finacial analysis 111111

7/31/2019 Finacial Analysis 111111

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A

PRESENTATION

ON

SUBMITTED TO:SUBMITTED BY:

Dr. Shaveta Gupta AnkitaBadyal

Roll No. 1172345


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Hero Cycles is a product of this philosophy. The philosophy

that instills commitment, team work and foresight. Heros

colossal journey started before Independence. The four

Munjal brothers, hailing from a small town called Kamalia,

now in Pakistan, are the men who are behind the mission.

Brotherhood apart, what knit the men together was the

wealth of will, integrity, ambition & determination. In the year

1944, they decided to start a business of bicycle spare parts

in Amritsar. Its is modest beginning and the next 3 years

saw the business grow rapidly. But the dark clouds of

partition eclipsed their plans of the future. With renewed

vigor and optimism, the operational base was shifted to

Ludhiana.


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The need of Financial Analysis arises

because both internal management and

external users such as analysts, creditors,

and investors of the financial statements

need to evaluate a company's profitability,

liquidity, and solvency. The need should

cover the research gap as identified from

conclusion of reviews and also the relevance


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The scope was limited to Ludhiana city only. The

scope should cover the area, time and location.

Financial performance analysis is a well researched

area and innumerable studies have proved the utility

and usefulness of this analytical technique. It helps to

Find out gray areas for improvement.

Understand companys position over time.

Estimate the managers contribution to the company.

Get an idea of overall performance of the company.


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To study the financial position of the company (total assts &liabilities) by comparing the balance sheet of the year ending

2009, 2010 and 2011.

To study the overall profitability of the company.

To analyze whether company is able to meet its current

obligation with the help of Current assets or it borrows

additional loan.

To scrutinize the liquidity position of the company.

To analyze the solvency position of the company.

To study & analyze cash flow statement.

To determine the efficiency with which assets are managed.


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Basically project study is usually based on a research,which gives a concrete answer to a problem. This

research may be Problem Solving or Problem Oriented.

Both types of research are usually known as Applied

Research.

Marketing is a form of Applied Research which proceeds

with a certain problem, specifies alternative solutions and

the possible outcomes of each alternative. It may befurther named as DecisionalResearch.

The Marketing Research Methodology involves a number

of interrelated activities, which overlap and do not rigidly


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It is only a study of interim reports.

As financial statements are prepared on the basis

of going concern; it does not give the exact

position.

The analysis is only a mean not an end in itself.

The analysis has to make interpretations and draw

its own conclusion.

Time was not sufficient to study the financial

position of company.


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The comparative financial statements are statements of thefinancial position at different period of time. The elements of

financial position are shown in a comparative form so as to give an

idea of financial position at two or more periods. From practical

point of view, generally, two financial statements (balance sheet

and income statement) are prepared in comparative form for

financial analysis purpose. Not only the comparison of the figure of

two periods but also be relationship between balance sheet and

income statement may show

Absolute figures (rupee amounts)

Changes in absolute figures (increase or decrease in absolute

figures)

Absolute data in term of percentages

Increase or decrease in terms of percentages


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The comparative balance sheet analysis is the study ofthe trend of the same items, groups of items and

computed items in two or more balance sheets of the

same business enterprise on different dates. The

changes can be observed by comparison of the balance

sheet at the beginning and at the end of a period and

changes can help in forming an opinion about the

progress of an enterprise.

The comparative balance sheet has two columns for the

data of original balance sheets. A third column is used

to show increase in figures. The fourth column may be

added for giving percentages of increases or


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The comparative income statement gives an idea of abusiness over a period of time. The changes in absolute

data in money values and percentages can be

determined to analyze the profitability of the business. It

has also four columns. First two columns give figures

of various items for two years. Third and fourth

columns are used to show increase or decrease in

figures in absolute amounts and percentages

respectively.


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Particulars 2009 2008 Increase/Decrease %age

Assets

Fixed Assets 1715514501 1868618197 -153103696 -8.19

Investments 4787763407 4643913422 143849985 3.10

Deferred Tax Assets (Net) 164041457 57796461 106244996 183.83

Current Assets, Loans &

Advances- Inventories 777581277 1106936341 -329355064 -29.75

- Sundry Debtors 2406661773 1968290674 438371099 22.27

- Cash & Bank balance 152820715 151600603 1220112 0.80

- Loans & Advances 1163110437 851293187 311817250 36.63

Total Assets 11167493567 10648448885 519044682 4.87

LiabilitiesShareholders Funds 6526360604 5992951800 533408804 8.90

Loan Funds 2415142595 2538217041 -123074446 -4.85Current Liabilities & Provisions

- Liabilities 1736638728 1942587980 -205949252 -10.60

- Provisions 161268726 174692064 -13423338 -7.68Total Liabilities 10839410653 10648448885 190961768 1.79


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Particulars 2009 2010 Increase/Decrease %ageAssets

Fixed Assets 1893341411 1868618197 -24723214 - 1.31

Investments 3843437861 4643913422 +800475561 +20.83

Deferred Tax Assets (Net) 19845655 57796461 +37950806 +191.23

Current Assets, Loans &Advances

- Inventories 805661034 1106936341 +301275307 +37.39

- Sundry Debtors 2228592486 1968290674 -260301812 -11.68

- Cash & Bank balance 22134657 151600603 +129465946 +584.9

- Loans & Advances 457780835 851293187 +393512352 +85.96

Total Assets 9270793939 10648448885 +1377654946 +14.86Liabilities

Shareholders Funds 5364231022 5992951800 +628720778 +11.72

Loan Funds 1732223697 2538217041 +805993344 +46.53

Current Liabilities & Provisions

- Liabilities 1978589143 1942587980 -36001163 -1.82

- Provisions 195750077 174692064 -21058013 -10.76Total Liabilities 9270793939 10648448885 +1377654946 +14.86

(For the year ending 31.03.2010)


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Particulars 2011 2010Increase/

Decrease %age

INCOME

Sales 14901978247 12850038969 2051939278 15.97

Other Income 470434957 722047800 -251612843 -34.85

Gross Profit 15372413204 13572086769 1800326435 13.26

LESS : Expenditure (Material

Consumed, Manufacturing Expenses,

Personnel Expenses, Administrative

Expenses, Financial Expenses,

Selling Expenses, Depreciation)

14343464316 12799820955 1543643361 12.06

Profit for the year before tax 1028948888 772265814 256683074 33.24

Less : Taxes (Wealth Tax, Taxation,

Fringe Benefit Tax and Deferred Tax)493137918 109348194 383789724 350.98

Profit after tax 535810970 662917620 -127106650 -19.17


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Net Sales 13308705116 12850038969 -458666147 -3.45

Less: Cost of Goods Sold (Opening

stock + Raw material consumed +

Manufacturing Exp.+ Wages + Packing

Exp.- Closing stock)

11590074348 11256550930 -333523418 -2.88

Gross Profit 1718630768 1593488039 -125142729 -7.28

Less: Operating expenses (

Administration expenses, financial

expenses, selling expenses, depreciation,

repairs, personnel expenses)

1275908067 1411863170 +135955103 +10.65

Operating Profit/Loss 442722701 181624869 -261097832 -58.97

Add: Other Income 898158858 722048800 -176110058 -19.61

Less: Non operating expenses 129553764 131406853 +1853089 +1.43

Net profit before tax 1211327795 772266816 -439060979 -36.25

Less: Tax provision for wealth tax, fringe

benefit tax, taxation & deferred tax

185742059 109349194 -76392865 -41.13

Net profit after tax 1025585736 662917622 -362668114 -35.36


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(Rs. In lakhs)


Profit Before Tax 10289.5 7722.67 2566.81 33.24

Net Cash Flow Operating

Activity

2747.5 -1241.6 3989.13 -321.28

Net Cash used in Investing

Activity

1221.49 -3560.4 4781.84 -134.31

Net Cash used in Financing

Activity

-3956.8 6096.64 -10053 -164.90

Net Inc./Dec. in Cash &

Equivalent

12.2 1294.66 -1282.5 -99.06

Cash & Cash Equivalent at

the begin of the year

1516.01 221.35 1294.66 584.89

Cash & Cash Equivalent at

the end of the year

1528.21 1516.01 12.2 0.80


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(Rs. In lakhs)

Particulars 2009 2010 Increase/Decrease %ageProfit Before Tax 12113.28 7722.67 -4390.61 -35.59

Net Cash Flow

Operating Activity2996.85 -1241.63 -4238.48 -141.41

Net Cash used in

Investing Activity

-3143.35 -3560.35 -417 -13.27Net Cash used in

Financing Activity-326.97 6096.64 +6423.61 970.61

Net Inc./Dec. in Cash &

Equivalent- 473.47 1294.66 +1768.13 373.44

Cash & Cash Equivalentat the begin of the year 694.82

221.35

-473.47

-68.19

Cash & Cash Equivalent

at the end of the year221.35 1516.01 +1294.66 584.89


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A question arises as to the definition ofFUND

. It means Funds may mean change in cash only.

Funds may mean change in working capital (the differencebetween current assets and current liabilities) only.

Funds may mean change in financial resources, arising fromchanges in working capital items and from financing andinvesting activities of the enterprise, which may involve onlynon-current items.

The fund flow statement analyses only the causes ofchanges in the firms working capital position. The cash flowstatement is prepared to analyze changes in the flow of cashonly. These statements fail to consider the changes in thefirms total financial resources. They do not reveal some

significant items that do not affect the firms cash or working


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Particulars 2011 2010 Effects on Working Capital

Increase Decrease

Current Assets

- Inventories 777581277 1106936341 329355064

- Sundry Debtors 2406661773 1968290674 438371099

- Cash & Bank Balances 152820715 151600603 1220112- Loans & Advances 1163110437 851293187 311817250

(A) 4500174202 4078120805

Current Liabilities

- Liabilities 1736638728 1942587980 205949252

- Provision 161268726 174692064 13423338

(B) 1897907454 2117280044

Net Working Capital (A-B) 2602266748 1960840761

Net increase in working Capital - 641425987 641425987

Total 2602266748 2602266748 970781051 970781051


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Particulars 2009 2010 Effects on Working Capital

Increase DecreaseCurrent Assets

- Inventories 805661034 1106936341 301275307 -

- Sundry Debtors 2228592486 1968290674 - 260301812

- Cash & Bank Balances 22134657 151600603 129465946 -

- Loans & Advances 457780835 851293187 393512352 -

(A) 3514169012 4078120805

Current Liabilities

- Liabilities 1978589143 1942587980 36001163 -

- Provision 195750077 174692064 21058013 -(B) 2174339220 2117280044

Net Working Capital (A-B) 1339829792 1960840761 - -

Net increase in working Capital 621010969 - - 621010969

Total 1960840761 1960840761 881312781 881312781


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Year 2009 2010 2011

Liquid assets 2250727143 2119891277 2559482488

Current liabilities 1978589143 1942587980 1736638728

Liquid Ratio 1.14 1.09 1.47


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Year 2009 2010 2011

Absolute Liquid assets 22134657 151600603 152820715

Current liabilities 1978589143 1942587980 1736638728

Absolute Liquid Ratio 0.01 0.08 0.08


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Year 2009 2010 2011

Net Sales 13308705116 12850038969 14901978247

Net working capital 1339829792 1960840761 2602266748

Working Capital

Turnover Ratio

9.93 6.55 5.72


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Year 2009 2010 2011

Sales 13308705116 12850038969 14901978247

Closing inventory 805661034 1106936341 777581277

Inventory Turnover Ratio 16.51 11.60 19.16


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Year 2009 2010 2011

No. of days in a year 365 366 365

Inventory Turnover Ratio 16.51 11.60 19.16

Inventory conversion period 22 (days) 32 (days) 19 (days)


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Year 2009 2010 2011

Total Sales 13308705116 12850038969 14901978247

Sundry Debtors 2228592486 1968290674 2406661773

Debtors Turnover ratio 5.97 6.52 6.19


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Year 2009 2010 2011

No. of days in a year 365 366 365

Debtor Turnover Ratio 5.97 6.52 6.19

Average collection period 61 days 56 days 59 days


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Year 2009 2010 2011

Long term Debts 1732223697 2538217041 2415142595

Shareholders Funds 5364231022 5992951800 6526360604

Debt Equity Ratio 32.29 42.35 37.00


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Year 2009 2010 2011

Shareholder's Funds 5364231022 5992951800 6526360604

Total Assets 5407510423 5946739002 6215688703

Equity Ratio 99.20 100.77 104.99


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Year 2009 2010 2011

Fixed Assets (after Dep.) 1893341411 1868618197 1715514501

Shareholder funds 5364231022 5992951800 6526360604

Fixed Assets to Net Worth Ratio 35.30 31.18 26.28


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Year 2009 2010 2011

Net profit after tax 1025585736 662917622 535810970

Net sales 13308705116 12850038969 14901978247

Net Profit Ratio 7.71 5.15 3.59


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In this project report it has been found that sales have beendecreased as compared to previous year and assets have

been increased which leads to low gross profit and net profit

of the company.

The inventory has been increased.

There is decrease in profit as compared to previous year.

Instead the company is also diverting its funds in

investments.

There is decrease in sale as compared to previous year and

increase in inventory as compared to previous year which is

due to unplanned purchasing which needs to be controlled.

Expenses have increased a lot so a detail note must be

given to know the reason of such increase.


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The Company is enjoying a good current position. Itshould take steps to further improve its position by

repositioning the composition of current assets as large

amount has been block in debtors and inventories.

Period of credit sale should be reduced so that

utilization of blocked funds with debtors can be

properly And timely utilized.

Inventory control should be on JIT basis so that stockof material as well as wastage of funds can be reduced.

Expenses have increased a lot so detail note must be

given to know the reason of such increase.


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In the present study to the investigator point of view, it canbe said that there is scope for more improvement even thereis continuous improvement process on true spirit and to thetone of the KAIZEN approach.

As investigator points of view, there are some of the findingsbased on the whole study and put forward the fewsuggestions relevant thereto. These however based on thedescription made in previous chapters.

The company is not adopting the uniform credit policy eventhe company has a credit policy.

The Company should strictly follow the guidelines of itscredit policy so that the funds from the customers berecovered in time

The company should negotiate with bank on the interest rateon its working capital requirement so that the financialexpenses or liability towards bank can be reduced.


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THANK

YOU

finacial analysis 111111

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