Financial Analysis - Final New-1

________________________________________A Study of Financial Performance___
Chapter 1
Research Design
1.1 Introduction, Importance and Significance
Finance is needed to perform a firm’s production, marketing and other functions.
The actions of managers have financial consequences for the firm. It is, therefore
imperative that they know the importance of finance functions and there with their own
activities.
Finance involves the management of firm’s financial resources. A firm carries out
production and marketing activities to make profits and to generate wealth for further
growth. All business operations involves, use of financial resources e.g. acquiring new
equipment or replacing the old one in order to interpret financial reports prepared by the
finance department and should be able to ask finance related questions.
“Financial analysis means evaluation of past performance, present financial
position, liquidity situation, and enquires into profitability of the industry”
Our study is based on the financial analysis. By analyzing financial statement we
see the financial position of company. Financial ratios are used for financial analysis. We
should know the solvency and liquidity position of company so far controlling the
production cost researcher try to study financial analysis.
1.2 Rationale of the study

In India, the sugar industry is the second largest agro base industry next to cotton
textile. It provide direct employment to well over 4 lacks of people and livelihood to
_______YCMOU______MBA Programme___________________________________1
another one million of agriculturist and persons engaged in transportation and harvesting
sugarcane.
The government encouraged primary cooperative societies, banks, irrigation
schemes, and agro industrial processing organization so also spinning mills and sugar
factories. These cooperatives have about outstanding progress in the course of time.
Jawaharlal Nehru was so much impressed by the contribution of cooperative movement
and its basic principle that he wanted this movement to spread up not only in industrial
sectors but also become a part of our every day life.
In 1991, Jawahar Shetkari Sahakari Sakhar Karkhana is established.
Last two-three years there is disease on sugar-cane named Lokary mava, so
farmers have got very less crop of cane. Also some times more percentage of crop is
destroyed due to flood etc.
So we want to study the financial position of Jawahar. For reducing production
cost of sugar, to over come financial losses, researcher studied the financial analysis of
Jawahar sugar factory.
1.3 Objectives of the study

The main objective of the study of financial analysis is to control the cost of
production and also we can analyze and reduce the production cost. For controlling
financial soundness this study is also very much helpful.
To analyses and to evaluate the cost management in company is also one of the
objective. Following are the other objective of the study:
1. To study the financial analysis.
2. To assess the problem of process costing.
3. To study cost control methods.
1.4 Hypothesis of the study

1. Financial position of factory can be understood by analyzing financial
statements.
2. Solvency and liquidity position of company so far controlling the production
cost help to study financial analysis
1.5 Research methodology

Both primary & secondary data will be collected from different sources to
evaluate the objective of the study.
Primary Data:
To collect primary data on the financial analysis of the “Jawahar Shetkari
Sahakari Sakhar Karkhana Ltd., Hupari, Dist. Kolhapur.” researcher has taken interview
schedule. Care will be taken to include most of the variables, which will relevant for the
study. The data will be collected through personal interviews by the researchers on
working performance for the years 2003-04 to 2007-08.
Secondary Data:
The secondary data on the physical & financial performance indicators of the
organization will be collected from the annual reports, audit reports & other official
records of the study unit for a period of five years i.e. 2003, 2004, 2005,2006,2007,2008.
1.6 Expected Contribution of the study

In this project report the emphasis was given on the working capital of the “Jawahar
Shetkari Sahakari Sakhar Karkhana Ltd., Hupari, Dist. Kolhapur.”. The study was
focused mainly on the various factors of financial analysis. The study is important as it
gives the various financial positions of the business. After the data collection, the
presentation, analysis & interpretation was done with the help of tables & graphs. And
finally, the findings & suggestions if any were given for further improvement.
1.7 Limitations of the study

Limitations for the study are as follows,
• As the certain documents and data are confidential, it was not possible to collect
all the information necessary for the deep study.
• As the study is on the implementation stage so there is non-availability of any past
record.
Chapter 2
Organizational profile
2.1 Overview of the organisation:
Name of the organization: Jawahar Shetkari Sahakari Sakhar Karkhana Ltd., Hupari,
Dist. Kolhapur.
Location of the unit: 100 hector of land at Hupari-Yalgud formally known as “
Shreemati Indumati Rani Sarkar Park.”
Establishment: 28th September 1990.
Annual turnover: 14005.45 Lac
2.2 History:
Sugar industry is a backbone of Indian economy. Western Maharashtra has
always remained on the fore front of co-operative movements. To make an integrated
development of Maharashtra state the first sugar factory on co-operative basis was
established in Maharashtra at ‘Loni’ in Shrirampur, Tehsil of Ahmednagar district under
the leadership of Padmashri Vitthalrao Vikhe-Patil and guidance of Lt. Dr D.R. Gadgil.
Prior to this, efforts were taken to form sugar factory on co-operative basis in 1918 and
Baramati in Pune district named ‘Neera vally co-operative sugar factory’ under the
guidance of Mr. Lallubhai Samaldas. As a result of successful endeavor of Padmashri
Vitthalrao Vikhe-Patil’s ‘Pravara co-operative sugar factory’ at Loni.
The co-operative sugar factories are conducting various schemes such as cane
development programs, roads, repairing, construction of bridges, provide drinking water
to people, educational & medical facilities, biogas plants, etc.
Preamble:
Kolhapur district has made speediest progress towards abundant production of
sugarcane on account of fertile soil, favorable climate, hardworking farmers & growing
irrigation facilities. In turn it gave impetus to co-operative sugar industry. In the
beginning of 80es Kolhapur District witness such a bumper crop of sugar cane that even
after meeting the requirement of the existing factories a large quantity of sugar cane
remained surplus. Rather an additional land was come under irrigation due to new
irrigation projects such as Chandoli and Kalammawadi. Moreover it has been observed
that other food crops can not take root when sugarcane mushrooms the surrounding areas.
It being a cash crop, farmers also incline towards the cultivation of sugar cane.
This has resulted in soaring the sugar cane production. Even then existing sugar factories
and some of them implementing their expansion program could not have crushed the
voluminous production of sugar cane.
This abstain a large number of non member came cultivator from crushing their
sugar cane in time and there interest was at stake. These circumstances necessitated the
acute need of one more sugar factory in co-operative sphere. Hence a meeting of cane
cultivators was called in the year 1981 and it was decided to establish “Jawahar Shetkari
Sahakari Sakhar Karkhana” under the leadership of honorable Shri. Kallappanna Awade,
Ex. M.P. However in spite of persistent follow-up the licensing was dragged for about
decades due to restrictions in the licensing policies of union government.
Multi state status:

The factory is situated on the southern border of Maharashtra adjoining the state
of Karnataka. A number of farmers from Karnataka have been supplying sugarcane to
Jawahar factory. Hence in the year 1994, the status of Jawahar was converted into multi-
state co-operative society by incorporating 182 villages in the area of operation of which
62 belong to Karnataka & rest 120 are from Maharashtra.
Location:
100 hector of land at Hupari-Yalgud, formally known as ‘Shreemati Indumati
Rani Sarkar Park’ was purchased for the project as approved by the site selection
committee appointed by Govt. of Maharashtra. A district water supply scheme from
Dudh Ganga River, about 6 KM away from the site was completed to cater the
requirement of industrial as well as drinking water. This place is near the silver city
Hupari which is connected by road transport cane from cultivated land to factory.
Vision:
To be an ideal sugar industry in the co-operative sector in the term of providing
better price and benefit s to the agriculturists who supply cane and provision of
employment to the people residing around the industry.
Mission:
• To promote the interest of all members to attain their social and economic
betterment through self-help and mutual aid.
• To inspired for promoting self-confidence thrift and co-operation amongst the
members to give encouragement.
Objective of Industry:
The principle objective of the industry will be to promote the interest of all its
members to attain their social and economic betterment through self-help and mutual aid
in accordance with the co-operative principles.
Past five years cane crushing bagging or Production of sugar:
Year Cane crushing(M.T.) Production of sugar

(Lacs Bags)
2003-04 6.58 8.31
2004-05 9.13 10.98
2005-06 10.6 12.76
2006-07 9.54 11.6
2007-08 6.99 8.1
14
12
10
8
Cane crushing(M.T.)
6
3-D Column 2
4
2
0
2003-04 2004-05 2005-06 2006-07 2007-08
Awards:
Season Name of the Institution Particular of the Prize

1994- National federation of co-op Sugar 1st prize for excellent technical
95 factories Ltd., New Delhi performance
1994- National federation of co-op Sugar 1st prize for best implementation of
95 factories Ltd., New Delhi various cane development schemes
1994- Vasant Dada sugar institute Pune 1st prize for highest reduced overall
95 recovery
1996- Vasant Dada sugar institute Pune 3rd prize for excellent technical
97 performance
1996- Maharashtra Rajya Sahakari Sakhar 3rd prize for excellent technical
97 Karkhana Sangh Ltd., Mumbai. performance
1997- Vasant Dada sugar institute Pune 2nd prize for highest reduced overall
98 recovery
2000- Maharashtra chamber of Commerce Dr. R.J. Rathi award for environment
01 industries and Agriculture, pune. pollution control
Conceptual background
3.1 Introduction
Finance is needed to perform a firm’s production, marketing and other functions.
The actions of managers have financial consequences for the firm. It is, therefore
imperative that they know the importance of finance functions and there with their own
activities.
Finance involves the management of firm’s financial resources. A firm carries out
production and marketing activities to make profits and to generate wealth for further
growth. All business operations involves, use of financial resources e.g. acquiring new
equipment or replacing the old one in order to interpret financial reports prepared by the
finance department and should be able to ask finance related questions.
What should manager know about finance?
Finance functions may require special skills. Managers should understand and
able to interpret financial statements, namely the balance sheet and the profit and loss
statement. They should also know how costs are estimated and allocated, how they help
in decision making and how they are related to profit. Managers must be familiar with the
following in finance to better equip them to function effectively and efficiently.
Understanding financial statements:
What are financial statements? Why and how are they prepared? The overall
financial consequences of a firm’s activities during a given period of time are
summarized in the financial statements balance sheet and profit and loss statements.
These statements may also prepare for divisions. They contain information on the firm’s
revenues, expenses, profit and loss, sources and uses of funds. Managers must know the
basic principles of preparing these statements.
Financial statement analysis:
What does financial statement imply? How can information given in financial
statements be interpreted? If financial statements contain information about the financial
consequences and sources and uses of financial resources, one should be able to say what
the financial conditions of a firm is good or bad, whether it is improving or deteriorating.
One can relate the financial variables given in financial statements in a meaningful way
which will suggest the action which one may have to initiate to improve the firm’s
financial condition.
Meaning:
“Financial analysis means evaluation of past performance, present financial
position, liquidity situation, and enquires into profitability of the industry”
The analysis of financial statement is an attempt determines the significance and
meaning of the financial statement data. The analysis of financial statements and is an
important accounting activity.
Types of financial analysis

Ratio analysis:
According to J Batty, “Accounting ratio is used to describe significant
relationship between figures shown in balance sheet, in a profit and loss account, in a
budgetary control system or in any part of the accounting organization.”
Ratio analysis is useful to shareholders, creditors, and executives of the company.
Framework for ratio analysis:

It is possible to calculate a large number of ratios, because a ratio as just as
arithmetic relationship between two figures. But too many ratios only tend to confuse the
analyst. Therefore, it is desirable to first establish the broad parameters of financial
analysis, so that certain ratios may be calculated to fit into that basic framework.
There are 6 important areas, which should be studied.
1. Stability ratio
2. Liquidity ratio
3. Solvency ratio
4. Turnover ratio
5. Profitability ratio
6. Coverage ratio
Stability ratio:
By studying these ratio we should understand strong and stable is the company
and also know to what extent it can absorb. Future stocks which may be caused by
business cycles, risks and uncertainties. Study the relative stake of the stake holder in the
success of company, compared to that of the outsiders, who extend loans to the company.
There are two stability ratios:
Fixed assets to net worth:

Fixed assets as cost less depreciation
Fixed assets to net worth = ------------------------------------------------------------------
Equity shares preference shares + reserve & surplus
It shows whether fixed assets are entirely financial by the shareholders fund or
whether outside participation is also there in financing the fixed assets.
Debt / equity ratio:

Short term lib + long term lib (including debentures)
Debt / equity ratio = ---------------------------------------------------------------------
Equity shares + preference shares + reserves & surplus
Liquidity ratio:
Liquidity ratio measures the relationship between current assets and current
liabilities, and indicate the firm’s ability to honor its current obligations. Two common
liquidity ratios are:
Current ratio:
When we divided current assets by current liabilities you obtain the current ratio.
That is:
Current assets
Current ratio = ---------------------------
Current liabilities
Lenders generally consider 2:1 to be a desirable current ratio. By this norm, even
if half of the current assets are realized in cash, current obligations will be fully met. This
provides a 100% safety margin. The logic is based on the principle of conservatism. It
assumes that all current obligations have to be met immediately. Some lenders shw even
greater caution. The argue that out of current assets, inventories take longer to be
converted into cash. You have to first convert raw material into finished goods, sell it and
then realize cash from customers. They therefore, like to judge the firm’s liquidity after
deducting the inventories from current assets.
Quick ratio:
When we divided current assets excluding inventories ( called quick assets) by
current liabilities, we obtain the quick ratio.
Current assets - Inventories

Quick Ratio = --------------------------------
Current liabilities
It is also called ‘acid test ratio’ or simply liquidity ratio. Lenders would be
satisfied if a firm has a quick ratio of 1:1
Current ratio and quick ratio are a ready means of assessing a firm’s liquidity.
They are mostly used by creditors and lenders to ascertain the margin of safety. A firm’s
liquidity is in fact determined by the matching of cash flows – in & out. It may be having
difficulties with customers who do not pay or it may be stuck with slow moving
inventories. Another firm may be holding a smaller inventory but converting it into cash
faster. It may have customers who pay in time the firms point of view, it is much better to
have fast moving current assets and hold as few current assets as possible without
sacrificing production & sales.
Solvency Ratios:
When a company borrows money, it creates a legal obligation to pay interest
regularly and repay the principle at maturity. On the other hand, payment of dividend to
shareholders is discretionary and share capital is not returnable. An owner thus assumes
the risk of business. A high amount of debt can, therefore, threaten the solvency of a firm.
We can relate shareholders funds and loan funds to assess the company’s dependence on
to the people money. The mix of share holders funds and loan funds represents the
company’s structure and therefore, solvency ratios are also called capital structure ratios.
Some peoples also use the term leverage ratios.
We can calculate the following ratios to determine a firm’s solvency:
Debt – Equity Ratio:

This is most commonly used solvency ratio and is obtained by dividing borrowing
by net worth. That is:
Borrowings
Debt – Equity Ratio = ------------------------------------------------
Net worth
In this ratio, debt means total loan funds and equity means net worth (share
capital + reserves, which are shareholder funds. Again lenders follow a norm of a debt
equity ratio 2:1; which means you can have borrowing twice the equity. A company will
be considered, risky fit exceeds this norm. Should you borrow accounts twice, your
firm’s equity funds, if some one is prepared to lend them to you? Obviously if it cannot
put borrowed funds to profitable use, you should not borrow. The debt equity ratio
provides a broad guideline for this. A cash flow analysis is needed to determine whether a
company can service debt.
Debt to – capital employed ratio:

Debt ratio can be expressed differently. We can take the total of debt and equity
i.e. capital employed, in the denominator of the ratio.
Borrowing
Debt to – capital employed ratio = ------------------------------------
Capital employed
Borrowing
Debt to – capital employed ratio = ------------------------------------
Borrowing + net worth
Debt to – capital employed ratio will range between 0 & 1 because part of capital
is divided by whole (i.e. debt and equity).
Interest coverage:
We have indicated that more than its debt ratio, it is the firm’s ability to pay interest
regularly which determines its solvency. Therefore, we can examine how many times a
firm’s earning cover its interest. We may require earnings to be at least twice the amount
of interest. This is because interest has to be paid in cash while earning may take time to
appear as cash.
Profit before interest and tax

Interest coverage = -------------------------------------------------------------
Interest
Turnover ratios:
Shareholders funds and loan funds are invested in assets so that revenue could be
generated. A firm should, therefore, utilized its assets efficiently so that it can generate
maximum revenue. Turnover ratios are used to indicate the firm’s efficiency in managing
assets for generating revenue current assets are covered into sales and ultimately into
cash within a short period of time. The higher the speed with which these assets are
turned over into sales and cash, the better the performance of the company. Turnover
ratio, thus relate sales or revenue to various assets. They are also called activity ratios.
Commonly used turnover ratios are,
Net assets turnover:

When we divide sales by net assets we obtain net assets turnover since net assets
equal the employed, we can also call this ratio the capital employed turnover. Thus net
assets turnover ratio is
Sales
Net assets turnover = --------------------
Net assets
Net assets turnover indicates revenue generated for each rupee of net assets
investment. If assets are unutilized or underutilized, the firm will generate less revenue.
This will prove to be expensive.
Inventory turnover:
Inventory is an important item of current assets. We will generate more sales if
inventory is turned over faster. Inventory turnover can be calculated by dividing sales by
inventory. That is
Sales
Inventory turnover = ------------------------------
Inventory
Debtors turnover:
Like inventory debtors should also be turned over faster. We can obtain debtors
turnover by dividing sales by debtors. That is
Sales
Debtors turnover = ------------------
Debtors
Debtors arise when a company sells or credit. A higher debtors turnover implies
that the company is realizing its sales faster. We should also calculate the collection
period as
360 days
Collection period = --------------------------------
Debtor’s turnover
Debtors
= ------------------------- x 360 days
Sales
Creditors turnover ratio:

Creditors x 365
Creditors turnover ratio = ------------------------------------
Annual credit purchases
It indicates the extent to which credit facilities are being enjoyed by the company
from its supplies. It is also expressed in number of days. A comparison between debtors’
turnover ratio and creditors turnover ratio indicates how efficiently more credit is
extended than received.
Profitability ratio:
Profits are necessary for a company’s growth and for satisfying investors with
reasonable returns. A firm’s profitability can be determined by relating profits to sales
and investments. The most important profitability ratios are as follows.
Gross margin (Gross profit ratio):

Gross profit
Gross margin = ----------------------------
Sales
Gross profit
Gross profit ratio = ----------------------- x 100
Sales
It indicates the gross margin obtained on all goods sold. It demonstrates the
manufacturing efficiency of a company.
Gross profit = Sales - Cost of goods sold
If selling price does not change significantly, the firm’s gross profit can increase
only if it can control its materials and other manufacturing costs.
Net margin ( Net profit ratio):

Profit after tax
Net margin = -------------------------------
Sales
Net profit
Net profit ratio = ----------------------- x100
Sales
It indicates the overall profitability, after taking into account all expenses and
income net margin indicates the overall cost effectiveness of the firm. If company is able
to control its non manufacturing costs, other things remaining the same its net margin
will increase.
Return on investment (ROI):

Investments refer to the funds invested by shareholders and lenders, or the capital
employed. The profit figure to be used for calculating return on investment, therefore,
should reflect incomes of both shareholders and lenders. Profit before interest and tax
(PBIT) is the most appropriate figure for this purpose. Thus ROI can be calculated as
PBIT
Return on investment = -----------------------------
Capital employed
Since capital employed is equal to net assets, ROI or return on net assets can also
be found by dividing profit before interest and tax by net assets.
PBIT
Return on net assets = ----------------------------
Net assets
Return on equity (ROE):

Ultimately the firm has to earn reasonable income for its owners shareholders in
the case of a company. It is thus imperative to calculate return on equity to ascertain
whether shareholder’s expectations are being met. ROE can be calculated by dividing
profit after tax (PAT) by shareholder’s funds (i.e. net worth). Thus
PAT
Return on equity = --------------------
Net worth
Coverage ratio:
Interest cover:
Profit before interest and income tax
Interest cover = ------------------------------------------------------------
Interest charges
It shows the extent to which interest on debentures, bank overdrafts, etc are
covered by net profit.
Equity dividend cover:

Profit after tax and preference dividend
Equity dividend cover = -----------------------------------------------------------
Dividend on equity shares
It indicates the extent to which equity dividend is covered.
Uses of financial ratios:

Financial ratios are helpful in different ways as follows,
• They helps to the management for taking decisions like forecasting, planning ,
budgeting etc.
• They help to inter firm comparison.
• They help to state government to ensure that its industrial policy can be suitable to
the national planning strategies.
• They help to shareholders and investors.
Chapter 4
Data presentation, analysis and interpretation
The present study is related to the financial analysis of Jawahar sugar mill. The
researcher has studied last five years data from 1999-2004.
Financial position:
The current assets, current liabilities etc. are considered for analysis. The base
year figure is taken as 100 and then figures of the subsequent years are shown in term of
percentage.
4.1Current assets over the period:

Current assets include cash and other assets which can be easily converted into the cash
within a short period of time generally one year such as bills receivables sundry debtors’
inventories etc.
Table no – 1 current assets

(Rs. in Lacs)
Year Yearly current assets Trend ratio
2003-04 12268.03 100%
2004-05 18030.15 147%
2005-06 24510.27 200%
2006-07 19266.27 157%
2007-08 20351.77 166%
25000
20000
15000
10000
5000
Table no 1 is
0
2003-04 2004-05 2005-06 2006-07 2007-08
related to the industry’s current assets are continuously and slightly increasing per year.
In the year 2003-04 it is Rs. 12268.03 but last year in 2007-08 current assets has
increased i.e. Rs. 20351.77. This is possible sue to stock of sugar and cash and bank
balance along with sundry debtors also increasing.
4.2 Current liabilities over the period:

Current liabilities are those obligations which are payable within a short period of
time generally one year and include out standing expenses bills payable, sundry creditors,
working capital loans etc.
Table no – 2 current liabilities :
(Rs. in Lacs )
Year Yearly Current Liabilities Trend Ratio
2003-04 8747.38 100%
2004-05 15788.9 180%
2005-06 20318.09 232%
2006-07 17998.89 206%
2007-08 18838.49 215%
250%
200%
150%
100%
50%
0%
2003-04 2004-05 2005-06 2006-07 2007-08
The above table and graph shows that industry’s current liabilities are Rs 8447.38
in the year 2002-03 which is continuously increasing and it become Rs 18838.49 in year
2006-07. The increase in current liabilities is required high amount of working capital.
4.3 Working capital over the period:

Working capital is the difference between current assets and current liabilities.
Working capital = Current Assets – Current Liabilities.
Table no – 3 Working Capital
( Rs in Lakhs )
Year Yearly working capital Trend Ratio
2003-04 3520.65 100%
2004-05 2241.25 64%
2005-06 4192.18 119%

2006-07 1267.38 35%
2007-08 1513.28 43%
43%
100%
35% 2003-04
2004-05
2005-06
2006-07
2007-08
119% 64%
We can understand from above table and graph that the working capital position
of the industry is fluctuating since last five years due to stock of sugar is increasing
because industry has to sale the sugar as per release order. So keeping the stock of sugar
in warehousing industry requires additional working capital. In the year 2007-08 working
capital is decreasing as compare to 2003-04. It was Rs 3520.65 to Rs 1513.28.
4.4 Fixed assets over the period:

Fixed assets are those assets which exclude current assets and include plant and
machinery, land and building etc.
Table no – 4 fixed assets

( Rs in Lakhs )
Year Yearly fixed assets Trend Ratio
2003-04 7149.94 100%
2004-05 14363.61 201%
2005-06 15380.58 215%
2006-07 16438.40 230%
2007-08 17482.06 244%
2003-04
2004-05
2005-06
2006-07
2007-08
We can interpret from the above table and graph that the industry fixed assets are
increasing per year. This is possible as the industry has extended its daily cane crushing
capacity from 2500 TCD to 5000 TCD.
4.5 Analysis of short term liquidity:

To analysis short term liquidity position of the industry, the liquidity ratio can be
calculated from the liquidity ratios. We can understand whether industry is able to meet
its current obligations within the stipulated time or not and from the efficiency ratio we
can understand whether industry has utilized its funds very efficiently in the various
assets or not here the base tear figure is taken as 100 and then figures of the subsequent
years are shown the term percentage.
a) Liquidity ratios:
• Current ratio
The current ratio is the ratio of total current assets divided by total current
liabilities. The current assets include current cash and bank balance sugar stock, sundry
debtors, bills receivables etc. and the current liabilities including working capital
calculated by using following formula.
Current assets
Current ratio = ----------------------
Current liabilities
Table no 5 current ratio:
(Rs in Lacs)
Year Yearly Current Yearly Current Ratio
Assets Liabilities
2003-04 12268.03 8747.38 1.4
2004-05 18030.15 15788.9 1.14
2005-06 24510.27 20318.09 1.21
2006-07 19266.26 17998.89 1.07
2007-08 20351.77 18838.49 1.08
1.5
0.5
0
2003-04 2004-05 2005-06 2006-07 2007-08
The above table and graph shows that current ratio of industry at all the year is
below the standard norm 2:1 but the satisfactory position in the year 2007-08 as
compared to other years. It indicates that there has been deterioration in the liquidity
position of the industry to achieve the standard norm either industry should have to
increase the current assets or reduce the current liabilities.
• Quick ratio:
The quick ratio is the ratio between quick assets and current liabilities. The term
quick assets refer to those assets which can be converted into cash immediately. It
includes cash and bank balances sundry debtors bills receivables etc. it is calculated by
using the following formulae:
Quick assets = current assets – prepaid expenses stock

Quick assets
Quick liquid ratio = ---------------------
Current liabilities
Table no – 6 Quick Liquid Ratio
( Rs in Lakhs )
Year Quick Assets Current Liabilities Ratio

2003-04 2518.2 8747.38 0.29
2004-05 2562.9 15788.9 0.16
2005-06 3654.64 20318.09 0.18
2006-07 3410.39 17998.89 0.19
2007-08 2717.78 18838.49 0.14
0.14
0.29
2003-04 0.19
2004-05
2005-06
2006-07 0.16
0.18
2007-08
The above table and graph shows that quick ratio of the industry is 0.14 in the
year 2007-08 which is less as compared to standard norm 1:1 but better position in the
year 2003-04 i.e. 0.29 times. This has been possible due to industry have very low
amount cash in hand. To improve this ratio either industry should have to increase quick
assets or reduce the current liabilities.
b) Efficiency ratio:
• Inventory turnover ratio:
The inventory turnover is the ratio between cost of good sold and average
inventory.
Cost of good sold = (sales – gross profit)
The average inventory refers to simple average of the opening and closing
inventory. It is calculated by using the following formula.
Cost of the goods sold

Inventory turnover ratio=-------------------------------
Average inventory
Table no 7 . inventory turnover ratio

(Rs in Lacs)
Year Cost of the goods sold average inventory Ratio
2003-04 9424.48 9273.13 1.02 Times
2004-05 13050.79 14809.9 0.88 Times
2005-06 14316.83 20633.85 0.69 Times
2006-07 10868.08 15094.75 0.72 Times
2007-08 11216.21 12751.78 0.88 Times
20000
We can interpret from the above
15000
10000 table and graph that the industry’s
5000 inventory turnover ratio is high in

0
the year 1999-2000 which
2003-04 2004-05 2005-06 2006-07 2007-08
indicate efficient management after that low ratio show efficient management of
inventory. In the year 2004-05 ratio is very less i.e. 0.88 times. It is possible due to
industry has to sale the sugar as per the release order per month which is drawn by central
government. So lot of sugar has remained in the warehouse. Industry should try to sell the
sugar which in the stipulated time.
• Debtors turnover ratio

It is the ratio between net amount sales and average debtors are the simple
average of debtors at the beginning and at the end of the year. It is calculated by using the
fallowing formula.
Net annual sales

Debtors turnover ratio = -----------------------
Average debtors
Table no 8. debtors turnover ratio
(Rs in Lacs)
Year Net sales average inventory Ratio

2003-04 10834.41 839.51 13 Times
2004-05 15116.95 1826.59 8.27 Times
2005-06 18973.33 2330.35 8.14 Times
2006-07 12899.01 2051.45 6.29 Times
2007-08 13016.87 1264.8 10.29 Times
20000
15000
10000
5000
0
2003-04 2004-05 2005-06 2006-07 2007-08
The Above graph shows that industry’s debtors turnover ratio is 10.29 times in the year
2007-08 as compare to the year 2003-04 it is decreased by 2.71 times. It shows that
shorter time lags between net sales and cash collection. At all year debtors’ turnover ratio
is low so inefficient management of debtors but in 2003-04. It is higher i.e. 13 times. It
shows efficient management of debtors.
• Creditor turnover ratio

It indicates to what extent trade creditors are willing to wait for payment can be
approximated by the creditor’s turnover ratio. It is a ratio between purchase and average
amount of creditors outstanding during the year. It is calculated as follows.
Net amount purchase

Creditor turnover ratio = -------------------------------------
Average creditors
Table no 9. Creditor turnover ratio

(Rs in Lacs)
Year 2003-04 2004-05 2005-06 2006-07 2007-08
Purchases 6334.88 8659.57 9354.11 7185.49 6974.18
Creditors 2805.11 5600.16 2166.11 5158.35 2236.03
Ratio 2.26 times 1.54 times 4.32 times 1.39 times 3.12 times
10000
8000
6000
4000
2000
0
2003-04 2004-05 2005-06 2006-07 2007-08
We can understand thatpurchases

industry creditor’s turnover ratio is 3.12 times in the
Creditors
2007-08 which is less than the 4.32 times in the year 2005-06 and somewhat increased
then the 1.39 from the year 2006-07. It shows that the industry is not able to settle its
creditors rapidly. It is possible due to industry is not getting good rates for sugar in the
national as well as international market.
• Working capital turnover ratio

Cost of goods sold
Working capital turnover ratio = -------------------------------------
Net working capital
(Net working capital = Current assets – Current liabilities)
Table no. 10 Working capital turnover ratio

(Rs. In Lacs)
Year 2003-04 2004-05 2005-06 2006-07 2007-08
Cost of goods sold 9424.48 13050.79 14316.83 10868.08 11216.21
Net working capital 3520.65 2241.25 4192.18 1267.38 1513.28
16000
14000
12000
10000
8000
6000
4000
2000
0
2003-04 2004-05 2005-06 2006-07 2007-08
We can understand
Costfrom above graph
of goods sold the marketing
Net workingcapital
capitalturnover ratio of the
industry is 7.41 in the year 2007-08 which greater than the year 2003-04 but slightly
decreasing as compared to 8.58 in the year 2006-07. it means up to 2006-07 industry has
utilized its working capital satisfactory but in 2007-08 it has facing problem of getting
working capital, so it has affects in ratio which is reduced 1.83. Therefore factory has
improved its working capital investment.
Analysis of long term solvency

To analyzing long term solvency position of the industry equity ratio can be
calculated from these ratios we can understand whether industry is in position to meet its
long term debts along with interest within the time or not. Here the base year figure is
taken as 100 and then figures of the subsequent years are shown in terms of percentage.
• Equity ratio
The ratio of proprietor’s funds to total assets is an important ratio for determining long
term solvency of the industry. The components of this ratio are not worth.
Net worth = (Equity share capital + Undistributed profit + reserve and

surplus) – Accumulated losses
Total assets denoted the total resources of the concern. It can be calculated by the
following manner.
Net worth
Equity ratio = ---------------------- x 100
Total assets
Table no 11. Equity ratio

(Rs. In Lacs)
Year 2003-04 2004-05 2005-06 2006-07 2007-08
Net worth 5132.56 5313.65 6989.47 5737.41 5446.8
Total assets 19417.97 32393.76 39890.85 35704.67 37833.83
Ratio 26% 16% 18% 16% 14%
14%
26% 2003-04
2004-05
16% 2005-06
2006-07
16% 2007-08
18%
We can understand from above table and graph , in the year 2007-08, share
holders funds are less than the outsiders fund. It means long term solvency position of the
industry is not satisfactory. Better position in the year 2003-04 i.e. 26%, industry should
maintain this.
• Solvency ratio
It indicates that relationship between the total liabilities and total assets. The total
liabilities include current liabilities and long term liabilities. It can be calculated as
follows.
Total liabilities
Solvency ratio = -------------------------------- x 100
Total assets
Table no. 12 Solvency ratio

(Rs. In Lacs)
Year 2003-04 2004-05 2005-06 2006-07 2007-08
Total liabilities 14349.97 27175.58 33243.9 30309.63 32448.44
Total assets 19417.97 32393.76 39890.85 35704.67 37833.83
Ratio 74% 84% 83% 85% 86%
86% 74%
2003-04
2004-05
2005-06
84%
2006-07
85%
2007-08
83%
The above table and graph show that the solvency ratio of the industry is lower in
the year 2003-04 which is satisfactory or stable long term solvency position. But this
ratios is increasing per year, in 2007-08 it is 86% which shows that long term solvency of
the industry is unsatisfactory.
Analysis of profitability
To analyze the profitability, following ratios are to be calculated. It consists of gross
profit ratio, operating profit ratio, net profit ratio. Return on capital employed. From these
we can understand that earning capacity of the industry base year figure taken as 100 and
then figures of subsequent years are shown in terms of percentage.
• Gross profit ratio

Gross profit measures the relationship of gross profit and net sales. The gross
profit is simply the excess of net sales over cost of goods sold. Net sales can be found by
deducing sales returns or return in words. It can be calculated as follows,
Gross profit
Gross profit ratio = ----------------------------- x 100
Net sales
Table no 13. Gross profit ratio

(Rs. In Lacs)
Year 2003-04 2004-05 2005-06 2006-07 2007-08
Gross profit 1409.93 2066.16 4656.5 2030.93 1800.66
Net sales 10834.41 15116.95 18973.33 12899.01 13016.87
Ratio 13% 14% 25% 16% 14%
30%
25%
20%
15%
10%
5%
0%
2003-04 2004-05 2005-06 2006-07 2007-08
The above table and graph shows that industry’s gross profit ratio is 14% in the
year 2007-08 which is decreased as compared to last year overall it shows that from last
five years industries gross profit is fluctuating. It means company’s profitably position is
not highly satisfactory. It is better in the year 2005-06 which show 25% means cost of
goods sold is lesser amount.
• Operating profit ratio

Operating profit ratio shows the relationship between operating profit and net
sales.
Operating profit = Net sales – (Cost of goods sold + Administrative & office
expenses + Selling & distribution expenses)
This relationship can be calculated as

Operating profit
Operating profit ratio = --------------------------- x 100
Net sales
Table no. 14 Operating profit ratio

(Rs. In Lacs)
Year 2003-04 2004-05 2005-06 2006-07 2007-08
Operating profit 1179.15 1759.49 4224.06 1733.5 2214.04
Net sales 10834.41 15116.95 18973.33 12899.01 13016.87
Ratio 11% 12% 22% 13% 17%
11%
17%
2003-04
2004-05
12%
2005-06
13% 2006-07
2007-08
22%
From above graph we can understand industry’s operating profit ratio is 17% in
the year 2007-08 which is not up to mark. It means operational efficiency of the industry
is unsatisfactory. Satisfactory position in the year 2005-06 i.e. 22%.
Net profit /loss ratio

It establishes the relationship between net profit or loss and net sales. The net
profits are obtained after deducting income tax and generally non operating incomes and
expenses are excluded from the net profit. This ratio measures the overall profitability of
the industry. It can be calculated as follows.
Net profit
Net profit ratio =------------------ x 100
Net sales
Table no 15 Net profit ratios

(Rs. In Lacs)
Year 2003-04 2004-05 2005-06 2006-07 2007-08
Net profit / loss 31.07 -938.89 183.44 161.49 -176.51
Net sales 10834.41 15116.95 18973.33 12899.01 13016.87
Ratio 0.29% -6.21% 0.96% 1.25% -1.36%
-1.36% 0.29%
2003-04
1.25%
2004-05
2005-06
0.96% 2006-07
-6.21%
2007-08
Industry has suffered from huge loss in the year 2004-05 i.e. -6.21% as well as in
the year 2007-08 i.e. -1.36%. Even though the industry has suffered from loss, it has to
pay compulsory statutory minimum price (S.M.P.) to the producer of sugarcane farmer.
Financial expenses ratio

Expenses ratio indicates the relationship of various expenses to the net sales. Here a
financial expense means interest is taken. Hence the ratio can be calculated from the
following manner.
Financial expenses
Financial expenses ratio = ------------------------------------ x100
Net sales
Table no 16 financial expenses ratio

(Rs. In Lacs)
Year 2003-04 2004-05 2005-06 2006-07 2007-08
Financial expenses 908.63 1842.57 3279.38 3539.03 3202.61
Net sales 10834.41 15116.95 18973.33 12899.01 13016.87
Ratio 8% 12% 17% 27% 25%
8%
25% 2003-04
12%
2004-05
2005-06
2006-07
2007-08
17%
27%
Financial expenses ratio has been continuously increasing from the last four years
but last year 2007-08 it is decreased by 2% as compared to year 2006-07. in the year
2007-08 the ratio is 27% and in the year 2007-08 it become 25%. It indicates that
industry has try to control on payment of interest on the borrowed funds because it
influence on the profitability of the industry.
Return on the assets

Net profit
Return on the assets = -------------------- x 100
Total assets
Table no 17 Return on the assets

(Rs. In Lacs)
Year 2003-04 2004-05 2005-06 2006-07 2007-08
Net profit 31.07 -938.89 183.44 161.49 -176.51
Total assets * 100 19417.97 32393.76 39890.85 35704.67 37833.83
Ratio 0.16% -2.90% 0.46% 0.45% -0.47%
-0.47% 0.16%
0.45%
2003-04
2004-05
0.46% 2005-06
2006-07
2007-08
-2.90%
From above table and graph we can understand that industry’s return assets ratio
is -0.47% in the year 2007-08 which reflect that industry get to earn less amount of
returns. It means industry has not utilized its amount satisfactory, because it gives very
much problems in earning.
Return on capital employed

This ratio establishes the relationship between net profit and capital employed.
Net capital employed = (Net fixed assets + Net current assets + Investments)
- All current liabilities
It is calculated as follows.
Net profit
Return on capital employed = --------------------------- x 100
Net capital employed
Table no 18. Return on capital employed

(Rs. In Lacs)
Year 2003-04 2004-05 2005-06 2006-07 2007-08
Net profit /loss 31.07 -938.89 183.44 161.49 -176.51
Net capital 8127.28 13029.41 15216.52 14863.64 16157.58

employed
Ratio 0.38% -7.21% 1.21% 1.09% -1.09%
-1.09% 0.38%
2003-04
1.09% 2004-05
2005-06
2006-07
1.21%
2007-08
-7.21%
We can say that from the above table and graph net capital employed ratio of the industry
has shown some improvement since last 2 years i.e. 1.21 % and 1.09% resp. but it is not
continuous because last year 2007-08 company face -1.09% loss and also industry has not
overcome from -1.21% which is accord in the year 2004-05. it means industry is not
utilized its funds satisfactory.
Analysis of capital structure and net worth

To analyze capital structure & net worth debt equity ratio , net worth & reserved
to equity ratio etc. are calculated. From these ratios we can understand industries ability
to raise in the funds.
• Debt equity ratio

It establishes the relation between outsider’s funds & shareholders fund that is
equity capital performance, share capital, reserved & surplus and outsider’s funds include
all liabilities or debt. It is calculated as follows
Total long term debt

Debt – equity ratio = ------------------------------------
Equity share capital
Table no 19 : Debt Equity Ratio

(Rs. In Lacs)
Year 2003-04 2004-05 2005-06 2006-07 2007-08
Debt 5602.58 11386.68 12925.79 12310.74 13609.95
Equity 5196.23 6286.09 7778.46 6364.91 5756.96
16000
12000
8000
4000
0
2003-04 2004-05 2005-06 2006-07 2007-08
We can interpret fromDebt Equity

the above table & graph that the industries debt equity ratio
is 1.03 times in the year 2006-07 which is less than the standard norms 2:1 which is
accepted by financial institutions. It means debt is greater than equity. But last year 2007-
08 industry has try to improve debt equity ratio up to standard norms not more than 2
times therefore industry must try to maintain proper mix of capital means either increase
the equity or decrease the debt.
• Debt to net worth ratio

This ratio establishes the relationship between long term debt & net worth long
term debts. It is calculated as follows
Total long term debt

Debt – net worth ratio = ------------------------------------
Net worth
Table no 20: Debt – net worth ratio

(Rs. In Lacs)
Year 2003-04 2004-05 2005-06 2006-07 2007-08
Debt 5602.58 11386.68 12925.79 12310.74 13609.95
Net worth 1720.74 5313.65 6989.47 5737.41 5446.8
16000
12000
8000
4000
0
2003-04 2004-05 2005-06 2006-07 2007-08
Debt
Above table says that Net worth
industry’s net worth is 2.50 in the year 2007-08 which
indicates that industry having less amount of net worth to meet the long term debt.
Industry must try to reduce long tern debt and improve debt net worth ratio.
• Ratio of reserve to equity capital

This ratio establishes the relationship between reserve & equity share capital. It
shows that how much amount is kept by the industry from the profit for the future
growth. It is calculated as follows
Reserves
Ratio of reserve to equity capital = ---------------------------
Equity capital
Table no 21. Ratio of reserve to equity capital

(Rs. In Lacs)
Year 2003-04 2004-05 2005-06 2006-07 2007-08
Reserve 3411.62 4475.92 5504.59 3991.19 3209.33
Equity capital 1784.61 1810.17 2273.87 2373.72 2547.62
1.26 1.91
2003-04
1.68 2004-05
2005-06
2006-07
2.47 2007-08
2.42
We can understand the above table & graph that the industry’s reserve to equity
capital ratio is 1.26 in the year 2007-08 which shows that industry has retained the
sufficient amount in the term of reserve for future growth.
Chapter 5
Findings & Suggestions

The present study will be observed that with tighter control over its expenses the
organization will be able to improve its performance in future. The efficient running of
any firm successful handling the cash flow and control the production cost is must.
I] Findings
A) Analysis of financial statement:
• Current assets & current liabilities of factory have been higher in the year 2005-
06 as compare to the other years.
• Working capital of industry shows a fluctuation position since last five year.
• Fixed assets of industry is increased per year because of increased its cane
crushing capacity from 2500 TCD to 5000 TCD.
B) Analysis of short term liquidity:
• Current ratio of the industry is less than the standard norms mean liquidity
position of a factory is not sound.
• Inventory turnover ratio has fallen from the year 2003 to 2008.
• Creditor turnover ratio is increased as compare to year 2003-04 to 2007-08, which
shows that increased in purchases & decreased in creditor’s outsider’s credit.
C) Analysis of long term solvency position:
• Industry’s long term solvency position is unsatisfactory and industry is depending
upon outsiders fund for financing its affaires.
• Proprietary to equity ratio is fallen from 26 % in the year 2003-05 to 14 % in the
year 2007-08.
• Solvency ratio of the industry has grown up from 74% in the year 2003-04 to 86%
in the year 2007-08.
D) Analysis of profitability:
• Gross profit ratio has improved in year 2005-06 as compare to 2003-04 because
industry has been reduced cost of sales.
• Operational expenses are reduced. Operating profit increases from 11% to 17%.
• Profitability of the industry has been slightly decreased in year 2007-08. To
improve the profitability industry should reduce cost of sales.
E) Analysis of capital structure:
• Industry having less amount of net worth to meet its long term liabilities.
• Debt to equity ratio is below standard norms.
• Reserve to equity capital ratio shows that industry having sufficient amount of
reserve for future growth
• Capital structure position is not sound because industry having more amount of
capital from outsiders.
II] Suggestions
• After analyzing the case study of the organization some suggestions can be given
for the further improvement of the organization.
• Management of the industry should take measures to improve the operational
efficiency to reduce the cost and increase the turnover.
• The researchers think that with tighter control over its expenses the organization
will be able to improve its performance in future.
• Industry should avoid diversion of funds also borrow low cost of loans must
reduce interest burden.
• By improving industry’s operating efficiency avoid accumulated losses.
• Take cure control of factory’s cost of goods selling, administration as well as
general expenses.
• The organization should prepare monthly cash sheet and production data for
proper control over its costs and improvements in its working whenever the
monthly figure shows deterioration. The management must take immigrate steps
so that there is improvement in its working.
• In order to attain control over materials the factory should introduce the perpetual
inventory system. It will help maintaining up to date records and continuous stock
taking.
• As the wholes production and the duration of crushing seasons depends upon the
availability of sugarcane and in order to encourage the cultivators to grow better
quality of sugarcane. The organization should be tried to control various cost
centers other than the cane price which constitutes the major part of the total cost
of production.
• Most important aspect of costing control is cost control and cost reduction
organization should be decided standards for production as well as cost and
compare the actual with these standards and take proper action whenever
variations are observed.
APPENDIX – 1
“COMPARATIVE STATEMENT OF BALANCE SHEET” (Rs. in Lacs)
Particulars 2005-06 2006-07 Increase in Increase in
amount %
1. Share Holder’s Funds
a. paid up capital 2273.87 2373.72 99.85 4.39
b. reserve & surplus 5504.59 3919.19 -1513.04 -27.00
2. Loans fund
c. secured loans 5631.17 5090.25 -540.92 -10.00
d. unsecured loans 958.70 896.19 -62.51 -7.00
e. deposit 6335.91 6324.30 -11.61 -0.18
Total 20704.24 18675.65 -2028.59 -10.00
Fixed assets 15380.58 16438.40 1057.82 7.00

Investments 342.50 342.37 -0.13 -0.04
1. Current assets
a. stock of sugar 20033.85 15094.75 -4939.10 -25.00
b. spares & stores 821.78 761.13 -60.65 -7.00
c. cash & bank balance 1261.95 1311.67 49.73 4.00
d. sundry debtors 2330.35 2051.45 -279.20 -12.00
e. loans & advances 62.33 47.26 -15.07 -24.00
Total current assets 24510.27 19266.27 -5244.00 -21.39
Less : current liabilities &
provision
Working capital loans 16753.22 11541.38 -5211.84 -31.00
Sundry creditors 362.48 890.67 528.19 146.00
Bills payable 1803.63 4267.68 2464.05 137.00
Provision 1398.76 1299.16 -99.60 -7.00
Total current liabilities 20318.09 17998.89 -2319.20 -11.00
Current assets 4192.18 1267.38 -2924.79 -70.00
Profit & loss account 788.99 627.50 -161.49 -20.00
Total 20704.24 18675.65 -2028.59 10.00
APPENDIX – 2
“COMPARATIVE STATEMENT OF BALANCE SHEET” (Rs. in Lacs)
amount %
1. Share Holder’s Funds
a. paid up capital 2373.72 2547.63 173.91 -7.33
b. reserve & surplus 3919.19 3209.33 -781.86 -19.59
2. Loans fund
c. secured loans 5090.25 7520.22 2429.97 -47.74
d. unsecured loans 896.19 828.92 -67.27 -7.51
e. deposit 6324.30 5260.81 -1063.49 -16.81
Total 18675.65 19366.91 691.49 3.70
Fixed assets 16438.40 17482.06 1043.66 6.35
Investments 342.37 340.87 -2.00 -0.58
1. Current assets
a. stock of sugar 15094.75 16930.96 -1836.23 12.61
b. spares & stores 761.13 703.01 -59.12 -7.64
c. cash & bank balance 1311.67 1235.77 75.12 -5.79
d. sundry debtors 2051.45 1264.80 -786.65 -38.35
e. loans & advances 47.26 217.21 169.95 359.60
Total current assets 19266.27 20351.77 1085.50 5.63
Less : current liabilities &
provision
Working capital loans 11541.38 15241.36 3699.98 32.06
Sundry creditors 890.67 300.08 -590.59 -66.31
Bills payable 4267.68 1935.94 -2331.74 -54.64
Provision 1299.16 1361.11 61.95 4.77
Total current liabilities 17998.89 18838.49 839.60 4.66
Current assets 1267.38 1513.28 245.90 19.40
Profit & loss account 627.50 310.16 -596.90 -95.03
Total 18675.65 19366.91 691.26 3.70
APPENDIX – 3
“COMPARATIVE STATEMENT OF PROFIT & LOSS ACCOUNT”

amount %
Net sales 18973.33 12899.01 -6074.32 -32.00
Less cost of goods sold 14316.83 10868.08 -3448.75 -24.00
Gross profit 4656.50 2030.93 -2625.57 -56.00
Less operating expenses
Selling & distribution 152.03 109.89 -42.14 -28.00
Administrative expenses 280.41 187.54 -92.87 -33.00
Total operating expenses 432.44 297.43 -135.01 -31.00
Operating profit 4224.06 1733.50 -2490.56 -59.00
Other income 283.14 2591.25 2308.11 815.00
A. Total income 4507.09 4324.75 -182.44 -4.00
Less non operating expenses
Interest paid 3279.38 3539.03 259.65 8.00
Depreciation 1044.36 624.22 -420.14 -40.00
Accumulated losses 0.00 0.00 0.00 0.00
Total non operating 4323.74 4163.25 -160.49 -4.00

expenses
Net profit / loss account 183.45 161.50 -21.95 -12.00
Total expenses 4507.19 4324.75 -182.44 -4.00
APPENDIX – 4
“COMPARATIVE STATEMENT OF PROFIT & LOSS ACCOUNT”

amount %
Net sales 12899.01 13016.87 117.86 0.91
Less cost of goods sold 10868.08 11216.21 348.13 3.20
Gross profit 2030.93 1800.66 -230.27 -11.34
Less operating expenses
Selling & distribution 109.89 159.12 49.23 44.79
Administrative expenses 187.54 254.26 66.72 35.57
Total operating expenses 297.43 412.38 115.95 0.38
Operating profit 1733.50 2214.04 480.54 27.72
Other income 2591.25 812.06 -1779.19 -68.66
A. Total income 4324.75 3026.10 -1298.65 -30.03
Less non operating expenses
Interest paid 3539.03 3202.61 -336.42 -9.50
Depreciation 624.22 0.00 -624.22 -100.00
Accumulated losses 0.00 0.00 0.00 0.00
Total non operating 4163.25 3202.61 -960.64 -0.23
expenses
Net profit / loss account 161.50 -176.51 -328.01 -209.29

Total expenses 4324.75 3026.10 -1298.65 -30.03
APPENDIX – 5
“STATEMENT OF NET WORKING CAPITAL”

(Rs. in Lacs)
Particulars 2003-04 2004-05 2005-06 2006-07 2007-08

1. Current assets
a. stock of sugar 9273.13 14809.9 20033.8 15094.7 16930.98
b. spares & stores 476.69 0 5 5 703.01
c. cash & bank balance 607.76 657.36 821.79 761.13 1235.77
d. sundry debtors 1472.94 432.03 1261.96 1311.68 1064.73
e. bills receivable 437.51 1318.98 1878.88 1326.43 417.28
811.88 513.79 772.27
Total 12268.0 18030.1 24510.2 19266.2 20351.77
3 5 7 7
2. current liabilities
a. Working capital loans 5556.01 9551.74 16753.2 11541.3 15241.36
b. Sundry creditors 1977.17 3642.37 2 8 300.08
c. Bills payable 827.26 1975.79 362.48 890.67 1935.94
d. Provision 386.26 6370.00 1803.63 4267.68 1361.11
1398.76 1299.16
3520.65 2241.25 4192.18 1267.38 1513.28
Bibliography
1. Finance – A Management Guide for Managing Company Funds & Profit
–by I.M. Pandey
2. Finance for Non Financial Executives ---- by N.J. Yasaswy
3. Cost Accounting & Financial Management --- by M.E.Tukaramrao
4. Annual Reports ---- Jawahar Shetkari Sahakari Sakhar Karkhana Ltd.

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________________________________________A Study of Financial Performance___

finance department and should be able to ask finance related questions.

“Financial analysis means evaluation of past performance, present financial

position, liquidity situation, and enquires into profitability of the industry”

Our study is based on the financial analysis. By analyzing financial statement we

production cost researcher try to study financial analysis.

1.2 Rationale of the study

The government encouraged primary cooperative societies, banks, irrigation

Jawaharlal Nehru was so much impressed by the contribution of cooperative movement

sectors but also become a part of our every day life.

In 1991, Jawahar Shetkari Sahakari Sakhar Karkhana is established.

Last two-three years there is disease on sugar-cane named Lokary mava, so

destroyed due to flood etc.

So we want to study the financial position of Jawahar. For reducing production

Jawahar sugar factory.

1.3 Objectives of the study

financial soundness this study is also very much helpful.

objective. Following are the other objective of the study:

1. To study the financial analysis.

2. To assess the problem of process costing.

3. To study cost control methods.

1.4 Hypothesis of the study

2. Solvency and liquidity position of company so far controlling the production

cost help to study financial analysis

1.5 Research methodology

evaluate the objective of the study.

To collect primary data on the financial analysis of the “Jawahar Shetkari

working performance for the years 2003-04 to 2007-08.

1.6 Expected Contribution of the study

1.7 Limitations of the study

all the information necessary for the deep study.

• As the study is on the implementation stage so there is non-availability of any past

Location of the unit: 100 hector of land at Hupari-Yalgud formally known as “

Shreemati Indumati Rani Sarkar Park.”

Establishment: 28th September 1990.

Annual turnover: 14005.45 Lac

always remained on the fore front of co-operative movements. To make an integrated

established in Maharashtra at ‘Loni’ in Shrirampur, Tehsil of Ahmednagar district under

guidance of Mr. Lallubhai Samaldas. As a result of successful endeavor of Padmashri

Vitthalrao Vikhe-Patil’s ‘Pravara co-operative sugar factory’ at Loni.

development programs, roads, repairing, construction of bridges, provide drinking water

to people, educational & medical facilities, biogas plants, etc.

irrigation facilities. In turn it gave impetus to co-operative sugar industry. In the

voluminous production of sugar cane.

decades due to restrictions in the licensing policies of union government.

Multi state status:

of Karnataka. A number of farmers from Karnataka have been supplying sugarcane to

62 belong to Karnataka & rest 120 are from Maharashtra.

committee appointed by Govt. of Maharashtra. A district water supply scheme from

employment to the people residing around the industry.

betterment through self-help and mutual aid.

• To inspired for promoting self-confidence thrift and co-operation amongst the

members to give encouragement.

in accordance with the co-operative principles.

Past five years cane crushing bagging or Production of sugar:

Year Cane crushing(M.T.) Production of sugar

Season Name of the Institution Particular of the Prize

finance department and should be able to ask finance related questions.

What should manager know about finance?

following in finance to better equip them to function effectively and efficiently.

Understanding financial statements:

financial consequences of a firm’s activities during a given period of time are

______________________________________A Study of Financial Performance_