Fianace Project

FINANCIAL STATEMENT ANALYSIS
AN INTRODUCTION
FINANCIAL STATEMENTS :
Financial statements, as used in corporate business houses, refer to a set
of reports and schedules, which an accountant prepares at the end of the period
of time for a business enterprise. The financial statements are the means with
the help of which the accounting system performs its main function of providing
summarized information about the financial affairs of the business. These
statements comprises balance sheet or position statement and profit and loss
account or income statement. In India, every company has to present its financial
statements in the form and contents as prescribed under section 211 of the
companies Act, 1956.
ANALYSIS OF FINANCIAL STATEMENTS:

Financial analysis is to determine the significant operating and financial
characteristics of a firm from accounting data. It is a technique typically devoted
to evaluate the past, current and projected performance of a business firm.
Financial analysis is an attempt to determine the significance and meaning of
financial statement data so that forecast may be made of the future prospects for
earnings, ability to pay interest and debt maturities and profitability.
Published financial statements are the only source of information about
the activities and affairs of a business entity available to the public, shareholders,
investors and creditors and the government. These various groups are interested
in the progress, position and prospects of such entity in various ways. But these
statements howsoever, correctly and objectively prepared, by themselves do not
reveal the significance, meaning and relationship of the information contained
therein. For this propose, financial statements have to be carefully studied,
dispassionately analyzed and intelligently interpreted.
Financial analysis results in the presentation of information by arranging
financial statement data in a systematic manner that aids business managers,
investor, financial statement can provide valuable insights into a company’s
performance.
1
OBJECT OF FINANCIAL ANALYSIS:
• To estimate the earning capacity of the firm
• To gauge the financial position and financial performance to the firm
• To determine the long term liquidity of the funds as well as solvency.
• To determine the debt capacity of the firm
• To decide about the future prospects of the firms.
TYPES OF FINANCIAL STATEMENT ANALYSIS:

A distinction may be drawn between various types of financial analysis
and it may be as under :-
(A) According to the nature of the analyst and the material used by him
1. External Analysis:- It is made by those who do not have access to the
detailed records of the company. This group, which has to depend
almost entirely on published financial statement, includes investors,
credit agencies and government agencies regulating a business in
nominal way.
2. Internal analysis:- The internal analysis is accomplished by those who
have access to the books of accounts and all other information related
to business. While conducting this analysis, the analyst is a part of the
enterprise he is analyzing. Executives and employees of the enterprise
conduct it.
(B) According to the Modus Operandi of analysis :

1) Horizontal analysis: When financial statements for a number of years
are reviewed and analyzed, the analysis is called ‘Horizontal Analysis’.
As it is based on data from year to year rather than on one date or
period of time as a whole, this is also known as ‘ Dynamic Analysis’.
2) Vertical analysis: It is frequently used for referring to ratios developed
for one date or for one accounting period. It is also called ‘Static
Analysis’. This is not very conducive to proper analysis of the firm’s
financial position and its interpretation, as it does not enable to study
data in perspective.
2
(C) According to the objective of the analysis:
1. Long-term analysis:- This analysis is made in order to study the long-
term financial stability, solvency and liquidity as well as profitability and
earning capacity of a business. The objective of this analysis is to know
whether the firm will be able to earn a minimum amount, which will be
sufficient to maintain a reasonable rate of return on the investment
2. Short-term analysis:- This analysis is made to determine the short-term
solvency, stability, liquidity and earning capacity of the business. The
requirement or not and sufficient borrowing capacity to meet
contingencies in the near future.
PARTIES INTERESTED IN FINANCIAL ANALYSIS :
1. Financial Executives:-
The first party interested in the financial analysis is the finance
department of the business concern who have a deep insight into the
financial condition of the enterprise and a view of the past performance,
which helps in future decisions making.
2. Management:-
The management of the concern is also interested in the analysis of
the statements because it helps them in reaching conclusions regarding
the overall operations of the business. The management is 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 the firm’s financial position is sound. As such, return on
analysis is very important for them.
3. Creditors:-
Creditors also evaluate the financial statements and on the basis of
these financial statement they come about the credit worthiness of the
business enterprise and choose to extend, maintain or restrict credit.
Creditors will be interested to give credit for those business enterprises
having sound financial position and having capable of being repayment
3
of their credit. Some of the aspects of enterprise operations that are of
interest of the creditors are liquidity of funds, soundness of the financial
structure, profitability of the operations, effectiveness of working capital
management, etc. The bankers and trade creditors of a business
enterprise are interested in its cash generation and credit worthiness.
They want to asses whether the enterprise will as interest payments due
a per agreed schedules. They get all this information from the analysis
of balance sheet and income statement of the company.
4. Investors:-
Investors, present as well as prospective, are interested in the
measurement of earning capacity of securities. Every investor has the
tendency to get fair return on his or her investment. Investors have been
increasingly concerned with the cash generation capability of an
enterprise primarily in terms of the flexibility availability to such
enterprises to acquire other business and new assets on an
advantageous basis. For this purpose each cash flow analysis and fund
flow analysis are very useful.
5. Government:-
The financial statements are used to asses the tax liability of
business enterprise. The government studies economic situation of the
country from these statement enable the government to find out
whether business is following various rules and regulations or not.
6. Bankers:-
The banker is interested to see that the loan amount is secure and
the customer is also able to pay the interest regularly. The banker will
analysis the balance sheet to determine financial strength of the
concern and profits and loss account will also be studied to find out the
earning position.
The information provided by the analysis and interpretation of
various financial statements is important and useful to those groups also that are
interested in the working of the business due to one or other motive.
4
IMPORTANT OF FINANCIAL ANALYSIS
Financial analysis is very important for the management, shareholders,

creditors, investors and general public. Following are important points in this
regard:
1. It simplifies, summarizes and systematizes a long array of accounting

figures, which prove very useful to the interested parties as it helps
them in arriving at valuable decision.
2. Financial analysis is invaluable aid to the management in discharge of
its basic function of forecasting, planning, coordination, communication
and control.
3. It identifies the financial health of enterprise by evaluating important
aspects of business like liquidity, solvency, profitability, capital gearing,
etc,. Such an evaluation enables conclusion to be drawn regarding
financial health of business.
4. The process of analyzing financial statements involves the preparation
and interpretation of meaning devices such as ratios and trend
percentages. So with the preparation of meaning devices the data
becomes easy to establish its relationship and other data can be easily
ranked in terms of its relative significance.
5. Without analysis of financial statements it is impossible to interpret the
financial statement figures. Therefore interpretation requires analysis.
6. Owing to the increasing demand for analytical information by business
executives, bakers and other it is necessary to have analysis and
interpretation of financial and operating data.
The financial statements are a mirror, which reflect the

financial position and operating strength or weakness of the business enterprise.
5
PROCEDURE OF ANALYSIS
The process of analyzing financial statements involves the rearranging,
comparing and measuring the significance of financial and operating data.
Interpretation, which follows analysis, is an attempt to logical conclusion
regarding the position and progress of the business on the basis of analysis.
The procedure may be as under:
1. Deciding upon the extent of analysis:- The depth, object and extent of
analysis have to be determined so that the scope of the analysis, tool of
analysis and the amount and quality of financial data required could be
determined.
2. Going through the financial statements:- Before analyzing and

preparing any statement or composing financial ratios, it is necessary to
go through the various financial statements of the firm.
3. Collection of necessary information:- Other useful information which

cannot be revealed from financial statement but is useful for analysis,
has to be collected from management.
4. Rearranging of financial data:- The data available has to be rearranged

in a useful manner before analysis and interpretation.
5. Analysis:- In this step the actual analysis is made for which any
technique such as, comparative financial statements, trend analysis,
ratio analysis and cash flow statements, statements of change in
working capital, etc., can be used.
6. Interpretation and presentation:- After analysis, interpretation is done

and conclusions are drawn. These interpretations are of vital
importance to the management, shareholder, workers, etc., to know the
relative worth of the company.
Thus, analysis and interpretation of financial statements are
regarded as complimentary to each other.
6
TOOLS OF FINANCIAL ANALYSIS
The analysis of financial statements consists of relationships and trends,
to determine whether the financial position of the company is satisfactory or not.
The analytical methods or devices, listed below are used to ascertain or measure
the relationships among the financial statement’s items.
Analytical methods and devices used in analyzing financial statements are
as follows:
1. Comparative financial statements
2. Common size financial statements
3. Trend Ratios
4. Ratio Analysis
5. Cash flow statements
They may be discussed as under:
1. Comparative financial statements:-

Statements prepared in a form that reflect financial data for two or more
periods are known as comparative statements. Financial data become more
meaningful when compared with similar data for a previous period or a number of
prior periods. Annual data can be compared with similar data for prior years.
Comparative statements can be prepared for both types of financial statements
balance sheet as well as profit and loss account. The comparative balance sheet
shows the effect of operations on the assets and liabilities i.e., change in the
financial position duding the period under consideration. The comparative profit
and loss account will present a review of operating activities of the business.
2. Common Size financial statements:-

Comparative statements that give only the vertical percentage of ratios for
financial data without giving rupee values are known as common size financial
statements. They are also known as 100 % statements. A common size
statements shows the relation of each component to the whole. It is useful in
vertical financial analysis and comparison of two business enterprises at a
certain date.
7
3. Trend Analysis:-
Under the technique of trend analysis the ratios of different items for
various periods are calculated and then a comparison is made. An analysis of the
ratios over the past few years may well suggest the trend or direction in which
the concern is going – upward or downward.
4. Ratio Analysis:-
Ratio analysis is the most widely used tool of financial analysis. It is
essentially an attempt to develop meaningful relationship between individual
items or group of items in the balance sheet or profit and loss account. The
objects and utility of ratio analysis is confined not only to the internal parties but
to the credit suppliers, bans and lending institutions also. Ratio analysis tells
about the financial position of the enterprise as to whether the capital structure of
the business is in proper order, whether the capital structure of the enterprise is
satisfactory, whether the credit policy in relation to sales and purchases is
sound and whether the company is creditworthy. Thus, ratio analysis highlights
the liquidity, solvency, profitability and capital gearing position
5. Cash flow Statements : -

Cash flow analysis is a valuable aid to the financial executive and
creditors for evaluating the uses of funds by the firm and in determining how
these uses were financed. A cash flow statement indicates where funds came
from and where it was used during the period under review. They are important
tools for communication and very helpful for financial executives in planning the
intermediate and long term financing of the firm.
8
INDUSTRY STRUCTURE & DEVELOPMENTS
Cement as well as Sugar industries in India are fragments and scattered

throughout the country and have been experiencing consolidations and achieving
considerable growth rates and improved price realization. However the cement
prices in State of Andhra Pradesh are not showing mush improvement unlike
other parts of the country.
Sugar being an agro-based industry needs good irrigation facilities. Some

regions of the country having sufficient water have given good crop yields.
Whereas due to insufficient rainfall, sufficient sugarcane wad not available during
the year. However the recent heavy rains in the neighboring states of
Maharashtra and Karnataka will help the state in improving the local irrigation
facilities.
Infrastructure and rural development have been attracting considerable

resources of the Governments both at the Central and State levels. And the
sustained economic development of the county coupled with providing of
incentives for housing and expected to give boost to the cement industry. Mixing
and Ethanol and Petrol has improved demand for molasses, which is a positive
factor for Sugar industry.
9
COMPANY PROFILE
INTRODUCTION
Sri P. Venkateswarlu is the Chairman & Managing Director of Kakatiya

Cements Limited (KCL), was incorporated in the year 1979 with an installed
capacity of 200 TPD. Since then the company is operating at its rated capacity
and has been making profits since then. The company has pre-paid its entire
term loans in the year 1987 much ahead of its amortization schedule, there by,
the company became debt free in the 1987. In spite of recessionary trends
prevailing in the market intermittently between 1987 – 1990 and 1997 – 1999, the
KCL rewarded its shareholders with uninterrupted and constant dividends the
company expanded its capacity from 200 TPD to 600 TPD in the year 1992
which was funded partly by rights issues of shares and the balance by All India
Financial Institutions lead by IDBI. The enhance capacity has come into effect in
the year March 1993.
In the year 1994, the company rewarded it shareholders with bonus

shares in the ratio of 1 : 1 in the tune with substantial growth recorded by it. After
stabilizing the operations the company has plans to diversity into other profitable
areas, more specifically into core industries. In this direction, the company had
evaluated the opportunities and had chosen the sugar industry for further
investments.
In the year 1996 the company acquired a sick unit M/S. Sree Kailas
Sugars and chemical limited. Promoted in the year 1990 and since then the unit
has being facing teething problems and reached a stage where the net worth got
eroded. KCL has inducted thee of this nominees into the board of directors of
SKSCL for taking over the management and to administer the day to day
operations of the company and new management had referred the company to
BIFR to explore the possibilities of rehabilitations of the company and also
approached
10
All India Financial Institutions led by IDBI to settle the long term loans
under one time settlement scheme which reduced the interest burden on the
company and strengthened the operations of the approved OTS scheme
envisaged waive of interest of RS 2239.39 lakhs. The BIFR had appointed
Industrial Development Bank of India (IDBI) as operating agency for prepares a
Rehabilitation scheme for SKSCL.
The operating agency submitted its report to BIFR suggesting the merger
of SKSCL with KCL. Pursuant to the scheme of merger sanctioned by the BIFR
dated 7th Jan 1999. the SKSCL was merged with KCL with effect from 1st April
1997. According the SKSCL lost its identity and become a unit of KCL. Hence
KCL has two divisions
 Cement divisions and
 Sugar division
Hence, the entire business and assets and liabilities of erst SKSCL vest in
the company with effect from 1st April 1997. The name of the company was
changed from Kakatiya Cements Limited to Kakatiya Cement Sugar And
Industries Limited (KCSIL) with effect from 1st January 1999 as per Government
of India’s letter No”- RAP / TA.I/Sec.21/2485/98 dated 1st January, 1999 issued by
The Register of Companies, Andhra Pradesh, Hyderabad.
After takeover KCL promoters relieved the company ( M/S Kailas Sugars
and Chemical Limited) from its huge debt through one time settlement schemes
with All India Financial Institutions. Further the capacity utilization of the company
has also improved from the year 1997 – 1998 and since then the company
reached its optimum capacity with in a couple of years.
11
The OTS has been implemented as per schedule and the term loans
raised for sugar division by the earlier management were fully repaid by 31st
March 2000 by raising on secured loans and out of internal accruals/ reserves.
The legal formalities such as change of management and acquiring the
controlling stake in the company, revival through BIFR and OTS scheme with
financial institutions have been completed with in the stipulated period.
CO-GENERATION PLANT:
The company has implemented a bagasse based co-generation plant at

sugar division, Peruvancha village, Kullar mandalam Khamman district. The
project was appraised by Indian Renewable Energy Development Agency
Limited ( IREDA) at a total cost of Rs. 5017 lakhs out of which Rs. 3660 lakhs
was sanctioned by IREDA and the balance has been met by the company out of
its internal accruals, unsecured loans from promoters. The project loan was
sanctioned under Asian Development Bank (ADB) line of credit, where in the
procurement of plant and machinery is exempt from payment of exercise duty
and customs duty. The project has been implemented a head of schedule and
operations have stabilized with in a short time.
The power plant, after meeting requirement of sugar and cement divisions
is exporting surplus power of APTRANSCO, Pursuant to a PPA enter into with
them. The power plant started commercial operations on 12th April, 2002 and it
has successfully completed one year operation and running at more than 100 %
PLF ( plant load factor).
12
Locations:
The factories are located at
i) Cement
Srinivasa nagar, Mellacheruvu Mandal
Nalgonda District, A.P.
ii) Sugar & Power

Peruvancha Village
Kallur Mandal, Khammam Dist., A.P.
PERFORMANCE OF THE YEAR UNDER REVIEW
Cement Division:
During the year under review, the cement division has produced
2,75,727 MT of cement as against 2,84,105 MT of cement for the previous year.
The loss for the divisions was Rs. 136.77 lakhs as against Rs. 96.21 lakhs loss
for the previous year.
Sugar Division :
The sugar division crushed 1,88,013 MT of sugarcane for the current

seasons as against 2,60,836 MT for the previous season. The recovery rate was
10.76 % compared to 9.89 % for the previous season. The profit for the division
was Rs. 1160.98 lakhs as against Rs. 83.40 lakhs for the previous year.
Power Division:
During the year under review, the power division has generated
6,03,34,123 KWH against 11,29,12,362 KWH of power for the previous year. The
loss for the division was Rs. 14.50 lakhs as against profit of Rs. 684.73 lakhs for
the previous year.
13
RATIONALE FOR THE STUDY:
Financial analysis of an organization provides the clear view of its

performance parameters, present as well in comparison to past performance.
This analysis is important for the management and also for outsiders dealing with
organization as this shows the way of functioning and the direction in which an
organization is moving.
A management student should properly understand the various aspects of
financial analysis as if opted for specialization in Financial Management.
That’s why I have selected “ Financial Analysis” as a topic for my study.
OBJECTIVE OF THE STUDY
The objective of the study is to determine the clear picture of the

company’s performance. The comparison of past and present performance helps
to understand the company’s efficiency level and makes it able to understand
what should do to improve its performance.
The objective of the study are as under:
 To study the resources pattern and their utilization with a view to
analyze the financial statements of Kakatiya Cement Sugar and
Industries Limited.
 To evaluate the sources of funds and their application b y using
cash flow techniques of financial statements
 To analyze profitability and capital structure of the company with the
help of ratio analysis.
14
METHODOLOGY:
My visit to the premises of the company’s registered office, observation of
working, meeting the concerned authorities and the printed financial statements
of the company are the basis of the study.
I also studied various concerned books for this purpose. This study is
based entirely on the published financial statements of Kakatiya Cement Sugar &
Industries Limited.
15
LIMITATIONS OF THE STUDY:
The limitations of the present study are :
1. In the study many factors that need detailed analysis could not
be discussed in detail because of the limitations regarding length
of the project and available time.
2. The study is subject to limitations of the nature of financial

analysis tools and techniques.
3. Further, the study takes into consideration the quantitative

aspect of the performance and not the qualitative aspect such as
impact of industrial assistance of company in the economic
development of the state, on additional employment
opportunities, contribution to net domestic product an
development of industrial estate, etc.,
16
ANALYSIS AND INTERPRETATION
1. COMPARATIVE FINANCIAL STATEMENTS:
These financial statements are so designed as to provide time perspective

to the various elements of financial positions contained therein. These
statements given the data for all the periods stated so as to show:
 Absolute money values of each time separately for each item
separately for each of the period stated.
 Increase and decrease in absolute data in terms of money values
 Increase and decrease in terms of percentages
 Comparison expressed in ratios
 Percentage of totals
Such comparative statements are necessary for the study of trends and
direction of movement in the financial positions and operating results. This
calls for a consistency in the practice of preparing these statements,
otherwise comparability may be distorted. Comparative statements enable
horizontal analysis of figures.
COMPARATIVE BALANCE SHEET:
A comparative balance sheet shows the balance of accounts of assets

and liabilities on different dates and also the extent of their increase or decrease
between these dates throwing light on the trends an direction of changes in the
position over the periods. This helps in predicting about the position of the
business in future.
17
Comparative Balance Sheet as on 31st March 1999
1998 1999 Increase (+) / Percentage

(Rs in lakhs) (Rs in lakhs) Decrease ( - ) (%)
Particulars (Rs in lakhs)
Assets
Current Assets :-
Cash & Bank balances 324.05 458.42 + 134.37 41.47
Sundry Debtors 737.18 714.22 - 22.96 3.11
Inventories 2188.33 3916.81 + 1733.48 79.40
Advances 2230.97 1809.49 - 421.48 18.90
Total Current Assets 5475.33 6898.94 + 1423.61 26.00
Fixed Assets 6487.03 6896.55 + 409.52 6.31
Investments 32.24 32.24 --- ---
Miscellaneous expenses 110.60 84.95 - 25.65 23.19
Total Assets 12105.50 13912.68 + 1807.18 14.93
Liabilities & Capital
Liabilities
Current Liabilities 766.85 970.31 + 203.46 26.53
Other liabilities 392.12 415.30 + 23.18 5.91
Total Current Liabilities 1158.97 1385.61 + 226.64 19.55
Secured loans 4582.63 6064.75 + 1482.12 32.34
Unsecured loans 1404.26 1442.40 + 38.14 2.72
Total Liabilities 7145.86 8892.76 + 1746.9 24.44
Share Capital 740.00 740.00 --- ----
Share Capital Suspense 50.80 50.80 --- ---
Reserve & Surplus 4168.74 4229.12 + 60.38 1.45
Total Liabilities & Capital 12105.50 13912.68 + 1807.18 14.93
18

Assets
Current Assets :-
Cash & Bank balances 458.42 194.22 - 264.2 57.63
Sundry Debtors 714.22 911.44 + 197.22 27.61
Inventories 3916.81 4532.99 + 616.18 15.73
Advances 1809.49 1399.57 - 409.93 22.7
Fixed Assets 6896.55 8342.00 + 1445.45 21.00
Investments 32.24 32.24 --- ---
Total Assets 13912.68 15417.77 + 1559.08 11.21
Liabilities
Secured loans 6064.75 7162.36 + 1097.61 18.10
Unsecured loans 1442.40 1334.65 - 107.75 7.5
Share Capital 740.00 740.00 --- ---
Reserve & Surplus 4229.12 4343.50 + 114.38 2.70
19

(Rs in lakhs) Rs in lakhs) Decrease ( - ) (%)
Assets
Current Assets :-
Sundry Debtors 911.44 783.09 - 128..35 14.10
Inventories 4532.99 5500.96 + 967.97 21.35
Advances 1399.57 1824.19 + 424.62 30.34
Fixed Assets 8342.00 9044.64 + 702.64 8.42
Investments 32.24 34.52 + 2.28 7.07
Total Assets 15417.77 17790.11 + 2318.34 15.00
Liabilities
Secured loans 7162.36 8894.96 + 1732.1 24.2
Unsecured loans 1334.65 1404.31 + 69.66 5.22
Share Capital 740.00 740.00 --- ---
Share Capital Suspense 50.18 50.83 + 0.02 0.03
Reserve & Surplus 4343.49 4790.21 + 446.72 10.3
20

Assets
Current Assets :-
Cash & Bank balances 569.05 421.17 - 147.88 26.00
Sundry Debtors 783.09 679.28 - 103.81 13.26
Inventories 5500.96 7040.80 + 1539.84 28.00
Advances 1824.19 1561.33 - 262.86 14.41
Fixed Assets 9044.64 13063.29 + 4018.65 44.43
Investments 34.52 31.27 - 3.25 9.41
Total Assets 17790.11 22805.14 + 5014.03 28.20
Liabilities
Other liabilities 438.27 329.77 - 108.5 24.76
Secured loans 8894.96 12088.33 + 3193.88 36.00
Unsecured loans 1404.31 2319.23 + 898.15 63.20
Share Capital 740.00 777.39 + 37.39 5.05
Share Capital Suspense 50.83 14.69 - 36.14 71.1
Reserve & Surplus 4790.21 5224.25 + 434.03 9.06
21

Assets
Current Assets :-
Sundry Debtors 679.28 954.01 + 274.73 40.44
Inventories 7040.80 8849.39 + 1808.59 25.70
Advances 1561.33 1192.06 - 369.27 23.65
Other Current Assets ---- 255.37 + 255.37 ---
Fixed Assets 13063.29 12423.33 - 639.96 4.9
Investments 31.27 36.27 + 5.00 16.00
Total Assets 22805.14 24267.37 + 1462.23 6.41
Liabilities
Secured loans 12088.33 12417.33 + 329.00 2.72
Unsecured loans 2319.23 2593.29 + 274.06 11.82
Share Capital 777.39 777.39 --- ---
Reserve & Surplus 5224.25 5814.15 + 589.9 11.30
22

Assets
Current Assets :-
Sundry Debtors 954.01 717.25 - 236.76 24.81
Inventories 8849.39 6473.92 - 2375.47 26.84
Advances 1192.06 1730.07 + 538.01 45.13
Other Current Assets 255.37 319.08 + 63.71 24.95
Total Current Assets 11807.50 9829.35 - 1978.15 16.75
Fixed Assets 12423.33 11594.28 - 829.05 6.68
Investments 36.27 36.27 --- ---
Miscellaneous expenses 0.27 --- - 0.27 100
Total Assets 24267.37 21459.9 + 2807.47 11.57
Liabilities
Current Liabilities 2223.86 1108.00 - 1115.86 50.17
Total Current Liabilities 2650.52 1614.69 - 1035.83 39.08
Secured loans 12417.33 10584.14 + 1833.19 14.76
Unsecured loans 2593.29 2158.72 - 434.57 16.75
Total Liabilities 17661.14 14357.55 - 3303.59 18.70
Share Capital 777.39 777.39 --- ---
Reserve & Surplus 5814.15 6310.27 + 496.12 8.53
Total Liabilities & Capital 24267.37 21459.9 - 2807.47 11.57
23

Assets
Current Assets :-
Sundry Debtors 717.25 821.69 + 104.44 14.56
Inventories 6473.92 3292.42 - 3181.5 49.14
Advances 1730.07 1555.54 - 174.53 10.08
Other Current Assets 319.08 290.95 - 28.13 8.81
Total Current Assets 9829.35 6606.32 - 3223.03 32.79
Fixed Assets 11594.28 10770.25 - 824.03 7.10
Investments 36.27 5 - 31.27 86.21
Total Assets 21459.9 17381.57 - 4078.33 19
Liabilities
Current Liabilities 1108.00 759.39 - 348.61 31.46
Total Current Liabilities 1614.69 1311.07 - 303.62 18.80
Secured loans 10584.14 7032.96 - 3551.18 33.55
Unsecured loans 2158.72 1102.77 - 1055.95 48.91
Total Liabilities 14357.55 9446.8 - 4910.75 34.20
Share Capital 777.39 777.39 --- ---
Reserve & Surplus 6310.27 7142.69 + 832.42 19.19
Total Liabilities & Capital 21459.9 17381.57 - 4078.33 19
24
Analysis of Comparative Balance Sheets
(1998-19999 to 2004-2005)
Percentage ( % )
1998 1999 2000 2001 2002 2003 2004

Particulars to to to to to to to
1999 2000 2001 2002 2003 2004 2005
Assets
Current Assets :-
Cash & Bank balances 41.47 57.63 193.00 26.00 32.17 5.81 9.62
Sundry Debtors 3.11 27.61 14.10 13.26 40.44 24.81 14.56
Inventories 79.40 15.73 21.35 28.00 25.70 26.84 49.14
Advances 18.90 22.7 30.34 14.41 23.65 45.13 10.08
Other Current Assets --- --- --- --- --- 24.95 8.81
Total Current Assets 26.00 2.02 23.30 11.82 21.7 16.75 32.79
Fixed Assets 6.31 21.00 8.42 44.43 4.9 6.68 7.10
Investments --- --- 7.07 9.41 16.00 --- 86.21
Misc. expenditure 23.19 30.17 43.24 76.23 96.63 100 ---
Total Assets 14.93 11.21 15.00 28.20 6.41 11.57 19
Liabilities
Current Liabilities 26.53 45.11 4.55 41.00 8.40 50.17 31.46
Other liabilities 5.91 4.13 1.34 24.76 29.40 18.75 8.88
Total Current Liabilities 19.55 32.83 3.8 25.76 11.31 39.08 18.80
Secured loans 32.34 18.10 24.2 36.00 2.72 14.76 33.55
Unsecured loans 2.72 7.5 5.22 63.20 11.82 16.75 48.91
Total Liabilities 24.44 16.25 18.11 37.51 5.20 18.70 34.20
Share Capital ---- --- --- 5.05 --- --- ---
Share Capital Suspense ---- --- 0.03 71.10 --- --- ---
Reserve & Surplus 1.45 2.70 10.3 9.06 11.30 8.53 19.19
Total Liabilities & Capital 14.93 11.21 15.00 28.2 6.41 11.57 19
25
Interpretation :-
The above tables present the comparative balance sheets of the

company for the period 1998 – 99 to 2004-2005. During the year 1998 – 99 total
current assets is Rs. 1423.61 lakhs. Next year it decreased to Rs. 139.27 lakhs.
In the year 2000-01 they were enhanced and in 2001-02 decreased to
Rs. 1025.29 lakhs and in 2002-03 increased to Rs. 2104.92 lakhs. In 2003-04 it
has decreased to Rs. 1978.15 lakhs and in 2004 – 05 it has further decreased to
Rs. 3223.03 lakhs.
During the year 1998-99, fixed assets were Rs.409.52 lakhs. The
investment in fixed assets has also enhanced next year but declined in 2000-01.
The next year in 2001-02, it has increased to Rs. 4018.65 lakhs and in 2002-03 it
has decreased. In 2003-04 fixed assets decreased and in 2004-05 it further
declined. Total fixed assets is showing an increasing and decreasing trend. If
there is any fixed expansion program scheme the total fixed assets will show
increasing trend, otherwise will show decreasing trend.
As far as current liabilities are concerned, in year 1998-99 it was

Rs. 226.64 lakhs. It has increased in next year to Rs. 454.85 lakhs and
decreased to Rs.69.84 lakhs in 2000-01. In the year 2001-02 current liabilities
has increased to Rs. 487.72 lakhs and in 2002-03 it has decreased to Rs. 269.27
lakhs. In 2003-04 it has decreased to Rs. 1058.83 lakhs and in 2004-05 current
liabilities further declined. There was an increasing and decreasing trend.
With reference to the share capital there was no much change as
there was no further issues of shares. Reverses and surplus has increased and it
may be because the company has started making substantial profits after
providing for the proposed dividend. When total liabilities and capital are
concerned during the year 1998-99, they were Rs.1807.18 lakhs. In year
1999 – 2000 it has decreased to Rs. 1559.08 lakhs. During the year 2000-01 it
has increased to Rs. 2318.34 lakhs. Next year it has gone to Rs. 5015.03 lakhs
26
and in the year 2002 – 03 it has decreased to Rs. 1462.23 lakhs. In 2003-04 it
has gone done and in the year 2004-05 it has further declined to Rs. 4078.33.
2.COMMON SIZE STATEMENT ANALYSIS :
In the comparative financial statements it is difficult to comprehend

the changes over the years in relation to total assets, total liabilities and capital or
total net sales. These limitations of comparative statements make comparison
between two or more. This limitation of comparative statements makes
comparison between two or more firms of an industry impossible because there
is no common base of comparison for absolute figures. Again for an
interpretation of underlying causes of changes over time period a vertical
analysis is required and this with comparative statements.
Common size financial statements are those in which figures
reported are converted into percentages to some percentages to some common
base. For this, items in the financial statements are presented as percentages or
ratios to total of items and a common base for comparison is provided. Each
percentage shows the relation of the individual item to its respective total.
COMMON SIZE BALANCE SHEET :
In a common size balance sheet, total of assets or liabilities is taken

as 100 and all the figures are expressed as percentage of the total. Comparative
common size balance sheets for different periods help to highlight the trends in
different items. If it is prepared for different firms in an industry, it facilities to
judge the relative soundness and helps in understanding their financial strategy.
27
Common Size Balance sheet as on 31st March 1999
1998 % of total 1999 % of total

Particulars (Rs in lakhs) (Rs in lakhs)
Assets
Current Assets :-
Cash & Bank balances 324.05 2.70 458.42 3.30
Sundry Debtors 737.18 6.15 714.22 5.13
Inventories 2188.33 18.20 3916.81 28.15
Advances 2230.97 18.60 1809.49 13.00
Total Current Assets 5475.33 45.25 6898.94 49.59
Fixed Assets 6487.03 53.57 6896.55 49.57
Investments 32.24 0.27 32.24 0.23
Miscellaneous expenses 110.60 0.91 84.95 0.61
Total Assets 12105.50 100.00 13912.68 100.00
Liabilities
Current Liabilities 766.85 6.33 970.31 6.97
Other liabilities 392.12 3.24 415.30 2.99
Total Current Liabilities 1158.97 9.57 1385.61 9.96
Secured loans 4582.63 37.86 6064.75 43.60
Unsecured loans 1404.26 11.60 1442.40 10.36
Total Liabilities 7145.86 59.03 8892.76 63.91
Share Capital 740.00 6.11 740.00 5.32
Share Capital Suspense 50.80 0.42 50.80 0.37
Reserve & Surplus 4168.74 34.43 4229.12 30.40
Total Liabilities & Capital 12105.50 100.00 13912.68 100
28

Assets
Current Assets :-
Sundry Debtors 714.22 5.13 911.44 5.90
Inventories 3916.81 28.15 4532.99 29.30
Advances 1809.49 13.00 1399.57 9.04
Fixed Assets 6896.55 49.57 8342.00 53.91
Investments 32.24 0.23 32.24 0.21
Total Assets 13912.68 100.00 15417.77 100.00
Liabilities
Secured loans 6064.75 43.60 7162.36 46.29
Unsecured loans 1442.40 10.36 1334.65 8.62
Share Capital 740.00 5.32 740.00 4.78
Reserve & Surplus 4229.12 30.40 4343.50 28.09
Total Liabilities & Capital 13912.68 100.00 15471.77 100.00
29

Assets
Current Assets :-
Sundry Debtors 911.44 5.90 783.09 4.40
Inventories 4532.99 29.30 5500.96 30.92
Advances 1399.57 9.04 1824.19 10.25
Fixed Assets 8342.00 53.91 9044.64 50.84
Investments 32.24 0.21 34.52 0.20
Total Assets 15417.77 100.00 17790.11 100.00
Liabilities
Secured loans 7162.36 46.29 8894.96 49.99
Unsecured loans 1334.65 8.62 1404.31 7.89
Share Capital 740.00 4.78 740.00 4.16
Reserve & Surplus 4343.50 28.09 4790.21 26.92
30

Assets
Current Assets :-
Sundry Debtors 783.09 4.40 679.28 2.98
Inventories 5500.96 30.92 7040.80 30.87
Advances 1824.19 10.25 1561.33 6.85
Fixed Assets 9044.64 50.84 13063.29 57.29
Investments 34.52 0.20 31.27 0.13
Total Assets 17790.11 100.00 22805.14 100.00
Liabilities
Secured loans 8894.96 49.99 12088.33 53.01
Unsecured loans 1404.31 7.89 2319.23 10.17
Share Capital 740.00 68.63 777.39 3.40
Reserve & Surplus 4790.21 0.29 5224.25 22.91
31

Assets
Current Assets :-
Sundry Debtors 679.28 2.98 954.01 3.93
Inventories 7040.80 30.87 8849.39 36.45
Advances 1561.33 6.85 1192.06 4.91
Other current assets --- --- 255.37 1.04
Fixed Assets 13063.29 57.29 12423.33 51.20
Investments 31.27 0.13 36.27 0.14
Total Assets 22805.14 100.00 24267.37 100.00
Liabilities
Secured loans 12088.33 53.01 12417.33 51.17
Unsecured loans 2319.23 10.17 2593.29 10.69
Share Capital 777.39 3.40 777.39 3.20
Reserve & Surplus 5224.25 22.91 5814.15 23.96
32

Assets
Current Assets :-
Sundry Debtors 954.01 3.93 717.25 3.34
Inventories 8849.39 36.45 6473.92 30.17
Advances 1192.06 4.91 1730.07 8.06
Other current assets 255.37 1.04 319.08 1.49
Fixed Assets 12423.33 51.20 11594.28 53.03
Investments 36.27 0.14 36.27 0.17
Miscellaneous expenses 0.27 0.001 --- ---
Total Assets 24267.37 100.00 21459.9 100.00
Liabilities
Secured loans 12417.33 51.17 10584.14 49.32
Unsecured loans 2593.29 10.69 2158.72 10.06
Share Capital 777.39 3.20 777.39 3.63
Reserve & Surplus 5814.15 23.96 6310.27 29.40
33

Assets
Current Assets :-
Sundry Debtors 717.25 3.34 821.69 4.73
Inventories 6473.92 30.17 3292.42 19.74
Advances 1730.07 8.06 1555.54 8.95
Other current assets 319.08 1.49 290.95 1.67
Fixed Assets 11594.28 53.03 10770.25 61.97
Investments 36.27 0.17 5 0.03
Miscellaneous expenses --- --- --- ---
Total Assets 21459.9 100.00 17381.57 100.00
Liabilities
Secured loans 10584.14 49.32 7032.96 40.46
Unsecured loans 2158.72 10.06 1102.77 6.34
Share Capital 777.39 3.63 777.39 4.49
Reserve & Surplus 6310.27 29.40 7142.69 41.09
34
Analysis of Common Size Balance Sheets
(1998-1999 to 2004-2005)
Percentage ( % )
1998 1999 2000 2001 2002 2003 2004

1999 2000 2001 2002 2003 2004 2005
Assets
Current Assets :-
Cash & Bank balances 3.30 1.26 3.20 1.85 2.30 2.74 3.71
Sundry Debtors 5.13 5.90 4.40 2.98 3.93 3.34 4.73
Inventories 28.15 29.30 30.92 30.87 36.45 30.17 19.74
Advances 13.00 9.04 10.25 6.85 4.91 8.06 8.95
Other Current Assets --- --- --- --- 1.04 1.49 1.67
Total Current Assets 49.59 45.50 48.77 42.55 48.66 45.80 38.00
Fixed Assets 49.57 53.91 50.84 57.29 51.20 53.03 61.97
Investments 0.23 0.21 0.20 0.13 0.14 0.17 0.03
Misc. expenditure 0.61 0.38 0.19 0.03 0.001 --- ---
Total Assets 100 100 100 100 100 100 100
Liabilities
Current Liabilities 6.97 9.10 8.27 9.00 9.16 5.16 4.37
Other liabilities 2.99 2.79 2.46 1.45 1.76 2.36 3.17
Total Current Liabilities 9.96 11.89 10.73 10.45 10.92 7.52 7.54
Secured loans 43.60 46.29 49.99 53.01 51.17 49.32 40.46
Unsecured loans 10.36 8.62 7.89 10.17 10.69 10.06 6.34
Total Liabilities 63.91 66.80 68.63 73.63 72.78 66.90 54.34
Share Capital 5.32 4.78 4.16 3.40 3.20 3.63 4.49
Share Capital Suspense 0.37 0.33 0.29 0.06 0.06 0.07 0.08
Reserve & Surplus 30.40 28.09 26.92 22.91 23.96 29.40 41.09
Total Liabilities & Capital 100 100 100 100 100 100 100
35
Interpretation :-
In this section a attempt has been made to analyze the common size
balance sheets of Kakatiya Cement Sugar and Industries Ltd., for a period of
seven years i.e., 1998-99 to 2004-2005. The objective of this analysis is to
compare the performance of the company of two or more periods and to study
the relationship between them.
In common size analysis, the items in the balance sheet are stated
as percentages of total assets. Such percentage statements are called common
size statements. The common size balance sheets are shown in the above
tables.
Comparison reveals that there is an increasing and decreasing trend

in current assets within 1998-99 and 2002-2003. From 2002-03 to 2004-05 the
current assets are declined further. Similar trend can be observed in the
proportion of fixed assets up to 2002-2003. From 2002-03 to 2004-05 the fixed
assets are increased further and consistency was maintained in investments till
2000-01 and from 2001-02 to 2004-05 the investments has declined drastically.
Current liabilities have increased till 1999-2000 and after that it

declined in 2000-01 and again increased in 2001-02 and 2002.03. From 2003-04
to 2004-05 it has further declined. Secured loans decreased in the year 1999-
2000 and were raised in next two years and declined in the year 2002-03 to
2004-05.
The same trend can be observed in the case of unsecured loans.

Share capital has decreased viably as a percentage of the total assets till 2002-
03 and has increased viably as a percentage of the total assets from 2003-04 to
2004-2005. An decreasing trend is maintained in the case of reserves and
surplus till 2001-02 and from 2002-03 an increasing trend is maintained
till 2004-05.
36
3. TREND RATIOS : -
Trend analysis is also an important and useful technique of financial

analysis. Under this technique, the ratios of different items for various periods are
calculated and then a comparison is made. These ratios can be calculated for the
company over a definite period of time and then we can analyze the trends
highlighted by such ratios over the specified period of time. Generally, a period of
seven years is considered satisfactory. The trend analysis shows the direction of
progress upward or downward. Being a horizontal analysis of financial
statements it is often called a “Pyramid method” of ratio analysis.
In this method, the base year is taken as 100 and then the figures of
the subsequent years are shown in terms of percentages. This method is like
fixed base index numbers. It can show the trend in operating results but financial
positions of a concern cannot be discussed.
ADVANTAGES OF TREND ANALYSIS: -
 It is simple technique. It does not involve tedious calculations and does

not require trained experts
 It is a brief method to indicate the future trends
 It reduces the changes of errors as it provides the opportunity to compare
the percentages with absolute figures.
37
Trend percentages ( % ) : 1998-1999 to 2004-2005
( Base year 98 – 99 : 100 )
1998 1999 2000 2001 2002 2003 2004

1999 2000 2001 2002 2003 2004 2005
Assets
Current Assets :-
Cash & Bank balances 100 42.37 124.13 91.87 121.43 128.49 140.85
Sundry Debtors 100 127.61 109.64 95.11 133.57 100.42 115.05
Inventories 100 115.73 140.44 197.80 225.93 165.28 84.06
Advances 100 77.34 100.81 86.28 65.88 95.61 85.96
Total Current Assets 100 102.01 125.80 140.64 171.15 142.47 95.75
Fixed Assets 100 120.96 131.15 189.42 180.14 168.12 156.17
Investments 100 100 107.07 96.90 112.50 112.5 15.50
Misc. expenditure 100 69.82 39.62 9.42 3.15 --- ---
Total Assets 100 111.21 128.00 163.92 174.43 154.25 124.93
Liabilities
Current Liabilities 100 159.26 151.71 215.57 229.20 114.19 78.27
Other liabilities 100 104.13 105.53 79.41 102.74 122.00 132.84
Total Current Liabilities 100 102.01 125.78 140.64 171.15 116.53 94.62
Secured loans 100 118.10 146.66 199.32 204.75 174.52 115.96
Unsecured loans 100 83.01 97.36 158.00 179.79 149.66 76.45
Total Liabilities 100 116.25 137.30 188.80 198.60 161.45 106.23
Share Capital 100 100 100 105.05 105.05 105.05 105.05
Share Capital Suspense 100 100 100 45.56 45.56 28.91 28.91
Reserve & Surplus 100 102.70 113.27 123.53 137.48 149.21 168.89
Total Liabilities & Capital 100 111.20 128.00 163.92 174.43 154.25 124.93
38
4. RATIO ANALYSIS : -
Accounting ratios are relationships, expressed in arithmetical terms,

between figures which have a cause and effect relationship or which are
connected with each other in some other manner.
Accounting ratios are a very useful tool for grasping the true
message of the financial statements and understanding them. Ratio analysis is
defined as “ the systematic use of ratios to interpret the financial statements so
that the strengths and weaknesses of an organization as well as its historical
performance and current financial condition can be found out and analyzed”.
Interpretation of ratios form a core part of ratio analysis. The

usefulness of ratios dependent on the judicious interpretations.
USES OF RATIO ANALYSIS:
Ratios are an important tool in financial analysis. Ratios are a

comparative study of the relation between items of a financial statements, which
will reveal the profitability, solvency, as well as the overall financial position of a
business enterprise.
The uses of Ratio Analysis may be summarized as follows
 Ratio analysis helps to analyze and understand the financial health and
trend of a business
 Past performance and future projections could be easily reviewed with
ratio analysis
 “Inter-firm” and “Intra-firm” comparison becomes possible with ratio
analysis
 It is useful to the management in exercising control in various area like
budgetary control, inventory control, financial control
39
 It helps in fixing accountability and responsibility of the different heads of
the departments so as the ensure an effective and planned performance
 It is beneficial to all the constitutes of the company as follows:

A) Management: The management is interested in ratios since it
helps in the formulation of polices, decision making and
evaluating performances and trends of the business
B) Shareholders: Shareholder can use ratio analysis to understand
and review the operational efficiency of their company
C) Investors: Investors can take decisions regarding the type of
security and the industry in which they should invest
D) Government: Government are interested in the financial health of
the business. Ratio analysis will reflect the policy adopted by the
management of the company.
E) Creditors: Creditors need to assure themselves about the
solvency and liquidity poison of the business.
F) Analysts: Ratio analysis is most important technique used by
financial. This will help them to compare and study the progress
and position of various firms with each other as also with the
industry standard.
PRECAUTIONS IN RATIO ANALYSIS:
Ratios are valuable working tools for analysis and may prove very
helpful in making decisions. The following aspects should be kept in view while
drawing conclusion from the ratio analysis:
 The reliability of the ratios will depend upon the reliability of the financial
statements themselves. Hence, analysts should insist on the submission
of audited and certified copies of financial statements
40
 The financial performance is affected by general economic conditions,
local factors and the competence of the management. While interpreting
ratios, these factors should be kept in mind.
 One single ratio for a yea may not provide a complete picture, but when a
group of ratios of one year are compared to another group of ratios of
other years, certain trends would be visible. Their utility is further
increased when comparison are made with the rival firms, which are
doing, well in the same business.
CLASSIFICATION OF RATIOS:-
The ratios may be classified as under:
• According to the statements from which they are calculated such

as balance sheet ratios, operating ratios and combined ratios
• According to the functional classification they are profitability ratios,
turnover ratios, solvency ratios and market test ratios
• According to their importance they are primary ratios and
secondary ratios.
41
RATIO ANALYSIS AND INTERPRETATION:-
(A) Overall Profitability Ratio :-

It is the efficiency of a business, which can be measured in terms of
profit related to investment made in the business.
Overall profit ratio = Operating profit x 100

Capital employed
Operating profit Capital Employed

Year Ratios (%)
(Rs in lakhs ) ( Rs In lakhs)
1998 – 1999 79.01 5019.92 5.56
1999 – 2000 316.00 5134.30 6.15
2000 – 2001 609.89 5581.04 10.93
2001 – 2002 637.55 6016.33 10.60
2002 – 2003 831.05 6606.23 12.58
2003 – 2004 729.36 7102.35 10.27
2004 – 2005 1108.00 7934.77 13.96
Inference:-
In 1998-99 the overall profitability ratio is in least. It is due to more
borrowings to the business. It was also in the year 1999 – 2000. in the year
2000 – 01, the sales were 10025.10 lakhs the overall profitability ratio was 10.93
and at an increasing trend. During the year 2001 – 02, the sales were 11.71.92
lakhs but the overall profitability ratio declined a bit to 10.60. During the year
2002-03 it has increased to 12.58, it is due to low taxes paid during the year to
the Government. In 2003 – 04, overall profitability decreased compared to last
year and in the year 2004 – 05 it increased to 13.96.
(B) Return on Shareholders Fund :-
42
This ratio reveals how well the resources are being used and its
profitability from the shareholders point of view. The higher the ratio the better.
Return on shareholders = Net profit after tax x 100

Shareholders funds
Net profit after tax Shareholder funds

Year Ratios (%)
1998 – 1999 265.73 5019.92 5.29
1999 – 2000 294.94 5134.30 5.74
2000 – 2001 609.82 5581.04 10.93
2001 – 2002 503.97 6016.33 8.38
2002 – 2003 679.90 6606.23 10.29
2003 – 2004 671.92 7102.35 9.46
2004 – 2005 1009.71 7934.77 12.72
Inference:-
During the year 2004-05, return on shareholders fund ratio is high

12.72% while comparing to other periods. It indicates that the firm utilized its
resources in very appreciable manner.
During the year 1998-99, the ratio is least 5.29 % due to firm meet
more charges and heavy taxes. In 1998-99, 1999-2000, 2001-02 and 2003-04
years this ratio is less, the resources were not managed very well. In 2000-01,
2002-03 and 2004-05 this ratio is higher and appreciable manner. The resources
were managed very well.
(C) Return on Total Assets :-

This ratio is used to know the productivity of the total assets
employed in business. The higher the ratio, the better.
43
Return on total assets = Net profit after tax x 100
Total Assets
Net profit after tax Total Assets

Year Ratios (%)
1998 – 1999 265.73 12527.07 2.12
1999 – 2000 294.94 13631.31 2.16
2000 – 2001 609.82 15879.81 3.84
2001 – 2002 503.97 20423.89 2.47
2002 – 2003 679.90 21616.85 3.15
2003 – 2004 671.92 19845.21 3.38
2004 – 2005 1009.71 16070.50 6.28
Inference:-
During the years 1998 – 99 and 1999 – 2000, there was no much
difference between the productivity of the total assets. It was increased to 3.84 %
in the year 2000 – 01, this ratio was maintained in the year 2002 – 03 and
2004 – 05. In the year 2004 – 05, the ratio was increased to 6.28%.
(D) Gross Profit Ratio :-

This ratio is to know the relationship between the manufacturing cost
and sales. The higher the gross profit ratio, the better.
Gross Profit Ratio = Gross profit x 100

Net sales
44
Gross Profit Net sales
Year Ratios (%)
1998 – 1999 279.01 6329.94 4.41
1999 – 2000 369.18 9040.14 3.50
2000 – 2001 609.82 10025.10 6.08
2001 – 2002 637.55 11071.92 5.76
2002 – 2003 831.05 13592.80 6.11
2003 – 2004 729.36 14563.31 5.00
2004 – 2005 1108.00 14752.27 7.51
Inference:-
During the year 2000 – 01, 2002 – 03 and 2004 – 05, the ratio has
increased from low and the ratio is in increasing and decreasing trend. It
measures the efficiency of production and pricing.
During the year 1998-99, 1999 – 2000, 2001 – 02 and 2003 – 04 the
ratio has decreased and are low and not on a consistent basis.
(E) Net Profit Ratio :-
It establishes a relationship between net profits after taxes and sales,

it is to know the net profit margin on each sale. The higher the ratio, the better.
Net Profit Ratio = Net profit x 100

Net sales
Net profit after tax Net sales

Year Ratios (%)
45
1998 – 1999 265.73 6329.94 4.20
1999 – 2000 294.94 9040.14 3.26
2000 – 2001 609.82 10025.10 6.08
2001 – 2002 503.97 11071.92 4.55
2002 – 2003 679.90 13592.80 5.00
2003 – 2004 671.92 14563.31 4.61
2004 – 2005 1009.71 14752.27 6.84
Inference:-
During the year 2000 – 01 and 2004 – 05, the ratio was high and the
firm shall be able to achieve a satisfactory return on its investments.
During other periods it was comparatively low, the ratio would not be
useful as the profit was not sufficient to achieve a satisfactory return on its
investment.
(F) Capital Turnover Ratio :-
The ratio is useful to show the efficiency of capital employed in the

business. The higher the ratio, the better will be the profits
Capital Turnover Ratio = Net Sales

( No. of times) Capital employed
Net sales Capital Employed

Year Ratios
( Rs In lakhs) ( Rs In lakhs)
(No. of times)
1998 – 1999 6329.94 5019.92 1.26
1999 – 2000 9040.14 5134.30 1.76
2000 – 2001 10025.10 5581.04 1.80
2001 – 2002 11071.92 6016.33 1.83
46
2002 – 2003 13592.80 6606.23 2.05
2003 – 2004 14563.31 7102.35 2.05
2004 – 2005 14752.27 7934.77 1.86
Inference:-
It can be observed that the capital turnover ratio has been increasing
from year to year till 2003 –04. In the year 2004-05 it has declined to 1.86 times
During the year 2002 – 03 and 2003 – 04 the ratio was highest i.e., 2.05 times. It
can be said that at this stage the capital of the firm was efficiently employed.
(G) Fixed Assets Turnover Ratio:-
This ratio indicates to what extend fixed assets contributes to sales.

The higher the ratio, the better is the performance of the company.
Fixed Assets Turnover Ratio = Net Sales

( No. of times) Fixed Assets
Net sales Fixed Assets

Year Ratios
( Rs In lakhs) ( Rs in laksh)
(No. of times)
1998 – 1999 6329.94 6896.55 0.91
1999 – 2000 9040.14 8342.00 1.08
2000 – 2001 10025.10 9044.64 1.11
2001 – 2002 11071.92 13063.29 0.84
2002 – 2003 13592.80 12423.33 1.10
2003 – 2004 14563.31 11594.28 1.26
2004 – 2005 14752.27 10770.25 1.37
47
Inference:-
During the year 1998 – 99, the net sales is 0.91 times more than
fixed assets and in the next two years it is increased from 1.08 times to 1.11
times. Then in the next year it has decreased to 0.84 times and again it has
increased from 1.10 to 1.37 times.
(H) Working Capital Turnover Ratio:-

This ratio shows the number of times the working capital is turned
over during the period. A high working capital turnover ratio reveals that the
working capital funds, are properly employed to generate more sales ( for the
business).
Working Capital Turnover Ratio = Net Sales

( No. of times) Net Working Capital
Net sales Net Working Capital

Year Ratios
( Rs In lakhs) ( Rs in lakhs)
(No. of times)
1998 – 1999 6329.94 5515.35 1.15
1999 – 2000 9040.14 5197.76 1.74
2000 – 2001 10025.10 6766.99 1.48
2001 – 2002 11071.92 7321.33 1.51
2002 – 2003 13592.80 9156.98 1.48
2003 – 2004 14563.31 8214.66 1.77
2004 – 2005 14752.27 5295.25 2.78
48
Inference:-
During the year 1998 – 99 the ratio is 1.15 times and next year
1999 – 2000, it has increased to 1.74 times. During the years 2000 – 01 it has
decreased, it shows handling of working capital is poor. It shows an increasing
and decreasing trend till 2003-04. in the year 2004 – 05 the ratio was increased
to 2.78 times when compared to previous year.
(I) Current Ratio:-
This ratio is the measure of general liquidity and is most widely used
to make the analysis of a shorterm financial position or liquidity of a firm.
The higher ratio indicates that the firm is liquid and has the ability to
pay its current obligations in time.
Current Ratio = Current Assets
( No. of times) Current Liabilities
Current Assets Current Liabilities

Year Ratios
(No. of times)
1998 – 1999 6898.94 1385.61 4.98
1999 – 2000 7038.22 1840.46 3.82
2000 – 2001 8677.29 1910.30 4.44
2001 – 2002 9702.58 2381.25 4.07
2002 – 2003 11807.50 2650.52 4.45
2003 – 2004 9829.35 1614.69 6.08
2004 – 2005 6606.32 1311.07 5.04
Inference:-
49
The ideal current ratio is 2 : 1. It means that for every current liability
of Rs. 1 the firm has the current assets of Rs. 2. Here the company has higher
ratios and the firm having good liquidity position. But higher the current ratio
higher the marginal safety.
(J) Liquid Ratio:-
The firm liquidity refers to the ability of a firm to pay its short-term
obligation as and when they become due.
Liquid Ratio = Liquid Assets

( No. of times) Current Liabilities
Liquid Assets Current Liabilities

Year Ratios
(No. of times)
1998 – 1999 2960.37 1385.61 2.13
1999 – 2000 2495.96 1840.46 1.36
2000 – 2001 3169.15 1910.30 1.66
2001 – 2002 2661.78 2381.25 1.12
2002 – 2003 2945.96 2650.52 1.11
2003 – 2004 3355.43 1614.69 2.07
2004 – 2005 3313.90 1311.07 2.53
Inference:-
The ideal ratio is 1 : 1. A higher liquid ratio is an indication that the
firm is liquid and has the ability to meet its current or liquid liabilities in time and
on the other hand a low quick ratio represent that the firm’s liquidity position is
not good.
50
During the year 1998 – 99 he ratio is 2.13 times and from next year it
is showing decreasing trend till 2003 – 2004. In the year 2004 – 05 it has
increased to 2.53 times.
In overall we can observe that during the above periods, the liquid
ratio is to the ideal level.
(K) Proprietary Ratio:-
This ratio establishes the relationship between shareholder’s funds

and total assets of the firm. This ratio is important to determine the long term
solvency of a firm. The higher ratio indicates that the better long term solvency
position of the company
Proprietary Ratio = Shareholders funds x 100
Total Assets
Shareholders funds Total Assets

Year Ratios (%)
( Rs In lakhs) ( Rs In lakhs)
1998 – 1999 5019.92 12527.07 40.07
1999 – 2000 5134.30 13631.31 37.66
2000 – 2001 5581.04 15879.81 35.15
2001 – 2002 6016.33 20423.89 29.46
2002 – 2003 6606.23 21616.85 30.56
2003 – 2004 7102.35 19845.21 35.78
2004 – 2005 7934.77 16070.50 49.94
Inference:-
During the year 1998 – 99 this ratio is 40.07 % and next year it is
decreased to 36.46 % and very next year to 35.15 %. From 2001 – 02 the ratio is
in increasing trend. Generally found that the proprietary ratio of the firm is in
better position and satisfactory.
51
INTERPRETATION :-
In this section an attempt has been made to analyze the trend ratios
of Kakatiya Cement Sugar & Industries Limited, for the period of seven years i.e.,
from 1998 – 99 to 2004 – 05. The objective of this analysis is to compare the rate
of change over the period to the base year. In trend ratio analysis the items in the
balance sheet are expressed as an index relative to the base year. All items in
the base year assume a value of 100. the indexed balance sheet for the
company is shown in the above table.
Current assets have shown a larger constantly. Fixed assets have
increased except in the year 2003. Current liabilities have also shown an
increasing trend. Secured loans were on a constant increase from 1998 – 99 to
2004 – 05. The same increasing trend was in the case of unsecured loans. There
was further issue of shares.
52
4. CASH FLOW ANALYSIS : -
When it is desired to explain to management the sources of cash and

its uses during a particular period of time, a statement known as cash flow
statement is prepared. A statement of cash flows reports the inflows ( receipts)
and outflows ( payments ) of cash and its equivalents of an organization during a
particular period. It provides important information that compliments profit and
loss account and balance sheet. A statement of cash flow reports cash receipts
and payments classified according to the entities major activities – operating,
investing and financing during the period.
The main object of cash flow analysis is to show the causes of

changes in cash balances during the period under consideration. Cash flow
analysis also provides the information to the management regarding movement
of cash and the availability of cash. This analysis is not only concerned with the
good or bad management of cash but also the liquidity position of the concern. It
also helps the management in short-term financial decision relating to liquidity.
UTILITY OF CASH FLOW ANALYSIS:
A cash flow statement Is very important for financial management. It

is an essential tool of short-term financial analysis, as a business enterprise
needs sufficient cash to meet its various obligations in the near future such as
payment for purchase of fixed assets, expenses of business etc., A historical
analysis of the different sources and application cash will enable the
53
management to make reliable cash flow projections for the immediate future. It
may then plan out for investment of surplus or meeting the deficit, if any.
The main uses of cash flow analysis are as follows:-
 Helps in efficient cash management: Cash flow analysis helps in

evaluating financial polices and cash position, as the cash is the basis for
all operations. A projected cash flow statement will enable the
management to plan and coordinate the financial operations.
 Helps in internal financial management: Cash flow analysis provides

information about funds, which will be available from operations. This will
help the management in determining policies regarding internal financial
management, e.g., dividend polices, possibility of repayment of long-term
debt, etc.
 Discloses the movement of cash: Cash flow statement discloses the

complete story of cash movement. The increase in, or decrease of, cash
and the reason thereof can be known. It discloses the reasons for low
cash balance in spite of heavy operating profits or for heavy cash balance
in spite of low profits. The comparison of original forecast with the actual
result highlights the trends of management of cash, which may otherwise
go undetected.
 Discloses success or failure of cash planning: The extent of success or

failure of cash planning can be known by comparing the projected cash
flow statement with the actual cash flow statement and necessary
remedial measures can be taken.
LIMITATIONS OF CASH FLOW ANALYSIS :-

Cash flow analysis is a useful tool of financial analysis, but it has its
own limitations. Limitations of cash flow analysis are as follows:
 Cash flow statement cannot be equated with the income statement. An
income statement takes into account both cash as well as non cash items
54
and therefore, net cash flow does not necessarily mean net income of the
business.
 The cash balance as disclosed by the cash flow statement may not
represent the real liquid position of the business it can be easily influenced
by postponing purchase and other payments.
 Cash flow statement cannot replace the income statement or the funds
flow statement. Each of them has a separate function to perform
PREPARATION OF CASH FLOW STATEMENTS:
Cash flow statement is prepared with the help of balance sheet, income
statement, surplus appropriation statement and other given information. The
measurement of cash flow is primarily based on income statement as the items in any
income statement are shown on actual basis, whereas in cash flow statement they are
shown on cash basis. Cash flow measurement depends primarily on determining cash
receipts and disbursements over a given period.
The measurement of cash flow constitutes two aspects, determining the

inflow of cash and outflow of cash. The items constituting inflow of cash are the sources
of cash while outflow of cash is the application of cash.
SOURCES OF CASH OR CASH INFLOWS:
The transactions, which increase the cash position of the firm, are called as
sources of cash or cash inflows. The main sources of cash inflows are as follows:
 Increase in share capital :- Share capital raised whether in the form of preference
of equity capital would constitute inflows of cash. The inflow would be to the
extent of actually received on issue of shares. However, issue of shares by
capitalization of reserves or issue of shares for consideration other than cash or
issue of shares in conversion of debentures or long-term loans would not be a
cash inflow.
 Issue of debentures, loans, etc. :- The net amount received on the issue of
debentures and raising of loan will constitute inflow of cash. However, if the
debentures are issued or loans raised for consideration other than cash, it will not
constitute inflow of cash.
55
 Reduction in or sale of assets: Sale proceeds of fixed assets and longterm
investments to the extent payment being received in cash would be inflow of
cash. Similarly, decrease in debtors and bill receivable will be inflow of cash.
 Other receipts:- There may also be some other sources of cash inflows. For
example, sale proceeds of by-products of waste material, cash receipts of
dividends and interest, income-tax refund, compensation received etc.
APPLICATION OF CASH OR CASH OUTFLOW:
1. Operating loss:- If a business is operating at a loss then to that extent it is

treated as application of cash or cash outflow.
2. Reduction of redeemable shares or debentures:- Amount actually paid on the

redeemable of preference shares or debentures constitutes outflow of cash.
While paying back the preference capital, arrears of dividend may also be
paid. However, if equity shares are allotted in repayment of preference capital
or debentures, there will be no cash outflow
3. Decrease in or repayment of loans:- Decrease in the long-term or short-term

loans, creditors and bills payable also constitute outflow of cash.
4. Increase in or purchase of non-current assets:- The acquisition of fixed assets

and investments also involves the use of cash. For example, if furniture is
purchased for cash, it will constitute an outflow of cash. However, if the
acquisition is made on credit or by the issue of shares or debentures, it will not
involve outflow of cash.
5. Other payments: - Payments of dividend, income tax, interest, compensation,

etc., also constitutes outflow of cash.
FORM OF CASH FLOW STATEMENT:-

There is no set format for cash flow statement. Like fund flow
statements, it can also be prepared in two forms, either in report form or in an
56
account form. Under both these forms any of the following types may be
adopted:-
 Remainder type :- under this type, the cash flow statement is divided into
two parts – sources of cash and application of cash. The difference of the
totals of both the sides would show increase in cash or decrease in cash
during the period under study.
 Self balancing type:- Under this method, cash flow statement is prepared
in the same way as in remainder type but in this method the short side of
the statement is balanced by showing change in the balance of cash.
 Reconciling type :- Under this method opening and closing balances of

cash are tallied. In it, the statement starts with the opening balance of
cash. In this balance, all the inflows of cash are added and all outflows of
cash are deducted, the resulting figure will be closing balance of cash,
which must tally, with the cash balance shown in the current years balance
sheet. This method is most popular and widely used in practice.
CASH FLOW REPORTING:-
The Securities and Exchange Board of India (SEBI) had issued a

directive to all recognized stock exchanges asking them to include a requirement
of providing for cash inflows information as a part of listing agreements. SEBI has
also suggested that cash flow statements should be prepared in accordance with
the requirement of As- 3 ( Indian Accounting Standard – 3). According, all listed
companies whose annual accounts were approved after 31st March, 1996 were
required to include a cash flow statement in their annual reports. The Institute of
Charted Accountants of India has also revised AS – 3 and suggested to disclose
cash flow information.
57
Cash Flow Statements as on 31st March
from 1999 to 2005
( Rs. in lakhs)
Particulars / Years 1999 2000 2001 2002 2003 2004 2005
A. Cash Flow From

Operating Activities
Net profit before tax 280.10 274.96 609.89 637.55 831.05 733.20 1174.92
Adjustment for :
Depreciation 408.75 431.16 538.62 568.73 802.07 788.15 784.24
Misc. Expenses w.off 25.65 25.65 25.65 25.65 7.72 0.27 ---
Loss on sale of asset --- --- --- ---- 352.84 12.84 17.71
Interest 657.97 879.27 1059.46 1023.80 1744.62 1521.36 1208.16
Interest received (125.05) (68.11) (5.65) (5.44) (52.07) (51.65) (60.26)
Dividend Income --- --- --- --- (0.85) (1.40) (0.65)
Unsecured loans 38.14 (107.75) 207.00 --- --- --- ---
Profit on sale of asset --- --- --- --- --- (0.05) (26.14)
Transfer to Freehold land --- --- --- --- --- --- 18.00
Operating profit
before changes in 1303.56 1435.18 2434.97 2250.29 3685.38 3002.72 3115.98
W.C
Changes in W.C
(Increase) / Decrease
(1733.48) (616.18) (967.97) (1539.84) (2063.96) 2439.18 3209.63
in Inventories
22.96 (197.22) 128.35 103.81 (274.73) 236.76 (104.44)
in Sundry Debtors
421.48 409.92 (424.62) 262.86 369.27 (538.01) 174.54
in Loans & Advances
224.79 458.84 (67.50) 495.34 209.12 (1035.83) (305.11)
in Current Liability
Cash generated from
239.31 1486.54 1103.23 1572.46 1925.08 3977.40 6090.59
Operations
58
Interest Paid (675.97) (879.27) (1059.46) (1023.80) (1744.62) (1521.36) (1208.16)
Direct taxes paid (113.28) (21.24) --- (46.79) (65.75) (57.44) (98.29)
Dividend paid (203.50) (180.560) (163.10) --- --- --- ---
Cash flow before
(653.44) 405.47 (119.33) 501.87 114.71 2398.60 4784.14
extraordinary items
Extraordinary items
(prior year (1.09) 41.22 (0.07) --- --- (3.84) (66.92)
income/(expenditure)
Net Cash from
(654.33) 446.49 (119.40) 501.87 114.71 2394.76 4717.22
Operating activities
B. Cash flow from

Investing Activities
Inflow / (Outflow)
Purchase of Fixed Assets (892.87) (1720.15) (1058.24) (753.20) (5213.00) (94.06) (27.54)
Sale of fixed assets --- --- --- 1.49 175.52 127.79 39.63
74.60 (156.46) (186.18) (3835.64) 4522.54 (6.02) (7.97)
in Capital W.I.P
(Purchase) / sale
--- --- 3.16 3.25 (5.00) --- 57.37
of investments
Interest & discounting
125.05 68.11 5.65 5.44 52.07 51.65 60.26
charges received
Dividend Income --- --- --- --- 0.85 1.40 0.65
Net Cash flow from
(693.22) (1808.50) (1237.89) (4578.66) (467.02) 80.76 122.40
Investing activities
C. Cash flow from

financing activities
Inflow / (Outflow)
Dividend paid --- --- --- (163.10) (155.48) (175.40) (175.80)

Increase / (Decrease)
--- --- --- 898.15 314.29 (434.57) (1055.95)
In unsecured loans
(554.68) 604.28 1361.86 1973.09 (176.88) (1131.41 (1414.33)
of long term liabilities
2036.80 493.33 370.24 1220.78 505.88 (701.78) (2136.85)
cash credit utilization
Net Cash Flow From
Financing Activities 1482.12 1097.61 1732.12 3928.92 487.81 (2443.16) (4782.93)
D. Net Increase /
(decrease) in cash & 134.37 (264.20) 374.83 (147.87) 135.50 32.36 56.69
cash equivalent.
Cash & cash 324.05 458.42 194.22 569.04 421.17 556.67 589.03
equivalents as at the
commencement of the
59
year
Cash & cash
equivalents as at the 458.42 194.22 569.05 421.17 556.57 589.03 645.72
closing of the year
INTERPRETATION :-
In this section an attempt has been made to analyze in detail the

cash flow statements of Kakatiya Cement Sugar and Industries Limited for the
period of seven years from 1998 – 99 to 2004 – 05. These cash flow statements
has been taken from the published accounts of the company. The sources and
application of funds have been computed on year – to – year basis. The objective
of this analysis is to find out the different sources from where the company has
raised the funds during the period and how were these funds utilized in order to
achieve its objectives.
After going through the cash flow statements we can conclude that
cash at end of the financial year 2000 – 01 was maximum compared to other
years, as there was proper carry out of financing activities even there is no issue
of shares. In the year 1999 – 2000 through the cash at the end of the year
declined, it can be said that the company has invested in the purchase of fixed
assets. It has also paid adequate dividends to shareholders. Consequently,
Kakatiya Cement Sugar & Industries Ltd., is in a better position, which can be
seen from the cash position at the end of the financial year 2002 – 03. The
company is constantly investing in purchase of fixed assets and prompt
repayment of loans. There was no issue of shares throughout the period. It is
clear from the cash flows of the year 2004 – 05 that the company has
substantially invested in the purchase of fixed assets.
60
FINDINGS & SUGGESTIONS
In the previous chapter, we analyzed the financial statements of Kakatiya

Cement Sugar & Industries Ltd., for the period of seven year i.e.,
1998 – 99 to 2004 – 05. the present chapter is a summary on the performance of the
company based on its financial analysis an attempt has been made to recommend
improvements in its performance to achieve the objective of the company.
SUMMARY OF FINDINGS:
1. COMPARATIVE STATEMENTS:-
Comparative balance sheet revels that there was no change in share capital as
there was no fresh issue of shares. It can be seen that the company is heading in
the path of progress and prosperity during the recent years, as this can be
justified by the financial figures of the company. The company has generated the
funds by raising unsecured long-term loans. Company has consistently invested
in the purchase of fixed assets. The current assets are always more than the
current liabilities, which shows that the liquidity position of the company is sound.
2. COMMON SIZE STATEMENTS:-

Comparison of the common size balance sheet reveal that the proportion of the
share capital as part of total assets has decreased as part of total assets. An
increasing and decreasing trend was maintained in the case of reserves and
surplus. Similar trend could be viewed in case of fixed assets and consistency
was maintained in case of investments.
Current liabilities have increased till 1999 – 2000 and after that declined in
2000 – 01 and again increased in 2001 – 02 and 2002 – 03 and once again
61
declined in the year 2003 – 04 and 2004 – 05. A similar position can be viewed in
case of current assets.
3. TREND RATIO ANALYSIS:-

Current assets have shown a larger increase constantly. Fixed assets have
increased except in the year 2003, current liabilities have also shown an increasing
trend. Secured loans were on a constant increased from
1998 - 99 to 2002 – 03, and started declining. The same increasing trend was in
case of unsecured loans. There was no much change in share capital as there was
no further issue of shares.
4. RATIO ANALYSIS:-
After going through the depth analysis it can be drawn that the company is
heading towards the path of progress and prosperity during the recent years, as
this can be justified by the financial figures and from the fact of the company is
growing.
After the analytical study of financial statements of Kakatiya Cement Sugar
& Industries Ltd., and interpretation of various ratios, it can be concluded that the
liquidity position of the company is better. From the interpretation of current ratio,
it has been observed that the current ratio of the company was above standards,
which shows the liquidity position is better. The quick ratio, gives a picture of the
organization ability to pay its short – term liabilities through short – term assets.
5. CASH FLOW ANALYSIS :-

After going through the cash flow statements we can conclude that cash
at end of the financial year 2000 – 01 was maximum compared to other
years, as there was proper carry out of financing activities even there is no
issue of shares. In the year 1999 – 2000 through the cash at the end of the
year declined, it can be said that the company has invested in the
purchase of fixed assets. It has also paid adequate dividends to
shareholders.
Consequently, Kakatiya Cement Sugar & Industries Ltd., is
in a better position, which can be seen from the cash position at the end of
the financial year 2002 – 03. The company is constantly investing in
62
purchase of fixed assets and prompt repayment of loans. There was no
issue of shares throughout the period. It is clear from the cash flows of the year
2004 – 05 that the company has substantially invested in the purchase of fixed
assets.
SUGGESTIONS : -
The profitability of the company is increasing every year continuously

from the year 1998 – 99 with the turnover increasing. The profitability as
compared to the turnover is going on balance with the administrative and other
costs. The current ratio of the company as discussed is always much high than
the standard norms, which is also not favourable for the company, this means
that the big amount of money is not being utilized effectively as most of the cash
is tied up in debtors and inventories. The company should improve upon its credit
policies and holding of inventories, as the company can save the cost of working
capital by reducing the same.
The company should also review the opportunities and threats to its
business in the long – term perspective. The company is diversifying in various
aspects. While the only threat to the company in this field is from unorganized
sector producing cheaper and as the liability of excise duty is not there resulting
in low cost of production. This can be overcome by the company by maintaining
its quality standards, as the consumer now - a - days are ready to pay for the
quality products.
63
BIBILOGRAPHY
1. S.N. Maheswari : Management Accounting and Financial

Control
2. D.C. Sharma & K.G. Gupta : Management Accounting
3. M.Y. Khan & P.K. Jain : Financial Management
4. Prasanna Chandra : Financial Management
5. Published accounts of Kakatiya Cement Sugar & Industries Ltd.,

( 1998 – 99 to 2004 – 2005 )
64

Fianace Project

Enviado por

Dados do documento

Descrição original:

Direitos autorais

Formatos disponíveis

Compartilhar este documento

Compartilhar ou incorporar documento

Opções de compartilhamento

Você considera este documento útil?

Este conteúdo é inapropriado?

Direitos autorais:

Formatos disponíveis

Fianace Project

Enviado por

Direitos autorais:

Formatos disponíveis

FINANCIAL STATEMENT ANALYSIS

ANALYSIS OF FINANCIAL STATEMENTS:

TYPES OF FINANCIAL STATEMENT ANALYSIS:

(B) According to the Modus Operandi of analysis :

PARTIES INTERESTED IN FINANCIAL ANALYSIS :

Financial analysis is very important for the management, shareholders,

1. It simplifies, summarizes and systematizes a long array of accounting

The financial statements are a mirror, which reflect the

The procedure may be as under:

2. Going through the financial statements:- Before analyzing and

3. Collection of necessary information:- Other useful information which

4. Rearranging of financial data:- The data available has to be rearranged

6. Interpretation and presentation:- After analysis, interpretation is done

1. Comparative financial statements:-

2. Common Size financial statements:-

5. Cash flow Statements : -

Cement as well as Sugar industries in India are fragments and scattered

Sugar being an agro-based industry needs good irrigation facilities. Some

Infrastructure and rural development have been attracting considerable

Sri P. Venkateswarlu is the Chairman & Managing Director of Kakatiya

In the year 1994, the company rewarded it shareholders with bonus

The company has implemented a bagasse based co-generation plant at

ii) Sugar & Power

PERFORMANCE OF THE YEAR UNDER REVIEW

The sugar division crushed 1,88,013 MT of sugarcane for the current

Financial analysis of an organization provides the clear view of its

OBJECTIVE OF THE STUDY

The objective of the study is to determine the clear picture of the

My visit to the premises of the company’s registered office, observation of

of the company are the basis of the study.

The limitations of the present study are :

2. The study is subject to limitations of the nature of financial

3. Further, the study takes into consideration the quantitative

1. COMPARATIVE FINANCIAL STATEMENTS:

These financial statements are so designed as to provide time perspective

COMPARATIVE BALANCE SHEET:

A comparative balance sheet shows the balance of accounts of assets

1998 1999 Increase (+) / Percentage

Liabilities & Capital

1999 2000 Increase (+) / Percentage

Liabilities & Capital

2000 2001 Increase (+) / Percentage

Liabilities & Capital

2001 2002 Increase (+) / Percentage

Liabilities & Capital

2002 2003 Increase (+) / Percentage

Liabilities & Capital

2003 2004 Increase (+) / Percentage

Liabilities & Capital

2004 2005 Increase (+) / Percentage

Liabilities & Capital

1998 1999 2000 2001 2002 2003 2004

The above tables present the comparative balance sheets of the

As far as current liabilities are concerned, in year 1998-99 it was

2.COMMON SIZE STATEMENT ANALYSIS :

In the comparative financial statements it is difficult to comprehend

COMMON SIZE BALANCE SHEET :

In a common size balance sheet, total of assets or liabilities is taken

1998 % of total 1999 % of total

Liabilities & Capital

1999 % of total 2000 % of total

Liabilities & Capital

2000 % of total 2001 % of total