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Project Report

“To study on Profitability Ratio Analysis of TechnoSpace”

BACHELOR OF BUSINESS ADMINISTRATION


TO PUNJABI UNIVERSITY, PATIALA

Under the Supervision: Submitted By:


-------------------------------- Jyoti
Assistant Professor BBA 4th year
(Dept. Of Management) Uni. Roll No.:-

MALWA COLLEGE BATHINDA


(Affiliation to Punjabi University, Patiala)
2016-2019

BATHINDA
DECLARATION

I hereby declare that the project titled A Study the Profitability Ratio Analysis to
TechnoSpace Is an original piece of research work carried out under the guidance of
supervisor the information has been collected from genuine & authentic sources.

The work has been submitted in partial fulfillment of the requirement of BBA (Batch 2016-
2019) of Malwa College.

Jyoti
ACKNOWLEDGEMENT

Perseverance, inspiration and motivation have always played a key role in success of any
venture. In the present world of competition there is a race of existing in which those who are
having willed to come forward succeed. Project is like a bridge between theoretical and
practical working. With willing I join this particular project.

To design and compare a project report is very laborious work, which no student complete
without taking any help from any professional.

First of all, I would like to thank the supreme power of almighty God who is obviously the one
who has always guided us to work on right path of our life.

I express my deep gratitude to my guide for his invaluable guidance during the project. His
unlimited guidance, innovative ideas and tireless efforts helped along the way in completing the
project. I am also thankful to the staff members for their encouragement and cooperation in this
successful completion of my project.

In the end I would like to thank my parents whom greatly indebted for having me brought me
love and encouragement of this stage.

Jyoti
EXECUTIVE SUMMARY

Finance has been described as a lubricant of economic activity, without which the entire
business will grind to a halt. And money has been aptly described by monitory economist called
Geoffrey Crowther, “Finance as the essential invitation on which all the rest is based. With
unlimited wants and limited financial resources, the financier is concerned with what is
produced, requirements of funds (liquid and illiquid ), allocation of funds selection of
developmental priorities, determination of gestation periods, proper monitoring of accounts to
avoid cash flow problems and to ensure the profitability of the enterprises.

The main objective of financial performance analysis to judge the financial health the
undertaking and to judge the earning performance of the organization and to provide the
company with appraise for investment opportunity or potentiality. This analysis is carried over
about five years. This project deals with the financial performance analysis in the organization.
The ratio analysis, comparative analysis and trend analysis are the tools to analyze the financial
performance of the company.

The study reveals that the financial performance of the organization has been better. But the
company's profit over the last two years has been decreasing when compared to previous years.
So the management should take necessary steps to improve their financial position.
TABLE CONTENTS

CHAPTER NAME PAGE NO.

CHAPTER-1

Introduction of the company

Introduction profitability analysis

Introduction about project

CHAPTER-2

Objective of the Study

Scope of the Study

CHAPTER-3

Research Methodology

CHAPTER-4

Data Analysis And Interpretation

Balance sheets analysis

Profit & loss A/C anlysis

CHAPTER-5

Findings of the study

CHAPTER-6

Suggestion

CHAPTER-7

Conclusion

Bibliography
Chapter-1
Introduction
Introduction about company

TECHNO SPACE is a leading solution provider for Internet based applications and
manufactures various types of projects like Mechanical, Electrical, and Electronic & Comm.
Engineering Projects. It was established in 2011, the technology is changing all over the world.
Due to this reason future is a complicated! Do you have the technical skills and knowledge to
move the world to the future? TECHNOSPACE believes that you could be tomorrow's
technology and business leaders and should be equipped to be a part of, and lead, that change.
In helping achieve this goal, training is important key. We specialize in imparting unmatched
world-class training. An ISO 9001-2015 certified, Techno Space Company at Bathinda,
provides Industrial training in various streams like, Mech., Electrical Engineering, Civil, E.C.E,
C.S.E, I.T etc. The main objective of our company is to computerizing the engineering
profession
TECHNOSPACE has been delivering high-value and affordable application development,
mechanical engineering Computer Aided Designing, CNC Programming, PLC Programming,
SolidWorks, CATIA and Creo designing and analyzing based industrial training CAD
software’s.
TECHNOSPACE has adequately met the test of time by providing clients with low-cost, high-
quality, and exceptionally flexible solutions.
TECHNOSPACE offer of application development services, engineering CAD services and
Website development, Software development, School ERP, College ERP, Account Software’s,
BULKSMS etc. based services, are tested by a proven software development methodology that
ensures low risk and a predictable path to success.
TECHNOSPACE also a productive digital marketing company that aims to foster your business
fruitfully in the cyber world. It provides momentum to build your business and meeting its
business objectives. We are a castle of experts in the field of strategy making, planning,
designing and developing. Our distinct and innovative ways to handle work has helped us to
flourish successfully all these years.
What customer desire comes with experience. We are well aware of customer’s taste and work
accordingly to give you guaranteed success for long term benefits. Our collaborative and
consistent effort has helped us to think, create, design and develop what you desire.
TECHNOSPACE believes to satisfy their customers to maintain long- term cordial business
relationship. During our continuous process of project development, we initiate sustainable
amount of interaction with our client to ensure everything is working on according to his
requirement.
We believe client satisfaction is very significant. We work closely with our clients to
understand their requirements and fulfill them the best we can. Our core focus lies in delivering
quality work within the précised time and we work on our motive to give our clients exceptional
and ever- reaping results.

Vision, Mission and Goals

Vision

Our vision is to grow our multi-disciplinary team in order to offer a broad spectrum of specialist
Engineering, Information Technology and Management Consulting services to become our
Clients' preferred Professional Service Provider (PSP) choice through excellence and efficiency
in all aspects of the project life cycle.

Techno Spaceis a leading practice that will exceed expectations and set new standards!

Mission

Our Mission is to offer excellent service in each of our professional disciplines, in accordance
with statutory practices, codes of conduct and integrity, thereby developing our team and
providing a leading platform from which to service the built environment and in particular, our
valued Clients.

Goals

Techno Space would strive hard to achieve the 3 goals mentioned below:

 To provide clients awesome websites without incurring exorbitant costs.


 Create best value for Customers, Shareholders and all Stake holders.

To provide world class E – Commerce, Web Development Solutions to achieve impeccable


reputation and credentials through best business practices.
Products/ Services Offered By Company

Web Design

Website is key component of Internet World. From websites to mobile phone apps & portals, to
attractive product packaging, the work of a graphic designer is seen everywhere. But a good
design also requires a strong backbone of programming & development. This is the job of a
developer. An increase number of jobs and high demand for trained and skilled graphic
designers, web designers, and developers. You can be one of these in-demand professionals.
Therefore it is very important to develop a website with strong web presence and functionality.
Among web professionals, "web development" usually refers to the main non-design aspects of
building web sites: writing mark-up and coding. Most recently Web development has come to
mean the creation of content management systems or CMS.

These CMS can be made from scratch, proprietary or open source. In broad terms the CMS acts
as middleware between the database and the user through the browser. A major benefit of a
CMS is that it allows non-technical people to make changes to their web site without having
technical knowledge. At Techno Spacewe provide a best solution of website Development. Our
professional and skilled web developers build creative websites using the latest technologies.

Bulk Messaging

Bulk Messaging is the dissemination of large numbers of SMS messages for delivery to mobile
phone terminals. It is used by media companies, enterprises, banks (for marketing and fraud
control) and consumer brands for a variety of purposes including entertainment, enterprise and
mobile marketing.

Techno Spaceis a leading SMS messaging service provider offering two-way SMS
communication services straight from your internet enabled computer.

Industrial Training

Industrial training plays an important role in college studying period. Because of industrial
training, students will get opportunity to experience doing real work while studying and also
industrial training helps to fill the gap between the academic curriculum and the industry. It
gives an opportunity to students to apply theoretical knowledge practically. Industrial training
also gives exposure to students about the work environment in the companies.

They also learn tools used in the industries as no college teach them about tools used in the
industry. So because of industrial training, students become job-ready before they complete the
college and increase their chances to get employment.
Industrial training also helps to improve the personal skills and also provides the opportunity to
get employed after the completion of the training.

TechnoSpace is a industrail training provider company, was born from a desire to deliver
equally high standards and consistency in marketing, finance, HRM,website development and
App Development in Bathinda , Punjab & Through out India.
They offer a unique, creative, and technical vision. Beginning with your initial idea, they
persevere with the same intensity all the way to the grand launch ! TechnoSpace, belongs to a
new generation of hybrid directors who think that digital production can’t be built by just one
individual, but must be built by a group of very skilled, distinct, and talented friends.
They deliver innovative solutions to support new structuring, continuous optimization,
integration and operations of IT systems.
They provide a single point of contact to their Students & customers for their varied IT
requirements in three main service verticals, turnkey IT infrastructure, Customized application
and end to end e-Learning Solution and business solutions on web & mobile platforms.
Introduction about Topic
Profitability Ratio Analysis:

Profitability Ratios analysis are a class of financial metrics that are used to assess a business's
ability to generate earnings compared to its expenses and other relevant costs incurred during a
specific period of time. For most of these ratios, having a higher value relative to a competitor's
ratio or relative to the same ratio from a previous period indicates that the company is doing
well. A profitability ratio is a measure of profitability, which is a way to measure a company's
performance. Profitability is simply the capacity to make a profit, and a profit is what is left
over from income earned after you have deducted all costs and expenses related to earning the
income. The formulas you are about to learn can be used to judge a company's performance and
to compare its performance against other similarly-situated companies.

Breaking Down Profitability Ratios: Some industries experience seasonality in their


operations. The retail industry, for example, typically experiences higher revenues and earnings
for the Christmas season. It would not be useful to compare a retailer's fourth-quarter profit
margin with its first-quarter profit margin. Comparing a retailer's fourth-quarter profit margin
with the profit margin from the same period a year before would be far more informative.

Some examples of profitability ratios are profit margin, return on assets (ROA) and return on
equity (ROE). Profitability ratios are the most popular metrics used in financial analysis. Before
we talk about what profitability is, we need to understand why it matters. A business exists to
add value. Of course, a business has dozens of other identities: It could be an employer, a
taxpayer, an intellectual property thief, a B Corporation bent on doing environmental or social
good. But it’s still a system underneath; an economic machine that, like a bicycle, combines a
set of inputs in a way that yields a result – a value – whose sum is greater than the parts.

We measure this value with profit. It’s literally the most important concept for an investor to
understand. But what exactly is profit? The definition in economics textbooks is revenues minus
expenses. That definition – the accounting definition – is true, and it is useful for per-unit
analysis and capital budgeting. But for an investor, that definition alone doesn’t capture the full
economic value added by the company.

In the sections that follow, we’ll explain the various income statement-style definitions of
profit, their strengths, uses, and inadequacies. We’ll discuss why EBITDA is a favorite of
investment bankers trying to sell unprofitable companies, and walk through effective tax rates.
And most importantly, we’ll dive into the truest measures of value added to a business: Return
on Assets, Return on Equity, Return on Invested Capital, and Return on Capital Employed.

Knowing the truth about profitability may not change your life, but it may change your view on
investing. At least we hope it will.

Overview of Profitability Ratios

Introduction:- Profitability ratios are the financial ratios which talk about the profitability of a
business with respect to its sales or investments. Since the ratios measure the efficiency of
operations of a business with the help of profits, they are called profitability ratios. They are quite
useful tools to understand the efficiencies/inefficiencies of a business and thereby assist
management and owners to take corrective actions.

PURPOSE AND IMPORTANCE


A business (unless a non-government organization) starts with a motto of making a profit and thus
one of the most commonly used financial ratios is the profitability ratios. Management and
investors calculate these ratios often and they are always present in the annual reports of the
company. Since every business wants to generate profit and the investors also want returns on
their investments, it is mandatory to showcase how the company is working and generating profit.
Thus, profitability ratios analysis is an important evaluation criterion for companies.

Profitability ratios are the tools for financial analysis which communicate about the final goal of a
business. For all the profit-oriented businesses, the final goal is none other than the profits. Profits
are the lifeblood of any business without which a business cannot remain a going concern. Since
the profitability ratios deal with the profits, they are as important as the profits.

The purpose of calculating the profitability ratios is to measure the operating efficiency of a
business and returns which the business generates. The different stakeholders of a business are
interested in the profitability ratios for different purposes. The stakeholders of a business include
owners, management, creditors, lenders etc.

TYPES OF PROFITABILITY RATIOS

Profitability ratios are a bunch of financial metrics which measures the profit generated by the
company and its performance over a period of time. The profit of the company which is
assessed by these ratios can be simply defined or explained as the amount of revenue left after
deducting all the expenses and losses which incurred in the similar time period to generate that
revenue.

Ultimately, these ratios are nothing but a simple comparison of various levels of profits with
either SALES or INVESTMENT. So, these ratios can be further classified as Margin Ratios
(Sales based Ratios) and Return Ratios (Investment based Ratios). There are different ratios
under this profitability ratio category which are as below.

PROFITABILITY IN RELATION TO INVESTMENTS

1. Return on gross investment or gross capital employed

2. Return on net investment or net capital employed


3. Return on shareholder’s investment or shareholder’s capital employed.

4. Return on equity shareholder investment or equity shareholder capital employed.

1. RETURN ON GROSS CAPITAL EMPLOYED

This ratio establishes the relationship between net profit and the gross capital employed. The
term gross capital employed refers to the total investment made in business. The conventional
approach is to divide Earnings after Tax (EAT) by gross capital employed.

Return on gross capital employed = Earnings after Tax (EAT)/ Gross capital employed X 100

2. RETURN ON NET CAPITAL EMPLOYED

It is calculated by dividing Earnings Before Interest & Tax (EBIT) by the net capital employed.
The term net capital employed in the gross capital in the business minus current liabilities.
Thus it represents the long-term funds supplied by creditors and owners of the firm.

Return on net capital employed = Earnings before Interest & Tax (EBIT) / Net capital
employed* 100

3. RETURN ON SHARE CAPITAL EMPLOYED

This ratio establishes the relationship between earnings after taxes and the shareholder
investment in the business. This ratio reveals how profitability the owners’ funds have been
utilized by the firm. It is calculated by dividing Earnings after tax (EAT) by shareholder capital
employed.

Return on share capital employed = Earnings after tax (EAT) / Shareholder capital
employed*100

4. RETURN ON EQUITY SHARE CAPITAL EMPLOYED

Equity shareholders are entitled to all the profits remaining after the all outside claims including
dividends on preference share capital are paid in full. The earnings may be distributed to them
or retained in the business.
Return on equity share capital investments or capital employed establishes the relationship
between earnings after tax and preference dividend and equity shareholder investment or capital
employed or net worth.

It is calculated by dividing earnings after tax and preference dividend by equity shareholder’s
capital employed.

EARNINGS PER SHARE

IT measure the profit available to the equity shareholders on a per share basis. It is computed
by dividing earnings available to the equity shareholders by the total number of equity share
outstanding

Earnings per share = Earnings after tax – Preferred dividends (if any)/ Equity shares outstanding

DIVIDEND PER SHARE

The dividends paid to the shareholders on a per share basis in dividend per share. Thus
dividend per share is the earnings distributed to the ordinary shareholders divided by the
number of ordinary shares outstanding.

Dividend per share = Earnings paid to the ordinary shareholders/Number of ordinary shares
outstanding

DIVIDENDS PAY OUT RATIO (PAY OUT RATIO)

It measures the relationship between the earnings belonging to the equity shareholders and the
dividends paid to them. It shows what percentage shares of the earnings are available for the
ordinary shareholders are paid out as dividend to the ordinary shareholders. It can be calculated
by dividing the total dividend paid to the equity shareholders by the total earnings available to
them or alternatively by dividing dividend per share by earnings per share.

Dividend pays out ratio (Pay out ratio) = Total dividend paid to equity share holders/Total
earnings available to equity share holders

Or

Dividend per share


Earnings per share

DIVIDEND AND EARNINGS YIELD

While the earnings per share and dividend per share are based on the book value per share, the
yield is expressed in terms of market value per share. The dividend yield may be defined as the
relation of dividend per share to the market value per ordinary share and the earnings ratio as
the ratio of earnings per share to the market value of ordinary share.

Dividend Yield = Dividend Per share/Market value of ordinary share

Earnings yield = Earnings per share/Market value of ordinary share

PRICE EARNING RATIO

The reciprocal of the earnings yield is called price earnings ratio. It is calculated by dividing
the market price of the share by the earnings per share.

Price earnings (P/E) ratio = Market price of share/Earnings per share

It shows the relationship between profits & sales e.g. operating ratios, gross profit ratios,
operating net profit ratios, expenses ratios)It shows the relationship between profit &
investment e.g. return on investment, return on equity capital.

A profitability ratio is a measure of profitability, which is a way to measure a company's


performance. Profitability is simply the capacity to make a profit, and a profit is what is left
over from income earned after you have deducted all costs and expenses related to earning the
income. The formulas you are about to learn can be used to judge a company's performance and
to compare its performance against other similarly-situated companies.

The profitability ratios of a business concern can be measured by the profitability ratios. These
ratios highlight the end result of business activities by which alone the overall efficiency of a
business unit can be judged, (E.g.) gross ratios, and Net profit ratio

1. Profit Margin Ratio


The profit margin ratio, also called the return on sales ratio or gross profit ratio, is a profitability
ratio that measures the amount of net income earned with each dollar of sales generated by
comparing the net income and net sales of a company. In other words, the profit margin ratio
shows what percentage of sales are left over after all expenses are paid by the business.

Creditors and investors use this ratio to measure how effectively a company can convert sales
into net income. Investors want to make sure profits are high enough to distribute dividends
while creditors want to make sure the company has enough profits to pay back its loans. In other
words, outside users want to know that the company is running efficiently. An extremely low
profit margin formula would indicate the expenses are too high and the management needs to
budget and cut expenses.

The return on sales ratio is often used by internal management to set performance goals for the
future.

Net sales are calculated by subtracting any returns or refunds from gross sales. Net income
equals total revenues minus total expenses and is usually the last number reported on the
income statement.

Profit Margin Ratio Analysis

The profit margin ratio directly measures what percentage of sales is made up of net income. In
other words, it measures how much profits are produced at a certain level of sales.

This ratio also indirectly measures how well a company manages its expenses relative to its net
sales.
That is why companies strive to achieve higher ratios. They can do this by either generating
more revenues why keeping expenses constant or keep revenues constant and lower expenses.

Since most of the time generating additional revenues is much more difficult than cutting
expenses, managers generally tend to reduce spending budgets to improve their profit ratio.

Like most profitability ratios, this ratio is best used to compare like sized companies in the same
industry. This ratio is also effective for measuring past performance of a company.

1. Gross margin tells you about the profitability of your goods and services. It tells you
how much it costs you to produce the product. It is calculated by dividing your gross
profit (GP) by your net sales (NS) and multiplying the quotient by 100:

Gross Margin = Gross Profit/Net Sales * 100

2. Operating Profit Ratio

Operating margin takes into account the costs of producing the product or services that are
unrelated to the direct production of the product or services, such as overhead and
administrative expenses. It is calculated by dividing your operating profit (OP) by your net
sales (NS) and multiplying the quotient by 100:

Operating Margin = Operating Profit / Net Sales * 100

3. Net Profit Ratio

Net profit ratio is the percentage of revenue remaining after all operating expenses,
interest, taxes and preferred stock dividends (but not common stock dividends) have been
deducted from a company's total revenue.

The formula for net profit margin is:

(Total Revenue – Total Expenses)/Total Revenue = Net Profit/Total Revenue = Net


Profit Margin
4. Rate of Return Ratio

1. Return on Assets

Return on assets measures how effectively the company produces income from its
assets. You calculate it by dividing net income (NI) for the current year by the value of
all the company's assets (A) and multiplying the quotient by 100:

The return on assets ratio, often called the return on total assets, is a profitability ratio that
measures the net income produced by total assets during a period by comparing net income to
the average total assets. In other words, the return on assets ratio or ROA measures how
efficiently a company can manage its assets to produce profits during a period.

Since company assets’ sole purpose is to generate revenues and produce profits, this ratio helps
both management and investors see how well the company can convert its investments in assets
into profits. You can look at ROA as a return on investment for the company since capital assets
are often the biggest investment for most companies. In this case, the company invests money
into capital assets and the return is measured in profits. In short, this ratio measures how
profitable a company’s assets are

Return on Assets = Net Income / Assets * 100

Return on Assets Ratio Analysis


The return on assets ratio measures how effectively a company can earn a return on its
investment in assets. In other words, ROA shows how efficiently a company can convert the
money used to purchase assets into net income or profits.

Since all assets are either funded by equity or debt, some investors try to disregard the costs of
acquiring the assets in the return calculation by adding back interest expense in the formula.

It only makes sense that a higher ratio is more favorable to investors because it shows that the
company is more effectively managing its assets to produce greater amounts of net income. A
positive ROA ratio usually indicates an upward profit trend as well. ROA is most useful for
comparing companies in the same industry as different industries use assets differently. For
instance, construction companies use large, expensive equipment while software companies use
computers and servers.

2. Return on Equity

It measures how much a company makes for each dollar that investors put into it.

Return on Equity= Net Income/Shareholder Investment*100

3. Return on Capital Employed

Return on capital employed or ROCE is a profitability ratio that measures how efficiently a
company can generate profits from its capital employed by comparing net operating profit to
capital employed. In other words, return on capital employed shows investors how many dollars
in profits each dollar of capital employed generates.

ROCE is a long-term profitability ratio because it shows how effectively assets are performing
while taking into consideration long-term financing. This is why ROCE is a more useful ratio
than return on equity to evaluate the longevity of a company.

This ratio is based on two important calculations: operating profit and capital employed. Net
operating profit is often called EBIT or earnings before interest and taxes. EBIT is often
reported on the income statement because it shows the company profits generated from
operations. EBIT can be calculated by adding interest and taxes back into net income if need be.

Capital employed is a fairly convoluted term because it can be used to refer to many different
financial ratios. Most often capital employed refers to the total assets of a company less all
current liabilities. This could also be looked at as stockholders’ equity less long-term liabilities.
Both equal the same figure.

Formula

Return on capital employed formula calculated by dividing net operating profit or EBIT by the
employed capital.

Return On capital Employed = Net Operating Profit/ Total Assets-Current liabilities


If employed capital is not given in a problem or in the financial statement notes, you can
calculate it by subtracting current liabilities from total assets. In this case the ROCE formula
would look like this:

It isn’t uncommon for investors to use averages instead of year-end figures for this ratio, but it
isn’t necessary.
Chapter-2
Objectives of the
Study
Objectives of the Project
1. To analysis the profitability of the TechnoSpace.
2. To analysis the ability of the company to earn profit over a period of time.

Scope of the study

1. The main scope of the study was to put practical & theoretical aspect of the study
into real life work experience.

2. The Scope is limited to the TechnoSpace, Bathinda.


Chapter-3
Research
Methodology

25
Research Methodology

Research Methodology is a way to systematically solve the research problem. It deals with the
objective of a research study, the method of defining the research problem, the type of
hypothesis formulated, the type of data collected, method used for data collection and analyzing
the data etc. the methodology includes collection of secondary data

Sources of Data:

The sources of data include Secondary data.

Sources of Secondary data:


1. Most of the calculations are made on the financial statements that the company will provide.
2. Referring standard texts and referred books collected some of the information regarding
theoretical aspects.
Measurement Technique:

 Ratio analysis
 Comparative statement

Limitation of research:

1. Due to busy work schedules, the interests shown by employees to answer the questions

may be less. This may have resulted in collecting inaccurate information.

2. Time factor is the most crucial one. The study was conducted within a short period of

four months.

3. Techno Space executives were hesitating to provide information.

4. I had to wait for a long time to make contact with the executives, because they were busy

with their work.

26
5. It is also found that some of the executives lack interest, enthusiasm, initiative and

involvement, which was de-motivated me.

27
Chapter-4
Data Analysis &
Interpretation

28
Analysis of Financial Statements with Ratios

TechnoSpace
Balance Sheet

For the Period of 2015-2016 & 2016-2017

31.03.2016 LIABILITIES 31.03.2017

Authorized Share Capital:

4000.00 (40,00,000Shares of Rs.100each) 4000.00

2789.53 Share Capital:(Fully Paid Up) 2832.15

3110.39 Reserve Fund &Other Funds:(as per 3634.68


Schedule 1,Col.5)

1506.92 Grants:(as per Schedule 2,Col.6) 1466.92

831.80 NCDC BMC project Interest Free Loan 831.80


Loans(Secured):

0.00 Bank A/c –Milk Project 9224.98

50.00 HDFC Bank –TSC Project Loan 161.12

860.30 NCDC BMC Project Loan 810.39

0.00 Loan taken for Testing Lab. 183.51

0.00 Loan taken for Machines 96.68

1057.80 Axis Bank Long Term loan I 0.00

1184.82 Axis Bank Long Term loan II 0.00

3152.92

448.21 Redeemable Debenture:

7787.71 Fixed Deposits:

29
Current Liabilities:

336.18 Deposits 346.48

19202.52 Due to Societies 23851.96

3185.65 Outstanding Against Expenses 881.19

1767.94 Outstanding Against Purchases 5546.69

1568.72 Sundry Creditors 1865.66

7500.00 Bank Overdraft 8541

33561.01

Provisions:

557.78 Income Tax 1491.98

69.00 Fringe Benefit Tax 0.00

58.95 Doubtful Trade Debtors 58.95

1.50 Decline in Investment 1.50

578.24 Gratuity 172.33

36.21 Leave Encashment 65.61

1301.68 1790.38

Profit & Loss A/c:

926.65 Net Profit for the year 1070.29

55416.82 Total 72423.40

TRADING, PROFIT & LOSS ACCOUNT for the year ender 31St March, 2017

30
2015-2016 Particular 2016-2017

To Opening Stock

11121.03 Finished Goods Stock 9356.68

3709.66 Stock in Process 2618.92

527.77 Stock 289.37

0.00 Stock in Transit 134.90

3.94 Extra Stock 4.45

15362.40 12404.32

144763.65 To Purchases 159452.14

1123.63 To Purchases 0.00

28151.90 To Raw-Material Consumption 57527.08

744.39 To Research & Development Expenses 761.18

3623.20 To Processing Expenses 3260.62

12935.08 To Packaging Expenses 13813.88

5719.15 To Power & Fuel Expenses 7233.73

2651.94 To Salaries & Wages 2518.81

808.58 To Staff Provident Fund 1068.27

1577.01 To Repair & Maintenance Expenses 2140.12

1839.47 To Freight & Forwarding Expenses 818.34

149.36 To Marketing Expenses 106.45

64.93 To Telegram, Telephone, Postage

Printing & Stationary Expenses 106.24

31
50.73 To Insurance Premium 100.40

129.19 To Rent, Rate, Taxes 168.38

178.67 To Audit Fees 201.19

355.79 To Administration Expenses 266.85

1569.39 To Interest & Market Commission 1441.25

1614.63 Less Adjust Against Grants 1891.72

212.78 To IT Provision 983.08

3.54 To Prior Period Expenses 0.00

926.65 To Net Profit 1070.29

224556.07 267334.34

32
Return on Total Aseets

Year Net Pofit Total Assets Ratio

2015-16 926.65 40141.86 2.31

2016-17 1070.29 42613.33 2.51

Chart Title
2015-16 2016-17

42613.33

40141.86

1070.29

2.51
926.65

2.31
Net Pofit
Total Assets
Ratio

Interpretation

The above table shows the relationship between net profit and total assets in percentage. The
company earns a good return in the year 2016-17 as compare to 2015-16.

33
Operating Profit Ratio

Year Operating Profit Net Sales Ratio

2015-16 1021.5 15270.87 6.7

2016-17 1152.1 15827.85 7.2

Chart Title
2015-16 2016-17

15827.85
15270.87

1021.5 1152.1
6.7 7.2

Operating Profit Net Sales Ratio

Interpretation

The above table shows the relationship between net sales and operating profit. The company
earns a good profit in the year 2016-17 as compare to 2015-16.

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Net Profit Ratio

Year Net Pofit Net Sales Ratio

2015-16 926.65 15270.87 6.07

2016-17 1070.29 15827.85 6.76

Chart Title
2015-16 2016-17

15827.85

15270.87

1070.29

926.65 6.76

6.07
Net Pofit
Net Sales
Ratio

Interpretation

The above table shows that relationship between the Net profit and net sales in percentage.
During 2015-16 the gross profit position was 6.07 and in the next year 6.76 it was increasing.
But the net sales increase as compare to previous year.

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Gross Profit Ratio

Year Gross Pofit Net Sales Ratio

2015-16 1560.10 15270.87 10.21

2016-17 1438.10 15827.85 9.08

Chart Title
2015-16 2016-17

15827.85

15270.87

1438.1

1560.1 9.08

10.21
Gross Pofit
Net Sales
Ratio

Interpretation

The above table shows that relationship between the gross profit and net sales in percentage.
During 2015-16 the gross profit position was 10.21 and in the next year 9.08 it was decreasing.

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Return on Equity Ratio

Year Net Income Share Holder Ratio


Investment

2015-16 225482.72 4000 56.4

2016-17 268404.63 4000 67.1

Chart Title
2015-16 2016-17

268404.63

225482.72

4000 4000 56.4 67.1

Net Income Share Holder Investment Ratio

Interpretation

The above table shows that relationship between the Net income and share holder investment in
percentage. During 2015-16 the ratio was 56.04 and in the next year 67.1 it was increasing. But
the net income increase as compare to previous year.
37
Chapter-5
Findings of the Study

38
Findings of the Study

I started my survey with some sincere efforts was quite successful to obtain information from

respondent regarding different aspect of product. The conclusions of this report are as follows:.

1. The company earns a good return in the year 2016-17 as compare to 2015-16.

2. The relationship between net sales and operating profit. The company earns a good profit

in the year 2016-17 as compare to 2015-16.

3. Relationship between the Net profit and net sales in percentage. During 2015-16 the gross

profit position was 6.07 and in the next year 6.76 it was increasing. But the net sales

increase as compare to previous year.

4. The survey says that relationship between the gross profit and net sales in percentage.

During 2015-16 the gross profit position was 10.21 and in the next year 9.08 it was

decreasing.

5. The operating profit ratio of the Techno Space is in fluctuating manner.

6. The Net income and share holder investment in percentage. During 2015-16 the ratio was

56.04 and in the next year 67.1 it was increasing. But the net income increase as compare

to previous year.

39
Chapter-6
Suggestions of the
Study

40
Suggestion of the Study

1. The company's profit over the last two years has been increasing when compared to
previous year and even it incurred loss in the last year. The company must increase the
profit in future. The company must take steps to increase the profit level.

2. The Gross Profit ratio can be improved by increasing the gross profit and the factors
decreasing the gross profit ratio should be thoroughly checked timely whether they are
operating factors or any misleading factors.

3. Non-operating expense of the company is high. So the management should take


necessary steps to reduce the non-operating expenses. The management should take steps
to reduce the borrowed capital.

4. Net fixed asset of the company has increased and even though they are not utilizing the
enhanced technology to increase sales. So the management should take initiative steps for
the proper utilization of the resources.

5. The cash ratio position of the company is not satisfactory for the last five years. It is
fluctuating over the years and there is no standard ration maintained. So the management
should take steps to improving the cash position of the company.

6. The Management must also study the market position and it also find the demand
prevailing in the market for the products and thus this will guide them to enhance their
sales volume.

41
Chapter-7
Conclusion

42
Conclusion of the Study

After this report I conclude that the company's profit over the last two years has been increasing

when compared to previous year and even it incurred loss in the last year. The company must

increase the profit in future. Cash ratio position of the company is not satisfactory for the last

five years. It is fluctuating over the years and there is no standard ration maintained. So the

management should take steps to improving the cash position of the company.

So I conclude that the Management must also study the market position and it also find the

demand prevailing in the market for the products and thus this will guide them to enhance their

sales volume.

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BIBLIOGRAPHY

44
Books:

1. Khan & Jain, Financial Management 14th edition.

2. I.M. Pandey, Financial Management.

Websites:

1. www.technospacebathinda.com
2. www.google.com

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