finance statement analysis

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A Study on

FINANCIAL STATEMENT ANALYSIS

At

KESORAM CEMENT INDUSTRIES LIMITED

Project submitted in partia !u"ment !or t#ea$ard o! t#e De%ree o!

MASTER OF BUSINESS ADMINISTRATION

By

K.ANUSHAReg.No. 11EH1E0019

Under the esteemed guidance of

Mr. M. Dowlath AhammadMBA, M.Phil, Ph.!"

Department of Business Management

KOTTAM CO!"! O#

!N"$N!!%$N"&Appro'ed () A$CT! and Affiliated to *NTU Anantapur+

Chinnate,uru &-+ Kallur &M+ Kurnool Dist

/011 2 /013

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KOTTAM COLLEGE OF ENGINEERINGA##ro$ed %& A'()E and Affiliated to *N)UA, Ananta#ur"

(hinnate+uru", -allurM", -urnool!ist" /11

Dept. of Business Management

CERTI&ICATE

This is to certify that the Project Report titled A STUDY ON

FINANCIAL STATEMENT ANALYSIS was carried out by K.ANUSHA of

Regd.No11EH1E0019 This is submitted in partial fulfillment for the award

of the Degree of Master of Busiess A!"iistratio #MBA$of Jawaharlal

Nehru Technological Uniersity! "nantapur during the academic year #$%% &

#$%'.

(ignature of the (uperisor (ignature of the )*D

Head of the Department

Dept. of Business anagement

Kottam College Of !ngineering Chinnate,uru.

2ignature of E3ternal E3aminer

Date:

Pa!e:C"innate#u$u


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DECLARATION

I hereby declare that this Project Report titled A

STUDY ON FINANCIAL STATEMENT ANALYSIS

submitted by me to the Department of Business

Management, Kottam College of Engineering, is a

bonade !or" underta"en by me and it is not submitted

to any other #ni$ersity or Institution for the a!ard of any

degree%diploma%certicate or published any time before&

Name and Address of the Student

Signature of the Student

K.ANUSHA

D4O K.%AM!S5A %A %!DD6

H.NO7/710/

BAA8ANU%

KU%NOO

Date:

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CERTI&ICATE

This is to certify that the Project Report titled A STUDY ON

FINANCIAL STATEMENT ANALYSISsubmitted in partial fulfillment for

the award of the Degree of Master of Busiess A!"iistratio #MBA$was

carried out byK.ANUSHAunder my guidance. This has not been submitted to

any other Uniersity or +nstitution for the award of any

degree,diploma,certificate.

(ignature of the (uperisor

Mr.M. DO5ATH AHAMMAD

ASSOC$AT!8%O#!SSO%9H!AD

Department of MBA

Kottam College Of ngineering

Chinnate,uru.

Date:Pa!e:C"innate#u$u.

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ABST%ACT

)he stud& a%out the #$NANC$A STAT!M!NT ANA6S$S of

K!SO%AM C!M!NT $NDUST%6 TD, made to understand the financial

#erformance of the com#an&. )he com#arati$e anal&sis has done 6hile com#aring the

financial statement li+e Profit and 7oss Account and Balance 2heet.

8inancial management is Planning, rgani:ing, !irecting, and controlling

$arious financial acti$ities of the organi:ation. 'n order to #erform all the managerial

functions effecti$e and efficienc&, sufficient #ast and #resent information a%out the

firm and its o#erations should %e e;ui##ed along 6ith this changes o$ertime and this

financial information can %e deri$ed from the %asic financial statement.

8inall& to conclude ' made measurements for inter#retations and %etter

solutions, 6hich ma& hel#s the com#an& for im#ro$ing the #erformance. )his ma&

also hel#s to financial e3#erts outsiders of the com#anies li+e stoc+ holders, 'n$estors

and other researchers.

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ACKNO5!D!M!NT

', the researcher 6ould li+e to e3#ress m& than+s to all those 6ho hel#ed

me directl& or indirectl& to com#lete this #roo#eration 6ithout ' could not dra6 multifarious

s+etch for m& Pro


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$NT%ODUCT$ON /

N!!D #O% TH!STUD6 1/

OB*!CT$-!S O# TH! STUD6 13

SCO8! O# TH! STUD6 1:

%!S!A%CH M!THODOO"6 1;

$M$TAT$ONS O# TH! STUD6 1=


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$NT%ODUCT$ON


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#$NANC$A STAT!M!NT ANA6S$S

$NT%ODUCT$ON

8inancial statements are #rimaril& #re#ared for decision>ma+ing. 8inancial

anal&sis is a #rocess of identif&ing the financial strength and 6ea+nesses of the firm

%& #ro#erl& esta%lishing relationshi# %et6een the items of %alance sheet and #rofit

and loss account.

)he term financial anal&sis includes %oth anal&sis and inter#retation of financial

statements. )he term anal&sis is used t mean the sim#lification of financial data %&

methodical classification of data gi$en in financial statements. )he term inter#retation

means e3#laining the meaning and significance of the data so sim#lified. Both terms

are interrelated and com#lementar&.

Accounting is the #rocess of identif&ing, measuring and communicating

economic information to #ermit informed


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M!AN$N" O# #$NANC$A STAT!M!NTS?

A 8inancial 2tatement is a collection of data organi:ed according to logical

and consistent accounting #rocedures. 'ts #ur#ose is to con$e& an understanding of

some financial as#ects of a %usiness firm. 't ma& sho6 a #osition at moment in time,

as in the case of %alance sheet, or ma& re$eal a series of acti$ities o$er a gi$en #eriod

of time, as in the case of an income statement. )hus the term C8inancial 2tatementsD

generall& refers to the t6o statements

i" )he #osition statement or the Balance 2heet and

ii" )he 'ncome 2tatement or the Profit and 7oss account. )hese statements

are used to con$e& to management and other interested outsiders the #rofita%ilit& and

financial #osition of a firm.

8inancial statements are the outcome of summari:ing #rocess of accounting.

'n the 6ords of *ohn N.M&er, F)he 8inancial 2tatements #ro$ide a summar& of the

accounts of a %usiness enter#rise, the %alance sheet reflecting the assets, lia%ilities and

ca#ital as on a certain date and the income statement sho6ing the results of o#erations

during a certain #eriodG. 8inancial 2tatements are #re#ared as an end result of

financial accounting and are the mathat #ur#ort to re$eal the financial #osition of the enter#rise, the

result of its resent acti$ities, and an anal&sis of 6hat as %een don 6ith earnings.G

8inancial statements are also called financial re#orts, are account %alance

arra&ed in effecti$e and mining full order so that the facts and conce#ts the& #ortra&

ma& %e readil& inter#reted and used as %asis for decisions %& all #eo#le 6ho are

interested in the affairs of %usiness.

Management accounting collects and #ro$ides accounting cost accounting,

economic and statistical information to the men at $arious managerial le$els to assist

them in the #erformance of managerial functions and their e$aluations. 't is the

de$elo#ment and a##lication of $arious techni;ues of recording, anal&sis,

inter#retation and #resentation, ma+ing the financial, costing and other data acti$e and

effecti$e in the #erformance of managerial functions, $i:, #lanning, decision>ma+ing

and control.

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Management accounting ma+es use of not onl& accounting techni;ues %ut also

of statistical and mathematical techni;ues. Management accounting is for6ard

loo+ing and should, there fore %e also a%le to treat economic information and dated to

ma+e it suita%le for use %& the management.

$NT!%8%!TAT$ON O# #$NANC$A STAT!M!NTS

)he term financial statement as used in modern %usiness refers t6o statement

the %alance sheet or statement of financial #osition reflecting the assets, lia%ilities and

ca#ital as on a #articular date and income statement or #rofit and loss statement. More

o$er, the #ac+age of financial statement as it is some times referred to, also includes

such schedules, as those relating to land, %uildings, e;ui#ment, in$entories, long term

in$estments, accrued lia%ilities long>term de%t, cost of goods manufacture, selling and

administrati$e and general e3#enses. $er and a%o$e these the statement of changes

in net 6or+ing ca#ital, 6hich is an im#ortant statement from the #oint of $ie6 of

anal&sis, is %eing included in the C#ac+ageD %& some cor#orate enter#rises through it is

not currentl& in general use.

OB*!CT$-!S O# #$NANC$A STAT!M!NTS

8inancial statements are the sources of 'nformation on the %asis of 6hich

conclusions are dra6n a%out the #rofita%ilit& and financial #osition of a concern. )he&

are the ma


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US!S AND $M8O%TANC! O# #$NANC$A STAT!M!NTS

)he 8inancial 2tatements are mirror, 6hich reflects the financial

#osition and o#erating strength or 6ea+ness of the concern. )hese statements are

useful to the management, in$estors, creditors, %an+ers, 6or+ers, =o$ernment and

#u%lic at large.

1. As a %asis for the granting of credit.

. As information for #ros#ecti$e in$estors in an enter#rise.

4. As an aid to =o$ernment su#er$ision.

5. As a %asis for #rice or" rate regulation.

/. As a %asis for ta3ation

)he utilit& of financial statements to different #arties is discussed in detail as

follo6s

Management?

)he 8inancial 2tatements are useful for assessing the efficienc& for

different cost centers. )he efficient and inefficient s#ots are %rought to the notice to

the management. Management is a%le to decide the course of action to %e ado#ted in

future.

Creditors?

)he creditors are to %e #aid in a short #eriod. )his a%ilit& is met out of

current assets. )he creditors 6ill %e interested in current sol$enc& of the concern, %&

using the current ratio li;uid ratio.

Ban,ers?

)he %an+ers is interested to see that the loan amount is secure and the

customer is a%le concern and #rofit@ loss account 6ill also %e studied to find out the

earning #osition.

$n'estors?

)he in$estors include %oth short>term and long>term in$estors the& are

interested in the securit& of the #rinci#al amount of lone and regular interest #a&ments

%& the concern. )he in$estors 6ill stud& the long>term sol$enc& of the concern 6ith

the hel# of financial statements.

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"o'ernment?

)he financial statements are used to assess ta3 lia%ilit& of %usiness

enter#rises. )he =o$ernment studies economic situations of the countr& from these

statements. )hese statements ena%le the go$ernment to find out 6hether %usiness is

follo6ing $arious rules and regulations or not. )hese statements also %ecome a %ase

for framing and amending $arious la6s for the regulation of %usiness.

Trade Asso@iations

)hese associations #ro$ide ser$ices and #rotection to the mem%ers. )he& ma&

anal&ses the financial statements for the #ur#ose of #ro$iding facilities to these

mem%ers. )he& ma& de$elo# standard ratios and design uniform s&stem of accounts.

Sto@, !@hange

)he stoc+ e3change deals in #urchase and sale of securities of different

com#anies. )he financial statements ena%le the %ro+ers to


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3.%atio Anal)sis

Ratios are relationshi#, e3#ressed in arithmeticall& terms, %et6een

figures, 6hich ha$e a cause and effect relationshi# or 6hich or connected 6ith each

other in some other manner. 't re$eals the #rofita%ilit&, sol$enc& as 6ell as the o$erall

financial #osition of the enter#rises.

:. Capital Budgeting And $n'estment De@isions

)he term ca#ital %udgeting refers to long term #lanning for #ro#osed ca#ital

outla&s and their financing. 't includes %oth rising of long term funds as 6ell as there

utili:ation current funds are e3changed for future %enefits. )he father de$elo#ment of

a firm hinges on the ca#ital e3#enditure decisions. (a#ital %udgeting decisions are

$er& im#ortant in financial decisions as the& long term im#lications.

;. Anal)sis Of #inan@ial Statements

Pu%lished financial statements %& themsel$es donDt re$eal the

significance meaning and relationshi# of the information contained therein financial

statements anal&sis is largel& a stud& of relationshi# among the $arious financial

factors in %usiness as disclosed %& a single set of statements and a stud& of the trend

as sho6n in a series of statements.

NATURE OF FINANCIAL STATEMENTS

)he financial statements are #re#ared on the %asis of record facts concerning

the %usiness transactions, con$entions ado#ted to facilitate the accounting techni;ues,

#ostulates or assum#tions and #ersonal


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1. %!CO%D!D #ACTS

Recorded facts are included all the transactions recorded or maintained on the

%asis of actual cost data. )he items a##earing $arious accounts in the ledger such as

cash in hand, cash at %an+, %ills recei$a%le, and #a&a%le, de%tors and creditors, cost of

su##lies and fi3ed assets. 2ales during the #eriod ca#ital stoc+ and so forth. Are ta+en

as #er the figures entered in the accounting %oo+s.

/. ACCOUNT$N" CON-!NT$ON

Accounting con$entions ha$e reference to certain fundamental

accounting #rinci#les, the a##lication of 6hich has %een sanctified %& long usage.

)hese #rinci#les are matching of costs and re$enues the in$entor& $aluations and the

allocation of e3#enditure %et6een ca#ital and re$enue for the #ur#ose of assets

$aluation.

3. 8OSTUAT!S

An accountant ma+e $arious assum#tions for the con$entions of ado#ted one

of these assum#tions or #ostulates is to the effect that the enter#rise 6ill continue in

%usiness %e&ond the #eriod 6hich is cornered %& the financial statements i.e. %usiness

is A gro6ing concern. and the $alue of mone& 6ill remain the same in different

#eriods. )hough there is a drastic change in #urchasing #o6er of mone&. )he re$enue

is treated as

M!THODS O# #$NANC$A ANA6S$S

)he 8ollo6ing Methods 8inancial Anal&sis are generall& used

1.Comparati'e Statements

)he& refer to com#arison of financial statements #ertaining to t6o

different #eriods #utting them side %& side and finding out the changes 6ith res#ect to

each item of the statements o$erall changes in a%solute and relati$e terms. )he

elements of financial #osition are sho6n in a com#arati$e from to gi$e an idea of

financial #osition at t6o or more #eriods. A statement #re#ared in a com#arati$e form

com#ares the figures of the t6o #eriods and also esta%lishers a relationshi# %et6een

%alance sheet and income statement ena%ling an in de#th stud& on financial #osition.

)his 6ill indicate trend and direction of financial #osition and o#erating results.

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)he financial statements data 6ill %e com#arati$e onl& 6hen same accounting

#rinci#les are used in the #re#aring these statements. 'n case of an& de$iations in the

use of accounting #rinci#les, it is to %e mentioned at the foot of financial statement

and the anal&st should %e careful in using the statements.

/.Trend Anal)sis

'n 8inancial anal&sis in the direction of changes o$er a #eriod of &ears is

of crucial im#ortance. )ime>series or trend anal&sis of ratios indicates the direction of

change. )his +ind of anal&sis is #articular a##lica%le to the items of #rofit and loss

account. )he trends of sales and net income ma& %e studied in the light of t6o factors.

)he rate of fi3ed e3#ansion are secular trend in the gro6th of %usiness and general

#rice le$el.

't 6as found that a num%er of firms sho6 a #ersistent gro6th o$er a #eriod

of &ears. But a true trend of gro6th the sales figures should %e ad


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:. #unds #low Statements

't is a statement, 6hich sho6s the mo$ement of funds and is a re#ort of

the financial o#erations of the %usiness. 't is a statement of sources and a##lications of

funds .)he term F87?G means mo$ement and includes %oth inflo6 and outflo6.

)he term flo6 of funds means transfer of economic $alues from one asset of e;uit& to

another. )he flo6 of funds occurs 6hen a transactions changes from a non current

account to a current account and $ice>$ersa.

'n sim#le, funds mo$e 6hen a transactions affects

1. A (urrent asset and a fi3ed asset

. A 8i3ed asset and a current lia%ilit&

4. A (urrent asset and a fi3ed lia%ilit&

5. A fi3ed asset and a current lia%ilit&

8unds do not mo$e 6hen the transaction affects fi3ed asset and fi3ed

lia%ilit& or current asset and current lia%ilit&.

US!S

't hel#s in anal&sis of financial o#erations

't hel#s in formation of realistic di$idend #olic&

't hel#s in #ro#er allocation of resources

't hel#s in a##raising the use of 6or+ing ca#ital

;. Cash #low Statements

(ash #la&s a $er& im#ortant role in the entire economic life of a %usiness.

't is $er& essential for a %usiness to maintain an ade;uate %alance of cash. )his is

%ecause

'. Although huge #rofits ha$e %een earned, cash ma& not ha$e %een recei$ed.

''. E$en if cash has %een recei$ed it ma& ha$e drained out for some other

#ur#oses.

A 2tatement of changes in the financial #osition of a firm on cash

%asis called cash flo6 statement. 2uch a statement enumerates net effects of the

$arious %usiness transactions on cash and ta+es into account recei#ts and

dis%ursement of cash.

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>. %atio Anal)sis

't is one of the most #o6erful tools of financial anal&sis. 't is the #rocess

of esta%lishing and inter#reting $arious ratios, 6hich hel#s in effecti$e decision>

ma+ing. 'ts strengths and 6ea+ness of a firm as 6ell as its historical and current

#erformance can %e determined. A 8inancial ratio is the relationshi# %et6een t6o

accounting figures e3#ressed mathematicall&.

)he follo6ing four ste#s are in ratio anal&sis.

'. 2election of rele$ant data from the financial statements de#ending u#on

the o%ma+ing.

(P Anal&sis ans6ers the follo6ing ;uestions

o 2ales re;uired to earn a desired #rofitI

o ?hat 6ill %e the effect of changes in #rices, cost and $olumes on

#rofitsI

o ?hich #roduct or #roduct mi3 is most #rofita%le.

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N!!D #O% TH! STUD6?

)o understand the e3isting #osition of the com#an& relating to its financial

#osition and to +no6 6hat are the factors that result an organi:ation &ield Profit

J7oss.

)he anal&sis of financial statements relating to -E2RAM (EMEN)

'N!U2)R'E2 7td, -urnool is carried out %& the common si:e anal&sis these

statements are $er& useful to inter#reting the data %& re#resenting each item in the

statements.

)he anal&sis of financial statements through common si:e anal&sis statements

gi$es a true #icture a%out the financial #osition of MJs -E2RAM (EMEN)

'N!U2)R'E2 7td,. 't is the techni;ue 6hich is commonl& used as a &ardstic+ to

e$aluate the financial condition and #erformance of a concern. Past data #ro$ide the%ase for %udgeting. )he& are ad


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OB*!CT$-!S O# TH! STUD6

Broadl& the o%term li;uidit& #osition of the firm.

e. )o e3amine the sol$enc& of the firm.

f. )o find out the a%ilit& of the firm to meet its current o%ligations.

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SCO8! O# TH! STUD6

Anal&sis of financial statement can %e underta+en %& different #ersons and for

different #ur#oses, therefore, the sco#e of the A82 ma& %e $ar&ing from one

situation to another.

Ho6e$er, the follo6ing are some the techni;ues of the A82

(om#arati$e financial statements.

(ommon>si:e financial statements.

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%!S!A%CH M!THODOO"6

)o anal&:e the financial anal&sis trends for the #ur#ose of ratio anal&sis has to

carried out financial anal&sis is the anal&sis and inter#retation of financial statements

and a #ro#er financial anal&sis can %e gi$e the user %etter insight a%out financial

strengths and 6ea+ness of the firm. 8inancial anal&sis is the starting #oint for ma+ing

#lans %efore using an& so#histicated forecasting and #lanning #rocedures.

8or the #ur#ose, first the re;uired information has to get collected li+e ratio

anal&sis, ?or+ing (a#ital and management anal&sis, income statement, trading and

#rofit and loss, etc. are to %e collected then, the data in statements is to #ro#erl&

organi:ed and arranged and then relationshi# is to %e esta%lished %et6een financial

statements and finall& conclusions are to %e dra6n from the inter#reted information

and #resented form of re#ort.

Research in$ol$es getting tools, ideas from te3ts,


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Sour@es of Data

)he sources of information fall under t6o categories

$nternal Sour@es

E$er& com#an& +ee#s certain records such as accounts, records, re#orts, etc

these records #ro$ide sim#le information for research.

!ternal Sour@es

?hen internal records are insufficient and re;uired information is not a$aila%le,

then the organi:ation de#ends on e3ternal sources. )he e3ternal sources of data are

1.Primar& !ata

.2econdar& !ata

8rimar) Data

)he data collected for the #ur#ose in original and for the first time is +no6n as

FPrimar& dataG. )he researcher he to stud& a #articular #ro%lem collects the data.

)he #rimar& of the stud& is collected through interaction and discussion 6ith the

officials and staff at -E2RAM 'N!U2)R'E2 7'M')E!, HL!.

Se@ondar) Data

)he data collected from the #u%lished sources i.e. not for the first time is called

F2econdar& !ataG. )he secondar& data for the stud& is collected from

Annual Re#orts of the com#an& from the &ear 00>01

Accounting


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imitations of #inan@ial Statements?

't is onl& a stud& of interim re#orts.

!ifferent #eo#le ma& inter#ret the same anal&sis in different 6a&s. 't does not consider the changes in #rices le$el. (hanges in accounting #rocedure %& firm ma& often ma+e financial

anal&sis misleading.

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%!-$!5 O# $T!%ATU%!


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%!-$!5 O# $T!%ATU%!

CONC!8T O# #$NANC$A STAT!M!NT ANA6S$S

$. $NT%ODUCT$ON

8inancial 2tatements are #re#ared #rimaril& for decision>ma+ing. )he& #la& a

dominant role in the setting the frame6or+ of management decision. But the

information is #ro$ided in the financial statements is not an end in itself as no

meaningful conclusions can %e dra6n from these statements alone. 8inancial anal&sis

is the #rocess of identif&ing the financial strengths and 6ea+nesses of the firm %&

#ro#erl& esta%lishing relationshi#s %et6een the items of the %alance sheet and the

#rofit and loss account.

$$. M!AN$N" O# #$NANC$A ANA6S$S

't is also +no6n as anal&sis and inter#retation of financial statements. According to

Metcalf and )itard, F8inancial anal&sis is #rocess of e$aluating the relationshi#

%et6een com#onent #arts of financial statements to o%tain %etter understanding of

firms financial #osition and #erformance. 't hel#s in.

1.8orecasting the future earnings.

.A%ilit& to #a& interest and de%t maturities

4.#rofita%ilit& of a sound di$idend #olic&.

)he term financial anal&sis includes %oth anal&sis and inter#retation. )he term

anal&sis is used to mean sim#lification financial data %& methodical classification of

data gi$en in financial statements. 'nter#retation means e3#laining the meaning and

significance of the sim#lified data.


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B.-!%T$CA ANA6S$S? 't refers to the stud& relationshi# of the $arious

items in the financial statements of one accounting #eriod. 'n this te of anal&sis, the

figures from financial statements are com#ared 6ith a %ase selected from the same

&ear statements. 't is also +no6n as static anal&sis. (ommon si:e financial statements

and financial ratios are the t6o tools em#lo&ed in $ertical anal&sis.

$-. 8%OC!DU%! #O% #$NANC$A ANA6S$S?

)he follo6ing #rocedure is ado#ted for anal&sis and inter#retation of

financial statements.

1. )he Anal&st should ac;uaint him self 6ith the #rinci#les and #ostulates of

accounting.

. )he e3tent of anal&sis should %e determined so that %eli$e in s#here of

6or+ ma& %e decided. 'f the aim is to find earning, then income statement

is anal&:ed.

4. )he 8inancial data is re>arranged %& grou#ing of similar data under same

heads, %rea+ing do6n of indi$idual com#onents according to their nature.

5. A Relationshi#s esta%lished 6ith the hel# of tools and techni;ues of

anal&sis such as ratios, trends, common si:e, funds flo6 etc..

/. )he 'nformation is inter#reted in a sim#le and understanda%le 6a&, 6hich

hel#s in decision ma+ing.

. )he conclusions are #resented as re#orts to the management.

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$NDUST%6 9 COM8AN6

8%O#$!

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$NDUST%6 8%O#$!

K!SO%AM $NDUST%$!S $M$T!D

Cementis a %inder, a su%stance 6hich sets and hardens inde#endentl&, and

can %ind other materials together. )he 6ord cement traces to the Romans, 6ho used

the term o#us caementicium to descri%e masonr& 6hich resem%led concrete and 6as

made from crushed roc+ 6ith %urnt limeas %inder. )he $olcanic ash and #ul$eri:ed

%ric+ additi$es 6hich 6ere added to the %urnt lime to o%tain a h&draulic %inder 6ere

later referred to as cement, c&matium, comment and cement. (ements used in

construction are characteri:ed as h)drauli@or non7h)drauli@.

)he most im#ortant use of cement is the #roduction of mortarand concrete

the %onding of natural or artificial aggregates to form a strong %uilding material 6hich

is dura%le in the face of normal en$ironmental effects.

(oncreteshould not %e confused 6ith cement %ecause the term cementrefers

onl& to the dr& #o6der su%stance used to %ind the aggregate materials of concrete.

U#on the addition of 6ater andJor additi$es the cement mi3ture is referred to as

concrete, es#eciall& if aggregates ha$e %een added.

Histor) of the origin of @ement

!arl) uses

't is uncertain 6here it 6as first disco$ered that a com%ination of h&drated

non>h&draulic limeand a#u::le#roduces a h&draulic mi3ture see also Po::olanic

reaction", %ut concrete made from such mi3tures 6as first used on a large scale %&

Roman engineers. )he& used %oth natural #u::les tress or #umice" and artificial

#u::les ground %ric+ or #otter&" in these concretes. Man& e3cellent e3am#les of

structures made from these concretes are still standing, nota%l& the huge monolithic

dome of the PantheoninRomeand the massi$e Baths of (aracalla. )he $ast s&stem

ofRoman a;ueducts also made e3tensi$e use of h&draulic cement. )he use of

structural concrete disa##eared in medie$al Euro#e, although 6ea+ #o::olanic

concretes continued to %e used as a core fill in stone 6alls and columns.

41
http://en.wikipedia.org/wiki/Ancient_Romehttp://en.wikipedia.org/wiki/Calcium_oxidehttp://en.wikipedia.org/wiki/Mortar_(masonry)http://en.wikipedia.org/wiki/Concretehttp://en.wikipedia.org/wiki/Concretehttp://en.wikipedia.org/wiki/Concretehttp://en.wikipedia.org/wiki/Slaked_limehttp://en.wikipedia.org/wiki/Slaked_limehttp://en.wikipedia.org/wiki/Pozzolanhttp://en.wikipedia.org/wiki/Pozzolanic_reactionhttp://en.wikipedia.org/wiki/Pozzolanic_reactionhttp://en.wikipedia.org/wiki/Roman_engineeringhttp://en.wikipedia.org/wiki/Roman_engineeringhttp://en.wikipedia.org/wiki/Trasshttp://en.wikipedia.org/wiki/Pumicehttp://en.wikipedia.org/wiki/Pantheon,_Romehttp://en.wikipedia.org/wiki/Romehttp://en.wikipedia.org/wiki/Romehttp://en.wikipedia.org/wiki/Romehttp://en.wikipedia.org/wiki/Baths_of_Caracallahttp://en.wikipedia.org/wiki/Roman_aqueducthttp://en.wikipedia.org/wiki/Roman_aqueducthttp://en.wikipedia.org/wiki/Calcium_oxidehttp://en.wikipedia.org/wiki/Mortar_(masonry)http://en.wikipedia.org/wiki/Concretehttp://en.wikipedia.org/wiki/Concretehttp://en.wikipedia.org/wiki/Slaked_limehttp://en.wikipedia.org/wiki/Slaked_limehttp://en.wikipedia.org/wiki/Pozzolanhttp://en.wikipedia.org/wiki/Pozzolanic_reactionhttp://en.wikipedia.org/wiki/Pozzolanic_reactionhttp://en.wikipedia.org/wiki/Roman_engineeringhttp://en.wikipedia.org/wiki/Trasshttp://en.wikipedia.org/wiki/Pumicehttp://en.wikipedia.org/wiki/Pantheon,_Romehttp://en.wikipedia.org/wiki/Romehttp://en.wikipedia.org/wiki/Baths_of_Caracallahttp://en.wikipedia.org/wiki/Roman_aqueducthttp://en.wikipedia.org/wiki/Ancient_Rome


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Modern @ement

Modern h&draulic cements %egan to %e de$elo#ed from the start of the 'ndustrial

Re$olutionaround 100", dri$en %& three main needs

H&draulic rendersfor finishing %ric+ %uildings in 6et climates

H&draulic mortars for masonr& construction of har%or 6or+s etc, in contact

6ith sea 6ater.

!e$elo#ment of strong concretes.

'n Britain#articularl&, good ;ualit& %uilding stone %ecame e$er more e3#ensi$e

during a #eriod of ra#id gro6th, and it %ecame a common #ractice to construct

#restige %uildings from the ne6 industrial %ric+s, and to finish them 6ith a stuccoto

imitate stone. H&draulic limes 6ere fa$ored for this, %ut the need for a fast set time

encouraged the de$elo#ment of ne6 cements. Most famous 6as Par+erOs Roman

cement. )his 6as de$elo#ed %& *ames Par+erin the 10s, and finall& #atented in

19. 't 6as, in fact, nothing li+e an& material used %& the Romans, %ut 6as a

Natural cement made %& %urning sectarian> nodules that are found in certain cla&

de#osits, and that contain %oth cla& minerals and calcium car%onate. )he %urnt

nodules 6ere ground to a fine #o6der. )his #roduct, made into a mortar 6ith sand, set

in /1/ minutes. )he success of Roman (ement led other manufacturers to de$elo#

ri$al #roducts %& %urning artificial mi3tures of cla& and chal+.

*ohn 2eatonmade an im#ortant contri%ution to the de$elo#ment of cements 6hen

he 6as #lanning the construction of the third Edd& stone 7ighthouse1//>9" in the

English (hannel. He needed a h&draulic mortar that 6ould set and de$elo# some

strength in the t6el$e hour #eriod %et6een successi$e high tides. He #erformed an

e3hausti$e mar+et research on the a$aila%le h&draulic lines, $isiting their #roduction

sites, and noted that the h&draulic of the lime 6as directl& related to the cla& content

of the limestone from 6hich it 6as made. 2eaton 6as a ci$il engineer%& #rofession,

and too+ the idea no further. A##arentl& una6are of 2eatonDs 6or+, the same #rinci#le

6as identified %& 7ouis acatein the first decade of the nineteenth centur&. acate

6ent on to de$ise a method of com%ining chal+ and cla& into an intimate mi3ture,

4
http://en.wikipedia.org/wiki/Industrial_Revolutionhttp://en.wikipedia.org/wiki/Industrial_Revolutionhttp://en.wikipedia.org/wiki/Stuccohttp://en.wikipedia.org/wiki/Stuccohttp://en.wikipedia.org/wiki/Kingdom_of_Great_Britainhttp://en.wikipedia.org/wiki/Stuccohttp://en.wikipedia.org/wiki/Stuccohttp://en.wikipedia.org/wiki/Roman_cementhttp://en.wikipedia.org/wiki/Roman_cementhttp://en.wikipedia.org/wiki/James_Parker_(cement_maker)http://en.wikipedia.org/wiki/Concretion#Septarian_concretionshttp://en.wikipedia.org/wiki/John_Smeatonhttp://en.wikipedia.org/wiki/Eddystone_Lighthousehttp://en.wikipedia.org/wiki/Civil_engineerhttp://en.wikipedia.org/wiki/Louis_Vicathttp://en.wikipedia.org/wiki/Industrial_Revolutionhttp://en.wikipedia.org/wiki/Industrial_Revolutionhttp://en.wikipedia.org/wiki/Stuccohttp://en.wikipedia.org/wiki/Kingdom_of_Great_Britainhttp://en.wikipedia.org/wiki/Stuccohttp://en.wikipedia.org/wiki/Roman_cementhttp://en.wikipedia.org/wiki/Roman_cementhttp://en.wikipedia.org/wiki/James_Parker_(cement_maker)http://en.wikipedia.org/wiki/Concretion#Septarian_concretionshttp://en.wikipedia.org/wiki/John_Smeatonhttp://en.wikipedia.org/wiki/Eddystone_Lighthousehttp://en.wikipedia.org/wiki/Civil_engineerhttp://en.wikipedia.org/wiki/Louis_Vicat


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34/76

ABOUT TH! K!SO%AM

K!SO%AM $NDUST%$!S $M$T!Dis one of the leading manufacturers cement

in 'ndia, incor#orated %& the #romoters of Birla "roup Compan). 't is a dr& #rocess

cement #lant. )he plant @apa@it) is la,h tones per annum it is located at

Basanthnagar in Karimnagar Dist. Of Andhra 8radesh whi@h is < ,m awa) from

the %amagundam %ailwa) Station lin,ing Chennai to New Delhi.

)he com#an&Ds first unit Basanthnagar 6ith a ca#acit& of .1la+h tones #er annum.

Hum%les sus#ension #reheated s&stem 6as commissioned during the &ear 199. )he

second unit 6as set u# in the &ear 191 6ith a ca#acit& .1la+h tones #er annum and

the third unit 6ith a ca#acit& of ./la+h tones #er annum 6ent on stream in the &ear19. )he coal for this com#an& is %eing su##lied %& 2#ingarn (ollieries and the

#o6er is o%tained forms AP2EB. )he #o6er demand for the factor& is a%out installed

in the &ear 19.

-esoram (ement has set u# a 1/ M? ca#acit& #o6er #lant to facilitate for

uninterru#ted #o6er su##l& for manufacturing of cement, 6hich starts on 5thAugust,

199.

-esoram 'ndustr& distinguished itself all the cement factories in 'ndia %& %agging the

National Producti$it& A6ard (onsecuti$el& for t6o &ears i.e., for the &ear 19/>

and 19>.

)he 8ederation of Andhra Pradesh (ham%er of (ommerce and 'ndustries 8AP(('"

also conferred on -esoram (ement, an A6ard for Best 'ndustrial #romotion J

e3#ansion efforts in the state for the &ear 195. -esoram also %agged 8AP((' a6ard

for FBest #amil) 8lanning !ffort in the StateGfor the &ear 19>

ne among the industrial giants in the countr& toda&, ser$ing the nation on industrial

front, -esoram 'ndustries 7td., has a che;uered and e$entful histor& dating %ac+ to

the t6enties 6hen the 'ndustrial House of Birla ac;uired it. ?ith onl& a )e3tile Mill

under is %anner in 195, it gre6 form strength and s#read its acti$ities to ne6er fields

Ra&on, 2#un Pi#es )rans#arent #a#er, Pul#, )ires, Refectories and other #roducts.

45


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(ement, 6hich #la&s an im#ortant role in Nation Building acti$it&, the =o$ernment of

'ndia, had de>licensed the cement industr& in the &ear 19 6ith a $ie6 to attract

#ri$ate entre#reneurs to argument the cement #roduction. )hen -esoram decided to

set u# a fe6 (ement Plants in the (ountr&.

Birla su#reme is #o#ular %rand of -esoram (ement from its #restigious #lant of

Basanthnagar, in A.P., 6hich has outstanding trac+ record in #erformance and

#roducti$it&, ser$ing the nation for the last t6o and half decades. 't has #ro$ed its

distinction %& %agging se$eral national a6ards and state a6ards. 't also has the

distinction of achie$ing o#timum ca#acit& utili:ation.

-esoram offers a choice of to# ;ualit& Portland cement for light, hea$& constructions

and allied a##lications. ualit& is %uilt to e$er& fact of the o#erations. As is the

#reference for ;ualit&, so is the demand for the #roduct.

)he limestone is rich in calcium car%onate, a +e& factor that influences the ;ualit& of

the final #roduct. )he dr& #rocess technolog& used in the late com#uteri:ed

monitoring o$erseas the manufacturing #rocess. 2am#les are sent regularl& to the

%ureau of 'ndian 2tandards, National (ouncil of (onstruction and Building Material

for certification of deri$ed ;ualit& norms.

)he com#an& has acti$el& underta+en #romotional measures for #romoting their

#roduct through different media, 6hich includes the use of hoardings, (om#liments,

Ne6s#a#ers etc.,

-esoram (ement is underta+ing the mar+eting acti$ities e3tensi$el& in the states of

Andhra Pradesh, -arnata+a, and )amilnadu, -erala, Maharashtra and =u


36/76

-esoram (ement ca#tured $arious a6ards including national a6ards for #roducti$it&

technolog& conser$ation and se$eral state a6ards.

8or the &ear 199, -esoram %agged FBest 8amil& Planning Effort in the 2tateG %& the

8ederation of A.P., (ham%ers of (ommerce @ 'ndustr& and National A6ards for

FMines 2afet&G for t6o successi$e &ears 19/> @ 19>. 't also %agged the

FNational A6ard for Energ& Efficienc&G for the &ear 199>90 for the %est #erformance

among all cement #lants in 'ndia. )his a6ard installed %& National (ouncil for

(ement and Building and Material N(BM" in association 6ith the de#artment of

#o6er, ministr& of energ&, =o$ernment of 'ndia.

-esoram %agged the #restigious FA.P. 2ate Producti$it& A6ardG in 19>9, also

announced the state a6ard for industrial Management in the state and Fa:aman&

Rattan and Best Efforts on an 'ndustrial UnitG in the state to de$elo#ed FRural

Econom&G 6as %agged for its contri%ution to6ards the social res#onsi%ilit& and rural

and communit& de$elo#ment #rogrammers for the &ear 1991. 't %agged FMa& !a&

A6ardG of the go$ernment of A.P. FBest ManagementG and the Pundit *a6aharlal

Nehru F2il$er Rolling )ro#h& for the 'ndustrial Producti$it& effort in the 2tate of A.P.,

%& 8AP(('G. )he 'ndira =andhi Memorial National A6ard for e3cellence in industr&.

FBest Management A6ardG of the go$ernment of A.P., for the &ear 1994, and it got the

#restigious a6ard F'2>900G a6ard for its ;ualit&.

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T)pes of modern @ement

8ortland @ement

(ement is made %& heating limestone calcium car%onate", 6ith small ;uantities of

other materials such as cla&" to 15/0( in a +iln, in a #rocess +no6n as calcinations,

6here%& a molecule of car%on dio3ideis li%erated from the calcium car%onate to form

calcium o3ide, or lime, 6hich is then %lended 6ith the other materials that ha$e %een

included in the mi3 . )he resulting hard su%stance, called Oclin+erO, is then ground 6ith

a small amount of gsum into a #o6der to ma+e Ordinar& Portland (ementO, the

most commonl& used te of cement often referred to as P(".

Portland cement is a %asic ingredient of concrete, mortar and most non>s#ecialt&

grout. )he most common use for Portland cement is in the #roduction of concrete.

(oncrete is a com#osite material consisting of aggregategra$el and sand", cement,

and 6ater. As a construction material, concrete can %e cast in almost an& sha#e

desired, and once hardened, can %ecome a structural load %earing" element. Portland

cement ma& %e gra& or 6hite.

8ortland @ement (lends

)hese are often a$aila%le as inter>ground mi3tures from cement manufacturers, %ut

similar formulations are often also mi3ed from the ground com#onents at the concrete

mi3ing #lant.

8ortland (last furna@e @ementcontains u# to 0S ground granulated %last furnace

slag, 6ith the rest Portland clin+er and a little gsum. All com#ositions #roduce high

ultimate strength, %ut as slag content is increased, earl& strength is reduced, 6hile

sulfate resistance increases and heat e$olution diminishes. Used as an economic

alternati$e to Portland sulfate>resisting and lo6>heat cements.

8ortland flash @ementcontains u# to 40S fl& ash. )he fl& ash is#o::olanic, so that

ultimate strength is maintained. Because fl& ash addition allo6s lo6er concrete 6ater

content, earl& strength can also %e maintained. ?here good ;ualit& chea# fl& ash is

a$aila%le, this can %e an economic alternati$e to ordinar& Portland cement

4
http://en.wikipedia.org/wiki/Limestonehttp://en.wikipedia.org/wiki/Limestonehttp://en.wikipedia.org/wiki/Clayhttp://en.wikipedia.org/wiki/Kilnhttp://en.wikipedia.org/wiki/Calcinationhttp://en.wikipedia.org/wiki/Calcinationhttp://en.wikipedia.org/wiki/Carbon_dioxidehttp://en.wikipedia.org/wiki/Calcium_oxidehttp://en.wikipedia.org/wiki/Gypsumhttp://en.wikipedia.org/wiki/Gypsumhttp://en.wikipedia.org/wiki/Concretehttp://en.wikipedia.org/wiki/Concretehttp://en.wikipedia.org/wiki/Mortar_(masonry)http://en.wikipedia.org/wiki/Grouthttp://en.wikipedia.org/wiki/Construction_aggregatehttp://en.wikipedia.org/wiki/Ground_granulated_blast_furnace_slaghttp://en.wikipedia.org/wiki/Ground_granulated_blast_furnace_slaghttp://en.wikipedia.org/wiki/Fly_ashhttp://en.wikipedia.org/wiki/Pozzolanichttp://en.wikipedia.org/wiki/Limestonehttp://en.wikipedia.org/wiki/Clayhttp://en.wikipedia.org/wiki/Kilnhttp://en.wikipedia.org/wiki/Calcinationhttp://en.wikipedia.org/wiki/Carbon_dioxidehttp://en.wikipedia.org/wiki/Calcium_oxidehttp://en.wikipedia.org/wiki/Gypsumhttp://en.wikipedia.org/wiki/Concretehttp://en.wikipedia.org/wiki/Mortar_(masonry)http://en.wikipedia.org/wiki/Grouthttp://en.wikipedia.org/wiki/Construction_aggregatehttp://en.wikipedia.org/wiki/Ground_granulated_blast_furnace_slaghttp://en.wikipedia.org/wiki/Ground_granulated_blast_furnace_slaghttp://en.wikipedia.org/wiki/Fly_ashhttp://en.wikipedia.org/wiki/Pozzolanic


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8ortland pule @ementincludes fl& ash cement, since fl& ash is a#u::le, %ut also

includes cements made from other natural or artificial #u::les. 'n countries 6here

$olcanic ashes are a$aila%le e.g. 'tal&, (hile, Me3ico, and the Phili##ines" these

cements are often the most common form in use.

8ortland sili@a fumes @ement. Addition of silica fumecan &ield e3ce#tionall& high

strengths, and cements containing />0S silica fume are occasionall& #roduced.

Ho6e$er, silica fume is more usuall& added to Portland cement at the concrete mi3er.

Masonr) @ementsare used for #re#aring %ric+la&ing mortarsand stuccos, and must

not %e used in concrete. )he& are usuall& com#le3 #ro#rietar& formulations containing

Portland clin+er and a num%er of other ingredients that ma& include limestone,

h&drated lime, air entertainers, retarders, 6ater roofers and coloring agents. )he& are

formulated to &ield 6or+a%le mortars that allo6 ra#id and consistent masonr& 6or+.

2u%tle $ariations of Masonr& cement in the U2 are Plastic (ements and 2tucco

(ements. )hese are designed to #roduce controlled %ond 6ith masonr& %loc+s.

!pansi'e @ements contain, in addition to Portland clin+er, e3#ansi$e clin+ers

usuall& sulfoaluminate clin+ers", and are designed to offset the effects of dr&ing

shrin+age that is normall& encountered 6ith h&draulic cements. )his allo6s large

floor sla%s u# to 0 m s;uare" to %e #re#ared 6ithout contraction #urit& met +aolin.

Colored @ementsare used for decorati$e #ur#oses. 'n some standards, the addition of

#igments to #roduce colored Portland cement is allo6ed. 'n other standards e.g.

A2)M", #igments are not allo6ed constituents of Portland cement, and colored

cements are sold as %lended h&draulic cements.

4
http://en.wikipedia.org/wiki/Pozzolanhttp://en.wikipedia.org/wiki/Silica_fumehttp://en.wikipedia.org/wiki/Mortar_(masonry)http://en.wikipedia.org/wiki/Stuccoshttp://en.wikipedia.org/wiki/Metakaolinhttp://en.wikipedia.org/wiki/Pozzolanhttp://en.wikipedia.org/wiki/Silica_fumehttp://en.wikipedia.org/wiki/Mortar_(masonry)http://en.wikipedia.org/wiki/Stuccoshttp://en.wikipedia.org/wiki/Metakaolin


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-er) finel) ground @ementsare made from mi3tures of cement 6ith sand or 6ith

slag or other #u::le te minerals 6hich are e3tremel& finel& ground together. 2uch

cements can ha$e the same #h&sical characteristics as normal cement %ut 6ith /0S

less cement #articularl& due to their increased surface area for the chemical reaction.

E$en 6ith intensi$e grinding the& can use u# to /0S less energ& to fa%ricate than

ordinar& Portland cements.

Non78ortland h)drauli@ @ements

8oolan7lime @ements.Mi3tures of ground#u::leand lime are the cements used %&

the Romans, and are to %e found in Roman structures still standing e.g. the Pantheon

in Rome". )he& de$elo# strength slo6l&, %ut their ultimate strength can %e $er& high.)he h&dration #roducts that #roduce strength are essentiall& the same as those

#roduced %& Portland cement.

Slag7lime @ements.=round granulated %last furnace slagis not h&draulic on its o6n,

%ut is acti$ated %& addition of al+alis, most economicall& using lime. )he& are

similar to #u::le lime cements in their #ro#erties. nl& granulated slag i.e. 6ater>

;uenched, glass& slag" is effecti$e as a cement com#onent.

Super sulfated @ements.)hese contain a%out 0S ground granulated %last furnace

slag, 1/S gsum or anh&drite and a little Portland clin+er or lime as an acti$ator.

)he& #roduce strength %& formation of stringier, 6ith strength gro6th similar to a

slo6 Portland cement. )he& e3hi%it good resistance to aggressi$e agents, including

sulfate.

Cal@ium aluminates @ementsare h&draulic cements made #rimaril& from limestone

and %au3ite. )he acti$e ingredients are monocalcium aluminates (aAl 5 (a T

Al4or (A in (ement chemist notation, ((N" and ma&enite(a1Al15441 (a T

Al4, or (1Ain ((N". 2trength forms %& h&dration to calcium aluminates h&drates.

)he& are 6ell>ada#ted for use in refractor& high>tem#erature resistant" concretes, e.g.

for furnace linings.

49
http://en.wikipedia.org/wiki/Pozzolanic_ashhttp://en.wikipedia.org/wiki/Pozzolanic_ashhttp://en.wikipedia.org/wiki/Ground_granulated_blast_furnace_slaghttp://en.wikipedia.org/wiki/Ettringitehttp://en.wikipedia.org/wiki/Calcium_aluminate_cementshttp://en.wikipedia.org/wiki/Cement_chemist_notationhttp://en.wikipedia.org/wiki/Mayenitehttp://en.wikipedia.org/wiki/Pozzolanic_ashhttp://en.wikipedia.org/wiki/Ground_granulated_blast_furnace_slaghttp://en.wikipedia.org/wiki/Ettringitehttp://en.wikipedia.org/wiki/Calcium_aluminate_cementshttp://en.wikipedia.org/wiki/Cement_chemist_notationhttp://en.wikipedia.org/wiki/Mayenite


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41/76

K!SO%AM "%OU8 O# $NDUST%$!S

a" )e3tiles -esoram 'ndustries 7td.,

5, =arden Reach Road,

(alcutta 00 05.

%" Ra&on -esoram Ra&on )riennia #o",

!ist. Hooghl&,

?est Bengal.

c" 2#un Pi#es -esoram 2#un Pi#e @ 8oundries,

Bans Beria #o", !ist. Hooghl&,

?est Bengal.

d" (ement -esoram (ement,

Basanthnagar /0/ 1,

!ist. -arimnagar,

A.P.

e" (ement asa$adatta (ement,

2edum // ,

!ist =ul%arga,

-arnata+a.

f" )&ers Birla )&res,

2hi$a (ham%ers,

/4, 2&ed amid Ali A$enue,

(alcutta>00019.

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42/76

CHA8!%7:

DATANA6S$S 9

$NT!%8%!TAT$ON

5


43/76

DATANA6S$S 9$NT!%8%!TAT$ON

#inan@ial Statement Anal)sis

)he term Cfinancial anal&sis also +no6n as anal&sis and inter#retation of

financial statementsD , refers to the #rocess of determining financial strength and

6ea+nesses of the firm %& esta%lishing strategic relationshi# %et6een the items of the

%alance sheet , #rofit and loss account and other o#erati$e data.

FAnal&:ing financial statementsG %& Met@alf and Titard

F8inancial anal&sis is a #rocess of e$aluating the relationshi# %et6een

com#onent #arts of a financial statement to o%tain a %etter understanding of a firms

#osition and #erformanceG %&M)ers

)he #ur#ose of financial anal&sis is to diagnose the information contained in

financial statements so as to *ude the #rofita%ilit& and financial soundness of the firm.

*ust li+e a doctor e3amines his #atient %& recording his %od& tem#erature, %lood

#ressure, E(). Before ma+ing his conclusion regarding the illness and %efore gi$ing

his treatment, a financial anal&st anal&sis the financial statements 6ith $arious tools

of anal&sis %efore commenting u#on the financial health or 6ea+nesses of an

enter#rise.

)he anal&sis and inter#retation of financial statements is essential to %ring out

the m&ster& %ehind the figures in financial statements. 8inancial statements anal&sis is

an attem#t to determine the significance and meaning of the financial statement data

so that forecast ma& %e made of the future earnings, a%ilit& to #a& interest and de%t

maturities %oth current and long term" and #rofita%ilit& of a sound di$ided #olic&.

54


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T)pes of finan@ial anal)sis>

8inancial anal&sis into different categories de#ending u#on

1" )he material used and

" )he method of o#eration follo6ed in the anal&sis or the modus o#erandi of

anal&sis

T)pes of finan@ial anal)sis?7

1" n the %asis of material used " on the %asis of mode o#eration

a" E3ternal %" 'nternal a" Hori:ontal %" ertical

Anal&sis Anal&sis Anal&sis Anal&sis

1. On the (asis of material used? 7

According to material used, financial anal&sis can %e of t6o tes

E3ternal anal&sis 'nternal anal&sis

a+ !ternal anal)sis? 7

)his anal&sis is done %& outsiders 6ho do not ha$e access to the

detailed internal outsiders include in$estors, #otential in$estors, (reditors,

Potential (reditors, =o$ernment Agencies, (redit Agencies and =eneral

Pu%lic. 8or financial anal&sis, these e3ternal #arties to the firm de#end almost

entirel& on the #u%lished financial statements.

(+ $nternal anal)sis?7

)he anal&sis conducted %& #ersons 6ho ha$e access to the internal accounting

records of a %usiness firm is +no6n as internal anal&sis.

55


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/. On the (asis of mode operation? 7

According to the modus o#erandi financial anal&sis can also %e of t6o tes

a. Hori:ontal anal&sis

0%. ertical anal&sis

a+ Horiontal anal)sis?7

Hori:ontal anal&sis refers to the com#arison of financial data of a com#an& for

se$eral &ears. )he figures for this te of anal&sis are #resented hori:ontall& o$er a

num%er of columns. )he figures of the $arious &ears are com#ared 6ith standard or

%ase &ear. A %ase &ear is &ear chosen as %eginning #oint. )his te of anal&sis is also

called Cd&namic anal&sisD as it is %ased on the data from &ear to &ear rather than on

data of an& one &ear. )he hori:ontal anal&sis ma+es it #ossi%le to focus attention on

items that ha$e changed significantl& during the #eriod under $ie6

(+ -erti@al anal)sis >

ertical anal&sis refers to the stud& of relationshi# of the $arious items in the

financial statements of one accounting #eriod. in this tes of anal&sis the figures

from financial statement of a &ear are com#ared 6ith a %ase selected from the same

&ears statement

Methods of finan@ial anal)sis

)he follo6ing methods of anal&sis are generall& used>

1. (om#arati$e 2tatements.

. )rend Anal&sis.

4. (ommon>2i:e 2tatements.

5. 8unds flo6 Anal&sis.

/. (ash Anal&sis

. Ratio Anal&sis

. (ost>$olume>Profit Anal&sis

1. Comparati'e statement

)he com#arati$e financial statements are statements of the financial #osition

at different #eriods of time .(om#arati$e 2tatement #ro$ides an idea of financial

#osition at t6o or more #eriods. =enerall& t6o financial statements %alance sheet and

income statement" are #re#ared in com#arati$e form for financial anal&sis.

5/


46/76

TH! COM8A%AT$-! STAT!M!NT MA6 SHO5

1. A%solute figures ru#ee amounts"

. (hanges in a%solute figures i.e. increase or decrease in a%solute figures.

4. A%solute data in terms of #ercentages.

5. 'ncrease or decrease in terms of #ercentages.

TH! T5O COM8A%AT$-! STAT!M!NTS A%!

1. (om#arati$e %alance sheet, and

. (om#arati$e 'ncome statement.

&1+ Comparati'e (alan@e sheet?7

)he com#arati$e %alance sheet anal&sis is the stud& of the trend of the

same items, grou# of items and com#uted items in t6o or more %alance sheets

of the same %usiness enter#rise on different dates. )he change in #eriodic

%alance sheet items reflect the conduct of a %usiness the change can %e

o%ser$ed %& com#arison of the %alance sheet at the %eginning and at the end of

a #eriod and these changes can hel# in forming an o#inion a%out the #rogress

of an enter#rise.

=U'!E 7'NE2 8R 'N)ERPRE)A)'N 8 (MPARA)'E BA7AN(E

2HEE)

?hile inter#reting com#arati$e %alance sheet the inter#reter is e3#ected to

stud& the follo6ing as#ects>

1. (urrent financial #osition and li;uidit& #osition

. 7ong>term financial #osition

4. Profita%ilit& of the concern.

5


47/76

/. COMMON S$E! STAT!M!NT>

)he common>si:e statements, %alance sheet and income statement are sho6 in

anal&tical #ercentages. )he figures are sho6n as #ercentages of total assets, total

lia%ilities and total sales. )he total assets are ta+en as 100 and different assets are

e3#ressed as a #ercentage of the total similarl&, $arious lia%ilities are ta+en as a #art of

total lia%ilities.

COMMON S$E! BAANC! SH!!T?7

A statement in 6hich %alance sheet items are e3#ressed as the ratio of each

asset to total assets and the ratio of each lia%ilit& is e3#ressed as a ratio of total

lia%ilities is called common si:e %alance. )he common si:e %alance sheet can %e used

to com#are com#anies of differing si:e. )he com#arison of figures in different #eriods

is not useful %ecause total figures ma& %e affected %& a num%er of factors. 't is not

#ossi%le to esta%lish standard norms for $arious assets. )he trends of figures from

&ear to &ear ma& not %e studied and e$en the& ma& not gi$e #ro#er results.

5


48/76

COM8A%AT$-! BAANC! SH!!T STAT!M!NT #O% TH! 6!A% /00


49/76

/00< /00= A(solute @hange I @hange

Total Current

Assets

1/./ 15.5 4/.9 /.4

Total Currentia(ilities

901.0 1011.1 110.1 1.

#ied Assets 105.5 105.4/ 0.11 .51

59


50/76

$NT!%8%!TAT$ON?

)he (om#arati$e Balance 2heet com#aring (urrent Assets and (urrent 7ia%ilities.

)he financial &ear 00 and 009, the (urrent Assets are increased %& /.4S in

the &ear 009. At the same time the (urrent lia%ilities are increased %& 1.S in the

&ear 009. And 8i3ed Assets are increased %& .51S in the &ear 009. )he o$erall

#osition of the com#an& is satisfactor&.

/0


51/76

COM8A%AT$-! BAANC! SH!!T STAT!M!NT #O% TH! 6!A% /00=710

%'n 7a+hs"

8A%T$CUA%S /00= /010 $n@rease4De@rease

Amount

$n@rease4De@rease

per@entage

A" A22E)28i3ed Asset 105.4/ 4541. 1.5 90.19

(a#ital 6or+ in

#rogress

5./ 51.4 >5/.0 >/.

TOTA 9. 455./ 11/.5/ 55.04

B" (URREN)

A22E)2

'n$estments 1. /1.54 >10.4/ >1./

'n$entories /9.0 91.19 4.14 //./4

2undr& de%tors 40.1 /5.9 1. 5.0

(ash and %an+%alance /./ 0.15 4./ 51.

7oans and

ad$ances

//5. /.0 110.55 19.91

8i3ed de#osits 0. 0.41 0.04 10.1

TOTA

CU%%!NT

ASS!TS

15.5 /.0 14./5 4.4/

TOTA ASS!TS 5411.9 100. 1.99 51.59

7'AB'7')'E2

E;uit& 2hare

(a#tial

5/.5 5/.5 0 0

(a#ital reser$es 10.5 1591.11 10. 1.5

Re$aluation

Reser$es

5.1 4.49 >0.4 >1.1

2ecured 7oans 1/4. 14. 4.5/ 1.41

Un 2ecured 7oans 545.1 1./0 .45 /.1

(urrent 7ia%ilities

@ Pro$isions

1011.1 1545. 54.0 51.4

TOTA 1011.1 1545. 54.0 51.4

TOTA

$AB$$T$!S

5411.9 100. 1.99 51.59

/1


52/76

/00= /010 A(solute @hange I @hange

Total Current

Assets

15.5 /.0 14./5 4.4/

Total Current

ia(ilities

1011.1 1545. 54.0 51.4

#ied Assets 105.4/ 4541. 1.5 90.19

/


53/76

$NT!%8%!TAT$ON?


)he financial &ear 009 and 010, the (urrent Assets are increased %& 4.4/S in

the &ear 010. At the same time the (urrent lia%ilities are increased %& 51.4S in the

&ear 010. And 8i3ed Assets are increased %& 90.19S in the &ear 010. )he o$erall


/4


54/76

COM8A%AT$-! BAANC! SH!!T STAT!M!NT #O% TH! 6!A% /010711

%'n 7a+hs"

8A%T$CUA%S /010 /011 $n@rease4De@rease

Amount

$n@rease4De@rease

per@entage

A" A22E)28i3ed Asset 4541. 491. /9.9 ./

(a#ital 6or+ in

#rogress

51.4 54.1 5.9 .0/

TOTA 455./ 519./4 5. .50

B" (URREN)

A22E)2

'n$estments /1.54 /. 15.49 .9

'n$entories 91.19 111.// 0.4 .0

2undr& de%tors /5.9 41.45 .9/ 1.4

(ash and %an+%alance 0.15 1. >. >10.40

7oans and

ad$ances

/.0 545.0 >40.5 >45./

8i3ed de#osits 0.41 1. 1.5/ 5.

TOTA

CU%%!NT

ASS!TS

/.0 44.9/ .94 4.01

TOTA ASS!TS 100. 5/4.5 4/. /.

7'AB'7')'E2

E;uit& 2hare

(a#tial

5/.5 5/.5 0 0

(a#ital reser$es 1591.11 1/1. >49.59 >1.0

Re$aluation

Reser$es

4.49 .9 >0./ >15.5

2ecured 7oans 14. 41.4 /0.11 .

Un 2ecured 7oans 1./0 1.55 45.95 .90

(urrent 7ia%ilities

@ Pro$isions

1545. 11/4.9 >0. >19./5

TOTA 1545. 11/4.9 >0. >19./5

TOTA

$AB$$T$!S

100. 5/4.5 4/. /.

/5


55/76

/010 /011 A(solute @hange I @hange

Total Current

Assets

/.0 44.9/ .94 4.01

Total Currentia(ilities

1545. 11/4.9 >0. >19./5

#ied Assets 4541. 491. /9.9 ./

//


56/76

$NT!%8%!TAT$ON?


)he financial &ear 010 and 011, the (urrent Assets are increased %& 4.01S in

the &ear 011. At the same time the (urrent lia%ilities are decreased %& >19./5S in the

&ear 011. And 8i3ed Assets are increased %& ./S in the &ear 011. )he o$erall

#osition of the com#an& is moderate

COM8A%AT$-! BAANC! SH!!T STAT!M!NT #O% TH! 6!A% /01171/

% 'n 7a+hs"

8A%T$CUA%S /011 /01/ $n@rease4De@rease

Amount

$n@rease4De@rease

per@entage

A" A22E)2

8i3ed Asset 491. 4/.1 >105./1 >.4

(a#ital 6or+ in

#rogress

54.1 0./ 5.5 //.5

TOTA 519./4 5. 14.44 4.45

B" (URREN)

A22E)2

'n$estments

/.

.4 0./5 0.

'n$entories 111.// 99/.1 >14.49 >11.04

/


57/76

2undr& de%tors 41.45 4./ 5.5 .9

(ash and %an+

%alance

1. 9./9 >.9 >4.1

7oans and

ad$ances

545.0 11/5.09 19.59 1/.//

8i3ed de#osits 1. 1.0 >0.9 >49.0TOTA

CU%%!NT

ASS!TS

44.9/ 9/9./ 4/.9 10.44

TOTA ASS!TS 5/4.5 .1 5.4 11.99

7'AB'7')'E2

E;uit& 2hare

(a#tial

5/.5 5/.5 0 0

(a#ital reser$es 1/1. ./ >4/.0/ >40.

Re$aluation

Reser$es

.9 .0 >0.19 >./

2ecured 7oans 41.4 41.9 0.09 44.9

Un 2ecured 7oans 1.55 9.5 >00.0 >54.01

(urrent 7ia%ilities

@ Pro$isions

11/4.9 0.4 10/4.5 91.

TOTA 11/4.9 0.4 10/4.5 91.

TOTA

$AB$$T$!S

5/4.5 .1 5.4 11.99

/011 /01/ A(solute @hange I @hange

Total Current

Assets

44.9/ 9/9./ 4/.9 10.44

Total Current

ia(ilities

11/4.9 0.4 10/4.5 91.

#ied Assets 491. 4/.1 >105./1 >.4

/


58/76

/


59/76

$NT!%8%!TAT$ON?


)he financial &ear 011 and 01, the (urrent Assets are increased %& 10.44S in

the &ear 01. At the same time the (urrent lia%ilities are increased %& 91.S in the

&ear 01. And 8i3ed Assets are decreased %& >.4S in the &ear 01. )he o$erall


COMMON S$E! BAANC! SH!!T STAT!M!NT #O% TH! 6!A% /00


60/76

8i3ed de#osits 0.1 0.00 0. 0.00

TOTA

CU%%!NT

ASS!TS

1/./ 5.5 15.5 4.09

TOTA ASS!TS 9/.44 100 5411.9 100

7'AB'7')'E2E;uit& 2hare

(a#tial

5/.5 1./4 5/.5 1.0

(a#ital Reser$es 940./ 41. 10.5 9.9

Re$aluation

Reser$es

/.44 0.1 5.1 0.09

2ecured 7oans 91.0 4.4 1/4. 4/.4

Un 2ecured 7oans 11.9 5.0 545.1 10.0

TOTA 05. 9. 4400./4 ./4

(urrent 7ia%ilities

@ Pro$isions

901.0 40. 1011.1 4.5/

TOTA 901.0 40. 1011.1 4.5/

TOTA

$AB$$T$!S

9/.44 100 5411.9 100

/00< I /00= I

Total Current

Assets

1/./ 5.5 15.5 4.09

Total Current

ia(ilities

901.0 40. 1011.1 4.5/

#ied Assets 105.5 4.55 105.4/ 51.5

0


61/76

$NT!%8%!TAT$ON?

1


62/76

)he current assets are 5.5S in 00 and decrease to 4.09S in 009 i.e5.1/S"

decrease. At the same time 8i3ed Assets are 4.55S in 00 and increase to 51.5S

in 009 i.e /.5S" increase. )he (urrent 7ia%ilities are 40.S in the &ear 00 and

decrease to 4.5/S i.e, .4S" decrease.

COMMON S$E! BAANC! SH!!T STAT!M!NT #O% TH! 6!A% /00=710

%'n 7a+hs"

8A%T$CUA%S /00= I /010 I

A" A22E)2

8i3ed Asset 105.4/ 51.5 4541. /./

(a#ital 6or+ in

#rogress

5./ 0./ 51.4 .

TOTA 9. 1.9 455./ 4.01

B" (URREN)

A22E)2

'n$estments 1. 1.54 /1.54 0.5

'n$entories /9.0 14. 91.19 1/.01

7oans @

Ad$ances

//5. 1. /.0 10.90

2undr& de%tors 40.1 .4 /5.9 .9

(ash and %an+%alance

/./ 1.41 0.15 1.41


63/76

8i3ed de#osits 0. 0.00 0.41 0.00/

TOTA

CU%%!NT

ASS!TS

15.5 4.09 /.0 4.9/

TOTA ASS!TS 5411.9 100 100. 100


(a#tial

5/.5 1.0 5/.5 0.5

(a#ital Reser$es 10.5 9.9 1591.11 5.55

Re$aluation

Reser$es

5.1 0.09 4.49 0.0/

2ecured 7oans 1/4. 4/.4 14. 40./5

Un 2ecured 7oans 545.1 10.0 1./0 0.9

TOTA 4400./4 .// 5.5 .5

(urrent 7ia%ilities

@ Pro$isions

1011.1 4.5/ 1545. 4./0

TOTA 1011.1 4.5/ 1545. 4./0

TOTA

$AB$$T$!S

5411.9 100 100. 100

/00= I /010 I

Total Current

Assets

15.5 4.09 /.0 4.9/

Total Current

ia(ilities

1011.1 4.5/ 1545. 4./0

#ied Assets 105.4/ 51.5 4541. /./

4


64/76

$NT!%8%!TAT$ON?

)he current assets are 4.09S in 009 and decrease to 4.9/S in 010 i.e1.15S"

decrease. At the same time 8i3ed Assets are 51.5S in 009 and increase to /./S

in 010 i.e 15.51S" increase. )he (urrent 7ia%ilities are 4.5/S in the &ear 009and increase to 4./0S i.e, 0.0/S" increase.

5


65/76

COMMON S$E! BAANC! SH!!T STAT!M!NT #O% TH! 6!A% /010711

%'n 7a+hs"

8A%T$CUA%S /010 I /011 I

A" A22E)2

8i3ed Asset 4541. /./ 491. /.0

(a#ital 6or+ in

#rogress

51.4 . 54.1 .

TOTA 455./ 4.01 519./4 4.9

B" (URREN)

A22E)2'n$estments /1.54 0. /. 1.01

'n$entories 91.19 1/.0 111.// 1.44

7oans @

Ad$ances

/.0 10.90 545.0 .4

2undr& de%tors /5.9 .9 41.45 9.

(ash and %an+

%alance

0.15 1.41 1. 1.11

8i3ed de#osits 0.41 0.00/ 1. 0.0

TOTA

CU%%!NT

ASS!TS

/.0 4.9 44.9/ 4/.9

TOTA ASS!TS 1545. 4./0 11/4.9 1.

7'AB'7')'E2

E;uit& 2hare

(a#tial

5/.5 0.5 5/.5 0.0

(a#ital Reser$es 1591.11 5.55 1/1. 19.49

Re$aluation

Reser$es

4.49 0.0/ .9 0.05

2ecured 7oans 14. 40./5 41.4 4./

Un 2ecured 7oans 1./0 0.9 1.55 /.1

TOTA 5.5 .5 /99./ .09(urrent 7ia%ilities 1545. 4./0 11/4.9 1.

/


66/76

@ Pro$isions

TOTA 1545. 4./0 11/4.9 1.

TOTA

$AB$$T$!S

100. 100 5/4.5 100

/010 I /011 I

Total Current

Assets

/.0 4.9 44.9/ 4/.9

Total Current

ia(ilities

1545. 4./0 11/4.9 1.

#ied Assets 4541. /./ 491. /.0


67/76

$NT!%8%!TAT$ON?

)he current assets are 4.9S in 010 and decrease to 4/.9S in 011 i.e1S"

decrease. At the same time 8i3ed Assets are /./S in 010 and decrease to /.0S

in 011 i.e 0.9/S" decrease. )he (urrent 7ia%ilities are 4./0S in the &ear 010 and

decrease to 1.S i.e, /.S" decrease.


68/76

COMMON S$E! BAANC! SH!!T STAT!M!NT #O% TH! 6!A% /01171/

%'n 7a+hs"8A%T$CUA%S /011 I /01/ I

A" A22E)2

8i3ed Asset 491. /.0 4/.1 59.4

(a#ital 6or+ in

#rogress

54.1 . 0./ 9.51

TOTA 519./4 4.9 5. /9.05

B" (URREN)

A22E)2

'n$estments /. 1.01 .4 0.91

'n$entories 111.// 1.44 99/.1 14.7oans @

Ad$ances

545.0 .4 11/5.09 1/.9

2undr& de%tors 41.45 9. 4./ 9.41

(ash and %an+

%alance

1. 1.11 9./9 0.9

8i3ed de#osits 1. 0.0 1.0 0.01

TOTA

CU%%!NT

ASS!TS

44.9/ 4/.9 9/9./ 50.9/

TOTA ASS!TS 5/4.5 100 .1 100


(a#tial

5/.5 0.0 5/.5 0.4

(a#ital Reser$es 1/1. 19.49 ./ 11.9

Re$aluation

Reser$es

.9 0.05 .0 0.04

2ecured 7oans 41.4 4./ 41.9 54.9

Un 2ecured 7oans 1.55 /.1 9.5 1.4

TOTA /99./ .09 /00.4/ 9.54

(urrent 7ia%ilities

@ Pro$isions

11/4.9 1. 0.4 40./5

TOTA 11/4.9 1. 0.4 40./5


69/76


70/76

$NT!%8%!TAT$O$N?

)he current assets are 4/.9S in 011 and increase to 50.9/S in 01 i.e5.9S"

increase. At the same time 8i3ed Assets are /.0S in 011 and decrease to 59.4S

in 01 i.e ./S" decrease. )he (urrent 7ia%ilities are 1.S in the &ear 011 and

increase to 40./5S i.e, 1.S" increase.

0


71/76

CHA8T!%7;

#$ND$N"S SU""!ST$ONS 9

CONCUS$ON

1


72/76

#$ND$N"S

'n com#arati$e %alance sheet the current assets are increased in all the

&ears 6hereas in common si:e the current assets are increased in 4

&ears e3ce#t the last &ear that is decreased. )he (urrent 7ia%ilities are also increased in all the &ears in

com#arati$e %alance sheet e3ce#t in 010>011 the current lia%ilities

are decreased.

'n common si:e the current lia%ilities are increased in &ears and

decreased in &ears.

)he fi3ed assets are increased in all the &ears from00>01 in

com#arati$e %alance sheet 6hereas in common si:e e3ce#t in 00 >09

it is increased in the remaining &ears. 7oans @ Ad$ances are increased in the &ear 00>010. E3ce#t in the

&ear 011 decrease. At the same time common si:e also increase in the

&ear 00>010. E3ce#t 011 decrease.

)he secured loans are decrease in all the &ears.

)he un secured loans are increase in all &ears. 'n common si:e the un

secured loans are also increased. E3ce#t 009 is decrease.


73/76

SU""!ST$ONS

)o ma+e the current financial #osition of the com#an& is more effecti$e.

)he current assets are im#ro$e in ne3t financial &ear.

)he com#an& should concentrate in the current lia%ilities to maintain a #ro#er

se;uence in the ne3t financial &ear.

)he fi3ed assets are $er& #oor in the financial re#orts to im#ro$e the fi3ed

assets in ne3t financial &ear.

7oans @ Ad$ances are normal decrease %ut the com#an& should %e increase

on the %asis of the #ast financial re#ort.

)he secured loans 6ill %e im#ro$e in the ne3t financial &ear. And also the un

secure loans also im#ro$e.

CONCUS$ON

't should al6a&s %e %orne in mind that the success or failure of a (om#an&

de#ends u#on the amount of shareholdersO $alue that a (om#an& generates. 8inancial

4


74/76

(ontrol is a measure that reflects the a%solute amount of shareholdersO $alue created

or destro&ed during each &ear. (ontrol has no steering failures li+e Return on

'n$estment R'" and Earning #er 2hare EP2". 'n the case of R' and EP2,

ma3imi:ing these measures might not lead to o#timal outcome or ma3imum

shareholder $alue.

)hus, ' strongl& %elie$e that the im#lementation of 8inancial (ontrol hel#s the

(om#an& in the follo6ing 6a&s

Reduction in cost of ca#ital and increase in the net o#erating #rofit after ta3 %&

%etter 6or+ing ca#ital management and %& +ee#ing o#timum %alance of de%t and

e;uit& in the ca#ital structure.

(ost control and cost reduction in the area of controlla%le e3#enses.

Reduction in ca#ital em#lo&ed 6ith s#ecific targeted reductions in %oo+ de%ts,

in$entories etc.

Effecti$e utili:ation of fi3ed assets to deri$e the #romised return from

'n$estments.

)o ma3imi:e shareholders $alue.

)o im#ro$e ca#ital efficienc& and o$er>all %usiness #erformance.

)o encourage greater %e>o6ner and entre#reneurial %eha$iors among

em#lo&ees.

)o guide in decision ma+ing.

5


75/76


76/76

B$B$O"%A8H6

BOOKS *OU%NAS AND MA"AE$N!S?

1. BU2'NE22 )!AL, 8EBRUARL, 000

. 8'NAN('A7 MANA=EMEN) BL $.M. 8AND!6

4. 8UN!AMEN)A72 8 8'NAN('A7 MAN=EMEN) BL (.AN HPRNE

5!BS$T!S?

1. 666.google.com

. 666.6i+i#edia.com

4. 666.%usiness.com

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