DATA INTERPRETATION AND

ANALYSIS
BALANCE SHEET OF BINDAL DUPLEX PAPER LTD FOR THE YEAR ENDING 31 ST MARCH 2015-16,
2016-17 & 2017-18
Year 2015-16 2016-17 2017-18
Particulars Rupees Rupees Rupees
Assets
Current Assets 78247514
156490107 7328420 121255078
Inventories
159043950 345446 56269146
Sundry debtors
Cash and bank (8198120) 75520061 94352

Other current Assets and Advance 80826503 72014233

Total Current Assets 388162440 201456077 249632810

Fixed Assets
Gross Block 1132533440 1214884226 1224760449

Less: Depreciation 628548446 684538902 750360104

Net Block 503984994 530345324 474400344

Capital w-i-p 73440193 64887208 95980257
Investment 10000 10000 10000

Total Assets 965597627 796698609 389876485

Liabilities
Current Liabilities
318346063 395491828 430146926
Liabilities
2181353 - -
Provision
Total Current Liabilities 320527416 395491828 430146926
Share holder’s fund
Share capital - - -
Share capital Suspense - - -

Reserve & Surplus 438297559 632388801 890442350

Loan Fund’s
236075 5072641 11190303
Secured Loan
- - -
Unsecured Loan

Inter unit balance 206556577 236254661 511756168

Total Liabilities 965607627 796698609 389876485
 PROFIT & LOSS A/C OF BINDAL DUPLEX PAPER LTD FOR THE
YEAR 2015-16, 2016-17& 2017-18
Year 2015-16 2016-17 2017-18
Particulars Rupees Rupees Rupees
Income
Sales 2854472773 3272153735 3766249364

Other Income 1280473 953520 1129698

Interest & dividend (99565827) (109849799) (120155891)
Operating receipt 29569712 (54768748) 21941484
Stock adjustment changes
Total Income 2785757131 3108488708 3669164655
Expenditure
Raw material 129094617 125431360 259836496

Manufacturing & Operating expenses 823027720 1032838379 1148324586

Exercise duty 370998885 495049075 521325223
Purchase of trading goods 62072276 36704200 -
Staff expenses 29746984 36163437 41608587
Sales & administrative expenses 871288094 687833192 735152319
Interest & brokerage 2802486 4429385 6010083
Depreciation 58428510 57939750 66663309
Less: Self-consumption 0 (288870) (198298)
Total Expenditure 2347459572 2476099908 2778722305
Profit for the year 438297559 632388801 890442350
Provision for Taxes 0 0 0
Profit after Tax 438297559 632388801 890442350
FININACIAL ANALYSIS
PRELUDE:-
Financial accounting involves recording transaction and preparing report and financial
statement that can be used by management, owners, creditor, government agencies
and other to understand what is happening in the business or nonprofit organization.
“Accounting” is the process of identifying, measuring and communicating economic
information to permit informed judgment and decision by users of the information.
CONCEPT OF FINANCIAL STATEMENTS
Financial statement are major means employed by firm to present their financial
situation to stock holders creditors and the public financial statement is a collection of
data organized accounting to logical andconsistent accounting procedure. Its purpose
is to convey understanding ofsome financial aspects of a business firm. The and
product of financial accounting is financial statement consisting of the balance sheet,
profit and lossaccounting and statement changes in financial position.Financial
statements are major means employed by a firm topresent their financial situation to
stock holders, creditors and the generalpublic. Accounting reports on the result of
operation and the current status of abusiness enterprise by a financial statement. The
balance sheet and income and statement. Since the balance sheet and income
statement are of limited interest the annual report of the company are supplemented
by a third statement thechange in financial position and by foot notes which explain
and amplify thereported numerical data.

TYPES OF FINANCIAL STATEMENTS

(A) The Balance Sheet:-

The balance sheet is called a fundamental accounting report. It provides information
about the financial standing or position of affirm at given instant. The balance sheet
can be visualized, as a snapshot of the financial status of company is a valid for only
one day the reference day. The position of the firm on a preceding day is bound to be
different.“The balance sheet of a company indicates to management the financial
status of a company as on a given moment. From an analyst point of view a balance
sheet is written representation of the resources and liabilities of an individual
partnership firm an association of a corporation.”
The contents of balance sheet can be divided into three divisions
*Assets: -
Assets are valuable resources owned by a business, which are acquired at a
measurable money cost these are economic resources of a firm which provide
economic benefits to the company.
Liabilities:-
Liabilities are claim of creditors against the enterprises arising out of past activities
that are to be satisfied by the disbursement of utilization ofcorporate resources. They
are economic obligation of the firm.
*Owner’s equity:-
The owner’s equity is the owner’s current investment in the assets of company. The
entire system of recording business transaction is based on accounting equation. The
accounting equation is an accounting formula expressing equivalence of the two
expressions of assets and liabilities.

ACCOUNTING EQUATION
(B) The Income Statement:-
The balance sheet, as discussed above, is considered a very significant statement from
the view point of bankers, and other lenders, because it indicates the firm’s financial
position and strength, as measured by its recourses and obligations, however, editors
and financial analysis have recently started paying more attention to the firm’s
capacity as a measure of its financial strength. Its income statement revels the firm’s
capacity as a measure of its financial strength. Its income statement reveals the
earning potential of the firm.
ASSETS = LIABILITIES + OWNER’S EQUITY
OR
OWNERS EQUITY = ASSETS - LIBILITIES
OR
LIBILITIES = ASSETS - OWNER’S EQUITY
An income statement is a financial statement summarizing the result of company’s
income (profit) making activities for a specific time period. It summarizes revenues
and expenses in a manner that discloses whether a company’s activates in a particular
fiscal period have resulted in profit or loss. The income statement is a scoreboard of
the firm’s performance during particular period of time. “The profit and loss account
is the condensed and classified record of the gains losses posing change in the owner’s
interest in the business for a period of time.”The income statement or the profit and
loss account presents the summary of revenues, expenses and net income (or net loss)
of a firm for a period of time. Thus, it serves as measure of the firm’s profit ability.
It’s systematic array of the data of the revenues, revenues deduction (expenses,
revenues, revenue deductions, expenses, losses, taxes etc.) Net income and
distribution or assignment of the net income to creditors and property investors of a
particular period.
(C)STATEMENT OF CHANGE IN FINANCIAL POSITION
Until 1960, the income statement and the balance sheet constituted the major financial
statement. However, management traditionally made use of a wide variety of
statement and reports in apprising internal company performance. One popular report
for management’s internal use was called the statement of changes in final position.
From such a report, management could extract valuable information about where
working CapitaLand cash come from and how they were used. If these past events
could be projected in future, management would have a useful tool for budgeting.
Today, the statement of changes of financial position represents third financial
position represents a third financial statement.
PARTIES INTERESTED
According to the American institute of certified public accountants, financial
statement reflects, a combination a recorded facts, accounting convention and
personal judgments and the judgments and conventions applied, affect
themmaterially.Following are interested in financial statement:-
 Credit, suppliers and others are having business with the company.
 Debenture holders.
 Credit institutions and banks.
 Potential lenders and investors.
 Trade unions and employees.
 Important customers wishing to make a long standing with the company.
 Economist and analyst.
 Members of parliament, the public committee in respect in government
companies.
 Taxation authorities.
 Other departments dealing with the industry in which the company engaged
cooperative.
  The company law board.
FINANCIAL APPRAISAL
A company’s financial statement are intended to summarize the results of its operation
and its ending financial condition. The information in the statement is studied and
related to other information by external users for several reasons. Current
shareholders, for example, are concerned about there invested income, as well as the
company’s overall profitability and stability. Some potential investors are invested in
“solid “companies that are companies whose financial statement indicate stable
earnings and dividends with little growth in operations. Other prefers companies
whose financial statement indicate rend for rapid growth in a company’s short run
solvency, its ability to pay current obligation as they become due. Long-term creditors
are concerned about the safety of their interest; income and company’s ability to
continue earning cash flow to meet its financial commitments and these are only few
of the users, and uses of financial statements. But the numerical data in the financial
statement are quit calm. They cannot speak. Analytical data are not ending in
themselves, but they are meant to an end. Financial appraisal is an attempt to
determine the significance, and meaning of the financial statement data so that
forecast may be made of the prospects for future earnings, ability to pay interest, debt
maturities both current as well as long term profitability of a sound dividend policy.
Financial appraisal involves the assessment of firm’s past, present and anticipated
future financial condition. Financial appraisal is a scientific evaluation if the
profitability and financial strength of a business concern. In fact financial appraisal
and analysis of financial statement have nearly the same meaning. Financial statement
analysis is used for the purpose of financial appraisal. Financial appraisal is the
process of making a scientific proper, critical and comparative evaluation of the
profitability and financial health of given concern through the application of financial
statement analysis. Financial statement analysis is a preliminary step towards the
evaluation of result dawn by the analysis or management accountant. Appraisal or
evaluation of such results is made thereafter. Financial appraisal begins where
financial analysis ends, and financial analysis starts where the summarization of
financial data in the form of profit and loss account and balance sheet ends, in the
words of Kenney and mecmillan,“financial statement analysis attempts to unveil the
meaning and significance of the items composed in profit and loss account and
balance sheet so as to assist the
management in the formation of sound operating financial policies. The appraisal or
analysis of financial statement spotlights the significant facts and relationship
concerning managerial performance, corporate efficiency, financial strength or
weakness and credit worthiness, that would have otherwise been buries in the maze of
details.”The technique of financial appraisals frequently applied to the study of
accounting data with a view to determining continuity or discontinuity of the
Liquidity Ratio:-

Current Ratio:-
Current ratio is one of the important ratios used in testing liquidity of a
Concerned firm. This is a good measure of the ability of company to maintain
solvency over a short run. This is computed by dividing the total current assets by the
total current liabilities and is expressed as:
Current Ratio = Current Assets
Current Liabilities
The current assets of a firm represent those assets, which can be in the ordinary course
of business, converted into cash within one accounting year. The current liabilities are
defines as obligation maturing within a short period (usually one accounting year).
Excess of current assets over current liabilities is known as working capital and since
these two (current assets and current liabilities) are used incurrent ratio therefore, this
ratio is also known as working capital ratio. With the help of this ratio the analyst can
review the extent to which the company can covert such liabilities with current assets.
The current ratio gives the analyst a general picture of the adequacy of the working
capital of accompany and ability of the company to meet its day-to-day payment
obligation. “It likewise measures the margin of safety provided for paying current
debts in the event of a reduction in the values of current assets.”The current ratio is
very useful as a measure of short terms debt prying ability but it is tricky to interpret
this ratio. Experts are of the view that the value of current assets should be at least
double the amount if current liabilities. Walker and Bough have the same view when
they ay “a good current ratio may mean a good umbrella for creditors against the rainy
days.”But to the management it reflects bad financial planning or presence of idle
assets or overcapitalization”
IDLE CURRENT RATIO: 2:1

 If this ratio is higher than standards than it is assumed

 Very good short –term liquidity/solvency.
 Excess stocks, bad debts and idle cash.
 Under trading If this ratio is lower than standards than it is assumed
 Unsatisfactory short-term liquidity.
 Shortage of stocks, less credit sales, shortage of cash.

Year 2015-16 2016-17 2017-18

Ratio 2.22 1.51 1.58

2.5

1.5

0.5

0
2015-16 2016-17 2017-18
Interpretation:-
According to banker’s rule of thumb 2:1 is the ideal ratio for current ratio
but as per the statistics of the last 3 years, the current ratio is good in 2015-16
and quite satisfactory in 2017-18. However the company is able to manage
with the above current ratio, availing more credit from the vendor. If we see
the nature of the business it is a grinding unit, so the investment is done more
for the fixed assets.

Quick Ratio:-

The solvency of a company is batter indicated by quick ratio. The fundamental

this Ratio is to enable the financial management of company to ascertain that
would happen
If current creditors press for immediate payment and either not Possible to
push up the sales of closing or it id sold, a heavy loss is likely to be suffered.
This problem arises because closing stock is two steps away from the cash and
their price more or less uncertain according to market demand. The term quick
assets include all current assets except inventories and prepaid expenses. It
shows the relationship of quick assets and current liabilities. The Ratio is
calculated as following

Quick Ratio = Current Assets – Inventor

Current Liabilities
It is indicator of a company's short-term liquidity. The quick ratio measures a
company’s ability to meet its short-term obligations with its most liquid assets. The
higher the quick ratio, the better is the position of the company. It is known as the
"acid-test ratio" or the "quick assets ratio".

IDLE QUICK RATIO 1:1

Year 2015-16 2016-17 2017-18

Ratio 2.72 2.31 2.30

2.8

2.7

2.6

2.5

2.4

2.3

2.2

2.1

2
2015-16 2016-17 2017-18

Interpretation:-
As per the Banker’s rule of thumb 1:1 ratio is satisfactory for the quick ratio.
Here the inventories are not included as this ratio requires the liquid assets which are
easily convertible to cash within a short period of time. The average collection period
also affect this ratio as debts are the liquid assets. Again the firm’s transactions are
mainly done in credit and the credit period is a bit longer. So the quick ratio doesn’t
affect the firm.

Inventory Turn-over ratio:

Every firm has to maintain a certain level of inventory of finished goods so as to be
able to meet the requirements of the business. But the level of inventory should
neither to be high not to be low. It to high inventory means higher carrying cost and
higher risk of stocks becoming obsolete whereas to low inventory may mean the loss
of business opportunities. it is express in number of time . Stock turnover ratio or
inventory turnover ratio indicates the no. of times the stock has been turned over
during the period and evaluates the efficiency with which a firm a able to manage its
inventory. This ratio indicates whether investment in stock is within proper limit or

HIGHER RATIO INDICATES:-

 Stock is sold out fast.

 Same volume of sales from less stock or more sales from

 Same stock
 Too high ratio shows stock outs or over trading.
 Less working capital requirement.
 LOWER RATIO REVEALS:-
 Stock a sold out at a slow speed.
 Same volume of sale for more stock or less sale from same stock.
 More working capital requirement.
 Too low ratio show obsolete stock or under trading.

Inventory turn-over ratio = Sales

Inventory

Inventory turnover ratio measures the velocity of conversion of stock in to sales.

Usually a high inventory turnover / stock velocity indicates efficient management of
inventory because more frequently the stock are sold, the lesser amount of money is
required to finance the inventory. Low inventory turnover ratio indicates inefficient
management of inventory. in low inventory turnover implies over investment in
inventories, the business, poor quality of goods, stock accumulation, accumulation of
absolute and slow moving good and low profit as compared to total investment the
inventory turnover ratio is also an index profitability where a high ratio signifies more
profit ‘a low ratio signifies low profit some time a high inventories.

Year 2015-16 2016-17 2017-18

Ratio 28.24 51.82 41.06

60

50

40

30

20

10

0
2015-16 2016-17 2017-18

Interpretation:-
Activity ratio indicates the speed with which assets are converted to sales.
Inventory turn-over ratio indicates the rate at which funds invested in inventories are
converted into sales. The inventory turn-over ratio of the company is more in 2016-
017 than 2017-18. The inventories are managed better in 2016-17 than the previous
years and 2017-18 as higher inventory turn-over ratio is considered to be better.
Higher the inventory turn-over ratio, lesser amount is required to be invested in
inventories.
 Days of Inventory Holding:-

Days of inventory holding = Inventory x 360

Sales
Year 2015-16 2016-17 2017-18
Ratio 22 11 18

25

20

15

10

0
2015-16 2016-17 2017-18

Interpretation:-
The days of inventory holding shows the efficiency of the movement of the
inventories into sales. Here we can see 2015-16 is a great year for the company as per
inventory holding. The inventories are converted into sales quicker than the previous
years.
Raw Material Inventory Turn-Over Ratio:-

Raw Material Turn-Over Ratio = Materials Consumed

Avg. Raw Material Inventory

Year 2015-16 2016-17 2017-18

Ratio 34.96 16.07 22.53

40

35

30

25

20

15

10

0
2015-16 2016-17 2017-18
Interpretation:- This ratio tells about the time period to convert raw materials
into work-in-progress. The figure shows that 2016-17 has a lower level of raw
material inventory turn-over. In manufacturing industries raw materials must be
consumed fast and as per that point of view 2016-17 is better than 2015-16 and
2017-18.

Debtors Turn-Over Ratio:-

Debtors Turn-Over Ratio = Sales

Debtors

Year 2015-16 2016-17 2017-18

Ratio 27.94 79.14 76.93

90

80

70

60

50

40

30

20

10

0
2015-16 2016-17 2017-18
 Interpretation:-
This ratio shows the liquidity of the debtors, how promptly
they are paying to the firm. Higher value is considered to be
better for this ratio, so in 2016-17 the debtors are more liquid
and this helps the firm to maintain a healthy liquid asset.
Average Collection Period:-

Average Collection Period = Debtors x 365

Sales

Year 2015-16 2016-17 2017-18

Ratio 20 5 5

25

20

15

10

0
2015-16 2016-17 2017-18

Interpretation:-
The average collection period shows promptness of the debtors
in making payments. As per the statics 2016-17 and 2017-18 are
the best among the 3 years for the company in getting the
payments. The chances of bad debts and losses are more in
2015-16.

Creditor Turn-Over Ratio:-

Creditor Turn-Over Ratio = Purchase

Creditors

Year 2015-16 2016-17 2017-18

Ratio 7.32 10.11 16.38

18

16

14

12

10

0
2015-16 2016-17 2017-18

Interpretation:-The ratio indicates the velocity with which the

creditors are turned over in relation to purchases. Better the
value better it is or otherwise lower the value less favorable the
result.
Average Payment Period:-

Average Payment Period = Creditor x 365

Purchase

Year 2015-16 2016-17 2017-18

Ratio 32 36 22

50

45

40

35

30

25

20

15

10

0
2015-16 2016-17 2017-18

Interpretation:-
It shows the average number of days taken by the firm to pay
to its creditors. Higher the value implies greater credit period
enjoyed by the firm. Lower value is considered to be better as it
keeps a healthy liquidity position.
Working Capital Turn-Over Ratio:-

A measurement comparing the depletion of working capital to the generation of Sales

over a given period. This provides some useful information as to how
Effectively a company is using its working capital to generate sales.
Working Capital Turn-Over Ratio = Cost of sales
Net Working Capital

A company uses working capital (current assets - current liabilities) to fund operations
and purchase inventory. These operations and inventory are then converted into sales
revenue for the company. The working capital turnover ratio is used to analyze the
relationship between the money used to fund operations and the sales generated from
these operations. In a general sense, the higher the working capital turnover, the better
because it means that the company is generating a lot of sales compared to the money
it uses to fund the sales.

Year 2015-16 2016-17 2017-18

Ratio 14 8 10
16

14

12

10

0
2015-16 2016-17 2017-18
Interpretation:-
It shows the effective utilization of the net working capital. If
we see the statistics of the company, the working capital turn
over ratio is negative for the company, in the financial2016-17
and 2017-18. This is because current liabilities are more than
current assets in both years.
Net Profit Margin:-

Net Profit Margin = PAT x 100

Sales

Year 2015-16 2016-17 2017-18

Ratio 15.35 19.33 23.64

25

20

15

10

0
2015-16 2016-17 2017-18

Interpretation:-
This ratio indicates the efficiency of the management in manufacturing, selling,
administrative and other activities of the firm. This ratio measures the overall ability
of the company to turn each rupee sales in profit. In 2015-16 when the company
gained 15.35% for each one rupee invested, in the next 2 years it has increased to
19.33% and 23.64% respectively.
Gross Profit Ratio:-

Gross Profit Ratio = (Sales – COGS) x 100

Sales
Year 2015-16 2016-17 2017-18
Ratio 75.51 71.81 82.80

84

82

80

78

76

74

72

70

68

66
2015-16 2016-17 2017-18

Interpretation:-
This ratio indicates the efficiency with which a company
produces its products. It is good in 2018-19 as compare to the
previous years. In previous years the manufacturing cost is
higher and excessive competition might be one of the reasons.
FINDINGS
 Current assets are not sufficient to meet the current
liabilities.

 The liquid assets are also not sufficient to fund the

liabilities.

 The company holds the inventory for around 30-35 days in

an average for last 3 years. It is not same for all the years
as the production capacity is changed every year.

 The company is getting material on credit for a long time.

 The average collection period is manageable and the

company pays immediately to the suppliers.

 Sales are increasing over the years.

 Liabilities are increasing year-on-year basis and it is one of

the reasons for the unhealthy Working Capital Position.