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    Submitted toKumaun University Nainital



    DEPARTMENT OF MANAGEMENT STUDIES,Kumaun University, Nainital Uttarakhand`

    Submitted By:



  • 8/13/2019 Govind Financial Analysis



    I Govind Singh hereby declare that the summer training project report entitled

    Performance Appraisal System with special reference to EDGE MANAGEMENT

    CONSULTANTS PRIVATE LIMITED being submitted to Department of

    Management Studies, Bhimtal & Kumaun University, Nainital is my own piece of work

    and it has not been submitted to any other institute or published at any time before.


  • 8/13/2019 Govind Financial Analysis


  • 8/13/2019 Govind Financial Analysis


  • 8/13/2019 Govind Financial Analysis



    Despite the continuing caution exercised by many organizations amid ongoingeconomic uncertainty, a substantial proportion of employers around the globeidentify a lack of available skilled talent as a continuing drag on business

    performance. This project basically focuses on financial analysis and its operating procedure of EDGE MANAGEMENT CONSULTANTS PRIVATE LIMITED performance in past years. From their balance sheet and through ratio analysismethod we try to identify the major changes in trends, and relationships and theinvestigation of the reasons underlying those changes.

    Probably the most widely used financial analysis technique is adopted and

    conclusion is being drawn that the company is .

  • 8/13/2019 Govind Financial Analysis



    Financial analysis is the process of identifying the financial strengths and weakness of the firm by properly establishing relationships between the items of the balance sheet and the profit and

    loss account. Financial analysis can be undertaken by management of firms, or by the partiesoutside the firm, viz. Owners, creditors, investors and others. The nature of analysis will differdepending on the purpose of the analyst. For example, trade creditors are interested in the firmsability to meet their claim over a very short period of time. Their suppliers of long term debt, onthe other hand, are concerned with firms long term solvency and survival. They analyze thefirms profitability over a period of time, its ability to generate cash to be able to pay interest andrepay principal and relationship between various sources of fund (capital structure relationships).Long term creditors do analyze the historical financial statement, but they place more emphasison the firms projected, or pro forma, financi al statement on make analysis about its futuresolvency and profitability. Similarly, investors, who have invested their money in firms shares,are most concerned about the firms earnings. They restore more confidence on those firms that

    show steady grow th in earnings. As such, they concentrate on the analysis of the firms presentand future profitability. They are also interested in firms financial structure to the extent itinfluences the firms earning ability and risk. Finally, management of the fi rm would beinterested in every aspect of financial analysis. It is their overall responsibility to see that thefirms resources are used most efficiently and effectively, and that the firms financial conditionis sound.

    Financial analysis

    Financial analysis (also referred to as financial statement analysis or accounting analysis orAnalysis of finance ) refers to an assessment of the viability, stability and profitability of a

    business, sub-business or project.

    It is performed by professionals who prepare reports using ratios that make use of informationtaken from financial statements and other reports. These reports are usually presented to topmanagement as one of their bases in making business decisions.

    Continue or discontinue its main operation or part of its business; Make or purchase certain materials in the manufacture of its product; Acquire or rent/lease certain machineries and equipment in the production of its goods; Issue stocks or negotiate for a bank loan to increase its working capital; Make decisions regarding investing or lending capital; Other decisions that allow management to make an informed selection on various

    alternatives in the conduct of its business.

    Definition of 'Financial Analysis'

    The process of evaluating businesses, projects, budgets and other finance-related entities todetermine their suitability for investment. Typically, financial analysis is used to analyze whetheran entity is stable, solvent, liquid, or profitable enough to be invested in. When looking at a
  • 8/13/2019 Govind Financial Analysis


    specific company, the financial analyst will often focus on the income statement, balance sheet,and cash flow statement. In addition, one key area of financial analysis involves extrapolating thecompany's past performance into an estimate of the company's future performance.

    Capital investment decisions comprise the long term choices about which projects receiveinvestments, whether to finance that investment with equity or debt, and when or whether to paydividends to shareholders. Short term corporate finance decisions are called working capitalmanagement and deal with balance of current assets and current liabilities by managing cash,inventories, and short term borrowings and lending (e.g., the credit terms extended to customers).Corporate finance is closely related to managerial finance, which is slight broader in scope,describing the financial technique available to all forms of business enterprise, corporate or not.

    ROLE OF FINANCIAL MANAGEMENT What is Financial Management? Nature of work

    Working conditions Employment Training, Other qualifications and Advancement. Job outlook Earnings Related occupations The Goal of the Firm Corporate Governance Organization of the Financial Management Function Financial Management

    Let us discuss each of this in detailed manner.


    Almost every firm, government agency and organization has one or more financialmanager who oversees the preparations of financial reports, direct investmentactivities, and implement cash management strategies. As computers are used torecord and organize data, many financial managers are spending more timedeveloping strategies and implementing the long-term goals of their organizations.

    The duties of financial manger vary with their specific titles, which are controller,treasurer or finance officer, credit manager, cash manager, and risk and insurancemanager. Controllers direct the preparation of financial report that summarize andforecast the organizations financial position, such as income statement, balancesheets, and analysis of future earnings and expenses. Regulatory authorities also incharge of preparing special reports require controllers. Often, controllers overseeaccounting, audit, and budget departments. Treasurers and finance officers direct

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    the organizations financial goals, objectives, and budgets. They oversee theinvestments of funds and manage associated risks, supervise cash managementactivities, execute capital raising strategies to support a firms expansion, anddealwith mergers and acquisitions. Credit managers oversee the firms is suance ofcredit. They establish credit rating criteria, determine credit ceilings, and monitor

    past-due accounts. Managers specializing in international finance develop financialand accounting systems for the banking transactions of multinational organizations.

    Cash manager s monitor and control the flow of cash receipts and disbursements tomeet the business and investments needs of the firm. For example, cash flow

    projections are needed to determine whether loans must be obtained to meet cashrequirements or whether surplus cash should be invested in interest-bearinginstruments. Risk and insurance managers oversee programs to minimize risks andlosses that might arise from financial transactions and business operations undertaken

    by the institution. They also manage the organizations insurance budget.

    Financial institutions, such as commercial banks, savings and loan associations, creditunions, and mortgage and finance companies, employ additional financial managerwho oversee various functions, such as lending, trusting, mortgages, and investment,or programs, including sales, operations, or electronic financial services. Thesemanagers may be required to solicit business, authorize loans, and direct theinvestment of funds, always adhering to State laws and regulations.Branch managers of financial institutions administer and manage all of the functionsof a branch office, which may include hiring personnel, approving loans and lines ofcredit, establishing a rapport with the community to attract business, and assistingcustomers with account problems. Financial managers who work for financialinsitutions must keep abreast of the rapidly growing array of financial services and


    In addition to general duties described above, all financial managers perform tasksunique to their organization or industry. For example, government financial managersmust be experts on the government appropriations and budgeting processes, whereashealthcare financial managers must be knowledgeable about issues surroundinghealthcare financing. Moreover, financial managers must be aware of special tax lawsand regulation that affect their industry.Financial manager play an increasingly important role in mergers and consolidationsand in global expansion and related financing. These areas require extensive,specialized knowledge on the part of it, the financial manager to reduce risk andmaximize profit. Financial managers increasingly hired on temporary basis to advicesenior manager on these and other matters. In fact, some small firms contract out allaccounting and financial functions to companies that provide these services.

    The role of financial manager, particularly in business, is changing in response totechnological advances that have significantly reduced the amount of time it takes to

    produce financial reports. Financial managers now perform more data analysis and use itto offer senior managers ideas on how to maximize profits. They often work in teams,

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    acting as business advisors to top management. Financial managers need to keep abreastof latest computer technology in order to increase the efficiency of the ir firms financialoperations

    Financial Management

    Concerns the acquisition, financing, and management of assets with some overall goal in mind .

    Investment Decisions

    Most important of the three decisions .

    What is the optimal firm size What specific assets should be acquired What assets (if any) should be reduced or eliminated

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  • 8/13/2019 Govind Financial Analysis


  • 8/13/2019 Govind Financial Analysis


  • 8/13/2019 Govind Financial Analysis




    NAME OF THE COMPANY EDGE Management ConsultantsPrivate Limited

    CONSTITION Private Limited Company

    DATE OF INCORPORATION 22th April 1992

    INDUSTRY Developer & Service Provide

    REGISTERED OFFOCE B-19, Gulmohar Park, New Delhi 110049,

    CORPORATE OFFICE B-19, Gulmohar Park, New Delhi 110049

    DIRECTORS Mr. Naresh Bhatt(Managing Director)Mr. Subhash Chander Batra

    A Brief note on EGDE Management Consultants Private Ltd. EGDE management Consultants Private Ltd. a corporate organization established in 1992 was

    the culmination of the common-man dream, dream to provide an ultimate solution in housing.

    With over 18 years of experience and the professional approach of the organization, EGDE

    Management Consultants company has a turnover of approx. Rs. 75 lakhs. The company has

    provide loan of other company and provide tool of machine. The liability of the Members is

    limited. The Authorized share capital of the Company is Rs. 1,00,000/- (Rupees one lack)

    divided into 10,000 (Ten thousand) Equity share of Rs. 10/- (Rupees Ten) each.

    Proposed Project at Gulmohar Park B-19 Road Distance between Anand Vihar to Green Park to Gulmohar distance between 21Kms and 14miles. Metor station to Green Park to Gulmohar Park B-19 New Delhi 500miter. National Highway distance between 35Kms and 22miles. City Railway Station distance between 26Kms and 16miles.

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    Domestic Airport distance between 12Kms 7miles.

    Proposed project at Gulmohar Park B-19Location/land mark Distance from Side

    Nizamudin railway Station 8.600Kms.

    Indira Gandhi International Airport 11.800Kms.

    The Name of the Company is EDGE MANAGEMENT CONSULTANTS PRIVATE Ltd. The Registered Office of the Company is situated in Union in Territory of Delhi.

    The Company on its Incorporation are to carry on Business of providing professional andMarketing services in the field of computer software, Cement, foodstuff, foodgrain, import,export, technical Collobaration within the outside India, Plastic papers.To carry on Business, Profession or vacation of acting as consultants and Advisors for all mattersand problems arising out of or relating to or touching upon the field of finance, Accounts, Local

    or International investment, real estate, Foreign exchange, Taxation, law, import export,administration organization management staff selection techno-economics costingcommencement and expansion of trade commerce and industries and provide multi-dimensionalconsultancy and advisory services in the field of innovation in financial inter-mediation,improved quality ofexisting financial and accounting services help to provide survey of foreignmarkets for increase in Indian export to procure technical know how and import of hightechnology for industrial market in country.

    Assets investigation on behalf of any company corporation body corporate industries firmsassociation or any person and collect information of data and submit reports on feasibility of new


    A acquire by purchase lease exchange or otherwise any movable or immovable property and anyrights or any arrangement for sharing profits union of interest joint venture.

    To compensate for loss off office of any Managing Director or Director or such other officer ofthe Company within the limitations prescribed under the Companies Act, 1956 or such otherstatutes or rules having the force of law and to make payments to any person whose officer of theemployment or duties may be determined by virtue of any transaction in which the Company isengaged in.

    Company Objective:-The objective for which the Company is established are:-


  • 8/13/2019 Govind Financial Analysis


    1. To carry on business of providing professional and marketing services in the field ofComputer software, Cement, foodstuff, food grain, import, export, technical collaborationwithin or out side India, Plastic papers.

    2. To carry on business, profession or vacation of acting as Consultants and Advisors for allmatters and problems arising out of or relating to or touching upon the field of finance,Accounts, local or international investment, real estate, foreign exchange, taxation, law,import export, administration, organization, management, staff selection, techno-economics, costing, commencement and expansion of trade, commerce and industries,

    purchasing techniques, production, storages, purchases,Sales marketing distribution advisory services to individuals, firms, bodies corporate,institutions concerns and association.

    3. To provide multi-dimensional consultancy and advisory services in the field ofinnovation in financial inter-mediation, improve the quality of existing financial andaccounting service, help to provide survey of foreign market for increase in IndianExport, to procure technical know how and import of high technology for industrialmarkets in the country.

    4. To assist in investigation on behalf of any Company, Corporation, body corporate,industries, firms, association or any person and collect information and data and submitreports on feasibility of new project and/or improvement to and or expansion of existing

    project and diagonise operational difficulties and weakness and suggest remedialmeasures to improve and modernize existing unites.

    MISSION1. To acquire by purchase, lease, exchange or otherwise any movable or immovable

    property and rights or privileges which may deem necessary convenient for the main business of the Company.

    2. To enter into partnership or any arrangement for the share profits, union interest, jointventure, reciprocal concession or co-operation with persons or companies carrying on orengaged in the main business of the Company.

    3. To import, buy, exchange alter, improve and manipulate, in all kinds of plant, machinery,apparatus, tool, and things, necessary for carrying on the main business of the Company.

    4. To vest any movable or immovable property, rights or interests acquired by or received

    or belonging to the Company in any person or for the benefit of the Company with or

    without any declared trust in favors of the Company.

    5. To purchase or otherwise acquire, construct, carry out, equip, maintain, alter, improve,

    develop, manage, work, control and superintend any factories plants, ware houses,

    workshops, sheds, dwellings, offices, shops, stores, buildings, telephones, electric and gas

    works, machinery, apparatus, labour lines and houses, warehouses, and such other works

    and conveniences necessary for carrying on the main business of the Company.

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    1. To carry on the business as trades, importers and exporters of and dealers in aluminum

    utensils, and all other such types of utensils and kitchen requisites of all types.

    2. To act as business consultants, give advice, to engage in dissemination of information in

    all aspects of business organization and industry and advise upon the means and methods

    for expending and developing systems or processes relating to production, storage,

    distribution, marketing and securing of orders for sale of goods in India and abroad

    and/or relating to the rending of services.

    3. To carry on the business of running motor lorries, motor taxis, mini buses and

    conveyances of all kinds and to transport passengers and goods and to do the business of

    common carriers.

    4. To carry on the business of wholesale or retail, or otherwise as interior decorators, andfurnishers, upholsterers, and dealers in and hirers, repairers, cleaners, stores and

    warehouses of furniture, carpets, linoleums, furnishing fabrics and such other floor

    coverings of all types household utensils, china and glass goods, fittings, curtains and

    such other household requisites of all types.

    5. To carry on business as brewers, distillers, bottlers, canners, preservers, coopers,

    dehydrators, masters of and dealers in fruits herbs, vegetables, plants and liquors of every

    description such as Indian made foreign liquors, country liquors and by products

    therefore, whether intoxicating or not tonics vitamin beverages, flavored drinks, nector,

    punch, aerated waters and drinks whether soft or otherwise.


    1. The study has great significance and provides benefits to various parties who, directly orindirectly interact with the company.

    2. It is beneficial to management of the company by providing crystal clear pictureregarding important aspects like liquidity, leverage, activity and profitability.

    3. The study is also beneficial to employees and offer motivation by showing how activelythey are contributing fo r companys growth.

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    4. The investors who are interested in investing in companys share will also get benefited by going through the study and easily take a decision whether to invest or not to invest incompanys shares.

    5. It will help us in understanding the organizations working and how it will help us inworking in a reputed organization.


    OBJECTIVESThe objectives of the study are as follows:

    1. To evaluate the performance of the company by using financial analysis as a yard stick tomeasure the efficiency of the company.

    2. To study the present financial system of EDGE MANAGEMENT CONSULTANTS


    4. To offer appropriate suggestions for the better performance of the organization.


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    RESEARCH DESIGN: Research methodology must be classified on the basis of the major purpose of investigation. In this project description study has been used.

    DATA COLLECTION: The information is collected through secondary sources during the

    project. The study is restricted to Egde Management Private Limited only and the financialstatement of the company has been referred to and various interne sites and blogs have been usedto collect information about the company.

    The information is collected through the secondary sources during the project. That informationwas utilized for calculating performance evaluation based on that, interpretations were made.

    Secondary Data: It is the information, which has been already collected for other purposes and is readily availablein some form. Its advantage is that it is readily available and cheap while its disadvantage is that

    data may be irrelevant.

    Sources of collecting Secondary data:1. Internal sources: The Companys profit and loss statement, balance sheets, sales figure,

    credit policies, investment statement and annual reports.2. Financial books from various libraries providing information on financial analysis.3. Information technology tools like Internet.4. Useful trade and general business magazines like Business India, Business Today etc.5. Newspaper like Economic times, Financial Express etc. providing various article on the

    financial review (liquidity position) of various companies.



    Financial analysis is an evaluation of both a firms past financial performance and its prospectsfor the future. Typically, it involves an analysis of the firms financial statements and its cashflows. Financial statement analysis involves the calculation of various ratios. It is used by suchinterested parties as creditors, investors and managers to determine the firms financial positionrelative to that of others. The way in which an entitys financial position and operating results areviewed by investors and creditors will have an impact on the firms reputation, price/earningsratio, and effective interest rate. Cash flow analysis is an evaluation of the firms statements ofcash flows in order to determine the impact that its sources and uses of cash have on the firmsoperation and financial condition.It is used in decisions that involve corporate investments, operations and financing.


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    The financial statements of an enterprise present the summarized data of its assets, liabilities andequities in the balance sheet and its revenue and expenses in the income statement. If notanalyzed, such data may lead one draw erroneous conclusions about the firms financial

    condition. Various measuring instruments may be used to evaluate the financial health of a business, including horizontal, vertical, and ratio analysis. A financial analyst uses the ratio tomake two types of comparisons:

    1. Industry comparison. The ratios of a firm are compared with those of similar firms or withindustry averages or norms to determine how the company is faring relative to its competitors.Industry average ratios are available from a number of sources, including:

    a. Risk Management Association (RMA). RMA (formerly known as Robert MorrisAssociation) has been compiling statistical data on financial statements for more than 75years. The RMA Annual Statement Studies provide statistical data from more than150,000 actual companies on many key financial ratios, such as gross margin, operating

    margins, and return on equity and assets. If you are looking to put real authority into theindustry average numbers that your company is beating, the Statement Studies are theway to go. They are organized by SIC codes, and you can buy the financial statementstudies for your industry in report form or over the Internet ( ).

    b. Dun and Bradstreet. Dun and Bradstreet publishes Industry Norms and Key BusinessRatios, which cover over 1 million firms in over 800 lines of business.

    c. Value Line. Value Line Investment Service provides financial data and rate stocks ofover 1,700 firms.

    d. The Department of Commerce. The Department of Commerce Financial Report providesfinancial statement data and includes a variety of ratios and industry wide common-sizevertical financial statements.

    e. Others. Standard and poors, Moodys Investment Service, and various broke ratecompile industry studies.

    2. Trend analysis. A firms present ratio is compared with its past and expected futureratios to determine whether the companys financial condition is improving ordeteriorating over time.After completing the financial statement analysis the firms financial statement analystwill consult with management to discuss their plans and prospects, any problem areasidentified in the analysis, and possible solutions.


    The term Ratio refers to the numerical and quantitative relationship between two items orvariables. This relationship can be exposed as

    Percentages Fractions Proportion of numbers

    Ratio analysis is defined as the systematic use of the ratio to interpret the financial statements. Sothat the strengths and weaknesses of a firm, as well as its historical performance and current
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    financial condition can be determined. Ratio reflects a quantitative relationship helps to form aquantitative judgment.


    The first task of the financial analysis is to select the information relevant to thedecision under consideration from the statements and calculate appropriate ratios.

    To compare the calculated ratios with the ratios of the same firm relating to the past or with the industry ratios. It facilitates in assessing success or failure of thefirm.

    Third step is of interpretation, drawing of inferences and report writing andconclusions are drawn after comparison in the shape of report or recommendedcourses of action.


    Ratios are relative figures reflecting the relation between variables. They enable analyst to drawconclusions regarding financial operations. The use of ratios as a tool of financial analysisinvolves the comparison with related facts. This is the basis of ratio analysis. The basis of ratioanalysis is of four types.

    Past ratios, calculated from past financial statements of the firm. Competitors ratio, of the some most progressive and successful competitor firm at the

    same point of time. Industry ratio, the ratio of industry to which the firm belongs to. Projected ratios, ratios of the future developed from the projected or pro forma financial



    Ratio analysis is a technique of analysis and interpretation of financial statements. It is the process of establishing and interpreting various ratios for helping in making certain decisions. Itis only a means of understanding of financial strengths and weaknesses of a firm. There are anumber of ratios which can be calculated from the information given in the financial statements,

    but the analyst has to select the appropriate data and calculate only a few appropriate ratios. The

    following are the four steps involved in the ratio analysis.

    Selection of relevant data from the financial statements depending upon the objective ofanalysis.

    Calculation of appropriate ratios from the above data. Comparison of the calculated ratios with the ratios of the same firm in the past, or the

    ratios developed from projected financial statements or the ratios of some other firm orthe comparison with the ratios of the industry to which the firm belongs.

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    Detals of Balance sheet as at 31 March, 2012


    Trial Balance as on 31st March 2012

    BALANCE AS on 31.3.2012Particulars Dr Cr

    Current Non-Current CurrentNon-


    LIABILITIES Amount in `

    Notes As at31 March


    As at31 March

    2011EQUITY AND LIABILITIESShareholders' fundsShare capital 2.1

    100,000 100,000Reserves and surplus 2.2

    621,561 522,976

    721,561 622,976Current liabilitiesOther current liabilities 2.3

    421,990 1,211,078TOTAL

    1,143,551 1,834,054

    ASSETSCurrent assetsTrade Receivable 2.4

    - 340,956Cash and cash equivalents 2.5

    640,556 547,557Short-term loans and advances 2.6

    502,995 945,541TOTAL

    1,143,551 1,834,054

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    Share capital - 100,000

    Reserve & sur plu s--General reserve

    -Reserve u/s 45IC of RBI-(Deficit)/ surplus 522975.80

    01 - CAPITAL FUND - - 522,976 100,000

    Andhra Bank 638952.41 -

    Cash in hand 1604.00 -

    06 - CASH AND BANK 640,556 - - -

    Sundry debtors :

    Ajay Krishan Mehrotra 0.00 -Shipra Hotels LimitedIncome tax refundabale- A.Y. 2010-11Income tax refundabale- A.Y. 2011-12Income tax refundabale- A.Y. 2012-13 352995.00Cenvat credit available for utilizationCenvat credit receivable

    06 - CURRENT ASSETS - 352,995 - -

    Advance to staff 150000.00

    08 - ADVANCES 150,000 - - -

    Provission for income tax -

    Service tax payable 10% -

    Service tax payable 12% -

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    TDS payable -Audit fees payable 5056.00Professional charges payable 416934.0010 -CURRENT LIABILITIES &

    PROVISIONS - - 421,990 -Consultancy fee 3600000.00Interest on income tax refund 39646.00

    11 - INCOME- 3,639,646

    -Audit fees 5056.00Salalry 1025800.00Staff welfare 19868.00Printing & stationery 19553.00Postage 18574.00

    Conveyance 18241.00 -Travelling charges 19554.00Professional charges 1920000.00Telephone 15213.39Electricity charges 19000.00Misc. expenses 21434.00Bank charges 746.00Rent 66000.00Filling charges 400.00

    Newspaper books & periodicals 6238.00Office expenses 5324.00Internet charges 13960.00Provision for income tax 44085.00

    Director remuneration 302014.00 -

    12 - EXPENSES 3,541,060 - - -

    Grand Total4,331,617 352,995 4,584,612 100,000

    4,684,612 4,684,612


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    Provission for income tax 0.00Service tax payable 10% 30900.00Service tax payable 12% 4746.00

    TDS payable- 25698.00

    Audit fees payable - 4964.00Professional charges payable 1144770.0010 -CURRENT LIABILITIES &PROVISIONS - - 1,211,078 -Consultancy fee 3723500.00Interest on income tax refund 68143.00

    11 - INCOME - - 3,791,643 -

    - - - -Audit fees 4964.00Salalry 1014600.00Staff welfare 16697.00Printing & stationery 4593.00Postage 6305.00

    Conveyance 34843.00 - - -Travelling charges 40545.00Professional charges 2040000.00Telephone 32118.12Electricity charges 36030.00Misc. expenses 3750.00Bank charges 359.00Rent 65500.00Filling charges 400.00

    Newspaper books & periodicals 3031.00Office expenses 6456.00Internet charges 9566.00Provision for income tax 61982.00

    Director remuneration 271300.00 - - -

    12 - EXPENSES 3,653,039 - - -

    Grand Total 5,359,116 127,977 5,387,093 100,000

    5,487,093 5,487,093

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    Cash flows from operating activities

    Profit before extraordinary items and tax 142,671 200,586

    Add : Non-cash adjustment - -

    Operating profit before working capital changes 142,671 200,586Add:

    (Increase)/Decrease Trade Recievable 340,956 49,533

    (Increase)/Decrease in Loans & Advances 442,546 572,682

    (Decrease)/ Increase in other current liabilities (789,088) (220,497)

    Cash used in operations 137,085 602,304

    Less: Taxes paid (44,085) (87,353)

    Cash flow/(used) from operating activities before extraordinary items 93,000 514,951

    Net Cash flow from operating activities after extraordinary item (A) 93,000 514,951Cash flows from investing activities

    Net cash flow from investing activities (B) - -Cash flows from financing activities

    Net cash flow from financing activities (C) - -

    Net (decrease)/increase in cash and cash equivalents (A+B+C) 93,000 514,951

    Cash and cash equivalents at the beginning of period 547,557 32,606

    Cash and cash equivalents at the end of the period 640,556 547,557

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    EDGE MANAGEMENT CONSULANTS PRIVATE LIMITEDStatement of profit and loss for the year ended 31 March 2012

    Amount in`



    For theyear

    ended31 March


    For theyear

    ended31 March



    Revenue from operation 2.7 3,600,000 3,723,500Other income 2.8

    39,646 68,143Total Revenue

    3,639,646 3,791,643

    ExpensesEmployee benefit expense 2.9

    1,347,682 1,302,597Other expenses 2.10

    2,149,293 2,288,460Total expenses

    3,496,975 3,591,057

    Profit/(loss) before tax 142,671 200,586Current tax

    44,085 61,982Profit/(loss) for the year

    98,586 138,604

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    Ration Analysis:

    Financial statement analysis is a judgmental process. One of the primary objectives isidentification of major changes in trends, and relationships and the investigation of the reasons

    underlying those changes. The judgment process can be improved by experience and the use ofanalytical tools. Probably the most widely used financial analysis technique is ratio analysis, theanalysis of relationships between two or more line items on the financial statement. Financialratios are usually expressed in percentage or times. Generally, financial ratios are calculated forthe purpose of evaluating aspects of a company's operations and fall into the followingcategories:

    liquidity ratios measure a firm's ability to meet its current obligations.

    o Working Capital

    Working capital compares current assets to current liabilities, and serves as the liquid reserveavailable to satisfy contingencies and uncertainties. A high working capital balance is mandatedif the entity is unable to borrow on short notice. The ratio indicates the short-term solvency of a

    business and in determining if a firm can pay its current liabilities when due.

    Working Capital = Current Assets - Current Liabilities

    Working Capital 2012 = 11,43,551 4,21,990

    Working Capital 2012 = 7,21,561 Rs.

    Working Capital 2011 = 18,34,054 12,11,078

    Working Capital 2011 = 6,22,976 Rs.

    o Acid Test or Quick Ratio

    A measurement of the liquidity position of the business. The quick ratio compares the cash pluscash equivalents and accounts receivable to the current liabilities. The primary difference

    between the current ratio and the quick ratio is the quick ratio does not include inventory and prepaid expenses in the calculation. Consequently, a business's quick ratio will be lower than itscurrent ratio. It is a stringent test of liquidity.

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    Acid Test or Quick Ratio = Cash + Marketable Securities + Accounts ReceivableCurrent Liabilities

    Acid Test or Quick Ratio 2012 = 6,40,5564,21,990

    Acid Test or Quick Ratio 2012 = 1.52:1

    Acid Test or Quick Ratio 2011 = 8,88,57312,11,078

    Acid Test or Quick Ratio 2011 = 0.73 :1

    o Current Ratio

    Provides an indication of the liquidity of the business by comparing the amount of current assetsto current liabilities. A business's current assets generally consist of cash, marketable securities,accounts receivable, and inventories. Current liabilities include accounts payable, currentmaturities of long-term debt, accrued income taxes, and other accrued expenses that are duewithin one year. In general, businesses prefer to have at least one dollar of current assets forevery dollar of current liabilities. However, the normal current ratio fluctuates from industry toindustry. A current ratio significantly higher than the industry average could indicate the

    existence of redundant assets. Conversely, a current ratio significantly lower than the industryaverage could indicate a lack of liquidity.

    Current Ratio = Current AssetsCurrent Liabilities

    Current Ratio 2012 = 11,43,5514,21,990

    Current Ratio 2012 = 2.71:1

    Current Ratio 2011 = 18,34,05412,11,078

    Current Ratio 2011= 1.51:1

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    o Cash Ratio

    Indicates a conservative view of liquidity such as when a company has pledged its receivablesand its inventory, or the analyst suspects severe liquidity problems with inventory and


    Cash Ratio = Cash Equivalents + Marketable SecuritiesCurrent Liabilities

    Cash Ratio 2012 = 6,40,5544,21,990

    Cash Ratio 2012 = 1.51:1

    Cash Ratio 2011 = 54755712,11,078

    Cash Ratio 2011 = 0.45:1

    o Return on Investment or Return on Capital Employee

    o Return on Total Resources

    Return on Total Resources = Profit Before Tax*100Total Assets

    Return on Total Resources 2012 = 1,42,671*1001143551

    Return on Total Resources 2012 = 12.48%Return on Total Resources 2011 = 2,00,586 *100


    Return on Total Resources 2011 = 10.94%

    o Return on Capital Employee

    Return on Capital Employee = Profit Before Tax*100Capital Employee

    Return on Capital Employee 2012 = 1,42,671*1007,21,561

    Return on Capital Employee 2012 = 19.77

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    Return on Capital Employee 2011 = 200586*1006,22,976

    Return on Capital Employee 2011 = 32.19

    o Return on Shareholder FundReturn on Shareholder Fund = Profit After Tax*100

    Capital Employee

    Return on Shareholder Fund 2012 = 98,586*1001,00,000

    Return on Shareholder Fund 2012 = 98.58

    Return on Shareholder Fund 2011 = 1,38,604*100100,000

    Return on Shareholder Fund 2011 = 138.60



    Analysis Ratio

    PARTICULAR YEAR 2012 YEAR 2011Working Capital 7,21,561 Rs. 6,22,976 Rs.Acid Test or Quick Ratio 1.52 0.73Current Ratio 2.71 1.51Cash Ratio 1.51 0.45Return on Total Resources 12.48% 10.94%

    Return on Capital Employee 19.77% 32.19%

    Return in Shareholder Fund 98.58 138.60

    Edge Management Consultants Private Limited Working Capital for the past two year hasbeen as follows:

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    Year Working Capital (in lakhs)2012 7.222011 6.23

    Working Capital in lakhs there are more capital than next year. 2012 working capital will be 7.22Lakhs. 2011 working capital will be 6.23 lakhs. It will be good position of company. It is morethan 1Lakhs working capital.

    Acid Test or Quick Ratio

    Edge Management Consultants Private Limited Acid Test or Quick Ratiofor the past two year has been as follows:

    The acid test ratio is a measure of liquidity designed to overcome this defect of the current ratio.It is often referred to as quick ratio because it is a measurement of firms ability to convert itscurrent assets quickly into cash in order to meet its current liabilities.The acid test ratio is calculated by dividing the quick assets by the current liabilities.

    The term quick assets include cash and bank balances, short term marketable securities anddebtors/receivables. The usefulness of the ratio lies in the fact that it is widely accepted as the











    2012 2011

    Working Capital (in lakhs)

    Working Capital (in lakhs)


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    best available test of liquidity position of the firm. An acid test ratio of 1:1 is consideredsatisfactory.

    Years Quick Ratio





    Edge Management Consultants Private Limited acid test ratio shows a fluctuating trend over pasttwo years though it is more than 1:1. Thus we can say that Edge Management ConsultantsPrivate Limited does not face any problems in liquidity front. It has sufficient assets to dischargeits short-term obligations as an when they become due.Thus, it can be concluded that Mescots liquidity ratios like current ra tio, liquid ratio aresatisfactory and it can be inferred from them that the firm will be able to meet its short-termobligations as when they become due. Another ratio that is important is current assets as a

    proportion to total assets. This ratio tells how much funds of the company are employed incurrent assets as compared to total amount of funds invested in total assets. 2012 is a satisfactoryit will more than 1.52:1.

    Edge Management Consultants Private Limited current ratio for the past two years has beenas follows:










    Quick Ratio

    2012 22011

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    Years Current Ratio





    Its current ratio has been more than 1.51:1 for 2011 and 2.71:1 2012 which indicates that it hadno problems in discharging its short-term obligations in the past. It seems that more amounts areinvested in current assets than is desirable. Also its quite possible that it has not made fullutilization of its current borrowing capacity. But in year 2012, Edge Management ConsultantsPrivate Limited current ratio went will be increase and current assets increase by the year.

    Cash Ration:

    Indicates a conservative view of liquidity such as when a company has pledged its receivablesand its inventory, or the analyst suspects severe liquidity problems with inventory andreceivables.

    Years Cash ratio








    Years 2011 2012

    Current Ratio

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    Cash ratio for Edge Management Consultants Private Limited over the past few years shows adeclining trend indicating that over the years less amount is being held in form of cash and bank

    balance and marketable securities and more is being invested in other current assets such asdebtors or inventories. Ideally cash ratio should be fifty percent of current assets or 1.51:1. Butfor Edge Management Consultants Private Limited it is less than even 1:1 for all the years.

    Years Return on TotalResources













    Years 2011 2012

    Cash Ratio

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    Year Return on Capital Employee2011




    Years 2011 2012

    0 10.94% 12.48%

    0 10.94% 12.48%

    Return on Tatal Resources

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    Years Return in Shareholder Fund2011







    Year 2011 2012

    Return on Capital Employee










    Years 2011 2012

    Return in shareholder fund

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