A

Project Report
on
Study of Consumer
Perception
in
Liberty Shoes Limited,
Karnal-132001
(Haryana)

Submitted to : - Kurkushetra University Kurkushetra

In partial fulfillment of the requirement for the Degree of Bachlor of Business

Adminitration on 2012-13

Under Supevision of
By
Mr. Vishal Goel
Rani
(C.A)

Submitted
Pooja

Govt. P.G Collage for Women, Karnal-132001 (Haryana)

CERTIFICATE OF ORIGINALITY

This is to certify that the project report entitled "Finance"

Submitted to Govt. P.G Collage for Woman, Karnal in

the patial

fulfillment of the requirement for the award of the degree of BBA

in an original work carried out by Pooja Rani under the guidance of
Mr. Vishal Goel. The matter embodied in this project is a genuine
work done by Pooj Rani to the best of my knowledge and belief and
has been submitted neither to this university nor to nay other
university for the fulfillment of the requirement of the course of
study.

Signature of the Student

Signature of the Guide

Designation

Certificate

This is to certify that the project titled " Finance " is an academic
work done by

"Pooja Rani" submitted in in the partial

fulfillment of requirement for requirement for the award of the

degree of course form " Govt. P.G Collage for Woman, Karnal. It has
been completed under the guidance of Mr. Vishal Goel and Mr.
Prabhash Kumar Singh. We are thankful to Liberty Shoes Limited.
For having allowed our student to undergo project work training.
The authenticity of the project work will be examined by the viva
examiner which uncludes data verification, checking duplicity of
information etc. And it may be rejected due to non fulfillment of
quality standard set by the Institude.

Acknowledgement

An individual cannot do project of this scale. I take this opportunity

to express my acknowledgement and deep sense of gratitude to the
individuals for rendering valuable assistant and gratitude to me.
Their input have played a vital role in success of this project &
formal piece of acknowledgement my not be sufficient to express
the feeling

of gratitude towards people who have helped me

successfully completion of my training.

I would like to wish my sincere thanks to my project Mr. Vishal

Goel ( C.A) studies for her keen interest and giving valuable
guidance at every stage of this project. Lator on I would like to
confer the flower of acknowledgement to the company guide Mr.
Prabhash Kuamr Singh (Assistant) Ex-Imp, Department, who is my
external guide.
I take this opportunity to thank all respondent who spared their
precious time to provide me with valuable input for project without
it would have been possible.
I firmly belive that there is always a scope of improvement. I
welcome any suggestion for futher enrching the quality of this
report.

Signature of Student

Preface

The Shoe industry is highly competitive. Product and services that

are easily replicated, together with informed and demanding
consumer markers, add to the complexity of the dynamic and fast
changing shoe industry. The Companies try to diffrerentiate
themselves on the basis of corporate indentity.

The purpose of

current study was to understand the customer needs and wands

and waht a customer expects from the company, and how do and
on what attibutes customer choose a particular brand, and what is
their frequency of their purpose.
The review of literature focuses on the importance of safety
products and customer preference. The questionnaire was made to
fulfill all the set empirical objectives. The schedule had the
question on different attributes to understand the complete
perception of the customer.
The statistical analysis was done. The study and analysis can help
the verious companies to understand that how much shoes in the
market and what are those factors on the bases of which customers
select those shoes.

Signature of Student

Certificate

This is to certify that report entitled " Finance" submitted for the
degree of BBA in subject of Summer Training Report, is a bonafide
research project earned out by Pooja Rani " Govt. P.G Collage for
Woman, Karnal student under my supervision and no part of this
report has been submitted for any other degree.
The assistance and help received during the coures of investigation
have been fully acknowledge.

Mr. Vishal Goel

(C.A)

Contents

Chaper No.

Title

Industry Profile

1.1

Overview of industry as a
whole

1.2

Profile of Liberty Shoes Ltd

1.2.1

History

1.2.
2

Corporate Philosophy

1.2.
3

Social Responsibility

1.2.
4

Corporate Goals

1.2.
5

Awards

1.2.
6

Product

1.2.
7

Mission & Vision

1.2.
8

Liberty Group of Companies

1.2.
9

Board of Directors

1.3.

Competition information

1.3.
1

Corporate values

1.3.
2

Core strenght of Liberty

1.3.
3

Objective of the Company

1.3.
5

Corporate goals of the

company

Page No

1.3.
6

National & International

Awards

2.

Re-search Methology

3.

Balance Sheet

4.

About Ratio Analsis

5.

Calculation & Analysis of

various Ratios and their
comparison with various
years.

6.

Suggestion &
Recommendations

Industry Profile

INTRODUCTION TO FOOTWEAR COMPANY

Footwear has come out as one of the basic needs and
necessities of todays human being. It is as important for a
human being as clothes, bread and shelter. The importance
of the said product has been highly recognized in the
western and advanced countries. Footwear industry in
these countries
came in category of other developed
industries as Nike and Reebok of America, Lapses of U.K,
Goose of Italy are some highly reputed companies
manufacturing hi tech shoes and having world wide
acceptability. Scenario in India being the second largest
populated country in the world, surplus manpower and
resources of raw materials, whatever the reason being.
Till the mid of the 20th century, the bulk of shoe industry
were in cottage sector.
Professional cobblers were
responsible for traditional shoes, Indian as well western
styles.
In the post independence era the policies of government
were slowly guided to provide protection to cobblers, who

mainly come from schedule cast through direct or indirect

regulations. In the past one decade the situation has
completely changed because the new generation of
professionals did not adopt this line as shoemaker and they
preferred to join white-collar jobs. Now a majority of
existing workers are working in the shoe industry at Agra.
Evan in Agra the fewer servants of other class are taking
over the job of shoemaking.
With the situation the growth of industry remained
stagnant because of no availability of workers to keep the
pace of demands. Plastic industry and Hawaii chaplets
replace the shortage of footwear. National Bata remained
the main source of supply to meet such demand.
The present scenario of shoe industry has changed by the
Liberalization of Economic Policy.
Many national and
international brands have emerged in Indian footwear
industry. Rate of production is not adequate to meet the
requirements. Even the combined strength of total output
of plastic, canvas, rubber and other categories shoe donor
make up the populated requirement of this country.
Taking Indian shoe industry in consideration all
modernization as anticipated would remain in the smallscale sector because of low availability of capital.

We can look towards Italy which is the leader of footwear

trader bulk of production is from the small-scale sector and
unit having about 20 to 30 workers could produce 200 to
500 pairs per day. The total capital in machinery and raw
material is few lakh rupee whereas in India one person can
produce pair of high quality of shoe in a day. In cottage
small scale industry the production is quite low in
comparison to the international standards.
With the mechanization of shoe industry production of
footwear in 1980s have been increased in almost each of
the state where as earlier it used to be mainly in Agra.
But now in Karnal, Agra, Saharanpur, Gharaunda, Liberty

Puram and at many other places production centers have

been set up for various production activities.
It is an ideal industry for entrepreneurs and the profits are
assured. Availability of raw material and manpower is no
problem. So the small-scale sector has to play a vital role
for the industry development.
ROLE OF FOOTWEAR INDUSTRY
The main aim of footwear industry is to provide footwear
to all human beings and in any of its variety. Footwear is a
necessity and the industry ought to succeed on this front.
Times are changing and so in the urban and rural
requirements. The industry is working to cater to the
requirements and demands of the people.
INDIAN FOOTWEAR INDUSTRY
Many people still seem to think that shoe warring is
comparatively a new thing in India. On the contrary it can
be attributed to the past. In the Rig Veda mention is
made of the treatment of leather. In the Ramayana and
Mahabharta there is not only clear mention of shoes but
description of richly ornamented and bejeweled shoes. And
in the Indian society there has been since the olden times a
particular class of the people who made shoes from leather.
However this industry could not develop itself despite the
fact that India has surplus manpower and resources of raw
materials.
Although there is a sea change in the overall studies of
industry with corporate entering the field and setting up a
number of modern production facilities in different parts of
the country but due to reservation increase in the price of
leather in international market most of the corporate
players are focusing more on the production of non-leather
footwear. Therefore the bulk of industry output of leather
footwear comes from the small-scale and cottage sector.

India ranks first among major livestock holding countries

in the world but this has hardly been a guarantee for
steady availability of raw hides and skins. There is a

considerable gap between demand and supply of leather

that is expected to wide further.
There is also going to take place revolution in the footwear
consumption patterns within the country the signs of
which are clear ever in the last five to six years.
The present scenario of shoe industry has changed by the
liberalization of economic policy.
Many national and
international brands have emerged in Indian footwear
industry. Rate of production is not adequate to meet the
requirements. Even the combined strength of total output
of plastics, canvas, rubber and other categories shoe donor
make up the populated requirement of this country. The
industry held enough if expansion opportunity with the
massive availability of natural resources and simultaneous
consumption of the products being produced.
It is an ideal industry for entrepreneurs and profits are rest
assured.
POINEERING BRANDS IN FOOTWEAR INDUSTRY
LIBERTY
RELAXO
WOODLAND
LAKHANI
BATA
ACTION
RED TAPE
NIKE
REEBOK
These are having the infrastructure, the competence, the
budget and the potential to take the industry in the global
way.

INTRODUCTION: Liberty Group come a long way since it began its

operations a little over 50 years ago in the city of Karnal,
Haryana. The emphasis since the very beginning has been
to offer great products at value for money/affordable
prices. This led to the development of Liberty Patented
Humantech approach which synergies traditional
workmanship with state of the art technology to provide
the best quality at the most competitive price.
Liberty
group companies set various benchmarks in
Footwear manufacturing within the Groups Production
facilities and also to industry
Liberty Shoes Limited
Gharaunda and Libertypuram units are having state of the
art manufacturing technologies.
HISTORY: Liberty Group started operations in 1954 and today
comprises of give firms, namely Liberty Footwear Company,
Liberty Enterprises, Liberty Leathers, Liberty Group
Marketing Division and Liberty Shoes Limited. The group
has an annual turnover of Rs.500 crore approximately.
Liberty has its own studio for design and development of
footwear. It manufactures footwear both for export and
domestic markets. The company has carved a name for
itself in the international market and is India largest
exporter of footwear to Germany.
Liberty Shoes Limited., the public company of the group
started commercial production in 1993 and is the countrys
leading footwear manufacturers today. The company has
the state of the art production facilities at Libertypuram to
manufacture high quality footwear and its contribution in
Liberty Groups total sale is over 30% and its rising
steadily.
CORPORATE PHILOSOPHY: Steeped in a philosophy that has at its core innovation,
technology and advancement, Liberty, pride itself over and

above everything else on healthy and heart-felt respect for

the human ethos.
That which projects itself in the expectancy and excitement
with which one greets the arrival of the new combined with
a sincere and deep regard for the old. That which is
appreciative of and adopts at every stage the unique
balance between modernization and tradition.
Liberty as a brand is constantly evolving to keep pace with
the changing trends, styles, beliefs and aspirations of
people while maintaining the sanctity of certain traditions
like workmanship and good value.

COMPANY CREDO :1. To ensure that the method we use is the latest
technology world over
2. To follow the highest standards
workmanship in whatever we make.

of

honest

3. To walk that extra mile to ensure customer

satisfaction worldwide, to remain a true cosmopolitan
to the spirit, to know that we are about people
MANUFACTURING : What gives Liberty the edge is vertically integrated
manufacturing infrastructure on technology basis with
completely in-house state of the art production facilities
which includes & DESMA machines for PU Direct Injection,
15 machines for PVC Direct Injection, 3 machines for EVA
Injection, 3 PU Injection units for unit sole, 6 Lines for
cement lasted injection and one machine for the latest TPU
Injection. Above production facilities are maintained with
focus on environment cleanliness under ISES 2000 norms,
provides a complete range of family footwear of all seasons
and occasions, covers the entire domain of Industrial safety
and Health Footwear requirements.

Liberty is a technology company Humantech Libertys

patented technology is a combination of human
craftsmanship and technological excellence.
PROMOTERS OF THE COMPANY
The company has been promoted by three business minded
persons named as:Late Sh.D.P.Gupta
He has been associated with the shoe industry for the last
50 years. He initiated the shoes business under the trading
cycle Pal boot house in 1944.
Late Sh.P.D.Gupta
He was the Chairman and the Managing Director of the
Company. He has been associated with the shoe industry
since the age of 16 years. He was also the chairman of
joint venture setup in Russia by the Company. He had been
the president of all India chambers of footwear exports.

Late Sh.R.K.Bansal
He was the promoter Director of the Company. He had
been associated with shoe industry and with the trade for
the last 45 years. He had the knowledge of international
market and with his abilities he was able to introduce
Liberty products in most advanced countries like Italy
and America.
GROUP COMPANIES
LIBERTY AUTOMOTIVE
Liberty Automotive is a joint venture company promoted by
Azin Khodro Group of Iran and Liberty Group of India
manufactures Automotive Trim Parts.
It came up with its green field at Bawal Industrial Growth
Centre on Delhi-Jaipur national highway for manufacturing
automotive trim parts.
Drawing upon the considerable manufacturing experience
of Azin Khodro group and business acumen of Liberty
group it is all set to deliver high quality finished product.

Armed with the unique R & D source Liberty Automotive is

able to offer ideas to create solutions an d resources to
meet the challenges of performance optimization.
LIBERTY ORGANOSYS
Liberty Organises Limited is promoted by Liberty Group
Lfor manufacturing acetic acid in India promotes. Liberty
proposes to use carbonylation route for manufacturing the
chemical.60% of the worlds production is based on this
technology .Liberty plans to build this project on large
scale, meeting the entire demand of the nation.
LIBERTY REVOLUTIONS
In the elite shopping avenues of fashion capitals
Revolutions has begun its walk. The fashion accessory
and footwear stores have begun operation in Chennai,
Banglore, Mumbai, Calcutta, Hyderabad and pune. These
are company managed and owned outlets where the
emphasis is to deliver high fashion to the customers backed
by quality service making it a delightful shopping
experience. Liberty showrooms enter the international
market as company has plans of opening more revolution
showrooms nationally and internationally.

CORPORATE VALUES
1.

We value and trust out people.

2.

We recruit and select quality people through a secular

approach.

3.

Continuous investment in development of people pays.

4.

We appreciate and regard integrity, loyalty and

commitment.

5.

Objectivity and fairness are the criteria for

performance and action evaluation.

6.

Means are as important as the result achieved.

7.

Performers thrive.

8.

Our style of operation is participative.

9.

Creative and high aesthetic sense is encouraged and

changes welcomed

10. We keep the organization systematic yet simple.

11. Courtesy and freedom of expression across the
organization from the basis of our communication.
12. Our profitability is based on customer satisfaction
through high quality products and service.
13. Consistent growth based on new technology is
necessary for the continued health of the organization.
14. A positive corporate image helps us in all our tasks.

CORE STRENGHT OF LIBERTY.

Corporate Image.
Consistent Growth.

 Organizational Transparency.
Visionary & Dynamic Leadership.
Fair Employment Practices.
Multi-technology Manufacturing Capabilities.
Manufacturing Flexibility.
Multi-disciplinary R & D.

OBJECTIVE OF THE COMPANY

The main objective to be pursued by the company on its

incorporation as set on memorandum of association as
under:

To work as buying selling agent with or without trademark for

finished product.

To import the technical know how of footwear and PVC

technology.

To deal in raw hides and skins.

To carry on business of manufacturing and repairing, and

wholesale dealers in all types of footwear and accessories of
footwear (such as heels, soles, puckers and hand grouse and
other product of leather), PCC, leather manufactures and
dealers in all kinds of water proof articles.

To prepare, process, cost, transport, refine, recover, retain,

utilize, extract, finish import, buy and sell market install
summary and carry on business as manufacture dealer in all
kinds of footwear, component and accessories.

Corporate Goals of the Company

Any company if it wants to grow in the long run; it should
have clear cut and well-defined goals. The goals of the
Liberty Shoes Company are as follows:

Liberty Company wants to develop a sprit of co-operation

between individual and group with in the company.

It

wants

to

maintain

good

relationship

among

the

management and the union of the company.

It well endeavors to keep highly qualified employee by

appropriate

training

and

thus

raise

their

morale

and

competence.

Liberty will try to make the management for facing the

competition of highest level.

It will try to remain as technically fir as the market leader of

the footwear industry and leather product industry.

Liberty wants to be known for the quality of its products and

services.

National and International awards

The liberty group has won several prestigious national and
international awards, which are as under:

Arch of Europe international gold star, 1994.

International awards for good quality, Brussels, Belgium 1988.

Europe award for pair in 1987.

International Asian award, Jakarta in 1982.

National award from government in 1981 1982.udyog rattan

by government of India.

Certificate of merit as national export award from government

of India in 1989.

Leather export promotion council merit award for outstanding

performance for 1976 to 1982.

National award for best export performance in leather

garments in 1987 1988.

Haryana government exports award in 1978 1979.

National productivity award in 1995 1996.

Research Methodology
Research, which is done for this particular project, is with the help
of data collection.
Data, which is collected, is mainly secondary data, which is
collected from the account books of the Liberty Shoes Limited.
Here the research process, which is used, is as follows:
Research problem: here the problem is to analyze the ratio of the
company for which we have to conduct the research.
Extensive literature survey: now we have to see that from where
the data is being collected on which we have to perform the
research.

Preparing the research design: here the research is descriptive

research as we to give various descriptions so design are
formulated accordingly.
Sample size: here the sample is taken from the companies past
records of various accounts. Here sampling is done step by step or
we can say multistage sampling.
Collecting of data: data, which is collected for the research is
secondary data as I had collected it from the account books of the
company.
Execution of project: when data is being collected then that data
is used for the execution of the project.
Analysis of data: in this stage of research process the data is
made in the tabulated whether data is adequate or not.
Preparation of report: finally the report is prepared on the basis
of various conclusions drawn.

Sources of data collection

1.

Primary data: Primary data comprises of information obtain from employees

of this organization.

2.

Secondary data: Secondary data comprises of annual reports, questioning,

ledger and past records.

Company has provided me annual reports from 2000 2001 to

2006 2007 by the help of which prepared my report.
Questioning: Actually no particulars questionnaire was prepared. Questions
related to problems and data tallied with FM, CA, &
accountants of the company.
Special record searching: Special records are maintains by accountants have been
studied thoroughly while making this report.
Analysis: Analysis of various types of data, statements are also made
during the study by using standard formulas.
Sample size: Interview from 10 employees.

Limitation of study

The study was conducted in limited areas.

Employees felt unnecessary burden.

Any biases by the respondents may lead to wrong infer.

The time of study was less.

Scope of study was very wide.

Respondent cannot be force give true response.

Balance Sheet
Amount in crores.

Year

Mar.11 Mar.10 Mar.09 Mar.08

Mar.07

Share capital

17.04

17.04

5.07

Reserve & surplus

81.81

64.63

57.12

50.90 45.91

Total shareholder funds 98.85

81.67

62.19

55.97 50.98

Secured loans

104.03

48.82

22.1

23.17 23.67

Unsecured loans

23.92

23.04

32.91

48.71

Total debt

127.95 71.86

55.02

71.88 27.97

Total Liability

226.80 153.53 117.21 12785 78.95

Gross block

110.55

Less: accum. Depreciation

79.70

5.07

5.07

4.30

66.50

60.65 51.43

35.54

31.21

27.39 23.74

48.49

39.11

36.91 31.32

20.11
Net block

75.01

Capital work in progress

8.14

0.92

0.25

0.12

Investment

18.49

6.42

4.02

1.53

Inventories

76.17

53.64

41.01

44.37 44.31

Sundry debtors

72.08

48.33

47.26

48.55 21.49

2.94

2.45

Cash and bank balances

4.62

4.25

1.32
0.00

1.47

Loan and advances

28.31

30.01

23.20

25.64 23.45

Current liabilities

43.53

22.26

31.82

25.24 37.40

7.36

8.27

97.70

73.83

0.00

0.00

Provisions
Net current assets
Misc. expenses not w/o
Total Assets

5.20
127.26
0.00

8.28

7.16

89.29 46.16
0.00

0.15

226.80 153.53 117.21 127.8578.95

Contingent liabilities

15.16

16.14

18.11

17.83

6.34

Profit & Loss account

Years
Sales turnover
Other income

Mar 11 Mar 10 Mar 9

Mar 08

Mar 07

237.54
1.67
20.12
259.33

221.11
1.11
6.49
228.71

194.84
1.25
0.13
196.22

199.20
0.42
1.94
201.56

70.57
1.14
14.62
86.33

121.22
15.64
4.65
16.26

96.67
16.35
5.00
14.95

81.79
17.32
4.09
13.10

83.27
22.05
3.99
6.75

41.78
11.53
1.92
5.94

exp.
Employee cost
Selling &

21.23
45.86

19.91
42.03

16.41
37.95

15.23
46.83

4.86
7.13

administration
Miscellaneous

1.51

1.21

1.06

1.59

1.12

0.00

0.00

0.00

0.00

0.00

32.95

32.59

24.24

21.85

12.05

8.81

4.74

6.99

5.60

0.71

24.14

27.85

17.25

16.25

11.34

Depreciation
Profit before tax

4.63
19.51

3.99
23.85

3.71
13.54

3.64
12.61

3.15
8.19

Tax
Profit after tax

2.50
17.01

5.36
18.49

3.75
9.79

4.21
8.40

1.72
6.47

0.15

0.43

0.10

0.26

0.11

11.72

1.69

1.47

1.48

2.98

Stock adjustment

Total Income
Raw materials
Excise duty
Power & fuel coast
Other manufacturing

Expenses
Less: Preoperative
expenditure
capitalised
Profit before
depreciation
Interest & financial
charges
Profit before depreciation
& tax

Adjustment below net

profit
P & l Balance brought

forward

Appropriation
P& l Bal. Carried
down

6.00
22.90

8.89
11.72

9.47
1.69

8.15
1.47

7.86
1.48

Introduction to the Project

Financial Analysis
Every company mainly prepares two statements, which are:
a)

The income statement

b)

The balance sheet

The data, which are shown by the Co. in both the statements, do
not show better insight to various users, unless these data
reanalyzed. So it is very crucial aspect to analyze the information
and shown in statements so they can provide the knowledge of
strength & weakness of the firm. In firm many parties are always
interested to know firm financial position & they came to know all
this by analyzing the data & information.

The term analysis is methodical classification of data given in the

financial statements. Financial analysis is the process of identifying
the financial strength and weakness of tiles Finn by properly
establishing relationship between the item of balance sheet &
profit & loss account.
Financial analysis can be undertaken by the firm or by outside
parties, firms owner, creditors, investors and other. Actually the
nature of analysis depends upon the parties.
Following statements are include in the list of financial
statements:
1.

Profit and loss account.

2.

Balance sheet

3.

P & L Appropriation account.

4.

Fund flow statement

5.

Various schedules

6.

Explanatory notes given at the end of financial statement.

Feature Of Financial Analysis

To present a complex data contained in the financial

statement in simple and understandable form.

To classify the item contained in the financial statements in

convenient and rational groups.

To make comparison between various groups to draw various

conclusions.

Objective of study of financial statements

To determine the change in financial condition of business.

To determine the source from where the working capital was

obtained & for which purpose it will be used.

To spot out strength & weakness of business.

To determine the absolute figure for last three years and the
absolute changes from one year to another two years and the
absolute change in term of percentage.

To compare assets & liabilities and find out the any increase
or decrease in above on three different dates.

To depict change in cash position from one years to another

two years.

Purpose of analysis of financial analysis

The purpose of analysis of financial statements. Depends upon the
need of a person who analysis these statements. These needs may
be:

To know the earning capacity or profitability.

To know the solvency.

To know the financial strength.

To make comparative study with other firms.

To know the capability of payment of interest & dividend.

To know the trend of business.

Procedure of financial statement analysis

The following procedure is adept for the analysis and
interpretation of financial statements:

The analyst should acquaint himself with principals and

postulates of accounting. He should know the plans and
policies of the management so that he may be able to find out
whether these plans are properly executed or not.

The extent of analysis should be determined so that the

sphere of work may be decided. If the aim is to find out the
earning capacity of the enterprises then analysis of the
income statement will be undertaken. On the other hand, if
financial position is to be studied then balance sheet analysis
will be necessary.

The financial data be given in the statement should be

recognized and rearranged. It will involve the grouping of
similar data under same heads. Breaking down of individual
components of statement according to nature. The data is
reduced to a standard form.

A relation is established among financial statements with the

help of tool & technique of analysis such as ratio, trends,
common size, fund flow etc.

The information is interpreted in a simple and understandable

way. The significance and utility of financial data is explained
for help in decision making.

The conclusion drawn from interpretation is presented to the

management in the forms of reports.

Types of financial analysis

Classification on the basis of material used.

Classification on the basis of modus operandi.

On the basis of material used: 1.

External analysis: Outsiders, who dont have access to the detailed internal
accounting record of business firm, do this analysis. These
outside parties are potential investors, creditors, government
agencies & general public.

2.

Internal analysis: The analysis conducted by person who has access to the
internal accounting records of a business firm is known as
internal analysis.

On the basis of modus operandi: 1.

Horizontal analysis: Horizontal analysis refers to the comparison, of financial data

of a company for several years. The figures of this type of
analysis are presented horizontally over a number of columns.
This type of analysis is also called dynamic analysis.

2.

Vertical analysis: This analysis refers to the study of relationship of the various
items in the financial statements, of one accounting period. It
is also known as Static analysis.

Analysis and interpretation

Ratio analysis:
A ratio is simple arithmetic expression of relationship of one
number to another. A financial ratio is the relationship between
two accounting figures expressed mathematically. It can be
expressed as percentage by multiplying the ratio by 100. Ratio is
the indicator of financial strength, soundness, position or weakness
of enterprises. We can draw conclusion about the extract financial
position of a concern with the help of ratios.
Definition:
According to accountants handbook by WIXON, K.ELL &
BEDFORD A ratio is an expression of the quantitative relationship
between two numbers.
According to KOTLER a ratio is the relation of the amount, a
to another b, expressed as the ratio of a to b, a b (a is to b); or as a
simple fraction, integer, decimal, fraction or percentage.
Signification of ratio analysis:

Helps in decision making of investor, creditors.

Helpful for employees, government & shareholders.

Helpful in coordination and control.

Limitation of ratio analysis:

Limited use of single ratio.

Lack of adequate standards.

Inherent limitation of accounting.

Change of accounting procedure.

Window dressing.

Incomparable.

Classification of ratio analysis

Liquidity ratio:

Current ratio.

Quick ratio.

Solvency ratio:

Debt equity ratio.

Funded debt to total capitalization ratio.

Preparatory ratio.

Fixed interest coverage ratio.

Debt to total fund ratio.

Fixed asset to net worth ratio.

Activity ratio:

Debtors turnover ratio.

Total asset turnover ratio.

Net asset turnover ratio.

Fixed asset turnover ratio.

Stock turnover ratio.

Working capital turnover ratio.

Capital turnover ratio.

Profitability ratio:

Net profit ratio.

Interest & financial charge ratio.

Operating ratio.

Return on capital employed.

Return on equity.

Earning per share.

Gross profit ratio.

Liquidity ratios

These are the ratio, which measures the short-term solvency or

financial position of a firm. These are calculated to comment upon
the short term paying capacity of a concern or the firms ability to
meet its current obligations. The short-term obligation is met by
realization amounts from current, floating or circulations assets.
The current assets should either be liquid or near liquidity. These
should be convertible into cash for paying obligation of short-term
nature. Comparing them whit short-term (current) liabilities should
assess the sufficiency of current assets.
Current Ratio: current assets / current liability.
Years

Current

2006

2007

2008

2009

2010

2007

2008

2009

2010

2011

90.70

122.81

113.92

134.94

181.20

56.26

89.89

77.28

75.67

60.67

1.61

1.37

1.47

1.78

2.99

assets
(In Crores)
Current
Liabilities
(In Crores)
Current
Ratio

In a business, current ratio is considered to be satisfactory when it

is 14% less in the years 2006 2007 & 2007 2008. It is more than
standard i.e. 1.61 & 1.37 means co. is not using its resources fully
in the years 2006 2007, 2007 2008 it is just less than
satisfactory i.e. 1.61, 1.37, means co. does not have sufficient
assets in these years.
Quick ratio: quick assets / current liabilities.
Quick assets: current assets stock prepaid expenses
Years

2006

2007

2008

2009

2010

2007

2008

2009

2010

2011

Quick assets

46.40

78.40

72.91

81.29

85.29

( In Croces)
Current

56.26

89.89

77.28

75.67

60.67

0.82

0.87

0.94

1.07

1.41

Liabilities
( In Crores)
Quick ratio

Interpretation: Usually a high quick ratio is an indication that the firm is liquid and
has the ability to meet its current liquid liabilities in time and on
the other hand a low quick ratio represent that the firms liquidity
position is not good. As a rule of thumb or as a conversion quick
ratio 1:1 is considered satisfactory. The quick ratio of the company
is in years 2006 2007 and 2010 2011 i.e. 0.82 and 1.41 while in
the year 2006 2007, 2007 2008, 2008 2009, it grows.
Solvency ratios
The term solvency refers to the ability of a concern to meet its
long-term obligations. The long-term indebtedness of a firm
includes debenture holder, financial institutions providing medium
and

long-term

loans

and

other

creditors

selling

goods

on

installment basis. Long-term creditors of a firm are primarily

interested in knowing the firms ability to pay regularly interest on
a long term borrowing, repayment of the principal amount at the
maturity and the security of their loans. Accordingly, long term
solvency ration indicates associated with its long-term borrowing.
Debt equity ratio: -

Long term loan / shareholder funds

Years

2006

2007-

2008

2009

2010

2007

2008

2009

2010

2011

( In crores )
9.65
Share
holder

8.50

10.30

71.84

127.95

fund

55.97

62.19

81.67

98.85

0.15

0.16

0.87

1.29

Loan funds

50.98

( In crores )
Debt
equity 0.19
ratio

Interpretation: A debt equity ratio 1:1 may be considered to be satisfactory ratio.

Although there cannot be any role of thumb. The debt equity ratio
of the firm is 0.16 in the years 2009-2010 and 0.87 in the years
2010-2011 which shows the financing by the outsiders which can
be consider a good sign for the firm as they may lead to much more
flexibility in the operation of the firm. Debt equity ration of the firm
is 1.29 in the years 2010-2011. Which shows a large share of
financing by the creditors of the firm.
Funded debt to total capitalization ratio: Funded debt / total capitalization
Funded debt = secured loans + unsecured loans

Total capitalization shareholder fund + funded debt

misc.expenditure
Years

2006-

2007-

2008-

2009-

2010-

2007

2008

2009

2010

2011

Loan funds (In

27.97

71.87

55.02

71.84

127.95

crore)
Total

78.85

127.84

117.21

153.51

226.80

0.35

0.56

046

0.47

0.56

capitalization
Funded debt to
total
capitalization
ratio

Interpretation: This ratio establishes a link between the long-term funds raised
from outsider and total long-term funds available in the business.
Through there is no role of thumb but still the reliance on
outsiders the better it will be. If this ratio is smaller, better it will
be upon 50% or 55%. If ratio is smaller better than we can say that
this ratio was better position in the year 2006-2007as compared to
the years 2006-2007 to 2010-2011.

Proprietary ratio: Shareholder fund / shareholders + long term loans

Years

2006-

2007-

2008-

2009-

2010-

2007

2008

2009

2010

2011

Shareholder

50.98

55.97

62.19

81.67

98.85

fund
Shareholder

60.63

64.47

83.78

128.39

188.40

0.84

0.87

0.74

0.64

0.52

fund + long
term fund
Proprietary
ratio
Interpretation:
As proprietary ratio represents the relationship of owners fund to
total assets, higher the ratio or the share of the shareholder in the
total capital of the company, better the long-term solvency position
of the company. This ratio indicates the extent to which the assets
solvency position of the company can be lost without affecting the
interest of creditors of the company. It changes fraction from the
years 2006-2007 to 2010-2011 i.e. 0.84 to 0.52.
Fixed interest coverage ration: - EBIT / Interest
Year

EBIT (in crore)

Interest ( in

2006-

2007-

2008-

2009-

2010-

2007

2008

2009

2010

2011

8.90
0.71

18.20
5.59

20.52
6.98

28.59
4.74

27.11
8.81

12.52

3.25

2.05

6.03

3.08

crore)
Fixed interest
coverage ratio

Interpretation: The interest coverage ratio indicates how much interest charges
operating profit available to pay the interest charge covers. It is
desirable in the years 2006-2007 & 2010-2011 i.e. 12.52 & 3.08
respectively. But in the years 2008-2009 & 2007-2008 it shows 3.25
& 2.05 indicates excessive use of debt. However in the years 20062007 it is too high i.e.12.52 shows that firm is very conservative.

Debt to total funds ratio

Long term / shareholders funds + long term loans
Years

2006-

2007-

2008-

2009-

2010-

2007

2008

2009

2010

2011

Long term loans 9.65

Shareholder
60.63

8.50
64.47

21.59
83.78

46.72
128.39

89.55
188.40

0.13

0.25

0.36

0.48

fund + long
term fund
Fixed assets to 0.16
net worth
ratio
Interpretation: In the years 2006-2007 , 2007-2008 & 2008-2009 debt to total
funds ratio is not satisfactory as if only 0.16,0.13 & 0.25
respectively. Which is less than ideal. However in the years 2006-

2007 & 2010-2011. It is more than desirable i.e. 0.16 & 0.48
respectively. Means in last five years three is no improvement in
this context.

Fixed assets to net worth ratio: Fixed assets / net worth

Years

Fixed assets
Net worth

2006-

2007-

2008-

2009-

2010-

2007

2008

2009

2010

2011

32.64
50.98

Fixed assets to 0.64

37.03
55.97

39.35
62.19

49.40
81.67

83.14
116.86

0.66

0.63

0.60

0.71

net worth
ratio
Interpretation: 1. The ratio of fixed assets to net worth indicates the extent to
which shareholders fund sunk in to the need assets. There is
rule of thumb to interpret this ratio but 60% to 65% is
considered to be satisfactory ratio in case of industrial
undertaking. As this ratio less than 100% in the years 2006-

2007, 2007-2008, 2008-2009, 2009-2010 & 2010-2011 it

implies that owners funds are not sufficient to finance fixed
assets and the firm has depended upon outsiders to finance
the fixed assets.

Activity ratios
Activity ratios are also called Turnover ratio it indicates
efficiency with which firms manage its capital employed is rotated
in the business. We know that the funds of the creditors and owner
are invested in various assets to generate sale profit, which
depends upon the better management of assets. So better
management can be said that it is better efficiency of managers. So
in these ratio efficiency is evaluated.
In these ratio we come to know the speed which assets are being
converted into sales. Thats why these are called turnover ratio.
Activity ratio can be calculated to judge effectiveness of assets
utilization.

Debtors turnover ratio: Sales / average debtors

Years

2006-

2007-

2008-

2009-

2010-

2007

2008

2009

2010

2011

Sales ( in

70.57

199.20

194.82

221.11

237.54

crore )
Average

19.65

35.01

47.89

47.79

71.08

debtors

Debtors

3.59

5.68

4.06

4.62

3.34

turnover ratio
Average collection period
No of days / debtors turnover ratio:
Years

No. of days
Debtors turnover

2006-

2007-

2008-

2009-

2010-

2007

2008

2009

2010

2011

365
3.59

365
5.68

365
4.06

365
4.62

365
3.34

102

64

90

79

110

ratio

Average
collection
period ( days )

Interpretation: By interpreting above ratio, we come to know how many debtors

are liquid or good. In the years 2003-2004 it is good i.e. 5.68. it is
also good in the year 2005-2006 i.e.4.62 but in the years 20062007, 2007-2008 , 2008- 2009 & 2010-11 it is bit lesser i.e. 4.06,
4.62, 3.34. It quite low.

Total asset turnover ratio: -

Sales / total assets.

Years

2006-

2007-

2008-

2009-

2010-

2007

2008

2009

2010

2011

199.20
127.85

194.83
117.21

221.11
153.53

237.54
226.80

1.55

1.66

1.44

1.04

Sales ( in crore) 70.57

Total assets ( in
78.95
crore)

Total assets

0.89

turnover ratio
Interpretation: The ratio means how much sales is generated by one rupee
invested in total assets, it is high in year 2006-2007 & 2007-2008
i.e. 1.55, 1.66 in both years which higher than one rupee, so these
are favorable to co. & indicates efficient use of resources by the
company but it was low in 2006-2007, 2007-2008, 2008-2009,
2009-2010 & 2010-2011 i.e. 0.89, 1.55, 1.66, 1.44 & 1.04
respectively.
Net assets turnover ratio: Sales / net assets
Net assets = net fixed assets + net current assets + investments
Years

2006-

2007-

2008-

2009-

2010-

2007

2008

2009

2010

2011

199.20
134.80

194.83
124.70

221.11
161.15

237.54
234.15

1.48

1.56

1.37

1.01

Sales ( in crore) 70.57

Net assets (in
85.39
crore)

Net assets
turnover ratio

0.83

Interpretation: Net assets turnover ratio of the company is good in the year 20062007 & 2006-2007 i.e. 1.48 & 1.56 respectfully. Which indicates
efficiency utilization of resources. It also show good response in
the year 2006-2007 & 2007-2008 but it was low in the year 20062007 i.e. 0.83 shows inefficiency of resources.
Fixed assets turnover ration: - sales / fixed assets
Years

2006-

2007-

2008-

2009-

2010-

2007

2008

2009

2010

2011

199.20
37.03

194.83
39.35

221.11
49.40

237.54
83.14

5.37

4.95

4.48

2.85

Sales ( in crore) 70.57

Fixed assets (in
32.64
crore)

Fixed assets

2.16

turnover ratio
Interpretation: - As calculated above, this ratio 2.16 in the year
2006-2007 which is low indicates inefficiency of assets but it is
good in the next four years and in the year 2006-2007 it has gained
its maximum in last five years i.e. 5.37 shows higher efficiency.
This indicates the progress of the company.
Stock turnover ratio:- sales / stock
Years

2006-

2007-

2008-

2009-

2010-

2007

2008

2009

2010

2010

Sales ( in crore) 70.57

Stock (in crore)
44.30

199.20
44.37

194.83
41.01

221.11
53.64

237.54
76.17

stock turnover 1.59

4.49

4.75

4.12

3.11

ratio

Interpretation: The stock turnover ratio shows how long goods are kept in store
before being sold. In the year 2006-2007, 2007-2008, 2008-2009,
2009-2010, 2010-2011 the ratio is good which indicates efficient
sales performance. However in the year 2002-2003 it is very low
i.e. 1.59 shows that stock does not sell quickly and remains in
godown for a long time.
Working capital turnover ratio: - sales / capital employed
Years

2006-

2007-

2008-

2009-

2010-

2007

2008

2009

2010

2011

199.20
71.47

194.83
80.01

221.11
107.47

237.54
125.35

1.49

2.44

2.05

1.89

Sales ( in crore) 70.57

Capital employed
67.10
(in crore)
Capital turnover
ratio

0.82

Interpretation: - this ratio measures the effectiveness with which

a firm uses financial resources at its disposal. In the years 20082009 this ratio is high, which shows efficient utilization either
capital is lying idle or the sale shave been suppressed or any
constituents of capital employed has been inflated.

Profitability ratio
What is profitability?
Profitability is the indication of the efficiency with which the
operations of business are carried on. Every business is established
for profit. Profit is the main aim of any business concern. Profit
depends upon the sales and operational performance. But sale
alone are not the factor. Sometimes sale may be high but company
is earning low profit and vice versa. Other factor also affects the
profitability. Although we know profit is the difference the revenue
and expenditure. But if expenditure is such like financial expenses,

administration expenses are highs it will reduce the profit instead

of increase the profit.
A Company should earn profit to survive and grow over a long
period of time. But it does not mean that every action of
management should be aim at maximizing of the profit. Sometimes
companies considered social consequences. But some firm always
to increase their profit at the cost of employees, customers and
society. But it is not possible for the long time. But Company should
earn at least sufficient profit to sustain the operation of business to
be able to obtain funds from investors for execution and growth the
contribution toward social overheads for the welfare of the society.
We can say that if company is not earning sufficient profit,
company has no future.
Various groups are interested in knowing the profit due their
associated interest with company profit so to satisfy all the groups,
financial managers should continuously evaluate and efficiency of
its company in the terms of profit so that they can provide relevant
information to various groups.
Profitability ratio is calculated to measure operating efficiency of
the company. Following are the ratios, which have been calculated
in regards of the Liberty Shoes Limited to measure operating
efficiency of the firm.
Net profit ratio: - Pat / sales * 100
Years

2006-

2007-

2008-

2009-

2010-

2007
Net profit ( in

6.46

crore)
Sales ( in crore) 70.57
Net profit ratio

10.94

2008

2009

2010

2011

8.39

9.80

18.49

17.01

199.20

194.83

221.11

237.54

4.73

5.52

8.36

7.16

Interpretation: Net profit ratio is slightly fluctuating it was 10.94% in 2006-2007 &
8.36%

in

2009-2010.

This

ratio

expresses

the

cost

price

effectiveness of the operation. A high net profit margin would

ensure adequate return to the owners as well as enable to with
stand adverse economic condition when selling price is decline.
Cost of production is rising and demand for product is falling.
Interest & financial coverage ratio: Interest & financial coverage / total sale * 100
Years

Interest &

2006-

2007-

2008-

2009-

2010-

2007

2008

2009

2010

2011

0.57

5.30

6.70

4.74

8.81

crore)
Sales ( in crore) 70.57

199.20

194.83

221.11

237.54

Interest &

2.67

3.44

2.14

3.71

financial
coverage ( in

0.81

financial
ration %
Interpretation: -

In the year 2006-2007 this ratio is 0.81% which is favorable for the
company but there is constant increase after as in 2006-2007 it has
increased to 0.81% in 2010-2011 it is 3.71% & in 2010-2011 it has
increased maximum up to 3.71 which is very unfavorable for the
company. This ratio also should be as far as low for company
profitability.

Operating ratio: Cost of goods sold + operating expenses / net sales * 100
Years

Cogs +

2006-

2007-

2008-

2009-

2010-

2007

2008

2009

2010

2011

43.27

140.48

138.10

14.87

16.88

59.04

177.15

177.51

204.88

222.14

73.28

79.30

77.79

7.25

7.60

operating exp. (
in crore)
Net Sales ( in
crore)
Operating
ratio
Interpretation: In the year 2006-2007 this ratio is desirable but in 2006-2007 &
2007-2008 but in year 2009-2010 a very low ratio i.e. 7.25% it is
not satisfactory as in these years this ratio is quite high, high
means it leaves a small portion of income to meet other nonoperating expenses. A low ratio is better because it reflects the
efficiency of management. The lower ratio higher would be
profitability.

Return on capital employed: Profit before interest, tax and dividend / capital employed * 100
Years

Profit before

2006-

2007-

2008-

2009-

2010-

2007

2008

2009

2010

2011

8.90

18.20

28.59

20.52

18.10

67.10

71.47

80.01

107.47

125.35

13.25

25.46

28.44

19.09

14.44

int.tax & dividend

( in crore)
Capital employed
(in crore)
Return on
capital employed

Interpretation: Return shareholder investment is the basic profitability ratio. In

2006-2007 & 2007-2008 there is adequate return on investment
i.e. 25.46% & 25.65% which shows good sign of companys
progress. However in proceeding years i.e. 2006-2007, 2007-2008,
2008-2009 & 2009-2010 the return percentage is quite low but the
company tends to improve this context.
Return on equity: Pat / shareholders fund * 100
Years

Pat ( in crore)
Share holder

2006-

2007-

2008-

2009-

2010-

2007

2008

2009

2010

2011

6.46
50.98

8.39
55.97

9.80
62.19

18.49
81.67

17.01
98.85

12.67

15.00

15.74

22.63

17.21

fund ( in crore)
Return on equity
%

Interpretation: This ratio measures the profitability o the capital committed to the
business by equity shareholders. This ratio tends to increase at
increasing rate as in 2006-2007 it was 12.67% in 2007-2008 it was
15% & in 2010-2011 it was 17.21% which shows good return &
indicates that firm has earned a satisfactory return for its
shareholders. It enables that firm has earned a satisfactory return
for its shareholders. It enables the earning capacity of the
enterprises to be contrasted with the earning capacity of other
investments.

Earning per share: - pat / no. Of equity share

Years

Pat ( in crore)
No of equity

2006-

2007-

2008-

2009-

2010-

2007

2008

2009

2010

2011

6.46
507

8.39
507

9.80
507

18.49
170.40

17.01
170.40

12.74

16.55

19.32

10.88

9.98

shares (in
crore)
Earning per
share

Interpretation: This ratio is low in 2006-2007 i.e. 12.74 but it show good response
in upcoming year as in 2006-2007 it was 16.55 & in 2007-2008 it

was maximum 19.32

which

shows

its

earning

capacity,

profitability and its bright future.

Gross profit ratio: Gross profit / net sales * 100
Years

Gross profit (in

2006-

2007-

2008-

2009-

2010-

2007

2008

2009

2010

2011

27.35

77.72

118.59

141.90

154.20

59.04

177.15

177.51

204.88

222.14

46.32

43.87

67.17

69.26

69.42

crore)

Net Sales ( in
crore)
Operating
ratio

Interpretation: This ratio measures the relationship between gross profit in

relation to net sales. This ratio tends to increase year by with
increase in gross profit. It was 46.32% in 2006-2007 and increase
to 67.42 up to 2010-2011. This year to year change may be the
result of decrease in cost of goods sold without increase in sales
revenue or change in the method of valuation of closing stock.

Fund flow statement

Till now we have analyzed ratio analysis. The second technique of
financial statement is fund flow statement. It is prepared for the
analyzing the past situation of the company not the future.fund
flow statement we come to know the changing in fund between in
two years balance sheet.

The fund flow statement is a statement which shows the

movement of fund and is a report of the financial operation or the
business undertaking. It indicates various means were obtained
during the particular period and the ways in which these funds
were employed. In simple words, is a statement of sources and
application of funds.
Meaning of funds: In a narrow sense it means only cash and a fund flow statement
prepared on these basis is called a cash flow statement. Such a
statement
transaction

enumerates
on

cash

net
and

effect
takes

of

into

the

various

accounts

business

receipts

and

disbursement or cash.
In a broader sense the term funds refer to money values in
whatever from. It may exist, here funds means all financial
resources used in business weather in the form of men, material,
money, machinery and others.
Significance of fund flow statement:

It helps in analysis of financial statements.

It throws light on many perplexing questions of general

interest.
Such as:-

Were the current assets lesser in-spite of higher profits?

Why more dividends could not be declared in spite of profits?

It helps in the proper allocation of resources.

It acts as a future guide.

It helps in apprising the user of working capital.

It helps in knowing the overall credit worthiness of a firm.

Limitation of fund flow statement

It should remember that a fund flow statement is not a

substitute of an income statement or balance sheet. It
provides only some additional information as regard changes
in working capital.

It cant reveal continuous changes.

It is not original statement but simply arrangement of data

given in financial statements.

It is essentially historic in nature and project fund flow

statement cannot be prepared with much accuracy.

Change in cash is more important and relevant for financial

management than the working capital.

Fund flow statement has three parts:

Schedule of change in working capital.

Fund from operation.

Fund flow statement.

Schedule of change in working capital: Particular

Current
assets
Inventories
Sundry debtors
Cash & bank
balances
Loan
&
advances

Current
year
( 2010)

Previous
year
( 2010 )

Effect on
working
( increase)

73,17,38,3
15
72,08,97,4
74
4,62,40,48
3
28,31,64,8
80

53,64,96,0
35
48,33,85,8
17
2,94,45,56
1
30,01,48,4
34

19,52,42,280
23,75,11,657
1,67,94,922
-1,69,83,554

Capital
(decreas
e)

Total (A)

1,78,20,4
1,152

1,34,94,7
5,847

Sundry
Creditors
Advances from
Customers

35,55,87,1
55
1,29,14,75
5

12,02,22,9
74
2,82,47,54
1

23,53,64,181

Expenses
payable
Other liabilities

6,54,71,16
2
3,13,80,14
0
5,20,13,50
0

4,86,07,62
7
2,55,42,57
9
7,36,57,31
7

1,68,63,535

51,73,66,
712

29,62,78,
038

1,26,46,7
4,440

1,05,31,9
7,809

Current
Liabilities

Provisions
Total ( B)

(AB)
Net increase
in working
capital

1,53,32,7
86
58,37,56
1
2,16,43,817
27,38,71,53
3 94,95,22
5

28,33,66,75
8

Cash flow statement for the period ended 31st

march 2011
Cash flow from operating activities:
Net profit before tax, interest and extra
ordinary items
Adjustment for:
Unrealized foreign exchange difference
Depreciation
Loss on sale of assets
Bank & other interest
Dividend on investments
Operating profit before working capital
Adjustment for:
Trade & other receivable
Inventories
Loan & advances
Trade & other payables
Cash generated from operations
Direct taxes paid
Cash flow before extra ordinary items
Extra ordinary items
Net cash flow from operation activities

31.03.2007

31.03.2007

27,8166,047

28,27,06,838

58,78,246
4,63,34,608
7,10,758
18,62,142
2,918
32,78,03,083

6,27,720
3,99,98,538
5,65,596
5,86,356
1,69,866
32,18,87,030

23,75,08,657
22,52,42,280
54,48,87,395
57,93,85,239
49,89,24,780
3,66,06,698
46,23,18,082
7,40,683
46,30,58,765

1,08,11,770
12,63,54,123
61,44,440
18,20,56,916
36,06,33,613
5,78,06,406
30,28,27,207
54,964
30,28,82,17
1

38,99,54,764
68,96,605
18,62,142
2,918
12,07,37,395
50,19,30,497

14,16,89,324
6,58,778
5,86,356
1,69,866
2,40,40,581
16,43,14,90
5

14,01,69,870
1,99,58,904
5,86,66,066
..
6,15,44,900

.
2,66,74,830
4,40,14,944
6,35,91,743
13,42,81,51
7

2,26,73,168

43,85,749

Cash flow from investing activities:

Purchase of fixed assets
Sale of fixed assets
Bank & other interest
Dividend on investments
Increase in investments
Net cash used in investing
Cash flow from financing activities:
Proceed from long tem borrowing
Repayment of long term borrowing
Interest paid
Dividend paid & corporate dividend tax
Net cash use in financial activities
Net increase in cash

Cash & cash equivalents ( opening Balance)

Unrealized foreign exchange difference
Cash & cash equivalent ( closing balance
)

2,94,45,561
58,78,246
4,62,40,483

2,45,32,092
6,27,720
2,94,45,561

Comparative profit & loss statement for the

year 2010 and 2011
Particulars Year
2010
Net sales

Year
2011

Change

% change

2,05,03,42,
236
1,23,12,13,
758

2,22,39,72, +17,36,30,2
520
84
1,81,74,29, +38,62,15,9
658
00

Gross profit
(A)

81,91,28,4
78

50,65,42,8 +31,25,85,
62
616

+38.16%

Operating
expenses: Payment to
employees
administrati
on expenses

19,91,55,74 21,23,26,51 +1,31,70,76

7
0
3

+6.61%

Less: - cost
of goods
sales

+8.47%
+31.37%

+9.63%
43,20,32,91 47,36,32,51 +4,15,99,59
8
4
6

Total (B)

63,11,88,6
62

68,59,59,0 +5,47,70,3
24
59

Operating
profit ( AB)
Less: Operating
exp.
Add: Operating
income

18,79,39,81 17,94,16,16
3
2

+8.68%

-85,23,651

-4.54%

3,99,98,538

4,63,34,608

+63,36,070

+15.84%

1,11,11,202
4,74,18,093

1,67,28,098 +56,16,896
8,81,68,867 +4,07,50,77
4
19,51,16,28

+50.55%
+85.94%

23,85,56,73

-18.21%

Less: Interest
Profit
before tax

4,34,40,449

4,88,26,320

2,46,36,260

2,41,90,060

12,96,900

32,48,830

-49.51%
-150.51%

-19,51,930
Less:provision
for deferred
tax liability
Net profit

18,49,28,5
14

17,01,94,5
55

1,47,33,95
9

-7.97%

Suggestions & recommendations

Company must increase its investment on advertisement, as it

has become now more effective and catchy.

Company should make their prices more competitive because

they are cost effective.

Company should have proper inventory management for high

quality of production.

Company should stress on domestic market as well as on

export, which are key areas of profit earning areas of the
company.

As company is planning its business to diversity in consumer

good, image, sales, profits of the company can enhance its
established brand name in market.

Quick disposal of rejected and defected goods should be done

at reasonable price to increase sales and profit.

Companys ACP is still under control but company should be

careful because of it increase it may face difficulties in future.

Company should try to keep more current assets as in recent

years its current ratio is less than ideal.