Financial Statement Anal

Financial Statement Analysis
INTRODUCTION
The term financial analysis also known as analysis and interpretation of
financial statements, refers to the process of determining financial strength and
weakness of the firm by establishing strategic relationship between the items of the
balance sheet, profit and loss account and other operative data.
The purpose of financial analysis is to diagnose the information contained
in financial statement so as to judge the profitability and financial soundness of
firm the analysis and interpretation of financial statements is essential to bring out
the mystery behind the figures in financial statements. Financial statements
analysis is an attempt to determine the significance meaning of the financial
statement data so earnings, ability to pay interest and debt maturities and
profitability of a sound dividend policy.
The term financial statement analysis includes both analysis and
interpretation. A distinction should, therefore, be made between two terms. hile
the term analysis is used to mean the simplification of financial data by
methodical classification of the data given in the financial statements.
!nterpretation means e"ploring the meaning and significance of the data so
simplified.
Master of Business Adminstration Guntur Engineering College
5
Meaning and scope of financial management:-
Finance is considered as the life#blood of any business. !t is defined as the
provision of money at the time it is needed. All the plans of a businessman would
remain mere dreams unless ade$uate money is available to convert them into
reality.
Finance management is very important to every type of organi%ation. !t
refers to that part of managerial activity concerned with the procurement and
utili%ation of funds for business purposes. The financial manager is also
responsible for affective utili%ation of funds. &e is to point out situations where the
funds are being kept idle or where a proper use of funds is not being made. This is
also as an important consideration in dividend decision. &ence, it is crucial to
employ the funds properly and profitably.
The funds have to be invested that the company can produce at its optimum
level without endangering its financial solvency. Thus financial implications of
each decision to invest in fi"ed assets are to be properly analy%ed. For this, the
financial manager must have a detailed knowledge of techni$ues of capital
budgeting and $ualifying uncertainty.
&e must also keep in view the needs of working capital and ensure that
while true forms enjoy an optimum level of working capital they do not keep too
much Funds blocked in inventories, book debts and cash etc.

5
The twin aspects of procurement and effective utili%ation of funds therefore, are
the crucial tasks which the financer manager performs.
Thus financial management is concerned with'
(a) *stimation of the fi"ed and working capital re$uirements,
(b) Formulation of capital structure,
(c) +rocurement of fi"ed and working capital, and
(d) ,anagement of earnings.
Importance of financial management:-
The importance of financial management cannot be over emphasi%ed. !n
every organi%ation where funds are involved, sound financial management is
necessary. As Collin roo!s has remarked,- .ad production management and bad
sales management have slain in hundreds, but faulty financial management has
slain in thousands-.
Financial management also helps in ascertain how the company would
perform in future it helps in indicating whether the firm will generate enough funds
to meet its various obligations. !t also helps in profit planning, capital spending,
measuring costs, controlling inventory accounts, receivable, etc.
5
Need of t"e st#dy:
/. To know the li$uidity position of the company.
0. To know the solvency position of the company.
1. To know the profitability performance of the company.
2. To know the funds flow and cash flow analysis represents the figures
continues the condensed report of the position, development, and problems
of the concern.
O$%ecti&es of t"e st#dy:
/. To study the financial strengths and weakness of 3T45A6!
6**76-+8T.5T7.
0. To e"amine the moment of comparative balance sheet and comparative
income statement and common si%e and trend analysis of 3T45A6!
6**76-.
1. To evaluate the financial position of the company.
2. To offer suggestion based on findings and suggestions and conclusion of
study.
5
Met"odology:
,ethodology describes the method of achieving objectives through
collection of data. The data collected can be either primary or secondary. The
above information is carried on with the cooperation of management of T45A6!
6**76 +8T.5T7.
So#rces of data:
/. +rimary data
0. 6econdary data
'rimary data:
,ost of the information is collected from internal interviews and
discussion with various officials in the finance department and concerned
e"ecutive of other department.
Secondary data:
The information collection from
/. Annual reports, published records and reference books.
0. *"ecutive and staff of financial accounting department.
1. *"ecutives of other departments.
5
(imitations of t"e st#dy:
/. Two months is too short for e"tensive study.
0. All the financial details are not revealed as some matters are confidential.
1. !nformation provided is mostly of secondary data, so the accuracy of the
study is limited.

5
5
INDUSTR) 'ROFI(*
The prospects of the seed industry would re$uire changes in government
policy, facilitating its development and removing controls and restrictions. !n brief
seed industry re$uires simple policy legislation.
&istorically, the importance of seed has been recogni%ed since the 8edic
times for increasing food production and $uality. &owever organi%ed production
and supply of $uality seed at the national level stated in /9:1 as a conse$uence of
the introduction of hybrid technology during /9:/#:;.
+RO,T-:
The release of high yield dwarf varieties of wheat and rice by the mid /9:<s
gave further impetus to the growth of seed industry. This period also saw the
constitution of the seed review team, enhancement of seeds act./99: for regulating
the $uality of seed and formation of the =ational >ommission of agriculture. This
was the period in which the private sector took significant steps into the seed
business.
The /9?<s witnessed two more important developments vi%., granting of
permission to ,@T+A F*@A companies for investment in the seed sector in /9?B
and the introduction of 3=* +C5!>D- on seed development in /9??. The new
policy on seed development while helping liberali%e import of vegetable and
flowers seeds in general and seeds of others crops in a restricted manner
encouraged global seeds companies to enter the seed business of !ndia.
5
CURR*NT STATUS:
To supply the seeds necessary for the five hundred thousand !ndian villages
is a big problem. 6torage, transportation and timely distribution of pure seed from
village to village calls for careful organi%ation with in the state department of
agriculture and the willing co#operation of farmers.
!ndians seed industry has grown in si%e and level of performance over the
past four decades. !t represents a blend of private and public sector companiesA
corporations. The private sector comprises appro"imately /2< seed companies,
which includes national, global, regional and other seed producing andA or selling
companies. The industry has made impressive strides from modest beginning in
/9:0#:1 to over ; lakh hectares in seed production in /99;#9:. The $uantum of
seed distributed also grew from /2 lakh $uintals during this period. Cn the inputs
supply the certified $uality seeds distribution touched a new high of one million
tons during the year 0<<<#0<</. !t was <.9/ million tons the previous year.
C-A((*N+*S:
!mplementing of new techni$ues re$uires dissemination and training for
their beneficial use. To achieve this goal radical change will be re$uired in the
e"isting e"tension system. !n many cases entirely new approaches for
dissemination of knowledge will be re$uired. These will have to be constant
learning an up gradation of skills to enable transmission of knowledge to the user.
5
To reali%ation of the prospects of the industry will also changes in the
government policy, which would facilitate the development of the !ndian
agriculture and seed industry. The policy must aim at governing greater self#
discipline and removing controls and restrictions, which inhibit growth and
development.
RO(* OF T-* +O.*RNM*NT:
To achieve self#sufficiency in the production through planned programmes,
the distribution of $uality seed was rightly considered as a key factor by the
government. The far#sighted and liberal policies of government of !ndia has always
laid emphasis to build a sound seed industry in the country and has supported both
public and private sector organi%ations to develop and to meet the increasing seed
demand and also to produce surplus stocks re$uire for e"port.
To support e"panded activities the 3=ational seed programme- was
launched with the financial assistance of the 3world bank- (!nternational .ank for
@econstruction and 7evelopment). !n order to make available the right $uality of
seed to the !ndian farmers in ade$uate $uantities and at reasonable price in time.
The government of !ndia took various steps including promulgation of 36eed Act-
during /99:, which became operative throughout the country from Cctober /9:9.
The main objective of the act is to produce $uality seed of different crop varieties
under a system of seed certification and testing is voluntary but the farmers have
recogni%ed the importance of $uality seed to get higher production with limited
resources available at their end.
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&igh yielding varieties are being released for cultivation in $uick succession
by various agricultural universities and !>@A institutions through massive research
project and screening of planning materials. 6teps have been taken during early
/9?2 to bring seed within the purview of the essential commodities Act to
strengthen the regulation of seed $uality and to economies production at derived
levels.
'RO(*MS:
The seed industries and farmers from many years are facing many problems.
A number of multi#national corporations have stepped into our agricultural country
to gain control over the seeds and their distribution. @ecently, a new variety of
seeds have entered the country. This created many new problems for the seed
industry and farmers.
Eenerally, a seed may be used either as a food material or as a seed for
another crop. .ut now, the life in the seed is being taken out for making it to be
used only as a food material and not as a seed for another crop. These types of
seeds are called genetic change or genetic engineering seeds. For e"ample, .T
>otton seed. The farmers are made to purchase those seeds, which are
manufactured by the corporation for their crops. Cnce the farmers or industry have
used these types of seeds, they face many problems. They have to use only those
pesticides, which are produced by that association for protecting their crops from
the pests, diseases etc. these types would use by the wide associations.
5
S**D INDUSTR) IN +(OA( '*RS'*CTI.*:
The population has been growing at a faster rate in the country. To increase
the production accordingly an 3All !ndia >o#ordinate organi%ation has been
established in /9;/ with the assistance of 3@ockefeller Foundation- which belongs
to America. As a part of this project, it produced new seeds of mai%e in /9:/ and
cotton seeds in /9B/.
ith a view that the state governments are unable to meet the demand for
seeds correctly, two associations have been established with the help of
@ockefeller Foundation. They are 3=ational 6eed Association- /9:1 and 36tate
Farm >orporation of !ndia-, /9:9. 7ue to the 37evelopment +rogramme- which
came into e"istence in /9??, many multinational corporations have stepped into
the seed industry.
At present there are more than B<< multinational corporations in !ndia
organi%ing seed business directly or industry. =ineteen multinational companies
have been made an agreement with the !ndian seed industries and have been
enjoying the leadership in the seed market. ,onsanto, an American multinational
corporation, has ac$uired one#fourth part of the ,!>C seeds industry, one of the
biggest seed industries in !ndia. The ac$uisition value given by the ,onsanto
>orporation is more than /B times to the real value.
5
S**D INDUSTR) IN INDIA:
!ndian seeds industry has grown in si%e and level of performance over
the past four decades. !ndia stands in the ?
th
position all over the world in the
production of different variety of crops. Again in each crop there are thousands of
varieties. To co#ordinate the seeds research centers and private organi%ations in the
country and to support the e"panded activities, the 3=ational seed +rogram- was
launched in /9:B with the financial assistance of the orld .ank. !n /9:< many
private organi%ations have participated in the production of seeds. ,any seed
industries have laid a strong foundation in the country. Following are some of the
major seed industries in !ndia.
/. ,!>C seeds private 5imited, ,umbai.
0. ,onsanto holdings private 5imited, ,umbai.
1. =amdhari 6eed >orporation limited, .angalore.
2. =ational 6eeds >orporation limited. =ew 7elhi.
;. @allies !ndia limited, =ew 7elhi.
:. 6ungro seeds limited, 7elhi.
B. >argill hybrids private limited, =ew 7elhi.
?. +ioneer !ndia limited, Folkata.
9. +roagro seeds private limited, >hennai.
/<. 6asys seeds private limited, .angalore.
//. 6injent !ndia limited, pune.
/0. =unhams seeds private limited, Eurgaon.
5
S**D INDUSTR) IN AND-RA 'RAD*S-:
!n Andhra +radesh the seed industries are many in number. Though
Andhra +radesh is one among the states in !ndia who have been producing
different varieties of crops. !t does not have the major seed industries in it when
compared to other states. ,any seed have formed recently in the state. Also the
state is growing industrially and there is sample scope and potential for the entry
and success of new industries.
The crop producing seasons are different for different states. !n Andhra
+radesh the crop producing seasons starts from Gune and ends with the month of
6eptember. Eenerally the rain fed crop in situated in the irrigated crop may not
have better results when compared. The stock to be sold by the seed industries is
kept ready during the starting of years as the period during which the demand will
be more fall between march and august. The industries in the state market with
other states, which form the boundaries of it. The selling period of those states will
vary. The following are some of the seed industries in Andhra +radesh.
!ndo American hybrid seeds (!ndia) +vt. 5td, &yderabad.
6eed works !ndia limited, &yderabad.
,ourya agri#tech., &yderabad.
6riram .io#seed genetics !ndia limited. &yderabad.
Gk seeds limited, 6ecunderabad.
=ugeveedu seeds limited, &yderabad.
Tulasi seeds +rivate limited, Euntur.
8enus crane seeds +vt. 5td, Euntur.
Tammareaddy seeds, 8ijayawada.
5
Eopikrishna seeds, ,ahaboobnagar.
COM'AN) 'ROFI(*
Tulasi seeds private limited was incorporated on /;
th
may, /990 under the
proprietorship of 6ri Tulasi @ama >handra +rabhu. There are other organi%ations,
which are under the same managementH T6+5 is also one among them.
>oastal packing was the first industry started by them in the year /9BB. 5ater
on >haitanya +ackaging +rivate 5imited and transport agencies were started in
/9??. After that white gold chits I finance came into e"istence. This institution
holds ;<J of total number of shares of Tulasi seeds private limited.
The company was started with an initial investment of @s.0lakhs. !n the
initial stage, there was no processing plant. !n the year /992 it has been set up a
processing plant e$uipped with full machinery. Thirty acres of land being
cultivated under the ownership of the company. This year the company e$uipped
their own laboratory for @I7.
The company proprietor, 6ri T#lasi Rama C"andra 'ra$"#, had received
following awards'
Eovernment of A.+ gave .*6T 6,A55 6>A5* !=746T@!A5!6T
AA@7 in /992.
5
A+6F> awarded +A@!6@A,!FA 8!G*T&A consecutively for 2 years from
0<</.
,inistry of 6mall 6cale !ndustries, Eovt. of !ndia, given =AT!C=A5
AA@7 K 0<<1 handed over the award by 7r. A.+.G Abdul Falam, +resident
of !ndia on 0?#/<#0<<; at =ew 7elhi.
,inistry of small scale industries, Eovt. of !ndia, given =AT!!C=A5
AA@7 K 0<<; for L4A5!TD +@C74>T6 issued by 6ri +ranab
,ukherjee 4nion ,inister for 7efence on <B#/<#0<<: at =ew 7elhi.
.*6T ,A=AE*,*=T AA@7 under ,ay 7ay >elebrations 0<hief ,inister of A.+. on <;#0<hamber of >ommerce I !ndustries &yd,
>hosen T45A6! 6**76 +8T.5T7. for the Award of *M>*55*=>* !=
@*6*A@>& I 7*8*5C+,*=T for 0<<B.
!>A! =ational Award for *"cellence in >ost ,anagement K 0<<? Trophy
for >haitanya +ackagings +vt. 5td.
MAIN O/*CTI.*:
The main objective of the company is to provide pure $uality and certified
seeds to the farmers. The $uality standard of the company is to provide perfect
$uality seeds.
5
(OCATION OF T-* COM'AN):
The processing plant and research farm are at Ameenabad. They are located in
7okiparru in ,edikonduru mandal of Euntur district in the state of Andhra#
pradesh. !t is only 2;km from 8ijayawada, which is industrially located. The
registered office named T45A6! &C46* is located at 2
th
lane of Arundelpet
Euntur. !t is nearer to the railway station. The %onal office is situated at
&yderabad. The branch office is situated at =agpur in the state of ,aharastra.
R*+IST*R*D OFFIC*:
M0S TU(ASI S**DS 'RI.AT* (IMIT*D
Tulasi house 6-4-6,
4/5 Cross, Arundalpet,
Guntur-522002(A.P)
1ONA( OFFIC*:
7.no/:#0#B<;A;A?,
=ear rice mills,
,alakpet,
&yderabad#;<<<1:9 (A.+)
RANC- OFFIC*:
A#0phase apartment,
Tri murthi nagar,
5
=agpur#00,
,aharastra.
FINANCIA( O(I+ATIONS:
/. =o e"penditure was incurred during the year in foreign currency.
0. The contingent liabilities at the end of the year were nil.
1. The amount due by company to is units as nil.
2. The company has paid the interest and commissions regularly to the
respective parties.
FUTUR* OUT(OO2:
The company has introduced own branded seeds in the local market
along with the partial introduction of them in the states of ,aharastra, ,adhya
+radesh and Farnataka. !t has made good progress in the previous year from the
own hybrids of >otton 6eeds and established its own good will in the market. The
company is confident of achieving better results in the current financial year in the
view of the improving marketing conditions and the companies strategically
developed network in various areas. !t has been taking all necessary steps for
improving $uality of the products and services.
TS'( ACCOUNTIN+ 'O(ICI*S:
34 Acco#nting con&ention:
5
!n Tulasi seeds +vt. 5td., the financial statements are prepared on historical
cost conventions and in accordance with generally accepted accounting principles
and the provisions of the companies act, /9;:.
54 Fi6ed assets:
!n T6+5, fi"ed assets are stated at cost of ac$uisition less accumulated
depreciation.

74 Depreciation:
!n T6+5, 7epreciation in accounts of straight line method at the rate and in
the number specified in 6chedule M!8 of the companies Act /9;:.
2. In&estments:
5ong#term investments in T6+5 are stated at cost and income thereon is
accounted for on accrual. +rovision towards decline in the value of long#term
investments is made only when such decline is other than temporary.
;4 In&entories:
8alues of !nventories are made as under'
(a) @aw materials, work#in#progress and finished goods are valued at cost or
net reali%able value whichever is lower.
(b) 6tores and spares at cost.
5
:. Sales in TS'(:
6ales and inclusive of *"cise duty, packing charges and sales ta".
B. Interest and Disco#nt:
!nterest payable and receivable and discounts payable and receivable
are taken into account while preparing financial statements.
?. 'reliminary *6penses:
+reliminary e"penses are amorti%ed over a period of ten years.
9. Researc" and De&elopment *6pendit#re:
@evenue e"penditure is charged to profit I 5oss Account and >apital
e"penditure is added to the cost of fi"ed assets in the year in which it is
incurred.
/<. A#ditors Fee:
The company accounts are audited by ,As 8.@ao I Eopi. !t pays the
auditors @s./<, ;<<A# per year as remuneration.
5
FUNCTIONA( AR*AS
/. MAR2*TIN+: -
The company mainly markets its products from its processing plant at
Ameenabad. The consumers come to the registered office of to the processing plant
and place their order. The company has its own trucks and vans for the
transportation purposes. !t means $uick delivery of the materials ordered by the
consumers through these trucks and vans. !f any unforeseen demand arises and
orders are placed in plenty, it consults the >handra Transport Agency for the
delivery of the material ordered.

The prices are fi"ed basing on its competitors and the variations in the
prices of the goods in the market. The company does advertising of seeds. The
advertisement relating to the company seeds are given in daily newspapers like
8AA@T&A and monthly journals like A==A7AATA, etc.
The advertisement and business promotion e"penses are included in the selling and
distribution e"penses while preparing the financial statements. The advertisement
e"penses during the year incurred by the company are less than the previous year.
The packing of the seeds is the last stage in processing. The packages are kept in
corrugated bo"es and sent for delivery to consumers. These packing e"penses are
included in the sale price.
5

The distribution is the main function in the marketing of seeds of the
company. !f maintains good relations with its dealers, distributors and farmers. The
company conducts and organi%es the meetings where the farmers, dealers and
distributors come for the discussions. This facilitates good understanding between
them and finally leads to the overall development of both the company and the
members. The farmers and dealers directly approach the company and reserve the
material they want to purchase by marketing advance payments.
54 ADMINISTRATION: -
@ecruitment in Tulasi seeds +vt. 5td. is done mainly through internal
sources. !t has good relations with its employees, workers, farmers, dealers and
distributors. +romotion is mainly based on seniority. !t maintains farmers
guesthouse at the processing plant. +rogrammes were also arranged on relevant
topics such as 6afety, @ole of employees, self#development, +roductivity, &uman
relation, &ealth etc.
74 FINANCIA(: -
Tulasi seeds private limited use both its own capital and debt to perform
its activities. The company aims at wealth ma"imi%ation, rather than earning more
profits. !t maintains proper record if every transaction showing full particulars
when wanted. The company has ade$uate internal audit system commensurate with
the si%e and nature of its business. hile gold chits and finance, one of the units
maintained by the same management itself holds ;<J shares of the company
5
having @s /<A# face value each. The parties and employees to whom loans and
advances have been given by the company are repaying the principal amount
stipulated.
'RODUCTION: -
The production profile of Tulasi 6eeds +rivate 5imited deals with the
hole issue of processing of various kinds of seeds, which includes the procedure,
stockpile, etc., the company processing of >otton 6eeds takes the major +lace
among all seeds. The different types of seeds, which are being processed by The
>ompany, are as follows.
5
PRODUCTS PROFILE
R*S*ARC- T COTTON -)RID
Tulasi K2.tA 6@! T45A6! .t
Tulasi K//B.tA =A,A6FA@ .t
RS*ARC- -)RID COTTON
T>&&#2 (6@! T45A6!)
T>&&#9 (.&A6FA@)
RS*ARC- -)RID MAI1*
T,&#102 (647&A)
T,&#1:9 (=AEA)
R*S*ARC- -)RID SUNF(O,*R
T6F&#/0/0 (64@AG)
RS*ARC- -)RID A/RA
T.&#2/2
T.&#2<;
R*S*ARC- -)RID -*NDI
TC&#;00 (+A8A=!)
IM'RO.*D C-I((I .ARI*TI*S
T>8#11; (ECTA,!)
5
T>8#<<0 (@A,DA)
R8D AND T*C-NO(O+) ASOR'TION:
/. 6pecific area in which @I7 carried out by the company.
7evelopment of own hybrid seed.
0. .enefits derived as a result of the above @I7.
!mproved $uality.
!mproved productivity and
+rocess efficiencies.
1. *"penditure on @I7.
@s. 1, 29,/<? spent under own research and development program
during the year.
2. Technology absorption during the year under review is nil.
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Researc" 8 De&elopment:
@I7 division of T6+5 was standard in /992 with a view to develop 6uperior
hybrids and C+8s for higher yield, early maturity better $uality And @esistance to
biotic and .io#tech tresses in major crops. The @I7 division has e"cellent
infrastructure facilities within higher $ualified scientific manpower for conducting
research in plant breeding and biotechnology. 76!@ (7epartment of 6cientific and
!ndustrial @esearch), ,inistry of science I technology, Eovt of !ndia has accorded
recogni%es To T6+5s !n#house @I7 division. >ollaborate research is also being
carried out with international institutes like !>@!6AT etc for hybrid development
program due to the continues efforts at @I7 division, several high yielding
hybrids in crops like cotton, chilly, mai%e, sunflower, pearl millet, okra, etc, have
been developed.
8ery popular and revolutionary Tulasi cotton research hybrids like
TulasiN2.t O6ri Tulasi .tP, Tulasi 9Bt[Bhaskar Bt], [central Zone] & Tulasi//B.t
O=amaskar .tP, are being cultivated in lacks of acres in major cotton growing areas
in the country and these Tulasi .t cotton hybrids are showing e"cellent results in
farmers fields. The @I7 division has also developed .E !! version for TulasiN2
5
.E !! I Tulasi 9 BG !! and these two hybrids have shown the best performance in
the large scale field trails in north, central and south Qones. After E*A> approval,
TulasiN2 .E !! and Tulasi K9 .E !! hybrids would be made available to farmers
for kharif 0<<? season.
A+RI IOT*C-NO(O+):
>onsidering the importance of Agri .io#Tech research, Tulasi seeds had
also entered in to the new era of Agri .io#technology. >ollaboration was made
with ,onsanto >ompany for the transfer of .t technology (.ollgard I .ollgard !!
genes) in promising 3Tulasi- cotton research hybrids. 6pacious green houses were
built in 00<<< s$. ft area at @I7 division. .iotechnology laboratory was
constructed and several modern e$uipments like +>@, Eel 7oc system, *5!6A
reader, centrifuges etc, are available for conducting biotechnology research,
several cotton hybrids have been developed and the performance of these .t
hybrids is e"tremely good. Another ten new promising Tulasi K .ollgard !! cotton
hybrids have been developed at @I7 division and they are under field trails.
9UA(IT) ASSURANC*:
Tulasi products are known for their e"cellent $uality. The seed
production, processing, $uality tests and packing of seeds are done as per stringent
$uality assurance norms. 6eed $uality implies to genetically, physical,
physiological and health components. At most care is taken at the time of seed
production, processing, storage and distribution by continues $uality testing. A
well#e$uipped $uality control laboratory is available where $uality tests like seed
5
germinationH physical purity, moisture, health etc are conducted. Eenetic purity
tests (Erow out tests) are conducted at Tulasi research firm. A separate $uality
control seed is available for through checking at seed production fields and
processing plants. +roper guidance is also given for maintaining hygiene
conditions at seed processing plants and seed storage godowns.
5
F#nctions of financial management:-
!n the conte"t of achieving the goals like ma"imi%ation of risks, li$uidity,
profitability, wealth ma"imi%ation etc. The total functions of financial management
can be divided into three different groups.
/. 5i$uidity function
0. +rofitability functions
1. ,anagement functions
2. ,anaging funds and
;. ,anagement assets
34 (i:#idity f#nction:-
!n seeking sufficient li$uidity to carry the firms activities the financial
managers perform the following the tasks. Forecasting the cash flows and
managing the flow of internal funds.
5
54 'rofita$ility f#nction:-
The other function of financial manager is to provide reasonable and
ade$uate return on capital employed. ith respect to profitability important
financial functions are cost control and measuring re$uired return.
74 Managing f#nctions:-
,anaging functions are divided into two types. They are
/. ,anaging assets.
0. ,anaging funds.
34 Managing assets:-
Assets are the resources by which the firm is able to conduct business. The
function of asset management recogni%es the decision making role of financial
manager. Asset management includes knowing the total amount of the assets
needed by the firm to carry out its operation.
54 Managing f#nds:-
Funds may be viewed as the li$uid assets of a firm the term includes cash
held by the firm, money borrowed by the firm and money gained from purchases
of common and preferred stock.

5
Financial Analysis:-
The term financial analysis refers to the process of determining
financial strength and weakness of the firm by establishing strategic
relationship between the items of the balance sheet, profit and loss account
and other operative data.
!n the words of /o"n N4Myer 3the financial statement analysis is largely a
study of relationship among various financial factors in the .usiness has disclosed
by a simple set of statement and a study of the trend of these factors as shown in
series of statements.

Types of financial Analysis:-
The various types of financial analysis can be brought into different
categories the material used and the method of operation followed in the analysis.
According to material used, the financial analysis may be used either e"ternal
analysis for internal analysis. .ut on the basis of the modus, operandi, it can be
classified into hori%ontal analysis and vertical analysis.
*6ternal Analysis:-
This analysis is done on the basis of information available from published
records. Thus an analysis which is done by outsiders who dont have access to the
detailed records of the company is known as e"ternal analysis. Cutsiders include
investors, credit agencies, government agencies and other creditors. *"ternal
analysis serves only a very limited purpose.
5
Internal analysis:-
This analysis is done on the basis of information obtained from internal
records. Thus an analysis which is conducted by persons who have access to the
detailed records of the concern is known as internal analysis. 6uch an analysis is
usually performed by e"ecutives and employees of the organi%ation and
government officials. Analysis for managerial purpose is one of the e"amples of
internal analysis.
-ori;ontal analysis: -
&ori%ontal analysis is also known as dynamic analysis or trend analysis.
Analysis which is done by analy%ing the financial data of a company for several
years is called hori%ontal analysis. 4nder this analysis, the analysts compare the
figures of the various years with that of the standard or base year to know the
periodical trend of various items shown in the statements with the passage of time.
&ori%ontal analysis helps the management to focus attention on items that have
significantly changed during the period under review.
.ertical analysis: -
8ertical analysis is also known as static analysis or structural analysis.
Analysis which is done by analy%ing a single set of financial statement is known as
vertical analysis. 4nder this analysis, the figures from financial statement of a year
are compared with a base selected from the same years statement. 8ertical
analysis is not very conductive to a proper analysis of financial statement as it
considers data for one period only. &owever, it may be used along with hori%ontal
analysis to make it more meaningful.
5
Types of financial statements
Financial statements primarily comprise two basic statements.
/. The position statement or the balance sheet and
0. The income statement or the profit and loss account.
&owever, specified that a complete set of financial statements must include.
/. A balance sheet
0. An income statement
1. A statement of changes in financial position.
34 alance S"eet:
An American institute of certified public accountants defines balance sheet
as a tabular statement of summary of balances carried forward after an actual and
constructive closing of books of account and kept according to principles of
accounting. The purpose of balance sheet is the show the resources that the
company has i.e., its assets and from where there resources come from i.e., its
liabilities and investments by owners and outsiders.
The balance sheet is one of the important statements depicting the financial
strength of the concern. !t shows on the one hand the properties that it utili%es and
on other hand the sources of these properties. The balance sheet shows all the
assets owned by lthe concern and all the liabilities and claims it owes to owners
and outsiders. The balance sheet is prepared on a particular date.
5
54Income statement:
!ncome statement is prepared to determine the operational position of the
concern. !t is statement of revenues earned and the e"penses incurred for earning
that revenue, if there is e"cess of revenues over e"penditures ti will show a profit
and if the e"penditures are more than the income then there will be a loss. The
income statement is prepared for a partition period, generally a year. hen
income statement is prepared for the year ending then all r1evenues and
e"penditures falling due in that year will be taken into account irrespective of their
receipt or payment.
The income statement may be prepared in the form of a manufacturing
account to find out. The cost of production, in the form of trading account to
determine gross profit or gross loss. !n the form of profit and loss account
determine net profit or net loss, a statement or retained earnings may also be
prepared to show the distribution of profits.
Statements of c"anges in financial position:-
The basic financial statements, the balance sheet and the profit and loss
account or income statement of the business operations by summari%ing revenues
and e"penses of the company. The balance sheet gives a static view of the sources
and users of finances. The profit and loss account but besides profits owners
e$uity may change due to other factors such additional investment or withdrawal
of profits.
5
An additional statements in needed to show the changes in assets, liabilities
and owners e$uity between dates of two balance sheets. @hen a statement is
referred to as the statement of changes in financial position. >hanges in assets and
liabilities resulting from financial and investment transactions during the period.
The most commonly used forms of the statement of changes in financial position
are called funds flow statement and the cash flow statements.
F#nds flo< statement:
The funds flow statement is designed to analy%e the changes in financial
position of a business enterprise between two periods. = The word fund is used to
denote a working capital. This statement will show the sources from which the
funds are received and the uses which these have been put this statement enable the
management to have an idea about the sources of funds and their uses for various
purposes like statement helps the management in policy formulation and
performance appraisal.
Cas" flo< statement:
A statement of changes in the financial position of a firm on cash basis is
called cash flow statement. 6ummari%es the courses o changes in cash position of
a business enterprise between states of two balance sheets. This statement is
similar to changes in working capital i.e., funds flow statement cash flow statement
focuses attention on cash changes only.
5
C"aracteristics of Ideal Financial Statements: -
The financial statements are prepared with a view to depict financial
position of the concern. A proper analysis and interpretation of these statements
enables a person to judge the profitability and financial strength of the business.
The financial statements should be prepared in such a way that they are able to
give a clear and orderly picture of the concern. The ideal financial statements
have the following characteristics.
34 Depict Tr#e Financial 'osition: -
The information contained in the financial statements should be such that a
true and correct idea is taken about the financial position of the concern. =o
material information should be with held while preparing position of the concern.
=o material information should be with held while preparing these statements.
54 *ffecti&e 'resentation: -
The financial statements should be presented in a simple and lucid way so
as to make them easily understandable. A person who is not well versed with
accounting terminology should also be able to understand the statements without
much difficulty. This characteristic will enhance the utility of these statements.
5
74 Rele&ance: -
Financial statements should be relevant to the objectives of the enterprises.
This will be possible when the person preparing these statements is able to
properly utili%e the accounting information. The information, which is not
relevant to the statements, should be avoidedH otherwise it will be difficult to
make a distinction between relevant and irrelevant data.
=4 Attracti&e: -
The financial statements should be prepared in such a way that important
information is underlined so that it attracts the eye of the reader.
>4 *asiness: -
Financial statements should be easily prepared. The balances of different
ledger accounts should be easily taken to these statements. The calculation
work should be minimum possible while preparing these statements. The si%e of
the statements should not be very large. The columns to be used for gibing the
information should also be less. This will enable the saving of time in preparing
the statements.
5
?4 Compara$ility: -
The results of financial analysis should be in a way that can be compared to
the previous years statements. The statement can also be in compared with the
figures of other concerns of the same nature. 6ometimes budgeted figures are given
along with the present figures. The comparable figures will make the statements
more useful. The !ndian companies Act. /9;: has made it obligatory to give
previous years figures in the balance sheet. The comparison of figures will enable
a proper assessment for the working of the concern.
@4 Analytical representation: -
The information should be analy%ed in such a way that similar date is
presented at the same place. A relationship can be established in similar type of
information. This will be helpful in analysis and interpretation.
A4 rief: -
!f possible, the financial statements should be presented in brief. The reader
will be able to form an idea about the figures. Cn the other hand, it figures are
given in details then it will become difficult to judge the working of the
business.
5
B4 'romptness: -
The financial statements should be prepared and presented at the earliest
possible. !mmediately at the close of the financial year, statements should be
ready.
Met"ods or De&ices of financial analysis
The analysis and interpretation of financial statement is used to determine
the financial position and result of operations as well. A number of methods or
devices are used to study the relationship between different statements. An effort
is made to use those devices, which clearly analy%e the position of the enterprise.
The following methods of analysis are generally used.
/. >omparative statement
0. >ommon#si%e statement
1. Trend analysis
2. Funds flow statement
;. >ash flow statement
:. @atio analysis
5
34 Comparati&e statement:
>omparative statements are those statements which are designed to provide
time perspective to the consideration of various elements of financial position
embodied in such statements. .oth the income statement and balance sheets be
prepared in the form of comparative financial statements.
54 Comparati&e income statements:
The income statement describes net profit or net loss account of operations.
A comparative income statement will show the absolute figures for two or more
periods. The absolute change from one period to another and if change in terms
percentages. 6ince the two or more period can $uickly ascertain whether sales
have increased or decreased whether cost of sales has increased or decreased etc.
74 Comparati&e $alance s"eet:
The comparative balance sheet analysis is the study of the e"tend of the
same items groups of items and computed items in two or more balance sheet of
the same business enterprise on different dates. The changes in periodic balance
sheet the conduct of a business. The changes can be observed by comparison of
the balance sheet at the beginning and at the end of a period and these changes can
help in forming an opinion about the progress of an enterprise. The comparative
balance sheet has two columns for the data of original balance sheet. A third
5
column is used to show in increasing figures. The fourth column may be added for
giving percentages of increases or decreases.
=4 Common si;e statement:
>ommon si%e statements financial tool of studying key changes and trends
in financial position of a company. !n common si%e statement, each item is stated
as a percentage of the total of which that item is a part each percentage e"hibits the
relation of the individual item to its respective tool. The common si%e percentage
method represents a type of ratio analysis. This statement component percentage
or/<< percent statement.
/. 6tate the total of the statement as /<<
0. >ompute the ratio of each item to the total in the statement. >ommon si%e
statement can be used both for vertical and hori%ontal analysis.
Common si;e alance s"eet:
>ommon si%e balance sheet is prepared by stating the total assets as /<< and
reducing individual assets into percentages of the total. The common si%e balance
sheet percentage shows the relation of each asset item to total assets and of each
liability and owners e$uity item to total liabilities and owners e$uity. >omparison
of common si%e statement of a single enterprise over the years is valuable in that it
reveals the changing proportions of components within groups of assets and
liabilities.
5
Trend Analysis:
The financial statements may be analy%ed by computing trends of series of
information. This method determines the direction upwards or downward and
involves. The computation of the percentage relationships that each statement item
bears to the same item in base year. The information for a number of years is taken
one year. The figures of the base year are taken as /<< and trend ratios for other
years are calculated on the base of the year. The analyst is able to see the trend of
figures whether upward or downward.
F#nds flo< statement:
The statement of changes in financial position a business enterprise. The
sources and uses of working capital between dates of two balance sheets are known
as the funds flow statement. A projected statement of changes in working capital
is immensely useful in the firms long range planning. The flows of in order to
plan the repayment schedules of its long#term debt.
The major sources of working capital are the firms net profit from
operations. The ultimate success of a company depends upon its ability to earn
profit. The e"pense items that do not involve working capital should be added to
not profit.
5
Cas" flo< statement:
The statement of cash flows is useful for short run planning. A firm
needs sufficient cash to pay debts maturing in the near future to pay interest and
other e"penses and to pay dividend to share holders. A statement of changes in
financial position on cash basis, commonly known as the cash flow statement.
6ummari%es the causes of changes in cash position between dates of the two
balance sheets. !t indicates the sources and user of cash. The cash flow
statement is similar to the funds flow statements e"pect that it focuses attention
on cash instead of working capital or funds. This statement analyses changes in
non#current accounts as well as current accounts to determine the flow of cash.
RATIO ANA()SIS:-
@atio analysis is the most popular techni$ue of financial analysis. !t is 3the
techni$ue of analy%ing and interpreting financial statements with the help of
accounting ratio-.
A ratio is a mathematical relationship between two items e"pressed in $uantitative
forms. The strengths and weaknesses as well as historical performance and current
financial condition can be determined. Three types of comparison are generally
involved.
/. Trend Analysis
0. !nter firm comparison
5
1. >omparison with 6tandard or !ndustry Average
Meaning of Ratio Analysis:-
A ratio is only a comparison of the numerator with the denominator. The
term ratio refers to the numerical or $uantitative relationship between two figures.
A ratio is the relationship between two figures, and obtained by dividing the
former by the latter. !t is worked out by dividing one number by another.
Importance of Ratios:-
The inter relationship that e"ists among the different items appeared in the
financial statements, are revealed by accounting ratios. @atio analysis of a firms
financial statements is of interest to a number of parties, mainly, shareholders,
creditors, financial e"ecutives etc.
6hareholders are interested with earning capacity of the firm' creditors are
interested in knowing the ability of firm to meet its financial obligationsH and
financial e"ecutives are concerned with evolving analytical tools that will measure
and compare costs, efficiency, li$uidity and profitability with a view to making
intelligent decisions.
5
Utility of Ratio Analysis:-
The ratio analysis is the most powerful tool of the financial analysis. ,any
diverse groups of people are interested in analy%ing the financial information to
indicate the operating and financial efficiency and growth of the firm.
The efficiency with which the firm is utili%ing its assets in generating sales
revenues.
The ability of firm to meet its current obligations.
The overall operating efficiency and performance of the firm.
The tent to which the firm has used its long term solvency by borrowing
funds.
Significance of Ratio Analysis:-
The ratio analysis is one of the powerful tools of financial analysis. !t is used
as a device to analy%e and interrupt the financial help of enterprise .Gust like a
doctor e"amines his patient by recording his body temperature, blood pressure, etc.
A ratio is known as symptom like blood pressure, the pulse rate of the temperature
of an individual.
The use of ratios is not confined to financial managers only as discussed
earlier, there are different parties interested in the ratio analysis for knowing the
5
financial position of a firm for different purposes. The supplier of goods on credit,
banks, financial institutions, investors, shareholders, and management all make use
of ratio analysis as a tool in evaluating the financial position and performance o a
firm for generating credit, providing loans are making investments in the firm. The
conclusions can also be drawn as to whether the performance of the firm is
improving or deteriorating. Thus, ratios have wide applications and are of immense
use today.
Types of Ratios:-
Cn the basis of the objectives of analysis, ratios are broadly classified
into the following categories'
/. +rofitability ratios
0. 5i$uidity ratios
1. Activity ratios
2. 6olvency ratios
;. 5everageA>apital structure ratios
C3D 'rofita$ility ratios:-
+rofitability ratios are an indication of the efficiency with which the
operations of the concern are carried on. !f a profit is what is left for
shareholders after all the charges have been paid, profitability is a ratio.
.eing ratio profitability is a meaningful measure and reveals the
relation of different individual items with sales of the concern. +rofitability of a
5
concern can be known through the analysis of general and overall
profitability. Thus profitability ratios are brought into two groups. They are
(a) Eeneral profitability ratios and
(b) Cverall profitability ratios
!5D (i:#idity ratios:-
5i$uidity means the ability of a concern to meet it s current obligations as
and when these become due. Thus the li$uidity ratios indicate the ability of a
concern to meet its short#term obligations. @atios measuring the li$uidity of a
concern are.
/. >urrent ratio
0. Luick or acid test or li$uidity ratio
1. Absolute li$uidity or cash position ratio
C7D Acti&ity ratios:-
Activity ratios measure the efficiency or effectiveness with which a concern
manages its resources or assets. Activity ratios are also known as turnover ratios as
they indicate the speed with which assets are converted or turned over into sales.
The important activity or current assets movement ratios are'
/. !nventoryA6tock turnover ratio
0. 7ebtors Turnover ratio
5
1. >reditorsA+ayable Turnover ratio
2. orking capital Turnover ratio
C=D Sol&ency ratios:-
The solvency or leverage ratios measure the financial position of a concern.
6uch ratios reflect the ability of the concern to assure the payment of long#term
creditors in time. The important ratios which determine the solvency of the
concerns are'
/) 7ebt#e$uity ratio
0) +roprietary or e$uity ratio or *$uity ratio
1) >ash to debt Kservice ratio
2) 6olvency ratio or ratio of total liabilities of total assets.
C>D (e&erage or capital str#ct#re ratios:-

5everage ratios are found out mainly to test the long#term financial position
of a concern. The important leverage or capital structural ratios are'#
/ >apital gearing ratio
0 7ebt#e$uity ratio
1 Total investment to long# term liabilities
5
2 @atio of fi"ed assets to funded debt
; @atio of current 5iabilities to proprietors fund
5
Comparati&e income statement of C5EE>-E?D in FTU(ASI S**DSG '.T4(TD4
5
Interpretation'
'ARTICU(ARS
5EE>
Rs4
5EE?
Rs4
A$sol#te
Increase/
(decrease) Rs4
H
Increase /
(decrease)
=et sales 0:,09,;1,;B<.;< /:,?;,<9,/;/.21 (9,22,22,2/9./<) (1;.90)
(ess: cost of goods sold /2,11,9B,;0:.9< :,<:,;;,?1/.B; (?,0B,2/,:9;./;) (;B.B<)
+ross profit 33IB>I>?IE=74?E 3EI@AI>7I73B4?A C33@IE5I@5=4EED CB4@BD
(ess: operating
e"penses
9,99,//,B</.<9 9,0/,B2,2<<.<: (BB,1B,1</.<1) (B.B2)
3IB?I==I7=54>3 3I>?I@AIB3B4?5 C7BI?>I=554ABD C5E43BD
Add: operating income /1,2B,0/B.<< ;2,99,9?B.<< 2/,;0,BB<.<< 1<?.0;
Operating profit 5IEBIB3I>>B4>E 5I33I@AIBE?4?5 3IA@I7=@433 E4AB
(ess: =on#operating
e"penses
/,1:,?;,B90.2; 0,<B,;<,?<<.;< B<,:;,<<?.<; ;/.:0
@7IE>I@?@4E> =I5AI3E?435 C?AI@@I??E4B7D CB=43=D
Add: =on#operating
income
N N N N
@7IE>I@?@4E> =I5AI3E?435 C?AI@@I??E4B7D CB=43=D
(ess: provision for ta" 2<,B/,BB0.<< 2,//,?<2.<< (1:,;9,9:?.<<) (?9.?9)
Net profit 75I77IBB>4E> 3?I7E5435 C75I3@I?B54B7D CBB4>ED
5
The sales have decreased in 0<<: (/:?;<9/;/.21), when compared to 0<<;
(0:09;1;B<.;<).
Cperating e"penses is very high (90/B22<<.<:), when compared to
operating income.
=on#operating e"penses are very high (0<B;<?<<.;<), which are also
responsible for decrease in profit.
Comparati&e income statement of C5EE?-5EE@D in FTU(ASI S**DSG'.T4(TD4
5
Interpretation'
'ARTICU(ARS
5EE?
Rs4
5EE@
Rs4
A$sol#te
Increase/
(decrease) Rs4
H
Increase /
(decrease)
=et sales /:,?;,<9,/;/.21 0?,2:,:0,/0;.?< //,:/,;0,9B2.2< :?.91
(ess: cost of goods sold :,<:,;;,?1/.B; :,:B,/9,<:/.;/ :<,:1,009.B: /<
+ross profit 3EI@AI>7I73B4?A 53I@BI=7IE?=45B 33IEEIABI@==4?E 3E54E@
(ess: operating e"penses 9,0/,B2,2<<.<: /2,?9,/1,/<:.10 ;,:B,1?,B<:.02 :/.;:
3I>?I@AIB3B4?5 ?IBEI5BIB>@4B@ >I77I>3IE7A47> 7=E45@
Add: operating income ;2,99,9?B.<< /,/0,91,///.<< ;B,91,/02.<< /<;.11
Operating profit 5I33I@AIBE?4?5 AIE7I57IE?A4B@ >IB3I==I3?547> 5@B45?
(ess: =on#operating
e"penses
0,<B,;<,?<<.;< :,;0,91,2;1.EI5BI?3>4BE 3I=?IE3I>EB4@A 7I=3E4@5
Add: =on#operating
income
N N N N
=I5AI3E?435 3I>EI5BI?3>4BE 3I=?IE3I>EB4@A 7I=3E4@5
(ess: provision for ta" 2,//,?<2.<< B:,00,:29.<< B0,/<,?2;.<< /,B;/.<<
Net profit 3?I7E5435 @=IE?IB??4BE @7IBEI??=4@A =>I77>4?E
5
The sales have increased in 0<<B (0?2::0/0;.?<). This is responsible for
increase in net profit.
The operating income has increased in 0<<B, when compared to 0<<:.
Ta" has gone up in 0<<B, which is also responsible for decrease in net profit.
5
Comparati&e income statement of C5EE@-EAD in FTU(ASI S**DSG '.T4(TD4
Interpretation'
'ARTICU(ARS
5EE@
Rs4
5EEA
Rs4
A$sol#te
Increase/
(decrease) Rs4
H
Increase /
(decrease)
=et sales 0?,2:,:0,/0;.?< A=I75IBBIA?>4EE ;;,?:,1B,B19.0< /9:.0;
(ess: cost of goods sold :,:B,/9,<:/.;/ 0B,B:,:<,;92.00 0/,<9,2/,;10.B/ 1/:.0<
+ross profit 53I@BI=7IE?=45B >?I>?I7BI5@E4@A 7=I@?IB?I5E?4=B 3?E4E=
(ess: operating
e"penses
/2,?9,/1,/<:.10 10,B:,B:,<B9.:; /B,?B,:0,9B1.11 /0<.<;
?IBEI5BIB>@4B@ 57I@BI?7I3B3437 3?IABI77I57743? 5=>4E5
Add: operating income /,/0,91,///.<< 0,01,;0,0?B.<< /,/<,;9,/B:.<< 9?.<1
Operating profit AIE7I57IE?A4B@ 5?IE7I3>I=@A437 3@IBBIB5I=EB43? 55=433
(ess: =on#operating
e"penses
:,;0,91,2;1.EI5BI?3>4BE @I>?IB5I@?74E7 ?IE?I?7I3=@437 =E=4E5
Add: =on#operating
income
N N N N
3I>EI5BI?3>4BE @I>?IB5I@?74E7 ?IE?I?7I3=@437 =E=4E5
(ess: provision for ta" B:,00,:29.<< 1,<:,<;,0B:.:B 0,09,?0,:0B.:B 1<0.<<
Net profit @=IE?IB??4BE =I>EIA@I=A?47? 7I@?IAEI>3B4=? >EB4E5
5
The sales have increased in 0<<? (?21099?:;.<<), when compared to 0<<B
(0?2::0/0;.?<). This is responsible for increase in net profit.
Cperating e"penses is very high (10B:B:<B9.:;), when compared to
operating income.
=on#operating e"penses are very high (/?2:00B/;./<), which are also
Comparati&e income statement of C5EEA-EBD in FTU(ASI S**DSG '.T4(TD4
5
Interpretation'
'ARTICU(ARS
5EEA
Rs4
5EEB
Rs4
A$sol#te
Increase/
(decrease) Rs4
H
Increase /
(decrease)
=et sales A=I75IBBIA?>4EE 3I=5IEEIBAI@AB4E >@I?@IBAIB5=4EE :?.2/
(ess: cost of goods sold 0B,B:,:<,;92.00 2:,;1,2/,;2;.21 /?,B:,?<,9;/.0/ :?./<
+ross profit >?I>?I7BI5@E4@A B>I=@I>@I5=74>@ 7AIB3I3@IB@54@B ?B435
(ess: operating
e"penses
10,B:,B:,<B9.:; 29,;:,B/,/:9.99 /:,B9,9;,<9<.12 ;/.10
57I@BI?7I3B3437 =>IBEIA?IE@74>A 55I33I55IAA54=> B74E5
Add: operating income 0,01,;0,0?B.<< 1,90,?9,;21.<< /,:9,1B,0;:.<< B:./<
Operating profit 5?IE7I3>I=@A437 =BIA7I@>I?3?4>A 57IAEI?EI37A4=> B34>E
(ess: =on#operating
e"penses
/?,2:,00,B/;./< 2<,B/,/B,:;:.9< 00,02,92,92/.?< /0/.</
@I>?IB5I@?74E7 BI35I>@IB>B4?A 3I>>I?>I3B?4?> 5343E
Add: =on#operating
income
N N N N
@I>?IB5I@?74E7 BI35I>@IB>B4?A 3I>>I?>I3B?4?> 5343E
(ess: provision for ta" 1,<:,<;,0B:.:B 1,?B,/:,?99.<< ?/,//,:00.11 0B.<<
Net profit =I>EIA@I=A?47? >I5>I=3IE?E4?A @=I>7I>@=475 3@4E3
5
The sales have increased in 0<<9 (/20<<9?B?9). This is responsible for
increase in net profit.
Cperating e"penses is very high (29;:B//:9.99), when compared to
operating income.
=on#operating e"penses are very high (2<B//B:;:.9<), which are also
Ta" has gone up in 0<<9, which is also responsible for decrease in net profit.
Comparati&e alance s"eet for t"e year ended 5EE>-E? of FTU(ASI S**DSG'.T4(TD4
5
'ARTICU(ARS
5EE>
Rs4
5EE?
Rs4
A$sol#te

Increase/
(decrease)
H
Increase/
(decrease)
So#rces of f#nds:
S"are "olders f#nd
6hare >apital /,<<,<<,<<<.<< /,<<,<<,<<<.<< N N
+rofit and loss aAc B<,<;,</;.;1 B<,0/,1/B.:; /:,1<0./0 <.01
(oan f#nds:
6ecured loans 1,?;,B/,?0?.B? 9,2;,:2,?B?.B9 ;,;9,91,<;<.</ /2;./:
4nsecured loans 0,0<,;B;./0 B,BB,292./0 ;,;:,9/9.<< 0;0.2?
C#rrent lia$ilities and
pro&isions
5iabilities and provisions /1,2B,/;,09:.12 /;,/1,;1,00<./: /,::,1B,901.?< /0.1;
Ot"er lia$ilities
7iffered ta" liability B,19,222.<< B,19,222.<< N N
Total f#nds /9,/0,;0,/;9.BB 0:,22,;:,1;2.B0 B,10,<2,/9;.<< 1?.0B
Applications of f#nds:
=et Fi"ed assets 1,1B,<:,11;.?2 1,::,<?,900.?2 09,<0,;?B.<< ?.:/
C#rrent assetsI loans and
ad&ances:
!nventories 1,B<,?1,02:.0; B,1/,1B,;;;.<< 1,:<,;2,1<?.B; 9B.00
6undry debtors ;,??,02,9:0.?2 ;,:0,<2,/B;./1 (0:,0<,B?B.B/) (2.2;)
>ash and bank balance 1;,;;,B9<.10 /9,29,<B1.20 (/:,<:,B/:.9<) (2;./?)
5oans and advances ;,?<,/;,002.;0 9,:;,/0,00?.11 1,?2,9B,<<1.?/ ::.1;
,iscellaneous e"penditure to
the e"tent of not written off
::,:<<.<< 22,2<<.<< (00,0<<.<<) (11.11)
Total Assets 3BI35I>5I3>B4@@ 5?I==I>?I7>=4@5 @I75IE=I3B>4EE 7A45@
Interpretation:
5
From the above analy%ed >omparative balance sheet the following points can be
noted.
The comparative balance sheet in the year 0<<2#<; shows 6hare capital
@s./<<<<<<< and the year 0<<;#<: @s./<<<<<<< there is no change in the
share capital.
The balance sheet in the year 0<<2#<; @eserves I surplus @s.B<<;</;.;1
and the year 0<<;#<: B<0/1/B.:; it have increased <.0 J with @s./:1<0./0
!n the loan funds the secured loans and unsecured loans are increased.
!n the current assets the inventories are increased by 9B.00J and cash I
bank balance are decreased by 2;./?J.
Comparati&e alance s"eet for t"e year ended 5EE?-E@ of FTU(ASI S**DSG '.T4(TD4
5
'ARTICU(ARS
5EE?
Rs4
5EE@
Rs4
A$sol#te

Increase/
(decrease)
H
Increase/
(decrease)
So#rces of f#nds:
S"are "olders f#nd
6hare >apital /,<<,<<,<<<.<< /,<<,<<,<<<.<< N N
+rofit and loss aAc B<,0/,1/B.:; /,22,0?,0?2.;2 B2,<:,9::.?9 /<;.29
(oan f#nds
6ecured loans 9,2;,:2,?B?.B9 9,?<,99,;/:.;0 1;,12,:1B.B1 1.B1
4nsecured loans B,BB,292./0 B,11,/12.90 (22,1;9.0<) (;.B<)
pro&isions
5iabilities and provisions /;,/1,;1,00<./: 1?,0?,:/,BB1./2 01,/;,<?,;;1.<< /;0.9;
Ot"er lia$ilities
Total f#nds 5?I==I>?I7>=4@5 >EI?AI?5I3>7435 5=I5=IE>I@BA4=E B34??
=et Fi"ed assets 1,::,<?,900.?2 ;,BB,91,/</.<0 0,//,?2,/B?./? ;B.?:
ad&ances
!nventories B,1/,1B,;;;.<< 0/,9;,??,<?B.2< /2,:2,;<,;10.2< 0<<
6undry debtors ;,:0,<2,/B;./1 00,<;,B<,?;0.:2 /:,21,::,:BB.;< 090
>ash and bank balance /9,29,<B1.20 0?,;<,9B0.<: 9,</,?9?.:2 2:.0B
5oans and advances 9,:;,/0,00?.11 02,2:,<<:.<< (B,0<,;0,000.11) (B2.:;)
+repaid e"penses N 1;,9<,912.<< 1;,9<,912.<< /<<
,iscellaneous e"penditure to
the e"tent of not written off
22,2<<.<< 00,0<<.<< (00,0<<.<<) (;<)
Total Assets 5?I==I>?I7>=4@5 >EI?AI?5I3>7435 5I33IA=I3@A43A >@4A?
Interpretation:
5
noted.
The comparative balance sheet in the year 0<<;#<: shows 6hare capital
@s./<<<<<<< and the year 0<<:#<B @s./<<<<<<< there is no change in the
share capital.
!n 0<<B @eserves I surplus has increased by /<;.29J when compared to
0<<:.
The current liabilities I provisions are increased by /;0.9;J.
The fi"ed assets have increased by ;B.?:J.
Comparati&e alance s"eet for t"e year ended 5EE@-EA of FTU(ASI S**DSG '.T4(TD4
5
'ARTICU(ARS
5EE@
Rs4
5EEA
Rs4
A$sol#te

Increase/
(decrease)
H
Increase/
(decrease)
So#rces of f#nds:
S"are "olders f#nd
6hare >apital /,<<,<<,<<<.<< /,:9,<<,<<<.<< :9,<<,<<<.<< :9.<<
+rofit and loss aAc /,22,0?,0?2.;2 ;,9;,/;,BB<.?; 2,;<,?B,2?:.1/ 1/0.;0
(oan f#nds
6ecured loans 9,?<,99,;/:.;0 /1,/2,1<,:<9.91 1,11,1/,<91.2/ 12.0/
4nsecured loans B,11,/12.90 ;,B0,:9?.90 (/,:<,21:) (00./1)
pro&isions
5iabilities and provisions 1?,0?,:/,BB1./2 :1,B?,12,2/1.0B 0;,29,B0,:2<./1 :B./0
Ot"er lia$ilities
Total f#nds >EI?AI?5I3>7435 A=I?BIB5IB7?4B@ 7=IE3I7EI@A74A> ?@433
=et Fi"ed assets ;,BB,91,/</.<0 /<,2?,1:,10:.0B 2,B<,21,00;.0; ?/.20
ad&ances
!nventories 0/,9;,??,<?B.2< 0:,:?,:<,9?0.:? 2,B0,B0,?9;.0? 00.</
6undry debtors 00,<;,B<,?;0.:2 21,1B,/;,</9.B1 0/,1/,22,/:B.<9 9B.<1
>ash and bank balance 0?,;<,9B0.<: /,0B,;:,<?2.B9 99,<;,//0.B1 12B.21
5oans and advances 02,2:,<<:.<< 0,2/,0?,;B;.<< 0,/:,?0,;:9.<< ??:.2;
+repaid e"penses 1;,9<,912.<< 2;,:1,2/9.;< 9,B0,2?;.;< 0B./<
,iscellaneous e"penditure to the
e"tent of not written off
00,0<<.<< /,10,;09.<< /,/<,109.<< 29B./<
Total Assets >EI?AI?5I3>7435 A=I?BIB5IB7?4B@ 7=IE3I7EI@A74A> ?@433
Interpretation:
5
noted.
The comparative balance sheet in the year 0<<:#<B shows 6hare capital
@s./<<<<<<< and the year 0<<B#<? @s./:9<<<<< there is a change in the
share capital.
The balance sheet in the year 0<<:#<B @eserves I surplus @s. /220?0?2.;2
and the year 0<<B#<? @s.;9;/;BB<.?; it have increased 1/0.;0J with
@s.2;<?B2?:.1/
The balance sheet in the year 0<<:#<B 6ecured loans @s. 9?<99;/:.;0 I the
year 0<<B#<? @s. /1/21<:<9.91 it increased 12.0/J.
The current liabilities I provisions are increased by :B./0J.
!n the current assets the inventories are increased by 00.</J and cash I
bank balance are decreased by 12B.21J.
Comparati&e alance s"eet for t"e year ended 5EEA-EB of TU(ASI S**DS '.T4(TD4
5
'ARTICU(ARS
5EEA
Rs4
5EEB
Rs4
A$sol#te

Increase/
(decrease)
H
Increase/
(decrease)
So#rces of f#nds:
S"are "olders f#nd
6hare >apital /,:9,<<,<<<.<< /<,1;,<<,<<<.<< ?,::,<<,<<<.<< ;/0.21
+rofit and loss aAc ;,9;,/;,BB<.?; ;,<0,<9,;;/.2/ (91,<:,0/9.22) (/:.<2)
(oan f#nds
6ecured loans /1,/2,1<,:<9.91 0/,:<,;9,B;2./: ?,2:,09,/22.01 :2.2<
4nsecured loans ;,B0,:9?.90 9,/:,;;B.<< 1,21,?;?.<? :<.<2
pro&isions
5iabilities and provisions :1,B?,12,2/1.0B /,<<,<B,1B,0B<.B; 1:,09,<0,?;B.2? ;B.//
Ot"er lia$ilities
Total f#nds A=I?BIB5IB7?4B@ 3I=?I55I?5I>@@475 ?3I>5I?BI?=E47> @74E=
=et Fi"ed assets /<,2?,1:,10:.0B /0,?0,9<,90B.9< 0,12,;2,:</.:1 00.2<
ad&ances
!nventories 0:,:?,:<,9?0.:? 21,<B,?B,:11.0< /:,19,0:,:;<.;0 :/.21
6undry debtors 21,1B,/;,</9.B1 ?9,:1,/<,/1?./: 2:,0;,9;,//?.21 /<B./0
>ash and bank balance /,0B,;:,<?2.B9 /B,0?,0;?.9? (/,/<,0B,?0;.?/) (?:.;<)
5oans and advances 0,2/,0?,;B;.<< 02,B9,2?B.<< (0,/:,29,<??.<<) (9<.<0)
+repaid e"penses 2;,:1,2/9.;< 0;,::,B1:.<< (/9,9:,:?1.;<) (B2./<)
,iscellaneous e"penditure to the
e"tent of not written off
/,10,;09.<< 99,19:.<< (11,/11.<<) (0;.<<)
Total Assets A=I?BIB5IB7?4B@ 3I=?I55I?5I>@@475 ?3I>5I?BI?=E47> @74E=
Interpretation:
5
noted.
The comparative balance sheet in the year 0<<B#<? shows 6hare capital
@s./:9<<<<< and the year 0<<?#<9 @s./<1;<<<<< there is a change in the
share capital.
!n 0<<9 @eserves I surplus has decreased by (/:.<2) J when compared to
0<<?.
The balance sheet in the year 0<<B#<? 6ecured loans @s./1/21<:<9.91 I
the year 0<<?#<9 @s. 0/:<;9B;2./: it increased :2.2<J.
The current liabilities I provisions are increased by ;B.//J.
!n the current assets the inventories are increased by :/.21J and cash I
bank balance are decreased by (?:.;<) J.
The fi"ed assets have increased by B1.<2J.
5
Common-Si;e income statement for t"e year 5EE>
'ARTICU(ARS
73-E7-5EE>
Rs
'ercentage
Net sales 5?I5BI>7I>@E4>E 3EE
(ess: cost of goods sold /2,11,9B,;0:.9< ;2.;1
+ross profit 33IB>I>?IE=74?E =>4=@
(ess: operating e"penses 9,99,//,B</.<9 1?.<<
3IB?I==I7=54>3 @4=@
Add: operating income /1,2B,0/B.<< <.;/
Operating profit 5IEBIB3I>>B4>E @4BA
(ess: =on#operating e"penses /,1:,?;,B90.2; ;.0<
@7IE>I@?@4E> 54@A
Add: =on#operating income N <.<<
@7IE>I@?@4E> 54@A
(ess: provision for ta"I differed ta"
liability
2<,B/,BB0.<< /.;;
Net profit 75I77IBB>4E> 3457
5
Interpretation:
From the above table the following points are observed
Eross profit is increased in 0<<; by 2;.2BJ.
Cperating e"penses are high compare with operating income.
=on#operating e"penses are high compared to non#operating income.
5
Common Si;e income statement for t"e year 5EE?
'ARTICU(ARS 73-E7-5EE?
Rs
'ercentage
Net sales 3?IA>IEBI3>34=7 3EE
(ess: cost of goods sold :,<:,;;,?1/.B; 1:
+ross profit 3EI@AI>7I73B4?A ?=
(ess: operating e"penses 9,0/,B2,2<<.<: ;2.B<
3I>?I@AIB3B4?5 B47E
Add: operating income ;2,99,9?B.<< 1.0:
Operating profit 5I33I@AIBE?4?5 354>?
(ess: =on#operating e"penses 0,<B,;<,?<<.;< /0.1/
=I5AI3E?435 E45>
=I5AI3E?435 E45>
(ess: provision for ta"I differed ta"
liability
2,//,?<2.<< <.02
Net profit 3?I7E5435 E4E3
Interpretation:
5
Eross profit is increased in 0<<: by :2J the reason is decrease in cost of
goods sold in 0<<:.
Cperating e"penses has increased by ;2.B<J
The net profit is very low the reason is decreased in sales.
Common Si;e income statement for t"e year 5EE@
5
'ARTICU(ARS 73-E7-5EE@
Rs
'ercentage
Net sales 5AI=?I?5I35>4AE 3EE
(ess: cost of goods sold :,:B,/9,<:/.;/ 01.22
+ross profit 53I@BI=7IE?=45B @?4>?
(ess: operating e"penses /2,?9,/1,/<:.10 ;0.1/
?IBEI5BIB>@4B@ 5=45>
Add: operating income /,/0,91,///.<< 1.9B
Operating profit AIE7I57IE?A4B@ 5A455
(ess: =on#operating e"penses :,;0,91,2;1.EI5BI?3>4BE >45A
3I>EI5BI?3>4BE >45A
(ess: provision for ta"I differed
ta" liability
B:,00,:29.<< 0.:?
Net profit @=IE?IB??4BE 54?E
Interpretation:
5
Eross profit is very high for a given cost of sales.
Cperating profit is increased in 0<4EE 3EE
(ess: cost of goods sold 0B,B:,:<,;92.00 11.<1
+ross profit >?I>?I7BI5@E4@A ?@43E
(ess: operating e"penses 10,B:,B:,<B9.:; 19./0
57I@BI?7I3B3437 5A457
Add: operating income 0,01,;0,0?B.<< 1./<
Operating profit 5?IE7I3>I=@A437 73435
(ess: =on#operating e"penses /?,2:,00,B/;./< 00./<
@I>?IB5I@?74E7 B435
@I>?IB5I@?74E7 B435
ta" liability
1,<:,<;,0B:.:B 2.<1
Net profit =I>EIA@I=A?47? >47>
Interpretation:
5
Eross profit is increased in 0<<? by :B./<J.
Cperating profit is increased in 0<<? by 0?.00J.
The net profit is increased in 0<<? by ;.1;J.
Common Si;e income statement for t"e year 5EEB
5
'ARTICU(ARS 73-E7-5EEB
Rs
'ercentage
Net sales 3I=5IEEIBAI@AB4EE 3EE
(ess: cost of goods sold 2:,;1,2/,;2;.21 11./0
+ross profit B>I=@I>@I5=74>@ ?@473
(ess: operating e"penses 29,;:,B/,/:9.99 1;.<<
=>IBEIA?IE@74>A 7547>
Add: operating income 1,90,?9,;21.<< 1./0
Operating profit =BIA7I@>I?3?4>A 7>43E
(ess: =on#operating e"penses 2<,B/,/B,:;:.9< 09./0
BI35I>@IB>B4?A ?4=7
BI35I>@IB>B4?A ?4=7
ta" liability
1,?B,/:,?99.<< 1.<1
Net profit >I5>I=3IE?E4?A =435
Interpretation:
5
Eross profit is increased in 0<<9 by :B.1/J.
Cperating profit is increased in 0<<9 by 1;./<J.
=on#operating e"penses are also increased in 0<<9 by 09./0J.
Common-Si;e alance s"eet for t"e year 5EE>
5
'ARTICU(ARS

73-E7-5EE>
Rs4

'ercentage in
lia$ilities0assets
So#rces of f#nds:
S"are "olders f#nd
6hare >apital /,<<,<<,<<<.<< ;.01
+rofit and loss aAc B<,<;,</;.;1 1.::
(oan f#nds
6ecured loans 1,?;,B/,?0?.B? 0<./B
4nsecured loans 0,0<,;B;./0 <.//
C#rrent lia$ilities and pro&isions
5iabilities and provisions /1,2B,/;,09:.12 B<.22
Ot"er lia$ilities
7iffered ta" liability B,19,222.<< <.19
Total f#nds 3BI35I>5I3>B4@@ 3EE
Applications of f#nds
=et Fi"ed assets 1,1B,<:,11;.?2 /B.:0
C#rrent assetsI loans and ad&ances
!nventories 1,B<,?1,02:.0; /9.19
6undry debtors ;,??,02,9:0.?2 1<.B:
>ash and bank balance 1;,;;,B9<.10 /.?:
5oans and advances ;,?<,/;,002.;0 1<.11
Miscellaneo#s e6pendit#re to t"e e6tent of
not <ritten off
::,:<<.<< <.<1
Total Assets 3BI35I>5I3>B4@@ 3EE
Interpretation:
5
@eserves I surplus is increased from 1BB/<0<.21 to B<<;</;.;1.
5oan funds are increased from /2.::J to 0<./BJ.
!n the current assets the inventories are decreased by /9.19J and cash I
bank balance are increased by /.?:J.
Common-Si;e alance s"eet for t"e year 5EE?
'ARTICU(ARS 73-E7-5EE? 'ercentage in
5
Rs4 lia$ilities0assets
So#rces of f#nds:
S"are "olders f#nd
6hare >apital /,<<,<<,<<<.<< 1.B?
+rofit and loss aAc B<,0/,1/B.:; 0.::
(oan f#nds
6ecured loans 9,2;,:2,?B?.B9 1;.B:
4nsecured loans B,BB,292./0 <.09
5iabilities and provisions /;,/1,;1,00<./: ;B.01
Ot"er lia$ilities
7iffered ta" liability B,19,222.<< <.0?
Total f#nds 5?I==I>?I7>=4@5 3EE
=et Fi"ed assets 1,::,<?,900.?2 /1.?2
!nventories B,1/,1B,;;;.<< 0B.::
6undry debtors ;,:0,<2,/B;./1 0/.0;
>ash and bank balance /9,29,<B1.20 <.B2
5oans and advances 9,:;,/0,00?.11 1:.29
,iscellaneous e"penditure to the e"tent of not
written off
22,2<<.<< <.<0
Total Assets 5?I==I>?I7>=4@5 3EE
Interpretation:
@eserves I surplus have diminished in 0<<: that is from 1.::J to 0.::J.
5oan funds are increased from 0<./BJ to 1;.B:J.
5
The current liabilities I provisions are decreased by ;B.01J.
!n the current assets the inventories are decreased by 0B.::J and cash I
bank balance are decreased by <.B2J.
Common-Si;e alance s"eet for t"e year 5EE@
'ARTICU(ARS 73-E7-5EE@
Rs4
'ercentage in
lia$ilities0assets
5
So#rces of f#nds:
S"are "olders f#nd
6hare >apital /,<<,<<,<<<.<< /.9B
+rofit and loss aAc /,22,0?,0?2.;2 0.?;
(oan f#nds
6ecured loans 9,?<,99,;/:.;0 /9.1;
4nsecured loans B,11,/12.90 <./2
5iabilities and provisions 1?,0?,:/,BB1./2 B;.;2
Ot"er lia$ilities
7iffered ta" liability B,19,222.<< <./;
Total f#nds >EI?AI?5I3>7435 3EE
=et Fi"ed assets ;,BB,91,/</.<0 //.2<
!nventories 0/,9;,??,<?B.2< 21.10
6undry debtors 00,<;,B<,?;0.:2 21.;0
>ash and bank balance 0?,;<,9B0.<: <.;:
5oans and advances 02,2:,<<:.<< <.2?
+repaid e"penses 1;,9<,912.<< <.B/
written off
00,0<<.<< <.<<
Total Assets >EI?AI?5I3>7435 3EE
Interpretation:
@eserves I surplus have increased in 0<urrent liabilities are increased in 0<apital /,:9,<<,<<<.<< 0.</
+rofit and loss aAc ;,9;,/;,BB<.?; B.<1
(oan f#nds
6ecured loans /1,/2,1<,:<9.91 /;.;0
4nsecured loans ;,B0,:9?.90 <./0
5iabilities and provisions :1,B?,12,2/1.0B B;.1/
Ot"er lia$ilities
7iffered ta" liability B,19,222.<< <./<
Total f#nds A=I?BIB5IB7?4B@ 3EE
=et Fi"ed assets /<,2?,1:,10:.0B /0.1?
!nventories 0:,:?,:<,9?0.:? 1/.;/
6undry debtors 21,1B,/;,</9.B1 ;/.0/
>ash and bank balance /,0B,;:,<?2.B9 /.;/
5oans and advances 0,2/,0?,;B;.<< 0.?;
+repaid e"penses 2;,:1,2/9.;< <.;2
written off
/,10,;09.<< <.0/
Total Assets A=I?BIB5IB7?4B@ 3EE
Interpretation:
@eserves I surplus have increased in 0<<? that is from 0.?;J to B.<1J.
5oan funds are decreased from /9.1;J to /;.;0J.
>urrent liabilities are slightly decreased in 0<<? from B;.;2J to B;.1/J.
5
!n the current assets the inventories are decreased by 1/.;/J and cash I
bank balance are increased by /.;/J.
Common-Si;e alance s"eet for t"e year 5EEB
'ARTICU(ARS 73-E7-5EEB
Rs4
'ercentage in
lia$ilities0assets
So#rces of f#nds:
S"are "olders f#nd
5
6hare >apital /<,1;,<<,<<<.<< B.//
+rofit and loss aAc ;,<0,<9,;;/.2/ 1.21
(oan f#nds
6ecured loans 0/,:<,;9,B;2./: /2.?0
4nsecured loans 9,/<,/:,;;B.<< :.00
5iabilities and provisions /,<<,<B,1B,0B<.B; :?.2;
Ot"er lia$ilities
7iffered ta" liability B,19,222.<< <.<;
Total f#nds 3I=?I55I?5I>@@475 3EE
=et Fi"ed assets /0,?0,9<,90B.9< ?.BB
!nventories 21,<B,?B,:11.0< 09.;/
6undry debtors ?9,:1,/<,/1?./: :/.1/
>ash and bank balance /B,0?,0;?.9? <./0
5oans and advances 02,B9,2?B.<< <.0/
+repaid e"penses 0;,::,B1:.<< <.0/
written off
99,19:.<< <.</
Total Assets 3I=?I55I?5I>@@475 3EE
Interpretation:
@eserves I surplus have decreased in 0<<9 that is from B.<1J to 1.21J.
5oan funds are decreased from /;.;0J to /2.?0J.
>urrent liabilities are s decreased in 0<<9 from B;.1/J to :?.2;J.

5

Trend Analysis for t"e year C5EE>-E?D in FTU(ASI S**DSG '.T4(TD4
'artic#lars 5EE> H 5EE? H
So#rces of F#nds
S"are"oldersG F#nds:
6hare >apital /,<<,<<,<<<.<< /<< /,<<,<<,<<<.<< /<<.<<
+ I 5 AA> B<,<;,</;.;1 /<< B<,0/,1/B.:; /<<.01
(oan F#nds:
5
6ecured 5oans 1,?;,B/,?0?.B? /<< 9,2;,:2,?B?.B9 02;.0/
4n 6ecured 5oans 0,0<,;B;./0 /<< B,BB,292./0 1;0.;<
C#rrent (ia$ilities:
>urrent 5iabilities I
+rovisions
/1,2B,/;,09:.12 /<< /;,/1,;1,00<./: //0.2<
Ot"er (ia$ilities:
7iffered Ta" 5iability B,19,222.< /<< B,19,222.< /<<.<<
Total lia$ilities 37I>=I>=I@=E47= 3EE 3>I5EIB5I??=43? 3354=E
Total F#nds 3BI35I>5I3>B4@@ 3EE 5?I==I>?I7>=4@5 37A473
Application of F#nds:
Technical knowhow
tangible assets
11,11,112.<< /<< 0;,<<,<</.<< B;.<<
=et Fi"ed Assets 1,<1,B1,<</.?2 /<< 1,2/,<?,90/.?2 //0.1<
C#rrent AssetsI (oans
8Ad&ances:
!nventories 1,B<,?1,02:.0; /<< B,1/,1B,;;;.<< /9B.01
6undry 7ebtors ;,;?,02,9:0.?2 /<< ;,:0,<2,/B;./1 /</./0
>ash I.ank .alances 1;,;;,B9<.10 /<< /9,29,<B1.20 ;;.</
5oansI Advances ;,?<,/;,002.;0 /<< 9,:;,/0,00?.11 /::.1:
,iscellaneous
e"penditure to the
e"tent not written off
::,:<<.< /<< 22,2<<.<<
Total Assets 3BI35I>5I3>B4@@ 3EE 5?I==I>?I7>=4@5 ?@435
Trend Analysis for t"e year C5EE?-E@D in FTU(ASI S**DSG '.T4(TD4
'artic#lars 5EE? H 5EE@ H
So#rces of F#nds
6hare >apital /,<<,<<,<<<.<< /<< /,<<,<<,<<<.<< /<<.<<
+ I 5 AA> B<,0/,1/B.:; /<< /,22,0?,0?2.;2 0<;.;/
(oan F#nds:
5
6ecured 5oans 9,2;,:2,?B?.B9 /<< 9,?<,99,;/:.;0 /<2.<2
4n 6ecured 5oans B,BB,292./0 /<< B,11,/12.90 92.1<
+rovisions
/;,/1,;1,00<./: /<< 1?,0?,:/,BB1./2 0;1.//
Ot"er (ia$ilities:
7iffered Ta" 5iability B,19,222.<< /<< B,19,222.<< /<<.<<
Total lia$ilities 3>I5EIB5I??=43? 3EE 7AI7?IE3I53@43= 5>5455
Total F#nds 5?I==I>?I7>=4@5 3EE >EI?AI?5I3>7435 3B5433
Technical knowhow
tangible assets
0;,<<,<</.< /<< /:,::,::?.<< :B./0
=et Fi"ed Assets 1,2/,<?,90/.?2 /<< ;,:/,0:,211.<0 /:;./<
8Ad&ances:
!nventories B,1/,1B,;;;.<< /<< 0/,9;,??,<?B.2< 1<<.02
6undry 7ebtors ;,:0,<2,/B;./1 /<< 00,<;,B<,?;0.:2 190.2;
>ash I.ank .alances /9,29,<B1.20 /<< 0?,;<,9B0.<: /2:.1<
5oansI Advances 9,:;,/0,00?.11 /<< 02,2:,<<:.<< 0.;1
+repaid *"penses N /<< 1;,9<,912.<< N
,iscellaneous
e"penditure to the
22,2<<.<< /<< 00,0<<.<< ;<.<<
Total Assets 5?I==I>?I7>=4@5 3EE >EI?AI?5I3>7435 3B5433
Trend Analysis for t"e year C5EE@-EAD in FTU(ASI S**DSG '.T4(TD4
'artic#lars 5EE@ H 5EEA H
So#rces of F#nds
6hare >apital /,<<,<<,<<<.<< /<< /,:9,<<,<<<.<< /:9.<<
+ I 5 AA> /,22,0?,0?2.;2 /<< ;,9;,/;,BB<.?; 2/0.;<
(oan F#nds:
5
6ecured 5oans 9,?<,99,;/:.;0 /<< /1,/2,1<,:<9.91 /12./0
4n 6ecured 5oans B,11,/12.90 /<< ;,B0,:9?.90 B?./0
+rovisions
1?,0?,:/,BB1./2 /<< :1,B?,12,2/1.0B /:B./0
Ot"er (ia$ilities:
Total lia$ilities 7AI7?IE3I53@43= 3EE ?7IA>I@7IA>@45@ 3??4>5
Total F#nds >EI?AI?5I3>7435 3EE A=I?BIB5IB7?4B@ 3?@433
Technical knowhow
tangible assets
/:,::,::?.<< /<< ?,11,11;.<< ;<.<<
=et Fi"ed Assets ;,:/,0:,211.<0 /<< /<,2<,<0,99/.0B /?;.1<
8Ad&ances:
!nventories 0/,9;,??,<?B.2< /<< 0:,:?,:<,9?0.:? /00.<0
6undry 7ebtors 00,<;,B<,?;0.:2 /<< 21,1B,/;,</9.;< /9B.<1
>ash I.ank .alances 0?,;<,9B0.<: /<< /,0B,;:,<?2.B9 22B.21
5oansI Advances 02,2:,<<:.<< /<< 0,2/,0?,;B;.<<2 9?:.2;
+repaid *"penses 1;,9<,912.<< /<< 2;,:1,2/9.;< /0B./<
,iscellaneous
e"penditure to the
00,0<<.<< /<< /,10,;09.<< ;9B./0
Total Assets >EI?AI?5I3>7435 3EE A=I?BIB5IB7?4B@ 3?@433
Trend Analysis for t"e year C5EEA-EBD in FTU(ASI S**DSG '.T4(TD4
'artic#lars 5EEA H 5EEB H
So#rces of F#nds
6hare >apital /,:9,<<,<<<.<< /<< /<,1;,<<,<<<.<< :/0.21
+ I 5 AA> ;,9;,/;,BB<.?; /<< ;,<0,<9,;;/.2/ ?2.2<
(oan F#nds:
5
6ecured 5oans /1,/2,1<,:<9.91 /<< 0/,:<,;9,B;2./: /:2.2<
4n 6ecured 5oans ;,B0,:9?.90 /<< 9,/</:,;;B.<< /;?./:
+rovisions
:1,B?,12,2/1.0B /<< /,<<,<B,1B,0B<.B; /;B./0
Ot"er (ia$ilities:
Total lia$ilities ?7IA>I@7IA>@45@ 3EE 3IEEI3=I@?I@3=4@> 3>@4E7
Total F#nds A=I?BIB5IB7?4B@ 3EE 3I=?I55I?5I>@@475 3@74E=
Technical knowhow
tangible assets
?,11,11;.<< /<< N N
=et Fi"ed Assets /<,2<,<0,99/.0B /<< /0,?0,9<,90B.9? /01.2<
8Ad&ances:
!nventories 0:,:?,:<,9?0.:? /<<
21,<B,?B,:11.0<
/:/.21
6undry 7ebtors 21,1B,/;,</9.;< /<<
?9,:1,/<,/1?./:
0<B./0
>ash I.ank .alances /,0B,;:,<?2.B9 /<<
/B,0?,0;?.9?
/2.<;
5oansI Advances 0,2/,0?,;B;.<<2 /<<
02,B9,2?B.<<
/<.1;
+repaid *"penses 2;,:1,2/9.;< /<<
0;,::,B1:.<<
;:.0;
,iscellaneous e"p to
e"tent not written#off
/,10,;09.<< /<<
99,19:.<<
B;./<
Total Assets A=I?BIB5IB7?4B@ 3EE 3I=?I55I?5I>@@475 3@74E=
CURR*NT RATIO:
>urrent ratio is calculated in order to work out firmRs ability to pay off its short#
term liabilities. This ratio is also called working capital ratio. This ratio e"plains
the relationship between current assets and current liabilities of a business. here
current assets are those assets which are either in the form of cash or easily
convertible into cash within a year. 6imilarly, liabilities, which are to be paid
within an accounting year, are called current liabilities. >urrent ratio shows the
5
short#term financial position of the business. This ratio measures the ability of the
business to pay its current liabilities. The ideal current ratio is supposed to be 0'/
i.e. current assets must be twice the current liabilities. !n case, this ratio is less than
0'/, the short#term financial position is not supposed to be very sound and in case,
it is more than 0'/, it indicates idleness of working capital.

)ear C#rrent Assets C#rrent (ia$ilities Ratio
0<<2#<; /;B2B9002 /12B/;09: /./:
0<<;#<: 00B?<1<10 /;/1;100< /.;<
0<<:#<B 229<2:?;0 1?0?:/BB1 /./B
0<<B#<? B20<02<?0 :1B?122/1 /./:
0<<?#<9 /111?B00;1 /<<<B1B0B/ /.11
5
INT*R'R*TATION:
The identified current ratio 0'/ is healthy li$uidity position for every firm.
The current ratio has been fluctuating in the study period. !n the year 0<<2#
<; the current ratio was recorded /./:. !n the year 0<<;#<: the current ratio
increases from /./: to /.;<. 5ater on in the year 0<<:#<B the ratio is decreased
from /.;< to /./B. Again it slightly decreased to /./: in 0<<B#<?, and in 0<<?#<9
the current ratio is increased to /.11.
To maintain good li$uidity position firm has to increase its current assets
than current liabilities.
9UIC2 RATIO0 (I9UID RATIO:
5i$uid ratio shows short#term solvency of a business in a true manner. !t is also
called acid#test ratio and $uick ratio. !t is calculated in order to know how $uickly
current liabilities can be paid with the help of $uick assets. Luick assets mean
those assets, which are $uickly convertible into cash. 5i$uid ratio is calculated to
work out the li$uidity of a business. This ratio measures the ability of the business
to pay its current liabilities in a real way. The ideal li$uid ratio is supposed to be
/'/ i.e. li$uid assets must be e$ual to the current liabilities. !n case, this ratio is less
5
than /'/, it shows a very weak short#term financial position and in case, it is more
than /'/, it shows a better short#term financial position4

)ear 9#ic! Assets C#rrent (ia$ilities Ratio
0<<2#<; /92;:02B< /12B/;09: /./<
0<<;#<: /:?012/;9 /;/1;100< /.//
0<<:#<B 011<29:99 1?0?:/BB1 /.</
0<<B#<? 2B9B0:;/9 :1B?122/1 /./<
0<<?#<9 9<;:;/1;: /<<<B1B0B/ /.<<
5
INT*R'R*TATION:
The standard $uick ratio /'/ is considered healthy li$uidity position for every
company. The $uick ratio has been varying throughout the study period. The $uick
ratio was noticed /./< in the year 0<<2#<; and in the year 0<<;#<: the ratio is
increases to /.//. 5ater on in the year 0<<:#<B the ratio is decreased from /.// to
/.</. Again it increased to /./< in 0<<B#<?. And in 0<<?#<9 the $uick ratio is
decreased to /.<<.
FIJ*D ASS*TS TUNO.*R RATIO:
Fi"ed assets turnover ratio establishes a relationship between net sales and net
fi"ed assets. This ratio indicates how well the fi"ed assets are being utili%ed. This
ratio e"presses the number to times the fi"ed assets are being turned over in a
stated period. !t measures the efficiency with which fi"ed assets are employed. A
high ratio means a high rate of efficiency of utili%ation of fi"ed asset and low ratio
means improper use of the assets.
5
Fi6ed Assets T#rno&er Ratio K Net Sales0Net Fi6ed Assets
)ear Net Sales Net Fi6ed Assets Ratio
0<<2#<; 0:09;1;B/ 1<1B1<<0 9.//
0<<;#<: /:?;<9/;/ 12/<?900 ;.<2
0<<:#<B 0?2::0/0: ;:/0:211 ;./<
0<<B#<? ?21099?:; /<2<<099/ ?./0
0<<?#<9 /20<<9?B?9 /0?09<90? //./<
INT*R'R*TATION:
The fi"ed assets turnover ratio has been fluctuating during the study period.
5
The fi"ed assets turnover ratio was recorded 9.// in the year 0<<2#<;. The
fi"ed assets turnover ratio decreased from 9.// to ;.<2 in the year 0<<;#<:.5ater
on the fi"ed assets turnover ratio gradually fall down from ;.<2 to ;./ from the
year 0<<:#<B. !n the year 0<<B#<? it is increased to ?./0. The ma"imum fi"ed asset
turnover ratio recorded //./< in the year 0<<?#<9.
Above the variations occurred due to the reason that more increases in net sales in
proportion to increase in net fi"ed assets.

STOC2 TURNO.*R RATIO:
6tock turnover ratio is a ratio between cost of goods sold and average stock. This
ratio is also known as stock velocity or inventory turnover ratio. 6tock is a most
important component of working capital. This ratio provides guidelines to the
management while framing stock policy. !t measures how fast the stock is moving
through the firm and generating sales. !t helps to maintain a proper amount of stock
to fulfill the re$uirements of the concern. A proper inventory turnover makes the
business to earn a reasonable margin of profit.
5
Stoc! T#rno&er Ratio K Cost of +oods Sold0A&erage Stoc!
)ear Cost Of +oods
Sold
A&erage Stoc! Ratio
0<<2#<; /2119B;0B ;9?/B/9? 0.2/
0<<;#<: :<:;;?10 ;;//<2</ /./<
0<<:#<B ::B/9<:0 /2:1:0?0/ /.</
0<<B#<? 0BB::<;92 021002;1; /./2
0<<?#<9 2:;12/;2; 12??021<? /.11
INT*R'R*TATION:
The stock turnover ratio has been fluctuating year to year throughout the study
period. The stock turnover ratio was recorded 0.2/ in the year 0<<2#<;. 5ater on
the stock turnover ratio is continuously decreasing up to 0<<:#<B.!n the year 0<<B#
5
<? it is increased to /./2. And in 0<<?#<9 it is increased to /./2 to /.11. .ecause of
increase in purchases and closing stock. The ratio will effect on inventory
collection period.
,OR2IN+ CA'ITA( TURNO.*R RATIO:
orking capital turnover ratio establishes a relationship between net sales and
working capital. This ratio measures the efficiency of utili%ation of working
capital. This ratio indicates the number of times the utili%ation of working capital
in the process of doing business. The higher is the ratio, the lower is the investment
in working capital and the greater are the profits. &owever, a very high turnover
indicates a sign of over#trading and puts the firm in financial difficulties. A low
working capital turnover ratio indicates that the working capital has not been used
efficiently.
,or!ing Capital T#rno&er Ratio K Net Sales0Net ,or!ing Capital
5
)ear Net Sales Net ,or!ing Capital Ratio
0<<2#<; 0:09;1;B/ 00B:190? /0./<
0<<;#<: /:?;<9/;/ B:229?/0 0.0<
0<<:#<B 0?2::0/0: ::/?;<B9 2.1<
0<<B#<? ?21099?:; /<2/?9::? ?./<
0<<?#<9 /20<<9?B?9 111/129?1 2.1<
INT*R'R*TATION:
The working capital turnover ratio has been fluctuating year to year throughout the
study period. The working capital turnover ratio was recorded /0./< in the year
0<<2#<;. 5ater on the working capital turnover ratio decreasing to 0.0< in 0<<;#
<:.!n the year 0<<:#apital turnover ratio establishes a relationship between net sales and capital
employed. The ratio indicates the times by which the capital employed is used to
generate sales. The objective of capital turnover ratio is to calculate how efficiently
the capital invested in the business is being used and how many times the capital is
turned into sales. &igher the ratio, better the efficiency of utili%ation of capital and
it would lead to higher profitability.
Capital T#rno&er Ratio K Net Sales 0 Capital *mployed
5
)ear Net Sales Capital *mployed Ratio
0<<2#<; 0:09;1;B/ /<<<<<<< 0:.1/
0<<;#<: /:?;<9/;/ /<<<<<<< /B./<
0<<:#<B 0?2::0/0: /<<<<<<< 0?.;/
0<<B#<? ?21099?:; /:9<<<<< ;<.//
0<<?#<9 /20<<9?B?9 /<1;<<<<< /2.<0
INT*R'R*TATION:
The capital turnover ratio has been fluctuating year to year throughout the study
period. The >apital turnover ratio was recorded 0:.1/ in the year 0<<2#<;. !n the
ne"t year the >apital turnover ratio has been decreased to /B./<. And in the year
0<<:#apital turnover ratio increased to 0?.;/. !n the year 0<<B#<? it is
increased to ;<.//. !n 0<<?#<9 the capital turnover ratio is decreased to /2.<0. As a
whole the >apital turnover ratio has been increasing e"cept in the years 0<<; and
0<<9.
5
+ROSS 'ROFIT RATIO:
Eross +rofit @atio shows the relationship between Eross +rofit of the concern and
its =et 6ales. Eross +rofit @atio provides guidelines to the concern whether it is
earning sufficient profit to cover administration and marketing e"penses and is able
to cover its fi"ed e"penses. The gross profit ratio of current year is compared to
previous yearsR ratios or it is compared with the ratios of the other concerns. The
minor change in the ratio from year to year may be ignored but in case there is big
change, it must be investigated. This investigation will be helpful to know about
any departure from the standard mark#up and would indicate losses on account of
theft, damage, bad stock system, bad sales policies and other such reasons.
&owever it is desirable that this ratio must be high and steady because any fall in it
would put the management in difficulty in the reali%ation of fi"ed e"penses of the
business.
+ross 'rofit Ratio K +ross 'rofit0Net Sales 6 3EE
5
)ear +ross 'rofit Net Sales Ratio
0<<2#<; //9;;:<22 0:09;1;B/ 2;.;/
0<<;#<: /<B?;110< /:?;<9/;/ :2.<<
0<<:#<B 0/B921<:2 0?2::0/0: BB./<
0<<B#<? ;:;:190B/ ?21099?:; :B./<
0<<?#<9 9;2B;B021 /20<<9?B?9 :B.01
INT*R'R*TATION:
The gross profit ratio has been fluctuating during the study period. The gross profit
ratio was recorded as 2;.;/ in the year 0<<2#<;. !n the year 0<<;#<: the gross
profit ratio was increased from 2;.;/ to :2.<<. Then after the gross profit ratio
gone up from :2.<< to BB./< in the year 0<<:#<B. !n the year 0<<B#<? it is
decreases to :B./<. 5ater on the gross profit ratio again increases from :B./< to
:B.01 in the year 0<<?#<9. &owever the gross profit ratio is satisfactory throughout
the study period.
Above the changes occurred due to the fact that more increase in net sales in
proportion to increase in gross profit.
5

N*T 'ROFIT RATIO:
=et +rofit @atio shows the relationship between =et +rofit of the concern and !ts
=et 6ales. !n order to work out overall efficiency of the concern =et +rofit ratio is
calculated. This ratio is helpful to determine the operational ability of the concern.
hile comparing the ratio to previous yearsR ratios, the increment shows the
efficiency of the concern.
Net 'rofit Ratio K Net 'rofit0Net Sales 6 3EE
)ear Net 'rofit Net Sales Ratio
0<<2#<; 101199; 0:09;1;B/ /.01
0<<;#<: /:1<0 /:?;<9/;/ <.</
0<<:#<B B2<:9:B 0?2::0/0: 1.<<
0<<B#<? 2;<?B2?: ?21099?:; ;.1;
5
0<<?#<9 ;<<91B?/ /20<<9?B?9 2.<1
INT*R'R*TATION:
The net profit ratio has been varying in the study period. !n the year 0<<2#<; the
net profit ratio was /.01. Then after the net profit ratio fall down from /.01 to <.</
in the year 0<<;#<:. 5ater on the net profit ratio again increased from <.</ to 1.<<
from the year 0<<:# 0<<B. !n the year 0<<B#<? it is increases to ;.1;. .ut again
decreased in the year 0<<?#<9 to 2.<1.
Above the variations occurred due to the reason that there is a decrease in net profit
and more increase in net sales.
5
D*T *9UIT) RATIO:
7ebt e$uity ratio shows the relationship between long#term debts and shareholders
fundsR. !t is also known as S*"ternal#!nternalR e$uity ratio. This ratio is a measure of
ownerRs stock in the business. +roprietors are always keen to have more funds from
borrowings because'
(i) Their stake in the business is reduced and subse$uently their risk too
(ii) !nterest on loans or borrowings is a deductible e"penditure while computing
ta"able profits. 7ividend on shares is not so allowed by !ncome Ta" Authorities.
The normally acceptable debt#e$uity ratio is 0'/.
De$t *:#ity Ratio K De$t0*:#ity
)ear De$t *:#ity Ratio
0<<2#<; 1?B902<2 /B<<;</: 0.1<
0<<;#<: 9;1201B1 /B<0/1/? :.<<
0<<:#<B 9??10:;/ 0220?0?; 2.<;
0<<B#<? /10<<11<9 B:2/;BB/ 0.<1
5
0<<?#<9 1<B<B:1// /;1B<9;;/ 0./0
INT*R'R*TATION:
The normally acceptable debt#e$uity ratio is 0'/.
The debt#e$uity ratio has been varying in the study period. !n the year 0<<2#<; the
debt#e$uity ratio was 0.1<. Then after debt#e$uity ratio increases from 0.1< to :.<<
in the year 0<<;#<:. 5ater on debt#e$uity ratio again decreases from :.<< to 2.<;
from the year 0<<:# 0<<B. !n the year 0<<B#<? it is decreases to 0.<1. .ut in the
year 0<<?#<9 the debt#e$uity ratio increases to 0./0.
The main reason for fluctuations of this ratio is the increase in debt is more than
the increase in e$uity.
5
D*T TO TOTA( FUNDS RATIO:
This ratio gives same indication as the debt#e$uity ratio as this is a variation of
debt#e$uity ratio. This ratio is also known as solvency ratio. This is a ratio between
long#term debt and total long#term funds. 7ebt to Total Funds @atios shows the
proportion of long#term funds, which have been raised by way of loans. This ratio
measures the long#term financial position and soundness of long#term financial
policies. !n !ndia debt to total funds ratio of 0'1 or <.:B is considered satisfactory.
A higher proportion is not considered good and treated an indicator of risky long#
term financial position of the business. !t indicates that the business depends too
much upon outsidersR loans.
De$t to Total F#nds Ratio K De$t0Total F#nds
)ear De$t Total f#nds Ratio
0<<2#<; 1?B902<2 ;;B9B2/91 <./<
0<<;#<: 9;1201B1 //01:1:9/ /.<;
0<<:#<B 9??10:;/ /010:<91: /./<
0<<B#<? /10<<11<9 0<?2/9<?< /.<1
0<<?#<9 1<B<B:1// 2:<B?;?:1 /./<
5
INT*R'R*TATION:
The debt to total funds ratio was recorded <./< in the year 0<<2#<;. !n the ne"t
year the debt to total funds ratio has increased to /.<;. 5ater the debt to total funds
ratio increased to /./< in the year 0<<:#<B. !n the year 0<<B#<? the debt to total
funds ratio decreased slightly to /.<1. !n the year 0<<?#<9 it is decreased to /.<<.
As a whole the debt to total funds ratio has been fluctuating from year to year
during the study period.
5
FIJ*D ASS*TS RATIO:
Fi"ed Assets @atio establishes the relationship of Fi"ed Assets to 5ong#term
Funds. This ratio indicates as to what e"tent fi"ed assets are financed out of long#
term funds. !t is well established that fi"ed assets should be financed only out of
long#term funds. This ratio workout the proportion of investment of funds from the
point of view of long#term financial soundness. This ratio should be e$ual to /. !f
the ratio is less than /, it means the firm has adopted the impudent policy of using
short#term funds for ac$uiring fi"ed assets. Cn the other hand, a very high ratio
would indicate that long#term funds are being used for short#term purposes, i.e. for
financing working capital.
Fi6ed Assets Ratio K (ong-term F#nds0Net Fi6ed Assets
)ear (ong-term
F#nds
Net fi6ed Assets Ratio
0<<2#<; ;;B9B2/91 1<1B1<<0 /?.<2
0<<;#<: //01:1:9/ 12/<?900 1.1<
0<<:#<B /010:<91: ;:/0:211 0.0/
0<<B#<? 0<?2/9<?< /<2<<099/ 0.<<
0<<?#<9 2:<B?;?:1 /0?09<90? 2./<
5
INT*R'R*TATION:
The fi"ed assets ratio was recorded /?.2< in the year 0<<2#<;. !n the ne"t year the
fi"ed assets ratio has decreased to 1.1<. 5ater in 0<<:#<B, the fi"ed assets ratio was
decreased to 0.0/. !n the year 0<<B#<?, the fi"ed assets ratio was decreased slightly
to 0.<<. .ut in the year 0<<?#<9, the fi"ed assets ratio is increased to 2./<. As a
whole the fi"ed assets ratio has decreased and later it was increased in 0<<9.
5
R*TURN ON *9UIT):
@eturn on e$uity is also known as return on shareholdersR investment. The ratio
establishes relationship between profits available to e$uity shareholders with
e$uity shareholdersR funds. @eturn on *$uity judges the profitability from the point
of view of e$uity shareholders. This ratio has great interest to e$uity shareholders.
The return on e$uity measures the profitability of e$uity funds invested in the firm.
The investors favour the company with higher @C*.
Ret#rn on *:#ity K 'AT C'rofit after ta6D0*:#ity 6 3EE
)ear 'rofit After Ta6 *:#ity Ratio
0<<2#<; 101199; /B<<;</: /9.<0
0<<;#<: /:1<0 /B<0/1/? <.//
0<<:#<B B2<:9:B 0220?0?; 1<.10
0<<B#<? 2;<?B2?: B:2/;BB/ ;9.<<
0<<?#<9 ;<<91B?/ /;1B<9;;/ 11./0
5
INT*R'R*TATION:
The return on e$uity ratio was recorded as /9.<0 in 0<<2#<;. !t is decreased in the
year 0<<;#<: from /9.<0 to <.//. 5ater on it is increases from <.// to 1<.10 in the
year 0<<:#<B.!n the year 0<<B#<? also it is increases from 1<.10 to ;9.<<. .ut in
the year 0<<?#<9 it is decreased to 11./0.
5
'RO'RI*TAR) RATIO:
+roprietary @atio establishes the relationship between proprietorsR funds and total
tangible assets. This ratio is also termed as S=et orth to Total AssetsR or S*$uity#
Assets @atioR. This ratio indicates the general financial position of the business
concern. This ratio has a particular importance for the creditors who can ascertain
the proportion of shareholderRs funds in the total assets of the business. &igher the
ratio, greater the satisfaction for creditors of all types.
'roprietary Ratio K 'roprietorsL F#nds0Total Assets
)ear 'roprietorsL
F#nds
Total Assets Ratio
0<<2#<; /<<<<<<< /9/0;0/:< <.<;
0<<;#<: /<<<<<<< 0:22;:1;; <.<2
0<<:#<B /<<<<<<< ;<:?:0/;1 <.<0
0<<B#<? /:9<<<<< ?2:99091B <.<0
0<<?#<9 /<1;<<<<< /2:00:0;BB <.<B
5
INT*R'R*TATION:
The proprietary funds ratio was noticed <.<; in the year 0<<2#<;. !n the ne"t year
the proprietary funds ratio has decreased to <.<2. !n 0<<:#<B also the proprietary
funds ratio decreased to <.<0. !n 0<<B#<? the ratio is constant to <.<0. !n the year
0<<?#<9 the proprietary funds ratio is increased to <.<B. As a whole the proprietary
funds ratio has been fluctuating from year to year during the study period.

5

5
Findings:-
The current ratio of the company is fluctuated in the study period. The
current ratio is unsatisfactory. .ecause the company is not maintaining
the !deal ratio of 0'/. !n the year 0<<?#<9 the current ratio is /.11'/.
The Luick ratio of the company is fluctuated in the study period. The
$uick ratio is satisfactory. .ecause the $uick assets are increasing year to
year. !n the year 0<<?#<9 the ratio is low compared to previous year.
&owever the company is maintaining the !deal ratio of /'/.
Fi"ed assets turnover ratio is increasing year to Dear. The >ompany
maintaining the fi"ed assets in a proper way.
6tock turnover ratio has been increasing year to year during the study
period. This shows the company maintains a proper amount of stock to
fulfill the re$uirement of the concern.
orking capital turnover ratio of the company is fluctuated in the study
period. orking capital turnover ratio is increasing year to year. !n the
year 0<<?#<9 it is decreased comparing to the previous year.
The gross profit ratio is fluctuating in the study period. The gross profit
of the company is fluctuated but the net sale of the company is increasing
year to year. The gross profit is used to purchase the current assets for the
short term purposes.
The net profit ratio of the company is fluctuating in the study period. =et
profit of the company is increasing and net sales of the company are also
5
increasing. .ut the net profit ratio is decreasing. The net profit is used to
purchase the fi"ed assets of the company for the long term purposes.
7ebt#e$uity ratio was satisfactory. .ecause the company maintains the
!deal ratio of 0'/.
Fi"ed assets ratio of the company is fluctuating in the study period. !n the
present year only it is increasing compared to the previous years. At
present the fi"ed assets ratio is 2./<.
5
S#ggestions:-
!t is suggested to the company to maintain current ratio in proper way
because current assets are re$uired for the daily activity purposes. To
maintain good li$uidity position firm has to increase its current assets than
current liabilities.
!t is suggested to the company should invest in working capital management
for doing business to earn better profits.
!t is suggested to improve the long term investments for the future benefit of
the company.
5
I(IO+RA'-)
Name of t"e $oo! A#t"or
Financial management +rasanna >handra
Theory I +ractice
Financial management Fhan and jain
Financial management !.,.pandey
Financial management 6.=.maheswari
5

5

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