COMPANY PROFILE

About Liberty Plywood Pvt. Ltd.

Registered in 2008, Liberty Plywood Pvt. Ltd. has gained immense expertise in
supplying & trading of Pre-laminated particle board, plywood etc. The supplier company
is located in Jagadhri, Haryana and is one of the leading sellers of listed products. Buy
Pre-laminated particle board, plywood in bulk from us for the best quality products and
service.

Pre-Laminated Particle Board - Manufacturer From Jagadhri

Liberty Plywood Pvt. Ltd. is a quality driven organization offering a wide range of Pre-
laminated particle board, plywood, . Registered in 2008, the firm supplies Pre-laminated
particle board, plywood within preset time limit.

Contact Details

Liberty Plywood Pvt. Ltd.

Kalyan Nagar, Madhuban Colony, Main Market, Near Bus Stand. ,
Jagadhri, Haryana, 135003, India
Contact Supplier

Mr. Yashpal Madan Director

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 INTRODUCTION

Financial statements are prepared primarily for decision-making. They play a dominant
role in setting the framework of managerial decision. But the information provided in the
financial statements is not an end in itself as no meaningful conclusions can be drawn
from these statements alone.

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

statements so as to judge the profitability and financial soundness of the firm.The
financial performance analysis is important for the following reason.

1. To assess the earning capacity or profitability of the firm.

2. To assess the operational efficiency and managerial effectiveness.
3. To make inter-firm comparison.
4. To make forecasts about future prospects of the firm.
5. To help in decision making and control.
6. To provide important information for granting credit.
7. To assess the progress of the firm over a period of time.

Parties Interested In Financial Performance Analysis

1. Investors
2. Management
3. Creditors
4. Bankers and financial institutions.
5. Employees.
6. Government.
7. Trade associations
8. Stock changes.

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 9. Taxation authorities.
10. Suppliers

Types Of Financial Performance Analysis

1. On the basis of material used-

(a) External Analysis- This analysis is done by outsiders who do not have access
to the detailed internal accouting records of the business firm.These outsiders
include investors, creditors, Govt.agencies etc.
(b) Internal Analysis- The analysis conducted by persons who have access to the
internal accounting records of a business firm is known as internal analysis.
2. On the basis of modus operand-

(a) Horizontal Analysis-This analysis refers to the comparison of financial data

of a company for several years. The figures for this type of analysis are
presented horizontally.It is also called’’ Dynamics Analysis’’.
(b) Vertical Analysis- This analysis refers to the study of relationship of the
various items in the financial statements of one accounting period.It is also
called ‘’Static Analysis’

3. On the basis of objective of analysis-

(a)Short-term analysis- It measures of the liquidity position of a firm.

(b)Long-term analysis-It measures the solvency, stability and profit of a firm

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Methods Of Financial Performance Analysis

1. COMPARATIVE STATEMENTS:-

The comparative financial statements are statements of the financial at different

periods of time. The elements of financial position are shown in a comparative form
so as to give an idea of financial position at two or more periods.

The comparative may show:-

A. Absolute figures]
B. Changes in absolute figures
C. Absolute data in terms of percentages.
D. Increase or decrease in terms of percentages.

The two comparative statements are:-

a. Balance sheet, and

b. Income statement

Example:-1 from the following information, prepare a comparative balance sheet.

Particulars 31/03/2013 31/03/2017

Equity share capital 50.00.000 50.00.000
Fixed assets 72.00.000 60.00.000
Reserve and surplus 12.00.000 10.00.000
Investments 10.00.000 10.00.000
Long term loans 30.00.000 30.00.000
Current assets 21.00.000 30.00.000
Current liabilities 11.00.000 10.00.000

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Solutions:-

Comparative balance sheet (as on 30/03/2013-14)

2013 2014 Absolute Change % Change
Rs.
Assets
Fixed Assets 60.00.000 72.00.000 12.00.000 20
Investments 10.00.000 10.00.000 ----- ---
Currents assets 30.00.000 21.00.000 (9.00.000) (-----)30
Total Assets 1.00.00.000 1.03.00.000 3.00.000 3
Liabilities and
Capital
Equity share 50.00.000 50.00.000 ------ ---
capital

Reverse and 10.00.000 12.00.000 2.00.000 20

Surplus
Long terms loans 30.00.000 30.00.000 ------- 10
Current 10.00.000 11.00.000 1.00.000 10
Liabilities 1.00.00.000 1.03.00.000 3.00.000 3
Total

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2.Funds flow statements

Meaning of funds

(a) In a narrow sense:It means cash only and a funds flow statement prepared on
this basis is called a cash flow statement.
(b) In a broader sense: Here “ funds” means all financial resources, used in business
whether in the form of men,material,money,machinery and others.
(c) In a popular sense: The term “funds “ means woring capital i.e, the excess of
current assets over current liabilities.

Meaning of “flow of funds”

The terms flow means movements and includes both inflow and outflow the terms
flow of funds mean transfer of economic values from one asset of equity to another.
Flow of fund is said to have taken place when any transaction. If the effect of
transaction results in the increase of funds, it is called a source of funds and if it
results in the decrease of funds, it is known as an application of funds.

Rule- The flow of funds occurs when a transaction changes on the one hand a non-
current account and on the other a current account and vice-versa

Meaning of funds flow statement

A statement of sources and application of funds is a technical device, designed to

analyses the changes in the financial condition of a business enterprise between two
dates. Funds flow statement is a statement which indicates various means by which
the funds have been obtained during a certain period and the ways to which these
funds have been used during that period.

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Procedure for preparing a funds flow statement

1. Statement or schedule of changes in working capital

Working capital means the excess of current liabilities.

Working capital = Current assets- current liabilities

Statement of schedule of changes in working capital

Effect on
working
capital
Particular Previous Current year Increase Decrease
year
Current Assets:-
Cash in hand
Cash in Bank
Bills receivable
Sundry Debtors
Temporary
Investment
Stock
Prepaid Expenses
Accrued Income
Total Current
assets
Current Liabilities
Bills Payable
Outstanding
expenses
Bank overdraft

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 Short terms
advances
Dividends payable
Proposed dividents
Provision for
taxation
Total current
liabilities
Working capital
(CA-CL)
Net increase or
decrease in
working capital

Statement of sources and application of funds

Sources Rs. application Rs

Funds from operation Funds lost in operation
Issue of Share capital Redemption of Preferecne
share capital
Issue of Debentures Redemption of
Raising of ling terms Debentures
loans Repayment of long terms
Receipts from party loans
paid shares, Called up Purchase of non current
Sales of non current assets
assets Purchase of long terms
Non trading receipt investments
such as dividends Non trading payments

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Sale of long terms
investment Payment of dividends
Net decrease in
working capital Net increase in working
capital

3. Cash flow Statement

Meaning of cash flow statement

Cash flow statement is a statement which describes the inflows (sources) and outflow of
cash and cash equivalents in an enterprise during a specification period of time. Such a
statement enumerates net effects of various business transactions on cash and its
equivalents and takes into account receipt and disbursement of cash.

Classification of Cash flow

1. Cash flow from operating activities.

2. Cash flow from investing activities.
3. Cash flows from financing activities.

Cash flow from Operating activities: The amount of cash flows arising from operating
activities is a key indicator of the extent to which the operations of the enterprise have
generated sufficient cash flows to maintain the operating capability of the enterprise.

Items included in these activities-

(a) Cash receipts from the sale of goods and rendering of services.
(b) Cash receipts from fees, commissions.
(c) Cash payments to suppliers of goods and services.
(d) Cash payment of income tax.etc.

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Cash flows from Investing activities: Investing activities are the acquisition and
disposal of long-term assets and other investments in cash equivalents.

Items included in these activities-

(a) Cash payments to acquire fixed assets.
(b) Cash receipts from disposal of fixed assets.
(c) Cash receipts from disposal of shares, warrants, or debt instruments

Cash flows from financing activities: These activities are activities that result in
changes in the size and composition of the owner capital and borrowings of the
enterprise.

Items included in these activities-

(a) Cash proceeds from issuing shares or other similar instruments
(b) Cash proceeds from issuing debentures, loans, notes and bonds.
(c) Cash repayments of amounts borrowed such as redemption of debentures,
bonds, preference shares.

4. Ratio Analysis

Meaning of Ratio Analysis

Ratio analysis is a technique of analysis and interpretation of financial statement. It is

the process of establishing and interpreting various for helping in making certain
decisions.

Classification of Ratio

a. Liquidity Ratios:

These are the ratios which measure the short terms solvency or financial position of a
firm. These ratio are calculated to comment upon the short term paying capacity of a
concern or the firm’s ability to meet its current obligation.

It includes Current Ratio, Quick Ratio etc.

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b. Long terms solvency and leverage ratios:-

Long terms solvency ratio convey a firms ability to meet the interest costs and
repayments schedules of its ling term obligations.

It includes Debt-Equity Ratio, Proprietary Ratio etc.

c. Activity Ratio

Activity ratios are calculated to measure the efficiency with which the resources of a
firm have been employed.

It includes Stock Turnover Ratio. Debtors Turnover Ratio, Fixed Turnover Ratio.

d. Profitability Ratio:

These ratios measure the results business operations or overall performance and
effectiveness of the firm.

It includes Gross Profit Ratio, Net Profit Ratio, Operating Profit Ratio.

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 LITERATURE
Penman Stephen (2014) explained in his paper about the sustainability (or persistence)
of earnings and about the trailing P/E ratio. The score is delivered from a model that
identifies unsustainable earnings from the financial statements by exploiting accounting
relations that require that unsustainable earnings leave a trail in the accounts. The paper
also builds a P/E model that recognizes that investors buy future earnings, so should pay
less for current earnings if those earnings cannot be sustained in the future. In out-of-
sample prediction tests, the analysis reliably identifies unsustainable earnings, and also
explains cross-sectional differences in P/E ratios. The paper also finds that stock returns
are predictable when traded P/E ratios differ from those indicated by our P/E model.
Steven (2015) examined the relationship between two audit committee characteristics -
the composition (expertise and independence) and size of the audit committee - and the
quality of financial reporting. We show that after controlling for firm size, board
composition, a measure of management's commitment to transparency (the existence of
an ethics program) and institutional ownership, the percentage of audit committee
members having expertise in accounting or financial management is positively related to
financial reporting quality. They also find some evidence of a positive relationship
between the size of the audit committee and financial reporting quality. However, audit
committee independence is not related to financial reporting quality. They also verify that
our results are robust across different measures of financial reporting quality. Our results
suggest that mandating greater expertise on audit committees rather than simply requiring
one expert on the audit committee may be beneficial to investors. In addition, our results
also provide weak support for the recommendation of the Blue Ribbon Committee that
firms devote significant directorial resources to the audit committee. Given the prior
evidence of a negative relationship between financial reporting quality and cost of
capital, firms could improve their reporting quality by appropriately structuring their
audit committees, thus reducing their cost of capital.
Anthony (2016) This paper attempts to answer these questions by examining the two
financial reporting issues that contributed to Enron's most significant accounting
restatements: the consolidation of special purpose entities (SPEs) and the issuance of
stock for notes receivable. First, they examine Enron's financial performance during the

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10 years prior to its declaration of bankruptcy. This analysis reveals increasing variability
of key performance measures from 1997 through 2000, a time during which Enron's
stock price generally outperformed the NASDAQ composite. Additionally, using metrics
developed to measure the likelihood of earnings management, they find a high
probability of earnings manipulation in Enron's financial statements for several years
preceding its bankruptcy. These results are particularly surprising because they are based
on Enron's reported financial results, which they now know were erroneous. This
investigation suggests that considerable evidence existed that should have lead analysts,
sophisticated investors, and regulators to question Enron's financial results and soaring
stock price. Next, they briefly describe the accounting and financial reporting standards
applicable to Enron's consolidation of SPEs and issuance of stock for notes receivable.
They specifically discuss three major sets of transactions in which Enron created SPEs to
hold assets, borrow money, and hedge fluctuations in the value of its investment
activities.
Soliman (2016)Explained about Industry peer groups serve as both a theoretical and an
intuitive benchmark in financial statement analysis. However, the practice of industry-
adjusting financial ratios is sparse in existing financial statement analysis research. Much
of the academic research on the mean reversion of profitability assumes economy-wide
reversion targets. Economic theory supports the use of this target and empirical evidence
is consistent with these predictions. However, some components of profitability may not
revert to economy-wide averages because of structural differences across industries. For
these components, industry averages serve as better long-term targets. DuPont analysis
decomposes return-on-net-operating assets (RNOA) into two multiplicative components:
profit margin and asset turnover, both of which are largely driven by industry
membership. This paper investigates whether using industry-adjusted DuPont analysis is
a useful tool in predicting future changes in RNOA. In contrast to prior research that used
economy-wide targets and finds that these components are not useful in forecasting, They
find that these components are informative when industry-adjusted and that using them
helps predict future changes in RNOA in both in-sample and out-of-sample forecasting
tests.

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Michael (2016) explained that Private equity funds are important actors in the economy,
yet there is little analysis explaining their financial structure. In our model the financial
structure minimizes agency conflicts between fund managers and investors. Relative to
financing each deal separately, raising a fund where the manager receives a fraction of
aggregate excess returns reduces incentives to make bad investments. Efficiency is
further improved by requiring funds to also use deal-by-deal debt financing, which
becomes unavailable in states where internal discipline fails. Private equity investment
becomes highly sensitive to economy-wide availability of credit and investments in bad
states outperform investments in good states

Joseph (2017) explained about some ideas useful when forecasting financial statements
that are based on historical data. The paper is organized as follows: First They discuss the
relevance of prospective analysis for non traded firms. In a second section, a basic
reviews of subjects that will be needed for forecasting financial statements. They discuss
the use of plugs for financial forecasting. They show an alternate approach to avoid such
popular practice. The approach we propose follows the Double Entry Principle. This
principle guarantees consistent and error free financial statements. They show with a
simple example how the plug works and its limitations and problems that arise when
using it. The reader found what information is needed for the forecasting of financial
statements and where and how to find it. They present the procedure to identify policies
that govern the ongoing of a firm such as accounts receivable and payable, inventories,
dividend payout, and identify price increases and other basic variables. They also deal
with the real life problem of a firm with multiple products and/or services.
they start with historical financial statements. They include inflation rates, real increases
in prices and volume and policies in order to construct intermediate tables that make very
easy the construction of the pro forma financial statements. They use a detailed example
to illustrate the method. They derive the cash flows that will be used in the book to value
a firm. This type of models might be used by non traded firm for a permanent assessment
of the value creation.

Richardo (2017)explained about teaching material for a module of Financial analysis at

Universidad Tecnologica de Bolivar. The educational material was developed with

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Professor Ricardo Davila from Universidad Javeriana, Bogota, Colombia. The written
material has been modified several times, but the basic content is the same we developed
many years ago. This focuses on different financial ratios commonly used in financial
management. However, they make some changes to the traditional way of measuring
ratios and many of them are related to items from current and previous period. The usual
formulation is to compare all items with other items of the same period. This is not
correct for some ratios (i.e. for measuring return of equity and/or total assets. They give
detailed examples for each case.

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 NEED OF THE STUDY

Through Review of literature, we came to know that several studies have been done in
this regard but Study of financial performance analysis of Reliance life insurance is not
much. So here we are doing this research to understand the financial statement analysis
and particularly the financial analysis of Reliance life insurance

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 RESEARCH METHODOLOGY

Research Problem

The research studies “Financial Performance Analysis of Liberty Plywood Pvt. Ltd.”.

Research Design

The research is exploratory and descriptive in nature keeping in the mind the problem and
trends to study.

Data Collection

In this project main source of data is secondary. The data useful for the project has been
collected from various sources like: Annual statements of the company from the financial
year 2013-2014 to 2016-2017, Journal, Magzines, Newspapers, Books and internet.

Sample Unit or Area

Reliance Life Insurance Company Ltd.

Data Analysis

Advance excel has been used to analyse the data with the help of percentage, charts, bar
diagrams and pie charts.

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 LIMITATION OF STUDY

a. It is only a study of interim reports.

b. Financial analysis is based upon only monetary information and non monetary factors
are ignored.
c. It does not consider changes in price levels.
d. As the financial statement are prepared on the basis of going concern, it does not
give exact position. Thus accounting concepts and conventions cause a serious
limitation to financial analysis.

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 OBJECTIVE OF THE STUDY

1. To Understand the analysis framework and financial statement of the Liberty

Polywood Pvt. Ltd..
2. To analyze and interpret financial statements and related reports of the company.
3. To determine the liquidity and profitability position of the company

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 Data analysis and interpretation

Comparative Analysis

COMPARATIVE ANALYSIS OF 2013-14 (In Cr.)

Particular 2013 2014 Increase/decrease %

Equity share 1453.39 1573.53 120.14 8

capital

Reserves 77441.6 112945 35503.9 46

Revaluation 871.26 11785.8 10914.5 12.53

reserves

Secured loans 6600.17 10697.9 4097.75 62

Unsecured 29879.5 63206.6 33327.1 1.11

loans
Suspense 1682.4 68.25 -1614.2 -44.84

Total 117928 200277 82349.2 84.8

Liabilities

Net Block 61883.6 100343 38459 62

Capital Work 23005.8 69043.8 46038 20

in Progress

Investment 22063.6 21606.5 -457011 -2

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Total of Net 106953 190993 84040.3 70
Block, capital
work in
progress and
Investment.
Inventories 14247.5 14836.7 589.18 4

Debtors 6227.58 4571.38 -1656.2 -26

Cash 217.79 500.13 282.34 13
Loans or 18441.2 13375.2 -5066.1 -27
Advances

Fixed Deposal 4062.26 21676.4 17614.1 43.4

Current 43196.4 54959.8 11763.4 61.4

Assets
Less-Current 29228.5 42664.8 13436.3 46
Liabilities

Provision 2992.62 3010.9 18.28 0.6

Net Current 10975.2 9284.07 -1691.1 -14.8

Assets

Total Assets 117928 200277 82349.2 84.8

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 Equity share capital

Reserves

Revaluation reserves

Secured loans

Unsecured loans

Suspense

Fig:1

Interpretation

(a) Equity share capital has increase in Year 2014 by 120.14 Cr.ie., 8%. Secured
and unsecured loans also increased by 4097.75Cr. and 33327.05 Cr.in 2009.
(b) Investment decrease by 457.11Cr. ie.,2%..
(c) Current Assets and Current Liability have both increase but Current Liability
have more increase in the comparison of Current Assets in Year

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COMPARATIVE ANALYSIS OF 2014-2015 (In Cr.)

Particular 2014 2015 Increase/decrease %

Equity share capital 1573.53 3270.37 1696.84 10.8

Reserves 112945 125096 12150.5 11

Revaluation Reserves 11785.8 8804.27 -2981.5 -25

Secured Loans 10697.9 11670.5 972.58 9

Unsecured Loans 63206.6 50824.2 -12382 -20

Suspense 68.25 ------------ -68.25 -1

Total Liabilities 200277 199665 -612.15 -0.3

Net Block 100343 153260 52916.8 53

Capital work in 69043.8 12138.8 -56095 -82

Progress

Investments 21606.5 23228.6 1622.13 7

Total 190993 188627 -2366.1 -1.2

Inventories 14836.7 26981.6 12144.9 82

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Debtors 4571.38 11660.2 7088.83 1.5
Cash 500.13 362.36 -137.77 -28
Loans 13375.2 10517.6 -2857.6 -21
Or Advances

Fixed Deposal 21676.4 13100.3 -8576.1 -40

Current Assets 54959.8 62622.1 7662.27 14

Less-Current 42664.8 48018.7 5353.84 12

liabilities

Provision 3010.9 3565.43 554.53 18

Net Current assets 9284.07 11038 1753.9 19

Total Assets 200277 199665 -612.15 -0.3

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 2015
Equity share capital
Reserves
Revaluation Reserves
Secured Loans
Unsecured Loans
Suspense
Total Liabilities

Net Block

Fig:2

Interpretation

(a) Equity share capital has increase by 1696.84 Cr. Secured Loan Increased by
972.58 ie., 9%, but Unsecured loan decreased by 12382.37 ie.,20% in Year
2010.
(b) Investment increase by 1622.13 ie.,7%.
(c) Current Assets have more increase in the comparison of Current Liability.

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COMPARATIVE ANALYSIS OF 2015-2016 (In Cr.)
Particular 2015 2016 Increase/decrease %

Equity share capital 3270.37 3273.37 3 0.09

Reserves 125096 142800 17704 14

Revaluation 8804.27 5467 -3337.3 -38

Reserves

Secured loans 11670.5 10571.2 -1099.3 -9

Unsecured loans 50824.2 56825.5 6001.28 12

Total Liabilities 199665 218937 19271.7 10

Net Block 153260 142706 -10553 -7

Capital work in 12138.8 12819.6 680.74 6

Progress

Investments 23228.6 37651.5 14422.9 62

Total 188627 193178 4550.24 2

Inventories 26981.6 29825.4 2843.76 10.54

Debtors 11660.2 17441.9 5781.73 66.84

Cash 362.36 604.57 242.21 66.84

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Loans orAdvances 10517.6 17320.6 6803.03 64.68

Fixed deposal 13100.3 26530.3 13430 10.25

Current Assets 62622.1 91722.8 29100.7 46

Less-Current 48018.7 61399.9 13381.2 27.86

Liabilities

Provision 3565.43 4563.48 498.05 27.99

Net Current Assets 11038 25759.4 14721.5 133

Total Assets 199665 218937 19271.7 10

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 2016
Equity share capital
Reserves
Revaluation Reserves
Secured loans
Unsecured loans
Total Liabilities

Net Block
Capital work in Progress

Fig: 3

Interpretation

(a) Equity share capital increased by 3Cr. In Year 2016. Secured loan decreased by
1099.29 but Unsecured loan increase by 6001.28 in Year 2011.
(b) Investment have both increased by 14422.92
(c) Current Assets have more increased in the comparison of Current Liability in
Year2011.

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COMPARATIVE ANALYSIS OF 2016-2017 (In Cr.)

Particular 2016 2017 Increase or %

decrease

Equity share capital 3273.37 3271 -2.37 -0.07

Reserves 142800 159698 16898.1 12

Revaluation Reserves 5467 3127 -2340 -42

Secured Loans 10571.2 6969 -3602.2 -34

Unsecured Loans 56825.5 51658 -5167.5 -9

Total Liabilities 218937 224723 5786 2.6

Net Block 142706 117782 -24924 -17

Capital work in 12819.6 4885 -7934.6 -61

Progress
Investment 37651.5 54008 6356.46 17

Total 193178 176675 -16503 -8

Inventories 29825.4 35955 6129.62 20

Debtors 17441.9 18424 982.06 6
Cash 604.57 889 284.43 47
Loans or Advances 17320.6 24573 7252.4 42

Fixed Deposal 26530.3 38709 12178.7 46

Current Assets 91722.8 118550 26827.2 29

Less-Current 61399.9 66244 4844.13 7.8

Liabilities

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 Provision 4563.48 4258 -305.48 -6.7

Net Current Assets 25759.4 48048 -22289 -86

Total Assets 218937 224723 5786 2.6

2017
Equity share capital
Reserves
Revaluation Reserves
Secured Loans
Unsecured Loans
Total Liabilities

Net Block
Capital work in Progress

Fig:4

Interpretation

(a) Equity Share capital has decrease by 2.37 Cr. In Year 2012. Secured and
Unsecured loan have decreased by 3602.2 Cr.and 5167.5 Cr.in Year2012.
(b) Investment increased by 6356.46 Cr.ie., 17% in Year 2012.
(c) Current Liability have more increased in the comparison of Current
Assets.

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Ratio Analysis

Liquidity Ratio

Current Ratio=Current Assets/Current Liability

Quick Ratio= Quick Assets/Current Liability

Liquidity ratio
Particular 2013 2014 2015 2016 2017

Current 1.48 1.20 1.21 1.39 0.68

Ratio
Quick Ratio 0.9 0.87 0.69 0.94 1.71

Particular Current Ratio Quick Ratio

1.71
0.94
0.68
0.69 1.39
0.87 1.21
0.9 1.2
1.48
2017
2016
2015
2014
2013

1 2 3 4 5

Interpretation: It is found from the above table that current ratio and liquid ratio of the
company are not satisfactory because they not achieving the ideal ratio in both the cases.
i.e. Current ratio is less than 2:1 and liquid ratio is less than 1:1. Hence company needs
to improve its short term solvency.

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Leverage Ratio
.Debt-Equity Ratio=Debt/Equity
Proprietary Ratio=Shareholders Funds/Total Assets
Shareholders also called the Equity.

Leverage Ratio

Particular 2013 2014 2015 2016 2017

Debt-equity 0.45 0.58 0.46 0.44 0.35
ratio
Proprietary 0.68 0.37 0.68 0.69 0.74
ratio

Particular Debt-equity ratio Proprietary ratio

0.74
0.35
0.69
0.44
0.68
0.46
0.37
0.58
0.68 2017
0.45 2016
2015
2014
2013

1 2 3 4 5

Interpretation: It is found from the above table that debt-equity ratio is not satisfactory
because it is not acheiving the idel ratio ie.,2:1.The proprietary ratio is satisfactory in all
the yearsexcept the year2009 because the ideal proprietary ratio is 68%.

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Activity Ratio

1.Stock Turnover Ratio=Cost of Goods Sold/Average Stock

2.Debtors Turnover Ratio=Net Sales/Average Debtors
3.Fixed Assets Turnover Ratio=Cost of Goods Sold/Fixed Assets

Activity Ratio
Particular 2013 2014 2015 2016 2017
Stock Turnover 0.80 0.54 0.35 0.26 0.4
Ratio

Debtors Turnover 7.27 18.03 13.77 14.42 36.88

Ratio

Fixed Assets 0.77 0.79 1.11 0.94 0.70

Turnover Ratio

Particular Stock Turnover Ratio

Debtors Turnover Ratio Fixed Assets Turnover Ratio

0.7

0.79 36.88
1.11 0.94
0.77 18.03 13.77 14.42
7.27 0.35 0.26 0.4
0.8 0.54

2013 2014 2015 2016 2017

1 2 3 4 5

Interpretation: It is found from the table that stock turnoverratio is low but the debtor
turnover and fixed assets turnover ratio is high.

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Profitability Ratio

1.Gross profit Ratio=G.P/Net Sales.

2.Net Profit Ratio= N.P/Net Sales.
3.Operating Profit Ratio=Operating Profit/Net Sales.

Profitability Ratio

Particular 2013 2014 2015 2016 2017

Gross Profit Ratio 70% 92% 95% 97% 98%
Net Profit Ratio -- 33% 24% 9% 7%
Operating Profit Ratio 43% 15% 26% 24% 16%

95% 97% 98%

100% 92%
90%
80% 70%
70%
60%
50% 43%
40% 33%
24%26% 24%
30%
15% 16%
20% 9% 7%
10% 0
0%
2013 2014 2015 2016 2017

Gross Profit Ratio Net Profit Ratio Operating Profit Ratio

Interpretation:

The Gross Profit is higher than the net profit.The Net Profit is higher only in the year
2009. The Operating Profit is very lower in the comparison of gross profit and net
profit.So the company have to improve the operating efficiency.

42
 FINDINGS OF THE DATA

1 . Equity share capital, Secured and unsecured loans has increased in year2014.
Current assets and current liability have increased but It is found that increase in
current liability was much more than current assets. Whereas investment has
decreased in the same year.

2. Equity share capital, secured loans has increased but unsecured loan has decreased.
in year 2015 . Current assets and current liability have increased but It is found that
increase in the current assets was much more than current liability whereas
investment has increased in the same year.

3. Equity share capital, Unsecured loan has increased but secured loan has increased
in year 2016.Current assets were increased more than current liability and investment
also increased in the same year.

4. Equity share capital, secured loan and unsecured loan have decreased in year 2017.
It is found that increase in Current liabilities was more than current assets and
investment also increased in the same year.

5. Current ratio and Quick ratio are not found in satisfactory position as they are not
achieving their ideal ratio.

6. The company is using more of owned capital in its capital structure.

7. It is found that company has low stock turnover ratio. Whereas debtor turnover
ratio & fixed assets Turnover ratio are found satisfactory.

8. Gross profit is continuously increasing in 2014 to 2017. Whereas net profit is

decreasing due to increase in expenses every year.

43
 SUGGESTIONS

1. Company should focus to improve its short term solvency position by

concentrating on investment of working capital.
2. Company should focus on increasing its profitability by controlling the
expenses or cost.
3. Company should make more use of the debt capital in its capital structure,
which will further facilitate to lower its cost of capital.
4. Proper inventory management techniques should use by the firm.

44
 CONCLUSION

According to my research, it is found that the financial position in context with short term
position is not satisfactory company should focus on its investment policies and should
concentrate on proper management of its working capital. Moreover concentration should
be on cost control so that profitability can be increased in future.

45
 BIBLIOGRAPHY

Books

1. Kothri C.r,”Quantitative Techniques” Vikas publishing house Pvt Ltd.New

Delhi,2010.page no.-10-20.
2. Gupta S.k,”Accounting for managerial decision”Kalyani Publishers,New
Delhi,2010,Page no-10.1-10.5.
3. Mittal R.k”Management Accounting and Financial
Management”V.k(India)Enterprises,New Delhi.
4. Khan,Jain”Management Accounting”Tata Mcgraw house publishingLtd,New
Delhi,2003 page No.60-95
5. Roy and Singhal,Accounting For Manager,Vayu education of India,New
Delhi,2009,page no.339-374
6. Gupta S.k”Financial Mgt”Kalyani Publication,New Delhi,2008,Page no.6.1-6.28.

 [1] Roy L. Crum, Darwin D. Klingman and Lee A. T a-i$' (1983), "An
operational approach to integrated working capital planning", Journal of
Economics and Business Vol 35, Issues 3-4, pp. 343-378.

 [2] C.L. Pass, R.H. Pike, (1993) "An Overview of Working Capital Management
and Corporate Financing", Managerial Finance, Vol. 10 Issue 3, pp.1 - 11.

 [3] Rafuse, M. E. 1996. "Working Capital Management: An Urgent Need to

Refocus", Journal of Management Decision, Vol. 34 No 2, pp. 59-63.
 [4] Habib Ahmed (1998), "Responses in output to monetary shocks and the
interest rate: a rational expectations model with Working Capital", Economics
Letters, Vol61, Issue 3, pp. 351-358.

 [5] M. Anand (2001), "Working Capital performance of corporate India: An

empirical survey", Management & Accounting Research, Vol. 4(4), pp. 35-65.

46
Website Accessed
1.http://www.reliancelife.com/rlic/about us/our-founder.aspx.
2.http://www.reliancelife.com/rlic/about us/vision-mission.aspx.
3.http://www.reliancelife.com/rlic/aboutus/achievements.aspx.
4.http://www.reliancelife.com/rlic/about us/leadership-team.aspx.
5.http://ssrn.com/abstract=318967
6.http://ssrn.com/abstract=292725
7.http://ssrn.com/abstract=676546
8. http://ssrn.com/abstract=401240
9.http://ssrn.com/abstract=1366523
10.http://ssrn.com/abstract=456700
11.http://ssrn.com/abstract=1026210

47
 BALANCE SHEET
Balance Sheet ------------------- in Rs. Cr. -------------------

Mar '17 Mar '16 Mar '15 Mar '14 Mar '0\13

12 mths 12 mths 12 mths 12 mths 12 mths

Sources Of Funds
Total Share Capital 3,271.00 3,273.37 3,270.37 1,573.53 1,453.39
Equity Share Capital 3,271.00 3,273.37 3,270.37 1,573.53 1,453.39
Share Application Money 0.00 0.00 0.00 69.25 1,682.40
Preference Share Capital 0.00 0.00 0.00 0.00 0.00
Reserves 159,698.00 142,799.95 125,095.97 112,945.44 77,441.55
Revaluation Reserves 3,127.00 5,467.00 8,804.27 11,784.75 871.26
Networth 166,096.00 151,540.32 137,170.61 126,372.97 81,448.60
Secured Loans 6,969.00 10,571.21 11,670.50 10,697.92 6,600.17
Unsecured Loans 51,658.00 56,825.47 50,824.19 63,206.56 29,879.51
Total Debt 58,627.00 67,396.68 62,494.69 73,904.48 36,479.68
Total Liabilities 224,723.00 218,937.00 199,665.30 200,277.45 117,928.28
Mar '12 Mar '11 Mar '10 Mar '09 Mar '08
12 mths 12 mths 12 mths 12 mths 12 mths
Application Of Funds
Gross Block 209,552.00 221,251.97 215,864.71 149,628.70 104,229.10
Less: Accum. Depreciation 91,770.00 78,545.50 62,604.82 49,285.64 42,345.47
Net Block 117,782.00 142,706.47 153,259.89 100,343.06 61,883.63
Capital Work in Progress 4,885.00 12,819.56 12,138.82 69,043.83 23,005.84
Investments 54,008.00 37,651.54 23,228.62 21,606.49 22,063.60
Inventories 35,955.00 29,825.38 26,981.62 14,836.72 14,247.54
Sundry Debtors 18,424.00 17,441.94 11,660.21 4,571.38 6,227.58
Cash and Bank Balance 889.00 604.57 362.36 500.13 217.79
Total Current Assets 55,268.00 47,871.89 39,004.19 19,908.23 20,692.91
Loans and Advances 24,573.00 17,320.60 10,517.57 13,375.15 18,441.20
Fixed Deposits 38,709.00 26,530.29 13,100.29 21,676.40 4,062.26
Total CA, Loans & Advances 118,550.00 91,722.78 62,622.05 54,959.78 43,196.37
Deffered Credit 0.00 0.00 0.00 0.00 0.00
Total CL & Provisions 70,502.00 65,963.35 51,584.08 45,675.71 32,221.16
Net Current Assets 48,048.00 25,759.43 11,037.97 9,284.07 10,975.21
Miscellaneous Expenses 0.00 0.00 0.00 0.00 0.00
Total Assets 224,723.00 218,937.00 199,665.30 200,277.45 117,928.28

48
Profit and loss account

Particular 2017 2016 2015 2014 2013

Income 12756 14792 15086 13555 13308
Operating 12756 14792 15086 13555 13308
Income
Expenses
Material 16 15 29 50 65
consumed
Manufacturing 3358 4144 5975 7995 8300
exp.
Personal exp. 684 858 755 672 608
Selling Exp. 1399 1067 773 662 772
Administrative 1784 2532 2323 1980 1852
exp.
Cost of sale 7243 8618 9856 11361 11598
Operating 5513 6173 5229 2193 1710
profit
Other 169 29 675 798 707
recurring
income
Adjusted Pbdit 5682 6201 5905 2991 2417
Financial exp. 456 870 1153 1254 854
Depreciation 1836 1843 1933 1511 1594
Adjusted Pbt 3389 3488 2818 226 -30
Tax charges 1043 1393 1488 1404 1179
Adjusted Pat 2346 2694 1329 1178 1209
Non recurring 62 491 3473 1657 349
items

49
Other non – 101.52
cash
adjustment
Reported net 2408 2586 4802 478 -758
profit

50