TERM PAPER ON

HERO HONDA MOTORS LTD.

ACCOUNTING FOR
MANAGERS

SUBMITTED TO: SUBMITTED BY:

Ms .Anushital sinha DIPENDRA KUMAR

REG NO:-11000781

ROLL NO:-B32

MBA- I.T
 HERO HONDA
Hero Honda Motors Ltd. is the world's largest manufacturer of two – wheelers, based in
India.

The company is a joint venture between India's Hero Group and Honda Motor Company,
Japan that began in 1984.

In 2001, the company achieved the coveted position of being the largest two-wheeler
manufacturing company in India and the ‘World No.1’ two-wheeler company in terms of
unit volume sales in a calendar year by a single company. Hero Honda has retained that
coveted position till date.

Today, every second motorcycle sold in the country is a Hero Honda bike. Every 30
seconds, someone in India buys Hero Honda's top-selling motorcycle – Splendor.

These are some glorious years in Hero Honda history:

1985 CD-100
1989 SLEEK
1991 CD-100 SS
1994 Splendor
1997 Street
1999 CBZ
2001 PASSION
2002 DAWN, AMBITION
CD-DAWN, SPLENDOR +, PASSION +,
2003
KARIZMA
SUPER-SPLENDOR, CD-DELUX,
2005
GLAMOUR, ACHIEVER

Vision
The Hero Honda story began with a simple vision – the vision of a mobile and an
empowered India, powered by Hero Honda. This vision was driven by Hero Honda’s
commitment to customer, quality and excellence, and while doing so, maintaining the
highest standards of ethics and societal responsibilities. Hero Honda believes that the
fastest way to turn that dream into a reality is by remaining focused on that vision.

Strategy
Hero Honda’s key strategy has been driven by innovation in every sphere of activity –
building a robust product portfolio across categories, exploring new markets, aggressively
expanding the network and continuing to invest in brand building activities.

Manufacturing
Hero Honda bikes are manufactured across three globally benchmarked manufacturing
facilities. Two of these are based at Gurgaon and Dharuhera which are located in the state
of Haryana in northern India. The third and the latest manufacturing plant is based at
Haridwar, in the hill state of Uttrakhand.

Technology
In the 1980’s Hero Honda pioneered the introduction of fuel-efficient, environment friendly
four-stroke motorcycles in the country. Today, Hero Honda continues to be technology
pioneer. It became the first company to launch the Fuel Injection (FI) technology in Indian
motorcycles, with the launch of the Glamour FI in June 2006.

Products
Hero Honda's product range includes variety of motorcycles that have set the industry
standards across all the market segments. The company also started manufacturing
scooter in 2006. Hero Honda offers large no. of products and caters to wide variety of
requirements across all the segments.

Distribution
The company's growth in the two wheeler market in India is the result of an intrinsic ability
to increase reach in new geographies and growth markets. Hero Honda's extensive sales
and service network now spans close to 4500 customer touch points. These comprise a
mix of authorized dealerships, Service & Spare Parts outlets, and dealer-appointed outlets
across the country.

Brand
The company has been continuously investing in brand building utilizing not only the new
product launch and new campaign launch opportunities but also through innovative
marketing initiatives revolving around cricket, entertainment and ground- level activation.

Hero Honda has been actively promoting various sports such as hockey, cricket and golf.
Hero Honda was the title sponsor of the Hero Honda FIH Hockey World Cup that was
played in Delhi during Feb-March 2010. Hero Honda also partners the Commonwealth
Games Delhi 2010.

2009-10 Performance
Total unit sales of 46,00,130 two-wheelers, growth of 23.6 per cent
Total net operating income of Rs. 15860.51 Crores, growth of 28.1 per cent
Net profit after tax at Rs. 2231.83 Crores, growth of 74.1 per cent
Final dividend of 1500% or Rs. 30 per share on face value of each share of Rs. 2
EBIDTA margin for the year 17.4 per cent
EPS of Rs. 111.77, growth of 74.1 per cent

These are some big personalities of hero Honda:

No Name of the Designation

. Directors

1 Mr. Brijmohan Lall Chairman & Whole-time

Munjal Director

2 Mr. Pawan Munjal Managing Director & CEO

3 Mr. Toshiaki Joint Managing Director

Nakagawa

4 Mr. Sumihisa Fukuda Technical Director

5 Mr. Om Prakash Non-executive Director

Munjal

6 Mr. Sunil Kant Munjal Non-executive Director

7 Mr. Masahiro Non-executive Director

Takedagawa

8 Mr. Satoshi Matsuzawa Non-executive Director

 (Alternate Director to
Mr. Takashi Nagai)

9 Mr. Pradeep Dinodia Non-executive &

Independent Director

10 Gen.(Retd.) V. P. Malik Non-executive &

Independent Director

11 Mr. Analjit Singh Non-executive &

Independent Director

12 Dr. Pritam Singh Non-executive &

Independent Director

13 Ms. Shobhana Bhartia Non-executive &

Independent Director

14. Mr. Meleveetil Non-executive &

Damodaran Independent Director

15. Mr. Ravi Nath Non-executive &

Independent Director

16. Dr. Anand C. Burman Non-executive &

Independent Director

COMPARATIVE BALANCE SHEET

Mar Mar absolute %

'09 '10 change change

Total Share Capital 39.94 39.94 0 0

Equity Share Capital 39.94 39.94 0 0
Share Application Money 0 0 0 0
Preference Share Capital 0 0 0 0

3,760.8 3,425.0
Reserves 1 8 -335.73 -8.93
Revaluation Reserves 0 0 0 0
3,800. 3,465.
Networth 75 02 -335.73 -8.83
Secured Loans 0 0 0 0
Unsecured Loans 78.49 66.03 -12.46 -15.87
Total Debt 78.49 66.03 -12.46 -15.87
Deffered Credit 0 0 0 0
 1,678.9 3,965.6
Current Liabilities 3 9 2286.76 136.2
1,026.3
Provisions 526.97 5 499.38 94.76
2,205. 4,992.
Total CL & Provisions 90 04 2786.14 126.3

6,085. 8,523.
total liabilities 14 09 2437.95 40.06

Mar '09 Mar '10

2,516.2 2,750.9
Gross Block 7 8 234.71 9.33
Less: Accum. 1,092.2
Depreciation 942.56 0 149.64 15.88
1,573. 1,658.
Net Block 71 78 85.07 5.41
Capital Work in Progress 120.54 48.14 -72.40 -60.06
3,368. 3,925.
Investments 75 71 556.96 16.53
Inventories 326.83 436.4 109.57 33.52
Sundry Debtors 149.94 108.39 -41.55 -27.71
1,863.4
Cash and Bank Balance 217.49 8 1,645.99 756.81
2,408.
Total Current Assets 694.26 27 1,714.01 246.88
Loans and Advances 325.8 438.46 112.66 34.58
Fixed Deposits 2.08 43.73 41.65 2002.4
Total CA, Loans & 1,022. 2,890.
Advances 14 46 1,868.32 182.78
Miscellaneous Expenses 0 0 0.00 0
6,085. 8,523.
Total Assets 14 09 2,437.95 40.06
Contingent Liabilities 100.54 73.04 -27.50 -27.35
Book Value (Rs) 190.33 173.52 -16.81 -8.83

COMPARATIVE PROFIT &

LOSS A/C

%
ABSOLUTE CHANGE
31/3/2009 31/3/2010 CHANGES S

24.37205
Sales Turnover 13,553.23 16,856.43 3,303.20 006
-
17.18450
Excise Duty 1,227.85 1,016.85 -211.00 951
 28.51189
Net Sales 12,325.38 15,839.58 3,514.20 984
30.85891
Other Income 222.14 290.69 68.55 78
-
152.2408
Stock Adjustments 22.09 -11.54 -33.63 33
28.2357
Total Income 12,569.61 16,118.73 3,549.12 2092

22.40238
Raw Materials 8,842.14 10,822.99 1,980.85 223
9.972862
Power & Fuel Cost 73.7 81.05 7.35 958
24.89022
Employee Cost 448.65 560.32 111.67 623
Other Manufacturing 28.32128
Expenses 354.08 454.36 100.28 333
Selling and Admin 32.09797
Expenses 669.98 885.03 215.05 307
Miscellaneous 36.29917
Expenses 205.9 280.64 74.74 436
Preoperative Exp
Capitalised 0 0 0.00 0
23.5023
Total Expenses 10,594.45 13,084.39 2,489.94 0545

56.50990
Operating Profit 1,753.02 2,743.65 990.63 861
53.62502
PBDIT 1,975.16 3,034.34 1,059.18 278
-
14.57055
Interest 13.04 11.14 -1.90 215
54.07824
PBDT 1,962.12 3,023.20 1,061.08 19
5.983615
Depreciation 180.66 191.47 10.81 632
Other Written Off 0 0 0.00 0
58.95557
Profit Before Tax 1,781.46 2,831.73 1,050.27 576
Extra-ordinary items 0 0 0.00 0
PBT (Post Extra-ord 58.95557
Items) 1,781.46 2,831.73 1,050.27 576
20.05203
Tax 499.7 599.9 100.20 122
Reported Net 74.1223
Profit 1,281.76 2,231.83 950.07 0059
29.05250
Total Value Addition 1,752.31 2,261.40 509.09 783
Preference Dividend 0 0 0.00 0
449.9924
Equity Dividend 399.38 2,196.56 1,797.18 884
Corporate Dividend 67.87 371 303.13 446.6332
Tax 695

Shares in issue
(lakhs) 1,996.88 1,996.88 0.00 0
Earning Per Share 74.12369
(Rs) 64.19 111.77 47.58 528
Equity Dividend (%) 1,000.00 5,500.00 4,500.00 450
-
8.832028
Book Value (Rs) 190.33 173.52 -16.81 582

COMMON SIZE
BALANCE SHEET

Mar % M
'09 Share ar '10 % Share

Total Share Capital 39.94 - 39.94 - -

Equity Share Capital 39.94 0.66 39.94 0.47
Share Application
Money 0 0 0 0
Preference Share
Capital 0 0 0 0
Reserves 3,760.81 61.8 3,425.08 40.19
Revaluation
Reserves 0 0 0 0

Networth 3,800.75 - 3,465.02 -

Secured Loans 0 0 0 0
Unsecured Loans 78.49 1.29 66.03 0.78

Total Debt 78.49 - 66.03 -

Deffered Credit 0 0 0 0
Current Liabilities 1,678.93 27.6 3,965.69 46.53
Provisions 526.97 8.66 1,026.35 12.05
Total CL &
Provisions 2,205.90 - 4,992.04 -
total liabilities 6,085.14 100 8,523.09 100

Mar M
'09 ar '10

Gross Block 2,516.27 - 2,750.98 -

Less: Accum.
Depreciation 942.56 - 1,092.20 -
Net Block 1,573.71 25.87 1,658.78 19.46
Capital Work in
Progress 120.54 1.99 48.14 0.57
Fixed Deposits 2.08 0.034 43.73 0.51
Investments 3,368.75 55.36 3,925.71 46.06
Inventories 326.83 5.38 436.4 5.12
Sundry Debtors 149.94 2.46 108.39 1.27
Cash and Bank
Balance 217.49 3.58 1,863.48 21.86
Total Current
Assets 694.26 - 2,408.27 -
Loans and Advances 325.8 5.35 438.46 5.14
Total CA, Loans &
Advances 1,020.06 - 2,846.73 -
Miscellaneous
Expenses 0 0 0 0
Total Assets 6,083.06 100 8,479.36 100

Contingent Liabilities 100.54 - 73.04 -

Book Value (Rs) 190.33 - 173.52 -

\
COMMON SIZE PROFIT &
LOSS A/C

31/3/20
09 % 31/3/2010 %
 13,553.
Sales Turnover 23 0.00 16,856.43 0.00
1,227.8
Excise Duty 5 0.00 1,016.85 0.00
12,325.
Net Sales 38 100.00 15,839.58 100.00
Other Income 222.14 1.8 290.69 1.85
Stock Adjustments 22.09 0.18 -11.54 0.07
12,569.
Total Income 61 0 16,118.73 0

8,842.1
Raw Materials 4 71.74 10,822.99 68.33
Power & Fuel Cost 73.7 0.60 81.05 0.52
Employee Cost 448.65 3.64 560.32 3.54
Other Manufacturing Expenses 354.08 2.82 454.36 2.87
Selling and Admin Expenses 669.98 5.44 885.03 5.58
Miscellaneous Expenses 205.9 1.67 280.64 1.77
Preoperative Exp Capitalised 0 0.00 0 0
10,594.
Total Expenses 45 0.00 13,084.39 0

1,753.0
Operating Profit 2 0.00 2,743.65 0.00
1,975.1
PBDIT 6 0.00 3,034.34 0.00
Interest 13.04 0.11 11.14 0.07
1,962.1
PBDT 2 0 3,023.20 0
Depreciation 180.66 1.47 191.47 1.21
Other Written Off 0 0 0 0
1,781.4
Profit Before Tax 6 0 2,831.73 0
Extra-ordinary items 0 0 0 0
1,781.4
PBT (Post Extra-ord Items) 6 0 2,831.73 0
Tax 499.7 4.05 599.9 3.79
1,281.7
Reported Net Profit 6 10.4 2,231.83 14.09
1,752.3
Total Value Addition 1 0 2,261.40 0
Preference Dividend 0 0 0 0
Equity Dividend 399.38 0 2,196.56 0
Corporate Dividend Tax 67.87 0 371 0

1,996.8
Shares in issue (lakhs) 8 0.00 1,996.88 0.00
Earning Per Share (Rs) 64.19 0 111.77 0
1,000.0
Equity Dividend (%) 0 0.00 5,500.00 0.00
Book Value (Rs) 190.33 0 173.52 0
 TREND PROFIT &
LOSS A/C

31/3/200
9 % 31/3/2010 %

13,553.2
Sales Turnover 3 100.00 16,856.43 124.37
Excise Duty 1,227.85 100.00 1,016.85 82.82
12,325.3
Net Sales 8 100.00 15,839.58 128.511
Other Income 222.14 100.00 290.69 130.82
Stock Adjustments 22.09 100.00 -11.54 -52.24
12,569.6
Total Income 1 100.00 16,118.73 128.24

Raw Materials 8,842.14 100.00 10,822.99 122.4

Power & Fuel Cost 73.7 100.00 81.05 110
Employee Cost 448.65 100.00 560.32 124.9
Other
Manufacturing
Expenses 354.08 100.00 454.36 128.32
Selling and Admin
Expenses 669.98 100.00 885.03 132.1
Miscellaneous
Expenses 205.9 100.00 280.64 136.3
Preoperative Exp
Capitalised 0 100.00 0 0
10,594.4
Total Expenses 5 100.00 13,084.39 123.5

Operating Profit 1,753.02 100.00 2,743.65 156.51

PBDIT 1,975.16 100.00 3,034.34 153.6
Interest 13.04 100.00 11.14 85.43
PBDT 1,962.12 100.00 3,023.20 154.07
Depreciation 180.66 100.00 191.47 105.98
Other Written Off 0 100.00 0 0
Profit Before Tax 1,781.46 100.00 2,831.73 158.95
Extra-ordinary
items 0 100.00 0 0
PBT (Post Extra-
ord Items) 1,781.46 100.00 2,831.73 158.95
Tax 499.7 100.00 599.9 120
Reported Net
Profit 1,281.76 100.00 2,231.83 174.12
Total Value
Addition 1,752.31 100.00 2,261.40 129.05
Preference
Dividend 0 100.00 0 0
Equity Dividend 399.38 100.00 2,196.56 550
Corporate
Dividend Tax 67.87 100.00 371 546.33

Shares in issue
(lakhs) 1,996.88 100.00 1,996.88 100
Earning Per Share
(Rs) 64.19 100.00 111.77 174.12
Equity Dividend
(%) 1,000.00 100.00 5,500.00 550
Book Value (Rs) 190.33 100.00 173.52 91.17

TREND BALANCE SHEET

Mar
'09 Mar '10

Total Share Capital 39.94 100 39.94 100

Equity Share Capital 39.94 100 39.94 100
Share Application
Money 0 100 0 0
Preference Share
Capital 0 100 0 0
Reserves 3,760.81 100.00 3,425.08 91.07
Revaluation
Reserves 0 100 0 0
3,800.7
Networth 5 100.00 3,465.02 91.17
Secured Loans 0 100 0 0
Unsecured Loans 78.49 100 66.03 84.14
Total Debt 78.49 100 66.03 84.14
Deffered Credit 0 100 0 0
Current Liabilities 1,678.93 100.00 3,965.69 236.2
Provisions 526.97 100 1,026.35 194.76
Total CL & 2,205.9
Provisions 0 100.00 4,992.04 226.3

6,085.1
total liabilities 4 100.00 8,523.09 140.06

Mar '09 Mar '10

Gross Block 2,516.27 100.00 2,750.98 109.33

Less: Accum.
Depreciation 942.56 100 1,092.20 115.88
1,573.7
Net Block 1 100.00 1,658.78 105.40
Capital Work in 120.54 100 48.14 39.94
Progress
3,368.7
Investments 5 100.00 3,925.71 116.53
Inventories 326.83 100 436.4 133.52
Sundry Debtors 149.94 100 108.39 72.29
Cash and Bank
Balance 217.49 100 1,863.48 856.8
Total Current
Assets 694.26 100.00 2,408.27 346.88
Loans and Advances 325.8 100 438.46 134.58
Fixed Deposits 2.08 100 43.73 2102.4
Total CA, Loans & 1,022.1
Advances 4 100.00 2,890.46 282.7
Miscellaneous
Expenses 0 100 0 0
6,085.1
Total Assets 4 100.00 8,523.09 140.06
Contingent Liabilities 100.54 100 73.04 72.65
Book Value (Rs) 190.33 100 173.52 91.17

RATIO ANALYSIS

Ratio analysis is the calculation and comparison of ratios which are derived from
the information in
a company's financial statements. The level and historical trends of these ratios can be
used to make
inferences about a company's financial condition, its operations and attractiveness as an
investment.

Financial ratios are calculated from one or more pieces of information from a company's financial

statements. For example, the "gross margin" is the gross profit from operations divided by the total sales or

revenues of a company, expressed in percentage terms. In isolation, a financial ratio is a useless piece of

information. In context, however, a financial ratio can give a financial analyst an excellent picture of a

company's situation and the trends that are developing.

A ratio gains utility by comparison to other data and standards. Taking our example, a gross profit

margin for a company of 25% is meaningless by itself. If we know that this company's competitors have

profit margins of 10%, we know that it is more profitable than its industry peers which is quite favourable. If

we also know that the historical trend is upwards, for example has been increasing steadily for the last few

years, this would also be a favourable sign that management is implementing effective business policies and

strategies.

Financial ratio analysis groups the ratios into categories which tell us about different facets of a

company's finances and operations. An overview of some of the categories of ratios is given below.
 • Leverage Ratios which show the extent that debt is used in a company's capital
structure.
• Liquidity Ratios which give a picture of a company's short term financial situation or
solvency.
• Operational Ratios which use turnover measures to show how efficient a company
is in its operations
• and use of assets
• Profitability Ratios which use margin analysis and show the return on sales and
capital employed.
• Solvency Ratios which give a picture of a company's ability to generate cash flow
and pay it financial obligations.

Although financial ratio analysis is well-developed and the actual ratios are well-known, practicing

financial analysts often develop their own measures for particular industries and even individual companies.

Analysts will often differ drastically in their conclusions from the same ratio analysis.

RATIO ANALYSIS

1) LIQUIDITY RATIOS:

a) Current ratio: Current assets

Current liabilities

2009 = 1,020.06
2205.9 =.46

2010 = 2846.73
4992.04 =.57

b) Quik ratio : liquid assets

Current liabilities

2009 = Liquid assts = current assets – stock

 1020.06 – 326.83 = 693.23

QR = 693.23
2205.9 = .31

2010 = liquid assets = 2846.73– 436.4 = 2410.33

QR = 2410.33
4992.04 =.48

 INTERPRETATION OF LIQUDITY RATIOS:

A) The ideal current ratio is 2:1.
B) In 2009 it was .46:1 which does not match with ideal.
C) In 2010 CR is .57:1 which is very & comparative low.
D) According to this ratio the financial position of Hero Honda is not good.
E) Current assets should be double of current liabilities.
F) Quik ratio is good(.31:1) in 2009. The ideal QR is 1:1.
G) In 2010 QR is 0.48:1 which is below desirable level.
H) The main reason for this situation is raising more current liabilities.

2) SOLVENCY RATIOS :

A) Bebt equity ratio : debt

Equity

2009 = 78.49
3800.75 = .021
 2010 = 66.03
3465.02 = .019

B) Debt to total fund ratio : debt

Total funds

2009 = 78.49
6085.14 =.013 * 100 = 1.3

2010 = 66.03
8523.09 = .008 * 100 = .8

C) Interest coverage ratio : NPBIT

Interest charges

2009 = 1975.16
13.04 = 151.47 times

2010 = 3034.34
11.14 = 272 times

 INTERPRETATION OF SOLVENCY RATIOS:

A)The ideal DEBT EQUITY RATIO is 2:1. It means co. should arrange funds from debt
twice than equity.
B) In 2009 DER is .021 & in 2010 this is .19. Which is less than desirable level.
C)The DEBT TO TOTAL FUNDS RATIO should be under 50%.
D) If it is more than 50% it would be risky for any organization because in that
condition it will depends on outside liabilities. Which leads to higher interest.
E) This ratio is under control in both years.

3) ACTIVITY RATIO :
A) Stock turnover ratio : cost of goods sold
Average stock

2009 = 12325 . 38
259.48 = 47.5 times

2010 = 15839. 58
381.615 = 41.51 times

B) Capital turnover ratio(CTR) : cost of goods sold

Total capital employed

Total capital employed (TCE) = Fixed assets + working capital

2009 = TCE = 1573.71 + (1020.06– 2205.9)

=1573.71 – 1185.84
= 387.87
CTR = 12325.38
387.87 = 31.77 times

2010 = TCE = 1658.78 + (2846.73 – 4992.04)

= 1658.78 – 2145.31
= - 486.53

CTR = 15839.58
-486.53 = - 32.56 times

C) Fixed assets turnover ratio : sales

Total fixed assets
2009 = 12325.38
1573.71 = 7.83
 2010 = 15839 .58
1658.78 = 9.55

D) Working capital turnover ratio : cost of sales

Working capital

2009 = 12325.38
1185.84 = 10.4

2010 = 15839.58
2145.31 = 7.38

 INTERPRETATION OF ACTIVITY RATIOS:

A)STOCK TURNOVER RATIO means how many times the inventories/ stock of a company
is rotated in a year.
B) It was 47.5 times in 2009 & 41.51 in 2010.
C)CAPITAL TURNOVER RATIO shows that how efficiently the capital is being used in the
business.
D) It is decreasing in last financial year. That shows inefficiency of this company
E) FIXED ASSETS TURNOVER RATIO shows how we are using our assets for generating
sale. It also shows whether adequate investment in fixed assets.
F) FATR is7.83 & 9.55 in respectively years.
G) WORKING CAPITAL TURNOVER RATIO tells the velocity of the utilization of net
working capital.
H) This ratio has decreased from 10.4 to 7.38 times in last year. This kind of changes
may be dangerous for an organization.

4) PROFITABILITY RATIOS :

A) Net profit ratio : net profit

sales
 2009 = 1281.76
12325.38 = .104 * 100 = 10.4

2010 = 2231.83
15839.58 = .141 * 100 = 14.1

B) Operating profit ratio : operating profit

Sales

2009 = 1753.76
12325.38 = .142 * 100 = 14.2

2010 = 2743.65
15839.58 = .173 * 100 = 17.3

C) Earning per share : net profit after preference dividend

No of Equity shares

2009 = 1281.76
1996.88 = .642

2010 = 2231.83
1996.88 = 1.12

D) Dividend per share : equity dividend

No. of equity

2009 = 399.38
1996.88 =.20
 2010 = 2196.56
1996.88 = 1.1

E) Payout ratio = dividend per share

Earning per share

2009 = 0.20
0.642 = .31 * 100 = 31

2010 = 1.1
1.12 = .98 * 100 = 98

 INTERPRETATION OF PROFITABILITIES RATIOS:

1)THE NET PROFIT & OPERATING PROFIT OF HERO HONDA HAS INCREASED
IN LAST 2 YEARS WHICH IS THE STAGE COMPANY WANTS IT.
2)IN 2009 THEY WERE EARNING .642 ON EVERY SHARE BUT IN 2010 THIS
HAS INCREASED TO 1.12.
3)THE DIVIDEND HAS ALSO INCREASED IN LAST TWO CONSECTIVE YEARS.
4)HERO HONDA IS PAYING DIVIDEND AT 98 % OUT OF THEIR EARNING PER
SHARE.
 CASH FLOW STATEMENT OF
2010

 CASH FROM OPERATING ACTIVITIES =

2686.64

NET PROFIT BEFORE TAX = 2831.73

(+) INTEREST = 11.14
(+) INCREASE IN CURRENT LIABILITIES = 2602.84
(-)INCREASE IN CURRENT LIABILITIES = 1826.67
(-) INCOME TAX PAID = 1100.00

 CASH FLOW FROM INVESTING ACTIVITIES =

( 527.9)

PURCHASE OF FIXED ASSETS = (85.07)

PURCHASE OF INVESTMENTS = (556.96)
WORK IN PROGRESS = 72.4
FIXED DEPOSITES = 41.65
CASH FLOW FROM FINANCING ACTIVITIES =
(2109.3)

DIVIDEND PAID = (2085.7)

INTEREST PAID = (11.14)
LOAN PAID = (12.46)

NET DECREASE IN CASH & CASH EQUILANTS

= 49.44

(+) OPENING BALANCE OF CASH & CASH EQUILANTS =

13.45
CLOSING BALANCE OF CASH & CASH EQUILANTS =
63.15

FUND FLOW STATEMENT

Fund Flow Statements summarize a firm’s inflow and outflow of funds. Simply put, it
tells investors

where funds have come from and where funds have gone. The statements are often used
to determine

whether companies efficiently source and utilize funds available to them.

This statement shows the flow of funds, flow of funds means movement of working
capital over a
period of time. In other words , increase or decrease in the working capital reflects the flow
of funds.
When a transaction increases the working capital , it is known as a source of fund and
when it decreases
the working capital, it is termed as use of funds. When a business transaction does affect
the working
capital, no flow of funds take place. So we can say that a statement which depicts the
various sources and
uses of fund is known as fund flow statement.

CHANGES IN WORKING
CAPITAL

2 2 IN DE
P
0 0 C CR
A 0 1 R EA
R 9 0 E SE
T A IN
I S W.
C E C
U IN
W
L .C
A
R
S

CURREN
T 32 4 10
ASSETS: 6. 3 16 9.5
Inventori 83 6. 45 7
es 14 4 .9 41.
Debtors 9. 1 9 55
Cash 94 0 11
Loans & 21 8. 2.
Advance 7. 3 66
s 49 9 41 22
FIXED 32 1 .6 86.
DEPOSIT 5. 8 5 76
ES 8 6 49
2. 3.
9.3
CURREN 08 4 8
T 8 18 29
LIABILITI 16 4 00 37.
ES: 78 3 .3 26
Current .9 8.
liabilities 3 4 11
Provision 52 6 36.
s 6. 4 96
Changes 97 3.
in WC 7
3
 Net decrease in WC
3965.6
9
1026.3
5

Fund flow statement

Sources amount application amount
To decrease in To sale of fixed asset 85.07
work in 72.4 By payment of
progress unsecured loans
1136.96 By Uses of reserves 12.46
To decrease in
335.73
work in capital 3023.2 By payment of 11.14
To funds from interest
1100
operation By payment of tax
By purchase of 556.96
investments

Fund from operation

Net profit before tax as on 31mar 2010 2831.73

Add: depreciation 191.47
3023.2

INTERPRETATION OF FUNDS FLOW

STATEMENT

 Inventories have increased from 326.83 to 436.4. Because of this working

capital also increased.
 Debtors are current assets that is why decreases in debtors leads to same
results in working capital.
  Here cash & bank balance is increases by 1645.99. This is the reason to
increase in WC.
 Loans & advances & fixed deposits are increasing by 154.31. These are
giving same impact on WC.
 The current liabilities of jet airways are increasing in comparison of last year
& that is why WC is decreasing by 2286.76 by this transaction.
 The provisions also our current liabilities & these are increasing by 499.38
in a financial year.
 The decrement in WORKING CAPITAL is 1136.96.
 The jet airways have sold its fixed assets of 85.07 in last year to create
sources of money.
 They paid some unsecured loans (12.46) in last financial year.

COST SHEET

Cost sheet is a statement of cost. In other words, when costing information are set out in the form of a
statement, it is called cost sheet. It is usually adopted when there is only one product is produced and
all costs are incurred for that product only. Cost sheet may be prepared for a week, monthly, quarterly
or yearly indicating various components of cost as prime cost, works cost, cost of production, cost of
goods sold, total cost and also profitability on a production.

The preparation of cost sheet depends on the cost data provided by cost accounting. Due to differences
in the nature of cost data there are three different cost sheet Performa may be used.

(a) Cost sheet with break up cost: These types of cost sheet contains two column as total cost, cost per
unit of out put. A specimen of cost sheet with imaginary figure.

(b) Cost Sheet with treatment of Stock: This type of cost sheet is maintained in case of manufacturing
concern. Generally there are three types of stock as (1) Stock of Raw material, (2) Stock of work in
progress and (3) Stock of finished goods. The treatment of stock in cost sheet has been given in a
separate Performa.

(c) Estimated cost sheet or price quotation: Price quotation means quoting the minimum price for
obtaining a specific order. The quotation is send in the form or estimated cost sheet having one column.
In estimated cost sheet all elements of cost and overhead expenses are calculated in the following
manner.
Estimated direct material
Estimated labor cost
Estimated overhead

Interpretation: -
This is the cost sheet of HERO HONDA MOTORS LTD.. This shows the overall cash flow for the year 2009 and
2010. As we see the total prime cost of the company increase this year this shows that company use more direct
material this year as compare with previous year. There is also increase in total factory over head this include
interconnect and port change, installation, power and fuel, rent and repairs and maintenance this all increase the
cost of factory overhead cost. This is all incurred within the factory while production. The salaries and sales and
marketing expenses also decrease this year as compare with previous year. This because of huge cutting in
employee’s cost. Because of total increase in prime cost, total factory cost, and decrease in administration
overhead and also selling and distribution overhead and total factory overhead, total increase is less than total
decrease for that it decrease the cost of sales of the company. It decreases the total profit of the company as
compare with this year that is 2010.

 REFERENCES:

1) www.google.com
2) Wikipedia
3) www.herohonda.com
4) Text book
5) www.moneycontrol.com