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ACCOUNTING FOR MANAGERS
TERM PAPERBASED ON FINANCIAL STATEMENT
ANALYSIS AND INTERPRETATION.
SUBMITTED TO:- SUBMITTED BY:-
Mrs.Manu kalia Subodh kumar singh
Regd.no- 11008039
Roll.no-A19
M.B.A- S1003
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Steel Authority of India Limited (SAIL) is the leading steel-making company in
India. It is a fully integrated iron and steel maker, producing both basic and special
steels for domestic construction, engineering, power, railway, automotive and
defense industries and forsale in export markets.
Ranked amongst the top ten public sector companiesin India in terms of turnover,
SAIL manufactures and sells a broad range ofsteel products, including hot and
cold rolled sheets and coils, galvanized sheets, electrical sheets, structurals,
railway products, plates, bars and rods, stainlesssteel and other alloy steels. SAIL
producesiron and steel at five integrated plants and three special steel plants,located principally in the eastern and central regions of India and situated close to
domestic sources of raw materials, including the Company'siron ore, limestone
and dolomite mines. The company has the distinction of being Indiassecond
largest producer ofiron ore and of having the countryssecond largest mines
network. This gives SAIL a competitive edge in terms of captive availability ofiron ore, limestone, and dolomite which are inputs forsteel making.
SAIL's wide range of long and flat steel productsis much in demand in the
domestic as well as the international market. Thisvital responsibility is carried out
by SAIL's own Central Marketing Organization (CMO) that transacts businessthrough its network of 37 Branch Sales Officesspread across the four regions, 25
Departmental Warehouses, 42 Consignment Agents and 27 Customer Contact
Offices. CMOs domestic marketing effort issupplemented by its ever widening
network of rural dealers who meet the demands of the smallest customersin the
remotest corners of the country. With the total number of dealers over 2000 ,
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SAIL's wide marketing spread ensures availability of quality steel in virtually allthe districts of the country.
SAIL's International Trade Division ( ITD), in New Delhi- an ISO 9001:2000
accredited unit of CMO, undertakes exports of Mild Steel products and Pig Iron
from SAILs five integrated steel plants.
With technical and managerial expertise and know-how in steel making gained
over four decades, SAIL's Consultancy Division (SAILCON) at New Delhi offersservices and consultancy to clients world-wide.
SAIL has a well-equipped Research and Development Centre for Iron and Steel
(RDCIS) at Ranchi which helps to produce quality steel and develop new
technologies for the steel industry. Besides, SAIL hasits own in-house Centre for
Engineering and Technology (CET).
Major Units
Integrated Steel Plants
y Bhilai Steel Plant (BSP) in Chhattisgarh
y Durgapur Steel Plant (DSP) in West Bengal
y Rourkela Steel Plant (RSP) in Orissa
yBokaro Steel Plant (BSL) in Jharkhand
y IISCO Steel Plant (ISP) in West Bengal
Special Steel Plants
y Alloy Steels Plants (ASP) in West Bengal
y Salem Steel Plant (SSP) in Tamil Nadu
y Visvesvaraya Iron and Steel Plant (VISL) in Karnataka
Subsidiary
y Maharashtra Elektrosmelt Limited (MEL) in Maharashtra
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VISION
y To be a respected world class corporation and the leader in Indian steel business in quality,
productivity, profitability and customer satisfaction
MISSION
To be a respected world class corporation and the leader in Indian steel business in quality, productivity,
profitability and customer satisfaction.
CREDO
y We build lasting relationships with customers based on trust and mutual benefits.
y We uphold highest ethical standards in conduct of our business.
y We create and nurture a culture that supports flexibility, learning and is
proactive to change.
y We chart a challenging career for employees with opportunities for advancement
and rewards.
y We value the opportunity and responsibility to make a meaningful difference in
people's lives.
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Companyprofile:
Type State-owned enterprise
Public (BSE: 500113)
Industry Steel
Founded 1954
Headquarters Ispat Bhawan, NewDelhi, India[1]
Key people C.S Verma (Chairman)
Revenue 41,356.50 crore (US$9.31 billion)[2]
Net income 6,791.09 crore (US$1.53 billion)[2]
Total assets US$10.54 billion (2008)
Employees 131,910 (2006)
Website www.sail.co.in
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It facilitates both type of analysis , i.e, horizontal as well asvertical. Thisstatement
indicate the relationship ofvariousitemsin terms of with some common or basic
items . In Income statement the common item ids Net Sales and in Position
statement the common item is total of assets and liabilities.
Individual items / net sales * 100
Trend analysis :-
This analysisis an important tool of horizontal financial analysis . Under this
method trend ratio are calculated from selected items of financial year taking the
figure of the base year as 100 .
Trend Ratio = Current Year Amount / Base Year Amount *100
Ratio Analysis :
It is Used to establish meaning full mathematical relationship between two items
or two group ofitemsshown in financial statement. This relationship issimply
Expressed in ratio like 1:1or percentage orin times.
Cash Flow statement :-
This technique isvery useful in the management of cash and analysis ofshort term
liquidity . Under this method a statement is prepared to show the inflow or outflow
of cash related to various activitiesin the concern during a specific period. There is
a perfect format that was followed to make this analysis
Fund Flow Statement ;-
It is prepared to reveals the sources from which funds are obtained and the uses to
which they are being put. Here the term fundsstand for working capital . It
always accompanied by schedule of working capital changes.. There is a perfect
format that was followed to make this analysis
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OBJECTIVE:
y To analyze the financial position of SAIL.
yTo attain the liq
u
idity and the solvency position of the company in respectto the past twoyears.
y To compare the performance of sail in the past twoyears.
y To identify the financial weaknesses of the firm and to suggest remedial
measures
y To determine the long term as well as short term solvency, which decide
the credit worthiness of the firm also.
y To determine and examine the earning capacity of the firm and to
estimates the future prospects.y It helps in identifying the financial strength and weakness of the firm by
properly establish the relation between the items of balance sheet and
profit & loss account.
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IMPORTANCE OF FINANCIAL STATEMENT ANALYSIS
Financial Statement contains a bundle of useful and valuable informationwhich is not used by only owners but by various parties have interest in the
business concern. The main users of financial statements are as ;-
y Investors
y Lenders
y Trade creditors
y Employees
y Government and its agencies
y Management
y Stock Exchange
METHODOLOGY:
y We had collected all the relevant information from the secondary
source i.e. from the annual report of the company. . The income
statement, Position statement, fund flow statement and cash flow
statement ,these all are extracted from the annual report of sail.
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Balance Sheet :
Steel Authority of India
Balance Sheet
Mar '09 Mar '10
12 mths 12 mths
Sources Of Funds
Total Share Capital 4,130.40 4,130.40
Equity Share Capital 4,130.40 4,130.40
Share Application Money 0 0
Preference Share Capital 0 0
Reserves 23,853.70 29,186.30
Revaluation Reserves 0 0
Networth 27,984.10 33,316.70
Secured Loans 1,473.60 7,755.90
Unsecured Loans 6,065.19 8,755.35
Total Debt 7,538.79 16,511.25
Total Liabilities 35,522.89 49,827.95
Mar '09 Mar '10
12 mths 12 mths
Application Of Funds
Gross Block 32,728.69 35,396.19
Less: Accum. Depreciation 20,459.86 21,780.91
Net Block 12,268.83 13,615.28
Capital Work in Progress 6,544.24 15,026.13
Investments 652.7 668.83
Inventories 10,121.45 9,027.46
Sundry Debtors 3,024.36 3,493.90
Cash and Bank Balance 347.94 22,436.37
Total Current Assets 13,493.75 34,957.73
Loans and Advances 4,292.50 4,123.43
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Fixed Deposits 17,880.59 0
Total CA, Loans & Advances 35,666.84 39,081.16
Deffered Credit 0 0
Current Liabilities 10,201.51 12,351.78
Provisions 9,408.21 6,211.67
Total CL & Provisions 19,609.72 18,563.45
Net Current Assets 16,057.12 20,517.71
Miscellaneous Expenses 0 0
Total Assets 35,522.89 49,827.95
Contingent Liabilities 32,193.13 28,382.46
Book Value (Rs) 67.75 80.66
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Profit and loss :
Profit & Loss account of Steel Authority of India
In rs croreParticulars
Mar '09 Mar '10
12 mths 12 mths
Income
Sales Turnover 49,331.47 43,934.70
Excise Duty 5,532.89 3,386.88
Net Sales 43,798.58 40,547.82
Other Income 2,002.77 2,768.23
Stock Adjustments 1,872.87 -1,157.45
Total Income 47,674.22 42,158.60
Expenditure
Raw Materials 23,915.45 20,506.40
Power & Fuel Cost 3,119.42 3,369.35
Employee Cost 8,401.73 5,416.81
Other Manufacturing
Expenses
643.35 287.66
Selling and Admin
Expenses
1,587.61 0
Miscellaneous Expenses 992.85 719.99
Preoperative Exp
Capitalised
-1,930.40 0
Total Expenses 36,730.01 30,300.21
Mar '09 Mar '10
12 mths 12 mths
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Operating Profit 8,941.44 9,090.16
PBDIT 10,944.21 11,858.39
Interest 253.24 402.01PBDT 10,690.97 11,456.38
Depreciation 1,285.12 1,337.24
Other Written Off 128.02 10.33
Profit Before Tax 9,277.83 10,108.81
Extra-ordinary items 181.26 98.45
PBT (Post Extra-ord Items) 9,459.09 10,207.26
Tax 3,284.28 3,452.89
Reported Net Profit 6,174.81 6,754.37
Total Value Addition 12,814.56 9,793.81
Preference Dividend 0 0
Equity Dividend 1,073.90 1,363.03
Corporate Dividend Tax 181.26 227.52
Per share data (annualised)
Shares in issue (lakhs) 41,304.01 41,304.01
Earning Per Share (Rs) 14.95 16.35
Equity Dividend (%) 26 33
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Cash Flow Statement
Steel Authority of India
Cash Flow statement
Particulars
Mar '08 Mar '09
12 mths 12 mths
Net Profit Before
Tax
11468.73 9403.45
Net Cash From
Operating
Activities
8378.18 6124.26
Net Cash (used
in)/from
-1139.89 -4406.47
Investing Activities
Net Cash (usedin)/from Financing
Activities
-3088.68 2751.3
Net
(decrease)/increase
In Cash and Cash
Equivalents
4149.61 4469.09
Opening Cash &
Cash Equivalents
9609.83 13759.44
Closing Cash &
Cash Equivalents
13759.44 18228.53
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Fund Flow Statement
Sources of funds
YEAR 09 YEAR 10
Total Share Capital 4,130.40 4,130.40
Equity Share Capital 4,130.40 4,130.40
Share Application Money 0 0
Preference Share Capital 0 0
Reserves 23,853.70 29,186.30
Revaluation Reserves 0 0
Networth 27,984.10 33,316.70
Secured Loans 1,473.60 7,755.90
Unsecured Loans 6,065.19 8,755.35
Total Debt 7,538.79 16,511.25
Total Liabilities 35,522.89 49,827.95
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Application of funds
Gross Block 32,728.69 35,396.19
Less: Accum. Depreciation 20,459.86 21,780.91
Net Block 12,268.83 13,615.28
Capital Workin Progress 6,544.24 15,026.13
Investments 652.7 668.83
Inventories 10,121.45 9,027.46
Sundry Debtors 3,024.36 3,493.90
Cash and Bank Balance 347.94 22,436.37
Total Current Assets 13,493.75 34,957.73
Loans and Advances 4,292.50 4,123.43
Fixed Deposits 17,880.59 0
Total CA, Loans & Advances 35,666.84 39,081.16
Deffered Credit 0 0
Current Liabilities 10,201.51 12,351.78
Provisions 9,408.21 6,211.67
Total CL & Provisions 19,609.72 18,563.45
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Net Current Assets 16,057.12 20,517.71
Mis
cellaneous
Expenses
0 0
Total Assets 35,522.89 49,827.95
Contingent Liabilities 32,193.13 28,382.46
Book Value (Rs) 67.75 80.66
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ANALYSIS OF STATEMENTS
RATIO ANALYSIS
It is the important tool of Financial Statement Analysis. It is a process
through which various ratios are calculated and on that basis
conclusions are drawn which become the base of managerial decision.
Objective Of Ratio Analysis
Ratio Analysis is an important technique of financial analysis. It also
provide useful indications related to financial health and operational
efficiency of the concern.
The following are the objective or advantages of ratio analysis:-
1.It is useful in Financial Position Analysis
2.It is helpful in Financial Forecasting and Planning.
3.It is useful in assessing the Operational efficiency.
4.It help in Comparative study
5.It is Useful in Control
6.It help in locating the weak spots of the Business
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Classification Of Ratios
1.Liquidity Ratio
2.Profitability Ratio
3.Turnover/Activity/efficiency Ratio
4.Solvency Ratio
1.LIQUIDITY RATIO :-
1.Current Ratio :- Current Assets
Current Liabilities
Rule of Thumb :- 2:1
2.Quick Ratio / Acid Test Ratio :- Quick Assets
Current Liabilities
Where ,Quick Assets = Current assets Inventory (stock) Prepaid
expenses
Rule of Thumb : 1:1
3 Absolute Liquid Ratio / Cash Ratio :- Absolute Quick Assets
Current Liabilities
It is also known as a Super Quick Ratio because it is very - very liquid.
2.PROFITABILITY RATIO
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Gross Profit Ratio :- Gross Profit * 100
Net Sales
Where , Gross Profit = Sales Cost of goods sold (COGS)
COGS = opening stock + purchases + direct expenses closing stock
Net Sales = Sales Sales Return (Return Inward)
1.Net Profit Ratio :- Net profit * 100
Net Sales
Where , Net Sales = Gross Profit indirect expenses
2. Operating Ratio :- Operating cost * 100
Net Sales
Where , operating cost = cost of good sold + operating expenses
(selling & distribution expenses , administration expenses )
3.Return On Investment : Net profit * 100
Share holder funds
This ratio is determine the earning capacity related to owners capital
and investment
4.Return on Equity :- Net Profit Preference Dividend
Share holder funds
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It is very important from the view point of equity shareholders because
dividend on equity shares depends upon the profit available for equity
shareholders.
5.Earning Per Share :- Net profit Preference dividend
Number of shares equity
3.Turnover Ratio/ Activity Ratio / Efficiency Ratio
.
1.Inventory Turnover Ratio :- Cost ofGoods sold
Average Stock
Where , Average stock = opening stock + closing stock
2
2.Debtor Turnover Ratio :- Net Annual Credit Sales
Average Debtors
Where, Debtors includes Bills Receivables , Accounts Receivables.
3.Creditors Turnover Ratio :- Net Annual Credit Purchase
Average Creditors
4. Solvency Ratio
It means ability of firm to pay its liabilities on due date.
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1.Debt Equity Ratio :- Debt
Equity
It reflect the long term financial position of the firm.
2.Interest Coverage Ratio ; Earnings Before Interest & Tax
Interest Charges
This ratio indicates the ability of concern to pay the interest due.
Whenever any concern procures loans, the creditors wants to satisfied
that interest will be received regularly and easily.
FOR 2009:-
Preference share dividend=0
Share holder fund= 1135.19
Return on equity =Net profit-Preference dividend/Shareholder fund*100
= 228.16 -0 / 1135.19 *100
= 20 %*LIQUIDITYRATIO
1. Current ratio (rupees in crores)
Current assets = 533.22
Current liability= 367.32
Current ratio = current assets/current liability
= 533.22/367.32
= 1.45
Interpretation
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As a rule of thumb a ratio of2:1 is consideredsound enough however it is not
universally applicable. In Havells India limited. The current ratio is very high .it is
1.45 which indicates that the enterprise has not enough finance to meet their
current obligation.
2 .Acid test ratio/Quick ratio
Current assets = 533.22
Current liability = 367.32
Quick ratio =current assets (investment +prepaid expense)/current liability
=533.22-207.53/367.32
= 325.69/367.32
=0.89
INTERPRETATION
Current ratio and test ratio indicate the ability of the enterprise to meet its
current liability however the acid test ratio is better indicator of liquidity. Acid test
ratio of Havells India limited is 0.89.the acid test ratio of company is not too
much .it means company has not too much financial resources .so Company
cannot easily meet their current liability.
3. Absolute liquid ratio
Absolute liquid assets =cash in hand + cash in bank +marketable securities
Cash and bank =157.37
Current liability=367.32
Absolute liquid ratio =absolute liquid assets/current liability
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=157.37/533.22
=0.29
INTERPRETATION
Absolute liquidity is represented by cash and near cash item .the absolute liquid
ratio are cash, bank and marketable securities .A standard of 0.5:1 absolute
liquidty is considered. The ratio of absolute liquid ratio is 0.29 which show that
company has too much liquidty assets which is good for the company .it show a
good financial position in the market.
*profitability ratio
1. Gross profit ratio
Gross profit =185.06
Net sales = 2195.15
Gross profit ratio =gross profit/net sales*100
=185.06/2195.15*100
=8.43%
INTERPRETATION
Gross profit ratio indicates what extent the selling price of goods per unit
may be reduced without incurring losses on operation. It reflects the
efficiency with which a firm produced its product. The ratio of company is8.43 which show that company production is good according to their ratio.
2. Net profit ratio
Net profit= 145.23
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Net sales =2195.15
Net profit ratio=net profit/net sales*100
=145.23/2195.15*100
=6.6%
INTERPRETATION
Actually the business totally depends on the profit of the company.
Business is only run success if it earns profit. So net profit ratio of this
company is 6.6% which show that company is not earns a huge net profit.
3. Operating ratio
Operating cost =COGS + operating expenses
=2010.09+361.74+14.56=2386.39
Net sales = 2195.15
Operating ratio=operating cost /net sales*100
=2386.39/2195.15*100
=108.7%INTERPRETATION
Operating ratio indicate the relationship between operating expenses and
sales. The ratio indicates operating efficiency of the organisation and it is
important to the management to evaluating its own efficiency.
The ratio of reliance power is 108.7%which indicate the
efficiency of the organisation is good but not better management should
take more steps towards their utilisation of their resources.
4. Return on investment
Net profit =145.23
Shareholder fund=934.33
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Return on investment=net profit/shareholder fund*100
=145.23/934.33*100
=15.54%
INTERPRETATION
Through this ratio company can measure the percentage return to the
company on the fund .it is also a good indication of the profitability of the
organisation.
The company has ratio of RETURN OF INVESTMENT is 15.54% this
percentage sufficient for the company because profit is a function of
accounting and operating policies of an enterprise.
5. Return on equity
Net profit=145.23
Preference share dividend=0
Share holder fund=934.33
Return on equity =Net profit-Preference dividend/Shareholder fund*100
=145.23-0/934.33*100=15.54%
INTERPRETATION
Return on equity measure a corporation ,s profitability by revealing how much
profit a company generate with the money shareholder have invested. The ratio
of ROE is15.54% indicating good performance in generating profit from that
amount which is invested by the shareholder.
6. Earnings per share =Net profit-preference dividend/No. Of equity
share outstanding
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*Activity /turnover ratio
1. Inventory turnover ratio
COGS=net sales-gross profit
=2195.15-185.06
=2010.09
Average stock= 207.53
Inventory turnover ratio=COGS/average stock
= 2010.09/ 207.53 =10
INTERPRETATION
Inventory turnover ratio indicate that how many times a company, s inventory is
sold and replaced over a period. A high ratio implies either strong sales or
effective buying. But company ITR is 10 which show that company has good
turnover implies good sales.
2. Debtors turnover ratio=net credit annual sales/average debtors
Net credit sales= 2195.15
Average debtor= 86.74
Debtor turnover ratio=2195.15/86.74
=25.31
3. Creditors turnover ratio =net credit purchase/average creditor
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Average payment period=365/CTR
NOTE there is no any credit purchase by the company so we could not find.
*solvency ratio
1. Debt to equity ratio
Debt=70.28
Equity= 30.08
Debt to equity ratio= total debt/equity
=70.28/30.08
=2.3
INTERPRETATION
Through this ratio company find out financial power of the company. Ahigh debt to equity ratio generally means that a company has been aggressive in
financial its growth with debt. If company debt may increase more than it may
lead to bankruptcy.
Company debt to equity ratio is not much which indicates that company
took debt according to their need.
*coverage ratio
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1. Interest coverage ratio
EBIT=167.20
Interest charges= 25.03
Interest coverage ratio=earnings before interest tax/interest charges
=167.20/25.03
=6.7
INTERPRETATION
Interest coverage ratio determines that how easily a company can pay interest on
outstanding debt. The lower the ratio, the company is burden by debt expense.
But the Havells India limited has interest coverage ratio is 6.7. Which show that
company has not much debt or if company has any debt it can easily met by thecompany.
CALCULATION FOR 2010
*LIQUIDITYRATIO
1. Current ratio (rupees in crores)
Current assets = 561.25
Current liability= 416.17
Current ratio = current assets/current liability
= 561.25 / 416.17
= 1.35
Interpretation
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Generally as a rule of thumb a ratio of2:1 is consideredsound enough however it
is not universally applicable. In Havells India limited. The current ratio is very
low .it is 1.35 which indicates that the enterprise has not more finance than it
need .the ratio show that company has not much finance.
Thus, a high current ratio means the enterprise has more finance so they can use
efficiently. But company has low current ratio.
2 .Acid test ratio/Quick ratio
Current assets = 561.25
Current liability = 416.17
Quick ratio =current assets (investment +prepaid expense)/current liability
=561.25-330.65/416.17
= 231/416.17
= 0.56
INTERPRETATION
Current ratio and test ratio indicate the ability of the enterprise to meet its
current liability however the acid test ratio is better indicator of liquidity. Acid test
ratio of havells India limited is 0.56.the acid test ratio of company is not too
much. It means company has not too much finance available.
2. Absolute liquid ratio
Cash and bank = 68.31
Current liability= 416.17
Absolute liquid assets =cash in hand + cash in bank +marketable securities
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=68.31
Absolute liquid ratio =absolute liquid assets/current liability
= 68.31 / 416.17
= 0.16
INTERPRETATION
Absolute liquidity is presented by cash and near cash item .the absolute liquid
ratio are cash, bank and marketable securities .A standard of 0.5:1 absolute
liquidity is considered. The ratio of absolute liquid ratio is 0.16. Which show that
company has not good liquid assets.
*profitability ratio
3. Gross profit ratio
Gross profit = 313.53
Net sales = 2468.77
Gross profit ratio =gross profit/net sales*100
= 313.53 / 2468.77 * 100
= 12.7%
INTERPRETATION
Gross profit ratio indicate what extent the selling price of goods per unit
may be reduced without incurring losses on operation .it reflect theefficiency with which a firm produced its product. The ratio of company is
12.7%. Which show that company production is good according to their
ratio.
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4. Net profit ratio
Net profit= 228.16
Net sales =2468.77
Net profit ratio=net profit/net sales*100
= 228.16 / 2468.77 * 100
= 9.24%
INTERPRETATION
Actually the business totally depend on the profit of the company .Business is only
run success if it earn profit. So net profit ratio of this company is 9.24% which
show that company earn a normal net profit .it is good for the company.
3. Operating ratio
Operating cost =COGS+ operating expenses
=2155.24+424.52+16.56
= 2596.32
Net sales = 2468.77
Operating ratio=operating cost /net sales*100= 2596.32 / 2468.77 *100
= 105%
INTERPRETATION
Operating ratio indicate the relationship between operating expenses and
sales. The ratios indicate operating efficiency of the organisation and it is
important to the management to evaluating its own efficiency.
The ratio of havells India limited is 105%which indicate the
efficiency of the organisation is good but not better management should
take more steps towards their utilisation of their resources.
4. Return on investment
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Net profit =228.16
Shareholder fund= 1135.19
Return on investment=net profit/shareholder fund*100
= 228.16 / 1135.19 *100
= 20 %
INTERPRETATION
Through this ratio company can measure the percentage return to the
company on the fund .it is also a good indication of the profitability of the
organisation.
The company has ratio of RE
TURN OFINV
ESTME
NT is 20% this percentagesufficient for the company because profit is a function of accounting and
operating policies of an enterprise.
5. Return on equity
Net profit=228.16
INTERPRETATION
Return on equity measure a corporation ,s profitability by prevailing how
much profit a company generate with the money shareholder have
invested. The ratio of ROE is indicating good performance in generating
profit from that amount which is invested by the shareholder.
6. Earnings per share =Net profit-preference dividend/No. Of equity
share outstanding
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*Activity /turnover ratio
1. Inventory turnover ratio
COGS=net sales-gross profit
= 2468.77 313.53
= 2155.24
Average stock= 330.65
Inventory turnover ratio=COGS / average stock
= 2155.24 / 330.65 = 6.5
INTERPRETATION
Inventory turnover ratio indicate that how many times a company, s inventory is
sold and replaced over a period. A high ratio implies either strong sales or
effective buying. But company ITR is 6.5 which show that company has high
turnover implies good sales.
3. Debtors turnover ratio=net credit annual sales/average debtors
Net credit sales= 2468.77
Average debtor= 79.47
Debtor turnover ratio=2468.77 / 79.47
= 31
3. Creditors turnover ratio =net credit purchase/average creditor
Average payment period=365/CTR
NOTE there is no any credit purchase by the company so we could not find.
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*solvency ratio
1. Debt to equity ratio
Debt= 115.81
Equity= 31.19
Debt to equity ratio= total debt/equity
= 115.81 / 31.19
= 3.7
INTERPRETATION
Through this ratio company find out financial power of the company. A high debt
to equity ratio generally means that a company has been aggressive in financial its
growth with debt. If company debt may increase more than it may lead to
bankruptcy.
Company debt to equity ratio is not much which indicates that company
took debt according to their need.
*coverage ratio
3. Inertest coverage ratio
EBIT= 290.26
Interest charges= 11.74
Interest coverage ratio=earnings before interest tax/interest charges
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=290.26 / 11.74
= 24.7
INTERPRETATION
Interest coverage ratio determine that how easily a company can pay interest on
outstanding debt .the lower the ratio ,the company is burden by debt expense.
But the reliance power company has interest coverage ratio is 24.7 which show
that company has no any debt or if company has any debt it can easily meet by
the company.
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TREND ANALYSIS
BALANCE SHEET :
Particulars Mar '09 Mar '10
Trend Analysis=
Current year*100 /
Base year(2009)
Total Share Capital 4,130.40 4,130.40 100
Equity Share Capital 4,130.40 4,130.40 100
Share Application
Money 0 0 0
Preference Share
Capital 0 0 0
Reserves 23,853.70 29,186.30 122.3554417
Revaluation Reserves 0 0 0
Networth 27,984.10 33,316.70 119.055821
Secured Loans 1,473.60 7,755.90 526.3232899
Unsecured Loans 6,065.19 8,755.35 144.3540928
Total Debt 7,538.79 16,511.25 219.0172428
Total Liabilities 35,522.89 49,827.95 140.269978
Assets
Gross Block 32,728.69 35,396.19 108.1503415
Less: Accum.
Depreciation 20,459.86 21,780.91 106.456789
Net Block 12,268.83 13,615.28 110.9745591
Capital Work in 6,544.24 15,026.13 229.6084801
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Progress
Investments 652.7 668.83 102.4712732
Inventories 10,121.45 9,027.46 89.1913708
Sundry Debtors 3,024.36 3,493.90 115.5252682Cash and Bank
Balance 347.94 22,436.37 6448.344542
Total Current Assets 13,493.75 34,957.73 259.0660862
Loans and Advances 4,292.50 4,123.43 96.06126966
Fixed Deposits 17,880.59 0 0
Total CA, Loans &
Advances 35,666.84 39,081.16 109.5728133
Deffered Credit 0 0 0
Current Liabilities 10,201.51 12,351.78 121.0779581
Provisions 9,408.21 6,211.67 66.02393016
Total CL & Provisions 19,609.72 18,563.45 94.66453371
Net Current Assets 16,057.12 20,517.71 127.7795146
Miscellaneous
Expenses 0 0 0
Total Assets 35,522.89 49,827.95 140.269978
Contingent Liabilities 32,193.13 28,382.46 88.16309567
Book Value (Rs) 67.75 80.66 119.0553506
Profit and Loss:
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Miscellaneous Expenses 992.85 719.9972.5175
Preoperative Exp Capitalised -1,930.40 0
0Total Expenses 36,730.01 30,300.21
82.49442
Mar '09 Mar '10
12 mths 12 mths
Operating Profit 8,941.44 9,090.16 101.6633
PBDIT 10,944.21 11,858.39108.3531
Interest 253.24 402.01158.7466
PBDT 10,690.97 11,456.38107.1594
Depreciation 1,285.12 1,337.24104.0557
Other Written Off 128.02 10.338.069052
Profit Before Tax 9,277.83 10,108.81108.9566
Extra-ordinary items 181.26 98.4554.31424
PBT (Post Extra-ord Items) 9,459.09 10,207.26107.9095
Tax 3,284.28 3,452.89105.1338
Reported Net Profit 6,174.81 6,754.37109.3859
Total Value Addition 12,814.56 9,793.8176.4272
Preference Dividend 0 00
Equity Dividend 1,073.90 1,363.03126.9234
Corporate Dividend Tax 181.26 227.521255.214
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Per share data (annualised)
Shares in issue (lakhs) 41,304.01 41,304.01100
Earning Per Share (Rs) 14.95 16.35
109.3645Equity Dividend (%) 26 33
126.9231
Common sizeStatement
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Balance sheet
Sources Of Funds YEAR 09 YEAR 10% change in
2009
% change
in 2010
Total Share Capital 4,130.40 4,130.40 11.627432 8.2893236
Equity Share Capital 4,130.40 4,130.40 11.627432 8.2893236
Share Application
Money 0 0 0 0
Preference Share
Capital 0 0 0 0
Reserves 23,853.70 29,186.30 35,208.41 36184.354
Revaluation Reserves 0 0 0
Networth 27,984.10 33,316.70 78.78 66.863477
Secured Loans 1,473.60 7,755.90 4.15 15.56536
Unsecured Loans 6,065.19 8,755.35 17.07 17.571162
Total Debt 7,538.79 16,511.25 21.22 33.136523
Total Liabilities 35,522.89 49,827.95 100.00 100
Application Of Funds
Gross Block 32,728.69 35,396.19 92.13 71.036818
Less: Accum.
Depreciation 20,459.86 21,780.91 57.60 43.712234
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Net Block 12,268.83 13,615.28 34.54 27.324584
Capital Work in
Progress 6,544.24 15,026.13 18.42 30.156027
Investments 652.7 668.83 1.8374068 1.3422788
Inventories 10,121.45 9,027.46 28.49 18.117261
Sundry Debtors 3,024.36 3,493.90 8.5138343 7.011928
Cash and Bank Balance 347.94 22,436.37 0.98 45.02768
Total Current Assets 13,493.75 34,957.73 37.99 70.15687
Loans and Advances 4,292.50 4,123.43 12.083758 8.2753354
Fixed Deposits 17,880.59 0 50.34 0
Total CA, Loans &
Advances 35,666.84 39,081.16 100.41 78.432205
Deffered Credit 0 0 0 0
Current Liabilities 10,201.51 12,351.78 28.72 24.788858
Provisions 9,408.21 6,211.67 26.48 12.466236
Total CL & Provisions 19,609.72 18,563.45 55.20 37.255095
Net Current Assets 16,057.12 20,517.71 45.20 41.17711
Miscellaneous Expenses 0 0 0 0
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Raw Materials 23,915.45 20,506.4054.6032543 50.5733
Power & Fuel Cost 3,119.42 3,369.357.12219437 f13/f7*10
Employee Cost 8,401.73 5,416.81
19.1826539 13.3590Other Manufacturing
Expenses
643.35 287.66
1.46888324 0.70943
Selling and Admin
Expenses
1,587.61 0
3.62479788
Miscellaneous
Expenses
992.85 719.99
2.26685431 1.77565
Preoperative Exp
Capitalised
-1,930.40 0
-4.4074488
Total Expenses 36,730.01 30,300.21 83.8611891 74.727
Mar '09 Mar '10
12 mths 12 mths
Operating Profit 8,941.44 9,090.1620.4149084 22.4183
PBDIT 10,944.21 11,858.3924.9875909 29.2454
Interest 253.24 402.010.57819226 0.99144
PBDT 10,690.97 11,456.3824.4093987 28.25
Depreciation 1,285.12 1,337.242.93415905 3.29793
Other Written Off 128.02 10.330.29229258 0.02547
Profit Before Tax 9,277.83 10,108.81
21.182947 24.9305Extra-ordinary items 181.26 98.45
0.41384903 0.242
PBT (Post Extra-ord
Items)
9,459.09 10,207.26
21.5967961 25.1733
Tax 3,284.28 3,452.897.49859927 8.515
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Reported Net Profit 6,174.81 6,754.3714.0981968 16.6577
Total Value Addition 12,814.56 9,793.8129.2579348 24.1537
Preference Dividend 0 0
0 Equity Dividend 1,073.90 1,363.03
470352.951 3.36153
Corporate Dividend
Tax
181.26 227.52
0.41384903 0.56111
Per share data
(annualised)
Shares in issue (lakhs) 41,304.01 41,304.0194.3044501 101.864
Earning Per Share (Rs) 14.95 16.35
0.03413353 0.04032Equity Dividend (%) 26 330.05936266 0.08138
ComparativeStatement
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Net Block 12,268.83 13,615.28 1,346.45 10.974559
Capital Work in
Progress 6,544.24 15,026.13 8,481.89 129.60848
Investments 652.7 668.83 16.13 2.4712732
Inventories 10,121.45 9,027.46 -1,093.99 -10.808629
Sundry Debtors 3,024.36 3,493.90 469.54 15.525268
Cash and Bank
Balance 347.94 22,436.37 22,088.43 6348.3445
Total Current Assets 13,493.75 34,957.73 21,463.98 159.06609
Loans and Advances 4,292.50 4,123.43 -169.07 -3.9387303
Fixed Deposits 17,880.59 0 -17,880.59 -100
Total CA, Loans &
Advances 35,666.84 39,081.16 3,414.32 9.5728133
Deffered Credit 0 0 0 0
Current Liabilities 10,201.51 12,351.78 2,150.27 21.077958
Provisions 9,408.21 6,211.67 -3,196.54 -33.97607
Total CL &
Provisions 19,609.72 18,563.45 -1,046.27 -5.3354663
Net Current Assets 16,057.12 20,517.71 4,460.59 27.779515
Miscellaneous
Expenses 0 0 0 0
Total Assets 35,522.89 49,827.95 14,305.06 40.269978
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Contingent Liabilities 32,193.13 28,382.46 -3,810.67 -11.836904
Book Value (Rs) 67.75 80.66 12.91 19.055351
Profit and Loss
Particulars Mar '09 Mar '10
Increase ordecrease % change
12 mths 12 mths
Income
Sales Turnover 49,331.47 43,934.7043,934.70 89.0602
Excise Duty 5,532.89 3,386.88-45,944.59 -830.39
Net Sales 43,798.58 40,547.82
35,014.93 79.9454Other Income 2,002.77 2,768.23
-41,030.35 -2048.7
Stock Adjustments 1,872.87 -1,157.45-3,160.22 -168.74
Total Income 47,674.22 42,158.6040,285.73 84.5021
Expenditure
Raw Materials 23,915.45 20,506.40-3,409.05 -14.255
Power & Fuel Cost 3,119.42 3,369.35 249.93 8.01207
Employee Cost 8,401.73 5,416.81-2,984.92 -35.527
Other Manufacturing
Expenses
643.35 287.66
-355.69 -55.287
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Selling and Admin
Expenses
1,587.61 0
-1,587.61 -100
Miscellaneous Expenses 992.85 719.99-272.86 -27.482
Preoperative ExpCapitalised
-1,930.40 0
1,930.40 -100
Total Expenses 36,730.01 30,300.21-6,429.80 -17.506
Mar '09 Mar '10
12 mths 12 mths
Operating Profit 8,941.44 9,090.16148.72 1.66327
PBDIT 10,944.21 11,858.39914.18 8.35309
Interest 253.24 402.01148.77 58.7466
PBDT 10,690.97 11,456.38765.41 7.15941
Depreciation 1,285.12 1,337.2452.12 4.05565
Other Written Off 128.02 10.33-117.69 -91.931
Profit Before Tax 9,277.83 10,108.81830.98 8.95662
Extra-ordinary items 181.26 98.45-82.81 -45.686
PBT (Post Extra-ord
Items)
9,459.09 10,207.26
748.17 7.90953
Tax 3,284.28 3,452.89168.61 5.13385
Reported Net Profit 6,174.81 6,754.37 579.56 9.38588
Total Value Addition 12,814.56 9,793.81-3,020.75 -23.573
Preference Dividend 0 00.00 0
Equity Dividend 1,073.90 1,363.03289.13 26.9234
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Corporate Dividend Tax 181.26 227.5246.26 25.5214
Per share data
(annualised)
Shares in issue (lakhs) 41,304.01 41,304.01 0.00 0
Earning Per Share (Rs) 14.95 16.351.40 9.36455
Equity Dividend (%) 26 337.00 26.9231
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