INTRODUCTION
1
Financial Performance Management is more than satisfying
the obstacles of regulations. It is applying best practices that have
emerged to improve the financial strength and reporting capabilities
of an enterprise. Through performance management systems,
analytics, dashboards and technology, corporate financial processes
can become a cornerstone for making decisions and growing an
organization.
2
SECONDARY OBJECTIVES:
• To study the financial position of the firm.
• To find out the liquidity and profitability of the firm.
• To find out the nature of changes in the financial position of
the company.
• To make a comparative study through trend analysis.
SECONDARY DATA:
The data formulate company records were used for the
analysis. It includes the annual reports and other published sources.
TOOLS USED:
RATIO ANALYSIS:
Ratio Analysis is one of the techniques of financial analysis
where ratios used as a yardstick for evaluating the financial
condition and performance of a firm. Analysis and interpretation of
various accounting ratios gives a skilled and experienced analyst, a
better understanding of the financial condition and performance of
the firm than what he could have obtained only through a perusal of
financial statements.
3
Ratios represent the relationship, expressed in mathematical
terms between figures, which are connected with each other in some
manner. Obviously, no purpose will be served by comparing two sets
of figures, which are not at all connate with each other. Moreover,
absolute figures are also unfit for comparison. They are expressed as
percentage, times and in ratio.
TREND ANALYSIS:
In financial analysis the direction of changes over a period of
years is of crucial important, time series or trend of change. This
kind of analysis is practically applicable to the items of profit and
loss account. It is advisable that trends of sales.
4
management tries to know the actual performance and also discovers
future prospects of the business.
1
Bharathi pathak, Finance India, vol, xvii, No-4, December 2003 .
5
2
R. Hamsalakshmi, M. Manicham, September 2005
In this study, it has been found that liquidity position and
working capital position were favorable and good during the period
of study. Regarding turnover ratios, efficiency in management of
fixed assets and total assets must be increased. Regarding Return on
Investment and Return on Equity was proved that the overall
profitability position of the software companies had been increasing
at a moderate rate.
3
G. Sudarsana Reddy, September 2003
In this study, it has been found that the paper industry in
Andhra Pradesh needs the induction of additional funds along with
restructuring of finances, modernization of technology for better
operating performance, use of fixed assets efficiently, creation of
adequate depreciation provision, optimizing inventory, investments,
the degree of liquidity, adoption of sound credit policies, creative
efforts on marketing frond and government concessions and support.
These would go a long way towards strengthening the profitability of
paper mills. With this, there is a very possibility of the industry
flourishing and touching the new heights in future.
6
The scope of the study is defined below in terms of concepts
adopted and the period under focus:
The study which deals with the management of comparison of
financial performance is confined only to the PHYTO CHEM
(INDIA) LTD.
The study is based on annual reports of the company for a
period of four years from 31-03-2003 to 31-03-2007.
The study will help to analyze the financial status of the firm.
The study reveals the present liquidity and profitability
position of the company.
CHAPTER II
7
COMPANY PROFILE
8
otherwise engage or deal in all type of organic and inorganic
chemicals fertilizers, micro fertilizers of any nature used or capable
of being used in all types of agricultural and commercial crops and
to carry on the activities of cotton ginning, spinning sale of cotton
bales and seeds.
9
Keeping pace with technological revolution around the world,
PHYTO CHEM(INDIA) Ltd, installed the latest technologies to yield
the best products with the rock solid commitment to quality.
ORGANIZATION STRUCTURE
The organization of PHYTO CHEM (INDIA) Ltd is divided
into three levels of management as Top level management, Middle
level management ,Lower level management.
BOARD OF DIRECTORS:
Dr. P.Sreemannarayana - Chairman
10
Mr. Y. Nayudamm - Managing Director
Mr. U. Venkateswararao - Whole time Director
Mr. P. Anjaneyulu - Director
Mr. C.N.Chary - Director
AUDITORS:
M S F Adinarayana & Co are the chartered accountants who
makes auditing every year.
o Personal Department
o Production Department
PRODUCTION CAPABILITIES
Liquid formulations -- 2700 KL per annum
11
(Monocrotophos 36%, Endosulfan 36%, Quinalphos
25%, Fenvalerate 20%, Cypermethrin 10%,
Cypermethrin 25%)
Wettable Powders -- 900 MT per annum
Groundless Formulation -- 4000 MT per annum
TECHNICAL
Cypermethrin _ 150MT per annum
Fenvelerate _ 150MT per annum
PRODUCTS PRODUCED
Insecticides: Accphate, Alphamethrain, Carbofuran, Chlorphriphos,
Cypermethrin, Deltamethrin, Diehlororos, Dimethoate, Dicofol,
Endosulfan, Ethion, Fenvalerate, Lindane, Moulouthion,
Methylaparathion, Monocrotophos, Phorate, Profenphos,
Quinolphos
Fungicides: Captan, Carbendiazim, Hexaconazole, Manconazole,
Ziram, Metalaxyi
Herbicides: Anilophos, Atratine, Butachior, Isoproturon
EXPORTS
The company has been exporting its products within and
outside the country. The major exports were made to South Africa,
Tunisia and Nigeria.
12
Raw materials purchased from Gujarat, Indore. In order to
manufacture the products the company is importing Raw materials
from Hang Kong and China.
FINANCIAL ASSISTANCE
The capital was contributed in cash by the N R I’ s and Federal
Bank Ltd and they receive non cash shares issued towards
compensation of technical knowledge. Rest of the share capital was
contributed by the general public.
WORKING CONDITIONS AND WELFARE HOURS OF WORK
AND SHIFT SYSTEM:
1st shift - 23:00 to 7:00 Hrs
2nd shift - 07:oo to 15:00 Hrs
3rd shift - 15:00 to 23:00 Hrs
4th shift - 08:00 to 16:30 Hrs
SAFETY:
The department will conduct periodical training programs in
safety to all the workmen as well as to managerial staff inculcate safe
work habits among the workmen.
AMBULANCE ROOM:
A well furnished Ambulance Room is provided for immediate
medical aid with round the clock service for the benefit of the
13
Employees headed by the chief Medical officer major competitors of
PHYTO CHEM (INDIA) Ltd.
BOOTS:
Unlined rubber or neoprene (nit rile etc.,) books should be
worn over work shoes or in place of work shoes when mixing or
applying pesticides. Pull the legs of trousers over the tops of boots to
help prevent spilled pesticide from getting inside boots. Wash boots
with soap and water after each use. “Never wear cloth or leather
boots when Mixing or Applying Pesticides.” Cloth or leather boots
will absorb pesticides and allow the pesticide to contact the skin of
the leg or foot and will be a source of residues causing chronic
exposure.
HEAD WEAR:
14
A water proof hat should be worn when mixing or applying
pesticides because pesticides can be readily absorbed through the
scalp. The hat should have a brim to keep drift or splashes off curs
and neck. Plastic Safety hats are ideal for use with pesticides and
should be washed in soap and water after each use. Cloth hats may
absorb pesticides and contaminate the wearer. Do not use Cloth
Hats.
RESPIRATORS:
Respirators are designed to prevent in haling toxic fumes and
mists. They should be used when mixing or applying pesticides. If the
label specifies the need. Choose the correct cartridge for the type of
pesticide being used. The manufacturer or supplier can provide
guidance on selecting correct cartridges. Replace cartridges when the
odor of the pesticide becomes noticeable or when. Breathing becomes
difficult during use. The life of cartridges will vary with the
concentration of pesticide in the air around the air around the
respirator breathing rate of the user temperature humidity and
composition of the cartridge.
15
involving pesticides are usually due to improper handling, mixing,
application of pesticides, or failure to use proper personal protective
equipment and clothing.
GENERAL GUIDELINES:
The minimum protection when working with pesticides is long
sleeves, long pants, shoes and socks, rubber gloves and splash-proof
eye protection regardless of the toxicity level of the pesticides.
Rubber boots and a respirator are necessary when working with
moderately or highly toxic pesticides. EPA’s recommendations
include wearing a double layer of clothing. This can be accomplished
by wearing coveralls over the long pants and long sleeve shirt, and
rubber boots over the shoes and socks.
UNIFORM:
The company maintains a unique feature on dues uniform all
the individual working in the organization maintain an unique
uniform which is in Blue colored. This shows that all are equal and
there are no discriminations.
GLOVES:
The use of gloves is mandatory when working with highly toxic
pesticides. It is recommended that only unlined rubber or neoprene
(nit rile etc) gloves be used when handling or using all pesticides.
Unlined gloves should be thoroughly washed (Inside and Outside)
16
after each use. Gloves should be at least 12 inches long to provide
adequate protection for wrists and the cuffs should be inside sleeves
for most work. This will keep run of pesticide from getting into the
gloves.
CATETERIA:
The PHYTO CHEM (INDIA) Ltd right from its inception is
maintaining highly subsidized canteen. Lunch or dinner is served in
the cafeteria at nominal prices. Snacks, coffee are supplied to
different sections or plants in the company.
TURNOVER:
The turnover the company is around 15 crores.
17
• Co-ordination between the wants & needs of the consumers
and their satisfaction.
18
COMPETITORS OF THE COMPANY:
1. Hyderabad Chemicals
3. Agasya
4. Aries
5. Magmani Chemicals
CHAPTER III
FINANCIAL STATEMENT ANALYSIS
19
Finance is regarded as the lifeblood of a business enterprise.
In general, finance may be defined as a provision of money at
the time it is wanted. “Business finance can broadly be defined
as the activity controlling, and administering of the funds used
in the business”.
Financial statement are used by the management as the
basis for planning operations including procurement of
adequate financing and as a means of exercising control
financing position of the business and efficient and profitable use
of the assets An understanding of different aspects of financial
statement is necessary for the development of financial skills.
Financial statements are used by the management as the
basis for planning operations procurement of adequate
financing and are means of exercising control over financial
position of the business and efficient and profitable use of assets.
An understanding of different aspects of financial statements is
necessary for the development of financial skills.
20
TYPES OF FINANCIAL STATEMENTS
Financial statement include
A Balance sheet
An Income statement
A statement of changes in owners account
A statement of changes in financial position.
The financial statements are prepared with a view to depict
financial position of the concord Proper analysis and interpretation
of this statement enables a person to judge the profitability and
financial strength of the business.
21
The financial statements (balance sheet and profit and loss
account) are the basis instruments of an accounting system which
communicate financial information to users, Balance sheet contains
the information about the firm’s assets and liabilities. Assets
represent economic resources possessed by the firm. Fixed assets are
used in business for more than accounting period of one year, while
current assets are converted into cash payable within an accounting
period are called current liabilities.
22
The profit and loss account shows the profitability of the firm
by giving details above revenues and expenses. Revenues are benefits
which customers contribute of the firm in exchange for goods of
services provided buy the firm. The cost if the economic resource use
in providing goods and service to the customers is called expenses.
Thus the basic purpose of the profit and loss account is to is to
provided a concise summary of the firm’s revenues and expenses
during period of the time and measure its profitability.
23
NEED FOR FINANCIAL STATEMENT ANALYSIS
Stockholders, creditors and management have concerns about
the financial data of a company, which can be resolved to some
degree predictive ability of financial statement analysis. Stockholders
are concerned about the future success of operation and their
leadership.
24
x. To decide about the future prospects of the firm. As a matter
of fact, the objectives of financial statement analysis, depend to
a large extent on the view-point of the analysis.
25
comparison and the later is known as “Inter-unit” or Inter-firm”
comparison.
TREND ANALYSIS:
Trend Analysis or Trend percentage also plays a significant
role in the analysis of horizontal financial statements. An efficient
and effective management tries to know the actual performance and
also discovers future prospects of the business. This trend ratio can
be computed by dividing each amount in the other statement with
the corresponding item found in base statement.
• Trend analysis is a barometer of the changes taking place in
the economic profile of an enterprise.
• Trend analysis indicates the rate of changes in the value of an
item in terms of an index.
• Trend analysis rearranges the data in a manner which makes
it easy to identify change and interpret the same.
26
CHAPTER IV
ANALYSIS AND INTERPRETION OF FINANCIAL
STATEMENTS
27
Analysis and interpretation of financial statements are an
attempt to determine the significance and meaning of the financial
statement data so that forecast may be made of the prospect for
future earnings, to ability to pay interest, debt maturities – both
current as well as long term- and probability of a sound dividend
policy. This process involves both the analysis and the interpretation.
28
4.1 RATIO ANALYSIS
Ratio analysis is one of the important tools of analyzing
financial statements. The financial statements are detailed and do not
furnish the required information at a glance. Accountants have to
strive hard to dig out the required information.
29
and performance of the firm. Through leverage and solvency ratios,
ratio analysis helps in assessing the financial position of the firm.
Current and liquid ratios indicate short term financial position,
whereas debt equity ratios, fixed assets ratios and proprietary ratios
show long term financial position. Similarly, activity ratios and
profitability ratios are useful in evaluating the efficiency of
performance.
30
Table No-1 : Overall Profitability Ratio (Rupees in lakhs)
Year Operating profit Capital Ratio
employed
2002-03 -6,12,44,365 10,87,02,998 -56.34
2003-04 1,74,96,805 11,00,82,045 15.89
2004-05 62,09,979 12,85,06,154 4.83
2005-06 1,65,84,915 22,73,12,955 7.29
2006-07 61,86,590 89,48,47,694 6.91
Source: Annual reports of the company
The above table reveals the overall profitability ratio. The
trend of this ratio is dynamic. The indices of this ratio are -834.13,
15.89, 4.83, 7.29 and 6.91. It may be infested that the profitability is
not stable.
31
Overall P ro fitab ility R atio
15.89
20
4.83 7.29 6.91
10
0
-10
Ra tio -20
-30
-40
-50 -56.34
-60
2002-03 2003-04 2004-05 2005-06 2006-07
Ye a rs
32
sales in terms of percentage indicating the percentage of gross profit
earned on sales.
Gross profit
Gross Profit Ratio = -------------------- * 100
Net sales
33
G ro s s P ro fit R a tio
33.6
35
30
25 21.8
19.52
20 15.55
R a tio
15
9.23
10
5
0
2002-03 2003-04 2004-05 2005-06 2 006-07
ye a rs
34
This ratio establishes the relationship between the amount of
Net profit and the amount of revenue. This ratio is taken in
percentage. Net profit or Net income is the gross profit less selling,
distribution and financial expenses. Net profit for calculating this
ratio is picked up from the profit & loss A/c.
Net profit
Net profit ratio = ------------------ * 100
Net sales
From the above table, we can inter prêt that the Net Profit
Ratio are -5.07, 1.82,1.56,9.18,1.01. The average ratio is 1.7 .The net
profit ratio vary from -5.07 to 1.01, so it gain profits in spite of
having loss in 2002-2003.
35
Chart No-3 : Net Profit Ratio
N et profit R atio
10 9.18
8
6
4
1.82 1.56
Ra tio 2 1.01
0
-2
-4 -5.07
-6
2002-03 2003-04 2004-05 2005-06 2006-07
Ye a rs
36
enough to leave a portion of sales to give a fair return to the investor.
This ratio is a complementary of net profit ratio. In case the net
profit ratio is 20%, it means that the operating ratio is 80%.
Operating costs
Operating or Expenses Ratio = --------------------- * 100
Net sales
The above table ratio reveals that the operating ratio. The
higher the ratio occurred in 2003 – 04. The operating cost is having
more contribution towards sales . The indices of this ratio is 105.04,
81.16 , 95.75 , 90.18 , 94.77.
37
Operating Expenses Ratio
120
105.04
95.75 94.77
100 90.18
81.16
80
Ratio 60
40
20
0
2002-03 2003-04 2004-05 2005-06 2006-07
Yea rs
38
known as activity or efficiency ratios. They indicated in the efficiency
with which the capital employed is rotated in the business.
From the above table we can interpret that the highest ratio
(indicated in 2005-06 i.e.) is 7.8. The lowest ratio was in 2002-03 i.e.
2.7. This ratio represents the how many times fixed assets has
turnover to sales. The indices of this ratio are 2.7, 4.2, 7.06, 7.8 & 5.6.
39
Fixed Assets Turnover R atio
7.87
8 7.067
7
5.632
6
5 4.267
Ra tio 4
2.764
3
2
1
0
2002-03 2003-04 2004-05 2005-06 2006-07
Ye a rs
40
Working capital
From the above table we can interpret that the turnover of Net
working capital is not satisfactory because the ratio is not state.
41
Working capital turnover Ratio
1.8
1.54
1.6
1.39
1.4
1.2 1.01
Ratios
1
0.8
0.6
0.4
0.18
0.2 0.11
0
2003 2004 2005 2006 2007
Years
42
Debtors constitute an important constituent of current assets
and therefore the quality of debtors to a great extent determines a
firm’s liquidities.
Sales
Debtors Turnover Ratio = -----------------------------------
Average accounts receivable
The debt turnover ratio has been increased year to year. The
highest ratio has indicated in the year 2005. then it has been declined.
The ratio ranges from 1.67 to 1.76.
43
Debtors Turnover Ratio
3 2.71
2.5
1.92 1.85
2 1.67 1.76
Ratio
1.5
0.5
0
2002-03 2003-04 2004-05 2005-06 2006-07
Ye a rs
44
run its day-to-day operations. Inadequacy of working capital may
bring the entire business operation to a grinding halt because of
inability of the enterprise to pay for wages materials and other
regular expenses.
1. CURRENT RATIO:
This ratio is also known as working capital ratio and can be
expressed as a pure ratio or percent ratio. This ratio is an indicator
of the firm’s commitment to meet its short-term liabilities. A current
ratio of 2:1 is considered an ideal one.
Current assets
Current Ratio = -----------------------
Current liabilities
Table No-8 : Current Ratio (Rupees in lakhs)
Year Current assets Current Ratio
liabilities
2002-03 7,43,06,690 1,11,45,900 6.67
2003-04 7,77,74,448 1,10,46,147 7.04
2004-05 9,44,39,400 1,70,16,584 5.55
2005-06 14,38,08,962 3,47,58,007 4.14
2006-07 12,67,84,753 2,31,10,000 5.49
Source: Annual reports of the company
The above table reveals the current ratio of the firm. The ratio
varies from 6.67 to 5.49. The current assets position of the company
is very high. The average ratio is 5.78. This can be in forced that the
firm has been current assets to meet one its current liabilities.
45
Chart No-8 : Current Ratio
Current Ratio
8
7.04
6.67
7
6 5.55 5.49
5
Ratios
4.14
4
3
2
1
0
2003 2004 2005 2006 2007
Years
2. LIQUID RATIO:
This ratio is also termed as acid test ratio. This ratio is
ascertained by comparing the liquid assets to current liabilities.
Prepaid expenses and stock are not taken as liquid assets. The
standard ratio is 1:1.
46
Liquid Assets
Liquid Ratio = ---------------------
Current Liability
Liquid Assets = Current Assets-Inventory
The above table reveals the liquidity ratio of the firm. The
ratio varies from 4.24 to 3.25. The liquidity assets position of the
company is very high. The average ratio is 3.89.
47
Liquid Ratio
6 5.68
5
4.24
4 3.52
3.25
2.79
Ratio 3
0
2002-03 2003-04 2004-05 2005-06 2006-07
Years
48
The difference between current assets and current liabilities
excluding short-term Bank borrowing is called net working capital
(NWC) or net current assets (NCA). NWC is used as a measure of a
firm’s liquidity.
Net Working Capital
NWC = ---------------------------
Net Assets
Table No-10: Net working capital ratio (Rupees in lakhs)
Year Net working capital Fixed assets Ratio
2002-03 6,31,60,790 2,31,24,299 2.731
2003-04 6,67,28,301 2,17,58,173 3.066
2004-05 7,74,22,816 2,06,62,370 3.747
2005-06 10,90,50,955 2,14,65,947 5.080
2006-07 10,36,74,753 2,09,96,680 4.937
Source: Annual reports of the company
49
Net working capital ratio
2006-07 4.937
2005-06 5.08
Years
2004-05 3.747
2003-04 3.066
2002-03 2.731
0 1 2 3 4 5 6
Ratio
50
Solvency means the ability of the business to repay its outside
liabilities. These liabilities are categorized as short term liabilities
and long term liabilities. Ratios concerning the short term solvency
of the business have been discussed under liquidity ratio.
LONG-TERM SOLVENCY RATIO:
1.FIXED ASSETS RATIO:
This ratio is also known as ratio of capital or long term funds
to fixed assets. one of the key principle of financial policy is that fixed
assets acquisition should be financed by long term funds only.
Fixed assets
Fixed assets ratio = ------------------------
Shareholder funds
51
contributed by share holders fund. The higher the ratio indicates in
2002-03.i.e. 48%.
,
F ix e d As s e ts R a tio
0.6
0.48
0.5
0.43
0.39 0.4 0.38
0.4
Ratio
0.3
0.2
0.1
0
2002-03 2003-04 2004-05 2005-06 2006-07
Ye a rs
52
The debt-equity ratio is determined to ascertain the soundness
of the long-term financial policies of the company. It is also known as
external internal equity ratio.
External equities
Debt- Equity Ratio = -----------------------
Internal equities
From the above table, we can inter prêt that the debt-equity
ratio are 0.74, 0.71, 0.81, 1.36, 1.22. The average ratio is 0.97. The
ratio is in first three years found to be good and in the later years, it
is exceeding i.e external debts have increased.
53
Debt- Equity Ratio
2006-07 1.22
2005-06 1.36
Years
2004-05 0.81
2003-04 0.71
2002-03 0.74
54
Leverage refers to the proportion between fixed interest or
dividend bearing funds and non-fixed interest or dividend bearing
funds in the total capital employed in the business. The fixed interest
funds include the funds provided by the debenture holders and
preference shareholders.
1. PROPRIETARY RATIO
This ratio is also known as ‘Owners fund ratio’ or ‘Net worth
ratio’. This ratio establishes the relationship between the proprietors
funds and total tangible assets. It is a variant of debt-equity ratio.
Shareholder funds
Proprietary Ratio = -----------------------------
Total tangible assets
From the above table, proprietary ratio are 0.53, 0.55, 0.52,
0.41, 0.43. highest proprietary ratio is 0.55 in 2004. Lowest is 0.41 in
2006. The total average is 2.44.
55
Chart No-13 : Proprietary Ratio
Proprietary Ratio
0.6 0.55
0.53 0.52
0.5
0.41 0.43
0.4
Ratio 0.3
0.2
0.1
0
2002-03 2003-04 2004-05 2005-06 2006-07
Years
2. DEBT-RATIO:
Debt-ratio may be used to analyze the long-term solvency of a
firm. This helps to know the proportion of the interest-bearing debt
(also called funded debt) in the capital structure.
56
Total Debt
Debt ratio = ---------------------
Net assets
57
Debt Ratio
3.5
2.86
3
2.5 2.33
2.14
Ratios
2
1.4 1.49
1.5
1
0.5
0
2003 2004 2005 2006 2007
Years
4.2.TREND ANALYSIS
Trend analysis acquaints us with the profitability and the short
term, and long-term liquidity of the business. In addition it also
58
discovers the future prospects of the business in terms of
profitability, operational efficiency and financial soundness of the
enterprise. Under this technique, the profit and loss account and the
balance sheet of an accounting year are taken as base.
59
Years Sales (Y) Base year X XY
(X)
2002-03 6.39 -2 4 -12.78
2003-04 9.28 -1 1 -9.78
2004-05 14.60 0 0 0
2005-06 16.89 1 1 16.89
2006-07 11.82 2 4 23.64
∑Y=58.98 ∑X=0 ∑X2=10 ∑XY=18.47
YC = a + bX
Y2008 = 16.452 +1.85(4) = 16.452 +7.4 = 23.852
Y2009 = 16.452 +1.85(5) = 16.452 +9.25 = 25.705
Y2009 = 16.452 +1.85(6) = 16.452 +11.1 = 27.55
60
FUTURE PREDICTION:
(Rupees in lakhs)
Years Sales
2008 23.852
2009 25.705
2010 27.55
61
Years Stock Year base X XY
(Y) year
(X)
2002-03 2.72 -2 4 -5.44
2003-04 1.53 -1 1 -1.53
2004-05 3.48 0 0 0
2005-06 4.69 1 1 4.69
2006-07 52.03 2 4 104.06
∑Y= 64.45 ∑X= 0 ∑X2=10 ∑XY=
101.78
YC = a + bX
Y2008 = 12.89 +10.18(4) = 53.61
Y2009 = 12.89 +10.18(5) = 63.79
Y2010 = 12.89 +10.18(6) = 73.97
FUTURE PREDICTION:
(Rupees in lakhs)
Years Stock
2008 53.61
2009 63.79
2010 73.97
62
The stock levels in future will be increasing up to 73.97. The
stock level is 53.61, 63.79,73.97.
63
Statement on which balance sheets, income statements, or
statements of changes in financial position are assembled side by side
for review purposes. Changes that have occurred in individual
categories from year to year and over the years are easily noted. The
key factor revealed is the trend in an account or financial statement
category over time. A comparison of financial statements over two to
three years can be undertaken by computing the year-to-year change
in absolute dollars and in terms of percentage change. Longer-term
comparisons are best undertaken by means of Index-Number Trend
Series.
64
Administrative & 91,26,295 1,37,09,252 45,82,957 50.22
selling expenses
Financial charges 38,03,328 45,53,070 7,49,742 19.71
Other operating 14,82,009 15,13,702 31,693 2.09
expenses
Total 1,44,11,632 1,97,76,024 53,64,392 37.22
Operating profit -85,06,757 1,14,30,033 1,99,36,790 234.36
Less: operating - - - -
expenses
Profit before tax -85,06,757 1,14,30,033 1,99,36,790 234.36
65
Gross profit 59,04,875 2,27,12,871 1,68,07,996 74.00
Administrative & 91,26,295 1,65,02,892 73,76,597 284.64
selling expenses
Financial charges 38,03,328 35,98,205 2,05,123 5.39
Other operating 14,82,009 16,02,118 1,20,109 8.10
expenses
Total 1,44,11,632 2,17,03,215 72,91,583 50.59
Operating profit -85,06,757 10,09,656 95,16,413 111.87
Less: operating - 32,727 - -
expenses
Profit before tax -85,06,757 9,76,929 94,83,686 111.48
66
Administrative 91,26,295 2,02,47,631 1,11,21,336 121.86
& selling
expenses
Financial 38,03,328 41,83,130 33,85,018 89.00
charges
Other operating 14,82,009 17,75,955 2,93,946 19.83
expenses
Total 1,44,11,632 26,20,67,16 1,17,95,084 81.84
Less: operating - - - -
expenses
Profit before tax -85,06,757 1,06,25,830 1,91,32,587 224.91
67
Administrative 91,26,295 1,69,00,000 77,73,705 85.179
& selling
expenses
Financial 38,03,328 62,29,397 2,05,123 5.39
charges
Other 14,82,009 18,53,974 1,20,109 8.10
operating
expenses
Total 1,44,11,632 2,49,83,371 1,05,71,739 73.35
Operating -85,06,757 18,96,781 1,04,03,538 122.30
profit
Less: operating - - - -
expenses
Profit before -85,06,757 18,96,781 1,04,03,538 122.30
tax
From the above tables, the facts of last four years are
compared to the base year 2003. For these years, there has been an
increasing trend of accounting information. Gross profit ratio is
fluctuating year by year. The highest ratio was in 2003-04, i.e. 33.60.
The ratio has the range from 9.23 to 19.52. Administrative & selling
expenses compared to proves years decreasing. The higher the ratio
occurred in 2003. The operating cost is having more contribution
towards sales.
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4.3.2.a Comparative Balance Sheet of 5 years
(Rupees in lakhs)
PARTICULARS 2003 2004 Increase %
(+) and
decrease (-)
(1) Shareholder funds
A) Capital 4,30,02,000 4,30,02,000 - -
B) Reserve and Surplus 48,69,467 65,63,037 16,93,570 34.77
(2) Loan Funds
A) Secured Loans 2,89,48,760 2,72,71,596 -16,77,164 6.14
B) Unsecured Loans 67,39,880 82,11,527 14,71,617 17.82
(3) Deferred Tax 51,31,750 51,31,750 - -
Total 8,86,91,857 9,01,79,911 14,88,054 1.67
ii. Application of funds
(1) Fixed assets
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A) Gross block 3,32,29,680 3,33,77,257 1,45,577 0.44
B) Less Depreciation 1,01,05,381 1,16,19,084 15,13,703 13.02
C) Net Block 2,31,24,299 2,17,58,173 13,66,126 6.27
D) Investments 16,66,745 13,23,426 3,43,319 25.94
(2) Current Assets
A) Inventories 2,72,14,332 1,53,15,751 1,18,98,581 77.68
B) Sundry debtors 3,83,63,309 4,83,44,179 99,80,870 20.64
C) Cash and bank 2,88,842 44.50
balances 3,60,164 6,49,006
D) Loans and advances 83,68,884 1,34,65,512 50,96,628 37.84
Less: Current Liability
& Provisions 1,11,45,900 1,10,46,148 -99,752 0.90
Net current assets 6,31,60,790 6,67,28,300 35,67,510 5.34
Miscellaneous
Expenditure
A) Preliminary -3,70,011 99.99
Expenses 7,40,023 3,70,012
Total 8,86,91,857 9,01,79,911 14,88,054 1.67
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B) Less Depreciation 1,01,05,381 1,32,08,330 31,02,949 23.49
C) Net Block 2,31,24,299 2,06,62,370 -24,61,929 11.91
D) Investments 16,66,745 12,29,027 -4,37,718 35.61
(2) Current Assets
A) Inventories 2,72,14,332 3,48,07,347 1,11,93,015 32.15
B) Sundry debtors 3,83,63,309 5,38,22,496 1,54,59,187 64.89
C) Cash and bank
balances 3,60,164 8,39,699 4,79,535 57.10
D) Loans and advances 83,68,884 49,69,858 -33,99,026 68.39
Less: Current Liability
& Provisions 1,11,45,900 1,70,16,584 58,70,684 34.49
Net current assets 6,31,60,790 7,74,22,817 1,42,62,027 18.43
Miscellaneous
Expenditure
A) Preliminary - -
Expenses 7,40,023 -
Total 8,86,91,857 9,93,14,214 1,06,22,357 10.69
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A) Gross block 3,32,29,680 3,64,50,232 32,20,552 8.83
B) Less Depreciation 1,01,05,381 1,49,84,285 48,78,904 32.56
C) Net Block 2,31,24,299 2,14,65,947 -16,58,352 7.72
D) Investments 16,66,745 7,72,987 -8,93,758 115.62
(2) Current Assets
A) Inventories 2,72,14,332 4,69,07,893 1,96,93,561 41.98
B) Sundry debtors 3,83,63,309 9,11,77,645 5,28,14,336 57.92
C) Cash and bank
balances 3,60,164 18,51,768 14,91,604 80.55
D) Loans and advances 83,68,884 38,71,656 -44,97,228 116.15
Less: Current Liability
& Provisions 1,11,45,900 3,47,58,007 2,36,12,107 67.93
Net current assets 6,31,60,790 10,90,50,956 4,58,90,166 42.08
Miscellaneous
Expenditure
A) Preliminary - -
Expenses 7,40,023 -
Total 8,86,91,857 13,12,89,889 4,25,98,032 32.44
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(1) Fixed assets
A) Gross block 3,32,29,680 3,92,61,430 60,31,750 15.36
B) Less Depreciation 1,01,05,381 1,82,64,750 81,59,369 44.67
C) Net Block 2,31,24,299 2,09,96,680 -21,27,619 10.13
D) Investments 16,66,745 17,13,378 46,633 2.72
(2) Current Assets
A) Inventories 2,72,14,332 5,20,39,974 2,48,25,642 47.70
B) Sundry debtors 3,83,63,309 6,71,68,236 2,88,04,927 42.88
C) Cash and bank
balances 3,60,164 19,27,000 15,66,836 81.30
D) Loans and advances 8368884 56,49,544 -27,19,340 48.13
Less: Current Liability
& Provisions 1,11,45,900 2,31,10,000 1,19,64,100 51.77
Net current assets 6,31,60,790 10,36,74,754 4,05,13,964 39.07
Miscellaneous
Expenditure
A) Preliminary - -
Expenses 7,40,023 -
Total 8,86,91,857 2,63,84,812 -6,23,07,045 236.14
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CHAPTER V
FINDINGS & CONCLUSION
5.1 FINDINGS
• The factory should take necessary steps for the study up of
market department, which enables the factory to increase its
able in an effective manner. Similarly it should also establish a
Finance Department for making the best investment plans
raising of funds rate.
• Gross profit ratio indicates low performance of the company so
it is suggested that the company as to take steps in order to
increase sales and reduce cost of production.
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• The operating expenses ratio of the company is high so that the
company should try to reduce the manufacturing expenses so
as to improve the operating efficiency of the business.
• The Debtors ratio is increases year to year it means there is an
increase in receivable investment. It indicates the firm is not
managing the debtors effectively.
• The liquidity position of the division is in the better position.
On the average, it is good. The management should maintain
same liquidity position in feature also.
• Higher current ratio indicates grater margin of safety of the
firm.
• The company followed the idle current ratio from the past 5
years.
5.2 CONCLUSION
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In handling of the financial statements professionalism may be
encouraged. The company’s overall position is satisfactory. During
my project work I had got good experience, regarding the PHYTO
CHEM INDIA LTD., HYDERABAD.
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