Jan 21, 2016
COMPANY PROFILECOMPANY PROFILE
ABOUT COMPANY
The Escorts Group is among Indias leading engineering conglomerates operating
in the high growth sectors of agri-machinery construction amp material handling
equipment railway equipment and auto components
Having pioneered farm mechanization in the country Escorts has played a pivotal role
in the agricultural growth of India for over five decades One of the leading tractor
manufacturers of the country Escorts offers a comprehensive range of tractors more
than 45 variants starting from 25 to 80 HP Escort Farmtrac and Powertrac are the
widely accepted and preferred brands of tractors from the house of Escorts
A leading material handling and construction equipment manufacturer we manufacture
and market a diverse range of equipment like cranes loaders vibratory rollers and
forklifts Escorts today is the worlds largest Pick n Carry Hydraulic Mobile Crane
manufacturer
Escorts has been a major player in the railway equipment business in India for nearly
five decades Our product offering includes brakes couplers shock absorbers rail
fastening systems composite brake blocks and vulcanized rubber parts
In the auto components segment Escorts is a leading manufacturer of auto suspension
products including shock absorbers and telescopic front forks Over the years with
continuous development and improvement in manufacturing technology and design
new reliable products have been introduced
The Escort Group has also been operating in the ITES and financial services sectors
Throughout the evolution of Escorts technology has always been its greatest ally for
growth In the over six decades of our inception Escorts has been much more than just
being one of Indias largest engineering companies It has been a harbinger of new
technology a prime mover on the industrial front at every stage introducing products
and technologies that helped take the country forward in key growth areas Over a
million tractors and over 16000 construction and material handling equipment that have
rolled out from the facilities of Escorts complemented by a highly satisfied customer
base are testimony to the manufacturing excellence of Escorts Following the globally
accepted best manufacturing practices with relentless focus on research and
development Escorts is today in the league of premier corporate entities in India
Technological and business collaboration with world leaders over the years Globally
competitive indigenous engineering capabilities over 1600 sales and service outlets and
footprints in over 40 countries have been instrumental in making Escorts the Indian
multinational At a time when the world is looking at India as an outsourcing
destination Escorts is rightly placed to be the dependable outsourcing partner of worlds
leading engineering corporations looking at outsourcing manufacture of engines
transmissions gears hydraulics implements and attachments to tractors and shock
absorbers for heavy trailers and armored tanks
In todays Global Market Place Escorts is fast on the path of an internal transformation
which will help it to be a key driver of manufacturing excellence in the global arena For
this we are going beyond just adhering to prevailing norms we are setting our own
standards and relentlessly pursuing them to achieve our desired benchmarks of
excellence
INDIAN TRACTOR INDUSTRY
INTRODUCTION
India is predominantly an agricultural country70 of the population lives in villages
and villagers depends upon agriculture for their bread and butter Since Indian valley
civilization agriculture is the main source of income but at that time the agriculture was
manual work Before independence Indian agriculture was in very bad situation But
since 1947 when India became independent the farmers also became independent
They had seen many ups and downs in their income After independence in five-year
plans first priority was assigned to agriculture government tried best to improve the
industry but a systematic planned approach for development started in 1950 since than
irrigation was recognized as key factor for agriculture Education and research were also
taken as a major initiative
In over six decades of the inception Escorts has been much
more than just being one of Indias largest engineering companies It has been a prime
mover on the industrial front introducing products and technologies and taking the
country forward in key areas
All these developments made mechanization mandatory for agriculture and
imports of tractors began Acceptance of mechanization was slow in fiftyrsquos the use of
tractor was very low Green Revolution was the result of tractor was barely 10000 in
1970 The industry was producing around 25000 to 30000 tractors Today India is the
largest tractor market estimating 2185000 tractors per annum with the annual growth of
123 Today the tractor industry is of about 5000 crores
With the 12 of arable land today India has 47 of the worldrsquos tractor India splits
tractors largely into four categories ie 20-30hp 31-40hp 41-50hp 51amp above 21-30hp
and 31-40hp ranges into together are nearly 76
SEGMENT OF TRACTORS ACCORDING TO HP WISE
Tractor Range 1965-97 1997-98 1998-99 1999-2000
20-30 HP 24 22 17 10
31-40 HP 51 50 54 55
41-50 HP 19 20 22 25
50ampabove 6 8 7 10
Demand for big hp segment is increasing as per the table shown In the budget of 1995-
96 the central government has given subsidy of Rs 30000 per tractor The subsidy was
for the user of low up segment tractors (for small farmers) The government wants to
increase the usage of tractor for higher agriculture production In the budget of
year1998-99 the finance minister Mr Yashwant Sinha has levied 8 excise duty on the
imports This was to save the Indian tractor industry form the slow down of economy
and the East Asian Crises According to economic survey of 1997-98 the production of
agriculture has dropped by 205 Until 1993-94 small tractor (below 25hp) were
exempted fro the excise in bid to encourage small farmers Because in India almost
65 of farmers has less than 4 acres of arable land
According to business India due to the Mahindra amp Mahindra and Swaraj tractors
would be benefited about Rs 10000 to Rs12000 per tractor as compared to others
which imports parts from abroad The compound average growth rate during last six
years has been around 15 The level of tractorization is high in Punjab amp Haryana at
around 95amp74 tractors per thousand hectares respectively The tractor demand is driven
by agriculture Products Interest Rates Total
Agricultural Credit Total Irrigation Facilities and Crop Pattern Among them credit is
strongly correlated with the tractor sale Nearly 80 of the tractorrsquos sale is through
credit
Financial Pattern
As stated above that 80 of the tractor is financed through credit rates essentially
through commercial banks regional banks rural banks and state level land development
banks The credit worthiness of the farmer is ascertained to have minimum holding of 6
areas of cultivated land to be eligible for loan However bank can provide a loan on
smaller landholding subject to farmer establishing his credit worthiness The credit
inflow since financial year 1996 is increasing support from NSBARD This has already
allocated 2000 crores from current year
HISTORICAL BACKGROUND
Indian agricultural in the fifties followed age bound tradition and was considered
backward The country did not produce enough food grain to feed its 36 crores
population and famines were recurrent features Import of food grains became necessary
to meet the short fall in domestic production there by causing a drain on scare foreign
exchange resources It therefore became imperative to high priority to the development
of agriculture
First phase of development (1960-1967)
Farm mechanism made a small beginning in the first five year PLAN Tractors were
imported for introduction is isolated pockets However acceptance of mechanization was
a slow process due to lack of awareness about its economic usefulness and versatility
The decade 1960 saw green revolution both increase in production and productivity with
the parallel emphasis on industry The birth of Indian tractor industry took place in
1959-60 when
import was restricted amp five manufacturing units were set up in private sector all with
collaboration It was in this background that production of tractors in the country in
1960
NAME COLLABORATION YEAR OF
COMMENCEMENT
MS EICHER TRACTORS
LTD
WEST GERMANY 1959
MS HINDUSTAN
TRACTORS LTD
CZECHOSLOVAKIA 1963
MS TRACTORS amp
FARM EQUIPMENT
LTD(TAFE)
UK 1963
MS ESCORTS LTD POLAND 1964
MS INTERNATIONAL
TTACTORS CO OF
INDIA LTS LATER
RENAMED AS
MAHINDRA amp
MAHINDRA
UK 1965
The total indigenous production of tractors by 1965 was just 6000 The real spurt in
mechanization of agriculture came in the introduction of high yielding variety (HYV) of
seeds in 1966-67 and their enthusiastic adoption by farmers particularly in the wheat
growing northern region With the successful introduction and acceptance these high
quality seeds there was a upspring in the demand of tractors in 1967 and demand started
multiplying at an annual rate of almost 50 (19671800-197033000)A natural
consequent of sharp upsurge and consequent shortage was heavy price premium on
tractors Recognizing the situation imports of tractors were liberalized and over and
above the domestic production of 20000 in 1970 3000 tractors were imported
Second phase of development (1968-1980)
Since the pace of indigenous five tractors manufacturing units already set up far below
expectation the Government decided to provide diligence to the tractor industry in 1968
and invites new entrepreneurs Benefiting from this forward-loo
king policy six more units came in during 1971-1974 These were
NAME COLLABORTION YEAR OF
COMMENCEMENT
MS ESCORTS
TRACTORS LTD
UK 1971
MS HMT LTD CZECHOSLIVAKIA 1971
MS KIRLOSKAR
TRACTORS LTD
WEST GERMANY 1974
MS PUNJAB
TRACTORS LTD
INDIGENOUS 1974
MS HARSHA
TARCTORS LTD
USSR 1975
Not withstanding the above progress on the setting up to new units Tractor industry ran
into difficulties from 1969 onwards and by 1972 domestic tractor production stagnated
at a level of 20000units primarily due to continuing of imports of tractors Problem was
further compounded by the oil crisis in 1973-74 and the resultant economic crisis and
inflationary pressures which persisted till middle of 1975
The tractor market started slowly pocking up from 1975 (31000tractors) because of
relative price stability govt directives of the commercial banks increase rural lending
expansion of rural branches of commercial banks good monsoons which resulted in
bumper harvests and accelerated pace of extension of irrigation facilities This trend
continued throughout the late seventies and by 1979-80 yearly market off take had risen
to a level of 62000tractors
Third phase of development (1980-86) The buoyancy in the tractor market experienced in the late seventies continued tell 1981-82 when 78000
tractors were sold The encouraging trend led to the setting up of more for the manufacture of tractors
during 1981-86 These units were
NAME COLLABORATION YEAR OF
COMMENCEMENT
MS AUTO TRACTORS
LTD
UK 1981
MS PRATAP STEEL
ROLLING MILL LTD
INDIGENOUS 1983
MS VST TRACTORS
LTD
JAPAN 1986
However the sale of tractors plummeted to a low level of 66000 tractors in the year
1982-83 in the wake of severe credit squeeze imposed by reserve bank of India
The demand for tractors again picked up when the credit squeeze was eased and a sale
of 80000units was recorded in the year 1984-85 for next year Tractor industry stagnated
causing closure of five manufacturing units as detailed below
NAME YEAR OF CLOSURE
PINE TRACTORS LTD 1983
HARSHA TRACTORS LTD 1987
AUTO TRACTORS LTD 1987
KISLOSKAR TRACTOR LTD 1991
PRALAP STEEL ROLLING MILLS
(HARYANA TRACTORS LTD)
1996
Fourth phase of development( 1987 onwards)
In the year 1987-88 the country saw a severe drought situation This was a difficult
period and it widely anticipated that crop yield would be severely affected Under such a
situation it was necessary to have provisions for supply of power to perform farm
operation at proper time in order to fully exploit the limited moisture content left in soil
The versatility in the tractor became evident as this vehicle was used for pumping out
underground water in this background tractor industry showed a remarkable growth
during this period and all time high sale of 90000 tractors was recorded in the drought
year (1987-88)Fourth phase of development
The growth trend appears to be continuing with relaxation of tractor financing norms
except for a 2 year slack period due to general economic slowdown and political
turmoil In fiscal 1997-98 tractors sales refaced an all time high record of 250000This
impressive growth has influenced 3 more players as listed below to enter the market
NAME COLLABORATION YEAR OF
COMMENCEMENT
INTERNATIONAL
TRACTORS LTD
INDIGENOUS 1997
BAJAJ TEMPO LTD INDIGENOUS 1997
NEW HALLAND
TRACTORS (INDIA)
PVT LTD
ITALY 1998
JOHN DHEER
TRACTORLTD
POLAND 2000
HISTORICAL BACKGROUND OF ESCORTS GROUP
Escorts came into being a vision that led two brothers Yudi Nanda and Hari Nanda to
branch out their familyrsquos prospering transport s business and institute ventures that were
to become the foundations of escorts Ltd Escorts Agents Limited was born at Lahore on
17th October 1944 with Yudi Nanda as Managing Director and Hari Nanda as Chairman
After the owing to opportunity lying in the Indian village Escorts (Agricultural
Machinery) Ltd was launched in 1948 with Yudi Nanda as Director Tragically Yudi
Nanda died in an accident in 1952 Then Escorts agent Ltd And Escorts (Agricultural
Machine) Ltd Was merged in 1953 to create single Escorts agents Pvt Ltd
SOME MILESTONES
1948 Pioneered farm mechanization in the country by launching Escorts Agricultural Machines Ltd
With a franchise from a US based MINNEAPOLIS MOLINE WISCONCIN for marketing
tractors implements engines and other equipments
1958 Started importing MF tractor from Yugoslavia for marketing the same in India
1960 A manufacturing plant was set up at Faridabad
1965 Got industrial license to manufacture URSUS ESCORT tractors
169
1969 Escorts signed a contract with FORD MOTOR COMPANY to manufacture Ford 3000 model
tractors Escorts Institute of Farm Mechanization (EIFM) was established at Bangalore This
training Institute is one of its kind
1971 1st February the first tractor FORD 3000 rolled out of the factory The same year the turnover
touched the Rs53 million mark
1973 Escorts Tractors Limited (ETL) declared a healthy Profit Before Tax of Rs4725 million
1974 Export of 400 tractors to Afghanistan - perhaps the worlds largest ever airlift of such
equipment
1975 Turnover crossed the Rs 200 million mark for ETL Profit After Tax Rs 87 million Maiden
dividend of 10 declared
1976
1976 FORD 3600 advancement in Farm Mechanization was launched with fanfare to a
tremendous reception Trial production of in-plant manufacturing of engine parts (Block amp
Head)
1977
1977 Escorts Scientific Research Centre marked its beginning at Faridabad by developing its own
Engines for E-27 and E-37 Due to constant technology absorption indigenization level
touched 72 for FORD tractors which was a result of relentless effort in that direction
1979 Turnover crossed the Rs 50 crores mark In plant facility for machining centre housing and
case transmission on built-in line concept installed
1983 Escorts Tractors Limited (ETL) established a state-of-the-art research and development centre
to spearhead newer breakthroughs in Farm Mechanization and to maintain industry
leadership Line concept introduced for engine block machining
1984 75000th tractor rolled out A great occasion for the large family that worked for ETL Newer
challenges and frontiers were set
1985 In keeping with the stupendous financial success Escorts Tractors Limited (ETL) offered its
first Bonus Issue (11)
1987 50hp FORD 3610 was launched another leap for the Indian Farm Mechanization Industry the
farmers and the people of the land
1988
1988 ETLrsquos annualized turnover crossed Rs 100 crores Dividend 45 for 15 months
1989 A MOU with CLAAS was signed for manufacturing amp
1990-
91
First Public Issue (Februaryrsquo91) over-subscribed four times Shares listed on Delhi and Bombay
Stock Exchanges
1991-
92
The Crop Tiger range of Combine Harvesters was launched by Escorts Claas Ltd
1993 FORD 3620 tractor launched
1996 Disengagement of joint venture collaboration with New Holland and launch of FARMTRAC
Tractor
1997 A Joint Venture with Italian company CARRARO was finalized to establish a company in India
for manufacturing and marketing of transmission and axles
COLLABORATIONS
Collaboration with international Organization of technological excellence constant
research to adopt the emerging technology to specify requirement of the market and
belief in the philosophy industrial interdependence have made Escorts today one of the
leading trend steers in Indiarsquos New Industrial Culture Escorts have merged as fraternity
of above 50000 shareholders 22000 employees 4000 ancillary suppliers and 1 6000
dealers and stockiest all engaged in a large scale investment and sustained efforts to
meet the ever widening market horizons of technological competence appropriate to
Indiarsquos unique changing needs
Escorts believe in incorporating the finest existing technology to meet Indian consumers
demands by collaborating with the internationally renowned companies prominent
among these are
IN GERMANY
GOETZE AG Piston rings and cylinder liners
MAHLE GmbH Piston
CLASS OHG Harvesters Combines
KNORR BREMSE AG Railway Brake System
AUGUST BILSTEIN GmbH Absorbers Hydraulic products
Pressure and temperature switches
IN JAPAN
KAYABA INDUSTRY CO LTD Telescopic Front Forks Car
MIKUNI SHOKO CO Carburetors for BI-Wheelers
IN UK
JCBAMFORD EXCAVATORS JCB Excavators loaders Front end
Loaders Telescopic handlers
IN USA
HUGHESNETWORKS SYSTEMS AB Road Construction Machinery
Vibratory Road Rollers
OFFICIAL ADDRESS OF ESCORTS
Registered Office Corporate
Secretariat amp Law
Escorts Ltd
11 Scindia House
Connaught Circus
New Delhi-110 001
Tel No 011-23310145
Fax No 011-23311715
Escorts Ltd
155 Mathura Road
Faridabad - 121 003
Tel No ( 0129 ) 2250222
Fax ( 0129 ) 2250060
Email Address corpsectndbvsnlnetin
Web Site wwwescortsgroupcom
LEADERSHIP TEAM
Mr Rajan Nanda
Chairman
Mr Nikhil Nanda
Joint Managing Director
Mr Rohtash Mal
Executive Director and Chief Executive Officer - Agri Machinery Group
Mr Manoj Jha
Executive Vice President of Engineering Division
Mr Kamal Bali
CEO ndash Escorts Construction Equipment Limited (ECEL)
Mr GB Mathur
Vice President - Law amp Company Secretary
Mr Rakesh Kumar Budhiraja
Group Chief Financial Officer
Mr Partha Dasgupta
Group Vice President Human Resources and Employee Relations
LEVELS OF MANAGEMENT
MANAGEMENT
TOP
MANAGEMENT
SENIOR
MANAGEMENT
MIDDLE
MANAGEMENT
JUNIOR
MANAGEMENT
MANAGING
DIRECTOR amp
CEO(G-11)
CHIEF GENERAL
MANGER(G-8)
CHIEF
MANAGER
(G-5)
ASSISTANT
MANAGER(G-2)
VICE PRESIDENT
(G-10)
GENERAL
MANAGER(G-7)
SENIOR
MANAGER(G-4)
EXECUTIVE(G-
1)
ASSOCIATE
VICE PRESIDENT
(G-9)
DEPUTY
GENERAL
MANAGER(G-6)
MANAGER(G-3)
MISSION
WE WILL ACHIEVE LEADERSHIP IN MARKET SHARE amp PROFITABILITY IN
THE DOMESTIC TRACTOR MARKET BY THE YEAR 2004-2006 AND SHALL BE
THE WORLSrsquoS LARGEST SUPPLIER OF SUB 100 HP TRACTORS WE SHALL
PROACTIVELY CONTRIBUTE TO THE PROSPERITY OF THE RURAL
ECONOMY BY DEFINING A LARGER ROLE FOR OURSELVES IN THE FOOD
AND AGRICULTURE SECTOR
THE VISION
WE SHALL STRIVE TO BE THE NUMERO UNO IN THE INDIAN TRACTOR
INDUSTRY AND TOP FIVE TRACTOR MANUFACTURERS IN THE WORLD
WE SHALL CONTINUOUSLY STRIVE TO MEET THE EVER RISING
EXPECTATIONS OF OUR VALUED CUSTOMERS AT THE LOWEST
INTERNAL COST
WE SHALL AIM TO OFFER THE FARMING COMMUNITY A RANGE OF
INNOVATIVE PRODUCTS AND SERVICES WHICH SHALL ENABLE THEM
TO IMPROVE THEIR PRODUCTIVITY AND COMPETITIVNESS
WE SHALL ACHIEVE A TURNOVER OF RS 2 BILLION BY THE YEAR
2006TRANSCENDING NATIONAL BOUNDARIES WE SHALL STRIVE TO
ATTAIN EXPORTS OF ONE TENTH OF OUR TOTAL TRACTOR PRODUCTION
BY THE YEAR 2
REVIEW OF LITERATURE
INTRODUCTION
MEANING OF FINANCIAL STATEMENTS
The financial statements are nothing but the financial information presented in concise and
capsule form and are the financial information is the information relating to the financial
position of any firm The firm prepares the financial statements
bull To communicate with different parties about the financial position of the firm
(Shareholders creditors banks financial institution financial analysts investors
etc And
bull To analyze the operations and performance of the firm for the further
planning
The basic source which provides the financial information is the Annual report of the
company which is presented by the company to its shareholders at the Annual General
Meeting
Though the presentation of annual report is a statutory requirement under the
Companies Act 1956 however it is also a medium of communication with the present as well
as prospective investors and creditors of the company
Clause 43 A of the Listing Agreement (with the stock exchange) requires every
listed company to publish unaudited quarterly results But it does not mean the non-corporate
firms do not prepare the financial statements Every firm big or small prepare the following
financial statements
The Balance Sheet (BS)
1 The Income Statement (IS)
Two other key financial statements which are usually prepared by corporate firms are
1 Statement of appropriation of profit and
2 Statement of Change in financial position
ANALYSIS OF FINANCIAL STATEMENTS (AFS)
Analysis of financial statements refers to the process of the critical examination of the
financial information contained in the financial statements in order to understand and
make decisions regarding the operations of the firm The AFS is basically a study of the
relationship among various financial fact and figures as given in a set of financial
statements AFS is the process of establishment and identifying the financial weakness
and strength of the firm It is indicative of two aspects of a firm ie the profitability
and the financial position
OBJECTIVES OF AFS
The objectives of the AFS is to understand the information contained in financial
statements with a view to know the weakness and strength of the firm and to make a
forecast about the future prospects of the firm and thereby enabling the financial
analyst to take different decisions regarding the operation of the firm The objectives
are as follows
bull To assess the present profitability and operating efficiency of the fir
COMMON-SIZE STATEMENTS (CSS)
The CSS represents the relationship of different items of financial statements with some
Common items by expressing each item as a percentage of the common item In common size
Balance Sheet each item of the balance sheet is stated as a percentage of the total balance
sheet The percentages for different items are computed by dividing the absolute amount of
that item by the Common Base and then multiply by 100 The percentage so calculated can
be easily compared with the corresponding percentage in some other period Thus the CSS is
useful not only in intra-firm comparison for the same year or free several years
TREND PERCENTAGE ANALYSYS(TPA)
The TPA is a technique of studying several financial statements over a series of years In
TPA the trend percentages are calculated for each item by taking the figure of that item for
some base year as 100 So the trend percentage is the percentage relationship which
Each item of different years bears to the same item in the base year Any year may be Taken
as the base year but generally the starting initial year is taken as the base year So each
item for base year is taken as 100 and then the same item for other years is Expressed as a
percentage of the base year
RATIO ANALYSIS (RA)
The RA has emerged as the principle technique of the AFS A ratio is a relationship
Expressed in mathematical terms between two individual or groups of figures connected with
other in some logical manner The RA is based in the premise that a single accounting figure
by itself may not communicate any meaningful information but when expressed as a relative
to some other figure it may definitely give some significant information The relationship
between two or more accounting figuresgroups is called a Financial Ratio
A financial ratio helps to summarize a large mass of financial data into a concise form
and to make meaningful interpretations and conclusions about the performance of a firm
For example a firm has net sales Rs 5 00000
Gross Profit Rs 100000
Ratio of Gross Profit to net sales is 20
ie (Rsl 00000 Rs5 00000)
Forms of Ratios
Since a ratio is a mathematical relationship between two or more variables accounting
figures such relationship can be expressed in different ways as follows
bull As a Pure Ratio
bull As a Rate of Times
bull As a Percentage
Ratio can be classified into
bull The Liquidity Ratio
bull The Activity Ratio
bull The Leverage Ratio
bull The Profitability Ratio
STATEMENT OF CHANGES IN FINANCIAL POSITION
(SCFP)
Since the BS amp IS of a firm are two basic depicting the financial position of a firm at the end
of the year These two financial statements are called the traditional statements Both these
statements fail to throw light on changes in assets liabilities and shareholders wealth during
this year
BS deals with the financial position gives only the static view of the year- end financial
position and fails to indicate the movement and causes in assets and liabilities during the
year Similarly IS show the profit or loss resulting out of the operations of the firm during
the year This profit or loss in fact to ascertain the sufficiency of resources to declare the
dividend etc thus there is a need to prepare another statement (together with the BS amp IS)
which may identify the changes in assets liabilities and the shareholders funds over a given
period
The SCFP is essentially an explanation of the changes in financial position of a Firm
occasioned by the firm in between two successive BSs The SCFP draws basic Information
from the BS and IS helps in understanding the change in assets liabilities and shareholders
worth The SCFP deals with the flow of funds during the year ie the funds coming in and
going out of the firm It summarizes the sources from where the funds might have been
arranged procured by the firm and the uses for which the funs might have been used by
the firm during the year
The SCFP can be prepared as follows
bull SCFP (Cash Basis) also known as a Cash F low Statement
bull SCFP (Net Working Capital Basis) Fund Flow Statement
SCFP (WORKING CAPITAL BASIS)
FUND FLOW STATEMENT
The FFS reports the flows of funds through the firm during the year ie it shows the
Sources and uses of working capital between two balance sheet dates The FFS
attempts to explain the changes in financial position from one BS to the subsequent BS
in terms of the change in the funds or the working capital position of the firm
The term Working capital (WC) is generally defined as the excess of total
current assets over the total current liabilities The current Assets (CA) of a firm may
include cash in hand and at bank stock debtors bills advances etc and the Current
Liabilities (CL) includes creditors bills payable outstanding expenses provision for
tax short term liabilities etc the term WC is a single figure representing the net effect
of a transaction is to increase or decrease the Working Capital by affecting any of the
elements of Current Assets or Current Liabilities Therefore the FFS in its standard
form incorporates only those transactions which affect the Working Capital i e those
transactions where in only one of the affected accounted is a current account
Now a flow of working capital arises when one of the affected accounts is a current
account From the point of view of current account the effected on working capital
can examined in the light of the definitions of the term working capital ie the excess
of current assets over current liabilities ie
Impliedly change in any of the CA or CL will affect the WC Simple observation
equation tells that
bull Increase in any of the CA or decrease in any of the CLs will result in increase
in the WC
bull Decrease in any of the CA or increase in any of the CLs will result in decrease
in the WC
To find out the relative importance of different components of the financial position
of the firm
bull To identify the reasons for change in the profitability financial position of the
firm and
bull To assess the short term as well as the long term liquidity position of the
firm
TECHNIQUES TOOLS OF THE AFS
AFS can be undertaken by different persons and for different purposes therefore the
methodology adopted for the AFS may be carrying from one situation to another However
the following are some of the common techniques of the AFS
bull Comparative financial statements
bull Common-size financial statements
bull Trend percentage analysis and
bull Ratio Analysis
COMPARATIVE FINANCIAL STATEMENTS
In CFS two or more BS andor the IS of a firm are presented simultaneously in columnar
form The Financial data for two or more tears are placed and presented in adjacent columns
and thereby the financial data is provided at times perspective in order to facilitate periodic
comparison In CFS the BS and the IS for number of years are presented in condensed
form for year to year comparison and to exhibit the magnitude and direction of changes
The CFS helps a financial analyst of the firm and in establishing operating and
positional trend of the firm The CFS may be prepared to show
1 The absolute amount of different items in monetary terms
2 The amount of periodic changes in monetary terms
1 The percentages of periodic changes to reveal the proportionate changes
The CFS can be prepared for both the BS and the IS
CORE COMPETENCE OF ESCORTS
Customer 1
We put customers first in everything we do We take decisions keeping the customer in
mind
Challenging Spirit
We strive for excellence in everything we do and in the quality of goods amp services we
provide We work hard to achieve what we commit amp achieve results faster than our
competitors and we never give up
Team-work
We work cohesively with our colleagues as a multi-cultural team built on trust respect
understanding amp mutual co-operation Everyones contribution is equally important for
our success
Frank amp Fair Organization
We are honest sincere open minded fair amp transparent in our dealings We actively
listen to others and participate in healthy amp frank discussions to achieve the
organizations
A firm undertakes numerous during a year and most of these transactions during a year and
most of these transactions may affect one or the other current account ie most of these
transactions May results in the flow of the WC Neither is it necessary nor practical to
identify the effect of each and every transaction on the WC These transactions instead are
considered and analyzed in a collective form and then their effect on the WC is identified
SCFP (CASH BASIS) OR
THE CASH FLOW STATEMENT
The CFS attempts to analyze the transactions of the firm in terms of cash ie the transactions
generating cash and using cash The focus in the CFS is on cash rather than on WC The
sources of cash may be the cash profits earned by the firm issue of capital for cash issue of
other securities for cash borrowings sale of assets investment redemption of debenture or
preference share repayment of loan payment of tax dividend distribution etc Thus the
CFS summarizes the cash inflows and outflows
An analysis of cash flows is useful for short-run planning A firm needs sufficient cash to
debts maturing in the near future to pay interest and other expenses and to pay dividends to
shareholders The firm can make projections of cash flows and outflows for the near future to
determine the availability of cash This cash balance can be matched with the firms need for
cash during the period and accordingly arrangements can be made the deficit or invest the
surplus cash temporarily A historical analysis of cash flows provides insight to prepare
reliable cash flow projections for the immediate future
A statement of changes in financial position on cash basis commonly known as cash flow
statement summarizes the causes of changes in cash position between dates of two balance
sheets It indicates the sources amp uses of cash The cash flow statement is similar to the fund
flow statement except that it focuses attentions on cash instead of working capital (funds)
Thus this statement analyses change in non-current accounts as well as current accounts
(other than cash) to determine the flow of cash
The CFS is based on the concept on the WC Where as the CFS is based in cash which is only
the element of WC Thus the CFS provides details of cash movements whereas the FFS
provides the details of funds movements
The CFS considers only the actual movement of cash whereas the FFS considers the
movements of the funds as defined in terms of net working capital
CASH-FLOW STATEMENT
A cash-flow statement is a statement showing inflows (receipts) and outflows (payments) of
cash during a particular period In other words it is a summary of sources and applications of
Cash during a particular span of time It analyses the reason for changes in balance of cash
between the two balance sheet dates The term Cash here stands for cash and cash
equivalents
A cash-flow statement includes only those items which affect cash As such the cash-flow
statement is called a statement of changes in financial position - cash basis
A cash - flow statement can be for the past or can be projected for a future period
OBJECTS OR USES OF CASH-FLOW STATEMENT
The main objectives behind preparing a cash-flow statement can be laid down as under-
bull USEFUL FOR SHORT-TERM FINANCIAL PLANNING-
A cash-flow statement provides information for planning the short-term financial needs of the
firm Since it provides information regarding the sources and utilization of cash during a period
it become easier for the management to assess whether it will have Adequate cash to meet day-
to-day expenses and pay the long - term loans and interest Thereon and whether it has enough
cash to pay for the purchase of fixed assets or not
USEFUL FOR PREARING THE CASH BUDGET-
A cash-flow statement prepared for the future period is helpful in preparing a cash budget It
informs the management about the future period is helpful in preparing a cash budget It informs
the management about the surplus or deficit periods of cash ie in which months the payments
will be in excess of receipts It helps in planning the investment of surplus cash in short-term
investment and to plan short-term credit in advance of deficit periods
bull COMPARISON WITH CASH BUDGET-
A cash budget is prepared at the commencement of the year whereas a cash flow Statement is
prepared at the end of the year A comparison between the two helps in ascertaining the extent
to which the financial resources of the firm have been generated and used according to the plan
Causes of variances between the figures of two statements can be analyzed and proper
corrective measures may be takes
bull STUDY OF THE TREND OF CASH RECEIPTS AND PAYMENTS-
A cash-flow statement reveals the speed at which the cash is being generated from debtors stock
and other current assets the speed at which the current liabilities are being paid It enables the
management to assess the true position of the cash in future
bull IT EXPLAINS THE DEVIATIONS OF CASH FROM EARNINGS-
A firm may earn huge profits yet it may have paucity of cash or when it suffered a loss it may
still have plenty of cash A cash flow statement explains the reasons for it
HELPFUL IN ASCERTAINING CASH-FLOW FROM VARIOUS
ACTIBITIES SEPARATELY-
A cash-flow statement aims at highlighting the cash flow from operating investing and
financing activities separately It includes how much cash has been generated or used in these
activities
bull HELPFUL IN MAKING DIVIDEND DECISIONS-
Dividend must be paid within 42 days of its declaration Hence the management takes the help of
cash-flow statement to ascertain the position of cash generated from operating activities which
can be used for payment of dividend
IMPORTANCE AND RELEVANCE OF CFS
The CFS has gained importance in view of the fact that there are many managerial Decisions
which are taken in the light of the cash availability or cash position of the firm
For example declaration of dividend by the company requires cash disbursement and
Therefore the Board of Directors must consider the cash position before proposing a dividend
The CFS also provides information for the short term financial planning and in particular the
short term cash needs of the firm
In view of increasing importance and relevance of the CFS the clause 32 of the Listing
agreement (between a Company and the Stock Exchange where the shares proposed to be listed)
has been amended by the SEBI As a result the listed companies in India are now required to
supply a copy of the CFS to each shareholder as a part of Annual Report As a result the listed
companies have started a practice of sending a CFS for which the BS has been prepared as
apart of the Annual Report of the company
DIFFRENCE BETWEEN CASH - FLOW STATEMENT AND
CASH BUDGET
There is not much difference between cash flow statement and a cash budget The
only difference is that a cash flow statement is prepared for a past period where as cash
budget is prepared for a future period Hence it is of limited use as far as the future
periods are concerned A cash budget is therefore prepared showing how much cash is
likely to be received and what will be the disbursements during a future period of time
Thus a cash budget indicates in which months there will be surplus cash and in which
moths there will be deficiency of cash resources The management can then take suitable
decision to invest the surplus cash or make arrangement for the deficiency of cash at the
required time
LIQUIDITY
It does not present true picture of the liquidity of the firm the liquidity does
not depend upon cash alone Liquidity also depends upon those assets
which can be converted into cash easily
bull Exclusion of these assets obstructs the true reporting of the ability of the firm to
meet its liabilities when they become due for payment
bull The possibilities of window - dressing is higher in case of cash position in
comparison to the working capital position of the firm
bull The cash balance can be easily maneuvered by postponing purchases and other
payments and by rapidly collecting cash from debtors before the balance sheet date
Hence a fund - flow statement presents a more realistic picture than a cash flow
statement
bull Cash flow statement ignores non- cash charges Hence the true position of the
enterprise cannot be judged by cash flow statement
bull It is prepared on cash basis and hence ignores one of the basic concept of accounting
namely accrual concept
PROCEDURE OF PREPARING CASH FLOW STATEMENT-
The institute of charted accountants of India has issued accounting standards (as)-3 revised for
preparing a cash flow statement This accounting standard has been made mandatory in respect
of accounting periods commencing on or after 1st April 2001 for certain enterprises These
enterprises are-
bull Enterprises whose equity or debt securities are listed on a recognized stock exchange in
India And enterprise that are in the process of issuing equity or debt securities that will
be listed on a recognized stock exchange in India
bull All other commercial industrial and business enterprises whose turnover for accounting
period Rs 50 crores
As such the cash flow statement has been prepared according to as -3 revised in this project
According to as-3 revised the cash flow statement summarizes the cash inflows and cash
outflows and the net changes (increase or decrease) in cash and cash equipment resulting from
operating investing and financing activities of a firm during a period The following terms are
used for preparing a cash flow statement
CASH-
It compares cash in hand and demands with banks
CASH EQUIVALENTS-
There are short - term highly liquid investments that are readily into known amounts of cash
and which present insignificant risk of changes in their values Normally an investment will be
termed as cash equivalent only if it has a short maturity period say three months or less from the
date of its acquisition Examples of cash equivalent are treasury bills commercial papers etc
Which are purchased with cash that is in excess of immediate needs investment in shares are
excluded from cash equivalents unless they are cash equivalent in reality For example the
preference shares of the company which are purchased shortly before their redemption date will
be included in cash equivalents provided there is only an insignificant risk of failure of the
company in repaying the amount at the date of the maturity
CLASSIFICATION OF CASH FLOW-
According to as -3 (revised) cash flow statement should be presented in a manner that it reports
inflows of cash by classifying them into three categories namely operating investing and
financing activities Classification of all activities into these activities on the cash and cash
equivalents of the enterprise such information will be helpful in evaluating the relationships
among these three activities are explained as below
CASH FLOW FROM OPERATING ACTIVITIES-
Operating activities are the main revenue generating activities of an enterprise As such they
include cash flows from those transactions and events which enter into the ascertainment of
net profit or loss of the enterprise Examples of cash flows arising operating activities are
bull Cash receipts from the sale of goods and rendering of services
bull Cash receipts from royalties fees commissions and other revenue
bull Cash payments to suppliers for goods and services
bull Cash payments to and on behalf of employees
bull Cash receipts and cash payments of an insurance enterprise for premiums and claims
annuities and other policy benefits
bull Cash receipts and payments relating to future contracts forward contracts option
contracts and swap contracts when the contracts are held for dealing or trade purpose and
bull Cash payments of refunds of income taxes unless they can be specifically identified with
financing and investing activities
CASH FLOW FROM INVESTING ACTIVITIES-
Investing activities include the purchase and sale of long term assets such as land building plant
and machinery etc not held for resale These activities also include the purchase and sale of such
investment which are not including in cash equipments Cash flow from investing activities
discloses the expenditures incurred for resources intended to generate future income and cash
flows
Examples cash flow arising from investing activities are
bull Cash payments to acquire fixed assets (including intangible)
bull Cash receipts from sale of fixed assets (including intangibles)
bull Cash payments to acquire shares warrants or debt instruments of other enterprises
(other than receipts for those instruments considered to be cash equivalents)
bull Cash receipts from sale of shares warrants or debt instruments of other enterprises (other
than receipts for those instruments considered to be cash equivalents)
bull Cash advances and loans made to third parties In case of financial enterprises these will
be treated as cash flow from operating activities
bull Cash receipts from the repayment of advances and loans made to third parties In case of
financial enterprises these will be treated as cash flow from operating activities
bull Cash receipts of insurance claim for property involved in accident and
bull Cash receipts of interest and dividend In case of financial enterprise these will be treated
cash flow from operating activities
CASH FLOW FROM FIANCING ACTIVITIES-
Financing activities are the activities that result in change in capital and borrowing of the
enterprise
Examples of cash flows arising from financing activities are
bull Cash receipts from issuing shares or other similar instruments
bull Cash receipts from issuing debentures loans bonds and other short term or long term
borrowing
bull Cash repayment of amounts borrowed buy back of equity shares redemption of
preference shares debentures loans bonds etc
bull Cash payment of interest and dividend
IMPORTANT NOTE
In case of financial enterprise such as bank or mutual fund company cash Outflow
and cash inflow arising from the purchase and sale of securities will Be treated as
flows from operating activities This is because purchase and sale of securities is a
part of operating activity in case of financial enterprise In addition interest paid
and interest received as well as dividends received will also be treated as cash flow
from operating activities in case of financial Enterprises
CASH FLOW STATEMENT
(DIRECT METHOD)
CASH FLOW FROM OPERATING ACTIVITIES
Cash receipts from costumers
Cash paid to suppliers and employers ()
Cash generated from operations
Income tax paid ()
Cash flows from extraordinary item
plusmn Extra ordinary items
Net cash from operating activities
CASH FLOW FROM INVESTING ACTIVITIES-
Purchase of fixed assets
Proceed from sale equipment ()
Interest received
Dividend received ()
Net cash from investing activities
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from insurance of share capital
Proceeds from long- term borrowings ()
Repayment of from long-term borrowings
Interest paid
Dividend paid ()
Net cash from financing activities
Net increase in cash and cash equivalent
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
SOME SPECIAL TERMS-
i) INTERSET AND DIVIDEND-
Cash inflow from interest and dividends and cash outflow on account of interest and
dividends should be disclosed separately Cash inflow arising from interest and dividends
received should be shown as cash flow from investing activities where as cash outflow
disclosed outflow on account of interest and dividend paid should be shown as cash flow
from financing activity
ii) TAXES ON INCOME-
Tax paid on income is a part of cash flow from operating activity Hence taxes paid are
shown as a deduction under cash flow from operating activity
iii) EXTRA ORDINARY ITEMS-
Cash flow relating to extra ordinary items such as bad debts recovered Claims received from
insurance companies winning of a lottery or a law etc Should be disclosed separately as
arising from operating investing or financing activities For example the amount received
for insurance company on account of loss of stock by fire Earthquake and floods etc Should
be reported as cash flow from operating activities
iv) SIGNIFICANT NON - CASH TRANSACTION-
There are some investing and financing activities which do not require the use of cash or
cash equivalents Such non cash activities should be excluded from the cash flow statement
Examples are the acquisition of assets by issue of debentures or shares conversion of
shares into debentures etc Such significant on non cash transaction should be disclosed
outside the cash flow statement
CASH FLOW STATEMENT
(INDIRECT METHOD)
CASH FLOW FROM OPERARATTNG ACTIVITIES
Net profit before taxation and extraordinary item
Adjustment for
Depreciation
Foreign exchange loss
Interest income
Dividend income
Interest expense
Operating profit before working capital changes
Increase in sundry debtors
Decrease in inventories
Decrease in sundry creditors
Cash generated from operations
Income tax paid ()
Cash flow before extraordinary item
plusmn Extra - ordinary items
Net cash from operating activities
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of fixed assets ()
Proceeds from sale of equipment
Interest received
Dividend received ()
Net cash from investing activities
CASH FLOW FROM FINANCING ACTIVITIES-
Proceeds from insurance of share capital
Proceeds from long - term borrowings
Repayments of from long - term borrowings ()
Interest paid ()
Dividend paid ()
Net cash from financing activities
Net increase in cash and cash equivalent
Cash and cash equivalents at beginning of period
CHANGES IN CASH FLOWS
Changes in cash flows can be treated to the following
1 Net profit will increase the cash flows these cash flows will be
increased further if there are any non-cash changes (such as depreciation
and amortization)
2 Any payment of dividends will decrease the cash flows as will the
repayment of debt an issue of share or debt will also increase the
cash flows
3 An increase in non-cash assets will decrease cash flows increase in
current assets and fixed assets will result in drain on cash flows
Thus a statement of changes in cash flows ie the cash flow statement
classifies all Changes into one of three categories - operating investing or
financing activities Therefore the preparation of a statement of changes in cash
flows requires classification of changes in liabilities shareholders equity and
non-cash assets into one of these categories although some items will not fit
easily onto one other
h equivalent at end of period
STEP- BY-STEP PROCEDURE TO PREPARE CFS
1 Calculate the net increase or decrease in cash and cash equivalents-
For this purpose the opening balance of total cash and cash equivalents is compared with the
closing balance of cash and equivalents
Increasedecrease in cash and equivalents
Opening balance Closing Balance
Cash in hand
Cash in bank
Short-term Investment
Total
The difference between the total of opening and closing balance will be increased or
Decreased in cash equivalents during the period It may be noted that if there are only one or
two of items of cash etc
2 Net Cash flaw from operating activities-
The term operating refers to the normal purchase of goods and services On the basis of the
information contained in the comparative BS s and the IS and the additional Information the
net cash flow generated or use by the operating activities may be ascertained The IS prepared
by the firm gives the net profit figure earned by the firm On actual basis ie all items in the
IS are incorporated on the basis of earnedaccrued even
3 If not resulting in cash movements-
So the profit or loss as by the IS may not result in increase or decrease in cash balance by the
SYNOPSIS
INTRODUCTION
ESCORTS PVT LTD is a private limited company not listed in a stock exchange of India
and employees 900 highly trained personnel Its manufacturing plants are strategically located
in close proximity to its customers at Faridabad (Haryana) Noida (UP)
OBJECTIVES OF THE STUDY
bull To find the movement of cash inflow and cash outflow
bull To make the comparison between cash inflow and
bull Cash outflow
bull To prepare the Cash Flow Statement
bull To analyze the Balance Sheet of the company in terms of Cash Flow Statement
bull To focus on various activities of the organization in terms of Operating
Financing Investment
SCOPE OF THE STUDY
Financial resources are the assets for the company and their productivity is key
factor for profitability It is necessary to know their problems their knowledge
skills abilities amp the measures that can be taken to reduce them By analyzing this
top management can build good relations with the employees
The whole study is to determine the competencies of different employees who are
working in ESCORTS PVT LTD By analyzing it the top management can
introduce the concept of competency mapping in the organization Through this
management can attempt to use more suitable strategies towards the human
resource development
The research is confined to elicit the existing gap between the standard skill
required to perform the job and the skill processed by the employees at ESCORTS
PVT LTD And to provide them suitable training program to over come those gaps
for the better utilization of human resources
RELEVANCE
The scope of the study was confined to the outside parties like creditors
shareholders government etc Who want to invest their money in the
company
The benefit of the report for the company is that through this report they can come
to know about the cash flow statements of the company
This study also unable the company that their cash is not utilizing in unnecessary
things
The benefit of the report for the researcher is that it has helped to get knowledge
about the cash inflow and cash
RESERRCH METHODOLOGY-
RESEARCH DESIGN
bull The study was conducted under well- structured approach
bull The project lasted for 4 weeks and the year 2009 ie from 08 July to 12
Aug2009
bull The questionnaire method amp personal interview method was used to collect
the primary data for the study
The secondary data is collected from Internet amp company training material and
many other company materials
SAMPLE DESIGN
The process of extracting a sample from a population is called sampling
procedure The selection of sampling procedure to conduct the research
depends upon the nature of the study and the objective to be accomplished
Judgment sampling technique is adopted to select the respondents in this
study The sample design included the various departments in the YAMAHA
MOTORS PVT LTD
Methodology of date collection
bull Conducting personal interview
bull Data collection from primary and secondary sources
bull Designing questionnaire
bull Selecting sample size from the sample frame for the survey
bull Questionnaire distribution
bull Analysis of collected data with the help of statistical tools
bull Interpretation of collected data
bull Stating the conclusion based on the entire study
Sampling Technique
The sampling technique used for this research is of non-probability and convenience
sampling
Sample Unit
Employees of the company
Sample Size
For this research study the sample size is 25 respondents
Sources of data
Primary data
Primary data is the data which is collected by the researcher for the first time
and which was not there The tools used to collect the data are-
1)Questionnaire method from the employers in different departments
2) Face to Face personal interactions
Secondary Data
The data already collected is called as secondary data The relevant information
for this study has been collected from secondary source such as
Books
Journal
Reports
Publication by the organizational circulation
Company records
Business bulletins
Internet
Secondary data is also collected from various of the internet and intranet Some
of the website trough which information was gathered was through
HYPOTHESIS
The report is analyzed under the presumption that cash flow position of
YAMAHA MOTORS PVTLTD It can be improved and made effective in
terms of cash flows
In testing the above hypothesis the following aspects will be considered
1 Balance sheet comparisons
2 Presentation of cash flow statement in terms of revised AS-3
LIMITATIONS
The study though conducted to the best of the ability suffers from some
certain limitations There are
The data is secondary one and as such its reliability may be
questioned upon
The time availability for the study is less and as such it hinders thee
progress of the study
Senior officials were rarely approachable
Websites were not giving comprehensive data
Not having face-to-face interaction to get more relevant
information
Analysis and interpretation of data was done on the assumption that
the respondentsrsquo information was online
Information collected was totally subjective
The interviews are done during office hours but could not be done
for the other employees of other
DATA ANALYSIS
ESCORTS PVT LTD
CASH FLOW STRATEMENT
Year Ended Year Ended
30092009 30092008
Rs Crores Rs
Crores
A Cash Flow from Operating Activities
Net profit before tax (1733) 3444
Adjustment for
Loss on sale Provision for diminution in value of Long Term
Investments amp loans to Group Companies 189 4018
Gain on sale of Long Term Investments (122) (9492)
Gain on sale of Asset (013) -
Depreciation 4497 3955
Misc Exp Assets Write off Provisions 808 750
Interest Expense 7222 7999
Dividend Income (002) (001)
Interest Income (2082) -
Operating Profit before working capital changes 8764 10673
Adjustments for
Trade and other Receivables (8817) (12035)
Inventories 1379 (4692)
Trade Payables 6705 19046
Miscellaneous Expenditure (750) (511)
(1483) 1808
Cash Generated from Operations 7281 12481
Direct Taxes (Paid)Refunds (1785) 3166
Net Cash Flow from operating activities 5496 15647
B Cash Flow from Investing Activities
Purchase of Fixed Assets (3095) (2794)
Proceeds from sale of Fixed Assets 086 177
Movement in Loans and Advances (1627) (1644)
Sale of Investments 3233 11452
Short Term Deposits with schedule Banks (231) (1048)
Interest Received 2070 -
Dividend Received 002 001
Net Cash Flow from Investing activities 438 6144
Proceeds from Share Capital amp Securities Premium 11444 -
Proceeds from Long Term Borrowings 8660 -
Less Repayment of Long Term Borrowings (054) (7896)
Proceeds (Repayment) from short term borrowings (net) (22726) -
Interest Paid (7740) (8223)
Net Cash used in financing activities (10416) (16119)
Net Increase(Decrease) in Cash and Cash equivalents (4482) 5672
Cash and Cash equivalents as at 01102008 10565 4893
Cash and Cash equivalents as at 30092009 6083 1056
ANALYSIS OF CASH FLOW
From the cash flow statements of the ESCORT PVTLTDIt can be analyzed
from the two years that the net cash balance of the company has increased
manifold in 30-09-2008 than the year 30-09-2009
The net profit in 30-09-2008 is higher than the 30-09-2009 but due to certain
changes there has been increase in the cash balance
The interest paid this year is ore of the last year which implies that thee
company has not repaid his borrowed capital due to which the interest has got
down
The depreciation has increased but it does not affect cash to an extent as it is a
non-cash item In the head of working capital there is drastic change in the cash
balance in the form of ldquoTrade and other Receivables which has affected the cash
balance
There is outflow of cash for receivables rather than the inflow in the last year
So the net effect is that the cash from operating activities has been decreased
two times from the last year
The company has no accumulated losses as at the end of the financial year ie
September 31 2008
Provision for taxation has been made in accordance with the requirement of AS-
22 issued by Institute of Charted Accountants of India
Pursuant to that current year deferred tax liability have been charged to profit amp
loss account
In opinion of the board of directors of thee company the current assets loans
and advances have a value on realization in the ordinary course of the business at
least equal to the amount stated in the balance sheet and provision for all
liabilities have been made
Balance of sundry debtors creditors loans and advances are subject to confirmation by
the concerned parties
METHOD OF ANALYSIS
1 Data analysis is done using the following statistical tools wherever required in
order to extract meaningful information from the collected data
o Simple percentage and averages
o Bar diagram
o Cone diagram
o Pie diagram
2 The collected data from the questionnaire has been put together in the form of
tables
3 Percentage has been calculated wherever necessary for generalization of the
data
4 Data analysis and interpretation has been done on the basis of primary and
secondary data
5 The findings researches have been recorded based on the analysis
6 The study conducted pertains only to YAMAHA MOTORS INDIA PVTLTD
All bank balances (debitcredit) have been confirmed by the concerned bank
Identified from the available information which has been relied upon by the auditors
The names of small-scale industrial units to whom outstanding for more than
thirty days within agreed terms
The company has 9996 of shareholders in its subsidiary company named as
ESCORTS PVT LTD As at 31-03-2008
So the net effect is that the net cash from investing activities has many more
times than the last year which is negative Now the company has repaid its long
term borrowing more than the last year which has decreased the cash balance by
the little amount
Balance with the schedule banks under the head current amp collection account
amounting to represent funds in transit lying with schedule banks pending
transfer against loan liabilities under the head cash credit amp bill discounting
LIQUIDITY RATIO
1 CURRENT RATIO
(Amount in Rs)
Current Ratio
Year Current Assets Current Liabilities Ratio
2003 58574151 7903952 7412004 69765346 31884616 2192005 72021081 16065621 4482006 91328208 47117199 1942007 115642068 30266661 382
Interpretation
As a rule the current ratio with 21 (or) more is considered as satisfactory
position of the firm
When compared with 2006 there is an increase in the provision for tax because
the debtors are raised and for that the provision is created The current liabilities
majorly included Lanco Group of company for consultancy additional services
The sundry debtors have increased due to the increase to corporate taxes
In the year 2006 the cash and bank balance is reduced because that is used for
payment of dividends In the year 2007 the loans and advances include majorly
the advances to employees and deposits to government The loans and advances
reduced because the employees set off their claims The other current assets
include the interest attained from the deposits The deposits reduced due to the
declaration of dividends So the other current assets decreased
The huge increase in sundry debtors resulted an increase in the ratio which is
above the benchmark level of 21 which shows the comfortable position of the
firm
GRAPHICAL REPRESENTATION
741
219
448
194
382
000
100
200
300
400
500
600
700
800
Ratio
2003 2004 2005 2006 2007
Years
CURRENT RATIO
Ratio
2 QUICK RATIO
(Amount
in Rs)
Quick Ratio
Year Quick Assets Current Liabilities Ratio
2003 58574151 7903952 741
2004 52470336 31884616 165
2005 69883268 16065620 435
2006 89433596 47117199 19
2007 115431868 30266661 381
Interpretation
Quick assets are those assets which can be converted into cash with in a short
period of time say to six months So here the sundry debtors which are with the
long period does not include in the quick assets
Compare with 2006 the Quick ratio is increased because the sundry debtors are
increased due to the increase in the corporate tax and for that the provision
created is also increased So the ratio is also increased with the 2006
GRAPHICAL REPRESENTATION
741
165
435
190
381
000
100
200
300
400
500
600
700
800
Ratio
2003 2004 2005 2006 2007
Years
QUICK RATIO
Ratios
3 ABOSULTE LIQUIDITY RATIO
(Amount
in Rs)
Absolute Cash Ratio
Year Absolute Liquid Assets Current Liabilities Ratio
2003 31004027 7903952 392
2004 10859778 31884616 034
2005 39466542 16065620 246
2006 53850852 47117199 114
2007 35649070 30266661 118
Interpretation
The current assets which are ready in the form of cash are considered as absolute
liquid assets Here the cash and bank balance and the interest on fixed assts are
absolute liquid assets
In the year 2006 the cash and bank balance is decreased due to decrease in the
deposits and the current liabilities are also reduced because of the payment of
dividend That causes a slight increase in the current yearrsquos ratio
GRAPHICAL REPRESENTATION
392
034
246
114 118
0
05
1
15
2
25
3
35
4
Ratios
2003 2004 2005 2006 2007
Years
ABSOLUTE CASH RATIO
Ratios
LEVERAGE RATIOS
4 PROPRIETORY RATIO
(Amount
in Rs)
Proprietory Ratio
Year Share Holders Funds Total Assets Ratio
2003 67679219 78572171 086
2004 53301834 88438107 06
2005 70231061 89158391 079
2006 56473652 106385201 053
2007 97060013 129805102 075
Interpretation
The proprietary ratio establishes the relationship between shareholders funds to
total assets It determines the long-term solvency of the firm This ratio indicates
the extent to which the assets of the company can be lost without affecting the
interest of the company
There is no increase in the capital from the year2004 The share holderrsquos funds
include capital and reserves and surplus The reserves and surplus is increased
due to the increase in balance in profit and loss account which is caused by the
increase of income from services
Total assets includes fixed and current assets The fixed assets are reduced
because of the depreciation and there are no major increments in the fixed assets
The current assets are increased compared with the year 2006 Total assets are
also increased than precious year which resulted an increase in the ratio than old
GRAPHICAL REPRESENTATION
086
060
079
053
075
000
010
020
030
040
050
060
070
080
090
Ratios
2003 2004 2005 2006 2007
Years
PROPRIETORY RATIO
Ratios
ACTIVITY RATIOS
5 WORKING CAPITAL TURNOVER RATIO
(Amount
in Rs)
Working Capital Turnover Ratio
Year Income From Services Working Capital Ratio
2003 36309834 50670199 0722004 53899084 37880730 1422005 72728759 55355460 1312006 55550649 44211009 1262007 96654902 85375407 113
Interpretation
Income from services is greatly increased due to the extra invoice for Operations
amp Maintenance fee and the working capital is also increased greater due to the
increase in from services because the huge increase in current assets
The income from services is raised and the current assets are also raised together
resulted in the decrease of the ratio of 2007 compared with 2006
GRAPHICAL REPRESENTATION
072
142 131126
113
000
020
040
060
080
100
120
140
160
Ratio
2003 2004 2005 2006 2007
Years
WORKING CAPITAL TURNOVER RATIO
Ratio
6 FIXED ASSETS TURNOVER RATIO
(Amount in Rs)
Fixed Assets Turnover Ratio
Year Income From Services Net Fixed Assets Ratio
2003 36309834 28834317 126
2004 53899084 29568279 182
2005 72728759 17137310 424
2006 55550649 15056993 369
2007 96654902 14163034 682
Interpretation
Fixed assets are used in the business for producing the goods to be sold This
ratio shows the firmrsquos ability in generating sales from all financial resources
committed to total assets The ratio indicates the account of one rupee
investment in fixed assets
The income from services is greaterly increased in the current year due to the
increase in the Operations amp Maintenance fee due to the increase in extra invoice
and the net fixed assets are reduced because of the increased charge of
depreciation Finally that effected a huge increase in the ratio compared with the
previous yearrsquos ratio
GRAPHICAL REPRSENTATION
126182
424 369
682
000
100
200
300
400
500
600
700
Ratios
2003 2004 2005 2006 2007
Years
FIXED ASSETS TURNOVER RATIO
Ratios
7 CAPITAL TURNOVER RATIO
(Amount
in Rs)
Capital Turnover Ratio
Year Income From Services Capital Employed Ratio
2003 36309834 37175892 0982004 53899084 53301834 1012005 72728759 70231061 1042006 55550649 56473652 0982007 96654902 97060013 100
Interpretation
This is another ratio to judge the efficiency and effectiveness of the company
like profitability ratio
The income from services is greaterly increased compared with the previous year
and the total capital employed includes capital and reserves amp surplus Due to
huge increase in the net profit the capital employed is also increased along with
income from services Both are effected in the increment of the ratio of current
year
GRAPHICAL REPRESENTATION
098
101
104
098
100
094095096097098099100101102103104
Ratios
2003 2004 2005 2006 2007
Years
CAPITAL TURNOVER RATIO
Ratios
8 CURRENT ASSETS TO FIXED ASSETS RATIO
(Amount
in Rs)
Current Assets To Fixed Assets Ratio
Year Current Assets Fixed Assets Ratio
2003 58524151 19998020 2932004 69765346 18672761 3742005 72021081 17137310 4202006 91328208 15056993 6072007 115642068 14163034 817
Interpretation
Current assets are increased due to the increase in the sundry debtors and the net
fixed assets of the firm are decreased due to the charge of depreciation and there
is no major increment in the fixed assets
The increment in current assets and the decrease in fixed assets resulted an
increase in the ratio compared with the previous year
GRAPHICAL REPRESENTATION
293374
420
607
817
000
100
200
300
400
500
600
700
800
900
Ratios
2003 2004 2005 2006 2007
Years
CURRENT ASSETS TO FIXED ASSETS RATIO
Ratios
PROFITABILITY RATIOS
GENERAL PROFITABILITY RATIOS
9 NET PROFIT RATIO
(Amount in Rs)
Net Profit Ratio
Year Net Profit After Tax Income from Services Ratio
2003 21123474 36039834 059
2004 16125942 53899084 030
2005 16929227 72728759 023
2006 18259580 55550649 033
2007 40586359 96654902 042
Interpretation
The net profit ratio is the overall measure of the firmrsquos ability to turn each rupee
of income from services in net profit If the net margin is inadequate the firm
will fail to achieve return on shareholderrsquos funds High net profit ratio will help
the firm service in the fall of income from services rise in cost of production or
declining demand
The net profit is increased because the income from services is increased The
increment resulted a slight increase in 2007 ratio compared with the year 2006
GRAPHICAL REPRESENTATION
059
030
023
033
042
000
010
020
030
040
050
060
Ratios
2003 2004 2005 2006 2007
Years
NET PROFIT RATIO
Ratios
10 OPERATING PROFIT
(Amount in Rs)
Operating Profit
Year Operating Profit Income From Services Ratio
2003 36094877 36309834 099
2004 27576814 53899084 051
2005 29540599 72728759 041
2006 31586718 55550649 057
2007 67192677 96654902 070
Interpretation
The operating profit ratio is used to measure the relationship between net profits
and sales of a firm Depending on the concept it will decide
The operating profit ratio is increased compared with the last year The earnings
are increased due to the increase in the income from services because of
Operations amp Maintenance fee So the ratio is increased slightly compared with
the previous year
GRAPHICAL REPRESENTATION
099
051
041
057
070
000
010
020
030
040
050060
070
080
090
100
Ratios
2003 2004 2005 2006 2007
Years
OPERATING PROFIT RATIO
Ratios
11 RETURN ON TOTAL ASSETS RATIO
(Amount in Rs)
Return on Total Assets Ratio
Year Net Profit After Tax Total Assets Ratio
2003 21123474 78572171 027
2004 16125942 88438107 018
2005 16929227 89158391 019
2006 18259580 106385201 017
2007 40586359 129805102 031
Interpretation
This is the ratio between net profit and total assets The ratio indicates the return
on total assets in the form of profits
The net profit is increased in the current year because of the increment in the
income from services due to the increase in Operations amp Maintenance fee The
fixed assets are reduced due to the charge of depreciation and no major
increments in fixed assets but the current assets are increased because of sundry
debtors and that effects an increase in the ratio compared with the last year ie
2006
GRAPHICAL REPRESENTATION
027
018 019017
031
000
005
010
015
020
025
030
035
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON TOTAL ASSETS
Ratios
12 RESERVES amp SURPLUS TO CAPITAL RATIO
(Amount in Rs)
Reserves amp Surplus To Capital Ratio
Year Reserves amp Surplus Capital Ratio
2003 65599299 2079920 31542004 34582554 18719280 1852005 51511781 18719280 2752006 37754372 18719280 2022007 78340733 18719280 419
Interpretation
The ratio is used to reveal the policy pursued by the company a very high ratio
indicates a conservative dividend policy and vice-versa Higher the ratio better
will be the position
The reserves amp surplus is decreased in the year 2006 due to the payment of
dividends and in the year 2007 the profit is increased But the capital is
remaining constant from the year 2004 So the increase in the reserves amp surplus
caused a greater increase in the current yearrsquos ratio compared with the older
GRAPHICAL REPRESENTATION
3154
185 275 202419
-
500
1000
1500
2000
2500
3000
3500
Ratios
2003 2004 2005 2006 2007
Years
RESERVES amp SRUPLUS TO CAPITAL RATIO
Ratios
OVERALL PROFITABILITY RATIOS
13 EARNINGS PER SHARE
(Amount in Rs)
Earnings Per Share
Year Net Profit After Tax No of Equity Shares Ratio
2003 21123474 207992 101562004 16125942 1871928 8612005 16929227 1871928 9042006 18259580 1871928 9752007 40586359 1871928 2168
Interpretation
Earnings per share ratio are used to find out the return that the shareholderrsquos earn
from their shares After charging depreciation and after payment of tax the
remaining amount will be distributed by all the shareholders
Net profit after tax is increased due to the huge increase in the income from
services That is the amount which is available to the shareholders to take There
are 1871928 shares of Rs10- each The share capital is constant from the year
2004 Due to the huge increase in net profit the earnings per share is greaterly
increased in 2007
GRAPHICAL REPRESENTATION
10156
861904 975
2168
000
2000
4000
6000
8000
10000
12000
Ratios
2003 2004 2005 2006 2007
Years
EARNINGS PER SHARE
Ratios
14 PRICE EARNINGS (PE) RATIO
(Amount in Rs)
Price Earning (PE) Ratio
Year Market Price Per Share Earnings Per Share Ratio
2003 3254 10156 0322004 2847 861 3302005 3752 904 4152006 3017 975 3092007 5185 2168 239
Interpretation
The ratio is calculated to make an estimate of application in the value of share of
a company
The market price per share is increased due to the increase in the reserves
amp surplus The earnings per share are also increased greaterly compared
with the last year because of increase in the net profit So the ratio is
decreased compared with the previous year
GRAPHICAL REPRESENTATION
032
330
415
309
239
000
050
100
150
200
250
300
350
400
450
Ratios
2003 2004 2005 2006 2007
Years
PE RATIO
Ratios
15 RETURN ON INVESTMENT
(Amount in Rs)
Return on Investment
Year Net Profit After Tax Share Holders Fund Ratio
2003 21123474 67679219 031
2004 16125942 53301834 03
2005 16929227 70231061 024
2006 18259580 56473652 032
2007 40586359 97060013 042
Interpretation
This is the ratio between net profits and shareholders funds The ratio is
generally calculated as percentage multiplying with 100
The net profit is increased due to the increase in the income from services ant
the shareholders funds are increased because of reserve amp surplus So the ratio
is increased in the current year
GRAPHICAL REPRESENTATION
031 030
024
032
042
000
005
010
015
020
025
030
035
040
045
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON INVESTMENT RATIO
RatioS
DATA COLLECTION
The data can be of two types
Primary Data
Secondary Data
Primary Data
Primary data are those data which is originally collected afresh
Secondary Data
Secondary data are those data which are already collected and stored and which has
been passed through statistical research
In this project Secondary data has been collected from following sources-
Annual report
Books
MIS
Other material and report published by company There are two methods to prepare
the Cash flow Statement
ndirect Method
I
The indirect method (or reconciliation method) starts with net income and converts it
to net cash flow from operating activities In other words the indirect method adjusts
net income for items that affected reported net income but did not affect cash To
compute net cash flow from operating activities non-cash charges in the income
statement are added ack to net income and non-cash credits are deducted
b
Direct Method
Under the direct method the statement of cash flows reports net cash flow from
operating activities as major classes of operating cash receipts (eg cash collected from
customers and cash received from interest and dividends) and cash disbursements (eg
cash paid to suppliers for goods to employees for services to creditors for interest and
to government authorities for taxes)
INDIRECT VERSUS DIRECT METHOD
The most contentious decision that the FASB faced in issuing Statement No 95 was
choosing between the direct method and the indirect method of determining net cash
flow from operating activities Companies lobbied against the direct method urging
adoption of the indirect method Commercial lending officers expressed a strong
preference to the FASB hat the direct method be required
tCF-Page 3 of 5
In Favor of the Direct Method
The principal advantage of the direct method is that it shows operating cash receipts and
payments That is it is more consistent with the objective of a statement of cash flows to
provide information about cash receipts and cash payments than the in-direct method
which does not report operating cash receipts and payments
Supporters of the direct method contend that knowledge of the specific sources of
operating cash receipts and the purposes for which operating cash payments were made
in past periods is useful in estimating future operating cash flows Furthermore in-
formation about amounts of major classes of operating cash receipts and payments is
more useful than information only about their arithmetic sum (the net cash flow from
operating activities) Such information is more revealing of an enterprises ability (1) to
generate sufficient cash from operating activities to pay its debts (2) to reinvest in its
operations and (3) to make distributions to its owners
Many corporate providers of financial statements say that they do not currently collect
information in a manner that allows them to determine amounts such as cash received
from customers or cash paid to suppliers directly from their accounting systems But
supporters of the direct method contend that the incremental cost of assimilating such
operating cash receipts and payments data is not significant
In Favor of the Indirect Method
The principal advantage of the indirect method is that it focuses on the differences
between net income and net cash flow from operating activities That is it provides a
useful link between the statement of cash flows and the income statement and balance
sheet
Many providers of financial statements contend that it is less costly to adjust net income
to net cash flow from operating activities (indirect) than it is to report gross operating
cash receipts and payments (direct) Supporters of the indirect method also state that the
direct method which effectively reports income statement information on a cash rather
than an accrual basis may erroneously suggest that net cash flow from operating
activities is as good as or better than net income as a measure of performance
Special Rules Applying to Direct and Indirect Methods
Companies that use the direct method are required at a
minimum to report separately the following classes of
operating cash receipts and payments
Receipts
1048713 Cash collected from customers (including lessees licensees etc)
1048713 Interest and dividends received
1048713 Other operating cash receipts if any
Payments
1048713 Cash paid to employees and suppliers of goods or services (including
suppliers of
insurance advertising etc)
1048713 Interest paid
1048713 Income taxes paid
1048713 Other operating cash payments if any
Companies using the indirect method are required to disclose separately changes in
inventory receivables and payables to reconcile net income to net cash flow from
operating activities In addition interest paid (net of amount capitalized) and income
taxes paid must be disclosed elsewhere in the financial statements or accompanying
notes
The FASB requires these separate and additional disclosures so that users
may approximate the direct method Also an acceptable alternative presentation
of the in-direct method is to report net cash flow from operating activities as a
single line item in the statement of cash flows and to present the reconciliation
details elsewhere in the financial statements
FINDING OF SUDY
According to cash flow statement of the company The finding of the study are as
follows-
The company has not taken any loans secured or unsecured from companies
firms or other parties
The company has not accepted any deposit from the public during the year
The company is not a sick industrial company
The company has not granted any loan secured or unsecured to company firms
or other parties
The company has paid the entire long term and short term borrowing during the
year
The company has buy back the companyrsquos own share this year
The interest paid in 2008 is more than the
There has been a significant decline in volume over the years from 2001-02
to 2005-06 as can be seen in the graph below
Table 43
The Net sales of Tractor has increased considerably from 2004-05 to 2007-08
This can be mainly attributed to changes in Variable and material costs and in
the price
The Net sale of Tractor has increased considerably from 2004-05 to 2007-08
that is an decrease of Rs7216 per tractor This can be mainly attributed to
changes in
Variable and material costs and in the prices
RECOMMENDATIONS
According to cash flow statement of the company The suggestions of the study
are as follows-
The time durations for training program have to increase
Buy regular review and consultations develop a career progression
which is sensitive to performance and ability
Create an environment where by people are trend developed to enable
The to take advantages of opportunities that arise
The jab can be redesigned where the work man stay in what is normally
the same job but has elements of it changed
The principle amount must be paid in time which can be reducing the
interest the out flow
The purchase of the fixed asset must be made only when there is extreme
requirement
In order to avoid taxes the company should go for more investment
The companyrsquos borrowings should go for more investment
o The company should try to reduce the depreciations as maximum
as possible
CONCLUSION
The study on competency level of employees at ESCORTS PVTLTD gave an
insight about the acceptance of competency mapping by employees
The employees at Ymi welcome the introduction of competency mapping in their
organization as they felt it was very much essential in enhancing their skills and
organizational development
The organization has provided the recourses guidance and support to facilitate the
introduction of competency level easily and develop the employees in such a way
that they can face any kind of challenge
However the level of competency in employees is found to be satisfactory
Providing proper training education and guidance to the employees can enhance
the level
This study was mainly carried out to find out whether thee competency mapping
being followed by the company is effective till date If the competency mapping
and fitment to the organization
By looking at the graphs and tables it is quite that the employees still are not up to
the level of competent pool they still have to be trained and made competent in
order to fill the gap As the organization has just applied the mapping it has to see
to that it meets all the requirements for competency mapping
Therefore the graphs make it quite clear that the potential of the employees is not
up to the mark and ie they are not competent enough to meet the competency-
mapping requirement Hence by further training and counseling this gap can be
closed
This report includes the training requirements of employees and it highlights skills
possessed by each employee and skill required All employees get training so that
skill can be improved and maintain balance between standard performance with
their actual performance to avoid gap
APPENDIX
QUESTIONNAIRE
Consumer Survey
Name _____________________________
Age _____________________________
Sex
Male
Female
Occupation
Businessman
Service man
Professional
Others
Monthly income brackets
Below 15000
15000- 20000
20000-30000
30000 and above
of your savings _________
Do you invest
Yes
No
If yes then where do you invest your money
Bank
Insurance
funds
Others
Why do you made that statement
Return
Risk hedging
Tax benefits
Other reasons (specify) _______
Who influence your cash decision
Relatives and friends
Family members
Advisors experts
You yourself
If no then why
Do not know where to invest
Satisfied with your current investment return
Donrsquot want take risk
Other reasons
__________________________________________________________________
___________________
Do you know about CF statement
Yes
No
If yes then from where you have come to know about an cash statement
Advertisements on newspapers
Friends and relative
Agents experts
Other source
What do you think about cash statement
It means investing only in share market
Constant watch must be kept always
Return is not satisfactory
Other perception
__________________________________________________
Can you recall any cash flow of company
___________________________
Would you want to made CF of an org
Yes
No
If yes then why
_______________________________________________________
If no then why
_______________________________________________________
BIBLIOGRAPHY
List of Books
1 PANDEY IM - FINANCIAL MANAGEMANT
2 KHAN MY AND JAIN PK -FINANCIAL MANAGEMANT
3 SMITH KV ndash MANAGEMANT OF WORKING CAPITAL
3 COMPANY RECORDS
4 JOURNAL
5 REPORTS
WEBLIOGRAPHY
1 wwwescortspvtltdcom
2 wwwgooglecom
Throughout the evolution of Escorts technology has always been its greatest ally for
growth In the over six decades of our inception Escorts has been much more than just
being one of Indias largest engineering companies It has been a harbinger of new
technology a prime mover on the industrial front at every stage introducing products
and technologies that helped take the country forward in key growth areas Over a
million tractors and over 16000 construction and material handling equipment that have
rolled out from the facilities of Escorts complemented by a highly satisfied customer
base are testimony to the manufacturing excellence of Escorts Following the globally
accepted best manufacturing practices with relentless focus on research and
development Escorts is today in the league of premier corporate entities in India
Technological and business collaboration with world leaders over the years Globally
competitive indigenous engineering capabilities over 1600 sales and service outlets and
footprints in over 40 countries have been instrumental in making Escorts the Indian
multinational At a time when the world is looking at India as an outsourcing
destination Escorts is rightly placed to be the dependable outsourcing partner of worlds
leading engineering corporations looking at outsourcing manufacture of engines
transmissions gears hydraulics implements and attachments to tractors and shock
absorbers for heavy trailers and armored tanks
In todays Global Market Place Escorts is fast on the path of an internal transformation
which will help it to be a key driver of manufacturing excellence in the global arena For
this we are going beyond just adhering to prevailing norms we are setting our own
standards and relentlessly pursuing them to achieve our desired benchmarks of
excellence
INDIAN TRACTOR INDUSTRY
INTRODUCTION
India is predominantly an agricultural country70 of the population lives in villages
and villagers depends upon agriculture for their bread and butter Since Indian valley
civilization agriculture is the main source of income but at that time the agriculture was
manual work Before independence Indian agriculture was in very bad situation But
since 1947 when India became independent the farmers also became independent
They had seen many ups and downs in their income After independence in five-year
plans first priority was assigned to agriculture government tried best to improve the
industry but a systematic planned approach for development started in 1950 since than
irrigation was recognized as key factor for agriculture Education and research were also
taken as a major initiative
In over six decades of the inception Escorts has been much
more than just being one of Indias largest engineering companies It has been a prime
mover on the industrial front introducing products and technologies and taking the
country forward in key areas
All these developments made mechanization mandatory for agriculture and
imports of tractors began Acceptance of mechanization was slow in fiftyrsquos the use of
tractor was very low Green Revolution was the result of tractor was barely 10000 in
1970 The industry was producing around 25000 to 30000 tractors Today India is the
largest tractor market estimating 2185000 tractors per annum with the annual growth of
123 Today the tractor industry is of about 5000 crores
With the 12 of arable land today India has 47 of the worldrsquos tractor India splits
tractors largely into four categories ie 20-30hp 31-40hp 41-50hp 51amp above 21-30hp
and 31-40hp ranges into together are nearly 76
SEGMENT OF TRACTORS ACCORDING TO HP WISE
Tractor Range 1965-97 1997-98 1998-99 1999-2000
20-30 HP 24 22 17 10
31-40 HP 51 50 54 55
41-50 HP 19 20 22 25
50ampabove 6 8 7 10
Demand for big hp segment is increasing as per the table shown In the budget of 1995-
96 the central government has given subsidy of Rs 30000 per tractor The subsidy was
for the user of low up segment tractors (for small farmers) The government wants to
increase the usage of tractor for higher agriculture production In the budget of
year1998-99 the finance minister Mr Yashwant Sinha has levied 8 excise duty on the
imports This was to save the Indian tractor industry form the slow down of economy
and the East Asian Crises According to economic survey of 1997-98 the production of
agriculture has dropped by 205 Until 1993-94 small tractor (below 25hp) were
exempted fro the excise in bid to encourage small farmers Because in India almost
65 of farmers has less than 4 acres of arable land
According to business India due to the Mahindra amp Mahindra and Swaraj tractors
would be benefited about Rs 10000 to Rs12000 per tractor as compared to others
which imports parts from abroad The compound average growth rate during last six
years has been around 15 The level of tractorization is high in Punjab amp Haryana at
around 95amp74 tractors per thousand hectares respectively The tractor demand is driven
by agriculture Products Interest Rates Total
Agricultural Credit Total Irrigation Facilities and Crop Pattern Among them credit is
strongly correlated with the tractor sale Nearly 80 of the tractorrsquos sale is through
credit
Financial Pattern
As stated above that 80 of the tractor is financed through credit rates essentially
through commercial banks regional banks rural banks and state level land development
banks The credit worthiness of the farmer is ascertained to have minimum holding of 6
areas of cultivated land to be eligible for loan However bank can provide a loan on
smaller landholding subject to farmer establishing his credit worthiness The credit
inflow since financial year 1996 is increasing support from NSBARD This has already
allocated 2000 crores from current year
HISTORICAL BACKGROUND
Indian agricultural in the fifties followed age bound tradition and was considered
backward The country did not produce enough food grain to feed its 36 crores
population and famines were recurrent features Import of food grains became necessary
to meet the short fall in domestic production there by causing a drain on scare foreign
exchange resources It therefore became imperative to high priority to the development
of agriculture
First phase of development (1960-1967)
Farm mechanism made a small beginning in the first five year PLAN Tractors were
imported for introduction is isolated pockets However acceptance of mechanization was
a slow process due to lack of awareness about its economic usefulness and versatility
The decade 1960 saw green revolution both increase in production and productivity with
the parallel emphasis on industry The birth of Indian tractor industry took place in
1959-60 when
import was restricted amp five manufacturing units were set up in private sector all with
collaboration It was in this background that production of tractors in the country in
1960
NAME COLLABORATION YEAR OF
COMMENCEMENT
MS EICHER TRACTORS
LTD
WEST GERMANY 1959
MS HINDUSTAN
TRACTORS LTD
CZECHOSLOVAKIA 1963
MS TRACTORS amp
FARM EQUIPMENT
LTD(TAFE)
UK 1963
MS ESCORTS LTD POLAND 1964
MS INTERNATIONAL
TTACTORS CO OF
INDIA LTS LATER
RENAMED AS
MAHINDRA amp
MAHINDRA
UK 1965
The total indigenous production of tractors by 1965 was just 6000 The real spurt in
mechanization of agriculture came in the introduction of high yielding variety (HYV) of
seeds in 1966-67 and their enthusiastic adoption by farmers particularly in the wheat
growing northern region With the successful introduction and acceptance these high
quality seeds there was a upspring in the demand of tractors in 1967 and demand started
multiplying at an annual rate of almost 50 (19671800-197033000)A natural
consequent of sharp upsurge and consequent shortage was heavy price premium on
tractors Recognizing the situation imports of tractors were liberalized and over and
above the domestic production of 20000 in 1970 3000 tractors were imported
Second phase of development (1968-1980)
Since the pace of indigenous five tractors manufacturing units already set up far below
expectation the Government decided to provide diligence to the tractor industry in 1968
and invites new entrepreneurs Benefiting from this forward-loo
king policy six more units came in during 1971-1974 These were
NAME COLLABORTION YEAR OF
COMMENCEMENT
MS ESCORTS
TRACTORS LTD
UK 1971
MS HMT LTD CZECHOSLIVAKIA 1971
MS KIRLOSKAR
TRACTORS LTD
WEST GERMANY 1974
MS PUNJAB
TRACTORS LTD
INDIGENOUS 1974
MS HARSHA
TARCTORS LTD
USSR 1975
Not withstanding the above progress on the setting up to new units Tractor industry ran
into difficulties from 1969 onwards and by 1972 domestic tractor production stagnated
at a level of 20000units primarily due to continuing of imports of tractors Problem was
further compounded by the oil crisis in 1973-74 and the resultant economic crisis and
inflationary pressures which persisted till middle of 1975
The tractor market started slowly pocking up from 1975 (31000tractors) because of
relative price stability govt directives of the commercial banks increase rural lending
expansion of rural branches of commercial banks good monsoons which resulted in
bumper harvests and accelerated pace of extension of irrigation facilities This trend
continued throughout the late seventies and by 1979-80 yearly market off take had risen
to a level of 62000tractors
Third phase of development (1980-86) The buoyancy in the tractor market experienced in the late seventies continued tell 1981-82 when 78000
tractors were sold The encouraging trend led to the setting up of more for the manufacture of tractors
during 1981-86 These units were
NAME COLLABORATION YEAR OF
COMMENCEMENT
MS AUTO TRACTORS
LTD
UK 1981
MS PRATAP STEEL
ROLLING MILL LTD
INDIGENOUS 1983
MS VST TRACTORS
LTD
JAPAN 1986
However the sale of tractors plummeted to a low level of 66000 tractors in the year
1982-83 in the wake of severe credit squeeze imposed by reserve bank of India
The demand for tractors again picked up when the credit squeeze was eased and a sale
of 80000units was recorded in the year 1984-85 for next year Tractor industry stagnated
causing closure of five manufacturing units as detailed below
NAME YEAR OF CLOSURE
PINE TRACTORS LTD 1983
HARSHA TRACTORS LTD 1987
AUTO TRACTORS LTD 1987
KISLOSKAR TRACTOR LTD 1991
PRALAP STEEL ROLLING MILLS
(HARYANA TRACTORS LTD)
1996
Fourth phase of development( 1987 onwards)
In the year 1987-88 the country saw a severe drought situation This was a difficult
period and it widely anticipated that crop yield would be severely affected Under such a
situation it was necessary to have provisions for supply of power to perform farm
operation at proper time in order to fully exploit the limited moisture content left in soil
The versatility in the tractor became evident as this vehicle was used for pumping out
underground water in this background tractor industry showed a remarkable growth
during this period and all time high sale of 90000 tractors was recorded in the drought
year (1987-88)Fourth phase of development
The growth trend appears to be continuing with relaxation of tractor financing norms
except for a 2 year slack period due to general economic slowdown and political
turmoil In fiscal 1997-98 tractors sales refaced an all time high record of 250000This
impressive growth has influenced 3 more players as listed below to enter the market
NAME COLLABORATION YEAR OF
COMMENCEMENT
INTERNATIONAL
TRACTORS LTD
INDIGENOUS 1997
BAJAJ TEMPO LTD INDIGENOUS 1997
NEW HALLAND
TRACTORS (INDIA)
PVT LTD
ITALY 1998
JOHN DHEER
TRACTORLTD
POLAND 2000
HISTORICAL BACKGROUND OF ESCORTS GROUP
Escorts came into being a vision that led two brothers Yudi Nanda and Hari Nanda to
branch out their familyrsquos prospering transport s business and institute ventures that were
to become the foundations of escorts Ltd Escorts Agents Limited was born at Lahore on
17th October 1944 with Yudi Nanda as Managing Director and Hari Nanda as Chairman
After the owing to opportunity lying in the Indian village Escorts (Agricultural
Machinery) Ltd was launched in 1948 with Yudi Nanda as Director Tragically Yudi
Nanda died in an accident in 1952 Then Escorts agent Ltd And Escorts (Agricultural
Machine) Ltd Was merged in 1953 to create single Escorts agents Pvt Ltd
SOME MILESTONES
1948 Pioneered farm mechanization in the country by launching Escorts Agricultural Machines Ltd
With a franchise from a US based MINNEAPOLIS MOLINE WISCONCIN for marketing
tractors implements engines and other equipments
1958 Started importing MF tractor from Yugoslavia for marketing the same in India
1960 A manufacturing plant was set up at Faridabad
1965 Got industrial license to manufacture URSUS ESCORT tractors
169
1969 Escorts signed a contract with FORD MOTOR COMPANY to manufacture Ford 3000 model
tractors Escorts Institute of Farm Mechanization (EIFM) was established at Bangalore This
training Institute is one of its kind
1971 1st February the first tractor FORD 3000 rolled out of the factory The same year the turnover
touched the Rs53 million mark
1973 Escorts Tractors Limited (ETL) declared a healthy Profit Before Tax of Rs4725 million
1974 Export of 400 tractors to Afghanistan - perhaps the worlds largest ever airlift of such
equipment
1975 Turnover crossed the Rs 200 million mark for ETL Profit After Tax Rs 87 million Maiden
dividend of 10 declared
1976
1976 FORD 3600 advancement in Farm Mechanization was launched with fanfare to a
tremendous reception Trial production of in-plant manufacturing of engine parts (Block amp
Head)
1977
1977 Escorts Scientific Research Centre marked its beginning at Faridabad by developing its own
Engines for E-27 and E-37 Due to constant technology absorption indigenization level
touched 72 for FORD tractors which was a result of relentless effort in that direction
1979 Turnover crossed the Rs 50 crores mark In plant facility for machining centre housing and
case transmission on built-in line concept installed
1983 Escorts Tractors Limited (ETL) established a state-of-the-art research and development centre
to spearhead newer breakthroughs in Farm Mechanization and to maintain industry
leadership Line concept introduced for engine block machining
1984 75000th tractor rolled out A great occasion for the large family that worked for ETL Newer
challenges and frontiers were set
1985 In keeping with the stupendous financial success Escorts Tractors Limited (ETL) offered its
first Bonus Issue (11)
1987 50hp FORD 3610 was launched another leap for the Indian Farm Mechanization Industry the
farmers and the people of the land
1988
1988 ETLrsquos annualized turnover crossed Rs 100 crores Dividend 45 for 15 months
1989 A MOU with CLAAS was signed for manufacturing amp
1990-
91
First Public Issue (Februaryrsquo91) over-subscribed four times Shares listed on Delhi and Bombay
Stock Exchanges
1991-
92
The Crop Tiger range of Combine Harvesters was launched by Escorts Claas Ltd
1993 FORD 3620 tractor launched
1996 Disengagement of joint venture collaboration with New Holland and launch of FARMTRAC
Tractor
1997 A Joint Venture with Italian company CARRARO was finalized to establish a company in India
for manufacturing and marketing of transmission and axles
COLLABORATIONS
Collaboration with international Organization of technological excellence constant
research to adopt the emerging technology to specify requirement of the market and
belief in the philosophy industrial interdependence have made Escorts today one of the
leading trend steers in Indiarsquos New Industrial Culture Escorts have merged as fraternity
of above 50000 shareholders 22000 employees 4000 ancillary suppliers and 1 6000
dealers and stockiest all engaged in a large scale investment and sustained efforts to
meet the ever widening market horizons of technological competence appropriate to
Indiarsquos unique changing needs
Escorts believe in incorporating the finest existing technology to meet Indian consumers
demands by collaborating with the internationally renowned companies prominent
among these are
IN GERMANY
GOETZE AG Piston rings and cylinder liners
MAHLE GmbH Piston
CLASS OHG Harvesters Combines
KNORR BREMSE AG Railway Brake System
AUGUST BILSTEIN GmbH Absorbers Hydraulic products
Pressure and temperature switches
IN JAPAN
KAYABA INDUSTRY CO LTD Telescopic Front Forks Car
MIKUNI SHOKO CO Carburetors for BI-Wheelers
IN UK
JCBAMFORD EXCAVATORS JCB Excavators loaders Front end
Loaders Telescopic handlers
IN USA
HUGHESNETWORKS SYSTEMS AB Road Construction Machinery
Vibratory Road Rollers
OFFICIAL ADDRESS OF ESCORTS
Registered Office Corporate
Secretariat amp Law
Escorts Ltd
11 Scindia House
Connaught Circus
New Delhi-110 001
Tel No 011-23310145
Fax No 011-23311715
Escorts Ltd
155 Mathura Road
Faridabad - 121 003
Tel No ( 0129 ) 2250222
Fax ( 0129 ) 2250060
Email Address corpsectndbvsnlnetin
Web Site wwwescortsgroupcom
LEADERSHIP TEAM
Mr Rajan Nanda
Chairman
Mr Nikhil Nanda
Joint Managing Director
Mr Rohtash Mal
Executive Director and Chief Executive Officer - Agri Machinery Group
Mr Manoj Jha
Executive Vice President of Engineering Division
Mr Kamal Bali
CEO ndash Escorts Construction Equipment Limited (ECEL)
Mr GB Mathur
Vice President - Law amp Company Secretary
Mr Rakesh Kumar Budhiraja
Group Chief Financial Officer
Mr Partha Dasgupta
Group Vice President Human Resources and Employee Relations
LEVELS OF MANAGEMENT
MANAGEMENT
TOP
MANAGEMENT
SENIOR
MANAGEMENT
MIDDLE
MANAGEMENT
JUNIOR
MANAGEMENT
MANAGING
DIRECTOR amp
CEO(G-11)
CHIEF GENERAL
MANGER(G-8)
CHIEF
MANAGER
(G-5)
ASSISTANT
MANAGER(G-2)
VICE PRESIDENT
(G-10)
GENERAL
MANAGER(G-7)
SENIOR
MANAGER(G-4)
EXECUTIVE(G-
1)
ASSOCIATE
VICE PRESIDENT
(G-9)
DEPUTY
GENERAL
MANAGER(G-6)
MANAGER(G-3)
MISSION
WE WILL ACHIEVE LEADERSHIP IN MARKET SHARE amp PROFITABILITY IN
THE DOMESTIC TRACTOR MARKET BY THE YEAR 2004-2006 AND SHALL BE
THE WORLSrsquoS LARGEST SUPPLIER OF SUB 100 HP TRACTORS WE SHALL
PROACTIVELY CONTRIBUTE TO THE PROSPERITY OF THE RURAL
ECONOMY BY DEFINING A LARGER ROLE FOR OURSELVES IN THE FOOD
AND AGRICULTURE SECTOR
THE VISION
WE SHALL STRIVE TO BE THE NUMERO UNO IN THE INDIAN TRACTOR
INDUSTRY AND TOP FIVE TRACTOR MANUFACTURERS IN THE WORLD
WE SHALL CONTINUOUSLY STRIVE TO MEET THE EVER RISING
EXPECTATIONS OF OUR VALUED CUSTOMERS AT THE LOWEST
INTERNAL COST
WE SHALL AIM TO OFFER THE FARMING COMMUNITY A RANGE OF
INNOVATIVE PRODUCTS AND SERVICES WHICH SHALL ENABLE THEM
TO IMPROVE THEIR PRODUCTIVITY AND COMPETITIVNESS
WE SHALL ACHIEVE A TURNOVER OF RS 2 BILLION BY THE YEAR
2006TRANSCENDING NATIONAL BOUNDARIES WE SHALL STRIVE TO
ATTAIN EXPORTS OF ONE TENTH OF OUR TOTAL TRACTOR PRODUCTION
BY THE YEAR 2
REVIEW OF LITERATURE
INTRODUCTION
MEANING OF FINANCIAL STATEMENTS
The financial statements are nothing but the financial information presented in concise and
capsule form and are the financial information is the information relating to the financial
position of any firm The firm prepares the financial statements
bull To communicate with different parties about the financial position of the firm
(Shareholders creditors banks financial institution financial analysts investors
etc And
bull To analyze the operations and performance of the firm for the further
planning
The basic source which provides the financial information is the Annual report of the
company which is presented by the company to its shareholders at the Annual General
Meeting
Though the presentation of annual report is a statutory requirement under the
Companies Act 1956 however it is also a medium of communication with the present as well
as prospective investors and creditors of the company
Clause 43 A of the Listing Agreement (with the stock exchange) requires every
listed company to publish unaudited quarterly results But it does not mean the non-corporate
firms do not prepare the financial statements Every firm big or small prepare the following
financial statements
The Balance Sheet (BS)
1 The Income Statement (IS)
Two other key financial statements which are usually prepared by corporate firms are
1 Statement of appropriation of profit and
2 Statement of Change in financial position
ANALYSIS OF FINANCIAL STATEMENTS (AFS)
Analysis of financial statements refers to the process of the critical examination of the
financial information contained in the financial statements in order to understand and
make decisions regarding the operations of the firm The AFS is basically a study of the
relationship among various financial fact and figures as given in a set of financial
statements AFS is the process of establishment and identifying the financial weakness
and strength of the firm It is indicative of two aspects of a firm ie the profitability
and the financial position
OBJECTIVES OF AFS
The objectives of the AFS is to understand the information contained in financial
statements with a view to know the weakness and strength of the firm and to make a
forecast about the future prospects of the firm and thereby enabling the financial
analyst to take different decisions regarding the operation of the firm The objectives
are as follows
bull To assess the present profitability and operating efficiency of the fir
COMMON-SIZE STATEMENTS (CSS)
The CSS represents the relationship of different items of financial statements with some
Common items by expressing each item as a percentage of the common item In common size
Balance Sheet each item of the balance sheet is stated as a percentage of the total balance
sheet The percentages for different items are computed by dividing the absolute amount of
that item by the Common Base and then multiply by 100 The percentage so calculated can
be easily compared with the corresponding percentage in some other period Thus the CSS is
useful not only in intra-firm comparison for the same year or free several years
TREND PERCENTAGE ANALYSYS(TPA)
The TPA is a technique of studying several financial statements over a series of years In
TPA the trend percentages are calculated for each item by taking the figure of that item for
some base year as 100 So the trend percentage is the percentage relationship which
Each item of different years bears to the same item in the base year Any year may be Taken
as the base year but generally the starting initial year is taken as the base year So each
item for base year is taken as 100 and then the same item for other years is Expressed as a
percentage of the base year
RATIO ANALYSIS (RA)
The RA has emerged as the principle technique of the AFS A ratio is a relationship
Expressed in mathematical terms between two individual or groups of figures connected with
other in some logical manner The RA is based in the premise that a single accounting figure
by itself may not communicate any meaningful information but when expressed as a relative
to some other figure it may definitely give some significant information The relationship
between two or more accounting figuresgroups is called a Financial Ratio
A financial ratio helps to summarize a large mass of financial data into a concise form
and to make meaningful interpretations and conclusions about the performance of a firm
For example a firm has net sales Rs 5 00000
Gross Profit Rs 100000
Ratio of Gross Profit to net sales is 20
ie (Rsl 00000 Rs5 00000)
Forms of Ratios
Since a ratio is a mathematical relationship between two or more variables accounting
figures such relationship can be expressed in different ways as follows
bull As a Pure Ratio
bull As a Rate of Times
bull As a Percentage
Ratio can be classified into
bull The Liquidity Ratio
bull The Activity Ratio
bull The Leverage Ratio
bull The Profitability Ratio
STATEMENT OF CHANGES IN FINANCIAL POSITION
(SCFP)
Since the BS amp IS of a firm are two basic depicting the financial position of a firm at the end
of the year These two financial statements are called the traditional statements Both these
statements fail to throw light on changes in assets liabilities and shareholders wealth during
this year
BS deals with the financial position gives only the static view of the year- end financial
position and fails to indicate the movement and causes in assets and liabilities during the
year Similarly IS show the profit or loss resulting out of the operations of the firm during
the year This profit or loss in fact to ascertain the sufficiency of resources to declare the
dividend etc thus there is a need to prepare another statement (together with the BS amp IS)
which may identify the changes in assets liabilities and the shareholders funds over a given
period
The SCFP is essentially an explanation of the changes in financial position of a Firm
occasioned by the firm in between two successive BSs The SCFP draws basic Information
from the BS and IS helps in understanding the change in assets liabilities and shareholders
worth The SCFP deals with the flow of funds during the year ie the funds coming in and
going out of the firm It summarizes the sources from where the funds might have been
arranged procured by the firm and the uses for which the funs might have been used by
the firm during the year
The SCFP can be prepared as follows
bull SCFP (Cash Basis) also known as a Cash F low Statement
bull SCFP (Net Working Capital Basis) Fund Flow Statement
SCFP (WORKING CAPITAL BASIS)
FUND FLOW STATEMENT
The FFS reports the flows of funds through the firm during the year ie it shows the
Sources and uses of working capital between two balance sheet dates The FFS
attempts to explain the changes in financial position from one BS to the subsequent BS
in terms of the change in the funds or the working capital position of the firm
The term Working capital (WC) is generally defined as the excess of total
current assets over the total current liabilities The current Assets (CA) of a firm may
include cash in hand and at bank stock debtors bills advances etc and the Current
Liabilities (CL) includes creditors bills payable outstanding expenses provision for
tax short term liabilities etc the term WC is a single figure representing the net effect
of a transaction is to increase or decrease the Working Capital by affecting any of the
elements of Current Assets or Current Liabilities Therefore the FFS in its standard
form incorporates only those transactions which affect the Working Capital i e those
transactions where in only one of the affected accounted is a current account
Now a flow of working capital arises when one of the affected accounts is a current
account From the point of view of current account the effected on working capital
can examined in the light of the definitions of the term working capital ie the excess
of current assets over current liabilities ie
Impliedly change in any of the CA or CL will affect the WC Simple observation
equation tells that
bull Increase in any of the CA or decrease in any of the CLs will result in increase
in the WC
bull Decrease in any of the CA or increase in any of the CLs will result in decrease
in the WC
To find out the relative importance of different components of the financial position
of the firm
bull To identify the reasons for change in the profitability financial position of the
firm and
bull To assess the short term as well as the long term liquidity position of the
firm
TECHNIQUES TOOLS OF THE AFS
AFS can be undertaken by different persons and for different purposes therefore the
methodology adopted for the AFS may be carrying from one situation to another However
the following are some of the common techniques of the AFS
bull Comparative financial statements
bull Common-size financial statements
bull Trend percentage analysis and
bull Ratio Analysis
COMPARATIVE FINANCIAL STATEMENTS
In CFS two or more BS andor the IS of a firm are presented simultaneously in columnar
form The Financial data for two or more tears are placed and presented in adjacent columns
and thereby the financial data is provided at times perspective in order to facilitate periodic
comparison In CFS the BS and the IS for number of years are presented in condensed
form for year to year comparison and to exhibit the magnitude and direction of changes
The CFS helps a financial analyst of the firm and in establishing operating and
positional trend of the firm The CFS may be prepared to show
1 The absolute amount of different items in monetary terms
2 The amount of periodic changes in monetary terms
1 The percentages of periodic changes to reveal the proportionate changes
The CFS can be prepared for both the BS and the IS
CORE COMPETENCE OF ESCORTS
Customer 1
We put customers first in everything we do We take decisions keeping the customer in
mind
Challenging Spirit
We strive for excellence in everything we do and in the quality of goods amp services we
provide We work hard to achieve what we commit amp achieve results faster than our
competitors and we never give up
Team-work
We work cohesively with our colleagues as a multi-cultural team built on trust respect
understanding amp mutual co-operation Everyones contribution is equally important for
our success
Frank amp Fair Organization
We are honest sincere open minded fair amp transparent in our dealings We actively
listen to others and participate in healthy amp frank discussions to achieve the
organizations
A firm undertakes numerous during a year and most of these transactions during a year and
most of these transactions may affect one or the other current account ie most of these
transactions May results in the flow of the WC Neither is it necessary nor practical to
identify the effect of each and every transaction on the WC These transactions instead are
considered and analyzed in a collective form and then their effect on the WC is identified
SCFP (CASH BASIS) OR
THE CASH FLOW STATEMENT
The CFS attempts to analyze the transactions of the firm in terms of cash ie the transactions
generating cash and using cash The focus in the CFS is on cash rather than on WC The
sources of cash may be the cash profits earned by the firm issue of capital for cash issue of
other securities for cash borrowings sale of assets investment redemption of debenture or
preference share repayment of loan payment of tax dividend distribution etc Thus the
CFS summarizes the cash inflows and outflows
An analysis of cash flows is useful for short-run planning A firm needs sufficient cash to
debts maturing in the near future to pay interest and other expenses and to pay dividends to
shareholders The firm can make projections of cash flows and outflows for the near future to
determine the availability of cash This cash balance can be matched with the firms need for
cash during the period and accordingly arrangements can be made the deficit or invest the
surplus cash temporarily A historical analysis of cash flows provides insight to prepare
reliable cash flow projections for the immediate future
A statement of changes in financial position on cash basis commonly known as cash flow
statement summarizes the causes of changes in cash position between dates of two balance
sheets It indicates the sources amp uses of cash The cash flow statement is similar to the fund
flow statement except that it focuses attentions on cash instead of working capital (funds)
Thus this statement analyses change in non-current accounts as well as current accounts
(other than cash) to determine the flow of cash
The CFS is based on the concept on the WC Where as the CFS is based in cash which is only
the element of WC Thus the CFS provides details of cash movements whereas the FFS
provides the details of funds movements
The CFS considers only the actual movement of cash whereas the FFS considers the
movements of the funds as defined in terms of net working capital
CASH-FLOW STATEMENT
A cash-flow statement is a statement showing inflows (receipts) and outflows (payments) of
cash during a particular period In other words it is a summary of sources and applications of
Cash during a particular span of time It analyses the reason for changes in balance of cash
between the two balance sheet dates The term Cash here stands for cash and cash
equivalents
A cash-flow statement includes only those items which affect cash As such the cash-flow
statement is called a statement of changes in financial position - cash basis
A cash - flow statement can be for the past or can be projected for a future period
OBJECTS OR USES OF CASH-FLOW STATEMENT
The main objectives behind preparing a cash-flow statement can be laid down as under-
bull USEFUL FOR SHORT-TERM FINANCIAL PLANNING-
A cash-flow statement provides information for planning the short-term financial needs of the
firm Since it provides information regarding the sources and utilization of cash during a period
it become easier for the management to assess whether it will have Adequate cash to meet day-
to-day expenses and pay the long - term loans and interest Thereon and whether it has enough
cash to pay for the purchase of fixed assets or not
USEFUL FOR PREARING THE CASH BUDGET-
A cash-flow statement prepared for the future period is helpful in preparing a cash budget It
informs the management about the future period is helpful in preparing a cash budget It informs
the management about the surplus or deficit periods of cash ie in which months the payments
will be in excess of receipts It helps in planning the investment of surplus cash in short-term
investment and to plan short-term credit in advance of deficit periods
bull COMPARISON WITH CASH BUDGET-
A cash budget is prepared at the commencement of the year whereas a cash flow Statement is
prepared at the end of the year A comparison between the two helps in ascertaining the extent
to which the financial resources of the firm have been generated and used according to the plan
Causes of variances between the figures of two statements can be analyzed and proper
corrective measures may be takes
bull STUDY OF THE TREND OF CASH RECEIPTS AND PAYMENTS-
A cash-flow statement reveals the speed at which the cash is being generated from debtors stock
and other current assets the speed at which the current liabilities are being paid It enables the
management to assess the true position of the cash in future
bull IT EXPLAINS THE DEVIATIONS OF CASH FROM EARNINGS-
A firm may earn huge profits yet it may have paucity of cash or when it suffered a loss it may
still have plenty of cash A cash flow statement explains the reasons for it
HELPFUL IN ASCERTAINING CASH-FLOW FROM VARIOUS
ACTIBITIES SEPARATELY-
A cash-flow statement aims at highlighting the cash flow from operating investing and
financing activities separately It includes how much cash has been generated or used in these
activities
bull HELPFUL IN MAKING DIVIDEND DECISIONS-
Dividend must be paid within 42 days of its declaration Hence the management takes the help of
cash-flow statement to ascertain the position of cash generated from operating activities which
can be used for payment of dividend
IMPORTANCE AND RELEVANCE OF CFS
The CFS has gained importance in view of the fact that there are many managerial Decisions
which are taken in the light of the cash availability or cash position of the firm
For example declaration of dividend by the company requires cash disbursement and
Therefore the Board of Directors must consider the cash position before proposing a dividend
The CFS also provides information for the short term financial planning and in particular the
short term cash needs of the firm
In view of increasing importance and relevance of the CFS the clause 32 of the Listing
agreement (between a Company and the Stock Exchange where the shares proposed to be listed)
has been amended by the SEBI As a result the listed companies in India are now required to
supply a copy of the CFS to each shareholder as a part of Annual Report As a result the listed
companies have started a practice of sending a CFS for which the BS has been prepared as
apart of the Annual Report of the company
DIFFRENCE BETWEEN CASH - FLOW STATEMENT AND
CASH BUDGET
There is not much difference between cash flow statement and a cash budget The
only difference is that a cash flow statement is prepared for a past period where as cash
budget is prepared for a future period Hence it is of limited use as far as the future
periods are concerned A cash budget is therefore prepared showing how much cash is
likely to be received and what will be the disbursements during a future period of time
Thus a cash budget indicates in which months there will be surplus cash and in which
moths there will be deficiency of cash resources The management can then take suitable
decision to invest the surplus cash or make arrangement for the deficiency of cash at the
required time
LIQUIDITY
It does not present true picture of the liquidity of the firm the liquidity does
not depend upon cash alone Liquidity also depends upon those assets
which can be converted into cash easily
bull Exclusion of these assets obstructs the true reporting of the ability of the firm to
meet its liabilities when they become due for payment
bull The possibilities of window - dressing is higher in case of cash position in
comparison to the working capital position of the firm
bull The cash balance can be easily maneuvered by postponing purchases and other
payments and by rapidly collecting cash from debtors before the balance sheet date
Hence a fund - flow statement presents a more realistic picture than a cash flow
statement
bull Cash flow statement ignores non- cash charges Hence the true position of the
enterprise cannot be judged by cash flow statement
bull It is prepared on cash basis and hence ignores one of the basic concept of accounting
namely accrual concept
PROCEDURE OF PREPARING CASH FLOW STATEMENT-
The institute of charted accountants of India has issued accounting standards (as)-3 revised for
preparing a cash flow statement This accounting standard has been made mandatory in respect
of accounting periods commencing on or after 1st April 2001 for certain enterprises These
enterprises are-
bull Enterprises whose equity or debt securities are listed on a recognized stock exchange in
India And enterprise that are in the process of issuing equity or debt securities that will
be listed on a recognized stock exchange in India
bull All other commercial industrial and business enterprises whose turnover for accounting
period Rs 50 crores
As such the cash flow statement has been prepared according to as -3 revised in this project
According to as-3 revised the cash flow statement summarizes the cash inflows and cash
outflows and the net changes (increase or decrease) in cash and cash equipment resulting from
operating investing and financing activities of a firm during a period The following terms are
used for preparing a cash flow statement
CASH-
It compares cash in hand and demands with banks
CASH EQUIVALENTS-
There are short - term highly liquid investments that are readily into known amounts of cash
and which present insignificant risk of changes in their values Normally an investment will be
termed as cash equivalent only if it has a short maturity period say three months or less from the
date of its acquisition Examples of cash equivalent are treasury bills commercial papers etc
Which are purchased with cash that is in excess of immediate needs investment in shares are
excluded from cash equivalents unless they are cash equivalent in reality For example the
preference shares of the company which are purchased shortly before their redemption date will
be included in cash equivalents provided there is only an insignificant risk of failure of the
company in repaying the amount at the date of the maturity
CLASSIFICATION OF CASH FLOW-
According to as -3 (revised) cash flow statement should be presented in a manner that it reports
inflows of cash by classifying them into three categories namely operating investing and
financing activities Classification of all activities into these activities on the cash and cash
equivalents of the enterprise such information will be helpful in evaluating the relationships
among these three activities are explained as below
CASH FLOW FROM OPERATING ACTIVITIES-
Operating activities are the main revenue generating activities of an enterprise As such they
include cash flows from those transactions and events which enter into the ascertainment of
net profit or loss of the enterprise Examples of cash flows arising operating activities are
bull Cash receipts from the sale of goods and rendering of services
bull Cash receipts from royalties fees commissions and other revenue
bull Cash payments to suppliers for goods and services
bull Cash payments to and on behalf of employees
bull Cash receipts and cash payments of an insurance enterprise for premiums and claims
annuities and other policy benefits
bull Cash receipts and payments relating to future contracts forward contracts option
contracts and swap contracts when the contracts are held for dealing or trade purpose and
bull Cash payments of refunds of income taxes unless they can be specifically identified with
financing and investing activities
CASH FLOW FROM INVESTING ACTIVITIES-
Investing activities include the purchase and sale of long term assets such as land building plant
and machinery etc not held for resale These activities also include the purchase and sale of such
investment which are not including in cash equipments Cash flow from investing activities
discloses the expenditures incurred for resources intended to generate future income and cash
flows
Examples cash flow arising from investing activities are
bull Cash payments to acquire fixed assets (including intangible)
bull Cash receipts from sale of fixed assets (including intangibles)
bull Cash payments to acquire shares warrants or debt instruments of other enterprises
(other than receipts for those instruments considered to be cash equivalents)
bull Cash receipts from sale of shares warrants or debt instruments of other enterprises (other
than receipts for those instruments considered to be cash equivalents)
bull Cash advances and loans made to third parties In case of financial enterprises these will
be treated as cash flow from operating activities
bull Cash receipts from the repayment of advances and loans made to third parties In case of
financial enterprises these will be treated as cash flow from operating activities
bull Cash receipts of insurance claim for property involved in accident and
bull Cash receipts of interest and dividend In case of financial enterprise these will be treated
cash flow from operating activities
CASH FLOW FROM FIANCING ACTIVITIES-
Financing activities are the activities that result in change in capital and borrowing of the
enterprise
Examples of cash flows arising from financing activities are
bull Cash receipts from issuing shares or other similar instruments
bull Cash receipts from issuing debentures loans bonds and other short term or long term
borrowing
bull Cash repayment of amounts borrowed buy back of equity shares redemption of
preference shares debentures loans bonds etc
bull Cash payment of interest and dividend
IMPORTANT NOTE
In case of financial enterprise such as bank or mutual fund company cash Outflow
and cash inflow arising from the purchase and sale of securities will Be treated as
flows from operating activities This is because purchase and sale of securities is a
part of operating activity in case of financial enterprise In addition interest paid
and interest received as well as dividends received will also be treated as cash flow
from operating activities in case of financial Enterprises
CASH FLOW STATEMENT
(DIRECT METHOD)
CASH FLOW FROM OPERATING ACTIVITIES
Cash receipts from costumers
Cash paid to suppliers and employers ()
Cash generated from operations
Income tax paid ()
Cash flows from extraordinary item
plusmn Extra ordinary items
Net cash from operating activities
CASH FLOW FROM INVESTING ACTIVITIES-
Purchase of fixed assets
Proceed from sale equipment ()
Interest received
Dividend received ()
Net cash from investing activities
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from insurance of share capital
Proceeds from long- term borrowings ()
Repayment of from long-term borrowings
Interest paid
Dividend paid ()
Net cash from financing activities
Net increase in cash and cash equivalent
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
SOME SPECIAL TERMS-
i) INTERSET AND DIVIDEND-
Cash inflow from interest and dividends and cash outflow on account of interest and
dividends should be disclosed separately Cash inflow arising from interest and dividends
received should be shown as cash flow from investing activities where as cash outflow
disclosed outflow on account of interest and dividend paid should be shown as cash flow
from financing activity
ii) TAXES ON INCOME-
Tax paid on income is a part of cash flow from operating activity Hence taxes paid are
shown as a deduction under cash flow from operating activity
iii) EXTRA ORDINARY ITEMS-
Cash flow relating to extra ordinary items such as bad debts recovered Claims received from
insurance companies winning of a lottery or a law etc Should be disclosed separately as
arising from operating investing or financing activities For example the amount received
for insurance company on account of loss of stock by fire Earthquake and floods etc Should
be reported as cash flow from operating activities
iv) SIGNIFICANT NON - CASH TRANSACTION-
There are some investing and financing activities which do not require the use of cash or
cash equivalents Such non cash activities should be excluded from the cash flow statement
Examples are the acquisition of assets by issue of debentures or shares conversion of
shares into debentures etc Such significant on non cash transaction should be disclosed
outside the cash flow statement
CASH FLOW STATEMENT
(INDIRECT METHOD)
CASH FLOW FROM OPERARATTNG ACTIVITIES
Net profit before taxation and extraordinary item
Adjustment for
Depreciation
Foreign exchange loss
Interest income
Dividend income
Interest expense
Operating profit before working capital changes
Increase in sundry debtors
Decrease in inventories
Decrease in sundry creditors
Cash generated from operations
Income tax paid ()
Cash flow before extraordinary item
plusmn Extra - ordinary items
Net cash from operating activities
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of fixed assets ()
Proceeds from sale of equipment
Interest received
Dividend received ()
Net cash from investing activities
CASH FLOW FROM FINANCING ACTIVITIES-
Proceeds from insurance of share capital
Proceeds from long - term borrowings
Repayments of from long - term borrowings ()
Interest paid ()
Dividend paid ()
Net cash from financing activities
Net increase in cash and cash equivalent
Cash and cash equivalents at beginning of period
CHANGES IN CASH FLOWS
Changes in cash flows can be treated to the following
1 Net profit will increase the cash flows these cash flows will be
increased further if there are any non-cash changes (such as depreciation
and amortization)
2 Any payment of dividends will decrease the cash flows as will the
repayment of debt an issue of share or debt will also increase the
cash flows
3 An increase in non-cash assets will decrease cash flows increase in
current assets and fixed assets will result in drain on cash flows
Thus a statement of changes in cash flows ie the cash flow statement
classifies all Changes into one of three categories - operating investing or
financing activities Therefore the preparation of a statement of changes in cash
flows requires classification of changes in liabilities shareholders equity and
non-cash assets into one of these categories although some items will not fit
easily onto one other
h equivalent at end of period
STEP- BY-STEP PROCEDURE TO PREPARE CFS
1 Calculate the net increase or decrease in cash and cash equivalents-
For this purpose the opening balance of total cash and cash equivalents is compared with the
closing balance of cash and equivalents
Increasedecrease in cash and equivalents
Opening balance Closing Balance
Cash in hand
Cash in bank
Short-term Investment
Total
The difference between the total of opening and closing balance will be increased or
Decreased in cash equivalents during the period It may be noted that if there are only one or
two of items of cash etc
2 Net Cash flaw from operating activities-
The term operating refers to the normal purchase of goods and services On the basis of the
information contained in the comparative BS s and the IS and the additional Information the
net cash flow generated or use by the operating activities may be ascertained The IS prepared
by the firm gives the net profit figure earned by the firm On actual basis ie all items in the
IS are incorporated on the basis of earnedaccrued even
3 If not resulting in cash movements-
So the profit or loss as by the IS may not result in increase or decrease in cash balance by the
SYNOPSIS
INTRODUCTION
ESCORTS PVT LTD is a private limited company not listed in a stock exchange of India
and employees 900 highly trained personnel Its manufacturing plants are strategically located
in close proximity to its customers at Faridabad (Haryana) Noida (UP)
OBJECTIVES OF THE STUDY
bull To find the movement of cash inflow and cash outflow
bull To make the comparison between cash inflow and
bull Cash outflow
bull To prepare the Cash Flow Statement
bull To analyze the Balance Sheet of the company in terms of Cash Flow Statement
bull To focus on various activities of the organization in terms of Operating
Financing Investment
SCOPE OF THE STUDY
Financial resources are the assets for the company and their productivity is key
factor for profitability It is necessary to know their problems their knowledge
skills abilities amp the measures that can be taken to reduce them By analyzing this
top management can build good relations with the employees
The whole study is to determine the competencies of different employees who are
working in ESCORTS PVT LTD By analyzing it the top management can
introduce the concept of competency mapping in the organization Through this
management can attempt to use more suitable strategies towards the human
resource development
The research is confined to elicit the existing gap between the standard skill
required to perform the job and the skill processed by the employees at ESCORTS
PVT LTD And to provide them suitable training program to over come those gaps
for the better utilization of human resources
RELEVANCE
The scope of the study was confined to the outside parties like creditors
shareholders government etc Who want to invest their money in the
company
The benefit of the report for the company is that through this report they can come
to know about the cash flow statements of the company
This study also unable the company that their cash is not utilizing in unnecessary
things
The benefit of the report for the researcher is that it has helped to get knowledge
about the cash inflow and cash
RESERRCH METHODOLOGY-
RESEARCH DESIGN
bull The study was conducted under well- structured approach
bull The project lasted for 4 weeks and the year 2009 ie from 08 July to 12
Aug2009
bull The questionnaire method amp personal interview method was used to collect
the primary data for the study
The secondary data is collected from Internet amp company training material and
many other company materials
SAMPLE DESIGN
The process of extracting a sample from a population is called sampling
procedure The selection of sampling procedure to conduct the research
depends upon the nature of the study and the objective to be accomplished
Judgment sampling technique is adopted to select the respondents in this
study The sample design included the various departments in the YAMAHA
MOTORS PVT LTD
Methodology of date collection
bull Conducting personal interview
bull Data collection from primary and secondary sources
bull Designing questionnaire
bull Selecting sample size from the sample frame for the survey
bull Questionnaire distribution
bull Analysis of collected data with the help of statistical tools
bull Interpretation of collected data
bull Stating the conclusion based on the entire study
Sampling Technique
The sampling technique used for this research is of non-probability and convenience
sampling
Sample Unit
Employees of the company
Sample Size
For this research study the sample size is 25 respondents
Sources of data
Primary data
Primary data is the data which is collected by the researcher for the first time
and which was not there The tools used to collect the data are-
1)Questionnaire method from the employers in different departments
2) Face to Face personal interactions
Secondary Data
The data already collected is called as secondary data The relevant information
for this study has been collected from secondary source such as
Books
Journal
Reports
Publication by the organizational circulation
Company records
Business bulletins
Internet
Secondary data is also collected from various of the internet and intranet Some
of the website trough which information was gathered was through
HYPOTHESIS
The report is analyzed under the presumption that cash flow position of
YAMAHA MOTORS PVTLTD It can be improved and made effective in
terms of cash flows
In testing the above hypothesis the following aspects will be considered
1 Balance sheet comparisons
2 Presentation of cash flow statement in terms of revised AS-3
LIMITATIONS
The study though conducted to the best of the ability suffers from some
certain limitations There are
The data is secondary one and as such its reliability may be
questioned upon
The time availability for the study is less and as such it hinders thee
progress of the study
Senior officials were rarely approachable
Websites were not giving comprehensive data
Not having face-to-face interaction to get more relevant
information
Analysis and interpretation of data was done on the assumption that
the respondentsrsquo information was online
Information collected was totally subjective
The interviews are done during office hours but could not be done
for the other employees of other
DATA ANALYSIS
ESCORTS PVT LTD
CASH FLOW STRATEMENT
Year Ended Year Ended
30092009 30092008
Rs Crores Rs
Crores
A Cash Flow from Operating Activities
Net profit before tax (1733) 3444
Adjustment for
Loss on sale Provision for diminution in value of Long Term
Investments amp loans to Group Companies 189 4018
Gain on sale of Long Term Investments (122) (9492)
Gain on sale of Asset (013) -
Depreciation 4497 3955
Misc Exp Assets Write off Provisions 808 750
Interest Expense 7222 7999
Dividend Income (002) (001)
Interest Income (2082) -
Operating Profit before working capital changes 8764 10673
Adjustments for
Trade and other Receivables (8817) (12035)
Inventories 1379 (4692)
Trade Payables 6705 19046
Miscellaneous Expenditure (750) (511)
(1483) 1808
Cash Generated from Operations 7281 12481
Direct Taxes (Paid)Refunds (1785) 3166
Net Cash Flow from operating activities 5496 15647
B Cash Flow from Investing Activities
Purchase of Fixed Assets (3095) (2794)
Proceeds from sale of Fixed Assets 086 177
Movement in Loans and Advances (1627) (1644)
Sale of Investments 3233 11452
Short Term Deposits with schedule Banks (231) (1048)
Interest Received 2070 -
Dividend Received 002 001
Net Cash Flow from Investing activities 438 6144
Proceeds from Share Capital amp Securities Premium 11444 -
Proceeds from Long Term Borrowings 8660 -
Less Repayment of Long Term Borrowings (054) (7896)
Proceeds (Repayment) from short term borrowings (net) (22726) -
Interest Paid (7740) (8223)
Net Cash used in financing activities (10416) (16119)
Net Increase(Decrease) in Cash and Cash equivalents (4482) 5672
Cash and Cash equivalents as at 01102008 10565 4893
Cash and Cash equivalents as at 30092009 6083 1056
ANALYSIS OF CASH FLOW
From the cash flow statements of the ESCORT PVTLTDIt can be analyzed
from the two years that the net cash balance of the company has increased
manifold in 30-09-2008 than the year 30-09-2009
The net profit in 30-09-2008 is higher than the 30-09-2009 but due to certain
changes there has been increase in the cash balance
The interest paid this year is ore of the last year which implies that thee
company has not repaid his borrowed capital due to which the interest has got
down
The depreciation has increased but it does not affect cash to an extent as it is a
non-cash item In the head of working capital there is drastic change in the cash
balance in the form of ldquoTrade and other Receivables which has affected the cash
balance
There is outflow of cash for receivables rather than the inflow in the last year
So the net effect is that the cash from operating activities has been decreased
two times from the last year
The company has no accumulated losses as at the end of the financial year ie
September 31 2008
Provision for taxation has been made in accordance with the requirement of AS-
22 issued by Institute of Charted Accountants of India
Pursuant to that current year deferred tax liability have been charged to profit amp
loss account
In opinion of the board of directors of thee company the current assets loans
and advances have a value on realization in the ordinary course of the business at
least equal to the amount stated in the balance sheet and provision for all
liabilities have been made
Balance of sundry debtors creditors loans and advances are subject to confirmation by
the concerned parties
METHOD OF ANALYSIS
1 Data analysis is done using the following statistical tools wherever required in
order to extract meaningful information from the collected data
o Simple percentage and averages
o Bar diagram
o Cone diagram
o Pie diagram
2 The collected data from the questionnaire has been put together in the form of
tables
3 Percentage has been calculated wherever necessary for generalization of the
data
4 Data analysis and interpretation has been done on the basis of primary and
secondary data
5 The findings researches have been recorded based on the analysis
6 The study conducted pertains only to YAMAHA MOTORS INDIA PVTLTD
All bank balances (debitcredit) have been confirmed by the concerned bank
Identified from the available information which has been relied upon by the auditors
The names of small-scale industrial units to whom outstanding for more than
thirty days within agreed terms
The company has 9996 of shareholders in its subsidiary company named as
ESCORTS PVT LTD As at 31-03-2008
So the net effect is that the net cash from investing activities has many more
times than the last year which is negative Now the company has repaid its long
term borrowing more than the last year which has decreased the cash balance by
the little amount
Balance with the schedule banks under the head current amp collection account
amounting to represent funds in transit lying with schedule banks pending
transfer against loan liabilities under the head cash credit amp bill discounting
LIQUIDITY RATIO
1 CURRENT RATIO
(Amount in Rs)
Current Ratio
Year Current Assets Current Liabilities Ratio
2003 58574151 7903952 7412004 69765346 31884616 2192005 72021081 16065621 4482006 91328208 47117199 1942007 115642068 30266661 382
Interpretation
As a rule the current ratio with 21 (or) more is considered as satisfactory
position of the firm
When compared with 2006 there is an increase in the provision for tax because
the debtors are raised and for that the provision is created The current liabilities
majorly included Lanco Group of company for consultancy additional services
The sundry debtors have increased due to the increase to corporate taxes
In the year 2006 the cash and bank balance is reduced because that is used for
payment of dividends In the year 2007 the loans and advances include majorly
the advances to employees and deposits to government The loans and advances
reduced because the employees set off their claims The other current assets
include the interest attained from the deposits The deposits reduced due to the
declaration of dividends So the other current assets decreased
The huge increase in sundry debtors resulted an increase in the ratio which is
above the benchmark level of 21 which shows the comfortable position of the
firm
GRAPHICAL REPRESENTATION
741
219
448
194
382
000
100
200
300
400
500
600
700
800
Ratio
2003 2004 2005 2006 2007
Years
CURRENT RATIO
Ratio
2 QUICK RATIO
(Amount
in Rs)
Quick Ratio
Year Quick Assets Current Liabilities Ratio
2003 58574151 7903952 741
2004 52470336 31884616 165
2005 69883268 16065620 435
2006 89433596 47117199 19
2007 115431868 30266661 381
Interpretation
Quick assets are those assets which can be converted into cash with in a short
period of time say to six months So here the sundry debtors which are with the
long period does not include in the quick assets
Compare with 2006 the Quick ratio is increased because the sundry debtors are
increased due to the increase in the corporate tax and for that the provision
created is also increased So the ratio is also increased with the 2006
GRAPHICAL REPRESENTATION
741
165
435
190
381
000
100
200
300
400
500
600
700
800
Ratio
2003 2004 2005 2006 2007
Years
QUICK RATIO
Ratios
3 ABOSULTE LIQUIDITY RATIO
(Amount
in Rs)
Absolute Cash Ratio
Year Absolute Liquid Assets Current Liabilities Ratio
2003 31004027 7903952 392
2004 10859778 31884616 034
2005 39466542 16065620 246
2006 53850852 47117199 114
2007 35649070 30266661 118
Interpretation
The current assets which are ready in the form of cash are considered as absolute
liquid assets Here the cash and bank balance and the interest on fixed assts are
absolute liquid assets
In the year 2006 the cash and bank balance is decreased due to decrease in the
deposits and the current liabilities are also reduced because of the payment of
dividend That causes a slight increase in the current yearrsquos ratio
GRAPHICAL REPRESENTATION
392
034
246
114 118
0
05
1
15
2
25
3
35
4
Ratios
2003 2004 2005 2006 2007
Years
ABSOLUTE CASH RATIO
Ratios
LEVERAGE RATIOS
4 PROPRIETORY RATIO
(Amount
in Rs)
Proprietory Ratio
Year Share Holders Funds Total Assets Ratio
2003 67679219 78572171 086
2004 53301834 88438107 06
2005 70231061 89158391 079
2006 56473652 106385201 053
2007 97060013 129805102 075
Interpretation
The proprietary ratio establishes the relationship between shareholders funds to
total assets It determines the long-term solvency of the firm This ratio indicates
the extent to which the assets of the company can be lost without affecting the
interest of the company
There is no increase in the capital from the year2004 The share holderrsquos funds
include capital and reserves and surplus The reserves and surplus is increased
due to the increase in balance in profit and loss account which is caused by the
increase of income from services
Total assets includes fixed and current assets The fixed assets are reduced
because of the depreciation and there are no major increments in the fixed assets
The current assets are increased compared with the year 2006 Total assets are
also increased than precious year which resulted an increase in the ratio than old
GRAPHICAL REPRESENTATION
086
060
079
053
075
000
010
020
030
040
050
060
070
080
090
Ratios
2003 2004 2005 2006 2007
Years
PROPRIETORY RATIO
Ratios
ACTIVITY RATIOS
5 WORKING CAPITAL TURNOVER RATIO
(Amount
in Rs)
Working Capital Turnover Ratio
Year Income From Services Working Capital Ratio
2003 36309834 50670199 0722004 53899084 37880730 1422005 72728759 55355460 1312006 55550649 44211009 1262007 96654902 85375407 113
Interpretation
Income from services is greatly increased due to the extra invoice for Operations
amp Maintenance fee and the working capital is also increased greater due to the
increase in from services because the huge increase in current assets
The income from services is raised and the current assets are also raised together
resulted in the decrease of the ratio of 2007 compared with 2006
GRAPHICAL REPRESENTATION
072
142 131126
113
000
020
040
060
080
100
120
140
160
Ratio
2003 2004 2005 2006 2007
Years
WORKING CAPITAL TURNOVER RATIO
Ratio
6 FIXED ASSETS TURNOVER RATIO
(Amount in Rs)
Fixed Assets Turnover Ratio
Year Income From Services Net Fixed Assets Ratio
2003 36309834 28834317 126
2004 53899084 29568279 182
2005 72728759 17137310 424
2006 55550649 15056993 369
2007 96654902 14163034 682
Interpretation
Fixed assets are used in the business for producing the goods to be sold This
ratio shows the firmrsquos ability in generating sales from all financial resources
committed to total assets The ratio indicates the account of one rupee
investment in fixed assets
The income from services is greaterly increased in the current year due to the
increase in the Operations amp Maintenance fee due to the increase in extra invoice
and the net fixed assets are reduced because of the increased charge of
depreciation Finally that effected a huge increase in the ratio compared with the
previous yearrsquos ratio
GRAPHICAL REPRSENTATION
126182
424 369
682
000
100
200
300
400
500
600
700
Ratios
2003 2004 2005 2006 2007
Years
FIXED ASSETS TURNOVER RATIO
Ratios
7 CAPITAL TURNOVER RATIO
(Amount
in Rs)
Capital Turnover Ratio
Year Income From Services Capital Employed Ratio
2003 36309834 37175892 0982004 53899084 53301834 1012005 72728759 70231061 1042006 55550649 56473652 0982007 96654902 97060013 100
Interpretation
This is another ratio to judge the efficiency and effectiveness of the company
like profitability ratio
The income from services is greaterly increased compared with the previous year
and the total capital employed includes capital and reserves amp surplus Due to
huge increase in the net profit the capital employed is also increased along with
income from services Both are effected in the increment of the ratio of current
year
GRAPHICAL REPRESENTATION
098
101
104
098
100
094095096097098099100101102103104
Ratios
2003 2004 2005 2006 2007
Years
CAPITAL TURNOVER RATIO
Ratios
8 CURRENT ASSETS TO FIXED ASSETS RATIO
(Amount
in Rs)
Current Assets To Fixed Assets Ratio
Year Current Assets Fixed Assets Ratio
2003 58524151 19998020 2932004 69765346 18672761 3742005 72021081 17137310 4202006 91328208 15056993 6072007 115642068 14163034 817
Interpretation
Current assets are increased due to the increase in the sundry debtors and the net
fixed assets of the firm are decreased due to the charge of depreciation and there
is no major increment in the fixed assets
The increment in current assets and the decrease in fixed assets resulted an
increase in the ratio compared with the previous year
GRAPHICAL REPRESENTATION
293374
420
607
817
000
100
200
300
400
500
600
700
800
900
Ratios
2003 2004 2005 2006 2007
Years
CURRENT ASSETS TO FIXED ASSETS RATIO
Ratios
PROFITABILITY RATIOS
GENERAL PROFITABILITY RATIOS
9 NET PROFIT RATIO
(Amount in Rs)
Net Profit Ratio
Year Net Profit After Tax Income from Services Ratio
2003 21123474 36039834 059
2004 16125942 53899084 030
2005 16929227 72728759 023
2006 18259580 55550649 033
2007 40586359 96654902 042
Interpretation
The net profit ratio is the overall measure of the firmrsquos ability to turn each rupee
of income from services in net profit If the net margin is inadequate the firm
will fail to achieve return on shareholderrsquos funds High net profit ratio will help
the firm service in the fall of income from services rise in cost of production or
declining demand
The net profit is increased because the income from services is increased The
increment resulted a slight increase in 2007 ratio compared with the year 2006
GRAPHICAL REPRESENTATION
059
030
023
033
042
000
010
020
030
040
050
060
Ratios
2003 2004 2005 2006 2007
Years
NET PROFIT RATIO
Ratios
10 OPERATING PROFIT
(Amount in Rs)
Operating Profit
Year Operating Profit Income From Services Ratio
2003 36094877 36309834 099
2004 27576814 53899084 051
2005 29540599 72728759 041
2006 31586718 55550649 057
2007 67192677 96654902 070
Interpretation
The operating profit ratio is used to measure the relationship between net profits
and sales of a firm Depending on the concept it will decide
The operating profit ratio is increased compared with the last year The earnings
are increased due to the increase in the income from services because of
Operations amp Maintenance fee So the ratio is increased slightly compared with
the previous year
GRAPHICAL REPRESENTATION
099
051
041
057
070
000
010
020
030
040
050060
070
080
090
100
Ratios
2003 2004 2005 2006 2007
Years
OPERATING PROFIT RATIO
Ratios
11 RETURN ON TOTAL ASSETS RATIO
(Amount in Rs)
Return on Total Assets Ratio
Year Net Profit After Tax Total Assets Ratio
2003 21123474 78572171 027
2004 16125942 88438107 018
2005 16929227 89158391 019
2006 18259580 106385201 017
2007 40586359 129805102 031
Interpretation
This is the ratio between net profit and total assets The ratio indicates the return
on total assets in the form of profits
The net profit is increased in the current year because of the increment in the
income from services due to the increase in Operations amp Maintenance fee The
fixed assets are reduced due to the charge of depreciation and no major
increments in fixed assets but the current assets are increased because of sundry
debtors and that effects an increase in the ratio compared with the last year ie
2006
GRAPHICAL REPRESENTATION
027
018 019017
031
000
005
010
015
020
025
030
035
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON TOTAL ASSETS
Ratios
12 RESERVES amp SURPLUS TO CAPITAL RATIO
(Amount in Rs)
Reserves amp Surplus To Capital Ratio
Year Reserves amp Surplus Capital Ratio
2003 65599299 2079920 31542004 34582554 18719280 1852005 51511781 18719280 2752006 37754372 18719280 2022007 78340733 18719280 419
Interpretation
The ratio is used to reveal the policy pursued by the company a very high ratio
indicates a conservative dividend policy and vice-versa Higher the ratio better
will be the position
The reserves amp surplus is decreased in the year 2006 due to the payment of
dividends and in the year 2007 the profit is increased But the capital is
remaining constant from the year 2004 So the increase in the reserves amp surplus
caused a greater increase in the current yearrsquos ratio compared with the older
GRAPHICAL REPRESENTATION
3154
185 275 202419
-
500
1000
1500
2000
2500
3000
3500
Ratios
2003 2004 2005 2006 2007
Years
RESERVES amp SRUPLUS TO CAPITAL RATIO
Ratios
OVERALL PROFITABILITY RATIOS
13 EARNINGS PER SHARE
(Amount in Rs)
Earnings Per Share
Year Net Profit After Tax No of Equity Shares Ratio
2003 21123474 207992 101562004 16125942 1871928 8612005 16929227 1871928 9042006 18259580 1871928 9752007 40586359 1871928 2168
Interpretation
Earnings per share ratio are used to find out the return that the shareholderrsquos earn
from their shares After charging depreciation and after payment of tax the
remaining amount will be distributed by all the shareholders
Net profit after tax is increased due to the huge increase in the income from
services That is the amount which is available to the shareholders to take There
are 1871928 shares of Rs10- each The share capital is constant from the year
2004 Due to the huge increase in net profit the earnings per share is greaterly
increased in 2007
GRAPHICAL REPRESENTATION
10156
861904 975
2168
000
2000
4000
6000
8000
10000
12000
Ratios
2003 2004 2005 2006 2007
Years
EARNINGS PER SHARE
Ratios
14 PRICE EARNINGS (PE) RATIO
(Amount in Rs)
Price Earning (PE) Ratio
Year Market Price Per Share Earnings Per Share Ratio
2003 3254 10156 0322004 2847 861 3302005 3752 904 4152006 3017 975 3092007 5185 2168 239
Interpretation
The ratio is calculated to make an estimate of application in the value of share of
a company
The market price per share is increased due to the increase in the reserves
amp surplus The earnings per share are also increased greaterly compared
with the last year because of increase in the net profit So the ratio is
decreased compared with the previous year
GRAPHICAL REPRESENTATION
032
330
415
309
239
000
050
100
150
200
250
300
350
400
450
Ratios
2003 2004 2005 2006 2007
Years
PE RATIO
Ratios
15 RETURN ON INVESTMENT
(Amount in Rs)
Return on Investment
Year Net Profit After Tax Share Holders Fund Ratio
2003 21123474 67679219 031
2004 16125942 53301834 03
2005 16929227 70231061 024
2006 18259580 56473652 032
2007 40586359 97060013 042
Interpretation
This is the ratio between net profits and shareholders funds The ratio is
generally calculated as percentage multiplying with 100
The net profit is increased due to the increase in the income from services ant
the shareholders funds are increased because of reserve amp surplus So the ratio
is increased in the current year
GRAPHICAL REPRESENTATION
031 030
024
032
042
000
005
010
015
020
025
030
035
040
045
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON INVESTMENT RATIO
RatioS
DATA COLLECTION
The data can be of two types
Primary Data
Secondary Data
Primary Data
Primary data are those data which is originally collected afresh
Secondary Data
Secondary data are those data which are already collected and stored and which has
been passed through statistical research
In this project Secondary data has been collected from following sources-
Annual report
Books
MIS
Other material and report published by company There are two methods to prepare
the Cash flow Statement
ndirect Method
I
The indirect method (or reconciliation method) starts with net income and converts it
to net cash flow from operating activities In other words the indirect method adjusts
net income for items that affected reported net income but did not affect cash To
compute net cash flow from operating activities non-cash charges in the income
statement are added ack to net income and non-cash credits are deducted
b
Direct Method
Under the direct method the statement of cash flows reports net cash flow from
operating activities as major classes of operating cash receipts (eg cash collected from
customers and cash received from interest and dividends) and cash disbursements (eg
cash paid to suppliers for goods to employees for services to creditors for interest and
to government authorities for taxes)
INDIRECT VERSUS DIRECT METHOD
The most contentious decision that the FASB faced in issuing Statement No 95 was
choosing between the direct method and the indirect method of determining net cash
flow from operating activities Companies lobbied against the direct method urging
adoption of the indirect method Commercial lending officers expressed a strong
preference to the FASB hat the direct method be required
tCF-Page 3 of 5
In Favor of the Direct Method
The principal advantage of the direct method is that it shows operating cash receipts and
payments That is it is more consistent with the objective of a statement of cash flows to
provide information about cash receipts and cash payments than the in-direct method
which does not report operating cash receipts and payments
Supporters of the direct method contend that knowledge of the specific sources of
operating cash receipts and the purposes for which operating cash payments were made
in past periods is useful in estimating future operating cash flows Furthermore in-
formation about amounts of major classes of operating cash receipts and payments is
more useful than information only about their arithmetic sum (the net cash flow from
operating activities) Such information is more revealing of an enterprises ability (1) to
generate sufficient cash from operating activities to pay its debts (2) to reinvest in its
operations and (3) to make distributions to its owners
Many corporate providers of financial statements say that they do not currently collect
information in a manner that allows them to determine amounts such as cash received
from customers or cash paid to suppliers directly from their accounting systems But
supporters of the direct method contend that the incremental cost of assimilating such
operating cash receipts and payments data is not significant
In Favor of the Indirect Method
The principal advantage of the indirect method is that it focuses on the differences
between net income and net cash flow from operating activities That is it provides a
useful link between the statement of cash flows and the income statement and balance
sheet
Many providers of financial statements contend that it is less costly to adjust net income
to net cash flow from operating activities (indirect) than it is to report gross operating
cash receipts and payments (direct) Supporters of the indirect method also state that the
direct method which effectively reports income statement information on a cash rather
than an accrual basis may erroneously suggest that net cash flow from operating
activities is as good as or better than net income as a measure of performance
Special Rules Applying to Direct and Indirect Methods
Companies that use the direct method are required at a
minimum to report separately the following classes of
operating cash receipts and payments
Receipts
1048713 Cash collected from customers (including lessees licensees etc)
1048713 Interest and dividends received
1048713 Other operating cash receipts if any
Payments
1048713 Cash paid to employees and suppliers of goods or services (including
suppliers of
insurance advertising etc)
1048713 Interest paid
1048713 Income taxes paid
1048713 Other operating cash payments if any
Companies using the indirect method are required to disclose separately changes in
inventory receivables and payables to reconcile net income to net cash flow from
operating activities In addition interest paid (net of amount capitalized) and income
taxes paid must be disclosed elsewhere in the financial statements or accompanying
notes
The FASB requires these separate and additional disclosures so that users
may approximate the direct method Also an acceptable alternative presentation
of the in-direct method is to report net cash flow from operating activities as a
single line item in the statement of cash flows and to present the reconciliation
details elsewhere in the financial statements
FINDING OF SUDY
According to cash flow statement of the company The finding of the study are as
follows-
The company has not taken any loans secured or unsecured from companies
firms or other parties
The company has not accepted any deposit from the public during the year
The company is not a sick industrial company
The company has not granted any loan secured or unsecured to company firms
or other parties
The company has paid the entire long term and short term borrowing during the
year
The company has buy back the companyrsquos own share this year
The interest paid in 2008 is more than the
There has been a significant decline in volume over the years from 2001-02
to 2005-06 as can be seen in the graph below
Table 43
The Net sales of Tractor has increased considerably from 2004-05 to 2007-08
This can be mainly attributed to changes in Variable and material costs and in
the price
The Net sale of Tractor has increased considerably from 2004-05 to 2007-08
that is an decrease of Rs7216 per tractor This can be mainly attributed to
changes in
Variable and material costs and in the prices
RECOMMENDATIONS
According to cash flow statement of the company The suggestions of the study
are as follows-
The time durations for training program have to increase
Buy regular review and consultations develop a career progression
which is sensitive to performance and ability
Create an environment where by people are trend developed to enable
The to take advantages of opportunities that arise
The jab can be redesigned where the work man stay in what is normally
the same job but has elements of it changed
The principle amount must be paid in time which can be reducing the
interest the out flow
The purchase of the fixed asset must be made only when there is extreme
requirement
In order to avoid taxes the company should go for more investment
The companyrsquos borrowings should go for more investment
o The company should try to reduce the depreciations as maximum
as possible
CONCLUSION
The study on competency level of employees at ESCORTS PVTLTD gave an
insight about the acceptance of competency mapping by employees
The employees at Ymi welcome the introduction of competency mapping in their
organization as they felt it was very much essential in enhancing their skills and
organizational development
The organization has provided the recourses guidance and support to facilitate the
introduction of competency level easily and develop the employees in such a way
that they can face any kind of challenge
However the level of competency in employees is found to be satisfactory
Providing proper training education and guidance to the employees can enhance
the level
This study was mainly carried out to find out whether thee competency mapping
being followed by the company is effective till date If the competency mapping
and fitment to the organization
By looking at the graphs and tables it is quite that the employees still are not up to
the level of competent pool they still have to be trained and made competent in
order to fill the gap As the organization has just applied the mapping it has to see
to that it meets all the requirements for competency mapping
Therefore the graphs make it quite clear that the potential of the employees is not
up to the mark and ie they are not competent enough to meet the competency-
mapping requirement Hence by further training and counseling this gap can be
closed
This report includes the training requirements of employees and it highlights skills
possessed by each employee and skill required All employees get training so that
skill can be improved and maintain balance between standard performance with
their actual performance to avoid gap
APPENDIX
QUESTIONNAIRE
Consumer Survey
Name _____________________________
Age _____________________________
Sex
Male
Female
Occupation
Businessman
Service man
Professional
Others
Monthly income brackets
Below 15000
15000- 20000
20000-30000
30000 and above
of your savings _________
Do you invest
Yes
No
If yes then where do you invest your money
Bank
Insurance
funds
Others
Why do you made that statement
Return
Risk hedging
Tax benefits
Other reasons (specify) _______
Who influence your cash decision
Relatives and friends
Family members
Advisors experts
You yourself
If no then why
Do not know where to invest
Satisfied with your current investment return
Donrsquot want take risk
Other reasons
__________________________________________________________________
___________________
Do you know about CF statement
Yes
No
If yes then from where you have come to know about an cash statement
Advertisements on newspapers
Friends and relative
Agents experts
Other source
What do you think about cash statement
It means investing only in share market
Constant watch must be kept always
Return is not satisfactory
Other perception
__________________________________________________
Can you recall any cash flow of company
___________________________
Would you want to made CF of an org
Yes
No
If yes then why
_______________________________________________________
If no then why
_______________________________________________________
BIBLIOGRAPHY
List of Books
1 PANDEY IM - FINANCIAL MANAGEMANT
2 KHAN MY AND JAIN PK -FINANCIAL MANAGEMANT
3 SMITH KV ndash MANAGEMANT OF WORKING CAPITAL
3 COMPANY RECORDS
4 JOURNAL
5 REPORTS
WEBLIOGRAPHY
1 wwwescortspvtltdcom
2 wwwgooglecom
manual work Before independence Indian agriculture was in very bad situation But
since 1947 when India became independent the farmers also became independent
They had seen many ups and downs in their income After independence in five-year
plans first priority was assigned to agriculture government tried best to improve the
industry but a systematic planned approach for development started in 1950 since than
irrigation was recognized as key factor for agriculture Education and research were also
taken as a major initiative
In over six decades of the inception Escorts has been much
more than just being one of Indias largest engineering companies It has been a prime
mover on the industrial front introducing products and technologies and taking the
country forward in key areas
All these developments made mechanization mandatory for agriculture and
imports of tractors began Acceptance of mechanization was slow in fiftyrsquos the use of
tractor was very low Green Revolution was the result of tractor was barely 10000 in
1970 The industry was producing around 25000 to 30000 tractors Today India is the
largest tractor market estimating 2185000 tractors per annum with the annual growth of
123 Today the tractor industry is of about 5000 crores
With the 12 of arable land today India has 47 of the worldrsquos tractor India splits
tractors largely into four categories ie 20-30hp 31-40hp 41-50hp 51amp above 21-30hp
and 31-40hp ranges into together are nearly 76
SEGMENT OF TRACTORS ACCORDING TO HP WISE
Tractor Range 1965-97 1997-98 1998-99 1999-2000
20-30 HP 24 22 17 10
31-40 HP 51 50 54 55
41-50 HP 19 20 22 25
50ampabove 6 8 7 10
Demand for big hp segment is increasing as per the table shown In the budget of 1995-
96 the central government has given subsidy of Rs 30000 per tractor The subsidy was
for the user of low up segment tractors (for small farmers) The government wants to
increase the usage of tractor for higher agriculture production In the budget of
year1998-99 the finance minister Mr Yashwant Sinha has levied 8 excise duty on the
imports This was to save the Indian tractor industry form the slow down of economy
and the East Asian Crises According to economic survey of 1997-98 the production of
agriculture has dropped by 205 Until 1993-94 small tractor (below 25hp) were
exempted fro the excise in bid to encourage small farmers Because in India almost
65 of farmers has less than 4 acres of arable land
According to business India due to the Mahindra amp Mahindra and Swaraj tractors
would be benefited about Rs 10000 to Rs12000 per tractor as compared to others
which imports parts from abroad The compound average growth rate during last six
years has been around 15 The level of tractorization is high in Punjab amp Haryana at
around 95amp74 tractors per thousand hectares respectively The tractor demand is driven
by agriculture Products Interest Rates Total
Agricultural Credit Total Irrigation Facilities and Crop Pattern Among them credit is
strongly correlated with the tractor sale Nearly 80 of the tractorrsquos sale is through
credit
Financial Pattern
As stated above that 80 of the tractor is financed through credit rates essentially
through commercial banks regional banks rural banks and state level land development
banks The credit worthiness of the farmer is ascertained to have minimum holding of 6
areas of cultivated land to be eligible for loan However bank can provide a loan on
smaller landholding subject to farmer establishing his credit worthiness The credit
inflow since financial year 1996 is increasing support from NSBARD This has already
allocated 2000 crores from current year
HISTORICAL BACKGROUND
Indian agricultural in the fifties followed age bound tradition and was considered
backward The country did not produce enough food grain to feed its 36 crores
population and famines were recurrent features Import of food grains became necessary
to meet the short fall in domestic production there by causing a drain on scare foreign
exchange resources It therefore became imperative to high priority to the development
of agriculture
First phase of development (1960-1967)
Farm mechanism made a small beginning in the first five year PLAN Tractors were
imported for introduction is isolated pockets However acceptance of mechanization was
a slow process due to lack of awareness about its economic usefulness and versatility
The decade 1960 saw green revolution both increase in production and productivity with
the parallel emphasis on industry The birth of Indian tractor industry took place in
1959-60 when
import was restricted amp five manufacturing units were set up in private sector all with
collaboration It was in this background that production of tractors in the country in
1960
NAME COLLABORATION YEAR OF
COMMENCEMENT
MS EICHER TRACTORS
LTD
WEST GERMANY 1959
MS HINDUSTAN
TRACTORS LTD
CZECHOSLOVAKIA 1963
MS TRACTORS amp
FARM EQUIPMENT
LTD(TAFE)
UK 1963
MS ESCORTS LTD POLAND 1964
MS INTERNATIONAL
TTACTORS CO OF
INDIA LTS LATER
RENAMED AS
MAHINDRA amp
MAHINDRA
UK 1965
The total indigenous production of tractors by 1965 was just 6000 The real spurt in
mechanization of agriculture came in the introduction of high yielding variety (HYV) of
seeds in 1966-67 and their enthusiastic adoption by farmers particularly in the wheat
growing northern region With the successful introduction and acceptance these high
quality seeds there was a upspring in the demand of tractors in 1967 and demand started
multiplying at an annual rate of almost 50 (19671800-197033000)A natural
consequent of sharp upsurge and consequent shortage was heavy price premium on
tractors Recognizing the situation imports of tractors were liberalized and over and
above the domestic production of 20000 in 1970 3000 tractors were imported
Second phase of development (1968-1980)
Since the pace of indigenous five tractors manufacturing units already set up far below
expectation the Government decided to provide diligence to the tractor industry in 1968
and invites new entrepreneurs Benefiting from this forward-loo
king policy six more units came in during 1971-1974 These were
NAME COLLABORTION YEAR OF
COMMENCEMENT
MS ESCORTS
TRACTORS LTD
UK 1971
MS HMT LTD CZECHOSLIVAKIA 1971
MS KIRLOSKAR
TRACTORS LTD
WEST GERMANY 1974
MS PUNJAB
TRACTORS LTD
INDIGENOUS 1974
MS HARSHA
TARCTORS LTD
USSR 1975
Not withstanding the above progress on the setting up to new units Tractor industry ran
into difficulties from 1969 onwards and by 1972 domestic tractor production stagnated
at a level of 20000units primarily due to continuing of imports of tractors Problem was
further compounded by the oil crisis in 1973-74 and the resultant economic crisis and
inflationary pressures which persisted till middle of 1975
The tractor market started slowly pocking up from 1975 (31000tractors) because of
relative price stability govt directives of the commercial banks increase rural lending
expansion of rural branches of commercial banks good monsoons which resulted in
bumper harvests and accelerated pace of extension of irrigation facilities This trend
continued throughout the late seventies and by 1979-80 yearly market off take had risen
to a level of 62000tractors
Third phase of development (1980-86) The buoyancy in the tractor market experienced in the late seventies continued tell 1981-82 when 78000
tractors were sold The encouraging trend led to the setting up of more for the manufacture of tractors
during 1981-86 These units were
NAME COLLABORATION YEAR OF
COMMENCEMENT
MS AUTO TRACTORS
LTD
UK 1981
MS PRATAP STEEL
ROLLING MILL LTD
INDIGENOUS 1983
MS VST TRACTORS
LTD
JAPAN 1986
However the sale of tractors plummeted to a low level of 66000 tractors in the year
1982-83 in the wake of severe credit squeeze imposed by reserve bank of India
The demand for tractors again picked up when the credit squeeze was eased and a sale
of 80000units was recorded in the year 1984-85 for next year Tractor industry stagnated
causing closure of five manufacturing units as detailed below
NAME YEAR OF CLOSURE
PINE TRACTORS LTD 1983
HARSHA TRACTORS LTD 1987
AUTO TRACTORS LTD 1987
KISLOSKAR TRACTOR LTD 1991
PRALAP STEEL ROLLING MILLS
(HARYANA TRACTORS LTD)
1996
Fourth phase of development( 1987 onwards)
In the year 1987-88 the country saw a severe drought situation This was a difficult
period and it widely anticipated that crop yield would be severely affected Under such a
situation it was necessary to have provisions for supply of power to perform farm
operation at proper time in order to fully exploit the limited moisture content left in soil
The versatility in the tractor became evident as this vehicle was used for pumping out
underground water in this background tractor industry showed a remarkable growth
during this period and all time high sale of 90000 tractors was recorded in the drought
year (1987-88)Fourth phase of development
The growth trend appears to be continuing with relaxation of tractor financing norms
except for a 2 year slack period due to general economic slowdown and political
turmoil In fiscal 1997-98 tractors sales refaced an all time high record of 250000This
impressive growth has influenced 3 more players as listed below to enter the market
NAME COLLABORATION YEAR OF
COMMENCEMENT
INTERNATIONAL
TRACTORS LTD
INDIGENOUS 1997
BAJAJ TEMPO LTD INDIGENOUS 1997
NEW HALLAND
TRACTORS (INDIA)
PVT LTD
ITALY 1998
JOHN DHEER
TRACTORLTD
POLAND 2000
HISTORICAL BACKGROUND OF ESCORTS GROUP
Escorts came into being a vision that led two brothers Yudi Nanda and Hari Nanda to
branch out their familyrsquos prospering transport s business and institute ventures that were
to become the foundations of escorts Ltd Escorts Agents Limited was born at Lahore on
17th October 1944 with Yudi Nanda as Managing Director and Hari Nanda as Chairman
After the owing to opportunity lying in the Indian village Escorts (Agricultural
Machinery) Ltd was launched in 1948 with Yudi Nanda as Director Tragically Yudi
Nanda died in an accident in 1952 Then Escorts agent Ltd And Escorts (Agricultural
Machine) Ltd Was merged in 1953 to create single Escorts agents Pvt Ltd
SOME MILESTONES
1948 Pioneered farm mechanization in the country by launching Escorts Agricultural Machines Ltd
With a franchise from a US based MINNEAPOLIS MOLINE WISCONCIN for marketing
tractors implements engines and other equipments
1958 Started importing MF tractor from Yugoslavia for marketing the same in India
1960 A manufacturing plant was set up at Faridabad
1965 Got industrial license to manufacture URSUS ESCORT tractors
169
1969 Escorts signed a contract with FORD MOTOR COMPANY to manufacture Ford 3000 model
tractors Escorts Institute of Farm Mechanization (EIFM) was established at Bangalore This
training Institute is one of its kind
1971 1st February the first tractor FORD 3000 rolled out of the factory The same year the turnover
touched the Rs53 million mark
1973 Escorts Tractors Limited (ETL) declared a healthy Profit Before Tax of Rs4725 million
1974 Export of 400 tractors to Afghanistan - perhaps the worlds largest ever airlift of such
equipment
1975 Turnover crossed the Rs 200 million mark for ETL Profit After Tax Rs 87 million Maiden
dividend of 10 declared
1976
1976 FORD 3600 advancement in Farm Mechanization was launched with fanfare to a
tremendous reception Trial production of in-plant manufacturing of engine parts (Block amp
Head)
1977
1977 Escorts Scientific Research Centre marked its beginning at Faridabad by developing its own
Engines for E-27 and E-37 Due to constant technology absorption indigenization level
touched 72 for FORD tractors which was a result of relentless effort in that direction
1979 Turnover crossed the Rs 50 crores mark In plant facility for machining centre housing and
case transmission on built-in line concept installed
1983 Escorts Tractors Limited (ETL) established a state-of-the-art research and development centre
to spearhead newer breakthroughs in Farm Mechanization and to maintain industry
leadership Line concept introduced for engine block machining
1984 75000th tractor rolled out A great occasion for the large family that worked for ETL Newer
challenges and frontiers were set
1985 In keeping with the stupendous financial success Escorts Tractors Limited (ETL) offered its
first Bonus Issue (11)
1987 50hp FORD 3610 was launched another leap for the Indian Farm Mechanization Industry the
farmers and the people of the land
1988
1988 ETLrsquos annualized turnover crossed Rs 100 crores Dividend 45 for 15 months
1989 A MOU with CLAAS was signed for manufacturing amp
1990-
91
First Public Issue (Februaryrsquo91) over-subscribed four times Shares listed on Delhi and Bombay
Stock Exchanges
1991-
92
The Crop Tiger range of Combine Harvesters was launched by Escorts Claas Ltd
1993 FORD 3620 tractor launched
1996 Disengagement of joint venture collaboration with New Holland and launch of FARMTRAC
Tractor
1997 A Joint Venture with Italian company CARRARO was finalized to establish a company in India
for manufacturing and marketing of transmission and axles
COLLABORATIONS
Collaboration with international Organization of technological excellence constant
research to adopt the emerging technology to specify requirement of the market and
belief in the philosophy industrial interdependence have made Escorts today one of the
leading trend steers in Indiarsquos New Industrial Culture Escorts have merged as fraternity
of above 50000 shareholders 22000 employees 4000 ancillary suppliers and 1 6000
dealers and stockiest all engaged in a large scale investment and sustained efforts to
meet the ever widening market horizons of technological competence appropriate to
Indiarsquos unique changing needs
Escorts believe in incorporating the finest existing technology to meet Indian consumers
demands by collaborating with the internationally renowned companies prominent
among these are
IN GERMANY
GOETZE AG Piston rings and cylinder liners
MAHLE GmbH Piston
CLASS OHG Harvesters Combines
KNORR BREMSE AG Railway Brake System
AUGUST BILSTEIN GmbH Absorbers Hydraulic products
Pressure and temperature switches
IN JAPAN
KAYABA INDUSTRY CO LTD Telescopic Front Forks Car
MIKUNI SHOKO CO Carburetors for BI-Wheelers
IN UK
JCBAMFORD EXCAVATORS JCB Excavators loaders Front end
Loaders Telescopic handlers
IN USA
HUGHESNETWORKS SYSTEMS AB Road Construction Machinery
Vibratory Road Rollers
OFFICIAL ADDRESS OF ESCORTS
Registered Office Corporate
Secretariat amp Law
Escorts Ltd
11 Scindia House
Connaught Circus
New Delhi-110 001
Tel No 011-23310145
Fax No 011-23311715
Escorts Ltd
155 Mathura Road
Faridabad - 121 003
Tel No ( 0129 ) 2250222
Fax ( 0129 ) 2250060
Email Address corpsectndbvsnlnetin
Web Site wwwescortsgroupcom
LEADERSHIP TEAM
Mr Rajan Nanda
Chairman
Mr Nikhil Nanda
Joint Managing Director
Mr Rohtash Mal
Executive Director and Chief Executive Officer - Agri Machinery Group
Mr Manoj Jha
Executive Vice President of Engineering Division
Mr Kamal Bali
CEO ndash Escorts Construction Equipment Limited (ECEL)
Mr GB Mathur
Vice President - Law amp Company Secretary
Mr Rakesh Kumar Budhiraja
Group Chief Financial Officer
Mr Partha Dasgupta
Group Vice President Human Resources and Employee Relations
LEVELS OF MANAGEMENT
MANAGEMENT
TOP
MANAGEMENT
SENIOR
MANAGEMENT
MIDDLE
MANAGEMENT
JUNIOR
MANAGEMENT
MANAGING
DIRECTOR amp
CEO(G-11)
CHIEF GENERAL
MANGER(G-8)
CHIEF
MANAGER
(G-5)
ASSISTANT
MANAGER(G-2)
VICE PRESIDENT
(G-10)
GENERAL
MANAGER(G-7)
SENIOR
MANAGER(G-4)
EXECUTIVE(G-
1)
ASSOCIATE
VICE PRESIDENT
(G-9)
DEPUTY
GENERAL
MANAGER(G-6)
MANAGER(G-3)
MISSION
WE WILL ACHIEVE LEADERSHIP IN MARKET SHARE amp PROFITABILITY IN
THE DOMESTIC TRACTOR MARKET BY THE YEAR 2004-2006 AND SHALL BE
THE WORLSrsquoS LARGEST SUPPLIER OF SUB 100 HP TRACTORS WE SHALL
PROACTIVELY CONTRIBUTE TO THE PROSPERITY OF THE RURAL
ECONOMY BY DEFINING A LARGER ROLE FOR OURSELVES IN THE FOOD
AND AGRICULTURE SECTOR
THE VISION
WE SHALL STRIVE TO BE THE NUMERO UNO IN THE INDIAN TRACTOR
INDUSTRY AND TOP FIVE TRACTOR MANUFACTURERS IN THE WORLD
WE SHALL CONTINUOUSLY STRIVE TO MEET THE EVER RISING
EXPECTATIONS OF OUR VALUED CUSTOMERS AT THE LOWEST
INTERNAL COST
WE SHALL AIM TO OFFER THE FARMING COMMUNITY A RANGE OF
INNOVATIVE PRODUCTS AND SERVICES WHICH SHALL ENABLE THEM
TO IMPROVE THEIR PRODUCTIVITY AND COMPETITIVNESS
WE SHALL ACHIEVE A TURNOVER OF RS 2 BILLION BY THE YEAR
2006TRANSCENDING NATIONAL BOUNDARIES WE SHALL STRIVE TO
ATTAIN EXPORTS OF ONE TENTH OF OUR TOTAL TRACTOR PRODUCTION
BY THE YEAR 2
REVIEW OF LITERATURE
INTRODUCTION
MEANING OF FINANCIAL STATEMENTS
The financial statements are nothing but the financial information presented in concise and
capsule form and are the financial information is the information relating to the financial
position of any firm The firm prepares the financial statements
bull To communicate with different parties about the financial position of the firm
(Shareholders creditors banks financial institution financial analysts investors
etc And
bull To analyze the operations and performance of the firm for the further
planning
The basic source which provides the financial information is the Annual report of the
company which is presented by the company to its shareholders at the Annual General
Meeting
Though the presentation of annual report is a statutory requirement under the
Companies Act 1956 however it is also a medium of communication with the present as well
as prospective investors and creditors of the company
Clause 43 A of the Listing Agreement (with the stock exchange) requires every
listed company to publish unaudited quarterly results But it does not mean the non-corporate
firms do not prepare the financial statements Every firm big or small prepare the following
financial statements
The Balance Sheet (BS)
1 The Income Statement (IS)
Two other key financial statements which are usually prepared by corporate firms are
1 Statement of appropriation of profit and
2 Statement of Change in financial position
ANALYSIS OF FINANCIAL STATEMENTS (AFS)
Analysis of financial statements refers to the process of the critical examination of the
financial information contained in the financial statements in order to understand and
make decisions regarding the operations of the firm The AFS is basically a study of the
relationship among various financial fact and figures as given in a set of financial
statements AFS is the process of establishment and identifying the financial weakness
and strength of the firm It is indicative of two aspects of a firm ie the profitability
and the financial position
OBJECTIVES OF AFS
The objectives of the AFS is to understand the information contained in financial
statements with a view to know the weakness and strength of the firm and to make a
forecast about the future prospects of the firm and thereby enabling the financial
analyst to take different decisions regarding the operation of the firm The objectives
are as follows
bull To assess the present profitability and operating efficiency of the fir
COMMON-SIZE STATEMENTS (CSS)
The CSS represents the relationship of different items of financial statements with some
Common items by expressing each item as a percentage of the common item In common size
Balance Sheet each item of the balance sheet is stated as a percentage of the total balance
sheet The percentages for different items are computed by dividing the absolute amount of
that item by the Common Base and then multiply by 100 The percentage so calculated can
be easily compared with the corresponding percentage in some other period Thus the CSS is
useful not only in intra-firm comparison for the same year or free several years
TREND PERCENTAGE ANALYSYS(TPA)
The TPA is a technique of studying several financial statements over a series of years In
TPA the trend percentages are calculated for each item by taking the figure of that item for
some base year as 100 So the trend percentage is the percentage relationship which
Each item of different years bears to the same item in the base year Any year may be Taken
as the base year but generally the starting initial year is taken as the base year So each
item for base year is taken as 100 and then the same item for other years is Expressed as a
percentage of the base year
RATIO ANALYSIS (RA)
The RA has emerged as the principle technique of the AFS A ratio is a relationship
Expressed in mathematical terms between two individual or groups of figures connected with
other in some logical manner The RA is based in the premise that a single accounting figure
by itself may not communicate any meaningful information but when expressed as a relative
to some other figure it may definitely give some significant information The relationship
between two or more accounting figuresgroups is called a Financial Ratio
A financial ratio helps to summarize a large mass of financial data into a concise form
and to make meaningful interpretations and conclusions about the performance of a firm
For example a firm has net sales Rs 5 00000
Gross Profit Rs 100000
Ratio of Gross Profit to net sales is 20
ie (Rsl 00000 Rs5 00000)
Forms of Ratios
Since a ratio is a mathematical relationship between two or more variables accounting
figures such relationship can be expressed in different ways as follows
bull As a Pure Ratio
bull As a Rate of Times
bull As a Percentage
Ratio can be classified into
bull The Liquidity Ratio
bull The Activity Ratio
bull The Leverage Ratio
bull The Profitability Ratio
STATEMENT OF CHANGES IN FINANCIAL POSITION
(SCFP)
Since the BS amp IS of a firm are two basic depicting the financial position of a firm at the end
of the year These two financial statements are called the traditional statements Both these
statements fail to throw light on changes in assets liabilities and shareholders wealth during
this year
BS deals with the financial position gives only the static view of the year- end financial
position and fails to indicate the movement and causes in assets and liabilities during the
year Similarly IS show the profit or loss resulting out of the operations of the firm during
the year This profit or loss in fact to ascertain the sufficiency of resources to declare the
dividend etc thus there is a need to prepare another statement (together with the BS amp IS)
which may identify the changes in assets liabilities and the shareholders funds over a given
period
The SCFP is essentially an explanation of the changes in financial position of a Firm
occasioned by the firm in between two successive BSs The SCFP draws basic Information
from the BS and IS helps in understanding the change in assets liabilities and shareholders
worth The SCFP deals with the flow of funds during the year ie the funds coming in and
going out of the firm It summarizes the sources from where the funds might have been
arranged procured by the firm and the uses for which the funs might have been used by
the firm during the year
The SCFP can be prepared as follows
bull SCFP (Cash Basis) also known as a Cash F low Statement
bull SCFP (Net Working Capital Basis) Fund Flow Statement
SCFP (WORKING CAPITAL BASIS)
FUND FLOW STATEMENT
The FFS reports the flows of funds through the firm during the year ie it shows the
Sources and uses of working capital between two balance sheet dates The FFS
attempts to explain the changes in financial position from one BS to the subsequent BS
in terms of the change in the funds or the working capital position of the firm
The term Working capital (WC) is generally defined as the excess of total
current assets over the total current liabilities The current Assets (CA) of a firm may
include cash in hand and at bank stock debtors bills advances etc and the Current
Liabilities (CL) includes creditors bills payable outstanding expenses provision for
tax short term liabilities etc the term WC is a single figure representing the net effect
of a transaction is to increase or decrease the Working Capital by affecting any of the
elements of Current Assets or Current Liabilities Therefore the FFS in its standard
form incorporates only those transactions which affect the Working Capital i e those
transactions where in only one of the affected accounted is a current account
Now a flow of working capital arises when one of the affected accounts is a current
account From the point of view of current account the effected on working capital
can examined in the light of the definitions of the term working capital ie the excess
of current assets over current liabilities ie
Impliedly change in any of the CA or CL will affect the WC Simple observation
equation tells that
bull Increase in any of the CA or decrease in any of the CLs will result in increase
in the WC
bull Decrease in any of the CA or increase in any of the CLs will result in decrease
in the WC
To find out the relative importance of different components of the financial position
of the firm
bull To identify the reasons for change in the profitability financial position of the
firm and
bull To assess the short term as well as the long term liquidity position of the
firm
TECHNIQUES TOOLS OF THE AFS
AFS can be undertaken by different persons and for different purposes therefore the
methodology adopted for the AFS may be carrying from one situation to another However
the following are some of the common techniques of the AFS
bull Comparative financial statements
bull Common-size financial statements
bull Trend percentage analysis and
bull Ratio Analysis
COMPARATIVE FINANCIAL STATEMENTS
In CFS two or more BS andor the IS of a firm are presented simultaneously in columnar
form The Financial data for two or more tears are placed and presented in adjacent columns
and thereby the financial data is provided at times perspective in order to facilitate periodic
comparison In CFS the BS and the IS for number of years are presented in condensed
form for year to year comparison and to exhibit the magnitude and direction of changes
The CFS helps a financial analyst of the firm and in establishing operating and
positional trend of the firm The CFS may be prepared to show
1 The absolute amount of different items in monetary terms
2 The amount of periodic changes in monetary terms
1 The percentages of periodic changes to reveal the proportionate changes
The CFS can be prepared for both the BS and the IS
CORE COMPETENCE OF ESCORTS
Customer 1
We put customers first in everything we do We take decisions keeping the customer in
mind
Challenging Spirit
We strive for excellence in everything we do and in the quality of goods amp services we
provide We work hard to achieve what we commit amp achieve results faster than our
competitors and we never give up
Team-work
We work cohesively with our colleagues as a multi-cultural team built on trust respect
understanding amp mutual co-operation Everyones contribution is equally important for
our success
Frank amp Fair Organization
We are honest sincere open minded fair amp transparent in our dealings We actively
listen to others and participate in healthy amp frank discussions to achieve the
organizations
A firm undertakes numerous during a year and most of these transactions during a year and
most of these transactions may affect one or the other current account ie most of these
transactions May results in the flow of the WC Neither is it necessary nor practical to
identify the effect of each and every transaction on the WC These transactions instead are
considered and analyzed in a collective form and then their effect on the WC is identified
SCFP (CASH BASIS) OR
THE CASH FLOW STATEMENT
The CFS attempts to analyze the transactions of the firm in terms of cash ie the transactions
generating cash and using cash The focus in the CFS is on cash rather than on WC The
sources of cash may be the cash profits earned by the firm issue of capital for cash issue of
other securities for cash borrowings sale of assets investment redemption of debenture or
preference share repayment of loan payment of tax dividend distribution etc Thus the
CFS summarizes the cash inflows and outflows
An analysis of cash flows is useful for short-run planning A firm needs sufficient cash to
debts maturing in the near future to pay interest and other expenses and to pay dividends to
shareholders The firm can make projections of cash flows and outflows for the near future to
determine the availability of cash This cash balance can be matched with the firms need for
cash during the period and accordingly arrangements can be made the deficit or invest the
surplus cash temporarily A historical analysis of cash flows provides insight to prepare
reliable cash flow projections for the immediate future
A statement of changes in financial position on cash basis commonly known as cash flow
statement summarizes the causes of changes in cash position between dates of two balance
sheets It indicates the sources amp uses of cash The cash flow statement is similar to the fund
flow statement except that it focuses attentions on cash instead of working capital (funds)
Thus this statement analyses change in non-current accounts as well as current accounts
(other than cash) to determine the flow of cash
The CFS is based on the concept on the WC Where as the CFS is based in cash which is only
the element of WC Thus the CFS provides details of cash movements whereas the FFS
provides the details of funds movements
The CFS considers only the actual movement of cash whereas the FFS considers the
movements of the funds as defined in terms of net working capital
CASH-FLOW STATEMENT
A cash-flow statement is a statement showing inflows (receipts) and outflows (payments) of
cash during a particular period In other words it is a summary of sources and applications of
Cash during a particular span of time It analyses the reason for changes in balance of cash
between the two balance sheet dates The term Cash here stands for cash and cash
equivalents
A cash-flow statement includes only those items which affect cash As such the cash-flow
statement is called a statement of changes in financial position - cash basis
A cash - flow statement can be for the past or can be projected for a future period
OBJECTS OR USES OF CASH-FLOW STATEMENT
The main objectives behind preparing a cash-flow statement can be laid down as under-
bull USEFUL FOR SHORT-TERM FINANCIAL PLANNING-
A cash-flow statement provides information for planning the short-term financial needs of the
firm Since it provides information regarding the sources and utilization of cash during a period
it become easier for the management to assess whether it will have Adequate cash to meet day-
to-day expenses and pay the long - term loans and interest Thereon and whether it has enough
cash to pay for the purchase of fixed assets or not
USEFUL FOR PREARING THE CASH BUDGET-
A cash-flow statement prepared for the future period is helpful in preparing a cash budget It
informs the management about the future period is helpful in preparing a cash budget It informs
the management about the surplus or deficit periods of cash ie in which months the payments
will be in excess of receipts It helps in planning the investment of surplus cash in short-term
investment and to plan short-term credit in advance of deficit periods
bull COMPARISON WITH CASH BUDGET-
A cash budget is prepared at the commencement of the year whereas a cash flow Statement is
prepared at the end of the year A comparison between the two helps in ascertaining the extent
to which the financial resources of the firm have been generated and used according to the plan
Causes of variances between the figures of two statements can be analyzed and proper
corrective measures may be takes
bull STUDY OF THE TREND OF CASH RECEIPTS AND PAYMENTS-
A cash-flow statement reveals the speed at which the cash is being generated from debtors stock
and other current assets the speed at which the current liabilities are being paid It enables the
management to assess the true position of the cash in future
bull IT EXPLAINS THE DEVIATIONS OF CASH FROM EARNINGS-
A firm may earn huge profits yet it may have paucity of cash or when it suffered a loss it may
still have plenty of cash A cash flow statement explains the reasons for it
HELPFUL IN ASCERTAINING CASH-FLOW FROM VARIOUS
ACTIBITIES SEPARATELY-
A cash-flow statement aims at highlighting the cash flow from operating investing and
financing activities separately It includes how much cash has been generated or used in these
activities
bull HELPFUL IN MAKING DIVIDEND DECISIONS-
Dividend must be paid within 42 days of its declaration Hence the management takes the help of
cash-flow statement to ascertain the position of cash generated from operating activities which
can be used for payment of dividend
IMPORTANCE AND RELEVANCE OF CFS
The CFS has gained importance in view of the fact that there are many managerial Decisions
which are taken in the light of the cash availability or cash position of the firm
For example declaration of dividend by the company requires cash disbursement and
Therefore the Board of Directors must consider the cash position before proposing a dividend
The CFS also provides information for the short term financial planning and in particular the
short term cash needs of the firm
In view of increasing importance and relevance of the CFS the clause 32 of the Listing
agreement (between a Company and the Stock Exchange where the shares proposed to be listed)
has been amended by the SEBI As a result the listed companies in India are now required to
supply a copy of the CFS to each shareholder as a part of Annual Report As a result the listed
companies have started a practice of sending a CFS for which the BS has been prepared as
apart of the Annual Report of the company
DIFFRENCE BETWEEN CASH - FLOW STATEMENT AND
CASH BUDGET
There is not much difference between cash flow statement and a cash budget The
only difference is that a cash flow statement is prepared for a past period where as cash
budget is prepared for a future period Hence it is of limited use as far as the future
periods are concerned A cash budget is therefore prepared showing how much cash is
likely to be received and what will be the disbursements during a future period of time
Thus a cash budget indicates in which months there will be surplus cash and in which
moths there will be deficiency of cash resources The management can then take suitable
decision to invest the surplus cash or make arrangement for the deficiency of cash at the
required time
LIQUIDITY
It does not present true picture of the liquidity of the firm the liquidity does
not depend upon cash alone Liquidity also depends upon those assets
which can be converted into cash easily
bull Exclusion of these assets obstructs the true reporting of the ability of the firm to
meet its liabilities when they become due for payment
bull The possibilities of window - dressing is higher in case of cash position in
comparison to the working capital position of the firm
bull The cash balance can be easily maneuvered by postponing purchases and other
payments and by rapidly collecting cash from debtors before the balance sheet date
Hence a fund - flow statement presents a more realistic picture than a cash flow
statement
bull Cash flow statement ignores non- cash charges Hence the true position of the
enterprise cannot be judged by cash flow statement
bull It is prepared on cash basis and hence ignores one of the basic concept of accounting
namely accrual concept
PROCEDURE OF PREPARING CASH FLOW STATEMENT-
The institute of charted accountants of India has issued accounting standards (as)-3 revised for
preparing a cash flow statement This accounting standard has been made mandatory in respect
of accounting periods commencing on or after 1st April 2001 for certain enterprises These
enterprises are-
bull Enterprises whose equity or debt securities are listed on a recognized stock exchange in
India And enterprise that are in the process of issuing equity or debt securities that will
be listed on a recognized stock exchange in India
bull All other commercial industrial and business enterprises whose turnover for accounting
period Rs 50 crores
As such the cash flow statement has been prepared according to as -3 revised in this project
According to as-3 revised the cash flow statement summarizes the cash inflows and cash
outflows and the net changes (increase or decrease) in cash and cash equipment resulting from
operating investing and financing activities of a firm during a period The following terms are
used for preparing a cash flow statement
CASH-
It compares cash in hand and demands with banks
CASH EQUIVALENTS-
There are short - term highly liquid investments that are readily into known amounts of cash
and which present insignificant risk of changes in their values Normally an investment will be
termed as cash equivalent only if it has a short maturity period say three months or less from the
date of its acquisition Examples of cash equivalent are treasury bills commercial papers etc
Which are purchased with cash that is in excess of immediate needs investment in shares are
excluded from cash equivalents unless they are cash equivalent in reality For example the
preference shares of the company which are purchased shortly before their redemption date will
be included in cash equivalents provided there is only an insignificant risk of failure of the
company in repaying the amount at the date of the maturity
CLASSIFICATION OF CASH FLOW-
According to as -3 (revised) cash flow statement should be presented in a manner that it reports
inflows of cash by classifying them into three categories namely operating investing and
financing activities Classification of all activities into these activities on the cash and cash
equivalents of the enterprise such information will be helpful in evaluating the relationships
among these three activities are explained as below
CASH FLOW FROM OPERATING ACTIVITIES-
Operating activities are the main revenue generating activities of an enterprise As such they
include cash flows from those transactions and events which enter into the ascertainment of
net profit or loss of the enterprise Examples of cash flows arising operating activities are
bull Cash receipts from the sale of goods and rendering of services
bull Cash receipts from royalties fees commissions and other revenue
bull Cash payments to suppliers for goods and services
bull Cash payments to and on behalf of employees
bull Cash receipts and cash payments of an insurance enterprise for premiums and claims
annuities and other policy benefits
bull Cash receipts and payments relating to future contracts forward contracts option
contracts and swap contracts when the contracts are held for dealing or trade purpose and
bull Cash payments of refunds of income taxes unless they can be specifically identified with
financing and investing activities
CASH FLOW FROM INVESTING ACTIVITIES-
Investing activities include the purchase and sale of long term assets such as land building plant
and machinery etc not held for resale These activities also include the purchase and sale of such
investment which are not including in cash equipments Cash flow from investing activities
discloses the expenditures incurred for resources intended to generate future income and cash
flows
Examples cash flow arising from investing activities are
bull Cash payments to acquire fixed assets (including intangible)
bull Cash receipts from sale of fixed assets (including intangibles)
bull Cash payments to acquire shares warrants or debt instruments of other enterprises
(other than receipts for those instruments considered to be cash equivalents)
bull Cash receipts from sale of shares warrants or debt instruments of other enterprises (other
than receipts for those instruments considered to be cash equivalents)
bull Cash advances and loans made to third parties In case of financial enterprises these will
be treated as cash flow from operating activities
bull Cash receipts from the repayment of advances and loans made to third parties In case of
financial enterprises these will be treated as cash flow from operating activities
bull Cash receipts of insurance claim for property involved in accident and
bull Cash receipts of interest and dividend In case of financial enterprise these will be treated
cash flow from operating activities
CASH FLOW FROM FIANCING ACTIVITIES-
Financing activities are the activities that result in change in capital and borrowing of the
enterprise
Examples of cash flows arising from financing activities are
bull Cash receipts from issuing shares or other similar instruments
bull Cash receipts from issuing debentures loans bonds and other short term or long term
borrowing
bull Cash repayment of amounts borrowed buy back of equity shares redemption of
preference shares debentures loans bonds etc
bull Cash payment of interest and dividend
IMPORTANT NOTE
In case of financial enterprise such as bank or mutual fund company cash Outflow
and cash inflow arising from the purchase and sale of securities will Be treated as
flows from operating activities This is because purchase and sale of securities is a
part of operating activity in case of financial enterprise In addition interest paid
and interest received as well as dividends received will also be treated as cash flow
from operating activities in case of financial Enterprises
CASH FLOW STATEMENT
(DIRECT METHOD)
CASH FLOW FROM OPERATING ACTIVITIES
Cash receipts from costumers
Cash paid to suppliers and employers ()
Cash generated from operations
Income tax paid ()
Cash flows from extraordinary item
plusmn Extra ordinary items
Net cash from operating activities
CASH FLOW FROM INVESTING ACTIVITIES-
Purchase of fixed assets
Proceed from sale equipment ()
Interest received
Dividend received ()
Net cash from investing activities
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from insurance of share capital
Proceeds from long- term borrowings ()
Repayment of from long-term borrowings
Interest paid
Dividend paid ()
Net cash from financing activities
Net increase in cash and cash equivalent
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
SOME SPECIAL TERMS-
i) INTERSET AND DIVIDEND-
Cash inflow from interest and dividends and cash outflow on account of interest and
dividends should be disclosed separately Cash inflow arising from interest and dividends
received should be shown as cash flow from investing activities where as cash outflow
disclosed outflow on account of interest and dividend paid should be shown as cash flow
from financing activity
ii) TAXES ON INCOME-
Tax paid on income is a part of cash flow from operating activity Hence taxes paid are
shown as a deduction under cash flow from operating activity
iii) EXTRA ORDINARY ITEMS-
Cash flow relating to extra ordinary items such as bad debts recovered Claims received from
insurance companies winning of a lottery or a law etc Should be disclosed separately as
arising from operating investing or financing activities For example the amount received
for insurance company on account of loss of stock by fire Earthquake and floods etc Should
be reported as cash flow from operating activities
iv) SIGNIFICANT NON - CASH TRANSACTION-
There are some investing and financing activities which do not require the use of cash or
cash equivalents Such non cash activities should be excluded from the cash flow statement
Examples are the acquisition of assets by issue of debentures or shares conversion of
shares into debentures etc Such significant on non cash transaction should be disclosed
outside the cash flow statement
CASH FLOW STATEMENT
(INDIRECT METHOD)
CASH FLOW FROM OPERARATTNG ACTIVITIES
Net profit before taxation and extraordinary item
Adjustment for
Depreciation
Foreign exchange loss
Interest income
Dividend income
Interest expense
Operating profit before working capital changes
Increase in sundry debtors
Decrease in inventories
Decrease in sundry creditors
Cash generated from operations
Income tax paid ()
Cash flow before extraordinary item
plusmn Extra - ordinary items
Net cash from operating activities
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of fixed assets ()
Proceeds from sale of equipment
Interest received
Dividend received ()
Net cash from investing activities
CASH FLOW FROM FINANCING ACTIVITIES-
Proceeds from insurance of share capital
Proceeds from long - term borrowings
Repayments of from long - term borrowings ()
Interest paid ()
Dividend paid ()
Net cash from financing activities
Net increase in cash and cash equivalent
Cash and cash equivalents at beginning of period
CHANGES IN CASH FLOWS
Changes in cash flows can be treated to the following
1 Net profit will increase the cash flows these cash flows will be
increased further if there are any non-cash changes (such as depreciation
and amortization)
2 Any payment of dividends will decrease the cash flows as will the
repayment of debt an issue of share or debt will also increase the
cash flows
3 An increase in non-cash assets will decrease cash flows increase in
current assets and fixed assets will result in drain on cash flows
Thus a statement of changes in cash flows ie the cash flow statement
classifies all Changes into one of three categories - operating investing or
financing activities Therefore the preparation of a statement of changes in cash
flows requires classification of changes in liabilities shareholders equity and
non-cash assets into one of these categories although some items will not fit
easily onto one other
h equivalent at end of period
STEP- BY-STEP PROCEDURE TO PREPARE CFS
1 Calculate the net increase or decrease in cash and cash equivalents-
For this purpose the opening balance of total cash and cash equivalents is compared with the
closing balance of cash and equivalents
Increasedecrease in cash and equivalents
Opening balance Closing Balance
Cash in hand
Cash in bank
Short-term Investment
Total
The difference between the total of opening and closing balance will be increased or
Decreased in cash equivalents during the period It may be noted that if there are only one or
two of items of cash etc
2 Net Cash flaw from operating activities-
The term operating refers to the normal purchase of goods and services On the basis of the
information contained in the comparative BS s and the IS and the additional Information the
net cash flow generated or use by the operating activities may be ascertained The IS prepared
by the firm gives the net profit figure earned by the firm On actual basis ie all items in the
IS are incorporated on the basis of earnedaccrued even
3 If not resulting in cash movements-
So the profit or loss as by the IS may not result in increase or decrease in cash balance by the
SYNOPSIS
INTRODUCTION
ESCORTS PVT LTD is a private limited company not listed in a stock exchange of India
and employees 900 highly trained personnel Its manufacturing plants are strategically located
in close proximity to its customers at Faridabad (Haryana) Noida (UP)
OBJECTIVES OF THE STUDY
bull To find the movement of cash inflow and cash outflow
bull To make the comparison between cash inflow and
bull Cash outflow
bull To prepare the Cash Flow Statement
bull To analyze the Balance Sheet of the company in terms of Cash Flow Statement
bull To focus on various activities of the organization in terms of Operating
Financing Investment
SCOPE OF THE STUDY
Financial resources are the assets for the company and their productivity is key
factor for profitability It is necessary to know their problems their knowledge
skills abilities amp the measures that can be taken to reduce them By analyzing this
top management can build good relations with the employees
The whole study is to determine the competencies of different employees who are
working in ESCORTS PVT LTD By analyzing it the top management can
introduce the concept of competency mapping in the organization Through this
management can attempt to use more suitable strategies towards the human
resource development
The research is confined to elicit the existing gap between the standard skill
required to perform the job and the skill processed by the employees at ESCORTS
PVT LTD And to provide them suitable training program to over come those gaps
for the better utilization of human resources
RELEVANCE
The scope of the study was confined to the outside parties like creditors
shareholders government etc Who want to invest their money in the
company
The benefit of the report for the company is that through this report they can come
to know about the cash flow statements of the company
This study also unable the company that their cash is not utilizing in unnecessary
things
The benefit of the report for the researcher is that it has helped to get knowledge
about the cash inflow and cash
RESERRCH METHODOLOGY-
RESEARCH DESIGN
bull The study was conducted under well- structured approach
bull The project lasted for 4 weeks and the year 2009 ie from 08 July to 12
Aug2009
bull The questionnaire method amp personal interview method was used to collect
the primary data for the study
The secondary data is collected from Internet amp company training material and
many other company materials
SAMPLE DESIGN
The process of extracting a sample from a population is called sampling
procedure The selection of sampling procedure to conduct the research
depends upon the nature of the study and the objective to be accomplished
Judgment sampling technique is adopted to select the respondents in this
study The sample design included the various departments in the YAMAHA
MOTORS PVT LTD
Methodology of date collection
bull Conducting personal interview
bull Data collection from primary and secondary sources
bull Designing questionnaire
bull Selecting sample size from the sample frame for the survey
bull Questionnaire distribution
bull Analysis of collected data with the help of statistical tools
bull Interpretation of collected data
bull Stating the conclusion based on the entire study
Sampling Technique
The sampling technique used for this research is of non-probability and convenience
sampling
Sample Unit
Employees of the company
Sample Size
For this research study the sample size is 25 respondents
Sources of data
Primary data
Primary data is the data which is collected by the researcher for the first time
and which was not there The tools used to collect the data are-
1)Questionnaire method from the employers in different departments
2) Face to Face personal interactions
Secondary Data
The data already collected is called as secondary data The relevant information
for this study has been collected from secondary source such as
Books
Journal
Reports
Publication by the organizational circulation
Company records
Business bulletins
Internet
Secondary data is also collected from various of the internet and intranet Some
of the website trough which information was gathered was through
HYPOTHESIS
The report is analyzed under the presumption that cash flow position of
YAMAHA MOTORS PVTLTD It can be improved and made effective in
terms of cash flows
In testing the above hypothesis the following aspects will be considered
1 Balance sheet comparisons
2 Presentation of cash flow statement in terms of revised AS-3
LIMITATIONS
The study though conducted to the best of the ability suffers from some
certain limitations There are
The data is secondary one and as such its reliability may be
questioned upon
The time availability for the study is less and as such it hinders thee
progress of the study
Senior officials were rarely approachable
Websites were not giving comprehensive data
Not having face-to-face interaction to get more relevant
information
Analysis and interpretation of data was done on the assumption that
the respondentsrsquo information was online
Information collected was totally subjective
The interviews are done during office hours but could not be done
for the other employees of other
DATA ANALYSIS
ESCORTS PVT LTD
CASH FLOW STRATEMENT
Year Ended Year Ended
30092009 30092008
Rs Crores Rs
Crores
A Cash Flow from Operating Activities
Net profit before tax (1733) 3444
Adjustment for
Loss on sale Provision for diminution in value of Long Term
Investments amp loans to Group Companies 189 4018
Gain on sale of Long Term Investments (122) (9492)
Gain on sale of Asset (013) -
Depreciation 4497 3955
Misc Exp Assets Write off Provisions 808 750
Interest Expense 7222 7999
Dividend Income (002) (001)
Interest Income (2082) -
Operating Profit before working capital changes 8764 10673
Adjustments for
Trade and other Receivables (8817) (12035)
Inventories 1379 (4692)
Trade Payables 6705 19046
Miscellaneous Expenditure (750) (511)
(1483) 1808
Cash Generated from Operations 7281 12481
Direct Taxes (Paid)Refunds (1785) 3166
Net Cash Flow from operating activities 5496 15647
B Cash Flow from Investing Activities
Purchase of Fixed Assets (3095) (2794)
Proceeds from sale of Fixed Assets 086 177
Movement in Loans and Advances (1627) (1644)
Sale of Investments 3233 11452
Short Term Deposits with schedule Banks (231) (1048)
Interest Received 2070 -
Dividend Received 002 001
Net Cash Flow from Investing activities 438 6144
Proceeds from Share Capital amp Securities Premium 11444 -
Proceeds from Long Term Borrowings 8660 -
Less Repayment of Long Term Borrowings (054) (7896)
Proceeds (Repayment) from short term borrowings (net) (22726) -
Interest Paid (7740) (8223)
Net Cash used in financing activities (10416) (16119)
Net Increase(Decrease) in Cash and Cash equivalents (4482) 5672
Cash and Cash equivalents as at 01102008 10565 4893
Cash and Cash equivalents as at 30092009 6083 1056
ANALYSIS OF CASH FLOW
From the cash flow statements of the ESCORT PVTLTDIt can be analyzed
from the two years that the net cash balance of the company has increased
manifold in 30-09-2008 than the year 30-09-2009
The net profit in 30-09-2008 is higher than the 30-09-2009 but due to certain
changes there has been increase in the cash balance
The interest paid this year is ore of the last year which implies that thee
company has not repaid his borrowed capital due to which the interest has got
down
The depreciation has increased but it does not affect cash to an extent as it is a
non-cash item In the head of working capital there is drastic change in the cash
balance in the form of ldquoTrade and other Receivables which has affected the cash
balance
There is outflow of cash for receivables rather than the inflow in the last year
So the net effect is that the cash from operating activities has been decreased
two times from the last year
The company has no accumulated losses as at the end of the financial year ie
September 31 2008
Provision for taxation has been made in accordance with the requirement of AS-
22 issued by Institute of Charted Accountants of India
Pursuant to that current year deferred tax liability have been charged to profit amp
loss account
In opinion of the board of directors of thee company the current assets loans
and advances have a value on realization in the ordinary course of the business at
least equal to the amount stated in the balance sheet and provision for all
liabilities have been made
Balance of sundry debtors creditors loans and advances are subject to confirmation by
the concerned parties
METHOD OF ANALYSIS
1 Data analysis is done using the following statistical tools wherever required in
order to extract meaningful information from the collected data
o Simple percentage and averages
o Bar diagram
o Cone diagram
o Pie diagram
2 The collected data from the questionnaire has been put together in the form of
tables
3 Percentage has been calculated wherever necessary for generalization of the
data
4 Data analysis and interpretation has been done on the basis of primary and
secondary data
5 The findings researches have been recorded based on the analysis
6 The study conducted pertains only to YAMAHA MOTORS INDIA PVTLTD
All bank balances (debitcredit) have been confirmed by the concerned bank
Identified from the available information which has been relied upon by the auditors
The names of small-scale industrial units to whom outstanding for more than
thirty days within agreed terms
The company has 9996 of shareholders in its subsidiary company named as
ESCORTS PVT LTD As at 31-03-2008
So the net effect is that the net cash from investing activities has many more
times than the last year which is negative Now the company has repaid its long
term borrowing more than the last year which has decreased the cash balance by
the little amount
Balance with the schedule banks under the head current amp collection account
amounting to represent funds in transit lying with schedule banks pending
transfer against loan liabilities under the head cash credit amp bill discounting
LIQUIDITY RATIO
1 CURRENT RATIO
(Amount in Rs)
Current Ratio
Year Current Assets Current Liabilities Ratio
2003 58574151 7903952 7412004 69765346 31884616 2192005 72021081 16065621 4482006 91328208 47117199 1942007 115642068 30266661 382
Interpretation
As a rule the current ratio with 21 (or) more is considered as satisfactory
position of the firm
When compared with 2006 there is an increase in the provision for tax because
the debtors are raised and for that the provision is created The current liabilities
majorly included Lanco Group of company for consultancy additional services
The sundry debtors have increased due to the increase to corporate taxes
In the year 2006 the cash and bank balance is reduced because that is used for
payment of dividends In the year 2007 the loans and advances include majorly
the advances to employees and deposits to government The loans and advances
reduced because the employees set off their claims The other current assets
include the interest attained from the deposits The deposits reduced due to the
declaration of dividends So the other current assets decreased
The huge increase in sundry debtors resulted an increase in the ratio which is
above the benchmark level of 21 which shows the comfortable position of the
firm
GRAPHICAL REPRESENTATION
741
219
448
194
382
000
100
200
300
400
500
600
700
800
Ratio
2003 2004 2005 2006 2007
Years
CURRENT RATIO
Ratio
2 QUICK RATIO
(Amount
in Rs)
Quick Ratio
Year Quick Assets Current Liabilities Ratio
2003 58574151 7903952 741
2004 52470336 31884616 165
2005 69883268 16065620 435
2006 89433596 47117199 19
2007 115431868 30266661 381
Interpretation
Quick assets are those assets which can be converted into cash with in a short
period of time say to six months So here the sundry debtors which are with the
long period does not include in the quick assets
Compare with 2006 the Quick ratio is increased because the sundry debtors are
increased due to the increase in the corporate tax and for that the provision
created is also increased So the ratio is also increased with the 2006
GRAPHICAL REPRESENTATION
741
165
435
190
381
000
100
200
300
400
500
600
700
800
Ratio
2003 2004 2005 2006 2007
Years
QUICK RATIO
Ratios
3 ABOSULTE LIQUIDITY RATIO
(Amount
in Rs)
Absolute Cash Ratio
Year Absolute Liquid Assets Current Liabilities Ratio
2003 31004027 7903952 392
2004 10859778 31884616 034
2005 39466542 16065620 246
2006 53850852 47117199 114
2007 35649070 30266661 118
Interpretation
The current assets which are ready in the form of cash are considered as absolute
liquid assets Here the cash and bank balance and the interest on fixed assts are
absolute liquid assets
In the year 2006 the cash and bank balance is decreased due to decrease in the
deposits and the current liabilities are also reduced because of the payment of
dividend That causes a slight increase in the current yearrsquos ratio
GRAPHICAL REPRESENTATION
392
034
246
114 118
0
05
1
15
2
25
3
35
4
Ratios
2003 2004 2005 2006 2007
Years
ABSOLUTE CASH RATIO
Ratios
LEVERAGE RATIOS
4 PROPRIETORY RATIO
(Amount
in Rs)
Proprietory Ratio
Year Share Holders Funds Total Assets Ratio
2003 67679219 78572171 086
2004 53301834 88438107 06
2005 70231061 89158391 079
2006 56473652 106385201 053
2007 97060013 129805102 075
Interpretation
The proprietary ratio establishes the relationship between shareholders funds to
total assets It determines the long-term solvency of the firm This ratio indicates
the extent to which the assets of the company can be lost without affecting the
interest of the company
There is no increase in the capital from the year2004 The share holderrsquos funds
include capital and reserves and surplus The reserves and surplus is increased
due to the increase in balance in profit and loss account which is caused by the
increase of income from services
Total assets includes fixed and current assets The fixed assets are reduced
because of the depreciation and there are no major increments in the fixed assets
The current assets are increased compared with the year 2006 Total assets are
also increased than precious year which resulted an increase in the ratio than old
GRAPHICAL REPRESENTATION
086
060
079
053
075
000
010
020
030
040
050
060
070
080
090
Ratios
2003 2004 2005 2006 2007
Years
PROPRIETORY RATIO
Ratios
ACTIVITY RATIOS
5 WORKING CAPITAL TURNOVER RATIO
(Amount
in Rs)
Working Capital Turnover Ratio
Year Income From Services Working Capital Ratio
2003 36309834 50670199 0722004 53899084 37880730 1422005 72728759 55355460 1312006 55550649 44211009 1262007 96654902 85375407 113
Interpretation
Income from services is greatly increased due to the extra invoice for Operations
amp Maintenance fee and the working capital is also increased greater due to the
increase in from services because the huge increase in current assets
The income from services is raised and the current assets are also raised together
resulted in the decrease of the ratio of 2007 compared with 2006
GRAPHICAL REPRESENTATION
072
142 131126
113
000
020
040
060
080
100
120
140
160
Ratio
2003 2004 2005 2006 2007
Years
WORKING CAPITAL TURNOVER RATIO
Ratio
6 FIXED ASSETS TURNOVER RATIO
(Amount in Rs)
Fixed Assets Turnover Ratio
Year Income From Services Net Fixed Assets Ratio
2003 36309834 28834317 126
2004 53899084 29568279 182
2005 72728759 17137310 424
2006 55550649 15056993 369
2007 96654902 14163034 682
Interpretation
Fixed assets are used in the business for producing the goods to be sold This
ratio shows the firmrsquos ability in generating sales from all financial resources
committed to total assets The ratio indicates the account of one rupee
investment in fixed assets
The income from services is greaterly increased in the current year due to the
increase in the Operations amp Maintenance fee due to the increase in extra invoice
and the net fixed assets are reduced because of the increased charge of
depreciation Finally that effected a huge increase in the ratio compared with the
previous yearrsquos ratio
GRAPHICAL REPRSENTATION
126182
424 369
682
000
100
200
300
400
500
600
700
Ratios
2003 2004 2005 2006 2007
Years
FIXED ASSETS TURNOVER RATIO
Ratios
7 CAPITAL TURNOVER RATIO
(Amount
in Rs)
Capital Turnover Ratio
Year Income From Services Capital Employed Ratio
2003 36309834 37175892 0982004 53899084 53301834 1012005 72728759 70231061 1042006 55550649 56473652 0982007 96654902 97060013 100
Interpretation
This is another ratio to judge the efficiency and effectiveness of the company
like profitability ratio
The income from services is greaterly increased compared with the previous year
and the total capital employed includes capital and reserves amp surplus Due to
huge increase in the net profit the capital employed is also increased along with
income from services Both are effected in the increment of the ratio of current
year
GRAPHICAL REPRESENTATION
098
101
104
098
100
094095096097098099100101102103104
Ratios
2003 2004 2005 2006 2007
Years
CAPITAL TURNOVER RATIO
Ratios
8 CURRENT ASSETS TO FIXED ASSETS RATIO
(Amount
in Rs)
Current Assets To Fixed Assets Ratio
Year Current Assets Fixed Assets Ratio
2003 58524151 19998020 2932004 69765346 18672761 3742005 72021081 17137310 4202006 91328208 15056993 6072007 115642068 14163034 817
Interpretation
Current assets are increased due to the increase in the sundry debtors and the net
fixed assets of the firm are decreased due to the charge of depreciation and there
is no major increment in the fixed assets
The increment in current assets and the decrease in fixed assets resulted an
increase in the ratio compared with the previous year
GRAPHICAL REPRESENTATION
293374
420
607
817
000
100
200
300
400
500
600
700
800
900
Ratios
2003 2004 2005 2006 2007
Years
CURRENT ASSETS TO FIXED ASSETS RATIO
Ratios
PROFITABILITY RATIOS
GENERAL PROFITABILITY RATIOS
9 NET PROFIT RATIO
(Amount in Rs)
Net Profit Ratio
Year Net Profit After Tax Income from Services Ratio
2003 21123474 36039834 059
2004 16125942 53899084 030
2005 16929227 72728759 023
2006 18259580 55550649 033
2007 40586359 96654902 042
Interpretation
The net profit ratio is the overall measure of the firmrsquos ability to turn each rupee
of income from services in net profit If the net margin is inadequate the firm
will fail to achieve return on shareholderrsquos funds High net profit ratio will help
the firm service in the fall of income from services rise in cost of production or
declining demand
The net profit is increased because the income from services is increased The
increment resulted a slight increase in 2007 ratio compared with the year 2006
GRAPHICAL REPRESENTATION
059
030
023
033
042
000
010
020
030
040
050
060
Ratios
2003 2004 2005 2006 2007
Years
NET PROFIT RATIO
Ratios
10 OPERATING PROFIT
(Amount in Rs)
Operating Profit
Year Operating Profit Income From Services Ratio
2003 36094877 36309834 099
2004 27576814 53899084 051
2005 29540599 72728759 041
2006 31586718 55550649 057
2007 67192677 96654902 070
Interpretation
The operating profit ratio is used to measure the relationship between net profits
and sales of a firm Depending on the concept it will decide
The operating profit ratio is increased compared with the last year The earnings
are increased due to the increase in the income from services because of
Operations amp Maintenance fee So the ratio is increased slightly compared with
the previous year
GRAPHICAL REPRESENTATION
099
051
041
057
070
000
010
020
030
040
050060
070
080
090
100
Ratios
2003 2004 2005 2006 2007
Years
OPERATING PROFIT RATIO
Ratios
11 RETURN ON TOTAL ASSETS RATIO
(Amount in Rs)
Return on Total Assets Ratio
Year Net Profit After Tax Total Assets Ratio
2003 21123474 78572171 027
2004 16125942 88438107 018
2005 16929227 89158391 019
2006 18259580 106385201 017
2007 40586359 129805102 031
Interpretation
This is the ratio between net profit and total assets The ratio indicates the return
on total assets in the form of profits
The net profit is increased in the current year because of the increment in the
income from services due to the increase in Operations amp Maintenance fee The
fixed assets are reduced due to the charge of depreciation and no major
increments in fixed assets but the current assets are increased because of sundry
debtors and that effects an increase in the ratio compared with the last year ie
2006
GRAPHICAL REPRESENTATION
027
018 019017
031
000
005
010
015
020
025
030
035
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON TOTAL ASSETS
Ratios
12 RESERVES amp SURPLUS TO CAPITAL RATIO
(Amount in Rs)
Reserves amp Surplus To Capital Ratio
Year Reserves amp Surplus Capital Ratio
2003 65599299 2079920 31542004 34582554 18719280 1852005 51511781 18719280 2752006 37754372 18719280 2022007 78340733 18719280 419
Interpretation
The ratio is used to reveal the policy pursued by the company a very high ratio
indicates a conservative dividend policy and vice-versa Higher the ratio better
will be the position
The reserves amp surplus is decreased in the year 2006 due to the payment of
dividends and in the year 2007 the profit is increased But the capital is
remaining constant from the year 2004 So the increase in the reserves amp surplus
caused a greater increase in the current yearrsquos ratio compared with the older
GRAPHICAL REPRESENTATION
3154
185 275 202419
-
500
1000
1500
2000
2500
3000
3500
Ratios
2003 2004 2005 2006 2007
Years
RESERVES amp SRUPLUS TO CAPITAL RATIO
Ratios
OVERALL PROFITABILITY RATIOS
13 EARNINGS PER SHARE
(Amount in Rs)
Earnings Per Share
Year Net Profit After Tax No of Equity Shares Ratio
2003 21123474 207992 101562004 16125942 1871928 8612005 16929227 1871928 9042006 18259580 1871928 9752007 40586359 1871928 2168
Interpretation
Earnings per share ratio are used to find out the return that the shareholderrsquos earn
from their shares After charging depreciation and after payment of tax the
remaining amount will be distributed by all the shareholders
Net profit after tax is increased due to the huge increase in the income from
services That is the amount which is available to the shareholders to take There
are 1871928 shares of Rs10- each The share capital is constant from the year
2004 Due to the huge increase in net profit the earnings per share is greaterly
increased in 2007
GRAPHICAL REPRESENTATION
10156
861904 975
2168
000
2000
4000
6000
8000
10000
12000
Ratios
2003 2004 2005 2006 2007
Years
EARNINGS PER SHARE
Ratios
14 PRICE EARNINGS (PE) RATIO
(Amount in Rs)
Price Earning (PE) Ratio
Year Market Price Per Share Earnings Per Share Ratio
2003 3254 10156 0322004 2847 861 3302005 3752 904 4152006 3017 975 3092007 5185 2168 239
Interpretation
The ratio is calculated to make an estimate of application in the value of share of
a company
The market price per share is increased due to the increase in the reserves
amp surplus The earnings per share are also increased greaterly compared
with the last year because of increase in the net profit So the ratio is
decreased compared with the previous year
GRAPHICAL REPRESENTATION
032
330
415
309
239
000
050
100
150
200
250
300
350
400
450
Ratios
2003 2004 2005 2006 2007
Years
PE RATIO
Ratios
15 RETURN ON INVESTMENT
(Amount in Rs)
Return on Investment
Year Net Profit After Tax Share Holders Fund Ratio
2003 21123474 67679219 031
2004 16125942 53301834 03
2005 16929227 70231061 024
2006 18259580 56473652 032
2007 40586359 97060013 042
Interpretation
This is the ratio between net profits and shareholders funds The ratio is
generally calculated as percentage multiplying with 100
The net profit is increased due to the increase in the income from services ant
the shareholders funds are increased because of reserve amp surplus So the ratio
is increased in the current year
GRAPHICAL REPRESENTATION
031 030
024
032
042
000
005
010
015
020
025
030
035
040
045
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON INVESTMENT RATIO
RatioS
DATA COLLECTION
The data can be of two types
Primary Data
Secondary Data
Primary Data
Primary data are those data which is originally collected afresh
Secondary Data
Secondary data are those data which are already collected and stored and which has
been passed through statistical research
In this project Secondary data has been collected from following sources-
Annual report
Books
MIS
Other material and report published by company There are two methods to prepare
the Cash flow Statement
ndirect Method
I
The indirect method (or reconciliation method) starts with net income and converts it
to net cash flow from operating activities In other words the indirect method adjusts
net income for items that affected reported net income but did not affect cash To
compute net cash flow from operating activities non-cash charges in the income
statement are added ack to net income and non-cash credits are deducted
b
Direct Method
Under the direct method the statement of cash flows reports net cash flow from
operating activities as major classes of operating cash receipts (eg cash collected from
customers and cash received from interest and dividends) and cash disbursements (eg
cash paid to suppliers for goods to employees for services to creditors for interest and
to government authorities for taxes)
INDIRECT VERSUS DIRECT METHOD
The most contentious decision that the FASB faced in issuing Statement No 95 was
choosing between the direct method and the indirect method of determining net cash
flow from operating activities Companies lobbied against the direct method urging
adoption of the indirect method Commercial lending officers expressed a strong
preference to the FASB hat the direct method be required
tCF-Page 3 of 5
In Favor of the Direct Method
The principal advantage of the direct method is that it shows operating cash receipts and
payments That is it is more consistent with the objective of a statement of cash flows to
provide information about cash receipts and cash payments than the in-direct method
which does not report operating cash receipts and payments
Supporters of the direct method contend that knowledge of the specific sources of
operating cash receipts and the purposes for which operating cash payments were made
in past periods is useful in estimating future operating cash flows Furthermore in-
formation about amounts of major classes of operating cash receipts and payments is
more useful than information only about their arithmetic sum (the net cash flow from
operating activities) Such information is more revealing of an enterprises ability (1) to
generate sufficient cash from operating activities to pay its debts (2) to reinvest in its
operations and (3) to make distributions to its owners
Many corporate providers of financial statements say that they do not currently collect
information in a manner that allows them to determine amounts such as cash received
from customers or cash paid to suppliers directly from their accounting systems But
supporters of the direct method contend that the incremental cost of assimilating such
operating cash receipts and payments data is not significant
In Favor of the Indirect Method
The principal advantage of the indirect method is that it focuses on the differences
between net income and net cash flow from operating activities That is it provides a
useful link between the statement of cash flows and the income statement and balance
sheet
Many providers of financial statements contend that it is less costly to adjust net income
to net cash flow from operating activities (indirect) than it is to report gross operating
cash receipts and payments (direct) Supporters of the indirect method also state that the
direct method which effectively reports income statement information on a cash rather
than an accrual basis may erroneously suggest that net cash flow from operating
activities is as good as or better than net income as a measure of performance
Special Rules Applying to Direct and Indirect Methods
Companies that use the direct method are required at a
minimum to report separately the following classes of
operating cash receipts and payments
Receipts
1048713 Cash collected from customers (including lessees licensees etc)
1048713 Interest and dividends received
1048713 Other operating cash receipts if any
Payments
1048713 Cash paid to employees and suppliers of goods or services (including
suppliers of
insurance advertising etc)
1048713 Interest paid
1048713 Income taxes paid
1048713 Other operating cash payments if any
Companies using the indirect method are required to disclose separately changes in
inventory receivables and payables to reconcile net income to net cash flow from
operating activities In addition interest paid (net of amount capitalized) and income
taxes paid must be disclosed elsewhere in the financial statements or accompanying
notes
The FASB requires these separate and additional disclosures so that users
may approximate the direct method Also an acceptable alternative presentation
of the in-direct method is to report net cash flow from operating activities as a
single line item in the statement of cash flows and to present the reconciliation
details elsewhere in the financial statements
FINDING OF SUDY
According to cash flow statement of the company The finding of the study are as
follows-
The company has not taken any loans secured or unsecured from companies
firms or other parties
The company has not accepted any deposit from the public during the year
The company is not a sick industrial company
The company has not granted any loan secured or unsecured to company firms
or other parties
The company has paid the entire long term and short term borrowing during the
year
The company has buy back the companyrsquos own share this year
The interest paid in 2008 is more than the
There has been a significant decline in volume over the years from 2001-02
to 2005-06 as can be seen in the graph below
Table 43
The Net sales of Tractor has increased considerably from 2004-05 to 2007-08
This can be mainly attributed to changes in Variable and material costs and in
the price
The Net sale of Tractor has increased considerably from 2004-05 to 2007-08
that is an decrease of Rs7216 per tractor This can be mainly attributed to
changes in
Variable and material costs and in the prices
RECOMMENDATIONS
According to cash flow statement of the company The suggestions of the study
are as follows-
The time durations for training program have to increase
Buy regular review and consultations develop a career progression
which is sensitive to performance and ability
Create an environment where by people are trend developed to enable
The to take advantages of opportunities that arise
The jab can be redesigned where the work man stay in what is normally
the same job but has elements of it changed
The principle amount must be paid in time which can be reducing the
interest the out flow
The purchase of the fixed asset must be made only when there is extreme
requirement
In order to avoid taxes the company should go for more investment
The companyrsquos borrowings should go for more investment
o The company should try to reduce the depreciations as maximum
as possible
CONCLUSION
The study on competency level of employees at ESCORTS PVTLTD gave an
insight about the acceptance of competency mapping by employees
The employees at Ymi welcome the introduction of competency mapping in their
organization as they felt it was very much essential in enhancing their skills and
organizational development
The organization has provided the recourses guidance and support to facilitate the
introduction of competency level easily and develop the employees in such a way
that they can face any kind of challenge
However the level of competency in employees is found to be satisfactory
Providing proper training education and guidance to the employees can enhance
the level
This study was mainly carried out to find out whether thee competency mapping
being followed by the company is effective till date If the competency mapping
and fitment to the organization
By looking at the graphs and tables it is quite that the employees still are not up to
the level of competent pool they still have to be trained and made competent in
order to fill the gap As the organization has just applied the mapping it has to see
to that it meets all the requirements for competency mapping
Therefore the graphs make it quite clear that the potential of the employees is not
up to the mark and ie they are not competent enough to meet the competency-
mapping requirement Hence by further training and counseling this gap can be
closed
This report includes the training requirements of employees and it highlights skills
possessed by each employee and skill required All employees get training so that
skill can be improved and maintain balance between standard performance with
their actual performance to avoid gap
APPENDIX
QUESTIONNAIRE
Consumer Survey
Name _____________________________
Age _____________________________
Sex
Male
Female
Occupation
Businessman
Service man
Professional
Others
Monthly income brackets
Below 15000
15000- 20000
20000-30000
30000 and above
of your savings _________
Do you invest
Yes
No
If yes then where do you invest your money
Bank
Insurance
funds
Others
Why do you made that statement
Return
Risk hedging
Tax benefits
Other reasons (specify) _______
Who influence your cash decision
Relatives and friends
Family members
Advisors experts
You yourself
If no then why
Do not know where to invest
Satisfied with your current investment return
Donrsquot want take risk
Other reasons
__________________________________________________________________
___________________
Do you know about CF statement
Yes
No
If yes then from where you have come to know about an cash statement
Advertisements on newspapers
Friends and relative
Agents experts
Other source
What do you think about cash statement
It means investing only in share market
Constant watch must be kept always
Return is not satisfactory
Other perception
__________________________________________________
Can you recall any cash flow of company
___________________________
Would you want to made CF of an org
Yes
No
If yes then why
_______________________________________________________
If no then why
_______________________________________________________
BIBLIOGRAPHY
List of Books
1 PANDEY IM - FINANCIAL MANAGEMANT
2 KHAN MY AND JAIN PK -FINANCIAL MANAGEMANT
3 SMITH KV ndash MANAGEMANT OF WORKING CAPITAL
3 COMPANY RECORDS
4 JOURNAL
5 REPORTS
WEBLIOGRAPHY
1 wwwescortspvtltdcom
2 wwwgooglecom
and the East Asian Crises According to economic survey of 1997-98 the production of
agriculture has dropped by 205 Until 1993-94 small tractor (below 25hp) were
exempted fro the excise in bid to encourage small farmers Because in India almost
65 of farmers has less than 4 acres of arable land
According to business India due to the Mahindra amp Mahindra and Swaraj tractors
would be benefited about Rs 10000 to Rs12000 per tractor as compared to others
which imports parts from abroad The compound average growth rate during last six
years has been around 15 The level of tractorization is high in Punjab amp Haryana at
around 95amp74 tractors per thousand hectares respectively The tractor demand is driven
by agriculture Products Interest Rates Total
Agricultural Credit Total Irrigation Facilities and Crop Pattern Among them credit is
strongly correlated with the tractor sale Nearly 80 of the tractorrsquos sale is through
credit
Financial Pattern
As stated above that 80 of the tractor is financed through credit rates essentially
through commercial banks regional banks rural banks and state level land development
banks The credit worthiness of the farmer is ascertained to have minimum holding of 6
areas of cultivated land to be eligible for loan However bank can provide a loan on
smaller landholding subject to farmer establishing his credit worthiness The credit
inflow since financial year 1996 is increasing support from NSBARD This has already
allocated 2000 crores from current year
HISTORICAL BACKGROUND
Indian agricultural in the fifties followed age bound tradition and was considered
backward The country did not produce enough food grain to feed its 36 crores
population and famines were recurrent features Import of food grains became necessary
to meet the short fall in domestic production there by causing a drain on scare foreign
exchange resources It therefore became imperative to high priority to the development
of agriculture
First phase of development (1960-1967)
Farm mechanism made a small beginning in the first five year PLAN Tractors were
imported for introduction is isolated pockets However acceptance of mechanization was
a slow process due to lack of awareness about its economic usefulness and versatility
The decade 1960 saw green revolution both increase in production and productivity with
the parallel emphasis on industry The birth of Indian tractor industry took place in
1959-60 when
import was restricted amp five manufacturing units were set up in private sector all with
collaboration It was in this background that production of tractors in the country in
1960
NAME COLLABORATION YEAR OF
COMMENCEMENT
MS EICHER TRACTORS
LTD
WEST GERMANY 1959
MS HINDUSTAN
TRACTORS LTD
CZECHOSLOVAKIA 1963
MS TRACTORS amp
FARM EQUIPMENT
LTD(TAFE)
UK 1963
MS ESCORTS LTD POLAND 1964
MS INTERNATIONAL
TTACTORS CO OF
INDIA LTS LATER
RENAMED AS
MAHINDRA amp
MAHINDRA
UK 1965
The total indigenous production of tractors by 1965 was just 6000 The real spurt in
mechanization of agriculture came in the introduction of high yielding variety (HYV) of
seeds in 1966-67 and their enthusiastic adoption by farmers particularly in the wheat
growing northern region With the successful introduction and acceptance these high
quality seeds there was a upspring in the demand of tractors in 1967 and demand started
multiplying at an annual rate of almost 50 (19671800-197033000)A natural
consequent of sharp upsurge and consequent shortage was heavy price premium on
tractors Recognizing the situation imports of tractors were liberalized and over and
above the domestic production of 20000 in 1970 3000 tractors were imported
Second phase of development (1968-1980)
Since the pace of indigenous five tractors manufacturing units already set up far below
expectation the Government decided to provide diligence to the tractor industry in 1968
and invites new entrepreneurs Benefiting from this forward-loo
king policy six more units came in during 1971-1974 These were
NAME COLLABORTION YEAR OF
COMMENCEMENT
MS ESCORTS
TRACTORS LTD
UK 1971
MS HMT LTD CZECHOSLIVAKIA 1971
MS KIRLOSKAR
TRACTORS LTD
WEST GERMANY 1974
MS PUNJAB
TRACTORS LTD
INDIGENOUS 1974
MS HARSHA
TARCTORS LTD
USSR 1975
Not withstanding the above progress on the setting up to new units Tractor industry ran
into difficulties from 1969 onwards and by 1972 domestic tractor production stagnated
at a level of 20000units primarily due to continuing of imports of tractors Problem was
further compounded by the oil crisis in 1973-74 and the resultant economic crisis and
inflationary pressures which persisted till middle of 1975
The tractor market started slowly pocking up from 1975 (31000tractors) because of
relative price stability govt directives of the commercial banks increase rural lending
expansion of rural branches of commercial banks good monsoons which resulted in
bumper harvests and accelerated pace of extension of irrigation facilities This trend
continued throughout the late seventies and by 1979-80 yearly market off take had risen
to a level of 62000tractors
Third phase of development (1980-86) The buoyancy in the tractor market experienced in the late seventies continued tell 1981-82 when 78000
tractors were sold The encouraging trend led to the setting up of more for the manufacture of tractors
during 1981-86 These units were
NAME COLLABORATION YEAR OF
COMMENCEMENT
MS AUTO TRACTORS
LTD
UK 1981
MS PRATAP STEEL
ROLLING MILL LTD
INDIGENOUS 1983
MS VST TRACTORS
LTD
JAPAN 1986
However the sale of tractors plummeted to a low level of 66000 tractors in the year
1982-83 in the wake of severe credit squeeze imposed by reserve bank of India
The demand for tractors again picked up when the credit squeeze was eased and a sale
of 80000units was recorded in the year 1984-85 for next year Tractor industry stagnated
causing closure of five manufacturing units as detailed below
NAME YEAR OF CLOSURE
PINE TRACTORS LTD 1983
HARSHA TRACTORS LTD 1987
AUTO TRACTORS LTD 1987
KISLOSKAR TRACTOR LTD 1991
PRALAP STEEL ROLLING MILLS
(HARYANA TRACTORS LTD)
1996
Fourth phase of development( 1987 onwards)
In the year 1987-88 the country saw a severe drought situation This was a difficult
period and it widely anticipated that crop yield would be severely affected Under such a
situation it was necessary to have provisions for supply of power to perform farm
operation at proper time in order to fully exploit the limited moisture content left in soil
The versatility in the tractor became evident as this vehicle was used for pumping out
underground water in this background tractor industry showed a remarkable growth
during this period and all time high sale of 90000 tractors was recorded in the drought
year (1987-88)Fourth phase of development
The growth trend appears to be continuing with relaxation of tractor financing norms
except for a 2 year slack period due to general economic slowdown and political
turmoil In fiscal 1997-98 tractors sales refaced an all time high record of 250000This
impressive growth has influenced 3 more players as listed below to enter the market
NAME COLLABORATION YEAR OF
COMMENCEMENT
INTERNATIONAL
TRACTORS LTD
INDIGENOUS 1997
BAJAJ TEMPO LTD INDIGENOUS 1997
NEW HALLAND
TRACTORS (INDIA)
PVT LTD
ITALY 1998
JOHN DHEER
TRACTORLTD
POLAND 2000
HISTORICAL BACKGROUND OF ESCORTS GROUP
Escorts came into being a vision that led two brothers Yudi Nanda and Hari Nanda to
branch out their familyrsquos prospering transport s business and institute ventures that were
to become the foundations of escorts Ltd Escorts Agents Limited was born at Lahore on
17th October 1944 with Yudi Nanda as Managing Director and Hari Nanda as Chairman
After the owing to opportunity lying in the Indian village Escorts (Agricultural
Machinery) Ltd was launched in 1948 with Yudi Nanda as Director Tragically Yudi
Nanda died in an accident in 1952 Then Escorts agent Ltd And Escorts (Agricultural
Machine) Ltd Was merged in 1953 to create single Escorts agents Pvt Ltd
SOME MILESTONES
1948 Pioneered farm mechanization in the country by launching Escorts Agricultural Machines Ltd
With a franchise from a US based MINNEAPOLIS MOLINE WISCONCIN for marketing
tractors implements engines and other equipments
1958 Started importing MF tractor from Yugoslavia for marketing the same in India
1960 A manufacturing plant was set up at Faridabad
1965 Got industrial license to manufacture URSUS ESCORT tractors
169
1969 Escorts signed a contract with FORD MOTOR COMPANY to manufacture Ford 3000 model
tractors Escorts Institute of Farm Mechanization (EIFM) was established at Bangalore This
training Institute is one of its kind
1971 1st February the first tractor FORD 3000 rolled out of the factory The same year the turnover
touched the Rs53 million mark
1973 Escorts Tractors Limited (ETL) declared a healthy Profit Before Tax of Rs4725 million
1974 Export of 400 tractors to Afghanistan - perhaps the worlds largest ever airlift of such
equipment
1975 Turnover crossed the Rs 200 million mark for ETL Profit After Tax Rs 87 million Maiden
dividend of 10 declared
1976
1976 FORD 3600 advancement in Farm Mechanization was launched with fanfare to a
tremendous reception Trial production of in-plant manufacturing of engine parts (Block amp
Head)
1977
1977 Escorts Scientific Research Centre marked its beginning at Faridabad by developing its own
Engines for E-27 and E-37 Due to constant technology absorption indigenization level
touched 72 for FORD tractors which was a result of relentless effort in that direction
1979 Turnover crossed the Rs 50 crores mark In plant facility for machining centre housing and
case transmission on built-in line concept installed
1983 Escorts Tractors Limited (ETL) established a state-of-the-art research and development centre
to spearhead newer breakthroughs in Farm Mechanization and to maintain industry
leadership Line concept introduced for engine block machining
1984 75000th tractor rolled out A great occasion for the large family that worked for ETL Newer
challenges and frontiers were set
1985 In keeping with the stupendous financial success Escorts Tractors Limited (ETL) offered its
first Bonus Issue (11)
1987 50hp FORD 3610 was launched another leap for the Indian Farm Mechanization Industry the
farmers and the people of the land
1988
1988 ETLrsquos annualized turnover crossed Rs 100 crores Dividend 45 for 15 months
1989 A MOU with CLAAS was signed for manufacturing amp
1990-
91
First Public Issue (Februaryrsquo91) over-subscribed four times Shares listed on Delhi and Bombay
Stock Exchanges
1991-
92
The Crop Tiger range of Combine Harvesters was launched by Escorts Claas Ltd
1993 FORD 3620 tractor launched
1996 Disengagement of joint venture collaboration with New Holland and launch of FARMTRAC
Tractor
1997 A Joint Venture with Italian company CARRARO was finalized to establish a company in India
for manufacturing and marketing of transmission and axles
COLLABORATIONS
Collaboration with international Organization of technological excellence constant
research to adopt the emerging technology to specify requirement of the market and
belief in the philosophy industrial interdependence have made Escorts today one of the
leading trend steers in Indiarsquos New Industrial Culture Escorts have merged as fraternity
of above 50000 shareholders 22000 employees 4000 ancillary suppliers and 1 6000
dealers and stockiest all engaged in a large scale investment and sustained efforts to
meet the ever widening market horizons of technological competence appropriate to
Indiarsquos unique changing needs
Escorts believe in incorporating the finest existing technology to meet Indian consumers
demands by collaborating with the internationally renowned companies prominent
among these are
IN GERMANY
GOETZE AG Piston rings and cylinder liners
MAHLE GmbH Piston
CLASS OHG Harvesters Combines
KNORR BREMSE AG Railway Brake System
AUGUST BILSTEIN GmbH Absorbers Hydraulic products
Pressure and temperature switches
IN JAPAN
KAYABA INDUSTRY CO LTD Telescopic Front Forks Car
MIKUNI SHOKO CO Carburetors for BI-Wheelers
IN UK
JCBAMFORD EXCAVATORS JCB Excavators loaders Front end
Loaders Telescopic handlers
IN USA
HUGHESNETWORKS SYSTEMS AB Road Construction Machinery
Vibratory Road Rollers
OFFICIAL ADDRESS OF ESCORTS
Registered Office Corporate
Secretariat amp Law
Escorts Ltd
11 Scindia House
Connaught Circus
New Delhi-110 001
Tel No 011-23310145
Fax No 011-23311715
Escorts Ltd
155 Mathura Road
Faridabad - 121 003
Tel No ( 0129 ) 2250222
Fax ( 0129 ) 2250060
Email Address corpsectndbvsnlnetin
Web Site wwwescortsgroupcom
LEADERSHIP TEAM
Mr Rajan Nanda
Chairman
Mr Nikhil Nanda
Joint Managing Director
Mr Rohtash Mal
Executive Director and Chief Executive Officer - Agri Machinery Group
Mr Manoj Jha
Executive Vice President of Engineering Division
Mr Kamal Bali
CEO ndash Escorts Construction Equipment Limited (ECEL)
Mr GB Mathur
Vice President - Law amp Company Secretary
Mr Rakesh Kumar Budhiraja
Group Chief Financial Officer
Mr Partha Dasgupta
Group Vice President Human Resources and Employee Relations
LEVELS OF MANAGEMENT
MANAGEMENT
TOP
MANAGEMENT
SENIOR
MANAGEMENT
MIDDLE
MANAGEMENT
JUNIOR
MANAGEMENT
MANAGING
DIRECTOR amp
CEO(G-11)
CHIEF GENERAL
MANGER(G-8)
CHIEF
MANAGER
(G-5)
ASSISTANT
MANAGER(G-2)
VICE PRESIDENT
(G-10)
GENERAL
MANAGER(G-7)
SENIOR
MANAGER(G-4)
EXECUTIVE(G-
1)
ASSOCIATE
VICE PRESIDENT
(G-9)
DEPUTY
GENERAL
MANAGER(G-6)
MANAGER(G-3)
MISSION
WE WILL ACHIEVE LEADERSHIP IN MARKET SHARE amp PROFITABILITY IN
THE DOMESTIC TRACTOR MARKET BY THE YEAR 2004-2006 AND SHALL BE
THE WORLSrsquoS LARGEST SUPPLIER OF SUB 100 HP TRACTORS WE SHALL
PROACTIVELY CONTRIBUTE TO THE PROSPERITY OF THE RURAL
ECONOMY BY DEFINING A LARGER ROLE FOR OURSELVES IN THE FOOD
AND AGRICULTURE SECTOR
THE VISION
WE SHALL STRIVE TO BE THE NUMERO UNO IN THE INDIAN TRACTOR
INDUSTRY AND TOP FIVE TRACTOR MANUFACTURERS IN THE WORLD
WE SHALL CONTINUOUSLY STRIVE TO MEET THE EVER RISING
EXPECTATIONS OF OUR VALUED CUSTOMERS AT THE LOWEST
INTERNAL COST
WE SHALL AIM TO OFFER THE FARMING COMMUNITY A RANGE OF
INNOVATIVE PRODUCTS AND SERVICES WHICH SHALL ENABLE THEM
TO IMPROVE THEIR PRODUCTIVITY AND COMPETITIVNESS
WE SHALL ACHIEVE A TURNOVER OF RS 2 BILLION BY THE YEAR
2006TRANSCENDING NATIONAL BOUNDARIES WE SHALL STRIVE TO
ATTAIN EXPORTS OF ONE TENTH OF OUR TOTAL TRACTOR PRODUCTION
BY THE YEAR 2
REVIEW OF LITERATURE
INTRODUCTION
MEANING OF FINANCIAL STATEMENTS
The financial statements are nothing but the financial information presented in concise and
capsule form and are the financial information is the information relating to the financial
position of any firm The firm prepares the financial statements
bull To communicate with different parties about the financial position of the firm
(Shareholders creditors banks financial institution financial analysts investors
etc And
bull To analyze the operations and performance of the firm for the further
planning
The basic source which provides the financial information is the Annual report of the
company which is presented by the company to its shareholders at the Annual General
Meeting
Though the presentation of annual report is a statutory requirement under the
Companies Act 1956 however it is also a medium of communication with the present as well
as prospective investors and creditors of the company
Clause 43 A of the Listing Agreement (with the stock exchange) requires every
listed company to publish unaudited quarterly results But it does not mean the non-corporate
firms do not prepare the financial statements Every firm big or small prepare the following
financial statements
The Balance Sheet (BS)
1 The Income Statement (IS)
Two other key financial statements which are usually prepared by corporate firms are
1 Statement of appropriation of profit and
2 Statement of Change in financial position
ANALYSIS OF FINANCIAL STATEMENTS (AFS)
Analysis of financial statements refers to the process of the critical examination of the
financial information contained in the financial statements in order to understand and
make decisions regarding the operations of the firm The AFS is basically a study of the
relationship among various financial fact and figures as given in a set of financial
statements AFS is the process of establishment and identifying the financial weakness
and strength of the firm It is indicative of two aspects of a firm ie the profitability
and the financial position
OBJECTIVES OF AFS
The objectives of the AFS is to understand the information contained in financial
statements with a view to know the weakness and strength of the firm and to make a
forecast about the future prospects of the firm and thereby enabling the financial
analyst to take different decisions regarding the operation of the firm The objectives
are as follows
bull To assess the present profitability and operating efficiency of the fir
COMMON-SIZE STATEMENTS (CSS)
The CSS represents the relationship of different items of financial statements with some
Common items by expressing each item as a percentage of the common item In common size
Balance Sheet each item of the balance sheet is stated as a percentage of the total balance
sheet The percentages for different items are computed by dividing the absolute amount of
that item by the Common Base and then multiply by 100 The percentage so calculated can
be easily compared with the corresponding percentage in some other period Thus the CSS is
useful not only in intra-firm comparison for the same year or free several years
TREND PERCENTAGE ANALYSYS(TPA)
The TPA is a technique of studying several financial statements over a series of years In
TPA the trend percentages are calculated for each item by taking the figure of that item for
some base year as 100 So the trend percentage is the percentage relationship which
Each item of different years bears to the same item in the base year Any year may be Taken
as the base year but generally the starting initial year is taken as the base year So each
item for base year is taken as 100 and then the same item for other years is Expressed as a
percentage of the base year
RATIO ANALYSIS (RA)
The RA has emerged as the principle technique of the AFS A ratio is a relationship
Expressed in mathematical terms between two individual or groups of figures connected with
other in some logical manner The RA is based in the premise that a single accounting figure
by itself may not communicate any meaningful information but when expressed as a relative
to some other figure it may definitely give some significant information The relationship
between two or more accounting figuresgroups is called a Financial Ratio
A financial ratio helps to summarize a large mass of financial data into a concise form
and to make meaningful interpretations and conclusions about the performance of a firm
For example a firm has net sales Rs 5 00000
Gross Profit Rs 100000
Ratio of Gross Profit to net sales is 20
ie (Rsl 00000 Rs5 00000)
Forms of Ratios
Since a ratio is a mathematical relationship between two or more variables accounting
figures such relationship can be expressed in different ways as follows
bull As a Pure Ratio
bull As a Rate of Times
bull As a Percentage
Ratio can be classified into
bull The Liquidity Ratio
bull The Activity Ratio
bull The Leverage Ratio
bull The Profitability Ratio
STATEMENT OF CHANGES IN FINANCIAL POSITION
(SCFP)
Since the BS amp IS of a firm are two basic depicting the financial position of a firm at the end
of the year These two financial statements are called the traditional statements Both these
statements fail to throw light on changes in assets liabilities and shareholders wealth during
this year
BS deals with the financial position gives only the static view of the year- end financial
position and fails to indicate the movement and causes in assets and liabilities during the
year Similarly IS show the profit or loss resulting out of the operations of the firm during
the year This profit or loss in fact to ascertain the sufficiency of resources to declare the
dividend etc thus there is a need to prepare another statement (together with the BS amp IS)
which may identify the changes in assets liabilities and the shareholders funds over a given
period
The SCFP is essentially an explanation of the changes in financial position of a Firm
occasioned by the firm in between two successive BSs The SCFP draws basic Information
from the BS and IS helps in understanding the change in assets liabilities and shareholders
worth The SCFP deals with the flow of funds during the year ie the funds coming in and
going out of the firm It summarizes the sources from where the funds might have been
arranged procured by the firm and the uses for which the funs might have been used by
the firm during the year
The SCFP can be prepared as follows
bull SCFP (Cash Basis) also known as a Cash F low Statement
bull SCFP (Net Working Capital Basis) Fund Flow Statement
SCFP (WORKING CAPITAL BASIS)
FUND FLOW STATEMENT
The FFS reports the flows of funds through the firm during the year ie it shows the
Sources and uses of working capital between two balance sheet dates The FFS
attempts to explain the changes in financial position from one BS to the subsequent BS
in terms of the change in the funds or the working capital position of the firm
The term Working capital (WC) is generally defined as the excess of total
current assets over the total current liabilities The current Assets (CA) of a firm may
include cash in hand and at bank stock debtors bills advances etc and the Current
Liabilities (CL) includes creditors bills payable outstanding expenses provision for
tax short term liabilities etc the term WC is a single figure representing the net effect
of a transaction is to increase or decrease the Working Capital by affecting any of the
elements of Current Assets or Current Liabilities Therefore the FFS in its standard
form incorporates only those transactions which affect the Working Capital i e those
transactions where in only one of the affected accounted is a current account
Now a flow of working capital arises when one of the affected accounts is a current
account From the point of view of current account the effected on working capital
can examined in the light of the definitions of the term working capital ie the excess
of current assets over current liabilities ie
Impliedly change in any of the CA or CL will affect the WC Simple observation
equation tells that
bull Increase in any of the CA or decrease in any of the CLs will result in increase
in the WC
bull Decrease in any of the CA or increase in any of the CLs will result in decrease
in the WC
To find out the relative importance of different components of the financial position
of the firm
bull To identify the reasons for change in the profitability financial position of the
firm and
bull To assess the short term as well as the long term liquidity position of the
firm
TECHNIQUES TOOLS OF THE AFS
AFS can be undertaken by different persons and for different purposes therefore the
methodology adopted for the AFS may be carrying from one situation to another However
the following are some of the common techniques of the AFS
bull Comparative financial statements
bull Common-size financial statements
bull Trend percentage analysis and
bull Ratio Analysis
COMPARATIVE FINANCIAL STATEMENTS
In CFS two or more BS andor the IS of a firm are presented simultaneously in columnar
form The Financial data for two or more tears are placed and presented in adjacent columns
and thereby the financial data is provided at times perspective in order to facilitate periodic
comparison In CFS the BS and the IS for number of years are presented in condensed
form for year to year comparison and to exhibit the magnitude and direction of changes
The CFS helps a financial analyst of the firm and in establishing operating and
positional trend of the firm The CFS may be prepared to show
1 The absolute amount of different items in monetary terms
2 The amount of periodic changes in monetary terms
1 The percentages of periodic changes to reveal the proportionate changes
The CFS can be prepared for both the BS and the IS
CORE COMPETENCE OF ESCORTS
Customer 1
We put customers first in everything we do We take decisions keeping the customer in
mind
Challenging Spirit
We strive for excellence in everything we do and in the quality of goods amp services we
provide We work hard to achieve what we commit amp achieve results faster than our
competitors and we never give up
Team-work
We work cohesively with our colleagues as a multi-cultural team built on trust respect
understanding amp mutual co-operation Everyones contribution is equally important for
our success
Frank amp Fair Organization
We are honest sincere open minded fair amp transparent in our dealings We actively
listen to others and participate in healthy amp frank discussions to achieve the
organizations
A firm undertakes numerous during a year and most of these transactions during a year and
most of these transactions may affect one or the other current account ie most of these
transactions May results in the flow of the WC Neither is it necessary nor practical to
identify the effect of each and every transaction on the WC These transactions instead are
considered and analyzed in a collective form and then their effect on the WC is identified
SCFP (CASH BASIS) OR
THE CASH FLOW STATEMENT
The CFS attempts to analyze the transactions of the firm in terms of cash ie the transactions
generating cash and using cash The focus in the CFS is on cash rather than on WC The
sources of cash may be the cash profits earned by the firm issue of capital for cash issue of
other securities for cash borrowings sale of assets investment redemption of debenture or
preference share repayment of loan payment of tax dividend distribution etc Thus the
CFS summarizes the cash inflows and outflows
An analysis of cash flows is useful for short-run planning A firm needs sufficient cash to
debts maturing in the near future to pay interest and other expenses and to pay dividends to
shareholders The firm can make projections of cash flows and outflows for the near future to
determine the availability of cash This cash balance can be matched with the firms need for
cash during the period and accordingly arrangements can be made the deficit or invest the
surplus cash temporarily A historical analysis of cash flows provides insight to prepare
reliable cash flow projections for the immediate future
A statement of changes in financial position on cash basis commonly known as cash flow
statement summarizes the causes of changes in cash position between dates of two balance
sheets It indicates the sources amp uses of cash The cash flow statement is similar to the fund
flow statement except that it focuses attentions on cash instead of working capital (funds)
Thus this statement analyses change in non-current accounts as well as current accounts
(other than cash) to determine the flow of cash
The CFS is based on the concept on the WC Where as the CFS is based in cash which is only
the element of WC Thus the CFS provides details of cash movements whereas the FFS
provides the details of funds movements
The CFS considers only the actual movement of cash whereas the FFS considers the
movements of the funds as defined in terms of net working capital
CASH-FLOW STATEMENT
A cash-flow statement is a statement showing inflows (receipts) and outflows (payments) of
cash during a particular period In other words it is a summary of sources and applications of
Cash during a particular span of time It analyses the reason for changes in balance of cash
between the two balance sheet dates The term Cash here stands for cash and cash
equivalents
A cash-flow statement includes only those items which affect cash As such the cash-flow
statement is called a statement of changes in financial position - cash basis
A cash - flow statement can be for the past or can be projected for a future period
OBJECTS OR USES OF CASH-FLOW STATEMENT
The main objectives behind preparing a cash-flow statement can be laid down as under-
bull USEFUL FOR SHORT-TERM FINANCIAL PLANNING-
A cash-flow statement provides information for planning the short-term financial needs of the
firm Since it provides information regarding the sources and utilization of cash during a period
it become easier for the management to assess whether it will have Adequate cash to meet day-
to-day expenses and pay the long - term loans and interest Thereon and whether it has enough
cash to pay for the purchase of fixed assets or not
USEFUL FOR PREARING THE CASH BUDGET-
A cash-flow statement prepared for the future period is helpful in preparing a cash budget It
informs the management about the future period is helpful in preparing a cash budget It informs
the management about the surplus or deficit periods of cash ie in which months the payments
will be in excess of receipts It helps in planning the investment of surplus cash in short-term
investment and to plan short-term credit in advance of deficit periods
bull COMPARISON WITH CASH BUDGET-
A cash budget is prepared at the commencement of the year whereas a cash flow Statement is
prepared at the end of the year A comparison between the two helps in ascertaining the extent
to which the financial resources of the firm have been generated and used according to the plan
Causes of variances between the figures of two statements can be analyzed and proper
corrective measures may be takes
bull STUDY OF THE TREND OF CASH RECEIPTS AND PAYMENTS-
A cash-flow statement reveals the speed at which the cash is being generated from debtors stock
and other current assets the speed at which the current liabilities are being paid It enables the
management to assess the true position of the cash in future
bull IT EXPLAINS THE DEVIATIONS OF CASH FROM EARNINGS-
A firm may earn huge profits yet it may have paucity of cash or when it suffered a loss it may
still have plenty of cash A cash flow statement explains the reasons for it
HELPFUL IN ASCERTAINING CASH-FLOW FROM VARIOUS
ACTIBITIES SEPARATELY-
A cash-flow statement aims at highlighting the cash flow from operating investing and
financing activities separately It includes how much cash has been generated or used in these
activities
bull HELPFUL IN MAKING DIVIDEND DECISIONS-
Dividend must be paid within 42 days of its declaration Hence the management takes the help of
cash-flow statement to ascertain the position of cash generated from operating activities which
can be used for payment of dividend
IMPORTANCE AND RELEVANCE OF CFS
The CFS has gained importance in view of the fact that there are many managerial Decisions
which are taken in the light of the cash availability or cash position of the firm
For example declaration of dividend by the company requires cash disbursement and
Therefore the Board of Directors must consider the cash position before proposing a dividend
The CFS also provides information for the short term financial planning and in particular the
short term cash needs of the firm
In view of increasing importance and relevance of the CFS the clause 32 of the Listing
agreement (between a Company and the Stock Exchange where the shares proposed to be listed)
has been amended by the SEBI As a result the listed companies in India are now required to
supply a copy of the CFS to each shareholder as a part of Annual Report As a result the listed
companies have started a practice of sending a CFS for which the BS has been prepared as
apart of the Annual Report of the company
DIFFRENCE BETWEEN CASH - FLOW STATEMENT AND
CASH BUDGET
There is not much difference between cash flow statement and a cash budget The
only difference is that a cash flow statement is prepared for a past period where as cash
budget is prepared for a future period Hence it is of limited use as far as the future
periods are concerned A cash budget is therefore prepared showing how much cash is
likely to be received and what will be the disbursements during a future period of time
Thus a cash budget indicates in which months there will be surplus cash and in which
moths there will be deficiency of cash resources The management can then take suitable
decision to invest the surplus cash or make arrangement for the deficiency of cash at the
required time
LIQUIDITY
It does not present true picture of the liquidity of the firm the liquidity does
not depend upon cash alone Liquidity also depends upon those assets
which can be converted into cash easily
bull Exclusion of these assets obstructs the true reporting of the ability of the firm to
meet its liabilities when they become due for payment
bull The possibilities of window - dressing is higher in case of cash position in
comparison to the working capital position of the firm
bull The cash balance can be easily maneuvered by postponing purchases and other
payments and by rapidly collecting cash from debtors before the balance sheet date
Hence a fund - flow statement presents a more realistic picture than a cash flow
statement
bull Cash flow statement ignores non- cash charges Hence the true position of the
enterprise cannot be judged by cash flow statement
bull It is prepared on cash basis and hence ignores one of the basic concept of accounting
namely accrual concept
PROCEDURE OF PREPARING CASH FLOW STATEMENT-
The institute of charted accountants of India has issued accounting standards (as)-3 revised for
preparing a cash flow statement This accounting standard has been made mandatory in respect
of accounting periods commencing on or after 1st April 2001 for certain enterprises These
enterprises are-
bull Enterprises whose equity or debt securities are listed on a recognized stock exchange in
India And enterprise that are in the process of issuing equity or debt securities that will
be listed on a recognized stock exchange in India
bull All other commercial industrial and business enterprises whose turnover for accounting
period Rs 50 crores
As such the cash flow statement has been prepared according to as -3 revised in this project
According to as-3 revised the cash flow statement summarizes the cash inflows and cash
outflows and the net changes (increase or decrease) in cash and cash equipment resulting from
operating investing and financing activities of a firm during a period The following terms are
used for preparing a cash flow statement
CASH-
It compares cash in hand and demands with banks
CASH EQUIVALENTS-
There are short - term highly liquid investments that are readily into known amounts of cash
and which present insignificant risk of changes in their values Normally an investment will be
termed as cash equivalent only if it has a short maturity period say three months or less from the
date of its acquisition Examples of cash equivalent are treasury bills commercial papers etc
Which are purchased with cash that is in excess of immediate needs investment in shares are
excluded from cash equivalents unless they are cash equivalent in reality For example the
preference shares of the company which are purchased shortly before their redemption date will
be included in cash equivalents provided there is only an insignificant risk of failure of the
company in repaying the amount at the date of the maturity
CLASSIFICATION OF CASH FLOW-
According to as -3 (revised) cash flow statement should be presented in a manner that it reports
inflows of cash by classifying them into three categories namely operating investing and
financing activities Classification of all activities into these activities on the cash and cash
equivalents of the enterprise such information will be helpful in evaluating the relationships
among these three activities are explained as below
CASH FLOW FROM OPERATING ACTIVITIES-
Operating activities are the main revenue generating activities of an enterprise As such they
include cash flows from those transactions and events which enter into the ascertainment of
net profit or loss of the enterprise Examples of cash flows arising operating activities are
bull Cash receipts from the sale of goods and rendering of services
bull Cash receipts from royalties fees commissions and other revenue
bull Cash payments to suppliers for goods and services
bull Cash payments to and on behalf of employees
bull Cash receipts and cash payments of an insurance enterprise for premiums and claims
annuities and other policy benefits
bull Cash receipts and payments relating to future contracts forward contracts option
contracts and swap contracts when the contracts are held for dealing or trade purpose and
bull Cash payments of refunds of income taxes unless they can be specifically identified with
financing and investing activities
CASH FLOW FROM INVESTING ACTIVITIES-
Investing activities include the purchase and sale of long term assets such as land building plant
and machinery etc not held for resale These activities also include the purchase and sale of such
investment which are not including in cash equipments Cash flow from investing activities
discloses the expenditures incurred for resources intended to generate future income and cash
flows
Examples cash flow arising from investing activities are
bull Cash payments to acquire fixed assets (including intangible)
bull Cash receipts from sale of fixed assets (including intangibles)
bull Cash payments to acquire shares warrants or debt instruments of other enterprises
(other than receipts for those instruments considered to be cash equivalents)
bull Cash receipts from sale of shares warrants or debt instruments of other enterprises (other
than receipts for those instruments considered to be cash equivalents)
bull Cash advances and loans made to third parties In case of financial enterprises these will
be treated as cash flow from operating activities
bull Cash receipts from the repayment of advances and loans made to third parties In case of
financial enterprises these will be treated as cash flow from operating activities
bull Cash receipts of insurance claim for property involved in accident and
bull Cash receipts of interest and dividend In case of financial enterprise these will be treated
cash flow from operating activities
CASH FLOW FROM FIANCING ACTIVITIES-
Financing activities are the activities that result in change in capital and borrowing of the
enterprise
Examples of cash flows arising from financing activities are
bull Cash receipts from issuing shares or other similar instruments
bull Cash receipts from issuing debentures loans bonds and other short term or long term
borrowing
bull Cash repayment of amounts borrowed buy back of equity shares redemption of
preference shares debentures loans bonds etc
bull Cash payment of interest and dividend
IMPORTANT NOTE
In case of financial enterprise such as bank or mutual fund company cash Outflow
and cash inflow arising from the purchase and sale of securities will Be treated as
flows from operating activities This is because purchase and sale of securities is a
part of operating activity in case of financial enterprise In addition interest paid
and interest received as well as dividends received will also be treated as cash flow
from operating activities in case of financial Enterprises
CASH FLOW STATEMENT
(DIRECT METHOD)
CASH FLOW FROM OPERATING ACTIVITIES
Cash receipts from costumers
Cash paid to suppliers and employers ()
Cash generated from operations
Income tax paid ()
Cash flows from extraordinary item
plusmn Extra ordinary items
Net cash from operating activities
CASH FLOW FROM INVESTING ACTIVITIES-
Purchase of fixed assets
Proceed from sale equipment ()
Interest received
Dividend received ()
Net cash from investing activities
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from insurance of share capital
Proceeds from long- term borrowings ()
Repayment of from long-term borrowings
Interest paid
Dividend paid ()
Net cash from financing activities
Net increase in cash and cash equivalent
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
SOME SPECIAL TERMS-
i) INTERSET AND DIVIDEND-
Cash inflow from interest and dividends and cash outflow on account of interest and
dividends should be disclosed separately Cash inflow arising from interest and dividends
received should be shown as cash flow from investing activities where as cash outflow
disclosed outflow on account of interest and dividend paid should be shown as cash flow
from financing activity
ii) TAXES ON INCOME-
Tax paid on income is a part of cash flow from operating activity Hence taxes paid are
shown as a deduction under cash flow from operating activity
iii) EXTRA ORDINARY ITEMS-
Cash flow relating to extra ordinary items such as bad debts recovered Claims received from
insurance companies winning of a lottery or a law etc Should be disclosed separately as
arising from operating investing or financing activities For example the amount received
for insurance company on account of loss of stock by fire Earthquake and floods etc Should
be reported as cash flow from operating activities
iv) SIGNIFICANT NON - CASH TRANSACTION-
There are some investing and financing activities which do not require the use of cash or
cash equivalents Such non cash activities should be excluded from the cash flow statement
Examples are the acquisition of assets by issue of debentures or shares conversion of
shares into debentures etc Such significant on non cash transaction should be disclosed
outside the cash flow statement
CASH FLOW STATEMENT
(INDIRECT METHOD)
CASH FLOW FROM OPERARATTNG ACTIVITIES
Net profit before taxation and extraordinary item
Adjustment for
Depreciation
Foreign exchange loss
Interest income
Dividend income
Interest expense
Operating profit before working capital changes
Increase in sundry debtors
Decrease in inventories
Decrease in sundry creditors
Cash generated from operations
Income tax paid ()
Cash flow before extraordinary item
plusmn Extra - ordinary items
Net cash from operating activities
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of fixed assets ()
Proceeds from sale of equipment
Interest received
Dividend received ()
Net cash from investing activities
CASH FLOW FROM FINANCING ACTIVITIES-
Proceeds from insurance of share capital
Proceeds from long - term borrowings
Repayments of from long - term borrowings ()
Interest paid ()
Dividend paid ()
Net cash from financing activities
Net increase in cash and cash equivalent
Cash and cash equivalents at beginning of period
CHANGES IN CASH FLOWS
Changes in cash flows can be treated to the following
1 Net profit will increase the cash flows these cash flows will be
increased further if there are any non-cash changes (such as depreciation
and amortization)
2 Any payment of dividends will decrease the cash flows as will the
repayment of debt an issue of share or debt will also increase the
cash flows
3 An increase in non-cash assets will decrease cash flows increase in
current assets and fixed assets will result in drain on cash flows
Thus a statement of changes in cash flows ie the cash flow statement
classifies all Changes into one of three categories - operating investing or
financing activities Therefore the preparation of a statement of changes in cash
flows requires classification of changes in liabilities shareholders equity and
non-cash assets into one of these categories although some items will not fit
easily onto one other
h equivalent at end of period
STEP- BY-STEP PROCEDURE TO PREPARE CFS
1 Calculate the net increase or decrease in cash and cash equivalents-
For this purpose the opening balance of total cash and cash equivalents is compared with the
closing balance of cash and equivalents
Increasedecrease in cash and equivalents
Opening balance Closing Balance
Cash in hand
Cash in bank
Short-term Investment
Total
The difference between the total of opening and closing balance will be increased or
Decreased in cash equivalents during the period It may be noted that if there are only one or
two of items of cash etc
2 Net Cash flaw from operating activities-
The term operating refers to the normal purchase of goods and services On the basis of the
information contained in the comparative BS s and the IS and the additional Information the
net cash flow generated or use by the operating activities may be ascertained The IS prepared
by the firm gives the net profit figure earned by the firm On actual basis ie all items in the
IS are incorporated on the basis of earnedaccrued even
3 If not resulting in cash movements-
So the profit or loss as by the IS may not result in increase or decrease in cash balance by the
SYNOPSIS
INTRODUCTION
ESCORTS PVT LTD is a private limited company not listed in a stock exchange of India
and employees 900 highly trained personnel Its manufacturing plants are strategically located
in close proximity to its customers at Faridabad (Haryana) Noida (UP)
OBJECTIVES OF THE STUDY
bull To find the movement of cash inflow and cash outflow
bull To make the comparison between cash inflow and
bull Cash outflow
bull To prepare the Cash Flow Statement
bull To analyze the Balance Sheet of the company in terms of Cash Flow Statement
bull To focus on various activities of the organization in terms of Operating
Financing Investment
SCOPE OF THE STUDY
Financial resources are the assets for the company and their productivity is key
factor for profitability It is necessary to know their problems their knowledge
skills abilities amp the measures that can be taken to reduce them By analyzing this
top management can build good relations with the employees
The whole study is to determine the competencies of different employees who are
working in ESCORTS PVT LTD By analyzing it the top management can
introduce the concept of competency mapping in the organization Through this
management can attempt to use more suitable strategies towards the human
resource development
The research is confined to elicit the existing gap between the standard skill
required to perform the job and the skill processed by the employees at ESCORTS
PVT LTD And to provide them suitable training program to over come those gaps
for the better utilization of human resources
RELEVANCE
The scope of the study was confined to the outside parties like creditors
shareholders government etc Who want to invest their money in the
company
The benefit of the report for the company is that through this report they can come
to know about the cash flow statements of the company
This study also unable the company that their cash is not utilizing in unnecessary
things
The benefit of the report for the researcher is that it has helped to get knowledge
about the cash inflow and cash
RESERRCH METHODOLOGY-
RESEARCH DESIGN
bull The study was conducted under well- structured approach
bull The project lasted for 4 weeks and the year 2009 ie from 08 July to 12
Aug2009
bull The questionnaire method amp personal interview method was used to collect
the primary data for the study
The secondary data is collected from Internet amp company training material and
many other company materials
SAMPLE DESIGN
The process of extracting a sample from a population is called sampling
procedure The selection of sampling procedure to conduct the research
depends upon the nature of the study and the objective to be accomplished
Judgment sampling technique is adopted to select the respondents in this
study The sample design included the various departments in the YAMAHA
MOTORS PVT LTD
Methodology of date collection
bull Conducting personal interview
bull Data collection from primary and secondary sources
bull Designing questionnaire
bull Selecting sample size from the sample frame for the survey
bull Questionnaire distribution
bull Analysis of collected data with the help of statistical tools
bull Interpretation of collected data
bull Stating the conclusion based on the entire study
Sampling Technique
The sampling technique used for this research is of non-probability and convenience
sampling
Sample Unit
Employees of the company
Sample Size
For this research study the sample size is 25 respondents
Sources of data
Primary data
Primary data is the data which is collected by the researcher for the first time
and which was not there The tools used to collect the data are-
1)Questionnaire method from the employers in different departments
2) Face to Face personal interactions
Secondary Data
The data already collected is called as secondary data The relevant information
for this study has been collected from secondary source such as
Books
Journal
Reports
Publication by the organizational circulation
Company records
Business bulletins
Internet
Secondary data is also collected from various of the internet and intranet Some
of the website trough which information was gathered was through
HYPOTHESIS
The report is analyzed under the presumption that cash flow position of
YAMAHA MOTORS PVTLTD It can be improved and made effective in
terms of cash flows
In testing the above hypothesis the following aspects will be considered
1 Balance sheet comparisons
2 Presentation of cash flow statement in terms of revised AS-3
LIMITATIONS
The study though conducted to the best of the ability suffers from some
certain limitations There are
The data is secondary one and as such its reliability may be
questioned upon
The time availability for the study is less and as such it hinders thee
progress of the study
Senior officials were rarely approachable
Websites were not giving comprehensive data
Not having face-to-face interaction to get more relevant
information
Analysis and interpretation of data was done on the assumption that
the respondentsrsquo information was online
Information collected was totally subjective
The interviews are done during office hours but could not be done
for the other employees of other
DATA ANALYSIS
ESCORTS PVT LTD
CASH FLOW STRATEMENT
Year Ended Year Ended
30092009 30092008
Rs Crores Rs
Crores
A Cash Flow from Operating Activities
Net profit before tax (1733) 3444
Adjustment for
Loss on sale Provision for diminution in value of Long Term
Investments amp loans to Group Companies 189 4018
Gain on sale of Long Term Investments (122) (9492)
Gain on sale of Asset (013) -
Depreciation 4497 3955
Misc Exp Assets Write off Provisions 808 750
Interest Expense 7222 7999
Dividend Income (002) (001)
Interest Income (2082) -
Operating Profit before working capital changes 8764 10673
Adjustments for
Trade and other Receivables (8817) (12035)
Inventories 1379 (4692)
Trade Payables 6705 19046
Miscellaneous Expenditure (750) (511)
(1483) 1808
Cash Generated from Operations 7281 12481
Direct Taxes (Paid)Refunds (1785) 3166
Net Cash Flow from operating activities 5496 15647
B Cash Flow from Investing Activities
Purchase of Fixed Assets (3095) (2794)
Proceeds from sale of Fixed Assets 086 177
Movement in Loans and Advances (1627) (1644)
Sale of Investments 3233 11452
Short Term Deposits with schedule Banks (231) (1048)
Interest Received 2070 -
Dividend Received 002 001
Net Cash Flow from Investing activities 438 6144
Proceeds from Share Capital amp Securities Premium 11444 -
Proceeds from Long Term Borrowings 8660 -
Less Repayment of Long Term Borrowings (054) (7896)
Proceeds (Repayment) from short term borrowings (net) (22726) -
Interest Paid (7740) (8223)
Net Cash used in financing activities (10416) (16119)
Net Increase(Decrease) in Cash and Cash equivalents (4482) 5672
Cash and Cash equivalents as at 01102008 10565 4893
Cash and Cash equivalents as at 30092009 6083 1056
ANALYSIS OF CASH FLOW
From the cash flow statements of the ESCORT PVTLTDIt can be analyzed
from the two years that the net cash balance of the company has increased
manifold in 30-09-2008 than the year 30-09-2009
The net profit in 30-09-2008 is higher than the 30-09-2009 but due to certain
changes there has been increase in the cash balance
The interest paid this year is ore of the last year which implies that thee
company has not repaid his borrowed capital due to which the interest has got
down
The depreciation has increased but it does not affect cash to an extent as it is a
non-cash item In the head of working capital there is drastic change in the cash
balance in the form of ldquoTrade and other Receivables which has affected the cash
balance
There is outflow of cash for receivables rather than the inflow in the last year
So the net effect is that the cash from operating activities has been decreased
two times from the last year
The company has no accumulated losses as at the end of the financial year ie
September 31 2008
Provision for taxation has been made in accordance with the requirement of AS-
22 issued by Institute of Charted Accountants of India
Pursuant to that current year deferred tax liability have been charged to profit amp
loss account
In opinion of the board of directors of thee company the current assets loans
and advances have a value on realization in the ordinary course of the business at
least equal to the amount stated in the balance sheet and provision for all
liabilities have been made
Balance of sundry debtors creditors loans and advances are subject to confirmation by
the concerned parties
METHOD OF ANALYSIS
1 Data analysis is done using the following statistical tools wherever required in
order to extract meaningful information from the collected data
o Simple percentage and averages
o Bar diagram
o Cone diagram
o Pie diagram
2 The collected data from the questionnaire has been put together in the form of
tables
3 Percentage has been calculated wherever necessary for generalization of the
data
4 Data analysis and interpretation has been done on the basis of primary and
secondary data
5 The findings researches have been recorded based on the analysis
6 The study conducted pertains only to YAMAHA MOTORS INDIA PVTLTD
All bank balances (debitcredit) have been confirmed by the concerned bank
Identified from the available information which has been relied upon by the auditors
The names of small-scale industrial units to whom outstanding for more than
thirty days within agreed terms
The company has 9996 of shareholders in its subsidiary company named as
ESCORTS PVT LTD As at 31-03-2008
So the net effect is that the net cash from investing activities has many more
times than the last year which is negative Now the company has repaid its long
term borrowing more than the last year which has decreased the cash balance by
the little amount
Balance with the schedule banks under the head current amp collection account
amounting to represent funds in transit lying with schedule banks pending
transfer against loan liabilities under the head cash credit amp bill discounting
LIQUIDITY RATIO
1 CURRENT RATIO
(Amount in Rs)
Current Ratio
Year Current Assets Current Liabilities Ratio
2003 58574151 7903952 7412004 69765346 31884616 2192005 72021081 16065621 4482006 91328208 47117199 1942007 115642068 30266661 382
Interpretation
As a rule the current ratio with 21 (or) more is considered as satisfactory
position of the firm
When compared with 2006 there is an increase in the provision for tax because
the debtors are raised and for that the provision is created The current liabilities
majorly included Lanco Group of company for consultancy additional services
The sundry debtors have increased due to the increase to corporate taxes
In the year 2006 the cash and bank balance is reduced because that is used for
payment of dividends In the year 2007 the loans and advances include majorly
the advances to employees and deposits to government The loans and advances
reduced because the employees set off their claims The other current assets
include the interest attained from the deposits The deposits reduced due to the
declaration of dividends So the other current assets decreased
The huge increase in sundry debtors resulted an increase in the ratio which is
above the benchmark level of 21 which shows the comfortable position of the
firm
GRAPHICAL REPRESENTATION
741
219
448
194
382
000
100
200
300
400
500
600
700
800
Ratio
2003 2004 2005 2006 2007
Years
CURRENT RATIO
Ratio
2 QUICK RATIO
(Amount
in Rs)
Quick Ratio
Year Quick Assets Current Liabilities Ratio
2003 58574151 7903952 741
2004 52470336 31884616 165
2005 69883268 16065620 435
2006 89433596 47117199 19
2007 115431868 30266661 381
Interpretation
Quick assets are those assets which can be converted into cash with in a short
period of time say to six months So here the sundry debtors which are with the
long period does not include in the quick assets
Compare with 2006 the Quick ratio is increased because the sundry debtors are
increased due to the increase in the corporate tax and for that the provision
created is also increased So the ratio is also increased with the 2006
GRAPHICAL REPRESENTATION
741
165
435
190
381
000
100
200
300
400
500
600
700
800
Ratio
2003 2004 2005 2006 2007
Years
QUICK RATIO
Ratios
3 ABOSULTE LIQUIDITY RATIO
(Amount
in Rs)
Absolute Cash Ratio
Year Absolute Liquid Assets Current Liabilities Ratio
2003 31004027 7903952 392
2004 10859778 31884616 034
2005 39466542 16065620 246
2006 53850852 47117199 114
2007 35649070 30266661 118
Interpretation
The current assets which are ready in the form of cash are considered as absolute
liquid assets Here the cash and bank balance and the interest on fixed assts are
absolute liquid assets
In the year 2006 the cash and bank balance is decreased due to decrease in the
deposits and the current liabilities are also reduced because of the payment of
dividend That causes a slight increase in the current yearrsquos ratio
GRAPHICAL REPRESENTATION
392
034
246
114 118
0
05
1
15
2
25
3
35
4
Ratios
2003 2004 2005 2006 2007
Years
ABSOLUTE CASH RATIO
Ratios
LEVERAGE RATIOS
4 PROPRIETORY RATIO
(Amount
in Rs)
Proprietory Ratio
Year Share Holders Funds Total Assets Ratio
2003 67679219 78572171 086
2004 53301834 88438107 06
2005 70231061 89158391 079
2006 56473652 106385201 053
2007 97060013 129805102 075
Interpretation
The proprietary ratio establishes the relationship between shareholders funds to
total assets It determines the long-term solvency of the firm This ratio indicates
the extent to which the assets of the company can be lost without affecting the
interest of the company
There is no increase in the capital from the year2004 The share holderrsquos funds
include capital and reserves and surplus The reserves and surplus is increased
due to the increase in balance in profit and loss account which is caused by the
increase of income from services
Total assets includes fixed and current assets The fixed assets are reduced
because of the depreciation and there are no major increments in the fixed assets
The current assets are increased compared with the year 2006 Total assets are
also increased than precious year which resulted an increase in the ratio than old
GRAPHICAL REPRESENTATION
086
060
079
053
075
000
010
020
030
040
050
060
070
080
090
Ratios
2003 2004 2005 2006 2007
Years
PROPRIETORY RATIO
Ratios
ACTIVITY RATIOS
5 WORKING CAPITAL TURNOVER RATIO
(Amount
in Rs)
Working Capital Turnover Ratio
Year Income From Services Working Capital Ratio
2003 36309834 50670199 0722004 53899084 37880730 1422005 72728759 55355460 1312006 55550649 44211009 1262007 96654902 85375407 113
Interpretation
Income from services is greatly increased due to the extra invoice for Operations
amp Maintenance fee and the working capital is also increased greater due to the
increase in from services because the huge increase in current assets
The income from services is raised and the current assets are also raised together
resulted in the decrease of the ratio of 2007 compared with 2006
GRAPHICAL REPRESENTATION
072
142 131126
113
000
020
040
060
080
100
120
140
160
Ratio
2003 2004 2005 2006 2007
Years
WORKING CAPITAL TURNOVER RATIO
Ratio
6 FIXED ASSETS TURNOVER RATIO
(Amount in Rs)
Fixed Assets Turnover Ratio
Year Income From Services Net Fixed Assets Ratio
2003 36309834 28834317 126
2004 53899084 29568279 182
2005 72728759 17137310 424
2006 55550649 15056993 369
2007 96654902 14163034 682
Interpretation
Fixed assets are used in the business for producing the goods to be sold This
ratio shows the firmrsquos ability in generating sales from all financial resources
committed to total assets The ratio indicates the account of one rupee
investment in fixed assets
The income from services is greaterly increased in the current year due to the
increase in the Operations amp Maintenance fee due to the increase in extra invoice
and the net fixed assets are reduced because of the increased charge of
depreciation Finally that effected a huge increase in the ratio compared with the
previous yearrsquos ratio
GRAPHICAL REPRSENTATION
126182
424 369
682
000
100
200
300
400
500
600
700
Ratios
2003 2004 2005 2006 2007
Years
FIXED ASSETS TURNOVER RATIO
Ratios
7 CAPITAL TURNOVER RATIO
(Amount
in Rs)
Capital Turnover Ratio
Year Income From Services Capital Employed Ratio
2003 36309834 37175892 0982004 53899084 53301834 1012005 72728759 70231061 1042006 55550649 56473652 0982007 96654902 97060013 100
Interpretation
This is another ratio to judge the efficiency and effectiveness of the company
like profitability ratio
The income from services is greaterly increased compared with the previous year
and the total capital employed includes capital and reserves amp surplus Due to
huge increase in the net profit the capital employed is also increased along with
income from services Both are effected in the increment of the ratio of current
year
GRAPHICAL REPRESENTATION
098
101
104
098
100
094095096097098099100101102103104
Ratios
2003 2004 2005 2006 2007
Years
CAPITAL TURNOVER RATIO
Ratios
8 CURRENT ASSETS TO FIXED ASSETS RATIO
(Amount
in Rs)
Current Assets To Fixed Assets Ratio
Year Current Assets Fixed Assets Ratio
2003 58524151 19998020 2932004 69765346 18672761 3742005 72021081 17137310 4202006 91328208 15056993 6072007 115642068 14163034 817
Interpretation
Current assets are increased due to the increase in the sundry debtors and the net
fixed assets of the firm are decreased due to the charge of depreciation and there
is no major increment in the fixed assets
The increment in current assets and the decrease in fixed assets resulted an
increase in the ratio compared with the previous year
GRAPHICAL REPRESENTATION
293374
420
607
817
000
100
200
300
400
500
600
700
800
900
Ratios
2003 2004 2005 2006 2007
Years
CURRENT ASSETS TO FIXED ASSETS RATIO
Ratios
PROFITABILITY RATIOS
GENERAL PROFITABILITY RATIOS
9 NET PROFIT RATIO
(Amount in Rs)
Net Profit Ratio
Year Net Profit After Tax Income from Services Ratio
2003 21123474 36039834 059
2004 16125942 53899084 030
2005 16929227 72728759 023
2006 18259580 55550649 033
2007 40586359 96654902 042
Interpretation
The net profit ratio is the overall measure of the firmrsquos ability to turn each rupee
of income from services in net profit If the net margin is inadequate the firm
will fail to achieve return on shareholderrsquos funds High net profit ratio will help
the firm service in the fall of income from services rise in cost of production or
declining demand
The net profit is increased because the income from services is increased The
increment resulted a slight increase in 2007 ratio compared with the year 2006
GRAPHICAL REPRESENTATION
059
030
023
033
042
000
010
020
030
040
050
060
Ratios
2003 2004 2005 2006 2007
Years
NET PROFIT RATIO
Ratios
10 OPERATING PROFIT
(Amount in Rs)
Operating Profit
Year Operating Profit Income From Services Ratio
2003 36094877 36309834 099
2004 27576814 53899084 051
2005 29540599 72728759 041
2006 31586718 55550649 057
2007 67192677 96654902 070
Interpretation
The operating profit ratio is used to measure the relationship between net profits
and sales of a firm Depending on the concept it will decide
The operating profit ratio is increased compared with the last year The earnings
are increased due to the increase in the income from services because of
Operations amp Maintenance fee So the ratio is increased slightly compared with
the previous year
GRAPHICAL REPRESENTATION
099
051
041
057
070
000
010
020
030
040
050060
070
080
090
100
Ratios
2003 2004 2005 2006 2007
Years
OPERATING PROFIT RATIO
Ratios
11 RETURN ON TOTAL ASSETS RATIO
(Amount in Rs)
Return on Total Assets Ratio
Year Net Profit After Tax Total Assets Ratio
2003 21123474 78572171 027
2004 16125942 88438107 018
2005 16929227 89158391 019
2006 18259580 106385201 017
2007 40586359 129805102 031
Interpretation
This is the ratio between net profit and total assets The ratio indicates the return
on total assets in the form of profits
The net profit is increased in the current year because of the increment in the
income from services due to the increase in Operations amp Maintenance fee The
fixed assets are reduced due to the charge of depreciation and no major
increments in fixed assets but the current assets are increased because of sundry
debtors and that effects an increase in the ratio compared with the last year ie
2006
GRAPHICAL REPRESENTATION
027
018 019017
031
000
005
010
015
020
025
030
035
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON TOTAL ASSETS
Ratios
12 RESERVES amp SURPLUS TO CAPITAL RATIO
(Amount in Rs)
Reserves amp Surplus To Capital Ratio
Year Reserves amp Surplus Capital Ratio
2003 65599299 2079920 31542004 34582554 18719280 1852005 51511781 18719280 2752006 37754372 18719280 2022007 78340733 18719280 419
Interpretation
The ratio is used to reveal the policy pursued by the company a very high ratio
indicates a conservative dividend policy and vice-versa Higher the ratio better
will be the position
The reserves amp surplus is decreased in the year 2006 due to the payment of
dividends and in the year 2007 the profit is increased But the capital is
remaining constant from the year 2004 So the increase in the reserves amp surplus
caused a greater increase in the current yearrsquos ratio compared with the older
GRAPHICAL REPRESENTATION
3154
185 275 202419
-
500
1000
1500
2000
2500
3000
3500
Ratios
2003 2004 2005 2006 2007
Years
RESERVES amp SRUPLUS TO CAPITAL RATIO
Ratios
OVERALL PROFITABILITY RATIOS
13 EARNINGS PER SHARE
(Amount in Rs)
Earnings Per Share
Year Net Profit After Tax No of Equity Shares Ratio
2003 21123474 207992 101562004 16125942 1871928 8612005 16929227 1871928 9042006 18259580 1871928 9752007 40586359 1871928 2168
Interpretation
Earnings per share ratio are used to find out the return that the shareholderrsquos earn
from their shares After charging depreciation and after payment of tax the
remaining amount will be distributed by all the shareholders
Net profit after tax is increased due to the huge increase in the income from
services That is the amount which is available to the shareholders to take There
are 1871928 shares of Rs10- each The share capital is constant from the year
2004 Due to the huge increase in net profit the earnings per share is greaterly
increased in 2007
GRAPHICAL REPRESENTATION
10156
861904 975
2168
000
2000
4000
6000
8000
10000
12000
Ratios
2003 2004 2005 2006 2007
Years
EARNINGS PER SHARE
Ratios
14 PRICE EARNINGS (PE) RATIO
(Amount in Rs)
Price Earning (PE) Ratio
Year Market Price Per Share Earnings Per Share Ratio
2003 3254 10156 0322004 2847 861 3302005 3752 904 4152006 3017 975 3092007 5185 2168 239
Interpretation
The ratio is calculated to make an estimate of application in the value of share of
a company
The market price per share is increased due to the increase in the reserves
amp surplus The earnings per share are also increased greaterly compared
with the last year because of increase in the net profit So the ratio is
decreased compared with the previous year
GRAPHICAL REPRESENTATION
032
330
415
309
239
000
050
100
150
200
250
300
350
400
450
Ratios
2003 2004 2005 2006 2007
Years
PE RATIO
Ratios
15 RETURN ON INVESTMENT
(Amount in Rs)
Return on Investment
Year Net Profit After Tax Share Holders Fund Ratio
2003 21123474 67679219 031
2004 16125942 53301834 03
2005 16929227 70231061 024
2006 18259580 56473652 032
2007 40586359 97060013 042
Interpretation
This is the ratio between net profits and shareholders funds The ratio is
generally calculated as percentage multiplying with 100
The net profit is increased due to the increase in the income from services ant
the shareholders funds are increased because of reserve amp surplus So the ratio
is increased in the current year
GRAPHICAL REPRESENTATION
031 030
024
032
042
000
005
010
015
020
025
030
035
040
045
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON INVESTMENT RATIO
RatioS
DATA COLLECTION
The data can be of two types
Primary Data
Secondary Data
Primary Data
Primary data are those data which is originally collected afresh
Secondary Data
Secondary data are those data which are already collected and stored and which has
been passed through statistical research
In this project Secondary data has been collected from following sources-
Annual report
Books
MIS
Other material and report published by company There are two methods to prepare
the Cash flow Statement
ndirect Method
I
The indirect method (or reconciliation method) starts with net income and converts it
to net cash flow from operating activities In other words the indirect method adjusts
net income for items that affected reported net income but did not affect cash To
compute net cash flow from operating activities non-cash charges in the income
statement are added ack to net income and non-cash credits are deducted
b
Direct Method
Under the direct method the statement of cash flows reports net cash flow from
operating activities as major classes of operating cash receipts (eg cash collected from
customers and cash received from interest and dividends) and cash disbursements (eg
cash paid to suppliers for goods to employees for services to creditors for interest and
to government authorities for taxes)
INDIRECT VERSUS DIRECT METHOD
The most contentious decision that the FASB faced in issuing Statement No 95 was
choosing between the direct method and the indirect method of determining net cash
flow from operating activities Companies lobbied against the direct method urging
adoption of the indirect method Commercial lending officers expressed a strong
preference to the FASB hat the direct method be required
tCF-Page 3 of 5
In Favor of the Direct Method
The principal advantage of the direct method is that it shows operating cash receipts and
payments That is it is more consistent with the objective of a statement of cash flows to
provide information about cash receipts and cash payments than the in-direct method
which does not report operating cash receipts and payments
Supporters of the direct method contend that knowledge of the specific sources of
operating cash receipts and the purposes for which operating cash payments were made
in past periods is useful in estimating future operating cash flows Furthermore in-
formation about amounts of major classes of operating cash receipts and payments is
more useful than information only about their arithmetic sum (the net cash flow from
operating activities) Such information is more revealing of an enterprises ability (1) to
generate sufficient cash from operating activities to pay its debts (2) to reinvest in its
operations and (3) to make distributions to its owners
Many corporate providers of financial statements say that they do not currently collect
information in a manner that allows them to determine amounts such as cash received
from customers or cash paid to suppliers directly from their accounting systems But
supporters of the direct method contend that the incremental cost of assimilating such
operating cash receipts and payments data is not significant
In Favor of the Indirect Method
The principal advantage of the indirect method is that it focuses on the differences
between net income and net cash flow from operating activities That is it provides a
useful link between the statement of cash flows and the income statement and balance
sheet
Many providers of financial statements contend that it is less costly to adjust net income
to net cash flow from operating activities (indirect) than it is to report gross operating
cash receipts and payments (direct) Supporters of the indirect method also state that the
direct method which effectively reports income statement information on a cash rather
than an accrual basis may erroneously suggest that net cash flow from operating
activities is as good as or better than net income as a measure of performance
Special Rules Applying to Direct and Indirect Methods
Companies that use the direct method are required at a
minimum to report separately the following classes of
operating cash receipts and payments
Receipts
1048713 Cash collected from customers (including lessees licensees etc)
1048713 Interest and dividends received
1048713 Other operating cash receipts if any
Payments
1048713 Cash paid to employees and suppliers of goods or services (including
suppliers of
insurance advertising etc)
1048713 Interest paid
1048713 Income taxes paid
1048713 Other operating cash payments if any
Companies using the indirect method are required to disclose separately changes in
inventory receivables and payables to reconcile net income to net cash flow from
operating activities In addition interest paid (net of amount capitalized) and income
taxes paid must be disclosed elsewhere in the financial statements or accompanying
notes
The FASB requires these separate and additional disclosures so that users
may approximate the direct method Also an acceptable alternative presentation
of the in-direct method is to report net cash flow from operating activities as a
single line item in the statement of cash flows and to present the reconciliation
details elsewhere in the financial statements
FINDING OF SUDY
According to cash flow statement of the company The finding of the study are as
follows-
The company has not taken any loans secured or unsecured from companies
firms or other parties
The company has not accepted any deposit from the public during the year
The company is not a sick industrial company
The company has not granted any loan secured or unsecured to company firms
or other parties
The company has paid the entire long term and short term borrowing during the
year
The company has buy back the companyrsquos own share this year
The interest paid in 2008 is more than the
There has been a significant decline in volume over the years from 2001-02
to 2005-06 as can be seen in the graph below
Table 43
The Net sales of Tractor has increased considerably from 2004-05 to 2007-08
This can be mainly attributed to changes in Variable and material costs and in
the price
The Net sale of Tractor has increased considerably from 2004-05 to 2007-08
that is an decrease of Rs7216 per tractor This can be mainly attributed to
changes in
Variable and material costs and in the prices
RECOMMENDATIONS
According to cash flow statement of the company The suggestions of the study
are as follows-
The time durations for training program have to increase
Buy regular review and consultations develop a career progression
which is sensitive to performance and ability
Create an environment where by people are trend developed to enable
The to take advantages of opportunities that arise
The jab can be redesigned where the work man stay in what is normally
the same job but has elements of it changed
The principle amount must be paid in time which can be reducing the
interest the out flow
The purchase of the fixed asset must be made only when there is extreme
requirement
In order to avoid taxes the company should go for more investment
The companyrsquos borrowings should go for more investment
o The company should try to reduce the depreciations as maximum
as possible
CONCLUSION
The study on competency level of employees at ESCORTS PVTLTD gave an
insight about the acceptance of competency mapping by employees
The employees at Ymi welcome the introduction of competency mapping in their
organization as they felt it was very much essential in enhancing their skills and
organizational development
The organization has provided the recourses guidance and support to facilitate the
introduction of competency level easily and develop the employees in such a way
that they can face any kind of challenge
However the level of competency in employees is found to be satisfactory
Providing proper training education and guidance to the employees can enhance
the level
This study was mainly carried out to find out whether thee competency mapping
being followed by the company is effective till date If the competency mapping
and fitment to the organization
By looking at the graphs and tables it is quite that the employees still are not up to
the level of competent pool they still have to be trained and made competent in
order to fill the gap As the organization has just applied the mapping it has to see
to that it meets all the requirements for competency mapping
Therefore the graphs make it quite clear that the potential of the employees is not
up to the mark and ie they are not competent enough to meet the competency-
mapping requirement Hence by further training and counseling this gap can be
closed
This report includes the training requirements of employees and it highlights skills
possessed by each employee and skill required All employees get training so that
skill can be improved and maintain balance between standard performance with
their actual performance to avoid gap
APPENDIX
QUESTIONNAIRE
Consumer Survey
Name _____________________________
Age _____________________________
Sex
Male
Female
Occupation
Businessman
Service man
Professional
Others
Monthly income brackets
Below 15000
15000- 20000
20000-30000
30000 and above
of your savings _________
Do you invest
Yes
No
If yes then where do you invest your money
Bank
Insurance
funds
Others
Why do you made that statement
Return
Risk hedging
Tax benefits
Other reasons (specify) _______
Who influence your cash decision
Relatives and friends
Family members
Advisors experts
You yourself
If no then why
Do not know where to invest
Satisfied with your current investment return
Donrsquot want take risk
Other reasons
__________________________________________________________________
___________________
Do you know about CF statement
Yes
No
If yes then from where you have come to know about an cash statement
Advertisements on newspapers
Friends and relative
Agents experts
Other source
What do you think about cash statement
It means investing only in share market
Constant watch must be kept always
Return is not satisfactory
Other perception
__________________________________________________
Can you recall any cash flow of company
___________________________
Would you want to made CF of an org
Yes
No
If yes then why
_______________________________________________________
If no then why
_______________________________________________________
BIBLIOGRAPHY
List of Books
1 PANDEY IM - FINANCIAL MANAGEMANT
2 KHAN MY AND JAIN PK -FINANCIAL MANAGEMANT
3 SMITH KV ndash MANAGEMANT OF WORKING CAPITAL
3 COMPANY RECORDS
4 JOURNAL
5 REPORTS
WEBLIOGRAPHY
1 wwwescortspvtltdcom
2 wwwgooglecom
the parallel emphasis on industry The birth of Indian tractor industry took place in
1959-60 when
import was restricted amp five manufacturing units were set up in private sector all with
collaboration It was in this background that production of tractors in the country in
1960
NAME COLLABORATION YEAR OF
COMMENCEMENT
MS EICHER TRACTORS
LTD
WEST GERMANY 1959
MS HINDUSTAN
TRACTORS LTD
CZECHOSLOVAKIA 1963
MS TRACTORS amp
FARM EQUIPMENT
LTD(TAFE)
UK 1963
MS ESCORTS LTD POLAND 1964
MS INTERNATIONAL
TTACTORS CO OF
INDIA LTS LATER
RENAMED AS
MAHINDRA amp
MAHINDRA
UK 1965
The total indigenous production of tractors by 1965 was just 6000 The real spurt in
mechanization of agriculture came in the introduction of high yielding variety (HYV) of
seeds in 1966-67 and their enthusiastic adoption by farmers particularly in the wheat
growing northern region With the successful introduction and acceptance these high
quality seeds there was a upspring in the demand of tractors in 1967 and demand started
multiplying at an annual rate of almost 50 (19671800-197033000)A natural
consequent of sharp upsurge and consequent shortage was heavy price premium on
tractors Recognizing the situation imports of tractors were liberalized and over and
above the domestic production of 20000 in 1970 3000 tractors were imported
Second phase of development (1968-1980)
Since the pace of indigenous five tractors manufacturing units already set up far below
expectation the Government decided to provide diligence to the tractor industry in 1968
and invites new entrepreneurs Benefiting from this forward-loo
king policy six more units came in during 1971-1974 These were
NAME COLLABORTION YEAR OF
COMMENCEMENT
MS ESCORTS
TRACTORS LTD
UK 1971
MS HMT LTD CZECHOSLIVAKIA 1971
MS KIRLOSKAR
TRACTORS LTD
WEST GERMANY 1974
MS PUNJAB
TRACTORS LTD
INDIGENOUS 1974
MS HARSHA
TARCTORS LTD
USSR 1975
Not withstanding the above progress on the setting up to new units Tractor industry ran
into difficulties from 1969 onwards and by 1972 domestic tractor production stagnated
at a level of 20000units primarily due to continuing of imports of tractors Problem was
further compounded by the oil crisis in 1973-74 and the resultant economic crisis and
inflationary pressures which persisted till middle of 1975
The tractor market started slowly pocking up from 1975 (31000tractors) because of
relative price stability govt directives of the commercial banks increase rural lending
expansion of rural branches of commercial banks good monsoons which resulted in
bumper harvests and accelerated pace of extension of irrigation facilities This trend
continued throughout the late seventies and by 1979-80 yearly market off take had risen
to a level of 62000tractors
Third phase of development (1980-86) The buoyancy in the tractor market experienced in the late seventies continued tell 1981-82 when 78000
tractors were sold The encouraging trend led to the setting up of more for the manufacture of tractors
during 1981-86 These units were
NAME COLLABORATION YEAR OF
COMMENCEMENT
MS AUTO TRACTORS
LTD
UK 1981
MS PRATAP STEEL
ROLLING MILL LTD
INDIGENOUS 1983
MS VST TRACTORS
LTD
JAPAN 1986
However the sale of tractors plummeted to a low level of 66000 tractors in the year
1982-83 in the wake of severe credit squeeze imposed by reserve bank of India
The demand for tractors again picked up when the credit squeeze was eased and a sale
of 80000units was recorded in the year 1984-85 for next year Tractor industry stagnated
causing closure of five manufacturing units as detailed below
NAME YEAR OF CLOSURE
PINE TRACTORS LTD 1983
HARSHA TRACTORS LTD 1987
AUTO TRACTORS LTD 1987
KISLOSKAR TRACTOR LTD 1991
PRALAP STEEL ROLLING MILLS
(HARYANA TRACTORS LTD)
1996
Fourth phase of development( 1987 onwards)
In the year 1987-88 the country saw a severe drought situation This was a difficult
period and it widely anticipated that crop yield would be severely affected Under such a
situation it was necessary to have provisions for supply of power to perform farm
operation at proper time in order to fully exploit the limited moisture content left in soil
The versatility in the tractor became evident as this vehicle was used for pumping out
underground water in this background tractor industry showed a remarkable growth
during this period and all time high sale of 90000 tractors was recorded in the drought
year (1987-88)Fourth phase of development
The growth trend appears to be continuing with relaxation of tractor financing norms
except for a 2 year slack period due to general economic slowdown and political
turmoil In fiscal 1997-98 tractors sales refaced an all time high record of 250000This
impressive growth has influenced 3 more players as listed below to enter the market
NAME COLLABORATION YEAR OF
COMMENCEMENT
INTERNATIONAL
TRACTORS LTD
INDIGENOUS 1997
BAJAJ TEMPO LTD INDIGENOUS 1997
NEW HALLAND
TRACTORS (INDIA)
PVT LTD
ITALY 1998
JOHN DHEER
TRACTORLTD
POLAND 2000
HISTORICAL BACKGROUND OF ESCORTS GROUP
Escorts came into being a vision that led two brothers Yudi Nanda and Hari Nanda to
branch out their familyrsquos prospering transport s business and institute ventures that were
to become the foundations of escorts Ltd Escorts Agents Limited was born at Lahore on
17th October 1944 with Yudi Nanda as Managing Director and Hari Nanda as Chairman
After the owing to opportunity lying in the Indian village Escorts (Agricultural
Machinery) Ltd was launched in 1948 with Yudi Nanda as Director Tragically Yudi
Nanda died in an accident in 1952 Then Escorts agent Ltd And Escorts (Agricultural
Machine) Ltd Was merged in 1953 to create single Escorts agents Pvt Ltd
SOME MILESTONES
1948 Pioneered farm mechanization in the country by launching Escorts Agricultural Machines Ltd
With a franchise from a US based MINNEAPOLIS MOLINE WISCONCIN for marketing
tractors implements engines and other equipments
1958 Started importing MF tractor from Yugoslavia for marketing the same in India
1960 A manufacturing plant was set up at Faridabad
1965 Got industrial license to manufacture URSUS ESCORT tractors
169
1969 Escorts signed a contract with FORD MOTOR COMPANY to manufacture Ford 3000 model
tractors Escorts Institute of Farm Mechanization (EIFM) was established at Bangalore This
training Institute is one of its kind
1971 1st February the first tractor FORD 3000 rolled out of the factory The same year the turnover
touched the Rs53 million mark
1973 Escorts Tractors Limited (ETL) declared a healthy Profit Before Tax of Rs4725 million
1974 Export of 400 tractors to Afghanistan - perhaps the worlds largest ever airlift of such
equipment
1975 Turnover crossed the Rs 200 million mark for ETL Profit After Tax Rs 87 million Maiden
dividend of 10 declared
1976
1976 FORD 3600 advancement in Farm Mechanization was launched with fanfare to a
tremendous reception Trial production of in-plant manufacturing of engine parts (Block amp
Head)
1977
1977 Escorts Scientific Research Centre marked its beginning at Faridabad by developing its own
Engines for E-27 and E-37 Due to constant technology absorption indigenization level
touched 72 for FORD tractors which was a result of relentless effort in that direction
1979 Turnover crossed the Rs 50 crores mark In plant facility for machining centre housing and
case transmission on built-in line concept installed
1983 Escorts Tractors Limited (ETL) established a state-of-the-art research and development centre
to spearhead newer breakthroughs in Farm Mechanization and to maintain industry
leadership Line concept introduced for engine block machining
1984 75000th tractor rolled out A great occasion for the large family that worked for ETL Newer
challenges and frontiers were set
1985 In keeping with the stupendous financial success Escorts Tractors Limited (ETL) offered its
first Bonus Issue (11)
1987 50hp FORD 3610 was launched another leap for the Indian Farm Mechanization Industry the
farmers and the people of the land
1988
1988 ETLrsquos annualized turnover crossed Rs 100 crores Dividend 45 for 15 months
1989 A MOU with CLAAS was signed for manufacturing amp
1990-
91
First Public Issue (Februaryrsquo91) over-subscribed four times Shares listed on Delhi and Bombay
Stock Exchanges
1991-
92
The Crop Tiger range of Combine Harvesters was launched by Escorts Claas Ltd
1993 FORD 3620 tractor launched
1996 Disengagement of joint venture collaboration with New Holland and launch of FARMTRAC
Tractor
1997 A Joint Venture with Italian company CARRARO was finalized to establish a company in India
for manufacturing and marketing of transmission and axles
COLLABORATIONS
Collaboration with international Organization of technological excellence constant
research to adopt the emerging technology to specify requirement of the market and
belief in the philosophy industrial interdependence have made Escorts today one of the
leading trend steers in Indiarsquos New Industrial Culture Escorts have merged as fraternity
of above 50000 shareholders 22000 employees 4000 ancillary suppliers and 1 6000
dealers and stockiest all engaged in a large scale investment and sustained efforts to
meet the ever widening market horizons of technological competence appropriate to
Indiarsquos unique changing needs
Escorts believe in incorporating the finest existing technology to meet Indian consumers
demands by collaborating with the internationally renowned companies prominent
among these are
IN GERMANY
GOETZE AG Piston rings and cylinder liners
MAHLE GmbH Piston
CLASS OHG Harvesters Combines
KNORR BREMSE AG Railway Brake System
AUGUST BILSTEIN GmbH Absorbers Hydraulic products
Pressure and temperature switches
IN JAPAN
KAYABA INDUSTRY CO LTD Telescopic Front Forks Car
MIKUNI SHOKO CO Carburetors for BI-Wheelers
IN UK
JCBAMFORD EXCAVATORS JCB Excavators loaders Front end
Loaders Telescopic handlers
IN USA
HUGHESNETWORKS SYSTEMS AB Road Construction Machinery
Vibratory Road Rollers
OFFICIAL ADDRESS OF ESCORTS
Registered Office Corporate
Secretariat amp Law
Escorts Ltd
11 Scindia House
Connaught Circus
New Delhi-110 001
Tel No 011-23310145
Fax No 011-23311715
Escorts Ltd
155 Mathura Road
Faridabad - 121 003
Tel No ( 0129 ) 2250222
Fax ( 0129 ) 2250060
Email Address corpsectndbvsnlnetin
Web Site wwwescortsgroupcom
LEADERSHIP TEAM
Mr Rajan Nanda
Chairman
Mr Nikhil Nanda
Joint Managing Director
Mr Rohtash Mal
Executive Director and Chief Executive Officer - Agri Machinery Group
Mr Manoj Jha
Executive Vice President of Engineering Division
Mr Kamal Bali
CEO ndash Escorts Construction Equipment Limited (ECEL)
Mr GB Mathur
Vice President - Law amp Company Secretary
Mr Rakesh Kumar Budhiraja
Group Chief Financial Officer
Mr Partha Dasgupta
Group Vice President Human Resources and Employee Relations
LEVELS OF MANAGEMENT
MANAGEMENT
TOP
MANAGEMENT
SENIOR
MANAGEMENT
MIDDLE
MANAGEMENT
JUNIOR
MANAGEMENT
MANAGING
DIRECTOR amp
CEO(G-11)
CHIEF GENERAL
MANGER(G-8)
CHIEF
MANAGER
(G-5)
ASSISTANT
MANAGER(G-2)
VICE PRESIDENT
(G-10)
GENERAL
MANAGER(G-7)
SENIOR
MANAGER(G-4)
EXECUTIVE(G-
1)
ASSOCIATE
VICE PRESIDENT
(G-9)
DEPUTY
GENERAL
MANAGER(G-6)
MANAGER(G-3)
MISSION
WE WILL ACHIEVE LEADERSHIP IN MARKET SHARE amp PROFITABILITY IN
THE DOMESTIC TRACTOR MARKET BY THE YEAR 2004-2006 AND SHALL BE
THE WORLSrsquoS LARGEST SUPPLIER OF SUB 100 HP TRACTORS WE SHALL
PROACTIVELY CONTRIBUTE TO THE PROSPERITY OF THE RURAL
ECONOMY BY DEFINING A LARGER ROLE FOR OURSELVES IN THE FOOD
AND AGRICULTURE SECTOR
THE VISION
WE SHALL STRIVE TO BE THE NUMERO UNO IN THE INDIAN TRACTOR
INDUSTRY AND TOP FIVE TRACTOR MANUFACTURERS IN THE WORLD
WE SHALL CONTINUOUSLY STRIVE TO MEET THE EVER RISING
EXPECTATIONS OF OUR VALUED CUSTOMERS AT THE LOWEST
INTERNAL COST
WE SHALL AIM TO OFFER THE FARMING COMMUNITY A RANGE OF
INNOVATIVE PRODUCTS AND SERVICES WHICH SHALL ENABLE THEM
TO IMPROVE THEIR PRODUCTIVITY AND COMPETITIVNESS
WE SHALL ACHIEVE A TURNOVER OF RS 2 BILLION BY THE YEAR
2006TRANSCENDING NATIONAL BOUNDARIES WE SHALL STRIVE TO
ATTAIN EXPORTS OF ONE TENTH OF OUR TOTAL TRACTOR PRODUCTION
BY THE YEAR 2
REVIEW OF LITERATURE
INTRODUCTION
MEANING OF FINANCIAL STATEMENTS
The financial statements are nothing but the financial information presented in concise and
capsule form and are the financial information is the information relating to the financial
position of any firm The firm prepares the financial statements
bull To communicate with different parties about the financial position of the firm
(Shareholders creditors banks financial institution financial analysts investors
etc And
bull To analyze the operations and performance of the firm for the further
planning
The basic source which provides the financial information is the Annual report of the
company which is presented by the company to its shareholders at the Annual General
Meeting
Though the presentation of annual report is a statutory requirement under the
Companies Act 1956 however it is also a medium of communication with the present as well
as prospective investors and creditors of the company
Clause 43 A of the Listing Agreement (with the stock exchange) requires every
listed company to publish unaudited quarterly results But it does not mean the non-corporate
firms do not prepare the financial statements Every firm big or small prepare the following
financial statements
The Balance Sheet (BS)
1 The Income Statement (IS)
Two other key financial statements which are usually prepared by corporate firms are
1 Statement of appropriation of profit and
2 Statement of Change in financial position
ANALYSIS OF FINANCIAL STATEMENTS (AFS)
Analysis of financial statements refers to the process of the critical examination of the
financial information contained in the financial statements in order to understand and
make decisions regarding the operations of the firm The AFS is basically a study of the
relationship among various financial fact and figures as given in a set of financial
statements AFS is the process of establishment and identifying the financial weakness
and strength of the firm It is indicative of two aspects of a firm ie the profitability
and the financial position
OBJECTIVES OF AFS
The objectives of the AFS is to understand the information contained in financial
statements with a view to know the weakness and strength of the firm and to make a
forecast about the future prospects of the firm and thereby enabling the financial
analyst to take different decisions regarding the operation of the firm The objectives
are as follows
bull To assess the present profitability and operating efficiency of the fir
COMMON-SIZE STATEMENTS (CSS)
The CSS represents the relationship of different items of financial statements with some
Common items by expressing each item as a percentage of the common item In common size
Balance Sheet each item of the balance sheet is stated as a percentage of the total balance
sheet The percentages for different items are computed by dividing the absolute amount of
that item by the Common Base and then multiply by 100 The percentage so calculated can
be easily compared with the corresponding percentage in some other period Thus the CSS is
useful not only in intra-firm comparison for the same year or free several years
TREND PERCENTAGE ANALYSYS(TPA)
The TPA is a technique of studying several financial statements over a series of years In
TPA the trend percentages are calculated for each item by taking the figure of that item for
some base year as 100 So the trend percentage is the percentage relationship which
Each item of different years bears to the same item in the base year Any year may be Taken
as the base year but generally the starting initial year is taken as the base year So each
item for base year is taken as 100 and then the same item for other years is Expressed as a
percentage of the base year
RATIO ANALYSIS (RA)
The RA has emerged as the principle technique of the AFS A ratio is a relationship
Expressed in mathematical terms between two individual or groups of figures connected with
other in some logical manner The RA is based in the premise that a single accounting figure
by itself may not communicate any meaningful information but when expressed as a relative
to some other figure it may definitely give some significant information The relationship
between two or more accounting figuresgroups is called a Financial Ratio
A financial ratio helps to summarize a large mass of financial data into a concise form
and to make meaningful interpretations and conclusions about the performance of a firm
For example a firm has net sales Rs 5 00000
Gross Profit Rs 100000
Ratio of Gross Profit to net sales is 20
ie (Rsl 00000 Rs5 00000)
Forms of Ratios
Since a ratio is a mathematical relationship between two or more variables accounting
figures such relationship can be expressed in different ways as follows
bull As a Pure Ratio
bull As a Rate of Times
bull As a Percentage
Ratio can be classified into
bull The Liquidity Ratio
bull The Activity Ratio
bull The Leverage Ratio
bull The Profitability Ratio
STATEMENT OF CHANGES IN FINANCIAL POSITION
(SCFP)
Since the BS amp IS of a firm are two basic depicting the financial position of a firm at the end
of the year These two financial statements are called the traditional statements Both these
statements fail to throw light on changes in assets liabilities and shareholders wealth during
this year
BS deals with the financial position gives only the static view of the year- end financial
position and fails to indicate the movement and causes in assets and liabilities during the
year Similarly IS show the profit or loss resulting out of the operations of the firm during
the year This profit or loss in fact to ascertain the sufficiency of resources to declare the
dividend etc thus there is a need to prepare another statement (together with the BS amp IS)
which may identify the changes in assets liabilities and the shareholders funds over a given
period
The SCFP is essentially an explanation of the changes in financial position of a Firm
occasioned by the firm in between two successive BSs The SCFP draws basic Information
from the BS and IS helps in understanding the change in assets liabilities and shareholders
worth The SCFP deals with the flow of funds during the year ie the funds coming in and
going out of the firm It summarizes the sources from where the funds might have been
arranged procured by the firm and the uses for which the funs might have been used by
the firm during the year
The SCFP can be prepared as follows
bull SCFP (Cash Basis) also known as a Cash F low Statement
bull SCFP (Net Working Capital Basis) Fund Flow Statement
SCFP (WORKING CAPITAL BASIS)
FUND FLOW STATEMENT
The FFS reports the flows of funds through the firm during the year ie it shows the
Sources and uses of working capital between two balance sheet dates The FFS
attempts to explain the changes in financial position from one BS to the subsequent BS
in terms of the change in the funds or the working capital position of the firm
The term Working capital (WC) is generally defined as the excess of total
current assets over the total current liabilities The current Assets (CA) of a firm may
include cash in hand and at bank stock debtors bills advances etc and the Current
Liabilities (CL) includes creditors bills payable outstanding expenses provision for
tax short term liabilities etc the term WC is a single figure representing the net effect
of a transaction is to increase or decrease the Working Capital by affecting any of the
elements of Current Assets or Current Liabilities Therefore the FFS in its standard
form incorporates only those transactions which affect the Working Capital i e those
transactions where in only one of the affected accounted is a current account
Now a flow of working capital arises when one of the affected accounts is a current
account From the point of view of current account the effected on working capital
can examined in the light of the definitions of the term working capital ie the excess
of current assets over current liabilities ie
Impliedly change in any of the CA or CL will affect the WC Simple observation
equation tells that
bull Increase in any of the CA or decrease in any of the CLs will result in increase
in the WC
bull Decrease in any of the CA or increase in any of the CLs will result in decrease
in the WC
To find out the relative importance of different components of the financial position
of the firm
bull To identify the reasons for change in the profitability financial position of the
firm and
bull To assess the short term as well as the long term liquidity position of the
firm
TECHNIQUES TOOLS OF THE AFS
AFS can be undertaken by different persons and for different purposes therefore the
methodology adopted for the AFS may be carrying from one situation to another However
the following are some of the common techniques of the AFS
bull Comparative financial statements
bull Common-size financial statements
bull Trend percentage analysis and
bull Ratio Analysis
COMPARATIVE FINANCIAL STATEMENTS
In CFS two or more BS andor the IS of a firm are presented simultaneously in columnar
form The Financial data for two or more tears are placed and presented in adjacent columns
and thereby the financial data is provided at times perspective in order to facilitate periodic
comparison In CFS the BS and the IS for number of years are presented in condensed
form for year to year comparison and to exhibit the magnitude and direction of changes
The CFS helps a financial analyst of the firm and in establishing operating and
positional trend of the firm The CFS may be prepared to show
1 The absolute amount of different items in monetary terms
2 The amount of periodic changes in monetary terms
1 The percentages of periodic changes to reveal the proportionate changes
The CFS can be prepared for both the BS and the IS
CORE COMPETENCE OF ESCORTS
Customer 1
We put customers first in everything we do We take decisions keeping the customer in
mind
Challenging Spirit
We strive for excellence in everything we do and in the quality of goods amp services we
provide We work hard to achieve what we commit amp achieve results faster than our
competitors and we never give up
Team-work
We work cohesively with our colleagues as a multi-cultural team built on trust respect
understanding amp mutual co-operation Everyones contribution is equally important for
our success
Frank amp Fair Organization
We are honest sincere open minded fair amp transparent in our dealings We actively
listen to others and participate in healthy amp frank discussions to achieve the
organizations
A firm undertakes numerous during a year and most of these transactions during a year and
most of these transactions may affect one or the other current account ie most of these
transactions May results in the flow of the WC Neither is it necessary nor practical to
identify the effect of each and every transaction on the WC These transactions instead are
considered and analyzed in a collective form and then their effect on the WC is identified
SCFP (CASH BASIS) OR
THE CASH FLOW STATEMENT
The CFS attempts to analyze the transactions of the firm in terms of cash ie the transactions
generating cash and using cash The focus in the CFS is on cash rather than on WC The
sources of cash may be the cash profits earned by the firm issue of capital for cash issue of
other securities for cash borrowings sale of assets investment redemption of debenture or
preference share repayment of loan payment of tax dividend distribution etc Thus the
CFS summarizes the cash inflows and outflows
An analysis of cash flows is useful for short-run planning A firm needs sufficient cash to
debts maturing in the near future to pay interest and other expenses and to pay dividends to
shareholders The firm can make projections of cash flows and outflows for the near future to
determine the availability of cash This cash balance can be matched with the firms need for
cash during the period and accordingly arrangements can be made the deficit or invest the
surplus cash temporarily A historical analysis of cash flows provides insight to prepare
reliable cash flow projections for the immediate future
A statement of changes in financial position on cash basis commonly known as cash flow
statement summarizes the causes of changes in cash position between dates of two balance
sheets It indicates the sources amp uses of cash The cash flow statement is similar to the fund
flow statement except that it focuses attentions on cash instead of working capital (funds)
Thus this statement analyses change in non-current accounts as well as current accounts
(other than cash) to determine the flow of cash
The CFS is based on the concept on the WC Where as the CFS is based in cash which is only
the element of WC Thus the CFS provides details of cash movements whereas the FFS
provides the details of funds movements
The CFS considers only the actual movement of cash whereas the FFS considers the
movements of the funds as defined in terms of net working capital
CASH-FLOW STATEMENT
A cash-flow statement is a statement showing inflows (receipts) and outflows (payments) of
cash during a particular period In other words it is a summary of sources and applications of
Cash during a particular span of time It analyses the reason for changes in balance of cash
between the two balance sheet dates The term Cash here stands for cash and cash
equivalents
A cash-flow statement includes only those items which affect cash As such the cash-flow
statement is called a statement of changes in financial position - cash basis
A cash - flow statement can be for the past or can be projected for a future period
OBJECTS OR USES OF CASH-FLOW STATEMENT
The main objectives behind preparing a cash-flow statement can be laid down as under-
bull USEFUL FOR SHORT-TERM FINANCIAL PLANNING-
A cash-flow statement provides information for planning the short-term financial needs of the
firm Since it provides information regarding the sources and utilization of cash during a period
it become easier for the management to assess whether it will have Adequate cash to meet day-
to-day expenses and pay the long - term loans and interest Thereon and whether it has enough
cash to pay for the purchase of fixed assets or not
USEFUL FOR PREARING THE CASH BUDGET-
A cash-flow statement prepared for the future period is helpful in preparing a cash budget It
informs the management about the future period is helpful in preparing a cash budget It informs
the management about the surplus or deficit periods of cash ie in which months the payments
will be in excess of receipts It helps in planning the investment of surplus cash in short-term
investment and to plan short-term credit in advance of deficit periods
bull COMPARISON WITH CASH BUDGET-
A cash budget is prepared at the commencement of the year whereas a cash flow Statement is
prepared at the end of the year A comparison between the two helps in ascertaining the extent
to which the financial resources of the firm have been generated and used according to the plan
Causes of variances between the figures of two statements can be analyzed and proper
corrective measures may be takes
bull STUDY OF THE TREND OF CASH RECEIPTS AND PAYMENTS-
A cash-flow statement reveals the speed at which the cash is being generated from debtors stock
and other current assets the speed at which the current liabilities are being paid It enables the
management to assess the true position of the cash in future
bull IT EXPLAINS THE DEVIATIONS OF CASH FROM EARNINGS-
A firm may earn huge profits yet it may have paucity of cash or when it suffered a loss it may
still have plenty of cash A cash flow statement explains the reasons for it
HELPFUL IN ASCERTAINING CASH-FLOW FROM VARIOUS
ACTIBITIES SEPARATELY-
A cash-flow statement aims at highlighting the cash flow from operating investing and
financing activities separately It includes how much cash has been generated or used in these
activities
bull HELPFUL IN MAKING DIVIDEND DECISIONS-
Dividend must be paid within 42 days of its declaration Hence the management takes the help of
cash-flow statement to ascertain the position of cash generated from operating activities which
can be used for payment of dividend
IMPORTANCE AND RELEVANCE OF CFS
The CFS has gained importance in view of the fact that there are many managerial Decisions
which are taken in the light of the cash availability or cash position of the firm
For example declaration of dividend by the company requires cash disbursement and
Therefore the Board of Directors must consider the cash position before proposing a dividend
The CFS also provides information for the short term financial planning and in particular the
short term cash needs of the firm
In view of increasing importance and relevance of the CFS the clause 32 of the Listing
agreement (between a Company and the Stock Exchange where the shares proposed to be listed)
has been amended by the SEBI As a result the listed companies in India are now required to
supply a copy of the CFS to each shareholder as a part of Annual Report As a result the listed
companies have started a practice of sending a CFS for which the BS has been prepared as
apart of the Annual Report of the company
DIFFRENCE BETWEEN CASH - FLOW STATEMENT AND
CASH BUDGET
There is not much difference between cash flow statement and a cash budget The
only difference is that a cash flow statement is prepared for a past period where as cash
budget is prepared for a future period Hence it is of limited use as far as the future
periods are concerned A cash budget is therefore prepared showing how much cash is
likely to be received and what will be the disbursements during a future period of time
Thus a cash budget indicates in which months there will be surplus cash and in which
moths there will be deficiency of cash resources The management can then take suitable
decision to invest the surplus cash or make arrangement for the deficiency of cash at the
required time
LIQUIDITY
It does not present true picture of the liquidity of the firm the liquidity does
not depend upon cash alone Liquidity also depends upon those assets
which can be converted into cash easily
bull Exclusion of these assets obstructs the true reporting of the ability of the firm to
meet its liabilities when they become due for payment
bull The possibilities of window - dressing is higher in case of cash position in
comparison to the working capital position of the firm
bull The cash balance can be easily maneuvered by postponing purchases and other
payments and by rapidly collecting cash from debtors before the balance sheet date
Hence a fund - flow statement presents a more realistic picture than a cash flow
statement
bull Cash flow statement ignores non- cash charges Hence the true position of the
enterprise cannot be judged by cash flow statement
bull It is prepared on cash basis and hence ignores one of the basic concept of accounting
namely accrual concept
PROCEDURE OF PREPARING CASH FLOW STATEMENT-
The institute of charted accountants of India has issued accounting standards (as)-3 revised for
preparing a cash flow statement This accounting standard has been made mandatory in respect
of accounting periods commencing on or after 1st April 2001 for certain enterprises These
enterprises are-
bull Enterprises whose equity or debt securities are listed on a recognized stock exchange in
India And enterprise that are in the process of issuing equity or debt securities that will
be listed on a recognized stock exchange in India
bull All other commercial industrial and business enterprises whose turnover for accounting
period Rs 50 crores
As such the cash flow statement has been prepared according to as -3 revised in this project
According to as-3 revised the cash flow statement summarizes the cash inflows and cash
outflows and the net changes (increase or decrease) in cash and cash equipment resulting from
operating investing and financing activities of a firm during a period The following terms are
used for preparing a cash flow statement
CASH-
It compares cash in hand and demands with banks
CASH EQUIVALENTS-
There are short - term highly liquid investments that are readily into known amounts of cash
and which present insignificant risk of changes in their values Normally an investment will be
termed as cash equivalent only if it has a short maturity period say three months or less from the
date of its acquisition Examples of cash equivalent are treasury bills commercial papers etc
Which are purchased with cash that is in excess of immediate needs investment in shares are
excluded from cash equivalents unless they are cash equivalent in reality For example the
preference shares of the company which are purchased shortly before their redemption date will
be included in cash equivalents provided there is only an insignificant risk of failure of the
company in repaying the amount at the date of the maturity
CLASSIFICATION OF CASH FLOW-
According to as -3 (revised) cash flow statement should be presented in a manner that it reports
inflows of cash by classifying them into three categories namely operating investing and
financing activities Classification of all activities into these activities on the cash and cash
equivalents of the enterprise such information will be helpful in evaluating the relationships
among these three activities are explained as below
CASH FLOW FROM OPERATING ACTIVITIES-
Operating activities are the main revenue generating activities of an enterprise As such they
include cash flows from those transactions and events which enter into the ascertainment of
net profit or loss of the enterprise Examples of cash flows arising operating activities are
bull Cash receipts from the sale of goods and rendering of services
bull Cash receipts from royalties fees commissions and other revenue
bull Cash payments to suppliers for goods and services
bull Cash payments to and on behalf of employees
bull Cash receipts and cash payments of an insurance enterprise for premiums and claims
annuities and other policy benefits
bull Cash receipts and payments relating to future contracts forward contracts option
contracts and swap contracts when the contracts are held for dealing or trade purpose and
bull Cash payments of refunds of income taxes unless they can be specifically identified with
financing and investing activities
CASH FLOW FROM INVESTING ACTIVITIES-
Investing activities include the purchase and sale of long term assets such as land building plant
and machinery etc not held for resale These activities also include the purchase and sale of such
investment which are not including in cash equipments Cash flow from investing activities
discloses the expenditures incurred for resources intended to generate future income and cash
flows
Examples cash flow arising from investing activities are
bull Cash payments to acquire fixed assets (including intangible)
bull Cash receipts from sale of fixed assets (including intangibles)
bull Cash payments to acquire shares warrants or debt instruments of other enterprises
(other than receipts for those instruments considered to be cash equivalents)
bull Cash receipts from sale of shares warrants or debt instruments of other enterprises (other
than receipts for those instruments considered to be cash equivalents)
bull Cash advances and loans made to third parties In case of financial enterprises these will
be treated as cash flow from operating activities
bull Cash receipts from the repayment of advances and loans made to third parties In case of
financial enterprises these will be treated as cash flow from operating activities
bull Cash receipts of insurance claim for property involved in accident and
bull Cash receipts of interest and dividend In case of financial enterprise these will be treated
cash flow from operating activities
CASH FLOW FROM FIANCING ACTIVITIES-
Financing activities are the activities that result in change in capital and borrowing of the
enterprise
Examples of cash flows arising from financing activities are
bull Cash receipts from issuing shares or other similar instruments
bull Cash receipts from issuing debentures loans bonds and other short term or long term
borrowing
bull Cash repayment of amounts borrowed buy back of equity shares redemption of
preference shares debentures loans bonds etc
bull Cash payment of interest and dividend
IMPORTANT NOTE
In case of financial enterprise such as bank or mutual fund company cash Outflow
and cash inflow arising from the purchase and sale of securities will Be treated as
flows from operating activities This is because purchase and sale of securities is a
part of operating activity in case of financial enterprise In addition interest paid
and interest received as well as dividends received will also be treated as cash flow
from operating activities in case of financial Enterprises
CASH FLOW STATEMENT
(DIRECT METHOD)
CASH FLOW FROM OPERATING ACTIVITIES
Cash receipts from costumers
Cash paid to suppliers and employers ()
Cash generated from operations
Income tax paid ()
Cash flows from extraordinary item
plusmn Extra ordinary items
Net cash from operating activities
CASH FLOW FROM INVESTING ACTIVITIES-
Purchase of fixed assets
Proceed from sale equipment ()
Interest received
Dividend received ()
Net cash from investing activities
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from insurance of share capital
Proceeds from long- term borrowings ()
Repayment of from long-term borrowings
Interest paid
Dividend paid ()
Net cash from financing activities
Net increase in cash and cash equivalent
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
SOME SPECIAL TERMS-
i) INTERSET AND DIVIDEND-
Cash inflow from interest and dividends and cash outflow on account of interest and
dividends should be disclosed separately Cash inflow arising from interest and dividends
received should be shown as cash flow from investing activities where as cash outflow
disclosed outflow on account of interest and dividend paid should be shown as cash flow
from financing activity
ii) TAXES ON INCOME-
Tax paid on income is a part of cash flow from operating activity Hence taxes paid are
shown as a deduction under cash flow from operating activity
iii) EXTRA ORDINARY ITEMS-
Cash flow relating to extra ordinary items such as bad debts recovered Claims received from
insurance companies winning of a lottery or a law etc Should be disclosed separately as
arising from operating investing or financing activities For example the amount received
for insurance company on account of loss of stock by fire Earthquake and floods etc Should
be reported as cash flow from operating activities
iv) SIGNIFICANT NON - CASH TRANSACTION-
There are some investing and financing activities which do not require the use of cash or
cash equivalents Such non cash activities should be excluded from the cash flow statement
Examples are the acquisition of assets by issue of debentures or shares conversion of
shares into debentures etc Such significant on non cash transaction should be disclosed
outside the cash flow statement
CASH FLOW STATEMENT
(INDIRECT METHOD)
CASH FLOW FROM OPERARATTNG ACTIVITIES
Net profit before taxation and extraordinary item
Adjustment for
Depreciation
Foreign exchange loss
Interest income
Dividend income
Interest expense
Operating profit before working capital changes
Increase in sundry debtors
Decrease in inventories
Decrease in sundry creditors
Cash generated from operations
Income tax paid ()
Cash flow before extraordinary item
plusmn Extra - ordinary items
Net cash from operating activities
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of fixed assets ()
Proceeds from sale of equipment
Interest received
Dividend received ()
Net cash from investing activities
CASH FLOW FROM FINANCING ACTIVITIES-
Proceeds from insurance of share capital
Proceeds from long - term borrowings
Repayments of from long - term borrowings ()
Interest paid ()
Dividend paid ()
Net cash from financing activities
Net increase in cash and cash equivalent
Cash and cash equivalents at beginning of period
CHANGES IN CASH FLOWS
Changes in cash flows can be treated to the following
1 Net profit will increase the cash flows these cash flows will be
increased further if there are any non-cash changes (such as depreciation
and amortization)
2 Any payment of dividends will decrease the cash flows as will the
repayment of debt an issue of share or debt will also increase the
cash flows
3 An increase in non-cash assets will decrease cash flows increase in
current assets and fixed assets will result in drain on cash flows
Thus a statement of changes in cash flows ie the cash flow statement
classifies all Changes into one of three categories - operating investing or
financing activities Therefore the preparation of a statement of changes in cash
flows requires classification of changes in liabilities shareholders equity and
non-cash assets into one of these categories although some items will not fit
easily onto one other
h equivalent at end of period
STEP- BY-STEP PROCEDURE TO PREPARE CFS
1 Calculate the net increase or decrease in cash and cash equivalents-
For this purpose the opening balance of total cash and cash equivalents is compared with the
closing balance of cash and equivalents
Increasedecrease in cash and equivalents
Opening balance Closing Balance
Cash in hand
Cash in bank
Short-term Investment
Total
The difference between the total of opening and closing balance will be increased or
Decreased in cash equivalents during the period It may be noted that if there are only one or
two of items of cash etc
2 Net Cash flaw from operating activities-
The term operating refers to the normal purchase of goods and services On the basis of the
information contained in the comparative BS s and the IS and the additional Information the
net cash flow generated or use by the operating activities may be ascertained The IS prepared
by the firm gives the net profit figure earned by the firm On actual basis ie all items in the
IS are incorporated on the basis of earnedaccrued even
3 If not resulting in cash movements-
So the profit or loss as by the IS may not result in increase or decrease in cash balance by the
SYNOPSIS
INTRODUCTION
ESCORTS PVT LTD is a private limited company not listed in a stock exchange of India
and employees 900 highly trained personnel Its manufacturing plants are strategically located
in close proximity to its customers at Faridabad (Haryana) Noida (UP)
OBJECTIVES OF THE STUDY
bull To find the movement of cash inflow and cash outflow
bull To make the comparison between cash inflow and
bull Cash outflow
bull To prepare the Cash Flow Statement
bull To analyze the Balance Sheet of the company in terms of Cash Flow Statement
bull To focus on various activities of the organization in terms of Operating
Financing Investment
SCOPE OF THE STUDY
Financial resources are the assets for the company and their productivity is key
factor for profitability It is necessary to know their problems their knowledge
skills abilities amp the measures that can be taken to reduce them By analyzing this
top management can build good relations with the employees
The whole study is to determine the competencies of different employees who are
working in ESCORTS PVT LTD By analyzing it the top management can
introduce the concept of competency mapping in the organization Through this
management can attempt to use more suitable strategies towards the human
resource development
The research is confined to elicit the existing gap between the standard skill
required to perform the job and the skill processed by the employees at ESCORTS
PVT LTD And to provide them suitable training program to over come those gaps
for the better utilization of human resources
RELEVANCE
The scope of the study was confined to the outside parties like creditors
shareholders government etc Who want to invest their money in the
company
The benefit of the report for the company is that through this report they can come
to know about the cash flow statements of the company
This study also unable the company that their cash is not utilizing in unnecessary
things
The benefit of the report for the researcher is that it has helped to get knowledge
about the cash inflow and cash
RESERRCH METHODOLOGY-
RESEARCH DESIGN
bull The study was conducted under well- structured approach
bull The project lasted for 4 weeks and the year 2009 ie from 08 July to 12
Aug2009
bull The questionnaire method amp personal interview method was used to collect
the primary data for the study
The secondary data is collected from Internet amp company training material and
many other company materials
SAMPLE DESIGN
The process of extracting a sample from a population is called sampling
procedure The selection of sampling procedure to conduct the research
depends upon the nature of the study and the objective to be accomplished
Judgment sampling technique is adopted to select the respondents in this
study The sample design included the various departments in the YAMAHA
MOTORS PVT LTD
Methodology of date collection
bull Conducting personal interview
bull Data collection from primary and secondary sources
bull Designing questionnaire
bull Selecting sample size from the sample frame for the survey
bull Questionnaire distribution
bull Analysis of collected data with the help of statistical tools
bull Interpretation of collected data
bull Stating the conclusion based on the entire study
Sampling Technique
The sampling technique used for this research is of non-probability and convenience
sampling
Sample Unit
Employees of the company
Sample Size
For this research study the sample size is 25 respondents
Sources of data
Primary data
Primary data is the data which is collected by the researcher for the first time
and which was not there The tools used to collect the data are-
1)Questionnaire method from the employers in different departments
2) Face to Face personal interactions
Secondary Data
The data already collected is called as secondary data The relevant information
for this study has been collected from secondary source such as
Books
Journal
Reports
Publication by the organizational circulation
Company records
Business bulletins
Internet
Secondary data is also collected from various of the internet and intranet Some
of the website trough which information was gathered was through
HYPOTHESIS
The report is analyzed under the presumption that cash flow position of
YAMAHA MOTORS PVTLTD It can be improved and made effective in
terms of cash flows
In testing the above hypothesis the following aspects will be considered
1 Balance sheet comparisons
2 Presentation of cash flow statement in terms of revised AS-3
LIMITATIONS
The study though conducted to the best of the ability suffers from some
certain limitations There are
The data is secondary one and as such its reliability may be
questioned upon
The time availability for the study is less and as such it hinders thee
progress of the study
Senior officials were rarely approachable
Websites were not giving comprehensive data
Not having face-to-face interaction to get more relevant
information
Analysis and interpretation of data was done on the assumption that
the respondentsrsquo information was online
Information collected was totally subjective
The interviews are done during office hours but could not be done
for the other employees of other
DATA ANALYSIS
ESCORTS PVT LTD
CASH FLOW STRATEMENT
Year Ended Year Ended
30092009 30092008
Rs Crores Rs
Crores
A Cash Flow from Operating Activities
Net profit before tax (1733) 3444
Adjustment for
Loss on sale Provision for diminution in value of Long Term
Investments amp loans to Group Companies 189 4018
Gain on sale of Long Term Investments (122) (9492)
Gain on sale of Asset (013) -
Depreciation 4497 3955
Misc Exp Assets Write off Provisions 808 750
Interest Expense 7222 7999
Dividend Income (002) (001)
Interest Income (2082) -
Operating Profit before working capital changes 8764 10673
Adjustments for
Trade and other Receivables (8817) (12035)
Inventories 1379 (4692)
Trade Payables 6705 19046
Miscellaneous Expenditure (750) (511)
(1483) 1808
Cash Generated from Operations 7281 12481
Direct Taxes (Paid)Refunds (1785) 3166
Net Cash Flow from operating activities 5496 15647
B Cash Flow from Investing Activities
Purchase of Fixed Assets (3095) (2794)
Proceeds from sale of Fixed Assets 086 177
Movement in Loans and Advances (1627) (1644)
Sale of Investments 3233 11452
Short Term Deposits with schedule Banks (231) (1048)
Interest Received 2070 -
Dividend Received 002 001
Net Cash Flow from Investing activities 438 6144
Proceeds from Share Capital amp Securities Premium 11444 -
Proceeds from Long Term Borrowings 8660 -
Less Repayment of Long Term Borrowings (054) (7896)
Proceeds (Repayment) from short term borrowings (net) (22726) -
Interest Paid (7740) (8223)
Net Cash used in financing activities (10416) (16119)
Net Increase(Decrease) in Cash and Cash equivalents (4482) 5672
Cash and Cash equivalents as at 01102008 10565 4893
Cash and Cash equivalents as at 30092009 6083 1056
ANALYSIS OF CASH FLOW
From the cash flow statements of the ESCORT PVTLTDIt can be analyzed
from the two years that the net cash balance of the company has increased
manifold in 30-09-2008 than the year 30-09-2009
The net profit in 30-09-2008 is higher than the 30-09-2009 but due to certain
changes there has been increase in the cash balance
The interest paid this year is ore of the last year which implies that thee
company has not repaid his borrowed capital due to which the interest has got
down
The depreciation has increased but it does not affect cash to an extent as it is a
non-cash item In the head of working capital there is drastic change in the cash
balance in the form of ldquoTrade and other Receivables which has affected the cash
balance
There is outflow of cash for receivables rather than the inflow in the last year
So the net effect is that the cash from operating activities has been decreased
two times from the last year
The company has no accumulated losses as at the end of the financial year ie
September 31 2008
Provision for taxation has been made in accordance with the requirement of AS-
22 issued by Institute of Charted Accountants of India
Pursuant to that current year deferred tax liability have been charged to profit amp
loss account
In opinion of the board of directors of thee company the current assets loans
and advances have a value on realization in the ordinary course of the business at
least equal to the amount stated in the balance sheet and provision for all
liabilities have been made
Balance of sundry debtors creditors loans and advances are subject to confirmation by
the concerned parties
METHOD OF ANALYSIS
1 Data analysis is done using the following statistical tools wherever required in
order to extract meaningful information from the collected data
o Simple percentage and averages
o Bar diagram
o Cone diagram
o Pie diagram
2 The collected data from the questionnaire has been put together in the form of
tables
3 Percentage has been calculated wherever necessary for generalization of the
data
4 Data analysis and interpretation has been done on the basis of primary and
secondary data
5 The findings researches have been recorded based on the analysis
6 The study conducted pertains only to YAMAHA MOTORS INDIA PVTLTD
All bank balances (debitcredit) have been confirmed by the concerned bank
Identified from the available information which has been relied upon by the auditors
The names of small-scale industrial units to whom outstanding for more than
thirty days within agreed terms
The company has 9996 of shareholders in its subsidiary company named as
ESCORTS PVT LTD As at 31-03-2008
So the net effect is that the net cash from investing activities has many more
times than the last year which is negative Now the company has repaid its long
term borrowing more than the last year which has decreased the cash balance by
the little amount
Balance with the schedule banks under the head current amp collection account
amounting to represent funds in transit lying with schedule banks pending
transfer against loan liabilities under the head cash credit amp bill discounting
LIQUIDITY RATIO
1 CURRENT RATIO
(Amount in Rs)
Current Ratio
Year Current Assets Current Liabilities Ratio
2003 58574151 7903952 7412004 69765346 31884616 2192005 72021081 16065621 4482006 91328208 47117199 1942007 115642068 30266661 382
Interpretation
As a rule the current ratio with 21 (or) more is considered as satisfactory
position of the firm
When compared with 2006 there is an increase in the provision for tax because
the debtors are raised and for that the provision is created The current liabilities
majorly included Lanco Group of company for consultancy additional services
The sundry debtors have increased due to the increase to corporate taxes
In the year 2006 the cash and bank balance is reduced because that is used for
payment of dividends In the year 2007 the loans and advances include majorly
the advances to employees and deposits to government The loans and advances
reduced because the employees set off their claims The other current assets
include the interest attained from the deposits The deposits reduced due to the
declaration of dividends So the other current assets decreased
The huge increase in sundry debtors resulted an increase in the ratio which is
above the benchmark level of 21 which shows the comfortable position of the
firm
GRAPHICAL REPRESENTATION
741
219
448
194
382
000
100
200
300
400
500
600
700
800
Ratio
2003 2004 2005 2006 2007
Years
CURRENT RATIO
Ratio
2 QUICK RATIO
(Amount
in Rs)
Quick Ratio
Year Quick Assets Current Liabilities Ratio
2003 58574151 7903952 741
2004 52470336 31884616 165
2005 69883268 16065620 435
2006 89433596 47117199 19
2007 115431868 30266661 381
Interpretation
Quick assets are those assets which can be converted into cash with in a short
period of time say to six months So here the sundry debtors which are with the
long period does not include in the quick assets
Compare with 2006 the Quick ratio is increased because the sundry debtors are
increased due to the increase in the corporate tax and for that the provision
created is also increased So the ratio is also increased with the 2006
GRAPHICAL REPRESENTATION
741
165
435
190
381
000
100
200
300
400
500
600
700
800
Ratio
2003 2004 2005 2006 2007
Years
QUICK RATIO
Ratios
3 ABOSULTE LIQUIDITY RATIO
(Amount
in Rs)
Absolute Cash Ratio
Year Absolute Liquid Assets Current Liabilities Ratio
2003 31004027 7903952 392
2004 10859778 31884616 034
2005 39466542 16065620 246
2006 53850852 47117199 114
2007 35649070 30266661 118
Interpretation
The current assets which are ready in the form of cash are considered as absolute
liquid assets Here the cash and bank balance and the interest on fixed assts are
absolute liquid assets
In the year 2006 the cash and bank balance is decreased due to decrease in the
deposits and the current liabilities are also reduced because of the payment of
dividend That causes a slight increase in the current yearrsquos ratio
GRAPHICAL REPRESENTATION
392
034
246
114 118
0
05
1
15
2
25
3
35
4
Ratios
2003 2004 2005 2006 2007
Years
ABSOLUTE CASH RATIO
Ratios
LEVERAGE RATIOS
4 PROPRIETORY RATIO
(Amount
in Rs)
Proprietory Ratio
Year Share Holders Funds Total Assets Ratio
2003 67679219 78572171 086
2004 53301834 88438107 06
2005 70231061 89158391 079
2006 56473652 106385201 053
2007 97060013 129805102 075
Interpretation
The proprietary ratio establishes the relationship between shareholders funds to
total assets It determines the long-term solvency of the firm This ratio indicates
the extent to which the assets of the company can be lost without affecting the
interest of the company
There is no increase in the capital from the year2004 The share holderrsquos funds
include capital and reserves and surplus The reserves and surplus is increased
due to the increase in balance in profit and loss account which is caused by the
increase of income from services
Total assets includes fixed and current assets The fixed assets are reduced
because of the depreciation and there are no major increments in the fixed assets
The current assets are increased compared with the year 2006 Total assets are
also increased than precious year which resulted an increase in the ratio than old
GRAPHICAL REPRESENTATION
086
060
079
053
075
000
010
020
030
040
050
060
070
080
090
Ratios
2003 2004 2005 2006 2007
Years
PROPRIETORY RATIO
Ratios
ACTIVITY RATIOS
5 WORKING CAPITAL TURNOVER RATIO
(Amount
in Rs)
Working Capital Turnover Ratio
Year Income From Services Working Capital Ratio
2003 36309834 50670199 0722004 53899084 37880730 1422005 72728759 55355460 1312006 55550649 44211009 1262007 96654902 85375407 113
Interpretation
Income from services is greatly increased due to the extra invoice for Operations
amp Maintenance fee and the working capital is also increased greater due to the
increase in from services because the huge increase in current assets
The income from services is raised and the current assets are also raised together
resulted in the decrease of the ratio of 2007 compared with 2006
GRAPHICAL REPRESENTATION
072
142 131126
113
000
020
040
060
080
100
120
140
160
Ratio
2003 2004 2005 2006 2007
Years
WORKING CAPITAL TURNOVER RATIO
Ratio
6 FIXED ASSETS TURNOVER RATIO
(Amount in Rs)
Fixed Assets Turnover Ratio
Year Income From Services Net Fixed Assets Ratio
2003 36309834 28834317 126
2004 53899084 29568279 182
2005 72728759 17137310 424
2006 55550649 15056993 369
2007 96654902 14163034 682
Interpretation
Fixed assets are used in the business for producing the goods to be sold This
ratio shows the firmrsquos ability in generating sales from all financial resources
committed to total assets The ratio indicates the account of one rupee
investment in fixed assets
The income from services is greaterly increased in the current year due to the
increase in the Operations amp Maintenance fee due to the increase in extra invoice
and the net fixed assets are reduced because of the increased charge of
depreciation Finally that effected a huge increase in the ratio compared with the
previous yearrsquos ratio
GRAPHICAL REPRSENTATION
126182
424 369
682
000
100
200
300
400
500
600
700
Ratios
2003 2004 2005 2006 2007
Years
FIXED ASSETS TURNOVER RATIO
Ratios
7 CAPITAL TURNOVER RATIO
(Amount
in Rs)
Capital Turnover Ratio
Year Income From Services Capital Employed Ratio
2003 36309834 37175892 0982004 53899084 53301834 1012005 72728759 70231061 1042006 55550649 56473652 0982007 96654902 97060013 100
Interpretation
This is another ratio to judge the efficiency and effectiveness of the company
like profitability ratio
The income from services is greaterly increased compared with the previous year
and the total capital employed includes capital and reserves amp surplus Due to
huge increase in the net profit the capital employed is also increased along with
income from services Both are effected in the increment of the ratio of current
year
GRAPHICAL REPRESENTATION
098
101
104
098
100
094095096097098099100101102103104
Ratios
2003 2004 2005 2006 2007
Years
CAPITAL TURNOVER RATIO
Ratios
8 CURRENT ASSETS TO FIXED ASSETS RATIO
(Amount
in Rs)
Current Assets To Fixed Assets Ratio
Year Current Assets Fixed Assets Ratio
2003 58524151 19998020 2932004 69765346 18672761 3742005 72021081 17137310 4202006 91328208 15056993 6072007 115642068 14163034 817
Interpretation
Current assets are increased due to the increase in the sundry debtors and the net
fixed assets of the firm are decreased due to the charge of depreciation and there
is no major increment in the fixed assets
The increment in current assets and the decrease in fixed assets resulted an
increase in the ratio compared with the previous year
GRAPHICAL REPRESENTATION
293374
420
607
817
000
100
200
300
400
500
600
700
800
900
Ratios
2003 2004 2005 2006 2007
Years
CURRENT ASSETS TO FIXED ASSETS RATIO
Ratios
PROFITABILITY RATIOS
GENERAL PROFITABILITY RATIOS
9 NET PROFIT RATIO
(Amount in Rs)
Net Profit Ratio
Year Net Profit After Tax Income from Services Ratio
2003 21123474 36039834 059
2004 16125942 53899084 030
2005 16929227 72728759 023
2006 18259580 55550649 033
2007 40586359 96654902 042
Interpretation
The net profit ratio is the overall measure of the firmrsquos ability to turn each rupee
of income from services in net profit If the net margin is inadequate the firm
will fail to achieve return on shareholderrsquos funds High net profit ratio will help
the firm service in the fall of income from services rise in cost of production or
declining demand
The net profit is increased because the income from services is increased The
increment resulted a slight increase in 2007 ratio compared with the year 2006
GRAPHICAL REPRESENTATION
059
030
023
033
042
000
010
020
030
040
050
060
Ratios
2003 2004 2005 2006 2007
Years
NET PROFIT RATIO
Ratios
10 OPERATING PROFIT
(Amount in Rs)
Operating Profit
Year Operating Profit Income From Services Ratio
2003 36094877 36309834 099
2004 27576814 53899084 051
2005 29540599 72728759 041
2006 31586718 55550649 057
2007 67192677 96654902 070
Interpretation
The operating profit ratio is used to measure the relationship between net profits
and sales of a firm Depending on the concept it will decide
The operating profit ratio is increased compared with the last year The earnings
are increased due to the increase in the income from services because of
Operations amp Maintenance fee So the ratio is increased slightly compared with
the previous year
GRAPHICAL REPRESENTATION
099
051
041
057
070
000
010
020
030
040
050060
070
080
090
100
Ratios
2003 2004 2005 2006 2007
Years
OPERATING PROFIT RATIO
Ratios
11 RETURN ON TOTAL ASSETS RATIO
(Amount in Rs)
Return on Total Assets Ratio
Year Net Profit After Tax Total Assets Ratio
2003 21123474 78572171 027
2004 16125942 88438107 018
2005 16929227 89158391 019
2006 18259580 106385201 017
2007 40586359 129805102 031
Interpretation
This is the ratio between net profit and total assets The ratio indicates the return
on total assets in the form of profits
The net profit is increased in the current year because of the increment in the
income from services due to the increase in Operations amp Maintenance fee The
fixed assets are reduced due to the charge of depreciation and no major
increments in fixed assets but the current assets are increased because of sundry
debtors and that effects an increase in the ratio compared with the last year ie
2006
GRAPHICAL REPRESENTATION
027
018 019017
031
000
005
010
015
020
025
030
035
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON TOTAL ASSETS
Ratios
12 RESERVES amp SURPLUS TO CAPITAL RATIO
(Amount in Rs)
Reserves amp Surplus To Capital Ratio
Year Reserves amp Surplus Capital Ratio
2003 65599299 2079920 31542004 34582554 18719280 1852005 51511781 18719280 2752006 37754372 18719280 2022007 78340733 18719280 419
Interpretation
The ratio is used to reveal the policy pursued by the company a very high ratio
indicates a conservative dividend policy and vice-versa Higher the ratio better
will be the position
The reserves amp surplus is decreased in the year 2006 due to the payment of
dividends and in the year 2007 the profit is increased But the capital is
remaining constant from the year 2004 So the increase in the reserves amp surplus
caused a greater increase in the current yearrsquos ratio compared with the older
GRAPHICAL REPRESENTATION
3154
185 275 202419
-
500
1000
1500
2000
2500
3000
3500
Ratios
2003 2004 2005 2006 2007
Years
RESERVES amp SRUPLUS TO CAPITAL RATIO
Ratios
OVERALL PROFITABILITY RATIOS
13 EARNINGS PER SHARE
(Amount in Rs)
Earnings Per Share
Year Net Profit After Tax No of Equity Shares Ratio
2003 21123474 207992 101562004 16125942 1871928 8612005 16929227 1871928 9042006 18259580 1871928 9752007 40586359 1871928 2168
Interpretation
Earnings per share ratio are used to find out the return that the shareholderrsquos earn
from their shares After charging depreciation and after payment of tax the
remaining amount will be distributed by all the shareholders
Net profit after tax is increased due to the huge increase in the income from
services That is the amount which is available to the shareholders to take There
are 1871928 shares of Rs10- each The share capital is constant from the year
2004 Due to the huge increase in net profit the earnings per share is greaterly
increased in 2007
GRAPHICAL REPRESENTATION
10156
861904 975
2168
000
2000
4000
6000
8000
10000
12000
Ratios
2003 2004 2005 2006 2007
Years
EARNINGS PER SHARE
Ratios
14 PRICE EARNINGS (PE) RATIO
(Amount in Rs)
Price Earning (PE) Ratio
Year Market Price Per Share Earnings Per Share Ratio
2003 3254 10156 0322004 2847 861 3302005 3752 904 4152006 3017 975 3092007 5185 2168 239
Interpretation
The ratio is calculated to make an estimate of application in the value of share of
a company
The market price per share is increased due to the increase in the reserves
amp surplus The earnings per share are also increased greaterly compared
with the last year because of increase in the net profit So the ratio is
decreased compared with the previous year
GRAPHICAL REPRESENTATION
032
330
415
309
239
000
050
100
150
200
250
300
350
400
450
Ratios
2003 2004 2005 2006 2007
Years
PE RATIO
Ratios
15 RETURN ON INVESTMENT
(Amount in Rs)
Return on Investment
Year Net Profit After Tax Share Holders Fund Ratio
2003 21123474 67679219 031
2004 16125942 53301834 03
2005 16929227 70231061 024
2006 18259580 56473652 032
2007 40586359 97060013 042
Interpretation
This is the ratio between net profits and shareholders funds The ratio is
generally calculated as percentage multiplying with 100
The net profit is increased due to the increase in the income from services ant
the shareholders funds are increased because of reserve amp surplus So the ratio
is increased in the current year
GRAPHICAL REPRESENTATION
031 030
024
032
042
000
005
010
015
020
025
030
035
040
045
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON INVESTMENT RATIO
RatioS
DATA COLLECTION
The data can be of two types
Primary Data
Secondary Data
Primary Data
Primary data are those data which is originally collected afresh
Secondary Data
Secondary data are those data which are already collected and stored and which has
been passed through statistical research
In this project Secondary data has been collected from following sources-
Annual report
Books
MIS
Other material and report published by company There are two methods to prepare
the Cash flow Statement
ndirect Method
I
The indirect method (or reconciliation method) starts with net income and converts it
to net cash flow from operating activities In other words the indirect method adjusts
net income for items that affected reported net income but did not affect cash To
compute net cash flow from operating activities non-cash charges in the income
statement are added ack to net income and non-cash credits are deducted
b
Direct Method
Under the direct method the statement of cash flows reports net cash flow from
operating activities as major classes of operating cash receipts (eg cash collected from
customers and cash received from interest and dividends) and cash disbursements (eg
cash paid to suppliers for goods to employees for services to creditors for interest and
to government authorities for taxes)
INDIRECT VERSUS DIRECT METHOD
The most contentious decision that the FASB faced in issuing Statement No 95 was
choosing between the direct method and the indirect method of determining net cash
flow from operating activities Companies lobbied against the direct method urging
adoption of the indirect method Commercial lending officers expressed a strong
preference to the FASB hat the direct method be required
tCF-Page 3 of 5
In Favor of the Direct Method
The principal advantage of the direct method is that it shows operating cash receipts and
payments That is it is more consistent with the objective of a statement of cash flows to
provide information about cash receipts and cash payments than the in-direct method
which does not report operating cash receipts and payments
Supporters of the direct method contend that knowledge of the specific sources of
operating cash receipts and the purposes for which operating cash payments were made
in past periods is useful in estimating future operating cash flows Furthermore in-
formation about amounts of major classes of operating cash receipts and payments is
more useful than information only about their arithmetic sum (the net cash flow from
operating activities) Such information is more revealing of an enterprises ability (1) to
generate sufficient cash from operating activities to pay its debts (2) to reinvest in its
operations and (3) to make distributions to its owners
Many corporate providers of financial statements say that they do not currently collect
information in a manner that allows them to determine amounts such as cash received
from customers or cash paid to suppliers directly from their accounting systems But
supporters of the direct method contend that the incremental cost of assimilating such
operating cash receipts and payments data is not significant
In Favor of the Indirect Method
The principal advantage of the indirect method is that it focuses on the differences
between net income and net cash flow from operating activities That is it provides a
useful link between the statement of cash flows and the income statement and balance
sheet
Many providers of financial statements contend that it is less costly to adjust net income
to net cash flow from operating activities (indirect) than it is to report gross operating
cash receipts and payments (direct) Supporters of the indirect method also state that the
direct method which effectively reports income statement information on a cash rather
than an accrual basis may erroneously suggest that net cash flow from operating
activities is as good as or better than net income as a measure of performance
Special Rules Applying to Direct and Indirect Methods
Companies that use the direct method are required at a
minimum to report separately the following classes of
operating cash receipts and payments
Receipts
1048713 Cash collected from customers (including lessees licensees etc)
1048713 Interest and dividends received
1048713 Other operating cash receipts if any
Payments
1048713 Cash paid to employees and suppliers of goods or services (including
suppliers of
insurance advertising etc)
1048713 Interest paid
1048713 Income taxes paid
1048713 Other operating cash payments if any
Companies using the indirect method are required to disclose separately changes in
inventory receivables and payables to reconcile net income to net cash flow from
operating activities In addition interest paid (net of amount capitalized) and income
taxes paid must be disclosed elsewhere in the financial statements or accompanying
notes
The FASB requires these separate and additional disclosures so that users
may approximate the direct method Also an acceptable alternative presentation
of the in-direct method is to report net cash flow from operating activities as a
single line item in the statement of cash flows and to present the reconciliation
details elsewhere in the financial statements
FINDING OF SUDY
According to cash flow statement of the company The finding of the study are as
follows-
The company has not taken any loans secured or unsecured from companies
firms or other parties
The company has not accepted any deposit from the public during the year
The company is not a sick industrial company
The company has not granted any loan secured or unsecured to company firms
or other parties
The company has paid the entire long term and short term borrowing during the
year
The company has buy back the companyrsquos own share this year
The interest paid in 2008 is more than the
There has been a significant decline in volume over the years from 2001-02
to 2005-06 as can be seen in the graph below
Table 43
The Net sales of Tractor has increased considerably from 2004-05 to 2007-08
This can be mainly attributed to changes in Variable and material costs and in
the price
The Net sale of Tractor has increased considerably from 2004-05 to 2007-08
that is an decrease of Rs7216 per tractor This can be mainly attributed to
changes in
Variable and material costs and in the prices
RECOMMENDATIONS
According to cash flow statement of the company The suggestions of the study
are as follows-
The time durations for training program have to increase
Buy regular review and consultations develop a career progression
which is sensitive to performance and ability
Create an environment where by people are trend developed to enable
The to take advantages of opportunities that arise
The jab can be redesigned where the work man stay in what is normally
the same job but has elements of it changed
The principle amount must be paid in time which can be reducing the
interest the out flow
The purchase of the fixed asset must be made only when there is extreme
requirement
In order to avoid taxes the company should go for more investment
The companyrsquos borrowings should go for more investment
o The company should try to reduce the depreciations as maximum
as possible
CONCLUSION
The study on competency level of employees at ESCORTS PVTLTD gave an
insight about the acceptance of competency mapping by employees
The employees at Ymi welcome the introduction of competency mapping in their
organization as they felt it was very much essential in enhancing their skills and
organizational development
The organization has provided the recourses guidance and support to facilitate the
introduction of competency level easily and develop the employees in such a way
that they can face any kind of challenge
However the level of competency in employees is found to be satisfactory
Providing proper training education and guidance to the employees can enhance
the level
This study was mainly carried out to find out whether thee competency mapping
being followed by the company is effective till date If the competency mapping
and fitment to the organization
By looking at the graphs and tables it is quite that the employees still are not up to
the level of competent pool they still have to be trained and made competent in
order to fill the gap As the organization has just applied the mapping it has to see
to that it meets all the requirements for competency mapping
Therefore the graphs make it quite clear that the potential of the employees is not
up to the mark and ie they are not competent enough to meet the competency-
mapping requirement Hence by further training and counseling this gap can be
closed
This report includes the training requirements of employees and it highlights skills
possessed by each employee and skill required All employees get training so that
skill can be improved and maintain balance between standard performance with
their actual performance to avoid gap
APPENDIX
QUESTIONNAIRE
Consumer Survey
Name _____________________________
Age _____________________________
Sex
Male
Female
Occupation
Businessman
Service man
Professional
Others
Monthly income brackets
Below 15000
15000- 20000
20000-30000
30000 and above
of your savings _________
Do you invest
Yes
No
If yes then where do you invest your money
Bank
Insurance
funds
Others
Why do you made that statement
Return
Risk hedging
Tax benefits
Other reasons (specify) _______
Who influence your cash decision
Relatives and friends
Family members
Advisors experts
You yourself
If no then why
Do not know where to invest
Satisfied with your current investment return
Donrsquot want take risk
Other reasons
__________________________________________________________________
___________________
Do you know about CF statement
Yes
No
If yes then from where you have come to know about an cash statement
Advertisements on newspapers
Friends and relative
Agents experts
Other source
What do you think about cash statement
It means investing only in share market
Constant watch must be kept always
Return is not satisfactory
Other perception
__________________________________________________
Can you recall any cash flow of company
___________________________
Would you want to made CF of an org
Yes
No
If yes then why
_______________________________________________________
If no then why
_______________________________________________________
BIBLIOGRAPHY
List of Books
1 PANDEY IM - FINANCIAL MANAGEMANT
2 KHAN MY AND JAIN PK -FINANCIAL MANAGEMANT
3 SMITH KV ndash MANAGEMANT OF WORKING CAPITAL
3 COMPANY RECORDS
4 JOURNAL
5 REPORTS
WEBLIOGRAPHY
1 wwwescortspvtltdcom
2 wwwgooglecom
multiplying at an annual rate of almost 50 (19671800-197033000)A natural
consequent of sharp upsurge and consequent shortage was heavy price premium on
tractors Recognizing the situation imports of tractors were liberalized and over and
above the domestic production of 20000 in 1970 3000 tractors were imported
Second phase of development (1968-1980)
Since the pace of indigenous five tractors manufacturing units already set up far below
expectation the Government decided to provide diligence to the tractor industry in 1968
and invites new entrepreneurs Benefiting from this forward-loo
king policy six more units came in during 1971-1974 These were
NAME COLLABORTION YEAR OF
COMMENCEMENT
MS ESCORTS
TRACTORS LTD
UK 1971
MS HMT LTD CZECHOSLIVAKIA 1971
MS KIRLOSKAR
TRACTORS LTD
WEST GERMANY 1974
MS PUNJAB
TRACTORS LTD
INDIGENOUS 1974
MS HARSHA
TARCTORS LTD
USSR 1975
Not withstanding the above progress on the setting up to new units Tractor industry ran
into difficulties from 1969 onwards and by 1972 domestic tractor production stagnated
at a level of 20000units primarily due to continuing of imports of tractors Problem was
further compounded by the oil crisis in 1973-74 and the resultant economic crisis and
inflationary pressures which persisted till middle of 1975
The tractor market started slowly pocking up from 1975 (31000tractors) because of
relative price stability govt directives of the commercial banks increase rural lending
expansion of rural branches of commercial banks good monsoons which resulted in
bumper harvests and accelerated pace of extension of irrigation facilities This trend
continued throughout the late seventies and by 1979-80 yearly market off take had risen
to a level of 62000tractors
Third phase of development (1980-86) The buoyancy in the tractor market experienced in the late seventies continued tell 1981-82 when 78000
tractors were sold The encouraging trend led to the setting up of more for the manufacture of tractors
during 1981-86 These units were
NAME COLLABORATION YEAR OF
COMMENCEMENT
MS AUTO TRACTORS
LTD
UK 1981
MS PRATAP STEEL
ROLLING MILL LTD
INDIGENOUS 1983
MS VST TRACTORS
LTD
JAPAN 1986
However the sale of tractors plummeted to a low level of 66000 tractors in the year
1982-83 in the wake of severe credit squeeze imposed by reserve bank of India
The demand for tractors again picked up when the credit squeeze was eased and a sale
of 80000units was recorded in the year 1984-85 for next year Tractor industry stagnated
causing closure of five manufacturing units as detailed below
NAME YEAR OF CLOSURE
PINE TRACTORS LTD 1983
HARSHA TRACTORS LTD 1987
AUTO TRACTORS LTD 1987
KISLOSKAR TRACTOR LTD 1991
PRALAP STEEL ROLLING MILLS
(HARYANA TRACTORS LTD)
1996
Fourth phase of development( 1987 onwards)
In the year 1987-88 the country saw a severe drought situation This was a difficult
period and it widely anticipated that crop yield would be severely affected Under such a
situation it was necessary to have provisions for supply of power to perform farm
operation at proper time in order to fully exploit the limited moisture content left in soil
The versatility in the tractor became evident as this vehicle was used for pumping out
underground water in this background tractor industry showed a remarkable growth
during this period and all time high sale of 90000 tractors was recorded in the drought
year (1987-88)Fourth phase of development
The growth trend appears to be continuing with relaxation of tractor financing norms
except for a 2 year slack period due to general economic slowdown and political
turmoil In fiscal 1997-98 tractors sales refaced an all time high record of 250000This
impressive growth has influenced 3 more players as listed below to enter the market
NAME COLLABORATION YEAR OF
COMMENCEMENT
INTERNATIONAL
TRACTORS LTD
INDIGENOUS 1997
BAJAJ TEMPO LTD INDIGENOUS 1997
NEW HALLAND
TRACTORS (INDIA)
PVT LTD
ITALY 1998
JOHN DHEER
TRACTORLTD
POLAND 2000
HISTORICAL BACKGROUND OF ESCORTS GROUP
Escorts came into being a vision that led two brothers Yudi Nanda and Hari Nanda to
branch out their familyrsquos prospering transport s business and institute ventures that were
to become the foundations of escorts Ltd Escorts Agents Limited was born at Lahore on
17th October 1944 with Yudi Nanda as Managing Director and Hari Nanda as Chairman
After the owing to opportunity lying in the Indian village Escorts (Agricultural
Machinery) Ltd was launched in 1948 with Yudi Nanda as Director Tragically Yudi
Nanda died in an accident in 1952 Then Escorts agent Ltd And Escorts (Agricultural
Machine) Ltd Was merged in 1953 to create single Escorts agents Pvt Ltd
SOME MILESTONES
1948 Pioneered farm mechanization in the country by launching Escorts Agricultural Machines Ltd
With a franchise from a US based MINNEAPOLIS MOLINE WISCONCIN for marketing
tractors implements engines and other equipments
1958 Started importing MF tractor from Yugoslavia for marketing the same in India
1960 A manufacturing plant was set up at Faridabad
1965 Got industrial license to manufacture URSUS ESCORT tractors
169
1969 Escorts signed a contract with FORD MOTOR COMPANY to manufacture Ford 3000 model
tractors Escorts Institute of Farm Mechanization (EIFM) was established at Bangalore This
training Institute is one of its kind
1971 1st February the first tractor FORD 3000 rolled out of the factory The same year the turnover
touched the Rs53 million mark
1973 Escorts Tractors Limited (ETL) declared a healthy Profit Before Tax of Rs4725 million
1974 Export of 400 tractors to Afghanistan - perhaps the worlds largest ever airlift of such
equipment
1975 Turnover crossed the Rs 200 million mark for ETL Profit After Tax Rs 87 million Maiden
dividend of 10 declared
1976
1976 FORD 3600 advancement in Farm Mechanization was launched with fanfare to a
tremendous reception Trial production of in-plant manufacturing of engine parts (Block amp
Head)
1977
1977 Escorts Scientific Research Centre marked its beginning at Faridabad by developing its own
Engines for E-27 and E-37 Due to constant technology absorption indigenization level
touched 72 for FORD tractors which was a result of relentless effort in that direction
1979 Turnover crossed the Rs 50 crores mark In plant facility for machining centre housing and
case transmission on built-in line concept installed
1983 Escorts Tractors Limited (ETL) established a state-of-the-art research and development centre
to spearhead newer breakthroughs in Farm Mechanization and to maintain industry
leadership Line concept introduced for engine block machining
1984 75000th tractor rolled out A great occasion for the large family that worked for ETL Newer
challenges and frontiers were set
1985 In keeping with the stupendous financial success Escorts Tractors Limited (ETL) offered its
first Bonus Issue (11)
1987 50hp FORD 3610 was launched another leap for the Indian Farm Mechanization Industry the
farmers and the people of the land
1988
1988 ETLrsquos annualized turnover crossed Rs 100 crores Dividend 45 for 15 months
1989 A MOU with CLAAS was signed for manufacturing amp
1990-
91
First Public Issue (Februaryrsquo91) over-subscribed four times Shares listed on Delhi and Bombay
Stock Exchanges
1991-
92
The Crop Tiger range of Combine Harvesters was launched by Escorts Claas Ltd
1993 FORD 3620 tractor launched
1996 Disengagement of joint venture collaboration with New Holland and launch of FARMTRAC
Tractor
1997 A Joint Venture with Italian company CARRARO was finalized to establish a company in India
for manufacturing and marketing of transmission and axles
COLLABORATIONS
Collaboration with international Organization of technological excellence constant
research to adopt the emerging technology to specify requirement of the market and
belief in the philosophy industrial interdependence have made Escorts today one of the
leading trend steers in Indiarsquos New Industrial Culture Escorts have merged as fraternity
of above 50000 shareholders 22000 employees 4000 ancillary suppliers and 1 6000
dealers and stockiest all engaged in a large scale investment and sustained efforts to
meet the ever widening market horizons of technological competence appropriate to
Indiarsquos unique changing needs
Escorts believe in incorporating the finest existing technology to meet Indian consumers
demands by collaborating with the internationally renowned companies prominent
among these are
IN GERMANY
GOETZE AG Piston rings and cylinder liners
MAHLE GmbH Piston
CLASS OHG Harvesters Combines
KNORR BREMSE AG Railway Brake System
AUGUST BILSTEIN GmbH Absorbers Hydraulic products
Pressure and temperature switches
IN JAPAN
KAYABA INDUSTRY CO LTD Telescopic Front Forks Car
MIKUNI SHOKO CO Carburetors for BI-Wheelers
IN UK
JCBAMFORD EXCAVATORS JCB Excavators loaders Front end
Loaders Telescopic handlers
IN USA
HUGHESNETWORKS SYSTEMS AB Road Construction Machinery
Vibratory Road Rollers
OFFICIAL ADDRESS OF ESCORTS
Registered Office Corporate
Secretariat amp Law
Escorts Ltd
11 Scindia House
Connaught Circus
New Delhi-110 001
Tel No 011-23310145
Fax No 011-23311715
Escorts Ltd
155 Mathura Road
Faridabad - 121 003
Tel No ( 0129 ) 2250222
Fax ( 0129 ) 2250060
Email Address corpsectndbvsnlnetin
Web Site wwwescortsgroupcom
LEADERSHIP TEAM
Mr Rajan Nanda
Chairman
Mr Nikhil Nanda
Joint Managing Director
Mr Rohtash Mal
Executive Director and Chief Executive Officer - Agri Machinery Group
Mr Manoj Jha
Executive Vice President of Engineering Division
Mr Kamal Bali
CEO ndash Escorts Construction Equipment Limited (ECEL)
Mr GB Mathur
Vice President - Law amp Company Secretary
Mr Rakesh Kumar Budhiraja
Group Chief Financial Officer
Mr Partha Dasgupta
Group Vice President Human Resources and Employee Relations
LEVELS OF MANAGEMENT
MANAGEMENT
TOP
MANAGEMENT
SENIOR
MANAGEMENT
MIDDLE
MANAGEMENT
JUNIOR
MANAGEMENT
MANAGING
DIRECTOR amp
CEO(G-11)
CHIEF GENERAL
MANGER(G-8)
CHIEF
MANAGER
(G-5)
ASSISTANT
MANAGER(G-2)
VICE PRESIDENT
(G-10)
GENERAL
MANAGER(G-7)
SENIOR
MANAGER(G-4)
EXECUTIVE(G-
1)
ASSOCIATE
VICE PRESIDENT
(G-9)
DEPUTY
GENERAL
MANAGER(G-6)
MANAGER(G-3)
MISSION
WE WILL ACHIEVE LEADERSHIP IN MARKET SHARE amp PROFITABILITY IN
THE DOMESTIC TRACTOR MARKET BY THE YEAR 2004-2006 AND SHALL BE
THE WORLSrsquoS LARGEST SUPPLIER OF SUB 100 HP TRACTORS WE SHALL
PROACTIVELY CONTRIBUTE TO THE PROSPERITY OF THE RURAL
ECONOMY BY DEFINING A LARGER ROLE FOR OURSELVES IN THE FOOD
AND AGRICULTURE SECTOR
THE VISION
WE SHALL STRIVE TO BE THE NUMERO UNO IN THE INDIAN TRACTOR
INDUSTRY AND TOP FIVE TRACTOR MANUFACTURERS IN THE WORLD
WE SHALL CONTINUOUSLY STRIVE TO MEET THE EVER RISING
EXPECTATIONS OF OUR VALUED CUSTOMERS AT THE LOWEST
INTERNAL COST
WE SHALL AIM TO OFFER THE FARMING COMMUNITY A RANGE OF
INNOVATIVE PRODUCTS AND SERVICES WHICH SHALL ENABLE THEM
TO IMPROVE THEIR PRODUCTIVITY AND COMPETITIVNESS
WE SHALL ACHIEVE A TURNOVER OF RS 2 BILLION BY THE YEAR
2006TRANSCENDING NATIONAL BOUNDARIES WE SHALL STRIVE TO
ATTAIN EXPORTS OF ONE TENTH OF OUR TOTAL TRACTOR PRODUCTION
BY THE YEAR 2
REVIEW OF LITERATURE
INTRODUCTION
MEANING OF FINANCIAL STATEMENTS
The financial statements are nothing but the financial information presented in concise and
capsule form and are the financial information is the information relating to the financial
position of any firm The firm prepares the financial statements
bull To communicate with different parties about the financial position of the firm
(Shareholders creditors banks financial institution financial analysts investors
etc And
bull To analyze the operations and performance of the firm for the further
planning
The basic source which provides the financial information is the Annual report of the
company which is presented by the company to its shareholders at the Annual General
Meeting
Though the presentation of annual report is a statutory requirement under the
Companies Act 1956 however it is also a medium of communication with the present as well
as prospective investors and creditors of the company
Clause 43 A of the Listing Agreement (with the stock exchange) requires every
listed company to publish unaudited quarterly results But it does not mean the non-corporate
firms do not prepare the financial statements Every firm big or small prepare the following
financial statements
The Balance Sheet (BS)
1 The Income Statement (IS)
Two other key financial statements which are usually prepared by corporate firms are
1 Statement of appropriation of profit and
2 Statement of Change in financial position
ANALYSIS OF FINANCIAL STATEMENTS (AFS)
Analysis of financial statements refers to the process of the critical examination of the
financial information contained in the financial statements in order to understand and
make decisions regarding the operations of the firm The AFS is basically a study of the
relationship among various financial fact and figures as given in a set of financial
statements AFS is the process of establishment and identifying the financial weakness
and strength of the firm It is indicative of two aspects of a firm ie the profitability
and the financial position
OBJECTIVES OF AFS
The objectives of the AFS is to understand the information contained in financial
statements with a view to know the weakness and strength of the firm and to make a
forecast about the future prospects of the firm and thereby enabling the financial
analyst to take different decisions regarding the operation of the firm The objectives
are as follows
bull To assess the present profitability and operating efficiency of the fir
COMMON-SIZE STATEMENTS (CSS)
The CSS represents the relationship of different items of financial statements with some
Common items by expressing each item as a percentage of the common item In common size
Balance Sheet each item of the balance sheet is stated as a percentage of the total balance
sheet The percentages for different items are computed by dividing the absolute amount of
that item by the Common Base and then multiply by 100 The percentage so calculated can
be easily compared with the corresponding percentage in some other period Thus the CSS is
useful not only in intra-firm comparison for the same year or free several years
TREND PERCENTAGE ANALYSYS(TPA)
The TPA is a technique of studying several financial statements over a series of years In
TPA the trend percentages are calculated for each item by taking the figure of that item for
some base year as 100 So the trend percentage is the percentage relationship which
Each item of different years bears to the same item in the base year Any year may be Taken
as the base year but generally the starting initial year is taken as the base year So each
item for base year is taken as 100 and then the same item for other years is Expressed as a
percentage of the base year
RATIO ANALYSIS (RA)
The RA has emerged as the principle technique of the AFS A ratio is a relationship
Expressed in mathematical terms between two individual or groups of figures connected with
other in some logical manner The RA is based in the premise that a single accounting figure
by itself may not communicate any meaningful information but when expressed as a relative
to some other figure it may definitely give some significant information The relationship
between two or more accounting figuresgroups is called a Financial Ratio
A financial ratio helps to summarize a large mass of financial data into a concise form
and to make meaningful interpretations and conclusions about the performance of a firm
For example a firm has net sales Rs 5 00000
Gross Profit Rs 100000
Ratio of Gross Profit to net sales is 20
ie (Rsl 00000 Rs5 00000)
Forms of Ratios
Since a ratio is a mathematical relationship between two or more variables accounting
figures such relationship can be expressed in different ways as follows
bull As a Pure Ratio
bull As a Rate of Times
bull As a Percentage
Ratio can be classified into
bull The Liquidity Ratio
bull The Activity Ratio
bull The Leverage Ratio
bull The Profitability Ratio
STATEMENT OF CHANGES IN FINANCIAL POSITION
(SCFP)
Since the BS amp IS of a firm are two basic depicting the financial position of a firm at the end
of the year These two financial statements are called the traditional statements Both these
statements fail to throw light on changes in assets liabilities and shareholders wealth during
this year
BS deals with the financial position gives only the static view of the year- end financial
position and fails to indicate the movement and causes in assets and liabilities during the
year Similarly IS show the profit or loss resulting out of the operations of the firm during
the year This profit or loss in fact to ascertain the sufficiency of resources to declare the
dividend etc thus there is a need to prepare another statement (together with the BS amp IS)
which may identify the changes in assets liabilities and the shareholders funds over a given
period
The SCFP is essentially an explanation of the changes in financial position of a Firm
occasioned by the firm in between two successive BSs The SCFP draws basic Information
from the BS and IS helps in understanding the change in assets liabilities and shareholders
worth The SCFP deals with the flow of funds during the year ie the funds coming in and
going out of the firm It summarizes the sources from where the funds might have been
arranged procured by the firm and the uses for which the funs might have been used by
the firm during the year
The SCFP can be prepared as follows
bull SCFP (Cash Basis) also known as a Cash F low Statement
bull SCFP (Net Working Capital Basis) Fund Flow Statement
SCFP (WORKING CAPITAL BASIS)
FUND FLOW STATEMENT
The FFS reports the flows of funds through the firm during the year ie it shows the
Sources and uses of working capital between two balance sheet dates The FFS
attempts to explain the changes in financial position from one BS to the subsequent BS
in terms of the change in the funds or the working capital position of the firm
The term Working capital (WC) is generally defined as the excess of total
current assets over the total current liabilities The current Assets (CA) of a firm may
include cash in hand and at bank stock debtors bills advances etc and the Current
Liabilities (CL) includes creditors bills payable outstanding expenses provision for
tax short term liabilities etc the term WC is a single figure representing the net effect
of a transaction is to increase or decrease the Working Capital by affecting any of the
elements of Current Assets or Current Liabilities Therefore the FFS in its standard
form incorporates only those transactions which affect the Working Capital i e those
transactions where in only one of the affected accounted is a current account
Now a flow of working capital arises when one of the affected accounts is a current
account From the point of view of current account the effected on working capital
can examined in the light of the definitions of the term working capital ie the excess
of current assets over current liabilities ie
Impliedly change in any of the CA or CL will affect the WC Simple observation
equation tells that
bull Increase in any of the CA or decrease in any of the CLs will result in increase
in the WC
bull Decrease in any of the CA or increase in any of the CLs will result in decrease
in the WC
To find out the relative importance of different components of the financial position
of the firm
bull To identify the reasons for change in the profitability financial position of the
firm and
bull To assess the short term as well as the long term liquidity position of the
firm
TECHNIQUES TOOLS OF THE AFS
AFS can be undertaken by different persons and for different purposes therefore the
methodology adopted for the AFS may be carrying from one situation to another However
the following are some of the common techniques of the AFS
bull Comparative financial statements
bull Common-size financial statements
bull Trend percentage analysis and
bull Ratio Analysis
COMPARATIVE FINANCIAL STATEMENTS
In CFS two or more BS andor the IS of a firm are presented simultaneously in columnar
form The Financial data for two or more tears are placed and presented in adjacent columns
and thereby the financial data is provided at times perspective in order to facilitate periodic
comparison In CFS the BS and the IS for number of years are presented in condensed
form for year to year comparison and to exhibit the magnitude and direction of changes
The CFS helps a financial analyst of the firm and in establishing operating and
positional trend of the firm The CFS may be prepared to show
1 The absolute amount of different items in monetary terms
2 The amount of periodic changes in monetary terms
1 The percentages of periodic changes to reveal the proportionate changes
The CFS can be prepared for both the BS and the IS
CORE COMPETENCE OF ESCORTS
Customer 1
We put customers first in everything we do We take decisions keeping the customer in
mind
Challenging Spirit
We strive for excellence in everything we do and in the quality of goods amp services we
provide We work hard to achieve what we commit amp achieve results faster than our
competitors and we never give up
Team-work
We work cohesively with our colleagues as a multi-cultural team built on trust respect
understanding amp mutual co-operation Everyones contribution is equally important for
our success
Frank amp Fair Organization
We are honest sincere open minded fair amp transparent in our dealings We actively
listen to others and participate in healthy amp frank discussions to achieve the
organizations
A firm undertakes numerous during a year and most of these transactions during a year and
most of these transactions may affect one or the other current account ie most of these
transactions May results in the flow of the WC Neither is it necessary nor practical to
identify the effect of each and every transaction on the WC These transactions instead are
considered and analyzed in a collective form and then their effect on the WC is identified
SCFP (CASH BASIS) OR
THE CASH FLOW STATEMENT
The CFS attempts to analyze the transactions of the firm in terms of cash ie the transactions
generating cash and using cash The focus in the CFS is on cash rather than on WC The
sources of cash may be the cash profits earned by the firm issue of capital for cash issue of
other securities for cash borrowings sale of assets investment redemption of debenture or
preference share repayment of loan payment of tax dividend distribution etc Thus the
CFS summarizes the cash inflows and outflows
An analysis of cash flows is useful for short-run planning A firm needs sufficient cash to
debts maturing in the near future to pay interest and other expenses and to pay dividends to
shareholders The firm can make projections of cash flows and outflows for the near future to
determine the availability of cash This cash balance can be matched with the firms need for
cash during the period and accordingly arrangements can be made the deficit or invest the
surplus cash temporarily A historical analysis of cash flows provides insight to prepare
reliable cash flow projections for the immediate future
A statement of changes in financial position on cash basis commonly known as cash flow
statement summarizes the causes of changes in cash position between dates of two balance
sheets It indicates the sources amp uses of cash The cash flow statement is similar to the fund
flow statement except that it focuses attentions on cash instead of working capital (funds)
Thus this statement analyses change in non-current accounts as well as current accounts
(other than cash) to determine the flow of cash
The CFS is based on the concept on the WC Where as the CFS is based in cash which is only
the element of WC Thus the CFS provides details of cash movements whereas the FFS
provides the details of funds movements
The CFS considers only the actual movement of cash whereas the FFS considers the
movements of the funds as defined in terms of net working capital
CASH-FLOW STATEMENT
A cash-flow statement is a statement showing inflows (receipts) and outflows (payments) of
cash during a particular period In other words it is a summary of sources and applications of
Cash during a particular span of time It analyses the reason for changes in balance of cash
between the two balance sheet dates The term Cash here stands for cash and cash
equivalents
A cash-flow statement includes only those items which affect cash As such the cash-flow
statement is called a statement of changes in financial position - cash basis
A cash - flow statement can be for the past or can be projected for a future period
OBJECTS OR USES OF CASH-FLOW STATEMENT
The main objectives behind preparing a cash-flow statement can be laid down as under-
bull USEFUL FOR SHORT-TERM FINANCIAL PLANNING-
A cash-flow statement provides information for planning the short-term financial needs of the
firm Since it provides information regarding the sources and utilization of cash during a period
it become easier for the management to assess whether it will have Adequate cash to meet day-
to-day expenses and pay the long - term loans and interest Thereon and whether it has enough
cash to pay for the purchase of fixed assets or not
USEFUL FOR PREARING THE CASH BUDGET-
A cash-flow statement prepared for the future period is helpful in preparing a cash budget It
informs the management about the future period is helpful in preparing a cash budget It informs
the management about the surplus or deficit periods of cash ie in which months the payments
will be in excess of receipts It helps in planning the investment of surplus cash in short-term
investment and to plan short-term credit in advance of deficit periods
bull COMPARISON WITH CASH BUDGET-
A cash budget is prepared at the commencement of the year whereas a cash flow Statement is
prepared at the end of the year A comparison between the two helps in ascertaining the extent
to which the financial resources of the firm have been generated and used according to the plan
Causes of variances between the figures of two statements can be analyzed and proper
corrective measures may be takes
bull STUDY OF THE TREND OF CASH RECEIPTS AND PAYMENTS-
A cash-flow statement reveals the speed at which the cash is being generated from debtors stock
and other current assets the speed at which the current liabilities are being paid It enables the
management to assess the true position of the cash in future
bull IT EXPLAINS THE DEVIATIONS OF CASH FROM EARNINGS-
A firm may earn huge profits yet it may have paucity of cash or when it suffered a loss it may
still have plenty of cash A cash flow statement explains the reasons for it
HELPFUL IN ASCERTAINING CASH-FLOW FROM VARIOUS
ACTIBITIES SEPARATELY-
A cash-flow statement aims at highlighting the cash flow from operating investing and
financing activities separately It includes how much cash has been generated or used in these
activities
bull HELPFUL IN MAKING DIVIDEND DECISIONS-
Dividend must be paid within 42 days of its declaration Hence the management takes the help of
cash-flow statement to ascertain the position of cash generated from operating activities which
can be used for payment of dividend
IMPORTANCE AND RELEVANCE OF CFS
The CFS has gained importance in view of the fact that there are many managerial Decisions
which are taken in the light of the cash availability or cash position of the firm
For example declaration of dividend by the company requires cash disbursement and
Therefore the Board of Directors must consider the cash position before proposing a dividend
The CFS also provides information for the short term financial planning and in particular the
short term cash needs of the firm
In view of increasing importance and relevance of the CFS the clause 32 of the Listing
agreement (between a Company and the Stock Exchange where the shares proposed to be listed)
has been amended by the SEBI As a result the listed companies in India are now required to
supply a copy of the CFS to each shareholder as a part of Annual Report As a result the listed
companies have started a practice of sending a CFS for which the BS has been prepared as
apart of the Annual Report of the company
DIFFRENCE BETWEEN CASH - FLOW STATEMENT AND
CASH BUDGET
There is not much difference between cash flow statement and a cash budget The
only difference is that a cash flow statement is prepared for a past period where as cash
budget is prepared for a future period Hence it is of limited use as far as the future
periods are concerned A cash budget is therefore prepared showing how much cash is
likely to be received and what will be the disbursements during a future period of time
Thus a cash budget indicates in which months there will be surplus cash and in which
moths there will be deficiency of cash resources The management can then take suitable
decision to invest the surplus cash or make arrangement for the deficiency of cash at the
required time
LIQUIDITY
It does not present true picture of the liquidity of the firm the liquidity does
not depend upon cash alone Liquidity also depends upon those assets
which can be converted into cash easily
bull Exclusion of these assets obstructs the true reporting of the ability of the firm to
meet its liabilities when they become due for payment
bull The possibilities of window - dressing is higher in case of cash position in
comparison to the working capital position of the firm
bull The cash balance can be easily maneuvered by postponing purchases and other
payments and by rapidly collecting cash from debtors before the balance sheet date
Hence a fund - flow statement presents a more realistic picture than a cash flow
statement
bull Cash flow statement ignores non- cash charges Hence the true position of the
enterprise cannot be judged by cash flow statement
bull It is prepared on cash basis and hence ignores one of the basic concept of accounting
namely accrual concept
PROCEDURE OF PREPARING CASH FLOW STATEMENT-
The institute of charted accountants of India has issued accounting standards (as)-3 revised for
preparing a cash flow statement This accounting standard has been made mandatory in respect
of accounting periods commencing on or after 1st April 2001 for certain enterprises These
enterprises are-
bull Enterprises whose equity or debt securities are listed on a recognized stock exchange in
India And enterprise that are in the process of issuing equity or debt securities that will
be listed on a recognized stock exchange in India
bull All other commercial industrial and business enterprises whose turnover for accounting
period Rs 50 crores
As such the cash flow statement has been prepared according to as -3 revised in this project
According to as-3 revised the cash flow statement summarizes the cash inflows and cash
outflows and the net changes (increase or decrease) in cash and cash equipment resulting from
operating investing and financing activities of a firm during a period The following terms are
used for preparing a cash flow statement
CASH-
It compares cash in hand and demands with banks
CASH EQUIVALENTS-
There are short - term highly liquid investments that are readily into known amounts of cash
and which present insignificant risk of changes in their values Normally an investment will be
termed as cash equivalent only if it has a short maturity period say three months or less from the
date of its acquisition Examples of cash equivalent are treasury bills commercial papers etc
Which are purchased with cash that is in excess of immediate needs investment in shares are
excluded from cash equivalents unless they are cash equivalent in reality For example the
preference shares of the company which are purchased shortly before their redemption date will
be included in cash equivalents provided there is only an insignificant risk of failure of the
company in repaying the amount at the date of the maturity
CLASSIFICATION OF CASH FLOW-
According to as -3 (revised) cash flow statement should be presented in a manner that it reports
inflows of cash by classifying them into three categories namely operating investing and
financing activities Classification of all activities into these activities on the cash and cash
equivalents of the enterprise such information will be helpful in evaluating the relationships
among these three activities are explained as below
CASH FLOW FROM OPERATING ACTIVITIES-
Operating activities are the main revenue generating activities of an enterprise As such they
include cash flows from those transactions and events which enter into the ascertainment of
net profit or loss of the enterprise Examples of cash flows arising operating activities are
bull Cash receipts from the sale of goods and rendering of services
bull Cash receipts from royalties fees commissions and other revenue
bull Cash payments to suppliers for goods and services
bull Cash payments to and on behalf of employees
bull Cash receipts and cash payments of an insurance enterprise for premiums and claims
annuities and other policy benefits
bull Cash receipts and payments relating to future contracts forward contracts option
contracts and swap contracts when the contracts are held for dealing or trade purpose and
bull Cash payments of refunds of income taxes unless they can be specifically identified with
financing and investing activities
CASH FLOW FROM INVESTING ACTIVITIES-
Investing activities include the purchase and sale of long term assets such as land building plant
and machinery etc not held for resale These activities also include the purchase and sale of such
investment which are not including in cash equipments Cash flow from investing activities
discloses the expenditures incurred for resources intended to generate future income and cash
flows
Examples cash flow arising from investing activities are
bull Cash payments to acquire fixed assets (including intangible)
bull Cash receipts from sale of fixed assets (including intangibles)
bull Cash payments to acquire shares warrants or debt instruments of other enterprises
(other than receipts for those instruments considered to be cash equivalents)
bull Cash receipts from sale of shares warrants or debt instruments of other enterprises (other
than receipts for those instruments considered to be cash equivalents)
bull Cash advances and loans made to third parties In case of financial enterprises these will
be treated as cash flow from operating activities
bull Cash receipts from the repayment of advances and loans made to third parties In case of
financial enterprises these will be treated as cash flow from operating activities
bull Cash receipts of insurance claim for property involved in accident and
bull Cash receipts of interest and dividend In case of financial enterprise these will be treated
cash flow from operating activities
CASH FLOW FROM FIANCING ACTIVITIES-
Financing activities are the activities that result in change in capital and borrowing of the
enterprise
Examples of cash flows arising from financing activities are
bull Cash receipts from issuing shares or other similar instruments
bull Cash receipts from issuing debentures loans bonds and other short term or long term
borrowing
bull Cash repayment of amounts borrowed buy back of equity shares redemption of
preference shares debentures loans bonds etc
bull Cash payment of interest and dividend
IMPORTANT NOTE
In case of financial enterprise such as bank or mutual fund company cash Outflow
and cash inflow arising from the purchase and sale of securities will Be treated as
flows from operating activities This is because purchase and sale of securities is a
part of operating activity in case of financial enterprise In addition interest paid
and interest received as well as dividends received will also be treated as cash flow
from operating activities in case of financial Enterprises
CASH FLOW STATEMENT
(DIRECT METHOD)
CASH FLOW FROM OPERATING ACTIVITIES
Cash receipts from costumers
Cash paid to suppliers and employers ()
Cash generated from operations
Income tax paid ()
Cash flows from extraordinary item
plusmn Extra ordinary items
Net cash from operating activities
CASH FLOW FROM INVESTING ACTIVITIES-
Purchase of fixed assets
Proceed from sale equipment ()
Interest received
Dividend received ()
Net cash from investing activities
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from insurance of share capital
Proceeds from long- term borrowings ()
Repayment of from long-term borrowings
Interest paid
Dividend paid ()
Net cash from financing activities
Net increase in cash and cash equivalent
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
SOME SPECIAL TERMS-
i) INTERSET AND DIVIDEND-
Cash inflow from interest and dividends and cash outflow on account of interest and
dividends should be disclosed separately Cash inflow arising from interest and dividends
received should be shown as cash flow from investing activities where as cash outflow
disclosed outflow on account of interest and dividend paid should be shown as cash flow
from financing activity
ii) TAXES ON INCOME-
Tax paid on income is a part of cash flow from operating activity Hence taxes paid are
shown as a deduction under cash flow from operating activity
iii) EXTRA ORDINARY ITEMS-
Cash flow relating to extra ordinary items such as bad debts recovered Claims received from
insurance companies winning of a lottery or a law etc Should be disclosed separately as
arising from operating investing or financing activities For example the amount received
for insurance company on account of loss of stock by fire Earthquake and floods etc Should
be reported as cash flow from operating activities
iv) SIGNIFICANT NON - CASH TRANSACTION-
There are some investing and financing activities which do not require the use of cash or
cash equivalents Such non cash activities should be excluded from the cash flow statement
Examples are the acquisition of assets by issue of debentures or shares conversion of
shares into debentures etc Such significant on non cash transaction should be disclosed
outside the cash flow statement
CASH FLOW STATEMENT
(INDIRECT METHOD)
CASH FLOW FROM OPERARATTNG ACTIVITIES
Net profit before taxation and extraordinary item
Adjustment for
Depreciation
Foreign exchange loss
Interest income
Dividend income
Interest expense
Operating profit before working capital changes
Increase in sundry debtors
Decrease in inventories
Decrease in sundry creditors
Cash generated from operations
Income tax paid ()
Cash flow before extraordinary item
plusmn Extra - ordinary items
Net cash from operating activities
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of fixed assets ()
Proceeds from sale of equipment
Interest received
Dividend received ()
Net cash from investing activities
CASH FLOW FROM FINANCING ACTIVITIES-
Proceeds from insurance of share capital
Proceeds from long - term borrowings
Repayments of from long - term borrowings ()
Interest paid ()
Dividend paid ()
Net cash from financing activities
Net increase in cash and cash equivalent
Cash and cash equivalents at beginning of period
CHANGES IN CASH FLOWS
Changes in cash flows can be treated to the following
1 Net profit will increase the cash flows these cash flows will be
increased further if there are any non-cash changes (such as depreciation
and amortization)
2 Any payment of dividends will decrease the cash flows as will the
repayment of debt an issue of share or debt will also increase the
cash flows
3 An increase in non-cash assets will decrease cash flows increase in
current assets and fixed assets will result in drain on cash flows
Thus a statement of changes in cash flows ie the cash flow statement
classifies all Changes into one of three categories - operating investing or
financing activities Therefore the preparation of a statement of changes in cash
flows requires classification of changes in liabilities shareholders equity and
non-cash assets into one of these categories although some items will not fit
easily onto one other
h equivalent at end of period
STEP- BY-STEP PROCEDURE TO PREPARE CFS
1 Calculate the net increase or decrease in cash and cash equivalents-
For this purpose the opening balance of total cash and cash equivalents is compared with the
closing balance of cash and equivalents
Increasedecrease in cash and equivalents
Opening balance Closing Balance
Cash in hand
Cash in bank
Short-term Investment
Total
The difference between the total of opening and closing balance will be increased or
Decreased in cash equivalents during the period It may be noted that if there are only one or
two of items of cash etc
2 Net Cash flaw from operating activities-
The term operating refers to the normal purchase of goods and services On the basis of the
information contained in the comparative BS s and the IS and the additional Information the
net cash flow generated or use by the operating activities may be ascertained The IS prepared
by the firm gives the net profit figure earned by the firm On actual basis ie all items in the
IS are incorporated on the basis of earnedaccrued even
3 If not resulting in cash movements-
So the profit or loss as by the IS may not result in increase or decrease in cash balance by the
SYNOPSIS
INTRODUCTION
ESCORTS PVT LTD is a private limited company not listed in a stock exchange of India
and employees 900 highly trained personnel Its manufacturing plants are strategically located
in close proximity to its customers at Faridabad (Haryana) Noida (UP)
OBJECTIVES OF THE STUDY
bull To find the movement of cash inflow and cash outflow
bull To make the comparison between cash inflow and
bull Cash outflow
bull To prepare the Cash Flow Statement
bull To analyze the Balance Sheet of the company in terms of Cash Flow Statement
bull To focus on various activities of the organization in terms of Operating
Financing Investment
SCOPE OF THE STUDY
Financial resources are the assets for the company and their productivity is key
factor for profitability It is necessary to know their problems their knowledge
skills abilities amp the measures that can be taken to reduce them By analyzing this
top management can build good relations with the employees
The whole study is to determine the competencies of different employees who are
working in ESCORTS PVT LTD By analyzing it the top management can
introduce the concept of competency mapping in the organization Through this
management can attempt to use more suitable strategies towards the human
resource development
The research is confined to elicit the existing gap between the standard skill
required to perform the job and the skill processed by the employees at ESCORTS
PVT LTD And to provide them suitable training program to over come those gaps
for the better utilization of human resources
RELEVANCE
The scope of the study was confined to the outside parties like creditors
shareholders government etc Who want to invest their money in the
company
The benefit of the report for the company is that through this report they can come
to know about the cash flow statements of the company
This study also unable the company that their cash is not utilizing in unnecessary
things
The benefit of the report for the researcher is that it has helped to get knowledge
about the cash inflow and cash
RESERRCH METHODOLOGY-
RESEARCH DESIGN
bull The study was conducted under well- structured approach
bull The project lasted for 4 weeks and the year 2009 ie from 08 July to 12
Aug2009
bull The questionnaire method amp personal interview method was used to collect
the primary data for the study
The secondary data is collected from Internet amp company training material and
many other company materials
SAMPLE DESIGN
The process of extracting a sample from a population is called sampling
procedure The selection of sampling procedure to conduct the research
depends upon the nature of the study and the objective to be accomplished
Judgment sampling technique is adopted to select the respondents in this
study The sample design included the various departments in the YAMAHA
MOTORS PVT LTD
Methodology of date collection
bull Conducting personal interview
bull Data collection from primary and secondary sources
bull Designing questionnaire
bull Selecting sample size from the sample frame for the survey
bull Questionnaire distribution
bull Analysis of collected data with the help of statistical tools
bull Interpretation of collected data
bull Stating the conclusion based on the entire study
Sampling Technique
The sampling technique used for this research is of non-probability and convenience
sampling
Sample Unit
Employees of the company
Sample Size
For this research study the sample size is 25 respondents
Sources of data
Primary data
Primary data is the data which is collected by the researcher for the first time
and which was not there The tools used to collect the data are-
1)Questionnaire method from the employers in different departments
2) Face to Face personal interactions
Secondary Data
The data already collected is called as secondary data The relevant information
for this study has been collected from secondary source such as
Books
Journal
Reports
Publication by the organizational circulation
Company records
Business bulletins
Internet
Secondary data is also collected from various of the internet and intranet Some
of the website trough which information was gathered was through
HYPOTHESIS
The report is analyzed under the presumption that cash flow position of
YAMAHA MOTORS PVTLTD It can be improved and made effective in
terms of cash flows
In testing the above hypothesis the following aspects will be considered
1 Balance sheet comparisons
2 Presentation of cash flow statement in terms of revised AS-3
LIMITATIONS
The study though conducted to the best of the ability suffers from some
certain limitations There are
The data is secondary one and as such its reliability may be
questioned upon
The time availability for the study is less and as such it hinders thee
progress of the study
Senior officials were rarely approachable
Websites were not giving comprehensive data
Not having face-to-face interaction to get more relevant
information
Analysis and interpretation of data was done on the assumption that
the respondentsrsquo information was online
Information collected was totally subjective
The interviews are done during office hours but could not be done
for the other employees of other
DATA ANALYSIS
ESCORTS PVT LTD
CASH FLOW STRATEMENT
Year Ended Year Ended
30092009 30092008
Rs Crores Rs
Crores
A Cash Flow from Operating Activities
Net profit before tax (1733) 3444
Adjustment for
Loss on sale Provision for diminution in value of Long Term
Investments amp loans to Group Companies 189 4018
Gain on sale of Long Term Investments (122) (9492)
Gain on sale of Asset (013) -
Depreciation 4497 3955
Misc Exp Assets Write off Provisions 808 750
Interest Expense 7222 7999
Dividend Income (002) (001)
Interest Income (2082) -
Operating Profit before working capital changes 8764 10673
Adjustments for
Trade and other Receivables (8817) (12035)
Inventories 1379 (4692)
Trade Payables 6705 19046
Miscellaneous Expenditure (750) (511)
(1483) 1808
Cash Generated from Operations 7281 12481
Direct Taxes (Paid)Refunds (1785) 3166
Net Cash Flow from operating activities 5496 15647
B Cash Flow from Investing Activities
Purchase of Fixed Assets (3095) (2794)
Proceeds from sale of Fixed Assets 086 177
Movement in Loans and Advances (1627) (1644)
Sale of Investments 3233 11452
Short Term Deposits with schedule Banks (231) (1048)
Interest Received 2070 -
Dividend Received 002 001
Net Cash Flow from Investing activities 438 6144
Proceeds from Share Capital amp Securities Premium 11444 -
Proceeds from Long Term Borrowings 8660 -
Less Repayment of Long Term Borrowings (054) (7896)
Proceeds (Repayment) from short term borrowings (net) (22726) -
Interest Paid (7740) (8223)
Net Cash used in financing activities (10416) (16119)
Net Increase(Decrease) in Cash and Cash equivalents (4482) 5672
Cash and Cash equivalents as at 01102008 10565 4893
Cash and Cash equivalents as at 30092009 6083 1056
ANALYSIS OF CASH FLOW
From the cash flow statements of the ESCORT PVTLTDIt can be analyzed
from the two years that the net cash balance of the company has increased
manifold in 30-09-2008 than the year 30-09-2009
The net profit in 30-09-2008 is higher than the 30-09-2009 but due to certain
changes there has been increase in the cash balance
The interest paid this year is ore of the last year which implies that thee
company has not repaid his borrowed capital due to which the interest has got
down
The depreciation has increased but it does not affect cash to an extent as it is a
non-cash item In the head of working capital there is drastic change in the cash
balance in the form of ldquoTrade and other Receivables which has affected the cash
balance
There is outflow of cash for receivables rather than the inflow in the last year
So the net effect is that the cash from operating activities has been decreased
two times from the last year
The company has no accumulated losses as at the end of the financial year ie
September 31 2008
Provision for taxation has been made in accordance with the requirement of AS-
22 issued by Institute of Charted Accountants of India
Pursuant to that current year deferred tax liability have been charged to profit amp
loss account
In opinion of the board of directors of thee company the current assets loans
and advances have a value on realization in the ordinary course of the business at
least equal to the amount stated in the balance sheet and provision for all
liabilities have been made
Balance of sundry debtors creditors loans and advances are subject to confirmation by
the concerned parties
METHOD OF ANALYSIS
1 Data analysis is done using the following statistical tools wherever required in
order to extract meaningful information from the collected data
o Simple percentage and averages
o Bar diagram
o Cone diagram
o Pie diagram
2 The collected data from the questionnaire has been put together in the form of
tables
3 Percentage has been calculated wherever necessary for generalization of the
data
4 Data analysis and interpretation has been done on the basis of primary and
secondary data
5 The findings researches have been recorded based on the analysis
6 The study conducted pertains only to YAMAHA MOTORS INDIA PVTLTD
All bank balances (debitcredit) have been confirmed by the concerned bank
Identified from the available information which has been relied upon by the auditors
The names of small-scale industrial units to whom outstanding for more than
thirty days within agreed terms
The company has 9996 of shareholders in its subsidiary company named as
ESCORTS PVT LTD As at 31-03-2008
So the net effect is that the net cash from investing activities has many more
times than the last year which is negative Now the company has repaid its long
term borrowing more than the last year which has decreased the cash balance by
the little amount
Balance with the schedule banks under the head current amp collection account
amounting to represent funds in transit lying with schedule banks pending
transfer against loan liabilities under the head cash credit amp bill discounting
LIQUIDITY RATIO
1 CURRENT RATIO
(Amount in Rs)
Current Ratio
Year Current Assets Current Liabilities Ratio
2003 58574151 7903952 7412004 69765346 31884616 2192005 72021081 16065621 4482006 91328208 47117199 1942007 115642068 30266661 382
Interpretation
As a rule the current ratio with 21 (or) more is considered as satisfactory
position of the firm
When compared with 2006 there is an increase in the provision for tax because
the debtors are raised and for that the provision is created The current liabilities
majorly included Lanco Group of company for consultancy additional services
The sundry debtors have increased due to the increase to corporate taxes
In the year 2006 the cash and bank balance is reduced because that is used for
payment of dividends In the year 2007 the loans and advances include majorly
the advances to employees and deposits to government The loans and advances
reduced because the employees set off their claims The other current assets
include the interest attained from the deposits The deposits reduced due to the
declaration of dividends So the other current assets decreased
The huge increase in sundry debtors resulted an increase in the ratio which is
above the benchmark level of 21 which shows the comfortable position of the
firm
GRAPHICAL REPRESENTATION
741
219
448
194
382
000
100
200
300
400
500
600
700
800
Ratio
2003 2004 2005 2006 2007
Years
CURRENT RATIO
Ratio
2 QUICK RATIO
(Amount
in Rs)
Quick Ratio
Year Quick Assets Current Liabilities Ratio
2003 58574151 7903952 741
2004 52470336 31884616 165
2005 69883268 16065620 435
2006 89433596 47117199 19
2007 115431868 30266661 381
Interpretation
Quick assets are those assets which can be converted into cash with in a short
period of time say to six months So here the sundry debtors which are with the
long period does not include in the quick assets
Compare with 2006 the Quick ratio is increased because the sundry debtors are
increased due to the increase in the corporate tax and for that the provision
created is also increased So the ratio is also increased with the 2006
GRAPHICAL REPRESENTATION
741
165
435
190
381
000
100
200
300
400
500
600
700
800
Ratio
2003 2004 2005 2006 2007
Years
QUICK RATIO
Ratios
3 ABOSULTE LIQUIDITY RATIO
(Amount
in Rs)
Absolute Cash Ratio
Year Absolute Liquid Assets Current Liabilities Ratio
2003 31004027 7903952 392
2004 10859778 31884616 034
2005 39466542 16065620 246
2006 53850852 47117199 114
2007 35649070 30266661 118
Interpretation
The current assets which are ready in the form of cash are considered as absolute
liquid assets Here the cash and bank balance and the interest on fixed assts are
absolute liquid assets
In the year 2006 the cash and bank balance is decreased due to decrease in the
deposits and the current liabilities are also reduced because of the payment of
dividend That causes a slight increase in the current yearrsquos ratio
GRAPHICAL REPRESENTATION
392
034
246
114 118
0
05
1
15
2
25
3
35
4
Ratios
2003 2004 2005 2006 2007
Years
ABSOLUTE CASH RATIO
Ratios
LEVERAGE RATIOS
4 PROPRIETORY RATIO
(Amount
in Rs)
Proprietory Ratio
Year Share Holders Funds Total Assets Ratio
2003 67679219 78572171 086
2004 53301834 88438107 06
2005 70231061 89158391 079
2006 56473652 106385201 053
2007 97060013 129805102 075
Interpretation
The proprietary ratio establishes the relationship between shareholders funds to
total assets It determines the long-term solvency of the firm This ratio indicates
the extent to which the assets of the company can be lost without affecting the
interest of the company
There is no increase in the capital from the year2004 The share holderrsquos funds
include capital and reserves and surplus The reserves and surplus is increased
due to the increase in balance in profit and loss account which is caused by the
increase of income from services
Total assets includes fixed and current assets The fixed assets are reduced
because of the depreciation and there are no major increments in the fixed assets
The current assets are increased compared with the year 2006 Total assets are
also increased than precious year which resulted an increase in the ratio than old
GRAPHICAL REPRESENTATION
086
060
079
053
075
000
010
020
030
040
050
060
070
080
090
Ratios
2003 2004 2005 2006 2007
Years
PROPRIETORY RATIO
Ratios
ACTIVITY RATIOS
5 WORKING CAPITAL TURNOVER RATIO
(Amount
in Rs)
Working Capital Turnover Ratio
Year Income From Services Working Capital Ratio
2003 36309834 50670199 0722004 53899084 37880730 1422005 72728759 55355460 1312006 55550649 44211009 1262007 96654902 85375407 113
Interpretation
Income from services is greatly increased due to the extra invoice for Operations
amp Maintenance fee and the working capital is also increased greater due to the
increase in from services because the huge increase in current assets
The income from services is raised and the current assets are also raised together
resulted in the decrease of the ratio of 2007 compared with 2006
GRAPHICAL REPRESENTATION
072
142 131126
113
000
020
040
060
080
100
120
140
160
Ratio
2003 2004 2005 2006 2007
Years
WORKING CAPITAL TURNOVER RATIO
Ratio
6 FIXED ASSETS TURNOVER RATIO
(Amount in Rs)
Fixed Assets Turnover Ratio
Year Income From Services Net Fixed Assets Ratio
2003 36309834 28834317 126
2004 53899084 29568279 182
2005 72728759 17137310 424
2006 55550649 15056993 369
2007 96654902 14163034 682
Interpretation
Fixed assets are used in the business for producing the goods to be sold This
ratio shows the firmrsquos ability in generating sales from all financial resources
committed to total assets The ratio indicates the account of one rupee
investment in fixed assets
The income from services is greaterly increased in the current year due to the
increase in the Operations amp Maintenance fee due to the increase in extra invoice
and the net fixed assets are reduced because of the increased charge of
depreciation Finally that effected a huge increase in the ratio compared with the
previous yearrsquos ratio
GRAPHICAL REPRSENTATION
126182
424 369
682
000
100
200
300
400
500
600
700
Ratios
2003 2004 2005 2006 2007
Years
FIXED ASSETS TURNOVER RATIO
Ratios
7 CAPITAL TURNOVER RATIO
(Amount
in Rs)
Capital Turnover Ratio
Year Income From Services Capital Employed Ratio
2003 36309834 37175892 0982004 53899084 53301834 1012005 72728759 70231061 1042006 55550649 56473652 0982007 96654902 97060013 100
Interpretation
This is another ratio to judge the efficiency and effectiveness of the company
like profitability ratio
The income from services is greaterly increased compared with the previous year
and the total capital employed includes capital and reserves amp surplus Due to
huge increase in the net profit the capital employed is also increased along with
income from services Both are effected in the increment of the ratio of current
year
GRAPHICAL REPRESENTATION
098
101
104
098
100
094095096097098099100101102103104
Ratios
2003 2004 2005 2006 2007
Years
CAPITAL TURNOVER RATIO
Ratios
8 CURRENT ASSETS TO FIXED ASSETS RATIO
(Amount
in Rs)
Current Assets To Fixed Assets Ratio
Year Current Assets Fixed Assets Ratio
2003 58524151 19998020 2932004 69765346 18672761 3742005 72021081 17137310 4202006 91328208 15056993 6072007 115642068 14163034 817
Interpretation
Current assets are increased due to the increase in the sundry debtors and the net
fixed assets of the firm are decreased due to the charge of depreciation and there
is no major increment in the fixed assets
The increment in current assets and the decrease in fixed assets resulted an
increase in the ratio compared with the previous year
GRAPHICAL REPRESENTATION
293374
420
607
817
000
100
200
300
400
500
600
700
800
900
Ratios
2003 2004 2005 2006 2007
Years
CURRENT ASSETS TO FIXED ASSETS RATIO
Ratios
PROFITABILITY RATIOS
GENERAL PROFITABILITY RATIOS
9 NET PROFIT RATIO
(Amount in Rs)
Net Profit Ratio
Year Net Profit After Tax Income from Services Ratio
2003 21123474 36039834 059
2004 16125942 53899084 030
2005 16929227 72728759 023
2006 18259580 55550649 033
2007 40586359 96654902 042
Interpretation
The net profit ratio is the overall measure of the firmrsquos ability to turn each rupee
of income from services in net profit If the net margin is inadequate the firm
will fail to achieve return on shareholderrsquos funds High net profit ratio will help
the firm service in the fall of income from services rise in cost of production or
declining demand
The net profit is increased because the income from services is increased The
increment resulted a slight increase in 2007 ratio compared with the year 2006
GRAPHICAL REPRESENTATION
059
030
023
033
042
000
010
020
030
040
050
060
Ratios
2003 2004 2005 2006 2007
Years
NET PROFIT RATIO
Ratios
10 OPERATING PROFIT
(Amount in Rs)
Operating Profit
Year Operating Profit Income From Services Ratio
2003 36094877 36309834 099
2004 27576814 53899084 051
2005 29540599 72728759 041
2006 31586718 55550649 057
2007 67192677 96654902 070
Interpretation
The operating profit ratio is used to measure the relationship between net profits
and sales of a firm Depending on the concept it will decide
The operating profit ratio is increased compared with the last year The earnings
are increased due to the increase in the income from services because of
Operations amp Maintenance fee So the ratio is increased slightly compared with
the previous year
GRAPHICAL REPRESENTATION
099
051
041
057
070
000
010
020
030
040
050060
070
080
090
100
Ratios
2003 2004 2005 2006 2007
Years
OPERATING PROFIT RATIO
Ratios
11 RETURN ON TOTAL ASSETS RATIO
(Amount in Rs)
Return on Total Assets Ratio
Year Net Profit After Tax Total Assets Ratio
2003 21123474 78572171 027
2004 16125942 88438107 018
2005 16929227 89158391 019
2006 18259580 106385201 017
2007 40586359 129805102 031
Interpretation
This is the ratio between net profit and total assets The ratio indicates the return
on total assets in the form of profits
The net profit is increased in the current year because of the increment in the
income from services due to the increase in Operations amp Maintenance fee The
fixed assets are reduced due to the charge of depreciation and no major
increments in fixed assets but the current assets are increased because of sundry
debtors and that effects an increase in the ratio compared with the last year ie
2006
GRAPHICAL REPRESENTATION
027
018 019017
031
000
005
010
015
020
025
030
035
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON TOTAL ASSETS
Ratios
12 RESERVES amp SURPLUS TO CAPITAL RATIO
(Amount in Rs)
Reserves amp Surplus To Capital Ratio
Year Reserves amp Surplus Capital Ratio
2003 65599299 2079920 31542004 34582554 18719280 1852005 51511781 18719280 2752006 37754372 18719280 2022007 78340733 18719280 419
Interpretation
The ratio is used to reveal the policy pursued by the company a very high ratio
indicates a conservative dividend policy and vice-versa Higher the ratio better
will be the position
The reserves amp surplus is decreased in the year 2006 due to the payment of
dividends and in the year 2007 the profit is increased But the capital is
remaining constant from the year 2004 So the increase in the reserves amp surplus
caused a greater increase in the current yearrsquos ratio compared with the older
GRAPHICAL REPRESENTATION
3154
185 275 202419
-
500
1000
1500
2000
2500
3000
3500
Ratios
2003 2004 2005 2006 2007
Years
RESERVES amp SRUPLUS TO CAPITAL RATIO
Ratios
OVERALL PROFITABILITY RATIOS
13 EARNINGS PER SHARE
(Amount in Rs)
Earnings Per Share
Year Net Profit After Tax No of Equity Shares Ratio
2003 21123474 207992 101562004 16125942 1871928 8612005 16929227 1871928 9042006 18259580 1871928 9752007 40586359 1871928 2168
Interpretation
Earnings per share ratio are used to find out the return that the shareholderrsquos earn
from their shares After charging depreciation and after payment of tax the
remaining amount will be distributed by all the shareholders
Net profit after tax is increased due to the huge increase in the income from
services That is the amount which is available to the shareholders to take There
are 1871928 shares of Rs10- each The share capital is constant from the year
2004 Due to the huge increase in net profit the earnings per share is greaterly
increased in 2007
GRAPHICAL REPRESENTATION
10156
861904 975
2168
000
2000
4000
6000
8000
10000
12000
Ratios
2003 2004 2005 2006 2007
Years
EARNINGS PER SHARE
Ratios
14 PRICE EARNINGS (PE) RATIO
(Amount in Rs)
Price Earning (PE) Ratio
Year Market Price Per Share Earnings Per Share Ratio
2003 3254 10156 0322004 2847 861 3302005 3752 904 4152006 3017 975 3092007 5185 2168 239
Interpretation
The ratio is calculated to make an estimate of application in the value of share of
a company
The market price per share is increased due to the increase in the reserves
amp surplus The earnings per share are also increased greaterly compared
with the last year because of increase in the net profit So the ratio is
decreased compared with the previous year
GRAPHICAL REPRESENTATION
032
330
415
309
239
000
050
100
150
200
250
300
350
400
450
Ratios
2003 2004 2005 2006 2007
Years
PE RATIO
Ratios
15 RETURN ON INVESTMENT
(Amount in Rs)
Return on Investment
Year Net Profit After Tax Share Holders Fund Ratio
2003 21123474 67679219 031
2004 16125942 53301834 03
2005 16929227 70231061 024
2006 18259580 56473652 032
2007 40586359 97060013 042
Interpretation
This is the ratio between net profits and shareholders funds The ratio is
generally calculated as percentage multiplying with 100
The net profit is increased due to the increase in the income from services ant
the shareholders funds are increased because of reserve amp surplus So the ratio
is increased in the current year
GRAPHICAL REPRESENTATION
031 030
024
032
042
000
005
010
015
020
025
030
035
040
045
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON INVESTMENT RATIO
RatioS
DATA COLLECTION
The data can be of two types
Primary Data
Secondary Data
Primary Data
Primary data are those data which is originally collected afresh
Secondary Data
Secondary data are those data which are already collected and stored and which has
been passed through statistical research
In this project Secondary data has been collected from following sources-
Annual report
Books
MIS
Other material and report published by company There are two methods to prepare
the Cash flow Statement
ndirect Method
I
The indirect method (or reconciliation method) starts with net income and converts it
to net cash flow from operating activities In other words the indirect method adjusts
net income for items that affected reported net income but did not affect cash To
compute net cash flow from operating activities non-cash charges in the income
statement are added ack to net income and non-cash credits are deducted
b
Direct Method
Under the direct method the statement of cash flows reports net cash flow from
operating activities as major classes of operating cash receipts (eg cash collected from
customers and cash received from interest and dividends) and cash disbursements (eg
cash paid to suppliers for goods to employees for services to creditors for interest and
to government authorities for taxes)
INDIRECT VERSUS DIRECT METHOD
The most contentious decision that the FASB faced in issuing Statement No 95 was
choosing between the direct method and the indirect method of determining net cash
flow from operating activities Companies lobbied against the direct method urging
adoption of the indirect method Commercial lending officers expressed a strong
preference to the FASB hat the direct method be required
tCF-Page 3 of 5
In Favor of the Direct Method
The principal advantage of the direct method is that it shows operating cash receipts and
payments That is it is more consistent with the objective of a statement of cash flows to
provide information about cash receipts and cash payments than the in-direct method
which does not report operating cash receipts and payments
Supporters of the direct method contend that knowledge of the specific sources of
operating cash receipts and the purposes for which operating cash payments were made
in past periods is useful in estimating future operating cash flows Furthermore in-
formation about amounts of major classes of operating cash receipts and payments is
more useful than information only about their arithmetic sum (the net cash flow from
operating activities) Such information is more revealing of an enterprises ability (1) to
generate sufficient cash from operating activities to pay its debts (2) to reinvest in its
operations and (3) to make distributions to its owners
Many corporate providers of financial statements say that they do not currently collect
information in a manner that allows them to determine amounts such as cash received
from customers or cash paid to suppliers directly from their accounting systems But
supporters of the direct method contend that the incremental cost of assimilating such
operating cash receipts and payments data is not significant
In Favor of the Indirect Method
The principal advantage of the indirect method is that it focuses on the differences
between net income and net cash flow from operating activities That is it provides a
useful link between the statement of cash flows and the income statement and balance
sheet
Many providers of financial statements contend that it is less costly to adjust net income
to net cash flow from operating activities (indirect) than it is to report gross operating
cash receipts and payments (direct) Supporters of the indirect method also state that the
direct method which effectively reports income statement information on a cash rather
than an accrual basis may erroneously suggest that net cash flow from operating
activities is as good as or better than net income as a measure of performance
Special Rules Applying to Direct and Indirect Methods
Companies that use the direct method are required at a
minimum to report separately the following classes of
operating cash receipts and payments
Receipts
1048713 Cash collected from customers (including lessees licensees etc)
1048713 Interest and dividends received
1048713 Other operating cash receipts if any
Payments
1048713 Cash paid to employees and suppliers of goods or services (including
suppliers of
insurance advertising etc)
1048713 Interest paid
1048713 Income taxes paid
1048713 Other operating cash payments if any
Companies using the indirect method are required to disclose separately changes in
inventory receivables and payables to reconcile net income to net cash flow from
operating activities In addition interest paid (net of amount capitalized) and income
taxes paid must be disclosed elsewhere in the financial statements or accompanying
notes
The FASB requires these separate and additional disclosures so that users
may approximate the direct method Also an acceptable alternative presentation
of the in-direct method is to report net cash flow from operating activities as a
single line item in the statement of cash flows and to present the reconciliation
details elsewhere in the financial statements
FINDING OF SUDY
According to cash flow statement of the company The finding of the study are as
follows-
The company has not taken any loans secured or unsecured from companies
firms or other parties
The company has not accepted any deposit from the public during the year
The company is not a sick industrial company
The company has not granted any loan secured or unsecured to company firms
or other parties
The company has paid the entire long term and short term borrowing during the
year
The company has buy back the companyrsquos own share this year
The interest paid in 2008 is more than the
There has been a significant decline in volume over the years from 2001-02
to 2005-06 as can be seen in the graph below
Table 43
The Net sales of Tractor has increased considerably from 2004-05 to 2007-08
This can be mainly attributed to changes in Variable and material costs and in
the price
The Net sale of Tractor has increased considerably from 2004-05 to 2007-08
that is an decrease of Rs7216 per tractor This can be mainly attributed to
changes in
Variable and material costs and in the prices
RECOMMENDATIONS
According to cash flow statement of the company The suggestions of the study
are as follows-
The time durations for training program have to increase
Buy regular review and consultations develop a career progression
which is sensitive to performance and ability
Create an environment where by people are trend developed to enable
The to take advantages of opportunities that arise
The jab can be redesigned where the work man stay in what is normally
the same job but has elements of it changed
The principle amount must be paid in time which can be reducing the
interest the out flow
The purchase of the fixed asset must be made only when there is extreme
requirement
In order to avoid taxes the company should go for more investment
The companyrsquos borrowings should go for more investment
o The company should try to reduce the depreciations as maximum
as possible
CONCLUSION
The study on competency level of employees at ESCORTS PVTLTD gave an
insight about the acceptance of competency mapping by employees
The employees at Ymi welcome the introduction of competency mapping in their
organization as they felt it was very much essential in enhancing their skills and
organizational development
The organization has provided the recourses guidance and support to facilitate the
introduction of competency level easily and develop the employees in such a way
that they can face any kind of challenge
However the level of competency in employees is found to be satisfactory
Providing proper training education and guidance to the employees can enhance
the level
This study was mainly carried out to find out whether thee competency mapping
being followed by the company is effective till date If the competency mapping
and fitment to the organization
By looking at the graphs and tables it is quite that the employees still are not up to
the level of competent pool they still have to be trained and made competent in
order to fill the gap As the organization has just applied the mapping it has to see
to that it meets all the requirements for competency mapping
Therefore the graphs make it quite clear that the potential of the employees is not
up to the mark and ie they are not competent enough to meet the competency-
mapping requirement Hence by further training and counseling this gap can be
closed
This report includes the training requirements of employees and it highlights skills
possessed by each employee and skill required All employees get training so that
skill can be improved and maintain balance between standard performance with
their actual performance to avoid gap
APPENDIX
QUESTIONNAIRE
Consumer Survey
Name _____________________________
Age _____________________________
Sex
Male
Female
Occupation
Businessman
Service man
Professional
Others
Monthly income brackets
Below 15000
15000- 20000
20000-30000
30000 and above
of your savings _________
Do you invest
Yes
No
If yes then where do you invest your money
Bank
Insurance
funds
Others
Why do you made that statement
Return
Risk hedging
Tax benefits
Other reasons (specify) _______
Who influence your cash decision
Relatives and friends
Family members
Advisors experts
You yourself
If no then why
Do not know where to invest
Satisfied with your current investment return
Donrsquot want take risk
Other reasons
__________________________________________________________________
___________________
Do you know about CF statement
Yes
No
If yes then from where you have come to know about an cash statement
Advertisements on newspapers
Friends and relative
Agents experts
Other source
What do you think about cash statement
It means investing only in share market
Constant watch must be kept always
Return is not satisfactory
Other perception
__________________________________________________
Can you recall any cash flow of company
___________________________
Would you want to made CF of an org
Yes
No
If yes then why
_______________________________________________________
If no then why
_______________________________________________________
BIBLIOGRAPHY
List of Books
1 PANDEY IM - FINANCIAL MANAGEMANT
2 KHAN MY AND JAIN PK -FINANCIAL MANAGEMANT
3 SMITH KV ndash MANAGEMANT OF WORKING CAPITAL
3 COMPANY RECORDS
4 JOURNAL
5 REPORTS
WEBLIOGRAPHY
1 wwwescortspvtltdcom
2 wwwgooglecom
to a level of 62000tractors
Third phase of development (1980-86) The buoyancy in the tractor market experienced in the late seventies continued tell 1981-82 when 78000
tractors were sold The encouraging trend led to the setting up of more for the manufacture of tractors
during 1981-86 These units were
NAME COLLABORATION YEAR OF
COMMENCEMENT
MS AUTO TRACTORS
LTD
UK 1981
MS PRATAP STEEL
ROLLING MILL LTD
INDIGENOUS 1983
MS VST TRACTORS
LTD
JAPAN 1986
However the sale of tractors plummeted to a low level of 66000 tractors in the year
1982-83 in the wake of severe credit squeeze imposed by reserve bank of India
The demand for tractors again picked up when the credit squeeze was eased and a sale
of 80000units was recorded in the year 1984-85 for next year Tractor industry stagnated
causing closure of five manufacturing units as detailed below
NAME YEAR OF CLOSURE
PINE TRACTORS LTD 1983
HARSHA TRACTORS LTD 1987
AUTO TRACTORS LTD 1987
KISLOSKAR TRACTOR LTD 1991
PRALAP STEEL ROLLING MILLS
(HARYANA TRACTORS LTD)
1996
Fourth phase of development( 1987 onwards)
In the year 1987-88 the country saw a severe drought situation This was a difficult
period and it widely anticipated that crop yield would be severely affected Under such a
situation it was necessary to have provisions for supply of power to perform farm
operation at proper time in order to fully exploit the limited moisture content left in soil
The versatility in the tractor became evident as this vehicle was used for pumping out
underground water in this background tractor industry showed a remarkable growth
during this period and all time high sale of 90000 tractors was recorded in the drought
year (1987-88)Fourth phase of development
The growth trend appears to be continuing with relaxation of tractor financing norms
except for a 2 year slack period due to general economic slowdown and political
turmoil In fiscal 1997-98 tractors sales refaced an all time high record of 250000This
impressive growth has influenced 3 more players as listed below to enter the market
NAME COLLABORATION YEAR OF
COMMENCEMENT
INTERNATIONAL
TRACTORS LTD
INDIGENOUS 1997
BAJAJ TEMPO LTD INDIGENOUS 1997
NEW HALLAND
TRACTORS (INDIA)
PVT LTD
ITALY 1998
JOHN DHEER
TRACTORLTD
POLAND 2000
HISTORICAL BACKGROUND OF ESCORTS GROUP
Escorts came into being a vision that led two brothers Yudi Nanda and Hari Nanda to
branch out their familyrsquos prospering transport s business and institute ventures that were
to become the foundations of escorts Ltd Escorts Agents Limited was born at Lahore on
17th October 1944 with Yudi Nanda as Managing Director and Hari Nanda as Chairman
After the owing to opportunity lying in the Indian village Escorts (Agricultural
Machinery) Ltd was launched in 1948 with Yudi Nanda as Director Tragically Yudi
Nanda died in an accident in 1952 Then Escorts agent Ltd And Escorts (Agricultural
Machine) Ltd Was merged in 1953 to create single Escorts agents Pvt Ltd
SOME MILESTONES
1948 Pioneered farm mechanization in the country by launching Escorts Agricultural Machines Ltd
With a franchise from a US based MINNEAPOLIS MOLINE WISCONCIN for marketing
tractors implements engines and other equipments
1958 Started importing MF tractor from Yugoslavia for marketing the same in India
1960 A manufacturing plant was set up at Faridabad
1965 Got industrial license to manufacture URSUS ESCORT tractors
169
1969 Escorts signed a contract with FORD MOTOR COMPANY to manufacture Ford 3000 model
tractors Escorts Institute of Farm Mechanization (EIFM) was established at Bangalore This
training Institute is one of its kind
1971 1st February the first tractor FORD 3000 rolled out of the factory The same year the turnover
touched the Rs53 million mark
1973 Escorts Tractors Limited (ETL) declared a healthy Profit Before Tax of Rs4725 million
1974 Export of 400 tractors to Afghanistan - perhaps the worlds largest ever airlift of such
equipment
1975 Turnover crossed the Rs 200 million mark for ETL Profit After Tax Rs 87 million Maiden
dividend of 10 declared
1976
1976 FORD 3600 advancement in Farm Mechanization was launched with fanfare to a
tremendous reception Trial production of in-plant manufacturing of engine parts (Block amp
Head)
1977
1977 Escorts Scientific Research Centre marked its beginning at Faridabad by developing its own
Engines for E-27 and E-37 Due to constant technology absorption indigenization level
touched 72 for FORD tractors which was a result of relentless effort in that direction
1979 Turnover crossed the Rs 50 crores mark In plant facility for machining centre housing and
case transmission on built-in line concept installed
1983 Escorts Tractors Limited (ETL) established a state-of-the-art research and development centre
to spearhead newer breakthroughs in Farm Mechanization and to maintain industry
leadership Line concept introduced for engine block machining
1984 75000th tractor rolled out A great occasion for the large family that worked for ETL Newer
challenges and frontiers were set
1985 In keeping with the stupendous financial success Escorts Tractors Limited (ETL) offered its
first Bonus Issue (11)
1987 50hp FORD 3610 was launched another leap for the Indian Farm Mechanization Industry the
farmers and the people of the land
1988
1988 ETLrsquos annualized turnover crossed Rs 100 crores Dividend 45 for 15 months
1989 A MOU with CLAAS was signed for manufacturing amp
1990-
91
First Public Issue (Februaryrsquo91) over-subscribed four times Shares listed on Delhi and Bombay
Stock Exchanges
1991-
92
The Crop Tiger range of Combine Harvesters was launched by Escorts Claas Ltd
1993 FORD 3620 tractor launched
1996 Disengagement of joint venture collaboration with New Holland and launch of FARMTRAC
Tractor
1997 A Joint Venture with Italian company CARRARO was finalized to establish a company in India
for manufacturing and marketing of transmission and axles
COLLABORATIONS
Collaboration with international Organization of technological excellence constant
research to adopt the emerging technology to specify requirement of the market and
belief in the philosophy industrial interdependence have made Escorts today one of the
leading trend steers in Indiarsquos New Industrial Culture Escorts have merged as fraternity
of above 50000 shareholders 22000 employees 4000 ancillary suppliers and 1 6000
dealers and stockiest all engaged in a large scale investment and sustained efforts to
meet the ever widening market horizons of technological competence appropriate to
Indiarsquos unique changing needs
Escorts believe in incorporating the finest existing technology to meet Indian consumers
demands by collaborating with the internationally renowned companies prominent
among these are
IN GERMANY
GOETZE AG Piston rings and cylinder liners
MAHLE GmbH Piston
CLASS OHG Harvesters Combines
KNORR BREMSE AG Railway Brake System
AUGUST BILSTEIN GmbH Absorbers Hydraulic products
Pressure and temperature switches
IN JAPAN
KAYABA INDUSTRY CO LTD Telescopic Front Forks Car
MIKUNI SHOKO CO Carburetors for BI-Wheelers
IN UK
JCBAMFORD EXCAVATORS JCB Excavators loaders Front end
Loaders Telescopic handlers
IN USA
HUGHESNETWORKS SYSTEMS AB Road Construction Machinery
Vibratory Road Rollers
OFFICIAL ADDRESS OF ESCORTS
Registered Office Corporate
Secretariat amp Law
Escorts Ltd
11 Scindia House
Connaught Circus
New Delhi-110 001
Tel No 011-23310145
Fax No 011-23311715
Escorts Ltd
155 Mathura Road
Faridabad - 121 003
Tel No ( 0129 ) 2250222
Fax ( 0129 ) 2250060
Email Address corpsectndbvsnlnetin
Web Site wwwescortsgroupcom
LEADERSHIP TEAM
Mr Rajan Nanda
Chairman
Mr Nikhil Nanda
Joint Managing Director
Mr Rohtash Mal
Executive Director and Chief Executive Officer - Agri Machinery Group
Mr Manoj Jha
Executive Vice President of Engineering Division
Mr Kamal Bali
CEO ndash Escorts Construction Equipment Limited (ECEL)
Mr GB Mathur
Vice President - Law amp Company Secretary
Mr Rakesh Kumar Budhiraja
Group Chief Financial Officer
Mr Partha Dasgupta
Group Vice President Human Resources and Employee Relations
LEVELS OF MANAGEMENT
MANAGEMENT
TOP
MANAGEMENT
SENIOR
MANAGEMENT
MIDDLE
MANAGEMENT
JUNIOR
MANAGEMENT
MANAGING
DIRECTOR amp
CEO(G-11)
CHIEF GENERAL
MANGER(G-8)
CHIEF
MANAGER
(G-5)
ASSISTANT
MANAGER(G-2)
VICE PRESIDENT
(G-10)
GENERAL
MANAGER(G-7)
SENIOR
MANAGER(G-4)
EXECUTIVE(G-
1)
ASSOCIATE
VICE PRESIDENT
(G-9)
DEPUTY
GENERAL
MANAGER(G-6)
MANAGER(G-3)
MISSION
WE WILL ACHIEVE LEADERSHIP IN MARKET SHARE amp PROFITABILITY IN
THE DOMESTIC TRACTOR MARKET BY THE YEAR 2004-2006 AND SHALL BE
THE WORLSrsquoS LARGEST SUPPLIER OF SUB 100 HP TRACTORS WE SHALL
PROACTIVELY CONTRIBUTE TO THE PROSPERITY OF THE RURAL
ECONOMY BY DEFINING A LARGER ROLE FOR OURSELVES IN THE FOOD
AND AGRICULTURE SECTOR
THE VISION
WE SHALL STRIVE TO BE THE NUMERO UNO IN THE INDIAN TRACTOR
INDUSTRY AND TOP FIVE TRACTOR MANUFACTURERS IN THE WORLD
WE SHALL CONTINUOUSLY STRIVE TO MEET THE EVER RISING
EXPECTATIONS OF OUR VALUED CUSTOMERS AT THE LOWEST
INTERNAL COST
WE SHALL AIM TO OFFER THE FARMING COMMUNITY A RANGE OF
INNOVATIVE PRODUCTS AND SERVICES WHICH SHALL ENABLE THEM
TO IMPROVE THEIR PRODUCTIVITY AND COMPETITIVNESS
WE SHALL ACHIEVE A TURNOVER OF RS 2 BILLION BY THE YEAR
2006TRANSCENDING NATIONAL BOUNDARIES WE SHALL STRIVE TO
ATTAIN EXPORTS OF ONE TENTH OF OUR TOTAL TRACTOR PRODUCTION
BY THE YEAR 2
REVIEW OF LITERATURE
INTRODUCTION
MEANING OF FINANCIAL STATEMENTS
The financial statements are nothing but the financial information presented in concise and
capsule form and are the financial information is the information relating to the financial
position of any firm The firm prepares the financial statements
bull To communicate with different parties about the financial position of the firm
(Shareholders creditors banks financial institution financial analysts investors
etc And
bull To analyze the operations and performance of the firm for the further
planning
The basic source which provides the financial information is the Annual report of the
company which is presented by the company to its shareholders at the Annual General
Meeting
Though the presentation of annual report is a statutory requirement under the
Companies Act 1956 however it is also a medium of communication with the present as well
as prospective investors and creditors of the company
Clause 43 A of the Listing Agreement (with the stock exchange) requires every
listed company to publish unaudited quarterly results But it does not mean the non-corporate
firms do not prepare the financial statements Every firm big or small prepare the following
financial statements
The Balance Sheet (BS)
1 The Income Statement (IS)
Two other key financial statements which are usually prepared by corporate firms are
1 Statement of appropriation of profit and
2 Statement of Change in financial position
ANALYSIS OF FINANCIAL STATEMENTS (AFS)
Analysis of financial statements refers to the process of the critical examination of the
financial information contained in the financial statements in order to understand and
make decisions regarding the operations of the firm The AFS is basically a study of the
relationship among various financial fact and figures as given in a set of financial
statements AFS is the process of establishment and identifying the financial weakness
and strength of the firm It is indicative of two aspects of a firm ie the profitability
and the financial position
OBJECTIVES OF AFS
The objectives of the AFS is to understand the information contained in financial
statements with a view to know the weakness and strength of the firm and to make a
forecast about the future prospects of the firm and thereby enabling the financial
analyst to take different decisions regarding the operation of the firm The objectives
are as follows
bull To assess the present profitability and operating efficiency of the fir
COMMON-SIZE STATEMENTS (CSS)
The CSS represents the relationship of different items of financial statements with some
Common items by expressing each item as a percentage of the common item In common size
Balance Sheet each item of the balance sheet is stated as a percentage of the total balance
sheet The percentages for different items are computed by dividing the absolute amount of
that item by the Common Base and then multiply by 100 The percentage so calculated can
be easily compared with the corresponding percentage in some other period Thus the CSS is
useful not only in intra-firm comparison for the same year or free several years
TREND PERCENTAGE ANALYSYS(TPA)
The TPA is a technique of studying several financial statements over a series of years In
TPA the trend percentages are calculated for each item by taking the figure of that item for
some base year as 100 So the trend percentage is the percentage relationship which
Each item of different years bears to the same item in the base year Any year may be Taken
as the base year but generally the starting initial year is taken as the base year So each
item for base year is taken as 100 and then the same item for other years is Expressed as a
percentage of the base year
RATIO ANALYSIS (RA)
The RA has emerged as the principle technique of the AFS A ratio is a relationship
Expressed in mathematical terms between two individual or groups of figures connected with
other in some logical manner The RA is based in the premise that a single accounting figure
by itself may not communicate any meaningful information but when expressed as a relative
to some other figure it may definitely give some significant information The relationship
between two or more accounting figuresgroups is called a Financial Ratio
A financial ratio helps to summarize a large mass of financial data into a concise form
and to make meaningful interpretations and conclusions about the performance of a firm
For example a firm has net sales Rs 5 00000
Gross Profit Rs 100000
Ratio of Gross Profit to net sales is 20
ie (Rsl 00000 Rs5 00000)
Forms of Ratios
Since a ratio is a mathematical relationship between two or more variables accounting
figures such relationship can be expressed in different ways as follows
bull As a Pure Ratio
bull As a Rate of Times
bull As a Percentage
Ratio can be classified into
bull The Liquidity Ratio
bull The Activity Ratio
bull The Leverage Ratio
bull The Profitability Ratio
STATEMENT OF CHANGES IN FINANCIAL POSITION
(SCFP)
Since the BS amp IS of a firm are two basic depicting the financial position of a firm at the end
of the year These two financial statements are called the traditional statements Both these
statements fail to throw light on changes in assets liabilities and shareholders wealth during
this year
BS deals with the financial position gives only the static view of the year- end financial
position and fails to indicate the movement and causes in assets and liabilities during the
year Similarly IS show the profit or loss resulting out of the operations of the firm during
the year This profit or loss in fact to ascertain the sufficiency of resources to declare the
dividend etc thus there is a need to prepare another statement (together with the BS amp IS)
which may identify the changes in assets liabilities and the shareholders funds over a given
period
The SCFP is essentially an explanation of the changes in financial position of a Firm
occasioned by the firm in between two successive BSs The SCFP draws basic Information
from the BS and IS helps in understanding the change in assets liabilities and shareholders
worth The SCFP deals with the flow of funds during the year ie the funds coming in and
going out of the firm It summarizes the sources from where the funds might have been
arranged procured by the firm and the uses for which the funs might have been used by
the firm during the year
The SCFP can be prepared as follows
bull SCFP (Cash Basis) also known as a Cash F low Statement
bull SCFP (Net Working Capital Basis) Fund Flow Statement
SCFP (WORKING CAPITAL BASIS)
FUND FLOW STATEMENT
The FFS reports the flows of funds through the firm during the year ie it shows the
Sources and uses of working capital between two balance sheet dates The FFS
attempts to explain the changes in financial position from one BS to the subsequent BS
in terms of the change in the funds or the working capital position of the firm
The term Working capital (WC) is generally defined as the excess of total
current assets over the total current liabilities The current Assets (CA) of a firm may
include cash in hand and at bank stock debtors bills advances etc and the Current
Liabilities (CL) includes creditors bills payable outstanding expenses provision for
tax short term liabilities etc the term WC is a single figure representing the net effect
of a transaction is to increase or decrease the Working Capital by affecting any of the
elements of Current Assets or Current Liabilities Therefore the FFS in its standard
form incorporates only those transactions which affect the Working Capital i e those
transactions where in only one of the affected accounted is a current account
Now a flow of working capital arises when one of the affected accounts is a current
account From the point of view of current account the effected on working capital
can examined in the light of the definitions of the term working capital ie the excess
of current assets over current liabilities ie
Impliedly change in any of the CA or CL will affect the WC Simple observation
equation tells that
bull Increase in any of the CA or decrease in any of the CLs will result in increase
in the WC
bull Decrease in any of the CA or increase in any of the CLs will result in decrease
in the WC
To find out the relative importance of different components of the financial position
of the firm
bull To identify the reasons for change in the profitability financial position of the
firm and
bull To assess the short term as well as the long term liquidity position of the
firm
TECHNIQUES TOOLS OF THE AFS
AFS can be undertaken by different persons and for different purposes therefore the
methodology adopted for the AFS may be carrying from one situation to another However
the following are some of the common techniques of the AFS
bull Comparative financial statements
bull Common-size financial statements
bull Trend percentage analysis and
bull Ratio Analysis
COMPARATIVE FINANCIAL STATEMENTS
In CFS two or more BS andor the IS of a firm are presented simultaneously in columnar
form The Financial data for two or more tears are placed and presented in adjacent columns
and thereby the financial data is provided at times perspective in order to facilitate periodic
comparison In CFS the BS and the IS for number of years are presented in condensed
form for year to year comparison and to exhibit the magnitude and direction of changes
The CFS helps a financial analyst of the firm and in establishing operating and
positional trend of the firm The CFS may be prepared to show
1 The absolute amount of different items in monetary terms
2 The amount of periodic changes in monetary terms
1 The percentages of periodic changes to reveal the proportionate changes
The CFS can be prepared for both the BS and the IS
CORE COMPETENCE OF ESCORTS
Customer 1
We put customers first in everything we do We take decisions keeping the customer in
mind
Challenging Spirit
We strive for excellence in everything we do and in the quality of goods amp services we
provide We work hard to achieve what we commit amp achieve results faster than our
competitors and we never give up
Team-work
We work cohesively with our colleagues as a multi-cultural team built on trust respect
understanding amp mutual co-operation Everyones contribution is equally important for
our success
Frank amp Fair Organization
We are honest sincere open minded fair amp transparent in our dealings We actively
listen to others and participate in healthy amp frank discussions to achieve the
organizations
A firm undertakes numerous during a year and most of these transactions during a year and
most of these transactions may affect one or the other current account ie most of these
transactions May results in the flow of the WC Neither is it necessary nor practical to
identify the effect of each and every transaction on the WC These transactions instead are
considered and analyzed in a collective form and then their effect on the WC is identified
SCFP (CASH BASIS) OR
THE CASH FLOW STATEMENT
The CFS attempts to analyze the transactions of the firm in terms of cash ie the transactions
generating cash and using cash The focus in the CFS is on cash rather than on WC The
sources of cash may be the cash profits earned by the firm issue of capital for cash issue of
other securities for cash borrowings sale of assets investment redemption of debenture or
preference share repayment of loan payment of tax dividend distribution etc Thus the
CFS summarizes the cash inflows and outflows
An analysis of cash flows is useful for short-run planning A firm needs sufficient cash to
debts maturing in the near future to pay interest and other expenses and to pay dividends to
shareholders The firm can make projections of cash flows and outflows for the near future to
determine the availability of cash This cash balance can be matched with the firms need for
cash during the period and accordingly arrangements can be made the deficit or invest the
surplus cash temporarily A historical analysis of cash flows provides insight to prepare
reliable cash flow projections for the immediate future
A statement of changes in financial position on cash basis commonly known as cash flow
statement summarizes the causes of changes in cash position between dates of two balance
sheets It indicates the sources amp uses of cash The cash flow statement is similar to the fund
flow statement except that it focuses attentions on cash instead of working capital (funds)
Thus this statement analyses change in non-current accounts as well as current accounts
(other than cash) to determine the flow of cash
The CFS is based on the concept on the WC Where as the CFS is based in cash which is only
the element of WC Thus the CFS provides details of cash movements whereas the FFS
provides the details of funds movements
The CFS considers only the actual movement of cash whereas the FFS considers the
movements of the funds as defined in terms of net working capital
CASH-FLOW STATEMENT
A cash-flow statement is a statement showing inflows (receipts) and outflows (payments) of
cash during a particular period In other words it is a summary of sources and applications of
Cash during a particular span of time It analyses the reason for changes in balance of cash
between the two balance sheet dates The term Cash here stands for cash and cash
equivalents
A cash-flow statement includes only those items which affect cash As such the cash-flow
statement is called a statement of changes in financial position - cash basis
A cash - flow statement can be for the past or can be projected for a future period
OBJECTS OR USES OF CASH-FLOW STATEMENT
The main objectives behind preparing a cash-flow statement can be laid down as under-
bull USEFUL FOR SHORT-TERM FINANCIAL PLANNING-
A cash-flow statement provides information for planning the short-term financial needs of the
firm Since it provides information regarding the sources and utilization of cash during a period
it become easier for the management to assess whether it will have Adequate cash to meet day-
to-day expenses and pay the long - term loans and interest Thereon and whether it has enough
cash to pay for the purchase of fixed assets or not
USEFUL FOR PREARING THE CASH BUDGET-
A cash-flow statement prepared for the future period is helpful in preparing a cash budget It
informs the management about the future period is helpful in preparing a cash budget It informs
the management about the surplus or deficit periods of cash ie in which months the payments
will be in excess of receipts It helps in planning the investment of surplus cash in short-term
investment and to plan short-term credit in advance of deficit periods
bull COMPARISON WITH CASH BUDGET-
A cash budget is prepared at the commencement of the year whereas a cash flow Statement is
prepared at the end of the year A comparison between the two helps in ascertaining the extent
to which the financial resources of the firm have been generated and used according to the plan
Causes of variances between the figures of two statements can be analyzed and proper
corrective measures may be takes
bull STUDY OF THE TREND OF CASH RECEIPTS AND PAYMENTS-
A cash-flow statement reveals the speed at which the cash is being generated from debtors stock
and other current assets the speed at which the current liabilities are being paid It enables the
management to assess the true position of the cash in future
bull IT EXPLAINS THE DEVIATIONS OF CASH FROM EARNINGS-
A firm may earn huge profits yet it may have paucity of cash or when it suffered a loss it may
still have plenty of cash A cash flow statement explains the reasons for it
HELPFUL IN ASCERTAINING CASH-FLOW FROM VARIOUS
ACTIBITIES SEPARATELY-
A cash-flow statement aims at highlighting the cash flow from operating investing and
financing activities separately It includes how much cash has been generated or used in these
activities
bull HELPFUL IN MAKING DIVIDEND DECISIONS-
Dividend must be paid within 42 days of its declaration Hence the management takes the help of
cash-flow statement to ascertain the position of cash generated from operating activities which
can be used for payment of dividend
IMPORTANCE AND RELEVANCE OF CFS
The CFS has gained importance in view of the fact that there are many managerial Decisions
which are taken in the light of the cash availability or cash position of the firm
For example declaration of dividend by the company requires cash disbursement and
Therefore the Board of Directors must consider the cash position before proposing a dividend
The CFS also provides information for the short term financial planning and in particular the
short term cash needs of the firm
In view of increasing importance and relevance of the CFS the clause 32 of the Listing
agreement (between a Company and the Stock Exchange where the shares proposed to be listed)
has been amended by the SEBI As a result the listed companies in India are now required to
supply a copy of the CFS to each shareholder as a part of Annual Report As a result the listed
companies have started a practice of sending a CFS for which the BS has been prepared as
apart of the Annual Report of the company
DIFFRENCE BETWEEN CASH - FLOW STATEMENT AND
CASH BUDGET
There is not much difference between cash flow statement and a cash budget The
only difference is that a cash flow statement is prepared for a past period where as cash
budget is prepared for a future period Hence it is of limited use as far as the future
periods are concerned A cash budget is therefore prepared showing how much cash is
likely to be received and what will be the disbursements during a future period of time
Thus a cash budget indicates in which months there will be surplus cash and in which
moths there will be deficiency of cash resources The management can then take suitable
decision to invest the surplus cash or make arrangement for the deficiency of cash at the
required time
LIQUIDITY
It does not present true picture of the liquidity of the firm the liquidity does
not depend upon cash alone Liquidity also depends upon those assets
which can be converted into cash easily
bull Exclusion of these assets obstructs the true reporting of the ability of the firm to
meet its liabilities when they become due for payment
bull The possibilities of window - dressing is higher in case of cash position in
comparison to the working capital position of the firm
bull The cash balance can be easily maneuvered by postponing purchases and other
payments and by rapidly collecting cash from debtors before the balance sheet date
Hence a fund - flow statement presents a more realistic picture than a cash flow
statement
bull Cash flow statement ignores non- cash charges Hence the true position of the
enterprise cannot be judged by cash flow statement
bull It is prepared on cash basis and hence ignores one of the basic concept of accounting
namely accrual concept
PROCEDURE OF PREPARING CASH FLOW STATEMENT-
The institute of charted accountants of India has issued accounting standards (as)-3 revised for
preparing a cash flow statement This accounting standard has been made mandatory in respect
of accounting periods commencing on or after 1st April 2001 for certain enterprises These
enterprises are-
bull Enterprises whose equity or debt securities are listed on a recognized stock exchange in
India And enterprise that are in the process of issuing equity or debt securities that will
be listed on a recognized stock exchange in India
bull All other commercial industrial and business enterprises whose turnover for accounting
period Rs 50 crores
As such the cash flow statement has been prepared according to as -3 revised in this project
According to as-3 revised the cash flow statement summarizes the cash inflows and cash
outflows and the net changes (increase or decrease) in cash and cash equipment resulting from
operating investing and financing activities of a firm during a period The following terms are
used for preparing a cash flow statement
CASH-
It compares cash in hand and demands with banks
CASH EQUIVALENTS-
There are short - term highly liquid investments that are readily into known amounts of cash
and which present insignificant risk of changes in their values Normally an investment will be
termed as cash equivalent only if it has a short maturity period say three months or less from the
date of its acquisition Examples of cash equivalent are treasury bills commercial papers etc
Which are purchased with cash that is in excess of immediate needs investment in shares are
excluded from cash equivalents unless they are cash equivalent in reality For example the
preference shares of the company which are purchased shortly before their redemption date will
be included in cash equivalents provided there is only an insignificant risk of failure of the
company in repaying the amount at the date of the maturity
CLASSIFICATION OF CASH FLOW-
According to as -3 (revised) cash flow statement should be presented in a manner that it reports
inflows of cash by classifying them into three categories namely operating investing and
financing activities Classification of all activities into these activities on the cash and cash
equivalents of the enterprise such information will be helpful in evaluating the relationships
among these three activities are explained as below
CASH FLOW FROM OPERATING ACTIVITIES-
Operating activities are the main revenue generating activities of an enterprise As such they
include cash flows from those transactions and events which enter into the ascertainment of
net profit or loss of the enterprise Examples of cash flows arising operating activities are
bull Cash receipts from the sale of goods and rendering of services
bull Cash receipts from royalties fees commissions and other revenue
bull Cash payments to suppliers for goods and services
bull Cash payments to and on behalf of employees
bull Cash receipts and cash payments of an insurance enterprise for premiums and claims
annuities and other policy benefits
bull Cash receipts and payments relating to future contracts forward contracts option
contracts and swap contracts when the contracts are held for dealing or trade purpose and
bull Cash payments of refunds of income taxes unless they can be specifically identified with
financing and investing activities
CASH FLOW FROM INVESTING ACTIVITIES-
Investing activities include the purchase and sale of long term assets such as land building plant
and machinery etc not held for resale These activities also include the purchase and sale of such
investment which are not including in cash equipments Cash flow from investing activities
discloses the expenditures incurred for resources intended to generate future income and cash
flows
Examples cash flow arising from investing activities are
bull Cash payments to acquire fixed assets (including intangible)
bull Cash receipts from sale of fixed assets (including intangibles)
bull Cash payments to acquire shares warrants or debt instruments of other enterprises
(other than receipts for those instruments considered to be cash equivalents)
bull Cash receipts from sale of shares warrants or debt instruments of other enterprises (other
than receipts for those instruments considered to be cash equivalents)
bull Cash advances and loans made to third parties In case of financial enterprises these will
be treated as cash flow from operating activities
bull Cash receipts from the repayment of advances and loans made to third parties In case of
financial enterprises these will be treated as cash flow from operating activities
bull Cash receipts of insurance claim for property involved in accident and
bull Cash receipts of interest and dividend In case of financial enterprise these will be treated
cash flow from operating activities
CASH FLOW FROM FIANCING ACTIVITIES-
Financing activities are the activities that result in change in capital and borrowing of the
enterprise
Examples of cash flows arising from financing activities are
bull Cash receipts from issuing shares or other similar instruments
bull Cash receipts from issuing debentures loans bonds and other short term or long term
borrowing
bull Cash repayment of amounts borrowed buy back of equity shares redemption of
preference shares debentures loans bonds etc
bull Cash payment of interest and dividend
IMPORTANT NOTE
In case of financial enterprise such as bank or mutual fund company cash Outflow
and cash inflow arising from the purchase and sale of securities will Be treated as
flows from operating activities This is because purchase and sale of securities is a
part of operating activity in case of financial enterprise In addition interest paid
and interest received as well as dividends received will also be treated as cash flow
from operating activities in case of financial Enterprises
CASH FLOW STATEMENT
(DIRECT METHOD)
CASH FLOW FROM OPERATING ACTIVITIES
Cash receipts from costumers
Cash paid to suppliers and employers ()
Cash generated from operations
Income tax paid ()
Cash flows from extraordinary item
plusmn Extra ordinary items
Net cash from operating activities
CASH FLOW FROM INVESTING ACTIVITIES-
Purchase of fixed assets
Proceed from sale equipment ()
Interest received
Dividend received ()
Net cash from investing activities
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from insurance of share capital
Proceeds from long- term borrowings ()
Repayment of from long-term borrowings
Interest paid
Dividend paid ()
Net cash from financing activities
Net increase in cash and cash equivalent
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
SOME SPECIAL TERMS-
i) INTERSET AND DIVIDEND-
Cash inflow from interest and dividends and cash outflow on account of interest and
dividends should be disclosed separately Cash inflow arising from interest and dividends
received should be shown as cash flow from investing activities where as cash outflow
disclosed outflow on account of interest and dividend paid should be shown as cash flow
from financing activity
ii) TAXES ON INCOME-
Tax paid on income is a part of cash flow from operating activity Hence taxes paid are
shown as a deduction under cash flow from operating activity
iii) EXTRA ORDINARY ITEMS-
Cash flow relating to extra ordinary items such as bad debts recovered Claims received from
insurance companies winning of a lottery or a law etc Should be disclosed separately as
arising from operating investing or financing activities For example the amount received
for insurance company on account of loss of stock by fire Earthquake and floods etc Should
be reported as cash flow from operating activities
iv) SIGNIFICANT NON - CASH TRANSACTION-
There are some investing and financing activities which do not require the use of cash or
cash equivalents Such non cash activities should be excluded from the cash flow statement
Examples are the acquisition of assets by issue of debentures or shares conversion of
shares into debentures etc Such significant on non cash transaction should be disclosed
outside the cash flow statement
CASH FLOW STATEMENT
(INDIRECT METHOD)
CASH FLOW FROM OPERARATTNG ACTIVITIES
Net profit before taxation and extraordinary item
Adjustment for
Depreciation
Foreign exchange loss
Interest income
Dividend income
Interest expense
Operating profit before working capital changes
Increase in sundry debtors
Decrease in inventories
Decrease in sundry creditors
Cash generated from operations
Income tax paid ()
Cash flow before extraordinary item
plusmn Extra - ordinary items
Net cash from operating activities
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of fixed assets ()
Proceeds from sale of equipment
Interest received
Dividend received ()
Net cash from investing activities
CASH FLOW FROM FINANCING ACTIVITIES-
Proceeds from insurance of share capital
Proceeds from long - term borrowings
Repayments of from long - term borrowings ()
Interest paid ()
Dividend paid ()
Net cash from financing activities
Net increase in cash and cash equivalent
Cash and cash equivalents at beginning of period
CHANGES IN CASH FLOWS
Changes in cash flows can be treated to the following
1 Net profit will increase the cash flows these cash flows will be
increased further if there are any non-cash changes (such as depreciation
and amortization)
2 Any payment of dividends will decrease the cash flows as will the
repayment of debt an issue of share or debt will also increase the
cash flows
3 An increase in non-cash assets will decrease cash flows increase in
current assets and fixed assets will result in drain on cash flows
Thus a statement of changes in cash flows ie the cash flow statement
classifies all Changes into one of three categories - operating investing or
financing activities Therefore the preparation of a statement of changes in cash
flows requires classification of changes in liabilities shareholders equity and
non-cash assets into one of these categories although some items will not fit
easily onto one other
h equivalent at end of period
STEP- BY-STEP PROCEDURE TO PREPARE CFS
1 Calculate the net increase or decrease in cash and cash equivalents-
For this purpose the opening balance of total cash and cash equivalents is compared with the
closing balance of cash and equivalents
Increasedecrease in cash and equivalents
Opening balance Closing Balance
Cash in hand
Cash in bank
Short-term Investment
Total
The difference between the total of opening and closing balance will be increased or
Decreased in cash equivalents during the period It may be noted that if there are only one or
two of items of cash etc
2 Net Cash flaw from operating activities-
The term operating refers to the normal purchase of goods and services On the basis of the
information contained in the comparative BS s and the IS and the additional Information the
net cash flow generated or use by the operating activities may be ascertained The IS prepared
by the firm gives the net profit figure earned by the firm On actual basis ie all items in the
IS are incorporated on the basis of earnedaccrued even
3 If not resulting in cash movements-
So the profit or loss as by the IS may not result in increase or decrease in cash balance by the
SYNOPSIS
INTRODUCTION
ESCORTS PVT LTD is a private limited company not listed in a stock exchange of India
and employees 900 highly trained personnel Its manufacturing plants are strategically located
in close proximity to its customers at Faridabad (Haryana) Noida (UP)
OBJECTIVES OF THE STUDY
bull To find the movement of cash inflow and cash outflow
bull To make the comparison between cash inflow and
bull Cash outflow
bull To prepare the Cash Flow Statement
bull To analyze the Balance Sheet of the company in terms of Cash Flow Statement
bull To focus on various activities of the organization in terms of Operating
Financing Investment
SCOPE OF THE STUDY
Financial resources are the assets for the company and their productivity is key
factor for profitability It is necessary to know their problems their knowledge
skills abilities amp the measures that can be taken to reduce them By analyzing this
top management can build good relations with the employees
The whole study is to determine the competencies of different employees who are
working in ESCORTS PVT LTD By analyzing it the top management can
introduce the concept of competency mapping in the organization Through this
management can attempt to use more suitable strategies towards the human
resource development
The research is confined to elicit the existing gap between the standard skill
required to perform the job and the skill processed by the employees at ESCORTS
PVT LTD And to provide them suitable training program to over come those gaps
for the better utilization of human resources
RELEVANCE
The scope of the study was confined to the outside parties like creditors
shareholders government etc Who want to invest their money in the
company
The benefit of the report for the company is that through this report they can come
to know about the cash flow statements of the company
This study also unable the company that their cash is not utilizing in unnecessary
things
The benefit of the report for the researcher is that it has helped to get knowledge
about the cash inflow and cash
RESERRCH METHODOLOGY-
RESEARCH DESIGN
bull The study was conducted under well- structured approach
bull The project lasted for 4 weeks and the year 2009 ie from 08 July to 12
Aug2009
bull The questionnaire method amp personal interview method was used to collect
the primary data for the study
The secondary data is collected from Internet amp company training material and
many other company materials
SAMPLE DESIGN
The process of extracting a sample from a population is called sampling
procedure The selection of sampling procedure to conduct the research
depends upon the nature of the study and the objective to be accomplished
Judgment sampling technique is adopted to select the respondents in this
study The sample design included the various departments in the YAMAHA
MOTORS PVT LTD
Methodology of date collection
bull Conducting personal interview
bull Data collection from primary and secondary sources
bull Designing questionnaire
bull Selecting sample size from the sample frame for the survey
bull Questionnaire distribution
bull Analysis of collected data with the help of statistical tools
bull Interpretation of collected data
bull Stating the conclusion based on the entire study
Sampling Technique
The sampling technique used for this research is of non-probability and convenience
sampling
Sample Unit
Employees of the company
Sample Size
For this research study the sample size is 25 respondents
Sources of data
Primary data
Primary data is the data which is collected by the researcher for the first time
and which was not there The tools used to collect the data are-
1)Questionnaire method from the employers in different departments
2) Face to Face personal interactions
Secondary Data
The data already collected is called as secondary data The relevant information
for this study has been collected from secondary source such as
Books
Journal
Reports
Publication by the organizational circulation
Company records
Business bulletins
Internet
Secondary data is also collected from various of the internet and intranet Some
of the website trough which information was gathered was through
HYPOTHESIS
The report is analyzed under the presumption that cash flow position of
YAMAHA MOTORS PVTLTD It can be improved and made effective in
terms of cash flows
In testing the above hypothesis the following aspects will be considered
1 Balance sheet comparisons
2 Presentation of cash flow statement in terms of revised AS-3
LIMITATIONS
The study though conducted to the best of the ability suffers from some
certain limitations There are
The data is secondary one and as such its reliability may be
questioned upon
The time availability for the study is less and as such it hinders thee
progress of the study
Senior officials were rarely approachable
Websites were not giving comprehensive data
Not having face-to-face interaction to get more relevant
information
Analysis and interpretation of data was done on the assumption that
the respondentsrsquo information was online
Information collected was totally subjective
The interviews are done during office hours but could not be done
for the other employees of other
DATA ANALYSIS
ESCORTS PVT LTD
CASH FLOW STRATEMENT
Year Ended Year Ended
30092009 30092008
Rs Crores Rs
Crores
A Cash Flow from Operating Activities
Net profit before tax (1733) 3444
Adjustment for
Loss on sale Provision for diminution in value of Long Term
Investments amp loans to Group Companies 189 4018
Gain on sale of Long Term Investments (122) (9492)
Gain on sale of Asset (013) -
Depreciation 4497 3955
Misc Exp Assets Write off Provisions 808 750
Interest Expense 7222 7999
Dividend Income (002) (001)
Interest Income (2082) -
Operating Profit before working capital changes 8764 10673
Adjustments for
Trade and other Receivables (8817) (12035)
Inventories 1379 (4692)
Trade Payables 6705 19046
Miscellaneous Expenditure (750) (511)
(1483) 1808
Cash Generated from Operations 7281 12481
Direct Taxes (Paid)Refunds (1785) 3166
Net Cash Flow from operating activities 5496 15647
B Cash Flow from Investing Activities
Purchase of Fixed Assets (3095) (2794)
Proceeds from sale of Fixed Assets 086 177
Movement in Loans and Advances (1627) (1644)
Sale of Investments 3233 11452
Short Term Deposits with schedule Banks (231) (1048)
Interest Received 2070 -
Dividend Received 002 001
Net Cash Flow from Investing activities 438 6144
Proceeds from Share Capital amp Securities Premium 11444 -
Proceeds from Long Term Borrowings 8660 -
Less Repayment of Long Term Borrowings (054) (7896)
Proceeds (Repayment) from short term borrowings (net) (22726) -
Interest Paid (7740) (8223)
Net Cash used in financing activities (10416) (16119)
Net Increase(Decrease) in Cash and Cash equivalents (4482) 5672
Cash and Cash equivalents as at 01102008 10565 4893
Cash and Cash equivalents as at 30092009 6083 1056
ANALYSIS OF CASH FLOW
From the cash flow statements of the ESCORT PVTLTDIt can be analyzed
from the two years that the net cash balance of the company has increased
manifold in 30-09-2008 than the year 30-09-2009
The net profit in 30-09-2008 is higher than the 30-09-2009 but due to certain
changes there has been increase in the cash balance
The interest paid this year is ore of the last year which implies that thee
company has not repaid his borrowed capital due to which the interest has got
down
The depreciation has increased but it does not affect cash to an extent as it is a
non-cash item In the head of working capital there is drastic change in the cash
balance in the form of ldquoTrade and other Receivables which has affected the cash
balance
There is outflow of cash for receivables rather than the inflow in the last year
So the net effect is that the cash from operating activities has been decreased
two times from the last year
The company has no accumulated losses as at the end of the financial year ie
September 31 2008
Provision for taxation has been made in accordance with the requirement of AS-
22 issued by Institute of Charted Accountants of India
Pursuant to that current year deferred tax liability have been charged to profit amp
loss account
In opinion of the board of directors of thee company the current assets loans
and advances have a value on realization in the ordinary course of the business at
least equal to the amount stated in the balance sheet and provision for all
liabilities have been made
Balance of sundry debtors creditors loans and advances are subject to confirmation by
the concerned parties
METHOD OF ANALYSIS
1 Data analysis is done using the following statistical tools wherever required in
order to extract meaningful information from the collected data
o Simple percentage and averages
o Bar diagram
o Cone diagram
o Pie diagram
2 The collected data from the questionnaire has been put together in the form of
tables
3 Percentage has been calculated wherever necessary for generalization of the
data
4 Data analysis and interpretation has been done on the basis of primary and
secondary data
5 The findings researches have been recorded based on the analysis
6 The study conducted pertains only to YAMAHA MOTORS INDIA PVTLTD
All bank balances (debitcredit) have been confirmed by the concerned bank
Identified from the available information which has been relied upon by the auditors
The names of small-scale industrial units to whom outstanding for more than
thirty days within agreed terms
The company has 9996 of shareholders in its subsidiary company named as
ESCORTS PVT LTD As at 31-03-2008
So the net effect is that the net cash from investing activities has many more
times than the last year which is negative Now the company has repaid its long
term borrowing more than the last year which has decreased the cash balance by
the little amount
Balance with the schedule banks under the head current amp collection account
amounting to represent funds in transit lying with schedule banks pending
transfer against loan liabilities under the head cash credit amp bill discounting
LIQUIDITY RATIO
1 CURRENT RATIO
(Amount in Rs)
Current Ratio
Year Current Assets Current Liabilities Ratio
2003 58574151 7903952 7412004 69765346 31884616 2192005 72021081 16065621 4482006 91328208 47117199 1942007 115642068 30266661 382
Interpretation
As a rule the current ratio with 21 (or) more is considered as satisfactory
position of the firm
When compared with 2006 there is an increase in the provision for tax because
the debtors are raised and for that the provision is created The current liabilities
majorly included Lanco Group of company for consultancy additional services
The sundry debtors have increased due to the increase to corporate taxes
In the year 2006 the cash and bank balance is reduced because that is used for
payment of dividends In the year 2007 the loans and advances include majorly
the advances to employees and deposits to government The loans and advances
reduced because the employees set off their claims The other current assets
include the interest attained from the deposits The deposits reduced due to the
declaration of dividends So the other current assets decreased
The huge increase in sundry debtors resulted an increase in the ratio which is
above the benchmark level of 21 which shows the comfortable position of the
firm
GRAPHICAL REPRESENTATION
741
219
448
194
382
000
100
200
300
400
500
600
700
800
Ratio
2003 2004 2005 2006 2007
Years
CURRENT RATIO
Ratio
2 QUICK RATIO
(Amount
in Rs)
Quick Ratio
Year Quick Assets Current Liabilities Ratio
2003 58574151 7903952 741
2004 52470336 31884616 165
2005 69883268 16065620 435
2006 89433596 47117199 19
2007 115431868 30266661 381
Interpretation
Quick assets are those assets which can be converted into cash with in a short
period of time say to six months So here the sundry debtors which are with the
long period does not include in the quick assets
Compare with 2006 the Quick ratio is increased because the sundry debtors are
increased due to the increase in the corporate tax and for that the provision
created is also increased So the ratio is also increased with the 2006
GRAPHICAL REPRESENTATION
741
165
435
190
381
000
100
200
300
400
500
600
700
800
Ratio
2003 2004 2005 2006 2007
Years
QUICK RATIO
Ratios
3 ABOSULTE LIQUIDITY RATIO
(Amount
in Rs)
Absolute Cash Ratio
Year Absolute Liquid Assets Current Liabilities Ratio
2003 31004027 7903952 392
2004 10859778 31884616 034
2005 39466542 16065620 246
2006 53850852 47117199 114
2007 35649070 30266661 118
Interpretation
The current assets which are ready in the form of cash are considered as absolute
liquid assets Here the cash and bank balance and the interest on fixed assts are
absolute liquid assets
In the year 2006 the cash and bank balance is decreased due to decrease in the
deposits and the current liabilities are also reduced because of the payment of
dividend That causes a slight increase in the current yearrsquos ratio
GRAPHICAL REPRESENTATION
392
034
246
114 118
0
05
1
15
2
25
3
35
4
Ratios
2003 2004 2005 2006 2007
Years
ABSOLUTE CASH RATIO
Ratios
LEVERAGE RATIOS
4 PROPRIETORY RATIO
(Amount
in Rs)
Proprietory Ratio
Year Share Holders Funds Total Assets Ratio
2003 67679219 78572171 086
2004 53301834 88438107 06
2005 70231061 89158391 079
2006 56473652 106385201 053
2007 97060013 129805102 075
Interpretation
The proprietary ratio establishes the relationship between shareholders funds to
total assets It determines the long-term solvency of the firm This ratio indicates
the extent to which the assets of the company can be lost without affecting the
interest of the company
There is no increase in the capital from the year2004 The share holderrsquos funds
include capital and reserves and surplus The reserves and surplus is increased
due to the increase in balance in profit and loss account which is caused by the
increase of income from services
Total assets includes fixed and current assets The fixed assets are reduced
because of the depreciation and there are no major increments in the fixed assets
The current assets are increased compared with the year 2006 Total assets are
also increased than precious year which resulted an increase in the ratio than old
GRAPHICAL REPRESENTATION
086
060
079
053
075
000
010
020
030
040
050
060
070
080
090
Ratios
2003 2004 2005 2006 2007
Years
PROPRIETORY RATIO
Ratios
ACTIVITY RATIOS
5 WORKING CAPITAL TURNOVER RATIO
(Amount
in Rs)
Working Capital Turnover Ratio
Year Income From Services Working Capital Ratio
2003 36309834 50670199 0722004 53899084 37880730 1422005 72728759 55355460 1312006 55550649 44211009 1262007 96654902 85375407 113
Interpretation
Income from services is greatly increased due to the extra invoice for Operations
amp Maintenance fee and the working capital is also increased greater due to the
increase in from services because the huge increase in current assets
The income from services is raised and the current assets are also raised together
resulted in the decrease of the ratio of 2007 compared with 2006
GRAPHICAL REPRESENTATION
072
142 131126
113
000
020
040
060
080
100
120
140
160
Ratio
2003 2004 2005 2006 2007
Years
WORKING CAPITAL TURNOVER RATIO
Ratio
6 FIXED ASSETS TURNOVER RATIO
(Amount in Rs)
Fixed Assets Turnover Ratio
Year Income From Services Net Fixed Assets Ratio
2003 36309834 28834317 126
2004 53899084 29568279 182
2005 72728759 17137310 424
2006 55550649 15056993 369
2007 96654902 14163034 682
Interpretation
Fixed assets are used in the business for producing the goods to be sold This
ratio shows the firmrsquos ability in generating sales from all financial resources
committed to total assets The ratio indicates the account of one rupee
investment in fixed assets
The income from services is greaterly increased in the current year due to the
increase in the Operations amp Maintenance fee due to the increase in extra invoice
and the net fixed assets are reduced because of the increased charge of
depreciation Finally that effected a huge increase in the ratio compared with the
previous yearrsquos ratio
GRAPHICAL REPRSENTATION
126182
424 369
682
000
100
200
300
400
500
600
700
Ratios
2003 2004 2005 2006 2007
Years
FIXED ASSETS TURNOVER RATIO
Ratios
7 CAPITAL TURNOVER RATIO
(Amount
in Rs)
Capital Turnover Ratio
Year Income From Services Capital Employed Ratio
2003 36309834 37175892 0982004 53899084 53301834 1012005 72728759 70231061 1042006 55550649 56473652 0982007 96654902 97060013 100
Interpretation
This is another ratio to judge the efficiency and effectiveness of the company
like profitability ratio
The income from services is greaterly increased compared with the previous year
and the total capital employed includes capital and reserves amp surplus Due to
huge increase in the net profit the capital employed is also increased along with
income from services Both are effected in the increment of the ratio of current
year
GRAPHICAL REPRESENTATION
098
101
104
098
100
094095096097098099100101102103104
Ratios
2003 2004 2005 2006 2007
Years
CAPITAL TURNOVER RATIO
Ratios
8 CURRENT ASSETS TO FIXED ASSETS RATIO
(Amount
in Rs)
Current Assets To Fixed Assets Ratio
Year Current Assets Fixed Assets Ratio
2003 58524151 19998020 2932004 69765346 18672761 3742005 72021081 17137310 4202006 91328208 15056993 6072007 115642068 14163034 817
Interpretation
Current assets are increased due to the increase in the sundry debtors and the net
fixed assets of the firm are decreased due to the charge of depreciation and there
is no major increment in the fixed assets
The increment in current assets and the decrease in fixed assets resulted an
increase in the ratio compared with the previous year
GRAPHICAL REPRESENTATION
293374
420
607
817
000
100
200
300
400
500
600
700
800
900
Ratios
2003 2004 2005 2006 2007
Years
CURRENT ASSETS TO FIXED ASSETS RATIO
Ratios
PROFITABILITY RATIOS
GENERAL PROFITABILITY RATIOS
9 NET PROFIT RATIO
(Amount in Rs)
Net Profit Ratio
Year Net Profit After Tax Income from Services Ratio
2003 21123474 36039834 059
2004 16125942 53899084 030
2005 16929227 72728759 023
2006 18259580 55550649 033
2007 40586359 96654902 042
Interpretation
The net profit ratio is the overall measure of the firmrsquos ability to turn each rupee
of income from services in net profit If the net margin is inadequate the firm
will fail to achieve return on shareholderrsquos funds High net profit ratio will help
the firm service in the fall of income from services rise in cost of production or
declining demand
The net profit is increased because the income from services is increased The
increment resulted a slight increase in 2007 ratio compared with the year 2006
GRAPHICAL REPRESENTATION
059
030
023
033
042
000
010
020
030
040
050
060
Ratios
2003 2004 2005 2006 2007
Years
NET PROFIT RATIO
Ratios
10 OPERATING PROFIT
(Amount in Rs)
Operating Profit
Year Operating Profit Income From Services Ratio
2003 36094877 36309834 099
2004 27576814 53899084 051
2005 29540599 72728759 041
2006 31586718 55550649 057
2007 67192677 96654902 070
Interpretation
The operating profit ratio is used to measure the relationship between net profits
and sales of a firm Depending on the concept it will decide
The operating profit ratio is increased compared with the last year The earnings
are increased due to the increase in the income from services because of
Operations amp Maintenance fee So the ratio is increased slightly compared with
the previous year
GRAPHICAL REPRESENTATION
099
051
041
057
070
000
010
020
030
040
050060
070
080
090
100
Ratios
2003 2004 2005 2006 2007
Years
OPERATING PROFIT RATIO
Ratios
11 RETURN ON TOTAL ASSETS RATIO
(Amount in Rs)
Return on Total Assets Ratio
Year Net Profit After Tax Total Assets Ratio
2003 21123474 78572171 027
2004 16125942 88438107 018
2005 16929227 89158391 019
2006 18259580 106385201 017
2007 40586359 129805102 031
Interpretation
This is the ratio between net profit and total assets The ratio indicates the return
on total assets in the form of profits
The net profit is increased in the current year because of the increment in the
income from services due to the increase in Operations amp Maintenance fee The
fixed assets are reduced due to the charge of depreciation and no major
increments in fixed assets but the current assets are increased because of sundry
debtors and that effects an increase in the ratio compared with the last year ie
2006
GRAPHICAL REPRESENTATION
027
018 019017
031
000
005
010
015
020
025
030
035
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON TOTAL ASSETS
Ratios
12 RESERVES amp SURPLUS TO CAPITAL RATIO
(Amount in Rs)
Reserves amp Surplus To Capital Ratio
Year Reserves amp Surplus Capital Ratio
2003 65599299 2079920 31542004 34582554 18719280 1852005 51511781 18719280 2752006 37754372 18719280 2022007 78340733 18719280 419
Interpretation
The ratio is used to reveal the policy pursued by the company a very high ratio
indicates a conservative dividend policy and vice-versa Higher the ratio better
will be the position
The reserves amp surplus is decreased in the year 2006 due to the payment of
dividends and in the year 2007 the profit is increased But the capital is
remaining constant from the year 2004 So the increase in the reserves amp surplus
caused a greater increase in the current yearrsquos ratio compared with the older
GRAPHICAL REPRESENTATION
3154
185 275 202419
-
500
1000
1500
2000
2500
3000
3500
Ratios
2003 2004 2005 2006 2007
Years
RESERVES amp SRUPLUS TO CAPITAL RATIO
Ratios
OVERALL PROFITABILITY RATIOS
13 EARNINGS PER SHARE
(Amount in Rs)
Earnings Per Share
Year Net Profit After Tax No of Equity Shares Ratio
2003 21123474 207992 101562004 16125942 1871928 8612005 16929227 1871928 9042006 18259580 1871928 9752007 40586359 1871928 2168
Interpretation
Earnings per share ratio are used to find out the return that the shareholderrsquos earn
from their shares After charging depreciation and after payment of tax the
remaining amount will be distributed by all the shareholders
Net profit after tax is increased due to the huge increase in the income from
services That is the amount which is available to the shareholders to take There
are 1871928 shares of Rs10- each The share capital is constant from the year
2004 Due to the huge increase in net profit the earnings per share is greaterly
increased in 2007
GRAPHICAL REPRESENTATION
10156
861904 975
2168
000
2000
4000
6000
8000
10000
12000
Ratios
2003 2004 2005 2006 2007
Years
EARNINGS PER SHARE
Ratios
14 PRICE EARNINGS (PE) RATIO
(Amount in Rs)
Price Earning (PE) Ratio
Year Market Price Per Share Earnings Per Share Ratio
2003 3254 10156 0322004 2847 861 3302005 3752 904 4152006 3017 975 3092007 5185 2168 239
Interpretation
The ratio is calculated to make an estimate of application in the value of share of
a company
The market price per share is increased due to the increase in the reserves
amp surplus The earnings per share are also increased greaterly compared
with the last year because of increase in the net profit So the ratio is
decreased compared with the previous year
GRAPHICAL REPRESENTATION
032
330
415
309
239
000
050
100
150
200
250
300
350
400
450
Ratios
2003 2004 2005 2006 2007
Years
PE RATIO
Ratios
15 RETURN ON INVESTMENT
(Amount in Rs)
Return on Investment
Year Net Profit After Tax Share Holders Fund Ratio
2003 21123474 67679219 031
2004 16125942 53301834 03
2005 16929227 70231061 024
2006 18259580 56473652 032
2007 40586359 97060013 042
Interpretation
This is the ratio between net profits and shareholders funds The ratio is
generally calculated as percentage multiplying with 100
The net profit is increased due to the increase in the income from services ant
the shareholders funds are increased because of reserve amp surplus So the ratio
is increased in the current year
GRAPHICAL REPRESENTATION
031 030
024
032
042
000
005
010
015
020
025
030
035
040
045
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON INVESTMENT RATIO
RatioS
DATA COLLECTION
The data can be of two types
Primary Data
Secondary Data
Primary Data
Primary data are those data which is originally collected afresh
Secondary Data
Secondary data are those data which are already collected and stored and which has
been passed through statistical research
In this project Secondary data has been collected from following sources-
Annual report
Books
MIS
Other material and report published by company There are two methods to prepare
the Cash flow Statement
ndirect Method
I
The indirect method (or reconciliation method) starts with net income and converts it
to net cash flow from operating activities In other words the indirect method adjusts
net income for items that affected reported net income but did not affect cash To
compute net cash flow from operating activities non-cash charges in the income
statement are added ack to net income and non-cash credits are deducted
b
Direct Method
Under the direct method the statement of cash flows reports net cash flow from
operating activities as major classes of operating cash receipts (eg cash collected from
customers and cash received from interest and dividends) and cash disbursements (eg
cash paid to suppliers for goods to employees for services to creditors for interest and
to government authorities for taxes)
INDIRECT VERSUS DIRECT METHOD
The most contentious decision that the FASB faced in issuing Statement No 95 was
choosing between the direct method and the indirect method of determining net cash
flow from operating activities Companies lobbied against the direct method urging
adoption of the indirect method Commercial lending officers expressed a strong
preference to the FASB hat the direct method be required
tCF-Page 3 of 5
In Favor of the Direct Method
The principal advantage of the direct method is that it shows operating cash receipts and
payments That is it is more consistent with the objective of a statement of cash flows to
provide information about cash receipts and cash payments than the in-direct method
which does not report operating cash receipts and payments
Supporters of the direct method contend that knowledge of the specific sources of
operating cash receipts and the purposes for which operating cash payments were made
in past periods is useful in estimating future operating cash flows Furthermore in-
formation about amounts of major classes of operating cash receipts and payments is
more useful than information only about their arithmetic sum (the net cash flow from
operating activities) Such information is more revealing of an enterprises ability (1) to
generate sufficient cash from operating activities to pay its debts (2) to reinvest in its
operations and (3) to make distributions to its owners
Many corporate providers of financial statements say that they do not currently collect
information in a manner that allows them to determine amounts such as cash received
from customers or cash paid to suppliers directly from their accounting systems But
supporters of the direct method contend that the incremental cost of assimilating such
operating cash receipts and payments data is not significant
In Favor of the Indirect Method
The principal advantage of the indirect method is that it focuses on the differences
between net income and net cash flow from operating activities That is it provides a
useful link between the statement of cash flows and the income statement and balance
sheet
Many providers of financial statements contend that it is less costly to adjust net income
to net cash flow from operating activities (indirect) than it is to report gross operating
cash receipts and payments (direct) Supporters of the indirect method also state that the
direct method which effectively reports income statement information on a cash rather
than an accrual basis may erroneously suggest that net cash flow from operating
activities is as good as or better than net income as a measure of performance
Special Rules Applying to Direct and Indirect Methods
Companies that use the direct method are required at a
minimum to report separately the following classes of
operating cash receipts and payments
Receipts
1048713 Cash collected from customers (including lessees licensees etc)
1048713 Interest and dividends received
1048713 Other operating cash receipts if any
Payments
1048713 Cash paid to employees and suppliers of goods or services (including
suppliers of
insurance advertising etc)
1048713 Interest paid
1048713 Income taxes paid
1048713 Other operating cash payments if any
Companies using the indirect method are required to disclose separately changes in
inventory receivables and payables to reconcile net income to net cash flow from
operating activities In addition interest paid (net of amount capitalized) and income
taxes paid must be disclosed elsewhere in the financial statements or accompanying
notes
The FASB requires these separate and additional disclosures so that users
may approximate the direct method Also an acceptable alternative presentation
of the in-direct method is to report net cash flow from operating activities as a
single line item in the statement of cash flows and to present the reconciliation
details elsewhere in the financial statements
FINDING OF SUDY
According to cash flow statement of the company The finding of the study are as
follows-
The company has not taken any loans secured or unsecured from companies
firms or other parties
The company has not accepted any deposit from the public during the year
The company is not a sick industrial company
The company has not granted any loan secured or unsecured to company firms
or other parties
The company has paid the entire long term and short term borrowing during the
year
The company has buy back the companyrsquos own share this year
The interest paid in 2008 is more than the
There has been a significant decline in volume over the years from 2001-02
to 2005-06 as can be seen in the graph below
Table 43
The Net sales of Tractor has increased considerably from 2004-05 to 2007-08
This can be mainly attributed to changes in Variable and material costs and in
the price
The Net sale of Tractor has increased considerably from 2004-05 to 2007-08
that is an decrease of Rs7216 per tractor This can be mainly attributed to
changes in
Variable and material costs and in the prices
RECOMMENDATIONS
According to cash flow statement of the company The suggestions of the study
are as follows-
The time durations for training program have to increase
Buy regular review and consultations develop a career progression
which is sensitive to performance and ability
Create an environment where by people are trend developed to enable
The to take advantages of opportunities that arise
The jab can be redesigned where the work man stay in what is normally
the same job but has elements of it changed
The principle amount must be paid in time which can be reducing the
interest the out flow
The purchase of the fixed asset must be made only when there is extreme
requirement
In order to avoid taxes the company should go for more investment
The companyrsquos borrowings should go for more investment
o The company should try to reduce the depreciations as maximum
as possible
CONCLUSION
The study on competency level of employees at ESCORTS PVTLTD gave an
insight about the acceptance of competency mapping by employees
The employees at Ymi welcome the introduction of competency mapping in their
organization as they felt it was very much essential in enhancing their skills and
organizational development
The organization has provided the recourses guidance and support to facilitate the
introduction of competency level easily and develop the employees in such a way
that they can face any kind of challenge
However the level of competency in employees is found to be satisfactory
Providing proper training education and guidance to the employees can enhance
the level
This study was mainly carried out to find out whether thee competency mapping
being followed by the company is effective till date If the competency mapping
and fitment to the organization
By looking at the graphs and tables it is quite that the employees still are not up to
the level of competent pool they still have to be trained and made competent in
order to fill the gap As the organization has just applied the mapping it has to see
to that it meets all the requirements for competency mapping
Therefore the graphs make it quite clear that the potential of the employees is not
up to the mark and ie they are not competent enough to meet the competency-
mapping requirement Hence by further training and counseling this gap can be
closed
This report includes the training requirements of employees and it highlights skills
possessed by each employee and skill required All employees get training so that
skill can be improved and maintain balance between standard performance with
their actual performance to avoid gap
APPENDIX
QUESTIONNAIRE
Consumer Survey
Name _____________________________
Age _____________________________
Sex
Male
Female
Occupation
Businessman
Service man
Professional
Others
Monthly income brackets
Below 15000
15000- 20000
20000-30000
30000 and above
of your savings _________
Do you invest
Yes
No
If yes then where do you invest your money
Bank
Insurance
funds
Others
Why do you made that statement
Return
Risk hedging
Tax benefits
Other reasons (specify) _______
Who influence your cash decision
Relatives and friends
Family members
Advisors experts
You yourself
If no then why
Do not know where to invest
Satisfied with your current investment return
Donrsquot want take risk
Other reasons
__________________________________________________________________
___________________
Do you know about CF statement
Yes
No
If yes then from where you have come to know about an cash statement
Advertisements on newspapers
Friends and relative
Agents experts
Other source
What do you think about cash statement
It means investing only in share market
Constant watch must be kept always
Return is not satisfactory
Other perception
__________________________________________________
Can you recall any cash flow of company
___________________________
Would you want to made CF of an org
Yes
No
If yes then why
_______________________________________________________
If no then why
_______________________________________________________
BIBLIOGRAPHY
List of Books
1 PANDEY IM - FINANCIAL MANAGEMANT
2 KHAN MY AND JAIN PK -FINANCIAL MANAGEMANT
3 SMITH KV ndash MANAGEMANT OF WORKING CAPITAL
3 COMPANY RECORDS
4 JOURNAL
5 REPORTS
WEBLIOGRAPHY
1 wwwescortspvtltdcom
2 wwwgooglecom
The versatility in the tractor became evident as this vehicle was used for pumping out
underground water in this background tractor industry showed a remarkable growth
during this period and all time high sale of 90000 tractors was recorded in the drought
year (1987-88)Fourth phase of development
The growth trend appears to be continuing with relaxation of tractor financing norms
except for a 2 year slack period due to general economic slowdown and political
turmoil In fiscal 1997-98 tractors sales refaced an all time high record of 250000This
impressive growth has influenced 3 more players as listed below to enter the market
NAME COLLABORATION YEAR OF
COMMENCEMENT
INTERNATIONAL
TRACTORS LTD
INDIGENOUS 1997
BAJAJ TEMPO LTD INDIGENOUS 1997
NEW HALLAND
TRACTORS (INDIA)
PVT LTD
ITALY 1998
JOHN DHEER
TRACTORLTD
POLAND 2000
HISTORICAL BACKGROUND OF ESCORTS GROUP
Escorts came into being a vision that led two brothers Yudi Nanda and Hari Nanda to
branch out their familyrsquos prospering transport s business and institute ventures that were
to become the foundations of escorts Ltd Escorts Agents Limited was born at Lahore on
17th October 1944 with Yudi Nanda as Managing Director and Hari Nanda as Chairman
After the owing to opportunity lying in the Indian village Escorts (Agricultural
Machinery) Ltd was launched in 1948 with Yudi Nanda as Director Tragically Yudi
Nanda died in an accident in 1952 Then Escorts agent Ltd And Escorts (Agricultural
Machine) Ltd Was merged in 1953 to create single Escorts agents Pvt Ltd
SOME MILESTONES
1948 Pioneered farm mechanization in the country by launching Escorts Agricultural Machines Ltd
With a franchise from a US based MINNEAPOLIS MOLINE WISCONCIN for marketing
tractors implements engines and other equipments
1958 Started importing MF tractor from Yugoslavia for marketing the same in India
1960 A manufacturing plant was set up at Faridabad
1965 Got industrial license to manufacture URSUS ESCORT tractors
169
1969 Escorts signed a contract with FORD MOTOR COMPANY to manufacture Ford 3000 model
tractors Escorts Institute of Farm Mechanization (EIFM) was established at Bangalore This
training Institute is one of its kind
1971 1st February the first tractor FORD 3000 rolled out of the factory The same year the turnover
touched the Rs53 million mark
1973 Escorts Tractors Limited (ETL) declared a healthy Profit Before Tax of Rs4725 million
1974 Export of 400 tractors to Afghanistan - perhaps the worlds largest ever airlift of such
equipment
1975 Turnover crossed the Rs 200 million mark for ETL Profit After Tax Rs 87 million Maiden
dividend of 10 declared
1976
1976 FORD 3600 advancement in Farm Mechanization was launched with fanfare to a
tremendous reception Trial production of in-plant manufacturing of engine parts (Block amp
Head)
1977
1977 Escorts Scientific Research Centre marked its beginning at Faridabad by developing its own
Engines for E-27 and E-37 Due to constant technology absorption indigenization level
touched 72 for FORD tractors which was a result of relentless effort in that direction
1979 Turnover crossed the Rs 50 crores mark In plant facility for machining centre housing and
case transmission on built-in line concept installed
1983 Escorts Tractors Limited (ETL) established a state-of-the-art research and development centre
to spearhead newer breakthroughs in Farm Mechanization and to maintain industry
leadership Line concept introduced for engine block machining
1984 75000th tractor rolled out A great occasion for the large family that worked for ETL Newer
challenges and frontiers were set
1985 In keeping with the stupendous financial success Escorts Tractors Limited (ETL) offered its
first Bonus Issue (11)
1987 50hp FORD 3610 was launched another leap for the Indian Farm Mechanization Industry the
farmers and the people of the land
1988
1988 ETLrsquos annualized turnover crossed Rs 100 crores Dividend 45 for 15 months
1989 A MOU with CLAAS was signed for manufacturing amp
1990-
91
First Public Issue (Februaryrsquo91) over-subscribed four times Shares listed on Delhi and Bombay
Stock Exchanges
1991-
92
The Crop Tiger range of Combine Harvesters was launched by Escorts Claas Ltd
1993 FORD 3620 tractor launched
1996 Disengagement of joint venture collaboration with New Holland and launch of FARMTRAC
Tractor
1997 A Joint Venture with Italian company CARRARO was finalized to establish a company in India
for manufacturing and marketing of transmission and axles
COLLABORATIONS
Collaboration with international Organization of technological excellence constant
research to adopt the emerging technology to specify requirement of the market and
belief in the philosophy industrial interdependence have made Escorts today one of the
leading trend steers in Indiarsquos New Industrial Culture Escorts have merged as fraternity
of above 50000 shareholders 22000 employees 4000 ancillary suppliers and 1 6000
dealers and stockiest all engaged in a large scale investment and sustained efforts to
meet the ever widening market horizons of technological competence appropriate to
Indiarsquos unique changing needs
Escorts believe in incorporating the finest existing technology to meet Indian consumers
demands by collaborating with the internationally renowned companies prominent
among these are
IN GERMANY
GOETZE AG Piston rings and cylinder liners
MAHLE GmbH Piston
CLASS OHG Harvesters Combines
KNORR BREMSE AG Railway Brake System
AUGUST BILSTEIN GmbH Absorbers Hydraulic products
Pressure and temperature switches
IN JAPAN
KAYABA INDUSTRY CO LTD Telescopic Front Forks Car
MIKUNI SHOKO CO Carburetors for BI-Wheelers
IN UK
JCBAMFORD EXCAVATORS JCB Excavators loaders Front end
Loaders Telescopic handlers
IN USA
HUGHESNETWORKS SYSTEMS AB Road Construction Machinery
Vibratory Road Rollers
OFFICIAL ADDRESS OF ESCORTS
Registered Office Corporate
Secretariat amp Law
Escorts Ltd
11 Scindia House
Connaught Circus
New Delhi-110 001
Tel No 011-23310145
Fax No 011-23311715
Escorts Ltd
155 Mathura Road
Faridabad - 121 003
Tel No ( 0129 ) 2250222
Fax ( 0129 ) 2250060
Email Address corpsectndbvsnlnetin
Web Site wwwescortsgroupcom
LEADERSHIP TEAM
Mr Rajan Nanda
Chairman
Mr Nikhil Nanda
Joint Managing Director
Mr Rohtash Mal
Executive Director and Chief Executive Officer - Agri Machinery Group
Mr Manoj Jha
Executive Vice President of Engineering Division
Mr Kamal Bali
CEO ndash Escorts Construction Equipment Limited (ECEL)
Mr GB Mathur
Vice President - Law amp Company Secretary
Mr Rakesh Kumar Budhiraja
Group Chief Financial Officer
Mr Partha Dasgupta
Group Vice President Human Resources and Employee Relations
LEVELS OF MANAGEMENT
MANAGEMENT
TOP
MANAGEMENT
SENIOR
MANAGEMENT
MIDDLE
MANAGEMENT
JUNIOR
MANAGEMENT
MANAGING
DIRECTOR amp
CEO(G-11)
CHIEF GENERAL
MANGER(G-8)
CHIEF
MANAGER
(G-5)
ASSISTANT
MANAGER(G-2)
VICE PRESIDENT
(G-10)
GENERAL
MANAGER(G-7)
SENIOR
MANAGER(G-4)
EXECUTIVE(G-
1)
ASSOCIATE
VICE PRESIDENT
(G-9)
DEPUTY
GENERAL
MANAGER(G-6)
MANAGER(G-3)
MISSION
WE WILL ACHIEVE LEADERSHIP IN MARKET SHARE amp PROFITABILITY IN
THE DOMESTIC TRACTOR MARKET BY THE YEAR 2004-2006 AND SHALL BE
THE WORLSrsquoS LARGEST SUPPLIER OF SUB 100 HP TRACTORS WE SHALL
PROACTIVELY CONTRIBUTE TO THE PROSPERITY OF THE RURAL
ECONOMY BY DEFINING A LARGER ROLE FOR OURSELVES IN THE FOOD
AND AGRICULTURE SECTOR
THE VISION
WE SHALL STRIVE TO BE THE NUMERO UNO IN THE INDIAN TRACTOR
INDUSTRY AND TOP FIVE TRACTOR MANUFACTURERS IN THE WORLD
WE SHALL CONTINUOUSLY STRIVE TO MEET THE EVER RISING
EXPECTATIONS OF OUR VALUED CUSTOMERS AT THE LOWEST
INTERNAL COST
WE SHALL AIM TO OFFER THE FARMING COMMUNITY A RANGE OF
INNOVATIVE PRODUCTS AND SERVICES WHICH SHALL ENABLE THEM
TO IMPROVE THEIR PRODUCTIVITY AND COMPETITIVNESS
WE SHALL ACHIEVE A TURNOVER OF RS 2 BILLION BY THE YEAR
2006TRANSCENDING NATIONAL BOUNDARIES WE SHALL STRIVE TO
ATTAIN EXPORTS OF ONE TENTH OF OUR TOTAL TRACTOR PRODUCTION
BY THE YEAR 2
REVIEW OF LITERATURE
INTRODUCTION
MEANING OF FINANCIAL STATEMENTS
The financial statements are nothing but the financial information presented in concise and
capsule form and are the financial information is the information relating to the financial
position of any firm The firm prepares the financial statements
bull To communicate with different parties about the financial position of the firm
(Shareholders creditors banks financial institution financial analysts investors
etc And
bull To analyze the operations and performance of the firm for the further
planning
The basic source which provides the financial information is the Annual report of the
company which is presented by the company to its shareholders at the Annual General
Meeting
Though the presentation of annual report is a statutory requirement under the
Companies Act 1956 however it is also a medium of communication with the present as well
as prospective investors and creditors of the company
Clause 43 A of the Listing Agreement (with the stock exchange) requires every
listed company to publish unaudited quarterly results But it does not mean the non-corporate
firms do not prepare the financial statements Every firm big or small prepare the following
financial statements
The Balance Sheet (BS)
1 The Income Statement (IS)
Two other key financial statements which are usually prepared by corporate firms are
1 Statement of appropriation of profit and
2 Statement of Change in financial position
ANALYSIS OF FINANCIAL STATEMENTS (AFS)
Analysis of financial statements refers to the process of the critical examination of the
financial information contained in the financial statements in order to understand and
make decisions regarding the operations of the firm The AFS is basically a study of the
relationship among various financial fact and figures as given in a set of financial
statements AFS is the process of establishment and identifying the financial weakness
and strength of the firm It is indicative of two aspects of a firm ie the profitability
and the financial position
OBJECTIVES OF AFS
The objectives of the AFS is to understand the information contained in financial
statements with a view to know the weakness and strength of the firm and to make a
forecast about the future prospects of the firm and thereby enabling the financial
analyst to take different decisions regarding the operation of the firm The objectives
are as follows
bull To assess the present profitability and operating efficiency of the fir
COMMON-SIZE STATEMENTS (CSS)
The CSS represents the relationship of different items of financial statements with some
Common items by expressing each item as a percentage of the common item In common size
Balance Sheet each item of the balance sheet is stated as a percentage of the total balance
sheet The percentages for different items are computed by dividing the absolute amount of
that item by the Common Base and then multiply by 100 The percentage so calculated can
be easily compared with the corresponding percentage in some other period Thus the CSS is
useful not only in intra-firm comparison for the same year or free several years
TREND PERCENTAGE ANALYSYS(TPA)
The TPA is a technique of studying several financial statements over a series of years In
TPA the trend percentages are calculated for each item by taking the figure of that item for
some base year as 100 So the trend percentage is the percentage relationship which
Each item of different years bears to the same item in the base year Any year may be Taken
as the base year but generally the starting initial year is taken as the base year So each
item for base year is taken as 100 and then the same item for other years is Expressed as a
percentage of the base year
RATIO ANALYSIS (RA)
The RA has emerged as the principle technique of the AFS A ratio is a relationship
Expressed in mathematical terms between two individual or groups of figures connected with
other in some logical manner The RA is based in the premise that a single accounting figure
by itself may not communicate any meaningful information but when expressed as a relative
to some other figure it may definitely give some significant information The relationship
between two or more accounting figuresgroups is called a Financial Ratio
A financial ratio helps to summarize a large mass of financial data into a concise form
and to make meaningful interpretations and conclusions about the performance of a firm
For example a firm has net sales Rs 5 00000
Gross Profit Rs 100000
Ratio of Gross Profit to net sales is 20
ie (Rsl 00000 Rs5 00000)
Forms of Ratios
Since a ratio is a mathematical relationship between two or more variables accounting
figures such relationship can be expressed in different ways as follows
bull As a Pure Ratio
bull As a Rate of Times
bull As a Percentage
Ratio can be classified into
bull The Liquidity Ratio
bull The Activity Ratio
bull The Leverage Ratio
bull The Profitability Ratio
STATEMENT OF CHANGES IN FINANCIAL POSITION
(SCFP)
Since the BS amp IS of a firm are two basic depicting the financial position of a firm at the end
of the year These two financial statements are called the traditional statements Both these
statements fail to throw light on changes in assets liabilities and shareholders wealth during
this year
BS deals with the financial position gives only the static view of the year- end financial
position and fails to indicate the movement and causes in assets and liabilities during the
year Similarly IS show the profit or loss resulting out of the operations of the firm during
the year This profit or loss in fact to ascertain the sufficiency of resources to declare the
dividend etc thus there is a need to prepare another statement (together with the BS amp IS)
which may identify the changes in assets liabilities and the shareholders funds over a given
period
The SCFP is essentially an explanation of the changes in financial position of a Firm
occasioned by the firm in between two successive BSs The SCFP draws basic Information
from the BS and IS helps in understanding the change in assets liabilities and shareholders
worth The SCFP deals with the flow of funds during the year ie the funds coming in and
going out of the firm It summarizes the sources from where the funds might have been
arranged procured by the firm and the uses for which the funs might have been used by
the firm during the year
The SCFP can be prepared as follows
bull SCFP (Cash Basis) also known as a Cash F low Statement
bull SCFP (Net Working Capital Basis) Fund Flow Statement
SCFP (WORKING CAPITAL BASIS)
FUND FLOW STATEMENT
The FFS reports the flows of funds through the firm during the year ie it shows the
Sources and uses of working capital between two balance sheet dates The FFS
attempts to explain the changes in financial position from one BS to the subsequent BS
in terms of the change in the funds or the working capital position of the firm
The term Working capital (WC) is generally defined as the excess of total
current assets over the total current liabilities The current Assets (CA) of a firm may
include cash in hand and at bank stock debtors bills advances etc and the Current
Liabilities (CL) includes creditors bills payable outstanding expenses provision for
tax short term liabilities etc the term WC is a single figure representing the net effect
of a transaction is to increase or decrease the Working Capital by affecting any of the
elements of Current Assets or Current Liabilities Therefore the FFS in its standard
form incorporates only those transactions which affect the Working Capital i e those
transactions where in only one of the affected accounted is a current account
Now a flow of working capital arises when one of the affected accounts is a current
account From the point of view of current account the effected on working capital
can examined in the light of the definitions of the term working capital ie the excess
of current assets over current liabilities ie
Impliedly change in any of the CA or CL will affect the WC Simple observation
equation tells that
bull Increase in any of the CA or decrease in any of the CLs will result in increase
in the WC
bull Decrease in any of the CA or increase in any of the CLs will result in decrease
in the WC
To find out the relative importance of different components of the financial position
of the firm
bull To identify the reasons for change in the profitability financial position of the
firm and
bull To assess the short term as well as the long term liquidity position of the
firm
TECHNIQUES TOOLS OF THE AFS
AFS can be undertaken by different persons and for different purposes therefore the
methodology adopted for the AFS may be carrying from one situation to another However
the following are some of the common techniques of the AFS
bull Comparative financial statements
bull Common-size financial statements
bull Trend percentage analysis and
bull Ratio Analysis
COMPARATIVE FINANCIAL STATEMENTS
In CFS two or more BS andor the IS of a firm are presented simultaneously in columnar
form The Financial data for two or more tears are placed and presented in adjacent columns
and thereby the financial data is provided at times perspective in order to facilitate periodic
comparison In CFS the BS and the IS for number of years are presented in condensed
form for year to year comparison and to exhibit the magnitude and direction of changes
The CFS helps a financial analyst of the firm and in establishing operating and
positional trend of the firm The CFS may be prepared to show
1 The absolute amount of different items in monetary terms
2 The amount of periodic changes in monetary terms
1 The percentages of periodic changes to reveal the proportionate changes
The CFS can be prepared for both the BS and the IS
CORE COMPETENCE OF ESCORTS
Customer 1
We put customers first in everything we do We take decisions keeping the customer in
mind
Challenging Spirit
We strive for excellence in everything we do and in the quality of goods amp services we
provide We work hard to achieve what we commit amp achieve results faster than our
competitors and we never give up
Team-work
We work cohesively with our colleagues as a multi-cultural team built on trust respect
understanding amp mutual co-operation Everyones contribution is equally important for
our success
Frank amp Fair Organization
We are honest sincere open minded fair amp transparent in our dealings We actively
listen to others and participate in healthy amp frank discussions to achieve the
organizations
A firm undertakes numerous during a year and most of these transactions during a year and
most of these transactions may affect one or the other current account ie most of these
transactions May results in the flow of the WC Neither is it necessary nor practical to
identify the effect of each and every transaction on the WC These transactions instead are
considered and analyzed in a collective form and then their effect on the WC is identified
SCFP (CASH BASIS) OR
THE CASH FLOW STATEMENT
The CFS attempts to analyze the transactions of the firm in terms of cash ie the transactions
generating cash and using cash The focus in the CFS is on cash rather than on WC The
sources of cash may be the cash profits earned by the firm issue of capital for cash issue of
other securities for cash borrowings sale of assets investment redemption of debenture or
preference share repayment of loan payment of tax dividend distribution etc Thus the
CFS summarizes the cash inflows and outflows
An analysis of cash flows is useful for short-run planning A firm needs sufficient cash to
debts maturing in the near future to pay interest and other expenses and to pay dividends to
shareholders The firm can make projections of cash flows and outflows for the near future to
determine the availability of cash This cash balance can be matched with the firms need for
cash during the period and accordingly arrangements can be made the deficit or invest the
surplus cash temporarily A historical analysis of cash flows provides insight to prepare
reliable cash flow projections for the immediate future
A statement of changes in financial position on cash basis commonly known as cash flow
statement summarizes the causes of changes in cash position between dates of two balance
sheets It indicates the sources amp uses of cash The cash flow statement is similar to the fund
flow statement except that it focuses attentions on cash instead of working capital (funds)
Thus this statement analyses change in non-current accounts as well as current accounts
(other than cash) to determine the flow of cash
The CFS is based on the concept on the WC Where as the CFS is based in cash which is only
the element of WC Thus the CFS provides details of cash movements whereas the FFS
provides the details of funds movements
The CFS considers only the actual movement of cash whereas the FFS considers the
movements of the funds as defined in terms of net working capital
CASH-FLOW STATEMENT
A cash-flow statement is a statement showing inflows (receipts) and outflows (payments) of
cash during a particular period In other words it is a summary of sources and applications of
Cash during a particular span of time It analyses the reason for changes in balance of cash
between the two balance sheet dates The term Cash here stands for cash and cash
equivalents
A cash-flow statement includes only those items which affect cash As such the cash-flow
statement is called a statement of changes in financial position - cash basis
A cash - flow statement can be for the past or can be projected for a future period
OBJECTS OR USES OF CASH-FLOW STATEMENT
The main objectives behind preparing a cash-flow statement can be laid down as under-
bull USEFUL FOR SHORT-TERM FINANCIAL PLANNING-
A cash-flow statement provides information for planning the short-term financial needs of the
firm Since it provides information regarding the sources and utilization of cash during a period
it become easier for the management to assess whether it will have Adequate cash to meet day-
to-day expenses and pay the long - term loans and interest Thereon and whether it has enough
cash to pay for the purchase of fixed assets or not
USEFUL FOR PREARING THE CASH BUDGET-
A cash-flow statement prepared for the future period is helpful in preparing a cash budget It
informs the management about the future period is helpful in preparing a cash budget It informs
the management about the surplus or deficit periods of cash ie in which months the payments
will be in excess of receipts It helps in planning the investment of surplus cash in short-term
investment and to plan short-term credit in advance of deficit periods
bull COMPARISON WITH CASH BUDGET-
A cash budget is prepared at the commencement of the year whereas a cash flow Statement is
prepared at the end of the year A comparison between the two helps in ascertaining the extent
to which the financial resources of the firm have been generated and used according to the plan
Causes of variances between the figures of two statements can be analyzed and proper
corrective measures may be takes
bull STUDY OF THE TREND OF CASH RECEIPTS AND PAYMENTS-
A cash-flow statement reveals the speed at which the cash is being generated from debtors stock
and other current assets the speed at which the current liabilities are being paid It enables the
management to assess the true position of the cash in future
bull IT EXPLAINS THE DEVIATIONS OF CASH FROM EARNINGS-
A firm may earn huge profits yet it may have paucity of cash or when it suffered a loss it may
still have plenty of cash A cash flow statement explains the reasons for it
HELPFUL IN ASCERTAINING CASH-FLOW FROM VARIOUS
ACTIBITIES SEPARATELY-
A cash-flow statement aims at highlighting the cash flow from operating investing and
financing activities separately It includes how much cash has been generated or used in these
activities
bull HELPFUL IN MAKING DIVIDEND DECISIONS-
Dividend must be paid within 42 days of its declaration Hence the management takes the help of
cash-flow statement to ascertain the position of cash generated from operating activities which
can be used for payment of dividend
IMPORTANCE AND RELEVANCE OF CFS
The CFS has gained importance in view of the fact that there are many managerial Decisions
which are taken in the light of the cash availability or cash position of the firm
For example declaration of dividend by the company requires cash disbursement and
Therefore the Board of Directors must consider the cash position before proposing a dividend
The CFS also provides information for the short term financial planning and in particular the
short term cash needs of the firm
In view of increasing importance and relevance of the CFS the clause 32 of the Listing
agreement (between a Company and the Stock Exchange where the shares proposed to be listed)
has been amended by the SEBI As a result the listed companies in India are now required to
supply a copy of the CFS to each shareholder as a part of Annual Report As a result the listed
companies have started a practice of sending a CFS for which the BS has been prepared as
apart of the Annual Report of the company
DIFFRENCE BETWEEN CASH - FLOW STATEMENT AND
CASH BUDGET
There is not much difference between cash flow statement and a cash budget The
only difference is that a cash flow statement is prepared for a past period where as cash
budget is prepared for a future period Hence it is of limited use as far as the future
periods are concerned A cash budget is therefore prepared showing how much cash is
likely to be received and what will be the disbursements during a future period of time
Thus a cash budget indicates in which months there will be surplus cash and in which
moths there will be deficiency of cash resources The management can then take suitable
decision to invest the surplus cash or make arrangement for the deficiency of cash at the
required time
LIQUIDITY
It does not present true picture of the liquidity of the firm the liquidity does
not depend upon cash alone Liquidity also depends upon those assets
which can be converted into cash easily
bull Exclusion of these assets obstructs the true reporting of the ability of the firm to
meet its liabilities when they become due for payment
bull The possibilities of window - dressing is higher in case of cash position in
comparison to the working capital position of the firm
bull The cash balance can be easily maneuvered by postponing purchases and other
payments and by rapidly collecting cash from debtors before the balance sheet date
Hence a fund - flow statement presents a more realistic picture than a cash flow
statement
bull Cash flow statement ignores non- cash charges Hence the true position of the
enterprise cannot be judged by cash flow statement
bull It is prepared on cash basis and hence ignores one of the basic concept of accounting
namely accrual concept
PROCEDURE OF PREPARING CASH FLOW STATEMENT-
The institute of charted accountants of India has issued accounting standards (as)-3 revised for
preparing a cash flow statement This accounting standard has been made mandatory in respect
of accounting periods commencing on or after 1st April 2001 for certain enterprises These
enterprises are-
bull Enterprises whose equity or debt securities are listed on a recognized stock exchange in
India And enterprise that are in the process of issuing equity or debt securities that will
be listed on a recognized stock exchange in India
bull All other commercial industrial and business enterprises whose turnover for accounting
period Rs 50 crores
As such the cash flow statement has been prepared according to as -3 revised in this project
According to as-3 revised the cash flow statement summarizes the cash inflows and cash
outflows and the net changes (increase or decrease) in cash and cash equipment resulting from
operating investing and financing activities of a firm during a period The following terms are
used for preparing a cash flow statement
CASH-
It compares cash in hand and demands with banks
CASH EQUIVALENTS-
There are short - term highly liquid investments that are readily into known amounts of cash
and which present insignificant risk of changes in their values Normally an investment will be
termed as cash equivalent only if it has a short maturity period say three months or less from the
date of its acquisition Examples of cash equivalent are treasury bills commercial papers etc
Which are purchased with cash that is in excess of immediate needs investment in shares are
excluded from cash equivalents unless they are cash equivalent in reality For example the
preference shares of the company which are purchased shortly before their redemption date will
be included in cash equivalents provided there is only an insignificant risk of failure of the
company in repaying the amount at the date of the maturity
CLASSIFICATION OF CASH FLOW-
According to as -3 (revised) cash flow statement should be presented in a manner that it reports
inflows of cash by classifying them into three categories namely operating investing and
financing activities Classification of all activities into these activities on the cash and cash
equivalents of the enterprise such information will be helpful in evaluating the relationships
among these three activities are explained as below
CASH FLOW FROM OPERATING ACTIVITIES-
Operating activities are the main revenue generating activities of an enterprise As such they
include cash flows from those transactions and events which enter into the ascertainment of
net profit or loss of the enterprise Examples of cash flows arising operating activities are
bull Cash receipts from the sale of goods and rendering of services
bull Cash receipts from royalties fees commissions and other revenue
bull Cash payments to suppliers for goods and services
bull Cash payments to and on behalf of employees
bull Cash receipts and cash payments of an insurance enterprise for premiums and claims
annuities and other policy benefits
bull Cash receipts and payments relating to future contracts forward contracts option
contracts and swap contracts when the contracts are held for dealing or trade purpose and
bull Cash payments of refunds of income taxes unless they can be specifically identified with
financing and investing activities
CASH FLOW FROM INVESTING ACTIVITIES-
Investing activities include the purchase and sale of long term assets such as land building plant
and machinery etc not held for resale These activities also include the purchase and sale of such
investment which are not including in cash equipments Cash flow from investing activities
discloses the expenditures incurred for resources intended to generate future income and cash
flows
Examples cash flow arising from investing activities are
bull Cash payments to acquire fixed assets (including intangible)
bull Cash receipts from sale of fixed assets (including intangibles)
bull Cash payments to acquire shares warrants or debt instruments of other enterprises
(other than receipts for those instruments considered to be cash equivalents)
bull Cash receipts from sale of shares warrants or debt instruments of other enterprises (other
than receipts for those instruments considered to be cash equivalents)
bull Cash advances and loans made to third parties In case of financial enterprises these will
be treated as cash flow from operating activities
bull Cash receipts from the repayment of advances and loans made to third parties In case of
financial enterprises these will be treated as cash flow from operating activities
bull Cash receipts of insurance claim for property involved in accident and
bull Cash receipts of interest and dividend In case of financial enterprise these will be treated
cash flow from operating activities
CASH FLOW FROM FIANCING ACTIVITIES-
Financing activities are the activities that result in change in capital and borrowing of the
enterprise
Examples of cash flows arising from financing activities are
bull Cash receipts from issuing shares or other similar instruments
bull Cash receipts from issuing debentures loans bonds and other short term or long term
borrowing
bull Cash repayment of amounts borrowed buy back of equity shares redemption of
preference shares debentures loans bonds etc
bull Cash payment of interest and dividend
IMPORTANT NOTE
In case of financial enterprise such as bank or mutual fund company cash Outflow
and cash inflow arising from the purchase and sale of securities will Be treated as
flows from operating activities This is because purchase and sale of securities is a
part of operating activity in case of financial enterprise In addition interest paid
and interest received as well as dividends received will also be treated as cash flow
from operating activities in case of financial Enterprises
CASH FLOW STATEMENT
(DIRECT METHOD)
CASH FLOW FROM OPERATING ACTIVITIES
Cash receipts from costumers
Cash paid to suppliers and employers ()
Cash generated from operations
Income tax paid ()
Cash flows from extraordinary item
plusmn Extra ordinary items
Net cash from operating activities
CASH FLOW FROM INVESTING ACTIVITIES-
Purchase of fixed assets
Proceed from sale equipment ()
Interest received
Dividend received ()
Net cash from investing activities
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from insurance of share capital
Proceeds from long- term borrowings ()
Repayment of from long-term borrowings
Interest paid
Dividend paid ()
Net cash from financing activities
Net increase in cash and cash equivalent
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
SOME SPECIAL TERMS-
i) INTERSET AND DIVIDEND-
Cash inflow from interest and dividends and cash outflow on account of interest and
dividends should be disclosed separately Cash inflow arising from interest and dividends
received should be shown as cash flow from investing activities where as cash outflow
disclosed outflow on account of interest and dividend paid should be shown as cash flow
from financing activity
ii) TAXES ON INCOME-
Tax paid on income is a part of cash flow from operating activity Hence taxes paid are
shown as a deduction under cash flow from operating activity
iii) EXTRA ORDINARY ITEMS-
Cash flow relating to extra ordinary items such as bad debts recovered Claims received from
insurance companies winning of a lottery or a law etc Should be disclosed separately as
arising from operating investing or financing activities For example the amount received
for insurance company on account of loss of stock by fire Earthquake and floods etc Should
be reported as cash flow from operating activities
iv) SIGNIFICANT NON - CASH TRANSACTION-
There are some investing and financing activities which do not require the use of cash or
cash equivalents Such non cash activities should be excluded from the cash flow statement
Examples are the acquisition of assets by issue of debentures or shares conversion of
shares into debentures etc Such significant on non cash transaction should be disclosed
outside the cash flow statement
CASH FLOW STATEMENT
(INDIRECT METHOD)
CASH FLOW FROM OPERARATTNG ACTIVITIES
Net profit before taxation and extraordinary item
Adjustment for
Depreciation
Foreign exchange loss
Interest income
Dividend income
Interest expense
Operating profit before working capital changes
Increase in sundry debtors
Decrease in inventories
Decrease in sundry creditors
Cash generated from operations
Income tax paid ()
Cash flow before extraordinary item
plusmn Extra - ordinary items
Net cash from operating activities
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of fixed assets ()
Proceeds from sale of equipment
Interest received
Dividend received ()
Net cash from investing activities
CASH FLOW FROM FINANCING ACTIVITIES-
Proceeds from insurance of share capital
Proceeds from long - term borrowings
Repayments of from long - term borrowings ()
Interest paid ()
Dividend paid ()
Net cash from financing activities
Net increase in cash and cash equivalent
Cash and cash equivalents at beginning of period
CHANGES IN CASH FLOWS
Changes in cash flows can be treated to the following
1 Net profit will increase the cash flows these cash flows will be
increased further if there are any non-cash changes (such as depreciation
and amortization)
2 Any payment of dividends will decrease the cash flows as will the
repayment of debt an issue of share or debt will also increase the
cash flows
3 An increase in non-cash assets will decrease cash flows increase in
current assets and fixed assets will result in drain on cash flows
Thus a statement of changes in cash flows ie the cash flow statement
classifies all Changes into one of three categories - operating investing or
financing activities Therefore the preparation of a statement of changes in cash
flows requires classification of changes in liabilities shareholders equity and
non-cash assets into one of these categories although some items will not fit
easily onto one other
h equivalent at end of period
STEP- BY-STEP PROCEDURE TO PREPARE CFS
1 Calculate the net increase or decrease in cash and cash equivalents-
For this purpose the opening balance of total cash and cash equivalents is compared with the
closing balance of cash and equivalents
Increasedecrease in cash and equivalents
Opening balance Closing Balance
Cash in hand
Cash in bank
Short-term Investment
Total
The difference between the total of opening and closing balance will be increased or
Decreased in cash equivalents during the period It may be noted that if there are only one or
two of items of cash etc
2 Net Cash flaw from operating activities-
The term operating refers to the normal purchase of goods and services On the basis of the
information contained in the comparative BS s and the IS and the additional Information the
net cash flow generated or use by the operating activities may be ascertained The IS prepared
by the firm gives the net profit figure earned by the firm On actual basis ie all items in the
IS are incorporated on the basis of earnedaccrued even
3 If not resulting in cash movements-
So the profit or loss as by the IS may not result in increase or decrease in cash balance by the
SYNOPSIS
INTRODUCTION
ESCORTS PVT LTD is a private limited company not listed in a stock exchange of India
and employees 900 highly trained personnel Its manufacturing plants are strategically located
in close proximity to its customers at Faridabad (Haryana) Noida (UP)
OBJECTIVES OF THE STUDY
bull To find the movement of cash inflow and cash outflow
bull To make the comparison between cash inflow and
bull Cash outflow
bull To prepare the Cash Flow Statement
bull To analyze the Balance Sheet of the company in terms of Cash Flow Statement
bull To focus on various activities of the organization in terms of Operating
Financing Investment
SCOPE OF THE STUDY
Financial resources are the assets for the company and their productivity is key
factor for profitability It is necessary to know their problems their knowledge
skills abilities amp the measures that can be taken to reduce them By analyzing this
top management can build good relations with the employees
The whole study is to determine the competencies of different employees who are
working in ESCORTS PVT LTD By analyzing it the top management can
introduce the concept of competency mapping in the organization Through this
management can attempt to use more suitable strategies towards the human
resource development
The research is confined to elicit the existing gap between the standard skill
required to perform the job and the skill processed by the employees at ESCORTS
PVT LTD And to provide them suitable training program to over come those gaps
for the better utilization of human resources
RELEVANCE
The scope of the study was confined to the outside parties like creditors
shareholders government etc Who want to invest their money in the
company
The benefit of the report for the company is that through this report they can come
to know about the cash flow statements of the company
This study also unable the company that their cash is not utilizing in unnecessary
things
The benefit of the report for the researcher is that it has helped to get knowledge
about the cash inflow and cash
RESERRCH METHODOLOGY-
RESEARCH DESIGN
bull The study was conducted under well- structured approach
bull The project lasted for 4 weeks and the year 2009 ie from 08 July to 12
Aug2009
bull The questionnaire method amp personal interview method was used to collect
the primary data for the study
The secondary data is collected from Internet amp company training material and
many other company materials
SAMPLE DESIGN
The process of extracting a sample from a population is called sampling
procedure The selection of sampling procedure to conduct the research
depends upon the nature of the study and the objective to be accomplished
Judgment sampling technique is adopted to select the respondents in this
study The sample design included the various departments in the YAMAHA
MOTORS PVT LTD
Methodology of date collection
bull Conducting personal interview
bull Data collection from primary and secondary sources
bull Designing questionnaire
bull Selecting sample size from the sample frame for the survey
bull Questionnaire distribution
bull Analysis of collected data with the help of statistical tools
bull Interpretation of collected data
bull Stating the conclusion based on the entire study
Sampling Technique
The sampling technique used for this research is of non-probability and convenience
sampling
Sample Unit
Employees of the company
Sample Size
For this research study the sample size is 25 respondents
Sources of data
Primary data
Primary data is the data which is collected by the researcher for the first time
and which was not there The tools used to collect the data are-
1)Questionnaire method from the employers in different departments
2) Face to Face personal interactions
Secondary Data
The data already collected is called as secondary data The relevant information
for this study has been collected from secondary source such as
Books
Journal
Reports
Publication by the organizational circulation
Company records
Business bulletins
Internet
Secondary data is also collected from various of the internet and intranet Some
of the website trough which information was gathered was through
HYPOTHESIS
The report is analyzed under the presumption that cash flow position of
YAMAHA MOTORS PVTLTD It can be improved and made effective in
terms of cash flows
In testing the above hypothesis the following aspects will be considered
1 Balance sheet comparisons
2 Presentation of cash flow statement in terms of revised AS-3
LIMITATIONS
The study though conducted to the best of the ability suffers from some
certain limitations There are
The data is secondary one and as such its reliability may be
questioned upon
The time availability for the study is less and as such it hinders thee
progress of the study
Senior officials were rarely approachable
Websites were not giving comprehensive data
Not having face-to-face interaction to get more relevant
information
Analysis and interpretation of data was done on the assumption that
the respondentsrsquo information was online
Information collected was totally subjective
The interviews are done during office hours but could not be done
for the other employees of other
DATA ANALYSIS
ESCORTS PVT LTD
CASH FLOW STRATEMENT
Year Ended Year Ended
30092009 30092008
Rs Crores Rs
Crores
A Cash Flow from Operating Activities
Net profit before tax (1733) 3444
Adjustment for
Loss on sale Provision for diminution in value of Long Term
Investments amp loans to Group Companies 189 4018
Gain on sale of Long Term Investments (122) (9492)
Gain on sale of Asset (013) -
Depreciation 4497 3955
Misc Exp Assets Write off Provisions 808 750
Interest Expense 7222 7999
Dividend Income (002) (001)
Interest Income (2082) -
Operating Profit before working capital changes 8764 10673
Adjustments for
Trade and other Receivables (8817) (12035)
Inventories 1379 (4692)
Trade Payables 6705 19046
Miscellaneous Expenditure (750) (511)
(1483) 1808
Cash Generated from Operations 7281 12481
Direct Taxes (Paid)Refunds (1785) 3166
Net Cash Flow from operating activities 5496 15647
B Cash Flow from Investing Activities
Purchase of Fixed Assets (3095) (2794)
Proceeds from sale of Fixed Assets 086 177
Movement in Loans and Advances (1627) (1644)
Sale of Investments 3233 11452
Short Term Deposits with schedule Banks (231) (1048)
Interest Received 2070 -
Dividend Received 002 001
Net Cash Flow from Investing activities 438 6144
Proceeds from Share Capital amp Securities Premium 11444 -
Proceeds from Long Term Borrowings 8660 -
Less Repayment of Long Term Borrowings (054) (7896)
Proceeds (Repayment) from short term borrowings (net) (22726) -
Interest Paid (7740) (8223)
Net Cash used in financing activities (10416) (16119)
Net Increase(Decrease) in Cash and Cash equivalents (4482) 5672
Cash and Cash equivalents as at 01102008 10565 4893
Cash and Cash equivalents as at 30092009 6083 1056
ANALYSIS OF CASH FLOW
From the cash flow statements of the ESCORT PVTLTDIt can be analyzed
from the two years that the net cash balance of the company has increased
manifold in 30-09-2008 than the year 30-09-2009
The net profit in 30-09-2008 is higher than the 30-09-2009 but due to certain
changes there has been increase in the cash balance
The interest paid this year is ore of the last year which implies that thee
company has not repaid his borrowed capital due to which the interest has got
down
The depreciation has increased but it does not affect cash to an extent as it is a
non-cash item In the head of working capital there is drastic change in the cash
balance in the form of ldquoTrade and other Receivables which has affected the cash
balance
There is outflow of cash for receivables rather than the inflow in the last year
So the net effect is that the cash from operating activities has been decreased
two times from the last year
The company has no accumulated losses as at the end of the financial year ie
September 31 2008
Provision for taxation has been made in accordance with the requirement of AS-
22 issued by Institute of Charted Accountants of India
Pursuant to that current year deferred tax liability have been charged to profit amp
loss account
In opinion of the board of directors of thee company the current assets loans
and advances have a value on realization in the ordinary course of the business at
least equal to the amount stated in the balance sheet and provision for all
liabilities have been made
Balance of sundry debtors creditors loans and advances are subject to confirmation by
the concerned parties
METHOD OF ANALYSIS
1 Data analysis is done using the following statistical tools wherever required in
order to extract meaningful information from the collected data
o Simple percentage and averages
o Bar diagram
o Cone diagram
o Pie diagram
2 The collected data from the questionnaire has been put together in the form of
tables
3 Percentage has been calculated wherever necessary for generalization of the
data
4 Data analysis and interpretation has been done on the basis of primary and
secondary data
5 The findings researches have been recorded based on the analysis
6 The study conducted pertains only to YAMAHA MOTORS INDIA PVTLTD
All bank balances (debitcredit) have been confirmed by the concerned bank
Identified from the available information which has been relied upon by the auditors
The names of small-scale industrial units to whom outstanding for more than
thirty days within agreed terms
The company has 9996 of shareholders in its subsidiary company named as
ESCORTS PVT LTD As at 31-03-2008
So the net effect is that the net cash from investing activities has many more
times than the last year which is negative Now the company has repaid its long
term borrowing more than the last year which has decreased the cash balance by
the little amount
Balance with the schedule banks under the head current amp collection account
amounting to represent funds in transit lying with schedule banks pending
transfer against loan liabilities under the head cash credit amp bill discounting
LIQUIDITY RATIO
1 CURRENT RATIO
(Amount in Rs)
Current Ratio
Year Current Assets Current Liabilities Ratio
2003 58574151 7903952 7412004 69765346 31884616 2192005 72021081 16065621 4482006 91328208 47117199 1942007 115642068 30266661 382
Interpretation
As a rule the current ratio with 21 (or) more is considered as satisfactory
position of the firm
When compared with 2006 there is an increase in the provision for tax because
the debtors are raised and for that the provision is created The current liabilities
majorly included Lanco Group of company for consultancy additional services
The sundry debtors have increased due to the increase to corporate taxes
In the year 2006 the cash and bank balance is reduced because that is used for
payment of dividends In the year 2007 the loans and advances include majorly
the advances to employees and deposits to government The loans and advances
reduced because the employees set off their claims The other current assets
include the interest attained from the deposits The deposits reduced due to the
declaration of dividends So the other current assets decreased
The huge increase in sundry debtors resulted an increase in the ratio which is
above the benchmark level of 21 which shows the comfortable position of the
firm
GRAPHICAL REPRESENTATION
741
219
448
194
382
000
100
200
300
400
500
600
700
800
Ratio
2003 2004 2005 2006 2007
Years
CURRENT RATIO
Ratio
2 QUICK RATIO
(Amount
in Rs)
Quick Ratio
Year Quick Assets Current Liabilities Ratio
2003 58574151 7903952 741
2004 52470336 31884616 165
2005 69883268 16065620 435
2006 89433596 47117199 19
2007 115431868 30266661 381
Interpretation
Quick assets are those assets which can be converted into cash with in a short
period of time say to six months So here the sundry debtors which are with the
long period does not include in the quick assets
Compare with 2006 the Quick ratio is increased because the sundry debtors are
increased due to the increase in the corporate tax and for that the provision
created is also increased So the ratio is also increased with the 2006
GRAPHICAL REPRESENTATION
741
165
435
190
381
000
100
200
300
400
500
600
700
800
Ratio
2003 2004 2005 2006 2007
Years
QUICK RATIO
Ratios
3 ABOSULTE LIQUIDITY RATIO
(Amount
in Rs)
Absolute Cash Ratio
Year Absolute Liquid Assets Current Liabilities Ratio
2003 31004027 7903952 392
2004 10859778 31884616 034
2005 39466542 16065620 246
2006 53850852 47117199 114
2007 35649070 30266661 118
Interpretation
The current assets which are ready in the form of cash are considered as absolute
liquid assets Here the cash and bank balance and the interest on fixed assts are
absolute liquid assets
In the year 2006 the cash and bank balance is decreased due to decrease in the
deposits and the current liabilities are also reduced because of the payment of
dividend That causes a slight increase in the current yearrsquos ratio
GRAPHICAL REPRESENTATION
392
034
246
114 118
0
05
1
15
2
25
3
35
4
Ratios
2003 2004 2005 2006 2007
Years
ABSOLUTE CASH RATIO
Ratios
LEVERAGE RATIOS
4 PROPRIETORY RATIO
(Amount
in Rs)
Proprietory Ratio
Year Share Holders Funds Total Assets Ratio
2003 67679219 78572171 086
2004 53301834 88438107 06
2005 70231061 89158391 079
2006 56473652 106385201 053
2007 97060013 129805102 075
Interpretation
The proprietary ratio establishes the relationship between shareholders funds to
total assets It determines the long-term solvency of the firm This ratio indicates
the extent to which the assets of the company can be lost without affecting the
interest of the company
There is no increase in the capital from the year2004 The share holderrsquos funds
include capital and reserves and surplus The reserves and surplus is increased
due to the increase in balance in profit and loss account which is caused by the
increase of income from services
Total assets includes fixed and current assets The fixed assets are reduced
because of the depreciation and there are no major increments in the fixed assets
The current assets are increased compared with the year 2006 Total assets are
also increased than precious year which resulted an increase in the ratio than old
GRAPHICAL REPRESENTATION
086
060
079
053
075
000
010
020
030
040
050
060
070
080
090
Ratios
2003 2004 2005 2006 2007
Years
PROPRIETORY RATIO
Ratios
ACTIVITY RATIOS
5 WORKING CAPITAL TURNOVER RATIO
(Amount
in Rs)
Working Capital Turnover Ratio
Year Income From Services Working Capital Ratio
2003 36309834 50670199 0722004 53899084 37880730 1422005 72728759 55355460 1312006 55550649 44211009 1262007 96654902 85375407 113
Interpretation
Income from services is greatly increased due to the extra invoice for Operations
amp Maintenance fee and the working capital is also increased greater due to the
increase in from services because the huge increase in current assets
The income from services is raised and the current assets are also raised together
resulted in the decrease of the ratio of 2007 compared with 2006
GRAPHICAL REPRESENTATION
072
142 131126
113
000
020
040
060
080
100
120
140
160
Ratio
2003 2004 2005 2006 2007
Years
WORKING CAPITAL TURNOVER RATIO
Ratio
6 FIXED ASSETS TURNOVER RATIO
(Amount in Rs)
Fixed Assets Turnover Ratio
Year Income From Services Net Fixed Assets Ratio
2003 36309834 28834317 126
2004 53899084 29568279 182
2005 72728759 17137310 424
2006 55550649 15056993 369
2007 96654902 14163034 682
Interpretation
Fixed assets are used in the business for producing the goods to be sold This
ratio shows the firmrsquos ability in generating sales from all financial resources
committed to total assets The ratio indicates the account of one rupee
investment in fixed assets
The income from services is greaterly increased in the current year due to the
increase in the Operations amp Maintenance fee due to the increase in extra invoice
and the net fixed assets are reduced because of the increased charge of
depreciation Finally that effected a huge increase in the ratio compared with the
previous yearrsquos ratio
GRAPHICAL REPRSENTATION
126182
424 369
682
000
100
200
300
400
500
600
700
Ratios
2003 2004 2005 2006 2007
Years
FIXED ASSETS TURNOVER RATIO
Ratios
7 CAPITAL TURNOVER RATIO
(Amount
in Rs)
Capital Turnover Ratio
Year Income From Services Capital Employed Ratio
2003 36309834 37175892 0982004 53899084 53301834 1012005 72728759 70231061 1042006 55550649 56473652 0982007 96654902 97060013 100
Interpretation
This is another ratio to judge the efficiency and effectiveness of the company
like profitability ratio
The income from services is greaterly increased compared with the previous year
and the total capital employed includes capital and reserves amp surplus Due to
huge increase in the net profit the capital employed is also increased along with
income from services Both are effected in the increment of the ratio of current
year
GRAPHICAL REPRESENTATION
098
101
104
098
100
094095096097098099100101102103104
Ratios
2003 2004 2005 2006 2007
Years
CAPITAL TURNOVER RATIO
Ratios
8 CURRENT ASSETS TO FIXED ASSETS RATIO
(Amount
in Rs)
Current Assets To Fixed Assets Ratio
Year Current Assets Fixed Assets Ratio
2003 58524151 19998020 2932004 69765346 18672761 3742005 72021081 17137310 4202006 91328208 15056993 6072007 115642068 14163034 817
Interpretation
Current assets are increased due to the increase in the sundry debtors and the net
fixed assets of the firm are decreased due to the charge of depreciation and there
is no major increment in the fixed assets
The increment in current assets and the decrease in fixed assets resulted an
increase in the ratio compared with the previous year
GRAPHICAL REPRESENTATION
293374
420
607
817
000
100
200
300
400
500
600
700
800
900
Ratios
2003 2004 2005 2006 2007
Years
CURRENT ASSETS TO FIXED ASSETS RATIO
Ratios
PROFITABILITY RATIOS
GENERAL PROFITABILITY RATIOS
9 NET PROFIT RATIO
(Amount in Rs)
Net Profit Ratio
Year Net Profit After Tax Income from Services Ratio
2003 21123474 36039834 059
2004 16125942 53899084 030
2005 16929227 72728759 023
2006 18259580 55550649 033
2007 40586359 96654902 042
Interpretation
The net profit ratio is the overall measure of the firmrsquos ability to turn each rupee
of income from services in net profit If the net margin is inadequate the firm
will fail to achieve return on shareholderrsquos funds High net profit ratio will help
the firm service in the fall of income from services rise in cost of production or
declining demand
The net profit is increased because the income from services is increased The
increment resulted a slight increase in 2007 ratio compared with the year 2006
GRAPHICAL REPRESENTATION
059
030
023
033
042
000
010
020
030
040
050
060
Ratios
2003 2004 2005 2006 2007
Years
NET PROFIT RATIO
Ratios
10 OPERATING PROFIT
(Amount in Rs)
Operating Profit
Year Operating Profit Income From Services Ratio
2003 36094877 36309834 099
2004 27576814 53899084 051
2005 29540599 72728759 041
2006 31586718 55550649 057
2007 67192677 96654902 070
Interpretation
The operating profit ratio is used to measure the relationship between net profits
and sales of a firm Depending on the concept it will decide
The operating profit ratio is increased compared with the last year The earnings
are increased due to the increase in the income from services because of
Operations amp Maintenance fee So the ratio is increased slightly compared with
the previous year
GRAPHICAL REPRESENTATION
099
051
041
057
070
000
010
020
030
040
050060
070
080
090
100
Ratios
2003 2004 2005 2006 2007
Years
OPERATING PROFIT RATIO
Ratios
11 RETURN ON TOTAL ASSETS RATIO
(Amount in Rs)
Return on Total Assets Ratio
Year Net Profit After Tax Total Assets Ratio
2003 21123474 78572171 027
2004 16125942 88438107 018
2005 16929227 89158391 019
2006 18259580 106385201 017
2007 40586359 129805102 031
Interpretation
This is the ratio between net profit and total assets The ratio indicates the return
on total assets in the form of profits
The net profit is increased in the current year because of the increment in the
income from services due to the increase in Operations amp Maintenance fee The
fixed assets are reduced due to the charge of depreciation and no major
increments in fixed assets but the current assets are increased because of sundry
debtors and that effects an increase in the ratio compared with the last year ie
2006
GRAPHICAL REPRESENTATION
027
018 019017
031
000
005
010
015
020
025
030
035
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON TOTAL ASSETS
Ratios
12 RESERVES amp SURPLUS TO CAPITAL RATIO
(Amount in Rs)
Reserves amp Surplus To Capital Ratio
Year Reserves amp Surplus Capital Ratio
2003 65599299 2079920 31542004 34582554 18719280 1852005 51511781 18719280 2752006 37754372 18719280 2022007 78340733 18719280 419
Interpretation
The ratio is used to reveal the policy pursued by the company a very high ratio
indicates a conservative dividend policy and vice-versa Higher the ratio better
will be the position
The reserves amp surplus is decreased in the year 2006 due to the payment of
dividends and in the year 2007 the profit is increased But the capital is
remaining constant from the year 2004 So the increase in the reserves amp surplus
caused a greater increase in the current yearrsquos ratio compared with the older
GRAPHICAL REPRESENTATION
3154
185 275 202419
-
500
1000
1500
2000
2500
3000
3500
Ratios
2003 2004 2005 2006 2007
Years
RESERVES amp SRUPLUS TO CAPITAL RATIO
Ratios
OVERALL PROFITABILITY RATIOS
13 EARNINGS PER SHARE
(Amount in Rs)
Earnings Per Share
Year Net Profit After Tax No of Equity Shares Ratio
2003 21123474 207992 101562004 16125942 1871928 8612005 16929227 1871928 9042006 18259580 1871928 9752007 40586359 1871928 2168
Interpretation
Earnings per share ratio are used to find out the return that the shareholderrsquos earn
from their shares After charging depreciation and after payment of tax the
remaining amount will be distributed by all the shareholders
Net profit after tax is increased due to the huge increase in the income from
services That is the amount which is available to the shareholders to take There
are 1871928 shares of Rs10- each The share capital is constant from the year
2004 Due to the huge increase in net profit the earnings per share is greaterly
increased in 2007
GRAPHICAL REPRESENTATION
10156
861904 975
2168
000
2000
4000
6000
8000
10000
12000
Ratios
2003 2004 2005 2006 2007
Years
EARNINGS PER SHARE
Ratios
14 PRICE EARNINGS (PE) RATIO
(Amount in Rs)
Price Earning (PE) Ratio
Year Market Price Per Share Earnings Per Share Ratio
2003 3254 10156 0322004 2847 861 3302005 3752 904 4152006 3017 975 3092007 5185 2168 239
Interpretation
The ratio is calculated to make an estimate of application in the value of share of
a company
The market price per share is increased due to the increase in the reserves
amp surplus The earnings per share are also increased greaterly compared
with the last year because of increase in the net profit So the ratio is
decreased compared with the previous year
GRAPHICAL REPRESENTATION
032
330
415
309
239
000
050
100
150
200
250
300
350
400
450
Ratios
2003 2004 2005 2006 2007
Years
PE RATIO
Ratios
15 RETURN ON INVESTMENT
(Amount in Rs)
Return on Investment
Year Net Profit After Tax Share Holders Fund Ratio
2003 21123474 67679219 031
2004 16125942 53301834 03
2005 16929227 70231061 024
2006 18259580 56473652 032
2007 40586359 97060013 042
Interpretation
This is the ratio between net profits and shareholders funds The ratio is
generally calculated as percentage multiplying with 100
The net profit is increased due to the increase in the income from services ant
the shareholders funds are increased because of reserve amp surplus So the ratio
is increased in the current year
GRAPHICAL REPRESENTATION
031 030
024
032
042
000
005
010
015
020
025
030
035
040
045
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON INVESTMENT RATIO
RatioS
DATA COLLECTION
The data can be of two types
Primary Data
Secondary Data
Primary Data
Primary data are those data which is originally collected afresh
Secondary Data
Secondary data are those data which are already collected and stored and which has
been passed through statistical research
In this project Secondary data has been collected from following sources-
Annual report
Books
MIS
Other material and report published by company There are two methods to prepare
the Cash flow Statement
ndirect Method
I
The indirect method (or reconciliation method) starts with net income and converts it
to net cash flow from operating activities In other words the indirect method adjusts
net income for items that affected reported net income but did not affect cash To
compute net cash flow from operating activities non-cash charges in the income
statement are added ack to net income and non-cash credits are deducted
b
Direct Method
Under the direct method the statement of cash flows reports net cash flow from
operating activities as major classes of operating cash receipts (eg cash collected from
customers and cash received from interest and dividends) and cash disbursements (eg
cash paid to suppliers for goods to employees for services to creditors for interest and
to government authorities for taxes)
INDIRECT VERSUS DIRECT METHOD
The most contentious decision that the FASB faced in issuing Statement No 95 was
choosing between the direct method and the indirect method of determining net cash
flow from operating activities Companies lobbied against the direct method urging
adoption of the indirect method Commercial lending officers expressed a strong
preference to the FASB hat the direct method be required
tCF-Page 3 of 5
In Favor of the Direct Method
The principal advantage of the direct method is that it shows operating cash receipts and
payments That is it is more consistent with the objective of a statement of cash flows to
provide information about cash receipts and cash payments than the in-direct method
which does not report operating cash receipts and payments
Supporters of the direct method contend that knowledge of the specific sources of
operating cash receipts and the purposes for which operating cash payments were made
in past periods is useful in estimating future operating cash flows Furthermore in-
formation about amounts of major classes of operating cash receipts and payments is
more useful than information only about their arithmetic sum (the net cash flow from
operating activities) Such information is more revealing of an enterprises ability (1) to
generate sufficient cash from operating activities to pay its debts (2) to reinvest in its
operations and (3) to make distributions to its owners
Many corporate providers of financial statements say that they do not currently collect
information in a manner that allows them to determine amounts such as cash received
from customers or cash paid to suppliers directly from their accounting systems But
supporters of the direct method contend that the incremental cost of assimilating such
operating cash receipts and payments data is not significant
In Favor of the Indirect Method
The principal advantage of the indirect method is that it focuses on the differences
between net income and net cash flow from operating activities That is it provides a
useful link between the statement of cash flows and the income statement and balance
sheet
Many providers of financial statements contend that it is less costly to adjust net income
to net cash flow from operating activities (indirect) than it is to report gross operating
cash receipts and payments (direct) Supporters of the indirect method also state that the
direct method which effectively reports income statement information on a cash rather
than an accrual basis may erroneously suggest that net cash flow from operating
activities is as good as or better than net income as a measure of performance
Special Rules Applying to Direct and Indirect Methods
Companies that use the direct method are required at a
minimum to report separately the following classes of
operating cash receipts and payments
Receipts
1048713 Cash collected from customers (including lessees licensees etc)
1048713 Interest and dividends received
1048713 Other operating cash receipts if any
Payments
1048713 Cash paid to employees and suppliers of goods or services (including
suppliers of
insurance advertising etc)
1048713 Interest paid
1048713 Income taxes paid
1048713 Other operating cash payments if any
Companies using the indirect method are required to disclose separately changes in
inventory receivables and payables to reconcile net income to net cash flow from
operating activities In addition interest paid (net of amount capitalized) and income
taxes paid must be disclosed elsewhere in the financial statements or accompanying
notes
The FASB requires these separate and additional disclosures so that users
may approximate the direct method Also an acceptable alternative presentation
of the in-direct method is to report net cash flow from operating activities as a
single line item in the statement of cash flows and to present the reconciliation
details elsewhere in the financial statements
FINDING OF SUDY
According to cash flow statement of the company The finding of the study are as
follows-
The company has not taken any loans secured or unsecured from companies
firms or other parties
The company has not accepted any deposit from the public during the year
The company is not a sick industrial company
The company has not granted any loan secured or unsecured to company firms
or other parties
The company has paid the entire long term and short term borrowing during the
year
The company has buy back the companyrsquos own share this year
The interest paid in 2008 is more than the
There has been a significant decline in volume over the years from 2001-02
to 2005-06 as can be seen in the graph below
Table 43
The Net sales of Tractor has increased considerably from 2004-05 to 2007-08
This can be mainly attributed to changes in Variable and material costs and in
the price
The Net sale of Tractor has increased considerably from 2004-05 to 2007-08
that is an decrease of Rs7216 per tractor This can be mainly attributed to
changes in
Variable and material costs and in the prices
RECOMMENDATIONS
According to cash flow statement of the company The suggestions of the study
are as follows-
The time durations for training program have to increase
Buy regular review and consultations develop a career progression
which is sensitive to performance and ability
Create an environment where by people are trend developed to enable
The to take advantages of opportunities that arise
The jab can be redesigned where the work man stay in what is normally
the same job but has elements of it changed
The principle amount must be paid in time which can be reducing the
interest the out flow
The purchase of the fixed asset must be made only when there is extreme
requirement
In order to avoid taxes the company should go for more investment
The companyrsquos borrowings should go for more investment
o The company should try to reduce the depreciations as maximum
as possible
CONCLUSION
The study on competency level of employees at ESCORTS PVTLTD gave an
insight about the acceptance of competency mapping by employees
The employees at Ymi welcome the introduction of competency mapping in their
organization as they felt it was very much essential in enhancing their skills and
organizational development
The organization has provided the recourses guidance and support to facilitate the
introduction of competency level easily and develop the employees in such a way
that they can face any kind of challenge
However the level of competency in employees is found to be satisfactory
Providing proper training education and guidance to the employees can enhance
the level
This study was mainly carried out to find out whether thee competency mapping
being followed by the company is effective till date If the competency mapping
and fitment to the organization
By looking at the graphs and tables it is quite that the employees still are not up to
the level of competent pool they still have to be trained and made competent in
order to fill the gap As the organization has just applied the mapping it has to see
to that it meets all the requirements for competency mapping
Therefore the graphs make it quite clear that the potential of the employees is not
up to the mark and ie they are not competent enough to meet the competency-
mapping requirement Hence by further training and counseling this gap can be
closed
This report includes the training requirements of employees and it highlights skills
possessed by each employee and skill required All employees get training so that
skill can be improved and maintain balance between standard performance with
their actual performance to avoid gap
APPENDIX
QUESTIONNAIRE
Consumer Survey
Name _____________________________
Age _____________________________
Sex
Male
Female
Occupation
Businessman
Service man
Professional
Others
Monthly income brackets
Below 15000
15000- 20000
20000-30000
30000 and above
of your savings _________
Do you invest
Yes
No
If yes then where do you invest your money
Bank
Insurance
funds
Others
Why do you made that statement
Return
Risk hedging
Tax benefits
Other reasons (specify) _______
Who influence your cash decision
Relatives and friends
Family members
Advisors experts
You yourself
If no then why
Do not know where to invest
Satisfied with your current investment return
Donrsquot want take risk
Other reasons
__________________________________________________________________
___________________
Do you know about CF statement
Yes
No
If yes then from where you have come to know about an cash statement
Advertisements on newspapers
Friends and relative
Agents experts
Other source
What do you think about cash statement
It means investing only in share market
Constant watch must be kept always
Return is not satisfactory
Other perception
__________________________________________________
Can you recall any cash flow of company
___________________________
Would you want to made CF of an org
Yes
No
If yes then why
_______________________________________________________
If no then why
_______________________________________________________
BIBLIOGRAPHY
List of Books
1 PANDEY IM - FINANCIAL MANAGEMANT
2 KHAN MY AND JAIN PK -FINANCIAL MANAGEMANT
3 SMITH KV ndash MANAGEMANT OF WORKING CAPITAL
3 COMPANY RECORDS
4 JOURNAL
5 REPORTS
WEBLIOGRAPHY
1 wwwescortspvtltdcom
2 wwwgooglecom
17th October 1944 with Yudi Nanda as Managing Director and Hari Nanda as Chairman
After the owing to opportunity lying in the Indian village Escorts (Agricultural
Machinery) Ltd was launched in 1948 with Yudi Nanda as Director Tragically Yudi
Nanda died in an accident in 1952 Then Escorts agent Ltd And Escorts (Agricultural
Machine) Ltd Was merged in 1953 to create single Escorts agents Pvt Ltd
SOME MILESTONES
1948 Pioneered farm mechanization in the country by launching Escorts Agricultural Machines Ltd
With a franchise from a US based MINNEAPOLIS MOLINE WISCONCIN for marketing
tractors implements engines and other equipments
1958 Started importing MF tractor from Yugoslavia for marketing the same in India
1960 A manufacturing plant was set up at Faridabad
1965 Got industrial license to manufacture URSUS ESCORT tractors
169
1969 Escorts signed a contract with FORD MOTOR COMPANY to manufacture Ford 3000 model
tractors Escorts Institute of Farm Mechanization (EIFM) was established at Bangalore This
training Institute is one of its kind
1971 1st February the first tractor FORD 3000 rolled out of the factory The same year the turnover
touched the Rs53 million mark
1973 Escorts Tractors Limited (ETL) declared a healthy Profit Before Tax of Rs4725 million
1974 Export of 400 tractors to Afghanistan - perhaps the worlds largest ever airlift of such
equipment
1975 Turnover crossed the Rs 200 million mark for ETL Profit After Tax Rs 87 million Maiden
dividend of 10 declared
1976
1976 FORD 3600 advancement in Farm Mechanization was launched with fanfare to a
tremendous reception Trial production of in-plant manufacturing of engine parts (Block amp
Head)
1977
1977 Escorts Scientific Research Centre marked its beginning at Faridabad by developing its own
Engines for E-27 and E-37 Due to constant technology absorption indigenization level
touched 72 for FORD tractors which was a result of relentless effort in that direction
1979 Turnover crossed the Rs 50 crores mark In plant facility for machining centre housing and
case transmission on built-in line concept installed
1983 Escorts Tractors Limited (ETL) established a state-of-the-art research and development centre
to spearhead newer breakthroughs in Farm Mechanization and to maintain industry
leadership Line concept introduced for engine block machining
1984 75000th tractor rolled out A great occasion for the large family that worked for ETL Newer
challenges and frontiers were set
1985 In keeping with the stupendous financial success Escorts Tractors Limited (ETL) offered its
first Bonus Issue (11)
1987 50hp FORD 3610 was launched another leap for the Indian Farm Mechanization Industry the
farmers and the people of the land
1988
1988 ETLrsquos annualized turnover crossed Rs 100 crores Dividend 45 for 15 months
1989 A MOU with CLAAS was signed for manufacturing amp
1990-
91
First Public Issue (Februaryrsquo91) over-subscribed four times Shares listed on Delhi and Bombay
Stock Exchanges
1991-
92
The Crop Tiger range of Combine Harvesters was launched by Escorts Claas Ltd
1993 FORD 3620 tractor launched
1996 Disengagement of joint venture collaboration with New Holland and launch of FARMTRAC
Tractor
1997 A Joint Venture with Italian company CARRARO was finalized to establish a company in India
for manufacturing and marketing of transmission and axles
COLLABORATIONS
Collaboration with international Organization of technological excellence constant
research to adopt the emerging technology to specify requirement of the market and
belief in the philosophy industrial interdependence have made Escorts today one of the
leading trend steers in Indiarsquos New Industrial Culture Escorts have merged as fraternity
of above 50000 shareholders 22000 employees 4000 ancillary suppliers and 1 6000
dealers and stockiest all engaged in a large scale investment and sustained efforts to
meet the ever widening market horizons of technological competence appropriate to
Indiarsquos unique changing needs
Escorts believe in incorporating the finest existing technology to meet Indian consumers
demands by collaborating with the internationally renowned companies prominent
among these are
IN GERMANY
GOETZE AG Piston rings and cylinder liners
MAHLE GmbH Piston
CLASS OHG Harvesters Combines
KNORR BREMSE AG Railway Brake System
AUGUST BILSTEIN GmbH Absorbers Hydraulic products
Pressure and temperature switches
IN JAPAN
KAYABA INDUSTRY CO LTD Telescopic Front Forks Car
MIKUNI SHOKO CO Carburetors for BI-Wheelers
IN UK
JCBAMFORD EXCAVATORS JCB Excavators loaders Front end
Loaders Telescopic handlers
IN USA
HUGHESNETWORKS SYSTEMS AB Road Construction Machinery
Vibratory Road Rollers
OFFICIAL ADDRESS OF ESCORTS
Registered Office Corporate
Secretariat amp Law
Escorts Ltd
11 Scindia House
Connaught Circus
New Delhi-110 001
Tel No 011-23310145
Fax No 011-23311715
Escorts Ltd
155 Mathura Road
Faridabad - 121 003
Tel No ( 0129 ) 2250222
Fax ( 0129 ) 2250060
Email Address corpsectndbvsnlnetin
Web Site wwwescortsgroupcom
LEADERSHIP TEAM
Mr Rajan Nanda
Chairman
Mr Nikhil Nanda
Joint Managing Director
Mr Rohtash Mal
Executive Director and Chief Executive Officer - Agri Machinery Group
Mr Manoj Jha
Executive Vice President of Engineering Division
Mr Kamal Bali
CEO ndash Escorts Construction Equipment Limited (ECEL)
Mr GB Mathur
Vice President - Law amp Company Secretary
Mr Rakesh Kumar Budhiraja
Group Chief Financial Officer
Mr Partha Dasgupta
Group Vice President Human Resources and Employee Relations
LEVELS OF MANAGEMENT
MANAGEMENT
TOP
MANAGEMENT
SENIOR
MANAGEMENT
MIDDLE
MANAGEMENT
JUNIOR
MANAGEMENT
MANAGING
DIRECTOR amp
CEO(G-11)
CHIEF GENERAL
MANGER(G-8)
CHIEF
MANAGER
(G-5)
ASSISTANT
MANAGER(G-2)
VICE PRESIDENT
(G-10)
GENERAL
MANAGER(G-7)
SENIOR
MANAGER(G-4)
EXECUTIVE(G-
1)
ASSOCIATE
VICE PRESIDENT
(G-9)
DEPUTY
GENERAL
MANAGER(G-6)
MANAGER(G-3)
MISSION
WE WILL ACHIEVE LEADERSHIP IN MARKET SHARE amp PROFITABILITY IN
THE DOMESTIC TRACTOR MARKET BY THE YEAR 2004-2006 AND SHALL BE
THE WORLSrsquoS LARGEST SUPPLIER OF SUB 100 HP TRACTORS WE SHALL
PROACTIVELY CONTRIBUTE TO THE PROSPERITY OF THE RURAL
ECONOMY BY DEFINING A LARGER ROLE FOR OURSELVES IN THE FOOD
AND AGRICULTURE SECTOR
THE VISION
WE SHALL STRIVE TO BE THE NUMERO UNO IN THE INDIAN TRACTOR
INDUSTRY AND TOP FIVE TRACTOR MANUFACTURERS IN THE WORLD
WE SHALL CONTINUOUSLY STRIVE TO MEET THE EVER RISING
EXPECTATIONS OF OUR VALUED CUSTOMERS AT THE LOWEST
INTERNAL COST
WE SHALL AIM TO OFFER THE FARMING COMMUNITY A RANGE OF
INNOVATIVE PRODUCTS AND SERVICES WHICH SHALL ENABLE THEM
TO IMPROVE THEIR PRODUCTIVITY AND COMPETITIVNESS
WE SHALL ACHIEVE A TURNOVER OF RS 2 BILLION BY THE YEAR
2006TRANSCENDING NATIONAL BOUNDARIES WE SHALL STRIVE TO
ATTAIN EXPORTS OF ONE TENTH OF OUR TOTAL TRACTOR PRODUCTION
BY THE YEAR 2
REVIEW OF LITERATURE
INTRODUCTION
MEANING OF FINANCIAL STATEMENTS
The financial statements are nothing but the financial information presented in concise and
capsule form and are the financial information is the information relating to the financial
position of any firm The firm prepares the financial statements
bull To communicate with different parties about the financial position of the firm
(Shareholders creditors banks financial institution financial analysts investors
etc And
bull To analyze the operations and performance of the firm for the further
planning
The basic source which provides the financial information is the Annual report of the
company which is presented by the company to its shareholders at the Annual General
Meeting
Though the presentation of annual report is a statutory requirement under the
Companies Act 1956 however it is also a medium of communication with the present as well
as prospective investors and creditors of the company
Clause 43 A of the Listing Agreement (with the stock exchange) requires every
listed company to publish unaudited quarterly results But it does not mean the non-corporate
firms do not prepare the financial statements Every firm big or small prepare the following
financial statements
The Balance Sheet (BS)
1 The Income Statement (IS)
Two other key financial statements which are usually prepared by corporate firms are
1 Statement of appropriation of profit and
2 Statement of Change in financial position
ANALYSIS OF FINANCIAL STATEMENTS (AFS)
Analysis of financial statements refers to the process of the critical examination of the
financial information contained in the financial statements in order to understand and
make decisions regarding the operations of the firm The AFS is basically a study of the
relationship among various financial fact and figures as given in a set of financial
statements AFS is the process of establishment and identifying the financial weakness
and strength of the firm It is indicative of two aspects of a firm ie the profitability
and the financial position
OBJECTIVES OF AFS
The objectives of the AFS is to understand the information contained in financial
statements with a view to know the weakness and strength of the firm and to make a
forecast about the future prospects of the firm and thereby enabling the financial
analyst to take different decisions regarding the operation of the firm The objectives
are as follows
bull To assess the present profitability and operating efficiency of the fir
COMMON-SIZE STATEMENTS (CSS)
The CSS represents the relationship of different items of financial statements with some
Common items by expressing each item as a percentage of the common item In common size
Balance Sheet each item of the balance sheet is stated as a percentage of the total balance
sheet The percentages for different items are computed by dividing the absolute amount of
that item by the Common Base and then multiply by 100 The percentage so calculated can
be easily compared with the corresponding percentage in some other period Thus the CSS is
useful not only in intra-firm comparison for the same year or free several years
TREND PERCENTAGE ANALYSYS(TPA)
The TPA is a technique of studying several financial statements over a series of years In
TPA the trend percentages are calculated for each item by taking the figure of that item for
some base year as 100 So the trend percentage is the percentage relationship which
Each item of different years bears to the same item in the base year Any year may be Taken
as the base year but generally the starting initial year is taken as the base year So each
item for base year is taken as 100 and then the same item for other years is Expressed as a
percentage of the base year
RATIO ANALYSIS (RA)
The RA has emerged as the principle technique of the AFS A ratio is a relationship
Expressed in mathematical terms between two individual or groups of figures connected with
other in some logical manner The RA is based in the premise that a single accounting figure
by itself may not communicate any meaningful information but when expressed as a relative
to some other figure it may definitely give some significant information The relationship
between two or more accounting figuresgroups is called a Financial Ratio
A financial ratio helps to summarize a large mass of financial data into a concise form
and to make meaningful interpretations and conclusions about the performance of a firm
For example a firm has net sales Rs 5 00000
Gross Profit Rs 100000
Ratio of Gross Profit to net sales is 20
ie (Rsl 00000 Rs5 00000)
Forms of Ratios
Since a ratio is a mathematical relationship between two or more variables accounting
figures such relationship can be expressed in different ways as follows
bull As a Pure Ratio
bull As a Rate of Times
bull As a Percentage
Ratio can be classified into
bull The Liquidity Ratio
bull The Activity Ratio
bull The Leverage Ratio
bull The Profitability Ratio
STATEMENT OF CHANGES IN FINANCIAL POSITION
(SCFP)
Since the BS amp IS of a firm are two basic depicting the financial position of a firm at the end
of the year These two financial statements are called the traditional statements Both these
statements fail to throw light on changes in assets liabilities and shareholders wealth during
this year
BS deals with the financial position gives only the static view of the year- end financial
position and fails to indicate the movement and causes in assets and liabilities during the
year Similarly IS show the profit or loss resulting out of the operations of the firm during
the year This profit or loss in fact to ascertain the sufficiency of resources to declare the
dividend etc thus there is a need to prepare another statement (together with the BS amp IS)
which may identify the changes in assets liabilities and the shareholders funds over a given
period
The SCFP is essentially an explanation of the changes in financial position of a Firm
occasioned by the firm in between two successive BSs The SCFP draws basic Information
from the BS and IS helps in understanding the change in assets liabilities and shareholders
worth The SCFP deals with the flow of funds during the year ie the funds coming in and
going out of the firm It summarizes the sources from where the funds might have been
arranged procured by the firm and the uses for which the funs might have been used by
the firm during the year
The SCFP can be prepared as follows
bull SCFP (Cash Basis) also known as a Cash F low Statement
bull SCFP (Net Working Capital Basis) Fund Flow Statement
SCFP (WORKING CAPITAL BASIS)
FUND FLOW STATEMENT
The FFS reports the flows of funds through the firm during the year ie it shows the
Sources and uses of working capital between two balance sheet dates The FFS
attempts to explain the changes in financial position from one BS to the subsequent BS
in terms of the change in the funds or the working capital position of the firm
The term Working capital (WC) is generally defined as the excess of total
current assets over the total current liabilities The current Assets (CA) of a firm may
include cash in hand and at bank stock debtors bills advances etc and the Current
Liabilities (CL) includes creditors bills payable outstanding expenses provision for
tax short term liabilities etc the term WC is a single figure representing the net effect
of a transaction is to increase or decrease the Working Capital by affecting any of the
elements of Current Assets or Current Liabilities Therefore the FFS in its standard
form incorporates only those transactions which affect the Working Capital i e those
transactions where in only one of the affected accounted is a current account
Now a flow of working capital arises when one of the affected accounts is a current
account From the point of view of current account the effected on working capital
can examined in the light of the definitions of the term working capital ie the excess
of current assets over current liabilities ie
Impliedly change in any of the CA or CL will affect the WC Simple observation
equation tells that
bull Increase in any of the CA or decrease in any of the CLs will result in increase
in the WC
bull Decrease in any of the CA or increase in any of the CLs will result in decrease
in the WC
To find out the relative importance of different components of the financial position
of the firm
bull To identify the reasons for change in the profitability financial position of the
firm and
bull To assess the short term as well as the long term liquidity position of the
firm
TECHNIQUES TOOLS OF THE AFS
AFS can be undertaken by different persons and for different purposes therefore the
methodology adopted for the AFS may be carrying from one situation to another However
the following are some of the common techniques of the AFS
bull Comparative financial statements
bull Common-size financial statements
bull Trend percentage analysis and
bull Ratio Analysis
COMPARATIVE FINANCIAL STATEMENTS
In CFS two or more BS andor the IS of a firm are presented simultaneously in columnar
form The Financial data for two or more tears are placed and presented in adjacent columns
and thereby the financial data is provided at times perspective in order to facilitate periodic
comparison In CFS the BS and the IS for number of years are presented in condensed
form for year to year comparison and to exhibit the magnitude and direction of changes
The CFS helps a financial analyst of the firm and in establishing operating and
positional trend of the firm The CFS may be prepared to show
1 The absolute amount of different items in monetary terms
2 The amount of periodic changes in monetary terms
1 The percentages of periodic changes to reveal the proportionate changes
The CFS can be prepared for both the BS and the IS
CORE COMPETENCE OF ESCORTS
Customer 1
We put customers first in everything we do We take decisions keeping the customer in
mind
Challenging Spirit
We strive for excellence in everything we do and in the quality of goods amp services we
provide We work hard to achieve what we commit amp achieve results faster than our
competitors and we never give up
Team-work
We work cohesively with our colleagues as a multi-cultural team built on trust respect
understanding amp mutual co-operation Everyones contribution is equally important for
our success
Frank amp Fair Organization
We are honest sincere open minded fair amp transparent in our dealings We actively
listen to others and participate in healthy amp frank discussions to achieve the
organizations
A firm undertakes numerous during a year and most of these transactions during a year and
most of these transactions may affect one or the other current account ie most of these
transactions May results in the flow of the WC Neither is it necessary nor practical to
identify the effect of each and every transaction on the WC These transactions instead are
considered and analyzed in a collective form and then their effect on the WC is identified
SCFP (CASH BASIS) OR
THE CASH FLOW STATEMENT
The CFS attempts to analyze the transactions of the firm in terms of cash ie the transactions
generating cash and using cash The focus in the CFS is on cash rather than on WC The
sources of cash may be the cash profits earned by the firm issue of capital for cash issue of
other securities for cash borrowings sale of assets investment redemption of debenture or
preference share repayment of loan payment of tax dividend distribution etc Thus the
CFS summarizes the cash inflows and outflows
An analysis of cash flows is useful for short-run planning A firm needs sufficient cash to
debts maturing in the near future to pay interest and other expenses and to pay dividends to
shareholders The firm can make projections of cash flows and outflows for the near future to
determine the availability of cash This cash balance can be matched with the firms need for
cash during the period and accordingly arrangements can be made the deficit or invest the
surplus cash temporarily A historical analysis of cash flows provides insight to prepare
reliable cash flow projections for the immediate future
A statement of changes in financial position on cash basis commonly known as cash flow
statement summarizes the causes of changes in cash position between dates of two balance
sheets It indicates the sources amp uses of cash The cash flow statement is similar to the fund
flow statement except that it focuses attentions on cash instead of working capital (funds)
Thus this statement analyses change in non-current accounts as well as current accounts
(other than cash) to determine the flow of cash
The CFS is based on the concept on the WC Where as the CFS is based in cash which is only
the element of WC Thus the CFS provides details of cash movements whereas the FFS
provides the details of funds movements
The CFS considers only the actual movement of cash whereas the FFS considers the
movements of the funds as defined in terms of net working capital
CASH-FLOW STATEMENT
A cash-flow statement is a statement showing inflows (receipts) and outflows (payments) of
cash during a particular period In other words it is a summary of sources and applications of
Cash during a particular span of time It analyses the reason for changes in balance of cash
between the two balance sheet dates The term Cash here stands for cash and cash
equivalents
A cash-flow statement includes only those items which affect cash As such the cash-flow
statement is called a statement of changes in financial position - cash basis
A cash - flow statement can be for the past or can be projected for a future period
OBJECTS OR USES OF CASH-FLOW STATEMENT
The main objectives behind preparing a cash-flow statement can be laid down as under-
bull USEFUL FOR SHORT-TERM FINANCIAL PLANNING-
A cash-flow statement provides information for planning the short-term financial needs of the
firm Since it provides information regarding the sources and utilization of cash during a period
it become easier for the management to assess whether it will have Adequate cash to meet day-
to-day expenses and pay the long - term loans and interest Thereon and whether it has enough
cash to pay for the purchase of fixed assets or not
USEFUL FOR PREARING THE CASH BUDGET-
A cash-flow statement prepared for the future period is helpful in preparing a cash budget It
informs the management about the future period is helpful in preparing a cash budget It informs
the management about the surplus or deficit periods of cash ie in which months the payments
will be in excess of receipts It helps in planning the investment of surplus cash in short-term
investment and to plan short-term credit in advance of deficit periods
bull COMPARISON WITH CASH BUDGET-
A cash budget is prepared at the commencement of the year whereas a cash flow Statement is
prepared at the end of the year A comparison between the two helps in ascertaining the extent
to which the financial resources of the firm have been generated and used according to the plan
Causes of variances between the figures of two statements can be analyzed and proper
corrective measures may be takes
bull STUDY OF THE TREND OF CASH RECEIPTS AND PAYMENTS-
A cash-flow statement reveals the speed at which the cash is being generated from debtors stock
and other current assets the speed at which the current liabilities are being paid It enables the
management to assess the true position of the cash in future
bull IT EXPLAINS THE DEVIATIONS OF CASH FROM EARNINGS-
A firm may earn huge profits yet it may have paucity of cash or when it suffered a loss it may
still have plenty of cash A cash flow statement explains the reasons for it
HELPFUL IN ASCERTAINING CASH-FLOW FROM VARIOUS
ACTIBITIES SEPARATELY-
A cash-flow statement aims at highlighting the cash flow from operating investing and
financing activities separately It includes how much cash has been generated or used in these
activities
bull HELPFUL IN MAKING DIVIDEND DECISIONS-
Dividend must be paid within 42 days of its declaration Hence the management takes the help of
cash-flow statement to ascertain the position of cash generated from operating activities which
can be used for payment of dividend
IMPORTANCE AND RELEVANCE OF CFS
The CFS has gained importance in view of the fact that there are many managerial Decisions
which are taken in the light of the cash availability or cash position of the firm
For example declaration of dividend by the company requires cash disbursement and
Therefore the Board of Directors must consider the cash position before proposing a dividend
The CFS also provides information for the short term financial planning and in particular the
short term cash needs of the firm
In view of increasing importance and relevance of the CFS the clause 32 of the Listing
agreement (between a Company and the Stock Exchange where the shares proposed to be listed)
has been amended by the SEBI As a result the listed companies in India are now required to
supply a copy of the CFS to each shareholder as a part of Annual Report As a result the listed
companies have started a practice of sending a CFS for which the BS has been prepared as
apart of the Annual Report of the company
DIFFRENCE BETWEEN CASH - FLOW STATEMENT AND
CASH BUDGET
There is not much difference between cash flow statement and a cash budget The
only difference is that a cash flow statement is prepared for a past period where as cash
budget is prepared for a future period Hence it is of limited use as far as the future
periods are concerned A cash budget is therefore prepared showing how much cash is
likely to be received and what will be the disbursements during a future period of time
Thus a cash budget indicates in which months there will be surplus cash and in which
moths there will be deficiency of cash resources The management can then take suitable
decision to invest the surplus cash or make arrangement for the deficiency of cash at the
required time
LIQUIDITY
It does not present true picture of the liquidity of the firm the liquidity does
not depend upon cash alone Liquidity also depends upon those assets
which can be converted into cash easily
bull Exclusion of these assets obstructs the true reporting of the ability of the firm to
meet its liabilities when they become due for payment
bull The possibilities of window - dressing is higher in case of cash position in
comparison to the working capital position of the firm
bull The cash balance can be easily maneuvered by postponing purchases and other
payments and by rapidly collecting cash from debtors before the balance sheet date
Hence a fund - flow statement presents a more realistic picture than a cash flow
statement
bull Cash flow statement ignores non- cash charges Hence the true position of the
enterprise cannot be judged by cash flow statement
bull It is prepared on cash basis and hence ignores one of the basic concept of accounting
namely accrual concept
PROCEDURE OF PREPARING CASH FLOW STATEMENT-
The institute of charted accountants of India has issued accounting standards (as)-3 revised for
preparing a cash flow statement This accounting standard has been made mandatory in respect
of accounting periods commencing on or after 1st April 2001 for certain enterprises These
enterprises are-
bull Enterprises whose equity or debt securities are listed on a recognized stock exchange in
India And enterprise that are in the process of issuing equity or debt securities that will
be listed on a recognized stock exchange in India
bull All other commercial industrial and business enterprises whose turnover for accounting
period Rs 50 crores
As such the cash flow statement has been prepared according to as -3 revised in this project
According to as-3 revised the cash flow statement summarizes the cash inflows and cash
outflows and the net changes (increase or decrease) in cash and cash equipment resulting from
operating investing and financing activities of a firm during a period The following terms are
used for preparing a cash flow statement
CASH-
It compares cash in hand and demands with banks
CASH EQUIVALENTS-
There are short - term highly liquid investments that are readily into known amounts of cash
and which present insignificant risk of changes in their values Normally an investment will be
termed as cash equivalent only if it has a short maturity period say three months or less from the
date of its acquisition Examples of cash equivalent are treasury bills commercial papers etc
Which are purchased with cash that is in excess of immediate needs investment in shares are
excluded from cash equivalents unless they are cash equivalent in reality For example the
preference shares of the company which are purchased shortly before their redemption date will
be included in cash equivalents provided there is only an insignificant risk of failure of the
company in repaying the amount at the date of the maturity
CLASSIFICATION OF CASH FLOW-
According to as -3 (revised) cash flow statement should be presented in a manner that it reports
inflows of cash by classifying them into three categories namely operating investing and
financing activities Classification of all activities into these activities on the cash and cash
equivalents of the enterprise such information will be helpful in evaluating the relationships
among these three activities are explained as below
CASH FLOW FROM OPERATING ACTIVITIES-
Operating activities are the main revenue generating activities of an enterprise As such they
include cash flows from those transactions and events which enter into the ascertainment of
net profit or loss of the enterprise Examples of cash flows arising operating activities are
bull Cash receipts from the sale of goods and rendering of services
bull Cash receipts from royalties fees commissions and other revenue
bull Cash payments to suppliers for goods and services
bull Cash payments to and on behalf of employees
bull Cash receipts and cash payments of an insurance enterprise for premiums and claims
annuities and other policy benefits
bull Cash receipts and payments relating to future contracts forward contracts option
contracts and swap contracts when the contracts are held for dealing or trade purpose and
bull Cash payments of refunds of income taxes unless they can be specifically identified with
financing and investing activities
CASH FLOW FROM INVESTING ACTIVITIES-
Investing activities include the purchase and sale of long term assets such as land building plant
and machinery etc not held for resale These activities also include the purchase and sale of such
investment which are not including in cash equipments Cash flow from investing activities
discloses the expenditures incurred for resources intended to generate future income and cash
flows
Examples cash flow arising from investing activities are
bull Cash payments to acquire fixed assets (including intangible)
bull Cash receipts from sale of fixed assets (including intangibles)
bull Cash payments to acquire shares warrants or debt instruments of other enterprises
(other than receipts for those instruments considered to be cash equivalents)
bull Cash receipts from sale of shares warrants or debt instruments of other enterprises (other
than receipts for those instruments considered to be cash equivalents)
bull Cash advances and loans made to third parties In case of financial enterprises these will
be treated as cash flow from operating activities
bull Cash receipts from the repayment of advances and loans made to third parties In case of
financial enterprises these will be treated as cash flow from operating activities
bull Cash receipts of insurance claim for property involved in accident and
bull Cash receipts of interest and dividend In case of financial enterprise these will be treated
cash flow from operating activities
CASH FLOW FROM FIANCING ACTIVITIES-
Financing activities are the activities that result in change in capital and borrowing of the
enterprise
Examples of cash flows arising from financing activities are
bull Cash receipts from issuing shares or other similar instruments
bull Cash receipts from issuing debentures loans bonds and other short term or long term
borrowing
bull Cash repayment of amounts borrowed buy back of equity shares redemption of
preference shares debentures loans bonds etc
bull Cash payment of interest and dividend
IMPORTANT NOTE
In case of financial enterprise such as bank or mutual fund company cash Outflow
and cash inflow arising from the purchase and sale of securities will Be treated as
flows from operating activities This is because purchase and sale of securities is a
part of operating activity in case of financial enterprise In addition interest paid
and interest received as well as dividends received will also be treated as cash flow
from operating activities in case of financial Enterprises
CASH FLOW STATEMENT
(DIRECT METHOD)
CASH FLOW FROM OPERATING ACTIVITIES
Cash receipts from costumers
Cash paid to suppliers and employers ()
Cash generated from operations
Income tax paid ()
Cash flows from extraordinary item
plusmn Extra ordinary items
Net cash from operating activities
CASH FLOW FROM INVESTING ACTIVITIES-
Purchase of fixed assets
Proceed from sale equipment ()
Interest received
Dividend received ()
Net cash from investing activities
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from insurance of share capital
Proceeds from long- term borrowings ()
Repayment of from long-term borrowings
Interest paid
Dividend paid ()
Net cash from financing activities
Net increase in cash and cash equivalent
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
SOME SPECIAL TERMS-
i) INTERSET AND DIVIDEND-
Cash inflow from interest and dividends and cash outflow on account of interest and
dividends should be disclosed separately Cash inflow arising from interest and dividends
received should be shown as cash flow from investing activities where as cash outflow
disclosed outflow on account of interest and dividend paid should be shown as cash flow
from financing activity
ii) TAXES ON INCOME-
Tax paid on income is a part of cash flow from operating activity Hence taxes paid are
shown as a deduction under cash flow from operating activity
iii) EXTRA ORDINARY ITEMS-
Cash flow relating to extra ordinary items such as bad debts recovered Claims received from
insurance companies winning of a lottery or a law etc Should be disclosed separately as
arising from operating investing or financing activities For example the amount received
for insurance company on account of loss of stock by fire Earthquake and floods etc Should
be reported as cash flow from operating activities
iv) SIGNIFICANT NON - CASH TRANSACTION-
There are some investing and financing activities which do not require the use of cash or
cash equivalents Such non cash activities should be excluded from the cash flow statement
Examples are the acquisition of assets by issue of debentures or shares conversion of
shares into debentures etc Such significant on non cash transaction should be disclosed
outside the cash flow statement
CASH FLOW STATEMENT
(INDIRECT METHOD)
CASH FLOW FROM OPERARATTNG ACTIVITIES
Net profit before taxation and extraordinary item
Adjustment for
Depreciation
Foreign exchange loss
Interest income
Dividend income
Interest expense
Operating profit before working capital changes
Increase in sundry debtors
Decrease in inventories
Decrease in sundry creditors
Cash generated from operations
Income tax paid ()
Cash flow before extraordinary item
plusmn Extra - ordinary items
Net cash from operating activities
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of fixed assets ()
Proceeds from sale of equipment
Interest received
Dividend received ()
Net cash from investing activities
CASH FLOW FROM FINANCING ACTIVITIES-
Proceeds from insurance of share capital
Proceeds from long - term borrowings
Repayments of from long - term borrowings ()
Interest paid ()
Dividend paid ()
Net cash from financing activities
Net increase in cash and cash equivalent
Cash and cash equivalents at beginning of period
CHANGES IN CASH FLOWS
Changes in cash flows can be treated to the following
1 Net profit will increase the cash flows these cash flows will be
increased further if there are any non-cash changes (such as depreciation
and amortization)
2 Any payment of dividends will decrease the cash flows as will the
repayment of debt an issue of share or debt will also increase the
cash flows
3 An increase in non-cash assets will decrease cash flows increase in
current assets and fixed assets will result in drain on cash flows
Thus a statement of changes in cash flows ie the cash flow statement
classifies all Changes into one of three categories - operating investing or
financing activities Therefore the preparation of a statement of changes in cash
flows requires classification of changes in liabilities shareholders equity and
non-cash assets into one of these categories although some items will not fit
easily onto one other
h equivalent at end of period
STEP- BY-STEP PROCEDURE TO PREPARE CFS
1 Calculate the net increase or decrease in cash and cash equivalents-
For this purpose the opening balance of total cash and cash equivalents is compared with the
closing balance of cash and equivalents
Increasedecrease in cash and equivalents
Opening balance Closing Balance
Cash in hand
Cash in bank
Short-term Investment
Total
The difference between the total of opening and closing balance will be increased or
Decreased in cash equivalents during the period It may be noted that if there are only one or
two of items of cash etc
2 Net Cash flaw from operating activities-
The term operating refers to the normal purchase of goods and services On the basis of the
information contained in the comparative BS s and the IS and the additional Information the
net cash flow generated or use by the operating activities may be ascertained The IS prepared
by the firm gives the net profit figure earned by the firm On actual basis ie all items in the
IS are incorporated on the basis of earnedaccrued even
3 If not resulting in cash movements-
So the profit or loss as by the IS may not result in increase or decrease in cash balance by the
SYNOPSIS
INTRODUCTION
ESCORTS PVT LTD is a private limited company not listed in a stock exchange of India
and employees 900 highly trained personnel Its manufacturing plants are strategically located
in close proximity to its customers at Faridabad (Haryana) Noida (UP)
OBJECTIVES OF THE STUDY
bull To find the movement of cash inflow and cash outflow
bull To make the comparison between cash inflow and
bull Cash outflow
bull To prepare the Cash Flow Statement
bull To analyze the Balance Sheet of the company in terms of Cash Flow Statement
bull To focus on various activities of the organization in terms of Operating
Financing Investment
SCOPE OF THE STUDY
Financial resources are the assets for the company and their productivity is key
factor for profitability It is necessary to know their problems their knowledge
skills abilities amp the measures that can be taken to reduce them By analyzing this
top management can build good relations with the employees
The whole study is to determine the competencies of different employees who are
working in ESCORTS PVT LTD By analyzing it the top management can
introduce the concept of competency mapping in the organization Through this
management can attempt to use more suitable strategies towards the human
resource development
The research is confined to elicit the existing gap between the standard skill
required to perform the job and the skill processed by the employees at ESCORTS
PVT LTD And to provide them suitable training program to over come those gaps
for the better utilization of human resources
RELEVANCE
The scope of the study was confined to the outside parties like creditors
shareholders government etc Who want to invest their money in the
company
The benefit of the report for the company is that through this report they can come
to know about the cash flow statements of the company
This study also unable the company that their cash is not utilizing in unnecessary
things
The benefit of the report for the researcher is that it has helped to get knowledge
about the cash inflow and cash
RESERRCH METHODOLOGY-
RESEARCH DESIGN
bull The study was conducted under well- structured approach
bull The project lasted for 4 weeks and the year 2009 ie from 08 July to 12
Aug2009
bull The questionnaire method amp personal interview method was used to collect
the primary data for the study
The secondary data is collected from Internet amp company training material and
many other company materials
SAMPLE DESIGN
The process of extracting a sample from a population is called sampling
procedure The selection of sampling procedure to conduct the research
depends upon the nature of the study and the objective to be accomplished
Judgment sampling technique is adopted to select the respondents in this
study The sample design included the various departments in the YAMAHA
MOTORS PVT LTD
Methodology of date collection
bull Conducting personal interview
bull Data collection from primary and secondary sources
bull Designing questionnaire
bull Selecting sample size from the sample frame for the survey
bull Questionnaire distribution
bull Analysis of collected data with the help of statistical tools
bull Interpretation of collected data
bull Stating the conclusion based on the entire study
Sampling Technique
The sampling technique used for this research is of non-probability and convenience
sampling
Sample Unit
Employees of the company
Sample Size
For this research study the sample size is 25 respondents
Sources of data
Primary data
Primary data is the data which is collected by the researcher for the first time
and which was not there The tools used to collect the data are-
1)Questionnaire method from the employers in different departments
2) Face to Face personal interactions
Secondary Data
The data already collected is called as secondary data The relevant information
for this study has been collected from secondary source such as
Books
Journal
Reports
Publication by the organizational circulation
Company records
Business bulletins
Internet
Secondary data is also collected from various of the internet and intranet Some
of the website trough which information was gathered was through
HYPOTHESIS
The report is analyzed under the presumption that cash flow position of
YAMAHA MOTORS PVTLTD It can be improved and made effective in
terms of cash flows
In testing the above hypothesis the following aspects will be considered
1 Balance sheet comparisons
2 Presentation of cash flow statement in terms of revised AS-3
LIMITATIONS
The study though conducted to the best of the ability suffers from some
certain limitations There are
The data is secondary one and as such its reliability may be
questioned upon
The time availability for the study is less and as such it hinders thee
progress of the study
Senior officials were rarely approachable
Websites were not giving comprehensive data
Not having face-to-face interaction to get more relevant
information
Analysis and interpretation of data was done on the assumption that
the respondentsrsquo information was online
Information collected was totally subjective
The interviews are done during office hours but could not be done
for the other employees of other
DATA ANALYSIS
ESCORTS PVT LTD
CASH FLOW STRATEMENT
Year Ended Year Ended
30092009 30092008
Rs Crores Rs
Crores
A Cash Flow from Operating Activities
Net profit before tax (1733) 3444
Adjustment for
Loss on sale Provision for diminution in value of Long Term
Investments amp loans to Group Companies 189 4018
Gain on sale of Long Term Investments (122) (9492)
Gain on sale of Asset (013) -
Depreciation 4497 3955
Misc Exp Assets Write off Provisions 808 750
Interest Expense 7222 7999
Dividend Income (002) (001)
Interest Income (2082) -
Operating Profit before working capital changes 8764 10673
Adjustments for
Trade and other Receivables (8817) (12035)
Inventories 1379 (4692)
Trade Payables 6705 19046
Miscellaneous Expenditure (750) (511)
(1483) 1808
Cash Generated from Operations 7281 12481
Direct Taxes (Paid)Refunds (1785) 3166
Net Cash Flow from operating activities 5496 15647
B Cash Flow from Investing Activities
Purchase of Fixed Assets (3095) (2794)
Proceeds from sale of Fixed Assets 086 177
Movement in Loans and Advances (1627) (1644)
Sale of Investments 3233 11452
Short Term Deposits with schedule Banks (231) (1048)
Interest Received 2070 -
Dividend Received 002 001
Net Cash Flow from Investing activities 438 6144
Proceeds from Share Capital amp Securities Premium 11444 -
Proceeds from Long Term Borrowings 8660 -
Less Repayment of Long Term Borrowings (054) (7896)
Proceeds (Repayment) from short term borrowings (net) (22726) -
Interest Paid (7740) (8223)
Net Cash used in financing activities (10416) (16119)
Net Increase(Decrease) in Cash and Cash equivalents (4482) 5672
Cash and Cash equivalents as at 01102008 10565 4893
Cash and Cash equivalents as at 30092009 6083 1056
ANALYSIS OF CASH FLOW
From the cash flow statements of the ESCORT PVTLTDIt can be analyzed
from the two years that the net cash balance of the company has increased
manifold in 30-09-2008 than the year 30-09-2009
The net profit in 30-09-2008 is higher than the 30-09-2009 but due to certain
changes there has been increase in the cash balance
The interest paid this year is ore of the last year which implies that thee
company has not repaid his borrowed capital due to which the interest has got
down
The depreciation has increased but it does not affect cash to an extent as it is a
non-cash item In the head of working capital there is drastic change in the cash
balance in the form of ldquoTrade and other Receivables which has affected the cash
balance
There is outflow of cash for receivables rather than the inflow in the last year
So the net effect is that the cash from operating activities has been decreased
two times from the last year
The company has no accumulated losses as at the end of the financial year ie
September 31 2008
Provision for taxation has been made in accordance with the requirement of AS-
22 issued by Institute of Charted Accountants of India
Pursuant to that current year deferred tax liability have been charged to profit amp
loss account
In opinion of the board of directors of thee company the current assets loans
and advances have a value on realization in the ordinary course of the business at
least equal to the amount stated in the balance sheet and provision for all
liabilities have been made
Balance of sundry debtors creditors loans and advances are subject to confirmation by
the concerned parties
METHOD OF ANALYSIS
1 Data analysis is done using the following statistical tools wherever required in
order to extract meaningful information from the collected data
o Simple percentage and averages
o Bar diagram
o Cone diagram
o Pie diagram
2 The collected data from the questionnaire has been put together in the form of
tables
3 Percentage has been calculated wherever necessary for generalization of the
data
4 Data analysis and interpretation has been done on the basis of primary and
secondary data
5 The findings researches have been recorded based on the analysis
6 The study conducted pertains only to YAMAHA MOTORS INDIA PVTLTD
All bank balances (debitcredit) have been confirmed by the concerned bank
Identified from the available information which has been relied upon by the auditors
The names of small-scale industrial units to whom outstanding for more than
thirty days within agreed terms
The company has 9996 of shareholders in its subsidiary company named as
ESCORTS PVT LTD As at 31-03-2008
So the net effect is that the net cash from investing activities has many more
times than the last year which is negative Now the company has repaid its long
term borrowing more than the last year which has decreased the cash balance by
the little amount
Balance with the schedule banks under the head current amp collection account
amounting to represent funds in transit lying with schedule banks pending
transfer against loan liabilities under the head cash credit amp bill discounting
LIQUIDITY RATIO
1 CURRENT RATIO
(Amount in Rs)
Current Ratio
Year Current Assets Current Liabilities Ratio
2003 58574151 7903952 7412004 69765346 31884616 2192005 72021081 16065621 4482006 91328208 47117199 1942007 115642068 30266661 382
Interpretation
As a rule the current ratio with 21 (or) more is considered as satisfactory
position of the firm
When compared with 2006 there is an increase in the provision for tax because
the debtors are raised and for that the provision is created The current liabilities
majorly included Lanco Group of company for consultancy additional services
The sundry debtors have increased due to the increase to corporate taxes
In the year 2006 the cash and bank balance is reduced because that is used for
payment of dividends In the year 2007 the loans and advances include majorly
the advances to employees and deposits to government The loans and advances
reduced because the employees set off their claims The other current assets
include the interest attained from the deposits The deposits reduced due to the
declaration of dividends So the other current assets decreased
The huge increase in sundry debtors resulted an increase in the ratio which is
above the benchmark level of 21 which shows the comfortable position of the
firm
GRAPHICAL REPRESENTATION
741
219
448
194
382
000
100
200
300
400
500
600
700
800
Ratio
2003 2004 2005 2006 2007
Years
CURRENT RATIO
Ratio
2 QUICK RATIO
(Amount
in Rs)
Quick Ratio
Year Quick Assets Current Liabilities Ratio
2003 58574151 7903952 741
2004 52470336 31884616 165
2005 69883268 16065620 435
2006 89433596 47117199 19
2007 115431868 30266661 381
Interpretation
Quick assets are those assets which can be converted into cash with in a short
period of time say to six months So here the sundry debtors which are with the
long period does not include in the quick assets
Compare with 2006 the Quick ratio is increased because the sundry debtors are
increased due to the increase in the corporate tax and for that the provision
created is also increased So the ratio is also increased with the 2006
GRAPHICAL REPRESENTATION
741
165
435
190
381
000
100
200
300
400
500
600
700
800
Ratio
2003 2004 2005 2006 2007
Years
QUICK RATIO
Ratios
3 ABOSULTE LIQUIDITY RATIO
(Amount
in Rs)
Absolute Cash Ratio
Year Absolute Liquid Assets Current Liabilities Ratio
2003 31004027 7903952 392
2004 10859778 31884616 034
2005 39466542 16065620 246
2006 53850852 47117199 114
2007 35649070 30266661 118
Interpretation
The current assets which are ready in the form of cash are considered as absolute
liquid assets Here the cash and bank balance and the interest on fixed assts are
absolute liquid assets
In the year 2006 the cash and bank balance is decreased due to decrease in the
deposits and the current liabilities are also reduced because of the payment of
dividend That causes a slight increase in the current yearrsquos ratio
GRAPHICAL REPRESENTATION
392
034
246
114 118
0
05
1
15
2
25
3
35
4
Ratios
2003 2004 2005 2006 2007
Years
ABSOLUTE CASH RATIO
Ratios
LEVERAGE RATIOS
4 PROPRIETORY RATIO
(Amount
in Rs)
Proprietory Ratio
Year Share Holders Funds Total Assets Ratio
2003 67679219 78572171 086
2004 53301834 88438107 06
2005 70231061 89158391 079
2006 56473652 106385201 053
2007 97060013 129805102 075
Interpretation
The proprietary ratio establishes the relationship between shareholders funds to
total assets It determines the long-term solvency of the firm This ratio indicates
the extent to which the assets of the company can be lost without affecting the
interest of the company
There is no increase in the capital from the year2004 The share holderrsquos funds
include capital and reserves and surplus The reserves and surplus is increased
due to the increase in balance in profit and loss account which is caused by the
increase of income from services
Total assets includes fixed and current assets The fixed assets are reduced
because of the depreciation and there are no major increments in the fixed assets
The current assets are increased compared with the year 2006 Total assets are
also increased than precious year which resulted an increase in the ratio than old
GRAPHICAL REPRESENTATION
086
060
079
053
075
000
010
020
030
040
050
060
070
080
090
Ratios
2003 2004 2005 2006 2007
Years
PROPRIETORY RATIO
Ratios
ACTIVITY RATIOS
5 WORKING CAPITAL TURNOVER RATIO
(Amount
in Rs)
Working Capital Turnover Ratio
Year Income From Services Working Capital Ratio
2003 36309834 50670199 0722004 53899084 37880730 1422005 72728759 55355460 1312006 55550649 44211009 1262007 96654902 85375407 113
Interpretation
Income from services is greatly increased due to the extra invoice for Operations
amp Maintenance fee and the working capital is also increased greater due to the
increase in from services because the huge increase in current assets
The income from services is raised and the current assets are also raised together
resulted in the decrease of the ratio of 2007 compared with 2006
GRAPHICAL REPRESENTATION
072
142 131126
113
000
020
040
060
080
100
120
140
160
Ratio
2003 2004 2005 2006 2007
Years
WORKING CAPITAL TURNOVER RATIO
Ratio
6 FIXED ASSETS TURNOVER RATIO
(Amount in Rs)
Fixed Assets Turnover Ratio
Year Income From Services Net Fixed Assets Ratio
2003 36309834 28834317 126
2004 53899084 29568279 182
2005 72728759 17137310 424
2006 55550649 15056993 369
2007 96654902 14163034 682
Interpretation
Fixed assets are used in the business for producing the goods to be sold This
ratio shows the firmrsquos ability in generating sales from all financial resources
committed to total assets The ratio indicates the account of one rupee
investment in fixed assets
The income from services is greaterly increased in the current year due to the
increase in the Operations amp Maintenance fee due to the increase in extra invoice
and the net fixed assets are reduced because of the increased charge of
depreciation Finally that effected a huge increase in the ratio compared with the
previous yearrsquos ratio
GRAPHICAL REPRSENTATION
126182
424 369
682
000
100
200
300
400
500
600
700
Ratios
2003 2004 2005 2006 2007
Years
FIXED ASSETS TURNOVER RATIO
Ratios
7 CAPITAL TURNOVER RATIO
(Amount
in Rs)
Capital Turnover Ratio
Year Income From Services Capital Employed Ratio
2003 36309834 37175892 0982004 53899084 53301834 1012005 72728759 70231061 1042006 55550649 56473652 0982007 96654902 97060013 100
Interpretation
This is another ratio to judge the efficiency and effectiveness of the company
like profitability ratio
The income from services is greaterly increased compared with the previous year
and the total capital employed includes capital and reserves amp surplus Due to
huge increase in the net profit the capital employed is also increased along with
income from services Both are effected in the increment of the ratio of current
year
GRAPHICAL REPRESENTATION
098
101
104
098
100
094095096097098099100101102103104
Ratios
2003 2004 2005 2006 2007
Years
CAPITAL TURNOVER RATIO
Ratios
8 CURRENT ASSETS TO FIXED ASSETS RATIO
(Amount
in Rs)
Current Assets To Fixed Assets Ratio
Year Current Assets Fixed Assets Ratio
2003 58524151 19998020 2932004 69765346 18672761 3742005 72021081 17137310 4202006 91328208 15056993 6072007 115642068 14163034 817
Interpretation
Current assets are increased due to the increase in the sundry debtors and the net
fixed assets of the firm are decreased due to the charge of depreciation and there
is no major increment in the fixed assets
The increment in current assets and the decrease in fixed assets resulted an
increase in the ratio compared with the previous year
GRAPHICAL REPRESENTATION
293374
420
607
817
000
100
200
300
400
500
600
700
800
900
Ratios
2003 2004 2005 2006 2007
Years
CURRENT ASSETS TO FIXED ASSETS RATIO
Ratios
PROFITABILITY RATIOS
GENERAL PROFITABILITY RATIOS
9 NET PROFIT RATIO
(Amount in Rs)
Net Profit Ratio
Year Net Profit After Tax Income from Services Ratio
2003 21123474 36039834 059
2004 16125942 53899084 030
2005 16929227 72728759 023
2006 18259580 55550649 033
2007 40586359 96654902 042
Interpretation
The net profit ratio is the overall measure of the firmrsquos ability to turn each rupee
of income from services in net profit If the net margin is inadequate the firm
will fail to achieve return on shareholderrsquos funds High net profit ratio will help
the firm service in the fall of income from services rise in cost of production or
declining demand
The net profit is increased because the income from services is increased The
increment resulted a slight increase in 2007 ratio compared with the year 2006
GRAPHICAL REPRESENTATION
059
030
023
033
042
000
010
020
030
040
050
060
Ratios
2003 2004 2005 2006 2007
Years
NET PROFIT RATIO
Ratios
10 OPERATING PROFIT
(Amount in Rs)
Operating Profit
Year Operating Profit Income From Services Ratio
2003 36094877 36309834 099
2004 27576814 53899084 051
2005 29540599 72728759 041
2006 31586718 55550649 057
2007 67192677 96654902 070
Interpretation
The operating profit ratio is used to measure the relationship between net profits
and sales of a firm Depending on the concept it will decide
The operating profit ratio is increased compared with the last year The earnings
are increased due to the increase in the income from services because of
Operations amp Maintenance fee So the ratio is increased slightly compared with
the previous year
GRAPHICAL REPRESENTATION
099
051
041
057
070
000
010
020
030
040
050060
070
080
090
100
Ratios
2003 2004 2005 2006 2007
Years
OPERATING PROFIT RATIO
Ratios
11 RETURN ON TOTAL ASSETS RATIO
(Amount in Rs)
Return on Total Assets Ratio
Year Net Profit After Tax Total Assets Ratio
2003 21123474 78572171 027
2004 16125942 88438107 018
2005 16929227 89158391 019
2006 18259580 106385201 017
2007 40586359 129805102 031
Interpretation
This is the ratio between net profit and total assets The ratio indicates the return
on total assets in the form of profits
The net profit is increased in the current year because of the increment in the
income from services due to the increase in Operations amp Maintenance fee The
fixed assets are reduced due to the charge of depreciation and no major
increments in fixed assets but the current assets are increased because of sundry
debtors and that effects an increase in the ratio compared with the last year ie
2006
GRAPHICAL REPRESENTATION
027
018 019017
031
000
005
010
015
020
025
030
035
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON TOTAL ASSETS
Ratios
12 RESERVES amp SURPLUS TO CAPITAL RATIO
(Amount in Rs)
Reserves amp Surplus To Capital Ratio
Year Reserves amp Surplus Capital Ratio
2003 65599299 2079920 31542004 34582554 18719280 1852005 51511781 18719280 2752006 37754372 18719280 2022007 78340733 18719280 419
Interpretation
The ratio is used to reveal the policy pursued by the company a very high ratio
indicates a conservative dividend policy and vice-versa Higher the ratio better
will be the position
The reserves amp surplus is decreased in the year 2006 due to the payment of
dividends and in the year 2007 the profit is increased But the capital is
remaining constant from the year 2004 So the increase in the reserves amp surplus
caused a greater increase in the current yearrsquos ratio compared with the older
GRAPHICAL REPRESENTATION
3154
185 275 202419
-
500
1000
1500
2000
2500
3000
3500
Ratios
2003 2004 2005 2006 2007
Years
RESERVES amp SRUPLUS TO CAPITAL RATIO
Ratios
OVERALL PROFITABILITY RATIOS
13 EARNINGS PER SHARE
(Amount in Rs)
Earnings Per Share
Year Net Profit After Tax No of Equity Shares Ratio
2003 21123474 207992 101562004 16125942 1871928 8612005 16929227 1871928 9042006 18259580 1871928 9752007 40586359 1871928 2168
Interpretation
Earnings per share ratio are used to find out the return that the shareholderrsquos earn
from their shares After charging depreciation and after payment of tax the
remaining amount will be distributed by all the shareholders
Net profit after tax is increased due to the huge increase in the income from
services That is the amount which is available to the shareholders to take There
are 1871928 shares of Rs10- each The share capital is constant from the year
2004 Due to the huge increase in net profit the earnings per share is greaterly
increased in 2007
GRAPHICAL REPRESENTATION
10156
861904 975
2168
000
2000
4000
6000
8000
10000
12000
Ratios
2003 2004 2005 2006 2007
Years
EARNINGS PER SHARE
Ratios
14 PRICE EARNINGS (PE) RATIO
(Amount in Rs)
Price Earning (PE) Ratio
Year Market Price Per Share Earnings Per Share Ratio
2003 3254 10156 0322004 2847 861 3302005 3752 904 4152006 3017 975 3092007 5185 2168 239
Interpretation
The ratio is calculated to make an estimate of application in the value of share of
a company
The market price per share is increased due to the increase in the reserves
amp surplus The earnings per share are also increased greaterly compared
with the last year because of increase in the net profit So the ratio is
decreased compared with the previous year
GRAPHICAL REPRESENTATION
032
330
415
309
239
000
050
100
150
200
250
300
350
400
450
Ratios
2003 2004 2005 2006 2007
Years
PE RATIO
Ratios
15 RETURN ON INVESTMENT
(Amount in Rs)
Return on Investment
Year Net Profit After Tax Share Holders Fund Ratio
2003 21123474 67679219 031
2004 16125942 53301834 03
2005 16929227 70231061 024
2006 18259580 56473652 032
2007 40586359 97060013 042
Interpretation
This is the ratio between net profits and shareholders funds The ratio is
generally calculated as percentage multiplying with 100
The net profit is increased due to the increase in the income from services ant
the shareholders funds are increased because of reserve amp surplus So the ratio
is increased in the current year
GRAPHICAL REPRESENTATION
031 030
024
032
042
000
005
010
015
020
025
030
035
040
045
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON INVESTMENT RATIO
RatioS
DATA COLLECTION
The data can be of two types
Primary Data
Secondary Data
Primary Data
Primary data are those data which is originally collected afresh
Secondary Data
Secondary data are those data which are already collected and stored and which has
been passed through statistical research
In this project Secondary data has been collected from following sources-
Annual report
Books
MIS
Other material and report published by company There are two methods to prepare
the Cash flow Statement
ndirect Method
I
The indirect method (or reconciliation method) starts with net income and converts it
to net cash flow from operating activities In other words the indirect method adjusts
net income for items that affected reported net income but did not affect cash To
compute net cash flow from operating activities non-cash charges in the income
statement are added ack to net income and non-cash credits are deducted
b
Direct Method
Under the direct method the statement of cash flows reports net cash flow from
operating activities as major classes of operating cash receipts (eg cash collected from
customers and cash received from interest and dividends) and cash disbursements (eg
cash paid to suppliers for goods to employees for services to creditors for interest and
to government authorities for taxes)
INDIRECT VERSUS DIRECT METHOD
The most contentious decision that the FASB faced in issuing Statement No 95 was
choosing between the direct method and the indirect method of determining net cash
flow from operating activities Companies lobbied against the direct method urging
adoption of the indirect method Commercial lending officers expressed a strong
preference to the FASB hat the direct method be required
tCF-Page 3 of 5
In Favor of the Direct Method
The principal advantage of the direct method is that it shows operating cash receipts and
payments That is it is more consistent with the objective of a statement of cash flows to
provide information about cash receipts and cash payments than the in-direct method
which does not report operating cash receipts and payments
Supporters of the direct method contend that knowledge of the specific sources of
operating cash receipts and the purposes for which operating cash payments were made
in past periods is useful in estimating future operating cash flows Furthermore in-
formation about amounts of major classes of operating cash receipts and payments is
more useful than information only about their arithmetic sum (the net cash flow from
operating activities) Such information is more revealing of an enterprises ability (1) to
generate sufficient cash from operating activities to pay its debts (2) to reinvest in its
operations and (3) to make distributions to its owners
Many corporate providers of financial statements say that they do not currently collect
information in a manner that allows them to determine amounts such as cash received
from customers or cash paid to suppliers directly from their accounting systems But
supporters of the direct method contend that the incremental cost of assimilating such
operating cash receipts and payments data is not significant
In Favor of the Indirect Method
The principal advantage of the indirect method is that it focuses on the differences
between net income and net cash flow from operating activities That is it provides a
useful link between the statement of cash flows and the income statement and balance
sheet
Many providers of financial statements contend that it is less costly to adjust net income
to net cash flow from operating activities (indirect) than it is to report gross operating
cash receipts and payments (direct) Supporters of the indirect method also state that the
direct method which effectively reports income statement information on a cash rather
than an accrual basis may erroneously suggest that net cash flow from operating
activities is as good as or better than net income as a measure of performance
Special Rules Applying to Direct and Indirect Methods
Companies that use the direct method are required at a
minimum to report separately the following classes of
operating cash receipts and payments
Receipts
1048713 Cash collected from customers (including lessees licensees etc)
1048713 Interest and dividends received
1048713 Other operating cash receipts if any
Payments
1048713 Cash paid to employees and suppliers of goods or services (including
suppliers of
insurance advertising etc)
1048713 Interest paid
1048713 Income taxes paid
1048713 Other operating cash payments if any
Companies using the indirect method are required to disclose separately changes in
inventory receivables and payables to reconcile net income to net cash flow from
operating activities In addition interest paid (net of amount capitalized) and income
taxes paid must be disclosed elsewhere in the financial statements or accompanying
notes
The FASB requires these separate and additional disclosures so that users
may approximate the direct method Also an acceptable alternative presentation
of the in-direct method is to report net cash flow from operating activities as a
single line item in the statement of cash flows and to present the reconciliation
details elsewhere in the financial statements
FINDING OF SUDY
According to cash flow statement of the company The finding of the study are as
follows-
The company has not taken any loans secured or unsecured from companies
firms or other parties
The company has not accepted any deposit from the public during the year
The company is not a sick industrial company
The company has not granted any loan secured or unsecured to company firms
or other parties
The company has paid the entire long term and short term borrowing during the
year
The company has buy back the companyrsquos own share this year
The interest paid in 2008 is more than the
There has been a significant decline in volume over the years from 2001-02
to 2005-06 as can be seen in the graph below
Table 43
The Net sales of Tractor has increased considerably from 2004-05 to 2007-08
This can be mainly attributed to changes in Variable and material costs and in
the price
The Net sale of Tractor has increased considerably from 2004-05 to 2007-08
that is an decrease of Rs7216 per tractor This can be mainly attributed to
changes in
Variable and material costs and in the prices
RECOMMENDATIONS
According to cash flow statement of the company The suggestions of the study
are as follows-
The time durations for training program have to increase
Buy regular review and consultations develop a career progression
which is sensitive to performance and ability
Create an environment where by people are trend developed to enable
The to take advantages of opportunities that arise
The jab can be redesigned where the work man stay in what is normally
the same job but has elements of it changed
The principle amount must be paid in time which can be reducing the
interest the out flow
The purchase of the fixed asset must be made only when there is extreme
requirement
In order to avoid taxes the company should go for more investment
The companyrsquos borrowings should go for more investment
o The company should try to reduce the depreciations as maximum
as possible
CONCLUSION
The study on competency level of employees at ESCORTS PVTLTD gave an
insight about the acceptance of competency mapping by employees
The employees at Ymi welcome the introduction of competency mapping in their
organization as they felt it was very much essential in enhancing their skills and
organizational development
The organization has provided the recourses guidance and support to facilitate the
introduction of competency level easily and develop the employees in such a way
that they can face any kind of challenge
However the level of competency in employees is found to be satisfactory
Providing proper training education and guidance to the employees can enhance
the level
This study was mainly carried out to find out whether thee competency mapping
being followed by the company is effective till date If the competency mapping
and fitment to the organization
By looking at the graphs and tables it is quite that the employees still are not up to
the level of competent pool they still have to be trained and made competent in
order to fill the gap As the organization has just applied the mapping it has to see
to that it meets all the requirements for competency mapping
Therefore the graphs make it quite clear that the potential of the employees is not
up to the mark and ie they are not competent enough to meet the competency-
mapping requirement Hence by further training and counseling this gap can be
closed
This report includes the training requirements of employees and it highlights skills
possessed by each employee and skill required All employees get training so that
skill can be improved and maintain balance between standard performance with
their actual performance to avoid gap
APPENDIX
QUESTIONNAIRE
Consumer Survey
Name _____________________________
Age _____________________________
Sex
Male
Female
Occupation
Businessman
Service man
Professional
Others
Monthly income brackets
Below 15000
15000- 20000
20000-30000
30000 and above
of your savings _________
Do you invest
Yes
No
If yes then where do you invest your money
Bank
Insurance
funds
Others
Why do you made that statement
Return
Risk hedging
Tax benefits
Other reasons (specify) _______
Who influence your cash decision
Relatives and friends
Family members
Advisors experts
You yourself
If no then why
Do not know where to invest
Satisfied with your current investment return
Donrsquot want take risk
Other reasons
__________________________________________________________________
___________________
Do you know about CF statement
Yes
No
If yes then from where you have come to know about an cash statement
Advertisements on newspapers
Friends and relative
Agents experts
Other source
What do you think about cash statement
It means investing only in share market
Constant watch must be kept always
Return is not satisfactory
Other perception
__________________________________________________
Can you recall any cash flow of company
___________________________
Would you want to made CF of an org
Yes
No
If yes then why
_______________________________________________________
If no then why
_______________________________________________________
BIBLIOGRAPHY
List of Books
1 PANDEY IM - FINANCIAL MANAGEMANT
2 KHAN MY AND JAIN PK -FINANCIAL MANAGEMANT
3 SMITH KV ndash MANAGEMANT OF WORKING CAPITAL
3 COMPANY RECORDS
4 JOURNAL
5 REPORTS
WEBLIOGRAPHY
1 wwwescortspvtltdcom
2 wwwgooglecom
tractors Escorts Institute of Farm Mechanization (EIFM) was established at Bangalore This
training Institute is one of its kind
1971 1st February the first tractor FORD 3000 rolled out of the factory The same year the turnover
touched the Rs53 million mark
1973 Escorts Tractors Limited (ETL) declared a healthy Profit Before Tax of Rs4725 million
1974 Export of 400 tractors to Afghanistan - perhaps the worlds largest ever airlift of such
equipment
1975 Turnover crossed the Rs 200 million mark for ETL Profit After Tax Rs 87 million Maiden
dividend of 10 declared
1976
1976 FORD 3600 advancement in Farm Mechanization was launched with fanfare to a
tremendous reception Trial production of in-plant manufacturing of engine parts (Block amp
Head)
1977
1977 Escorts Scientific Research Centre marked its beginning at Faridabad by developing its own
Engines for E-27 and E-37 Due to constant technology absorption indigenization level
touched 72 for FORD tractors which was a result of relentless effort in that direction
1979 Turnover crossed the Rs 50 crores mark In plant facility for machining centre housing and
case transmission on built-in line concept installed
1983 Escorts Tractors Limited (ETL) established a state-of-the-art research and development centre
to spearhead newer breakthroughs in Farm Mechanization and to maintain industry
leadership Line concept introduced for engine block machining
1984 75000th tractor rolled out A great occasion for the large family that worked for ETL Newer
challenges and frontiers were set
1985 In keeping with the stupendous financial success Escorts Tractors Limited (ETL) offered its
first Bonus Issue (11)
1987 50hp FORD 3610 was launched another leap for the Indian Farm Mechanization Industry the
farmers and the people of the land
1988
1988 ETLrsquos annualized turnover crossed Rs 100 crores Dividend 45 for 15 months
1989 A MOU with CLAAS was signed for manufacturing amp
1990-
91
First Public Issue (Februaryrsquo91) over-subscribed four times Shares listed on Delhi and Bombay
Stock Exchanges
1991-
92
The Crop Tiger range of Combine Harvesters was launched by Escorts Claas Ltd
1993 FORD 3620 tractor launched
1996 Disengagement of joint venture collaboration with New Holland and launch of FARMTRAC
Tractor
1997 A Joint Venture with Italian company CARRARO was finalized to establish a company in India
for manufacturing and marketing of transmission and axles
COLLABORATIONS
Collaboration with international Organization of technological excellence constant
research to adopt the emerging technology to specify requirement of the market and
belief in the philosophy industrial interdependence have made Escorts today one of the
leading trend steers in Indiarsquos New Industrial Culture Escorts have merged as fraternity
of above 50000 shareholders 22000 employees 4000 ancillary suppliers and 1 6000
dealers and stockiest all engaged in a large scale investment and sustained efforts to
meet the ever widening market horizons of technological competence appropriate to
Indiarsquos unique changing needs
Escorts believe in incorporating the finest existing technology to meet Indian consumers
demands by collaborating with the internationally renowned companies prominent
among these are
IN GERMANY
GOETZE AG Piston rings and cylinder liners
MAHLE GmbH Piston
CLASS OHG Harvesters Combines
KNORR BREMSE AG Railway Brake System
AUGUST BILSTEIN GmbH Absorbers Hydraulic products
Pressure and temperature switches
IN JAPAN
KAYABA INDUSTRY CO LTD Telescopic Front Forks Car
MIKUNI SHOKO CO Carburetors for BI-Wheelers
IN UK
JCBAMFORD EXCAVATORS JCB Excavators loaders Front end
Loaders Telescopic handlers
IN USA
HUGHESNETWORKS SYSTEMS AB Road Construction Machinery
Vibratory Road Rollers
OFFICIAL ADDRESS OF ESCORTS
Registered Office Corporate
Secretariat amp Law
Escorts Ltd
11 Scindia House
Connaught Circus
New Delhi-110 001
Tel No 011-23310145
Fax No 011-23311715
Escorts Ltd
155 Mathura Road
Faridabad - 121 003
Tel No ( 0129 ) 2250222
Fax ( 0129 ) 2250060
Email Address corpsectndbvsnlnetin
Web Site wwwescortsgroupcom
LEADERSHIP TEAM
Mr Rajan Nanda
Chairman
Mr Nikhil Nanda
Joint Managing Director
Mr Rohtash Mal
Executive Director and Chief Executive Officer - Agri Machinery Group
Mr Manoj Jha
Executive Vice President of Engineering Division
Mr Kamal Bali
CEO ndash Escorts Construction Equipment Limited (ECEL)
Mr GB Mathur
Vice President - Law amp Company Secretary
Mr Rakesh Kumar Budhiraja
Group Chief Financial Officer
Mr Partha Dasgupta
Group Vice President Human Resources and Employee Relations
LEVELS OF MANAGEMENT
MANAGEMENT
TOP
MANAGEMENT
SENIOR
MANAGEMENT
MIDDLE
MANAGEMENT
JUNIOR
MANAGEMENT
MANAGING
DIRECTOR amp
CEO(G-11)
CHIEF GENERAL
MANGER(G-8)
CHIEF
MANAGER
(G-5)
ASSISTANT
MANAGER(G-2)
VICE PRESIDENT
(G-10)
GENERAL
MANAGER(G-7)
SENIOR
MANAGER(G-4)
EXECUTIVE(G-
1)
ASSOCIATE
VICE PRESIDENT
(G-9)
DEPUTY
GENERAL
MANAGER(G-6)
MANAGER(G-3)
MISSION
WE WILL ACHIEVE LEADERSHIP IN MARKET SHARE amp PROFITABILITY IN
THE DOMESTIC TRACTOR MARKET BY THE YEAR 2004-2006 AND SHALL BE
THE WORLSrsquoS LARGEST SUPPLIER OF SUB 100 HP TRACTORS WE SHALL
PROACTIVELY CONTRIBUTE TO THE PROSPERITY OF THE RURAL
ECONOMY BY DEFINING A LARGER ROLE FOR OURSELVES IN THE FOOD
AND AGRICULTURE SECTOR
THE VISION
WE SHALL STRIVE TO BE THE NUMERO UNO IN THE INDIAN TRACTOR
INDUSTRY AND TOP FIVE TRACTOR MANUFACTURERS IN THE WORLD
WE SHALL CONTINUOUSLY STRIVE TO MEET THE EVER RISING
EXPECTATIONS OF OUR VALUED CUSTOMERS AT THE LOWEST
INTERNAL COST
WE SHALL AIM TO OFFER THE FARMING COMMUNITY A RANGE OF
INNOVATIVE PRODUCTS AND SERVICES WHICH SHALL ENABLE THEM
TO IMPROVE THEIR PRODUCTIVITY AND COMPETITIVNESS
WE SHALL ACHIEVE A TURNOVER OF RS 2 BILLION BY THE YEAR
2006TRANSCENDING NATIONAL BOUNDARIES WE SHALL STRIVE TO
ATTAIN EXPORTS OF ONE TENTH OF OUR TOTAL TRACTOR PRODUCTION
BY THE YEAR 2
REVIEW OF LITERATURE
INTRODUCTION
MEANING OF FINANCIAL STATEMENTS
The financial statements are nothing but the financial information presented in concise and
capsule form and are the financial information is the information relating to the financial
position of any firm The firm prepares the financial statements
bull To communicate with different parties about the financial position of the firm
(Shareholders creditors banks financial institution financial analysts investors
etc And
bull To analyze the operations and performance of the firm for the further
planning
The basic source which provides the financial information is the Annual report of the
company which is presented by the company to its shareholders at the Annual General
Meeting
Though the presentation of annual report is a statutory requirement under the
Companies Act 1956 however it is also a medium of communication with the present as well
as prospective investors and creditors of the company
Clause 43 A of the Listing Agreement (with the stock exchange) requires every
listed company to publish unaudited quarterly results But it does not mean the non-corporate
firms do not prepare the financial statements Every firm big or small prepare the following
financial statements
The Balance Sheet (BS)
1 The Income Statement (IS)
Two other key financial statements which are usually prepared by corporate firms are
1 Statement of appropriation of profit and
2 Statement of Change in financial position
ANALYSIS OF FINANCIAL STATEMENTS (AFS)
Analysis of financial statements refers to the process of the critical examination of the
financial information contained in the financial statements in order to understand and
make decisions regarding the operations of the firm The AFS is basically a study of the
relationship among various financial fact and figures as given in a set of financial
statements AFS is the process of establishment and identifying the financial weakness
and strength of the firm It is indicative of two aspects of a firm ie the profitability
and the financial position
OBJECTIVES OF AFS
The objectives of the AFS is to understand the information contained in financial
statements with a view to know the weakness and strength of the firm and to make a
forecast about the future prospects of the firm and thereby enabling the financial
analyst to take different decisions regarding the operation of the firm The objectives
are as follows
bull To assess the present profitability and operating efficiency of the fir
COMMON-SIZE STATEMENTS (CSS)
The CSS represents the relationship of different items of financial statements with some
Common items by expressing each item as a percentage of the common item In common size
Balance Sheet each item of the balance sheet is stated as a percentage of the total balance
sheet The percentages for different items are computed by dividing the absolute amount of
that item by the Common Base and then multiply by 100 The percentage so calculated can
be easily compared with the corresponding percentage in some other period Thus the CSS is
useful not only in intra-firm comparison for the same year or free several years
TREND PERCENTAGE ANALYSYS(TPA)
The TPA is a technique of studying several financial statements over a series of years In
TPA the trend percentages are calculated for each item by taking the figure of that item for
some base year as 100 So the trend percentage is the percentage relationship which
Each item of different years bears to the same item in the base year Any year may be Taken
as the base year but generally the starting initial year is taken as the base year So each
item for base year is taken as 100 and then the same item for other years is Expressed as a
percentage of the base year
RATIO ANALYSIS (RA)
The RA has emerged as the principle technique of the AFS A ratio is a relationship
Expressed in mathematical terms between two individual or groups of figures connected with
other in some logical manner The RA is based in the premise that a single accounting figure
by itself may not communicate any meaningful information but when expressed as a relative
to some other figure it may definitely give some significant information The relationship
between two or more accounting figuresgroups is called a Financial Ratio
A financial ratio helps to summarize a large mass of financial data into a concise form
and to make meaningful interpretations and conclusions about the performance of a firm
For example a firm has net sales Rs 5 00000
Gross Profit Rs 100000
Ratio of Gross Profit to net sales is 20
ie (Rsl 00000 Rs5 00000)
Forms of Ratios
Since a ratio is a mathematical relationship between two or more variables accounting
figures such relationship can be expressed in different ways as follows
bull As a Pure Ratio
bull As a Rate of Times
bull As a Percentage
Ratio can be classified into
bull The Liquidity Ratio
bull The Activity Ratio
bull The Leverage Ratio
bull The Profitability Ratio
STATEMENT OF CHANGES IN FINANCIAL POSITION
(SCFP)
Since the BS amp IS of a firm are two basic depicting the financial position of a firm at the end
of the year These two financial statements are called the traditional statements Both these
statements fail to throw light on changes in assets liabilities and shareholders wealth during
this year
BS deals with the financial position gives only the static view of the year- end financial
position and fails to indicate the movement and causes in assets and liabilities during the
year Similarly IS show the profit or loss resulting out of the operations of the firm during
the year This profit or loss in fact to ascertain the sufficiency of resources to declare the
dividend etc thus there is a need to prepare another statement (together with the BS amp IS)
which may identify the changes in assets liabilities and the shareholders funds over a given
period
The SCFP is essentially an explanation of the changes in financial position of a Firm
occasioned by the firm in between two successive BSs The SCFP draws basic Information
from the BS and IS helps in understanding the change in assets liabilities and shareholders
worth The SCFP deals with the flow of funds during the year ie the funds coming in and
going out of the firm It summarizes the sources from where the funds might have been
arranged procured by the firm and the uses for which the funs might have been used by
the firm during the year
The SCFP can be prepared as follows
bull SCFP (Cash Basis) also known as a Cash F low Statement
bull SCFP (Net Working Capital Basis) Fund Flow Statement
SCFP (WORKING CAPITAL BASIS)
FUND FLOW STATEMENT
The FFS reports the flows of funds through the firm during the year ie it shows the
Sources and uses of working capital between two balance sheet dates The FFS
attempts to explain the changes in financial position from one BS to the subsequent BS
in terms of the change in the funds or the working capital position of the firm
The term Working capital (WC) is generally defined as the excess of total
current assets over the total current liabilities The current Assets (CA) of a firm may
include cash in hand and at bank stock debtors bills advances etc and the Current
Liabilities (CL) includes creditors bills payable outstanding expenses provision for
tax short term liabilities etc the term WC is a single figure representing the net effect
of a transaction is to increase or decrease the Working Capital by affecting any of the
elements of Current Assets or Current Liabilities Therefore the FFS in its standard
form incorporates only those transactions which affect the Working Capital i e those
transactions where in only one of the affected accounted is a current account
Now a flow of working capital arises when one of the affected accounts is a current
account From the point of view of current account the effected on working capital
can examined in the light of the definitions of the term working capital ie the excess
of current assets over current liabilities ie
Impliedly change in any of the CA or CL will affect the WC Simple observation
equation tells that
bull Increase in any of the CA or decrease in any of the CLs will result in increase
in the WC
bull Decrease in any of the CA or increase in any of the CLs will result in decrease
in the WC
To find out the relative importance of different components of the financial position
of the firm
bull To identify the reasons for change in the profitability financial position of the
firm and
bull To assess the short term as well as the long term liquidity position of the
firm
TECHNIQUES TOOLS OF THE AFS
AFS can be undertaken by different persons and for different purposes therefore the
methodology adopted for the AFS may be carrying from one situation to another However
the following are some of the common techniques of the AFS
bull Comparative financial statements
bull Common-size financial statements
bull Trend percentage analysis and
bull Ratio Analysis
COMPARATIVE FINANCIAL STATEMENTS
In CFS two or more BS andor the IS of a firm are presented simultaneously in columnar
form The Financial data for two or more tears are placed and presented in adjacent columns
and thereby the financial data is provided at times perspective in order to facilitate periodic
comparison In CFS the BS and the IS for number of years are presented in condensed
form for year to year comparison and to exhibit the magnitude and direction of changes
The CFS helps a financial analyst of the firm and in establishing operating and
positional trend of the firm The CFS may be prepared to show
1 The absolute amount of different items in monetary terms
2 The amount of periodic changes in monetary terms
1 The percentages of periodic changes to reveal the proportionate changes
The CFS can be prepared for both the BS and the IS
CORE COMPETENCE OF ESCORTS
Customer 1
We put customers first in everything we do We take decisions keeping the customer in
mind
Challenging Spirit
We strive for excellence in everything we do and in the quality of goods amp services we
provide We work hard to achieve what we commit amp achieve results faster than our
competitors and we never give up
Team-work
We work cohesively with our colleagues as a multi-cultural team built on trust respect
understanding amp mutual co-operation Everyones contribution is equally important for
our success
Frank amp Fair Organization
We are honest sincere open minded fair amp transparent in our dealings We actively
listen to others and participate in healthy amp frank discussions to achieve the
organizations
A firm undertakes numerous during a year and most of these transactions during a year and
most of these transactions may affect one or the other current account ie most of these
transactions May results in the flow of the WC Neither is it necessary nor practical to
identify the effect of each and every transaction on the WC These transactions instead are
considered and analyzed in a collective form and then their effect on the WC is identified
SCFP (CASH BASIS) OR
THE CASH FLOW STATEMENT
The CFS attempts to analyze the transactions of the firm in terms of cash ie the transactions
generating cash and using cash The focus in the CFS is on cash rather than on WC The
sources of cash may be the cash profits earned by the firm issue of capital for cash issue of
other securities for cash borrowings sale of assets investment redemption of debenture or
preference share repayment of loan payment of tax dividend distribution etc Thus the
CFS summarizes the cash inflows and outflows
An analysis of cash flows is useful for short-run planning A firm needs sufficient cash to
debts maturing in the near future to pay interest and other expenses and to pay dividends to
shareholders The firm can make projections of cash flows and outflows for the near future to
determine the availability of cash This cash balance can be matched with the firms need for
cash during the period and accordingly arrangements can be made the deficit or invest the
surplus cash temporarily A historical analysis of cash flows provides insight to prepare
reliable cash flow projections for the immediate future
A statement of changes in financial position on cash basis commonly known as cash flow
statement summarizes the causes of changes in cash position between dates of two balance
sheets It indicates the sources amp uses of cash The cash flow statement is similar to the fund
flow statement except that it focuses attentions on cash instead of working capital (funds)
Thus this statement analyses change in non-current accounts as well as current accounts
(other than cash) to determine the flow of cash
The CFS is based on the concept on the WC Where as the CFS is based in cash which is only
the element of WC Thus the CFS provides details of cash movements whereas the FFS
provides the details of funds movements
The CFS considers only the actual movement of cash whereas the FFS considers the
movements of the funds as defined in terms of net working capital
CASH-FLOW STATEMENT
A cash-flow statement is a statement showing inflows (receipts) and outflows (payments) of
cash during a particular period In other words it is a summary of sources and applications of
Cash during a particular span of time It analyses the reason for changes in balance of cash
between the two balance sheet dates The term Cash here stands for cash and cash
equivalents
A cash-flow statement includes only those items which affect cash As such the cash-flow
statement is called a statement of changes in financial position - cash basis
A cash - flow statement can be for the past or can be projected for a future period
OBJECTS OR USES OF CASH-FLOW STATEMENT
The main objectives behind preparing a cash-flow statement can be laid down as under-
bull USEFUL FOR SHORT-TERM FINANCIAL PLANNING-
A cash-flow statement provides information for planning the short-term financial needs of the
firm Since it provides information regarding the sources and utilization of cash during a period
it become easier for the management to assess whether it will have Adequate cash to meet day-
to-day expenses and pay the long - term loans and interest Thereon and whether it has enough
cash to pay for the purchase of fixed assets or not
USEFUL FOR PREARING THE CASH BUDGET-
A cash-flow statement prepared for the future period is helpful in preparing a cash budget It
informs the management about the future period is helpful in preparing a cash budget It informs
the management about the surplus or deficit periods of cash ie in which months the payments
will be in excess of receipts It helps in planning the investment of surplus cash in short-term
investment and to plan short-term credit in advance of deficit periods
bull COMPARISON WITH CASH BUDGET-
A cash budget is prepared at the commencement of the year whereas a cash flow Statement is
prepared at the end of the year A comparison between the two helps in ascertaining the extent
to which the financial resources of the firm have been generated and used according to the plan
Causes of variances between the figures of two statements can be analyzed and proper
corrective measures may be takes
bull STUDY OF THE TREND OF CASH RECEIPTS AND PAYMENTS-
A cash-flow statement reveals the speed at which the cash is being generated from debtors stock
and other current assets the speed at which the current liabilities are being paid It enables the
management to assess the true position of the cash in future
bull IT EXPLAINS THE DEVIATIONS OF CASH FROM EARNINGS-
A firm may earn huge profits yet it may have paucity of cash or when it suffered a loss it may
still have plenty of cash A cash flow statement explains the reasons for it
HELPFUL IN ASCERTAINING CASH-FLOW FROM VARIOUS
ACTIBITIES SEPARATELY-
A cash-flow statement aims at highlighting the cash flow from operating investing and
financing activities separately It includes how much cash has been generated or used in these
activities
bull HELPFUL IN MAKING DIVIDEND DECISIONS-
Dividend must be paid within 42 days of its declaration Hence the management takes the help of
cash-flow statement to ascertain the position of cash generated from operating activities which
can be used for payment of dividend
IMPORTANCE AND RELEVANCE OF CFS
The CFS has gained importance in view of the fact that there are many managerial Decisions
which are taken in the light of the cash availability or cash position of the firm
For example declaration of dividend by the company requires cash disbursement and
Therefore the Board of Directors must consider the cash position before proposing a dividend
The CFS also provides information for the short term financial planning and in particular the
short term cash needs of the firm
In view of increasing importance and relevance of the CFS the clause 32 of the Listing
agreement (between a Company and the Stock Exchange where the shares proposed to be listed)
has been amended by the SEBI As a result the listed companies in India are now required to
supply a copy of the CFS to each shareholder as a part of Annual Report As a result the listed
companies have started a practice of sending a CFS for which the BS has been prepared as
apart of the Annual Report of the company
DIFFRENCE BETWEEN CASH - FLOW STATEMENT AND
CASH BUDGET
There is not much difference between cash flow statement and a cash budget The
only difference is that a cash flow statement is prepared for a past period where as cash
budget is prepared for a future period Hence it is of limited use as far as the future
periods are concerned A cash budget is therefore prepared showing how much cash is
likely to be received and what will be the disbursements during a future period of time
Thus a cash budget indicates in which months there will be surplus cash and in which
moths there will be deficiency of cash resources The management can then take suitable
decision to invest the surplus cash or make arrangement for the deficiency of cash at the
required time
LIQUIDITY
It does not present true picture of the liquidity of the firm the liquidity does
not depend upon cash alone Liquidity also depends upon those assets
which can be converted into cash easily
bull Exclusion of these assets obstructs the true reporting of the ability of the firm to
meet its liabilities when they become due for payment
bull The possibilities of window - dressing is higher in case of cash position in
comparison to the working capital position of the firm
bull The cash balance can be easily maneuvered by postponing purchases and other
payments and by rapidly collecting cash from debtors before the balance sheet date
Hence a fund - flow statement presents a more realistic picture than a cash flow
statement
bull Cash flow statement ignores non- cash charges Hence the true position of the
enterprise cannot be judged by cash flow statement
bull It is prepared on cash basis and hence ignores one of the basic concept of accounting
namely accrual concept
PROCEDURE OF PREPARING CASH FLOW STATEMENT-
The institute of charted accountants of India has issued accounting standards (as)-3 revised for
preparing a cash flow statement This accounting standard has been made mandatory in respect
of accounting periods commencing on or after 1st April 2001 for certain enterprises These
enterprises are-
bull Enterprises whose equity or debt securities are listed on a recognized stock exchange in
India And enterprise that are in the process of issuing equity or debt securities that will
be listed on a recognized stock exchange in India
bull All other commercial industrial and business enterprises whose turnover for accounting
period Rs 50 crores
As such the cash flow statement has been prepared according to as -3 revised in this project
According to as-3 revised the cash flow statement summarizes the cash inflows and cash
outflows and the net changes (increase or decrease) in cash and cash equipment resulting from
operating investing and financing activities of a firm during a period The following terms are
used for preparing a cash flow statement
CASH-
It compares cash in hand and demands with banks
CASH EQUIVALENTS-
There are short - term highly liquid investments that are readily into known amounts of cash
and which present insignificant risk of changes in their values Normally an investment will be
termed as cash equivalent only if it has a short maturity period say three months or less from the
date of its acquisition Examples of cash equivalent are treasury bills commercial papers etc
Which are purchased with cash that is in excess of immediate needs investment in shares are
excluded from cash equivalents unless they are cash equivalent in reality For example the
preference shares of the company which are purchased shortly before their redemption date will
be included in cash equivalents provided there is only an insignificant risk of failure of the
company in repaying the amount at the date of the maturity
CLASSIFICATION OF CASH FLOW-
According to as -3 (revised) cash flow statement should be presented in a manner that it reports
inflows of cash by classifying them into three categories namely operating investing and
financing activities Classification of all activities into these activities on the cash and cash
equivalents of the enterprise such information will be helpful in evaluating the relationships
among these three activities are explained as below
CASH FLOW FROM OPERATING ACTIVITIES-
Operating activities are the main revenue generating activities of an enterprise As such they
include cash flows from those transactions and events which enter into the ascertainment of
net profit or loss of the enterprise Examples of cash flows arising operating activities are
bull Cash receipts from the sale of goods and rendering of services
bull Cash receipts from royalties fees commissions and other revenue
bull Cash payments to suppliers for goods and services
bull Cash payments to and on behalf of employees
bull Cash receipts and cash payments of an insurance enterprise for premiums and claims
annuities and other policy benefits
bull Cash receipts and payments relating to future contracts forward contracts option
contracts and swap contracts when the contracts are held for dealing or trade purpose and
bull Cash payments of refunds of income taxes unless they can be specifically identified with
financing and investing activities
CASH FLOW FROM INVESTING ACTIVITIES-
Investing activities include the purchase and sale of long term assets such as land building plant
and machinery etc not held for resale These activities also include the purchase and sale of such
investment which are not including in cash equipments Cash flow from investing activities
discloses the expenditures incurred for resources intended to generate future income and cash
flows
Examples cash flow arising from investing activities are
bull Cash payments to acquire fixed assets (including intangible)
bull Cash receipts from sale of fixed assets (including intangibles)
bull Cash payments to acquire shares warrants or debt instruments of other enterprises
(other than receipts for those instruments considered to be cash equivalents)
bull Cash receipts from sale of shares warrants or debt instruments of other enterprises (other
than receipts for those instruments considered to be cash equivalents)
bull Cash advances and loans made to third parties In case of financial enterprises these will
be treated as cash flow from operating activities
bull Cash receipts from the repayment of advances and loans made to third parties In case of
financial enterprises these will be treated as cash flow from operating activities
bull Cash receipts of insurance claim for property involved in accident and
bull Cash receipts of interest and dividend In case of financial enterprise these will be treated
cash flow from operating activities
CASH FLOW FROM FIANCING ACTIVITIES-
Financing activities are the activities that result in change in capital and borrowing of the
enterprise
Examples of cash flows arising from financing activities are
bull Cash receipts from issuing shares or other similar instruments
bull Cash receipts from issuing debentures loans bonds and other short term or long term
borrowing
bull Cash repayment of amounts borrowed buy back of equity shares redemption of
preference shares debentures loans bonds etc
bull Cash payment of interest and dividend
IMPORTANT NOTE
In case of financial enterprise such as bank or mutual fund company cash Outflow
and cash inflow arising from the purchase and sale of securities will Be treated as
flows from operating activities This is because purchase and sale of securities is a
part of operating activity in case of financial enterprise In addition interest paid
and interest received as well as dividends received will also be treated as cash flow
from operating activities in case of financial Enterprises
CASH FLOW STATEMENT
(DIRECT METHOD)
CASH FLOW FROM OPERATING ACTIVITIES
Cash receipts from costumers
Cash paid to suppliers and employers ()
Cash generated from operations
Income tax paid ()
Cash flows from extraordinary item
plusmn Extra ordinary items
Net cash from operating activities
CASH FLOW FROM INVESTING ACTIVITIES-
Purchase of fixed assets
Proceed from sale equipment ()
Interest received
Dividend received ()
Net cash from investing activities
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from insurance of share capital
Proceeds from long- term borrowings ()
Repayment of from long-term borrowings
Interest paid
Dividend paid ()
Net cash from financing activities
Net increase in cash and cash equivalent
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
SOME SPECIAL TERMS-
i) INTERSET AND DIVIDEND-
Cash inflow from interest and dividends and cash outflow on account of interest and
dividends should be disclosed separately Cash inflow arising from interest and dividends
received should be shown as cash flow from investing activities where as cash outflow
disclosed outflow on account of interest and dividend paid should be shown as cash flow
from financing activity
ii) TAXES ON INCOME-
Tax paid on income is a part of cash flow from operating activity Hence taxes paid are
shown as a deduction under cash flow from operating activity
iii) EXTRA ORDINARY ITEMS-
Cash flow relating to extra ordinary items such as bad debts recovered Claims received from
insurance companies winning of a lottery or a law etc Should be disclosed separately as
arising from operating investing or financing activities For example the amount received
for insurance company on account of loss of stock by fire Earthquake and floods etc Should
be reported as cash flow from operating activities
iv) SIGNIFICANT NON - CASH TRANSACTION-
There are some investing and financing activities which do not require the use of cash or
cash equivalents Such non cash activities should be excluded from the cash flow statement
Examples are the acquisition of assets by issue of debentures or shares conversion of
shares into debentures etc Such significant on non cash transaction should be disclosed
outside the cash flow statement
CASH FLOW STATEMENT
(INDIRECT METHOD)
CASH FLOW FROM OPERARATTNG ACTIVITIES
Net profit before taxation and extraordinary item
Adjustment for
Depreciation
Foreign exchange loss
Interest income
Dividend income
Interest expense
Operating profit before working capital changes
Increase in sundry debtors
Decrease in inventories
Decrease in sundry creditors
Cash generated from operations
Income tax paid ()
Cash flow before extraordinary item
plusmn Extra - ordinary items
Net cash from operating activities
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of fixed assets ()
Proceeds from sale of equipment
Interest received
Dividend received ()
Net cash from investing activities
CASH FLOW FROM FINANCING ACTIVITIES-
Proceeds from insurance of share capital
Proceeds from long - term borrowings
Repayments of from long - term borrowings ()
Interest paid ()
Dividend paid ()
Net cash from financing activities
Net increase in cash and cash equivalent
Cash and cash equivalents at beginning of period
CHANGES IN CASH FLOWS
Changes in cash flows can be treated to the following
1 Net profit will increase the cash flows these cash flows will be
increased further if there are any non-cash changes (such as depreciation
and amortization)
2 Any payment of dividends will decrease the cash flows as will the
repayment of debt an issue of share or debt will also increase the
cash flows
3 An increase in non-cash assets will decrease cash flows increase in
current assets and fixed assets will result in drain on cash flows
Thus a statement of changes in cash flows ie the cash flow statement
classifies all Changes into one of three categories - operating investing or
financing activities Therefore the preparation of a statement of changes in cash
flows requires classification of changes in liabilities shareholders equity and
non-cash assets into one of these categories although some items will not fit
easily onto one other
h equivalent at end of period
STEP- BY-STEP PROCEDURE TO PREPARE CFS
1 Calculate the net increase or decrease in cash and cash equivalents-
For this purpose the opening balance of total cash and cash equivalents is compared with the
closing balance of cash and equivalents
Increasedecrease in cash and equivalents
Opening balance Closing Balance
Cash in hand
Cash in bank
Short-term Investment
Total
The difference between the total of opening and closing balance will be increased or
Decreased in cash equivalents during the period It may be noted that if there are only one or
two of items of cash etc
2 Net Cash flaw from operating activities-
The term operating refers to the normal purchase of goods and services On the basis of the
information contained in the comparative BS s and the IS and the additional Information the
net cash flow generated or use by the operating activities may be ascertained The IS prepared
by the firm gives the net profit figure earned by the firm On actual basis ie all items in the
IS are incorporated on the basis of earnedaccrued even
3 If not resulting in cash movements-
So the profit or loss as by the IS may not result in increase or decrease in cash balance by the
SYNOPSIS
INTRODUCTION
ESCORTS PVT LTD is a private limited company not listed in a stock exchange of India
and employees 900 highly trained personnel Its manufacturing plants are strategically located
in close proximity to its customers at Faridabad (Haryana) Noida (UP)
OBJECTIVES OF THE STUDY
bull To find the movement of cash inflow and cash outflow
bull To make the comparison between cash inflow and
bull Cash outflow
bull To prepare the Cash Flow Statement
bull To analyze the Balance Sheet of the company in terms of Cash Flow Statement
bull To focus on various activities of the organization in terms of Operating
Financing Investment
SCOPE OF THE STUDY
Financial resources are the assets for the company and their productivity is key
factor for profitability It is necessary to know their problems their knowledge
skills abilities amp the measures that can be taken to reduce them By analyzing this
top management can build good relations with the employees
The whole study is to determine the competencies of different employees who are
working in ESCORTS PVT LTD By analyzing it the top management can
introduce the concept of competency mapping in the organization Through this
management can attempt to use more suitable strategies towards the human
resource development
The research is confined to elicit the existing gap between the standard skill
required to perform the job and the skill processed by the employees at ESCORTS
PVT LTD And to provide them suitable training program to over come those gaps
for the better utilization of human resources
RELEVANCE
The scope of the study was confined to the outside parties like creditors
shareholders government etc Who want to invest their money in the
company
The benefit of the report for the company is that through this report they can come
to know about the cash flow statements of the company
This study also unable the company that their cash is not utilizing in unnecessary
things
The benefit of the report for the researcher is that it has helped to get knowledge
about the cash inflow and cash
RESERRCH METHODOLOGY-
RESEARCH DESIGN
bull The study was conducted under well- structured approach
bull The project lasted for 4 weeks and the year 2009 ie from 08 July to 12
Aug2009
bull The questionnaire method amp personal interview method was used to collect
the primary data for the study
The secondary data is collected from Internet amp company training material and
many other company materials
SAMPLE DESIGN
The process of extracting a sample from a population is called sampling
procedure The selection of sampling procedure to conduct the research
depends upon the nature of the study and the objective to be accomplished
Judgment sampling technique is adopted to select the respondents in this
study The sample design included the various departments in the YAMAHA
MOTORS PVT LTD
Methodology of date collection
bull Conducting personal interview
bull Data collection from primary and secondary sources
bull Designing questionnaire
bull Selecting sample size from the sample frame for the survey
bull Questionnaire distribution
bull Analysis of collected data with the help of statistical tools
bull Interpretation of collected data
bull Stating the conclusion based on the entire study
Sampling Technique
The sampling technique used for this research is of non-probability and convenience
sampling
Sample Unit
Employees of the company
Sample Size
For this research study the sample size is 25 respondents
Sources of data
Primary data
Primary data is the data which is collected by the researcher for the first time
and which was not there The tools used to collect the data are-
1)Questionnaire method from the employers in different departments
2) Face to Face personal interactions
Secondary Data
The data already collected is called as secondary data The relevant information
for this study has been collected from secondary source such as
Books
Journal
Reports
Publication by the organizational circulation
Company records
Business bulletins
Internet
Secondary data is also collected from various of the internet and intranet Some
of the website trough which information was gathered was through
HYPOTHESIS
The report is analyzed under the presumption that cash flow position of
YAMAHA MOTORS PVTLTD It can be improved and made effective in
terms of cash flows
In testing the above hypothesis the following aspects will be considered
1 Balance sheet comparisons
2 Presentation of cash flow statement in terms of revised AS-3
LIMITATIONS
The study though conducted to the best of the ability suffers from some
certain limitations There are
The data is secondary one and as such its reliability may be
questioned upon
The time availability for the study is less and as such it hinders thee
progress of the study
Senior officials were rarely approachable
Websites were not giving comprehensive data
Not having face-to-face interaction to get more relevant
information
Analysis and interpretation of data was done on the assumption that
the respondentsrsquo information was online
Information collected was totally subjective
The interviews are done during office hours but could not be done
for the other employees of other
DATA ANALYSIS
ESCORTS PVT LTD
CASH FLOW STRATEMENT
Year Ended Year Ended
30092009 30092008
Rs Crores Rs
Crores
A Cash Flow from Operating Activities
Net profit before tax (1733) 3444
Adjustment for
Loss on sale Provision for diminution in value of Long Term
Investments amp loans to Group Companies 189 4018
Gain on sale of Long Term Investments (122) (9492)
Gain on sale of Asset (013) -
Depreciation 4497 3955
Misc Exp Assets Write off Provisions 808 750
Interest Expense 7222 7999
Dividend Income (002) (001)
Interest Income (2082) -
Operating Profit before working capital changes 8764 10673
Adjustments for
Trade and other Receivables (8817) (12035)
Inventories 1379 (4692)
Trade Payables 6705 19046
Miscellaneous Expenditure (750) (511)
(1483) 1808
Cash Generated from Operations 7281 12481
Direct Taxes (Paid)Refunds (1785) 3166
Net Cash Flow from operating activities 5496 15647
B Cash Flow from Investing Activities
Purchase of Fixed Assets (3095) (2794)
Proceeds from sale of Fixed Assets 086 177
Movement in Loans and Advances (1627) (1644)
Sale of Investments 3233 11452
Short Term Deposits with schedule Banks (231) (1048)
Interest Received 2070 -
Dividend Received 002 001
Net Cash Flow from Investing activities 438 6144
Proceeds from Share Capital amp Securities Premium 11444 -
Proceeds from Long Term Borrowings 8660 -
Less Repayment of Long Term Borrowings (054) (7896)
Proceeds (Repayment) from short term borrowings (net) (22726) -
Interest Paid (7740) (8223)
Net Cash used in financing activities (10416) (16119)
Net Increase(Decrease) in Cash and Cash equivalents (4482) 5672
Cash and Cash equivalents as at 01102008 10565 4893
Cash and Cash equivalents as at 30092009 6083 1056
ANALYSIS OF CASH FLOW
From the cash flow statements of the ESCORT PVTLTDIt can be analyzed
from the two years that the net cash balance of the company has increased
manifold in 30-09-2008 than the year 30-09-2009
The net profit in 30-09-2008 is higher than the 30-09-2009 but due to certain
changes there has been increase in the cash balance
The interest paid this year is ore of the last year which implies that thee
company has not repaid his borrowed capital due to which the interest has got
down
The depreciation has increased but it does not affect cash to an extent as it is a
non-cash item In the head of working capital there is drastic change in the cash
balance in the form of ldquoTrade and other Receivables which has affected the cash
balance
There is outflow of cash for receivables rather than the inflow in the last year
So the net effect is that the cash from operating activities has been decreased
two times from the last year
The company has no accumulated losses as at the end of the financial year ie
September 31 2008
Provision for taxation has been made in accordance with the requirement of AS-
22 issued by Institute of Charted Accountants of India
Pursuant to that current year deferred tax liability have been charged to profit amp
loss account
In opinion of the board of directors of thee company the current assets loans
and advances have a value on realization in the ordinary course of the business at
least equal to the amount stated in the balance sheet and provision for all
liabilities have been made
Balance of sundry debtors creditors loans and advances are subject to confirmation by
the concerned parties
METHOD OF ANALYSIS
1 Data analysis is done using the following statistical tools wherever required in
order to extract meaningful information from the collected data
o Simple percentage and averages
o Bar diagram
o Cone diagram
o Pie diagram
2 The collected data from the questionnaire has been put together in the form of
tables
3 Percentage has been calculated wherever necessary for generalization of the
data
4 Data analysis and interpretation has been done on the basis of primary and
secondary data
5 The findings researches have been recorded based on the analysis
6 The study conducted pertains only to YAMAHA MOTORS INDIA PVTLTD
All bank balances (debitcredit) have been confirmed by the concerned bank
Identified from the available information which has been relied upon by the auditors
The names of small-scale industrial units to whom outstanding for more than
thirty days within agreed terms
The company has 9996 of shareholders in its subsidiary company named as
ESCORTS PVT LTD As at 31-03-2008
So the net effect is that the net cash from investing activities has many more
times than the last year which is negative Now the company has repaid its long
term borrowing more than the last year which has decreased the cash balance by
the little amount
Balance with the schedule banks under the head current amp collection account
amounting to represent funds in transit lying with schedule banks pending
transfer against loan liabilities under the head cash credit amp bill discounting
LIQUIDITY RATIO
1 CURRENT RATIO
(Amount in Rs)
Current Ratio
Year Current Assets Current Liabilities Ratio
2003 58574151 7903952 7412004 69765346 31884616 2192005 72021081 16065621 4482006 91328208 47117199 1942007 115642068 30266661 382
Interpretation
As a rule the current ratio with 21 (or) more is considered as satisfactory
position of the firm
When compared with 2006 there is an increase in the provision for tax because
the debtors are raised and for that the provision is created The current liabilities
majorly included Lanco Group of company for consultancy additional services
The sundry debtors have increased due to the increase to corporate taxes
In the year 2006 the cash and bank balance is reduced because that is used for
payment of dividends In the year 2007 the loans and advances include majorly
the advances to employees and deposits to government The loans and advances
reduced because the employees set off their claims The other current assets
include the interest attained from the deposits The deposits reduced due to the
declaration of dividends So the other current assets decreased
The huge increase in sundry debtors resulted an increase in the ratio which is
above the benchmark level of 21 which shows the comfortable position of the
firm
GRAPHICAL REPRESENTATION
741
219
448
194
382
000
100
200
300
400
500
600
700
800
Ratio
2003 2004 2005 2006 2007
Years
CURRENT RATIO
Ratio
2 QUICK RATIO
(Amount
in Rs)
Quick Ratio
Year Quick Assets Current Liabilities Ratio
2003 58574151 7903952 741
2004 52470336 31884616 165
2005 69883268 16065620 435
2006 89433596 47117199 19
2007 115431868 30266661 381
Interpretation
Quick assets are those assets which can be converted into cash with in a short
period of time say to six months So here the sundry debtors which are with the
long period does not include in the quick assets
Compare with 2006 the Quick ratio is increased because the sundry debtors are
increased due to the increase in the corporate tax and for that the provision
created is also increased So the ratio is also increased with the 2006
GRAPHICAL REPRESENTATION
741
165
435
190
381
000
100
200
300
400
500
600
700
800
Ratio
2003 2004 2005 2006 2007
Years
QUICK RATIO
Ratios
3 ABOSULTE LIQUIDITY RATIO
(Amount
in Rs)
Absolute Cash Ratio
Year Absolute Liquid Assets Current Liabilities Ratio
2003 31004027 7903952 392
2004 10859778 31884616 034
2005 39466542 16065620 246
2006 53850852 47117199 114
2007 35649070 30266661 118
Interpretation
The current assets which are ready in the form of cash are considered as absolute
liquid assets Here the cash and bank balance and the interest on fixed assts are
absolute liquid assets
In the year 2006 the cash and bank balance is decreased due to decrease in the
deposits and the current liabilities are also reduced because of the payment of
dividend That causes a slight increase in the current yearrsquos ratio
GRAPHICAL REPRESENTATION
392
034
246
114 118
0
05
1
15
2
25
3
35
4
Ratios
2003 2004 2005 2006 2007
Years
ABSOLUTE CASH RATIO
Ratios
LEVERAGE RATIOS
4 PROPRIETORY RATIO
(Amount
in Rs)
Proprietory Ratio
Year Share Holders Funds Total Assets Ratio
2003 67679219 78572171 086
2004 53301834 88438107 06
2005 70231061 89158391 079
2006 56473652 106385201 053
2007 97060013 129805102 075
Interpretation
The proprietary ratio establishes the relationship between shareholders funds to
total assets It determines the long-term solvency of the firm This ratio indicates
the extent to which the assets of the company can be lost without affecting the
interest of the company
There is no increase in the capital from the year2004 The share holderrsquos funds
include capital and reserves and surplus The reserves and surplus is increased
due to the increase in balance in profit and loss account which is caused by the
increase of income from services
Total assets includes fixed and current assets The fixed assets are reduced
because of the depreciation and there are no major increments in the fixed assets
The current assets are increased compared with the year 2006 Total assets are
also increased than precious year which resulted an increase in the ratio than old
GRAPHICAL REPRESENTATION
086
060
079
053
075
000
010
020
030
040
050
060
070
080
090
Ratios
2003 2004 2005 2006 2007
Years
PROPRIETORY RATIO
Ratios
ACTIVITY RATIOS
5 WORKING CAPITAL TURNOVER RATIO
(Amount
in Rs)
Working Capital Turnover Ratio
Year Income From Services Working Capital Ratio
2003 36309834 50670199 0722004 53899084 37880730 1422005 72728759 55355460 1312006 55550649 44211009 1262007 96654902 85375407 113
Interpretation
Income from services is greatly increased due to the extra invoice for Operations
amp Maintenance fee and the working capital is also increased greater due to the
increase in from services because the huge increase in current assets
The income from services is raised and the current assets are also raised together
resulted in the decrease of the ratio of 2007 compared with 2006
GRAPHICAL REPRESENTATION
072
142 131126
113
000
020
040
060
080
100
120
140
160
Ratio
2003 2004 2005 2006 2007
Years
WORKING CAPITAL TURNOVER RATIO
Ratio
6 FIXED ASSETS TURNOVER RATIO
(Amount in Rs)
Fixed Assets Turnover Ratio
Year Income From Services Net Fixed Assets Ratio
2003 36309834 28834317 126
2004 53899084 29568279 182
2005 72728759 17137310 424
2006 55550649 15056993 369
2007 96654902 14163034 682
Interpretation
Fixed assets are used in the business for producing the goods to be sold This
ratio shows the firmrsquos ability in generating sales from all financial resources
committed to total assets The ratio indicates the account of one rupee
investment in fixed assets
The income from services is greaterly increased in the current year due to the
increase in the Operations amp Maintenance fee due to the increase in extra invoice
and the net fixed assets are reduced because of the increased charge of
depreciation Finally that effected a huge increase in the ratio compared with the
previous yearrsquos ratio
GRAPHICAL REPRSENTATION
126182
424 369
682
000
100
200
300
400
500
600
700
Ratios
2003 2004 2005 2006 2007
Years
FIXED ASSETS TURNOVER RATIO
Ratios
7 CAPITAL TURNOVER RATIO
(Amount
in Rs)
Capital Turnover Ratio
Year Income From Services Capital Employed Ratio
2003 36309834 37175892 0982004 53899084 53301834 1012005 72728759 70231061 1042006 55550649 56473652 0982007 96654902 97060013 100
Interpretation
This is another ratio to judge the efficiency and effectiveness of the company
like profitability ratio
The income from services is greaterly increased compared with the previous year
and the total capital employed includes capital and reserves amp surplus Due to
huge increase in the net profit the capital employed is also increased along with
income from services Both are effected in the increment of the ratio of current
year
GRAPHICAL REPRESENTATION
098
101
104
098
100
094095096097098099100101102103104
Ratios
2003 2004 2005 2006 2007
Years
CAPITAL TURNOVER RATIO
Ratios
8 CURRENT ASSETS TO FIXED ASSETS RATIO
(Amount
in Rs)
Current Assets To Fixed Assets Ratio
Year Current Assets Fixed Assets Ratio
2003 58524151 19998020 2932004 69765346 18672761 3742005 72021081 17137310 4202006 91328208 15056993 6072007 115642068 14163034 817
Interpretation
Current assets are increased due to the increase in the sundry debtors and the net
fixed assets of the firm are decreased due to the charge of depreciation and there
is no major increment in the fixed assets
The increment in current assets and the decrease in fixed assets resulted an
increase in the ratio compared with the previous year
GRAPHICAL REPRESENTATION
293374
420
607
817
000
100
200
300
400
500
600
700
800
900
Ratios
2003 2004 2005 2006 2007
Years
CURRENT ASSETS TO FIXED ASSETS RATIO
Ratios
PROFITABILITY RATIOS
GENERAL PROFITABILITY RATIOS
9 NET PROFIT RATIO
(Amount in Rs)
Net Profit Ratio
Year Net Profit After Tax Income from Services Ratio
2003 21123474 36039834 059
2004 16125942 53899084 030
2005 16929227 72728759 023
2006 18259580 55550649 033
2007 40586359 96654902 042
Interpretation
The net profit ratio is the overall measure of the firmrsquos ability to turn each rupee
of income from services in net profit If the net margin is inadequate the firm
will fail to achieve return on shareholderrsquos funds High net profit ratio will help
the firm service in the fall of income from services rise in cost of production or
declining demand
The net profit is increased because the income from services is increased The
increment resulted a slight increase in 2007 ratio compared with the year 2006
GRAPHICAL REPRESENTATION
059
030
023
033
042
000
010
020
030
040
050
060
Ratios
2003 2004 2005 2006 2007
Years
NET PROFIT RATIO
Ratios
10 OPERATING PROFIT
(Amount in Rs)
Operating Profit
Year Operating Profit Income From Services Ratio
2003 36094877 36309834 099
2004 27576814 53899084 051
2005 29540599 72728759 041
2006 31586718 55550649 057
2007 67192677 96654902 070
Interpretation
The operating profit ratio is used to measure the relationship between net profits
and sales of a firm Depending on the concept it will decide
The operating profit ratio is increased compared with the last year The earnings
are increased due to the increase in the income from services because of
Operations amp Maintenance fee So the ratio is increased slightly compared with
the previous year
GRAPHICAL REPRESENTATION
099
051
041
057
070
000
010
020
030
040
050060
070
080
090
100
Ratios
2003 2004 2005 2006 2007
Years
OPERATING PROFIT RATIO
Ratios
11 RETURN ON TOTAL ASSETS RATIO
(Amount in Rs)
Return on Total Assets Ratio
Year Net Profit After Tax Total Assets Ratio
2003 21123474 78572171 027
2004 16125942 88438107 018
2005 16929227 89158391 019
2006 18259580 106385201 017
2007 40586359 129805102 031
Interpretation
This is the ratio between net profit and total assets The ratio indicates the return
on total assets in the form of profits
The net profit is increased in the current year because of the increment in the
income from services due to the increase in Operations amp Maintenance fee The
fixed assets are reduced due to the charge of depreciation and no major
increments in fixed assets but the current assets are increased because of sundry
debtors and that effects an increase in the ratio compared with the last year ie
2006
GRAPHICAL REPRESENTATION
027
018 019017
031
000
005
010
015
020
025
030
035
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON TOTAL ASSETS
Ratios
12 RESERVES amp SURPLUS TO CAPITAL RATIO
(Amount in Rs)
Reserves amp Surplus To Capital Ratio
Year Reserves amp Surplus Capital Ratio
2003 65599299 2079920 31542004 34582554 18719280 1852005 51511781 18719280 2752006 37754372 18719280 2022007 78340733 18719280 419
Interpretation
The ratio is used to reveal the policy pursued by the company a very high ratio
indicates a conservative dividend policy and vice-versa Higher the ratio better
will be the position
The reserves amp surplus is decreased in the year 2006 due to the payment of
dividends and in the year 2007 the profit is increased But the capital is
remaining constant from the year 2004 So the increase in the reserves amp surplus
caused a greater increase in the current yearrsquos ratio compared with the older
GRAPHICAL REPRESENTATION
3154
185 275 202419
-
500
1000
1500
2000
2500
3000
3500
Ratios
2003 2004 2005 2006 2007
Years
RESERVES amp SRUPLUS TO CAPITAL RATIO
Ratios
OVERALL PROFITABILITY RATIOS
13 EARNINGS PER SHARE
(Amount in Rs)
Earnings Per Share
Year Net Profit After Tax No of Equity Shares Ratio
2003 21123474 207992 101562004 16125942 1871928 8612005 16929227 1871928 9042006 18259580 1871928 9752007 40586359 1871928 2168
Interpretation
Earnings per share ratio are used to find out the return that the shareholderrsquos earn
from their shares After charging depreciation and after payment of tax the
remaining amount will be distributed by all the shareholders
Net profit after tax is increased due to the huge increase in the income from
services That is the amount which is available to the shareholders to take There
are 1871928 shares of Rs10- each The share capital is constant from the year
2004 Due to the huge increase in net profit the earnings per share is greaterly
increased in 2007
GRAPHICAL REPRESENTATION
10156
861904 975
2168
000
2000
4000
6000
8000
10000
12000
Ratios
2003 2004 2005 2006 2007
Years
EARNINGS PER SHARE
Ratios
14 PRICE EARNINGS (PE) RATIO
(Amount in Rs)
Price Earning (PE) Ratio
Year Market Price Per Share Earnings Per Share Ratio
2003 3254 10156 0322004 2847 861 3302005 3752 904 4152006 3017 975 3092007 5185 2168 239
Interpretation
The ratio is calculated to make an estimate of application in the value of share of
a company
The market price per share is increased due to the increase in the reserves
amp surplus The earnings per share are also increased greaterly compared
with the last year because of increase in the net profit So the ratio is
decreased compared with the previous year
GRAPHICAL REPRESENTATION
032
330
415
309
239
000
050
100
150
200
250
300
350
400
450
Ratios
2003 2004 2005 2006 2007
Years
PE RATIO
Ratios
15 RETURN ON INVESTMENT
(Amount in Rs)
Return on Investment
Year Net Profit After Tax Share Holders Fund Ratio
2003 21123474 67679219 031
2004 16125942 53301834 03
2005 16929227 70231061 024
2006 18259580 56473652 032
2007 40586359 97060013 042
Interpretation
This is the ratio between net profits and shareholders funds The ratio is
generally calculated as percentage multiplying with 100
The net profit is increased due to the increase in the income from services ant
the shareholders funds are increased because of reserve amp surplus So the ratio
is increased in the current year
GRAPHICAL REPRESENTATION
031 030
024
032
042
000
005
010
015
020
025
030
035
040
045
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON INVESTMENT RATIO
RatioS
DATA COLLECTION
The data can be of two types
Primary Data
Secondary Data
Primary Data
Primary data are those data which is originally collected afresh
Secondary Data
Secondary data are those data which are already collected and stored and which has
been passed through statistical research
In this project Secondary data has been collected from following sources-
Annual report
Books
MIS
Other material and report published by company There are two methods to prepare
the Cash flow Statement
ndirect Method
I
The indirect method (or reconciliation method) starts with net income and converts it
to net cash flow from operating activities In other words the indirect method adjusts
net income for items that affected reported net income but did not affect cash To
compute net cash flow from operating activities non-cash charges in the income
statement are added ack to net income and non-cash credits are deducted
b
Direct Method
Under the direct method the statement of cash flows reports net cash flow from
operating activities as major classes of operating cash receipts (eg cash collected from
customers and cash received from interest and dividends) and cash disbursements (eg
cash paid to suppliers for goods to employees for services to creditors for interest and
to government authorities for taxes)
INDIRECT VERSUS DIRECT METHOD
The most contentious decision that the FASB faced in issuing Statement No 95 was
choosing between the direct method and the indirect method of determining net cash
flow from operating activities Companies lobbied against the direct method urging
adoption of the indirect method Commercial lending officers expressed a strong
preference to the FASB hat the direct method be required
tCF-Page 3 of 5
In Favor of the Direct Method
The principal advantage of the direct method is that it shows operating cash receipts and
payments That is it is more consistent with the objective of a statement of cash flows to
provide information about cash receipts and cash payments than the in-direct method
which does not report operating cash receipts and payments
Supporters of the direct method contend that knowledge of the specific sources of
operating cash receipts and the purposes for which operating cash payments were made
in past periods is useful in estimating future operating cash flows Furthermore in-
formation about amounts of major classes of operating cash receipts and payments is
more useful than information only about their arithmetic sum (the net cash flow from
operating activities) Such information is more revealing of an enterprises ability (1) to
generate sufficient cash from operating activities to pay its debts (2) to reinvest in its
operations and (3) to make distributions to its owners
Many corporate providers of financial statements say that they do not currently collect
information in a manner that allows them to determine amounts such as cash received
from customers or cash paid to suppliers directly from their accounting systems But
supporters of the direct method contend that the incremental cost of assimilating such
operating cash receipts and payments data is not significant
In Favor of the Indirect Method
The principal advantage of the indirect method is that it focuses on the differences
between net income and net cash flow from operating activities That is it provides a
useful link between the statement of cash flows and the income statement and balance
sheet
Many providers of financial statements contend that it is less costly to adjust net income
to net cash flow from operating activities (indirect) than it is to report gross operating
cash receipts and payments (direct) Supporters of the indirect method also state that the
direct method which effectively reports income statement information on a cash rather
than an accrual basis may erroneously suggest that net cash flow from operating
activities is as good as or better than net income as a measure of performance
Special Rules Applying to Direct and Indirect Methods
Companies that use the direct method are required at a
minimum to report separately the following classes of
operating cash receipts and payments
Receipts
1048713 Cash collected from customers (including lessees licensees etc)
1048713 Interest and dividends received
1048713 Other operating cash receipts if any
Payments
1048713 Cash paid to employees and suppliers of goods or services (including
suppliers of
insurance advertising etc)
1048713 Interest paid
1048713 Income taxes paid
1048713 Other operating cash payments if any
Companies using the indirect method are required to disclose separately changes in
inventory receivables and payables to reconcile net income to net cash flow from
operating activities In addition interest paid (net of amount capitalized) and income
taxes paid must be disclosed elsewhere in the financial statements or accompanying
notes
The FASB requires these separate and additional disclosures so that users
may approximate the direct method Also an acceptable alternative presentation
of the in-direct method is to report net cash flow from operating activities as a
single line item in the statement of cash flows and to present the reconciliation
details elsewhere in the financial statements
FINDING OF SUDY
According to cash flow statement of the company The finding of the study are as
follows-
The company has not taken any loans secured or unsecured from companies
firms or other parties
The company has not accepted any deposit from the public during the year
The company is not a sick industrial company
The company has not granted any loan secured or unsecured to company firms
or other parties
The company has paid the entire long term and short term borrowing during the
year
The company has buy back the companyrsquos own share this year
The interest paid in 2008 is more than the
There has been a significant decline in volume over the years from 2001-02
to 2005-06 as can be seen in the graph below
Table 43
The Net sales of Tractor has increased considerably from 2004-05 to 2007-08
This can be mainly attributed to changes in Variable and material costs and in
the price
The Net sale of Tractor has increased considerably from 2004-05 to 2007-08
that is an decrease of Rs7216 per tractor This can be mainly attributed to
changes in
Variable and material costs and in the prices
RECOMMENDATIONS
According to cash flow statement of the company The suggestions of the study
are as follows-
The time durations for training program have to increase
Buy regular review and consultations develop a career progression
which is sensitive to performance and ability
Create an environment where by people are trend developed to enable
The to take advantages of opportunities that arise
The jab can be redesigned where the work man stay in what is normally
the same job but has elements of it changed
The principle amount must be paid in time which can be reducing the
interest the out flow
The purchase of the fixed asset must be made only when there is extreme
requirement
In order to avoid taxes the company should go for more investment
The companyrsquos borrowings should go for more investment
o The company should try to reduce the depreciations as maximum
as possible
CONCLUSION
The study on competency level of employees at ESCORTS PVTLTD gave an
insight about the acceptance of competency mapping by employees
The employees at Ymi welcome the introduction of competency mapping in their
organization as they felt it was very much essential in enhancing their skills and
organizational development
The organization has provided the recourses guidance and support to facilitate the
introduction of competency level easily and develop the employees in such a way
that they can face any kind of challenge
However the level of competency in employees is found to be satisfactory
Providing proper training education and guidance to the employees can enhance
the level
This study was mainly carried out to find out whether thee competency mapping
being followed by the company is effective till date If the competency mapping
and fitment to the organization
By looking at the graphs and tables it is quite that the employees still are not up to
the level of competent pool they still have to be trained and made competent in
order to fill the gap As the organization has just applied the mapping it has to see
to that it meets all the requirements for competency mapping
Therefore the graphs make it quite clear that the potential of the employees is not
up to the mark and ie they are not competent enough to meet the competency-
mapping requirement Hence by further training and counseling this gap can be
closed
This report includes the training requirements of employees and it highlights skills
possessed by each employee and skill required All employees get training so that
skill can be improved and maintain balance between standard performance with
their actual performance to avoid gap
APPENDIX
QUESTIONNAIRE
Consumer Survey
Name _____________________________
Age _____________________________
Sex
Male
Female
Occupation
Businessman
Service man
Professional
Others
Monthly income brackets
Below 15000
15000- 20000
20000-30000
30000 and above
of your savings _________
Do you invest
Yes
No
If yes then where do you invest your money
Bank
Insurance
funds
Others
Why do you made that statement
Return
Risk hedging
Tax benefits
Other reasons (specify) _______
Who influence your cash decision
Relatives and friends
Family members
Advisors experts
You yourself
If no then why
Do not know where to invest
Satisfied with your current investment return
Donrsquot want take risk
Other reasons
__________________________________________________________________
___________________
Do you know about CF statement
Yes
No
If yes then from where you have come to know about an cash statement
Advertisements on newspapers
Friends and relative
Agents experts
Other source
What do you think about cash statement
It means investing only in share market
Constant watch must be kept always
Return is not satisfactory
Other perception
__________________________________________________
Can you recall any cash flow of company
___________________________
Would you want to made CF of an org
Yes
No
If yes then why
_______________________________________________________
If no then why
_______________________________________________________
BIBLIOGRAPHY
List of Books
1 PANDEY IM - FINANCIAL MANAGEMANT
2 KHAN MY AND JAIN PK -FINANCIAL MANAGEMANT
3 SMITH KV ndash MANAGEMANT OF WORKING CAPITAL
3 COMPANY RECORDS
4 JOURNAL
5 REPORTS
WEBLIOGRAPHY
1 wwwescortspvtltdcom
2 wwwgooglecom
leadership Line concept introduced for engine block machining
1984 75000th tractor rolled out A great occasion for the large family that worked for ETL Newer
challenges and frontiers were set
1985 In keeping with the stupendous financial success Escorts Tractors Limited (ETL) offered its
first Bonus Issue (11)
1987 50hp FORD 3610 was launched another leap for the Indian Farm Mechanization Industry the
farmers and the people of the land
1988
1988 ETLrsquos annualized turnover crossed Rs 100 crores Dividend 45 for 15 months
1989 A MOU with CLAAS was signed for manufacturing amp
1990-
91
First Public Issue (Februaryrsquo91) over-subscribed four times Shares listed on Delhi and Bombay
Stock Exchanges
1991-
92
The Crop Tiger range of Combine Harvesters was launched by Escorts Claas Ltd
1993 FORD 3620 tractor launched
1996 Disengagement of joint venture collaboration with New Holland and launch of FARMTRAC
Tractor
1997 A Joint Venture with Italian company CARRARO was finalized to establish a company in India
for manufacturing and marketing of transmission and axles
COLLABORATIONS
Collaboration with international Organization of technological excellence constant
research to adopt the emerging technology to specify requirement of the market and
belief in the philosophy industrial interdependence have made Escorts today one of the
leading trend steers in Indiarsquos New Industrial Culture Escorts have merged as fraternity
of above 50000 shareholders 22000 employees 4000 ancillary suppliers and 1 6000
dealers and stockiest all engaged in a large scale investment and sustained efforts to
meet the ever widening market horizons of technological competence appropriate to
Indiarsquos unique changing needs
Escorts believe in incorporating the finest existing technology to meet Indian consumers
demands by collaborating with the internationally renowned companies prominent
among these are
IN GERMANY
GOETZE AG Piston rings and cylinder liners
MAHLE GmbH Piston
CLASS OHG Harvesters Combines
KNORR BREMSE AG Railway Brake System
AUGUST BILSTEIN GmbH Absorbers Hydraulic products
Pressure and temperature switches
IN JAPAN
KAYABA INDUSTRY CO LTD Telescopic Front Forks Car
MIKUNI SHOKO CO Carburetors for BI-Wheelers
IN UK
JCBAMFORD EXCAVATORS JCB Excavators loaders Front end
Loaders Telescopic handlers
IN USA
HUGHESNETWORKS SYSTEMS AB Road Construction Machinery
Vibratory Road Rollers
OFFICIAL ADDRESS OF ESCORTS
Registered Office Corporate
Secretariat amp Law
Escorts Ltd
11 Scindia House
Connaught Circus
New Delhi-110 001
Tel No 011-23310145
Fax No 011-23311715
Escorts Ltd
155 Mathura Road
Faridabad - 121 003
Tel No ( 0129 ) 2250222
Fax ( 0129 ) 2250060
Email Address corpsectndbvsnlnetin
Web Site wwwescortsgroupcom
LEADERSHIP TEAM
Mr Rajan Nanda
Chairman
Mr Nikhil Nanda
Joint Managing Director
Mr Rohtash Mal
Executive Director and Chief Executive Officer - Agri Machinery Group
Mr Manoj Jha
Executive Vice President of Engineering Division
Mr Kamal Bali
CEO ndash Escorts Construction Equipment Limited (ECEL)
Mr GB Mathur
Vice President - Law amp Company Secretary
Mr Rakesh Kumar Budhiraja
Group Chief Financial Officer
Mr Partha Dasgupta
Group Vice President Human Resources and Employee Relations
LEVELS OF MANAGEMENT
MANAGEMENT
TOP
MANAGEMENT
SENIOR
MANAGEMENT
MIDDLE
MANAGEMENT
JUNIOR
MANAGEMENT
MANAGING
DIRECTOR amp
CEO(G-11)
CHIEF GENERAL
MANGER(G-8)
CHIEF
MANAGER
(G-5)
ASSISTANT
MANAGER(G-2)
VICE PRESIDENT
(G-10)
GENERAL
MANAGER(G-7)
SENIOR
MANAGER(G-4)
EXECUTIVE(G-
1)
ASSOCIATE
VICE PRESIDENT
(G-9)
DEPUTY
GENERAL
MANAGER(G-6)
MANAGER(G-3)
MISSION
WE WILL ACHIEVE LEADERSHIP IN MARKET SHARE amp PROFITABILITY IN
THE DOMESTIC TRACTOR MARKET BY THE YEAR 2004-2006 AND SHALL BE
THE WORLSrsquoS LARGEST SUPPLIER OF SUB 100 HP TRACTORS WE SHALL
PROACTIVELY CONTRIBUTE TO THE PROSPERITY OF THE RURAL
ECONOMY BY DEFINING A LARGER ROLE FOR OURSELVES IN THE FOOD
AND AGRICULTURE SECTOR
THE VISION
WE SHALL STRIVE TO BE THE NUMERO UNO IN THE INDIAN TRACTOR
INDUSTRY AND TOP FIVE TRACTOR MANUFACTURERS IN THE WORLD
WE SHALL CONTINUOUSLY STRIVE TO MEET THE EVER RISING
EXPECTATIONS OF OUR VALUED CUSTOMERS AT THE LOWEST
INTERNAL COST
WE SHALL AIM TO OFFER THE FARMING COMMUNITY A RANGE OF
INNOVATIVE PRODUCTS AND SERVICES WHICH SHALL ENABLE THEM
TO IMPROVE THEIR PRODUCTIVITY AND COMPETITIVNESS
WE SHALL ACHIEVE A TURNOVER OF RS 2 BILLION BY THE YEAR
2006TRANSCENDING NATIONAL BOUNDARIES WE SHALL STRIVE TO
ATTAIN EXPORTS OF ONE TENTH OF OUR TOTAL TRACTOR PRODUCTION
BY THE YEAR 2
REVIEW OF LITERATURE
INTRODUCTION
MEANING OF FINANCIAL STATEMENTS
The financial statements are nothing but the financial information presented in concise and
capsule form and are the financial information is the information relating to the financial
position of any firm The firm prepares the financial statements
bull To communicate with different parties about the financial position of the firm
(Shareholders creditors banks financial institution financial analysts investors
etc And
bull To analyze the operations and performance of the firm for the further
planning
The basic source which provides the financial information is the Annual report of the
company which is presented by the company to its shareholders at the Annual General
Meeting
Though the presentation of annual report is a statutory requirement under the
Companies Act 1956 however it is also a medium of communication with the present as well
as prospective investors and creditors of the company
Clause 43 A of the Listing Agreement (with the stock exchange) requires every
listed company to publish unaudited quarterly results But it does not mean the non-corporate
firms do not prepare the financial statements Every firm big or small prepare the following
financial statements
The Balance Sheet (BS)
1 The Income Statement (IS)
Two other key financial statements which are usually prepared by corporate firms are
1 Statement of appropriation of profit and
2 Statement of Change in financial position
ANALYSIS OF FINANCIAL STATEMENTS (AFS)
Analysis of financial statements refers to the process of the critical examination of the
financial information contained in the financial statements in order to understand and
make decisions regarding the operations of the firm The AFS is basically a study of the
relationship among various financial fact and figures as given in a set of financial
statements AFS is the process of establishment and identifying the financial weakness
and strength of the firm It is indicative of two aspects of a firm ie the profitability
and the financial position
OBJECTIVES OF AFS
The objectives of the AFS is to understand the information contained in financial
statements with a view to know the weakness and strength of the firm and to make a
forecast about the future prospects of the firm and thereby enabling the financial
analyst to take different decisions regarding the operation of the firm The objectives
are as follows
bull To assess the present profitability and operating efficiency of the fir
COMMON-SIZE STATEMENTS (CSS)
The CSS represents the relationship of different items of financial statements with some
Common items by expressing each item as a percentage of the common item In common size
Balance Sheet each item of the balance sheet is stated as a percentage of the total balance
sheet The percentages for different items are computed by dividing the absolute amount of
that item by the Common Base and then multiply by 100 The percentage so calculated can
be easily compared with the corresponding percentage in some other period Thus the CSS is
useful not only in intra-firm comparison for the same year or free several years
TREND PERCENTAGE ANALYSYS(TPA)
The TPA is a technique of studying several financial statements over a series of years In
TPA the trend percentages are calculated for each item by taking the figure of that item for
some base year as 100 So the trend percentage is the percentage relationship which
Each item of different years bears to the same item in the base year Any year may be Taken
as the base year but generally the starting initial year is taken as the base year So each
item for base year is taken as 100 and then the same item for other years is Expressed as a
percentage of the base year
RATIO ANALYSIS (RA)
The RA has emerged as the principle technique of the AFS A ratio is a relationship
Expressed in mathematical terms between two individual or groups of figures connected with
other in some logical manner The RA is based in the premise that a single accounting figure
by itself may not communicate any meaningful information but when expressed as a relative
to some other figure it may definitely give some significant information The relationship
between two or more accounting figuresgroups is called a Financial Ratio
A financial ratio helps to summarize a large mass of financial data into a concise form
and to make meaningful interpretations and conclusions about the performance of a firm
For example a firm has net sales Rs 5 00000
Gross Profit Rs 100000
Ratio of Gross Profit to net sales is 20
ie (Rsl 00000 Rs5 00000)
Forms of Ratios
Since a ratio is a mathematical relationship between two or more variables accounting
figures such relationship can be expressed in different ways as follows
bull As a Pure Ratio
bull As a Rate of Times
bull As a Percentage
Ratio can be classified into
bull The Liquidity Ratio
bull The Activity Ratio
bull The Leverage Ratio
bull The Profitability Ratio
STATEMENT OF CHANGES IN FINANCIAL POSITION
(SCFP)
Since the BS amp IS of a firm are two basic depicting the financial position of a firm at the end
of the year These two financial statements are called the traditional statements Both these
statements fail to throw light on changes in assets liabilities and shareholders wealth during
this year
BS deals with the financial position gives only the static view of the year- end financial
position and fails to indicate the movement and causes in assets and liabilities during the
year Similarly IS show the profit or loss resulting out of the operations of the firm during
the year This profit or loss in fact to ascertain the sufficiency of resources to declare the
dividend etc thus there is a need to prepare another statement (together with the BS amp IS)
which may identify the changes in assets liabilities and the shareholders funds over a given
period
The SCFP is essentially an explanation of the changes in financial position of a Firm
occasioned by the firm in between two successive BSs The SCFP draws basic Information
from the BS and IS helps in understanding the change in assets liabilities and shareholders
worth The SCFP deals with the flow of funds during the year ie the funds coming in and
going out of the firm It summarizes the sources from where the funds might have been
arranged procured by the firm and the uses for which the funs might have been used by
the firm during the year
The SCFP can be prepared as follows
bull SCFP (Cash Basis) also known as a Cash F low Statement
bull SCFP (Net Working Capital Basis) Fund Flow Statement
SCFP (WORKING CAPITAL BASIS)
FUND FLOW STATEMENT
The FFS reports the flows of funds through the firm during the year ie it shows the
Sources and uses of working capital between two balance sheet dates The FFS
attempts to explain the changes in financial position from one BS to the subsequent BS
in terms of the change in the funds or the working capital position of the firm
The term Working capital (WC) is generally defined as the excess of total
current assets over the total current liabilities The current Assets (CA) of a firm may
include cash in hand and at bank stock debtors bills advances etc and the Current
Liabilities (CL) includes creditors bills payable outstanding expenses provision for
tax short term liabilities etc the term WC is a single figure representing the net effect
of a transaction is to increase or decrease the Working Capital by affecting any of the
elements of Current Assets or Current Liabilities Therefore the FFS in its standard
form incorporates only those transactions which affect the Working Capital i e those
transactions where in only one of the affected accounted is a current account
Now a flow of working capital arises when one of the affected accounts is a current
account From the point of view of current account the effected on working capital
can examined in the light of the definitions of the term working capital ie the excess
of current assets over current liabilities ie
Impliedly change in any of the CA or CL will affect the WC Simple observation
equation tells that
bull Increase in any of the CA or decrease in any of the CLs will result in increase
in the WC
bull Decrease in any of the CA or increase in any of the CLs will result in decrease
in the WC
To find out the relative importance of different components of the financial position
of the firm
bull To identify the reasons for change in the profitability financial position of the
firm and
bull To assess the short term as well as the long term liquidity position of the
firm
TECHNIQUES TOOLS OF THE AFS
AFS can be undertaken by different persons and for different purposes therefore the
methodology adopted for the AFS may be carrying from one situation to another However
the following are some of the common techniques of the AFS
bull Comparative financial statements
bull Common-size financial statements
bull Trend percentage analysis and
bull Ratio Analysis
COMPARATIVE FINANCIAL STATEMENTS
In CFS two or more BS andor the IS of a firm are presented simultaneously in columnar
form The Financial data for two or more tears are placed and presented in adjacent columns
and thereby the financial data is provided at times perspective in order to facilitate periodic
comparison In CFS the BS and the IS for number of years are presented in condensed
form for year to year comparison and to exhibit the magnitude and direction of changes
The CFS helps a financial analyst of the firm and in establishing operating and
positional trend of the firm The CFS may be prepared to show
1 The absolute amount of different items in monetary terms
2 The amount of periodic changes in monetary terms
1 The percentages of periodic changes to reveal the proportionate changes
The CFS can be prepared for both the BS and the IS
CORE COMPETENCE OF ESCORTS
Customer 1
We put customers first in everything we do We take decisions keeping the customer in
mind
Challenging Spirit
We strive for excellence in everything we do and in the quality of goods amp services we
provide We work hard to achieve what we commit amp achieve results faster than our
competitors and we never give up
Team-work
We work cohesively with our colleagues as a multi-cultural team built on trust respect
understanding amp mutual co-operation Everyones contribution is equally important for
our success
Frank amp Fair Organization
We are honest sincere open minded fair amp transparent in our dealings We actively
listen to others and participate in healthy amp frank discussions to achieve the
organizations
A firm undertakes numerous during a year and most of these transactions during a year and
most of these transactions may affect one or the other current account ie most of these
transactions May results in the flow of the WC Neither is it necessary nor practical to
identify the effect of each and every transaction on the WC These transactions instead are
considered and analyzed in a collective form and then their effect on the WC is identified
SCFP (CASH BASIS) OR
THE CASH FLOW STATEMENT
The CFS attempts to analyze the transactions of the firm in terms of cash ie the transactions
generating cash and using cash The focus in the CFS is on cash rather than on WC The
sources of cash may be the cash profits earned by the firm issue of capital for cash issue of
other securities for cash borrowings sale of assets investment redemption of debenture or
preference share repayment of loan payment of tax dividend distribution etc Thus the
CFS summarizes the cash inflows and outflows
An analysis of cash flows is useful for short-run planning A firm needs sufficient cash to
debts maturing in the near future to pay interest and other expenses and to pay dividends to
shareholders The firm can make projections of cash flows and outflows for the near future to
determine the availability of cash This cash balance can be matched with the firms need for
cash during the period and accordingly arrangements can be made the deficit or invest the
surplus cash temporarily A historical analysis of cash flows provides insight to prepare
reliable cash flow projections for the immediate future
A statement of changes in financial position on cash basis commonly known as cash flow
statement summarizes the causes of changes in cash position between dates of two balance
sheets It indicates the sources amp uses of cash The cash flow statement is similar to the fund
flow statement except that it focuses attentions on cash instead of working capital (funds)
Thus this statement analyses change in non-current accounts as well as current accounts
(other than cash) to determine the flow of cash
The CFS is based on the concept on the WC Where as the CFS is based in cash which is only
the element of WC Thus the CFS provides details of cash movements whereas the FFS
provides the details of funds movements
The CFS considers only the actual movement of cash whereas the FFS considers the
movements of the funds as defined in terms of net working capital
CASH-FLOW STATEMENT
A cash-flow statement is a statement showing inflows (receipts) and outflows (payments) of
cash during a particular period In other words it is a summary of sources and applications of
Cash during a particular span of time It analyses the reason for changes in balance of cash
between the two balance sheet dates The term Cash here stands for cash and cash
equivalents
A cash-flow statement includes only those items which affect cash As such the cash-flow
statement is called a statement of changes in financial position - cash basis
A cash - flow statement can be for the past or can be projected for a future period
OBJECTS OR USES OF CASH-FLOW STATEMENT
The main objectives behind preparing a cash-flow statement can be laid down as under-
bull USEFUL FOR SHORT-TERM FINANCIAL PLANNING-
A cash-flow statement provides information for planning the short-term financial needs of the
firm Since it provides information regarding the sources and utilization of cash during a period
it become easier for the management to assess whether it will have Adequate cash to meet day-
to-day expenses and pay the long - term loans and interest Thereon and whether it has enough
cash to pay for the purchase of fixed assets or not
USEFUL FOR PREARING THE CASH BUDGET-
A cash-flow statement prepared for the future period is helpful in preparing a cash budget It
informs the management about the future period is helpful in preparing a cash budget It informs
the management about the surplus or deficit periods of cash ie in which months the payments
will be in excess of receipts It helps in planning the investment of surplus cash in short-term
investment and to plan short-term credit in advance of deficit periods
bull COMPARISON WITH CASH BUDGET-
A cash budget is prepared at the commencement of the year whereas a cash flow Statement is
prepared at the end of the year A comparison between the two helps in ascertaining the extent
to which the financial resources of the firm have been generated and used according to the plan
Causes of variances between the figures of two statements can be analyzed and proper
corrective measures may be takes
bull STUDY OF THE TREND OF CASH RECEIPTS AND PAYMENTS-
A cash-flow statement reveals the speed at which the cash is being generated from debtors stock
and other current assets the speed at which the current liabilities are being paid It enables the
management to assess the true position of the cash in future
bull IT EXPLAINS THE DEVIATIONS OF CASH FROM EARNINGS-
A firm may earn huge profits yet it may have paucity of cash or when it suffered a loss it may
still have plenty of cash A cash flow statement explains the reasons for it
HELPFUL IN ASCERTAINING CASH-FLOW FROM VARIOUS
ACTIBITIES SEPARATELY-
A cash-flow statement aims at highlighting the cash flow from operating investing and
financing activities separately It includes how much cash has been generated or used in these
activities
bull HELPFUL IN MAKING DIVIDEND DECISIONS-
Dividend must be paid within 42 days of its declaration Hence the management takes the help of
cash-flow statement to ascertain the position of cash generated from operating activities which
can be used for payment of dividend
IMPORTANCE AND RELEVANCE OF CFS
The CFS has gained importance in view of the fact that there are many managerial Decisions
which are taken in the light of the cash availability or cash position of the firm
For example declaration of dividend by the company requires cash disbursement and
Therefore the Board of Directors must consider the cash position before proposing a dividend
The CFS also provides information for the short term financial planning and in particular the
short term cash needs of the firm
In view of increasing importance and relevance of the CFS the clause 32 of the Listing
agreement (between a Company and the Stock Exchange where the shares proposed to be listed)
has been amended by the SEBI As a result the listed companies in India are now required to
supply a copy of the CFS to each shareholder as a part of Annual Report As a result the listed
companies have started a practice of sending a CFS for which the BS has been prepared as
apart of the Annual Report of the company
DIFFRENCE BETWEEN CASH - FLOW STATEMENT AND
CASH BUDGET
There is not much difference between cash flow statement and a cash budget The
only difference is that a cash flow statement is prepared for a past period where as cash
budget is prepared for a future period Hence it is of limited use as far as the future
periods are concerned A cash budget is therefore prepared showing how much cash is
likely to be received and what will be the disbursements during a future period of time
Thus a cash budget indicates in which months there will be surplus cash and in which
moths there will be deficiency of cash resources The management can then take suitable
decision to invest the surplus cash or make arrangement for the deficiency of cash at the
required time
LIQUIDITY
It does not present true picture of the liquidity of the firm the liquidity does
not depend upon cash alone Liquidity also depends upon those assets
which can be converted into cash easily
bull Exclusion of these assets obstructs the true reporting of the ability of the firm to
meet its liabilities when they become due for payment
bull The possibilities of window - dressing is higher in case of cash position in
comparison to the working capital position of the firm
bull The cash balance can be easily maneuvered by postponing purchases and other
payments and by rapidly collecting cash from debtors before the balance sheet date
Hence a fund - flow statement presents a more realistic picture than a cash flow
statement
bull Cash flow statement ignores non- cash charges Hence the true position of the
enterprise cannot be judged by cash flow statement
bull It is prepared on cash basis and hence ignores one of the basic concept of accounting
namely accrual concept
PROCEDURE OF PREPARING CASH FLOW STATEMENT-
The institute of charted accountants of India has issued accounting standards (as)-3 revised for
preparing a cash flow statement This accounting standard has been made mandatory in respect
of accounting periods commencing on or after 1st April 2001 for certain enterprises These
enterprises are-
bull Enterprises whose equity or debt securities are listed on a recognized stock exchange in
India And enterprise that are in the process of issuing equity or debt securities that will
be listed on a recognized stock exchange in India
bull All other commercial industrial and business enterprises whose turnover for accounting
period Rs 50 crores
As such the cash flow statement has been prepared according to as -3 revised in this project
According to as-3 revised the cash flow statement summarizes the cash inflows and cash
outflows and the net changes (increase or decrease) in cash and cash equipment resulting from
operating investing and financing activities of a firm during a period The following terms are
used for preparing a cash flow statement
CASH-
It compares cash in hand and demands with banks
CASH EQUIVALENTS-
There are short - term highly liquid investments that are readily into known amounts of cash
and which present insignificant risk of changes in their values Normally an investment will be
termed as cash equivalent only if it has a short maturity period say three months or less from the
date of its acquisition Examples of cash equivalent are treasury bills commercial papers etc
Which are purchased with cash that is in excess of immediate needs investment in shares are
excluded from cash equivalents unless they are cash equivalent in reality For example the
preference shares of the company which are purchased shortly before their redemption date will
be included in cash equivalents provided there is only an insignificant risk of failure of the
company in repaying the amount at the date of the maturity
CLASSIFICATION OF CASH FLOW-
According to as -3 (revised) cash flow statement should be presented in a manner that it reports
inflows of cash by classifying them into three categories namely operating investing and
financing activities Classification of all activities into these activities on the cash and cash
equivalents of the enterprise such information will be helpful in evaluating the relationships
among these three activities are explained as below
CASH FLOW FROM OPERATING ACTIVITIES-
Operating activities are the main revenue generating activities of an enterprise As such they
include cash flows from those transactions and events which enter into the ascertainment of
net profit or loss of the enterprise Examples of cash flows arising operating activities are
bull Cash receipts from the sale of goods and rendering of services
bull Cash receipts from royalties fees commissions and other revenue
bull Cash payments to suppliers for goods and services
bull Cash payments to and on behalf of employees
bull Cash receipts and cash payments of an insurance enterprise for premiums and claims
annuities and other policy benefits
bull Cash receipts and payments relating to future contracts forward contracts option
contracts and swap contracts when the contracts are held for dealing or trade purpose and
bull Cash payments of refunds of income taxes unless they can be specifically identified with
financing and investing activities
CASH FLOW FROM INVESTING ACTIVITIES-
Investing activities include the purchase and sale of long term assets such as land building plant
and machinery etc not held for resale These activities also include the purchase and sale of such
investment which are not including in cash equipments Cash flow from investing activities
discloses the expenditures incurred for resources intended to generate future income and cash
flows
Examples cash flow arising from investing activities are
bull Cash payments to acquire fixed assets (including intangible)
bull Cash receipts from sale of fixed assets (including intangibles)
bull Cash payments to acquire shares warrants or debt instruments of other enterprises
(other than receipts for those instruments considered to be cash equivalents)
bull Cash receipts from sale of shares warrants or debt instruments of other enterprises (other
than receipts for those instruments considered to be cash equivalents)
bull Cash advances and loans made to third parties In case of financial enterprises these will
be treated as cash flow from operating activities
bull Cash receipts from the repayment of advances and loans made to third parties In case of
financial enterprises these will be treated as cash flow from operating activities
bull Cash receipts of insurance claim for property involved in accident and
bull Cash receipts of interest and dividend In case of financial enterprise these will be treated
cash flow from operating activities
CASH FLOW FROM FIANCING ACTIVITIES-
Financing activities are the activities that result in change in capital and borrowing of the
enterprise
Examples of cash flows arising from financing activities are
bull Cash receipts from issuing shares or other similar instruments
bull Cash receipts from issuing debentures loans bonds and other short term or long term
borrowing
bull Cash repayment of amounts borrowed buy back of equity shares redemption of
preference shares debentures loans bonds etc
bull Cash payment of interest and dividend
IMPORTANT NOTE
In case of financial enterprise such as bank or mutual fund company cash Outflow
and cash inflow arising from the purchase and sale of securities will Be treated as
flows from operating activities This is because purchase and sale of securities is a
part of operating activity in case of financial enterprise In addition interest paid
and interest received as well as dividends received will also be treated as cash flow
from operating activities in case of financial Enterprises
CASH FLOW STATEMENT
(DIRECT METHOD)
CASH FLOW FROM OPERATING ACTIVITIES
Cash receipts from costumers
Cash paid to suppliers and employers ()
Cash generated from operations
Income tax paid ()
Cash flows from extraordinary item
plusmn Extra ordinary items
Net cash from operating activities
CASH FLOW FROM INVESTING ACTIVITIES-
Purchase of fixed assets
Proceed from sale equipment ()
Interest received
Dividend received ()
Net cash from investing activities
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from insurance of share capital
Proceeds from long- term borrowings ()
Repayment of from long-term borrowings
Interest paid
Dividend paid ()
Net cash from financing activities
Net increase in cash and cash equivalent
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
SOME SPECIAL TERMS-
i) INTERSET AND DIVIDEND-
Cash inflow from interest and dividends and cash outflow on account of interest and
dividends should be disclosed separately Cash inflow arising from interest and dividends
received should be shown as cash flow from investing activities where as cash outflow
disclosed outflow on account of interest and dividend paid should be shown as cash flow
from financing activity
ii) TAXES ON INCOME-
Tax paid on income is a part of cash flow from operating activity Hence taxes paid are
shown as a deduction under cash flow from operating activity
iii) EXTRA ORDINARY ITEMS-
Cash flow relating to extra ordinary items such as bad debts recovered Claims received from
insurance companies winning of a lottery or a law etc Should be disclosed separately as
arising from operating investing or financing activities For example the amount received
for insurance company on account of loss of stock by fire Earthquake and floods etc Should
be reported as cash flow from operating activities
iv) SIGNIFICANT NON - CASH TRANSACTION-
There are some investing and financing activities which do not require the use of cash or
cash equivalents Such non cash activities should be excluded from the cash flow statement
Examples are the acquisition of assets by issue of debentures or shares conversion of
shares into debentures etc Such significant on non cash transaction should be disclosed
outside the cash flow statement
CASH FLOW STATEMENT
(INDIRECT METHOD)
CASH FLOW FROM OPERARATTNG ACTIVITIES
Net profit before taxation and extraordinary item
Adjustment for
Depreciation
Foreign exchange loss
Interest income
Dividend income
Interest expense
Operating profit before working capital changes
Increase in sundry debtors
Decrease in inventories
Decrease in sundry creditors
Cash generated from operations
Income tax paid ()
Cash flow before extraordinary item
plusmn Extra - ordinary items
Net cash from operating activities
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of fixed assets ()
Proceeds from sale of equipment
Interest received
Dividend received ()
Net cash from investing activities
CASH FLOW FROM FINANCING ACTIVITIES-
Proceeds from insurance of share capital
Proceeds from long - term borrowings
Repayments of from long - term borrowings ()
Interest paid ()
Dividend paid ()
Net cash from financing activities
Net increase in cash and cash equivalent
Cash and cash equivalents at beginning of period
CHANGES IN CASH FLOWS
Changes in cash flows can be treated to the following
1 Net profit will increase the cash flows these cash flows will be
increased further if there are any non-cash changes (such as depreciation
and amortization)
2 Any payment of dividends will decrease the cash flows as will the
repayment of debt an issue of share or debt will also increase the
cash flows
3 An increase in non-cash assets will decrease cash flows increase in
current assets and fixed assets will result in drain on cash flows
Thus a statement of changes in cash flows ie the cash flow statement
classifies all Changes into one of three categories - operating investing or
financing activities Therefore the preparation of a statement of changes in cash
flows requires classification of changes in liabilities shareholders equity and
non-cash assets into one of these categories although some items will not fit
easily onto one other
h equivalent at end of period
STEP- BY-STEP PROCEDURE TO PREPARE CFS
1 Calculate the net increase or decrease in cash and cash equivalents-
For this purpose the opening balance of total cash and cash equivalents is compared with the
closing balance of cash and equivalents
Increasedecrease in cash and equivalents
Opening balance Closing Balance
Cash in hand
Cash in bank
Short-term Investment
Total
The difference between the total of opening and closing balance will be increased or
Decreased in cash equivalents during the period It may be noted that if there are only one or
two of items of cash etc
2 Net Cash flaw from operating activities-
The term operating refers to the normal purchase of goods and services On the basis of the
information contained in the comparative BS s and the IS and the additional Information the
net cash flow generated or use by the operating activities may be ascertained The IS prepared
by the firm gives the net profit figure earned by the firm On actual basis ie all items in the
IS are incorporated on the basis of earnedaccrued even
3 If not resulting in cash movements-
So the profit or loss as by the IS may not result in increase or decrease in cash balance by the
SYNOPSIS
INTRODUCTION
ESCORTS PVT LTD is a private limited company not listed in a stock exchange of India
and employees 900 highly trained personnel Its manufacturing plants are strategically located
in close proximity to its customers at Faridabad (Haryana) Noida (UP)
OBJECTIVES OF THE STUDY
bull To find the movement of cash inflow and cash outflow
bull To make the comparison between cash inflow and
bull Cash outflow
bull To prepare the Cash Flow Statement
bull To analyze the Balance Sheet of the company in terms of Cash Flow Statement
bull To focus on various activities of the organization in terms of Operating
Financing Investment
SCOPE OF THE STUDY
Financial resources are the assets for the company and their productivity is key
factor for profitability It is necessary to know their problems their knowledge
skills abilities amp the measures that can be taken to reduce them By analyzing this
top management can build good relations with the employees
The whole study is to determine the competencies of different employees who are
working in ESCORTS PVT LTD By analyzing it the top management can
introduce the concept of competency mapping in the organization Through this
management can attempt to use more suitable strategies towards the human
resource development
The research is confined to elicit the existing gap between the standard skill
required to perform the job and the skill processed by the employees at ESCORTS
PVT LTD And to provide them suitable training program to over come those gaps
for the better utilization of human resources
RELEVANCE
The scope of the study was confined to the outside parties like creditors
shareholders government etc Who want to invest their money in the
company
The benefit of the report for the company is that through this report they can come
to know about the cash flow statements of the company
This study also unable the company that their cash is not utilizing in unnecessary
things
The benefit of the report for the researcher is that it has helped to get knowledge
about the cash inflow and cash
RESERRCH METHODOLOGY-
RESEARCH DESIGN
bull The study was conducted under well- structured approach
bull The project lasted for 4 weeks and the year 2009 ie from 08 July to 12
Aug2009
bull The questionnaire method amp personal interview method was used to collect
the primary data for the study
The secondary data is collected from Internet amp company training material and
many other company materials
SAMPLE DESIGN
The process of extracting a sample from a population is called sampling
procedure The selection of sampling procedure to conduct the research
depends upon the nature of the study and the objective to be accomplished
Judgment sampling technique is adopted to select the respondents in this
study The sample design included the various departments in the YAMAHA
MOTORS PVT LTD
Methodology of date collection
bull Conducting personal interview
bull Data collection from primary and secondary sources
bull Designing questionnaire
bull Selecting sample size from the sample frame for the survey
bull Questionnaire distribution
bull Analysis of collected data with the help of statistical tools
bull Interpretation of collected data
bull Stating the conclusion based on the entire study
Sampling Technique
The sampling technique used for this research is of non-probability and convenience
sampling
Sample Unit
Employees of the company
Sample Size
For this research study the sample size is 25 respondents
Sources of data
Primary data
Primary data is the data which is collected by the researcher for the first time
and which was not there The tools used to collect the data are-
1)Questionnaire method from the employers in different departments
2) Face to Face personal interactions
Secondary Data
The data already collected is called as secondary data The relevant information
for this study has been collected from secondary source such as
Books
Journal
Reports
Publication by the organizational circulation
Company records
Business bulletins
Internet
Secondary data is also collected from various of the internet and intranet Some
of the website trough which information was gathered was through
HYPOTHESIS
The report is analyzed under the presumption that cash flow position of
YAMAHA MOTORS PVTLTD It can be improved and made effective in
terms of cash flows
In testing the above hypothesis the following aspects will be considered
1 Balance sheet comparisons
2 Presentation of cash flow statement in terms of revised AS-3
LIMITATIONS
The study though conducted to the best of the ability suffers from some
certain limitations There are
The data is secondary one and as such its reliability may be
questioned upon
The time availability for the study is less and as such it hinders thee
progress of the study
Senior officials were rarely approachable
Websites were not giving comprehensive data
Not having face-to-face interaction to get more relevant
information
Analysis and interpretation of data was done on the assumption that
the respondentsrsquo information was online
Information collected was totally subjective
The interviews are done during office hours but could not be done
for the other employees of other
DATA ANALYSIS
ESCORTS PVT LTD
CASH FLOW STRATEMENT
Year Ended Year Ended
30092009 30092008
Rs Crores Rs
Crores
A Cash Flow from Operating Activities
Net profit before tax (1733) 3444
Adjustment for
Loss on sale Provision for diminution in value of Long Term
Investments amp loans to Group Companies 189 4018
Gain on sale of Long Term Investments (122) (9492)
Gain on sale of Asset (013) -
Depreciation 4497 3955
Misc Exp Assets Write off Provisions 808 750
Interest Expense 7222 7999
Dividend Income (002) (001)
Interest Income (2082) -
Operating Profit before working capital changes 8764 10673
Adjustments for
Trade and other Receivables (8817) (12035)
Inventories 1379 (4692)
Trade Payables 6705 19046
Miscellaneous Expenditure (750) (511)
(1483) 1808
Cash Generated from Operations 7281 12481
Direct Taxes (Paid)Refunds (1785) 3166
Net Cash Flow from operating activities 5496 15647
B Cash Flow from Investing Activities
Purchase of Fixed Assets (3095) (2794)
Proceeds from sale of Fixed Assets 086 177
Movement in Loans and Advances (1627) (1644)
Sale of Investments 3233 11452
Short Term Deposits with schedule Banks (231) (1048)
Interest Received 2070 -
Dividend Received 002 001
Net Cash Flow from Investing activities 438 6144
Proceeds from Share Capital amp Securities Premium 11444 -
Proceeds from Long Term Borrowings 8660 -
Less Repayment of Long Term Borrowings (054) (7896)
Proceeds (Repayment) from short term borrowings (net) (22726) -
Interest Paid (7740) (8223)
Net Cash used in financing activities (10416) (16119)
Net Increase(Decrease) in Cash and Cash equivalents (4482) 5672
Cash and Cash equivalents as at 01102008 10565 4893
Cash and Cash equivalents as at 30092009 6083 1056
ANALYSIS OF CASH FLOW
From the cash flow statements of the ESCORT PVTLTDIt can be analyzed
from the two years that the net cash balance of the company has increased
manifold in 30-09-2008 than the year 30-09-2009
The net profit in 30-09-2008 is higher than the 30-09-2009 but due to certain
changes there has been increase in the cash balance
The interest paid this year is ore of the last year which implies that thee
company has not repaid his borrowed capital due to which the interest has got
down
The depreciation has increased but it does not affect cash to an extent as it is a
non-cash item In the head of working capital there is drastic change in the cash
balance in the form of ldquoTrade and other Receivables which has affected the cash
balance
There is outflow of cash for receivables rather than the inflow in the last year
So the net effect is that the cash from operating activities has been decreased
two times from the last year
The company has no accumulated losses as at the end of the financial year ie
September 31 2008
Provision for taxation has been made in accordance with the requirement of AS-
22 issued by Institute of Charted Accountants of India
Pursuant to that current year deferred tax liability have been charged to profit amp
loss account
In opinion of the board of directors of thee company the current assets loans
and advances have a value on realization in the ordinary course of the business at
least equal to the amount stated in the balance sheet and provision for all
liabilities have been made
Balance of sundry debtors creditors loans and advances are subject to confirmation by
the concerned parties
METHOD OF ANALYSIS
1 Data analysis is done using the following statistical tools wherever required in
order to extract meaningful information from the collected data
o Simple percentage and averages
o Bar diagram
o Cone diagram
o Pie diagram
2 The collected data from the questionnaire has been put together in the form of
tables
3 Percentage has been calculated wherever necessary for generalization of the
data
4 Data analysis and interpretation has been done on the basis of primary and
secondary data
5 The findings researches have been recorded based on the analysis
6 The study conducted pertains only to YAMAHA MOTORS INDIA PVTLTD
All bank balances (debitcredit) have been confirmed by the concerned bank
Identified from the available information which has been relied upon by the auditors
The names of small-scale industrial units to whom outstanding for more than
thirty days within agreed terms
The company has 9996 of shareholders in its subsidiary company named as
ESCORTS PVT LTD As at 31-03-2008
So the net effect is that the net cash from investing activities has many more
times than the last year which is negative Now the company has repaid its long
term borrowing more than the last year which has decreased the cash balance by
the little amount
Balance with the schedule banks under the head current amp collection account
amounting to represent funds in transit lying with schedule banks pending
transfer against loan liabilities under the head cash credit amp bill discounting
LIQUIDITY RATIO
1 CURRENT RATIO
(Amount in Rs)
Current Ratio
Year Current Assets Current Liabilities Ratio
2003 58574151 7903952 7412004 69765346 31884616 2192005 72021081 16065621 4482006 91328208 47117199 1942007 115642068 30266661 382
Interpretation
As a rule the current ratio with 21 (or) more is considered as satisfactory
position of the firm
When compared with 2006 there is an increase in the provision for tax because
the debtors are raised and for that the provision is created The current liabilities
majorly included Lanco Group of company for consultancy additional services
The sundry debtors have increased due to the increase to corporate taxes
In the year 2006 the cash and bank balance is reduced because that is used for
payment of dividends In the year 2007 the loans and advances include majorly
the advances to employees and deposits to government The loans and advances
reduced because the employees set off their claims The other current assets
include the interest attained from the deposits The deposits reduced due to the
declaration of dividends So the other current assets decreased
The huge increase in sundry debtors resulted an increase in the ratio which is
above the benchmark level of 21 which shows the comfortable position of the
firm
GRAPHICAL REPRESENTATION
741
219
448
194
382
000
100
200
300
400
500
600
700
800
Ratio
2003 2004 2005 2006 2007
Years
CURRENT RATIO
Ratio
2 QUICK RATIO
(Amount
in Rs)
Quick Ratio
Year Quick Assets Current Liabilities Ratio
2003 58574151 7903952 741
2004 52470336 31884616 165
2005 69883268 16065620 435
2006 89433596 47117199 19
2007 115431868 30266661 381
Interpretation
Quick assets are those assets which can be converted into cash with in a short
period of time say to six months So here the sundry debtors which are with the
long period does not include in the quick assets
Compare with 2006 the Quick ratio is increased because the sundry debtors are
increased due to the increase in the corporate tax and for that the provision
created is also increased So the ratio is also increased with the 2006
GRAPHICAL REPRESENTATION
741
165
435
190
381
000
100
200
300
400
500
600
700
800
Ratio
2003 2004 2005 2006 2007
Years
QUICK RATIO
Ratios
3 ABOSULTE LIQUIDITY RATIO
(Amount
in Rs)
Absolute Cash Ratio
Year Absolute Liquid Assets Current Liabilities Ratio
2003 31004027 7903952 392
2004 10859778 31884616 034
2005 39466542 16065620 246
2006 53850852 47117199 114
2007 35649070 30266661 118
Interpretation
The current assets which are ready in the form of cash are considered as absolute
liquid assets Here the cash and bank balance and the interest on fixed assts are
absolute liquid assets
In the year 2006 the cash and bank balance is decreased due to decrease in the
deposits and the current liabilities are also reduced because of the payment of
dividend That causes a slight increase in the current yearrsquos ratio
GRAPHICAL REPRESENTATION
392
034
246
114 118
0
05
1
15
2
25
3
35
4
Ratios
2003 2004 2005 2006 2007
Years
ABSOLUTE CASH RATIO
Ratios
LEVERAGE RATIOS
4 PROPRIETORY RATIO
(Amount
in Rs)
Proprietory Ratio
Year Share Holders Funds Total Assets Ratio
2003 67679219 78572171 086
2004 53301834 88438107 06
2005 70231061 89158391 079
2006 56473652 106385201 053
2007 97060013 129805102 075
Interpretation
The proprietary ratio establishes the relationship between shareholders funds to
total assets It determines the long-term solvency of the firm This ratio indicates
the extent to which the assets of the company can be lost without affecting the
interest of the company
There is no increase in the capital from the year2004 The share holderrsquos funds
include capital and reserves and surplus The reserves and surplus is increased
due to the increase in balance in profit and loss account which is caused by the
increase of income from services
Total assets includes fixed and current assets The fixed assets are reduced
because of the depreciation and there are no major increments in the fixed assets
The current assets are increased compared with the year 2006 Total assets are
also increased than precious year which resulted an increase in the ratio than old
GRAPHICAL REPRESENTATION
086
060
079
053
075
000
010
020
030
040
050
060
070
080
090
Ratios
2003 2004 2005 2006 2007
Years
PROPRIETORY RATIO
Ratios
ACTIVITY RATIOS
5 WORKING CAPITAL TURNOVER RATIO
(Amount
in Rs)
Working Capital Turnover Ratio
Year Income From Services Working Capital Ratio
2003 36309834 50670199 0722004 53899084 37880730 1422005 72728759 55355460 1312006 55550649 44211009 1262007 96654902 85375407 113
Interpretation
Income from services is greatly increased due to the extra invoice for Operations
amp Maintenance fee and the working capital is also increased greater due to the
increase in from services because the huge increase in current assets
The income from services is raised and the current assets are also raised together
resulted in the decrease of the ratio of 2007 compared with 2006
GRAPHICAL REPRESENTATION
072
142 131126
113
000
020
040
060
080
100
120
140
160
Ratio
2003 2004 2005 2006 2007
Years
WORKING CAPITAL TURNOVER RATIO
Ratio
6 FIXED ASSETS TURNOVER RATIO
(Amount in Rs)
Fixed Assets Turnover Ratio
Year Income From Services Net Fixed Assets Ratio
2003 36309834 28834317 126
2004 53899084 29568279 182
2005 72728759 17137310 424
2006 55550649 15056993 369
2007 96654902 14163034 682
Interpretation
Fixed assets are used in the business for producing the goods to be sold This
ratio shows the firmrsquos ability in generating sales from all financial resources
committed to total assets The ratio indicates the account of one rupee
investment in fixed assets
The income from services is greaterly increased in the current year due to the
increase in the Operations amp Maintenance fee due to the increase in extra invoice
and the net fixed assets are reduced because of the increased charge of
depreciation Finally that effected a huge increase in the ratio compared with the
previous yearrsquos ratio
GRAPHICAL REPRSENTATION
126182
424 369
682
000
100
200
300
400
500
600
700
Ratios
2003 2004 2005 2006 2007
Years
FIXED ASSETS TURNOVER RATIO
Ratios
7 CAPITAL TURNOVER RATIO
(Amount
in Rs)
Capital Turnover Ratio
Year Income From Services Capital Employed Ratio
2003 36309834 37175892 0982004 53899084 53301834 1012005 72728759 70231061 1042006 55550649 56473652 0982007 96654902 97060013 100
Interpretation
This is another ratio to judge the efficiency and effectiveness of the company
like profitability ratio
The income from services is greaterly increased compared with the previous year
and the total capital employed includes capital and reserves amp surplus Due to
huge increase in the net profit the capital employed is also increased along with
income from services Both are effected in the increment of the ratio of current
year
GRAPHICAL REPRESENTATION
098
101
104
098
100
094095096097098099100101102103104
Ratios
2003 2004 2005 2006 2007
Years
CAPITAL TURNOVER RATIO
Ratios
8 CURRENT ASSETS TO FIXED ASSETS RATIO
(Amount
in Rs)
Current Assets To Fixed Assets Ratio
Year Current Assets Fixed Assets Ratio
2003 58524151 19998020 2932004 69765346 18672761 3742005 72021081 17137310 4202006 91328208 15056993 6072007 115642068 14163034 817
Interpretation
Current assets are increased due to the increase in the sundry debtors and the net
fixed assets of the firm are decreased due to the charge of depreciation and there
is no major increment in the fixed assets
The increment in current assets and the decrease in fixed assets resulted an
increase in the ratio compared with the previous year
GRAPHICAL REPRESENTATION
293374
420
607
817
000
100
200
300
400
500
600
700
800
900
Ratios
2003 2004 2005 2006 2007
Years
CURRENT ASSETS TO FIXED ASSETS RATIO
Ratios
PROFITABILITY RATIOS
GENERAL PROFITABILITY RATIOS
9 NET PROFIT RATIO
(Amount in Rs)
Net Profit Ratio
Year Net Profit After Tax Income from Services Ratio
2003 21123474 36039834 059
2004 16125942 53899084 030
2005 16929227 72728759 023
2006 18259580 55550649 033
2007 40586359 96654902 042
Interpretation
The net profit ratio is the overall measure of the firmrsquos ability to turn each rupee
of income from services in net profit If the net margin is inadequate the firm
will fail to achieve return on shareholderrsquos funds High net profit ratio will help
the firm service in the fall of income from services rise in cost of production or
declining demand
The net profit is increased because the income from services is increased The
increment resulted a slight increase in 2007 ratio compared with the year 2006
GRAPHICAL REPRESENTATION
059
030
023
033
042
000
010
020
030
040
050
060
Ratios
2003 2004 2005 2006 2007
Years
NET PROFIT RATIO
Ratios
10 OPERATING PROFIT
(Amount in Rs)
Operating Profit
Year Operating Profit Income From Services Ratio
2003 36094877 36309834 099
2004 27576814 53899084 051
2005 29540599 72728759 041
2006 31586718 55550649 057
2007 67192677 96654902 070
Interpretation
The operating profit ratio is used to measure the relationship between net profits
and sales of a firm Depending on the concept it will decide
The operating profit ratio is increased compared with the last year The earnings
are increased due to the increase in the income from services because of
Operations amp Maintenance fee So the ratio is increased slightly compared with
the previous year
GRAPHICAL REPRESENTATION
099
051
041
057
070
000
010
020
030
040
050060
070
080
090
100
Ratios
2003 2004 2005 2006 2007
Years
OPERATING PROFIT RATIO
Ratios
11 RETURN ON TOTAL ASSETS RATIO
(Amount in Rs)
Return on Total Assets Ratio
Year Net Profit After Tax Total Assets Ratio
2003 21123474 78572171 027
2004 16125942 88438107 018
2005 16929227 89158391 019
2006 18259580 106385201 017
2007 40586359 129805102 031
Interpretation
This is the ratio between net profit and total assets The ratio indicates the return
on total assets in the form of profits
The net profit is increased in the current year because of the increment in the
income from services due to the increase in Operations amp Maintenance fee The
fixed assets are reduced due to the charge of depreciation and no major
increments in fixed assets but the current assets are increased because of sundry
debtors and that effects an increase in the ratio compared with the last year ie
2006
GRAPHICAL REPRESENTATION
027
018 019017
031
000
005
010
015
020
025
030
035
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON TOTAL ASSETS
Ratios
12 RESERVES amp SURPLUS TO CAPITAL RATIO
(Amount in Rs)
Reserves amp Surplus To Capital Ratio
Year Reserves amp Surplus Capital Ratio
2003 65599299 2079920 31542004 34582554 18719280 1852005 51511781 18719280 2752006 37754372 18719280 2022007 78340733 18719280 419
Interpretation
The ratio is used to reveal the policy pursued by the company a very high ratio
indicates a conservative dividend policy and vice-versa Higher the ratio better
will be the position
The reserves amp surplus is decreased in the year 2006 due to the payment of
dividends and in the year 2007 the profit is increased But the capital is
remaining constant from the year 2004 So the increase in the reserves amp surplus
caused a greater increase in the current yearrsquos ratio compared with the older
GRAPHICAL REPRESENTATION
3154
185 275 202419
-
500
1000
1500
2000
2500
3000
3500
Ratios
2003 2004 2005 2006 2007
Years
RESERVES amp SRUPLUS TO CAPITAL RATIO
Ratios
OVERALL PROFITABILITY RATIOS
13 EARNINGS PER SHARE
(Amount in Rs)
Earnings Per Share
Year Net Profit After Tax No of Equity Shares Ratio
2003 21123474 207992 101562004 16125942 1871928 8612005 16929227 1871928 9042006 18259580 1871928 9752007 40586359 1871928 2168
Interpretation
Earnings per share ratio are used to find out the return that the shareholderrsquos earn
from their shares After charging depreciation and after payment of tax the
remaining amount will be distributed by all the shareholders
Net profit after tax is increased due to the huge increase in the income from
services That is the amount which is available to the shareholders to take There
are 1871928 shares of Rs10- each The share capital is constant from the year
2004 Due to the huge increase in net profit the earnings per share is greaterly
increased in 2007
GRAPHICAL REPRESENTATION
10156
861904 975
2168
000
2000
4000
6000
8000
10000
12000
Ratios
2003 2004 2005 2006 2007
Years
EARNINGS PER SHARE
Ratios
14 PRICE EARNINGS (PE) RATIO
(Amount in Rs)
Price Earning (PE) Ratio
Year Market Price Per Share Earnings Per Share Ratio
2003 3254 10156 0322004 2847 861 3302005 3752 904 4152006 3017 975 3092007 5185 2168 239
Interpretation
The ratio is calculated to make an estimate of application in the value of share of
a company
The market price per share is increased due to the increase in the reserves
amp surplus The earnings per share are also increased greaterly compared
with the last year because of increase in the net profit So the ratio is
decreased compared with the previous year
GRAPHICAL REPRESENTATION
032
330
415
309
239
000
050
100
150
200
250
300
350
400
450
Ratios
2003 2004 2005 2006 2007
Years
PE RATIO
Ratios
15 RETURN ON INVESTMENT
(Amount in Rs)
Return on Investment
Year Net Profit After Tax Share Holders Fund Ratio
2003 21123474 67679219 031
2004 16125942 53301834 03
2005 16929227 70231061 024
2006 18259580 56473652 032
2007 40586359 97060013 042
Interpretation
This is the ratio between net profits and shareholders funds The ratio is
generally calculated as percentage multiplying with 100
The net profit is increased due to the increase in the income from services ant
the shareholders funds are increased because of reserve amp surplus So the ratio
is increased in the current year
GRAPHICAL REPRESENTATION
031 030
024
032
042
000
005
010
015
020
025
030
035
040
045
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON INVESTMENT RATIO
RatioS
DATA COLLECTION
The data can be of two types
Primary Data
Secondary Data
Primary Data
Primary data are those data which is originally collected afresh
Secondary Data
Secondary data are those data which are already collected and stored and which has
been passed through statistical research
In this project Secondary data has been collected from following sources-
Annual report
Books
MIS
Other material and report published by company There are two methods to prepare
the Cash flow Statement
ndirect Method
I
The indirect method (or reconciliation method) starts with net income and converts it
to net cash flow from operating activities In other words the indirect method adjusts
net income for items that affected reported net income but did not affect cash To
compute net cash flow from operating activities non-cash charges in the income
statement are added ack to net income and non-cash credits are deducted
b
Direct Method
Under the direct method the statement of cash flows reports net cash flow from
operating activities as major classes of operating cash receipts (eg cash collected from
customers and cash received from interest and dividends) and cash disbursements (eg
cash paid to suppliers for goods to employees for services to creditors for interest and
to government authorities for taxes)
INDIRECT VERSUS DIRECT METHOD
The most contentious decision that the FASB faced in issuing Statement No 95 was
choosing between the direct method and the indirect method of determining net cash
flow from operating activities Companies lobbied against the direct method urging
adoption of the indirect method Commercial lending officers expressed a strong
preference to the FASB hat the direct method be required
tCF-Page 3 of 5
In Favor of the Direct Method
The principal advantage of the direct method is that it shows operating cash receipts and
payments That is it is more consistent with the objective of a statement of cash flows to
provide information about cash receipts and cash payments than the in-direct method
which does not report operating cash receipts and payments
Supporters of the direct method contend that knowledge of the specific sources of
operating cash receipts and the purposes for which operating cash payments were made
in past periods is useful in estimating future operating cash flows Furthermore in-
formation about amounts of major classes of operating cash receipts and payments is
more useful than information only about their arithmetic sum (the net cash flow from
operating activities) Such information is more revealing of an enterprises ability (1) to
generate sufficient cash from operating activities to pay its debts (2) to reinvest in its
operations and (3) to make distributions to its owners
Many corporate providers of financial statements say that they do not currently collect
information in a manner that allows them to determine amounts such as cash received
from customers or cash paid to suppliers directly from their accounting systems But
supporters of the direct method contend that the incremental cost of assimilating such
operating cash receipts and payments data is not significant
In Favor of the Indirect Method
The principal advantage of the indirect method is that it focuses on the differences
between net income and net cash flow from operating activities That is it provides a
useful link between the statement of cash flows and the income statement and balance
sheet
Many providers of financial statements contend that it is less costly to adjust net income
to net cash flow from operating activities (indirect) than it is to report gross operating
cash receipts and payments (direct) Supporters of the indirect method also state that the
direct method which effectively reports income statement information on a cash rather
than an accrual basis may erroneously suggest that net cash flow from operating
activities is as good as or better than net income as a measure of performance
Special Rules Applying to Direct and Indirect Methods
Companies that use the direct method are required at a
minimum to report separately the following classes of
operating cash receipts and payments
Receipts
1048713 Cash collected from customers (including lessees licensees etc)
1048713 Interest and dividends received
1048713 Other operating cash receipts if any
Payments
1048713 Cash paid to employees and suppliers of goods or services (including
suppliers of
insurance advertising etc)
1048713 Interest paid
1048713 Income taxes paid
1048713 Other operating cash payments if any
Companies using the indirect method are required to disclose separately changes in
inventory receivables and payables to reconcile net income to net cash flow from
operating activities In addition interest paid (net of amount capitalized) and income
taxes paid must be disclosed elsewhere in the financial statements or accompanying
notes
The FASB requires these separate and additional disclosures so that users
may approximate the direct method Also an acceptable alternative presentation
of the in-direct method is to report net cash flow from operating activities as a
single line item in the statement of cash flows and to present the reconciliation
details elsewhere in the financial statements
FINDING OF SUDY
According to cash flow statement of the company The finding of the study are as
follows-
The company has not taken any loans secured or unsecured from companies
firms or other parties
The company has not accepted any deposit from the public during the year
The company is not a sick industrial company
The company has not granted any loan secured or unsecured to company firms
or other parties
The company has paid the entire long term and short term borrowing during the
year
The company has buy back the companyrsquos own share this year
The interest paid in 2008 is more than the
There has been a significant decline in volume over the years from 2001-02
to 2005-06 as can be seen in the graph below
Table 43
The Net sales of Tractor has increased considerably from 2004-05 to 2007-08
This can be mainly attributed to changes in Variable and material costs and in
the price
The Net sale of Tractor has increased considerably from 2004-05 to 2007-08
that is an decrease of Rs7216 per tractor This can be mainly attributed to
changes in
Variable and material costs and in the prices
RECOMMENDATIONS
According to cash flow statement of the company The suggestions of the study
are as follows-
The time durations for training program have to increase
Buy regular review and consultations develop a career progression
which is sensitive to performance and ability
Create an environment where by people are trend developed to enable
The to take advantages of opportunities that arise
The jab can be redesigned where the work man stay in what is normally
the same job but has elements of it changed
The principle amount must be paid in time which can be reducing the
interest the out flow
The purchase of the fixed asset must be made only when there is extreme
requirement
In order to avoid taxes the company should go for more investment
The companyrsquos borrowings should go for more investment
o The company should try to reduce the depreciations as maximum
as possible
CONCLUSION
The study on competency level of employees at ESCORTS PVTLTD gave an
insight about the acceptance of competency mapping by employees
The employees at Ymi welcome the introduction of competency mapping in their
organization as they felt it was very much essential in enhancing their skills and
organizational development
The organization has provided the recourses guidance and support to facilitate the
introduction of competency level easily and develop the employees in such a way
that they can face any kind of challenge
However the level of competency in employees is found to be satisfactory
Providing proper training education and guidance to the employees can enhance
the level
This study was mainly carried out to find out whether thee competency mapping
being followed by the company is effective till date If the competency mapping
and fitment to the organization
By looking at the graphs and tables it is quite that the employees still are not up to
the level of competent pool they still have to be trained and made competent in
order to fill the gap As the organization has just applied the mapping it has to see
to that it meets all the requirements for competency mapping
Therefore the graphs make it quite clear that the potential of the employees is not
up to the mark and ie they are not competent enough to meet the competency-
mapping requirement Hence by further training and counseling this gap can be
closed
This report includes the training requirements of employees and it highlights skills
possessed by each employee and skill required All employees get training so that
skill can be improved and maintain balance between standard performance with
their actual performance to avoid gap
APPENDIX
QUESTIONNAIRE
Consumer Survey
Name _____________________________
Age _____________________________
Sex
Male
Female
Occupation
Businessman
Service man
Professional
Others
Monthly income brackets
Below 15000
15000- 20000
20000-30000
30000 and above
of your savings _________
Do you invest
Yes
No
If yes then where do you invest your money
Bank
Insurance
funds
Others
Why do you made that statement
Return
Risk hedging
Tax benefits
Other reasons (specify) _______
Who influence your cash decision
Relatives and friends
Family members
Advisors experts
You yourself
If no then why
Do not know where to invest
Satisfied with your current investment return
Donrsquot want take risk
Other reasons
__________________________________________________________________
___________________
Do you know about CF statement
Yes
No
If yes then from where you have come to know about an cash statement
Advertisements on newspapers
Friends and relative
Agents experts
Other source
What do you think about cash statement
It means investing only in share market
Constant watch must be kept always
Return is not satisfactory
Other perception
__________________________________________________
Can you recall any cash flow of company
___________________________
Would you want to made CF of an org
Yes
No
If yes then why
_______________________________________________________
If no then why
_______________________________________________________
BIBLIOGRAPHY
List of Books
1 PANDEY IM - FINANCIAL MANAGEMANT
2 KHAN MY AND JAIN PK -FINANCIAL MANAGEMANT
3 SMITH KV ndash MANAGEMANT OF WORKING CAPITAL
3 COMPANY RECORDS
4 JOURNAL
5 REPORTS
WEBLIOGRAPHY
1 wwwescortspvtltdcom
2 wwwgooglecom
1997 A Joint Venture with Italian company CARRARO was finalized to establish a company in India
for manufacturing and marketing of transmission and axles
COLLABORATIONS
Collaboration with international Organization of technological excellence constant
research to adopt the emerging technology to specify requirement of the market and
belief in the philosophy industrial interdependence have made Escorts today one of the
leading trend steers in Indiarsquos New Industrial Culture Escorts have merged as fraternity
of above 50000 shareholders 22000 employees 4000 ancillary suppliers and 1 6000
dealers and stockiest all engaged in a large scale investment and sustained efforts to
meet the ever widening market horizons of technological competence appropriate to
Indiarsquos unique changing needs
Escorts believe in incorporating the finest existing technology to meet Indian consumers
demands by collaborating with the internationally renowned companies prominent
among these are
IN GERMANY
GOETZE AG Piston rings and cylinder liners
MAHLE GmbH Piston
CLASS OHG Harvesters Combines
KNORR BREMSE AG Railway Brake System
AUGUST BILSTEIN GmbH Absorbers Hydraulic products
Pressure and temperature switches
IN JAPAN
KAYABA INDUSTRY CO LTD Telescopic Front Forks Car
MIKUNI SHOKO CO Carburetors for BI-Wheelers
IN UK
JCBAMFORD EXCAVATORS JCB Excavators loaders Front end
Loaders Telescopic handlers
IN USA
HUGHESNETWORKS SYSTEMS AB Road Construction Machinery
Vibratory Road Rollers
OFFICIAL ADDRESS OF ESCORTS
Registered Office Corporate
Secretariat amp Law
Escorts Ltd
11 Scindia House
Connaught Circus
New Delhi-110 001
Tel No 011-23310145
Fax No 011-23311715
Escorts Ltd
155 Mathura Road
Faridabad - 121 003
Tel No ( 0129 ) 2250222
Fax ( 0129 ) 2250060
Email Address corpsectndbvsnlnetin
Web Site wwwescortsgroupcom
LEADERSHIP TEAM
Mr Rajan Nanda
Chairman
Mr Nikhil Nanda
Joint Managing Director
Mr Rohtash Mal
Executive Director and Chief Executive Officer - Agri Machinery Group
Mr Manoj Jha
Executive Vice President of Engineering Division
Mr Kamal Bali
CEO ndash Escorts Construction Equipment Limited (ECEL)
Mr GB Mathur
Vice President - Law amp Company Secretary
Mr Rakesh Kumar Budhiraja
Group Chief Financial Officer
Mr Partha Dasgupta
Group Vice President Human Resources and Employee Relations
LEVELS OF MANAGEMENT
MANAGEMENT
TOP
MANAGEMENT
SENIOR
MANAGEMENT
MIDDLE
MANAGEMENT
JUNIOR
MANAGEMENT
MANAGING
DIRECTOR amp
CEO(G-11)
CHIEF GENERAL
MANGER(G-8)
CHIEF
MANAGER
(G-5)
ASSISTANT
MANAGER(G-2)
VICE PRESIDENT
(G-10)
GENERAL
MANAGER(G-7)
SENIOR
MANAGER(G-4)
EXECUTIVE(G-
1)
ASSOCIATE
VICE PRESIDENT
(G-9)
DEPUTY
GENERAL
MANAGER(G-6)
MANAGER(G-3)
MISSION
WE WILL ACHIEVE LEADERSHIP IN MARKET SHARE amp PROFITABILITY IN
THE DOMESTIC TRACTOR MARKET BY THE YEAR 2004-2006 AND SHALL BE
THE WORLSrsquoS LARGEST SUPPLIER OF SUB 100 HP TRACTORS WE SHALL
PROACTIVELY CONTRIBUTE TO THE PROSPERITY OF THE RURAL
ECONOMY BY DEFINING A LARGER ROLE FOR OURSELVES IN THE FOOD
AND AGRICULTURE SECTOR
THE VISION
WE SHALL STRIVE TO BE THE NUMERO UNO IN THE INDIAN TRACTOR
INDUSTRY AND TOP FIVE TRACTOR MANUFACTURERS IN THE WORLD
WE SHALL CONTINUOUSLY STRIVE TO MEET THE EVER RISING
EXPECTATIONS OF OUR VALUED CUSTOMERS AT THE LOWEST
INTERNAL COST
WE SHALL AIM TO OFFER THE FARMING COMMUNITY A RANGE OF
INNOVATIVE PRODUCTS AND SERVICES WHICH SHALL ENABLE THEM
TO IMPROVE THEIR PRODUCTIVITY AND COMPETITIVNESS
WE SHALL ACHIEVE A TURNOVER OF RS 2 BILLION BY THE YEAR
2006TRANSCENDING NATIONAL BOUNDARIES WE SHALL STRIVE TO
ATTAIN EXPORTS OF ONE TENTH OF OUR TOTAL TRACTOR PRODUCTION
BY THE YEAR 2
REVIEW OF LITERATURE
INTRODUCTION
MEANING OF FINANCIAL STATEMENTS
The financial statements are nothing but the financial information presented in concise and
capsule form and are the financial information is the information relating to the financial
position of any firm The firm prepares the financial statements
bull To communicate with different parties about the financial position of the firm
(Shareholders creditors banks financial institution financial analysts investors
etc And
bull To analyze the operations and performance of the firm for the further
planning
The basic source which provides the financial information is the Annual report of the
company which is presented by the company to its shareholders at the Annual General
Meeting
Though the presentation of annual report is a statutory requirement under the
Companies Act 1956 however it is also a medium of communication with the present as well
as prospective investors and creditors of the company
Clause 43 A of the Listing Agreement (with the stock exchange) requires every
listed company to publish unaudited quarterly results But it does not mean the non-corporate
firms do not prepare the financial statements Every firm big or small prepare the following
financial statements
The Balance Sheet (BS)
1 The Income Statement (IS)
Two other key financial statements which are usually prepared by corporate firms are
1 Statement of appropriation of profit and
2 Statement of Change in financial position
ANALYSIS OF FINANCIAL STATEMENTS (AFS)
Analysis of financial statements refers to the process of the critical examination of the
financial information contained in the financial statements in order to understand and
make decisions regarding the operations of the firm The AFS is basically a study of the
relationship among various financial fact and figures as given in a set of financial
statements AFS is the process of establishment and identifying the financial weakness
and strength of the firm It is indicative of two aspects of a firm ie the profitability
and the financial position
OBJECTIVES OF AFS
The objectives of the AFS is to understand the information contained in financial
statements with a view to know the weakness and strength of the firm and to make a
forecast about the future prospects of the firm and thereby enabling the financial
analyst to take different decisions regarding the operation of the firm The objectives
are as follows
bull To assess the present profitability and operating efficiency of the fir
COMMON-SIZE STATEMENTS (CSS)
The CSS represents the relationship of different items of financial statements with some
Common items by expressing each item as a percentage of the common item In common size
Balance Sheet each item of the balance sheet is stated as a percentage of the total balance
sheet The percentages for different items are computed by dividing the absolute amount of
that item by the Common Base and then multiply by 100 The percentage so calculated can
be easily compared with the corresponding percentage in some other period Thus the CSS is
useful not only in intra-firm comparison for the same year or free several years
TREND PERCENTAGE ANALYSYS(TPA)
The TPA is a technique of studying several financial statements over a series of years In
TPA the trend percentages are calculated for each item by taking the figure of that item for
some base year as 100 So the trend percentage is the percentage relationship which
Each item of different years bears to the same item in the base year Any year may be Taken
as the base year but generally the starting initial year is taken as the base year So each
item for base year is taken as 100 and then the same item for other years is Expressed as a
percentage of the base year
RATIO ANALYSIS (RA)
The RA has emerged as the principle technique of the AFS A ratio is a relationship
Expressed in mathematical terms between two individual or groups of figures connected with
other in some logical manner The RA is based in the premise that a single accounting figure
by itself may not communicate any meaningful information but when expressed as a relative
to some other figure it may definitely give some significant information The relationship
between two or more accounting figuresgroups is called a Financial Ratio
A financial ratio helps to summarize a large mass of financial data into a concise form
and to make meaningful interpretations and conclusions about the performance of a firm
For example a firm has net sales Rs 5 00000
Gross Profit Rs 100000
Ratio of Gross Profit to net sales is 20
ie (Rsl 00000 Rs5 00000)
Forms of Ratios
Since a ratio is a mathematical relationship between two or more variables accounting
figures such relationship can be expressed in different ways as follows
bull As a Pure Ratio
bull As a Rate of Times
bull As a Percentage
Ratio can be classified into
bull The Liquidity Ratio
bull The Activity Ratio
bull The Leverage Ratio
bull The Profitability Ratio
STATEMENT OF CHANGES IN FINANCIAL POSITION
(SCFP)
Since the BS amp IS of a firm are two basic depicting the financial position of a firm at the end
of the year These two financial statements are called the traditional statements Both these
statements fail to throw light on changes in assets liabilities and shareholders wealth during
this year
BS deals with the financial position gives only the static view of the year- end financial
position and fails to indicate the movement and causes in assets and liabilities during the
year Similarly IS show the profit or loss resulting out of the operations of the firm during
the year This profit or loss in fact to ascertain the sufficiency of resources to declare the
dividend etc thus there is a need to prepare another statement (together with the BS amp IS)
which may identify the changes in assets liabilities and the shareholders funds over a given
period
The SCFP is essentially an explanation of the changes in financial position of a Firm
occasioned by the firm in between two successive BSs The SCFP draws basic Information
from the BS and IS helps in understanding the change in assets liabilities and shareholders
worth The SCFP deals with the flow of funds during the year ie the funds coming in and
going out of the firm It summarizes the sources from where the funds might have been
arranged procured by the firm and the uses for which the funs might have been used by
the firm during the year
The SCFP can be prepared as follows
bull SCFP (Cash Basis) also known as a Cash F low Statement
bull SCFP (Net Working Capital Basis) Fund Flow Statement
SCFP (WORKING CAPITAL BASIS)
FUND FLOW STATEMENT
The FFS reports the flows of funds through the firm during the year ie it shows the
Sources and uses of working capital between two balance sheet dates The FFS
attempts to explain the changes in financial position from one BS to the subsequent BS
in terms of the change in the funds or the working capital position of the firm
The term Working capital (WC) is generally defined as the excess of total
current assets over the total current liabilities The current Assets (CA) of a firm may
include cash in hand and at bank stock debtors bills advances etc and the Current
Liabilities (CL) includes creditors bills payable outstanding expenses provision for
tax short term liabilities etc the term WC is a single figure representing the net effect
of a transaction is to increase or decrease the Working Capital by affecting any of the
elements of Current Assets or Current Liabilities Therefore the FFS in its standard
form incorporates only those transactions which affect the Working Capital i e those
transactions where in only one of the affected accounted is a current account
Now a flow of working capital arises when one of the affected accounts is a current
account From the point of view of current account the effected on working capital
can examined in the light of the definitions of the term working capital ie the excess
of current assets over current liabilities ie
Impliedly change in any of the CA or CL will affect the WC Simple observation
equation tells that
bull Increase in any of the CA or decrease in any of the CLs will result in increase
in the WC
bull Decrease in any of the CA or increase in any of the CLs will result in decrease
in the WC
To find out the relative importance of different components of the financial position
of the firm
bull To identify the reasons for change in the profitability financial position of the
firm and
bull To assess the short term as well as the long term liquidity position of the
firm
TECHNIQUES TOOLS OF THE AFS
AFS can be undertaken by different persons and for different purposes therefore the
methodology adopted for the AFS may be carrying from one situation to another However
the following are some of the common techniques of the AFS
bull Comparative financial statements
bull Common-size financial statements
bull Trend percentage analysis and
bull Ratio Analysis
COMPARATIVE FINANCIAL STATEMENTS
In CFS two or more BS andor the IS of a firm are presented simultaneously in columnar
form The Financial data for two or more tears are placed and presented in adjacent columns
and thereby the financial data is provided at times perspective in order to facilitate periodic
comparison In CFS the BS and the IS for number of years are presented in condensed
form for year to year comparison and to exhibit the magnitude and direction of changes
The CFS helps a financial analyst of the firm and in establishing operating and
positional trend of the firm The CFS may be prepared to show
1 The absolute amount of different items in monetary terms
2 The amount of periodic changes in monetary terms
1 The percentages of periodic changes to reveal the proportionate changes
The CFS can be prepared for both the BS and the IS
CORE COMPETENCE OF ESCORTS
Customer 1
We put customers first in everything we do We take decisions keeping the customer in
mind
Challenging Spirit
We strive for excellence in everything we do and in the quality of goods amp services we
provide We work hard to achieve what we commit amp achieve results faster than our
competitors and we never give up
Team-work
We work cohesively with our colleagues as a multi-cultural team built on trust respect
understanding amp mutual co-operation Everyones contribution is equally important for
our success
Frank amp Fair Organization
We are honest sincere open minded fair amp transparent in our dealings We actively
listen to others and participate in healthy amp frank discussions to achieve the
organizations
A firm undertakes numerous during a year and most of these transactions during a year and
most of these transactions may affect one or the other current account ie most of these
transactions May results in the flow of the WC Neither is it necessary nor practical to
identify the effect of each and every transaction on the WC These transactions instead are
considered and analyzed in a collective form and then their effect on the WC is identified
SCFP (CASH BASIS) OR
THE CASH FLOW STATEMENT
The CFS attempts to analyze the transactions of the firm in terms of cash ie the transactions
generating cash and using cash The focus in the CFS is on cash rather than on WC The
sources of cash may be the cash profits earned by the firm issue of capital for cash issue of
other securities for cash borrowings sale of assets investment redemption of debenture or
preference share repayment of loan payment of tax dividend distribution etc Thus the
CFS summarizes the cash inflows and outflows
An analysis of cash flows is useful for short-run planning A firm needs sufficient cash to
debts maturing in the near future to pay interest and other expenses and to pay dividends to
shareholders The firm can make projections of cash flows and outflows for the near future to
determine the availability of cash This cash balance can be matched with the firms need for
cash during the period and accordingly arrangements can be made the deficit or invest the
surplus cash temporarily A historical analysis of cash flows provides insight to prepare
reliable cash flow projections for the immediate future
A statement of changes in financial position on cash basis commonly known as cash flow
statement summarizes the causes of changes in cash position between dates of two balance
sheets It indicates the sources amp uses of cash The cash flow statement is similar to the fund
flow statement except that it focuses attentions on cash instead of working capital (funds)
Thus this statement analyses change in non-current accounts as well as current accounts
(other than cash) to determine the flow of cash
The CFS is based on the concept on the WC Where as the CFS is based in cash which is only
the element of WC Thus the CFS provides details of cash movements whereas the FFS
provides the details of funds movements
The CFS considers only the actual movement of cash whereas the FFS considers the
movements of the funds as defined in terms of net working capital
CASH-FLOW STATEMENT
A cash-flow statement is a statement showing inflows (receipts) and outflows (payments) of
cash during a particular period In other words it is a summary of sources and applications of
Cash during a particular span of time It analyses the reason for changes in balance of cash
between the two balance sheet dates The term Cash here stands for cash and cash
equivalents
A cash-flow statement includes only those items which affect cash As such the cash-flow
statement is called a statement of changes in financial position - cash basis
A cash - flow statement can be for the past or can be projected for a future period
OBJECTS OR USES OF CASH-FLOW STATEMENT
The main objectives behind preparing a cash-flow statement can be laid down as under-
bull USEFUL FOR SHORT-TERM FINANCIAL PLANNING-
A cash-flow statement provides information for planning the short-term financial needs of the
firm Since it provides information regarding the sources and utilization of cash during a period
it become easier for the management to assess whether it will have Adequate cash to meet day-
to-day expenses and pay the long - term loans and interest Thereon and whether it has enough
cash to pay for the purchase of fixed assets or not
USEFUL FOR PREARING THE CASH BUDGET-
A cash-flow statement prepared for the future period is helpful in preparing a cash budget It
informs the management about the future period is helpful in preparing a cash budget It informs
the management about the surplus or deficit periods of cash ie in which months the payments
will be in excess of receipts It helps in planning the investment of surplus cash in short-term
investment and to plan short-term credit in advance of deficit periods
bull COMPARISON WITH CASH BUDGET-
A cash budget is prepared at the commencement of the year whereas a cash flow Statement is
prepared at the end of the year A comparison between the two helps in ascertaining the extent
to which the financial resources of the firm have been generated and used according to the plan
Causes of variances between the figures of two statements can be analyzed and proper
corrective measures may be takes
bull STUDY OF THE TREND OF CASH RECEIPTS AND PAYMENTS-
A cash-flow statement reveals the speed at which the cash is being generated from debtors stock
and other current assets the speed at which the current liabilities are being paid It enables the
management to assess the true position of the cash in future
bull IT EXPLAINS THE DEVIATIONS OF CASH FROM EARNINGS-
A firm may earn huge profits yet it may have paucity of cash or when it suffered a loss it may
still have plenty of cash A cash flow statement explains the reasons for it
HELPFUL IN ASCERTAINING CASH-FLOW FROM VARIOUS
ACTIBITIES SEPARATELY-
A cash-flow statement aims at highlighting the cash flow from operating investing and
financing activities separately It includes how much cash has been generated or used in these
activities
bull HELPFUL IN MAKING DIVIDEND DECISIONS-
Dividend must be paid within 42 days of its declaration Hence the management takes the help of
cash-flow statement to ascertain the position of cash generated from operating activities which
can be used for payment of dividend
IMPORTANCE AND RELEVANCE OF CFS
The CFS has gained importance in view of the fact that there are many managerial Decisions
which are taken in the light of the cash availability or cash position of the firm
For example declaration of dividend by the company requires cash disbursement and
Therefore the Board of Directors must consider the cash position before proposing a dividend
The CFS also provides information for the short term financial planning and in particular the
short term cash needs of the firm
In view of increasing importance and relevance of the CFS the clause 32 of the Listing
agreement (between a Company and the Stock Exchange where the shares proposed to be listed)
has been amended by the SEBI As a result the listed companies in India are now required to
supply a copy of the CFS to each shareholder as a part of Annual Report As a result the listed
companies have started a practice of sending a CFS for which the BS has been prepared as
apart of the Annual Report of the company
DIFFRENCE BETWEEN CASH - FLOW STATEMENT AND
CASH BUDGET
There is not much difference between cash flow statement and a cash budget The
only difference is that a cash flow statement is prepared for a past period where as cash
budget is prepared for a future period Hence it is of limited use as far as the future
periods are concerned A cash budget is therefore prepared showing how much cash is
likely to be received and what will be the disbursements during a future period of time
Thus a cash budget indicates in which months there will be surplus cash and in which
moths there will be deficiency of cash resources The management can then take suitable
decision to invest the surplus cash or make arrangement for the deficiency of cash at the
required time
LIQUIDITY
It does not present true picture of the liquidity of the firm the liquidity does
not depend upon cash alone Liquidity also depends upon those assets
which can be converted into cash easily
bull Exclusion of these assets obstructs the true reporting of the ability of the firm to
meet its liabilities when they become due for payment
bull The possibilities of window - dressing is higher in case of cash position in
comparison to the working capital position of the firm
bull The cash balance can be easily maneuvered by postponing purchases and other
payments and by rapidly collecting cash from debtors before the balance sheet date
Hence a fund - flow statement presents a more realistic picture than a cash flow
statement
bull Cash flow statement ignores non- cash charges Hence the true position of the
enterprise cannot be judged by cash flow statement
bull It is prepared on cash basis and hence ignores one of the basic concept of accounting
namely accrual concept
PROCEDURE OF PREPARING CASH FLOW STATEMENT-
The institute of charted accountants of India has issued accounting standards (as)-3 revised for
preparing a cash flow statement This accounting standard has been made mandatory in respect
of accounting periods commencing on or after 1st April 2001 for certain enterprises These
enterprises are-
bull Enterprises whose equity or debt securities are listed on a recognized stock exchange in
India And enterprise that are in the process of issuing equity or debt securities that will
be listed on a recognized stock exchange in India
bull All other commercial industrial and business enterprises whose turnover for accounting
period Rs 50 crores
As such the cash flow statement has been prepared according to as -3 revised in this project
According to as-3 revised the cash flow statement summarizes the cash inflows and cash
outflows and the net changes (increase or decrease) in cash and cash equipment resulting from
operating investing and financing activities of a firm during a period The following terms are
used for preparing a cash flow statement
CASH-
It compares cash in hand and demands with banks
CASH EQUIVALENTS-
There are short - term highly liquid investments that are readily into known amounts of cash
and which present insignificant risk of changes in their values Normally an investment will be
termed as cash equivalent only if it has a short maturity period say three months or less from the
date of its acquisition Examples of cash equivalent are treasury bills commercial papers etc
Which are purchased with cash that is in excess of immediate needs investment in shares are
excluded from cash equivalents unless they are cash equivalent in reality For example the
preference shares of the company which are purchased shortly before their redemption date will
be included in cash equivalents provided there is only an insignificant risk of failure of the
company in repaying the amount at the date of the maturity
CLASSIFICATION OF CASH FLOW-
According to as -3 (revised) cash flow statement should be presented in a manner that it reports
inflows of cash by classifying them into three categories namely operating investing and
financing activities Classification of all activities into these activities on the cash and cash
equivalents of the enterprise such information will be helpful in evaluating the relationships
among these three activities are explained as below
CASH FLOW FROM OPERATING ACTIVITIES-
Operating activities are the main revenue generating activities of an enterprise As such they
include cash flows from those transactions and events which enter into the ascertainment of
net profit or loss of the enterprise Examples of cash flows arising operating activities are
bull Cash receipts from the sale of goods and rendering of services
bull Cash receipts from royalties fees commissions and other revenue
bull Cash payments to suppliers for goods and services
bull Cash payments to and on behalf of employees
bull Cash receipts and cash payments of an insurance enterprise for premiums and claims
annuities and other policy benefits
bull Cash receipts and payments relating to future contracts forward contracts option
contracts and swap contracts when the contracts are held for dealing or trade purpose and
bull Cash payments of refunds of income taxes unless they can be specifically identified with
financing and investing activities
CASH FLOW FROM INVESTING ACTIVITIES-
Investing activities include the purchase and sale of long term assets such as land building plant
and machinery etc not held for resale These activities also include the purchase and sale of such
investment which are not including in cash equipments Cash flow from investing activities
discloses the expenditures incurred for resources intended to generate future income and cash
flows
Examples cash flow arising from investing activities are
bull Cash payments to acquire fixed assets (including intangible)
bull Cash receipts from sale of fixed assets (including intangibles)
bull Cash payments to acquire shares warrants or debt instruments of other enterprises
(other than receipts for those instruments considered to be cash equivalents)
bull Cash receipts from sale of shares warrants or debt instruments of other enterprises (other
than receipts for those instruments considered to be cash equivalents)
bull Cash advances and loans made to third parties In case of financial enterprises these will
be treated as cash flow from operating activities
bull Cash receipts from the repayment of advances and loans made to third parties In case of
financial enterprises these will be treated as cash flow from operating activities
bull Cash receipts of insurance claim for property involved in accident and
bull Cash receipts of interest and dividend In case of financial enterprise these will be treated
cash flow from operating activities
CASH FLOW FROM FIANCING ACTIVITIES-
Financing activities are the activities that result in change in capital and borrowing of the
enterprise
Examples of cash flows arising from financing activities are
bull Cash receipts from issuing shares or other similar instruments
bull Cash receipts from issuing debentures loans bonds and other short term or long term
borrowing
bull Cash repayment of amounts borrowed buy back of equity shares redemption of
preference shares debentures loans bonds etc
bull Cash payment of interest and dividend
IMPORTANT NOTE
In case of financial enterprise such as bank or mutual fund company cash Outflow
and cash inflow arising from the purchase and sale of securities will Be treated as
flows from operating activities This is because purchase and sale of securities is a
part of operating activity in case of financial enterprise In addition interest paid
and interest received as well as dividends received will also be treated as cash flow
from operating activities in case of financial Enterprises
CASH FLOW STATEMENT
(DIRECT METHOD)
CASH FLOW FROM OPERATING ACTIVITIES
Cash receipts from costumers
Cash paid to suppliers and employers ()
Cash generated from operations
Income tax paid ()
Cash flows from extraordinary item
plusmn Extra ordinary items
Net cash from operating activities
CASH FLOW FROM INVESTING ACTIVITIES-
Purchase of fixed assets
Proceed from sale equipment ()
Interest received
Dividend received ()
Net cash from investing activities
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from insurance of share capital
Proceeds from long- term borrowings ()
Repayment of from long-term borrowings
Interest paid
Dividend paid ()
Net cash from financing activities
Net increase in cash and cash equivalent
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
SOME SPECIAL TERMS-
i) INTERSET AND DIVIDEND-
Cash inflow from interest and dividends and cash outflow on account of interest and
dividends should be disclosed separately Cash inflow arising from interest and dividends
received should be shown as cash flow from investing activities where as cash outflow
disclosed outflow on account of interest and dividend paid should be shown as cash flow
from financing activity
ii) TAXES ON INCOME-
Tax paid on income is a part of cash flow from operating activity Hence taxes paid are
shown as a deduction under cash flow from operating activity
iii) EXTRA ORDINARY ITEMS-
Cash flow relating to extra ordinary items such as bad debts recovered Claims received from
insurance companies winning of a lottery or a law etc Should be disclosed separately as
arising from operating investing or financing activities For example the amount received
for insurance company on account of loss of stock by fire Earthquake and floods etc Should
be reported as cash flow from operating activities
iv) SIGNIFICANT NON - CASH TRANSACTION-
There are some investing and financing activities which do not require the use of cash or
cash equivalents Such non cash activities should be excluded from the cash flow statement
Examples are the acquisition of assets by issue of debentures or shares conversion of
shares into debentures etc Such significant on non cash transaction should be disclosed
outside the cash flow statement
CASH FLOW STATEMENT
(INDIRECT METHOD)
CASH FLOW FROM OPERARATTNG ACTIVITIES
Net profit before taxation and extraordinary item
Adjustment for
Depreciation
Foreign exchange loss
Interest income
Dividend income
Interest expense
Operating profit before working capital changes
Increase in sundry debtors
Decrease in inventories
Decrease in sundry creditors
Cash generated from operations
Income tax paid ()
Cash flow before extraordinary item
plusmn Extra - ordinary items
Net cash from operating activities
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of fixed assets ()
Proceeds from sale of equipment
Interest received
Dividend received ()
Net cash from investing activities
CASH FLOW FROM FINANCING ACTIVITIES-
Proceeds from insurance of share capital
Proceeds from long - term borrowings
Repayments of from long - term borrowings ()
Interest paid ()
Dividend paid ()
Net cash from financing activities
Net increase in cash and cash equivalent
Cash and cash equivalents at beginning of period
CHANGES IN CASH FLOWS
Changes in cash flows can be treated to the following
1 Net profit will increase the cash flows these cash flows will be
increased further if there are any non-cash changes (such as depreciation
and amortization)
2 Any payment of dividends will decrease the cash flows as will the
repayment of debt an issue of share or debt will also increase the
cash flows
3 An increase in non-cash assets will decrease cash flows increase in
current assets and fixed assets will result in drain on cash flows
Thus a statement of changes in cash flows ie the cash flow statement
classifies all Changes into one of three categories - operating investing or
financing activities Therefore the preparation of a statement of changes in cash
flows requires classification of changes in liabilities shareholders equity and
non-cash assets into one of these categories although some items will not fit
easily onto one other
h equivalent at end of period
STEP- BY-STEP PROCEDURE TO PREPARE CFS
1 Calculate the net increase or decrease in cash and cash equivalents-
For this purpose the opening balance of total cash and cash equivalents is compared with the
closing balance of cash and equivalents
Increasedecrease in cash and equivalents
Opening balance Closing Balance
Cash in hand
Cash in bank
Short-term Investment
Total
The difference between the total of opening and closing balance will be increased or
Decreased in cash equivalents during the period It may be noted that if there are only one or
two of items of cash etc
2 Net Cash flaw from operating activities-
The term operating refers to the normal purchase of goods and services On the basis of the
information contained in the comparative BS s and the IS and the additional Information the
net cash flow generated or use by the operating activities may be ascertained The IS prepared
by the firm gives the net profit figure earned by the firm On actual basis ie all items in the
IS are incorporated on the basis of earnedaccrued even
3 If not resulting in cash movements-
So the profit or loss as by the IS may not result in increase or decrease in cash balance by the
SYNOPSIS
INTRODUCTION
ESCORTS PVT LTD is a private limited company not listed in a stock exchange of India
and employees 900 highly trained personnel Its manufacturing plants are strategically located
in close proximity to its customers at Faridabad (Haryana) Noida (UP)
OBJECTIVES OF THE STUDY
bull To find the movement of cash inflow and cash outflow
bull To make the comparison between cash inflow and
bull Cash outflow
bull To prepare the Cash Flow Statement
bull To analyze the Balance Sheet of the company in terms of Cash Flow Statement
bull To focus on various activities of the organization in terms of Operating
Financing Investment
SCOPE OF THE STUDY
Financial resources are the assets for the company and their productivity is key
factor for profitability It is necessary to know their problems their knowledge
skills abilities amp the measures that can be taken to reduce them By analyzing this
top management can build good relations with the employees
The whole study is to determine the competencies of different employees who are
working in ESCORTS PVT LTD By analyzing it the top management can
introduce the concept of competency mapping in the organization Through this
management can attempt to use more suitable strategies towards the human
resource development
The research is confined to elicit the existing gap between the standard skill
required to perform the job and the skill processed by the employees at ESCORTS
PVT LTD And to provide them suitable training program to over come those gaps
for the better utilization of human resources
RELEVANCE
The scope of the study was confined to the outside parties like creditors
shareholders government etc Who want to invest their money in the
company
The benefit of the report for the company is that through this report they can come
to know about the cash flow statements of the company
This study also unable the company that their cash is not utilizing in unnecessary
things
The benefit of the report for the researcher is that it has helped to get knowledge
about the cash inflow and cash
RESERRCH METHODOLOGY-
RESEARCH DESIGN
bull The study was conducted under well- structured approach
bull The project lasted for 4 weeks and the year 2009 ie from 08 July to 12
Aug2009
bull The questionnaire method amp personal interview method was used to collect
the primary data for the study
The secondary data is collected from Internet amp company training material and
many other company materials
SAMPLE DESIGN
The process of extracting a sample from a population is called sampling
procedure The selection of sampling procedure to conduct the research
depends upon the nature of the study and the objective to be accomplished
Judgment sampling technique is adopted to select the respondents in this
study The sample design included the various departments in the YAMAHA
MOTORS PVT LTD
Methodology of date collection
bull Conducting personal interview
bull Data collection from primary and secondary sources
bull Designing questionnaire
bull Selecting sample size from the sample frame for the survey
bull Questionnaire distribution
bull Analysis of collected data with the help of statistical tools
bull Interpretation of collected data
bull Stating the conclusion based on the entire study
Sampling Technique
The sampling technique used for this research is of non-probability and convenience
sampling
Sample Unit
Employees of the company
Sample Size
For this research study the sample size is 25 respondents
Sources of data
Primary data
Primary data is the data which is collected by the researcher for the first time
and which was not there The tools used to collect the data are-
1)Questionnaire method from the employers in different departments
2) Face to Face personal interactions
Secondary Data
The data already collected is called as secondary data The relevant information
for this study has been collected from secondary source such as
Books
Journal
Reports
Publication by the organizational circulation
Company records
Business bulletins
Internet
Secondary data is also collected from various of the internet and intranet Some
of the website trough which information was gathered was through
HYPOTHESIS
The report is analyzed under the presumption that cash flow position of
YAMAHA MOTORS PVTLTD It can be improved and made effective in
terms of cash flows
In testing the above hypothesis the following aspects will be considered
1 Balance sheet comparisons
2 Presentation of cash flow statement in terms of revised AS-3
LIMITATIONS
The study though conducted to the best of the ability suffers from some
certain limitations There are
The data is secondary one and as such its reliability may be
questioned upon
The time availability for the study is less and as such it hinders thee
progress of the study
Senior officials were rarely approachable
Websites were not giving comprehensive data
Not having face-to-face interaction to get more relevant
information
Analysis and interpretation of data was done on the assumption that
the respondentsrsquo information was online
Information collected was totally subjective
The interviews are done during office hours but could not be done
for the other employees of other
DATA ANALYSIS
ESCORTS PVT LTD
CASH FLOW STRATEMENT
Year Ended Year Ended
30092009 30092008
Rs Crores Rs
Crores
A Cash Flow from Operating Activities
Net profit before tax (1733) 3444
Adjustment for
Loss on sale Provision for diminution in value of Long Term
Investments amp loans to Group Companies 189 4018
Gain on sale of Long Term Investments (122) (9492)
Gain on sale of Asset (013) -
Depreciation 4497 3955
Misc Exp Assets Write off Provisions 808 750
Interest Expense 7222 7999
Dividend Income (002) (001)
Interest Income (2082) -
Operating Profit before working capital changes 8764 10673
Adjustments for
Trade and other Receivables (8817) (12035)
Inventories 1379 (4692)
Trade Payables 6705 19046
Miscellaneous Expenditure (750) (511)
(1483) 1808
Cash Generated from Operations 7281 12481
Direct Taxes (Paid)Refunds (1785) 3166
Net Cash Flow from operating activities 5496 15647
B Cash Flow from Investing Activities
Purchase of Fixed Assets (3095) (2794)
Proceeds from sale of Fixed Assets 086 177
Movement in Loans and Advances (1627) (1644)
Sale of Investments 3233 11452
Short Term Deposits with schedule Banks (231) (1048)
Interest Received 2070 -
Dividend Received 002 001
Net Cash Flow from Investing activities 438 6144
Proceeds from Share Capital amp Securities Premium 11444 -
Proceeds from Long Term Borrowings 8660 -
Less Repayment of Long Term Borrowings (054) (7896)
Proceeds (Repayment) from short term borrowings (net) (22726) -
Interest Paid (7740) (8223)
Net Cash used in financing activities (10416) (16119)
Net Increase(Decrease) in Cash and Cash equivalents (4482) 5672
Cash and Cash equivalents as at 01102008 10565 4893
Cash and Cash equivalents as at 30092009 6083 1056
ANALYSIS OF CASH FLOW
From the cash flow statements of the ESCORT PVTLTDIt can be analyzed
from the two years that the net cash balance of the company has increased
manifold in 30-09-2008 than the year 30-09-2009
The net profit in 30-09-2008 is higher than the 30-09-2009 but due to certain
changes there has been increase in the cash balance
The interest paid this year is ore of the last year which implies that thee
company has not repaid his borrowed capital due to which the interest has got
down
The depreciation has increased but it does not affect cash to an extent as it is a
non-cash item In the head of working capital there is drastic change in the cash
balance in the form of ldquoTrade and other Receivables which has affected the cash
balance
There is outflow of cash for receivables rather than the inflow in the last year
So the net effect is that the cash from operating activities has been decreased
two times from the last year
The company has no accumulated losses as at the end of the financial year ie
September 31 2008
Provision for taxation has been made in accordance with the requirement of AS-
22 issued by Institute of Charted Accountants of India
Pursuant to that current year deferred tax liability have been charged to profit amp
loss account
In opinion of the board of directors of thee company the current assets loans
and advances have a value on realization in the ordinary course of the business at
least equal to the amount stated in the balance sheet and provision for all
liabilities have been made
Balance of sundry debtors creditors loans and advances are subject to confirmation by
the concerned parties
METHOD OF ANALYSIS
1 Data analysis is done using the following statistical tools wherever required in
order to extract meaningful information from the collected data
o Simple percentage and averages
o Bar diagram
o Cone diagram
o Pie diagram
2 The collected data from the questionnaire has been put together in the form of
tables
3 Percentage has been calculated wherever necessary for generalization of the
data
4 Data analysis and interpretation has been done on the basis of primary and
secondary data
5 The findings researches have been recorded based on the analysis
6 The study conducted pertains only to YAMAHA MOTORS INDIA PVTLTD
All bank balances (debitcredit) have been confirmed by the concerned bank
Identified from the available information which has been relied upon by the auditors
The names of small-scale industrial units to whom outstanding for more than
thirty days within agreed terms
The company has 9996 of shareholders in its subsidiary company named as
ESCORTS PVT LTD As at 31-03-2008
So the net effect is that the net cash from investing activities has many more
times than the last year which is negative Now the company has repaid its long
term borrowing more than the last year which has decreased the cash balance by
the little amount
Balance with the schedule banks under the head current amp collection account
amounting to represent funds in transit lying with schedule banks pending
transfer against loan liabilities under the head cash credit amp bill discounting
LIQUIDITY RATIO
1 CURRENT RATIO
(Amount in Rs)
Current Ratio
Year Current Assets Current Liabilities Ratio
2003 58574151 7903952 7412004 69765346 31884616 2192005 72021081 16065621 4482006 91328208 47117199 1942007 115642068 30266661 382
Interpretation
As a rule the current ratio with 21 (or) more is considered as satisfactory
position of the firm
When compared with 2006 there is an increase in the provision for tax because
the debtors are raised and for that the provision is created The current liabilities
majorly included Lanco Group of company for consultancy additional services
The sundry debtors have increased due to the increase to corporate taxes
In the year 2006 the cash and bank balance is reduced because that is used for
payment of dividends In the year 2007 the loans and advances include majorly
the advances to employees and deposits to government The loans and advances
reduced because the employees set off their claims The other current assets
include the interest attained from the deposits The deposits reduced due to the
declaration of dividends So the other current assets decreased
The huge increase in sundry debtors resulted an increase in the ratio which is
above the benchmark level of 21 which shows the comfortable position of the
firm
GRAPHICAL REPRESENTATION
741
219
448
194
382
000
100
200
300
400
500
600
700
800
Ratio
2003 2004 2005 2006 2007
Years
CURRENT RATIO
Ratio
2 QUICK RATIO
(Amount
in Rs)
Quick Ratio
Year Quick Assets Current Liabilities Ratio
2003 58574151 7903952 741
2004 52470336 31884616 165
2005 69883268 16065620 435
2006 89433596 47117199 19
2007 115431868 30266661 381
Interpretation
Quick assets are those assets which can be converted into cash with in a short
period of time say to six months So here the sundry debtors which are with the
long period does not include in the quick assets
Compare with 2006 the Quick ratio is increased because the sundry debtors are
increased due to the increase in the corporate tax and for that the provision
created is also increased So the ratio is also increased with the 2006
GRAPHICAL REPRESENTATION
741
165
435
190
381
000
100
200
300
400
500
600
700
800
Ratio
2003 2004 2005 2006 2007
Years
QUICK RATIO
Ratios
3 ABOSULTE LIQUIDITY RATIO
(Amount
in Rs)
Absolute Cash Ratio
Year Absolute Liquid Assets Current Liabilities Ratio
2003 31004027 7903952 392
2004 10859778 31884616 034
2005 39466542 16065620 246
2006 53850852 47117199 114
2007 35649070 30266661 118
Interpretation
The current assets which are ready in the form of cash are considered as absolute
liquid assets Here the cash and bank balance and the interest on fixed assts are
absolute liquid assets
In the year 2006 the cash and bank balance is decreased due to decrease in the
deposits and the current liabilities are also reduced because of the payment of
dividend That causes a slight increase in the current yearrsquos ratio
GRAPHICAL REPRESENTATION
392
034
246
114 118
0
05
1
15
2
25
3
35
4
Ratios
2003 2004 2005 2006 2007
Years
ABSOLUTE CASH RATIO
Ratios
LEVERAGE RATIOS
4 PROPRIETORY RATIO
(Amount
in Rs)
Proprietory Ratio
Year Share Holders Funds Total Assets Ratio
2003 67679219 78572171 086
2004 53301834 88438107 06
2005 70231061 89158391 079
2006 56473652 106385201 053
2007 97060013 129805102 075
Interpretation
The proprietary ratio establishes the relationship between shareholders funds to
total assets It determines the long-term solvency of the firm This ratio indicates
the extent to which the assets of the company can be lost without affecting the
interest of the company
There is no increase in the capital from the year2004 The share holderrsquos funds
include capital and reserves and surplus The reserves and surplus is increased
due to the increase in balance in profit and loss account which is caused by the
increase of income from services
Total assets includes fixed and current assets The fixed assets are reduced
because of the depreciation and there are no major increments in the fixed assets
The current assets are increased compared with the year 2006 Total assets are
also increased than precious year which resulted an increase in the ratio than old
GRAPHICAL REPRESENTATION
086
060
079
053
075
000
010
020
030
040
050
060
070
080
090
Ratios
2003 2004 2005 2006 2007
Years
PROPRIETORY RATIO
Ratios
ACTIVITY RATIOS
5 WORKING CAPITAL TURNOVER RATIO
(Amount
in Rs)
Working Capital Turnover Ratio
Year Income From Services Working Capital Ratio
2003 36309834 50670199 0722004 53899084 37880730 1422005 72728759 55355460 1312006 55550649 44211009 1262007 96654902 85375407 113
Interpretation
Income from services is greatly increased due to the extra invoice for Operations
amp Maintenance fee and the working capital is also increased greater due to the
increase in from services because the huge increase in current assets
The income from services is raised and the current assets are also raised together
resulted in the decrease of the ratio of 2007 compared with 2006
GRAPHICAL REPRESENTATION
072
142 131126
113
000
020
040
060
080
100
120
140
160
Ratio
2003 2004 2005 2006 2007
Years
WORKING CAPITAL TURNOVER RATIO
Ratio
6 FIXED ASSETS TURNOVER RATIO
(Amount in Rs)
Fixed Assets Turnover Ratio
Year Income From Services Net Fixed Assets Ratio
2003 36309834 28834317 126
2004 53899084 29568279 182
2005 72728759 17137310 424
2006 55550649 15056993 369
2007 96654902 14163034 682
Interpretation
Fixed assets are used in the business for producing the goods to be sold This
ratio shows the firmrsquos ability in generating sales from all financial resources
committed to total assets The ratio indicates the account of one rupee
investment in fixed assets
The income from services is greaterly increased in the current year due to the
increase in the Operations amp Maintenance fee due to the increase in extra invoice
and the net fixed assets are reduced because of the increased charge of
depreciation Finally that effected a huge increase in the ratio compared with the
previous yearrsquos ratio
GRAPHICAL REPRSENTATION
126182
424 369
682
000
100
200
300
400
500
600
700
Ratios
2003 2004 2005 2006 2007
Years
FIXED ASSETS TURNOVER RATIO
Ratios
7 CAPITAL TURNOVER RATIO
(Amount
in Rs)
Capital Turnover Ratio
Year Income From Services Capital Employed Ratio
2003 36309834 37175892 0982004 53899084 53301834 1012005 72728759 70231061 1042006 55550649 56473652 0982007 96654902 97060013 100
Interpretation
This is another ratio to judge the efficiency and effectiveness of the company
like profitability ratio
The income from services is greaterly increased compared with the previous year
and the total capital employed includes capital and reserves amp surplus Due to
huge increase in the net profit the capital employed is also increased along with
income from services Both are effected in the increment of the ratio of current
year
GRAPHICAL REPRESENTATION
098
101
104
098
100
094095096097098099100101102103104
Ratios
2003 2004 2005 2006 2007
Years
CAPITAL TURNOVER RATIO
Ratios
8 CURRENT ASSETS TO FIXED ASSETS RATIO
(Amount
in Rs)
Current Assets To Fixed Assets Ratio
Year Current Assets Fixed Assets Ratio
2003 58524151 19998020 2932004 69765346 18672761 3742005 72021081 17137310 4202006 91328208 15056993 6072007 115642068 14163034 817
Interpretation
Current assets are increased due to the increase in the sundry debtors and the net
fixed assets of the firm are decreased due to the charge of depreciation and there
is no major increment in the fixed assets
The increment in current assets and the decrease in fixed assets resulted an
increase in the ratio compared with the previous year
GRAPHICAL REPRESENTATION
293374
420
607
817
000
100
200
300
400
500
600
700
800
900
Ratios
2003 2004 2005 2006 2007
Years
CURRENT ASSETS TO FIXED ASSETS RATIO
Ratios
PROFITABILITY RATIOS
GENERAL PROFITABILITY RATIOS
9 NET PROFIT RATIO
(Amount in Rs)
Net Profit Ratio
Year Net Profit After Tax Income from Services Ratio
2003 21123474 36039834 059
2004 16125942 53899084 030
2005 16929227 72728759 023
2006 18259580 55550649 033
2007 40586359 96654902 042
Interpretation
The net profit ratio is the overall measure of the firmrsquos ability to turn each rupee
of income from services in net profit If the net margin is inadequate the firm
will fail to achieve return on shareholderrsquos funds High net profit ratio will help
the firm service in the fall of income from services rise in cost of production or
declining demand
The net profit is increased because the income from services is increased The
increment resulted a slight increase in 2007 ratio compared with the year 2006
GRAPHICAL REPRESENTATION
059
030
023
033
042
000
010
020
030
040
050
060
Ratios
2003 2004 2005 2006 2007
Years
NET PROFIT RATIO
Ratios
10 OPERATING PROFIT
(Amount in Rs)
Operating Profit
Year Operating Profit Income From Services Ratio
2003 36094877 36309834 099
2004 27576814 53899084 051
2005 29540599 72728759 041
2006 31586718 55550649 057
2007 67192677 96654902 070
Interpretation
The operating profit ratio is used to measure the relationship between net profits
and sales of a firm Depending on the concept it will decide
The operating profit ratio is increased compared with the last year The earnings
are increased due to the increase in the income from services because of
Operations amp Maintenance fee So the ratio is increased slightly compared with
the previous year
GRAPHICAL REPRESENTATION
099
051
041
057
070
000
010
020
030
040
050060
070
080
090
100
Ratios
2003 2004 2005 2006 2007
Years
OPERATING PROFIT RATIO
Ratios
11 RETURN ON TOTAL ASSETS RATIO
(Amount in Rs)
Return on Total Assets Ratio
Year Net Profit After Tax Total Assets Ratio
2003 21123474 78572171 027
2004 16125942 88438107 018
2005 16929227 89158391 019
2006 18259580 106385201 017
2007 40586359 129805102 031
Interpretation
This is the ratio between net profit and total assets The ratio indicates the return
on total assets in the form of profits
The net profit is increased in the current year because of the increment in the
income from services due to the increase in Operations amp Maintenance fee The
fixed assets are reduced due to the charge of depreciation and no major
increments in fixed assets but the current assets are increased because of sundry
debtors and that effects an increase in the ratio compared with the last year ie
2006
GRAPHICAL REPRESENTATION
027
018 019017
031
000
005
010
015
020
025
030
035
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON TOTAL ASSETS
Ratios
12 RESERVES amp SURPLUS TO CAPITAL RATIO
(Amount in Rs)
Reserves amp Surplus To Capital Ratio
Year Reserves amp Surplus Capital Ratio
2003 65599299 2079920 31542004 34582554 18719280 1852005 51511781 18719280 2752006 37754372 18719280 2022007 78340733 18719280 419
Interpretation
The ratio is used to reveal the policy pursued by the company a very high ratio
indicates a conservative dividend policy and vice-versa Higher the ratio better
will be the position
The reserves amp surplus is decreased in the year 2006 due to the payment of
dividends and in the year 2007 the profit is increased But the capital is
remaining constant from the year 2004 So the increase in the reserves amp surplus
caused a greater increase in the current yearrsquos ratio compared with the older
GRAPHICAL REPRESENTATION
3154
185 275 202419
-
500
1000
1500
2000
2500
3000
3500
Ratios
2003 2004 2005 2006 2007
Years
RESERVES amp SRUPLUS TO CAPITAL RATIO
Ratios
OVERALL PROFITABILITY RATIOS
13 EARNINGS PER SHARE
(Amount in Rs)
Earnings Per Share
Year Net Profit After Tax No of Equity Shares Ratio
2003 21123474 207992 101562004 16125942 1871928 8612005 16929227 1871928 9042006 18259580 1871928 9752007 40586359 1871928 2168
Interpretation
Earnings per share ratio are used to find out the return that the shareholderrsquos earn
from their shares After charging depreciation and after payment of tax the
remaining amount will be distributed by all the shareholders
Net profit after tax is increased due to the huge increase in the income from
services That is the amount which is available to the shareholders to take There
are 1871928 shares of Rs10- each The share capital is constant from the year
2004 Due to the huge increase in net profit the earnings per share is greaterly
increased in 2007
GRAPHICAL REPRESENTATION
10156
861904 975
2168
000
2000
4000
6000
8000
10000
12000
Ratios
2003 2004 2005 2006 2007
Years
EARNINGS PER SHARE
Ratios
14 PRICE EARNINGS (PE) RATIO
(Amount in Rs)
Price Earning (PE) Ratio
Year Market Price Per Share Earnings Per Share Ratio
2003 3254 10156 0322004 2847 861 3302005 3752 904 4152006 3017 975 3092007 5185 2168 239
Interpretation
The ratio is calculated to make an estimate of application in the value of share of
a company
The market price per share is increased due to the increase in the reserves
amp surplus The earnings per share are also increased greaterly compared
with the last year because of increase in the net profit So the ratio is
decreased compared with the previous year
GRAPHICAL REPRESENTATION
032
330
415
309
239
000
050
100
150
200
250
300
350
400
450
Ratios
2003 2004 2005 2006 2007
Years
PE RATIO
Ratios
15 RETURN ON INVESTMENT
(Amount in Rs)
Return on Investment
Year Net Profit After Tax Share Holders Fund Ratio
2003 21123474 67679219 031
2004 16125942 53301834 03
2005 16929227 70231061 024
2006 18259580 56473652 032
2007 40586359 97060013 042
Interpretation
This is the ratio between net profits and shareholders funds The ratio is
generally calculated as percentage multiplying with 100
The net profit is increased due to the increase in the income from services ant
the shareholders funds are increased because of reserve amp surplus So the ratio
is increased in the current year
GRAPHICAL REPRESENTATION
031 030
024
032
042
000
005
010
015
020
025
030
035
040
045
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON INVESTMENT RATIO
RatioS
DATA COLLECTION
The data can be of two types
Primary Data
Secondary Data
Primary Data
Primary data are those data which is originally collected afresh
Secondary Data
Secondary data are those data which are already collected and stored and which has
been passed through statistical research
In this project Secondary data has been collected from following sources-
Annual report
Books
MIS
Other material and report published by company There are two methods to prepare
the Cash flow Statement
ndirect Method
I
The indirect method (or reconciliation method) starts with net income and converts it
to net cash flow from operating activities In other words the indirect method adjusts
net income for items that affected reported net income but did not affect cash To
compute net cash flow from operating activities non-cash charges in the income
statement are added ack to net income and non-cash credits are deducted
b
Direct Method
Under the direct method the statement of cash flows reports net cash flow from
operating activities as major classes of operating cash receipts (eg cash collected from
customers and cash received from interest and dividends) and cash disbursements (eg
cash paid to suppliers for goods to employees for services to creditors for interest and
to government authorities for taxes)
INDIRECT VERSUS DIRECT METHOD
The most contentious decision that the FASB faced in issuing Statement No 95 was
choosing between the direct method and the indirect method of determining net cash
flow from operating activities Companies lobbied against the direct method urging
adoption of the indirect method Commercial lending officers expressed a strong
preference to the FASB hat the direct method be required
tCF-Page 3 of 5
In Favor of the Direct Method
The principal advantage of the direct method is that it shows operating cash receipts and
payments That is it is more consistent with the objective of a statement of cash flows to
provide information about cash receipts and cash payments than the in-direct method
which does not report operating cash receipts and payments
Supporters of the direct method contend that knowledge of the specific sources of
operating cash receipts and the purposes for which operating cash payments were made
in past periods is useful in estimating future operating cash flows Furthermore in-
formation about amounts of major classes of operating cash receipts and payments is
more useful than information only about their arithmetic sum (the net cash flow from
operating activities) Such information is more revealing of an enterprises ability (1) to
generate sufficient cash from operating activities to pay its debts (2) to reinvest in its
operations and (3) to make distributions to its owners
Many corporate providers of financial statements say that they do not currently collect
information in a manner that allows them to determine amounts such as cash received
from customers or cash paid to suppliers directly from their accounting systems But
supporters of the direct method contend that the incremental cost of assimilating such
operating cash receipts and payments data is not significant
In Favor of the Indirect Method
The principal advantage of the indirect method is that it focuses on the differences
between net income and net cash flow from operating activities That is it provides a
useful link between the statement of cash flows and the income statement and balance
sheet
Many providers of financial statements contend that it is less costly to adjust net income
to net cash flow from operating activities (indirect) than it is to report gross operating
cash receipts and payments (direct) Supporters of the indirect method also state that the
direct method which effectively reports income statement information on a cash rather
than an accrual basis may erroneously suggest that net cash flow from operating
activities is as good as or better than net income as a measure of performance
Special Rules Applying to Direct and Indirect Methods
Companies that use the direct method are required at a
minimum to report separately the following classes of
operating cash receipts and payments
Receipts
1048713 Cash collected from customers (including lessees licensees etc)
1048713 Interest and dividends received
1048713 Other operating cash receipts if any
Payments
1048713 Cash paid to employees and suppliers of goods or services (including
suppliers of
insurance advertising etc)
1048713 Interest paid
1048713 Income taxes paid
1048713 Other operating cash payments if any
Companies using the indirect method are required to disclose separately changes in
inventory receivables and payables to reconcile net income to net cash flow from
operating activities In addition interest paid (net of amount capitalized) and income
taxes paid must be disclosed elsewhere in the financial statements or accompanying
notes
The FASB requires these separate and additional disclosures so that users
may approximate the direct method Also an acceptable alternative presentation
of the in-direct method is to report net cash flow from operating activities as a
single line item in the statement of cash flows and to present the reconciliation
details elsewhere in the financial statements
FINDING OF SUDY
According to cash flow statement of the company The finding of the study are as
follows-
The company has not taken any loans secured or unsecured from companies
firms or other parties
The company has not accepted any deposit from the public during the year
The company is not a sick industrial company
The company has not granted any loan secured or unsecured to company firms
or other parties
The company has paid the entire long term and short term borrowing during the
year
The company has buy back the companyrsquos own share this year
The interest paid in 2008 is more than the
There has been a significant decline in volume over the years from 2001-02
to 2005-06 as can be seen in the graph below
Table 43
The Net sales of Tractor has increased considerably from 2004-05 to 2007-08
This can be mainly attributed to changes in Variable and material costs and in
the price
The Net sale of Tractor has increased considerably from 2004-05 to 2007-08
that is an decrease of Rs7216 per tractor This can be mainly attributed to
changes in
Variable and material costs and in the prices
RECOMMENDATIONS
According to cash flow statement of the company The suggestions of the study
are as follows-
The time durations for training program have to increase
Buy regular review and consultations develop a career progression
which is sensitive to performance and ability
Create an environment where by people are trend developed to enable
The to take advantages of opportunities that arise
The jab can be redesigned where the work man stay in what is normally
the same job but has elements of it changed
The principle amount must be paid in time which can be reducing the
interest the out flow
The purchase of the fixed asset must be made only when there is extreme
requirement
In order to avoid taxes the company should go for more investment
The companyrsquos borrowings should go for more investment
o The company should try to reduce the depreciations as maximum
as possible
CONCLUSION
The study on competency level of employees at ESCORTS PVTLTD gave an
insight about the acceptance of competency mapping by employees
The employees at Ymi welcome the introduction of competency mapping in their
organization as they felt it was very much essential in enhancing their skills and
organizational development
The organization has provided the recourses guidance and support to facilitate the
introduction of competency level easily and develop the employees in such a way
that they can face any kind of challenge
However the level of competency in employees is found to be satisfactory
Providing proper training education and guidance to the employees can enhance
the level
This study was mainly carried out to find out whether thee competency mapping
being followed by the company is effective till date If the competency mapping
and fitment to the organization
By looking at the graphs and tables it is quite that the employees still are not up to
the level of competent pool they still have to be trained and made competent in
order to fill the gap As the organization has just applied the mapping it has to see
to that it meets all the requirements for competency mapping
Therefore the graphs make it quite clear that the potential of the employees is not
up to the mark and ie they are not competent enough to meet the competency-
mapping requirement Hence by further training and counseling this gap can be
closed
This report includes the training requirements of employees and it highlights skills
possessed by each employee and skill required All employees get training so that
skill can be improved and maintain balance between standard performance with
their actual performance to avoid gap
APPENDIX
QUESTIONNAIRE
Consumer Survey
Name _____________________________
Age _____________________________
Sex
Male
Female
Occupation
Businessman
Service man
Professional
Others
Monthly income brackets
Below 15000
15000- 20000
20000-30000
30000 and above
of your savings _________
Do you invest
Yes
No
If yes then where do you invest your money
Bank
Insurance
funds
Others
Why do you made that statement
Return
Risk hedging
Tax benefits
Other reasons (specify) _______
Who influence your cash decision
Relatives and friends
Family members
Advisors experts
You yourself
If no then why
Do not know where to invest
Satisfied with your current investment return
Donrsquot want take risk
Other reasons
__________________________________________________________________
___________________
Do you know about CF statement
Yes
No
If yes then from where you have come to know about an cash statement
Advertisements on newspapers
Friends and relative
Agents experts
Other source
What do you think about cash statement
It means investing only in share market
Constant watch must be kept always
Return is not satisfactory
Other perception
__________________________________________________
Can you recall any cash flow of company
___________________________
Would you want to made CF of an org
Yes
No
If yes then why
_______________________________________________________
If no then why
_______________________________________________________
BIBLIOGRAPHY
List of Books
1 PANDEY IM - FINANCIAL MANAGEMANT
2 KHAN MY AND JAIN PK -FINANCIAL MANAGEMANT
3 SMITH KV ndash MANAGEMANT OF WORKING CAPITAL
3 COMPANY RECORDS
4 JOURNAL
5 REPORTS
WEBLIOGRAPHY
1 wwwescortspvtltdcom
2 wwwgooglecom
OFFICIAL ADDRESS OF ESCORTS
Registered Office Corporate
Secretariat amp Law
Escorts Ltd
11 Scindia House
Connaught Circus
New Delhi-110 001
Tel No 011-23310145
Fax No 011-23311715
Escorts Ltd
155 Mathura Road
Faridabad - 121 003
Tel No ( 0129 ) 2250222
Fax ( 0129 ) 2250060
Email Address corpsectndbvsnlnetin
Web Site wwwescortsgroupcom
LEADERSHIP TEAM
Mr Rajan Nanda
Chairman
Mr Nikhil Nanda
Joint Managing Director
Mr Rohtash Mal
Executive Director and Chief Executive Officer - Agri Machinery Group
Mr Manoj Jha
Executive Vice President of Engineering Division
Mr Kamal Bali
CEO ndash Escorts Construction Equipment Limited (ECEL)
Mr GB Mathur
Vice President - Law amp Company Secretary
Mr Rakesh Kumar Budhiraja
Group Chief Financial Officer
Mr Partha Dasgupta
Group Vice President Human Resources and Employee Relations
LEVELS OF MANAGEMENT
MANAGEMENT
TOP
MANAGEMENT
SENIOR
MANAGEMENT
MIDDLE
MANAGEMENT
JUNIOR
MANAGEMENT
MANAGING
DIRECTOR amp
CEO(G-11)
CHIEF GENERAL
MANGER(G-8)
CHIEF
MANAGER
(G-5)
ASSISTANT
MANAGER(G-2)
VICE PRESIDENT
(G-10)
GENERAL
MANAGER(G-7)
SENIOR
MANAGER(G-4)
EXECUTIVE(G-
1)
ASSOCIATE
VICE PRESIDENT
(G-9)
DEPUTY
GENERAL
MANAGER(G-6)
MANAGER(G-3)
MISSION
WE WILL ACHIEVE LEADERSHIP IN MARKET SHARE amp PROFITABILITY IN
THE DOMESTIC TRACTOR MARKET BY THE YEAR 2004-2006 AND SHALL BE
THE WORLSrsquoS LARGEST SUPPLIER OF SUB 100 HP TRACTORS WE SHALL
PROACTIVELY CONTRIBUTE TO THE PROSPERITY OF THE RURAL
ECONOMY BY DEFINING A LARGER ROLE FOR OURSELVES IN THE FOOD
AND AGRICULTURE SECTOR
THE VISION
WE SHALL STRIVE TO BE THE NUMERO UNO IN THE INDIAN TRACTOR
INDUSTRY AND TOP FIVE TRACTOR MANUFACTURERS IN THE WORLD
WE SHALL CONTINUOUSLY STRIVE TO MEET THE EVER RISING
EXPECTATIONS OF OUR VALUED CUSTOMERS AT THE LOWEST
INTERNAL COST
WE SHALL AIM TO OFFER THE FARMING COMMUNITY A RANGE OF
INNOVATIVE PRODUCTS AND SERVICES WHICH SHALL ENABLE THEM
TO IMPROVE THEIR PRODUCTIVITY AND COMPETITIVNESS
WE SHALL ACHIEVE A TURNOVER OF RS 2 BILLION BY THE YEAR
2006TRANSCENDING NATIONAL BOUNDARIES WE SHALL STRIVE TO
ATTAIN EXPORTS OF ONE TENTH OF OUR TOTAL TRACTOR PRODUCTION
BY THE YEAR 2
REVIEW OF LITERATURE
INTRODUCTION
MEANING OF FINANCIAL STATEMENTS
The financial statements are nothing but the financial information presented in concise and
capsule form and are the financial information is the information relating to the financial
position of any firm The firm prepares the financial statements
bull To communicate with different parties about the financial position of the firm
(Shareholders creditors banks financial institution financial analysts investors
etc And
bull To analyze the operations and performance of the firm for the further
planning
The basic source which provides the financial information is the Annual report of the
company which is presented by the company to its shareholders at the Annual General
Meeting
Though the presentation of annual report is a statutory requirement under the
Companies Act 1956 however it is also a medium of communication with the present as well
as prospective investors and creditors of the company
Clause 43 A of the Listing Agreement (with the stock exchange) requires every
listed company to publish unaudited quarterly results But it does not mean the non-corporate
firms do not prepare the financial statements Every firm big or small prepare the following
financial statements
The Balance Sheet (BS)
1 The Income Statement (IS)
Two other key financial statements which are usually prepared by corporate firms are
1 Statement of appropriation of profit and
2 Statement of Change in financial position
ANALYSIS OF FINANCIAL STATEMENTS (AFS)
Analysis of financial statements refers to the process of the critical examination of the
financial information contained in the financial statements in order to understand and
make decisions regarding the operations of the firm The AFS is basically a study of the
relationship among various financial fact and figures as given in a set of financial
statements AFS is the process of establishment and identifying the financial weakness
and strength of the firm It is indicative of two aspects of a firm ie the profitability
and the financial position
OBJECTIVES OF AFS
The objectives of the AFS is to understand the information contained in financial
statements with a view to know the weakness and strength of the firm and to make a
forecast about the future prospects of the firm and thereby enabling the financial
analyst to take different decisions regarding the operation of the firm The objectives
are as follows
bull To assess the present profitability and operating efficiency of the fir
COMMON-SIZE STATEMENTS (CSS)
The CSS represents the relationship of different items of financial statements with some
Common items by expressing each item as a percentage of the common item In common size
Balance Sheet each item of the balance sheet is stated as a percentage of the total balance
sheet The percentages for different items are computed by dividing the absolute amount of
that item by the Common Base and then multiply by 100 The percentage so calculated can
be easily compared with the corresponding percentage in some other period Thus the CSS is
useful not only in intra-firm comparison for the same year or free several years
TREND PERCENTAGE ANALYSYS(TPA)
The TPA is a technique of studying several financial statements over a series of years In
TPA the trend percentages are calculated for each item by taking the figure of that item for
some base year as 100 So the trend percentage is the percentage relationship which
Each item of different years bears to the same item in the base year Any year may be Taken
as the base year but generally the starting initial year is taken as the base year So each
item for base year is taken as 100 and then the same item for other years is Expressed as a
percentage of the base year
RATIO ANALYSIS (RA)
The RA has emerged as the principle technique of the AFS A ratio is a relationship
Expressed in mathematical terms between two individual or groups of figures connected with
other in some logical manner The RA is based in the premise that a single accounting figure
by itself may not communicate any meaningful information but when expressed as a relative
to some other figure it may definitely give some significant information The relationship
between two or more accounting figuresgroups is called a Financial Ratio
A financial ratio helps to summarize a large mass of financial data into a concise form
and to make meaningful interpretations and conclusions about the performance of a firm
For example a firm has net sales Rs 5 00000
Gross Profit Rs 100000
Ratio of Gross Profit to net sales is 20
ie (Rsl 00000 Rs5 00000)
Forms of Ratios
Since a ratio is a mathematical relationship between two or more variables accounting
figures such relationship can be expressed in different ways as follows
bull As a Pure Ratio
bull As a Rate of Times
bull As a Percentage
Ratio can be classified into
bull The Liquidity Ratio
bull The Activity Ratio
bull The Leverage Ratio
bull The Profitability Ratio
STATEMENT OF CHANGES IN FINANCIAL POSITION
(SCFP)
Since the BS amp IS of a firm are two basic depicting the financial position of a firm at the end
of the year These two financial statements are called the traditional statements Both these
statements fail to throw light on changes in assets liabilities and shareholders wealth during
this year
BS deals with the financial position gives only the static view of the year- end financial
position and fails to indicate the movement and causes in assets and liabilities during the
year Similarly IS show the profit or loss resulting out of the operations of the firm during
the year This profit or loss in fact to ascertain the sufficiency of resources to declare the
dividend etc thus there is a need to prepare another statement (together with the BS amp IS)
which may identify the changes in assets liabilities and the shareholders funds over a given
period
The SCFP is essentially an explanation of the changes in financial position of a Firm
occasioned by the firm in between two successive BSs The SCFP draws basic Information
from the BS and IS helps in understanding the change in assets liabilities and shareholders
worth The SCFP deals with the flow of funds during the year ie the funds coming in and
going out of the firm It summarizes the sources from where the funds might have been
arranged procured by the firm and the uses for which the funs might have been used by
the firm during the year
The SCFP can be prepared as follows
bull SCFP (Cash Basis) also known as a Cash F low Statement
bull SCFP (Net Working Capital Basis) Fund Flow Statement
SCFP (WORKING CAPITAL BASIS)
FUND FLOW STATEMENT
The FFS reports the flows of funds through the firm during the year ie it shows the
Sources and uses of working capital between two balance sheet dates The FFS
attempts to explain the changes in financial position from one BS to the subsequent BS
in terms of the change in the funds or the working capital position of the firm
The term Working capital (WC) is generally defined as the excess of total
current assets over the total current liabilities The current Assets (CA) of a firm may
include cash in hand and at bank stock debtors bills advances etc and the Current
Liabilities (CL) includes creditors bills payable outstanding expenses provision for
tax short term liabilities etc the term WC is a single figure representing the net effect
of a transaction is to increase or decrease the Working Capital by affecting any of the
elements of Current Assets or Current Liabilities Therefore the FFS in its standard
form incorporates only those transactions which affect the Working Capital i e those
transactions where in only one of the affected accounted is a current account
Now a flow of working capital arises when one of the affected accounts is a current
account From the point of view of current account the effected on working capital
can examined in the light of the definitions of the term working capital ie the excess
of current assets over current liabilities ie
Impliedly change in any of the CA or CL will affect the WC Simple observation
equation tells that
bull Increase in any of the CA or decrease in any of the CLs will result in increase
in the WC
bull Decrease in any of the CA or increase in any of the CLs will result in decrease
in the WC
To find out the relative importance of different components of the financial position
of the firm
bull To identify the reasons for change in the profitability financial position of the
firm and
bull To assess the short term as well as the long term liquidity position of the
firm
TECHNIQUES TOOLS OF THE AFS
AFS can be undertaken by different persons and for different purposes therefore the
methodology adopted for the AFS may be carrying from one situation to another However
the following are some of the common techniques of the AFS
bull Comparative financial statements
bull Common-size financial statements
bull Trend percentage analysis and
bull Ratio Analysis
COMPARATIVE FINANCIAL STATEMENTS
In CFS two or more BS andor the IS of a firm are presented simultaneously in columnar
form The Financial data for two or more tears are placed and presented in adjacent columns
and thereby the financial data is provided at times perspective in order to facilitate periodic
comparison In CFS the BS and the IS for number of years are presented in condensed
form for year to year comparison and to exhibit the magnitude and direction of changes
The CFS helps a financial analyst of the firm and in establishing operating and
positional trend of the firm The CFS may be prepared to show
1 The absolute amount of different items in monetary terms
2 The amount of periodic changes in monetary terms
1 The percentages of periodic changes to reveal the proportionate changes
The CFS can be prepared for both the BS and the IS
CORE COMPETENCE OF ESCORTS
Customer 1
We put customers first in everything we do We take decisions keeping the customer in
mind
Challenging Spirit
We strive for excellence in everything we do and in the quality of goods amp services we
provide We work hard to achieve what we commit amp achieve results faster than our
competitors and we never give up
Team-work
We work cohesively with our colleagues as a multi-cultural team built on trust respect
understanding amp mutual co-operation Everyones contribution is equally important for
our success
Frank amp Fair Organization
We are honest sincere open minded fair amp transparent in our dealings We actively
listen to others and participate in healthy amp frank discussions to achieve the
organizations
A firm undertakes numerous during a year and most of these transactions during a year and
most of these transactions may affect one or the other current account ie most of these
transactions May results in the flow of the WC Neither is it necessary nor practical to
identify the effect of each and every transaction on the WC These transactions instead are
considered and analyzed in a collective form and then their effect on the WC is identified
SCFP (CASH BASIS) OR
THE CASH FLOW STATEMENT
The CFS attempts to analyze the transactions of the firm in terms of cash ie the transactions
generating cash and using cash The focus in the CFS is on cash rather than on WC The
sources of cash may be the cash profits earned by the firm issue of capital for cash issue of
other securities for cash borrowings sale of assets investment redemption of debenture or
preference share repayment of loan payment of tax dividend distribution etc Thus the
CFS summarizes the cash inflows and outflows
An analysis of cash flows is useful for short-run planning A firm needs sufficient cash to
debts maturing in the near future to pay interest and other expenses and to pay dividends to
shareholders The firm can make projections of cash flows and outflows for the near future to
determine the availability of cash This cash balance can be matched with the firms need for
cash during the period and accordingly arrangements can be made the deficit or invest the
surplus cash temporarily A historical analysis of cash flows provides insight to prepare
reliable cash flow projections for the immediate future
A statement of changes in financial position on cash basis commonly known as cash flow
statement summarizes the causes of changes in cash position between dates of two balance
sheets It indicates the sources amp uses of cash The cash flow statement is similar to the fund
flow statement except that it focuses attentions on cash instead of working capital (funds)
Thus this statement analyses change in non-current accounts as well as current accounts
(other than cash) to determine the flow of cash
The CFS is based on the concept on the WC Where as the CFS is based in cash which is only
the element of WC Thus the CFS provides details of cash movements whereas the FFS
provides the details of funds movements
The CFS considers only the actual movement of cash whereas the FFS considers the
movements of the funds as defined in terms of net working capital
CASH-FLOW STATEMENT
A cash-flow statement is a statement showing inflows (receipts) and outflows (payments) of
cash during a particular period In other words it is a summary of sources and applications of
Cash during a particular span of time It analyses the reason for changes in balance of cash
between the two balance sheet dates The term Cash here stands for cash and cash
equivalents
A cash-flow statement includes only those items which affect cash As such the cash-flow
statement is called a statement of changes in financial position - cash basis
A cash - flow statement can be for the past or can be projected for a future period
OBJECTS OR USES OF CASH-FLOW STATEMENT
The main objectives behind preparing a cash-flow statement can be laid down as under-
bull USEFUL FOR SHORT-TERM FINANCIAL PLANNING-
A cash-flow statement provides information for planning the short-term financial needs of the
firm Since it provides information regarding the sources and utilization of cash during a period
it become easier for the management to assess whether it will have Adequate cash to meet day-
to-day expenses and pay the long - term loans and interest Thereon and whether it has enough
cash to pay for the purchase of fixed assets or not
USEFUL FOR PREARING THE CASH BUDGET-
A cash-flow statement prepared for the future period is helpful in preparing a cash budget It
informs the management about the future period is helpful in preparing a cash budget It informs
the management about the surplus or deficit periods of cash ie in which months the payments
will be in excess of receipts It helps in planning the investment of surplus cash in short-term
investment and to plan short-term credit in advance of deficit periods
bull COMPARISON WITH CASH BUDGET-
A cash budget is prepared at the commencement of the year whereas a cash flow Statement is
prepared at the end of the year A comparison between the two helps in ascertaining the extent
to which the financial resources of the firm have been generated and used according to the plan
Causes of variances between the figures of two statements can be analyzed and proper
corrective measures may be takes
bull STUDY OF THE TREND OF CASH RECEIPTS AND PAYMENTS-
A cash-flow statement reveals the speed at which the cash is being generated from debtors stock
and other current assets the speed at which the current liabilities are being paid It enables the
management to assess the true position of the cash in future
bull IT EXPLAINS THE DEVIATIONS OF CASH FROM EARNINGS-
A firm may earn huge profits yet it may have paucity of cash or when it suffered a loss it may
still have plenty of cash A cash flow statement explains the reasons for it
HELPFUL IN ASCERTAINING CASH-FLOW FROM VARIOUS
ACTIBITIES SEPARATELY-
A cash-flow statement aims at highlighting the cash flow from operating investing and
financing activities separately It includes how much cash has been generated or used in these
activities
bull HELPFUL IN MAKING DIVIDEND DECISIONS-
Dividend must be paid within 42 days of its declaration Hence the management takes the help of
cash-flow statement to ascertain the position of cash generated from operating activities which
can be used for payment of dividend
IMPORTANCE AND RELEVANCE OF CFS
The CFS has gained importance in view of the fact that there are many managerial Decisions
which are taken in the light of the cash availability or cash position of the firm
For example declaration of dividend by the company requires cash disbursement and
Therefore the Board of Directors must consider the cash position before proposing a dividend
The CFS also provides information for the short term financial planning and in particular the
short term cash needs of the firm
In view of increasing importance and relevance of the CFS the clause 32 of the Listing
agreement (between a Company and the Stock Exchange where the shares proposed to be listed)
has been amended by the SEBI As a result the listed companies in India are now required to
supply a copy of the CFS to each shareholder as a part of Annual Report As a result the listed
companies have started a practice of sending a CFS for which the BS has been prepared as
apart of the Annual Report of the company
DIFFRENCE BETWEEN CASH - FLOW STATEMENT AND
CASH BUDGET
There is not much difference between cash flow statement and a cash budget The
only difference is that a cash flow statement is prepared for a past period where as cash
budget is prepared for a future period Hence it is of limited use as far as the future
periods are concerned A cash budget is therefore prepared showing how much cash is
likely to be received and what will be the disbursements during a future period of time
Thus a cash budget indicates in which months there will be surplus cash and in which
moths there will be deficiency of cash resources The management can then take suitable
decision to invest the surplus cash or make arrangement for the deficiency of cash at the
required time
LIQUIDITY
It does not present true picture of the liquidity of the firm the liquidity does
not depend upon cash alone Liquidity also depends upon those assets
which can be converted into cash easily
bull Exclusion of these assets obstructs the true reporting of the ability of the firm to
meet its liabilities when they become due for payment
bull The possibilities of window - dressing is higher in case of cash position in
comparison to the working capital position of the firm
bull The cash balance can be easily maneuvered by postponing purchases and other
payments and by rapidly collecting cash from debtors before the balance sheet date
Hence a fund - flow statement presents a more realistic picture than a cash flow
statement
bull Cash flow statement ignores non- cash charges Hence the true position of the
enterprise cannot be judged by cash flow statement
bull It is prepared on cash basis and hence ignores one of the basic concept of accounting
namely accrual concept
PROCEDURE OF PREPARING CASH FLOW STATEMENT-
The institute of charted accountants of India has issued accounting standards (as)-3 revised for
preparing a cash flow statement This accounting standard has been made mandatory in respect
of accounting periods commencing on or after 1st April 2001 for certain enterprises These
enterprises are-
bull Enterprises whose equity or debt securities are listed on a recognized stock exchange in
India And enterprise that are in the process of issuing equity or debt securities that will
be listed on a recognized stock exchange in India
bull All other commercial industrial and business enterprises whose turnover for accounting
period Rs 50 crores
As such the cash flow statement has been prepared according to as -3 revised in this project
According to as-3 revised the cash flow statement summarizes the cash inflows and cash
outflows and the net changes (increase or decrease) in cash and cash equipment resulting from
operating investing and financing activities of a firm during a period The following terms are
used for preparing a cash flow statement
CASH-
It compares cash in hand and demands with banks
CASH EQUIVALENTS-
There are short - term highly liquid investments that are readily into known amounts of cash
and which present insignificant risk of changes in their values Normally an investment will be
termed as cash equivalent only if it has a short maturity period say three months or less from the
date of its acquisition Examples of cash equivalent are treasury bills commercial papers etc
Which are purchased with cash that is in excess of immediate needs investment in shares are
excluded from cash equivalents unless they are cash equivalent in reality For example the
preference shares of the company which are purchased shortly before their redemption date will
be included in cash equivalents provided there is only an insignificant risk of failure of the
company in repaying the amount at the date of the maturity
CLASSIFICATION OF CASH FLOW-
According to as -3 (revised) cash flow statement should be presented in a manner that it reports
inflows of cash by classifying them into three categories namely operating investing and
financing activities Classification of all activities into these activities on the cash and cash
equivalents of the enterprise such information will be helpful in evaluating the relationships
among these three activities are explained as below
CASH FLOW FROM OPERATING ACTIVITIES-
Operating activities are the main revenue generating activities of an enterprise As such they
include cash flows from those transactions and events which enter into the ascertainment of
net profit or loss of the enterprise Examples of cash flows arising operating activities are
bull Cash receipts from the sale of goods and rendering of services
bull Cash receipts from royalties fees commissions and other revenue
bull Cash payments to suppliers for goods and services
bull Cash payments to and on behalf of employees
bull Cash receipts and cash payments of an insurance enterprise for premiums and claims
annuities and other policy benefits
bull Cash receipts and payments relating to future contracts forward contracts option
contracts and swap contracts when the contracts are held for dealing or trade purpose and
bull Cash payments of refunds of income taxes unless they can be specifically identified with
financing and investing activities
CASH FLOW FROM INVESTING ACTIVITIES-
Investing activities include the purchase and sale of long term assets such as land building plant
and machinery etc not held for resale These activities also include the purchase and sale of such
investment which are not including in cash equipments Cash flow from investing activities
discloses the expenditures incurred for resources intended to generate future income and cash
flows
Examples cash flow arising from investing activities are
bull Cash payments to acquire fixed assets (including intangible)
bull Cash receipts from sale of fixed assets (including intangibles)
bull Cash payments to acquire shares warrants or debt instruments of other enterprises
(other than receipts for those instruments considered to be cash equivalents)
bull Cash receipts from sale of shares warrants or debt instruments of other enterprises (other
than receipts for those instruments considered to be cash equivalents)
bull Cash advances and loans made to third parties In case of financial enterprises these will
be treated as cash flow from operating activities
bull Cash receipts from the repayment of advances and loans made to third parties In case of
financial enterprises these will be treated as cash flow from operating activities
bull Cash receipts of insurance claim for property involved in accident and
bull Cash receipts of interest and dividend In case of financial enterprise these will be treated
cash flow from operating activities
CASH FLOW FROM FIANCING ACTIVITIES-
Financing activities are the activities that result in change in capital and borrowing of the
enterprise
Examples of cash flows arising from financing activities are
bull Cash receipts from issuing shares or other similar instruments
bull Cash receipts from issuing debentures loans bonds and other short term or long term
borrowing
bull Cash repayment of amounts borrowed buy back of equity shares redemption of
preference shares debentures loans bonds etc
bull Cash payment of interest and dividend
IMPORTANT NOTE
In case of financial enterprise such as bank or mutual fund company cash Outflow
and cash inflow arising from the purchase and sale of securities will Be treated as
flows from operating activities This is because purchase and sale of securities is a
part of operating activity in case of financial enterprise In addition interest paid
and interest received as well as dividends received will also be treated as cash flow
from operating activities in case of financial Enterprises
CASH FLOW STATEMENT
(DIRECT METHOD)
CASH FLOW FROM OPERATING ACTIVITIES
Cash receipts from costumers
Cash paid to suppliers and employers ()
Cash generated from operations
Income tax paid ()
Cash flows from extraordinary item
plusmn Extra ordinary items
Net cash from operating activities
CASH FLOW FROM INVESTING ACTIVITIES-
Purchase of fixed assets
Proceed from sale equipment ()
Interest received
Dividend received ()
Net cash from investing activities
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from insurance of share capital
Proceeds from long- term borrowings ()
Repayment of from long-term borrowings
Interest paid
Dividend paid ()
Net cash from financing activities
Net increase in cash and cash equivalent
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
SOME SPECIAL TERMS-
i) INTERSET AND DIVIDEND-
Cash inflow from interest and dividends and cash outflow on account of interest and
dividends should be disclosed separately Cash inflow arising from interest and dividends
received should be shown as cash flow from investing activities where as cash outflow
disclosed outflow on account of interest and dividend paid should be shown as cash flow
from financing activity
ii) TAXES ON INCOME-
Tax paid on income is a part of cash flow from operating activity Hence taxes paid are
shown as a deduction under cash flow from operating activity
iii) EXTRA ORDINARY ITEMS-
Cash flow relating to extra ordinary items such as bad debts recovered Claims received from
insurance companies winning of a lottery or a law etc Should be disclosed separately as
arising from operating investing or financing activities For example the amount received
for insurance company on account of loss of stock by fire Earthquake and floods etc Should
be reported as cash flow from operating activities
iv) SIGNIFICANT NON - CASH TRANSACTION-
There are some investing and financing activities which do not require the use of cash or
cash equivalents Such non cash activities should be excluded from the cash flow statement
Examples are the acquisition of assets by issue of debentures or shares conversion of
shares into debentures etc Such significant on non cash transaction should be disclosed
outside the cash flow statement
CASH FLOW STATEMENT
(INDIRECT METHOD)
CASH FLOW FROM OPERARATTNG ACTIVITIES
Net profit before taxation and extraordinary item
Adjustment for
Depreciation
Foreign exchange loss
Interest income
Dividend income
Interest expense
Operating profit before working capital changes
Increase in sundry debtors
Decrease in inventories
Decrease in sundry creditors
Cash generated from operations
Income tax paid ()
Cash flow before extraordinary item
plusmn Extra - ordinary items
Net cash from operating activities
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of fixed assets ()
Proceeds from sale of equipment
Interest received
Dividend received ()
Net cash from investing activities
CASH FLOW FROM FINANCING ACTIVITIES-
Proceeds from insurance of share capital
Proceeds from long - term borrowings
Repayments of from long - term borrowings ()
Interest paid ()
Dividend paid ()
Net cash from financing activities
Net increase in cash and cash equivalent
Cash and cash equivalents at beginning of period
CHANGES IN CASH FLOWS
Changes in cash flows can be treated to the following
1 Net profit will increase the cash flows these cash flows will be
increased further if there are any non-cash changes (such as depreciation
and amortization)
2 Any payment of dividends will decrease the cash flows as will the
repayment of debt an issue of share or debt will also increase the
cash flows
3 An increase in non-cash assets will decrease cash flows increase in
current assets and fixed assets will result in drain on cash flows
Thus a statement of changes in cash flows ie the cash flow statement
classifies all Changes into one of three categories - operating investing or
financing activities Therefore the preparation of a statement of changes in cash
flows requires classification of changes in liabilities shareholders equity and
non-cash assets into one of these categories although some items will not fit
easily onto one other
h equivalent at end of period
STEP- BY-STEP PROCEDURE TO PREPARE CFS
1 Calculate the net increase or decrease in cash and cash equivalents-
For this purpose the opening balance of total cash and cash equivalents is compared with the
closing balance of cash and equivalents
Increasedecrease in cash and equivalents
Opening balance Closing Balance
Cash in hand
Cash in bank
Short-term Investment
Total
The difference between the total of opening and closing balance will be increased or
Decreased in cash equivalents during the period It may be noted that if there are only one or
two of items of cash etc
2 Net Cash flaw from operating activities-
The term operating refers to the normal purchase of goods and services On the basis of the
information contained in the comparative BS s and the IS and the additional Information the
net cash flow generated or use by the operating activities may be ascertained The IS prepared
by the firm gives the net profit figure earned by the firm On actual basis ie all items in the
IS are incorporated on the basis of earnedaccrued even
3 If not resulting in cash movements-
So the profit or loss as by the IS may not result in increase or decrease in cash balance by the
SYNOPSIS
INTRODUCTION
ESCORTS PVT LTD is a private limited company not listed in a stock exchange of India
and employees 900 highly trained personnel Its manufacturing plants are strategically located
in close proximity to its customers at Faridabad (Haryana) Noida (UP)
OBJECTIVES OF THE STUDY
bull To find the movement of cash inflow and cash outflow
bull To make the comparison between cash inflow and
bull Cash outflow
bull To prepare the Cash Flow Statement
bull To analyze the Balance Sheet of the company in terms of Cash Flow Statement
bull To focus on various activities of the organization in terms of Operating
Financing Investment
SCOPE OF THE STUDY
Financial resources are the assets for the company and their productivity is key
factor for profitability It is necessary to know their problems their knowledge
skills abilities amp the measures that can be taken to reduce them By analyzing this
top management can build good relations with the employees
The whole study is to determine the competencies of different employees who are
working in ESCORTS PVT LTD By analyzing it the top management can
introduce the concept of competency mapping in the organization Through this
management can attempt to use more suitable strategies towards the human
resource development
The research is confined to elicit the existing gap between the standard skill
required to perform the job and the skill processed by the employees at ESCORTS
PVT LTD And to provide them suitable training program to over come those gaps
for the better utilization of human resources
RELEVANCE
The scope of the study was confined to the outside parties like creditors
shareholders government etc Who want to invest their money in the
company
The benefit of the report for the company is that through this report they can come
to know about the cash flow statements of the company
This study also unable the company that their cash is not utilizing in unnecessary
things
The benefit of the report for the researcher is that it has helped to get knowledge
about the cash inflow and cash
RESERRCH METHODOLOGY-
RESEARCH DESIGN
bull The study was conducted under well- structured approach
bull The project lasted for 4 weeks and the year 2009 ie from 08 July to 12
Aug2009
bull The questionnaire method amp personal interview method was used to collect
the primary data for the study
The secondary data is collected from Internet amp company training material and
many other company materials
SAMPLE DESIGN
The process of extracting a sample from a population is called sampling
procedure The selection of sampling procedure to conduct the research
depends upon the nature of the study and the objective to be accomplished
Judgment sampling technique is adopted to select the respondents in this
study The sample design included the various departments in the YAMAHA
MOTORS PVT LTD
Methodology of date collection
bull Conducting personal interview
bull Data collection from primary and secondary sources
bull Designing questionnaire
bull Selecting sample size from the sample frame for the survey
bull Questionnaire distribution
bull Analysis of collected data with the help of statistical tools
bull Interpretation of collected data
bull Stating the conclusion based on the entire study
Sampling Technique
The sampling technique used for this research is of non-probability and convenience
sampling
Sample Unit
Employees of the company
Sample Size
For this research study the sample size is 25 respondents
Sources of data
Primary data
Primary data is the data which is collected by the researcher for the first time
and which was not there The tools used to collect the data are-
1)Questionnaire method from the employers in different departments
2) Face to Face personal interactions
Secondary Data
The data already collected is called as secondary data The relevant information
for this study has been collected from secondary source such as
Books
Journal
Reports
Publication by the organizational circulation
Company records
Business bulletins
Internet
Secondary data is also collected from various of the internet and intranet Some
of the website trough which information was gathered was through
HYPOTHESIS
The report is analyzed under the presumption that cash flow position of
YAMAHA MOTORS PVTLTD It can be improved and made effective in
terms of cash flows
In testing the above hypothesis the following aspects will be considered
1 Balance sheet comparisons
2 Presentation of cash flow statement in terms of revised AS-3
LIMITATIONS
The study though conducted to the best of the ability suffers from some
certain limitations There are
The data is secondary one and as such its reliability may be
questioned upon
The time availability for the study is less and as such it hinders thee
progress of the study
Senior officials were rarely approachable
Websites were not giving comprehensive data
Not having face-to-face interaction to get more relevant
information
Analysis and interpretation of data was done on the assumption that
the respondentsrsquo information was online
Information collected was totally subjective
The interviews are done during office hours but could not be done
for the other employees of other
DATA ANALYSIS
ESCORTS PVT LTD
CASH FLOW STRATEMENT
Year Ended Year Ended
30092009 30092008
Rs Crores Rs
Crores
A Cash Flow from Operating Activities
Net profit before tax (1733) 3444
Adjustment for
Loss on sale Provision for diminution in value of Long Term
Investments amp loans to Group Companies 189 4018
Gain on sale of Long Term Investments (122) (9492)
Gain on sale of Asset (013) -
Depreciation 4497 3955
Misc Exp Assets Write off Provisions 808 750
Interest Expense 7222 7999
Dividend Income (002) (001)
Interest Income (2082) -
Operating Profit before working capital changes 8764 10673
Adjustments for
Trade and other Receivables (8817) (12035)
Inventories 1379 (4692)
Trade Payables 6705 19046
Miscellaneous Expenditure (750) (511)
(1483) 1808
Cash Generated from Operations 7281 12481
Direct Taxes (Paid)Refunds (1785) 3166
Net Cash Flow from operating activities 5496 15647
B Cash Flow from Investing Activities
Purchase of Fixed Assets (3095) (2794)
Proceeds from sale of Fixed Assets 086 177
Movement in Loans and Advances (1627) (1644)
Sale of Investments 3233 11452
Short Term Deposits with schedule Banks (231) (1048)
Interest Received 2070 -
Dividend Received 002 001
Net Cash Flow from Investing activities 438 6144
Proceeds from Share Capital amp Securities Premium 11444 -
Proceeds from Long Term Borrowings 8660 -
Less Repayment of Long Term Borrowings (054) (7896)
Proceeds (Repayment) from short term borrowings (net) (22726) -
Interest Paid (7740) (8223)
Net Cash used in financing activities (10416) (16119)
Net Increase(Decrease) in Cash and Cash equivalents (4482) 5672
Cash and Cash equivalents as at 01102008 10565 4893
Cash and Cash equivalents as at 30092009 6083 1056
ANALYSIS OF CASH FLOW
From the cash flow statements of the ESCORT PVTLTDIt can be analyzed
from the two years that the net cash balance of the company has increased
manifold in 30-09-2008 than the year 30-09-2009
The net profit in 30-09-2008 is higher than the 30-09-2009 but due to certain
changes there has been increase in the cash balance
The interest paid this year is ore of the last year which implies that thee
company has not repaid his borrowed capital due to which the interest has got
down
The depreciation has increased but it does not affect cash to an extent as it is a
non-cash item In the head of working capital there is drastic change in the cash
balance in the form of ldquoTrade and other Receivables which has affected the cash
balance
There is outflow of cash for receivables rather than the inflow in the last year
So the net effect is that the cash from operating activities has been decreased
two times from the last year
The company has no accumulated losses as at the end of the financial year ie
September 31 2008
Provision for taxation has been made in accordance with the requirement of AS-
22 issued by Institute of Charted Accountants of India
Pursuant to that current year deferred tax liability have been charged to profit amp
loss account
In opinion of the board of directors of thee company the current assets loans
and advances have a value on realization in the ordinary course of the business at
least equal to the amount stated in the balance sheet and provision for all
liabilities have been made
Balance of sundry debtors creditors loans and advances are subject to confirmation by
the concerned parties
METHOD OF ANALYSIS
1 Data analysis is done using the following statistical tools wherever required in
order to extract meaningful information from the collected data
o Simple percentage and averages
o Bar diagram
o Cone diagram
o Pie diagram
2 The collected data from the questionnaire has been put together in the form of
tables
3 Percentage has been calculated wherever necessary for generalization of the
data
4 Data analysis and interpretation has been done on the basis of primary and
secondary data
5 The findings researches have been recorded based on the analysis
6 The study conducted pertains only to YAMAHA MOTORS INDIA PVTLTD
All bank balances (debitcredit) have been confirmed by the concerned bank
Identified from the available information which has been relied upon by the auditors
The names of small-scale industrial units to whom outstanding for more than
thirty days within agreed terms
The company has 9996 of shareholders in its subsidiary company named as
ESCORTS PVT LTD As at 31-03-2008
So the net effect is that the net cash from investing activities has many more
times than the last year which is negative Now the company has repaid its long
term borrowing more than the last year which has decreased the cash balance by
the little amount
Balance with the schedule banks under the head current amp collection account
amounting to represent funds in transit lying with schedule banks pending
transfer against loan liabilities under the head cash credit amp bill discounting
LIQUIDITY RATIO
1 CURRENT RATIO
(Amount in Rs)
Current Ratio
Year Current Assets Current Liabilities Ratio
2003 58574151 7903952 7412004 69765346 31884616 2192005 72021081 16065621 4482006 91328208 47117199 1942007 115642068 30266661 382
Interpretation
As a rule the current ratio with 21 (or) more is considered as satisfactory
position of the firm
When compared with 2006 there is an increase in the provision for tax because
the debtors are raised and for that the provision is created The current liabilities
majorly included Lanco Group of company for consultancy additional services
The sundry debtors have increased due to the increase to corporate taxes
In the year 2006 the cash and bank balance is reduced because that is used for
payment of dividends In the year 2007 the loans and advances include majorly
the advances to employees and deposits to government The loans and advances
reduced because the employees set off their claims The other current assets
include the interest attained from the deposits The deposits reduced due to the
declaration of dividends So the other current assets decreased
The huge increase in sundry debtors resulted an increase in the ratio which is
above the benchmark level of 21 which shows the comfortable position of the
firm
GRAPHICAL REPRESENTATION
741
219
448
194
382
000
100
200
300
400
500
600
700
800
Ratio
2003 2004 2005 2006 2007
Years
CURRENT RATIO
Ratio
2 QUICK RATIO
(Amount
in Rs)
Quick Ratio
Year Quick Assets Current Liabilities Ratio
2003 58574151 7903952 741
2004 52470336 31884616 165
2005 69883268 16065620 435
2006 89433596 47117199 19
2007 115431868 30266661 381
Interpretation
Quick assets are those assets which can be converted into cash with in a short
period of time say to six months So here the sundry debtors which are with the
long period does not include in the quick assets
Compare with 2006 the Quick ratio is increased because the sundry debtors are
increased due to the increase in the corporate tax and for that the provision
created is also increased So the ratio is also increased with the 2006
GRAPHICAL REPRESENTATION
741
165
435
190
381
000
100
200
300
400
500
600
700
800
Ratio
2003 2004 2005 2006 2007
Years
QUICK RATIO
Ratios
3 ABOSULTE LIQUIDITY RATIO
(Amount
in Rs)
Absolute Cash Ratio
Year Absolute Liquid Assets Current Liabilities Ratio
2003 31004027 7903952 392
2004 10859778 31884616 034
2005 39466542 16065620 246
2006 53850852 47117199 114
2007 35649070 30266661 118
Interpretation
The current assets which are ready in the form of cash are considered as absolute
liquid assets Here the cash and bank balance and the interest on fixed assts are
absolute liquid assets
In the year 2006 the cash and bank balance is decreased due to decrease in the
deposits and the current liabilities are also reduced because of the payment of
dividend That causes a slight increase in the current yearrsquos ratio
GRAPHICAL REPRESENTATION
392
034
246
114 118
0
05
1
15
2
25
3
35
4
Ratios
2003 2004 2005 2006 2007
Years
ABSOLUTE CASH RATIO
Ratios
LEVERAGE RATIOS
4 PROPRIETORY RATIO
(Amount
in Rs)
Proprietory Ratio
Year Share Holders Funds Total Assets Ratio
2003 67679219 78572171 086
2004 53301834 88438107 06
2005 70231061 89158391 079
2006 56473652 106385201 053
2007 97060013 129805102 075
Interpretation
The proprietary ratio establishes the relationship between shareholders funds to
total assets It determines the long-term solvency of the firm This ratio indicates
the extent to which the assets of the company can be lost without affecting the
interest of the company
There is no increase in the capital from the year2004 The share holderrsquos funds
include capital and reserves and surplus The reserves and surplus is increased
due to the increase in balance in profit and loss account which is caused by the
increase of income from services
Total assets includes fixed and current assets The fixed assets are reduced
because of the depreciation and there are no major increments in the fixed assets
The current assets are increased compared with the year 2006 Total assets are
also increased than precious year which resulted an increase in the ratio than old
GRAPHICAL REPRESENTATION
086
060
079
053
075
000
010
020
030
040
050
060
070
080
090
Ratios
2003 2004 2005 2006 2007
Years
PROPRIETORY RATIO
Ratios
ACTIVITY RATIOS
5 WORKING CAPITAL TURNOVER RATIO
(Amount
in Rs)
Working Capital Turnover Ratio
Year Income From Services Working Capital Ratio
2003 36309834 50670199 0722004 53899084 37880730 1422005 72728759 55355460 1312006 55550649 44211009 1262007 96654902 85375407 113
Interpretation
Income from services is greatly increased due to the extra invoice for Operations
amp Maintenance fee and the working capital is also increased greater due to the
increase in from services because the huge increase in current assets
The income from services is raised and the current assets are also raised together
resulted in the decrease of the ratio of 2007 compared with 2006
GRAPHICAL REPRESENTATION
072
142 131126
113
000
020
040
060
080
100
120
140
160
Ratio
2003 2004 2005 2006 2007
Years
WORKING CAPITAL TURNOVER RATIO
Ratio
6 FIXED ASSETS TURNOVER RATIO
(Amount in Rs)
Fixed Assets Turnover Ratio
Year Income From Services Net Fixed Assets Ratio
2003 36309834 28834317 126
2004 53899084 29568279 182
2005 72728759 17137310 424
2006 55550649 15056993 369
2007 96654902 14163034 682
Interpretation
Fixed assets are used in the business for producing the goods to be sold This
ratio shows the firmrsquos ability in generating sales from all financial resources
committed to total assets The ratio indicates the account of one rupee
investment in fixed assets
The income from services is greaterly increased in the current year due to the
increase in the Operations amp Maintenance fee due to the increase in extra invoice
and the net fixed assets are reduced because of the increased charge of
depreciation Finally that effected a huge increase in the ratio compared with the
previous yearrsquos ratio
GRAPHICAL REPRSENTATION
126182
424 369
682
000
100
200
300
400
500
600
700
Ratios
2003 2004 2005 2006 2007
Years
FIXED ASSETS TURNOVER RATIO
Ratios
7 CAPITAL TURNOVER RATIO
(Amount
in Rs)
Capital Turnover Ratio
Year Income From Services Capital Employed Ratio
2003 36309834 37175892 0982004 53899084 53301834 1012005 72728759 70231061 1042006 55550649 56473652 0982007 96654902 97060013 100
Interpretation
This is another ratio to judge the efficiency and effectiveness of the company
like profitability ratio
The income from services is greaterly increased compared with the previous year
and the total capital employed includes capital and reserves amp surplus Due to
huge increase in the net profit the capital employed is also increased along with
income from services Both are effected in the increment of the ratio of current
year
GRAPHICAL REPRESENTATION
098
101
104
098
100
094095096097098099100101102103104
Ratios
2003 2004 2005 2006 2007
Years
CAPITAL TURNOVER RATIO
Ratios
8 CURRENT ASSETS TO FIXED ASSETS RATIO
(Amount
in Rs)
Current Assets To Fixed Assets Ratio
Year Current Assets Fixed Assets Ratio
2003 58524151 19998020 2932004 69765346 18672761 3742005 72021081 17137310 4202006 91328208 15056993 6072007 115642068 14163034 817
Interpretation
Current assets are increased due to the increase in the sundry debtors and the net
fixed assets of the firm are decreased due to the charge of depreciation and there
is no major increment in the fixed assets
The increment in current assets and the decrease in fixed assets resulted an
increase in the ratio compared with the previous year
GRAPHICAL REPRESENTATION
293374
420
607
817
000
100
200
300
400
500
600
700
800
900
Ratios
2003 2004 2005 2006 2007
Years
CURRENT ASSETS TO FIXED ASSETS RATIO
Ratios
PROFITABILITY RATIOS
GENERAL PROFITABILITY RATIOS
9 NET PROFIT RATIO
(Amount in Rs)
Net Profit Ratio
Year Net Profit After Tax Income from Services Ratio
2003 21123474 36039834 059
2004 16125942 53899084 030
2005 16929227 72728759 023
2006 18259580 55550649 033
2007 40586359 96654902 042
Interpretation
The net profit ratio is the overall measure of the firmrsquos ability to turn each rupee
of income from services in net profit If the net margin is inadequate the firm
will fail to achieve return on shareholderrsquos funds High net profit ratio will help
the firm service in the fall of income from services rise in cost of production or
declining demand
The net profit is increased because the income from services is increased The
increment resulted a slight increase in 2007 ratio compared with the year 2006
GRAPHICAL REPRESENTATION
059
030
023
033
042
000
010
020
030
040
050
060
Ratios
2003 2004 2005 2006 2007
Years
NET PROFIT RATIO
Ratios
10 OPERATING PROFIT
(Amount in Rs)
Operating Profit
Year Operating Profit Income From Services Ratio
2003 36094877 36309834 099
2004 27576814 53899084 051
2005 29540599 72728759 041
2006 31586718 55550649 057
2007 67192677 96654902 070
Interpretation
The operating profit ratio is used to measure the relationship between net profits
and sales of a firm Depending on the concept it will decide
The operating profit ratio is increased compared with the last year The earnings
are increased due to the increase in the income from services because of
Operations amp Maintenance fee So the ratio is increased slightly compared with
the previous year
GRAPHICAL REPRESENTATION
099
051
041
057
070
000
010
020
030
040
050060
070
080
090
100
Ratios
2003 2004 2005 2006 2007
Years
OPERATING PROFIT RATIO
Ratios
11 RETURN ON TOTAL ASSETS RATIO
(Amount in Rs)
Return on Total Assets Ratio
Year Net Profit After Tax Total Assets Ratio
2003 21123474 78572171 027
2004 16125942 88438107 018
2005 16929227 89158391 019
2006 18259580 106385201 017
2007 40586359 129805102 031
Interpretation
This is the ratio between net profit and total assets The ratio indicates the return
on total assets in the form of profits
The net profit is increased in the current year because of the increment in the
income from services due to the increase in Operations amp Maintenance fee The
fixed assets are reduced due to the charge of depreciation and no major
increments in fixed assets but the current assets are increased because of sundry
debtors and that effects an increase in the ratio compared with the last year ie
2006
GRAPHICAL REPRESENTATION
027
018 019017
031
000
005
010
015
020
025
030
035
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON TOTAL ASSETS
Ratios
12 RESERVES amp SURPLUS TO CAPITAL RATIO
(Amount in Rs)
Reserves amp Surplus To Capital Ratio
Year Reserves amp Surplus Capital Ratio
2003 65599299 2079920 31542004 34582554 18719280 1852005 51511781 18719280 2752006 37754372 18719280 2022007 78340733 18719280 419
Interpretation
The ratio is used to reveal the policy pursued by the company a very high ratio
indicates a conservative dividend policy and vice-versa Higher the ratio better
will be the position
The reserves amp surplus is decreased in the year 2006 due to the payment of
dividends and in the year 2007 the profit is increased But the capital is
remaining constant from the year 2004 So the increase in the reserves amp surplus
caused a greater increase in the current yearrsquos ratio compared with the older
GRAPHICAL REPRESENTATION
3154
185 275 202419
-
500
1000
1500
2000
2500
3000
3500
Ratios
2003 2004 2005 2006 2007
Years
RESERVES amp SRUPLUS TO CAPITAL RATIO
Ratios
OVERALL PROFITABILITY RATIOS
13 EARNINGS PER SHARE
(Amount in Rs)
Earnings Per Share
Year Net Profit After Tax No of Equity Shares Ratio
2003 21123474 207992 101562004 16125942 1871928 8612005 16929227 1871928 9042006 18259580 1871928 9752007 40586359 1871928 2168
Interpretation
Earnings per share ratio are used to find out the return that the shareholderrsquos earn
from their shares After charging depreciation and after payment of tax the
remaining amount will be distributed by all the shareholders
Net profit after tax is increased due to the huge increase in the income from
services That is the amount which is available to the shareholders to take There
are 1871928 shares of Rs10- each The share capital is constant from the year
2004 Due to the huge increase in net profit the earnings per share is greaterly
increased in 2007
GRAPHICAL REPRESENTATION
10156
861904 975
2168
000
2000
4000
6000
8000
10000
12000
Ratios
2003 2004 2005 2006 2007
Years
EARNINGS PER SHARE
Ratios
14 PRICE EARNINGS (PE) RATIO
(Amount in Rs)
Price Earning (PE) Ratio
Year Market Price Per Share Earnings Per Share Ratio
2003 3254 10156 0322004 2847 861 3302005 3752 904 4152006 3017 975 3092007 5185 2168 239
Interpretation
The ratio is calculated to make an estimate of application in the value of share of
a company
The market price per share is increased due to the increase in the reserves
amp surplus The earnings per share are also increased greaterly compared
with the last year because of increase in the net profit So the ratio is
decreased compared with the previous year
GRAPHICAL REPRESENTATION
032
330
415
309
239
000
050
100
150
200
250
300
350
400
450
Ratios
2003 2004 2005 2006 2007
Years
PE RATIO
Ratios
15 RETURN ON INVESTMENT
(Amount in Rs)
Return on Investment
Year Net Profit After Tax Share Holders Fund Ratio
2003 21123474 67679219 031
2004 16125942 53301834 03
2005 16929227 70231061 024
2006 18259580 56473652 032
2007 40586359 97060013 042
Interpretation
This is the ratio between net profits and shareholders funds The ratio is
generally calculated as percentage multiplying with 100
The net profit is increased due to the increase in the income from services ant
the shareholders funds are increased because of reserve amp surplus So the ratio
is increased in the current year
GRAPHICAL REPRESENTATION
031 030
024
032
042
000
005
010
015
020
025
030
035
040
045
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON INVESTMENT RATIO
RatioS
DATA COLLECTION
The data can be of two types
Primary Data
Secondary Data
Primary Data
Primary data are those data which is originally collected afresh
Secondary Data
Secondary data are those data which are already collected and stored and which has
been passed through statistical research
In this project Secondary data has been collected from following sources-
Annual report
Books
MIS
Other material and report published by company There are two methods to prepare
the Cash flow Statement
ndirect Method
I
The indirect method (or reconciliation method) starts with net income and converts it
to net cash flow from operating activities In other words the indirect method adjusts
net income for items that affected reported net income but did not affect cash To
compute net cash flow from operating activities non-cash charges in the income
statement are added ack to net income and non-cash credits are deducted
b
Direct Method
Under the direct method the statement of cash flows reports net cash flow from
operating activities as major classes of operating cash receipts (eg cash collected from
customers and cash received from interest and dividends) and cash disbursements (eg
cash paid to suppliers for goods to employees for services to creditors for interest and
to government authorities for taxes)
INDIRECT VERSUS DIRECT METHOD
The most contentious decision that the FASB faced in issuing Statement No 95 was
choosing between the direct method and the indirect method of determining net cash
flow from operating activities Companies lobbied against the direct method urging
adoption of the indirect method Commercial lending officers expressed a strong
preference to the FASB hat the direct method be required
tCF-Page 3 of 5
In Favor of the Direct Method
The principal advantage of the direct method is that it shows operating cash receipts and
payments That is it is more consistent with the objective of a statement of cash flows to
provide information about cash receipts and cash payments than the in-direct method
which does not report operating cash receipts and payments
Supporters of the direct method contend that knowledge of the specific sources of
operating cash receipts and the purposes for which operating cash payments were made
in past periods is useful in estimating future operating cash flows Furthermore in-
formation about amounts of major classes of operating cash receipts and payments is
more useful than information only about their arithmetic sum (the net cash flow from
operating activities) Such information is more revealing of an enterprises ability (1) to
generate sufficient cash from operating activities to pay its debts (2) to reinvest in its
operations and (3) to make distributions to its owners
Many corporate providers of financial statements say that they do not currently collect
information in a manner that allows them to determine amounts such as cash received
from customers or cash paid to suppliers directly from their accounting systems But
supporters of the direct method contend that the incremental cost of assimilating such
operating cash receipts and payments data is not significant
In Favor of the Indirect Method
The principal advantage of the indirect method is that it focuses on the differences
between net income and net cash flow from operating activities That is it provides a
useful link between the statement of cash flows and the income statement and balance
sheet
Many providers of financial statements contend that it is less costly to adjust net income
to net cash flow from operating activities (indirect) than it is to report gross operating
cash receipts and payments (direct) Supporters of the indirect method also state that the
direct method which effectively reports income statement information on a cash rather
than an accrual basis may erroneously suggest that net cash flow from operating
activities is as good as or better than net income as a measure of performance
Special Rules Applying to Direct and Indirect Methods
Companies that use the direct method are required at a
minimum to report separately the following classes of
operating cash receipts and payments
Receipts
1048713 Cash collected from customers (including lessees licensees etc)
1048713 Interest and dividends received
1048713 Other operating cash receipts if any
Payments
1048713 Cash paid to employees and suppliers of goods or services (including
suppliers of
insurance advertising etc)
1048713 Interest paid
1048713 Income taxes paid
1048713 Other operating cash payments if any
Companies using the indirect method are required to disclose separately changes in
inventory receivables and payables to reconcile net income to net cash flow from
operating activities In addition interest paid (net of amount capitalized) and income
taxes paid must be disclosed elsewhere in the financial statements or accompanying
notes
The FASB requires these separate and additional disclosures so that users
may approximate the direct method Also an acceptable alternative presentation
of the in-direct method is to report net cash flow from operating activities as a
single line item in the statement of cash flows and to present the reconciliation
details elsewhere in the financial statements
FINDING OF SUDY
According to cash flow statement of the company The finding of the study are as
follows-
The company has not taken any loans secured or unsecured from companies
firms or other parties
The company has not accepted any deposit from the public during the year
The company is not a sick industrial company
The company has not granted any loan secured or unsecured to company firms
or other parties
The company has paid the entire long term and short term borrowing during the
year
The company has buy back the companyrsquos own share this year
The interest paid in 2008 is more than the
There has been a significant decline in volume over the years from 2001-02
to 2005-06 as can be seen in the graph below
Table 43
The Net sales of Tractor has increased considerably from 2004-05 to 2007-08
This can be mainly attributed to changes in Variable and material costs and in
the price
The Net sale of Tractor has increased considerably from 2004-05 to 2007-08
that is an decrease of Rs7216 per tractor This can be mainly attributed to
changes in
Variable and material costs and in the prices
RECOMMENDATIONS
According to cash flow statement of the company The suggestions of the study
are as follows-
The time durations for training program have to increase
Buy regular review and consultations develop a career progression
which is sensitive to performance and ability
Create an environment where by people are trend developed to enable
The to take advantages of opportunities that arise
The jab can be redesigned where the work man stay in what is normally
the same job but has elements of it changed
The principle amount must be paid in time which can be reducing the
interest the out flow
The purchase of the fixed asset must be made only when there is extreme
requirement
In order to avoid taxes the company should go for more investment
The companyrsquos borrowings should go for more investment
o The company should try to reduce the depreciations as maximum
as possible
CONCLUSION
The study on competency level of employees at ESCORTS PVTLTD gave an
insight about the acceptance of competency mapping by employees
The employees at Ymi welcome the introduction of competency mapping in their
organization as they felt it was very much essential in enhancing their skills and
organizational development
The organization has provided the recourses guidance and support to facilitate the
introduction of competency level easily and develop the employees in such a way
that they can face any kind of challenge
However the level of competency in employees is found to be satisfactory
Providing proper training education and guidance to the employees can enhance
the level
This study was mainly carried out to find out whether thee competency mapping
being followed by the company is effective till date If the competency mapping
and fitment to the organization
By looking at the graphs and tables it is quite that the employees still are not up to
the level of competent pool they still have to be trained and made competent in
order to fill the gap As the organization has just applied the mapping it has to see
to that it meets all the requirements for competency mapping
Therefore the graphs make it quite clear that the potential of the employees is not
up to the mark and ie they are not competent enough to meet the competency-
mapping requirement Hence by further training and counseling this gap can be
closed
This report includes the training requirements of employees and it highlights skills
possessed by each employee and skill required All employees get training so that
skill can be improved and maintain balance between standard performance with
their actual performance to avoid gap
APPENDIX
QUESTIONNAIRE
Consumer Survey
Name _____________________________
Age _____________________________
Sex
Male
Female
Occupation
Businessman
Service man
Professional
Others
Monthly income brackets
Below 15000
15000- 20000
20000-30000
30000 and above
of your savings _________
Do you invest
Yes
No
If yes then where do you invest your money
Bank
Insurance
funds
Others
Why do you made that statement
Return
Risk hedging
Tax benefits
Other reasons (specify) _______
Who influence your cash decision
Relatives and friends
Family members
Advisors experts
You yourself
If no then why
Do not know where to invest
Satisfied with your current investment return
Donrsquot want take risk
Other reasons
__________________________________________________________________
___________________
Do you know about CF statement
Yes
No
If yes then from where you have come to know about an cash statement
Advertisements on newspapers
Friends and relative
Agents experts
Other source
What do you think about cash statement
It means investing only in share market
Constant watch must be kept always
Return is not satisfactory
Other perception
__________________________________________________
Can you recall any cash flow of company
___________________________
Would you want to made CF of an org
Yes
No
If yes then why
_______________________________________________________
If no then why
_______________________________________________________
BIBLIOGRAPHY
List of Books
1 PANDEY IM - FINANCIAL MANAGEMANT
2 KHAN MY AND JAIN PK -FINANCIAL MANAGEMANT
3 SMITH KV ndash MANAGEMANT OF WORKING CAPITAL
3 COMPANY RECORDS
4 JOURNAL
5 REPORTS
WEBLIOGRAPHY
1 wwwescortspvtltdcom
2 wwwgooglecom
CEO ndash Escorts Construction Equipment Limited (ECEL)
Mr GB Mathur
Vice President - Law amp Company Secretary
Mr Rakesh Kumar Budhiraja
Group Chief Financial Officer
Mr Partha Dasgupta
Group Vice President Human Resources and Employee Relations
LEVELS OF MANAGEMENT
MANAGEMENT
TOP
MANAGEMENT
SENIOR
MANAGEMENT
MIDDLE
MANAGEMENT
JUNIOR
MANAGEMENT
MANAGING
DIRECTOR amp
CEO(G-11)
CHIEF GENERAL
MANGER(G-8)
CHIEF
MANAGER
(G-5)
ASSISTANT
MANAGER(G-2)
VICE PRESIDENT
(G-10)
GENERAL
MANAGER(G-7)
SENIOR
MANAGER(G-4)
EXECUTIVE(G-
1)
ASSOCIATE
VICE PRESIDENT
(G-9)
DEPUTY
GENERAL
MANAGER(G-6)
MANAGER(G-3)
MISSION
WE WILL ACHIEVE LEADERSHIP IN MARKET SHARE amp PROFITABILITY IN
THE DOMESTIC TRACTOR MARKET BY THE YEAR 2004-2006 AND SHALL BE
THE WORLSrsquoS LARGEST SUPPLIER OF SUB 100 HP TRACTORS WE SHALL
PROACTIVELY CONTRIBUTE TO THE PROSPERITY OF THE RURAL
ECONOMY BY DEFINING A LARGER ROLE FOR OURSELVES IN THE FOOD
AND AGRICULTURE SECTOR
THE VISION
WE SHALL STRIVE TO BE THE NUMERO UNO IN THE INDIAN TRACTOR
INDUSTRY AND TOP FIVE TRACTOR MANUFACTURERS IN THE WORLD
WE SHALL CONTINUOUSLY STRIVE TO MEET THE EVER RISING
EXPECTATIONS OF OUR VALUED CUSTOMERS AT THE LOWEST
INTERNAL COST
WE SHALL AIM TO OFFER THE FARMING COMMUNITY A RANGE OF
INNOVATIVE PRODUCTS AND SERVICES WHICH SHALL ENABLE THEM
TO IMPROVE THEIR PRODUCTIVITY AND COMPETITIVNESS
WE SHALL ACHIEVE A TURNOVER OF RS 2 BILLION BY THE YEAR
2006TRANSCENDING NATIONAL BOUNDARIES WE SHALL STRIVE TO
ATTAIN EXPORTS OF ONE TENTH OF OUR TOTAL TRACTOR PRODUCTION
BY THE YEAR 2
REVIEW OF LITERATURE
INTRODUCTION
MEANING OF FINANCIAL STATEMENTS
The financial statements are nothing but the financial information presented in concise and
capsule form and are the financial information is the information relating to the financial
position of any firm The firm prepares the financial statements
bull To communicate with different parties about the financial position of the firm
(Shareholders creditors banks financial institution financial analysts investors
etc And
bull To analyze the operations and performance of the firm for the further
planning
The basic source which provides the financial information is the Annual report of the
company which is presented by the company to its shareholders at the Annual General
Meeting
Though the presentation of annual report is a statutory requirement under the
Companies Act 1956 however it is also a medium of communication with the present as well
as prospective investors and creditors of the company
Clause 43 A of the Listing Agreement (with the stock exchange) requires every
listed company to publish unaudited quarterly results But it does not mean the non-corporate
firms do not prepare the financial statements Every firm big or small prepare the following
financial statements
The Balance Sheet (BS)
1 The Income Statement (IS)
Two other key financial statements which are usually prepared by corporate firms are
1 Statement of appropriation of profit and
2 Statement of Change in financial position
ANALYSIS OF FINANCIAL STATEMENTS (AFS)
Analysis of financial statements refers to the process of the critical examination of the
financial information contained in the financial statements in order to understand and
make decisions regarding the operations of the firm The AFS is basically a study of the
relationship among various financial fact and figures as given in a set of financial
statements AFS is the process of establishment and identifying the financial weakness
and strength of the firm It is indicative of two aspects of a firm ie the profitability
and the financial position
OBJECTIVES OF AFS
The objectives of the AFS is to understand the information contained in financial
statements with a view to know the weakness and strength of the firm and to make a
forecast about the future prospects of the firm and thereby enabling the financial
analyst to take different decisions regarding the operation of the firm The objectives
are as follows
bull To assess the present profitability and operating efficiency of the fir
COMMON-SIZE STATEMENTS (CSS)
The CSS represents the relationship of different items of financial statements with some
Common items by expressing each item as a percentage of the common item In common size
Balance Sheet each item of the balance sheet is stated as a percentage of the total balance
sheet The percentages for different items are computed by dividing the absolute amount of
that item by the Common Base and then multiply by 100 The percentage so calculated can
be easily compared with the corresponding percentage in some other period Thus the CSS is
useful not only in intra-firm comparison for the same year or free several years
TREND PERCENTAGE ANALYSYS(TPA)
The TPA is a technique of studying several financial statements over a series of years In
TPA the trend percentages are calculated for each item by taking the figure of that item for
some base year as 100 So the trend percentage is the percentage relationship which
Each item of different years bears to the same item in the base year Any year may be Taken
as the base year but generally the starting initial year is taken as the base year So each
item for base year is taken as 100 and then the same item for other years is Expressed as a
percentage of the base year
RATIO ANALYSIS (RA)
The RA has emerged as the principle technique of the AFS A ratio is a relationship
Expressed in mathematical terms between two individual or groups of figures connected with
other in some logical manner The RA is based in the premise that a single accounting figure
by itself may not communicate any meaningful information but when expressed as a relative
to some other figure it may definitely give some significant information The relationship
between two or more accounting figuresgroups is called a Financial Ratio
A financial ratio helps to summarize a large mass of financial data into a concise form
and to make meaningful interpretations and conclusions about the performance of a firm
For example a firm has net sales Rs 5 00000
Gross Profit Rs 100000
Ratio of Gross Profit to net sales is 20
ie (Rsl 00000 Rs5 00000)
Forms of Ratios
Since a ratio is a mathematical relationship between two or more variables accounting
figures such relationship can be expressed in different ways as follows
bull As a Pure Ratio
bull As a Rate of Times
bull As a Percentage
Ratio can be classified into
bull The Liquidity Ratio
bull The Activity Ratio
bull The Leverage Ratio
bull The Profitability Ratio
STATEMENT OF CHANGES IN FINANCIAL POSITION
(SCFP)
Since the BS amp IS of a firm are two basic depicting the financial position of a firm at the end
of the year These two financial statements are called the traditional statements Both these
statements fail to throw light on changes in assets liabilities and shareholders wealth during
this year
BS deals with the financial position gives only the static view of the year- end financial
position and fails to indicate the movement and causes in assets and liabilities during the
year Similarly IS show the profit or loss resulting out of the operations of the firm during
the year This profit or loss in fact to ascertain the sufficiency of resources to declare the
dividend etc thus there is a need to prepare another statement (together with the BS amp IS)
which may identify the changes in assets liabilities and the shareholders funds over a given
period
The SCFP is essentially an explanation of the changes in financial position of a Firm
occasioned by the firm in between two successive BSs The SCFP draws basic Information
from the BS and IS helps in understanding the change in assets liabilities and shareholders
worth The SCFP deals with the flow of funds during the year ie the funds coming in and
going out of the firm It summarizes the sources from where the funds might have been
arranged procured by the firm and the uses for which the funs might have been used by
the firm during the year
The SCFP can be prepared as follows
bull SCFP (Cash Basis) also known as a Cash F low Statement
bull SCFP (Net Working Capital Basis) Fund Flow Statement
SCFP (WORKING CAPITAL BASIS)
FUND FLOW STATEMENT
The FFS reports the flows of funds through the firm during the year ie it shows the
Sources and uses of working capital between two balance sheet dates The FFS
attempts to explain the changes in financial position from one BS to the subsequent BS
in terms of the change in the funds or the working capital position of the firm
The term Working capital (WC) is generally defined as the excess of total
current assets over the total current liabilities The current Assets (CA) of a firm may
include cash in hand and at bank stock debtors bills advances etc and the Current
Liabilities (CL) includes creditors bills payable outstanding expenses provision for
tax short term liabilities etc the term WC is a single figure representing the net effect
of a transaction is to increase or decrease the Working Capital by affecting any of the
elements of Current Assets or Current Liabilities Therefore the FFS in its standard
form incorporates only those transactions which affect the Working Capital i e those
transactions where in only one of the affected accounted is a current account
Now a flow of working capital arises when one of the affected accounts is a current
account From the point of view of current account the effected on working capital
can examined in the light of the definitions of the term working capital ie the excess
of current assets over current liabilities ie
Impliedly change in any of the CA or CL will affect the WC Simple observation
equation tells that
bull Increase in any of the CA or decrease in any of the CLs will result in increase
in the WC
bull Decrease in any of the CA or increase in any of the CLs will result in decrease
in the WC
To find out the relative importance of different components of the financial position
of the firm
bull To identify the reasons for change in the profitability financial position of the
firm and
bull To assess the short term as well as the long term liquidity position of the
firm
TECHNIQUES TOOLS OF THE AFS
AFS can be undertaken by different persons and for different purposes therefore the
methodology adopted for the AFS may be carrying from one situation to another However
the following are some of the common techniques of the AFS
bull Comparative financial statements
bull Common-size financial statements
bull Trend percentage analysis and
bull Ratio Analysis
COMPARATIVE FINANCIAL STATEMENTS
In CFS two or more BS andor the IS of a firm are presented simultaneously in columnar
form The Financial data for two or more tears are placed and presented in adjacent columns
and thereby the financial data is provided at times perspective in order to facilitate periodic
comparison In CFS the BS and the IS for number of years are presented in condensed
form for year to year comparison and to exhibit the magnitude and direction of changes
The CFS helps a financial analyst of the firm and in establishing operating and
positional trend of the firm The CFS may be prepared to show
1 The absolute amount of different items in monetary terms
2 The amount of periodic changes in monetary terms
1 The percentages of periodic changes to reveal the proportionate changes
The CFS can be prepared for both the BS and the IS
CORE COMPETENCE OF ESCORTS
Customer 1
We put customers first in everything we do We take decisions keeping the customer in
mind
Challenging Spirit
We strive for excellence in everything we do and in the quality of goods amp services we
provide We work hard to achieve what we commit amp achieve results faster than our
competitors and we never give up
Team-work
We work cohesively with our colleagues as a multi-cultural team built on trust respect
understanding amp mutual co-operation Everyones contribution is equally important for
our success
Frank amp Fair Organization
We are honest sincere open minded fair amp transparent in our dealings We actively
listen to others and participate in healthy amp frank discussions to achieve the
organizations
A firm undertakes numerous during a year and most of these transactions during a year and
most of these transactions may affect one or the other current account ie most of these
transactions May results in the flow of the WC Neither is it necessary nor practical to
identify the effect of each and every transaction on the WC These transactions instead are
considered and analyzed in a collective form and then their effect on the WC is identified
SCFP (CASH BASIS) OR
THE CASH FLOW STATEMENT
The CFS attempts to analyze the transactions of the firm in terms of cash ie the transactions
generating cash and using cash The focus in the CFS is on cash rather than on WC The
sources of cash may be the cash profits earned by the firm issue of capital for cash issue of
other securities for cash borrowings sale of assets investment redemption of debenture or
preference share repayment of loan payment of tax dividend distribution etc Thus the
CFS summarizes the cash inflows and outflows
An analysis of cash flows is useful for short-run planning A firm needs sufficient cash to
debts maturing in the near future to pay interest and other expenses and to pay dividends to
shareholders The firm can make projections of cash flows and outflows for the near future to
determine the availability of cash This cash balance can be matched with the firms need for
cash during the period and accordingly arrangements can be made the deficit or invest the
surplus cash temporarily A historical analysis of cash flows provides insight to prepare
reliable cash flow projections for the immediate future
A statement of changes in financial position on cash basis commonly known as cash flow
statement summarizes the causes of changes in cash position between dates of two balance
sheets It indicates the sources amp uses of cash The cash flow statement is similar to the fund
flow statement except that it focuses attentions on cash instead of working capital (funds)
Thus this statement analyses change in non-current accounts as well as current accounts
(other than cash) to determine the flow of cash
The CFS is based on the concept on the WC Where as the CFS is based in cash which is only
the element of WC Thus the CFS provides details of cash movements whereas the FFS
provides the details of funds movements
The CFS considers only the actual movement of cash whereas the FFS considers the
movements of the funds as defined in terms of net working capital
CASH-FLOW STATEMENT
A cash-flow statement is a statement showing inflows (receipts) and outflows (payments) of
cash during a particular period In other words it is a summary of sources and applications of
Cash during a particular span of time It analyses the reason for changes in balance of cash
between the two balance sheet dates The term Cash here stands for cash and cash
equivalents
A cash-flow statement includes only those items which affect cash As such the cash-flow
statement is called a statement of changes in financial position - cash basis
A cash - flow statement can be for the past or can be projected for a future period
OBJECTS OR USES OF CASH-FLOW STATEMENT
The main objectives behind preparing a cash-flow statement can be laid down as under-
bull USEFUL FOR SHORT-TERM FINANCIAL PLANNING-
A cash-flow statement provides information for planning the short-term financial needs of the
firm Since it provides information regarding the sources and utilization of cash during a period
it become easier for the management to assess whether it will have Adequate cash to meet day-
to-day expenses and pay the long - term loans and interest Thereon and whether it has enough
cash to pay for the purchase of fixed assets or not
USEFUL FOR PREARING THE CASH BUDGET-
A cash-flow statement prepared for the future period is helpful in preparing a cash budget It
informs the management about the future period is helpful in preparing a cash budget It informs
the management about the surplus or deficit periods of cash ie in which months the payments
will be in excess of receipts It helps in planning the investment of surplus cash in short-term
investment and to plan short-term credit in advance of deficit periods
bull COMPARISON WITH CASH BUDGET-
A cash budget is prepared at the commencement of the year whereas a cash flow Statement is
prepared at the end of the year A comparison between the two helps in ascertaining the extent
to which the financial resources of the firm have been generated and used according to the plan
Causes of variances between the figures of two statements can be analyzed and proper
corrective measures may be takes
bull STUDY OF THE TREND OF CASH RECEIPTS AND PAYMENTS-
A cash-flow statement reveals the speed at which the cash is being generated from debtors stock
and other current assets the speed at which the current liabilities are being paid It enables the
management to assess the true position of the cash in future
bull IT EXPLAINS THE DEVIATIONS OF CASH FROM EARNINGS-
A firm may earn huge profits yet it may have paucity of cash or when it suffered a loss it may
still have plenty of cash A cash flow statement explains the reasons for it
HELPFUL IN ASCERTAINING CASH-FLOW FROM VARIOUS
ACTIBITIES SEPARATELY-
A cash-flow statement aims at highlighting the cash flow from operating investing and
financing activities separately It includes how much cash has been generated or used in these
activities
bull HELPFUL IN MAKING DIVIDEND DECISIONS-
Dividend must be paid within 42 days of its declaration Hence the management takes the help of
cash-flow statement to ascertain the position of cash generated from operating activities which
can be used for payment of dividend
IMPORTANCE AND RELEVANCE OF CFS
The CFS has gained importance in view of the fact that there are many managerial Decisions
which are taken in the light of the cash availability or cash position of the firm
For example declaration of dividend by the company requires cash disbursement and
Therefore the Board of Directors must consider the cash position before proposing a dividend
The CFS also provides information for the short term financial planning and in particular the
short term cash needs of the firm
In view of increasing importance and relevance of the CFS the clause 32 of the Listing
agreement (between a Company and the Stock Exchange where the shares proposed to be listed)
has been amended by the SEBI As a result the listed companies in India are now required to
supply a copy of the CFS to each shareholder as a part of Annual Report As a result the listed
companies have started a practice of sending a CFS for which the BS has been prepared as
apart of the Annual Report of the company
DIFFRENCE BETWEEN CASH - FLOW STATEMENT AND
CASH BUDGET
There is not much difference between cash flow statement and a cash budget The
only difference is that a cash flow statement is prepared for a past period where as cash
budget is prepared for a future period Hence it is of limited use as far as the future
periods are concerned A cash budget is therefore prepared showing how much cash is
likely to be received and what will be the disbursements during a future period of time
Thus a cash budget indicates in which months there will be surplus cash and in which
moths there will be deficiency of cash resources The management can then take suitable
decision to invest the surplus cash or make arrangement for the deficiency of cash at the
required time
LIQUIDITY
It does not present true picture of the liquidity of the firm the liquidity does
not depend upon cash alone Liquidity also depends upon those assets
which can be converted into cash easily
bull Exclusion of these assets obstructs the true reporting of the ability of the firm to
meet its liabilities when they become due for payment
bull The possibilities of window - dressing is higher in case of cash position in
comparison to the working capital position of the firm
bull The cash balance can be easily maneuvered by postponing purchases and other
payments and by rapidly collecting cash from debtors before the balance sheet date
Hence a fund - flow statement presents a more realistic picture than a cash flow
statement
bull Cash flow statement ignores non- cash charges Hence the true position of the
enterprise cannot be judged by cash flow statement
bull It is prepared on cash basis and hence ignores one of the basic concept of accounting
namely accrual concept
PROCEDURE OF PREPARING CASH FLOW STATEMENT-
The institute of charted accountants of India has issued accounting standards (as)-3 revised for
preparing a cash flow statement This accounting standard has been made mandatory in respect
of accounting periods commencing on or after 1st April 2001 for certain enterprises These
enterprises are-
bull Enterprises whose equity or debt securities are listed on a recognized stock exchange in
India And enterprise that are in the process of issuing equity or debt securities that will
be listed on a recognized stock exchange in India
bull All other commercial industrial and business enterprises whose turnover for accounting
period Rs 50 crores
As such the cash flow statement has been prepared according to as -3 revised in this project
According to as-3 revised the cash flow statement summarizes the cash inflows and cash
outflows and the net changes (increase or decrease) in cash and cash equipment resulting from
operating investing and financing activities of a firm during a period The following terms are
used for preparing a cash flow statement
CASH-
It compares cash in hand and demands with banks
CASH EQUIVALENTS-
There are short - term highly liquid investments that are readily into known amounts of cash
and which present insignificant risk of changes in their values Normally an investment will be
termed as cash equivalent only if it has a short maturity period say three months or less from the
date of its acquisition Examples of cash equivalent are treasury bills commercial papers etc
Which are purchased with cash that is in excess of immediate needs investment in shares are
excluded from cash equivalents unless they are cash equivalent in reality For example the
preference shares of the company which are purchased shortly before their redemption date will
be included in cash equivalents provided there is only an insignificant risk of failure of the
company in repaying the amount at the date of the maturity
CLASSIFICATION OF CASH FLOW-
According to as -3 (revised) cash flow statement should be presented in a manner that it reports
inflows of cash by classifying them into three categories namely operating investing and
financing activities Classification of all activities into these activities on the cash and cash
equivalents of the enterprise such information will be helpful in evaluating the relationships
among these three activities are explained as below
CASH FLOW FROM OPERATING ACTIVITIES-
Operating activities are the main revenue generating activities of an enterprise As such they
include cash flows from those transactions and events which enter into the ascertainment of
net profit or loss of the enterprise Examples of cash flows arising operating activities are
bull Cash receipts from the sale of goods and rendering of services
bull Cash receipts from royalties fees commissions and other revenue
bull Cash payments to suppliers for goods and services
bull Cash payments to and on behalf of employees
bull Cash receipts and cash payments of an insurance enterprise for premiums and claims
annuities and other policy benefits
bull Cash receipts and payments relating to future contracts forward contracts option
contracts and swap contracts when the contracts are held for dealing or trade purpose and
bull Cash payments of refunds of income taxes unless they can be specifically identified with
financing and investing activities
CASH FLOW FROM INVESTING ACTIVITIES-
Investing activities include the purchase and sale of long term assets such as land building plant
and machinery etc not held for resale These activities also include the purchase and sale of such
investment which are not including in cash equipments Cash flow from investing activities
discloses the expenditures incurred for resources intended to generate future income and cash
flows
Examples cash flow arising from investing activities are
bull Cash payments to acquire fixed assets (including intangible)
bull Cash receipts from sale of fixed assets (including intangibles)
bull Cash payments to acquire shares warrants or debt instruments of other enterprises
(other than receipts for those instruments considered to be cash equivalents)
bull Cash receipts from sale of shares warrants or debt instruments of other enterprises (other
than receipts for those instruments considered to be cash equivalents)
bull Cash advances and loans made to third parties In case of financial enterprises these will
be treated as cash flow from operating activities
bull Cash receipts from the repayment of advances and loans made to third parties In case of
financial enterprises these will be treated as cash flow from operating activities
bull Cash receipts of insurance claim for property involved in accident and
bull Cash receipts of interest and dividend In case of financial enterprise these will be treated
cash flow from operating activities
CASH FLOW FROM FIANCING ACTIVITIES-
Financing activities are the activities that result in change in capital and borrowing of the
enterprise
Examples of cash flows arising from financing activities are
bull Cash receipts from issuing shares or other similar instruments
bull Cash receipts from issuing debentures loans bonds and other short term or long term
borrowing
bull Cash repayment of amounts borrowed buy back of equity shares redemption of
preference shares debentures loans bonds etc
bull Cash payment of interest and dividend
IMPORTANT NOTE
In case of financial enterprise such as bank or mutual fund company cash Outflow
and cash inflow arising from the purchase and sale of securities will Be treated as
flows from operating activities This is because purchase and sale of securities is a
part of operating activity in case of financial enterprise In addition interest paid
and interest received as well as dividends received will also be treated as cash flow
from operating activities in case of financial Enterprises
CASH FLOW STATEMENT
(DIRECT METHOD)
CASH FLOW FROM OPERATING ACTIVITIES
Cash receipts from costumers
Cash paid to suppliers and employers ()
Cash generated from operations
Income tax paid ()
Cash flows from extraordinary item
plusmn Extra ordinary items
Net cash from operating activities
CASH FLOW FROM INVESTING ACTIVITIES-
Purchase of fixed assets
Proceed from sale equipment ()
Interest received
Dividend received ()
Net cash from investing activities
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from insurance of share capital
Proceeds from long- term borrowings ()
Repayment of from long-term borrowings
Interest paid
Dividend paid ()
Net cash from financing activities
Net increase in cash and cash equivalent
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
SOME SPECIAL TERMS-
i) INTERSET AND DIVIDEND-
Cash inflow from interest and dividends and cash outflow on account of interest and
dividends should be disclosed separately Cash inflow arising from interest and dividends
received should be shown as cash flow from investing activities where as cash outflow
disclosed outflow on account of interest and dividend paid should be shown as cash flow
from financing activity
ii) TAXES ON INCOME-
Tax paid on income is a part of cash flow from operating activity Hence taxes paid are
shown as a deduction under cash flow from operating activity
iii) EXTRA ORDINARY ITEMS-
Cash flow relating to extra ordinary items such as bad debts recovered Claims received from
insurance companies winning of a lottery or a law etc Should be disclosed separately as
arising from operating investing or financing activities For example the amount received
for insurance company on account of loss of stock by fire Earthquake and floods etc Should
be reported as cash flow from operating activities
iv) SIGNIFICANT NON - CASH TRANSACTION-
There are some investing and financing activities which do not require the use of cash or
cash equivalents Such non cash activities should be excluded from the cash flow statement
Examples are the acquisition of assets by issue of debentures or shares conversion of
shares into debentures etc Such significant on non cash transaction should be disclosed
outside the cash flow statement
CASH FLOW STATEMENT
(INDIRECT METHOD)
CASH FLOW FROM OPERARATTNG ACTIVITIES
Net profit before taxation and extraordinary item
Adjustment for
Depreciation
Foreign exchange loss
Interest income
Dividend income
Interest expense
Operating profit before working capital changes
Increase in sundry debtors
Decrease in inventories
Decrease in sundry creditors
Cash generated from operations
Income tax paid ()
Cash flow before extraordinary item
plusmn Extra - ordinary items
Net cash from operating activities
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of fixed assets ()
Proceeds from sale of equipment
Interest received
Dividend received ()
Net cash from investing activities
CASH FLOW FROM FINANCING ACTIVITIES-
Proceeds from insurance of share capital
Proceeds from long - term borrowings
Repayments of from long - term borrowings ()
Interest paid ()
Dividend paid ()
Net cash from financing activities
Net increase in cash and cash equivalent
Cash and cash equivalents at beginning of period
CHANGES IN CASH FLOWS
Changes in cash flows can be treated to the following
1 Net profit will increase the cash flows these cash flows will be
increased further if there are any non-cash changes (such as depreciation
and amortization)
2 Any payment of dividends will decrease the cash flows as will the
repayment of debt an issue of share or debt will also increase the
cash flows
3 An increase in non-cash assets will decrease cash flows increase in
current assets and fixed assets will result in drain on cash flows
Thus a statement of changes in cash flows ie the cash flow statement
classifies all Changes into one of three categories - operating investing or
financing activities Therefore the preparation of a statement of changes in cash
flows requires classification of changes in liabilities shareholders equity and
non-cash assets into one of these categories although some items will not fit
easily onto one other
h equivalent at end of period
STEP- BY-STEP PROCEDURE TO PREPARE CFS
1 Calculate the net increase or decrease in cash and cash equivalents-
For this purpose the opening balance of total cash and cash equivalents is compared with the
closing balance of cash and equivalents
Increasedecrease in cash and equivalents
Opening balance Closing Balance
Cash in hand
Cash in bank
Short-term Investment
Total
The difference between the total of opening and closing balance will be increased or
Decreased in cash equivalents during the period It may be noted that if there are only one or
two of items of cash etc
2 Net Cash flaw from operating activities-
The term operating refers to the normal purchase of goods and services On the basis of the
information contained in the comparative BS s and the IS and the additional Information the
net cash flow generated or use by the operating activities may be ascertained The IS prepared
by the firm gives the net profit figure earned by the firm On actual basis ie all items in the
IS are incorporated on the basis of earnedaccrued even
3 If not resulting in cash movements-
So the profit or loss as by the IS may not result in increase or decrease in cash balance by the
SYNOPSIS
INTRODUCTION
ESCORTS PVT LTD is a private limited company not listed in a stock exchange of India
and employees 900 highly trained personnel Its manufacturing plants are strategically located
in close proximity to its customers at Faridabad (Haryana) Noida (UP)
OBJECTIVES OF THE STUDY
bull To find the movement of cash inflow and cash outflow
bull To make the comparison between cash inflow and
bull Cash outflow
bull To prepare the Cash Flow Statement
bull To analyze the Balance Sheet of the company in terms of Cash Flow Statement
bull To focus on various activities of the organization in terms of Operating
Financing Investment
SCOPE OF THE STUDY
Financial resources are the assets for the company and their productivity is key
factor for profitability It is necessary to know their problems their knowledge
skills abilities amp the measures that can be taken to reduce them By analyzing this
top management can build good relations with the employees
The whole study is to determine the competencies of different employees who are
working in ESCORTS PVT LTD By analyzing it the top management can
introduce the concept of competency mapping in the organization Through this
management can attempt to use more suitable strategies towards the human
resource development
The research is confined to elicit the existing gap between the standard skill
required to perform the job and the skill processed by the employees at ESCORTS
PVT LTD And to provide them suitable training program to over come those gaps
for the better utilization of human resources
RELEVANCE
The scope of the study was confined to the outside parties like creditors
shareholders government etc Who want to invest their money in the
company
The benefit of the report for the company is that through this report they can come
to know about the cash flow statements of the company
This study also unable the company that their cash is not utilizing in unnecessary
things
The benefit of the report for the researcher is that it has helped to get knowledge
about the cash inflow and cash
RESERRCH METHODOLOGY-
RESEARCH DESIGN
bull The study was conducted under well- structured approach
bull The project lasted for 4 weeks and the year 2009 ie from 08 July to 12
Aug2009
bull The questionnaire method amp personal interview method was used to collect
the primary data for the study
The secondary data is collected from Internet amp company training material and
many other company materials
SAMPLE DESIGN
The process of extracting a sample from a population is called sampling
procedure The selection of sampling procedure to conduct the research
depends upon the nature of the study and the objective to be accomplished
Judgment sampling technique is adopted to select the respondents in this
study The sample design included the various departments in the YAMAHA
MOTORS PVT LTD
Methodology of date collection
bull Conducting personal interview
bull Data collection from primary and secondary sources
bull Designing questionnaire
bull Selecting sample size from the sample frame for the survey
bull Questionnaire distribution
bull Analysis of collected data with the help of statistical tools
bull Interpretation of collected data
bull Stating the conclusion based on the entire study
Sampling Technique
The sampling technique used for this research is of non-probability and convenience
sampling
Sample Unit
Employees of the company
Sample Size
For this research study the sample size is 25 respondents
Sources of data
Primary data
Primary data is the data which is collected by the researcher for the first time
and which was not there The tools used to collect the data are-
1)Questionnaire method from the employers in different departments
2) Face to Face personal interactions
Secondary Data
The data already collected is called as secondary data The relevant information
for this study has been collected from secondary source such as
Books
Journal
Reports
Publication by the organizational circulation
Company records
Business bulletins
Internet
Secondary data is also collected from various of the internet and intranet Some
of the website trough which information was gathered was through
HYPOTHESIS
The report is analyzed under the presumption that cash flow position of
YAMAHA MOTORS PVTLTD It can be improved and made effective in
terms of cash flows
In testing the above hypothesis the following aspects will be considered
1 Balance sheet comparisons
2 Presentation of cash flow statement in terms of revised AS-3
LIMITATIONS
The study though conducted to the best of the ability suffers from some
certain limitations There are
The data is secondary one and as such its reliability may be
questioned upon
The time availability for the study is less and as such it hinders thee
progress of the study
Senior officials were rarely approachable
Websites were not giving comprehensive data
Not having face-to-face interaction to get more relevant
information
Analysis and interpretation of data was done on the assumption that
the respondentsrsquo information was online
Information collected was totally subjective
The interviews are done during office hours but could not be done
for the other employees of other
DATA ANALYSIS
ESCORTS PVT LTD
CASH FLOW STRATEMENT
Year Ended Year Ended
30092009 30092008
Rs Crores Rs
Crores
A Cash Flow from Operating Activities
Net profit before tax (1733) 3444
Adjustment for
Loss on sale Provision for diminution in value of Long Term
Investments amp loans to Group Companies 189 4018
Gain on sale of Long Term Investments (122) (9492)
Gain on sale of Asset (013) -
Depreciation 4497 3955
Misc Exp Assets Write off Provisions 808 750
Interest Expense 7222 7999
Dividend Income (002) (001)
Interest Income (2082) -
Operating Profit before working capital changes 8764 10673
Adjustments for
Trade and other Receivables (8817) (12035)
Inventories 1379 (4692)
Trade Payables 6705 19046
Miscellaneous Expenditure (750) (511)
(1483) 1808
Cash Generated from Operations 7281 12481
Direct Taxes (Paid)Refunds (1785) 3166
Net Cash Flow from operating activities 5496 15647
B Cash Flow from Investing Activities
Purchase of Fixed Assets (3095) (2794)
Proceeds from sale of Fixed Assets 086 177
Movement in Loans and Advances (1627) (1644)
Sale of Investments 3233 11452
Short Term Deposits with schedule Banks (231) (1048)
Interest Received 2070 -
Dividend Received 002 001
Net Cash Flow from Investing activities 438 6144
Proceeds from Share Capital amp Securities Premium 11444 -
Proceeds from Long Term Borrowings 8660 -
Less Repayment of Long Term Borrowings (054) (7896)
Proceeds (Repayment) from short term borrowings (net) (22726) -
Interest Paid (7740) (8223)
Net Cash used in financing activities (10416) (16119)
Net Increase(Decrease) in Cash and Cash equivalents (4482) 5672
Cash and Cash equivalents as at 01102008 10565 4893
Cash and Cash equivalents as at 30092009 6083 1056
ANALYSIS OF CASH FLOW
From the cash flow statements of the ESCORT PVTLTDIt can be analyzed
from the two years that the net cash balance of the company has increased
manifold in 30-09-2008 than the year 30-09-2009
The net profit in 30-09-2008 is higher than the 30-09-2009 but due to certain
changes there has been increase in the cash balance
The interest paid this year is ore of the last year which implies that thee
company has not repaid his borrowed capital due to which the interest has got
down
The depreciation has increased but it does not affect cash to an extent as it is a
non-cash item In the head of working capital there is drastic change in the cash
balance in the form of ldquoTrade and other Receivables which has affected the cash
balance
There is outflow of cash for receivables rather than the inflow in the last year
So the net effect is that the cash from operating activities has been decreased
two times from the last year
The company has no accumulated losses as at the end of the financial year ie
September 31 2008
Provision for taxation has been made in accordance with the requirement of AS-
22 issued by Institute of Charted Accountants of India
Pursuant to that current year deferred tax liability have been charged to profit amp
loss account
In opinion of the board of directors of thee company the current assets loans
and advances have a value on realization in the ordinary course of the business at
least equal to the amount stated in the balance sheet and provision for all
liabilities have been made
Balance of sundry debtors creditors loans and advances are subject to confirmation by
the concerned parties
METHOD OF ANALYSIS
1 Data analysis is done using the following statistical tools wherever required in
order to extract meaningful information from the collected data
o Simple percentage and averages
o Bar diagram
o Cone diagram
o Pie diagram
2 The collected data from the questionnaire has been put together in the form of
tables
3 Percentage has been calculated wherever necessary for generalization of the
data
4 Data analysis and interpretation has been done on the basis of primary and
secondary data
5 The findings researches have been recorded based on the analysis
6 The study conducted pertains only to YAMAHA MOTORS INDIA PVTLTD
All bank balances (debitcredit) have been confirmed by the concerned bank
Identified from the available information which has been relied upon by the auditors
The names of small-scale industrial units to whom outstanding for more than
thirty days within agreed terms
The company has 9996 of shareholders in its subsidiary company named as
ESCORTS PVT LTD As at 31-03-2008
So the net effect is that the net cash from investing activities has many more
times than the last year which is negative Now the company has repaid its long
term borrowing more than the last year which has decreased the cash balance by
the little amount
Balance with the schedule banks under the head current amp collection account
amounting to represent funds in transit lying with schedule banks pending
transfer against loan liabilities under the head cash credit amp bill discounting
LIQUIDITY RATIO
1 CURRENT RATIO
(Amount in Rs)
Current Ratio
Year Current Assets Current Liabilities Ratio
2003 58574151 7903952 7412004 69765346 31884616 2192005 72021081 16065621 4482006 91328208 47117199 1942007 115642068 30266661 382
Interpretation
As a rule the current ratio with 21 (or) more is considered as satisfactory
position of the firm
When compared with 2006 there is an increase in the provision for tax because
the debtors are raised and for that the provision is created The current liabilities
majorly included Lanco Group of company for consultancy additional services
The sundry debtors have increased due to the increase to corporate taxes
In the year 2006 the cash and bank balance is reduced because that is used for
payment of dividends In the year 2007 the loans and advances include majorly
the advances to employees and deposits to government The loans and advances
reduced because the employees set off their claims The other current assets
include the interest attained from the deposits The deposits reduced due to the
declaration of dividends So the other current assets decreased
The huge increase in sundry debtors resulted an increase in the ratio which is
above the benchmark level of 21 which shows the comfortable position of the
firm
GRAPHICAL REPRESENTATION
741
219
448
194
382
000
100
200
300
400
500
600
700
800
Ratio
2003 2004 2005 2006 2007
Years
CURRENT RATIO
Ratio
2 QUICK RATIO
(Amount
in Rs)
Quick Ratio
Year Quick Assets Current Liabilities Ratio
2003 58574151 7903952 741
2004 52470336 31884616 165
2005 69883268 16065620 435
2006 89433596 47117199 19
2007 115431868 30266661 381
Interpretation
Quick assets are those assets which can be converted into cash with in a short
period of time say to six months So here the sundry debtors which are with the
long period does not include in the quick assets
Compare with 2006 the Quick ratio is increased because the sundry debtors are
increased due to the increase in the corporate tax and for that the provision
created is also increased So the ratio is also increased with the 2006
GRAPHICAL REPRESENTATION
741
165
435
190
381
000
100
200
300
400
500
600
700
800
Ratio
2003 2004 2005 2006 2007
Years
QUICK RATIO
Ratios
3 ABOSULTE LIQUIDITY RATIO
(Amount
in Rs)
Absolute Cash Ratio
Year Absolute Liquid Assets Current Liabilities Ratio
2003 31004027 7903952 392
2004 10859778 31884616 034
2005 39466542 16065620 246
2006 53850852 47117199 114
2007 35649070 30266661 118
Interpretation
The current assets which are ready in the form of cash are considered as absolute
liquid assets Here the cash and bank balance and the interest on fixed assts are
absolute liquid assets
In the year 2006 the cash and bank balance is decreased due to decrease in the
deposits and the current liabilities are also reduced because of the payment of
dividend That causes a slight increase in the current yearrsquos ratio
GRAPHICAL REPRESENTATION
392
034
246
114 118
0
05
1
15
2
25
3
35
4
Ratios
2003 2004 2005 2006 2007
Years
ABSOLUTE CASH RATIO
Ratios
LEVERAGE RATIOS
4 PROPRIETORY RATIO
(Amount
in Rs)
Proprietory Ratio
Year Share Holders Funds Total Assets Ratio
2003 67679219 78572171 086
2004 53301834 88438107 06
2005 70231061 89158391 079
2006 56473652 106385201 053
2007 97060013 129805102 075
Interpretation
The proprietary ratio establishes the relationship between shareholders funds to
total assets It determines the long-term solvency of the firm This ratio indicates
the extent to which the assets of the company can be lost without affecting the
interest of the company
There is no increase in the capital from the year2004 The share holderrsquos funds
include capital and reserves and surplus The reserves and surplus is increased
due to the increase in balance in profit and loss account which is caused by the
increase of income from services
Total assets includes fixed and current assets The fixed assets are reduced
because of the depreciation and there are no major increments in the fixed assets
The current assets are increased compared with the year 2006 Total assets are
also increased than precious year which resulted an increase in the ratio than old
GRAPHICAL REPRESENTATION
086
060
079
053
075
000
010
020
030
040
050
060
070
080
090
Ratios
2003 2004 2005 2006 2007
Years
PROPRIETORY RATIO
Ratios
ACTIVITY RATIOS
5 WORKING CAPITAL TURNOVER RATIO
(Amount
in Rs)
Working Capital Turnover Ratio
Year Income From Services Working Capital Ratio
2003 36309834 50670199 0722004 53899084 37880730 1422005 72728759 55355460 1312006 55550649 44211009 1262007 96654902 85375407 113
Interpretation
Income from services is greatly increased due to the extra invoice for Operations
amp Maintenance fee and the working capital is also increased greater due to the
increase in from services because the huge increase in current assets
The income from services is raised and the current assets are also raised together
resulted in the decrease of the ratio of 2007 compared with 2006
GRAPHICAL REPRESENTATION
072
142 131126
113
000
020
040
060
080
100
120
140
160
Ratio
2003 2004 2005 2006 2007
Years
WORKING CAPITAL TURNOVER RATIO
Ratio
6 FIXED ASSETS TURNOVER RATIO
(Amount in Rs)
Fixed Assets Turnover Ratio
Year Income From Services Net Fixed Assets Ratio
2003 36309834 28834317 126
2004 53899084 29568279 182
2005 72728759 17137310 424
2006 55550649 15056993 369
2007 96654902 14163034 682
Interpretation
Fixed assets are used in the business for producing the goods to be sold This
ratio shows the firmrsquos ability in generating sales from all financial resources
committed to total assets The ratio indicates the account of one rupee
investment in fixed assets
The income from services is greaterly increased in the current year due to the
increase in the Operations amp Maintenance fee due to the increase in extra invoice
and the net fixed assets are reduced because of the increased charge of
depreciation Finally that effected a huge increase in the ratio compared with the
previous yearrsquos ratio
GRAPHICAL REPRSENTATION
126182
424 369
682
000
100
200
300
400
500
600
700
Ratios
2003 2004 2005 2006 2007
Years
FIXED ASSETS TURNOVER RATIO
Ratios
7 CAPITAL TURNOVER RATIO
(Amount
in Rs)
Capital Turnover Ratio
Year Income From Services Capital Employed Ratio
2003 36309834 37175892 0982004 53899084 53301834 1012005 72728759 70231061 1042006 55550649 56473652 0982007 96654902 97060013 100
Interpretation
This is another ratio to judge the efficiency and effectiveness of the company
like profitability ratio
The income from services is greaterly increased compared with the previous year
and the total capital employed includes capital and reserves amp surplus Due to
huge increase in the net profit the capital employed is also increased along with
income from services Both are effected in the increment of the ratio of current
year
GRAPHICAL REPRESENTATION
098
101
104
098
100
094095096097098099100101102103104
Ratios
2003 2004 2005 2006 2007
Years
CAPITAL TURNOVER RATIO
Ratios
8 CURRENT ASSETS TO FIXED ASSETS RATIO
(Amount
in Rs)
Current Assets To Fixed Assets Ratio
Year Current Assets Fixed Assets Ratio
2003 58524151 19998020 2932004 69765346 18672761 3742005 72021081 17137310 4202006 91328208 15056993 6072007 115642068 14163034 817
Interpretation
Current assets are increased due to the increase in the sundry debtors and the net
fixed assets of the firm are decreased due to the charge of depreciation and there
is no major increment in the fixed assets
The increment in current assets and the decrease in fixed assets resulted an
increase in the ratio compared with the previous year
GRAPHICAL REPRESENTATION
293374
420
607
817
000
100
200
300
400
500
600
700
800
900
Ratios
2003 2004 2005 2006 2007
Years
CURRENT ASSETS TO FIXED ASSETS RATIO
Ratios
PROFITABILITY RATIOS
GENERAL PROFITABILITY RATIOS
9 NET PROFIT RATIO
(Amount in Rs)
Net Profit Ratio
Year Net Profit After Tax Income from Services Ratio
2003 21123474 36039834 059
2004 16125942 53899084 030
2005 16929227 72728759 023
2006 18259580 55550649 033
2007 40586359 96654902 042
Interpretation
The net profit ratio is the overall measure of the firmrsquos ability to turn each rupee
of income from services in net profit If the net margin is inadequate the firm
will fail to achieve return on shareholderrsquos funds High net profit ratio will help
the firm service in the fall of income from services rise in cost of production or
declining demand
The net profit is increased because the income from services is increased The
increment resulted a slight increase in 2007 ratio compared with the year 2006
GRAPHICAL REPRESENTATION
059
030
023
033
042
000
010
020
030
040
050
060
Ratios
2003 2004 2005 2006 2007
Years
NET PROFIT RATIO
Ratios
10 OPERATING PROFIT
(Amount in Rs)
Operating Profit
Year Operating Profit Income From Services Ratio
2003 36094877 36309834 099
2004 27576814 53899084 051
2005 29540599 72728759 041
2006 31586718 55550649 057
2007 67192677 96654902 070
Interpretation
The operating profit ratio is used to measure the relationship between net profits
and sales of a firm Depending on the concept it will decide
The operating profit ratio is increased compared with the last year The earnings
are increased due to the increase in the income from services because of
Operations amp Maintenance fee So the ratio is increased slightly compared with
the previous year
GRAPHICAL REPRESENTATION
099
051
041
057
070
000
010
020
030
040
050060
070
080
090
100
Ratios
2003 2004 2005 2006 2007
Years
OPERATING PROFIT RATIO
Ratios
11 RETURN ON TOTAL ASSETS RATIO
(Amount in Rs)
Return on Total Assets Ratio
Year Net Profit After Tax Total Assets Ratio
2003 21123474 78572171 027
2004 16125942 88438107 018
2005 16929227 89158391 019
2006 18259580 106385201 017
2007 40586359 129805102 031
Interpretation
This is the ratio between net profit and total assets The ratio indicates the return
on total assets in the form of profits
The net profit is increased in the current year because of the increment in the
income from services due to the increase in Operations amp Maintenance fee The
fixed assets are reduced due to the charge of depreciation and no major
increments in fixed assets but the current assets are increased because of sundry
debtors and that effects an increase in the ratio compared with the last year ie
2006
GRAPHICAL REPRESENTATION
027
018 019017
031
000
005
010
015
020
025
030
035
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON TOTAL ASSETS
Ratios
12 RESERVES amp SURPLUS TO CAPITAL RATIO
(Amount in Rs)
Reserves amp Surplus To Capital Ratio
Year Reserves amp Surplus Capital Ratio
2003 65599299 2079920 31542004 34582554 18719280 1852005 51511781 18719280 2752006 37754372 18719280 2022007 78340733 18719280 419
Interpretation
The ratio is used to reveal the policy pursued by the company a very high ratio
indicates a conservative dividend policy and vice-versa Higher the ratio better
will be the position
The reserves amp surplus is decreased in the year 2006 due to the payment of
dividends and in the year 2007 the profit is increased But the capital is
remaining constant from the year 2004 So the increase in the reserves amp surplus
caused a greater increase in the current yearrsquos ratio compared with the older
GRAPHICAL REPRESENTATION
3154
185 275 202419
-
500
1000
1500
2000
2500
3000
3500
Ratios
2003 2004 2005 2006 2007
Years
RESERVES amp SRUPLUS TO CAPITAL RATIO
Ratios
OVERALL PROFITABILITY RATIOS
13 EARNINGS PER SHARE
(Amount in Rs)
Earnings Per Share
Year Net Profit After Tax No of Equity Shares Ratio
2003 21123474 207992 101562004 16125942 1871928 8612005 16929227 1871928 9042006 18259580 1871928 9752007 40586359 1871928 2168
Interpretation
Earnings per share ratio are used to find out the return that the shareholderrsquos earn
from their shares After charging depreciation and after payment of tax the
remaining amount will be distributed by all the shareholders
Net profit after tax is increased due to the huge increase in the income from
services That is the amount which is available to the shareholders to take There
are 1871928 shares of Rs10- each The share capital is constant from the year
2004 Due to the huge increase in net profit the earnings per share is greaterly
increased in 2007
GRAPHICAL REPRESENTATION
10156
861904 975
2168
000
2000
4000
6000
8000
10000
12000
Ratios
2003 2004 2005 2006 2007
Years
EARNINGS PER SHARE
Ratios
14 PRICE EARNINGS (PE) RATIO
(Amount in Rs)
Price Earning (PE) Ratio
Year Market Price Per Share Earnings Per Share Ratio
2003 3254 10156 0322004 2847 861 3302005 3752 904 4152006 3017 975 3092007 5185 2168 239
Interpretation
The ratio is calculated to make an estimate of application in the value of share of
a company
The market price per share is increased due to the increase in the reserves
amp surplus The earnings per share are also increased greaterly compared
with the last year because of increase in the net profit So the ratio is
decreased compared with the previous year
GRAPHICAL REPRESENTATION
032
330
415
309
239
000
050
100
150
200
250
300
350
400
450
Ratios
2003 2004 2005 2006 2007
Years
PE RATIO
Ratios
15 RETURN ON INVESTMENT
(Amount in Rs)
Return on Investment
Year Net Profit After Tax Share Holders Fund Ratio
2003 21123474 67679219 031
2004 16125942 53301834 03
2005 16929227 70231061 024
2006 18259580 56473652 032
2007 40586359 97060013 042
Interpretation
This is the ratio between net profits and shareholders funds The ratio is
generally calculated as percentage multiplying with 100
The net profit is increased due to the increase in the income from services ant
the shareholders funds are increased because of reserve amp surplus So the ratio
is increased in the current year
GRAPHICAL REPRESENTATION
031 030
024
032
042
000
005
010
015
020
025
030
035
040
045
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON INVESTMENT RATIO
RatioS
DATA COLLECTION
The data can be of two types
Primary Data
Secondary Data
Primary Data
Primary data are those data which is originally collected afresh
Secondary Data
Secondary data are those data which are already collected and stored and which has
been passed through statistical research
In this project Secondary data has been collected from following sources-
Annual report
Books
MIS
Other material and report published by company There are two methods to prepare
the Cash flow Statement
ndirect Method
I
The indirect method (or reconciliation method) starts with net income and converts it
to net cash flow from operating activities In other words the indirect method adjusts
net income for items that affected reported net income but did not affect cash To
compute net cash flow from operating activities non-cash charges in the income
statement are added ack to net income and non-cash credits are deducted
b
Direct Method
Under the direct method the statement of cash flows reports net cash flow from
operating activities as major classes of operating cash receipts (eg cash collected from
customers and cash received from interest and dividends) and cash disbursements (eg
cash paid to suppliers for goods to employees for services to creditors for interest and
to government authorities for taxes)
INDIRECT VERSUS DIRECT METHOD
The most contentious decision that the FASB faced in issuing Statement No 95 was
choosing between the direct method and the indirect method of determining net cash
flow from operating activities Companies lobbied against the direct method urging
adoption of the indirect method Commercial lending officers expressed a strong
preference to the FASB hat the direct method be required
tCF-Page 3 of 5
In Favor of the Direct Method
The principal advantage of the direct method is that it shows operating cash receipts and
payments That is it is more consistent with the objective of a statement of cash flows to
provide information about cash receipts and cash payments than the in-direct method
which does not report operating cash receipts and payments
Supporters of the direct method contend that knowledge of the specific sources of
operating cash receipts and the purposes for which operating cash payments were made
in past periods is useful in estimating future operating cash flows Furthermore in-
formation about amounts of major classes of operating cash receipts and payments is
more useful than information only about their arithmetic sum (the net cash flow from
operating activities) Such information is more revealing of an enterprises ability (1) to
generate sufficient cash from operating activities to pay its debts (2) to reinvest in its
operations and (3) to make distributions to its owners
Many corporate providers of financial statements say that they do not currently collect
information in a manner that allows them to determine amounts such as cash received
from customers or cash paid to suppliers directly from their accounting systems But
supporters of the direct method contend that the incremental cost of assimilating such
operating cash receipts and payments data is not significant
In Favor of the Indirect Method
The principal advantage of the indirect method is that it focuses on the differences
between net income and net cash flow from operating activities That is it provides a
useful link between the statement of cash flows and the income statement and balance
sheet
Many providers of financial statements contend that it is less costly to adjust net income
to net cash flow from operating activities (indirect) than it is to report gross operating
cash receipts and payments (direct) Supporters of the indirect method also state that the
direct method which effectively reports income statement information on a cash rather
than an accrual basis may erroneously suggest that net cash flow from operating
activities is as good as or better than net income as a measure of performance
Special Rules Applying to Direct and Indirect Methods
Companies that use the direct method are required at a
minimum to report separately the following classes of
operating cash receipts and payments
Receipts
1048713 Cash collected from customers (including lessees licensees etc)
1048713 Interest and dividends received
1048713 Other operating cash receipts if any
Payments
1048713 Cash paid to employees and suppliers of goods or services (including
suppliers of
insurance advertising etc)
1048713 Interest paid
1048713 Income taxes paid
1048713 Other operating cash payments if any
Companies using the indirect method are required to disclose separately changes in
inventory receivables and payables to reconcile net income to net cash flow from
operating activities In addition interest paid (net of amount capitalized) and income
taxes paid must be disclosed elsewhere in the financial statements or accompanying
notes
The FASB requires these separate and additional disclosures so that users
may approximate the direct method Also an acceptable alternative presentation
of the in-direct method is to report net cash flow from operating activities as a
single line item in the statement of cash flows and to present the reconciliation
details elsewhere in the financial statements
FINDING OF SUDY
According to cash flow statement of the company The finding of the study are as
follows-
The company has not taken any loans secured or unsecured from companies
firms or other parties
The company has not accepted any deposit from the public during the year
The company is not a sick industrial company
The company has not granted any loan secured or unsecured to company firms
or other parties
The company has paid the entire long term and short term borrowing during the
year
The company has buy back the companyrsquos own share this year
The interest paid in 2008 is more than the
There has been a significant decline in volume over the years from 2001-02
to 2005-06 as can be seen in the graph below
Table 43
The Net sales of Tractor has increased considerably from 2004-05 to 2007-08
This can be mainly attributed to changes in Variable and material costs and in
the price
The Net sale of Tractor has increased considerably from 2004-05 to 2007-08
that is an decrease of Rs7216 per tractor This can be mainly attributed to
changes in
Variable and material costs and in the prices
RECOMMENDATIONS
According to cash flow statement of the company The suggestions of the study
are as follows-
The time durations for training program have to increase
Buy regular review and consultations develop a career progression
which is sensitive to performance and ability
Create an environment where by people are trend developed to enable
The to take advantages of opportunities that arise
The jab can be redesigned where the work man stay in what is normally
the same job but has elements of it changed
The principle amount must be paid in time which can be reducing the
interest the out flow
The purchase of the fixed asset must be made only when there is extreme
requirement
In order to avoid taxes the company should go for more investment
The companyrsquos borrowings should go for more investment
o The company should try to reduce the depreciations as maximum
as possible
CONCLUSION
The study on competency level of employees at ESCORTS PVTLTD gave an
insight about the acceptance of competency mapping by employees
The employees at Ymi welcome the introduction of competency mapping in their
organization as they felt it was very much essential in enhancing their skills and
organizational development
The organization has provided the recourses guidance and support to facilitate the
introduction of competency level easily and develop the employees in such a way
that they can face any kind of challenge
However the level of competency in employees is found to be satisfactory
Providing proper training education and guidance to the employees can enhance
the level
This study was mainly carried out to find out whether thee competency mapping
being followed by the company is effective till date If the competency mapping
and fitment to the organization
By looking at the graphs and tables it is quite that the employees still are not up to
the level of competent pool they still have to be trained and made competent in
order to fill the gap As the organization has just applied the mapping it has to see
to that it meets all the requirements for competency mapping
Therefore the graphs make it quite clear that the potential of the employees is not
up to the mark and ie they are not competent enough to meet the competency-
mapping requirement Hence by further training and counseling this gap can be
closed
This report includes the training requirements of employees and it highlights skills
possessed by each employee and skill required All employees get training so that
skill can be improved and maintain balance between standard performance with
their actual performance to avoid gap
APPENDIX
QUESTIONNAIRE
Consumer Survey
Name _____________________________
Age _____________________________
Sex
Male
Female
Occupation
Businessman
Service man
Professional
Others
Monthly income brackets
Below 15000
15000- 20000
20000-30000
30000 and above
of your savings _________
Do you invest
Yes
No
If yes then where do you invest your money
Bank
Insurance
funds
Others
Why do you made that statement
Return
Risk hedging
Tax benefits
Other reasons (specify) _______
Who influence your cash decision
Relatives and friends
Family members
Advisors experts
You yourself
If no then why
Do not know where to invest
Satisfied with your current investment return
Donrsquot want take risk
Other reasons
__________________________________________________________________
___________________
Do you know about CF statement
Yes
No
If yes then from where you have come to know about an cash statement
Advertisements on newspapers
Friends and relative
Agents experts
Other source
What do you think about cash statement
It means investing only in share market
Constant watch must be kept always
Return is not satisfactory
Other perception
__________________________________________________
Can you recall any cash flow of company
___________________________
Would you want to made CF of an org
Yes
No
If yes then why
_______________________________________________________
If no then why
_______________________________________________________
BIBLIOGRAPHY
List of Books
1 PANDEY IM - FINANCIAL MANAGEMANT
2 KHAN MY AND JAIN PK -FINANCIAL MANAGEMANT
3 SMITH KV ndash MANAGEMANT OF WORKING CAPITAL
3 COMPANY RECORDS
4 JOURNAL
5 REPORTS
WEBLIOGRAPHY
1 wwwescortspvtltdcom
2 wwwgooglecom
MISSION
WE WILL ACHIEVE LEADERSHIP IN MARKET SHARE amp PROFITABILITY IN
THE DOMESTIC TRACTOR MARKET BY THE YEAR 2004-2006 AND SHALL BE
THE WORLSrsquoS LARGEST SUPPLIER OF SUB 100 HP TRACTORS WE SHALL
PROACTIVELY CONTRIBUTE TO THE PROSPERITY OF THE RURAL
ECONOMY BY DEFINING A LARGER ROLE FOR OURSELVES IN THE FOOD
AND AGRICULTURE SECTOR
THE VISION
WE SHALL STRIVE TO BE THE NUMERO UNO IN THE INDIAN TRACTOR
INDUSTRY AND TOP FIVE TRACTOR MANUFACTURERS IN THE WORLD
WE SHALL CONTINUOUSLY STRIVE TO MEET THE EVER RISING
EXPECTATIONS OF OUR VALUED CUSTOMERS AT THE LOWEST
INTERNAL COST
WE SHALL AIM TO OFFER THE FARMING COMMUNITY A RANGE OF
INNOVATIVE PRODUCTS AND SERVICES WHICH SHALL ENABLE THEM
TO IMPROVE THEIR PRODUCTIVITY AND COMPETITIVNESS
WE SHALL ACHIEVE A TURNOVER OF RS 2 BILLION BY THE YEAR
2006TRANSCENDING NATIONAL BOUNDARIES WE SHALL STRIVE TO
ATTAIN EXPORTS OF ONE TENTH OF OUR TOTAL TRACTOR PRODUCTION
BY THE YEAR 2
REVIEW OF LITERATURE
INTRODUCTION
MEANING OF FINANCIAL STATEMENTS
The financial statements are nothing but the financial information presented in concise and
capsule form and are the financial information is the information relating to the financial
position of any firm The firm prepares the financial statements
bull To communicate with different parties about the financial position of the firm
(Shareholders creditors banks financial institution financial analysts investors
etc And
bull To analyze the operations and performance of the firm for the further
planning
The basic source which provides the financial information is the Annual report of the
company which is presented by the company to its shareholders at the Annual General
Meeting
Though the presentation of annual report is a statutory requirement under the
Companies Act 1956 however it is also a medium of communication with the present as well
as prospective investors and creditors of the company
Clause 43 A of the Listing Agreement (with the stock exchange) requires every
listed company to publish unaudited quarterly results But it does not mean the non-corporate
firms do not prepare the financial statements Every firm big or small prepare the following
financial statements
The Balance Sheet (BS)
1 The Income Statement (IS)
Two other key financial statements which are usually prepared by corporate firms are
1 Statement of appropriation of profit and
2 Statement of Change in financial position
ANALYSIS OF FINANCIAL STATEMENTS (AFS)
Analysis of financial statements refers to the process of the critical examination of the
financial information contained in the financial statements in order to understand and
make decisions regarding the operations of the firm The AFS is basically a study of the
relationship among various financial fact and figures as given in a set of financial
statements AFS is the process of establishment and identifying the financial weakness
and strength of the firm It is indicative of two aspects of a firm ie the profitability
and the financial position
OBJECTIVES OF AFS
The objectives of the AFS is to understand the information contained in financial
statements with a view to know the weakness and strength of the firm and to make a
forecast about the future prospects of the firm and thereby enabling the financial
analyst to take different decisions regarding the operation of the firm The objectives
are as follows
bull To assess the present profitability and operating efficiency of the fir
COMMON-SIZE STATEMENTS (CSS)
The CSS represents the relationship of different items of financial statements with some
Common items by expressing each item as a percentage of the common item In common size
Balance Sheet each item of the balance sheet is stated as a percentage of the total balance
sheet The percentages for different items are computed by dividing the absolute amount of
that item by the Common Base and then multiply by 100 The percentage so calculated can
be easily compared with the corresponding percentage in some other period Thus the CSS is
useful not only in intra-firm comparison for the same year or free several years
TREND PERCENTAGE ANALYSYS(TPA)
The TPA is a technique of studying several financial statements over a series of years In
TPA the trend percentages are calculated for each item by taking the figure of that item for
some base year as 100 So the trend percentage is the percentage relationship which
Each item of different years bears to the same item in the base year Any year may be Taken
as the base year but generally the starting initial year is taken as the base year So each
item for base year is taken as 100 and then the same item for other years is Expressed as a
percentage of the base year
RATIO ANALYSIS (RA)
The RA has emerged as the principle technique of the AFS A ratio is a relationship
Expressed in mathematical terms between two individual or groups of figures connected with
other in some logical manner The RA is based in the premise that a single accounting figure
by itself may not communicate any meaningful information but when expressed as a relative
to some other figure it may definitely give some significant information The relationship
between two or more accounting figuresgroups is called a Financial Ratio
A financial ratio helps to summarize a large mass of financial data into a concise form
and to make meaningful interpretations and conclusions about the performance of a firm
For example a firm has net sales Rs 5 00000
Gross Profit Rs 100000
Ratio of Gross Profit to net sales is 20
ie (Rsl 00000 Rs5 00000)
Forms of Ratios
Since a ratio is a mathematical relationship between two or more variables accounting
figures such relationship can be expressed in different ways as follows
bull As a Pure Ratio
bull As a Rate of Times
bull As a Percentage
Ratio can be classified into
bull The Liquidity Ratio
bull The Activity Ratio
bull The Leverage Ratio
bull The Profitability Ratio
STATEMENT OF CHANGES IN FINANCIAL POSITION
(SCFP)
Since the BS amp IS of a firm are two basic depicting the financial position of a firm at the end
of the year These two financial statements are called the traditional statements Both these
statements fail to throw light on changes in assets liabilities and shareholders wealth during
this year
BS deals with the financial position gives only the static view of the year- end financial
position and fails to indicate the movement and causes in assets and liabilities during the
year Similarly IS show the profit or loss resulting out of the operations of the firm during
the year This profit or loss in fact to ascertain the sufficiency of resources to declare the
dividend etc thus there is a need to prepare another statement (together with the BS amp IS)
which may identify the changes in assets liabilities and the shareholders funds over a given
period
The SCFP is essentially an explanation of the changes in financial position of a Firm
occasioned by the firm in between two successive BSs The SCFP draws basic Information
from the BS and IS helps in understanding the change in assets liabilities and shareholders
worth The SCFP deals with the flow of funds during the year ie the funds coming in and
going out of the firm It summarizes the sources from where the funds might have been
arranged procured by the firm and the uses for which the funs might have been used by
the firm during the year
The SCFP can be prepared as follows
bull SCFP (Cash Basis) also known as a Cash F low Statement
bull SCFP (Net Working Capital Basis) Fund Flow Statement
SCFP (WORKING CAPITAL BASIS)
FUND FLOW STATEMENT
The FFS reports the flows of funds through the firm during the year ie it shows the
Sources and uses of working capital between two balance sheet dates The FFS
attempts to explain the changes in financial position from one BS to the subsequent BS
in terms of the change in the funds or the working capital position of the firm
The term Working capital (WC) is generally defined as the excess of total
current assets over the total current liabilities The current Assets (CA) of a firm may
include cash in hand and at bank stock debtors bills advances etc and the Current
Liabilities (CL) includes creditors bills payable outstanding expenses provision for
tax short term liabilities etc the term WC is a single figure representing the net effect
of a transaction is to increase or decrease the Working Capital by affecting any of the
elements of Current Assets or Current Liabilities Therefore the FFS in its standard
form incorporates only those transactions which affect the Working Capital i e those
transactions where in only one of the affected accounted is a current account
Now a flow of working capital arises when one of the affected accounts is a current
account From the point of view of current account the effected on working capital
can examined in the light of the definitions of the term working capital ie the excess
of current assets over current liabilities ie
Impliedly change in any of the CA or CL will affect the WC Simple observation
equation tells that
bull Increase in any of the CA or decrease in any of the CLs will result in increase
in the WC
bull Decrease in any of the CA or increase in any of the CLs will result in decrease
in the WC
To find out the relative importance of different components of the financial position
of the firm
bull To identify the reasons for change in the profitability financial position of the
firm and
bull To assess the short term as well as the long term liquidity position of the
firm
TECHNIQUES TOOLS OF THE AFS
AFS can be undertaken by different persons and for different purposes therefore the
methodology adopted for the AFS may be carrying from one situation to another However
the following are some of the common techniques of the AFS
bull Comparative financial statements
bull Common-size financial statements
bull Trend percentage analysis and
bull Ratio Analysis
COMPARATIVE FINANCIAL STATEMENTS
In CFS two or more BS andor the IS of a firm are presented simultaneously in columnar
form The Financial data for two or more tears are placed and presented in adjacent columns
and thereby the financial data is provided at times perspective in order to facilitate periodic
comparison In CFS the BS and the IS for number of years are presented in condensed
form for year to year comparison and to exhibit the magnitude and direction of changes
The CFS helps a financial analyst of the firm and in establishing operating and
positional trend of the firm The CFS may be prepared to show
1 The absolute amount of different items in monetary terms
2 The amount of periodic changes in monetary terms
1 The percentages of periodic changes to reveal the proportionate changes
The CFS can be prepared for both the BS and the IS
CORE COMPETENCE OF ESCORTS
Customer 1
We put customers first in everything we do We take decisions keeping the customer in
mind
Challenging Spirit
We strive for excellence in everything we do and in the quality of goods amp services we
provide We work hard to achieve what we commit amp achieve results faster than our
competitors and we never give up
Team-work
We work cohesively with our colleagues as a multi-cultural team built on trust respect
understanding amp mutual co-operation Everyones contribution is equally important for
our success
Frank amp Fair Organization
We are honest sincere open minded fair amp transparent in our dealings We actively
listen to others and participate in healthy amp frank discussions to achieve the
organizations
A firm undertakes numerous during a year and most of these transactions during a year and
most of these transactions may affect one or the other current account ie most of these
transactions May results in the flow of the WC Neither is it necessary nor practical to
identify the effect of each and every transaction on the WC These transactions instead are
considered and analyzed in a collective form and then their effect on the WC is identified
SCFP (CASH BASIS) OR
THE CASH FLOW STATEMENT
The CFS attempts to analyze the transactions of the firm in terms of cash ie the transactions
generating cash and using cash The focus in the CFS is on cash rather than on WC The
sources of cash may be the cash profits earned by the firm issue of capital for cash issue of
other securities for cash borrowings sale of assets investment redemption of debenture or
preference share repayment of loan payment of tax dividend distribution etc Thus the
CFS summarizes the cash inflows and outflows
An analysis of cash flows is useful for short-run planning A firm needs sufficient cash to
debts maturing in the near future to pay interest and other expenses and to pay dividends to
shareholders The firm can make projections of cash flows and outflows for the near future to
determine the availability of cash This cash balance can be matched with the firms need for
cash during the period and accordingly arrangements can be made the deficit or invest the
surplus cash temporarily A historical analysis of cash flows provides insight to prepare
reliable cash flow projections for the immediate future
A statement of changes in financial position on cash basis commonly known as cash flow
statement summarizes the causes of changes in cash position between dates of two balance
sheets It indicates the sources amp uses of cash The cash flow statement is similar to the fund
flow statement except that it focuses attentions on cash instead of working capital (funds)
Thus this statement analyses change in non-current accounts as well as current accounts
(other than cash) to determine the flow of cash
The CFS is based on the concept on the WC Where as the CFS is based in cash which is only
the element of WC Thus the CFS provides details of cash movements whereas the FFS
provides the details of funds movements
The CFS considers only the actual movement of cash whereas the FFS considers the
movements of the funds as defined in terms of net working capital
CASH-FLOW STATEMENT
A cash-flow statement is a statement showing inflows (receipts) and outflows (payments) of
cash during a particular period In other words it is a summary of sources and applications of
Cash during a particular span of time It analyses the reason for changes in balance of cash
between the two balance sheet dates The term Cash here stands for cash and cash
equivalents
A cash-flow statement includes only those items which affect cash As such the cash-flow
statement is called a statement of changes in financial position - cash basis
A cash - flow statement can be for the past or can be projected for a future period
OBJECTS OR USES OF CASH-FLOW STATEMENT
The main objectives behind preparing a cash-flow statement can be laid down as under-
bull USEFUL FOR SHORT-TERM FINANCIAL PLANNING-
A cash-flow statement provides information for planning the short-term financial needs of the
firm Since it provides information regarding the sources and utilization of cash during a period
it become easier for the management to assess whether it will have Adequate cash to meet day-
to-day expenses and pay the long - term loans and interest Thereon and whether it has enough
cash to pay for the purchase of fixed assets or not
USEFUL FOR PREARING THE CASH BUDGET-
A cash-flow statement prepared for the future period is helpful in preparing a cash budget It
informs the management about the future period is helpful in preparing a cash budget It informs
the management about the surplus or deficit periods of cash ie in which months the payments
will be in excess of receipts It helps in planning the investment of surplus cash in short-term
investment and to plan short-term credit in advance of deficit periods
bull COMPARISON WITH CASH BUDGET-
A cash budget is prepared at the commencement of the year whereas a cash flow Statement is
prepared at the end of the year A comparison between the two helps in ascertaining the extent
to which the financial resources of the firm have been generated and used according to the plan
Causes of variances between the figures of two statements can be analyzed and proper
corrective measures may be takes
bull STUDY OF THE TREND OF CASH RECEIPTS AND PAYMENTS-
A cash-flow statement reveals the speed at which the cash is being generated from debtors stock
and other current assets the speed at which the current liabilities are being paid It enables the
management to assess the true position of the cash in future
bull IT EXPLAINS THE DEVIATIONS OF CASH FROM EARNINGS-
A firm may earn huge profits yet it may have paucity of cash or when it suffered a loss it may
still have plenty of cash A cash flow statement explains the reasons for it
HELPFUL IN ASCERTAINING CASH-FLOW FROM VARIOUS
ACTIBITIES SEPARATELY-
A cash-flow statement aims at highlighting the cash flow from operating investing and
financing activities separately It includes how much cash has been generated or used in these
activities
bull HELPFUL IN MAKING DIVIDEND DECISIONS-
Dividend must be paid within 42 days of its declaration Hence the management takes the help of
cash-flow statement to ascertain the position of cash generated from operating activities which
can be used for payment of dividend
IMPORTANCE AND RELEVANCE OF CFS
The CFS has gained importance in view of the fact that there are many managerial Decisions
which are taken in the light of the cash availability or cash position of the firm
For example declaration of dividend by the company requires cash disbursement and
Therefore the Board of Directors must consider the cash position before proposing a dividend
The CFS also provides information for the short term financial planning and in particular the
short term cash needs of the firm
In view of increasing importance and relevance of the CFS the clause 32 of the Listing
agreement (between a Company and the Stock Exchange where the shares proposed to be listed)
has been amended by the SEBI As a result the listed companies in India are now required to
supply a copy of the CFS to each shareholder as a part of Annual Report As a result the listed
companies have started a practice of sending a CFS for which the BS has been prepared as
apart of the Annual Report of the company
DIFFRENCE BETWEEN CASH - FLOW STATEMENT AND
CASH BUDGET
There is not much difference between cash flow statement and a cash budget The
only difference is that a cash flow statement is prepared for a past period where as cash
budget is prepared for a future period Hence it is of limited use as far as the future
periods are concerned A cash budget is therefore prepared showing how much cash is
likely to be received and what will be the disbursements during a future period of time
Thus a cash budget indicates in which months there will be surplus cash and in which
moths there will be deficiency of cash resources The management can then take suitable
decision to invest the surplus cash or make arrangement for the deficiency of cash at the
required time
LIQUIDITY
It does not present true picture of the liquidity of the firm the liquidity does
not depend upon cash alone Liquidity also depends upon those assets
which can be converted into cash easily
bull Exclusion of these assets obstructs the true reporting of the ability of the firm to
meet its liabilities when they become due for payment
bull The possibilities of window - dressing is higher in case of cash position in
comparison to the working capital position of the firm
bull The cash balance can be easily maneuvered by postponing purchases and other
payments and by rapidly collecting cash from debtors before the balance sheet date
Hence a fund - flow statement presents a more realistic picture than a cash flow
statement
bull Cash flow statement ignores non- cash charges Hence the true position of the
enterprise cannot be judged by cash flow statement
bull It is prepared on cash basis and hence ignores one of the basic concept of accounting
namely accrual concept
PROCEDURE OF PREPARING CASH FLOW STATEMENT-
The institute of charted accountants of India has issued accounting standards (as)-3 revised for
preparing a cash flow statement This accounting standard has been made mandatory in respect
of accounting periods commencing on or after 1st April 2001 for certain enterprises These
enterprises are-
bull Enterprises whose equity or debt securities are listed on a recognized stock exchange in
India And enterprise that are in the process of issuing equity or debt securities that will
be listed on a recognized stock exchange in India
bull All other commercial industrial and business enterprises whose turnover for accounting
period Rs 50 crores
As such the cash flow statement has been prepared according to as -3 revised in this project
According to as-3 revised the cash flow statement summarizes the cash inflows and cash
outflows and the net changes (increase or decrease) in cash and cash equipment resulting from
operating investing and financing activities of a firm during a period The following terms are
used for preparing a cash flow statement
CASH-
It compares cash in hand and demands with banks
CASH EQUIVALENTS-
There are short - term highly liquid investments that are readily into known amounts of cash
and which present insignificant risk of changes in their values Normally an investment will be
termed as cash equivalent only if it has a short maturity period say three months or less from the
date of its acquisition Examples of cash equivalent are treasury bills commercial papers etc
Which are purchased with cash that is in excess of immediate needs investment in shares are
excluded from cash equivalents unless they are cash equivalent in reality For example the
preference shares of the company which are purchased shortly before their redemption date will
be included in cash equivalents provided there is only an insignificant risk of failure of the
company in repaying the amount at the date of the maturity
CLASSIFICATION OF CASH FLOW-
According to as -3 (revised) cash flow statement should be presented in a manner that it reports
inflows of cash by classifying them into three categories namely operating investing and
financing activities Classification of all activities into these activities on the cash and cash
equivalents of the enterprise such information will be helpful in evaluating the relationships
among these three activities are explained as below
CASH FLOW FROM OPERATING ACTIVITIES-
Operating activities are the main revenue generating activities of an enterprise As such they
include cash flows from those transactions and events which enter into the ascertainment of
net profit or loss of the enterprise Examples of cash flows arising operating activities are
bull Cash receipts from the sale of goods and rendering of services
bull Cash receipts from royalties fees commissions and other revenue
bull Cash payments to suppliers for goods and services
bull Cash payments to and on behalf of employees
bull Cash receipts and cash payments of an insurance enterprise for premiums and claims
annuities and other policy benefits
bull Cash receipts and payments relating to future contracts forward contracts option
contracts and swap contracts when the contracts are held for dealing or trade purpose and
bull Cash payments of refunds of income taxes unless they can be specifically identified with
financing and investing activities
CASH FLOW FROM INVESTING ACTIVITIES-
Investing activities include the purchase and sale of long term assets such as land building plant
and machinery etc not held for resale These activities also include the purchase and sale of such
investment which are not including in cash equipments Cash flow from investing activities
discloses the expenditures incurred for resources intended to generate future income and cash
flows
Examples cash flow arising from investing activities are
bull Cash payments to acquire fixed assets (including intangible)
bull Cash receipts from sale of fixed assets (including intangibles)
bull Cash payments to acquire shares warrants or debt instruments of other enterprises
(other than receipts for those instruments considered to be cash equivalents)
bull Cash receipts from sale of shares warrants or debt instruments of other enterprises (other
than receipts for those instruments considered to be cash equivalents)
bull Cash advances and loans made to third parties In case of financial enterprises these will
be treated as cash flow from operating activities
bull Cash receipts from the repayment of advances and loans made to third parties In case of
financial enterprises these will be treated as cash flow from operating activities
bull Cash receipts of insurance claim for property involved in accident and
bull Cash receipts of interest and dividend In case of financial enterprise these will be treated
cash flow from operating activities
CASH FLOW FROM FIANCING ACTIVITIES-
Financing activities are the activities that result in change in capital and borrowing of the
enterprise
Examples of cash flows arising from financing activities are
bull Cash receipts from issuing shares or other similar instruments
bull Cash receipts from issuing debentures loans bonds and other short term or long term
borrowing
bull Cash repayment of amounts borrowed buy back of equity shares redemption of
preference shares debentures loans bonds etc
bull Cash payment of interest and dividend
IMPORTANT NOTE
In case of financial enterprise such as bank or mutual fund company cash Outflow
and cash inflow arising from the purchase and sale of securities will Be treated as
flows from operating activities This is because purchase and sale of securities is a
part of operating activity in case of financial enterprise In addition interest paid
and interest received as well as dividends received will also be treated as cash flow
from operating activities in case of financial Enterprises
CASH FLOW STATEMENT
(DIRECT METHOD)
CASH FLOW FROM OPERATING ACTIVITIES
Cash receipts from costumers
Cash paid to suppliers and employers ()
Cash generated from operations
Income tax paid ()
Cash flows from extraordinary item
plusmn Extra ordinary items
Net cash from operating activities
CASH FLOW FROM INVESTING ACTIVITIES-
Purchase of fixed assets
Proceed from sale equipment ()
Interest received
Dividend received ()
Net cash from investing activities
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from insurance of share capital
Proceeds from long- term borrowings ()
Repayment of from long-term borrowings
Interest paid
Dividend paid ()
Net cash from financing activities
Net increase in cash and cash equivalent
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
SOME SPECIAL TERMS-
i) INTERSET AND DIVIDEND-
Cash inflow from interest and dividends and cash outflow on account of interest and
dividends should be disclosed separately Cash inflow arising from interest and dividends
received should be shown as cash flow from investing activities where as cash outflow
disclosed outflow on account of interest and dividend paid should be shown as cash flow
from financing activity
ii) TAXES ON INCOME-
Tax paid on income is a part of cash flow from operating activity Hence taxes paid are
shown as a deduction under cash flow from operating activity
iii) EXTRA ORDINARY ITEMS-
Cash flow relating to extra ordinary items such as bad debts recovered Claims received from
insurance companies winning of a lottery or a law etc Should be disclosed separately as
arising from operating investing or financing activities For example the amount received
for insurance company on account of loss of stock by fire Earthquake and floods etc Should
be reported as cash flow from operating activities
iv) SIGNIFICANT NON - CASH TRANSACTION-
There are some investing and financing activities which do not require the use of cash or
cash equivalents Such non cash activities should be excluded from the cash flow statement
Examples are the acquisition of assets by issue of debentures or shares conversion of
shares into debentures etc Such significant on non cash transaction should be disclosed
outside the cash flow statement
CASH FLOW STATEMENT
(INDIRECT METHOD)
CASH FLOW FROM OPERARATTNG ACTIVITIES
Net profit before taxation and extraordinary item
Adjustment for
Depreciation
Foreign exchange loss
Interest income
Dividend income
Interest expense
Operating profit before working capital changes
Increase in sundry debtors
Decrease in inventories
Decrease in sundry creditors
Cash generated from operations
Income tax paid ()
Cash flow before extraordinary item
plusmn Extra - ordinary items
Net cash from operating activities
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of fixed assets ()
Proceeds from sale of equipment
Interest received
Dividend received ()
Net cash from investing activities
CASH FLOW FROM FINANCING ACTIVITIES-
Proceeds from insurance of share capital
Proceeds from long - term borrowings
Repayments of from long - term borrowings ()
Interest paid ()
Dividend paid ()
Net cash from financing activities
Net increase in cash and cash equivalent
Cash and cash equivalents at beginning of period
CHANGES IN CASH FLOWS
Changes in cash flows can be treated to the following
1 Net profit will increase the cash flows these cash flows will be
increased further if there are any non-cash changes (such as depreciation
and amortization)
2 Any payment of dividends will decrease the cash flows as will the
repayment of debt an issue of share or debt will also increase the
cash flows
3 An increase in non-cash assets will decrease cash flows increase in
current assets and fixed assets will result in drain on cash flows
Thus a statement of changes in cash flows ie the cash flow statement
classifies all Changes into one of three categories - operating investing or
financing activities Therefore the preparation of a statement of changes in cash
flows requires classification of changes in liabilities shareholders equity and
non-cash assets into one of these categories although some items will not fit
easily onto one other
h equivalent at end of period
STEP- BY-STEP PROCEDURE TO PREPARE CFS
1 Calculate the net increase or decrease in cash and cash equivalents-
For this purpose the opening balance of total cash and cash equivalents is compared with the
closing balance of cash and equivalents
Increasedecrease in cash and equivalents
Opening balance Closing Balance
Cash in hand
Cash in bank
Short-term Investment
Total
The difference between the total of opening and closing balance will be increased or
Decreased in cash equivalents during the period It may be noted that if there are only one or
two of items of cash etc
2 Net Cash flaw from operating activities-
The term operating refers to the normal purchase of goods and services On the basis of the
information contained in the comparative BS s and the IS and the additional Information the
net cash flow generated or use by the operating activities may be ascertained The IS prepared
by the firm gives the net profit figure earned by the firm On actual basis ie all items in the
IS are incorporated on the basis of earnedaccrued even
3 If not resulting in cash movements-
So the profit or loss as by the IS may not result in increase or decrease in cash balance by the
SYNOPSIS
INTRODUCTION
ESCORTS PVT LTD is a private limited company not listed in a stock exchange of India
and employees 900 highly trained personnel Its manufacturing plants are strategically located
in close proximity to its customers at Faridabad (Haryana) Noida (UP)
OBJECTIVES OF THE STUDY
bull To find the movement of cash inflow and cash outflow
bull To make the comparison between cash inflow and
bull Cash outflow
bull To prepare the Cash Flow Statement
bull To analyze the Balance Sheet of the company in terms of Cash Flow Statement
bull To focus on various activities of the organization in terms of Operating
Financing Investment
SCOPE OF THE STUDY
Financial resources are the assets for the company and their productivity is key
factor for profitability It is necessary to know their problems their knowledge
skills abilities amp the measures that can be taken to reduce them By analyzing this
top management can build good relations with the employees
The whole study is to determine the competencies of different employees who are
working in ESCORTS PVT LTD By analyzing it the top management can
introduce the concept of competency mapping in the organization Through this
management can attempt to use more suitable strategies towards the human
resource development
The research is confined to elicit the existing gap between the standard skill
required to perform the job and the skill processed by the employees at ESCORTS
PVT LTD And to provide them suitable training program to over come those gaps
for the better utilization of human resources
RELEVANCE
The scope of the study was confined to the outside parties like creditors
shareholders government etc Who want to invest their money in the
company
The benefit of the report for the company is that through this report they can come
to know about the cash flow statements of the company
This study also unable the company that their cash is not utilizing in unnecessary
things
The benefit of the report for the researcher is that it has helped to get knowledge
about the cash inflow and cash
RESERRCH METHODOLOGY-
RESEARCH DESIGN
bull The study was conducted under well- structured approach
bull The project lasted for 4 weeks and the year 2009 ie from 08 July to 12
Aug2009
bull The questionnaire method amp personal interview method was used to collect
the primary data for the study
The secondary data is collected from Internet amp company training material and
many other company materials
SAMPLE DESIGN
The process of extracting a sample from a population is called sampling
procedure The selection of sampling procedure to conduct the research
depends upon the nature of the study and the objective to be accomplished
Judgment sampling technique is adopted to select the respondents in this
study The sample design included the various departments in the YAMAHA
MOTORS PVT LTD
Methodology of date collection
bull Conducting personal interview
bull Data collection from primary and secondary sources
bull Designing questionnaire
bull Selecting sample size from the sample frame for the survey
bull Questionnaire distribution
bull Analysis of collected data with the help of statistical tools
bull Interpretation of collected data
bull Stating the conclusion based on the entire study
Sampling Technique
The sampling technique used for this research is of non-probability and convenience
sampling
Sample Unit
Employees of the company
Sample Size
For this research study the sample size is 25 respondents
Sources of data
Primary data
Primary data is the data which is collected by the researcher for the first time
and which was not there The tools used to collect the data are-
1)Questionnaire method from the employers in different departments
2) Face to Face personal interactions
Secondary Data
The data already collected is called as secondary data The relevant information
for this study has been collected from secondary source such as
Books
Journal
Reports
Publication by the organizational circulation
Company records
Business bulletins
Internet
Secondary data is also collected from various of the internet and intranet Some
of the website trough which information was gathered was through
HYPOTHESIS
The report is analyzed under the presumption that cash flow position of
YAMAHA MOTORS PVTLTD It can be improved and made effective in
terms of cash flows
In testing the above hypothesis the following aspects will be considered
1 Balance sheet comparisons
2 Presentation of cash flow statement in terms of revised AS-3
LIMITATIONS
The study though conducted to the best of the ability suffers from some
certain limitations There are
The data is secondary one and as such its reliability may be
questioned upon
The time availability for the study is less and as such it hinders thee
progress of the study
Senior officials were rarely approachable
Websites were not giving comprehensive data
Not having face-to-face interaction to get more relevant
information
Analysis and interpretation of data was done on the assumption that
the respondentsrsquo information was online
Information collected was totally subjective
The interviews are done during office hours but could not be done
for the other employees of other
DATA ANALYSIS
ESCORTS PVT LTD
CASH FLOW STRATEMENT
Year Ended Year Ended
30092009 30092008
Rs Crores Rs
Crores
A Cash Flow from Operating Activities
Net profit before tax (1733) 3444
Adjustment for
Loss on sale Provision for diminution in value of Long Term
Investments amp loans to Group Companies 189 4018
Gain on sale of Long Term Investments (122) (9492)
Gain on sale of Asset (013) -
Depreciation 4497 3955
Misc Exp Assets Write off Provisions 808 750
Interest Expense 7222 7999
Dividend Income (002) (001)
Interest Income (2082) -
Operating Profit before working capital changes 8764 10673
Adjustments for
Trade and other Receivables (8817) (12035)
Inventories 1379 (4692)
Trade Payables 6705 19046
Miscellaneous Expenditure (750) (511)
(1483) 1808
Cash Generated from Operations 7281 12481
Direct Taxes (Paid)Refunds (1785) 3166
Net Cash Flow from operating activities 5496 15647
B Cash Flow from Investing Activities
Purchase of Fixed Assets (3095) (2794)
Proceeds from sale of Fixed Assets 086 177
Movement in Loans and Advances (1627) (1644)
Sale of Investments 3233 11452
Short Term Deposits with schedule Banks (231) (1048)
Interest Received 2070 -
Dividend Received 002 001
Net Cash Flow from Investing activities 438 6144
Proceeds from Share Capital amp Securities Premium 11444 -
Proceeds from Long Term Borrowings 8660 -
Less Repayment of Long Term Borrowings (054) (7896)
Proceeds (Repayment) from short term borrowings (net) (22726) -
Interest Paid (7740) (8223)
Net Cash used in financing activities (10416) (16119)
Net Increase(Decrease) in Cash and Cash equivalents (4482) 5672
Cash and Cash equivalents as at 01102008 10565 4893
Cash and Cash equivalents as at 30092009 6083 1056
ANALYSIS OF CASH FLOW
From the cash flow statements of the ESCORT PVTLTDIt can be analyzed
from the two years that the net cash balance of the company has increased
manifold in 30-09-2008 than the year 30-09-2009
The net profit in 30-09-2008 is higher than the 30-09-2009 but due to certain
changes there has been increase in the cash balance
The interest paid this year is ore of the last year which implies that thee
company has not repaid his borrowed capital due to which the interest has got
down
The depreciation has increased but it does not affect cash to an extent as it is a
non-cash item In the head of working capital there is drastic change in the cash
balance in the form of ldquoTrade and other Receivables which has affected the cash
balance
There is outflow of cash for receivables rather than the inflow in the last year
So the net effect is that the cash from operating activities has been decreased
two times from the last year
The company has no accumulated losses as at the end of the financial year ie
September 31 2008
Provision for taxation has been made in accordance with the requirement of AS-
22 issued by Institute of Charted Accountants of India
Pursuant to that current year deferred tax liability have been charged to profit amp
loss account
In opinion of the board of directors of thee company the current assets loans
and advances have a value on realization in the ordinary course of the business at
least equal to the amount stated in the balance sheet and provision for all
liabilities have been made
Balance of sundry debtors creditors loans and advances are subject to confirmation by
the concerned parties
METHOD OF ANALYSIS
1 Data analysis is done using the following statistical tools wherever required in
order to extract meaningful information from the collected data
o Simple percentage and averages
o Bar diagram
o Cone diagram
o Pie diagram
2 The collected data from the questionnaire has been put together in the form of
tables
3 Percentage has been calculated wherever necessary for generalization of the
data
4 Data analysis and interpretation has been done on the basis of primary and
secondary data
5 The findings researches have been recorded based on the analysis
6 The study conducted pertains only to YAMAHA MOTORS INDIA PVTLTD
All bank balances (debitcredit) have been confirmed by the concerned bank
Identified from the available information which has been relied upon by the auditors
The names of small-scale industrial units to whom outstanding for more than
thirty days within agreed terms
The company has 9996 of shareholders in its subsidiary company named as
ESCORTS PVT LTD As at 31-03-2008
So the net effect is that the net cash from investing activities has many more
times than the last year which is negative Now the company has repaid its long
term borrowing more than the last year which has decreased the cash balance by
the little amount
Balance with the schedule banks under the head current amp collection account
amounting to represent funds in transit lying with schedule banks pending
transfer against loan liabilities under the head cash credit amp bill discounting
LIQUIDITY RATIO
1 CURRENT RATIO
(Amount in Rs)
Current Ratio
Year Current Assets Current Liabilities Ratio
2003 58574151 7903952 7412004 69765346 31884616 2192005 72021081 16065621 4482006 91328208 47117199 1942007 115642068 30266661 382
Interpretation
As a rule the current ratio with 21 (or) more is considered as satisfactory
position of the firm
When compared with 2006 there is an increase in the provision for tax because
the debtors are raised and for that the provision is created The current liabilities
majorly included Lanco Group of company for consultancy additional services
The sundry debtors have increased due to the increase to corporate taxes
In the year 2006 the cash and bank balance is reduced because that is used for
payment of dividends In the year 2007 the loans and advances include majorly
the advances to employees and deposits to government The loans and advances
reduced because the employees set off their claims The other current assets
include the interest attained from the deposits The deposits reduced due to the
declaration of dividends So the other current assets decreased
The huge increase in sundry debtors resulted an increase in the ratio which is
above the benchmark level of 21 which shows the comfortable position of the
firm
GRAPHICAL REPRESENTATION
741
219
448
194
382
000
100
200
300
400
500
600
700
800
Ratio
2003 2004 2005 2006 2007
Years
CURRENT RATIO
Ratio
2 QUICK RATIO
(Amount
in Rs)
Quick Ratio
Year Quick Assets Current Liabilities Ratio
2003 58574151 7903952 741
2004 52470336 31884616 165
2005 69883268 16065620 435
2006 89433596 47117199 19
2007 115431868 30266661 381
Interpretation
Quick assets are those assets which can be converted into cash with in a short
period of time say to six months So here the sundry debtors which are with the
long period does not include in the quick assets
Compare with 2006 the Quick ratio is increased because the sundry debtors are
increased due to the increase in the corporate tax and for that the provision
created is also increased So the ratio is also increased with the 2006
GRAPHICAL REPRESENTATION
741
165
435
190
381
000
100
200
300
400
500
600
700
800
Ratio
2003 2004 2005 2006 2007
Years
QUICK RATIO
Ratios
3 ABOSULTE LIQUIDITY RATIO
(Amount
in Rs)
Absolute Cash Ratio
Year Absolute Liquid Assets Current Liabilities Ratio
2003 31004027 7903952 392
2004 10859778 31884616 034
2005 39466542 16065620 246
2006 53850852 47117199 114
2007 35649070 30266661 118
Interpretation
The current assets which are ready in the form of cash are considered as absolute
liquid assets Here the cash and bank balance and the interest on fixed assts are
absolute liquid assets
In the year 2006 the cash and bank balance is decreased due to decrease in the
deposits and the current liabilities are also reduced because of the payment of
dividend That causes a slight increase in the current yearrsquos ratio
GRAPHICAL REPRESENTATION
392
034
246
114 118
0
05
1
15
2
25
3
35
4
Ratios
2003 2004 2005 2006 2007
Years
ABSOLUTE CASH RATIO
Ratios
LEVERAGE RATIOS
4 PROPRIETORY RATIO
(Amount
in Rs)
Proprietory Ratio
Year Share Holders Funds Total Assets Ratio
2003 67679219 78572171 086
2004 53301834 88438107 06
2005 70231061 89158391 079
2006 56473652 106385201 053
2007 97060013 129805102 075
Interpretation
The proprietary ratio establishes the relationship between shareholders funds to
total assets It determines the long-term solvency of the firm This ratio indicates
the extent to which the assets of the company can be lost without affecting the
interest of the company
There is no increase in the capital from the year2004 The share holderrsquos funds
include capital and reserves and surplus The reserves and surplus is increased
due to the increase in balance in profit and loss account which is caused by the
increase of income from services
Total assets includes fixed and current assets The fixed assets are reduced
because of the depreciation and there are no major increments in the fixed assets
The current assets are increased compared with the year 2006 Total assets are
also increased than precious year which resulted an increase in the ratio than old
GRAPHICAL REPRESENTATION
086
060
079
053
075
000
010
020
030
040
050
060
070
080
090
Ratios
2003 2004 2005 2006 2007
Years
PROPRIETORY RATIO
Ratios
ACTIVITY RATIOS
5 WORKING CAPITAL TURNOVER RATIO
(Amount
in Rs)
Working Capital Turnover Ratio
Year Income From Services Working Capital Ratio
2003 36309834 50670199 0722004 53899084 37880730 1422005 72728759 55355460 1312006 55550649 44211009 1262007 96654902 85375407 113
Interpretation
Income from services is greatly increased due to the extra invoice for Operations
amp Maintenance fee and the working capital is also increased greater due to the
increase in from services because the huge increase in current assets
The income from services is raised and the current assets are also raised together
resulted in the decrease of the ratio of 2007 compared with 2006
GRAPHICAL REPRESENTATION
072
142 131126
113
000
020
040
060
080
100
120
140
160
Ratio
2003 2004 2005 2006 2007
Years
WORKING CAPITAL TURNOVER RATIO
Ratio
6 FIXED ASSETS TURNOVER RATIO
(Amount in Rs)
Fixed Assets Turnover Ratio
Year Income From Services Net Fixed Assets Ratio
2003 36309834 28834317 126
2004 53899084 29568279 182
2005 72728759 17137310 424
2006 55550649 15056993 369
2007 96654902 14163034 682
Interpretation
Fixed assets are used in the business for producing the goods to be sold This
ratio shows the firmrsquos ability in generating sales from all financial resources
committed to total assets The ratio indicates the account of one rupee
investment in fixed assets
The income from services is greaterly increased in the current year due to the
increase in the Operations amp Maintenance fee due to the increase in extra invoice
and the net fixed assets are reduced because of the increased charge of
depreciation Finally that effected a huge increase in the ratio compared with the
previous yearrsquos ratio
GRAPHICAL REPRSENTATION
126182
424 369
682
000
100
200
300
400
500
600
700
Ratios
2003 2004 2005 2006 2007
Years
FIXED ASSETS TURNOVER RATIO
Ratios
7 CAPITAL TURNOVER RATIO
(Amount
in Rs)
Capital Turnover Ratio
Year Income From Services Capital Employed Ratio
2003 36309834 37175892 0982004 53899084 53301834 1012005 72728759 70231061 1042006 55550649 56473652 0982007 96654902 97060013 100
Interpretation
This is another ratio to judge the efficiency and effectiveness of the company
like profitability ratio
The income from services is greaterly increased compared with the previous year
and the total capital employed includes capital and reserves amp surplus Due to
huge increase in the net profit the capital employed is also increased along with
income from services Both are effected in the increment of the ratio of current
year
GRAPHICAL REPRESENTATION
098
101
104
098
100
094095096097098099100101102103104
Ratios
2003 2004 2005 2006 2007
Years
CAPITAL TURNOVER RATIO
Ratios
8 CURRENT ASSETS TO FIXED ASSETS RATIO
(Amount
in Rs)
Current Assets To Fixed Assets Ratio
Year Current Assets Fixed Assets Ratio
2003 58524151 19998020 2932004 69765346 18672761 3742005 72021081 17137310 4202006 91328208 15056993 6072007 115642068 14163034 817
Interpretation
Current assets are increased due to the increase in the sundry debtors and the net
fixed assets of the firm are decreased due to the charge of depreciation and there
is no major increment in the fixed assets
The increment in current assets and the decrease in fixed assets resulted an
increase in the ratio compared with the previous year
GRAPHICAL REPRESENTATION
293374
420
607
817
000
100
200
300
400
500
600
700
800
900
Ratios
2003 2004 2005 2006 2007
Years
CURRENT ASSETS TO FIXED ASSETS RATIO
Ratios
PROFITABILITY RATIOS
GENERAL PROFITABILITY RATIOS
9 NET PROFIT RATIO
(Amount in Rs)
Net Profit Ratio
Year Net Profit After Tax Income from Services Ratio
2003 21123474 36039834 059
2004 16125942 53899084 030
2005 16929227 72728759 023
2006 18259580 55550649 033
2007 40586359 96654902 042
Interpretation
The net profit ratio is the overall measure of the firmrsquos ability to turn each rupee
of income from services in net profit If the net margin is inadequate the firm
will fail to achieve return on shareholderrsquos funds High net profit ratio will help
the firm service in the fall of income from services rise in cost of production or
declining demand
The net profit is increased because the income from services is increased The
increment resulted a slight increase in 2007 ratio compared with the year 2006
GRAPHICAL REPRESENTATION
059
030
023
033
042
000
010
020
030
040
050
060
Ratios
2003 2004 2005 2006 2007
Years
NET PROFIT RATIO
Ratios
10 OPERATING PROFIT
(Amount in Rs)
Operating Profit
Year Operating Profit Income From Services Ratio
2003 36094877 36309834 099
2004 27576814 53899084 051
2005 29540599 72728759 041
2006 31586718 55550649 057
2007 67192677 96654902 070
Interpretation
The operating profit ratio is used to measure the relationship between net profits
and sales of a firm Depending on the concept it will decide
The operating profit ratio is increased compared with the last year The earnings
are increased due to the increase in the income from services because of
Operations amp Maintenance fee So the ratio is increased slightly compared with
the previous year
GRAPHICAL REPRESENTATION
099
051
041
057
070
000
010
020
030
040
050060
070
080
090
100
Ratios
2003 2004 2005 2006 2007
Years
OPERATING PROFIT RATIO
Ratios
11 RETURN ON TOTAL ASSETS RATIO
(Amount in Rs)
Return on Total Assets Ratio
Year Net Profit After Tax Total Assets Ratio
2003 21123474 78572171 027
2004 16125942 88438107 018
2005 16929227 89158391 019
2006 18259580 106385201 017
2007 40586359 129805102 031
Interpretation
This is the ratio between net profit and total assets The ratio indicates the return
on total assets in the form of profits
The net profit is increased in the current year because of the increment in the
income from services due to the increase in Operations amp Maintenance fee The
fixed assets are reduced due to the charge of depreciation and no major
increments in fixed assets but the current assets are increased because of sundry
debtors and that effects an increase in the ratio compared with the last year ie
2006
GRAPHICAL REPRESENTATION
027
018 019017
031
000
005
010
015
020
025
030
035
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON TOTAL ASSETS
Ratios
12 RESERVES amp SURPLUS TO CAPITAL RATIO
(Amount in Rs)
Reserves amp Surplus To Capital Ratio
Year Reserves amp Surplus Capital Ratio
2003 65599299 2079920 31542004 34582554 18719280 1852005 51511781 18719280 2752006 37754372 18719280 2022007 78340733 18719280 419
Interpretation
The ratio is used to reveal the policy pursued by the company a very high ratio
indicates a conservative dividend policy and vice-versa Higher the ratio better
will be the position
The reserves amp surplus is decreased in the year 2006 due to the payment of
dividends and in the year 2007 the profit is increased But the capital is
remaining constant from the year 2004 So the increase in the reserves amp surplus
caused a greater increase in the current yearrsquos ratio compared with the older
GRAPHICAL REPRESENTATION
3154
185 275 202419
-
500
1000
1500
2000
2500
3000
3500
Ratios
2003 2004 2005 2006 2007
Years
RESERVES amp SRUPLUS TO CAPITAL RATIO
Ratios
OVERALL PROFITABILITY RATIOS
13 EARNINGS PER SHARE
(Amount in Rs)
Earnings Per Share
Year Net Profit After Tax No of Equity Shares Ratio
2003 21123474 207992 101562004 16125942 1871928 8612005 16929227 1871928 9042006 18259580 1871928 9752007 40586359 1871928 2168
Interpretation
Earnings per share ratio are used to find out the return that the shareholderrsquos earn
from their shares After charging depreciation and after payment of tax the
remaining amount will be distributed by all the shareholders
Net profit after tax is increased due to the huge increase in the income from
services That is the amount which is available to the shareholders to take There
are 1871928 shares of Rs10- each The share capital is constant from the year
2004 Due to the huge increase in net profit the earnings per share is greaterly
increased in 2007
GRAPHICAL REPRESENTATION
10156
861904 975
2168
000
2000
4000
6000
8000
10000
12000
Ratios
2003 2004 2005 2006 2007
Years
EARNINGS PER SHARE
Ratios
14 PRICE EARNINGS (PE) RATIO
(Amount in Rs)
Price Earning (PE) Ratio
Year Market Price Per Share Earnings Per Share Ratio
2003 3254 10156 0322004 2847 861 3302005 3752 904 4152006 3017 975 3092007 5185 2168 239
Interpretation
The ratio is calculated to make an estimate of application in the value of share of
a company
The market price per share is increased due to the increase in the reserves
amp surplus The earnings per share are also increased greaterly compared
with the last year because of increase in the net profit So the ratio is
decreased compared with the previous year
GRAPHICAL REPRESENTATION
032
330
415
309
239
000
050
100
150
200
250
300
350
400
450
Ratios
2003 2004 2005 2006 2007
Years
PE RATIO
Ratios
15 RETURN ON INVESTMENT
(Amount in Rs)
Return on Investment
Year Net Profit After Tax Share Holders Fund Ratio
2003 21123474 67679219 031
2004 16125942 53301834 03
2005 16929227 70231061 024
2006 18259580 56473652 032
2007 40586359 97060013 042
Interpretation
This is the ratio between net profits and shareholders funds The ratio is
generally calculated as percentage multiplying with 100
The net profit is increased due to the increase in the income from services ant
the shareholders funds are increased because of reserve amp surplus So the ratio
is increased in the current year
GRAPHICAL REPRESENTATION
031 030
024
032
042
000
005
010
015
020
025
030
035
040
045
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON INVESTMENT RATIO
RatioS
DATA COLLECTION
The data can be of two types
Primary Data
Secondary Data
Primary Data
Primary data are those data which is originally collected afresh
Secondary Data
Secondary data are those data which are already collected and stored and which has
been passed through statistical research
In this project Secondary data has been collected from following sources-
Annual report
Books
MIS
Other material and report published by company There are two methods to prepare
the Cash flow Statement
ndirect Method
I
The indirect method (or reconciliation method) starts with net income and converts it
to net cash flow from operating activities In other words the indirect method adjusts
net income for items that affected reported net income but did not affect cash To
compute net cash flow from operating activities non-cash charges in the income
statement are added ack to net income and non-cash credits are deducted
b
Direct Method
Under the direct method the statement of cash flows reports net cash flow from
operating activities as major classes of operating cash receipts (eg cash collected from
customers and cash received from interest and dividends) and cash disbursements (eg
cash paid to suppliers for goods to employees for services to creditors for interest and
to government authorities for taxes)
INDIRECT VERSUS DIRECT METHOD
The most contentious decision that the FASB faced in issuing Statement No 95 was
choosing between the direct method and the indirect method of determining net cash
flow from operating activities Companies lobbied against the direct method urging
adoption of the indirect method Commercial lending officers expressed a strong
preference to the FASB hat the direct method be required
tCF-Page 3 of 5
In Favor of the Direct Method
The principal advantage of the direct method is that it shows operating cash receipts and
payments That is it is more consistent with the objective of a statement of cash flows to
provide information about cash receipts and cash payments than the in-direct method
which does not report operating cash receipts and payments
Supporters of the direct method contend that knowledge of the specific sources of
operating cash receipts and the purposes for which operating cash payments were made
in past periods is useful in estimating future operating cash flows Furthermore in-
formation about amounts of major classes of operating cash receipts and payments is
more useful than information only about their arithmetic sum (the net cash flow from
operating activities) Such information is more revealing of an enterprises ability (1) to
generate sufficient cash from operating activities to pay its debts (2) to reinvest in its
operations and (3) to make distributions to its owners
Many corporate providers of financial statements say that they do not currently collect
information in a manner that allows them to determine amounts such as cash received
from customers or cash paid to suppliers directly from their accounting systems But
supporters of the direct method contend that the incremental cost of assimilating such
operating cash receipts and payments data is not significant
In Favor of the Indirect Method
The principal advantage of the indirect method is that it focuses on the differences
between net income and net cash flow from operating activities That is it provides a
useful link between the statement of cash flows and the income statement and balance
sheet
Many providers of financial statements contend that it is less costly to adjust net income
to net cash flow from operating activities (indirect) than it is to report gross operating
cash receipts and payments (direct) Supporters of the indirect method also state that the
direct method which effectively reports income statement information on a cash rather
than an accrual basis may erroneously suggest that net cash flow from operating
activities is as good as or better than net income as a measure of performance
Special Rules Applying to Direct and Indirect Methods
Companies that use the direct method are required at a
minimum to report separately the following classes of
operating cash receipts and payments
Receipts
1048713 Cash collected from customers (including lessees licensees etc)
1048713 Interest and dividends received
1048713 Other operating cash receipts if any
Payments
1048713 Cash paid to employees and suppliers of goods or services (including
suppliers of
insurance advertising etc)
1048713 Interest paid
1048713 Income taxes paid
1048713 Other operating cash payments if any
Companies using the indirect method are required to disclose separately changes in
inventory receivables and payables to reconcile net income to net cash flow from
operating activities In addition interest paid (net of amount capitalized) and income
taxes paid must be disclosed elsewhere in the financial statements or accompanying
notes
The FASB requires these separate and additional disclosures so that users
may approximate the direct method Also an acceptable alternative presentation
of the in-direct method is to report net cash flow from operating activities as a
single line item in the statement of cash flows and to present the reconciliation
details elsewhere in the financial statements
FINDING OF SUDY
According to cash flow statement of the company The finding of the study are as
follows-
The company has not taken any loans secured or unsecured from companies
firms or other parties
The company has not accepted any deposit from the public during the year
The company is not a sick industrial company
The company has not granted any loan secured or unsecured to company firms
or other parties
The company has paid the entire long term and short term borrowing during the
year
The company has buy back the companyrsquos own share this year
The interest paid in 2008 is more than the
There has been a significant decline in volume over the years from 2001-02
to 2005-06 as can be seen in the graph below
Table 43
The Net sales of Tractor has increased considerably from 2004-05 to 2007-08
This can be mainly attributed to changes in Variable and material costs and in
the price
The Net sale of Tractor has increased considerably from 2004-05 to 2007-08
that is an decrease of Rs7216 per tractor This can be mainly attributed to
changes in
Variable and material costs and in the prices
RECOMMENDATIONS
According to cash flow statement of the company The suggestions of the study
are as follows-
The time durations for training program have to increase
Buy regular review and consultations develop a career progression
which is sensitive to performance and ability
Create an environment where by people are trend developed to enable
The to take advantages of opportunities that arise
The jab can be redesigned where the work man stay in what is normally
the same job but has elements of it changed
The principle amount must be paid in time which can be reducing the
interest the out flow
The purchase of the fixed asset must be made only when there is extreme
requirement
In order to avoid taxes the company should go for more investment
The companyrsquos borrowings should go for more investment
o The company should try to reduce the depreciations as maximum
as possible
CONCLUSION
The study on competency level of employees at ESCORTS PVTLTD gave an
insight about the acceptance of competency mapping by employees
The employees at Ymi welcome the introduction of competency mapping in their
organization as they felt it was very much essential in enhancing their skills and
organizational development
The organization has provided the recourses guidance and support to facilitate the
introduction of competency level easily and develop the employees in such a way
that they can face any kind of challenge
However the level of competency in employees is found to be satisfactory
Providing proper training education and guidance to the employees can enhance
the level
This study was mainly carried out to find out whether thee competency mapping
being followed by the company is effective till date If the competency mapping
and fitment to the organization
By looking at the graphs and tables it is quite that the employees still are not up to
the level of competent pool they still have to be trained and made competent in
order to fill the gap As the organization has just applied the mapping it has to see
to that it meets all the requirements for competency mapping
Therefore the graphs make it quite clear that the potential of the employees is not
up to the mark and ie they are not competent enough to meet the competency-
mapping requirement Hence by further training and counseling this gap can be
closed
This report includes the training requirements of employees and it highlights skills
possessed by each employee and skill required All employees get training so that
skill can be improved and maintain balance between standard performance with
their actual performance to avoid gap
APPENDIX
QUESTIONNAIRE
Consumer Survey
Name _____________________________
Age _____________________________
Sex
Male
Female
Occupation
Businessman
Service man
Professional
Others
Monthly income brackets
Below 15000
15000- 20000
20000-30000
30000 and above
of your savings _________
Do you invest
Yes
No
If yes then where do you invest your money
Bank
Insurance
funds
Others
Why do you made that statement
Return
Risk hedging
Tax benefits
Other reasons (specify) _______
Who influence your cash decision
Relatives and friends
Family members
Advisors experts
You yourself
If no then why
Do not know where to invest
Satisfied with your current investment return
Donrsquot want take risk
Other reasons
__________________________________________________________________
___________________
Do you know about CF statement
Yes
No
If yes then from where you have come to know about an cash statement
Advertisements on newspapers
Friends and relative
Agents experts
Other source
What do you think about cash statement
It means investing only in share market
Constant watch must be kept always
Return is not satisfactory
Other perception
__________________________________________________
Can you recall any cash flow of company
___________________________
Would you want to made CF of an org
Yes
No
If yes then why
_______________________________________________________
If no then why
_______________________________________________________
BIBLIOGRAPHY
List of Books
1 PANDEY IM - FINANCIAL MANAGEMANT
2 KHAN MY AND JAIN PK -FINANCIAL MANAGEMANT
3 SMITH KV ndash MANAGEMANT OF WORKING CAPITAL
3 COMPANY RECORDS
4 JOURNAL
5 REPORTS
WEBLIOGRAPHY
1 wwwescortspvtltdcom
2 wwwgooglecom
WE SHALL CONTINUOUSLY STRIVE TO MEET THE EVER RISING
EXPECTATIONS OF OUR VALUED CUSTOMERS AT THE LOWEST
INTERNAL COST
WE SHALL AIM TO OFFER THE FARMING COMMUNITY A RANGE OF
INNOVATIVE PRODUCTS AND SERVICES WHICH SHALL ENABLE THEM
TO IMPROVE THEIR PRODUCTIVITY AND COMPETITIVNESS
WE SHALL ACHIEVE A TURNOVER OF RS 2 BILLION BY THE YEAR
2006TRANSCENDING NATIONAL BOUNDARIES WE SHALL STRIVE TO
ATTAIN EXPORTS OF ONE TENTH OF OUR TOTAL TRACTOR PRODUCTION
BY THE YEAR 2
REVIEW OF LITERATURE
INTRODUCTION
MEANING OF FINANCIAL STATEMENTS
The financial statements are nothing but the financial information presented in concise and
capsule form and are the financial information is the information relating to the financial
position of any firm The firm prepares the financial statements
bull To communicate with different parties about the financial position of the firm
(Shareholders creditors banks financial institution financial analysts investors
etc And
bull To analyze the operations and performance of the firm for the further
planning
The basic source which provides the financial information is the Annual report of the
company which is presented by the company to its shareholders at the Annual General
Meeting
Though the presentation of annual report is a statutory requirement under the
Companies Act 1956 however it is also a medium of communication with the present as well
as prospective investors and creditors of the company
Clause 43 A of the Listing Agreement (with the stock exchange) requires every
listed company to publish unaudited quarterly results But it does not mean the non-corporate
firms do not prepare the financial statements Every firm big or small prepare the following
financial statements
The Balance Sheet (BS)
1 The Income Statement (IS)
Two other key financial statements which are usually prepared by corporate firms are
1 Statement of appropriation of profit and
2 Statement of Change in financial position
ANALYSIS OF FINANCIAL STATEMENTS (AFS)
Analysis of financial statements refers to the process of the critical examination of the
financial information contained in the financial statements in order to understand and
make decisions regarding the operations of the firm The AFS is basically a study of the
relationship among various financial fact and figures as given in a set of financial
statements AFS is the process of establishment and identifying the financial weakness
and strength of the firm It is indicative of two aspects of a firm ie the profitability
and the financial position
OBJECTIVES OF AFS
The objectives of the AFS is to understand the information contained in financial
statements with a view to know the weakness and strength of the firm and to make a
forecast about the future prospects of the firm and thereby enabling the financial
analyst to take different decisions regarding the operation of the firm The objectives
are as follows
bull To assess the present profitability and operating efficiency of the fir
COMMON-SIZE STATEMENTS (CSS)
The CSS represents the relationship of different items of financial statements with some
Common items by expressing each item as a percentage of the common item In common size
Balance Sheet each item of the balance sheet is stated as a percentage of the total balance
sheet The percentages for different items are computed by dividing the absolute amount of
that item by the Common Base and then multiply by 100 The percentage so calculated can
be easily compared with the corresponding percentage in some other period Thus the CSS is
useful not only in intra-firm comparison for the same year or free several years
TREND PERCENTAGE ANALYSYS(TPA)
The TPA is a technique of studying several financial statements over a series of years In
TPA the trend percentages are calculated for each item by taking the figure of that item for
some base year as 100 So the trend percentage is the percentage relationship which
Each item of different years bears to the same item in the base year Any year may be Taken
as the base year but generally the starting initial year is taken as the base year So each
item for base year is taken as 100 and then the same item for other years is Expressed as a
percentage of the base year
RATIO ANALYSIS (RA)
The RA has emerged as the principle technique of the AFS A ratio is a relationship
Expressed in mathematical terms between two individual or groups of figures connected with
other in some logical manner The RA is based in the premise that a single accounting figure
by itself may not communicate any meaningful information but when expressed as a relative
to some other figure it may definitely give some significant information The relationship
between two or more accounting figuresgroups is called a Financial Ratio
A financial ratio helps to summarize a large mass of financial data into a concise form
and to make meaningful interpretations and conclusions about the performance of a firm
For example a firm has net sales Rs 5 00000
Gross Profit Rs 100000
Ratio of Gross Profit to net sales is 20
ie (Rsl 00000 Rs5 00000)
Forms of Ratios
Since a ratio is a mathematical relationship between two or more variables accounting
figures such relationship can be expressed in different ways as follows
bull As a Pure Ratio
bull As a Rate of Times
bull As a Percentage
Ratio can be classified into
bull The Liquidity Ratio
bull The Activity Ratio
bull The Leverage Ratio
bull The Profitability Ratio
STATEMENT OF CHANGES IN FINANCIAL POSITION
(SCFP)
Since the BS amp IS of a firm are two basic depicting the financial position of a firm at the end
of the year These two financial statements are called the traditional statements Both these
statements fail to throw light on changes in assets liabilities and shareholders wealth during
this year
BS deals with the financial position gives only the static view of the year- end financial
position and fails to indicate the movement and causes in assets and liabilities during the
year Similarly IS show the profit or loss resulting out of the operations of the firm during
the year This profit or loss in fact to ascertain the sufficiency of resources to declare the
dividend etc thus there is a need to prepare another statement (together with the BS amp IS)
which may identify the changes in assets liabilities and the shareholders funds over a given
period
The SCFP is essentially an explanation of the changes in financial position of a Firm
occasioned by the firm in between two successive BSs The SCFP draws basic Information
from the BS and IS helps in understanding the change in assets liabilities and shareholders
worth The SCFP deals with the flow of funds during the year ie the funds coming in and
going out of the firm It summarizes the sources from where the funds might have been
arranged procured by the firm and the uses for which the funs might have been used by
the firm during the year
The SCFP can be prepared as follows
bull SCFP (Cash Basis) also known as a Cash F low Statement
bull SCFP (Net Working Capital Basis) Fund Flow Statement
SCFP (WORKING CAPITAL BASIS)
FUND FLOW STATEMENT
The FFS reports the flows of funds through the firm during the year ie it shows the
Sources and uses of working capital between two balance sheet dates The FFS
attempts to explain the changes in financial position from one BS to the subsequent BS
in terms of the change in the funds or the working capital position of the firm
The term Working capital (WC) is generally defined as the excess of total
current assets over the total current liabilities The current Assets (CA) of a firm may
include cash in hand and at bank stock debtors bills advances etc and the Current
Liabilities (CL) includes creditors bills payable outstanding expenses provision for
tax short term liabilities etc the term WC is a single figure representing the net effect
of a transaction is to increase or decrease the Working Capital by affecting any of the
elements of Current Assets or Current Liabilities Therefore the FFS in its standard
form incorporates only those transactions which affect the Working Capital i e those
transactions where in only one of the affected accounted is a current account
Now a flow of working capital arises when one of the affected accounts is a current
account From the point of view of current account the effected on working capital
can examined in the light of the definitions of the term working capital ie the excess
of current assets over current liabilities ie
Impliedly change in any of the CA or CL will affect the WC Simple observation
equation tells that
bull Increase in any of the CA or decrease in any of the CLs will result in increase
in the WC
bull Decrease in any of the CA or increase in any of the CLs will result in decrease
in the WC
To find out the relative importance of different components of the financial position
of the firm
bull To identify the reasons for change in the profitability financial position of the
firm and
bull To assess the short term as well as the long term liquidity position of the
firm
TECHNIQUES TOOLS OF THE AFS
AFS can be undertaken by different persons and for different purposes therefore the
methodology adopted for the AFS may be carrying from one situation to another However
the following are some of the common techniques of the AFS
bull Comparative financial statements
bull Common-size financial statements
bull Trend percentage analysis and
bull Ratio Analysis
COMPARATIVE FINANCIAL STATEMENTS
In CFS two or more BS andor the IS of a firm are presented simultaneously in columnar
form The Financial data for two or more tears are placed and presented in adjacent columns
and thereby the financial data is provided at times perspective in order to facilitate periodic
comparison In CFS the BS and the IS for number of years are presented in condensed
form for year to year comparison and to exhibit the magnitude and direction of changes
The CFS helps a financial analyst of the firm and in establishing operating and
positional trend of the firm The CFS may be prepared to show
1 The absolute amount of different items in monetary terms
2 The amount of periodic changes in monetary terms
1 The percentages of periodic changes to reveal the proportionate changes
The CFS can be prepared for both the BS and the IS
CORE COMPETENCE OF ESCORTS
Customer 1
We put customers first in everything we do We take decisions keeping the customer in
mind
Challenging Spirit
We strive for excellence in everything we do and in the quality of goods amp services we
provide We work hard to achieve what we commit amp achieve results faster than our
competitors and we never give up
Team-work
We work cohesively with our colleagues as a multi-cultural team built on trust respect
understanding amp mutual co-operation Everyones contribution is equally important for
our success
Frank amp Fair Organization
We are honest sincere open minded fair amp transparent in our dealings We actively
listen to others and participate in healthy amp frank discussions to achieve the
organizations
A firm undertakes numerous during a year and most of these transactions during a year and
most of these transactions may affect one or the other current account ie most of these
transactions May results in the flow of the WC Neither is it necessary nor practical to
identify the effect of each and every transaction on the WC These transactions instead are
considered and analyzed in a collective form and then their effect on the WC is identified
SCFP (CASH BASIS) OR
THE CASH FLOW STATEMENT
The CFS attempts to analyze the transactions of the firm in terms of cash ie the transactions
generating cash and using cash The focus in the CFS is on cash rather than on WC The
sources of cash may be the cash profits earned by the firm issue of capital for cash issue of
other securities for cash borrowings sale of assets investment redemption of debenture or
preference share repayment of loan payment of tax dividend distribution etc Thus the
CFS summarizes the cash inflows and outflows
An analysis of cash flows is useful for short-run planning A firm needs sufficient cash to
debts maturing in the near future to pay interest and other expenses and to pay dividends to
shareholders The firm can make projections of cash flows and outflows for the near future to
determine the availability of cash This cash balance can be matched with the firms need for
cash during the period and accordingly arrangements can be made the deficit or invest the
surplus cash temporarily A historical analysis of cash flows provides insight to prepare
reliable cash flow projections for the immediate future
A statement of changes in financial position on cash basis commonly known as cash flow
statement summarizes the causes of changes in cash position between dates of two balance
sheets It indicates the sources amp uses of cash The cash flow statement is similar to the fund
flow statement except that it focuses attentions on cash instead of working capital (funds)
Thus this statement analyses change in non-current accounts as well as current accounts
(other than cash) to determine the flow of cash
The CFS is based on the concept on the WC Where as the CFS is based in cash which is only
the element of WC Thus the CFS provides details of cash movements whereas the FFS
provides the details of funds movements
The CFS considers only the actual movement of cash whereas the FFS considers the
movements of the funds as defined in terms of net working capital
CASH-FLOW STATEMENT
A cash-flow statement is a statement showing inflows (receipts) and outflows (payments) of
cash during a particular period In other words it is a summary of sources and applications of
Cash during a particular span of time It analyses the reason for changes in balance of cash
between the two balance sheet dates The term Cash here stands for cash and cash
equivalents
A cash-flow statement includes only those items which affect cash As such the cash-flow
statement is called a statement of changes in financial position - cash basis
A cash - flow statement can be for the past or can be projected for a future period
OBJECTS OR USES OF CASH-FLOW STATEMENT
The main objectives behind preparing a cash-flow statement can be laid down as under-
bull USEFUL FOR SHORT-TERM FINANCIAL PLANNING-
A cash-flow statement provides information for planning the short-term financial needs of the
firm Since it provides information regarding the sources and utilization of cash during a period
it become easier for the management to assess whether it will have Adequate cash to meet day-
to-day expenses and pay the long - term loans and interest Thereon and whether it has enough
cash to pay for the purchase of fixed assets or not
USEFUL FOR PREARING THE CASH BUDGET-
A cash-flow statement prepared for the future period is helpful in preparing a cash budget It
informs the management about the future period is helpful in preparing a cash budget It informs
the management about the surplus or deficit periods of cash ie in which months the payments
will be in excess of receipts It helps in planning the investment of surplus cash in short-term
investment and to plan short-term credit in advance of deficit periods
bull COMPARISON WITH CASH BUDGET-
A cash budget is prepared at the commencement of the year whereas a cash flow Statement is
prepared at the end of the year A comparison between the two helps in ascertaining the extent
to which the financial resources of the firm have been generated and used according to the plan
Causes of variances between the figures of two statements can be analyzed and proper
corrective measures may be takes
bull STUDY OF THE TREND OF CASH RECEIPTS AND PAYMENTS-
A cash-flow statement reveals the speed at which the cash is being generated from debtors stock
and other current assets the speed at which the current liabilities are being paid It enables the
management to assess the true position of the cash in future
bull IT EXPLAINS THE DEVIATIONS OF CASH FROM EARNINGS-
A firm may earn huge profits yet it may have paucity of cash or when it suffered a loss it may
still have plenty of cash A cash flow statement explains the reasons for it
HELPFUL IN ASCERTAINING CASH-FLOW FROM VARIOUS
ACTIBITIES SEPARATELY-
A cash-flow statement aims at highlighting the cash flow from operating investing and
financing activities separately It includes how much cash has been generated or used in these
activities
bull HELPFUL IN MAKING DIVIDEND DECISIONS-
Dividend must be paid within 42 days of its declaration Hence the management takes the help of
cash-flow statement to ascertain the position of cash generated from operating activities which
can be used for payment of dividend
IMPORTANCE AND RELEVANCE OF CFS
The CFS has gained importance in view of the fact that there are many managerial Decisions
which are taken in the light of the cash availability or cash position of the firm
For example declaration of dividend by the company requires cash disbursement and
Therefore the Board of Directors must consider the cash position before proposing a dividend
The CFS also provides information for the short term financial planning and in particular the
short term cash needs of the firm
In view of increasing importance and relevance of the CFS the clause 32 of the Listing
agreement (between a Company and the Stock Exchange where the shares proposed to be listed)
has been amended by the SEBI As a result the listed companies in India are now required to
supply a copy of the CFS to each shareholder as a part of Annual Report As a result the listed
companies have started a practice of sending a CFS for which the BS has been prepared as
apart of the Annual Report of the company
DIFFRENCE BETWEEN CASH - FLOW STATEMENT AND
CASH BUDGET
There is not much difference between cash flow statement and a cash budget The
only difference is that a cash flow statement is prepared for a past period where as cash
budget is prepared for a future period Hence it is of limited use as far as the future
periods are concerned A cash budget is therefore prepared showing how much cash is
likely to be received and what will be the disbursements during a future period of time
Thus a cash budget indicates in which months there will be surplus cash and in which
moths there will be deficiency of cash resources The management can then take suitable
decision to invest the surplus cash or make arrangement for the deficiency of cash at the
required time
LIQUIDITY
It does not present true picture of the liquidity of the firm the liquidity does
not depend upon cash alone Liquidity also depends upon those assets
which can be converted into cash easily
bull Exclusion of these assets obstructs the true reporting of the ability of the firm to
meet its liabilities when they become due for payment
bull The possibilities of window - dressing is higher in case of cash position in
comparison to the working capital position of the firm
bull The cash balance can be easily maneuvered by postponing purchases and other
payments and by rapidly collecting cash from debtors before the balance sheet date
Hence a fund - flow statement presents a more realistic picture than a cash flow
statement
bull Cash flow statement ignores non- cash charges Hence the true position of the
enterprise cannot be judged by cash flow statement
bull It is prepared on cash basis and hence ignores one of the basic concept of accounting
namely accrual concept
PROCEDURE OF PREPARING CASH FLOW STATEMENT-
The institute of charted accountants of India has issued accounting standards (as)-3 revised for
preparing a cash flow statement This accounting standard has been made mandatory in respect
of accounting periods commencing on or after 1st April 2001 for certain enterprises These
enterprises are-
bull Enterprises whose equity or debt securities are listed on a recognized stock exchange in
India And enterprise that are in the process of issuing equity or debt securities that will
be listed on a recognized stock exchange in India
bull All other commercial industrial and business enterprises whose turnover for accounting
period Rs 50 crores
As such the cash flow statement has been prepared according to as -3 revised in this project
According to as-3 revised the cash flow statement summarizes the cash inflows and cash
outflows and the net changes (increase or decrease) in cash and cash equipment resulting from
operating investing and financing activities of a firm during a period The following terms are
used for preparing a cash flow statement
CASH-
It compares cash in hand and demands with banks
CASH EQUIVALENTS-
There are short - term highly liquid investments that are readily into known amounts of cash
and which present insignificant risk of changes in their values Normally an investment will be
termed as cash equivalent only if it has a short maturity period say three months or less from the
date of its acquisition Examples of cash equivalent are treasury bills commercial papers etc
Which are purchased with cash that is in excess of immediate needs investment in shares are
excluded from cash equivalents unless they are cash equivalent in reality For example the
preference shares of the company which are purchased shortly before their redemption date will
be included in cash equivalents provided there is only an insignificant risk of failure of the
company in repaying the amount at the date of the maturity
CLASSIFICATION OF CASH FLOW-
According to as -3 (revised) cash flow statement should be presented in a manner that it reports
inflows of cash by classifying them into three categories namely operating investing and
financing activities Classification of all activities into these activities on the cash and cash
equivalents of the enterprise such information will be helpful in evaluating the relationships
among these three activities are explained as below
CASH FLOW FROM OPERATING ACTIVITIES-
Operating activities are the main revenue generating activities of an enterprise As such they
include cash flows from those transactions and events which enter into the ascertainment of
net profit or loss of the enterprise Examples of cash flows arising operating activities are
bull Cash receipts from the sale of goods and rendering of services
bull Cash receipts from royalties fees commissions and other revenue
bull Cash payments to suppliers for goods and services
bull Cash payments to and on behalf of employees
bull Cash receipts and cash payments of an insurance enterprise for premiums and claims
annuities and other policy benefits
bull Cash receipts and payments relating to future contracts forward contracts option
contracts and swap contracts when the contracts are held for dealing or trade purpose and
bull Cash payments of refunds of income taxes unless they can be specifically identified with
financing and investing activities
CASH FLOW FROM INVESTING ACTIVITIES-
Investing activities include the purchase and sale of long term assets such as land building plant
and machinery etc not held for resale These activities also include the purchase and sale of such
investment which are not including in cash equipments Cash flow from investing activities
discloses the expenditures incurred for resources intended to generate future income and cash
flows
Examples cash flow arising from investing activities are
bull Cash payments to acquire fixed assets (including intangible)
bull Cash receipts from sale of fixed assets (including intangibles)
bull Cash payments to acquire shares warrants or debt instruments of other enterprises
(other than receipts for those instruments considered to be cash equivalents)
bull Cash receipts from sale of shares warrants or debt instruments of other enterprises (other
than receipts for those instruments considered to be cash equivalents)
bull Cash advances and loans made to third parties In case of financial enterprises these will
be treated as cash flow from operating activities
bull Cash receipts from the repayment of advances and loans made to third parties In case of
financial enterprises these will be treated as cash flow from operating activities
bull Cash receipts of insurance claim for property involved in accident and
bull Cash receipts of interest and dividend In case of financial enterprise these will be treated
cash flow from operating activities
CASH FLOW FROM FIANCING ACTIVITIES-
Financing activities are the activities that result in change in capital and borrowing of the
enterprise
Examples of cash flows arising from financing activities are
bull Cash receipts from issuing shares or other similar instruments
bull Cash receipts from issuing debentures loans bonds and other short term or long term
borrowing
bull Cash repayment of amounts borrowed buy back of equity shares redemption of
preference shares debentures loans bonds etc
bull Cash payment of interest and dividend
IMPORTANT NOTE
In case of financial enterprise such as bank or mutual fund company cash Outflow
and cash inflow arising from the purchase and sale of securities will Be treated as
flows from operating activities This is because purchase and sale of securities is a
part of operating activity in case of financial enterprise In addition interest paid
and interest received as well as dividends received will also be treated as cash flow
from operating activities in case of financial Enterprises
CASH FLOW STATEMENT
(DIRECT METHOD)
CASH FLOW FROM OPERATING ACTIVITIES
Cash receipts from costumers
Cash paid to suppliers and employers ()
Cash generated from operations
Income tax paid ()
Cash flows from extraordinary item
plusmn Extra ordinary items
Net cash from operating activities
CASH FLOW FROM INVESTING ACTIVITIES-
Purchase of fixed assets
Proceed from sale equipment ()
Interest received
Dividend received ()
Net cash from investing activities
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from insurance of share capital
Proceeds from long- term borrowings ()
Repayment of from long-term borrowings
Interest paid
Dividend paid ()
Net cash from financing activities
Net increase in cash and cash equivalent
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
SOME SPECIAL TERMS-
i) INTERSET AND DIVIDEND-
Cash inflow from interest and dividends and cash outflow on account of interest and
dividends should be disclosed separately Cash inflow arising from interest and dividends
received should be shown as cash flow from investing activities where as cash outflow
disclosed outflow on account of interest and dividend paid should be shown as cash flow
from financing activity
ii) TAXES ON INCOME-
Tax paid on income is a part of cash flow from operating activity Hence taxes paid are
shown as a deduction under cash flow from operating activity
iii) EXTRA ORDINARY ITEMS-
Cash flow relating to extra ordinary items such as bad debts recovered Claims received from
insurance companies winning of a lottery or a law etc Should be disclosed separately as
arising from operating investing or financing activities For example the amount received
for insurance company on account of loss of stock by fire Earthquake and floods etc Should
be reported as cash flow from operating activities
iv) SIGNIFICANT NON - CASH TRANSACTION-
There are some investing and financing activities which do not require the use of cash or
cash equivalents Such non cash activities should be excluded from the cash flow statement
Examples are the acquisition of assets by issue of debentures or shares conversion of
shares into debentures etc Such significant on non cash transaction should be disclosed
outside the cash flow statement
CASH FLOW STATEMENT
(INDIRECT METHOD)
CASH FLOW FROM OPERARATTNG ACTIVITIES
Net profit before taxation and extraordinary item
Adjustment for
Depreciation
Foreign exchange loss
Interest income
Dividend income
Interest expense
Operating profit before working capital changes
Increase in sundry debtors
Decrease in inventories
Decrease in sundry creditors
Cash generated from operations
Income tax paid ()
Cash flow before extraordinary item
plusmn Extra - ordinary items
Net cash from operating activities
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of fixed assets ()
Proceeds from sale of equipment
Interest received
Dividend received ()
Net cash from investing activities
CASH FLOW FROM FINANCING ACTIVITIES-
Proceeds from insurance of share capital
Proceeds from long - term borrowings
Repayments of from long - term borrowings ()
Interest paid ()
Dividend paid ()
Net cash from financing activities
Net increase in cash and cash equivalent
Cash and cash equivalents at beginning of period
CHANGES IN CASH FLOWS
Changes in cash flows can be treated to the following
1 Net profit will increase the cash flows these cash flows will be
increased further if there are any non-cash changes (such as depreciation
and amortization)
2 Any payment of dividends will decrease the cash flows as will the
repayment of debt an issue of share or debt will also increase the
cash flows
3 An increase in non-cash assets will decrease cash flows increase in
current assets and fixed assets will result in drain on cash flows
Thus a statement of changes in cash flows ie the cash flow statement
classifies all Changes into one of three categories - operating investing or
financing activities Therefore the preparation of a statement of changes in cash
flows requires classification of changes in liabilities shareholders equity and
non-cash assets into one of these categories although some items will not fit
easily onto one other
h equivalent at end of period
STEP- BY-STEP PROCEDURE TO PREPARE CFS
1 Calculate the net increase or decrease in cash and cash equivalents-
For this purpose the opening balance of total cash and cash equivalents is compared with the
closing balance of cash and equivalents
Increasedecrease in cash and equivalents
Opening balance Closing Balance
Cash in hand
Cash in bank
Short-term Investment
Total
The difference between the total of opening and closing balance will be increased or
Decreased in cash equivalents during the period It may be noted that if there are only one or
two of items of cash etc
2 Net Cash flaw from operating activities-
The term operating refers to the normal purchase of goods and services On the basis of the
information contained in the comparative BS s and the IS and the additional Information the
net cash flow generated or use by the operating activities may be ascertained The IS prepared
by the firm gives the net profit figure earned by the firm On actual basis ie all items in the
IS are incorporated on the basis of earnedaccrued even
3 If not resulting in cash movements-
So the profit or loss as by the IS may not result in increase or decrease in cash balance by the
SYNOPSIS
INTRODUCTION
ESCORTS PVT LTD is a private limited company not listed in a stock exchange of India
and employees 900 highly trained personnel Its manufacturing plants are strategically located
in close proximity to its customers at Faridabad (Haryana) Noida (UP)
OBJECTIVES OF THE STUDY
bull To find the movement of cash inflow and cash outflow
bull To make the comparison between cash inflow and
bull Cash outflow
bull To prepare the Cash Flow Statement
bull To analyze the Balance Sheet of the company in terms of Cash Flow Statement
bull To focus on various activities of the organization in terms of Operating
Financing Investment
SCOPE OF THE STUDY
Financial resources are the assets for the company and their productivity is key
factor for profitability It is necessary to know their problems their knowledge
skills abilities amp the measures that can be taken to reduce them By analyzing this
top management can build good relations with the employees
The whole study is to determine the competencies of different employees who are
working in ESCORTS PVT LTD By analyzing it the top management can
introduce the concept of competency mapping in the organization Through this
management can attempt to use more suitable strategies towards the human
resource development
The research is confined to elicit the existing gap between the standard skill
required to perform the job and the skill processed by the employees at ESCORTS
PVT LTD And to provide them suitable training program to over come those gaps
for the better utilization of human resources
RELEVANCE
The scope of the study was confined to the outside parties like creditors
shareholders government etc Who want to invest their money in the
company
The benefit of the report for the company is that through this report they can come
to know about the cash flow statements of the company
This study also unable the company that their cash is not utilizing in unnecessary
things
The benefit of the report for the researcher is that it has helped to get knowledge
about the cash inflow and cash
RESERRCH METHODOLOGY-
RESEARCH DESIGN
bull The study was conducted under well- structured approach
bull The project lasted for 4 weeks and the year 2009 ie from 08 July to 12
Aug2009
bull The questionnaire method amp personal interview method was used to collect
the primary data for the study
The secondary data is collected from Internet amp company training material and
many other company materials
SAMPLE DESIGN
The process of extracting a sample from a population is called sampling
procedure The selection of sampling procedure to conduct the research
depends upon the nature of the study and the objective to be accomplished
Judgment sampling technique is adopted to select the respondents in this
study The sample design included the various departments in the YAMAHA
MOTORS PVT LTD
Methodology of date collection
bull Conducting personal interview
bull Data collection from primary and secondary sources
bull Designing questionnaire
bull Selecting sample size from the sample frame for the survey
bull Questionnaire distribution
bull Analysis of collected data with the help of statistical tools
bull Interpretation of collected data
bull Stating the conclusion based on the entire study
Sampling Technique
The sampling technique used for this research is of non-probability and convenience
sampling
Sample Unit
Employees of the company
Sample Size
For this research study the sample size is 25 respondents
Sources of data
Primary data
Primary data is the data which is collected by the researcher for the first time
and which was not there The tools used to collect the data are-
1)Questionnaire method from the employers in different departments
2) Face to Face personal interactions
Secondary Data
The data already collected is called as secondary data The relevant information
for this study has been collected from secondary source such as
Books
Journal
Reports
Publication by the organizational circulation
Company records
Business bulletins
Internet
Secondary data is also collected from various of the internet and intranet Some
of the website trough which information was gathered was through
HYPOTHESIS
The report is analyzed under the presumption that cash flow position of
YAMAHA MOTORS PVTLTD It can be improved and made effective in
terms of cash flows
In testing the above hypothesis the following aspects will be considered
1 Balance sheet comparisons
2 Presentation of cash flow statement in terms of revised AS-3
LIMITATIONS
The study though conducted to the best of the ability suffers from some
certain limitations There are
The data is secondary one and as such its reliability may be
questioned upon
The time availability for the study is less and as such it hinders thee
progress of the study
Senior officials were rarely approachable
Websites were not giving comprehensive data
Not having face-to-face interaction to get more relevant
information
Analysis and interpretation of data was done on the assumption that
the respondentsrsquo information was online
Information collected was totally subjective
The interviews are done during office hours but could not be done
for the other employees of other
DATA ANALYSIS
ESCORTS PVT LTD
CASH FLOW STRATEMENT
Year Ended Year Ended
30092009 30092008
Rs Crores Rs
Crores
A Cash Flow from Operating Activities
Net profit before tax (1733) 3444
Adjustment for
Loss on sale Provision for diminution in value of Long Term
Investments amp loans to Group Companies 189 4018
Gain on sale of Long Term Investments (122) (9492)
Gain on sale of Asset (013) -
Depreciation 4497 3955
Misc Exp Assets Write off Provisions 808 750
Interest Expense 7222 7999
Dividend Income (002) (001)
Interest Income (2082) -
Operating Profit before working capital changes 8764 10673
Adjustments for
Trade and other Receivables (8817) (12035)
Inventories 1379 (4692)
Trade Payables 6705 19046
Miscellaneous Expenditure (750) (511)
(1483) 1808
Cash Generated from Operations 7281 12481
Direct Taxes (Paid)Refunds (1785) 3166
Net Cash Flow from operating activities 5496 15647
B Cash Flow from Investing Activities
Purchase of Fixed Assets (3095) (2794)
Proceeds from sale of Fixed Assets 086 177
Movement in Loans and Advances (1627) (1644)
Sale of Investments 3233 11452
Short Term Deposits with schedule Banks (231) (1048)
Interest Received 2070 -
Dividend Received 002 001
Net Cash Flow from Investing activities 438 6144
Proceeds from Share Capital amp Securities Premium 11444 -
Proceeds from Long Term Borrowings 8660 -
Less Repayment of Long Term Borrowings (054) (7896)
Proceeds (Repayment) from short term borrowings (net) (22726) -
Interest Paid (7740) (8223)
Net Cash used in financing activities (10416) (16119)
Net Increase(Decrease) in Cash and Cash equivalents (4482) 5672
Cash and Cash equivalents as at 01102008 10565 4893
Cash and Cash equivalents as at 30092009 6083 1056
ANALYSIS OF CASH FLOW
From the cash flow statements of the ESCORT PVTLTDIt can be analyzed
from the two years that the net cash balance of the company has increased
manifold in 30-09-2008 than the year 30-09-2009
The net profit in 30-09-2008 is higher than the 30-09-2009 but due to certain
changes there has been increase in the cash balance
The interest paid this year is ore of the last year which implies that thee
company has not repaid his borrowed capital due to which the interest has got
down
The depreciation has increased but it does not affect cash to an extent as it is a
non-cash item In the head of working capital there is drastic change in the cash
balance in the form of ldquoTrade and other Receivables which has affected the cash
balance
There is outflow of cash for receivables rather than the inflow in the last year
So the net effect is that the cash from operating activities has been decreased
two times from the last year
The company has no accumulated losses as at the end of the financial year ie
September 31 2008
Provision for taxation has been made in accordance with the requirement of AS-
22 issued by Institute of Charted Accountants of India
Pursuant to that current year deferred tax liability have been charged to profit amp
loss account
In opinion of the board of directors of thee company the current assets loans
and advances have a value on realization in the ordinary course of the business at
least equal to the amount stated in the balance sheet and provision for all
liabilities have been made
Balance of sundry debtors creditors loans and advances are subject to confirmation by
the concerned parties
METHOD OF ANALYSIS
1 Data analysis is done using the following statistical tools wherever required in
order to extract meaningful information from the collected data
o Simple percentage and averages
o Bar diagram
o Cone diagram
o Pie diagram
2 The collected data from the questionnaire has been put together in the form of
tables
3 Percentage has been calculated wherever necessary for generalization of the
data
4 Data analysis and interpretation has been done on the basis of primary and
secondary data
5 The findings researches have been recorded based on the analysis
6 The study conducted pertains only to YAMAHA MOTORS INDIA PVTLTD
All bank balances (debitcredit) have been confirmed by the concerned bank
Identified from the available information which has been relied upon by the auditors
The names of small-scale industrial units to whom outstanding for more than
thirty days within agreed terms
The company has 9996 of shareholders in its subsidiary company named as
ESCORTS PVT LTD As at 31-03-2008
So the net effect is that the net cash from investing activities has many more
times than the last year which is negative Now the company has repaid its long
term borrowing more than the last year which has decreased the cash balance by
the little amount
Balance with the schedule banks under the head current amp collection account
amounting to represent funds in transit lying with schedule banks pending
transfer against loan liabilities under the head cash credit amp bill discounting
LIQUIDITY RATIO
1 CURRENT RATIO
(Amount in Rs)
Current Ratio
Year Current Assets Current Liabilities Ratio
2003 58574151 7903952 7412004 69765346 31884616 2192005 72021081 16065621 4482006 91328208 47117199 1942007 115642068 30266661 382
Interpretation
As a rule the current ratio with 21 (or) more is considered as satisfactory
position of the firm
When compared with 2006 there is an increase in the provision for tax because
the debtors are raised and for that the provision is created The current liabilities
majorly included Lanco Group of company for consultancy additional services
The sundry debtors have increased due to the increase to corporate taxes
In the year 2006 the cash and bank balance is reduced because that is used for
payment of dividends In the year 2007 the loans and advances include majorly
the advances to employees and deposits to government The loans and advances
reduced because the employees set off their claims The other current assets
include the interest attained from the deposits The deposits reduced due to the
declaration of dividends So the other current assets decreased
The huge increase in sundry debtors resulted an increase in the ratio which is
above the benchmark level of 21 which shows the comfortable position of the
firm
GRAPHICAL REPRESENTATION
741
219
448
194
382
000
100
200
300
400
500
600
700
800
Ratio
2003 2004 2005 2006 2007
Years
CURRENT RATIO
Ratio
2 QUICK RATIO
(Amount
in Rs)
Quick Ratio
Year Quick Assets Current Liabilities Ratio
2003 58574151 7903952 741
2004 52470336 31884616 165
2005 69883268 16065620 435
2006 89433596 47117199 19
2007 115431868 30266661 381
Interpretation
Quick assets are those assets which can be converted into cash with in a short
period of time say to six months So here the sundry debtors which are with the
long period does not include in the quick assets
Compare with 2006 the Quick ratio is increased because the sundry debtors are
increased due to the increase in the corporate tax and for that the provision
created is also increased So the ratio is also increased with the 2006
GRAPHICAL REPRESENTATION
741
165
435
190
381
000
100
200
300
400
500
600
700
800
Ratio
2003 2004 2005 2006 2007
Years
QUICK RATIO
Ratios
3 ABOSULTE LIQUIDITY RATIO
(Amount
in Rs)
Absolute Cash Ratio
Year Absolute Liquid Assets Current Liabilities Ratio
2003 31004027 7903952 392
2004 10859778 31884616 034
2005 39466542 16065620 246
2006 53850852 47117199 114
2007 35649070 30266661 118
Interpretation
The current assets which are ready in the form of cash are considered as absolute
liquid assets Here the cash and bank balance and the interest on fixed assts are
absolute liquid assets
In the year 2006 the cash and bank balance is decreased due to decrease in the
deposits and the current liabilities are also reduced because of the payment of
dividend That causes a slight increase in the current yearrsquos ratio
GRAPHICAL REPRESENTATION
392
034
246
114 118
0
05
1
15
2
25
3
35
4
Ratios
2003 2004 2005 2006 2007
Years
ABSOLUTE CASH RATIO
Ratios
LEVERAGE RATIOS
4 PROPRIETORY RATIO
(Amount
in Rs)
Proprietory Ratio
Year Share Holders Funds Total Assets Ratio
2003 67679219 78572171 086
2004 53301834 88438107 06
2005 70231061 89158391 079
2006 56473652 106385201 053
2007 97060013 129805102 075
Interpretation
The proprietary ratio establishes the relationship between shareholders funds to
total assets It determines the long-term solvency of the firm This ratio indicates
the extent to which the assets of the company can be lost without affecting the
interest of the company
There is no increase in the capital from the year2004 The share holderrsquos funds
include capital and reserves and surplus The reserves and surplus is increased
due to the increase in balance in profit and loss account which is caused by the
increase of income from services
Total assets includes fixed and current assets The fixed assets are reduced
because of the depreciation and there are no major increments in the fixed assets
The current assets are increased compared with the year 2006 Total assets are
also increased than precious year which resulted an increase in the ratio than old
GRAPHICAL REPRESENTATION
086
060
079
053
075
000
010
020
030
040
050
060
070
080
090
Ratios
2003 2004 2005 2006 2007
Years
PROPRIETORY RATIO
Ratios
ACTIVITY RATIOS
5 WORKING CAPITAL TURNOVER RATIO
(Amount
in Rs)
Working Capital Turnover Ratio
Year Income From Services Working Capital Ratio
2003 36309834 50670199 0722004 53899084 37880730 1422005 72728759 55355460 1312006 55550649 44211009 1262007 96654902 85375407 113
Interpretation
Income from services is greatly increased due to the extra invoice for Operations
amp Maintenance fee and the working capital is also increased greater due to the
increase in from services because the huge increase in current assets
The income from services is raised and the current assets are also raised together
resulted in the decrease of the ratio of 2007 compared with 2006
GRAPHICAL REPRESENTATION
072
142 131126
113
000
020
040
060
080
100
120
140
160
Ratio
2003 2004 2005 2006 2007
Years
WORKING CAPITAL TURNOVER RATIO
Ratio
6 FIXED ASSETS TURNOVER RATIO
(Amount in Rs)
Fixed Assets Turnover Ratio
Year Income From Services Net Fixed Assets Ratio
2003 36309834 28834317 126
2004 53899084 29568279 182
2005 72728759 17137310 424
2006 55550649 15056993 369
2007 96654902 14163034 682
Interpretation
Fixed assets are used in the business for producing the goods to be sold This
ratio shows the firmrsquos ability in generating sales from all financial resources
committed to total assets The ratio indicates the account of one rupee
investment in fixed assets
The income from services is greaterly increased in the current year due to the
increase in the Operations amp Maintenance fee due to the increase in extra invoice
and the net fixed assets are reduced because of the increased charge of
depreciation Finally that effected a huge increase in the ratio compared with the
previous yearrsquos ratio
GRAPHICAL REPRSENTATION
126182
424 369
682
000
100
200
300
400
500
600
700
Ratios
2003 2004 2005 2006 2007
Years
FIXED ASSETS TURNOVER RATIO
Ratios
7 CAPITAL TURNOVER RATIO
(Amount
in Rs)
Capital Turnover Ratio
Year Income From Services Capital Employed Ratio
2003 36309834 37175892 0982004 53899084 53301834 1012005 72728759 70231061 1042006 55550649 56473652 0982007 96654902 97060013 100
Interpretation
This is another ratio to judge the efficiency and effectiveness of the company
like profitability ratio
The income from services is greaterly increased compared with the previous year
and the total capital employed includes capital and reserves amp surplus Due to
huge increase in the net profit the capital employed is also increased along with
income from services Both are effected in the increment of the ratio of current
year
GRAPHICAL REPRESENTATION
098
101
104
098
100
094095096097098099100101102103104
Ratios
2003 2004 2005 2006 2007
Years
CAPITAL TURNOVER RATIO
Ratios
8 CURRENT ASSETS TO FIXED ASSETS RATIO
(Amount
in Rs)
Current Assets To Fixed Assets Ratio
Year Current Assets Fixed Assets Ratio
2003 58524151 19998020 2932004 69765346 18672761 3742005 72021081 17137310 4202006 91328208 15056993 6072007 115642068 14163034 817
Interpretation
Current assets are increased due to the increase in the sundry debtors and the net
fixed assets of the firm are decreased due to the charge of depreciation and there
is no major increment in the fixed assets
The increment in current assets and the decrease in fixed assets resulted an
increase in the ratio compared with the previous year
GRAPHICAL REPRESENTATION
293374
420
607
817
000
100
200
300
400
500
600
700
800
900
Ratios
2003 2004 2005 2006 2007
Years
CURRENT ASSETS TO FIXED ASSETS RATIO
Ratios
PROFITABILITY RATIOS
GENERAL PROFITABILITY RATIOS
9 NET PROFIT RATIO
(Amount in Rs)
Net Profit Ratio
Year Net Profit After Tax Income from Services Ratio
2003 21123474 36039834 059
2004 16125942 53899084 030
2005 16929227 72728759 023
2006 18259580 55550649 033
2007 40586359 96654902 042
Interpretation
The net profit ratio is the overall measure of the firmrsquos ability to turn each rupee
of income from services in net profit If the net margin is inadequate the firm
will fail to achieve return on shareholderrsquos funds High net profit ratio will help
the firm service in the fall of income from services rise in cost of production or
declining demand
The net profit is increased because the income from services is increased The
increment resulted a slight increase in 2007 ratio compared with the year 2006
GRAPHICAL REPRESENTATION
059
030
023
033
042
000
010
020
030
040
050
060
Ratios
2003 2004 2005 2006 2007
Years
NET PROFIT RATIO
Ratios
10 OPERATING PROFIT
(Amount in Rs)
Operating Profit
Year Operating Profit Income From Services Ratio
2003 36094877 36309834 099
2004 27576814 53899084 051
2005 29540599 72728759 041
2006 31586718 55550649 057
2007 67192677 96654902 070
Interpretation
The operating profit ratio is used to measure the relationship between net profits
and sales of a firm Depending on the concept it will decide
The operating profit ratio is increased compared with the last year The earnings
are increased due to the increase in the income from services because of
Operations amp Maintenance fee So the ratio is increased slightly compared with
the previous year
GRAPHICAL REPRESENTATION
099
051
041
057
070
000
010
020
030
040
050060
070
080
090
100
Ratios
2003 2004 2005 2006 2007
Years
OPERATING PROFIT RATIO
Ratios
11 RETURN ON TOTAL ASSETS RATIO
(Amount in Rs)
Return on Total Assets Ratio
Year Net Profit After Tax Total Assets Ratio
2003 21123474 78572171 027
2004 16125942 88438107 018
2005 16929227 89158391 019
2006 18259580 106385201 017
2007 40586359 129805102 031
Interpretation
This is the ratio between net profit and total assets The ratio indicates the return
on total assets in the form of profits
The net profit is increased in the current year because of the increment in the
income from services due to the increase in Operations amp Maintenance fee The
fixed assets are reduced due to the charge of depreciation and no major
increments in fixed assets but the current assets are increased because of sundry
debtors and that effects an increase in the ratio compared with the last year ie
2006
GRAPHICAL REPRESENTATION
027
018 019017
031
000
005
010
015
020
025
030
035
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON TOTAL ASSETS
Ratios
12 RESERVES amp SURPLUS TO CAPITAL RATIO
(Amount in Rs)
Reserves amp Surplus To Capital Ratio
Year Reserves amp Surplus Capital Ratio
2003 65599299 2079920 31542004 34582554 18719280 1852005 51511781 18719280 2752006 37754372 18719280 2022007 78340733 18719280 419
Interpretation
The ratio is used to reveal the policy pursued by the company a very high ratio
indicates a conservative dividend policy and vice-versa Higher the ratio better
will be the position
The reserves amp surplus is decreased in the year 2006 due to the payment of
dividends and in the year 2007 the profit is increased But the capital is
remaining constant from the year 2004 So the increase in the reserves amp surplus
caused a greater increase in the current yearrsquos ratio compared with the older
GRAPHICAL REPRESENTATION
3154
185 275 202419
-
500
1000
1500
2000
2500
3000
3500
Ratios
2003 2004 2005 2006 2007
Years
RESERVES amp SRUPLUS TO CAPITAL RATIO
Ratios
OVERALL PROFITABILITY RATIOS
13 EARNINGS PER SHARE
(Amount in Rs)
Earnings Per Share
Year Net Profit After Tax No of Equity Shares Ratio
2003 21123474 207992 101562004 16125942 1871928 8612005 16929227 1871928 9042006 18259580 1871928 9752007 40586359 1871928 2168
Interpretation
Earnings per share ratio are used to find out the return that the shareholderrsquos earn
from their shares After charging depreciation and after payment of tax the
remaining amount will be distributed by all the shareholders
Net profit after tax is increased due to the huge increase in the income from
services That is the amount which is available to the shareholders to take There
are 1871928 shares of Rs10- each The share capital is constant from the year
2004 Due to the huge increase in net profit the earnings per share is greaterly
increased in 2007
GRAPHICAL REPRESENTATION
10156
861904 975
2168
000
2000
4000
6000
8000
10000
12000
Ratios
2003 2004 2005 2006 2007
Years
EARNINGS PER SHARE
Ratios
14 PRICE EARNINGS (PE) RATIO
(Amount in Rs)
Price Earning (PE) Ratio
Year Market Price Per Share Earnings Per Share Ratio
2003 3254 10156 0322004 2847 861 3302005 3752 904 4152006 3017 975 3092007 5185 2168 239
Interpretation
The ratio is calculated to make an estimate of application in the value of share of
a company
The market price per share is increased due to the increase in the reserves
amp surplus The earnings per share are also increased greaterly compared
with the last year because of increase in the net profit So the ratio is
decreased compared with the previous year
GRAPHICAL REPRESENTATION
032
330
415
309
239
000
050
100
150
200
250
300
350
400
450
Ratios
2003 2004 2005 2006 2007
Years
PE RATIO
Ratios
15 RETURN ON INVESTMENT
(Amount in Rs)
Return on Investment
Year Net Profit After Tax Share Holders Fund Ratio
2003 21123474 67679219 031
2004 16125942 53301834 03
2005 16929227 70231061 024
2006 18259580 56473652 032
2007 40586359 97060013 042
Interpretation
This is the ratio between net profits and shareholders funds The ratio is
generally calculated as percentage multiplying with 100
The net profit is increased due to the increase in the income from services ant
the shareholders funds are increased because of reserve amp surplus So the ratio
is increased in the current year
GRAPHICAL REPRESENTATION
031 030
024
032
042
000
005
010
015
020
025
030
035
040
045
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON INVESTMENT RATIO
RatioS
DATA COLLECTION
The data can be of two types
Primary Data
Secondary Data
Primary Data
Primary data are those data which is originally collected afresh
Secondary Data
Secondary data are those data which are already collected and stored and which has
been passed through statistical research
In this project Secondary data has been collected from following sources-
Annual report
Books
MIS
Other material and report published by company There are two methods to prepare
the Cash flow Statement
ndirect Method
I
The indirect method (or reconciliation method) starts with net income and converts it
to net cash flow from operating activities In other words the indirect method adjusts
net income for items that affected reported net income but did not affect cash To
compute net cash flow from operating activities non-cash charges in the income
statement are added ack to net income and non-cash credits are deducted
b
Direct Method
Under the direct method the statement of cash flows reports net cash flow from
operating activities as major classes of operating cash receipts (eg cash collected from
customers and cash received from interest and dividends) and cash disbursements (eg
cash paid to suppliers for goods to employees for services to creditors for interest and
to government authorities for taxes)
INDIRECT VERSUS DIRECT METHOD
The most contentious decision that the FASB faced in issuing Statement No 95 was
choosing between the direct method and the indirect method of determining net cash
flow from operating activities Companies lobbied against the direct method urging
adoption of the indirect method Commercial lending officers expressed a strong
preference to the FASB hat the direct method be required
tCF-Page 3 of 5
In Favor of the Direct Method
The principal advantage of the direct method is that it shows operating cash receipts and
payments That is it is more consistent with the objective of a statement of cash flows to
provide information about cash receipts and cash payments than the in-direct method
which does not report operating cash receipts and payments
Supporters of the direct method contend that knowledge of the specific sources of
operating cash receipts and the purposes for which operating cash payments were made
in past periods is useful in estimating future operating cash flows Furthermore in-
formation about amounts of major classes of operating cash receipts and payments is
more useful than information only about their arithmetic sum (the net cash flow from
operating activities) Such information is more revealing of an enterprises ability (1) to
generate sufficient cash from operating activities to pay its debts (2) to reinvest in its
operations and (3) to make distributions to its owners
Many corporate providers of financial statements say that they do not currently collect
information in a manner that allows them to determine amounts such as cash received
from customers or cash paid to suppliers directly from their accounting systems But
supporters of the direct method contend that the incremental cost of assimilating such
operating cash receipts and payments data is not significant
In Favor of the Indirect Method
The principal advantage of the indirect method is that it focuses on the differences
between net income and net cash flow from operating activities That is it provides a
useful link between the statement of cash flows and the income statement and balance
sheet
Many providers of financial statements contend that it is less costly to adjust net income
to net cash flow from operating activities (indirect) than it is to report gross operating
cash receipts and payments (direct) Supporters of the indirect method also state that the
direct method which effectively reports income statement information on a cash rather
than an accrual basis may erroneously suggest that net cash flow from operating
activities is as good as or better than net income as a measure of performance
Special Rules Applying to Direct and Indirect Methods
Companies that use the direct method are required at a
minimum to report separately the following classes of
operating cash receipts and payments
Receipts
1048713 Cash collected from customers (including lessees licensees etc)
1048713 Interest and dividends received
1048713 Other operating cash receipts if any
Payments
1048713 Cash paid to employees and suppliers of goods or services (including
suppliers of
insurance advertising etc)
1048713 Interest paid
1048713 Income taxes paid
1048713 Other operating cash payments if any
Companies using the indirect method are required to disclose separately changes in
inventory receivables and payables to reconcile net income to net cash flow from
operating activities In addition interest paid (net of amount capitalized) and income
taxes paid must be disclosed elsewhere in the financial statements or accompanying
notes
The FASB requires these separate and additional disclosures so that users
may approximate the direct method Also an acceptable alternative presentation
of the in-direct method is to report net cash flow from operating activities as a
single line item in the statement of cash flows and to present the reconciliation
details elsewhere in the financial statements
FINDING OF SUDY
According to cash flow statement of the company The finding of the study are as
follows-
The company has not taken any loans secured or unsecured from companies
firms or other parties
The company has not accepted any deposit from the public during the year
The company is not a sick industrial company
The company has not granted any loan secured or unsecured to company firms
or other parties
The company has paid the entire long term and short term borrowing during the
year
The company has buy back the companyrsquos own share this year
The interest paid in 2008 is more than the
There has been a significant decline in volume over the years from 2001-02
to 2005-06 as can be seen in the graph below
Table 43
The Net sales of Tractor has increased considerably from 2004-05 to 2007-08
This can be mainly attributed to changes in Variable and material costs and in
the price
The Net sale of Tractor has increased considerably from 2004-05 to 2007-08
that is an decrease of Rs7216 per tractor This can be mainly attributed to
changes in
Variable and material costs and in the prices
RECOMMENDATIONS
According to cash flow statement of the company The suggestions of the study
are as follows-
The time durations for training program have to increase
Buy regular review and consultations develop a career progression
which is sensitive to performance and ability
Create an environment where by people are trend developed to enable
The to take advantages of opportunities that arise
The jab can be redesigned where the work man stay in what is normally
the same job but has elements of it changed
The principle amount must be paid in time which can be reducing the
interest the out flow
The purchase of the fixed asset must be made only when there is extreme
requirement
In order to avoid taxes the company should go for more investment
The companyrsquos borrowings should go for more investment
o The company should try to reduce the depreciations as maximum
as possible
CONCLUSION
The study on competency level of employees at ESCORTS PVTLTD gave an
insight about the acceptance of competency mapping by employees
The employees at Ymi welcome the introduction of competency mapping in their
organization as they felt it was very much essential in enhancing their skills and
organizational development
The organization has provided the recourses guidance and support to facilitate the
introduction of competency level easily and develop the employees in such a way
that they can face any kind of challenge
However the level of competency in employees is found to be satisfactory
Providing proper training education and guidance to the employees can enhance
the level
This study was mainly carried out to find out whether thee competency mapping
being followed by the company is effective till date If the competency mapping
and fitment to the organization
By looking at the graphs and tables it is quite that the employees still are not up to
the level of competent pool they still have to be trained and made competent in
order to fill the gap As the organization has just applied the mapping it has to see
to that it meets all the requirements for competency mapping
Therefore the graphs make it quite clear that the potential of the employees is not
up to the mark and ie they are not competent enough to meet the competency-
mapping requirement Hence by further training and counseling this gap can be
closed
This report includes the training requirements of employees and it highlights skills
possessed by each employee and skill required All employees get training so that
skill can be improved and maintain balance between standard performance with
their actual performance to avoid gap
APPENDIX
QUESTIONNAIRE
Consumer Survey
Name _____________________________
Age _____________________________
Sex
Male
Female
Occupation
Businessman
Service man
Professional
Others
Monthly income brackets
Below 15000
15000- 20000
20000-30000
30000 and above
of your savings _________
Do you invest
Yes
No
If yes then where do you invest your money
Bank
Insurance
funds
Others
Why do you made that statement
Return
Risk hedging
Tax benefits
Other reasons (specify) _______
Who influence your cash decision
Relatives and friends
Family members
Advisors experts
You yourself
If no then why
Do not know where to invest
Satisfied with your current investment return
Donrsquot want take risk
Other reasons
__________________________________________________________________
___________________
Do you know about CF statement
Yes
No
If yes then from where you have come to know about an cash statement
Advertisements on newspapers
Friends and relative
Agents experts
Other source
What do you think about cash statement
It means investing only in share market
Constant watch must be kept always
Return is not satisfactory
Other perception
__________________________________________________
Can you recall any cash flow of company
___________________________
Would you want to made CF of an org
Yes
No
If yes then why
_______________________________________________________
If no then why
_______________________________________________________
BIBLIOGRAPHY
List of Books
1 PANDEY IM - FINANCIAL MANAGEMANT
2 KHAN MY AND JAIN PK -FINANCIAL MANAGEMANT
3 SMITH KV ndash MANAGEMANT OF WORKING CAPITAL
3 COMPANY RECORDS
4 JOURNAL
5 REPORTS
WEBLIOGRAPHY
1 wwwescortspvtltdcom
2 wwwgooglecom
Though the presentation of annual report is a statutory requirement under the
Companies Act 1956 however it is also a medium of communication with the present as well
as prospective investors and creditors of the company
Clause 43 A of the Listing Agreement (with the stock exchange) requires every
listed company to publish unaudited quarterly results But it does not mean the non-corporate
firms do not prepare the financial statements Every firm big or small prepare the following
financial statements
The Balance Sheet (BS)
1 The Income Statement (IS)
Two other key financial statements which are usually prepared by corporate firms are
1 Statement of appropriation of profit and
2 Statement of Change in financial position
ANALYSIS OF FINANCIAL STATEMENTS (AFS)
Analysis of financial statements refers to the process of the critical examination of the
financial information contained in the financial statements in order to understand and
make decisions regarding the operations of the firm The AFS is basically a study of the
relationship among various financial fact and figures as given in a set of financial
statements AFS is the process of establishment and identifying the financial weakness
and strength of the firm It is indicative of two aspects of a firm ie the profitability
and the financial position
OBJECTIVES OF AFS
The objectives of the AFS is to understand the information contained in financial
statements with a view to know the weakness and strength of the firm and to make a
forecast about the future prospects of the firm and thereby enabling the financial
analyst to take different decisions regarding the operation of the firm The objectives
are as follows
bull To assess the present profitability and operating efficiency of the fir
COMMON-SIZE STATEMENTS (CSS)
The CSS represents the relationship of different items of financial statements with some
Common items by expressing each item as a percentage of the common item In common size
Balance Sheet each item of the balance sheet is stated as a percentage of the total balance
sheet The percentages for different items are computed by dividing the absolute amount of
that item by the Common Base and then multiply by 100 The percentage so calculated can
be easily compared with the corresponding percentage in some other period Thus the CSS is
useful not only in intra-firm comparison for the same year or free several years
TREND PERCENTAGE ANALYSYS(TPA)
The TPA is a technique of studying several financial statements over a series of years In
TPA the trend percentages are calculated for each item by taking the figure of that item for
some base year as 100 So the trend percentage is the percentage relationship which
Each item of different years bears to the same item in the base year Any year may be Taken
as the base year but generally the starting initial year is taken as the base year So each
item for base year is taken as 100 and then the same item for other years is Expressed as a
percentage of the base year
RATIO ANALYSIS (RA)
The RA has emerged as the principle technique of the AFS A ratio is a relationship
Expressed in mathematical terms between two individual or groups of figures connected with
other in some logical manner The RA is based in the premise that a single accounting figure
by itself may not communicate any meaningful information but when expressed as a relative
to some other figure it may definitely give some significant information The relationship
between two or more accounting figuresgroups is called a Financial Ratio
A financial ratio helps to summarize a large mass of financial data into a concise form
and to make meaningful interpretations and conclusions about the performance of a firm
For example a firm has net sales Rs 5 00000
Gross Profit Rs 100000
Ratio of Gross Profit to net sales is 20
ie (Rsl 00000 Rs5 00000)
Forms of Ratios
Since a ratio is a mathematical relationship between two or more variables accounting
figures such relationship can be expressed in different ways as follows
bull As a Pure Ratio
bull As a Rate of Times
bull As a Percentage
Ratio can be classified into
bull The Liquidity Ratio
bull The Activity Ratio
bull The Leverage Ratio
bull The Profitability Ratio
STATEMENT OF CHANGES IN FINANCIAL POSITION
(SCFP)
Since the BS amp IS of a firm are two basic depicting the financial position of a firm at the end
of the year These two financial statements are called the traditional statements Both these
statements fail to throw light on changes in assets liabilities and shareholders wealth during
this year
BS deals with the financial position gives only the static view of the year- end financial
position and fails to indicate the movement and causes in assets and liabilities during the
year Similarly IS show the profit or loss resulting out of the operations of the firm during
the year This profit or loss in fact to ascertain the sufficiency of resources to declare the
dividend etc thus there is a need to prepare another statement (together with the BS amp IS)
which may identify the changes in assets liabilities and the shareholders funds over a given
period
The SCFP is essentially an explanation of the changes in financial position of a Firm
occasioned by the firm in between two successive BSs The SCFP draws basic Information
from the BS and IS helps in understanding the change in assets liabilities and shareholders
worth The SCFP deals with the flow of funds during the year ie the funds coming in and
going out of the firm It summarizes the sources from where the funds might have been
arranged procured by the firm and the uses for which the funs might have been used by
the firm during the year
The SCFP can be prepared as follows
bull SCFP (Cash Basis) also known as a Cash F low Statement
bull SCFP (Net Working Capital Basis) Fund Flow Statement
SCFP (WORKING CAPITAL BASIS)
FUND FLOW STATEMENT
The FFS reports the flows of funds through the firm during the year ie it shows the
Sources and uses of working capital between two balance sheet dates The FFS
attempts to explain the changes in financial position from one BS to the subsequent BS
in terms of the change in the funds or the working capital position of the firm
The term Working capital (WC) is generally defined as the excess of total
current assets over the total current liabilities The current Assets (CA) of a firm may
include cash in hand and at bank stock debtors bills advances etc and the Current
Liabilities (CL) includes creditors bills payable outstanding expenses provision for
tax short term liabilities etc the term WC is a single figure representing the net effect
of a transaction is to increase or decrease the Working Capital by affecting any of the
elements of Current Assets or Current Liabilities Therefore the FFS in its standard
form incorporates only those transactions which affect the Working Capital i e those
transactions where in only one of the affected accounted is a current account
Now a flow of working capital arises when one of the affected accounts is a current
account From the point of view of current account the effected on working capital
can examined in the light of the definitions of the term working capital ie the excess
of current assets over current liabilities ie
Impliedly change in any of the CA or CL will affect the WC Simple observation
equation tells that
bull Increase in any of the CA or decrease in any of the CLs will result in increase
in the WC
bull Decrease in any of the CA or increase in any of the CLs will result in decrease
in the WC
To find out the relative importance of different components of the financial position
of the firm
bull To identify the reasons for change in the profitability financial position of the
firm and
bull To assess the short term as well as the long term liquidity position of the
firm
TECHNIQUES TOOLS OF THE AFS
AFS can be undertaken by different persons and for different purposes therefore the
methodology adopted for the AFS may be carrying from one situation to another However
the following are some of the common techniques of the AFS
bull Comparative financial statements
bull Common-size financial statements
bull Trend percentage analysis and
bull Ratio Analysis
COMPARATIVE FINANCIAL STATEMENTS
In CFS two or more BS andor the IS of a firm are presented simultaneously in columnar
form The Financial data for two or more tears are placed and presented in adjacent columns
and thereby the financial data is provided at times perspective in order to facilitate periodic
comparison In CFS the BS and the IS for number of years are presented in condensed
form for year to year comparison and to exhibit the magnitude and direction of changes
The CFS helps a financial analyst of the firm and in establishing operating and
positional trend of the firm The CFS may be prepared to show
1 The absolute amount of different items in monetary terms
2 The amount of periodic changes in monetary terms
1 The percentages of periodic changes to reveal the proportionate changes
The CFS can be prepared for both the BS and the IS
CORE COMPETENCE OF ESCORTS
Customer 1
We put customers first in everything we do We take decisions keeping the customer in
mind
Challenging Spirit
We strive for excellence in everything we do and in the quality of goods amp services we
provide We work hard to achieve what we commit amp achieve results faster than our
competitors and we never give up
Team-work
We work cohesively with our colleagues as a multi-cultural team built on trust respect
understanding amp mutual co-operation Everyones contribution is equally important for
our success
Frank amp Fair Organization
We are honest sincere open minded fair amp transparent in our dealings We actively
listen to others and participate in healthy amp frank discussions to achieve the
organizations
A firm undertakes numerous during a year and most of these transactions during a year and
most of these transactions may affect one or the other current account ie most of these
transactions May results in the flow of the WC Neither is it necessary nor practical to
identify the effect of each and every transaction on the WC These transactions instead are
considered and analyzed in a collective form and then their effect on the WC is identified
SCFP (CASH BASIS) OR
THE CASH FLOW STATEMENT
The CFS attempts to analyze the transactions of the firm in terms of cash ie the transactions
generating cash and using cash The focus in the CFS is on cash rather than on WC The
sources of cash may be the cash profits earned by the firm issue of capital for cash issue of
other securities for cash borrowings sale of assets investment redemption of debenture or
preference share repayment of loan payment of tax dividend distribution etc Thus the
CFS summarizes the cash inflows and outflows
An analysis of cash flows is useful for short-run planning A firm needs sufficient cash to
debts maturing in the near future to pay interest and other expenses and to pay dividends to
shareholders The firm can make projections of cash flows and outflows for the near future to
determine the availability of cash This cash balance can be matched with the firms need for
cash during the period and accordingly arrangements can be made the deficit or invest the
surplus cash temporarily A historical analysis of cash flows provides insight to prepare
reliable cash flow projections for the immediate future
A statement of changes in financial position on cash basis commonly known as cash flow
statement summarizes the causes of changes in cash position between dates of two balance
sheets It indicates the sources amp uses of cash The cash flow statement is similar to the fund
flow statement except that it focuses attentions on cash instead of working capital (funds)
Thus this statement analyses change in non-current accounts as well as current accounts
(other than cash) to determine the flow of cash
The CFS is based on the concept on the WC Where as the CFS is based in cash which is only
the element of WC Thus the CFS provides details of cash movements whereas the FFS
provides the details of funds movements
The CFS considers only the actual movement of cash whereas the FFS considers the
movements of the funds as defined in terms of net working capital
CASH-FLOW STATEMENT
A cash-flow statement is a statement showing inflows (receipts) and outflows (payments) of
cash during a particular period In other words it is a summary of sources and applications of
Cash during a particular span of time It analyses the reason for changes in balance of cash
between the two balance sheet dates The term Cash here stands for cash and cash
equivalents
A cash-flow statement includes only those items which affect cash As such the cash-flow
statement is called a statement of changes in financial position - cash basis
A cash - flow statement can be for the past or can be projected for a future period
OBJECTS OR USES OF CASH-FLOW STATEMENT
The main objectives behind preparing a cash-flow statement can be laid down as under-
bull USEFUL FOR SHORT-TERM FINANCIAL PLANNING-
A cash-flow statement provides information for planning the short-term financial needs of the
firm Since it provides information regarding the sources and utilization of cash during a period
it become easier for the management to assess whether it will have Adequate cash to meet day-
to-day expenses and pay the long - term loans and interest Thereon and whether it has enough
cash to pay for the purchase of fixed assets or not
USEFUL FOR PREARING THE CASH BUDGET-
A cash-flow statement prepared for the future period is helpful in preparing a cash budget It
informs the management about the future period is helpful in preparing a cash budget It informs
the management about the surplus or deficit periods of cash ie in which months the payments
will be in excess of receipts It helps in planning the investment of surplus cash in short-term
investment and to plan short-term credit in advance of deficit periods
bull COMPARISON WITH CASH BUDGET-
A cash budget is prepared at the commencement of the year whereas a cash flow Statement is
prepared at the end of the year A comparison between the two helps in ascertaining the extent
to which the financial resources of the firm have been generated and used according to the plan
Causes of variances between the figures of two statements can be analyzed and proper
corrective measures may be takes
bull STUDY OF THE TREND OF CASH RECEIPTS AND PAYMENTS-
A cash-flow statement reveals the speed at which the cash is being generated from debtors stock
and other current assets the speed at which the current liabilities are being paid It enables the
management to assess the true position of the cash in future
bull IT EXPLAINS THE DEVIATIONS OF CASH FROM EARNINGS-
A firm may earn huge profits yet it may have paucity of cash or when it suffered a loss it may
still have plenty of cash A cash flow statement explains the reasons for it
HELPFUL IN ASCERTAINING CASH-FLOW FROM VARIOUS
ACTIBITIES SEPARATELY-
A cash-flow statement aims at highlighting the cash flow from operating investing and
financing activities separately It includes how much cash has been generated or used in these
activities
bull HELPFUL IN MAKING DIVIDEND DECISIONS-
Dividend must be paid within 42 days of its declaration Hence the management takes the help of
cash-flow statement to ascertain the position of cash generated from operating activities which
can be used for payment of dividend
IMPORTANCE AND RELEVANCE OF CFS
The CFS has gained importance in view of the fact that there are many managerial Decisions
which are taken in the light of the cash availability or cash position of the firm
For example declaration of dividend by the company requires cash disbursement and
Therefore the Board of Directors must consider the cash position before proposing a dividend
The CFS also provides information for the short term financial planning and in particular the
short term cash needs of the firm
In view of increasing importance and relevance of the CFS the clause 32 of the Listing
agreement (between a Company and the Stock Exchange where the shares proposed to be listed)
has been amended by the SEBI As a result the listed companies in India are now required to
supply a copy of the CFS to each shareholder as a part of Annual Report As a result the listed
companies have started a practice of sending a CFS for which the BS has been prepared as
apart of the Annual Report of the company
DIFFRENCE BETWEEN CASH - FLOW STATEMENT AND
CASH BUDGET
There is not much difference between cash flow statement and a cash budget The
only difference is that a cash flow statement is prepared for a past period where as cash
budget is prepared for a future period Hence it is of limited use as far as the future
periods are concerned A cash budget is therefore prepared showing how much cash is
likely to be received and what will be the disbursements during a future period of time
Thus a cash budget indicates in which months there will be surplus cash and in which
moths there will be deficiency of cash resources The management can then take suitable
decision to invest the surplus cash or make arrangement for the deficiency of cash at the
required time
LIQUIDITY
It does not present true picture of the liquidity of the firm the liquidity does
not depend upon cash alone Liquidity also depends upon those assets
which can be converted into cash easily
bull Exclusion of these assets obstructs the true reporting of the ability of the firm to
meet its liabilities when they become due for payment
bull The possibilities of window - dressing is higher in case of cash position in
comparison to the working capital position of the firm
bull The cash balance can be easily maneuvered by postponing purchases and other
payments and by rapidly collecting cash from debtors before the balance sheet date
Hence a fund - flow statement presents a more realistic picture than a cash flow
statement
bull Cash flow statement ignores non- cash charges Hence the true position of the
enterprise cannot be judged by cash flow statement
bull It is prepared on cash basis and hence ignores one of the basic concept of accounting
namely accrual concept
PROCEDURE OF PREPARING CASH FLOW STATEMENT-
The institute of charted accountants of India has issued accounting standards (as)-3 revised for
preparing a cash flow statement This accounting standard has been made mandatory in respect
of accounting periods commencing on or after 1st April 2001 for certain enterprises These
enterprises are-
bull Enterprises whose equity or debt securities are listed on a recognized stock exchange in
India And enterprise that are in the process of issuing equity or debt securities that will
be listed on a recognized stock exchange in India
bull All other commercial industrial and business enterprises whose turnover for accounting
period Rs 50 crores
As such the cash flow statement has been prepared according to as -3 revised in this project
According to as-3 revised the cash flow statement summarizes the cash inflows and cash
outflows and the net changes (increase or decrease) in cash and cash equipment resulting from
operating investing and financing activities of a firm during a period The following terms are
used for preparing a cash flow statement
CASH-
It compares cash in hand and demands with banks
CASH EQUIVALENTS-
There are short - term highly liquid investments that are readily into known amounts of cash
and which present insignificant risk of changes in their values Normally an investment will be
termed as cash equivalent only if it has a short maturity period say three months or less from the
date of its acquisition Examples of cash equivalent are treasury bills commercial papers etc
Which are purchased with cash that is in excess of immediate needs investment in shares are
excluded from cash equivalents unless they are cash equivalent in reality For example the
preference shares of the company which are purchased shortly before their redemption date will
be included in cash equivalents provided there is only an insignificant risk of failure of the
company in repaying the amount at the date of the maturity
CLASSIFICATION OF CASH FLOW-
According to as -3 (revised) cash flow statement should be presented in a manner that it reports
inflows of cash by classifying them into three categories namely operating investing and
financing activities Classification of all activities into these activities on the cash and cash
equivalents of the enterprise such information will be helpful in evaluating the relationships
among these three activities are explained as below
CASH FLOW FROM OPERATING ACTIVITIES-
Operating activities are the main revenue generating activities of an enterprise As such they
include cash flows from those transactions and events which enter into the ascertainment of
net profit or loss of the enterprise Examples of cash flows arising operating activities are
bull Cash receipts from the sale of goods and rendering of services
bull Cash receipts from royalties fees commissions and other revenue
bull Cash payments to suppliers for goods and services
bull Cash payments to and on behalf of employees
bull Cash receipts and cash payments of an insurance enterprise for premiums and claims
annuities and other policy benefits
bull Cash receipts and payments relating to future contracts forward contracts option
contracts and swap contracts when the contracts are held for dealing or trade purpose and
bull Cash payments of refunds of income taxes unless they can be specifically identified with
financing and investing activities
CASH FLOW FROM INVESTING ACTIVITIES-
Investing activities include the purchase and sale of long term assets such as land building plant
and machinery etc not held for resale These activities also include the purchase and sale of such
investment which are not including in cash equipments Cash flow from investing activities
discloses the expenditures incurred for resources intended to generate future income and cash
flows
Examples cash flow arising from investing activities are
bull Cash payments to acquire fixed assets (including intangible)
bull Cash receipts from sale of fixed assets (including intangibles)
bull Cash payments to acquire shares warrants or debt instruments of other enterprises
(other than receipts for those instruments considered to be cash equivalents)
bull Cash receipts from sale of shares warrants or debt instruments of other enterprises (other
than receipts for those instruments considered to be cash equivalents)
bull Cash advances and loans made to third parties In case of financial enterprises these will
be treated as cash flow from operating activities
bull Cash receipts from the repayment of advances and loans made to third parties In case of
financial enterprises these will be treated as cash flow from operating activities
bull Cash receipts of insurance claim for property involved in accident and
bull Cash receipts of interest and dividend In case of financial enterprise these will be treated
cash flow from operating activities
CASH FLOW FROM FIANCING ACTIVITIES-
Financing activities are the activities that result in change in capital and borrowing of the
enterprise
Examples of cash flows arising from financing activities are
bull Cash receipts from issuing shares or other similar instruments
bull Cash receipts from issuing debentures loans bonds and other short term or long term
borrowing
bull Cash repayment of amounts borrowed buy back of equity shares redemption of
preference shares debentures loans bonds etc
bull Cash payment of interest and dividend
IMPORTANT NOTE
In case of financial enterprise such as bank or mutual fund company cash Outflow
and cash inflow arising from the purchase and sale of securities will Be treated as
flows from operating activities This is because purchase and sale of securities is a
part of operating activity in case of financial enterprise In addition interest paid
and interest received as well as dividends received will also be treated as cash flow
from operating activities in case of financial Enterprises
CASH FLOW STATEMENT
(DIRECT METHOD)
CASH FLOW FROM OPERATING ACTIVITIES
Cash receipts from costumers
Cash paid to suppliers and employers ()
Cash generated from operations
Income tax paid ()
Cash flows from extraordinary item
plusmn Extra ordinary items
Net cash from operating activities
CASH FLOW FROM INVESTING ACTIVITIES-
Purchase of fixed assets
Proceed from sale equipment ()
Interest received
Dividend received ()
Net cash from investing activities
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from insurance of share capital
Proceeds from long- term borrowings ()
Repayment of from long-term borrowings
Interest paid
Dividend paid ()
Net cash from financing activities
Net increase in cash and cash equivalent
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
SOME SPECIAL TERMS-
i) INTERSET AND DIVIDEND-
Cash inflow from interest and dividends and cash outflow on account of interest and
dividends should be disclosed separately Cash inflow arising from interest and dividends
received should be shown as cash flow from investing activities where as cash outflow
disclosed outflow on account of interest and dividend paid should be shown as cash flow
from financing activity
ii) TAXES ON INCOME-
Tax paid on income is a part of cash flow from operating activity Hence taxes paid are
shown as a deduction under cash flow from operating activity
iii) EXTRA ORDINARY ITEMS-
Cash flow relating to extra ordinary items such as bad debts recovered Claims received from
insurance companies winning of a lottery or a law etc Should be disclosed separately as
arising from operating investing or financing activities For example the amount received
for insurance company on account of loss of stock by fire Earthquake and floods etc Should
be reported as cash flow from operating activities
iv) SIGNIFICANT NON - CASH TRANSACTION-
There are some investing and financing activities which do not require the use of cash or
cash equivalents Such non cash activities should be excluded from the cash flow statement
Examples are the acquisition of assets by issue of debentures or shares conversion of
shares into debentures etc Such significant on non cash transaction should be disclosed
outside the cash flow statement
CASH FLOW STATEMENT
(INDIRECT METHOD)
CASH FLOW FROM OPERARATTNG ACTIVITIES
Net profit before taxation and extraordinary item
Adjustment for
Depreciation
Foreign exchange loss
Interest income
Dividend income
Interest expense
Operating profit before working capital changes
Increase in sundry debtors
Decrease in inventories
Decrease in sundry creditors
Cash generated from operations
Income tax paid ()
Cash flow before extraordinary item
plusmn Extra - ordinary items
Net cash from operating activities
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of fixed assets ()
Proceeds from sale of equipment
Interest received
Dividend received ()
Net cash from investing activities
CASH FLOW FROM FINANCING ACTIVITIES-
Proceeds from insurance of share capital
Proceeds from long - term borrowings
Repayments of from long - term borrowings ()
Interest paid ()
Dividend paid ()
Net cash from financing activities
Net increase in cash and cash equivalent
Cash and cash equivalents at beginning of period
CHANGES IN CASH FLOWS
Changes in cash flows can be treated to the following
1 Net profit will increase the cash flows these cash flows will be
increased further if there are any non-cash changes (such as depreciation
and amortization)
2 Any payment of dividends will decrease the cash flows as will the
repayment of debt an issue of share or debt will also increase the
cash flows
3 An increase in non-cash assets will decrease cash flows increase in
current assets and fixed assets will result in drain on cash flows
Thus a statement of changes in cash flows ie the cash flow statement
classifies all Changes into one of three categories - operating investing or
financing activities Therefore the preparation of a statement of changes in cash
flows requires classification of changes in liabilities shareholders equity and
non-cash assets into one of these categories although some items will not fit
easily onto one other
h equivalent at end of period
STEP- BY-STEP PROCEDURE TO PREPARE CFS
1 Calculate the net increase or decrease in cash and cash equivalents-
For this purpose the opening balance of total cash and cash equivalents is compared with the
closing balance of cash and equivalents
Increasedecrease in cash and equivalents
Opening balance Closing Balance
Cash in hand
Cash in bank
Short-term Investment
Total
The difference between the total of opening and closing balance will be increased or
Decreased in cash equivalents during the period It may be noted that if there are only one or
two of items of cash etc
2 Net Cash flaw from operating activities-
The term operating refers to the normal purchase of goods and services On the basis of the
information contained in the comparative BS s and the IS and the additional Information the
net cash flow generated or use by the operating activities may be ascertained The IS prepared
by the firm gives the net profit figure earned by the firm On actual basis ie all items in the
IS are incorporated on the basis of earnedaccrued even
3 If not resulting in cash movements-
So the profit or loss as by the IS may not result in increase or decrease in cash balance by the
SYNOPSIS
INTRODUCTION
ESCORTS PVT LTD is a private limited company not listed in a stock exchange of India
and employees 900 highly trained personnel Its manufacturing plants are strategically located
in close proximity to its customers at Faridabad (Haryana) Noida (UP)
OBJECTIVES OF THE STUDY
bull To find the movement of cash inflow and cash outflow
bull To make the comparison between cash inflow and
bull Cash outflow
bull To prepare the Cash Flow Statement
bull To analyze the Balance Sheet of the company in terms of Cash Flow Statement
bull To focus on various activities of the organization in terms of Operating
Financing Investment
SCOPE OF THE STUDY
Financial resources are the assets for the company and their productivity is key
factor for profitability It is necessary to know their problems their knowledge
skills abilities amp the measures that can be taken to reduce them By analyzing this
top management can build good relations with the employees
The whole study is to determine the competencies of different employees who are
working in ESCORTS PVT LTD By analyzing it the top management can
introduce the concept of competency mapping in the organization Through this
management can attempt to use more suitable strategies towards the human
resource development
The research is confined to elicit the existing gap between the standard skill
required to perform the job and the skill processed by the employees at ESCORTS
PVT LTD And to provide them suitable training program to over come those gaps
for the better utilization of human resources
RELEVANCE
The scope of the study was confined to the outside parties like creditors
shareholders government etc Who want to invest their money in the
company
The benefit of the report for the company is that through this report they can come
to know about the cash flow statements of the company
This study also unable the company that their cash is not utilizing in unnecessary
things
The benefit of the report for the researcher is that it has helped to get knowledge
about the cash inflow and cash
RESERRCH METHODOLOGY-
RESEARCH DESIGN
bull The study was conducted under well- structured approach
bull The project lasted for 4 weeks and the year 2009 ie from 08 July to 12
Aug2009
bull The questionnaire method amp personal interview method was used to collect
the primary data for the study
The secondary data is collected from Internet amp company training material and
many other company materials
SAMPLE DESIGN
The process of extracting a sample from a population is called sampling
procedure The selection of sampling procedure to conduct the research
depends upon the nature of the study and the objective to be accomplished
Judgment sampling technique is adopted to select the respondents in this
study The sample design included the various departments in the YAMAHA
MOTORS PVT LTD
Methodology of date collection
bull Conducting personal interview
bull Data collection from primary and secondary sources
bull Designing questionnaire
bull Selecting sample size from the sample frame for the survey
bull Questionnaire distribution
bull Analysis of collected data with the help of statistical tools
bull Interpretation of collected data
bull Stating the conclusion based on the entire study
Sampling Technique
The sampling technique used for this research is of non-probability and convenience
sampling
Sample Unit
Employees of the company
Sample Size
For this research study the sample size is 25 respondents
Sources of data
Primary data
Primary data is the data which is collected by the researcher for the first time
and which was not there The tools used to collect the data are-
1)Questionnaire method from the employers in different departments
2) Face to Face personal interactions
Secondary Data
The data already collected is called as secondary data The relevant information
for this study has been collected from secondary source such as
Books
Journal
Reports
Publication by the organizational circulation
Company records
Business bulletins
Internet
Secondary data is also collected from various of the internet and intranet Some
of the website trough which information was gathered was through
HYPOTHESIS
The report is analyzed under the presumption that cash flow position of
YAMAHA MOTORS PVTLTD It can be improved and made effective in
terms of cash flows
In testing the above hypothesis the following aspects will be considered
1 Balance sheet comparisons
2 Presentation of cash flow statement in terms of revised AS-3
LIMITATIONS
The study though conducted to the best of the ability suffers from some
certain limitations There are
The data is secondary one and as such its reliability may be
questioned upon
The time availability for the study is less and as such it hinders thee
progress of the study
Senior officials were rarely approachable
Websites were not giving comprehensive data
Not having face-to-face interaction to get more relevant
information
Analysis and interpretation of data was done on the assumption that
the respondentsrsquo information was online
Information collected was totally subjective
The interviews are done during office hours but could not be done
for the other employees of other
DATA ANALYSIS
ESCORTS PVT LTD
CASH FLOW STRATEMENT
Year Ended Year Ended
30092009 30092008
Rs Crores Rs
Crores
A Cash Flow from Operating Activities
Net profit before tax (1733) 3444
Adjustment for
Loss on sale Provision for diminution in value of Long Term
Investments amp loans to Group Companies 189 4018
Gain on sale of Long Term Investments (122) (9492)
Gain on sale of Asset (013) -
Depreciation 4497 3955
Misc Exp Assets Write off Provisions 808 750
Interest Expense 7222 7999
Dividend Income (002) (001)
Interest Income (2082) -
Operating Profit before working capital changes 8764 10673
Adjustments for
Trade and other Receivables (8817) (12035)
Inventories 1379 (4692)
Trade Payables 6705 19046
Miscellaneous Expenditure (750) (511)
(1483) 1808
Cash Generated from Operations 7281 12481
Direct Taxes (Paid)Refunds (1785) 3166
Net Cash Flow from operating activities 5496 15647
B Cash Flow from Investing Activities
Purchase of Fixed Assets (3095) (2794)
Proceeds from sale of Fixed Assets 086 177
Movement in Loans and Advances (1627) (1644)
Sale of Investments 3233 11452
Short Term Deposits with schedule Banks (231) (1048)
Interest Received 2070 -
Dividend Received 002 001
Net Cash Flow from Investing activities 438 6144
Proceeds from Share Capital amp Securities Premium 11444 -
Proceeds from Long Term Borrowings 8660 -
Less Repayment of Long Term Borrowings (054) (7896)
Proceeds (Repayment) from short term borrowings (net) (22726) -
Interest Paid (7740) (8223)
Net Cash used in financing activities (10416) (16119)
Net Increase(Decrease) in Cash and Cash equivalents (4482) 5672
Cash and Cash equivalents as at 01102008 10565 4893
Cash and Cash equivalents as at 30092009 6083 1056
ANALYSIS OF CASH FLOW
From the cash flow statements of the ESCORT PVTLTDIt can be analyzed
from the two years that the net cash balance of the company has increased
manifold in 30-09-2008 than the year 30-09-2009
The net profit in 30-09-2008 is higher than the 30-09-2009 but due to certain
changes there has been increase in the cash balance
The interest paid this year is ore of the last year which implies that thee
company has not repaid his borrowed capital due to which the interest has got
down
The depreciation has increased but it does not affect cash to an extent as it is a
non-cash item In the head of working capital there is drastic change in the cash
balance in the form of ldquoTrade and other Receivables which has affected the cash
balance
There is outflow of cash for receivables rather than the inflow in the last year
So the net effect is that the cash from operating activities has been decreased
two times from the last year
The company has no accumulated losses as at the end of the financial year ie
September 31 2008
Provision for taxation has been made in accordance with the requirement of AS-
22 issued by Institute of Charted Accountants of India
Pursuant to that current year deferred tax liability have been charged to profit amp
loss account
In opinion of the board of directors of thee company the current assets loans
and advances have a value on realization in the ordinary course of the business at
least equal to the amount stated in the balance sheet and provision for all
liabilities have been made
Balance of sundry debtors creditors loans and advances are subject to confirmation by
the concerned parties
METHOD OF ANALYSIS
1 Data analysis is done using the following statistical tools wherever required in
order to extract meaningful information from the collected data
o Simple percentage and averages
o Bar diagram
o Cone diagram
o Pie diagram
2 The collected data from the questionnaire has been put together in the form of
tables
3 Percentage has been calculated wherever necessary for generalization of the
data
4 Data analysis and interpretation has been done on the basis of primary and
secondary data
5 The findings researches have been recorded based on the analysis
6 The study conducted pertains only to YAMAHA MOTORS INDIA PVTLTD
All bank balances (debitcredit) have been confirmed by the concerned bank
Identified from the available information which has been relied upon by the auditors
The names of small-scale industrial units to whom outstanding for more than
thirty days within agreed terms
The company has 9996 of shareholders in its subsidiary company named as
ESCORTS PVT LTD As at 31-03-2008
So the net effect is that the net cash from investing activities has many more
times than the last year which is negative Now the company has repaid its long
term borrowing more than the last year which has decreased the cash balance by
the little amount
Balance with the schedule banks under the head current amp collection account
amounting to represent funds in transit lying with schedule banks pending
transfer against loan liabilities under the head cash credit amp bill discounting
LIQUIDITY RATIO
1 CURRENT RATIO
(Amount in Rs)
Current Ratio
Year Current Assets Current Liabilities Ratio
2003 58574151 7903952 7412004 69765346 31884616 2192005 72021081 16065621 4482006 91328208 47117199 1942007 115642068 30266661 382
Interpretation
As a rule the current ratio with 21 (or) more is considered as satisfactory
position of the firm
When compared with 2006 there is an increase in the provision for tax because
the debtors are raised and for that the provision is created The current liabilities
majorly included Lanco Group of company for consultancy additional services
The sundry debtors have increased due to the increase to corporate taxes
In the year 2006 the cash and bank balance is reduced because that is used for
payment of dividends In the year 2007 the loans and advances include majorly
the advances to employees and deposits to government The loans and advances
reduced because the employees set off their claims The other current assets
include the interest attained from the deposits The deposits reduced due to the
declaration of dividends So the other current assets decreased
The huge increase in sundry debtors resulted an increase in the ratio which is
above the benchmark level of 21 which shows the comfortable position of the
firm
GRAPHICAL REPRESENTATION
741
219
448
194
382
000
100
200
300
400
500
600
700
800
Ratio
2003 2004 2005 2006 2007
Years
CURRENT RATIO
Ratio
2 QUICK RATIO
(Amount
in Rs)
Quick Ratio
Year Quick Assets Current Liabilities Ratio
2003 58574151 7903952 741
2004 52470336 31884616 165
2005 69883268 16065620 435
2006 89433596 47117199 19
2007 115431868 30266661 381
Interpretation
Quick assets are those assets which can be converted into cash with in a short
period of time say to six months So here the sundry debtors which are with the
long period does not include in the quick assets
Compare with 2006 the Quick ratio is increased because the sundry debtors are
increased due to the increase in the corporate tax and for that the provision
created is also increased So the ratio is also increased with the 2006
GRAPHICAL REPRESENTATION
741
165
435
190
381
000
100
200
300
400
500
600
700
800
Ratio
2003 2004 2005 2006 2007
Years
QUICK RATIO
Ratios
3 ABOSULTE LIQUIDITY RATIO
(Amount
in Rs)
Absolute Cash Ratio
Year Absolute Liquid Assets Current Liabilities Ratio
2003 31004027 7903952 392
2004 10859778 31884616 034
2005 39466542 16065620 246
2006 53850852 47117199 114
2007 35649070 30266661 118
Interpretation
The current assets which are ready in the form of cash are considered as absolute
liquid assets Here the cash and bank balance and the interest on fixed assts are
absolute liquid assets
In the year 2006 the cash and bank balance is decreased due to decrease in the
deposits and the current liabilities are also reduced because of the payment of
dividend That causes a slight increase in the current yearrsquos ratio
GRAPHICAL REPRESENTATION
392
034
246
114 118
0
05
1
15
2
25
3
35
4
Ratios
2003 2004 2005 2006 2007
Years
ABSOLUTE CASH RATIO
Ratios
LEVERAGE RATIOS
4 PROPRIETORY RATIO
(Amount
in Rs)
Proprietory Ratio
Year Share Holders Funds Total Assets Ratio
2003 67679219 78572171 086
2004 53301834 88438107 06
2005 70231061 89158391 079
2006 56473652 106385201 053
2007 97060013 129805102 075
Interpretation
The proprietary ratio establishes the relationship between shareholders funds to
total assets It determines the long-term solvency of the firm This ratio indicates
the extent to which the assets of the company can be lost without affecting the
interest of the company
There is no increase in the capital from the year2004 The share holderrsquos funds
include capital and reserves and surplus The reserves and surplus is increased
due to the increase in balance in profit and loss account which is caused by the
increase of income from services
Total assets includes fixed and current assets The fixed assets are reduced
because of the depreciation and there are no major increments in the fixed assets
The current assets are increased compared with the year 2006 Total assets are
also increased than precious year which resulted an increase in the ratio than old
GRAPHICAL REPRESENTATION
086
060
079
053
075
000
010
020
030
040
050
060
070
080
090
Ratios
2003 2004 2005 2006 2007
Years
PROPRIETORY RATIO
Ratios
ACTIVITY RATIOS
5 WORKING CAPITAL TURNOVER RATIO
(Amount
in Rs)
Working Capital Turnover Ratio
Year Income From Services Working Capital Ratio
2003 36309834 50670199 0722004 53899084 37880730 1422005 72728759 55355460 1312006 55550649 44211009 1262007 96654902 85375407 113
Interpretation
Income from services is greatly increased due to the extra invoice for Operations
amp Maintenance fee and the working capital is also increased greater due to the
increase in from services because the huge increase in current assets
The income from services is raised and the current assets are also raised together
resulted in the decrease of the ratio of 2007 compared with 2006
GRAPHICAL REPRESENTATION
072
142 131126
113
000
020
040
060
080
100
120
140
160
Ratio
2003 2004 2005 2006 2007
Years
WORKING CAPITAL TURNOVER RATIO
Ratio
6 FIXED ASSETS TURNOVER RATIO
(Amount in Rs)
Fixed Assets Turnover Ratio
Year Income From Services Net Fixed Assets Ratio
2003 36309834 28834317 126
2004 53899084 29568279 182
2005 72728759 17137310 424
2006 55550649 15056993 369
2007 96654902 14163034 682
Interpretation
Fixed assets are used in the business for producing the goods to be sold This
ratio shows the firmrsquos ability in generating sales from all financial resources
committed to total assets The ratio indicates the account of one rupee
investment in fixed assets
The income from services is greaterly increased in the current year due to the
increase in the Operations amp Maintenance fee due to the increase in extra invoice
and the net fixed assets are reduced because of the increased charge of
depreciation Finally that effected a huge increase in the ratio compared with the
previous yearrsquos ratio
GRAPHICAL REPRSENTATION
126182
424 369
682
000
100
200
300
400
500
600
700
Ratios
2003 2004 2005 2006 2007
Years
FIXED ASSETS TURNOVER RATIO
Ratios
7 CAPITAL TURNOVER RATIO
(Amount
in Rs)
Capital Turnover Ratio
Year Income From Services Capital Employed Ratio
2003 36309834 37175892 0982004 53899084 53301834 1012005 72728759 70231061 1042006 55550649 56473652 0982007 96654902 97060013 100
Interpretation
This is another ratio to judge the efficiency and effectiveness of the company
like profitability ratio
The income from services is greaterly increased compared with the previous year
and the total capital employed includes capital and reserves amp surplus Due to
huge increase in the net profit the capital employed is also increased along with
income from services Both are effected in the increment of the ratio of current
year
GRAPHICAL REPRESENTATION
098
101
104
098
100
094095096097098099100101102103104
Ratios
2003 2004 2005 2006 2007
Years
CAPITAL TURNOVER RATIO
Ratios
8 CURRENT ASSETS TO FIXED ASSETS RATIO
(Amount
in Rs)
Current Assets To Fixed Assets Ratio
Year Current Assets Fixed Assets Ratio
2003 58524151 19998020 2932004 69765346 18672761 3742005 72021081 17137310 4202006 91328208 15056993 6072007 115642068 14163034 817
Interpretation
Current assets are increased due to the increase in the sundry debtors and the net
fixed assets of the firm are decreased due to the charge of depreciation and there
is no major increment in the fixed assets
The increment in current assets and the decrease in fixed assets resulted an
increase in the ratio compared with the previous year
GRAPHICAL REPRESENTATION
293374
420
607
817
000
100
200
300
400
500
600
700
800
900
Ratios
2003 2004 2005 2006 2007
Years
CURRENT ASSETS TO FIXED ASSETS RATIO
Ratios
PROFITABILITY RATIOS
GENERAL PROFITABILITY RATIOS
9 NET PROFIT RATIO
(Amount in Rs)
Net Profit Ratio
Year Net Profit After Tax Income from Services Ratio
2003 21123474 36039834 059
2004 16125942 53899084 030
2005 16929227 72728759 023
2006 18259580 55550649 033
2007 40586359 96654902 042
Interpretation
The net profit ratio is the overall measure of the firmrsquos ability to turn each rupee
of income from services in net profit If the net margin is inadequate the firm
will fail to achieve return on shareholderrsquos funds High net profit ratio will help
the firm service in the fall of income from services rise in cost of production or
declining demand
The net profit is increased because the income from services is increased The
increment resulted a slight increase in 2007 ratio compared with the year 2006
GRAPHICAL REPRESENTATION
059
030
023
033
042
000
010
020
030
040
050
060
Ratios
2003 2004 2005 2006 2007
Years
NET PROFIT RATIO
Ratios
10 OPERATING PROFIT
(Amount in Rs)
Operating Profit
Year Operating Profit Income From Services Ratio
2003 36094877 36309834 099
2004 27576814 53899084 051
2005 29540599 72728759 041
2006 31586718 55550649 057
2007 67192677 96654902 070
Interpretation
The operating profit ratio is used to measure the relationship between net profits
and sales of a firm Depending on the concept it will decide
The operating profit ratio is increased compared with the last year The earnings
are increased due to the increase in the income from services because of
Operations amp Maintenance fee So the ratio is increased slightly compared with
the previous year
GRAPHICAL REPRESENTATION
099
051
041
057
070
000
010
020
030
040
050060
070
080
090
100
Ratios
2003 2004 2005 2006 2007
Years
OPERATING PROFIT RATIO
Ratios
11 RETURN ON TOTAL ASSETS RATIO
(Amount in Rs)
Return on Total Assets Ratio
Year Net Profit After Tax Total Assets Ratio
2003 21123474 78572171 027
2004 16125942 88438107 018
2005 16929227 89158391 019
2006 18259580 106385201 017
2007 40586359 129805102 031
Interpretation
This is the ratio between net profit and total assets The ratio indicates the return
on total assets in the form of profits
The net profit is increased in the current year because of the increment in the
income from services due to the increase in Operations amp Maintenance fee The
fixed assets are reduced due to the charge of depreciation and no major
increments in fixed assets but the current assets are increased because of sundry
debtors and that effects an increase in the ratio compared with the last year ie
2006
GRAPHICAL REPRESENTATION
027
018 019017
031
000
005
010
015
020
025
030
035
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON TOTAL ASSETS
Ratios
12 RESERVES amp SURPLUS TO CAPITAL RATIO
(Amount in Rs)
Reserves amp Surplus To Capital Ratio
Year Reserves amp Surplus Capital Ratio
2003 65599299 2079920 31542004 34582554 18719280 1852005 51511781 18719280 2752006 37754372 18719280 2022007 78340733 18719280 419
Interpretation
The ratio is used to reveal the policy pursued by the company a very high ratio
indicates a conservative dividend policy and vice-versa Higher the ratio better
will be the position
The reserves amp surplus is decreased in the year 2006 due to the payment of
dividends and in the year 2007 the profit is increased But the capital is
remaining constant from the year 2004 So the increase in the reserves amp surplus
caused a greater increase in the current yearrsquos ratio compared with the older
GRAPHICAL REPRESENTATION
3154
185 275 202419
-
500
1000
1500
2000
2500
3000
3500
Ratios
2003 2004 2005 2006 2007
Years
RESERVES amp SRUPLUS TO CAPITAL RATIO
Ratios
OVERALL PROFITABILITY RATIOS
13 EARNINGS PER SHARE
(Amount in Rs)
Earnings Per Share
Year Net Profit After Tax No of Equity Shares Ratio
2003 21123474 207992 101562004 16125942 1871928 8612005 16929227 1871928 9042006 18259580 1871928 9752007 40586359 1871928 2168
Interpretation
Earnings per share ratio are used to find out the return that the shareholderrsquos earn
from their shares After charging depreciation and after payment of tax the
remaining amount will be distributed by all the shareholders
Net profit after tax is increased due to the huge increase in the income from
services That is the amount which is available to the shareholders to take There
are 1871928 shares of Rs10- each The share capital is constant from the year
2004 Due to the huge increase in net profit the earnings per share is greaterly
increased in 2007
GRAPHICAL REPRESENTATION
10156
861904 975
2168
000
2000
4000
6000
8000
10000
12000
Ratios
2003 2004 2005 2006 2007
Years
EARNINGS PER SHARE
Ratios
14 PRICE EARNINGS (PE) RATIO
(Amount in Rs)
Price Earning (PE) Ratio
Year Market Price Per Share Earnings Per Share Ratio
2003 3254 10156 0322004 2847 861 3302005 3752 904 4152006 3017 975 3092007 5185 2168 239
Interpretation
The ratio is calculated to make an estimate of application in the value of share of
a company
The market price per share is increased due to the increase in the reserves
amp surplus The earnings per share are also increased greaterly compared
with the last year because of increase in the net profit So the ratio is
decreased compared with the previous year
GRAPHICAL REPRESENTATION
032
330
415
309
239
000
050
100
150
200
250
300
350
400
450
Ratios
2003 2004 2005 2006 2007
Years
PE RATIO
Ratios
15 RETURN ON INVESTMENT
(Amount in Rs)
Return on Investment
Year Net Profit After Tax Share Holders Fund Ratio
2003 21123474 67679219 031
2004 16125942 53301834 03
2005 16929227 70231061 024
2006 18259580 56473652 032
2007 40586359 97060013 042
Interpretation
This is the ratio between net profits and shareholders funds The ratio is
generally calculated as percentage multiplying with 100
The net profit is increased due to the increase in the income from services ant
the shareholders funds are increased because of reserve amp surplus So the ratio
is increased in the current year
GRAPHICAL REPRESENTATION
031 030
024
032
042
000
005
010
015
020
025
030
035
040
045
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON INVESTMENT RATIO
RatioS
DATA COLLECTION
The data can be of two types
Primary Data
Secondary Data
Primary Data
Primary data are those data which is originally collected afresh
Secondary Data
Secondary data are those data which are already collected and stored and which has
been passed through statistical research
In this project Secondary data has been collected from following sources-
Annual report
Books
MIS
Other material and report published by company There are two methods to prepare
the Cash flow Statement
ndirect Method
I
The indirect method (or reconciliation method) starts with net income and converts it
to net cash flow from operating activities In other words the indirect method adjusts
net income for items that affected reported net income but did not affect cash To
compute net cash flow from operating activities non-cash charges in the income
statement are added ack to net income and non-cash credits are deducted
b
Direct Method
Under the direct method the statement of cash flows reports net cash flow from
operating activities as major classes of operating cash receipts (eg cash collected from
customers and cash received from interest and dividends) and cash disbursements (eg
cash paid to suppliers for goods to employees for services to creditors for interest and
to government authorities for taxes)
INDIRECT VERSUS DIRECT METHOD
The most contentious decision that the FASB faced in issuing Statement No 95 was
choosing between the direct method and the indirect method of determining net cash
flow from operating activities Companies lobbied against the direct method urging
adoption of the indirect method Commercial lending officers expressed a strong
preference to the FASB hat the direct method be required
tCF-Page 3 of 5
In Favor of the Direct Method
The principal advantage of the direct method is that it shows operating cash receipts and
payments That is it is more consistent with the objective of a statement of cash flows to
provide information about cash receipts and cash payments than the in-direct method
which does not report operating cash receipts and payments
Supporters of the direct method contend that knowledge of the specific sources of
operating cash receipts and the purposes for which operating cash payments were made
in past periods is useful in estimating future operating cash flows Furthermore in-
formation about amounts of major classes of operating cash receipts and payments is
more useful than information only about their arithmetic sum (the net cash flow from
operating activities) Such information is more revealing of an enterprises ability (1) to
generate sufficient cash from operating activities to pay its debts (2) to reinvest in its
operations and (3) to make distributions to its owners
Many corporate providers of financial statements say that they do not currently collect
information in a manner that allows them to determine amounts such as cash received
from customers or cash paid to suppliers directly from their accounting systems But
supporters of the direct method contend that the incremental cost of assimilating such
operating cash receipts and payments data is not significant
In Favor of the Indirect Method
The principal advantage of the indirect method is that it focuses on the differences
between net income and net cash flow from operating activities That is it provides a
useful link between the statement of cash flows and the income statement and balance
sheet
Many providers of financial statements contend that it is less costly to adjust net income
to net cash flow from operating activities (indirect) than it is to report gross operating
cash receipts and payments (direct) Supporters of the indirect method also state that the
direct method which effectively reports income statement information on a cash rather
than an accrual basis may erroneously suggest that net cash flow from operating
activities is as good as or better than net income as a measure of performance
Special Rules Applying to Direct and Indirect Methods
Companies that use the direct method are required at a
minimum to report separately the following classes of
operating cash receipts and payments
Receipts
1048713 Cash collected from customers (including lessees licensees etc)
1048713 Interest and dividends received
1048713 Other operating cash receipts if any
Payments
1048713 Cash paid to employees and suppliers of goods or services (including
suppliers of
insurance advertising etc)
1048713 Interest paid
1048713 Income taxes paid
1048713 Other operating cash payments if any
Companies using the indirect method are required to disclose separately changes in
inventory receivables and payables to reconcile net income to net cash flow from
operating activities In addition interest paid (net of amount capitalized) and income
taxes paid must be disclosed elsewhere in the financial statements or accompanying
notes
The FASB requires these separate and additional disclosures so that users
may approximate the direct method Also an acceptable alternative presentation
of the in-direct method is to report net cash flow from operating activities as a
single line item in the statement of cash flows and to present the reconciliation
details elsewhere in the financial statements
FINDING OF SUDY
According to cash flow statement of the company The finding of the study are as
follows-
The company has not taken any loans secured or unsecured from companies
firms or other parties
The company has not accepted any deposit from the public during the year
The company is not a sick industrial company
The company has not granted any loan secured or unsecured to company firms
or other parties
The company has paid the entire long term and short term borrowing during the
year
The company has buy back the companyrsquos own share this year
The interest paid in 2008 is more than the
There has been a significant decline in volume over the years from 2001-02
to 2005-06 as can be seen in the graph below
Table 43
The Net sales of Tractor has increased considerably from 2004-05 to 2007-08
This can be mainly attributed to changes in Variable and material costs and in
the price
The Net sale of Tractor has increased considerably from 2004-05 to 2007-08
that is an decrease of Rs7216 per tractor This can be mainly attributed to
changes in
Variable and material costs and in the prices
RECOMMENDATIONS
According to cash flow statement of the company The suggestions of the study
are as follows-
The time durations for training program have to increase
Buy regular review and consultations develop a career progression
which is sensitive to performance and ability
Create an environment where by people are trend developed to enable
The to take advantages of opportunities that arise
The jab can be redesigned where the work man stay in what is normally
the same job but has elements of it changed
The principle amount must be paid in time which can be reducing the
interest the out flow
The purchase of the fixed asset must be made only when there is extreme
requirement
In order to avoid taxes the company should go for more investment
The companyrsquos borrowings should go for more investment
o The company should try to reduce the depreciations as maximum
as possible
CONCLUSION
The study on competency level of employees at ESCORTS PVTLTD gave an
insight about the acceptance of competency mapping by employees
The employees at Ymi welcome the introduction of competency mapping in their
organization as they felt it was very much essential in enhancing their skills and
organizational development
The organization has provided the recourses guidance and support to facilitate the
introduction of competency level easily and develop the employees in such a way
that they can face any kind of challenge
However the level of competency in employees is found to be satisfactory
Providing proper training education and guidance to the employees can enhance
the level
This study was mainly carried out to find out whether thee competency mapping
being followed by the company is effective till date If the competency mapping
and fitment to the organization
By looking at the graphs and tables it is quite that the employees still are not up to
the level of competent pool they still have to be trained and made competent in
order to fill the gap As the organization has just applied the mapping it has to see
to that it meets all the requirements for competency mapping
Therefore the graphs make it quite clear that the potential of the employees is not
up to the mark and ie they are not competent enough to meet the competency-
mapping requirement Hence by further training and counseling this gap can be
closed
This report includes the training requirements of employees and it highlights skills
possessed by each employee and skill required All employees get training so that
skill can be improved and maintain balance between standard performance with
their actual performance to avoid gap
APPENDIX
QUESTIONNAIRE
Consumer Survey
Name _____________________________
Age _____________________________
Sex
Male
Female
Occupation
Businessman
Service man
Professional
Others
Monthly income brackets
Below 15000
15000- 20000
20000-30000
30000 and above
of your savings _________
Do you invest
Yes
No
If yes then where do you invest your money
Bank
Insurance
funds
Others
Why do you made that statement
Return
Risk hedging
Tax benefits
Other reasons (specify) _______
Who influence your cash decision
Relatives and friends
Family members
Advisors experts
You yourself
If no then why
Do not know where to invest
Satisfied with your current investment return
Donrsquot want take risk
Other reasons
__________________________________________________________________
___________________
Do you know about CF statement
Yes
No
If yes then from where you have come to know about an cash statement
Advertisements on newspapers
Friends and relative
Agents experts
Other source
What do you think about cash statement
It means investing only in share market
Constant watch must be kept always
Return is not satisfactory
Other perception
__________________________________________________
Can you recall any cash flow of company
___________________________
Would you want to made CF of an org
Yes
No
If yes then why
_______________________________________________________
If no then why
_______________________________________________________
BIBLIOGRAPHY
List of Books
1 PANDEY IM - FINANCIAL MANAGEMANT
2 KHAN MY AND JAIN PK -FINANCIAL MANAGEMANT
3 SMITH KV ndash MANAGEMANT OF WORKING CAPITAL
3 COMPANY RECORDS
4 JOURNAL
5 REPORTS
WEBLIOGRAPHY
1 wwwescortspvtltdcom
2 wwwgooglecom
The Balance Sheet (BS)
1 The Income Statement (IS)
Two other key financial statements which are usually prepared by corporate firms are
1 Statement of appropriation of profit and
2 Statement of Change in financial position
ANALYSIS OF FINANCIAL STATEMENTS (AFS)
Analysis of financial statements refers to the process of the critical examination of the
financial information contained in the financial statements in order to understand and
make decisions regarding the operations of the firm The AFS is basically a study of the
relationship among various financial fact and figures as given in a set of financial
statements AFS is the process of establishment and identifying the financial weakness
and strength of the firm It is indicative of two aspects of a firm ie the profitability
and the financial position
OBJECTIVES OF AFS
The objectives of the AFS is to understand the information contained in financial
statements with a view to know the weakness and strength of the firm and to make a
forecast about the future prospects of the firm and thereby enabling the financial
analyst to take different decisions regarding the operation of the firm The objectives
are as follows
bull To assess the present profitability and operating efficiency of the fir
COMMON-SIZE STATEMENTS (CSS)
The CSS represents the relationship of different items of financial statements with some
Common items by expressing each item as a percentage of the common item In common size
Balance Sheet each item of the balance sheet is stated as a percentage of the total balance
sheet The percentages for different items are computed by dividing the absolute amount of
that item by the Common Base and then multiply by 100 The percentage so calculated can
be easily compared with the corresponding percentage in some other period Thus the CSS is
useful not only in intra-firm comparison for the same year or free several years
TREND PERCENTAGE ANALYSYS(TPA)
The TPA is a technique of studying several financial statements over a series of years In
TPA the trend percentages are calculated for each item by taking the figure of that item for
some base year as 100 So the trend percentage is the percentage relationship which
Each item of different years bears to the same item in the base year Any year may be Taken
as the base year but generally the starting initial year is taken as the base year So each
item for base year is taken as 100 and then the same item for other years is Expressed as a
percentage of the base year
RATIO ANALYSIS (RA)
The RA has emerged as the principle technique of the AFS A ratio is a relationship
Expressed in mathematical terms between two individual or groups of figures connected with
other in some logical manner The RA is based in the premise that a single accounting figure
by itself may not communicate any meaningful information but when expressed as a relative
to some other figure it may definitely give some significant information The relationship
between two or more accounting figuresgroups is called a Financial Ratio
A financial ratio helps to summarize a large mass of financial data into a concise form
and to make meaningful interpretations and conclusions about the performance of a firm
For example a firm has net sales Rs 5 00000
Gross Profit Rs 100000
Ratio of Gross Profit to net sales is 20
ie (Rsl 00000 Rs5 00000)
Forms of Ratios
Since a ratio is a mathematical relationship between two or more variables accounting
figures such relationship can be expressed in different ways as follows
bull As a Pure Ratio
bull As a Rate of Times
bull As a Percentage
Ratio can be classified into
bull The Liquidity Ratio
bull The Activity Ratio
bull The Leverage Ratio
bull The Profitability Ratio
STATEMENT OF CHANGES IN FINANCIAL POSITION
(SCFP)
Since the BS amp IS of a firm are two basic depicting the financial position of a firm at the end
of the year These two financial statements are called the traditional statements Both these
statements fail to throw light on changes in assets liabilities and shareholders wealth during
this year
BS deals with the financial position gives only the static view of the year- end financial
position and fails to indicate the movement and causes in assets and liabilities during the
year Similarly IS show the profit or loss resulting out of the operations of the firm during
the year This profit or loss in fact to ascertain the sufficiency of resources to declare the
dividend etc thus there is a need to prepare another statement (together with the BS amp IS)
which may identify the changes in assets liabilities and the shareholders funds over a given
period
The SCFP is essentially an explanation of the changes in financial position of a Firm
occasioned by the firm in between two successive BSs The SCFP draws basic Information
from the BS and IS helps in understanding the change in assets liabilities and shareholders
worth The SCFP deals with the flow of funds during the year ie the funds coming in and
going out of the firm It summarizes the sources from where the funds might have been
arranged procured by the firm and the uses for which the funs might have been used by
the firm during the year
The SCFP can be prepared as follows
bull SCFP (Cash Basis) also known as a Cash F low Statement
bull SCFP (Net Working Capital Basis) Fund Flow Statement
SCFP (WORKING CAPITAL BASIS)
FUND FLOW STATEMENT
The FFS reports the flows of funds through the firm during the year ie it shows the
Sources and uses of working capital between two balance sheet dates The FFS
attempts to explain the changes in financial position from one BS to the subsequent BS
in terms of the change in the funds or the working capital position of the firm
The term Working capital (WC) is generally defined as the excess of total
current assets over the total current liabilities The current Assets (CA) of a firm may
include cash in hand and at bank stock debtors bills advances etc and the Current
Liabilities (CL) includes creditors bills payable outstanding expenses provision for
tax short term liabilities etc the term WC is a single figure representing the net effect
of a transaction is to increase or decrease the Working Capital by affecting any of the
elements of Current Assets or Current Liabilities Therefore the FFS in its standard
form incorporates only those transactions which affect the Working Capital i e those
transactions where in only one of the affected accounted is a current account
Now a flow of working capital arises when one of the affected accounts is a current
account From the point of view of current account the effected on working capital
can examined in the light of the definitions of the term working capital ie the excess
of current assets over current liabilities ie
Impliedly change in any of the CA or CL will affect the WC Simple observation
equation tells that
bull Increase in any of the CA or decrease in any of the CLs will result in increase
in the WC
bull Decrease in any of the CA or increase in any of the CLs will result in decrease
in the WC
To find out the relative importance of different components of the financial position
of the firm
bull To identify the reasons for change in the profitability financial position of the
firm and
bull To assess the short term as well as the long term liquidity position of the
firm
TECHNIQUES TOOLS OF THE AFS
AFS can be undertaken by different persons and for different purposes therefore the
methodology adopted for the AFS may be carrying from one situation to another However
the following are some of the common techniques of the AFS
bull Comparative financial statements
bull Common-size financial statements
bull Trend percentage analysis and
bull Ratio Analysis
COMPARATIVE FINANCIAL STATEMENTS
In CFS two or more BS andor the IS of a firm are presented simultaneously in columnar
form The Financial data for two or more tears are placed and presented in adjacent columns
and thereby the financial data is provided at times perspective in order to facilitate periodic
comparison In CFS the BS and the IS for number of years are presented in condensed
form for year to year comparison and to exhibit the magnitude and direction of changes
The CFS helps a financial analyst of the firm and in establishing operating and
positional trend of the firm The CFS may be prepared to show
1 The absolute amount of different items in monetary terms
2 The amount of periodic changes in monetary terms
1 The percentages of periodic changes to reveal the proportionate changes
The CFS can be prepared for both the BS and the IS
CORE COMPETENCE OF ESCORTS
Customer 1
We put customers first in everything we do We take decisions keeping the customer in
mind
Challenging Spirit
We strive for excellence in everything we do and in the quality of goods amp services we
provide We work hard to achieve what we commit amp achieve results faster than our
competitors and we never give up
Team-work
We work cohesively with our colleagues as a multi-cultural team built on trust respect
understanding amp mutual co-operation Everyones contribution is equally important for
our success
Frank amp Fair Organization
We are honest sincere open minded fair amp transparent in our dealings We actively
listen to others and participate in healthy amp frank discussions to achieve the
organizations
A firm undertakes numerous during a year and most of these transactions during a year and
most of these transactions may affect one or the other current account ie most of these
transactions May results in the flow of the WC Neither is it necessary nor practical to
identify the effect of each and every transaction on the WC These transactions instead are
considered and analyzed in a collective form and then their effect on the WC is identified
SCFP (CASH BASIS) OR
THE CASH FLOW STATEMENT
The CFS attempts to analyze the transactions of the firm in terms of cash ie the transactions
generating cash and using cash The focus in the CFS is on cash rather than on WC The
sources of cash may be the cash profits earned by the firm issue of capital for cash issue of
other securities for cash borrowings sale of assets investment redemption of debenture or
preference share repayment of loan payment of tax dividend distribution etc Thus the
CFS summarizes the cash inflows and outflows
An analysis of cash flows is useful for short-run planning A firm needs sufficient cash to
debts maturing in the near future to pay interest and other expenses and to pay dividends to
shareholders The firm can make projections of cash flows and outflows for the near future to
determine the availability of cash This cash balance can be matched with the firms need for
cash during the period and accordingly arrangements can be made the deficit or invest the
surplus cash temporarily A historical analysis of cash flows provides insight to prepare
reliable cash flow projections for the immediate future
A statement of changes in financial position on cash basis commonly known as cash flow
statement summarizes the causes of changes in cash position between dates of two balance
sheets It indicates the sources amp uses of cash The cash flow statement is similar to the fund
flow statement except that it focuses attentions on cash instead of working capital (funds)
Thus this statement analyses change in non-current accounts as well as current accounts
(other than cash) to determine the flow of cash
The CFS is based on the concept on the WC Where as the CFS is based in cash which is only
the element of WC Thus the CFS provides details of cash movements whereas the FFS
provides the details of funds movements
The CFS considers only the actual movement of cash whereas the FFS considers the
movements of the funds as defined in terms of net working capital
CASH-FLOW STATEMENT
A cash-flow statement is a statement showing inflows (receipts) and outflows (payments) of
cash during a particular period In other words it is a summary of sources and applications of
Cash during a particular span of time It analyses the reason for changes in balance of cash
between the two balance sheet dates The term Cash here stands for cash and cash
equivalents
A cash-flow statement includes only those items which affect cash As such the cash-flow
statement is called a statement of changes in financial position - cash basis
A cash - flow statement can be for the past or can be projected for a future period
OBJECTS OR USES OF CASH-FLOW STATEMENT
The main objectives behind preparing a cash-flow statement can be laid down as under-
bull USEFUL FOR SHORT-TERM FINANCIAL PLANNING-
A cash-flow statement provides information for planning the short-term financial needs of the
firm Since it provides information regarding the sources and utilization of cash during a period
it become easier for the management to assess whether it will have Adequate cash to meet day-
to-day expenses and pay the long - term loans and interest Thereon and whether it has enough
cash to pay for the purchase of fixed assets or not
USEFUL FOR PREARING THE CASH BUDGET-
A cash-flow statement prepared for the future period is helpful in preparing a cash budget It
informs the management about the future period is helpful in preparing a cash budget It informs
the management about the surplus or deficit periods of cash ie in which months the payments
will be in excess of receipts It helps in planning the investment of surplus cash in short-term
investment and to plan short-term credit in advance of deficit periods
bull COMPARISON WITH CASH BUDGET-
A cash budget is prepared at the commencement of the year whereas a cash flow Statement is
prepared at the end of the year A comparison between the two helps in ascertaining the extent
to which the financial resources of the firm have been generated and used according to the plan
Causes of variances between the figures of two statements can be analyzed and proper
corrective measures may be takes
bull STUDY OF THE TREND OF CASH RECEIPTS AND PAYMENTS-
A cash-flow statement reveals the speed at which the cash is being generated from debtors stock
and other current assets the speed at which the current liabilities are being paid It enables the
management to assess the true position of the cash in future
bull IT EXPLAINS THE DEVIATIONS OF CASH FROM EARNINGS-
A firm may earn huge profits yet it may have paucity of cash or when it suffered a loss it may
still have plenty of cash A cash flow statement explains the reasons for it
HELPFUL IN ASCERTAINING CASH-FLOW FROM VARIOUS
ACTIBITIES SEPARATELY-
A cash-flow statement aims at highlighting the cash flow from operating investing and
financing activities separately It includes how much cash has been generated or used in these
activities
bull HELPFUL IN MAKING DIVIDEND DECISIONS-
Dividend must be paid within 42 days of its declaration Hence the management takes the help of
cash-flow statement to ascertain the position of cash generated from operating activities which
can be used for payment of dividend
IMPORTANCE AND RELEVANCE OF CFS
The CFS has gained importance in view of the fact that there are many managerial Decisions
which are taken in the light of the cash availability or cash position of the firm
For example declaration of dividend by the company requires cash disbursement and
Therefore the Board of Directors must consider the cash position before proposing a dividend
The CFS also provides information for the short term financial planning and in particular the
short term cash needs of the firm
In view of increasing importance and relevance of the CFS the clause 32 of the Listing
agreement (between a Company and the Stock Exchange where the shares proposed to be listed)
has been amended by the SEBI As a result the listed companies in India are now required to
supply a copy of the CFS to each shareholder as a part of Annual Report As a result the listed
companies have started a practice of sending a CFS for which the BS has been prepared as
apart of the Annual Report of the company
DIFFRENCE BETWEEN CASH - FLOW STATEMENT AND
CASH BUDGET
There is not much difference between cash flow statement and a cash budget The
only difference is that a cash flow statement is prepared for a past period where as cash
budget is prepared for a future period Hence it is of limited use as far as the future
periods are concerned A cash budget is therefore prepared showing how much cash is
likely to be received and what will be the disbursements during a future period of time
Thus a cash budget indicates in which months there will be surplus cash and in which
moths there will be deficiency of cash resources The management can then take suitable
decision to invest the surplus cash or make arrangement for the deficiency of cash at the
required time
LIQUIDITY
It does not present true picture of the liquidity of the firm the liquidity does
not depend upon cash alone Liquidity also depends upon those assets
which can be converted into cash easily
bull Exclusion of these assets obstructs the true reporting of the ability of the firm to
meet its liabilities when they become due for payment
bull The possibilities of window - dressing is higher in case of cash position in
comparison to the working capital position of the firm
bull The cash balance can be easily maneuvered by postponing purchases and other
payments and by rapidly collecting cash from debtors before the balance sheet date
Hence a fund - flow statement presents a more realistic picture than a cash flow
statement
bull Cash flow statement ignores non- cash charges Hence the true position of the
enterprise cannot be judged by cash flow statement
bull It is prepared on cash basis and hence ignores one of the basic concept of accounting
namely accrual concept
PROCEDURE OF PREPARING CASH FLOW STATEMENT-
The institute of charted accountants of India has issued accounting standards (as)-3 revised for
preparing a cash flow statement This accounting standard has been made mandatory in respect
of accounting periods commencing on or after 1st April 2001 for certain enterprises These
enterprises are-
bull Enterprises whose equity or debt securities are listed on a recognized stock exchange in
India And enterprise that are in the process of issuing equity or debt securities that will
be listed on a recognized stock exchange in India
bull All other commercial industrial and business enterprises whose turnover for accounting
period Rs 50 crores
As such the cash flow statement has been prepared according to as -3 revised in this project
According to as-3 revised the cash flow statement summarizes the cash inflows and cash
outflows and the net changes (increase or decrease) in cash and cash equipment resulting from
operating investing and financing activities of a firm during a period The following terms are
used for preparing a cash flow statement
CASH-
It compares cash in hand and demands with banks
CASH EQUIVALENTS-
There are short - term highly liquid investments that are readily into known amounts of cash
and which present insignificant risk of changes in their values Normally an investment will be
termed as cash equivalent only if it has a short maturity period say three months or less from the
date of its acquisition Examples of cash equivalent are treasury bills commercial papers etc
Which are purchased with cash that is in excess of immediate needs investment in shares are
excluded from cash equivalents unless they are cash equivalent in reality For example the
preference shares of the company which are purchased shortly before their redemption date will
be included in cash equivalents provided there is only an insignificant risk of failure of the
company in repaying the amount at the date of the maturity
CLASSIFICATION OF CASH FLOW-
According to as -3 (revised) cash flow statement should be presented in a manner that it reports
inflows of cash by classifying them into three categories namely operating investing and
financing activities Classification of all activities into these activities on the cash and cash
equivalents of the enterprise such information will be helpful in evaluating the relationships
among these three activities are explained as below
CASH FLOW FROM OPERATING ACTIVITIES-
Operating activities are the main revenue generating activities of an enterprise As such they
include cash flows from those transactions and events which enter into the ascertainment of
net profit or loss of the enterprise Examples of cash flows arising operating activities are
bull Cash receipts from the sale of goods and rendering of services
bull Cash receipts from royalties fees commissions and other revenue
bull Cash payments to suppliers for goods and services
bull Cash payments to and on behalf of employees
bull Cash receipts and cash payments of an insurance enterprise for premiums and claims
annuities and other policy benefits
bull Cash receipts and payments relating to future contracts forward contracts option
contracts and swap contracts when the contracts are held for dealing or trade purpose and
bull Cash payments of refunds of income taxes unless they can be specifically identified with
financing and investing activities
CASH FLOW FROM INVESTING ACTIVITIES-
Investing activities include the purchase and sale of long term assets such as land building plant
and machinery etc not held for resale These activities also include the purchase and sale of such
investment which are not including in cash equipments Cash flow from investing activities
discloses the expenditures incurred for resources intended to generate future income and cash
flows
Examples cash flow arising from investing activities are
bull Cash payments to acquire fixed assets (including intangible)
bull Cash receipts from sale of fixed assets (including intangibles)
bull Cash payments to acquire shares warrants or debt instruments of other enterprises
(other than receipts for those instruments considered to be cash equivalents)
bull Cash receipts from sale of shares warrants or debt instruments of other enterprises (other
than receipts for those instruments considered to be cash equivalents)
bull Cash advances and loans made to third parties In case of financial enterprises these will
be treated as cash flow from operating activities
bull Cash receipts from the repayment of advances and loans made to third parties In case of
financial enterprises these will be treated as cash flow from operating activities
bull Cash receipts of insurance claim for property involved in accident and
bull Cash receipts of interest and dividend In case of financial enterprise these will be treated
cash flow from operating activities
CASH FLOW FROM FIANCING ACTIVITIES-
Financing activities are the activities that result in change in capital and borrowing of the
enterprise
Examples of cash flows arising from financing activities are
bull Cash receipts from issuing shares or other similar instruments
bull Cash receipts from issuing debentures loans bonds and other short term or long term
borrowing
bull Cash repayment of amounts borrowed buy back of equity shares redemption of
preference shares debentures loans bonds etc
bull Cash payment of interest and dividend
IMPORTANT NOTE
In case of financial enterprise such as bank or mutual fund company cash Outflow
and cash inflow arising from the purchase and sale of securities will Be treated as
flows from operating activities This is because purchase and sale of securities is a
part of operating activity in case of financial enterprise In addition interest paid
and interest received as well as dividends received will also be treated as cash flow
from operating activities in case of financial Enterprises
CASH FLOW STATEMENT
(DIRECT METHOD)
CASH FLOW FROM OPERATING ACTIVITIES
Cash receipts from costumers
Cash paid to suppliers and employers ()
Cash generated from operations
Income tax paid ()
Cash flows from extraordinary item
plusmn Extra ordinary items
Net cash from operating activities
CASH FLOW FROM INVESTING ACTIVITIES-
Purchase of fixed assets
Proceed from sale equipment ()
Interest received
Dividend received ()
Net cash from investing activities
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from insurance of share capital
Proceeds from long- term borrowings ()
Repayment of from long-term borrowings
Interest paid
Dividend paid ()
Net cash from financing activities
Net increase in cash and cash equivalent
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
SOME SPECIAL TERMS-
i) INTERSET AND DIVIDEND-
Cash inflow from interest and dividends and cash outflow on account of interest and
dividends should be disclosed separately Cash inflow arising from interest and dividends
received should be shown as cash flow from investing activities where as cash outflow
disclosed outflow on account of interest and dividend paid should be shown as cash flow
from financing activity
ii) TAXES ON INCOME-
Tax paid on income is a part of cash flow from operating activity Hence taxes paid are
shown as a deduction under cash flow from operating activity
iii) EXTRA ORDINARY ITEMS-
Cash flow relating to extra ordinary items such as bad debts recovered Claims received from
insurance companies winning of a lottery or a law etc Should be disclosed separately as
arising from operating investing or financing activities For example the amount received
for insurance company on account of loss of stock by fire Earthquake and floods etc Should
be reported as cash flow from operating activities
iv) SIGNIFICANT NON - CASH TRANSACTION-
There are some investing and financing activities which do not require the use of cash or
cash equivalents Such non cash activities should be excluded from the cash flow statement
Examples are the acquisition of assets by issue of debentures or shares conversion of
shares into debentures etc Such significant on non cash transaction should be disclosed
outside the cash flow statement
CASH FLOW STATEMENT
(INDIRECT METHOD)
CASH FLOW FROM OPERARATTNG ACTIVITIES
Net profit before taxation and extraordinary item
Adjustment for
Depreciation
Foreign exchange loss
Interest income
Dividend income
Interest expense
Operating profit before working capital changes
Increase in sundry debtors
Decrease in inventories
Decrease in sundry creditors
Cash generated from operations
Income tax paid ()
Cash flow before extraordinary item
plusmn Extra - ordinary items
Net cash from operating activities
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of fixed assets ()
Proceeds from sale of equipment
Interest received
Dividend received ()
Net cash from investing activities
CASH FLOW FROM FINANCING ACTIVITIES-
Proceeds from insurance of share capital
Proceeds from long - term borrowings
Repayments of from long - term borrowings ()
Interest paid ()
Dividend paid ()
Net cash from financing activities
Net increase in cash and cash equivalent
Cash and cash equivalents at beginning of period
CHANGES IN CASH FLOWS
Changes in cash flows can be treated to the following
1 Net profit will increase the cash flows these cash flows will be
increased further if there are any non-cash changes (such as depreciation
and amortization)
2 Any payment of dividends will decrease the cash flows as will the
repayment of debt an issue of share or debt will also increase the
cash flows
3 An increase in non-cash assets will decrease cash flows increase in
current assets and fixed assets will result in drain on cash flows
Thus a statement of changes in cash flows ie the cash flow statement
classifies all Changes into one of three categories - operating investing or
financing activities Therefore the preparation of a statement of changes in cash
flows requires classification of changes in liabilities shareholders equity and
non-cash assets into one of these categories although some items will not fit
easily onto one other
h equivalent at end of period
STEP- BY-STEP PROCEDURE TO PREPARE CFS
1 Calculate the net increase or decrease in cash and cash equivalents-
For this purpose the opening balance of total cash and cash equivalents is compared with the
closing balance of cash and equivalents
Increasedecrease in cash and equivalents
Opening balance Closing Balance
Cash in hand
Cash in bank
Short-term Investment
Total
The difference between the total of opening and closing balance will be increased or
Decreased in cash equivalents during the period It may be noted that if there are only one or
two of items of cash etc
2 Net Cash flaw from operating activities-
The term operating refers to the normal purchase of goods and services On the basis of the
information contained in the comparative BS s and the IS and the additional Information the
net cash flow generated or use by the operating activities may be ascertained The IS prepared
by the firm gives the net profit figure earned by the firm On actual basis ie all items in the
IS are incorporated on the basis of earnedaccrued even
3 If not resulting in cash movements-
So the profit or loss as by the IS may not result in increase or decrease in cash balance by the
SYNOPSIS
INTRODUCTION
ESCORTS PVT LTD is a private limited company not listed in a stock exchange of India
and employees 900 highly trained personnel Its manufacturing plants are strategically located
in close proximity to its customers at Faridabad (Haryana) Noida (UP)
OBJECTIVES OF THE STUDY
bull To find the movement of cash inflow and cash outflow
bull To make the comparison between cash inflow and
bull Cash outflow
bull To prepare the Cash Flow Statement
bull To analyze the Balance Sheet of the company in terms of Cash Flow Statement
bull To focus on various activities of the organization in terms of Operating
Financing Investment
SCOPE OF THE STUDY
Financial resources are the assets for the company and their productivity is key
factor for profitability It is necessary to know their problems their knowledge
skills abilities amp the measures that can be taken to reduce them By analyzing this
top management can build good relations with the employees
The whole study is to determine the competencies of different employees who are
working in ESCORTS PVT LTD By analyzing it the top management can
introduce the concept of competency mapping in the organization Through this
management can attempt to use more suitable strategies towards the human
resource development
The research is confined to elicit the existing gap between the standard skill
required to perform the job and the skill processed by the employees at ESCORTS
PVT LTD And to provide them suitable training program to over come those gaps
for the better utilization of human resources
RELEVANCE
The scope of the study was confined to the outside parties like creditors
shareholders government etc Who want to invest their money in the
company
The benefit of the report for the company is that through this report they can come
to know about the cash flow statements of the company
This study also unable the company that their cash is not utilizing in unnecessary
things
The benefit of the report for the researcher is that it has helped to get knowledge
about the cash inflow and cash
RESERRCH METHODOLOGY-
RESEARCH DESIGN
bull The study was conducted under well- structured approach
bull The project lasted for 4 weeks and the year 2009 ie from 08 July to 12
Aug2009
bull The questionnaire method amp personal interview method was used to collect
the primary data for the study
The secondary data is collected from Internet amp company training material and
many other company materials
SAMPLE DESIGN
The process of extracting a sample from a population is called sampling
procedure The selection of sampling procedure to conduct the research
depends upon the nature of the study and the objective to be accomplished
Judgment sampling technique is adopted to select the respondents in this
study The sample design included the various departments in the YAMAHA
MOTORS PVT LTD
Methodology of date collection
bull Conducting personal interview
bull Data collection from primary and secondary sources
bull Designing questionnaire
bull Selecting sample size from the sample frame for the survey
bull Questionnaire distribution
bull Analysis of collected data with the help of statistical tools
bull Interpretation of collected data
bull Stating the conclusion based on the entire study
Sampling Technique
The sampling technique used for this research is of non-probability and convenience
sampling
Sample Unit
Employees of the company
Sample Size
For this research study the sample size is 25 respondents
Sources of data
Primary data
Primary data is the data which is collected by the researcher for the first time
and which was not there The tools used to collect the data are-
1)Questionnaire method from the employers in different departments
2) Face to Face personal interactions
Secondary Data
The data already collected is called as secondary data The relevant information
for this study has been collected from secondary source such as
Books
Journal
Reports
Publication by the organizational circulation
Company records
Business bulletins
Internet
Secondary data is also collected from various of the internet and intranet Some
of the website trough which information was gathered was through
HYPOTHESIS
The report is analyzed under the presumption that cash flow position of
YAMAHA MOTORS PVTLTD It can be improved and made effective in
terms of cash flows
In testing the above hypothesis the following aspects will be considered
1 Balance sheet comparisons
2 Presentation of cash flow statement in terms of revised AS-3
LIMITATIONS
The study though conducted to the best of the ability suffers from some
certain limitations There are
The data is secondary one and as such its reliability may be
questioned upon
The time availability for the study is less and as such it hinders thee
progress of the study
Senior officials were rarely approachable
Websites were not giving comprehensive data
Not having face-to-face interaction to get more relevant
information
Analysis and interpretation of data was done on the assumption that
the respondentsrsquo information was online
Information collected was totally subjective
The interviews are done during office hours but could not be done
for the other employees of other
DATA ANALYSIS
ESCORTS PVT LTD
CASH FLOW STRATEMENT
Year Ended Year Ended
30092009 30092008
Rs Crores Rs
Crores
A Cash Flow from Operating Activities
Net profit before tax (1733) 3444
Adjustment for
Loss on sale Provision for diminution in value of Long Term
Investments amp loans to Group Companies 189 4018
Gain on sale of Long Term Investments (122) (9492)
Gain on sale of Asset (013) -
Depreciation 4497 3955
Misc Exp Assets Write off Provisions 808 750
Interest Expense 7222 7999
Dividend Income (002) (001)
Interest Income (2082) -
Operating Profit before working capital changes 8764 10673
Adjustments for
Trade and other Receivables (8817) (12035)
Inventories 1379 (4692)
Trade Payables 6705 19046
Miscellaneous Expenditure (750) (511)
(1483) 1808
Cash Generated from Operations 7281 12481
Direct Taxes (Paid)Refunds (1785) 3166
Net Cash Flow from operating activities 5496 15647
B Cash Flow from Investing Activities
Purchase of Fixed Assets (3095) (2794)
Proceeds from sale of Fixed Assets 086 177
Movement in Loans and Advances (1627) (1644)
Sale of Investments 3233 11452
Short Term Deposits with schedule Banks (231) (1048)
Interest Received 2070 -
Dividend Received 002 001
Net Cash Flow from Investing activities 438 6144
Proceeds from Share Capital amp Securities Premium 11444 -
Proceeds from Long Term Borrowings 8660 -
Less Repayment of Long Term Borrowings (054) (7896)
Proceeds (Repayment) from short term borrowings (net) (22726) -
Interest Paid (7740) (8223)
Net Cash used in financing activities (10416) (16119)
Net Increase(Decrease) in Cash and Cash equivalents (4482) 5672
Cash and Cash equivalents as at 01102008 10565 4893
Cash and Cash equivalents as at 30092009 6083 1056
ANALYSIS OF CASH FLOW
From the cash flow statements of the ESCORT PVTLTDIt can be analyzed
from the two years that the net cash balance of the company has increased
manifold in 30-09-2008 than the year 30-09-2009
The net profit in 30-09-2008 is higher than the 30-09-2009 but due to certain
changes there has been increase in the cash balance
The interest paid this year is ore of the last year which implies that thee
company has not repaid his borrowed capital due to which the interest has got
down
The depreciation has increased but it does not affect cash to an extent as it is a
non-cash item In the head of working capital there is drastic change in the cash
balance in the form of ldquoTrade and other Receivables which has affected the cash
balance
There is outflow of cash for receivables rather than the inflow in the last year
So the net effect is that the cash from operating activities has been decreased
two times from the last year
The company has no accumulated losses as at the end of the financial year ie
September 31 2008
Provision for taxation has been made in accordance with the requirement of AS-
22 issued by Institute of Charted Accountants of India
Pursuant to that current year deferred tax liability have been charged to profit amp
loss account
In opinion of the board of directors of thee company the current assets loans
and advances have a value on realization in the ordinary course of the business at
least equal to the amount stated in the balance sheet and provision for all
liabilities have been made
Balance of sundry debtors creditors loans and advances are subject to confirmation by
the concerned parties
METHOD OF ANALYSIS
1 Data analysis is done using the following statistical tools wherever required in
order to extract meaningful information from the collected data
o Simple percentage and averages
o Bar diagram
o Cone diagram
o Pie diagram
2 The collected data from the questionnaire has been put together in the form of
tables
3 Percentage has been calculated wherever necessary for generalization of the
data
4 Data analysis and interpretation has been done on the basis of primary and
secondary data
5 The findings researches have been recorded based on the analysis
6 The study conducted pertains only to YAMAHA MOTORS INDIA PVTLTD
All bank balances (debitcredit) have been confirmed by the concerned bank
Identified from the available information which has been relied upon by the auditors
The names of small-scale industrial units to whom outstanding for more than
thirty days within agreed terms
The company has 9996 of shareholders in its subsidiary company named as
ESCORTS PVT LTD As at 31-03-2008
So the net effect is that the net cash from investing activities has many more
times than the last year which is negative Now the company has repaid its long
term borrowing more than the last year which has decreased the cash balance by
the little amount
Balance with the schedule banks under the head current amp collection account
amounting to represent funds in transit lying with schedule banks pending
transfer against loan liabilities under the head cash credit amp bill discounting
LIQUIDITY RATIO
1 CURRENT RATIO
(Amount in Rs)
Current Ratio
Year Current Assets Current Liabilities Ratio
2003 58574151 7903952 7412004 69765346 31884616 2192005 72021081 16065621 4482006 91328208 47117199 1942007 115642068 30266661 382
Interpretation
As a rule the current ratio with 21 (or) more is considered as satisfactory
position of the firm
When compared with 2006 there is an increase in the provision for tax because
the debtors are raised and for that the provision is created The current liabilities
majorly included Lanco Group of company for consultancy additional services
The sundry debtors have increased due to the increase to corporate taxes
In the year 2006 the cash and bank balance is reduced because that is used for
payment of dividends In the year 2007 the loans and advances include majorly
the advances to employees and deposits to government The loans and advances
reduced because the employees set off their claims The other current assets
include the interest attained from the deposits The deposits reduced due to the
declaration of dividends So the other current assets decreased
The huge increase in sundry debtors resulted an increase in the ratio which is
above the benchmark level of 21 which shows the comfortable position of the
firm
GRAPHICAL REPRESENTATION
741
219
448
194
382
000
100
200
300
400
500
600
700
800
Ratio
2003 2004 2005 2006 2007
Years
CURRENT RATIO
Ratio
2 QUICK RATIO
(Amount
in Rs)
Quick Ratio
Year Quick Assets Current Liabilities Ratio
2003 58574151 7903952 741
2004 52470336 31884616 165
2005 69883268 16065620 435
2006 89433596 47117199 19
2007 115431868 30266661 381
Interpretation
Quick assets are those assets which can be converted into cash with in a short
period of time say to six months So here the sundry debtors which are with the
long period does not include in the quick assets
Compare with 2006 the Quick ratio is increased because the sundry debtors are
increased due to the increase in the corporate tax and for that the provision
created is also increased So the ratio is also increased with the 2006
GRAPHICAL REPRESENTATION
741
165
435
190
381
000
100
200
300
400
500
600
700
800
Ratio
2003 2004 2005 2006 2007
Years
QUICK RATIO
Ratios
3 ABOSULTE LIQUIDITY RATIO
(Amount
in Rs)
Absolute Cash Ratio
Year Absolute Liquid Assets Current Liabilities Ratio
2003 31004027 7903952 392
2004 10859778 31884616 034
2005 39466542 16065620 246
2006 53850852 47117199 114
2007 35649070 30266661 118
Interpretation
The current assets which are ready in the form of cash are considered as absolute
liquid assets Here the cash and bank balance and the interest on fixed assts are
absolute liquid assets
In the year 2006 the cash and bank balance is decreased due to decrease in the
deposits and the current liabilities are also reduced because of the payment of
dividend That causes a slight increase in the current yearrsquos ratio
GRAPHICAL REPRESENTATION
392
034
246
114 118
0
05
1
15
2
25
3
35
4
Ratios
2003 2004 2005 2006 2007
Years
ABSOLUTE CASH RATIO
Ratios
LEVERAGE RATIOS
4 PROPRIETORY RATIO
(Amount
in Rs)
Proprietory Ratio
Year Share Holders Funds Total Assets Ratio
2003 67679219 78572171 086
2004 53301834 88438107 06
2005 70231061 89158391 079
2006 56473652 106385201 053
2007 97060013 129805102 075
Interpretation
The proprietary ratio establishes the relationship between shareholders funds to
total assets It determines the long-term solvency of the firm This ratio indicates
the extent to which the assets of the company can be lost without affecting the
interest of the company
There is no increase in the capital from the year2004 The share holderrsquos funds
include capital and reserves and surplus The reserves and surplus is increased
due to the increase in balance in profit and loss account which is caused by the
increase of income from services
Total assets includes fixed and current assets The fixed assets are reduced
because of the depreciation and there are no major increments in the fixed assets
The current assets are increased compared with the year 2006 Total assets are
also increased than precious year which resulted an increase in the ratio than old
GRAPHICAL REPRESENTATION
086
060
079
053
075
000
010
020
030
040
050
060
070
080
090
Ratios
2003 2004 2005 2006 2007
Years
PROPRIETORY RATIO
Ratios
ACTIVITY RATIOS
5 WORKING CAPITAL TURNOVER RATIO
(Amount
in Rs)
Working Capital Turnover Ratio
Year Income From Services Working Capital Ratio
2003 36309834 50670199 0722004 53899084 37880730 1422005 72728759 55355460 1312006 55550649 44211009 1262007 96654902 85375407 113
Interpretation
Income from services is greatly increased due to the extra invoice for Operations
amp Maintenance fee and the working capital is also increased greater due to the
increase in from services because the huge increase in current assets
The income from services is raised and the current assets are also raised together
resulted in the decrease of the ratio of 2007 compared with 2006
GRAPHICAL REPRESENTATION
072
142 131126
113
000
020
040
060
080
100
120
140
160
Ratio
2003 2004 2005 2006 2007
Years
WORKING CAPITAL TURNOVER RATIO
Ratio
6 FIXED ASSETS TURNOVER RATIO
(Amount in Rs)
Fixed Assets Turnover Ratio
Year Income From Services Net Fixed Assets Ratio
2003 36309834 28834317 126
2004 53899084 29568279 182
2005 72728759 17137310 424
2006 55550649 15056993 369
2007 96654902 14163034 682
Interpretation
Fixed assets are used in the business for producing the goods to be sold This
ratio shows the firmrsquos ability in generating sales from all financial resources
committed to total assets The ratio indicates the account of one rupee
investment in fixed assets
The income from services is greaterly increased in the current year due to the
increase in the Operations amp Maintenance fee due to the increase in extra invoice
and the net fixed assets are reduced because of the increased charge of
depreciation Finally that effected a huge increase in the ratio compared with the
previous yearrsquos ratio
GRAPHICAL REPRSENTATION
126182
424 369
682
000
100
200
300
400
500
600
700
Ratios
2003 2004 2005 2006 2007
Years
FIXED ASSETS TURNOVER RATIO
Ratios
7 CAPITAL TURNOVER RATIO
(Amount
in Rs)
Capital Turnover Ratio
Year Income From Services Capital Employed Ratio
2003 36309834 37175892 0982004 53899084 53301834 1012005 72728759 70231061 1042006 55550649 56473652 0982007 96654902 97060013 100
Interpretation
This is another ratio to judge the efficiency and effectiveness of the company
like profitability ratio
The income from services is greaterly increased compared with the previous year
and the total capital employed includes capital and reserves amp surplus Due to
huge increase in the net profit the capital employed is also increased along with
income from services Both are effected in the increment of the ratio of current
year
GRAPHICAL REPRESENTATION
098
101
104
098
100
094095096097098099100101102103104
Ratios
2003 2004 2005 2006 2007
Years
CAPITAL TURNOVER RATIO
Ratios
8 CURRENT ASSETS TO FIXED ASSETS RATIO
(Amount
in Rs)
Current Assets To Fixed Assets Ratio
Year Current Assets Fixed Assets Ratio
2003 58524151 19998020 2932004 69765346 18672761 3742005 72021081 17137310 4202006 91328208 15056993 6072007 115642068 14163034 817
Interpretation
Current assets are increased due to the increase in the sundry debtors and the net
fixed assets of the firm are decreased due to the charge of depreciation and there
is no major increment in the fixed assets
The increment in current assets and the decrease in fixed assets resulted an
increase in the ratio compared with the previous year
GRAPHICAL REPRESENTATION
293374
420
607
817
000
100
200
300
400
500
600
700
800
900
Ratios
2003 2004 2005 2006 2007
Years
CURRENT ASSETS TO FIXED ASSETS RATIO
Ratios
PROFITABILITY RATIOS
GENERAL PROFITABILITY RATIOS
9 NET PROFIT RATIO
(Amount in Rs)
Net Profit Ratio
Year Net Profit After Tax Income from Services Ratio
2003 21123474 36039834 059
2004 16125942 53899084 030
2005 16929227 72728759 023
2006 18259580 55550649 033
2007 40586359 96654902 042
Interpretation
The net profit ratio is the overall measure of the firmrsquos ability to turn each rupee
of income from services in net profit If the net margin is inadequate the firm
will fail to achieve return on shareholderrsquos funds High net profit ratio will help
the firm service in the fall of income from services rise in cost of production or
declining demand
The net profit is increased because the income from services is increased The
increment resulted a slight increase in 2007 ratio compared with the year 2006
GRAPHICAL REPRESENTATION
059
030
023
033
042
000
010
020
030
040
050
060
Ratios
2003 2004 2005 2006 2007
Years
NET PROFIT RATIO
Ratios
10 OPERATING PROFIT
(Amount in Rs)
Operating Profit
Year Operating Profit Income From Services Ratio
2003 36094877 36309834 099
2004 27576814 53899084 051
2005 29540599 72728759 041
2006 31586718 55550649 057
2007 67192677 96654902 070
Interpretation
The operating profit ratio is used to measure the relationship between net profits
and sales of a firm Depending on the concept it will decide
The operating profit ratio is increased compared with the last year The earnings
are increased due to the increase in the income from services because of
Operations amp Maintenance fee So the ratio is increased slightly compared with
the previous year
GRAPHICAL REPRESENTATION
099
051
041
057
070
000
010
020
030
040
050060
070
080
090
100
Ratios
2003 2004 2005 2006 2007
Years
OPERATING PROFIT RATIO
Ratios
11 RETURN ON TOTAL ASSETS RATIO
(Amount in Rs)
Return on Total Assets Ratio
Year Net Profit After Tax Total Assets Ratio
2003 21123474 78572171 027
2004 16125942 88438107 018
2005 16929227 89158391 019
2006 18259580 106385201 017
2007 40586359 129805102 031
Interpretation
This is the ratio between net profit and total assets The ratio indicates the return
on total assets in the form of profits
The net profit is increased in the current year because of the increment in the
income from services due to the increase in Operations amp Maintenance fee The
fixed assets are reduced due to the charge of depreciation and no major
increments in fixed assets but the current assets are increased because of sundry
debtors and that effects an increase in the ratio compared with the last year ie
2006
GRAPHICAL REPRESENTATION
027
018 019017
031
000
005
010
015
020
025
030
035
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON TOTAL ASSETS
Ratios
12 RESERVES amp SURPLUS TO CAPITAL RATIO
(Amount in Rs)
Reserves amp Surplus To Capital Ratio
Year Reserves amp Surplus Capital Ratio
2003 65599299 2079920 31542004 34582554 18719280 1852005 51511781 18719280 2752006 37754372 18719280 2022007 78340733 18719280 419
Interpretation
The ratio is used to reveal the policy pursued by the company a very high ratio
indicates a conservative dividend policy and vice-versa Higher the ratio better
will be the position
The reserves amp surplus is decreased in the year 2006 due to the payment of
dividends and in the year 2007 the profit is increased But the capital is
remaining constant from the year 2004 So the increase in the reserves amp surplus
caused a greater increase in the current yearrsquos ratio compared with the older
GRAPHICAL REPRESENTATION
3154
185 275 202419
-
500
1000
1500
2000
2500
3000
3500
Ratios
2003 2004 2005 2006 2007
Years
RESERVES amp SRUPLUS TO CAPITAL RATIO
Ratios
OVERALL PROFITABILITY RATIOS
13 EARNINGS PER SHARE
(Amount in Rs)
Earnings Per Share
Year Net Profit After Tax No of Equity Shares Ratio
2003 21123474 207992 101562004 16125942 1871928 8612005 16929227 1871928 9042006 18259580 1871928 9752007 40586359 1871928 2168
Interpretation
Earnings per share ratio are used to find out the return that the shareholderrsquos earn
from their shares After charging depreciation and after payment of tax the
remaining amount will be distributed by all the shareholders
Net profit after tax is increased due to the huge increase in the income from
services That is the amount which is available to the shareholders to take There
are 1871928 shares of Rs10- each The share capital is constant from the year
2004 Due to the huge increase in net profit the earnings per share is greaterly
increased in 2007
GRAPHICAL REPRESENTATION
10156
861904 975
2168
000
2000
4000
6000
8000
10000
12000
Ratios
2003 2004 2005 2006 2007
Years
EARNINGS PER SHARE
Ratios
14 PRICE EARNINGS (PE) RATIO
(Amount in Rs)
Price Earning (PE) Ratio
Year Market Price Per Share Earnings Per Share Ratio
2003 3254 10156 0322004 2847 861 3302005 3752 904 4152006 3017 975 3092007 5185 2168 239
Interpretation
The ratio is calculated to make an estimate of application in the value of share of
a company
The market price per share is increased due to the increase in the reserves
amp surplus The earnings per share are also increased greaterly compared
with the last year because of increase in the net profit So the ratio is
decreased compared with the previous year
GRAPHICAL REPRESENTATION
032
330
415
309
239
000
050
100
150
200
250
300
350
400
450
Ratios
2003 2004 2005 2006 2007
Years
PE RATIO
Ratios
15 RETURN ON INVESTMENT
(Amount in Rs)
Return on Investment
Year Net Profit After Tax Share Holders Fund Ratio
2003 21123474 67679219 031
2004 16125942 53301834 03
2005 16929227 70231061 024
2006 18259580 56473652 032
2007 40586359 97060013 042
Interpretation
This is the ratio between net profits and shareholders funds The ratio is
generally calculated as percentage multiplying with 100
The net profit is increased due to the increase in the income from services ant
the shareholders funds are increased because of reserve amp surplus So the ratio
is increased in the current year
GRAPHICAL REPRESENTATION
031 030
024
032
042
000
005
010
015
020
025
030
035
040
045
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON INVESTMENT RATIO
RatioS
DATA COLLECTION
The data can be of two types
Primary Data
Secondary Data
Primary Data
Primary data are those data which is originally collected afresh
Secondary Data
Secondary data are those data which are already collected and stored and which has
been passed through statistical research
In this project Secondary data has been collected from following sources-
Annual report
Books
MIS
Other material and report published by company There are two methods to prepare
the Cash flow Statement
ndirect Method
I
The indirect method (or reconciliation method) starts with net income and converts it
to net cash flow from operating activities In other words the indirect method adjusts
net income for items that affected reported net income but did not affect cash To
compute net cash flow from operating activities non-cash charges in the income
statement are added ack to net income and non-cash credits are deducted
b
Direct Method
Under the direct method the statement of cash flows reports net cash flow from
operating activities as major classes of operating cash receipts (eg cash collected from
customers and cash received from interest and dividends) and cash disbursements (eg
cash paid to suppliers for goods to employees for services to creditors for interest and
to government authorities for taxes)
INDIRECT VERSUS DIRECT METHOD
The most contentious decision that the FASB faced in issuing Statement No 95 was
choosing between the direct method and the indirect method of determining net cash
flow from operating activities Companies lobbied against the direct method urging
adoption of the indirect method Commercial lending officers expressed a strong
preference to the FASB hat the direct method be required
tCF-Page 3 of 5
In Favor of the Direct Method
The principal advantage of the direct method is that it shows operating cash receipts and
payments That is it is more consistent with the objective of a statement of cash flows to
provide information about cash receipts and cash payments than the in-direct method
which does not report operating cash receipts and payments
Supporters of the direct method contend that knowledge of the specific sources of
operating cash receipts and the purposes for which operating cash payments were made
in past periods is useful in estimating future operating cash flows Furthermore in-
formation about amounts of major classes of operating cash receipts and payments is
more useful than information only about their arithmetic sum (the net cash flow from
operating activities) Such information is more revealing of an enterprises ability (1) to
generate sufficient cash from operating activities to pay its debts (2) to reinvest in its
operations and (3) to make distributions to its owners
Many corporate providers of financial statements say that they do not currently collect
information in a manner that allows them to determine amounts such as cash received
from customers or cash paid to suppliers directly from their accounting systems But
supporters of the direct method contend that the incremental cost of assimilating such
operating cash receipts and payments data is not significant
In Favor of the Indirect Method
The principal advantage of the indirect method is that it focuses on the differences
between net income and net cash flow from operating activities That is it provides a
useful link between the statement of cash flows and the income statement and balance
sheet
Many providers of financial statements contend that it is less costly to adjust net income
to net cash flow from operating activities (indirect) than it is to report gross operating
cash receipts and payments (direct) Supporters of the indirect method also state that the
direct method which effectively reports income statement information on a cash rather
than an accrual basis may erroneously suggest that net cash flow from operating
activities is as good as or better than net income as a measure of performance
Special Rules Applying to Direct and Indirect Methods
Companies that use the direct method are required at a
minimum to report separately the following classes of
operating cash receipts and payments
Receipts
1048713 Cash collected from customers (including lessees licensees etc)
1048713 Interest and dividends received
1048713 Other operating cash receipts if any
Payments
1048713 Cash paid to employees and suppliers of goods or services (including
suppliers of
insurance advertising etc)
1048713 Interest paid
1048713 Income taxes paid
1048713 Other operating cash payments if any
Companies using the indirect method are required to disclose separately changes in
inventory receivables and payables to reconcile net income to net cash flow from
operating activities In addition interest paid (net of amount capitalized) and income
taxes paid must be disclosed elsewhere in the financial statements or accompanying
notes
The FASB requires these separate and additional disclosures so that users
may approximate the direct method Also an acceptable alternative presentation
of the in-direct method is to report net cash flow from operating activities as a
single line item in the statement of cash flows and to present the reconciliation
details elsewhere in the financial statements
FINDING OF SUDY
According to cash flow statement of the company The finding of the study are as
follows-
The company has not taken any loans secured or unsecured from companies
firms or other parties
The company has not accepted any deposit from the public during the year
The company is not a sick industrial company
The company has not granted any loan secured or unsecured to company firms
or other parties
The company has paid the entire long term and short term borrowing during the
year
The company has buy back the companyrsquos own share this year
The interest paid in 2008 is more than the
There has been a significant decline in volume over the years from 2001-02
to 2005-06 as can be seen in the graph below
Table 43
The Net sales of Tractor has increased considerably from 2004-05 to 2007-08
This can be mainly attributed to changes in Variable and material costs and in
the price
The Net sale of Tractor has increased considerably from 2004-05 to 2007-08
that is an decrease of Rs7216 per tractor This can be mainly attributed to
changes in
Variable and material costs and in the prices
RECOMMENDATIONS
According to cash flow statement of the company The suggestions of the study
are as follows-
The time durations for training program have to increase
Buy regular review and consultations develop a career progression
which is sensitive to performance and ability
Create an environment where by people are trend developed to enable
The to take advantages of opportunities that arise
The jab can be redesigned where the work man stay in what is normally
the same job but has elements of it changed
The principle amount must be paid in time which can be reducing the
interest the out flow
The purchase of the fixed asset must be made only when there is extreme
requirement
In order to avoid taxes the company should go for more investment
The companyrsquos borrowings should go for more investment
o The company should try to reduce the depreciations as maximum
as possible
CONCLUSION
The study on competency level of employees at ESCORTS PVTLTD gave an
insight about the acceptance of competency mapping by employees
The employees at Ymi welcome the introduction of competency mapping in their
organization as they felt it was very much essential in enhancing their skills and
organizational development
The organization has provided the recourses guidance and support to facilitate the
introduction of competency level easily and develop the employees in such a way
that they can face any kind of challenge
However the level of competency in employees is found to be satisfactory
Providing proper training education and guidance to the employees can enhance
the level
This study was mainly carried out to find out whether thee competency mapping
being followed by the company is effective till date If the competency mapping
and fitment to the organization
By looking at the graphs and tables it is quite that the employees still are not up to
the level of competent pool they still have to be trained and made competent in
order to fill the gap As the organization has just applied the mapping it has to see
to that it meets all the requirements for competency mapping
Therefore the graphs make it quite clear that the potential of the employees is not
up to the mark and ie they are not competent enough to meet the competency-
mapping requirement Hence by further training and counseling this gap can be
closed
This report includes the training requirements of employees and it highlights skills
possessed by each employee and skill required All employees get training so that
skill can be improved and maintain balance between standard performance with
their actual performance to avoid gap
APPENDIX
QUESTIONNAIRE
Consumer Survey
Name _____________________________
Age _____________________________
Sex
Male
Female
Occupation
Businessman
Service man
Professional
Others
Monthly income brackets
Below 15000
15000- 20000
20000-30000
30000 and above
of your savings _________
Do you invest
Yes
No
If yes then where do you invest your money
Bank
Insurance
funds
Others
Why do you made that statement
Return
Risk hedging
Tax benefits
Other reasons (specify) _______
Who influence your cash decision
Relatives and friends
Family members
Advisors experts
You yourself
If no then why
Do not know where to invest
Satisfied with your current investment return
Donrsquot want take risk
Other reasons
__________________________________________________________________
___________________
Do you know about CF statement
Yes
No
If yes then from where you have come to know about an cash statement
Advertisements on newspapers
Friends and relative
Agents experts
Other source
What do you think about cash statement
It means investing only in share market
Constant watch must be kept always
Return is not satisfactory
Other perception
__________________________________________________
Can you recall any cash flow of company
___________________________
Would you want to made CF of an org
Yes
No
If yes then why
_______________________________________________________
If no then why
_______________________________________________________
BIBLIOGRAPHY
List of Books
1 PANDEY IM - FINANCIAL MANAGEMANT
2 KHAN MY AND JAIN PK -FINANCIAL MANAGEMANT
3 SMITH KV ndash MANAGEMANT OF WORKING CAPITAL
3 COMPANY RECORDS
4 JOURNAL
5 REPORTS
WEBLIOGRAPHY
1 wwwescortspvtltdcom
2 wwwgooglecom
COMMON-SIZE STATEMENTS (CSS)
The CSS represents the relationship of different items of financial statements with some
Common items by expressing each item as a percentage of the common item In common size
Balance Sheet each item of the balance sheet is stated as a percentage of the total balance
sheet The percentages for different items are computed by dividing the absolute amount of
that item by the Common Base and then multiply by 100 The percentage so calculated can
be easily compared with the corresponding percentage in some other period Thus the CSS is
useful not only in intra-firm comparison for the same year or free several years
TREND PERCENTAGE ANALYSYS(TPA)
The TPA is a technique of studying several financial statements over a series of years In
TPA the trend percentages are calculated for each item by taking the figure of that item for
some base year as 100 So the trend percentage is the percentage relationship which
Each item of different years bears to the same item in the base year Any year may be Taken
as the base year but generally the starting initial year is taken as the base year So each
item for base year is taken as 100 and then the same item for other years is Expressed as a
percentage of the base year
RATIO ANALYSIS (RA)
The RA has emerged as the principle technique of the AFS A ratio is a relationship
Expressed in mathematical terms between two individual or groups of figures connected with
other in some logical manner The RA is based in the premise that a single accounting figure
by itself may not communicate any meaningful information but when expressed as a relative
to some other figure it may definitely give some significant information The relationship
between two or more accounting figuresgroups is called a Financial Ratio
A financial ratio helps to summarize a large mass of financial data into a concise form
and to make meaningful interpretations and conclusions about the performance of a firm
For example a firm has net sales Rs 5 00000
Gross Profit Rs 100000
Ratio of Gross Profit to net sales is 20
ie (Rsl 00000 Rs5 00000)
Forms of Ratios
Since a ratio is a mathematical relationship between two or more variables accounting
figures such relationship can be expressed in different ways as follows
bull As a Pure Ratio
bull As a Rate of Times
bull As a Percentage
Ratio can be classified into
bull The Liquidity Ratio
bull The Activity Ratio
bull The Leverage Ratio
bull The Profitability Ratio
STATEMENT OF CHANGES IN FINANCIAL POSITION
(SCFP)
Since the BS amp IS of a firm are two basic depicting the financial position of a firm at the end
of the year These two financial statements are called the traditional statements Both these
statements fail to throw light on changes in assets liabilities and shareholders wealth during
this year
BS deals with the financial position gives only the static view of the year- end financial
position and fails to indicate the movement and causes in assets and liabilities during the
year Similarly IS show the profit or loss resulting out of the operations of the firm during
the year This profit or loss in fact to ascertain the sufficiency of resources to declare the
dividend etc thus there is a need to prepare another statement (together with the BS amp IS)
which may identify the changes in assets liabilities and the shareholders funds over a given
period
The SCFP is essentially an explanation of the changes in financial position of a Firm
occasioned by the firm in between two successive BSs The SCFP draws basic Information
from the BS and IS helps in understanding the change in assets liabilities and shareholders
worth The SCFP deals with the flow of funds during the year ie the funds coming in and
going out of the firm It summarizes the sources from where the funds might have been
arranged procured by the firm and the uses for which the funs might have been used by
the firm during the year
The SCFP can be prepared as follows
bull SCFP (Cash Basis) also known as a Cash F low Statement
bull SCFP (Net Working Capital Basis) Fund Flow Statement
SCFP (WORKING CAPITAL BASIS)
FUND FLOW STATEMENT
The FFS reports the flows of funds through the firm during the year ie it shows the
Sources and uses of working capital between two balance sheet dates The FFS
attempts to explain the changes in financial position from one BS to the subsequent BS
in terms of the change in the funds or the working capital position of the firm
The term Working capital (WC) is generally defined as the excess of total
current assets over the total current liabilities The current Assets (CA) of a firm may
include cash in hand and at bank stock debtors bills advances etc and the Current
Liabilities (CL) includes creditors bills payable outstanding expenses provision for
tax short term liabilities etc the term WC is a single figure representing the net effect
of a transaction is to increase or decrease the Working Capital by affecting any of the
elements of Current Assets or Current Liabilities Therefore the FFS in its standard
form incorporates only those transactions which affect the Working Capital i e those
transactions where in only one of the affected accounted is a current account
Now a flow of working capital arises when one of the affected accounts is a current
account From the point of view of current account the effected on working capital
can examined in the light of the definitions of the term working capital ie the excess
of current assets over current liabilities ie
Impliedly change in any of the CA or CL will affect the WC Simple observation
equation tells that
bull Increase in any of the CA or decrease in any of the CLs will result in increase
in the WC
bull Decrease in any of the CA or increase in any of the CLs will result in decrease
in the WC
To find out the relative importance of different components of the financial position
of the firm
bull To identify the reasons for change in the profitability financial position of the
firm and
bull To assess the short term as well as the long term liquidity position of the
firm
TECHNIQUES TOOLS OF THE AFS
AFS can be undertaken by different persons and for different purposes therefore the
methodology adopted for the AFS may be carrying from one situation to another However
the following are some of the common techniques of the AFS
bull Comparative financial statements
bull Common-size financial statements
bull Trend percentage analysis and
bull Ratio Analysis
COMPARATIVE FINANCIAL STATEMENTS
In CFS two or more BS andor the IS of a firm are presented simultaneously in columnar
form The Financial data for two or more tears are placed and presented in adjacent columns
and thereby the financial data is provided at times perspective in order to facilitate periodic
comparison In CFS the BS and the IS for number of years are presented in condensed
form for year to year comparison and to exhibit the magnitude and direction of changes
The CFS helps a financial analyst of the firm and in establishing operating and
positional trend of the firm The CFS may be prepared to show
1 The absolute amount of different items in monetary terms
2 The amount of periodic changes in monetary terms
1 The percentages of periodic changes to reveal the proportionate changes
The CFS can be prepared for both the BS and the IS
CORE COMPETENCE OF ESCORTS
Customer 1
We put customers first in everything we do We take decisions keeping the customer in
mind
Challenging Spirit
We strive for excellence in everything we do and in the quality of goods amp services we
provide We work hard to achieve what we commit amp achieve results faster than our
competitors and we never give up
Team-work
We work cohesively with our colleagues as a multi-cultural team built on trust respect
understanding amp mutual co-operation Everyones contribution is equally important for
our success
Frank amp Fair Organization
We are honest sincere open minded fair amp transparent in our dealings We actively
listen to others and participate in healthy amp frank discussions to achieve the
organizations
A firm undertakes numerous during a year and most of these transactions during a year and
most of these transactions may affect one or the other current account ie most of these
transactions May results in the flow of the WC Neither is it necessary nor practical to
identify the effect of each and every transaction on the WC These transactions instead are
considered and analyzed in a collective form and then their effect on the WC is identified
SCFP (CASH BASIS) OR
THE CASH FLOW STATEMENT
The CFS attempts to analyze the transactions of the firm in terms of cash ie the transactions
generating cash and using cash The focus in the CFS is on cash rather than on WC The
sources of cash may be the cash profits earned by the firm issue of capital for cash issue of
other securities for cash borrowings sale of assets investment redemption of debenture or
preference share repayment of loan payment of tax dividend distribution etc Thus the
CFS summarizes the cash inflows and outflows
An analysis of cash flows is useful for short-run planning A firm needs sufficient cash to
debts maturing in the near future to pay interest and other expenses and to pay dividends to
shareholders The firm can make projections of cash flows and outflows for the near future to
determine the availability of cash This cash balance can be matched with the firms need for
cash during the period and accordingly arrangements can be made the deficit or invest the
surplus cash temporarily A historical analysis of cash flows provides insight to prepare
reliable cash flow projections for the immediate future
A statement of changes in financial position on cash basis commonly known as cash flow
statement summarizes the causes of changes in cash position between dates of two balance
sheets It indicates the sources amp uses of cash The cash flow statement is similar to the fund
flow statement except that it focuses attentions on cash instead of working capital (funds)
Thus this statement analyses change in non-current accounts as well as current accounts
(other than cash) to determine the flow of cash
The CFS is based on the concept on the WC Where as the CFS is based in cash which is only
the element of WC Thus the CFS provides details of cash movements whereas the FFS
provides the details of funds movements
The CFS considers only the actual movement of cash whereas the FFS considers the
movements of the funds as defined in terms of net working capital
CASH-FLOW STATEMENT
A cash-flow statement is a statement showing inflows (receipts) and outflows (payments) of
cash during a particular period In other words it is a summary of sources and applications of
Cash during a particular span of time It analyses the reason for changes in balance of cash
between the two balance sheet dates The term Cash here stands for cash and cash
equivalents
A cash-flow statement includes only those items which affect cash As such the cash-flow
statement is called a statement of changes in financial position - cash basis
A cash - flow statement can be for the past or can be projected for a future period
OBJECTS OR USES OF CASH-FLOW STATEMENT
The main objectives behind preparing a cash-flow statement can be laid down as under-
bull USEFUL FOR SHORT-TERM FINANCIAL PLANNING-
A cash-flow statement provides information for planning the short-term financial needs of the
firm Since it provides information regarding the sources and utilization of cash during a period
it become easier for the management to assess whether it will have Adequate cash to meet day-
to-day expenses and pay the long - term loans and interest Thereon and whether it has enough
cash to pay for the purchase of fixed assets or not
USEFUL FOR PREARING THE CASH BUDGET-
A cash-flow statement prepared for the future period is helpful in preparing a cash budget It
informs the management about the future period is helpful in preparing a cash budget It informs
the management about the surplus or deficit periods of cash ie in which months the payments
will be in excess of receipts It helps in planning the investment of surplus cash in short-term
investment and to plan short-term credit in advance of deficit periods
bull COMPARISON WITH CASH BUDGET-
A cash budget is prepared at the commencement of the year whereas a cash flow Statement is
prepared at the end of the year A comparison between the two helps in ascertaining the extent
to which the financial resources of the firm have been generated and used according to the plan
Causes of variances between the figures of two statements can be analyzed and proper
corrective measures may be takes
bull STUDY OF THE TREND OF CASH RECEIPTS AND PAYMENTS-
A cash-flow statement reveals the speed at which the cash is being generated from debtors stock
and other current assets the speed at which the current liabilities are being paid It enables the
management to assess the true position of the cash in future
bull IT EXPLAINS THE DEVIATIONS OF CASH FROM EARNINGS-
A firm may earn huge profits yet it may have paucity of cash or when it suffered a loss it may
still have plenty of cash A cash flow statement explains the reasons for it
HELPFUL IN ASCERTAINING CASH-FLOW FROM VARIOUS
ACTIBITIES SEPARATELY-
A cash-flow statement aims at highlighting the cash flow from operating investing and
financing activities separately It includes how much cash has been generated or used in these
activities
bull HELPFUL IN MAKING DIVIDEND DECISIONS-
Dividend must be paid within 42 days of its declaration Hence the management takes the help of
cash-flow statement to ascertain the position of cash generated from operating activities which
can be used for payment of dividend
IMPORTANCE AND RELEVANCE OF CFS
The CFS has gained importance in view of the fact that there are many managerial Decisions
which are taken in the light of the cash availability or cash position of the firm
For example declaration of dividend by the company requires cash disbursement and
Therefore the Board of Directors must consider the cash position before proposing a dividend
The CFS also provides information for the short term financial planning and in particular the
short term cash needs of the firm
In view of increasing importance and relevance of the CFS the clause 32 of the Listing
agreement (between a Company and the Stock Exchange where the shares proposed to be listed)
has been amended by the SEBI As a result the listed companies in India are now required to
supply a copy of the CFS to each shareholder as a part of Annual Report As a result the listed
companies have started a practice of sending a CFS for which the BS has been prepared as
apart of the Annual Report of the company
DIFFRENCE BETWEEN CASH - FLOW STATEMENT AND
CASH BUDGET
There is not much difference between cash flow statement and a cash budget The
only difference is that a cash flow statement is prepared for a past period where as cash
budget is prepared for a future period Hence it is of limited use as far as the future
periods are concerned A cash budget is therefore prepared showing how much cash is
likely to be received and what will be the disbursements during a future period of time
Thus a cash budget indicates in which months there will be surplus cash and in which
moths there will be deficiency of cash resources The management can then take suitable
decision to invest the surplus cash or make arrangement for the deficiency of cash at the
required time
LIQUIDITY
It does not present true picture of the liquidity of the firm the liquidity does
not depend upon cash alone Liquidity also depends upon those assets
which can be converted into cash easily
bull Exclusion of these assets obstructs the true reporting of the ability of the firm to
meet its liabilities when they become due for payment
bull The possibilities of window - dressing is higher in case of cash position in
comparison to the working capital position of the firm
bull The cash balance can be easily maneuvered by postponing purchases and other
payments and by rapidly collecting cash from debtors before the balance sheet date
Hence a fund - flow statement presents a more realistic picture than a cash flow
statement
bull Cash flow statement ignores non- cash charges Hence the true position of the
enterprise cannot be judged by cash flow statement
bull It is prepared on cash basis and hence ignores one of the basic concept of accounting
namely accrual concept
PROCEDURE OF PREPARING CASH FLOW STATEMENT-
The institute of charted accountants of India has issued accounting standards (as)-3 revised for
preparing a cash flow statement This accounting standard has been made mandatory in respect
of accounting periods commencing on or after 1st April 2001 for certain enterprises These
enterprises are-
bull Enterprises whose equity or debt securities are listed on a recognized stock exchange in
India And enterprise that are in the process of issuing equity or debt securities that will
be listed on a recognized stock exchange in India
bull All other commercial industrial and business enterprises whose turnover for accounting
period Rs 50 crores
As such the cash flow statement has been prepared according to as -3 revised in this project
According to as-3 revised the cash flow statement summarizes the cash inflows and cash
outflows and the net changes (increase or decrease) in cash and cash equipment resulting from
operating investing and financing activities of a firm during a period The following terms are
used for preparing a cash flow statement
CASH-
It compares cash in hand and demands with banks
CASH EQUIVALENTS-
There are short - term highly liquid investments that are readily into known amounts of cash
and which present insignificant risk of changes in their values Normally an investment will be
termed as cash equivalent only if it has a short maturity period say three months or less from the
date of its acquisition Examples of cash equivalent are treasury bills commercial papers etc
Which are purchased with cash that is in excess of immediate needs investment in shares are
excluded from cash equivalents unless they are cash equivalent in reality For example the
preference shares of the company which are purchased shortly before their redemption date will
be included in cash equivalents provided there is only an insignificant risk of failure of the
company in repaying the amount at the date of the maturity
CLASSIFICATION OF CASH FLOW-
According to as -3 (revised) cash flow statement should be presented in a manner that it reports
inflows of cash by classifying them into three categories namely operating investing and
financing activities Classification of all activities into these activities on the cash and cash
equivalents of the enterprise such information will be helpful in evaluating the relationships
among these three activities are explained as below
CASH FLOW FROM OPERATING ACTIVITIES-
Operating activities are the main revenue generating activities of an enterprise As such they
include cash flows from those transactions and events which enter into the ascertainment of
net profit or loss of the enterprise Examples of cash flows arising operating activities are
bull Cash receipts from the sale of goods and rendering of services
bull Cash receipts from royalties fees commissions and other revenue
bull Cash payments to suppliers for goods and services
bull Cash payments to and on behalf of employees
bull Cash receipts and cash payments of an insurance enterprise for premiums and claims
annuities and other policy benefits
bull Cash receipts and payments relating to future contracts forward contracts option
contracts and swap contracts when the contracts are held for dealing or trade purpose and
bull Cash payments of refunds of income taxes unless they can be specifically identified with
financing and investing activities
CASH FLOW FROM INVESTING ACTIVITIES-
Investing activities include the purchase and sale of long term assets such as land building plant
and machinery etc not held for resale These activities also include the purchase and sale of such
investment which are not including in cash equipments Cash flow from investing activities
discloses the expenditures incurred for resources intended to generate future income and cash
flows
Examples cash flow arising from investing activities are
bull Cash payments to acquire fixed assets (including intangible)
bull Cash receipts from sale of fixed assets (including intangibles)
bull Cash payments to acquire shares warrants or debt instruments of other enterprises
(other than receipts for those instruments considered to be cash equivalents)
bull Cash receipts from sale of shares warrants or debt instruments of other enterprises (other
than receipts for those instruments considered to be cash equivalents)
bull Cash advances and loans made to third parties In case of financial enterprises these will
be treated as cash flow from operating activities
bull Cash receipts from the repayment of advances and loans made to third parties In case of
financial enterprises these will be treated as cash flow from operating activities
bull Cash receipts of insurance claim for property involved in accident and
bull Cash receipts of interest and dividend In case of financial enterprise these will be treated
cash flow from operating activities
CASH FLOW FROM FIANCING ACTIVITIES-
Financing activities are the activities that result in change in capital and borrowing of the
enterprise
Examples of cash flows arising from financing activities are
bull Cash receipts from issuing shares or other similar instruments
bull Cash receipts from issuing debentures loans bonds and other short term or long term
borrowing
bull Cash repayment of amounts borrowed buy back of equity shares redemption of
preference shares debentures loans bonds etc
bull Cash payment of interest and dividend
IMPORTANT NOTE
In case of financial enterprise such as bank or mutual fund company cash Outflow
and cash inflow arising from the purchase and sale of securities will Be treated as
flows from operating activities This is because purchase and sale of securities is a
part of operating activity in case of financial enterprise In addition interest paid
and interest received as well as dividends received will also be treated as cash flow
from operating activities in case of financial Enterprises
CASH FLOW STATEMENT
(DIRECT METHOD)
CASH FLOW FROM OPERATING ACTIVITIES
Cash receipts from costumers
Cash paid to suppliers and employers ()
Cash generated from operations
Income tax paid ()
Cash flows from extraordinary item
plusmn Extra ordinary items
Net cash from operating activities
CASH FLOW FROM INVESTING ACTIVITIES-
Purchase of fixed assets
Proceed from sale equipment ()
Interest received
Dividend received ()
Net cash from investing activities
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from insurance of share capital
Proceeds from long- term borrowings ()
Repayment of from long-term borrowings
Interest paid
Dividend paid ()
Net cash from financing activities
Net increase in cash and cash equivalent
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
SOME SPECIAL TERMS-
i) INTERSET AND DIVIDEND-
Cash inflow from interest and dividends and cash outflow on account of interest and
dividends should be disclosed separately Cash inflow arising from interest and dividends
received should be shown as cash flow from investing activities where as cash outflow
disclosed outflow on account of interest and dividend paid should be shown as cash flow
from financing activity
ii) TAXES ON INCOME-
Tax paid on income is a part of cash flow from operating activity Hence taxes paid are
shown as a deduction under cash flow from operating activity
iii) EXTRA ORDINARY ITEMS-
Cash flow relating to extra ordinary items such as bad debts recovered Claims received from
insurance companies winning of a lottery or a law etc Should be disclosed separately as
arising from operating investing or financing activities For example the amount received
for insurance company on account of loss of stock by fire Earthquake and floods etc Should
be reported as cash flow from operating activities
iv) SIGNIFICANT NON - CASH TRANSACTION-
There are some investing and financing activities which do not require the use of cash or
cash equivalents Such non cash activities should be excluded from the cash flow statement
Examples are the acquisition of assets by issue of debentures or shares conversion of
shares into debentures etc Such significant on non cash transaction should be disclosed
outside the cash flow statement
CASH FLOW STATEMENT
(INDIRECT METHOD)
CASH FLOW FROM OPERARATTNG ACTIVITIES
Net profit before taxation and extraordinary item
Adjustment for
Depreciation
Foreign exchange loss
Interest income
Dividend income
Interest expense
Operating profit before working capital changes
Increase in sundry debtors
Decrease in inventories
Decrease in sundry creditors
Cash generated from operations
Income tax paid ()
Cash flow before extraordinary item
plusmn Extra - ordinary items
Net cash from operating activities
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of fixed assets ()
Proceeds from sale of equipment
Interest received
Dividend received ()
Net cash from investing activities
CASH FLOW FROM FINANCING ACTIVITIES-
Proceeds from insurance of share capital
Proceeds from long - term borrowings
Repayments of from long - term borrowings ()
Interest paid ()
Dividend paid ()
Net cash from financing activities
Net increase in cash and cash equivalent
Cash and cash equivalents at beginning of period
CHANGES IN CASH FLOWS
Changes in cash flows can be treated to the following
1 Net profit will increase the cash flows these cash flows will be
increased further if there are any non-cash changes (such as depreciation
and amortization)
2 Any payment of dividends will decrease the cash flows as will the
repayment of debt an issue of share or debt will also increase the
cash flows
3 An increase in non-cash assets will decrease cash flows increase in
current assets and fixed assets will result in drain on cash flows
Thus a statement of changes in cash flows ie the cash flow statement
classifies all Changes into one of three categories - operating investing or
financing activities Therefore the preparation of a statement of changes in cash
flows requires classification of changes in liabilities shareholders equity and
non-cash assets into one of these categories although some items will not fit
easily onto one other
h equivalent at end of period
STEP- BY-STEP PROCEDURE TO PREPARE CFS
1 Calculate the net increase or decrease in cash and cash equivalents-
For this purpose the opening balance of total cash and cash equivalents is compared with the
closing balance of cash and equivalents
Increasedecrease in cash and equivalents
Opening balance Closing Balance
Cash in hand
Cash in bank
Short-term Investment
Total
The difference between the total of opening and closing balance will be increased or
Decreased in cash equivalents during the period It may be noted that if there are only one or
two of items of cash etc
2 Net Cash flaw from operating activities-
The term operating refers to the normal purchase of goods and services On the basis of the
information contained in the comparative BS s and the IS and the additional Information the
net cash flow generated or use by the operating activities may be ascertained The IS prepared
by the firm gives the net profit figure earned by the firm On actual basis ie all items in the
IS are incorporated on the basis of earnedaccrued even
3 If not resulting in cash movements-
So the profit or loss as by the IS may not result in increase or decrease in cash balance by the
SYNOPSIS
INTRODUCTION
ESCORTS PVT LTD is a private limited company not listed in a stock exchange of India
and employees 900 highly trained personnel Its manufacturing plants are strategically located
in close proximity to its customers at Faridabad (Haryana) Noida (UP)
OBJECTIVES OF THE STUDY
bull To find the movement of cash inflow and cash outflow
bull To make the comparison between cash inflow and
bull Cash outflow
bull To prepare the Cash Flow Statement
bull To analyze the Balance Sheet of the company in terms of Cash Flow Statement
bull To focus on various activities of the organization in terms of Operating
Financing Investment
SCOPE OF THE STUDY
Financial resources are the assets for the company and their productivity is key
factor for profitability It is necessary to know their problems their knowledge
skills abilities amp the measures that can be taken to reduce them By analyzing this
top management can build good relations with the employees
The whole study is to determine the competencies of different employees who are
working in ESCORTS PVT LTD By analyzing it the top management can
introduce the concept of competency mapping in the organization Through this
management can attempt to use more suitable strategies towards the human
resource development
The research is confined to elicit the existing gap between the standard skill
required to perform the job and the skill processed by the employees at ESCORTS
PVT LTD And to provide them suitable training program to over come those gaps
for the better utilization of human resources
RELEVANCE
The scope of the study was confined to the outside parties like creditors
shareholders government etc Who want to invest their money in the
company
The benefit of the report for the company is that through this report they can come
to know about the cash flow statements of the company
This study also unable the company that their cash is not utilizing in unnecessary
things
The benefit of the report for the researcher is that it has helped to get knowledge
about the cash inflow and cash
RESERRCH METHODOLOGY-
RESEARCH DESIGN
bull The study was conducted under well- structured approach
bull The project lasted for 4 weeks and the year 2009 ie from 08 July to 12
Aug2009
bull The questionnaire method amp personal interview method was used to collect
the primary data for the study
The secondary data is collected from Internet amp company training material and
many other company materials
SAMPLE DESIGN
The process of extracting a sample from a population is called sampling
procedure The selection of sampling procedure to conduct the research
depends upon the nature of the study and the objective to be accomplished
Judgment sampling technique is adopted to select the respondents in this
study The sample design included the various departments in the YAMAHA
MOTORS PVT LTD
Methodology of date collection
bull Conducting personal interview
bull Data collection from primary and secondary sources
bull Designing questionnaire
bull Selecting sample size from the sample frame for the survey
bull Questionnaire distribution
bull Analysis of collected data with the help of statistical tools
bull Interpretation of collected data
bull Stating the conclusion based on the entire study
Sampling Technique
The sampling technique used for this research is of non-probability and convenience
sampling
Sample Unit
Employees of the company
Sample Size
For this research study the sample size is 25 respondents
Sources of data
Primary data
Primary data is the data which is collected by the researcher for the first time
and which was not there The tools used to collect the data are-
1)Questionnaire method from the employers in different departments
2) Face to Face personal interactions
Secondary Data
The data already collected is called as secondary data The relevant information
for this study has been collected from secondary source such as
Books
Journal
Reports
Publication by the organizational circulation
Company records
Business bulletins
Internet
Secondary data is also collected from various of the internet and intranet Some
of the website trough which information was gathered was through
HYPOTHESIS
The report is analyzed under the presumption that cash flow position of
YAMAHA MOTORS PVTLTD It can be improved and made effective in
terms of cash flows
In testing the above hypothesis the following aspects will be considered
1 Balance sheet comparisons
2 Presentation of cash flow statement in terms of revised AS-3
LIMITATIONS
The study though conducted to the best of the ability suffers from some
certain limitations There are
The data is secondary one and as such its reliability may be
questioned upon
The time availability for the study is less and as such it hinders thee
progress of the study
Senior officials were rarely approachable
Websites were not giving comprehensive data
Not having face-to-face interaction to get more relevant
information
Analysis and interpretation of data was done on the assumption that
the respondentsrsquo information was online
Information collected was totally subjective
The interviews are done during office hours but could not be done
for the other employees of other
DATA ANALYSIS
ESCORTS PVT LTD
CASH FLOW STRATEMENT
Year Ended Year Ended
30092009 30092008
Rs Crores Rs
Crores
A Cash Flow from Operating Activities
Net profit before tax (1733) 3444
Adjustment for
Loss on sale Provision for diminution in value of Long Term
Investments amp loans to Group Companies 189 4018
Gain on sale of Long Term Investments (122) (9492)
Gain on sale of Asset (013) -
Depreciation 4497 3955
Misc Exp Assets Write off Provisions 808 750
Interest Expense 7222 7999
Dividend Income (002) (001)
Interest Income (2082) -
Operating Profit before working capital changes 8764 10673
Adjustments for
Trade and other Receivables (8817) (12035)
Inventories 1379 (4692)
Trade Payables 6705 19046
Miscellaneous Expenditure (750) (511)
(1483) 1808
Cash Generated from Operations 7281 12481
Direct Taxes (Paid)Refunds (1785) 3166
Net Cash Flow from operating activities 5496 15647
B Cash Flow from Investing Activities
Purchase of Fixed Assets (3095) (2794)
Proceeds from sale of Fixed Assets 086 177
Movement in Loans and Advances (1627) (1644)
Sale of Investments 3233 11452
Short Term Deposits with schedule Banks (231) (1048)
Interest Received 2070 -
Dividend Received 002 001
Net Cash Flow from Investing activities 438 6144
Proceeds from Share Capital amp Securities Premium 11444 -
Proceeds from Long Term Borrowings 8660 -
Less Repayment of Long Term Borrowings (054) (7896)
Proceeds (Repayment) from short term borrowings (net) (22726) -
Interest Paid (7740) (8223)
Net Cash used in financing activities (10416) (16119)
Net Increase(Decrease) in Cash and Cash equivalents (4482) 5672
Cash and Cash equivalents as at 01102008 10565 4893
Cash and Cash equivalents as at 30092009 6083 1056
ANALYSIS OF CASH FLOW
From the cash flow statements of the ESCORT PVTLTDIt can be analyzed
from the two years that the net cash balance of the company has increased
manifold in 30-09-2008 than the year 30-09-2009
The net profit in 30-09-2008 is higher than the 30-09-2009 but due to certain
changes there has been increase in the cash balance
The interest paid this year is ore of the last year which implies that thee
company has not repaid his borrowed capital due to which the interest has got
down
The depreciation has increased but it does not affect cash to an extent as it is a
non-cash item In the head of working capital there is drastic change in the cash
balance in the form of ldquoTrade and other Receivables which has affected the cash
balance
There is outflow of cash for receivables rather than the inflow in the last year
So the net effect is that the cash from operating activities has been decreased
two times from the last year
The company has no accumulated losses as at the end of the financial year ie
September 31 2008
Provision for taxation has been made in accordance with the requirement of AS-
22 issued by Institute of Charted Accountants of India
Pursuant to that current year deferred tax liability have been charged to profit amp
loss account
In opinion of the board of directors of thee company the current assets loans
and advances have a value on realization in the ordinary course of the business at
least equal to the amount stated in the balance sheet and provision for all
liabilities have been made
Balance of sundry debtors creditors loans and advances are subject to confirmation by
the concerned parties
METHOD OF ANALYSIS
1 Data analysis is done using the following statistical tools wherever required in
order to extract meaningful information from the collected data
o Simple percentage and averages
o Bar diagram
o Cone diagram
o Pie diagram
2 The collected data from the questionnaire has been put together in the form of
tables
3 Percentage has been calculated wherever necessary for generalization of the
data
4 Data analysis and interpretation has been done on the basis of primary and
secondary data
5 The findings researches have been recorded based on the analysis
6 The study conducted pertains only to YAMAHA MOTORS INDIA PVTLTD
All bank balances (debitcredit) have been confirmed by the concerned bank
Identified from the available information which has been relied upon by the auditors
The names of small-scale industrial units to whom outstanding for more than
thirty days within agreed terms
The company has 9996 of shareholders in its subsidiary company named as
ESCORTS PVT LTD As at 31-03-2008
So the net effect is that the net cash from investing activities has many more
times than the last year which is negative Now the company has repaid its long
term borrowing more than the last year which has decreased the cash balance by
the little amount
Balance with the schedule banks under the head current amp collection account
amounting to represent funds in transit lying with schedule banks pending
transfer against loan liabilities under the head cash credit amp bill discounting
LIQUIDITY RATIO
1 CURRENT RATIO
(Amount in Rs)
Current Ratio
Year Current Assets Current Liabilities Ratio
2003 58574151 7903952 7412004 69765346 31884616 2192005 72021081 16065621 4482006 91328208 47117199 1942007 115642068 30266661 382
Interpretation
As a rule the current ratio with 21 (or) more is considered as satisfactory
position of the firm
When compared with 2006 there is an increase in the provision for tax because
the debtors are raised and for that the provision is created The current liabilities
majorly included Lanco Group of company for consultancy additional services
The sundry debtors have increased due to the increase to corporate taxes
In the year 2006 the cash and bank balance is reduced because that is used for
payment of dividends In the year 2007 the loans and advances include majorly
the advances to employees and deposits to government The loans and advances
reduced because the employees set off their claims The other current assets
include the interest attained from the deposits The deposits reduced due to the
declaration of dividends So the other current assets decreased
The huge increase in sundry debtors resulted an increase in the ratio which is
above the benchmark level of 21 which shows the comfortable position of the
firm
GRAPHICAL REPRESENTATION
741
219
448
194
382
000
100
200
300
400
500
600
700
800
Ratio
2003 2004 2005 2006 2007
Years
CURRENT RATIO
Ratio
2 QUICK RATIO
(Amount
in Rs)
Quick Ratio
Year Quick Assets Current Liabilities Ratio
2003 58574151 7903952 741
2004 52470336 31884616 165
2005 69883268 16065620 435
2006 89433596 47117199 19
2007 115431868 30266661 381
Interpretation
Quick assets are those assets which can be converted into cash with in a short
period of time say to six months So here the sundry debtors which are with the
long period does not include in the quick assets
Compare with 2006 the Quick ratio is increased because the sundry debtors are
increased due to the increase in the corporate tax and for that the provision
created is also increased So the ratio is also increased with the 2006
GRAPHICAL REPRESENTATION
741
165
435
190
381
000
100
200
300
400
500
600
700
800
Ratio
2003 2004 2005 2006 2007
Years
QUICK RATIO
Ratios
3 ABOSULTE LIQUIDITY RATIO
(Amount
in Rs)
Absolute Cash Ratio
Year Absolute Liquid Assets Current Liabilities Ratio
2003 31004027 7903952 392
2004 10859778 31884616 034
2005 39466542 16065620 246
2006 53850852 47117199 114
2007 35649070 30266661 118
Interpretation
The current assets which are ready in the form of cash are considered as absolute
liquid assets Here the cash and bank balance and the interest on fixed assts are
absolute liquid assets
In the year 2006 the cash and bank balance is decreased due to decrease in the
deposits and the current liabilities are also reduced because of the payment of
dividend That causes a slight increase in the current yearrsquos ratio
GRAPHICAL REPRESENTATION
392
034
246
114 118
0
05
1
15
2
25
3
35
4
Ratios
2003 2004 2005 2006 2007
Years
ABSOLUTE CASH RATIO
Ratios
LEVERAGE RATIOS
4 PROPRIETORY RATIO
(Amount
in Rs)
Proprietory Ratio
Year Share Holders Funds Total Assets Ratio
2003 67679219 78572171 086
2004 53301834 88438107 06
2005 70231061 89158391 079
2006 56473652 106385201 053
2007 97060013 129805102 075
Interpretation
The proprietary ratio establishes the relationship between shareholders funds to
total assets It determines the long-term solvency of the firm This ratio indicates
the extent to which the assets of the company can be lost without affecting the
interest of the company
There is no increase in the capital from the year2004 The share holderrsquos funds
include capital and reserves and surplus The reserves and surplus is increased
due to the increase in balance in profit and loss account which is caused by the
increase of income from services
Total assets includes fixed and current assets The fixed assets are reduced
because of the depreciation and there are no major increments in the fixed assets
The current assets are increased compared with the year 2006 Total assets are
also increased than precious year which resulted an increase in the ratio than old
GRAPHICAL REPRESENTATION
086
060
079
053
075
000
010
020
030
040
050
060
070
080
090
Ratios
2003 2004 2005 2006 2007
Years
PROPRIETORY RATIO
Ratios
ACTIVITY RATIOS
5 WORKING CAPITAL TURNOVER RATIO
(Amount
in Rs)
Working Capital Turnover Ratio
Year Income From Services Working Capital Ratio
2003 36309834 50670199 0722004 53899084 37880730 1422005 72728759 55355460 1312006 55550649 44211009 1262007 96654902 85375407 113
Interpretation
Income from services is greatly increased due to the extra invoice for Operations
amp Maintenance fee and the working capital is also increased greater due to the
increase in from services because the huge increase in current assets
The income from services is raised and the current assets are also raised together
resulted in the decrease of the ratio of 2007 compared with 2006
GRAPHICAL REPRESENTATION
072
142 131126
113
000
020
040
060
080
100
120
140
160
Ratio
2003 2004 2005 2006 2007
Years
WORKING CAPITAL TURNOVER RATIO
Ratio
6 FIXED ASSETS TURNOVER RATIO
(Amount in Rs)
Fixed Assets Turnover Ratio
Year Income From Services Net Fixed Assets Ratio
2003 36309834 28834317 126
2004 53899084 29568279 182
2005 72728759 17137310 424
2006 55550649 15056993 369
2007 96654902 14163034 682
Interpretation
Fixed assets are used in the business for producing the goods to be sold This
ratio shows the firmrsquos ability in generating sales from all financial resources
committed to total assets The ratio indicates the account of one rupee
investment in fixed assets
The income from services is greaterly increased in the current year due to the
increase in the Operations amp Maintenance fee due to the increase in extra invoice
and the net fixed assets are reduced because of the increased charge of
depreciation Finally that effected a huge increase in the ratio compared with the
previous yearrsquos ratio
GRAPHICAL REPRSENTATION
126182
424 369
682
000
100
200
300
400
500
600
700
Ratios
2003 2004 2005 2006 2007
Years
FIXED ASSETS TURNOVER RATIO
Ratios
7 CAPITAL TURNOVER RATIO
(Amount
in Rs)
Capital Turnover Ratio
Year Income From Services Capital Employed Ratio
2003 36309834 37175892 0982004 53899084 53301834 1012005 72728759 70231061 1042006 55550649 56473652 0982007 96654902 97060013 100
Interpretation
This is another ratio to judge the efficiency and effectiveness of the company
like profitability ratio
The income from services is greaterly increased compared with the previous year
and the total capital employed includes capital and reserves amp surplus Due to
huge increase in the net profit the capital employed is also increased along with
income from services Both are effected in the increment of the ratio of current
year
GRAPHICAL REPRESENTATION
098
101
104
098
100
094095096097098099100101102103104
Ratios
2003 2004 2005 2006 2007
Years
CAPITAL TURNOVER RATIO
Ratios
8 CURRENT ASSETS TO FIXED ASSETS RATIO
(Amount
in Rs)
Current Assets To Fixed Assets Ratio
Year Current Assets Fixed Assets Ratio
2003 58524151 19998020 2932004 69765346 18672761 3742005 72021081 17137310 4202006 91328208 15056993 6072007 115642068 14163034 817
Interpretation
Current assets are increased due to the increase in the sundry debtors and the net
fixed assets of the firm are decreased due to the charge of depreciation and there
is no major increment in the fixed assets
The increment in current assets and the decrease in fixed assets resulted an
increase in the ratio compared with the previous year
GRAPHICAL REPRESENTATION
293374
420
607
817
000
100
200
300
400
500
600
700
800
900
Ratios
2003 2004 2005 2006 2007
Years
CURRENT ASSETS TO FIXED ASSETS RATIO
Ratios
PROFITABILITY RATIOS
GENERAL PROFITABILITY RATIOS
9 NET PROFIT RATIO
(Amount in Rs)
Net Profit Ratio
Year Net Profit After Tax Income from Services Ratio
2003 21123474 36039834 059
2004 16125942 53899084 030
2005 16929227 72728759 023
2006 18259580 55550649 033
2007 40586359 96654902 042
Interpretation
The net profit ratio is the overall measure of the firmrsquos ability to turn each rupee
of income from services in net profit If the net margin is inadequate the firm
will fail to achieve return on shareholderrsquos funds High net profit ratio will help
the firm service in the fall of income from services rise in cost of production or
declining demand
The net profit is increased because the income from services is increased The
increment resulted a slight increase in 2007 ratio compared with the year 2006
GRAPHICAL REPRESENTATION
059
030
023
033
042
000
010
020
030
040
050
060
Ratios
2003 2004 2005 2006 2007
Years
NET PROFIT RATIO
Ratios
10 OPERATING PROFIT
(Amount in Rs)
Operating Profit
Year Operating Profit Income From Services Ratio
2003 36094877 36309834 099
2004 27576814 53899084 051
2005 29540599 72728759 041
2006 31586718 55550649 057
2007 67192677 96654902 070
Interpretation
The operating profit ratio is used to measure the relationship between net profits
and sales of a firm Depending on the concept it will decide
The operating profit ratio is increased compared with the last year The earnings
are increased due to the increase in the income from services because of
Operations amp Maintenance fee So the ratio is increased slightly compared with
the previous year
GRAPHICAL REPRESENTATION
099
051
041
057
070
000
010
020
030
040
050060
070
080
090
100
Ratios
2003 2004 2005 2006 2007
Years
OPERATING PROFIT RATIO
Ratios
11 RETURN ON TOTAL ASSETS RATIO
(Amount in Rs)
Return on Total Assets Ratio
Year Net Profit After Tax Total Assets Ratio
2003 21123474 78572171 027
2004 16125942 88438107 018
2005 16929227 89158391 019
2006 18259580 106385201 017
2007 40586359 129805102 031
Interpretation
This is the ratio between net profit and total assets The ratio indicates the return
on total assets in the form of profits
The net profit is increased in the current year because of the increment in the
income from services due to the increase in Operations amp Maintenance fee The
fixed assets are reduced due to the charge of depreciation and no major
increments in fixed assets but the current assets are increased because of sundry
debtors and that effects an increase in the ratio compared with the last year ie
2006
GRAPHICAL REPRESENTATION
027
018 019017
031
000
005
010
015
020
025
030
035
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON TOTAL ASSETS
Ratios
12 RESERVES amp SURPLUS TO CAPITAL RATIO
(Amount in Rs)
Reserves amp Surplus To Capital Ratio
Year Reserves amp Surplus Capital Ratio
2003 65599299 2079920 31542004 34582554 18719280 1852005 51511781 18719280 2752006 37754372 18719280 2022007 78340733 18719280 419
Interpretation
The ratio is used to reveal the policy pursued by the company a very high ratio
indicates a conservative dividend policy and vice-versa Higher the ratio better
will be the position
The reserves amp surplus is decreased in the year 2006 due to the payment of
dividends and in the year 2007 the profit is increased But the capital is
remaining constant from the year 2004 So the increase in the reserves amp surplus
caused a greater increase in the current yearrsquos ratio compared with the older
GRAPHICAL REPRESENTATION
3154
185 275 202419
-
500
1000
1500
2000
2500
3000
3500
Ratios
2003 2004 2005 2006 2007
Years
RESERVES amp SRUPLUS TO CAPITAL RATIO
Ratios
OVERALL PROFITABILITY RATIOS
13 EARNINGS PER SHARE
(Amount in Rs)
Earnings Per Share
Year Net Profit After Tax No of Equity Shares Ratio
2003 21123474 207992 101562004 16125942 1871928 8612005 16929227 1871928 9042006 18259580 1871928 9752007 40586359 1871928 2168
Interpretation
Earnings per share ratio are used to find out the return that the shareholderrsquos earn
from their shares After charging depreciation and after payment of tax the
remaining amount will be distributed by all the shareholders
Net profit after tax is increased due to the huge increase in the income from
services That is the amount which is available to the shareholders to take There
are 1871928 shares of Rs10- each The share capital is constant from the year
2004 Due to the huge increase in net profit the earnings per share is greaterly
increased in 2007
GRAPHICAL REPRESENTATION
10156
861904 975
2168
000
2000
4000
6000
8000
10000
12000
Ratios
2003 2004 2005 2006 2007
Years
EARNINGS PER SHARE
Ratios
14 PRICE EARNINGS (PE) RATIO
(Amount in Rs)
Price Earning (PE) Ratio
Year Market Price Per Share Earnings Per Share Ratio
2003 3254 10156 0322004 2847 861 3302005 3752 904 4152006 3017 975 3092007 5185 2168 239
Interpretation
The ratio is calculated to make an estimate of application in the value of share of
a company
The market price per share is increased due to the increase in the reserves
amp surplus The earnings per share are also increased greaterly compared
with the last year because of increase in the net profit So the ratio is
decreased compared with the previous year
GRAPHICAL REPRESENTATION
032
330
415
309
239
000
050
100
150
200
250
300
350
400
450
Ratios
2003 2004 2005 2006 2007
Years
PE RATIO
Ratios
15 RETURN ON INVESTMENT
(Amount in Rs)
Return on Investment
Year Net Profit After Tax Share Holders Fund Ratio
2003 21123474 67679219 031
2004 16125942 53301834 03
2005 16929227 70231061 024
2006 18259580 56473652 032
2007 40586359 97060013 042
Interpretation
This is the ratio between net profits and shareholders funds The ratio is
generally calculated as percentage multiplying with 100
The net profit is increased due to the increase in the income from services ant
the shareholders funds are increased because of reserve amp surplus So the ratio
is increased in the current year
GRAPHICAL REPRESENTATION
031 030
024
032
042
000
005
010
015
020
025
030
035
040
045
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON INVESTMENT RATIO
RatioS
DATA COLLECTION
The data can be of two types
Primary Data
Secondary Data
Primary Data
Primary data are those data which is originally collected afresh
Secondary Data
Secondary data are those data which are already collected and stored and which has
been passed through statistical research
In this project Secondary data has been collected from following sources-
Annual report
Books
MIS
Other material and report published by company There are two methods to prepare
the Cash flow Statement
ndirect Method
I
The indirect method (or reconciliation method) starts with net income and converts it
to net cash flow from operating activities In other words the indirect method adjusts
net income for items that affected reported net income but did not affect cash To
compute net cash flow from operating activities non-cash charges in the income
statement are added ack to net income and non-cash credits are deducted
b
Direct Method
Under the direct method the statement of cash flows reports net cash flow from
operating activities as major classes of operating cash receipts (eg cash collected from
customers and cash received from interest and dividends) and cash disbursements (eg
cash paid to suppliers for goods to employees for services to creditors for interest and
to government authorities for taxes)
INDIRECT VERSUS DIRECT METHOD
The most contentious decision that the FASB faced in issuing Statement No 95 was
choosing between the direct method and the indirect method of determining net cash
flow from operating activities Companies lobbied against the direct method urging
adoption of the indirect method Commercial lending officers expressed a strong
preference to the FASB hat the direct method be required
tCF-Page 3 of 5
In Favor of the Direct Method
The principal advantage of the direct method is that it shows operating cash receipts and
payments That is it is more consistent with the objective of a statement of cash flows to
provide information about cash receipts and cash payments than the in-direct method
which does not report operating cash receipts and payments
Supporters of the direct method contend that knowledge of the specific sources of
operating cash receipts and the purposes for which operating cash payments were made
in past periods is useful in estimating future operating cash flows Furthermore in-
formation about amounts of major classes of operating cash receipts and payments is
more useful than information only about their arithmetic sum (the net cash flow from
operating activities) Such information is more revealing of an enterprises ability (1) to
generate sufficient cash from operating activities to pay its debts (2) to reinvest in its
operations and (3) to make distributions to its owners
Many corporate providers of financial statements say that they do not currently collect
information in a manner that allows them to determine amounts such as cash received
from customers or cash paid to suppliers directly from their accounting systems But
supporters of the direct method contend that the incremental cost of assimilating such
operating cash receipts and payments data is not significant
In Favor of the Indirect Method
The principal advantage of the indirect method is that it focuses on the differences
between net income and net cash flow from operating activities That is it provides a
useful link between the statement of cash flows and the income statement and balance
sheet
Many providers of financial statements contend that it is less costly to adjust net income
to net cash flow from operating activities (indirect) than it is to report gross operating
cash receipts and payments (direct) Supporters of the indirect method also state that the
direct method which effectively reports income statement information on a cash rather
than an accrual basis may erroneously suggest that net cash flow from operating
activities is as good as or better than net income as a measure of performance
Special Rules Applying to Direct and Indirect Methods
Companies that use the direct method are required at a
minimum to report separately the following classes of
operating cash receipts and payments
Receipts
1048713 Cash collected from customers (including lessees licensees etc)
1048713 Interest and dividends received
1048713 Other operating cash receipts if any
Payments
1048713 Cash paid to employees and suppliers of goods or services (including
suppliers of
insurance advertising etc)
1048713 Interest paid
1048713 Income taxes paid
1048713 Other operating cash payments if any
Companies using the indirect method are required to disclose separately changes in
inventory receivables and payables to reconcile net income to net cash flow from
operating activities In addition interest paid (net of amount capitalized) and income
taxes paid must be disclosed elsewhere in the financial statements or accompanying
notes
The FASB requires these separate and additional disclosures so that users
may approximate the direct method Also an acceptable alternative presentation
of the in-direct method is to report net cash flow from operating activities as a
single line item in the statement of cash flows and to present the reconciliation
details elsewhere in the financial statements
FINDING OF SUDY
According to cash flow statement of the company The finding of the study are as
follows-
The company has not taken any loans secured or unsecured from companies
firms or other parties
The company has not accepted any deposit from the public during the year
The company is not a sick industrial company
The company has not granted any loan secured or unsecured to company firms
or other parties
The company has paid the entire long term and short term borrowing during the
year
The company has buy back the companyrsquos own share this year
The interest paid in 2008 is more than the
There has been a significant decline in volume over the years from 2001-02
to 2005-06 as can be seen in the graph below
Table 43
The Net sales of Tractor has increased considerably from 2004-05 to 2007-08
This can be mainly attributed to changes in Variable and material costs and in
the price
The Net sale of Tractor has increased considerably from 2004-05 to 2007-08
that is an decrease of Rs7216 per tractor This can be mainly attributed to
changes in
Variable and material costs and in the prices
RECOMMENDATIONS
According to cash flow statement of the company The suggestions of the study
are as follows-
The time durations for training program have to increase
Buy regular review and consultations develop a career progression
which is sensitive to performance and ability
Create an environment where by people are trend developed to enable
The to take advantages of opportunities that arise
The jab can be redesigned where the work man stay in what is normally
the same job but has elements of it changed
The principle amount must be paid in time which can be reducing the
interest the out flow
The purchase of the fixed asset must be made only when there is extreme
requirement
In order to avoid taxes the company should go for more investment
The companyrsquos borrowings should go for more investment
o The company should try to reduce the depreciations as maximum
as possible
CONCLUSION
The study on competency level of employees at ESCORTS PVTLTD gave an
insight about the acceptance of competency mapping by employees
The employees at Ymi welcome the introduction of competency mapping in their
organization as they felt it was very much essential in enhancing their skills and
organizational development
The organization has provided the recourses guidance and support to facilitate the
introduction of competency level easily and develop the employees in such a way
that they can face any kind of challenge
However the level of competency in employees is found to be satisfactory
Providing proper training education and guidance to the employees can enhance
the level
This study was mainly carried out to find out whether thee competency mapping
being followed by the company is effective till date If the competency mapping
and fitment to the organization
By looking at the graphs and tables it is quite that the employees still are not up to
the level of competent pool they still have to be trained and made competent in
order to fill the gap As the organization has just applied the mapping it has to see
to that it meets all the requirements for competency mapping
Therefore the graphs make it quite clear that the potential of the employees is not
up to the mark and ie they are not competent enough to meet the competency-
mapping requirement Hence by further training and counseling this gap can be
closed
This report includes the training requirements of employees and it highlights skills
possessed by each employee and skill required All employees get training so that
skill can be improved and maintain balance between standard performance with
their actual performance to avoid gap
APPENDIX
QUESTIONNAIRE
Consumer Survey
Name _____________________________
Age _____________________________
Sex
Male
Female
Occupation
Businessman
Service man
Professional
Others
Monthly income brackets
Below 15000
15000- 20000
20000-30000
30000 and above
of your savings _________
Do you invest
Yes
No
If yes then where do you invest your money
Bank
Insurance
funds
Others
Why do you made that statement
Return
Risk hedging
Tax benefits
Other reasons (specify) _______
Who influence your cash decision
Relatives and friends
Family members
Advisors experts
You yourself
If no then why
Do not know where to invest
Satisfied with your current investment return
Donrsquot want take risk
Other reasons
__________________________________________________________________
___________________
Do you know about CF statement
Yes
No
If yes then from where you have come to know about an cash statement
Advertisements on newspapers
Friends and relative
Agents experts
Other source
What do you think about cash statement
It means investing only in share market
Constant watch must be kept always
Return is not satisfactory
Other perception
__________________________________________________
Can you recall any cash flow of company
___________________________
Would you want to made CF of an org
Yes
No
If yes then why
_______________________________________________________
If no then why
_______________________________________________________
BIBLIOGRAPHY
List of Books
1 PANDEY IM - FINANCIAL MANAGEMANT
2 KHAN MY AND JAIN PK -FINANCIAL MANAGEMANT
3 SMITH KV ndash MANAGEMANT OF WORKING CAPITAL
3 COMPANY RECORDS
4 JOURNAL
5 REPORTS
WEBLIOGRAPHY
1 wwwescortspvtltdcom
2 wwwgooglecom
RATIO ANALYSIS (RA)
The RA has emerged as the principle technique of the AFS A ratio is a relationship
Expressed in mathematical terms between two individual or groups of figures connected with
other in some logical manner The RA is based in the premise that a single accounting figure
by itself may not communicate any meaningful information but when expressed as a relative
to some other figure it may definitely give some significant information The relationship
between two or more accounting figuresgroups is called a Financial Ratio
A financial ratio helps to summarize a large mass of financial data into a concise form
and to make meaningful interpretations and conclusions about the performance of a firm
For example a firm has net sales Rs 5 00000
Gross Profit Rs 100000
Ratio of Gross Profit to net sales is 20
ie (Rsl 00000 Rs5 00000)
Forms of Ratios
Since a ratio is a mathematical relationship between two or more variables accounting
figures such relationship can be expressed in different ways as follows
bull As a Pure Ratio
bull As a Rate of Times
bull As a Percentage
Ratio can be classified into
bull The Liquidity Ratio
bull The Activity Ratio
bull The Leverage Ratio
bull The Profitability Ratio
STATEMENT OF CHANGES IN FINANCIAL POSITION
(SCFP)
Since the BS amp IS of a firm are two basic depicting the financial position of a firm at the end
of the year These two financial statements are called the traditional statements Both these
statements fail to throw light on changes in assets liabilities and shareholders wealth during
this year
BS deals with the financial position gives only the static view of the year- end financial
position and fails to indicate the movement and causes in assets and liabilities during the
year Similarly IS show the profit or loss resulting out of the operations of the firm during
the year This profit or loss in fact to ascertain the sufficiency of resources to declare the
dividend etc thus there is a need to prepare another statement (together with the BS amp IS)
which may identify the changes in assets liabilities and the shareholders funds over a given
period
The SCFP is essentially an explanation of the changes in financial position of a Firm
occasioned by the firm in between two successive BSs The SCFP draws basic Information
from the BS and IS helps in understanding the change in assets liabilities and shareholders
worth The SCFP deals with the flow of funds during the year ie the funds coming in and
going out of the firm It summarizes the sources from where the funds might have been
arranged procured by the firm and the uses for which the funs might have been used by
the firm during the year
The SCFP can be prepared as follows
bull SCFP (Cash Basis) also known as a Cash F low Statement
bull SCFP (Net Working Capital Basis) Fund Flow Statement
SCFP (WORKING CAPITAL BASIS)
FUND FLOW STATEMENT
The FFS reports the flows of funds through the firm during the year ie it shows the
Sources and uses of working capital between two balance sheet dates The FFS
attempts to explain the changes in financial position from one BS to the subsequent BS
in terms of the change in the funds or the working capital position of the firm
The term Working capital (WC) is generally defined as the excess of total
current assets over the total current liabilities The current Assets (CA) of a firm may
include cash in hand and at bank stock debtors bills advances etc and the Current
Liabilities (CL) includes creditors bills payable outstanding expenses provision for
tax short term liabilities etc the term WC is a single figure representing the net effect
of a transaction is to increase or decrease the Working Capital by affecting any of the
elements of Current Assets or Current Liabilities Therefore the FFS in its standard
form incorporates only those transactions which affect the Working Capital i e those
transactions where in only one of the affected accounted is a current account
Now a flow of working capital arises when one of the affected accounts is a current
account From the point of view of current account the effected on working capital
can examined in the light of the definitions of the term working capital ie the excess
of current assets over current liabilities ie
Impliedly change in any of the CA or CL will affect the WC Simple observation
equation tells that
bull Increase in any of the CA or decrease in any of the CLs will result in increase
in the WC
bull Decrease in any of the CA or increase in any of the CLs will result in decrease
in the WC
To find out the relative importance of different components of the financial position
of the firm
bull To identify the reasons for change in the profitability financial position of the
firm and
bull To assess the short term as well as the long term liquidity position of the
firm
TECHNIQUES TOOLS OF THE AFS
AFS can be undertaken by different persons and for different purposes therefore the
methodology adopted for the AFS may be carrying from one situation to another However
the following are some of the common techniques of the AFS
bull Comparative financial statements
bull Common-size financial statements
bull Trend percentage analysis and
bull Ratio Analysis
COMPARATIVE FINANCIAL STATEMENTS
In CFS two or more BS andor the IS of a firm are presented simultaneously in columnar
form The Financial data for two or more tears are placed and presented in adjacent columns
and thereby the financial data is provided at times perspective in order to facilitate periodic
comparison In CFS the BS and the IS for number of years are presented in condensed
form for year to year comparison and to exhibit the magnitude and direction of changes
The CFS helps a financial analyst of the firm and in establishing operating and
positional trend of the firm The CFS may be prepared to show
1 The absolute amount of different items in monetary terms
2 The amount of periodic changes in monetary terms
1 The percentages of periodic changes to reveal the proportionate changes
The CFS can be prepared for both the BS and the IS
CORE COMPETENCE OF ESCORTS
Customer 1
We put customers first in everything we do We take decisions keeping the customer in
mind
Challenging Spirit
We strive for excellence in everything we do and in the quality of goods amp services we
provide We work hard to achieve what we commit amp achieve results faster than our
competitors and we never give up
Team-work
We work cohesively with our colleagues as a multi-cultural team built on trust respect
understanding amp mutual co-operation Everyones contribution is equally important for
our success
Frank amp Fair Organization
We are honest sincere open minded fair amp transparent in our dealings We actively
listen to others and participate in healthy amp frank discussions to achieve the
organizations
A firm undertakes numerous during a year and most of these transactions during a year and
most of these transactions may affect one or the other current account ie most of these
transactions May results in the flow of the WC Neither is it necessary nor practical to
identify the effect of each and every transaction on the WC These transactions instead are
considered and analyzed in a collective form and then their effect on the WC is identified
SCFP (CASH BASIS) OR
THE CASH FLOW STATEMENT
The CFS attempts to analyze the transactions of the firm in terms of cash ie the transactions
generating cash and using cash The focus in the CFS is on cash rather than on WC The
sources of cash may be the cash profits earned by the firm issue of capital for cash issue of
other securities for cash borrowings sale of assets investment redemption of debenture or
preference share repayment of loan payment of tax dividend distribution etc Thus the
CFS summarizes the cash inflows and outflows
An analysis of cash flows is useful for short-run planning A firm needs sufficient cash to
debts maturing in the near future to pay interest and other expenses and to pay dividends to
shareholders The firm can make projections of cash flows and outflows for the near future to
determine the availability of cash This cash balance can be matched with the firms need for
cash during the period and accordingly arrangements can be made the deficit or invest the
surplus cash temporarily A historical analysis of cash flows provides insight to prepare
reliable cash flow projections for the immediate future
A statement of changes in financial position on cash basis commonly known as cash flow
statement summarizes the causes of changes in cash position between dates of two balance
sheets It indicates the sources amp uses of cash The cash flow statement is similar to the fund
flow statement except that it focuses attentions on cash instead of working capital (funds)
Thus this statement analyses change in non-current accounts as well as current accounts
(other than cash) to determine the flow of cash
The CFS is based on the concept on the WC Where as the CFS is based in cash which is only
the element of WC Thus the CFS provides details of cash movements whereas the FFS
provides the details of funds movements
The CFS considers only the actual movement of cash whereas the FFS considers the
movements of the funds as defined in terms of net working capital
CASH-FLOW STATEMENT
A cash-flow statement is a statement showing inflows (receipts) and outflows (payments) of
cash during a particular period In other words it is a summary of sources and applications of
Cash during a particular span of time It analyses the reason for changes in balance of cash
between the two balance sheet dates The term Cash here stands for cash and cash
equivalents
A cash-flow statement includes only those items which affect cash As such the cash-flow
statement is called a statement of changes in financial position - cash basis
A cash - flow statement can be for the past or can be projected for a future period
OBJECTS OR USES OF CASH-FLOW STATEMENT
The main objectives behind preparing a cash-flow statement can be laid down as under-
bull USEFUL FOR SHORT-TERM FINANCIAL PLANNING-
A cash-flow statement provides information for planning the short-term financial needs of the
firm Since it provides information regarding the sources and utilization of cash during a period
it become easier for the management to assess whether it will have Adequate cash to meet day-
to-day expenses and pay the long - term loans and interest Thereon and whether it has enough
cash to pay for the purchase of fixed assets or not
USEFUL FOR PREARING THE CASH BUDGET-
A cash-flow statement prepared for the future period is helpful in preparing a cash budget It
informs the management about the future period is helpful in preparing a cash budget It informs
the management about the surplus or deficit periods of cash ie in which months the payments
will be in excess of receipts It helps in planning the investment of surplus cash in short-term
investment and to plan short-term credit in advance of deficit periods
bull COMPARISON WITH CASH BUDGET-
A cash budget is prepared at the commencement of the year whereas a cash flow Statement is
prepared at the end of the year A comparison between the two helps in ascertaining the extent
to which the financial resources of the firm have been generated and used according to the plan
Causes of variances between the figures of two statements can be analyzed and proper
corrective measures may be takes
bull STUDY OF THE TREND OF CASH RECEIPTS AND PAYMENTS-
A cash-flow statement reveals the speed at which the cash is being generated from debtors stock
and other current assets the speed at which the current liabilities are being paid It enables the
management to assess the true position of the cash in future
bull IT EXPLAINS THE DEVIATIONS OF CASH FROM EARNINGS-
A firm may earn huge profits yet it may have paucity of cash or when it suffered a loss it may
still have plenty of cash A cash flow statement explains the reasons for it
HELPFUL IN ASCERTAINING CASH-FLOW FROM VARIOUS
ACTIBITIES SEPARATELY-
A cash-flow statement aims at highlighting the cash flow from operating investing and
financing activities separately It includes how much cash has been generated or used in these
activities
bull HELPFUL IN MAKING DIVIDEND DECISIONS-
Dividend must be paid within 42 days of its declaration Hence the management takes the help of
cash-flow statement to ascertain the position of cash generated from operating activities which
can be used for payment of dividend
IMPORTANCE AND RELEVANCE OF CFS
The CFS has gained importance in view of the fact that there are many managerial Decisions
which are taken in the light of the cash availability or cash position of the firm
For example declaration of dividend by the company requires cash disbursement and
Therefore the Board of Directors must consider the cash position before proposing a dividend
The CFS also provides information for the short term financial planning and in particular the
short term cash needs of the firm
In view of increasing importance and relevance of the CFS the clause 32 of the Listing
agreement (between a Company and the Stock Exchange where the shares proposed to be listed)
has been amended by the SEBI As a result the listed companies in India are now required to
supply a copy of the CFS to each shareholder as a part of Annual Report As a result the listed
companies have started a practice of sending a CFS for which the BS has been prepared as
apart of the Annual Report of the company
DIFFRENCE BETWEEN CASH - FLOW STATEMENT AND
CASH BUDGET
There is not much difference between cash flow statement and a cash budget The
only difference is that a cash flow statement is prepared for a past period where as cash
budget is prepared for a future period Hence it is of limited use as far as the future
periods are concerned A cash budget is therefore prepared showing how much cash is
likely to be received and what will be the disbursements during a future period of time
Thus a cash budget indicates in which months there will be surplus cash and in which
moths there will be deficiency of cash resources The management can then take suitable
decision to invest the surplus cash or make arrangement for the deficiency of cash at the
required time
LIQUIDITY
It does not present true picture of the liquidity of the firm the liquidity does
not depend upon cash alone Liquidity also depends upon those assets
which can be converted into cash easily
bull Exclusion of these assets obstructs the true reporting of the ability of the firm to
meet its liabilities when they become due for payment
bull The possibilities of window - dressing is higher in case of cash position in
comparison to the working capital position of the firm
bull The cash balance can be easily maneuvered by postponing purchases and other
payments and by rapidly collecting cash from debtors before the balance sheet date
Hence a fund - flow statement presents a more realistic picture than a cash flow
statement
bull Cash flow statement ignores non- cash charges Hence the true position of the
enterprise cannot be judged by cash flow statement
bull It is prepared on cash basis and hence ignores one of the basic concept of accounting
namely accrual concept
PROCEDURE OF PREPARING CASH FLOW STATEMENT-
The institute of charted accountants of India has issued accounting standards (as)-3 revised for
preparing a cash flow statement This accounting standard has been made mandatory in respect
of accounting periods commencing on or after 1st April 2001 for certain enterprises These
enterprises are-
bull Enterprises whose equity or debt securities are listed on a recognized stock exchange in
India And enterprise that are in the process of issuing equity or debt securities that will
be listed on a recognized stock exchange in India
bull All other commercial industrial and business enterprises whose turnover for accounting
period Rs 50 crores
As such the cash flow statement has been prepared according to as -3 revised in this project
According to as-3 revised the cash flow statement summarizes the cash inflows and cash
outflows and the net changes (increase or decrease) in cash and cash equipment resulting from
operating investing and financing activities of a firm during a period The following terms are
used for preparing a cash flow statement
CASH-
It compares cash in hand and demands with banks
CASH EQUIVALENTS-
There are short - term highly liquid investments that are readily into known amounts of cash
and which present insignificant risk of changes in their values Normally an investment will be
termed as cash equivalent only if it has a short maturity period say three months or less from the
date of its acquisition Examples of cash equivalent are treasury bills commercial papers etc
Which are purchased with cash that is in excess of immediate needs investment in shares are
excluded from cash equivalents unless they are cash equivalent in reality For example the
preference shares of the company which are purchased shortly before their redemption date will
be included in cash equivalents provided there is only an insignificant risk of failure of the
company in repaying the amount at the date of the maturity
CLASSIFICATION OF CASH FLOW-
According to as -3 (revised) cash flow statement should be presented in a manner that it reports
inflows of cash by classifying them into three categories namely operating investing and
financing activities Classification of all activities into these activities on the cash and cash
equivalents of the enterprise such information will be helpful in evaluating the relationships
among these three activities are explained as below
CASH FLOW FROM OPERATING ACTIVITIES-
Operating activities are the main revenue generating activities of an enterprise As such they
include cash flows from those transactions and events which enter into the ascertainment of
net profit or loss of the enterprise Examples of cash flows arising operating activities are
bull Cash receipts from the sale of goods and rendering of services
bull Cash receipts from royalties fees commissions and other revenue
bull Cash payments to suppliers for goods and services
bull Cash payments to and on behalf of employees
bull Cash receipts and cash payments of an insurance enterprise for premiums and claims
annuities and other policy benefits
bull Cash receipts and payments relating to future contracts forward contracts option
contracts and swap contracts when the contracts are held for dealing or trade purpose and
bull Cash payments of refunds of income taxes unless they can be specifically identified with
financing and investing activities
CASH FLOW FROM INVESTING ACTIVITIES-
Investing activities include the purchase and sale of long term assets such as land building plant
and machinery etc not held for resale These activities also include the purchase and sale of such
investment which are not including in cash equipments Cash flow from investing activities
discloses the expenditures incurred for resources intended to generate future income and cash
flows
Examples cash flow arising from investing activities are
bull Cash payments to acquire fixed assets (including intangible)
bull Cash receipts from sale of fixed assets (including intangibles)
bull Cash payments to acquire shares warrants or debt instruments of other enterprises
(other than receipts for those instruments considered to be cash equivalents)
bull Cash receipts from sale of shares warrants or debt instruments of other enterprises (other
than receipts for those instruments considered to be cash equivalents)
bull Cash advances and loans made to third parties In case of financial enterprises these will
be treated as cash flow from operating activities
bull Cash receipts from the repayment of advances and loans made to third parties In case of
financial enterprises these will be treated as cash flow from operating activities
bull Cash receipts of insurance claim for property involved in accident and
bull Cash receipts of interest and dividend In case of financial enterprise these will be treated
cash flow from operating activities
CASH FLOW FROM FIANCING ACTIVITIES-
Financing activities are the activities that result in change in capital and borrowing of the
enterprise
Examples of cash flows arising from financing activities are
bull Cash receipts from issuing shares or other similar instruments
bull Cash receipts from issuing debentures loans bonds and other short term or long term
borrowing
bull Cash repayment of amounts borrowed buy back of equity shares redemption of
preference shares debentures loans bonds etc
bull Cash payment of interest and dividend
IMPORTANT NOTE
In case of financial enterprise such as bank or mutual fund company cash Outflow
and cash inflow arising from the purchase and sale of securities will Be treated as
flows from operating activities This is because purchase and sale of securities is a
part of operating activity in case of financial enterprise In addition interest paid
and interest received as well as dividends received will also be treated as cash flow
from operating activities in case of financial Enterprises
CASH FLOW STATEMENT
(DIRECT METHOD)
CASH FLOW FROM OPERATING ACTIVITIES
Cash receipts from costumers
Cash paid to suppliers and employers ()
Cash generated from operations
Income tax paid ()
Cash flows from extraordinary item
plusmn Extra ordinary items
Net cash from operating activities
CASH FLOW FROM INVESTING ACTIVITIES-
Purchase of fixed assets
Proceed from sale equipment ()
Interest received
Dividend received ()
Net cash from investing activities
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from insurance of share capital
Proceeds from long- term borrowings ()
Repayment of from long-term borrowings
Interest paid
Dividend paid ()
Net cash from financing activities
Net increase in cash and cash equivalent
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
SOME SPECIAL TERMS-
i) INTERSET AND DIVIDEND-
Cash inflow from interest and dividends and cash outflow on account of interest and
dividends should be disclosed separately Cash inflow arising from interest and dividends
received should be shown as cash flow from investing activities where as cash outflow
disclosed outflow on account of interest and dividend paid should be shown as cash flow
from financing activity
ii) TAXES ON INCOME-
Tax paid on income is a part of cash flow from operating activity Hence taxes paid are
shown as a deduction under cash flow from operating activity
iii) EXTRA ORDINARY ITEMS-
Cash flow relating to extra ordinary items such as bad debts recovered Claims received from
insurance companies winning of a lottery or a law etc Should be disclosed separately as
arising from operating investing or financing activities For example the amount received
for insurance company on account of loss of stock by fire Earthquake and floods etc Should
be reported as cash flow from operating activities
iv) SIGNIFICANT NON - CASH TRANSACTION-
There are some investing and financing activities which do not require the use of cash or
cash equivalents Such non cash activities should be excluded from the cash flow statement
Examples are the acquisition of assets by issue of debentures or shares conversion of
shares into debentures etc Such significant on non cash transaction should be disclosed
outside the cash flow statement
CASH FLOW STATEMENT
(INDIRECT METHOD)
CASH FLOW FROM OPERARATTNG ACTIVITIES
Net profit before taxation and extraordinary item
Adjustment for
Depreciation
Foreign exchange loss
Interest income
Dividend income
Interest expense
Operating profit before working capital changes
Increase in sundry debtors
Decrease in inventories
Decrease in sundry creditors
Cash generated from operations
Income tax paid ()
Cash flow before extraordinary item
plusmn Extra - ordinary items
Net cash from operating activities
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of fixed assets ()
Proceeds from sale of equipment
Interest received
Dividend received ()
Net cash from investing activities
CASH FLOW FROM FINANCING ACTIVITIES-
Proceeds from insurance of share capital
Proceeds from long - term borrowings
Repayments of from long - term borrowings ()
Interest paid ()
Dividend paid ()
Net cash from financing activities
Net increase in cash and cash equivalent
Cash and cash equivalents at beginning of period
CHANGES IN CASH FLOWS
Changes in cash flows can be treated to the following
1 Net profit will increase the cash flows these cash flows will be
increased further if there are any non-cash changes (such as depreciation
and amortization)
2 Any payment of dividends will decrease the cash flows as will the
repayment of debt an issue of share or debt will also increase the
cash flows
3 An increase in non-cash assets will decrease cash flows increase in
current assets and fixed assets will result in drain on cash flows
Thus a statement of changes in cash flows ie the cash flow statement
classifies all Changes into one of three categories - operating investing or
financing activities Therefore the preparation of a statement of changes in cash
flows requires classification of changes in liabilities shareholders equity and
non-cash assets into one of these categories although some items will not fit
easily onto one other
h equivalent at end of period
STEP- BY-STEP PROCEDURE TO PREPARE CFS
1 Calculate the net increase or decrease in cash and cash equivalents-
For this purpose the opening balance of total cash and cash equivalents is compared with the
closing balance of cash and equivalents
Increasedecrease in cash and equivalents
Opening balance Closing Balance
Cash in hand
Cash in bank
Short-term Investment
Total
The difference between the total of opening and closing balance will be increased or
Decreased in cash equivalents during the period It may be noted that if there are only one or
two of items of cash etc
2 Net Cash flaw from operating activities-
The term operating refers to the normal purchase of goods and services On the basis of the
information contained in the comparative BS s and the IS and the additional Information the
net cash flow generated or use by the operating activities may be ascertained The IS prepared
by the firm gives the net profit figure earned by the firm On actual basis ie all items in the
IS are incorporated on the basis of earnedaccrued even
3 If not resulting in cash movements-
So the profit or loss as by the IS may not result in increase or decrease in cash balance by the
SYNOPSIS
INTRODUCTION
ESCORTS PVT LTD is a private limited company not listed in a stock exchange of India
and employees 900 highly trained personnel Its manufacturing plants are strategically located
in close proximity to its customers at Faridabad (Haryana) Noida (UP)
OBJECTIVES OF THE STUDY
bull To find the movement of cash inflow and cash outflow
bull To make the comparison between cash inflow and
bull Cash outflow
bull To prepare the Cash Flow Statement
bull To analyze the Balance Sheet of the company in terms of Cash Flow Statement
bull To focus on various activities of the organization in terms of Operating
Financing Investment
SCOPE OF THE STUDY
Financial resources are the assets for the company and their productivity is key
factor for profitability It is necessary to know their problems their knowledge
skills abilities amp the measures that can be taken to reduce them By analyzing this
top management can build good relations with the employees
The whole study is to determine the competencies of different employees who are
working in ESCORTS PVT LTD By analyzing it the top management can
introduce the concept of competency mapping in the organization Through this
management can attempt to use more suitable strategies towards the human
resource development
The research is confined to elicit the existing gap between the standard skill
required to perform the job and the skill processed by the employees at ESCORTS
PVT LTD And to provide them suitable training program to over come those gaps
for the better utilization of human resources
RELEVANCE
The scope of the study was confined to the outside parties like creditors
shareholders government etc Who want to invest their money in the
company
The benefit of the report for the company is that through this report they can come
to know about the cash flow statements of the company
This study also unable the company that their cash is not utilizing in unnecessary
things
The benefit of the report for the researcher is that it has helped to get knowledge
about the cash inflow and cash
RESERRCH METHODOLOGY-
RESEARCH DESIGN
bull The study was conducted under well- structured approach
bull The project lasted for 4 weeks and the year 2009 ie from 08 July to 12
Aug2009
bull The questionnaire method amp personal interview method was used to collect
the primary data for the study
The secondary data is collected from Internet amp company training material and
many other company materials
SAMPLE DESIGN
The process of extracting a sample from a population is called sampling
procedure The selection of sampling procedure to conduct the research
depends upon the nature of the study and the objective to be accomplished
Judgment sampling technique is adopted to select the respondents in this
study The sample design included the various departments in the YAMAHA
MOTORS PVT LTD
Methodology of date collection
bull Conducting personal interview
bull Data collection from primary and secondary sources
bull Designing questionnaire
bull Selecting sample size from the sample frame for the survey
bull Questionnaire distribution
bull Analysis of collected data with the help of statistical tools
bull Interpretation of collected data
bull Stating the conclusion based on the entire study
Sampling Technique
The sampling technique used for this research is of non-probability and convenience
sampling
Sample Unit
Employees of the company
Sample Size
For this research study the sample size is 25 respondents
Sources of data
Primary data
Primary data is the data which is collected by the researcher for the first time
and which was not there The tools used to collect the data are-
1)Questionnaire method from the employers in different departments
2) Face to Face personal interactions
Secondary Data
The data already collected is called as secondary data The relevant information
for this study has been collected from secondary source such as
Books
Journal
Reports
Publication by the organizational circulation
Company records
Business bulletins
Internet
Secondary data is also collected from various of the internet and intranet Some
of the website trough which information was gathered was through
HYPOTHESIS
The report is analyzed under the presumption that cash flow position of
YAMAHA MOTORS PVTLTD It can be improved and made effective in
terms of cash flows
In testing the above hypothesis the following aspects will be considered
1 Balance sheet comparisons
2 Presentation of cash flow statement in terms of revised AS-3
LIMITATIONS
The study though conducted to the best of the ability suffers from some
certain limitations There are
The data is secondary one and as such its reliability may be
questioned upon
The time availability for the study is less and as such it hinders thee
progress of the study
Senior officials were rarely approachable
Websites were not giving comprehensive data
Not having face-to-face interaction to get more relevant
information
Analysis and interpretation of data was done on the assumption that
the respondentsrsquo information was online
Information collected was totally subjective
The interviews are done during office hours but could not be done
for the other employees of other
DATA ANALYSIS
ESCORTS PVT LTD
CASH FLOW STRATEMENT
Year Ended Year Ended
30092009 30092008
Rs Crores Rs
Crores
A Cash Flow from Operating Activities
Net profit before tax (1733) 3444
Adjustment for
Loss on sale Provision for diminution in value of Long Term
Investments amp loans to Group Companies 189 4018
Gain on sale of Long Term Investments (122) (9492)
Gain on sale of Asset (013) -
Depreciation 4497 3955
Misc Exp Assets Write off Provisions 808 750
Interest Expense 7222 7999
Dividend Income (002) (001)
Interest Income (2082) -
Operating Profit before working capital changes 8764 10673
Adjustments for
Trade and other Receivables (8817) (12035)
Inventories 1379 (4692)
Trade Payables 6705 19046
Miscellaneous Expenditure (750) (511)
(1483) 1808
Cash Generated from Operations 7281 12481
Direct Taxes (Paid)Refunds (1785) 3166
Net Cash Flow from operating activities 5496 15647
B Cash Flow from Investing Activities
Purchase of Fixed Assets (3095) (2794)
Proceeds from sale of Fixed Assets 086 177
Movement in Loans and Advances (1627) (1644)
Sale of Investments 3233 11452
Short Term Deposits with schedule Banks (231) (1048)
Interest Received 2070 -
Dividend Received 002 001
Net Cash Flow from Investing activities 438 6144
Proceeds from Share Capital amp Securities Premium 11444 -
Proceeds from Long Term Borrowings 8660 -
Less Repayment of Long Term Borrowings (054) (7896)
Proceeds (Repayment) from short term borrowings (net) (22726) -
Interest Paid (7740) (8223)
Net Cash used in financing activities (10416) (16119)
Net Increase(Decrease) in Cash and Cash equivalents (4482) 5672
Cash and Cash equivalents as at 01102008 10565 4893
Cash and Cash equivalents as at 30092009 6083 1056
ANALYSIS OF CASH FLOW
From the cash flow statements of the ESCORT PVTLTDIt can be analyzed
from the two years that the net cash balance of the company has increased
manifold in 30-09-2008 than the year 30-09-2009
The net profit in 30-09-2008 is higher than the 30-09-2009 but due to certain
changes there has been increase in the cash balance
The interest paid this year is ore of the last year which implies that thee
company has not repaid his borrowed capital due to which the interest has got
down
The depreciation has increased but it does not affect cash to an extent as it is a
non-cash item In the head of working capital there is drastic change in the cash
balance in the form of ldquoTrade and other Receivables which has affected the cash
balance
There is outflow of cash for receivables rather than the inflow in the last year
So the net effect is that the cash from operating activities has been decreased
two times from the last year
The company has no accumulated losses as at the end of the financial year ie
September 31 2008
Provision for taxation has been made in accordance with the requirement of AS-
22 issued by Institute of Charted Accountants of India
Pursuant to that current year deferred tax liability have been charged to profit amp
loss account
In opinion of the board of directors of thee company the current assets loans
and advances have a value on realization in the ordinary course of the business at
least equal to the amount stated in the balance sheet and provision for all
liabilities have been made
Balance of sundry debtors creditors loans and advances are subject to confirmation by
the concerned parties
METHOD OF ANALYSIS
1 Data analysis is done using the following statistical tools wherever required in
order to extract meaningful information from the collected data
o Simple percentage and averages
o Bar diagram
o Cone diagram
o Pie diagram
2 The collected data from the questionnaire has been put together in the form of
tables
3 Percentage has been calculated wherever necessary for generalization of the
data
4 Data analysis and interpretation has been done on the basis of primary and
secondary data
5 The findings researches have been recorded based on the analysis
6 The study conducted pertains only to YAMAHA MOTORS INDIA PVTLTD
All bank balances (debitcredit) have been confirmed by the concerned bank
Identified from the available information which has been relied upon by the auditors
The names of small-scale industrial units to whom outstanding for more than
thirty days within agreed terms
The company has 9996 of shareholders in its subsidiary company named as
ESCORTS PVT LTD As at 31-03-2008
So the net effect is that the net cash from investing activities has many more
times than the last year which is negative Now the company has repaid its long
term borrowing more than the last year which has decreased the cash balance by
the little amount
Balance with the schedule banks under the head current amp collection account
amounting to represent funds in transit lying with schedule banks pending
transfer against loan liabilities under the head cash credit amp bill discounting
LIQUIDITY RATIO
1 CURRENT RATIO
(Amount in Rs)
Current Ratio
Year Current Assets Current Liabilities Ratio
2003 58574151 7903952 7412004 69765346 31884616 2192005 72021081 16065621 4482006 91328208 47117199 1942007 115642068 30266661 382
Interpretation
As a rule the current ratio with 21 (or) more is considered as satisfactory
position of the firm
When compared with 2006 there is an increase in the provision for tax because
the debtors are raised and for that the provision is created The current liabilities
majorly included Lanco Group of company for consultancy additional services
The sundry debtors have increased due to the increase to corporate taxes
In the year 2006 the cash and bank balance is reduced because that is used for
payment of dividends In the year 2007 the loans and advances include majorly
the advances to employees and deposits to government The loans and advances
reduced because the employees set off their claims The other current assets
include the interest attained from the deposits The deposits reduced due to the
declaration of dividends So the other current assets decreased
The huge increase in sundry debtors resulted an increase in the ratio which is
above the benchmark level of 21 which shows the comfortable position of the
firm
GRAPHICAL REPRESENTATION
741
219
448
194
382
000
100
200
300
400
500
600
700
800
Ratio
2003 2004 2005 2006 2007
Years
CURRENT RATIO
Ratio
2 QUICK RATIO
(Amount
in Rs)
Quick Ratio
Year Quick Assets Current Liabilities Ratio
2003 58574151 7903952 741
2004 52470336 31884616 165
2005 69883268 16065620 435
2006 89433596 47117199 19
2007 115431868 30266661 381
Interpretation
Quick assets are those assets which can be converted into cash with in a short
period of time say to six months So here the sundry debtors which are with the
long period does not include in the quick assets
Compare with 2006 the Quick ratio is increased because the sundry debtors are
increased due to the increase in the corporate tax and for that the provision
created is also increased So the ratio is also increased with the 2006
GRAPHICAL REPRESENTATION
741
165
435
190
381
000
100
200
300
400
500
600
700
800
Ratio
2003 2004 2005 2006 2007
Years
QUICK RATIO
Ratios
3 ABOSULTE LIQUIDITY RATIO
(Amount
in Rs)
Absolute Cash Ratio
Year Absolute Liquid Assets Current Liabilities Ratio
2003 31004027 7903952 392
2004 10859778 31884616 034
2005 39466542 16065620 246
2006 53850852 47117199 114
2007 35649070 30266661 118
Interpretation
The current assets which are ready in the form of cash are considered as absolute
liquid assets Here the cash and bank balance and the interest on fixed assts are
absolute liquid assets
In the year 2006 the cash and bank balance is decreased due to decrease in the
deposits and the current liabilities are also reduced because of the payment of
dividend That causes a slight increase in the current yearrsquos ratio
GRAPHICAL REPRESENTATION
392
034
246
114 118
0
05
1
15
2
25
3
35
4
Ratios
2003 2004 2005 2006 2007
Years
ABSOLUTE CASH RATIO
Ratios
LEVERAGE RATIOS
4 PROPRIETORY RATIO
(Amount
in Rs)
Proprietory Ratio
Year Share Holders Funds Total Assets Ratio
2003 67679219 78572171 086
2004 53301834 88438107 06
2005 70231061 89158391 079
2006 56473652 106385201 053
2007 97060013 129805102 075
Interpretation
The proprietary ratio establishes the relationship between shareholders funds to
total assets It determines the long-term solvency of the firm This ratio indicates
the extent to which the assets of the company can be lost without affecting the
interest of the company
There is no increase in the capital from the year2004 The share holderrsquos funds
include capital and reserves and surplus The reserves and surplus is increased
due to the increase in balance in profit and loss account which is caused by the
increase of income from services
Total assets includes fixed and current assets The fixed assets are reduced
because of the depreciation and there are no major increments in the fixed assets
The current assets are increased compared with the year 2006 Total assets are
also increased than precious year which resulted an increase in the ratio than old
GRAPHICAL REPRESENTATION
086
060
079
053
075
000
010
020
030
040
050
060
070
080
090
Ratios
2003 2004 2005 2006 2007
Years
PROPRIETORY RATIO
Ratios
ACTIVITY RATIOS
5 WORKING CAPITAL TURNOVER RATIO
(Amount
in Rs)
Working Capital Turnover Ratio
Year Income From Services Working Capital Ratio
2003 36309834 50670199 0722004 53899084 37880730 1422005 72728759 55355460 1312006 55550649 44211009 1262007 96654902 85375407 113
Interpretation
Income from services is greatly increased due to the extra invoice for Operations
amp Maintenance fee and the working capital is also increased greater due to the
increase in from services because the huge increase in current assets
The income from services is raised and the current assets are also raised together
resulted in the decrease of the ratio of 2007 compared with 2006
GRAPHICAL REPRESENTATION
072
142 131126
113
000
020
040
060
080
100
120
140
160
Ratio
2003 2004 2005 2006 2007
Years
WORKING CAPITAL TURNOVER RATIO
Ratio
6 FIXED ASSETS TURNOVER RATIO
(Amount in Rs)
Fixed Assets Turnover Ratio
Year Income From Services Net Fixed Assets Ratio
2003 36309834 28834317 126
2004 53899084 29568279 182
2005 72728759 17137310 424
2006 55550649 15056993 369
2007 96654902 14163034 682
Interpretation
Fixed assets are used in the business for producing the goods to be sold This
ratio shows the firmrsquos ability in generating sales from all financial resources
committed to total assets The ratio indicates the account of one rupee
investment in fixed assets
The income from services is greaterly increased in the current year due to the
increase in the Operations amp Maintenance fee due to the increase in extra invoice
and the net fixed assets are reduced because of the increased charge of
depreciation Finally that effected a huge increase in the ratio compared with the
previous yearrsquos ratio
GRAPHICAL REPRSENTATION
126182
424 369
682
000
100
200
300
400
500
600
700
Ratios
2003 2004 2005 2006 2007
Years
FIXED ASSETS TURNOVER RATIO
Ratios
7 CAPITAL TURNOVER RATIO
(Amount
in Rs)
Capital Turnover Ratio
Year Income From Services Capital Employed Ratio
2003 36309834 37175892 0982004 53899084 53301834 1012005 72728759 70231061 1042006 55550649 56473652 0982007 96654902 97060013 100
Interpretation
This is another ratio to judge the efficiency and effectiveness of the company
like profitability ratio
The income from services is greaterly increased compared with the previous year
and the total capital employed includes capital and reserves amp surplus Due to
huge increase in the net profit the capital employed is also increased along with
income from services Both are effected in the increment of the ratio of current
year
GRAPHICAL REPRESENTATION
098
101
104
098
100
094095096097098099100101102103104
Ratios
2003 2004 2005 2006 2007
Years
CAPITAL TURNOVER RATIO
Ratios
8 CURRENT ASSETS TO FIXED ASSETS RATIO
(Amount
in Rs)
Current Assets To Fixed Assets Ratio
Year Current Assets Fixed Assets Ratio
2003 58524151 19998020 2932004 69765346 18672761 3742005 72021081 17137310 4202006 91328208 15056993 6072007 115642068 14163034 817
Interpretation
Current assets are increased due to the increase in the sundry debtors and the net
fixed assets of the firm are decreased due to the charge of depreciation and there
is no major increment in the fixed assets
The increment in current assets and the decrease in fixed assets resulted an
increase in the ratio compared with the previous year
GRAPHICAL REPRESENTATION
293374
420
607
817
000
100
200
300
400
500
600
700
800
900
Ratios
2003 2004 2005 2006 2007
Years
CURRENT ASSETS TO FIXED ASSETS RATIO
Ratios
PROFITABILITY RATIOS
GENERAL PROFITABILITY RATIOS
9 NET PROFIT RATIO
(Amount in Rs)
Net Profit Ratio
Year Net Profit After Tax Income from Services Ratio
2003 21123474 36039834 059
2004 16125942 53899084 030
2005 16929227 72728759 023
2006 18259580 55550649 033
2007 40586359 96654902 042
Interpretation
The net profit ratio is the overall measure of the firmrsquos ability to turn each rupee
of income from services in net profit If the net margin is inadequate the firm
will fail to achieve return on shareholderrsquos funds High net profit ratio will help
the firm service in the fall of income from services rise in cost of production or
declining demand
The net profit is increased because the income from services is increased The
increment resulted a slight increase in 2007 ratio compared with the year 2006
GRAPHICAL REPRESENTATION
059
030
023
033
042
000
010
020
030
040
050
060
Ratios
2003 2004 2005 2006 2007
Years
NET PROFIT RATIO
Ratios
10 OPERATING PROFIT
(Amount in Rs)
Operating Profit
Year Operating Profit Income From Services Ratio
2003 36094877 36309834 099
2004 27576814 53899084 051
2005 29540599 72728759 041
2006 31586718 55550649 057
2007 67192677 96654902 070
Interpretation
The operating profit ratio is used to measure the relationship between net profits
and sales of a firm Depending on the concept it will decide
The operating profit ratio is increased compared with the last year The earnings
are increased due to the increase in the income from services because of
Operations amp Maintenance fee So the ratio is increased slightly compared with
the previous year
GRAPHICAL REPRESENTATION
099
051
041
057
070
000
010
020
030
040
050060
070
080
090
100
Ratios
2003 2004 2005 2006 2007
Years
OPERATING PROFIT RATIO
Ratios
11 RETURN ON TOTAL ASSETS RATIO
(Amount in Rs)
Return on Total Assets Ratio
Year Net Profit After Tax Total Assets Ratio
2003 21123474 78572171 027
2004 16125942 88438107 018
2005 16929227 89158391 019
2006 18259580 106385201 017
2007 40586359 129805102 031
Interpretation
This is the ratio between net profit and total assets The ratio indicates the return
on total assets in the form of profits
The net profit is increased in the current year because of the increment in the
income from services due to the increase in Operations amp Maintenance fee The
fixed assets are reduced due to the charge of depreciation and no major
increments in fixed assets but the current assets are increased because of sundry
debtors and that effects an increase in the ratio compared with the last year ie
2006
GRAPHICAL REPRESENTATION
027
018 019017
031
000
005
010
015
020
025
030
035
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON TOTAL ASSETS
Ratios
12 RESERVES amp SURPLUS TO CAPITAL RATIO
(Amount in Rs)
Reserves amp Surplus To Capital Ratio
Year Reserves amp Surplus Capital Ratio
2003 65599299 2079920 31542004 34582554 18719280 1852005 51511781 18719280 2752006 37754372 18719280 2022007 78340733 18719280 419
Interpretation
The ratio is used to reveal the policy pursued by the company a very high ratio
indicates a conservative dividend policy and vice-versa Higher the ratio better
will be the position
The reserves amp surplus is decreased in the year 2006 due to the payment of
dividends and in the year 2007 the profit is increased But the capital is
remaining constant from the year 2004 So the increase in the reserves amp surplus
caused a greater increase in the current yearrsquos ratio compared with the older
GRAPHICAL REPRESENTATION
3154
185 275 202419
-
500
1000
1500
2000
2500
3000
3500
Ratios
2003 2004 2005 2006 2007
Years
RESERVES amp SRUPLUS TO CAPITAL RATIO
Ratios
OVERALL PROFITABILITY RATIOS
13 EARNINGS PER SHARE
(Amount in Rs)
Earnings Per Share
Year Net Profit After Tax No of Equity Shares Ratio
2003 21123474 207992 101562004 16125942 1871928 8612005 16929227 1871928 9042006 18259580 1871928 9752007 40586359 1871928 2168
Interpretation
Earnings per share ratio are used to find out the return that the shareholderrsquos earn
from their shares After charging depreciation and after payment of tax the
remaining amount will be distributed by all the shareholders
Net profit after tax is increased due to the huge increase in the income from
services That is the amount which is available to the shareholders to take There
are 1871928 shares of Rs10- each The share capital is constant from the year
2004 Due to the huge increase in net profit the earnings per share is greaterly
increased in 2007
GRAPHICAL REPRESENTATION
10156
861904 975
2168
000
2000
4000
6000
8000
10000
12000
Ratios
2003 2004 2005 2006 2007
Years
EARNINGS PER SHARE
Ratios
14 PRICE EARNINGS (PE) RATIO
(Amount in Rs)
Price Earning (PE) Ratio
Year Market Price Per Share Earnings Per Share Ratio
2003 3254 10156 0322004 2847 861 3302005 3752 904 4152006 3017 975 3092007 5185 2168 239
Interpretation
The ratio is calculated to make an estimate of application in the value of share of
a company
The market price per share is increased due to the increase in the reserves
amp surplus The earnings per share are also increased greaterly compared
with the last year because of increase in the net profit So the ratio is
decreased compared with the previous year
GRAPHICAL REPRESENTATION
032
330
415
309
239
000
050
100
150
200
250
300
350
400
450
Ratios
2003 2004 2005 2006 2007
Years
PE RATIO
Ratios
15 RETURN ON INVESTMENT
(Amount in Rs)
Return on Investment
Year Net Profit After Tax Share Holders Fund Ratio
2003 21123474 67679219 031
2004 16125942 53301834 03
2005 16929227 70231061 024
2006 18259580 56473652 032
2007 40586359 97060013 042
Interpretation
This is the ratio between net profits and shareholders funds The ratio is
generally calculated as percentage multiplying with 100
The net profit is increased due to the increase in the income from services ant
the shareholders funds are increased because of reserve amp surplus So the ratio
is increased in the current year
GRAPHICAL REPRESENTATION
031 030
024
032
042
000
005
010
015
020
025
030
035
040
045
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON INVESTMENT RATIO
RatioS
DATA COLLECTION
The data can be of two types
Primary Data
Secondary Data
Primary Data
Primary data are those data which is originally collected afresh
Secondary Data
Secondary data are those data which are already collected and stored and which has
been passed through statistical research
In this project Secondary data has been collected from following sources-
Annual report
Books
MIS
Other material and report published by company There are two methods to prepare
the Cash flow Statement
ndirect Method
I
The indirect method (or reconciliation method) starts with net income and converts it
to net cash flow from operating activities In other words the indirect method adjusts
net income for items that affected reported net income but did not affect cash To
compute net cash flow from operating activities non-cash charges in the income
statement are added ack to net income and non-cash credits are deducted
b
Direct Method
Under the direct method the statement of cash flows reports net cash flow from
operating activities as major classes of operating cash receipts (eg cash collected from
customers and cash received from interest and dividends) and cash disbursements (eg
cash paid to suppliers for goods to employees for services to creditors for interest and
to government authorities for taxes)
INDIRECT VERSUS DIRECT METHOD
The most contentious decision that the FASB faced in issuing Statement No 95 was
choosing between the direct method and the indirect method of determining net cash
flow from operating activities Companies lobbied against the direct method urging
adoption of the indirect method Commercial lending officers expressed a strong
preference to the FASB hat the direct method be required
tCF-Page 3 of 5
In Favor of the Direct Method
The principal advantage of the direct method is that it shows operating cash receipts and
payments That is it is more consistent with the objective of a statement of cash flows to
provide information about cash receipts and cash payments than the in-direct method
which does not report operating cash receipts and payments
Supporters of the direct method contend that knowledge of the specific sources of
operating cash receipts and the purposes for which operating cash payments were made
in past periods is useful in estimating future operating cash flows Furthermore in-
formation about amounts of major classes of operating cash receipts and payments is
more useful than information only about their arithmetic sum (the net cash flow from
operating activities) Such information is more revealing of an enterprises ability (1) to
generate sufficient cash from operating activities to pay its debts (2) to reinvest in its
operations and (3) to make distributions to its owners
Many corporate providers of financial statements say that they do not currently collect
information in a manner that allows them to determine amounts such as cash received
from customers or cash paid to suppliers directly from their accounting systems But
supporters of the direct method contend that the incremental cost of assimilating such
operating cash receipts and payments data is not significant
In Favor of the Indirect Method
The principal advantage of the indirect method is that it focuses on the differences
between net income and net cash flow from operating activities That is it provides a
useful link between the statement of cash flows and the income statement and balance
sheet
Many providers of financial statements contend that it is less costly to adjust net income
to net cash flow from operating activities (indirect) than it is to report gross operating
cash receipts and payments (direct) Supporters of the indirect method also state that the
direct method which effectively reports income statement information on a cash rather
than an accrual basis may erroneously suggest that net cash flow from operating
activities is as good as or better than net income as a measure of performance
Special Rules Applying to Direct and Indirect Methods
Companies that use the direct method are required at a
minimum to report separately the following classes of
operating cash receipts and payments
Receipts
1048713 Cash collected from customers (including lessees licensees etc)
1048713 Interest and dividends received
1048713 Other operating cash receipts if any
Payments
1048713 Cash paid to employees and suppliers of goods or services (including
suppliers of
insurance advertising etc)
1048713 Interest paid
1048713 Income taxes paid
1048713 Other operating cash payments if any
Companies using the indirect method are required to disclose separately changes in
inventory receivables and payables to reconcile net income to net cash flow from
operating activities In addition interest paid (net of amount capitalized) and income
taxes paid must be disclosed elsewhere in the financial statements or accompanying
notes
The FASB requires these separate and additional disclosures so that users
may approximate the direct method Also an acceptable alternative presentation
of the in-direct method is to report net cash flow from operating activities as a
single line item in the statement of cash flows and to present the reconciliation
details elsewhere in the financial statements
FINDING OF SUDY
According to cash flow statement of the company The finding of the study are as
follows-
The company has not taken any loans secured or unsecured from companies
firms or other parties
The company has not accepted any deposit from the public during the year
The company is not a sick industrial company
The company has not granted any loan secured or unsecured to company firms
or other parties
The company has paid the entire long term and short term borrowing during the
year
The company has buy back the companyrsquos own share this year
The interest paid in 2008 is more than the
There has been a significant decline in volume over the years from 2001-02
to 2005-06 as can be seen in the graph below
Table 43
The Net sales of Tractor has increased considerably from 2004-05 to 2007-08
This can be mainly attributed to changes in Variable and material costs and in
the price
The Net sale of Tractor has increased considerably from 2004-05 to 2007-08
that is an decrease of Rs7216 per tractor This can be mainly attributed to
changes in
Variable and material costs and in the prices
RECOMMENDATIONS
According to cash flow statement of the company The suggestions of the study
are as follows-
The time durations for training program have to increase
Buy regular review and consultations develop a career progression
which is sensitive to performance and ability
Create an environment where by people are trend developed to enable
The to take advantages of opportunities that arise
The jab can be redesigned where the work man stay in what is normally
the same job but has elements of it changed
The principle amount must be paid in time which can be reducing the
interest the out flow
The purchase of the fixed asset must be made only when there is extreme
requirement
In order to avoid taxes the company should go for more investment
The companyrsquos borrowings should go for more investment
o The company should try to reduce the depreciations as maximum
as possible
CONCLUSION
The study on competency level of employees at ESCORTS PVTLTD gave an
insight about the acceptance of competency mapping by employees
The employees at Ymi welcome the introduction of competency mapping in their
organization as they felt it was very much essential in enhancing their skills and
organizational development
The organization has provided the recourses guidance and support to facilitate the
introduction of competency level easily and develop the employees in such a way
that they can face any kind of challenge
However the level of competency in employees is found to be satisfactory
Providing proper training education and guidance to the employees can enhance
the level
This study was mainly carried out to find out whether thee competency mapping
being followed by the company is effective till date If the competency mapping
and fitment to the organization
By looking at the graphs and tables it is quite that the employees still are not up to
the level of competent pool they still have to be trained and made competent in
order to fill the gap As the organization has just applied the mapping it has to see
to that it meets all the requirements for competency mapping
Therefore the graphs make it quite clear that the potential of the employees is not
up to the mark and ie they are not competent enough to meet the competency-
mapping requirement Hence by further training and counseling this gap can be
closed
This report includes the training requirements of employees and it highlights skills
possessed by each employee and skill required All employees get training so that
skill can be improved and maintain balance between standard performance with
their actual performance to avoid gap
APPENDIX
QUESTIONNAIRE
Consumer Survey
Name _____________________________
Age _____________________________
Sex
Male
Female
Occupation
Businessman
Service man
Professional
Others
Monthly income brackets
Below 15000
15000- 20000
20000-30000
30000 and above
of your savings _________
Do you invest
Yes
No
If yes then where do you invest your money
Bank
Insurance
funds
Others
Why do you made that statement
Return
Risk hedging
Tax benefits
Other reasons (specify) _______
Who influence your cash decision
Relatives and friends
Family members
Advisors experts
You yourself
If no then why
Do not know where to invest
Satisfied with your current investment return
Donrsquot want take risk
Other reasons
__________________________________________________________________
___________________
Do you know about CF statement
Yes
No
If yes then from where you have come to know about an cash statement
Advertisements on newspapers
Friends and relative
Agents experts
Other source
What do you think about cash statement
It means investing only in share market
Constant watch must be kept always
Return is not satisfactory
Other perception
__________________________________________________
Can you recall any cash flow of company
___________________________
Would you want to made CF of an org
Yes
No
If yes then why
_______________________________________________________
If no then why
_______________________________________________________
BIBLIOGRAPHY
List of Books
1 PANDEY IM - FINANCIAL MANAGEMANT
2 KHAN MY AND JAIN PK -FINANCIAL MANAGEMANT
3 SMITH KV ndash MANAGEMANT OF WORKING CAPITAL
3 COMPANY RECORDS
4 JOURNAL
5 REPORTS
WEBLIOGRAPHY
1 wwwescortspvtltdcom
2 wwwgooglecom
STATEMENT OF CHANGES IN FINANCIAL POSITION
(SCFP)
Since the BS amp IS of a firm are two basic depicting the financial position of a firm at the end
of the year These two financial statements are called the traditional statements Both these
statements fail to throw light on changes in assets liabilities and shareholders wealth during
this year
BS deals with the financial position gives only the static view of the year- end financial
position and fails to indicate the movement and causes in assets and liabilities during the
year Similarly IS show the profit or loss resulting out of the operations of the firm during
the year This profit or loss in fact to ascertain the sufficiency of resources to declare the
dividend etc thus there is a need to prepare another statement (together with the BS amp IS)
which may identify the changes in assets liabilities and the shareholders funds over a given
period
The SCFP is essentially an explanation of the changes in financial position of a Firm
occasioned by the firm in between two successive BSs The SCFP draws basic Information
from the BS and IS helps in understanding the change in assets liabilities and shareholders
worth The SCFP deals with the flow of funds during the year ie the funds coming in and
going out of the firm It summarizes the sources from where the funds might have been
arranged procured by the firm and the uses for which the funs might have been used by
the firm during the year
The SCFP can be prepared as follows
bull SCFP (Cash Basis) also known as a Cash F low Statement
bull SCFP (Net Working Capital Basis) Fund Flow Statement
SCFP (WORKING CAPITAL BASIS)
FUND FLOW STATEMENT
The FFS reports the flows of funds through the firm during the year ie it shows the
Sources and uses of working capital between two balance sheet dates The FFS
attempts to explain the changes in financial position from one BS to the subsequent BS
in terms of the change in the funds or the working capital position of the firm
The term Working capital (WC) is generally defined as the excess of total
current assets over the total current liabilities The current Assets (CA) of a firm may
include cash in hand and at bank stock debtors bills advances etc and the Current
Liabilities (CL) includes creditors bills payable outstanding expenses provision for
tax short term liabilities etc the term WC is a single figure representing the net effect
of a transaction is to increase or decrease the Working Capital by affecting any of the
elements of Current Assets or Current Liabilities Therefore the FFS in its standard
form incorporates only those transactions which affect the Working Capital i e those
transactions where in only one of the affected accounted is a current account
Now a flow of working capital arises when one of the affected accounts is a current
account From the point of view of current account the effected on working capital
can examined in the light of the definitions of the term working capital ie the excess
of current assets over current liabilities ie
Impliedly change in any of the CA or CL will affect the WC Simple observation
equation tells that
bull Increase in any of the CA or decrease in any of the CLs will result in increase
in the WC
bull Decrease in any of the CA or increase in any of the CLs will result in decrease
in the WC
To find out the relative importance of different components of the financial position
of the firm
bull To identify the reasons for change in the profitability financial position of the
firm and
bull To assess the short term as well as the long term liquidity position of the
firm
TECHNIQUES TOOLS OF THE AFS
AFS can be undertaken by different persons and for different purposes therefore the
methodology adopted for the AFS may be carrying from one situation to another However
the following are some of the common techniques of the AFS
bull Comparative financial statements
bull Common-size financial statements
bull Trend percentage analysis and
bull Ratio Analysis
COMPARATIVE FINANCIAL STATEMENTS
In CFS two or more BS andor the IS of a firm are presented simultaneously in columnar
form The Financial data for two or more tears are placed and presented in adjacent columns
and thereby the financial data is provided at times perspective in order to facilitate periodic
comparison In CFS the BS and the IS for number of years are presented in condensed
form for year to year comparison and to exhibit the magnitude and direction of changes
The CFS helps a financial analyst of the firm and in establishing operating and
positional trend of the firm The CFS may be prepared to show
1 The absolute amount of different items in monetary terms
2 The amount of periodic changes in monetary terms
1 The percentages of periodic changes to reveal the proportionate changes
The CFS can be prepared for both the BS and the IS
CORE COMPETENCE OF ESCORTS
Customer 1
We put customers first in everything we do We take decisions keeping the customer in
mind
Challenging Spirit
We strive for excellence in everything we do and in the quality of goods amp services we
provide We work hard to achieve what we commit amp achieve results faster than our
competitors and we never give up
Team-work
We work cohesively with our colleagues as a multi-cultural team built on trust respect
understanding amp mutual co-operation Everyones contribution is equally important for
our success
Frank amp Fair Organization
We are honest sincere open minded fair amp transparent in our dealings We actively
listen to others and participate in healthy amp frank discussions to achieve the
organizations
A firm undertakes numerous during a year and most of these transactions during a year and
most of these transactions may affect one or the other current account ie most of these
transactions May results in the flow of the WC Neither is it necessary nor practical to
identify the effect of each and every transaction on the WC These transactions instead are
considered and analyzed in a collective form and then their effect on the WC is identified
SCFP (CASH BASIS) OR
THE CASH FLOW STATEMENT
The CFS attempts to analyze the transactions of the firm in terms of cash ie the transactions
generating cash and using cash The focus in the CFS is on cash rather than on WC The
sources of cash may be the cash profits earned by the firm issue of capital for cash issue of
other securities for cash borrowings sale of assets investment redemption of debenture or
preference share repayment of loan payment of tax dividend distribution etc Thus the
CFS summarizes the cash inflows and outflows
An analysis of cash flows is useful for short-run planning A firm needs sufficient cash to
debts maturing in the near future to pay interest and other expenses and to pay dividends to
shareholders The firm can make projections of cash flows and outflows for the near future to
determine the availability of cash This cash balance can be matched with the firms need for
cash during the period and accordingly arrangements can be made the deficit or invest the
surplus cash temporarily A historical analysis of cash flows provides insight to prepare
reliable cash flow projections for the immediate future
A statement of changes in financial position on cash basis commonly known as cash flow
statement summarizes the causes of changes in cash position between dates of two balance
sheets It indicates the sources amp uses of cash The cash flow statement is similar to the fund
flow statement except that it focuses attentions on cash instead of working capital (funds)
Thus this statement analyses change in non-current accounts as well as current accounts
(other than cash) to determine the flow of cash
The CFS is based on the concept on the WC Where as the CFS is based in cash which is only
the element of WC Thus the CFS provides details of cash movements whereas the FFS
provides the details of funds movements
The CFS considers only the actual movement of cash whereas the FFS considers the
movements of the funds as defined in terms of net working capital
CASH-FLOW STATEMENT
A cash-flow statement is a statement showing inflows (receipts) and outflows (payments) of
cash during a particular period In other words it is a summary of sources and applications of
Cash during a particular span of time It analyses the reason for changes in balance of cash
between the two balance sheet dates The term Cash here stands for cash and cash
equivalents
A cash-flow statement includes only those items which affect cash As such the cash-flow
statement is called a statement of changes in financial position - cash basis
A cash - flow statement can be for the past or can be projected for a future period
OBJECTS OR USES OF CASH-FLOW STATEMENT
The main objectives behind preparing a cash-flow statement can be laid down as under-
bull USEFUL FOR SHORT-TERM FINANCIAL PLANNING-
A cash-flow statement provides information for planning the short-term financial needs of the
firm Since it provides information regarding the sources and utilization of cash during a period
it become easier for the management to assess whether it will have Adequate cash to meet day-
to-day expenses and pay the long - term loans and interest Thereon and whether it has enough
cash to pay for the purchase of fixed assets or not
USEFUL FOR PREARING THE CASH BUDGET-
A cash-flow statement prepared for the future period is helpful in preparing a cash budget It
informs the management about the future period is helpful in preparing a cash budget It informs
the management about the surplus or deficit periods of cash ie in which months the payments
will be in excess of receipts It helps in planning the investment of surplus cash in short-term
investment and to plan short-term credit in advance of deficit periods
bull COMPARISON WITH CASH BUDGET-
A cash budget is prepared at the commencement of the year whereas a cash flow Statement is
prepared at the end of the year A comparison between the two helps in ascertaining the extent
to which the financial resources of the firm have been generated and used according to the plan
Causes of variances between the figures of two statements can be analyzed and proper
corrective measures may be takes
bull STUDY OF THE TREND OF CASH RECEIPTS AND PAYMENTS-
A cash-flow statement reveals the speed at which the cash is being generated from debtors stock
and other current assets the speed at which the current liabilities are being paid It enables the
management to assess the true position of the cash in future
bull IT EXPLAINS THE DEVIATIONS OF CASH FROM EARNINGS-
A firm may earn huge profits yet it may have paucity of cash or when it suffered a loss it may
still have plenty of cash A cash flow statement explains the reasons for it
HELPFUL IN ASCERTAINING CASH-FLOW FROM VARIOUS
ACTIBITIES SEPARATELY-
A cash-flow statement aims at highlighting the cash flow from operating investing and
financing activities separately It includes how much cash has been generated or used in these
activities
bull HELPFUL IN MAKING DIVIDEND DECISIONS-
Dividend must be paid within 42 days of its declaration Hence the management takes the help of
cash-flow statement to ascertain the position of cash generated from operating activities which
can be used for payment of dividend
IMPORTANCE AND RELEVANCE OF CFS
The CFS has gained importance in view of the fact that there are many managerial Decisions
which are taken in the light of the cash availability or cash position of the firm
For example declaration of dividend by the company requires cash disbursement and
Therefore the Board of Directors must consider the cash position before proposing a dividend
The CFS also provides information for the short term financial planning and in particular the
short term cash needs of the firm
In view of increasing importance and relevance of the CFS the clause 32 of the Listing
agreement (between a Company and the Stock Exchange where the shares proposed to be listed)
has been amended by the SEBI As a result the listed companies in India are now required to
supply a copy of the CFS to each shareholder as a part of Annual Report As a result the listed
companies have started a practice of sending a CFS for which the BS has been prepared as
apart of the Annual Report of the company
DIFFRENCE BETWEEN CASH - FLOW STATEMENT AND
CASH BUDGET
There is not much difference between cash flow statement and a cash budget The
only difference is that a cash flow statement is prepared for a past period where as cash
budget is prepared for a future period Hence it is of limited use as far as the future
periods are concerned A cash budget is therefore prepared showing how much cash is
likely to be received and what will be the disbursements during a future period of time
Thus a cash budget indicates in which months there will be surplus cash and in which
moths there will be deficiency of cash resources The management can then take suitable
decision to invest the surplus cash or make arrangement for the deficiency of cash at the
required time
LIQUIDITY
It does not present true picture of the liquidity of the firm the liquidity does
not depend upon cash alone Liquidity also depends upon those assets
which can be converted into cash easily
bull Exclusion of these assets obstructs the true reporting of the ability of the firm to
meet its liabilities when they become due for payment
bull The possibilities of window - dressing is higher in case of cash position in
comparison to the working capital position of the firm
bull The cash balance can be easily maneuvered by postponing purchases and other
payments and by rapidly collecting cash from debtors before the balance sheet date
Hence a fund - flow statement presents a more realistic picture than a cash flow
statement
bull Cash flow statement ignores non- cash charges Hence the true position of the
enterprise cannot be judged by cash flow statement
bull It is prepared on cash basis and hence ignores one of the basic concept of accounting
namely accrual concept
PROCEDURE OF PREPARING CASH FLOW STATEMENT-
The institute of charted accountants of India has issued accounting standards (as)-3 revised for
preparing a cash flow statement This accounting standard has been made mandatory in respect
of accounting periods commencing on or after 1st April 2001 for certain enterprises These
enterprises are-
bull Enterprises whose equity or debt securities are listed on a recognized stock exchange in
India And enterprise that are in the process of issuing equity or debt securities that will
be listed on a recognized stock exchange in India
bull All other commercial industrial and business enterprises whose turnover for accounting
period Rs 50 crores
As such the cash flow statement has been prepared according to as -3 revised in this project
According to as-3 revised the cash flow statement summarizes the cash inflows and cash
outflows and the net changes (increase or decrease) in cash and cash equipment resulting from
operating investing and financing activities of a firm during a period The following terms are
used for preparing a cash flow statement
CASH-
It compares cash in hand and demands with banks
CASH EQUIVALENTS-
There are short - term highly liquid investments that are readily into known amounts of cash
and which present insignificant risk of changes in their values Normally an investment will be
termed as cash equivalent only if it has a short maturity period say three months or less from the
date of its acquisition Examples of cash equivalent are treasury bills commercial papers etc
Which are purchased with cash that is in excess of immediate needs investment in shares are
excluded from cash equivalents unless they are cash equivalent in reality For example the
preference shares of the company which are purchased shortly before their redemption date will
be included in cash equivalents provided there is only an insignificant risk of failure of the
company in repaying the amount at the date of the maturity
CLASSIFICATION OF CASH FLOW-
According to as -3 (revised) cash flow statement should be presented in a manner that it reports
inflows of cash by classifying them into three categories namely operating investing and
financing activities Classification of all activities into these activities on the cash and cash
equivalents of the enterprise such information will be helpful in evaluating the relationships
among these three activities are explained as below
CASH FLOW FROM OPERATING ACTIVITIES-
Operating activities are the main revenue generating activities of an enterprise As such they
include cash flows from those transactions and events which enter into the ascertainment of
net profit or loss of the enterprise Examples of cash flows arising operating activities are
bull Cash receipts from the sale of goods and rendering of services
bull Cash receipts from royalties fees commissions and other revenue
bull Cash payments to suppliers for goods and services
bull Cash payments to and on behalf of employees
bull Cash receipts and cash payments of an insurance enterprise for premiums and claims
annuities and other policy benefits
bull Cash receipts and payments relating to future contracts forward contracts option
contracts and swap contracts when the contracts are held for dealing or trade purpose and
bull Cash payments of refunds of income taxes unless they can be specifically identified with
financing and investing activities
CASH FLOW FROM INVESTING ACTIVITIES-
Investing activities include the purchase and sale of long term assets such as land building plant
and machinery etc not held for resale These activities also include the purchase and sale of such
investment which are not including in cash equipments Cash flow from investing activities
discloses the expenditures incurred for resources intended to generate future income and cash
flows
Examples cash flow arising from investing activities are
bull Cash payments to acquire fixed assets (including intangible)
bull Cash receipts from sale of fixed assets (including intangibles)
bull Cash payments to acquire shares warrants or debt instruments of other enterprises
(other than receipts for those instruments considered to be cash equivalents)
bull Cash receipts from sale of shares warrants or debt instruments of other enterprises (other
than receipts for those instruments considered to be cash equivalents)
bull Cash advances and loans made to third parties In case of financial enterprises these will
be treated as cash flow from operating activities
bull Cash receipts from the repayment of advances and loans made to third parties In case of
financial enterprises these will be treated as cash flow from operating activities
bull Cash receipts of insurance claim for property involved in accident and
bull Cash receipts of interest and dividend In case of financial enterprise these will be treated
cash flow from operating activities
CASH FLOW FROM FIANCING ACTIVITIES-
Financing activities are the activities that result in change in capital and borrowing of the
enterprise
Examples of cash flows arising from financing activities are
bull Cash receipts from issuing shares or other similar instruments
bull Cash receipts from issuing debentures loans bonds and other short term or long term
borrowing
bull Cash repayment of amounts borrowed buy back of equity shares redemption of
preference shares debentures loans bonds etc
bull Cash payment of interest and dividend
IMPORTANT NOTE
In case of financial enterprise such as bank or mutual fund company cash Outflow
and cash inflow arising from the purchase and sale of securities will Be treated as
flows from operating activities This is because purchase and sale of securities is a
part of operating activity in case of financial enterprise In addition interest paid
and interest received as well as dividends received will also be treated as cash flow
from operating activities in case of financial Enterprises
CASH FLOW STATEMENT
(DIRECT METHOD)
CASH FLOW FROM OPERATING ACTIVITIES
Cash receipts from costumers
Cash paid to suppliers and employers ()
Cash generated from operations
Income tax paid ()
Cash flows from extraordinary item
plusmn Extra ordinary items
Net cash from operating activities
CASH FLOW FROM INVESTING ACTIVITIES-
Purchase of fixed assets
Proceed from sale equipment ()
Interest received
Dividend received ()
Net cash from investing activities
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from insurance of share capital
Proceeds from long- term borrowings ()
Repayment of from long-term borrowings
Interest paid
Dividend paid ()
Net cash from financing activities
Net increase in cash and cash equivalent
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
SOME SPECIAL TERMS-
i) INTERSET AND DIVIDEND-
Cash inflow from interest and dividends and cash outflow on account of interest and
dividends should be disclosed separately Cash inflow arising from interest and dividends
received should be shown as cash flow from investing activities where as cash outflow
disclosed outflow on account of interest and dividend paid should be shown as cash flow
from financing activity
ii) TAXES ON INCOME-
Tax paid on income is a part of cash flow from operating activity Hence taxes paid are
shown as a deduction under cash flow from operating activity
iii) EXTRA ORDINARY ITEMS-
Cash flow relating to extra ordinary items such as bad debts recovered Claims received from
insurance companies winning of a lottery or a law etc Should be disclosed separately as
arising from operating investing or financing activities For example the amount received
for insurance company on account of loss of stock by fire Earthquake and floods etc Should
be reported as cash flow from operating activities
iv) SIGNIFICANT NON - CASH TRANSACTION-
There are some investing and financing activities which do not require the use of cash or
cash equivalents Such non cash activities should be excluded from the cash flow statement
Examples are the acquisition of assets by issue of debentures or shares conversion of
shares into debentures etc Such significant on non cash transaction should be disclosed
outside the cash flow statement
CASH FLOW STATEMENT
(INDIRECT METHOD)
CASH FLOW FROM OPERARATTNG ACTIVITIES
Net profit before taxation and extraordinary item
Adjustment for
Depreciation
Foreign exchange loss
Interest income
Dividend income
Interest expense
Operating profit before working capital changes
Increase in sundry debtors
Decrease in inventories
Decrease in sundry creditors
Cash generated from operations
Income tax paid ()
Cash flow before extraordinary item
plusmn Extra - ordinary items
Net cash from operating activities
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of fixed assets ()
Proceeds from sale of equipment
Interest received
Dividend received ()
Net cash from investing activities
CASH FLOW FROM FINANCING ACTIVITIES-
Proceeds from insurance of share capital
Proceeds from long - term borrowings
Repayments of from long - term borrowings ()
Interest paid ()
Dividend paid ()
Net cash from financing activities
Net increase in cash and cash equivalent
Cash and cash equivalents at beginning of period
CHANGES IN CASH FLOWS
Changes in cash flows can be treated to the following
1 Net profit will increase the cash flows these cash flows will be
increased further if there are any non-cash changes (such as depreciation
and amortization)
2 Any payment of dividends will decrease the cash flows as will the
repayment of debt an issue of share or debt will also increase the
cash flows
3 An increase in non-cash assets will decrease cash flows increase in
current assets and fixed assets will result in drain on cash flows
Thus a statement of changes in cash flows ie the cash flow statement
classifies all Changes into one of three categories - operating investing or
financing activities Therefore the preparation of a statement of changes in cash
flows requires classification of changes in liabilities shareholders equity and
non-cash assets into one of these categories although some items will not fit
easily onto one other
h equivalent at end of period
STEP- BY-STEP PROCEDURE TO PREPARE CFS
1 Calculate the net increase or decrease in cash and cash equivalents-
For this purpose the opening balance of total cash and cash equivalents is compared with the
closing balance of cash and equivalents
Increasedecrease in cash and equivalents
Opening balance Closing Balance
Cash in hand
Cash in bank
Short-term Investment
Total
The difference between the total of opening and closing balance will be increased or
Decreased in cash equivalents during the period It may be noted that if there are only one or
two of items of cash etc
2 Net Cash flaw from operating activities-
The term operating refers to the normal purchase of goods and services On the basis of the
information contained in the comparative BS s and the IS and the additional Information the
net cash flow generated or use by the operating activities may be ascertained The IS prepared
by the firm gives the net profit figure earned by the firm On actual basis ie all items in the
IS are incorporated on the basis of earnedaccrued even
3 If not resulting in cash movements-
So the profit or loss as by the IS may not result in increase or decrease in cash balance by the
SYNOPSIS
INTRODUCTION
ESCORTS PVT LTD is a private limited company not listed in a stock exchange of India
and employees 900 highly trained personnel Its manufacturing plants are strategically located
in close proximity to its customers at Faridabad (Haryana) Noida (UP)
OBJECTIVES OF THE STUDY
bull To find the movement of cash inflow and cash outflow
bull To make the comparison between cash inflow and
bull Cash outflow
bull To prepare the Cash Flow Statement
bull To analyze the Balance Sheet of the company in terms of Cash Flow Statement
bull To focus on various activities of the organization in terms of Operating
Financing Investment
SCOPE OF THE STUDY
Financial resources are the assets for the company and their productivity is key
factor for profitability It is necessary to know their problems their knowledge
skills abilities amp the measures that can be taken to reduce them By analyzing this
top management can build good relations with the employees
The whole study is to determine the competencies of different employees who are
working in ESCORTS PVT LTD By analyzing it the top management can
introduce the concept of competency mapping in the organization Through this
management can attempt to use more suitable strategies towards the human
resource development
The research is confined to elicit the existing gap between the standard skill
required to perform the job and the skill processed by the employees at ESCORTS
PVT LTD And to provide them suitable training program to over come those gaps
for the better utilization of human resources
RELEVANCE
The scope of the study was confined to the outside parties like creditors
shareholders government etc Who want to invest their money in the
company
The benefit of the report for the company is that through this report they can come
to know about the cash flow statements of the company
This study also unable the company that their cash is not utilizing in unnecessary
things
The benefit of the report for the researcher is that it has helped to get knowledge
about the cash inflow and cash
RESERRCH METHODOLOGY-
RESEARCH DESIGN
bull The study was conducted under well- structured approach
bull The project lasted for 4 weeks and the year 2009 ie from 08 July to 12
Aug2009
bull The questionnaire method amp personal interview method was used to collect
the primary data for the study
The secondary data is collected from Internet amp company training material and
many other company materials
SAMPLE DESIGN
The process of extracting a sample from a population is called sampling
procedure The selection of sampling procedure to conduct the research
depends upon the nature of the study and the objective to be accomplished
Judgment sampling technique is adopted to select the respondents in this
study The sample design included the various departments in the YAMAHA
MOTORS PVT LTD
Methodology of date collection
bull Conducting personal interview
bull Data collection from primary and secondary sources
bull Designing questionnaire
bull Selecting sample size from the sample frame for the survey
bull Questionnaire distribution
bull Analysis of collected data with the help of statistical tools
bull Interpretation of collected data
bull Stating the conclusion based on the entire study
Sampling Technique
The sampling technique used for this research is of non-probability and convenience
sampling
Sample Unit
Employees of the company
Sample Size
For this research study the sample size is 25 respondents
Sources of data
Primary data
Primary data is the data which is collected by the researcher for the first time
and which was not there The tools used to collect the data are-
1)Questionnaire method from the employers in different departments
2) Face to Face personal interactions
Secondary Data
The data already collected is called as secondary data The relevant information
for this study has been collected from secondary source such as
Books
Journal
Reports
Publication by the organizational circulation
Company records
Business bulletins
Internet
Secondary data is also collected from various of the internet and intranet Some
of the website trough which information was gathered was through
HYPOTHESIS
The report is analyzed under the presumption that cash flow position of
YAMAHA MOTORS PVTLTD It can be improved and made effective in
terms of cash flows
In testing the above hypothesis the following aspects will be considered
1 Balance sheet comparisons
2 Presentation of cash flow statement in terms of revised AS-3
LIMITATIONS
The study though conducted to the best of the ability suffers from some
certain limitations There are
The data is secondary one and as such its reliability may be
questioned upon
The time availability for the study is less and as such it hinders thee
progress of the study
Senior officials were rarely approachable
Websites were not giving comprehensive data
Not having face-to-face interaction to get more relevant
information
Analysis and interpretation of data was done on the assumption that
the respondentsrsquo information was online
Information collected was totally subjective
The interviews are done during office hours but could not be done
for the other employees of other
DATA ANALYSIS
ESCORTS PVT LTD
CASH FLOW STRATEMENT
Year Ended Year Ended
30092009 30092008
Rs Crores Rs
Crores
A Cash Flow from Operating Activities
Net profit before tax (1733) 3444
Adjustment for
Loss on sale Provision for diminution in value of Long Term
Investments amp loans to Group Companies 189 4018
Gain on sale of Long Term Investments (122) (9492)
Gain on sale of Asset (013) -
Depreciation 4497 3955
Misc Exp Assets Write off Provisions 808 750
Interest Expense 7222 7999
Dividend Income (002) (001)
Interest Income (2082) -
Operating Profit before working capital changes 8764 10673
Adjustments for
Trade and other Receivables (8817) (12035)
Inventories 1379 (4692)
Trade Payables 6705 19046
Miscellaneous Expenditure (750) (511)
(1483) 1808
Cash Generated from Operations 7281 12481
Direct Taxes (Paid)Refunds (1785) 3166
Net Cash Flow from operating activities 5496 15647
B Cash Flow from Investing Activities
Purchase of Fixed Assets (3095) (2794)
Proceeds from sale of Fixed Assets 086 177
Movement in Loans and Advances (1627) (1644)
Sale of Investments 3233 11452
Short Term Deposits with schedule Banks (231) (1048)
Interest Received 2070 -
Dividend Received 002 001
Net Cash Flow from Investing activities 438 6144
Proceeds from Share Capital amp Securities Premium 11444 -
Proceeds from Long Term Borrowings 8660 -
Less Repayment of Long Term Borrowings (054) (7896)
Proceeds (Repayment) from short term borrowings (net) (22726) -
Interest Paid (7740) (8223)
Net Cash used in financing activities (10416) (16119)
Net Increase(Decrease) in Cash and Cash equivalents (4482) 5672
Cash and Cash equivalents as at 01102008 10565 4893
Cash and Cash equivalents as at 30092009 6083 1056
ANALYSIS OF CASH FLOW
From the cash flow statements of the ESCORT PVTLTDIt can be analyzed
from the two years that the net cash balance of the company has increased
manifold in 30-09-2008 than the year 30-09-2009
The net profit in 30-09-2008 is higher than the 30-09-2009 but due to certain
changes there has been increase in the cash balance
The interest paid this year is ore of the last year which implies that thee
company has not repaid his borrowed capital due to which the interest has got
down
The depreciation has increased but it does not affect cash to an extent as it is a
non-cash item In the head of working capital there is drastic change in the cash
balance in the form of ldquoTrade and other Receivables which has affected the cash
balance
There is outflow of cash for receivables rather than the inflow in the last year
So the net effect is that the cash from operating activities has been decreased
two times from the last year
The company has no accumulated losses as at the end of the financial year ie
September 31 2008
Provision for taxation has been made in accordance with the requirement of AS-
22 issued by Institute of Charted Accountants of India
Pursuant to that current year deferred tax liability have been charged to profit amp
loss account
In opinion of the board of directors of thee company the current assets loans
and advances have a value on realization in the ordinary course of the business at
least equal to the amount stated in the balance sheet and provision for all
liabilities have been made
Balance of sundry debtors creditors loans and advances are subject to confirmation by
the concerned parties
METHOD OF ANALYSIS
1 Data analysis is done using the following statistical tools wherever required in
order to extract meaningful information from the collected data
o Simple percentage and averages
o Bar diagram
o Cone diagram
o Pie diagram
2 The collected data from the questionnaire has been put together in the form of
tables
3 Percentage has been calculated wherever necessary for generalization of the
data
4 Data analysis and interpretation has been done on the basis of primary and
secondary data
5 The findings researches have been recorded based on the analysis
6 The study conducted pertains only to YAMAHA MOTORS INDIA PVTLTD
All bank balances (debitcredit) have been confirmed by the concerned bank
Identified from the available information which has been relied upon by the auditors
The names of small-scale industrial units to whom outstanding for more than
thirty days within agreed terms
The company has 9996 of shareholders in its subsidiary company named as
ESCORTS PVT LTD As at 31-03-2008
So the net effect is that the net cash from investing activities has many more
times than the last year which is negative Now the company has repaid its long
term borrowing more than the last year which has decreased the cash balance by
the little amount
Balance with the schedule banks under the head current amp collection account
amounting to represent funds in transit lying with schedule banks pending
transfer against loan liabilities under the head cash credit amp bill discounting
LIQUIDITY RATIO
1 CURRENT RATIO
(Amount in Rs)
Current Ratio
Year Current Assets Current Liabilities Ratio
2003 58574151 7903952 7412004 69765346 31884616 2192005 72021081 16065621 4482006 91328208 47117199 1942007 115642068 30266661 382
Interpretation
As a rule the current ratio with 21 (or) more is considered as satisfactory
position of the firm
When compared with 2006 there is an increase in the provision for tax because
the debtors are raised and for that the provision is created The current liabilities
majorly included Lanco Group of company for consultancy additional services
The sundry debtors have increased due to the increase to corporate taxes
In the year 2006 the cash and bank balance is reduced because that is used for
payment of dividends In the year 2007 the loans and advances include majorly
the advances to employees and deposits to government The loans and advances
reduced because the employees set off their claims The other current assets
include the interest attained from the deposits The deposits reduced due to the
declaration of dividends So the other current assets decreased
The huge increase in sundry debtors resulted an increase in the ratio which is
above the benchmark level of 21 which shows the comfortable position of the
firm
GRAPHICAL REPRESENTATION
741
219
448
194
382
000
100
200
300
400
500
600
700
800
Ratio
2003 2004 2005 2006 2007
Years
CURRENT RATIO
Ratio
2 QUICK RATIO
(Amount
in Rs)
Quick Ratio
Year Quick Assets Current Liabilities Ratio
2003 58574151 7903952 741
2004 52470336 31884616 165
2005 69883268 16065620 435
2006 89433596 47117199 19
2007 115431868 30266661 381
Interpretation
Quick assets are those assets which can be converted into cash with in a short
period of time say to six months So here the sundry debtors which are with the
long period does not include in the quick assets
Compare with 2006 the Quick ratio is increased because the sundry debtors are
increased due to the increase in the corporate tax and for that the provision
created is also increased So the ratio is also increased with the 2006
GRAPHICAL REPRESENTATION
741
165
435
190
381
000
100
200
300
400
500
600
700
800
Ratio
2003 2004 2005 2006 2007
Years
QUICK RATIO
Ratios
3 ABOSULTE LIQUIDITY RATIO
(Amount
in Rs)
Absolute Cash Ratio
Year Absolute Liquid Assets Current Liabilities Ratio
2003 31004027 7903952 392
2004 10859778 31884616 034
2005 39466542 16065620 246
2006 53850852 47117199 114
2007 35649070 30266661 118
Interpretation
The current assets which are ready in the form of cash are considered as absolute
liquid assets Here the cash and bank balance and the interest on fixed assts are
absolute liquid assets
In the year 2006 the cash and bank balance is decreased due to decrease in the
deposits and the current liabilities are also reduced because of the payment of
dividend That causes a slight increase in the current yearrsquos ratio
GRAPHICAL REPRESENTATION
392
034
246
114 118
0
05
1
15
2
25
3
35
4
Ratios
2003 2004 2005 2006 2007
Years
ABSOLUTE CASH RATIO
Ratios
LEVERAGE RATIOS
4 PROPRIETORY RATIO
(Amount
in Rs)
Proprietory Ratio
Year Share Holders Funds Total Assets Ratio
2003 67679219 78572171 086
2004 53301834 88438107 06
2005 70231061 89158391 079
2006 56473652 106385201 053
2007 97060013 129805102 075
Interpretation
The proprietary ratio establishes the relationship between shareholders funds to
total assets It determines the long-term solvency of the firm This ratio indicates
the extent to which the assets of the company can be lost without affecting the
interest of the company
There is no increase in the capital from the year2004 The share holderrsquos funds
include capital and reserves and surplus The reserves and surplus is increased
due to the increase in balance in profit and loss account which is caused by the
increase of income from services
Total assets includes fixed and current assets The fixed assets are reduced
because of the depreciation and there are no major increments in the fixed assets
The current assets are increased compared with the year 2006 Total assets are
also increased than precious year which resulted an increase in the ratio than old
GRAPHICAL REPRESENTATION
086
060
079
053
075
000
010
020
030
040
050
060
070
080
090
Ratios
2003 2004 2005 2006 2007
Years
PROPRIETORY RATIO
Ratios
ACTIVITY RATIOS
5 WORKING CAPITAL TURNOVER RATIO
(Amount
in Rs)
Working Capital Turnover Ratio
Year Income From Services Working Capital Ratio
2003 36309834 50670199 0722004 53899084 37880730 1422005 72728759 55355460 1312006 55550649 44211009 1262007 96654902 85375407 113
Interpretation
Income from services is greatly increased due to the extra invoice for Operations
amp Maintenance fee and the working capital is also increased greater due to the
increase in from services because the huge increase in current assets
The income from services is raised and the current assets are also raised together
resulted in the decrease of the ratio of 2007 compared with 2006
GRAPHICAL REPRESENTATION
072
142 131126
113
000
020
040
060
080
100
120
140
160
Ratio
2003 2004 2005 2006 2007
Years
WORKING CAPITAL TURNOVER RATIO
Ratio
6 FIXED ASSETS TURNOVER RATIO
(Amount in Rs)
Fixed Assets Turnover Ratio
Year Income From Services Net Fixed Assets Ratio
2003 36309834 28834317 126
2004 53899084 29568279 182
2005 72728759 17137310 424
2006 55550649 15056993 369
2007 96654902 14163034 682
Interpretation
Fixed assets are used in the business for producing the goods to be sold This
ratio shows the firmrsquos ability in generating sales from all financial resources
committed to total assets The ratio indicates the account of one rupee
investment in fixed assets
The income from services is greaterly increased in the current year due to the
increase in the Operations amp Maintenance fee due to the increase in extra invoice
and the net fixed assets are reduced because of the increased charge of
depreciation Finally that effected a huge increase in the ratio compared with the
previous yearrsquos ratio
GRAPHICAL REPRSENTATION
126182
424 369
682
000
100
200
300
400
500
600
700
Ratios
2003 2004 2005 2006 2007
Years
FIXED ASSETS TURNOVER RATIO
Ratios
7 CAPITAL TURNOVER RATIO
(Amount
in Rs)
Capital Turnover Ratio
Year Income From Services Capital Employed Ratio
2003 36309834 37175892 0982004 53899084 53301834 1012005 72728759 70231061 1042006 55550649 56473652 0982007 96654902 97060013 100
Interpretation
This is another ratio to judge the efficiency and effectiveness of the company
like profitability ratio
The income from services is greaterly increased compared with the previous year
and the total capital employed includes capital and reserves amp surplus Due to
huge increase in the net profit the capital employed is also increased along with
income from services Both are effected in the increment of the ratio of current
year
GRAPHICAL REPRESENTATION
098
101
104
098
100
094095096097098099100101102103104
Ratios
2003 2004 2005 2006 2007
Years
CAPITAL TURNOVER RATIO
Ratios
8 CURRENT ASSETS TO FIXED ASSETS RATIO
(Amount
in Rs)
Current Assets To Fixed Assets Ratio
Year Current Assets Fixed Assets Ratio
2003 58524151 19998020 2932004 69765346 18672761 3742005 72021081 17137310 4202006 91328208 15056993 6072007 115642068 14163034 817
Interpretation
Current assets are increased due to the increase in the sundry debtors and the net
fixed assets of the firm are decreased due to the charge of depreciation and there
is no major increment in the fixed assets
The increment in current assets and the decrease in fixed assets resulted an
increase in the ratio compared with the previous year
GRAPHICAL REPRESENTATION
293374
420
607
817
000
100
200
300
400
500
600
700
800
900
Ratios
2003 2004 2005 2006 2007
Years
CURRENT ASSETS TO FIXED ASSETS RATIO
Ratios
PROFITABILITY RATIOS
GENERAL PROFITABILITY RATIOS
9 NET PROFIT RATIO
(Amount in Rs)
Net Profit Ratio
Year Net Profit After Tax Income from Services Ratio
2003 21123474 36039834 059
2004 16125942 53899084 030
2005 16929227 72728759 023
2006 18259580 55550649 033
2007 40586359 96654902 042
Interpretation
The net profit ratio is the overall measure of the firmrsquos ability to turn each rupee
of income from services in net profit If the net margin is inadequate the firm
will fail to achieve return on shareholderrsquos funds High net profit ratio will help
the firm service in the fall of income from services rise in cost of production or
declining demand
The net profit is increased because the income from services is increased The
increment resulted a slight increase in 2007 ratio compared with the year 2006
GRAPHICAL REPRESENTATION
059
030
023
033
042
000
010
020
030
040
050
060
Ratios
2003 2004 2005 2006 2007
Years
NET PROFIT RATIO
Ratios
10 OPERATING PROFIT
(Amount in Rs)
Operating Profit
Year Operating Profit Income From Services Ratio
2003 36094877 36309834 099
2004 27576814 53899084 051
2005 29540599 72728759 041
2006 31586718 55550649 057
2007 67192677 96654902 070
Interpretation
The operating profit ratio is used to measure the relationship between net profits
and sales of a firm Depending on the concept it will decide
The operating profit ratio is increased compared with the last year The earnings
are increased due to the increase in the income from services because of
Operations amp Maintenance fee So the ratio is increased slightly compared with
the previous year
GRAPHICAL REPRESENTATION
099
051
041
057
070
000
010
020
030
040
050060
070
080
090
100
Ratios
2003 2004 2005 2006 2007
Years
OPERATING PROFIT RATIO
Ratios
11 RETURN ON TOTAL ASSETS RATIO
(Amount in Rs)
Return on Total Assets Ratio
Year Net Profit After Tax Total Assets Ratio
2003 21123474 78572171 027
2004 16125942 88438107 018
2005 16929227 89158391 019
2006 18259580 106385201 017
2007 40586359 129805102 031
Interpretation
This is the ratio between net profit and total assets The ratio indicates the return
on total assets in the form of profits
The net profit is increased in the current year because of the increment in the
income from services due to the increase in Operations amp Maintenance fee The
fixed assets are reduced due to the charge of depreciation and no major
increments in fixed assets but the current assets are increased because of sundry
debtors and that effects an increase in the ratio compared with the last year ie
2006
GRAPHICAL REPRESENTATION
027
018 019017
031
000
005
010
015
020
025
030
035
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON TOTAL ASSETS
Ratios
12 RESERVES amp SURPLUS TO CAPITAL RATIO
(Amount in Rs)
Reserves amp Surplus To Capital Ratio
Year Reserves amp Surplus Capital Ratio
2003 65599299 2079920 31542004 34582554 18719280 1852005 51511781 18719280 2752006 37754372 18719280 2022007 78340733 18719280 419
Interpretation
The ratio is used to reveal the policy pursued by the company a very high ratio
indicates a conservative dividend policy and vice-versa Higher the ratio better
will be the position
The reserves amp surplus is decreased in the year 2006 due to the payment of
dividends and in the year 2007 the profit is increased But the capital is
remaining constant from the year 2004 So the increase in the reserves amp surplus
caused a greater increase in the current yearrsquos ratio compared with the older
GRAPHICAL REPRESENTATION
3154
185 275 202419
-
500
1000
1500
2000
2500
3000
3500
Ratios
2003 2004 2005 2006 2007
Years
RESERVES amp SRUPLUS TO CAPITAL RATIO
Ratios
OVERALL PROFITABILITY RATIOS
13 EARNINGS PER SHARE
(Amount in Rs)
Earnings Per Share
Year Net Profit After Tax No of Equity Shares Ratio
2003 21123474 207992 101562004 16125942 1871928 8612005 16929227 1871928 9042006 18259580 1871928 9752007 40586359 1871928 2168
Interpretation
Earnings per share ratio are used to find out the return that the shareholderrsquos earn
from their shares After charging depreciation and after payment of tax the
remaining amount will be distributed by all the shareholders
Net profit after tax is increased due to the huge increase in the income from
services That is the amount which is available to the shareholders to take There
are 1871928 shares of Rs10- each The share capital is constant from the year
2004 Due to the huge increase in net profit the earnings per share is greaterly
increased in 2007
GRAPHICAL REPRESENTATION
10156
861904 975
2168
000
2000
4000
6000
8000
10000
12000
Ratios
2003 2004 2005 2006 2007
Years
EARNINGS PER SHARE
Ratios
14 PRICE EARNINGS (PE) RATIO
(Amount in Rs)
Price Earning (PE) Ratio
Year Market Price Per Share Earnings Per Share Ratio
2003 3254 10156 0322004 2847 861 3302005 3752 904 4152006 3017 975 3092007 5185 2168 239
Interpretation
The ratio is calculated to make an estimate of application in the value of share of
a company
The market price per share is increased due to the increase in the reserves
amp surplus The earnings per share are also increased greaterly compared
with the last year because of increase in the net profit So the ratio is
decreased compared with the previous year
GRAPHICAL REPRESENTATION
032
330
415
309
239
000
050
100
150
200
250
300
350
400
450
Ratios
2003 2004 2005 2006 2007
Years
PE RATIO
Ratios
15 RETURN ON INVESTMENT
(Amount in Rs)
Return on Investment
Year Net Profit After Tax Share Holders Fund Ratio
2003 21123474 67679219 031
2004 16125942 53301834 03
2005 16929227 70231061 024
2006 18259580 56473652 032
2007 40586359 97060013 042
Interpretation
This is the ratio between net profits and shareholders funds The ratio is
generally calculated as percentage multiplying with 100
The net profit is increased due to the increase in the income from services ant
the shareholders funds are increased because of reserve amp surplus So the ratio
is increased in the current year
GRAPHICAL REPRESENTATION
031 030
024
032
042
000
005
010
015
020
025
030
035
040
045
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON INVESTMENT RATIO
RatioS
DATA COLLECTION
The data can be of two types
Primary Data
Secondary Data
Primary Data
Primary data are those data which is originally collected afresh
Secondary Data
Secondary data are those data which are already collected and stored and which has
been passed through statistical research
In this project Secondary data has been collected from following sources-
Annual report
Books
MIS
Other material and report published by company There are two methods to prepare
the Cash flow Statement
ndirect Method
I
The indirect method (or reconciliation method) starts with net income and converts it
to net cash flow from operating activities In other words the indirect method adjusts
net income for items that affected reported net income but did not affect cash To
compute net cash flow from operating activities non-cash charges in the income
statement are added ack to net income and non-cash credits are deducted
b
Direct Method
Under the direct method the statement of cash flows reports net cash flow from
operating activities as major classes of operating cash receipts (eg cash collected from
customers and cash received from interest and dividends) and cash disbursements (eg
cash paid to suppliers for goods to employees for services to creditors for interest and
to government authorities for taxes)
INDIRECT VERSUS DIRECT METHOD
The most contentious decision that the FASB faced in issuing Statement No 95 was
choosing between the direct method and the indirect method of determining net cash
flow from operating activities Companies lobbied against the direct method urging
adoption of the indirect method Commercial lending officers expressed a strong
preference to the FASB hat the direct method be required
tCF-Page 3 of 5
In Favor of the Direct Method
The principal advantage of the direct method is that it shows operating cash receipts and
payments That is it is more consistent with the objective of a statement of cash flows to
provide information about cash receipts and cash payments than the in-direct method
which does not report operating cash receipts and payments
Supporters of the direct method contend that knowledge of the specific sources of
operating cash receipts and the purposes for which operating cash payments were made
in past periods is useful in estimating future operating cash flows Furthermore in-
formation about amounts of major classes of operating cash receipts and payments is
more useful than information only about their arithmetic sum (the net cash flow from
operating activities) Such information is more revealing of an enterprises ability (1) to
generate sufficient cash from operating activities to pay its debts (2) to reinvest in its
operations and (3) to make distributions to its owners
Many corporate providers of financial statements say that they do not currently collect
information in a manner that allows them to determine amounts such as cash received
from customers or cash paid to suppliers directly from their accounting systems But
supporters of the direct method contend that the incremental cost of assimilating such
operating cash receipts and payments data is not significant
In Favor of the Indirect Method
The principal advantage of the indirect method is that it focuses on the differences
between net income and net cash flow from operating activities That is it provides a
useful link between the statement of cash flows and the income statement and balance
sheet
Many providers of financial statements contend that it is less costly to adjust net income
to net cash flow from operating activities (indirect) than it is to report gross operating
cash receipts and payments (direct) Supporters of the indirect method also state that the
direct method which effectively reports income statement information on a cash rather
than an accrual basis may erroneously suggest that net cash flow from operating
activities is as good as or better than net income as a measure of performance
Special Rules Applying to Direct and Indirect Methods
Companies that use the direct method are required at a
minimum to report separately the following classes of
operating cash receipts and payments
Receipts
1048713 Cash collected from customers (including lessees licensees etc)
1048713 Interest and dividends received
1048713 Other operating cash receipts if any
Payments
1048713 Cash paid to employees and suppliers of goods or services (including
suppliers of
insurance advertising etc)
1048713 Interest paid
1048713 Income taxes paid
1048713 Other operating cash payments if any
Companies using the indirect method are required to disclose separately changes in
inventory receivables and payables to reconcile net income to net cash flow from
operating activities In addition interest paid (net of amount capitalized) and income
taxes paid must be disclosed elsewhere in the financial statements or accompanying
notes
The FASB requires these separate and additional disclosures so that users
may approximate the direct method Also an acceptable alternative presentation
of the in-direct method is to report net cash flow from operating activities as a
single line item in the statement of cash flows and to present the reconciliation
details elsewhere in the financial statements
FINDING OF SUDY
According to cash flow statement of the company The finding of the study are as
follows-
The company has not taken any loans secured or unsecured from companies
firms or other parties
The company has not accepted any deposit from the public during the year
The company is not a sick industrial company
The company has not granted any loan secured or unsecured to company firms
or other parties
The company has paid the entire long term and short term borrowing during the
year
The company has buy back the companyrsquos own share this year
The interest paid in 2008 is more than the
There has been a significant decline in volume over the years from 2001-02
to 2005-06 as can be seen in the graph below
Table 43
The Net sales of Tractor has increased considerably from 2004-05 to 2007-08
This can be mainly attributed to changes in Variable and material costs and in
the price
The Net sale of Tractor has increased considerably from 2004-05 to 2007-08
that is an decrease of Rs7216 per tractor This can be mainly attributed to
changes in
Variable and material costs and in the prices
RECOMMENDATIONS
According to cash flow statement of the company The suggestions of the study
are as follows-
The time durations for training program have to increase
Buy regular review and consultations develop a career progression
which is sensitive to performance and ability
Create an environment where by people are trend developed to enable
The to take advantages of opportunities that arise
The jab can be redesigned where the work man stay in what is normally
the same job but has elements of it changed
The principle amount must be paid in time which can be reducing the
interest the out flow
The purchase of the fixed asset must be made only when there is extreme
requirement
In order to avoid taxes the company should go for more investment
The companyrsquos borrowings should go for more investment
o The company should try to reduce the depreciations as maximum
as possible
CONCLUSION
The study on competency level of employees at ESCORTS PVTLTD gave an
insight about the acceptance of competency mapping by employees
The employees at Ymi welcome the introduction of competency mapping in their
organization as they felt it was very much essential in enhancing their skills and
organizational development
The organization has provided the recourses guidance and support to facilitate the
introduction of competency level easily and develop the employees in such a way
that they can face any kind of challenge
However the level of competency in employees is found to be satisfactory
Providing proper training education and guidance to the employees can enhance
the level
This study was mainly carried out to find out whether thee competency mapping
being followed by the company is effective till date If the competency mapping
and fitment to the organization
By looking at the graphs and tables it is quite that the employees still are not up to
the level of competent pool they still have to be trained and made competent in
order to fill the gap As the organization has just applied the mapping it has to see
to that it meets all the requirements for competency mapping
Therefore the graphs make it quite clear that the potential of the employees is not
up to the mark and ie they are not competent enough to meet the competency-
mapping requirement Hence by further training and counseling this gap can be
closed
This report includes the training requirements of employees and it highlights skills
possessed by each employee and skill required All employees get training so that
skill can be improved and maintain balance between standard performance with
their actual performance to avoid gap
APPENDIX
QUESTIONNAIRE
Consumer Survey
Name _____________________________
Age _____________________________
Sex
Male
Female
Occupation
Businessman
Service man
Professional
Others
Monthly income brackets
Below 15000
15000- 20000
20000-30000
30000 and above
of your savings _________
Do you invest
Yes
No
If yes then where do you invest your money
Bank
Insurance
funds
Others
Why do you made that statement
Return
Risk hedging
Tax benefits
Other reasons (specify) _______
Who influence your cash decision
Relatives and friends
Family members
Advisors experts
You yourself
If no then why
Do not know where to invest
Satisfied with your current investment return
Donrsquot want take risk
Other reasons
__________________________________________________________________
___________________
Do you know about CF statement
Yes
No
If yes then from where you have come to know about an cash statement
Advertisements on newspapers
Friends and relative
Agents experts
Other source
What do you think about cash statement
It means investing only in share market
Constant watch must be kept always
Return is not satisfactory
Other perception
__________________________________________________
Can you recall any cash flow of company
___________________________
Would you want to made CF of an org
Yes
No
If yes then why
_______________________________________________________
If no then why
_______________________________________________________
BIBLIOGRAPHY
List of Books
1 PANDEY IM - FINANCIAL MANAGEMANT
2 KHAN MY AND JAIN PK -FINANCIAL MANAGEMANT
3 SMITH KV ndash MANAGEMANT OF WORKING CAPITAL
3 COMPANY RECORDS
4 JOURNAL
5 REPORTS
WEBLIOGRAPHY
1 wwwescortspvtltdcom
2 wwwgooglecom
SCFP (WORKING CAPITAL BASIS)
FUND FLOW STATEMENT
The FFS reports the flows of funds through the firm during the year ie it shows the
Sources and uses of working capital between two balance sheet dates The FFS
attempts to explain the changes in financial position from one BS to the subsequent BS
in terms of the change in the funds or the working capital position of the firm
The term Working capital (WC) is generally defined as the excess of total
current assets over the total current liabilities The current Assets (CA) of a firm may
include cash in hand and at bank stock debtors bills advances etc and the Current
Liabilities (CL) includes creditors bills payable outstanding expenses provision for
tax short term liabilities etc the term WC is a single figure representing the net effect
of a transaction is to increase or decrease the Working Capital by affecting any of the
elements of Current Assets or Current Liabilities Therefore the FFS in its standard
form incorporates only those transactions which affect the Working Capital i e those
transactions where in only one of the affected accounted is a current account
Now a flow of working capital arises when one of the affected accounts is a current
account From the point of view of current account the effected on working capital
can examined in the light of the definitions of the term working capital ie the excess
of current assets over current liabilities ie
Impliedly change in any of the CA or CL will affect the WC Simple observation
equation tells that
bull Increase in any of the CA or decrease in any of the CLs will result in increase
in the WC
bull Decrease in any of the CA or increase in any of the CLs will result in decrease
in the WC
To find out the relative importance of different components of the financial position
of the firm
bull To identify the reasons for change in the profitability financial position of the
firm and
bull To assess the short term as well as the long term liquidity position of the
firm
TECHNIQUES TOOLS OF THE AFS
AFS can be undertaken by different persons and for different purposes therefore the
methodology adopted for the AFS may be carrying from one situation to another However
the following are some of the common techniques of the AFS
bull Comparative financial statements
bull Common-size financial statements
bull Trend percentage analysis and
bull Ratio Analysis
COMPARATIVE FINANCIAL STATEMENTS
In CFS two or more BS andor the IS of a firm are presented simultaneously in columnar
form The Financial data for two or more tears are placed and presented in adjacent columns
and thereby the financial data is provided at times perspective in order to facilitate periodic
comparison In CFS the BS and the IS for number of years are presented in condensed
form for year to year comparison and to exhibit the magnitude and direction of changes
The CFS helps a financial analyst of the firm and in establishing operating and
positional trend of the firm The CFS may be prepared to show
1 The absolute amount of different items in monetary terms
2 The amount of periodic changes in monetary terms
1 The percentages of periodic changes to reveal the proportionate changes
The CFS can be prepared for both the BS and the IS
CORE COMPETENCE OF ESCORTS
Customer 1
We put customers first in everything we do We take decisions keeping the customer in
mind
Challenging Spirit
We strive for excellence in everything we do and in the quality of goods amp services we
provide We work hard to achieve what we commit amp achieve results faster than our
competitors and we never give up
Team-work
We work cohesively with our colleagues as a multi-cultural team built on trust respect
understanding amp mutual co-operation Everyones contribution is equally important for
our success
Frank amp Fair Organization
We are honest sincere open minded fair amp transparent in our dealings We actively
listen to others and participate in healthy amp frank discussions to achieve the
organizations
A firm undertakes numerous during a year and most of these transactions during a year and
most of these transactions may affect one or the other current account ie most of these
transactions May results in the flow of the WC Neither is it necessary nor practical to
identify the effect of each and every transaction on the WC These transactions instead are
considered and analyzed in a collective form and then their effect on the WC is identified
SCFP (CASH BASIS) OR
THE CASH FLOW STATEMENT
The CFS attempts to analyze the transactions of the firm in terms of cash ie the transactions
generating cash and using cash The focus in the CFS is on cash rather than on WC The
sources of cash may be the cash profits earned by the firm issue of capital for cash issue of
other securities for cash borrowings sale of assets investment redemption of debenture or
preference share repayment of loan payment of tax dividend distribution etc Thus the
CFS summarizes the cash inflows and outflows
An analysis of cash flows is useful for short-run planning A firm needs sufficient cash to
debts maturing in the near future to pay interest and other expenses and to pay dividends to
shareholders The firm can make projections of cash flows and outflows for the near future to
determine the availability of cash This cash balance can be matched with the firms need for
cash during the period and accordingly arrangements can be made the deficit or invest the
surplus cash temporarily A historical analysis of cash flows provides insight to prepare
reliable cash flow projections for the immediate future
A statement of changes in financial position on cash basis commonly known as cash flow
statement summarizes the causes of changes in cash position between dates of two balance
sheets It indicates the sources amp uses of cash The cash flow statement is similar to the fund
flow statement except that it focuses attentions on cash instead of working capital (funds)
Thus this statement analyses change in non-current accounts as well as current accounts
(other than cash) to determine the flow of cash
The CFS is based on the concept on the WC Where as the CFS is based in cash which is only
the element of WC Thus the CFS provides details of cash movements whereas the FFS
provides the details of funds movements
The CFS considers only the actual movement of cash whereas the FFS considers the
movements of the funds as defined in terms of net working capital
CASH-FLOW STATEMENT
A cash-flow statement is a statement showing inflows (receipts) and outflows (payments) of
cash during a particular period In other words it is a summary of sources and applications of
Cash during a particular span of time It analyses the reason for changes in balance of cash
between the two balance sheet dates The term Cash here stands for cash and cash
equivalents
A cash-flow statement includes only those items which affect cash As such the cash-flow
statement is called a statement of changes in financial position - cash basis
A cash - flow statement can be for the past or can be projected for a future period
OBJECTS OR USES OF CASH-FLOW STATEMENT
The main objectives behind preparing a cash-flow statement can be laid down as under-
bull USEFUL FOR SHORT-TERM FINANCIAL PLANNING-
A cash-flow statement provides information for planning the short-term financial needs of the
firm Since it provides information regarding the sources and utilization of cash during a period
it become easier for the management to assess whether it will have Adequate cash to meet day-
to-day expenses and pay the long - term loans and interest Thereon and whether it has enough
cash to pay for the purchase of fixed assets or not
USEFUL FOR PREARING THE CASH BUDGET-
A cash-flow statement prepared for the future period is helpful in preparing a cash budget It
informs the management about the future period is helpful in preparing a cash budget It informs
the management about the surplus or deficit periods of cash ie in which months the payments
will be in excess of receipts It helps in planning the investment of surplus cash in short-term
investment and to plan short-term credit in advance of deficit periods
bull COMPARISON WITH CASH BUDGET-
A cash budget is prepared at the commencement of the year whereas a cash flow Statement is
prepared at the end of the year A comparison between the two helps in ascertaining the extent
to which the financial resources of the firm have been generated and used according to the plan
Causes of variances between the figures of two statements can be analyzed and proper
corrective measures may be takes
bull STUDY OF THE TREND OF CASH RECEIPTS AND PAYMENTS-
A cash-flow statement reveals the speed at which the cash is being generated from debtors stock
and other current assets the speed at which the current liabilities are being paid It enables the
management to assess the true position of the cash in future
bull IT EXPLAINS THE DEVIATIONS OF CASH FROM EARNINGS-
A firm may earn huge profits yet it may have paucity of cash or when it suffered a loss it may
still have plenty of cash A cash flow statement explains the reasons for it
HELPFUL IN ASCERTAINING CASH-FLOW FROM VARIOUS
ACTIBITIES SEPARATELY-
A cash-flow statement aims at highlighting the cash flow from operating investing and
financing activities separately It includes how much cash has been generated or used in these
activities
bull HELPFUL IN MAKING DIVIDEND DECISIONS-
Dividend must be paid within 42 days of its declaration Hence the management takes the help of
cash-flow statement to ascertain the position of cash generated from operating activities which
can be used for payment of dividend
IMPORTANCE AND RELEVANCE OF CFS
The CFS has gained importance in view of the fact that there are many managerial Decisions
which are taken in the light of the cash availability or cash position of the firm
For example declaration of dividend by the company requires cash disbursement and
Therefore the Board of Directors must consider the cash position before proposing a dividend
The CFS also provides information for the short term financial planning and in particular the
short term cash needs of the firm
In view of increasing importance and relevance of the CFS the clause 32 of the Listing
agreement (between a Company and the Stock Exchange where the shares proposed to be listed)
has been amended by the SEBI As a result the listed companies in India are now required to
supply a copy of the CFS to each shareholder as a part of Annual Report As a result the listed
companies have started a practice of sending a CFS for which the BS has been prepared as
apart of the Annual Report of the company
DIFFRENCE BETWEEN CASH - FLOW STATEMENT AND
CASH BUDGET
There is not much difference between cash flow statement and a cash budget The
only difference is that a cash flow statement is prepared for a past period where as cash
budget is prepared for a future period Hence it is of limited use as far as the future
periods are concerned A cash budget is therefore prepared showing how much cash is
likely to be received and what will be the disbursements during a future period of time
Thus a cash budget indicates in which months there will be surplus cash and in which
moths there will be deficiency of cash resources The management can then take suitable
decision to invest the surplus cash or make arrangement for the deficiency of cash at the
required time
LIQUIDITY
It does not present true picture of the liquidity of the firm the liquidity does
not depend upon cash alone Liquidity also depends upon those assets
which can be converted into cash easily
bull Exclusion of these assets obstructs the true reporting of the ability of the firm to
meet its liabilities when they become due for payment
bull The possibilities of window - dressing is higher in case of cash position in
comparison to the working capital position of the firm
bull The cash balance can be easily maneuvered by postponing purchases and other
payments and by rapidly collecting cash from debtors before the balance sheet date
Hence a fund - flow statement presents a more realistic picture than a cash flow
statement
bull Cash flow statement ignores non- cash charges Hence the true position of the
enterprise cannot be judged by cash flow statement
bull It is prepared on cash basis and hence ignores one of the basic concept of accounting
namely accrual concept
PROCEDURE OF PREPARING CASH FLOW STATEMENT-
The institute of charted accountants of India has issued accounting standards (as)-3 revised for
preparing a cash flow statement This accounting standard has been made mandatory in respect
of accounting periods commencing on or after 1st April 2001 for certain enterprises These
enterprises are-
bull Enterprises whose equity or debt securities are listed on a recognized stock exchange in
India And enterprise that are in the process of issuing equity or debt securities that will
be listed on a recognized stock exchange in India
bull All other commercial industrial and business enterprises whose turnover for accounting
period Rs 50 crores
As such the cash flow statement has been prepared according to as -3 revised in this project
According to as-3 revised the cash flow statement summarizes the cash inflows and cash
outflows and the net changes (increase or decrease) in cash and cash equipment resulting from
operating investing and financing activities of a firm during a period The following terms are
used for preparing a cash flow statement
CASH-
It compares cash in hand and demands with banks
CASH EQUIVALENTS-
There are short - term highly liquid investments that are readily into known amounts of cash
and which present insignificant risk of changes in their values Normally an investment will be
termed as cash equivalent only if it has a short maturity period say three months or less from the
date of its acquisition Examples of cash equivalent are treasury bills commercial papers etc
Which are purchased with cash that is in excess of immediate needs investment in shares are
excluded from cash equivalents unless they are cash equivalent in reality For example the
preference shares of the company which are purchased shortly before their redemption date will
be included in cash equivalents provided there is only an insignificant risk of failure of the
company in repaying the amount at the date of the maturity
CLASSIFICATION OF CASH FLOW-
According to as -3 (revised) cash flow statement should be presented in a manner that it reports
inflows of cash by classifying them into three categories namely operating investing and
financing activities Classification of all activities into these activities on the cash and cash
equivalents of the enterprise such information will be helpful in evaluating the relationships
among these three activities are explained as below
CASH FLOW FROM OPERATING ACTIVITIES-
Operating activities are the main revenue generating activities of an enterprise As such they
include cash flows from those transactions and events which enter into the ascertainment of
net profit or loss of the enterprise Examples of cash flows arising operating activities are
bull Cash receipts from the sale of goods and rendering of services
bull Cash receipts from royalties fees commissions and other revenue
bull Cash payments to suppliers for goods and services
bull Cash payments to and on behalf of employees
bull Cash receipts and cash payments of an insurance enterprise for premiums and claims
annuities and other policy benefits
bull Cash receipts and payments relating to future contracts forward contracts option
contracts and swap contracts when the contracts are held for dealing or trade purpose and
bull Cash payments of refunds of income taxes unless they can be specifically identified with
financing and investing activities
CASH FLOW FROM INVESTING ACTIVITIES-
Investing activities include the purchase and sale of long term assets such as land building plant
and machinery etc not held for resale These activities also include the purchase and sale of such
investment which are not including in cash equipments Cash flow from investing activities
discloses the expenditures incurred for resources intended to generate future income and cash
flows
Examples cash flow arising from investing activities are
bull Cash payments to acquire fixed assets (including intangible)
bull Cash receipts from sale of fixed assets (including intangibles)
bull Cash payments to acquire shares warrants or debt instruments of other enterprises
(other than receipts for those instruments considered to be cash equivalents)
bull Cash receipts from sale of shares warrants or debt instruments of other enterprises (other
than receipts for those instruments considered to be cash equivalents)
bull Cash advances and loans made to third parties In case of financial enterprises these will
be treated as cash flow from operating activities
bull Cash receipts from the repayment of advances and loans made to third parties In case of
financial enterprises these will be treated as cash flow from operating activities
bull Cash receipts of insurance claim for property involved in accident and
bull Cash receipts of interest and dividend In case of financial enterprise these will be treated
cash flow from operating activities
CASH FLOW FROM FIANCING ACTIVITIES-
Financing activities are the activities that result in change in capital and borrowing of the
enterprise
Examples of cash flows arising from financing activities are
bull Cash receipts from issuing shares or other similar instruments
bull Cash receipts from issuing debentures loans bonds and other short term or long term
borrowing
bull Cash repayment of amounts borrowed buy back of equity shares redemption of
preference shares debentures loans bonds etc
bull Cash payment of interest and dividend
IMPORTANT NOTE
In case of financial enterprise such as bank or mutual fund company cash Outflow
and cash inflow arising from the purchase and sale of securities will Be treated as
flows from operating activities This is because purchase and sale of securities is a
part of operating activity in case of financial enterprise In addition interest paid
and interest received as well as dividends received will also be treated as cash flow
from operating activities in case of financial Enterprises
CASH FLOW STATEMENT
(DIRECT METHOD)
CASH FLOW FROM OPERATING ACTIVITIES
Cash receipts from costumers
Cash paid to suppliers and employers ()
Cash generated from operations
Income tax paid ()
Cash flows from extraordinary item
plusmn Extra ordinary items
Net cash from operating activities
CASH FLOW FROM INVESTING ACTIVITIES-
Purchase of fixed assets
Proceed from sale equipment ()
Interest received
Dividend received ()
Net cash from investing activities
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from insurance of share capital
Proceeds from long- term borrowings ()
Repayment of from long-term borrowings
Interest paid
Dividend paid ()
Net cash from financing activities
Net increase in cash and cash equivalent
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
SOME SPECIAL TERMS-
i) INTERSET AND DIVIDEND-
Cash inflow from interest and dividends and cash outflow on account of interest and
dividends should be disclosed separately Cash inflow arising from interest and dividends
received should be shown as cash flow from investing activities where as cash outflow
disclosed outflow on account of interest and dividend paid should be shown as cash flow
from financing activity
ii) TAXES ON INCOME-
Tax paid on income is a part of cash flow from operating activity Hence taxes paid are
shown as a deduction under cash flow from operating activity
iii) EXTRA ORDINARY ITEMS-
Cash flow relating to extra ordinary items such as bad debts recovered Claims received from
insurance companies winning of a lottery or a law etc Should be disclosed separately as
arising from operating investing or financing activities For example the amount received
for insurance company on account of loss of stock by fire Earthquake and floods etc Should
be reported as cash flow from operating activities
iv) SIGNIFICANT NON - CASH TRANSACTION-
There are some investing and financing activities which do not require the use of cash or
cash equivalents Such non cash activities should be excluded from the cash flow statement
Examples are the acquisition of assets by issue of debentures or shares conversion of
shares into debentures etc Such significant on non cash transaction should be disclosed
outside the cash flow statement
CASH FLOW STATEMENT
(INDIRECT METHOD)
CASH FLOW FROM OPERARATTNG ACTIVITIES
Net profit before taxation and extraordinary item
Adjustment for
Depreciation
Foreign exchange loss
Interest income
Dividend income
Interest expense
Operating profit before working capital changes
Increase in sundry debtors
Decrease in inventories
Decrease in sundry creditors
Cash generated from operations
Income tax paid ()
Cash flow before extraordinary item
plusmn Extra - ordinary items
Net cash from operating activities
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of fixed assets ()
Proceeds from sale of equipment
Interest received
Dividend received ()
Net cash from investing activities
CASH FLOW FROM FINANCING ACTIVITIES-
Proceeds from insurance of share capital
Proceeds from long - term borrowings
Repayments of from long - term borrowings ()
Interest paid ()
Dividend paid ()
Net cash from financing activities
Net increase in cash and cash equivalent
Cash and cash equivalents at beginning of period
CHANGES IN CASH FLOWS
Changes in cash flows can be treated to the following
1 Net profit will increase the cash flows these cash flows will be
increased further if there are any non-cash changes (such as depreciation
and amortization)
2 Any payment of dividends will decrease the cash flows as will the
repayment of debt an issue of share or debt will also increase the
cash flows
3 An increase in non-cash assets will decrease cash flows increase in
current assets and fixed assets will result in drain on cash flows
Thus a statement of changes in cash flows ie the cash flow statement
classifies all Changes into one of three categories - operating investing or
financing activities Therefore the preparation of a statement of changes in cash
flows requires classification of changes in liabilities shareholders equity and
non-cash assets into one of these categories although some items will not fit
easily onto one other
h equivalent at end of period
STEP- BY-STEP PROCEDURE TO PREPARE CFS
1 Calculate the net increase or decrease in cash and cash equivalents-
For this purpose the opening balance of total cash and cash equivalents is compared with the
closing balance of cash and equivalents
Increasedecrease in cash and equivalents
Opening balance Closing Balance
Cash in hand
Cash in bank
Short-term Investment
Total
The difference between the total of opening and closing balance will be increased or
Decreased in cash equivalents during the period It may be noted that if there are only one or
two of items of cash etc
2 Net Cash flaw from operating activities-
The term operating refers to the normal purchase of goods and services On the basis of the
information contained in the comparative BS s and the IS and the additional Information the
net cash flow generated or use by the operating activities may be ascertained The IS prepared
by the firm gives the net profit figure earned by the firm On actual basis ie all items in the
IS are incorporated on the basis of earnedaccrued even
3 If not resulting in cash movements-
So the profit or loss as by the IS may not result in increase or decrease in cash balance by the
SYNOPSIS
INTRODUCTION
ESCORTS PVT LTD is a private limited company not listed in a stock exchange of India
and employees 900 highly trained personnel Its manufacturing plants are strategically located
in close proximity to its customers at Faridabad (Haryana) Noida (UP)
OBJECTIVES OF THE STUDY
bull To find the movement of cash inflow and cash outflow
bull To make the comparison between cash inflow and
bull Cash outflow
bull To prepare the Cash Flow Statement
bull To analyze the Balance Sheet of the company in terms of Cash Flow Statement
bull To focus on various activities of the organization in terms of Operating
Financing Investment
SCOPE OF THE STUDY
Financial resources are the assets for the company and their productivity is key
factor for profitability It is necessary to know their problems their knowledge
skills abilities amp the measures that can be taken to reduce them By analyzing this
top management can build good relations with the employees
The whole study is to determine the competencies of different employees who are
working in ESCORTS PVT LTD By analyzing it the top management can
introduce the concept of competency mapping in the organization Through this
management can attempt to use more suitable strategies towards the human
resource development
The research is confined to elicit the existing gap between the standard skill
required to perform the job and the skill processed by the employees at ESCORTS
PVT LTD And to provide them suitable training program to over come those gaps
for the better utilization of human resources
RELEVANCE
The scope of the study was confined to the outside parties like creditors
shareholders government etc Who want to invest their money in the
company
The benefit of the report for the company is that through this report they can come
to know about the cash flow statements of the company
This study also unable the company that their cash is not utilizing in unnecessary
things
The benefit of the report for the researcher is that it has helped to get knowledge
about the cash inflow and cash
RESERRCH METHODOLOGY-
RESEARCH DESIGN
bull The study was conducted under well- structured approach
bull The project lasted for 4 weeks and the year 2009 ie from 08 July to 12
Aug2009
bull The questionnaire method amp personal interview method was used to collect
the primary data for the study
The secondary data is collected from Internet amp company training material and
many other company materials
SAMPLE DESIGN
The process of extracting a sample from a population is called sampling
procedure The selection of sampling procedure to conduct the research
depends upon the nature of the study and the objective to be accomplished
Judgment sampling technique is adopted to select the respondents in this
study The sample design included the various departments in the YAMAHA
MOTORS PVT LTD
Methodology of date collection
bull Conducting personal interview
bull Data collection from primary and secondary sources
bull Designing questionnaire
bull Selecting sample size from the sample frame for the survey
bull Questionnaire distribution
bull Analysis of collected data with the help of statistical tools
bull Interpretation of collected data
bull Stating the conclusion based on the entire study
Sampling Technique
The sampling technique used for this research is of non-probability and convenience
sampling
Sample Unit
Employees of the company
Sample Size
For this research study the sample size is 25 respondents
Sources of data
Primary data
Primary data is the data which is collected by the researcher for the first time
and which was not there The tools used to collect the data are-
1)Questionnaire method from the employers in different departments
2) Face to Face personal interactions
Secondary Data
The data already collected is called as secondary data The relevant information
for this study has been collected from secondary source such as
Books
Journal
Reports
Publication by the organizational circulation
Company records
Business bulletins
Internet
Secondary data is also collected from various of the internet and intranet Some
of the website trough which information was gathered was through
HYPOTHESIS
The report is analyzed under the presumption that cash flow position of
YAMAHA MOTORS PVTLTD It can be improved and made effective in
terms of cash flows
In testing the above hypothesis the following aspects will be considered
1 Balance sheet comparisons
2 Presentation of cash flow statement in terms of revised AS-3
LIMITATIONS
The study though conducted to the best of the ability suffers from some
certain limitations There are
The data is secondary one and as such its reliability may be
questioned upon
The time availability for the study is less and as such it hinders thee
progress of the study
Senior officials were rarely approachable
Websites were not giving comprehensive data
Not having face-to-face interaction to get more relevant
information
Analysis and interpretation of data was done on the assumption that
the respondentsrsquo information was online
Information collected was totally subjective
The interviews are done during office hours but could not be done
for the other employees of other
DATA ANALYSIS
ESCORTS PVT LTD
CASH FLOW STRATEMENT
Year Ended Year Ended
30092009 30092008
Rs Crores Rs
Crores
A Cash Flow from Operating Activities
Net profit before tax (1733) 3444
Adjustment for
Loss on sale Provision for diminution in value of Long Term
Investments amp loans to Group Companies 189 4018
Gain on sale of Long Term Investments (122) (9492)
Gain on sale of Asset (013) -
Depreciation 4497 3955
Misc Exp Assets Write off Provisions 808 750
Interest Expense 7222 7999
Dividend Income (002) (001)
Interest Income (2082) -
Operating Profit before working capital changes 8764 10673
Adjustments for
Trade and other Receivables (8817) (12035)
Inventories 1379 (4692)
Trade Payables 6705 19046
Miscellaneous Expenditure (750) (511)
(1483) 1808
Cash Generated from Operations 7281 12481
Direct Taxes (Paid)Refunds (1785) 3166
Net Cash Flow from operating activities 5496 15647
B Cash Flow from Investing Activities
Purchase of Fixed Assets (3095) (2794)
Proceeds from sale of Fixed Assets 086 177
Movement in Loans and Advances (1627) (1644)
Sale of Investments 3233 11452
Short Term Deposits with schedule Banks (231) (1048)
Interest Received 2070 -
Dividend Received 002 001
Net Cash Flow from Investing activities 438 6144
Proceeds from Share Capital amp Securities Premium 11444 -
Proceeds from Long Term Borrowings 8660 -
Less Repayment of Long Term Borrowings (054) (7896)
Proceeds (Repayment) from short term borrowings (net) (22726) -
Interest Paid (7740) (8223)
Net Cash used in financing activities (10416) (16119)
Net Increase(Decrease) in Cash and Cash equivalents (4482) 5672
Cash and Cash equivalents as at 01102008 10565 4893
Cash and Cash equivalents as at 30092009 6083 1056
ANALYSIS OF CASH FLOW
From the cash flow statements of the ESCORT PVTLTDIt can be analyzed
from the two years that the net cash balance of the company has increased
manifold in 30-09-2008 than the year 30-09-2009
The net profit in 30-09-2008 is higher than the 30-09-2009 but due to certain
changes there has been increase in the cash balance
The interest paid this year is ore of the last year which implies that thee
company has not repaid his borrowed capital due to which the interest has got
down
The depreciation has increased but it does not affect cash to an extent as it is a
non-cash item In the head of working capital there is drastic change in the cash
balance in the form of ldquoTrade and other Receivables which has affected the cash
balance
There is outflow of cash for receivables rather than the inflow in the last year
So the net effect is that the cash from operating activities has been decreased
two times from the last year
The company has no accumulated losses as at the end of the financial year ie
September 31 2008
Provision for taxation has been made in accordance with the requirement of AS-
22 issued by Institute of Charted Accountants of India
Pursuant to that current year deferred tax liability have been charged to profit amp
loss account
In opinion of the board of directors of thee company the current assets loans
and advances have a value on realization in the ordinary course of the business at
least equal to the amount stated in the balance sheet and provision for all
liabilities have been made
Balance of sundry debtors creditors loans and advances are subject to confirmation by
the concerned parties
METHOD OF ANALYSIS
1 Data analysis is done using the following statistical tools wherever required in
order to extract meaningful information from the collected data
o Simple percentage and averages
o Bar diagram
o Cone diagram
o Pie diagram
2 The collected data from the questionnaire has been put together in the form of
tables
3 Percentage has been calculated wherever necessary for generalization of the
data
4 Data analysis and interpretation has been done on the basis of primary and
secondary data
5 The findings researches have been recorded based on the analysis
6 The study conducted pertains only to YAMAHA MOTORS INDIA PVTLTD
All bank balances (debitcredit) have been confirmed by the concerned bank
Identified from the available information which has been relied upon by the auditors
The names of small-scale industrial units to whom outstanding for more than
thirty days within agreed terms
The company has 9996 of shareholders in its subsidiary company named as
ESCORTS PVT LTD As at 31-03-2008
So the net effect is that the net cash from investing activities has many more
times than the last year which is negative Now the company has repaid its long
term borrowing more than the last year which has decreased the cash balance by
the little amount
Balance with the schedule banks under the head current amp collection account
amounting to represent funds in transit lying with schedule banks pending
transfer against loan liabilities under the head cash credit amp bill discounting
LIQUIDITY RATIO
1 CURRENT RATIO
(Amount in Rs)
Current Ratio
Year Current Assets Current Liabilities Ratio
2003 58574151 7903952 7412004 69765346 31884616 2192005 72021081 16065621 4482006 91328208 47117199 1942007 115642068 30266661 382
Interpretation
As a rule the current ratio with 21 (or) more is considered as satisfactory
position of the firm
When compared with 2006 there is an increase in the provision for tax because
the debtors are raised and for that the provision is created The current liabilities
majorly included Lanco Group of company for consultancy additional services
The sundry debtors have increased due to the increase to corporate taxes
In the year 2006 the cash and bank balance is reduced because that is used for
payment of dividends In the year 2007 the loans and advances include majorly
the advances to employees and deposits to government The loans and advances
reduced because the employees set off their claims The other current assets
include the interest attained from the deposits The deposits reduced due to the
declaration of dividends So the other current assets decreased
The huge increase in sundry debtors resulted an increase in the ratio which is
above the benchmark level of 21 which shows the comfortable position of the
firm
GRAPHICAL REPRESENTATION
741
219
448
194
382
000
100
200
300
400
500
600
700
800
Ratio
2003 2004 2005 2006 2007
Years
CURRENT RATIO
Ratio
2 QUICK RATIO
(Amount
in Rs)
Quick Ratio
Year Quick Assets Current Liabilities Ratio
2003 58574151 7903952 741
2004 52470336 31884616 165
2005 69883268 16065620 435
2006 89433596 47117199 19
2007 115431868 30266661 381
Interpretation
Quick assets are those assets which can be converted into cash with in a short
period of time say to six months So here the sundry debtors which are with the
long period does not include in the quick assets
Compare with 2006 the Quick ratio is increased because the sundry debtors are
increased due to the increase in the corporate tax and for that the provision
created is also increased So the ratio is also increased with the 2006
GRAPHICAL REPRESENTATION
741
165
435
190
381
000
100
200
300
400
500
600
700
800
Ratio
2003 2004 2005 2006 2007
Years
QUICK RATIO
Ratios
3 ABOSULTE LIQUIDITY RATIO
(Amount
in Rs)
Absolute Cash Ratio
Year Absolute Liquid Assets Current Liabilities Ratio
2003 31004027 7903952 392
2004 10859778 31884616 034
2005 39466542 16065620 246
2006 53850852 47117199 114
2007 35649070 30266661 118
Interpretation
The current assets which are ready in the form of cash are considered as absolute
liquid assets Here the cash and bank balance and the interest on fixed assts are
absolute liquid assets
In the year 2006 the cash and bank balance is decreased due to decrease in the
deposits and the current liabilities are also reduced because of the payment of
dividend That causes a slight increase in the current yearrsquos ratio
GRAPHICAL REPRESENTATION
392
034
246
114 118
0
05
1
15
2
25
3
35
4
Ratios
2003 2004 2005 2006 2007
Years
ABSOLUTE CASH RATIO
Ratios
LEVERAGE RATIOS
4 PROPRIETORY RATIO
(Amount
in Rs)
Proprietory Ratio
Year Share Holders Funds Total Assets Ratio
2003 67679219 78572171 086
2004 53301834 88438107 06
2005 70231061 89158391 079
2006 56473652 106385201 053
2007 97060013 129805102 075
Interpretation
The proprietary ratio establishes the relationship between shareholders funds to
total assets It determines the long-term solvency of the firm This ratio indicates
the extent to which the assets of the company can be lost without affecting the
interest of the company
There is no increase in the capital from the year2004 The share holderrsquos funds
include capital and reserves and surplus The reserves and surplus is increased
due to the increase in balance in profit and loss account which is caused by the
increase of income from services
Total assets includes fixed and current assets The fixed assets are reduced
because of the depreciation and there are no major increments in the fixed assets
The current assets are increased compared with the year 2006 Total assets are
also increased than precious year which resulted an increase in the ratio than old
GRAPHICAL REPRESENTATION
086
060
079
053
075
000
010
020
030
040
050
060
070
080
090
Ratios
2003 2004 2005 2006 2007
Years
PROPRIETORY RATIO
Ratios
ACTIVITY RATIOS
5 WORKING CAPITAL TURNOVER RATIO
(Amount
in Rs)
Working Capital Turnover Ratio
Year Income From Services Working Capital Ratio
2003 36309834 50670199 0722004 53899084 37880730 1422005 72728759 55355460 1312006 55550649 44211009 1262007 96654902 85375407 113
Interpretation
Income from services is greatly increased due to the extra invoice for Operations
amp Maintenance fee and the working capital is also increased greater due to the
increase in from services because the huge increase in current assets
The income from services is raised and the current assets are also raised together
resulted in the decrease of the ratio of 2007 compared with 2006
GRAPHICAL REPRESENTATION
072
142 131126
113
000
020
040
060
080
100
120
140
160
Ratio
2003 2004 2005 2006 2007
Years
WORKING CAPITAL TURNOVER RATIO
Ratio
6 FIXED ASSETS TURNOVER RATIO
(Amount in Rs)
Fixed Assets Turnover Ratio
Year Income From Services Net Fixed Assets Ratio
2003 36309834 28834317 126
2004 53899084 29568279 182
2005 72728759 17137310 424
2006 55550649 15056993 369
2007 96654902 14163034 682
Interpretation
Fixed assets are used in the business for producing the goods to be sold This
ratio shows the firmrsquos ability in generating sales from all financial resources
committed to total assets The ratio indicates the account of one rupee
investment in fixed assets
The income from services is greaterly increased in the current year due to the
increase in the Operations amp Maintenance fee due to the increase in extra invoice
and the net fixed assets are reduced because of the increased charge of
depreciation Finally that effected a huge increase in the ratio compared with the
previous yearrsquos ratio
GRAPHICAL REPRSENTATION
126182
424 369
682
000
100
200
300
400
500
600
700
Ratios
2003 2004 2005 2006 2007
Years
FIXED ASSETS TURNOVER RATIO
Ratios
7 CAPITAL TURNOVER RATIO
(Amount
in Rs)
Capital Turnover Ratio
Year Income From Services Capital Employed Ratio
2003 36309834 37175892 0982004 53899084 53301834 1012005 72728759 70231061 1042006 55550649 56473652 0982007 96654902 97060013 100
Interpretation
This is another ratio to judge the efficiency and effectiveness of the company
like profitability ratio
The income from services is greaterly increased compared with the previous year
and the total capital employed includes capital and reserves amp surplus Due to
huge increase in the net profit the capital employed is also increased along with
income from services Both are effected in the increment of the ratio of current
year
GRAPHICAL REPRESENTATION
098
101
104
098
100
094095096097098099100101102103104
Ratios
2003 2004 2005 2006 2007
Years
CAPITAL TURNOVER RATIO
Ratios
8 CURRENT ASSETS TO FIXED ASSETS RATIO
(Amount
in Rs)
Current Assets To Fixed Assets Ratio
Year Current Assets Fixed Assets Ratio
2003 58524151 19998020 2932004 69765346 18672761 3742005 72021081 17137310 4202006 91328208 15056993 6072007 115642068 14163034 817
Interpretation
Current assets are increased due to the increase in the sundry debtors and the net
fixed assets of the firm are decreased due to the charge of depreciation and there
is no major increment in the fixed assets
The increment in current assets and the decrease in fixed assets resulted an
increase in the ratio compared with the previous year
GRAPHICAL REPRESENTATION
293374
420
607
817
000
100
200
300
400
500
600
700
800
900
Ratios
2003 2004 2005 2006 2007
Years
CURRENT ASSETS TO FIXED ASSETS RATIO
Ratios
PROFITABILITY RATIOS
GENERAL PROFITABILITY RATIOS
9 NET PROFIT RATIO
(Amount in Rs)
Net Profit Ratio
Year Net Profit After Tax Income from Services Ratio
2003 21123474 36039834 059
2004 16125942 53899084 030
2005 16929227 72728759 023
2006 18259580 55550649 033
2007 40586359 96654902 042
Interpretation
The net profit ratio is the overall measure of the firmrsquos ability to turn each rupee
of income from services in net profit If the net margin is inadequate the firm
will fail to achieve return on shareholderrsquos funds High net profit ratio will help
the firm service in the fall of income from services rise in cost of production or
declining demand
The net profit is increased because the income from services is increased The
increment resulted a slight increase in 2007 ratio compared with the year 2006
GRAPHICAL REPRESENTATION
059
030
023
033
042
000
010
020
030
040
050
060
Ratios
2003 2004 2005 2006 2007
Years
NET PROFIT RATIO
Ratios
10 OPERATING PROFIT
(Amount in Rs)
Operating Profit
Year Operating Profit Income From Services Ratio
2003 36094877 36309834 099
2004 27576814 53899084 051
2005 29540599 72728759 041
2006 31586718 55550649 057
2007 67192677 96654902 070
Interpretation
The operating profit ratio is used to measure the relationship between net profits
and sales of a firm Depending on the concept it will decide
The operating profit ratio is increased compared with the last year The earnings
are increased due to the increase in the income from services because of
Operations amp Maintenance fee So the ratio is increased slightly compared with
the previous year
GRAPHICAL REPRESENTATION
099
051
041
057
070
000
010
020
030
040
050060
070
080
090
100
Ratios
2003 2004 2005 2006 2007
Years
OPERATING PROFIT RATIO
Ratios
11 RETURN ON TOTAL ASSETS RATIO
(Amount in Rs)
Return on Total Assets Ratio
Year Net Profit After Tax Total Assets Ratio
2003 21123474 78572171 027
2004 16125942 88438107 018
2005 16929227 89158391 019
2006 18259580 106385201 017
2007 40586359 129805102 031
Interpretation
This is the ratio between net profit and total assets The ratio indicates the return
on total assets in the form of profits
The net profit is increased in the current year because of the increment in the
income from services due to the increase in Operations amp Maintenance fee The
fixed assets are reduced due to the charge of depreciation and no major
increments in fixed assets but the current assets are increased because of sundry
debtors and that effects an increase in the ratio compared with the last year ie
2006
GRAPHICAL REPRESENTATION
027
018 019017
031
000
005
010
015
020
025
030
035
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON TOTAL ASSETS
Ratios
12 RESERVES amp SURPLUS TO CAPITAL RATIO
(Amount in Rs)
Reserves amp Surplus To Capital Ratio
Year Reserves amp Surplus Capital Ratio
2003 65599299 2079920 31542004 34582554 18719280 1852005 51511781 18719280 2752006 37754372 18719280 2022007 78340733 18719280 419
Interpretation
The ratio is used to reveal the policy pursued by the company a very high ratio
indicates a conservative dividend policy and vice-versa Higher the ratio better
will be the position
The reserves amp surplus is decreased in the year 2006 due to the payment of
dividends and in the year 2007 the profit is increased But the capital is
remaining constant from the year 2004 So the increase in the reserves amp surplus
caused a greater increase in the current yearrsquos ratio compared with the older
GRAPHICAL REPRESENTATION
3154
185 275 202419
-
500
1000
1500
2000
2500
3000
3500
Ratios
2003 2004 2005 2006 2007
Years
RESERVES amp SRUPLUS TO CAPITAL RATIO
Ratios
OVERALL PROFITABILITY RATIOS
13 EARNINGS PER SHARE
(Amount in Rs)
Earnings Per Share
Year Net Profit After Tax No of Equity Shares Ratio
2003 21123474 207992 101562004 16125942 1871928 8612005 16929227 1871928 9042006 18259580 1871928 9752007 40586359 1871928 2168
Interpretation
Earnings per share ratio are used to find out the return that the shareholderrsquos earn
from their shares After charging depreciation and after payment of tax the
remaining amount will be distributed by all the shareholders
Net profit after tax is increased due to the huge increase in the income from
services That is the amount which is available to the shareholders to take There
are 1871928 shares of Rs10- each The share capital is constant from the year
2004 Due to the huge increase in net profit the earnings per share is greaterly
increased in 2007
GRAPHICAL REPRESENTATION
10156
861904 975
2168
000
2000
4000
6000
8000
10000
12000
Ratios
2003 2004 2005 2006 2007
Years
EARNINGS PER SHARE
Ratios
14 PRICE EARNINGS (PE) RATIO
(Amount in Rs)
Price Earning (PE) Ratio
Year Market Price Per Share Earnings Per Share Ratio
2003 3254 10156 0322004 2847 861 3302005 3752 904 4152006 3017 975 3092007 5185 2168 239
Interpretation
The ratio is calculated to make an estimate of application in the value of share of
a company
The market price per share is increased due to the increase in the reserves
amp surplus The earnings per share are also increased greaterly compared
with the last year because of increase in the net profit So the ratio is
decreased compared with the previous year
GRAPHICAL REPRESENTATION
032
330
415
309
239
000
050
100
150
200
250
300
350
400
450
Ratios
2003 2004 2005 2006 2007
Years
PE RATIO
Ratios
15 RETURN ON INVESTMENT
(Amount in Rs)
Return on Investment
Year Net Profit After Tax Share Holders Fund Ratio
2003 21123474 67679219 031
2004 16125942 53301834 03
2005 16929227 70231061 024
2006 18259580 56473652 032
2007 40586359 97060013 042
Interpretation
This is the ratio between net profits and shareholders funds The ratio is
generally calculated as percentage multiplying with 100
The net profit is increased due to the increase in the income from services ant
the shareholders funds are increased because of reserve amp surplus So the ratio
is increased in the current year
GRAPHICAL REPRESENTATION
031 030
024
032
042
000
005
010
015
020
025
030
035
040
045
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON INVESTMENT RATIO
RatioS
DATA COLLECTION
The data can be of two types
Primary Data
Secondary Data
Primary Data
Primary data are those data which is originally collected afresh
Secondary Data
Secondary data are those data which are already collected and stored and which has
been passed through statistical research
In this project Secondary data has been collected from following sources-
Annual report
Books
MIS
Other material and report published by company There are two methods to prepare
the Cash flow Statement
ndirect Method
I
The indirect method (or reconciliation method) starts with net income and converts it
to net cash flow from operating activities In other words the indirect method adjusts
net income for items that affected reported net income but did not affect cash To
compute net cash flow from operating activities non-cash charges in the income
statement are added ack to net income and non-cash credits are deducted
b
Direct Method
Under the direct method the statement of cash flows reports net cash flow from
operating activities as major classes of operating cash receipts (eg cash collected from
customers and cash received from interest and dividends) and cash disbursements (eg
cash paid to suppliers for goods to employees for services to creditors for interest and
to government authorities for taxes)
INDIRECT VERSUS DIRECT METHOD
The most contentious decision that the FASB faced in issuing Statement No 95 was
choosing between the direct method and the indirect method of determining net cash
flow from operating activities Companies lobbied against the direct method urging
adoption of the indirect method Commercial lending officers expressed a strong
preference to the FASB hat the direct method be required
tCF-Page 3 of 5
In Favor of the Direct Method
The principal advantage of the direct method is that it shows operating cash receipts and
payments That is it is more consistent with the objective of a statement of cash flows to
provide information about cash receipts and cash payments than the in-direct method
which does not report operating cash receipts and payments
Supporters of the direct method contend that knowledge of the specific sources of
operating cash receipts and the purposes for which operating cash payments were made
in past periods is useful in estimating future operating cash flows Furthermore in-
formation about amounts of major classes of operating cash receipts and payments is
more useful than information only about their arithmetic sum (the net cash flow from
operating activities) Such information is more revealing of an enterprises ability (1) to
generate sufficient cash from operating activities to pay its debts (2) to reinvest in its
operations and (3) to make distributions to its owners
Many corporate providers of financial statements say that they do not currently collect
information in a manner that allows them to determine amounts such as cash received
from customers or cash paid to suppliers directly from their accounting systems But
supporters of the direct method contend that the incremental cost of assimilating such
operating cash receipts and payments data is not significant
In Favor of the Indirect Method
The principal advantage of the indirect method is that it focuses on the differences
between net income and net cash flow from operating activities That is it provides a
useful link between the statement of cash flows and the income statement and balance
sheet
Many providers of financial statements contend that it is less costly to adjust net income
to net cash flow from operating activities (indirect) than it is to report gross operating
cash receipts and payments (direct) Supporters of the indirect method also state that the
direct method which effectively reports income statement information on a cash rather
than an accrual basis may erroneously suggest that net cash flow from operating
activities is as good as or better than net income as a measure of performance
Special Rules Applying to Direct and Indirect Methods
Companies that use the direct method are required at a
minimum to report separately the following classes of
operating cash receipts and payments
Receipts
1048713 Cash collected from customers (including lessees licensees etc)
1048713 Interest and dividends received
1048713 Other operating cash receipts if any
Payments
1048713 Cash paid to employees and suppliers of goods or services (including
suppliers of
insurance advertising etc)
1048713 Interest paid
1048713 Income taxes paid
1048713 Other operating cash payments if any
Companies using the indirect method are required to disclose separately changes in
inventory receivables and payables to reconcile net income to net cash flow from
operating activities In addition interest paid (net of amount capitalized) and income
taxes paid must be disclosed elsewhere in the financial statements or accompanying
notes
The FASB requires these separate and additional disclosures so that users
may approximate the direct method Also an acceptable alternative presentation
of the in-direct method is to report net cash flow from operating activities as a
single line item in the statement of cash flows and to present the reconciliation
details elsewhere in the financial statements
FINDING OF SUDY
According to cash flow statement of the company The finding of the study are as
follows-
The company has not taken any loans secured or unsecured from companies
firms or other parties
The company has not accepted any deposit from the public during the year
The company is not a sick industrial company
The company has not granted any loan secured or unsecured to company firms
or other parties
The company has paid the entire long term and short term borrowing during the
year
The company has buy back the companyrsquos own share this year
The interest paid in 2008 is more than the
There has been a significant decline in volume over the years from 2001-02
to 2005-06 as can be seen in the graph below
Table 43
The Net sales of Tractor has increased considerably from 2004-05 to 2007-08
This can be mainly attributed to changes in Variable and material costs and in
the price
The Net sale of Tractor has increased considerably from 2004-05 to 2007-08
that is an decrease of Rs7216 per tractor This can be mainly attributed to
changes in
Variable and material costs and in the prices
RECOMMENDATIONS
According to cash flow statement of the company The suggestions of the study
are as follows-
The time durations for training program have to increase
Buy regular review and consultations develop a career progression
which is sensitive to performance and ability
Create an environment where by people are trend developed to enable
The to take advantages of opportunities that arise
The jab can be redesigned where the work man stay in what is normally
the same job but has elements of it changed
The principle amount must be paid in time which can be reducing the
interest the out flow
The purchase of the fixed asset must be made only when there is extreme
requirement
In order to avoid taxes the company should go for more investment
The companyrsquos borrowings should go for more investment
o The company should try to reduce the depreciations as maximum
as possible
CONCLUSION
The study on competency level of employees at ESCORTS PVTLTD gave an
insight about the acceptance of competency mapping by employees
The employees at Ymi welcome the introduction of competency mapping in their
organization as they felt it was very much essential in enhancing their skills and
organizational development
The organization has provided the recourses guidance and support to facilitate the
introduction of competency level easily and develop the employees in such a way
that they can face any kind of challenge
However the level of competency in employees is found to be satisfactory
Providing proper training education and guidance to the employees can enhance
the level
This study was mainly carried out to find out whether thee competency mapping
being followed by the company is effective till date If the competency mapping
and fitment to the organization
By looking at the graphs and tables it is quite that the employees still are not up to
the level of competent pool they still have to be trained and made competent in
order to fill the gap As the organization has just applied the mapping it has to see
to that it meets all the requirements for competency mapping
Therefore the graphs make it quite clear that the potential of the employees is not
up to the mark and ie they are not competent enough to meet the competency-
mapping requirement Hence by further training and counseling this gap can be
closed
This report includes the training requirements of employees and it highlights skills
possessed by each employee and skill required All employees get training so that
skill can be improved and maintain balance between standard performance with
their actual performance to avoid gap
APPENDIX
QUESTIONNAIRE
Consumer Survey
Name _____________________________
Age _____________________________
Sex
Male
Female
Occupation
Businessman
Service man
Professional
Others
Monthly income brackets
Below 15000
15000- 20000
20000-30000
30000 and above
of your savings _________
Do you invest
Yes
No
If yes then where do you invest your money
Bank
Insurance
funds
Others
Why do you made that statement
Return
Risk hedging
Tax benefits
Other reasons (specify) _______
Who influence your cash decision
Relatives and friends
Family members
Advisors experts
You yourself
If no then why
Do not know where to invest
Satisfied with your current investment return
Donrsquot want take risk
Other reasons
__________________________________________________________________
___________________
Do you know about CF statement
Yes
No
If yes then from where you have come to know about an cash statement
Advertisements on newspapers
Friends and relative
Agents experts
Other source
What do you think about cash statement
It means investing only in share market
Constant watch must be kept always
Return is not satisfactory
Other perception
__________________________________________________
Can you recall any cash flow of company
___________________________
Would you want to made CF of an org
Yes
No
If yes then why
_______________________________________________________
If no then why
_______________________________________________________
BIBLIOGRAPHY
List of Books
1 PANDEY IM - FINANCIAL MANAGEMANT
2 KHAN MY AND JAIN PK -FINANCIAL MANAGEMANT
3 SMITH KV ndash MANAGEMANT OF WORKING CAPITAL
3 COMPANY RECORDS
4 JOURNAL
5 REPORTS
WEBLIOGRAPHY
1 wwwescortspvtltdcom
2 wwwgooglecom
To find out the relative importance of different components of the financial position
of the firm
bull To identify the reasons for change in the profitability financial position of the
firm and
bull To assess the short term as well as the long term liquidity position of the
firm
TECHNIQUES TOOLS OF THE AFS
AFS can be undertaken by different persons and for different purposes therefore the
methodology adopted for the AFS may be carrying from one situation to another However
the following are some of the common techniques of the AFS
bull Comparative financial statements
bull Common-size financial statements
bull Trend percentage analysis and
bull Ratio Analysis
COMPARATIVE FINANCIAL STATEMENTS
In CFS two or more BS andor the IS of a firm are presented simultaneously in columnar
form The Financial data for two or more tears are placed and presented in adjacent columns
and thereby the financial data is provided at times perspective in order to facilitate periodic
comparison In CFS the BS and the IS for number of years are presented in condensed
form for year to year comparison and to exhibit the magnitude and direction of changes
The CFS helps a financial analyst of the firm and in establishing operating and
positional trend of the firm The CFS may be prepared to show
1 The absolute amount of different items in monetary terms
2 The amount of periodic changes in monetary terms
1 The percentages of periodic changes to reveal the proportionate changes
The CFS can be prepared for both the BS and the IS
CORE COMPETENCE OF ESCORTS
Customer 1
We put customers first in everything we do We take decisions keeping the customer in
mind
Challenging Spirit
We strive for excellence in everything we do and in the quality of goods amp services we
provide We work hard to achieve what we commit amp achieve results faster than our
competitors and we never give up
Team-work
We work cohesively with our colleagues as a multi-cultural team built on trust respect
understanding amp mutual co-operation Everyones contribution is equally important for
our success
Frank amp Fair Organization
We are honest sincere open minded fair amp transparent in our dealings We actively
listen to others and participate in healthy amp frank discussions to achieve the
organizations
A firm undertakes numerous during a year and most of these transactions during a year and
most of these transactions may affect one or the other current account ie most of these
transactions May results in the flow of the WC Neither is it necessary nor practical to
identify the effect of each and every transaction on the WC These transactions instead are
considered and analyzed in a collective form and then their effect on the WC is identified
SCFP (CASH BASIS) OR
THE CASH FLOW STATEMENT
The CFS attempts to analyze the transactions of the firm in terms of cash ie the transactions
generating cash and using cash The focus in the CFS is on cash rather than on WC The
sources of cash may be the cash profits earned by the firm issue of capital for cash issue of
other securities for cash borrowings sale of assets investment redemption of debenture or
preference share repayment of loan payment of tax dividend distribution etc Thus the
CFS summarizes the cash inflows and outflows
An analysis of cash flows is useful for short-run planning A firm needs sufficient cash to
debts maturing in the near future to pay interest and other expenses and to pay dividends to
shareholders The firm can make projections of cash flows and outflows for the near future to
determine the availability of cash This cash balance can be matched with the firms need for
cash during the period and accordingly arrangements can be made the deficit or invest the
surplus cash temporarily A historical analysis of cash flows provides insight to prepare
reliable cash flow projections for the immediate future
A statement of changes in financial position on cash basis commonly known as cash flow
statement summarizes the causes of changes in cash position between dates of two balance
sheets It indicates the sources amp uses of cash The cash flow statement is similar to the fund
flow statement except that it focuses attentions on cash instead of working capital (funds)
Thus this statement analyses change in non-current accounts as well as current accounts
(other than cash) to determine the flow of cash
The CFS is based on the concept on the WC Where as the CFS is based in cash which is only
the element of WC Thus the CFS provides details of cash movements whereas the FFS
provides the details of funds movements
The CFS considers only the actual movement of cash whereas the FFS considers the
movements of the funds as defined in terms of net working capital
CASH-FLOW STATEMENT
A cash-flow statement is a statement showing inflows (receipts) and outflows (payments) of
cash during a particular period In other words it is a summary of sources and applications of
Cash during a particular span of time It analyses the reason for changes in balance of cash
between the two balance sheet dates The term Cash here stands for cash and cash
equivalents
A cash-flow statement includes only those items which affect cash As such the cash-flow
statement is called a statement of changes in financial position - cash basis
A cash - flow statement can be for the past or can be projected for a future period
OBJECTS OR USES OF CASH-FLOW STATEMENT
The main objectives behind preparing a cash-flow statement can be laid down as under-
bull USEFUL FOR SHORT-TERM FINANCIAL PLANNING-
A cash-flow statement provides information for planning the short-term financial needs of the
firm Since it provides information regarding the sources and utilization of cash during a period
it become easier for the management to assess whether it will have Adequate cash to meet day-
to-day expenses and pay the long - term loans and interest Thereon and whether it has enough
cash to pay for the purchase of fixed assets or not
USEFUL FOR PREARING THE CASH BUDGET-
A cash-flow statement prepared for the future period is helpful in preparing a cash budget It
informs the management about the future period is helpful in preparing a cash budget It informs
the management about the surplus or deficit periods of cash ie in which months the payments
will be in excess of receipts It helps in planning the investment of surplus cash in short-term
investment and to plan short-term credit in advance of deficit periods
bull COMPARISON WITH CASH BUDGET-
A cash budget is prepared at the commencement of the year whereas a cash flow Statement is
prepared at the end of the year A comparison between the two helps in ascertaining the extent
to which the financial resources of the firm have been generated and used according to the plan
Causes of variances between the figures of two statements can be analyzed and proper
corrective measures may be takes
bull STUDY OF THE TREND OF CASH RECEIPTS AND PAYMENTS-
A cash-flow statement reveals the speed at which the cash is being generated from debtors stock
and other current assets the speed at which the current liabilities are being paid It enables the
management to assess the true position of the cash in future
bull IT EXPLAINS THE DEVIATIONS OF CASH FROM EARNINGS-
A firm may earn huge profits yet it may have paucity of cash or when it suffered a loss it may
still have plenty of cash A cash flow statement explains the reasons for it
HELPFUL IN ASCERTAINING CASH-FLOW FROM VARIOUS
ACTIBITIES SEPARATELY-
A cash-flow statement aims at highlighting the cash flow from operating investing and
financing activities separately It includes how much cash has been generated or used in these
activities
bull HELPFUL IN MAKING DIVIDEND DECISIONS-
Dividend must be paid within 42 days of its declaration Hence the management takes the help of
cash-flow statement to ascertain the position of cash generated from operating activities which
can be used for payment of dividend
IMPORTANCE AND RELEVANCE OF CFS
The CFS has gained importance in view of the fact that there are many managerial Decisions
which are taken in the light of the cash availability or cash position of the firm
For example declaration of dividend by the company requires cash disbursement and
Therefore the Board of Directors must consider the cash position before proposing a dividend
The CFS also provides information for the short term financial planning and in particular the
short term cash needs of the firm
In view of increasing importance and relevance of the CFS the clause 32 of the Listing
agreement (between a Company and the Stock Exchange where the shares proposed to be listed)
has been amended by the SEBI As a result the listed companies in India are now required to
supply a copy of the CFS to each shareholder as a part of Annual Report As a result the listed
companies have started a practice of sending a CFS for which the BS has been prepared as
apart of the Annual Report of the company
DIFFRENCE BETWEEN CASH - FLOW STATEMENT AND
CASH BUDGET
There is not much difference between cash flow statement and a cash budget The
only difference is that a cash flow statement is prepared for a past period where as cash
budget is prepared for a future period Hence it is of limited use as far as the future
periods are concerned A cash budget is therefore prepared showing how much cash is
likely to be received and what will be the disbursements during a future period of time
Thus a cash budget indicates in which months there will be surplus cash and in which
moths there will be deficiency of cash resources The management can then take suitable
decision to invest the surplus cash or make arrangement for the deficiency of cash at the
required time
LIQUIDITY
It does not present true picture of the liquidity of the firm the liquidity does
not depend upon cash alone Liquidity also depends upon those assets
which can be converted into cash easily
bull Exclusion of these assets obstructs the true reporting of the ability of the firm to
meet its liabilities when they become due for payment
bull The possibilities of window - dressing is higher in case of cash position in
comparison to the working capital position of the firm
bull The cash balance can be easily maneuvered by postponing purchases and other
payments and by rapidly collecting cash from debtors before the balance sheet date
Hence a fund - flow statement presents a more realistic picture than a cash flow
statement
bull Cash flow statement ignores non- cash charges Hence the true position of the
enterprise cannot be judged by cash flow statement
bull It is prepared on cash basis and hence ignores one of the basic concept of accounting
namely accrual concept
PROCEDURE OF PREPARING CASH FLOW STATEMENT-
The institute of charted accountants of India has issued accounting standards (as)-3 revised for
preparing a cash flow statement This accounting standard has been made mandatory in respect
of accounting periods commencing on or after 1st April 2001 for certain enterprises These
enterprises are-
bull Enterprises whose equity or debt securities are listed on a recognized stock exchange in
India And enterprise that are in the process of issuing equity or debt securities that will
be listed on a recognized stock exchange in India
bull All other commercial industrial and business enterprises whose turnover for accounting
period Rs 50 crores
As such the cash flow statement has been prepared according to as -3 revised in this project
According to as-3 revised the cash flow statement summarizes the cash inflows and cash
outflows and the net changes (increase or decrease) in cash and cash equipment resulting from
operating investing and financing activities of a firm during a period The following terms are
used for preparing a cash flow statement
CASH-
It compares cash in hand and demands with banks
CASH EQUIVALENTS-
There are short - term highly liquid investments that are readily into known amounts of cash
and which present insignificant risk of changes in their values Normally an investment will be
termed as cash equivalent only if it has a short maturity period say three months or less from the
date of its acquisition Examples of cash equivalent are treasury bills commercial papers etc
Which are purchased with cash that is in excess of immediate needs investment in shares are
excluded from cash equivalents unless they are cash equivalent in reality For example the
preference shares of the company which are purchased shortly before their redemption date will
be included in cash equivalents provided there is only an insignificant risk of failure of the
company in repaying the amount at the date of the maturity
CLASSIFICATION OF CASH FLOW-
According to as -3 (revised) cash flow statement should be presented in a manner that it reports
inflows of cash by classifying them into three categories namely operating investing and
financing activities Classification of all activities into these activities on the cash and cash
equivalents of the enterprise such information will be helpful in evaluating the relationships
among these three activities are explained as below
CASH FLOW FROM OPERATING ACTIVITIES-
Operating activities are the main revenue generating activities of an enterprise As such they
include cash flows from those transactions and events which enter into the ascertainment of
net profit or loss of the enterprise Examples of cash flows arising operating activities are
bull Cash receipts from the sale of goods and rendering of services
bull Cash receipts from royalties fees commissions and other revenue
bull Cash payments to suppliers for goods and services
bull Cash payments to and on behalf of employees
bull Cash receipts and cash payments of an insurance enterprise for premiums and claims
annuities and other policy benefits
bull Cash receipts and payments relating to future contracts forward contracts option
contracts and swap contracts when the contracts are held for dealing or trade purpose and
bull Cash payments of refunds of income taxes unless they can be specifically identified with
financing and investing activities
CASH FLOW FROM INVESTING ACTIVITIES-
Investing activities include the purchase and sale of long term assets such as land building plant
and machinery etc not held for resale These activities also include the purchase and sale of such
investment which are not including in cash equipments Cash flow from investing activities
discloses the expenditures incurred for resources intended to generate future income and cash
flows
Examples cash flow arising from investing activities are
bull Cash payments to acquire fixed assets (including intangible)
bull Cash receipts from sale of fixed assets (including intangibles)
bull Cash payments to acquire shares warrants or debt instruments of other enterprises
(other than receipts for those instruments considered to be cash equivalents)
bull Cash receipts from sale of shares warrants or debt instruments of other enterprises (other
than receipts for those instruments considered to be cash equivalents)
bull Cash advances and loans made to third parties In case of financial enterprises these will
be treated as cash flow from operating activities
bull Cash receipts from the repayment of advances and loans made to third parties In case of
financial enterprises these will be treated as cash flow from operating activities
bull Cash receipts of insurance claim for property involved in accident and
bull Cash receipts of interest and dividend In case of financial enterprise these will be treated
cash flow from operating activities
CASH FLOW FROM FIANCING ACTIVITIES-
Financing activities are the activities that result in change in capital and borrowing of the
enterprise
Examples of cash flows arising from financing activities are
bull Cash receipts from issuing shares or other similar instruments
bull Cash receipts from issuing debentures loans bonds and other short term or long term
borrowing
bull Cash repayment of amounts borrowed buy back of equity shares redemption of
preference shares debentures loans bonds etc
bull Cash payment of interest and dividend
IMPORTANT NOTE
In case of financial enterprise such as bank or mutual fund company cash Outflow
and cash inflow arising from the purchase and sale of securities will Be treated as
flows from operating activities This is because purchase and sale of securities is a
part of operating activity in case of financial enterprise In addition interest paid
and interest received as well as dividends received will also be treated as cash flow
from operating activities in case of financial Enterprises
CASH FLOW STATEMENT
(DIRECT METHOD)
CASH FLOW FROM OPERATING ACTIVITIES
Cash receipts from costumers
Cash paid to suppliers and employers ()
Cash generated from operations
Income tax paid ()
Cash flows from extraordinary item
plusmn Extra ordinary items
Net cash from operating activities
CASH FLOW FROM INVESTING ACTIVITIES-
Purchase of fixed assets
Proceed from sale equipment ()
Interest received
Dividend received ()
Net cash from investing activities
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from insurance of share capital
Proceeds from long- term borrowings ()
Repayment of from long-term borrowings
Interest paid
Dividend paid ()
Net cash from financing activities
Net increase in cash and cash equivalent
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
SOME SPECIAL TERMS-
i) INTERSET AND DIVIDEND-
Cash inflow from interest and dividends and cash outflow on account of interest and
dividends should be disclosed separately Cash inflow arising from interest and dividends
received should be shown as cash flow from investing activities where as cash outflow
disclosed outflow on account of interest and dividend paid should be shown as cash flow
from financing activity
ii) TAXES ON INCOME-
Tax paid on income is a part of cash flow from operating activity Hence taxes paid are
shown as a deduction under cash flow from operating activity
iii) EXTRA ORDINARY ITEMS-
Cash flow relating to extra ordinary items such as bad debts recovered Claims received from
insurance companies winning of a lottery or a law etc Should be disclosed separately as
arising from operating investing or financing activities For example the amount received
for insurance company on account of loss of stock by fire Earthquake and floods etc Should
be reported as cash flow from operating activities
iv) SIGNIFICANT NON - CASH TRANSACTION-
There are some investing and financing activities which do not require the use of cash or
cash equivalents Such non cash activities should be excluded from the cash flow statement
Examples are the acquisition of assets by issue of debentures or shares conversion of
shares into debentures etc Such significant on non cash transaction should be disclosed
outside the cash flow statement
CASH FLOW STATEMENT
(INDIRECT METHOD)
CASH FLOW FROM OPERARATTNG ACTIVITIES
Net profit before taxation and extraordinary item
Adjustment for
Depreciation
Foreign exchange loss
Interest income
Dividend income
Interest expense
Operating profit before working capital changes
Increase in sundry debtors
Decrease in inventories
Decrease in sundry creditors
Cash generated from operations
Income tax paid ()
Cash flow before extraordinary item
plusmn Extra - ordinary items
Net cash from operating activities
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of fixed assets ()
Proceeds from sale of equipment
Interest received
Dividend received ()
Net cash from investing activities
CASH FLOW FROM FINANCING ACTIVITIES-
Proceeds from insurance of share capital
Proceeds from long - term borrowings
Repayments of from long - term borrowings ()
Interest paid ()
Dividend paid ()
Net cash from financing activities
Net increase in cash and cash equivalent
Cash and cash equivalents at beginning of period
CHANGES IN CASH FLOWS
Changes in cash flows can be treated to the following
1 Net profit will increase the cash flows these cash flows will be
increased further if there are any non-cash changes (such as depreciation
and amortization)
2 Any payment of dividends will decrease the cash flows as will the
repayment of debt an issue of share or debt will also increase the
cash flows
3 An increase in non-cash assets will decrease cash flows increase in
current assets and fixed assets will result in drain on cash flows
Thus a statement of changes in cash flows ie the cash flow statement
classifies all Changes into one of three categories - operating investing or
financing activities Therefore the preparation of a statement of changes in cash
flows requires classification of changes in liabilities shareholders equity and
non-cash assets into one of these categories although some items will not fit
easily onto one other
h equivalent at end of period
STEP- BY-STEP PROCEDURE TO PREPARE CFS
1 Calculate the net increase or decrease in cash and cash equivalents-
For this purpose the opening balance of total cash and cash equivalents is compared with the
closing balance of cash and equivalents
Increasedecrease in cash and equivalents
Opening balance Closing Balance
Cash in hand
Cash in bank
Short-term Investment
Total
The difference between the total of opening and closing balance will be increased or
Decreased in cash equivalents during the period It may be noted that if there are only one or
two of items of cash etc
2 Net Cash flaw from operating activities-
The term operating refers to the normal purchase of goods and services On the basis of the
information contained in the comparative BS s and the IS and the additional Information the
net cash flow generated or use by the operating activities may be ascertained The IS prepared
by the firm gives the net profit figure earned by the firm On actual basis ie all items in the
IS are incorporated on the basis of earnedaccrued even
3 If not resulting in cash movements-
So the profit or loss as by the IS may not result in increase or decrease in cash balance by the
SYNOPSIS
INTRODUCTION
ESCORTS PVT LTD is a private limited company not listed in a stock exchange of India
and employees 900 highly trained personnel Its manufacturing plants are strategically located
in close proximity to its customers at Faridabad (Haryana) Noida (UP)
OBJECTIVES OF THE STUDY
bull To find the movement of cash inflow and cash outflow
bull To make the comparison between cash inflow and
bull Cash outflow
bull To prepare the Cash Flow Statement
bull To analyze the Balance Sheet of the company in terms of Cash Flow Statement
bull To focus on various activities of the organization in terms of Operating
Financing Investment
SCOPE OF THE STUDY
Financial resources are the assets for the company and their productivity is key
factor for profitability It is necessary to know their problems their knowledge
skills abilities amp the measures that can be taken to reduce them By analyzing this
top management can build good relations with the employees
The whole study is to determine the competencies of different employees who are
working in ESCORTS PVT LTD By analyzing it the top management can
introduce the concept of competency mapping in the organization Through this
management can attempt to use more suitable strategies towards the human
resource development
The research is confined to elicit the existing gap between the standard skill
required to perform the job and the skill processed by the employees at ESCORTS
PVT LTD And to provide them suitable training program to over come those gaps
for the better utilization of human resources
RELEVANCE
The scope of the study was confined to the outside parties like creditors
shareholders government etc Who want to invest their money in the
company
The benefit of the report for the company is that through this report they can come
to know about the cash flow statements of the company
This study also unable the company that their cash is not utilizing in unnecessary
things
The benefit of the report for the researcher is that it has helped to get knowledge
about the cash inflow and cash
RESERRCH METHODOLOGY-
RESEARCH DESIGN
bull The study was conducted under well- structured approach
bull The project lasted for 4 weeks and the year 2009 ie from 08 July to 12
Aug2009
bull The questionnaire method amp personal interview method was used to collect
the primary data for the study
The secondary data is collected from Internet amp company training material and
many other company materials
SAMPLE DESIGN
The process of extracting a sample from a population is called sampling
procedure The selection of sampling procedure to conduct the research
depends upon the nature of the study and the objective to be accomplished
Judgment sampling technique is adopted to select the respondents in this
study The sample design included the various departments in the YAMAHA
MOTORS PVT LTD
Methodology of date collection
bull Conducting personal interview
bull Data collection from primary and secondary sources
bull Designing questionnaire
bull Selecting sample size from the sample frame for the survey
bull Questionnaire distribution
bull Analysis of collected data with the help of statistical tools
bull Interpretation of collected data
bull Stating the conclusion based on the entire study
Sampling Technique
The sampling technique used for this research is of non-probability and convenience
sampling
Sample Unit
Employees of the company
Sample Size
For this research study the sample size is 25 respondents
Sources of data
Primary data
Primary data is the data which is collected by the researcher for the first time
and which was not there The tools used to collect the data are-
1)Questionnaire method from the employers in different departments
2) Face to Face personal interactions
Secondary Data
The data already collected is called as secondary data The relevant information
for this study has been collected from secondary source such as
Books
Journal
Reports
Publication by the organizational circulation
Company records
Business bulletins
Internet
Secondary data is also collected from various of the internet and intranet Some
of the website trough which information was gathered was through
HYPOTHESIS
The report is analyzed under the presumption that cash flow position of
YAMAHA MOTORS PVTLTD It can be improved and made effective in
terms of cash flows
In testing the above hypothesis the following aspects will be considered
1 Balance sheet comparisons
2 Presentation of cash flow statement in terms of revised AS-3
LIMITATIONS
The study though conducted to the best of the ability suffers from some
certain limitations There are
The data is secondary one and as such its reliability may be
questioned upon
The time availability for the study is less and as such it hinders thee
progress of the study
Senior officials were rarely approachable
Websites were not giving comprehensive data
Not having face-to-face interaction to get more relevant
information
Analysis and interpretation of data was done on the assumption that
the respondentsrsquo information was online
Information collected was totally subjective
The interviews are done during office hours but could not be done
for the other employees of other
DATA ANALYSIS
ESCORTS PVT LTD
CASH FLOW STRATEMENT
Year Ended Year Ended
30092009 30092008
Rs Crores Rs
Crores
A Cash Flow from Operating Activities
Net profit before tax (1733) 3444
Adjustment for
Loss on sale Provision for diminution in value of Long Term
Investments amp loans to Group Companies 189 4018
Gain on sale of Long Term Investments (122) (9492)
Gain on sale of Asset (013) -
Depreciation 4497 3955
Misc Exp Assets Write off Provisions 808 750
Interest Expense 7222 7999
Dividend Income (002) (001)
Interest Income (2082) -
Operating Profit before working capital changes 8764 10673
Adjustments for
Trade and other Receivables (8817) (12035)
Inventories 1379 (4692)
Trade Payables 6705 19046
Miscellaneous Expenditure (750) (511)
(1483) 1808
Cash Generated from Operations 7281 12481
Direct Taxes (Paid)Refunds (1785) 3166
Net Cash Flow from operating activities 5496 15647
B Cash Flow from Investing Activities
Purchase of Fixed Assets (3095) (2794)
Proceeds from sale of Fixed Assets 086 177
Movement in Loans and Advances (1627) (1644)
Sale of Investments 3233 11452
Short Term Deposits with schedule Banks (231) (1048)
Interest Received 2070 -
Dividend Received 002 001
Net Cash Flow from Investing activities 438 6144
Proceeds from Share Capital amp Securities Premium 11444 -
Proceeds from Long Term Borrowings 8660 -
Less Repayment of Long Term Borrowings (054) (7896)
Proceeds (Repayment) from short term borrowings (net) (22726) -
Interest Paid (7740) (8223)
Net Cash used in financing activities (10416) (16119)
Net Increase(Decrease) in Cash and Cash equivalents (4482) 5672
Cash and Cash equivalents as at 01102008 10565 4893
Cash and Cash equivalents as at 30092009 6083 1056
ANALYSIS OF CASH FLOW
From the cash flow statements of the ESCORT PVTLTDIt can be analyzed
from the two years that the net cash balance of the company has increased
manifold in 30-09-2008 than the year 30-09-2009
The net profit in 30-09-2008 is higher than the 30-09-2009 but due to certain
changes there has been increase in the cash balance
The interest paid this year is ore of the last year which implies that thee
company has not repaid his borrowed capital due to which the interest has got
down
The depreciation has increased but it does not affect cash to an extent as it is a
non-cash item In the head of working capital there is drastic change in the cash
balance in the form of ldquoTrade and other Receivables which has affected the cash
balance
There is outflow of cash for receivables rather than the inflow in the last year
So the net effect is that the cash from operating activities has been decreased
two times from the last year
The company has no accumulated losses as at the end of the financial year ie
September 31 2008
Provision for taxation has been made in accordance with the requirement of AS-
22 issued by Institute of Charted Accountants of India
Pursuant to that current year deferred tax liability have been charged to profit amp
loss account
In opinion of the board of directors of thee company the current assets loans
and advances have a value on realization in the ordinary course of the business at
least equal to the amount stated in the balance sheet and provision for all
liabilities have been made
Balance of sundry debtors creditors loans and advances are subject to confirmation by
the concerned parties
METHOD OF ANALYSIS
1 Data analysis is done using the following statistical tools wherever required in
order to extract meaningful information from the collected data
o Simple percentage and averages
o Bar diagram
o Cone diagram
o Pie diagram
2 The collected data from the questionnaire has been put together in the form of
tables
3 Percentage has been calculated wherever necessary for generalization of the
data
4 Data analysis and interpretation has been done on the basis of primary and
secondary data
5 The findings researches have been recorded based on the analysis
6 The study conducted pertains only to YAMAHA MOTORS INDIA PVTLTD
All bank balances (debitcredit) have been confirmed by the concerned bank
Identified from the available information which has been relied upon by the auditors
The names of small-scale industrial units to whom outstanding for more than
thirty days within agreed terms
The company has 9996 of shareholders in its subsidiary company named as
ESCORTS PVT LTD As at 31-03-2008
So the net effect is that the net cash from investing activities has many more
times than the last year which is negative Now the company has repaid its long
term borrowing more than the last year which has decreased the cash balance by
the little amount
Balance with the schedule banks under the head current amp collection account
amounting to represent funds in transit lying with schedule banks pending
transfer against loan liabilities under the head cash credit amp bill discounting
LIQUIDITY RATIO
1 CURRENT RATIO
(Amount in Rs)
Current Ratio
Year Current Assets Current Liabilities Ratio
2003 58574151 7903952 7412004 69765346 31884616 2192005 72021081 16065621 4482006 91328208 47117199 1942007 115642068 30266661 382
Interpretation
As a rule the current ratio with 21 (or) more is considered as satisfactory
position of the firm
When compared with 2006 there is an increase in the provision for tax because
the debtors are raised and for that the provision is created The current liabilities
majorly included Lanco Group of company for consultancy additional services
The sundry debtors have increased due to the increase to corporate taxes
In the year 2006 the cash and bank balance is reduced because that is used for
payment of dividends In the year 2007 the loans and advances include majorly
the advances to employees and deposits to government The loans and advances
reduced because the employees set off their claims The other current assets
include the interest attained from the deposits The deposits reduced due to the
declaration of dividends So the other current assets decreased
The huge increase in sundry debtors resulted an increase in the ratio which is
above the benchmark level of 21 which shows the comfortable position of the
firm
GRAPHICAL REPRESENTATION
741
219
448
194
382
000
100
200
300
400
500
600
700
800
Ratio
2003 2004 2005 2006 2007
Years
CURRENT RATIO
Ratio
2 QUICK RATIO
(Amount
in Rs)
Quick Ratio
Year Quick Assets Current Liabilities Ratio
2003 58574151 7903952 741
2004 52470336 31884616 165
2005 69883268 16065620 435
2006 89433596 47117199 19
2007 115431868 30266661 381
Interpretation
Quick assets are those assets which can be converted into cash with in a short
period of time say to six months So here the sundry debtors which are with the
long period does not include in the quick assets
Compare with 2006 the Quick ratio is increased because the sundry debtors are
increased due to the increase in the corporate tax and for that the provision
created is also increased So the ratio is also increased with the 2006
GRAPHICAL REPRESENTATION
741
165
435
190
381
000
100
200
300
400
500
600
700
800
Ratio
2003 2004 2005 2006 2007
Years
QUICK RATIO
Ratios
3 ABOSULTE LIQUIDITY RATIO
(Amount
in Rs)
Absolute Cash Ratio
Year Absolute Liquid Assets Current Liabilities Ratio
2003 31004027 7903952 392
2004 10859778 31884616 034
2005 39466542 16065620 246
2006 53850852 47117199 114
2007 35649070 30266661 118
Interpretation
The current assets which are ready in the form of cash are considered as absolute
liquid assets Here the cash and bank balance and the interest on fixed assts are
absolute liquid assets
In the year 2006 the cash and bank balance is decreased due to decrease in the
deposits and the current liabilities are also reduced because of the payment of
dividend That causes a slight increase in the current yearrsquos ratio
GRAPHICAL REPRESENTATION
392
034
246
114 118
0
05
1
15
2
25
3
35
4
Ratios
2003 2004 2005 2006 2007
Years
ABSOLUTE CASH RATIO
Ratios
LEVERAGE RATIOS
4 PROPRIETORY RATIO
(Amount
in Rs)
Proprietory Ratio
Year Share Holders Funds Total Assets Ratio
2003 67679219 78572171 086
2004 53301834 88438107 06
2005 70231061 89158391 079
2006 56473652 106385201 053
2007 97060013 129805102 075
Interpretation
The proprietary ratio establishes the relationship between shareholders funds to
total assets It determines the long-term solvency of the firm This ratio indicates
the extent to which the assets of the company can be lost without affecting the
interest of the company
There is no increase in the capital from the year2004 The share holderrsquos funds
include capital and reserves and surplus The reserves and surplus is increased
due to the increase in balance in profit and loss account which is caused by the
increase of income from services
Total assets includes fixed and current assets The fixed assets are reduced
because of the depreciation and there are no major increments in the fixed assets
The current assets are increased compared with the year 2006 Total assets are
also increased than precious year which resulted an increase in the ratio than old
GRAPHICAL REPRESENTATION
086
060
079
053
075
000
010
020
030
040
050
060
070
080
090
Ratios
2003 2004 2005 2006 2007
Years
PROPRIETORY RATIO
Ratios
ACTIVITY RATIOS
5 WORKING CAPITAL TURNOVER RATIO
(Amount
in Rs)
Working Capital Turnover Ratio
Year Income From Services Working Capital Ratio
2003 36309834 50670199 0722004 53899084 37880730 1422005 72728759 55355460 1312006 55550649 44211009 1262007 96654902 85375407 113
Interpretation
Income from services is greatly increased due to the extra invoice for Operations
amp Maintenance fee and the working capital is also increased greater due to the
increase in from services because the huge increase in current assets
The income from services is raised and the current assets are also raised together
resulted in the decrease of the ratio of 2007 compared with 2006
GRAPHICAL REPRESENTATION
072
142 131126
113
000
020
040
060
080
100
120
140
160
Ratio
2003 2004 2005 2006 2007
Years
WORKING CAPITAL TURNOVER RATIO
Ratio
6 FIXED ASSETS TURNOVER RATIO
(Amount in Rs)
Fixed Assets Turnover Ratio
Year Income From Services Net Fixed Assets Ratio
2003 36309834 28834317 126
2004 53899084 29568279 182
2005 72728759 17137310 424
2006 55550649 15056993 369
2007 96654902 14163034 682
Interpretation
Fixed assets are used in the business for producing the goods to be sold This
ratio shows the firmrsquos ability in generating sales from all financial resources
committed to total assets The ratio indicates the account of one rupee
investment in fixed assets
The income from services is greaterly increased in the current year due to the
increase in the Operations amp Maintenance fee due to the increase in extra invoice
and the net fixed assets are reduced because of the increased charge of
depreciation Finally that effected a huge increase in the ratio compared with the
previous yearrsquos ratio
GRAPHICAL REPRSENTATION
126182
424 369
682
000
100
200
300
400
500
600
700
Ratios
2003 2004 2005 2006 2007
Years
FIXED ASSETS TURNOVER RATIO
Ratios
7 CAPITAL TURNOVER RATIO
(Amount
in Rs)
Capital Turnover Ratio
Year Income From Services Capital Employed Ratio
2003 36309834 37175892 0982004 53899084 53301834 1012005 72728759 70231061 1042006 55550649 56473652 0982007 96654902 97060013 100
Interpretation
This is another ratio to judge the efficiency and effectiveness of the company
like profitability ratio
The income from services is greaterly increased compared with the previous year
and the total capital employed includes capital and reserves amp surplus Due to
huge increase in the net profit the capital employed is also increased along with
income from services Both are effected in the increment of the ratio of current
year
GRAPHICAL REPRESENTATION
098
101
104
098
100
094095096097098099100101102103104
Ratios
2003 2004 2005 2006 2007
Years
CAPITAL TURNOVER RATIO
Ratios
8 CURRENT ASSETS TO FIXED ASSETS RATIO
(Amount
in Rs)
Current Assets To Fixed Assets Ratio
Year Current Assets Fixed Assets Ratio
2003 58524151 19998020 2932004 69765346 18672761 3742005 72021081 17137310 4202006 91328208 15056993 6072007 115642068 14163034 817
Interpretation
Current assets are increased due to the increase in the sundry debtors and the net
fixed assets of the firm are decreased due to the charge of depreciation and there
is no major increment in the fixed assets
The increment in current assets and the decrease in fixed assets resulted an
increase in the ratio compared with the previous year
GRAPHICAL REPRESENTATION
293374
420
607
817
000
100
200
300
400
500
600
700
800
900
Ratios
2003 2004 2005 2006 2007
Years
CURRENT ASSETS TO FIXED ASSETS RATIO
Ratios
PROFITABILITY RATIOS
GENERAL PROFITABILITY RATIOS
9 NET PROFIT RATIO
(Amount in Rs)
Net Profit Ratio
Year Net Profit After Tax Income from Services Ratio
2003 21123474 36039834 059
2004 16125942 53899084 030
2005 16929227 72728759 023
2006 18259580 55550649 033
2007 40586359 96654902 042
Interpretation
The net profit ratio is the overall measure of the firmrsquos ability to turn each rupee
of income from services in net profit If the net margin is inadequate the firm
will fail to achieve return on shareholderrsquos funds High net profit ratio will help
the firm service in the fall of income from services rise in cost of production or
declining demand
The net profit is increased because the income from services is increased The
increment resulted a slight increase in 2007 ratio compared with the year 2006
GRAPHICAL REPRESENTATION
059
030
023
033
042
000
010
020
030
040
050
060
Ratios
2003 2004 2005 2006 2007
Years
NET PROFIT RATIO
Ratios
10 OPERATING PROFIT
(Amount in Rs)
Operating Profit
Year Operating Profit Income From Services Ratio
2003 36094877 36309834 099
2004 27576814 53899084 051
2005 29540599 72728759 041
2006 31586718 55550649 057
2007 67192677 96654902 070
Interpretation
The operating profit ratio is used to measure the relationship between net profits
and sales of a firm Depending on the concept it will decide
The operating profit ratio is increased compared with the last year The earnings
are increased due to the increase in the income from services because of
Operations amp Maintenance fee So the ratio is increased slightly compared with
the previous year
GRAPHICAL REPRESENTATION
099
051
041
057
070
000
010
020
030
040
050060
070
080
090
100
Ratios
2003 2004 2005 2006 2007
Years
OPERATING PROFIT RATIO
Ratios
11 RETURN ON TOTAL ASSETS RATIO
(Amount in Rs)
Return on Total Assets Ratio
Year Net Profit After Tax Total Assets Ratio
2003 21123474 78572171 027
2004 16125942 88438107 018
2005 16929227 89158391 019
2006 18259580 106385201 017
2007 40586359 129805102 031
Interpretation
This is the ratio between net profit and total assets The ratio indicates the return
on total assets in the form of profits
The net profit is increased in the current year because of the increment in the
income from services due to the increase in Operations amp Maintenance fee The
fixed assets are reduced due to the charge of depreciation and no major
increments in fixed assets but the current assets are increased because of sundry
debtors and that effects an increase in the ratio compared with the last year ie
2006
GRAPHICAL REPRESENTATION
027
018 019017
031
000
005
010
015
020
025
030
035
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON TOTAL ASSETS
Ratios
12 RESERVES amp SURPLUS TO CAPITAL RATIO
(Amount in Rs)
Reserves amp Surplus To Capital Ratio
Year Reserves amp Surplus Capital Ratio
2003 65599299 2079920 31542004 34582554 18719280 1852005 51511781 18719280 2752006 37754372 18719280 2022007 78340733 18719280 419
Interpretation
The ratio is used to reveal the policy pursued by the company a very high ratio
indicates a conservative dividend policy and vice-versa Higher the ratio better
will be the position
The reserves amp surplus is decreased in the year 2006 due to the payment of
dividends and in the year 2007 the profit is increased But the capital is
remaining constant from the year 2004 So the increase in the reserves amp surplus
caused a greater increase in the current yearrsquos ratio compared with the older
GRAPHICAL REPRESENTATION
3154
185 275 202419
-
500
1000
1500
2000
2500
3000
3500
Ratios
2003 2004 2005 2006 2007
Years
RESERVES amp SRUPLUS TO CAPITAL RATIO
Ratios
OVERALL PROFITABILITY RATIOS
13 EARNINGS PER SHARE
(Amount in Rs)
Earnings Per Share
Year Net Profit After Tax No of Equity Shares Ratio
2003 21123474 207992 101562004 16125942 1871928 8612005 16929227 1871928 9042006 18259580 1871928 9752007 40586359 1871928 2168
Interpretation
Earnings per share ratio are used to find out the return that the shareholderrsquos earn
from their shares After charging depreciation and after payment of tax the
remaining amount will be distributed by all the shareholders
Net profit after tax is increased due to the huge increase in the income from
services That is the amount which is available to the shareholders to take There
are 1871928 shares of Rs10- each The share capital is constant from the year
2004 Due to the huge increase in net profit the earnings per share is greaterly
increased in 2007
GRAPHICAL REPRESENTATION
10156
861904 975
2168
000
2000
4000
6000
8000
10000
12000
Ratios
2003 2004 2005 2006 2007
Years
EARNINGS PER SHARE
Ratios
14 PRICE EARNINGS (PE) RATIO
(Amount in Rs)
Price Earning (PE) Ratio
Year Market Price Per Share Earnings Per Share Ratio
2003 3254 10156 0322004 2847 861 3302005 3752 904 4152006 3017 975 3092007 5185 2168 239
Interpretation
The ratio is calculated to make an estimate of application in the value of share of
a company
The market price per share is increased due to the increase in the reserves
amp surplus The earnings per share are also increased greaterly compared
with the last year because of increase in the net profit So the ratio is
decreased compared with the previous year
GRAPHICAL REPRESENTATION
032
330
415
309
239
000
050
100
150
200
250
300
350
400
450
Ratios
2003 2004 2005 2006 2007
Years
PE RATIO
Ratios
15 RETURN ON INVESTMENT
(Amount in Rs)
Return on Investment
Year Net Profit After Tax Share Holders Fund Ratio
2003 21123474 67679219 031
2004 16125942 53301834 03
2005 16929227 70231061 024
2006 18259580 56473652 032
2007 40586359 97060013 042
Interpretation
This is the ratio between net profits and shareholders funds The ratio is
generally calculated as percentage multiplying with 100
The net profit is increased due to the increase in the income from services ant
the shareholders funds are increased because of reserve amp surplus So the ratio
is increased in the current year
GRAPHICAL REPRESENTATION
031 030
024
032
042
000
005
010
015
020
025
030
035
040
045
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON INVESTMENT RATIO
RatioS
DATA COLLECTION
The data can be of two types
Primary Data
Secondary Data
Primary Data
Primary data are those data which is originally collected afresh
Secondary Data
Secondary data are those data which are already collected and stored and which has
been passed through statistical research
In this project Secondary data has been collected from following sources-
Annual report
Books
MIS
Other material and report published by company There are two methods to prepare
the Cash flow Statement
ndirect Method
I
The indirect method (or reconciliation method) starts with net income and converts it
to net cash flow from operating activities In other words the indirect method adjusts
net income for items that affected reported net income but did not affect cash To
compute net cash flow from operating activities non-cash charges in the income
statement are added ack to net income and non-cash credits are deducted
b
Direct Method
Under the direct method the statement of cash flows reports net cash flow from
operating activities as major classes of operating cash receipts (eg cash collected from
customers and cash received from interest and dividends) and cash disbursements (eg
cash paid to suppliers for goods to employees for services to creditors for interest and
to government authorities for taxes)
INDIRECT VERSUS DIRECT METHOD
The most contentious decision that the FASB faced in issuing Statement No 95 was
choosing between the direct method and the indirect method of determining net cash
flow from operating activities Companies lobbied against the direct method urging
adoption of the indirect method Commercial lending officers expressed a strong
preference to the FASB hat the direct method be required
tCF-Page 3 of 5
In Favor of the Direct Method
The principal advantage of the direct method is that it shows operating cash receipts and
payments That is it is more consistent with the objective of a statement of cash flows to
provide information about cash receipts and cash payments than the in-direct method
which does not report operating cash receipts and payments
Supporters of the direct method contend that knowledge of the specific sources of
operating cash receipts and the purposes for which operating cash payments were made
in past periods is useful in estimating future operating cash flows Furthermore in-
formation about amounts of major classes of operating cash receipts and payments is
more useful than information only about their arithmetic sum (the net cash flow from
operating activities) Such information is more revealing of an enterprises ability (1) to
generate sufficient cash from operating activities to pay its debts (2) to reinvest in its
operations and (3) to make distributions to its owners
Many corporate providers of financial statements say that they do not currently collect
information in a manner that allows them to determine amounts such as cash received
from customers or cash paid to suppliers directly from their accounting systems But
supporters of the direct method contend that the incremental cost of assimilating such
operating cash receipts and payments data is not significant
In Favor of the Indirect Method
The principal advantage of the indirect method is that it focuses on the differences
between net income and net cash flow from operating activities That is it provides a
useful link between the statement of cash flows and the income statement and balance
sheet
Many providers of financial statements contend that it is less costly to adjust net income
to net cash flow from operating activities (indirect) than it is to report gross operating
cash receipts and payments (direct) Supporters of the indirect method also state that the
direct method which effectively reports income statement information on a cash rather
than an accrual basis may erroneously suggest that net cash flow from operating
activities is as good as or better than net income as a measure of performance
Special Rules Applying to Direct and Indirect Methods
Companies that use the direct method are required at a
minimum to report separately the following classes of
operating cash receipts and payments
Receipts
1048713 Cash collected from customers (including lessees licensees etc)
1048713 Interest and dividends received
1048713 Other operating cash receipts if any
Payments
1048713 Cash paid to employees and suppliers of goods or services (including
suppliers of
insurance advertising etc)
1048713 Interest paid
1048713 Income taxes paid
1048713 Other operating cash payments if any
Companies using the indirect method are required to disclose separately changes in
inventory receivables and payables to reconcile net income to net cash flow from
operating activities In addition interest paid (net of amount capitalized) and income
taxes paid must be disclosed elsewhere in the financial statements or accompanying
notes
The FASB requires these separate and additional disclosures so that users
may approximate the direct method Also an acceptable alternative presentation
of the in-direct method is to report net cash flow from operating activities as a
single line item in the statement of cash flows and to present the reconciliation
details elsewhere in the financial statements
FINDING OF SUDY
According to cash flow statement of the company The finding of the study are as
follows-
The company has not taken any loans secured or unsecured from companies
firms or other parties
The company has not accepted any deposit from the public during the year
The company is not a sick industrial company
The company has not granted any loan secured or unsecured to company firms
or other parties
The company has paid the entire long term and short term borrowing during the
year
The company has buy back the companyrsquos own share this year
The interest paid in 2008 is more than the
There has been a significant decline in volume over the years from 2001-02
to 2005-06 as can be seen in the graph below
Table 43
The Net sales of Tractor has increased considerably from 2004-05 to 2007-08
This can be mainly attributed to changes in Variable and material costs and in
the price
The Net sale of Tractor has increased considerably from 2004-05 to 2007-08
that is an decrease of Rs7216 per tractor This can be mainly attributed to
changes in
Variable and material costs and in the prices
RECOMMENDATIONS
According to cash flow statement of the company The suggestions of the study
are as follows-
The time durations for training program have to increase
Buy regular review and consultations develop a career progression
which is sensitive to performance and ability
Create an environment where by people are trend developed to enable
The to take advantages of opportunities that arise
The jab can be redesigned where the work man stay in what is normally
the same job but has elements of it changed
The principle amount must be paid in time which can be reducing the
interest the out flow
The purchase of the fixed asset must be made only when there is extreme
requirement
In order to avoid taxes the company should go for more investment
The companyrsquos borrowings should go for more investment
o The company should try to reduce the depreciations as maximum
as possible
CONCLUSION
The study on competency level of employees at ESCORTS PVTLTD gave an
insight about the acceptance of competency mapping by employees
The employees at Ymi welcome the introduction of competency mapping in their
organization as they felt it was very much essential in enhancing their skills and
organizational development
The organization has provided the recourses guidance and support to facilitate the
introduction of competency level easily and develop the employees in such a way
that they can face any kind of challenge
However the level of competency in employees is found to be satisfactory
Providing proper training education and guidance to the employees can enhance
the level
This study was mainly carried out to find out whether thee competency mapping
being followed by the company is effective till date If the competency mapping
and fitment to the organization
By looking at the graphs and tables it is quite that the employees still are not up to
the level of competent pool they still have to be trained and made competent in
order to fill the gap As the organization has just applied the mapping it has to see
to that it meets all the requirements for competency mapping
Therefore the graphs make it quite clear that the potential of the employees is not
up to the mark and ie they are not competent enough to meet the competency-
mapping requirement Hence by further training and counseling this gap can be
closed
This report includes the training requirements of employees and it highlights skills
possessed by each employee and skill required All employees get training so that
skill can be improved and maintain balance between standard performance with
their actual performance to avoid gap
APPENDIX
QUESTIONNAIRE
Consumer Survey
Name _____________________________
Age _____________________________
Sex
Male
Female
Occupation
Businessman
Service man
Professional
Others
Monthly income brackets
Below 15000
15000- 20000
20000-30000
30000 and above
of your savings _________
Do you invest
Yes
No
If yes then where do you invest your money
Bank
Insurance
funds
Others
Why do you made that statement
Return
Risk hedging
Tax benefits
Other reasons (specify) _______
Who influence your cash decision
Relatives and friends
Family members
Advisors experts
You yourself
If no then why
Do not know where to invest
Satisfied with your current investment return
Donrsquot want take risk
Other reasons
__________________________________________________________________
___________________
Do you know about CF statement
Yes
No
If yes then from where you have come to know about an cash statement
Advertisements on newspapers
Friends and relative
Agents experts
Other source
What do you think about cash statement
It means investing only in share market
Constant watch must be kept always
Return is not satisfactory
Other perception
__________________________________________________
Can you recall any cash flow of company
___________________________
Would you want to made CF of an org
Yes
No
If yes then why
_______________________________________________________
If no then why
_______________________________________________________
BIBLIOGRAPHY
List of Books
1 PANDEY IM - FINANCIAL MANAGEMANT
2 KHAN MY AND JAIN PK -FINANCIAL MANAGEMANT
3 SMITH KV ndash MANAGEMANT OF WORKING CAPITAL
3 COMPANY RECORDS
4 JOURNAL
5 REPORTS
WEBLIOGRAPHY
1 wwwescortspvtltdcom
2 wwwgooglecom
COMPARATIVE FINANCIAL STATEMENTS
In CFS two or more BS andor the IS of a firm are presented simultaneously in columnar
form The Financial data for two or more tears are placed and presented in adjacent columns
and thereby the financial data is provided at times perspective in order to facilitate periodic
comparison In CFS the BS and the IS for number of years are presented in condensed
form for year to year comparison and to exhibit the magnitude and direction of changes
The CFS helps a financial analyst of the firm and in establishing operating and
positional trend of the firm The CFS may be prepared to show
1 The absolute amount of different items in monetary terms
2 The amount of periodic changes in monetary terms
1 The percentages of periodic changes to reveal the proportionate changes
The CFS can be prepared for both the BS and the IS
CORE COMPETENCE OF ESCORTS
Customer 1
We put customers first in everything we do We take decisions keeping the customer in
mind
Challenging Spirit
We strive for excellence in everything we do and in the quality of goods amp services we
provide We work hard to achieve what we commit amp achieve results faster than our
competitors and we never give up
Team-work
We work cohesively with our colleagues as a multi-cultural team built on trust respect
understanding amp mutual co-operation Everyones contribution is equally important for
our success
Frank amp Fair Organization
We are honest sincere open minded fair amp transparent in our dealings We actively
listen to others and participate in healthy amp frank discussions to achieve the
organizations
A firm undertakes numerous during a year and most of these transactions during a year and
most of these transactions may affect one or the other current account ie most of these
transactions May results in the flow of the WC Neither is it necessary nor practical to
identify the effect of each and every transaction on the WC These transactions instead are
considered and analyzed in a collective form and then their effect on the WC is identified
SCFP (CASH BASIS) OR
THE CASH FLOW STATEMENT
The CFS attempts to analyze the transactions of the firm in terms of cash ie the transactions
generating cash and using cash The focus in the CFS is on cash rather than on WC The
sources of cash may be the cash profits earned by the firm issue of capital for cash issue of
other securities for cash borrowings sale of assets investment redemption of debenture or
preference share repayment of loan payment of tax dividend distribution etc Thus the
CFS summarizes the cash inflows and outflows
An analysis of cash flows is useful for short-run planning A firm needs sufficient cash to
debts maturing in the near future to pay interest and other expenses and to pay dividends to
shareholders The firm can make projections of cash flows and outflows for the near future to
determine the availability of cash This cash balance can be matched with the firms need for
cash during the period and accordingly arrangements can be made the deficit or invest the
surplus cash temporarily A historical analysis of cash flows provides insight to prepare
reliable cash flow projections for the immediate future
A statement of changes in financial position on cash basis commonly known as cash flow
statement summarizes the causes of changes in cash position between dates of two balance
sheets It indicates the sources amp uses of cash The cash flow statement is similar to the fund
flow statement except that it focuses attentions on cash instead of working capital (funds)
Thus this statement analyses change in non-current accounts as well as current accounts
(other than cash) to determine the flow of cash
The CFS is based on the concept on the WC Where as the CFS is based in cash which is only
the element of WC Thus the CFS provides details of cash movements whereas the FFS
provides the details of funds movements
The CFS considers only the actual movement of cash whereas the FFS considers the
movements of the funds as defined in terms of net working capital
CASH-FLOW STATEMENT
A cash-flow statement is a statement showing inflows (receipts) and outflows (payments) of
cash during a particular period In other words it is a summary of sources and applications of
Cash during a particular span of time It analyses the reason for changes in balance of cash
between the two balance sheet dates The term Cash here stands for cash and cash
equivalents
A cash-flow statement includes only those items which affect cash As such the cash-flow
statement is called a statement of changes in financial position - cash basis
A cash - flow statement can be for the past or can be projected for a future period
OBJECTS OR USES OF CASH-FLOW STATEMENT
The main objectives behind preparing a cash-flow statement can be laid down as under-
bull USEFUL FOR SHORT-TERM FINANCIAL PLANNING-
A cash-flow statement provides information for planning the short-term financial needs of the
firm Since it provides information regarding the sources and utilization of cash during a period
it become easier for the management to assess whether it will have Adequate cash to meet day-
to-day expenses and pay the long - term loans and interest Thereon and whether it has enough
cash to pay for the purchase of fixed assets or not
USEFUL FOR PREARING THE CASH BUDGET-
A cash-flow statement prepared for the future period is helpful in preparing a cash budget It
informs the management about the future period is helpful in preparing a cash budget It informs
the management about the surplus or deficit periods of cash ie in which months the payments
will be in excess of receipts It helps in planning the investment of surplus cash in short-term
investment and to plan short-term credit in advance of deficit periods
bull COMPARISON WITH CASH BUDGET-
A cash budget is prepared at the commencement of the year whereas a cash flow Statement is
prepared at the end of the year A comparison between the two helps in ascertaining the extent
to which the financial resources of the firm have been generated and used according to the plan
Causes of variances between the figures of two statements can be analyzed and proper
corrective measures may be takes
bull STUDY OF THE TREND OF CASH RECEIPTS AND PAYMENTS-
A cash-flow statement reveals the speed at which the cash is being generated from debtors stock
and other current assets the speed at which the current liabilities are being paid It enables the
management to assess the true position of the cash in future
bull IT EXPLAINS THE DEVIATIONS OF CASH FROM EARNINGS-
A firm may earn huge profits yet it may have paucity of cash or when it suffered a loss it may
still have plenty of cash A cash flow statement explains the reasons for it
HELPFUL IN ASCERTAINING CASH-FLOW FROM VARIOUS
ACTIBITIES SEPARATELY-
A cash-flow statement aims at highlighting the cash flow from operating investing and
financing activities separately It includes how much cash has been generated or used in these
activities
bull HELPFUL IN MAKING DIVIDEND DECISIONS-
Dividend must be paid within 42 days of its declaration Hence the management takes the help of
cash-flow statement to ascertain the position of cash generated from operating activities which
can be used for payment of dividend
IMPORTANCE AND RELEVANCE OF CFS
The CFS has gained importance in view of the fact that there are many managerial Decisions
which are taken in the light of the cash availability or cash position of the firm
For example declaration of dividend by the company requires cash disbursement and
Therefore the Board of Directors must consider the cash position before proposing a dividend
The CFS also provides information for the short term financial planning and in particular the
short term cash needs of the firm
In view of increasing importance and relevance of the CFS the clause 32 of the Listing
agreement (between a Company and the Stock Exchange where the shares proposed to be listed)
has been amended by the SEBI As a result the listed companies in India are now required to
supply a copy of the CFS to each shareholder as a part of Annual Report As a result the listed
companies have started a practice of sending a CFS for which the BS has been prepared as
apart of the Annual Report of the company
DIFFRENCE BETWEEN CASH - FLOW STATEMENT AND
CASH BUDGET
There is not much difference between cash flow statement and a cash budget The
only difference is that a cash flow statement is prepared for a past period where as cash
budget is prepared for a future period Hence it is of limited use as far as the future
periods are concerned A cash budget is therefore prepared showing how much cash is
likely to be received and what will be the disbursements during a future period of time
Thus a cash budget indicates in which months there will be surplus cash and in which
moths there will be deficiency of cash resources The management can then take suitable
decision to invest the surplus cash or make arrangement for the deficiency of cash at the
required time
LIQUIDITY
It does not present true picture of the liquidity of the firm the liquidity does
not depend upon cash alone Liquidity also depends upon those assets
which can be converted into cash easily
bull Exclusion of these assets obstructs the true reporting of the ability of the firm to
meet its liabilities when they become due for payment
bull The possibilities of window - dressing is higher in case of cash position in
comparison to the working capital position of the firm
bull The cash balance can be easily maneuvered by postponing purchases and other
payments and by rapidly collecting cash from debtors before the balance sheet date
Hence a fund - flow statement presents a more realistic picture than a cash flow
statement
bull Cash flow statement ignores non- cash charges Hence the true position of the
enterprise cannot be judged by cash flow statement
bull It is prepared on cash basis and hence ignores one of the basic concept of accounting
namely accrual concept
PROCEDURE OF PREPARING CASH FLOW STATEMENT-
The institute of charted accountants of India has issued accounting standards (as)-3 revised for
preparing a cash flow statement This accounting standard has been made mandatory in respect
of accounting periods commencing on or after 1st April 2001 for certain enterprises These
enterprises are-
bull Enterprises whose equity or debt securities are listed on a recognized stock exchange in
India And enterprise that are in the process of issuing equity or debt securities that will
be listed on a recognized stock exchange in India
bull All other commercial industrial and business enterprises whose turnover for accounting
period Rs 50 crores
As such the cash flow statement has been prepared according to as -3 revised in this project
According to as-3 revised the cash flow statement summarizes the cash inflows and cash
outflows and the net changes (increase or decrease) in cash and cash equipment resulting from
operating investing and financing activities of a firm during a period The following terms are
used for preparing a cash flow statement
CASH-
It compares cash in hand and demands with banks
CASH EQUIVALENTS-
There are short - term highly liquid investments that are readily into known amounts of cash
and which present insignificant risk of changes in their values Normally an investment will be
termed as cash equivalent only if it has a short maturity period say three months or less from the
date of its acquisition Examples of cash equivalent are treasury bills commercial papers etc
Which are purchased with cash that is in excess of immediate needs investment in shares are
excluded from cash equivalents unless they are cash equivalent in reality For example the
preference shares of the company which are purchased shortly before their redemption date will
be included in cash equivalents provided there is only an insignificant risk of failure of the
company in repaying the amount at the date of the maturity
CLASSIFICATION OF CASH FLOW-
According to as -3 (revised) cash flow statement should be presented in a manner that it reports
inflows of cash by classifying them into three categories namely operating investing and
financing activities Classification of all activities into these activities on the cash and cash
equivalents of the enterprise such information will be helpful in evaluating the relationships
among these three activities are explained as below
CASH FLOW FROM OPERATING ACTIVITIES-
Operating activities are the main revenue generating activities of an enterprise As such they
include cash flows from those transactions and events which enter into the ascertainment of
net profit or loss of the enterprise Examples of cash flows arising operating activities are
bull Cash receipts from the sale of goods and rendering of services
bull Cash receipts from royalties fees commissions and other revenue
bull Cash payments to suppliers for goods and services
bull Cash payments to and on behalf of employees
bull Cash receipts and cash payments of an insurance enterprise for premiums and claims
annuities and other policy benefits
bull Cash receipts and payments relating to future contracts forward contracts option
contracts and swap contracts when the contracts are held for dealing or trade purpose and
bull Cash payments of refunds of income taxes unless they can be specifically identified with
financing and investing activities
CASH FLOW FROM INVESTING ACTIVITIES-
Investing activities include the purchase and sale of long term assets such as land building plant
and machinery etc not held for resale These activities also include the purchase and sale of such
investment which are not including in cash equipments Cash flow from investing activities
discloses the expenditures incurred for resources intended to generate future income and cash
flows
Examples cash flow arising from investing activities are
bull Cash payments to acquire fixed assets (including intangible)
bull Cash receipts from sale of fixed assets (including intangibles)
bull Cash payments to acquire shares warrants or debt instruments of other enterprises
(other than receipts for those instruments considered to be cash equivalents)
bull Cash receipts from sale of shares warrants or debt instruments of other enterprises (other
than receipts for those instruments considered to be cash equivalents)
bull Cash advances and loans made to third parties In case of financial enterprises these will
be treated as cash flow from operating activities
bull Cash receipts from the repayment of advances and loans made to third parties In case of
financial enterprises these will be treated as cash flow from operating activities
bull Cash receipts of insurance claim for property involved in accident and
bull Cash receipts of interest and dividend In case of financial enterprise these will be treated
cash flow from operating activities
CASH FLOW FROM FIANCING ACTIVITIES-
Financing activities are the activities that result in change in capital and borrowing of the
enterprise
Examples of cash flows arising from financing activities are
bull Cash receipts from issuing shares or other similar instruments
bull Cash receipts from issuing debentures loans bonds and other short term or long term
borrowing
bull Cash repayment of amounts borrowed buy back of equity shares redemption of
preference shares debentures loans bonds etc
bull Cash payment of interest and dividend
IMPORTANT NOTE
In case of financial enterprise such as bank or mutual fund company cash Outflow
and cash inflow arising from the purchase and sale of securities will Be treated as
flows from operating activities This is because purchase and sale of securities is a
part of operating activity in case of financial enterprise In addition interest paid
and interest received as well as dividends received will also be treated as cash flow
from operating activities in case of financial Enterprises
CASH FLOW STATEMENT
(DIRECT METHOD)
CASH FLOW FROM OPERATING ACTIVITIES
Cash receipts from costumers
Cash paid to suppliers and employers ()
Cash generated from operations
Income tax paid ()
Cash flows from extraordinary item
plusmn Extra ordinary items
Net cash from operating activities
CASH FLOW FROM INVESTING ACTIVITIES-
Purchase of fixed assets
Proceed from sale equipment ()
Interest received
Dividend received ()
Net cash from investing activities
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from insurance of share capital
Proceeds from long- term borrowings ()
Repayment of from long-term borrowings
Interest paid
Dividend paid ()
Net cash from financing activities
Net increase in cash and cash equivalent
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
SOME SPECIAL TERMS-
i) INTERSET AND DIVIDEND-
Cash inflow from interest and dividends and cash outflow on account of interest and
dividends should be disclosed separately Cash inflow arising from interest and dividends
received should be shown as cash flow from investing activities where as cash outflow
disclosed outflow on account of interest and dividend paid should be shown as cash flow
from financing activity
ii) TAXES ON INCOME-
Tax paid on income is a part of cash flow from operating activity Hence taxes paid are
shown as a deduction under cash flow from operating activity
iii) EXTRA ORDINARY ITEMS-
Cash flow relating to extra ordinary items such as bad debts recovered Claims received from
insurance companies winning of a lottery or a law etc Should be disclosed separately as
arising from operating investing or financing activities For example the amount received
for insurance company on account of loss of stock by fire Earthquake and floods etc Should
be reported as cash flow from operating activities
iv) SIGNIFICANT NON - CASH TRANSACTION-
There are some investing and financing activities which do not require the use of cash or
cash equivalents Such non cash activities should be excluded from the cash flow statement
Examples are the acquisition of assets by issue of debentures or shares conversion of
shares into debentures etc Such significant on non cash transaction should be disclosed
outside the cash flow statement
CASH FLOW STATEMENT
(INDIRECT METHOD)
CASH FLOW FROM OPERARATTNG ACTIVITIES
Net profit before taxation and extraordinary item
Adjustment for
Depreciation
Foreign exchange loss
Interest income
Dividend income
Interest expense
Operating profit before working capital changes
Increase in sundry debtors
Decrease in inventories
Decrease in sundry creditors
Cash generated from operations
Income tax paid ()
Cash flow before extraordinary item
plusmn Extra - ordinary items
Net cash from operating activities
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of fixed assets ()
Proceeds from sale of equipment
Interest received
Dividend received ()
Net cash from investing activities
CASH FLOW FROM FINANCING ACTIVITIES-
Proceeds from insurance of share capital
Proceeds from long - term borrowings
Repayments of from long - term borrowings ()
Interest paid ()
Dividend paid ()
Net cash from financing activities
Net increase in cash and cash equivalent
Cash and cash equivalents at beginning of period
CHANGES IN CASH FLOWS
Changes in cash flows can be treated to the following
1 Net profit will increase the cash flows these cash flows will be
increased further if there are any non-cash changes (such as depreciation
and amortization)
2 Any payment of dividends will decrease the cash flows as will the
repayment of debt an issue of share or debt will also increase the
cash flows
3 An increase in non-cash assets will decrease cash flows increase in
current assets and fixed assets will result in drain on cash flows
Thus a statement of changes in cash flows ie the cash flow statement
classifies all Changes into one of three categories - operating investing or
financing activities Therefore the preparation of a statement of changes in cash
flows requires classification of changes in liabilities shareholders equity and
non-cash assets into one of these categories although some items will not fit
easily onto one other
h equivalent at end of period
STEP- BY-STEP PROCEDURE TO PREPARE CFS
1 Calculate the net increase or decrease in cash and cash equivalents-
For this purpose the opening balance of total cash and cash equivalents is compared with the
closing balance of cash and equivalents
Increasedecrease in cash and equivalents
Opening balance Closing Balance
Cash in hand
Cash in bank
Short-term Investment
Total
The difference between the total of opening and closing balance will be increased or
Decreased in cash equivalents during the period It may be noted that if there are only one or
two of items of cash etc
2 Net Cash flaw from operating activities-
The term operating refers to the normal purchase of goods and services On the basis of the
information contained in the comparative BS s and the IS and the additional Information the
net cash flow generated or use by the operating activities may be ascertained The IS prepared
by the firm gives the net profit figure earned by the firm On actual basis ie all items in the
IS are incorporated on the basis of earnedaccrued even
3 If not resulting in cash movements-
So the profit or loss as by the IS may not result in increase or decrease in cash balance by the
SYNOPSIS
INTRODUCTION
ESCORTS PVT LTD is a private limited company not listed in a stock exchange of India
and employees 900 highly trained personnel Its manufacturing plants are strategically located
in close proximity to its customers at Faridabad (Haryana) Noida (UP)
OBJECTIVES OF THE STUDY
bull To find the movement of cash inflow and cash outflow
bull To make the comparison between cash inflow and
bull Cash outflow
bull To prepare the Cash Flow Statement
bull To analyze the Balance Sheet of the company in terms of Cash Flow Statement
bull To focus on various activities of the organization in terms of Operating
Financing Investment
SCOPE OF THE STUDY
Financial resources are the assets for the company and their productivity is key
factor for profitability It is necessary to know their problems their knowledge
skills abilities amp the measures that can be taken to reduce them By analyzing this
top management can build good relations with the employees
The whole study is to determine the competencies of different employees who are
working in ESCORTS PVT LTD By analyzing it the top management can
introduce the concept of competency mapping in the organization Through this
management can attempt to use more suitable strategies towards the human
resource development
The research is confined to elicit the existing gap between the standard skill
required to perform the job and the skill processed by the employees at ESCORTS
PVT LTD And to provide them suitable training program to over come those gaps
for the better utilization of human resources
RELEVANCE
The scope of the study was confined to the outside parties like creditors
shareholders government etc Who want to invest their money in the
company
The benefit of the report for the company is that through this report they can come
to know about the cash flow statements of the company
This study also unable the company that their cash is not utilizing in unnecessary
things
The benefit of the report for the researcher is that it has helped to get knowledge
about the cash inflow and cash
RESERRCH METHODOLOGY-
RESEARCH DESIGN
bull The study was conducted under well- structured approach
bull The project lasted for 4 weeks and the year 2009 ie from 08 July to 12
Aug2009
bull The questionnaire method amp personal interview method was used to collect
the primary data for the study
The secondary data is collected from Internet amp company training material and
many other company materials
SAMPLE DESIGN
The process of extracting a sample from a population is called sampling
procedure The selection of sampling procedure to conduct the research
depends upon the nature of the study and the objective to be accomplished
Judgment sampling technique is adopted to select the respondents in this
study The sample design included the various departments in the YAMAHA
MOTORS PVT LTD
Methodology of date collection
bull Conducting personal interview
bull Data collection from primary and secondary sources
bull Designing questionnaire
bull Selecting sample size from the sample frame for the survey
bull Questionnaire distribution
bull Analysis of collected data with the help of statistical tools
bull Interpretation of collected data
bull Stating the conclusion based on the entire study
Sampling Technique
The sampling technique used for this research is of non-probability and convenience
sampling
Sample Unit
Employees of the company
Sample Size
For this research study the sample size is 25 respondents
Sources of data
Primary data
Primary data is the data which is collected by the researcher for the first time
and which was not there The tools used to collect the data are-
1)Questionnaire method from the employers in different departments
2) Face to Face personal interactions
Secondary Data
The data already collected is called as secondary data The relevant information
for this study has been collected from secondary source such as
Books
Journal
Reports
Publication by the organizational circulation
Company records
Business bulletins
Internet
Secondary data is also collected from various of the internet and intranet Some
of the website trough which information was gathered was through
HYPOTHESIS
The report is analyzed under the presumption that cash flow position of
YAMAHA MOTORS PVTLTD It can be improved and made effective in
terms of cash flows
In testing the above hypothesis the following aspects will be considered
1 Balance sheet comparisons
2 Presentation of cash flow statement in terms of revised AS-3
LIMITATIONS
The study though conducted to the best of the ability suffers from some
certain limitations There are
The data is secondary one and as such its reliability may be
questioned upon
The time availability for the study is less and as such it hinders thee
progress of the study
Senior officials were rarely approachable
Websites were not giving comprehensive data
Not having face-to-face interaction to get more relevant
information
Analysis and interpretation of data was done on the assumption that
the respondentsrsquo information was online
Information collected was totally subjective
The interviews are done during office hours but could not be done
for the other employees of other
DATA ANALYSIS
ESCORTS PVT LTD
CASH FLOW STRATEMENT
Year Ended Year Ended
30092009 30092008
Rs Crores Rs
Crores
A Cash Flow from Operating Activities
Net profit before tax (1733) 3444
Adjustment for
Loss on sale Provision for diminution in value of Long Term
Investments amp loans to Group Companies 189 4018
Gain on sale of Long Term Investments (122) (9492)
Gain on sale of Asset (013) -
Depreciation 4497 3955
Misc Exp Assets Write off Provisions 808 750
Interest Expense 7222 7999
Dividend Income (002) (001)
Interest Income (2082) -
Operating Profit before working capital changes 8764 10673
Adjustments for
Trade and other Receivables (8817) (12035)
Inventories 1379 (4692)
Trade Payables 6705 19046
Miscellaneous Expenditure (750) (511)
(1483) 1808
Cash Generated from Operations 7281 12481
Direct Taxes (Paid)Refunds (1785) 3166
Net Cash Flow from operating activities 5496 15647
B Cash Flow from Investing Activities
Purchase of Fixed Assets (3095) (2794)
Proceeds from sale of Fixed Assets 086 177
Movement in Loans and Advances (1627) (1644)
Sale of Investments 3233 11452
Short Term Deposits with schedule Banks (231) (1048)
Interest Received 2070 -
Dividend Received 002 001
Net Cash Flow from Investing activities 438 6144
Proceeds from Share Capital amp Securities Premium 11444 -
Proceeds from Long Term Borrowings 8660 -
Less Repayment of Long Term Borrowings (054) (7896)
Proceeds (Repayment) from short term borrowings (net) (22726) -
Interest Paid (7740) (8223)
Net Cash used in financing activities (10416) (16119)
Net Increase(Decrease) in Cash and Cash equivalents (4482) 5672
Cash and Cash equivalents as at 01102008 10565 4893
Cash and Cash equivalents as at 30092009 6083 1056
ANALYSIS OF CASH FLOW
From the cash flow statements of the ESCORT PVTLTDIt can be analyzed
from the two years that the net cash balance of the company has increased
manifold in 30-09-2008 than the year 30-09-2009
The net profit in 30-09-2008 is higher than the 30-09-2009 but due to certain
changes there has been increase in the cash balance
The interest paid this year is ore of the last year which implies that thee
company has not repaid his borrowed capital due to which the interest has got
down
The depreciation has increased but it does not affect cash to an extent as it is a
non-cash item In the head of working capital there is drastic change in the cash
balance in the form of ldquoTrade and other Receivables which has affected the cash
balance
There is outflow of cash for receivables rather than the inflow in the last year
So the net effect is that the cash from operating activities has been decreased
two times from the last year
The company has no accumulated losses as at the end of the financial year ie
September 31 2008
Provision for taxation has been made in accordance with the requirement of AS-
22 issued by Institute of Charted Accountants of India
Pursuant to that current year deferred tax liability have been charged to profit amp
loss account
In opinion of the board of directors of thee company the current assets loans
and advances have a value on realization in the ordinary course of the business at
least equal to the amount stated in the balance sheet and provision for all
liabilities have been made
Balance of sundry debtors creditors loans and advances are subject to confirmation by
the concerned parties
METHOD OF ANALYSIS
1 Data analysis is done using the following statistical tools wherever required in
order to extract meaningful information from the collected data
o Simple percentage and averages
o Bar diagram
o Cone diagram
o Pie diagram
2 The collected data from the questionnaire has been put together in the form of
tables
3 Percentage has been calculated wherever necessary for generalization of the
data
4 Data analysis and interpretation has been done on the basis of primary and
secondary data
5 The findings researches have been recorded based on the analysis
6 The study conducted pertains only to YAMAHA MOTORS INDIA PVTLTD
All bank balances (debitcredit) have been confirmed by the concerned bank
Identified from the available information which has been relied upon by the auditors
The names of small-scale industrial units to whom outstanding for more than
thirty days within agreed terms
The company has 9996 of shareholders in its subsidiary company named as
ESCORTS PVT LTD As at 31-03-2008
So the net effect is that the net cash from investing activities has many more
times than the last year which is negative Now the company has repaid its long
term borrowing more than the last year which has decreased the cash balance by
the little amount
Balance with the schedule banks under the head current amp collection account
amounting to represent funds in transit lying with schedule banks pending
transfer against loan liabilities under the head cash credit amp bill discounting
LIQUIDITY RATIO
1 CURRENT RATIO
(Amount in Rs)
Current Ratio
Year Current Assets Current Liabilities Ratio
2003 58574151 7903952 7412004 69765346 31884616 2192005 72021081 16065621 4482006 91328208 47117199 1942007 115642068 30266661 382
Interpretation
As a rule the current ratio with 21 (or) more is considered as satisfactory
position of the firm
When compared with 2006 there is an increase in the provision for tax because
the debtors are raised and for that the provision is created The current liabilities
majorly included Lanco Group of company for consultancy additional services
The sundry debtors have increased due to the increase to corporate taxes
In the year 2006 the cash and bank balance is reduced because that is used for
payment of dividends In the year 2007 the loans and advances include majorly
the advances to employees and deposits to government The loans and advances
reduced because the employees set off their claims The other current assets
include the interest attained from the deposits The deposits reduced due to the
declaration of dividends So the other current assets decreased
The huge increase in sundry debtors resulted an increase in the ratio which is
above the benchmark level of 21 which shows the comfortable position of the
firm
GRAPHICAL REPRESENTATION
741
219
448
194
382
000
100
200
300
400
500
600
700
800
Ratio
2003 2004 2005 2006 2007
Years
CURRENT RATIO
Ratio
2 QUICK RATIO
(Amount
in Rs)
Quick Ratio
Year Quick Assets Current Liabilities Ratio
2003 58574151 7903952 741
2004 52470336 31884616 165
2005 69883268 16065620 435
2006 89433596 47117199 19
2007 115431868 30266661 381
Interpretation
Quick assets are those assets which can be converted into cash with in a short
period of time say to six months So here the sundry debtors which are with the
long period does not include in the quick assets
Compare with 2006 the Quick ratio is increased because the sundry debtors are
increased due to the increase in the corporate tax and for that the provision
created is also increased So the ratio is also increased with the 2006
GRAPHICAL REPRESENTATION
741
165
435
190
381
000
100
200
300
400
500
600
700
800
Ratio
2003 2004 2005 2006 2007
Years
QUICK RATIO
Ratios
3 ABOSULTE LIQUIDITY RATIO
(Amount
in Rs)
Absolute Cash Ratio
Year Absolute Liquid Assets Current Liabilities Ratio
2003 31004027 7903952 392
2004 10859778 31884616 034
2005 39466542 16065620 246
2006 53850852 47117199 114
2007 35649070 30266661 118
Interpretation
The current assets which are ready in the form of cash are considered as absolute
liquid assets Here the cash and bank balance and the interest on fixed assts are
absolute liquid assets
In the year 2006 the cash and bank balance is decreased due to decrease in the
deposits and the current liabilities are also reduced because of the payment of
dividend That causes a slight increase in the current yearrsquos ratio
GRAPHICAL REPRESENTATION
392
034
246
114 118
0
05
1
15
2
25
3
35
4
Ratios
2003 2004 2005 2006 2007
Years
ABSOLUTE CASH RATIO
Ratios
LEVERAGE RATIOS
4 PROPRIETORY RATIO
(Amount
in Rs)
Proprietory Ratio
Year Share Holders Funds Total Assets Ratio
2003 67679219 78572171 086
2004 53301834 88438107 06
2005 70231061 89158391 079
2006 56473652 106385201 053
2007 97060013 129805102 075
Interpretation
The proprietary ratio establishes the relationship between shareholders funds to
total assets It determines the long-term solvency of the firm This ratio indicates
the extent to which the assets of the company can be lost without affecting the
interest of the company
There is no increase in the capital from the year2004 The share holderrsquos funds
include capital and reserves and surplus The reserves and surplus is increased
due to the increase in balance in profit and loss account which is caused by the
increase of income from services
Total assets includes fixed and current assets The fixed assets are reduced
because of the depreciation and there are no major increments in the fixed assets
The current assets are increased compared with the year 2006 Total assets are
also increased than precious year which resulted an increase in the ratio than old
GRAPHICAL REPRESENTATION
086
060
079
053
075
000
010
020
030
040
050
060
070
080
090
Ratios
2003 2004 2005 2006 2007
Years
PROPRIETORY RATIO
Ratios
ACTIVITY RATIOS
5 WORKING CAPITAL TURNOVER RATIO
(Amount
in Rs)
Working Capital Turnover Ratio
Year Income From Services Working Capital Ratio
2003 36309834 50670199 0722004 53899084 37880730 1422005 72728759 55355460 1312006 55550649 44211009 1262007 96654902 85375407 113
Interpretation
Income from services is greatly increased due to the extra invoice for Operations
amp Maintenance fee and the working capital is also increased greater due to the
increase in from services because the huge increase in current assets
The income from services is raised and the current assets are also raised together
resulted in the decrease of the ratio of 2007 compared with 2006
GRAPHICAL REPRESENTATION
072
142 131126
113
000
020
040
060
080
100
120
140
160
Ratio
2003 2004 2005 2006 2007
Years
WORKING CAPITAL TURNOVER RATIO
Ratio
6 FIXED ASSETS TURNOVER RATIO
(Amount in Rs)
Fixed Assets Turnover Ratio
Year Income From Services Net Fixed Assets Ratio
2003 36309834 28834317 126
2004 53899084 29568279 182
2005 72728759 17137310 424
2006 55550649 15056993 369
2007 96654902 14163034 682
Interpretation
Fixed assets are used in the business for producing the goods to be sold This
ratio shows the firmrsquos ability in generating sales from all financial resources
committed to total assets The ratio indicates the account of one rupee
investment in fixed assets
The income from services is greaterly increased in the current year due to the
increase in the Operations amp Maintenance fee due to the increase in extra invoice
and the net fixed assets are reduced because of the increased charge of
depreciation Finally that effected a huge increase in the ratio compared with the
previous yearrsquos ratio
GRAPHICAL REPRSENTATION
126182
424 369
682
000
100
200
300
400
500
600
700
Ratios
2003 2004 2005 2006 2007
Years
FIXED ASSETS TURNOVER RATIO
Ratios
7 CAPITAL TURNOVER RATIO
(Amount
in Rs)
Capital Turnover Ratio
Year Income From Services Capital Employed Ratio
2003 36309834 37175892 0982004 53899084 53301834 1012005 72728759 70231061 1042006 55550649 56473652 0982007 96654902 97060013 100
Interpretation
This is another ratio to judge the efficiency and effectiveness of the company
like profitability ratio
The income from services is greaterly increased compared with the previous year
and the total capital employed includes capital and reserves amp surplus Due to
huge increase in the net profit the capital employed is also increased along with
income from services Both are effected in the increment of the ratio of current
year
GRAPHICAL REPRESENTATION
098
101
104
098
100
094095096097098099100101102103104
Ratios
2003 2004 2005 2006 2007
Years
CAPITAL TURNOVER RATIO
Ratios
8 CURRENT ASSETS TO FIXED ASSETS RATIO
(Amount
in Rs)
Current Assets To Fixed Assets Ratio
Year Current Assets Fixed Assets Ratio
2003 58524151 19998020 2932004 69765346 18672761 3742005 72021081 17137310 4202006 91328208 15056993 6072007 115642068 14163034 817
Interpretation
Current assets are increased due to the increase in the sundry debtors and the net
fixed assets of the firm are decreased due to the charge of depreciation and there
is no major increment in the fixed assets
The increment in current assets and the decrease in fixed assets resulted an
increase in the ratio compared with the previous year
GRAPHICAL REPRESENTATION
293374
420
607
817
000
100
200
300
400
500
600
700
800
900
Ratios
2003 2004 2005 2006 2007
Years
CURRENT ASSETS TO FIXED ASSETS RATIO
Ratios
PROFITABILITY RATIOS
GENERAL PROFITABILITY RATIOS
9 NET PROFIT RATIO
(Amount in Rs)
Net Profit Ratio
Year Net Profit After Tax Income from Services Ratio
2003 21123474 36039834 059
2004 16125942 53899084 030
2005 16929227 72728759 023
2006 18259580 55550649 033
2007 40586359 96654902 042
Interpretation
The net profit ratio is the overall measure of the firmrsquos ability to turn each rupee
of income from services in net profit If the net margin is inadequate the firm
will fail to achieve return on shareholderrsquos funds High net profit ratio will help
the firm service in the fall of income from services rise in cost of production or
declining demand
The net profit is increased because the income from services is increased The
increment resulted a slight increase in 2007 ratio compared with the year 2006
GRAPHICAL REPRESENTATION
059
030
023
033
042
000
010
020
030
040
050
060
Ratios
2003 2004 2005 2006 2007
Years
NET PROFIT RATIO
Ratios
10 OPERATING PROFIT
(Amount in Rs)
Operating Profit
Year Operating Profit Income From Services Ratio
2003 36094877 36309834 099
2004 27576814 53899084 051
2005 29540599 72728759 041
2006 31586718 55550649 057
2007 67192677 96654902 070
Interpretation
The operating profit ratio is used to measure the relationship between net profits
and sales of a firm Depending on the concept it will decide
The operating profit ratio is increased compared with the last year The earnings
are increased due to the increase in the income from services because of
Operations amp Maintenance fee So the ratio is increased slightly compared with
the previous year
GRAPHICAL REPRESENTATION
099
051
041
057
070
000
010
020
030
040
050060
070
080
090
100
Ratios
2003 2004 2005 2006 2007
Years
OPERATING PROFIT RATIO
Ratios
11 RETURN ON TOTAL ASSETS RATIO
(Amount in Rs)
Return on Total Assets Ratio
Year Net Profit After Tax Total Assets Ratio
2003 21123474 78572171 027
2004 16125942 88438107 018
2005 16929227 89158391 019
2006 18259580 106385201 017
2007 40586359 129805102 031
Interpretation
This is the ratio between net profit and total assets The ratio indicates the return
on total assets in the form of profits
The net profit is increased in the current year because of the increment in the
income from services due to the increase in Operations amp Maintenance fee The
fixed assets are reduced due to the charge of depreciation and no major
increments in fixed assets but the current assets are increased because of sundry
debtors and that effects an increase in the ratio compared with the last year ie
2006
GRAPHICAL REPRESENTATION
027
018 019017
031
000
005
010
015
020
025
030
035
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON TOTAL ASSETS
Ratios
12 RESERVES amp SURPLUS TO CAPITAL RATIO
(Amount in Rs)
Reserves amp Surplus To Capital Ratio
Year Reserves amp Surplus Capital Ratio
2003 65599299 2079920 31542004 34582554 18719280 1852005 51511781 18719280 2752006 37754372 18719280 2022007 78340733 18719280 419
Interpretation
The ratio is used to reveal the policy pursued by the company a very high ratio
indicates a conservative dividend policy and vice-versa Higher the ratio better
will be the position
The reserves amp surplus is decreased in the year 2006 due to the payment of
dividends and in the year 2007 the profit is increased But the capital is
remaining constant from the year 2004 So the increase in the reserves amp surplus
caused a greater increase in the current yearrsquos ratio compared with the older
GRAPHICAL REPRESENTATION
3154
185 275 202419
-
500
1000
1500
2000
2500
3000
3500
Ratios
2003 2004 2005 2006 2007
Years
RESERVES amp SRUPLUS TO CAPITAL RATIO
Ratios
OVERALL PROFITABILITY RATIOS
13 EARNINGS PER SHARE
(Amount in Rs)
Earnings Per Share
Year Net Profit After Tax No of Equity Shares Ratio
2003 21123474 207992 101562004 16125942 1871928 8612005 16929227 1871928 9042006 18259580 1871928 9752007 40586359 1871928 2168
Interpretation
Earnings per share ratio are used to find out the return that the shareholderrsquos earn
from their shares After charging depreciation and after payment of tax the
remaining amount will be distributed by all the shareholders
Net profit after tax is increased due to the huge increase in the income from
services That is the amount which is available to the shareholders to take There
are 1871928 shares of Rs10- each The share capital is constant from the year
2004 Due to the huge increase in net profit the earnings per share is greaterly
increased in 2007
GRAPHICAL REPRESENTATION
10156
861904 975
2168
000
2000
4000
6000
8000
10000
12000
Ratios
2003 2004 2005 2006 2007
Years
EARNINGS PER SHARE
Ratios
14 PRICE EARNINGS (PE) RATIO
(Amount in Rs)
Price Earning (PE) Ratio
Year Market Price Per Share Earnings Per Share Ratio
2003 3254 10156 0322004 2847 861 3302005 3752 904 4152006 3017 975 3092007 5185 2168 239
Interpretation
The ratio is calculated to make an estimate of application in the value of share of
a company
The market price per share is increased due to the increase in the reserves
amp surplus The earnings per share are also increased greaterly compared
with the last year because of increase in the net profit So the ratio is
decreased compared with the previous year
GRAPHICAL REPRESENTATION
032
330
415
309
239
000
050
100
150
200
250
300
350
400
450
Ratios
2003 2004 2005 2006 2007
Years
PE RATIO
Ratios
15 RETURN ON INVESTMENT
(Amount in Rs)
Return on Investment
Year Net Profit After Tax Share Holders Fund Ratio
2003 21123474 67679219 031
2004 16125942 53301834 03
2005 16929227 70231061 024
2006 18259580 56473652 032
2007 40586359 97060013 042
Interpretation
This is the ratio between net profits and shareholders funds The ratio is
generally calculated as percentage multiplying with 100
The net profit is increased due to the increase in the income from services ant
the shareholders funds are increased because of reserve amp surplus So the ratio
is increased in the current year
GRAPHICAL REPRESENTATION
031 030
024
032
042
000
005
010
015
020
025
030
035
040
045
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON INVESTMENT RATIO
RatioS
DATA COLLECTION
The data can be of two types
Primary Data
Secondary Data
Primary Data
Primary data are those data which is originally collected afresh
Secondary Data
Secondary data are those data which are already collected and stored and which has
been passed through statistical research
In this project Secondary data has been collected from following sources-
Annual report
Books
MIS
Other material and report published by company There are two methods to prepare
the Cash flow Statement
ndirect Method
I
The indirect method (or reconciliation method) starts with net income and converts it
to net cash flow from operating activities In other words the indirect method adjusts
net income for items that affected reported net income but did not affect cash To
compute net cash flow from operating activities non-cash charges in the income
statement are added ack to net income and non-cash credits are deducted
b
Direct Method
Under the direct method the statement of cash flows reports net cash flow from
operating activities as major classes of operating cash receipts (eg cash collected from
customers and cash received from interest and dividends) and cash disbursements (eg
cash paid to suppliers for goods to employees for services to creditors for interest and
to government authorities for taxes)
INDIRECT VERSUS DIRECT METHOD
The most contentious decision that the FASB faced in issuing Statement No 95 was
choosing between the direct method and the indirect method of determining net cash
flow from operating activities Companies lobbied against the direct method urging
adoption of the indirect method Commercial lending officers expressed a strong
preference to the FASB hat the direct method be required
tCF-Page 3 of 5
In Favor of the Direct Method
The principal advantage of the direct method is that it shows operating cash receipts and
payments That is it is more consistent with the objective of a statement of cash flows to
provide information about cash receipts and cash payments than the in-direct method
which does not report operating cash receipts and payments
Supporters of the direct method contend that knowledge of the specific sources of
operating cash receipts and the purposes for which operating cash payments were made
in past periods is useful in estimating future operating cash flows Furthermore in-
formation about amounts of major classes of operating cash receipts and payments is
more useful than information only about their arithmetic sum (the net cash flow from
operating activities) Such information is more revealing of an enterprises ability (1) to
generate sufficient cash from operating activities to pay its debts (2) to reinvest in its
operations and (3) to make distributions to its owners
Many corporate providers of financial statements say that they do not currently collect
information in a manner that allows them to determine amounts such as cash received
from customers or cash paid to suppliers directly from their accounting systems But
supporters of the direct method contend that the incremental cost of assimilating such
operating cash receipts and payments data is not significant
In Favor of the Indirect Method
The principal advantage of the indirect method is that it focuses on the differences
between net income and net cash flow from operating activities That is it provides a
useful link between the statement of cash flows and the income statement and balance
sheet
Many providers of financial statements contend that it is less costly to adjust net income
to net cash flow from operating activities (indirect) than it is to report gross operating
cash receipts and payments (direct) Supporters of the indirect method also state that the
direct method which effectively reports income statement information on a cash rather
than an accrual basis may erroneously suggest that net cash flow from operating
activities is as good as or better than net income as a measure of performance
Special Rules Applying to Direct and Indirect Methods
Companies that use the direct method are required at a
minimum to report separately the following classes of
operating cash receipts and payments
Receipts
1048713 Cash collected from customers (including lessees licensees etc)
1048713 Interest and dividends received
1048713 Other operating cash receipts if any
Payments
1048713 Cash paid to employees and suppliers of goods or services (including
suppliers of
insurance advertising etc)
1048713 Interest paid
1048713 Income taxes paid
1048713 Other operating cash payments if any
Companies using the indirect method are required to disclose separately changes in
inventory receivables and payables to reconcile net income to net cash flow from
operating activities In addition interest paid (net of amount capitalized) and income
taxes paid must be disclosed elsewhere in the financial statements or accompanying
notes
The FASB requires these separate and additional disclosures so that users
may approximate the direct method Also an acceptable alternative presentation
of the in-direct method is to report net cash flow from operating activities as a
single line item in the statement of cash flows and to present the reconciliation
details elsewhere in the financial statements
FINDING OF SUDY
According to cash flow statement of the company The finding of the study are as
follows-
The company has not taken any loans secured or unsecured from companies
firms or other parties
The company has not accepted any deposit from the public during the year
The company is not a sick industrial company
The company has not granted any loan secured or unsecured to company firms
or other parties
The company has paid the entire long term and short term borrowing during the
year
The company has buy back the companyrsquos own share this year
The interest paid in 2008 is more than the
There has been a significant decline in volume over the years from 2001-02
to 2005-06 as can be seen in the graph below
Table 43
The Net sales of Tractor has increased considerably from 2004-05 to 2007-08
This can be mainly attributed to changes in Variable and material costs and in
the price
The Net sale of Tractor has increased considerably from 2004-05 to 2007-08
that is an decrease of Rs7216 per tractor This can be mainly attributed to
changes in
Variable and material costs and in the prices
RECOMMENDATIONS
According to cash flow statement of the company The suggestions of the study
are as follows-
The time durations for training program have to increase
Buy regular review and consultations develop a career progression
which is sensitive to performance and ability
Create an environment where by people are trend developed to enable
The to take advantages of opportunities that arise
The jab can be redesigned where the work man stay in what is normally
the same job but has elements of it changed
The principle amount must be paid in time which can be reducing the
interest the out flow
The purchase of the fixed asset must be made only when there is extreme
requirement
In order to avoid taxes the company should go for more investment
The companyrsquos borrowings should go for more investment
o The company should try to reduce the depreciations as maximum
as possible
CONCLUSION
The study on competency level of employees at ESCORTS PVTLTD gave an
insight about the acceptance of competency mapping by employees
The employees at Ymi welcome the introduction of competency mapping in their
organization as they felt it was very much essential in enhancing their skills and
organizational development
The organization has provided the recourses guidance and support to facilitate the
introduction of competency level easily and develop the employees in such a way
that they can face any kind of challenge
However the level of competency in employees is found to be satisfactory
Providing proper training education and guidance to the employees can enhance
the level
This study was mainly carried out to find out whether thee competency mapping
being followed by the company is effective till date If the competency mapping
and fitment to the organization
By looking at the graphs and tables it is quite that the employees still are not up to
the level of competent pool they still have to be trained and made competent in
order to fill the gap As the organization has just applied the mapping it has to see
to that it meets all the requirements for competency mapping
Therefore the graphs make it quite clear that the potential of the employees is not
up to the mark and ie they are not competent enough to meet the competency-
mapping requirement Hence by further training and counseling this gap can be
closed
This report includes the training requirements of employees and it highlights skills
possessed by each employee and skill required All employees get training so that
skill can be improved and maintain balance between standard performance with
their actual performance to avoid gap
APPENDIX
QUESTIONNAIRE
Consumer Survey
Name _____________________________
Age _____________________________
Sex
Male
Female
Occupation
Businessman
Service man
Professional
Others
Monthly income brackets
Below 15000
15000- 20000
20000-30000
30000 and above
of your savings _________
Do you invest
Yes
No
If yes then where do you invest your money
Bank
Insurance
funds
Others
Why do you made that statement
Return
Risk hedging
Tax benefits
Other reasons (specify) _______
Who influence your cash decision
Relatives and friends
Family members
Advisors experts
You yourself
If no then why
Do not know where to invest
Satisfied with your current investment return
Donrsquot want take risk
Other reasons
__________________________________________________________________
___________________
Do you know about CF statement
Yes
No
If yes then from where you have come to know about an cash statement
Advertisements on newspapers
Friends and relative
Agents experts
Other source
What do you think about cash statement
It means investing only in share market
Constant watch must be kept always
Return is not satisfactory
Other perception
__________________________________________________
Can you recall any cash flow of company
___________________________
Would you want to made CF of an org
Yes
No
If yes then why
_______________________________________________________
If no then why
_______________________________________________________
BIBLIOGRAPHY
List of Books
1 PANDEY IM - FINANCIAL MANAGEMANT
2 KHAN MY AND JAIN PK -FINANCIAL MANAGEMANT
3 SMITH KV ndash MANAGEMANT OF WORKING CAPITAL
3 COMPANY RECORDS
4 JOURNAL
5 REPORTS
WEBLIOGRAPHY
1 wwwescortspvtltdcom
2 wwwgooglecom
CORE COMPETENCE OF ESCORTS
Customer 1
We put customers first in everything we do We take decisions keeping the customer in
mind
Challenging Spirit
We strive for excellence in everything we do and in the quality of goods amp services we
provide We work hard to achieve what we commit amp achieve results faster than our
competitors and we never give up
Team-work
We work cohesively with our colleagues as a multi-cultural team built on trust respect
understanding amp mutual co-operation Everyones contribution is equally important for
our success
Frank amp Fair Organization
We are honest sincere open minded fair amp transparent in our dealings We actively
listen to others and participate in healthy amp frank discussions to achieve the
organizations
A firm undertakes numerous during a year and most of these transactions during a year and
most of these transactions may affect one or the other current account ie most of these
transactions May results in the flow of the WC Neither is it necessary nor practical to
identify the effect of each and every transaction on the WC These transactions instead are
considered and analyzed in a collective form and then their effect on the WC is identified
SCFP (CASH BASIS) OR
THE CASH FLOW STATEMENT
The CFS attempts to analyze the transactions of the firm in terms of cash ie the transactions
generating cash and using cash The focus in the CFS is on cash rather than on WC The
sources of cash may be the cash profits earned by the firm issue of capital for cash issue of
other securities for cash borrowings sale of assets investment redemption of debenture or
preference share repayment of loan payment of tax dividend distribution etc Thus the
CFS summarizes the cash inflows and outflows
An analysis of cash flows is useful for short-run planning A firm needs sufficient cash to
debts maturing in the near future to pay interest and other expenses and to pay dividends to
shareholders The firm can make projections of cash flows and outflows for the near future to
determine the availability of cash This cash balance can be matched with the firms need for
cash during the period and accordingly arrangements can be made the deficit or invest the
surplus cash temporarily A historical analysis of cash flows provides insight to prepare
reliable cash flow projections for the immediate future
A statement of changes in financial position on cash basis commonly known as cash flow
statement summarizes the causes of changes in cash position between dates of two balance
sheets It indicates the sources amp uses of cash The cash flow statement is similar to the fund
flow statement except that it focuses attentions on cash instead of working capital (funds)
Thus this statement analyses change in non-current accounts as well as current accounts
(other than cash) to determine the flow of cash
The CFS is based on the concept on the WC Where as the CFS is based in cash which is only
the element of WC Thus the CFS provides details of cash movements whereas the FFS
provides the details of funds movements
The CFS considers only the actual movement of cash whereas the FFS considers the
movements of the funds as defined in terms of net working capital
CASH-FLOW STATEMENT
A cash-flow statement is a statement showing inflows (receipts) and outflows (payments) of
cash during a particular period In other words it is a summary of sources and applications of
Cash during a particular span of time It analyses the reason for changes in balance of cash
between the two balance sheet dates The term Cash here stands for cash and cash
equivalents
A cash-flow statement includes only those items which affect cash As such the cash-flow
statement is called a statement of changes in financial position - cash basis
A cash - flow statement can be for the past or can be projected for a future period
OBJECTS OR USES OF CASH-FLOW STATEMENT
The main objectives behind preparing a cash-flow statement can be laid down as under-
bull USEFUL FOR SHORT-TERM FINANCIAL PLANNING-
A cash-flow statement provides information for planning the short-term financial needs of the
firm Since it provides information regarding the sources and utilization of cash during a period
it become easier for the management to assess whether it will have Adequate cash to meet day-
to-day expenses and pay the long - term loans and interest Thereon and whether it has enough
cash to pay for the purchase of fixed assets or not
USEFUL FOR PREARING THE CASH BUDGET-
A cash-flow statement prepared for the future period is helpful in preparing a cash budget It
informs the management about the future period is helpful in preparing a cash budget It informs
the management about the surplus or deficit periods of cash ie in which months the payments
will be in excess of receipts It helps in planning the investment of surplus cash in short-term
investment and to plan short-term credit in advance of deficit periods
bull COMPARISON WITH CASH BUDGET-
A cash budget is prepared at the commencement of the year whereas a cash flow Statement is
prepared at the end of the year A comparison between the two helps in ascertaining the extent
to which the financial resources of the firm have been generated and used according to the plan
Causes of variances between the figures of two statements can be analyzed and proper
corrective measures may be takes
bull STUDY OF THE TREND OF CASH RECEIPTS AND PAYMENTS-
A cash-flow statement reveals the speed at which the cash is being generated from debtors stock
and other current assets the speed at which the current liabilities are being paid It enables the
management to assess the true position of the cash in future
bull IT EXPLAINS THE DEVIATIONS OF CASH FROM EARNINGS-
A firm may earn huge profits yet it may have paucity of cash or when it suffered a loss it may
still have plenty of cash A cash flow statement explains the reasons for it
HELPFUL IN ASCERTAINING CASH-FLOW FROM VARIOUS
ACTIBITIES SEPARATELY-
A cash-flow statement aims at highlighting the cash flow from operating investing and
financing activities separately It includes how much cash has been generated or used in these
activities
bull HELPFUL IN MAKING DIVIDEND DECISIONS-
Dividend must be paid within 42 days of its declaration Hence the management takes the help of
cash-flow statement to ascertain the position of cash generated from operating activities which
can be used for payment of dividend
IMPORTANCE AND RELEVANCE OF CFS
The CFS has gained importance in view of the fact that there are many managerial Decisions
which are taken in the light of the cash availability or cash position of the firm
For example declaration of dividend by the company requires cash disbursement and
Therefore the Board of Directors must consider the cash position before proposing a dividend
The CFS also provides information for the short term financial planning and in particular the
short term cash needs of the firm
In view of increasing importance and relevance of the CFS the clause 32 of the Listing
agreement (between a Company and the Stock Exchange where the shares proposed to be listed)
has been amended by the SEBI As a result the listed companies in India are now required to
supply a copy of the CFS to each shareholder as a part of Annual Report As a result the listed
companies have started a practice of sending a CFS for which the BS has been prepared as
apart of the Annual Report of the company
DIFFRENCE BETWEEN CASH - FLOW STATEMENT AND
CASH BUDGET
There is not much difference between cash flow statement and a cash budget The
only difference is that a cash flow statement is prepared for a past period where as cash
budget is prepared for a future period Hence it is of limited use as far as the future
periods are concerned A cash budget is therefore prepared showing how much cash is
likely to be received and what will be the disbursements during a future period of time
Thus a cash budget indicates in which months there will be surplus cash and in which
moths there will be deficiency of cash resources The management can then take suitable
decision to invest the surplus cash or make arrangement for the deficiency of cash at the
required time
LIQUIDITY
It does not present true picture of the liquidity of the firm the liquidity does
not depend upon cash alone Liquidity also depends upon those assets
which can be converted into cash easily
bull Exclusion of these assets obstructs the true reporting of the ability of the firm to
meet its liabilities when they become due for payment
bull The possibilities of window - dressing is higher in case of cash position in
comparison to the working capital position of the firm
bull The cash balance can be easily maneuvered by postponing purchases and other
payments and by rapidly collecting cash from debtors before the balance sheet date
Hence a fund - flow statement presents a more realistic picture than a cash flow
statement
bull Cash flow statement ignores non- cash charges Hence the true position of the
enterprise cannot be judged by cash flow statement
bull It is prepared on cash basis and hence ignores one of the basic concept of accounting
namely accrual concept
PROCEDURE OF PREPARING CASH FLOW STATEMENT-
The institute of charted accountants of India has issued accounting standards (as)-3 revised for
preparing a cash flow statement This accounting standard has been made mandatory in respect
of accounting periods commencing on or after 1st April 2001 for certain enterprises These
enterprises are-
bull Enterprises whose equity or debt securities are listed on a recognized stock exchange in
India And enterprise that are in the process of issuing equity or debt securities that will
be listed on a recognized stock exchange in India
bull All other commercial industrial and business enterprises whose turnover for accounting
period Rs 50 crores
As such the cash flow statement has been prepared according to as -3 revised in this project
According to as-3 revised the cash flow statement summarizes the cash inflows and cash
outflows and the net changes (increase or decrease) in cash and cash equipment resulting from
operating investing and financing activities of a firm during a period The following terms are
used for preparing a cash flow statement
CASH-
It compares cash in hand and demands with banks
CASH EQUIVALENTS-
There are short - term highly liquid investments that are readily into known amounts of cash
and which present insignificant risk of changes in their values Normally an investment will be
termed as cash equivalent only if it has a short maturity period say three months or less from the
date of its acquisition Examples of cash equivalent are treasury bills commercial papers etc
Which are purchased with cash that is in excess of immediate needs investment in shares are
excluded from cash equivalents unless they are cash equivalent in reality For example the
preference shares of the company which are purchased shortly before their redemption date will
be included in cash equivalents provided there is only an insignificant risk of failure of the
company in repaying the amount at the date of the maturity
CLASSIFICATION OF CASH FLOW-
According to as -3 (revised) cash flow statement should be presented in a manner that it reports
inflows of cash by classifying them into three categories namely operating investing and
financing activities Classification of all activities into these activities on the cash and cash
equivalents of the enterprise such information will be helpful in evaluating the relationships
among these three activities are explained as below
CASH FLOW FROM OPERATING ACTIVITIES-
Operating activities are the main revenue generating activities of an enterprise As such they
include cash flows from those transactions and events which enter into the ascertainment of
net profit or loss of the enterprise Examples of cash flows arising operating activities are
bull Cash receipts from the sale of goods and rendering of services
bull Cash receipts from royalties fees commissions and other revenue
bull Cash payments to suppliers for goods and services
bull Cash payments to and on behalf of employees
bull Cash receipts and cash payments of an insurance enterprise for premiums and claims
annuities and other policy benefits
bull Cash receipts and payments relating to future contracts forward contracts option
contracts and swap contracts when the contracts are held for dealing or trade purpose and
bull Cash payments of refunds of income taxes unless they can be specifically identified with
financing and investing activities
CASH FLOW FROM INVESTING ACTIVITIES-
Investing activities include the purchase and sale of long term assets such as land building plant
and machinery etc not held for resale These activities also include the purchase and sale of such
investment which are not including in cash equipments Cash flow from investing activities
discloses the expenditures incurred for resources intended to generate future income and cash
flows
Examples cash flow arising from investing activities are
bull Cash payments to acquire fixed assets (including intangible)
bull Cash receipts from sale of fixed assets (including intangibles)
bull Cash payments to acquire shares warrants or debt instruments of other enterprises
(other than receipts for those instruments considered to be cash equivalents)
bull Cash receipts from sale of shares warrants or debt instruments of other enterprises (other
than receipts for those instruments considered to be cash equivalents)
bull Cash advances and loans made to third parties In case of financial enterprises these will
be treated as cash flow from operating activities
bull Cash receipts from the repayment of advances and loans made to third parties In case of
financial enterprises these will be treated as cash flow from operating activities
bull Cash receipts of insurance claim for property involved in accident and
bull Cash receipts of interest and dividend In case of financial enterprise these will be treated
cash flow from operating activities
CASH FLOW FROM FIANCING ACTIVITIES-
Financing activities are the activities that result in change in capital and borrowing of the
enterprise
Examples of cash flows arising from financing activities are
bull Cash receipts from issuing shares or other similar instruments
bull Cash receipts from issuing debentures loans bonds and other short term or long term
borrowing
bull Cash repayment of amounts borrowed buy back of equity shares redemption of
preference shares debentures loans bonds etc
bull Cash payment of interest and dividend
IMPORTANT NOTE
In case of financial enterprise such as bank or mutual fund company cash Outflow
and cash inflow arising from the purchase and sale of securities will Be treated as
flows from operating activities This is because purchase and sale of securities is a
part of operating activity in case of financial enterprise In addition interest paid
and interest received as well as dividends received will also be treated as cash flow
from operating activities in case of financial Enterprises
CASH FLOW STATEMENT
(DIRECT METHOD)
CASH FLOW FROM OPERATING ACTIVITIES
Cash receipts from costumers
Cash paid to suppliers and employers ()
Cash generated from operations
Income tax paid ()
Cash flows from extraordinary item
plusmn Extra ordinary items
Net cash from operating activities
CASH FLOW FROM INVESTING ACTIVITIES-
Purchase of fixed assets
Proceed from sale equipment ()
Interest received
Dividend received ()
Net cash from investing activities
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from insurance of share capital
Proceeds from long- term borrowings ()
Repayment of from long-term borrowings
Interest paid
Dividend paid ()
Net cash from financing activities
Net increase in cash and cash equivalent
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
SOME SPECIAL TERMS-
i) INTERSET AND DIVIDEND-
Cash inflow from interest and dividends and cash outflow on account of interest and
dividends should be disclosed separately Cash inflow arising from interest and dividends
received should be shown as cash flow from investing activities where as cash outflow
disclosed outflow on account of interest and dividend paid should be shown as cash flow
from financing activity
ii) TAXES ON INCOME-
Tax paid on income is a part of cash flow from operating activity Hence taxes paid are
shown as a deduction under cash flow from operating activity
iii) EXTRA ORDINARY ITEMS-
Cash flow relating to extra ordinary items such as bad debts recovered Claims received from
insurance companies winning of a lottery or a law etc Should be disclosed separately as
arising from operating investing or financing activities For example the amount received
for insurance company on account of loss of stock by fire Earthquake and floods etc Should
be reported as cash flow from operating activities
iv) SIGNIFICANT NON - CASH TRANSACTION-
There are some investing and financing activities which do not require the use of cash or
cash equivalents Such non cash activities should be excluded from the cash flow statement
Examples are the acquisition of assets by issue of debentures or shares conversion of
shares into debentures etc Such significant on non cash transaction should be disclosed
outside the cash flow statement
CASH FLOW STATEMENT
(INDIRECT METHOD)
CASH FLOW FROM OPERARATTNG ACTIVITIES
Net profit before taxation and extraordinary item
Adjustment for
Depreciation
Foreign exchange loss
Interest income
Dividend income
Interest expense
Operating profit before working capital changes
Increase in sundry debtors
Decrease in inventories
Decrease in sundry creditors
Cash generated from operations
Income tax paid ()
Cash flow before extraordinary item
plusmn Extra - ordinary items
Net cash from operating activities
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of fixed assets ()
Proceeds from sale of equipment
Interest received
Dividend received ()
Net cash from investing activities
CASH FLOW FROM FINANCING ACTIVITIES-
Proceeds from insurance of share capital
Proceeds from long - term borrowings
Repayments of from long - term borrowings ()
Interest paid ()
Dividend paid ()
Net cash from financing activities
Net increase in cash and cash equivalent
Cash and cash equivalents at beginning of period
CHANGES IN CASH FLOWS
Changes in cash flows can be treated to the following
1 Net profit will increase the cash flows these cash flows will be
increased further if there are any non-cash changes (such as depreciation
and amortization)
2 Any payment of dividends will decrease the cash flows as will the
repayment of debt an issue of share or debt will also increase the
cash flows
3 An increase in non-cash assets will decrease cash flows increase in
current assets and fixed assets will result in drain on cash flows
Thus a statement of changes in cash flows ie the cash flow statement
classifies all Changes into one of three categories - operating investing or
financing activities Therefore the preparation of a statement of changes in cash
flows requires classification of changes in liabilities shareholders equity and
non-cash assets into one of these categories although some items will not fit
easily onto one other
h equivalent at end of period
STEP- BY-STEP PROCEDURE TO PREPARE CFS
1 Calculate the net increase or decrease in cash and cash equivalents-
For this purpose the opening balance of total cash and cash equivalents is compared with the
closing balance of cash and equivalents
Increasedecrease in cash and equivalents
Opening balance Closing Balance
Cash in hand
Cash in bank
Short-term Investment
Total
The difference between the total of opening and closing balance will be increased or
Decreased in cash equivalents during the period It may be noted that if there are only one or
two of items of cash etc
2 Net Cash flaw from operating activities-
The term operating refers to the normal purchase of goods and services On the basis of the
information contained in the comparative BS s and the IS and the additional Information the
net cash flow generated or use by the operating activities may be ascertained The IS prepared
by the firm gives the net profit figure earned by the firm On actual basis ie all items in the
IS are incorporated on the basis of earnedaccrued even
3 If not resulting in cash movements-
So the profit or loss as by the IS may not result in increase or decrease in cash balance by the
SYNOPSIS
INTRODUCTION
ESCORTS PVT LTD is a private limited company not listed in a stock exchange of India
and employees 900 highly trained personnel Its manufacturing plants are strategically located
in close proximity to its customers at Faridabad (Haryana) Noida (UP)
OBJECTIVES OF THE STUDY
bull To find the movement of cash inflow and cash outflow
bull To make the comparison between cash inflow and
bull Cash outflow
bull To prepare the Cash Flow Statement
bull To analyze the Balance Sheet of the company in terms of Cash Flow Statement
bull To focus on various activities of the organization in terms of Operating
Financing Investment
SCOPE OF THE STUDY
Financial resources are the assets for the company and their productivity is key
factor for profitability It is necessary to know their problems their knowledge
skills abilities amp the measures that can be taken to reduce them By analyzing this
top management can build good relations with the employees
The whole study is to determine the competencies of different employees who are
working in ESCORTS PVT LTD By analyzing it the top management can
introduce the concept of competency mapping in the organization Through this
management can attempt to use more suitable strategies towards the human
resource development
The research is confined to elicit the existing gap between the standard skill
required to perform the job and the skill processed by the employees at ESCORTS
PVT LTD And to provide them suitable training program to over come those gaps
for the better utilization of human resources
RELEVANCE
The scope of the study was confined to the outside parties like creditors
shareholders government etc Who want to invest their money in the
company
The benefit of the report for the company is that through this report they can come
to know about the cash flow statements of the company
This study also unable the company that their cash is not utilizing in unnecessary
things
The benefit of the report for the researcher is that it has helped to get knowledge
about the cash inflow and cash
RESERRCH METHODOLOGY-
RESEARCH DESIGN
bull The study was conducted under well- structured approach
bull The project lasted for 4 weeks and the year 2009 ie from 08 July to 12
Aug2009
bull The questionnaire method amp personal interview method was used to collect
the primary data for the study
The secondary data is collected from Internet amp company training material and
many other company materials
SAMPLE DESIGN
The process of extracting a sample from a population is called sampling
procedure The selection of sampling procedure to conduct the research
depends upon the nature of the study and the objective to be accomplished
Judgment sampling technique is adopted to select the respondents in this
study The sample design included the various departments in the YAMAHA
MOTORS PVT LTD
Methodology of date collection
bull Conducting personal interview
bull Data collection from primary and secondary sources
bull Designing questionnaire
bull Selecting sample size from the sample frame for the survey
bull Questionnaire distribution
bull Analysis of collected data with the help of statistical tools
bull Interpretation of collected data
bull Stating the conclusion based on the entire study
Sampling Technique
The sampling technique used for this research is of non-probability and convenience
sampling
Sample Unit
Employees of the company
Sample Size
For this research study the sample size is 25 respondents
Sources of data
Primary data
Primary data is the data which is collected by the researcher for the first time
and which was not there The tools used to collect the data are-
1)Questionnaire method from the employers in different departments
2) Face to Face personal interactions
Secondary Data
The data already collected is called as secondary data The relevant information
for this study has been collected from secondary source such as
Books
Journal
Reports
Publication by the organizational circulation
Company records
Business bulletins
Internet
Secondary data is also collected from various of the internet and intranet Some
of the website trough which information was gathered was through
HYPOTHESIS
The report is analyzed under the presumption that cash flow position of
YAMAHA MOTORS PVTLTD It can be improved and made effective in
terms of cash flows
In testing the above hypothesis the following aspects will be considered
1 Balance sheet comparisons
2 Presentation of cash flow statement in terms of revised AS-3
LIMITATIONS
The study though conducted to the best of the ability suffers from some
certain limitations There are
The data is secondary one and as such its reliability may be
questioned upon
The time availability for the study is less and as such it hinders thee
progress of the study
Senior officials were rarely approachable
Websites were not giving comprehensive data
Not having face-to-face interaction to get more relevant
information
Analysis and interpretation of data was done on the assumption that
the respondentsrsquo information was online
Information collected was totally subjective
The interviews are done during office hours but could not be done
for the other employees of other
DATA ANALYSIS
ESCORTS PVT LTD
CASH FLOW STRATEMENT
Year Ended Year Ended
30092009 30092008
Rs Crores Rs
Crores
A Cash Flow from Operating Activities
Net profit before tax (1733) 3444
Adjustment for
Loss on sale Provision for diminution in value of Long Term
Investments amp loans to Group Companies 189 4018
Gain on sale of Long Term Investments (122) (9492)
Gain on sale of Asset (013) -
Depreciation 4497 3955
Misc Exp Assets Write off Provisions 808 750
Interest Expense 7222 7999
Dividend Income (002) (001)
Interest Income (2082) -
Operating Profit before working capital changes 8764 10673
Adjustments for
Trade and other Receivables (8817) (12035)
Inventories 1379 (4692)
Trade Payables 6705 19046
Miscellaneous Expenditure (750) (511)
(1483) 1808
Cash Generated from Operations 7281 12481
Direct Taxes (Paid)Refunds (1785) 3166
Net Cash Flow from operating activities 5496 15647
B Cash Flow from Investing Activities
Purchase of Fixed Assets (3095) (2794)
Proceeds from sale of Fixed Assets 086 177
Movement in Loans and Advances (1627) (1644)
Sale of Investments 3233 11452
Short Term Deposits with schedule Banks (231) (1048)
Interest Received 2070 -
Dividend Received 002 001
Net Cash Flow from Investing activities 438 6144
Proceeds from Share Capital amp Securities Premium 11444 -
Proceeds from Long Term Borrowings 8660 -
Less Repayment of Long Term Borrowings (054) (7896)
Proceeds (Repayment) from short term borrowings (net) (22726) -
Interest Paid (7740) (8223)
Net Cash used in financing activities (10416) (16119)
Net Increase(Decrease) in Cash and Cash equivalents (4482) 5672
Cash and Cash equivalents as at 01102008 10565 4893
Cash and Cash equivalents as at 30092009 6083 1056
ANALYSIS OF CASH FLOW
From the cash flow statements of the ESCORT PVTLTDIt can be analyzed
from the two years that the net cash balance of the company has increased
manifold in 30-09-2008 than the year 30-09-2009
The net profit in 30-09-2008 is higher than the 30-09-2009 but due to certain
changes there has been increase in the cash balance
The interest paid this year is ore of the last year which implies that thee
company has not repaid his borrowed capital due to which the interest has got
down
The depreciation has increased but it does not affect cash to an extent as it is a
non-cash item In the head of working capital there is drastic change in the cash
balance in the form of ldquoTrade and other Receivables which has affected the cash
balance
There is outflow of cash for receivables rather than the inflow in the last year
So the net effect is that the cash from operating activities has been decreased
two times from the last year
The company has no accumulated losses as at the end of the financial year ie
September 31 2008
Provision for taxation has been made in accordance with the requirement of AS-
22 issued by Institute of Charted Accountants of India
Pursuant to that current year deferred tax liability have been charged to profit amp
loss account
In opinion of the board of directors of thee company the current assets loans
and advances have a value on realization in the ordinary course of the business at
least equal to the amount stated in the balance sheet and provision for all
liabilities have been made
Balance of sundry debtors creditors loans and advances are subject to confirmation by
the concerned parties
METHOD OF ANALYSIS
1 Data analysis is done using the following statistical tools wherever required in
order to extract meaningful information from the collected data
o Simple percentage and averages
o Bar diagram
o Cone diagram
o Pie diagram
2 The collected data from the questionnaire has been put together in the form of
tables
3 Percentage has been calculated wherever necessary for generalization of the
data
4 Data analysis and interpretation has been done on the basis of primary and
secondary data
5 The findings researches have been recorded based on the analysis
6 The study conducted pertains only to YAMAHA MOTORS INDIA PVTLTD
All bank balances (debitcredit) have been confirmed by the concerned bank
Identified from the available information which has been relied upon by the auditors
The names of small-scale industrial units to whom outstanding for more than
thirty days within agreed terms
The company has 9996 of shareholders in its subsidiary company named as
ESCORTS PVT LTD As at 31-03-2008
So the net effect is that the net cash from investing activities has many more
times than the last year which is negative Now the company has repaid its long
term borrowing more than the last year which has decreased the cash balance by
the little amount
Balance with the schedule banks under the head current amp collection account
amounting to represent funds in transit lying with schedule banks pending
transfer against loan liabilities under the head cash credit amp bill discounting
LIQUIDITY RATIO
1 CURRENT RATIO
(Amount in Rs)
Current Ratio
Year Current Assets Current Liabilities Ratio
2003 58574151 7903952 7412004 69765346 31884616 2192005 72021081 16065621 4482006 91328208 47117199 1942007 115642068 30266661 382
Interpretation
As a rule the current ratio with 21 (or) more is considered as satisfactory
position of the firm
When compared with 2006 there is an increase in the provision for tax because
the debtors are raised and for that the provision is created The current liabilities
majorly included Lanco Group of company for consultancy additional services
The sundry debtors have increased due to the increase to corporate taxes
In the year 2006 the cash and bank balance is reduced because that is used for
payment of dividends In the year 2007 the loans and advances include majorly
the advances to employees and deposits to government The loans and advances
reduced because the employees set off their claims The other current assets
include the interest attained from the deposits The deposits reduced due to the
declaration of dividends So the other current assets decreased
The huge increase in sundry debtors resulted an increase in the ratio which is
above the benchmark level of 21 which shows the comfortable position of the
firm
GRAPHICAL REPRESENTATION
741
219
448
194
382
000
100
200
300
400
500
600
700
800
Ratio
2003 2004 2005 2006 2007
Years
CURRENT RATIO
Ratio
2 QUICK RATIO
(Amount
in Rs)
Quick Ratio
Year Quick Assets Current Liabilities Ratio
2003 58574151 7903952 741
2004 52470336 31884616 165
2005 69883268 16065620 435
2006 89433596 47117199 19
2007 115431868 30266661 381
Interpretation
Quick assets are those assets which can be converted into cash with in a short
period of time say to six months So here the sundry debtors which are with the
long period does not include in the quick assets
Compare with 2006 the Quick ratio is increased because the sundry debtors are
increased due to the increase in the corporate tax and for that the provision
created is also increased So the ratio is also increased with the 2006
GRAPHICAL REPRESENTATION
741
165
435
190
381
000
100
200
300
400
500
600
700
800
Ratio
2003 2004 2005 2006 2007
Years
QUICK RATIO
Ratios
3 ABOSULTE LIQUIDITY RATIO
(Amount
in Rs)
Absolute Cash Ratio
Year Absolute Liquid Assets Current Liabilities Ratio
2003 31004027 7903952 392
2004 10859778 31884616 034
2005 39466542 16065620 246
2006 53850852 47117199 114
2007 35649070 30266661 118
Interpretation
The current assets which are ready in the form of cash are considered as absolute
liquid assets Here the cash and bank balance and the interest on fixed assts are
absolute liquid assets
In the year 2006 the cash and bank balance is decreased due to decrease in the
deposits and the current liabilities are also reduced because of the payment of
dividend That causes a slight increase in the current yearrsquos ratio
GRAPHICAL REPRESENTATION
392
034
246
114 118
0
05
1
15
2
25
3
35
4
Ratios
2003 2004 2005 2006 2007
Years
ABSOLUTE CASH RATIO
Ratios
LEVERAGE RATIOS
4 PROPRIETORY RATIO
(Amount
in Rs)
Proprietory Ratio
Year Share Holders Funds Total Assets Ratio
2003 67679219 78572171 086
2004 53301834 88438107 06
2005 70231061 89158391 079
2006 56473652 106385201 053
2007 97060013 129805102 075
Interpretation
The proprietary ratio establishes the relationship between shareholders funds to
total assets It determines the long-term solvency of the firm This ratio indicates
the extent to which the assets of the company can be lost without affecting the
interest of the company
There is no increase in the capital from the year2004 The share holderrsquos funds
include capital and reserves and surplus The reserves and surplus is increased
due to the increase in balance in profit and loss account which is caused by the
increase of income from services
Total assets includes fixed and current assets The fixed assets are reduced
because of the depreciation and there are no major increments in the fixed assets
The current assets are increased compared with the year 2006 Total assets are
also increased than precious year which resulted an increase in the ratio than old
GRAPHICAL REPRESENTATION
086
060
079
053
075
000
010
020
030
040
050
060
070
080
090
Ratios
2003 2004 2005 2006 2007
Years
PROPRIETORY RATIO
Ratios
ACTIVITY RATIOS
5 WORKING CAPITAL TURNOVER RATIO
(Amount
in Rs)
Working Capital Turnover Ratio
Year Income From Services Working Capital Ratio
2003 36309834 50670199 0722004 53899084 37880730 1422005 72728759 55355460 1312006 55550649 44211009 1262007 96654902 85375407 113
Interpretation
Income from services is greatly increased due to the extra invoice for Operations
amp Maintenance fee and the working capital is also increased greater due to the
increase in from services because the huge increase in current assets
The income from services is raised and the current assets are also raised together
resulted in the decrease of the ratio of 2007 compared with 2006
GRAPHICAL REPRESENTATION
072
142 131126
113
000
020
040
060
080
100
120
140
160
Ratio
2003 2004 2005 2006 2007
Years
WORKING CAPITAL TURNOVER RATIO
Ratio
6 FIXED ASSETS TURNOVER RATIO
(Amount in Rs)
Fixed Assets Turnover Ratio
Year Income From Services Net Fixed Assets Ratio
2003 36309834 28834317 126
2004 53899084 29568279 182
2005 72728759 17137310 424
2006 55550649 15056993 369
2007 96654902 14163034 682
Interpretation
Fixed assets are used in the business for producing the goods to be sold This
ratio shows the firmrsquos ability in generating sales from all financial resources
committed to total assets The ratio indicates the account of one rupee
investment in fixed assets
The income from services is greaterly increased in the current year due to the
increase in the Operations amp Maintenance fee due to the increase in extra invoice
and the net fixed assets are reduced because of the increased charge of
depreciation Finally that effected a huge increase in the ratio compared with the
previous yearrsquos ratio
GRAPHICAL REPRSENTATION
126182
424 369
682
000
100
200
300
400
500
600
700
Ratios
2003 2004 2005 2006 2007
Years
FIXED ASSETS TURNOVER RATIO
Ratios
7 CAPITAL TURNOVER RATIO
(Amount
in Rs)
Capital Turnover Ratio
Year Income From Services Capital Employed Ratio
2003 36309834 37175892 0982004 53899084 53301834 1012005 72728759 70231061 1042006 55550649 56473652 0982007 96654902 97060013 100
Interpretation
This is another ratio to judge the efficiency and effectiveness of the company
like profitability ratio
The income from services is greaterly increased compared with the previous year
and the total capital employed includes capital and reserves amp surplus Due to
huge increase in the net profit the capital employed is also increased along with
income from services Both are effected in the increment of the ratio of current
year
GRAPHICAL REPRESENTATION
098
101
104
098
100
094095096097098099100101102103104
Ratios
2003 2004 2005 2006 2007
Years
CAPITAL TURNOVER RATIO
Ratios
8 CURRENT ASSETS TO FIXED ASSETS RATIO
(Amount
in Rs)
Current Assets To Fixed Assets Ratio
Year Current Assets Fixed Assets Ratio
2003 58524151 19998020 2932004 69765346 18672761 3742005 72021081 17137310 4202006 91328208 15056993 6072007 115642068 14163034 817
Interpretation
Current assets are increased due to the increase in the sundry debtors and the net
fixed assets of the firm are decreased due to the charge of depreciation and there
is no major increment in the fixed assets
The increment in current assets and the decrease in fixed assets resulted an
increase in the ratio compared with the previous year
GRAPHICAL REPRESENTATION
293374
420
607
817
000
100
200
300
400
500
600
700
800
900
Ratios
2003 2004 2005 2006 2007
Years
CURRENT ASSETS TO FIXED ASSETS RATIO
Ratios
PROFITABILITY RATIOS
GENERAL PROFITABILITY RATIOS
9 NET PROFIT RATIO
(Amount in Rs)
Net Profit Ratio
Year Net Profit After Tax Income from Services Ratio
2003 21123474 36039834 059
2004 16125942 53899084 030
2005 16929227 72728759 023
2006 18259580 55550649 033
2007 40586359 96654902 042
Interpretation
The net profit ratio is the overall measure of the firmrsquos ability to turn each rupee
of income from services in net profit If the net margin is inadequate the firm
will fail to achieve return on shareholderrsquos funds High net profit ratio will help
the firm service in the fall of income from services rise in cost of production or
declining demand
The net profit is increased because the income from services is increased The
increment resulted a slight increase in 2007 ratio compared with the year 2006
GRAPHICAL REPRESENTATION
059
030
023
033
042
000
010
020
030
040
050
060
Ratios
2003 2004 2005 2006 2007
Years
NET PROFIT RATIO
Ratios
10 OPERATING PROFIT
(Amount in Rs)
Operating Profit
Year Operating Profit Income From Services Ratio
2003 36094877 36309834 099
2004 27576814 53899084 051
2005 29540599 72728759 041
2006 31586718 55550649 057
2007 67192677 96654902 070
Interpretation
The operating profit ratio is used to measure the relationship between net profits
and sales of a firm Depending on the concept it will decide
The operating profit ratio is increased compared with the last year The earnings
are increased due to the increase in the income from services because of
Operations amp Maintenance fee So the ratio is increased slightly compared with
the previous year
GRAPHICAL REPRESENTATION
099
051
041
057
070
000
010
020
030
040
050060
070
080
090
100
Ratios
2003 2004 2005 2006 2007
Years
OPERATING PROFIT RATIO
Ratios
11 RETURN ON TOTAL ASSETS RATIO
(Amount in Rs)
Return on Total Assets Ratio
Year Net Profit After Tax Total Assets Ratio
2003 21123474 78572171 027
2004 16125942 88438107 018
2005 16929227 89158391 019
2006 18259580 106385201 017
2007 40586359 129805102 031
Interpretation
This is the ratio between net profit and total assets The ratio indicates the return
on total assets in the form of profits
The net profit is increased in the current year because of the increment in the
income from services due to the increase in Operations amp Maintenance fee The
fixed assets are reduced due to the charge of depreciation and no major
increments in fixed assets but the current assets are increased because of sundry
debtors and that effects an increase in the ratio compared with the last year ie
2006
GRAPHICAL REPRESENTATION
027
018 019017
031
000
005
010
015
020
025
030
035
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON TOTAL ASSETS
Ratios
12 RESERVES amp SURPLUS TO CAPITAL RATIO
(Amount in Rs)
Reserves amp Surplus To Capital Ratio
Year Reserves amp Surplus Capital Ratio
2003 65599299 2079920 31542004 34582554 18719280 1852005 51511781 18719280 2752006 37754372 18719280 2022007 78340733 18719280 419
Interpretation
The ratio is used to reveal the policy pursued by the company a very high ratio
indicates a conservative dividend policy and vice-versa Higher the ratio better
will be the position
The reserves amp surplus is decreased in the year 2006 due to the payment of
dividends and in the year 2007 the profit is increased But the capital is
remaining constant from the year 2004 So the increase in the reserves amp surplus
caused a greater increase in the current yearrsquos ratio compared with the older
GRAPHICAL REPRESENTATION
3154
185 275 202419
-
500
1000
1500
2000
2500
3000
3500
Ratios
2003 2004 2005 2006 2007
Years
RESERVES amp SRUPLUS TO CAPITAL RATIO
Ratios
OVERALL PROFITABILITY RATIOS
13 EARNINGS PER SHARE
(Amount in Rs)
Earnings Per Share
Year Net Profit After Tax No of Equity Shares Ratio
2003 21123474 207992 101562004 16125942 1871928 8612005 16929227 1871928 9042006 18259580 1871928 9752007 40586359 1871928 2168
Interpretation
Earnings per share ratio are used to find out the return that the shareholderrsquos earn
from their shares After charging depreciation and after payment of tax the
remaining amount will be distributed by all the shareholders
Net profit after tax is increased due to the huge increase in the income from
services That is the amount which is available to the shareholders to take There
are 1871928 shares of Rs10- each The share capital is constant from the year
2004 Due to the huge increase in net profit the earnings per share is greaterly
increased in 2007
GRAPHICAL REPRESENTATION
10156
861904 975
2168
000
2000
4000
6000
8000
10000
12000
Ratios
2003 2004 2005 2006 2007
Years
EARNINGS PER SHARE
Ratios
14 PRICE EARNINGS (PE) RATIO
(Amount in Rs)
Price Earning (PE) Ratio
Year Market Price Per Share Earnings Per Share Ratio
2003 3254 10156 0322004 2847 861 3302005 3752 904 4152006 3017 975 3092007 5185 2168 239
Interpretation
The ratio is calculated to make an estimate of application in the value of share of
a company
The market price per share is increased due to the increase in the reserves
amp surplus The earnings per share are also increased greaterly compared
with the last year because of increase in the net profit So the ratio is
decreased compared with the previous year
GRAPHICAL REPRESENTATION
032
330
415
309
239
000
050
100
150
200
250
300
350
400
450
Ratios
2003 2004 2005 2006 2007
Years
PE RATIO
Ratios
15 RETURN ON INVESTMENT
(Amount in Rs)
Return on Investment
Year Net Profit After Tax Share Holders Fund Ratio
2003 21123474 67679219 031
2004 16125942 53301834 03
2005 16929227 70231061 024
2006 18259580 56473652 032
2007 40586359 97060013 042
Interpretation
This is the ratio between net profits and shareholders funds The ratio is
generally calculated as percentage multiplying with 100
The net profit is increased due to the increase in the income from services ant
the shareholders funds are increased because of reserve amp surplus So the ratio
is increased in the current year
GRAPHICAL REPRESENTATION
031 030
024
032
042
000
005
010
015
020
025
030
035
040
045
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON INVESTMENT RATIO
RatioS
DATA COLLECTION
The data can be of two types
Primary Data
Secondary Data
Primary Data
Primary data are those data which is originally collected afresh
Secondary Data
Secondary data are those data which are already collected and stored and which has
been passed through statistical research
In this project Secondary data has been collected from following sources-
Annual report
Books
MIS
Other material and report published by company There are two methods to prepare
the Cash flow Statement
ndirect Method
I
The indirect method (or reconciliation method) starts with net income and converts it
to net cash flow from operating activities In other words the indirect method adjusts
net income for items that affected reported net income but did not affect cash To
compute net cash flow from operating activities non-cash charges in the income
statement are added ack to net income and non-cash credits are deducted
b
Direct Method
Under the direct method the statement of cash flows reports net cash flow from
operating activities as major classes of operating cash receipts (eg cash collected from
customers and cash received from interest and dividends) and cash disbursements (eg
cash paid to suppliers for goods to employees for services to creditors for interest and
to government authorities for taxes)
INDIRECT VERSUS DIRECT METHOD
The most contentious decision that the FASB faced in issuing Statement No 95 was
choosing between the direct method and the indirect method of determining net cash
flow from operating activities Companies lobbied against the direct method urging
adoption of the indirect method Commercial lending officers expressed a strong
preference to the FASB hat the direct method be required
tCF-Page 3 of 5
In Favor of the Direct Method
The principal advantage of the direct method is that it shows operating cash receipts and
payments That is it is more consistent with the objective of a statement of cash flows to
provide information about cash receipts and cash payments than the in-direct method
which does not report operating cash receipts and payments
Supporters of the direct method contend that knowledge of the specific sources of
operating cash receipts and the purposes for which operating cash payments were made
in past periods is useful in estimating future operating cash flows Furthermore in-
formation about amounts of major classes of operating cash receipts and payments is
more useful than information only about their arithmetic sum (the net cash flow from
operating activities) Such information is more revealing of an enterprises ability (1) to
generate sufficient cash from operating activities to pay its debts (2) to reinvest in its
operations and (3) to make distributions to its owners
Many corporate providers of financial statements say that they do not currently collect
information in a manner that allows them to determine amounts such as cash received
from customers or cash paid to suppliers directly from their accounting systems But
supporters of the direct method contend that the incremental cost of assimilating such
operating cash receipts and payments data is not significant
In Favor of the Indirect Method
The principal advantage of the indirect method is that it focuses on the differences
between net income and net cash flow from operating activities That is it provides a
useful link between the statement of cash flows and the income statement and balance
sheet
Many providers of financial statements contend that it is less costly to adjust net income
to net cash flow from operating activities (indirect) than it is to report gross operating
cash receipts and payments (direct) Supporters of the indirect method also state that the
direct method which effectively reports income statement information on a cash rather
than an accrual basis may erroneously suggest that net cash flow from operating
activities is as good as or better than net income as a measure of performance
Special Rules Applying to Direct and Indirect Methods
Companies that use the direct method are required at a
minimum to report separately the following classes of
operating cash receipts and payments
Receipts
1048713 Cash collected from customers (including lessees licensees etc)
1048713 Interest and dividends received
1048713 Other operating cash receipts if any
Payments
1048713 Cash paid to employees and suppliers of goods or services (including
suppliers of
insurance advertising etc)
1048713 Interest paid
1048713 Income taxes paid
1048713 Other operating cash payments if any
Companies using the indirect method are required to disclose separately changes in
inventory receivables and payables to reconcile net income to net cash flow from
operating activities In addition interest paid (net of amount capitalized) and income
taxes paid must be disclosed elsewhere in the financial statements or accompanying
notes
The FASB requires these separate and additional disclosures so that users
may approximate the direct method Also an acceptable alternative presentation
of the in-direct method is to report net cash flow from operating activities as a
single line item in the statement of cash flows and to present the reconciliation
details elsewhere in the financial statements
FINDING OF SUDY
According to cash flow statement of the company The finding of the study are as
follows-
The company has not taken any loans secured or unsecured from companies
firms or other parties
The company has not accepted any deposit from the public during the year
The company is not a sick industrial company
The company has not granted any loan secured or unsecured to company firms
or other parties
The company has paid the entire long term and short term borrowing during the
year
The company has buy back the companyrsquos own share this year
The interest paid in 2008 is more than the
There has been a significant decline in volume over the years from 2001-02
to 2005-06 as can be seen in the graph below
Table 43
The Net sales of Tractor has increased considerably from 2004-05 to 2007-08
This can be mainly attributed to changes in Variable and material costs and in
the price
The Net sale of Tractor has increased considerably from 2004-05 to 2007-08
that is an decrease of Rs7216 per tractor This can be mainly attributed to
changes in
Variable and material costs and in the prices
RECOMMENDATIONS
According to cash flow statement of the company The suggestions of the study
are as follows-
The time durations for training program have to increase
Buy regular review and consultations develop a career progression
which is sensitive to performance and ability
Create an environment where by people are trend developed to enable
The to take advantages of opportunities that arise
The jab can be redesigned where the work man stay in what is normally
the same job but has elements of it changed
The principle amount must be paid in time which can be reducing the
interest the out flow
The purchase of the fixed asset must be made only when there is extreme
requirement
In order to avoid taxes the company should go for more investment
The companyrsquos borrowings should go for more investment
o The company should try to reduce the depreciations as maximum
as possible
CONCLUSION
The study on competency level of employees at ESCORTS PVTLTD gave an
insight about the acceptance of competency mapping by employees
The employees at Ymi welcome the introduction of competency mapping in their
organization as they felt it was very much essential in enhancing their skills and
organizational development
The organization has provided the recourses guidance and support to facilitate the
introduction of competency level easily and develop the employees in such a way
that they can face any kind of challenge
However the level of competency in employees is found to be satisfactory
Providing proper training education and guidance to the employees can enhance
the level
This study was mainly carried out to find out whether thee competency mapping
being followed by the company is effective till date If the competency mapping
and fitment to the organization
By looking at the graphs and tables it is quite that the employees still are not up to
the level of competent pool they still have to be trained and made competent in
order to fill the gap As the organization has just applied the mapping it has to see
to that it meets all the requirements for competency mapping
Therefore the graphs make it quite clear that the potential of the employees is not
up to the mark and ie they are not competent enough to meet the competency-
mapping requirement Hence by further training and counseling this gap can be
closed
This report includes the training requirements of employees and it highlights skills
possessed by each employee and skill required All employees get training so that
skill can be improved and maintain balance between standard performance with
their actual performance to avoid gap
APPENDIX
QUESTIONNAIRE
Consumer Survey
Name _____________________________
Age _____________________________
Sex
Male
Female
Occupation
Businessman
Service man
Professional
Others
Monthly income brackets
Below 15000
15000- 20000
20000-30000
30000 and above
of your savings _________
Do you invest
Yes
No
If yes then where do you invest your money
Bank
Insurance
funds
Others
Why do you made that statement
Return
Risk hedging
Tax benefits
Other reasons (specify) _______
Who influence your cash decision
Relatives and friends
Family members
Advisors experts
You yourself
If no then why
Do not know where to invest
Satisfied with your current investment return
Donrsquot want take risk
Other reasons
__________________________________________________________________
___________________
Do you know about CF statement
Yes
No
If yes then from where you have come to know about an cash statement
Advertisements on newspapers
Friends and relative
Agents experts
Other source
What do you think about cash statement
It means investing only in share market
Constant watch must be kept always
Return is not satisfactory
Other perception
__________________________________________________
Can you recall any cash flow of company
___________________________
Would you want to made CF of an org
Yes
No
If yes then why
_______________________________________________________
If no then why
_______________________________________________________
BIBLIOGRAPHY
List of Books
1 PANDEY IM - FINANCIAL MANAGEMANT
2 KHAN MY AND JAIN PK -FINANCIAL MANAGEMANT
3 SMITH KV ndash MANAGEMANT OF WORKING CAPITAL
3 COMPANY RECORDS
4 JOURNAL
5 REPORTS
WEBLIOGRAPHY
1 wwwescortspvtltdcom
2 wwwgooglecom
SCFP (CASH BASIS) OR
THE CASH FLOW STATEMENT
The CFS attempts to analyze the transactions of the firm in terms of cash ie the transactions
generating cash and using cash The focus in the CFS is on cash rather than on WC The
sources of cash may be the cash profits earned by the firm issue of capital for cash issue of
other securities for cash borrowings sale of assets investment redemption of debenture or
preference share repayment of loan payment of tax dividend distribution etc Thus the
CFS summarizes the cash inflows and outflows
An analysis of cash flows is useful for short-run planning A firm needs sufficient cash to
debts maturing in the near future to pay interest and other expenses and to pay dividends to
shareholders The firm can make projections of cash flows and outflows for the near future to
determine the availability of cash This cash balance can be matched with the firms need for
cash during the period and accordingly arrangements can be made the deficit or invest the
surplus cash temporarily A historical analysis of cash flows provides insight to prepare
reliable cash flow projections for the immediate future
A statement of changes in financial position on cash basis commonly known as cash flow
statement summarizes the causes of changes in cash position between dates of two balance
sheets It indicates the sources amp uses of cash The cash flow statement is similar to the fund
flow statement except that it focuses attentions on cash instead of working capital (funds)
Thus this statement analyses change in non-current accounts as well as current accounts
(other than cash) to determine the flow of cash
The CFS is based on the concept on the WC Where as the CFS is based in cash which is only
the element of WC Thus the CFS provides details of cash movements whereas the FFS
provides the details of funds movements
The CFS considers only the actual movement of cash whereas the FFS considers the
movements of the funds as defined in terms of net working capital
CASH-FLOW STATEMENT
A cash-flow statement is a statement showing inflows (receipts) and outflows (payments) of
cash during a particular period In other words it is a summary of sources and applications of
Cash during a particular span of time It analyses the reason for changes in balance of cash
between the two balance sheet dates The term Cash here stands for cash and cash
equivalents
A cash-flow statement includes only those items which affect cash As such the cash-flow
statement is called a statement of changes in financial position - cash basis
A cash - flow statement can be for the past or can be projected for a future period
OBJECTS OR USES OF CASH-FLOW STATEMENT
The main objectives behind preparing a cash-flow statement can be laid down as under-
bull USEFUL FOR SHORT-TERM FINANCIAL PLANNING-
A cash-flow statement provides information for planning the short-term financial needs of the
firm Since it provides information regarding the sources and utilization of cash during a period
it become easier for the management to assess whether it will have Adequate cash to meet day-
to-day expenses and pay the long - term loans and interest Thereon and whether it has enough
cash to pay for the purchase of fixed assets or not
USEFUL FOR PREARING THE CASH BUDGET-
A cash-flow statement prepared for the future period is helpful in preparing a cash budget It
informs the management about the future period is helpful in preparing a cash budget It informs
the management about the surplus or deficit periods of cash ie in which months the payments
will be in excess of receipts It helps in planning the investment of surplus cash in short-term
investment and to plan short-term credit in advance of deficit periods
bull COMPARISON WITH CASH BUDGET-
A cash budget is prepared at the commencement of the year whereas a cash flow Statement is
prepared at the end of the year A comparison between the two helps in ascertaining the extent
to which the financial resources of the firm have been generated and used according to the plan
Causes of variances between the figures of two statements can be analyzed and proper
corrective measures may be takes
bull STUDY OF THE TREND OF CASH RECEIPTS AND PAYMENTS-
A cash-flow statement reveals the speed at which the cash is being generated from debtors stock
and other current assets the speed at which the current liabilities are being paid It enables the
management to assess the true position of the cash in future
bull IT EXPLAINS THE DEVIATIONS OF CASH FROM EARNINGS-
A firm may earn huge profits yet it may have paucity of cash or when it suffered a loss it may
still have plenty of cash A cash flow statement explains the reasons for it
HELPFUL IN ASCERTAINING CASH-FLOW FROM VARIOUS
ACTIBITIES SEPARATELY-
A cash-flow statement aims at highlighting the cash flow from operating investing and
financing activities separately It includes how much cash has been generated or used in these
activities
bull HELPFUL IN MAKING DIVIDEND DECISIONS-
Dividend must be paid within 42 days of its declaration Hence the management takes the help of
cash-flow statement to ascertain the position of cash generated from operating activities which
can be used for payment of dividend
IMPORTANCE AND RELEVANCE OF CFS
The CFS has gained importance in view of the fact that there are many managerial Decisions
which are taken in the light of the cash availability or cash position of the firm
For example declaration of dividend by the company requires cash disbursement and
Therefore the Board of Directors must consider the cash position before proposing a dividend
The CFS also provides information for the short term financial planning and in particular the
short term cash needs of the firm
In view of increasing importance and relevance of the CFS the clause 32 of the Listing
agreement (between a Company and the Stock Exchange where the shares proposed to be listed)
has been amended by the SEBI As a result the listed companies in India are now required to
supply a copy of the CFS to each shareholder as a part of Annual Report As a result the listed
companies have started a practice of sending a CFS for which the BS has been prepared as
apart of the Annual Report of the company
DIFFRENCE BETWEEN CASH - FLOW STATEMENT AND
CASH BUDGET
There is not much difference between cash flow statement and a cash budget The
only difference is that a cash flow statement is prepared for a past period where as cash
budget is prepared for a future period Hence it is of limited use as far as the future
periods are concerned A cash budget is therefore prepared showing how much cash is
likely to be received and what will be the disbursements during a future period of time
Thus a cash budget indicates in which months there will be surplus cash and in which
moths there will be deficiency of cash resources The management can then take suitable
decision to invest the surplus cash or make arrangement for the deficiency of cash at the
required time
LIQUIDITY
It does not present true picture of the liquidity of the firm the liquidity does
not depend upon cash alone Liquidity also depends upon those assets
which can be converted into cash easily
bull Exclusion of these assets obstructs the true reporting of the ability of the firm to
meet its liabilities when they become due for payment
bull The possibilities of window - dressing is higher in case of cash position in
comparison to the working capital position of the firm
bull The cash balance can be easily maneuvered by postponing purchases and other
payments and by rapidly collecting cash from debtors before the balance sheet date
Hence a fund - flow statement presents a more realistic picture than a cash flow
statement
bull Cash flow statement ignores non- cash charges Hence the true position of the
enterprise cannot be judged by cash flow statement
bull It is prepared on cash basis and hence ignores one of the basic concept of accounting
namely accrual concept
PROCEDURE OF PREPARING CASH FLOW STATEMENT-
The institute of charted accountants of India has issued accounting standards (as)-3 revised for
preparing a cash flow statement This accounting standard has been made mandatory in respect
of accounting periods commencing on or after 1st April 2001 for certain enterprises These
enterprises are-
bull Enterprises whose equity or debt securities are listed on a recognized stock exchange in
India And enterprise that are in the process of issuing equity or debt securities that will
be listed on a recognized stock exchange in India
bull All other commercial industrial and business enterprises whose turnover for accounting
period Rs 50 crores
As such the cash flow statement has been prepared according to as -3 revised in this project
According to as-3 revised the cash flow statement summarizes the cash inflows and cash
outflows and the net changes (increase or decrease) in cash and cash equipment resulting from
operating investing and financing activities of a firm during a period The following terms are
used for preparing a cash flow statement
CASH-
It compares cash in hand and demands with banks
CASH EQUIVALENTS-
There are short - term highly liquid investments that are readily into known amounts of cash
and which present insignificant risk of changes in their values Normally an investment will be
termed as cash equivalent only if it has a short maturity period say three months or less from the
date of its acquisition Examples of cash equivalent are treasury bills commercial papers etc
Which are purchased with cash that is in excess of immediate needs investment in shares are
excluded from cash equivalents unless they are cash equivalent in reality For example the
preference shares of the company which are purchased shortly before their redemption date will
be included in cash equivalents provided there is only an insignificant risk of failure of the
company in repaying the amount at the date of the maturity
CLASSIFICATION OF CASH FLOW-
According to as -3 (revised) cash flow statement should be presented in a manner that it reports
inflows of cash by classifying them into three categories namely operating investing and
financing activities Classification of all activities into these activities on the cash and cash
equivalents of the enterprise such information will be helpful in evaluating the relationships
among these three activities are explained as below
CASH FLOW FROM OPERATING ACTIVITIES-
Operating activities are the main revenue generating activities of an enterprise As such they
include cash flows from those transactions and events which enter into the ascertainment of
net profit or loss of the enterprise Examples of cash flows arising operating activities are
bull Cash receipts from the sale of goods and rendering of services
bull Cash receipts from royalties fees commissions and other revenue
bull Cash payments to suppliers for goods and services
bull Cash payments to and on behalf of employees
bull Cash receipts and cash payments of an insurance enterprise for premiums and claims
annuities and other policy benefits
bull Cash receipts and payments relating to future contracts forward contracts option
contracts and swap contracts when the contracts are held for dealing or trade purpose and
bull Cash payments of refunds of income taxes unless they can be specifically identified with
financing and investing activities
CASH FLOW FROM INVESTING ACTIVITIES-
Investing activities include the purchase and sale of long term assets such as land building plant
and machinery etc not held for resale These activities also include the purchase and sale of such
investment which are not including in cash equipments Cash flow from investing activities
discloses the expenditures incurred for resources intended to generate future income and cash
flows
Examples cash flow arising from investing activities are
bull Cash payments to acquire fixed assets (including intangible)
bull Cash receipts from sale of fixed assets (including intangibles)
bull Cash payments to acquire shares warrants or debt instruments of other enterprises
(other than receipts for those instruments considered to be cash equivalents)
bull Cash receipts from sale of shares warrants or debt instruments of other enterprises (other
than receipts for those instruments considered to be cash equivalents)
bull Cash advances and loans made to third parties In case of financial enterprises these will
be treated as cash flow from operating activities
bull Cash receipts from the repayment of advances and loans made to third parties In case of
financial enterprises these will be treated as cash flow from operating activities
bull Cash receipts of insurance claim for property involved in accident and
bull Cash receipts of interest and dividend In case of financial enterprise these will be treated
cash flow from operating activities
CASH FLOW FROM FIANCING ACTIVITIES-
Financing activities are the activities that result in change in capital and borrowing of the
enterprise
Examples of cash flows arising from financing activities are
bull Cash receipts from issuing shares or other similar instruments
bull Cash receipts from issuing debentures loans bonds and other short term or long term
borrowing
bull Cash repayment of amounts borrowed buy back of equity shares redemption of
preference shares debentures loans bonds etc
bull Cash payment of interest and dividend
IMPORTANT NOTE
In case of financial enterprise such as bank or mutual fund company cash Outflow
and cash inflow arising from the purchase and sale of securities will Be treated as
flows from operating activities This is because purchase and sale of securities is a
part of operating activity in case of financial enterprise In addition interest paid
and interest received as well as dividends received will also be treated as cash flow
from operating activities in case of financial Enterprises
CASH FLOW STATEMENT
(DIRECT METHOD)
CASH FLOW FROM OPERATING ACTIVITIES
Cash receipts from costumers
Cash paid to suppliers and employers ()
Cash generated from operations
Income tax paid ()
Cash flows from extraordinary item
plusmn Extra ordinary items
Net cash from operating activities
CASH FLOW FROM INVESTING ACTIVITIES-
Purchase of fixed assets
Proceed from sale equipment ()
Interest received
Dividend received ()
Net cash from investing activities
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from insurance of share capital
Proceeds from long- term borrowings ()
Repayment of from long-term borrowings
Interest paid
Dividend paid ()
Net cash from financing activities
Net increase in cash and cash equivalent
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
SOME SPECIAL TERMS-
i) INTERSET AND DIVIDEND-
Cash inflow from interest and dividends and cash outflow on account of interest and
dividends should be disclosed separately Cash inflow arising from interest and dividends
received should be shown as cash flow from investing activities where as cash outflow
disclosed outflow on account of interest and dividend paid should be shown as cash flow
from financing activity
ii) TAXES ON INCOME-
Tax paid on income is a part of cash flow from operating activity Hence taxes paid are
shown as a deduction under cash flow from operating activity
iii) EXTRA ORDINARY ITEMS-
Cash flow relating to extra ordinary items such as bad debts recovered Claims received from
insurance companies winning of a lottery or a law etc Should be disclosed separately as
arising from operating investing or financing activities For example the amount received
for insurance company on account of loss of stock by fire Earthquake and floods etc Should
be reported as cash flow from operating activities
iv) SIGNIFICANT NON - CASH TRANSACTION-
There are some investing and financing activities which do not require the use of cash or
cash equivalents Such non cash activities should be excluded from the cash flow statement
Examples are the acquisition of assets by issue of debentures or shares conversion of
shares into debentures etc Such significant on non cash transaction should be disclosed
outside the cash flow statement
CASH FLOW STATEMENT
(INDIRECT METHOD)
CASH FLOW FROM OPERARATTNG ACTIVITIES
Net profit before taxation and extraordinary item
Adjustment for
Depreciation
Foreign exchange loss
Interest income
Dividend income
Interest expense
Operating profit before working capital changes
Increase in sundry debtors
Decrease in inventories
Decrease in sundry creditors
Cash generated from operations
Income tax paid ()
Cash flow before extraordinary item
plusmn Extra - ordinary items
Net cash from operating activities
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of fixed assets ()
Proceeds from sale of equipment
Interest received
Dividend received ()
Net cash from investing activities
CASH FLOW FROM FINANCING ACTIVITIES-
Proceeds from insurance of share capital
Proceeds from long - term borrowings
Repayments of from long - term borrowings ()
Interest paid ()
Dividend paid ()
Net cash from financing activities
Net increase in cash and cash equivalent
Cash and cash equivalents at beginning of period
CHANGES IN CASH FLOWS
Changes in cash flows can be treated to the following
1 Net profit will increase the cash flows these cash flows will be
increased further if there are any non-cash changes (such as depreciation
and amortization)
2 Any payment of dividends will decrease the cash flows as will the
repayment of debt an issue of share or debt will also increase the
cash flows
3 An increase in non-cash assets will decrease cash flows increase in
current assets and fixed assets will result in drain on cash flows
Thus a statement of changes in cash flows ie the cash flow statement
classifies all Changes into one of three categories - operating investing or
financing activities Therefore the preparation of a statement of changes in cash
flows requires classification of changes in liabilities shareholders equity and
non-cash assets into one of these categories although some items will not fit
easily onto one other
h equivalent at end of period
STEP- BY-STEP PROCEDURE TO PREPARE CFS
1 Calculate the net increase or decrease in cash and cash equivalents-
For this purpose the opening balance of total cash and cash equivalents is compared with the
closing balance of cash and equivalents
Increasedecrease in cash and equivalents
Opening balance Closing Balance
Cash in hand
Cash in bank
Short-term Investment
Total
The difference between the total of opening and closing balance will be increased or
Decreased in cash equivalents during the period It may be noted that if there are only one or
two of items of cash etc
2 Net Cash flaw from operating activities-
The term operating refers to the normal purchase of goods and services On the basis of the
information contained in the comparative BS s and the IS and the additional Information the
net cash flow generated or use by the operating activities may be ascertained The IS prepared
by the firm gives the net profit figure earned by the firm On actual basis ie all items in the
IS are incorporated on the basis of earnedaccrued even
3 If not resulting in cash movements-
So the profit or loss as by the IS may not result in increase or decrease in cash balance by the
SYNOPSIS
INTRODUCTION
ESCORTS PVT LTD is a private limited company not listed in a stock exchange of India
and employees 900 highly trained personnel Its manufacturing plants are strategically located
in close proximity to its customers at Faridabad (Haryana) Noida (UP)
OBJECTIVES OF THE STUDY
bull To find the movement of cash inflow and cash outflow
bull To make the comparison between cash inflow and
bull Cash outflow
bull To prepare the Cash Flow Statement
bull To analyze the Balance Sheet of the company in terms of Cash Flow Statement
bull To focus on various activities of the organization in terms of Operating
Financing Investment
SCOPE OF THE STUDY
Financial resources are the assets for the company and their productivity is key
factor for profitability It is necessary to know their problems their knowledge
skills abilities amp the measures that can be taken to reduce them By analyzing this
top management can build good relations with the employees
The whole study is to determine the competencies of different employees who are
working in ESCORTS PVT LTD By analyzing it the top management can
introduce the concept of competency mapping in the organization Through this
management can attempt to use more suitable strategies towards the human
resource development
The research is confined to elicit the existing gap between the standard skill
required to perform the job and the skill processed by the employees at ESCORTS
PVT LTD And to provide them suitable training program to over come those gaps
for the better utilization of human resources
RELEVANCE
The scope of the study was confined to the outside parties like creditors
shareholders government etc Who want to invest their money in the
company
The benefit of the report for the company is that through this report they can come
to know about the cash flow statements of the company
This study also unable the company that their cash is not utilizing in unnecessary
things
The benefit of the report for the researcher is that it has helped to get knowledge
about the cash inflow and cash
RESERRCH METHODOLOGY-
RESEARCH DESIGN
bull The study was conducted under well- structured approach
bull The project lasted for 4 weeks and the year 2009 ie from 08 July to 12
Aug2009
bull The questionnaire method amp personal interview method was used to collect
the primary data for the study
The secondary data is collected from Internet amp company training material and
many other company materials
SAMPLE DESIGN
The process of extracting a sample from a population is called sampling
procedure The selection of sampling procedure to conduct the research
depends upon the nature of the study and the objective to be accomplished
Judgment sampling technique is adopted to select the respondents in this
study The sample design included the various departments in the YAMAHA
MOTORS PVT LTD
Methodology of date collection
bull Conducting personal interview
bull Data collection from primary and secondary sources
bull Designing questionnaire
bull Selecting sample size from the sample frame for the survey
bull Questionnaire distribution
bull Analysis of collected data with the help of statistical tools
bull Interpretation of collected data
bull Stating the conclusion based on the entire study
Sampling Technique
The sampling technique used for this research is of non-probability and convenience
sampling
Sample Unit
Employees of the company
Sample Size
For this research study the sample size is 25 respondents
Sources of data
Primary data
Primary data is the data which is collected by the researcher for the first time
and which was not there The tools used to collect the data are-
1)Questionnaire method from the employers in different departments
2) Face to Face personal interactions
Secondary Data
The data already collected is called as secondary data The relevant information
for this study has been collected from secondary source such as
Books
Journal
Reports
Publication by the organizational circulation
Company records
Business bulletins
Internet
Secondary data is also collected from various of the internet and intranet Some
of the website trough which information was gathered was through
HYPOTHESIS
The report is analyzed under the presumption that cash flow position of
YAMAHA MOTORS PVTLTD It can be improved and made effective in
terms of cash flows
In testing the above hypothesis the following aspects will be considered
1 Balance sheet comparisons
2 Presentation of cash flow statement in terms of revised AS-3
LIMITATIONS
The study though conducted to the best of the ability suffers from some
certain limitations There are
The data is secondary one and as such its reliability may be
questioned upon
The time availability for the study is less and as such it hinders thee
progress of the study
Senior officials were rarely approachable
Websites were not giving comprehensive data
Not having face-to-face interaction to get more relevant
information
Analysis and interpretation of data was done on the assumption that
the respondentsrsquo information was online
Information collected was totally subjective
The interviews are done during office hours but could not be done
for the other employees of other
DATA ANALYSIS
ESCORTS PVT LTD
CASH FLOW STRATEMENT
Year Ended Year Ended
30092009 30092008
Rs Crores Rs
Crores
A Cash Flow from Operating Activities
Net profit before tax (1733) 3444
Adjustment for
Loss on sale Provision for diminution in value of Long Term
Investments amp loans to Group Companies 189 4018
Gain on sale of Long Term Investments (122) (9492)
Gain on sale of Asset (013) -
Depreciation 4497 3955
Misc Exp Assets Write off Provisions 808 750
Interest Expense 7222 7999
Dividend Income (002) (001)
Interest Income (2082) -
Operating Profit before working capital changes 8764 10673
Adjustments for
Trade and other Receivables (8817) (12035)
Inventories 1379 (4692)
Trade Payables 6705 19046
Miscellaneous Expenditure (750) (511)
(1483) 1808
Cash Generated from Operations 7281 12481
Direct Taxes (Paid)Refunds (1785) 3166
Net Cash Flow from operating activities 5496 15647
B Cash Flow from Investing Activities
Purchase of Fixed Assets (3095) (2794)
Proceeds from sale of Fixed Assets 086 177
Movement in Loans and Advances (1627) (1644)
Sale of Investments 3233 11452
Short Term Deposits with schedule Banks (231) (1048)
Interest Received 2070 -
Dividend Received 002 001
Net Cash Flow from Investing activities 438 6144
Proceeds from Share Capital amp Securities Premium 11444 -
Proceeds from Long Term Borrowings 8660 -
Less Repayment of Long Term Borrowings (054) (7896)
Proceeds (Repayment) from short term borrowings (net) (22726) -
Interest Paid (7740) (8223)
Net Cash used in financing activities (10416) (16119)
Net Increase(Decrease) in Cash and Cash equivalents (4482) 5672
Cash and Cash equivalents as at 01102008 10565 4893
Cash and Cash equivalents as at 30092009 6083 1056
ANALYSIS OF CASH FLOW
From the cash flow statements of the ESCORT PVTLTDIt can be analyzed
from the two years that the net cash balance of the company has increased
manifold in 30-09-2008 than the year 30-09-2009
The net profit in 30-09-2008 is higher than the 30-09-2009 but due to certain
changes there has been increase in the cash balance
The interest paid this year is ore of the last year which implies that thee
company has not repaid his borrowed capital due to which the interest has got
down
The depreciation has increased but it does not affect cash to an extent as it is a
non-cash item In the head of working capital there is drastic change in the cash
balance in the form of ldquoTrade and other Receivables which has affected the cash
balance
There is outflow of cash for receivables rather than the inflow in the last year
So the net effect is that the cash from operating activities has been decreased
two times from the last year
The company has no accumulated losses as at the end of the financial year ie
September 31 2008
Provision for taxation has been made in accordance with the requirement of AS-
22 issued by Institute of Charted Accountants of India
Pursuant to that current year deferred tax liability have been charged to profit amp
loss account
In opinion of the board of directors of thee company the current assets loans
and advances have a value on realization in the ordinary course of the business at
least equal to the amount stated in the balance sheet and provision for all
liabilities have been made
Balance of sundry debtors creditors loans and advances are subject to confirmation by
the concerned parties
METHOD OF ANALYSIS
1 Data analysis is done using the following statistical tools wherever required in
order to extract meaningful information from the collected data
o Simple percentage and averages
o Bar diagram
o Cone diagram
o Pie diagram
2 The collected data from the questionnaire has been put together in the form of
tables
3 Percentage has been calculated wherever necessary for generalization of the
data
4 Data analysis and interpretation has been done on the basis of primary and
secondary data
5 The findings researches have been recorded based on the analysis
6 The study conducted pertains only to YAMAHA MOTORS INDIA PVTLTD
All bank balances (debitcredit) have been confirmed by the concerned bank
Identified from the available information which has been relied upon by the auditors
The names of small-scale industrial units to whom outstanding for more than
thirty days within agreed terms
The company has 9996 of shareholders in its subsidiary company named as
ESCORTS PVT LTD As at 31-03-2008
So the net effect is that the net cash from investing activities has many more
times than the last year which is negative Now the company has repaid its long
term borrowing more than the last year which has decreased the cash balance by
the little amount
Balance with the schedule banks under the head current amp collection account
amounting to represent funds in transit lying with schedule banks pending
transfer against loan liabilities under the head cash credit amp bill discounting
LIQUIDITY RATIO
1 CURRENT RATIO
(Amount in Rs)
Current Ratio
Year Current Assets Current Liabilities Ratio
2003 58574151 7903952 7412004 69765346 31884616 2192005 72021081 16065621 4482006 91328208 47117199 1942007 115642068 30266661 382
Interpretation
As a rule the current ratio with 21 (or) more is considered as satisfactory
position of the firm
When compared with 2006 there is an increase in the provision for tax because
the debtors are raised and for that the provision is created The current liabilities
majorly included Lanco Group of company for consultancy additional services
The sundry debtors have increased due to the increase to corporate taxes
In the year 2006 the cash and bank balance is reduced because that is used for
payment of dividends In the year 2007 the loans and advances include majorly
the advances to employees and deposits to government The loans and advances
reduced because the employees set off their claims The other current assets
include the interest attained from the deposits The deposits reduced due to the
declaration of dividends So the other current assets decreased
The huge increase in sundry debtors resulted an increase in the ratio which is
above the benchmark level of 21 which shows the comfortable position of the
firm
GRAPHICAL REPRESENTATION
741
219
448
194
382
000
100
200
300
400
500
600
700
800
Ratio
2003 2004 2005 2006 2007
Years
CURRENT RATIO
Ratio
2 QUICK RATIO
(Amount
in Rs)
Quick Ratio
Year Quick Assets Current Liabilities Ratio
2003 58574151 7903952 741
2004 52470336 31884616 165
2005 69883268 16065620 435
2006 89433596 47117199 19
2007 115431868 30266661 381
Interpretation
Quick assets are those assets which can be converted into cash with in a short
period of time say to six months So here the sundry debtors which are with the
long period does not include in the quick assets
Compare with 2006 the Quick ratio is increased because the sundry debtors are
increased due to the increase in the corporate tax and for that the provision
created is also increased So the ratio is also increased with the 2006
GRAPHICAL REPRESENTATION
741
165
435
190
381
000
100
200
300
400
500
600
700
800
Ratio
2003 2004 2005 2006 2007
Years
QUICK RATIO
Ratios
3 ABOSULTE LIQUIDITY RATIO
(Amount
in Rs)
Absolute Cash Ratio
Year Absolute Liquid Assets Current Liabilities Ratio
2003 31004027 7903952 392
2004 10859778 31884616 034
2005 39466542 16065620 246
2006 53850852 47117199 114
2007 35649070 30266661 118
Interpretation
The current assets which are ready in the form of cash are considered as absolute
liquid assets Here the cash and bank balance and the interest on fixed assts are
absolute liquid assets
In the year 2006 the cash and bank balance is decreased due to decrease in the
deposits and the current liabilities are also reduced because of the payment of
dividend That causes a slight increase in the current yearrsquos ratio
GRAPHICAL REPRESENTATION
392
034
246
114 118
0
05
1
15
2
25
3
35
4
Ratios
2003 2004 2005 2006 2007
Years
ABSOLUTE CASH RATIO
Ratios
LEVERAGE RATIOS
4 PROPRIETORY RATIO
(Amount
in Rs)
Proprietory Ratio
Year Share Holders Funds Total Assets Ratio
2003 67679219 78572171 086
2004 53301834 88438107 06
2005 70231061 89158391 079
2006 56473652 106385201 053
2007 97060013 129805102 075
Interpretation
The proprietary ratio establishes the relationship between shareholders funds to
total assets It determines the long-term solvency of the firm This ratio indicates
the extent to which the assets of the company can be lost without affecting the
interest of the company
There is no increase in the capital from the year2004 The share holderrsquos funds
include capital and reserves and surplus The reserves and surplus is increased
due to the increase in balance in profit and loss account which is caused by the
increase of income from services
Total assets includes fixed and current assets The fixed assets are reduced
because of the depreciation and there are no major increments in the fixed assets
The current assets are increased compared with the year 2006 Total assets are
also increased than precious year which resulted an increase in the ratio than old
GRAPHICAL REPRESENTATION
086
060
079
053
075
000
010
020
030
040
050
060
070
080
090
Ratios
2003 2004 2005 2006 2007
Years
PROPRIETORY RATIO
Ratios
ACTIVITY RATIOS
5 WORKING CAPITAL TURNOVER RATIO
(Amount
in Rs)
Working Capital Turnover Ratio
Year Income From Services Working Capital Ratio
2003 36309834 50670199 0722004 53899084 37880730 1422005 72728759 55355460 1312006 55550649 44211009 1262007 96654902 85375407 113
Interpretation
Income from services is greatly increased due to the extra invoice for Operations
amp Maintenance fee and the working capital is also increased greater due to the
increase in from services because the huge increase in current assets
The income from services is raised and the current assets are also raised together
resulted in the decrease of the ratio of 2007 compared with 2006
GRAPHICAL REPRESENTATION
072
142 131126
113
000
020
040
060
080
100
120
140
160
Ratio
2003 2004 2005 2006 2007
Years
WORKING CAPITAL TURNOVER RATIO
Ratio
6 FIXED ASSETS TURNOVER RATIO
(Amount in Rs)
Fixed Assets Turnover Ratio
Year Income From Services Net Fixed Assets Ratio
2003 36309834 28834317 126
2004 53899084 29568279 182
2005 72728759 17137310 424
2006 55550649 15056993 369
2007 96654902 14163034 682
Interpretation
Fixed assets are used in the business for producing the goods to be sold This
ratio shows the firmrsquos ability in generating sales from all financial resources
committed to total assets The ratio indicates the account of one rupee
investment in fixed assets
The income from services is greaterly increased in the current year due to the
increase in the Operations amp Maintenance fee due to the increase in extra invoice
and the net fixed assets are reduced because of the increased charge of
depreciation Finally that effected a huge increase in the ratio compared with the
previous yearrsquos ratio
GRAPHICAL REPRSENTATION
126182
424 369
682
000
100
200
300
400
500
600
700
Ratios
2003 2004 2005 2006 2007
Years
FIXED ASSETS TURNOVER RATIO
Ratios
7 CAPITAL TURNOVER RATIO
(Amount
in Rs)
Capital Turnover Ratio
Year Income From Services Capital Employed Ratio
2003 36309834 37175892 0982004 53899084 53301834 1012005 72728759 70231061 1042006 55550649 56473652 0982007 96654902 97060013 100
Interpretation
This is another ratio to judge the efficiency and effectiveness of the company
like profitability ratio
The income from services is greaterly increased compared with the previous year
and the total capital employed includes capital and reserves amp surplus Due to
huge increase in the net profit the capital employed is also increased along with
income from services Both are effected in the increment of the ratio of current
year
GRAPHICAL REPRESENTATION
098
101
104
098
100
094095096097098099100101102103104
Ratios
2003 2004 2005 2006 2007
Years
CAPITAL TURNOVER RATIO
Ratios
8 CURRENT ASSETS TO FIXED ASSETS RATIO
(Amount
in Rs)
Current Assets To Fixed Assets Ratio
Year Current Assets Fixed Assets Ratio
2003 58524151 19998020 2932004 69765346 18672761 3742005 72021081 17137310 4202006 91328208 15056993 6072007 115642068 14163034 817
Interpretation
Current assets are increased due to the increase in the sundry debtors and the net
fixed assets of the firm are decreased due to the charge of depreciation and there
is no major increment in the fixed assets
The increment in current assets and the decrease in fixed assets resulted an
increase in the ratio compared with the previous year
GRAPHICAL REPRESENTATION
293374
420
607
817
000
100
200
300
400
500
600
700
800
900
Ratios
2003 2004 2005 2006 2007
Years
CURRENT ASSETS TO FIXED ASSETS RATIO
Ratios
PROFITABILITY RATIOS
GENERAL PROFITABILITY RATIOS
9 NET PROFIT RATIO
(Amount in Rs)
Net Profit Ratio
Year Net Profit After Tax Income from Services Ratio
2003 21123474 36039834 059
2004 16125942 53899084 030
2005 16929227 72728759 023
2006 18259580 55550649 033
2007 40586359 96654902 042
Interpretation
The net profit ratio is the overall measure of the firmrsquos ability to turn each rupee
of income from services in net profit If the net margin is inadequate the firm
will fail to achieve return on shareholderrsquos funds High net profit ratio will help
the firm service in the fall of income from services rise in cost of production or
declining demand
The net profit is increased because the income from services is increased The
increment resulted a slight increase in 2007 ratio compared with the year 2006
GRAPHICAL REPRESENTATION
059
030
023
033
042
000
010
020
030
040
050
060
Ratios
2003 2004 2005 2006 2007
Years
NET PROFIT RATIO
Ratios
10 OPERATING PROFIT
(Amount in Rs)
Operating Profit
Year Operating Profit Income From Services Ratio
2003 36094877 36309834 099
2004 27576814 53899084 051
2005 29540599 72728759 041
2006 31586718 55550649 057
2007 67192677 96654902 070
Interpretation
The operating profit ratio is used to measure the relationship between net profits
and sales of a firm Depending on the concept it will decide
The operating profit ratio is increased compared with the last year The earnings
are increased due to the increase in the income from services because of
Operations amp Maintenance fee So the ratio is increased slightly compared with
the previous year
GRAPHICAL REPRESENTATION
099
051
041
057
070
000
010
020
030
040
050060
070
080
090
100
Ratios
2003 2004 2005 2006 2007
Years
OPERATING PROFIT RATIO
Ratios
11 RETURN ON TOTAL ASSETS RATIO
(Amount in Rs)
Return on Total Assets Ratio
Year Net Profit After Tax Total Assets Ratio
2003 21123474 78572171 027
2004 16125942 88438107 018
2005 16929227 89158391 019
2006 18259580 106385201 017
2007 40586359 129805102 031
Interpretation
This is the ratio between net profit and total assets The ratio indicates the return
on total assets in the form of profits
The net profit is increased in the current year because of the increment in the
income from services due to the increase in Operations amp Maintenance fee The
fixed assets are reduced due to the charge of depreciation and no major
increments in fixed assets but the current assets are increased because of sundry
debtors and that effects an increase in the ratio compared with the last year ie
2006
GRAPHICAL REPRESENTATION
027
018 019017
031
000
005
010
015
020
025
030
035
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON TOTAL ASSETS
Ratios
12 RESERVES amp SURPLUS TO CAPITAL RATIO
(Amount in Rs)
Reserves amp Surplus To Capital Ratio
Year Reserves amp Surplus Capital Ratio
2003 65599299 2079920 31542004 34582554 18719280 1852005 51511781 18719280 2752006 37754372 18719280 2022007 78340733 18719280 419
Interpretation
The ratio is used to reveal the policy pursued by the company a very high ratio
indicates a conservative dividend policy and vice-versa Higher the ratio better
will be the position
The reserves amp surplus is decreased in the year 2006 due to the payment of
dividends and in the year 2007 the profit is increased But the capital is
remaining constant from the year 2004 So the increase in the reserves amp surplus
caused a greater increase in the current yearrsquos ratio compared with the older
GRAPHICAL REPRESENTATION
3154
185 275 202419
-
500
1000
1500
2000
2500
3000
3500
Ratios
2003 2004 2005 2006 2007
Years
RESERVES amp SRUPLUS TO CAPITAL RATIO
Ratios
OVERALL PROFITABILITY RATIOS
13 EARNINGS PER SHARE
(Amount in Rs)
Earnings Per Share
Year Net Profit After Tax No of Equity Shares Ratio
2003 21123474 207992 101562004 16125942 1871928 8612005 16929227 1871928 9042006 18259580 1871928 9752007 40586359 1871928 2168
Interpretation
Earnings per share ratio are used to find out the return that the shareholderrsquos earn
from their shares After charging depreciation and after payment of tax the
remaining amount will be distributed by all the shareholders
Net profit after tax is increased due to the huge increase in the income from
services That is the amount which is available to the shareholders to take There
are 1871928 shares of Rs10- each The share capital is constant from the year
2004 Due to the huge increase in net profit the earnings per share is greaterly
increased in 2007
GRAPHICAL REPRESENTATION
10156
861904 975
2168
000
2000
4000
6000
8000
10000
12000
Ratios
2003 2004 2005 2006 2007
Years
EARNINGS PER SHARE
Ratios
14 PRICE EARNINGS (PE) RATIO
(Amount in Rs)
Price Earning (PE) Ratio
Year Market Price Per Share Earnings Per Share Ratio
2003 3254 10156 0322004 2847 861 3302005 3752 904 4152006 3017 975 3092007 5185 2168 239
Interpretation
The ratio is calculated to make an estimate of application in the value of share of
a company
The market price per share is increased due to the increase in the reserves
amp surplus The earnings per share are also increased greaterly compared
with the last year because of increase in the net profit So the ratio is
decreased compared with the previous year
GRAPHICAL REPRESENTATION
032
330
415
309
239
000
050
100
150
200
250
300
350
400
450
Ratios
2003 2004 2005 2006 2007
Years
PE RATIO
Ratios
15 RETURN ON INVESTMENT
(Amount in Rs)
Return on Investment
Year Net Profit After Tax Share Holders Fund Ratio
2003 21123474 67679219 031
2004 16125942 53301834 03
2005 16929227 70231061 024
2006 18259580 56473652 032
2007 40586359 97060013 042
Interpretation
This is the ratio between net profits and shareholders funds The ratio is
generally calculated as percentage multiplying with 100
The net profit is increased due to the increase in the income from services ant
the shareholders funds are increased because of reserve amp surplus So the ratio
is increased in the current year
GRAPHICAL REPRESENTATION
031 030
024
032
042
000
005
010
015
020
025
030
035
040
045
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON INVESTMENT RATIO
RatioS
DATA COLLECTION
The data can be of two types
Primary Data
Secondary Data
Primary Data
Primary data are those data which is originally collected afresh
Secondary Data
Secondary data are those data which are already collected and stored and which has
been passed through statistical research
In this project Secondary data has been collected from following sources-
Annual report
Books
MIS
Other material and report published by company There are two methods to prepare
the Cash flow Statement
ndirect Method
I
The indirect method (or reconciliation method) starts with net income and converts it
to net cash flow from operating activities In other words the indirect method adjusts
net income for items that affected reported net income but did not affect cash To
compute net cash flow from operating activities non-cash charges in the income
statement are added ack to net income and non-cash credits are deducted
b
Direct Method
Under the direct method the statement of cash flows reports net cash flow from
operating activities as major classes of operating cash receipts (eg cash collected from
customers and cash received from interest and dividends) and cash disbursements (eg
cash paid to suppliers for goods to employees for services to creditors for interest and
to government authorities for taxes)
INDIRECT VERSUS DIRECT METHOD
The most contentious decision that the FASB faced in issuing Statement No 95 was
choosing between the direct method and the indirect method of determining net cash
flow from operating activities Companies lobbied against the direct method urging
adoption of the indirect method Commercial lending officers expressed a strong
preference to the FASB hat the direct method be required
tCF-Page 3 of 5
In Favor of the Direct Method
The principal advantage of the direct method is that it shows operating cash receipts and
payments That is it is more consistent with the objective of a statement of cash flows to
provide information about cash receipts and cash payments than the in-direct method
which does not report operating cash receipts and payments
Supporters of the direct method contend that knowledge of the specific sources of
operating cash receipts and the purposes for which operating cash payments were made
in past periods is useful in estimating future operating cash flows Furthermore in-
formation about amounts of major classes of operating cash receipts and payments is
more useful than information only about their arithmetic sum (the net cash flow from
operating activities) Such information is more revealing of an enterprises ability (1) to
generate sufficient cash from operating activities to pay its debts (2) to reinvest in its
operations and (3) to make distributions to its owners
Many corporate providers of financial statements say that they do not currently collect
information in a manner that allows them to determine amounts such as cash received
from customers or cash paid to suppliers directly from their accounting systems But
supporters of the direct method contend that the incremental cost of assimilating such
operating cash receipts and payments data is not significant
In Favor of the Indirect Method
The principal advantage of the indirect method is that it focuses on the differences
between net income and net cash flow from operating activities That is it provides a
useful link between the statement of cash flows and the income statement and balance
sheet
Many providers of financial statements contend that it is less costly to adjust net income
to net cash flow from operating activities (indirect) than it is to report gross operating
cash receipts and payments (direct) Supporters of the indirect method also state that the
direct method which effectively reports income statement information on a cash rather
than an accrual basis may erroneously suggest that net cash flow from operating
activities is as good as or better than net income as a measure of performance
Special Rules Applying to Direct and Indirect Methods
Companies that use the direct method are required at a
minimum to report separately the following classes of
operating cash receipts and payments
Receipts
1048713 Cash collected from customers (including lessees licensees etc)
1048713 Interest and dividends received
1048713 Other operating cash receipts if any
Payments
1048713 Cash paid to employees and suppliers of goods or services (including
suppliers of
insurance advertising etc)
1048713 Interest paid
1048713 Income taxes paid
1048713 Other operating cash payments if any
Companies using the indirect method are required to disclose separately changes in
inventory receivables and payables to reconcile net income to net cash flow from
operating activities In addition interest paid (net of amount capitalized) and income
taxes paid must be disclosed elsewhere in the financial statements or accompanying
notes
The FASB requires these separate and additional disclosures so that users
may approximate the direct method Also an acceptable alternative presentation
of the in-direct method is to report net cash flow from operating activities as a
single line item in the statement of cash flows and to present the reconciliation
details elsewhere in the financial statements
FINDING OF SUDY
According to cash flow statement of the company The finding of the study are as
follows-
The company has not taken any loans secured or unsecured from companies
firms or other parties
The company has not accepted any deposit from the public during the year
The company is not a sick industrial company
The company has not granted any loan secured or unsecured to company firms
or other parties
The company has paid the entire long term and short term borrowing during the
year
The company has buy back the companyrsquos own share this year
The interest paid in 2008 is more than the
There has been a significant decline in volume over the years from 2001-02
to 2005-06 as can be seen in the graph below
Table 43
The Net sales of Tractor has increased considerably from 2004-05 to 2007-08
This can be mainly attributed to changes in Variable and material costs and in
the price
The Net sale of Tractor has increased considerably from 2004-05 to 2007-08
that is an decrease of Rs7216 per tractor This can be mainly attributed to
changes in
Variable and material costs and in the prices
RECOMMENDATIONS
According to cash flow statement of the company The suggestions of the study
are as follows-
The time durations for training program have to increase
Buy regular review and consultations develop a career progression
which is sensitive to performance and ability
Create an environment where by people are trend developed to enable
The to take advantages of opportunities that arise
The jab can be redesigned where the work man stay in what is normally
the same job but has elements of it changed
The principle amount must be paid in time which can be reducing the
interest the out flow
The purchase of the fixed asset must be made only when there is extreme
requirement
In order to avoid taxes the company should go for more investment
The companyrsquos borrowings should go for more investment
o The company should try to reduce the depreciations as maximum
as possible
CONCLUSION
The study on competency level of employees at ESCORTS PVTLTD gave an
insight about the acceptance of competency mapping by employees
The employees at Ymi welcome the introduction of competency mapping in their
organization as they felt it was very much essential in enhancing their skills and
organizational development
The organization has provided the recourses guidance and support to facilitate the
introduction of competency level easily and develop the employees in such a way
that they can face any kind of challenge
However the level of competency in employees is found to be satisfactory
Providing proper training education and guidance to the employees can enhance
the level
This study was mainly carried out to find out whether thee competency mapping
being followed by the company is effective till date If the competency mapping
and fitment to the organization
By looking at the graphs and tables it is quite that the employees still are not up to
the level of competent pool they still have to be trained and made competent in
order to fill the gap As the organization has just applied the mapping it has to see
to that it meets all the requirements for competency mapping
Therefore the graphs make it quite clear that the potential of the employees is not
up to the mark and ie they are not competent enough to meet the competency-
mapping requirement Hence by further training and counseling this gap can be
closed
This report includes the training requirements of employees and it highlights skills
possessed by each employee and skill required All employees get training so that
skill can be improved and maintain balance between standard performance with
their actual performance to avoid gap
APPENDIX
QUESTIONNAIRE
Consumer Survey
Name _____________________________
Age _____________________________
Sex
Male
Female
Occupation
Businessman
Service man
Professional
Others
Monthly income brackets
Below 15000
15000- 20000
20000-30000
30000 and above
of your savings _________
Do you invest
Yes
No
If yes then where do you invest your money
Bank
Insurance
funds
Others
Why do you made that statement
Return
Risk hedging
Tax benefits
Other reasons (specify) _______
Who influence your cash decision
Relatives and friends
Family members
Advisors experts
You yourself
If no then why
Do not know where to invest
Satisfied with your current investment return
Donrsquot want take risk
Other reasons
__________________________________________________________________
___________________
Do you know about CF statement
Yes
No
If yes then from where you have come to know about an cash statement
Advertisements on newspapers
Friends and relative
Agents experts
Other source
What do you think about cash statement
It means investing only in share market
Constant watch must be kept always
Return is not satisfactory
Other perception
__________________________________________________
Can you recall any cash flow of company
___________________________
Would you want to made CF of an org
Yes
No
If yes then why
_______________________________________________________
If no then why
_______________________________________________________
BIBLIOGRAPHY
List of Books
1 PANDEY IM - FINANCIAL MANAGEMANT
2 KHAN MY AND JAIN PK -FINANCIAL MANAGEMANT
3 SMITH KV ndash MANAGEMANT OF WORKING CAPITAL
3 COMPANY RECORDS
4 JOURNAL
5 REPORTS
WEBLIOGRAPHY
1 wwwescortspvtltdcom
2 wwwgooglecom
CASH-FLOW STATEMENT
A cash-flow statement is a statement showing inflows (receipts) and outflows (payments) of
cash during a particular period In other words it is a summary of sources and applications of
Cash during a particular span of time It analyses the reason for changes in balance of cash
between the two balance sheet dates The term Cash here stands for cash and cash
equivalents
A cash-flow statement includes only those items which affect cash As such the cash-flow
statement is called a statement of changes in financial position - cash basis
A cash - flow statement can be for the past or can be projected for a future period
OBJECTS OR USES OF CASH-FLOW STATEMENT
The main objectives behind preparing a cash-flow statement can be laid down as under-
bull USEFUL FOR SHORT-TERM FINANCIAL PLANNING-
A cash-flow statement provides information for planning the short-term financial needs of the
firm Since it provides information regarding the sources and utilization of cash during a period
it become easier for the management to assess whether it will have Adequate cash to meet day-
to-day expenses and pay the long - term loans and interest Thereon and whether it has enough
cash to pay for the purchase of fixed assets or not
USEFUL FOR PREARING THE CASH BUDGET-
A cash-flow statement prepared for the future period is helpful in preparing a cash budget It
informs the management about the future period is helpful in preparing a cash budget It informs
the management about the surplus or deficit periods of cash ie in which months the payments
will be in excess of receipts It helps in planning the investment of surplus cash in short-term
investment and to plan short-term credit in advance of deficit periods
bull COMPARISON WITH CASH BUDGET-
A cash budget is prepared at the commencement of the year whereas a cash flow Statement is
prepared at the end of the year A comparison between the two helps in ascertaining the extent
to which the financial resources of the firm have been generated and used according to the plan
Causes of variances between the figures of two statements can be analyzed and proper
corrective measures may be takes
bull STUDY OF THE TREND OF CASH RECEIPTS AND PAYMENTS-
A cash-flow statement reveals the speed at which the cash is being generated from debtors stock
and other current assets the speed at which the current liabilities are being paid It enables the
management to assess the true position of the cash in future
bull IT EXPLAINS THE DEVIATIONS OF CASH FROM EARNINGS-
A firm may earn huge profits yet it may have paucity of cash or when it suffered a loss it may
still have plenty of cash A cash flow statement explains the reasons for it
HELPFUL IN ASCERTAINING CASH-FLOW FROM VARIOUS
ACTIBITIES SEPARATELY-
A cash-flow statement aims at highlighting the cash flow from operating investing and
financing activities separately It includes how much cash has been generated or used in these
activities
bull HELPFUL IN MAKING DIVIDEND DECISIONS-
Dividend must be paid within 42 days of its declaration Hence the management takes the help of
cash-flow statement to ascertain the position of cash generated from operating activities which
can be used for payment of dividend
IMPORTANCE AND RELEVANCE OF CFS
The CFS has gained importance in view of the fact that there are many managerial Decisions
which are taken in the light of the cash availability or cash position of the firm
For example declaration of dividend by the company requires cash disbursement and
Therefore the Board of Directors must consider the cash position before proposing a dividend
The CFS also provides information for the short term financial planning and in particular the
short term cash needs of the firm
In view of increasing importance and relevance of the CFS the clause 32 of the Listing
agreement (between a Company and the Stock Exchange where the shares proposed to be listed)
has been amended by the SEBI As a result the listed companies in India are now required to
supply a copy of the CFS to each shareholder as a part of Annual Report As a result the listed
companies have started a practice of sending a CFS for which the BS has been prepared as
apart of the Annual Report of the company
DIFFRENCE BETWEEN CASH - FLOW STATEMENT AND
CASH BUDGET
There is not much difference between cash flow statement and a cash budget The
only difference is that a cash flow statement is prepared for a past period where as cash
budget is prepared for a future period Hence it is of limited use as far as the future
periods are concerned A cash budget is therefore prepared showing how much cash is
likely to be received and what will be the disbursements during a future period of time
Thus a cash budget indicates in which months there will be surplus cash and in which
moths there will be deficiency of cash resources The management can then take suitable
decision to invest the surplus cash or make arrangement for the deficiency of cash at the
required time
LIQUIDITY
It does not present true picture of the liquidity of the firm the liquidity does
not depend upon cash alone Liquidity also depends upon those assets
which can be converted into cash easily
bull Exclusion of these assets obstructs the true reporting of the ability of the firm to
meet its liabilities when they become due for payment
bull The possibilities of window - dressing is higher in case of cash position in
comparison to the working capital position of the firm
bull The cash balance can be easily maneuvered by postponing purchases and other
payments and by rapidly collecting cash from debtors before the balance sheet date
Hence a fund - flow statement presents a more realistic picture than a cash flow
statement
bull Cash flow statement ignores non- cash charges Hence the true position of the
enterprise cannot be judged by cash flow statement
bull It is prepared on cash basis and hence ignores one of the basic concept of accounting
namely accrual concept
PROCEDURE OF PREPARING CASH FLOW STATEMENT-
The institute of charted accountants of India has issued accounting standards (as)-3 revised for
preparing a cash flow statement This accounting standard has been made mandatory in respect
of accounting periods commencing on or after 1st April 2001 for certain enterprises These
enterprises are-
bull Enterprises whose equity or debt securities are listed on a recognized stock exchange in
India And enterprise that are in the process of issuing equity or debt securities that will
be listed on a recognized stock exchange in India
bull All other commercial industrial and business enterprises whose turnover for accounting
period Rs 50 crores
As such the cash flow statement has been prepared according to as -3 revised in this project
According to as-3 revised the cash flow statement summarizes the cash inflows and cash
outflows and the net changes (increase or decrease) in cash and cash equipment resulting from
operating investing and financing activities of a firm during a period The following terms are
used for preparing a cash flow statement
CASH-
It compares cash in hand and demands with banks
CASH EQUIVALENTS-
There are short - term highly liquid investments that are readily into known amounts of cash
and which present insignificant risk of changes in their values Normally an investment will be
termed as cash equivalent only if it has a short maturity period say three months or less from the
date of its acquisition Examples of cash equivalent are treasury bills commercial papers etc
Which are purchased with cash that is in excess of immediate needs investment in shares are
excluded from cash equivalents unless they are cash equivalent in reality For example the
preference shares of the company which are purchased shortly before their redemption date will
be included in cash equivalents provided there is only an insignificant risk of failure of the
company in repaying the amount at the date of the maturity
CLASSIFICATION OF CASH FLOW-
According to as -3 (revised) cash flow statement should be presented in a manner that it reports
inflows of cash by classifying them into three categories namely operating investing and
financing activities Classification of all activities into these activities on the cash and cash
equivalents of the enterprise such information will be helpful in evaluating the relationships
among these three activities are explained as below
CASH FLOW FROM OPERATING ACTIVITIES-
Operating activities are the main revenue generating activities of an enterprise As such they
include cash flows from those transactions and events which enter into the ascertainment of
net profit or loss of the enterprise Examples of cash flows arising operating activities are
bull Cash receipts from the sale of goods and rendering of services
bull Cash receipts from royalties fees commissions and other revenue
bull Cash payments to suppliers for goods and services
bull Cash payments to and on behalf of employees
bull Cash receipts and cash payments of an insurance enterprise for premiums and claims
annuities and other policy benefits
bull Cash receipts and payments relating to future contracts forward contracts option
contracts and swap contracts when the contracts are held for dealing or trade purpose and
bull Cash payments of refunds of income taxes unless they can be specifically identified with
financing and investing activities
CASH FLOW FROM INVESTING ACTIVITIES-
Investing activities include the purchase and sale of long term assets such as land building plant
and machinery etc not held for resale These activities also include the purchase and sale of such
investment which are not including in cash equipments Cash flow from investing activities
discloses the expenditures incurred for resources intended to generate future income and cash
flows
Examples cash flow arising from investing activities are
bull Cash payments to acquire fixed assets (including intangible)
bull Cash receipts from sale of fixed assets (including intangibles)
bull Cash payments to acquire shares warrants or debt instruments of other enterprises
(other than receipts for those instruments considered to be cash equivalents)
bull Cash receipts from sale of shares warrants or debt instruments of other enterprises (other
than receipts for those instruments considered to be cash equivalents)
bull Cash advances and loans made to third parties In case of financial enterprises these will
be treated as cash flow from operating activities
bull Cash receipts from the repayment of advances and loans made to third parties In case of
financial enterprises these will be treated as cash flow from operating activities
bull Cash receipts of insurance claim for property involved in accident and
bull Cash receipts of interest and dividend In case of financial enterprise these will be treated
cash flow from operating activities
CASH FLOW FROM FIANCING ACTIVITIES-
Financing activities are the activities that result in change in capital and borrowing of the
enterprise
Examples of cash flows arising from financing activities are
bull Cash receipts from issuing shares or other similar instruments
bull Cash receipts from issuing debentures loans bonds and other short term or long term
borrowing
bull Cash repayment of amounts borrowed buy back of equity shares redemption of
preference shares debentures loans bonds etc
bull Cash payment of interest and dividend
IMPORTANT NOTE
In case of financial enterprise such as bank or mutual fund company cash Outflow
and cash inflow arising from the purchase and sale of securities will Be treated as
flows from operating activities This is because purchase and sale of securities is a
part of operating activity in case of financial enterprise In addition interest paid
and interest received as well as dividends received will also be treated as cash flow
from operating activities in case of financial Enterprises
CASH FLOW STATEMENT
(DIRECT METHOD)
CASH FLOW FROM OPERATING ACTIVITIES
Cash receipts from costumers
Cash paid to suppliers and employers ()
Cash generated from operations
Income tax paid ()
Cash flows from extraordinary item
plusmn Extra ordinary items
Net cash from operating activities
CASH FLOW FROM INVESTING ACTIVITIES-
Purchase of fixed assets
Proceed from sale equipment ()
Interest received
Dividend received ()
Net cash from investing activities
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from insurance of share capital
Proceeds from long- term borrowings ()
Repayment of from long-term borrowings
Interest paid
Dividend paid ()
Net cash from financing activities
Net increase in cash and cash equivalent
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
SOME SPECIAL TERMS-
i) INTERSET AND DIVIDEND-
Cash inflow from interest and dividends and cash outflow on account of interest and
dividends should be disclosed separately Cash inflow arising from interest and dividends
received should be shown as cash flow from investing activities where as cash outflow
disclosed outflow on account of interest and dividend paid should be shown as cash flow
from financing activity
ii) TAXES ON INCOME-
Tax paid on income is a part of cash flow from operating activity Hence taxes paid are
shown as a deduction under cash flow from operating activity
iii) EXTRA ORDINARY ITEMS-
Cash flow relating to extra ordinary items such as bad debts recovered Claims received from
insurance companies winning of a lottery or a law etc Should be disclosed separately as
arising from operating investing or financing activities For example the amount received
for insurance company on account of loss of stock by fire Earthquake and floods etc Should
be reported as cash flow from operating activities
iv) SIGNIFICANT NON - CASH TRANSACTION-
There are some investing and financing activities which do not require the use of cash or
cash equivalents Such non cash activities should be excluded from the cash flow statement
Examples are the acquisition of assets by issue of debentures or shares conversion of
shares into debentures etc Such significant on non cash transaction should be disclosed
outside the cash flow statement
CASH FLOW STATEMENT
(INDIRECT METHOD)
CASH FLOW FROM OPERARATTNG ACTIVITIES
Net profit before taxation and extraordinary item
Adjustment for
Depreciation
Foreign exchange loss
Interest income
Dividend income
Interest expense
Operating profit before working capital changes
Increase in sundry debtors
Decrease in inventories
Decrease in sundry creditors
Cash generated from operations
Income tax paid ()
Cash flow before extraordinary item
plusmn Extra - ordinary items
Net cash from operating activities
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of fixed assets ()
Proceeds from sale of equipment
Interest received
Dividend received ()
Net cash from investing activities
CASH FLOW FROM FINANCING ACTIVITIES-
Proceeds from insurance of share capital
Proceeds from long - term borrowings
Repayments of from long - term borrowings ()
Interest paid ()
Dividend paid ()
Net cash from financing activities
Net increase in cash and cash equivalent
Cash and cash equivalents at beginning of period
CHANGES IN CASH FLOWS
Changes in cash flows can be treated to the following
1 Net profit will increase the cash flows these cash flows will be
increased further if there are any non-cash changes (such as depreciation
and amortization)
2 Any payment of dividends will decrease the cash flows as will the
repayment of debt an issue of share or debt will also increase the
cash flows
3 An increase in non-cash assets will decrease cash flows increase in
current assets and fixed assets will result in drain on cash flows
Thus a statement of changes in cash flows ie the cash flow statement
classifies all Changes into one of three categories - operating investing or
financing activities Therefore the preparation of a statement of changes in cash
flows requires classification of changes in liabilities shareholders equity and
non-cash assets into one of these categories although some items will not fit
easily onto one other
h equivalent at end of period
STEP- BY-STEP PROCEDURE TO PREPARE CFS
1 Calculate the net increase or decrease in cash and cash equivalents-
For this purpose the opening balance of total cash and cash equivalents is compared with the
closing balance of cash and equivalents
Increasedecrease in cash and equivalents
Opening balance Closing Balance
Cash in hand
Cash in bank
Short-term Investment
Total
The difference between the total of opening and closing balance will be increased or
Decreased in cash equivalents during the period It may be noted that if there are only one or
two of items of cash etc
2 Net Cash flaw from operating activities-
The term operating refers to the normal purchase of goods and services On the basis of the
information contained in the comparative BS s and the IS and the additional Information the
net cash flow generated or use by the operating activities may be ascertained The IS prepared
by the firm gives the net profit figure earned by the firm On actual basis ie all items in the
IS are incorporated on the basis of earnedaccrued even
3 If not resulting in cash movements-
So the profit or loss as by the IS may not result in increase or decrease in cash balance by the
SYNOPSIS
INTRODUCTION
ESCORTS PVT LTD is a private limited company not listed in a stock exchange of India
and employees 900 highly trained personnel Its manufacturing plants are strategically located
in close proximity to its customers at Faridabad (Haryana) Noida (UP)
OBJECTIVES OF THE STUDY
bull To find the movement of cash inflow and cash outflow
bull To make the comparison between cash inflow and
bull Cash outflow
bull To prepare the Cash Flow Statement
bull To analyze the Balance Sheet of the company in terms of Cash Flow Statement
bull To focus on various activities of the organization in terms of Operating
Financing Investment
SCOPE OF THE STUDY
Financial resources are the assets for the company and their productivity is key
factor for profitability It is necessary to know their problems their knowledge
skills abilities amp the measures that can be taken to reduce them By analyzing this
top management can build good relations with the employees
The whole study is to determine the competencies of different employees who are
working in ESCORTS PVT LTD By analyzing it the top management can
introduce the concept of competency mapping in the organization Through this
management can attempt to use more suitable strategies towards the human
resource development
The research is confined to elicit the existing gap between the standard skill
required to perform the job and the skill processed by the employees at ESCORTS
PVT LTD And to provide them suitable training program to over come those gaps
for the better utilization of human resources
RELEVANCE
The scope of the study was confined to the outside parties like creditors
shareholders government etc Who want to invest their money in the
company
The benefit of the report for the company is that through this report they can come
to know about the cash flow statements of the company
This study also unable the company that their cash is not utilizing in unnecessary
things
The benefit of the report for the researcher is that it has helped to get knowledge
about the cash inflow and cash
RESERRCH METHODOLOGY-
RESEARCH DESIGN
bull The study was conducted under well- structured approach
bull The project lasted for 4 weeks and the year 2009 ie from 08 July to 12
Aug2009
bull The questionnaire method amp personal interview method was used to collect
the primary data for the study
The secondary data is collected from Internet amp company training material and
many other company materials
SAMPLE DESIGN
The process of extracting a sample from a population is called sampling
procedure The selection of sampling procedure to conduct the research
depends upon the nature of the study and the objective to be accomplished
Judgment sampling technique is adopted to select the respondents in this
study The sample design included the various departments in the YAMAHA
MOTORS PVT LTD
Methodology of date collection
bull Conducting personal interview
bull Data collection from primary and secondary sources
bull Designing questionnaire
bull Selecting sample size from the sample frame for the survey
bull Questionnaire distribution
bull Analysis of collected data with the help of statistical tools
bull Interpretation of collected data
bull Stating the conclusion based on the entire study
Sampling Technique
The sampling technique used for this research is of non-probability and convenience
sampling
Sample Unit
Employees of the company
Sample Size
For this research study the sample size is 25 respondents
Sources of data
Primary data
Primary data is the data which is collected by the researcher for the first time
and which was not there The tools used to collect the data are-
1)Questionnaire method from the employers in different departments
2) Face to Face personal interactions
Secondary Data
The data already collected is called as secondary data The relevant information
for this study has been collected from secondary source such as
Books
Journal
Reports
Publication by the organizational circulation
Company records
Business bulletins
Internet
Secondary data is also collected from various of the internet and intranet Some
of the website trough which information was gathered was through
HYPOTHESIS
The report is analyzed under the presumption that cash flow position of
YAMAHA MOTORS PVTLTD It can be improved and made effective in
terms of cash flows
In testing the above hypothesis the following aspects will be considered
1 Balance sheet comparisons
2 Presentation of cash flow statement in terms of revised AS-3
LIMITATIONS
The study though conducted to the best of the ability suffers from some
certain limitations There are
The data is secondary one and as such its reliability may be
questioned upon
The time availability for the study is less and as such it hinders thee
progress of the study
Senior officials were rarely approachable
Websites were not giving comprehensive data
Not having face-to-face interaction to get more relevant
information
Analysis and interpretation of data was done on the assumption that
the respondentsrsquo information was online
Information collected was totally subjective
The interviews are done during office hours but could not be done
for the other employees of other
DATA ANALYSIS
ESCORTS PVT LTD
CASH FLOW STRATEMENT
Year Ended Year Ended
30092009 30092008
Rs Crores Rs
Crores
A Cash Flow from Operating Activities
Net profit before tax (1733) 3444
Adjustment for
Loss on sale Provision for diminution in value of Long Term
Investments amp loans to Group Companies 189 4018
Gain on sale of Long Term Investments (122) (9492)
Gain on sale of Asset (013) -
Depreciation 4497 3955
Misc Exp Assets Write off Provisions 808 750
Interest Expense 7222 7999
Dividend Income (002) (001)
Interest Income (2082) -
Operating Profit before working capital changes 8764 10673
Adjustments for
Trade and other Receivables (8817) (12035)
Inventories 1379 (4692)
Trade Payables 6705 19046
Miscellaneous Expenditure (750) (511)
(1483) 1808
Cash Generated from Operations 7281 12481
Direct Taxes (Paid)Refunds (1785) 3166
Net Cash Flow from operating activities 5496 15647
B Cash Flow from Investing Activities
Purchase of Fixed Assets (3095) (2794)
Proceeds from sale of Fixed Assets 086 177
Movement in Loans and Advances (1627) (1644)
Sale of Investments 3233 11452
Short Term Deposits with schedule Banks (231) (1048)
Interest Received 2070 -
Dividend Received 002 001
Net Cash Flow from Investing activities 438 6144
Proceeds from Share Capital amp Securities Premium 11444 -
Proceeds from Long Term Borrowings 8660 -
Less Repayment of Long Term Borrowings (054) (7896)
Proceeds (Repayment) from short term borrowings (net) (22726) -
Interest Paid (7740) (8223)
Net Cash used in financing activities (10416) (16119)
Net Increase(Decrease) in Cash and Cash equivalents (4482) 5672
Cash and Cash equivalents as at 01102008 10565 4893
Cash and Cash equivalents as at 30092009 6083 1056
ANALYSIS OF CASH FLOW
From the cash flow statements of the ESCORT PVTLTDIt can be analyzed
from the two years that the net cash balance of the company has increased
manifold in 30-09-2008 than the year 30-09-2009
The net profit in 30-09-2008 is higher than the 30-09-2009 but due to certain
changes there has been increase in the cash balance
The interest paid this year is ore of the last year which implies that thee
company has not repaid his borrowed capital due to which the interest has got
down
The depreciation has increased but it does not affect cash to an extent as it is a
non-cash item In the head of working capital there is drastic change in the cash
balance in the form of ldquoTrade and other Receivables which has affected the cash
balance
There is outflow of cash for receivables rather than the inflow in the last year
So the net effect is that the cash from operating activities has been decreased
two times from the last year
The company has no accumulated losses as at the end of the financial year ie
September 31 2008
Provision for taxation has been made in accordance with the requirement of AS-
22 issued by Institute of Charted Accountants of India
Pursuant to that current year deferred tax liability have been charged to profit amp
loss account
In opinion of the board of directors of thee company the current assets loans
and advances have a value on realization in the ordinary course of the business at
least equal to the amount stated in the balance sheet and provision for all
liabilities have been made
Balance of sundry debtors creditors loans and advances are subject to confirmation by
the concerned parties
METHOD OF ANALYSIS
1 Data analysis is done using the following statistical tools wherever required in
order to extract meaningful information from the collected data
o Simple percentage and averages
o Bar diagram
o Cone diagram
o Pie diagram
2 The collected data from the questionnaire has been put together in the form of
tables
3 Percentage has been calculated wherever necessary for generalization of the
data
4 Data analysis and interpretation has been done on the basis of primary and
secondary data
5 The findings researches have been recorded based on the analysis
6 The study conducted pertains only to YAMAHA MOTORS INDIA PVTLTD
All bank balances (debitcredit) have been confirmed by the concerned bank
Identified from the available information which has been relied upon by the auditors
The names of small-scale industrial units to whom outstanding for more than
thirty days within agreed terms
The company has 9996 of shareholders in its subsidiary company named as
ESCORTS PVT LTD As at 31-03-2008
So the net effect is that the net cash from investing activities has many more
times than the last year which is negative Now the company has repaid its long
term borrowing more than the last year which has decreased the cash balance by
the little amount
Balance with the schedule banks under the head current amp collection account
amounting to represent funds in transit lying with schedule banks pending
transfer against loan liabilities under the head cash credit amp bill discounting
LIQUIDITY RATIO
1 CURRENT RATIO
(Amount in Rs)
Current Ratio
Year Current Assets Current Liabilities Ratio
2003 58574151 7903952 7412004 69765346 31884616 2192005 72021081 16065621 4482006 91328208 47117199 1942007 115642068 30266661 382
Interpretation
As a rule the current ratio with 21 (or) more is considered as satisfactory
position of the firm
When compared with 2006 there is an increase in the provision for tax because
the debtors are raised and for that the provision is created The current liabilities
majorly included Lanco Group of company for consultancy additional services
The sundry debtors have increased due to the increase to corporate taxes
In the year 2006 the cash and bank balance is reduced because that is used for
payment of dividends In the year 2007 the loans and advances include majorly
the advances to employees and deposits to government The loans and advances
reduced because the employees set off their claims The other current assets
include the interest attained from the deposits The deposits reduced due to the
declaration of dividends So the other current assets decreased
The huge increase in sundry debtors resulted an increase in the ratio which is
above the benchmark level of 21 which shows the comfortable position of the
firm
GRAPHICAL REPRESENTATION
741
219
448
194
382
000
100
200
300
400
500
600
700
800
Ratio
2003 2004 2005 2006 2007
Years
CURRENT RATIO
Ratio
2 QUICK RATIO
(Amount
in Rs)
Quick Ratio
Year Quick Assets Current Liabilities Ratio
2003 58574151 7903952 741
2004 52470336 31884616 165
2005 69883268 16065620 435
2006 89433596 47117199 19
2007 115431868 30266661 381
Interpretation
Quick assets are those assets which can be converted into cash with in a short
period of time say to six months So here the sundry debtors which are with the
long period does not include in the quick assets
Compare with 2006 the Quick ratio is increased because the sundry debtors are
increased due to the increase in the corporate tax and for that the provision
created is also increased So the ratio is also increased with the 2006
GRAPHICAL REPRESENTATION
741
165
435
190
381
000
100
200
300
400
500
600
700
800
Ratio
2003 2004 2005 2006 2007
Years
QUICK RATIO
Ratios
3 ABOSULTE LIQUIDITY RATIO
(Amount
in Rs)
Absolute Cash Ratio
Year Absolute Liquid Assets Current Liabilities Ratio
2003 31004027 7903952 392
2004 10859778 31884616 034
2005 39466542 16065620 246
2006 53850852 47117199 114
2007 35649070 30266661 118
Interpretation
The current assets which are ready in the form of cash are considered as absolute
liquid assets Here the cash and bank balance and the interest on fixed assts are
absolute liquid assets
In the year 2006 the cash and bank balance is decreased due to decrease in the
deposits and the current liabilities are also reduced because of the payment of
dividend That causes a slight increase in the current yearrsquos ratio
GRAPHICAL REPRESENTATION
392
034
246
114 118
0
05
1
15
2
25
3
35
4
Ratios
2003 2004 2005 2006 2007
Years
ABSOLUTE CASH RATIO
Ratios
LEVERAGE RATIOS
4 PROPRIETORY RATIO
(Amount
in Rs)
Proprietory Ratio
Year Share Holders Funds Total Assets Ratio
2003 67679219 78572171 086
2004 53301834 88438107 06
2005 70231061 89158391 079
2006 56473652 106385201 053
2007 97060013 129805102 075
Interpretation
The proprietary ratio establishes the relationship between shareholders funds to
total assets It determines the long-term solvency of the firm This ratio indicates
the extent to which the assets of the company can be lost without affecting the
interest of the company
There is no increase in the capital from the year2004 The share holderrsquos funds
include capital and reserves and surplus The reserves and surplus is increased
due to the increase in balance in profit and loss account which is caused by the
increase of income from services
Total assets includes fixed and current assets The fixed assets are reduced
because of the depreciation and there are no major increments in the fixed assets
The current assets are increased compared with the year 2006 Total assets are
also increased than precious year which resulted an increase in the ratio than old
GRAPHICAL REPRESENTATION
086
060
079
053
075
000
010
020
030
040
050
060
070
080
090
Ratios
2003 2004 2005 2006 2007
Years
PROPRIETORY RATIO
Ratios
ACTIVITY RATIOS
5 WORKING CAPITAL TURNOVER RATIO
(Amount
in Rs)
Working Capital Turnover Ratio
Year Income From Services Working Capital Ratio
2003 36309834 50670199 0722004 53899084 37880730 1422005 72728759 55355460 1312006 55550649 44211009 1262007 96654902 85375407 113
Interpretation
Income from services is greatly increased due to the extra invoice for Operations
amp Maintenance fee and the working capital is also increased greater due to the
increase in from services because the huge increase in current assets
The income from services is raised and the current assets are also raised together
resulted in the decrease of the ratio of 2007 compared with 2006
GRAPHICAL REPRESENTATION
072
142 131126
113
000
020
040
060
080
100
120
140
160
Ratio
2003 2004 2005 2006 2007
Years
WORKING CAPITAL TURNOVER RATIO
Ratio
6 FIXED ASSETS TURNOVER RATIO
(Amount in Rs)
Fixed Assets Turnover Ratio
Year Income From Services Net Fixed Assets Ratio
2003 36309834 28834317 126
2004 53899084 29568279 182
2005 72728759 17137310 424
2006 55550649 15056993 369
2007 96654902 14163034 682
Interpretation
Fixed assets are used in the business for producing the goods to be sold This
ratio shows the firmrsquos ability in generating sales from all financial resources
committed to total assets The ratio indicates the account of one rupee
investment in fixed assets
The income from services is greaterly increased in the current year due to the
increase in the Operations amp Maintenance fee due to the increase in extra invoice
and the net fixed assets are reduced because of the increased charge of
depreciation Finally that effected a huge increase in the ratio compared with the
previous yearrsquos ratio
GRAPHICAL REPRSENTATION
126182
424 369
682
000
100
200
300
400
500
600
700
Ratios
2003 2004 2005 2006 2007
Years
FIXED ASSETS TURNOVER RATIO
Ratios
7 CAPITAL TURNOVER RATIO
(Amount
in Rs)
Capital Turnover Ratio
Year Income From Services Capital Employed Ratio
2003 36309834 37175892 0982004 53899084 53301834 1012005 72728759 70231061 1042006 55550649 56473652 0982007 96654902 97060013 100
Interpretation
This is another ratio to judge the efficiency and effectiveness of the company
like profitability ratio
The income from services is greaterly increased compared with the previous year
and the total capital employed includes capital and reserves amp surplus Due to
huge increase in the net profit the capital employed is also increased along with
income from services Both are effected in the increment of the ratio of current
year
GRAPHICAL REPRESENTATION
098
101
104
098
100
094095096097098099100101102103104
Ratios
2003 2004 2005 2006 2007
Years
CAPITAL TURNOVER RATIO
Ratios
8 CURRENT ASSETS TO FIXED ASSETS RATIO
(Amount
in Rs)
Current Assets To Fixed Assets Ratio
Year Current Assets Fixed Assets Ratio
2003 58524151 19998020 2932004 69765346 18672761 3742005 72021081 17137310 4202006 91328208 15056993 6072007 115642068 14163034 817
Interpretation
Current assets are increased due to the increase in the sundry debtors and the net
fixed assets of the firm are decreased due to the charge of depreciation and there
is no major increment in the fixed assets
The increment in current assets and the decrease in fixed assets resulted an
increase in the ratio compared with the previous year
GRAPHICAL REPRESENTATION
293374
420
607
817
000
100
200
300
400
500
600
700
800
900
Ratios
2003 2004 2005 2006 2007
Years
CURRENT ASSETS TO FIXED ASSETS RATIO
Ratios
PROFITABILITY RATIOS
GENERAL PROFITABILITY RATIOS
9 NET PROFIT RATIO
(Amount in Rs)
Net Profit Ratio
Year Net Profit After Tax Income from Services Ratio
2003 21123474 36039834 059
2004 16125942 53899084 030
2005 16929227 72728759 023
2006 18259580 55550649 033
2007 40586359 96654902 042
Interpretation
The net profit ratio is the overall measure of the firmrsquos ability to turn each rupee
of income from services in net profit If the net margin is inadequate the firm
will fail to achieve return on shareholderrsquos funds High net profit ratio will help
the firm service in the fall of income from services rise in cost of production or
declining demand
The net profit is increased because the income from services is increased The
increment resulted a slight increase in 2007 ratio compared with the year 2006
GRAPHICAL REPRESENTATION
059
030
023
033
042
000
010
020
030
040
050
060
Ratios
2003 2004 2005 2006 2007
Years
NET PROFIT RATIO
Ratios
10 OPERATING PROFIT
(Amount in Rs)
Operating Profit
Year Operating Profit Income From Services Ratio
2003 36094877 36309834 099
2004 27576814 53899084 051
2005 29540599 72728759 041
2006 31586718 55550649 057
2007 67192677 96654902 070
Interpretation
The operating profit ratio is used to measure the relationship between net profits
and sales of a firm Depending on the concept it will decide
The operating profit ratio is increased compared with the last year The earnings
are increased due to the increase in the income from services because of
Operations amp Maintenance fee So the ratio is increased slightly compared with
the previous year
GRAPHICAL REPRESENTATION
099
051
041
057
070
000
010
020
030
040
050060
070
080
090
100
Ratios
2003 2004 2005 2006 2007
Years
OPERATING PROFIT RATIO
Ratios
11 RETURN ON TOTAL ASSETS RATIO
(Amount in Rs)
Return on Total Assets Ratio
Year Net Profit After Tax Total Assets Ratio
2003 21123474 78572171 027
2004 16125942 88438107 018
2005 16929227 89158391 019
2006 18259580 106385201 017
2007 40586359 129805102 031
Interpretation
This is the ratio between net profit and total assets The ratio indicates the return
on total assets in the form of profits
The net profit is increased in the current year because of the increment in the
income from services due to the increase in Operations amp Maintenance fee The
fixed assets are reduced due to the charge of depreciation and no major
increments in fixed assets but the current assets are increased because of sundry
debtors and that effects an increase in the ratio compared with the last year ie
2006
GRAPHICAL REPRESENTATION
027
018 019017
031
000
005
010
015
020
025
030
035
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON TOTAL ASSETS
Ratios
12 RESERVES amp SURPLUS TO CAPITAL RATIO
(Amount in Rs)
Reserves amp Surplus To Capital Ratio
Year Reserves amp Surplus Capital Ratio
2003 65599299 2079920 31542004 34582554 18719280 1852005 51511781 18719280 2752006 37754372 18719280 2022007 78340733 18719280 419
Interpretation
The ratio is used to reveal the policy pursued by the company a very high ratio
indicates a conservative dividend policy and vice-versa Higher the ratio better
will be the position
The reserves amp surplus is decreased in the year 2006 due to the payment of
dividends and in the year 2007 the profit is increased But the capital is
remaining constant from the year 2004 So the increase in the reserves amp surplus
caused a greater increase in the current yearrsquos ratio compared with the older
GRAPHICAL REPRESENTATION
3154
185 275 202419
-
500
1000
1500
2000
2500
3000
3500
Ratios
2003 2004 2005 2006 2007
Years
RESERVES amp SRUPLUS TO CAPITAL RATIO
Ratios
OVERALL PROFITABILITY RATIOS
13 EARNINGS PER SHARE
(Amount in Rs)
Earnings Per Share
Year Net Profit After Tax No of Equity Shares Ratio
2003 21123474 207992 101562004 16125942 1871928 8612005 16929227 1871928 9042006 18259580 1871928 9752007 40586359 1871928 2168
Interpretation
Earnings per share ratio are used to find out the return that the shareholderrsquos earn
from their shares After charging depreciation and after payment of tax the
remaining amount will be distributed by all the shareholders
Net profit after tax is increased due to the huge increase in the income from
services That is the amount which is available to the shareholders to take There
are 1871928 shares of Rs10- each The share capital is constant from the year
2004 Due to the huge increase in net profit the earnings per share is greaterly
increased in 2007
GRAPHICAL REPRESENTATION
10156
861904 975
2168
000
2000
4000
6000
8000
10000
12000
Ratios
2003 2004 2005 2006 2007
Years
EARNINGS PER SHARE
Ratios
14 PRICE EARNINGS (PE) RATIO
(Amount in Rs)
Price Earning (PE) Ratio
Year Market Price Per Share Earnings Per Share Ratio
2003 3254 10156 0322004 2847 861 3302005 3752 904 4152006 3017 975 3092007 5185 2168 239
Interpretation
The ratio is calculated to make an estimate of application in the value of share of
a company
The market price per share is increased due to the increase in the reserves
amp surplus The earnings per share are also increased greaterly compared
with the last year because of increase in the net profit So the ratio is
decreased compared with the previous year
GRAPHICAL REPRESENTATION
032
330
415
309
239
000
050
100
150
200
250
300
350
400
450
Ratios
2003 2004 2005 2006 2007
Years
PE RATIO
Ratios
15 RETURN ON INVESTMENT
(Amount in Rs)
Return on Investment
Year Net Profit After Tax Share Holders Fund Ratio
2003 21123474 67679219 031
2004 16125942 53301834 03
2005 16929227 70231061 024
2006 18259580 56473652 032
2007 40586359 97060013 042
Interpretation
This is the ratio between net profits and shareholders funds The ratio is
generally calculated as percentage multiplying with 100
The net profit is increased due to the increase in the income from services ant
the shareholders funds are increased because of reserve amp surplus So the ratio
is increased in the current year
GRAPHICAL REPRESENTATION
031 030
024
032
042
000
005
010
015
020
025
030
035
040
045
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON INVESTMENT RATIO
RatioS
DATA COLLECTION
The data can be of two types
Primary Data
Secondary Data
Primary Data
Primary data are those data which is originally collected afresh
Secondary Data
Secondary data are those data which are already collected and stored and which has
been passed through statistical research
In this project Secondary data has been collected from following sources-
Annual report
Books
MIS
Other material and report published by company There are two methods to prepare
the Cash flow Statement
ndirect Method
I
The indirect method (or reconciliation method) starts with net income and converts it
to net cash flow from operating activities In other words the indirect method adjusts
net income for items that affected reported net income but did not affect cash To
compute net cash flow from operating activities non-cash charges in the income
statement are added ack to net income and non-cash credits are deducted
b
Direct Method
Under the direct method the statement of cash flows reports net cash flow from
operating activities as major classes of operating cash receipts (eg cash collected from
customers and cash received from interest and dividends) and cash disbursements (eg
cash paid to suppliers for goods to employees for services to creditors for interest and
to government authorities for taxes)
INDIRECT VERSUS DIRECT METHOD
The most contentious decision that the FASB faced in issuing Statement No 95 was
choosing between the direct method and the indirect method of determining net cash
flow from operating activities Companies lobbied against the direct method urging
adoption of the indirect method Commercial lending officers expressed a strong
preference to the FASB hat the direct method be required
tCF-Page 3 of 5
In Favor of the Direct Method
The principal advantage of the direct method is that it shows operating cash receipts and
payments That is it is more consistent with the objective of a statement of cash flows to
provide information about cash receipts and cash payments than the in-direct method
which does not report operating cash receipts and payments
Supporters of the direct method contend that knowledge of the specific sources of
operating cash receipts and the purposes for which operating cash payments were made
in past periods is useful in estimating future operating cash flows Furthermore in-
formation about amounts of major classes of operating cash receipts and payments is
more useful than information only about their arithmetic sum (the net cash flow from
operating activities) Such information is more revealing of an enterprises ability (1) to
generate sufficient cash from operating activities to pay its debts (2) to reinvest in its
operations and (3) to make distributions to its owners
Many corporate providers of financial statements say that they do not currently collect
information in a manner that allows them to determine amounts such as cash received
from customers or cash paid to suppliers directly from their accounting systems But
supporters of the direct method contend that the incremental cost of assimilating such
operating cash receipts and payments data is not significant
In Favor of the Indirect Method
The principal advantage of the indirect method is that it focuses on the differences
between net income and net cash flow from operating activities That is it provides a
useful link between the statement of cash flows and the income statement and balance
sheet
Many providers of financial statements contend that it is less costly to adjust net income
to net cash flow from operating activities (indirect) than it is to report gross operating
cash receipts and payments (direct) Supporters of the indirect method also state that the
direct method which effectively reports income statement information on a cash rather
than an accrual basis may erroneously suggest that net cash flow from operating
activities is as good as or better than net income as a measure of performance
Special Rules Applying to Direct and Indirect Methods
Companies that use the direct method are required at a
minimum to report separately the following classes of
operating cash receipts and payments
Receipts
1048713 Cash collected from customers (including lessees licensees etc)
1048713 Interest and dividends received
1048713 Other operating cash receipts if any
Payments
1048713 Cash paid to employees and suppliers of goods or services (including
suppliers of
insurance advertising etc)
1048713 Interest paid
1048713 Income taxes paid
1048713 Other operating cash payments if any
Companies using the indirect method are required to disclose separately changes in
inventory receivables and payables to reconcile net income to net cash flow from
operating activities In addition interest paid (net of amount capitalized) and income
taxes paid must be disclosed elsewhere in the financial statements or accompanying
notes
The FASB requires these separate and additional disclosures so that users
may approximate the direct method Also an acceptable alternative presentation
of the in-direct method is to report net cash flow from operating activities as a
single line item in the statement of cash flows and to present the reconciliation
details elsewhere in the financial statements
FINDING OF SUDY
According to cash flow statement of the company The finding of the study are as
follows-
The company has not taken any loans secured or unsecured from companies
firms or other parties
The company has not accepted any deposit from the public during the year
The company is not a sick industrial company
The company has not granted any loan secured or unsecured to company firms
or other parties
The company has paid the entire long term and short term borrowing during the
year
The company has buy back the companyrsquos own share this year
The interest paid in 2008 is more than the
There has been a significant decline in volume over the years from 2001-02
to 2005-06 as can be seen in the graph below
Table 43
The Net sales of Tractor has increased considerably from 2004-05 to 2007-08
This can be mainly attributed to changes in Variable and material costs and in
the price
The Net sale of Tractor has increased considerably from 2004-05 to 2007-08
that is an decrease of Rs7216 per tractor This can be mainly attributed to
changes in
Variable and material costs and in the prices
RECOMMENDATIONS
According to cash flow statement of the company The suggestions of the study
are as follows-
The time durations for training program have to increase
Buy regular review and consultations develop a career progression
which is sensitive to performance and ability
Create an environment where by people are trend developed to enable
The to take advantages of opportunities that arise
The jab can be redesigned where the work man stay in what is normally
the same job but has elements of it changed
The principle amount must be paid in time which can be reducing the
interest the out flow
The purchase of the fixed asset must be made only when there is extreme
requirement
In order to avoid taxes the company should go for more investment
The companyrsquos borrowings should go for more investment
o The company should try to reduce the depreciations as maximum
as possible
CONCLUSION
The study on competency level of employees at ESCORTS PVTLTD gave an
insight about the acceptance of competency mapping by employees
The employees at Ymi welcome the introduction of competency mapping in their
organization as they felt it was very much essential in enhancing their skills and
organizational development
The organization has provided the recourses guidance and support to facilitate the
introduction of competency level easily and develop the employees in such a way
that they can face any kind of challenge
However the level of competency in employees is found to be satisfactory
Providing proper training education and guidance to the employees can enhance
the level
This study was mainly carried out to find out whether thee competency mapping
being followed by the company is effective till date If the competency mapping
and fitment to the organization
By looking at the graphs and tables it is quite that the employees still are not up to
the level of competent pool they still have to be trained and made competent in
order to fill the gap As the organization has just applied the mapping it has to see
to that it meets all the requirements for competency mapping
Therefore the graphs make it quite clear that the potential of the employees is not
up to the mark and ie they are not competent enough to meet the competency-
mapping requirement Hence by further training and counseling this gap can be
closed
This report includes the training requirements of employees and it highlights skills
possessed by each employee and skill required All employees get training so that
skill can be improved and maintain balance between standard performance with
their actual performance to avoid gap
APPENDIX
QUESTIONNAIRE
Consumer Survey
Name _____________________________
Age _____________________________
Sex
Male
Female
Occupation
Businessman
Service man
Professional
Others
Monthly income brackets
Below 15000
15000- 20000
20000-30000
30000 and above
of your savings _________
Do you invest
Yes
No
If yes then where do you invest your money
Bank
Insurance
funds
Others
Why do you made that statement
Return
Risk hedging
Tax benefits
Other reasons (specify) _______
Who influence your cash decision
Relatives and friends
Family members
Advisors experts
You yourself
If no then why
Do not know where to invest
Satisfied with your current investment return
Donrsquot want take risk
Other reasons
__________________________________________________________________
___________________
Do you know about CF statement
Yes
No
If yes then from where you have come to know about an cash statement
Advertisements on newspapers
Friends and relative
Agents experts
Other source
What do you think about cash statement
It means investing only in share market
Constant watch must be kept always
Return is not satisfactory
Other perception
__________________________________________________
Can you recall any cash flow of company
___________________________
Would you want to made CF of an org
Yes
No
If yes then why
_______________________________________________________
If no then why
_______________________________________________________
BIBLIOGRAPHY
List of Books
1 PANDEY IM - FINANCIAL MANAGEMANT
2 KHAN MY AND JAIN PK -FINANCIAL MANAGEMANT
3 SMITH KV ndash MANAGEMANT OF WORKING CAPITAL
3 COMPANY RECORDS
4 JOURNAL
5 REPORTS
WEBLIOGRAPHY
1 wwwescortspvtltdcom
2 wwwgooglecom
bull COMPARISON WITH CASH BUDGET-
A cash budget is prepared at the commencement of the year whereas a cash flow Statement is
prepared at the end of the year A comparison between the two helps in ascertaining the extent
to which the financial resources of the firm have been generated and used according to the plan
Causes of variances between the figures of two statements can be analyzed and proper
corrective measures may be takes
bull STUDY OF THE TREND OF CASH RECEIPTS AND PAYMENTS-
A cash-flow statement reveals the speed at which the cash is being generated from debtors stock
and other current assets the speed at which the current liabilities are being paid It enables the
management to assess the true position of the cash in future
bull IT EXPLAINS THE DEVIATIONS OF CASH FROM EARNINGS-
A firm may earn huge profits yet it may have paucity of cash or when it suffered a loss it may
still have plenty of cash A cash flow statement explains the reasons for it
HELPFUL IN ASCERTAINING CASH-FLOW FROM VARIOUS
ACTIBITIES SEPARATELY-
A cash-flow statement aims at highlighting the cash flow from operating investing and
financing activities separately It includes how much cash has been generated or used in these
activities
bull HELPFUL IN MAKING DIVIDEND DECISIONS-
Dividend must be paid within 42 days of its declaration Hence the management takes the help of
cash-flow statement to ascertain the position of cash generated from operating activities which
can be used for payment of dividend
IMPORTANCE AND RELEVANCE OF CFS
The CFS has gained importance in view of the fact that there are many managerial Decisions
which are taken in the light of the cash availability or cash position of the firm
For example declaration of dividend by the company requires cash disbursement and
Therefore the Board of Directors must consider the cash position before proposing a dividend
The CFS also provides information for the short term financial planning and in particular the
short term cash needs of the firm
In view of increasing importance and relevance of the CFS the clause 32 of the Listing
agreement (between a Company and the Stock Exchange where the shares proposed to be listed)
has been amended by the SEBI As a result the listed companies in India are now required to
supply a copy of the CFS to each shareholder as a part of Annual Report As a result the listed
companies have started a practice of sending a CFS for which the BS has been prepared as
apart of the Annual Report of the company
DIFFRENCE BETWEEN CASH - FLOW STATEMENT AND
CASH BUDGET
There is not much difference between cash flow statement and a cash budget The
only difference is that a cash flow statement is prepared for a past period where as cash
budget is prepared for a future period Hence it is of limited use as far as the future
periods are concerned A cash budget is therefore prepared showing how much cash is
likely to be received and what will be the disbursements during a future period of time
Thus a cash budget indicates in which months there will be surplus cash and in which
moths there will be deficiency of cash resources The management can then take suitable
decision to invest the surplus cash or make arrangement for the deficiency of cash at the
required time
LIQUIDITY
It does not present true picture of the liquidity of the firm the liquidity does
not depend upon cash alone Liquidity also depends upon those assets
which can be converted into cash easily
bull Exclusion of these assets obstructs the true reporting of the ability of the firm to
meet its liabilities when they become due for payment
bull The possibilities of window - dressing is higher in case of cash position in
comparison to the working capital position of the firm
bull The cash balance can be easily maneuvered by postponing purchases and other
payments and by rapidly collecting cash from debtors before the balance sheet date
Hence a fund - flow statement presents a more realistic picture than a cash flow
statement
bull Cash flow statement ignores non- cash charges Hence the true position of the
enterprise cannot be judged by cash flow statement
bull It is prepared on cash basis and hence ignores one of the basic concept of accounting
namely accrual concept
PROCEDURE OF PREPARING CASH FLOW STATEMENT-
The institute of charted accountants of India has issued accounting standards (as)-3 revised for
preparing a cash flow statement This accounting standard has been made mandatory in respect
of accounting periods commencing on or after 1st April 2001 for certain enterprises These
enterprises are-
bull Enterprises whose equity or debt securities are listed on a recognized stock exchange in
India And enterprise that are in the process of issuing equity or debt securities that will
be listed on a recognized stock exchange in India
bull All other commercial industrial and business enterprises whose turnover for accounting
period Rs 50 crores
As such the cash flow statement has been prepared according to as -3 revised in this project
According to as-3 revised the cash flow statement summarizes the cash inflows and cash
outflows and the net changes (increase or decrease) in cash and cash equipment resulting from
operating investing and financing activities of a firm during a period The following terms are
used for preparing a cash flow statement
CASH-
It compares cash in hand and demands with banks
CASH EQUIVALENTS-
There are short - term highly liquid investments that are readily into known amounts of cash
and which present insignificant risk of changes in their values Normally an investment will be
termed as cash equivalent only if it has a short maturity period say three months or less from the
date of its acquisition Examples of cash equivalent are treasury bills commercial papers etc
Which are purchased with cash that is in excess of immediate needs investment in shares are
excluded from cash equivalents unless they are cash equivalent in reality For example the
preference shares of the company which are purchased shortly before their redemption date will
be included in cash equivalents provided there is only an insignificant risk of failure of the
company in repaying the amount at the date of the maturity
CLASSIFICATION OF CASH FLOW-
According to as -3 (revised) cash flow statement should be presented in a manner that it reports
inflows of cash by classifying them into three categories namely operating investing and
financing activities Classification of all activities into these activities on the cash and cash
equivalents of the enterprise such information will be helpful in evaluating the relationships
among these three activities are explained as below
CASH FLOW FROM OPERATING ACTIVITIES-
Operating activities are the main revenue generating activities of an enterprise As such they
include cash flows from those transactions and events which enter into the ascertainment of
net profit or loss of the enterprise Examples of cash flows arising operating activities are
bull Cash receipts from the sale of goods and rendering of services
bull Cash receipts from royalties fees commissions and other revenue
bull Cash payments to suppliers for goods and services
bull Cash payments to and on behalf of employees
bull Cash receipts and cash payments of an insurance enterprise for premiums and claims
annuities and other policy benefits
bull Cash receipts and payments relating to future contracts forward contracts option
contracts and swap contracts when the contracts are held for dealing or trade purpose and
bull Cash payments of refunds of income taxes unless they can be specifically identified with
financing and investing activities
CASH FLOW FROM INVESTING ACTIVITIES-
Investing activities include the purchase and sale of long term assets such as land building plant
and machinery etc not held for resale These activities also include the purchase and sale of such
investment which are not including in cash equipments Cash flow from investing activities
discloses the expenditures incurred for resources intended to generate future income and cash
flows
Examples cash flow arising from investing activities are
bull Cash payments to acquire fixed assets (including intangible)
bull Cash receipts from sale of fixed assets (including intangibles)
bull Cash payments to acquire shares warrants or debt instruments of other enterprises
(other than receipts for those instruments considered to be cash equivalents)
bull Cash receipts from sale of shares warrants or debt instruments of other enterprises (other
than receipts for those instruments considered to be cash equivalents)
bull Cash advances and loans made to third parties In case of financial enterprises these will
be treated as cash flow from operating activities
bull Cash receipts from the repayment of advances and loans made to third parties In case of
financial enterprises these will be treated as cash flow from operating activities
bull Cash receipts of insurance claim for property involved in accident and
bull Cash receipts of interest and dividend In case of financial enterprise these will be treated
cash flow from operating activities
CASH FLOW FROM FIANCING ACTIVITIES-
Financing activities are the activities that result in change in capital and borrowing of the
enterprise
Examples of cash flows arising from financing activities are
bull Cash receipts from issuing shares or other similar instruments
bull Cash receipts from issuing debentures loans bonds and other short term or long term
borrowing
bull Cash repayment of amounts borrowed buy back of equity shares redemption of
preference shares debentures loans bonds etc
bull Cash payment of interest and dividend
IMPORTANT NOTE
In case of financial enterprise such as bank or mutual fund company cash Outflow
and cash inflow arising from the purchase and sale of securities will Be treated as
flows from operating activities This is because purchase and sale of securities is a
part of operating activity in case of financial enterprise In addition interest paid
and interest received as well as dividends received will also be treated as cash flow
from operating activities in case of financial Enterprises
CASH FLOW STATEMENT
(DIRECT METHOD)
CASH FLOW FROM OPERATING ACTIVITIES
Cash receipts from costumers
Cash paid to suppliers and employers ()
Cash generated from operations
Income tax paid ()
Cash flows from extraordinary item
plusmn Extra ordinary items
Net cash from operating activities
CASH FLOW FROM INVESTING ACTIVITIES-
Purchase of fixed assets
Proceed from sale equipment ()
Interest received
Dividend received ()
Net cash from investing activities
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from insurance of share capital
Proceeds from long- term borrowings ()
Repayment of from long-term borrowings
Interest paid
Dividend paid ()
Net cash from financing activities
Net increase in cash and cash equivalent
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
SOME SPECIAL TERMS-
i) INTERSET AND DIVIDEND-
Cash inflow from interest and dividends and cash outflow on account of interest and
dividends should be disclosed separately Cash inflow arising from interest and dividends
received should be shown as cash flow from investing activities where as cash outflow
disclosed outflow on account of interest and dividend paid should be shown as cash flow
from financing activity
ii) TAXES ON INCOME-
Tax paid on income is a part of cash flow from operating activity Hence taxes paid are
shown as a deduction under cash flow from operating activity
iii) EXTRA ORDINARY ITEMS-
Cash flow relating to extra ordinary items such as bad debts recovered Claims received from
insurance companies winning of a lottery or a law etc Should be disclosed separately as
arising from operating investing or financing activities For example the amount received
for insurance company on account of loss of stock by fire Earthquake and floods etc Should
be reported as cash flow from operating activities
iv) SIGNIFICANT NON - CASH TRANSACTION-
There are some investing and financing activities which do not require the use of cash or
cash equivalents Such non cash activities should be excluded from the cash flow statement
Examples are the acquisition of assets by issue of debentures or shares conversion of
shares into debentures etc Such significant on non cash transaction should be disclosed
outside the cash flow statement
CASH FLOW STATEMENT
(INDIRECT METHOD)
CASH FLOW FROM OPERARATTNG ACTIVITIES
Net profit before taxation and extraordinary item
Adjustment for
Depreciation
Foreign exchange loss
Interest income
Dividend income
Interest expense
Operating profit before working capital changes
Increase in sundry debtors
Decrease in inventories
Decrease in sundry creditors
Cash generated from operations
Income tax paid ()
Cash flow before extraordinary item
plusmn Extra - ordinary items
Net cash from operating activities
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of fixed assets ()
Proceeds from sale of equipment
Interest received
Dividend received ()
Net cash from investing activities
CASH FLOW FROM FINANCING ACTIVITIES-
Proceeds from insurance of share capital
Proceeds from long - term borrowings
Repayments of from long - term borrowings ()
Interest paid ()
Dividend paid ()
Net cash from financing activities
Net increase in cash and cash equivalent
Cash and cash equivalents at beginning of period
CHANGES IN CASH FLOWS
Changes in cash flows can be treated to the following
1 Net profit will increase the cash flows these cash flows will be
increased further if there are any non-cash changes (such as depreciation
and amortization)
2 Any payment of dividends will decrease the cash flows as will the
repayment of debt an issue of share or debt will also increase the
cash flows
3 An increase in non-cash assets will decrease cash flows increase in
current assets and fixed assets will result in drain on cash flows
Thus a statement of changes in cash flows ie the cash flow statement
classifies all Changes into one of three categories - operating investing or
financing activities Therefore the preparation of a statement of changes in cash
flows requires classification of changes in liabilities shareholders equity and
non-cash assets into one of these categories although some items will not fit
easily onto one other
h equivalent at end of period
STEP- BY-STEP PROCEDURE TO PREPARE CFS
1 Calculate the net increase or decrease in cash and cash equivalents-
For this purpose the opening balance of total cash and cash equivalents is compared with the
closing balance of cash and equivalents
Increasedecrease in cash and equivalents
Opening balance Closing Balance
Cash in hand
Cash in bank
Short-term Investment
Total
The difference between the total of opening and closing balance will be increased or
Decreased in cash equivalents during the period It may be noted that if there are only one or
two of items of cash etc
2 Net Cash flaw from operating activities-
The term operating refers to the normal purchase of goods and services On the basis of the
information contained in the comparative BS s and the IS and the additional Information the
net cash flow generated or use by the operating activities may be ascertained The IS prepared
by the firm gives the net profit figure earned by the firm On actual basis ie all items in the
IS are incorporated on the basis of earnedaccrued even
3 If not resulting in cash movements-
So the profit or loss as by the IS may not result in increase or decrease in cash balance by the
SYNOPSIS
INTRODUCTION
ESCORTS PVT LTD is a private limited company not listed in a stock exchange of India
and employees 900 highly trained personnel Its manufacturing plants are strategically located
in close proximity to its customers at Faridabad (Haryana) Noida (UP)
OBJECTIVES OF THE STUDY
bull To find the movement of cash inflow and cash outflow
bull To make the comparison between cash inflow and
bull Cash outflow
bull To prepare the Cash Flow Statement
bull To analyze the Balance Sheet of the company in terms of Cash Flow Statement
bull To focus on various activities of the organization in terms of Operating
Financing Investment
SCOPE OF THE STUDY
Financial resources are the assets for the company and their productivity is key
factor for profitability It is necessary to know their problems their knowledge
skills abilities amp the measures that can be taken to reduce them By analyzing this
top management can build good relations with the employees
The whole study is to determine the competencies of different employees who are
working in ESCORTS PVT LTD By analyzing it the top management can
introduce the concept of competency mapping in the organization Through this
management can attempt to use more suitable strategies towards the human
resource development
The research is confined to elicit the existing gap between the standard skill
required to perform the job and the skill processed by the employees at ESCORTS
PVT LTD And to provide them suitable training program to over come those gaps
for the better utilization of human resources
RELEVANCE
The scope of the study was confined to the outside parties like creditors
shareholders government etc Who want to invest their money in the
company
The benefit of the report for the company is that through this report they can come
to know about the cash flow statements of the company
This study also unable the company that their cash is not utilizing in unnecessary
things
The benefit of the report for the researcher is that it has helped to get knowledge
about the cash inflow and cash
RESERRCH METHODOLOGY-
RESEARCH DESIGN
bull The study was conducted under well- structured approach
bull The project lasted for 4 weeks and the year 2009 ie from 08 July to 12
Aug2009
bull The questionnaire method amp personal interview method was used to collect
the primary data for the study
The secondary data is collected from Internet amp company training material and
many other company materials
SAMPLE DESIGN
The process of extracting a sample from a population is called sampling
procedure The selection of sampling procedure to conduct the research
depends upon the nature of the study and the objective to be accomplished
Judgment sampling technique is adopted to select the respondents in this
study The sample design included the various departments in the YAMAHA
MOTORS PVT LTD
Methodology of date collection
bull Conducting personal interview
bull Data collection from primary and secondary sources
bull Designing questionnaire
bull Selecting sample size from the sample frame for the survey
bull Questionnaire distribution
bull Analysis of collected data with the help of statistical tools
bull Interpretation of collected data
bull Stating the conclusion based on the entire study
Sampling Technique
The sampling technique used for this research is of non-probability and convenience
sampling
Sample Unit
Employees of the company
Sample Size
For this research study the sample size is 25 respondents
Sources of data
Primary data
Primary data is the data which is collected by the researcher for the first time
and which was not there The tools used to collect the data are-
1)Questionnaire method from the employers in different departments
2) Face to Face personal interactions
Secondary Data
The data already collected is called as secondary data The relevant information
for this study has been collected from secondary source such as
Books
Journal
Reports
Publication by the organizational circulation
Company records
Business bulletins
Internet
Secondary data is also collected from various of the internet and intranet Some
of the website trough which information was gathered was through
HYPOTHESIS
The report is analyzed under the presumption that cash flow position of
YAMAHA MOTORS PVTLTD It can be improved and made effective in
terms of cash flows
In testing the above hypothesis the following aspects will be considered
1 Balance sheet comparisons
2 Presentation of cash flow statement in terms of revised AS-3
LIMITATIONS
The study though conducted to the best of the ability suffers from some
certain limitations There are
The data is secondary one and as such its reliability may be
questioned upon
The time availability for the study is less and as such it hinders thee
progress of the study
Senior officials were rarely approachable
Websites were not giving comprehensive data
Not having face-to-face interaction to get more relevant
information
Analysis and interpretation of data was done on the assumption that
the respondentsrsquo information was online
Information collected was totally subjective
The interviews are done during office hours but could not be done
for the other employees of other
DATA ANALYSIS
ESCORTS PVT LTD
CASH FLOW STRATEMENT
Year Ended Year Ended
30092009 30092008
Rs Crores Rs
Crores
A Cash Flow from Operating Activities
Net profit before tax (1733) 3444
Adjustment for
Loss on sale Provision for diminution in value of Long Term
Investments amp loans to Group Companies 189 4018
Gain on sale of Long Term Investments (122) (9492)
Gain on sale of Asset (013) -
Depreciation 4497 3955
Misc Exp Assets Write off Provisions 808 750
Interest Expense 7222 7999
Dividend Income (002) (001)
Interest Income (2082) -
Operating Profit before working capital changes 8764 10673
Adjustments for
Trade and other Receivables (8817) (12035)
Inventories 1379 (4692)
Trade Payables 6705 19046
Miscellaneous Expenditure (750) (511)
(1483) 1808
Cash Generated from Operations 7281 12481
Direct Taxes (Paid)Refunds (1785) 3166
Net Cash Flow from operating activities 5496 15647
B Cash Flow from Investing Activities
Purchase of Fixed Assets (3095) (2794)
Proceeds from sale of Fixed Assets 086 177
Movement in Loans and Advances (1627) (1644)
Sale of Investments 3233 11452
Short Term Deposits with schedule Banks (231) (1048)
Interest Received 2070 -
Dividend Received 002 001
Net Cash Flow from Investing activities 438 6144
Proceeds from Share Capital amp Securities Premium 11444 -
Proceeds from Long Term Borrowings 8660 -
Less Repayment of Long Term Borrowings (054) (7896)
Proceeds (Repayment) from short term borrowings (net) (22726) -
Interest Paid (7740) (8223)
Net Cash used in financing activities (10416) (16119)
Net Increase(Decrease) in Cash and Cash equivalents (4482) 5672
Cash and Cash equivalents as at 01102008 10565 4893
Cash and Cash equivalents as at 30092009 6083 1056
ANALYSIS OF CASH FLOW
From the cash flow statements of the ESCORT PVTLTDIt can be analyzed
from the two years that the net cash balance of the company has increased
manifold in 30-09-2008 than the year 30-09-2009
The net profit in 30-09-2008 is higher than the 30-09-2009 but due to certain
changes there has been increase in the cash balance
The interest paid this year is ore of the last year which implies that thee
company has not repaid his borrowed capital due to which the interest has got
down
The depreciation has increased but it does not affect cash to an extent as it is a
non-cash item In the head of working capital there is drastic change in the cash
balance in the form of ldquoTrade and other Receivables which has affected the cash
balance
There is outflow of cash for receivables rather than the inflow in the last year
So the net effect is that the cash from operating activities has been decreased
two times from the last year
The company has no accumulated losses as at the end of the financial year ie
September 31 2008
Provision for taxation has been made in accordance with the requirement of AS-
22 issued by Institute of Charted Accountants of India
Pursuant to that current year deferred tax liability have been charged to profit amp
loss account
In opinion of the board of directors of thee company the current assets loans
and advances have a value on realization in the ordinary course of the business at
least equal to the amount stated in the balance sheet and provision for all
liabilities have been made
Balance of sundry debtors creditors loans and advances are subject to confirmation by
the concerned parties
METHOD OF ANALYSIS
1 Data analysis is done using the following statistical tools wherever required in
order to extract meaningful information from the collected data
o Simple percentage and averages
o Bar diagram
o Cone diagram
o Pie diagram
2 The collected data from the questionnaire has been put together in the form of
tables
3 Percentage has been calculated wherever necessary for generalization of the
data
4 Data analysis and interpretation has been done on the basis of primary and
secondary data
5 The findings researches have been recorded based on the analysis
6 The study conducted pertains only to YAMAHA MOTORS INDIA PVTLTD
All bank balances (debitcredit) have been confirmed by the concerned bank
Identified from the available information which has been relied upon by the auditors
The names of small-scale industrial units to whom outstanding for more than
thirty days within agreed terms
The company has 9996 of shareholders in its subsidiary company named as
ESCORTS PVT LTD As at 31-03-2008
So the net effect is that the net cash from investing activities has many more
times than the last year which is negative Now the company has repaid its long
term borrowing more than the last year which has decreased the cash balance by
the little amount
Balance with the schedule banks under the head current amp collection account
amounting to represent funds in transit lying with schedule banks pending
transfer against loan liabilities under the head cash credit amp bill discounting
LIQUIDITY RATIO
1 CURRENT RATIO
(Amount in Rs)
Current Ratio
Year Current Assets Current Liabilities Ratio
2003 58574151 7903952 7412004 69765346 31884616 2192005 72021081 16065621 4482006 91328208 47117199 1942007 115642068 30266661 382
Interpretation
As a rule the current ratio with 21 (or) more is considered as satisfactory
position of the firm
When compared with 2006 there is an increase in the provision for tax because
the debtors are raised and for that the provision is created The current liabilities
majorly included Lanco Group of company for consultancy additional services
The sundry debtors have increased due to the increase to corporate taxes
In the year 2006 the cash and bank balance is reduced because that is used for
payment of dividends In the year 2007 the loans and advances include majorly
the advances to employees and deposits to government The loans and advances
reduced because the employees set off their claims The other current assets
include the interest attained from the deposits The deposits reduced due to the
declaration of dividends So the other current assets decreased
The huge increase in sundry debtors resulted an increase in the ratio which is
above the benchmark level of 21 which shows the comfortable position of the
firm
GRAPHICAL REPRESENTATION
741
219
448
194
382
000
100
200
300
400
500
600
700
800
Ratio
2003 2004 2005 2006 2007
Years
CURRENT RATIO
Ratio
2 QUICK RATIO
(Amount
in Rs)
Quick Ratio
Year Quick Assets Current Liabilities Ratio
2003 58574151 7903952 741
2004 52470336 31884616 165
2005 69883268 16065620 435
2006 89433596 47117199 19
2007 115431868 30266661 381
Interpretation
Quick assets are those assets which can be converted into cash with in a short
period of time say to six months So here the sundry debtors which are with the
long period does not include in the quick assets
Compare with 2006 the Quick ratio is increased because the sundry debtors are
increased due to the increase in the corporate tax and for that the provision
created is also increased So the ratio is also increased with the 2006
GRAPHICAL REPRESENTATION
741
165
435
190
381
000
100
200
300
400
500
600
700
800
Ratio
2003 2004 2005 2006 2007
Years
QUICK RATIO
Ratios
3 ABOSULTE LIQUIDITY RATIO
(Amount
in Rs)
Absolute Cash Ratio
Year Absolute Liquid Assets Current Liabilities Ratio
2003 31004027 7903952 392
2004 10859778 31884616 034
2005 39466542 16065620 246
2006 53850852 47117199 114
2007 35649070 30266661 118
Interpretation
The current assets which are ready in the form of cash are considered as absolute
liquid assets Here the cash and bank balance and the interest on fixed assts are
absolute liquid assets
In the year 2006 the cash and bank balance is decreased due to decrease in the
deposits and the current liabilities are also reduced because of the payment of
dividend That causes a slight increase in the current yearrsquos ratio
GRAPHICAL REPRESENTATION
392
034
246
114 118
0
05
1
15
2
25
3
35
4
Ratios
2003 2004 2005 2006 2007
Years
ABSOLUTE CASH RATIO
Ratios
LEVERAGE RATIOS
4 PROPRIETORY RATIO
(Amount
in Rs)
Proprietory Ratio
Year Share Holders Funds Total Assets Ratio
2003 67679219 78572171 086
2004 53301834 88438107 06
2005 70231061 89158391 079
2006 56473652 106385201 053
2007 97060013 129805102 075
Interpretation
The proprietary ratio establishes the relationship between shareholders funds to
total assets It determines the long-term solvency of the firm This ratio indicates
the extent to which the assets of the company can be lost without affecting the
interest of the company
There is no increase in the capital from the year2004 The share holderrsquos funds
include capital and reserves and surplus The reserves and surplus is increased
due to the increase in balance in profit and loss account which is caused by the
increase of income from services
Total assets includes fixed and current assets The fixed assets are reduced
because of the depreciation and there are no major increments in the fixed assets
The current assets are increased compared with the year 2006 Total assets are
also increased than precious year which resulted an increase in the ratio than old
GRAPHICAL REPRESENTATION
086
060
079
053
075
000
010
020
030
040
050
060
070
080
090
Ratios
2003 2004 2005 2006 2007
Years
PROPRIETORY RATIO
Ratios
ACTIVITY RATIOS
5 WORKING CAPITAL TURNOVER RATIO
(Amount
in Rs)
Working Capital Turnover Ratio
Year Income From Services Working Capital Ratio
2003 36309834 50670199 0722004 53899084 37880730 1422005 72728759 55355460 1312006 55550649 44211009 1262007 96654902 85375407 113
Interpretation
Income from services is greatly increased due to the extra invoice for Operations
amp Maintenance fee and the working capital is also increased greater due to the
increase in from services because the huge increase in current assets
The income from services is raised and the current assets are also raised together
resulted in the decrease of the ratio of 2007 compared with 2006
GRAPHICAL REPRESENTATION
072
142 131126
113
000
020
040
060
080
100
120
140
160
Ratio
2003 2004 2005 2006 2007
Years
WORKING CAPITAL TURNOVER RATIO
Ratio
6 FIXED ASSETS TURNOVER RATIO
(Amount in Rs)
Fixed Assets Turnover Ratio
Year Income From Services Net Fixed Assets Ratio
2003 36309834 28834317 126
2004 53899084 29568279 182
2005 72728759 17137310 424
2006 55550649 15056993 369
2007 96654902 14163034 682
Interpretation
Fixed assets are used in the business for producing the goods to be sold This
ratio shows the firmrsquos ability in generating sales from all financial resources
committed to total assets The ratio indicates the account of one rupee
investment in fixed assets
The income from services is greaterly increased in the current year due to the
increase in the Operations amp Maintenance fee due to the increase in extra invoice
and the net fixed assets are reduced because of the increased charge of
depreciation Finally that effected a huge increase in the ratio compared with the
previous yearrsquos ratio
GRAPHICAL REPRSENTATION
126182
424 369
682
000
100
200
300
400
500
600
700
Ratios
2003 2004 2005 2006 2007
Years
FIXED ASSETS TURNOVER RATIO
Ratios
7 CAPITAL TURNOVER RATIO
(Amount
in Rs)
Capital Turnover Ratio
Year Income From Services Capital Employed Ratio
2003 36309834 37175892 0982004 53899084 53301834 1012005 72728759 70231061 1042006 55550649 56473652 0982007 96654902 97060013 100
Interpretation
This is another ratio to judge the efficiency and effectiveness of the company
like profitability ratio
The income from services is greaterly increased compared with the previous year
and the total capital employed includes capital and reserves amp surplus Due to
huge increase in the net profit the capital employed is also increased along with
income from services Both are effected in the increment of the ratio of current
year
GRAPHICAL REPRESENTATION
098
101
104
098
100
094095096097098099100101102103104
Ratios
2003 2004 2005 2006 2007
Years
CAPITAL TURNOVER RATIO
Ratios
8 CURRENT ASSETS TO FIXED ASSETS RATIO
(Amount
in Rs)
Current Assets To Fixed Assets Ratio
Year Current Assets Fixed Assets Ratio
2003 58524151 19998020 2932004 69765346 18672761 3742005 72021081 17137310 4202006 91328208 15056993 6072007 115642068 14163034 817
Interpretation
Current assets are increased due to the increase in the sundry debtors and the net
fixed assets of the firm are decreased due to the charge of depreciation and there
is no major increment in the fixed assets
The increment in current assets and the decrease in fixed assets resulted an
increase in the ratio compared with the previous year
GRAPHICAL REPRESENTATION
293374
420
607
817
000
100
200
300
400
500
600
700
800
900
Ratios
2003 2004 2005 2006 2007
Years
CURRENT ASSETS TO FIXED ASSETS RATIO
Ratios
PROFITABILITY RATIOS
GENERAL PROFITABILITY RATIOS
9 NET PROFIT RATIO
(Amount in Rs)
Net Profit Ratio
Year Net Profit After Tax Income from Services Ratio
2003 21123474 36039834 059
2004 16125942 53899084 030
2005 16929227 72728759 023
2006 18259580 55550649 033
2007 40586359 96654902 042
Interpretation
The net profit ratio is the overall measure of the firmrsquos ability to turn each rupee
of income from services in net profit If the net margin is inadequate the firm
will fail to achieve return on shareholderrsquos funds High net profit ratio will help
the firm service in the fall of income from services rise in cost of production or
declining demand
The net profit is increased because the income from services is increased The
increment resulted a slight increase in 2007 ratio compared with the year 2006
GRAPHICAL REPRESENTATION
059
030
023
033
042
000
010
020
030
040
050
060
Ratios
2003 2004 2005 2006 2007
Years
NET PROFIT RATIO
Ratios
10 OPERATING PROFIT
(Amount in Rs)
Operating Profit
Year Operating Profit Income From Services Ratio
2003 36094877 36309834 099
2004 27576814 53899084 051
2005 29540599 72728759 041
2006 31586718 55550649 057
2007 67192677 96654902 070
Interpretation
The operating profit ratio is used to measure the relationship between net profits
and sales of a firm Depending on the concept it will decide
The operating profit ratio is increased compared with the last year The earnings
are increased due to the increase in the income from services because of
Operations amp Maintenance fee So the ratio is increased slightly compared with
the previous year
GRAPHICAL REPRESENTATION
099
051
041
057
070
000
010
020
030
040
050060
070
080
090
100
Ratios
2003 2004 2005 2006 2007
Years
OPERATING PROFIT RATIO
Ratios
11 RETURN ON TOTAL ASSETS RATIO
(Amount in Rs)
Return on Total Assets Ratio
Year Net Profit After Tax Total Assets Ratio
2003 21123474 78572171 027
2004 16125942 88438107 018
2005 16929227 89158391 019
2006 18259580 106385201 017
2007 40586359 129805102 031
Interpretation
This is the ratio between net profit and total assets The ratio indicates the return
on total assets in the form of profits
The net profit is increased in the current year because of the increment in the
income from services due to the increase in Operations amp Maintenance fee The
fixed assets are reduced due to the charge of depreciation and no major
increments in fixed assets but the current assets are increased because of sundry
debtors and that effects an increase in the ratio compared with the last year ie
2006
GRAPHICAL REPRESENTATION
027
018 019017
031
000
005
010
015
020
025
030
035
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON TOTAL ASSETS
Ratios
12 RESERVES amp SURPLUS TO CAPITAL RATIO
(Amount in Rs)
Reserves amp Surplus To Capital Ratio
Year Reserves amp Surplus Capital Ratio
2003 65599299 2079920 31542004 34582554 18719280 1852005 51511781 18719280 2752006 37754372 18719280 2022007 78340733 18719280 419
Interpretation
The ratio is used to reveal the policy pursued by the company a very high ratio
indicates a conservative dividend policy and vice-versa Higher the ratio better
will be the position
The reserves amp surplus is decreased in the year 2006 due to the payment of
dividends and in the year 2007 the profit is increased But the capital is
remaining constant from the year 2004 So the increase in the reserves amp surplus
caused a greater increase in the current yearrsquos ratio compared with the older
GRAPHICAL REPRESENTATION
3154
185 275 202419
-
500
1000
1500
2000
2500
3000
3500
Ratios
2003 2004 2005 2006 2007
Years
RESERVES amp SRUPLUS TO CAPITAL RATIO
Ratios
OVERALL PROFITABILITY RATIOS
13 EARNINGS PER SHARE
(Amount in Rs)
Earnings Per Share
Year Net Profit After Tax No of Equity Shares Ratio
2003 21123474 207992 101562004 16125942 1871928 8612005 16929227 1871928 9042006 18259580 1871928 9752007 40586359 1871928 2168
Interpretation
Earnings per share ratio are used to find out the return that the shareholderrsquos earn
from their shares After charging depreciation and after payment of tax the
remaining amount will be distributed by all the shareholders
Net profit after tax is increased due to the huge increase in the income from
services That is the amount which is available to the shareholders to take There
are 1871928 shares of Rs10- each The share capital is constant from the year
2004 Due to the huge increase in net profit the earnings per share is greaterly
increased in 2007
GRAPHICAL REPRESENTATION
10156
861904 975
2168
000
2000
4000
6000
8000
10000
12000
Ratios
2003 2004 2005 2006 2007
Years
EARNINGS PER SHARE
Ratios
14 PRICE EARNINGS (PE) RATIO
(Amount in Rs)
Price Earning (PE) Ratio
Year Market Price Per Share Earnings Per Share Ratio
2003 3254 10156 0322004 2847 861 3302005 3752 904 4152006 3017 975 3092007 5185 2168 239
Interpretation
The ratio is calculated to make an estimate of application in the value of share of
a company
The market price per share is increased due to the increase in the reserves
amp surplus The earnings per share are also increased greaterly compared
with the last year because of increase in the net profit So the ratio is
decreased compared with the previous year
GRAPHICAL REPRESENTATION
032
330
415
309
239
000
050
100
150
200
250
300
350
400
450
Ratios
2003 2004 2005 2006 2007
Years
PE RATIO
Ratios
15 RETURN ON INVESTMENT
(Amount in Rs)
Return on Investment
Year Net Profit After Tax Share Holders Fund Ratio
2003 21123474 67679219 031
2004 16125942 53301834 03
2005 16929227 70231061 024
2006 18259580 56473652 032
2007 40586359 97060013 042
Interpretation
This is the ratio between net profits and shareholders funds The ratio is
generally calculated as percentage multiplying with 100
The net profit is increased due to the increase in the income from services ant
the shareholders funds are increased because of reserve amp surplus So the ratio
is increased in the current year
GRAPHICAL REPRESENTATION
031 030
024
032
042
000
005
010
015
020
025
030
035
040
045
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON INVESTMENT RATIO
RatioS
DATA COLLECTION
The data can be of two types
Primary Data
Secondary Data
Primary Data
Primary data are those data which is originally collected afresh
Secondary Data
Secondary data are those data which are already collected and stored and which has
been passed through statistical research
In this project Secondary data has been collected from following sources-
Annual report
Books
MIS
Other material and report published by company There are two methods to prepare
the Cash flow Statement
ndirect Method
I
The indirect method (or reconciliation method) starts with net income and converts it
to net cash flow from operating activities In other words the indirect method adjusts
net income for items that affected reported net income but did not affect cash To
compute net cash flow from operating activities non-cash charges in the income
statement are added ack to net income and non-cash credits are deducted
b
Direct Method
Under the direct method the statement of cash flows reports net cash flow from
operating activities as major classes of operating cash receipts (eg cash collected from
customers and cash received from interest and dividends) and cash disbursements (eg
cash paid to suppliers for goods to employees for services to creditors for interest and
to government authorities for taxes)
INDIRECT VERSUS DIRECT METHOD
The most contentious decision that the FASB faced in issuing Statement No 95 was
choosing between the direct method and the indirect method of determining net cash
flow from operating activities Companies lobbied against the direct method urging
adoption of the indirect method Commercial lending officers expressed a strong
preference to the FASB hat the direct method be required
tCF-Page 3 of 5
In Favor of the Direct Method
The principal advantage of the direct method is that it shows operating cash receipts and
payments That is it is more consistent with the objective of a statement of cash flows to
provide information about cash receipts and cash payments than the in-direct method
which does not report operating cash receipts and payments
Supporters of the direct method contend that knowledge of the specific sources of
operating cash receipts and the purposes for which operating cash payments were made
in past periods is useful in estimating future operating cash flows Furthermore in-
formation about amounts of major classes of operating cash receipts and payments is
more useful than information only about their arithmetic sum (the net cash flow from
operating activities) Such information is more revealing of an enterprises ability (1) to
generate sufficient cash from operating activities to pay its debts (2) to reinvest in its
operations and (3) to make distributions to its owners
Many corporate providers of financial statements say that they do not currently collect
information in a manner that allows them to determine amounts such as cash received
from customers or cash paid to suppliers directly from their accounting systems But
supporters of the direct method contend that the incremental cost of assimilating such
operating cash receipts and payments data is not significant
In Favor of the Indirect Method
The principal advantage of the indirect method is that it focuses on the differences
between net income and net cash flow from operating activities That is it provides a
useful link between the statement of cash flows and the income statement and balance
sheet
Many providers of financial statements contend that it is less costly to adjust net income
to net cash flow from operating activities (indirect) than it is to report gross operating
cash receipts and payments (direct) Supporters of the indirect method also state that the
direct method which effectively reports income statement information on a cash rather
than an accrual basis may erroneously suggest that net cash flow from operating
activities is as good as or better than net income as a measure of performance
Special Rules Applying to Direct and Indirect Methods
Companies that use the direct method are required at a
minimum to report separately the following classes of
operating cash receipts and payments
Receipts
1048713 Cash collected from customers (including lessees licensees etc)
1048713 Interest and dividends received
1048713 Other operating cash receipts if any
Payments
1048713 Cash paid to employees and suppliers of goods or services (including
suppliers of
insurance advertising etc)
1048713 Interest paid
1048713 Income taxes paid
1048713 Other operating cash payments if any
Companies using the indirect method are required to disclose separately changes in
inventory receivables and payables to reconcile net income to net cash flow from
operating activities In addition interest paid (net of amount capitalized) and income
taxes paid must be disclosed elsewhere in the financial statements or accompanying
notes
The FASB requires these separate and additional disclosures so that users
may approximate the direct method Also an acceptable alternative presentation
of the in-direct method is to report net cash flow from operating activities as a
single line item in the statement of cash flows and to present the reconciliation
details elsewhere in the financial statements
FINDING OF SUDY
According to cash flow statement of the company The finding of the study are as
follows-
The company has not taken any loans secured or unsecured from companies
firms or other parties
The company has not accepted any deposit from the public during the year
The company is not a sick industrial company
The company has not granted any loan secured or unsecured to company firms
or other parties
The company has paid the entire long term and short term borrowing during the
year
The company has buy back the companyrsquos own share this year
The interest paid in 2008 is more than the
There has been a significant decline in volume over the years from 2001-02
to 2005-06 as can be seen in the graph below
Table 43
The Net sales of Tractor has increased considerably from 2004-05 to 2007-08
This can be mainly attributed to changes in Variable and material costs and in
the price
The Net sale of Tractor has increased considerably from 2004-05 to 2007-08
that is an decrease of Rs7216 per tractor This can be mainly attributed to
changes in
Variable and material costs and in the prices
RECOMMENDATIONS
According to cash flow statement of the company The suggestions of the study
are as follows-
The time durations for training program have to increase
Buy regular review and consultations develop a career progression
which is sensitive to performance and ability
Create an environment where by people are trend developed to enable
The to take advantages of opportunities that arise
The jab can be redesigned where the work man stay in what is normally
the same job but has elements of it changed
The principle amount must be paid in time which can be reducing the
interest the out flow
The purchase of the fixed asset must be made only when there is extreme
requirement
In order to avoid taxes the company should go for more investment
The companyrsquos borrowings should go for more investment
o The company should try to reduce the depreciations as maximum
as possible
CONCLUSION
The study on competency level of employees at ESCORTS PVTLTD gave an
insight about the acceptance of competency mapping by employees
The employees at Ymi welcome the introduction of competency mapping in their
organization as they felt it was very much essential in enhancing their skills and
organizational development
The organization has provided the recourses guidance and support to facilitate the
introduction of competency level easily and develop the employees in such a way
that they can face any kind of challenge
However the level of competency in employees is found to be satisfactory
Providing proper training education and guidance to the employees can enhance
the level
This study was mainly carried out to find out whether thee competency mapping
being followed by the company is effective till date If the competency mapping
and fitment to the organization
By looking at the graphs and tables it is quite that the employees still are not up to
the level of competent pool they still have to be trained and made competent in
order to fill the gap As the organization has just applied the mapping it has to see
to that it meets all the requirements for competency mapping
Therefore the graphs make it quite clear that the potential of the employees is not
up to the mark and ie they are not competent enough to meet the competency-
mapping requirement Hence by further training and counseling this gap can be
closed
This report includes the training requirements of employees and it highlights skills
possessed by each employee and skill required All employees get training so that
skill can be improved and maintain balance between standard performance with
their actual performance to avoid gap
APPENDIX
QUESTIONNAIRE
Consumer Survey
Name _____________________________
Age _____________________________
Sex
Male
Female
Occupation
Businessman
Service man
Professional
Others
Monthly income brackets
Below 15000
15000- 20000
20000-30000
30000 and above
of your savings _________
Do you invest
Yes
No
If yes then where do you invest your money
Bank
Insurance
funds
Others
Why do you made that statement
Return
Risk hedging
Tax benefits
Other reasons (specify) _______
Who influence your cash decision
Relatives and friends
Family members
Advisors experts
You yourself
If no then why
Do not know where to invest
Satisfied with your current investment return
Donrsquot want take risk
Other reasons
__________________________________________________________________
___________________
Do you know about CF statement
Yes
No
If yes then from where you have come to know about an cash statement
Advertisements on newspapers
Friends and relative
Agents experts
Other source
What do you think about cash statement
It means investing only in share market
Constant watch must be kept always
Return is not satisfactory
Other perception
__________________________________________________
Can you recall any cash flow of company
___________________________
Would you want to made CF of an org
Yes
No
If yes then why
_______________________________________________________
If no then why
_______________________________________________________
BIBLIOGRAPHY
List of Books
1 PANDEY IM - FINANCIAL MANAGEMANT
2 KHAN MY AND JAIN PK -FINANCIAL MANAGEMANT
3 SMITH KV ndash MANAGEMANT OF WORKING CAPITAL
3 COMPANY RECORDS
4 JOURNAL
5 REPORTS
WEBLIOGRAPHY
1 wwwescortspvtltdcom
2 wwwgooglecom
cash-flow statement to ascertain the position of cash generated from operating activities which
can be used for payment of dividend
IMPORTANCE AND RELEVANCE OF CFS
The CFS has gained importance in view of the fact that there are many managerial Decisions
which are taken in the light of the cash availability or cash position of the firm
For example declaration of dividend by the company requires cash disbursement and
Therefore the Board of Directors must consider the cash position before proposing a dividend
The CFS also provides information for the short term financial planning and in particular the
short term cash needs of the firm
In view of increasing importance and relevance of the CFS the clause 32 of the Listing
agreement (between a Company and the Stock Exchange where the shares proposed to be listed)
has been amended by the SEBI As a result the listed companies in India are now required to
supply a copy of the CFS to each shareholder as a part of Annual Report As a result the listed
companies have started a practice of sending a CFS for which the BS has been prepared as
apart of the Annual Report of the company
DIFFRENCE BETWEEN CASH - FLOW STATEMENT AND
CASH BUDGET
There is not much difference between cash flow statement and a cash budget The
only difference is that a cash flow statement is prepared for a past period where as cash
budget is prepared for a future period Hence it is of limited use as far as the future
periods are concerned A cash budget is therefore prepared showing how much cash is
likely to be received and what will be the disbursements during a future period of time
Thus a cash budget indicates in which months there will be surplus cash and in which
moths there will be deficiency of cash resources The management can then take suitable
decision to invest the surplus cash or make arrangement for the deficiency of cash at the
required time
LIQUIDITY
It does not present true picture of the liquidity of the firm the liquidity does
not depend upon cash alone Liquidity also depends upon those assets
which can be converted into cash easily
bull Exclusion of these assets obstructs the true reporting of the ability of the firm to
meet its liabilities when they become due for payment
bull The possibilities of window - dressing is higher in case of cash position in
comparison to the working capital position of the firm
bull The cash balance can be easily maneuvered by postponing purchases and other
payments and by rapidly collecting cash from debtors before the balance sheet date
Hence a fund - flow statement presents a more realistic picture than a cash flow
statement
bull Cash flow statement ignores non- cash charges Hence the true position of the
enterprise cannot be judged by cash flow statement
bull It is prepared on cash basis and hence ignores one of the basic concept of accounting
namely accrual concept
PROCEDURE OF PREPARING CASH FLOW STATEMENT-
The institute of charted accountants of India has issued accounting standards (as)-3 revised for
preparing a cash flow statement This accounting standard has been made mandatory in respect
of accounting periods commencing on or after 1st April 2001 for certain enterprises These
enterprises are-
bull Enterprises whose equity or debt securities are listed on a recognized stock exchange in
India And enterprise that are in the process of issuing equity or debt securities that will
be listed on a recognized stock exchange in India
bull All other commercial industrial and business enterprises whose turnover for accounting
period Rs 50 crores
As such the cash flow statement has been prepared according to as -3 revised in this project
According to as-3 revised the cash flow statement summarizes the cash inflows and cash
outflows and the net changes (increase or decrease) in cash and cash equipment resulting from
operating investing and financing activities of a firm during a period The following terms are
used for preparing a cash flow statement
CASH-
It compares cash in hand and demands with banks
CASH EQUIVALENTS-
There are short - term highly liquid investments that are readily into known amounts of cash
and which present insignificant risk of changes in their values Normally an investment will be
termed as cash equivalent only if it has a short maturity period say three months or less from the
date of its acquisition Examples of cash equivalent are treasury bills commercial papers etc
Which are purchased with cash that is in excess of immediate needs investment in shares are
excluded from cash equivalents unless they are cash equivalent in reality For example the
preference shares of the company which are purchased shortly before their redemption date will
be included in cash equivalents provided there is only an insignificant risk of failure of the
company in repaying the amount at the date of the maturity
CLASSIFICATION OF CASH FLOW-
According to as -3 (revised) cash flow statement should be presented in a manner that it reports
inflows of cash by classifying them into three categories namely operating investing and
financing activities Classification of all activities into these activities on the cash and cash
equivalents of the enterprise such information will be helpful in evaluating the relationships
among these three activities are explained as below
CASH FLOW FROM OPERATING ACTIVITIES-
Operating activities are the main revenue generating activities of an enterprise As such they
include cash flows from those transactions and events which enter into the ascertainment of
net profit or loss of the enterprise Examples of cash flows arising operating activities are
bull Cash receipts from the sale of goods and rendering of services
bull Cash receipts from royalties fees commissions and other revenue
bull Cash payments to suppliers for goods and services
bull Cash payments to and on behalf of employees
bull Cash receipts and cash payments of an insurance enterprise for premiums and claims
annuities and other policy benefits
bull Cash receipts and payments relating to future contracts forward contracts option
contracts and swap contracts when the contracts are held for dealing or trade purpose and
bull Cash payments of refunds of income taxes unless they can be specifically identified with
financing and investing activities
CASH FLOW FROM INVESTING ACTIVITIES-
Investing activities include the purchase and sale of long term assets such as land building plant
and machinery etc not held for resale These activities also include the purchase and sale of such
investment which are not including in cash equipments Cash flow from investing activities
discloses the expenditures incurred for resources intended to generate future income and cash
flows
Examples cash flow arising from investing activities are
bull Cash payments to acquire fixed assets (including intangible)
bull Cash receipts from sale of fixed assets (including intangibles)
bull Cash payments to acquire shares warrants or debt instruments of other enterprises
(other than receipts for those instruments considered to be cash equivalents)
bull Cash receipts from sale of shares warrants or debt instruments of other enterprises (other
than receipts for those instruments considered to be cash equivalents)
bull Cash advances and loans made to third parties In case of financial enterprises these will
be treated as cash flow from operating activities
bull Cash receipts from the repayment of advances and loans made to third parties In case of
financial enterprises these will be treated as cash flow from operating activities
bull Cash receipts of insurance claim for property involved in accident and
bull Cash receipts of interest and dividend In case of financial enterprise these will be treated
cash flow from operating activities
CASH FLOW FROM FIANCING ACTIVITIES-
Financing activities are the activities that result in change in capital and borrowing of the
enterprise
Examples of cash flows arising from financing activities are
bull Cash receipts from issuing shares or other similar instruments
bull Cash receipts from issuing debentures loans bonds and other short term or long term
borrowing
bull Cash repayment of amounts borrowed buy back of equity shares redemption of
preference shares debentures loans bonds etc
bull Cash payment of interest and dividend
IMPORTANT NOTE
In case of financial enterprise such as bank or mutual fund company cash Outflow
and cash inflow arising from the purchase and sale of securities will Be treated as
flows from operating activities This is because purchase and sale of securities is a
part of operating activity in case of financial enterprise In addition interest paid
and interest received as well as dividends received will also be treated as cash flow
from operating activities in case of financial Enterprises
CASH FLOW STATEMENT
(DIRECT METHOD)
CASH FLOW FROM OPERATING ACTIVITIES
Cash receipts from costumers
Cash paid to suppliers and employers ()
Cash generated from operations
Income tax paid ()
Cash flows from extraordinary item
plusmn Extra ordinary items
Net cash from operating activities
CASH FLOW FROM INVESTING ACTIVITIES-
Purchase of fixed assets
Proceed from sale equipment ()
Interest received
Dividend received ()
Net cash from investing activities
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from insurance of share capital
Proceeds from long- term borrowings ()
Repayment of from long-term borrowings
Interest paid
Dividend paid ()
Net cash from financing activities
Net increase in cash and cash equivalent
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
SOME SPECIAL TERMS-
i) INTERSET AND DIVIDEND-
Cash inflow from interest and dividends and cash outflow on account of interest and
dividends should be disclosed separately Cash inflow arising from interest and dividends
received should be shown as cash flow from investing activities where as cash outflow
disclosed outflow on account of interest and dividend paid should be shown as cash flow
from financing activity
ii) TAXES ON INCOME-
Tax paid on income is a part of cash flow from operating activity Hence taxes paid are
shown as a deduction under cash flow from operating activity
iii) EXTRA ORDINARY ITEMS-
Cash flow relating to extra ordinary items such as bad debts recovered Claims received from
insurance companies winning of a lottery or a law etc Should be disclosed separately as
arising from operating investing or financing activities For example the amount received
for insurance company on account of loss of stock by fire Earthquake and floods etc Should
be reported as cash flow from operating activities
iv) SIGNIFICANT NON - CASH TRANSACTION-
There are some investing and financing activities which do not require the use of cash or
cash equivalents Such non cash activities should be excluded from the cash flow statement
Examples are the acquisition of assets by issue of debentures or shares conversion of
shares into debentures etc Such significant on non cash transaction should be disclosed
outside the cash flow statement
CASH FLOW STATEMENT
(INDIRECT METHOD)
CASH FLOW FROM OPERARATTNG ACTIVITIES
Net profit before taxation and extraordinary item
Adjustment for
Depreciation
Foreign exchange loss
Interest income
Dividend income
Interest expense
Operating profit before working capital changes
Increase in sundry debtors
Decrease in inventories
Decrease in sundry creditors
Cash generated from operations
Income tax paid ()
Cash flow before extraordinary item
plusmn Extra - ordinary items
Net cash from operating activities
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of fixed assets ()
Proceeds from sale of equipment
Interest received
Dividend received ()
Net cash from investing activities
CASH FLOW FROM FINANCING ACTIVITIES-
Proceeds from insurance of share capital
Proceeds from long - term borrowings
Repayments of from long - term borrowings ()
Interest paid ()
Dividend paid ()
Net cash from financing activities
Net increase in cash and cash equivalent
Cash and cash equivalents at beginning of period
CHANGES IN CASH FLOWS
Changes in cash flows can be treated to the following
1 Net profit will increase the cash flows these cash flows will be
increased further if there are any non-cash changes (such as depreciation
and amortization)
2 Any payment of dividends will decrease the cash flows as will the
repayment of debt an issue of share or debt will also increase the
cash flows
3 An increase in non-cash assets will decrease cash flows increase in
current assets and fixed assets will result in drain on cash flows
Thus a statement of changes in cash flows ie the cash flow statement
classifies all Changes into one of three categories - operating investing or
financing activities Therefore the preparation of a statement of changes in cash
flows requires classification of changes in liabilities shareholders equity and
non-cash assets into one of these categories although some items will not fit
easily onto one other
h equivalent at end of period
STEP- BY-STEP PROCEDURE TO PREPARE CFS
1 Calculate the net increase or decrease in cash and cash equivalents-
For this purpose the opening balance of total cash and cash equivalents is compared with the
closing balance of cash and equivalents
Increasedecrease in cash and equivalents
Opening balance Closing Balance
Cash in hand
Cash in bank
Short-term Investment
Total
The difference between the total of opening and closing balance will be increased or
Decreased in cash equivalents during the period It may be noted that if there are only one or
two of items of cash etc
2 Net Cash flaw from operating activities-
The term operating refers to the normal purchase of goods and services On the basis of the
information contained in the comparative BS s and the IS and the additional Information the
net cash flow generated or use by the operating activities may be ascertained The IS prepared
by the firm gives the net profit figure earned by the firm On actual basis ie all items in the
IS are incorporated on the basis of earnedaccrued even
3 If not resulting in cash movements-
So the profit or loss as by the IS may not result in increase or decrease in cash balance by the
SYNOPSIS
INTRODUCTION
ESCORTS PVT LTD is a private limited company not listed in a stock exchange of India
and employees 900 highly trained personnel Its manufacturing plants are strategically located
in close proximity to its customers at Faridabad (Haryana) Noida (UP)
OBJECTIVES OF THE STUDY
bull To find the movement of cash inflow and cash outflow
bull To make the comparison between cash inflow and
bull Cash outflow
bull To prepare the Cash Flow Statement
bull To analyze the Balance Sheet of the company in terms of Cash Flow Statement
bull To focus on various activities of the organization in terms of Operating
Financing Investment
SCOPE OF THE STUDY
Financial resources are the assets for the company and their productivity is key
factor for profitability It is necessary to know their problems their knowledge
skills abilities amp the measures that can be taken to reduce them By analyzing this
top management can build good relations with the employees
The whole study is to determine the competencies of different employees who are
working in ESCORTS PVT LTD By analyzing it the top management can
introduce the concept of competency mapping in the organization Through this
management can attempt to use more suitable strategies towards the human
resource development
The research is confined to elicit the existing gap between the standard skill
required to perform the job and the skill processed by the employees at ESCORTS
PVT LTD And to provide them suitable training program to over come those gaps
for the better utilization of human resources
RELEVANCE
The scope of the study was confined to the outside parties like creditors
shareholders government etc Who want to invest their money in the
company
The benefit of the report for the company is that through this report they can come
to know about the cash flow statements of the company
This study also unable the company that their cash is not utilizing in unnecessary
things
The benefit of the report for the researcher is that it has helped to get knowledge
about the cash inflow and cash
RESERRCH METHODOLOGY-
RESEARCH DESIGN
bull The study was conducted under well- structured approach
bull The project lasted for 4 weeks and the year 2009 ie from 08 July to 12
Aug2009
bull The questionnaire method amp personal interview method was used to collect
the primary data for the study
The secondary data is collected from Internet amp company training material and
many other company materials
SAMPLE DESIGN
The process of extracting a sample from a population is called sampling
procedure The selection of sampling procedure to conduct the research
depends upon the nature of the study and the objective to be accomplished
Judgment sampling technique is adopted to select the respondents in this
study The sample design included the various departments in the YAMAHA
MOTORS PVT LTD
Methodology of date collection
bull Conducting personal interview
bull Data collection from primary and secondary sources
bull Designing questionnaire
bull Selecting sample size from the sample frame for the survey
bull Questionnaire distribution
bull Analysis of collected data with the help of statistical tools
bull Interpretation of collected data
bull Stating the conclusion based on the entire study
Sampling Technique
The sampling technique used for this research is of non-probability and convenience
sampling
Sample Unit
Employees of the company
Sample Size
For this research study the sample size is 25 respondents
Sources of data
Primary data
Primary data is the data which is collected by the researcher for the first time
and which was not there The tools used to collect the data are-
1)Questionnaire method from the employers in different departments
2) Face to Face personal interactions
Secondary Data
The data already collected is called as secondary data The relevant information
for this study has been collected from secondary source such as
Books
Journal
Reports
Publication by the organizational circulation
Company records
Business bulletins
Internet
Secondary data is also collected from various of the internet and intranet Some
of the website trough which information was gathered was through
HYPOTHESIS
The report is analyzed under the presumption that cash flow position of
YAMAHA MOTORS PVTLTD It can be improved and made effective in
terms of cash flows
In testing the above hypothesis the following aspects will be considered
1 Balance sheet comparisons
2 Presentation of cash flow statement in terms of revised AS-3
LIMITATIONS
The study though conducted to the best of the ability suffers from some
certain limitations There are
The data is secondary one and as such its reliability may be
questioned upon
The time availability for the study is less and as such it hinders thee
progress of the study
Senior officials were rarely approachable
Websites were not giving comprehensive data
Not having face-to-face interaction to get more relevant
information
Analysis and interpretation of data was done on the assumption that
the respondentsrsquo information was online
Information collected was totally subjective
The interviews are done during office hours but could not be done
for the other employees of other
DATA ANALYSIS
ESCORTS PVT LTD
CASH FLOW STRATEMENT
Year Ended Year Ended
30092009 30092008
Rs Crores Rs
Crores
A Cash Flow from Operating Activities
Net profit before tax (1733) 3444
Adjustment for
Loss on sale Provision for diminution in value of Long Term
Investments amp loans to Group Companies 189 4018
Gain on sale of Long Term Investments (122) (9492)
Gain on sale of Asset (013) -
Depreciation 4497 3955
Misc Exp Assets Write off Provisions 808 750
Interest Expense 7222 7999
Dividend Income (002) (001)
Interest Income (2082) -
Operating Profit before working capital changes 8764 10673
Adjustments for
Trade and other Receivables (8817) (12035)
Inventories 1379 (4692)
Trade Payables 6705 19046
Miscellaneous Expenditure (750) (511)
(1483) 1808
Cash Generated from Operations 7281 12481
Direct Taxes (Paid)Refunds (1785) 3166
Net Cash Flow from operating activities 5496 15647
B Cash Flow from Investing Activities
Purchase of Fixed Assets (3095) (2794)
Proceeds from sale of Fixed Assets 086 177
Movement in Loans and Advances (1627) (1644)
Sale of Investments 3233 11452
Short Term Deposits with schedule Banks (231) (1048)
Interest Received 2070 -
Dividend Received 002 001
Net Cash Flow from Investing activities 438 6144
Proceeds from Share Capital amp Securities Premium 11444 -
Proceeds from Long Term Borrowings 8660 -
Less Repayment of Long Term Borrowings (054) (7896)
Proceeds (Repayment) from short term borrowings (net) (22726) -
Interest Paid (7740) (8223)
Net Cash used in financing activities (10416) (16119)
Net Increase(Decrease) in Cash and Cash equivalents (4482) 5672
Cash and Cash equivalents as at 01102008 10565 4893
Cash and Cash equivalents as at 30092009 6083 1056
ANALYSIS OF CASH FLOW
From the cash flow statements of the ESCORT PVTLTDIt can be analyzed
from the two years that the net cash balance of the company has increased
manifold in 30-09-2008 than the year 30-09-2009
The net profit in 30-09-2008 is higher than the 30-09-2009 but due to certain
changes there has been increase in the cash balance
The interest paid this year is ore of the last year which implies that thee
company has not repaid his borrowed capital due to which the interest has got
down
The depreciation has increased but it does not affect cash to an extent as it is a
non-cash item In the head of working capital there is drastic change in the cash
balance in the form of ldquoTrade and other Receivables which has affected the cash
balance
There is outflow of cash for receivables rather than the inflow in the last year
So the net effect is that the cash from operating activities has been decreased
two times from the last year
The company has no accumulated losses as at the end of the financial year ie
September 31 2008
Provision for taxation has been made in accordance with the requirement of AS-
22 issued by Institute of Charted Accountants of India
Pursuant to that current year deferred tax liability have been charged to profit amp
loss account
In opinion of the board of directors of thee company the current assets loans
and advances have a value on realization in the ordinary course of the business at
least equal to the amount stated in the balance sheet and provision for all
liabilities have been made
Balance of sundry debtors creditors loans and advances are subject to confirmation by
the concerned parties
METHOD OF ANALYSIS
1 Data analysis is done using the following statistical tools wherever required in
order to extract meaningful information from the collected data
o Simple percentage and averages
o Bar diagram
o Cone diagram
o Pie diagram
2 The collected data from the questionnaire has been put together in the form of
tables
3 Percentage has been calculated wherever necessary for generalization of the
data
4 Data analysis and interpretation has been done on the basis of primary and
secondary data
5 The findings researches have been recorded based on the analysis
6 The study conducted pertains only to YAMAHA MOTORS INDIA PVTLTD
All bank balances (debitcredit) have been confirmed by the concerned bank
Identified from the available information which has been relied upon by the auditors
The names of small-scale industrial units to whom outstanding for more than
thirty days within agreed terms
The company has 9996 of shareholders in its subsidiary company named as
ESCORTS PVT LTD As at 31-03-2008
So the net effect is that the net cash from investing activities has many more
times than the last year which is negative Now the company has repaid its long
term borrowing more than the last year which has decreased the cash balance by
the little amount
Balance with the schedule banks under the head current amp collection account
amounting to represent funds in transit lying with schedule banks pending
transfer against loan liabilities under the head cash credit amp bill discounting
LIQUIDITY RATIO
1 CURRENT RATIO
(Amount in Rs)
Current Ratio
Year Current Assets Current Liabilities Ratio
2003 58574151 7903952 7412004 69765346 31884616 2192005 72021081 16065621 4482006 91328208 47117199 1942007 115642068 30266661 382
Interpretation
As a rule the current ratio with 21 (or) more is considered as satisfactory
position of the firm
When compared with 2006 there is an increase in the provision for tax because
the debtors are raised and for that the provision is created The current liabilities
majorly included Lanco Group of company for consultancy additional services
The sundry debtors have increased due to the increase to corporate taxes
In the year 2006 the cash and bank balance is reduced because that is used for
payment of dividends In the year 2007 the loans and advances include majorly
the advances to employees and deposits to government The loans and advances
reduced because the employees set off their claims The other current assets
include the interest attained from the deposits The deposits reduced due to the
declaration of dividends So the other current assets decreased
The huge increase in sundry debtors resulted an increase in the ratio which is
above the benchmark level of 21 which shows the comfortable position of the
firm
GRAPHICAL REPRESENTATION
741
219
448
194
382
000
100
200
300
400
500
600
700
800
Ratio
2003 2004 2005 2006 2007
Years
CURRENT RATIO
Ratio
2 QUICK RATIO
(Amount
in Rs)
Quick Ratio
Year Quick Assets Current Liabilities Ratio
2003 58574151 7903952 741
2004 52470336 31884616 165
2005 69883268 16065620 435
2006 89433596 47117199 19
2007 115431868 30266661 381
Interpretation
Quick assets are those assets which can be converted into cash with in a short
period of time say to six months So here the sundry debtors which are with the
long period does not include in the quick assets
Compare with 2006 the Quick ratio is increased because the sundry debtors are
increased due to the increase in the corporate tax and for that the provision
created is also increased So the ratio is also increased with the 2006
GRAPHICAL REPRESENTATION
741
165
435
190
381
000
100
200
300
400
500
600
700
800
Ratio
2003 2004 2005 2006 2007
Years
QUICK RATIO
Ratios
3 ABOSULTE LIQUIDITY RATIO
(Amount
in Rs)
Absolute Cash Ratio
Year Absolute Liquid Assets Current Liabilities Ratio
2003 31004027 7903952 392
2004 10859778 31884616 034
2005 39466542 16065620 246
2006 53850852 47117199 114
2007 35649070 30266661 118
Interpretation
The current assets which are ready in the form of cash are considered as absolute
liquid assets Here the cash and bank balance and the interest on fixed assts are
absolute liquid assets
In the year 2006 the cash and bank balance is decreased due to decrease in the
deposits and the current liabilities are also reduced because of the payment of
dividend That causes a slight increase in the current yearrsquos ratio
GRAPHICAL REPRESENTATION
392
034
246
114 118
0
05
1
15
2
25
3
35
4
Ratios
2003 2004 2005 2006 2007
Years
ABSOLUTE CASH RATIO
Ratios
LEVERAGE RATIOS
4 PROPRIETORY RATIO
(Amount
in Rs)
Proprietory Ratio
Year Share Holders Funds Total Assets Ratio
2003 67679219 78572171 086
2004 53301834 88438107 06
2005 70231061 89158391 079
2006 56473652 106385201 053
2007 97060013 129805102 075
Interpretation
The proprietary ratio establishes the relationship between shareholders funds to
total assets It determines the long-term solvency of the firm This ratio indicates
the extent to which the assets of the company can be lost without affecting the
interest of the company
There is no increase in the capital from the year2004 The share holderrsquos funds
include capital and reserves and surplus The reserves and surplus is increased
due to the increase in balance in profit and loss account which is caused by the
increase of income from services
Total assets includes fixed and current assets The fixed assets are reduced
because of the depreciation and there are no major increments in the fixed assets
The current assets are increased compared with the year 2006 Total assets are
also increased than precious year which resulted an increase in the ratio than old
GRAPHICAL REPRESENTATION
086
060
079
053
075
000
010
020
030
040
050
060
070
080
090
Ratios
2003 2004 2005 2006 2007
Years
PROPRIETORY RATIO
Ratios
ACTIVITY RATIOS
5 WORKING CAPITAL TURNOVER RATIO
(Amount
in Rs)
Working Capital Turnover Ratio
Year Income From Services Working Capital Ratio
2003 36309834 50670199 0722004 53899084 37880730 1422005 72728759 55355460 1312006 55550649 44211009 1262007 96654902 85375407 113
Interpretation
Income from services is greatly increased due to the extra invoice for Operations
amp Maintenance fee and the working capital is also increased greater due to the
increase in from services because the huge increase in current assets
The income from services is raised and the current assets are also raised together
resulted in the decrease of the ratio of 2007 compared with 2006
GRAPHICAL REPRESENTATION
072
142 131126
113
000
020
040
060
080
100
120
140
160
Ratio
2003 2004 2005 2006 2007
Years
WORKING CAPITAL TURNOVER RATIO
Ratio
6 FIXED ASSETS TURNOVER RATIO
(Amount in Rs)
Fixed Assets Turnover Ratio
Year Income From Services Net Fixed Assets Ratio
2003 36309834 28834317 126
2004 53899084 29568279 182
2005 72728759 17137310 424
2006 55550649 15056993 369
2007 96654902 14163034 682
Interpretation
Fixed assets are used in the business for producing the goods to be sold This
ratio shows the firmrsquos ability in generating sales from all financial resources
committed to total assets The ratio indicates the account of one rupee
investment in fixed assets
The income from services is greaterly increased in the current year due to the
increase in the Operations amp Maintenance fee due to the increase in extra invoice
and the net fixed assets are reduced because of the increased charge of
depreciation Finally that effected a huge increase in the ratio compared with the
previous yearrsquos ratio
GRAPHICAL REPRSENTATION
126182
424 369
682
000
100
200
300
400
500
600
700
Ratios
2003 2004 2005 2006 2007
Years
FIXED ASSETS TURNOVER RATIO
Ratios
7 CAPITAL TURNOVER RATIO
(Amount
in Rs)
Capital Turnover Ratio
Year Income From Services Capital Employed Ratio
2003 36309834 37175892 0982004 53899084 53301834 1012005 72728759 70231061 1042006 55550649 56473652 0982007 96654902 97060013 100
Interpretation
This is another ratio to judge the efficiency and effectiveness of the company
like profitability ratio
The income from services is greaterly increased compared with the previous year
and the total capital employed includes capital and reserves amp surplus Due to
huge increase in the net profit the capital employed is also increased along with
income from services Both are effected in the increment of the ratio of current
year
GRAPHICAL REPRESENTATION
098
101
104
098
100
094095096097098099100101102103104
Ratios
2003 2004 2005 2006 2007
Years
CAPITAL TURNOVER RATIO
Ratios
8 CURRENT ASSETS TO FIXED ASSETS RATIO
(Amount
in Rs)
Current Assets To Fixed Assets Ratio
Year Current Assets Fixed Assets Ratio
2003 58524151 19998020 2932004 69765346 18672761 3742005 72021081 17137310 4202006 91328208 15056993 6072007 115642068 14163034 817
Interpretation
Current assets are increased due to the increase in the sundry debtors and the net
fixed assets of the firm are decreased due to the charge of depreciation and there
is no major increment in the fixed assets
The increment in current assets and the decrease in fixed assets resulted an
increase in the ratio compared with the previous year
GRAPHICAL REPRESENTATION
293374
420
607
817
000
100
200
300
400
500
600
700
800
900
Ratios
2003 2004 2005 2006 2007
Years
CURRENT ASSETS TO FIXED ASSETS RATIO
Ratios
PROFITABILITY RATIOS
GENERAL PROFITABILITY RATIOS
9 NET PROFIT RATIO
(Amount in Rs)
Net Profit Ratio
Year Net Profit After Tax Income from Services Ratio
2003 21123474 36039834 059
2004 16125942 53899084 030
2005 16929227 72728759 023
2006 18259580 55550649 033
2007 40586359 96654902 042
Interpretation
The net profit ratio is the overall measure of the firmrsquos ability to turn each rupee
of income from services in net profit If the net margin is inadequate the firm
will fail to achieve return on shareholderrsquos funds High net profit ratio will help
the firm service in the fall of income from services rise in cost of production or
declining demand
The net profit is increased because the income from services is increased The
increment resulted a slight increase in 2007 ratio compared with the year 2006
GRAPHICAL REPRESENTATION
059
030
023
033
042
000
010
020
030
040
050
060
Ratios
2003 2004 2005 2006 2007
Years
NET PROFIT RATIO
Ratios
10 OPERATING PROFIT
(Amount in Rs)
Operating Profit
Year Operating Profit Income From Services Ratio
2003 36094877 36309834 099
2004 27576814 53899084 051
2005 29540599 72728759 041
2006 31586718 55550649 057
2007 67192677 96654902 070
Interpretation
The operating profit ratio is used to measure the relationship between net profits
and sales of a firm Depending on the concept it will decide
The operating profit ratio is increased compared with the last year The earnings
are increased due to the increase in the income from services because of
Operations amp Maintenance fee So the ratio is increased slightly compared with
the previous year
GRAPHICAL REPRESENTATION
099
051
041
057
070
000
010
020
030
040
050060
070
080
090
100
Ratios
2003 2004 2005 2006 2007
Years
OPERATING PROFIT RATIO
Ratios
11 RETURN ON TOTAL ASSETS RATIO
(Amount in Rs)
Return on Total Assets Ratio
Year Net Profit After Tax Total Assets Ratio
2003 21123474 78572171 027
2004 16125942 88438107 018
2005 16929227 89158391 019
2006 18259580 106385201 017
2007 40586359 129805102 031
Interpretation
This is the ratio between net profit and total assets The ratio indicates the return
on total assets in the form of profits
The net profit is increased in the current year because of the increment in the
income from services due to the increase in Operations amp Maintenance fee The
fixed assets are reduced due to the charge of depreciation and no major
increments in fixed assets but the current assets are increased because of sundry
debtors and that effects an increase in the ratio compared with the last year ie
2006
GRAPHICAL REPRESENTATION
027
018 019017
031
000
005
010
015
020
025
030
035
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON TOTAL ASSETS
Ratios
12 RESERVES amp SURPLUS TO CAPITAL RATIO
(Amount in Rs)
Reserves amp Surplus To Capital Ratio
Year Reserves amp Surplus Capital Ratio
2003 65599299 2079920 31542004 34582554 18719280 1852005 51511781 18719280 2752006 37754372 18719280 2022007 78340733 18719280 419
Interpretation
The ratio is used to reveal the policy pursued by the company a very high ratio
indicates a conservative dividend policy and vice-versa Higher the ratio better
will be the position
The reserves amp surplus is decreased in the year 2006 due to the payment of
dividends and in the year 2007 the profit is increased But the capital is
remaining constant from the year 2004 So the increase in the reserves amp surplus
caused a greater increase in the current yearrsquos ratio compared with the older
GRAPHICAL REPRESENTATION
3154
185 275 202419
-
500
1000
1500
2000
2500
3000
3500
Ratios
2003 2004 2005 2006 2007
Years
RESERVES amp SRUPLUS TO CAPITAL RATIO
Ratios
OVERALL PROFITABILITY RATIOS
13 EARNINGS PER SHARE
(Amount in Rs)
Earnings Per Share
Year Net Profit After Tax No of Equity Shares Ratio
2003 21123474 207992 101562004 16125942 1871928 8612005 16929227 1871928 9042006 18259580 1871928 9752007 40586359 1871928 2168
Interpretation
Earnings per share ratio are used to find out the return that the shareholderrsquos earn
from their shares After charging depreciation and after payment of tax the
remaining amount will be distributed by all the shareholders
Net profit after tax is increased due to the huge increase in the income from
services That is the amount which is available to the shareholders to take There
are 1871928 shares of Rs10- each The share capital is constant from the year
2004 Due to the huge increase in net profit the earnings per share is greaterly
increased in 2007
GRAPHICAL REPRESENTATION
10156
861904 975
2168
000
2000
4000
6000
8000
10000
12000
Ratios
2003 2004 2005 2006 2007
Years
EARNINGS PER SHARE
Ratios
14 PRICE EARNINGS (PE) RATIO
(Amount in Rs)
Price Earning (PE) Ratio
Year Market Price Per Share Earnings Per Share Ratio
2003 3254 10156 0322004 2847 861 3302005 3752 904 4152006 3017 975 3092007 5185 2168 239
Interpretation
The ratio is calculated to make an estimate of application in the value of share of
a company
The market price per share is increased due to the increase in the reserves
amp surplus The earnings per share are also increased greaterly compared
with the last year because of increase in the net profit So the ratio is
decreased compared with the previous year
GRAPHICAL REPRESENTATION
032
330
415
309
239
000
050
100
150
200
250
300
350
400
450
Ratios
2003 2004 2005 2006 2007
Years
PE RATIO
Ratios
15 RETURN ON INVESTMENT
(Amount in Rs)
Return on Investment
Year Net Profit After Tax Share Holders Fund Ratio
2003 21123474 67679219 031
2004 16125942 53301834 03
2005 16929227 70231061 024
2006 18259580 56473652 032
2007 40586359 97060013 042
Interpretation
This is the ratio between net profits and shareholders funds The ratio is
generally calculated as percentage multiplying with 100
The net profit is increased due to the increase in the income from services ant
the shareholders funds are increased because of reserve amp surplus So the ratio
is increased in the current year
GRAPHICAL REPRESENTATION
031 030
024
032
042
000
005
010
015
020
025
030
035
040
045
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON INVESTMENT RATIO
RatioS
DATA COLLECTION
The data can be of two types
Primary Data
Secondary Data
Primary Data
Primary data are those data which is originally collected afresh
Secondary Data
Secondary data are those data which are already collected and stored and which has
been passed through statistical research
In this project Secondary data has been collected from following sources-
Annual report
Books
MIS
Other material and report published by company There are two methods to prepare
the Cash flow Statement
ndirect Method
I
The indirect method (or reconciliation method) starts with net income and converts it
to net cash flow from operating activities In other words the indirect method adjusts
net income for items that affected reported net income but did not affect cash To
compute net cash flow from operating activities non-cash charges in the income
statement are added ack to net income and non-cash credits are deducted
b
Direct Method
Under the direct method the statement of cash flows reports net cash flow from
operating activities as major classes of operating cash receipts (eg cash collected from
customers and cash received from interest and dividends) and cash disbursements (eg
cash paid to suppliers for goods to employees for services to creditors for interest and
to government authorities for taxes)
INDIRECT VERSUS DIRECT METHOD
The most contentious decision that the FASB faced in issuing Statement No 95 was
choosing between the direct method and the indirect method of determining net cash
flow from operating activities Companies lobbied against the direct method urging
adoption of the indirect method Commercial lending officers expressed a strong
preference to the FASB hat the direct method be required
tCF-Page 3 of 5
In Favor of the Direct Method
The principal advantage of the direct method is that it shows operating cash receipts and
payments That is it is more consistent with the objective of a statement of cash flows to
provide information about cash receipts and cash payments than the in-direct method
which does not report operating cash receipts and payments
Supporters of the direct method contend that knowledge of the specific sources of
operating cash receipts and the purposes for which operating cash payments were made
in past periods is useful in estimating future operating cash flows Furthermore in-
formation about amounts of major classes of operating cash receipts and payments is
more useful than information only about their arithmetic sum (the net cash flow from
operating activities) Such information is more revealing of an enterprises ability (1) to
generate sufficient cash from operating activities to pay its debts (2) to reinvest in its
operations and (3) to make distributions to its owners
Many corporate providers of financial statements say that they do not currently collect
information in a manner that allows them to determine amounts such as cash received
from customers or cash paid to suppliers directly from their accounting systems But
supporters of the direct method contend that the incremental cost of assimilating such
operating cash receipts and payments data is not significant
In Favor of the Indirect Method
The principal advantage of the indirect method is that it focuses on the differences
between net income and net cash flow from operating activities That is it provides a
useful link between the statement of cash flows and the income statement and balance
sheet
Many providers of financial statements contend that it is less costly to adjust net income
to net cash flow from operating activities (indirect) than it is to report gross operating
cash receipts and payments (direct) Supporters of the indirect method also state that the
direct method which effectively reports income statement information on a cash rather
than an accrual basis may erroneously suggest that net cash flow from operating
activities is as good as or better than net income as a measure of performance
Special Rules Applying to Direct and Indirect Methods
Companies that use the direct method are required at a
minimum to report separately the following classes of
operating cash receipts and payments
Receipts
1048713 Cash collected from customers (including lessees licensees etc)
1048713 Interest and dividends received
1048713 Other operating cash receipts if any
Payments
1048713 Cash paid to employees and suppliers of goods or services (including
suppliers of
insurance advertising etc)
1048713 Interest paid
1048713 Income taxes paid
1048713 Other operating cash payments if any
Companies using the indirect method are required to disclose separately changes in
inventory receivables and payables to reconcile net income to net cash flow from
operating activities In addition interest paid (net of amount capitalized) and income
taxes paid must be disclosed elsewhere in the financial statements or accompanying
notes
The FASB requires these separate and additional disclosures so that users
may approximate the direct method Also an acceptable alternative presentation
of the in-direct method is to report net cash flow from operating activities as a
single line item in the statement of cash flows and to present the reconciliation
details elsewhere in the financial statements
FINDING OF SUDY
According to cash flow statement of the company The finding of the study are as
follows-
The company has not taken any loans secured or unsecured from companies
firms or other parties
The company has not accepted any deposit from the public during the year
The company is not a sick industrial company
The company has not granted any loan secured or unsecured to company firms
or other parties
The company has paid the entire long term and short term borrowing during the
year
The company has buy back the companyrsquos own share this year
The interest paid in 2008 is more than the
There has been a significant decline in volume over the years from 2001-02
to 2005-06 as can be seen in the graph below
Table 43
The Net sales of Tractor has increased considerably from 2004-05 to 2007-08
This can be mainly attributed to changes in Variable and material costs and in
the price
The Net sale of Tractor has increased considerably from 2004-05 to 2007-08
that is an decrease of Rs7216 per tractor This can be mainly attributed to
changes in
Variable and material costs and in the prices
RECOMMENDATIONS
According to cash flow statement of the company The suggestions of the study
are as follows-
The time durations for training program have to increase
Buy regular review and consultations develop a career progression
which is sensitive to performance and ability
Create an environment where by people are trend developed to enable
The to take advantages of opportunities that arise
The jab can be redesigned where the work man stay in what is normally
the same job but has elements of it changed
The principle amount must be paid in time which can be reducing the
interest the out flow
The purchase of the fixed asset must be made only when there is extreme
requirement
In order to avoid taxes the company should go for more investment
The companyrsquos borrowings should go for more investment
o The company should try to reduce the depreciations as maximum
as possible
CONCLUSION
The study on competency level of employees at ESCORTS PVTLTD gave an
insight about the acceptance of competency mapping by employees
The employees at Ymi welcome the introduction of competency mapping in their
organization as they felt it was very much essential in enhancing their skills and
organizational development
The organization has provided the recourses guidance and support to facilitate the
introduction of competency level easily and develop the employees in such a way
that they can face any kind of challenge
However the level of competency in employees is found to be satisfactory
Providing proper training education and guidance to the employees can enhance
the level
This study was mainly carried out to find out whether thee competency mapping
being followed by the company is effective till date If the competency mapping
and fitment to the organization
By looking at the graphs and tables it is quite that the employees still are not up to
the level of competent pool they still have to be trained and made competent in
order to fill the gap As the organization has just applied the mapping it has to see
to that it meets all the requirements for competency mapping
Therefore the graphs make it quite clear that the potential of the employees is not
up to the mark and ie they are not competent enough to meet the competency-
mapping requirement Hence by further training and counseling this gap can be
closed
This report includes the training requirements of employees and it highlights skills
possessed by each employee and skill required All employees get training so that
skill can be improved and maintain balance between standard performance with
their actual performance to avoid gap
APPENDIX
QUESTIONNAIRE
Consumer Survey
Name _____________________________
Age _____________________________
Sex
Male
Female
Occupation
Businessman
Service man
Professional
Others
Monthly income brackets
Below 15000
15000- 20000
20000-30000
30000 and above
of your savings _________
Do you invest
Yes
No
If yes then where do you invest your money
Bank
Insurance
funds
Others
Why do you made that statement
Return
Risk hedging
Tax benefits
Other reasons (specify) _______
Who influence your cash decision
Relatives and friends
Family members
Advisors experts
You yourself
If no then why
Do not know where to invest
Satisfied with your current investment return
Donrsquot want take risk
Other reasons
__________________________________________________________________
___________________
Do you know about CF statement
Yes
No
If yes then from where you have come to know about an cash statement
Advertisements on newspapers
Friends and relative
Agents experts
Other source
What do you think about cash statement
It means investing only in share market
Constant watch must be kept always
Return is not satisfactory
Other perception
__________________________________________________
Can you recall any cash flow of company
___________________________
Would you want to made CF of an org
Yes
No
If yes then why
_______________________________________________________
If no then why
_______________________________________________________
BIBLIOGRAPHY
List of Books
1 PANDEY IM - FINANCIAL MANAGEMANT
2 KHAN MY AND JAIN PK -FINANCIAL MANAGEMANT
3 SMITH KV ndash MANAGEMANT OF WORKING CAPITAL
3 COMPANY RECORDS
4 JOURNAL
5 REPORTS
WEBLIOGRAPHY
1 wwwescortspvtltdcom
2 wwwgooglecom
LIQUIDITY
It does not present true picture of the liquidity of the firm the liquidity does
not depend upon cash alone Liquidity also depends upon those assets
which can be converted into cash easily
bull Exclusion of these assets obstructs the true reporting of the ability of the firm to
meet its liabilities when they become due for payment
bull The possibilities of window - dressing is higher in case of cash position in
comparison to the working capital position of the firm
bull The cash balance can be easily maneuvered by postponing purchases and other
payments and by rapidly collecting cash from debtors before the balance sheet date
Hence a fund - flow statement presents a more realistic picture than a cash flow
statement
bull Cash flow statement ignores non- cash charges Hence the true position of the
enterprise cannot be judged by cash flow statement
bull It is prepared on cash basis and hence ignores one of the basic concept of accounting
namely accrual concept
PROCEDURE OF PREPARING CASH FLOW STATEMENT-
The institute of charted accountants of India has issued accounting standards (as)-3 revised for
preparing a cash flow statement This accounting standard has been made mandatory in respect
of accounting periods commencing on or after 1st April 2001 for certain enterprises These
enterprises are-
bull Enterprises whose equity or debt securities are listed on a recognized stock exchange in
India And enterprise that are in the process of issuing equity or debt securities that will
be listed on a recognized stock exchange in India
bull All other commercial industrial and business enterprises whose turnover for accounting
period Rs 50 crores
As such the cash flow statement has been prepared according to as -3 revised in this project
According to as-3 revised the cash flow statement summarizes the cash inflows and cash
outflows and the net changes (increase or decrease) in cash and cash equipment resulting from
operating investing and financing activities of a firm during a period The following terms are
used for preparing a cash flow statement
CASH-
It compares cash in hand and demands with banks
CASH EQUIVALENTS-
There are short - term highly liquid investments that are readily into known amounts of cash
and which present insignificant risk of changes in their values Normally an investment will be
termed as cash equivalent only if it has a short maturity period say three months or less from the
date of its acquisition Examples of cash equivalent are treasury bills commercial papers etc
Which are purchased with cash that is in excess of immediate needs investment in shares are
excluded from cash equivalents unless they are cash equivalent in reality For example the
preference shares of the company which are purchased shortly before their redemption date will
be included in cash equivalents provided there is only an insignificant risk of failure of the
company in repaying the amount at the date of the maturity
CLASSIFICATION OF CASH FLOW-
According to as -3 (revised) cash flow statement should be presented in a manner that it reports
inflows of cash by classifying them into three categories namely operating investing and
financing activities Classification of all activities into these activities on the cash and cash
equivalents of the enterprise such information will be helpful in evaluating the relationships
among these three activities are explained as below
CASH FLOW FROM OPERATING ACTIVITIES-
Operating activities are the main revenue generating activities of an enterprise As such they
include cash flows from those transactions and events which enter into the ascertainment of
net profit or loss of the enterprise Examples of cash flows arising operating activities are
bull Cash receipts from the sale of goods and rendering of services
bull Cash receipts from royalties fees commissions and other revenue
bull Cash payments to suppliers for goods and services
bull Cash payments to and on behalf of employees
bull Cash receipts and cash payments of an insurance enterprise for premiums and claims
annuities and other policy benefits
bull Cash receipts and payments relating to future contracts forward contracts option
contracts and swap contracts when the contracts are held for dealing or trade purpose and
bull Cash payments of refunds of income taxes unless they can be specifically identified with
financing and investing activities
CASH FLOW FROM INVESTING ACTIVITIES-
Investing activities include the purchase and sale of long term assets such as land building plant
and machinery etc not held for resale These activities also include the purchase and sale of such
investment which are not including in cash equipments Cash flow from investing activities
discloses the expenditures incurred for resources intended to generate future income and cash
flows
Examples cash flow arising from investing activities are
bull Cash payments to acquire fixed assets (including intangible)
bull Cash receipts from sale of fixed assets (including intangibles)
bull Cash payments to acquire shares warrants or debt instruments of other enterprises
(other than receipts for those instruments considered to be cash equivalents)
bull Cash receipts from sale of shares warrants or debt instruments of other enterprises (other
than receipts for those instruments considered to be cash equivalents)
bull Cash advances and loans made to third parties In case of financial enterprises these will
be treated as cash flow from operating activities
bull Cash receipts from the repayment of advances and loans made to third parties In case of
financial enterprises these will be treated as cash flow from operating activities
bull Cash receipts of insurance claim for property involved in accident and
bull Cash receipts of interest and dividend In case of financial enterprise these will be treated
cash flow from operating activities
CASH FLOW FROM FIANCING ACTIVITIES-
Financing activities are the activities that result in change in capital and borrowing of the
enterprise
Examples of cash flows arising from financing activities are
bull Cash receipts from issuing shares or other similar instruments
bull Cash receipts from issuing debentures loans bonds and other short term or long term
borrowing
bull Cash repayment of amounts borrowed buy back of equity shares redemption of
preference shares debentures loans bonds etc
bull Cash payment of interest and dividend
IMPORTANT NOTE
In case of financial enterprise such as bank or mutual fund company cash Outflow
and cash inflow arising from the purchase and sale of securities will Be treated as
flows from operating activities This is because purchase and sale of securities is a
part of operating activity in case of financial enterprise In addition interest paid
and interest received as well as dividends received will also be treated as cash flow
from operating activities in case of financial Enterprises
CASH FLOW STATEMENT
(DIRECT METHOD)
CASH FLOW FROM OPERATING ACTIVITIES
Cash receipts from costumers
Cash paid to suppliers and employers ()
Cash generated from operations
Income tax paid ()
Cash flows from extraordinary item
plusmn Extra ordinary items
Net cash from operating activities
CASH FLOW FROM INVESTING ACTIVITIES-
Purchase of fixed assets
Proceed from sale equipment ()
Interest received
Dividend received ()
Net cash from investing activities
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from insurance of share capital
Proceeds from long- term borrowings ()
Repayment of from long-term borrowings
Interest paid
Dividend paid ()
Net cash from financing activities
Net increase in cash and cash equivalent
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
SOME SPECIAL TERMS-
i) INTERSET AND DIVIDEND-
Cash inflow from interest and dividends and cash outflow on account of interest and
dividends should be disclosed separately Cash inflow arising from interest and dividends
received should be shown as cash flow from investing activities where as cash outflow
disclosed outflow on account of interest and dividend paid should be shown as cash flow
from financing activity
ii) TAXES ON INCOME-
Tax paid on income is a part of cash flow from operating activity Hence taxes paid are
shown as a deduction under cash flow from operating activity
iii) EXTRA ORDINARY ITEMS-
Cash flow relating to extra ordinary items such as bad debts recovered Claims received from
insurance companies winning of a lottery or a law etc Should be disclosed separately as
arising from operating investing or financing activities For example the amount received
for insurance company on account of loss of stock by fire Earthquake and floods etc Should
be reported as cash flow from operating activities
iv) SIGNIFICANT NON - CASH TRANSACTION-
There are some investing and financing activities which do not require the use of cash or
cash equivalents Such non cash activities should be excluded from the cash flow statement
Examples are the acquisition of assets by issue of debentures or shares conversion of
shares into debentures etc Such significant on non cash transaction should be disclosed
outside the cash flow statement
CASH FLOW STATEMENT
(INDIRECT METHOD)
CASH FLOW FROM OPERARATTNG ACTIVITIES
Net profit before taxation and extraordinary item
Adjustment for
Depreciation
Foreign exchange loss
Interest income
Dividend income
Interest expense
Operating profit before working capital changes
Increase in sundry debtors
Decrease in inventories
Decrease in sundry creditors
Cash generated from operations
Income tax paid ()
Cash flow before extraordinary item
plusmn Extra - ordinary items
Net cash from operating activities
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of fixed assets ()
Proceeds from sale of equipment
Interest received
Dividend received ()
Net cash from investing activities
CASH FLOW FROM FINANCING ACTIVITIES-
Proceeds from insurance of share capital
Proceeds from long - term borrowings
Repayments of from long - term borrowings ()
Interest paid ()
Dividend paid ()
Net cash from financing activities
Net increase in cash and cash equivalent
Cash and cash equivalents at beginning of period
CHANGES IN CASH FLOWS
Changes in cash flows can be treated to the following
1 Net profit will increase the cash flows these cash flows will be
increased further if there are any non-cash changes (such as depreciation
and amortization)
2 Any payment of dividends will decrease the cash flows as will the
repayment of debt an issue of share or debt will also increase the
cash flows
3 An increase in non-cash assets will decrease cash flows increase in
current assets and fixed assets will result in drain on cash flows
Thus a statement of changes in cash flows ie the cash flow statement
classifies all Changes into one of three categories - operating investing or
financing activities Therefore the preparation of a statement of changes in cash
flows requires classification of changes in liabilities shareholders equity and
non-cash assets into one of these categories although some items will not fit
easily onto one other
h equivalent at end of period
STEP- BY-STEP PROCEDURE TO PREPARE CFS
1 Calculate the net increase or decrease in cash and cash equivalents-
For this purpose the opening balance of total cash and cash equivalents is compared with the
closing balance of cash and equivalents
Increasedecrease in cash and equivalents
Opening balance Closing Balance
Cash in hand
Cash in bank
Short-term Investment
Total
The difference between the total of opening and closing balance will be increased or
Decreased in cash equivalents during the period It may be noted that if there are only one or
two of items of cash etc
2 Net Cash flaw from operating activities-
The term operating refers to the normal purchase of goods and services On the basis of the
information contained in the comparative BS s and the IS and the additional Information the
net cash flow generated or use by the operating activities may be ascertained The IS prepared
by the firm gives the net profit figure earned by the firm On actual basis ie all items in the
IS are incorporated on the basis of earnedaccrued even
3 If not resulting in cash movements-
So the profit or loss as by the IS may not result in increase or decrease in cash balance by the
SYNOPSIS
INTRODUCTION
ESCORTS PVT LTD is a private limited company not listed in a stock exchange of India
and employees 900 highly trained personnel Its manufacturing plants are strategically located
in close proximity to its customers at Faridabad (Haryana) Noida (UP)
OBJECTIVES OF THE STUDY
bull To find the movement of cash inflow and cash outflow
bull To make the comparison between cash inflow and
bull Cash outflow
bull To prepare the Cash Flow Statement
bull To analyze the Balance Sheet of the company in terms of Cash Flow Statement
bull To focus on various activities of the organization in terms of Operating
Financing Investment
SCOPE OF THE STUDY
Financial resources are the assets for the company and their productivity is key
factor for profitability It is necessary to know their problems their knowledge
skills abilities amp the measures that can be taken to reduce them By analyzing this
top management can build good relations with the employees
The whole study is to determine the competencies of different employees who are
working in ESCORTS PVT LTD By analyzing it the top management can
introduce the concept of competency mapping in the organization Through this
management can attempt to use more suitable strategies towards the human
resource development
The research is confined to elicit the existing gap between the standard skill
required to perform the job and the skill processed by the employees at ESCORTS
PVT LTD And to provide them suitable training program to over come those gaps
for the better utilization of human resources
RELEVANCE
The scope of the study was confined to the outside parties like creditors
shareholders government etc Who want to invest their money in the
company
The benefit of the report for the company is that through this report they can come
to know about the cash flow statements of the company
This study also unable the company that their cash is not utilizing in unnecessary
things
The benefit of the report for the researcher is that it has helped to get knowledge
about the cash inflow and cash
RESERRCH METHODOLOGY-
RESEARCH DESIGN
bull The study was conducted under well- structured approach
bull The project lasted for 4 weeks and the year 2009 ie from 08 July to 12
Aug2009
bull The questionnaire method amp personal interview method was used to collect
the primary data for the study
The secondary data is collected from Internet amp company training material and
many other company materials
SAMPLE DESIGN
The process of extracting a sample from a population is called sampling
procedure The selection of sampling procedure to conduct the research
depends upon the nature of the study and the objective to be accomplished
Judgment sampling technique is adopted to select the respondents in this
study The sample design included the various departments in the YAMAHA
MOTORS PVT LTD
Methodology of date collection
bull Conducting personal interview
bull Data collection from primary and secondary sources
bull Designing questionnaire
bull Selecting sample size from the sample frame for the survey
bull Questionnaire distribution
bull Analysis of collected data with the help of statistical tools
bull Interpretation of collected data
bull Stating the conclusion based on the entire study
Sampling Technique
The sampling technique used for this research is of non-probability and convenience
sampling
Sample Unit
Employees of the company
Sample Size
For this research study the sample size is 25 respondents
Sources of data
Primary data
Primary data is the data which is collected by the researcher for the first time
and which was not there The tools used to collect the data are-
1)Questionnaire method from the employers in different departments
2) Face to Face personal interactions
Secondary Data
The data already collected is called as secondary data The relevant information
for this study has been collected from secondary source such as
Books
Journal
Reports
Publication by the organizational circulation
Company records
Business bulletins
Internet
Secondary data is also collected from various of the internet and intranet Some
of the website trough which information was gathered was through
HYPOTHESIS
The report is analyzed under the presumption that cash flow position of
YAMAHA MOTORS PVTLTD It can be improved and made effective in
terms of cash flows
In testing the above hypothesis the following aspects will be considered
1 Balance sheet comparisons
2 Presentation of cash flow statement in terms of revised AS-3
LIMITATIONS
The study though conducted to the best of the ability suffers from some
certain limitations There are
The data is secondary one and as such its reliability may be
questioned upon
The time availability for the study is less and as such it hinders thee
progress of the study
Senior officials were rarely approachable
Websites were not giving comprehensive data
Not having face-to-face interaction to get more relevant
information
Analysis and interpretation of data was done on the assumption that
the respondentsrsquo information was online
Information collected was totally subjective
The interviews are done during office hours but could not be done
for the other employees of other
DATA ANALYSIS
ESCORTS PVT LTD
CASH FLOW STRATEMENT
Year Ended Year Ended
30092009 30092008
Rs Crores Rs
Crores
A Cash Flow from Operating Activities
Net profit before tax (1733) 3444
Adjustment for
Loss on sale Provision for diminution in value of Long Term
Investments amp loans to Group Companies 189 4018
Gain on sale of Long Term Investments (122) (9492)
Gain on sale of Asset (013) -
Depreciation 4497 3955
Misc Exp Assets Write off Provisions 808 750
Interest Expense 7222 7999
Dividend Income (002) (001)
Interest Income (2082) -
Operating Profit before working capital changes 8764 10673
Adjustments for
Trade and other Receivables (8817) (12035)
Inventories 1379 (4692)
Trade Payables 6705 19046
Miscellaneous Expenditure (750) (511)
(1483) 1808
Cash Generated from Operations 7281 12481
Direct Taxes (Paid)Refunds (1785) 3166
Net Cash Flow from operating activities 5496 15647
B Cash Flow from Investing Activities
Purchase of Fixed Assets (3095) (2794)
Proceeds from sale of Fixed Assets 086 177
Movement in Loans and Advances (1627) (1644)
Sale of Investments 3233 11452
Short Term Deposits with schedule Banks (231) (1048)
Interest Received 2070 -
Dividend Received 002 001
Net Cash Flow from Investing activities 438 6144
Proceeds from Share Capital amp Securities Premium 11444 -
Proceeds from Long Term Borrowings 8660 -
Less Repayment of Long Term Borrowings (054) (7896)
Proceeds (Repayment) from short term borrowings (net) (22726) -
Interest Paid (7740) (8223)
Net Cash used in financing activities (10416) (16119)
Net Increase(Decrease) in Cash and Cash equivalents (4482) 5672
Cash and Cash equivalents as at 01102008 10565 4893
Cash and Cash equivalents as at 30092009 6083 1056
ANALYSIS OF CASH FLOW
From the cash flow statements of the ESCORT PVTLTDIt can be analyzed
from the two years that the net cash balance of the company has increased
manifold in 30-09-2008 than the year 30-09-2009
The net profit in 30-09-2008 is higher than the 30-09-2009 but due to certain
changes there has been increase in the cash balance
The interest paid this year is ore of the last year which implies that thee
company has not repaid his borrowed capital due to which the interest has got
down
The depreciation has increased but it does not affect cash to an extent as it is a
non-cash item In the head of working capital there is drastic change in the cash
balance in the form of ldquoTrade and other Receivables which has affected the cash
balance
There is outflow of cash for receivables rather than the inflow in the last year
So the net effect is that the cash from operating activities has been decreased
two times from the last year
The company has no accumulated losses as at the end of the financial year ie
September 31 2008
Provision for taxation has been made in accordance with the requirement of AS-
22 issued by Institute of Charted Accountants of India
Pursuant to that current year deferred tax liability have been charged to profit amp
loss account
In opinion of the board of directors of thee company the current assets loans
and advances have a value on realization in the ordinary course of the business at
least equal to the amount stated in the balance sheet and provision for all
liabilities have been made
Balance of sundry debtors creditors loans and advances are subject to confirmation by
the concerned parties
METHOD OF ANALYSIS
1 Data analysis is done using the following statistical tools wherever required in
order to extract meaningful information from the collected data
o Simple percentage and averages
o Bar diagram
o Cone diagram
o Pie diagram
2 The collected data from the questionnaire has been put together in the form of
tables
3 Percentage has been calculated wherever necessary for generalization of the
data
4 Data analysis and interpretation has been done on the basis of primary and
secondary data
5 The findings researches have been recorded based on the analysis
6 The study conducted pertains only to YAMAHA MOTORS INDIA PVTLTD
All bank balances (debitcredit) have been confirmed by the concerned bank
Identified from the available information which has been relied upon by the auditors
The names of small-scale industrial units to whom outstanding for more than
thirty days within agreed terms
The company has 9996 of shareholders in its subsidiary company named as
ESCORTS PVT LTD As at 31-03-2008
So the net effect is that the net cash from investing activities has many more
times than the last year which is negative Now the company has repaid its long
term borrowing more than the last year which has decreased the cash balance by
the little amount
Balance with the schedule banks under the head current amp collection account
amounting to represent funds in transit lying with schedule banks pending
transfer against loan liabilities under the head cash credit amp bill discounting
LIQUIDITY RATIO
1 CURRENT RATIO
(Amount in Rs)
Current Ratio
Year Current Assets Current Liabilities Ratio
2003 58574151 7903952 7412004 69765346 31884616 2192005 72021081 16065621 4482006 91328208 47117199 1942007 115642068 30266661 382
Interpretation
As a rule the current ratio with 21 (or) more is considered as satisfactory
position of the firm
When compared with 2006 there is an increase in the provision for tax because
the debtors are raised and for that the provision is created The current liabilities
majorly included Lanco Group of company for consultancy additional services
The sundry debtors have increased due to the increase to corporate taxes
In the year 2006 the cash and bank balance is reduced because that is used for
payment of dividends In the year 2007 the loans and advances include majorly
the advances to employees and deposits to government The loans and advances
reduced because the employees set off their claims The other current assets
include the interest attained from the deposits The deposits reduced due to the
declaration of dividends So the other current assets decreased
The huge increase in sundry debtors resulted an increase in the ratio which is
above the benchmark level of 21 which shows the comfortable position of the
firm
GRAPHICAL REPRESENTATION
741
219
448
194
382
000
100
200
300
400
500
600
700
800
Ratio
2003 2004 2005 2006 2007
Years
CURRENT RATIO
Ratio
2 QUICK RATIO
(Amount
in Rs)
Quick Ratio
Year Quick Assets Current Liabilities Ratio
2003 58574151 7903952 741
2004 52470336 31884616 165
2005 69883268 16065620 435
2006 89433596 47117199 19
2007 115431868 30266661 381
Interpretation
Quick assets are those assets which can be converted into cash with in a short
period of time say to six months So here the sundry debtors which are with the
long period does not include in the quick assets
Compare with 2006 the Quick ratio is increased because the sundry debtors are
increased due to the increase in the corporate tax and for that the provision
created is also increased So the ratio is also increased with the 2006
GRAPHICAL REPRESENTATION
741
165
435
190
381
000
100
200
300
400
500
600
700
800
Ratio
2003 2004 2005 2006 2007
Years
QUICK RATIO
Ratios
3 ABOSULTE LIQUIDITY RATIO
(Amount
in Rs)
Absolute Cash Ratio
Year Absolute Liquid Assets Current Liabilities Ratio
2003 31004027 7903952 392
2004 10859778 31884616 034
2005 39466542 16065620 246
2006 53850852 47117199 114
2007 35649070 30266661 118
Interpretation
The current assets which are ready in the form of cash are considered as absolute
liquid assets Here the cash and bank balance and the interest on fixed assts are
absolute liquid assets
In the year 2006 the cash and bank balance is decreased due to decrease in the
deposits and the current liabilities are also reduced because of the payment of
dividend That causes a slight increase in the current yearrsquos ratio
GRAPHICAL REPRESENTATION
392
034
246
114 118
0
05
1
15
2
25
3
35
4
Ratios
2003 2004 2005 2006 2007
Years
ABSOLUTE CASH RATIO
Ratios
LEVERAGE RATIOS
4 PROPRIETORY RATIO
(Amount
in Rs)
Proprietory Ratio
Year Share Holders Funds Total Assets Ratio
2003 67679219 78572171 086
2004 53301834 88438107 06
2005 70231061 89158391 079
2006 56473652 106385201 053
2007 97060013 129805102 075
Interpretation
The proprietary ratio establishes the relationship between shareholders funds to
total assets It determines the long-term solvency of the firm This ratio indicates
the extent to which the assets of the company can be lost without affecting the
interest of the company
There is no increase in the capital from the year2004 The share holderrsquos funds
include capital and reserves and surplus The reserves and surplus is increased
due to the increase in balance in profit and loss account which is caused by the
increase of income from services
Total assets includes fixed and current assets The fixed assets are reduced
because of the depreciation and there are no major increments in the fixed assets
The current assets are increased compared with the year 2006 Total assets are
also increased than precious year which resulted an increase in the ratio than old
GRAPHICAL REPRESENTATION
086
060
079
053
075
000
010
020
030
040
050
060
070
080
090
Ratios
2003 2004 2005 2006 2007
Years
PROPRIETORY RATIO
Ratios
ACTIVITY RATIOS
5 WORKING CAPITAL TURNOVER RATIO
(Amount
in Rs)
Working Capital Turnover Ratio
Year Income From Services Working Capital Ratio
2003 36309834 50670199 0722004 53899084 37880730 1422005 72728759 55355460 1312006 55550649 44211009 1262007 96654902 85375407 113
Interpretation
Income from services is greatly increased due to the extra invoice for Operations
amp Maintenance fee and the working capital is also increased greater due to the
increase in from services because the huge increase in current assets
The income from services is raised and the current assets are also raised together
resulted in the decrease of the ratio of 2007 compared with 2006
GRAPHICAL REPRESENTATION
072
142 131126
113
000
020
040
060
080
100
120
140
160
Ratio
2003 2004 2005 2006 2007
Years
WORKING CAPITAL TURNOVER RATIO
Ratio
6 FIXED ASSETS TURNOVER RATIO
(Amount in Rs)
Fixed Assets Turnover Ratio
Year Income From Services Net Fixed Assets Ratio
2003 36309834 28834317 126
2004 53899084 29568279 182
2005 72728759 17137310 424
2006 55550649 15056993 369
2007 96654902 14163034 682
Interpretation
Fixed assets are used in the business for producing the goods to be sold This
ratio shows the firmrsquos ability in generating sales from all financial resources
committed to total assets The ratio indicates the account of one rupee
investment in fixed assets
The income from services is greaterly increased in the current year due to the
increase in the Operations amp Maintenance fee due to the increase in extra invoice
and the net fixed assets are reduced because of the increased charge of
depreciation Finally that effected a huge increase in the ratio compared with the
previous yearrsquos ratio
GRAPHICAL REPRSENTATION
126182
424 369
682
000
100
200
300
400
500
600
700
Ratios
2003 2004 2005 2006 2007
Years
FIXED ASSETS TURNOVER RATIO
Ratios
7 CAPITAL TURNOVER RATIO
(Amount
in Rs)
Capital Turnover Ratio
Year Income From Services Capital Employed Ratio
2003 36309834 37175892 0982004 53899084 53301834 1012005 72728759 70231061 1042006 55550649 56473652 0982007 96654902 97060013 100
Interpretation
This is another ratio to judge the efficiency and effectiveness of the company
like profitability ratio
The income from services is greaterly increased compared with the previous year
and the total capital employed includes capital and reserves amp surplus Due to
huge increase in the net profit the capital employed is also increased along with
income from services Both are effected in the increment of the ratio of current
year
GRAPHICAL REPRESENTATION
098
101
104
098
100
094095096097098099100101102103104
Ratios
2003 2004 2005 2006 2007
Years
CAPITAL TURNOVER RATIO
Ratios
8 CURRENT ASSETS TO FIXED ASSETS RATIO
(Amount
in Rs)
Current Assets To Fixed Assets Ratio
Year Current Assets Fixed Assets Ratio
2003 58524151 19998020 2932004 69765346 18672761 3742005 72021081 17137310 4202006 91328208 15056993 6072007 115642068 14163034 817
Interpretation
Current assets are increased due to the increase in the sundry debtors and the net
fixed assets of the firm are decreased due to the charge of depreciation and there
is no major increment in the fixed assets
The increment in current assets and the decrease in fixed assets resulted an
increase in the ratio compared with the previous year
GRAPHICAL REPRESENTATION
293374
420
607
817
000
100
200
300
400
500
600
700
800
900
Ratios
2003 2004 2005 2006 2007
Years
CURRENT ASSETS TO FIXED ASSETS RATIO
Ratios
PROFITABILITY RATIOS
GENERAL PROFITABILITY RATIOS
9 NET PROFIT RATIO
(Amount in Rs)
Net Profit Ratio
Year Net Profit After Tax Income from Services Ratio
2003 21123474 36039834 059
2004 16125942 53899084 030
2005 16929227 72728759 023
2006 18259580 55550649 033
2007 40586359 96654902 042
Interpretation
The net profit ratio is the overall measure of the firmrsquos ability to turn each rupee
of income from services in net profit If the net margin is inadequate the firm
will fail to achieve return on shareholderrsquos funds High net profit ratio will help
the firm service in the fall of income from services rise in cost of production or
declining demand
The net profit is increased because the income from services is increased The
increment resulted a slight increase in 2007 ratio compared with the year 2006
GRAPHICAL REPRESENTATION
059
030
023
033
042
000
010
020
030
040
050
060
Ratios
2003 2004 2005 2006 2007
Years
NET PROFIT RATIO
Ratios
10 OPERATING PROFIT
(Amount in Rs)
Operating Profit
Year Operating Profit Income From Services Ratio
2003 36094877 36309834 099
2004 27576814 53899084 051
2005 29540599 72728759 041
2006 31586718 55550649 057
2007 67192677 96654902 070
Interpretation
The operating profit ratio is used to measure the relationship between net profits
and sales of a firm Depending on the concept it will decide
The operating profit ratio is increased compared with the last year The earnings
are increased due to the increase in the income from services because of
Operations amp Maintenance fee So the ratio is increased slightly compared with
the previous year
GRAPHICAL REPRESENTATION
099
051
041
057
070
000
010
020
030
040
050060
070
080
090
100
Ratios
2003 2004 2005 2006 2007
Years
OPERATING PROFIT RATIO
Ratios
11 RETURN ON TOTAL ASSETS RATIO
(Amount in Rs)
Return on Total Assets Ratio
Year Net Profit After Tax Total Assets Ratio
2003 21123474 78572171 027
2004 16125942 88438107 018
2005 16929227 89158391 019
2006 18259580 106385201 017
2007 40586359 129805102 031
Interpretation
This is the ratio between net profit and total assets The ratio indicates the return
on total assets in the form of profits
The net profit is increased in the current year because of the increment in the
income from services due to the increase in Operations amp Maintenance fee The
fixed assets are reduced due to the charge of depreciation and no major
increments in fixed assets but the current assets are increased because of sundry
debtors and that effects an increase in the ratio compared with the last year ie
2006
GRAPHICAL REPRESENTATION
027
018 019017
031
000
005
010
015
020
025
030
035
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON TOTAL ASSETS
Ratios
12 RESERVES amp SURPLUS TO CAPITAL RATIO
(Amount in Rs)
Reserves amp Surplus To Capital Ratio
Year Reserves amp Surplus Capital Ratio
2003 65599299 2079920 31542004 34582554 18719280 1852005 51511781 18719280 2752006 37754372 18719280 2022007 78340733 18719280 419
Interpretation
The ratio is used to reveal the policy pursued by the company a very high ratio
indicates a conservative dividend policy and vice-versa Higher the ratio better
will be the position
The reserves amp surplus is decreased in the year 2006 due to the payment of
dividends and in the year 2007 the profit is increased But the capital is
remaining constant from the year 2004 So the increase in the reserves amp surplus
caused a greater increase in the current yearrsquos ratio compared with the older
GRAPHICAL REPRESENTATION
3154
185 275 202419
-
500
1000
1500
2000
2500
3000
3500
Ratios
2003 2004 2005 2006 2007
Years
RESERVES amp SRUPLUS TO CAPITAL RATIO
Ratios
OVERALL PROFITABILITY RATIOS
13 EARNINGS PER SHARE
(Amount in Rs)
Earnings Per Share
Year Net Profit After Tax No of Equity Shares Ratio
2003 21123474 207992 101562004 16125942 1871928 8612005 16929227 1871928 9042006 18259580 1871928 9752007 40586359 1871928 2168
Interpretation
Earnings per share ratio are used to find out the return that the shareholderrsquos earn
from their shares After charging depreciation and after payment of tax the
remaining amount will be distributed by all the shareholders
Net profit after tax is increased due to the huge increase in the income from
services That is the amount which is available to the shareholders to take There
are 1871928 shares of Rs10- each The share capital is constant from the year
2004 Due to the huge increase in net profit the earnings per share is greaterly
increased in 2007
GRAPHICAL REPRESENTATION
10156
861904 975
2168
000
2000
4000
6000
8000
10000
12000
Ratios
2003 2004 2005 2006 2007
Years
EARNINGS PER SHARE
Ratios
14 PRICE EARNINGS (PE) RATIO
(Amount in Rs)
Price Earning (PE) Ratio
Year Market Price Per Share Earnings Per Share Ratio
2003 3254 10156 0322004 2847 861 3302005 3752 904 4152006 3017 975 3092007 5185 2168 239
Interpretation
The ratio is calculated to make an estimate of application in the value of share of
a company
The market price per share is increased due to the increase in the reserves
amp surplus The earnings per share are also increased greaterly compared
with the last year because of increase in the net profit So the ratio is
decreased compared with the previous year
GRAPHICAL REPRESENTATION
032
330
415
309
239
000
050
100
150
200
250
300
350
400
450
Ratios
2003 2004 2005 2006 2007
Years
PE RATIO
Ratios
15 RETURN ON INVESTMENT
(Amount in Rs)
Return on Investment
Year Net Profit After Tax Share Holders Fund Ratio
2003 21123474 67679219 031
2004 16125942 53301834 03
2005 16929227 70231061 024
2006 18259580 56473652 032
2007 40586359 97060013 042
Interpretation
This is the ratio between net profits and shareholders funds The ratio is
generally calculated as percentage multiplying with 100
The net profit is increased due to the increase in the income from services ant
the shareholders funds are increased because of reserve amp surplus So the ratio
is increased in the current year
GRAPHICAL REPRESENTATION
031 030
024
032
042
000
005
010
015
020
025
030
035
040
045
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON INVESTMENT RATIO
RatioS
DATA COLLECTION
The data can be of two types
Primary Data
Secondary Data
Primary Data
Primary data are those data which is originally collected afresh
Secondary Data
Secondary data are those data which are already collected and stored and which has
been passed through statistical research
In this project Secondary data has been collected from following sources-
Annual report
Books
MIS
Other material and report published by company There are two methods to prepare
the Cash flow Statement
ndirect Method
I
The indirect method (or reconciliation method) starts with net income and converts it
to net cash flow from operating activities In other words the indirect method adjusts
net income for items that affected reported net income but did not affect cash To
compute net cash flow from operating activities non-cash charges in the income
statement are added ack to net income and non-cash credits are deducted
b
Direct Method
Under the direct method the statement of cash flows reports net cash flow from
operating activities as major classes of operating cash receipts (eg cash collected from
customers and cash received from interest and dividends) and cash disbursements (eg
cash paid to suppliers for goods to employees for services to creditors for interest and
to government authorities for taxes)
INDIRECT VERSUS DIRECT METHOD
The most contentious decision that the FASB faced in issuing Statement No 95 was
choosing between the direct method and the indirect method of determining net cash
flow from operating activities Companies lobbied against the direct method urging
adoption of the indirect method Commercial lending officers expressed a strong
preference to the FASB hat the direct method be required
tCF-Page 3 of 5
In Favor of the Direct Method
The principal advantage of the direct method is that it shows operating cash receipts and
payments That is it is more consistent with the objective of a statement of cash flows to
provide information about cash receipts and cash payments than the in-direct method
which does not report operating cash receipts and payments
Supporters of the direct method contend that knowledge of the specific sources of
operating cash receipts and the purposes for which operating cash payments were made
in past periods is useful in estimating future operating cash flows Furthermore in-
formation about amounts of major classes of operating cash receipts and payments is
more useful than information only about their arithmetic sum (the net cash flow from
operating activities) Such information is more revealing of an enterprises ability (1) to
generate sufficient cash from operating activities to pay its debts (2) to reinvest in its
operations and (3) to make distributions to its owners
Many corporate providers of financial statements say that they do not currently collect
information in a manner that allows them to determine amounts such as cash received
from customers or cash paid to suppliers directly from their accounting systems But
supporters of the direct method contend that the incremental cost of assimilating such
operating cash receipts and payments data is not significant
In Favor of the Indirect Method
The principal advantage of the indirect method is that it focuses on the differences
between net income and net cash flow from operating activities That is it provides a
useful link between the statement of cash flows and the income statement and balance
sheet
Many providers of financial statements contend that it is less costly to adjust net income
to net cash flow from operating activities (indirect) than it is to report gross operating
cash receipts and payments (direct) Supporters of the indirect method also state that the
direct method which effectively reports income statement information on a cash rather
than an accrual basis may erroneously suggest that net cash flow from operating
activities is as good as or better than net income as a measure of performance
Special Rules Applying to Direct and Indirect Methods
Companies that use the direct method are required at a
minimum to report separately the following classes of
operating cash receipts and payments
Receipts
1048713 Cash collected from customers (including lessees licensees etc)
1048713 Interest and dividends received
1048713 Other operating cash receipts if any
Payments
1048713 Cash paid to employees and suppliers of goods or services (including
suppliers of
insurance advertising etc)
1048713 Interest paid
1048713 Income taxes paid
1048713 Other operating cash payments if any
Companies using the indirect method are required to disclose separately changes in
inventory receivables and payables to reconcile net income to net cash flow from
operating activities In addition interest paid (net of amount capitalized) and income
taxes paid must be disclosed elsewhere in the financial statements or accompanying
notes
The FASB requires these separate and additional disclosures so that users
may approximate the direct method Also an acceptable alternative presentation
of the in-direct method is to report net cash flow from operating activities as a
single line item in the statement of cash flows and to present the reconciliation
details elsewhere in the financial statements
FINDING OF SUDY
According to cash flow statement of the company The finding of the study are as
follows-
The company has not taken any loans secured or unsecured from companies
firms or other parties
The company has not accepted any deposit from the public during the year
The company is not a sick industrial company
The company has not granted any loan secured or unsecured to company firms
or other parties
The company has paid the entire long term and short term borrowing during the
year
The company has buy back the companyrsquos own share this year
The interest paid in 2008 is more than the
There has been a significant decline in volume over the years from 2001-02
to 2005-06 as can be seen in the graph below
Table 43
The Net sales of Tractor has increased considerably from 2004-05 to 2007-08
This can be mainly attributed to changes in Variable and material costs and in
the price
The Net sale of Tractor has increased considerably from 2004-05 to 2007-08
that is an decrease of Rs7216 per tractor This can be mainly attributed to
changes in
Variable and material costs and in the prices
RECOMMENDATIONS
According to cash flow statement of the company The suggestions of the study
are as follows-
The time durations for training program have to increase
Buy regular review and consultations develop a career progression
which is sensitive to performance and ability
Create an environment where by people are trend developed to enable
The to take advantages of opportunities that arise
The jab can be redesigned where the work man stay in what is normally
the same job but has elements of it changed
The principle amount must be paid in time which can be reducing the
interest the out flow
The purchase of the fixed asset must be made only when there is extreme
requirement
In order to avoid taxes the company should go for more investment
The companyrsquos borrowings should go for more investment
o The company should try to reduce the depreciations as maximum
as possible
CONCLUSION
The study on competency level of employees at ESCORTS PVTLTD gave an
insight about the acceptance of competency mapping by employees
The employees at Ymi welcome the introduction of competency mapping in their
organization as they felt it was very much essential in enhancing their skills and
organizational development
The organization has provided the recourses guidance and support to facilitate the
introduction of competency level easily and develop the employees in such a way
that they can face any kind of challenge
However the level of competency in employees is found to be satisfactory
Providing proper training education and guidance to the employees can enhance
the level
This study was mainly carried out to find out whether thee competency mapping
being followed by the company is effective till date If the competency mapping
and fitment to the organization
By looking at the graphs and tables it is quite that the employees still are not up to
the level of competent pool they still have to be trained and made competent in
order to fill the gap As the organization has just applied the mapping it has to see
to that it meets all the requirements for competency mapping
Therefore the graphs make it quite clear that the potential of the employees is not
up to the mark and ie they are not competent enough to meet the competency-
mapping requirement Hence by further training and counseling this gap can be
closed
This report includes the training requirements of employees and it highlights skills
possessed by each employee and skill required All employees get training so that
skill can be improved and maintain balance between standard performance with
their actual performance to avoid gap
APPENDIX
QUESTIONNAIRE
Consumer Survey
Name _____________________________
Age _____________________________
Sex
Male
Female
Occupation
Businessman
Service man
Professional
Others
Monthly income brackets
Below 15000
15000- 20000
20000-30000
30000 and above
of your savings _________
Do you invest
Yes
No
If yes then where do you invest your money
Bank
Insurance
funds
Others
Why do you made that statement
Return
Risk hedging
Tax benefits
Other reasons (specify) _______
Who influence your cash decision
Relatives and friends
Family members
Advisors experts
You yourself
If no then why
Do not know where to invest
Satisfied with your current investment return
Donrsquot want take risk
Other reasons
__________________________________________________________________
___________________
Do you know about CF statement
Yes
No
If yes then from where you have come to know about an cash statement
Advertisements on newspapers
Friends and relative
Agents experts
Other source
What do you think about cash statement
It means investing only in share market
Constant watch must be kept always
Return is not satisfactory
Other perception
__________________________________________________
Can you recall any cash flow of company
___________________________
Would you want to made CF of an org
Yes
No
If yes then why
_______________________________________________________
If no then why
_______________________________________________________
BIBLIOGRAPHY
List of Books
1 PANDEY IM - FINANCIAL MANAGEMANT
2 KHAN MY AND JAIN PK -FINANCIAL MANAGEMANT
3 SMITH KV ndash MANAGEMANT OF WORKING CAPITAL
3 COMPANY RECORDS
4 JOURNAL
5 REPORTS
WEBLIOGRAPHY
1 wwwescortspvtltdcom
2 wwwgooglecom
India And enterprise that are in the process of issuing equity or debt securities that will
be listed on a recognized stock exchange in India
bull All other commercial industrial and business enterprises whose turnover for accounting
period Rs 50 crores
As such the cash flow statement has been prepared according to as -3 revised in this project
According to as-3 revised the cash flow statement summarizes the cash inflows and cash
outflows and the net changes (increase or decrease) in cash and cash equipment resulting from
operating investing and financing activities of a firm during a period The following terms are
used for preparing a cash flow statement
CASH-
It compares cash in hand and demands with banks
CASH EQUIVALENTS-
There are short - term highly liquid investments that are readily into known amounts of cash
and which present insignificant risk of changes in their values Normally an investment will be
termed as cash equivalent only if it has a short maturity period say three months or less from the
date of its acquisition Examples of cash equivalent are treasury bills commercial papers etc
Which are purchased with cash that is in excess of immediate needs investment in shares are
excluded from cash equivalents unless they are cash equivalent in reality For example the
preference shares of the company which are purchased shortly before their redemption date will
be included in cash equivalents provided there is only an insignificant risk of failure of the
company in repaying the amount at the date of the maturity
CLASSIFICATION OF CASH FLOW-
According to as -3 (revised) cash flow statement should be presented in a manner that it reports
inflows of cash by classifying them into three categories namely operating investing and
financing activities Classification of all activities into these activities on the cash and cash
equivalents of the enterprise such information will be helpful in evaluating the relationships
among these three activities are explained as below
CASH FLOW FROM OPERATING ACTIVITIES-
Operating activities are the main revenue generating activities of an enterprise As such they
include cash flows from those transactions and events which enter into the ascertainment of
net profit or loss of the enterprise Examples of cash flows arising operating activities are
bull Cash receipts from the sale of goods and rendering of services
bull Cash receipts from royalties fees commissions and other revenue
bull Cash payments to suppliers for goods and services
bull Cash payments to and on behalf of employees
bull Cash receipts and cash payments of an insurance enterprise for premiums and claims
annuities and other policy benefits
bull Cash receipts and payments relating to future contracts forward contracts option
contracts and swap contracts when the contracts are held for dealing or trade purpose and
bull Cash payments of refunds of income taxes unless they can be specifically identified with
financing and investing activities
CASH FLOW FROM INVESTING ACTIVITIES-
Investing activities include the purchase and sale of long term assets such as land building plant
and machinery etc not held for resale These activities also include the purchase and sale of such
investment which are not including in cash equipments Cash flow from investing activities
discloses the expenditures incurred for resources intended to generate future income and cash
flows
Examples cash flow arising from investing activities are
bull Cash payments to acquire fixed assets (including intangible)
bull Cash receipts from sale of fixed assets (including intangibles)
bull Cash payments to acquire shares warrants or debt instruments of other enterprises
(other than receipts for those instruments considered to be cash equivalents)
bull Cash receipts from sale of shares warrants or debt instruments of other enterprises (other
than receipts for those instruments considered to be cash equivalents)
bull Cash advances and loans made to third parties In case of financial enterprises these will
be treated as cash flow from operating activities
bull Cash receipts from the repayment of advances and loans made to third parties In case of
financial enterprises these will be treated as cash flow from operating activities
bull Cash receipts of insurance claim for property involved in accident and
bull Cash receipts of interest and dividend In case of financial enterprise these will be treated
cash flow from operating activities
CASH FLOW FROM FIANCING ACTIVITIES-
Financing activities are the activities that result in change in capital and borrowing of the
enterprise
Examples of cash flows arising from financing activities are
bull Cash receipts from issuing shares or other similar instruments
bull Cash receipts from issuing debentures loans bonds and other short term or long term
borrowing
bull Cash repayment of amounts borrowed buy back of equity shares redemption of
preference shares debentures loans bonds etc
bull Cash payment of interest and dividend
IMPORTANT NOTE
In case of financial enterprise such as bank or mutual fund company cash Outflow
and cash inflow arising from the purchase and sale of securities will Be treated as
flows from operating activities This is because purchase and sale of securities is a
part of operating activity in case of financial enterprise In addition interest paid
and interest received as well as dividends received will also be treated as cash flow
from operating activities in case of financial Enterprises
CASH FLOW STATEMENT
(DIRECT METHOD)
CASH FLOW FROM OPERATING ACTIVITIES
Cash receipts from costumers
Cash paid to suppliers and employers ()
Cash generated from operations
Income tax paid ()
Cash flows from extraordinary item
plusmn Extra ordinary items
Net cash from operating activities
CASH FLOW FROM INVESTING ACTIVITIES-
Purchase of fixed assets
Proceed from sale equipment ()
Interest received
Dividend received ()
Net cash from investing activities
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from insurance of share capital
Proceeds from long- term borrowings ()
Repayment of from long-term borrowings
Interest paid
Dividend paid ()
Net cash from financing activities
Net increase in cash and cash equivalent
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
SOME SPECIAL TERMS-
i) INTERSET AND DIVIDEND-
Cash inflow from interest and dividends and cash outflow on account of interest and
dividends should be disclosed separately Cash inflow arising from interest and dividends
received should be shown as cash flow from investing activities where as cash outflow
disclosed outflow on account of interest and dividend paid should be shown as cash flow
from financing activity
ii) TAXES ON INCOME-
Tax paid on income is a part of cash flow from operating activity Hence taxes paid are
shown as a deduction under cash flow from operating activity
iii) EXTRA ORDINARY ITEMS-
Cash flow relating to extra ordinary items such as bad debts recovered Claims received from
insurance companies winning of a lottery or a law etc Should be disclosed separately as
arising from operating investing or financing activities For example the amount received
for insurance company on account of loss of stock by fire Earthquake and floods etc Should
be reported as cash flow from operating activities
iv) SIGNIFICANT NON - CASH TRANSACTION-
There are some investing and financing activities which do not require the use of cash or
cash equivalents Such non cash activities should be excluded from the cash flow statement
Examples are the acquisition of assets by issue of debentures or shares conversion of
shares into debentures etc Such significant on non cash transaction should be disclosed
outside the cash flow statement
CASH FLOW STATEMENT
(INDIRECT METHOD)
CASH FLOW FROM OPERARATTNG ACTIVITIES
Net profit before taxation and extraordinary item
Adjustment for
Depreciation
Foreign exchange loss
Interest income
Dividend income
Interest expense
Operating profit before working capital changes
Increase in sundry debtors
Decrease in inventories
Decrease in sundry creditors
Cash generated from operations
Income tax paid ()
Cash flow before extraordinary item
plusmn Extra - ordinary items
Net cash from operating activities
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of fixed assets ()
Proceeds from sale of equipment
Interest received
Dividend received ()
Net cash from investing activities
CASH FLOW FROM FINANCING ACTIVITIES-
Proceeds from insurance of share capital
Proceeds from long - term borrowings
Repayments of from long - term borrowings ()
Interest paid ()
Dividend paid ()
Net cash from financing activities
Net increase in cash and cash equivalent
Cash and cash equivalents at beginning of period
CHANGES IN CASH FLOWS
Changes in cash flows can be treated to the following
1 Net profit will increase the cash flows these cash flows will be
increased further if there are any non-cash changes (such as depreciation
and amortization)
2 Any payment of dividends will decrease the cash flows as will the
repayment of debt an issue of share or debt will also increase the
cash flows
3 An increase in non-cash assets will decrease cash flows increase in
current assets and fixed assets will result in drain on cash flows
Thus a statement of changes in cash flows ie the cash flow statement
classifies all Changes into one of three categories - operating investing or
financing activities Therefore the preparation of a statement of changes in cash
flows requires classification of changes in liabilities shareholders equity and
non-cash assets into one of these categories although some items will not fit
easily onto one other
h equivalent at end of period
STEP- BY-STEP PROCEDURE TO PREPARE CFS
1 Calculate the net increase or decrease in cash and cash equivalents-
For this purpose the opening balance of total cash and cash equivalents is compared with the
closing balance of cash and equivalents
Increasedecrease in cash and equivalents
Opening balance Closing Balance
Cash in hand
Cash in bank
Short-term Investment
Total
The difference between the total of opening and closing balance will be increased or
Decreased in cash equivalents during the period It may be noted that if there are only one or
two of items of cash etc
2 Net Cash flaw from operating activities-
The term operating refers to the normal purchase of goods and services On the basis of the
information contained in the comparative BS s and the IS and the additional Information the
net cash flow generated or use by the operating activities may be ascertained The IS prepared
by the firm gives the net profit figure earned by the firm On actual basis ie all items in the
IS are incorporated on the basis of earnedaccrued even
3 If not resulting in cash movements-
So the profit or loss as by the IS may not result in increase or decrease in cash balance by the
SYNOPSIS
INTRODUCTION
ESCORTS PVT LTD is a private limited company not listed in a stock exchange of India
and employees 900 highly trained personnel Its manufacturing plants are strategically located
in close proximity to its customers at Faridabad (Haryana) Noida (UP)
OBJECTIVES OF THE STUDY
bull To find the movement of cash inflow and cash outflow
bull To make the comparison between cash inflow and
bull Cash outflow
bull To prepare the Cash Flow Statement
bull To analyze the Balance Sheet of the company in terms of Cash Flow Statement
bull To focus on various activities of the organization in terms of Operating
Financing Investment
SCOPE OF THE STUDY
Financial resources are the assets for the company and their productivity is key
factor for profitability It is necessary to know their problems their knowledge
skills abilities amp the measures that can be taken to reduce them By analyzing this
top management can build good relations with the employees
The whole study is to determine the competencies of different employees who are
working in ESCORTS PVT LTD By analyzing it the top management can
introduce the concept of competency mapping in the organization Through this
management can attempt to use more suitable strategies towards the human
resource development
The research is confined to elicit the existing gap between the standard skill
required to perform the job and the skill processed by the employees at ESCORTS
PVT LTD And to provide them suitable training program to over come those gaps
for the better utilization of human resources
RELEVANCE
The scope of the study was confined to the outside parties like creditors
shareholders government etc Who want to invest their money in the
company
The benefit of the report for the company is that through this report they can come
to know about the cash flow statements of the company
This study also unable the company that their cash is not utilizing in unnecessary
things
The benefit of the report for the researcher is that it has helped to get knowledge
about the cash inflow and cash
RESERRCH METHODOLOGY-
RESEARCH DESIGN
bull The study was conducted under well- structured approach
bull The project lasted for 4 weeks and the year 2009 ie from 08 July to 12
Aug2009
bull The questionnaire method amp personal interview method was used to collect
the primary data for the study
The secondary data is collected from Internet amp company training material and
many other company materials
SAMPLE DESIGN
The process of extracting a sample from a population is called sampling
procedure The selection of sampling procedure to conduct the research
depends upon the nature of the study and the objective to be accomplished
Judgment sampling technique is adopted to select the respondents in this
study The sample design included the various departments in the YAMAHA
MOTORS PVT LTD
Methodology of date collection
bull Conducting personal interview
bull Data collection from primary and secondary sources
bull Designing questionnaire
bull Selecting sample size from the sample frame for the survey
bull Questionnaire distribution
bull Analysis of collected data with the help of statistical tools
bull Interpretation of collected data
bull Stating the conclusion based on the entire study
Sampling Technique
The sampling technique used for this research is of non-probability and convenience
sampling
Sample Unit
Employees of the company
Sample Size
For this research study the sample size is 25 respondents
Sources of data
Primary data
Primary data is the data which is collected by the researcher for the first time
and which was not there The tools used to collect the data are-
1)Questionnaire method from the employers in different departments
2) Face to Face personal interactions
Secondary Data
The data already collected is called as secondary data The relevant information
for this study has been collected from secondary source such as
Books
Journal
Reports
Publication by the organizational circulation
Company records
Business bulletins
Internet
Secondary data is also collected from various of the internet and intranet Some
of the website trough which information was gathered was through
HYPOTHESIS
The report is analyzed under the presumption that cash flow position of
YAMAHA MOTORS PVTLTD It can be improved and made effective in
terms of cash flows
In testing the above hypothesis the following aspects will be considered
1 Balance sheet comparisons
2 Presentation of cash flow statement in terms of revised AS-3
LIMITATIONS
The study though conducted to the best of the ability suffers from some
certain limitations There are
The data is secondary one and as such its reliability may be
questioned upon
The time availability for the study is less and as such it hinders thee
progress of the study
Senior officials were rarely approachable
Websites were not giving comprehensive data
Not having face-to-face interaction to get more relevant
information
Analysis and interpretation of data was done on the assumption that
the respondentsrsquo information was online
Information collected was totally subjective
The interviews are done during office hours but could not be done
for the other employees of other
DATA ANALYSIS
ESCORTS PVT LTD
CASH FLOW STRATEMENT
Year Ended Year Ended
30092009 30092008
Rs Crores Rs
Crores
A Cash Flow from Operating Activities
Net profit before tax (1733) 3444
Adjustment for
Loss on sale Provision for diminution in value of Long Term
Investments amp loans to Group Companies 189 4018
Gain on sale of Long Term Investments (122) (9492)
Gain on sale of Asset (013) -
Depreciation 4497 3955
Misc Exp Assets Write off Provisions 808 750
Interest Expense 7222 7999
Dividend Income (002) (001)
Interest Income (2082) -
Operating Profit before working capital changes 8764 10673
Adjustments for
Trade and other Receivables (8817) (12035)
Inventories 1379 (4692)
Trade Payables 6705 19046
Miscellaneous Expenditure (750) (511)
(1483) 1808
Cash Generated from Operations 7281 12481
Direct Taxes (Paid)Refunds (1785) 3166
Net Cash Flow from operating activities 5496 15647
B Cash Flow from Investing Activities
Purchase of Fixed Assets (3095) (2794)
Proceeds from sale of Fixed Assets 086 177
Movement in Loans and Advances (1627) (1644)
Sale of Investments 3233 11452
Short Term Deposits with schedule Banks (231) (1048)
Interest Received 2070 -
Dividend Received 002 001
Net Cash Flow from Investing activities 438 6144
Proceeds from Share Capital amp Securities Premium 11444 -
Proceeds from Long Term Borrowings 8660 -
Less Repayment of Long Term Borrowings (054) (7896)
Proceeds (Repayment) from short term borrowings (net) (22726) -
Interest Paid (7740) (8223)
Net Cash used in financing activities (10416) (16119)
Net Increase(Decrease) in Cash and Cash equivalents (4482) 5672
Cash and Cash equivalents as at 01102008 10565 4893
Cash and Cash equivalents as at 30092009 6083 1056
ANALYSIS OF CASH FLOW
From the cash flow statements of the ESCORT PVTLTDIt can be analyzed
from the two years that the net cash balance of the company has increased
manifold in 30-09-2008 than the year 30-09-2009
The net profit in 30-09-2008 is higher than the 30-09-2009 but due to certain
changes there has been increase in the cash balance
The interest paid this year is ore of the last year which implies that thee
company has not repaid his borrowed capital due to which the interest has got
down
The depreciation has increased but it does not affect cash to an extent as it is a
non-cash item In the head of working capital there is drastic change in the cash
balance in the form of ldquoTrade and other Receivables which has affected the cash
balance
There is outflow of cash for receivables rather than the inflow in the last year
So the net effect is that the cash from operating activities has been decreased
two times from the last year
The company has no accumulated losses as at the end of the financial year ie
September 31 2008
Provision for taxation has been made in accordance with the requirement of AS-
22 issued by Institute of Charted Accountants of India
Pursuant to that current year deferred tax liability have been charged to profit amp
loss account
In opinion of the board of directors of thee company the current assets loans
and advances have a value on realization in the ordinary course of the business at
least equal to the amount stated in the balance sheet and provision for all
liabilities have been made
Balance of sundry debtors creditors loans and advances are subject to confirmation by
the concerned parties
METHOD OF ANALYSIS
1 Data analysis is done using the following statistical tools wherever required in
order to extract meaningful information from the collected data
o Simple percentage and averages
o Bar diagram
o Cone diagram
o Pie diagram
2 The collected data from the questionnaire has been put together in the form of
tables
3 Percentage has been calculated wherever necessary for generalization of the
data
4 Data analysis and interpretation has been done on the basis of primary and
secondary data
5 The findings researches have been recorded based on the analysis
6 The study conducted pertains only to YAMAHA MOTORS INDIA PVTLTD
All bank balances (debitcredit) have been confirmed by the concerned bank
Identified from the available information which has been relied upon by the auditors
The names of small-scale industrial units to whom outstanding for more than
thirty days within agreed terms
The company has 9996 of shareholders in its subsidiary company named as
ESCORTS PVT LTD As at 31-03-2008
So the net effect is that the net cash from investing activities has many more
times than the last year which is negative Now the company has repaid its long
term borrowing more than the last year which has decreased the cash balance by
the little amount
Balance with the schedule banks under the head current amp collection account
amounting to represent funds in transit lying with schedule banks pending
transfer against loan liabilities under the head cash credit amp bill discounting
LIQUIDITY RATIO
1 CURRENT RATIO
(Amount in Rs)
Current Ratio
Year Current Assets Current Liabilities Ratio
2003 58574151 7903952 7412004 69765346 31884616 2192005 72021081 16065621 4482006 91328208 47117199 1942007 115642068 30266661 382
Interpretation
As a rule the current ratio with 21 (or) more is considered as satisfactory
position of the firm
When compared with 2006 there is an increase in the provision for tax because
the debtors are raised and for that the provision is created The current liabilities
majorly included Lanco Group of company for consultancy additional services
The sundry debtors have increased due to the increase to corporate taxes
In the year 2006 the cash and bank balance is reduced because that is used for
payment of dividends In the year 2007 the loans and advances include majorly
the advances to employees and deposits to government The loans and advances
reduced because the employees set off their claims The other current assets
include the interest attained from the deposits The deposits reduced due to the
declaration of dividends So the other current assets decreased
The huge increase in sundry debtors resulted an increase in the ratio which is
above the benchmark level of 21 which shows the comfortable position of the
firm
GRAPHICAL REPRESENTATION
741
219
448
194
382
000
100
200
300
400
500
600
700
800
Ratio
2003 2004 2005 2006 2007
Years
CURRENT RATIO
Ratio
2 QUICK RATIO
(Amount
in Rs)
Quick Ratio
Year Quick Assets Current Liabilities Ratio
2003 58574151 7903952 741
2004 52470336 31884616 165
2005 69883268 16065620 435
2006 89433596 47117199 19
2007 115431868 30266661 381
Interpretation
Quick assets are those assets which can be converted into cash with in a short
period of time say to six months So here the sundry debtors which are with the
long period does not include in the quick assets
Compare with 2006 the Quick ratio is increased because the sundry debtors are
increased due to the increase in the corporate tax and for that the provision
created is also increased So the ratio is also increased with the 2006
GRAPHICAL REPRESENTATION
741
165
435
190
381
000
100
200
300
400
500
600
700
800
Ratio
2003 2004 2005 2006 2007
Years
QUICK RATIO
Ratios
3 ABOSULTE LIQUIDITY RATIO
(Amount
in Rs)
Absolute Cash Ratio
Year Absolute Liquid Assets Current Liabilities Ratio
2003 31004027 7903952 392
2004 10859778 31884616 034
2005 39466542 16065620 246
2006 53850852 47117199 114
2007 35649070 30266661 118
Interpretation
The current assets which are ready in the form of cash are considered as absolute
liquid assets Here the cash and bank balance and the interest on fixed assts are
absolute liquid assets
In the year 2006 the cash and bank balance is decreased due to decrease in the
deposits and the current liabilities are also reduced because of the payment of
dividend That causes a slight increase in the current yearrsquos ratio
GRAPHICAL REPRESENTATION
392
034
246
114 118
0
05
1
15
2
25
3
35
4
Ratios
2003 2004 2005 2006 2007
Years
ABSOLUTE CASH RATIO
Ratios
LEVERAGE RATIOS
4 PROPRIETORY RATIO
(Amount
in Rs)
Proprietory Ratio
Year Share Holders Funds Total Assets Ratio
2003 67679219 78572171 086
2004 53301834 88438107 06
2005 70231061 89158391 079
2006 56473652 106385201 053
2007 97060013 129805102 075
Interpretation
The proprietary ratio establishes the relationship between shareholders funds to
total assets It determines the long-term solvency of the firm This ratio indicates
the extent to which the assets of the company can be lost without affecting the
interest of the company
There is no increase in the capital from the year2004 The share holderrsquos funds
include capital and reserves and surplus The reserves and surplus is increased
due to the increase in balance in profit and loss account which is caused by the
increase of income from services
Total assets includes fixed and current assets The fixed assets are reduced
because of the depreciation and there are no major increments in the fixed assets
The current assets are increased compared with the year 2006 Total assets are
also increased than precious year which resulted an increase in the ratio than old
GRAPHICAL REPRESENTATION
086
060
079
053
075
000
010
020
030
040
050
060
070
080
090
Ratios
2003 2004 2005 2006 2007
Years
PROPRIETORY RATIO
Ratios
ACTIVITY RATIOS
5 WORKING CAPITAL TURNOVER RATIO
(Amount
in Rs)
Working Capital Turnover Ratio
Year Income From Services Working Capital Ratio
2003 36309834 50670199 0722004 53899084 37880730 1422005 72728759 55355460 1312006 55550649 44211009 1262007 96654902 85375407 113
Interpretation
Income from services is greatly increased due to the extra invoice for Operations
amp Maintenance fee and the working capital is also increased greater due to the
increase in from services because the huge increase in current assets
The income from services is raised and the current assets are also raised together
resulted in the decrease of the ratio of 2007 compared with 2006
GRAPHICAL REPRESENTATION
072
142 131126
113
000
020
040
060
080
100
120
140
160
Ratio
2003 2004 2005 2006 2007
Years
WORKING CAPITAL TURNOVER RATIO
Ratio
6 FIXED ASSETS TURNOVER RATIO
(Amount in Rs)
Fixed Assets Turnover Ratio
Year Income From Services Net Fixed Assets Ratio
2003 36309834 28834317 126
2004 53899084 29568279 182
2005 72728759 17137310 424
2006 55550649 15056993 369
2007 96654902 14163034 682
Interpretation
Fixed assets are used in the business for producing the goods to be sold This
ratio shows the firmrsquos ability in generating sales from all financial resources
committed to total assets The ratio indicates the account of one rupee
investment in fixed assets
The income from services is greaterly increased in the current year due to the
increase in the Operations amp Maintenance fee due to the increase in extra invoice
and the net fixed assets are reduced because of the increased charge of
depreciation Finally that effected a huge increase in the ratio compared with the
previous yearrsquos ratio
GRAPHICAL REPRSENTATION
126182
424 369
682
000
100
200
300
400
500
600
700
Ratios
2003 2004 2005 2006 2007
Years
FIXED ASSETS TURNOVER RATIO
Ratios
7 CAPITAL TURNOVER RATIO
(Amount
in Rs)
Capital Turnover Ratio
Year Income From Services Capital Employed Ratio
2003 36309834 37175892 0982004 53899084 53301834 1012005 72728759 70231061 1042006 55550649 56473652 0982007 96654902 97060013 100
Interpretation
This is another ratio to judge the efficiency and effectiveness of the company
like profitability ratio
The income from services is greaterly increased compared with the previous year
and the total capital employed includes capital and reserves amp surplus Due to
huge increase in the net profit the capital employed is also increased along with
income from services Both are effected in the increment of the ratio of current
year
GRAPHICAL REPRESENTATION
098
101
104
098
100
094095096097098099100101102103104
Ratios
2003 2004 2005 2006 2007
Years
CAPITAL TURNOVER RATIO
Ratios
8 CURRENT ASSETS TO FIXED ASSETS RATIO
(Amount
in Rs)
Current Assets To Fixed Assets Ratio
Year Current Assets Fixed Assets Ratio
2003 58524151 19998020 2932004 69765346 18672761 3742005 72021081 17137310 4202006 91328208 15056993 6072007 115642068 14163034 817
Interpretation
Current assets are increased due to the increase in the sundry debtors and the net
fixed assets of the firm are decreased due to the charge of depreciation and there
is no major increment in the fixed assets
The increment in current assets and the decrease in fixed assets resulted an
increase in the ratio compared with the previous year
GRAPHICAL REPRESENTATION
293374
420
607
817
000
100
200
300
400
500
600
700
800
900
Ratios
2003 2004 2005 2006 2007
Years
CURRENT ASSETS TO FIXED ASSETS RATIO
Ratios
PROFITABILITY RATIOS
GENERAL PROFITABILITY RATIOS
9 NET PROFIT RATIO
(Amount in Rs)
Net Profit Ratio
Year Net Profit After Tax Income from Services Ratio
2003 21123474 36039834 059
2004 16125942 53899084 030
2005 16929227 72728759 023
2006 18259580 55550649 033
2007 40586359 96654902 042
Interpretation
The net profit ratio is the overall measure of the firmrsquos ability to turn each rupee
of income from services in net profit If the net margin is inadequate the firm
will fail to achieve return on shareholderrsquos funds High net profit ratio will help
the firm service in the fall of income from services rise in cost of production or
declining demand
The net profit is increased because the income from services is increased The
increment resulted a slight increase in 2007 ratio compared with the year 2006
GRAPHICAL REPRESENTATION
059
030
023
033
042
000
010
020
030
040
050
060
Ratios
2003 2004 2005 2006 2007
Years
NET PROFIT RATIO
Ratios
10 OPERATING PROFIT
(Amount in Rs)
Operating Profit
Year Operating Profit Income From Services Ratio
2003 36094877 36309834 099
2004 27576814 53899084 051
2005 29540599 72728759 041
2006 31586718 55550649 057
2007 67192677 96654902 070
Interpretation
The operating profit ratio is used to measure the relationship between net profits
and sales of a firm Depending on the concept it will decide
The operating profit ratio is increased compared with the last year The earnings
are increased due to the increase in the income from services because of
Operations amp Maintenance fee So the ratio is increased slightly compared with
the previous year
GRAPHICAL REPRESENTATION
099
051
041
057
070
000
010
020
030
040
050060
070
080
090
100
Ratios
2003 2004 2005 2006 2007
Years
OPERATING PROFIT RATIO
Ratios
11 RETURN ON TOTAL ASSETS RATIO
(Amount in Rs)
Return on Total Assets Ratio
Year Net Profit After Tax Total Assets Ratio
2003 21123474 78572171 027
2004 16125942 88438107 018
2005 16929227 89158391 019
2006 18259580 106385201 017
2007 40586359 129805102 031
Interpretation
This is the ratio between net profit and total assets The ratio indicates the return
on total assets in the form of profits
The net profit is increased in the current year because of the increment in the
income from services due to the increase in Operations amp Maintenance fee The
fixed assets are reduced due to the charge of depreciation and no major
increments in fixed assets but the current assets are increased because of sundry
debtors and that effects an increase in the ratio compared with the last year ie
2006
GRAPHICAL REPRESENTATION
027
018 019017
031
000
005
010
015
020
025
030
035
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON TOTAL ASSETS
Ratios
12 RESERVES amp SURPLUS TO CAPITAL RATIO
(Amount in Rs)
Reserves amp Surplus To Capital Ratio
Year Reserves amp Surplus Capital Ratio
2003 65599299 2079920 31542004 34582554 18719280 1852005 51511781 18719280 2752006 37754372 18719280 2022007 78340733 18719280 419
Interpretation
The ratio is used to reveal the policy pursued by the company a very high ratio
indicates a conservative dividend policy and vice-versa Higher the ratio better
will be the position
The reserves amp surplus is decreased in the year 2006 due to the payment of
dividends and in the year 2007 the profit is increased But the capital is
remaining constant from the year 2004 So the increase in the reserves amp surplus
caused a greater increase in the current yearrsquos ratio compared with the older
GRAPHICAL REPRESENTATION
3154
185 275 202419
-
500
1000
1500
2000
2500
3000
3500
Ratios
2003 2004 2005 2006 2007
Years
RESERVES amp SRUPLUS TO CAPITAL RATIO
Ratios
OVERALL PROFITABILITY RATIOS
13 EARNINGS PER SHARE
(Amount in Rs)
Earnings Per Share
Year Net Profit After Tax No of Equity Shares Ratio
2003 21123474 207992 101562004 16125942 1871928 8612005 16929227 1871928 9042006 18259580 1871928 9752007 40586359 1871928 2168
Interpretation
Earnings per share ratio are used to find out the return that the shareholderrsquos earn
from their shares After charging depreciation and after payment of tax the
remaining amount will be distributed by all the shareholders
Net profit after tax is increased due to the huge increase in the income from
services That is the amount which is available to the shareholders to take There
are 1871928 shares of Rs10- each The share capital is constant from the year
2004 Due to the huge increase in net profit the earnings per share is greaterly
increased in 2007
GRAPHICAL REPRESENTATION
10156
861904 975
2168
000
2000
4000
6000
8000
10000
12000
Ratios
2003 2004 2005 2006 2007
Years
EARNINGS PER SHARE
Ratios
14 PRICE EARNINGS (PE) RATIO
(Amount in Rs)
Price Earning (PE) Ratio
Year Market Price Per Share Earnings Per Share Ratio
2003 3254 10156 0322004 2847 861 3302005 3752 904 4152006 3017 975 3092007 5185 2168 239
Interpretation
The ratio is calculated to make an estimate of application in the value of share of
a company
The market price per share is increased due to the increase in the reserves
amp surplus The earnings per share are also increased greaterly compared
with the last year because of increase in the net profit So the ratio is
decreased compared with the previous year
GRAPHICAL REPRESENTATION
032
330
415
309
239
000
050
100
150
200
250
300
350
400
450
Ratios
2003 2004 2005 2006 2007
Years
PE RATIO
Ratios
15 RETURN ON INVESTMENT
(Amount in Rs)
Return on Investment
Year Net Profit After Tax Share Holders Fund Ratio
2003 21123474 67679219 031
2004 16125942 53301834 03
2005 16929227 70231061 024
2006 18259580 56473652 032
2007 40586359 97060013 042
Interpretation
This is the ratio between net profits and shareholders funds The ratio is
generally calculated as percentage multiplying with 100
The net profit is increased due to the increase in the income from services ant
the shareholders funds are increased because of reserve amp surplus So the ratio
is increased in the current year
GRAPHICAL REPRESENTATION
031 030
024
032
042
000
005
010
015
020
025
030
035
040
045
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON INVESTMENT RATIO
RatioS
DATA COLLECTION
The data can be of two types
Primary Data
Secondary Data
Primary Data
Primary data are those data which is originally collected afresh
Secondary Data
Secondary data are those data which are already collected and stored and which has
been passed through statistical research
In this project Secondary data has been collected from following sources-
Annual report
Books
MIS
Other material and report published by company There are two methods to prepare
the Cash flow Statement
ndirect Method
I
The indirect method (or reconciliation method) starts with net income and converts it
to net cash flow from operating activities In other words the indirect method adjusts
net income for items that affected reported net income but did not affect cash To
compute net cash flow from operating activities non-cash charges in the income
statement are added ack to net income and non-cash credits are deducted
b
Direct Method
Under the direct method the statement of cash flows reports net cash flow from
operating activities as major classes of operating cash receipts (eg cash collected from
customers and cash received from interest and dividends) and cash disbursements (eg
cash paid to suppliers for goods to employees for services to creditors for interest and
to government authorities for taxes)
INDIRECT VERSUS DIRECT METHOD
The most contentious decision that the FASB faced in issuing Statement No 95 was
choosing between the direct method and the indirect method of determining net cash
flow from operating activities Companies lobbied against the direct method urging
adoption of the indirect method Commercial lending officers expressed a strong
preference to the FASB hat the direct method be required
tCF-Page 3 of 5
In Favor of the Direct Method
The principal advantage of the direct method is that it shows operating cash receipts and
payments That is it is more consistent with the objective of a statement of cash flows to
provide information about cash receipts and cash payments than the in-direct method
which does not report operating cash receipts and payments
Supporters of the direct method contend that knowledge of the specific sources of
operating cash receipts and the purposes for which operating cash payments were made
in past periods is useful in estimating future operating cash flows Furthermore in-
formation about amounts of major classes of operating cash receipts and payments is
more useful than information only about their arithmetic sum (the net cash flow from
operating activities) Such information is more revealing of an enterprises ability (1) to
generate sufficient cash from operating activities to pay its debts (2) to reinvest in its
operations and (3) to make distributions to its owners
Many corporate providers of financial statements say that they do not currently collect
information in a manner that allows them to determine amounts such as cash received
from customers or cash paid to suppliers directly from their accounting systems But
supporters of the direct method contend that the incremental cost of assimilating such
operating cash receipts and payments data is not significant
In Favor of the Indirect Method
The principal advantage of the indirect method is that it focuses on the differences
between net income and net cash flow from operating activities That is it provides a
useful link between the statement of cash flows and the income statement and balance
sheet
Many providers of financial statements contend that it is less costly to adjust net income
to net cash flow from operating activities (indirect) than it is to report gross operating
cash receipts and payments (direct) Supporters of the indirect method also state that the
direct method which effectively reports income statement information on a cash rather
than an accrual basis may erroneously suggest that net cash flow from operating
activities is as good as or better than net income as a measure of performance
Special Rules Applying to Direct and Indirect Methods
Companies that use the direct method are required at a
minimum to report separately the following classes of
operating cash receipts and payments
Receipts
1048713 Cash collected from customers (including lessees licensees etc)
1048713 Interest and dividends received
1048713 Other operating cash receipts if any
Payments
1048713 Cash paid to employees and suppliers of goods or services (including
suppliers of
insurance advertising etc)
1048713 Interest paid
1048713 Income taxes paid
1048713 Other operating cash payments if any
Companies using the indirect method are required to disclose separately changes in
inventory receivables and payables to reconcile net income to net cash flow from
operating activities In addition interest paid (net of amount capitalized) and income
taxes paid must be disclosed elsewhere in the financial statements or accompanying
notes
The FASB requires these separate and additional disclosures so that users
may approximate the direct method Also an acceptable alternative presentation
of the in-direct method is to report net cash flow from operating activities as a
single line item in the statement of cash flows and to present the reconciliation
details elsewhere in the financial statements
FINDING OF SUDY
According to cash flow statement of the company The finding of the study are as
follows-
The company has not taken any loans secured or unsecured from companies
firms or other parties
The company has not accepted any deposit from the public during the year
The company is not a sick industrial company
The company has not granted any loan secured or unsecured to company firms
or other parties
The company has paid the entire long term and short term borrowing during the
year
The company has buy back the companyrsquos own share this year
The interest paid in 2008 is more than the
There has been a significant decline in volume over the years from 2001-02
to 2005-06 as can be seen in the graph below
Table 43
The Net sales of Tractor has increased considerably from 2004-05 to 2007-08
This can be mainly attributed to changes in Variable and material costs and in
the price
The Net sale of Tractor has increased considerably from 2004-05 to 2007-08
that is an decrease of Rs7216 per tractor This can be mainly attributed to
changes in
Variable and material costs and in the prices
RECOMMENDATIONS
According to cash flow statement of the company The suggestions of the study
are as follows-
The time durations for training program have to increase
Buy regular review and consultations develop a career progression
which is sensitive to performance and ability
Create an environment where by people are trend developed to enable
The to take advantages of opportunities that arise
The jab can be redesigned where the work man stay in what is normally
the same job but has elements of it changed
The principle amount must be paid in time which can be reducing the
interest the out flow
The purchase of the fixed asset must be made only when there is extreme
requirement
In order to avoid taxes the company should go for more investment
The companyrsquos borrowings should go for more investment
o The company should try to reduce the depreciations as maximum
as possible
CONCLUSION
The study on competency level of employees at ESCORTS PVTLTD gave an
insight about the acceptance of competency mapping by employees
The employees at Ymi welcome the introduction of competency mapping in their
organization as they felt it was very much essential in enhancing their skills and
organizational development
The organization has provided the recourses guidance and support to facilitate the
introduction of competency level easily and develop the employees in such a way
that they can face any kind of challenge
However the level of competency in employees is found to be satisfactory
Providing proper training education and guidance to the employees can enhance
the level
This study was mainly carried out to find out whether thee competency mapping
being followed by the company is effective till date If the competency mapping
and fitment to the organization
By looking at the graphs and tables it is quite that the employees still are not up to
the level of competent pool they still have to be trained and made competent in
order to fill the gap As the organization has just applied the mapping it has to see
to that it meets all the requirements for competency mapping
Therefore the graphs make it quite clear that the potential of the employees is not
up to the mark and ie they are not competent enough to meet the competency-
mapping requirement Hence by further training and counseling this gap can be
closed
This report includes the training requirements of employees and it highlights skills
possessed by each employee and skill required All employees get training so that
skill can be improved and maintain balance between standard performance with
their actual performance to avoid gap
APPENDIX
QUESTIONNAIRE
Consumer Survey
Name _____________________________
Age _____________________________
Sex
Male
Female
Occupation
Businessman
Service man
Professional
Others
Monthly income brackets
Below 15000
15000- 20000
20000-30000
30000 and above
of your savings _________
Do you invest
Yes
No
If yes then where do you invest your money
Bank
Insurance
funds
Others
Why do you made that statement
Return
Risk hedging
Tax benefits
Other reasons (specify) _______
Who influence your cash decision
Relatives and friends
Family members
Advisors experts
You yourself
If no then why
Do not know where to invest
Satisfied with your current investment return
Donrsquot want take risk
Other reasons
__________________________________________________________________
___________________
Do you know about CF statement
Yes
No
If yes then from where you have come to know about an cash statement
Advertisements on newspapers
Friends and relative
Agents experts
Other source
What do you think about cash statement
It means investing only in share market
Constant watch must be kept always
Return is not satisfactory
Other perception
__________________________________________________
Can you recall any cash flow of company
___________________________
Would you want to made CF of an org
Yes
No
If yes then why
_______________________________________________________
If no then why
_______________________________________________________
BIBLIOGRAPHY
List of Books
1 PANDEY IM - FINANCIAL MANAGEMANT
2 KHAN MY AND JAIN PK -FINANCIAL MANAGEMANT
3 SMITH KV ndash MANAGEMANT OF WORKING CAPITAL
3 COMPANY RECORDS
4 JOURNAL
5 REPORTS
WEBLIOGRAPHY
1 wwwescortspvtltdcom
2 wwwgooglecom
CLASSIFICATION OF CASH FLOW-
According to as -3 (revised) cash flow statement should be presented in a manner that it reports
inflows of cash by classifying them into three categories namely operating investing and
financing activities Classification of all activities into these activities on the cash and cash
equivalents of the enterprise such information will be helpful in evaluating the relationships
among these three activities are explained as below
CASH FLOW FROM OPERATING ACTIVITIES-
Operating activities are the main revenue generating activities of an enterprise As such they
include cash flows from those transactions and events which enter into the ascertainment of
net profit or loss of the enterprise Examples of cash flows arising operating activities are
bull Cash receipts from the sale of goods and rendering of services
bull Cash receipts from royalties fees commissions and other revenue
bull Cash payments to suppliers for goods and services
bull Cash payments to and on behalf of employees
bull Cash receipts and cash payments of an insurance enterprise for premiums and claims
annuities and other policy benefits
bull Cash receipts and payments relating to future contracts forward contracts option
contracts and swap contracts when the contracts are held for dealing or trade purpose and
bull Cash payments of refunds of income taxes unless they can be specifically identified with
financing and investing activities
CASH FLOW FROM INVESTING ACTIVITIES-
Investing activities include the purchase and sale of long term assets such as land building plant
and machinery etc not held for resale These activities also include the purchase and sale of such
investment which are not including in cash equipments Cash flow from investing activities
discloses the expenditures incurred for resources intended to generate future income and cash
flows
Examples cash flow arising from investing activities are
bull Cash payments to acquire fixed assets (including intangible)
bull Cash receipts from sale of fixed assets (including intangibles)
bull Cash payments to acquire shares warrants or debt instruments of other enterprises
(other than receipts for those instruments considered to be cash equivalents)
bull Cash receipts from sale of shares warrants or debt instruments of other enterprises (other
than receipts for those instruments considered to be cash equivalents)
bull Cash advances and loans made to third parties In case of financial enterprises these will
be treated as cash flow from operating activities
bull Cash receipts from the repayment of advances and loans made to third parties In case of
financial enterprises these will be treated as cash flow from operating activities
bull Cash receipts of insurance claim for property involved in accident and
bull Cash receipts of interest and dividend In case of financial enterprise these will be treated
cash flow from operating activities
CASH FLOW FROM FIANCING ACTIVITIES-
Financing activities are the activities that result in change in capital and borrowing of the
enterprise
Examples of cash flows arising from financing activities are
bull Cash receipts from issuing shares or other similar instruments
bull Cash receipts from issuing debentures loans bonds and other short term or long term
borrowing
bull Cash repayment of amounts borrowed buy back of equity shares redemption of
preference shares debentures loans bonds etc
bull Cash payment of interest and dividend
IMPORTANT NOTE
In case of financial enterprise such as bank or mutual fund company cash Outflow
and cash inflow arising from the purchase and sale of securities will Be treated as
flows from operating activities This is because purchase and sale of securities is a
part of operating activity in case of financial enterprise In addition interest paid
and interest received as well as dividends received will also be treated as cash flow
from operating activities in case of financial Enterprises
CASH FLOW STATEMENT
(DIRECT METHOD)
CASH FLOW FROM OPERATING ACTIVITIES
Cash receipts from costumers
Cash paid to suppliers and employers ()
Cash generated from operations
Income tax paid ()
Cash flows from extraordinary item
plusmn Extra ordinary items
Net cash from operating activities
CASH FLOW FROM INVESTING ACTIVITIES-
Purchase of fixed assets
Proceed from sale equipment ()
Interest received
Dividend received ()
Net cash from investing activities
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from insurance of share capital
Proceeds from long- term borrowings ()
Repayment of from long-term borrowings
Interest paid
Dividend paid ()
Net cash from financing activities
Net increase in cash and cash equivalent
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
SOME SPECIAL TERMS-
i) INTERSET AND DIVIDEND-
Cash inflow from interest and dividends and cash outflow on account of interest and
dividends should be disclosed separately Cash inflow arising from interest and dividends
received should be shown as cash flow from investing activities where as cash outflow
disclosed outflow on account of interest and dividend paid should be shown as cash flow
from financing activity
ii) TAXES ON INCOME-
Tax paid on income is a part of cash flow from operating activity Hence taxes paid are
shown as a deduction under cash flow from operating activity
iii) EXTRA ORDINARY ITEMS-
Cash flow relating to extra ordinary items such as bad debts recovered Claims received from
insurance companies winning of a lottery or a law etc Should be disclosed separately as
arising from operating investing or financing activities For example the amount received
for insurance company on account of loss of stock by fire Earthquake and floods etc Should
be reported as cash flow from operating activities
iv) SIGNIFICANT NON - CASH TRANSACTION-
There are some investing and financing activities which do not require the use of cash or
cash equivalents Such non cash activities should be excluded from the cash flow statement
Examples are the acquisition of assets by issue of debentures or shares conversion of
shares into debentures etc Such significant on non cash transaction should be disclosed
outside the cash flow statement
CASH FLOW STATEMENT
(INDIRECT METHOD)
CASH FLOW FROM OPERARATTNG ACTIVITIES
Net profit before taxation and extraordinary item
Adjustment for
Depreciation
Foreign exchange loss
Interest income
Dividend income
Interest expense
Operating profit before working capital changes
Increase in sundry debtors
Decrease in inventories
Decrease in sundry creditors
Cash generated from operations
Income tax paid ()
Cash flow before extraordinary item
plusmn Extra - ordinary items
Net cash from operating activities
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of fixed assets ()
Proceeds from sale of equipment
Interest received
Dividend received ()
Net cash from investing activities
CASH FLOW FROM FINANCING ACTIVITIES-
Proceeds from insurance of share capital
Proceeds from long - term borrowings
Repayments of from long - term borrowings ()
Interest paid ()
Dividend paid ()
Net cash from financing activities
Net increase in cash and cash equivalent
Cash and cash equivalents at beginning of period
CHANGES IN CASH FLOWS
Changes in cash flows can be treated to the following
1 Net profit will increase the cash flows these cash flows will be
increased further if there are any non-cash changes (such as depreciation
and amortization)
2 Any payment of dividends will decrease the cash flows as will the
repayment of debt an issue of share or debt will also increase the
cash flows
3 An increase in non-cash assets will decrease cash flows increase in
current assets and fixed assets will result in drain on cash flows
Thus a statement of changes in cash flows ie the cash flow statement
classifies all Changes into one of three categories - operating investing or
financing activities Therefore the preparation of a statement of changes in cash
flows requires classification of changes in liabilities shareholders equity and
non-cash assets into one of these categories although some items will not fit
easily onto one other
h equivalent at end of period
STEP- BY-STEP PROCEDURE TO PREPARE CFS
1 Calculate the net increase or decrease in cash and cash equivalents-
For this purpose the opening balance of total cash and cash equivalents is compared with the
closing balance of cash and equivalents
Increasedecrease in cash and equivalents
Opening balance Closing Balance
Cash in hand
Cash in bank
Short-term Investment
Total
The difference between the total of opening and closing balance will be increased or
Decreased in cash equivalents during the period It may be noted that if there are only one or
two of items of cash etc
2 Net Cash flaw from operating activities-
The term operating refers to the normal purchase of goods and services On the basis of the
information contained in the comparative BS s and the IS and the additional Information the
net cash flow generated or use by the operating activities may be ascertained The IS prepared
by the firm gives the net profit figure earned by the firm On actual basis ie all items in the
IS are incorporated on the basis of earnedaccrued even
3 If not resulting in cash movements-
So the profit or loss as by the IS may not result in increase or decrease in cash balance by the
SYNOPSIS
INTRODUCTION
ESCORTS PVT LTD is a private limited company not listed in a stock exchange of India
and employees 900 highly trained personnel Its manufacturing plants are strategically located
in close proximity to its customers at Faridabad (Haryana) Noida (UP)
OBJECTIVES OF THE STUDY
bull To find the movement of cash inflow and cash outflow
bull To make the comparison between cash inflow and
bull Cash outflow
bull To prepare the Cash Flow Statement
bull To analyze the Balance Sheet of the company in terms of Cash Flow Statement
bull To focus on various activities of the organization in terms of Operating
Financing Investment
SCOPE OF THE STUDY
Financial resources are the assets for the company and their productivity is key
factor for profitability It is necessary to know their problems their knowledge
skills abilities amp the measures that can be taken to reduce them By analyzing this
top management can build good relations with the employees
The whole study is to determine the competencies of different employees who are
working in ESCORTS PVT LTD By analyzing it the top management can
introduce the concept of competency mapping in the organization Through this
management can attempt to use more suitable strategies towards the human
resource development
The research is confined to elicit the existing gap between the standard skill
required to perform the job and the skill processed by the employees at ESCORTS
PVT LTD And to provide them suitable training program to over come those gaps
for the better utilization of human resources
RELEVANCE
The scope of the study was confined to the outside parties like creditors
shareholders government etc Who want to invest their money in the
company
The benefit of the report for the company is that through this report they can come
to know about the cash flow statements of the company
This study also unable the company that their cash is not utilizing in unnecessary
things
The benefit of the report for the researcher is that it has helped to get knowledge
about the cash inflow and cash
RESERRCH METHODOLOGY-
RESEARCH DESIGN
bull The study was conducted under well- structured approach
bull The project lasted for 4 weeks and the year 2009 ie from 08 July to 12
Aug2009
bull The questionnaire method amp personal interview method was used to collect
the primary data for the study
The secondary data is collected from Internet amp company training material and
many other company materials
SAMPLE DESIGN
The process of extracting a sample from a population is called sampling
procedure The selection of sampling procedure to conduct the research
depends upon the nature of the study and the objective to be accomplished
Judgment sampling technique is adopted to select the respondents in this
study The sample design included the various departments in the YAMAHA
MOTORS PVT LTD
Methodology of date collection
bull Conducting personal interview
bull Data collection from primary and secondary sources
bull Designing questionnaire
bull Selecting sample size from the sample frame for the survey
bull Questionnaire distribution
bull Analysis of collected data with the help of statistical tools
bull Interpretation of collected data
bull Stating the conclusion based on the entire study
Sampling Technique
The sampling technique used for this research is of non-probability and convenience
sampling
Sample Unit
Employees of the company
Sample Size
For this research study the sample size is 25 respondents
Sources of data
Primary data
Primary data is the data which is collected by the researcher for the first time
and which was not there The tools used to collect the data are-
1)Questionnaire method from the employers in different departments
2) Face to Face personal interactions
Secondary Data
The data already collected is called as secondary data The relevant information
for this study has been collected from secondary source such as
Books
Journal
Reports
Publication by the organizational circulation
Company records
Business bulletins
Internet
Secondary data is also collected from various of the internet and intranet Some
of the website trough which information was gathered was through
HYPOTHESIS
The report is analyzed under the presumption that cash flow position of
YAMAHA MOTORS PVTLTD It can be improved and made effective in
terms of cash flows
In testing the above hypothesis the following aspects will be considered
1 Balance sheet comparisons
2 Presentation of cash flow statement in terms of revised AS-3
LIMITATIONS
The study though conducted to the best of the ability suffers from some
certain limitations There are
The data is secondary one and as such its reliability may be
questioned upon
The time availability for the study is less and as such it hinders thee
progress of the study
Senior officials were rarely approachable
Websites were not giving comprehensive data
Not having face-to-face interaction to get more relevant
information
Analysis and interpretation of data was done on the assumption that
the respondentsrsquo information was online
Information collected was totally subjective
The interviews are done during office hours but could not be done
for the other employees of other
DATA ANALYSIS
ESCORTS PVT LTD
CASH FLOW STRATEMENT
Year Ended Year Ended
30092009 30092008
Rs Crores Rs
Crores
A Cash Flow from Operating Activities
Net profit before tax (1733) 3444
Adjustment for
Loss on sale Provision for diminution in value of Long Term
Investments amp loans to Group Companies 189 4018
Gain on sale of Long Term Investments (122) (9492)
Gain on sale of Asset (013) -
Depreciation 4497 3955
Misc Exp Assets Write off Provisions 808 750
Interest Expense 7222 7999
Dividend Income (002) (001)
Interest Income (2082) -
Operating Profit before working capital changes 8764 10673
Adjustments for
Trade and other Receivables (8817) (12035)
Inventories 1379 (4692)
Trade Payables 6705 19046
Miscellaneous Expenditure (750) (511)
(1483) 1808
Cash Generated from Operations 7281 12481
Direct Taxes (Paid)Refunds (1785) 3166
Net Cash Flow from operating activities 5496 15647
B Cash Flow from Investing Activities
Purchase of Fixed Assets (3095) (2794)
Proceeds from sale of Fixed Assets 086 177
Movement in Loans and Advances (1627) (1644)
Sale of Investments 3233 11452
Short Term Deposits with schedule Banks (231) (1048)
Interest Received 2070 -
Dividend Received 002 001
Net Cash Flow from Investing activities 438 6144
Proceeds from Share Capital amp Securities Premium 11444 -
Proceeds from Long Term Borrowings 8660 -
Less Repayment of Long Term Borrowings (054) (7896)
Proceeds (Repayment) from short term borrowings (net) (22726) -
Interest Paid (7740) (8223)
Net Cash used in financing activities (10416) (16119)
Net Increase(Decrease) in Cash and Cash equivalents (4482) 5672
Cash and Cash equivalents as at 01102008 10565 4893
Cash and Cash equivalents as at 30092009 6083 1056
ANALYSIS OF CASH FLOW
From the cash flow statements of the ESCORT PVTLTDIt can be analyzed
from the two years that the net cash balance of the company has increased
manifold in 30-09-2008 than the year 30-09-2009
The net profit in 30-09-2008 is higher than the 30-09-2009 but due to certain
changes there has been increase in the cash balance
The interest paid this year is ore of the last year which implies that thee
company has not repaid his borrowed capital due to which the interest has got
down
The depreciation has increased but it does not affect cash to an extent as it is a
non-cash item In the head of working capital there is drastic change in the cash
balance in the form of ldquoTrade and other Receivables which has affected the cash
balance
There is outflow of cash for receivables rather than the inflow in the last year
So the net effect is that the cash from operating activities has been decreased
two times from the last year
The company has no accumulated losses as at the end of the financial year ie
September 31 2008
Provision for taxation has been made in accordance with the requirement of AS-
22 issued by Institute of Charted Accountants of India
Pursuant to that current year deferred tax liability have been charged to profit amp
loss account
In opinion of the board of directors of thee company the current assets loans
and advances have a value on realization in the ordinary course of the business at
least equal to the amount stated in the balance sheet and provision for all
liabilities have been made
Balance of sundry debtors creditors loans and advances are subject to confirmation by
the concerned parties
METHOD OF ANALYSIS
1 Data analysis is done using the following statistical tools wherever required in
order to extract meaningful information from the collected data
o Simple percentage and averages
o Bar diagram
o Cone diagram
o Pie diagram
2 The collected data from the questionnaire has been put together in the form of
tables
3 Percentage has been calculated wherever necessary for generalization of the
data
4 Data analysis and interpretation has been done on the basis of primary and
secondary data
5 The findings researches have been recorded based on the analysis
6 The study conducted pertains only to YAMAHA MOTORS INDIA PVTLTD
All bank balances (debitcredit) have been confirmed by the concerned bank
Identified from the available information which has been relied upon by the auditors
The names of small-scale industrial units to whom outstanding for more than
thirty days within agreed terms
The company has 9996 of shareholders in its subsidiary company named as
ESCORTS PVT LTD As at 31-03-2008
So the net effect is that the net cash from investing activities has many more
times than the last year which is negative Now the company has repaid its long
term borrowing more than the last year which has decreased the cash balance by
the little amount
Balance with the schedule banks under the head current amp collection account
amounting to represent funds in transit lying with schedule banks pending
transfer against loan liabilities under the head cash credit amp bill discounting
LIQUIDITY RATIO
1 CURRENT RATIO
(Amount in Rs)
Current Ratio
Year Current Assets Current Liabilities Ratio
2003 58574151 7903952 7412004 69765346 31884616 2192005 72021081 16065621 4482006 91328208 47117199 1942007 115642068 30266661 382
Interpretation
As a rule the current ratio with 21 (or) more is considered as satisfactory
position of the firm
When compared with 2006 there is an increase in the provision for tax because
the debtors are raised and for that the provision is created The current liabilities
majorly included Lanco Group of company for consultancy additional services
The sundry debtors have increased due to the increase to corporate taxes
In the year 2006 the cash and bank balance is reduced because that is used for
payment of dividends In the year 2007 the loans and advances include majorly
the advances to employees and deposits to government The loans and advances
reduced because the employees set off their claims The other current assets
include the interest attained from the deposits The deposits reduced due to the
declaration of dividends So the other current assets decreased
The huge increase in sundry debtors resulted an increase in the ratio which is
above the benchmark level of 21 which shows the comfortable position of the
firm
GRAPHICAL REPRESENTATION
741
219
448
194
382
000
100
200
300
400
500
600
700
800
Ratio
2003 2004 2005 2006 2007
Years
CURRENT RATIO
Ratio
2 QUICK RATIO
(Amount
in Rs)
Quick Ratio
Year Quick Assets Current Liabilities Ratio
2003 58574151 7903952 741
2004 52470336 31884616 165
2005 69883268 16065620 435
2006 89433596 47117199 19
2007 115431868 30266661 381
Interpretation
Quick assets are those assets which can be converted into cash with in a short
period of time say to six months So here the sundry debtors which are with the
long period does not include in the quick assets
Compare with 2006 the Quick ratio is increased because the sundry debtors are
increased due to the increase in the corporate tax and for that the provision
created is also increased So the ratio is also increased with the 2006
GRAPHICAL REPRESENTATION
741
165
435
190
381
000
100
200
300
400
500
600
700
800
Ratio
2003 2004 2005 2006 2007
Years
QUICK RATIO
Ratios
3 ABOSULTE LIQUIDITY RATIO
(Amount
in Rs)
Absolute Cash Ratio
Year Absolute Liquid Assets Current Liabilities Ratio
2003 31004027 7903952 392
2004 10859778 31884616 034
2005 39466542 16065620 246
2006 53850852 47117199 114
2007 35649070 30266661 118
Interpretation
The current assets which are ready in the form of cash are considered as absolute
liquid assets Here the cash and bank balance and the interest on fixed assts are
absolute liquid assets
In the year 2006 the cash and bank balance is decreased due to decrease in the
deposits and the current liabilities are also reduced because of the payment of
dividend That causes a slight increase in the current yearrsquos ratio
GRAPHICAL REPRESENTATION
392
034
246
114 118
0
05
1
15
2
25
3
35
4
Ratios
2003 2004 2005 2006 2007
Years
ABSOLUTE CASH RATIO
Ratios
LEVERAGE RATIOS
4 PROPRIETORY RATIO
(Amount
in Rs)
Proprietory Ratio
Year Share Holders Funds Total Assets Ratio
2003 67679219 78572171 086
2004 53301834 88438107 06
2005 70231061 89158391 079
2006 56473652 106385201 053
2007 97060013 129805102 075
Interpretation
The proprietary ratio establishes the relationship between shareholders funds to
total assets It determines the long-term solvency of the firm This ratio indicates
the extent to which the assets of the company can be lost without affecting the
interest of the company
There is no increase in the capital from the year2004 The share holderrsquos funds
include capital and reserves and surplus The reserves and surplus is increased
due to the increase in balance in profit and loss account which is caused by the
increase of income from services
Total assets includes fixed and current assets The fixed assets are reduced
because of the depreciation and there are no major increments in the fixed assets
The current assets are increased compared with the year 2006 Total assets are
also increased than precious year which resulted an increase in the ratio than old
GRAPHICAL REPRESENTATION
086
060
079
053
075
000
010
020
030
040
050
060
070
080
090
Ratios
2003 2004 2005 2006 2007
Years
PROPRIETORY RATIO
Ratios
ACTIVITY RATIOS
5 WORKING CAPITAL TURNOVER RATIO
(Amount
in Rs)
Working Capital Turnover Ratio
Year Income From Services Working Capital Ratio
2003 36309834 50670199 0722004 53899084 37880730 1422005 72728759 55355460 1312006 55550649 44211009 1262007 96654902 85375407 113
Interpretation
Income from services is greatly increased due to the extra invoice for Operations
amp Maintenance fee and the working capital is also increased greater due to the
increase in from services because the huge increase in current assets
The income from services is raised and the current assets are also raised together
resulted in the decrease of the ratio of 2007 compared with 2006
GRAPHICAL REPRESENTATION
072
142 131126
113
000
020
040
060
080
100
120
140
160
Ratio
2003 2004 2005 2006 2007
Years
WORKING CAPITAL TURNOVER RATIO
Ratio
6 FIXED ASSETS TURNOVER RATIO
(Amount in Rs)
Fixed Assets Turnover Ratio
Year Income From Services Net Fixed Assets Ratio
2003 36309834 28834317 126
2004 53899084 29568279 182
2005 72728759 17137310 424
2006 55550649 15056993 369
2007 96654902 14163034 682
Interpretation
Fixed assets are used in the business for producing the goods to be sold This
ratio shows the firmrsquos ability in generating sales from all financial resources
committed to total assets The ratio indicates the account of one rupee
investment in fixed assets
The income from services is greaterly increased in the current year due to the
increase in the Operations amp Maintenance fee due to the increase in extra invoice
and the net fixed assets are reduced because of the increased charge of
depreciation Finally that effected a huge increase in the ratio compared with the
previous yearrsquos ratio
GRAPHICAL REPRSENTATION
126182
424 369
682
000
100
200
300
400
500
600
700
Ratios
2003 2004 2005 2006 2007
Years
FIXED ASSETS TURNOVER RATIO
Ratios
7 CAPITAL TURNOVER RATIO
(Amount
in Rs)
Capital Turnover Ratio
Year Income From Services Capital Employed Ratio
2003 36309834 37175892 0982004 53899084 53301834 1012005 72728759 70231061 1042006 55550649 56473652 0982007 96654902 97060013 100
Interpretation
This is another ratio to judge the efficiency and effectiveness of the company
like profitability ratio
The income from services is greaterly increased compared with the previous year
and the total capital employed includes capital and reserves amp surplus Due to
huge increase in the net profit the capital employed is also increased along with
income from services Both are effected in the increment of the ratio of current
year
GRAPHICAL REPRESENTATION
098
101
104
098
100
094095096097098099100101102103104
Ratios
2003 2004 2005 2006 2007
Years
CAPITAL TURNOVER RATIO
Ratios
8 CURRENT ASSETS TO FIXED ASSETS RATIO
(Amount
in Rs)
Current Assets To Fixed Assets Ratio
Year Current Assets Fixed Assets Ratio
2003 58524151 19998020 2932004 69765346 18672761 3742005 72021081 17137310 4202006 91328208 15056993 6072007 115642068 14163034 817
Interpretation
Current assets are increased due to the increase in the sundry debtors and the net
fixed assets of the firm are decreased due to the charge of depreciation and there
is no major increment in the fixed assets
The increment in current assets and the decrease in fixed assets resulted an
increase in the ratio compared with the previous year
GRAPHICAL REPRESENTATION
293374
420
607
817
000
100
200
300
400
500
600
700
800
900
Ratios
2003 2004 2005 2006 2007
Years
CURRENT ASSETS TO FIXED ASSETS RATIO
Ratios
PROFITABILITY RATIOS
GENERAL PROFITABILITY RATIOS
9 NET PROFIT RATIO
(Amount in Rs)
Net Profit Ratio
Year Net Profit After Tax Income from Services Ratio
2003 21123474 36039834 059
2004 16125942 53899084 030
2005 16929227 72728759 023
2006 18259580 55550649 033
2007 40586359 96654902 042
Interpretation
The net profit ratio is the overall measure of the firmrsquos ability to turn each rupee
of income from services in net profit If the net margin is inadequate the firm
will fail to achieve return on shareholderrsquos funds High net profit ratio will help
the firm service in the fall of income from services rise in cost of production or
declining demand
The net profit is increased because the income from services is increased The
increment resulted a slight increase in 2007 ratio compared with the year 2006
GRAPHICAL REPRESENTATION
059
030
023
033
042
000
010
020
030
040
050
060
Ratios
2003 2004 2005 2006 2007
Years
NET PROFIT RATIO
Ratios
10 OPERATING PROFIT
(Amount in Rs)
Operating Profit
Year Operating Profit Income From Services Ratio
2003 36094877 36309834 099
2004 27576814 53899084 051
2005 29540599 72728759 041
2006 31586718 55550649 057
2007 67192677 96654902 070
Interpretation
The operating profit ratio is used to measure the relationship between net profits
and sales of a firm Depending on the concept it will decide
The operating profit ratio is increased compared with the last year The earnings
are increased due to the increase in the income from services because of
Operations amp Maintenance fee So the ratio is increased slightly compared with
the previous year
GRAPHICAL REPRESENTATION
099
051
041
057
070
000
010
020
030
040
050060
070
080
090
100
Ratios
2003 2004 2005 2006 2007
Years
OPERATING PROFIT RATIO
Ratios
11 RETURN ON TOTAL ASSETS RATIO
(Amount in Rs)
Return on Total Assets Ratio
Year Net Profit After Tax Total Assets Ratio
2003 21123474 78572171 027
2004 16125942 88438107 018
2005 16929227 89158391 019
2006 18259580 106385201 017
2007 40586359 129805102 031
Interpretation
This is the ratio between net profit and total assets The ratio indicates the return
on total assets in the form of profits
The net profit is increased in the current year because of the increment in the
income from services due to the increase in Operations amp Maintenance fee The
fixed assets are reduced due to the charge of depreciation and no major
increments in fixed assets but the current assets are increased because of sundry
debtors and that effects an increase in the ratio compared with the last year ie
2006
GRAPHICAL REPRESENTATION
027
018 019017
031
000
005
010
015
020
025
030
035
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON TOTAL ASSETS
Ratios
12 RESERVES amp SURPLUS TO CAPITAL RATIO
(Amount in Rs)
Reserves amp Surplus To Capital Ratio
Year Reserves amp Surplus Capital Ratio
2003 65599299 2079920 31542004 34582554 18719280 1852005 51511781 18719280 2752006 37754372 18719280 2022007 78340733 18719280 419
Interpretation
The ratio is used to reveal the policy pursued by the company a very high ratio
indicates a conservative dividend policy and vice-versa Higher the ratio better
will be the position
The reserves amp surplus is decreased in the year 2006 due to the payment of
dividends and in the year 2007 the profit is increased But the capital is
remaining constant from the year 2004 So the increase in the reserves amp surplus
caused a greater increase in the current yearrsquos ratio compared with the older
GRAPHICAL REPRESENTATION
3154
185 275 202419
-
500
1000
1500
2000
2500
3000
3500
Ratios
2003 2004 2005 2006 2007
Years
RESERVES amp SRUPLUS TO CAPITAL RATIO
Ratios
OVERALL PROFITABILITY RATIOS
13 EARNINGS PER SHARE
(Amount in Rs)
Earnings Per Share
Year Net Profit After Tax No of Equity Shares Ratio
2003 21123474 207992 101562004 16125942 1871928 8612005 16929227 1871928 9042006 18259580 1871928 9752007 40586359 1871928 2168
Interpretation
Earnings per share ratio are used to find out the return that the shareholderrsquos earn
from their shares After charging depreciation and after payment of tax the
remaining amount will be distributed by all the shareholders
Net profit after tax is increased due to the huge increase in the income from
services That is the amount which is available to the shareholders to take There
are 1871928 shares of Rs10- each The share capital is constant from the year
2004 Due to the huge increase in net profit the earnings per share is greaterly
increased in 2007
GRAPHICAL REPRESENTATION
10156
861904 975
2168
000
2000
4000
6000
8000
10000
12000
Ratios
2003 2004 2005 2006 2007
Years
EARNINGS PER SHARE
Ratios
14 PRICE EARNINGS (PE) RATIO
(Amount in Rs)
Price Earning (PE) Ratio
Year Market Price Per Share Earnings Per Share Ratio
2003 3254 10156 0322004 2847 861 3302005 3752 904 4152006 3017 975 3092007 5185 2168 239
Interpretation
The ratio is calculated to make an estimate of application in the value of share of
a company
The market price per share is increased due to the increase in the reserves
amp surplus The earnings per share are also increased greaterly compared
with the last year because of increase in the net profit So the ratio is
decreased compared with the previous year
GRAPHICAL REPRESENTATION
032
330
415
309
239
000
050
100
150
200
250
300
350
400
450
Ratios
2003 2004 2005 2006 2007
Years
PE RATIO
Ratios
15 RETURN ON INVESTMENT
(Amount in Rs)
Return on Investment
Year Net Profit After Tax Share Holders Fund Ratio
2003 21123474 67679219 031
2004 16125942 53301834 03
2005 16929227 70231061 024
2006 18259580 56473652 032
2007 40586359 97060013 042
Interpretation
This is the ratio between net profits and shareholders funds The ratio is
generally calculated as percentage multiplying with 100
The net profit is increased due to the increase in the income from services ant
the shareholders funds are increased because of reserve amp surplus So the ratio
is increased in the current year
GRAPHICAL REPRESENTATION
031 030
024
032
042
000
005
010
015
020
025
030
035
040
045
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON INVESTMENT RATIO
RatioS
DATA COLLECTION
The data can be of two types
Primary Data
Secondary Data
Primary Data
Primary data are those data which is originally collected afresh
Secondary Data
Secondary data are those data which are already collected and stored and which has
been passed through statistical research
In this project Secondary data has been collected from following sources-
Annual report
Books
MIS
Other material and report published by company There are two methods to prepare
the Cash flow Statement
ndirect Method
I
The indirect method (or reconciliation method) starts with net income and converts it
to net cash flow from operating activities In other words the indirect method adjusts
net income for items that affected reported net income but did not affect cash To
compute net cash flow from operating activities non-cash charges in the income
statement are added ack to net income and non-cash credits are deducted
b
Direct Method
Under the direct method the statement of cash flows reports net cash flow from
operating activities as major classes of operating cash receipts (eg cash collected from
customers and cash received from interest and dividends) and cash disbursements (eg
cash paid to suppliers for goods to employees for services to creditors for interest and
to government authorities for taxes)
INDIRECT VERSUS DIRECT METHOD
The most contentious decision that the FASB faced in issuing Statement No 95 was
choosing between the direct method and the indirect method of determining net cash
flow from operating activities Companies lobbied against the direct method urging
adoption of the indirect method Commercial lending officers expressed a strong
preference to the FASB hat the direct method be required
tCF-Page 3 of 5
In Favor of the Direct Method
The principal advantage of the direct method is that it shows operating cash receipts and
payments That is it is more consistent with the objective of a statement of cash flows to
provide information about cash receipts and cash payments than the in-direct method
which does not report operating cash receipts and payments
Supporters of the direct method contend that knowledge of the specific sources of
operating cash receipts and the purposes for which operating cash payments were made
in past periods is useful in estimating future operating cash flows Furthermore in-
formation about amounts of major classes of operating cash receipts and payments is
more useful than information only about their arithmetic sum (the net cash flow from
operating activities) Such information is more revealing of an enterprises ability (1) to
generate sufficient cash from operating activities to pay its debts (2) to reinvest in its
operations and (3) to make distributions to its owners
Many corporate providers of financial statements say that they do not currently collect
information in a manner that allows them to determine amounts such as cash received
from customers or cash paid to suppliers directly from their accounting systems But
supporters of the direct method contend that the incremental cost of assimilating such
operating cash receipts and payments data is not significant
In Favor of the Indirect Method
The principal advantage of the indirect method is that it focuses on the differences
between net income and net cash flow from operating activities That is it provides a
useful link between the statement of cash flows and the income statement and balance
sheet
Many providers of financial statements contend that it is less costly to adjust net income
to net cash flow from operating activities (indirect) than it is to report gross operating
cash receipts and payments (direct) Supporters of the indirect method also state that the
direct method which effectively reports income statement information on a cash rather
than an accrual basis may erroneously suggest that net cash flow from operating
activities is as good as or better than net income as a measure of performance
Special Rules Applying to Direct and Indirect Methods
Companies that use the direct method are required at a
minimum to report separately the following classes of
operating cash receipts and payments
Receipts
1048713 Cash collected from customers (including lessees licensees etc)
1048713 Interest and dividends received
1048713 Other operating cash receipts if any
Payments
1048713 Cash paid to employees and suppliers of goods or services (including
suppliers of
insurance advertising etc)
1048713 Interest paid
1048713 Income taxes paid
1048713 Other operating cash payments if any
Companies using the indirect method are required to disclose separately changes in
inventory receivables and payables to reconcile net income to net cash flow from
operating activities In addition interest paid (net of amount capitalized) and income
taxes paid must be disclosed elsewhere in the financial statements or accompanying
notes
The FASB requires these separate and additional disclosures so that users
may approximate the direct method Also an acceptable alternative presentation
of the in-direct method is to report net cash flow from operating activities as a
single line item in the statement of cash flows and to present the reconciliation
details elsewhere in the financial statements
FINDING OF SUDY
According to cash flow statement of the company The finding of the study are as
follows-
The company has not taken any loans secured or unsecured from companies
firms or other parties
The company has not accepted any deposit from the public during the year
The company is not a sick industrial company
The company has not granted any loan secured or unsecured to company firms
or other parties
The company has paid the entire long term and short term borrowing during the
year
The company has buy back the companyrsquos own share this year
The interest paid in 2008 is more than the
There has been a significant decline in volume over the years from 2001-02
to 2005-06 as can be seen in the graph below
Table 43
The Net sales of Tractor has increased considerably from 2004-05 to 2007-08
This can be mainly attributed to changes in Variable and material costs and in
the price
The Net sale of Tractor has increased considerably from 2004-05 to 2007-08
that is an decrease of Rs7216 per tractor This can be mainly attributed to
changes in
Variable and material costs and in the prices
RECOMMENDATIONS
According to cash flow statement of the company The suggestions of the study
are as follows-
The time durations for training program have to increase
Buy regular review and consultations develop a career progression
which is sensitive to performance and ability
Create an environment where by people are trend developed to enable
The to take advantages of opportunities that arise
The jab can be redesigned where the work man stay in what is normally
the same job but has elements of it changed
The principle amount must be paid in time which can be reducing the
interest the out flow
The purchase of the fixed asset must be made only when there is extreme
requirement
In order to avoid taxes the company should go for more investment
The companyrsquos borrowings should go for more investment
o The company should try to reduce the depreciations as maximum
as possible
CONCLUSION
The study on competency level of employees at ESCORTS PVTLTD gave an
insight about the acceptance of competency mapping by employees
The employees at Ymi welcome the introduction of competency mapping in their
organization as they felt it was very much essential in enhancing their skills and
organizational development
The organization has provided the recourses guidance and support to facilitate the
introduction of competency level easily and develop the employees in such a way
that they can face any kind of challenge
However the level of competency in employees is found to be satisfactory
Providing proper training education and guidance to the employees can enhance
the level
This study was mainly carried out to find out whether thee competency mapping
being followed by the company is effective till date If the competency mapping
and fitment to the organization
By looking at the graphs and tables it is quite that the employees still are not up to
the level of competent pool they still have to be trained and made competent in
order to fill the gap As the organization has just applied the mapping it has to see
to that it meets all the requirements for competency mapping
Therefore the graphs make it quite clear that the potential of the employees is not
up to the mark and ie they are not competent enough to meet the competency-
mapping requirement Hence by further training and counseling this gap can be
closed
This report includes the training requirements of employees and it highlights skills
possessed by each employee and skill required All employees get training so that
skill can be improved and maintain balance between standard performance with
their actual performance to avoid gap
APPENDIX
QUESTIONNAIRE
Consumer Survey
Name _____________________________
Age _____________________________
Sex
Male
Female
Occupation
Businessman
Service man
Professional
Others
Monthly income brackets
Below 15000
15000- 20000
20000-30000
30000 and above
of your savings _________
Do you invest
Yes
No
If yes then where do you invest your money
Bank
Insurance
funds
Others
Why do you made that statement
Return
Risk hedging
Tax benefits
Other reasons (specify) _______
Who influence your cash decision
Relatives and friends
Family members
Advisors experts
You yourself
If no then why
Do not know where to invest
Satisfied with your current investment return
Donrsquot want take risk
Other reasons
__________________________________________________________________
___________________
Do you know about CF statement
Yes
No
If yes then from where you have come to know about an cash statement
Advertisements on newspapers
Friends and relative
Agents experts
Other source
What do you think about cash statement
It means investing only in share market
Constant watch must be kept always
Return is not satisfactory
Other perception
__________________________________________________
Can you recall any cash flow of company
___________________________
Would you want to made CF of an org
Yes
No
If yes then why
_______________________________________________________
If no then why
_______________________________________________________
BIBLIOGRAPHY
List of Books
1 PANDEY IM - FINANCIAL MANAGEMANT
2 KHAN MY AND JAIN PK -FINANCIAL MANAGEMANT
3 SMITH KV ndash MANAGEMANT OF WORKING CAPITAL
3 COMPANY RECORDS
4 JOURNAL
5 REPORTS
WEBLIOGRAPHY
1 wwwescortspvtltdcom
2 wwwgooglecom
CASH FLOW FROM INVESTING ACTIVITIES-
Investing activities include the purchase and sale of long term assets such as land building plant
and machinery etc not held for resale These activities also include the purchase and sale of such
investment which are not including in cash equipments Cash flow from investing activities
discloses the expenditures incurred for resources intended to generate future income and cash
flows
Examples cash flow arising from investing activities are
bull Cash payments to acquire fixed assets (including intangible)
bull Cash receipts from sale of fixed assets (including intangibles)
bull Cash payments to acquire shares warrants or debt instruments of other enterprises
(other than receipts for those instruments considered to be cash equivalents)
bull Cash receipts from sale of shares warrants or debt instruments of other enterprises (other
than receipts for those instruments considered to be cash equivalents)
bull Cash advances and loans made to third parties In case of financial enterprises these will
be treated as cash flow from operating activities
bull Cash receipts from the repayment of advances and loans made to third parties In case of
financial enterprises these will be treated as cash flow from operating activities
bull Cash receipts of insurance claim for property involved in accident and
bull Cash receipts of interest and dividend In case of financial enterprise these will be treated
cash flow from operating activities
CASH FLOW FROM FIANCING ACTIVITIES-
Financing activities are the activities that result in change in capital and borrowing of the
enterprise
Examples of cash flows arising from financing activities are
bull Cash receipts from issuing shares or other similar instruments
bull Cash receipts from issuing debentures loans bonds and other short term or long term
borrowing
bull Cash repayment of amounts borrowed buy back of equity shares redemption of
preference shares debentures loans bonds etc
bull Cash payment of interest and dividend
IMPORTANT NOTE
In case of financial enterprise such as bank or mutual fund company cash Outflow
and cash inflow arising from the purchase and sale of securities will Be treated as
flows from operating activities This is because purchase and sale of securities is a
part of operating activity in case of financial enterprise In addition interest paid
and interest received as well as dividends received will also be treated as cash flow
from operating activities in case of financial Enterprises
CASH FLOW STATEMENT
(DIRECT METHOD)
CASH FLOW FROM OPERATING ACTIVITIES
Cash receipts from costumers
Cash paid to suppliers and employers ()
Cash generated from operations
Income tax paid ()
Cash flows from extraordinary item
plusmn Extra ordinary items
Net cash from operating activities
CASH FLOW FROM INVESTING ACTIVITIES-
Purchase of fixed assets
Proceed from sale equipment ()
Interest received
Dividend received ()
Net cash from investing activities
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from insurance of share capital
Proceeds from long- term borrowings ()
Repayment of from long-term borrowings
Interest paid
Dividend paid ()
Net cash from financing activities
Net increase in cash and cash equivalent
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
SOME SPECIAL TERMS-
i) INTERSET AND DIVIDEND-
Cash inflow from interest and dividends and cash outflow on account of interest and
dividends should be disclosed separately Cash inflow arising from interest and dividends
received should be shown as cash flow from investing activities where as cash outflow
disclosed outflow on account of interest and dividend paid should be shown as cash flow
from financing activity
ii) TAXES ON INCOME-
Tax paid on income is a part of cash flow from operating activity Hence taxes paid are
shown as a deduction under cash flow from operating activity
iii) EXTRA ORDINARY ITEMS-
Cash flow relating to extra ordinary items such as bad debts recovered Claims received from
insurance companies winning of a lottery or a law etc Should be disclosed separately as
arising from operating investing or financing activities For example the amount received
for insurance company on account of loss of stock by fire Earthquake and floods etc Should
be reported as cash flow from operating activities
iv) SIGNIFICANT NON - CASH TRANSACTION-
There are some investing and financing activities which do not require the use of cash or
cash equivalents Such non cash activities should be excluded from the cash flow statement
Examples are the acquisition of assets by issue of debentures or shares conversion of
shares into debentures etc Such significant on non cash transaction should be disclosed
outside the cash flow statement
CASH FLOW STATEMENT
(INDIRECT METHOD)
CASH FLOW FROM OPERARATTNG ACTIVITIES
Net profit before taxation and extraordinary item
Adjustment for
Depreciation
Foreign exchange loss
Interest income
Dividend income
Interest expense
Operating profit before working capital changes
Increase in sundry debtors
Decrease in inventories
Decrease in sundry creditors
Cash generated from operations
Income tax paid ()
Cash flow before extraordinary item
plusmn Extra - ordinary items
Net cash from operating activities
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of fixed assets ()
Proceeds from sale of equipment
Interest received
Dividend received ()
Net cash from investing activities
CASH FLOW FROM FINANCING ACTIVITIES-
Proceeds from insurance of share capital
Proceeds from long - term borrowings
Repayments of from long - term borrowings ()
Interest paid ()
Dividend paid ()
Net cash from financing activities
Net increase in cash and cash equivalent
Cash and cash equivalents at beginning of period
CHANGES IN CASH FLOWS
Changes in cash flows can be treated to the following
1 Net profit will increase the cash flows these cash flows will be
increased further if there are any non-cash changes (such as depreciation
and amortization)
2 Any payment of dividends will decrease the cash flows as will the
repayment of debt an issue of share or debt will also increase the
cash flows
3 An increase in non-cash assets will decrease cash flows increase in
current assets and fixed assets will result in drain on cash flows
Thus a statement of changes in cash flows ie the cash flow statement
classifies all Changes into one of three categories - operating investing or
financing activities Therefore the preparation of a statement of changes in cash
flows requires classification of changes in liabilities shareholders equity and
non-cash assets into one of these categories although some items will not fit
easily onto one other
h equivalent at end of period
STEP- BY-STEP PROCEDURE TO PREPARE CFS
1 Calculate the net increase or decrease in cash and cash equivalents-
For this purpose the opening balance of total cash and cash equivalents is compared with the
closing balance of cash and equivalents
Increasedecrease in cash and equivalents
Opening balance Closing Balance
Cash in hand
Cash in bank
Short-term Investment
Total
The difference between the total of opening and closing balance will be increased or
Decreased in cash equivalents during the period It may be noted that if there are only one or
two of items of cash etc
2 Net Cash flaw from operating activities-
The term operating refers to the normal purchase of goods and services On the basis of the
information contained in the comparative BS s and the IS and the additional Information the
net cash flow generated or use by the operating activities may be ascertained The IS prepared
by the firm gives the net profit figure earned by the firm On actual basis ie all items in the
IS are incorporated on the basis of earnedaccrued even
3 If not resulting in cash movements-
So the profit or loss as by the IS may not result in increase or decrease in cash balance by the
SYNOPSIS
INTRODUCTION
ESCORTS PVT LTD is a private limited company not listed in a stock exchange of India
and employees 900 highly trained personnel Its manufacturing plants are strategically located
in close proximity to its customers at Faridabad (Haryana) Noida (UP)
OBJECTIVES OF THE STUDY
bull To find the movement of cash inflow and cash outflow
bull To make the comparison between cash inflow and
bull Cash outflow
bull To prepare the Cash Flow Statement
bull To analyze the Balance Sheet of the company in terms of Cash Flow Statement
bull To focus on various activities of the organization in terms of Operating
Financing Investment
SCOPE OF THE STUDY
Financial resources are the assets for the company and their productivity is key
factor for profitability It is necessary to know their problems their knowledge
skills abilities amp the measures that can be taken to reduce them By analyzing this
top management can build good relations with the employees
The whole study is to determine the competencies of different employees who are
working in ESCORTS PVT LTD By analyzing it the top management can
introduce the concept of competency mapping in the organization Through this
management can attempt to use more suitable strategies towards the human
resource development
The research is confined to elicit the existing gap between the standard skill
required to perform the job and the skill processed by the employees at ESCORTS
PVT LTD And to provide them suitable training program to over come those gaps
for the better utilization of human resources
RELEVANCE
The scope of the study was confined to the outside parties like creditors
shareholders government etc Who want to invest their money in the
company
The benefit of the report for the company is that through this report they can come
to know about the cash flow statements of the company
This study also unable the company that their cash is not utilizing in unnecessary
things
The benefit of the report for the researcher is that it has helped to get knowledge
about the cash inflow and cash
RESERRCH METHODOLOGY-
RESEARCH DESIGN
bull The study was conducted under well- structured approach
bull The project lasted for 4 weeks and the year 2009 ie from 08 July to 12
Aug2009
bull The questionnaire method amp personal interview method was used to collect
the primary data for the study
The secondary data is collected from Internet amp company training material and
many other company materials
SAMPLE DESIGN
The process of extracting a sample from a population is called sampling
procedure The selection of sampling procedure to conduct the research
depends upon the nature of the study and the objective to be accomplished
Judgment sampling technique is adopted to select the respondents in this
study The sample design included the various departments in the YAMAHA
MOTORS PVT LTD
Methodology of date collection
bull Conducting personal interview
bull Data collection from primary and secondary sources
bull Designing questionnaire
bull Selecting sample size from the sample frame for the survey
bull Questionnaire distribution
bull Analysis of collected data with the help of statistical tools
bull Interpretation of collected data
bull Stating the conclusion based on the entire study
Sampling Technique
The sampling technique used for this research is of non-probability and convenience
sampling
Sample Unit
Employees of the company
Sample Size
For this research study the sample size is 25 respondents
Sources of data
Primary data
Primary data is the data which is collected by the researcher for the first time
and which was not there The tools used to collect the data are-
1)Questionnaire method from the employers in different departments
2) Face to Face personal interactions
Secondary Data
The data already collected is called as secondary data The relevant information
for this study has been collected from secondary source such as
Books
Journal
Reports
Publication by the organizational circulation
Company records
Business bulletins
Internet
Secondary data is also collected from various of the internet and intranet Some
of the website trough which information was gathered was through
HYPOTHESIS
The report is analyzed under the presumption that cash flow position of
YAMAHA MOTORS PVTLTD It can be improved and made effective in
terms of cash flows
In testing the above hypothesis the following aspects will be considered
1 Balance sheet comparisons
2 Presentation of cash flow statement in terms of revised AS-3
LIMITATIONS
The study though conducted to the best of the ability suffers from some
certain limitations There are
The data is secondary one and as such its reliability may be
questioned upon
The time availability for the study is less and as such it hinders thee
progress of the study
Senior officials were rarely approachable
Websites were not giving comprehensive data
Not having face-to-face interaction to get more relevant
information
Analysis and interpretation of data was done on the assumption that
the respondentsrsquo information was online
Information collected was totally subjective
The interviews are done during office hours but could not be done
for the other employees of other
DATA ANALYSIS
ESCORTS PVT LTD
CASH FLOW STRATEMENT
Year Ended Year Ended
30092009 30092008
Rs Crores Rs
Crores
A Cash Flow from Operating Activities
Net profit before tax (1733) 3444
Adjustment for
Loss on sale Provision for diminution in value of Long Term
Investments amp loans to Group Companies 189 4018
Gain on sale of Long Term Investments (122) (9492)
Gain on sale of Asset (013) -
Depreciation 4497 3955
Misc Exp Assets Write off Provisions 808 750
Interest Expense 7222 7999
Dividend Income (002) (001)
Interest Income (2082) -
Operating Profit before working capital changes 8764 10673
Adjustments for
Trade and other Receivables (8817) (12035)
Inventories 1379 (4692)
Trade Payables 6705 19046
Miscellaneous Expenditure (750) (511)
(1483) 1808
Cash Generated from Operations 7281 12481
Direct Taxes (Paid)Refunds (1785) 3166
Net Cash Flow from operating activities 5496 15647
B Cash Flow from Investing Activities
Purchase of Fixed Assets (3095) (2794)
Proceeds from sale of Fixed Assets 086 177
Movement in Loans and Advances (1627) (1644)
Sale of Investments 3233 11452
Short Term Deposits with schedule Banks (231) (1048)
Interest Received 2070 -
Dividend Received 002 001
Net Cash Flow from Investing activities 438 6144
Proceeds from Share Capital amp Securities Premium 11444 -
Proceeds from Long Term Borrowings 8660 -
Less Repayment of Long Term Borrowings (054) (7896)
Proceeds (Repayment) from short term borrowings (net) (22726) -
Interest Paid (7740) (8223)
Net Cash used in financing activities (10416) (16119)
Net Increase(Decrease) in Cash and Cash equivalents (4482) 5672
Cash and Cash equivalents as at 01102008 10565 4893
Cash and Cash equivalents as at 30092009 6083 1056
ANALYSIS OF CASH FLOW
From the cash flow statements of the ESCORT PVTLTDIt can be analyzed
from the two years that the net cash balance of the company has increased
manifold in 30-09-2008 than the year 30-09-2009
The net profit in 30-09-2008 is higher than the 30-09-2009 but due to certain
changes there has been increase in the cash balance
The interest paid this year is ore of the last year which implies that thee
company has not repaid his borrowed capital due to which the interest has got
down
The depreciation has increased but it does not affect cash to an extent as it is a
non-cash item In the head of working capital there is drastic change in the cash
balance in the form of ldquoTrade and other Receivables which has affected the cash
balance
There is outflow of cash for receivables rather than the inflow in the last year
So the net effect is that the cash from operating activities has been decreased
two times from the last year
The company has no accumulated losses as at the end of the financial year ie
September 31 2008
Provision for taxation has been made in accordance with the requirement of AS-
22 issued by Institute of Charted Accountants of India
Pursuant to that current year deferred tax liability have been charged to profit amp
loss account
In opinion of the board of directors of thee company the current assets loans
and advances have a value on realization in the ordinary course of the business at
least equal to the amount stated in the balance sheet and provision for all
liabilities have been made
Balance of sundry debtors creditors loans and advances are subject to confirmation by
the concerned parties
METHOD OF ANALYSIS
1 Data analysis is done using the following statistical tools wherever required in
order to extract meaningful information from the collected data
o Simple percentage and averages
o Bar diagram
o Cone diagram
o Pie diagram
2 The collected data from the questionnaire has been put together in the form of
tables
3 Percentage has been calculated wherever necessary for generalization of the
data
4 Data analysis and interpretation has been done on the basis of primary and
secondary data
5 The findings researches have been recorded based on the analysis
6 The study conducted pertains only to YAMAHA MOTORS INDIA PVTLTD
All bank balances (debitcredit) have been confirmed by the concerned bank
Identified from the available information which has been relied upon by the auditors
The names of small-scale industrial units to whom outstanding for more than
thirty days within agreed terms
The company has 9996 of shareholders in its subsidiary company named as
ESCORTS PVT LTD As at 31-03-2008
So the net effect is that the net cash from investing activities has many more
times than the last year which is negative Now the company has repaid its long
term borrowing more than the last year which has decreased the cash balance by
the little amount
Balance with the schedule banks under the head current amp collection account
amounting to represent funds in transit lying with schedule banks pending
transfer against loan liabilities under the head cash credit amp bill discounting
LIQUIDITY RATIO
1 CURRENT RATIO
(Amount in Rs)
Current Ratio
Year Current Assets Current Liabilities Ratio
2003 58574151 7903952 7412004 69765346 31884616 2192005 72021081 16065621 4482006 91328208 47117199 1942007 115642068 30266661 382
Interpretation
As a rule the current ratio with 21 (or) more is considered as satisfactory
position of the firm
When compared with 2006 there is an increase in the provision for tax because
the debtors are raised and for that the provision is created The current liabilities
majorly included Lanco Group of company for consultancy additional services
The sundry debtors have increased due to the increase to corporate taxes
In the year 2006 the cash and bank balance is reduced because that is used for
payment of dividends In the year 2007 the loans and advances include majorly
the advances to employees and deposits to government The loans and advances
reduced because the employees set off their claims The other current assets
include the interest attained from the deposits The deposits reduced due to the
declaration of dividends So the other current assets decreased
The huge increase in sundry debtors resulted an increase in the ratio which is
above the benchmark level of 21 which shows the comfortable position of the
firm
GRAPHICAL REPRESENTATION
741
219
448
194
382
000
100
200
300
400
500
600
700
800
Ratio
2003 2004 2005 2006 2007
Years
CURRENT RATIO
Ratio
2 QUICK RATIO
(Amount
in Rs)
Quick Ratio
Year Quick Assets Current Liabilities Ratio
2003 58574151 7903952 741
2004 52470336 31884616 165
2005 69883268 16065620 435
2006 89433596 47117199 19
2007 115431868 30266661 381
Interpretation
Quick assets are those assets which can be converted into cash with in a short
period of time say to six months So here the sundry debtors which are with the
long period does not include in the quick assets
Compare with 2006 the Quick ratio is increased because the sundry debtors are
increased due to the increase in the corporate tax and for that the provision
created is also increased So the ratio is also increased with the 2006
GRAPHICAL REPRESENTATION
741
165
435
190
381
000
100
200
300
400
500
600
700
800
Ratio
2003 2004 2005 2006 2007
Years
QUICK RATIO
Ratios
3 ABOSULTE LIQUIDITY RATIO
(Amount
in Rs)
Absolute Cash Ratio
Year Absolute Liquid Assets Current Liabilities Ratio
2003 31004027 7903952 392
2004 10859778 31884616 034
2005 39466542 16065620 246
2006 53850852 47117199 114
2007 35649070 30266661 118
Interpretation
The current assets which are ready in the form of cash are considered as absolute
liquid assets Here the cash and bank balance and the interest on fixed assts are
absolute liquid assets
In the year 2006 the cash and bank balance is decreased due to decrease in the
deposits and the current liabilities are also reduced because of the payment of
dividend That causes a slight increase in the current yearrsquos ratio
GRAPHICAL REPRESENTATION
392
034
246
114 118
0
05
1
15
2
25
3
35
4
Ratios
2003 2004 2005 2006 2007
Years
ABSOLUTE CASH RATIO
Ratios
LEVERAGE RATIOS
4 PROPRIETORY RATIO
(Amount
in Rs)
Proprietory Ratio
Year Share Holders Funds Total Assets Ratio
2003 67679219 78572171 086
2004 53301834 88438107 06
2005 70231061 89158391 079
2006 56473652 106385201 053
2007 97060013 129805102 075
Interpretation
The proprietary ratio establishes the relationship between shareholders funds to
total assets It determines the long-term solvency of the firm This ratio indicates
the extent to which the assets of the company can be lost without affecting the
interest of the company
There is no increase in the capital from the year2004 The share holderrsquos funds
include capital and reserves and surplus The reserves and surplus is increased
due to the increase in balance in profit and loss account which is caused by the
increase of income from services
Total assets includes fixed and current assets The fixed assets are reduced
because of the depreciation and there are no major increments in the fixed assets
The current assets are increased compared with the year 2006 Total assets are
also increased than precious year which resulted an increase in the ratio than old
GRAPHICAL REPRESENTATION
086
060
079
053
075
000
010
020
030
040
050
060
070
080
090
Ratios
2003 2004 2005 2006 2007
Years
PROPRIETORY RATIO
Ratios
ACTIVITY RATIOS
5 WORKING CAPITAL TURNOVER RATIO
(Amount
in Rs)
Working Capital Turnover Ratio
Year Income From Services Working Capital Ratio
2003 36309834 50670199 0722004 53899084 37880730 1422005 72728759 55355460 1312006 55550649 44211009 1262007 96654902 85375407 113
Interpretation
Income from services is greatly increased due to the extra invoice for Operations
amp Maintenance fee and the working capital is also increased greater due to the
increase in from services because the huge increase in current assets
The income from services is raised and the current assets are also raised together
resulted in the decrease of the ratio of 2007 compared with 2006
GRAPHICAL REPRESENTATION
072
142 131126
113
000
020
040
060
080
100
120
140
160
Ratio
2003 2004 2005 2006 2007
Years
WORKING CAPITAL TURNOVER RATIO
Ratio
6 FIXED ASSETS TURNOVER RATIO
(Amount in Rs)
Fixed Assets Turnover Ratio
Year Income From Services Net Fixed Assets Ratio
2003 36309834 28834317 126
2004 53899084 29568279 182
2005 72728759 17137310 424
2006 55550649 15056993 369
2007 96654902 14163034 682
Interpretation
Fixed assets are used in the business for producing the goods to be sold This
ratio shows the firmrsquos ability in generating sales from all financial resources
committed to total assets The ratio indicates the account of one rupee
investment in fixed assets
The income from services is greaterly increased in the current year due to the
increase in the Operations amp Maintenance fee due to the increase in extra invoice
and the net fixed assets are reduced because of the increased charge of
depreciation Finally that effected a huge increase in the ratio compared with the
previous yearrsquos ratio
GRAPHICAL REPRSENTATION
126182
424 369
682
000
100
200
300
400
500
600
700
Ratios
2003 2004 2005 2006 2007
Years
FIXED ASSETS TURNOVER RATIO
Ratios
7 CAPITAL TURNOVER RATIO
(Amount
in Rs)
Capital Turnover Ratio
Year Income From Services Capital Employed Ratio
2003 36309834 37175892 0982004 53899084 53301834 1012005 72728759 70231061 1042006 55550649 56473652 0982007 96654902 97060013 100
Interpretation
This is another ratio to judge the efficiency and effectiveness of the company
like profitability ratio
The income from services is greaterly increased compared with the previous year
and the total capital employed includes capital and reserves amp surplus Due to
huge increase in the net profit the capital employed is also increased along with
income from services Both are effected in the increment of the ratio of current
year
GRAPHICAL REPRESENTATION
098
101
104
098
100
094095096097098099100101102103104
Ratios
2003 2004 2005 2006 2007
Years
CAPITAL TURNOVER RATIO
Ratios
8 CURRENT ASSETS TO FIXED ASSETS RATIO
(Amount
in Rs)
Current Assets To Fixed Assets Ratio
Year Current Assets Fixed Assets Ratio
2003 58524151 19998020 2932004 69765346 18672761 3742005 72021081 17137310 4202006 91328208 15056993 6072007 115642068 14163034 817
Interpretation
Current assets are increased due to the increase in the sundry debtors and the net
fixed assets of the firm are decreased due to the charge of depreciation and there
is no major increment in the fixed assets
The increment in current assets and the decrease in fixed assets resulted an
increase in the ratio compared with the previous year
GRAPHICAL REPRESENTATION
293374
420
607
817
000
100
200
300
400
500
600
700
800
900
Ratios
2003 2004 2005 2006 2007
Years
CURRENT ASSETS TO FIXED ASSETS RATIO
Ratios
PROFITABILITY RATIOS
GENERAL PROFITABILITY RATIOS
9 NET PROFIT RATIO
(Amount in Rs)
Net Profit Ratio
Year Net Profit After Tax Income from Services Ratio
2003 21123474 36039834 059
2004 16125942 53899084 030
2005 16929227 72728759 023
2006 18259580 55550649 033
2007 40586359 96654902 042
Interpretation
The net profit ratio is the overall measure of the firmrsquos ability to turn each rupee
of income from services in net profit If the net margin is inadequate the firm
will fail to achieve return on shareholderrsquos funds High net profit ratio will help
the firm service in the fall of income from services rise in cost of production or
declining demand
The net profit is increased because the income from services is increased The
increment resulted a slight increase in 2007 ratio compared with the year 2006
GRAPHICAL REPRESENTATION
059
030
023
033
042
000
010
020
030
040
050
060
Ratios
2003 2004 2005 2006 2007
Years
NET PROFIT RATIO
Ratios
10 OPERATING PROFIT
(Amount in Rs)
Operating Profit
Year Operating Profit Income From Services Ratio
2003 36094877 36309834 099
2004 27576814 53899084 051
2005 29540599 72728759 041
2006 31586718 55550649 057
2007 67192677 96654902 070
Interpretation
The operating profit ratio is used to measure the relationship between net profits
and sales of a firm Depending on the concept it will decide
The operating profit ratio is increased compared with the last year The earnings
are increased due to the increase in the income from services because of
Operations amp Maintenance fee So the ratio is increased slightly compared with
the previous year
GRAPHICAL REPRESENTATION
099
051
041
057
070
000
010
020
030
040
050060
070
080
090
100
Ratios
2003 2004 2005 2006 2007
Years
OPERATING PROFIT RATIO
Ratios
11 RETURN ON TOTAL ASSETS RATIO
(Amount in Rs)
Return on Total Assets Ratio
Year Net Profit After Tax Total Assets Ratio
2003 21123474 78572171 027
2004 16125942 88438107 018
2005 16929227 89158391 019
2006 18259580 106385201 017
2007 40586359 129805102 031
Interpretation
This is the ratio between net profit and total assets The ratio indicates the return
on total assets in the form of profits
The net profit is increased in the current year because of the increment in the
income from services due to the increase in Operations amp Maintenance fee The
fixed assets are reduced due to the charge of depreciation and no major
increments in fixed assets but the current assets are increased because of sundry
debtors and that effects an increase in the ratio compared with the last year ie
2006
GRAPHICAL REPRESENTATION
027
018 019017
031
000
005
010
015
020
025
030
035
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON TOTAL ASSETS
Ratios
12 RESERVES amp SURPLUS TO CAPITAL RATIO
(Amount in Rs)
Reserves amp Surplus To Capital Ratio
Year Reserves amp Surplus Capital Ratio
2003 65599299 2079920 31542004 34582554 18719280 1852005 51511781 18719280 2752006 37754372 18719280 2022007 78340733 18719280 419
Interpretation
The ratio is used to reveal the policy pursued by the company a very high ratio
indicates a conservative dividend policy and vice-versa Higher the ratio better
will be the position
The reserves amp surplus is decreased in the year 2006 due to the payment of
dividends and in the year 2007 the profit is increased But the capital is
remaining constant from the year 2004 So the increase in the reserves amp surplus
caused a greater increase in the current yearrsquos ratio compared with the older
GRAPHICAL REPRESENTATION
3154
185 275 202419
-
500
1000
1500
2000
2500
3000
3500
Ratios
2003 2004 2005 2006 2007
Years
RESERVES amp SRUPLUS TO CAPITAL RATIO
Ratios
OVERALL PROFITABILITY RATIOS
13 EARNINGS PER SHARE
(Amount in Rs)
Earnings Per Share
Year Net Profit After Tax No of Equity Shares Ratio
2003 21123474 207992 101562004 16125942 1871928 8612005 16929227 1871928 9042006 18259580 1871928 9752007 40586359 1871928 2168
Interpretation
Earnings per share ratio are used to find out the return that the shareholderrsquos earn
from their shares After charging depreciation and after payment of tax the
remaining amount will be distributed by all the shareholders
Net profit after tax is increased due to the huge increase in the income from
services That is the amount which is available to the shareholders to take There
are 1871928 shares of Rs10- each The share capital is constant from the year
2004 Due to the huge increase in net profit the earnings per share is greaterly
increased in 2007
GRAPHICAL REPRESENTATION
10156
861904 975
2168
000
2000
4000
6000
8000
10000
12000
Ratios
2003 2004 2005 2006 2007
Years
EARNINGS PER SHARE
Ratios
14 PRICE EARNINGS (PE) RATIO
(Amount in Rs)
Price Earning (PE) Ratio
Year Market Price Per Share Earnings Per Share Ratio
2003 3254 10156 0322004 2847 861 3302005 3752 904 4152006 3017 975 3092007 5185 2168 239
Interpretation
The ratio is calculated to make an estimate of application in the value of share of
a company
The market price per share is increased due to the increase in the reserves
amp surplus The earnings per share are also increased greaterly compared
with the last year because of increase in the net profit So the ratio is
decreased compared with the previous year
GRAPHICAL REPRESENTATION
032
330
415
309
239
000
050
100
150
200
250
300
350
400
450
Ratios
2003 2004 2005 2006 2007
Years
PE RATIO
Ratios
15 RETURN ON INVESTMENT
(Amount in Rs)
Return on Investment
Year Net Profit After Tax Share Holders Fund Ratio
2003 21123474 67679219 031
2004 16125942 53301834 03
2005 16929227 70231061 024
2006 18259580 56473652 032
2007 40586359 97060013 042
Interpretation
This is the ratio between net profits and shareholders funds The ratio is
generally calculated as percentage multiplying with 100
The net profit is increased due to the increase in the income from services ant
the shareholders funds are increased because of reserve amp surplus So the ratio
is increased in the current year
GRAPHICAL REPRESENTATION
031 030
024
032
042
000
005
010
015
020
025
030
035
040
045
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON INVESTMENT RATIO
RatioS
DATA COLLECTION
The data can be of two types
Primary Data
Secondary Data
Primary Data
Primary data are those data which is originally collected afresh
Secondary Data
Secondary data are those data which are already collected and stored and which has
been passed through statistical research
In this project Secondary data has been collected from following sources-
Annual report
Books
MIS
Other material and report published by company There are two methods to prepare
the Cash flow Statement
ndirect Method
I
The indirect method (or reconciliation method) starts with net income and converts it
to net cash flow from operating activities In other words the indirect method adjusts
net income for items that affected reported net income but did not affect cash To
compute net cash flow from operating activities non-cash charges in the income
statement are added ack to net income and non-cash credits are deducted
b
Direct Method
Under the direct method the statement of cash flows reports net cash flow from
operating activities as major classes of operating cash receipts (eg cash collected from
customers and cash received from interest and dividends) and cash disbursements (eg
cash paid to suppliers for goods to employees for services to creditors for interest and
to government authorities for taxes)
INDIRECT VERSUS DIRECT METHOD
The most contentious decision that the FASB faced in issuing Statement No 95 was
choosing between the direct method and the indirect method of determining net cash
flow from operating activities Companies lobbied against the direct method urging
adoption of the indirect method Commercial lending officers expressed a strong
preference to the FASB hat the direct method be required
tCF-Page 3 of 5
In Favor of the Direct Method
The principal advantage of the direct method is that it shows operating cash receipts and
payments That is it is more consistent with the objective of a statement of cash flows to
provide information about cash receipts and cash payments than the in-direct method
which does not report operating cash receipts and payments
Supporters of the direct method contend that knowledge of the specific sources of
operating cash receipts and the purposes for which operating cash payments were made
in past periods is useful in estimating future operating cash flows Furthermore in-
formation about amounts of major classes of operating cash receipts and payments is
more useful than information only about their arithmetic sum (the net cash flow from
operating activities) Such information is more revealing of an enterprises ability (1) to
generate sufficient cash from operating activities to pay its debts (2) to reinvest in its
operations and (3) to make distributions to its owners
Many corporate providers of financial statements say that they do not currently collect
information in a manner that allows them to determine amounts such as cash received
from customers or cash paid to suppliers directly from their accounting systems But
supporters of the direct method contend that the incremental cost of assimilating such
operating cash receipts and payments data is not significant
In Favor of the Indirect Method
The principal advantage of the indirect method is that it focuses on the differences
between net income and net cash flow from operating activities That is it provides a
useful link between the statement of cash flows and the income statement and balance
sheet
Many providers of financial statements contend that it is less costly to adjust net income
to net cash flow from operating activities (indirect) than it is to report gross operating
cash receipts and payments (direct) Supporters of the indirect method also state that the
direct method which effectively reports income statement information on a cash rather
than an accrual basis may erroneously suggest that net cash flow from operating
activities is as good as or better than net income as a measure of performance
Special Rules Applying to Direct and Indirect Methods
Companies that use the direct method are required at a
minimum to report separately the following classes of
operating cash receipts and payments
Receipts
1048713 Cash collected from customers (including lessees licensees etc)
1048713 Interest and dividends received
1048713 Other operating cash receipts if any
Payments
1048713 Cash paid to employees and suppliers of goods or services (including
suppliers of
insurance advertising etc)
1048713 Interest paid
1048713 Income taxes paid
1048713 Other operating cash payments if any
Companies using the indirect method are required to disclose separately changes in
inventory receivables and payables to reconcile net income to net cash flow from
operating activities In addition interest paid (net of amount capitalized) and income
taxes paid must be disclosed elsewhere in the financial statements or accompanying
notes
The FASB requires these separate and additional disclosures so that users
may approximate the direct method Also an acceptable alternative presentation
of the in-direct method is to report net cash flow from operating activities as a
single line item in the statement of cash flows and to present the reconciliation
details elsewhere in the financial statements
FINDING OF SUDY
According to cash flow statement of the company The finding of the study are as
follows-
The company has not taken any loans secured or unsecured from companies
firms or other parties
The company has not accepted any deposit from the public during the year
The company is not a sick industrial company
The company has not granted any loan secured or unsecured to company firms
or other parties
The company has paid the entire long term and short term borrowing during the
year
The company has buy back the companyrsquos own share this year
The interest paid in 2008 is more than the
There has been a significant decline in volume over the years from 2001-02
to 2005-06 as can be seen in the graph below
Table 43
The Net sales of Tractor has increased considerably from 2004-05 to 2007-08
This can be mainly attributed to changes in Variable and material costs and in
the price
The Net sale of Tractor has increased considerably from 2004-05 to 2007-08
that is an decrease of Rs7216 per tractor This can be mainly attributed to
changes in
Variable and material costs and in the prices
RECOMMENDATIONS
According to cash flow statement of the company The suggestions of the study
are as follows-
The time durations for training program have to increase
Buy regular review and consultations develop a career progression
which is sensitive to performance and ability
Create an environment where by people are trend developed to enable
The to take advantages of opportunities that arise
The jab can be redesigned where the work man stay in what is normally
the same job but has elements of it changed
The principle amount must be paid in time which can be reducing the
interest the out flow
The purchase of the fixed asset must be made only when there is extreme
requirement
In order to avoid taxes the company should go for more investment
The companyrsquos borrowings should go for more investment
o The company should try to reduce the depreciations as maximum
as possible
CONCLUSION
The study on competency level of employees at ESCORTS PVTLTD gave an
insight about the acceptance of competency mapping by employees
The employees at Ymi welcome the introduction of competency mapping in their
organization as they felt it was very much essential in enhancing their skills and
organizational development
The organization has provided the recourses guidance and support to facilitate the
introduction of competency level easily and develop the employees in such a way
that they can face any kind of challenge
However the level of competency in employees is found to be satisfactory
Providing proper training education and guidance to the employees can enhance
the level
This study was mainly carried out to find out whether thee competency mapping
being followed by the company is effective till date If the competency mapping
and fitment to the organization
By looking at the graphs and tables it is quite that the employees still are not up to
the level of competent pool they still have to be trained and made competent in
order to fill the gap As the organization has just applied the mapping it has to see
to that it meets all the requirements for competency mapping
Therefore the graphs make it quite clear that the potential of the employees is not
up to the mark and ie they are not competent enough to meet the competency-
mapping requirement Hence by further training and counseling this gap can be
closed
This report includes the training requirements of employees and it highlights skills
possessed by each employee and skill required All employees get training so that
skill can be improved and maintain balance between standard performance with
their actual performance to avoid gap
APPENDIX
QUESTIONNAIRE
Consumer Survey
Name _____________________________
Age _____________________________
Sex
Male
Female
Occupation
Businessman
Service man
Professional
Others
Monthly income brackets
Below 15000
15000- 20000
20000-30000
30000 and above
of your savings _________
Do you invest
Yes
No
If yes then where do you invest your money
Bank
Insurance
funds
Others
Why do you made that statement
Return
Risk hedging
Tax benefits
Other reasons (specify) _______
Who influence your cash decision
Relatives and friends
Family members
Advisors experts
You yourself
If no then why
Do not know where to invest
Satisfied with your current investment return
Donrsquot want take risk
Other reasons
__________________________________________________________________
___________________
Do you know about CF statement
Yes
No
If yes then from where you have come to know about an cash statement
Advertisements on newspapers
Friends and relative
Agents experts
Other source
What do you think about cash statement
It means investing only in share market
Constant watch must be kept always
Return is not satisfactory
Other perception
__________________________________________________
Can you recall any cash flow of company
___________________________
Would you want to made CF of an org
Yes
No
If yes then why
_______________________________________________________
If no then why
_______________________________________________________
BIBLIOGRAPHY
List of Books
1 PANDEY IM - FINANCIAL MANAGEMANT
2 KHAN MY AND JAIN PK -FINANCIAL MANAGEMANT
3 SMITH KV ndash MANAGEMANT OF WORKING CAPITAL
3 COMPANY RECORDS
4 JOURNAL
5 REPORTS
WEBLIOGRAPHY
1 wwwescortspvtltdcom
2 wwwgooglecom
CASH FLOW FROM FIANCING ACTIVITIES-
Financing activities are the activities that result in change in capital and borrowing of the
enterprise
Examples of cash flows arising from financing activities are
bull Cash receipts from issuing shares or other similar instruments
bull Cash receipts from issuing debentures loans bonds and other short term or long term
borrowing
bull Cash repayment of amounts borrowed buy back of equity shares redemption of
preference shares debentures loans bonds etc
bull Cash payment of interest and dividend
IMPORTANT NOTE
In case of financial enterprise such as bank or mutual fund company cash Outflow
and cash inflow arising from the purchase and sale of securities will Be treated as
flows from operating activities This is because purchase and sale of securities is a
part of operating activity in case of financial enterprise In addition interest paid
and interest received as well as dividends received will also be treated as cash flow
from operating activities in case of financial Enterprises
CASH FLOW STATEMENT
(DIRECT METHOD)
CASH FLOW FROM OPERATING ACTIVITIES
Cash receipts from costumers
Cash paid to suppliers and employers ()
Cash generated from operations
Income tax paid ()
Cash flows from extraordinary item
plusmn Extra ordinary items
Net cash from operating activities
CASH FLOW FROM INVESTING ACTIVITIES-
Purchase of fixed assets
Proceed from sale equipment ()
Interest received
Dividend received ()
Net cash from investing activities
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from insurance of share capital
Proceeds from long- term borrowings ()
Repayment of from long-term borrowings
Interest paid
Dividend paid ()
Net cash from financing activities
Net increase in cash and cash equivalent
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
SOME SPECIAL TERMS-
i) INTERSET AND DIVIDEND-
Cash inflow from interest and dividends and cash outflow on account of interest and
dividends should be disclosed separately Cash inflow arising from interest and dividends
received should be shown as cash flow from investing activities where as cash outflow
disclosed outflow on account of interest and dividend paid should be shown as cash flow
from financing activity
ii) TAXES ON INCOME-
Tax paid on income is a part of cash flow from operating activity Hence taxes paid are
shown as a deduction under cash flow from operating activity
iii) EXTRA ORDINARY ITEMS-
Cash flow relating to extra ordinary items such as bad debts recovered Claims received from
insurance companies winning of a lottery or a law etc Should be disclosed separately as
arising from operating investing or financing activities For example the amount received
for insurance company on account of loss of stock by fire Earthquake and floods etc Should
be reported as cash flow from operating activities
iv) SIGNIFICANT NON - CASH TRANSACTION-
There are some investing and financing activities which do not require the use of cash or
cash equivalents Such non cash activities should be excluded from the cash flow statement
Examples are the acquisition of assets by issue of debentures or shares conversion of
shares into debentures etc Such significant on non cash transaction should be disclosed
outside the cash flow statement
CASH FLOW STATEMENT
(INDIRECT METHOD)
CASH FLOW FROM OPERARATTNG ACTIVITIES
Net profit before taxation and extraordinary item
Adjustment for
Depreciation
Foreign exchange loss
Interest income
Dividend income
Interest expense
Operating profit before working capital changes
Increase in sundry debtors
Decrease in inventories
Decrease in sundry creditors
Cash generated from operations
Income tax paid ()
Cash flow before extraordinary item
plusmn Extra - ordinary items
Net cash from operating activities
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of fixed assets ()
Proceeds from sale of equipment
Interest received
Dividend received ()
Net cash from investing activities
CASH FLOW FROM FINANCING ACTIVITIES-
Proceeds from insurance of share capital
Proceeds from long - term borrowings
Repayments of from long - term borrowings ()
Interest paid ()
Dividend paid ()
Net cash from financing activities
Net increase in cash and cash equivalent
Cash and cash equivalents at beginning of period
CHANGES IN CASH FLOWS
Changes in cash flows can be treated to the following
1 Net profit will increase the cash flows these cash flows will be
increased further if there are any non-cash changes (such as depreciation
and amortization)
2 Any payment of dividends will decrease the cash flows as will the
repayment of debt an issue of share or debt will also increase the
cash flows
3 An increase in non-cash assets will decrease cash flows increase in
current assets and fixed assets will result in drain on cash flows
Thus a statement of changes in cash flows ie the cash flow statement
classifies all Changes into one of three categories - operating investing or
financing activities Therefore the preparation of a statement of changes in cash
flows requires classification of changes in liabilities shareholders equity and
non-cash assets into one of these categories although some items will not fit
easily onto one other
h equivalent at end of period
STEP- BY-STEP PROCEDURE TO PREPARE CFS
1 Calculate the net increase or decrease in cash and cash equivalents-
For this purpose the opening balance of total cash and cash equivalents is compared with the
closing balance of cash and equivalents
Increasedecrease in cash and equivalents
Opening balance Closing Balance
Cash in hand
Cash in bank
Short-term Investment
Total
The difference between the total of opening and closing balance will be increased or
Decreased in cash equivalents during the period It may be noted that if there are only one or
two of items of cash etc
2 Net Cash flaw from operating activities-
The term operating refers to the normal purchase of goods and services On the basis of the
information contained in the comparative BS s and the IS and the additional Information the
net cash flow generated or use by the operating activities may be ascertained The IS prepared
by the firm gives the net profit figure earned by the firm On actual basis ie all items in the
IS are incorporated on the basis of earnedaccrued even
3 If not resulting in cash movements-
So the profit or loss as by the IS may not result in increase or decrease in cash balance by the
SYNOPSIS
INTRODUCTION
ESCORTS PVT LTD is a private limited company not listed in a stock exchange of India
and employees 900 highly trained personnel Its manufacturing plants are strategically located
in close proximity to its customers at Faridabad (Haryana) Noida (UP)
OBJECTIVES OF THE STUDY
bull To find the movement of cash inflow and cash outflow
bull To make the comparison between cash inflow and
bull Cash outflow
bull To prepare the Cash Flow Statement
bull To analyze the Balance Sheet of the company in terms of Cash Flow Statement
bull To focus on various activities of the organization in terms of Operating
Financing Investment
SCOPE OF THE STUDY
Financial resources are the assets for the company and their productivity is key
factor for profitability It is necessary to know their problems their knowledge
skills abilities amp the measures that can be taken to reduce them By analyzing this
top management can build good relations with the employees
The whole study is to determine the competencies of different employees who are
working in ESCORTS PVT LTD By analyzing it the top management can
introduce the concept of competency mapping in the organization Through this
management can attempt to use more suitable strategies towards the human
resource development
The research is confined to elicit the existing gap between the standard skill
required to perform the job and the skill processed by the employees at ESCORTS
PVT LTD And to provide them suitable training program to over come those gaps
for the better utilization of human resources
RELEVANCE
The scope of the study was confined to the outside parties like creditors
shareholders government etc Who want to invest their money in the
company
The benefit of the report for the company is that through this report they can come
to know about the cash flow statements of the company
This study also unable the company that their cash is not utilizing in unnecessary
things
The benefit of the report for the researcher is that it has helped to get knowledge
about the cash inflow and cash
RESERRCH METHODOLOGY-
RESEARCH DESIGN
bull The study was conducted under well- structured approach
bull The project lasted for 4 weeks and the year 2009 ie from 08 July to 12
Aug2009
bull The questionnaire method amp personal interview method was used to collect
the primary data for the study
The secondary data is collected from Internet amp company training material and
many other company materials
SAMPLE DESIGN
The process of extracting a sample from a population is called sampling
procedure The selection of sampling procedure to conduct the research
depends upon the nature of the study and the objective to be accomplished
Judgment sampling technique is adopted to select the respondents in this
study The sample design included the various departments in the YAMAHA
MOTORS PVT LTD
Methodology of date collection
bull Conducting personal interview
bull Data collection from primary and secondary sources
bull Designing questionnaire
bull Selecting sample size from the sample frame for the survey
bull Questionnaire distribution
bull Analysis of collected data with the help of statistical tools
bull Interpretation of collected data
bull Stating the conclusion based on the entire study
Sampling Technique
The sampling technique used for this research is of non-probability and convenience
sampling
Sample Unit
Employees of the company
Sample Size
For this research study the sample size is 25 respondents
Sources of data
Primary data
Primary data is the data which is collected by the researcher for the first time
and which was not there The tools used to collect the data are-
1)Questionnaire method from the employers in different departments
2) Face to Face personal interactions
Secondary Data
The data already collected is called as secondary data The relevant information
for this study has been collected from secondary source such as
Books
Journal
Reports
Publication by the organizational circulation
Company records
Business bulletins
Internet
Secondary data is also collected from various of the internet and intranet Some
of the website trough which information was gathered was through
HYPOTHESIS
The report is analyzed under the presumption that cash flow position of
YAMAHA MOTORS PVTLTD It can be improved and made effective in
terms of cash flows
In testing the above hypothesis the following aspects will be considered
1 Balance sheet comparisons
2 Presentation of cash flow statement in terms of revised AS-3
LIMITATIONS
The study though conducted to the best of the ability suffers from some
certain limitations There are
The data is secondary one and as such its reliability may be
questioned upon
The time availability for the study is less and as such it hinders thee
progress of the study
Senior officials were rarely approachable
Websites were not giving comprehensive data
Not having face-to-face interaction to get more relevant
information
Analysis and interpretation of data was done on the assumption that
the respondentsrsquo information was online
Information collected was totally subjective
The interviews are done during office hours but could not be done
for the other employees of other
DATA ANALYSIS
ESCORTS PVT LTD
CASH FLOW STRATEMENT
Year Ended Year Ended
30092009 30092008
Rs Crores Rs
Crores
A Cash Flow from Operating Activities
Net profit before tax (1733) 3444
Adjustment for
Loss on sale Provision for diminution in value of Long Term
Investments amp loans to Group Companies 189 4018
Gain on sale of Long Term Investments (122) (9492)
Gain on sale of Asset (013) -
Depreciation 4497 3955
Misc Exp Assets Write off Provisions 808 750
Interest Expense 7222 7999
Dividend Income (002) (001)
Interest Income (2082) -
Operating Profit before working capital changes 8764 10673
Adjustments for
Trade and other Receivables (8817) (12035)
Inventories 1379 (4692)
Trade Payables 6705 19046
Miscellaneous Expenditure (750) (511)
(1483) 1808
Cash Generated from Operations 7281 12481
Direct Taxes (Paid)Refunds (1785) 3166
Net Cash Flow from operating activities 5496 15647
B Cash Flow from Investing Activities
Purchase of Fixed Assets (3095) (2794)
Proceeds from sale of Fixed Assets 086 177
Movement in Loans and Advances (1627) (1644)
Sale of Investments 3233 11452
Short Term Deposits with schedule Banks (231) (1048)
Interest Received 2070 -
Dividend Received 002 001
Net Cash Flow from Investing activities 438 6144
Proceeds from Share Capital amp Securities Premium 11444 -
Proceeds from Long Term Borrowings 8660 -
Less Repayment of Long Term Borrowings (054) (7896)
Proceeds (Repayment) from short term borrowings (net) (22726) -
Interest Paid (7740) (8223)
Net Cash used in financing activities (10416) (16119)
Net Increase(Decrease) in Cash and Cash equivalents (4482) 5672
Cash and Cash equivalents as at 01102008 10565 4893
Cash and Cash equivalents as at 30092009 6083 1056
ANALYSIS OF CASH FLOW
From the cash flow statements of the ESCORT PVTLTDIt can be analyzed
from the two years that the net cash balance of the company has increased
manifold in 30-09-2008 than the year 30-09-2009
The net profit in 30-09-2008 is higher than the 30-09-2009 but due to certain
changes there has been increase in the cash balance
The interest paid this year is ore of the last year which implies that thee
company has not repaid his borrowed capital due to which the interest has got
down
The depreciation has increased but it does not affect cash to an extent as it is a
non-cash item In the head of working capital there is drastic change in the cash
balance in the form of ldquoTrade and other Receivables which has affected the cash
balance
There is outflow of cash for receivables rather than the inflow in the last year
So the net effect is that the cash from operating activities has been decreased
two times from the last year
The company has no accumulated losses as at the end of the financial year ie
September 31 2008
Provision for taxation has been made in accordance with the requirement of AS-
22 issued by Institute of Charted Accountants of India
Pursuant to that current year deferred tax liability have been charged to profit amp
loss account
In opinion of the board of directors of thee company the current assets loans
and advances have a value on realization in the ordinary course of the business at
least equal to the amount stated in the balance sheet and provision for all
liabilities have been made
Balance of sundry debtors creditors loans and advances are subject to confirmation by
the concerned parties
METHOD OF ANALYSIS
1 Data analysis is done using the following statistical tools wherever required in
order to extract meaningful information from the collected data
o Simple percentage and averages
o Bar diagram
o Cone diagram
o Pie diagram
2 The collected data from the questionnaire has been put together in the form of
tables
3 Percentage has been calculated wherever necessary for generalization of the
data
4 Data analysis and interpretation has been done on the basis of primary and
secondary data
5 The findings researches have been recorded based on the analysis
6 The study conducted pertains only to YAMAHA MOTORS INDIA PVTLTD
All bank balances (debitcredit) have been confirmed by the concerned bank
Identified from the available information which has been relied upon by the auditors
The names of small-scale industrial units to whom outstanding for more than
thirty days within agreed terms
The company has 9996 of shareholders in its subsidiary company named as
ESCORTS PVT LTD As at 31-03-2008
So the net effect is that the net cash from investing activities has many more
times than the last year which is negative Now the company has repaid its long
term borrowing more than the last year which has decreased the cash balance by
the little amount
Balance with the schedule banks under the head current amp collection account
amounting to represent funds in transit lying with schedule banks pending
transfer against loan liabilities under the head cash credit amp bill discounting
LIQUIDITY RATIO
1 CURRENT RATIO
(Amount in Rs)
Current Ratio
Year Current Assets Current Liabilities Ratio
2003 58574151 7903952 7412004 69765346 31884616 2192005 72021081 16065621 4482006 91328208 47117199 1942007 115642068 30266661 382
Interpretation
As a rule the current ratio with 21 (or) more is considered as satisfactory
position of the firm
When compared with 2006 there is an increase in the provision for tax because
the debtors are raised and for that the provision is created The current liabilities
majorly included Lanco Group of company for consultancy additional services
The sundry debtors have increased due to the increase to corporate taxes
In the year 2006 the cash and bank balance is reduced because that is used for
payment of dividends In the year 2007 the loans and advances include majorly
the advances to employees and deposits to government The loans and advances
reduced because the employees set off their claims The other current assets
include the interest attained from the deposits The deposits reduced due to the
declaration of dividends So the other current assets decreased
The huge increase in sundry debtors resulted an increase in the ratio which is
above the benchmark level of 21 which shows the comfortable position of the
firm
GRAPHICAL REPRESENTATION
741
219
448
194
382
000
100
200
300
400
500
600
700
800
Ratio
2003 2004 2005 2006 2007
Years
CURRENT RATIO
Ratio
2 QUICK RATIO
(Amount
in Rs)
Quick Ratio
Year Quick Assets Current Liabilities Ratio
2003 58574151 7903952 741
2004 52470336 31884616 165
2005 69883268 16065620 435
2006 89433596 47117199 19
2007 115431868 30266661 381
Interpretation
Quick assets are those assets which can be converted into cash with in a short
period of time say to six months So here the sundry debtors which are with the
long period does not include in the quick assets
Compare with 2006 the Quick ratio is increased because the sundry debtors are
increased due to the increase in the corporate tax and for that the provision
created is also increased So the ratio is also increased with the 2006
GRAPHICAL REPRESENTATION
741
165
435
190
381
000
100
200
300
400
500
600
700
800
Ratio
2003 2004 2005 2006 2007
Years
QUICK RATIO
Ratios
3 ABOSULTE LIQUIDITY RATIO
(Amount
in Rs)
Absolute Cash Ratio
Year Absolute Liquid Assets Current Liabilities Ratio
2003 31004027 7903952 392
2004 10859778 31884616 034
2005 39466542 16065620 246
2006 53850852 47117199 114
2007 35649070 30266661 118
Interpretation
The current assets which are ready in the form of cash are considered as absolute
liquid assets Here the cash and bank balance and the interest on fixed assts are
absolute liquid assets
In the year 2006 the cash and bank balance is decreased due to decrease in the
deposits and the current liabilities are also reduced because of the payment of
dividend That causes a slight increase in the current yearrsquos ratio
GRAPHICAL REPRESENTATION
392
034
246
114 118
0
05
1
15
2
25
3
35
4
Ratios
2003 2004 2005 2006 2007
Years
ABSOLUTE CASH RATIO
Ratios
LEVERAGE RATIOS
4 PROPRIETORY RATIO
(Amount
in Rs)
Proprietory Ratio
Year Share Holders Funds Total Assets Ratio
2003 67679219 78572171 086
2004 53301834 88438107 06
2005 70231061 89158391 079
2006 56473652 106385201 053
2007 97060013 129805102 075
Interpretation
The proprietary ratio establishes the relationship between shareholders funds to
total assets It determines the long-term solvency of the firm This ratio indicates
the extent to which the assets of the company can be lost without affecting the
interest of the company
There is no increase in the capital from the year2004 The share holderrsquos funds
include capital and reserves and surplus The reserves and surplus is increased
due to the increase in balance in profit and loss account which is caused by the
increase of income from services
Total assets includes fixed and current assets The fixed assets are reduced
because of the depreciation and there are no major increments in the fixed assets
The current assets are increased compared with the year 2006 Total assets are
also increased than precious year which resulted an increase in the ratio than old
GRAPHICAL REPRESENTATION
086
060
079
053
075
000
010
020
030
040
050
060
070
080
090
Ratios
2003 2004 2005 2006 2007
Years
PROPRIETORY RATIO
Ratios
ACTIVITY RATIOS
5 WORKING CAPITAL TURNOVER RATIO
(Amount
in Rs)
Working Capital Turnover Ratio
Year Income From Services Working Capital Ratio
2003 36309834 50670199 0722004 53899084 37880730 1422005 72728759 55355460 1312006 55550649 44211009 1262007 96654902 85375407 113
Interpretation
Income from services is greatly increased due to the extra invoice for Operations
amp Maintenance fee and the working capital is also increased greater due to the
increase in from services because the huge increase in current assets
The income from services is raised and the current assets are also raised together
resulted in the decrease of the ratio of 2007 compared with 2006
GRAPHICAL REPRESENTATION
072
142 131126
113
000
020
040
060
080
100
120
140
160
Ratio
2003 2004 2005 2006 2007
Years
WORKING CAPITAL TURNOVER RATIO
Ratio
6 FIXED ASSETS TURNOVER RATIO
(Amount in Rs)
Fixed Assets Turnover Ratio
Year Income From Services Net Fixed Assets Ratio
2003 36309834 28834317 126
2004 53899084 29568279 182
2005 72728759 17137310 424
2006 55550649 15056993 369
2007 96654902 14163034 682
Interpretation
Fixed assets are used in the business for producing the goods to be sold This
ratio shows the firmrsquos ability in generating sales from all financial resources
committed to total assets The ratio indicates the account of one rupee
investment in fixed assets
The income from services is greaterly increased in the current year due to the
increase in the Operations amp Maintenance fee due to the increase in extra invoice
and the net fixed assets are reduced because of the increased charge of
depreciation Finally that effected a huge increase in the ratio compared with the
previous yearrsquos ratio
GRAPHICAL REPRSENTATION
126182
424 369
682
000
100
200
300
400
500
600
700
Ratios
2003 2004 2005 2006 2007
Years
FIXED ASSETS TURNOVER RATIO
Ratios
7 CAPITAL TURNOVER RATIO
(Amount
in Rs)
Capital Turnover Ratio
Year Income From Services Capital Employed Ratio
2003 36309834 37175892 0982004 53899084 53301834 1012005 72728759 70231061 1042006 55550649 56473652 0982007 96654902 97060013 100
Interpretation
This is another ratio to judge the efficiency and effectiveness of the company
like profitability ratio
The income from services is greaterly increased compared with the previous year
and the total capital employed includes capital and reserves amp surplus Due to
huge increase in the net profit the capital employed is also increased along with
income from services Both are effected in the increment of the ratio of current
year
GRAPHICAL REPRESENTATION
098
101
104
098
100
094095096097098099100101102103104
Ratios
2003 2004 2005 2006 2007
Years
CAPITAL TURNOVER RATIO
Ratios
8 CURRENT ASSETS TO FIXED ASSETS RATIO
(Amount
in Rs)
Current Assets To Fixed Assets Ratio
Year Current Assets Fixed Assets Ratio
2003 58524151 19998020 2932004 69765346 18672761 3742005 72021081 17137310 4202006 91328208 15056993 6072007 115642068 14163034 817
Interpretation
Current assets are increased due to the increase in the sundry debtors and the net
fixed assets of the firm are decreased due to the charge of depreciation and there
is no major increment in the fixed assets
The increment in current assets and the decrease in fixed assets resulted an
increase in the ratio compared with the previous year
GRAPHICAL REPRESENTATION
293374
420
607
817
000
100
200
300
400
500
600
700
800
900
Ratios
2003 2004 2005 2006 2007
Years
CURRENT ASSETS TO FIXED ASSETS RATIO
Ratios
PROFITABILITY RATIOS
GENERAL PROFITABILITY RATIOS
9 NET PROFIT RATIO
(Amount in Rs)
Net Profit Ratio
Year Net Profit After Tax Income from Services Ratio
2003 21123474 36039834 059
2004 16125942 53899084 030
2005 16929227 72728759 023
2006 18259580 55550649 033
2007 40586359 96654902 042
Interpretation
The net profit ratio is the overall measure of the firmrsquos ability to turn each rupee
of income from services in net profit If the net margin is inadequate the firm
will fail to achieve return on shareholderrsquos funds High net profit ratio will help
the firm service in the fall of income from services rise in cost of production or
declining demand
The net profit is increased because the income from services is increased The
increment resulted a slight increase in 2007 ratio compared with the year 2006
GRAPHICAL REPRESENTATION
059
030
023
033
042
000
010
020
030
040
050
060
Ratios
2003 2004 2005 2006 2007
Years
NET PROFIT RATIO
Ratios
10 OPERATING PROFIT
(Amount in Rs)
Operating Profit
Year Operating Profit Income From Services Ratio
2003 36094877 36309834 099
2004 27576814 53899084 051
2005 29540599 72728759 041
2006 31586718 55550649 057
2007 67192677 96654902 070
Interpretation
The operating profit ratio is used to measure the relationship between net profits
and sales of a firm Depending on the concept it will decide
The operating profit ratio is increased compared with the last year The earnings
are increased due to the increase in the income from services because of
Operations amp Maintenance fee So the ratio is increased slightly compared with
the previous year
GRAPHICAL REPRESENTATION
099
051
041
057
070
000
010
020
030
040
050060
070
080
090
100
Ratios
2003 2004 2005 2006 2007
Years
OPERATING PROFIT RATIO
Ratios
11 RETURN ON TOTAL ASSETS RATIO
(Amount in Rs)
Return on Total Assets Ratio
Year Net Profit After Tax Total Assets Ratio
2003 21123474 78572171 027
2004 16125942 88438107 018
2005 16929227 89158391 019
2006 18259580 106385201 017
2007 40586359 129805102 031
Interpretation
This is the ratio between net profit and total assets The ratio indicates the return
on total assets in the form of profits
The net profit is increased in the current year because of the increment in the
income from services due to the increase in Operations amp Maintenance fee The
fixed assets are reduced due to the charge of depreciation and no major
increments in fixed assets but the current assets are increased because of sundry
debtors and that effects an increase in the ratio compared with the last year ie
2006
GRAPHICAL REPRESENTATION
027
018 019017
031
000
005
010
015
020
025
030
035
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON TOTAL ASSETS
Ratios
12 RESERVES amp SURPLUS TO CAPITAL RATIO
(Amount in Rs)
Reserves amp Surplus To Capital Ratio
Year Reserves amp Surplus Capital Ratio
2003 65599299 2079920 31542004 34582554 18719280 1852005 51511781 18719280 2752006 37754372 18719280 2022007 78340733 18719280 419
Interpretation
The ratio is used to reveal the policy pursued by the company a very high ratio
indicates a conservative dividend policy and vice-versa Higher the ratio better
will be the position
The reserves amp surplus is decreased in the year 2006 due to the payment of
dividends and in the year 2007 the profit is increased But the capital is
remaining constant from the year 2004 So the increase in the reserves amp surplus
caused a greater increase in the current yearrsquos ratio compared with the older
GRAPHICAL REPRESENTATION
3154
185 275 202419
-
500
1000
1500
2000
2500
3000
3500
Ratios
2003 2004 2005 2006 2007
Years
RESERVES amp SRUPLUS TO CAPITAL RATIO
Ratios
OVERALL PROFITABILITY RATIOS
13 EARNINGS PER SHARE
(Amount in Rs)
Earnings Per Share
Year Net Profit After Tax No of Equity Shares Ratio
2003 21123474 207992 101562004 16125942 1871928 8612005 16929227 1871928 9042006 18259580 1871928 9752007 40586359 1871928 2168
Interpretation
Earnings per share ratio are used to find out the return that the shareholderrsquos earn
from their shares After charging depreciation and after payment of tax the
remaining amount will be distributed by all the shareholders
Net profit after tax is increased due to the huge increase in the income from
services That is the amount which is available to the shareholders to take There
are 1871928 shares of Rs10- each The share capital is constant from the year
2004 Due to the huge increase in net profit the earnings per share is greaterly
increased in 2007
GRAPHICAL REPRESENTATION
10156
861904 975
2168
000
2000
4000
6000
8000
10000
12000
Ratios
2003 2004 2005 2006 2007
Years
EARNINGS PER SHARE
Ratios
14 PRICE EARNINGS (PE) RATIO
(Amount in Rs)
Price Earning (PE) Ratio
Year Market Price Per Share Earnings Per Share Ratio
2003 3254 10156 0322004 2847 861 3302005 3752 904 4152006 3017 975 3092007 5185 2168 239
Interpretation
The ratio is calculated to make an estimate of application in the value of share of
a company
The market price per share is increased due to the increase in the reserves
amp surplus The earnings per share are also increased greaterly compared
with the last year because of increase in the net profit So the ratio is
decreased compared with the previous year
GRAPHICAL REPRESENTATION
032
330
415
309
239
000
050
100
150
200
250
300
350
400
450
Ratios
2003 2004 2005 2006 2007
Years
PE RATIO
Ratios
15 RETURN ON INVESTMENT
(Amount in Rs)
Return on Investment
Year Net Profit After Tax Share Holders Fund Ratio
2003 21123474 67679219 031
2004 16125942 53301834 03
2005 16929227 70231061 024
2006 18259580 56473652 032
2007 40586359 97060013 042
Interpretation
This is the ratio between net profits and shareholders funds The ratio is
generally calculated as percentage multiplying with 100
The net profit is increased due to the increase in the income from services ant
the shareholders funds are increased because of reserve amp surplus So the ratio
is increased in the current year
GRAPHICAL REPRESENTATION
031 030
024
032
042
000
005
010
015
020
025
030
035
040
045
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON INVESTMENT RATIO
RatioS
DATA COLLECTION
The data can be of two types
Primary Data
Secondary Data
Primary Data
Primary data are those data which is originally collected afresh
Secondary Data
Secondary data are those data which are already collected and stored and which has
been passed through statistical research
In this project Secondary data has been collected from following sources-
Annual report
Books
MIS
Other material and report published by company There are two methods to prepare
the Cash flow Statement
ndirect Method
I
The indirect method (or reconciliation method) starts with net income and converts it
to net cash flow from operating activities In other words the indirect method adjusts
net income for items that affected reported net income but did not affect cash To
compute net cash flow from operating activities non-cash charges in the income
statement are added ack to net income and non-cash credits are deducted
b
Direct Method
Under the direct method the statement of cash flows reports net cash flow from
operating activities as major classes of operating cash receipts (eg cash collected from
customers and cash received from interest and dividends) and cash disbursements (eg
cash paid to suppliers for goods to employees for services to creditors for interest and
to government authorities for taxes)
INDIRECT VERSUS DIRECT METHOD
The most contentious decision that the FASB faced in issuing Statement No 95 was
choosing between the direct method and the indirect method of determining net cash
flow from operating activities Companies lobbied against the direct method urging
adoption of the indirect method Commercial lending officers expressed a strong
preference to the FASB hat the direct method be required
tCF-Page 3 of 5
In Favor of the Direct Method
The principal advantage of the direct method is that it shows operating cash receipts and
payments That is it is more consistent with the objective of a statement of cash flows to
provide information about cash receipts and cash payments than the in-direct method
which does not report operating cash receipts and payments
Supporters of the direct method contend that knowledge of the specific sources of
operating cash receipts and the purposes for which operating cash payments were made
in past periods is useful in estimating future operating cash flows Furthermore in-
formation about amounts of major classes of operating cash receipts and payments is
more useful than information only about their arithmetic sum (the net cash flow from
operating activities) Such information is more revealing of an enterprises ability (1) to
generate sufficient cash from operating activities to pay its debts (2) to reinvest in its
operations and (3) to make distributions to its owners
Many corporate providers of financial statements say that they do not currently collect
information in a manner that allows them to determine amounts such as cash received
from customers or cash paid to suppliers directly from their accounting systems But
supporters of the direct method contend that the incremental cost of assimilating such
operating cash receipts and payments data is not significant
In Favor of the Indirect Method
The principal advantage of the indirect method is that it focuses on the differences
between net income and net cash flow from operating activities That is it provides a
useful link between the statement of cash flows and the income statement and balance
sheet
Many providers of financial statements contend that it is less costly to adjust net income
to net cash flow from operating activities (indirect) than it is to report gross operating
cash receipts and payments (direct) Supporters of the indirect method also state that the
direct method which effectively reports income statement information on a cash rather
than an accrual basis may erroneously suggest that net cash flow from operating
activities is as good as or better than net income as a measure of performance
Special Rules Applying to Direct and Indirect Methods
Companies that use the direct method are required at a
minimum to report separately the following classes of
operating cash receipts and payments
Receipts
1048713 Cash collected from customers (including lessees licensees etc)
1048713 Interest and dividends received
1048713 Other operating cash receipts if any
Payments
1048713 Cash paid to employees and suppliers of goods or services (including
suppliers of
insurance advertising etc)
1048713 Interest paid
1048713 Income taxes paid
1048713 Other operating cash payments if any
Companies using the indirect method are required to disclose separately changes in
inventory receivables and payables to reconcile net income to net cash flow from
operating activities In addition interest paid (net of amount capitalized) and income
taxes paid must be disclosed elsewhere in the financial statements or accompanying
notes
The FASB requires these separate and additional disclosures so that users
may approximate the direct method Also an acceptable alternative presentation
of the in-direct method is to report net cash flow from operating activities as a
single line item in the statement of cash flows and to present the reconciliation
details elsewhere in the financial statements
FINDING OF SUDY
According to cash flow statement of the company The finding of the study are as
follows-
The company has not taken any loans secured or unsecured from companies
firms or other parties
The company has not accepted any deposit from the public during the year
The company is not a sick industrial company
The company has not granted any loan secured or unsecured to company firms
or other parties
The company has paid the entire long term and short term borrowing during the
year
The company has buy back the companyrsquos own share this year
The interest paid in 2008 is more than the
There has been a significant decline in volume over the years from 2001-02
to 2005-06 as can be seen in the graph below
Table 43
The Net sales of Tractor has increased considerably from 2004-05 to 2007-08
This can be mainly attributed to changes in Variable and material costs and in
the price
The Net sale of Tractor has increased considerably from 2004-05 to 2007-08
that is an decrease of Rs7216 per tractor This can be mainly attributed to
changes in
Variable and material costs and in the prices
RECOMMENDATIONS
According to cash flow statement of the company The suggestions of the study
are as follows-
The time durations for training program have to increase
Buy regular review and consultations develop a career progression
which is sensitive to performance and ability
Create an environment where by people are trend developed to enable
The to take advantages of opportunities that arise
The jab can be redesigned where the work man stay in what is normally
the same job but has elements of it changed
The principle amount must be paid in time which can be reducing the
interest the out flow
The purchase of the fixed asset must be made only when there is extreme
requirement
In order to avoid taxes the company should go for more investment
The companyrsquos borrowings should go for more investment
o The company should try to reduce the depreciations as maximum
as possible
CONCLUSION
The study on competency level of employees at ESCORTS PVTLTD gave an
insight about the acceptance of competency mapping by employees
The employees at Ymi welcome the introduction of competency mapping in their
organization as they felt it was very much essential in enhancing their skills and
organizational development
The organization has provided the recourses guidance and support to facilitate the
introduction of competency level easily and develop the employees in such a way
that they can face any kind of challenge
However the level of competency in employees is found to be satisfactory
Providing proper training education and guidance to the employees can enhance
the level
This study was mainly carried out to find out whether thee competency mapping
being followed by the company is effective till date If the competency mapping
and fitment to the organization
By looking at the graphs and tables it is quite that the employees still are not up to
the level of competent pool they still have to be trained and made competent in
order to fill the gap As the organization has just applied the mapping it has to see
to that it meets all the requirements for competency mapping
Therefore the graphs make it quite clear that the potential of the employees is not
up to the mark and ie they are not competent enough to meet the competency-
mapping requirement Hence by further training and counseling this gap can be
closed
This report includes the training requirements of employees and it highlights skills
possessed by each employee and skill required All employees get training so that
skill can be improved and maintain balance between standard performance with
their actual performance to avoid gap
APPENDIX
QUESTIONNAIRE
Consumer Survey
Name _____________________________
Age _____________________________
Sex
Male
Female
Occupation
Businessman
Service man
Professional
Others
Monthly income brackets
Below 15000
15000- 20000
20000-30000
30000 and above
of your savings _________
Do you invest
Yes
No
If yes then where do you invest your money
Bank
Insurance
funds
Others
Why do you made that statement
Return
Risk hedging
Tax benefits
Other reasons (specify) _______
Who influence your cash decision
Relatives and friends
Family members
Advisors experts
You yourself
If no then why
Do not know where to invest
Satisfied with your current investment return
Donrsquot want take risk
Other reasons
__________________________________________________________________
___________________
Do you know about CF statement
Yes
No
If yes then from where you have come to know about an cash statement
Advertisements on newspapers
Friends and relative
Agents experts
Other source
What do you think about cash statement
It means investing only in share market
Constant watch must be kept always
Return is not satisfactory
Other perception
__________________________________________________
Can you recall any cash flow of company
___________________________
Would you want to made CF of an org
Yes
No
If yes then why
_______________________________________________________
If no then why
_______________________________________________________
BIBLIOGRAPHY
List of Books
1 PANDEY IM - FINANCIAL MANAGEMANT
2 KHAN MY AND JAIN PK -FINANCIAL MANAGEMANT
3 SMITH KV ndash MANAGEMANT OF WORKING CAPITAL
3 COMPANY RECORDS
4 JOURNAL
5 REPORTS
WEBLIOGRAPHY
1 wwwescortspvtltdcom
2 wwwgooglecom
CASH FLOW STATEMENT
(DIRECT METHOD)
CASH FLOW FROM OPERATING ACTIVITIES
Cash receipts from costumers
Cash paid to suppliers and employers ()
Cash generated from operations
Income tax paid ()
Cash flows from extraordinary item
plusmn Extra ordinary items
Net cash from operating activities
CASH FLOW FROM INVESTING ACTIVITIES-
Purchase of fixed assets
Proceed from sale equipment ()
Interest received
Dividend received ()
Net cash from investing activities
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from insurance of share capital
Proceeds from long- term borrowings ()
Repayment of from long-term borrowings
Interest paid
Dividend paid ()
Net cash from financing activities
Net increase in cash and cash equivalent
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
SOME SPECIAL TERMS-
i) INTERSET AND DIVIDEND-
Cash inflow from interest and dividends and cash outflow on account of interest and
dividends should be disclosed separately Cash inflow arising from interest and dividends
received should be shown as cash flow from investing activities where as cash outflow
disclosed outflow on account of interest and dividend paid should be shown as cash flow
from financing activity
ii) TAXES ON INCOME-
Tax paid on income is a part of cash flow from operating activity Hence taxes paid are
shown as a deduction under cash flow from operating activity
iii) EXTRA ORDINARY ITEMS-
Cash flow relating to extra ordinary items such as bad debts recovered Claims received from
insurance companies winning of a lottery or a law etc Should be disclosed separately as
arising from operating investing or financing activities For example the amount received
for insurance company on account of loss of stock by fire Earthquake and floods etc Should
be reported as cash flow from operating activities
iv) SIGNIFICANT NON - CASH TRANSACTION-
There are some investing and financing activities which do not require the use of cash or
cash equivalents Such non cash activities should be excluded from the cash flow statement
Examples are the acquisition of assets by issue of debentures or shares conversion of
shares into debentures etc Such significant on non cash transaction should be disclosed
outside the cash flow statement
CASH FLOW STATEMENT
(INDIRECT METHOD)
CASH FLOW FROM OPERARATTNG ACTIVITIES
Net profit before taxation and extraordinary item
Adjustment for
Depreciation
Foreign exchange loss
Interest income
Dividend income
Interest expense
Operating profit before working capital changes
Increase in sundry debtors
Decrease in inventories
Decrease in sundry creditors
Cash generated from operations
Income tax paid ()
Cash flow before extraordinary item
plusmn Extra - ordinary items
Net cash from operating activities
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of fixed assets ()
Proceeds from sale of equipment
Interest received
Dividend received ()
Net cash from investing activities
CASH FLOW FROM FINANCING ACTIVITIES-
Proceeds from insurance of share capital
Proceeds from long - term borrowings
Repayments of from long - term borrowings ()
Interest paid ()
Dividend paid ()
Net cash from financing activities
Net increase in cash and cash equivalent
Cash and cash equivalents at beginning of period
CHANGES IN CASH FLOWS
Changes in cash flows can be treated to the following
1 Net profit will increase the cash flows these cash flows will be
increased further if there are any non-cash changes (such as depreciation
and amortization)
2 Any payment of dividends will decrease the cash flows as will the
repayment of debt an issue of share or debt will also increase the
cash flows
3 An increase in non-cash assets will decrease cash flows increase in
current assets and fixed assets will result in drain on cash flows
Thus a statement of changes in cash flows ie the cash flow statement
classifies all Changes into one of three categories - operating investing or
financing activities Therefore the preparation of a statement of changes in cash
flows requires classification of changes in liabilities shareholders equity and
non-cash assets into one of these categories although some items will not fit
easily onto one other
h equivalent at end of period
STEP- BY-STEP PROCEDURE TO PREPARE CFS
1 Calculate the net increase or decrease in cash and cash equivalents-
For this purpose the opening balance of total cash and cash equivalents is compared with the
closing balance of cash and equivalents
Increasedecrease in cash and equivalents
Opening balance Closing Balance
Cash in hand
Cash in bank
Short-term Investment
Total
The difference between the total of opening and closing balance will be increased or
Decreased in cash equivalents during the period It may be noted that if there are only one or
two of items of cash etc
2 Net Cash flaw from operating activities-
The term operating refers to the normal purchase of goods and services On the basis of the
information contained in the comparative BS s and the IS and the additional Information the
net cash flow generated or use by the operating activities may be ascertained The IS prepared
by the firm gives the net profit figure earned by the firm On actual basis ie all items in the
IS are incorporated on the basis of earnedaccrued even
3 If not resulting in cash movements-
So the profit or loss as by the IS may not result in increase or decrease in cash balance by the
SYNOPSIS
INTRODUCTION
ESCORTS PVT LTD is a private limited company not listed in a stock exchange of India
and employees 900 highly trained personnel Its manufacturing plants are strategically located
in close proximity to its customers at Faridabad (Haryana) Noida (UP)
OBJECTIVES OF THE STUDY
bull To find the movement of cash inflow and cash outflow
bull To make the comparison between cash inflow and
bull Cash outflow
bull To prepare the Cash Flow Statement
bull To analyze the Balance Sheet of the company in terms of Cash Flow Statement
bull To focus on various activities of the organization in terms of Operating
Financing Investment
SCOPE OF THE STUDY
Financial resources are the assets for the company and their productivity is key
factor for profitability It is necessary to know their problems their knowledge
skills abilities amp the measures that can be taken to reduce them By analyzing this
top management can build good relations with the employees
The whole study is to determine the competencies of different employees who are
working in ESCORTS PVT LTD By analyzing it the top management can
introduce the concept of competency mapping in the organization Through this
management can attempt to use more suitable strategies towards the human
resource development
The research is confined to elicit the existing gap between the standard skill
required to perform the job and the skill processed by the employees at ESCORTS
PVT LTD And to provide them suitable training program to over come those gaps
for the better utilization of human resources
RELEVANCE
The scope of the study was confined to the outside parties like creditors
shareholders government etc Who want to invest their money in the
company
The benefit of the report for the company is that through this report they can come
to know about the cash flow statements of the company
This study also unable the company that their cash is not utilizing in unnecessary
things
The benefit of the report for the researcher is that it has helped to get knowledge
about the cash inflow and cash
RESERRCH METHODOLOGY-
RESEARCH DESIGN
bull The study was conducted under well- structured approach
bull The project lasted for 4 weeks and the year 2009 ie from 08 July to 12
Aug2009
bull The questionnaire method amp personal interview method was used to collect
the primary data for the study
The secondary data is collected from Internet amp company training material and
many other company materials
SAMPLE DESIGN
The process of extracting a sample from a population is called sampling
procedure The selection of sampling procedure to conduct the research
depends upon the nature of the study and the objective to be accomplished
Judgment sampling technique is adopted to select the respondents in this
study The sample design included the various departments in the YAMAHA
MOTORS PVT LTD
Methodology of date collection
bull Conducting personal interview
bull Data collection from primary and secondary sources
bull Designing questionnaire
bull Selecting sample size from the sample frame for the survey
bull Questionnaire distribution
bull Analysis of collected data with the help of statistical tools
bull Interpretation of collected data
bull Stating the conclusion based on the entire study
Sampling Technique
The sampling technique used for this research is of non-probability and convenience
sampling
Sample Unit
Employees of the company
Sample Size
For this research study the sample size is 25 respondents
Sources of data
Primary data
Primary data is the data which is collected by the researcher for the first time
and which was not there The tools used to collect the data are-
1)Questionnaire method from the employers in different departments
2) Face to Face personal interactions
Secondary Data
The data already collected is called as secondary data The relevant information
for this study has been collected from secondary source such as
Books
Journal
Reports
Publication by the organizational circulation
Company records
Business bulletins
Internet
Secondary data is also collected from various of the internet and intranet Some
of the website trough which information was gathered was through
HYPOTHESIS
The report is analyzed under the presumption that cash flow position of
YAMAHA MOTORS PVTLTD It can be improved and made effective in
terms of cash flows
In testing the above hypothesis the following aspects will be considered
1 Balance sheet comparisons
2 Presentation of cash flow statement in terms of revised AS-3
LIMITATIONS
The study though conducted to the best of the ability suffers from some
certain limitations There are
The data is secondary one and as such its reliability may be
questioned upon
The time availability for the study is less and as such it hinders thee
progress of the study
Senior officials were rarely approachable
Websites were not giving comprehensive data
Not having face-to-face interaction to get more relevant
information
Analysis and interpretation of data was done on the assumption that
the respondentsrsquo information was online
Information collected was totally subjective
The interviews are done during office hours but could not be done
for the other employees of other
DATA ANALYSIS
ESCORTS PVT LTD
CASH FLOW STRATEMENT
Year Ended Year Ended
30092009 30092008
Rs Crores Rs
Crores
A Cash Flow from Operating Activities
Net profit before tax (1733) 3444
Adjustment for
Loss on sale Provision for diminution in value of Long Term
Investments amp loans to Group Companies 189 4018
Gain on sale of Long Term Investments (122) (9492)
Gain on sale of Asset (013) -
Depreciation 4497 3955
Misc Exp Assets Write off Provisions 808 750
Interest Expense 7222 7999
Dividend Income (002) (001)
Interest Income (2082) -
Operating Profit before working capital changes 8764 10673
Adjustments for
Trade and other Receivables (8817) (12035)
Inventories 1379 (4692)
Trade Payables 6705 19046
Miscellaneous Expenditure (750) (511)
(1483) 1808
Cash Generated from Operations 7281 12481
Direct Taxes (Paid)Refunds (1785) 3166
Net Cash Flow from operating activities 5496 15647
B Cash Flow from Investing Activities
Purchase of Fixed Assets (3095) (2794)
Proceeds from sale of Fixed Assets 086 177
Movement in Loans and Advances (1627) (1644)
Sale of Investments 3233 11452
Short Term Deposits with schedule Banks (231) (1048)
Interest Received 2070 -
Dividend Received 002 001
Net Cash Flow from Investing activities 438 6144
Proceeds from Share Capital amp Securities Premium 11444 -
Proceeds from Long Term Borrowings 8660 -
Less Repayment of Long Term Borrowings (054) (7896)
Proceeds (Repayment) from short term borrowings (net) (22726) -
Interest Paid (7740) (8223)
Net Cash used in financing activities (10416) (16119)
Net Increase(Decrease) in Cash and Cash equivalents (4482) 5672
Cash and Cash equivalents as at 01102008 10565 4893
Cash and Cash equivalents as at 30092009 6083 1056
ANALYSIS OF CASH FLOW
From the cash flow statements of the ESCORT PVTLTDIt can be analyzed
from the two years that the net cash balance of the company has increased
manifold in 30-09-2008 than the year 30-09-2009
The net profit in 30-09-2008 is higher than the 30-09-2009 but due to certain
changes there has been increase in the cash balance
The interest paid this year is ore of the last year which implies that thee
company has not repaid his borrowed capital due to which the interest has got
down
The depreciation has increased but it does not affect cash to an extent as it is a
non-cash item In the head of working capital there is drastic change in the cash
balance in the form of ldquoTrade and other Receivables which has affected the cash
balance
There is outflow of cash for receivables rather than the inflow in the last year
So the net effect is that the cash from operating activities has been decreased
two times from the last year
The company has no accumulated losses as at the end of the financial year ie
September 31 2008
Provision for taxation has been made in accordance with the requirement of AS-
22 issued by Institute of Charted Accountants of India
Pursuant to that current year deferred tax liability have been charged to profit amp
loss account
In opinion of the board of directors of thee company the current assets loans
and advances have a value on realization in the ordinary course of the business at
least equal to the amount stated in the balance sheet and provision for all
liabilities have been made
Balance of sundry debtors creditors loans and advances are subject to confirmation by
the concerned parties
METHOD OF ANALYSIS
1 Data analysis is done using the following statistical tools wherever required in
order to extract meaningful information from the collected data
o Simple percentage and averages
o Bar diagram
o Cone diagram
o Pie diagram
2 The collected data from the questionnaire has been put together in the form of
tables
3 Percentage has been calculated wherever necessary for generalization of the
data
4 Data analysis and interpretation has been done on the basis of primary and
secondary data
5 The findings researches have been recorded based on the analysis
6 The study conducted pertains only to YAMAHA MOTORS INDIA PVTLTD
All bank balances (debitcredit) have been confirmed by the concerned bank
Identified from the available information which has been relied upon by the auditors
The names of small-scale industrial units to whom outstanding for more than
thirty days within agreed terms
The company has 9996 of shareholders in its subsidiary company named as
ESCORTS PVT LTD As at 31-03-2008
So the net effect is that the net cash from investing activities has many more
times than the last year which is negative Now the company has repaid its long
term borrowing more than the last year which has decreased the cash balance by
the little amount
Balance with the schedule banks under the head current amp collection account
amounting to represent funds in transit lying with schedule banks pending
transfer against loan liabilities under the head cash credit amp bill discounting
LIQUIDITY RATIO
1 CURRENT RATIO
(Amount in Rs)
Current Ratio
Year Current Assets Current Liabilities Ratio
2003 58574151 7903952 7412004 69765346 31884616 2192005 72021081 16065621 4482006 91328208 47117199 1942007 115642068 30266661 382
Interpretation
As a rule the current ratio with 21 (or) more is considered as satisfactory
position of the firm
When compared with 2006 there is an increase in the provision for tax because
the debtors are raised and for that the provision is created The current liabilities
majorly included Lanco Group of company for consultancy additional services
The sundry debtors have increased due to the increase to corporate taxes
In the year 2006 the cash and bank balance is reduced because that is used for
payment of dividends In the year 2007 the loans and advances include majorly
the advances to employees and deposits to government The loans and advances
reduced because the employees set off their claims The other current assets
include the interest attained from the deposits The deposits reduced due to the
declaration of dividends So the other current assets decreased
The huge increase in sundry debtors resulted an increase in the ratio which is
above the benchmark level of 21 which shows the comfortable position of the
firm
GRAPHICAL REPRESENTATION
741
219
448
194
382
000
100
200
300
400
500
600
700
800
Ratio
2003 2004 2005 2006 2007
Years
CURRENT RATIO
Ratio
2 QUICK RATIO
(Amount
in Rs)
Quick Ratio
Year Quick Assets Current Liabilities Ratio
2003 58574151 7903952 741
2004 52470336 31884616 165
2005 69883268 16065620 435
2006 89433596 47117199 19
2007 115431868 30266661 381
Interpretation
Quick assets are those assets which can be converted into cash with in a short
period of time say to six months So here the sundry debtors which are with the
long period does not include in the quick assets
Compare with 2006 the Quick ratio is increased because the sundry debtors are
increased due to the increase in the corporate tax and for that the provision
created is also increased So the ratio is also increased with the 2006
GRAPHICAL REPRESENTATION
741
165
435
190
381
000
100
200
300
400
500
600
700
800
Ratio
2003 2004 2005 2006 2007
Years
QUICK RATIO
Ratios
3 ABOSULTE LIQUIDITY RATIO
(Amount
in Rs)
Absolute Cash Ratio
Year Absolute Liquid Assets Current Liabilities Ratio
2003 31004027 7903952 392
2004 10859778 31884616 034
2005 39466542 16065620 246
2006 53850852 47117199 114
2007 35649070 30266661 118
Interpretation
The current assets which are ready in the form of cash are considered as absolute
liquid assets Here the cash and bank balance and the interest on fixed assts are
absolute liquid assets
In the year 2006 the cash and bank balance is decreased due to decrease in the
deposits and the current liabilities are also reduced because of the payment of
dividend That causes a slight increase in the current yearrsquos ratio
GRAPHICAL REPRESENTATION
392
034
246
114 118
0
05
1
15
2
25
3
35
4
Ratios
2003 2004 2005 2006 2007
Years
ABSOLUTE CASH RATIO
Ratios
LEVERAGE RATIOS
4 PROPRIETORY RATIO
(Amount
in Rs)
Proprietory Ratio
Year Share Holders Funds Total Assets Ratio
2003 67679219 78572171 086
2004 53301834 88438107 06
2005 70231061 89158391 079
2006 56473652 106385201 053
2007 97060013 129805102 075
Interpretation
The proprietary ratio establishes the relationship between shareholders funds to
total assets It determines the long-term solvency of the firm This ratio indicates
the extent to which the assets of the company can be lost without affecting the
interest of the company
There is no increase in the capital from the year2004 The share holderrsquos funds
include capital and reserves and surplus The reserves and surplus is increased
due to the increase in balance in profit and loss account which is caused by the
increase of income from services
Total assets includes fixed and current assets The fixed assets are reduced
because of the depreciation and there are no major increments in the fixed assets
The current assets are increased compared with the year 2006 Total assets are
also increased than precious year which resulted an increase in the ratio than old
GRAPHICAL REPRESENTATION
086
060
079
053
075
000
010
020
030
040
050
060
070
080
090
Ratios
2003 2004 2005 2006 2007
Years
PROPRIETORY RATIO
Ratios
ACTIVITY RATIOS
5 WORKING CAPITAL TURNOVER RATIO
(Amount
in Rs)
Working Capital Turnover Ratio
Year Income From Services Working Capital Ratio
2003 36309834 50670199 0722004 53899084 37880730 1422005 72728759 55355460 1312006 55550649 44211009 1262007 96654902 85375407 113
Interpretation
Income from services is greatly increased due to the extra invoice for Operations
amp Maintenance fee and the working capital is also increased greater due to the
increase in from services because the huge increase in current assets
The income from services is raised and the current assets are also raised together
resulted in the decrease of the ratio of 2007 compared with 2006
GRAPHICAL REPRESENTATION
072
142 131126
113
000
020
040
060
080
100
120
140
160
Ratio
2003 2004 2005 2006 2007
Years
WORKING CAPITAL TURNOVER RATIO
Ratio
6 FIXED ASSETS TURNOVER RATIO
(Amount in Rs)
Fixed Assets Turnover Ratio
Year Income From Services Net Fixed Assets Ratio
2003 36309834 28834317 126
2004 53899084 29568279 182
2005 72728759 17137310 424
2006 55550649 15056993 369
2007 96654902 14163034 682
Interpretation
Fixed assets are used in the business for producing the goods to be sold This
ratio shows the firmrsquos ability in generating sales from all financial resources
committed to total assets The ratio indicates the account of one rupee
investment in fixed assets
The income from services is greaterly increased in the current year due to the
increase in the Operations amp Maintenance fee due to the increase in extra invoice
and the net fixed assets are reduced because of the increased charge of
depreciation Finally that effected a huge increase in the ratio compared with the
previous yearrsquos ratio
GRAPHICAL REPRSENTATION
126182
424 369
682
000
100
200
300
400
500
600
700
Ratios
2003 2004 2005 2006 2007
Years
FIXED ASSETS TURNOVER RATIO
Ratios
7 CAPITAL TURNOVER RATIO
(Amount
in Rs)
Capital Turnover Ratio
Year Income From Services Capital Employed Ratio
2003 36309834 37175892 0982004 53899084 53301834 1012005 72728759 70231061 1042006 55550649 56473652 0982007 96654902 97060013 100
Interpretation
This is another ratio to judge the efficiency and effectiveness of the company
like profitability ratio
The income from services is greaterly increased compared with the previous year
and the total capital employed includes capital and reserves amp surplus Due to
huge increase in the net profit the capital employed is also increased along with
income from services Both are effected in the increment of the ratio of current
year
GRAPHICAL REPRESENTATION
098
101
104
098
100
094095096097098099100101102103104
Ratios
2003 2004 2005 2006 2007
Years
CAPITAL TURNOVER RATIO
Ratios
8 CURRENT ASSETS TO FIXED ASSETS RATIO
(Amount
in Rs)
Current Assets To Fixed Assets Ratio
Year Current Assets Fixed Assets Ratio
2003 58524151 19998020 2932004 69765346 18672761 3742005 72021081 17137310 4202006 91328208 15056993 6072007 115642068 14163034 817
Interpretation
Current assets are increased due to the increase in the sundry debtors and the net
fixed assets of the firm are decreased due to the charge of depreciation and there
is no major increment in the fixed assets
The increment in current assets and the decrease in fixed assets resulted an
increase in the ratio compared with the previous year
GRAPHICAL REPRESENTATION
293374
420
607
817
000
100
200
300
400
500
600
700
800
900
Ratios
2003 2004 2005 2006 2007
Years
CURRENT ASSETS TO FIXED ASSETS RATIO
Ratios
PROFITABILITY RATIOS
GENERAL PROFITABILITY RATIOS
9 NET PROFIT RATIO
(Amount in Rs)
Net Profit Ratio
Year Net Profit After Tax Income from Services Ratio
2003 21123474 36039834 059
2004 16125942 53899084 030
2005 16929227 72728759 023
2006 18259580 55550649 033
2007 40586359 96654902 042
Interpretation
The net profit ratio is the overall measure of the firmrsquos ability to turn each rupee
of income from services in net profit If the net margin is inadequate the firm
will fail to achieve return on shareholderrsquos funds High net profit ratio will help
the firm service in the fall of income from services rise in cost of production or
declining demand
The net profit is increased because the income from services is increased The
increment resulted a slight increase in 2007 ratio compared with the year 2006
GRAPHICAL REPRESENTATION
059
030
023
033
042
000
010
020
030
040
050
060
Ratios
2003 2004 2005 2006 2007
Years
NET PROFIT RATIO
Ratios
10 OPERATING PROFIT
(Amount in Rs)
Operating Profit
Year Operating Profit Income From Services Ratio
2003 36094877 36309834 099
2004 27576814 53899084 051
2005 29540599 72728759 041
2006 31586718 55550649 057
2007 67192677 96654902 070
Interpretation
The operating profit ratio is used to measure the relationship between net profits
and sales of a firm Depending on the concept it will decide
The operating profit ratio is increased compared with the last year The earnings
are increased due to the increase in the income from services because of
Operations amp Maintenance fee So the ratio is increased slightly compared with
the previous year
GRAPHICAL REPRESENTATION
099
051
041
057
070
000
010
020
030
040
050060
070
080
090
100
Ratios
2003 2004 2005 2006 2007
Years
OPERATING PROFIT RATIO
Ratios
11 RETURN ON TOTAL ASSETS RATIO
(Amount in Rs)
Return on Total Assets Ratio
Year Net Profit After Tax Total Assets Ratio
2003 21123474 78572171 027
2004 16125942 88438107 018
2005 16929227 89158391 019
2006 18259580 106385201 017
2007 40586359 129805102 031
Interpretation
This is the ratio between net profit and total assets The ratio indicates the return
on total assets in the form of profits
The net profit is increased in the current year because of the increment in the
income from services due to the increase in Operations amp Maintenance fee The
fixed assets are reduced due to the charge of depreciation and no major
increments in fixed assets but the current assets are increased because of sundry
debtors and that effects an increase in the ratio compared with the last year ie
2006
GRAPHICAL REPRESENTATION
027
018 019017
031
000
005
010
015
020
025
030
035
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON TOTAL ASSETS
Ratios
12 RESERVES amp SURPLUS TO CAPITAL RATIO
(Amount in Rs)
Reserves amp Surplus To Capital Ratio
Year Reserves amp Surplus Capital Ratio
2003 65599299 2079920 31542004 34582554 18719280 1852005 51511781 18719280 2752006 37754372 18719280 2022007 78340733 18719280 419
Interpretation
The ratio is used to reveal the policy pursued by the company a very high ratio
indicates a conservative dividend policy and vice-versa Higher the ratio better
will be the position
The reserves amp surplus is decreased in the year 2006 due to the payment of
dividends and in the year 2007 the profit is increased But the capital is
remaining constant from the year 2004 So the increase in the reserves amp surplus
caused a greater increase in the current yearrsquos ratio compared with the older
GRAPHICAL REPRESENTATION
3154
185 275 202419
-
500
1000
1500
2000
2500
3000
3500
Ratios
2003 2004 2005 2006 2007
Years
RESERVES amp SRUPLUS TO CAPITAL RATIO
Ratios
OVERALL PROFITABILITY RATIOS
13 EARNINGS PER SHARE
(Amount in Rs)
Earnings Per Share
Year Net Profit After Tax No of Equity Shares Ratio
2003 21123474 207992 101562004 16125942 1871928 8612005 16929227 1871928 9042006 18259580 1871928 9752007 40586359 1871928 2168
Interpretation
Earnings per share ratio are used to find out the return that the shareholderrsquos earn
from their shares After charging depreciation and after payment of tax the
remaining amount will be distributed by all the shareholders
Net profit after tax is increased due to the huge increase in the income from
services That is the amount which is available to the shareholders to take There
are 1871928 shares of Rs10- each The share capital is constant from the year
2004 Due to the huge increase in net profit the earnings per share is greaterly
increased in 2007
GRAPHICAL REPRESENTATION
10156
861904 975
2168
000
2000
4000
6000
8000
10000
12000
Ratios
2003 2004 2005 2006 2007
Years
EARNINGS PER SHARE
Ratios
14 PRICE EARNINGS (PE) RATIO
(Amount in Rs)
Price Earning (PE) Ratio
Year Market Price Per Share Earnings Per Share Ratio
2003 3254 10156 0322004 2847 861 3302005 3752 904 4152006 3017 975 3092007 5185 2168 239
Interpretation
The ratio is calculated to make an estimate of application in the value of share of
a company
The market price per share is increased due to the increase in the reserves
amp surplus The earnings per share are also increased greaterly compared
with the last year because of increase in the net profit So the ratio is
decreased compared with the previous year
GRAPHICAL REPRESENTATION
032
330
415
309
239
000
050
100
150
200
250
300
350
400
450
Ratios
2003 2004 2005 2006 2007
Years
PE RATIO
Ratios
15 RETURN ON INVESTMENT
(Amount in Rs)
Return on Investment
Year Net Profit After Tax Share Holders Fund Ratio
2003 21123474 67679219 031
2004 16125942 53301834 03
2005 16929227 70231061 024
2006 18259580 56473652 032
2007 40586359 97060013 042
Interpretation
This is the ratio between net profits and shareholders funds The ratio is
generally calculated as percentage multiplying with 100
The net profit is increased due to the increase in the income from services ant
the shareholders funds are increased because of reserve amp surplus So the ratio
is increased in the current year
GRAPHICAL REPRESENTATION
031 030
024
032
042
000
005
010
015
020
025
030
035
040
045
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON INVESTMENT RATIO
RatioS
DATA COLLECTION
The data can be of two types
Primary Data
Secondary Data
Primary Data
Primary data are those data which is originally collected afresh
Secondary Data
Secondary data are those data which are already collected and stored and which has
been passed through statistical research
In this project Secondary data has been collected from following sources-
Annual report
Books
MIS
Other material and report published by company There are two methods to prepare
the Cash flow Statement
ndirect Method
I
The indirect method (or reconciliation method) starts with net income and converts it
to net cash flow from operating activities In other words the indirect method adjusts
net income for items that affected reported net income but did not affect cash To
compute net cash flow from operating activities non-cash charges in the income
statement are added ack to net income and non-cash credits are deducted
b
Direct Method
Under the direct method the statement of cash flows reports net cash flow from
operating activities as major classes of operating cash receipts (eg cash collected from
customers and cash received from interest and dividends) and cash disbursements (eg
cash paid to suppliers for goods to employees for services to creditors for interest and
to government authorities for taxes)
INDIRECT VERSUS DIRECT METHOD
The most contentious decision that the FASB faced in issuing Statement No 95 was
choosing between the direct method and the indirect method of determining net cash
flow from operating activities Companies lobbied against the direct method urging
adoption of the indirect method Commercial lending officers expressed a strong
preference to the FASB hat the direct method be required
tCF-Page 3 of 5
In Favor of the Direct Method
The principal advantage of the direct method is that it shows operating cash receipts and
payments That is it is more consistent with the objective of a statement of cash flows to
provide information about cash receipts and cash payments than the in-direct method
which does not report operating cash receipts and payments
Supporters of the direct method contend that knowledge of the specific sources of
operating cash receipts and the purposes for which operating cash payments were made
in past periods is useful in estimating future operating cash flows Furthermore in-
formation about amounts of major classes of operating cash receipts and payments is
more useful than information only about their arithmetic sum (the net cash flow from
operating activities) Such information is more revealing of an enterprises ability (1) to
generate sufficient cash from operating activities to pay its debts (2) to reinvest in its
operations and (3) to make distributions to its owners
Many corporate providers of financial statements say that they do not currently collect
information in a manner that allows them to determine amounts such as cash received
from customers or cash paid to suppliers directly from their accounting systems But
supporters of the direct method contend that the incremental cost of assimilating such
operating cash receipts and payments data is not significant
In Favor of the Indirect Method
The principal advantage of the indirect method is that it focuses on the differences
between net income and net cash flow from operating activities That is it provides a
useful link between the statement of cash flows and the income statement and balance
sheet
Many providers of financial statements contend that it is less costly to adjust net income
to net cash flow from operating activities (indirect) than it is to report gross operating
cash receipts and payments (direct) Supporters of the indirect method also state that the
direct method which effectively reports income statement information on a cash rather
than an accrual basis may erroneously suggest that net cash flow from operating
activities is as good as or better than net income as a measure of performance
Special Rules Applying to Direct and Indirect Methods
Companies that use the direct method are required at a
minimum to report separately the following classes of
operating cash receipts and payments
Receipts
1048713 Cash collected from customers (including lessees licensees etc)
1048713 Interest and dividends received
1048713 Other operating cash receipts if any
Payments
1048713 Cash paid to employees and suppliers of goods or services (including
suppliers of
insurance advertising etc)
1048713 Interest paid
1048713 Income taxes paid
1048713 Other operating cash payments if any
Companies using the indirect method are required to disclose separately changes in
inventory receivables and payables to reconcile net income to net cash flow from
operating activities In addition interest paid (net of amount capitalized) and income
taxes paid must be disclosed elsewhere in the financial statements or accompanying
notes
The FASB requires these separate and additional disclosures so that users
may approximate the direct method Also an acceptable alternative presentation
of the in-direct method is to report net cash flow from operating activities as a
single line item in the statement of cash flows and to present the reconciliation
details elsewhere in the financial statements
FINDING OF SUDY
According to cash flow statement of the company The finding of the study are as
follows-
The company has not taken any loans secured or unsecured from companies
firms or other parties
The company has not accepted any deposit from the public during the year
The company is not a sick industrial company
The company has not granted any loan secured or unsecured to company firms
or other parties
The company has paid the entire long term and short term borrowing during the
year
The company has buy back the companyrsquos own share this year
The interest paid in 2008 is more than the
There has been a significant decline in volume over the years from 2001-02
to 2005-06 as can be seen in the graph below
Table 43
The Net sales of Tractor has increased considerably from 2004-05 to 2007-08
This can be mainly attributed to changes in Variable and material costs and in
the price
The Net sale of Tractor has increased considerably from 2004-05 to 2007-08
that is an decrease of Rs7216 per tractor This can be mainly attributed to
changes in
Variable and material costs and in the prices
RECOMMENDATIONS
According to cash flow statement of the company The suggestions of the study
are as follows-
The time durations for training program have to increase
Buy regular review and consultations develop a career progression
which is sensitive to performance and ability
Create an environment where by people are trend developed to enable
The to take advantages of opportunities that arise
The jab can be redesigned where the work man stay in what is normally
the same job but has elements of it changed
The principle amount must be paid in time which can be reducing the
interest the out flow
The purchase of the fixed asset must be made only when there is extreme
requirement
In order to avoid taxes the company should go for more investment
The companyrsquos borrowings should go for more investment
o The company should try to reduce the depreciations as maximum
as possible
CONCLUSION
The study on competency level of employees at ESCORTS PVTLTD gave an
insight about the acceptance of competency mapping by employees
The employees at Ymi welcome the introduction of competency mapping in their
organization as they felt it was very much essential in enhancing their skills and
organizational development
The organization has provided the recourses guidance and support to facilitate the
introduction of competency level easily and develop the employees in such a way
that they can face any kind of challenge
However the level of competency in employees is found to be satisfactory
Providing proper training education and guidance to the employees can enhance
the level
This study was mainly carried out to find out whether thee competency mapping
being followed by the company is effective till date If the competency mapping
and fitment to the organization
By looking at the graphs and tables it is quite that the employees still are not up to
the level of competent pool they still have to be trained and made competent in
order to fill the gap As the organization has just applied the mapping it has to see
to that it meets all the requirements for competency mapping
Therefore the graphs make it quite clear that the potential of the employees is not
up to the mark and ie they are not competent enough to meet the competency-
mapping requirement Hence by further training and counseling this gap can be
closed
This report includes the training requirements of employees and it highlights skills
possessed by each employee and skill required All employees get training so that
skill can be improved and maintain balance between standard performance with
their actual performance to avoid gap
APPENDIX
QUESTIONNAIRE
Consumer Survey
Name _____________________________
Age _____________________________
Sex
Male
Female
Occupation
Businessman
Service man
Professional
Others
Monthly income brackets
Below 15000
15000- 20000
20000-30000
30000 and above
of your savings _________
Do you invest
Yes
No
If yes then where do you invest your money
Bank
Insurance
funds
Others
Why do you made that statement
Return
Risk hedging
Tax benefits
Other reasons (specify) _______
Who influence your cash decision
Relatives and friends
Family members
Advisors experts
You yourself
If no then why
Do not know where to invest
Satisfied with your current investment return
Donrsquot want take risk
Other reasons
__________________________________________________________________
___________________
Do you know about CF statement
Yes
No
If yes then from where you have come to know about an cash statement
Advertisements on newspapers
Friends and relative
Agents experts
Other source
What do you think about cash statement
It means investing only in share market
Constant watch must be kept always
Return is not satisfactory
Other perception
__________________________________________________
Can you recall any cash flow of company
___________________________
Would you want to made CF of an org
Yes
No
If yes then why
_______________________________________________________
If no then why
_______________________________________________________
BIBLIOGRAPHY
List of Books
1 PANDEY IM - FINANCIAL MANAGEMANT
2 KHAN MY AND JAIN PK -FINANCIAL MANAGEMANT
3 SMITH KV ndash MANAGEMANT OF WORKING CAPITAL
3 COMPANY RECORDS
4 JOURNAL
5 REPORTS
WEBLIOGRAPHY
1 wwwescortspvtltdcom
2 wwwgooglecom
SOME SPECIAL TERMS-
i) INTERSET AND DIVIDEND-
Cash inflow from interest and dividends and cash outflow on account of interest and
dividends should be disclosed separately Cash inflow arising from interest and dividends
received should be shown as cash flow from investing activities where as cash outflow
disclosed outflow on account of interest and dividend paid should be shown as cash flow
from financing activity
ii) TAXES ON INCOME-
Tax paid on income is a part of cash flow from operating activity Hence taxes paid are
shown as a deduction under cash flow from operating activity
iii) EXTRA ORDINARY ITEMS-
Cash flow relating to extra ordinary items such as bad debts recovered Claims received from
insurance companies winning of a lottery or a law etc Should be disclosed separately as
arising from operating investing or financing activities For example the amount received
for insurance company on account of loss of stock by fire Earthquake and floods etc Should
be reported as cash flow from operating activities
iv) SIGNIFICANT NON - CASH TRANSACTION-
There are some investing and financing activities which do not require the use of cash or
cash equivalents Such non cash activities should be excluded from the cash flow statement
Examples are the acquisition of assets by issue of debentures or shares conversion of
shares into debentures etc Such significant on non cash transaction should be disclosed
outside the cash flow statement
CASH FLOW STATEMENT
(INDIRECT METHOD)
CASH FLOW FROM OPERARATTNG ACTIVITIES
Net profit before taxation and extraordinary item
Adjustment for
Depreciation
Foreign exchange loss
Interest income
Dividend income
Interest expense
Operating profit before working capital changes
Increase in sundry debtors
Decrease in inventories
Decrease in sundry creditors
Cash generated from operations
Income tax paid ()
Cash flow before extraordinary item
plusmn Extra - ordinary items
Net cash from operating activities
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of fixed assets ()
Proceeds from sale of equipment
Interest received
Dividend received ()
Net cash from investing activities
CASH FLOW FROM FINANCING ACTIVITIES-
Proceeds from insurance of share capital
Proceeds from long - term borrowings
Repayments of from long - term borrowings ()
Interest paid ()
Dividend paid ()
Net cash from financing activities
Net increase in cash and cash equivalent
Cash and cash equivalents at beginning of period
CHANGES IN CASH FLOWS
Changes in cash flows can be treated to the following
1 Net profit will increase the cash flows these cash flows will be
increased further if there are any non-cash changes (such as depreciation
and amortization)
2 Any payment of dividends will decrease the cash flows as will the
repayment of debt an issue of share or debt will also increase the
cash flows
3 An increase in non-cash assets will decrease cash flows increase in
current assets and fixed assets will result in drain on cash flows
Thus a statement of changes in cash flows ie the cash flow statement
classifies all Changes into one of three categories - operating investing or
financing activities Therefore the preparation of a statement of changes in cash
flows requires classification of changes in liabilities shareholders equity and
non-cash assets into one of these categories although some items will not fit
easily onto one other
h equivalent at end of period
STEP- BY-STEP PROCEDURE TO PREPARE CFS
1 Calculate the net increase or decrease in cash and cash equivalents-
For this purpose the opening balance of total cash and cash equivalents is compared with the
closing balance of cash and equivalents
Increasedecrease in cash and equivalents
Opening balance Closing Balance
Cash in hand
Cash in bank
Short-term Investment
Total
The difference between the total of opening and closing balance will be increased or
Decreased in cash equivalents during the period It may be noted that if there are only one or
two of items of cash etc
2 Net Cash flaw from operating activities-
The term operating refers to the normal purchase of goods and services On the basis of the
information contained in the comparative BS s and the IS and the additional Information the
net cash flow generated or use by the operating activities may be ascertained The IS prepared
by the firm gives the net profit figure earned by the firm On actual basis ie all items in the
IS are incorporated on the basis of earnedaccrued even
3 If not resulting in cash movements-
So the profit or loss as by the IS may not result in increase or decrease in cash balance by the
SYNOPSIS
INTRODUCTION
ESCORTS PVT LTD is a private limited company not listed in a stock exchange of India
and employees 900 highly trained personnel Its manufacturing plants are strategically located
in close proximity to its customers at Faridabad (Haryana) Noida (UP)
OBJECTIVES OF THE STUDY
bull To find the movement of cash inflow and cash outflow
bull To make the comparison between cash inflow and
bull Cash outflow
bull To prepare the Cash Flow Statement
bull To analyze the Balance Sheet of the company in terms of Cash Flow Statement
bull To focus on various activities of the organization in terms of Operating
Financing Investment
SCOPE OF THE STUDY
Financial resources are the assets for the company and their productivity is key
factor for profitability It is necessary to know their problems their knowledge
skills abilities amp the measures that can be taken to reduce them By analyzing this
top management can build good relations with the employees
The whole study is to determine the competencies of different employees who are
working in ESCORTS PVT LTD By analyzing it the top management can
introduce the concept of competency mapping in the organization Through this
management can attempt to use more suitable strategies towards the human
resource development
The research is confined to elicit the existing gap between the standard skill
required to perform the job and the skill processed by the employees at ESCORTS
PVT LTD And to provide them suitable training program to over come those gaps
for the better utilization of human resources
RELEVANCE
The scope of the study was confined to the outside parties like creditors
shareholders government etc Who want to invest their money in the
company
The benefit of the report for the company is that through this report they can come
to know about the cash flow statements of the company
This study also unable the company that their cash is not utilizing in unnecessary
things
The benefit of the report for the researcher is that it has helped to get knowledge
about the cash inflow and cash
RESERRCH METHODOLOGY-
RESEARCH DESIGN
bull The study was conducted under well- structured approach
bull The project lasted for 4 weeks and the year 2009 ie from 08 July to 12
Aug2009
bull The questionnaire method amp personal interview method was used to collect
the primary data for the study
The secondary data is collected from Internet amp company training material and
many other company materials
SAMPLE DESIGN
The process of extracting a sample from a population is called sampling
procedure The selection of sampling procedure to conduct the research
depends upon the nature of the study and the objective to be accomplished
Judgment sampling technique is adopted to select the respondents in this
study The sample design included the various departments in the YAMAHA
MOTORS PVT LTD
Methodology of date collection
bull Conducting personal interview
bull Data collection from primary and secondary sources
bull Designing questionnaire
bull Selecting sample size from the sample frame for the survey
bull Questionnaire distribution
bull Analysis of collected data with the help of statistical tools
bull Interpretation of collected data
bull Stating the conclusion based on the entire study
Sampling Technique
The sampling technique used for this research is of non-probability and convenience
sampling
Sample Unit
Employees of the company
Sample Size
For this research study the sample size is 25 respondents
Sources of data
Primary data
Primary data is the data which is collected by the researcher for the first time
and which was not there The tools used to collect the data are-
1)Questionnaire method from the employers in different departments
2) Face to Face personal interactions
Secondary Data
The data already collected is called as secondary data The relevant information
for this study has been collected from secondary source such as
Books
Journal
Reports
Publication by the organizational circulation
Company records
Business bulletins
Internet
Secondary data is also collected from various of the internet and intranet Some
of the website trough which information was gathered was through
HYPOTHESIS
The report is analyzed under the presumption that cash flow position of
YAMAHA MOTORS PVTLTD It can be improved and made effective in
terms of cash flows
In testing the above hypothesis the following aspects will be considered
1 Balance sheet comparisons
2 Presentation of cash flow statement in terms of revised AS-3
LIMITATIONS
The study though conducted to the best of the ability suffers from some
certain limitations There are
The data is secondary one and as such its reliability may be
questioned upon
The time availability for the study is less and as such it hinders thee
progress of the study
Senior officials were rarely approachable
Websites were not giving comprehensive data
Not having face-to-face interaction to get more relevant
information
Analysis and interpretation of data was done on the assumption that
the respondentsrsquo information was online
Information collected was totally subjective
The interviews are done during office hours but could not be done
for the other employees of other
DATA ANALYSIS
ESCORTS PVT LTD
CASH FLOW STRATEMENT
Year Ended Year Ended
30092009 30092008
Rs Crores Rs
Crores
A Cash Flow from Operating Activities
Net profit before tax (1733) 3444
Adjustment for
Loss on sale Provision for diminution in value of Long Term
Investments amp loans to Group Companies 189 4018
Gain on sale of Long Term Investments (122) (9492)
Gain on sale of Asset (013) -
Depreciation 4497 3955
Misc Exp Assets Write off Provisions 808 750
Interest Expense 7222 7999
Dividend Income (002) (001)
Interest Income (2082) -
Operating Profit before working capital changes 8764 10673
Adjustments for
Trade and other Receivables (8817) (12035)
Inventories 1379 (4692)
Trade Payables 6705 19046
Miscellaneous Expenditure (750) (511)
(1483) 1808
Cash Generated from Operations 7281 12481
Direct Taxes (Paid)Refunds (1785) 3166
Net Cash Flow from operating activities 5496 15647
B Cash Flow from Investing Activities
Purchase of Fixed Assets (3095) (2794)
Proceeds from sale of Fixed Assets 086 177
Movement in Loans and Advances (1627) (1644)
Sale of Investments 3233 11452
Short Term Deposits with schedule Banks (231) (1048)
Interest Received 2070 -
Dividend Received 002 001
Net Cash Flow from Investing activities 438 6144
Proceeds from Share Capital amp Securities Premium 11444 -
Proceeds from Long Term Borrowings 8660 -
Less Repayment of Long Term Borrowings (054) (7896)
Proceeds (Repayment) from short term borrowings (net) (22726) -
Interest Paid (7740) (8223)
Net Cash used in financing activities (10416) (16119)
Net Increase(Decrease) in Cash and Cash equivalents (4482) 5672
Cash and Cash equivalents as at 01102008 10565 4893
Cash and Cash equivalents as at 30092009 6083 1056
ANALYSIS OF CASH FLOW
From the cash flow statements of the ESCORT PVTLTDIt can be analyzed
from the two years that the net cash balance of the company has increased
manifold in 30-09-2008 than the year 30-09-2009
The net profit in 30-09-2008 is higher than the 30-09-2009 but due to certain
changes there has been increase in the cash balance
The interest paid this year is ore of the last year which implies that thee
company has not repaid his borrowed capital due to which the interest has got
down
The depreciation has increased but it does not affect cash to an extent as it is a
non-cash item In the head of working capital there is drastic change in the cash
balance in the form of ldquoTrade and other Receivables which has affected the cash
balance
There is outflow of cash for receivables rather than the inflow in the last year
So the net effect is that the cash from operating activities has been decreased
two times from the last year
The company has no accumulated losses as at the end of the financial year ie
September 31 2008
Provision for taxation has been made in accordance with the requirement of AS-
22 issued by Institute of Charted Accountants of India
Pursuant to that current year deferred tax liability have been charged to profit amp
loss account
In opinion of the board of directors of thee company the current assets loans
and advances have a value on realization in the ordinary course of the business at
least equal to the amount stated in the balance sheet and provision for all
liabilities have been made
Balance of sundry debtors creditors loans and advances are subject to confirmation by
the concerned parties
METHOD OF ANALYSIS
1 Data analysis is done using the following statistical tools wherever required in
order to extract meaningful information from the collected data
o Simple percentage and averages
o Bar diagram
o Cone diagram
o Pie diagram
2 The collected data from the questionnaire has been put together in the form of
tables
3 Percentage has been calculated wherever necessary for generalization of the
data
4 Data analysis and interpretation has been done on the basis of primary and
secondary data
5 The findings researches have been recorded based on the analysis
6 The study conducted pertains only to YAMAHA MOTORS INDIA PVTLTD
All bank balances (debitcredit) have been confirmed by the concerned bank
Identified from the available information which has been relied upon by the auditors
The names of small-scale industrial units to whom outstanding for more than
thirty days within agreed terms
The company has 9996 of shareholders in its subsidiary company named as
ESCORTS PVT LTD As at 31-03-2008
So the net effect is that the net cash from investing activities has many more
times than the last year which is negative Now the company has repaid its long
term borrowing more than the last year which has decreased the cash balance by
the little amount
Balance with the schedule banks under the head current amp collection account
amounting to represent funds in transit lying with schedule banks pending
transfer against loan liabilities under the head cash credit amp bill discounting
LIQUIDITY RATIO
1 CURRENT RATIO
(Amount in Rs)
Current Ratio
Year Current Assets Current Liabilities Ratio
2003 58574151 7903952 7412004 69765346 31884616 2192005 72021081 16065621 4482006 91328208 47117199 1942007 115642068 30266661 382
Interpretation
As a rule the current ratio with 21 (or) more is considered as satisfactory
position of the firm
When compared with 2006 there is an increase in the provision for tax because
the debtors are raised and for that the provision is created The current liabilities
majorly included Lanco Group of company for consultancy additional services
The sundry debtors have increased due to the increase to corporate taxes
In the year 2006 the cash and bank balance is reduced because that is used for
payment of dividends In the year 2007 the loans and advances include majorly
the advances to employees and deposits to government The loans and advances
reduced because the employees set off their claims The other current assets
include the interest attained from the deposits The deposits reduced due to the
declaration of dividends So the other current assets decreased
The huge increase in sundry debtors resulted an increase in the ratio which is
above the benchmark level of 21 which shows the comfortable position of the
firm
GRAPHICAL REPRESENTATION
741
219
448
194
382
000
100
200
300
400
500
600
700
800
Ratio
2003 2004 2005 2006 2007
Years
CURRENT RATIO
Ratio
2 QUICK RATIO
(Amount
in Rs)
Quick Ratio
Year Quick Assets Current Liabilities Ratio
2003 58574151 7903952 741
2004 52470336 31884616 165
2005 69883268 16065620 435
2006 89433596 47117199 19
2007 115431868 30266661 381
Interpretation
Quick assets are those assets which can be converted into cash with in a short
period of time say to six months So here the sundry debtors which are with the
long period does not include in the quick assets
Compare with 2006 the Quick ratio is increased because the sundry debtors are
increased due to the increase in the corporate tax and for that the provision
created is also increased So the ratio is also increased with the 2006
GRAPHICAL REPRESENTATION
741
165
435
190
381
000
100
200
300
400
500
600
700
800
Ratio
2003 2004 2005 2006 2007
Years
QUICK RATIO
Ratios
3 ABOSULTE LIQUIDITY RATIO
(Amount
in Rs)
Absolute Cash Ratio
Year Absolute Liquid Assets Current Liabilities Ratio
2003 31004027 7903952 392
2004 10859778 31884616 034
2005 39466542 16065620 246
2006 53850852 47117199 114
2007 35649070 30266661 118
Interpretation
The current assets which are ready in the form of cash are considered as absolute
liquid assets Here the cash and bank balance and the interest on fixed assts are
absolute liquid assets
In the year 2006 the cash and bank balance is decreased due to decrease in the
deposits and the current liabilities are also reduced because of the payment of
dividend That causes a slight increase in the current yearrsquos ratio
GRAPHICAL REPRESENTATION
392
034
246
114 118
0
05
1
15
2
25
3
35
4
Ratios
2003 2004 2005 2006 2007
Years
ABSOLUTE CASH RATIO
Ratios
LEVERAGE RATIOS
4 PROPRIETORY RATIO
(Amount
in Rs)
Proprietory Ratio
Year Share Holders Funds Total Assets Ratio
2003 67679219 78572171 086
2004 53301834 88438107 06
2005 70231061 89158391 079
2006 56473652 106385201 053
2007 97060013 129805102 075
Interpretation
The proprietary ratio establishes the relationship between shareholders funds to
total assets It determines the long-term solvency of the firm This ratio indicates
the extent to which the assets of the company can be lost without affecting the
interest of the company
There is no increase in the capital from the year2004 The share holderrsquos funds
include capital and reserves and surplus The reserves and surplus is increased
due to the increase in balance in profit and loss account which is caused by the
increase of income from services
Total assets includes fixed and current assets The fixed assets are reduced
because of the depreciation and there are no major increments in the fixed assets
The current assets are increased compared with the year 2006 Total assets are
also increased than precious year which resulted an increase in the ratio than old
GRAPHICAL REPRESENTATION
086
060
079
053
075
000
010
020
030
040
050
060
070
080
090
Ratios
2003 2004 2005 2006 2007
Years
PROPRIETORY RATIO
Ratios
ACTIVITY RATIOS
5 WORKING CAPITAL TURNOVER RATIO
(Amount
in Rs)
Working Capital Turnover Ratio
Year Income From Services Working Capital Ratio
2003 36309834 50670199 0722004 53899084 37880730 1422005 72728759 55355460 1312006 55550649 44211009 1262007 96654902 85375407 113
Interpretation
Income from services is greatly increased due to the extra invoice for Operations
amp Maintenance fee and the working capital is also increased greater due to the
increase in from services because the huge increase in current assets
The income from services is raised and the current assets are also raised together
resulted in the decrease of the ratio of 2007 compared with 2006
GRAPHICAL REPRESENTATION
072
142 131126
113
000
020
040
060
080
100
120
140
160
Ratio
2003 2004 2005 2006 2007
Years
WORKING CAPITAL TURNOVER RATIO
Ratio
6 FIXED ASSETS TURNOVER RATIO
(Amount in Rs)
Fixed Assets Turnover Ratio
Year Income From Services Net Fixed Assets Ratio
2003 36309834 28834317 126
2004 53899084 29568279 182
2005 72728759 17137310 424
2006 55550649 15056993 369
2007 96654902 14163034 682
Interpretation
Fixed assets are used in the business for producing the goods to be sold This
ratio shows the firmrsquos ability in generating sales from all financial resources
committed to total assets The ratio indicates the account of one rupee
investment in fixed assets
The income from services is greaterly increased in the current year due to the
increase in the Operations amp Maintenance fee due to the increase in extra invoice
and the net fixed assets are reduced because of the increased charge of
depreciation Finally that effected a huge increase in the ratio compared with the
previous yearrsquos ratio
GRAPHICAL REPRSENTATION
126182
424 369
682
000
100
200
300
400
500
600
700
Ratios
2003 2004 2005 2006 2007
Years
FIXED ASSETS TURNOVER RATIO
Ratios
7 CAPITAL TURNOVER RATIO
(Amount
in Rs)
Capital Turnover Ratio
Year Income From Services Capital Employed Ratio
2003 36309834 37175892 0982004 53899084 53301834 1012005 72728759 70231061 1042006 55550649 56473652 0982007 96654902 97060013 100
Interpretation
This is another ratio to judge the efficiency and effectiveness of the company
like profitability ratio
The income from services is greaterly increased compared with the previous year
and the total capital employed includes capital and reserves amp surplus Due to
huge increase in the net profit the capital employed is also increased along with
income from services Both are effected in the increment of the ratio of current
year
GRAPHICAL REPRESENTATION
098
101
104
098
100
094095096097098099100101102103104
Ratios
2003 2004 2005 2006 2007
Years
CAPITAL TURNOVER RATIO
Ratios
8 CURRENT ASSETS TO FIXED ASSETS RATIO
(Amount
in Rs)
Current Assets To Fixed Assets Ratio
Year Current Assets Fixed Assets Ratio
2003 58524151 19998020 2932004 69765346 18672761 3742005 72021081 17137310 4202006 91328208 15056993 6072007 115642068 14163034 817
Interpretation
Current assets are increased due to the increase in the sundry debtors and the net
fixed assets of the firm are decreased due to the charge of depreciation and there
is no major increment in the fixed assets
The increment in current assets and the decrease in fixed assets resulted an
increase in the ratio compared with the previous year
GRAPHICAL REPRESENTATION
293374
420
607
817
000
100
200
300
400
500
600
700
800
900
Ratios
2003 2004 2005 2006 2007
Years
CURRENT ASSETS TO FIXED ASSETS RATIO
Ratios
PROFITABILITY RATIOS
GENERAL PROFITABILITY RATIOS
9 NET PROFIT RATIO
(Amount in Rs)
Net Profit Ratio
Year Net Profit After Tax Income from Services Ratio
2003 21123474 36039834 059
2004 16125942 53899084 030
2005 16929227 72728759 023
2006 18259580 55550649 033
2007 40586359 96654902 042
Interpretation
The net profit ratio is the overall measure of the firmrsquos ability to turn each rupee
of income from services in net profit If the net margin is inadequate the firm
will fail to achieve return on shareholderrsquos funds High net profit ratio will help
the firm service in the fall of income from services rise in cost of production or
declining demand
The net profit is increased because the income from services is increased The
increment resulted a slight increase in 2007 ratio compared with the year 2006
GRAPHICAL REPRESENTATION
059
030
023
033
042
000
010
020
030
040
050
060
Ratios
2003 2004 2005 2006 2007
Years
NET PROFIT RATIO
Ratios
10 OPERATING PROFIT
(Amount in Rs)
Operating Profit
Year Operating Profit Income From Services Ratio
2003 36094877 36309834 099
2004 27576814 53899084 051
2005 29540599 72728759 041
2006 31586718 55550649 057
2007 67192677 96654902 070
Interpretation
The operating profit ratio is used to measure the relationship between net profits
and sales of a firm Depending on the concept it will decide
The operating profit ratio is increased compared with the last year The earnings
are increased due to the increase in the income from services because of
Operations amp Maintenance fee So the ratio is increased slightly compared with
the previous year
GRAPHICAL REPRESENTATION
099
051
041
057
070
000
010
020
030
040
050060
070
080
090
100
Ratios
2003 2004 2005 2006 2007
Years
OPERATING PROFIT RATIO
Ratios
11 RETURN ON TOTAL ASSETS RATIO
(Amount in Rs)
Return on Total Assets Ratio
Year Net Profit After Tax Total Assets Ratio
2003 21123474 78572171 027
2004 16125942 88438107 018
2005 16929227 89158391 019
2006 18259580 106385201 017
2007 40586359 129805102 031
Interpretation
This is the ratio between net profit and total assets The ratio indicates the return
on total assets in the form of profits
The net profit is increased in the current year because of the increment in the
income from services due to the increase in Operations amp Maintenance fee The
fixed assets are reduced due to the charge of depreciation and no major
increments in fixed assets but the current assets are increased because of sundry
debtors and that effects an increase in the ratio compared with the last year ie
2006
GRAPHICAL REPRESENTATION
027
018 019017
031
000
005
010
015
020
025
030
035
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON TOTAL ASSETS
Ratios
12 RESERVES amp SURPLUS TO CAPITAL RATIO
(Amount in Rs)
Reserves amp Surplus To Capital Ratio
Year Reserves amp Surplus Capital Ratio
2003 65599299 2079920 31542004 34582554 18719280 1852005 51511781 18719280 2752006 37754372 18719280 2022007 78340733 18719280 419
Interpretation
The ratio is used to reveal the policy pursued by the company a very high ratio
indicates a conservative dividend policy and vice-versa Higher the ratio better
will be the position
The reserves amp surplus is decreased in the year 2006 due to the payment of
dividends and in the year 2007 the profit is increased But the capital is
remaining constant from the year 2004 So the increase in the reserves amp surplus
caused a greater increase in the current yearrsquos ratio compared with the older
GRAPHICAL REPRESENTATION
3154
185 275 202419
-
500
1000
1500
2000
2500
3000
3500
Ratios
2003 2004 2005 2006 2007
Years
RESERVES amp SRUPLUS TO CAPITAL RATIO
Ratios
OVERALL PROFITABILITY RATIOS
13 EARNINGS PER SHARE
(Amount in Rs)
Earnings Per Share
Year Net Profit After Tax No of Equity Shares Ratio
2003 21123474 207992 101562004 16125942 1871928 8612005 16929227 1871928 9042006 18259580 1871928 9752007 40586359 1871928 2168
Interpretation
Earnings per share ratio are used to find out the return that the shareholderrsquos earn
from their shares After charging depreciation and after payment of tax the
remaining amount will be distributed by all the shareholders
Net profit after tax is increased due to the huge increase in the income from
services That is the amount which is available to the shareholders to take There
are 1871928 shares of Rs10- each The share capital is constant from the year
2004 Due to the huge increase in net profit the earnings per share is greaterly
increased in 2007
GRAPHICAL REPRESENTATION
10156
861904 975
2168
000
2000
4000
6000
8000
10000
12000
Ratios
2003 2004 2005 2006 2007
Years
EARNINGS PER SHARE
Ratios
14 PRICE EARNINGS (PE) RATIO
(Amount in Rs)
Price Earning (PE) Ratio
Year Market Price Per Share Earnings Per Share Ratio
2003 3254 10156 0322004 2847 861 3302005 3752 904 4152006 3017 975 3092007 5185 2168 239
Interpretation
The ratio is calculated to make an estimate of application in the value of share of
a company
The market price per share is increased due to the increase in the reserves
amp surplus The earnings per share are also increased greaterly compared
with the last year because of increase in the net profit So the ratio is
decreased compared with the previous year
GRAPHICAL REPRESENTATION
032
330
415
309
239
000
050
100
150
200
250
300
350
400
450
Ratios
2003 2004 2005 2006 2007
Years
PE RATIO
Ratios
15 RETURN ON INVESTMENT
(Amount in Rs)
Return on Investment
Year Net Profit After Tax Share Holders Fund Ratio
2003 21123474 67679219 031
2004 16125942 53301834 03
2005 16929227 70231061 024
2006 18259580 56473652 032
2007 40586359 97060013 042
Interpretation
This is the ratio between net profits and shareholders funds The ratio is
generally calculated as percentage multiplying with 100
The net profit is increased due to the increase in the income from services ant
the shareholders funds are increased because of reserve amp surplus So the ratio
is increased in the current year
GRAPHICAL REPRESENTATION
031 030
024
032
042
000
005
010
015
020
025
030
035
040
045
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON INVESTMENT RATIO
RatioS
DATA COLLECTION
The data can be of two types
Primary Data
Secondary Data
Primary Data
Primary data are those data which is originally collected afresh
Secondary Data
Secondary data are those data which are already collected and stored and which has
been passed through statistical research
In this project Secondary data has been collected from following sources-
Annual report
Books
MIS
Other material and report published by company There are two methods to prepare
the Cash flow Statement
ndirect Method
I
The indirect method (or reconciliation method) starts with net income and converts it
to net cash flow from operating activities In other words the indirect method adjusts
net income for items that affected reported net income but did not affect cash To
compute net cash flow from operating activities non-cash charges in the income
statement are added ack to net income and non-cash credits are deducted
b
Direct Method
Under the direct method the statement of cash flows reports net cash flow from
operating activities as major classes of operating cash receipts (eg cash collected from
customers and cash received from interest and dividends) and cash disbursements (eg
cash paid to suppliers for goods to employees for services to creditors for interest and
to government authorities for taxes)
INDIRECT VERSUS DIRECT METHOD
The most contentious decision that the FASB faced in issuing Statement No 95 was
choosing between the direct method and the indirect method of determining net cash
flow from operating activities Companies lobbied against the direct method urging
adoption of the indirect method Commercial lending officers expressed a strong
preference to the FASB hat the direct method be required
tCF-Page 3 of 5
In Favor of the Direct Method
The principal advantage of the direct method is that it shows operating cash receipts and
payments That is it is more consistent with the objective of a statement of cash flows to
provide information about cash receipts and cash payments than the in-direct method
which does not report operating cash receipts and payments
Supporters of the direct method contend that knowledge of the specific sources of
operating cash receipts and the purposes for which operating cash payments were made
in past periods is useful in estimating future operating cash flows Furthermore in-
formation about amounts of major classes of operating cash receipts and payments is
more useful than information only about their arithmetic sum (the net cash flow from
operating activities) Such information is more revealing of an enterprises ability (1) to
generate sufficient cash from operating activities to pay its debts (2) to reinvest in its
operations and (3) to make distributions to its owners
Many corporate providers of financial statements say that they do not currently collect
information in a manner that allows them to determine amounts such as cash received
from customers or cash paid to suppliers directly from their accounting systems But
supporters of the direct method contend that the incremental cost of assimilating such
operating cash receipts and payments data is not significant
In Favor of the Indirect Method
The principal advantage of the indirect method is that it focuses on the differences
between net income and net cash flow from operating activities That is it provides a
useful link between the statement of cash flows and the income statement and balance
sheet
Many providers of financial statements contend that it is less costly to adjust net income
to net cash flow from operating activities (indirect) than it is to report gross operating
cash receipts and payments (direct) Supporters of the indirect method also state that the
direct method which effectively reports income statement information on a cash rather
than an accrual basis may erroneously suggest that net cash flow from operating
activities is as good as or better than net income as a measure of performance
Special Rules Applying to Direct and Indirect Methods
Companies that use the direct method are required at a
minimum to report separately the following classes of
operating cash receipts and payments
Receipts
1048713 Cash collected from customers (including lessees licensees etc)
1048713 Interest and dividends received
1048713 Other operating cash receipts if any
Payments
1048713 Cash paid to employees and suppliers of goods or services (including
suppliers of
insurance advertising etc)
1048713 Interest paid
1048713 Income taxes paid
1048713 Other operating cash payments if any
Companies using the indirect method are required to disclose separately changes in
inventory receivables and payables to reconcile net income to net cash flow from
operating activities In addition interest paid (net of amount capitalized) and income
taxes paid must be disclosed elsewhere in the financial statements or accompanying
notes
The FASB requires these separate and additional disclosures so that users
may approximate the direct method Also an acceptable alternative presentation
of the in-direct method is to report net cash flow from operating activities as a
single line item in the statement of cash flows and to present the reconciliation
details elsewhere in the financial statements
FINDING OF SUDY
According to cash flow statement of the company The finding of the study are as
follows-
The company has not taken any loans secured or unsecured from companies
firms or other parties
The company has not accepted any deposit from the public during the year
The company is not a sick industrial company
The company has not granted any loan secured or unsecured to company firms
or other parties
The company has paid the entire long term and short term borrowing during the
year
The company has buy back the companyrsquos own share this year
The interest paid in 2008 is more than the
There has been a significant decline in volume over the years from 2001-02
to 2005-06 as can be seen in the graph below
Table 43
The Net sales of Tractor has increased considerably from 2004-05 to 2007-08
This can be mainly attributed to changes in Variable and material costs and in
the price
The Net sale of Tractor has increased considerably from 2004-05 to 2007-08
that is an decrease of Rs7216 per tractor This can be mainly attributed to
changes in
Variable and material costs and in the prices
RECOMMENDATIONS
According to cash flow statement of the company The suggestions of the study
are as follows-
The time durations for training program have to increase
Buy regular review and consultations develop a career progression
which is sensitive to performance and ability
Create an environment where by people are trend developed to enable
The to take advantages of opportunities that arise
The jab can be redesigned where the work man stay in what is normally
the same job but has elements of it changed
The principle amount must be paid in time which can be reducing the
interest the out flow
The purchase of the fixed asset must be made only when there is extreme
requirement
In order to avoid taxes the company should go for more investment
The companyrsquos borrowings should go for more investment
o The company should try to reduce the depreciations as maximum
as possible
CONCLUSION
The study on competency level of employees at ESCORTS PVTLTD gave an
insight about the acceptance of competency mapping by employees
The employees at Ymi welcome the introduction of competency mapping in their
organization as they felt it was very much essential in enhancing their skills and
organizational development
The organization has provided the recourses guidance and support to facilitate the
introduction of competency level easily and develop the employees in such a way
that they can face any kind of challenge
However the level of competency in employees is found to be satisfactory
Providing proper training education and guidance to the employees can enhance
the level
This study was mainly carried out to find out whether thee competency mapping
being followed by the company is effective till date If the competency mapping
and fitment to the organization
By looking at the graphs and tables it is quite that the employees still are not up to
the level of competent pool they still have to be trained and made competent in
order to fill the gap As the organization has just applied the mapping it has to see
to that it meets all the requirements for competency mapping
Therefore the graphs make it quite clear that the potential of the employees is not
up to the mark and ie they are not competent enough to meet the competency-
mapping requirement Hence by further training and counseling this gap can be
closed
This report includes the training requirements of employees and it highlights skills
possessed by each employee and skill required All employees get training so that
skill can be improved and maintain balance between standard performance with
their actual performance to avoid gap
APPENDIX
QUESTIONNAIRE
Consumer Survey
Name _____________________________
Age _____________________________
Sex
Male
Female
Occupation
Businessman
Service man
Professional
Others
Monthly income brackets
Below 15000
15000- 20000
20000-30000
30000 and above
of your savings _________
Do you invest
Yes
No
If yes then where do you invest your money
Bank
Insurance
funds
Others
Why do you made that statement
Return
Risk hedging
Tax benefits
Other reasons (specify) _______
Who influence your cash decision
Relatives and friends
Family members
Advisors experts
You yourself
If no then why
Do not know where to invest
Satisfied with your current investment return
Donrsquot want take risk
Other reasons
__________________________________________________________________
___________________
Do you know about CF statement
Yes
No
If yes then from where you have come to know about an cash statement
Advertisements on newspapers
Friends and relative
Agents experts
Other source
What do you think about cash statement
It means investing only in share market
Constant watch must be kept always
Return is not satisfactory
Other perception
__________________________________________________
Can you recall any cash flow of company
___________________________
Would you want to made CF of an org
Yes
No
If yes then why
_______________________________________________________
If no then why
_______________________________________________________
BIBLIOGRAPHY
List of Books
1 PANDEY IM - FINANCIAL MANAGEMANT
2 KHAN MY AND JAIN PK -FINANCIAL MANAGEMANT
3 SMITH KV ndash MANAGEMANT OF WORKING CAPITAL
3 COMPANY RECORDS
4 JOURNAL
5 REPORTS
WEBLIOGRAPHY
1 wwwescortspvtltdcom
2 wwwgooglecom
CASH FLOW STATEMENT
(INDIRECT METHOD)
CASH FLOW FROM OPERARATTNG ACTIVITIES
Net profit before taxation and extraordinary item
Adjustment for
Depreciation
Foreign exchange loss
Interest income
Dividend income
Interest expense
Operating profit before working capital changes
Increase in sundry debtors
Decrease in inventories
Decrease in sundry creditors
Cash generated from operations
Income tax paid ()
Cash flow before extraordinary item
plusmn Extra - ordinary items
Net cash from operating activities
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of fixed assets ()
Proceeds from sale of equipment
Interest received
Dividend received ()
Net cash from investing activities
CASH FLOW FROM FINANCING ACTIVITIES-
Proceeds from insurance of share capital
Proceeds from long - term borrowings
Repayments of from long - term borrowings ()
Interest paid ()
Dividend paid ()
Net cash from financing activities
Net increase in cash and cash equivalent
Cash and cash equivalents at beginning of period
CHANGES IN CASH FLOWS
Changes in cash flows can be treated to the following
1 Net profit will increase the cash flows these cash flows will be
increased further if there are any non-cash changes (such as depreciation
and amortization)
2 Any payment of dividends will decrease the cash flows as will the
repayment of debt an issue of share or debt will also increase the
cash flows
3 An increase in non-cash assets will decrease cash flows increase in
current assets and fixed assets will result in drain on cash flows
Thus a statement of changes in cash flows ie the cash flow statement
classifies all Changes into one of three categories - operating investing or
financing activities Therefore the preparation of a statement of changes in cash
flows requires classification of changes in liabilities shareholders equity and
non-cash assets into one of these categories although some items will not fit
easily onto one other
h equivalent at end of period
STEP- BY-STEP PROCEDURE TO PREPARE CFS
1 Calculate the net increase or decrease in cash and cash equivalents-
For this purpose the opening balance of total cash and cash equivalents is compared with the
closing balance of cash and equivalents
Increasedecrease in cash and equivalents
Opening balance Closing Balance
Cash in hand
Cash in bank
Short-term Investment
Total
The difference between the total of opening and closing balance will be increased or
Decreased in cash equivalents during the period It may be noted that if there are only one or
two of items of cash etc
2 Net Cash flaw from operating activities-
The term operating refers to the normal purchase of goods and services On the basis of the
information contained in the comparative BS s and the IS and the additional Information the
net cash flow generated or use by the operating activities may be ascertained The IS prepared
by the firm gives the net profit figure earned by the firm On actual basis ie all items in the
IS are incorporated on the basis of earnedaccrued even
3 If not resulting in cash movements-
So the profit or loss as by the IS may not result in increase or decrease in cash balance by the
SYNOPSIS
INTRODUCTION
ESCORTS PVT LTD is a private limited company not listed in a stock exchange of India
and employees 900 highly trained personnel Its manufacturing plants are strategically located
in close proximity to its customers at Faridabad (Haryana) Noida (UP)
OBJECTIVES OF THE STUDY
bull To find the movement of cash inflow and cash outflow
bull To make the comparison between cash inflow and
bull Cash outflow
bull To prepare the Cash Flow Statement
bull To analyze the Balance Sheet of the company in terms of Cash Flow Statement
bull To focus on various activities of the organization in terms of Operating
Financing Investment
SCOPE OF THE STUDY
Financial resources are the assets for the company and their productivity is key
factor for profitability It is necessary to know their problems their knowledge
skills abilities amp the measures that can be taken to reduce them By analyzing this
top management can build good relations with the employees
The whole study is to determine the competencies of different employees who are
working in ESCORTS PVT LTD By analyzing it the top management can
introduce the concept of competency mapping in the organization Through this
management can attempt to use more suitable strategies towards the human
resource development
The research is confined to elicit the existing gap between the standard skill
required to perform the job and the skill processed by the employees at ESCORTS
PVT LTD And to provide them suitable training program to over come those gaps
for the better utilization of human resources
RELEVANCE
The scope of the study was confined to the outside parties like creditors
shareholders government etc Who want to invest their money in the
company
The benefit of the report for the company is that through this report they can come
to know about the cash flow statements of the company
This study also unable the company that their cash is not utilizing in unnecessary
things
The benefit of the report for the researcher is that it has helped to get knowledge
about the cash inflow and cash
RESERRCH METHODOLOGY-
RESEARCH DESIGN
bull The study was conducted under well- structured approach
bull The project lasted for 4 weeks and the year 2009 ie from 08 July to 12
Aug2009
bull The questionnaire method amp personal interview method was used to collect
the primary data for the study
The secondary data is collected from Internet amp company training material and
many other company materials
SAMPLE DESIGN
The process of extracting a sample from a population is called sampling
procedure The selection of sampling procedure to conduct the research
depends upon the nature of the study and the objective to be accomplished
Judgment sampling technique is adopted to select the respondents in this
study The sample design included the various departments in the YAMAHA
MOTORS PVT LTD
Methodology of date collection
bull Conducting personal interview
bull Data collection from primary and secondary sources
bull Designing questionnaire
bull Selecting sample size from the sample frame for the survey
bull Questionnaire distribution
bull Analysis of collected data with the help of statistical tools
bull Interpretation of collected data
bull Stating the conclusion based on the entire study
Sampling Technique
The sampling technique used for this research is of non-probability and convenience
sampling
Sample Unit
Employees of the company
Sample Size
For this research study the sample size is 25 respondents
Sources of data
Primary data
Primary data is the data which is collected by the researcher for the first time
and which was not there The tools used to collect the data are-
1)Questionnaire method from the employers in different departments
2) Face to Face personal interactions
Secondary Data
The data already collected is called as secondary data The relevant information
for this study has been collected from secondary source such as
Books
Journal
Reports
Publication by the organizational circulation
Company records
Business bulletins
Internet
Secondary data is also collected from various of the internet and intranet Some
of the website trough which information was gathered was through
HYPOTHESIS
The report is analyzed under the presumption that cash flow position of
YAMAHA MOTORS PVTLTD It can be improved and made effective in
terms of cash flows
In testing the above hypothesis the following aspects will be considered
1 Balance sheet comparisons
2 Presentation of cash flow statement in terms of revised AS-3
LIMITATIONS
The study though conducted to the best of the ability suffers from some
certain limitations There are
The data is secondary one and as such its reliability may be
questioned upon
The time availability for the study is less and as such it hinders thee
progress of the study
Senior officials were rarely approachable
Websites were not giving comprehensive data
Not having face-to-face interaction to get more relevant
information
Analysis and interpretation of data was done on the assumption that
the respondentsrsquo information was online
Information collected was totally subjective
The interviews are done during office hours but could not be done
for the other employees of other
DATA ANALYSIS
ESCORTS PVT LTD
CASH FLOW STRATEMENT
Year Ended Year Ended
30092009 30092008
Rs Crores Rs
Crores
A Cash Flow from Operating Activities
Net profit before tax (1733) 3444
Adjustment for
Loss on sale Provision for diminution in value of Long Term
Investments amp loans to Group Companies 189 4018
Gain on sale of Long Term Investments (122) (9492)
Gain on sale of Asset (013) -
Depreciation 4497 3955
Misc Exp Assets Write off Provisions 808 750
Interest Expense 7222 7999
Dividend Income (002) (001)
Interest Income (2082) -
Operating Profit before working capital changes 8764 10673
Adjustments for
Trade and other Receivables (8817) (12035)
Inventories 1379 (4692)
Trade Payables 6705 19046
Miscellaneous Expenditure (750) (511)
(1483) 1808
Cash Generated from Operations 7281 12481
Direct Taxes (Paid)Refunds (1785) 3166
Net Cash Flow from operating activities 5496 15647
B Cash Flow from Investing Activities
Purchase of Fixed Assets (3095) (2794)
Proceeds from sale of Fixed Assets 086 177
Movement in Loans and Advances (1627) (1644)
Sale of Investments 3233 11452
Short Term Deposits with schedule Banks (231) (1048)
Interest Received 2070 -
Dividend Received 002 001
Net Cash Flow from Investing activities 438 6144
Proceeds from Share Capital amp Securities Premium 11444 -
Proceeds from Long Term Borrowings 8660 -
Less Repayment of Long Term Borrowings (054) (7896)
Proceeds (Repayment) from short term borrowings (net) (22726) -
Interest Paid (7740) (8223)
Net Cash used in financing activities (10416) (16119)
Net Increase(Decrease) in Cash and Cash equivalents (4482) 5672
Cash and Cash equivalents as at 01102008 10565 4893
Cash and Cash equivalents as at 30092009 6083 1056
ANALYSIS OF CASH FLOW
From the cash flow statements of the ESCORT PVTLTDIt can be analyzed
from the two years that the net cash balance of the company has increased
manifold in 30-09-2008 than the year 30-09-2009
The net profit in 30-09-2008 is higher than the 30-09-2009 but due to certain
changes there has been increase in the cash balance
The interest paid this year is ore of the last year which implies that thee
company has not repaid his borrowed capital due to which the interest has got
down
The depreciation has increased but it does not affect cash to an extent as it is a
non-cash item In the head of working capital there is drastic change in the cash
balance in the form of ldquoTrade and other Receivables which has affected the cash
balance
There is outflow of cash for receivables rather than the inflow in the last year
So the net effect is that the cash from operating activities has been decreased
two times from the last year
The company has no accumulated losses as at the end of the financial year ie
September 31 2008
Provision for taxation has been made in accordance with the requirement of AS-
22 issued by Institute of Charted Accountants of India
Pursuant to that current year deferred tax liability have been charged to profit amp
loss account
In opinion of the board of directors of thee company the current assets loans
and advances have a value on realization in the ordinary course of the business at
least equal to the amount stated in the balance sheet and provision for all
liabilities have been made
Balance of sundry debtors creditors loans and advances are subject to confirmation by
the concerned parties
METHOD OF ANALYSIS
1 Data analysis is done using the following statistical tools wherever required in
order to extract meaningful information from the collected data
o Simple percentage and averages
o Bar diagram
o Cone diagram
o Pie diagram
2 The collected data from the questionnaire has been put together in the form of
tables
3 Percentage has been calculated wherever necessary for generalization of the
data
4 Data analysis and interpretation has been done on the basis of primary and
secondary data
5 The findings researches have been recorded based on the analysis
6 The study conducted pertains only to YAMAHA MOTORS INDIA PVTLTD
All bank balances (debitcredit) have been confirmed by the concerned bank
Identified from the available information which has been relied upon by the auditors
The names of small-scale industrial units to whom outstanding for more than
thirty days within agreed terms
The company has 9996 of shareholders in its subsidiary company named as
ESCORTS PVT LTD As at 31-03-2008
So the net effect is that the net cash from investing activities has many more
times than the last year which is negative Now the company has repaid its long
term borrowing more than the last year which has decreased the cash balance by
the little amount
Balance with the schedule banks under the head current amp collection account
amounting to represent funds in transit lying with schedule banks pending
transfer against loan liabilities under the head cash credit amp bill discounting
LIQUIDITY RATIO
1 CURRENT RATIO
(Amount in Rs)
Current Ratio
Year Current Assets Current Liabilities Ratio
2003 58574151 7903952 7412004 69765346 31884616 2192005 72021081 16065621 4482006 91328208 47117199 1942007 115642068 30266661 382
Interpretation
As a rule the current ratio with 21 (or) more is considered as satisfactory
position of the firm
When compared with 2006 there is an increase in the provision for tax because
the debtors are raised and for that the provision is created The current liabilities
majorly included Lanco Group of company for consultancy additional services
The sundry debtors have increased due to the increase to corporate taxes
In the year 2006 the cash and bank balance is reduced because that is used for
payment of dividends In the year 2007 the loans and advances include majorly
the advances to employees and deposits to government The loans and advances
reduced because the employees set off their claims The other current assets
include the interest attained from the deposits The deposits reduced due to the
declaration of dividends So the other current assets decreased
The huge increase in sundry debtors resulted an increase in the ratio which is
above the benchmark level of 21 which shows the comfortable position of the
firm
GRAPHICAL REPRESENTATION
741
219
448
194
382
000
100
200
300
400
500
600
700
800
Ratio
2003 2004 2005 2006 2007
Years
CURRENT RATIO
Ratio
2 QUICK RATIO
(Amount
in Rs)
Quick Ratio
Year Quick Assets Current Liabilities Ratio
2003 58574151 7903952 741
2004 52470336 31884616 165
2005 69883268 16065620 435
2006 89433596 47117199 19
2007 115431868 30266661 381
Interpretation
Quick assets are those assets which can be converted into cash with in a short
period of time say to six months So here the sundry debtors which are with the
long period does not include in the quick assets
Compare with 2006 the Quick ratio is increased because the sundry debtors are
increased due to the increase in the corporate tax and for that the provision
created is also increased So the ratio is also increased with the 2006
GRAPHICAL REPRESENTATION
741
165
435
190
381
000
100
200
300
400
500
600
700
800
Ratio
2003 2004 2005 2006 2007
Years
QUICK RATIO
Ratios
3 ABOSULTE LIQUIDITY RATIO
(Amount
in Rs)
Absolute Cash Ratio
Year Absolute Liquid Assets Current Liabilities Ratio
2003 31004027 7903952 392
2004 10859778 31884616 034
2005 39466542 16065620 246
2006 53850852 47117199 114
2007 35649070 30266661 118
Interpretation
The current assets which are ready in the form of cash are considered as absolute
liquid assets Here the cash and bank balance and the interest on fixed assts are
absolute liquid assets
In the year 2006 the cash and bank balance is decreased due to decrease in the
deposits and the current liabilities are also reduced because of the payment of
dividend That causes a slight increase in the current yearrsquos ratio
GRAPHICAL REPRESENTATION
392
034
246
114 118
0
05
1
15
2
25
3
35
4
Ratios
2003 2004 2005 2006 2007
Years
ABSOLUTE CASH RATIO
Ratios
LEVERAGE RATIOS
4 PROPRIETORY RATIO
(Amount
in Rs)
Proprietory Ratio
Year Share Holders Funds Total Assets Ratio
2003 67679219 78572171 086
2004 53301834 88438107 06
2005 70231061 89158391 079
2006 56473652 106385201 053
2007 97060013 129805102 075
Interpretation
The proprietary ratio establishes the relationship between shareholders funds to
total assets It determines the long-term solvency of the firm This ratio indicates
the extent to which the assets of the company can be lost without affecting the
interest of the company
There is no increase in the capital from the year2004 The share holderrsquos funds
include capital and reserves and surplus The reserves and surplus is increased
due to the increase in balance in profit and loss account which is caused by the
increase of income from services
Total assets includes fixed and current assets The fixed assets are reduced
because of the depreciation and there are no major increments in the fixed assets
The current assets are increased compared with the year 2006 Total assets are
also increased than precious year which resulted an increase in the ratio than old
GRAPHICAL REPRESENTATION
086
060
079
053
075
000
010
020
030
040
050
060
070
080
090
Ratios
2003 2004 2005 2006 2007
Years
PROPRIETORY RATIO
Ratios
ACTIVITY RATIOS
5 WORKING CAPITAL TURNOVER RATIO
(Amount
in Rs)
Working Capital Turnover Ratio
Year Income From Services Working Capital Ratio
2003 36309834 50670199 0722004 53899084 37880730 1422005 72728759 55355460 1312006 55550649 44211009 1262007 96654902 85375407 113
Interpretation
Income from services is greatly increased due to the extra invoice for Operations
amp Maintenance fee and the working capital is also increased greater due to the
increase in from services because the huge increase in current assets
The income from services is raised and the current assets are also raised together
resulted in the decrease of the ratio of 2007 compared with 2006
GRAPHICAL REPRESENTATION
072
142 131126
113
000
020
040
060
080
100
120
140
160
Ratio
2003 2004 2005 2006 2007
Years
WORKING CAPITAL TURNOVER RATIO
Ratio
6 FIXED ASSETS TURNOVER RATIO
(Amount in Rs)
Fixed Assets Turnover Ratio
Year Income From Services Net Fixed Assets Ratio
2003 36309834 28834317 126
2004 53899084 29568279 182
2005 72728759 17137310 424
2006 55550649 15056993 369
2007 96654902 14163034 682
Interpretation
Fixed assets are used in the business for producing the goods to be sold This
ratio shows the firmrsquos ability in generating sales from all financial resources
committed to total assets The ratio indicates the account of one rupee
investment in fixed assets
The income from services is greaterly increased in the current year due to the
increase in the Operations amp Maintenance fee due to the increase in extra invoice
and the net fixed assets are reduced because of the increased charge of
depreciation Finally that effected a huge increase in the ratio compared with the
previous yearrsquos ratio
GRAPHICAL REPRSENTATION
126182
424 369
682
000
100
200
300
400
500
600
700
Ratios
2003 2004 2005 2006 2007
Years
FIXED ASSETS TURNOVER RATIO
Ratios
7 CAPITAL TURNOVER RATIO
(Amount
in Rs)
Capital Turnover Ratio
Year Income From Services Capital Employed Ratio
2003 36309834 37175892 0982004 53899084 53301834 1012005 72728759 70231061 1042006 55550649 56473652 0982007 96654902 97060013 100
Interpretation
This is another ratio to judge the efficiency and effectiveness of the company
like profitability ratio
The income from services is greaterly increased compared with the previous year
and the total capital employed includes capital and reserves amp surplus Due to
huge increase in the net profit the capital employed is also increased along with
income from services Both are effected in the increment of the ratio of current
year
GRAPHICAL REPRESENTATION
098
101
104
098
100
094095096097098099100101102103104
Ratios
2003 2004 2005 2006 2007
Years
CAPITAL TURNOVER RATIO
Ratios
8 CURRENT ASSETS TO FIXED ASSETS RATIO
(Amount
in Rs)
Current Assets To Fixed Assets Ratio
Year Current Assets Fixed Assets Ratio
2003 58524151 19998020 2932004 69765346 18672761 3742005 72021081 17137310 4202006 91328208 15056993 6072007 115642068 14163034 817
Interpretation
Current assets are increased due to the increase in the sundry debtors and the net
fixed assets of the firm are decreased due to the charge of depreciation and there
is no major increment in the fixed assets
The increment in current assets and the decrease in fixed assets resulted an
increase in the ratio compared with the previous year
GRAPHICAL REPRESENTATION
293374
420
607
817
000
100
200
300
400
500
600
700
800
900
Ratios
2003 2004 2005 2006 2007
Years
CURRENT ASSETS TO FIXED ASSETS RATIO
Ratios
PROFITABILITY RATIOS
GENERAL PROFITABILITY RATIOS
9 NET PROFIT RATIO
(Amount in Rs)
Net Profit Ratio
Year Net Profit After Tax Income from Services Ratio
2003 21123474 36039834 059
2004 16125942 53899084 030
2005 16929227 72728759 023
2006 18259580 55550649 033
2007 40586359 96654902 042
Interpretation
The net profit ratio is the overall measure of the firmrsquos ability to turn each rupee
of income from services in net profit If the net margin is inadequate the firm
will fail to achieve return on shareholderrsquos funds High net profit ratio will help
the firm service in the fall of income from services rise in cost of production or
declining demand
The net profit is increased because the income from services is increased The
increment resulted a slight increase in 2007 ratio compared with the year 2006
GRAPHICAL REPRESENTATION
059
030
023
033
042
000
010
020
030
040
050
060
Ratios
2003 2004 2005 2006 2007
Years
NET PROFIT RATIO
Ratios
10 OPERATING PROFIT
(Amount in Rs)
Operating Profit
Year Operating Profit Income From Services Ratio
2003 36094877 36309834 099
2004 27576814 53899084 051
2005 29540599 72728759 041
2006 31586718 55550649 057
2007 67192677 96654902 070
Interpretation
The operating profit ratio is used to measure the relationship between net profits
and sales of a firm Depending on the concept it will decide
The operating profit ratio is increased compared with the last year The earnings
are increased due to the increase in the income from services because of
Operations amp Maintenance fee So the ratio is increased slightly compared with
the previous year
GRAPHICAL REPRESENTATION
099
051
041
057
070
000
010
020
030
040
050060
070
080
090
100
Ratios
2003 2004 2005 2006 2007
Years
OPERATING PROFIT RATIO
Ratios
11 RETURN ON TOTAL ASSETS RATIO
(Amount in Rs)
Return on Total Assets Ratio
Year Net Profit After Tax Total Assets Ratio
2003 21123474 78572171 027
2004 16125942 88438107 018
2005 16929227 89158391 019
2006 18259580 106385201 017
2007 40586359 129805102 031
Interpretation
This is the ratio between net profit and total assets The ratio indicates the return
on total assets in the form of profits
The net profit is increased in the current year because of the increment in the
income from services due to the increase in Operations amp Maintenance fee The
fixed assets are reduced due to the charge of depreciation and no major
increments in fixed assets but the current assets are increased because of sundry
debtors and that effects an increase in the ratio compared with the last year ie
2006
GRAPHICAL REPRESENTATION
027
018 019017
031
000
005
010
015
020
025
030
035
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON TOTAL ASSETS
Ratios
12 RESERVES amp SURPLUS TO CAPITAL RATIO
(Amount in Rs)
Reserves amp Surplus To Capital Ratio
Year Reserves amp Surplus Capital Ratio
2003 65599299 2079920 31542004 34582554 18719280 1852005 51511781 18719280 2752006 37754372 18719280 2022007 78340733 18719280 419
Interpretation
The ratio is used to reveal the policy pursued by the company a very high ratio
indicates a conservative dividend policy and vice-versa Higher the ratio better
will be the position
The reserves amp surplus is decreased in the year 2006 due to the payment of
dividends and in the year 2007 the profit is increased But the capital is
remaining constant from the year 2004 So the increase in the reserves amp surplus
caused a greater increase in the current yearrsquos ratio compared with the older
GRAPHICAL REPRESENTATION
3154
185 275 202419
-
500
1000
1500
2000
2500
3000
3500
Ratios
2003 2004 2005 2006 2007
Years
RESERVES amp SRUPLUS TO CAPITAL RATIO
Ratios
OVERALL PROFITABILITY RATIOS
13 EARNINGS PER SHARE
(Amount in Rs)
Earnings Per Share
Year Net Profit After Tax No of Equity Shares Ratio
2003 21123474 207992 101562004 16125942 1871928 8612005 16929227 1871928 9042006 18259580 1871928 9752007 40586359 1871928 2168
Interpretation
Earnings per share ratio are used to find out the return that the shareholderrsquos earn
from their shares After charging depreciation and after payment of tax the
remaining amount will be distributed by all the shareholders
Net profit after tax is increased due to the huge increase in the income from
services That is the amount which is available to the shareholders to take There
are 1871928 shares of Rs10- each The share capital is constant from the year
2004 Due to the huge increase in net profit the earnings per share is greaterly
increased in 2007
GRAPHICAL REPRESENTATION
10156
861904 975
2168
000
2000
4000
6000
8000
10000
12000
Ratios
2003 2004 2005 2006 2007
Years
EARNINGS PER SHARE
Ratios
14 PRICE EARNINGS (PE) RATIO
(Amount in Rs)
Price Earning (PE) Ratio
Year Market Price Per Share Earnings Per Share Ratio
2003 3254 10156 0322004 2847 861 3302005 3752 904 4152006 3017 975 3092007 5185 2168 239
Interpretation
The ratio is calculated to make an estimate of application in the value of share of
a company
The market price per share is increased due to the increase in the reserves
amp surplus The earnings per share are also increased greaterly compared
with the last year because of increase in the net profit So the ratio is
decreased compared with the previous year
GRAPHICAL REPRESENTATION
032
330
415
309
239
000
050
100
150
200
250
300
350
400
450
Ratios
2003 2004 2005 2006 2007
Years
PE RATIO
Ratios
15 RETURN ON INVESTMENT
(Amount in Rs)
Return on Investment
Year Net Profit After Tax Share Holders Fund Ratio
2003 21123474 67679219 031
2004 16125942 53301834 03
2005 16929227 70231061 024
2006 18259580 56473652 032
2007 40586359 97060013 042
Interpretation
This is the ratio between net profits and shareholders funds The ratio is
generally calculated as percentage multiplying with 100
The net profit is increased due to the increase in the income from services ant
the shareholders funds are increased because of reserve amp surplus So the ratio
is increased in the current year
GRAPHICAL REPRESENTATION
031 030
024
032
042
000
005
010
015
020
025
030
035
040
045
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON INVESTMENT RATIO
RatioS
DATA COLLECTION
The data can be of two types
Primary Data
Secondary Data
Primary Data
Primary data are those data which is originally collected afresh
Secondary Data
Secondary data are those data which are already collected and stored and which has
been passed through statistical research
In this project Secondary data has been collected from following sources-
Annual report
Books
MIS
Other material and report published by company There are two methods to prepare
the Cash flow Statement
ndirect Method
I
The indirect method (or reconciliation method) starts with net income and converts it
to net cash flow from operating activities In other words the indirect method adjusts
net income for items that affected reported net income but did not affect cash To
compute net cash flow from operating activities non-cash charges in the income
statement are added ack to net income and non-cash credits are deducted
b
Direct Method
Under the direct method the statement of cash flows reports net cash flow from
operating activities as major classes of operating cash receipts (eg cash collected from
customers and cash received from interest and dividends) and cash disbursements (eg
cash paid to suppliers for goods to employees for services to creditors for interest and
to government authorities for taxes)
INDIRECT VERSUS DIRECT METHOD
The most contentious decision that the FASB faced in issuing Statement No 95 was
choosing between the direct method and the indirect method of determining net cash
flow from operating activities Companies lobbied against the direct method urging
adoption of the indirect method Commercial lending officers expressed a strong
preference to the FASB hat the direct method be required
tCF-Page 3 of 5
In Favor of the Direct Method
The principal advantage of the direct method is that it shows operating cash receipts and
payments That is it is more consistent with the objective of a statement of cash flows to
provide information about cash receipts and cash payments than the in-direct method
which does not report operating cash receipts and payments
Supporters of the direct method contend that knowledge of the specific sources of
operating cash receipts and the purposes for which operating cash payments were made
in past periods is useful in estimating future operating cash flows Furthermore in-
formation about amounts of major classes of operating cash receipts and payments is
more useful than information only about their arithmetic sum (the net cash flow from
operating activities) Such information is more revealing of an enterprises ability (1) to
generate sufficient cash from operating activities to pay its debts (2) to reinvest in its
operations and (3) to make distributions to its owners
Many corporate providers of financial statements say that they do not currently collect
information in a manner that allows them to determine amounts such as cash received
from customers or cash paid to suppliers directly from their accounting systems But
supporters of the direct method contend that the incremental cost of assimilating such
operating cash receipts and payments data is not significant
In Favor of the Indirect Method
The principal advantage of the indirect method is that it focuses on the differences
between net income and net cash flow from operating activities That is it provides a
useful link between the statement of cash flows and the income statement and balance
sheet
Many providers of financial statements contend that it is less costly to adjust net income
to net cash flow from operating activities (indirect) than it is to report gross operating
cash receipts and payments (direct) Supporters of the indirect method also state that the
direct method which effectively reports income statement information on a cash rather
than an accrual basis may erroneously suggest that net cash flow from operating
activities is as good as or better than net income as a measure of performance
Special Rules Applying to Direct and Indirect Methods
Companies that use the direct method are required at a
minimum to report separately the following classes of
operating cash receipts and payments
Receipts
1048713 Cash collected from customers (including lessees licensees etc)
1048713 Interest and dividends received
1048713 Other operating cash receipts if any
Payments
1048713 Cash paid to employees and suppliers of goods or services (including
suppliers of
insurance advertising etc)
1048713 Interest paid
1048713 Income taxes paid
1048713 Other operating cash payments if any
Companies using the indirect method are required to disclose separately changes in
inventory receivables and payables to reconcile net income to net cash flow from
operating activities In addition interest paid (net of amount capitalized) and income
taxes paid must be disclosed elsewhere in the financial statements or accompanying
notes
The FASB requires these separate and additional disclosures so that users
may approximate the direct method Also an acceptable alternative presentation
of the in-direct method is to report net cash flow from operating activities as a
single line item in the statement of cash flows and to present the reconciliation
details elsewhere in the financial statements
FINDING OF SUDY
According to cash flow statement of the company The finding of the study are as
follows-
The company has not taken any loans secured or unsecured from companies
firms or other parties
The company has not accepted any deposit from the public during the year
The company is not a sick industrial company
The company has not granted any loan secured or unsecured to company firms
or other parties
The company has paid the entire long term and short term borrowing during the
year
The company has buy back the companyrsquos own share this year
The interest paid in 2008 is more than the
There has been a significant decline in volume over the years from 2001-02
to 2005-06 as can be seen in the graph below
Table 43
The Net sales of Tractor has increased considerably from 2004-05 to 2007-08
This can be mainly attributed to changes in Variable and material costs and in
the price
The Net sale of Tractor has increased considerably from 2004-05 to 2007-08
that is an decrease of Rs7216 per tractor This can be mainly attributed to
changes in
Variable and material costs and in the prices
RECOMMENDATIONS
According to cash flow statement of the company The suggestions of the study
are as follows-
The time durations for training program have to increase
Buy regular review and consultations develop a career progression
which is sensitive to performance and ability
Create an environment where by people are trend developed to enable
The to take advantages of opportunities that arise
The jab can be redesigned where the work man stay in what is normally
the same job but has elements of it changed
The principle amount must be paid in time which can be reducing the
interest the out flow
The purchase of the fixed asset must be made only when there is extreme
requirement
In order to avoid taxes the company should go for more investment
The companyrsquos borrowings should go for more investment
o The company should try to reduce the depreciations as maximum
as possible
CONCLUSION
The study on competency level of employees at ESCORTS PVTLTD gave an
insight about the acceptance of competency mapping by employees
The employees at Ymi welcome the introduction of competency mapping in their
organization as they felt it was very much essential in enhancing their skills and
organizational development
The organization has provided the recourses guidance and support to facilitate the
introduction of competency level easily and develop the employees in such a way
that they can face any kind of challenge
However the level of competency in employees is found to be satisfactory
Providing proper training education and guidance to the employees can enhance
the level
This study was mainly carried out to find out whether thee competency mapping
being followed by the company is effective till date If the competency mapping
and fitment to the organization
By looking at the graphs and tables it is quite that the employees still are not up to
the level of competent pool they still have to be trained and made competent in
order to fill the gap As the organization has just applied the mapping it has to see
to that it meets all the requirements for competency mapping
Therefore the graphs make it quite clear that the potential of the employees is not
up to the mark and ie they are not competent enough to meet the competency-
mapping requirement Hence by further training and counseling this gap can be
closed
This report includes the training requirements of employees and it highlights skills
possessed by each employee and skill required All employees get training so that
skill can be improved and maintain balance between standard performance with
their actual performance to avoid gap
APPENDIX
QUESTIONNAIRE
Consumer Survey
Name _____________________________
Age _____________________________
Sex
Male
Female
Occupation
Businessman
Service man
Professional
Others
Monthly income brackets
Below 15000
15000- 20000
20000-30000
30000 and above
of your savings _________
Do you invest
Yes
No
If yes then where do you invest your money
Bank
Insurance
funds
Others
Why do you made that statement
Return
Risk hedging
Tax benefits
Other reasons (specify) _______
Who influence your cash decision
Relatives and friends
Family members
Advisors experts
You yourself
If no then why
Do not know where to invest
Satisfied with your current investment return
Donrsquot want take risk
Other reasons
__________________________________________________________________
___________________
Do you know about CF statement
Yes
No
If yes then from where you have come to know about an cash statement
Advertisements on newspapers
Friends and relative
Agents experts
Other source
What do you think about cash statement
It means investing only in share market
Constant watch must be kept always
Return is not satisfactory
Other perception
__________________________________________________
Can you recall any cash flow of company
___________________________
Would you want to made CF of an org
Yes
No
If yes then why
_______________________________________________________
If no then why
_______________________________________________________
BIBLIOGRAPHY
List of Books
1 PANDEY IM - FINANCIAL MANAGEMANT
2 KHAN MY AND JAIN PK -FINANCIAL MANAGEMANT
3 SMITH KV ndash MANAGEMANT OF WORKING CAPITAL
3 COMPANY RECORDS
4 JOURNAL
5 REPORTS
WEBLIOGRAPHY
1 wwwescortspvtltdcom
2 wwwgooglecom
CASH FLOW FROM FINANCING ACTIVITIES-
Proceeds from insurance of share capital
Proceeds from long - term borrowings
Repayments of from long - term borrowings ()
Interest paid ()
Dividend paid ()
Net cash from financing activities
Net increase in cash and cash equivalent
Cash and cash equivalents at beginning of period
CHANGES IN CASH FLOWS
Changes in cash flows can be treated to the following
1 Net profit will increase the cash flows these cash flows will be
increased further if there are any non-cash changes (such as depreciation
and amortization)
2 Any payment of dividends will decrease the cash flows as will the
repayment of debt an issue of share or debt will also increase the
cash flows
3 An increase in non-cash assets will decrease cash flows increase in
current assets and fixed assets will result in drain on cash flows
Thus a statement of changes in cash flows ie the cash flow statement
classifies all Changes into one of three categories - operating investing or
financing activities Therefore the preparation of a statement of changes in cash
flows requires classification of changes in liabilities shareholders equity and
non-cash assets into one of these categories although some items will not fit
easily onto one other
h equivalent at end of period
STEP- BY-STEP PROCEDURE TO PREPARE CFS
1 Calculate the net increase or decrease in cash and cash equivalents-
For this purpose the opening balance of total cash and cash equivalents is compared with the
closing balance of cash and equivalents
Increasedecrease in cash and equivalents
Opening balance Closing Balance
Cash in hand
Cash in bank
Short-term Investment
Total
The difference between the total of opening and closing balance will be increased or
Decreased in cash equivalents during the period It may be noted that if there are only one or
two of items of cash etc
2 Net Cash flaw from operating activities-
The term operating refers to the normal purchase of goods and services On the basis of the
information contained in the comparative BS s and the IS and the additional Information the
net cash flow generated or use by the operating activities may be ascertained The IS prepared
by the firm gives the net profit figure earned by the firm On actual basis ie all items in the
IS are incorporated on the basis of earnedaccrued even
3 If not resulting in cash movements-
So the profit or loss as by the IS may not result in increase or decrease in cash balance by the
SYNOPSIS
INTRODUCTION
ESCORTS PVT LTD is a private limited company not listed in a stock exchange of India
and employees 900 highly trained personnel Its manufacturing plants are strategically located
in close proximity to its customers at Faridabad (Haryana) Noida (UP)
OBJECTIVES OF THE STUDY
bull To find the movement of cash inflow and cash outflow
bull To make the comparison between cash inflow and
bull Cash outflow
bull To prepare the Cash Flow Statement
bull To analyze the Balance Sheet of the company in terms of Cash Flow Statement
bull To focus on various activities of the organization in terms of Operating
Financing Investment
SCOPE OF THE STUDY
Financial resources are the assets for the company and their productivity is key
factor for profitability It is necessary to know their problems their knowledge
skills abilities amp the measures that can be taken to reduce them By analyzing this
top management can build good relations with the employees
The whole study is to determine the competencies of different employees who are
working in ESCORTS PVT LTD By analyzing it the top management can
introduce the concept of competency mapping in the organization Through this
management can attempt to use more suitable strategies towards the human
resource development
The research is confined to elicit the existing gap between the standard skill
required to perform the job and the skill processed by the employees at ESCORTS
PVT LTD And to provide them suitable training program to over come those gaps
for the better utilization of human resources
RELEVANCE
The scope of the study was confined to the outside parties like creditors
shareholders government etc Who want to invest their money in the
company
The benefit of the report for the company is that through this report they can come
to know about the cash flow statements of the company
This study also unable the company that their cash is not utilizing in unnecessary
things
The benefit of the report for the researcher is that it has helped to get knowledge
about the cash inflow and cash
RESERRCH METHODOLOGY-
RESEARCH DESIGN
bull The study was conducted under well- structured approach
bull The project lasted for 4 weeks and the year 2009 ie from 08 July to 12
Aug2009
bull The questionnaire method amp personal interview method was used to collect
the primary data for the study
The secondary data is collected from Internet amp company training material and
many other company materials
SAMPLE DESIGN
The process of extracting a sample from a population is called sampling
procedure The selection of sampling procedure to conduct the research
depends upon the nature of the study and the objective to be accomplished
Judgment sampling technique is adopted to select the respondents in this
study The sample design included the various departments in the YAMAHA
MOTORS PVT LTD
Methodology of date collection
bull Conducting personal interview
bull Data collection from primary and secondary sources
bull Designing questionnaire
bull Selecting sample size from the sample frame for the survey
bull Questionnaire distribution
bull Analysis of collected data with the help of statistical tools
bull Interpretation of collected data
bull Stating the conclusion based on the entire study
Sampling Technique
The sampling technique used for this research is of non-probability and convenience
sampling
Sample Unit
Employees of the company
Sample Size
For this research study the sample size is 25 respondents
Sources of data
Primary data
Primary data is the data which is collected by the researcher for the first time
and which was not there The tools used to collect the data are-
1)Questionnaire method from the employers in different departments
2) Face to Face personal interactions
Secondary Data
The data already collected is called as secondary data The relevant information
for this study has been collected from secondary source such as
Books
Journal
Reports
Publication by the organizational circulation
Company records
Business bulletins
Internet
Secondary data is also collected from various of the internet and intranet Some
of the website trough which information was gathered was through
HYPOTHESIS
The report is analyzed under the presumption that cash flow position of
YAMAHA MOTORS PVTLTD It can be improved and made effective in
terms of cash flows
In testing the above hypothesis the following aspects will be considered
1 Balance sheet comparisons
2 Presentation of cash flow statement in terms of revised AS-3
LIMITATIONS
The study though conducted to the best of the ability suffers from some
certain limitations There are
The data is secondary one and as such its reliability may be
questioned upon
The time availability for the study is less and as such it hinders thee
progress of the study
Senior officials were rarely approachable
Websites were not giving comprehensive data
Not having face-to-face interaction to get more relevant
information
Analysis and interpretation of data was done on the assumption that
the respondentsrsquo information was online
Information collected was totally subjective
The interviews are done during office hours but could not be done
for the other employees of other
DATA ANALYSIS
ESCORTS PVT LTD
CASH FLOW STRATEMENT
Year Ended Year Ended
30092009 30092008
Rs Crores Rs
Crores
A Cash Flow from Operating Activities
Net profit before tax (1733) 3444
Adjustment for
Loss on sale Provision for diminution in value of Long Term
Investments amp loans to Group Companies 189 4018
Gain on sale of Long Term Investments (122) (9492)
Gain on sale of Asset (013) -
Depreciation 4497 3955
Misc Exp Assets Write off Provisions 808 750
Interest Expense 7222 7999
Dividend Income (002) (001)
Interest Income (2082) -
Operating Profit before working capital changes 8764 10673
Adjustments for
Trade and other Receivables (8817) (12035)
Inventories 1379 (4692)
Trade Payables 6705 19046
Miscellaneous Expenditure (750) (511)
(1483) 1808
Cash Generated from Operations 7281 12481
Direct Taxes (Paid)Refunds (1785) 3166
Net Cash Flow from operating activities 5496 15647
B Cash Flow from Investing Activities
Purchase of Fixed Assets (3095) (2794)
Proceeds from sale of Fixed Assets 086 177
Movement in Loans and Advances (1627) (1644)
Sale of Investments 3233 11452
Short Term Deposits with schedule Banks (231) (1048)
Interest Received 2070 -
Dividend Received 002 001
Net Cash Flow from Investing activities 438 6144
Proceeds from Share Capital amp Securities Premium 11444 -
Proceeds from Long Term Borrowings 8660 -
Less Repayment of Long Term Borrowings (054) (7896)
Proceeds (Repayment) from short term borrowings (net) (22726) -
Interest Paid (7740) (8223)
Net Cash used in financing activities (10416) (16119)
Net Increase(Decrease) in Cash and Cash equivalents (4482) 5672
Cash and Cash equivalents as at 01102008 10565 4893
Cash and Cash equivalents as at 30092009 6083 1056
ANALYSIS OF CASH FLOW
From the cash flow statements of the ESCORT PVTLTDIt can be analyzed
from the two years that the net cash balance of the company has increased
manifold in 30-09-2008 than the year 30-09-2009
The net profit in 30-09-2008 is higher than the 30-09-2009 but due to certain
changes there has been increase in the cash balance
The interest paid this year is ore of the last year which implies that thee
company has not repaid his borrowed capital due to which the interest has got
down
The depreciation has increased but it does not affect cash to an extent as it is a
non-cash item In the head of working capital there is drastic change in the cash
balance in the form of ldquoTrade and other Receivables which has affected the cash
balance
There is outflow of cash for receivables rather than the inflow in the last year
So the net effect is that the cash from operating activities has been decreased
two times from the last year
The company has no accumulated losses as at the end of the financial year ie
September 31 2008
Provision for taxation has been made in accordance with the requirement of AS-
22 issued by Institute of Charted Accountants of India
Pursuant to that current year deferred tax liability have been charged to profit amp
loss account
In opinion of the board of directors of thee company the current assets loans
and advances have a value on realization in the ordinary course of the business at
least equal to the amount stated in the balance sheet and provision for all
liabilities have been made
Balance of sundry debtors creditors loans and advances are subject to confirmation by
the concerned parties
METHOD OF ANALYSIS
1 Data analysis is done using the following statistical tools wherever required in
order to extract meaningful information from the collected data
o Simple percentage and averages
o Bar diagram
o Cone diagram
o Pie diagram
2 The collected data from the questionnaire has been put together in the form of
tables
3 Percentage has been calculated wherever necessary for generalization of the
data
4 Data analysis and interpretation has been done on the basis of primary and
secondary data
5 The findings researches have been recorded based on the analysis
6 The study conducted pertains only to YAMAHA MOTORS INDIA PVTLTD
All bank balances (debitcredit) have been confirmed by the concerned bank
Identified from the available information which has been relied upon by the auditors
The names of small-scale industrial units to whom outstanding for more than
thirty days within agreed terms
The company has 9996 of shareholders in its subsidiary company named as
ESCORTS PVT LTD As at 31-03-2008
So the net effect is that the net cash from investing activities has many more
times than the last year which is negative Now the company has repaid its long
term borrowing more than the last year which has decreased the cash balance by
the little amount
Balance with the schedule banks under the head current amp collection account
amounting to represent funds in transit lying with schedule banks pending
transfer against loan liabilities under the head cash credit amp bill discounting
LIQUIDITY RATIO
1 CURRENT RATIO
(Amount in Rs)
Current Ratio
Year Current Assets Current Liabilities Ratio
2003 58574151 7903952 7412004 69765346 31884616 2192005 72021081 16065621 4482006 91328208 47117199 1942007 115642068 30266661 382
Interpretation
As a rule the current ratio with 21 (or) more is considered as satisfactory
position of the firm
When compared with 2006 there is an increase in the provision for tax because
the debtors are raised and for that the provision is created The current liabilities
majorly included Lanco Group of company for consultancy additional services
The sundry debtors have increased due to the increase to corporate taxes
In the year 2006 the cash and bank balance is reduced because that is used for
payment of dividends In the year 2007 the loans and advances include majorly
the advances to employees and deposits to government The loans and advances
reduced because the employees set off their claims The other current assets
include the interest attained from the deposits The deposits reduced due to the
declaration of dividends So the other current assets decreased
The huge increase in sundry debtors resulted an increase in the ratio which is
above the benchmark level of 21 which shows the comfortable position of the
firm
GRAPHICAL REPRESENTATION
741
219
448
194
382
000
100
200
300
400
500
600
700
800
Ratio
2003 2004 2005 2006 2007
Years
CURRENT RATIO
Ratio
2 QUICK RATIO
(Amount
in Rs)
Quick Ratio
Year Quick Assets Current Liabilities Ratio
2003 58574151 7903952 741
2004 52470336 31884616 165
2005 69883268 16065620 435
2006 89433596 47117199 19
2007 115431868 30266661 381
Interpretation
Quick assets are those assets which can be converted into cash with in a short
period of time say to six months So here the sundry debtors which are with the
long period does not include in the quick assets
Compare with 2006 the Quick ratio is increased because the sundry debtors are
increased due to the increase in the corporate tax and for that the provision
created is also increased So the ratio is also increased with the 2006
GRAPHICAL REPRESENTATION
741
165
435
190
381
000
100
200
300
400
500
600
700
800
Ratio
2003 2004 2005 2006 2007
Years
QUICK RATIO
Ratios
3 ABOSULTE LIQUIDITY RATIO
(Amount
in Rs)
Absolute Cash Ratio
Year Absolute Liquid Assets Current Liabilities Ratio
2003 31004027 7903952 392
2004 10859778 31884616 034
2005 39466542 16065620 246
2006 53850852 47117199 114
2007 35649070 30266661 118
Interpretation
The current assets which are ready in the form of cash are considered as absolute
liquid assets Here the cash and bank balance and the interest on fixed assts are
absolute liquid assets
In the year 2006 the cash and bank balance is decreased due to decrease in the
deposits and the current liabilities are also reduced because of the payment of
dividend That causes a slight increase in the current yearrsquos ratio
GRAPHICAL REPRESENTATION
392
034
246
114 118
0
05
1
15
2
25
3
35
4
Ratios
2003 2004 2005 2006 2007
Years
ABSOLUTE CASH RATIO
Ratios
LEVERAGE RATIOS
4 PROPRIETORY RATIO
(Amount
in Rs)
Proprietory Ratio
Year Share Holders Funds Total Assets Ratio
2003 67679219 78572171 086
2004 53301834 88438107 06
2005 70231061 89158391 079
2006 56473652 106385201 053
2007 97060013 129805102 075
Interpretation
The proprietary ratio establishes the relationship between shareholders funds to
total assets It determines the long-term solvency of the firm This ratio indicates
the extent to which the assets of the company can be lost without affecting the
interest of the company
There is no increase in the capital from the year2004 The share holderrsquos funds
include capital and reserves and surplus The reserves and surplus is increased
due to the increase in balance in profit and loss account which is caused by the
increase of income from services
Total assets includes fixed and current assets The fixed assets are reduced
because of the depreciation and there are no major increments in the fixed assets
The current assets are increased compared with the year 2006 Total assets are
also increased than precious year which resulted an increase in the ratio than old
GRAPHICAL REPRESENTATION
086
060
079
053
075
000
010
020
030
040
050
060
070
080
090
Ratios
2003 2004 2005 2006 2007
Years
PROPRIETORY RATIO
Ratios
ACTIVITY RATIOS
5 WORKING CAPITAL TURNOVER RATIO
(Amount
in Rs)
Working Capital Turnover Ratio
Year Income From Services Working Capital Ratio
2003 36309834 50670199 0722004 53899084 37880730 1422005 72728759 55355460 1312006 55550649 44211009 1262007 96654902 85375407 113
Interpretation
Income from services is greatly increased due to the extra invoice for Operations
amp Maintenance fee and the working capital is also increased greater due to the
increase in from services because the huge increase in current assets
The income from services is raised and the current assets are also raised together
resulted in the decrease of the ratio of 2007 compared with 2006
GRAPHICAL REPRESENTATION
072
142 131126
113
000
020
040
060
080
100
120
140
160
Ratio
2003 2004 2005 2006 2007
Years
WORKING CAPITAL TURNOVER RATIO
Ratio
6 FIXED ASSETS TURNOVER RATIO
(Amount in Rs)
Fixed Assets Turnover Ratio
Year Income From Services Net Fixed Assets Ratio
2003 36309834 28834317 126
2004 53899084 29568279 182
2005 72728759 17137310 424
2006 55550649 15056993 369
2007 96654902 14163034 682
Interpretation
Fixed assets are used in the business for producing the goods to be sold This
ratio shows the firmrsquos ability in generating sales from all financial resources
committed to total assets The ratio indicates the account of one rupee
investment in fixed assets
The income from services is greaterly increased in the current year due to the
increase in the Operations amp Maintenance fee due to the increase in extra invoice
and the net fixed assets are reduced because of the increased charge of
depreciation Finally that effected a huge increase in the ratio compared with the
previous yearrsquos ratio
GRAPHICAL REPRSENTATION
126182
424 369
682
000
100
200
300
400
500
600
700
Ratios
2003 2004 2005 2006 2007
Years
FIXED ASSETS TURNOVER RATIO
Ratios
7 CAPITAL TURNOVER RATIO
(Amount
in Rs)
Capital Turnover Ratio
Year Income From Services Capital Employed Ratio
2003 36309834 37175892 0982004 53899084 53301834 1012005 72728759 70231061 1042006 55550649 56473652 0982007 96654902 97060013 100
Interpretation
This is another ratio to judge the efficiency and effectiveness of the company
like profitability ratio
The income from services is greaterly increased compared with the previous year
and the total capital employed includes capital and reserves amp surplus Due to
huge increase in the net profit the capital employed is also increased along with
income from services Both are effected in the increment of the ratio of current
year
GRAPHICAL REPRESENTATION
098
101
104
098
100
094095096097098099100101102103104
Ratios
2003 2004 2005 2006 2007
Years
CAPITAL TURNOVER RATIO
Ratios
8 CURRENT ASSETS TO FIXED ASSETS RATIO
(Amount
in Rs)
Current Assets To Fixed Assets Ratio
Year Current Assets Fixed Assets Ratio
2003 58524151 19998020 2932004 69765346 18672761 3742005 72021081 17137310 4202006 91328208 15056993 6072007 115642068 14163034 817
Interpretation
Current assets are increased due to the increase in the sundry debtors and the net
fixed assets of the firm are decreased due to the charge of depreciation and there
is no major increment in the fixed assets
The increment in current assets and the decrease in fixed assets resulted an
increase in the ratio compared with the previous year
GRAPHICAL REPRESENTATION
293374
420
607
817
000
100
200
300
400
500
600
700
800
900
Ratios
2003 2004 2005 2006 2007
Years
CURRENT ASSETS TO FIXED ASSETS RATIO
Ratios
PROFITABILITY RATIOS
GENERAL PROFITABILITY RATIOS
9 NET PROFIT RATIO
(Amount in Rs)
Net Profit Ratio
Year Net Profit After Tax Income from Services Ratio
2003 21123474 36039834 059
2004 16125942 53899084 030
2005 16929227 72728759 023
2006 18259580 55550649 033
2007 40586359 96654902 042
Interpretation
The net profit ratio is the overall measure of the firmrsquos ability to turn each rupee
of income from services in net profit If the net margin is inadequate the firm
will fail to achieve return on shareholderrsquos funds High net profit ratio will help
the firm service in the fall of income from services rise in cost of production or
declining demand
The net profit is increased because the income from services is increased The
increment resulted a slight increase in 2007 ratio compared with the year 2006
GRAPHICAL REPRESENTATION
059
030
023
033
042
000
010
020
030
040
050
060
Ratios
2003 2004 2005 2006 2007
Years
NET PROFIT RATIO
Ratios
10 OPERATING PROFIT
(Amount in Rs)
Operating Profit
Year Operating Profit Income From Services Ratio
2003 36094877 36309834 099
2004 27576814 53899084 051
2005 29540599 72728759 041
2006 31586718 55550649 057
2007 67192677 96654902 070
Interpretation
The operating profit ratio is used to measure the relationship between net profits
and sales of a firm Depending on the concept it will decide
The operating profit ratio is increased compared with the last year The earnings
are increased due to the increase in the income from services because of
Operations amp Maintenance fee So the ratio is increased slightly compared with
the previous year
GRAPHICAL REPRESENTATION
099
051
041
057
070
000
010
020
030
040
050060
070
080
090
100
Ratios
2003 2004 2005 2006 2007
Years
OPERATING PROFIT RATIO
Ratios
11 RETURN ON TOTAL ASSETS RATIO
(Amount in Rs)
Return on Total Assets Ratio
Year Net Profit After Tax Total Assets Ratio
2003 21123474 78572171 027
2004 16125942 88438107 018
2005 16929227 89158391 019
2006 18259580 106385201 017
2007 40586359 129805102 031
Interpretation
This is the ratio between net profit and total assets The ratio indicates the return
on total assets in the form of profits
The net profit is increased in the current year because of the increment in the
income from services due to the increase in Operations amp Maintenance fee The
fixed assets are reduced due to the charge of depreciation and no major
increments in fixed assets but the current assets are increased because of sundry
debtors and that effects an increase in the ratio compared with the last year ie
2006
GRAPHICAL REPRESENTATION
027
018 019017
031
000
005
010
015
020
025
030
035
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON TOTAL ASSETS
Ratios
12 RESERVES amp SURPLUS TO CAPITAL RATIO
(Amount in Rs)
Reserves amp Surplus To Capital Ratio
Year Reserves amp Surplus Capital Ratio
2003 65599299 2079920 31542004 34582554 18719280 1852005 51511781 18719280 2752006 37754372 18719280 2022007 78340733 18719280 419
Interpretation
The ratio is used to reveal the policy pursued by the company a very high ratio
indicates a conservative dividend policy and vice-versa Higher the ratio better
will be the position
The reserves amp surplus is decreased in the year 2006 due to the payment of
dividends and in the year 2007 the profit is increased But the capital is
remaining constant from the year 2004 So the increase in the reserves amp surplus
caused a greater increase in the current yearrsquos ratio compared with the older
GRAPHICAL REPRESENTATION
3154
185 275 202419
-
500
1000
1500
2000
2500
3000
3500
Ratios
2003 2004 2005 2006 2007
Years
RESERVES amp SRUPLUS TO CAPITAL RATIO
Ratios
OVERALL PROFITABILITY RATIOS
13 EARNINGS PER SHARE
(Amount in Rs)
Earnings Per Share
Year Net Profit After Tax No of Equity Shares Ratio
2003 21123474 207992 101562004 16125942 1871928 8612005 16929227 1871928 9042006 18259580 1871928 9752007 40586359 1871928 2168
Interpretation
Earnings per share ratio are used to find out the return that the shareholderrsquos earn
from their shares After charging depreciation and after payment of tax the
remaining amount will be distributed by all the shareholders
Net profit after tax is increased due to the huge increase in the income from
services That is the amount which is available to the shareholders to take There
are 1871928 shares of Rs10- each The share capital is constant from the year
2004 Due to the huge increase in net profit the earnings per share is greaterly
increased in 2007
GRAPHICAL REPRESENTATION
10156
861904 975
2168
000
2000
4000
6000
8000
10000
12000
Ratios
2003 2004 2005 2006 2007
Years
EARNINGS PER SHARE
Ratios
14 PRICE EARNINGS (PE) RATIO
(Amount in Rs)
Price Earning (PE) Ratio
Year Market Price Per Share Earnings Per Share Ratio
2003 3254 10156 0322004 2847 861 3302005 3752 904 4152006 3017 975 3092007 5185 2168 239
Interpretation
The ratio is calculated to make an estimate of application in the value of share of
a company
The market price per share is increased due to the increase in the reserves
amp surplus The earnings per share are also increased greaterly compared
with the last year because of increase in the net profit So the ratio is
decreased compared with the previous year
GRAPHICAL REPRESENTATION
032
330
415
309
239
000
050
100
150
200
250
300
350
400
450
Ratios
2003 2004 2005 2006 2007
Years
PE RATIO
Ratios
15 RETURN ON INVESTMENT
(Amount in Rs)
Return on Investment
Year Net Profit After Tax Share Holders Fund Ratio
2003 21123474 67679219 031
2004 16125942 53301834 03
2005 16929227 70231061 024
2006 18259580 56473652 032
2007 40586359 97060013 042
Interpretation
This is the ratio between net profits and shareholders funds The ratio is
generally calculated as percentage multiplying with 100
The net profit is increased due to the increase in the income from services ant
the shareholders funds are increased because of reserve amp surplus So the ratio
is increased in the current year
GRAPHICAL REPRESENTATION
031 030
024
032
042
000
005
010
015
020
025
030
035
040
045
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON INVESTMENT RATIO
RatioS
DATA COLLECTION
The data can be of two types
Primary Data
Secondary Data
Primary Data
Primary data are those data which is originally collected afresh
Secondary Data
Secondary data are those data which are already collected and stored and which has
been passed through statistical research
In this project Secondary data has been collected from following sources-
Annual report
Books
MIS
Other material and report published by company There are two methods to prepare
the Cash flow Statement
ndirect Method
I
The indirect method (or reconciliation method) starts with net income and converts it
to net cash flow from operating activities In other words the indirect method adjusts
net income for items that affected reported net income but did not affect cash To
compute net cash flow from operating activities non-cash charges in the income
statement are added ack to net income and non-cash credits are deducted
b
Direct Method
Under the direct method the statement of cash flows reports net cash flow from
operating activities as major classes of operating cash receipts (eg cash collected from
customers and cash received from interest and dividends) and cash disbursements (eg
cash paid to suppliers for goods to employees for services to creditors for interest and
to government authorities for taxes)
INDIRECT VERSUS DIRECT METHOD
The most contentious decision that the FASB faced in issuing Statement No 95 was
choosing between the direct method and the indirect method of determining net cash
flow from operating activities Companies lobbied against the direct method urging
adoption of the indirect method Commercial lending officers expressed a strong
preference to the FASB hat the direct method be required
tCF-Page 3 of 5
In Favor of the Direct Method
The principal advantage of the direct method is that it shows operating cash receipts and
payments That is it is more consistent with the objective of a statement of cash flows to
provide information about cash receipts and cash payments than the in-direct method
which does not report operating cash receipts and payments
Supporters of the direct method contend that knowledge of the specific sources of
operating cash receipts and the purposes for which operating cash payments were made
in past periods is useful in estimating future operating cash flows Furthermore in-
formation about amounts of major classes of operating cash receipts and payments is
more useful than information only about their arithmetic sum (the net cash flow from
operating activities) Such information is more revealing of an enterprises ability (1) to
generate sufficient cash from operating activities to pay its debts (2) to reinvest in its
operations and (3) to make distributions to its owners
Many corporate providers of financial statements say that they do not currently collect
information in a manner that allows them to determine amounts such as cash received
from customers or cash paid to suppliers directly from their accounting systems But
supporters of the direct method contend that the incremental cost of assimilating such
operating cash receipts and payments data is not significant
In Favor of the Indirect Method
The principal advantage of the indirect method is that it focuses on the differences
between net income and net cash flow from operating activities That is it provides a
useful link between the statement of cash flows and the income statement and balance
sheet
Many providers of financial statements contend that it is less costly to adjust net income
to net cash flow from operating activities (indirect) than it is to report gross operating
cash receipts and payments (direct) Supporters of the indirect method also state that the
direct method which effectively reports income statement information on a cash rather
than an accrual basis may erroneously suggest that net cash flow from operating
activities is as good as or better than net income as a measure of performance
Special Rules Applying to Direct and Indirect Methods
Companies that use the direct method are required at a
minimum to report separately the following classes of
operating cash receipts and payments
Receipts
1048713 Cash collected from customers (including lessees licensees etc)
1048713 Interest and dividends received
1048713 Other operating cash receipts if any
Payments
1048713 Cash paid to employees and suppliers of goods or services (including
suppliers of
insurance advertising etc)
1048713 Interest paid
1048713 Income taxes paid
1048713 Other operating cash payments if any
Companies using the indirect method are required to disclose separately changes in
inventory receivables and payables to reconcile net income to net cash flow from
operating activities In addition interest paid (net of amount capitalized) and income
taxes paid must be disclosed elsewhere in the financial statements or accompanying
notes
The FASB requires these separate and additional disclosures so that users
may approximate the direct method Also an acceptable alternative presentation
of the in-direct method is to report net cash flow from operating activities as a
single line item in the statement of cash flows and to present the reconciliation
details elsewhere in the financial statements
FINDING OF SUDY
According to cash flow statement of the company The finding of the study are as
follows-
The company has not taken any loans secured or unsecured from companies
firms or other parties
The company has not accepted any deposit from the public during the year
The company is not a sick industrial company
The company has not granted any loan secured or unsecured to company firms
or other parties
The company has paid the entire long term and short term borrowing during the
year
The company has buy back the companyrsquos own share this year
The interest paid in 2008 is more than the
There has been a significant decline in volume over the years from 2001-02
to 2005-06 as can be seen in the graph below
Table 43
The Net sales of Tractor has increased considerably from 2004-05 to 2007-08
This can be mainly attributed to changes in Variable and material costs and in
the price
The Net sale of Tractor has increased considerably from 2004-05 to 2007-08
that is an decrease of Rs7216 per tractor This can be mainly attributed to
changes in
Variable and material costs and in the prices
RECOMMENDATIONS
According to cash flow statement of the company The suggestions of the study
are as follows-
The time durations for training program have to increase
Buy regular review and consultations develop a career progression
which is sensitive to performance and ability
Create an environment where by people are trend developed to enable
The to take advantages of opportunities that arise
The jab can be redesigned where the work man stay in what is normally
the same job but has elements of it changed
The principle amount must be paid in time which can be reducing the
interest the out flow
The purchase of the fixed asset must be made only when there is extreme
requirement
In order to avoid taxes the company should go for more investment
The companyrsquos borrowings should go for more investment
o The company should try to reduce the depreciations as maximum
as possible
CONCLUSION
The study on competency level of employees at ESCORTS PVTLTD gave an
insight about the acceptance of competency mapping by employees
The employees at Ymi welcome the introduction of competency mapping in their
organization as they felt it was very much essential in enhancing their skills and
organizational development
The organization has provided the recourses guidance and support to facilitate the
introduction of competency level easily and develop the employees in such a way
that they can face any kind of challenge
However the level of competency in employees is found to be satisfactory
Providing proper training education and guidance to the employees can enhance
the level
This study was mainly carried out to find out whether thee competency mapping
being followed by the company is effective till date If the competency mapping
and fitment to the organization
By looking at the graphs and tables it is quite that the employees still are not up to
the level of competent pool they still have to be trained and made competent in
order to fill the gap As the organization has just applied the mapping it has to see
to that it meets all the requirements for competency mapping
Therefore the graphs make it quite clear that the potential of the employees is not
up to the mark and ie they are not competent enough to meet the competency-
mapping requirement Hence by further training and counseling this gap can be
closed
This report includes the training requirements of employees and it highlights skills
possessed by each employee and skill required All employees get training so that
skill can be improved and maintain balance between standard performance with
their actual performance to avoid gap
APPENDIX
QUESTIONNAIRE
Consumer Survey
Name _____________________________
Age _____________________________
Sex
Male
Female
Occupation
Businessman
Service man
Professional
Others
Monthly income brackets
Below 15000
15000- 20000
20000-30000
30000 and above
of your savings _________
Do you invest
Yes
No
If yes then where do you invest your money
Bank
Insurance
funds
Others
Why do you made that statement
Return
Risk hedging
Tax benefits
Other reasons (specify) _______
Who influence your cash decision
Relatives and friends
Family members
Advisors experts
You yourself
If no then why
Do not know where to invest
Satisfied with your current investment return
Donrsquot want take risk
Other reasons
__________________________________________________________________
___________________
Do you know about CF statement
Yes
No
If yes then from where you have come to know about an cash statement
Advertisements on newspapers
Friends and relative
Agents experts
Other source
What do you think about cash statement
It means investing only in share market
Constant watch must be kept always
Return is not satisfactory
Other perception
__________________________________________________
Can you recall any cash flow of company
___________________________
Would you want to made CF of an org
Yes
No
If yes then why
_______________________________________________________
If no then why
_______________________________________________________
BIBLIOGRAPHY
List of Books
1 PANDEY IM - FINANCIAL MANAGEMANT
2 KHAN MY AND JAIN PK -FINANCIAL MANAGEMANT
3 SMITH KV ndash MANAGEMANT OF WORKING CAPITAL
3 COMPANY RECORDS
4 JOURNAL
5 REPORTS
WEBLIOGRAPHY
1 wwwescortspvtltdcom
2 wwwgooglecom
STEP- BY-STEP PROCEDURE TO PREPARE CFS
1 Calculate the net increase or decrease in cash and cash equivalents-
For this purpose the opening balance of total cash and cash equivalents is compared with the
closing balance of cash and equivalents
Increasedecrease in cash and equivalents
Opening balance Closing Balance
Cash in hand
Cash in bank
Short-term Investment
Total
The difference between the total of opening and closing balance will be increased or
Decreased in cash equivalents during the period It may be noted that if there are only one or
two of items of cash etc
2 Net Cash flaw from operating activities-
The term operating refers to the normal purchase of goods and services On the basis of the
information contained in the comparative BS s and the IS and the additional Information the
net cash flow generated or use by the operating activities may be ascertained The IS prepared
by the firm gives the net profit figure earned by the firm On actual basis ie all items in the
IS are incorporated on the basis of earnedaccrued even
3 If not resulting in cash movements-
So the profit or loss as by the IS may not result in increase or decrease in cash balance by the
SYNOPSIS
INTRODUCTION
ESCORTS PVT LTD is a private limited company not listed in a stock exchange of India
and employees 900 highly trained personnel Its manufacturing plants are strategically located
in close proximity to its customers at Faridabad (Haryana) Noida (UP)
OBJECTIVES OF THE STUDY
bull To find the movement of cash inflow and cash outflow
bull To make the comparison between cash inflow and
bull Cash outflow
bull To prepare the Cash Flow Statement
bull To analyze the Balance Sheet of the company in terms of Cash Flow Statement
bull To focus on various activities of the organization in terms of Operating
Financing Investment
SCOPE OF THE STUDY
Financial resources are the assets for the company and their productivity is key
factor for profitability It is necessary to know their problems their knowledge
skills abilities amp the measures that can be taken to reduce them By analyzing this
top management can build good relations with the employees
The whole study is to determine the competencies of different employees who are
working in ESCORTS PVT LTD By analyzing it the top management can
introduce the concept of competency mapping in the organization Through this
management can attempt to use more suitable strategies towards the human
resource development
The research is confined to elicit the existing gap between the standard skill
required to perform the job and the skill processed by the employees at ESCORTS
PVT LTD And to provide them suitable training program to over come those gaps
for the better utilization of human resources
RELEVANCE
The scope of the study was confined to the outside parties like creditors
shareholders government etc Who want to invest their money in the
company
The benefit of the report for the company is that through this report they can come
to know about the cash flow statements of the company
This study also unable the company that their cash is not utilizing in unnecessary
things
The benefit of the report for the researcher is that it has helped to get knowledge
about the cash inflow and cash
RESERRCH METHODOLOGY-
RESEARCH DESIGN
bull The study was conducted under well- structured approach
bull The project lasted for 4 weeks and the year 2009 ie from 08 July to 12
Aug2009
bull The questionnaire method amp personal interview method was used to collect
the primary data for the study
The secondary data is collected from Internet amp company training material and
many other company materials
SAMPLE DESIGN
The process of extracting a sample from a population is called sampling
procedure The selection of sampling procedure to conduct the research
depends upon the nature of the study and the objective to be accomplished
Judgment sampling technique is adopted to select the respondents in this
study The sample design included the various departments in the YAMAHA
MOTORS PVT LTD
Methodology of date collection
bull Conducting personal interview
bull Data collection from primary and secondary sources
bull Designing questionnaire
bull Selecting sample size from the sample frame for the survey
bull Questionnaire distribution
bull Analysis of collected data with the help of statistical tools
bull Interpretation of collected data
bull Stating the conclusion based on the entire study
Sampling Technique
The sampling technique used for this research is of non-probability and convenience
sampling
Sample Unit
Employees of the company
Sample Size
For this research study the sample size is 25 respondents
Sources of data
Primary data
Primary data is the data which is collected by the researcher for the first time
and which was not there The tools used to collect the data are-
1)Questionnaire method from the employers in different departments
2) Face to Face personal interactions
Secondary Data
The data already collected is called as secondary data The relevant information
for this study has been collected from secondary source such as
Books
Journal
Reports
Publication by the organizational circulation
Company records
Business bulletins
Internet
Secondary data is also collected from various of the internet and intranet Some
of the website trough which information was gathered was through
HYPOTHESIS
The report is analyzed under the presumption that cash flow position of
YAMAHA MOTORS PVTLTD It can be improved and made effective in
terms of cash flows
In testing the above hypothesis the following aspects will be considered
1 Balance sheet comparisons
2 Presentation of cash flow statement in terms of revised AS-3
LIMITATIONS
The study though conducted to the best of the ability suffers from some
certain limitations There are
The data is secondary one and as such its reliability may be
questioned upon
The time availability for the study is less and as such it hinders thee
progress of the study
Senior officials were rarely approachable
Websites were not giving comprehensive data
Not having face-to-face interaction to get more relevant
information
Analysis and interpretation of data was done on the assumption that
the respondentsrsquo information was online
Information collected was totally subjective
The interviews are done during office hours but could not be done
for the other employees of other
DATA ANALYSIS
ESCORTS PVT LTD
CASH FLOW STRATEMENT
Year Ended Year Ended
30092009 30092008
Rs Crores Rs
Crores
A Cash Flow from Operating Activities
Net profit before tax (1733) 3444
Adjustment for
Loss on sale Provision for diminution in value of Long Term
Investments amp loans to Group Companies 189 4018
Gain on sale of Long Term Investments (122) (9492)
Gain on sale of Asset (013) -
Depreciation 4497 3955
Misc Exp Assets Write off Provisions 808 750
Interest Expense 7222 7999
Dividend Income (002) (001)
Interest Income (2082) -
Operating Profit before working capital changes 8764 10673
Adjustments for
Trade and other Receivables (8817) (12035)
Inventories 1379 (4692)
Trade Payables 6705 19046
Miscellaneous Expenditure (750) (511)
(1483) 1808
Cash Generated from Operations 7281 12481
Direct Taxes (Paid)Refunds (1785) 3166
Net Cash Flow from operating activities 5496 15647
B Cash Flow from Investing Activities
Purchase of Fixed Assets (3095) (2794)
Proceeds from sale of Fixed Assets 086 177
Movement in Loans and Advances (1627) (1644)
Sale of Investments 3233 11452
Short Term Deposits with schedule Banks (231) (1048)
Interest Received 2070 -
Dividend Received 002 001
Net Cash Flow from Investing activities 438 6144
Proceeds from Share Capital amp Securities Premium 11444 -
Proceeds from Long Term Borrowings 8660 -
Less Repayment of Long Term Borrowings (054) (7896)
Proceeds (Repayment) from short term borrowings (net) (22726) -
Interest Paid (7740) (8223)
Net Cash used in financing activities (10416) (16119)
Net Increase(Decrease) in Cash and Cash equivalents (4482) 5672
Cash and Cash equivalents as at 01102008 10565 4893
Cash and Cash equivalents as at 30092009 6083 1056
ANALYSIS OF CASH FLOW
From the cash flow statements of the ESCORT PVTLTDIt can be analyzed
from the two years that the net cash balance of the company has increased
manifold in 30-09-2008 than the year 30-09-2009
The net profit in 30-09-2008 is higher than the 30-09-2009 but due to certain
changes there has been increase in the cash balance
The interest paid this year is ore of the last year which implies that thee
company has not repaid his borrowed capital due to which the interest has got
down
The depreciation has increased but it does not affect cash to an extent as it is a
non-cash item In the head of working capital there is drastic change in the cash
balance in the form of ldquoTrade and other Receivables which has affected the cash
balance
There is outflow of cash for receivables rather than the inflow in the last year
So the net effect is that the cash from operating activities has been decreased
two times from the last year
The company has no accumulated losses as at the end of the financial year ie
September 31 2008
Provision for taxation has been made in accordance with the requirement of AS-
22 issued by Institute of Charted Accountants of India
Pursuant to that current year deferred tax liability have been charged to profit amp
loss account
In opinion of the board of directors of thee company the current assets loans
and advances have a value on realization in the ordinary course of the business at
least equal to the amount stated in the balance sheet and provision for all
liabilities have been made
Balance of sundry debtors creditors loans and advances are subject to confirmation by
the concerned parties
METHOD OF ANALYSIS
1 Data analysis is done using the following statistical tools wherever required in
order to extract meaningful information from the collected data
o Simple percentage and averages
o Bar diagram
o Cone diagram
o Pie diagram
2 The collected data from the questionnaire has been put together in the form of
tables
3 Percentage has been calculated wherever necessary for generalization of the
data
4 Data analysis and interpretation has been done on the basis of primary and
secondary data
5 The findings researches have been recorded based on the analysis
6 The study conducted pertains only to YAMAHA MOTORS INDIA PVTLTD
All bank balances (debitcredit) have been confirmed by the concerned bank
Identified from the available information which has been relied upon by the auditors
The names of small-scale industrial units to whom outstanding for more than
thirty days within agreed terms
The company has 9996 of shareholders in its subsidiary company named as
ESCORTS PVT LTD As at 31-03-2008
So the net effect is that the net cash from investing activities has many more
times than the last year which is negative Now the company has repaid its long
term borrowing more than the last year which has decreased the cash balance by
the little amount
Balance with the schedule banks under the head current amp collection account
amounting to represent funds in transit lying with schedule banks pending
transfer against loan liabilities under the head cash credit amp bill discounting
LIQUIDITY RATIO
1 CURRENT RATIO
(Amount in Rs)
Current Ratio
Year Current Assets Current Liabilities Ratio
2003 58574151 7903952 7412004 69765346 31884616 2192005 72021081 16065621 4482006 91328208 47117199 1942007 115642068 30266661 382
Interpretation
As a rule the current ratio with 21 (or) more is considered as satisfactory
position of the firm
When compared with 2006 there is an increase in the provision for tax because
the debtors are raised and for that the provision is created The current liabilities
majorly included Lanco Group of company for consultancy additional services
The sundry debtors have increased due to the increase to corporate taxes
In the year 2006 the cash and bank balance is reduced because that is used for
payment of dividends In the year 2007 the loans and advances include majorly
the advances to employees and deposits to government The loans and advances
reduced because the employees set off their claims The other current assets
include the interest attained from the deposits The deposits reduced due to the
declaration of dividends So the other current assets decreased
The huge increase in sundry debtors resulted an increase in the ratio which is
above the benchmark level of 21 which shows the comfortable position of the
firm
GRAPHICAL REPRESENTATION
741
219
448
194
382
000
100
200
300
400
500
600
700
800
Ratio
2003 2004 2005 2006 2007
Years
CURRENT RATIO
Ratio
2 QUICK RATIO
(Amount
in Rs)
Quick Ratio
Year Quick Assets Current Liabilities Ratio
2003 58574151 7903952 741
2004 52470336 31884616 165
2005 69883268 16065620 435
2006 89433596 47117199 19
2007 115431868 30266661 381
Interpretation
Quick assets are those assets which can be converted into cash with in a short
period of time say to six months So here the sundry debtors which are with the
long period does not include in the quick assets
Compare with 2006 the Quick ratio is increased because the sundry debtors are
increased due to the increase in the corporate tax and for that the provision
created is also increased So the ratio is also increased with the 2006
GRAPHICAL REPRESENTATION
741
165
435
190
381
000
100
200
300
400
500
600
700
800
Ratio
2003 2004 2005 2006 2007
Years
QUICK RATIO
Ratios
3 ABOSULTE LIQUIDITY RATIO
(Amount
in Rs)
Absolute Cash Ratio
Year Absolute Liquid Assets Current Liabilities Ratio
2003 31004027 7903952 392
2004 10859778 31884616 034
2005 39466542 16065620 246
2006 53850852 47117199 114
2007 35649070 30266661 118
Interpretation
The current assets which are ready in the form of cash are considered as absolute
liquid assets Here the cash and bank balance and the interest on fixed assts are
absolute liquid assets
In the year 2006 the cash and bank balance is decreased due to decrease in the
deposits and the current liabilities are also reduced because of the payment of
dividend That causes a slight increase in the current yearrsquos ratio
GRAPHICAL REPRESENTATION
392
034
246
114 118
0
05
1
15
2
25
3
35
4
Ratios
2003 2004 2005 2006 2007
Years
ABSOLUTE CASH RATIO
Ratios
LEVERAGE RATIOS
4 PROPRIETORY RATIO
(Amount
in Rs)
Proprietory Ratio
Year Share Holders Funds Total Assets Ratio
2003 67679219 78572171 086
2004 53301834 88438107 06
2005 70231061 89158391 079
2006 56473652 106385201 053
2007 97060013 129805102 075
Interpretation
The proprietary ratio establishes the relationship between shareholders funds to
total assets It determines the long-term solvency of the firm This ratio indicates
the extent to which the assets of the company can be lost without affecting the
interest of the company
There is no increase in the capital from the year2004 The share holderrsquos funds
include capital and reserves and surplus The reserves and surplus is increased
due to the increase in balance in profit and loss account which is caused by the
increase of income from services
Total assets includes fixed and current assets The fixed assets are reduced
because of the depreciation and there are no major increments in the fixed assets
The current assets are increased compared with the year 2006 Total assets are
also increased than precious year which resulted an increase in the ratio than old
GRAPHICAL REPRESENTATION
086
060
079
053
075
000
010
020
030
040
050
060
070
080
090
Ratios
2003 2004 2005 2006 2007
Years
PROPRIETORY RATIO
Ratios
ACTIVITY RATIOS
5 WORKING CAPITAL TURNOVER RATIO
(Amount
in Rs)
Working Capital Turnover Ratio
Year Income From Services Working Capital Ratio
2003 36309834 50670199 0722004 53899084 37880730 1422005 72728759 55355460 1312006 55550649 44211009 1262007 96654902 85375407 113
Interpretation
Income from services is greatly increased due to the extra invoice for Operations
amp Maintenance fee and the working capital is also increased greater due to the
increase in from services because the huge increase in current assets
The income from services is raised and the current assets are also raised together
resulted in the decrease of the ratio of 2007 compared with 2006
GRAPHICAL REPRESENTATION
072
142 131126
113
000
020
040
060
080
100
120
140
160
Ratio
2003 2004 2005 2006 2007
Years
WORKING CAPITAL TURNOVER RATIO
Ratio
6 FIXED ASSETS TURNOVER RATIO
(Amount in Rs)
Fixed Assets Turnover Ratio
Year Income From Services Net Fixed Assets Ratio
2003 36309834 28834317 126
2004 53899084 29568279 182
2005 72728759 17137310 424
2006 55550649 15056993 369
2007 96654902 14163034 682
Interpretation
Fixed assets are used in the business for producing the goods to be sold This
ratio shows the firmrsquos ability in generating sales from all financial resources
committed to total assets The ratio indicates the account of one rupee
investment in fixed assets
The income from services is greaterly increased in the current year due to the
increase in the Operations amp Maintenance fee due to the increase in extra invoice
and the net fixed assets are reduced because of the increased charge of
depreciation Finally that effected a huge increase in the ratio compared with the
previous yearrsquos ratio
GRAPHICAL REPRSENTATION
126182
424 369
682
000
100
200
300
400
500
600
700
Ratios
2003 2004 2005 2006 2007
Years
FIXED ASSETS TURNOVER RATIO
Ratios
7 CAPITAL TURNOVER RATIO
(Amount
in Rs)
Capital Turnover Ratio
Year Income From Services Capital Employed Ratio
2003 36309834 37175892 0982004 53899084 53301834 1012005 72728759 70231061 1042006 55550649 56473652 0982007 96654902 97060013 100
Interpretation
This is another ratio to judge the efficiency and effectiveness of the company
like profitability ratio
The income from services is greaterly increased compared with the previous year
and the total capital employed includes capital and reserves amp surplus Due to
huge increase in the net profit the capital employed is also increased along with
income from services Both are effected in the increment of the ratio of current
year
GRAPHICAL REPRESENTATION
098
101
104
098
100
094095096097098099100101102103104
Ratios
2003 2004 2005 2006 2007
Years
CAPITAL TURNOVER RATIO
Ratios
8 CURRENT ASSETS TO FIXED ASSETS RATIO
(Amount
in Rs)
Current Assets To Fixed Assets Ratio
Year Current Assets Fixed Assets Ratio
2003 58524151 19998020 2932004 69765346 18672761 3742005 72021081 17137310 4202006 91328208 15056993 6072007 115642068 14163034 817
Interpretation
Current assets are increased due to the increase in the sundry debtors and the net
fixed assets of the firm are decreased due to the charge of depreciation and there
is no major increment in the fixed assets
The increment in current assets and the decrease in fixed assets resulted an
increase in the ratio compared with the previous year
GRAPHICAL REPRESENTATION
293374
420
607
817
000
100
200
300
400
500
600
700
800
900
Ratios
2003 2004 2005 2006 2007
Years
CURRENT ASSETS TO FIXED ASSETS RATIO
Ratios
PROFITABILITY RATIOS
GENERAL PROFITABILITY RATIOS
9 NET PROFIT RATIO
(Amount in Rs)
Net Profit Ratio
Year Net Profit After Tax Income from Services Ratio
2003 21123474 36039834 059
2004 16125942 53899084 030
2005 16929227 72728759 023
2006 18259580 55550649 033
2007 40586359 96654902 042
Interpretation
The net profit ratio is the overall measure of the firmrsquos ability to turn each rupee
of income from services in net profit If the net margin is inadequate the firm
will fail to achieve return on shareholderrsquos funds High net profit ratio will help
the firm service in the fall of income from services rise in cost of production or
declining demand
The net profit is increased because the income from services is increased The
increment resulted a slight increase in 2007 ratio compared with the year 2006
GRAPHICAL REPRESENTATION
059
030
023
033
042
000
010
020
030
040
050
060
Ratios
2003 2004 2005 2006 2007
Years
NET PROFIT RATIO
Ratios
10 OPERATING PROFIT
(Amount in Rs)
Operating Profit
Year Operating Profit Income From Services Ratio
2003 36094877 36309834 099
2004 27576814 53899084 051
2005 29540599 72728759 041
2006 31586718 55550649 057
2007 67192677 96654902 070
Interpretation
The operating profit ratio is used to measure the relationship between net profits
and sales of a firm Depending on the concept it will decide
The operating profit ratio is increased compared with the last year The earnings
are increased due to the increase in the income from services because of
Operations amp Maintenance fee So the ratio is increased slightly compared with
the previous year
GRAPHICAL REPRESENTATION
099
051
041
057
070
000
010
020
030
040
050060
070
080
090
100
Ratios
2003 2004 2005 2006 2007
Years
OPERATING PROFIT RATIO
Ratios
11 RETURN ON TOTAL ASSETS RATIO
(Amount in Rs)
Return on Total Assets Ratio
Year Net Profit After Tax Total Assets Ratio
2003 21123474 78572171 027
2004 16125942 88438107 018
2005 16929227 89158391 019
2006 18259580 106385201 017
2007 40586359 129805102 031
Interpretation
This is the ratio between net profit and total assets The ratio indicates the return
on total assets in the form of profits
The net profit is increased in the current year because of the increment in the
income from services due to the increase in Operations amp Maintenance fee The
fixed assets are reduced due to the charge of depreciation and no major
increments in fixed assets but the current assets are increased because of sundry
debtors and that effects an increase in the ratio compared with the last year ie
2006
GRAPHICAL REPRESENTATION
027
018 019017
031
000
005
010
015
020
025
030
035
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON TOTAL ASSETS
Ratios
12 RESERVES amp SURPLUS TO CAPITAL RATIO
(Amount in Rs)
Reserves amp Surplus To Capital Ratio
Year Reserves amp Surplus Capital Ratio
2003 65599299 2079920 31542004 34582554 18719280 1852005 51511781 18719280 2752006 37754372 18719280 2022007 78340733 18719280 419
Interpretation
The ratio is used to reveal the policy pursued by the company a very high ratio
indicates a conservative dividend policy and vice-versa Higher the ratio better
will be the position
The reserves amp surplus is decreased in the year 2006 due to the payment of
dividends and in the year 2007 the profit is increased But the capital is
remaining constant from the year 2004 So the increase in the reserves amp surplus
caused a greater increase in the current yearrsquos ratio compared with the older
GRAPHICAL REPRESENTATION
3154
185 275 202419
-
500
1000
1500
2000
2500
3000
3500
Ratios
2003 2004 2005 2006 2007
Years
RESERVES amp SRUPLUS TO CAPITAL RATIO
Ratios
OVERALL PROFITABILITY RATIOS
13 EARNINGS PER SHARE
(Amount in Rs)
Earnings Per Share
Year Net Profit After Tax No of Equity Shares Ratio
2003 21123474 207992 101562004 16125942 1871928 8612005 16929227 1871928 9042006 18259580 1871928 9752007 40586359 1871928 2168
Interpretation
Earnings per share ratio are used to find out the return that the shareholderrsquos earn
from their shares After charging depreciation and after payment of tax the
remaining amount will be distributed by all the shareholders
Net profit after tax is increased due to the huge increase in the income from
services That is the amount which is available to the shareholders to take There
are 1871928 shares of Rs10- each The share capital is constant from the year
2004 Due to the huge increase in net profit the earnings per share is greaterly
increased in 2007
GRAPHICAL REPRESENTATION
10156
861904 975
2168
000
2000
4000
6000
8000
10000
12000
Ratios
2003 2004 2005 2006 2007
Years
EARNINGS PER SHARE
Ratios
14 PRICE EARNINGS (PE) RATIO
(Amount in Rs)
Price Earning (PE) Ratio
Year Market Price Per Share Earnings Per Share Ratio
2003 3254 10156 0322004 2847 861 3302005 3752 904 4152006 3017 975 3092007 5185 2168 239
Interpretation
The ratio is calculated to make an estimate of application in the value of share of
a company
The market price per share is increased due to the increase in the reserves
amp surplus The earnings per share are also increased greaterly compared
with the last year because of increase in the net profit So the ratio is
decreased compared with the previous year
GRAPHICAL REPRESENTATION
032
330
415
309
239
000
050
100
150
200
250
300
350
400
450
Ratios
2003 2004 2005 2006 2007
Years
PE RATIO
Ratios
15 RETURN ON INVESTMENT
(Amount in Rs)
Return on Investment
Year Net Profit After Tax Share Holders Fund Ratio
2003 21123474 67679219 031
2004 16125942 53301834 03
2005 16929227 70231061 024
2006 18259580 56473652 032
2007 40586359 97060013 042
Interpretation
This is the ratio between net profits and shareholders funds The ratio is
generally calculated as percentage multiplying with 100
The net profit is increased due to the increase in the income from services ant
the shareholders funds are increased because of reserve amp surplus So the ratio
is increased in the current year
GRAPHICAL REPRESENTATION
031 030
024
032
042
000
005
010
015
020
025
030
035
040
045
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON INVESTMENT RATIO
RatioS
DATA COLLECTION
The data can be of two types
Primary Data
Secondary Data
Primary Data
Primary data are those data which is originally collected afresh
Secondary Data
Secondary data are those data which are already collected and stored and which has
been passed through statistical research
In this project Secondary data has been collected from following sources-
Annual report
Books
MIS
Other material and report published by company There are two methods to prepare
the Cash flow Statement
ndirect Method
I
The indirect method (or reconciliation method) starts with net income and converts it
to net cash flow from operating activities In other words the indirect method adjusts
net income for items that affected reported net income but did not affect cash To
compute net cash flow from operating activities non-cash charges in the income
statement are added ack to net income and non-cash credits are deducted
b
Direct Method
Under the direct method the statement of cash flows reports net cash flow from
operating activities as major classes of operating cash receipts (eg cash collected from
customers and cash received from interest and dividends) and cash disbursements (eg
cash paid to suppliers for goods to employees for services to creditors for interest and
to government authorities for taxes)
INDIRECT VERSUS DIRECT METHOD
The most contentious decision that the FASB faced in issuing Statement No 95 was
choosing between the direct method and the indirect method of determining net cash
flow from operating activities Companies lobbied against the direct method urging
adoption of the indirect method Commercial lending officers expressed a strong
preference to the FASB hat the direct method be required
tCF-Page 3 of 5
In Favor of the Direct Method
The principal advantage of the direct method is that it shows operating cash receipts and
payments That is it is more consistent with the objective of a statement of cash flows to
provide information about cash receipts and cash payments than the in-direct method
which does not report operating cash receipts and payments
Supporters of the direct method contend that knowledge of the specific sources of
operating cash receipts and the purposes for which operating cash payments were made
in past periods is useful in estimating future operating cash flows Furthermore in-
formation about amounts of major classes of operating cash receipts and payments is
more useful than information only about their arithmetic sum (the net cash flow from
operating activities) Such information is more revealing of an enterprises ability (1) to
generate sufficient cash from operating activities to pay its debts (2) to reinvest in its
operations and (3) to make distributions to its owners
Many corporate providers of financial statements say that they do not currently collect
information in a manner that allows them to determine amounts such as cash received
from customers or cash paid to suppliers directly from their accounting systems But
supporters of the direct method contend that the incremental cost of assimilating such
operating cash receipts and payments data is not significant
In Favor of the Indirect Method
The principal advantage of the indirect method is that it focuses on the differences
between net income and net cash flow from operating activities That is it provides a
useful link between the statement of cash flows and the income statement and balance
sheet
Many providers of financial statements contend that it is less costly to adjust net income
to net cash flow from operating activities (indirect) than it is to report gross operating
cash receipts and payments (direct) Supporters of the indirect method also state that the
direct method which effectively reports income statement information on a cash rather
than an accrual basis may erroneously suggest that net cash flow from operating
activities is as good as or better than net income as a measure of performance
Special Rules Applying to Direct and Indirect Methods
Companies that use the direct method are required at a
minimum to report separately the following classes of
operating cash receipts and payments
Receipts
1048713 Cash collected from customers (including lessees licensees etc)
1048713 Interest and dividends received
1048713 Other operating cash receipts if any
Payments
1048713 Cash paid to employees and suppliers of goods or services (including
suppliers of
insurance advertising etc)
1048713 Interest paid
1048713 Income taxes paid
1048713 Other operating cash payments if any
Companies using the indirect method are required to disclose separately changes in
inventory receivables and payables to reconcile net income to net cash flow from
operating activities In addition interest paid (net of amount capitalized) and income
taxes paid must be disclosed elsewhere in the financial statements or accompanying
notes
The FASB requires these separate and additional disclosures so that users
may approximate the direct method Also an acceptable alternative presentation
of the in-direct method is to report net cash flow from operating activities as a
single line item in the statement of cash flows and to present the reconciliation
details elsewhere in the financial statements
FINDING OF SUDY
According to cash flow statement of the company The finding of the study are as
follows-
The company has not taken any loans secured or unsecured from companies
firms or other parties
The company has not accepted any deposit from the public during the year
The company is not a sick industrial company
The company has not granted any loan secured or unsecured to company firms
or other parties
The company has paid the entire long term and short term borrowing during the
year
The company has buy back the companyrsquos own share this year
The interest paid in 2008 is more than the
There has been a significant decline in volume over the years from 2001-02
to 2005-06 as can be seen in the graph below
Table 43
The Net sales of Tractor has increased considerably from 2004-05 to 2007-08
This can be mainly attributed to changes in Variable and material costs and in
the price
The Net sale of Tractor has increased considerably from 2004-05 to 2007-08
that is an decrease of Rs7216 per tractor This can be mainly attributed to
changes in
Variable and material costs and in the prices
RECOMMENDATIONS
According to cash flow statement of the company The suggestions of the study
are as follows-
The time durations for training program have to increase
Buy regular review and consultations develop a career progression
which is sensitive to performance and ability
Create an environment where by people are trend developed to enable
The to take advantages of opportunities that arise
The jab can be redesigned where the work man stay in what is normally
the same job but has elements of it changed
The principle amount must be paid in time which can be reducing the
interest the out flow
The purchase of the fixed asset must be made only when there is extreme
requirement
In order to avoid taxes the company should go for more investment
The companyrsquos borrowings should go for more investment
o The company should try to reduce the depreciations as maximum
as possible
CONCLUSION
The study on competency level of employees at ESCORTS PVTLTD gave an
insight about the acceptance of competency mapping by employees
The employees at Ymi welcome the introduction of competency mapping in their
organization as they felt it was very much essential in enhancing their skills and
organizational development
The organization has provided the recourses guidance and support to facilitate the
introduction of competency level easily and develop the employees in such a way
that they can face any kind of challenge
However the level of competency in employees is found to be satisfactory
Providing proper training education and guidance to the employees can enhance
the level
This study was mainly carried out to find out whether thee competency mapping
being followed by the company is effective till date If the competency mapping
and fitment to the organization
By looking at the graphs and tables it is quite that the employees still are not up to
the level of competent pool they still have to be trained and made competent in
order to fill the gap As the organization has just applied the mapping it has to see
to that it meets all the requirements for competency mapping
Therefore the graphs make it quite clear that the potential of the employees is not
up to the mark and ie they are not competent enough to meet the competency-
mapping requirement Hence by further training and counseling this gap can be
closed
This report includes the training requirements of employees and it highlights skills
possessed by each employee and skill required All employees get training so that
skill can be improved and maintain balance between standard performance with
their actual performance to avoid gap
APPENDIX
QUESTIONNAIRE
Consumer Survey
Name _____________________________
Age _____________________________
Sex
Male
Female
Occupation
Businessman
Service man
Professional
Others
Monthly income brackets
Below 15000
15000- 20000
20000-30000
30000 and above
of your savings _________
Do you invest
Yes
No
If yes then where do you invest your money
Bank
Insurance
funds
Others
Why do you made that statement
Return
Risk hedging
Tax benefits
Other reasons (specify) _______
Who influence your cash decision
Relatives and friends
Family members
Advisors experts
You yourself
If no then why
Do not know where to invest
Satisfied with your current investment return
Donrsquot want take risk
Other reasons
__________________________________________________________________
___________________
Do you know about CF statement
Yes
No
If yes then from where you have come to know about an cash statement
Advertisements on newspapers
Friends and relative
Agents experts
Other source
What do you think about cash statement
It means investing only in share market
Constant watch must be kept always
Return is not satisfactory
Other perception
__________________________________________________
Can you recall any cash flow of company
___________________________
Would you want to made CF of an org
Yes
No
If yes then why
_______________________________________________________
If no then why
_______________________________________________________
BIBLIOGRAPHY
List of Books
1 PANDEY IM - FINANCIAL MANAGEMANT
2 KHAN MY AND JAIN PK -FINANCIAL MANAGEMANT
3 SMITH KV ndash MANAGEMANT OF WORKING CAPITAL
3 COMPANY RECORDS
4 JOURNAL
5 REPORTS
WEBLIOGRAPHY
1 wwwescortspvtltdcom
2 wwwgooglecom
SYNOPSIS
INTRODUCTION
ESCORTS PVT LTD is a private limited company not listed in a stock exchange of India
and employees 900 highly trained personnel Its manufacturing plants are strategically located
in close proximity to its customers at Faridabad (Haryana) Noida (UP)
OBJECTIVES OF THE STUDY
bull To find the movement of cash inflow and cash outflow
bull To make the comparison between cash inflow and
bull Cash outflow
bull To prepare the Cash Flow Statement
bull To analyze the Balance Sheet of the company in terms of Cash Flow Statement
bull To focus on various activities of the organization in terms of Operating
Financing Investment
SCOPE OF THE STUDY
Financial resources are the assets for the company and their productivity is key
factor for profitability It is necessary to know their problems their knowledge
skills abilities amp the measures that can be taken to reduce them By analyzing this
top management can build good relations with the employees
The whole study is to determine the competencies of different employees who are
working in ESCORTS PVT LTD By analyzing it the top management can
introduce the concept of competency mapping in the organization Through this
management can attempt to use more suitable strategies towards the human
resource development
The research is confined to elicit the existing gap between the standard skill
required to perform the job and the skill processed by the employees at ESCORTS
PVT LTD And to provide them suitable training program to over come those gaps
for the better utilization of human resources
RELEVANCE
The scope of the study was confined to the outside parties like creditors
shareholders government etc Who want to invest their money in the
company
The benefit of the report for the company is that through this report they can come
to know about the cash flow statements of the company
This study also unable the company that their cash is not utilizing in unnecessary
things
The benefit of the report for the researcher is that it has helped to get knowledge
about the cash inflow and cash
RESERRCH METHODOLOGY-
RESEARCH DESIGN
bull The study was conducted under well- structured approach
bull The project lasted for 4 weeks and the year 2009 ie from 08 July to 12
Aug2009
bull The questionnaire method amp personal interview method was used to collect
the primary data for the study
The secondary data is collected from Internet amp company training material and
many other company materials
SAMPLE DESIGN
The process of extracting a sample from a population is called sampling
procedure The selection of sampling procedure to conduct the research
depends upon the nature of the study and the objective to be accomplished
Judgment sampling technique is adopted to select the respondents in this
study The sample design included the various departments in the YAMAHA
MOTORS PVT LTD
Methodology of date collection
bull Conducting personal interview
bull Data collection from primary and secondary sources
bull Designing questionnaire
bull Selecting sample size from the sample frame for the survey
bull Questionnaire distribution
bull Analysis of collected data with the help of statistical tools
bull Interpretation of collected data
bull Stating the conclusion based on the entire study
Sampling Technique
The sampling technique used for this research is of non-probability and convenience
sampling
Sample Unit
Employees of the company
Sample Size
For this research study the sample size is 25 respondents
Sources of data
Primary data
Primary data is the data which is collected by the researcher for the first time
and which was not there The tools used to collect the data are-
1)Questionnaire method from the employers in different departments
2) Face to Face personal interactions
Secondary Data
The data already collected is called as secondary data The relevant information
for this study has been collected from secondary source such as
Books
Journal
Reports
Publication by the organizational circulation
Company records
Business bulletins
Internet
Secondary data is also collected from various of the internet and intranet Some
of the website trough which information was gathered was through
HYPOTHESIS
The report is analyzed under the presumption that cash flow position of
YAMAHA MOTORS PVTLTD It can be improved and made effective in
terms of cash flows
In testing the above hypothesis the following aspects will be considered
1 Balance sheet comparisons
2 Presentation of cash flow statement in terms of revised AS-3
LIMITATIONS
The study though conducted to the best of the ability suffers from some
certain limitations There are
The data is secondary one and as such its reliability may be
questioned upon
The time availability for the study is less and as such it hinders thee
progress of the study
Senior officials were rarely approachable
Websites were not giving comprehensive data
Not having face-to-face interaction to get more relevant
information
Analysis and interpretation of data was done on the assumption that
the respondentsrsquo information was online
Information collected was totally subjective
The interviews are done during office hours but could not be done
for the other employees of other
DATA ANALYSIS
ESCORTS PVT LTD
CASH FLOW STRATEMENT
Year Ended Year Ended
30092009 30092008
Rs Crores Rs
Crores
A Cash Flow from Operating Activities
Net profit before tax (1733) 3444
Adjustment for
Loss on sale Provision for diminution in value of Long Term
Investments amp loans to Group Companies 189 4018
Gain on sale of Long Term Investments (122) (9492)
Gain on sale of Asset (013) -
Depreciation 4497 3955
Misc Exp Assets Write off Provisions 808 750
Interest Expense 7222 7999
Dividend Income (002) (001)
Interest Income (2082) -
Operating Profit before working capital changes 8764 10673
Adjustments for
Trade and other Receivables (8817) (12035)
Inventories 1379 (4692)
Trade Payables 6705 19046
Miscellaneous Expenditure (750) (511)
(1483) 1808
Cash Generated from Operations 7281 12481
Direct Taxes (Paid)Refunds (1785) 3166
Net Cash Flow from operating activities 5496 15647
B Cash Flow from Investing Activities
Purchase of Fixed Assets (3095) (2794)
Proceeds from sale of Fixed Assets 086 177
Movement in Loans and Advances (1627) (1644)
Sale of Investments 3233 11452
Short Term Deposits with schedule Banks (231) (1048)
Interest Received 2070 -
Dividend Received 002 001
Net Cash Flow from Investing activities 438 6144
Proceeds from Share Capital amp Securities Premium 11444 -
Proceeds from Long Term Borrowings 8660 -
Less Repayment of Long Term Borrowings (054) (7896)
Proceeds (Repayment) from short term borrowings (net) (22726) -
Interest Paid (7740) (8223)
Net Cash used in financing activities (10416) (16119)
Net Increase(Decrease) in Cash and Cash equivalents (4482) 5672
Cash and Cash equivalents as at 01102008 10565 4893
Cash and Cash equivalents as at 30092009 6083 1056
ANALYSIS OF CASH FLOW
From the cash flow statements of the ESCORT PVTLTDIt can be analyzed
from the two years that the net cash balance of the company has increased
manifold in 30-09-2008 than the year 30-09-2009
The net profit in 30-09-2008 is higher than the 30-09-2009 but due to certain
changes there has been increase in the cash balance
The interest paid this year is ore of the last year which implies that thee
company has not repaid his borrowed capital due to which the interest has got
down
The depreciation has increased but it does not affect cash to an extent as it is a
non-cash item In the head of working capital there is drastic change in the cash
balance in the form of ldquoTrade and other Receivables which has affected the cash
balance
There is outflow of cash for receivables rather than the inflow in the last year
So the net effect is that the cash from operating activities has been decreased
two times from the last year
The company has no accumulated losses as at the end of the financial year ie
September 31 2008
Provision for taxation has been made in accordance with the requirement of AS-
22 issued by Institute of Charted Accountants of India
Pursuant to that current year deferred tax liability have been charged to profit amp
loss account
In opinion of the board of directors of thee company the current assets loans
and advances have a value on realization in the ordinary course of the business at
least equal to the amount stated in the balance sheet and provision for all
liabilities have been made
Balance of sundry debtors creditors loans and advances are subject to confirmation by
the concerned parties
METHOD OF ANALYSIS
1 Data analysis is done using the following statistical tools wherever required in
order to extract meaningful information from the collected data
o Simple percentage and averages
o Bar diagram
o Cone diagram
o Pie diagram
2 The collected data from the questionnaire has been put together in the form of
tables
3 Percentage has been calculated wherever necessary for generalization of the
data
4 Data analysis and interpretation has been done on the basis of primary and
secondary data
5 The findings researches have been recorded based on the analysis
6 The study conducted pertains only to YAMAHA MOTORS INDIA PVTLTD
All bank balances (debitcredit) have been confirmed by the concerned bank
Identified from the available information which has been relied upon by the auditors
The names of small-scale industrial units to whom outstanding for more than
thirty days within agreed terms
The company has 9996 of shareholders in its subsidiary company named as
ESCORTS PVT LTD As at 31-03-2008
So the net effect is that the net cash from investing activities has many more
times than the last year which is negative Now the company has repaid its long
term borrowing more than the last year which has decreased the cash balance by
the little amount
Balance with the schedule banks under the head current amp collection account
amounting to represent funds in transit lying with schedule banks pending
transfer against loan liabilities under the head cash credit amp bill discounting
LIQUIDITY RATIO
1 CURRENT RATIO
(Amount in Rs)
Current Ratio
Year Current Assets Current Liabilities Ratio
2003 58574151 7903952 7412004 69765346 31884616 2192005 72021081 16065621 4482006 91328208 47117199 1942007 115642068 30266661 382
Interpretation
As a rule the current ratio with 21 (or) more is considered as satisfactory
position of the firm
When compared with 2006 there is an increase in the provision for tax because
the debtors are raised and for that the provision is created The current liabilities
majorly included Lanco Group of company for consultancy additional services
The sundry debtors have increased due to the increase to corporate taxes
In the year 2006 the cash and bank balance is reduced because that is used for
payment of dividends In the year 2007 the loans and advances include majorly
the advances to employees and deposits to government The loans and advances
reduced because the employees set off their claims The other current assets
include the interest attained from the deposits The deposits reduced due to the
declaration of dividends So the other current assets decreased
The huge increase in sundry debtors resulted an increase in the ratio which is
above the benchmark level of 21 which shows the comfortable position of the
firm
GRAPHICAL REPRESENTATION
741
219
448
194
382
000
100
200
300
400
500
600
700
800
Ratio
2003 2004 2005 2006 2007
Years
CURRENT RATIO
Ratio
2 QUICK RATIO
(Amount
in Rs)
Quick Ratio
Year Quick Assets Current Liabilities Ratio
2003 58574151 7903952 741
2004 52470336 31884616 165
2005 69883268 16065620 435
2006 89433596 47117199 19
2007 115431868 30266661 381
Interpretation
Quick assets are those assets which can be converted into cash with in a short
period of time say to six months So here the sundry debtors which are with the
long period does not include in the quick assets
Compare with 2006 the Quick ratio is increased because the sundry debtors are
increased due to the increase in the corporate tax and for that the provision
created is also increased So the ratio is also increased with the 2006
GRAPHICAL REPRESENTATION
741
165
435
190
381
000
100
200
300
400
500
600
700
800
Ratio
2003 2004 2005 2006 2007
Years
QUICK RATIO
Ratios
3 ABOSULTE LIQUIDITY RATIO
(Amount
in Rs)
Absolute Cash Ratio
Year Absolute Liquid Assets Current Liabilities Ratio
2003 31004027 7903952 392
2004 10859778 31884616 034
2005 39466542 16065620 246
2006 53850852 47117199 114
2007 35649070 30266661 118
Interpretation
The current assets which are ready in the form of cash are considered as absolute
liquid assets Here the cash and bank balance and the interest on fixed assts are
absolute liquid assets
In the year 2006 the cash and bank balance is decreased due to decrease in the
deposits and the current liabilities are also reduced because of the payment of
dividend That causes a slight increase in the current yearrsquos ratio
GRAPHICAL REPRESENTATION
392
034
246
114 118
0
05
1
15
2
25
3
35
4
Ratios
2003 2004 2005 2006 2007
Years
ABSOLUTE CASH RATIO
Ratios
LEVERAGE RATIOS
4 PROPRIETORY RATIO
(Amount
in Rs)
Proprietory Ratio
Year Share Holders Funds Total Assets Ratio
2003 67679219 78572171 086
2004 53301834 88438107 06
2005 70231061 89158391 079
2006 56473652 106385201 053
2007 97060013 129805102 075
Interpretation
The proprietary ratio establishes the relationship between shareholders funds to
total assets It determines the long-term solvency of the firm This ratio indicates
the extent to which the assets of the company can be lost without affecting the
interest of the company
There is no increase in the capital from the year2004 The share holderrsquos funds
include capital and reserves and surplus The reserves and surplus is increased
due to the increase in balance in profit and loss account which is caused by the
increase of income from services
Total assets includes fixed and current assets The fixed assets are reduced
because of the depreciation and there are no major increments in the fixed assets
The current assets are increased compared with the year 2006 Total assets are
also increased than precious year which resulted an increase in the ratio than old
GRAPHICAL REPRESENTATION
086
060
079
053
075
000
010
020
030
040
050
060
070
080
090
Ratios
2003 2004 2005 2006 2007
Years
PROPRIETORY RATIO
Ratios
ACTIVITY RATIOS
5 WORKING CAPITAL TURNOVER RATIO
(Amount
in Rs)
Working Capital Turnover Ratio
Year Income From Services Working Capital Ratio
2003 36309834 50670199 0722004 53899084 37880730 1422005 72728759 55355460 1312006 55550649 44211009 1262007 96654902 85375407 113
Interpretation
Income from services is greatly increased due to the extra invoice for Operations
amp Maintenance fee and the working capital is also increased greater due to the
increase in from services because the huge increase in current assets
The income from services is raised and the current assets are also raised together
resulted in the decrease of the ratio of 2007 compared with 2006
GRAPHICAL REPRESENTATION
072
142 131126
113
000
020
040
060
080
100
120
140
160
Ratio
2003 2004 2005 2006 2007
Years
WORKING CAPITAL TURNOVER RATIO
Ratio
6 FIXED ASSETS TURNOVER RATIO
(Amount in Rs)
Fixed Assets Turnover Ratio
Year Income From Services Net Fixed Assets Ratio
2003 36309834 28834317 126
2004 53899084 29568279 182
2005 72728759 17137310 424
2006 55550649 15056993 369
2007 96654902 14163034 682
Interpretation
Fixed assets are used in the business for producing the goods to be sold This
ratio shows the firmrsquos ability in generating sales from all financial resources
committed to total assets The ratio indicates the account of one rupee
investment in fixed assets
The income from services is greaterly increased in the current year due to the
increase in the Operations amp Maintenance fee due to the increase in extra invoice
and the net fixed assets are reduced because of the increased charge of
depreciation Finally that effected a huge increase in the ratio compared with the
previous yearrsquos ratio
GRAPHICAL REPRSENTATION
126182
424 369
682
000
100
200
300
400
500
600
700
Ratios
2003 2004 2005 2006 2007
Years
FIXED ASSETS TURNOVER RATIO
Ratios
7 CAPITAL TURNOVER RATIO
(Amount
in Rs)
Capital Turnover Ratio
Year Income From Services Capital Employed Ratio
2003 36309834 37175892 0982004 53899084 53301834 1012005 72728759 70231061 1042006 55550649 56473652 0982007 96654902 97060013 100
Interpretation
This is another ratio to judge the efficiency and effectiveness of the company
like profitability ratio
The income from services is greaterly increased compared with the previous year
and the total capital employed includes capital and reserves amp surplus Due to
huge increase in the net profit the capital employed is also increased along with
income from services Both are effected in the increment of the ratio of current
year
GRAPHICAL REPRESENTATION
098
101
104
098
100
094095096097098099100101102103104
Ratios
2003 2004 2005 2006 2007
Years
CAPITAL TURNOVER RATIO
Ratios
8 CURRENT ASSETS TO FIXED ASSETS RATIO
(Amount
in Rs)
Current Assets To Fixed Assets Ratio
Year Current Assets Fixed Assets Ratio
2003 58524151 19998020 2932004 69765346 18672761 3742005 72021081 17137310 4202006 91328208 15056993 6072007 115642068 14163034 817
Interpretation
Current assets are increased due to the increase in the sundry debtors and the net
fixed assets of the firm are decreased due to the charge of depreciation and there
is no major increment in the fixed assets
The increment in current assets and the decrease in fixed assets resulted an
increase in the ratio compared with the previous year
GRAPHICAL REPRESENTATION
293374
420
607
817
000
100
200
300
400
500
600
700
800
900
Ratios
2003 2004 2005 2006 2007
Years
CURRENT ASSETS TO FIXED ASSETS RATIO
Ratios
PROFITABILITY RATIOS
GENERAL PROFITABILITY RATIOS
9 NET PROFIT RATIO
(Amount in Rs)
Net Profit Ratio
Year Net Profit After Tax Income from Services Ratio
2003 21123474 36039834 059
2004 16125942 53899084 030
2005 16929227 72728759 023
2006 18259580 55550649 033
2007 40586359 96654902 042
Interpretation
The net profit ratio is the overall measure of the firmrsquos ability to turn each rupee
of income from services in net profit If the net margin is inadequate the firm
will fail to achieve return on shareholderrsquos funds High net profit ratio will help
the firm service in the fall of income from services rise in cost of production or
declining demand
The net profit is increased because the income from services is increased The
increment resulted a slight increase in 2007 ratio compared with the year 2006
GRAPHICAL REPRESENTATION
059
030
023
033
042
000
010
020
030
040
050
060
Ratios
2003 2004 2005 2006 2007
Years
NET PROFIT RATIO
Ratios
10 OPERATING PROFIT
(Amount in Rs)
Operating Profit
Year Operating Profit Income From Services Ratio
2003 36094877 36309834 099
2004 27576814 53899084 051
2005 29540599 72728759 041
2006 31586718 55550649 057
2007 67192677 96654902 070
Interpretation
The operating profit ratio is used to measure the relationship between net profits
and sales of a firm Depending on the concept it will decide
The operating profit ratio is increased compared with the last year The earnings
are increased due to the increase in the income from services because of
Operations amp Maintenance fee So the ratio is increased slightly compared with
the previous year
GRAPHICAL REPRESENTATION
099
051
041
057
070
000
010
020
030
040
050060
070
080
090
100
Ratios
2003 2004 2005 2006 2007
Years
OPERATING PROFIT RATIO
Ratios
11 RETURN ON TOTAL ASSETS RATIO
(Amount in Rs)
Return on Total Assets Ratio
Year Net Profit After Tax Total Assets Ratio
2003 21123474 78572171 027
2004 16125942 88438107 018
2005 16929227 89158391 019
2006 18259580 106385201 017
2007 40586359 129805102 031
Interpretation
This is the ratio between net profit and total assets The ratio indicates the return
on total assets in the form of profits
The net profit is increased in the current year because of the increment in the
income from services due to the increase in Operations amp Maintenance fee The
fixed assets are reduced due to the charge of depreciation and no major
increments in fixed assets but the current assets are increased because of sundry
debtors and that effects an increase in the ratio compared with the last year ie
2006
GRAPHICAL REPRESENTATION
027
018 019017
031
000
005
010
015
020
025
030
035
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON TOTAL ASSETS
Ratios
12 RESERVES amp SURPLUS TO CAPITAL RATIO
(Amount in Rs)
Reserves amp Surplus To Capital Ratio
Year Reserves amp Surplus Capital Ratio
2003 65599299 2079920 31542004 34582554 18719280 1852005 51511781 18719280 2752006 37754372 18719280 2022007 78340733 18719280 419
Interpretation
The ratio is used to reveal the policy pursued by the company a very high ratio
indicates a conservative dividend policy and vice-versa Higher the ratio better
will be the position
The reserves amp surplus is decreased in the year 2006 due to the payment of
dividends and in the year 2007 the profit is increased But the capital is
remaining constant from the year 2004 So the increase in the reserves amp surplus
caused a greater increase in the current yearrsquos ratio compared with the older
GRAPHICAL REPRESENTATION
3154
185 275 202419
-
500
1000
1500
2000
2500
3000
3500
Ratios
2003 2004 2005 2006 2007
Years
RESERVES amp SRUPLUS TO CAPITAL RATIO
Ratios
OVERALL PROFITABILITY RATIOS
13 EARNINGS PER SHARE
(Amount in Rs)
Earnings Per Share
Year Net Profit After Tax No of Equity Shares Ratio
2003 21123474 207992 101562004 16125942 1871928 8612005 16929227 1871928 9042006 18259580 1871928 9752007 40586359 1871928 2168
Interpretation
Earnings per share ratio are used to find out the return that the shareholderrsquos earn
from their shares After charging depreciation and after payment of tax the
remaining amount will be distributed by all the shareholders
Net profit after tax is increased due to the huge increase in the income from
services That is the amount which is available to the shareholders to take There
are 1871928 shares of Rs10- each The share capital is constant from the year
2004 Due to the huge increase in net profit the earnings per share is greaterly
increased in 2007
GRAPHICAL REPRESENTATION
10156
861904 975
2168
000
2000
4000
6000
8000
10000
12000
Ratios
2003 2004 2005 2006 2007
Years
EARNINGS PER SHARE
Ratios
14 PRICE EARNINGS (PE) RATIO
(Amount in Rs)
Price Earning (PE) Ratio
Year Market Price Per Share Earnings Per Share Ratio
2003 3254 10156 0322004 2847 861 3302005 3752 904 4152006 3017 975 3092007 5185 2168 239
Interpretation
The ratio is calculated to make an estimate of application in the value of share of
a company
The market price per share is increased due to the increase in the reserves
amp surplus The earnings per share are also increased greaterly compared
with the last year because of increase in the net profit So the ratio is
decreased compared with the previous year
GRAPHICAL REPRESENTATION
032
330
415
309
239
000
050
100
150
200
250
300
350
400
450
Ratios
2003 2004 2005 2006 2007
Years
PE RATIO
Ratios
15 RETURN ON INVESTMENT
(Amount in Rs)
Return on Investment
Year Net Profit After Tax Share Holders Fund Ratio
2003 21123474 67679219 031
2004 16125942 53301834 03
2005 16929227 70231061 024
2006 18259580 56473652 032
2007 40586359 97060013 042
Interpretation
This is the ratio between net profits and shareholders funds The ratio is
generally calculated as percentage multiplying with 100
The net profit is increased due to the increase in the income from services ant
the shareholders funds are increased because of reserve amp surplus So the ratio
is increased in the current year
GRAPHICAL REPRESENTATION
031 030
024
032
042
000
005
010
015
020
025
030
035
040
045
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON INVESTMENT RATIO
RatioS
DATA COLLECTION
The data can be of two types
Primary Data
Secondary Data
Primary Data
Primary data are those data which is originally collected afresh
Secondary Data
Secondary data are those data which are already collected and stored and which has
been passed through statistical research
In this project Secondary data has been collected from following sources-
Annual report
Books
MIS
Other material and report published by company There are two methods to prepare
the Cash flow Statement
ndirect Method
I
The indirect method (or reconciliation method) starts with net income and converts it
to net cash flow from operating activities In other words the indirect method adjusts
net income for items that affected reported net income but did not affect cash To
compute net cash flow from operating activities non-cash charges in the income
statement are added ack to net income and non-cash credits are deducted
b
Direct Method
Under the direct method the statement of cash flows reports net cash flow from
operating activities as major classes of operating cash receipts (eg cash collected from
customers and cash received from interest and dividends) and cash disbursements (eg
cash paid to suppliers for goods to employees for services to creditors for interest and
to government authorities for taxes)
INDIRECT VERSUS DIRECT METHOD
The most contentious decision that the FASB faced in issuing Statement No 95 was
choosing between the direct method and the indirect method of determining net cash
flow from operating activities Companies lobbied against the direct method urging
adoption of the indirect method Commercial lending officers expressed a strong
preference to the FASB hat the direct method be required
tCF-Page 3 of 5
In Favor of the Direct Method
The principal advantage of the direct method is that it shows operating cash receipts and
payments That is it is more consistent with the objective of a statement of cash flows to
provide information about cash receipts and cash payments than the in-direct method
which does not report operating cash receipts and payments
Supporters of the direct method contend that knowledge of the specific sources of
operating cash receipts and the purposes for which operating cash payments were made
in past periods is useful in estimating future operating cash flows Furthermore in-
formation about amounts of major classes of operating cash receipts and payments is
more useful than information only about their arithmetic sum (the net cash flow from
operating activities) Such information is more revealing of an enterprises ability (1) to
generate sufficient cash from operating activities to pay its debts (2) to reinvest in its
operations and (3) to make distributions to its owners
Many corporate providers of financial statements say that they do not currently collect
information in a manner that allows them to determine amounts such as cash received
from customers or cash paid to suppliers directly from their accounting systems But
supporters of the direct method contend that the incremental cost of assimilating such
operating cash receipts and payments data is not significant
In Favor of the Indirect Method
The principal advantage of the indirect method is that it focuses on the differences
between net income and net cash flow from operating activities That is it provides a
useful link between the statement of cash flows and the income statement and balance
sheet
Many providers of financial statements contend that it is less costly to adjust net income
to net cash flow from operating activities (indirect) than it is to report gross operating
cash receipts and payments (direct) Supporters of the indirect method also state that the
direct method which effectively reports income statement information on a cash rather
than an accrual basis may erroneously suggest that net cash flow from operating
activities is as good as or better than net income as a measure of performance
Special Rules Applying to Direct and Indirect Methods
Companies that use the direct method are required at a
minimum to report separately the following classes of
operating cash receipts and payments
Receipts
1048713 Cash collected from customers (including lessees licensees etc)
1048713 Interest and dividends received
1048713 Other operating cash receipts if any
Payments
1048713 Cash paid to employees and suppliers of goods or services (including
suppliers of
insurance advertising etc)
1048713 Interest paid
1048713 Income taxes paid
1048713 Other operating cash payments if any
Companies using the indirect method are required to disclose separately changes in
inventory receivables and payables to reconcile net income to net cash flow from
operating activities In addition interest paid (net of amount capitalized) and income
taxes paid must be disclosed elsewhere in the financial statements or accompanying
notes
The FASB requires these separate and additional disclosures so that users
may approximate the direct method Also an acceptable alternative presentation
of the in-direct method is to report net cash flow from operating activities as a
single line item in the statement of cash flows and to present the reconciliation
details elsewhere in the financial statements
FINDING OF SUDY
According to cash flow statement of the company The finding of the study are as
follows-
The company has not taken any loans secured or unsecured from companies
firms or other parties
The company has not accepted any deposit from the public during the year
The company is not a sick industrial company
The company has not granted any loan secured or unsecured to company firms
or other parties
The company has paid the entire long term and short term borrowing during the
year
The company has buy back the companyrsquos own share this year
The interest paid in 2008 is more than the
There has been a significant decline in volume over the years from 2001-02
to 2005-06 as can be seen in the graph below
Table 43
The Net sales of Tractor has increased considerably from 2004-05 to 2007-08
This can be mainly attributed to changes in Variable and material costs and in
the price
The Net sale of Tractor has increased considerably from 2004-05 to 2007-08
that is an decrease of Rs7216 per tractor This can be mainly attributed to
changes in
Variable and material costs and in the prices
RECOMMENDATIONS
According to cash flow statement of the company The suggestions of the study
are as follows-
The time durations for training program have to increase
Buy regular review and consultations develop a career progression
which is sensitive to performance and ability
Create an environment where by people are trend developed to enable
The to take advantages of opportunities that arise
The jab can be redesigned where the work man stay in what is normally
the same job but has elements of it changed
The principle amount must be paid in time which can be reducing the
interest the out flow
The purchase of the fixed asset must be made only when there is extreme
requirement
In order to avoid taxes the company should go for more investment
The companyrsquos borrowings should go for more investment
o The company should try to reduce the depreciations as maximum
as possible
CONCLUSION
The study on competency level of employees at ESCORTS PVTLTD gave an
insight about the acceptance of competency mapping by employees
The employees at Ymi welcome the introduction of competency mapping in their
organization as they felt it was very much essential in enhancing their skills and
organizational development
The organization has provided the recourses guidance and support to facilitate the
introduction of competency level easily and develop the employees in such a way
that they can face any kind of challenge
However the level of competency in employees is found to be satisfactory
Providing proper training education and guidance to the employees can enhance
the level
This study was mainly carried out to find out whether thee competency mapping
being followed by the company is effective till date If the competency mapping
and fitment to the organization
By looking at the graphs and tables it is quite that the employees still are not up to
the level of competent pool they still have to be trained and made competent in
order to fill the gap As the organization has just applied the mapping it has to see
to that it meets all the requirements for competency mapping
Therefore the graphs make it quite clear that the potential of the employees is not
up to the mark and ie they are not competent enough to meet the competency-
mapping requirement Hence by further training and counseling this gap can be
closed
This report includes the training requirements of employees and it highlights skills
possessed by each employee and skill required All employees get training so that
skill can be improved and maintain balance between standard performance with
their actual performance to avoid gap
APPENDIX
QUESTIONNAIRE
Consumer Survey
Name _____________________________
Age _____________________________
Sex
Male
Female
Occupation
Businessman
Service man
Professional
Others
Monthly income brackets
Below 15000
15000- 20000
20000-30000
30000 and above
of your savings _________
Do you invest
Yes
No
If yes then where do you invest your money
Bank
Insurance
funds
Others
Why do you made that statement
Return
Risk hedging
Tax benefits
Other reasons (specify) _______
Who influence your cash decision
Relatives and friends
Family members
Advisors experts
You yourself
If no then why
Do not know where to invest
Satisfied with your current investment return
Donrsquot want take risk
Other reasons
__________________________________________________________________
___________________
Do you know about CF statement
Yes
No
If yes then from where you have come to know about an cash statement
Advertisements on newspapers
Friends and relative
Agents experts
Other source
What do you think about cash statement
It means investing only in share market
Constant watch must be kept always
Return is not satisfactory
Other perception
__________________________________________________
Can you recall any cash flow of company
___________________________
Would you want to made CF of an org
Yes
No
If yes then why
_______________________________________________________
If no then why
_______________________________________________________
BIBLIOGRAPHY
List of Books
1 PANDEY IM - FINANCIAL MANAGEMANT
2 KHAN MY AND JAIN PK -FINANCIAL MANAGEMANT
3 SMITH KV ndash MANAGEMANT OF WORKING CAPITAL
3 COMPANY RECORDS
4 JOURNAL
5 REPORTS
WEBLIOGRAPHY
1 wwwescortspvtltdcom
2 wwwgooglecom
SCOPE OF THE STUDY
Financial resources are the assets for the company and their productivity is key
factor for profitability It is necessary to know their problems their knowledge
skills abilities amp the measures that can be taken to reduce them By analyzing this
top management can build good relations with the employees
The whole study is to determine the competencies of different employees who are
working in ESCORTS PVT LTD By analyzing it the top management can
introduce the concept of competency mapping in the organization Through this
management can attempt to use more suitable strategies towards the human
resource development
The research is confined to elicit the existing gap between the standard skill
required to perform the job and the skill processed by the employees at ESCORTS
PVT LTD And to provide them suitable training program to over come those gaps
for the better utilization of human resources
RELEVANCE
The scope of the study was confined to the outside parties like creditors
shareholders government etc Who want to invest their money in the
company
The benefit of the report for the company is that through this report they can come
to know about the cash flow statements of the company
This study also unable the company that their cash is not utilizing in unnecessary
things
The benefit of the report for the researcher is that it has helped to get knowledge
about the cash inflow and cash
RESERRCH METHODOLOGY-
RESEARCH DESIGN
bull The study was conducted under well- structured approach
bull The project lasted for 4 weeks and the year 2009 ie from 08 July to 12
Aug2009
bull The questionnaire method amp personal interview method was used to collect
the primary data for the study
The secondary data is collected from Internet amp company training material and
many other company materials
SAMPLE DESIGN
The process of extracting a sample from a population is called sampling
procedure The selection of sampling procedure to conduct the research
depends upon the nature of the study and the objective to be accomplished
Judgment sampling technique is adopted to select the respondents in this
study The sample design included the various departments in the YAMAHA
MOTORS PVT LTD
Methodology of date collection
bull Conducting personal interview
bull Data collection from primary and secondary sources
bull Designing questionnaire
bull Selecting sample size from the sample frame for the survey
bull Questionnaire distribution
bull Analysis of collected data with the help of statistical tools
bull Interpretation of collected data
bull Stating the conclusion based on the entire study
Sampling Technique
The sampling technique used for this research is of non-probability and convenience
sampling
Sample Unit
Employees of the company
Sample Size
For this research study the sample size is 25 respondents
Sources of data
Primary data
Primary data is the data which is collected by the researcher for the first time
and which was not there The tools used to collect the data are-
1)Questionnaire method from the employers in different departments
2) Face to Face personal interactions
Secondary Data
The data already collected is called as secondary data The relevant information
for this study has been collected from secondary source such as
Books
Journal
Reports
Publication by the organizational circulation
Company records
Business bulletins
Internet
Secondary data is also collected from various of the internet and intranet Some
of the website trough which information was gathered was through
HYPOTHESIS
The report is analyzed under the presumption that cash flow position of
YAMAHA MOTORS PVTLTD It can be improved and made effective in
terms of cash flows
In testing the above hypothesis the following aspects will be considered
1 Balance sheet comparisons
2 Presentation of cash flow statement in terms of revised AS-3
LIMITATIONS
The study though conducted to the best of the ability suffers from some
certain limitations There are
The data is secondary one and as such its reliability may be
questioned upon
The time availability for the study is less and as such it hinders thee
progress of the study
Senior officials were rarely approachable
Websites were not giving comprehensive data
Not having face-to-face interaction to get more relevant
information
Analysis and interpretation of data was done on the assumption that
the respondentsrsquo information was online
Information collected was totally subjective
The interviews are done during office hours but could not be done
for the other employees of other
DATA ANALYSIS
ESCORTS PVT LTD
CASH FLOW STRATEMENT
Year Ended Year Ended
30092009 30092008
Rs Crores Rs
Crores
A Cash Flow from Operating Activities
Net profit before tax (1733) 3444
Adjustment for
Loss on sale Provision for diminution in value of Long Term
Investments amp loans to Group Companies 189 4018
Gain on sale of Long Term Investments (122) (9492)
Gain on sale of Asset (013) -
Depreciation 4497 3955
Misc Exp Assets Write off Provisions 808 750
Interest Expense 7222 7999
Dividend Income (002) (001)
Interest Income (2082) -
Operating Profit before working capital changes 8764 10673
Adjustments for
Trade and other Receivables (8817) (12035)
Inventories 1379 (4692)
Trade Payables 6705 19046
Miscellaneous Expenditure (750) (511)
(1483) 1808
Cash Generated from Operations 7281 12481
Direct Taxes (Paid)Refunds (1785) 3166
Net Cash Flow from operating activities 5496 15647
B Cash Flow from Investing Activities
Purchase of Fixed Assets (3095) (2794)
Proceeds from sale of Fixed Assets 086 177
Movement in Loans and Advances (1627) (1644)
Sale of Investments 3233 11452
Short Term Deposits with schedule Banks (231) (1048)
Interest Received 2070 -
Dividend Received 002 001
Net Cash Flow from Investing activities 438 6144
Proceeds from Share Capital amp Securities Premium 11444 -
Proceeds from Long Term Borrowings 8660 -
Less Repayment of Long Term Borrowings (054) (7896)
Proceeds (Repayment) from short term borrowings (net) (22726) -
Interest Paid (7740) (8223)
Net Cash used in financing activities (10416) (16119)
Net Increase(Decrease) in Cash and Cash equivalents (4482) 5672
Cash and Cash equivalents as at 01102008 10565 4893
Cash and Cash equivalents as at 30092009 6083 1056
ANALYSIS OF CASH FLOW
From the cash flow statements of the ESCORT PVTLTDIt can be analyzed
from the two years that the net cash balance of the company has increased
manifold in 30-09-2008 than the year 30-09-2009
The net profit in 30-09-2008 is higher than the 30-09-2009 but due to certain
changes there has been increase in the cash balance
The interest paid this year is ore of the last year which implies that thee
company has not repaid his borrowed capital due to which the interest has got
down
The depreciation has increased but it does not affect cash to an extent as it is a
non-cash item In the head of working capital there is drastic change in the cash
balance in the form of ldquoTrade and other Receivables which has affected the cash
balance
There is outflow of cash for receivables rather than the inflow in the last year
So the net effect is that the cash from operating activities has been decreased
two times from the last year
The company has no accumulated losses as at the end of the financial year ie
September 31 2008
Provision for taxation has been made in accordance with the requirement of AS-
22 issued by Institute of Charted Accountants of India
Pursuant to that current year deferred tax liability have been charged to profit amp
loss account
In opinion of the board of directors of thee company the current assets loans
and advances have a value on realization in the ordinary course of the business at
least equal to the amount stated in the balance sheet and provision for all
liabilities have been made
Balance of sundry debtors creditors loans and advances are subject to confirmation by
the concerned parties
METHOD OF ANALYSIS
1 Data analysis is done using the following statistical tools wherever required in
order to extract meaningful information from the collected data
o Simple percentage and averages
o Bar diagram
o Cone diagram
o Pie diagram
2 The collected data from the questionnaire has been put together in the form of
tables
3 Percentage has been calculated wherever necessary for generalization of the
data
4 Data analysis and interpretation has been done on the basis of primary and
secondary data
5 The findings researches have been recorded based on the analysis
6 The study conducted pertains only to YAMAHA MOTORS INDIA PVTLTD
All bank balances (debitcredit) have been confirmed by the concerned bank
Identified from the available information which has been relied upon by the auditors
The names of small-scale industrial units to whom outstanding for more than
thirty days within agreed terms
The company has 9996 of shareholders in its subsidiary company named as
ESCORTS PVT LTD As at 31-03-2008
So the net effect is that the net cash from investing activities has many more
times than the last year which is negative Now the company has repaid its long
term borrowing more than the last year which has decreased the cash balance by
the little amount
Balance with the schedule banks under the head current amp collection account
amounting to represent funds in transit lying with schedule banks pending
transfer against loan liabilities under the head cash credit amp bill discounting
LIQUIDITY RATIO
1 CURRENT RATIO
(Amount in Rs)
Current Ratio
Year Current Assets Current Liabilities Ratio
2003 58574151 7903952 7412004 69765346 31884616 2192005 72021081 16065621 4482006 91328208 47117199 1942007 115642068 30266661 382
Interpretation
As a rule the current ratio with 21 (or) more is considered as satisfactory
position of the firm
When compared with 2006 there is an increase in the provision for tax because
the debtors are raised and for that the provision is created The current liabilities
majorly included Lanco Group of company for consultancy additional services
The sundry debtors have increased due to the increase to corporate taxes
In the year 2006 the cash and bank balance is reduced because that is used for
payment of dividends In the year 2007 the loans and advances include majorly
the advances to employees and deposits to government The loans and advances
reduced because the employees set off their claims The other current assets
include the interest attained from the deposits The deposits reduced due to the
declaration of dividends So the other current assets decreased
The huge increase in sundry debtors resulted an increase in the ratio which is
above the benchmark level of 21 which shows the comfortable position of the
firm
GRAPHICAL REPRESENTATION
741
219
448
194
382
000
100
200
300
400
500
600
700
800
Ratio
2003 2004 2005 2006 2007
Years
CURRENT RATIO
Ratio
2 QUICK RATIO
(Amount
in Rs)
Quick Ratio
Year Quick Assets Current Liabilities Ratio
2003 58574151 7903952 741
2004 52470336 31884616 165
2005 69883268 16065620 435
2006 89433596 47117199 19
2007 115431868 30266661 381
Interpretation
Quick assets are those assets which can be converted into cash with in a short
period of time say to six months So here the sundry debtors which are with the
long period does not include in the quick assets
Compare with 2006 the Quick ratio is increased because the sundry debtors are
increased due to the increase in the corporate tax and for that the provision
created is also increased So the ratio is also increased with the 2006
GRAPHICAL REPRESENTATION
741
165
435
190
381
000
100
200
300
400
500
600
700
800
Ratio
2003 2004 2005 2006 2007
Years
QUICK RATIO
Ratios
3 ABOSULTE LIQUIDITY RATIO
(Amount
in Rs)
Absolute Cash Ratio
Year Absolute Liquid Assets Current Liabilities Ratio
2003 31004027 7903952 392
2004 10859778 31884616 034
2005 39466542 16065620 246
2006 53850852 47117199 114
2007 35649070 30266661 118
Interpretation
The current assets which are ready in the form of cash are considered as absolute
liquid assets Here the cash and bank balance and the interest on fixed assts are
absolute liquid assets
In the year 2006 the cash and bank balance is decreased due to decrease in the
deposits and the current liabilities are also reduced because of the payment of
dividend That causes a slight increase in the current yearrsquos ratio
GRAPHICAL REPRESENTATION
392
034
246
114 118
0
05
1
15
2
25
3
35
4
Ratios
2003 2004 2005 2006 2007
Years
ABSOLUTE CASH RATIO
Ratios
LEVERAGE RATIOS
4 PROPRIETORY RATIO
(Amount
in Rs)
Proprietory Ratio
Year Share Holders Funds Total Assets Ratio
2003 67679219 78572171 086
2004 53301834 88438107 06
2005 70231061 89158391 079
2006 56473652 106385201 053
2007 97060013 129805102 075
Interpretation
The proprietary ratio establishes the relationship between shareholders funds to
total assets It determines the long-term solvency of the firm This ratio indicates
the extent to which the assets of the company can be lost without affecting the
interest of the company
There is no increase in the capital from the year2004 The share holderrsquos funds
include capital and reserves and surplus The reserves and surplus is increased
due to the increase in balance in profit and loss account which is caused by the
increase of income from services
Total assets includes fixed and current assets The fixed assets are reduced
because of the depreciation and there are no major increments in the fixed assets
The current assets are increased compared with the year 2006 Total assets are
also increased than precious year which resulted an increase in the ratio than old
GRAPHICAL REPRESENTATION
086
060
079
053
075
000
010
020
030
040
050
060
070
080
090
Ratios
2003 2004 2005 2006 2007
Years
PROPRIETORY RATIO
Ratios
ACTIVITY RATIOS
5 WORKING CAPITAL TURNOVER RATIO
(Amount
in Rs)
Working Capital Turnover Ratio
Year Income From Services Working Capital Ratio
2003 36309834 50670199 0722004 53899084 37880730 1422005 72728759 55355460 1312006 55550649 44211009 1262007 96654902 85375407 113
Interpretation
Income from services is greatly increased due to the extra invoice for Operations
amp Maintenance fee and the working capital is also increased greater due to the
increase in from services because the huge increase in current assets
The income from services is raised and the current assets are also raised together
resulted in the decrease of the ratio of 2007 compared with 2006
GRAPHICAL REPRESENTATION
072
142 131126
113
000
020
040
060
080
100
120
140
160
Ratio
2003 2004 2005 2006 2007
Years
WORKING CAPITAL TURNOVER RATIO
Ratio
6 FIXED ASSETS TURNOVER RATIO
(Amount in Rs)
Fixed Assets Turnover Ratio
Year Income From Services Net Fixed Assets Ratio
2003 36309834 28834317 126
2004 53899084 29568279 182
2005 72728759 17137310 424
2006 55550649 15056993 369
2007 96654902 14163034 682
Interpretation
Fixed assets are used in the business for producing the goods to be sold This
ratio shows the firmrsquos ability in generating sales from all financial resources
committed to total assets The ratio indicates the account of one rupee
investment in fixed assets
The income from services is greaterly increased in the current year due to the
increase in the Operations amp Maintenance fee due to the increase in extra invoice
and the net fixed assets are reduced because of the increased charge of
depreciation Finally that effected a huge increase in the ratio compared with the
previous yearrsquos ratio
GRAPHICAL REPRSENTATION
126182
424 369
682
000
100
200
300
400
500
600
700
Ratios
2003 2004 2005 2006 2007
Years
FIXED ASSETS TURNOVER RATIO
Ratios
7 CAPITAL TURNOVER RATIO
(Amount
in Rs)
Capital Turnover Ratio
Year Income From Services Capital Employed Ratio
2003 36309834 37175892 0982004 53899084 53301834 1012005 72728759 70231061 1042006 55550649 56473652 0982007 96654902 97060013 100
Interpretation
This is another ratio to judge the efficiency and effectiveness of the company
like profitability ratio
The income from services is greaterly increased compared with the previous year
and the total capital employed includes capital and reserves amp surplus Due to
huge increase in the net profit the capital employed is also increased along with
income from services Both are effected in the increment of the ratio of current
year
GRAPHICAL REPRESENTATION
098
101
104
098
100
094095096097098099100101102103104
Ratios
2003 2004 2005 2006 2007
Years
CAPITAL TURNOVER RATIO
Ratios
8 CURRENT ASSETS TO FIXED ASSETS RATIO
(Amount
in Rs)
Current Assets To Fixed Assets Ratio
Year Current Assets Fixed Assets Ratio
2003 58524151 19998020 2932004 69765346 18672761 3742005 72021081 17137310 4202006 91328208 15056993 6072007 115642068 14163034 817
Interpretation
Current assets are increased due to the increase in the sundry debtors and the net
fixed assets of the firm are decreased due to the charge of depreciation and there
is no major increment in the fixed assets
The increment in current assets and the decrease in fixed assets resulted an
increase in the ratio compared with the previous year
GRAPHICAL REPRESENTATION
293374
420
607
817
000
100
200
300
400
500
600
700
800
900
Ratios
2003 2004 2005 2006 2007
Years
CURRENT ASSETS TO FIXED ASSETS RATIO
Ratios
PROFITABILITY RATIOS
GENERAL PROFITABILITY RATIOS
9 NET PROFIT RATIO
(Amount in Rs)
Net Profit Ratio
Year Net Profit After Tax Income from Services Ratio
2003 21123474 36039834 059
2004 16125942 53899084 030
2005 16929227 72728759 023
2006 18259580 55550649 033
2007 40586359 96654902 042
Interpretation
The net profit ratio is the overall measure of the firmrsquos ability to turn each rupee
of income from services in net profit If the net margin is inadequate the firm
will fail to achieve return on shareholderrsquos funds High net profit ratio will help
the firm service in the fall of income from services rise in cost of production or
declining demand
The net profit is increased because the income from services is increased The
increment resulted a slight increase in 2007 ratio compared with the year 2006
GRAPHICAL REPRESENTATION
059
030
023
033
042
000
010
020
030
040
050
060
Ratios
2003 2004 2005 2006 2007
Years
NET PROFIT RATIO
Ratios
10 OPERATING PROFIT
(Amount in Rs)
Operating Profit
Year Operating Profit Income From Services Ratio
2003 36094877 36309834 099
2004 27576814 53899084 051
2005 29540599 72728759 041
2006 31586718 55550649 057
2007 67192677 96654902 070
Interpretation
The operating profit ratio is used to measure the relationship between net profits
and sales of a firm Depending on the concept it will decide
The operating profit ratio is increased compared with the last year The earnings
are increased due to the increase in the income from services because of
Operations amp Maintenance fee So the ratio is increased slightly compared with
the previous year
GRAPHICAL REPRESENTATION
099
051
041
057
070
000
010
020
030
040
050060
070
080
090
100
Ratios
2003 2004 2005 2006 2007
Years
OPERATING PROFIT RATIO
Ratios
11 RETURN ON TOTAL ASSETS RATIO
(Amount in Rs)
Return on Total Assets Ratio
Year Net Profit After Tax Total Assets Ratio
2003 21123474 78572171 027
2004 16125942 88438107 018
2005 16929227 89158391 019
2006 18259580 106385201 017
2007 40586359 129805102 031
Interpretation
This is the ratio between net profit and total assets The ratio indicates the return
on total assets in the form of profits
The net profit is increased in the current year because of the increment in the
income from services due to the increase in Operations amp Maintenance fee The
fixed assets are reduced due to the charge of depreciation and no major
increments in fixed assets but the current assets are increased because of sundry
debtors and that effects an increase in the ratio compared with the last year ie
2006
GRAPHICAL REPRESENTATION
027
018 019017
031
000
005
010
015
020
025
030
035
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON TOTAL ASSETS
Ratios
12 RESERVES amp SURPLUS TO CAPITAL RATIO
(Amount in Rs)
Reserves amp Surplus To Capital Ratio
Year Reserves amp Surplus Capital Ratio
2003 65599299 2079920 31542004 34582554 18719280 1852005 51511781 18719280 2752006 37754372 18719280 2022007 78340733 18719280 419
Interpretation
The ratio is used to reveal the policy pursued by the company a very high ratio
indicates a conservative dividend policy and vice-versa Higher the ratio better
will be the position
The reserves amp surplus is decreased in the year 2006 due to the payment of
dividends and in the year 2007 the profit is increased But the capital is
remaining constant from the year 2004 So the increase in the reserves amp surplus
caused a greater increase in the current yearrsquos ratio compared with the older
GRAPHICAL REPRESENTATION
3154
185 275 202419
-
500
1000
1500
2000
2500
3000
3500
Ratios
2003 2004 2005 2006 2007
Years
RESERVES amp SRUPLUS TO CAPITAL RATIO
Ratios
OVERALL PROFITABILITY RATIOS
13 EARNINGS PER SHARE
(Amount in Rs)
Earnings Per Share
Year Net Profit After Tax No of Equity Shares Ratio
2003 21123474 207992 101562004 16125942 1871928 8612005 16929227 1871928 9042006 18259580 1871928 9752007 40586359 1871928 2168
Interpretation
Earnings per share ratio are used to find out the return that the shareholderrsquos earn
from their shares After charging depreciation and after payment of tax the
remaining amount will be distributed by all the shareholders
Net profit after tax is increased due to the huge increase in the income from
services That is the amount which is available to the shareholders to take There
are 1871928 shares of Rs10- each The share capital is constant from the year
2004 Due to the huge increase in net profit the earnings per share is greaterly
increased in 2007
GRAPHICAL REPRESENTATION
10156
861904 975
2168
000
2000
4000
6000
8000
10000
12000
Ratios
2003 2004 2005 2006 2007
Years
EARNINGS PER SHARE
Ratios
14 PRICE EARNINGS (PE) RATIO
(Amount in Rs)
Price Earning (PE) Ratio
Year Market Price Per Share Earnings Per Share Ratio
2003 3254 10156 0322004 2847 861 3302005 3752 904 4152006 3017 975 3092007 5185 2168 239
Interpretation
The ratio is calculated to make an estimate of application in the value of share of
a company
The market price per share is increased due to the increase in the reserves
amp surplus The earnings per share are also increased greaterly compared
with the last year because of increase in the net profit So the ratio is
decreased compared with the previous year
GRAPHICAL REPRESENTATION
032
330
415
309
239
000
050
100
150
200
250
300
350
400
450
Ratios
2003 2004 2005 2006 2007
Years
PE RATIO
Ratios
15 RETURN ON INVESTMENT
(Amount in Rs)
Return on Investment
Year Net Profit After Tax Share Holders Fund Ratio
2003 21123474 67679219 031
2004 16125942 53301834 03
2005 16929227 70231061 024
2006 18259580 56473652 032
2007 40586359 97060013 042
Interpretation
This is the ratio between net profits and shareholders funds The ratio is
generally calculated as percentage multiplying with 100
The net profit is increased due to the increase in the income from services ant
the shareholders funds are increased because of reserve amp surplus So the ratio
is increased in the current year
GRAPHICAL REPRESENTATION
031 030
024
032
042
000
005
010
015
020
025
030
035
040
045
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON INVESTMENT RATIO
RatioS
DATA COLLECTION
The data can be of two types
Primary Data
Secondary Data
Primary Data
Primary data are those data which is originally collected afresh
Secondary Data
Secondary data are those data which are already collected and stored and which has
been passed through statistical research
In this project Secondary data has been collected from following sources-
Annual report
Books
MIS
Other material and report published by company There are two methods to prepare
the Cash flow Statement
ndirect Method
I
The indirect method (or reconciliation method) starts with net income and converts it
to net cash flow from operating activities In other words the indirect method adjusts
net income for items that affected reported net income but did not affect cash To
compute net cash flow from operating activities non-cash charges in the income
statement are added ack to net income and non-cash credits are deducted
b
Direct Method
Under the direct method the statement of cash flows reports net cash flow from
operating activities as major classes of operating cash receipts (eg cash collected from
customers and cash received from interest and dividends) and cash disbursements (eg
cash paid to suppliers for goods to employees for services to creditors for interest and
to government authorities for taxes)
INDIRECT VERSUS DIRECT METHOD
The most contentious decision that the FASB faced in issuing Statement No 95 was
choosing between the direct method and the indirect method of determining net cash
flow from operating activities Companies lobbied against the direct method urging
adoption of the indirect method Commercial lending officers expressed a strong
preference to the FASB hat the direct method be required
tCF-Page 3 of 5
In Favor of the Direct Method
The principal advantage of the direct method is that it shows operating cash receipts and
payments That is it is more consistent with the objective of a statement of cash flows to
provide information about cash receipts and cash payments than the in-direct method
which does not report operating cash receipts and payments
Supporters of the direct method contend that knowledge of the specific sources of
operating cash receipts and the purposes for which operating cash payments were made
in past periods is useful in estimating future operating cash flows Furthermore in-
formation about amounts of major classes of operating cash receipts and payments is
more useful than information only about their arithmetic sum (the net cash flow from
operating activities) Such information is more revealing of an enterprises ability (1) to
generate sufficient cash from operating activities to pay its debts (2) to reinvest in its
operations and (3) to make distributions to its owners
Many corporate providers of financial statements say that they do not currently collect
information in a manner that allows them to determine amounts such as cash received
from customers or cash paid to suppliers directly from their accounting systems But
supporters of the direct method contend that the incremental cost of assimilating such
operating cash receipts and payments data is not significant
In Favor of the Indirect Method
The principal advantage of the indirect method is that it focuses on the differences
between net income and net cash flow from operating activities That is it provides a
useful link between the statement of cash flows and the income statement and balance
sheet
Many providers of financial statements contend that it is less costly to adjust net income
to net cash flow from operating activities (indirect) than it is to report gross operating
cash receipts and payments (direct) Supporters of the indirect method also state that the
direct method which effectively reports income statement information on a cash rather
than an accrual basis may erroneously suggest that net cash flow from operating
activities is as good as or better than net income as a measure of performance
Special Rules Applying to Direct and Indirect Methods
Companies that use the direct method are required at a
minimum to report separately the following classes of
operating cash receipts and payments
Receipts
1048713 Cash collected from customers (including lessees licensees etc)
1048713 Interest and dividends received
1048713 Other operating cash receipts if any
Payments
1048713 Cash paid to employees and suppliers of goods or services (including
suppliers of
insurance advertising etc)
1048713 Interest paid
1048713 Income taxes paid
1048713 Other operating cash payments if any
Companies using the indirect method are required to disclose separately changes in
inventory receivables and payables to reconcile net income to net cash flow from
operating activities In addition interest paid (net of amount capitalized) and income
taxes paid must be disclosed elsewhere in the financial statements or accompanying
notes
The FASB requires these separate and additional disclosures so that users
may approximate the direct method Also an acceptable alternative presentation
of the in-direct method is to report net cash flow from operating activities as a
single line item in the statement of cash flows and to present the reconciliation
details elsewhere in the financial statements
FINDING OF SUDY
According to cash flow statement of the company The finding of the study are as
follows-
The company has not taken any loans secured or unsecured from companies
firms or other parties
The company has not accepted any deposit from the public during the year
The company is not a sick industrial company
The company has not granted any loan secured or unsecured to company firms
or other parties
The company has paid the entire long term and short term borrowing during the
year
The company has buy back the companyrsquos own share this year
The interest paid in 2008 is more than the
There has been a significant decline in volume over the years from 2001-02
to 2005-06 as can be seen in the graph below
Table 43
The Net sales of Tractor has increased considerably from 2004-05 to 2007-08
This can be mainly attributed to changes in Variable and material costs and in
the price
The Net sale of Tractor has increased considerably from 2004-05 to 2007-08
that is an decrease of Rs7216 per tractor This can be mainly attributed to
changes in
Variable and material costs and in the prices
RECOMMENDATIONS
According to cash flow statement of the company The suggestions of the study
are as follows-
The time durations for training program have to increase
Buy regular review and consultations develop a career progression
which is sensitive to performance and ability
Create an environment where by people are trend developed to enable
The to take advantages of opportunities that arise
The jab can be redesigned where the work man stay in what is normally
the same job but has elements of it changed
The principle amount must be paid in time which can be reducing the
interest the out flow
The purchase of the fixed asset must be made only when there is extreme
requirement
In order to avoid taxes the company should go for more investment
The companyrsquos borrowings should go for more investment
o The company should try to reduce the depreciations as maximum
as possible
CONCLUSION
The study on competency level of employees at ESCORTS PVTLTD gave an
insight about the acceptance of competency mapping by employees
The employees at Ymi welcome the introduction of competency mapping in their
organization as they felt it was very much essential in enhancing their skills and
organizational development
The organization has provided the recourses guidance and support to facilitate the
introduction of competency level easily and develop the employees in such a way
that they can face any kind of challenge
However the level of competency in employees is found to be satisfactory
Providing proper training education and guidance to the employees can enhance
the level
This study was mainly carried out to find out whether thee competency mapping
being followed by the company is effective till date If the competency mapping
and fitment to the organization
By looking at the graphs and tables it is quite that the employees still are not up to
the level of competent pool they still have to be trained and made competent in
order to fill the gap As the organization has just applied the mapping it has to see
to that it meets all the requirements for competency mapping
Therefore the graphs make it quite clear that the potential of the employees is not
up to the mark and ie they are not competent enough to meet the competency-
mapping requirement Hence by further training and counseling this gap can be
closed
This report includes the training requirements of employees and it highlights skills
possessed by each employee and skill required All employees get training so that
skill can be improved and maintain balance between standard performance with
their actual performance to avoid gap
APPENDIX
QUESTIONNAIRE
Consumer Survey
Name _____________________________
Age _____________________________
Sex
Male
Female
Occupation
Businessman
Service man
Professional
Others
Monthly income brackets
Below 15000
15000- 20000
20000-30000
30000 and above
of your savings _________
Do you invest
Yes
No
If yes then where do you invest your money
Bank
Insurance
funds
Others
Why do you made that statement
Return
Risk hedging
Tax benefits
Other reasons (specify) _______
Who influence your cash decision
Relatives and friends
Family members
Advisors experts
You yourself
If no then why
Do not know where to invest
Satisfied with your current investment return
Donrsquot want take risk
Other reasons
__________________________________________________________________
___________________
Do you know about CF statement
Yes
No
If yes then from where you have come to know about an cash statement
Advertisements on newspapers
Friends and relative
Agents experts
Other source
What do you think about cash statement
It means investing only in share market
Constant watch must be kept always
Return is not satisfactory
Other perception
__________________________________________________
Can you recall any cash flow of company
___________________________
Would you want to made CF of an org
Yes
No
If yes then why
_______________________________________________________
If no then why
_______________________________________________________
BIBLIOGRAPHY
List of Books
1 PANDEY IM - FINANCIAL MANAGEMANT
2 KHAN MY AND JAIN PK -FINANCIAL MANAGEMANT
3 SMITH KV ndash MANAGEMANT OF WORKING CAPITAL
3 COMPANY RECORDS
4 JOURNAL
5 REPORTS
WEBLIOGRAPHY
1 wwwescortspvtltdcom
2 wwwgooglecom
RESERRCH METHODOLOGY-
RESEARCH DESIGN
bull The study was conducted under well- structured approach
bull The project lasted for 4 weeks and the year 2009 ie from 08 July to 12
Aug2009
bull The questionnaire method amp personal interview method was used to collect
the primary data for the study
The secondary data is collected from Internet amp company training material and
many other company materials
SAMPLE DESIGN
The process of extracting a sample from a population is called sampling
procedure The selection of sampling procedure to conduct the research
depends upon the nature of the study and the objective to be accomplished
Judgment sampling technique is adopted to select the respondents in this
study The sample design included the various departments in the YAMAHA
MOTORS PVT LTD
Methodology of date collection
bull Conducting personal interview
bull Data collection from primary and secondary sources
bull Designing questionnaire
bull Selecting sample size from the sample frame for the survey
bull Questionnaire distribution
bull Analysis of collected data with the help of statistical tools
bull Interpretation of collected data
bull Stating the conclusion based on the entire study
Sampling Technique
The sampling technique used for this research is of non-probability and convenience
sampling
Sample Unit
Employees of the company
Sample Size
For this research study the sample size is 25 respondents
Sources of data
Primary data
Primary data is the data which is collected by the researcher for the first time
and which was not there The tools used to collect the data are-
1)Questionnaire method from the employers in different departments
2) Face to Face personal interactions
Secondary Data
The data already collected is called as secondary data The relevant information
for this study has been collected from secondary source such as
Books
Journal
Reports
Publication by the organizational circulation
Company records
Business bulletins
Internet
Secondary data is also collected from various of the internet and intranet Some
of the website trough which information was gathered was through
HYPOTHESIS
The report is analyzed under the presumption that cash flow position of
YAMAHA MOTORS PVTLTD It can be improved and made effective in
terms of cash flows
In testing the above hypothesis the following aspects will be considered
1 Balance sheet comparisons
2 Presentation of cash flow statement in terms of revised AS-3
LIMITATIONS
The study though conducted to the best of the ability suffers from some
certain limitations There are
The data is secondary one and as such its reliability may be
questioned upon
The time availability for the study is less and as such it hinders thee
progress of the study
Senior officials were rarely approachable
Websites were not giving comprehensive data
Not having face-to-face interaction to get more relevant
information
Analysis and interpretation of data was done on the assumption that
the respondentsrsquo information was online
Information collected was totally subjective
The interviews are done during office hours but could not be done
for the other employees of other
DATA ANALYSIS
ESCORTS PVT LTD
CASH FLOW STRATEMENT
Year Ended Year Ended
30092009 30092008
Rs Crores Rs
Crores
A Cash Flow from Operating Activities
Net profit before tax (1733) 3444
Adjustment for
Loss on sale Provision for diminution in value of Long Term
Investments amp loans to Group Companies 189 4018
Gain on sale of Long Term Investments (122) (9492)
Gain on sale of Asset (013) -
Depreciation 4497 3955
Misc Exp Assets Write off Provisions 808 750
Interest Expense 7222 7999
Dividend Income (002) (001)
Interest Income (2082) -
Operating Profit before working capital changes 8764 10673
Adjustments for
Trade and other Receivables (8817) (12035)
Inventories 1379 (4692)
Trade Payables 6705 19046
Miscellaneous Expenditure (750) (511)
(1483) 1808
Cash Generated from Operations 7281 12481
Direct Taxes (Paid)Refunds (1785) 3166
Net Cash Flow from operating activities 5496 15647
B Cash Flow from Investing Activities
Purchase of Fixed Assets (3095) (2794)
Proceeds from sale of Fixed Assets 086 177
Movement in Loans and Advances (1627) (1644)
Sale of Investments 3233 11452
Short Term Deposits with schedule Banks (231) (1048)
Interest Received 2070 -
Dividend Received 002 001
Net Cash Flow from Investing activities 438 6144
Proceeds from Share Capital amp Securities Premium 11444 -
Proceeds from Long Term Borrowings 8660 -
Less Repayment of Long Term Borrowings (054) (7896)
Proceeds (Repayment) from short term borrowings (net) (22726) -
Interest Paid (7740) (8223)
Net Cash used in financing activities (10416) (16119)
Net Increase(Decrease) in Cash and Cash equivalents (4482) 5672
Cash and Cash equivalents as at 01102008 10565 4893
Cash and Cash equivalents as at 30092009 6083 1056
ANALYSIS OF CASH FLOW
From the cash flow statements of the ESCORT PVTLTDIt can be analyzed
from the two years that the net cash balance of the company has increased
manifold in 30-09-2008 than the year 30-09-2009
The net profit in 30-09-2008 is higher than the 30-09-2009 but due to certain
changes there has been increase in the cash balance
The interest paid this year is ore of the last year which implies that thee
company has not repaid his borrowed capital due to which the interest has got
down
The depreciation has increased but it does not affect cash to an extent as it is a
non-cash item In the head of working capital there is drastic change in the cash
balance in the form of ldquoTrade and other Receivables which has affected the cash
balance
There is outflow of cash for receivables rather than the inflow in the last year
So the net effect is that the cash from operating activities has been decreased
two times from the last year
The company has no accumulated losses as at the end of the financial year ie
September 31 2008
Provision for taxation has been made in accordance with the requirement of AS-
22 issued by Institute of Charted Accountants of India
Pursuant to that current year deferred tax liability have been charged to profit amp
loss account
In opinion of the board of directors of thee company the current assets loans
and advances have a value on realization in the ordinary course of the business at
least equal to the amount stated in the balance sheet and provision for all
liabilities have been made
Balance of sundry debtors creditors loans and advances are subject to confirmation by
the concerned parties
METHOD OF ANALYSIS
1 Data analysis is done using the following statistical tools wherever required in
order to extract meaningful information from the collected data
o Simple percentage and averages
o Bar diagram
o Cone diagram
o Pie diagram
2 The collected data from the questionnaire has been put together in the form of
tables
3 Percentage has been calculated wherever necessary for generalization of the
data
4 Data analysis and interpretation has been done on the basis of primary and
secondary data
5 The findings researches have been recorded based on the analysis
6 The study conducted pertains only to YAMAHA MOTORS INDIA PVTLTD
All bank balances (debitcredit) have been confirmed by the concerned bank
Identified from the available information which has been relied upon by the auditors
The names of small-scale industrial units to whom outstanding for more than
thirty days within agreed terms
The company has 9996 of shareholders in its subsidiary company named as
ESCORTS PVT LTD As at 31-03-2008
So the net effect is that the net cash from investing activities has many more
times than the last year which is negative Now the company has repaid its long
term borrowing more than the last year which has decreased the cash balance by
the little amount
Balance with the schedule banks under the head current amp collection account
amounting to represent funds in transit lying with schedule banks pending
transfer against loan liabilities under the head cash credit amp bill discounting
LIQUIDITY RATIO
1 CURRENT RATIO
(Amount in Rs)
Current Ratio
Year Current Assets Current Liabilities Ratio
2003 58574151 7903952 7412004 69765346 31884616 2192005 72021081 16065621 4482006 91328208 47117199 1942007 115642068 30266661 382
Interpretation
As a rule the current ratio with 21 (or) more is considered as satisfactory
position of the firm
When compared with 2006 there is an increase in the provision for tax because
the debtors are raised and for that the provision is created The current liabilities
majorly included Lanco Group of company for consultancy additional services
The sundry debtors have increased due to the increase to corporate taxes
In the year 2006 the cash and bank balance is reduced because that is used for
payment of dividends In the year 2007 the loans and advances include majorly
the advances to employees and deposits to government The loans and advances
reduced because the employees set off their claims The other current assets
include the interest attained from the deposits The deposits reduced due to the
declaration of dividends So the other current assets decreased
The huge increase in sundry debtors resulted an increase in the ratio which is
above the benchmark level of 21 which shows the comfortable position of the
firm
GRAPHICAL REPRESENTATION
741
219
448
194
382
000
100
200
300
400
500
600
700
800
Ratio
2003 2004 2005 2006 2007
Years
CURRENT RATIO
Ratio
2 QUICK RATIO
(Amount
in Rs)
Quick Ratio
Year Quick Assets Current Liabilities Ratio
2003 58574151 7903952 741
2004 52470336 31884616 165
2005 69883268 16065620 435
2006 89433596 47117199 19
2007 115431868 30266661 381
Interpretation
Quick assets are those assets which can be converted into cash with in a short
period of time say to six months So here the sundry debtors which are with the
long period does not include in the quick assets
Compare with 2006 the Quick ratio is increased because the sundry debtors are
increased due to the increase in the corporate tax and for that the provision
created is also increased So the ratio is also increased with the 2006
GRAPHICAL REPRESENTATION
741
165
435
190
381
000
100
200
300
400
500
600
700
800
Ratio
2003 2004 2005 2006 2007
Years
QUICK RATIO
Ratios
3 ABOSULTE LIQUIDITY RATIO
(Amount
in Rs)
Absolute Cash Ratio
Year Absolute Liquid Assets Current Liabilities Ratio
2003 31004027 7903952 392
2004 10859778 31884616 034
2005 39466542 16065620 246
2006 53850852 47117199 114
2007 35649070 30266661 118
Interpretation
The current assets which are ready in the form of cash are considered as absolute
liquid assets Here the cash and bank balance and the interest on fixed assts are
absolute liquid assets
In the year 2006 the cash and bank balance is decreased due to decrease in the
deposits and the current liabilities are also reduced because of the payment of
dividend That causes a slight increase in the current yearrsquos ratio
GRAPHICAL REPRESENTATION
392
034
246
114 118
0
05
1
15
2
25
3
35
4
Ratios
2003 2004 2005 2006 2007
Years
ABSOLUTE CASH RATIO
Ratios
LEVERAGE RATIOS
4 PROPRIETORY RATIO
(Amount
in Rs)
Proprietory Ratio
Year Share Holders Funds Total Assets Ratio
2003 67679219 78572171 086
2004 53301834 88438107 06
2005 70231061 89158391 079
2006 56473652 106385201 053
2007 97060013 129805102 075
Interpretation
The proprietary ratio establishes the relationship between shareholders funds to
total assets It determines the long-term solvency of the firm This ratio indicates
the extent to which the assets of the company can be lost without affecting the
interest of the company
There is no increase in the capital from the year2004 The share holderrsquos funds
include capital and reserves and surplus The reserves and surplus is increased
due to the increase in balance in profit and loss account which is caused by the
increase of income from services
Total assets includes fixed and current assets The fixed assets are reduced
because of the depreciation and there are no major increments in the fixed assets
The current assets are increased compared with the year 2006 Total assets are
also increased than precious year which resulted an increase in the ratio than old
GRAPHICAL REPRESENTATION
086
060
079
053
075
000
010
020
030
040
050
060
070
080
090
Ratios
2003 2004 2005 2006 2007
Years
PROPRIETORY RATIO
Ratios
ACTIVITY RATIOS
5 WORKING CAPITAL TURNOVER RATIO
(Amount
in Rs)
Working Capital Turnover Ratio
Year Income From Services Working Capital Ratio
2003 36309834 50670199 0722004 53899084 37880730 1422005 72728759 55355460 1312006 55550649 44211009 1262007 96654902 85375407 113
Interpretation
Income from services is greatly increased due to the extra invoice for Operations
amp Maintenance fee and the working capital is also increased greater due to the
increase in from services because the huge increase in current assets
The income from services is raised and the current assets are also raised together
resulted in the decrease of the ratio of 2007 compared with 2006
GRAPHICAL REPRESENTATION
072
142 131126
113
000
020
040
060
080
100
120
140
160
Ratio
2003 2004 2005 2006 2007
Years
WORKING CAPITAL TURNOVER RATIO
Ratio
6 FIXED ASSETS TURNOVER RATIO
(Amount in Rs)
Fixed Assets Turnover Ratio
Year Income From Services Net Fixed Assets Ratio
2003 36309834 28834317 126
2004 53899084 29568279 182
2005 72728759 17137310 424
2006 55550649 15056993 369
2007 96654902 14163034 682
Interpretation
Fixed assets are used in the business for producing the goods to be sold This
ratio shows the firmrsquos ability in generating sales from all financial resources
committed to total assets The ratio indicates the account of one rupee
investment in fixed assets
The income from services is greaterly increased in the current year due to the
increase in the Operations amp Maintenance fee due to the increase in extra invoice
and the net fixed assets are reduced because of the increased charge of
depreciation Finally that effected a huge increase in the ratio compared with the
previous yearrsquos ratio
GRAPHICAL REPRSENTATION
126182
424 369
682
000
100
200
300
400
500
600
700
Ratios
2003 2004 2005 2006 2007
Years
FIXED ASSETS TURNOVER RATIO
Ratios
7 CAPITAL TURNOVER RATIO
(Amount
in Rs)
Capital Turnover Ratio
Year Income From Services Capital Employed Ratio
2003 36309834 37175892 0982004 53899084 53301834 1012005 72728759 70231061 1042006 55550649 56473652 0982007 96654902 97060013 100
Interpretation
This is another ratio to judge the efficiency and effectiveness of the company
like profitability ratio
The income from services is greaterly increased compared with the previous year
and the total capital employed includes capital and reserves amp surplus Due to
huge increase in the net profit the capital employed is also increased along with
income from services Both are effected in the increment of the ratio of current
year
GRAPHICAL REPRESENTATION
098
101
104
098
100
094095096097098099100101102103104
Ratios
2003 2004 2005 2006 2007
Years
CAPITAL TURNOVER RATIO
Ratios
8 CURRENT ASSETS TO FIXED ASSETS RATIO
(Amount
in Rs)
Current Assets To Fixed Assets Ratio
Year Current Assets Fixed Assets Ratio
2003 58524151 19998020 2932004 69765346 18672761 3742005 72021081 17137310 4202006 91328208 15056993 6072007 115642068 14163034 817
Interpretation
Current assets are increased due to the increase in the sundry debtors and the net
fixed assets of the firm are decreased due to the charge of depreciation and there
is no major increment in the fixed assets
The increment in current assets and the decrease in fixed assets resulted an
increase in the ratio compared with the previous year
GRAPHICAL REPRESENTATION
293374
420
607
817
000
100
200
300
400
500
600
700
800
900
Ratios
2003 2004 2005 2006 2007
Years
CURRENT ASSETS TO FIXED ASSETS RATIO
Ratios
PROFITABILITY RATIOS
GENERAL PROFITABILITY RATIOS
9 NET PROFIT RATIO
(Amount in Rs)
Net Profit Ratio
Year Net Profit After Tax Income from Services Ratio
2003 21123474 36039834 059
2004 16125942 53899084 030
2005 16929227 72728759 023
2006 18259580 55550649 033
2007 40586359 96654902 042
Interpretation
The net profit ratio is the overall measure of the firmrsquos ability to turn each rupee
of income from services in net profit If the net margin is inadequate the firm
will fail to achieve return on shareholderrsquos funds High net profit ratio will help
the firm service in the fall of income from services rise in cost of production or
declining demand
The net profit is increased because the income from services is increased The
increment resulted a slight increase in 2007 ratio compared with the year 2006
GRAPHICAL REPRESENTATION
059
030
023
033
042
000
010
020
030
040
050
060
Ratios
2003 2004 2005 2006 2007
Years
NET PROFIT RATIO
Ratios
10 OPERATING PROFIT
(Amount in Rs)
Operating Profit
Year Operating Profit Income From Services Ratio
2003 36094877 36309834 099
2004 27576814 53899084 051
2005 29540599 72728759 041
2006 31586718 55550649 057
2007 67192677 96654902 070
Interpretation
The operating profit ratio is used to measure the relationship between net profits
and sales of a firm Depending on the concept it will decide
The operating profit ratio is increased compared with the last year The earnings
are increased due to the increase in the income from services because of
Operations amp Maintenance fee So the ratio is increased slightly compared with
the previous year
GRAPHICAL REPRESENTATION
099
051
041
057
070
000
010
020
030
040
050060
070
080
090
100
Ratios
2003 2004 2005 2006 2007
Years
OPERATING PROFIT RATIO
Ratios
11 RETURN ON TOTAL ASSETS RATIO
(Amount in Rs)
Return on Total Assets Ratio
Year Net Profit After Tax Total Assets Ratio
2003 21123474 78572171 027
2004 16125942 88438107 018
2005 16929227 89158391 019
2006 18259580 106385201 017
2007 40586359 129805102 031
Interpretation
This is the ratio between net profit and total assets The ratio indicates the return
on total assets in the form of profits
The net profit is increased in the current year because of the increment in the
income from services due to the increase in Operations amp Maintenance fee The
fixed assets are reduced due to the charge of depreciation and no major
increments in fixed assets but the current assets are increased because of sundry
debtors and that effects an increase in the ratio compared with the last year ie
2006
GRAPHICAL REPRESENTATION
027
018 019017
031
000
005
010
015
020
025
030
035
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON TOTAL ASSETS
Ratios
12 RESERVES amp SURPLUS TO CAPITAL RATIO
(Amount in Rs)
Reserves amp Surplus To Capital Ratio
Year Reserves amp Surplus Capital Ratio
2003 65599299 2079920 31542004 34582554 18719280 1852005 51511781 18719280 2752006 37754372 18719280 2022007 78340733 18719280 419
Interpretation
The ratio is used to reveal the policy pursued by the company a very high ratio
indicates a conservative dividend policy and vice-versa Higher the ratio better
will be the position
The reserves amp surplus is decreased in the year 2006 due to the payment of
dividends and in the year 2007 the profit is increased But the capital is
remaining constant from the year 2004 So the increase in the reserves amp surplus
caused a greater increase in the current yearrsquos ratio compared with the older
GRAPHICAL REPRESENTATION
3154
185 275 202419
-
500
1000
1500
2000
2500
3000
3500
Ratios
2003 2004 2005 2006 2007
Years
RESERVES amp SRUPLUS TO CAPITAL RATIO
Ratios
OVERALL PROFITABILITY RATIOS
13 EARNINGS PER SHARE
(Amount in Rs)
Earnings Per Share
Year Net Profit After Tax No of Equity Shares Ratio
2003 21123474 207992 101562004 16125942 1871928 8612005 16929227 1871928 9042006 18259580 1871928 9752007 40586359 1871928 2168
Interpretation
Earnings per share ratio are used to find out the return that the shareholderrsquos earn
from their shares After charging depreciation and after payment of tax the
remaining amount will be distributed by all the shareholders
Net profit after tax is increased due to the huge increase in the income from
services That is the amount which is available to the shareholders to take There
are 1871928 shares of Rs10- each The share capital is constant from the year
2004 Due to the huge increase in net profit the earnings per share is greaterly
increased in 2007
GRAPHICAL REPRESENTATION
10156
861904 975
2168
000
2000
4000
6000
8000
10000
12000
Ratios
2003 2004 2005 2006 2007
Years
EARNINGS PER SHARE
Ratios
14 PRICE EARNINGS (PE) RATIO
(Amount in Rs)
Price Earning (PE) Ratio
Year Market Price Per Share Earnings Per Share Ratio
2003 3254 10156 0322004 2847 861 3302005 3752 904 4152006 3017 975 3092007 5185 2168 239
Interpretation
The ratio is calculated to make an estimate of application in the value of share of
a company
The market price per share is increased due to the increase in the reserves
amp surplus The earnings per share are also increased greaterly compared
with the last year because of increase in the net profit So the ratio is
decreased compared with the previous year
GRAPHICAL REPRESENTATION
032
330
415
309
239
000
050
100
150
200
250
300
350
400
450
Ratios
2003 2004 2005 2006 2007
Years
PE RATIO
Ratios
15 RETURN ON INVESTMENT
(Amount in Rs)
Return on Investment
Year Net Profit After Tax Share Holders Fund Ratio
2003 21123474 67679219 031
2004 16125942 53301834 03
2005 16929227 70231061 024
2006 18259580 56473652 032
2007 40586359 97060013 042
Interpretation
This is the ratio between net profits and shareholders funds The ratio is
generally calculated as percentage multiplying with 100
The net profit is increased due to the increase in the income from services ant
the shareholders funds are increased because of reserve amp surplus So the ratio
is increased in the current year
GRAPHICAL REPRESENTATION
031 030
024
032
042
000
005
010
015
020
025
030
035
040
045
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON INVESTMENT RATIO
RatioS
DATA COLLECTION
The data can be of two types
Primary Data
Secondary Data
Primary Data
Primary data are those data which is originally collected afresh
Secondary Data
Secondary data are those data which are already collected and stored and which has
been passed through statistical research
In this project Secondary data has been collected from following sources-
Annual report
Books
MIS
Other material and report published by company There are two methods to prepare
the Cash flow Statement
ndirect Method
I
The indirect method (or reconciliation method) starts with net income and converts it
to net cash flow from operating activities In other words the indirect method adjusts
net income for items that affected reported net income but did not affect cash To
compute net cash flow from operating activities non-cash charges in the income
statement are added ack to net income and non-cash credits are deducted
b
Direct Method
Under the direct method the statement of cash flows reports net cash flow from
operating activities as major classes of operating cash receipts (eg cash collected from
customers and cash received from interest and dividends) and cash disbursements (eg
cash paid to suppliers for goods to employees for services to creditors for interest and
to government authorities for taxes)
INDIRECT VERSUS DIRECT METHOD
The most contentious decision that the FASB faced in issuing Statement No 95 was
choosing between the direct method and the indirect method of determining net cash
flow from operating activities Companies lobbied against the direct method urging
adoption of the indirect method Commercial lending officers expressed a strong
preference to the FASB hat the direct method be required
tCF-Page 3 of 5
In Favor of the Direct Method
The principal advantage of the direct method is that it shows operating cash receipts and
payments That is it is more consistent with the objective of a statement of cash flows to
provide information about cash receipts and cash payments than the in-direct method
which does not report operating cash receipts and payments
Supporters of the direct method contend that knowledge of the specific sources of
operating cash receipts and the purposes for which operating cash payments were made
in past periods is useful in estimating future operating cash flows Furthermore in-
formation about amounts of major classes of operating cash receipts and payments is
more useful than information only about their arithmetic sum (the net cash flow from
operating activities) Such information is more revealing of an enterprises ability (1) to
generate sufficient cash from operating activities to pay its debts (2) to reinvest in its
operations and (3) to make distributions to its owners
Many corporate providers of financial statements say that they do not currently collect
information in a manner that allows them to determine amounts such as cash received
from customers or cash paid to suppliers directly from their accounting systems But
supporters of the direct method contend that the incremental cost of assimilating such
operating cash receipts and payments data is not significant
In Favor of the Indirect Method
The principal advantage of the indirect method is that it focuses on the differences
between net income and net cash flow from operating activities That is it provides a
useful link between the statement of cash flows and the income statement and balance
sheet
Many providers of financial statements contend that it is less costly to adjust net income
to net cash flow from operating activities (indirect) than it is to report gross operating
cash receipts and payments (direct) Supporters of the indirect method also state that the
direct method which effectively reports income statement information on a cash rather
than an accrual basis may erroneously suggest that net cash flow from operating
activities is as good as or better than net income as a measure of performance
Special Rules Applying to Direct and Indirect Methods
Companies that use the direct method are required at a
minimum to report separately the following classes of
operating cash receipts and payments
Receipts
1048713 Cash collected from customers (including lessees licensees etc)
1048713 Interest and dividends received
1048713 Other operating cash receipts if any
Payments
1048713 Cash paid to employees and suppliers of goods or services (including
suppliers of
insurance advertising etc)
1048713 Interest paid
1048713 Income taxes paid
1048713 Other operating cash payments if any
Companies using the indirect method are required to disclose separately changes in
inventory receivables and payables to reconcile net income to net cash flow from
operating activities In addition interest paid (net of amount capitalized) and income
taxes paid must be disclosed elsewhere in the financial statements or accompanying
notes
The FASB requires these separate and additional disclosures so that users
may approximate the direct method Also an acceptable alternative presentation
of the in-direct method is to report net cash flow from operating activities as a
single line item in the statement of cash flows and to present the reconciliation
details elsewhere in the financial statements
FINDING OF SUDY
According to cash flow statement of the company The finding of the study are as
follows-
The company has not taken any loans secured or unsecured from companies
firms or other parties
The company has not accepted any deposit from the public during the year
The company is not a sick industrial company
The company has not granted any loan secured or unsecured to company firms
or other parties
The company has paid the entire long term and short term borrowing during the
year
The company has buy back the companyrsquos own share this year
The interest paid in 2008 is more than the
There has been a significant decline in volume over the years from 2001-02
to 2005-06 as can be seen in the graph below
Table 43
The Net sales of Tractor has increased considerably from 2004-05 to 2007-08
This can be mainly attributed to changes in Variable and material costs and in
the price
The Net sale of Tractor has increased considerably from 2004-05 to 2007-08
that is an decrease of Rs7216 per tractor This can be mainly attributed to
changes in
Variable and material costs and in the prices
RECOMMENDATIONS
According to cash flow statement of the company The suggestions of the study
are as follows-
The time durations for training program have to increase
Buy regular review and consultations develop a career progression
which is sensitive to performance and ability
Create an environment where by people are trend developed to enable
The to take advantages of opportunities that arise
The jab can be redesigned where the work man stay in what is normally
the same job but has elements of it changed
The principle amount must be paid in time which can be reducing the
interest the out flow
The purchase of the fixed asset must be made only when there is extreme
requirement
In order to avoid taxes the company should go for more investment
The companyrsquos borrowings should go for more investment
o The company should try to reduce the depreciations as maximum
as possible
CONCLUSION
The study on competency level of employees at ESCORTS PVTLTD gave an
insight about the acceptance of competency mapping by employees
The employees at Ymi welcome the introduction of competency mapping in their
organization as they felt it was very much essential in enhancing their skills and
organizational development
The organization has provided the recourses guidance and support to facilitate the
introduction of competency level easily and develop the employees in such a way
that they can face any kind of challenge
However the level of competency in employees is found to be satisfactory
Providing proper training education and guidance to the employees can enhance
the level
This study was mainly carried out to find out whether thee competency mapping
being followed by the company is effective till date If the competency mapping
and fitment to the organization
By looking at the graphs and tables it is quite that the employees still are not up to
the level of competent pool they still have to be trained and made competent in
order to fill the gap As the organization has just applied the mapping it has to see
to that it meets all the requirements for competency mapping
Therefore the graphs make it quite clear that the potential of the employees is not
up to the mark and ie they are not competent enough to meet the competency-
mapping requirement Hence by further training and counseling this gap can be
closed
This report includes the training requirements of employees and it highlights skills
possessed by each employee and skill required All employees get training so that
skill can be improved and maintain balance between standard performance with
their actual performance to avoid gap
APPENDIX
QUESTIONNAIRE
Consumer Survey
Name _____________________________
Age _____________________________
Sex
Male
Female
Occupation
Businessman
Service man
Professional
Others
Monthly income brackets
Below 15000
15000- 20000
20000-30000
30000 and above
of your savings _________
Do you invest
Yes
No
If yes then where do you invest your money
Bank
Insurance
funds
Others
Why do you made that statement
Return
Risk hedging
Tax benefits
Other reasons (specify) _______
Who influence your cash decision
Relatives and friends
Family members
Advisors experts
You yourself
If no then why
Do not know where to invest
Satisfied with your current investment return
Donrsquot want take risk
Other reasons
__________________________________________________________________
___________________
Do you know about CF statement
Yes
No
If yes then from where you have come to know about an cash statement
Advertisements on newspapers
Friends and relative
Agents experts
Other source
What do you think about cash statement
It means investing only in share market
Constant watch must be kept always
Return is not satisfactory
Other perception
__________________________________________________
Can you recall any cash flow of company
___________________________
Would you want to made CF of an org
Yes
No
If yes then why
_______________________________________________________
If no then why
_______________________________________________________
BIBLIOGRAPHY
List of Books
1 PANDEY IM - FINANCIAL MANAGEMANT
2 KHAN MY AND JAIN PK -FINANCIAL MANAGEMANT
3 SMITH KV ndash MANAGEMANT OF WORKING CAPITAL
3 COMPANY RECORDS
4 JOURNAL
5 REPORTS
WEBLIOGRAPHY
1 wwwescortspvtltdcom
2 wwwgooglecom
Methodology of date collection
bull Conducting personal interview
bull Data collection from primary and secondary sources
bull Designing questionnaire
bull Selecting sample size from the sample frame for the survey
bull Questionnaire distribution
bull Analysis of collected data with the help of statistical tools
bull Interpretation of collected data
bull Stating the conclusion based on the entire study
Sampling Technique
The sampling technique used for this research is of non-probability and convenience
sampling
Sample Unit
Employees of the company
Sample Size
For this research study the sample size is 25 respondents
Sources of data
Primary data
Primary data is the data which is collected by the researcher for the first time
and which was not there The tools used to collect the data are-
1)Questionnaire method from the employers in different departments
2) Face to Face personal interactions
Secondary Data
The data already collected is called as secondary data The relevant information
for this study has been collected from secondary source such as
Books
Journal
Reports
Publication by the organizational circulation
Company records
Business bulletins
Internet
Secondary data is also collected from various of the internet and intranet Some
of the website trough which information was gathered was through
HYPOTHESIS
The report is analyzed under the presumption that cash flow position of
YAMAHA MOTORS PVTLTD It can be improved and made effective in
terms of cash flows
In testing the above hypothesis the following aspects will be considered
1 Balance sheet comparisons
2 Presentation of cash flow statement in terms of revised AS-3
LIMITATIONS
The study though conducted to the best of the ability suffers from some
certain limitations There are
The data is secondary one and as such its reliability may be
questioned upon
The time availability for the study is less and as such it hinders thee
progress of the study
Senior officials were rarely approachable
Websites were not giving comprehensive data
Not having face-to-face interaction to get more relevant
information
Analysis and interpretation of data was done on the assumption that
the respondentsrsquo information was online
Information collected was totally subjective
The interviews are done during office hours but could not be done
for the other employees of other
DATA ANALYSIS
ESCORTS PVT LTD
CASH FLOW STRATEMENT
Year Ended Year Ended
30092009 30092008
Rs Crores Rs
Crores
A Cash Flow from Operating Activities
Net profit before tax (1733) 3444
Adjustment for
Loss on sale Provision for diminution in value of Long Term
Investments amp loans to Group Companies 189 4018
Gain on sale of Long Term Investments (122) (9492)
Gain on sale of Asset (013) -
Depreciation 4497 3955
Misc Exp Assets Write off Provisions 808 750
Interest Expense 7222 7999
Dividend Income (002) (001)
Interest Income (2082) -
Operating Profit before working capital changes 8764 10673
Adjustments for
Trade and other Receivables (8817) (12035)
Inventories 1379 (4692)
Trade Payables 6705 19046
Miscellaneous Expenditure (750) (511)
(1483) 1808
Cash Generated from Operations 7281 12481
Direct Taxes (Paid)Refunds (1785) 3166
Net Cash Flow from operating activities 5496 15647
B Cash Flow from Investing Activities
Purchase of Fixed Assets (3095) (2794)
Proceeds from sale of Fixed Assets 086 177
Movement in Loans and Advances (1627) (1644)
Sale of Investments 3233 11452
Short Term Deposits with schedule Banks (231) (1048)
Interest Received 2070 -
Dividend Received 002 001
Net Cash Flow from Investing activities 438 6144
Proceeds from Share Capital amp Securities Premium 11444 -
Proceeds from Long Term Borrowings 8660 -
Less Repayment of Long Term Borrowings (054) (7896)
Proceeds (Repayment) from short term borrowings (net) (22726) -
Interest Paid (7740) (8223)
Net Cash used in financing activities (10416) (16119)
Net Increase(Decrease) in Cash and Cash equivalents (4482) 5672
Cash and Cash equivalents as at 01102008 10565 4893
Cash and Cash equivalents as at 30092009 6083 1056
ANALYSIS OF CASH FLOW
From the cash flow statements of the ESCORT PVTLTDIt can be analyzed
from the two years that the net cash balance of the company has increased
manifold in 30-09-2008 than the year 30-09-2009
The net profit in 30-09-2008 is higher than the 30-09-2009 but due to certain
changes there has been increase in the cash balance
The interest paid this year is ore of the last year which implies that thee
company has not repaid his borrowed capital due to which the interest has got
down
The depreciation has increased but it does not affect cash to an extent as it is a
non-cash item In the head of working capital there is drastic change in the cash
balance in the form of ldquoTrade and other Receivables which has affected the cash
balance
There is outflow of cash for receivables rather than the inflow in the last year
So the net effect is that the cash from operating activities has been decreased
two times from the last year
The company has no accumulated losses as at the end of the financial year ie
September 31 2008
Provision for taxation has been made in accordance with the requirement of AS-
22 issued by Institute of Charted Accountants of India
Pursuant to that current year deferred tax liability have been charged to profit amp
loss account
In opinion of the board of directors of thee company the current assets loans
and advances have a value on realization in the ordinary course of the business at
least equal to the amount stated in the balance sheet and provision for all
liabilities have been made
Balance of sundry debtors creditors loans and advances are subject to confirmation by
the concerned parties
METHOD OF ANALYSIS
1 Data analysis is done using the following statistical tools wherever required in
order to extract meaningful information from the collected data
o Simple percentage and averages
o Bar diagram
o Cone diagram
o Pie diagram
2 The collected data from the questionnaire has been put together in the form of
tables
3 Percentage has been calculated wherever necessary for generalization of the
data
4 Data analysis and interpretation has been done on the basis of primary and
secondary data
5 The findings researches have been recorded based on the analysis
6 The study conducted pertains only to YAMAHA MOTORS INDIA PVTLTD
All bank balances (debitcredit) have been confirmed by the concerned bank
Identified from the available information which has been relied upon by the auditors
The names of small-scale industrial units to whom outstanding for more than
thirty days within agreed terms
The company has 9996 of shareholders in its subsidiary company named as
ESCORTS PVT LTD As at 31-03-2008
So the net effect is that the net cash from investing activities has many more
times than the last year which is negative Now the company has repaid its long
term borrowing more than the last year which has decreased the cash balance by
the little amount
Balance with the schedule banks under the head current amp collection account
amounting to represent funds in transit lying with schedule banks pending
transfer against loan liabilities under the head cash credit amp bill discounting
LIQUIDITY RATIO
1 CURRENT RATIO
(Amount in Rs)
Current Ratio
Year Current Assets Current Liabilities Ratio
2003 58574151 7903952 7412004 69765346 31884616 2192005 72021081 16065621 4482006 91328208 47117199 1942007 115642068 30266661 382
Interpretation
As a rule the current ratio with 21 (or) more is considered as satisfactory
position of the firm
When compared with 2006 there is an increase in the provision for tax because
the debtors are raised and for that the provision is created The current liabilities
majorly included Lanco Group of company for consultancy additional services
The sundry debtors have increased due to the increase to corporate taxes
In the year 2006 the cash and bank balance is reduced because that is used for
payment of dividends In the year 2007 the loans and advances include majorly
the advances to employees and deposits to government The loans and advances
reduced because the employees set off their claims The other current assets
include the interest attained from the deposits The deposits reduced due to the
declaration of dividends So the other current assets decreased
The huge increase in sundry debtors resulted an increase in the ratio which is
above the benchmark level of 21 which shows the comfortable position of the
firm
GRAPHICAL REPRESENTATION
741
219
448
194
382
000
100
200
300
400
500
600
700
800
Ratio
2003 2004 2005 2006 2007
Years
CURRENT RATIO
Ratio
2 QUICK RATIO
(Amount
in Rs)
Quick Ratio
Year Quick Assets Current Liabilities Ratio
2003 58574151 7903952 741
2004 52470336 31884616 165
2005 69883268 16065620 435
2006 89433596 47117199 19
2007 115431868 30266661 381
Interpretation
Quick assets are those assets which can be converted into cash with in a short
period of time say to six months So here the sundry debtors which are with the
long period does not include in the quick assets
Compare with 2006 the Quick ratio is increased because the sundry debtors are
increased due to the increase in the corporate tax and for that the provision
created is also increased So the ratio is also increased with the 2006
GRAPHICAL REPRESENTATION
741
165
435
190
381
000
100
200
300
400
500
600
700
800
Ratio
2003 2004 2005 2006 2007
Years
QUICK RATIO
Ratios
3 ABOSULTE LIQUIDITY RATIO
(Amount
in Rs)
Absolute Cash Ratio
Year Absolute Liquid Assets Current Liabilities Ratio
2003 31004027 7903952 392
2004 10859778 31884616 034
2005 39466542 16065620 246
2006 53850852 47117199 114
2007 35649070 30266661 118
Interpretation
The current assets which are ready in the form of cash are considered as absolute
liquid assets Here the cash and bank balance and the interest on fixed assts are
absolute liquid assets
In the year 2006 the cash and bank balance is decreased due to decrease in the
deposits and the current liabilities are also reduced because of the payment of
dividend That causes a slight increase in the current yearrsquos ratio
GRAPHICAL REPRESENTATION
392
034
246
114 118
0
05
1
15
2
25
3
35
4
Ratios
2003 2004 2005 2006 2007
Years
ABSOLUTE CASH RATIO
Ratios
LEVERAGE RATIOS
4 PROPRIETORY RATIO
(Amount
in Rs)
Proprietory Ratio
Year Share Holders Funds Total Assets Ratio
2003 67679219 78572171 086
2004 53301834 88438107 06
2005 70231061 89158391 079
2006 56473652 106385201 053
2007 97060013 129805102 075
Interpretation
The proprietary ratio establishes the relationship between shareholders funds to
total assets It determines the long-term solvency of the firm This ratio indicates
the extent to which the assets of the company can be lost without affecting the
interest of the company
There is no increase in the capital from the year2004 The share holderrsquos funds
include capital and reserves and surplus The reserves and surplus is increased
due to the increase in balance in profit and loss account which is caused by the
increase of income from services
Total assets includes fixed and current assets The fixed assets are reduced
because of the depreciation and there are no major increments in the fixed assets
The current assets are increased compared with the year 2006 Total assets are
also increased than precious year which resulted an increase in the ratio than old
GRAPHICAL REPRESENTATION
086
060
079
053
075
000
010
020
030
040
050
060
070
080
090
Ratios
2003 2004 2005 2006 2007
Years
PROPRIETORY RATIO
Ratios
ACTIVITY RATIOS
5 WORKING CAPITAL TURNOVER RATIO
(Amount
in Rs)
Working Capital Turnover Ratio
Year Income From Services Working Capital Ratio
2003 36309834 50670199 0722004 53899084 37880730 1422005 72728759 55355460 1312006 55550649 44211009 1262007 96654902 85375407 113
Interpretation
Income from services is greatly increased due to the extra invoice for Operations
amp Maintenance fee and the working capital is also increased greater due to the
increase in from services because the huge increase in current assets
The income from services is raised and the current assets are also raised together
resulted in the decrease of the ratio of 2007 compared with 2006
GRAPHICAL REPRESENTATION
072
142 131126
113
000
020
040
060
080
100
120
140
160
Ratio
2003 2004 2005 2006 2007
Years
WORKING CAPITAL TURNOVER RATIO
Ratio
6 FIXED ASSETS TURNOVER RATIO
(Amount in Rs)
Fixed Assets Turnover Ratio
Year Income From Services Net Fixed Assets Ratio
2003 36309834 28834317 126
2004 53899084 29568279 182
2005 72728759 17137310 424
2006 55550649 15056993 369
2007 96654902 14163034 682
Interpretation
Fixed assets are used in the business for producing the goods to be sold This
ratio shows the firmrsquos ability in generating sales from all financial resources
committed to total assets The ratio indicates the account of one rupee
investment in fixed assets
The income from services is greaterly increased in the current year due to the
increase in the Operations amp Maintenance fee due to the increase in extra invoice
and the net fixed assets are reduced because of the increased charge of
depreciation Finally that effected a huge increase in the ratio compared with the
previous yearrsquos ratio
GRAPHICAL REPRSENTATION
126182
424 369
682
000
100
200
300
400
500
600
700
Ratios
2003 2004 2005 2006 2007
Years
FIXED ASSETS TURNOVER RATIO
Ratios
7 CAPITAL TURNOVER RATIO
(Amount
in Rs)
Capital Turnover Ratio
Year Income From Services Capital Employed Ratio
2003 36309834 37175892 0982004 53899084 53301834 1012005 72728759 70231061 1042006 55550649 56473652 0982007 96654902 97060013 100
Interpretation
This is another ratio to judge the efficiency and effectiveness of the company
like profitability ratio
The income from services is greaterly increased compared with the previous year
and the total capital employed includes capital and reserves amp surplus Due to
huge increase in the net profit the capital employed is also increased along with
income from services Both are effected in the increment of the ratio of current
year
GRAPHICAL REPRESENTATION
098
101
104
098
100
094095096097098099100101102103104
Ratios
2003 2004 2005 2006 2007
Years
CAPITAL TURNOVER RATIO
Ratios
8 CURRENT ASSETS TO FIXED ASSETS RATIO
(Amount
in Rs)
Current Assets To Fixed Assets Ratio
Year Current Assets Fixed Assets Ratio
2003 58524151 19998020 2932004 69765346 18672761 3742005 72021081 17137310 4202006 91328208 15056993 6072007 115642068 14163034 817
Interpretation
Current assets are increased due to the increase in the sundry debtors and the net
fixed assets of the firm are decreased due to the charge of depreciation and there
is no major increment in the fixed assets
The increment in current assets and the decrease in fixed assets resulted an
increase in the ratio compared with the previous year
GRAPHICAL REPRESENTATION
293374
420
607
817
000
100
200
300
400
500
600
700
800
900
Ratios
2003 2004 2005 2006 2007
Years
CURRENT ASSETS TO FIXED ASSETS RATIO
Ratios
PROFITABILITY RATIOS
GENERAL PROFITABILITY RATIOS
9 NET PROFIT RATIO
(Amount in Rs)
Net Profit Ratio
Year Net Profit After Tax Income from Services Ratio
2003 21123474 36039834 059
2004 16125942 53899084 030
2005 16929227 72728759 023
2006 18259580 55550649 033
2007 40586359 96654902 042
Interpretation
The net profit ratio is the overall measure of the firmrsquos ability to turn each rupee
of income from services in net profit If the net margin is inadequate the firm
will fail to achieve return on shareholderrsquos funds High net profit ratio will help
the firm service in the fall of income from services rise in cost of production or
declining demand
The net profit is increased because the income from services is increased The
increment resulted a slight increase in 2007 ratio compared with the year 2006
GRAPHICAL REPRESENTATION
059
030
023
033
042
000
010
020
030
040
050
060
Ratios
2003 2004 2005 2006 2007
Years
NET PROFIT RATIO
Ratios
10 OPERATING PROFIT
(Amount in Rs)
Operating Profit
Year Operating Profit Income From Services Ratio
2003 36094877 36309834 099
2004 27576814 53899084 051
2005 29540599 72728759 041
2006 31586718 55550649 057
2007 67192677 96654902 070
Interpretation
The operating profit ratio is used to measure the relationship between net profits
and sales of a firm Depending on the concept it will decide
The operating profit ratio is increased compared with the last year The earnings
are increased due to the increase in the income from services because of
Operations amp Maintenance fee So the ratio is increased slightly compared with
the previous year
GRAPHICAL REPRESENTATION
099
051
041
057
070
000
010
020
030
040
050060
070
080
090
100
Ratios
2003 2004 2005 2006 2007
Years
OPERATING PROFIT RATIO
Ratios
11 RETURN ON TOTAL ASSETS RATIO
(Amount in Rs)
Return on Total Assets Ratio
Year Net Profit After Tax Total Assets Ratio
2003 21123474 78572171 027
2004 16125942 88438107 018
2005 16929227 89158391 019
2006 18259580 106385201 017
2007 40586359 129805102 031
Interpretation
This is the ratio between net profit and total assets The ratio indicates the return
on total assets in the form of profits
The net profit is increased in the current year because of the increment in the
income from services due to the increase in Operations amp Maintenance fee The
fixed assets are reduced due to the charge of depreciation and no major
increments in fixed assets but the current assets are increased because of sundry
debtors and that effects an increase in the ratio compared with the last year ie
2006
GRAPHICAL REPRESENTATION
027
018 019017
031
000
005
010
015
020
025
030
035
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON TOTAL ASSETS
Ratios
12 RESERVES amp SURPLUS TO CAPITAL RATIO
(Amount in Rs)
Reserves amp Surplus To Capital Ratio
Year Reserves amp Surplus Capital Ratio
2003 65599299 2079920 31542004 34582554 18719280 1852005 51511781 18719280 2752006 37754372 18719280 2022007 78340733 18719280 419
Interpretation
The ratio is used to reveal the policy pursued by the company a very high ratio
indicates a conservative dividend policy and vice-versa Higher the ratio better
will be the position
The reserves amp surplus is decreased in the year 2006 due to the payment of
dividends and in the year 2007 the profit is increased But the capital is
remaining constant from the year 2004 So the increase in the reserves amp surplus
caused a greater increase in the current yearrsquos ratio compared with the older
GRAPHICAL REPRESENTATION
3154
185 275 202419
-
500
1000
1500
2000
2500
3000
3500
Ratios
2003 2004 2005 2006 2007
Years
RESERVES amp SRUPLUS TO CAPITAL RATIO
Ratios
OVERALL PROFITABILITY RATIOS
13 EARNINGS PER SHARE
(Amount in Rs)
Earnings Per Share
Year Net Profit After Tax No of Equity Shares Ratio
2003 21123474 207992 101562004 16125942 1871928 8612005 16929227 1871928 9042006 18259580 1871928 9752007 40586359 1871928 2168
Interpretation
Earnings per share ratio are used to find out the return that the shareholderrsquos earn
from their shares After charging depreciation and after payment of tax the
remaining amount will be distributed by all the shareholders
Net profit after tax is increased due to the huge increase in the income from
services That is the amount which is available to the shareholders to take There
are 1871928 shares of Rs10- each The share capital is constant from the year
2004 Due to the huge increase in net profit the earnings per share is greaterly
increased in 2007
GRAPHICAL REPRESENTATION
10156
861904 975
2168
000
2000
4000
6000
8000
10000
12000
Ratios
2003 2004 2005 2006 2007
Years
EARNINGS PER SHARE
Ratios
14 PRICE EARNINGS (PE) RATIO
(Amount in Rs)
Price Earning (PE) Ratio
Year Market Price Per Share Earnings Per Share Ratio
2003 3254 10156 0322004 2847 861 3302005 3752 904 4152006 3017 975 3092007 5185 2168 239
Interpretation
The ratio is calculated to make an estimate of application in the value of share of
a company
The market price per share is increased due to the increase in the reserves
amp surplus The earnings per share are also increased greaterly compared
with the last year because of increase in the net profit So the ratio is
decreased compared with the previous year
GRAPHICAL REPRESENTATION
032
330
415
309
239
000
050
100
150
200
250
300
350
400
450
Ratios
2003 2004 2005 2006 2007
Years
PE RATIO
Ratios
15 RETURN ON INVESTMENT
(Amount in Rs)
Return on Investment
Year Net Profit After Tax Share Holders Fund Ratio
2003 21123474 67679219 031
2004 16125942 53301834 03
2005 16929227 70231061 024
2006 18259580 56473652 032
2007 40586359 97060013 042
Interpretation
This is the ratio between net profits and shareholders funds The ratio is
generally calculated as percentage multiplying with 100
The net profit is increased due to the increase in the income from services ant
the shareholders funds are increased because of reserve amp surplus So the ratio
is increased in the current year
GRAPHICAL REPRESENTATION
031 030
024
032
042
000
005
010
015
020
025
030
035
040
045
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON INVESTMENT RATIO
RatioS
DATA COLLECTION
The data can be of two types
Primary Data
Secondary Data
Primary Data
Primary data are those data which is originally collected afresh
Secondary Data
Secondary data are those data which are already collected and stored and which has
been passed through statistical research
In this project Secondary data has been collected from following sources-
Annual report
Books
MIS
Other material and report published by company There are two methods to prepare
the Cash flow Statement
ndirect Method
I
The indirect method (or reconciliation method) starts with net income and converts it
to net cash flow from operating activities In other words the indirect method adjusts
net income for items that affected reported net income but did not affect cash To
compute net cash flow from operating activities non-cash charges in the income
statement are added ack to net income and non-cash credits are deducted
b
Direct Method
Under the direct method the statement of cash flows reports net cash flow from
operating activities as major classes of operating cash receipts (eg cash collected from
customers and cash received from interest and dividends) and cash disbursements (eg
cash paid to suppliers for goods to employees for services to creditors for interest and
to government authorities for taxes)
INDIRECT VERSUS DIRECT METHOD
The most contentious decision that the FASB faced in issuing Statement No 95 was
choosing between the direct method and the indirect method of determining net cash
flow from operating activities Companies lobbied against the direct method urging
adoption of the indirect method Commercial lending officers expressed a strong
preference to the FASB hat the direct method be required
tCF-Page 3 of 5
In Favor of the Direct Method
The principal advantage of the direct method is that it shows operating cash receipts and
payments That is it is more consistent with the objective of a statement of cash flows to
provide information about cash receipts and cash payments than the in-direct method
which does not report operating cash receipts and payments
Supporters of the direct method contend that knowledge of the specific sources of
operating cash receipts and the purposes for which operating cash payments were made
in past periods is useful in estimating future operating cash flows Furthermore in-
formation about amounts of major classes of operating cash receipts and payments is
more useful than information only about their arithmetic sum (the net cash flow from
operating activities) Such information is more revealing of an enterprises ability (1) to
generate sufficient cash from operating activities to pay its debts (2) to reinvest in its
operations and (3) to make distributions to its owners
Many corporate providers of financial statements say that they do not currently collect
information in a manner that allows them to determine amounts such as cash received
from customers or cash paid to suppliers directly from their accounting systems But
supporters of the direct method contend that the incremental cost of assimilating such
operating cash receipts and payments data is not significant
In Favor of the Indirect Method
The principal advantage of the indirect method is that it focuses on the differences
between net income and net cash flow from operating activities That is it provides a
useful link between the statement of cash flows and the income statement and balance
sheet
Many providers of financial statements contend that it is less costly to adjust net income
to net cash flow from operating activities (indirect) than it is to report gross operating
cash receipts and payments (direct) Supporters of the indirect method also state that the
direct method which effectively reports income statement information on a cash rather
than an accrual basis may erroneously suggest that net cash flow from operating
activities is as good as or better than net income as a measure of performance
Special Rules Applying to Direct and Indirect Methods
Companies that use the direct method are required at a
minimum to report separately the following classes of
operating cash receipts and payments
Receipts
1048713 Cash collected from customers (including lessees licensees etc)
1048713 Interest and dividends received
1048713 Other operating cash receipts if any
Payments
1048713 Cash paid to employees and suppliers of goods or services (including
suppliers of
insurance advertising etc)
1048713 Interest paid
1048713 Income taxes paid
1048713 Other operating cash payments if any
Companies using the indirect method are required to disclose separately changes in
inventory receivables and payables to reconcile net income to net cash flow from
operating activities In addition interest paid (net of amount capitalized) and income
taxes paid must be disclosed elsewhere in the financial statements or accompanying
notes
The FASB requires these separate and additional disclosures so that users
may approximate the direct method Also an acceptable alternative presentation
of the in-direct method is to report net cash flow from operating activities as a
single line item in the statement of cash flows and to present the reconciliation
details elsewhere in the financial statements
FINDING OF SUDY
According to cash flow statement of the company The finding of the study are as
follows-
The company has not taken any loans secured or unsecured from companies
firms or other parties
The company has not accepted any deposit from the public during the year
The company is not a sick industrial company
The company has not granted any loan secured or unsecured to company firms
or other parties
The company has paid the entire long term and short term borrowing during the
year
The company has buy back the companyrsquos own share this year
The interest paid in 2008 is more than the
There has been a significant decline in volume over the years from 2001-02
to 2005-06 as can be seen in the graph below
Table 43
The Net sales of Tractor has increased considerably from 2004-05 to 2007-08
This can be mainly attributed to changes in Variable and material costs and in
the price
The Net sale of Tractor has increased considerably from 2004-05 to 2007-08
that is an decrease of Rs7216 per tractor This can be mainly attributed to
changes in
Variable and material costs and in the prices
RECOMMENDATIONS
According to cash flow statement of the company The suggestions of the study
are as follows-
The time durations for training program have to increase
Buy regular review and consultations develop a career progression
which is sensitive to performance and ability
Create an environment where by people are trend developed to enable
The to take advantages of opportunities that arise
The jab can be redesigned where the work man stay in what is normally
the same job but has elements of it changed
The principle amount must be paid in time which can be reducing the
interest the out flow
The purchase of the fixed asset must be made only when there is extreme
requirement
In order to avoid taxes the company should go for more investment
The companyrsquos borrowings should go for more investment
o The company should try to reduce the depreciations as maximum
as possible
CONCLUSION
The study on competency level of employees at ESCORTS PVTLTD gave an
insight about the acceptance of competency mapping by employees
The employees at Ymi welcome the introduction of competency mapping in their
organization as they felt it was very much essential in enhancing their skills and
organizational development
The organization has provided the recourses guidance and support to facilitate the
introduction of competency level easily and develop the employees in such a way
that they can face any kind of challenge
However the level of competency in employees is found to be satisfactory
Providing proper training education and guidance to the employees can enhance
the level
This study was mainly carried out to find out whether thee competency mapping
being followed by the company is effective till date If the competency mapping
and fitment to the organization
By looking at the graphs and tables it is quite that the employees still are not up to
the level of competent pool they still have to be trained and made competent in
order to fill the gap As the organization has just applied the mapping it has to see
to that it meets all the requirements for competency mapping
Therefore the graphs make it quite clear that the potential of the employees is not
up to the mark and ie they are not competent enough to meet the competency-
mapping requirement Hence by further training and counseling this gap can be
closed
This report includes the training requirements of employees and it highlights skills
possessed by each employee and skill required All employees get training so that
skill can be improved and maintain balance between standard performance with
their actual performance to avoid gap
APPENDIX
QUESTIONNAIRE
Consumer Survey
Name _____________________________
Age _____________________________
Sex
Male
Female
Occupation
Businessman
Service man
Professional
Others
Monthly income brackets
Below 15000
15000- 20000
20000-30000
30000 and above
of your savings _________
Do you invest
Yes
No
If yes then where do you invest your money
Bank
Insurance
funds
Others
Why do you made that statement
Return
Risk hedging
Tax benefits
Other reasons (specify) _______
Who influence your cash decision
Relatives and friends
Family members
Advisors experts
You yourself
If no then why
Do not know where to invest
Satisfied with your current investment return
Donrsquot want take risk
Other reasons
__________________________________________________________________
___________________
Do you know about CF statement
Yes
No
If yes then from where you have come to know about an cash statement
Advertisements on newspapers
Friends and relative
Agents experts
Other source
What do you think about cash statement
It means investing only in share market
Constant watch must be kept always
Return is not satisfactory
Other perception
__________________________________________________
Can you recall any cash flow of company
___________________________
Would you want to made CF of an org
Yes
No
If yes then why
_______________________________________________________
If no then why
_______________________________________________________
BIBLIOGRAPHY
List of Books
1 PANDEY IM - FINANCIAL MANAGEMANT
2 KHAN MY AND JAIN PK -FINANCIAL MANAGEMANT
3 SMITH KV ndash MANAGEMANT OF WORKING CAPITAL
3 COMPANY RECORDS
4 JOURNAL
5 REPORTS
WEBLIOGRAPHY
1 wwwescortspvtltdcom
2 wwwgooglecom
Sources of data
Primary data
Primary data is the data which is collected by the researcher for the first time
and which was not there The tools used to collect the data are-
1)Questionnaire method from the employers in different departments
2) Face to Face personal interactions
Secondary Data
The data already collected is called as secondary data The relevant information
for this study has been collected from secondary source such as
Books
Journal
Reports
Publication by the organizational circulation
Company records
Business bulletins
Internet
Secondary data is also collected from various of the internet and intranet Some
of the website trough which information was gathered was through
HYPOTHESIS
The report is analyzed under the presumption that cash flow position of
YAMAHA MOTORS PVTLTD It can be improved and made effective in
terms of cash flows
In testing the above hypothesis the following aspects will be considered
1 Balance sheet comparisons
2 Presentation of cash flow statement in terms of revised AS-3
LIMITATIONS
The study though conducted to the best of the ability suffers from some
certain limitations There are
The data is secondary one and as such its reliability may be
questioned upon
The time availability for the study is less and as such it hinders thee
progress of the study
Senior officials were rarely approachable
Websites were not giving comprehensive data
Not having face-to-face interaction to get more relevant
information
Analysis and interpretation of data was done on the assumption that
the respondentsrsquo information was online
Information collected was totally subjective
The interviews are done during office hours but could not be done
for the other employees of other
DATA ANALYSIS
ESCORTS PVT LTD
CASH FLOW STRATEMENT
Year Ended Year Ended
30092009 30092008
Rs Crores Rs
Crores
A Cash Flow from Operating Activities
Net profit before tax (1733) 3444
Adjustment for
Loss on sale Provision for diminution in value of Long Term
Investments amp loans to Group Companies 189 4018
Gain on sale of Long Term Investments (122) (9492)
Gain on sale of Asset (013) -
Depreciation 4497 3955
Misc Exp Assets Write off Provisions 808 750
Interest Expense 7222 7999
Dividend Income (002) (001)
Interest Income (2082) -
Operating Profit before working capital changes 8764 10673
Adjustments for
Trade and other Receivables (8817) (12035)
Inventories 1379 (4692)
Trade Payables 6705 19046
Miscellaneous Expenditure (750) (511)
(1483) 1808
Cash Generated from Operations 7281 12481
Direct Taxes (Paid)Refunds (1785) 3166
Net Cash Flow from operating activities 5496 15647
B Cash Flow from Investing Activities
Purchase of Fixed Assets (3095) (2794)
Proceeds from sale of Fixed Assets 086 177
Movement in Loans and Advances (1627) (1644)
Sale of Investments 3233 11452
Short Term Deposits with schedule Banks (231) (1048)
Interest Received 2070 -
Dividend Received 002 001
Net Cash Flow from Investing activities 438 6144
Proceeds from Share Capital amp Securities Premium 11444 -
Proceeds from Long Term Borrowings 8660 -
Less Repayment of Long Term Borrowings (054) (7896)
Proceeds (Repayment) from short term borrowings (net) (22726) -
Interest Paid (7740) (8223)
Net Cash used in financing activities (10416) (16119)
Net Increase(Decrease) in Cash and Cash equivalents (4482) 5672
Cash and Cash equivalents as at 01102008 10565 4893
Cash and Cash equivalents as at 30092009 6083 1056
ANALYSIS OF CASH FLOW
From the cash flow statements of the ESCORT PVTLTDIt can be analyzed
from the two years that the net cash balance of the company has increased
manifold in 30-09-2008 than the year 30-09-2009
The net profit in 30-09-2008 is higher than the 30-09-2009 but due to certain
changes there has been increase in the cash balance
The interest paid this year is ore of the last year which implies that thee
company has not repaid his borrowed capital due to which the interest has got
down
The depreciation has increased but it does not affect cash to an extent as it is a
non-cash item In the head of working capital there is drastic change in the cash
balance in the form of ldquoTrade and other Receivables which has affected the cash
balance
There is outflow of cash for receivables rather than the inflow in the last year
So the net effect is that the cash from operating activities has been decreased
two times from the last year
The company has no accumulated losses as at the end of the financial year ie
September 31 2008
Provision for taxation has been made in accordance with the requirement of AS-
22 issued by Institute of Charted Accountants of India
Pursuant to that current year deferred tax liability have been charged to profit amp
loss account
In opinion of the board of directors of thee company the current assets loans
and advances have a value on realization in the ordinary course of the business at
least equal to the amount stated in the balance sheet and provision for all
liabilities have been made
Balance of sundry debtors creditors loans and advances are subject to confirmation by
the concerned parties
METHOD OF ANALYSIS
1 Data analysis is done using the following statistical tools wherever required in
order to extract meaningful information from the collected data
o Simple percentage and averages
o Bar diagram
o Cone diagram
o Pie diagram
2 The collected data from the questionnaire has been put together in the form of
tables
3 Percentage has been calculated wherever necessary for generalization of the
data
4 Data analysis and interpretation has been done on the basis of primary and
secondary data
5 The findings researches have been recorded based on the analysis
6 The study conducted pertains only to YAMAHA MOTORS INDIA PVTLTD
All bank balances (debitcredit) have been confirmed by the concerned bank
Identified from the available information which has been relied upon by the auditors
The names of small-scale industrial units to whom outstanding for more than
thirty days within agreed terms
The company has 9996 of shareholders in its subsidiary company named as
ESCORTS PVT LTD As at 31-03-2008
So the net effect is that the net cash from investing activities has many more
times than the last year which is negative Now the company has repaid its long
term borrowing more than the last year which has decreased the cash balance by
the little amount
Balance with the schedule banks under the head current amp collection account
amounting to represent funds in transit lying with schedule banks pending
transfer against loan liabilities under the head cash credit amp bill discounting
LIQUIDITY RATIO
1 CURRENT RATIO
(Amount in Rs)
Current Ratio
Year Current Assets Current Liabilities Ratio
2003 58574151 7903952 7412004 69765346 31884616 2192005 72021081 16065621 4482006 91328208 47117199 1942007 115642068 30266661 382
Interpretation
As a rule the current ratio with 21 (or) more is considered as satisfactory
position of the firm
When compared with 2006 there is an increase in the provision for tax because
the debtors are raised and for that the provision is created The current liabilities
majorly included Lanco Group of company for consultancy additional services
The sundry debtors have increased due to the increase to corporate taxes
In the year 2006 the cash and bank balance is reduced because that is used for
payment of dividends In the year 2007 the loans and advances include majorly
the advances to employees and deposits to government The loans and advances
reduced because the employees set off their claims The other current assets
include the interest attained from the deposits The deposits reduced due to the
declaration of dividends So the other current assets decreased
The huge increase in sundry debtors resulted an increase in the ratio which is
above the benchmark level of 21 which shows the comfortable position of the
firm
GRAPHICAL REPRESENTATION
741
219
448
194
382
000
100
200
300
400
500
600
700
800
Ratio
2003 2004 2005 2006 2007
Years
CURRENT RATIO
Ratio
2 QUICK RATIO
(Amount
in Rs)
Quick Ratio
Year Quick Assets Current Liabilities Ratio
2003 58574151 7903952 741
2004 52470336 31884616 165
2005 69883268 16065620 435
2006 89433596 47117199 19
2007 115431868 30266661 381
Interpretation
Quick assets are those assets which can be converted into cash with in a short
period of time say to six months So here the sundry debtors which are with the
long period does not include in the quick assets
Compare with 2006 the Quick ratio is increased because the sundry debtors are
increased due to the increase in the corporate tax and for that the provision
created is also increased So the ratio is also increased with the 2006
GRAPHICAL REPRESENTATION
741
165
435
190
381
000
100
200
300
400
500
600
700
800
Ratio
2003 2004 2005 2006 2007
Years
QUICK RATIO
Ratios
3 ABOSULTE LIQUIDITY RATIO
(Amount
in Rs)
Absolute Cash Ratio
Year Absolute Liquid Assets Current Liabilities Ratio
2003 31004027 7903952 392
2004 10859778 31884616 034
2005 39466542 16065620 246
2006 53850852 47117199 114
2007 35649070 30266661 118
Interpretation
The current assets which are ready in the form of cash are considered as absolute
liquid assets Here the cash and bank balance and the interest on fixed assts are
absolute liquid assets
In the year 2006 the cash and bank balance is decreased due to decrease in the
deposits and the current liabilities are also reduced because of the payment of
dividend That causes a slight increase in the current yearrsquos ratio
GRAPHICAL REPRESENTATION
392
034
246
114 118
0
05
1
15
2
25
3
35
4
Ratios
2003 2004 2005 2006 2007
Years
ABSOLUTE CASH RATIO
Ratios
LEVERAGE RATIOS
4 PROPRIETORY RATIO
(Amount
in Rs)
Proprietory Ratio
Year Share Holders Funds Total Assets Ratio
2003 67679219 78572171 086
2004 53301834 88438107 06
2005 70231061 89158391 079
2006 56473652 106385201 053
2007 97060013 129805102 075
Interpretation
The proprietary ratio establishes the relationship between shareholders funds to
total assets It determines the long-term solvency of the firm This ratio indicates
the extent to which the assets of the company can be lost without affecting the
interest of the company
There is no increase in the capital from the year2004 The share holderrsquos funds
include capital and reserves and surplus The reserves and surplus is increased
due to the increase in balance in profit and loss account which is caused by the
increase of income from services
Total assets includes fixed and current assets The fixed assets are reduced
because of the depreciation and there are no major increments in the fixed assets
The current assets are increased compared with the year 2006 Total assets are
also increased than precious year which resulted an increase in the ratio than old
GRAPHICAL REPRESENTATION
086
060
079
053
075
000
010
020
030
040
050
060
070
080
090
Ratios
2003 2004 2005 2006 2007
Years
PROPRIETORY RATIO
Ratios
ACTIVITY RATIOS
5 WORKING CAPITAL TURNOVER RATIO
(Amount
in Rs)
Working Capital Turnover Ratio
Year Income From Services Working Capital Ratio
2003 36309834 50670199 0722004 53899084 37880730 1422005 72728759 55355460 1312006 55550649 44211009 1262007 96654902 85375407 113
Interpretation
Income from services is greatly increased due to the extra invoice for Operations
amp Maintenance fee and the working capital is also increased greater due to the
increase in from services because the huge increase in current assets
The income from services is raised and the current assets are also raised together
resulted in the decrease of the ratio of 2007 compared with 2006
GRAPHICAL REPRESENTATION
072
142 131126
113
000
020
040
060
080
100
120
140
160
Ratio
2003 2004 2005 2006 2007
Years
WORKING CAPITAL TURNOVER RATIO
Ratio
6 FIXED ASSETS TURNOVER RATIO
(Amount in Rs)
Fixed Assets Turnover Ratio
Year Income From Services Net Fixed Assets Ratio
2003 36309834 28834317 126
2004 53899084 29568279 182
2005 72728759 17137310 424
2006 55550649 15056993 369
2007 96654902 14163034 682
Interpretation
Fixed assets are used in the business for producing the goods to be sold This
ratio shows the firmrsquos ability in generating sales from all financial resources
committed to total assets The ratio indicates the account of one rupee
investment in fixed assets
The income from services is greaterly increased in the current year due to the
increase in the Operations amp Maintenance fee due to the increase in extra invoice
and the net fixed assets are reduced because of the increased charge of
depreciation Finally that effected a huge increase in the ratio compared with the
previous yearrsquos ratio
GRAPHICAL REPRSENTATION
126182
424 369
682
000
100
200
300
400
500
600
700
Ratios
2003 2004 2005 2006 2007
Years
FIXED ASSETS TURNOVER RATIO
Ratios
7 CAPITAL TURNOVER RATIO
(Amount
in Rs)
Capital Turnover Ratio
Year Income From Services Capital Employed Ratio
2003 36309834 37175892 0982004 53899084 53301834 1012005 72728759 70231061 1042006 55550649 56473652 0982007 96654902 97060013 100
Interpretation
This is another ratio to judge the efficiency and effectiveness of the company
like profitability ratio
The income from services is greaterly increased compared with the previous year
and the total capital employed includes capital and reserves amp surplus Due to
huge increase in the net profit the capital employed is also increased along with
income from services Both are effected in the increment of the ratio of current
year
GRAPHICAL REPRESENTATION
098
101
104
098
100
094095096097098099100101102103104
Ratios
2003 2004 2005 2006 2007
Years
CAPITAL TURNOVER RATIO
Ratios
8 CURRENT ASSETS TO FIXED ASSETS RATIO
(Amount
in Rs)
Current Assets To Fixed Assets Ratio
Year Current Assets Fixed Assets Ratio
2003 58524151 19998020 2932004 69765346 18672761 3742005 72021081 17137310 4202006 91328208 15056993 6072007 115642068 14163034 817
Interpretation
Current assets are increased due to the increase in the sundry debtors and the net
fixed assets of the firm are decreased due to the charge of depreciation and there
is no major increment in the fixed assets
The increment in current assets and the decrease in fixed assets resulted an
increase in the ratio compared with the previous year
GRAPHICAL REPRESENTATION
293374
420
607
817
000
100
200
300
400
500
600
700
800
900
Ratios
2003 2004 2005 2006 2007
Years
CURRENT ASSETS TO FIXED ASSETS RATIO
Ratios
PROFITABILITY RATIOS
GENERAL PROFITABILITY RATIOS
9 NET PROFIT RATIO
(Amount in Rs)
Net Profit Ratio
Year Net Profit After Tax Income from Services Ratio
2003 21123474 36039834 059
2004 16125942 53899084 030
2005 16929227 72728759 023
2006 18259580 55550649 033
2007 40586359 96654902 042
Interpretation
The net profit ratio is the overall measure of the firmrsquos ability to turn each rupee
of income from services in net profit If the net margin is inadequate the firm
will fail to achieve return on shareholderrsquos funds High net profit ratio will help
the firm service in the fall of income from services rise in cost of production or
declining demand
The net profit is increased because the income from services is increased The
increment resulted a slight increase in 2007 ratio compared with the year 2006
GRAPHICAL REPRESENTATION
059
030
023
033
042
000
010
020
030
040
050
060
Ratios
2003 2004 2005 2006 2007
Years
NET PROFIT RATIO
Ratios
10 OPERATING PROFIT
(Amount in Rs)
Operating Profit
Year Operating Profit Income From Services Ratio
2003 36094877 36309834 099
2004 27576814 53899084 051
2005 29540599 72728759 041
2006 31586718 55550649 057
2007 67192677 96654902 070
Interpretation
The operating profit ratio is used to measure the relationship between net profits
and sales of a firm Depending on the concept it will decide
The operating profit ratio is increased compared with the last year The earnings
are increased due to the increase in the income from services because of
Operations amp Maintenance fee So the ratio is increased slightly compared with
the previous year
GRAPHICAL REPRESENTATION
099
051
041
057
070
000
010
020
030
040
050060
070
080
090
100
Ratios
2003 2004 2005 2006 2007
Years
OPERATING PROFIT RATIO
Ratios
11 RETURN ON TOTAL ASSETS RATIO
(Amount in Rs)
Return on Total Assets Ratio
Year Net Profit After Tax Total Assets Ratio
2003 21123474 78572171 027
2004 16125942 88438107 018
2005 16929227 89158391 019
2006 18259580 106385201 017
2007 40586359 129805102 031
Interpretation
This is the ratio between net profit and total assets The ratio indicates the return
on total assets in the form of profits
The net profit is increased in the current year because of the increment in the
income from services due to the increase in Operations amp Maintenance fee The
fixed assets are reduced due to the charge of depreciation and no major
increments in fixed assets but the current assets are increased because of sundry
debtors and that effects an increase in the ratio compared with the last year ie
2006
GRAPHICAL REPRESENTATION
027
018 019017
031
000
005
010
015
020
025
030
035
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON TOTAL ASSETS
Ratios
12 RESERVES amp SURPLUS TO CAPITAL RATIO
(Amount in Rs)
Reserves amp Surplus To Capital Ratio
Year Reserves amp Surplus Capital Ratio
2003 65599299 2079920 31542004 34582554 18719280 1852005 51511781 18719280 2752006 37754372 18719280 2022007 78340733 18719280 419
Interpretation
The ratio is used to reveal the policy pursued by the company a very high ratio
indicates a conservative dividend policy and vice-versa Higher the ratio better
will be the position
The reserves amp surplus is decreased in the year 2006 due to the payment of
dividends and in the year 2007 the profit is increased But the capital is
remaining constant from the year 2004 So the increase in the reserves amp surplus
caused a greater increase in the current yearrsquos ratio compared with the older
GRAPHICAL REPRESENTATION
3154
185 275 202419
-
500
1000
1500
2000
2500
3000
3500
Ratios
2003 2004 2005 2006 2007
Years
RESERVES amp SRUPLUS TO CAPITAL RATIO
Ratios
OVERALL PROFITABILITY RATIOS
13 EARNINGS PER SHARE
(Amount in Rs)
Earnings Per Share
Year Net Profit After Tax No of Equity Shares Ratio
2003 21123474 207992 101562004 16125942 1871928 8612005 16929227 1871928 9042006 18259580 1871928 9752007 40586359 1871928 2168
Interpretation
Earnings per share ratio are used to find out the return that the shareholderrsquos earn
from their shares After charging depreciation and after payment of tax the
remaining amount will be distributed by all the shareholders
Net profit after tax is increased due to the huge increase in the income from
services That is the amount which is available to the shareholders to take There
are 1871928 shares of Rs10- each The share capital is constant from the year
2004 Due to the huge increase in net profit the earnings per share is greaterly
increased in 2007
GRAPHICAL REPRESENTATION
10156
861904 975
2168
000
2000
4000
6000
8000
10000
12000
Ratios
2003 2004 2005 2006 2007
Years
EARNINGS PER SHARE
Ratios
14 PRICE EARNINGS (PE) RATIO
(Amount in Rs)
Price Earning (PE) Ratio
Year Market Price Per Share Earnings Per Share Ratio
2003 3254 10156 0322004 2847 861 3302005 3752 904 4152006 3017 975 3092007 5185 2168 239
Interpretation
The ratio is calculated to make an estimate of application in the value of share of
a company
The market price per share is increased due to the increase in the reserves
amp surplus The earnings per share are also increased greaterly compared
with the last year because of increase in the net profit So the ratio is
decreased compared with the previous year
GRAPHICAL REPRESENTATION
032
330
415
309
239
000
050
100
150
200
250
300
350
400
450
Ratios
2003 2004 2005 2006 2007
Years
PE RATIO
Ratios
15 RETURN ON INVESTMENT
(Amount in Rs)
Return on Investment
Year Net Profit After Tax Share Holders Fund Ratio
2003 21123474 67679219 031
2004 16125942 53301834 03
2005 16929227 70231061 024
2006 18259580 56473652 032
2007 40586359 97060013 042
Interpretation
This is the ratio between net profits and shareholders funds The ratio is
generally calculated as percentage multiplying with 100
The net profit is increased due to the increase in the income from services ant
the shareholders funds are increased because of reserve amp surplus So the ratio
is increased in the current year
GRAPHICAL REPRESENTATION
031 030
024
032
042
000
005
010
015
020
025
030
035
040
045
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON INVESTMENT RATIO
RatioS
DATA COLLECTION
The data can be of two types
Primary Data
Secondary Data
Primary Data
Primary data are those data which is originally collected afresh
Secondary Data
Secondary data are those data which are already collected and stored and which has
been passed through statistical research
In this project Secondary data has been collected from following sources-
Annual report
Books
MIS
Other material and report published by company There are two methods to prepare
the Cash flow Statement
ndirect Method
I
The indirect method (or reconciliation method) starts with net income and converts it
to net cash flow from operating activities In other words the indirect method adjusts
net income for items that affected reported net income but did not affect cash To
compute net cash flow from operating activities non-cash charges in the income
statement are added ack to net income and non-cash credits are deducted
b
Direct Method
Under the direct method the statement of cash flows reports net cash flow from
operating activities as major classes of operating cash receipts (eg cash collected from
customers and cash received from interest and dividends) and cash disbursements (eg
cash paid to suppliers for goods to employees for services to creditors for interest and
to government authorities for taxes)
INDIRECT VERSUS DIRECT METHOD
The most contentious decision that the FASB faced in issuing Statement No 95 was
choosing between the direct method and the indirect method of determining net cash
flow from operating activities Companies lobbied against the direct method urging
adoption of the indirect method Commercial lending officers expressed a strong
preference to the FASB hat the direct method be required
tCF-Page 3 of 5
In Favor of the Direct Method
The principal advantage of the direct method is that it shows operating cash receipts and
payments That is it is more consistent with the objective of a statement of cash flows to
provide information about cash receipts and cash payments than the in-direct method
which does not report operating cash receipts and payments
Supporters of the direct method contend that knowledge of the specific sources of
operating cash receipts and the purposes for which operating cash payments were made
in past periods is useful in estimating future operating cash flows Furthermore in-
formation about amounts of major classes of operating cash receipts and payments is
more useful than information only about their arithmetic sum (the net cash flow from
operating activities) Such information is more revealing of an enterprises ability (1) to
generate sufficient cash from operating activities to pay its debts (2) to reinvest in its
operations and (3) to make distributions to its owners
Many corporate providers of financial statements say that they do not currently collect
information in a manner that allows them to determine amounts such as cash received
from customers or cash paid to suppliers directly from their accounting systems But
supporters of the direct method contend that the incremental cost of assimilating such
operating cash receipts and payments data is not significant
In Favor of the Indirect Method
The principal advantage of the indirect method is that it focuses on the differences
between net income and net cash flow from operating activities That is it provides a
useful link between the statement of cash flows and the income statement and balance
sheet
Many providers of financial statements contend that it is less costly to adjust net income
to net cash flow from operating activities (indirect) than it is to report gross operating
cash receipts and payments (direct) Supporters of the indirect method also state that the
direct method which effectively reports income statement information on a cash rather
than an accrual basis may erroneously suggest that net cash flow from operating
activities is as good as or better than net income as a measure of performance
Special Rules Applying to Direct and Indirect Methods
Companies that use the direct method are required at a
minimum to report separately the following classes of
operating cash receipts and payments
Receipts
1048713 Cash collected from customers (including lessees licensees etc)
1048713 Interest and dividends received
1048713 Other operating cash receipts if any
Payments
1048713 Cash paid to employees and suppliers of goods or services (including
suppliers of
insurance advertising etc)
1048713 Interest paid
1048713 Income taxes paid
1048713 Other operating cash payments if any
Companies using the indirect method are required to disclose separately changes in
inventory receivables and payables to reconcile net income to net cash flow from
operating activities In addition interest paid (net of amount capitalized) and income
taxes paid must be disclosed elsewhere in the financial statements or accompanying
notes
The FASB requires these separate and additional disclosures so that users
may approximate the direct method Also an acceptable alternative presentation
of the in-direct method is to report net cash flow from operating activities as a
single line item in the statement of cash flows and to present the reconciliation
details elsewhere in the financial statements
FINDING OF SUDY
According to cash flow statement of the company The finding of the study are as
follows-
The company has not taken any loans secured or unsecured from companies
firms or other parties
The company has not accepted any deposit from the public during the year
The company is not a sick industrial company
The company has not granted any loan secured or unsecured to company firms
or other parties
The company has paid the entire long term and short term borrowing during the
year
The company has buy back the companyrsquos own share this year
The interest paid in 2008 is more than the
There has been a significant decline in volume over the years from 2001-02
to 2005-06 as can be seen in the graph below
Table 43
The Net sales of Tractor has increased considerably from 2004-05 to 2007-08
This can be mainly attributed to changes in Variable and material costs and in
the price
The Net sale of Tractor has increased considerably from 2004-05 to 2007-08
that is an decrease of Rs7216 per tractor This can be mainly attributed to
changes in
Variable and material costs and in the prices
RECOMMENDATIONS
According to cash flow statement of the company The suggestions of the study
are as follows-
The time durations for training program have to increase
Buy regular review and consultations develop a career progression
which is sensitive to performance and ability
Create an environment where by people are trend developed to enable
The to take advantages of opportunities that arise
The jab can be redesigned where the work man stay in what is normally
the same job but has elements of it changed
The principle amount must be paid in time which can be reducing the
interest the out flow
The purchase of the fixed asset must be made only when there is extreme
requirement
In order to avoid taxes the company should go for more investment
The companyrsquos borrowings should go for more investment
o The company should try to reduce the depreciations as maximum
as possible
CONCLUSION
The study on competency level of employees at ESCORTS PVTLTD gave an
insight about the acceptance of competency mapping by employees
The employees at Ymi welcome the introduction of competency mapping in their
organization as they felt it was very much essential in enhancing their skills and
organizational development
The organization has provided the recourses guidance and support to facilitate the
introduction of competency level easily and develop the employees in such a way
that they can face any kind of challenge
However the level of competency in employees is found to be satisfactory
Providing proper training education and guidance to the employees can enhance
the level
This study was mainly carried out to find out whether thee competency mapping
being followed by the company is effective till date If the competency mapping
and fitment to the organization
By looking at the graphs and tables it is quite that the employees still are not up to
the level of competent pool they still have to be trained and made competent in
order to fill the gap As the organization has just applied the mapping it has to see
to that it meets all the requirements for competency mapping
Therefore the graphs make it quite clear that the potential of the employees is not
up to the mark and ie they are not competent enough to meet the competency-
mapping requirement Hence by further training and counseling this gap can be
closed
This report includes the training requirements of employees and it highlights skills
possessed by each employee and skill required All employees get training so that
skill can be improved and maintain balance between standard performance with
their actual performance to avoid gap
APPENDIX
QUESTIONNAIRE
Consumer Survey
Name _____________________________
Age _____________________________
Sex
Male
Female
Occupation
Businessman
Service man
Professional
Others
Monthly income brackets
Below 15000
15000- 20000
20000-30000
30000 and above
of your savings _________
Do you invest
Yes
No
If yes then where do you invest your money
Bank
Insurance
funds
Others
Why do you made that statement
Return
Risk hedging
Tax benefits
Other reasons (specify) _______
Who influence your cash decision
Relatives and friends
Family members
Advisors experts
You yourself
If no then why
Do not know where to invest
Satisfied with your current investment return
Donrsquot want take risk
Other reasons
__________________________________________________________________
___________________
Do you know about CF statement
Yes
No
If yes then from where you have come to know about an cash statement
Advertisements on newspapers
Friends and relative
Agents experts
Other source
What do you think about cash statement
It means investing only in share market
Constant watch must be kept always
Return is not satisfactory
Other perception
__________________________________________________
Can you recall any cash flow of company
___________________________
Would you want to made CF of an org
Yes
No
If yes then why
_______________________________________________________
If no then why
_______________________________________________________
BIBLIOGRAPHY
List of Books
1 PANDEY IM - FINANCIAL MANAGEMANT
2 KHAN MY AND JAIN PK -FINANCIAL MANAGEMANT
3 SMITH KV ndash MANAGEMANT OF WORKING CAPITAL
3 COMPANY RECORDS
4 JOURNAL
5 REPORTS
WEBLIOGRAPHY
1 wwwescortspvtltdcom
2 wwwgooglecom
HYPOTHESIS
The report is analyzed under the presumption that cash flow position of
YAMAHA MOTORS PVTLTD It can be improved and made effective in
terms of cash flows
In testing the above hypothesis the following aspects will be considered
1 Balance sheet comparisons
2 Presentation of cash flow statement in terms of revised AS-3
LIMITATIONS
The study though conducted to the best of the ability suffers from some
certain limitations There are
The data is secondary one and as such its reliability may be
questioned upon
The time availability for the study is less and as such it hinders thee
progress of the study
Senior officials were rarely approachable
Websites were not giving comprehensive data
Not having face-to-face interaction to get more relevant
information
Analysis and interpretation of data was done on the assumption that
the respondentsrsquo information was online
Information collected was totally subjective
The interviews are done during office hours but could not be done
for the other employees of other
DATA ANALYSIS
ESCORTS PVT LTD
CASH FLOW STRATEMENT
Year Ended Year Ended
30092009 30092008
Rs Crores Rs
Crores
A Cash Flow from Operating Activities
Net profit before tax (1733) 3444
Adjustment for
Loss on sale Provision for diminution in value of Long Term
Investments amp loans to Group Companies 189 4018
Gain on sale of Long Term Investments (122) (9492)
Gain on sale of Asset (013) -
Depreciation 4497 3955
Misc Exp Assets Write off Provisions 808 750
Interest Expense 7222 7999
Dividend Income (002) (001)
Interest Income (2082) -
Operating Profit before working capital changes 8764 10673
Adjustments for
Trade and other Receivables (8817) (12035)
Inventories 1379 (4692)
Trade Payables 6705 19046
Miscellaneous Expenditure (750) (511)
(1483) 1808
Cash Generated from Operations 7281 12481
Direct Taxes (Paid)Refunds (1785) 3166
Net Cash Flow from operating activities 5496 15647
B Cash Flow from Investing Activities
Purchase of Fixed Assets (3095) (2794)
Proceeds from sale of Fixed Assets 086 177
Movement in Loans and Advances (1627) (1644)
Sale of Investments 3233 11452
Short Term Deposits with schedule Banks (231) (1048)
Interest Received 2070 -
Dividend Received 002 001
Net Cash Flow from Investing activities 438 6144
Proceeds from Share Capital amp Securities Premium 11444 -
Proceeds from Long Term Borrowings 8660 -
Less Repayment of Long Term Borrowings (054) (7896)
Proceeds (Repayment) from short term borrowings (net) (22726) -
Interest Paid (7740) (8223)
Net Cash used in financing activities (10416) (16119)
Net Increase(Decrease) in Cash and Cash equivalents (4482) 5672
Cash and Cash equivalents as at 01102008 10565 4893
Cash and Cash equivalents as at 30092009 6083 1056
ANALYSIS OF CASH FLOW
From the cash flow statements of the ESCORT PVTLTDIt can be analyzed
from the two years that the net cash balance of the company has increased
manifold in 30-09-2008 than the year 30-09-2009
The net profit in 30-09-2008 is higher than the 30-09-2009 but due to certain
changes there has been increase in the cash balance
The interest paid this year is ore of the last year which implies that thee
company has not repaid his borrowed capital due to which the interest has got
down
The depreciation has increased but it does not affect cash to an extent as it is a
non-cash item In the head of working capital there is drastic change in the cash
balance in the form of ldquoTrade and other Receivables which has affected the cash
balance
There is outflow of cash for receivables rather than the inflow in the last year
So the net effect is that the cash from operating activities has been decreased
two times from the last year
The company has no accumulated losses as at the end of the financial year ie
September 31 2008
Provision for taxation has been made in accordance with the requirement of AS-
22 issued by Institute of Charted Accountants of India
Pursuant to that current year deferred tax liability have been charged to profit amp
loss account
In opinion of the board of directors of thee company the current assets loans
and advances have a value on realization in the ordinary course of the business at
least equal to the amount stated in the balance sheet and provision for all
liabilities have been made
Balance of sundry debtors creditors loans and advances are subject to confirmation by
the concerned parties
METHOD OF ANALYSIS
1 Data analysis is done using the following statistical tools wherever required in
order to extract meaningful information from the collected data
o Simple percentage and averages
o Bar diagram
o Cone diagram
o Pie diagram
2 The collected data from the questionnaire has been put together in the form of
tables
3 Percentage has been calculated wherever necessary for generalization of the
data
4 Data analysis and interpretation has been done on the basis of primary and
secondary data
5 The findings researches have been recorded based on the analysis
6 The study conducted pertains only to YAMAHA MOTORS INDIA PVTLTD
All bank balances (debitcredit) have been confirmed by the concerned bank
Identified from the available information which has been relied upon by the auditors
The names of small-scale industrial units to whom outstanding for more than
thirty days within agreed terms
The company has 9996 of shareholders in its subsidiary company named as
ESCORTS PVT LTD As at 31-03-2008
So the net effect is that the net cash from investing activities has many more
times than the last year which is negative Now the company has repaid its long
term borrowing more than the last year which has decreased the cash balance by
the little amount
Balance with the schedule banks under the head current amp collection account
amounting to represent funds in transit lying with schedule banks pending
transfer against loan liabilities under the head cash credit amp bill discounting
LIQUIDITY RATIO
1 CURRENT RATIO
(Amount in Rs)
Current Ratio
Year Current Assets Current Liabilities Ratio
2003 58574151 7903952 7412004 69765346 31884616 2192005 72021081 16065621 4482006 91328208 47117199 1942007 115642068 30266661 382
Interpretation
As a rule the current ratio with 21 (or) more is considered as satisfactory
position of the firm
When compared with 2006 there is an increase in the provision for tax because
the debtors are raised and for that the provision is created The current liabilities
majorly included Lanco Group of company for consultancy additional services
The sundry debtors have increased due to the increase to corporate taxes
In the year 2006 the cash and bank balance is reduced because that is used for
payment of dividends In the year 2007 the loans and advances include majorly
the advances to employees and deposits to government The loans and advances
reduced because the employees set off their claims The other current assets
include the interest attained from the deposits The deposits reduced due to the
declaration of dividends So the other current assets decreased
The huge increase in sundry debtors resulted an increase in the ratio which is
above the benchmark level of 21 which shows the comfortable position of the
firm
GRAPHICAL REPRESENTATION
741
219
448
194
382
000
100
200
300
400
500
600
700
800
Ratio
2003 2004 2005 2006 2007
Years
CURRENT RATIO
Ratio
2 QUICK RATIO
(Amount
in Rs)
Quick Ratio
Year Quick Assets Current Liabilities Ratio
2003 58574151 7903952 741
2004 52470336 31884616 165
2005 69883268 16065620 435
2006 89433596 47117199 19
2007 115431868 30266661 381
Interpretation
Quick assets are those assets which can be converted into cash with in a short
period of time say to six months So here the sundry debtors which are with the
long period does not include in the quick assets
Compare with 2006 the Quick ratio is increased because the sundry debtors are
increased due to the increase in the corporate tax and for that the provision
created is also increased So the ratio is also increased with the 2006
GRAPHICAL REPRESENTATION
741
165
435
190
381
000
100
200
300
400
500
600
700
800
Ratio
2003 2004 2005 2006 2007
Years
QUICK RATIO
Ratios
3 ABOSULTE LIQUIDITY RATIO
(Amount
in Rs)
Absolute Cash Ratio
Year Absolute Liquid Assets Current Liabilities Ratio
2003 31004027 7903952 392
2004 10859778 31884616 034
2005 39466542 16065620 246
2006 53850852 47117199 114
2007 35649070 30266661 118
Interpretation
The current assets which are ready in the form of cash are considered as absolute
liquid assets Here the cash and bank balance and the interest on fixed assts are
absolute liquid assets
In the year 2006 the cash and bank balance is decreased due to decrease in the
deposits and the current liabilities are also reduced because of the payment of
dividend That causes a slight increase in the current yearrsquos ratio
GRAPHICAL REPRESENTATION
392
034
246
114 118
0
05
1
15
2
25
3
35
4
Ratios
2003 2004 2005 2006 2007
Years
ABSOLUTE CASH RATIO
Ratios
LEVERAGE RATIOS
4 PROPRIETORY RATIO
(Amount
in Rs)
Proprietory Ratio
Year Share Holders Funds Total Assets Ratio
2003 67679219 78572171 086
2004 53301834 88438107 06
2005 70231061 89158391 079
2006 56473652 106385201 053
2007 97060013 129805102 075
Interpretation
The proprietary ratio establishes the relationship between shareholders funds to
total assets It determines the long-term solvency of the firm This ratio indicates
the extent to which the assets of the company can be lost without affecting the
interest of the company
There is no increase in the capital from the year2004 The share holderrsquos funds
include capital and reserves and surplus The reserves and surplus is increased
due to the increase in balance in profit and loss account which is caused by the
increase of income from services
Total assets includes fixed and current assets The fixed assets are reduced
because of the depreciation and there are no major increments in the fixed assets
The current assets are increased compared with the year 2006 Total assets are
also increased than precious year which resulted an increase in the ratio than old
GRAPHICAL REPRESENTATION
086
060
079
053
075
000
010
020
030
040
050
060
070
080
090
Ratios
2003 2004 2005 2006 2007
Years
PROPRIETORY RATIO
Ratios
ACTIVITY RATIOS
5 WORKING CAPITAL TURNOVER RATIO
(Amount
in Rs)
Working Capital Turnover Ratio
Year Income From Services Working Capital Ratio
2003 36309834 50670199 0722004 53899084 37880730 1422005 72728759 55355460 1312006 55550649 44211009 1262007 96654902 85375407 113
Interpretation
Income from services is greatly increased due to the extra invoice for Operations
amp Maintenance fee and the working capital is also increased greater due to the
increase in from services because the huge increase in current assets
The income from services is raised and the current assets are also raised together
resulted in the decrease of the ratio of 2007 compared with 2006
GRAPHICAL REPRESENTATION
072
142 131126
113
000
020
040
060
080
100
120
140
160
Ratio
2003 2004 2005 2006 2007
Years
WORKING CAPITAL TURNOVER RATIO
Ratio
6 FIXED ASSETS TURNOVER RATIO
(Amount in Rs)
Fixed Assets Turnover Ratio
Year Income From Services Net Fixed Assets Ratio
2003 36309834 28834317 126
2004 53899084 29568279 182
2005 72728759 17137310 424
2006 55550649 15056993 369
2007 96654902 14163034 682
Interpretation
Fixed assets are used in the business for producing the goods to be sold This
ratio shows the firmrsquos ability in generating sales from all financial resources
committed to total assets The ratio indicates the account of one rupee
investment in fixed assets
The income from services is greaterly increased in the current year due to the
increase in the Operations amp Maintenance fee due to the increase in extra invoice
and the net fixed assets are reduced because of the increased charge of
depreciation Finally that effected a huge increase in the ratio compared with the
previous yearrsquos ratio
GRAPHICAL REPRSENTATION
126182
424 369
682
000
100
200
300
400
500
600
700
Ratios
2003 2004 2005 2006 2007
Years
FIXED ASSETS TURNOVER RATIO
Ratios
7 CAPITAL TURNOVER RATIO
(Amount
in Rs)
Capital Turnover Ratio
Year Income From Services Capital Employed Ratio
2003 36309834 37175892 0982004 53899084 53301834 1012005 72728759 70231061 1042006 55550649 56473652 0982007 96654902 97060013 100
Interpretation
This is another ratio to judge the efficiency and effectiveness of the company
like profitability ratio
The income from services is greaterly increased compared with the previous year
and the total capital employed includes capital and reserves amp surplus Due to
huge increase in the net profit the capital employed is also increased along with
income from services Both are effected in the increment of the ratio of current
year
GRAPHICAL REPRESENTATION
098
101
104
098
100
094095096097098099100101102103104
Ratios
2003 2004 2005 2006 2007
Years
CAPITAL TURNOVER RATIO
Ratios
8 CURRENT ASSETS TO FIXED ASSETS RATIO
(Amount
in Rs)
Current Assets To Fixed Assets Ratio
Year Current Assets Fixed Assets Ratio
2003 58524151 19998020 2932004 69765346 18672761 3742005 72021081 17137310 4202006 91328208 15056993 6072007 115642068 14163034 817
Interpretation
Current assets are increased due to the increase in the sundry debtors and the net
fixed assets of the firm are decreased due to the charge of depreciation and there
is no major increment in the fixed assets
The increment in current assets and the decrease in fixed assets resulted an
increase in the ratio compared with the previous year
GRAPHICAL REPRESENTATION
293374
420
607
817
000
100
200
300
400
500
600
700
800
900
Ratios
2003 2004 2005 2006 2007
Years
CURRENT ASSETS TO FIXED ASSETS RATIO
Ratios
PROFITABILITY RATIOS
GENERAL PROFITABILITY RATIOS
9 NET PROFIT RATIO
(Amount in Rs)
Net Profit Ratio
Year Net Profit After Tax Income from Services Ratio
2003 21123474 36039834 059
2004 16125942 53899084 030
2005 16929227 72728759 023
2006 18259580 55550649 033
2007 40586359 96654902 042
Interpretation
The net profit ratio is the overall measure of the firmrsquos ability to turn each rupee
of income from services in net profit If the net margin is inadequate the firm
will fail to achieve return on shareholderrsquos funds High net profit ratio will help
the firm service in the fall of income from services rise in cost of production or
declining demand
The net profit is increased because the income from services is increased The
increment resulted a slight increase in 2007 ratio compared with the year 2006
GRAPHICAL REPRESENTATION
059
030
023
033
042
000
010
020
030
040
050
060
Ratios
2003 2004 2005 2006 2007
Years
NET PROFIT RATIO
Ratios
10 OPERATING PROFIT
(Amount in Rs)
Operating Profit
Year Operating Profit Income From Services Ratio
2003 36094877 36309834 099
2004 27576814 53899084 051
2005 29540599 72728759 041
2006 31586718 55550649 057
2007 67192677 96654902 070
Interpretation
The operating profit ratio is used to measure the relationship between net profits
and sales of a firm Depending on the concept it will decide
The operating profit ratio is increased compared with the last year The earnings
are increased due to the increase in the income from services because of
Operations amp Maintenance fee So the ratio is increased slightly compared with
the previous year
GRAPHICAL REPRESENTATION
099
051
041
057
070
000
010
020
030
040
050060
070
080
090
100
Ratios
2003 2004 2005 2006 2007
Years
OPERATING PROFIT RATIO
Ratios
11 RETURN ON TOTAL ASSETS RATIO
(Amount in Rs)
Return on Total Assets Ratio
Year Net Profit After Tax Total Assets Ratio
2003 21123474 78572171 027
2004 16125942 88438107 018
2005 16929227 89158391 019
2006 18259580 106385201 017
2007 40586359 129805102 031
Interpretation
This is the ratio between net profit and total assets The ratio indicates the return
on total assets in the form of profits
The net profit is increased in the current year because of the increment in the
income from services due to the increase in Operations amp Maintenance fee The
fixed assets are reduced due to the charge of depreciation and no major
increments in fixed assets but the current assets are increased because of sundry
debtors and that effects an increase in the ratio compared with the last year ie
2006
GRAPHICAL REPRESENTATION
027
018 019017
031
000
005
010
015
020
025
030
035
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON TOTAL ASSETS
Ratios
12 RESERVES amp SURPLUS TO CAPITAL RATIO
(Amount in Rs)
Reserves amp Surplus To Capital Ratio
Year Reserves amp Surplus Capital Ratio
2003 65599299 2079920 31542004 34582554 18719280 1852005 51511781 18719280 2752006 37754372 18719280 2022007 78340733 18719280 419
Interpretation
The ratio is used to reveal the policy pursued by the company a very high ratio
indicates a conservative dividend policy and vice-versa Higher the ratio better
will be the position
The reserves amp surplus is decreased in the year 2006 due to the payment of
dividends and in the year 2007 the profit is increased But the capital is
remaining constant from the year 2004 So the increase in the reserves amp surplus
caused a greater increase in the current yearrsquos ratio compared with the older
GRAPHICAL REPRESENTATION
3154
185 275 202419
-
500
1000
1500
2000
2500
3000
3500
Ratios
2003 2004 2005 2006 2007
Years
RESERVES amp SRUPLUS TO CAPITAL RATIO
Ratios
OVERALL PROFITABILITY RATIOS
13 EARNINGS PER SHARE
(Amount in Rs)
Earnings Per Share
Year Net Profit After Tax No of Equity Shares Ratio
2003 21123474 207992 101562004 16125942 1871928 8612005 16929227 1871928 9042006 18259580 1871928 9752007 40586359 1871928 2168
Interpretation
Earnings per share ratio are used to find out the return that the shareholderrsquos earn
from their shares After charging depreciation and after payment of tax the
remaining amount will be distributed by all the shareholders
Net profit after tax is increased due to the huge increase in the income from
services That is the amount which is available to the shareholders to take There
are 1871928 shares of Rs10- each The share capital is constant from the year
2004 Due to the huge increase in net profit the earnings per share is greaterly
increased in 2007
GRAPHICAL REPRESENTATION
10156
861904 975
2168
000
2000
4000
6000
8000
10000
12000
Ratios
2003 2004 2005 2006 2007
Years
EARNINGS PER SHARE
Ratios
14 PRICE EARNINGS (PE) RATIO
(Amount in Rs)
Price Earning (PE) Ratio
Year Market Price Per Share Earnings Per Share Ratio
2003 3254 10156 0322004 2847 861 3302005 3752 904 4152006 3017 975 3092007 5185 2168 239
Interpretation
The ratio is calculated to make an estimate of application in the value of share of
a company
The market price per share is increased due to the increase in the reserves
amp surplus The earnings per share are also increased greaterly compared
with the last year because of increase in the net profit So the ratio is
decreased compared with the previous year
GRAPHICAL REPRESENTATION
032
330
415
309
239
000
050
100
150
200
250
300
350
400
450
Ratios
2003 2004 2005 2006 2007
Years
PE RATIO
Ratios
15 RETURN ON INVESTMENT
(Amount in Rs)
Return on Investment
Year Net Profit After Tax Share Holders Fund Ratio
2003 21123474 67679219 031
2004 16125942 53301834 03
2005 16929227 70231061 024
2006 18259580 56473652 032
2007 40586359 97060013 042
Interpretation
This is the ratio between net profits and shareholders funds The ratio is
generally calculated as percentage multiplying with 100
The net profit is increased due to the increase in the income from services ant
the shareholders funds are increased because of reserve amp surplus So the ratio
is increased in the current year
GRAPHICAL REPRESENTATION
031 030
024
032
042
000
005
010
015
020
025
030
035
040
045
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON INVESTMENT RATIO
RatioS
DATA COLLECTION
The data can be of two types
Primary Data
Secondary Data
Primary Data
Primary data are those data which is originally collected afresh
Secondary Data
Secondary data are those data which are already collected and stored and which has
been passed through statistical research
In this project Secondary data has been collected from following sources-
Annual report
Books
MIS
Other material and report published by company There are two methods to prepare
the Cash flow Statement
ndirect Method
I
The indirect method (or reconciliation method) starts with net income and converts it
to net cash flow from operating activities In other words the indirect method adjusts
net income for items that affected reported net income but did not affect cash To
compute net cash flow from operating activities non-cash charges in the income
statement are added ack to net income and non-cash credits are deducted
b
Direct Method
Under the direct method the statement of cash flows reports net cash flow from
operating activities as major classes of operating cash receipts (eg cash collected from
customers and cash received from interest and dividends) and cash disbursements (eg
cash paid to suppliers for goods to employees for services to creditors for interest and
to government authorities for taxes)
INDIRECT VERSUS DIRECT METHOD
The most contentious decision that the FASB faced in issuing Statement No 95 was
choosing between the direct method and the indirect method of determining net cash
flow from operating activities Companies lobbied against the direct method urging
adoption of the indirect method Commercial lending officers expressed a strong
preference to the FASB hat the direct method be required
tCF-Page 3 of 5
In Favor of the Direct Method
The principal advantage of the direct method is that it shows operating cash receipts and
payments That is it is more consistent with the objective of a statement of cash flows to
provide information about cash receipts and cash payments than the in-direct method
which does not report operating cash receipts and payments
Supporters of the direct method contend that knowledge of the specific sources of
operating cash receipts and the purposes for which operating cash payments were made
in past periods is useful in estimating future operating cash flows Furthermore in-
formation about amounts of major classes of operating cash receipts and payments is
more useful than information only about their arithmetic sum (the net cash flow from
operating activities) Such information is more revealing of an enterprises ability (1) to
generate sufficient cash from operating activities to pay its debts (2) to reinvest in its
operations and (3) to make distributions to its owners
Many corporate providers of financial statements say that they do not currently collect
information in a manner that allows them to determine amounts such as cash received
from customers or cash paid to suppliers directly from their accounting systems But
supporters of the direct method contend that the incremental cost of assimilating such
operating cash receipts and payments data is not significant
In Favor of the Indirect Method
The principal advantage of the indirect method is that it focuses on the differences
between net income and net cash flow from operating activities That is it provides a
useful link between the statement of cash flows and the income statement and balance
sheet
Many providers of financial statements contend that it is less costly to adjust net income
to net cash flow from operating activities (indirect) than it is to report gross operating
cash receipts and payments (direct) Supporters of the indirect method also state that the
direct method which effectively reports income statement information on a cash rather
than an accrual basis may erroneously suggest that net cash flow from operating
activities is as good as or better than net income as a measure of performance
Special Rules Applying to Direct and Indirect Methods
Companies that use the direct method are required at a
minimum to report separately the following classes of
operating cash receipts and payments
Receipts
1048713 Cash collected from customers (including lessees licensees etc)
1048713 Interest and dividends received
1048713 Other operating cash receipts if any
Payments
1048713 Cash paid to employees and suppliers of goods or services (including
suppliers of
insurance advertising etc)
1048713 Interest paid
1048713 Income taxes paid
1048713 Other operating cash payments if any
Companies using the indirect method are required to disclose separately changes in
inventory receivables and payables to reconcile net income to net cash flow from
operating activities In addition interest paid (net of amount capitalized) and income
taxes paid must be disclosed elsewhere in the financial statements or accompanying
notes
The FASB requires these separate and additional disclosures so that users
may approximate the direct method Also an acceptable alternative presentation
of the in-direct method is to report net cash flow from operating activities as a
single line item in the statement of cash flows and to present the reconciliation
details elsewhere in the financial statements
FINDING OF SUDY
According to cash flow statement of the company The finding of the study are as
follows-
The company has not taken any loans secured or unsecured from companies
firms or other parties
The company has not accepted any deposit from the public during the year
The company is not a sick industrial company
The company has not granted any loan secured or unsecured to company firms
or other parties
The company has paid the entire long term and short term borrowing during the
year
The company has buy back the companyrsquos own share this year
The interest paid in 2008 is more than the
There has been a significant decline in volume over the years from 2001-02
to 2005-06 as can be seen in the graph below
Table 43
The Net sales of Tractor has increased considerably from 2004-05 to 2007-08
This can be mainly attributed to changes in Variable and material costs and in
the price
The Net sale of Tractor has increased considerably from 2004-05 to 2007-08
that is an decrease of Rs7216 per tractor This can be mainly attributed to
changes in
Variable and material costs and in the prices
RECOMMENDATIONS
According to cash flow statement of the company The suggestions of the study
are as follows-
The time durations for training program have to increase
Buy regular review and consultations develop a career progression
which is sensitive to performance and ability
Create an environment where by people are trend developed to enable
The to take advantages of opportunities that arise
The jab can be redesigned where the work man stay in what is normally
the same job but has elements of it changed
The principle amount must be paid in time which can be reducing the
interest the out flow
The purchase of the fixed asset must be made only when there is extreme
requirement
In order to avoid taxes the company should go for more investment
The companyrsquos borrowings should go for more investment
o The company should try to reduce the depreciations as maximum
as possible
CONCLUSION
The study on competency level of employees at ESCORTS PVTLTD gave an
insight about the acceptance of competency mapping by employees
The employees at Ymi welcome the introduction of competency mapping in their
organization as they felt it was very much essential in enhancing their skills and
organizational development
The organization has provided the recourses guidance and support to facilitate the
introduction of competency level easily and develop the employees in such a way
that they can face any kind of challenge
However the level of competency in employees is found to be satisfactory
Providing proper training education and guidance to the employees can enhance
the level
This study was mainly carried out to find out whether thee competency mapping
being followed by the company is effective till date If the competency mapping
and fitment to the organization
By looking at the graphs and tables it is quite that the employees still are not up to
the level of competent pool they still have to be trained and made competent in
order to fill the gap As the organization has just applied the mapping it has to see
to that it meets all the requirements for competency mapping
Therefore the graphs make it quite clear that the potential of the employees is not
up to the mark and ie they are not competent enough to meet the competency-
mapping requirement Hence by further training and counseling this gap can be
closed
This report includes the training requirements of employees and it highlights skills
possessed by each employee and skill required All employees get training so that
skill can be improved and maintain balance between standard performance with
their actual performance to avoid gap
APPENDIX
QUESTIONNAIRE
Consumer Survey
Name _____________________________
Age _____________________________
Sex
Male
Female
Occupation
Businessman
Service man
Professional
Others
Monthly income brackets
Below 15000
15000- 20000
20000-30000
30000 and above
of your savings _________
Do you invest
Yes
No
If yes then where do you invest your money
Bank
Insurance
funds
Others
Why do you made that statement
Return
Risk hedging
Tax benefits
Other reasons (specify) _______
Who influence your cash decision
Relatives and friends
Family members
Advisors experts
You yourself
If no then why
Do not know where to invest
Satisfied with your current investment return
Donrsquot want take risk
Other reasons
__________________________________________________________________
___________________
Do you know about CF statement
Yes
No
If yes then from where you have come to know about an cash statement
Advertisements on newspapers
Friends and relative
Agents experts
Other source
What do you think about cash statement
It means investing only in share market
Constant watch must be kept always
Return is not satisfactory
Other perception
__________________________________________________
Can you recall any cash flow of company
___________________________
Would you want to made CF of an org
Yes
No
If yes then why
_______________________________________________________
If no then why
_______________________________________________________
BIBLIOGRAPHY
List of Books
1 PANDEY IM - FINANCIAL MANAGEMANT
2 KHAN MY AND JAIN PK -FINANCIAL MANAGEMANT
3 SMITH KV ndash MANAGEMANT OF WORKING CAPITAL
3 COMPANY RECORDS
4 JOURNAL
5 REPORTS
WEBLIOGRAPHY
1 wwwescortspvtltdcom
2 wwwgooglecom
LIMITATIONS
The study though conducted to the best of the ability suffers from some
certain limitations There are
The data is secondary one and as such its reliability may be
questioned upon
The time availability for the study is less and as such it hinders thee
progress of the study
Senior officials were rarely approachable
Websites were not giving comprehensive data
Not having face-to-face interaction to get more relevant
information
Analysis and interpretation of data was done on the assumption that
the respondentsrsquo information was online
Information collected was totally subjective
The interviews are done during office hours but could not be done
for the other employees of other
DATA ANALYSIS
ESCORTS PVT LTD
CASH FLOW STRATEMENT
Year Ended Year Ended
30092009 30092008
Rs Crores Rs
Crores
A Cash Flow from Operating Activities
Net profit before tax (1733) 3444
Adjustment for
Loss on sale Provision for diminution in value of Long Term
Investments amp loans to Group Companies 189 4018
Gain on sale of Long Term Investments (122) (9492)
Gain on sale of Asset (013) -
Depreciation 4497 3955
Misc Exp Assets Write off Provisions 808 750
Interest Expense 7222 7999
Dividend Income (002) (001)
Interest Income (2082) -
Operating Profit before working capital changes 8764 10673
Adjustments for
Trade and other Receivables (8817) (12035)
Inventories 1379 (4692)
Trade Payables 6705 19046
Miscellaneous Expenditure (750) (511)
(1483) 1808
Cash Generated from Operations 7281 12481
Direct Taxes (Paid)Refunds (1785) 3166
Net Cash Flow from operating activities 5496 15647
B Cash Flow from Investing Activities
Purchase of Fixed Assets (3095) (2794)
Proceeds from sale of Fixed Assets 086 177
Movement in Loans and Advances (1627) (1644)
Sale of Investments 3233 11452
Short Term Deposits with schedule Banks (231) (1048)
Interest Received 2070 -
Dividend Received 002 001
Net Cash Flow from Investing activities 438 6144
Proceeds from Share Capital amp Securities Premium 11444 -
Proceeds from Long Term Borrowings 8660 -
Less Repayment of Long Term Borrowings (054) (7896)
Proceeds (Repayment) from short term borrowings (net) (22726) -
Interest Paid (7740) (8223)
Net Cash used in financing activities (10416) (16119)
Net Increase(Decrease) in Cash and Cash equivalents (4482) 5672
Cash and Cash equivalents as at 01102008 10565 4893
Cash and Cash equivalents as at 30092009 6083 1056
ANALYSIS OF CASH FLOW
From the cash flow statements of the ESCORT PVTLTDIt can be analyzed
from the two years that the net cash balance of the company has increased
manifold in 30-09-2008 than the year 30-09-2009
The net profit in 30-09-2008 is higher than the 30-09-2009 but due to certain
changes there has been increase in the cash balance
The interest paid this year is ore of the last year which implies that thee
company has not repaid his borrowed capital due to which the interest has got
down
The depreciation has increased but it does not affect cash to an extent as it is a
non-cash item In the head of working capital there is drastic change in the cash
balance in the form of ldquoTrade and other Receivables which has affected the cash
balance
There is outflow of cash for receivables rather than the inflow in the last year
So the net effect is that the cash from operating activities has been decreased
two times from the last year
The company has no accumulated losses as at the end of the financial year ie
September 31 2008
Provision for taxation has been made in accordance with the requirement of AS-
22 issued by Institute of Charted Accountants of India
Pursuant to that current year deferred tax liability have been charged to profit amp
loss account
In opinion of the board of directors of thee company the current assets loans
and advances have a value on realization in the ordinary course of the business at
least equal to the amount stated in the balance sheet and provision for all
liabilities have been made
Balance of sundry debtors creditors loans and advances are subject to confirmation by
the concerned parties
METHOD OF ANALYSIS
1 Data analysis is done using the following statistical tools wherever required in
order to extract meaningful information from the collected data
o Simple percentage and averages
o Bar diagram
o Cone diagram
o Pie diagram
2 The collected data from the questionnaire has been put together in the form of
tables
3 Percentage has been calculated wherever necessary for generalization of the
data
4 Data analysis and interpretation has been done on the basis of primary and
secondary data
5 The findings researches have been recorded based on the analysis
6 The study conducted pertains only to YAMAHA MOTORS INDIA PVTLTD
All bank balances (debitcredit) have been confirmed by the concerned bank
Identified from the available information which has been relied upon by the auditors
The names of small-scale industrial units to whom outstanding for more than
thirty days within agreed terms
The company has 9996 of shareholders in its subsidiary company named as
ESCORTS PVT LTD As at 31-03-2008
So the net effect is that the net cash from investing activities has many more
times than the last year which is negative Now the company has repaid its long
term borrowing more than the last year which has decreased the cash balance by
the little amount
Balance with the schedule banks under the head current amp collection account
amounting to represent funds in transit lying with schedule banks pending
transfer against loan liabilities under the head cash credit amp bill discounting
LIQUIDITY RATIO
1 CURRENT RATIO
(Amount in Rs)
Current Ratio
Year Current Assets Current Liabilities Ratio
2003 58574151 7903952 7412004 69765346 31884616 2192005 72021081 16065621 4482006 91328208 47117199 1942007 115642068 30266661 382
Interpretation
As a rule the current ratio with 21 (or) more is considered as satisfactory
position of the firm
When compared with 2006 there is an increase in the provision for tax because
the debtors are raised and for that the provision is created The current liabilities
majorly included Lanco Group of company for consultancy additional services
The sundry debtors have increased due to the increase to corporate taxes
In the year 2006 the cash and bank balance is reduced because that is used for
payment of dividends In the year 2007 the loans and advances include majorly
the advances to employees and deposits to government The loans and advances
reduced because the employees set off their claims The other current assets
include the interest attained from the deposits The deposits reduced due to the
declaration of dividends So the other current assets decreased
The huge increase in sundry debtors resulted an increase in the ratio which is
above the benchmark level of 21 which shows the comfortable position of the
firm
GRAPHICAL REPRESENTATION
741
219
448
194
382
000
100
200
300
400
500
600
700
800
Ratio
2003 2004 2005 2006 2007
Years
CURRENT RATIO
Ratio
2 QUICK RATIO
(Amount
in Rs)
Quick Ratio
Year Quick Assets Current Liabilities Ratio
2003 58574151 7903952 741
2004 52470336 31884616 165
2005 69883268 16065620 435
2006 89433596 47117199 19
2007 115431868 30266661 381
Interpretation
Quick assets are those assets which can be converted into cash with in a short
period of time say to six months So here the sundry debtors which are with the
long period does not include in the quick assets
Compare with 2006 the Quick ratio is increased because the sundry debtors are
increased due to the increase in the corporate tax and for that the provision
created is also increased So the ratio is also increased with the 2006
GRAPHICAL REPRESENTATION
741
165
435
190
381
000
100
200
300
400
500
600
700
800
Ratio
2003 2004 2005 2006 2007
Years
QUICK RATIO
Ratios
3 ABOSULTE LIQUIDITY RATIO
(Amount
in Rs)
Absolute Cash Ratio
Year Absolute Liquid Assets Current Liabilities Ratio
2003 31004027 7903952 392
2004 10859778 31884616 034
2005 39466542 16065620 246
2006 53850852 47117199 114
2007 35649070 30266661 118
Interpretation
The current assets which are ready in the form of cash are considered as absolute
liquid assets Here the cash and bank balance and the interest on fixed assts are
absolute liquid assets
In the year 2006 the cash and bank balance is decreased due to decrease in the
deposits and the current liabilities are also reduced because of the payment of
dividend That causes a slight increase in the current yearrsquos ratio
GRAPHICAL REPRESENTATION
392
034
246
114 118
0
05
1
15
2
25
3
35
4
Ratios
2003 2004 2005 2006 2007
Years
ABSOLUTE CASH RATIO
Ratios
LEVERAGE RATIOS
4 PROPRIETORY RATIO
(Amount
in Rs)
Proprietory Ratio
Year Share Holders Funds Total Assets Ratio
2003 67679219 78572171 086
2004 53301834 88438107 06
2005 70231061 89158391 079
2006 56473652 106385201 053
2007 97060013 129805102 075
Interpretation
The proprietary ratio establishes the relationship between shareholders funds to
total assets It determines the long-term solvency of the firm This ratio indicates
the extent to which the assets of the company can be lost without affecting the
interest of the company
There is no increase in the capital from the year2004 The share holderrsquos funds
include capital and reserves and surplus The reserves and surplus is increased
due to the increase in balance in profit and loss account which is caused by the
increase of income from services
Total assets includes fixed and current assets The fixed assets are reduced
because of the depreciation and there are no major increments in the fixed assets
The current assets are increased compared with the year 2006 Total assets are
also increased than precious year which resulted an increase in the ratio than old
GRAPHICAL REPRESENTATION
086
060
079
053
075
000
010
020
030
040
050
060
070
080
090
Ratios
2003 2004 2005 2006 2007
Years
PROPRIETORY RATIO
Ratios
ACTIVITY RATIOS
5 WORKING CAPITAL TURNOVER RATIO
(Amount
in Rs)
Working Capital Turnover Ratio
Year Income From Services Working Capital Ratio
2003 36309834 50670199 0722004 53899084 37880730 1422005 72728759 55355460 1312006 55550649 44211009 1262007 96654902 85375407 113
Interpretation
Income from services is greatly increased due to the extra invoice for Operations
amp Maintenance fee and the working capital is also increased greater due to the
increase in from services because the huge increase in current assets
The income from services is raised and the current assets are also raised together
resulted in the decrease of the ratio of 2007 compared with 2006
GRAPHICAL REPRESENTATION
072
142 131126
113
000
020
040
060
080
100
120
140
160
Ratio
2003 2004 2005 2006 2007
Years
WORKING CAPITAL TURNOVER RATIO
Ratio
6 FIXED ASSETS TURNOVER RATIO
(Amount in Rs)
Fixed Assets Turnover Ratio
Year Income From Services Net Fixed Assets Ratio
2003 36309834 28834317 126
2004 53899084 29568279 182
2005 72728759 17137310 424
2006 55550649 15056993 369
2007 96654902 14163034 682
Interpretation
Fixed assets are used in the business for producing the goods to be sold This
ratio shows the firmrsquos ability in generating sales from all financial resources
committed to total assets The ratio indicates the account of one rupee
investment in fixed assets
The income from services is greaterly increased in the current year due to the
increase in the Operations amp Maintenance fee due to the increase in extra invoice
and the net fixed assets are reduced because of the increased charge of
depreciation Finally that effected a huge increase in the ratio compared with the
previous yearrsquos ratio
GRAPHICAL REPRSENTATION
126182
424 369
682
000
100
200
300
400
500
600
700
Ratios
2003 2004 2005 2006 2007
Years
FIXED ASSETS TURNOVER RATIO
Ratios
7 CAPITAL TURNOVER RATIO
(Amount
in Rs)
Capital Turnover Ratio
Year Income From Services Capital Employed Ratio
2003 36309834 37175892 0982004 53899084 53301834 1012005 72728759 70231061 1042006 55550649 56473652 0982007 96654902 97060013 100
Interpretation
This is another ratio to judge the efficiency and effectiveness of the company
like profitability ratio
The income from services is greaterly increased compared with the previous year
and the total capital employed includes capital and reserves amp surplus Due to
huge increase in the net profit the capital employed is also increased along with
income from services Both are effected in the increment of the ratio of current
year
GRAPHICAL REPRESENTATION
098
101
104
098
100
094095096097098099100101102103104
Ratios
2003 2004 2005 2006 2007
Years
CAPITAL TURNOVER RATIO
Ratios
8 CURRENT ASSETS TO FIXED ASSETS RATIO
(Amount
in Rs)
Current Assets To Fixed Assets Ratio
Year Current Assets Fixed Assets Ratio
2003 58524151 19998020 2932004 69765346 18672761 3742005 72021081 17137310 4202006 91328208 15056993 6072007 115642068 14163034 817
Interpretation
Current assets are increased due to the increase in the sundry debtors and the net
fixed assets of the firm are decreased due to the charge of depreciation and there
is no major increment in the fixed assets
The increment in current assets and the decrease in fixed assets resulted an
increase in the ratio compared with the previous year
GRAPHICAL REPRESENTATION
293374
420
607
817
000
100
200
300
400
500
600
700
800
900
Ratios
2003 2004 2005 2006 2007
Years
CURRENT ASSETS TO FIXED ASSETS RATIO
Ratios
PROFITABILITY RATIOS
GENERAL PROFITABILITY RATIOS
9 NET PROFIT RATIO
(Amount in Rs)
Net Profit Ratio
Year Net Profit After Tax Income from Services Ratio
2003 21123474 36039834 059
2004 16125942 53899084 030
2005 16929227 72728759 023
2006 18259580 55550649 033
2007 40586359 96654902 042
Interpretation
The net profit ratio is the overall measure of the firmrsquos ability to turn each rupee
of income from services in net profit If the net margin is inadequate the firm
will fail to achieve return on shareholderrsquos funds High net profit ratio will help
the firm service in the fall of income from services rise in cost of production or
declining demand
The net profit is increased because the income from services is increased The
increment resulted a slight increase in 2007 ratio compared with the year 2006
GRAPHICAL REPRESENTATION
059
030
023
033
042
000
010
020
030
040
050
060
Ratios
2003 2004 2005 2006 2007
Years
NET PROFIT RATIO
Ratios
10 OPERATING PROFIT
(Amount in Rs)
Operating Profit
Year Operating Profit Income From Services Ratio
2003 36094877 36309834 099
2004 27576814 53899084 051
2005 29540599 72728759 041
2006 31586718 55550649 057
2007 67192677 96654902 070
Interpretation
The operating profit ratio is used to measure the relationship between net profits
and sales of a firm Depending on the concept it will decide
The operating profit ratio is increased compared with the last year The earnings
are increased due to the increase in the income from services because of
Operations amp Maintenance fee So the ratio is increased slightly compared with
the previous year
GRAPHICAL REPRESENTATION
099
051
041
057
070
000
010
020
030
040
050060
070
080
090
100
Ratios
2003 2004 2005 2006 2007
Years
OPERATING PROFIT RATIO
Ratios
11 RETURN ON TOTAL ASSETS RATIO
(Amount in Rs)
Return on Total Assets Ratio
Year Net Profit After Tax Total Assets Ratio
2003 21123474 78572171 027
2004 16125942 88438107 018
2005 16929227 89158391 019
2006 18259580 106385201 017
2007 40586359 129805102 031
Interpretation
This is the ratio between net profit and total assets The ratio indicates the return
on total assets in the form of profits
The net profit is increased in the current year because of the increment in the
income from services due to the increase in Operations amp Maintenance fee The
fixed assets are reduced due to the charge of depreciation and no major
increments in fixed assets but the current assets are increased because of sundry
debtors and that effects an increase in the ratio compared with the last year ie
2006
GRAPHICAL REPRESENTATION
027
018 019017
031
000
005
010
015
020
025
030
035
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON TOTAL ASSETS
Ratios
12 RESERVES amp SURPLUS TO CAPITAL RATIO
(Amount in Rs)
Reserves amp Surplus To Capital Ratio
Year Reserves amp Surplus Capital Ratio
2003 65599299 2079920 31542004 34582554 18719280 1852005 51511781 18719280 2752006 37754372 18719280 2022007 78340733 18719280 419
Interpretation
The ratio is used to reveal the policy pursued by the company a very high ratio
indicates a conservative dividend policy and vice-versa Higher the ratio better
will be the position
The reserves amp surplus is decreased in the year 2006 due to the payment of
dividends and in the year 2007 the profit is increased But the capital is
remaining constant from the year 2004 So the increase in the reserves amp surplus
caused a greater increase in the current yearrsquos ratio compared with the older
GRAPHICAL REPRESENTATION
3154
185 275 202419
-
500
1000
1500
2000
2500
3000
3500
Ratios
2003 2004 2005 2006 2007
Years
RESERVES amp SRUPLUS TO CAPITAL RATIO
Ratios
OVERALL PROFITABILITY RATIOS
13 EARNINGS PER SHARE
(Amount in Rs)
Earnings Per Share
Year Net Profit After Tax No of Equity Shares Ratio
2003 21123474 207992 101562004 16125942 1871928 8612005 16929227 1871928 9042006 18259580 1871928 9752007 40586359 1871928 2168
Interpretation
Earnings per share ratio are used to find out the return that the shareholderrsquos earn
from their shares After charging depreciation and after payment of tax the
remaining amount will be distributed by all the shareholders
Net profit after tax is increased due to the huge increase in the income from
services That is the amount which is available to the shareholders to take There
are 1871928 shares of Rs10- each The share capital is constant from the year
2004 Due to the huge increase in net profit the earnings per share is greaterly
increased in 2007
GRAPHICAL REPRESENTATION
10156
861904 975
2168
000
2000
4000
6000
8000
10000
12000
Ratios
2003 2004 2005 2006 2007
Years
EARNINGS PER SHARE
Ratios
14 PRICE EARNINGS (PE) RATIO
(Amount in Rs)
Price Earning (PE) Ratio
Year Market Price Per Share Earnings Per Share Ratio
2003 3254 10156 0322004 2847 861 3302005 3752 904 4152006 3017 975 3092007 5185 2168 239
Interpretation
The ratio is calculated to make an estimate of application in the value of share of
a company
The market price per share is increased due to the increase in the reserves
amp surplus The earnings per share are also increased greaterly compared
with the last year because of increase in the net profit So the ratio is
decreased compared with the previous year
GRAPHICAL REPRESENTATION
032
330
415
309
239
000
050
100
150
200
250
300
350
400
450
Ratios
2003 2004 2005 2006 2007
Years
PE RATIO
Ratios
15 RETURN ON INVESTMENT
(Amount in Rs)
Return on Investment
Year Net Profit After Tax Share Holders Fund Ratio
2003 21123474 67679219 031
2004 16125942 53301834 03
2005 16929227 70231061 024
2006 18259580 56473652 032
2007 40586359 97060013 042
Interpretation
This is the ratio between net profits and shareholders funds The ratio is
generally calculated as percentage multiplying with 100
The net profit is increased due to the increase in the income from services ant
the shareholders funds are increased because of reserve amp surplus So the ratio
is increased in the current year
GRAPHICAL REPRESENTATION
031 030
024
032
042
000
005
010
015
020
025
030
035
040
045
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON INVESTMENT RATIO
RatioS
DATA COLLECTION
The data can be of two types
Primary Data
Secondary Data
Primary Data
Primary data are those data which is originally collected afresh
Secondary Data
Secondary data are those data which are already collected and stored and which has
been passed through statistical research
In this project Secondary data has been collected from following sources-
Annual report
Books
MIS
Other material and report published by company There are two methods to prepare
the Cash flow Statement
ndirect Method
I
The indirect method (or reconciliation method) starts with net income and converts it
to net cash flow from operating activities In other words the indirect method adjusts
net income for items that affected reported net income but did not affect cash To
compute net cash flow from operating activities non-cash charges in the income
statement are added ack to net income and non-cash credits are deducted
b
Direct Method
Under the direct method the statement of cash flows reports net cash flow from
operating activities as major classes of operating cash receipts (eg cash collected from
customers and cash received from interest and dividends) and cash disbursements (eg
cash paid to suppliers for goods to employees for services to creditors for interest and
to government authorities for taxes)
INDIRECT VERSUS DIRECT METHOD
The most contentious decision that the FASB faced in issuing Statement No 95 was
choosing between the direct method and the indirect method of determining net cash
flow from operating activities Companies lobbied against the direct method urging
adoption of the indirect method Commercial lending officers expressed a strong
preference to the FASB hat the direct method be required
tCF-Page 3 of 5
In Favor of the Direct Method
The principal advantage of the direct method is that it shows operating cash receipts and
payments That is it is more consistent with the objective of a statement of cash flows to
provide information about cash receipts and cash payments than the in-direct method
which does not report operating cash receipts and payments
Supporters of the direct method contend that knowledge of the specific sources of
operating cash receipts and the purposes for which operating cash payments were made
in past periods is useful in estimating future operating cash flows Furthermore in-
formation about amounts of major classes of operating cash receipts and payments is
more useful than information only about their arithmetic sum (the net cash flow from
operating activities) Such information is more revealing of an enterprises ability (1) to
generate sufficient cash from operating activities to pay its debts (2) to reinvest in its
operations and (3) to make distributions to its owners
Many corporate providers of financial statements say that they do not currently collect
information in a manner that allows them to determine amounts such as cash received
from customers or cash paid to suppliers directly from their accounting systems But
supporters of the direct method contend that the incremental cost of assimilating such
operating cash receipts and payments data is not significant
In Favor of the Indirect Method
The principal advantage of the indirect method is that it focuses on the differences
between net income and net cash flow from operating activities That is it provides a
useful link between the statement of cash flows and the income statement and balance
sheet
Many providers of financial statements contend that it is less costly to adjust net income
to net cash flow from operating activities (indirect) than it is to report gross operating
cash receipts and payments (direct) Supporters of the indirect method also state that the
direct method which effectively reports income statement information on a cash rather
than an accrual basis may erroneously suggest that net cash flow from operating
activities is as good as or better than net income as a measure of performance
Special Rules Applying to Direct and Indirect Methods
Companies that use the direct method are required at a
minimum to report separately the following classes of
operating cash receipts and payments
Receipts
1048713 Cash collected from customers (including lessees licensees etc)
1048713 Interest and dividends received
1048713 Other operating cash receipts if any
Payments
1048713 Cash paid to employees and suppliers of goods or services (including
suppliers of
insurance advertising etc)
1048713 Interest paid
1048713 Income taxes paid
1048713 Other operating cash payments if any
Companies using the indirect method are required to disclose separately changes in
inventory receivables and payables to reconcile net income to net cash flow from
operating activities In addition interest paid (net of amount capitalized) and income
taxes paid must be disclosed elsewhere in the financial statements or accompanying
notes
The FASB requires these separate and additional disclosures so that users
may approximate the direct method Also an acceptable alternative presentation
of the in-direct method is to report net cash flow from operating activities as a
single line item in the statement of cash flows and to present the reconciliation
details elsewhere in the financial statements
FINDING OF SUDY
According to cash flow statement of the company The finding of the study are as
follows-
The company has not taken any loans secured or unsecured from companies
firms or other parties
The company has not accepted any deposit from the public during the year
The company is not a sick industrial company
The company has not granted any loan secured or unsecured to company firms
or other parties
The company has paid the entire long term and short term borrowing during the
year
The company has buy back the companyrsquos own share this year
The interest paid in 2008 is more than the
There has been a significant decline in volume over the years from 2001-02
to 2005-06 as can be seen in the graph below
Table 43
The Net sales of Tractor has increased considerably from 2004-05 to 2007-08
This can be mainly attributed to changes in Variable and material costs and in
the price
The Net sale of Tractor has increased considerably from 2004-05 to 2007-08
that is an decrease of Rs7216 per tractor This can be mainly attributed to
changes in
Variable and material costs and in the prices
RECOMMENDATIONS
According to cash flow statement of the company The suggestions of the study
are as follows-
The time durations for training program have to increase
Buy regular review and consultations develop a career progression
which is sensitive to performance and ability
Create an environment where by people are trend developed to enable
The to take advantages of opportunities that arise
The jab can be redesigned where the work man stay in what is normally
the same job but has elements of it changed
The principle amount must be paid in time which can be reducing the
interest the out flow
The purchase of the fixed asset must be made only when there is extreme
requirement
In order to avoid taxes the company should go for more investment
The companyrsquos borrowings should go for more investment
o The company should try to reduce the depreciations as maximum
as possible
CONCLUSION
The study on competency level of employees at ESCORTS PVTLTD gave an
insight about the acceptance of competency mapping by employees
The employees at Ymi welcome the introduction of competency mapping in their
organization as they felt it was very much essential in enhancing their skills and
organizational development
The organization has provided the recourses guidance and support to facilitate the
introduction of competency level easily and develop the employees in such a way
that they can face any kind of challenge
However the level of competency in employees is found to be satisfactory
Providing proper training education and guidance to the employees can enhance
the level
This study was mainly carried out to find out whether thee competency mapping
being followed by the company is effective till date If the competency mapping
and fitment to the organization
By looking at the graphs and tables it is quite that the employees still are not up to
the level of competent pool they still have to be trained and made competent in
order to fill the gap As the organization has just applied the mapping it has to see
to that it meets all the requirements for competency mapping
Therefore the graphs make it quite clear that the potential of the employees is not
up to the mark and ie they are not competent enough to meet the competency-
mapping requirement Hence by further training and counseling this gap can be
closed
This report includes the training requirements of employees and it highlights skills
possessed by each employee and skill required All employees get training so that
skill can be improved and maintain balance between standard performance with
their actual performance to avoid gap
APPENDIX
QUESTIONNAIRE
Consumer Survey
Name _____________________________
Age _____________________________
Sex
Male
Female
Occupation
Businessman
Service man
Professional
Others
Monthly income brackets
Below 15000
15000- 20000
20000-30000
30000 and above
of your savings _________
Do you invest
Yes
No
If yes then where do you invest your money
Bank
Insurance
funds
Others
Why do you made that statement
Return
Risk hedging
Tax benefits
Other reasons (specify) _______
Who influence your cash decision
Relatives and friends
Family members
Advisors experts
You yourself
If no then why
Do not know where to invest
Satisfied with your current investment return
Donrsquot want take risk
Other reasons
__________________________________________________________________
___________________
Do you know about CF statement
Yes
No
If yes then from where you have come to know about an cash statement
Advertisements on newspapers
Friends and relative
Agents experts
Other source
What do you think about cash statement
It means investing only in share market
Constant watch must be kept always
Return is not satisfactory
Other perception
__________________________________________________
Can you recall any cash flow of company
___________________________
Would you want to made CF of an org
Yes
No
If yes then why
_______________________________________________________
If no then why
_______________________________________________________
BIBLIOGRAPHY
List of Books
1 PANDEY IM - FINANCIAL MANAGEMANT
2 KHAN MY AND JAIN PK -FINANCIAL MANAGEMANT
3 SMITH KV ndash MANAGEMANT OF WORKING CAPITAL
3 COMPANY RECORDS
4 JOURNAL
5 REPORTS
WEBLIOGRAPHY
1 wwwescortspvtltdcom
2 wwwgooglecom
DATA ANALYSIS
ESCORTS PVT LTD
CASH FLOW STRATEMENT
Year Ended Year Ended
30092009 30092008
Rs Crores Rs
Crores
A Cash Flow from Operating Activities
Net profit before tax (1733) 3444
Adjustment for
Loss on sale Provision for diminution in value of Long Term
Investments amp loans to Group Companies 189 4018
Gain on sale of Long Term Investments (122) (9492)
Gain on sale of Asset (013) -
Depreciation 4497 3955
Misc Exp Assets Write off Provisions 808 750
Interest Expense 7222 7999
Dividend Income (002) (001)
Interest Income (2082) -
Operating Profit before working capital changes 8764 10673
Adjustments for
Trade and other Receivables (8817) (12035)
Inventories 1379 (4692)
Trade Payables 6705 19046
Miscellaneous Expenditure (750) (511)
(1483) 1808
Cash Generated from Operations 7281 12481
Direct Taxes (Paid)Refunds (1785) 3166
Net Cash Flow from operating activities 5496 15647
B Cash Flow from Investing Activities
Purchase of Fixed Assets (3095) (2794)
Proceeds from sale of Fixed Assets 086 177
Movement in Loans and Advances (1627) (1644)
Sale of Investments 3233 11452
Short Term Deposits with schedule Banks (231) (1048)
Interest Received 2070 -
Dividend Received 002 001
Net Cash Flow from Investing activities 438 6144
Proceeds from Share Capital amp Securities Premium 11444 -
Proceeds from Long Term Borrowings 8660 -
Less Repayment of Long Term Borrowings (054) (7896)
Proceeds (Repayment) from short term borrowings (net) (22726) -
Interest Paid (7740) (8223)
Net Cash used in financing activities (10416) (16119)
Net Increase(Decrease) in Cash and Cash equivalents (4482) 5672
Cash and Cash equivalents as at 01102008 10565 4893
Cash and Cash equivalents as at 30092009 6083 1056
ANALYSIS OF CASH FLOW
From the cash flow statements of the ESCORT PVTLTDIt can be analyzed
from the two years that the net cash balance of the company has increased
manifold in 30-09-2008 than the year 30-09-2009
The net profit in 30-09-2008 is higher than the 30-09-2009 but due to certain
changes there has been increase in the cash balance
The interest paid this year is ore of the last year which implies that thee
company has not repaid his borrowed capital due to which the interest has got
down
The depreciation has increased but it does not affect cash to an extent as it is a
non-cash item In the head of working capital there is drastic change in the cash
balance in the form of ldquoTrade and other Receivables which has affected the cash
balance
There is outflow of cash for receivables rather than the inflow in the last year
So the net effect is that the cash from operating activities has been decreased
two times from the last year
The company has no accumulated losses as at the end of the financial year ie
September 31 2008
Provision for taxation has been made in accordance with the requirement of AS-
22 issued by Institute of Charted Accountants of India
Pursuant to that current year deferred tax liability have been charged to profit amp
loss account
In opinion of the board of directors of thee company the current assets loans
and advances have a value on realization in the ordinary course of the business at
least equal to the amount stated in the balance sheet and provision for all
liabilities have been made
Balance of sundry debtors creditors loans and advances are subject to confirmation by
the concerned parties
METHOD OF ANALYSIS
1 Data analysis is done using the following statistical tools wherever required in
order to extract meaningful information from the collected data
o Simple percentage and averages
o Bar diagram
o Cone diagram
o Pie diagram
2 The collected data from the questionnaire has been put together in the form of
tables
3 Percentage has been calculated wherever necessary for generalization of the
data
4 Data analysis and interpretation has been done on the basis of primary and
secondary data
5 The findings researches have been recorded based on the analysis
6 The study conducted pertains only to YAMAHA MOTORS INDIA PVTLTD
All bank balances (debitcredit) have been confirmed by the concerned bank
Identified from the available information which has been relied upon by the auditors
The names of small-scale industrial units to whom outstanding for more than
thirty days within agreed terms
The company has 9996 of shareholders in its subsidiary company named as
ESCORTS PVT LTD As at 31-03-2008
So the net effect is that the net cash from investing activities has many more
times than the last year which is negative Now the company has repaid its long
term borrowing more than the last year which has decreased the cash balance by
the little amount
Balance with the schedule banks under the head current amp collection account
amounting to represent funds in transit lying with schedule banks pending
transfer against loan liabilities under the head cash credit amp bill discounting
LIQUIDITY RATIO
1 CURRENT RATIO
(Amount in Rs)
Current Ratio
Year Current Assets Current Liabilities Ratio
2003 58574151 7903952 7412004 69765346 31884616 2192005 72021081 16065621 4482006 91328208 47117199 1942007 115642068 30266661 382
Interpretation
As a rule the current ratio with 21 (or) more is considered as satisfactory
position of the firm
When compared with 2006 there is an increase in the provision for tax because
the debtors are raised and for that the provision is created The current liabilities
majorly included Lanco Group of company for consultancy additional services
The sundry debtors have increased due to the increase to corporate taxes
In the year 2006 the cash and bank balance is reduced because that is used for
payment of dividends In the year 2007 the loans and advances include majorly
the advances to employees and deposits to government The loans and advances
reduced because the employees set off their claims The other current assets
include the interest attained from the deposits The deposits reduced due to the
declaration of dividends So the other current assets decreased
The huge increase in sundry debtors resulted an increase in the ratio which is
above the benchmark level of 21 which shows the comfortable position of the
firm
GRAPHICAL REPRESENTATION
741
219
448
194
382
000
100
200
300
400
500
600
700
800
Ratio
2003 2004 2005 2006 2007
Years
CURRENT RATIO
Ratio
2 QUICK RATIO
(Amount
in Rs)
Quick Ratio
Year Quick Assets Current Liabilities Ratio
2003 58574151 7903952 741
2004 52470336 31884616 165
2005 69883268 16065620 435
2006 89433596 47117199 19
2007 115431868 30266661 381
Interpretation
Quick assets are those assets which can be converted into cash with in a short
period of time say to six months So here the sundry debtors which are with the
long period does not include in the quick assets
Compare with 2006 the Quick ratio is increased because the sundry debtors are
increased due to the increase in the corporate tax and for that the provision
created is also increased So the ratio is also increased with the 2006
GRAPHICAL REPRESENTATION
741
165
435
190
381
000
100
200
300
400
500
600
700
800
Ratio
2003 2004 2005 2006 2007
Years
QUICK RATIO
Ratios
3 ABOSULTE LIQUIDITY RATIO
(Amount
in Rs)
Absolute Cash Ratio
Year Absolute Liquid Assets Current Liabilities Ratio
2003 31004027 7903952 392
2004 10859778 31884616 034
2005 39466542 16065620 246
2006 53850852 47117199 114
2007 35649070 30266661 118
Interpretation
The current assets which are ready in the form of cash are considered as absolute
liquid assets Here the cash and bank balance and the interest on fixed assts are
absolute liquid assets
In the year 2006 the cash and bank balance is decreased due to decrease in the
deposits and the current liabilities are also reduced because of the payment of
dividend That causes a slight increase in the current yearrsquos ratio
GRAPHICAL REPRESENTATION
392
034
246
114 118
0
05
1
15
2
25
3
35
4
Ratios
2003 2004 2005 2006 2007
Years
ABSOLUTE CASH RATIO
Ratios
LEVERAGE RATIOS
4 PROPRIETORY RATIO
(Amount
in Rs)
Proprietory Ratio
Year Share Holders Funds Total Assets Ratio
2003 67679219 78572171 086
2004 53301834 88438107 06
2005 70231061 89158391 079
2006 56473652 106385201 053
2007 97060013 129805102 075
Interpretation
The proprietary ratio establishes the relationship between shareholders funds to
total assets It determines the long-term solvency of the firm This ratio indicates
the extent to which the assets of the company can be lost without affecting the
interest of the company
There is no increase in the capital from the year2004 The share holderrsquos funds
include capital and reserves and surplus The reserves and surplus is increased
due to the increase in balance in profit and loss account which is caused by the
increase of income from services
Total assets includes fixed and current assets The fixed assets are reduced
because of the depreciation and there are no major increments in the fixed assets
The current assets are increased compared with the year 2006 Total assets are
also increased than precious year which resulted an increase in the ratio than old
GRAPHICAL REPRESENTATION
086
060
079
053
075
000
010
020
030
040
050
060
070
080
090
Ratios
2003 2004 2005 2006 2007
Years
PROPRIETORY RATIO
Ratios
ACTIVITY RATIOS
5 WORKING CAPITAL TURNOVER RATIO
(Amount
in Rs)
Working Capital Turnover Ratio
Year Income From Services Working Capital Ratio
2003 36309834 50670199 0722004 53899084 37880730 1422005 72728759 55355460 1312006 55550649 44211009 1262007 96654902 85375407 113
Interpretation
Income from services is greatly increased due to the extra invoice for Operations
amp Maintenance fee and the working capital is also increased greater due to the
increase in from services because the huge increase in current assets
The income from services is raised and the current assets are also raised together
resulted in the decrease of the ratio of 2007 compared with 2006
GRAPHICAL REPRESENTATION
072
142 131126
113
000
020
040
060
080
100
120
140
160
Ratio
2003 2004 2005 2006 2007
Years
WORKING CAPITAL TURNOVER RATIO
Ratio
6 FIXED ASSETS TURNOVER RATIO
(Amount in Rs)
Fixed Assets Turnover Ratio
Year Income From Services Net Fixed Assets Ratio
2003 36309834 28834317 126
2004 53899084 29568279 182
2005 72728759 17137310 424
2006 55550649 15056993 369
2007 96654902 14163034 682
Interpretation
Fixed assets are used in the business for producing the goods to be sold This
ratio shows the firmrsquos ability in generating sales from all financial resources
committed to total assets The ratio indicates the account of one rupee
investment in fixed assets
The income from services is greaterly increased in the current year due to the
increase in the Operations amp Maintenance fee due to the increase in extra invoice
and the net fixed assets are reduced because of the increased charge of
depreciation Finally that effected a huge increase in the ratio compared with the
previous yearrsquos ratio
GRAPHICAL REPRSENTATION
126182
424 369
682
000
100
200
300
400
500
600
700
Ratios
2003 2004 2005 2006 2007
Years
FIXED ASSETS TURNOVER RATIO
Ratios
7 CAPITAL TURNOVER RATIO
(Amount
in Rs)
Capital Turnover Ratio
Year Income From Services Capital Employed Ratio
2003 36309834 37175892 0982004 53899084 53301834 1012005 72728759 70231061 1042006 55550649 56473652 0982007 96654902 97060013 100
Interpretation
This is another ratio to judge the efficiency and effectiveness of the company
like profitability ratio
The income from services is greaterly increased compared with the previous year
and the total capital employed includes capital and reserves amp surplus Due to
huge increase in the net profit the capital employed is also increased along with
income from services Both are effected in the increment of the ratio of current
year
GRAPHICAL REPRESENTATION
098
101
104
098
100
094095096097098099100101102103104
Ratios
2003 2004 2005 2006 2007
Years
CAPITAL TURNOVER RATIO
Ratios
8 CURRENT ASSETS TO FIXED ASSETS RATIO
(Amount
in Rs)
Current Assets To Fixed Assets Ratio
Year Current Assets Fixed Assets Ratio
2003 58524151 19998020 2932004 69765346 18672761 3742005 72021081 17137310 4202006 91328208 15056993 6072007 115642068 14163034 817
Interpretation
Current assets are increased due to the increase in the sundry debtors and the net
fixed assets of the firm are decreased due to the charge of depreciation and there
is no major increment in the fixed assets
The increment in current assets and the decrease in fixed assets resulted an
increase in the ratio compared with the previous year
GRAPHICAL REPRESENTATION
293374
420
607
817
000
100
200
300
400
500
600
700
800
900
Ratios
2003 2004 2005 2006 2007
Years
CURRENT ASSETS TO FIXED ASSETS RATIO
Ratios
PROFITABILITY RATIOS
GENERAL PROFITABILITY RATIOS
9 NET PROFIT RATIO
(Amount in Rs)
Net Profit Ratio
Year Net Profit After Tax Income from Services Ratio
2003 21123474 36039834 059
2004 16125942 53899084 030
2005 16929227 72728759 023
2006 18259580 55550649 033
2007 40586359 96654902 042
Interpretation
The net profit ratio is the overall measure of the firmrsquos ability to turn each rupee
of income from services in net profit If the net margin is inadequate the firm
will fail to achieve return on shareholderrsquos funds High net profit ratio will help
the firm service in the fall of income from services rise in cost of production or
declining demand
The net profit is increased because the income from services is increased The
increment resulted a slight increase in 2007 ratio compared with the year 2006
GRAPHICAL REPRESENTATION
059
030
023
033
042
000
010
020
030
040
050
060
Ratios
2003 2004 2005 2006 2007
Years
NET PROFIT RATIO
Ratios
10 OPERATING PROFIT
(Amount in Rs)
Operating Profit
Year Operating Profit Income From Services Ratio
2003 36094877 36309834 099
2004 27576814 53899084 051
2005 29540599 72728759 041
2006 31586718 55550649 057
2007 67192677 96654902 070
Interpretation
The operating profit ratio is used to measure the relationship between net profits
and sales of a firm Depending on the concept it will decide
The operating profit ratio is increased compared with the last year The earnings
are increased due to the increase in the income from services because of
Operations amp Maintenance fee So the ratio is increased slightly compared with
the previous year
GRAPHICAL REPRESENTATION
099
051
041
057
070
000
010
020
030
040
050060
070
080
090
100
Ratios
2003 2004 2005 2006 2007
Years
OPERATING PROFIT RATIO
Ratios
11 RETURN ON TOTAL ASSETS RATIO
(Amount in Rs)
Return on Total Assets Ratio
Year Net Profit After Tax Total Assets Ratio
2003 21123474 78572171 027
2004 16125942 88438107 018
2005 16929227 89158391 019
2006 18259580 106385201 017
2007 40586359 129805102 031
Interpretation
This is the ratio between net profit and total assets The ratio indicates the return
on total assets in the form of profits
The net profit is increased in the current year because of the increment in the
income from services due to the increase in Operations amp Maintenance fee The
fixed assets are reduced due to the charge of depreciation and no major
increments in fixed assets but the current assets are increased because of sundry
debtors and that effects an increase in the ratio compared with the last year ie
2006
GRAPHICAL REPRESENTATION
027
018 019017
031
000
005
010
015
020
025
030
035
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON TOTAL ASSETS
Ratios
12 RESERVES amp SURPLUS TO CAPITAL RATIO
(Amount in Rs)
Reserves amp Surplus To Capital Ratio
Year Reserves amp Surplus Capital Ratio
2003 65599299 2079920 31542004 34582554 18719280 1852005 51511781 18719280 2752006 37754372 18719280 2022007 78340733 18719280 419
Interpretation
The ratio is used to reveal the policy pursued by the company a very high ratio
indicates a conservative dividend policy and vice-versa Higher the ratio better
will be the position
The reserves amp surplus is decreased in the year 2006 due to the payment of
dividends and in the year 2007 the profit is increased But the capital is
remaining constant from the year 2004 So the increase in the reserves amp surplus
caused a greater increase in the current yearrsquos ratio compared with the older
GRAPHICAL REPRESENTATION
3154
185 275 202419
-
500
1000
1500
2000
2500
3000
3500
Ratios
2003 2004 2005 2006 2007
Years
RESERVES amp SRUPLUS TO CAPITAL RATIO
Ratios
OVERALL PROFITABILITY RATIOS
13 EARNINGS PER SHARE
(Amount in Rs)
Earnings Per Share
Year Net Profit After Tax No of Equity Shares Ratio
2003 21123474 207992 101562004 16125942 1871928 8612005 16929227 1871928 9042006 18259580 1871928 9752007 40586359 1871928 2168
Interpretation
Earnings per share ratio are used to find out the return that the shareholderrsquos earn
from their shares After charging depreciation and after payment of tax the
remaining amount will be distributed by all the shareholders
Net profit after tax is increased due to the huge increase in the income from
services That is the amount which is available to the shareholders to take There
are 1871928 shares of Rs10- each The share capital is constant from the year
2004 Due to the huge increase in net profit the earnings per share is greaterly
increased in 2007
GRAPHICAL REPRESENTATION
10156
861904 975
2168
000
2000
4000
6000
8000
10000
12000
Ratios
2003 2004 2005 2006 2007
Years
EARNINGS PER SHARE
Ratios
14 PRICE EARNINGS (PE) RATIO
(Amount in Rs)
Price Earning (PE) Ratio
Year Market Price Per Share Earnings Per Share Ratio
2003 3254 10156 0322004 2847 861 3302005 3752 904 4152006 3017 975 3092007 5185 2168 239
Interpretation
The ratio is calculated to make an estimate of application in the value of share of
a company
The market price per share is increased due to the increase in the reserves
amp surplus The earnings per share are also increased greaterly compared
with the last year because of increase in the net profit So the ratio is
decreased compared with the previous year
GRAPHICAL REPRESENTATION
032
330
415
309
239
000
050
100
150
200
250
300
350
400
450
Ratios
2003 2004 2005 2006 2007
Years
PE RATIO
Ratios
15 RETURN ON INVESTMENT
(Amount in Rs)
Return on Investment
Year Net Profit After Tax Share Holders Fund Ratio
2003 21123474 67679219 031
2004 16125942 53301834 03
2005 16929227 70231061 024
2006 18259580 56473652 032
2007 40586359 97060013 042
Interpretation
This is the ratio between net profits and shareholders funds The ratio is
generally calculated as percentage multiplying with 100
The net profit is increased due to the increase in the income from services ant
the shareholders funds are increased because of reserve amp surplus So the ratio
is increased in the current year
GRAPHICAL REPRESENTATION
031 030
024
032
042
000
005
010
015
020
025
030
035
040
045
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON INVESTMENT RATIO
RatioS
DATA COLLECTION
The data can be of two types
Primary Data
Secondary Data
Primary Data
Primary data are those data which is originally collected afresh
Secondary Data
Secondary data are those data which are already collected and stored and which has
been passed through statistical research
In this project Secondary data has been collected from following sources-
Annual report
Books
MIS
Other material and report published by company There are two methods to prepare
the Cash flow Statement
ndirect Method
I
The indirect method (or reconciliation method) starts with net income and converts it
to net cash flow from operating activities In other words the indirect method adjusts
net income for items that affected reported net income but did not affect cash To
compute net cash flow from operating activities non-cash charges in the income
statement are added ack to net income and non-cash credits are deducted
b
Direct Method
Under the direct method the statement of cash flows reports net cash flow from
operating activities as major classes of operating cash receipts (eg cash collected from
customers and cash received from interest and dividends) and cash disbursements (eg
cash paid to suppliers for goods to employees for services to creditors for interest and
to government authorities for taxes)
INDIRECT VERSUS DIRECT METHOD
The most contentious decision that the FASB faced in issuing Statement No 95 was
choosing between the direct method and the indirect method of determining net cash
flow from operating activities Companies lobbied against the direct method urging
adoption of the indirect method Commercial lending officers expressed a strong
preference to the FASB hat the direct method be required
tCF-Page 3 of 5
In Favor of the Direct Method
The principal advantage of the direct method is that it shows operating cash receipts and
payments That is it is more consistent with the objective of a statement of cash flows to
provide information about cash receipts and cash payments than the in-direct method
which does not report operating cash receipts and payments
Supporters of the direct method contend that knowledge of the specific sources of
operating cash receipts and the purposes for which operating cash payments were made
in past periods is useful in estimating future operating cash flows Furthermore in-
formation about amounts of major classes of operating cash receipts and payments is
more useful than information only about their arithmetic sum (the net cash flow from
operating activities) Such information is more revealing of an enterprises ability (1) to
generate sufficient cash from operating activities to pay its debts (2) to reinvest in its
operations and (3) to make distributions to its owners
Many corporate providers of financial statements say that they do not currently collect
information in a manner that allows them to determine amounts such as cash received
from customers or cash paid to suppliers directly from their accounting systems But
supporters of the direct method contend that the incremental cost of assimilating such
operating cash receipts and payments data is not significant
In Favor of the Indirect Method
The principal advantage of the indirect method is that it focuses on the differences
between net income and net cash flow from operating activities That is it provides a
useful link between the statement of cash flows and the income statement and balance
sheet
Many providers of financial statements contend that it is less costly to adjust net income
to net cash flow from operating activities (indirect) than it is to report gross operating
cash receipts and payments (direct) Supporters of the indirect method also state that the
direct method which effectively reports income statement information on a cash rather
than an accrual basis may erroneously suggest that net cash flow from operating
activities is as good as or better than net income as a measure of performance
Special Rules Applying to Direct and Indirect Methods
Companies that use the direct method are required at a
minimum to report separately the following classes of
operating cash receipts and payments
Receipts
1048713 Cash collected from customers (including lessees licensees etc)
1048713 Interest and dividends received
1048713 Other operating cash receipts if any
Payments
1048713 Cash paid to employees and suppliers of goods or services (including
suppliers of
insurance advertising etc)
1048713 Interest paid
1048713 Income taxes paid
1048713 Other operating cash payments if any
Companies using the indirect method are required to disclose separately changes in
inventory receivables and payables to reconcile net income to net cash flow from
operating activities In addition interest paid (net of amount capitalized) and income
taxes paid must be disclosed elsewhere in the financial statements or accompanying
notes
The FASB requires these separate and additional disclosures so that users
may approximate the direct method Also an acceptable alternative presentation
of the in-direct method is to report net cash flow from operating activities as a
single line item in the statement of cash flows and to present the reconciliation
details elsewhere in the financial statements
FINDING OF SUDY
According to cash flow statement of the company The finding of the study are as
follows-
The company has not taken any loans secured or unsecured from companies
firms or other parties
The company has not accepted any deposit from the public during the year
The company is not a sick industrial company
The company has not granted any loan secured or unsecured to company firms
or other parties
The company has paid the entire long term and short term borrowing during the
year
The company has buy back the companyrsquos own share this year
The interest paid in 2008 is more than the
There has been a significant decline in volume over the years from 2001-02
to 2005-06 as can be seen in the graph below
Table 43
The Net sales of Tractor has increased considerably from 2004-05 to 2007-08
This can be mainly attributed to changes in Variable and material costs and in
the price
The Net sale of Tractor has increased considerably from 2004-05 to 2007-08
that is an decrease of Rs7216 per tractor This can be mainly attributed to
changes in
Variable and material costs and in the prices
RECOMMENDATIONS
According to cash flow statement of the company The suggestions of the study
are as follows-
The time durations for training program have to increase
Buy regular review and consultations develop a career progression
which is sensitive to performance and ability
Create an environment where by people are trend developed to enable
The to take advantages of opportunities that arise
The jab can be redesigned where the work man stay in what is normally
the same job but has elements of it changed
The principle amount must be paid in time which can be reducing the
interest the out flow
The purchase of the fixed asset must be made only when there is extreme
requirement
In order to avoid taxes the company should go for more investment
The companyrsquos borrowings should go for more investment
o The company should try to reduce the depreciations as maximum
as possible
CONCLUSION
The study on competency level of employees at ESCORTS PVTLTD gave an
insight about the acceptance of competency mapping by employees
The employees at Ymi welcome the introduction of competency mapping in their
organization as they felt it was very much essential in enhancing their skills and
organizational development
The organization has provided the recourses guidance and support to facilitate the
introduction of competency level easily and develop the employees in such a way
that they can face any kind of challenge
However the level of competency in employees is found to be satisfactory
Providing proper training education and guidance to the employees can enhance
the level
This study was mainly carried out to find out whether thee competency mapping
being followed by the company is effective till date If the competency mapping
and fitment to the organization
By looking at the graphs and tables it is quite that the employees still are not up to
the level of competent pool they still have to be trained and made competent in
order to fill the gap As the organization has just applied the mapping it has to see
to that it meets all the requirements for competency mapping
Therefore the graphs make it quite clear that the potential of the employees is not
up to the mark and ie they are not competent enough to meet the competency-
mapping requirement Hence by further training and counseling this gap can be
closed
This report includes the training requirements of employees and it highlights skills
possessed by each employee and skill required All employees get training so that
skill can be improved and maintain balance between standard performance with
their actual performance to avoid gap
APPENDIX
QUESTIONNAIRE
Consumer Survey
Name _____________________________
Age _____________________________
Sex
Male
Female
Occupation
Businessman
Service man
Professional
Others
Monthly income brackets
Below 15000
15000- 20000
20000-30000
30000 and above
of your savings _________
Do you invest
Yes
No
If yes then where do you invest your money
Bank
Insurance
funds
Others
Why do you made that statement
Return
Risk hedging
Tax benefits
Other reasons (specify) _______
Who influence your cash decision
Relatives and friends
Family members
Advisors experts
You yourself
If no then why
Do not know where to invest
Satisfied with your current investment return
Donrsquot want take risk
Other reasons
__________________________________________________________________
___________________
Do you know about CF statement
Yes
No
If yes then from where you have come to know about an cash statement
Advertisements on newspapers
Friends and relative
Agents experts
Other source
What do you think about cash statement
It means investing only in share market
Constant watch must be kept always
Return is not satisfactory
Other perception
__________________________________________________
Can you recall any cash flow of company
___________________________
Would you want to made CF of an org
Yes
No
If yes then why
_______________________________________________________
If no then why
_______________________________________________________
BIBLIOGRAPHY
List of Books
1 PANDEY IM - FINANCIAL MANAGEMANT
2 KHAN MY AND JAIN PK -FINANCIAL MANAGEMANT
3 SMITH KV ndash MANAGEMANT OF WORKING CAPITAL
3 COMPANY RECORDS
4 JOURNAL
5 REPORTS
WEBLIOGRAPHY
1 wwwescortspvtltdcom
2 wwwgooglecom
Cash Generated from Operations 7281 12481
Direct Taxes (Paid)Refunds (1785) 3166
Net Cash Flow from operating activities 5496 15647
B Cash Flow from Investing Activities
Purchase of Fixed Assets (3095) (2794)
Proceeds from sale of Fixed Assets 086 177
Movement in Loans and Advances (1627) (1644)
Sale of Investments 3233 11452
Short Term Deposits with schedule Banks (231) (1048)
Interest Received 2070 -
Dividend Received 002 001
Net Cash Flow from Investing activities 438 6144
Proceeds from Share Capital amp Securities Premium 11444 -
Proceeds from Long Term Borrowings 8660 -
Less Repayment of Long Term Borrowings (054) (7896)
Proceeds (Repayment) from short term borrowings (net) (22726) -
Interest Paid (7740) (8223)
Net Cash used in financing activities (10416) (16119)
Net Increase(Decrease) in Cash and Cash equivalents (4482) 5672
Cash and Cash equivalents as at 01102008 10565 4893
Cash and Cash equivalents as at 30092009 6083 1056
ANALYSIS OF CASH FLOW
From the cash flow statements of the ESCORT PVTLTDIt can be analyzed
from the two years that the net cash balance of the company has increased
manifold in 30-09-2008 than the year 30-09-2009
The net profit in 30-09-2008 is higher than the 30-09-2009 but due to certain
changes there has been increase in the cash balance
The interest paid this year is ore of the last year which implies that thee
company has not repaid his borrowed capital due to which the interest has got
down
The depreciation has increased but it does not affect cash to an extent as it is a
non-cash item In the head of working capital there is drastic change in the cash
balance in the form of ldquoTrade and other Receivables which has affected the cash
balance
There is outflow of cash for receivables rather than the inflow in the last year
So the net effect is that the cash from operating activities has been decreased
two times from the last year
The company has no accumulated losses as at the end of the financial year ie
September 31 2008
Provision for taxation has been made in accordance with the requirement of AS-
22 issued by Institute of Charted Accountants of India
Pursuant to that current year deferred tax liability have been charged to profit amp
loss account
In opinion of the board of directors of thee company the current assets loans
and advances have a value on realization in the ordinary course of the business at
least equal to the amount stated in the balance sheet and provision for all
liabilities have been made
Balance of sundry debtors creditors loans and advances are subject to confirmation by
the concerned parties
METHOD OF ANALYSIS
1 Data analysis is done using the following statistical tools wherever required in
order to extract meaningful information from the collected data
o Simple percentage and averages
o Bar diagram
o Cone diagram
o Pie diagram
2 The collected data from the questionnaire has been put together in the form of
tables
3 Percentage has been calculated wherever necessary for generalization of the
data
4 Data analysis and interpretation has been done on the basis of primary and
secondary data
5 The findings researches have been recorded based on the analysis
6 The study conducted pertains only to YAMAHA MOTORS INDIA PVTLTD
All bank balances (debitcredit) have been confirmed by the concerned bank
Identified from the available information which has been relied upon by the auditors
The names of small-scale industrial units to whom outstanding for more than
thirty days within agreed terms
The company has 9996 of shareholders in its subsidiary company named as
ESCORTS PVT LTD As at 31-03-2008
So the net effect is that the net cash from investing activities has many more
times than the last year which is negative Now the company has repaid its long
term borrowing more than the last year which has decreased the cash balance by
the little amount
Balance with the schedule banks under the head current amp collection account
amounting to represent funds in transit lying with schedule banks pending
transfer against loan liabilities under the head cash credit amp bill discounting
LIQUIDITY RATIO
1 CURRENT RATIO
(Amount in Rs)
Current Ratio
Year Current Assets Current Liabilities Ratio
2003 58574151 7903952 7412004 69765346 31884616 2192005 72021081 16065621 4482006 91328208 47117199 1942007 115642068 30266661 382
Interpretation
As a rule the current ratio with 21 (or) more is considered as satisfactory
position of the firm
When compared with 2006 there is an increase in the provision for tax because
the debtors are raised and for that the provision is created The current liabilities
majorly included Lanco Group of company for consultancy additional services
The sundry debtors have increased due to the increase to corporate taxes
In the year 2006 the cash and bank balance is reduced because that is used for
payment of dividends In the year 2007 the loans and advances include majorly
the advances to employees and deposits to government The loans and advances
reduced because the employees set off their claims The other current assets
include the interest attained from the deposits The deposits reduced due to the
declaration of dividends So the other current assets decreased
The huge increase in sundry debtors resulted an increase in the ratio which is
above the benchmark level of 21 which shows the comfortable position of the
firm
GRAPHICAL REPRESENTATION
741
219
448
194
382
000
100
200
300
400
500
600
700
800
Ratio
2003 2004 2005 2006 2007
Years
CURRENT RATIO
Ratio
2 QUICK RATIO
(Amount
in Rs)
Quick Ratio
Year Quick Assets Current Liabilities Ratio
2003 58574151 7903952 741
2004 52470336 31884616 165
2005 69883268 16065620 435
2006 89433596 47117199 19
2007 115431868 30266661 381
Interpretation
Quick assets are those assets which can be converted into cash with in a short
period of time say to six months So here the sundry debtors which are with the
long period does not include in the quick assets
Compare with 2006 the Quick ratio is increased because the sundry debtors are
increased due to the increase in the corporate tax and for that the provision
created is also increased So the ratio is also increased with the 2006
GRAPHICAL REPRESENTATION
741
165
435
190
381
000
100
200
300
400
500
600
700
800
Ratio
2003 2004 2005 2006 2007
Years
QUICK RATIO
Ratios
3 ABOSULTE LIQUIDITY RATIO
(Amount
in Rs)
Absolute Cash Ratio
Year Absolute Liquid Assets Current Liabilities Ratio
2003 31004027 7903952 392
2004 10859778 31884616 034
2005 39466542 16065620 246
2006 53850852 47117199 114
2007 35649070 30266661 118
Interpretation
The current assets which are ready in the form of cash are considered as absolute
liquid assets Here the cash and bank balance and the interest on fixed assts are
absolute liquid assets
In the year 2006 the cash and bank balance is decreased due to decrease in the
deposits and the current liabilities are also reduced because of the payment of
dividend That causes a slight increase in the current yearrsquos ratio
GRAPHICAL REPRESENTATION
392
034
246
114 118
0
05
1
15
2
25
3
35
4
Ratios
2003 2004 2005 2006 2007
Years
ABSOLUTE CASH RATIO
Ratios
LEVERAGE RATIOS
4 PROPRIETORY RATIO
(Amount
in Rs)
Proprietory Ratio
Year Share Holders Funds Total Assets Ratio
2003 67679219 78572171 086
2004 53301834 88438107 06
2005 70231061 89158391 079
2006 56473652 106385201 053
2007 97060013 129805102 075
Interpretation
The proprietary ratio establishes the relationship between shareholders funds to
total assets It determines the long-term solvency of the firm This ratio indicates
the extent to which the assets of the company can be lost without affecting the
interest of the company
There is no increase in the capital from the year2004 The share holderrsquos funds
include capital and reserves and surplus The reserves and surplus is increased
due to the increase in balance in profit and loss account which is caused by the
increase of income from services
Total assets includes fixed and current assets The fixed assets are reduced
because of the depreciation and there are no major increments in the fixed assets
The current assets are increased compared with the year 2006 Total assets are
also increased than precious year which resulted an increase in the ratio than old
GRAPHICAL REPRESENTATION
086
060
079
053
075
000
010
020
030
040
050
060
070
080
090
Ratios
2003 2004 2005 2006 2007
Years
PROPRIETORY RATIO
Ratios
ACTIVITY RATIOS
5 WORKING CAPITAL TURNOVER RATIO
(Amount
in Rs)
Working Capital Turnover Ratio
Year Income From Services Working Capital Ratio
2003 36309834 50670199 0722004 53899084 37880730 1422005 72728759 55355460 1312006 55550649 44211009 1262007 96654902 85375407 113
Interpretation
Income from services is greatly increased due to the extra invoice for Operations
amp Maintenance fee and the working capital is also increased greater due to the
increase in from services because the huge increase in current assets
The income from services is raised and the current assets are also raised together
resulted in the decrease of the ratio of 2007 compared with 2006
GRAPHICAL REPRESENTATION
072
142 131126
113
000
020
040
060
080
100
120
140
160
Ratio
2003 2004 2005 2006 2007
Years
WORKING CAPITAL TURNOVER RATIO
Ratio
6 FIXED ASSETS TURNOVER RATIO
(Amount in Rs)
Fixed Assets Turnover Ratio
Year Income From Services Net Fixed Assets Ratio
2003 36309834 28834317 126
2004 53899084 29568279 182
2005 72728759 17137310 424
2006 55550649 15056993 369
2007 96654902 14163034 682
Interpretation
Fixed assets are used in the business for producing the goods to be sold This
ratio shows the firmrsquos ability in generating sales from all financial resources
committed to total assets The ratio indicates the account of one rupee
investment in fixed assets
The income from services is greaterly increased in the current year due to the
increase in the Operations amp Maintenance fee due to the increase in extra invoice
and the net fixed assets are reduced because of the increased charge of
depreciation Finally that effected a huge increase in the ratio compared with the
previous yearrsquos ratio
GRAPHICAL REPRSENTATION
126182
424 369
682
000
100
200
300
400
500
600
700
Ratios
2003 2004 2005 2006 2007
Years
FIXED ASSETS TURNOVER RATIO
Ratios
7 CAPITAL TURNOVER RATIO
(Amount
in Rs)
Capital Turnover Ratio
Year Income From Services Capital Employed Ratio
2003 36309834 37175892 0982004 53899084 53301834 1012005 72728759 70231061 1042006 55550649 56473652 0982007 96654902 97060013 100
Interpretation
This is another ratio to judge the efficiency and effectiveness of the company
like profitability ratio
The income from services is greaterly increased compared with the previous year
and the total capital employed includes capital and reserves amp surplus Due to
huge increase in the net profit the capital employed is also increased along with
income from services Both are effected in the increment of the ratio of current
year
GRAPHICAL REPRESENTATION
098
101
104
098
100
094095096097098099100101102103104
Ratios
2003 2004 2005 2006 2007
Years
CAPITAL TURNOVER RATIO
Ratios
8 CURRENT ASSETS TO FIXED ASSETS RATIO
(Amount
in Rs)
Current Assets To Fixed Assets Ratio
Year Current Assets Fixed Assets Ratio
2003 58524151 19998020 2932004 69765346 18672761 3742005 72021081 17137310 4202006 91328208 15056993 6072007 115642068 14163034 817
Interpretation
Current assets are increased due to the increase in the sundry debtors and the net
fixed assets of the firm are decreased due to the charge of depreciation and there
is no major increment in the fixed assets
The increment in current assets and the decrease in fixed assets resulted an
increase in the ratio compared with the previous year
GRAPHICAL REPRESENTATION
293374
420
607
817
000
100
200
300
400
500
600
700
800
900
Ratios
2003 2004 2005 2006 2007
Years
CURRENT ASSETS TO FIXED ASSETS RATIO
Ratios
PROFITABILITY RATIOS
GENERAL PROFITABILITY RATIOS
9 NET PROFIT RATIO
(Amount in Rs)
Net Profit Ratio
Year Net Profit After Tax Income from Services Ratio
2003 21123474 36039834 059
2004 16125942 53899084 030
2005 16929227 72728759 023
2006 18259580 55550649 033
2007 40586359 96654902 042
Interpretation
The net profit ratio is the overall measure of the firmrsquos ability to turn each rupee
of income from services in net profit If the net margin is inadequate the firm
will fail to achieve return on shareholderrsquos funds High net profit ratio will help
the firm service in the fall of income from services rise in cost of production or
declining demand
The net profit is increased because the income from services is increased The
increment resulted a slight increase in 2007 ratio compared with the year 2006
GRAPHICAL REPRESENTATION
059
030
023
033
042
000
010
020
030
040
050
060
Ratios
2003 2004 2005 2006 2007
Years
NET PROFIT RATIO
Ratios
10 OPERATING PROFIT
(Amount in Rs)
Operating Profit
Year Operating Profit Income From Services Ratio
2003 36094877 36309834 099
2004 27576814 53899084 051
2005 29540599 72728759 041
2006 31586718 55550649 057
2007 67192677 96654902 070
Interpretation
The operating profit ratio is used to measure the relationship between net profits
and sales of a firm Depending on the concept it will decide
The operating profit ratio is increased compared with the last year The earnings
are increased due to the increase in the income from services because of
Operations amp Maintenance fee So the ratio is increased slightly compared with
the previous year
GRAPHICAL REPRESENTATION
099
051
041
057
070
000
010
020
030
040
050060
070
080
090
100
Ratios
2003 2004 2005 2006 2007
Years
OPERATING PROFIT RATIO
Ratios
11 RETURN ON TOTAL ASSETS RATIO
(Amount in Rs)
Return on Total Assets Ratio
Year Net Profit After Tax Total Assets Ratio
2003 21123474 78572171 027
2004 16125942 88438107 018
2005 16929227 89158391 019
2006 18259580 106385201 017
2007 40586359 129805102 031
Interpretation
This is the ratio between net profit and total assets The ratio indicates the return
on total assets in the form of profits
The net profit is increased in the current year because of the increment in the
income from services due to the increase in Operations amp Maintenance fee The
fixed assets are reduced due to the charge of depreciation and no major
increments in fixed assets but the current assets are increased because of sundry
debtors and that effects an increase in the ratio compared with the last year ie
2006
GRAPHICAL REPRESENTATION
027
018 019017
031
000
005
010
015
020
025
030
035
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON TOTAL ASSETS
Ratios
12 RESERVES amp SURPLUS TO CAPITAL RATIO
(Amount in Rs)
Reserves amp Surplus To Capital Ratio
Year Reserves amp Surplus Capital Ratio
2003 65599299 2079920 31542004 34582554 18719280 1852005 51511781 18719280 2752006 37754372 18719280 2022007 78340733 18719280 419
Interpretation
The ratio is used to reveal the policy pursued by the company a very high ratio
indicates a conservative dividend policy and vice-versa Higher the ratio better
will be the position
The reserves amp surplus is decreased in the year 2006 due to the payment of
dividends and in the year 2007 the profit is increased But the capital is
remaining constant from the year 2004 So the increase in the reserves amp surplus
caused a greater increase in the current yearrsquos ratio compared with the older
GRAPHICAL REPRESENTATION
3154
185 275 202419
-
500
1000
1500
2000
2500
3000
3500
Ratios
2003 2004 2005 2006 2007
Years
RESERVES amp SRUPLUS TO CAPITAL RATIO
Ratios
OVERALL PROFITABILITY RATIOS
13 EARNINGS PER SHARE
(Amount in Rs)
Earnings Per Share
Year Net Profit After Tax No of Equity Shares Ratio
2003 21123474 207992 101562004 16125942 1871928 8612005 16929227 1871928 9042006 18259580 1871928 9752007 40586359 1871928 2168
Interpretation
Earnings per share ratio are used to find out the return that the shareholderrsquos earn
from their shares After charging depreciation and after payment of tax the
remaining amount will be distributed by all the shareholders
Net profit after tax is increased due to the huge increase in the income from
services That is the amount which is available to the shareholders to take There
are 1871928 shares of Rs10- each The share capital is constant from the year
2004 Due to the huge increase in net profit the earnings per share is greaterly
increased in 2007
GRAPHICAL REPRESENTATION
10156
861904 975
2168
000
2000
4000
6000
8000
10000
12000
Ratios
2003 2004 2005 2006 2007
Years
EARNINGS PER SHARE
Ratios
14 PRICE EARNINGS (PE) RATIO
(Amount in Rs)
Price Earning (PE) Ratio
Year Market Price Per Share Earnings Per Share Ratio
2003 3254 10156 0322004 2847 861 3302005 3752 904 4152006 3017 975 3092007 5185 2168 239
Interpretation
The ratio is calculated to make an estimate of application in the value of share of
a company
The market price per share is increased due to the increase in the reserves
amp surplus The earnings per share are also increased greaterly compared
with the last year because of increase in the net profit So the ratio is
decreased compared with the previous year
GRAPHICAL REPRESENTATION
032
330
415
309
239
000
050
100
150
200
250
300
350
400
450
Ratios
2003 2004 2005 2006 2007
Years
PE RATIO
Ratios
15 RETURN ON INVESTMENT
(Amount in Rs)
Return on Investment
Year Net Profit After Tax Share Holders Fund Ratio
2003 21123474 67679219 031
2004 16125942 53301834 03
2005 16929227 70231061 024
2006 18259580 56473652 032
2007 40586359 97060013 042
Interpretation
This is the ratio between net profits and shareholders funds The ratio is
generally calculated as percentage multiplying with 100
The net profit is increased due to the increase in the income from services ant
the shareholders funds are increased because of reserve amp surplus So the ratio
is increased in the current year
GRAPHICAL REPRESENTATION
031 030
024
032
042
000
005
010
015
020
025
030
035
040
045
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON INVESTMENT RATIO
RatioS
DATA COLLECTION
The data can be of two types
Primary Data
Secondary Data
Primary Data
Primary data are those data which is originally collected afresh
Secondary Data
Secondary data are those data which are already collected and stored and which has
been passed through statistical research
In this project Secondary data has been collected from following sources-
Annual report
Books
MIS
Other material and report published by company There are two methods to prepare
the Cash flow Statement
ndirect Method
I
The indirect method (or reconciliation method) starts with net income and converts it
to net cash flow from operating activities In other words the indirect method adjusts
net income for items that affected reported net income but did not affect cash To
compute net cash flow from operating activities non-cash charges in the income
statement are added ack to net income and non-cash credits are deducted
b
Direct Method
Under the direct method the statement of cash flows reports net cash flow from
operating activities as major classes of operating cash receipts (eg cash collected from
customers and cash received from interest and dividends) and cash disbursements (eg
cash paid to suppliers for goods to employees for services to creditors for interest and
to government authorities for taxes)
INDIRECT VERSUS DIRECT METHOD
The most contentious decision that the FASB faced in issuing Statement No 95 was
choosing between the direct method and the indirect method of determining net cash
flow from operating activities Companies lobbied against the direct method urging
adoption of the indirect method Commercial lending officers expressed a strong
preference to the FASB hat the direct method be required
tCF-Page 3 of 5
In Favor of the Direct Method
The principal advantage of the direct method is that it shows operating cash receipts and
payments That is it is more consistent with the objective of a statement of cash flows to
provide information about cash receipts and cash payments than the in-direct method
which does not report operating cash receipts and payments
Supporters of the direct method contend that knowledge of the specific sources of
operating cash receipts and the purposes for which operating cash payments were made
in past periods is useful in estimating future operating cash flows Furthermore in-
formation about amounts of major classes of operating cash receipts and payments is
more useful than information only about their arithmetic sum (the net cash flow from
operating activities) Such information is more revealing of an enterprises ability (1) to
generate sufficient cash from operating activities to pay its debts (2) to reinvest in its
operations and (3) to make distributions to its owners
Many corporate providers of financial statements say that they do not currently collect
information in a manner that allows them to determine amounts such as cash received
from customers or cash paid to suppliers directly from their accounting systems But
supporters of the direct method contend that the incremental cost of assimilating such
operating cash receipts and payments data is not significant
In Favor of the Indirect Method
The principal advantage of the indirect method is that it focuses on the differences
between net income and net cash flow from operating activities That is it provides a
useful link between the statement of cash flows and the income statement and balance
sheet
Many providers of financial statements contend that it is less costly to adjust net income
to net cash flow from operating activities (indirect) than it is to report gross operating
cash receipts and payments (direct) Supporters of the indirect method also state that the
direct method which effectively reports income statement information on a cash rather
than an accrual basis may erroneously suggest that net cash flow from operating
activities is as good as or better than net income as a measure of performance
Special Rules Applying to Direct and Indirect Methods
Companies that use the direct method are required at a
minimum to report separately the following classes of
operating cash receipts and payments
Receipts
1048713 Cash collected from customers (including lessees licensees etc)
1048713 Interest and dividends received
1048713 Other operating cash receipts if any
Payments
1048713 Cash paid to employees and suppliers of goods or services (including
suppliers of
insurance advertising etc)
1048713 Interest paid
1048713 Income taxes paid
1048713 Other operating cash payments if any
Companies using the indirect method are required to disclose separately changes in
inventory receivables and payables to reconcile net income to net cash flow from
operating activities In addition interest paid (net of amount capitalized) and income
taxes paid must be disclosed elsewhere in the financial statements or accompanying
notes
The FASB requires these separate and additional disclosures so that users
may approximate the direct method Also an acceptable alternative presentation
of the in-direct method is to report net cash flow from operating activities as a
single line item in the statement of cash flows and to present the reconciliation
details elsewhere in the financial statements
FINDING OF SUDY
According to cash flow statement of the company The finding of the study are as
follows-
The company has not taken any loans secured or unsecured from companies
firms or other parties
The company has not accepted any deposit from the public during the year
The company is not a sick industrial company
The company has not granted any loan secured or unsecured to company firms
or other parties
The company has paid the entire long term and short term borrowing during the
year
The company has buy back the companyrsquos own share this year
The interest paid in 2008 is more than the
There has been a significant decline in volume over the years from 2001-02
to 2005-06 as can be seen in the graph below
Table 43
The Net sales of Tractor has increased considerably from 2004-05 to 2007-08
This can be mainly attributed to changes in Variable and material costs and in
the price
The Net sale of Tractor has increased considerably from 2004-05 to 2007-08
that is an decrease of Rs7216 per tractor This can be mainly attributed to
changes in
Variable and material costs and in the prices
RECOMMENDATIONS
According to cash flow statement of the company The suggestions of the study
are as follows-
The time durations for training program have to increase
Buy regular review and consultations develop a career progression
which is sensitive to performance and ability
Create an environment where by people are trend developed to enable
The to take advantages of opportunities that arise
The jab can be redesigned where the work man stay in what is normally
the same job but has elements of it changed
The principle amount must be paid in time which can be reducing the
interest the out flow
The purchase of the fixed asset must be made only when there is extreme
requirement
In order to avoid taxes the company should go for more investment
The companyrsquos borrowings should go for more investment
o The company should try to reduce the depreciations as maximum
as possible
CONCLUSION
The study on competency level of employees at ESCORTS PVTLTD gave an
insight about the acceptance of competency mapping by employees
The employees at Ymi welcome the introduction of competency mapping in their
organization as they felt it was very much essential in enhancing their skills and
organizational development
The organization has provided the recourses guidance and support to facilitate the
introduction of competency level easily and develop the employees in such a way
that they can face any kind of challenge
However the level of competency in employees is found to be satisfactory
Providing proper training education and guidance to the employees can enhance
the level
This study was mainly carried out to find out whether thee competency mapping
being followed by the company is effective till date If the competency mapping
and fitment to the organization
By looking at the graphs and tables it is quite that the employees still are not up to
the level of competent pool they still have to be trained and made competent in
order to fill the gap As the organization has just applied the mapping it has to see
to that it meets all the requirements for competency mapping
Therefore the graphs make it quite clear that the potential of the employees is not
up to the mark and ie they are not competent enough to meet the competency-
mapping requirement Hence by further training and counseling this gap can be
closed
This report includes the training requirements of employees and it highlights skills
possessed by each employee and skill required All employees get training so that
skill can be improved and maintain balance between standard performance with
their actual performance to avoid gap
APPENDIX
QUESTIONNAIRE
Consumer Survey
Name _____________________________
Age _____________________________
Sex
Male
Female
Occupation
Businessman
Service man
Professional
Others
Monthly income brackets
Below 15000
15000- 20000
20000-30000
30000 and above
of your savings _________
Do you invest
Yes
No
If yes then where do you invest your money
Bank
Insurance
funds
Others
Why do you made that statement
Return
Risk hedging
Tax benefits
Other reasons (specify) _______
Who influence your cash decision
Relatives and friends
Family members
Advisors experts
You yourself
If no then why
Do not know where to invest
Satisfied with your current investment return
Donrsquot want take risk
Other reasons
__________________________________________________________________
___________________
Do you know about CF statement
Yes
No
If yes then from where you have come to know about an cash statement
Advertisements on newspapers
Friends and relative
Agents experts
Other source
What do you think about cash statement
It means investing only in share market
Constant watch must be kept always
Return is not satisfactory
Other perception
__________________________________________________
Can you recall any cash flow of company
___________________________
Would you want to made CF of an org
Yes
No
If yes then why
_______________________________________________________
If no then why
_______________________________________________________
BIBLIOGRAPHY
List of Books
1 PANDEY IM - FINANCIAL MANAGEMANT
2 KHAN MY AND JAIN PK -FINANCIAL MANAGEMANT
3 SMITH KV ndash MANAGEMANT OF WORKING CAPITAL
3 COMPANY RECORDS
4 JOURNAL
5 REPORTS
WEBLIOGRAPHY
1 wwwescortspvtltdcom
2 wwwgooglecom
ANALYSIS OF CASH FLOW
From the cash flow statements of the ESCORT PVTLTDIt can be analyzed
from the two years that the net cash balance of the company has increased
manifold in 30-09-2008 than the year 30-09-2009
The net profit in 30-09-2008 is higher than the 30-09-2009 but due to certain
changes there has been increase in the cash balance
The interest paid this year is ore of the last year which implies that thee
company has not repaid his borrowed capital due to which the interest has got
down
The depreciation has increased but it does not affect cash to an extent as it is a
non-cash item In the head of working capital there is drastic change in the cash
balance in the form of ldquoTrade and other Receivables which has affected the cash
balance
There is outflow of cash for receivables rather than the inflow in the last year
So the net effect is that the cash from operating activities has been decreased
two times from the last year
The company has no accumulated losses as at the end of the financial year ie
September 31 2008
Provision for taxation has been made in accordance with the requirement of AS-
22 issued by Institute of Charted Accountants of India
Pursuant to that current year deferred tax liability have been charged to profit amp
loss account
In opinion of the board of directors of thee company the current assets loans
and advances have a value on realization in the ordinary course of the business at
least equal to the amount stated in the balance sheet and provision for all
liabilities have been made
Balance of sundry debtors creditors loans and advances are subject to confirmation by
the concerned parties
METHOD OF ANALYSIS
1 Data analysis is done using the following statistical tools wherever required in
order to extract meaningful information from the collected data
o Simple percentage and averages
o Bar diagram
o Cone diagram
o Pie diagram
2 The collected data from the questionnaire has been put together in the form of
tables
3 Percentage has been calculated wherever necessary for generalization of the
data
4 Data analysis and interpretation has been done on the basis of primary and
secondary data
5 The findings researches have been recorded based on the analysis
6 The study conducted pertains only to YAMAHA MOTORS INDIA PVTLTD
All bank balances (debitcredit) have been confirmed by the concerned bank
Identified from the available information which has been relied upon by the auditors
The names of small-scale industrial units to whom outstanding for more than
thirty days within agreed terms
The company has 9996 of shareholders in its subsidiary company named as
ESCORTS PVT LTD As at 31-03-2008
So the net effect is that the net cash from investing activities has many more
times than the last year which is negative Now the company has repaid its long
term borrowing more than the last year which has decreased the cash balance by
the little amount
Balance with the schedule banks under the head current amp collection account
amounting to represent funds in transit lying with schedule banks pending
transfer against loan liabilities under the head cash credit amp bill discounting
LIQUIDITY RATIO
1 CURRENT RATIO
(Amount in Rs)
Current Ratio
Year Current Assets Current Liabilities Ratio
2003 58574151 7903952 7412004 69765346 31884616 2192005 72021081 16065621 4482006 91328208 47117199 1942007 115642068 30266661 382
Interpretation
As a rule the current ratio with 21 (or) more is considered as satisfactory
position of the firm
When compared with 2006 there is an increase in the provision for tax because
the debtors are raised and for that the provision is created The current liabilities
majorly included Lanco Group of company for consultancy additional services
The sundry debtors have increased due to the increase to corporate taxes
In the year 2006 the cash and bank balance is reduced because that is used for
payment of dividends In the year 2007 the loans and advances include majorly
the advances to employees and deposits to government The loans and advances
reduced because the employees set off their claims The other current assets
include the interest attained from the deposits The deposits reduced due to the
declaration of dividends So the other current assets decreased
The huge increase in sundry debtors resulted an increase in the ratio which is
above the benchmark level of 21 which shows the comfortable position of the
firm
GRAPHICAL REPRESENTATION
741
219
448
194
382
000
100
200
300
400
500
600
700
800
Ratio
2003 2004 2005 2006 2007
Years
CURRENT RATIO
Ratio
2 QUICK RATIO
(Amount
in Rs)
Quick Ratio
Year Quick Assets Current Liabilities Ratio
2003 58574151 7903952 741
2004 52470336 31884616 165
2005 69883268 16065620 435
2006 89433596 47117199 19
2007 115431868 30266661 381
Interpretation
Quick assets are those assets which can be converted into cash with in a short
period of time say to six months So here the sundry debtors which are with the
long period does not include in the quick assets
Compare with 2006 the Quick ratio is increased because the sundry debtors are
increased due to the increase in the corporate tax and for that the provision
created is also increased So the ratio is also increased with the 2006
GRAPHICAL REPRESENTATION
741
165
435
190
381
000
100
200
300
400
500
600
700
800
Ratio
2003 2004 2005 2006 2007
Years
QUICK RATIO
Ratios
3 ABOSULTE LIQUIDITY RATIO
(Amount
in Rs)
Absolute Cash Ratio
Year Absolute Liquid Assets Current Liabilities Ratio
2003 31004027 7903952 392
2004 10859778 31884616 034
2005 39466542 16065620 246
2006 53850852 47117199 114
2007 35649070 30266661 118
Interpretation
The current assets which are ready in the form of cash are considered as absolute
liquid assets Here the cash and bank balance and the interest on fixed assts are
absolute liquid assets
In the year 2006 the cash and bank balance is decreased due to decrease in the
deposits and the current liabilities are also reduced because of the payment of
dividend That causes a slight increase in the current yearrsquos ratio
GRAPHICAL REPRESENTATION
392
034
246
114 118
0
05
1
15
2
25
3
35
4
Ratios
2003 2004 2005 2006 2007
Years
ABSOLUTE CASH RATIO
Ratios
LEVERAGE RATIOS
4 PROPRIETORY RATIO
(Amount
in Rs)
Proprietory Ratio
Year Share Holders Funds Total Assets Ratio
2003 67679219 78572171 086
2004 53301834 88438107 06
2005 70231061 89158391 079
2006 56473652 106385201 053
2007 97060013 129805102 075
Interpretation
The proprietary ratio establishes the relationship between shareholders funds to
total assets It determines the long-term solvency of the firm This ratio indicates
the extent to which the assets of the company can be lost without affecting the
interest of the company
There is no increase in the capital from the year2004 The share holderrsquos funds
include capital and reserves and surplus The reserves and surplus is increased
due to the increase in balance in profit and loss account which is caused by the
increase of income from services
Total assets includes fixed and current assets The fixed assets are reduced
because of the depreciation and there are no major increments in the fixed assets
The current assets are increased compared with the year 2006 Total assets are
also increased than precious year which resulted an increase in the ratio than old
GRAPHICAL REPRESENTATION
086
060
079
053
075
000
010
020
030
040
050
060
070
080
090
Ratios
2003 2004 2005 2006 2007
Years
PROPRIETORY RATIO
Ratios
ACTIVITY RATIOS
5 WORKING CAPITAL TURNOVER RATIO
(Amount
in Rs)
Working Capital Turnover Ratio
Year Income From Services Working Capital Ratio
2003 36309834 50670199 0722004 53899084 37880730 1422005 72728759 55355460 1312006 55550649 44211009 1262007 96654902 85375407 113
Interpretation
Income from services is greatly increased due to the extra invoice for Operations
amp Maintenance fee and the working capital is also increased greater due to the
increase in from services because the huge increase in current assets
The income from services is raised and the current assets are also raised together
resulted in the decrease of the ratio of 2007 compared with 2006
GRAPHICAL REPRESENTATION
072
142 131126
113
000
020
040
060
080
100
120
140
160
Ratio
2003 2004 2005 2006 2007
Years
WORKING CAPITAL TURNOVER RATIO
Ratio
6 FIXED ASSETS TURNOVER RATIO
(Amount in Rs)
Fixed Assets Turnover Ratio
Year Income From Services Net Fixed Assets Ratio
2003 36309834 28834317 126
2004 53899084 29568279 182
2005 72728759 17137310 424
2006 55550649 15056993 369
2007 96654902 14163034 682
Interpretation
Fixed assets are used in the business for producing the goods to be sold This
ratio shows the firmrsquos ability in generating sales from all financial resources
committed to total assets The ratio indicates the account of one rupee
investment in fixed assets
The income from services is greaterly increased in the current year due to the
increase in the Operations amp Maintenance fee due to the increase in extra invoice
and the net fixed assets are reduced because of the increased charge of
depreciation Finally that effected a huge increase in the ratio compared with the
previous yearrsquos ratio
GRAPHICAL REPRSENTATION
126182
424 369
682
000
100
200
300
400
500
600
700
Ratios
2003 2004 2005 2006 2007
Years
FIXED ASSETS TURNOVER RATIO
Ratios
7 CAPITAL TURNOVER RATIO
(Amount
in Rs)
Capital Turnover Ratio
Year Income From Services Capital Employed Ratio
2003 36309834 37175892 0982004 53899084 53301834 1012005 72728759 70231061 1042006 55550649 56473652 0982007 96654902 97060013 100
Interpretation
This is another ratio to judge the efficiency and effectiveness of the company
like profitability ratio
The income from services is greaterly increased compared with the previous year
and the total capital employed includes capital and reserves amp surplus Due to
huge increase in the net profit the capital employed is also increased along with
income from services Both are effected in the increment of the ratio of current
year
GRAPHICAL REPRESENTATION
098
101
104
098
100
094095096097098099100101102103104
Ratios
2003 2004 2005 2006 2007
Years
CAPITAL TURNOVER RATIO
Ratios
8 CURRENT ASSETS TO FIXED ASSETS RATIO
(Amount
in Rs)
Current Assets To Fixed Assets Ratio
Year Current Assets Fixed Assets Ratio
2003 58524151 19998020 2932004 69765346 18672761 3742005 72021081 17137310 4202006 91328208 15056993 6072007 115642068 14163034 817
Interpretation
Current assets are increased due to the increase in the sundry debtors and the net
fixed assets of the firm are decreased due to the charge of depreciation and there
is no major increment in the fixed assets
The increment in current assets and the decrease in fixed assets resulted an
increase in the ratio compared with the previous year
GRAPHICAL REPRESENTATION
293374
420
607
817
000
100
200
300
400
500
600
700
800
900
Ratios
2003 2004 2005 2006 2007
Years
CURRENT ASSETS TO FIXED ASSETS RATIO
Ratios
PROFITABILITY RATIOS
GENERAL PROFITABILITY RATIOS
9 NET PROFIT RATIO
(Amount in Rs)
Net Profit Ratio
Year Net Profit After Tax Income from Services Ratio
2003 21123474 36039834 059
2004 16125942 53899084 030
2005 16929227 72728759 023
2006 18259580 55550649 033
2007 40586359 96654902 042
Interpretation
The net profit ratio is the overall measure of the firmrsquos ability to turn each rupee
of income from services in net profit If the net margin is inadequate the firm
will fail to achieve return on shareholderrsquos funds High net profit ratio will help
the firm service in the fall of income from services rise in cost of production or
declining demand
The net profit is increased because the income from services is increased The
increment resulted a slight increase in 2007 ratio compared with the year 2006
GRAPHICAL REPRESENTATION
059
030
023
033
042
000
010
020
030
040
050
060
Ratios
2003 2004 2005 2006 2007
Years
NET PROFIT RATIO
Ratios
10 OPERATING PROFIT
(Amount in Rs)
Operating Profit
Year Operating Profit Income From Services Ratio
2003 36094877 36309834 099
2004 27576814 53899084 051
2005 29540599 72728759 041
2006 31586718 55550649 057
2007 67192677 96654902 070
Interpretation
The operating profit ratio is used to measure the relationship between net profits
and sales of a firm Depending on the concept it will decide
The operating profit ratio is increased compared with the last year The earnings
are increased due to the increase in the income from services because of
Operations amp Maintenance fee So the ratio is increased slightly compared with
the previous year
GRAPHICAL REPRESENTATION
099
051
041
057
070
000
010
020
030
040
050060
070
080
090
100
Ratios
2003 2004 2005 2006 2007
Years
OPERATING PROFIT RATIO
Ratios
11 RETURN ON TOTAL ASSETS RATIO
(Amount in Rs)
Return on Total Assets Ratio
Year Net Profit After Tax Total Assets Ratio
2003 21123474 78572171 027
2004 16125942 88438107 018
2005 16929227 89158391 019
2006 18259580 106385201 017
2007 40586359 129805102 031
Interpretation
This is the ratio between net profit and total assets The ratio indicates the return
on total assets in the form of profits
The net profit is increased in the current year because of the increment in the
income from services due to the increase in Operations amp Maintenance fee The
fixed assets are reduced due to the charge of depreciation and no major
increments in fixed assets but the current assets are increased because of sundry
debtors and that effects an increase in the ratio compared with the last year ie
2006
GRAPHICAL REPRESENTATION
027
018 019017
031
000
005
010
015
020
025
030
035
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON TOTAL ASSETS
Ratios
12 RESERVES amp SURPLUS TO CAPITAL RATIO
(Amount in Rs)
Reserves amp Surplus To Capital Ratio
Year Reserves amp Surplus Capital Ratio
2003 65599299 2079920 31542004 34582554 18719280 1852005 51511781 18719280 2752006 37754372 18719280 2022007 78340733 18719280 419
Interpretation
The ratio is used to reveal the policy pursued by the company a very high ratio
indicates a conservative dividend policy and vice-versa Higher the ratio better
will be the position
The reserves amp surplus is decreased in the year 2006 due to the payment of
dividends and in the year 2007 the profit is increased But the capital is
remaining constant from the year 2004 So the increase in the reserves amp surplus
caused a greater increase in the current yearrsquos ratio compared with the older
GRAPHICAL REPRESENTATION
3154
185 275 202419
-
500
1000
1500
2000
2500
3000
3500
Ratios
2003 2004 2005 2006 2007
Years
RESERVES amp SRUPLUS TO CAPITAL RATIO
Ratios
OVERALL PROFITABILITY RATIOS
13 EARNINGS PER SHARE
(Amount in Rs)
Earnings Per Share
Year Net Profit After Tax No of Equity Shares Ratio
2003 21123474 207992 101562004 16125942 1871928 8612005 16929227 1871928 9042006 18259580 1871928 9752007 40586359 1871928 2168
Interpretation
Earnings per share ratio are used to find out the return that the shareholderrsquos earn
from their shares After charging depreciation and after payment of tax the
remaining amount will be distributed by all the shareholders
Net profit after tax is increased due to the huge increase in the income from
services That is the amount which is available to the shareholders to take There
are 1871928 shares of Rs10- each The share capital is constant from the year
2004 Due to the huge increase in net profit the earnings per share is greaterly
increased in 2007
GRAPHICAL REPRESENTATION
10156
861904 975
2168
000
2000
4000
6000
8000
10000
12000
Ratios
2003 2004 2005 2006 2007
Years
EARNINGS PER SHARE
Ratios
14 PRICE EARNINGS (PE) RATIO
(Amount in Rs)
Price Earning (PE) Ratio
Year Market Price Per Share Earnings Per Share Ratio
2003 3254 10156 0322004 2847 861 3302005 3752 904 4152006 3017 975 3092007 5185 2168 239
Interpretation
The ratio is calculated to make an estimate of application in the value of share of
a company
The market price per share is increased due to the increase in the reserves
amp surplus The earnings per share are also increased greaterly compared
with the last year because of increase in the net profit So the ratio is
decreased compared with the previous year
GRAPHICAL REPRESENTATION
032
330
415
309
239
000
050
100
150
200
250
300
350
400
450
Ratios
2003 2004 2005 2006 2007
Years
PE RATIO
Ratios
15 RETURN ON INVESTMENT
(Amount in Rs)
Return on Investment
Year Net Profit After Tax Share Holders Fund Ratio
2003 21123474 67679219 031
2004 16125942 53301834 03
2005 16929227 70231061 024
2006 18259580 56473652 032
2007 40586359 97060013 042
Interpretation
This is the ratio between net profits and shareholders funds The ratio is
generally calculated as percentage multiplying with 100
The net profit is increased due to the increase in the income from services ant
the shareholders funds are increased because of reserve amp surplus So the ratio
is increased in the current year
GRAPHICAL REPRESENTATION
031 030
024
032
042
000
005
010
015
020
025
030
035
040
045
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON INVESTMENT RATIO
RatioS
DATA COLLECTION
The data can be of two types
Primary Data
Secondary Data
Primary Data
Primary data are those data which is originally collected afresh
Secondary Data
Secondary data are those data which are already collected and stored and which has
been passed through statistical research
In this project Secondary data has been collected from following sources-
Annual report
Books
MIS
Other material and report published by company There are two methods to prepare
the Cash flow Statement
ndirect Method
I
The indirect method (or reconciliation method) starts with net income and converts it
to net cash flow from operating activities In other words the indirect method adjusts
net income for items that affected reported net income but did not affect cash To
compute net cash flow from operating activities non-cash charges in the income
statement are added ack to net income and non-cash credits are deducted
b
Direct Method
Under the direct method the statement of cash flows reports net cash flow from
operating activities as major classes of operating cash receipts (eg cash collected from
customers and cash received from interest and dividends) and cash disbursements (eg
cash paid to suppliers for goods to employees for services to creditors for interest and
to government authorities for taxes)
INDIRECT VERSUS DIRECT METHOD
The most contentious decision that the FASB faced in issuing Statement No 95 was
choosing between the direct method and the indirect method of determining net cash
flow from operating activities Companies lobbied against the direct method urging
adoption of the indirect method Commercial lending officers expressed a strong
preference to the FASB hat the direct method be required
tCF-Page 3 of 5
In Favor of the Direct Method
The principal advantage of the direct method is that it shows operating cash receipts and
payments That is it is more consistent with the objective of a statement of cash flows to
provide information about cash receipts and cash payments than the in-direct method
which does not report operating cash receipts and payments
Supporters of the direct method contend that knowledge of the specific sources of
operating cash receipts and the purposes for which operating cash payments were made
in past periods is useful in estimating future operating cash flows Furthermore in-
formation about amounts of major classes of operating cash receipts and payments is
more useful than information only about their arithmetic sum (the net cash flow from
operating activities) Such information is more revealing of an enterprises ability (1) to
generate sufficient cash from operating activities to pay its debts (2) to reinvest in its
operations and (3) to make distributions to its owners
Many corporate providers of financial statements say that they do not currently collect
information in a manner that allows them to determine amounts such as cash received
from customers or cash paid to suppliers directly from their accounting systems But
supporters of the direct method contend that the incremental cost of assimilating such
operating cash receipts and payments data is not significant
In Favor of the Indirect Method
The principal advantage of the indirect method is that it focuses on the differences
between net income and net cash flow from operating activities That is it provides a
useful link between the statement of cash flows and the income statement and balance
sheet
Many providers of financial statements contend that it is less costly to adjust net income
to net cash flow from operating activities (indirect) than it is to report gross operating
cash receipts and payments (direct) Supporters of the indirect method also state that the
direct method which effectively reports income statement information on a cash rather
than an accrual basis may erroneously suggest that net cash flow from operating
activities is as good as or better than net income as a measure of performance
Special Rules Applying to Direct and Indirect Methods
Companies that use the direct method are required at a
minimum to report separately the following classes of
operating cash receipts and payments
Receipts
1048713 Cash collected from customers (including lessees licensees etc)
1048713 Interest and dividends received
1048713 Other operating cash receipts if any
Payments
1048713 Cash paid to employees and suppliers of goods or services (including
suppliers of
insurance advertising etc)
1048713 Interest paid
1048713 Income taxes paid
1048713 Other operating cash payments if any
Companies using the indirect method are required to disclose separately changes in
inventory receivables and payables to reconcile net income to net cash flow from
operating activities In addition interest paid (net of amount capitalized) and income
taxes paid must be disclosed elsewhere in the financial statements or accompanying
notes
The FASB requires these separate and additional disclosures so that users
may approximate the direct method Also an acceptable alternative presentation
of the in-direct method is to report net cash flow from operating activities as a
single line item in the statement of cash flows and to present the reconciliation
details elsewhere in the financial statements
FINDING OF SUDY
According to cash flow statement of the company The finding of the study are as
follows-
The company has not taken any loans secured or unsecured from companies
firms or other parties
The company has not accepted any deposit from the public during the year
The company is not a sick industrial company
The company has not granted any loan secured or unsecured to company firms
or other parties
The company has paid the entire long term and short term borrowing during the
year
The company has buy back the companyrsquos own share this year
The interest paid in 2008 is more than the
There has been a significant decline in volume over the years from 2001-02
to 2005-06 as can be seen in the graph below
Table 43
The Net sales of Tractor has increased considerably from 2004-05 to 2007-08
This can be mainly attributed to changes in Variable and material costs and in
the price
The Net sale of Tractor has increased considerably from 2004-05 to 2007-08
that is an decrease of Rs7216 per tractor This can be mainly attributed to
changes in
Variable and material costs and in the prices
RECOMMENDATIONS
According to cash flow statement of the company The suggestions of the study
are as follows-
The time durations for training program have to increase
Buy regular review and consultations develop a career progression
which is sensitive to performance and ability
Create an environment where by people are trend developed to enable
The to take advantages of opportunities that arise
The jab can be redesigned where the work man stay in what is normally
the same job but has elements of it changed
The principle amount must be paid in time which can be reducing the
interest the out flow
The purchase of the fixed asset must be made only when there is extreme
requirement
In order to avoid taxes the company should go for more investment
The companyrsquos borrowings should go for more investment
o The company should try to reduce the depreciations as maximum
as possible
CONCLUSION
The study on competency level of employees at ESCORTS PVTLTD gave an
insight about the acceptance of competency mapping by employees
The employees at Ymi welcome the introduction of competency mapping in their
organization as they felt it was very much essential in enhancing their skills and
organizational development
The organization has provided the recourses guidance and support to facilitate the
introduction of competency level easily and develop the employees in such a way
that they can face any kind of challenge
However the level of competency in employees is found to be satisfactory
Providing proper training education and guidance to the employees can enhance
the level
This study was mainly carried out to find out whether thee competency mapping
being followed by the company is effective till date If the competency mapping
and fitment to the organization
By looking at the graphs and tables it is quite that the employees still are not up to
the level of competent pool they still have to be trained and made competent in
order to fill the gap As the organization has just applied the mapping it has to see
to that it meets all the requirements for competency mapping
Therefore the graphs make it quite clear that the potential of the employees is not
up to the mark and ie they are not competent enough to meet the competency-
mapping requirement Hence by further training and counseling this gap can be
closed
This report includes the training requirements of employees and it highlights skills
possessed by each employee and skill required All employees get training so that
skill can be improved and maintain balance between standard performance with
their actual performance to avoid gap
APPENDIX
QUESTIONNAIRE
Consumer Survey
Name _____________________________
Age _____________________________
Sex
Male
Female
Occupation
Businessman
Service man
Professional
Others
Monthly income brackets
Below 15000
15000- 20000
20000-30000
30000 and above
of your savings _________
Do you invest
Yes
No
If yes then where do you invest your money
Bank
Insurance
funds
Others
Why do you made that statement
Return
Risk hedging
Tax benefits
Other reasons (specify) _______
Who influence your cash decision
Relatives and friends
Family members
Advisors experts
You yourself
If no then why
Do not know where to invest
Satisfied with your current investment return
Donrsquot want take risk
Other reasons
__________________________________________________________________
___________________
Do you know about CF statement
Yes
No
If yes then from where you have come to know about an cash statement
Advertisements on newspapers
Friends and relative
Agents experts
Other source
What do you think about cash statement
It means investing only in share market
Constant watch must be kept always
Return is not satisfactory
Other perception
__________________________________________________
Can you recall any cash flow of company
___________________________
Would you want to made CF of an org
Yes
No
If yes then why
_______________________________________________________
If no then why
_______________________________________________________
BIBLIOGRAPHY
List of Books
1 PANDEY IM - FINANCIAL MANAGEMANT
2 KHAN MY AND JAIN PK -FINANCIAL MANAGEMANT
3 SMITH KV ndash MANAGEMANT OF WORKING CAPITAL
3 COMPANY RECORDS
4 JOURNAL
5 REPORTS
WEBLIOGRAPHY
1 wwwescortspvtltdcom
2 wwwgooglecom
METHOD OF ANALYSIS
1 Data analysis is done using the following statistical tools wherever required in
order to extract meaningful information from the collected data
o Simple percentage and averages
o Bar diagram
o Cone diagram
o Pie diagram
2 The collected data from the questionnaire has been put together in the form of
tables
3 Percentage has been calculated wherever necessary for generalization of the
data
4 Data analysis and interpretation has been done on the basis of primary and
secondary data
5 The findings researches have been recorded based on the analysis
6 The study conducted pertains only to YAMAHA MOTORS INDIA PVTLTD
All bank balances (debitcredit) have been confirmed by the concerned bank
Identified from the available information which has been relied upon by the auditors
The names of small-scale industrial units to whom outstanding for more than
thirty days within agreed terms
The company has 9996 of shareholders in its subsidiary company named as
ESCORTS PVT LTD As at 31-03-2008
So the net effect is that the net cash from investing activities has many more
times than the last year which is negative Now the company has repaid its long
term borrowing more than the last year which has decreased the cash balance by
the little amount
Balance with the schedule banks under the head current amp collection account
amounting to represent funds in transit lying with schedule banks pending
transfer against loan liabilities under the head cash credit amp bill discounting
LIQUIDITY RATIO
1 CURRENT RATIO
(Amount in Rs)
Current Ratio
Year Current Assets Current Liabilities Ratio
2003 58574151 7903952 7412004 69765346 31884616 2192005 72021081 16065621 4482006 91328208 47117199 1942007 115642068 30266661 382
Interpretation
As a rule the current ratio with 21 (or) more is considered as satisfactory
position of the firm
When compared with 2006 there is an increase in the provision for tax because
the debtors are raised and for that the provision is created The current liabilities
majorly included Lanco Group of company for consultancy additional services
The sundry debtors have increased due to the increase to corporate taxes
In the year 2006 the cash and bank balance is reduced because that is used for
payment of dividends In the year 2007 the loans and advances include majorly
the advances to employees and deposits to government The loans and advances
reduced because the employees set off their claims The other current assets
include the interest attained from the deposits The deposits reduced due to the
declaration of dividends So the other current assets decreased
The huge increase in sundry debtors resulted an increase in the ratio which is
above the benchmark level of 21 which shows the comfortable position of the
firm
GRAPHICAL REPRESENTATION
741
219
448
194
382
000
100
200
300
400
500
600
700
800
Ratio
2003 2004 2005 2006 2007
Years
CURRENT RATIO
Ratio
2 QUICK RATIO
(Amount
in Rs)
Quick Ratio
Year Quick Assets Current Liabilities Ratio
2003 58574151 7903952 741
2004 52470336 31884616 165
2005 69883268 16065620 435
2006 89433596 47117199 19
2007 115431868 30266661 381
Interpretation
Quick assets are those assets which can be converted into cash with in a short
period of time say to six months So here the sundry debtors which are with the
long period does not include in the quick assets
Compare with 2006 the Quick ratio is increased because the sundry debtors are
increased due to the increase in the corporate tax and for that the provision
created is also increased So the ratio is also increased with the 2006
GRAPHICAL REPRESENTATION
741
165
435
190
381
000
100
200
300
400
500
600
700
800
Ratio
2003 2004 2005 2006 2007
Years
QUICK RATIO
Ratios
3 ABOSULTE LIQUIDITY RATIO
(Amount
in Rs)
Absolute Cash Ratio
Year Absolute Liquid Assets Current Liabilities Ratio
2003 31004027 7903952 392
2004 10859778 31884616 034
2005 39466542 16065620 246
2006 53850852 47117199 114
2007 35649070 30266661 118
Interpretation
The current assets which are ready in the form of cash are considered as absolute
liquid assets Here the cash and bank balance and the interest on fixed assts are
absolute liquid assets
In the year 2006 the cash and bank balance is decreased due to decrease in the
deposits and the current liabilities are also reduced because of the payment of
dividend That causes a slight increase in the current yearrsquos ratio
GRAPHICAL REPRESENTATION
392
034
246
114 118
0
05
1
15
2
25
3
35
4
Ratios
2003 2004 2005 2006 2007
Years
ABSOLUTE CASH RATIO
Ratios
LEVERAGE RATIOS
4 PROPRIETORY RATIO
(Amount
in Rs)
Proprietory Ratio
Year Share Holders Funds Total Assets Ratio
2003 67679219 78572171 086
2004 53301834 88438107 06
2005 70231061 89158391 079
2006 56473652 106385201 053
2007 97060013 129805102 075
Interpretation
The proprietary ratio establishes the relationship between shareholders funds to
total assets It determines the long-term solvency of the firm This ratio indicates
the extent to which the assets of the company can be lost without affecting the
interest of the company
There is no increase in the capital from the year2004 The share holderrsquos funds
include capital and reserves and surplus The reserves and surplus is increased
due to the increase in balance in profit and loss account which is caused by the
increase of income from services
Total assets includes fixed and current assets The fixed assets are reduced
because of the depreciation and there are no major increments in the fixed assets
The current assets are increased compared with the year 2006 Total assets are
also increased than precious year which resulted an increase in the ratio than old
GRAPHICAL REPRESENTATION
086
060
079
053
075
000
010
020
030
040
050
060
070
080
090
Ratios
2003 2004 2005 2006 2007
Years
PROPRIETORY RATIO
Ratios
ACTIVITY RATIOS
5 WORKING CAPITAL TURNOVER RATIO
(Amount
in Rs)
Working Capital Turnover Ratio
Year Income From Services Working Capital Ratio
2003 36309834 50670199 0722004 53899084 37880730 1422005 72728759 55355460 1312006 55550649 44211009 1262007 96654902 85375407 113
Interpretation
Income from services is greatly increased due to the extra invoice for Operations
amp Maintenance fee and the working capital is also increased greater due to the
increase in from services because the huge increase in current assets
The income from services is raised and the current assets are also raised together
resulted in the decrease of the ratio of 2007 compared with 2006
GRAPHICAL REPRESENTATION
072
142 131126
113
000
020
040
060
080
100
120
140
160
Ratio
2003 2004 2005 2006 2007
Years
WORKING CAPITAL TURNOVER RATIO
Ratio
6 FIXED ASSETS TURNOVER RATIO
(Amount in Rs)
Fixed Assets Turnover Ratio
Year Income From Services Net Fixed Assets Ratio
2003 36309834 28834317 126
2004 53899084 29568279 182
2005 72728759 17137310 424
2006 55550649 15056993 369
2007 96654902 14163034 682
Interpretation
Fixed assets are used in the business for producing the goods to be sold This
ratio shows the firmrsquos ability in generating sales from all financial resources
committed to total assets The ratio indicates the account of one rupee
investment in fixed assets
The income from services is greaterly increased in the current year due to the
increase in the Operations amp Maintenance fee due to the increase in extra invoice
and the net fixed assets are reduced because of the increased charge of
depreciation Finally that effected a huge increase in the ratio compared with the
previous yearrsquos ratio
GRAPHICAL REPRSENTATION
126182
424 369
682
000
100
200
300
400
500
600
700
Ratios
2003 2004 2005 2006 2007
Years
FIXED ASSETS TURNOVER RATIO
Ratios
7 CAPITAL TURNOVER RATIO
(Amount
in Rs)
Capital Turnover Ratio
Year Income From Services Capital Employed Ratio
2003 36309834 37175892 0982004 53899084 53301834 1012005 72728759 70231061 1042006 55550649 56473652 0982007 96654902 97060013 100
Interpretation
This is another ratio to judge the efficiency and effectiveness of the company
like profitability ratio
The income from services is greaterly increased compared with the previous year
and the total capital employed includes capital and reserves amp surplus Due to
huge increase in the net profit the capital employed is also increased along with
income from services Both are effected in the increment of the ratio of current
year
GRAPHICAL REPRESENTATION
098
101
104
098
100
094095096097098099100101102103104
Ratios
2003 2004 2005 2006 2007
Years
CAPITAL TURNOVER RATIO
Ratios
8 CURRENT ASSETS TO FIXED ASSETS RATIO
(Amount
in Rs)
Current Assets To Fixed Assets Ratio
Year Current Assets Fixed Assets Ratio
2003 58524151 19998020 2932004 69765346 18672761 3742005 72021081 17137310 4202006 91328208 15056993 6072007 115642068 14163034 817
Interpretation
Current assets are increased due to the increase in the sundry debtors and the net
fixed assets of the firm are decreased due to the charge of depreciation and there
is no major increment in the fixed assets
The increment in current assets and the decrease in fixed assets resulted an
increase in the ratio compared with the previous year
GRAPHICAL REPRESENTATION
293374
420
607
817
000
100
200
300
400
500
600
700
800
900
Ratios
2003 2004 2005 2006 2007
Years
CURRENT ASSETS TO FIXED ASSETS RATIO
Ratios
PROFITABILITY RATIOS
GENERAL PROFITABILITY RATIOS
9 NET PROFIT RATIO
(Amount in Rs)
Net Profit Ratio
Year Net Profit After Tax Income from Services Ratio
2003 21123474 36039834 059
2004 16125942 53899084 030
2005 16929227 72728759 023
2006 18259580 55550649 033
2007 40586359 96654902 042
Interpretation
The net profit ratio is the overall measure of the firmrsquos ability to turn each rupee
of income from services in net profit If the net margin is inadequate the firm
will fail to achieve return on shareholderrsquos funds High net profit ratio will help
the firm service in the fall of income from services rise in cost of production or
declining demand
The net profit is increased because the income from services is increased The
increment resulted a slight increase in 2007 ratio compared with the year 2006
GRAPHICAL REPRESENTATION
059
030
023
033
042
000
010
020
030
040
050
060
Ratios
2003 2004 2005 2006 2007
Years
NET PROFIT RATIO
Ratios
10 OPERATING PROFIT
(Amount in Rs)
Operating Profit
Year Operating Profit Income From Services Ratio
2003 36094877 36309834 099
2004 27576814 53899084 051
2005 29540599 72728759 041
2006 31586718 55550649 057
2007 67192677 96654902 070
Interpretation
The operating profit ratio is used to measure the relationship between net profits
and sales of a firm Depending on the concept it will decide
The operating profit ratio is increased compared with the last year The earnings
are increased due to the increase in the income from services because of
Operations amp Maintenance fee So the ratio is increased slightly compared with
the previous year
GRAPHICAL REPRESENTATION
099
051
041
057
070
000
010
020
030
040
050060
070
080
090
100
Ratios
2003 2004 2005 2006 2007
Years
OPERATING PROFIT RATIO
Ratios
11 RETURN ON TOTAL ASSETS RATIO
(Amount in Rs)
Return on Total Assets Ratio
Year Net Profit After Tax Total Assets Ratio
2003 21123474 78572171 027
2004 16125942 88438107 018
2005 16929227 89158391 019
2006 18259580 106385201 017
2007 40586359 129805102 031
Interpretation
This is the ratio between net profit and total assets The ratio indicates the return
on total assets in the form of profits
The net profit is increased in the current year because of the increment in the
income from services due to the increase in Operations amp Maintenance fee The
fixed assets are reduced due to the charge of depreciation and no major
increments in fixed assets but the current assets are increased because of sundry
debtors and that effects an increase in the ratio compared with the last year ie
2006
GRAPHICAL REPRESENTATION
027
018 019017
031
000
005
010
015
020
025
030
035
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON TOTAL ASSETS
Ratios
12 RESERVES amp SURPLUS TO CAPITAL RATIO
(Amount in Rs)
Reserves amp Surplus To Capital Ratio
Year Reserves amp Surplus Capital Ratio
2003 65599299 2079920 31542004 34582554 18719280 1852005 51511781 18719280 2752006 37754372 18719280 2022007 78340733 18719280 419
Interpretation
The ratio is used to reveal the policy pursued by the company a very high ratio
indicates a conservative dividend policy and vice-versa Higher the ratio better
will be the position
The reserves amp surplus is decreased in the year 2006 due to the payment of
dividends and in the year 2007 the profit is increased But the capital is
remaining constant from the year 2004 So the increase in the reserves amp surplus
caused a greater increase in the current yearrsquos ratio compared with the older
GRAPHICAL REPRESENTATION
3154
185 275 202419
-
500
1000
1500
2000
2500
3000
3500
Ratios
2003 2004 2005 2006 2007
Years
RESERVES amp SRUPLUS TO CAPITAL RATIO
Ratios
OVERALL PROFITABILITY RATIOS
13 EARNINGS PER SHARE
(Amount in Rs)
Earnings Per Share
Year Net Profit After Tax No of Equity Shares Ratio
2003 21123474 207992 101562004 16125942 1871928 8612005 16929227 1871928 9042006 18259580 1871928 9752007 40586359 1871928 2168
Interpretation
Earnings per share ratio are used to find out the return that the shareholderrsquos earn
from their shares After charging depreciation and after payment of tax the
remaining amount will be distributed by all the shareholders
Net profit after tax is increased due to the huge increase in the income from
services That is the amount which is available to the shareholders to take There
are 1871928 shares of Rs10- each The share capital is constant from the year
2004 Due to the huge increase in net profit the earnings per share is greaterly
increased in 2007
GRAPHICAL REPRESENTATION
10156
861904 975
2168
000
2000
4000
6000
8000
10000
12000
Ratios
2003 2004 2005 2006 2007
Years
EARNINGS PER SHARE
Ratios
14 PRICE EARNINGS (PE) RATIO
(Amount in Rs)
Price Earning (PE) Ratio
Year Market Price Per Share Earnings Per Share Ratio
2003 3254 10156 0322004 2847 861 3302005 3752 904 4152006 3017 975 3092007 5185 2168 239
Interpretation
The ratio is calculated to make an estimate of application in the value of share of
a company
The market price per share is increased due to the increase in the reserves
amp surplus The earnings per share are also increased greaterly compared
with the last year because of increase in the net profit So the ratio is
decreased compared with the previous year
GRAPHICAL REPRESENTATION
032
330
415
309
239
000
050
100
150
200
250
300
350
400
450
Ratios
2003 2004 2005 2006 2007
Years
PE RATIO
Ratios
15 RETURN ON INVESTMENT
(Amount in Rs)
Return on Investment
Year Net Profit After Tax Share Holders Fund Ratio
2003 21123474 67679219 031
2004 16125942 53301834 03
2005 16929227 70231061 024
2006 18259580 56473652 032
2007 40586359 97060013 042
Interpretation
This is the ratio between net profits and shareholders funds The ratio is
generally calculated as percentage multiplying with 100
The net profit is increased due to the increase in the income from services ant
the shareholders funds are increased because of reserve amp surplus So the ratio
is increased in the current year
GRAPHICAL REPRESENTATION
031 030
024
032
042
000
005
010
015
020
025
030
035
040
045
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON INVESTMENT RATIO
RatioS
DATA COLLECTION
The data can be of two types
Primary Data
Secondary Data
Primary Data
Primary data are those data which is originally collected afresh
Secondary Data
Secondary data are those data which are already collected and stored and which has
been passed through statistical research
In this project Secondary data has been collected from following sources-
Annual report
Books
MIS
Other material and report published by company There are two methods to prepare
the Cash flow Statement
ndirect Method
I
The indirect method (or reconciliation method) starts with net income and converts it
to net cash flow from operating activities In other words the indirect method adjusts
net income for items that affected reported net income but did not affect cash To
compute net cash flow from operating activities non-cash charges in the income
statement are added ack to net income and non-cash credits are deducted
b
Direct Method
Under the direct method the statement of cash flows reports net cash flow from
operating activities as major classes of operating cash receipts (eg cash collected from
customers and cash received from interest and dividends) and cash disbursements (eg
cash paid to suppliers for goods to employees for services to creditors for interest and
to government authorities for taxes)
INDIRECT VERSUS DIRECT METHOD
The most contentious decision that the FASB faced in issuing Statement No 95 was
choosing between the direct method and the indirect method of determining net cash
flow from operating activities Companies lobbied against the direct method urging
adoption of the indirect method Commercial lending officers expressed a strong
preference to the FASB hat the direct method be required
tCF-Page 3 of 5
In Favor of the Direct Method
The principal advantage of the direct method is that it shows operating cash receipts and
payments That is it is more consistent with the objective of a statement of cash flows to
provide information about cash receipts and cash payments than the in-direct method
which does not report operating cash receipts and payments
Supporters of the direct method contend that knowledge of the specific sources of
operating cash receipts and the purposes for which operating cash payments were made
in past periods is useful in estimating future operating cash flows Furthermore in-
formation about amounts of major classes of operating cash receipts and payments is
more useful than information only about their arithmetic sum (the net cash flow from
operating activities) Such information is more revealing of an enterprises ability (1) to
generate sufficient cash from operating activities to pay its debts (2) to reinvest in its
operations and (3) to make distributions to its owners
Many corporate providers of financial statements say that they do not currently collect
information in a manner that allows them to determine amounts such as cash received
from customers or cash paid to suppliers directly from their accounting systems But
supporters of the direct method contend that the incremental cost of assimilating such
operating cash receipts and payments data is not significant
In Favor of the Indirect Method
The principal advantage of the indirect method is that it focuses on the differences
between net income and net cash flow from operating activities That is it provides a
useful link between the statement of cash flows and the income statement and balance
sheet
Many providers of financial statements contend that it is less costly to adjust net income
to net cash flow from operating activities (indirect) than it is to report gross operating
cash receipts and payments (direct) Supporters of the indirect method also state that the
direct method which effectively reports income statement information on a cash rather
than an accrual basis may erroneously suggest that net cash flow from operating
activities is as good as or better than net income as a measure of performance
Special Rules Applying to Direct and Indirect Methods
Companies that use the direct method are required at a
minimum to report separately the following classes of
operating cash receipts and payments
Receipts
1048713 Cash collected from customers (including lessees licensees etc)
1048713 Interest and dividends received
1048713 Other operating cash receipts if any
Payments
1048713 Cash paid to employees and suppliers of goods or services (including
suppliers of
insurance advertising etc)
1048713 Interest paid
1048713 Income taxes paid
1048713 Other operating cash payments if any
Companies using the indirect method are required to disclose separately changes in
inventory receivables and payables to reconcile net income to net cash flow from
operating activities In addition interest paid (net of amount capitalized) and income
taxes paid must be disclosed elsewhere in the financial statements or accompanying
notes
The FASB requires these separate and additional disclosures so that users
may approximate the direct method Also an acceptable alternative presentation
of the in-direct method is to report net cash flow from operating activities as a
single line item in the statement of cash flows and to present the reconciliation
details elsewhere in the financial statements
FINDING OF SUDY
According to cash flow statement of the company The finding of the study are as
follows-
The company has not taken any loans secured or unsecured from companies
firms or other parties
The company has not accepted any deposit from the public during the year
The company is not a sick industrial company
The company has not granted any loan secured or unsecured to company firms
or other parties
The company has paid the entire long term and short term borrowing during the
year
The company has buy back the companyrsquos own share this year
The interest paid in 2008 is more than the
There has been a significant decline in volume over the years from 2001-02
to 2005-06 as can be seen in the graph below
Table 43
The Net sales of Tractor has increased considerably from 2004-05 to 2007-08
This can be mainly attributed to changes in Variable and material costs and in
the price
The Net sale of Tractor has increased considerably from 2004-05 to 2007-08
that is an decrease of Rs7216 per tractor This can be mainly attributed to
changes in
Variable and material costs and in the prices
RECOMMENDATIONS
According to cash flow statement of the company The suggestions of the study
are as follows-
The time durations for training program have to increase
Buy regular review and consultations develop a career progression
which is sensitive to performance and ability
Create an environment where by people are trend developed to enable
The to take advantages of opportunities that arise
The jab can be redesigned where the work man stay in what is normally
the same job but has elements of it changed
The principle amount must be paid in time which can be reducing the
interest the out flow
The purchase of the fixed asset must be made only when there is extreme
requirement
In order to avoid taxes the company should go for more investment
The companyrsquos borrowings should go for more investment
o The company should try to reduce the depreciations as maximum
as possible
CONCLUSION
The study on competency level of employees at ESCORTS PVTLTD gave an
insight about the acceptance of competency mapping by employees
The employees at Ymi welcome the introduction of competency mapping in their
organization as they felt it was very much essential in enhancing their skills and
organizational development
The organization has provided the recourses guidance and support to facilitate the
introduction of competency level easily and develop the employees in such a way
that they can face any kind of challenge
However the level of competency in employees is found to be satisfactory
Providing proper training education and guidance to the employees can enhance
the level
This study was mainly carried out to find out whether thee competency mapping
being followed by the company is effective till date If the competency mapping
and fitment to the organization
By looking at the graphs and tables it is quite that the employees still are not up to
the level of competent pool they still have to be trained and made competent in
order to fill the gap As the organization has just applied the mapping it has to see
to that it meets all the requirements for competency mapping
Therefore the graphs make it quite clear that the potential of the employees is not
up to the mark and ie they are not competent enough to meet the competency-
mapping requirement Hence by further training and counseling this gap can be
closed
This report includes the training requirements of employees and it highlights skills
possessed by each employee and skill required All employees get training so that
skill can be improved and maintain balance between standard performance with
their actual performance to avoid gap
APPENDIX
QUESTIONNAIRE
Consumer Survey
Name _____________________________
Age _____________________________
Sex
Male
Female
Occupation
Businessman
Service man
Professional
Others
Monthly income brackets
Below 15000
15000- 20000
20000-30000
30000 and above
of your savings _________
Do you invest
Yes
No
If yes then where do you invest your money
Bank
Insurance
funds
Others
Why do you made that statement
Return
Risk hedging
Tax benefits
Other reasons (specify) _______
Who influence your cash decision
Relatives and friends
Family members
Advisors experts
You yourself
If no then why
Do not know where to invest
Satisfied with your current investment return
Donrsquot want take risk
Other reasons
__________________________________________________________________
___________________
Do you know about CF statement
Yes
No
If yes then from where you have come to know about an cash statement
Advertisements on newspapers
Friends and relative
Agents experts
Other source
What do you think about cash statement
It means investing only in share market
Constant watch must be kept always
Return is not satisfactory
Other perception
__________________________________________________
Can you recall any cash flow of company
___________________________
Would you want to made CF of an org
Yes
No
If yes then why
_______________________________________________________
If no then why
_______________________________________________________
BIBLIOGRAPHY
List of Books
1 PANDEY IM - FINANCIAL MANAGEMANT
2 KHAN MY AND JAIN PK -FINANCIAL MANAGEMANT
3 SMITH KV ndash MANAGEMANT OF WORKING CAPITAL
3 COMPANY RECORDS
4 JOURNAL
5 REPORTS
WEBLIOGRAPHY
1 wwwescortspvtltdcom
2 wwwgooglecom
Identified from the available information which has been relied upon by the auditors
The names of small-scale industrial units to whom outstanding for more than
thirty days within agreed terms
The company has 9996 of shareholders in its subsidiary company named as
ESCORTS PVT LTD As at 31-03-2008
So the net effect is that the net cash from investing activities has many more
times than the last year which is negative Now the company has repaid its long
term borrowing more than the last year which has decreased the cash balance by
the little amount
Balance with the schedule banks under the head current amp collection account
amounting to represent funds in transit lying with schedule banks pending
transfer against loan liabilities under the head cash credit amp bill discounting
LIQUIDITY RATIO
1 CURRENT RATIO
(Amount in Rs)
Current Ratio
Year Current Assets Current Liabilities Ratio
2003 58574151 7903952 7412004 69765346 31884616 2192005 72021081 16065621 4482006 91328208 47117199 1942007 115642068 30266661 382
Interpretation
As a rule the current ratio with 21 (or) more is considered as satisfactory
position of the firm
When compared with 2006 there is an increase in the provision for tax because
the debtors are raised and for that the provision is created The current liabilities
majorly included Lanco Group of company for consultancy additional services
The sundry debtors have increased due to the increase to corporate taxes
In the year 2006 the cash and bank balance is reduced because that is used for
payment of dividends In the year 2007 the loans and advances include majorly
the advances to employees and deposits to government The loans and advances
reduced because the employees set off their claims The other current assets
include the interest attained from the deposits The deposits reduced due to the
declaration of dividends So the other current assets decreased
The huge increase in sundry debtors resulted an increase in the ratio which is
above the benchmark level of 21 which shows the comfortable position of the
firm
GRAPHICAL REPRESENTATION
741
219
448
194
382
000
100
200
300
400
500
600
700
800
Ratio
2003 2004 2005 2006 2007
Years
CURRENT RATIO
Ratio
2 QUICK RATIO
(Amount
in Rs)
Quick Ratio
Year Quick Assets Current Liabilities Ratio
2003 58574151 7903952 741
2004 52470336 31884616 165
2005 69883268 16065620 435
2006 89433596 47117199 19
2007 115431868 30266661 381
Interpretation
Quick assets are those assets which can be converted into cash with in a short
period of time say to six months So here the sundry debtors which are with the
long period does not include in the quick assets
Compare with 2006 the Quick ratio is increased because the sundry debtors are
increased due to the increase in the corporate tax and for that the provision
created is also increased So the ratio is also increased with the 2006
GRAPHICAL REPRESENTATION
741
165
435
190
381
000
100
200
300
400
500
600
700
800
Ratio
2003 2004 2005 2006 2007
Years
QUICK RATIO
Ratios
3 ABOSULTE LIQUIDITY RATIO
(Amount
in Rs)
Absolute Cash Ratio
Year Absolute Liquid Assets Current Liabilities Ratio
2003 31004027 7903952 392
2004 10859778 31884616 034
2005 39466542 16065620 246
2006 53850852 47117199 114
2007 35649070 30266661 118
Interpretation
The current assets which are ready in the form of cash are considered as absolute
liquid assets Here the cash and bank balance and the interest on fixed assts are
absolute liquid assets
In the year 2006 the cash and bank balance is decreased due to decrease in the
deposits and the current liabilities are also reduced because of the payment of
dividend That causes a slight increase in the current yearrsquos ratio
GRAPHICAL REPRESENTATION
392
034
246
114 118
0
05
1
15
2
25
3
35
4
Ratios
2003 2004 2005 2006 2007
Years
ABSOLUTE CASH RATIO
Ratios
LEVERAGE RATIOS
4 PROPRIETORY RATIO
(Amount
in Rs)
Proprietory Ratio
Year Share Holders Funds Total Assets Ratio
2003 67679219 78572171 086
2004 53301834 88438107 06
2005 70231061 89158391 079
2006 56473652 106385201 053
2007 97060013 129805102 075
Interpretation
The proprietary ratio establishes the relationship between shareholders funds to
total assets It determines the long-term solvency of the firm This ratio indicates
the extent to which the assets of the company can be lost without affecting the
interest of the company
There is no increase in the capital from the year2004 The share holderrsquos funds
include capital and reserves and surplus The reserves and surplus is increased
due to the increase in balance in profit and loss account which is caused by the
increase of income from services
Total assets includes fixed and current assets The fixed assets are reduced
because of the depreciation and there are no major increments in the fixed assets
The current assets are increased compared with the year 2006 Total assets are
also increased than precious year which resulted an increase in the ratio than old
GRAPHICAL REPRESENTATION
086
060
079
053
075
000
010
020
030
040
050
060
070
080
090
Ratios
2003 2004 2005 2006 2007
Years
PROPRIETORY RATIO
Ratios
ACTIVITY RATIOS
5 WORKING CAPITAL TURNOVER RATIO
(Amount
in Rs)
Working Capital Turnover Ratio
Year Income From Services Working Capital Ratio
2003 36309834 50670199 0722004 53899084 37880730 1422005 72728759 55355460 1312006 55550649 44211009 1262007 96654902 85375407 113
Interpretation
Income from services is greatly increased due to the extra invoice for Operations
amp Maintenance fee and the working capital is also increased greater due to the
increase in from services because the huge increase in current assets
The income from services is raised and the current assets are also raised together
resulted in the decrease of the ratio of 2007 compared with 2006
GRAPHICAL REPRESENTATION
072
142 131126
113
000
020
040
060
080
100
120
140
160
Ratio
2003 2004 2005 2006 2007
Years
WORKING CAPITAL TURNOVER RATIO
Ratio
6 FIXED ASSETS TURNOVER RATIO
(Amount in Rs)
Fixed Assets Turnover Ratio
Year Income From Services Net Fixed Assets Ratio
2003 36309834 28834317 126
2004 53899084 29568279 182
2005 72728759 17137310 424
2006 55550649 15056993 369
2007 96654902 14163034 682
Interpretation
Fixed assets are used in the business for producing the goods to be sold This
ratio shows the firmrsquos ability in generating sales from all financial resources
committed to total assets The ratio indicates the account of one rupee
investment in fixed assets
The income from services is greaterly increased in the current year due to the
increase in the Operations amp Maintenance fee due to the increase in extra invoice
and the net fixed assets are reduced because of the increased charge of
depreciation Finally that effected a huge increase in the ratio compared with the
previous yearrsquos ratio
GRAPHICAL REPRSENTATION
126182
424 369
682
000
100
200
300
400
500
600
700
Ratios
2003 2004 2005 2006 2007
Years
FIXED ASSETS TURNOVER RATIO
Ratios
7 CAPITAL TURNOVER RATIO
(Amount
in Rs)
Capital Turnover Ratio
Year Income From Services Capital Employed Ratio
2003 36309834 37175892 0982004 53899084 53301834 1012005 72728759 70231061 1042006 55550649 56473652 0982007 96654902 97060013 100
Interpretation
This is another ratio to judge the efficiency and effectiveness of the company
like profitability ratio
The income from services is greaterly increased compared with the previous year
and the total capital employed includes capital and reserves amp surplus Due to
huge increase in the net profit the capital employed is also increased along with
income from services Both are effected in the increment of the ratio of current
year
GRAPHICAL REPRESENTATION
098
101
104
098
100
094095096097098099100101102103104
Ratios
2003 2004 2005 2006 2007
Years
CAPITAL TURNOVER RATIO
Ratios
8 CURRENT ASSETS TO FIXED ASSETS RATIO
(Amount
in Rs)
Current Assets To Fixed Assets Ratio
Year Current Assets Fixed Assets Ratio
2003 58524151 19998020 2932004 69765346 18672761 3742005 72021081 17137310 4202006 91328208 15056993 6072007 115642068 14163034 817
Interpretation
Current assets are increased due to the increase in the sundry debtors and the net
fixed assets of the firm are decreased due to the charge of depreciation and there
is no major increment in the fixed assets
The increment in current assets and the decrease in fixed assets resulted an
increase in the ratio compared with the previous year
GRAPHICAL REPRESENTATION
293374
420
607
817
000
100
200
300
400
500
600
700
800
900
Ratios
2003 2004 2005 2006 2007
Years
CURRENT ASSETS TO FIXED ASSETS RATIO
Ratios
PROFITABILITY RATIOS
GENERAL PROFITABILITY RATIOS
9 NET PROFIT RATIO
(Amount in Rs)
Net Profit Ratio
Year Net Profit After Tax Income from Services Ratio
2003 21123474 36039834 059
2004 16125942 53899084 030
2005 16929227 72728759 023
2006 18259580 55550649 033
2007 40586359 96654902 042
Interpretation
The net profit ratio is the overall measure of the firmrsquos ability to turn each rupee
of income from services in net profit If the net margin is inadequate the firm
will fail to achieve return on shareholderrsquos funds High net profit ratio will help
the firm service in the fall of income from services rise in cost of production or
declining demand
The net profit is increased because the income from services is increased The
increment resulted a slight increase in 2007 ratio compared with the year 2006
GRAPHICAL REPRESENTATION
059
030
023
033
042
000
010
020
030
040
050
060
Ratios
2003 2004 2005 2006 2007
Years
NET PROFIT RATIO
Ratios
10 OPERATING PROFIT
(Amount in Rs)
Operating Profit
Year Operating Profit Income From Services Ratio
2003 36094877 36309834 099
2004 27576814 53899084 051
2005 29540599 72728759 041
2006 31586718 55550649 057
2007 67192677 96654902 070
Interpretation
The operating profit ratio is used to measure the relationship between net profits
and sales of a firm Depending on the concept it will decide
The operating profit ratio is increased compared with the last year The earnings
are increased due to the increase in the income from services because of
Operations amp Maintenance fee So the ratio is increased slightly compared with
the previous year
GRAPHICAL REPRESENTATION
099
051
041
057
070
000
010
020
030
040
050060
070
080
090
100
Ratios
2003 2004 2005 2006 2007
Years
OPERATING PROFIT RATIO
Ratios
11 RETURN ON TOTAL ASSETS RATIO
(Amount in Rs)
Return on Total Assets Ratio
Year Net Profit After Tax Total Assets Ratio
2003 21123474 78572171 027
2004 16125942 88438107 018
2005 16929227 89158391 019
2006 18259580 106385201 017
2007 40586359 129805102 031
Interpretation
This is the ratio between net profit and total assets The ratio indicates the return
on total assets in the form of profits
The net profit is increased in the current year because of the increment in the
income from services due to the increase in Operations amp Maintenance fee The
fixed assets are reduced due to the charge of depreciation and no major
increments in fixed assets but the current assets are increased because of sundry
debtors and that effects an increase in the ratio compared with the last year ie
2006
GRAPHICAL REPRESENTATION
027
018 019017
031
000
005
010
015
020
025
030
035
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON TOTAL ASSETS
Ratios
12 RESERVES amp SURPLUS TO CAPITAL RATIO
(Amount in Rs)
Reserves amp Surplus To Capital Ratio
Year Reserves amp Surplus Capital Ratio
2003 65599299 2079920 31542004 34582554 18719280 1852005 51511781 18719280 2752006 37754372 18719280 2022007 78340733 18719280 419
Interpretation
The ratio is used to reveal the policy pursued by the company a very high ratio
indicates a conservative dividend policy and vice-versa Higher the ratio better
will be the position
The reserves amp surplus is decreased in the year 2006 due to the payment of
dividends and in the year 2007 the profit is increased But the capital is
remaining constant from the year 2004 So the increase in the reserves amp surplus
caused a greater increase in the current yearrsquos ratio compared with the older
GRAPHICAL REPRESENTATION
3154
185 275 202419
-
500
1000
1500
2000
2500
3000
3500
Ratios
2003 2004 2005 2006 2007
Years
RESERVES amp SRUPLUS TO CAPITAL RATIO
Ratios
OVERALL PROFITABILITY RATIOS
13 EARNINGS PER SHARE
(Amount in Rs)
Earnings Per Share
Year Net Profit After Tax No of Equity Shares Ratio
2003 21123474 207992 101562004 16125942 1871928 8612005 16929227 1871928 9042006 18259580 1871928 9752007 40586359 1871928 2168
Interpretation
Earnings per share ratio are used to find out the return that the shareholderrsquos earn
from their shares After charging depreciation and after payment of tax the
remaining amount will be distributed by all the shareholders
Net profit after tax is increased due to the huge increase in the income from
services That is the amount which is available to the shareholders to take There
are 1871928 shares of Rs10- each The share capital is constant from the year
2004 Due to the huge increase in net profit the earnings per share is greaterly
increased in 2007
GRAPHICAL REPRESENTATION
10156
861904 975
2168
000
2000
4000
6000
8000
10000
12000
Ratios
2003 2004 2005 2006 2007
Years
EARNINGS PER SHARE
Ratios
14 PRICE EARNINGS (PE) RATIO
(Amount in Rs)
Price Earning (PE) Ratio
Year Market Price Per Share Earnings Per Share Ratio
2003 3254 10156 0322004 2847 861 3302005 3752 904 4152006 3017 975 3092007 5185 2168 239
Interpretation
The ratio is calculated to make an estimate of application in the value of share of
a company
The market price per share is increased due to the increase in the reserves
amp surplus The earnings per share are also increased greaterly compared
with the last year because of increase in the net profit So the ratio is
decreased compared with the previous year
GRAPHICAL REPRESENTATION
032
330
415
309
239
000
050
100
150
200
250
300
350
400
450
Ratios
2003 2004 2005 2006 2007
Years
PE RATIO
Ratios
15 RETURN ON INVESTMENT
(Amount in Rs)
Return on Investment
Year Net Profit After Tax Share Holders Fund Ratio
2003 21123474 67679219 031
2004 16125942 53301834 03
2005 16929227 70231061 024
2006 18259580 56473652 032
2007 40586359 97060013 042
Interpretation
This is the ratio between net profits and shareholders funds The ratio is
generally calculated as percentage multiplying with 100
The net profit is increased due to the increase in the income from services ant
the shareholders funds are increased because of reserve amp surplus So the ratio
is increased in the current year
GRAPHICAL REPRESENTATION
031 030
024
032
042
000
005
010
015
020
025
030
035
040
045
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON INVESTMENT RATIO
RatioS
DATA COLLECTION
The data can be of two types
Primary Data
Secondary Data
Primary Data
Primary data are those data which is originally collected afresh
Secondary Data
Secondary data are those data which are already collected and stored and which has
been passed through statistical research
In this project Secondary data has been collected from following sources-
Annual report
Books
MIS
Other material and report published by company There are two methods to prepare
the Cash flow Statement
ndirect Method
I
The indirect method (or reconciliation method) starts with net income and converts it
to net cash flow from operating activities In other words the indirect method adjusts
net income for items that affected reported net income but did not affect cash To
compute net cash flow from operating activities non-cash charges in the income
statement are added ack to net income and non-cash credits are deducted
b
Direct Method
Under the direct method the statement of cash flows reports net cash flow from
operating activities as major classes of operating cash receipts (eg cash collected from
customers and cash received from interest and dividends) and cash disbursements (eg
cash paid to suppliers for goods to employees for services to creditors for interest and
to government authorities for taxes)
INDIRECT VERSUS DIRECT METHOD
The most contentious decision that the FASB faced in issuing Statement No 95 was
choosing between the direct method and the indirect method of determining net cash
flow from operating activities Companies lobbied against the direct method urging
adoption of the indirect method Commercial lending officers expressed a strong
preference to the FASB hat the direct method be required
tCF-Page 3 of 5
In Favor of the Direct Method
The principal advantage of the direct method is that it shows operating cash receipts and
payments That is it is more consistent with the objective of a statement of cash flows to
provide information about cash receipts and cash payments than the in-direct method
which does not report operating cash receipts and payments
Supporters of the direct method contend that knowledge of the specific sources of
operating cash receipts and the purposes for which operating cash payments were made
in past periods is useful in estimating future operating cash flows Furthermore in-
formation about amounts of major classes of operating cash receipts and payments is
more useful than information only about their arithmetic sum (the net cash flow from
operating activities) Such information is more revealing of an enterprises ability (1) to
generate sufficient cash from operating activities to pay its debts (2) to reinvest in its
operations and (3) to make distributions to its owners
Many corporate providers of financial statements say that they do not currently collect
information in a manner that allows them to determine amounts such as cash received
from customers or cash paid to suppliers directly from their accounting systems But
supporters of the direct method contend that the incremental cost of assimilating such
operating cash receipts and payments data is not significant
In Favor of the Indirect Method
The principal advantage of the indirect method is that it focuses on the differences
between net income and net cash flow from operating activities That is it provides a
useful link between the statement of cash flows and the income statement and balance
sheet
Many providers of financial statements contend that it is less costly to adjust net income
to net cash flow from operating activities (indirect) than it is to report gross operating
cash receipts and payments (direct) Supporters of the indirect method also state that the
direct method which effectively reports income statement information on a cash rather
than an accrual basis may erroneously suggest that net cash flow from operating
activities is as good as or better than net income as a measure of performance
Special Rules Applying to Direct and Indirect Methods
Companies that use the direct method are required at a
minimum to report separately the following classes of
operating cash receipts and payments
Receipts
1048713 Cash collected from customers (including lessees licensees etc)
1048713 Interest and dividends received
1048713 Other operating cash receipts if any
Payments
1048713 Cash paid to employees and suppliers of goods or services (including
suppliers of
insurance advertising etc)
1048713 Interest paid
1048713 Income taxes paid
1048713 Other operating cash payments if any
Companies using the indirect method are required to disclose separately changes in
inventory receivables and payables to reconcile net income to net cash flow from
operating activities In addition interest paid (net of amount capitalized) and income
taxes paid must be disclosed elsewhere in the financial statements or accompanying
notes
The FASB requires these separate and additional disclosures so that users
may approximate the direct method Also an acceptable alternative presentation
of the in-direct method is to report net cash flow from operating activities as a
single line item in the statement of cash flows and to present the reconciliation
details elsewhere in the financial statements
FINDING OF SUDY
According to cash flow statement of the company The finding of the study are as
follows-
The company has not taken any loans secured or unsecured from companies
firms or other parties
The company has not accepted any deposit from the public during the year
The company is not a sick industrial company
The company has not granted any loan secured or unsecured to company firms
or other parties
The company has paid the entire long term and short term borrowing during the
year
The company has buy back the companyrsquos own share this year
The interest paid in 2008 is more than the
There has been a significant decline in volume over the years from 2001-02
to 2005-06 as can be seen in the graph below
Table 43
The Net sales of Tractor has increased considerably from 2004-05 to 2007-08
This can be mainly attributed to changes in Variable and material costs and in
the price
The Net sale of Tractor has increased considerably from 2004-05 to 2007-08
that is an decrease of Rs7216 per tractor This can be mainly attributed to
changes in
Variable and material costs and in the prices
RECOMMENDATIONS
According to cash flow statement of the company The suggestions of the study
are as follows-
The time durations for training program have to increase
Buy regular review and consultations develop a career progression
which is sensitive to performance and ability
Create an environment where by people are trend developed to enable
The to take advantages of opportunities that arise
The jab can be redesigned where the work man stay in what is normally
the same job but has elements of it changed
The principle amount must be paid in time which can be reducing the
interest the out flow
The purchase of the fixed asset must be made only when there is extreme
requirement
In order to avoid taxes the company should go for more investment
The companyrsquos borrowings should go for more investment
o The company should try to reduce the depreciations as maximum
as possible
CONCLUSION
The study on competency level of employees at ESCORTS PVTLTD gave an
insight about the acceptance of competency mapping by employees
The employees at Ymi welcome the introduction of competency mapping in their
organization as they felt it was very much essential in enhancing their skills and
organizational development
The organization has provided the recourses guidance and support to facilitate the
introduction of competency level easily and develop the employees in such a way
that they can face any kind of challenge
However the level of competency in employees is found to be satisfactory
Providing proper training education and guidance to the employees can enhance
the level
This study was mainly carried out to find out whether thee competency mapping
being followed by the company is effective till date If the competency mapping
and fitment to the organization
By looking at the graphs and tables it is quite that the employees still are not up to
the level of competent pool they still have to be trained and made competent in
order to fill the gap As the organization has just applied the mapping it has to see
to that it meets all the requirements for competency mapping
Therefore the graphs make it quite clear that the potential of the employees is not
up to the mark and ie they are not competent enough to meet the competency-
mapping requirement Hence by further training and counseling this gap can be
closed
This report includes the training requirements of employees and it highlights skills
possessed by each employee and skill required All employees get training so that
skill can be improved and maintain balance between standard performance with
their actual performance to avoid gap
APPENDIX
QUESTIONNAIRE
Consumer Survey
Name _____________________________
Age _____________________________
Sex
Male
Female
Occupation
Businessman
Service man
Professional
Others
Monthly income brackets
Below 15000
15000- 20000
20000-30000
30000 and above
of your savings _________
Do you invest
Yes
No
If yes then where do you invest your money
Bank
Insurance
funds
Others
Why do you made that statement
Return
Risk hedging
Tax benefits
Other reasons (specify) _______
Who influence your cash decision
Relatives and friends
Family members
Advisors experts
You yourself
If no then why
Do not know where to invest
Satisfied with your current investment return
Donrsquot want take risk
Other reasons
__________________________________________________________________
___________________
Do you know about CF statement
Yes
No
If yes then from where you have come to know about an cash statement
Advertisements on newspapers
Friends and relative
Agents experts
Other source
What do you think about cash statement
It means investing only in share market
Constant watch must be kept always
Return is not satisfactory
Other perception
__________________________________________________
Can you recall any cash flow of company
___________________________
Would you want to made CF of an org
Yes
No
If yes then why
_______________________________________________________
If no then why
_______________________________________________________
BIBLIOGRAPHY
List of Books
1 PANDEY IM - FINANCIAL MANAGEMANT
2 KHAN MY AND JAIN PK -FINANCIAL MANAGEMANT
3 SMITH KV ndash MANAGEMANT OF WORKING CAPITAL
3 COMPANY RECORDS
4 JOURNAL
5 REPORTS
WEBLIOGRAPHY
1 wwwescortspvtltdcom
2 wwwgooglecom
LIQUIDITY RATIO
1 CURRENT RATIO
(Amount in Rs)
Current Ratio
Year Current Assets Current Liabilities Ratio
2003 58574151 7903952 7412004 69765346 31884616 2192005 72021081 16065621 4482006 91328208 47117199 1942007 115642068 30266661 382
Interpretation
As a rule the current ratio with 21 (or) more is considered as satisfactory
position of the firm
When compared with 2006 there is an increase in the provision for tax because
the debtors are raised and for that the provision is created The current liabilities
majorly included Lanco Group of company for consultancy additional services
The sundry debtors have increased due to the increase to corporate taxes
In the year 2006 the cash and bank balance is reduced because that is used for
payment of dividends In the year 2007 the loans and advances include majorly
the advances to employees and deposits to government The loans and advances
reduced because the employees set off their claims The other current assets
include the interest attained from the deposits The deposits reduced due to the
declaration of dividends So the other current assets decreased
The huge increase in sundry debtors resulted an increase in the ratio which is
above the benchmark level of 21 which shows the comfortable position of the
firm
GRAPHICAL REPRESENTATION
741
219
448
194
382
000
100
200
300
400
500
600
700
800
Ratio
2003 2004 2005 2006 2007
Years
CURRENT RATIO
Ratio
2 QUICK RATIO
(Amount
in Rs)
Quick Ratio
Year Quick Assets Current Liabilities Ratio
2003 58574151 7903952 741
2004 52470336 31884616 165
2005 69883268 16065620 435
2006 89433596 47117199 19
2007 115431868 30266661 381
Interpretation
Quick assets are those assets which can be converted into cash with in a short
period of time say to six months So here the sundry debtors which are with the
long period does not include in the quick assets
Compare with 2006 the Quick ratio is increased because the sundry debtors are
increased due to the increase in the corporate tax and for that the provision
created is also increased So the ratio is also increased with the 2006
GRAPHICAL REPRESENTATION
741
165
435
190
381
000
100
200
300
400
500
600
700
800
Ratio
2003 2004 2005 2006 2007
Years
QUICK RATIO
Ratios
3 ABOSULTE LIQUIDITY RATIO
(Amount
in Rs)
Absolute Cash Ratio
Year Absolute Liquid Assets Current Liabilities Ratio
2003 31004027 7903952 392
2004 10859778 31884616 034
2005 39466542 16065620 246
2006 53850852 47117199 114
2007 35649070 30266661 118
Interpretation
The current assets which are ready in the form of cash are considered as absolute
liquid assets Here the cash and bank balance and the interest on fixed assts are
absolute liquid assets
In the year 2006 the cash and bank balance is decreased due to decrease in the
deposits and the current liabilities are also reduced because of the payment of
dividend That causes a slight increase in the current yearrsquos ratio
GRAPHICAL REPRESENTATION
392
034
246
114 118
0
05
1
15
2
25
3
35
4
Ratios
2003 2004 2005 2006 2007
Years
ABSOLUTE CASH RATIO
Ratios
LEVERAGE RATIOS
4 PROPRIETORY RATIO
(Amount
in Rs)
Proprietory Ratio
Year Share Holders Funds Total Assets Ratio
2003 67679219 78572171 086
2004 53301834 88438107 06
2005 70231061 89158391 079
2006 56473652 106385201 053
2007 97060013 129805102 075
Interpretation
The proprietary ratio establishes the relationship between shareholders funds to
total assets It determines the long-term solvency of the firm This ratio indicates
the extent to which the assets of the company can be lost without affecting the
interest of the company
There is no increase in the capital from the year2004 The share holderrsquos funds
include capital and reserves and surplus The reserves and surplus is increased
due to the increase in balance in profit and loss account which is caused by the
increase of income from services
Total assets includes fixed and current assets The fixed assets are reduced
because of the depreciation and there are no major increments in the fixed assets
The current assets are increased compared with the year 2006 Total assets are
also increased than precious year which resulted an increase in the ratio than old
GRAPHICAL REPRESENTATION
086
060
079
053
075
000
010
020
030
040
050
060
070
080
090
Ratios
2003 2004 2005 2006 2007
Years
PROPRIETORY RATIO
Ratios
ACTIVITY RATIOS
5 WORKING CAPITAL TURNOVER RATIO
(Amount
in Rs)
Working Capital Turnover Ratio
Year Income From Services Working Capital Ratio
2003 36309834 50670199 0722004 53899084 37880730 1422005 72728759 55355460 1312006 55550649 44211009 1262007 96654902 85375407 113
Interpretation
Income from services is greatly increased due to the extra invoice for Operations
amp Maintenance fee and the working capital is also increased greater due to the
increase in from services because the huge increase in current assets
The income from services is raised and the current assets are also raised together
resulted in the decrease of the ratio of 2007 compared with 2006
GRAPHICAL REPRESENTATION
072
142 131126
113
000
020
040
060
080
100
120
140
160
Ratio
2003 2004 2005 2006 2007
Years
WORKING CAPITAL TURNOVER RATIO
Ratio
6 FIXED ASSETS TURNOVER RATIO
(Amount in Rs)
Fixed Assets Turnover Ratio
Year Income From Services Net Fixed Assets Ratio
2003 36309834 28834317 126
2004 53899084 29568279 182
2005 72728759 17137310 424
2006 55550649 15056993 369
2007 96654902 14163034 682
Interpretation
Fixed assets are used in the business for producing the goods to be sold This
ratio shows the firmrsquos ability in generating sales from all financial resources
committed to total assets The ratio indicates the account of one rupee
investment in fixed assets
The income from services is greaterly increased in the current year due to the
increase in the Operations amp Maintenance fee due to the increase in extra invoice
and the net fixed assets are reduced because of the increased charge of
depreciation Finally that effected a huge increase in the ratio compared with the
previous yearrsquos ratio
GRAPHICAL REPRSENTATION
126182
424 369
682
000
100
200
300
400
500
600
700
Ratios
2003 2004 2005 2006 2007
Years
FIXED ASSETS TURNOVER RATIO
Ratios
7 CAPITAL TURNOVER RATIO
(Amount
in Rs)
Capital Turnover Ratio
Year Income From Services Capital Employed Ratio
2003 36309834 37175892 0982004 53899084 53301834 1012005 72728759 70231061 1042006 55550649 56473652 0982007 96654902 97060013 100
Interpretation
This is another ratio to judge the efficiency and effectiveness of the company
like profitability ratio
The income from services is greaterly increased compared with the previous year
and the total capital employed includes capital and reserves amp surplus Due to
huge increase in the net profit the capital employed is also increased along with
income from services Both are effected in the increment of the ratio of current
year
GRAPHICAL REPRESENTATION
098
101
104
098
100
094095096097098099100101102103104
Ratios
2003 2004 2005 2006 2007
Years
CAPITAL TURNOVER RATIO
Ratios
8 CURRENT ASSETS TO FIXED ASSETS RATIO
(Amount
in Rs)
Current Assets To Fixed Assets Ratio
Year Current Assets Fixed Assets Ratio
2003 58524151 19998020 2932004 69765346 18672761 3742005 72021081 17137310 4202006 91328208 15056993 6072007 115642068 14163034 817
Interpretation
Current assets are increased due to the increase in the sundry debtors and the net
fixed assets of the firm are decreased due to the charge of depreciation and there
is no major increment in the fixed assets
The increment in current assets and the decrease in fixed assets resulted an
increase in the ratio compared with the previous year
GRAPHICAL REPRESENTATION
293374
420
607
817
000
100
200
300
400
500
600
700
800
900
Ratios
2003 2004 2005 2006 2007
Years
CURRENT ASSETS TO FIXED ASSETS RATIO
Ratios
PROFITABILITY RATIOS
GENERAL PROFITABILITY RATIOS
9 NET PROFIT RATIO
(Amount in Rs)
Net Profit Ratio
Year Net Profit After Tax Income from Services Ratio
2003 21123474 36039834 059
2004 16125942 53899084 030
2005 16929227 72728759 023
2006 18259580 55550649 033
2007 40586359 96654902 042
Interpretation
The net profit ratio is the overall measure of the firmrsquos ability to turn each rupee
of income from services in net profit If the net margin is inadequate the firm
will fail to achieve return on shareholderrsquos funds High net profit ratio will help
the firm service in the fall of income from services rise in cost of production or
declining demand
The net profit is increased because the income from services is increased The
increment resulted a slight increase in 2007 ratio compared with the year 2006
GRAPHICAL REPRESENTATION
059
030
023
033
042
000
010
020
030
040
050
060
Ratios
2003 2004 2005 2006 2007
Years
NET PROFIT RATIO
Ratios
10 OPERATING PROFIT
(Amount in Rs)
Operating Profit
Year Operating Profit Income From Services Ratio
2003 36094877 36309834 099
2004 27576814 53899084 051
2005 29540599 72728759 041
2006 31586718 55550649 057
2007 67192677 96654902 070
Interpretation
The operating profit ratio is used to measure the relationship between net profits
and sales of a firm Depending on the concept it will decide
The operating profit ratio is increased compared with the last year The earnings
are increased due to the increase in the income from services because of
Operations amp Maintenance fee So the ratio is increased slightly compared with
the previous year
GRAPHICAL REPRESENTATION
099
051
041
057
070
000
010
020
030
040
050060
070
080
090
100
Ratios
2003 2004 2005 2006 2007
Years
OPERATING PROFIT RATIO
Ratios
11 RETURN ON TOTAL ASSETS RATIO
(Amount in Rs)
Return on Total Assets Ratio
Year Net Profit After Tax Total Assets Ratio
2003 21123474 78572171 027
2004 16125942 88438107 018
2005 16929227 89158391 019
2006 18259580 106385201 017
2007 40586359 129805102 031
Interpretation
This is the ratio between net profit and total assets The ratio indicates the return
on total assets in the form of profits
The net profit is increased in the current year because of the increment in the
income from services due to the increase in Operations amp Maintenance fee The
fixed assets are reduced due to the charge of depreciation and no major
increments in fixed assets but the current assets are increased because of sundry
debtors and that effects an increase in the ratio compared with the last year ie
2006
GRAPHICAL REPRESENTATION
027
018 019017
031
000
005
010
015
020
025
030
035
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON TOTAL ASSETS
Ratios
12 RESERVES amp SURPLUS TO CAPITAL RATIO
(Amount in Rs)
Reserves amp Surplus To Capital Ratio
Year Reserves amp Surplus Capital Ratio
2003 65599299 2079920 31542004 34582554 18719280 1852005 51511781 18719280 2752006 37754372 18719280 2022007 78340733 18719280 419
Interpretation
The ratio is used to reveal the policy pursued by the company a very high ratio
indicates a conservative dividend policy and vice-versa Higher the ratio better
will be the position
The reserves amp surplus is decreased in the year 2006 due to the payment of
dividends and in the year 2007 the profit is increased But the capital is
remaining constant from the year 2004 So the increase in the reserves amp surplus
caused a greater increase in the current yearrsquos ratio compared with the older
GRAPHICAL REPRESENTATION
3154
185 275 202419
-
500
1000
1500
2000
2500
3000
3500
Ratios
2003 2004 2005 2006 2007
Years
RESERVES amp SRUPLUS TO CAPITAL RATIO
Ratios
OVERALL PROFITABILITY RATIOS
13 EARNINGS PER SHARE
(Amount in Rs)
Earnings Per Share
Year Net Profit After Tax No of Equity Shares Ratio
2003 21123474 207992 101562004 16125942 1871928 8612005 16929227 1871928 9042006 18259580 1871928 9752007 40586359 1871928 2168
Interpretation
Earnings per share ratio are used to find out the return that the shareholderrsquos earn
from their shares After charging depreciation and after payment of tax the
remaining amount will be distributed by all the shareholders
Net profit after tax is increased due to the huge increase in the income from
services That is the amount which is available to the shareholders to take There
are 1871928 shares of Rs10- each The share capital is constant from the year
2004 Due to the huge increase in net profit the earnings per share is greaterly
increased in 2007
GRAPHICAL REPRESENTATION
10156
861904 975
2168
000
2000
4000
6000
8000
10000
12000
Ratios
2003 2004 2005 2006 2007
Years
EARNINGS PER SHARE
Ratios
14 PRICE EARNINGS (PE) RATIO
(Amount in Rs)
Price Earning (PE) Ratio
Year Market Price Per Share Earnings Per Share Ratio
2003 3254 10156 0322004 2847 861 3302005 3752 904 4152006 3017 975 3092007 5185 2168 239
Interpretation
The ratio is calculated to make an estimate of application in the value of share of
a company
The market price per share is increased due to the increase in the reserves
amp surplus The earnings per share are also increased greaterly compared
with the last year because of increase in the net profit So the ratio is
decreased compared with the previous year
GRAPHICAL REPRESENTATION
032
330
415
309
239
000
050
100
150
200
250
300
350
400
450
Ratios
2003 2004 2005 2006 2007
Years
PE RATIO
Ratios
15 RETURN ON INVESTMENT
(Amount in Rs)
Return on Investment
Year Net Profit After Tax Share Holders Fund Ratio
2003 21123474 67679219 031
2004 16125942 53301834 03
2005 16929227 70231061 024
2006 18259580 56473652 032
2007 40586359 97060013 042
Interpretation
This is the ratio between net profits and shareholders funds The ratio is
generally calculated as percentage multiplying with 100
The net profit is increased due to the increase in the income from services ant
the shareholders funds are increased because of reserve amp surplus So the ratio
is increased in the current year
GRAPHICAL REPRESENTATION
031 030
024
032
042
000
005
010
015
020
025
030
035
040
045
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON INVESTMENT RATIO
RatioS
DATA COLLECTION
The data can be of two types
Primary Data
Secondary Data
Primary Data
Primary data are those data which is originally collected afresh
Secondary Data
Secondary data are those data which are already collected and stored and which has
been passed through statistical research
In this project Secondary data has been collected from following sources-
Annual report
Books
MIS
Other material and report published by company There are two methods to prepare
the Cash flow Statement
ndirect Method
I
The indirect method (or reconciliation method) starts with net income and converts it
to net cash flow from operating activities In other words the indirect method adjusts
net income for items that affected reported net income but did not affect cash To
compute net cash flow from operating activities non-cash charges in the income
statement are added ack to net income and non-cash credits are deducted
b
Direct Method
Under the direct method the statement of cash flows reports net cash flow from
operating activities as major classes of operating cash receipts (eg cash collected from
customers and cash received from interest and dividends) and cash disbursements (eg
cash paid to suppliers for goods to employees for services to creditors for interest and
to government authorities for taxes)
INDIRECT VERSUS DIRECT METHOD
The most contentious decision that the FASB faced in issuing Statement No 95 was
choosing between the direct method and the indirect method of determining net cash
flow from operating activities Companies lobbied against the direct method urging
adoption of the indirect method Commercial lending officers expressed a strong
preference to the FASB hat the direct method be required
tCF-Page 3 of 5
In Favor of the Direct Method
The principal advantage of the direct method is that it shows operating cash receipts and
payments That is it is more consistent with the objective of a statement of cash flows to
provide information about cash receipts and cash payments than the in-direct method
which does not report operating cash receipts and payments
Supporters of the direct method contend that knowledge of the specific sources of
operating cash receipts and the purposes for which operating cash payments were made
in past periods is useful in estimating future operating cash flows Furthermore in-
formation about amounts of major classes of operating cash receipts and payments is
more useful than information only about their arithmetic sum (the net cash flow from
operating activities) Such information is more revealing of an enterprises ability (1) to
generate sufficient cash from operating activities to pay its debts (2) to reinvest in its
operations and (3) to make distributions to its owners
Many corporate providers of financial statements say that they do not currently collect
information in a manner that allows them to determine amounts such as cash received
from customers or cash paid to suppliers directly from their accounting systems But
supporters of the direct method contend that the incremental cost of assimilating such
operating cash receipts and payments data is not significant
In Favor of the Indirect Method
The principal advantage of the indirect method is that it focuses on the differences
between net income and net cash flow from operating activities That is it provides a
useful link between the statement of cash flows and the income statement and balance
sheet
Many providers of financial statements contend that it is less costly to adjust net income
to net cash flow from operating activities (indirect) than it is to report gross operating
cash receipts and payments (direct) Supporters of the indirect method also state that the
direct method which effectively reports income statement information on a cash rather
than an accrual basis may erroneously suggest that net cash flow from operating
activities is as good as or better than net income as a measure of performance
Special Rules Applying to Direct and Indirect Methods
Companies that use the direct method are required at a
minimum to report separately the following classes of
operating cash receipts and payments
Receipts
1048713 Cash collected from customers (including lessees licensees etc)
1048713 Interest and dividends received
1048713 Other operating cash receipts if any
Payments
1048713 Cash paid to employees and suppliers of goods or services (including
suppliers of
insurance advertising etc)
1048713 Interest paid
1048713 Income taxes paid
1048713 Other operating cash payments if any
Companies using the indirect method are required to disclose separately changes in
inventory receivables and payables to reconcile net income to net cash flow from
operating activities In addition interest paid (net of amount capitalized) and income
taxes paid must be disclosed elsewhere in the financial statements or accompanying
notes
The FASB requires these separate and additional disclosures so that users
may approximate the direct method Also an acceptable alternative presentation
of the in-direct method is to report net cash flow from operating activities as a
single line item in the statement of cash flows and to present the reconciliation
details elsewhere in the financial statements
FINDING OF SUDY
According to cash flow statement of the company The finding of the study are as
follows-
The company has not taken any loans secured or unsecured from companies
firms or other parties
The company has not accepted any deposit from the public during the year
The company is not a sick industrial company
The company has not granted any loan secured or unsecured to company firms
or other parties
The company has paid the entire long term and short term borrowing during the
year
The company has buy back the companyrsquos own share this year
The interest paid in 2008 is more than the
There has been a significant decline in volume over the years from 2001-02
to 2005-06 as can be seen in the graph below
Table 43
The Net sales of Tractor has increased considerably from 2004-05 to 2007-08
This can be mainly attributed to changes in Variable and material costs and in
the price
The Net sale of Tractor has increased considerably from 2004-05 to 2007-08
that is an decrease of Rs7216 per tractor This can be mainly attributed to
changes in
Variable and material costs and in the prices
RECOMMENDATIONS
According to cash flow statement of the company The suggestions of the study
are as follows-
The time durations for training program have to increase
Buy regular review and consultations develop a career progression
which is sensitive to performance and ability
Create an environment where by people are trend developed to enable
The to take advantages of opportunities that arise
The jab can be redesigned where the work man stay in what is normally
the same job but has elements of it changed
The principle amount must be paid in time which can be reducing the
interest the out flow
The purchase of the fixed asset must be made only when there is extreme
requirement
In order to avoid taxes the company should go for more investment
The companyrsquos borrowings should go for more investment
o The company should try to reduce the depreciations as maximum
as possible
CONCLUSION
The study on competency level of employees at ESCORTS PVTLTD gave an
insight about the acceptance of competency mapping by employees
The employees at Ymi welcome the introduction of competency mapping in their
organization as they felt it was very much essential in enhancing their skills and
organizational development
The organization has provided the recourses guidance and support to facilitate the
introduction of competency level easily and develop the employees in such a way
that they can face any kind of challenge
However the level of competency in employees is found to be satisfactory
Providing proper training education and guidance to the employees can enhance
the level
This study was mainly carried out to find out whether thee competency mapping
being followed by the company is effective till date If the competency mapping
and fitment to the organization
By looking at the graphs and tables it is quite that the employees still are not up to
the level of competent pool they still have to be trained and made competent in
order to fill the gap As the organization has just applied the mapping it has to see
to that it meets all the requirements for competency mapping
Therefore the graphs make it quite clear that the potential of the employees is not
up to the mark and ie they are not competent enough to meet the competency-
mapping requirement Hence by further training and counseling this gap can be
closed
This report includes the training requirements of employees and it highlights skills
possessed by each employee and skill required All employees get training so that
skill can be improved and maintain balance between standard performance with
their actual performance to avoid gap
APPENDIX
QUESTIONNAIRE
Consumer Survey
Name _____________________________
Age _____________________________
Sex
Male
Female
Occupation
Businessman
Service man
Professional
Others
Monthly income brackets
Below 15000
15000- 20000
20000-30000
30000 and above
of your savings _________
Do you invest
Yes
No
If yes then where do you invest your money
Bank
Insurance
funds
Others
Why do you made that statement
Return
Risk hedging
Tax benefits
Other reasons (specify) _______
Who influence your cash decision
Relatives and friends
Family members
Advisors experts
You yourself
If no then why
Do not know where to invest
Satisfied with your current investment return
Donrsquot want take risk
Other reasons
__________________________________________________________________
___________________
Do you know about CF statement
Yes
No
If yes then from where you have come to know about an cash statement
Advertisements on newspapers
Friends and relative
Agents experts
Other source
What do you think about cash statement
It means investing only in share market
Constant watch must be kept always
Return is not satisfactory
Other perception
__________________________________________________
Can you recall any cash flow of company
___________________________
Would you want to made CF of an org
Yes
No
If yes then why
_______________________________________________________
If no then why
_______________________________________________________
BIBLIOGRAPHY
List of Books
1 PANDEY IM - FINANCIAL MANAGEMANT
2 KHAN MY AND JAIN PK -FINANCIAL MANAGEMANT
3 SMITH KV ndash MANAGEMANT OF WORKING CAPITAL
3 COMPANY RECORDS
4 JOURNAL
5 REPORTS
WEBLIOGRAPHY
1 wwwescortspvtltdcom
2 wwwgooglecom
firm
GRAPHICAL REPRESENTATION
741
219
448
194
382
000
100
200
300
400
500
600
700
800
Ratio
2003 2004 2005 2006 2007
Years
CURRENT RATIO
Ratio
2 QUICK RATIO
(Amount
in Rs)
Quick Ratio
Year Quick Assets Current Liabilities Ratio
2003 58574151 7903952 741
2004 52470336 31884616 165
2005 69883268 16065620 435
2006 89433596 47117199 19
2007 115431868 30266661 381
Interpretation
Quick assets are those assets which can be converted into cash with in a short
period of time say to six months So here the sundry debtors which are with the
long period does not include in the quick assets
Compare with 2006 the Quick ratio is increased because the sundry debtors are
increased due to the increase in the corporate tax and for that the provision
created is also increased So the ratio is also increased with the 2006
GRAPHICAL REPRESENTATION
741
165
435
190
381
000
100
200
300
400
500
600
700
800
Ratio
2003 2004 2005 2006 2007
Years
QUICK RATIO
Ratios
3 ABOSULTE LIQUIDITY RATIO
(Amount
in Rs)
Absolute Cash Ratio
Year Absolute Liquid Assets Current Liabilities Ratio
2003 31004027 7903952 392
2004 10859778 31884616 034
2005 39466542 16065620 246
2006 53850852 47117199 114
2007 35649070 30266661 118
Interpretation
The current assets which are ready in the form of cash are considered as absolute
liquid assets Here the cash and bank balance and the interest on fixed assts are
absolute liquid assets
In the year 2006 the cash and bank balance is decreased due to decrease in the
deposits and the current liabilities are also reduced because of the payment of
dividend That causes a slight increase in the current yearrsquos ratio
GRAPHICAL REPRESENTATION
392
034
246
114 118
0
05
1
15
2
25
3
35
4
Ratios
2003 2004 2005 2006 2007
Years
ABSOLUTE CASH RATIO
Ratios
LEVERAGE RATIOS
4 PROPRIETORY RATIO
(Amount
in Rs)
Proprietory Ratio
Year Share Holders Funds Total Assets Ratio
2003 67679219 78572171 086
2004 53301834 88438107 06
2005 70231061 89158391 079
2006 56473652 106385201 053
2007 97060013 129805102 075
Interpretation
The proprietary ratio establishes the relationship between shareholders funds to
total assets It determines the long-term solvency of the firm This ratio indicates
the extent to which the assets of the company can be lost without affecting the
interest of the company
There is no increase in the capital from the year2004 The share holderrsquos funds
include capital and reserves and surplus The reserves and surplus is increased
due to the increase in balance in profit and loss account which is caused by the
increase of income from services
Total assets includes fixed and current assets The fixed assets are reduced
because of the depreciation and there are no major increments in the fixed assets
The current assets are increased compared with the year 2006 Total assets are
also increased than precious year which resulted an increase in the ratio than old
GRAPHICAL REPRESENTATION
086
060
079
053
075
000
010
020
030
040
050
060
070
080
090
Ratios
2003 2004 2005 2006 2007
Years
PROPRIETORY RATIO
Ratios
ACTIVITY RATIOS
5 WORKING CAPITAL TURNOVER RATIO
(Amount
in Rs)
Working Capital Turnover Ratio
Year Income From Services Working Capital Ratio
2003 36309834 50670199 0722004 53899084 37880730 1422005 72728759 55355460 1312006 55550649 44211009 1262007 96654902 85375407 113
Interpretation
Income from services is greatly increased due to the extra invoice for Operations
amp Maintenance fee and the working capital is also increased greater due to the
increase in from services because the huge increase in current assets
The income from services is raised and the current assets are also raised together
resulted in the decrease of the ratio of 2007 compared with 2006
GRAPHICAL REPRESENTATION
072
142 131126
113
000
020
040
060
080
100
120
140
160
Ratio
2003 2004 2005 2006 2007
Years
WORKING CAPITAL TURNOVER RATIO
Ratio
6 FIXED ASSETS TURNOVER RATIO
(Amount in Rs)
Fixed Assets Turnover Ratio
Year Income From Services Net Fixed Assets Ratio
2003 36309834 28834317 126
2004 53899084 29568279 182
2005 72728759 17137310 424
2006 55550649 15056993 369
2007 96654902 14163034 682
Interpretation
Fixed assets are used in the business for producing the goods to be sold This
ratio shows the firmrsquos ability in generating sales from all financial resources
committed to total assets The ratio indicates the account of one rupee
investment in fixed assets
The income from services is greaterly increased in the current year due to the
increase in the Operations amp Maintenance fee due to the increase in extra invoice
and the net fixed assets are reduced because of the increased charge of
depreciation Finally that effected a huge increase in the ratio compared with the
previous yearrsquos ratio
GRAPHICAL REPRSENTATION
126182
424 369
682
000
100
200
300
400
500
600
700
Ratios
2003 2004 2005 2006 2007
Years
FIXED ASSETS TURNOVER RATIO
Ratios
7 CAPITAL TURNOVER RATIO
(Amount
in Rs)
Capital Turnover Ratio
Year Income From Services Capital Employed Ratio
2003 36309834 37175892 0982004 53899084 53301834 1012005 72728759 70231061 1042006 55550649 56473652 0982007 96654902 97060013 100
Interpretation
This is another ratio to judge the efficiency and effectiveness of the company
like profitability ratio
The income from services is greaterly increased compared with the previous year
and the total capital employed includes capital and reserves amp surplus Due to
huge increase in the net profit the capital employed is also increased along with
income from services Both are effected in the increment of the ratio of current
year
GRAPHICAL REPRESENTATION
098
101
104
098
100
094095096097098099100101102103104
Ratios
2003 2004 2005 2006 2007
Years
CAPITAL TURNOVER RATIO
Ratios
8 CURRENT ASSETS TO FIXED ASSETS RATIO
(Amount
in Rs)
Current Assets To Fixed Assets Ratio
Year Current Assets Fixed Assets Ratio
2003 58524151 19998020 2932004 69765346 18672761 3742005 72021081 17137310 4202006 91328208 15056993 6072007 115642068 14163034 817
Interpretation
Current assets are increased due to the increase in the sundry debtors and the net
fixed assets of the firm are decreased due to the charge of depreciation and there
is no major increment in the fixed assets
The increment in current assets and the decrease in fixed assets resulted an
increase in the ratio compared with the previous year
GRAPHICAL REPRESENTATION
293374
420
607
817
000
100
200
300
400
500
600
700
800
900
Ratios
2003 2004 2005 2006 2007
Years
CURRENT ASSETS TO FIXED ASSETS RATIO
Ratios
PROFITABILITY RATIOS
GENERAL PROFITABILITY RATIOS
9 NET PROFIT RATIO
(Amount in Rs)
Net Profit Ratio
Year Net Profit After Tax Income from Services Ratio
2003 21123474 36039834 059
2004 16125942 53899084 030
2005 16929227 72728759 023
2006 18259580 55550649 033
2007 40586359 96654902 042
Interpretation
The net profit ratio is the overall measure of the firmrsquos ability to turn each rupee
of income from services in net profit If the net margin is inadequate the firm
will fail to achieve return on shareholderrsquos funds High net profit ratio will help
the firm service in the fall of income from services rise in cost of production or
declining demand
The net profit is increased because the income from services is increased The
increment resulted a slight increase in 2007 ratio compared with the year 2006
GRAPHICAL REPRESENTATION
059
030
023
033
042
000
010
020
030
040
050
060
Ratios
2003 2004 2005 2006 2007
Years
NET PROFIT RATIO
Ratios
10 OPERATING PROFIT
(Amount in Rs)
Operating Profit
Year Operating Profit Income From Services Ratio
2003 36094877 36309834 099
2004 27576814 53899084 051
2005 29540599 72728759 041
2006 31586718 55550649 057
2007 67192677 96654902 070
Interpretation
The operating profit ratio is used to measure the relationship between net profits
and sales of a firm Depending on the concept it will decide
The operating profit ratio is increased compared with the last year The earnings
are increased due to the increase in the income from services because of
Operations amp Maintenance fee So the ratio is increased slightly compared with
the previous year
GRAPHICAL REPRESENTATION
099
051
041
057
070
000
010
020
030
040
050060
070
080
090
100
Ratios
2003 2004 2005 2006 2007
Years
OPERATING PROFIT RATIO
Ratios
11 RETURN ON TOTAL ASSETS RATIO
(Amount in Rs)
Return on Total Assets Ratio
Year Net Profit After Tax Total Assets Ratio
2003 21123474 78572171 027
2004 16125942 88438107 018
2005 16929227 89158391 019
2006 18259580 106385201 017
2007 40586359 129805102 031
Interpretation
This is the ratio between net profit and total assets The ratio indicates the return
on total assets in the form of profits
The net profit is increased in the current year because of the increment in the
income from services due to the increase in Operations amp Maintenance fee The
fixed assets are reduced due to the charge of depreciation and no major
increments in fixed assets but the current assets are increased because of sundry
debtors and that effects an increase in the ratio compared with the last year ie
2006
GRAPHICAL REPRESENTATION
027
018 019017
031
000
005
010
015
020
025
030
035
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON TOTAL ASSETS
Ratios
12 RESERVES amp SURPLUS TO CAPITAL RATIO
(Amount in Rs)
Reserves amp Surplus To Capital Ratio
Year Reserves amp Surplus Capital Ratio
2003 65599299 2079920 31542004 34582554 18719280 1852005 51511781 18719280 2752006 37754372 18719280 2022007 78340733 18719280 419
Interpretation
The ratio is used to reveal the policy pursued by the company a very high ratio
indicates a conservative dividend policy and vice-versa Higher the ratio better
will be the position
The reserves amp surplus is decreased in the year 2006 due to the payment of
dividends and in the year 2007 the profit is increased But the capital is
remaining constant from the year 2004 So the increase in the reserves amp surplus
caused a greater increase in the current yearrsquos ratio compared with the older
GRAPHICAL REPRESENTATION
3154
185 275 202419
-
500
1000
1500
2000
2500
3000
3500
Ratios
2003 2004 2005 2006 2007
Years
RESERVES amp SRUPLUS TO CAPITAL RATIO
Ratios
OVERALL PROFITABILITY RATIOS
13 EARNINGS PER SHARE
(Amount in Rs)
Earnings Per Share
Year Net Profit After Tax No of Equity Shares Ratio
2003 21123474 207992 101562004 16125942 1871928 8612005 16929227 1871928 9042006 18259580 1871928 9752007 40586359 1871928 2168
Interpretation
Earnings per share ratio are used to find out the return that the shareholderrsquos earn
from their shares After charging depreciation and after payment of tax the
remaining amount will be distributed by all the shareholders
Net profit after tax is increased due to the huge increase in the income from
services That is the amount which is available to the shareholders to take There
are 1871928 shares of Rs10- each The share capital is constant from the year
2004 Due to the huge increase in net profit the earnings per share is greaterly
increased in 2007
GRAPHICAL REPRESENTATION
10156
861904 975
2168
000
2000
4000
6000
8000
10000
12000
Ratios
2003 2004 2005 2006 2007
Years
EARNINGS PER SHARE
Ratios
14 PRICE EARNINGS (PE) RATIO
(Amount in Rs)
Price Earning (PE) Ratio
Year Market Price Per Share Earnings Per Share Ratio
2003 3254 10156 0322004 2847 861 3302005 3752 904 4152006 3017 975 3092007 5185 2168 239
Interpretation
The ratio is calculated to make an estimate of application in the value of share of
a company
The market price per share is increased due to the increase in the reserves
amp surplus The earnings per share are also increased greaterly compared
with the last year because of increase in the net profit So the ratio is
decreased compared with the previous year
GRAPHICAL REPRESENTATION
032
330
415
309
239
000
050
100
150
200
250
300
350
400
450
Ratios
2003 2004 2005 2006 2007
Years
PE RATIO
Ratios
15 RETURN ON INVESTMENT
(Amount in Rs)
Return on Investment
Year Net Profit After Tax Share Holders Fund Ratio
2003 21123474 67679219 031
2004 16125942 53301834 03
2005 16929227 70231061 024
2006 18259580 56473652 032
2007 40586359 97060013 042
Interpretation
This is the ratio between net profits and shareholders funds The ratio is
generally calculated as percentage multiplying with 100
The net profit is increased due to the increase in the income from services ant
the shareholders funds are increased because of reserve amp surplus So the ratio
is increased in the current year
GRAPHICAL REPRESENTATION
031 030
024
032
042
000
005
010
015
020
025
030
035
040
045
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON INVESTMENT RATIO
RatioS
DATA COLLECTION
The data can be of two types
Primary Data
Secondary Data
Primary Data
Primary data are those data which is originally collected afresh
Secondary Data
Secondary data are those data which are already collected and stored and which has
been passed through statistical research
In this project Secondary data has been collected from following sources-
Annual report
Books
MIS
Other material and report published by company There are two methods to prepare
the Cash flow Statement
ndirect Method
I
The indirect method (or reconciliation method) starts with net income and converts it
to net cash flow from operating activities In other words the indirect method adjusts
net income for items that affected reported net income but did not affect cash To
compute net cash flow from operating activities non-cash charges in the income
statement are added ack to net income and non-cash credits are deducted
b
Direct Method
Under the direct method the statement of cash flows reports net cash flow from
operating activities as major classes of operating cash receipts (eg cash collected from
customers and cash received from interest and dividends) and cash disbursements (eg
cash paid to suppliers for goods to employees for services to creditors for interest and
to government authorities for taxes)
INDIRECT VERSUS DIRECT METHOD
The most contentious decision that the FASB faced in issuing Statement No 95 was
choosing between the direct method and the indirect method of determining net cash
flow from operating activities Companies lobbied against the direct method urging
adoption of the indirect method Commercial lending officers expressed a strong
preference to the FASB hat the direct method be required
tCF-Page 3 of 5
In Favor of the Direct Method
The principal advantage of the direct method is that it shows operating cash receipts and
payments That is it is more consistent with the objective of a statement of cash flows to
provide information about cash receipts and cash payments than the in-direct method
which does not report operating cash receipts and payments
Supporters of the direct method contend that knowledge of the specific sources of
operating cash receipts and the purposes for which operating cash payments were made
in past periods is useful in estimating future operating cash flows Furthermore in-
formation about amounts of major classes of operating cash receipts and payments is
more useful than information only about their arithmetic sum (the net cash flow from
operating activities) Such information is more revealing of an enterprises ability (1) to
generate sufficient cash from operating activities to pay its debts (2) to reinvest in its
operations and (3) to make distributions to its owners
Many corporate providers of financial statements say that they do not currently collect
information in a manner that allows them to determine amounts such as cash received
from customers or cash paid to suppliers directly from their accounting systems But
supporters of the direct method contend that the incremental cost of assimilating such
operating cash receipts and payments data is not significant
In Favor of the Indirect Method
The principal advantage of the indirect method is that it focuses on the differences
between net income and net cash flow from operating activities That is it provides a
useful link between the statement of cash flows and the income statement and balance
sheet
Many providers of financial statements contend that it is less costly to adjust net income
to net cash flow from operating activities (indirect) than it is to report gross operating
cash receipts and payments (direct) Supporters of the indirect method also state that the
direct method which effectively reports income statement information on a cash rather
than an accrual basis may erroneously suggest that net cash flow from operating
activities is as good as or better than net income as a measure of performance
Special Rules Applying to Direct and Indirect Methods
Companies that use the direct method are required at a
minimum to report separately the following classes of
operating cash receipts and payments
Receipts
1048713 Cash collected from customers (including lessees licensees etc)
1048713 Interest and dividends received
1048713 Other operating cash receipts if any
Payments
1048713 Cash paid to employees and suppliers of goods or services (including
suppliers of
insurance advertising etc)
1048713 Interest paid
1048713 Income taxes paid
1048713 Other operating cash payments if any
Companies using the indirect method are required to disclose separately changes in
inventory receivables and payables to reconcile net income to net cash flow from
operating activities In addition interest paid (net of amount capitalized) and income
taxes paid must be disclosed elsewhere in the financial statements or accompanying
notes
The FASB requires these separate and additional disclosures so that users
may approximate the direct method Also an acceptable alternative presentation
of the in-direct method is to report net cash flow from operating activities as a
single line item in the statement of cash flows and to present the reconciliation
details elsewhere in the financial statements
FINDING OF SUDY
According to cash flow statement of the company The finding of the study are as
follows-
The company has not taken any loans secured or unsecured from companies
firms or other parties
The company has not accepted any deposit from the public during the year
The company is not a sick industrial company
The company has not granted any loan secured or unsecured to company firms
or other parties
The company has paid the entire long term and short term borrowing during the
year
The company has buy back the companyrsquos own share this year
The interest paid in 2008 is more than the
There has been a significant decline in volume over the years from 2001-02
to 2005-06 as can be seen in the graph below
Table 43
The Net sales of Tractor has increased considerably from 2004-05 to 2007-08
This can be mainly attributed to changes in Variable and material costs and in
the price
The Net sale of Tractor has increased considerably from 2004-05 to 2007-08
that is an decrease of Rs7216 per tractor This can be mainly attributed to
changes in
Variable and material costs and in the prices
RECOMMENDATIONS
According to cash flow statement of the company The suggestions of the study
are as follows-
The time durations for training program have to increase
Buy regular review and consultations develop a career progression
which is sensitive to performance and ability
Create an environment where by people are trend developed to enable
The to take advantages of opportunities that arise
The jab can be redesigned where the work man stay in what is normally
the same job but has elements of it changed
The principle amount must be paid in time which can be reducing the
interest the out flow
The purchase of the fixed asset must be made only when there is extreme
requirement
In order to avoid taxes the company should go for more investment
The companyrsquos borrowings should go for more investment
o The company should try to reduce the depreciations as maximum
as possible
CONCLUSION
The study on competency level of employees at ESCORTS PVTLTD gave an
insight about the acceptance of competency mapping by employees
The employees at Ymi welcome the introduction of competency mapping in their
organization as they felt it was very much essential in enhancing their skills and
organizational development
The organization has provided the recourses guidance and support to facilitate the
introduction of competency level easily and develop the employees in such a way
that they can face any kind of challenge
However the level of competency in employees is found to be satisfactory
Providing proper training education and guidance to the employees can enhance
the level
This study was mainly carried out to find out whether thee competency mapping
being followed by the company is effective till date If the competency mapping
and fitment to the organization
By looking at the graphs and tables it is quite that the employees still are not up to
the level of competent pool they still have to be trained and made competent in
order to fill the gap As the organization has just applied the mapping it has to see
to that it meets all the requirements for competency mapping
Therefore the graphs make it quite clear that the potential of the employees is not
up to the mark and ie they are not competent enough to meet the competency-
mapping requirement Hence by further training and counseling this gap can be
closed
This report includes the training requirements of employees and it highlights skills
possessed by each employee and skill required All employees get training so that
skill can be improved and maintain balance between standard performance with
their actual performance to avoid gap
APPENDIX
QUESTIONNAIRE
Consumer Survey
Name _____________________________
Age _____________________________
Sex
Male
Female
Occupation
Businessman
Service man
Professional
Others
Monthly income brackets
Below 15000
15000- 20000
20000-30000
30000 and above
of your savings _________
Do you invest
Yes
No
If yes then where do you invest your money
Bank
Insurance
funds
Others
Why do you made that statement
Return
Risk hedging
Tax benefits
Other reasons (specify) _______
Who influence your cash decision
Relatives and friends
Family members
Advisors experts
You yourself
If no then why
Do not know where to invest
Satisfied with your current investment return
Donrsquot want take risk
Other reasons
__________________________________________________________________
___________________
Do you know about CF statement
Yes
No
If yes then from where you have come to know about an cash statement
Advertisements on newspapers
Friends and relative
Agents experts
Other source
What do you think about cash statement
It means investing only in share market
Constant watch must be kept always
Return is not satisfactory
Other perception
__________________________________________________
Can you recall any cash flow of company
___________________________
Would you want to made CF of an org
Yes
No
If yes then why
_______________________________________________________
If no then why
_______________________________________________________
BIBLIOGRAPHY
List of Books
1 PANDEY IM - FINANCIAL MANAGEMANT
2 KHAN MY AND JAIN PK -FINANCIAL MANAGEMANT
3 SMITH KV ndash MANAGEMANT OF WORKING CAPITAL
3 COMPANY RECORDS
4 JOURNAL
5 REPORTS
WEBLIOGRAPHY
1 wwwescortspvtltdcom
2 wwwgooglecom
2 QUICK RATIO
(Amount
in Rs)
Quick Ratio
Year Quick Assets Current Liabilities Ratio
2003 58574151 7903952 741
2004 52470336 31884616 165
2005 69883268 16065620 435
2006 89433596 47117199 19
2007 115431868 30266661 381
Interpretation
Quick assets are those assets which can be converted into cash with in a short
period of time say to six months So here the sundry debtors which are with the
long period does not include in the quick assets
Compare with 2006 the Quick ratio is increased because the sundry debtors are
increased due to the increase in the corporate tax and for that the provision
created is also increased So the ratio is also increased with the 2006
GRAPHICAL REPRESENTATION
741
165
435
190
381
000
100
200
300
400
500
600
700
800
Ratio
2003 2004 2005 2006 2007
Years
QUICK RATIO
Ratios
3 ABOSULTE LIQUIDITY RATIO
(Amount
in Rs)
Absolute Cash Ratio
Year Absolute Liquid Assets Current Liabilities Ratio
2003 31004027 7903952 392
2004 10859778 31884616 034
2005 39466542 16065620 246
2006 53850852 47117199 114
2007 35649070 30266661 118
Interpretation
The current assets which are ready in the form of cash are considered as absolute
liquid assets Here the cash and bank balance and the interest on fixed assts are
absolute liquid assets
In the year 2006 the cash and bank balance is decreased due to decrease in the
deposits and the current liabilities are also reduced because of the payment of
dividend That causes a slight increase in the current yearrsquos ratio
GRAPHICAL REPRESENTATION
392
034
246
114 118
0
05
1
15
2
25
3
35
4
Ratios
2003 2004 2005 2006 2007
Years
ABSOLUTE CASH RATIO
Ratios
LEVERAGE RATIOS
4 PROPRIETORY RATIO
(Amount
in Rs)
Proprietory Ratio
Year Share Holders Funds Total Assets Ratio
2003 67679219 78572171 086
2004 53301834 88438107 06
2005 70231061 89158391 079
2006 56473652 106385201 053
2007 97060013 129805102 075
Interpretation
The proprietary ratio establishes the relationship between shareholders funds to
total assets It determines the long-term solvency of the firm This ratio indicates
the extent to which the assets of the company can be lost without affecting the
interest of the company
There is no increase in the capital from the year2004 The share holderrsquos funds
include capital and reserves and surplus The reserves and surplus is increased
due to the increase in balance in profit and loss account which is caused by the
increase of income from services
Total assets includes fixed and current assets The fixed assets are reduced
because of the depreciation and there are no major increments in the fixed assets
The current assets are increased compared with the year 2006 Total assets are
also increased than precious year which resulted an increase in the ratio than old
GRAPHICAL REPRESENTATION
086
060
079
053
075
000
010
020
030
040
050
060
070
080
090
Ratios
2003 2004 2005 2006 2007
Years
PROPRIETORY RATIO
Ratios
ACTIVITY RATIOS
5 WORKING CAPITAL TURNOVER RATIO
(Amount
in Rs)
Working Capital Turnover Ratio
Year Income From Services Working Capital Ratio
2003 36309834 50670199 0722004 53899084 37880730 1422005 72728759 55355460 1312006 55550649 44211009 1262007 96654902 85375407 113
Interpretation
Income from services is greatly increased due to the extra invoice for Operations
amp Maintenance fee and the working capital is also increased greater due to the
increase in from services because the huge increase in current assets
The income from services is raised and the current assets are also raised together
resulted in the decrease of the ratio of 2007 compared with 2006
GRAPHICAL REPRESENTATION
072
142 131126
113
000
020
040
060
080
100
120
140
160
Ratio
2003 2004 2005 2006 2007
Years
WORKING CAPITAL TURNOVER RATIO
Ratio
6 FIXED ASSETS TURNOVER RATIO
(Amount in Rs)
Fixed Assets Turnover Ratio
Year Income From Services Net Fixed Assets Ratio
2003 36309834 28834317 126
2004 53899084 29568279 182
2005 72728759 17137310 424
2006 55550649 15056993 369
2007 96654902 14163034 682
Interpretation
Fixed assets are used in the business for producing the goods to be sold This
ratio shows the firmrsquos ability in generating sales from all financial resources
committed to total assets The ratio indicates the account of one rupee
investment in fixed assets
The income from services is greaterly increased in the current year due to the
increase in the Operations amp Maintenance fee due to the increase in extra invoice
and the net fixed assets are reduced because of the increased charge of
depreciation Finally that effected a huge increase in the ratio compared with the
previous yearrsquos ratio
GRAPHICAL REPRSENTATION
126182
424 369
682
000
100
200
300
400
500
600
700
Ratios
2003 2004 2005 2006 2007
Years
FIXED ASSETS TURNOVER RATIO
Ratios
7 CAPITAL TURNOVER RATIO
(Amount
in Rs)
Capital Turnover Ratio
Year Income From Services Capital Employed Ratio
2003 36309834 37175892 0982004 53899084 53301834 1012005 72728759 70231061 1042006 55550649 56473652 0982007 96654902 97060013 100
Interpretation
This is another ratio to judge the efficiency and effectiveness of the company
like profitability ratio
The income from services is greaterly increased compared with the previous year
and the total capital employed includes capital and reserves amp surplus Due to
huge increase in the net profit the capital employed is also increased along with
income from services Both are effected in the increment of the ratio of current
year
GRAPHICAL REPRESENTATION
098
101
104
098
100
094095096097098099100101102103104
Ratios
2003 2004 2005 2006 2007
Years
CAPITAL TURNOVER RATIO
Ratios
8 CURRENT ASSETS TO FIXED ASSETS RATIO
(Amount
in Rs)
Current Assets To Fixed Assets Ratio
Year Current Assets Fixed Assets Ratio
2003 58524151 19998020 2932004 69765346 18672761 3742005 72021081 17137310 4202006 91328208 15056993 6072007 115642068 14163034 817
Interpretation
Current assets are increased due to the increase in the sundry debtors and the net
fixed assets of the firm are decreased due to the charge of depreciation and there
is no major increment in the fixed assets
The increment in current assets and the decrease in fixed assets resulted an
increase in the ratio compared with the previous year
GRAPHICAL REPRESENTATION
293374
420
607
817
000
100
200
300
400
500
600
700
800
900
Ratios
2003 2004 2005 2006 2007
Years
CURRENT ASSETS TO FIXED ASSETS RATIO
Ratios
PROFITABILITY RATIOS
GENERAL PROFITABILITY RATIOS
9 NET PROFIT RATIO
(Amount in Rs)
Net Profit Ratio
Year Net Profit After Tax Income from Services Ratio
2003 21123474 36039834 059
2004 16125942 53899084 030
2005 16929227 72728759 023
2006 18259580 55550649 033
2007 40586359 96654902 042
Interpretation
The net profit ratio is the overall measure of the firmrsquos ability to turn each rupee
of income from services in net profit If the net margin is inadequate the firm
will fail to achieve return on shareholderrsquos funds High net profit ratio will help
the firm service in the fall of income from services rise in cost of production or
declining demand
The net profit is increased because the income from services is increased The
increment resulted a slight increase in 2007 ratio compared with the year 2006
GRAPHICAL REPRESENTATION
059
030
023
033
042
000
010
020
030
040
050
060
Ratios
2003 2004 2005 2006 2007
Years
NET PROFIT RATIO
Ratios
10 OPERATING PROFIT
(Amount in Rs)
Operating Profit
Year Operating Profit Income From Services Ratio
2003 36094877 36309834 099
2004 27576814 53899084 051
2005 29540599 72728759 041
2006 31586718 55550649 057
2007 67192677 96654902 070
Interpretation
The operating profit ratio is used to measure the relationship between net profits
and sales of a firm Depending on the concept it will decide
The operating profit ratio is increased compared with the last year The earnings
are increased due to the increase in the income from services because of
Operations amp Maintenance fee So the ratio is increased slightly compared with
the previous year
GRAPHICAL REPRESENTATION
099
051
041
057
070
000
010
020
030
040
050060
070
080
090
100
Ratios
2003 2004 2005 2006 2007
Years
OPERATING PROFIT RATIO
Ratios
11 RETURN ON TOTAL ASSETS RATIO
(Amount in Rs)
Return on Total Assets Ratio
Year Net Profit After Tax Total Assets Ratio
2003 21123474 78572171 027
2004 16125942 88438107 018
2005 16929227 89158391 019
2006 18259580 106385201 017
2007 40586359 129805102 031
Interpretation
This is the ratio between net profit and total assets The ratio indicates the return
on total assets in the form of profits
The net profit is increased in the current year because of the increment in the
income from services due to the increase in Operations amp Maintenance fee The
fixed assets are reduced due to the charge of depreciation and no major
increments in fixed assets but the current assets are increased because of sundry
debtors and that effects an increase in the ratio compared with the last year ie
2006
GRAPHICAL REPRESENTATION
027
018 019017
031
000
005
010
015
020
025
030
035
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON TOTAL ASSETS
Ratios
12 RESERVES amp SURPLUS TO CAPITAL RATIO
(Amount in Rs)
Reserves amp Surplus To Capital Ratio
Year Reserves amp Surplus Capital Ratio
2003 65599299 2079920 31542004 34582554 18719280 1852005 51511781 18719280 2752006 37754372 18719280 2022007 78340733 18719280 419
Interpretation
The ratio is used to reveal the policy pursued by the company a very high ratio
indicates a conservative dividend policy and vice-versa Higher the ratio better
will be the position
The reserves amp surplus is decreased in the year 2006 due to the payment of
dividends and in the year 2007 the profit is increased But the capital is
remaining constant from the year 2004 So the increase in the reserves amp surplus
caused a greater increase in the current yearrsquos ratio compared with the older
GRAPHICAL REPRESENTATION
3154
185 275 202419
-
500
1000
1500
2000
2500
3000
3500
Ratios
2003 2004 2005 2006 2007
Years
RESERVES amp SRUPLUS TO CAPITAL RATIO
Ratios
OVERALL PROFITABILITY RATIOS
13 EARNINGS PER SHARE
(Amount in Rs)
Earnings Per Share
Year Net Profit After Tax No of Equity Shares Ratio
2003 21123474 207992 101562004 16125942 1871928 8612005 16929227 1871928 9042006 18259580 1871928 9752007 40586359 1871928 2168
Interpretation
Earnings per share ratio are used to find out the return that the shareholderrsquos earn
from their shares After charging depreciation and after payment of tax the
remaining amount will be distributed by all the shareholders
Net profit after tax is increased due to the huge increase in the income from
services That is the amount which is available to the shareholders to take There
are 1871928 shares of Rs10- each The share capital is constant from the year
2004 Due to the huge increase in net profit the earnings per share is greaterly
increased in 2007
GRAPHICAL REPRESENTATION
10156
861904 975
2168
000
2000
4000
6000
8000
10000
12000
Ratios
2003 2004 2005 2006 2007
Years
EARNINGS PER SHARE
Ratios
14 PRICE EARNINGS (PE) RATIO
(Amount in Rs)
Price Earning (PE) Ratio
Year Market Price Per Share Earnings Per Share Ratio
2003 3254 10156 0322004 2847 861 3302005 3752 904 4152006 3017 975 3092007 5185 2168 239
Interpretation
The ratio is calculated to make an estimate of application in the value of share of
a company
The market price per share is increased due to the increase in the reserves
amp surplus The earnings per share are also increased greaterly compared
with the last year because of increase in the net profit So the ratio is
decreased compared with the previous year
GRAPHICAL REPRESENTATION
032
330
415
309
239
000
050
100
150
200
250
300
350
400
450
Ratios
2003 2004 2005 2006 2007
Years
PE RATIO
Ratios
15 RETURN ON INVESTMENT
(Amount in Rs)
Return on Investment
Year Net Profit After Tax Share Holders Fund Ratio
2003 21123474 67679219 031
2004 16125942 53301834 03
2005 16929227 70231061 024
2006 18259580 56473652 032
2007 40586359 97060013 042
Interpretation
This is the ratio between net profits and shareholders funds The ratio is
generally calculated as percentage multiplying with 100
The net profit is increased due to the increase in the income from services ant
the shareholders funds are increased because of reserve amp surplus So the ratio
is increased in the current year
GRAPHICAL REPRESENTATION
031 030
024
032
042
000
005
010
015
020
025
030
035
040
045
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON INVESTMENT RATIO
RatioS
DATA COLLECTION
The data can be of two types
Primary Data
Secondary Data
Primary Data
Primary data are those data which is originally collected afresh
Secondary Data
Secondary data are those data which are already collected and stored and which has
been passed through statistical research
In this project Secondary data has been collected from following sources-
Annual report
Books
MIS
Other material and report published by company There are two methods to prepare
the Cash flow Statement
ndirect Method
I
The indirect method (or reconciliation method) starts with net income and converts it
to net cash flow from operating activities In other words the indirect method adjusts
net income for items that affected reported net income but did not affect cash To
compute net cash flow from operating activities non-cash charges in the income
statement are added ack to net income and non-cash credits are deducted
b
Direct Method
Under the direct method the statement of cash flows reports net cash flow from
operating activities as major classes of operating cash receipts (eg cash collected from
customers and cash received from interest and dividends) and cash disbursements (eg
cash paid to suppliers for goods to employees for services to creditors for interest and
to government authorities for taxes)
INDIRECT VERSUS DIRECT METHOD
The most contentious decision that the FASB faced in issuing Statement No 95 was
choosing between the direct method and the indirect method of determining net cash
flow from operating activities Companies lobbied against the direct method urging
adoption of the indirect method Commercial lending officers expressed a strong
preference to the FASB hat the direct method be required
tCF-Page 3 of 5
In Favor of the Direct Method
The principal advantage of the direct method is that it shows operating cash receipts and
payments That is it is more consistent with the objective of a statement of cash flows to
provide information about cash receipts and cash payments than the in-direct method
which does not report operating cash receipts and payments
Supporters of the direct method contend that knowledge of the specific sources of
operating cash receipts and the purposes for which operating cash payments were made
in past periods is useful in estimating future operating cash flows Furthermore in-
formation about amounts of major classes of operating cash receipts and payments is
more useful than information only about their arithmetic sum (the net cash flow from
operating activities) Such information is more revealing of an enterprises ability (1) to
generate sufficient cash from operating activities to pay its debts (2) to reinvest in its
operations and (3) to make distributions to its owners
Many corporate providers of financial statements say that they do not currently collect
information in a manner that allows them to determine amounts such as cash received
from customers or cash paid to suppliers directly from their accounting systems But
supporters of the direct method contend that the incremental cost of assimilating such
operating cash receipts and payments data is not significant
In Favor of the Indirect Method
The principal advantage of the indirect method is that it focuses on the differences
between net income and net cash flow from operating activities That is it provides a
useful link between the statement of cash flows and the income statement and balance
sheet
Many providers of financial statements contend that it is less costly to adjust net income
to net cash flow from operating activities (indirect) than it is to report gross operating
cash receipts and payments (direct) Supporters of the indirect method also state that the
direct method which effectively reports income statement information on a cash rather
than an accrual basis may erroneously suggest that net cash flow from operating
activities is as good as or better than net income as a measure of performance
Special Rules Applying to Direct and Indirect Methods
Companies that use the direct method are required at a
minimum to report separately the following classes of
operating cash receipts and payments
Receipts
1048713 Cash collected from customers (including lessees licensees etc)
1048713 Interest and dividends received
1048713 Other operating cash receipts if any
Payments
1048713 Cash paid to employees and suppliers of goods or services (including
suppliers of
insurance advertising etc)
1048713 Interest paid
1048713 Income taxes paid
1048713 Other operating cash payments if any
Companies using the indirect method are required to disclose separately changes in
inventory receivables and payables to reconcile net income to net cash flow from
operating activities In addition interest paid (net of amount capitalized) and income
taxes paid must be disclosed elsewhere in the financial statements or accompanying
notes
The FASB requires these separate and additional disclosures so that users
may approximate the direct method Also an acceptable alternative presentation
of the in-direct method is to report net cash flow from operating activities as a
single line item in the statement of cash flows and to present the reconciliation
details elsewhere in the financial statements
FINDING OF SUDY
According to cash flow statement of the company The finding of the study are as
follows-
The company has not taken any loans secured or unsecured from companies
firms or other parties
The company has not accepted any deposit from the public during the year
The company is not a sick industrial company
The company has not granted any loan secured or unsecured to company firms
or other parties
The company has paid the entire long term and short term borrowing during the
year
The company has buy back the companyrsquos own share this year
The interest paid in 2008 is more than the
There has been a significant decline in volume over the years from 2001-02
to 2005-06 as can be seen in the graph below
Table 43
The Net sales of Tractor has increased considerably from 2004-05 to 2007-08
This can be mainly attributed to changes in Variable and material costs and in
the price
The Net sale of Tractor has increased considerably from 2004-05 to 2007-08
that is an decrease of Rs7216 per tractor This can be mainly attributed to
changes in
Variable and material costs and in the prices
RECOMMENDATIONS
According to cash flow statement of the company The suggestions of the study
are as follows-
The time durations for training program have to increase
Buy regular review and consultations develop a career progression
which is sensitive to performance and ability
Create an environment where by people are trend developed to enable
The to take advantages of opportunities that arise
The jab can be redesigned where the work man stay in what is normally
the same job but has elements of it changed
The principle amount must be paid in time which can be reducing the
interest the out flow
The purchase of the fixed asset must be made only when there is extreme
requirement
In order to avoid taxes the company should go for more investment
The companyrsquos borrowings should go for more investment
o The company should try to reduce the depreciations as maximum
as possible
CONCLUSION
The study on competency level of employees at ESCORTS PVTLTD gave an
insight about the acceptance of competency mapping by employees
The employees at Ymi welcome the introduction of competency mapping in their
organization as they felt it was very much essential in enhancing their skills and
organizational development
The organization has provided the recourses guidance and support to facilitate the
introduction of competency level easily and develop the employees in such a way
that they can face any kind of challenge
However the level of competency in employees is found to be satisfactory
Providing proper training education and guidance to the employees can enhance
the level
This study was mainly carried out to find out whether thee competency mapping
being followed by the company is effective till date If the competency mapping
and fitment to the organization
By looking at the graphs and tables it is quite that the employees still are not up to
the level of competent pool they still have to be trained and made competent in
order to fill the gap As the organization has just applied the mapping it has to see
to that it meets all the requirements for competency mapping
Therefore the graphs make it quite clear that the potential of the employees is not
up to the mark and ie they are not competent enough to meet the competency-
mapping requirement Hence by further training and counseling this gap can be
closed
This report includes the training requirements of employees and it highlights skills
possessed by each employee and skill required All employees get training so that
skill can be improved and maintain balance between standard performance with
their actual performance to avoid gap
APPENDIX
QUESTIONNAIRE
Consumer Survey
Name _____________________________
Age _____________________________
Sex
Male
Female
Occupation
Businessman
Service man
Professional
Others
Monthly income brackets
Below 15000
15000- 20000
20000-30000
30000 and above
of your savings _________
Do you invest
Yes
No
If yes then where do you invest your money
Bank
Insurance
funds
Others
Why do you made that statement
Return
Risk hedging
Tax benefits
Other reasons (specify) _______
Who influence your cash decision
Relatives and friends
Family members
Advisors experts
You yourself
If no then why
Do not know where to invest
Satisfied with your current investment return
Donrsquot want take risk
Other reasons
__________________________________________________________________
___________________
Do you know about CF statement
Yes
No
If yes then from where you have come to know about an cash statement
Advertisements on newspapers
Friends and relative
Agents experts
Other source
What do you think about cash statement
It means investing only in share market
Constant watch must be kept always
Return is not satisfactory
Other perception
__________________________________________________
Can you recall any cash flow of company
___________________________
Would you want to made CF of an org
Yes
No
If yes then why
_______________________________________________________
If no then why
_______________________________________________________
BIBLIOGRAPHY
List of Books
1 PANDEY IM - FINANCIAL MANAGEMANT
2 KHAN MY AND JAIN PK -FINANCIAL MANAGEMANT
3 SMITH KV ndash MANAGEMANT OF WORKING CAPITAL
3 COMPANY RECORDS
4 JOURNAL
5 REPORTS
WEBLIOGRAPHY
1 wwwescortspvtltdcom
2 wwwgooglecom
GRAPHICAL REPRESENTATION
741
165
435
190
381
000
100
200
300
400
500
600
700
800
Ratio
2003 2004 2005 2006 2007
Years
QUICK RATIO
Ratios
3 ABOSULTE LIQUIDITY RATIO
(Amount
in Rs)
Absolute Cash Ratio
Year Absolute Liquid Assets Current Liabilities Ratio
2003 31004027 7903952 392
2004 10859778 31884616 034
2005 39466542 16065620 246
2006 53850852 47117199 114
2007 35649070 30266661 118
Interpretation
The current assets which are ready in the form of cash are considered as absolute
liquid assets Here the cash and bank balance and the interest on fixed assts are
absolute liquid assets
In the year 2006 the cash and bank balance is decreased due to decrease in the
deposits and the current liabilities are also reduced because of the payment of
dividend That causes a slight increase in the current yearrsquos ratio
GRAPHICAL REPRESENTATION
392
034
246
114 118
0
05
1
15
2
25
3
35
4
Ratios
2003 2004 2005 2006 2007
Years
ABSOLUTE CASH RATIO
Ratios
LEVERAGE RATIOS
4 PROPRIETORY RATIO
(Amount
in Rs)
Proprietory Ratio
Year Share Holders Funds Total Assets Ratio
2003 67679219 78572171 086
2004 53301834 88438107 06
2005 70231061 89158391 079
2006 56473652 106385201 053
2007 97060013 129805102 075
Interpretation
The proprietary ratio establishes the relationship between shareholders funds to
total assets It determines the long-term solvency of the firm This ratio indicates
the extent to which the assets of the company can be lost without affecting the
interest of the company
There is no increase in the capital from the year2004 The share holderrsquos funds
include capital and reserves and surplus The reserves and surplus is increased
due to the increase in balance in profit and loss account which is caused by the
increase of income from services
Total assets includes fixed and current assets The fixed assets are reduced
because of the depreciation and there are no major increments in the fixed assets
The current assets are increased compared with the year 2006 Total assets are
also increased than precious year which resulted an increase in the ratio than old
GRAPHICAL REPRESENTATION
086
060
079
053
075
000
010
020
030
040
050
060
070
080
090
Ratios
2003 2004 2005 2006 2007
Years
PROPRIETORY RATIO
Ratios
ACTIVITY RATIOS
5 WORKING CAPITAL TURNOVER RATIO
(Amount
in Rs)
Working Capital Turnover Ratio
Year Income From Services Working Capital Ratio
2003 36309834 50670199 0722004 53899084 37880730 1422005 72728759 55355460 1312006 55550649 44211009 1262007 96654902 85375407 113
Interpretation
Income from services is greatly increased due to the extra invoice for Operations
amp Maintenance fee and the working capital is also increased greater due to the
increase in from services because the huge increase in current assets
The income from services is raised and the current assets are also raised together
resulted in the decrease of the ratio of 2007 compared with 2006
GRAPHICAL REPRESENTATION
072
142 131126
113
000
020
040
060
080
100
120
140
160
Ratio
2003 2004 2005 2006 2007
Years
WORKING CAPITAL TURNOVER RATIO
Ratio
6 FIXED ASSETS TURNOVER RATIO
(Amount in Rs)
Fixed Assets Turnover Ratio
Year Income From Services Net Fixed Assets Ratio
2003 36309834 28834317 126
2004 53899084 29568279 182
2005 72728759 17137310 424
2006 55550649 15056993 369
2007 96654902 14163034 682
Interpretation
Fixed assets are used in the business for producing the goods to be sold This
ratio shows the firmrsquos ability in generating sales from all financial resources
committed to total assets The ratio indicates the account of one rupee
investment in fixed assets
The income from services is greaterly increased in the current year due to the
increase in the Operations amp Maintenance fee due to the increase in extra invoice
and the net fixed assets are reduced because of the increased charge of
depreciation Finally that effected a huge increase in the ratio compared with the
previous yearrsquos ratio
GRAPHICAL REPRSENTATION
126182
424 369
682
000
100
200
300
400
500
600
700
Ratios
2003 2004 2005 2006 2007
Years
FIXED ASSETS TURNOVER RATIO
Ratios
7 CAPITAL TURNOVER RATIO
(Amount
in Rs)
Capital Turnover Ratio
Year Income From Services Capital Employed Ratio
2003 36309834 37175892 0982004 53899084 53301834 1012005 72728759 70231061 1042006 55550649 56473652 0982007 96654902 97060013 100
Interpretation
This is another ratio to judge the efficiency and effectiveness of the company
like profitability ratio
The income from services is greaterly increased compared with the previous year
and the total capital employed includes capital and reserves amp surplus Due to
huge increase in the net profit the capital employed is also increased along with
income from services Both are effected in the increment of the ratio of current
year
GRAPHICAL REPRESENTATION
098
101
104
098
100
094095096097098099100101102103104
Ratios
2003 2004 2005 2006 2007
Years
CAPITAL TURNOVER RATIO
Ratios
8 CURRENT ASSETS TO FIXED ASSETS RATIO
(Amount
in Rs)
Current Assets To Fixed Assets Ratio
Year Current Assets Fixed Assets Ratio
2003 58524151 19998020 2932004 69765346 18672761 3742005 72021081 17137310 4202006 91328208 15056993 6072007 115642068 14163034 817
Interpretation
Current assets are increased due to the increase in the sundry debtors and the net
fixed assets of the firm are decreased due to the charge of depreciation and there
is no major increment in the fixed assets
The increment in current assets and the decrease in fixed assets resulted an
increase in the ratio compared with the previous year
GRAPHICAL REPRESENTATION
293374
420
607
817
000
100
200
300
400
500
600
700
800
900
Ratios
2003 2004 2005 2006 2007
Years
CURRENT ASSETS TO FIXED ASSETS RATIO
Ratios
PROFITABILITY RATIOS
GENERAL PROFITABILITY RATIOS
9 NET PROFIT RATIO
(Amount in Rs)
Net Profit Ratio
Year Net Profit After Tax Income from Services Ratio
2003 21123474 36039834 059
2004 16125942 53899084 030
2005 16929227 72728759 023
2006 18259580 55550649 033
2007 40586359 96654902 042
Interpretation
The net profit ratio is the overall measure of the firmrsquos ability to turn each rupee
of income from services in net profit If the net margin is inadequate the firm
will fail to achieve return on shareholderrsquos funds High net profit ratio will help
the firm service in the fall of income from services rise in cost of production or
declining demand
The net profit is increased because the income from services is increased The
increment resulted a slight increase in 2007 ratio compared with the year 2006
GRAPHICAL REPRESENTATION
059
030
023
033
042
000
010
020
030
040
050
060
Ratios
2003 2004 2005 2006 2007
Years
NET PROFIT RATIO
Ratios
10 OPERATING PROFIT
(Amount in Rs)
Operating Profit
Year Operating Profit Income From Services Ratio
2003 36094877 36309834 099
2004 27576814 53899084 051
2005 29540599 72728759 041
2006 31586718 55550649 057
2007 67192677 96654902 070
Interpretation
The operating profit ratio is used to measure the relationship between net profits
and sales of a firm Depending on the concept it will decide
The operating profit ratio is increased compared with the last year The earnings
are increased due to the increase in the income from services because of
Operations amp Maintenance fee So the ratio is increased slightly compared with
the previous year
GRAPHICAL REPRESENTATION
099
051
041
057
070
000
010
020
030
040
050060
070
080
090
100
Ratios
2003 2004 2005 2006 2007
Years
OPERATING PROFIT RATIO
Ratios
11 RETURN ON TOTAL ASSETS RATIO
(Amount in Rs)
Return on Total Assets Ratio
Year Net Profit After Tax Total Assets Ratio
2003 21123474 78572171 027
2004 16125942 88438107 018
2005 16929227 89158391 019
2006 18259580 106385201 017
2007 40586359 129805102 031
Interpretation
This is the ratio between net profit and total assets The ratio indicates the return
on total assets in the form of profits
The net profit is increased in the current year because of the increment in the
income from services due to the increase in Operations amp Maintenance fee The
fixed assets are reduced due to the charge of depreciation and no major
increments in fixed assets but the current assets are increased because of sundry
debtors and that effects an increase in the ratio compared with the last year ie
2006
GRAPHICAL REPRESENTATION
027
018 019017
031
000
005
010
015
020
025
030
035
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON TOTAL ASSETS
Ratios
12 RESERVES amp SURPLUS TO CAPITAL RATIO
(Amount in Rs)
Reserves amp Surplus To Capital Ratio
Year Reserves amp Surplus Capital Ratio
2003 65599299 2079920 31542004 34582554 18719280 1852005 51511781 18719280 2752006 37754372 18719280 2022007 78340733 18719280 419
Interpretation
The ratio is used to reveal the policy pursued by the company a very high ratio
indicates a conservative dividend policy and vice-versa Higher the ratio better
will be the position
The reserves amp surplus is decreased in the year 2006 due to the payment of
dividends and in the year 2007 the profit is increased But the capital is
remaining constant from the year 2004 So the increase in the reserves amp surplus
caused a greater increase in the current yearrsquos ratio compared with the older
GRAPHICAL REPRESENTATION
3154
185 275 202419
-
500
1000
1500
2000
2500
3000
3500
Ratios
2003 2004 2005 2006 2007
Years
RESERVES amp SRUPLUS TO CAPITAL RATIO
Ratios
OVERALL PROFITABILITY RATIOS
13 EARNINGS PER SHARE
(Amount in Rs)
Earnings Per Share
Year Net Profit After Tax No of Equity Shares Ratio
2003 21123474 207992 101562004 16125942 1871928 8612005 16929227 1871928 9042006 18259580 1871928 9752007 40586359 1871928 2168
Interpretation
Earnings per share ratio are used to find out the return that the shareholderrsquos earn
from their shares After charging depreciation and after payment of tax the
remaining amount will be distributed by all the shareholders
Net profit after tax is increased due to the huge increase in the income from
services That is the amount which is available to the shareholders to take There
are 1871928 shares of Rs10- each The share capital is constant from the year
2004 Due to the huge increase in net profit the earnings per share is greaterly
increased in 2007
GRAPHICAL REPRESENTATION
10156
861904 975
2168
000
2000
4000
6000
8000
10000
12000
Ratios
2003 2004 2005 2006 2007
Years
EARNINGS PER SHARE
Ratios
14 PRICE EARNINGS (PE) RATIO
(Amount in Rs)
Price Earning (PE) Ratio
Year Market Price Per Share Earnings Per Share Ratio
2003 3254 10156 0322004 2847 861 3302005 3752 904 4152006 3017 975 3092007 5185 2168 239
Interpretation
The ratio is calculated to make an estimate of application in the value of share of
a company
The market price per share is increased due to the increase in the reserves
amp surplus The earnings per share are also increased greaterly compared
with the last year because of increase in the net profit So the ratio is
decreased compared with the previous year
GRAPHICAL REPRESENTATION
032
330
415
309
239
000
050
100
150
200
250
300
350
400
450
Ratios
2003 2004 2005 2006 2007
Years
PE RATIO
Ratios
15 RETURN ON INVESTMENT
(Amount in Rs)
Return on Investment
Year Net Profit After Tax Share Holders Fund Ratio
2003 21123474 67679219 031
2004 16125942 53301834 03
2005 16929227 70231061 024
2006 18259580 56473652 032
2007 40586359 97060013 042
Interpretation
This is the ratio between net profits and shareholders funds The ratio is
generally calculated as percentage multiplying with 100
The net profit is increased due to the increase in the income from services ant
the shareholders funds are increased because of reserve amp surplus So the ratio
is increased in the current year
GRAPHICAL REPRESENTATION
031 030
024
032
042
000
005
010
015
020
025
030
035
040
045
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON INVESTMENT RATIO
RatioS
DATA COLLECTION
The data can be of two types
Primary Data
Secondary Data
Primary Data
Primary data are those data which is originally collected afresh
Secondary Data
Secondary data are those data which are already collected and stored and which has
been passed through statistical research
In this project Secondary data has been collected from following sources-
Annual report
Books
MIS
Other material and report published by company There are two methods to prepare
the Cash flow Statement
ndirect Method
I
The indirect method (or reconciliation method) starts with net income and converts it
to net cash flow from operating activities In other words the indirect method adjusts
net income for items that affected reported net income but did not affect cash To
compute net cash flow from operating activities non-cash charges in the income
statement are added ack to net income and non-cash credits are deducted
b
Direct Method
Under the direct method the statement of cash flows reports net cash flow from
operating activities as major classes of operating cash receipts (eg cash collected from
customers and cash received from interest and dividends) and cash disbursements (eg
cash paid to suppliers for goods to employees for services to creditors for interest and
to government authorities for taxes)
INDIRECT VERSUS DIRECT METHOD
The most contentious decision that the FASB faced in issuing Statement No 95 was
choosing between the direct method and the indirect method of determining net cash
flow from operating activities Companies lobbied against the direct method urging
adoption of the indirect method Commercial lending officers expressed a strong
preference to the FASB hat the direct method be required
tCF-Page 3 of 5
In Favor of the Direct Method
The principal advantage of the direct method is that it shows operating cash receipts and
payments That is it is more consistent with the objective of a statement of cash flows to
provide information about cash receipts and cash payments than the in-direct method
which does not report operating cash receipts and payments
Supporters of the direct method contend that knowledge of the specific sources of
operating cash receipts and the purposes for which operating cash payments were made
in past periods is useful in estimating future operating cash flows Furthermore in-
formation about amounts of major classes of operating cash receipts and payments is
more useful than information only about their arithmetic sum (the net cash flow from
operating activities) Such information is more revealing of an enterprises ability (1) to
generate sufficient cash from operating activities to pay its debts (2) to reinvest in its
operations and (3) to make distributions to its owners
Many corporate providers of financial statements say that they do not currently collect
information in a manner that allows them to determine amounts such as cash received
from customers or cash paid to suppliers directly from their accounting systems But
supporters of the direct method contend that the incremental cost of assimilating such
operating cash receipts and payments data is not significant
In Favor of the Indirect Method
The principal advantage of the indirect method is that it focuses on the differences
between net income and net cash flow from operating activities That is it provides a
useful link between the statement of cash flows and the income statement and balance
sheet
Many providers of financial statements contend that it is less costly to adjust net income
to net cash flow from operating activities (indirect) than it is to report gross operating
cash receipts and payments (direct) Supporters of the indirect method also state that the
direct method which effectively reports income statement information on a cash rather
than an accrual basis may erroneously suggest that net cash flow from operating
activities is as good as or better than net income as a measure of performance
Special Rules Applying to Direct and Indirect Methods
Companies that use the direct method are required at a
minimum to report separately the following classes of
operating cash receipts and payments
Receipts
1048713 Cash collected from customers (including lessees licensees etc)
1048713 Interest and dividends received
1048713 Other operating cash receipts if any
Payments
1048713 Cash paid to employees and suppliers of goods or services (including
suppliers of
insurance advertising etc)
1048713 Interest paid
1048713 Income taxes paid
1048713 Other operating cash payments if any
Companies using the indirect method are required to disclose separately changes in
inventory receivables and payables to reconcile net income to net cash flow from
operating activities In addition interest paid (net of amount capitalized) and income
taxes paid must be disclosed elsewhere in the financial statements or accompanying
notes
The FASB requires these separate and additional disclosures so that users
may approximate the direct method Also an acceptable alternative presentation
of the in-direct method is to report net cash flow from operating activities as a
single line item in the statement of cash flows and to present the reconciliation
details elsewhere in the financial statements
FINDING OF SUDY
According to cash flow statement of the company The finding of the study are as
follows-
The company has not taken any loans secured or unsecured from companies
firms or other parties
The company has not accepted any deposit from the public during the year
The company is not a sick industrial company
The company has not granted any loan secured or unsecured to company firms
or other parties
The company has paid the entire long term and short term borrowing during the
year
The company has buy back the companyrsquos own share this year
The interest paid in 2008 is more than the
There has been a significant decline in volume over the years from 2001-02
to 2005-06 as can be seen in the graph below
Table 43
The Net sales of Tractor has increased considerably from 2004-05 to 2007-08
This can be mainly attributed to changes in Variable and material costs and in
the price
The Net sale of Tractor has increased considerably from 2004-05 to 2007-08
that is an decrease of Rs7216 per tractor This can be mainly attributed to
changes in
Variable and material costs and in the prices
RECOMMENDATIONS
According to cash flow statement of the company The suggestions of the study
are as follows-
The time durations for training program have to increase
Buy regular review and consultations develop a career progression
which is sensitive to performance and ability
Create an environment where by people are trend developed to enable
The to take advantages of opportunities that arise
The jab can be redesigned where the work man stay in what is normally
the same job but has elements of it changed
The principle amount must be paid in time which can be reducing the
interest the out flow
The purchase of the fixed asset must be made only when there is extreme
requirement
In order to avoid taxes the company should go for more investment
The companyrsquos borrowings should go for more investment
o The company should try to reduce the depreciations as maximum
as possible
CONCLUSION
The study on competency level of employees at ESCORTS PVTLTD gave an
insight about the acceptance of competency mapping by employees
The employees at Ymi welcome the introduction of competency mapping in their
organization as they felt it was very much essential in enhancing their skills and
organizational development
The organization has provided the recourses guidance and support to facilitate the
introduction of competency level easily and develop the employees in such a way
that they can face any kind of challenge
However the level of competency in employees is found to be satisfactory
Providing proper training education and guidance to the employees can enhance
the level
This study was mainly carried out to find out whether thee competency mapping
being followed by the company is effective till date If the competency mapping
and fitment to the organization
By looking at the graphs and tables it is quite that the employees still are not up to
the level of competent pool they still have to be trained and made competent in
order to fill the gap As the organization has just applied the mapping it has to see
to that it meets all the requirements for competency mapping
Therefore the graphs make it quite clear that the potential of the employees is not
up to the mark and ie they are not competent enough to meet the competency-
mapping requirement Hence by further training and counseling this gap can be
closed
This report includes the training requirements of employees and it highlights skills
possessed by each employee and skill required All employees get training so that
skill can be improved and maintain balance between standard performance with
their actual performance to avoid gap
APPENDIX
QUESTIONNAIRE
Consumer Survey
Name _____________________________
Age _____________________________
Sex
Male
Female
Occupation
Businessman
Service man
Professional
Others
Monthly income brackets
Below 15000
15000- 20000
20000-30000
30000 and above
of your savings _________
Do you invest
Yes
No
If yes then where do you invest your money
Bank
Insurance
funds
Others
Why do you made that statement
Return
Risk hedging
Tax benefits
Other reasons (specify) _______
Who influence your cash decision
Relatives and friends
Family members
Advisors experts
You yourself
If no then why
Do not know where to invest
Satisfied with your current investment return
Donrsquot want take risk
Other reasons
__________________________________________________________________
___________________
Do you know about CF statement
Yes
No
If yes then from where you have come to know about an cash statement
Advertisements on newspapers
Friends and relative
Agents experts
Other source
What do you think about cash statement
It means investing only in share market
Constant watch must be kept always
Return is not satisfactory
Other perception
__________________________________________________
Can you recall any cash flow of company
___________________________
Would you want to made CF of an org
Yes
No
If yes then why
_______________________________________________________
If no then why
_______________________________________________________
BIBLIOGRAPHY
List of Books
1 PANDEY IM - FINANCIAL MANAGEMANT
2 KHAN MY AND JAIN PK -FINANCIAL MANAGEMANT
3 SMITH KV ndash MANAGEMANT OF WORKING CAPITAL
3 COMPANY RECORDS
4 JOURNAL
5 REPORTS
WEBLIOGRAPHY
1 wwwescortspvtltdcom
2 wwwgooglecom
3 ABOSULTE LIQUIDITY RATIO
(Amount
in Rs)
Absolute Cash Ratio
Year Absolute Liquid Assets Current Liabilities Ratio
2003 31004027 7903952 392
2004 10859778 31884616 034
2005 39466542 16065620 246
2006 53850852 47117199 114
2007 35649070 30266661 118
Interpretation
The current assets which are ready in the form of cash are considered as absolute
liquid assets Here the cash and bank balance and the interest on fixed assts are
absolute liquid assets
In the year 2006 the cash and bank balance is decreased due to decrease in the
deposits and the current liabilities are also reduced because of the payment of
dividend That causes a slight increase in the current yearrsquos ratio
GRAPHICAL REPRESENTATION
392
034
246
114 118
0
05
1
15
2
25
3
35
4
Ratios
2003 2004 2005 2006 2007
Years
ABSOLUTE CASH RATIO
Ratios
LEVERAGE RATIOS
4 PROPRIETORY RATIO
(Amount
in Rs)
Proprietory Ratio
Year Share Holders Funds Total Assets Ratio
2003 67679219 78572171 086
2004 53301834 88438107 06
2005 70231061 89158391 079
2006 56473652 106385201 053
2007 97060013 129805102 075
Interpretation
The proprietary ratio establishes the relationship between shareholders funds to
total assets It determines the long-term solvency of the firm This ratio indicates
the extent to which the assets of the company can be lost without affecting the
interest of the company
There is no increase in the capital from the year2004 The share holderrsquos funds
include capital and reserves and surplus The reserves and surplus is increased
due to the increase in balance in profit and loss account which is caused by the
increase of income from services
Total assets includes fixed and current assets The fixed assets are reduced
because of the depreciation and there are no major increments in the fixed assets
The current assets are increased compared with the year 2006 Total assets are
also increased than precious year which resulted an increase in the ratio than old
GRAPHICAL REPRESENTATION
086
060
079
053
075
000
010
020
030
040
050
060
070
080
090
Ratios
2003 2004 2005 2006 2007
Years
PROPRIETORY RATIO
Ratios
ACTIVITY RATIOS
5 WORKING CAPITAL TURNOVER RATIO
(Amount
in Rs)
Working Capital Turnover Ratio
Year Income From Services Working Capital Ratio
2003 36309834 50670199 0722004 53899084 37880730 1422005 72728759 55355460 1312006 55550649 44211009 1262007 96654902 85375407 113
Interpretation
Income from services is greatly increased due to the extra invoice for Operations
amp Maintenance fee and the working capital is also increased greater due to the
increase in from services because the huge increase in current assets
The income from services is raised and the current assets are also raised together
resulted in the decrease of the ratio of 2007 compared with 2006
GRAPHICAL REPRESENTATION
072
142 131126
113
000
020
040
060
080
100
120
140
160
Ratio
2003 2004 2005 2006 2007
Years
WORKING CAPITAL TURNOVER RATIO
Ratio
6 FIXED ASSETS TURNOVER RATIO
(Amount in Rs)
Fixed Assets Turnover Ratio
Year Income From Services Net Fixed Assets Ratio
2003 36309834 28834317 126
2004 53899084 29568279 182
2005 72728759 17137310 424
2006 55550649 15056993 369
2007 96654902 14163034 682
Interpretation
Fixed assets are used in the business for producing the goods to be sold This
ratio shows the firmrsquos ability in generating sales from all financial resources
committed to total assets The ratio indicates the account of one rupee
investment in fixed assets
The income from services is greaterly increased in the current year due to the
increase in the Operations amp Maintenance fee due to the increase in extra invoice
and the net fixed assets are reduced because of the increased charge of
depreciation Finally that effected a huge increase in the ratio compared with the
previous yearrsquos ratio
GRAPHICAL REPRSENTATION
126182
424 369
682
000
100
200
300
400
500
600
700
Ratios
2003 2004 2005 2006 2007
Years
FIXED ASSETS TURNOVER RATIO
Ratios
7 CAPITAL TURNOVER RATIO
(Amount
in Rs)
Capital Turnover Ratio
Year Income From Services Capital Employed Ratio
2003 36309834 37175892 0982004 53899084 53301834 1012005 72728759 70231061 1042006 55550649 56473652 0982007 96654902 97060013 100
Interpretation
This is another ratio to judge the efficiency and effectiveness of the company
like profitability ratio
The income from services is greaterly increased compared with the previous year
and the total capital employed includes capital and reserves amp surplus Due to
huge increase in the net profit the capital employed is also increased along with
income from services Both are effected in the increment of the ratio of current
year
GRAPHICAL REPRESENTATION
098
101
104
098
100
094095096097098099100101102103104
Ratios
2003 2004 2005 2006 2007
Years
CAPITAL TURNOVER RATIO
Ratios
8 CURRENT ASSETS TO FIXED ASSETS RATIO
(Amount
in Rs)
Current Assets To Fixed Assets Ratio
Year Current Assets Fixed Assets Ratio
2003 58524151 19998020 2932004 69765346 18672761 3742005 72021081 17137310 4202006 91328208 15056993 6072007 115642068 14163034 817
Interpretation
Current assets are increased due to the increase in the sundry debtors and the net
fixed assets of the firm are decreased due to the charge of depreciation and there
is no major increment in the fixed assets
The increment in current assets and the decrease in fixed assets resulted an
increase in the ratio compared with the previous year
GRAPHICAL REPRESENTATION
293374
420
607
817
000
100
200
300
400
500
600
700
800
900
Ratios
2003 2004 2005 2006 2007
Years
CURRENT ASSETS TO FIXED ASSETS RATIO
Ratios
PROFITABILITY RATIOS
GENERAL PROFITABILITY RATIOS
9 NET PROFIT RATIO
(Amount in Rs)
Net Profit Ratio
Year Net Profit After Tax Income from Services Ratio
2003 21123474 36039834 059
2004 16125942 53899084 030
2005 16929227 72728759 023
2006 18259580 55550649 033
2007 40586359 96654902 042
Interpretation
The net profit ratio is the overall measure of the firmrsquos ability to turn each rupee
of income from services in net profit If the net margin is inadequate the firm
will fail to achieve return on shareholderrsquos funds High net profit ratio will help
the firm service in the fall of income from services rise in cost of production or
declining demand
The net profit is increased because the income from services is increased The
increment resulted a slight increase in 2007 ratio compared with the year 2006
GRAPHICAL REPRESENTATION
059
030
023
033
042
000
010
020
030
040
050
060
Ratios
2003 2004 2005 2006 2007
Years
NET PROFIT RATIO
Ratios
10 OPERATING PROFIT
(Amount in Rs)
Operating Profit
Year Operating Profit Income From Services Ratio
2003 36094877 36309834 099
2004 27576814 53899084 051
2005 29540599 72728759 041
2006 31586718 55550649 057
2007 67192677 96654902 070
Interpretation
The operating profit ratio is used to measure the relationship between net profits
and sales of a firm Depending on the concept it will decide
The operating profit ratio is increased compared with the last year The earnings
are increased due to the increase in the income from services because of
Operations amp Maintenance fee So the ratio is increased slightly compared with
the previous year
GRAPHICAL REPRESENTATION
099
051
041
057
070
000
010
020
030
040
050060
070
080
090
100
Ratios
2003 2004 2005 2006 2007
Years
OPERATING PROFIT RATIO
Ratios
11 RETURN ON TOTAL ASSETS RATIO
(Amount in Rs)
Return on Total Assets Ratio
Year Net Profit After Tax Total Assets Ratio
2003 21123474 78572171 027
2004 16125942 88438107 018
2005 16929227 89158391 019
2006 18259580 106385201 017
2007 40586359 129805102 031
Interpretation
This is the ratio between net profit and total assets The ratio indicates the return
on total assets in the form of profits
The net profit is increased in the current year because of the increment in the
income from services due to the increase in Operations amp Maintenance fee The
fixed assets are reduced due to the charge of depreciation and no major
increments in fixed assets but the current assets are increased because of sundry
debtors and that effects an increase in the ratio compared with the last year ie
2006
GRAPHICAL REPRESENTATION
027
018 019017
031
000
005
010
015
020
025
030
035
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON TOTAL ASSETS
Ratios
12 RESERVES amp SURPLUS TO CAPITAL RATIO
(Amount in Rs)
Reserves amp Surplus To Capital Ratio
Year Reserves amp Surplus Capital Ratio
2003 65599299 2079920 31542004 34582554 18719280 1852005 51511781 18719280 2752006 37754372 18719280 2022007 78340733 18719280 419
Interpretation
The ratio is used to reveal the policy pursued by the company a very high ratio
indicates a conservative dividend policy and vice-versa Higher the ratio better
will be the position
The reserves amp surplus is decreased in the year 2006 due to the payment of
dividends and in the year 2007 the profit is increased But the capital is
remaining constant from the year 2004 So the increase in the reserves amp surplus
caused a greater increase in the current yearrsquos ratio compared with the older
GRAPHICAL REPRESENTATION
3154
185 275 202419
-
500
1000
1500
2000
2500
3000
3500
Ratios
2003 2004 2005 2006 2007
Years
RESERVES amp SRUPLUS TO CAPITAL RATIO
Ratios
OVERALL PROFITABILITY RATIOS
13 EARNINGS PER SHARE
(Amount in Rs)
Earnings Per Share
Year Net Profit After Tax No of Equity Shares Ratio
2003 21123474 207992 101562004 16125942 1871928 8612005 16929227 1871928 9042006 18259580 1871928 9752007 40586359 1871928 2168
Interpretation
Earnings per share ratio are used to find out the return that the shareholderrsquos earn
from their shares After charging depreciation and after payment of tax the
remaining amount will be distributed by all the shareholders
Net profit after tax is increased due to the huge increase in the income from
services That is the amount which is available to the shareholders to take There
are 1871928 shares of Rs10- each The share capital is constant from the year
2004 Due to the huge increase in net profit the earnings per share is greaterly
increased in 2007
GRAPHICAL REPRESENTATION
10156
861904 975
2168
000
2000
4000
6000
8000
10000
12000
Ratios
2003 2004 2005 2006 2007
Years
EARNINGS PER SHARE
Ratios
14 PRICE EARNINGS (PE) RATIO
(Amount in Rs)
Price Earning (PE) Ratio
Year Market Price Per Share Earnings Per Share Ratio
2003 3254 10156 0322004 2847 861 3302005 3752 904 4152006 3017 975 3092007 5185 2168 239
Interpretation
The ratio is calculated to make an estimate of application in the value of share of
a company
The market price per share is increased due to the increase in the reserves
amp surplus The earnings per share are also increased greaterly compared
with the last year because of increase in the net profit So the ratio is
decreased compared with the previous year
GRAPHICAL REPRESENTATION
032
330
415
309
239
000
050
100
150
200
250
300
350
400
450
Ratios
2003 2004 2005 2006 2007
Years
PE RATIO
Ratios
15 RETURN ON INVESTMENT
(Amount in Rs)
Return on Investment
Year Net Profit After Tax Share Holders Fund Ratio
2003 21123474 67679219 031
2004 16125942 53301834 03
2005 16929227 70231061 024
2006 18259580 56473652 032
2007 40586359 97060013 042
Interpretation
This is the ratio between net profits and shareholders funds The ratio is
generally calculated as percentage multiplying with 100
The net profit is increased due to the increase in the income from services ant
the shareholders funds are increased because of reserve amp surplus So the ratio
is increased in the current year
GRAPHICAL REPRESENTATION
031 030
024
032
042
000
005
010
015
020
025
030
035
040
045
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON INVESTMENT RATIO
RatioS
DATA COLLECTION
The data can be of two types
Primary Data
Secondary Data
Primary Data
Primary data are those data which is originally collected afresh
Secondary Data
Secondary data are those data which are already collected and stored and which has
been passed through statistical research
In this project Secondary data has been collected from following sources-
Annual report
Books
MIS
Other material and report published by company There are two methods to prepare
the Cash flow Statement
ndirect Method
I
The indirect method (or reconciliation method) starts with net income and converts it
to net cash flow from operating activities In other words the indirect method adjusts
net income for items that affected reported net income but did not affect cash To
compute net cash flow from operating activities non-cash charges in the income
statement are added ack to net income and non-cash credits are deducted
b
Direct Method
Under the direct method the statement of cash flows reports net cash flow from
operating activities as major classes of operating cash receipts (eg cash collected from
customers and cash received from interest and dividends) and cash disbursements (eg
cash paid to suppliers for goods to employees for services to creditors for interest and
to government authorities for taxes)
INDIRECT VERSUS DIRECT METHOD
The most contentious decision that the FASB faced in issuing Statement No 95 was
choosing between the direct method and the indirect method of determining net cash
flow from operating activities Companies lobbied against the direct method urging
adoption of the indirect method Commercial lending officers expressed a strong
preference to the FASB hat the direct method be required
tCF-Page 3 of 5
In Favor of the Direct Method
The principal advantage of the direct method is that it shows operating cash receipts and
payments That is it is more consistent with the objective of a statement of cash flows to
provide information about cash receipts and cash payments than the in-direct method
which does not report operating cash receipts and payments
Supporters of the direct method contend that knowledge of the specific sources of
operating cash receipts and the purposes for which operating cash payments were made
in past periods is useful in estimating future operating cash flows Furthermore in-
formation about amounts of major classes of operating cash receipts and payments is
more useful than information only about their arithmetic sum (the net cash flow from
operating activities) Such information is more revealing of an enterprises ability (1) to
generate sufficient cash from operating activities to pay its debts (2) to reinvest in its
operations and (3) to make distributions to its owners
Many corporate providers of financial statements say that they do not currently collect
information in a manner that allows them to determine amounts such as cash received
from customers or cash paid to suppliers directly from their accounting systems But
supporters of the direct method contend that the incremental cost of assimilating such
operating cash receipts and payments data is not significant
In Favor of the Indirect Method
The principal advantage of the indirect method is that it focuses on the differences
between net income and net cash flow from operating activities That is it provides a
useful link between the statement of cash flows and the income statement and balance
sheet
Many providers of financial statements contend that it is less costly to adjust net income
to net cash flow from operating activities (indirect) than it is to report gross operating
cash receipts and payments (direct) Supporters of the indirect method also state that the
direct method which effectively reports income statement information on a cash rather
than an accrual basis may erroneously suggest that net cash flow from operating
activities is as good as or better than net income as a measure of performance
Special Rules Applying to Direct and Indirect Methods
Companies that use the direct method are required at a
minimum to report separately the following classes of
operating cash receipts and payments
Receipts
1048713 Cash collected from customers (including lessees licensees etc)
1048713 Interest and dividends received
1048713 Other operating cash receipts if any
Payments
1048713 Cash paid to employees and suppliers of goods or services (including
suppliers of
insurance advertising etc)
1048713 Interest paid
1048713 Income taxes paid
1048713 Other operating cash payments if any
Companies using the indirect method are required to disclose separately changes in
inventory receivables and payables to reconcile net income to net cash flow from
operating activities In addition interest paid (net of amount capitalized) and income
taxes paid must be disclosed elsewhere in the financial statements or accompanying
notes
The FASB requires these separate and additional disclosures so that users
may approximate the direct method Also an acceptable alternative presentation
of the in-direct method is to report net cash flow from operating activities as a
single line item in the statement of cash flows and to present the reconciliation
details elsewhere in the financial statements
FINDING OF SUDY
According to cash flow statement of the company The finding of the study are as
follows-
The company has not taken any loans secured or unsecured from companies
firms or other parties
The company has not accepted any deposit from the public during the year
The company is not a sick industrial company
The company has not granted any loan secured or unsecured to company firms
or other parties
The company has paid the entire long term and short term borrowing during the
year
The company has buy back the companyrsquos own share this year
The interest paid in 2008 is more than the
There has been a significant decline in volume over the years from 2001-02
to 2005-06 as can be seen in the graph below
Table 43
The Net sales of Tractor has increased considerably from 2004-05 to 2007-08
This can be mainly attributed to changes in Variable and material costs and in
the price
The Net sale of Tractor has increased considerably from 2004-05 to 2007-08
that is an decrease of Rs7216 per tractor This can be mainly attributed to
changes in
Variable and material costs and in the prices
RECOMMENDATIONS
According to cash flow statement of the company The suggestions of the study
are as follows-
The time durations for training program have to increase
Buy regular review and consultations develop a career progression
which is sensitive to performance and ability
Create an environment where by people are trend developed to enable
The to take advantages of opportunities that arise
The jab can be redesigned where the work man stay in what is normally
the same job but has elements of it changed
The principle amount must be paid in time which can be reducing the
interest the out flow
The purchase of the fixed asset must be made only when there is extreme
requirement
In order to avoid taxes the company should go for more investment
The companyrsquos borrowings should go for more investment
o The company should try to reduce the depreciations as maximum
as possible
CONCLUSION
The study on competency level of employees at ESCORTS PVTLTD gave an
insight about the acceptance of competency mapping by employees
The employees at Ymi welcome the introduction of competency mapping in their
organization as they felt it was very much essential in enhancing their skills and
organizational development
The organization has provided the recourses guidance and support to facilitate the
introduction of competency level easily and develop the employees in such a way
that they can face any kind of challenge
However the level of competency in employees is found to be satisfactory
Providing proper training education and guidance to the employees can enhance
the level
This study was mainly carried out to find out whether thee competency mapping
being followed by the company is effective till date If the competency mapping
and fitment to the organization
By looking at the graphs and tables it is quite that the employees still are not up to
the level of competent pool they still have to be trained and made competent in
order to fill the gap As the organization has just applied the mapping it has to see
to that it meets all the requirements for competency mapping
Therefore the graphs make it quite clear that the potential of the employees is not
up to the mark and ie they are not competent enough to meet the competency-
mapping requirement Hence by further training and counseling this gap can be
closed
This report includes the training requirements of employees and it highlights skills
possessed by each employee and skill required All employees get training so that
skill can be improved and maintain balance between standard performance with
their actual performance to avoid gap
APPENDIX
QUESTIONNAIRE
Consumer Survey
Name _____________________________
Age _____________________________
Sex
Male
Female
Occupation
Businessman
Service man
Professional
Others
Monthly income brackets
Below 15000
15000- 20000
20000-30000
30000 and above
of your savings _________
Do you invest
Yes
No
If yes then where do you invest your money
Bank
Insurance
funds
Others
Why do you made that statement
Return
Risk hedging
Tax benefits
Other reasons (specify) _______
Who influence your cash decision
Relatives and friends
Family members
Advisors experts
You yourself
If no then why
Do not know where to invest
Satisfied with your current investment return
Donrsquot want take risk
Other reasons
__________________________________________________________________
___________________
Do you know about CF statement
Yes
No
If yes then from where you have come to know about an cash statement
Advertisements on newspapers
Friends and relative
Agents experts
Other source
What do you think about cash statement
It means investing only in share market
Constant watch must be kept always
Return is not satisfactory
Other perception
__________________________________________________
Can you recall any cash flow of company
___________________________
Would you want to made CF of an org
Yes
No
If yes then why
_______________________________________________________
If no then why
_______________________________________________________
BIBLIOGRAPHY
List of Books
1 PANDEY IM - FINANCIAL MANAGEMANT
2 KHAN MY AND JAIN PK -FINANCIAL MANAGEMANT
3 SMITH KV ndash MANAGEMANT OF WORKING CAPITAL
3 COMPANY RECORDS
4 JOURNAL
5 REPORTS
WEBLIOGRAPHY
1 wwwescortspvtltdcom
2 wwwgooglecom
392
034
246
114 118
0
05
1
15
2
25
3
35
4
Ratios
2003 2004 2005 2006 2007
Years
ABSOLUTE CASH RATIO
Ratios
LEVERAGE RATIOS
4 PROPRIETORY RATIO
(Amount
in Rs)
Proprietory Ratio
Year Share Holders Funds Total Assets Ratio
2003 67679219 78572171 086
2004 53301834 88438107 06
2005 70231061 89158391 079
2006 56473652 106385201 053
2007 97060013 129805102 075
Interpretation
The proprietary ratio establishes the relationship between shareholders funds to
total assets It determines the long-term solvency of the firm This ratio indicates
the extent to which the assets of the company can be lost without affecting the
interest of the company
There is no increase in the capital from the year2004 The share holderrsquos funds
include capital and reserves and surplus The reserves and surplus is increased
due to the increase in balance in profit and loss account which is caused by the
increase of income from services
Total assets includes fixed and current assets The fixed assets are reduced
because of the depreciation and there are no major increments in the fixed assets
The current assets are increased compared with the year 2006 Total assets are
also increased than precious year which resulted an increase in the ratio than old
GRAPHICAL REPRESENTATION
086
060
079
053
075
000
010
020
030
040
050
060
070
080
090
Ratios
2003 2004 2005 2006 2007
Years
PROPRIETORY RATIO
Ratios
ACTIVITY RATIOS
5 WORKING CAPITAL TURNOVER RATIO
(Amount
in Rs)
Working Capital Turnover Ratio
Year Income From Services Working Capital Ratio
2003 36309834 50670199 0722004 53899084 37880730 1422005 72728759 55355460 1312006 55550649 44211009 1262007 96654902 85375407 113
Interpretation
Income from services is greatly increased due to the extra invoice for Operations
amp Maintenance fee and the working capital is also increased greater due to the
increase in from services because the huge increase in current assets
The income from services is raised and the current assets are also raised together
resulted in the decrease of the ratio of 2007 compared with 2006
GRAPHICAL REPRESENTATION
072
142 131126
113
000
020
040
060
080
100
120
140
160
Ratio
2003 2004 2005 2006 2007
Years
WORKING CAPITAL TURNOVER RATIO
Ratio
6 FIXED ASSETS TURNOVER RATIO
(Amount in Rs)
Fixed Assets Turnover Ratio
Year Income From Services Net Fixed Assets Ratio
2003 36309834 28834317 126
2004 53899084 29568279 182
2005 72728759 17137310 424
2006 55550649 15056993 369
2007 96654902 14163034 682
Interpretation
Fixed assets are used in the business for producing the goods to be sold This
ratio shows the firmrsquos ability in generating sales from all financial resources
committed to total assets The ratio indicates the account of one rupee
investment in fixed assets
The income from services is greaterly increased in the current year due to the
increase in the Operations amp Maintenance fee due to the increase in extra invoice
and the net fixed assets are reduced because of the increased charge of
depreciation Finally that effected a huge increase in the ratio compared with the
previous yearrsquos ratio
GRAPHICAL REPRSENTATION
126182
424 369
682
000
100
200
300
400
500
600
700
Ratios
2003 2004 2005 2006 2007
Years
FIXED ASSETS TURNOVER RATIO
Ratios
7 CAPITAL TURNOVER RATIO
(Amount
in Rs)
Capital Turnover Ratio
Year Income From Services Capital Employed Ratio
2003 36309834 37175892 0982004 53899084 53301834 1012005 72728759 70231061 1042006 55550649 56473652 0982007 96654902 97060013 100
Interpretation
This is another ratio to judge the efficiency and effectiveness of the company
like profitability ratio
The income from services is greaterly increased compared with the previous year
and the total capital employed includes capital and reserves amp surplus Due to
huge increase in the net profit the capital employed is also increased along with
income from services Both are effected in the increment of the ratio of current
year
GRAPHICAL REPRESENTATION
098
101
104
098
100
094095096097098099100101102103104
Ratios
2003 2004 2005 2006 2007
Years
CAPITAL TURNOVER RATIO
Ratios
8 CURRENT ASSETS TO FIXED ASSETS RATIO
(Amount
in Rs)
Current Assets To Fixed Assets Ratio
Year Current Assets Fixed Assets Ratio
2003 58524151 19998020 2932004 69765346 18672761 3742005 72021081 17137310 4202006 91328208 15056993 6072007 115642068 14163034 817
Interpretation
Current assets are increased due to the increase in the sundry debtors and the net
fixed assets of the firm are decreased due to the charge of depreciation and there
is no major increment in the fixed assets
The increment in current assets and the decrease in fixed assets resulted an
increase in the ratio compared with the previous year
GRAPHICAL REPRESENTATION
293374
420
607
817
000
100
200
300
400
500
600
700
800
900
Ratios
2003 2004 2005 2006 2007
Years
CURRENT ASSETS TO FIXED ASSETS RATIO
Ratios
PROFITABILITY RATIOS
GENERAL PROFITABILITY RATIOS
9 NET PROFIT RATIO
(Amount in Rs)
Net Profit Ratio
Year Net Profit After Tax Income from Services Ratio
2003 21123474 36039834 059
2004 16125942 53899084 030
2005 16929227 72728759 023
2006 18259580 55550649 033
2007 40586359 96654902 042
Interpretation
The net profit ratio is the overall measure of the firmrsquos ability to turn each rupee
of income from services in net profit If the net margin is inadequate the firm
will fail to achieve return on shareholderrsquos funds High net profit ratio will help
the firm service in the fall of income from services rise in cost of production or
declining demand
The net profit is increased because the income from services is increased The
increment resulted a slight increase in 2007 ratio compared with the year 2006
GRAPHICAL REPRESENTATION
059
030
023
033
042
000
010
020
030
040
050
060
Ratios
2003 2004 2005 2006 2007
Years
NET PROFIT RATIO
Ratios
10 OPERATING PROFIT
(Amount in Rs)
Operating Profit
Year Operating Profit Income From Services Ratio
2003 36094877 36309834 099
2004 27576814 53899084 051
2005 29540599 72728759 041
2006 31586718 55550649 057
2007 67192677 96654902 070
Interpretation
The operating profit ratio is used to measure the relationship between net profits
and sales of a firm Depending on the concept it will decide
The operating profit ratio is increased compared with the last year The earnings
are increased due to the increase in the income from services because of
Operations amp Maintenance fee So the ratio is increased slightly compared with
the previous year
GRAPHICAL REPRESENTATION
099
051
041
057
070
000
010
020
030
040
050060
070
080
090
100
Ratios
2003 2004 2005 2006 2007
Years
OPERATING PROFIT RATIO
Ratios
11 RETURN ON TOTAL ASSETS RATIO
(Amount in Rs)
Return on Total Assets Ratio
Year Net Profit After Tax Total Assets Ratio
2003 21123474 78572171 027
2004 16125942 88438107 018
2005 16929227 89158391 019
2006 18259580 106385201 017
2007 40586359 129805102 031
Interpretation
This is the ratio between net profit and total assets The ratio indicates the return
on total assets in the form of profits
The net profit is increased in the current year because of the increment in the
income from services due to the increase in Operations amp Maintenance fee The
fixed assets are reduced due to the charge of depreciation and no major
increments in fixed assets but the current assets are increased because of sundry
debtors and that effects an increase in the ratio compared with the last year ie
2006
GRAPHICAL REPRESENTATION
027
018 019017
031
000
005
010
015
020
025
030
035
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON TOTAL ASSETS
Ratios
12 RESERVES amp SURPLUS TO CAPITAL RATIO
(Amount in Rs)
Reserves amp Surplus To Capital Ratio
Year Reserves amp Surplus Capital Ratio
2003 65599299 2079920 31542004 34582554 18719280 1852005 51511781 18719280 2752006 37754372 18719280 2022007 78340733 18719280 419
Interpretation
The ratio is used to reveal the policy pursued by the company a very high ratio
indicates a conservative dividend policy and vice-versa Higher the ratio better
will be the position
The reserves amp surplus is decreased in the year 2006 due to the payment of
dividends and in the year 2007 the profit is increased But the capital is
remaining constant from the year 2004 So the increase in the reserves amp surplus
caused a greater increase in the current yearrsquos ratio compared with the older
GRAPHICAL REPRESENTATION
3154
185 275 202419
-
500
1000
1500
2000
2500
3000
3500
Ratios
2003 2004 2005 2006 2007
Years
RESERVES amp SRUPLUS TO CAPITAL RATIO
Ratios
OVERALL PROFITABILITY RATIOS
13 EARNINGS PER SHARE
(Amount in Rs)
Earnings Per Share
Year Net Profit After Tax No of Equity Shares Ratio
2003 21123474 207992 101562004 16125942 1871928 8612005 16929227 1871928 9042006 18259580 1871928 9752007 40586359 1871928 2168
Interpretation
Earnings per share ratio are used to find out the return that the shareholderrsquos earn
from their shares After charging depreciation and after payment of tax the
remaining amount will be distributed by all the shareholders
Net profit after tax is increased due to the huge increase in the income from
services That is the amount which is available to the shareholders to take There
are 1871928 shares of Rs10- each The share capital is constant from the year
2004 Due to the huge increase in net profit the earnings per share is greaterly
increased in 2007
GRAPHICAL REPRESENTATION
10156
861904 975
2168
000
2000
4000
6000
8000
10000
12000
Ratios
2003 2004 2005 2006 2007
Years
EARNINGS PER SHARE
Ratios
14 PRICE EARNINGS (PE) RATIO
(Amount in Rs)
Price Earning (PE) Ratio
Year Market Price Per Share Earnings Per Share Ratio
2003 3254 10156 0322004 2847 861 3302005 3752 904 4152006 3017 975 3092007 5185 2168 239
Interpretation
The ratio is calculated to make an estimate of application in the value of share of
a company
The market price per share is increased due to the increase in the reserves
amp surplus The earnings per share are also increased greaterly compared
with the last year because of increase in the net profit So the ratio is
decreased compared with the previous year
GRAPHICAL REPRESENTATION
032
330
415
309
239
000
050
100
150
200
250
300
350
400
450
Ratios
2003 2004 2005 2006 2007
Years
PE RATIO
Ratios
15 RETURN ON INVESTMENT
(Amount in Rs)
Return on Investment
Year Net Profit After Tax Share Holders Fund Ratio
2003 21123474 67679219 031
2004 16125942 53301834 03
2005 16929227 70231061 024
2006 18259580 56473652 032
2007 40586359 97060013 042
Interpretation
This is the ratio between net profits and shareholders funds The ratio is
generally calculated as percentage multiplying with 100
The net profit is increased due to the increase in the income from services ant
the shareholders funds are increased because of reserve amp surplus So the ratio
is increased in the current year
GRAPHICAL REPRESENTATION
031 030
024
032
042
000
005
010
015
020
025
030
035
040
045
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON INVESTMENT RATIO
RatioS
DATA COLLECTION
The data can be of two types
Primary Data
Secondary Data
Primary Data
Primary data are those data which is originally collected afresh
Secondary Data
Secondary data are those data which are already collected and stored and which has
been passed through statistical research
In this project Secondary data has been collected from following sources-
Annual report
Books
MIS
Other material and report published by company There are two methods to prepare
the Cash flow Statement
ndirect Method
I
The indirect method (or reconciliation method) starts with net income and converts it
to net cash flow from operating activities In other words the indirect method adjusts
net income for items that affected reported net income but did not affect cash To
compute net cash flow from operating activities non-cash charges in the income
statement are added ack to net income and non-cash credits are deducted
b
Direct Method
Under the direct method the statement of cash flows reports net cash flow from
operating activities as major classes of operating cash receipts (eg cash collected from
customers and cash received from interest and dividends) and cash disbursements (eg
cash paid to suppliers for goods to employees for services to creditors for interest and
to government authorities for taxes)
INDIRECT VERSUS DIRECT METHOD
The most contentious decision that the FASB faced in issuing Statement No 95 was
choosing between the direct method and the indirect method of determining net cash
flow from operating activities Companies lobbied against the direct method urging
adoption of the indirect method Commercial lending officers expressed a strong
preference to the FASB hat the direct method be required
tCF-Page 3 of 5
In Favor of the Direct Method
The principal advantage of the direct method is that it shows operating cash receipts and
payments That is it is more consistent with the objective of a statement of cash flows to
provide information about cash receipts and cash payments than the in-direct method
which does not report operating cash receipts and payments
Supporters of the direct method contend that knowledge of the specific sources of
operating cash receipts and the purposes for which operating cash payments were made
in past periods is useful in estimating future operating cash flows Furthermore in-
formation about amounts of major classes of operating cash receipts and payments is
more useful than information only about their arithmetic sum (the net cash flow from
operating activities) Such information is more revealing of an enterprises ability (1) to
generate sufficient cash from operating activities to pay its debts (2) to reinvest in its
operations and (3) to make distributions to its owners
Many corporate providers of financial statements say that they do not currently collect
information in a manner that allows them to determine amounts such as cash received
from customers or cash paid to suppliers directly from their accounting systems But
supporters of the direct method contend that the incremental cost of assimilating such
operating cash receipts and payments data is not significant
In Favor of the Indirect Method
The principal advantage of the indirect method is that it focuses on the differences
between net income and net cash flow from operating activities That is it provides a
useful link between the statement of cash flows and the income statement and balance
sheet
Many providers of financial statements contend that it is less costly to adjust net income
to net cash flow from operating activities (indirect) than it is to report gross operating
cash receipts and payments (direct) Supporters of the indirect method also state that the
direct method which effectively reports income statement information on a cash rather
than an accrual basis may erroneously suggest that net cash flow from operating
activities is as good as or better than net income as a measure of performance
Special Rules Applying to Direct and Indirect Methods
Companies that use the direct method are required at a
minimum to report separately the following classes of
operating cash receipts and payments
Receipts
1048713 Cash collected from customers (including lessees licensees etc)
1048713 Interest and dividends received
1048713 Other operating cash receipts if any
Payments
1048713 Cash paid to employees and suppliers of goods or services (including
suppliers of
insurance advertising etc)
1048713 Interest paid
1048713 Income taxes paid
1048713 Other operating cash payments if any
Companies using the indirect method are required to disclose separately changes in
inventory receivables and payables to reconcile net income to net cash flow from
operating activities In addition interest paid (net of amount capitalized) and income
taxes paid must be disclosed elsewhere in the financial statements or accompanying
notes
The FASB requires these separate and additional disclosures so that users
may approximate the direct method Also an acceptable alternative presentation
of the in-direct method is to report net cash flow from operating activities as a
single line item in the statement of cash flows and to present the reconciliation
details elsewhere in the financial statements
FINDING OF SUDY
According to cash flow statement of the company The finding of the study are as
follows-
The company has not taken any loans secured or unsecured from companies
firms or other parties
The company has not accepted any deposit from the public during the year
The company is not a sick industrial company
The company has not granted any loan secured or unsecured to company firms
or other parties
The company has paid the entire long term and short term borrowing during the
year
The company has buy back the companyrsquos own share this year
The interest paid in 2008 is more than the
There has been a significant decline in volume over the years from 2001-02
to 2005-06 as can be seen in the graph below
Table 43
The Net sales of Tractor has increased considerably from 2004-05 to 2007-08
This can be mainly attributed to changes in Variable and material costs and in
the price
The Net sale of Tractor has increased considerably from 2004-05 to 2007-08
that is an decrease of Rs7216 per tractor This can be mainly attributed to
changes in
Variable and material costs and in the prices
RECOMMENDATIONS
According to cash flow statement of the company The suggestions of the study
are as follows-
The time durations for training program have to increase
Buy regular review and consultations develop a career progression
which is sensitive to performance and ability
Create an environment where by people are trend developed to enable
The to take advantages of opportunities that arise
The jab can be redesigned where the work man stay in what is normally
the same job but has elements of it changed
The principle amount must be paid in time which can be reducing the
interest the out flow
The purchase of the fixed asset must be made only when there is extreme
requirement
In order to avoid taxes the company should go for more investment
The companyrsquos borrowings should go for more investment
o The company should try to reduce the depreciations as maximum
as possible
CONCLUSION
The study on competency level of employees at ESCORTS PVTLTD gave an
insight about the acceptance of competency mapping by employees
The employees at Ymi welcome the introduction of competency mapping in their
organization as they felt it was very much essential in enhancing their skills and
organizational development
The organization has provided the recourses guidance and support to facilitate the
introduction of competency level easily and develop the employees in such a way
that they can face any kind of challenge
However the level of competency in employees is found to be satisfactory
Providing proper training education and guidance to the employees can enhance
the level
This study was mainly carried out to find out whether thee competency mapping
being followed by the company is effective till date If the competency mapping
and fitment to the organization
By looking at the graphs and tables it is quite that the employees still are not up to
the level of competent pool they still have to be trained and made competent in
order to fill the gap As the organization has just applied the mapping it has to see
to that it meets all the requirements for competency mapping
Therefore the graphs make it quite clear that the potential of the employees is not
up to the mark and ie they are not competent enough to meet the competency-
mapping requirement Hence by further training and counseling this gap can be
closed
This report includes the training requirements of employees and it highlights skills
possessed by each employee and skill required All employees get training so that
skill can be improved and maintain balance between standard performance with
their actual performance to avoid gap
APPENDIX
QUESTIONNAIRE
Consumer Survey
Name _____________________________
Age _____________________________
Sex
Male
Female
Occupation
Businessman
Service man
Professional
Others
Monthly income brackets
Below 15000
15000- 20000
20000-30000
30000 and above
of your savings _________
Do you invest
Yes
No
If yes then where do you invest your money
Bank
Insurance
funds
Others
Why do you made that statement
Return
Risk hedging
Tax benefits
Other reasons (specify) _______
Who influence your cash decision
Relatives and friends
Family members
Advisors experts
You yourself
If no then why
Do not know where to invest
Satisfied with your current investment return
Donrsquot want take risk
Other reasons
__________________________________________________________________
___________________
Do you know about CF statement
Yes
No
If yes then from where you have come to know about an cash statement
Advertisements on newspapers
Friends and relative
Agents experts
Other source
What do you think about cash statement
It means investing only in share market
Constant watch must be kept always
Return is not satisfactory
Other perception
__________________________________________________
Can you recall any cash flow of company
___________________________
Would you want to made CF of an org
Yes
No
If yes then why
_______________________________________________________
If no then why
_______________________________________________________
BIBLIOGRAPHY
List of Books
1 PANDEY IM - FINANCIAL MANAGEMANT
2 KHAN MY AND JAIN PK -FINANCIAL MANAGEMANT
3 SMITH KV ndash MANAGEMANT OF WORKING CAPITAL
3 COMPANY RECORDS
4 JOURNAL
5 REPORTS
WEBLIOGRAPHY
1 wwwescortspvtltdcom
2 wwwgooglecom
LEVERAGE RATIOS
4 PROPRIETORY RATIO
(Amount
in Rs)
Proprietory Ratio
Year Share Holders Funds Total Assets Ratio
2003 67679219 78572171 086
2004 53301834 88438107 06
2005 70231061 89158391 079
2006 56473652 106385201 053
2007 97060013 129805102 075
Interpretation
The proprietary ratio establishes the relationship between shareholders funds to
total assets It determines the long-term solvency of the firm This ratio indicates
the extent to which the assets of the company can be lost without affecting the
interest of the company
There is no increase in the capital from the year2004 The share holderrsquos funds
include capital and reserves and surplus The reserves and surplus is increased
due to the increase in balance in profit and loss account which is caused by the
increase of income from services
Total assets includes fixed and current assets The fixed assets are reduced
because of the depreciation and there are no major increments in the fixed assets
The current assets are increased compared with the year 2006 Total assets are
also increased than precious year which resulted an increase in the ratio than old
GRAPHICAL REPRESENTATION
086
060
079
053
075
000
010
020
030
040
050
060
070
080
090
Ratios
2003 2004 2005 2006 2007
Years
PROPRIETORY RATIO
Ratios
ACTIVITY RATIOS
5 WORKING CAPITAL TURNOVER RATIO
(Amount
in Rs)
Working Capital Turnover Ratio
Year Income From Services Working Capital Ratio
2003 36309834 50670199 0722004 53899084 37880730 1422005 72728759 55355460 1312006 55550649 44211009 1262007 96654902 85375407 113
Interpretation
Income from services is greatly increased due to the extra invoice for Operations
amp Maintenance fee and the working capital is also increased greater due to the
increase in from services because the huge increase in current assets
The income from services is raised and the current assets are also raised together
resulted in the decrease of the ratio of 2007 compared with 2006
GRAPHICAL REPRESENTATION
072
142 131126
113
000
020
040
060
080
100
120
140
160
Ratio
2003 2004 2005 2006 2007
Years
WORKING CAPITAL TURNOVER RATIO
Ratio
6 FIXED ASSETS TURNOVER RATIO
(Amount in Rs)
Fixed Assets Turnover Ratio
Year Income From Services Net Fixed Assets Ratio
2003 36309834 28834317 126
2004 53899084 29568279 182
2005 72728759 17137310 424
2006 55550649 15056993 369
2007 96654902 14163034 682
Interpretation
Fixed assets are used in the business for producing the goods to be sold This
ratio shows the firmrsquos ability in generating sales from all financial resources
committed to total assets The ratio indicates the account of one rupee
investment in fixed assets
The income from services is greaterly increased in the current year due to the
increase in the Operations amp Maintenance fee due to the increase in extra invoice
and the net fixed assets are reduced because of the increased charge of
depreciation Finally that effected a huge increase in the ratio compared with the
previous yearrsquos ratio
GRAPHICAL REPRSENTATION
126182
424 369
682
000
100
200
300
400
500
600
700
Ratios
2003 2004 2005 2006 2007
Years
FIXED ASSETS TURNOVER RATIO
Ratios
7 CAPITAL TURNOVER RATIO
(Amount
in Rs)
Capital Turnover Ratio
Year Income From Services Capital Employed Ratio
2003 36309834 37175892 0982004 53899084 53301834 1012005 72728759 70231061 1042006 55550649 56473652 0982007 96654902 97060013 100
Interpretation
This is another ratio to judge the efficiency and effectiveness of the company
like profitability ratio
The income from services is greaterly increased compared with the previous year
and the total capital employed includes capital and reserves amp surplus Due to
huge increase in the net profit the capital employed is also increased along with
income from services Both are effected in the increment of the ratio of current
year
GRAPHICAL REPRESENTATION
098
101
104
098
100
094095096097098099100101102103104
Ratios
2003 2004 2005 2006 2007
Years
CAPITAL TURNOVER RATIO
Ratios
8 CURRENT ASSETS TO FIXED ASSETS RATIO
(Amount
in Rs)
Current Assets To Fixed Assets Ratio
Year Current Assets Fixed Assets Ratio
2003 58524151 19998020 2932004 69765346 18672761 3742005 72021081 17137310 4202006 91328208 15056993 6072007 115642068 14163034 817
Interpretation
Current assets are increased due to the increase in the sundry debtors and the net
fixed assets of the firm are decreased due to the charge of depreciation and there
is no major increment in the fixed assets
The increment in current assets and the decrease in fixed assets resulted an
increase in the ratio compared with the previous year
GRAPHICAL REPRESENTATION
293374
420
607
817
000
100
200
300
400
500
600
700
800
900
Ratios
2003 2004 2005 2006 2007
Years
CURRENT ASSETS TO FIXED ASSETS RATIO
Ratios
PROFITABILITY RATIOS
GENERAL PROFITABILITY RATIOS
9 NET PROFIT RATIO
(Amount in Rs)
Net Profit Ratio
Year Net Profit After Tax Income from Services Ratio
2003 21123474 36039834 059
2004 16125942 53899084 030
2005 16929227 72728759 023
2006 18259580 55550649 033
2007 40586359 96654902 042
Interpretation
The net profit ratio is the overall measure of the firmrsquos ability to turn each rupee
of income from services in net profit If the net margin is inadequate the firm
will fail to achieve return on shareholderrsquos funds High net profit ratio will help
the firm service in the fall of income from services rise in cost of production or
declining demand
The net profit is increased because the income from services is increased The
increment resulted a slight increase in 2007 ratio compared with the year 2006
GRAPHICAL REPRESENTATION
059
030
023
033
042
000
010
020
030
040
050
060
Ratios
2003 2004 2005 2006 2007
Years
NET PROFIT RATIO
Ratios
10 OPERATING PROFIT
(Amount in Rs)
Operating Profit
Year Operating Profit Income From Services Ratio
2003 36094877 36309834 099
2004 27576814 53899084 051
2005 29540599 72728759 041
2006 31586718 55550649 057
2007 67192677 96654902 070
Interpretation
The operating profit ratio is used to measure the relationship between net profits
and sales of a firm Depending on the concept it will decide
The operating profit ratio is increased compared with the last year The earnings
are increased due to the increase in the income from services because of
Operations amp Maintenance fee So the ratio is increased slightly compared with
the previous year
GRAPHICAL REPRESENTATION
099
051
041
057
070
000
010
020
030
040
050060
070
080
090
100
Ratios
2003 2004 2005 2006 2007
Years
OPERATING PROFIT RATIO
Ratios
11 RETURN ON TOTAL ASSETS RATIO
(Amount in Rs)
Return on Total Assets Ratio
Year Net Profit After Tax Total Assets Ratio
2003 21123474 78572171 027
2004 16125942 88438107 018
2005 16929227 89158391 019
2006 18259580 106385201 017
2007 40586359 129805102 031
Interpretation
This is the ratio between net profit and total assets The ratio indicates the return
on total assets in the form of profits
The net profit is increased in the current year because of the increment in the
income from services due to the increase in Operations amp Maintenance fee The
fixed assets are reduced due to the charge of depreciation and no major
increments in fixed assets but the current assets are increased because of sundry
debtors and that effects an increase in the ratio compared with the last year ie
2006
GRAPHICAL REPRESENTATION
027
018 019017
031
000
005
010
015
020
025
030
035
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON TOTAL ASSETS
Ratios
12 RESERVES amp SURPLUS TO CAPITAL RATIO
(Amount in Rs)
Reserves amp Surplus To Capital Ratio
Year Reserves amp Surplus Capital Ratio
2003 65599299 2079920 31542004 34582554 18719280 1852005 51511781 18719280 2752006 37754372 18719280 2022007 78340733 18719280 419
Interpretation
The ratio is used to reveal the policy pursued by the company a very high ratio
indicates a conservative dividend policy and vice-versa Higher the ratio better
will be the position
The reserves amp surplus is decreased in the year 2006 due to the payment of
dividends and in the year 2007 the profit is increased But the capital is
remaining constant from the year 2004 So the increase in the reserves amp surplus
caused a greater increase in the current yearrsquos ratio compared with the older
GRAPHICAL REPRESENTATION
3154
185 275 202419
-
500
1000
1500
2000
2500
3000
3500
Ratios
2003 2004 2005 2006 2007
Years
RESERVES amp SRUPLUS TO CAPITAL RATIO
Ratios
OVERALL PROFITABILITY RATIOS
13 EARNINGS PER SHARE
(Amount in Rs)
Earnings Per Share
Year Net Profit After Tax No of Equity Shares Ratio
2003 21123474 207992 101562004 16125942 1871928 8612005 16929227 1871928 9042006 18259580 1871928 9752007 40586359 1871928 2168
Interpretation
Earnings per share ratio are used to find out the return that the shareholderrsquos earn
from their shares After charging depreciation and after payment of tax the
remaining amount will be distributed by all the shareholders
Net profit after tax is increased due to the huge increase in the income from
services That is the amount which is available to the shareholders to take There
are 1871928 shares of Rs10- each The share capital is constant from the year
2004 Due to the huge increase in net profit the earnings per share is greaterly
increased in 2007
GRAPHICAL REPRESENTATION
10156
861904 975
2168
000
2000
4000
6000
8000
10000
12000
Ratios
2003 2004 2005 2006 2007
Years
EARNINGS PER SHARE
Ratios
14 PRICE EARNINGS (PE) RATIO
(Amount in Rs)
Price Earning (PE) Ratio
Year Market Price Per Share Earnings Per Share Ratio
2003 3254 10156 0322004 2847 861 3302005 3752 904 4152006 3017 975 3092007 5185 2168 239
Interpretation
The ratio is calculated to make an estimate of application in the value of share of
a company
The market price per share is increased due to the increase in the reserves
amp surplus The earnings per share are also increased greaterly compared
with the last year because of increase in the net profit So the ratio is
decreased compared with the previous year
GRAPHICAL REPRESENTATION
032
330
415
309
239
000
050
100
150
200
250
300
350
400
450
Ratios
2003 2004 2005 2006 2007
Years
PE RATIO
Ratios
15 RETURN ON INVESTMENT
(Amount in Rs)
Return on Investment
Year Net Profit After Tax Share Holders Fund Ratio
2003 21123474 67679219 031
2004 16125942 53301834 03
2005 16929227 70231061 024
2006 18259580 56473652 032
2007 40586359 97060013 042
Interpretation
This is the ratio between net profits and shareholders funds The ratio is
generally calculated as percentage multiplying with 100
The net profit is increased due to the increase in the income from services ant
the shareholders funds are increased because of reserve amp surplus So the ratio
is increased in the current year
GRAPHICAL REPRESENTATION
031 030
024
032
042
000
005
010
015
020
025
030
035
040
045
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON INVESTMENT RATIO
RatioS
DATA COLLECTION
The data can be of two types
Primary Data
Secondary Data
Primary Data
Primary data are those data which is originally collected afresh
Secondary Data
Secondary data are those data which are already collected and stored and which has
been passed through statistical research
In this project Secondary data has been collected from following sources-
Annual report
Books
MIS
Other material and report published by company There are two methods to prepare
the Cash flow Statement
ndirect Method
I
The indirect method (or reconciliation method) starts with net income and converts it
to net cash flow from operating activities In other words the indirect method adjusts
net income for items that affected reported net income but did not affect cash To
compute net cash flow from operating activities non-cash charges in the income
statement are added ack to net income and non-cash credits are deducted
b
Direct Method
Under the direct method the statement of cash flows reports net cash flow from
operating activities as major classes of operating cash receipts (eg cash collected from
customers and cash received from interest and dividends) and cash disbursements (eg
cash paid to suppliers for goods to employees for services to creditors for interest and
to government authorities for taxes)
INDIRECT VERSUS DIRECT METHOD
The most contentious decision that the FASB faced in issuing Statement No 95 was
choosing between the direct method and the indirect method of determining net cash
flow from operating activities Companies lobbied against the direct method urging
adoption of the indirect method Commercial lending officers expressed a strong
preference to the FASB hat the direct method be required
tCF-Page 3 of 5
In Favor of the Direct Method
The principal advantage of the direct method is that it shows operating cash receipts and
payments That is it is more consistent with the objective of a statement of cash flows to
provide information about cash receipts and cash payments than the in-direct method
which does not report operating cash receipts and payments
Supporters of the direct method contend that knowledge of the specific sources of
operating cash receipts and the purposes for which operating cash payments were made
in past periods is useful in estimating future operating cash flows Furthermore in-
formation about amounts of major classes of operating cash receipts and payments is
more useful than information only about their arithmetic sum (the net cash flow from
operating activities) Such information is more revealing of an enterprises ability (1) to
generate sufficient cash from operating activities to pay its debts (2) to reinvest in its
operations and (3) to make distributions to its owners
Many corporate providers of financial statements say that they do not currently collect
information in a manner that allows them to determine amounts such as cash received
from customers or cash paid to suppliers directly from their accounting systems But
supporters of the direct method contend that the incremental cost of assimilating such
operating cash receipts and payments data is not significant
In Favor of the Indirect Method
The principal advantage of the indirect method is that it focuses on the differences
between net income and net cash flow from operating activities That is it provides a
useful link between the statement of cash flows and the income statement and balance
sheet
Many providers of financial statements contend that it is less costly to adjust net income
to net cash flow from operating activities (indirect) than it is to report gross operating
cash receipts and payments (direct) Supporters of the indirect method also state that the
direct method which effectively reports income statement information on a cash rather
than an accrual basis may erroneously suggest that net cash flow from operating
activities is as good as or better than net income as a measure of performance
Special Rules Applying to Direct and Indirect Methods
Companies that use the direct method are required at a
minimum to report separately the following classes of
operating cash receipts and payments
Receipts
1048713 Cash collected from customers (including lessees licensees etc)
1048713 Interest and dividends received
1048713 Other operating cash receipts if any
Payments
1048713 Cash paid to employees and suppliers of goods or services (including
suppliers of
insurance advertising etc)
1048713 Interest paid
1048713 Income taxes paid
1048713 Other operating cash payments if any
Companies using the indirect method are required to disclose separately changes in
inventory receivables and payables to reconcile net income to net cash flow from
operating activities In addition interest paid (net of amount capitalized) and income
taxes paid must be disclosed elsewhere in the financial statements or accompanying
notes
The FASB requires these separate and additional disclosures so that users
may approximate the direct method Also an acceptable alternative presentation
of the in-direct method is to report net cash flow from operating activities as a
single line item in the statement of cash flows and to present the reconciliation
details elsewhere in the financial statements
FINDING OF SUDY
According to cash flow statement of the company The finding of the study are as
follows-
The company has not taken any loans secured or unsecured from companies
firms or other parties
The company has not accepted any deposit from the public during the year
The company is not a sick industrial company
The company has not granted any loan secured or unsecured to company firms
or other parties
The company has paid the entire long term and short term borrowing during the
year
The company has buy back the companyrsquos own share this year
The interest paid in 2008 is more than the
There has been a significant decline in volume over the years from 2001-02
to 2005-06 as can be seen in the graph below
Table 43
The Net sales of Tractor has increased considerably from 2004-05 to 2007-08
This can be mainly attributed to changes in Variable and material costs and in
the price
The Net sale of Tractor has increased considerably from 2004-05 to 2007-08
that is an decrease of Rs7216 per tractor This can be mainly attributed to
changes in
Variable and material costs and in the prices
RECOMMENDATIONS
According to cash flow statement of the company The suggestions of the study
are as follows-
The time durations for training program have to increase
Buy regular review and consultations develop a career progression
which is sensitive to performance and ability
Create an environment where by people are trend developed to enable
The to take advantages of opportunities that arise
The jab can be redesigned where the work man stay in what is normally
the same job but has elements of it changed
The principle amount must be paid in time which can be reducing the
interest the out flow
The purchase of the fixed asset must be made only when there is extreme
requirement
In order to avoid taxes the company should go for more investment
The companyrsquos borrowings should go for more investment
o The company should try to reduce the depreciations as maximum
as possible
CONCLUSION
The study on competency level of employees at ESCORTS PVTLTD gave an
insight about the acceptance of competency mapping by employees
The employees at Ymi welcome the introduction of competency mapping in their
organization as they felt it was very much essential in enhancing their skills and
organizational development
The organization has provided the recourses guidance and support to facilitate the
introduction of competency level easily and develop the employees in such a way
that they can face any kind of challenge
However the level of competency in employees is found to be satisfactory
Providing proper training education and guidance to the employees can enhance
the level
This study was mainly carried out to find out whether thee competency mapping
being followed by the company is effective till date If the competency mapping
and fitment to the organization
By looking at the graphs and tables it is quite that the employees still are not up to
the level of competent pool they still have to be trained and made competent in
order to fill the gap As the organization has just applied the mapping it has to see
to that it meets all the requirements for competency mapping
Therefore the graphs make it quite clear that the potential of the employees is not
up to the mark and ie they are not competent enough to meet the competency-
mapping requirement Hence by further training and counseling this gap can be
closed
This report includes the training requirements of employees and it highlights skills
possessed by each employee and skill required All employees get training so that
skill can be improved and maintain balance between standard performance with
their actual performance to avoid gap
APPENDIX
QUESTIONNAIRE
Consumer Survey
Name _____________________________
Age _____________________________
Sex
Male
Female
Occupation
Businessman
Service man
Professional
Others
Monthly income brackets
Below 15000
15000- 20000
20000-30000
30000 and above
of your savings _________
Do you invest
Yes
No
If yes then where do you invest your money
Bank
Insurance
funds
Others
Why do you made that statement
Return
Risk hedging
Tax benefits
Other reasons (specify) _______
Who influence your cash decision
Relatives and friends
Family members
Advisors experts
You yourself
If no then why
Do not know where to invest
Satisfied with your current investment return
Donrsquot want take risk
Other reasons
__________________________________________________________________
___________________
Do you know about CF statement
Yes
No
If yes then from where you have come to know about an cash statement
Advertisements on newspapers
Friends and relative
Agents experts
Other source
What do you think about cash statement
It means investing only in share market
Constant watch must be kept always
Return is not satisfactory
Other perception
__________________________________________________
Can you recall any cash flow of company
___________________________
Would you want to made CF of an org
Yes
No
If yes then why
_______________________________________________________
If no then why
_______________________________________________________
BIBLIOGRAPHY
List of Books
1 PANDEY IM - FINANCIAL MANAGEMANT
2 KHAN MY AND JAIN PK -FINANCIAL MANAGEMANT
3 SMITH KV ndash MANAGEMANT OF WORKING CAPITAL
3 COMPANY RECORDS
4 JOURNAL
5 REPORTS
WEBLIOGRAPHY
1 wwwescortspvtltdcom
2 wwwgooglecom
GRAPHICAL REPRESENTATION
086
060
079
053
075
000
010
020
030
040
050
060
070
080
090
Ratios
2003 2004 2005 2006 2007
Years
PROPRIETORY RATIO
Ratios
ACTIVITY RATIOS
5 WORKING CAPITAL TURNOVER RATIO
(Amount
in Rs)
Working Capital Turnover Ratio
Year Income From Services Working Capital Ratio
2003 36309834 50670199 0722004 53899084 37880730 1422005 72728759 55355460 1312006 55550649 44211009 1262007 96654902 85375407 113
Interpretation
Income from services is greatly increased due to the extra invoice for Operations
amp Maintenance fee and the working capital is also increased greater due to the
increase in from services because the huge increase in current assets
The income from services is raised and the current assets are also raised together
resulted in the decrease of the ratio of 2007 compared with 2006
GRAPHICAL REPRESENTATION
072
142 131126
113
000
020
040
060
080
100
120
140
160
Ratio
2003 2004 2005 2006 2007
Years
WORKING CAPITAL TURNOVER RATIO
Ratio
6 FIXED ASSETS TURNOVER RATIO
(Amount in Rs)
Fixed Assets Turnover Ratio
Year Income From Services Net Fixed Assets Ratio
2003 36309834 28834317 126
2004 53899084 29568279 182
2005 72728759 17137310 424
2006 55550649 15056993 369
2007 96654902 14163034 682
Interpretation
Fixed assets are used in the business for producing the goods to be sold This
ratio shows the firmrsquos ability in generating sales from all financial resources
committed to total assets The ratio indicates the account of one rupee
investment in fixed assets
The income from services is greaterly increased in the current year due to the
increase in the Operations amp Maintenance fee due to the increase in extra invoice
and the net fixed assets are reduced because of the increased charge of
depreciation Finally that effected a huge increase in the ratio compared with the
previous yearrsquos ratio
GRAPHICAL REPRSENTATION
126182
424 369
682
000
100
200
300
400
500
600
700
Ratios
2003 2004 2005 2006 2007
Years
FIXED ASSETS TURNOVER RATIO
Ratios
7 CAPITAL TURNOVER RATIO
(Amount
in Rs)
Capital Turnover Ratio
Year Income From Services Capital Employed Ratio
2003 36309834 37175892 0982004 53899084 53301834 1012005 72728759 70231061 1042006 55550649 56473652 0982007 96654902 97060013 100
Interpretation
This is another ratio to judge the efficiency and effectiveness of the company
like profitability ratio
The income from services is greaterly increased compared with the previous year
and the total capital employed includes capital and reserves amp surplus Due to
huge increase in the net profit the capital employed is also increased along with
income from services Both are effected in the increment of the ratio of current
year
GRAPHICAL REPRESENTATION
098
101
104
098
100
094095096097098099100101102103104
Ratios
2003 2004 2005 2006 2007
Years
CAPITAL TURNOVER RATIO
Ratios
8 CURRENT ASSETS TO FIXED ASSETS RATIO
(Amount
in Rs)
Current Assets To Fixed Assets Ratio
Year Current Assets Fixed Assets Ratio
2003 58524151 19998020 2932004 69765346 18672761 3742005 72021081 17137310 4202006 91328208 15056993 6072007 115642068 14163034 817
Interpretation
Current assets are increased due to the increase in the sundry debtors and the net
fixed assets of the firm are decreased due to the charge of depreciation and there
is no major increment in the fixed assets
The increment in current assets and the decrease in fixed assets resulted an
increase in the ratio compared with the previous year
GRAPHICAL REPRESENTATION
293374
420
607
817
000
100
200
300
400
500
600
700
800
900
Ratios
2003 2004 2005 2006 2007
Years
CURRENT ASSETS TO FIXED ASSETS RATIO
Ratios
PROFITABILITY RATIOS
GENERAL PROFITABILITY RATIOS
9 NET PROFIT RATIO
(Amount in Rs)
Net Profit Ratio
Year Net Profit After Tax Income from Services Ratio
2003 21123474 36039834 059
2004 16125942 53899084 030
2005 16929227 72728759 023
2006 18259580 55550649 033
2007 40586359 96654902 042
Interpretation
The net profit ratio is the overall measure of the firmrsquos ability to turn each rupee
of income from services in net profit If the net margin is inadequate the firm
will fail to achieve return on shareholderrsquos funds High net profit ratio will help
the firm service in the fall of income from services rise in cost of production or
declining demand
The net profit is increased because the income from services is increased The
increment resulted a slight increase in 2007 ratio compared with the year 2006
GRAPHICAL REPRESENTATION
059
030
023
033
042
000
010
020
030
040
050
060
Ratios
2003 2004 2005 2006 2007
Years
NET PROFIT RATIO
Ratios
10 OPERATING PROFIT
(Amount in Rs)
Operating Profit
Year Operating Profit Income From Services Ratio
2003 36094877 36309834 099
2004 27576814 53899084 051
2005 29540599 72728759 041
2006 31586718 55550649 057
2007 67192677 96654902 070
Interpretation
The operating profit ratio is used to measure the relationship between net profits
and sales of a firm Depending on the concept it will decide
The operating profit ratio is increased compared with the last year The earnings
are increased due to the increase in the income from services because of
Operations amp Maintenance fee So the ratio is increased slightly compared with
the previous year
GRAPHICAL REPRESENTATION
099
051
041
057
070
000
010
020
030
040
050060
070
080
090
100
Ratios
2003 2004 2005 2006 2007
Years
OPERATING PROFIT RATIO
Ratios
11 RETURN ON TOTAL ASSETS RATIO
(Amount in Rs)
Return on Total Assets Ratio
Year Net Profit After Tax Total Assets Ratio
2003 21123474 78572171 027
2004 16125942 88438107 018
2005 16929227 89158391 019
2006 18259580 106385201 017
2007 40586359 129805102 031
Interpretation
This is the ratio between net profit and total assets The ratio indicates the return
on total assets in the form of profits
The net profit is increased in the current year because of the increment in the
income from services due to the increase in Operations amp Maintenance fee The
fixed assets are reduced due to the charge of depreciation and no major
increments in fixed assets but the current assets are increased because of sundry
debtors and that effects an increase in the ratio compared with the last year ie
2006
GRAPHICAL REPRESENTATION
027
018 019017
031
000
005
010
015
020
025
030
035
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON TOTAL ASSETS
Ratios
12 RESERVES amp SURPLUS TO CAPITAL RATIO
(Amount in Rs)
Reserves amp Surplus To Capital Ratio
Year Reserves amp Surplus Capital Ratio
2003 65599299 2079920 31542004 34582554 18719280 1852005 51511781 18719280 2752006 37754372 18719280 2022007 78340733 18719280 419
Interpretation
The ratio is used to reveal the policy pursued by the company a very high ratio
indicates a conservative dividend policy and vice-versa Higher the ratio better
will be the position
The reserves amp surplus is decreased in the year 2006 due to the payment of
dividends and in the year 2007 the profit is increased But the capital is
remaining constant from the year 2004 So the increase in the reserves amp surplus
caused a greater increase in the current yearrsquos ratio compared with the older
GRAPHICAL REPRESENTATION
3154
185 275 202419
-
500
1000
1500
2000
2500
3000
3500
Ratios
2003 2004 2005 2006 2007
Years
RESERVES amp SRUPLUS TO CAPITAL RATIO
Ratios
OVERALL PROFITABILITY RATIOS
13 EARNINGS PER SHARE
(Amount in Rs)
Earnings Per Share
Year Net Profit After Tax No of Equity Shares Ratio
2003 21123474 207992 101562004 16125942 1871928 8612005 16929227 1871928 9042006 18259580 1871928 9752007 40586359 1871928 2168
Interpretation
Earnings per share ratio are used to find out the return that the shareholderrsquos earn
from their shares After charging depreciation and after payment of tax the
remaining amount will be distributed by all the shareholders
Net profit after tax is increased due to the huge increase in the income from
services That is the amount which is available to the shareholders to take There
are 1871928 shares of Rs10- each The share capital is constant from the year
2004 Due to the huge increase in net profit the earnings per share is greaterly
increased in 2007
GRAPHICAL REPRESENTATION
10156
861904 975
2168
000
2000
4000
6000
8000
10000
12000
Ratios
2003 2004 2005 2006 2007
Years
EARNINGS PER SHARE
Ratios
14 PRICE EARNINGS (PE) RATIO
(Amount in Rs)
Price Earning (PE) Ratio
Year Market Price Per Share Earnings Per Share Ratio
2003 3254 10156 0322004 2847 861 3302005 3752 904 4152006 3017 975 3092007 5185 2168 239
Interpretation
The ratio is calculated to make an estimate of application in the value of share of
a company
The market price per share is increased due to the increase in the reserves
amp surplus The earnings per share are also increased greaterly compared
with the last year because of increase in the net profit So the ratio is
decreased compared with the previous year
GRAPHICAL REPRESENTATION
032
330
415
309
239
000
050
100
150
200
250
300
350
400
450
Ratios
2003 2004 2005 2006 2007
Years
PE RATIO
Ratios
15 RETURN ON INVESTMENT
(Amount in Rs)
Return on Investment
Year Net Profit After Tax Share Holders Fund Ratio
2003 21123474 67679219 031
2004 16125942 53301834 03
2005 16929227 70231061 024
2006 18259580 56473652 032
2007 40586359 97060013 042
Interpretation
This is the ratio between net profits and shareholders funds The ratio is
generally calculated as percentage multiplying with 100
The net profit is increased due to the increase in the income from services ant
the shareholders funds are increased because of reserve amp surplus So the ratio
is increased in the current year
GRAPHICAL REPRESENTATION
031 030
024
032
042
000
005
010
015
020
025
030
035
040
045
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON INVESTMENT RATIO
RatioS
DATA COLLECTION
The data can be of two types
Primary Data
Secondary Data
Primary Data
Primary data are those data which is originally collected afresh
Secondary Data
Secondary data are those data which are already collected and stored and which has
been passed through statistical research
In this project Secondary data has been collected from following sources-
Annual report
Books
MIS
Other material and report published by company There are two methods to prepare
the Cash flow Statement
ndirect Method
I
The indirect method (or reconciliation method) starts with net income and converts it
to net cash flow from operating activities In other words the indirect method adjusts
net income for items that affected reported net income but did not affect cash To
compute net cash flow from operating activities non-cash charges in the income
statement are added ack to net income and non-cash credits are deducted
b
Direct Method
Under the direct method the statement of cash flows reports net cash flow from
operating activities as major classes of operating cash receipts (eg cash collected from
customers and cash received from interest and dividends) and cash disbursements (eg
cash paid to suppliers for goods to employees for services to creditors for interest and
to government authorities for taxes)
INDIRECT VERSUS DIRECT METHOD
The most contentious decision that the FASB faced in issuing Statement No 95 was
choosing between the direct method and the indirect method of determining net cash
flow from operating activities Companies lobbied against the direct method urging
adoption of the indirect method Commercial lending officers expressed a strong
preference to the FASB hat the direct method be required
tCF-Page 3 of 5
In Favor of the Direct Method
The principal advantage of the direct method is that it shows operating cash receipts and
payments That is it is more consistent with the objective of a statement of cash flows to
provide information about cash receipts and cash payments than the in-direct method
which does not report operating cash receipts and payments
Supporters of the direct method contend that knowledge of the specific sources of
operating cash receipts and the purposes for which operating cash payments were made
in past periods is useful in estimating future operating cash flows Furthermore in-
formation about amounts of major classes of operating cash receipts and payments is
more useful than information only about their arithmetic sum (the net cash flow from
operating activities) Such information is more revealing of an enterprises ability (1) to
generate sufficient cash from operating activities to pay its debts (2) to reinvest in its
operations and (3) to make distributions to its owners
Many corporate providers of financial statements say that they do not currently collect
information in a manner that allows them to determine amounts such as cash received
from customers or cash paid to suppliers directly from their accounting systems But
supporters of the direct method contend that the incremental cost of assimilating such
operating cash receipts and payments data is not significant
In Favor of the Indirect Method
The principal advantage of the indirect method is that it focuses on the differences
between net income and net cash flow from operating activities That is it provides a
useful link between the statement of cash flows and the income statement and balance
sheet
Many providers of financial statements contend that it is less costly to adjust net income
to net cash flow from operating activities (indirect) than it is to report gross operating
cash receipts and payments (direct) Supporters of the indirect method also state that the
direct method which effectively reports income statement information on a cash rather
than an accrual basis may erroneously suggest that net cash flow from operating
activities is as good as or better than net income as a measure of performance
Special Rules Applying to Direct and Indirect Methods
Companies that use the direct method are required at a
minimum to report separately the following classes of
operating cash receipts and payments
Receipts
1048713 Cash collected from customers (including lessees licensees etc)
1048713 Interest and dividends received
1048713 Other operating cash receipts if any
Payments
1048713 Cash paid to employees and suppliers of goods or services (including
suppliers of
insurance advertising etc)
1048713 Interest paid
1048713 Income taxes paid
1048713 Other operating cash payments if any
Companies using the indirect method are required to disclose separately changes in
inventory receivables and payables to reconcile net income to net cash flow from
operating activities In addition interest paid (net of amount capitalized) and income
taxes paid must be disclosed elsewhere in the financial statements or accompanying
notes
The FASB requires these separate and additional disclosures so that users
may approximate the direct method Also an acceptable alternative presentation
of the in-direct method is to report net cash flow from operating activities as a
single line item in the statement of cash flows and to present the reconciliation
details elsewhere in the financial statements
FINDING OF SUDY
According to cash flow statement of the company The finding of the study are as
follows-
The company has not taken any loans secured or unsecured from companies
firms or other parties
The company has not accepted any deposit from the public during the year
The company is not a sick industrial company
The company has not granted any loan secured or unsecured to company firms
or other parties
The company has paid the entire long term and short term borrowing during the
year
The company has buy back the companyrsquos own share this year
The interest paid in 2008 is more than the
There has been a significant decline in volume over the years from 2001-02
to 2005-06 as can be seen in the graph below
Table 43
The Net sales of Tractor has increased considerably from 2004-05 to 2007-08
This can be mainly attributed to changes in Variable and material costs and in
the price
The Net sale of Tractor has increased considerably from 2004-05 to 2007-08
that is an decrease of Rs7216 per tractor This can be mainly attributed to
changes in
Variable and material costs and in the prices
RECOMMENDATIONS
According to cash flow statement of the company The suggestions of the study
are as follows-
The time durations for training program have to increase
Buy regular review and consultations develop a career progression
which is sensitive to performance and ability
Create an environment where by people are trend developed to enable
The to take advantages of opportunities that arise
The jab can be redesigned where the work man stay in what is normally
the same job but has elements of it changed
The principle amount must be paid in time which can be reducing the
interest the out flow
The purchase of the fixed asset must be made only when there is extreme
requirement
In order to avoid taxes the company should go for more investment
The companyrsquos borrowings should go for more investment
o The company should try to reduce the depreciations as maximum
as possible
CONCLUSION
The study on competency level of employees at ESCORTS PVTLTD gave an
insight about the acceptance of competency mapping by employees
The employees at Ymi welcome the introduction of competency mapping in their
organization as they felt it was very much essential in enhancing their skills and
organizational development
The organization has provided the recourses guidance and support to facilitate the
introduction of competency level easily and develop the employees in such a way
that they can face any kind of challenge
However the level of competency in employees is found to be satisfactory
Providing proper training education and guidance to the employees can enhance
the level
This study was mainly carried out to find out whether thee competency mapping
being followed by the company is effective till date If the competency mapping
and fitment to the organization
By looking at the graphs and tables it is quite that the employees still are not up to
the level of competent pool they still have to be trained and made competent in
order to fill the gap As the organization has just applied the mapping it has to see
to that it meets all the requirements for competency mapping
Therefore the graphs make it quite clear that the potential of the employees is not
up to the mark and ie they are not competent enough to meet the competency-
mapping requirement Hence by further training and counseling this gap can be
closed
This report includes the training requirements of employees and it highlights skills
possessed by each employee and skill required All employees get training so that
skill can be improved and maintain balance between standard performance with
their actual performance to avoid gap
APPENDIX
QUESTIONNAIRE
Consumer Survey
Name _____________________________
Age _____________________________
Sex
Male
Female
Occupation
Businessman
Service man
Professional
Others
Monthly income brackets
Below 15000
15000- 20000
20000-30000
30000 and above
of your savings _________
Do you invest
Yes
No
If yes then where do you invest your money
Bank
Insurance
funds
Others
Why do you made that statement
Return
Risk hedging
Tax benefits
Other reasons (specify) _______
Who influence your cash decision
Relatives and friends
Family members
Advisors experts
You yourself
If no then why
Do not know where to invest
Satisfied with your current investment return
Donrsquot want take risk
Other reasons
__________________________________________________________________
___________________
Do you know about CF statement
Yes
No
If yes then from where you have come to know about an cash statement
Advertisements on newspapers
Friends and relative
Agents experts
Other source
What do you think about cash statement
It means investing only in share market
Constant watch must be kept always
Return is not satisfactory
Other perception
__________________________________________________
Can you recall any cash flow of company
___________________________
Would you want to made CF of an org
Yes
No
If yes then why
_______________________________________________________
If no then why
_______________________________________________________
BIBLIOGRAPHY
List of Books
1 PANDEY IM - FINANCIAL MANAGEMANT
2 KHAN MY AND JAIN PK -FINANCIAL MANAGEMANT
3 SMITH KV ndash MANAGEMANT OF WORKING CAPITAL
3 COMPANY RECORDS
4 JOURNAL
5 REPORTS
WEBLIOGRAPHY
1 wwwescortspvtltdcom
2 wwwgooglecom
ACTIVITY RATIOS
5 WORKING CAPITAL TURNOVER RATIO
(Amount
in Rs)
Working Capital Turnover Ratio
Year Income From Services Working Capital Ratio
2003 36309834 50670199 0722004 53899084 37880730 1422005 72728759 55355460 1312006 55550649 44211009 1262007 96654902 85375407 113
Interpretation
Income from services is greatly increased due to the extra invoice for Operations
amp Maintenance fee and the working capital is also increased greater due to the
increase in from services because the huge increase in current assets
The income from services is raised and the current assets are also raised together
resulted in the decrease of the ratio of 2007 compared with 2006
GRAPHICAL REPRESENTATION
072
142 131126
113
000
020
040
060
080
100
120
140
160
Ratio
2003 2004 2005 2006 2007
Years
WORKING CAPITAL TURNOVER RATIO
Ratio
6 FIXED ASSETS TURNOVER RATIO
(Amount in Rs)
Fixed Assets Turnover Ratio
Year Income From Services Net Fixed Assets Ratio
2003 36309834 28834317 126
2004 53899084 29568279 182
2005 72728759 17137310 424
2006 55550649 15056993 369
2007 96654902 14163034 682
Interpretation
Fixed assets are used in the business for producing the goods to be sold This
ratio shows the firmrsquos ability in generating sales from all financial resources
committed to total assets The ratio indicates the account of one rupee
investment in fixed assets
The income from services is greaterly increased in the current year due to the
increase in the Operations amp Maintenance fee due to the increase in extra invoice
and the net fixed assets are reduced because of the increased charge of
depreciation Finally that effected a huge increase in the ratio compared with the
previous yearrsquos ratio
GRAPHICAL REPRSENTATION
126182
424 369
682
000
100
200
300
400
500
600
700
Ratios
2003 2004 2005 2006 2007
Years
FIXED ASSETS TURNOVER RATIO
Ratios
7 CAPITAL TURNOVER RATIO
(Amount
in Rs)
Capital Turnover Ratio
Year Income From Services Capital Employed Ratio
2003 36309834 37175892 0982004 53899084 53301834 1012005 72728759 70231061 1042006 55550649 56473652 0982007 96654902 97060013 100
Interpretation
This is another ratio to judge the efficiency and effectiveness of the company
like profitability ratio
The income from services is greaterly increased compared with the previous year
and the total capital employed includes capital and reserves amp surplus Due to
huge increase in the net profit the capital employed is also increased along with
income from services Both are effected in the increment of the ratio of current
year
GRAPHICAL REPRESENTATION
098
101
104
098
100
094095096097098099100101102103104
Ratios
2003 2004 2005 2006 2007
Years
CAPITAL TURNOVER RATIO
Ratios
8 CURRENT ASSETS TO FIXED ASSETS RATIO
(Amount
in Rs)
Current Assets To Fixed Assets Ratio
Year Current Assets Fixed Assets Ratio
2003 58524151 19998020 2932004 69765346 18672761 3742005 72021081 17137310 4202006 91328208 15056993 6072007 115642068 14163034 817
Interpretation
Current assets are increased due to the increase in the sundry debtors and the net
fixed assets of the firm are decreased due to the charge of depreciation and there
is no major increment in the fixed assets
The increment in current assets and the decrease in fixed assets resulted an
increase in the ratio compared with the previous year
GRAPHICAL REPRESENTATION
293374
420
607
817
000
100
200
300
400
500
600
700
800
900
Ratios
2003 2004 2005 2006 2007
Years
CURRENT ASSETS TO FIXED ASSETS RATIO
Ratios
PROFITABILITY RATIOS
GENERAL PROFITABILITY RATIOS
9 NET PROFIT RATIO
(Amount in Rs)
Net Profit Ratio
Year Net Profit After Tax Income from Services Ratio
2003 21123474 36039834 059
2004 16125942 53899084 030
2005 16929227 72728759 023
2006 18259580 55550649 033
2007 40586359 96654902 042
Interpretation
The net profit ratio is the overall measure of the firmrsquos ability to turn each rupee
of income from services in net profit If the net margin is inadequate the firm
will fail to achieve return on shareholderrsquos funds High net profit ratio will help
the firm service in the fall of income from services rise in cost of production or
declining demand
The net profit is increased because the income from services is increased The
increment resulted a slight increase in 2007 ratio compared with the year 2006
GRAPHICAL REPRESENTATION
059
030
023
033
042
000
010
020
030
040
050
060
Ratios
2003 2004 2005 2006 2007
Years
NET PROFIT RATIO
Ratios
10 OPERATING PROFIT
(Amount in Rs)
Operating Profit
Year Operating Profit Income From Services Ratio
2003 36094877 36309834 099
2004 27576814 53899084 051
2005 29540599 72728759 041
2006 31586718 55550649 057
2007 67192677 96654902 070
Interpretation
The operating profit ratio is used to measure the relationship between net profits
and sales of a firm Depending on the concept it will decide
The operating profit ratio is increased compared with the last year The earnings
are increased due to the increase in the income from services because of
Operations amp Maintenance fee So the ratio is increased slightly compared with
the previous year
GRAPHICAL REPRESENTATION
099
051
041
057
070
000
010
020
030
040
050060
070
080
090
100
Ratios
2003 2004 2005 2006 2007
Years
OPERATING PROFIT RATIO
Ratios
11 RETURN ON TOTAL ASSETS RATIO
(Amount in Rs)
Return on Total Assets Ratio
Year Net Profit After Tax Total Assets Ratio
2003 21123474 78572171 027
2004 16125942 88438107 018
2005 16929227 89158391 019
2006 18259580 106385201 017
2007 40586359 129805102 031
Interpretation
This is the ratio between net profit and total assets The ratio indicates the return
on total assets in the form of profits
The net profit is increased in the current year because of the increment in the
income from services due to the increase in Operations amp Maintenance fee The
fixed assets are reduced due to the charge of depreciation and no major
increments in fixed assets but the current assets are increased because of sundry
debtors and that effects an increase in the ratio compared with the last year ie
2006
GRAPHICAL REPRESENTATION
027
018 019017
031
000
005
010
015
020
025
030
035
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON TOTAL ASSETS
Ratios
12 RESERVES amp SURPLUS TO CAPITAL RATIO
(Amount in Rs)
Reserves amp Surplus To Capital Ratio
Year Reserves amp Surplus Capital Ratio
2003 65599299 2079920 31542004 34582554 18719280 1852005 51511781 18719280 2752006 37754372 18719280 2022007 78340733 18719280 419
Interpretation
The ratio is used to reveal the policy pursued by the company a very high ratio
indicates a conservative dividend policy and vice-versa Higher the ratio better
will be the position
The reserves amp surplus is decreased in the year 2006 due to the payment of
dividends and in the year 2007 the profit is increased But the capital is
remaining constant from the year 2004 So the increase in the reserves amp surplus
caused a greater increase in the current yearrsquos ratio compared with the older
GRAPHICAL REPRESENTATION
3154
185 275 202419
-
500
1000
1500
2000
2500
3000
3500
Ratios
2003 2004 2005 2006 2007
Years
RESERVES amp SRUPLUS TO CAPITAL RATIO
Ratios
OVERALL PROFITABILITY RATIOS
13 EARNINGS PER SHARE
(Amount in Rs)
Earnings Per Share
Year Net Profit After Tax No of Equity Shares Ratio
2003 21123474 207992 101562004 16125942 1871928 8612005 16929227 1871928 9042006 18259580 1871928 9752007 40586359 1871928 2168
Interpretation
Earnings per share ratio are used to find out the return that the shareholderrsquos earn
from their shares After charging depreciation and after payment of tax the
remaining amount will be distributed by all the shareholders
Net profit after tax is increased due to the huge increase in the income from
services That is the amount which is available to the shareholders to take There
are 1871928 shares of Rs10- each The share capital is constant from the year
2004 Due to the huge increase in net profit the earnings per share is greaterly
increased in 2007
GRAPHICAL REPRESENTATION
10156
861904 975
2168
000
2000
4000
6000
8000
10000
12000
Ratios
2003 2004 2005 2006 2007
Years
EARNINGS PER SHARE
Ratios
14 PRICE EARNINGS (PE) RATIO
(Amount in Rs)
Price Earning (PE) Ratio
Year Market Price Per Share Earnings Per Share Ratio
2003 3254 10156 0322004 2847 861 3302005 3752 904 4152006 3017 975 3092007 5185 2168 239
Interpretation
The ratio is calculated to make an estimate of application in the value of share of
a company
The market price per share is increased due to the increase in the reserves
amp surplus The earnings per share are also increased greaterly compared
with the last year because of increase in the net profit So the ratio is
decreased compared with the previous year
GRAPHICAL REPRESENTATION
032
330
415
309
239
000
050
100
150
200
250
300
350
400
450
Ratios
2003 2004 2005 2006 2007
Years
PE RATIO
Ratios
15 RETURN ON INVESTMENT
(Amount in Rs)
Return on Investment
Year Net Profit After Tax Share Holders Fund Ratio
2003 21123474 67679219 031
2004 16125942 53301834 03
2005 16929227 70231061 024
2006 18259580 56473652 032
2007 40586359 97060013 042
Interpretation
This is the ratio between net profits and shareholders funds The ratio is
generally calculated as percentage multiplying with 100
The net profit is increased due to the increase in the income from services ant
the shareholders funds are increased because of reserve amp surplus So the ratio
is increased in the current year
GRAPHICAL REPRESENTATION
031 030
024
032
042
000
005
010
015
020
025
030
035
040
045
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON INVESTMENT RATIO
RatioS
DATA COLLECTION
The data can be of two types
Primary Data
Secondary Data
Primary Data
Primary data are those data which is originally collected afresh
Secondary Data
Secondary data are those data which are already collected and stored and which has
been passed through statistical research
In this project Secondary data has been collected from following sources-
Annual report
Books
MIS
Other material and report published by company There are two methods to prepare
the Cash flow Statement
ndirect Method
I
The indirect method (or reconciliation method) starts with net income and converts it
to net cash flow from operating activities In other words the indirect method adjusts
net income for items that affected reported net income but did not affect cash To
compute net cash flow from operating activities non-cash charges in the income
statement are added ack to net income and non-cash credits are deducted
b
Direct Method
Under the direct method the statement of cash flows reports net cash flow from
operating activities as major classes of operating cash receipts (eg cash collected from
customers and cash received from interest and dividends) and cash disbursements (eg
cash paid to suppliers for goods to employees for services to creditors for interest and
to government authorities for taxes)
INDIRECT VERSUS DIRECT METHOD
The most contentious decision that the FASB faced in issuing Statement No 95 was
choosing between the direct method and the indirect method of determining net cash
flow from operating activities Companies lobbied against the direct method urging
adoption of the indirect method Commercial lending officers expressed a strong
preference to the FASB hat the direct method be required
tCF-Page 3 of 5
In Favor of the Direct Method
The principal advantage of the direct method is that it shows operating cash receipts and
payments That is it is more consistent with the objective of a statement of cash flows to
provide information about cash receipts and cash payments than the in-direct method
which does not report operating cash receipts and payments
Supporters of the direct method contend that knowledge of the specific sources of
operating cash receipts and the purposes for which operating cash payments were made
in past periods is useful in estimating future operating cash flows Furthermore in-
formation about amounts of major classes of operating cash receipts and payments is
more useful than information only about their arithmetic sum (the net cash flow from
operating activities) Such information is more revealing of an enterprises ability (1) to
generate sufficient cash from operating activities to pay its debts (2) to reinvest in its
operations and (3) to make distributions to its owners
Many corporate providers of financial statements say that they do not currently collect
information in a manner that allows them to determine amounts such as cash received
from customers or cash paid to suppliers directly from their accounting systems But
supporters of the direct method contend that the incremental cost of assimilating such
operating cash receipts and payments data is not significant
In Favor of the Indirect Method
The principal advantage of the indirect method is that it focuses on the differences
between net income and net cash flow from operating activities That is it provides a
useful link between the statement of cash flows and the income statement and balance
sheet
Many providers of financial statements contend that it is less costly to adjust net income
to net cash flow from operating activities (indirect) than it is to report gross operating
cash receipts and payments (direct) Supporters of the indirect method also state that the
direct method which effectively reports income statement information on a cash rather
than an accrual basis may erroneously suggest that net cash flow from operating
activities is as good as or better than net income as a measure of performance
Special Rules Applying to Direct and Indirect Methods
Companies that use the direct method are required at a
minimum to report separately the following classes of
operating cash receipts and payments
Receipts
1048713 Cash collected from customers (including lessees licensees etc)
1048713 Interest and dividends received
1048713 Other operating cash receipts if any
Payments
1048713 Cash paid to employees and suppliers of goods or services (including
suppliers of
insurance advertising etc)
1048713 Interest paid
1048713 Income taxes paid
1048713 Other operating cash payments if any
Companies using the indirect method are required to disclose separately changes in
inventory receivables and payables to reconcile net income to net cash flow from
operating activities In addition interest paid (net of amount capitalized) and income
taxes paid must be disclosed elsewhere in the financial statements or accompanying
notes
The FASB requires these separate and additional disclosures so that users
may approximate the direct method Also an acceptable alternative presentation
of the in-direct method is to report net cash flow from operating activities as a
single line item in the statement of cash flows and to present the reconciliation
details elsewhere in the financial statements
FINDING OF SUDY
According to cash flow statement of the company The finding of the study are as
follows-
The company has not taken any loans secured or unsecured from companies
firms or other parties
The company has not accepted any deposit from the public during the year
The company is not a sick industrial company
The company has not granted any loan secured or unsecured to company firms
or other parties
The company has paid the entire long term and short term borrowing during the
year
The company has buy back the companyrsquos own share this year
The interest paid in 2008 is more than the
There has been a significant decline in volume over the years from 2001-02
to 2005-06 as can be seen in the graph below
Table 43
The Net sales of Tractor has increased considerably from 2004-05 to 2007-08
This can be mainly attributed to changes in Variable and material costs and in
the price
The Net sale of Tractor has increased considerably from 2004-05 to 2007-08
that is an decrease of Rs7216 per tractor This can be mainly attributed to
changes in
Variable and material costs and in the prices
RECOMMENDATIONS
According to cash flow statement of the company The suggestions of the study
are as follows-
The time durations for training program have to increase
Buy regular review and consultations develop a career progression
which is sensitive to performance and ability
Create an environment where by people are trend developed to enable
The to take advantages of opportunities that arise
The jab can be redesigned where the work man stay in what is normally
the same job but has elements of it changed
The principle amount must be paid in time which can be reducing the
interest the out flow
The purchase of the fixed asset must be made only when there is extreme
requirement
In order to avoid taxes the company should go for more investment
The companyrsquos borrowings should go for more investment
o The company should try to reduce the depreciations as maximum
as possible
CONCLUSION
The study on competency level of employees at ESCORTS PVTLTD gave an
insight about the acceptance of competency mapping by employees
The employees at Ymi welcome the introduction of competency mapping in their
organization as they felt it was very much essential in enhancing their skills and
organizational development
The organization has provided the recourses guidance and support to facilitate the
introduction of competency level easily and develop the employees in such a way
that they can face any kind of challenge
However the level of competency in employees is found to be satisfactory
Providing proper training education and guidance to the employees can enhance
the level
This study was mainly carried out to find out whether thee competency mapping
being followed by the company is effective till date If the competency mapping
and fitment to the organization
By looking at the graphs and tables it is quite that the employees still are not up to
the level of competent pool they still have to be trained and made competent in
order to fill the gap As the organization has just applied the mapping it has to see
to that it meets all the requirements for competency mapping
Therefore the graphs make it quite clear that the potential of the employees is not
up to the mark and ie they are not competent enough to meet the competency-
mapping requirement Hence by further training and counseling this gap can be
closed
This report includes the training requirements of employees and it highlights skills
possessed by each employee and skill required All employees get training so that
skill can be improved and maintain balance between standard performance with
their actual performance to avoid gap
APPENDIX
QUESTIONNAIRE
Consumer Survey
Name _____________________________
Age _____________________________
Sex
Male
Female
Occupation
Businessman
Service man
Professional
Others
Monthly income brackets
Below 15000
15000- 20000
20000-30000
30000 and above
of your savings _________
Do you invest
Yes
No
If yes then where do you invest your money
Bank
Insurance
funds
Others
Why do you made that statement
Return
Risk hedging
Tax benefits
Other reasons (specify) _______
Who influence your cash decision
Relatives and friends
Family members
Advisors experts
You yourself
If no then why
Do not know where to invest
Satisfied with your current investment return
Donrsquot want take risk
Other reasons
__________________________________________________________________
___________________
Do you know about CF statement
Yes
No
If yes then from where you have come to know about an cash statement
Advertisements on newspapers
Friends and relative
Agents experts
Other source
What do you think about cash statement
It means investing only in share market
Constant watch must be kept always
Return is not satisfactory
Other perception
__________________________________________________
Can you recall any cash flow of company
___________________________
Would you want to made CF of an org
Yes
No
If yes then why
_______________________________________________________
If no then why
_______________________________________________________
BIBLIOGRAPHY
List of Books
1 PANDEY IM - FINANCIAL MANAGEMANT
2 KHAN MY AND JAIN PK -FINANCIAL MANAGEMANT
3 SMITH KV ndash MANAGEMANT OF WORKING CAPITAL
3 COMPANY RECORDS
4 JOURNAL
5 REPORTS
WEBLIOGRAPHY
1 wwwescortspvtltdcom
2 wwwgooglecom
GRAPHICAL REPRESENTATION
072
142 131126
113
000
020
040
060
080
100
120
140
160
Ratio
2003 2004 2005 2006 2007
Years
WORKING CAPITAL TURNOVER RATIO
Ratio
6 FIXED ASSETS TURNOVER RATIO
(Amount in Rs)
Fixed Assets Turnover Ratio
Year Income From Services Net Fixed Assets Ratio
2003 36309834 28834317 126
2004 53899084 29568279 182
2005 72728759 17137310 424
2006 55550649 15056993 369
2007 96654902 14163034 682
Interpretation
Fixed assets are used in the business for producing the goods to be sold This
ratio shows the firmrsquos ability in generating sales from all financial resources
committed to total assets The ratio indicates the account of one rupee
investment in fixed assets
The income from services is greaterly increased in the current year due to the
increase in the Operations amp Maintenance fee due to the increase in extra invoice
and the net fixed assets are reduced because of the increased charge of
depreciation Finally that effected a huge increase in the ratio compared with the
previous yearrsquos ratio
GRAPHICAL REPRSENTATION
126182
424 369
682
000
100
200
300
400
500
600
700
Ratios
2003 2004 2005 2006 2007
Years
FIXED ASSETS TURNOVER RATIO
Ratios
7 CAPITAL TURNOVER RATIO
(Amount
in Rs)
Capital Turnover Ratio
Year Income From Services Capital Employed Ratio
2003 36309834 37175892 0982004 53899084 53301834 1012005 72728759 70231061 1042006 55550649 56473652 0982007 96654902 97060013 100
Interpretation
This is another ratio to judge the efficiency and effectiveness of the company
like profitability ratio
The income from services is greaterly increased compared with the previous year
and the total capital employed includes capital and reserves amp surplus Due to
huge increase in the net profit the capital employed is also increased along with
income from services Both are effected in the increment of the ratio of current
year
GRAPHICAL REPRESENTATION
098
101
104
098
100
094095096097098099100101102103104
Ratios
2003 2004 2005 2006 2007
Years
CAPITAL TURNOVER RATIO
Ratios
8 CURRENT ASSETS TO FIXED ASSETS RATIO
(Amount
in Rs)
Current Assets To Fixed Assets Ratio
Year Current Assets Fixed Assets Ratio
2003 58524151 19998020 2932004 69765346 18672761 3742005 72021081 17137310 4202006 91328208 15056993 6072007 115642068 14163034 817
Interpretation
Current assets are increased due to the increase in the sundry debtors and the net
fixed assets of the firm are decreased due to the charge of depreciation and there
is no major increment in the fixed assets
The increment in current assets and the decrease in fixed assets resulted an
increase in the ratio compared with the previous year
GRAPHICAL REPRESENTATION
293374
420
607
817
000
100
200
300
400
500
600
700
800
900
Ratios
2003 2004 2005 2006 2007
Years
CURRENT ASSETS TO FIXED ASSETS RATIO
Ratios
PROFITABILITY RATIOS
GENERAL PROFITABILITY RATIOS
9 NET PROFIT RATIO
(Amount in Rs)
Net Profit Ratio
Year Net Profit After Tax Income from Services Ratio
2003 21123474 36039834 059
2004 16125942 53899084 030
2005 16929227 72728759 023
2006 18259580 55550649 033
2007 40586359 96654902 042
Interpretation
The net profit ratio is the overall measure of the firmrsquos ability to turn each rupee
of income from services in net profit If the net margin is inadequate the firm
will fail to achieve return on shareholderrsquos funds High net profit ratio will help
the firm service in the fall of income from services rise in cost of production or
declining demand
The net profit is increased because the income from services is increased The
increment resulted a slight increase in 2007 ratio compared with the year 2006
GRAPHICAL REPRESENTATION
059
030
023
033
042
000
010
020
030
040
050
060
Ratios
2003 2004 2005 2006 2007
Years
NET PROFIT RATIO
Ratios
10 OPERATING PROFIT
(Amount in Rs)
Operating Profit
Year Operating Profit Income From Services Ratio
2003 36094877 36309834 099
2004 27576814 53899084 051
2005 29540599 72728759 041
2006 31586718 55550649 057
2007 67192677 96654902 070
Interpretation
The operating profit ratio is used to measure the relationship between net profits
and sales of a firm Depending on the concept it will decide
The operating profit ratio is increased compared with the last year The earnings
are increased due to the increase in the income from services because of
Operations amp Maintenance fee So the ratio is increased slightly compared with
the previous year
GRAPHICAL REPRESENTATION
099
051
041
057
070
000
010
020
030
040
050060
070
080
090
100
Ratios
2003 2004 2005 2006 2007
Years
OPERATING PROFIT RATIO
Ratios
11 RETURN ON TOTAL ASSETS RATIO
(Amount in Rs)
Return on Total Assets Ratio
Year Net Profit After Tax Total Assets Ratio
2003 21123474 78572171 027
2004 16125942 88438107 018
2005 16929227 89158391 019
2006 18259580 106385201 017
2007 40586359 129805102 031
Interpretation
This is the ratio between net profit and total assets The ratio indicates the return
on total assets in the form of profits
The net profit is increased in the current year because of the increment in the
income from services due to the increase in Operations amp Maintenance fee The
fixed assets are reduced due to the charge of depreciation and no major
increments in fixed assets but the current assets are increased because of sundry
debtors and that effects an increase in the ratio compared with the last year ie
2006
GRAPHICAL REPRESENTATION
027
018 019017
031
000
005
010
015
020
025
030
035
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON TOTAL ASSETS
Ratios
12 RESERVES amp SURPLUS TO CAPITAL RATIO
(Amount in Rs)
Reserves amp Surplus To Capital Ratio
Year Reserves amp Surplus Capital Ratio
2003 65599299 2079920 31542004 34582554 18719280 1852005 51511781 18719280 2752006 37754372 18719280 2022007 78340733 18719280 419
Interpretation
The ratio is used to reveal the policy pursued by the company a very high ratio
indicates a conservative dividend policy and vice-versa Higher the ratio better
will be the position
The reserves amp surplus is decreased in the year 2006 due to the payment of
dividends and in the year 2007 the profit is increased But the capital is
remaining constant from the year 2004 So the increase in the reserves amp surplus
caused a greater increase in the current yearrsquos ratio compared with the older
GRAPHICAL REPRESENTATION
3154
185 275 202419
-
500
1000
1500
2000
2500
3000
3500
Ratios
2003 2004 2005 2006 2007
Years
RESERVES amp SRUPLUS TO CAPITAL RATIO
Ratios
OVERALL PROFITABILITY RATIOS
13 EARNINGS PER SHARE
(Amount in Rs)
Earnings Per Share
Year Net Profit After Tax No of Equity Shares Ratio
2003 21123474 207992 101562004 16125942 1871928 8612005 16929227 1871928 9042006 18259580 1871928 9752007 40586359 1871928 2168
Interpretation
Earnings per share ratio are used to find out the return that the shareholderrsquos earn
from their shares After charging depreciation and after payment of tax the
remaining amount will be distributed by all the shareholders
Net profit after tax is increased due to the huge increase in the income from
services That is the amount which is available to the shareholders to take There
are 1871928 shares of Rs10- each The share capital is constant from the year
2004 Due to the huge increase in net profit the earnings per share is greaterly
increased in 2007
GRAPHICAL REPRESENTATION
10156
861904 975
2168
000
2000
4000
6000
8000
10000
12000
Ratios
2003 2004 2005 2006 2007
Years
EARNINGS PER SHARE
Ratios
14 PRICE EARNINGS (PE) RATIO
(Amount in Rs)
Price Earning (PE) Ratio
Year Market Price Per Share Earnings Per Share Ratio
2003 3254 10156 0322004 2847 861 3302005 3752 904 4152006 3017 975 3092007 5185 2168 239
Interpretation
The ratio is calculated to make an estimate of application in the value of share of
a company
The market price per share is increased due to the increase in the reserves
amp surplus The earnings per share are also increased greaterly compared
with the last year because of increase in the net profit So the ratio is
decreased compared with the previous year
GRAPHICAL REPRESENTATION
032
330
415
309
239
000
050
100
150
200
250
300
350
400
450
Ratios
2003 2004 2005 2006 2007
Years
PE RATIO
Ratios
15 RETURN ON INVESTMENT
(Amount in Rs)
Return on Investment
Year Net Profit After Tax Share Holders Fund Ratio
2003 21123474 67679219 031
2004 16125942 53301834 03
2005 16929227 70231061 024
2006 18259580 56473652 032
2007 40586359 97060013 042
Interpretation
This is the ratio between net profits and shareholders funds The ratio is
generally calculated as percentage multiplying with 100
The net profit is increased due to the increase in the income from services ant
the shareholders funds are increased because of reserve amp surplus So the ratio
is increased in the current year
GRAPHICAL REPRESENTATION
031 030
024
032
042
000
005
010
015
020
025
030
035
040
045
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON INVESTMENT RATIO
RatioS
DATA COLLECTION
The data can be of two types
Primary Data
Secondary Data
Primary Data
Primary data are those data which is originally collected afresh
Secondary Data
Secondary data are those data which are already collected and stored and which has
been passed through statistical research
In this project Secondary data has been collected from following sources-
Annual report
Books
MIS
Other material and report published by company There are two methods to prepare
the Cash flow Statement
ndirect Method
I
The indirect method (or reconciliation method) starts with net income and converts it
to net cash flow from operating activities In other words the indirect method adjusts
net income for items that affected reported net income but did not affect cash To
compute net cash flow from operating activities non-cash charges in the income
statement are added ack to net income and non-cash credits are deducted
b
Direct Method
Under the direct method the statement of cash flows reports net cash flow from
operating activities as major classes of operating cash receipts (eg cash collected from
customers and cash received from interest and dividends) and cash disbursements (eg
cash paid to suppliers for goods to employees for services to creditors for interest and
to government authorities for taxes)
INDIRECT VERSUS DIRECT METHOD
The most contentious decision that the FASB faced in issuing Statement No 95 was
choosing between the direct method and the indirect method of determining net cash
flow from operating activities Companies lobbied against the direct method urging
adoption of the indirect method Commercial lending officers expressed a strong
preference to the FASB hat the direct method be required
tCF-Page 3 of 5
In Favor of the Direct Method
The principal advantage of the direct method is that it shows operating cash receipts and
payments That is it is more consistent with the objective of a statement of cash flows to
provide information about cash receipts and cash payments than the in-direct method
which does not report operating cash receipts and payments
Supporters of the direct method contend that knowledge of the specific sources of
operating cash receipts and the purposes for which operating cash payments were made
in past periods is useful in estimating future operating cash flows Furthermore in-
formation about amounts of major classes of operating cash receipts and payments is
more useful than information only about their arithmetic sum (the net cash flow from
operating activities) Such information is more revealing of an enterprises ability (1) to
generate sufficient cash from operating activities to pay its debts (2) to reinvest in its
operations and (3) to make distributions to its owners
Many corporate providers of financial statements say that they do not currently collect
information in a manner that allows them to determine amounts such as cash received
from customers or cash paid to suppliers directly from their accounting systems But
supporters of the direct method contend that the incremental cost of assimilating such
operating cash receipts and payments data is not significant
In Favor of the Indirect Method
The principal advantage of the indirect method is that it focuses on the differences
between net income and net cash flow from operating activities That is it provides a
useful link between the statement of cash flows and the income statement and balance
sheet
Many providers of financial statements contend that it is less costly to adjust net income
to net cash flow from operating activities (indirect) than it is to report gross operating
cash receipts and payments (direct) Supporters of the indirect method also state that the
direct method which effectively reports income statement information on a cash rather
than an accrual basis may erroneously suggest that net cash flow from operating
activities is as good as or better than net income as a measure of performance
Special Rules Applying to Direct and Indirect Methods
Companies that use the direct method are required at a
minimum to report separately the following classes of
operating cash receipts and payments
Receipts
1048713 Cash collected from customers (including lessees licensees etc)
1048713 Interest and dividends received
1048713 Other operating cash receipts if any
Payments
1048713 Cash paid to employees and suppliers of goods or services (including
suppliers of
insurance advertising etc)
1048713 Interest paid
1048713 Income taxes paid
1048713 Other operating cash payments if any
Companies using the indirect method are required to disclose separately changes in
inventory receivables and payables to reconcile net income to net cash flow from
operating activities In addition interest paid (net of amount capitalized) and income
taxes paid must be disclosed elsewhere in the financial statements or accompanying
notes
The FASB requires these separate and additional disclosures so that users
may approximate the direct method Also an acceptable alternative presentation
of the in-direct method is to report net cash flow from operating activities as a
single line item in the statement of cash flows and to present the reconciliation
details elsewhere in the financial statements
FINDING OF SUDY
According to cash flow statement of the company The finding of the study are as
follows-
The company has not taken any loans secured or unsecured from companies
firms or other parties
The company has not accepted any deposit from the public during the year
The company is not a sick industrial company
The company has not granted any loan secured or unsecured to company firms
or other parties
The company has paid the entire long term and short term borrowing during the
year
The company has buy back the companyrsquos own share this year
The interest paid in 2008 is more than the
There has been a significant decline in volume over the years from 2001-02
to 2005-06 as can be seen in the graph below
Table 43
The Net sales of Tractor has increased considerably from 2004-05 to 2007-08
This can be mainly attributed to changes in Variable and material costs and in
the price
The Net sale of Tractor has increased considerably from 2004-05 to 2007-08
that is an decrease of Rs7216 per tractor This can be mainly attributed to
changes in
Variable and material costs and in the prices
RECOMMENDATIONS
According to cash flow statement of the company The suggestions of the study
are as follows-
The time durations for training program have to increase
Buy regular review and consultations develop a career progression
which is sensitive to performance and ability
Create an environment where by people are trend developed to enable
The to take advantages of opportunities that arise
The jab can be redesigned where the work man stay in what is normally
the same job but has elements of it changed
The principle amount must be paid in time which can be reducing the
interest the out flow
The purchase of the fixed asset must be made only when there is extreme
requirement
In order to avoid taxes the company should go for more investment
The companyrsquos borrowings should go for more investment
o The company should try to reduce the depreciations as maximum
as possible
CONCLUSION
The study on competency level of employees at ESCORTS PVTLTD gave an
insight about the acceptance of competency mapping by employees
The employees at Ymi welcome the introduction of competency mapping in their
organization as they felt it was very much essential in enhancing their skills and
organizational development
The organization has provided the recourses guidance and support to facilitate the
introduction of competency level easily and develop the employees in such a way
that they can face any kind of challenge
However the level of competency in employees is found to be satisfactory
Providing proper training education and guidance to the employees can enhance
the level
This study was mainly carried out to find out whether thee competency mapping
being followed by the company is effective till date If the competency mapping
and fitment to the organization
By looking at the graphs and tables it is quite that the employees still are not up to
the level of competent pool they still have to be trained and made competent in
order to fill the gap As the organization has just applied the mapping it has to see
to that it meets all the requirements for competency mapping
Therefore the graphs make it quite clear that the potential of the employees is not
up to the mark and ie they are not competent enough to meet the competency-
mapping requirement Hence by further training and counseling this gap can be
closed
This report includes the training requirements of employees and it highlights skills
possessed by each employee and skill required All employees get training so that
skill can be improved and maintain balance between standard performance with
their actual performance to avoid gap
APPENDIX
QUESTIONNAIRE
Consumer Survey
Name _____________________________
Age _____________________________
Sex
Male
Female
Occupation
Businessman
Service man
Professional
Others
Monthly income brackets
Below 15000
15000- 20000
20000-30000
30000 and above
of your savings _________
Do you invest
Yes
No
If yes then where do you invest your money
Bank
Insurance
funds
Others
Why do you made that statement
Return
Risk hedging
Tax benefits
Other reasons (specify) _______
Who influence your cash decision
Relatives and friends
Family members
Advisors experts
You yourself
If no then why
Do not know where to invest
Satisfied with your current investment return
Donrsquot want take risk
Other reasons
__________________________________________________________________
___________________
Do you know about CF statement
Yes
No
If yes then from where you have come to know about an cash statement
Advertisements on newspapers
Friends and relative
Agents experts
Other source
What do you think about cash statement
It means investing only in share market
Constant watch must be kept always
Return is not satisfactory
Other perception
__________________________________________________
Can you recall any cash flow of company
___________________________
Would you want to made CF of an org
Yes
No
If yes then why
_______________________________________________________
If no then why
_______________________________________________________
BIBLIOGRAPHY
List of Books
1 PANDEY IM - FINANCIAL MANAGEMANT
2 KHAN MY AND JAIN PK -FINANCIAL MANAGEMANT
3 SMITH KV ndash MANAGEMANT OF WORKING CAPITAL
3 COMPANY RECORDS
4 JOURNAL
5 REPORTS
WEBLIOGRAPHY
1 wwwescortspvtltdcom
2 wwwgooglecom
6 FIXED ASSETS TURNOVER RATIO
(Amount in Rs)
Fixed Assets Turnover Ratio
Year Income From Services Net Fixed Assets Ratio
2003 36309834 28834317 126
2004 53899084 29568279 182
2005 72728759 17137310 424
2006 55550649 15056993 369
2007 96654902 14163034 682
Interpretation
Fixed assets are used in the business for producing the goods to be sold This
ratio shows the firmrsquos ability in generating sales from all financial resources
committed to total assets The ratio indicates the account of one rupee
investment in fixed assets
The income from services is greaterly increased in the current year due to the
increase in the Operations amp Maintenance fee due to the increase in extra invoice
and the net fixed assets are reduced because of the increased charge of
depreciation Finally that effected a huge increase in the ratio compared with the
previous yearrsquos ratio
GRAPHICAL REPRSENTATION
126182
424 369
682
000
100
200
300
400
500
600
700
Ratios
2003 2004 2005 2006 2007
Years
FIXED ASSETS TURNOVER RATIO
Ratios
7 CAPITAL TURNOVER RATIO
(Amount
in Rs)
Capital Turnover Ratio
Year Income From Services Capital Employed Ratio
2003 36309834 37175892 0982004 53899084 53301834 1012005 72728759 70231061 1042006 55550649 56473652 0982007 96654902 97060013 100
Interpretation
This is another ratio to judge the efficiency and effectiveness of the company
like profitability ratio
The income from services is greaterly increased compared with the previous year
and the total capital employed includes capital and reserves amp surplus Due to
huge increase in the net profit the capital employed is also increased along with
income from services Both are effected in the increment of the ratio of current
year
GRAPHICAL REPRESENTATION
098
101
104
098
100
094095096097098099100101102103104
Ratios
2003 2004 2005 2006 2007
Years
CAPITAL TURNOVER RATIO
Ratios
8 CURRENT ASSETS TO FIXED ASSETS RATIO
(Amount
in Rs)
Current Assets To Fixed Assets Ratio
Year Current Assets Fixed Assets Ratio
2003 58524151 19998020 2932004 69765346 18672761 3742005 72021081 17137310 4202006 91328208 15056993 6072007 115642068 14163034 817
Interpretation
Current assets are increased due to the increase in the sundry debtors and the net
fixed assets of the firm are decreased due to the charge of depreciation and there
is no major increment in the fixed assets
The increment in current assets and the decrease in fixed assets resulted an
increase in the ratio compared with the previous year
GRAPHICAL REPRESENTATION
293374
420
607
817
000
100
200
300
400
500
600
700
800
900
Ratios
2003 2004 2005 2006 2007
Years
CURRENT ASSETS TO FIXED ASSETS RATIO
Ratios
PROFITABILITY RATIOS
GENERAL PROFITABILITY RATIOS
9 NET PROFIT RATIO
(Amount in Rs)
Net Profit Ratio
Year Net Profit After Tax Income from Services Ratio
2003 21123474 36039834 059
2004 16125942 53899084 030
2005 16929227 72728759 023
2006 18259580 55550649 033
2007 40586359 96654902 042
Interpretation
The net profit ratio is the overall measure of the firmrsquos ability to turn each rupee
of income from services in net profit If the net margin is inadequate the firm
will fail to achieve return on shareholderrsquos funds High net profit ratio will help
the firm service in the fall of income from services rise in cost of production or
declining demand
The net profit is increased because the income from services is increased The
increment resulted a slight increase in 2007 ratio compared with the year 2006
GRAPHICAL REPRESENTATION
059
030
023
033
042
000
010
020
030
040
050
060
Ratios
2003 2004 2005 2006 2007
Years
NET PROFIT RATIO
Ratios
10 OPERATING PROFIT
(Amount in Rs)
Operating Profit
Year Operating Profit Income From Services Ratio
2003 36094877 36309834 099
2004 27576814 53899084 051
2005 29540599 72728759 041
2006 31586718 55550649 057
2007 67192677 96654902 070
Interpretation
The operating profit ratio is used to measure the relationship between net profits
and sales of a firm Depending on the concept it will decide
The operating profit ratio is increased compared with the last year The earnings
are increased due to the increase in the income from services because of
Operations amp Maintenance fee So the ratio is increased slightly compared with
the previous year
GRAPHICAL REPRESENTATION
099
051
041
057
070
000
010
020
030
040
050060
070
080
090
100
Ratios
2003 2004 2005 2006 2007
Years
OPERATING PROFIT RATIO
Ratios
11 RETURN ON TOTAL ASSETS RATIO
(Amount in Rs)
Return on Total Assets Ratio
Year Net Profit After Tax Total Assets Ratio
2003 21123474 78572171 027
2004 16125942 88438107 018
2005 16929227 89158391 019
2006 18259580 106385201 017
2007 40586359 129805102 031
Interpretation
This is the ratio between net profit and total assets The ratio indicates the return
on total assets in the form of profits
The net profit is increased in the current year because of the increment in the
income from services due to the increase in Operations amp Maintenance fee The
fixed assets are reduced due to the charge of depreciation and no major
increments in fixed assets but the current assets are increased because of sundry
debtors and that effects an increase in the ratio compared with the last year ie
2006
GRAPHICAL REPRESENTATION
027
018 019017
031
000
005
010
015
020
025
030
035
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON TOTAL ASSETS
Ratios
12 RESERVES amp SURPLUS TO CAPITAL RATIO
(Amount in Rs)
Reserves amp Surplus To Capital Ratio
Year Reserves amp Surplus Capital Ratio
2003 65599299 2079920 31542004 34582554 18719280 1852005 51511781 18719280 2752006 37754372 18719280 2022007 78340733 18719280 419
Interpretation
The ratio is used to reveal the policy pursued by the company a very high ratio
indicates a conservative dividend policy and vice-versa Higher the ratio better
will be the position
The reserves amp surplus is decreased in the year 2006 due to the payment of
dividends and in the year 2007 the profit is increased But the capital is
remaining constant from the year 2004 So the increase in the reserves amp surplus
caused a greater increase in the current yearrsquos ratio compared with the older
GRAPHICAL REPRESENTATION
3154
185 275 202419
-
500
1000
1500
2000
2500
3000
3500
Ratios
2003 2004 2005 2006 2007
Years
RESERVES amp SRUPLUS TO CAPITAL RATIO
Ratios
OVERALL PROFITABILITY RATIOS
13 EARNINGS PER SHARE
(Amount in Rs)
Earnings Per Share
Year Net Profit After Tax No of Equity Shares Ratio
2003 21123474 207992 101562004 16125942 1871928 8612005 16929227 1871928 9042006 18259580 1871928 9752007 40586359 1871928 2168
Interpretation
Earnings per share ratio are used to find out the return that the shareholderrsquos earn
from their shares After charging depreciation and after payment of tax the
remaining amount will be distributed by all the shareholders
Net profit after tax is increased due to the huge increase in the income from
services That is the amount which is available to the shareholders to take There
are 1871928 shares of Rs10- each The share capital is constant from the year
2004 Due to the huge increase in net profit the earnings per share is greaterly
increased in 2007
GRAPHICAL REPRESENTATION
10156
861904 975
2168
000
2000
4000
6000
8000
10000
12000
Ratios
2003 2004 2005 2006 2007
Years
EARNINGS PER SHARE
Ratios
14 PRICE EARNINGS (PE) RATIO
(Amount in Rs)
Price Earning (PE) Ratio
Year Market Price Per Share Earnings Per Share Ratio
2003 3254 10156 0322004 2847 861 3302005 3752 904 4152006 3017 975 3092007 5185 2168 239
Interpretation
The ratio is calculated to make an estimate of application in the value of share of
a company
The market price per share is increased due to the increase in the reserves
amp surplus The earnings per share are also increased greaterly compared
with the last year because of increase in the net profit So the ratio is
decreased compared with the previous year
GRAPHICAL REPRESENTATION
032
330
415
309
239
000
050
100
150
200
250
300
350
400
450
Ratios
2003 2004 2005 2006 2007
Years
PE RATIO
Ratios
15 RETURN ON INVESTMENT
(Amount in Rs)
Return on Investment
Year Net Profit After Tax Share Holders Fund Ratio
2003 21123474 67679219 031
2004 16125942 53301834 03
2005 16929227 70231061 024
2006 18259580 56473652 032
2007 40586359 97060013 042
Interpretation
This is the ratio between net profits and shareholders funds The ratio is
generally calculated as percentage multiplying with 100
The net profit is increased due to the increase in the income from services ant
the shareholders funds are increased because of reserve amp surplus So the ratio
is increased in the current year
GRAPHICAL REPRESENTATION
031 030
024
032
042
000
005
010
015
020
025
030
035
040
045
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON INVESTMENT RATIO
RatioS
DATA COLLECTION
The data can be of two types
Primary Data
Secondary Data
Primary Data
Primary data are those data which is originally collected afresh
Secondary Data
Secondary data are those data which are already collected and stored and which has
been passed through statistical research
In this project Secondary data has been collected from following sources-
Annual report
Books
MIS
Other material and report published by company There are two methods to prepare
the Cash flow Statement
ndirect Method
I
The indirect method (or reconciliation method) starts with net income and converts it
to net cash flow from operating activities In other words the indirect method adjusts
net income for items that affected reported net income but did not affect cash To
compute net cash flow from operating activities non-cash charges in the income
statement are added ack to net income and non-cash credits are deducted
b
Direct Method
Under the direct method the statement of cash flows reports net cash flow from
operating activities as major classes of operating cash receipts (eg cash collected from
customers and cash received from interest and dividends) and cash disbursements (eg
cash paid to suppliers for goods to employees for services to creditors for interest and
to government authorities for taxes)
INDIRECT VERSUS DIRECT METHOD
The most contentious decision that the FASB faced in issuing Statement No 95 was
choosing between the direct method and the indirect method of determining net cash
flow from operating activities Companies lobbied against the direct method urging
adoption of the indirect method Commercial lending officers expressed a strong
preference to the FASB hat the direct method be required
tCF-Page 3 of 5
In Favor of the Direct Method
The principal advantage of the direct method is that it shows operating cash receipts and
payments That is it is more consistent with the objective of a statement of cash flows to
provide information about cash receipts and cash payments than the in-direct method
which does not report operating cash receipts and payments
Supporters of the direct method contend that knowledge of the specific sources of
operating cash receipts and the purposes for which operating cash payments were made
in past periods is useful in estimating future operating cash flows Furthermore in-
formation about amounts of major classes of operating cash receipts and payments is
more useful than information only about their arithmetic sum (the net cash flow from
operating activities) Such information is more revealing of an enterprises ability (1) to
generate sufficient cash from operating activities to pay its debts (2) to reinvest in its
operations and (3) to make distributions to its owners
Many corporate providers of financial statements say that they do not currently collect
information in a manner that allows them to determine amounts such as cash received
from customers or cash paid to suppliers directly from their accounting systems But
supporters of the direct method contend that the incremental cost of assimilating such
operating cash receipts and payments data is not significant
In Favor of the Indirect Method
The principal advantage of the indirect method is that it focuses on the differences
between net income and net cash flow from operating activities That is it provides a
useful link between the statement of cash flows and the income statement and balance
sheet
Many providers of financial statements contend that it is less costly to adjust net income
to net cash flow from operating activities (indirect) than it is to report gross operating
cash receipts and payments (direct) Supporters of the indirect method also state that the
direct method which effectively reports income statement information on a cash rather
than an accrual basis may erroneously suggest that net cash flow from operating
activities is as good as or better than net income as a measure of performance
Special Rules Applying to Direct and Indirect Methods
Companies that use the direct method are required at a
minimum to report separately the following classes of
operating cash receipts and payments
Receipts
1048713 Cash collected from customers (including lessees licensees etc)
1048713 Interest and dividends received
1048713 Other operating cash receipts if any
Payments
1048713 Cash paid to employees and suppliers of goods or services (including
suppliers of
insurance advertising etc)
1048713 Interest paid
1048713 Income taxes paid
1048713 Other operating cash payments if any
Companies using the indirect method are required to disclose separately changes in
inventory receivables and payables to reconcile net income to net cash flow from
operating activities In addition interest paid (net of amount capitalized) and income
taxes paid must be disclosed elsewhere in the financial statements or accompanying
notes
The FASB requires these separate and additional disclosures so that users
may approximate the direct method Also an acceptable alternative presentation
of the in-direct method is to report net cash flow from operating activities as a
single line item in the statement of cash flows and to present the reconciliation
details elsewhere in the financial statements
FINDING OF SUDY
According to cash flow statement of the company The finding of the study are as
follows-
The company has not taken any loans secured or unsecured from companies
firms or other parties
The company has not accepted any deposit from the public during the year
The company is not a sick industrial company
The company has not granted any loan secured or unsecured to company firms
or other parties
The company has paid the entire long term and short term borrowing during the
year
The company has buy back the companyrsquos own share this year
The interest paid in 2008 is more than the
There has been a significant decline in volume over the years from 2001-02
to 2005-06 as can be seen in the graph below
Table 43
The Net sales of Tractor has increased considerably from 2004-05 to 2007-08
This can be mainly attributed to changes in Variable and material costs and in
the price
The Net sale of Tractor has increased considerably from 2004-05 to 2007-08
that is an decrease of Rs7216 per tractor This can be mainly attributed to
changes in
Variable and material costs and in the prices
RECOMMENDATIONS
According to cash flow statement of the company The suggestions of the study
are as follows-
The time durations for training program have to increase
Buy regular review and consultations develop a career progression
which is sensitive to performance and ability
Create an environment where by people are trend developed to enable
The to take advantages of opportunities that arise
The jab can be redesigned where the work man stay in what is normally
the same job but has elements of it changed
The principle amount must be paid in time which can be reducing the
interest the out flow
The purchase of the fixed asset must be made only when there is extreme
requirement
In order to avoid taxes the company should go for more investment
The companyrsquos borrowings should go for more investment
o The company should try to reduce the depreciations as maximum
as possible
CONCLUSION
The study on competency level of employees at ESCORTS PVTLTD gave an
insight about the acceptance of competency mapping by employees
The employees at Ymi welcome the introduction of competency mapping in their
organization as they felt it was very much essential in enhancing their skills and
organizational development
The organization has provided the recourses guidance and support to facilitate the
introduction of competency level easily and develop the employees in such a way
that they can face any kind of challenge
However the level of competency in employees is found to be satisfactory
Providing proper training education and guidance to the employees can enhance
the level
This study was mainly carried out to find out whether thee competency mapping
being followed by the company is effective till date If the competency mapping
and fitment to the organization
By looking at the graphs and tables it is quite that the employees still are not up to
the level of competent pool they still have to be trained and made competent in
order to fill the gap As the organization has just applied the mapping it has to see
to that it meets all the requirements for competency mapping
Therefore the graphs make it quite clear that the potential of the employees is not
up to the mark and ie they are not competent enough to meet the competency-
mapping requirement Hence by further training and counseling this gap can be
closed
This report includes the training requirements of employees and it highlights skills
possessed by each employee and skill required All employees get training so that
skill can be improved and maintain balance between standard performance with
their actual performance to avoid gap
APPENDIX
QUESTIONNAIRE
Consumer Survey
Name _____________________________
Age _____________________________
Sex
Male
Female
Occupation
Businessman
Service man
Professional
Others
Monthly income brackets
Below 15000
15000- 20000
20000-30000
30000 and above
of your savings _________
Do you invest
Yes
No
If yes then where do you invest your money
Bank
Insurance
funds
Others
Why do you made that statement
Return
Risk hedging
Tax benefits
Other reasons (specify) _______
Who influence your cash decision
Relatives and friends
Family members
Advisors experts
You yourself
If no then why
Do not know where to invest
Satisfied with your current investment return
Donrsquot want take risk
Other reasons
__________________________________________________________________
___________________
Do you know about CF statement
Yes
No
If yes then from where you have come to know about an cash statement
Advertisements on newspapers
Friends and relative
Agents experts
Other source
What do you think about cash statement
It means investing only in share market
Constant watch must be kept always
Return is not satisfactory
Other perception
__________________________________________________
Can you recall any cash flow of company
___________________________
Would you want to made CF of an org
Yes
No
If yes then why
_______________________________________________________
If no then why
_______________________________________________________
BIBLIOGRAPHY
List of Books
1 PANDEY IM - FINANCIAL MANAGEMANT
2 KHAN MY AND JAIN PK -FINANCIAL MANAGEMANT
3 SMITH KV ndash MANAGEMANT OF WORKING CAPITAL
3 COMPANY RECORDS
4 JOURNAL
5 REPORTS
WEBLIOGRAPHY
1 wwwescortspvtltdcom
2 wwwgooglecom
GRAPHICAL REPRSENTATION
126182
424 369
682
000
100
200
300
400
500
600
700
Ratios
2003 2004 2005 2006 2007
Years
FIXED ASSETS TURNOVER RATIO
Ratios
7 CAPITAL TURNOVER RATIO
(Amount
in Rs)
Capital Turnover Ratio
Year Income From Services Capital Employed Ratio
2003 36309834 37175892 0982004 53899084 53301834 1012005 72728759 70231061 1042006 55550649 56473652 0982007 96654902 97060013 100
Interpretation
This is another ratio to judge the efficiency and effectiveness of the company
like profitability ratio
The income from services is greaterly increased compared with the previous year
and the total capital employed includes capital and reserves amp surplus Due to
huge increase in the net profit the capital employed is also increased along with
income from services Both are effected in the increment of the ratio of current
year
GRAPHICAL REPRESENTATION
098
101
104
098
100
094095096097098099100101102103104
Ratios
2003 2004 2005 2006 2007
Years
CAPITAL TURNOVER RATIO
Ratios
8 CURRENT ASSETS TO FIXED ASSETS RATIO
(Amount
in Rs)
Current Assets To Fixed Assets Ratio
Year Current Assets Fixed Assets Ratio
2003 58524151 19998020 2932004 69765346 18672761 3742005 72021081 17137310 4202006 91328208 15056993 6072007 115642068 14163034 817
Interpretation
Current assets are increased due to the increase in the sundry debtors and the net
fixed assets of the firm are decreased due to the charge of depreciation and there
is no major increment in the fixed assets
The increment in current assets and the decrease in fixed assets resulted an
increase in the ratio compared with the previous year
GRAPHICAL REPRESENTATION
293374
420
607
817
000
100
200
300
400
500
600
700
800
900
Ratios
2003 2004 2005 2006 2007
Years
CURRENT ASSETS TO FIXED ASSETS RATIO
Ratios
PROFITABILITY RATIOS
GENERAL PROFITABILITY RATIOS
9 NET PROFIT RATIO
(Amount in Rs)
Net Profit Ratio
Year Net Profit After Tax Income from Services Ratio
2003 21123474 36039834 059
2004 16125942 53899084 030
2005 16929227 72728759 023
2006 18259580 55550649 033
2007 40586359 96654902 042
Interpretation
The net profit ratio is the overall measure of the firmrsquos ability to turn each rupee
of income from services in net profit If the net margin is inadequate the firm
will fail to achieve return on shareholderrsquos funds High net profit ratio will help
the firm service in the fall of income from services rise in cost of production or
declining demand
The net profit is increased because the income from services is increased The
increment resulted a slight increase in 2007 ratio compared with the year 2006
GRAPHICAL REPRESENTATION
059
030
023
033
042
000
010
020
030
040
050
060
Ratios
2003 2004 2005 2006 2007
Years
NET PROFIT RATIO
Ratios
10 OPERATING PROFIT
(Amount in Rs)
Operating Profit
Year Operating Profit Income From Services Ratio
2003 36094877 36309834 099
2004 27576814 53899084 051
2005 29540599 72728759 041
2006 31586718 55550649 057
2007 67192677 96654902 070
Interpretation
The operating profit ratio is used to measure the relationship between net profits
and sales of a firm Depending on the concept it will decide
The operating profit ratio is increased compared with the last year The earnings
are increased due to the increase in the income from services because of
Operations amp Maintenance fee So the ratio is increased slightly compared with
the previous year
GRAPHICAL REPRESENTATION
099
051
041
057
070
000
010
020
030
040
050060
070
080
090
100
Ratios
2003 2004 2005 2006 2007
Years
OPERATING PROFIT RATIO
Ratios
11 RETURN ON TOTAL ASSETS RATIO
(Amount in Rs)
Return on Total Assets Ratio
Year Net Profit After Tax Total Assets Ratio
2003 21123474 78572171 027
2004 16125942 88438107 018
2005 16929227 89158391 019
2006 18259580 106385201 017
2007 40586359 129805102 031
Interpretation
This is the ratio between net profit and total assets The ratio indicates the return
on total assets in the form of profits
The net profit is increased in the current year because of the increment in the
income from services due to the increase in Operations amp Maintenance fee The
fixed assets are reduced due to the charge of depreciation and no major
increments in fixed assets but the current assets are increased because of sundry
debtors and that effects an increase in the ratio compared with the last year ie
2006
GRAPHICAL REPRESENTATION
027
018 019017
031
000
005
010
015
020
025
030
035
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON TOTAL ASSETS
Ratios
12 RESERVES amp SURPLUS TO CAPITAL RATIO
(Amount in Rs)
Reserves amp Surplus To Capital Ratio
Year Reserves amp Surplus Capital Ratio
2003 65599299 2079920 31542004 34582554 18719280 1852005 51511781 18719280 2752006 37754372 18719280 2022007 78340733 18719280 419
Interpretation
The ratio is used to reveal the policy pursued by the company a very high ratio
indicates a conservative dividend policy and vice-versa Higher the ratio better
will be the position
The reserves amp surplus is decreased in the year 2006 due to the payment of
dividends and in the year 2007 the profit is increased But the capital is
remaining constant from the year 2004 So the increase in the reserves amp surplus
caused a greater increase in the current yearrsquos ratio compared with the older
GRAPHICAL REPRESENTATION
3154
185 275 202419
-
500
1000
1500
2000
2500
3000
3500
Ratios
2003 2004 2005 2006 2007
Years
RESERVES amp SRUPLUS TO CAPITAL RATIO
Ratios
OVERALL PROFITABILITY RATIOS
13 EARNINGS PER SHARE
(Amount in Rs)
Earnings Per Share
Year Net Profit After Tax No of Equity Shares Ratio
2003 21123474 207992 101562004 16125942 1871928 8612005 16929227 1871928 9042006 18259580 1871928 9752007 40586359 1871928 2168
Interpretation
Earnings per share ratio are used to find out the return that the shareholderrsquos earn
from their shares After charging depreciation and after payment of tax the
remaining amount will be distributed by all the shareholders
Net profit after tax is increased due to the huge increase in the income from
services That is the amount which is available to the shareholders to take There
are 1871928 shares of Rs10- each The share capital is constant from the year
2004 Due to the huge increase in net profit the earnings per share is greaterly
increased in 2007
GRAPHICAL REPRESENTATION
10156
861904 975
2168
000
2000
4000
6000
8000
10000
12000
Ratios
2003 2004 2005 2006 2007
Years
EARNINGS PER SHARE
Ratios
14 PRICE EARNINGS (PE) RATIO
(Amount in Rs)
Price Earning (PE) Ratio
Year Market Price Per Share Earnings Per Share Ratio
2003 3254 10156 0322004 2847 861 3302005 3752 904 4152006 3017 975 3092007 5185 2168 239
Interpretation
The ratio is calculated to make an estimate of application in the value of share of
a company
The market price per share is increased due to the increase in the reserves
amp surplus The earnings per share are also increased greaterly compared
with the last year because of increase in the net profit So the ratio is
decreased compared with the previous year
GRAPHICAL REPRESENTATION
032
330
415
309
239
000
050
100
150
200
250
300
350
400
450
Ratios
2003 2004 2005 2006 2007
Years
PE RATIO
Ratios
15 RETURN ON INVESTMENT
(Amount in Rs)
Return on Investment
Year Net Profit After Tax Share Holders Fund Ratio
2003 21123474 67679219 031
2004 16125942 53301834 03
2005 16929227 70231061 024
2006 18259580 56473652 032
2007 40586359 97060013 042
Interpretation
This is the ratio between net profits and shareholders funds The ratio is
generally calculated as percentage multiplying with 100
The net profit is increased due to the increase in the income from services ant
the shareholders funds are increased because of reserve amp surplus So the ratio
is increased in the current year
GRAPHICAL REPRESENTATION
031 030
024
032
042
000
005
010
015
020
025
030
035
040
045
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON INVESTMENT RATIO
RatioS
DATA COLLECTION
The data can be of two types
Primary Data
Secondary Data
Primary Data
Primary data are those data which is originally collected afresh
Secondary Data
Secondary data are those data which are already collected and stored and which has
been passed through statistical research
In this project Secondary data has been collected from following sources-
Annual report
Books
MIS
Other material and report published by company There are two methods to prepare
the Cash flow Statement
ndirect Method
I
The indirect method (or reconciliation method) starts with net income and converts it
to net cash flow from operating activities In other words the indirect method adjusts
net income for items that affected reported net income but did not affect cash To
compute net cash flow from operating activities non-cash charges in the income
statement are added ack to net income and non-cash credits are deducted
b
Direct Method
Under the direct method the statement of cash flows reports net cash flow from
operating activities as major classes of operating cash receipts (eg cash collected from
customers and cash received from interest and dividends) and cash disbursements (eg
cash paid to suppliers for goods to employees for services to creditors for interest and
to government authorities for taxes)
INDIRECT VERSUS DIRECT METHOD
The most contentious decision that the FASB faced in issuing Statement No 95 was
choosing between the direct method and the indirect method of determining net cash
flow from operating activities Companies lobbied against the direct method urging
adoption of the indirect method Commercial lending officers expressed a strong
preference to the FASB hat the direct method be required
tCF-Page 3 of 5
In Favor of the Direct Method
The principal advantage of the direct method is that it shows operating cash receipts and
payments That is it is more consistent with the objective of a statement of cash flows to
provide information about cash receipts and cash payments than the in-direct method
which does not report operating cash receipts and payments
Supporters of the direct method contend that knowledge of the specific sources of
operating cash receipts and the purposes for which operating cash payments were made
in past periods is useful in estimating future operating cash flows Furthermore in-
formation about amounts of major classes of operating cash receipts and payments is
more useful than information only about their arithmetic sum (the net cash flow from
operating activities) Such information is more revealing of an enterprises ability (1) to
generate sufficient cash from operating activities to pay its debts (2) to reinvest in its
operations and (3) to make distributions to its owners
Many corporate providers of financial statements say that they do not currently collect
information in a manner that allows them to determine amounts such as cash received
from customers or cash paid to suppliers directly from their accounting systems But
supporters of the direct method contend that the incremental cost of assimilating such
operating cash receipts and payments data is not significant
In Favor of the Indirect Method
The principal advantage of the indirect method is that it focuses on the differences
between net income and net cash flow from operating activities That is it provides a
useful link between the statement of cash flows and the income statement and balance
sheet
Many providers of financial statements contend that it is less costly to adjust net income
to net cash flow from operating activities (indirect) than it is to report gross operating
cash receipts and payments (direct) Supporters of the indirect method also state that the
direct method which effectively reports income statement information on a cash rather
than an accrual basis may erroneously suggest that net cash flow from operating
activities is as good as or better than net income as a measure of performance
Special Rules Applying to Direct and Indirect Methods
Companies that use the direct method are required at a
minimum to report separately the following classes of
operating cash receipts and payments
Receipts
1048713 Cash collected from customers (including lessees licensees etc)
1048713 Interest and dividends received
1048713 Other operating cash receipts if any
Payments
1048713 Cash paid to employees and suppliers of goods or services (including
suppliers of
insurance advertising etc)
1048713 Interest paid
1048713 Income taxes paid
1048713 Other operating cash payments if any
Companies using the indirect method are required to disclose separately changes in
inventory receivables and payables to reconcile net income to net cash flow from
operating activities In addition interest paid (net of amount capitalized) and income
taxes paid must be disclosed elsewhere in the financial statements or accompanying
notes
The FASB requires these separate and additional disclosures so that users
may approximate the direct method Also an acceptable alternative presentation
of the in-direct method is to report net cash flow from operating activities as a
single line item in the statement of cash flows and to present the reconciliation
details elsewhere in the financial statements
FINDING OF SUDY
According to cash flow statement of the company The finding of the study are as
follows-
The company has not taken any loans secured or unsecured from companies
firms or other parties
The company has not accepted any deposit from the public during the year
The company is not a sick industrial company
The company has not granted any loan secured or unsecured to company firms
or other parties
The company has paid the entire long term and short term borrowing during the
year
The company has buy back the companyrsquos own share this year
The interest paid in 2008 is more than the
There has been a significant decline in volume over the years from 2001-02
to 2005-06 as can be seen in the graph below
Table 43
The Net sales of Tractor has increased considerably from 2004-05 to 2007-08
This can be mainly attributed to changes in Variable and material costs and in
the price
The Net sale of Tractor has increased considerably from 2004-05 to 2007-08
that is an decrease of Rs7216 per tractor This can be mainly attributed to
changes in
Variable and material costs and in the prices
RECOMMENDATIONS
According to cash flow statement of the company The suggestions of the study
are as follows-
The time durations for training program have to increase
Buy regular review and consultations develop a career progression
which is sensitive to performance and ability
Create an environment where by people are trend developed to enable
The to take advantages of opportunities that arise
The jab can be redesigned where the work man stay in what is normally
the same job but has elements of it changed
The principle amount must be paid in time which can be reducing the
interest the out flow
The purchase of the fixed asset must be made only when there is extreme
requirement
In order to avoid taxes the company should go for more investment
The companyrsquos borrowings should go for more investment
o The company should try to reduce the depreciations as maximum
as possible
CONCLUSION
The study on competency level of employees at ESCORTS PVTLTD gave an
insight about the acceptance of competency mapping by employees
The employees at Ymi welcome the introduction of competency mapping in their
organization as they felt it was very much essential in enhancing their skills and
organizational development
The organization has provided the recourses guidance and support to facilitate the
introduction of competency level easily and develop the employees in such a way
that they can face any kind of challenge
However the level of competency in employees is found to be satisfactory
Providing proper training education and guidance to the employees can enhance
the level
This study was mainly carried out to find out whether thee competency mapping
being followed by the company is effective till date If the competency mapping
and fitment to the organization
By looking at the graphs and tables it is quite that the employees still are not up to
the level of competent pool they still have to be trained and made competent in
order to fill the gap As the organization has just applied the mapping it has to see
to that it meets all the requirements for competency mapping
Therefore the graphs make it quite clear that the potential of the employees is not
up to the mark and ie they are not competent enough to meet the competency-
mapping requirement Hence by further training and counseling this gap can be
closed
This report includes the training requirements of employees and it highlights skills
possessed by each employee and skill required All employees get training so that
skill can be improved and maintain balance between standard performance with
their actual performance to avoid gap
APPENDIX
QUESTIONNAIRE
Consumer Survey
Name _____________________________
Age _____________________________
Sex
Male
Female
Occupation
Businessman
Service man
Professional
Others
Monthly income brackets
Below 15000
15000- 20000
20000-30000
30000 and above
of your savings _________
Do you invest
Yes
No
If yes then where do you invest your money
Bank
Insurance
funds
Others
Why do you made that statement
Return
Risk hedging
Tax benefits
Other reasons (specify) _______
Who influence your cash decision
Relatives and friends
Family members
Advisors experts
You yourself
If no then why
Do not know where to invest
Satisfied with your current investment return
Donrsquot want take risk
Other reasons
__________________________________________________________________
___________________
Do you know about CF statement
Yes
No
If yes then from where you have come to know about an cash statement
Advertisements on newspapers
Friends and relative
Agents experts
Other source
What do you think about cash statement
It means investing only in share market
Constant watch must be kept always
Return is not satisfactory
Other perception
__________________________________________________
Can you recall any cash flow of company
___________________________
Would you want to made CF of an org
Yes
No
If yes then why
_______________________________________________________
If no then why
_______________________________________________________
BIBLIOGRAPHY
List of Books
1 PANDEY IM - FINANCIAL MANAGEMANT
2 KHAN MY AND JAIN PK -FINANCIAL MANAGEMANT
3 SMITH KV ndash MANAGEMANT OF WORKING CAPITAL
3 COMPANY RECORDS
4 JOURNAL
5 REPORTS
WEBLIOGRAPHY
1 wwwescortspvtltdcom
2 wwwgooglecom
7 CAPITAL TURNOVER RATIO
(Amount
in Rs)
Capital Turnover Ratio
Year Income From Services Capital Employed Ratio
2003 36309834 37175892 0982004 53899084 53301834 1012005 72728759 70231061 1042006 55550649 56473652 0982007 96654902 97060013 100
Interpretation
This is another ratio to judge the efficiency and effectiveness of the company
like profitability ratio
The income from services is greaterly increased compared with the previous year
and the total capital employed includes capital and reserves amp surplus Due to
huge increase in the net profit the capital employed is also increased along with
income from services Both are effected in the increment of the ratio of current
year
GRAPHICAL REPRESENTATION
098
101
104
098
100
094095096097098099100101102103104
Ratios
2003 2004 2005 2006 2007
Years
CAPITAL TURNOVER RATIO
Ratios
8 CURRENT ASSETS TO FIXED ASSETS RATIO
(Amount
in Rs)
Current Assets To Fixed Assets Ratio
Year Current Assets Fixed Assets Ratio
2003 58524151 19998020 2932004 69765346 18672761 3742005 72021081 17137310 4202006 91328208 15056993 6072007 115642068 14163034 817
Interpretation
Current assets are increased due to the increase in the sundry debtors and the net
fixed assets of the firm are decreased due to the charge of depreciation and there
is no major increment in the fixed assets
The increment in current assets and the decrease in fixed assets resulted an
increase in the ratio compared with the previous year
GRAPHICAL REPRESENTATION
293374
420
607
817
000
100
200
300
400
500
600
700
800
900
Ratios
2003 2004 2005 2006 2007
Years
CURRENT ASSETS TO FIXED ASSETS RATIO
Ratios
PROFITABILITY RATIOS
GENERAL PROFITABILITY RATIOS
9 NET PROFIT RATIO
(Amount in Rs)
Net Profit Ratio
Year Net Profit After Tax Income from Services Ratio
2003 21123474 36039834 059
2004 16125942 53899084 030
2005 16929227 72728759 023
2006 18259580 55550649 033
2007 40586359 96654902 042
Interpretation
The net profit ratio is the overall measure of the firmrsquos ability to turn each rupee
of income from services in net profit If the net margin is inadequate the firm
will fail to achieve return on shareholderrsquos funds High net profit ratio will help
the firm service in the fall of income from services rise in cost of production or
declining demand
The net profit is increased because the income from services is increased The
increment resulted a slight increase in 2007 ratio compared with the year 2006
GRAPHICAL REPRESENTATION
059
030
023
033
042
000
010
020
030
040
050
060
Ratios
2003 2004 2005 2006 2007
Years
NET PROFIT RATIO
Ratios
10 OPERATING PROFIT
(Amount in Rs)
Operating Profit
Year Operating Profit Income From Services Ratio
2003 36094877 36309834 099
2004 27576814 53899084 051
2005 29540599 72728759 041
2006 31586718 55550649 057
2007 67192677 96654902 070
Interpretation
The operating profit ratio is used to measure the relationship between net profits
and sales of a firm Depending on the concept it will decide
The operating profit ratio is increased compared with the last year The earnings
are increased due to the increase in the income from services because of
Operations amp Maintenance fee So the ratio is increased slightly compared with
the previous year
GRAPHICAL REPRESENTATION
099
051
041
057
070
000
010
020
030
040
050060
070
080
090
100
Ratios
2003 2004 2005 2006 2007
Years
OPERATING PROFIT RATIO
Ratios
11 RETURN ON TOTAL ASSETS RATIO
(Amount in Rs)
Return on Total Assets Ratio
Year Net Profit After Tax Total Assets Ratio
2003 21123474 78572171 027
2004 16125942 88438107 018
2005 16929227 89158391 019
2006 18259580 106385201 017
2007 40586359 129805102 031
Interpretation
This is the ratio between net profit and total assets The ratio indicates the return
on total assets in the form of profits
The net profit is increased in the current year because of the increment in the
income from services due to the increase in Operations amp Maintenance fee The
fixed assets are reduced due to the charge of depreciation and no major
increments in fixed assets but the current assets are increased because of sundry
debtors and that effects an increase in the ratio compared with the last year ie
2006
GRAPHICAL REPRESENTATION
027
018 019017
031
000
005
010
015
020
025
030
035
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON TOTAL ASSETS
Ratios
12 RESERVES amp SURPLUS TO CAPITAL RATIO
(Amount in Rs)
Reserves amp Surplus To Capital Ratio
Year Reserves amp Surplus Capital Ratio
2003 65599299 2079920 31542004 34582554 18719280 1852005 51511781 18719280 2752006 37754372 18719280 2022007 78340733 18719280 419
Interpretation
The ratio is used to reveal the policy pursued by the company a very high ratio
indicates a conservative dividend policy and vice-versa Higher the ratio better
will be the position
The reserves amp surplus is decreased in the year 2006 due to the payment of
dividends and in the year 2007 the profit is increased But the capital is
remaining constant from the year 2004 So the increase in the reserves amp surplus
caused a greater increase in the current yearrsquos ratio compared with the older
GRAPHICAL REPRESENTATION
3154
185 275 202419
-
500
1000
1500
2000
2500
3000
3500
Ratios
2003 2004 2005 2006 2007
Years
RESERVES amp SRUPLUS TO CAPITAL RATIO
Ratios
OVERALL PROFITABILITY RATIOS
13 EARNINGS PER SHARE
(Amount in Rs)
Earnings Per Share
Year Net Profit After Tax No of Equity Shares Ratio
2003 21123474 207992 101562004 16125942 1871928 8612005 16929227 1871928 9042006 18259580 1871928 9752007 40586359 1871928 2168
Interpretation
Earnings per share ratio are used to find out the return that the shareholderrsquos earn
from their shares After charging depreciation and after payment of tax the
remaining amount will be distributed by all the shareholders
Net profit after tax is increased due to the huge increase in the income from
services That is the amount which is available to the shareholders to take There
are 1871928 shares of Rs10- each The share capital is constant from the year
2004 Due to the huge increase in net profit the earnings per share is greaterly
increased in 2007
GRAPHICAL REPRESENTATION
10156
861904 975
2168
000
2000
4000
6000
8000
10000
12000
Ratios
2003 2004 2005 2006 2007
Years
EARNINGS PER SHARE
Ratios
14 PRICE EARNINGS (PE) RATIO
(Amount in Rs)
Price Earning (PE) Ratio
Year Market Price Per Share Earnings Per Share Ratio
2003 3254 10156 0322004 2847 861 3302005 3752 904 4152006 3017 975 3092007 5185 2168 239
Interpretation
The ratio is calculated to make an estimate of application in the value of share of
a company
The market price per share is increased due to the increase in the reserves
amp surplus The earnings per share are also increased greaterly compared
with the last year because of increase in the net profit So the ratio is
decreased compared with the previous year
GRAPHICAL REPRESENTATION
032
330
415
309
239
000
050
100
150
200
250
300
350
400
450
Ratios
2003 2004 2005 2006 2007
Years
PE RATIO
Ratios
15 RETURN ON INVESTMENT
(Amount in Rs)
Return on Investment
Year Net Profit After Tax Share Holders Fund Ratio
2003 21123474 67679219 031
2004 16125942 53301834 03
2005 16929227 70231061 024
2006 18259580 56473652 032
2007 40586359 97060013 042
Interpretation
This is the ratio between net profits and shareholders funds The ratio is
generally calculated as percentage multiplying with 100
The net profit is increased due to the increase in the income from services ant
the shareholders funds are increased because of reserve amp surplus So the ratio
is increased in the current year
GRAPHICAL REPRESENTATION
031 030
024
032
042
000
005
010
015
020
025
030
035
040
045
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON INVESTMENT RATIO
RatioS
DATA COLLECTION
The data can be of two types
Primary Data
Secondary Data
Primary Data
Primary data are those data which is originally collected afresh
Secondary Data
Secondary data are those data which are already collected and stored and which has
been passed through statistical research
In this project Secondary data has been collected from following sources-
Annual report
Books
MIS
Other material and report published by company There are two methods to prepare
the Cash flow Statement
ndirect Method
I
The indirect method (or reconciliation method) starts with net income and converts it
to net cash flow from operating activities In other words the indirect method adjusts
net income for items that affected reported net income but did not affect cash To
compute net cash flow from operating activities non-cash charges in the income
statement are added ack to net income and non-cash credits are deducted
b
Direct Method
Under the direct method the statement of cash flows reports net cash flow from
operating activities as major classes of operating cash receipts (eg cash collected from
customers and cash received from interest and dividends) and cash disbursements (eg
cash paid to suppliers for goods to employees for services to creditors for interest and
to government authorities for taxes)
INDIRECT VERSUS DIRECT METHOD
The most contentious decision that the FASB faced in issuing Statement No 95 was
choosing between the direct method and the indirect method of determining net cash
flow from operating activities Companies lobbied against the direct method urging
adoption of the indirect method Commercial lending officers expressed a strong
preference to the FASB hat the direct method be required
tCF-Page 3 of 5
In Favor of the Direct Method
The principal advantage of the direct method is that it shows operating cash receipts and
payments That is it is more consistent with the objective of a statement of cash flows to
provide information about cash receipts and cash payments than the in-direct method
which does not report operating cash receipts and payments
Supporters of the direct method contend that knowledge of the specific sources of
operating cash receipts and the purposes for which operating cash payments were made
in past periods is useful in estimating future operating cash flows Furthermore in-
formation about amounts of major classes of operating cash receipts and payments is
more useful than information only about their arithmetic sum (the net cash flow from
operating activities) Such information is more revealing of an enterprises ability (1) to
generate sufficient cash from operating activities to pay its debts (2) to reinvest in its
operations and (3) to make distributions to its owners
Many corporate providers of financial statements say that they do not currently collect
information in a manner that allows them to determine amounts such as cash received
from customers or cash paid to suppliers directly from their accounting systems But
supporters of the direct method contend that the incremental cost of assimilating such
operating cash receipts and payments data is not significant
In Favor of the Indirect Method
The principal advantage of the indirect method is that it focuses on the differences
between net income and net cash flow from operating activities That is it provides a
useful link between the statement of cash flows and the income statement and balance
sheet
Many providers of financial statements contend that it is less costly to adjust net income
to net cash flow from operating activities (indirect) than it is to report gross operating
cash receipts and payments (direct) Supporters of the indirect method also state that the
direct method which effectively reports income statement information on a cash rather
than an accrual basis may erroneously suggest that net cash flow from operating
activities is as good as or better than net income as a measure of performance
Special Rules Applying to Direct and Indirect Methods
Companies that use the direct method are required at a
minimum to report separately the following classes of
operating cash receipts and payments
Receipts
1048713 Cash collected from customers (including lessees licensees etc)
1048713 Interest and dividends received
1048713 Other operating cash receipts if any
Payments
1048713 Cash paid to employees and suppliers of goods or services (including
suppliers of
insurance advertising etc)
1048713 Interest paid
1048713 Income taxes paid
1048713 Other operating cash payments if any
Companies using the indirect method are required to disclose separately changes in
inventory receivables and payables to reconcile net income to net cash flow from
operating activities In addition interest paid (net of amount capitalized) and income
taxes paid must be disclosed elsewhere in the financial statements or accompanying
notes
The FASB requires these separate and additional disclosures so that users
may approximate the direct method Also an acceptable alternative presentation
of the in-direct method is to report net cash flow from operating activities as a
single line item in the statement of cash flows and to present the reconciliation
details elsewhere in the financial statements
FINDING OF SUDY
According to cash flow statement of the company The finding of the study are as
follows-
The company has not taken any loans secured or unsecured from companies
firms or other parties
The company has not accepted any deposit from the public during the year
The company is not a sick industrial company
The company has not granted any loan secured or unsecured to company firms
or other parties
The company has paid the entire long term and short term borrowing during the
year
The company has buy back the companyrsquos own share this year
The interest paid in 2008 is more than the
There has been a significant decline in volume over the years from 2001-02
to 2005-06 as can be seen in the graph below
Table 43
The Net sales of Tractor has increased considerably from 2004-05 to 2007-08
This can be mainly attributed to changes in Variable and material costs and in
the price
The Net sale of Tractor has increased considerably from 2004-05 to 2007-08
that is an decrease of Rs7216 per tractor This can be mainly attributed to
changes in
Variable and material costs and in the prices
RECOMMENDATIONS
According to cash flow statement of the company The suggestions of the study
are as follows-
The time durations for training program have to increase
Buy regular review and consultations develop a career progression
which is sensitive to performance and ability
Create an environment where by people are trend developed to enable
The to take advantages of opportunities that arise
The jab can be redesigned where the work man stay in what is normally
the same job but has elements of it changed
The principle amount must be paid in time which can be reducing the
interest the out flow
The purchase of the fixed asset must be made only when there is extreme
requirement
In order to avoid taxes the company should go for more investment
The companyrsquos borrowings should go for more investment
o The company should try to reduce the depreciations as maximum
as possible
CONCLUSION
The study on competency level of employees at ESCORTS PVTLTD gave an
insight about the acceptance of competency mapping by employees
The employees at Ymi welcome the introduction of competency mapping in their
organization as they felt it was very much essential in enhancing their skills and
organizational development
The organization has provided the recourses guidance and support to facilitate the
introduction of competency level easily and develop the employees in such a way
that they can face any kind of challenge
However the level of competency in employees is found to be satisfactory
Providing proper training education and guidance to the employees can enhance
the level
This study was mainly carried out to find out whether thee competency mapping
being followed by the company is effective till date If the competency mapping
and fitment to the organization
By looking at the graphs and tables it is quite that the employees still are not up to
the level of competent pool they still have to be trained and made competent in
order to fill the gap As the organization has just applied the mapping it has to see
to that it meets all the requirements for competency mapping
Therefore the graphs make it quite clear that the potential of the employees is not
up to the mark and ie they are not competent enough to meet the competency-
mapping requirement Hence by further training and counseling this gap can be
closed
This report includes the training requirements of employees and it highlights skills
possessed by each employee and skill required All employees get training so that
skill can be improved and maintain balance between standard performance with
their actual performance to avoid gap
APPENDIX
QUESTIONNAIRE
Consumer Survey
Name _____________________________
Age _____________________________
Sex
Male
Female
Occupation
Businessman
Service man
Professional
Others
Monthly income brackets
Below 15000
15000- 20000
20000-30000
30000 and above
of your savings _________
Do you invest
Yes
No
If yes then where do you invest your money
Bank
Insurance
funds
Others
Why do you made that statement
Return
Risk hedging
Tax benefits
Other reasons (specify) _______
Who influence your cash decision
Relatives and friends
Family members
Advisors experts
You yourself
If no then why
Do not know where to invest
Satisfied with your current investment return
Donrsquot want take risk
Other reasons
__________________________________________________________________
___________________
Do you know about CF statement
Yes
No
If yes then from where you have come to know about an cash statement
Advertisements on newspapers
Friends and relative
Agents experts
Other source
What do you think about cash statement
It means investing only in share market
Constant watch must be kept always
Return is not satisfactory
Other perception
__________________________________________________
Can you recall any cash flow of company
___________________________
Would you want to made CF of an org
Yes
No
If yes then why
_______________________________________________________
If no then why
_______________________________________________________
BIBLIOGRAPHY
List of Books
1 PANDEY IM - FINANCIAL MANAGEMANT
2 KHAN MY AND JAIN PK -FINANCIAL MANAGEMANT
3 SMITH KV ndash MANAGEMANT OF WORKING CAPITAL
3 COMPANY RECORDS
4 JOURNAL
5 REPORTS
WEBLIOGRAPHY
1 wwwescortspvtltdcom
2 wwwgooglecom
GRAPHICAL REPRESENTATION
098
101
104
098
100
094095096097098099100101102103104
Ratios
2003 2004 2005 2006 2007
Years
CAPITAL TURNOVER RATIO
Ratios
8 CURRENT ASSETS TO FIXED ASSETS RATIO
(Amount
in Rs)
Current Assets To Fixed Assets Ratio
Year Current Assets Fixed Assets Ratio
2003 58524151 19998020 2932004 69765346 18672761 3742005 72021081 17137310 4202006 91328208 15056993 6072007 115642068 14163034 817
Interpretation
Current assets are increased due to the increase in the sundry debtors and the net
fixed assets of the firm are decreased due to the charge of depreciation and there
is no major increment in the fixed assets
The increment in current assets and the decrease in fixed assets resulted an
increase in the ratio compared with the previous year
GRAPHICAL REPRESENTATION
293374
420
607
817
000
100
200
300
400
500
600
700
800
900
Ratios
2003 2004 2005 2006 2007
Years
CURRENT ASSETS TO FIXED ASSETS RATIO
Ratios
PROFITABILITY RATIOS
GENERAL PROFITABILITY RATIOS
9 NET PROFIT RATIO
(Amount in Rs)
Net Profit Ratio
Year Net Profit After Tax Income from Services Ratio
2003 21123474 36039834 059
2004 16125942 53899084 030
2005 16929227 72728759 023
2006 18259580 55550649 033
2007 40586359 96654902 042
Interpretation
The net profit ratio is the overall measure of the firmrsquos ability to turn each rupee
of income from services in net profit If the net margin is inadequate the firm
will fail to achieve return on shareholderrsquos funds High net profit ratio will help
the firm service in the fall of income from services rise in cost of production or
declining demand
The net profit is increased because the income from services is increased The
increment resulted a slight increase in 2007 ratio compared with the year 2006
GRAPHICAL REPRESENTATION
059
030
023
033
042
000
010
020
030
040
050
060
Ratios
2003 2004 2005 2006 2007
Years
NET PROFIT RATIO
Ratios
10 OPERATING PROFIT
(Amount in Rs)
Operating Profit
Year Operating Profit Income From Services Ratio
2003 36094877 36309834 099
2004 27576814 53899084 051
2005 29540599 72728759 041
2006 31586718 55550649 057
2007 67192677 96654902 070
Interpretation
The operating profit ratio is used to measure the relationship between net profits
and sales of a firm Depending on the concept it will decide
The operating profit ratio is increased compared with the last year The earnings
are increased due to the increase in the income from services because of
Operations amp Maintenance fee So the ratio is increased slightly compared with
the previous year
GRAPHICAL REPRESENTATION
099
051
041
057
070
000
010
020
030
040
050060
070
080
090
100
Ratios
2003 2004 2005 2006 2007
Years
OPERATING PROFIT RATIO
Ratios
11 RETURN ON TOTAL ASSETS RATIO
(Amount in Rs)
Return on Total Assets Ratio
Year Net Profit After Tax Total Assets Ratio
2003 21123474 78572171 027
2004 16125942 88438107 018
2005 16929227 89158391 019
2006 18259580 106385201 017
2007 40586359 129805102 031
Interpretation
This is the ratio between net profit and total assets The ratio indicates the return
on total assets in the form of profits
The net profit is increased in the current year because of the increment in the
income from services due to the increase in Operations amp Maintenance fee The
fixed assets are reduced due to the charge of depreciation and no major
increments in fixed assets but the current assets are increased because of sundry
debtors and that effects an increase in the ratio compared with the last year ie
2006
GRAPHICAL REPRESENTATION
027
018 019017
031
000
005
010
015
020
025
030
035
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON TOTAL ASSETS
Ratios
12 RESERVES amp SURPLUS TO CAPITAL RATIO
(Amount in Rs)
Reserves amp Surplus To Capital Ratio
Year Reserves amp Surplus Capital Ratio
2003 65599299 2079920 31542004 34582554 18719280 1852005 51511781 18719280 2752006 37754372 18719280 2022007 78340733 18719280 419
Interpretation
The ratio is used to reveal the policy pursued by the company a very high ratio
indicates a conservative dividend policy and vice-versa Higher the ratio better
will be the position
The reserves amp surplus is decreased in the year 2006 due to the payment of
dividends and in the year 2007 the profit is increased But the capital is
remaining constant from the year 2004 So the increase in the reserves amp surplus
caused a greater increase in the current yearrsquos ratio compared with the older
GRAPHICAL REPRESENTATION
3154
185 275 202419
-
500
1000
1500
2000
2500
3000
3500
Ratios
2003 2004 2005 2006 2007
Years
RESERVES amp SRUPLUS TO CAPITAL RATIO
Ratios
OVERALL PROFITABILITY RATIOS
13 EARNINGS PER SHARE
(Amount in Rs)
Earnings Per Share
Year Net Profit After Tax No of Equity Shares Ratio
2003 21123474 207992 101562004 16125942 1871928 8612005 16929227 1871928 9042006 18259580 1871928 9752007 40586359 1871928 2168
Interpretation
Earnings per share ratio are used to find out the return that the shareholderrsquos earn
from their shares After charging depreciation and after payment of tax the
remaining amount will be distributed by all the shareholders
Net profit after tax is increased due to the huge increase in the income from
services That is the amount which is available to the shareholders to take There
are 1871928 shares of Rs10- each The share capital is constant from the year
2004 Due to the huge increase in net profit the earnings per share is greaterly
increased in 2007
GRAPHICAL REPRESENTATION
10156
861904 975
2168
000
2000
4000
6000
8000
10000
12000
Ratios
2003 2004 2005 2006 2007
Years
EARNINGS PER SHARE
Ratios
14 PRICE EARNINGS (PE) RATIO
(Amount in Rs)
Price Earning (PE) Ratio
Year Market Price Per Share Earnings Per Share Ratio
2003 3254 10156 0322004 2847 861 3302005 3752 904 4152006 3017 975 3092007 5185 2168 239
Interpretation
The ratio is calculated to make an estimate of application in the value of share of
a company
The market price per share is increased due to the increase in the reserves
amp surplus The earnings per share are also increased greaterly compared
with the last year because of increase in the net profit So the ratio is
decreased compared with the previous year
GRAPHICAL REPRESENTATION
032
330
415
309
239
000
050
100
150
200
250
300
350
400
450
Ratios
2003 2004 2005 2006 2007
Years
PE RATIO
Ratios
15 RETURN ON INVESTMENT
(Amount in Rs)
Return on Investment
Year Net Profit After Tax Share Holders Fund Ratio
2003 21123474 67679219 031
2004 16125942 53301834 03
2005 16929227 70231061 024
2006 18259580 56473652 032
2007 40586359 97060013 042
Interpretation
This is the ratio between net profits and shareholders funds The ratio is
generally calculated as percentage multiplying with 100
The net profit is increased due to the increase in the income from services ant
the shareholders funds are increased because of reserve amp surplus So the ratio
is increased in the current year
GRAPHICAL REPRESENTATION
031 030
024
032
042
000
005
010
015
020
025
030
035
040
045
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON INVESTMENT RATIO
RatioS
DATA COLLECTION
The data can be of two types
Primary Data
Secondary Data
Primary Data
Primary data are those data which is originally collected afresh
Secondary Data
Secondary data are those data which are already collected and stored and which has
been passed through statistical research
In this project Secondary data has been collected from following sources-
Annual report
Books
MIS
Other material and report published by company There are two methods to prepare
the Cash flow Statement
ndirect Method
I
The indirect method (or reconciliation method) starts with net income and converts it
to net cash flow from operating activities In other words the indirect method adjusts
net income for items that affected reported net income but did not affect cash To
compute net cash flow from operating activities non-cash charges in the income
statement are added ack to net income and non-cash credits are deducted
b
Direct Method
Under the direct method the statement of cash flows reports net cash flow from
operating activities as major classes of operating cash receipts (eg cash collected from
customers and cash received from interest and dividends) and cash disbursements (eg
cash paid to suppliers for goods to employees for services to creditors for interest and
to government authorities for taxes)
INDIRECT VERSUS DIRECT METHOD
The most contentious decision that the FASB faced in issuing Statement No 95 was
choosing between the direct method and the indirect method of determining net cash
flow from operating activities Companies lobbied against the direct method urging
adoption of the indirect method Commercial lending officers expressed a strong
preference to the FASB hat the direct method be required
tCF-Page 3 of 5
In Favor of the Direct Method
The principal advantage of the direct method is that it shows operating cash receipts and
payments That is it is more consistent with the objective of a statement of cash flows to
provide information about cash receipts and cash payments than the in-direct method
which does not report operating cash receipts and payments
Supporters of the direct method contend that knowledge of the specific sources of
operating cash receipts and the purposes for which operating cash payments were made
in past periods is useful in estimating future operating cash flows Furthermore in-
formation about amounts of major classes of operating cash receipts and payments is
more useful than information only about their arithmetic sum (the net cash flow from
operating activities) Such information is more revealing of an enterprises ability (1) to
generate sufficient cash from operating activities to pay its debts (2) to reinvest in its
operations and (3) to make distributions to its owners
Many corporate providers of financial statements say that they do not currently collect
information in a manner that allows them to determine amounts such as cash received
from customers or cash paid to suppliers directly from their accounting systems But
supporters of the direct method contend that the incremental cost of assimilating such
operating cash receipts and payments data is not significant
In Favor of the Indirect Method
The principal advantage of the indirect method is that it focuses on the differences
between net income and net cash flow from operating activities That is it provides a
useful link between the statement of cash flows and the income statement and balance
sheet
Many providers of financial statements contend that it is less costly to adjust net income
to net cash flow from operating activities (indirect) than it is to report gross operating
cash receipts and payments (direct) Supporters of the indirect method also state that the
direct method which effectively reports income statement information on a cash rather
than an accrual basis may erroneously suggest that net cash flow from operating
activities is as good as or better than net income as a measure of performance
Special Rules Applying to Direct and Indirect Methods
Companies that use the direct method are required at a
minimum to report separately the following classes of
operating cash receipts and payments
Receipts
1048713 Cash collected from customers (including lessees licensees etc)
1048713 Interest and dividends received
1048713 Other operating cash receipts if any
Payments
1048713 Cash paid to employees and suppliers of goods or services (including
suppliers of
insurance advertising etc)
1048713 Interest paid
1048713 Income taxes paid
1048713 Other operating cash payments if any
Companies using the indirect method are required to disclose separately changes in
inventory receivables and payables to reconcile net income to net cash flow from
operating activities In addition interest paid (net of amount capitalized) and income
taxes paid must be disclosed elsewhere in the financial statements or accompanying
notes
The FASB requires these separate and additional disclosures so that users
may approximate the direct method Also an acceptable alternative presentation
of the in-direct method is to report net cash flow from operating activities as a
single line item in the statement of cash flows and to present the reconciliation
details elsewhere in the financial statements
FINDING OF SUDY
According to cash flow statement of the company The finding of the study are as
follows-
The company has not taken any loans secured or unsecured from companies
firms or other parties
The company has not accepted any deposit from the public during the year
The company is not a sick industrial company
The company has not granted any loan secured or unsecured to company firms
or other parties
The company has paid the entire long term and short term borrowing during the
year
The company has buy back the companyrsquos own share this year
The interest paid in 2008 is more than the
There has been a significant decline in volume over the years from 2001-02
to 2005-06 as can be seen in the graph below
Table 43
The Net sales of Tractor has increased considerably from 2004-05 to 2007-08
This can be mainly attributed to changes in Variable and material costs and in
the price
The Net sale of Tractor has increased considerably from 2004-05 to 2007-08
that is an decrease of Rs7216 per tractor This can be mainly attributed to
changes in
Variable and material costs and in the prices
RECOMMENDATIONS
According to cash flow statement of the company The suggestions of the study
are as follows-
The time durations for training program have to increase
Buy regular review and consultations develop a career progression
which is sensitive to performance and ability
Create an environment where by people are trend developed to enable
The to take advantages of opportunities that arise
The jab can be redesigned where the work man stay in what is normally
the same job but has elements of it changed
The principle amount must be paid in time which can be reducing the
interest the out flow
The purchase of the fixed asset must be made only when there is extreme
requirement
In order to avoid taxes the company should go for more investment
The companyrsquos borrowings should go for more investment
o The company should try to reduce the depreciations as maximum
as possible
CONCLUSION
The study on competency level of employees at ESCORTS PVTLTD gave an
insight about the acceptance of competency mapping by employees
The employees at Ymi welcome the introduction of competency mapping in their
organization as they felt it was very much essential in enhancing their skills and
organizational development
The organization has provided the recourses guidance and support to facilitate the
introduction of competency level easily and develop the employees in such a way
that they can face any kind of challenge
However the level of competency in employees is found to be satisfactory
Providing proper training education and guidance to the employees can enhance
the level
This study was mainly carried out to find out whether thee competency mapping
being followed by the company is effective till date If the competency mapping
and fitment to the organization
By looking at the graphs and tables it is quite that the employees still are not up to
the level of competent pool they still have to be trained and made competent in
order to fill the gap As the organization has just applied the mapping it has to see
to that it meets all the requirements for competency mapping
Therefore the graphs make it quite clear that the potential of the employees is not
up to the mark and ie they are not competent enough to meet the competency-
mapping requirement Hence by further training and counseling this gap can be
closed
This report includes the training requirements of employees and it highlights skills
possessed by each employee and skill required All employees get training so that
skill can be improved and maintain balance between standard performance with
their actual performance to avoid gap
APPENDIX
QUESTIONNAIRE
Consumer Survey
Name _____________________________
Age _____________________________
Sex
Male
Female
Occupation
Businessman
Service man
Professional
Others
Monthly income brackets
Below 15000
15000- 20000
20000-30000
30000 and above
of your savings _________
Do you invest
Yes
No
If yes then where do you invest your money
Bank
Insurance
funds
Others
Why do you made that statement
Return
Risk hedging
Tax benefits
Other reasons (specify) _______
Who influence your cash decision
Relatives and friends
Family members
Advisors experts
You yourself
If no then why
Do not know where to invest
Satisfied with your current investment return
Donrsquot want take risk
Other reasons
__________________________________________________________________
___________________
Do you know about CF statement
Yes
No
If yes then from where you have come to know about an cash statement
Advertisements on newspapers
Friends and relative
Agents experts
Other source
What do you think about cash statement
It means investing only in share market
Constant watch must be kept always
Return is not satisfactory
Other perception
__________________________________________________
Can you recall any cash flow of company
___________________________
Would you want to made CF of an org
Yes
No
If yes then why
_______________________________________________________
If no then why
_______________________________________________________
BIBLIOGRAPHY
List of Books
1 PANDEY IM - FINANCIAL MANAGEMANT
2 KHAN MY AND JAIN PK -FINANCIAL MANAGEMANT
3 SMITH KV ndash MANAGEMANT OF WORKING CAPITAL
3 COMPANY RECORDS
4 JOURNAL
5 REPORTS
WEBLIOGRAPHY
1 wwwescortspvtltdcom
2 wwwgooglecom
8 CURRENT ASSETS TO FIXED ASSETS RATIO
(Amount
in Rs)
Current Assets To Fixed Assets Ratio
Year Current Assets Fixed Assets Ratio
2003 58524151 19998020 2932004 69765346 18672761 3742005 72021081 17137310 4202006 91328208 15056993 6072007 115642068 14163034 817
Interpretation
Current assets are increased due to the increase in the sundry debtors and the net
fixed assets of the firm are decreased due to the charge of depreciation and there
is no major increment in the fixed assets
The increment in current assets and the decrease in fixed assets resulted an
increase in the ratio compared with the previous year
GRAPHICAL REPRESENTATION
293374
420
607
817
000
100
200
300
400
500
600
700
800
900
Ratios
2003 2004 2005 2006 2007
Years
CURRENT ASSETS TO FIXED ASSETS RATIO
Ratios
PROFITABILITY RATIOS
GENERAL PROFITABILITY RATIOS
9 NET PROFIT RATIO
(Amount in Rs)
Net Profit Ratio
Year Net Profit After Tax Income from Services Ratio
2003 21123474 36039834 059
2004 16125942 53899084 030
2005 16929227 72728759 023
2006 18259580 55550649 033
2007 40586359 96654902 042
Interpretation
The net profit ratio is the overall measure of the firmrsquos ability to turn each rupee
of income from services in net profit If the net margin is inadequate the firm
will fail to achieve return on shareholderrsquos funds High net profit ratio will help
the firm service in the fall of income from services rise in cost of production or
declining demand
The net profit is increased because the income from services is increased The
increment resulted a slight increase in 2007 ratio compared with the year 2006
GRAPHICAL REPRESENTATION
059
030
023
033
042
000
010
020
030
040
050
060
Ratios
2003 2004 2005 2006 2007
Years
NET PROFIT RATIO
Ratios
10 OPERATING PROFIT
(Amount in Rs)
Operating Profit
Year Operating Profit Income From Services Ratio
2003 36094877 36309834 099
2004 27576814 53899084 051
2005 29540599 72728759 041
2006 31586718 55550649 057
2007 67192677 96654902 070
Interpretation
The operating profit ratio is used to measure the relationship between net profits
and sales of a firm Depending on the concept it will decide
The operating profit ratio is increased compared with the last year The earnings
are increased due to the increase in the income from services because of
Operations amp Maintenance fee So the ratio is increased slightly compared with
the previous year
GRAPHICAL REPRESENTATION
099
051
041
057
070
000
010
020
030
040
050060
070
080
090
100
Ratios
2003 2004 2005 2006 2007
Years
OPERATING PROFIT RATIO
Ratios
11 RETURN ON TOTAL ASSETS RATIO
(Amount in Rs)
Return on Total Assets Ratio
Year Net Profit After Tax Total Assets Ratio
2003 21123474 78572171 027
2004 16125942 88438107 018
2005 16929227 89158391 019
2006 18259580 106385201 017
2007 40586359 129805102 031
Interpretation
This is the ratio between net profit and total assets The ratio indicates the return
on total assets in the form of profits
The net profit is increased in the current year because of the increment in the
income from services due to the increase in Operations amp Maintenance fee The
fixed assets are reduced due to the charge of depreciation and no major
increments in fixed assets but the current assets are increased because of sundry
debtors and that effects an increase in the ratio compared with the last year ie
2006
GRAPHICAL REPRESENTATION
027
018 019017
031
000
005
010
015
020
025
030
035
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON TOTAL ASSETS
Ratios
12 RESERVES amp SURPLUS TO CAPITAL RATIO
(Amount in Rs)
Reserves amp Surplus To Capital Ratio
Year Reserves amp Surplus Capital Ratio
2003 65599299 2079920 31542004 34582554 18719280 1852005 51511781 18719280 2752006 37754372 18719280 2022007 78340733 18719280 419
Interpretation
The ratio is used to reveal the policy pursued by the company a very high ratio
indicates a conservative dividend policy and vice-versa Higher the ratio better
will be the position
The reserves amp surplus is decreased in the year 2006 due to the payment of
dividends and in the year 2007 the profit is increased But the capital is
remaining constant from the year 2004 So the increase in the reserves amp surplus
caused a greater increase in the current yearrsquos ratio compared with the older
GRAPHICAL REPRESENTATION
3154
185 275 202419
-
500
1000
1500
2000
2500
3000
3500
Ratios
2003 2004 2005 2006 2007
Years
RESERVES amp SRUPLUS TO CAPITAL RATIO
Ratios
OVERALL PROFITABILITY RATIOS
13 EARNINGS PER SHARE
(Amount in Rs)
Earnings Per Share
Year Net Profit After Tax No of Equity Shares Ratio
2003 21123474 207992 101562004 16125942 1871928 8612005 16929227 1871928 9042006 18259580 1871928 9752007 40586359 1871928 2168
Interpretation
Earnings per share ratio are used to find out the return that the shareholderrsquos earn
from their shares After charging depreciation and after payment of tax the
remaining amount will be distributed by all the shareholders
Net profit after tax is increased due to the huge increase in the income from
services That is the amount which is available to the shareholders to take There
are 1871928 shares of Rs10- each The share capital is constant from the year
2004 Due to the huge increase in net profit the earnings per share is greaterly
increased in 2007
GRAPHICAL REPRESENTATION
10156
861904 975
2168
000
2000
4000
6000
8000
10000
12000
Ratios
2003 2004 2005 2006 2007
Years
EARNINGS PER SHARE
Ratios
14 PRICE EARNINGS (PE) RATIO
(Amount in Rs)
Price Earning (PE) Ratio
Year Market Price Per Share Earnings Per Share Ratio
2003 3254 10156 0322004 2847 861 3302005 3752 904 4152006 3017 975 3092007 5185 2168 239
Interpretation
The ratio is calculated to make an estimate of application in the value of share of
a company
The market price per share is increased due to the increase in the reserves
amp surplus The earnings per share are also increased greaterly compared
with the last year because of increase in the net profit So the ratio is
decreased compared with the previous year
GRAPHICAL REPRESENTATION
032
330
415
309
239
000
050
100
150
200
250
300
350
400
450
Ratios
2003 2004 2005 2006 2007
Years
PE RATIO
Ratios
15 RETURN ON INVESTMENT
(Amount in Rs)
Return on Investment
Year Net Profit After Tax Share Holders Fund Ratio
2003 21123474 67679219 031
2004 16125942 53301834 03
2005 16929227 70231061 024
2006 18259580 56473652 032
2007 40586359 97060013 042
Interpretation
This is the ratio between net profits and shareholders funds The ratio is
generally calculated as percentage multiplying with 100
The net profit is increased due to the increase in the income from services ant
the shareholders funds are increased because of reserve amp surplus So the ratio
is increased in the current year
GRAPHICAL REPRESENTATION
031 030
024
032
042
000
005
010
015
020
025
030
035
040
045
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON INVESTMENT RATIO
RatioS
DATA COLLECTION
The data can be of two types
Primary Data
Secondary Data
Primary Data
Primary data are those data which is originally collected afresh
Secondary Data
Secondary data are those data which are already collected and stored and which has
been passed through statistical research
In this project Secondary data has been collected from following sources-
Annual report
Books
MIS
Other material and report published by company There are two methods to prepare
the Cash flow Statement
ndirect Method
I
The indirect method (or reconciliation method) starts with net income and converts it
to net cash flow from operating activities In other words the indirect method adjusts
net income for items that affected reported net income but did not affect cash To
compute net cash flow from operating activities non-cash charges in the income
statement are added ack to net income and non-cash credits are deducted
b
Direct Method
Under the direct method the statement of cash flows reports net cash flow from
operating activities as major classes of operating cash receipts (eg cash collected from
customers and cash received from interest and dividends) and cash disbursements (eg
cash paid to suppliers for goods to employees for services to creditors for interest and
to government authorities for taxes)
INDIRECT VERSUS DIRECT METHOD
The most contentious decision that the FASB faced in issuing Statement No 95 was
choosing between the direct method and the indirect method of determining net cash
flow from operating activities Companies lobbied against the direct method urging
adoption of the indirect method Commercial lending officers expressed a strong
preference to the FASB hat the direct method be required
tCF-Page 3 of 5
In Favor of the Direct Method
The principal advantage of the direct method is that it shows operating cash receipts and
payments That is it is more consistent with the objective of a statement of cash flows to
provide information about cash receipts and cash payments than the in-direct method
which does not report operating cash receipts and payments
Supporters of the direct method contend that knowledge of the specific sources of
operating cash receipts and the purposes for which operating cash payments were made
in past periods is useful in estimating future operating cash flows Furthermore in-
formation about amounts of major classes of operating cash receipts and payments is
more useful than information only about their arithmetic sum (the net cash flow from
operating activities) Such information is more revealing of an enterprises ability (1) to
generate sufficient cash from operating activities to pay its debts (2) to reinvest in its
operations and (3) to make distributions to its owners
Many corporate providers of financial statements say that they do not currently collect
information in a manner that allows them to determine amounts such as cash received
from customers or cash paid to suppliers directly from their accounting systems But
supporters of the direct method contend that the incremental cost of assimilating such
operating cash receipts and payments data is not significant
In Favor of the Indirect Method
The principal advantage of the indirect method is that it focuses on the differences
between net income and net cash flow from operating activities That is it provides a
useful link between the statement of cash flows and the income statement and balance
sheet
Many providers of financial statements contend that it is less costly to adjust net income
to net cash flow from operating activities (indirect) than it is to report gross operating
cash receipts and payments (direct) Supporters of the indirect method also state that the
direct method which effectively reports income statement information on a cash rather
than an accrual basis may erroneously suggest that net cash flow from operating
activities is as good as or better than net income as a measure of performance
Special Rules Applying to Direct and Indirect Methods
Companies that use the direct method are required at a
minimum to report separately the following classes of
operating cash receipts and payments
Receipts
1048713 Cash collected from customers (including lessees licensees etc)
1048713 Interest and dividends received
1048713 Other operating cash receipts if any
Payments
1048713 Cash paid to employees and suppliers of goods or services (including
suppliers of
insurance advertising etc)
1048713 Interest paid
1048713 Income taxes paid
1048713 Other operating cash payments if any
Companies using the indirect method are required to disclose separately changes in
inventory receivables and payables to reconcile net income to net cash flow from
operating activities In addition interest paid (net of amount capitalized) and income
taxes paid must be disclosed elsewhere in the financial statements or accompanying
notes
The FASB requires these separate and additional disclosures so that users
may approximate the direct method Also an acceptable alternative presentation
of the in-direct method is to report net cash flow from operating activities as a
single line item in the statement of cash flows and to present the reconciliation
details elsewhere in the financial statements
FINDING OF SUDY
According to cash flow statement of the company The finding of the study are as
follows-
The company has not taken any loans secured or unsecured from companies
firms or other parties
The company has not accepted any deposit from the public during the year
The company is not a sick industrial company
The company has not granted any loan secured or unsecured to company firms
or other parties
The company has paid the entire long term and short term borrowing during the
year
The company has buy back the companyrsquos own share this year
The interest paid in 2008 is more than the
There has been a significant decline in volume over the years from 2001-02
to 2005-06 as can be seen in the graph below
Table 43
The Net sales of Tractor has increased considerably from 2004-05 to 2007-08
This can be mainly attributed to changes in Variable and material costs and in
the price
The Net sale of Tractor has increased considerably from 2004-05 to 2007-08
that is an decrease of Rs7216 per tractor This can be mainly attributed to
changes in
Variable and material costs and in the prices
RECOMMENDATIONS
According to cash flow statement of the company The suggestions of the study
are as follows-
The time durations for training program have to increase
Buy regular review and consultations develop a career progression
which is sensitive to performance and ability
Create an environment where by people are trend developed to enable
The to take advantages of opportunities that arise
The jab can be redesigned where the work man stay in what is normally
the same job but has elements of it changed
The principle amount must be paid in time which can be reducing the
interest the out flow
The purchase of the fixed asset must be made only when there is extreme
requirement
In order to avoid taxes the company should go for more investment
The companyrsquos borrowings should go for more investment
o The company should try to reduce the depreciations as maximum
as possible
CONCLUSION
The study on competency level of employees at ESCORTS PVTLTD gave an
insight about the acceptance of competency mapping by employees
The employees at Ymi welcome the introduction of competency mapping in their
organization as they felt it was very much essential in enhancing their skills and
organizational development
The organization has provided the recourses guidance and support to facilitate the
introduction of competency level easily and develop the employees in such a way
that they can face any kind of challenge
However the level of competency in employees is found to be satisfactory
Providing proper training education and guidance to the employees can enhance
the level
This study was mainly carried out to find out whether thee competency mapping
being followed by the company is effective till date If the competency mapping
and fitment to the organization
By looking at the graphs and tables it is quite that the employees still are not up to
the level of competent pool they still have to be trained and made competent in
order to fill the gap As the organization has just applied the mapping it has to see
to that it meets all the requirements for competency mapping
Therefore the graphs make it quite clear that the potential of the employees is not
up to the mark and ie they are not competent enough to meet the competency-
mapping requirement Hence by further training and counseling this gap can be
closed
This report includes the training requirements of employees and it highlights skills
possessed by each employee and skill required All employees get training so that
skill can be improved and maintain balance between standard performance with
their actual performance to avoid gap
APPENDIX
QUESTIONNAIRE
Consumer Survey
Name _____________________________
Age _____________________________
Sex
Male
Female
Occupation
Businessman
Service man
Professional
Others
Monthly income brackets
Below 15000
15000- 20000
20000-30000
30000 and above
of your savings _________
Do you invest
Yes
No
If yes then where do you invest your money
Bank
Insurance
funds
Others
Why do you made that statement
Return
Risk hedging
Tax benefits
Other reasons (specify) _______
Who influence your cash decision
Relatives and friends
Family members
Advisors experts
You yourself
If no then why
Do not know where to invest
Satisfied with your current investment return
Donrsquot want take risk
Other reasons
__________________________________________________________________
___________________
Do you know about CF statement
Yes
No
If yes then from where you have come to know about an cash statement
Advertisements on newspapers
Friends and relative
Agents experts
Other source
What do you think about cash statement
It means investing only in share market
Constant watch must be kept always
Return is not satisfactory
Other perception
__________________________________________________
Can you recall any cash flow of company
___________________________
Would you want to made CF of an org
Yes
No
If yes then why
_______________________________________________________
If no then why
_______________________________________________________
BIBLIOGRAPHY
List of Books
1 PANDEY IM - FINANCIAL MANAGEMANT
2 KHAN MY AND JAIN PK -FINANCIAL MANAGEMANT
3 SMITH KV ndash MANAGEMANT OF WORKING CAPITAL
3 COMPANY RECORDS
4 JOURNAL
5 REPORTS
WEBLIOGRAPHY
1 wwwescortspvtltdcom
2 wwwgooglecom
GRAPHICAL REPRESENTATION
293374
420
607
817
000
100
200
300
400
500
600
700
800
900
Ratios
2003 2004 2005 2006 2007
Years
CURRENT ASSETS TO FIXED ASSETS RATIO
Ratios
PROFITABILITY RATIOS
GENERAL PROFITABILITY RATIOS
9 NET PROFIT RATIO
(Amount in Rs)
Net Profit Ratio
Year Net Profit After Tax Income from Services Ratio
2003 21123474 36039834 059
2004 16125942 53899084 030
2005 16929227 72728759 023
2006 18259580 55550649 033
2007 40586359 96654902 042
Interpretation
The net profit ratio is the overall measure of the firmrsquos ability to turn each rupee
of income from services in net profit If the net margin is inadequate the firm
will fail to achieve return on shareholderrsquos funds High net profit ratio will help
the firm service in the fall of income from services rise in cost of production or
declining demand
The net profit is increased because the income from services is increased The
increment resulted a slight increase in 2007 ratio compared with the year 2006
GRAPHICAL REPRESENTATION
059
030
023
033
042
000
010
020
030
040
050
060
Ratios
2003 2004 2005 2006 2007
Years
NET PROFIT RATIO
Ratios
10 OPERATING PROFIT
(Amount in Rs)
Operating Profit
Year Operating Profit Income From Services Ratio
2003 36094877 36309834 099
2004 27576814 53899084 051
2005 29540599 72728759 041
2006 31586718 55550649 057
2007 67192677 96654902 070
Interpretation
The operating profit ratio is used to measure the relationship between net profits
and sales of a firm Depending on the concept it will decide
The operating profit ratio is increased compared with the last year The earnings
are increased due to the increase in the income from services because of
Operations amp Maintenance fee So the ratio is increased slightly compared with
the previous year
GRAPHICAL REPRESENTATION
099
051
041
057
070
000
010
020
030
040
050060
070
080
090
100
Ratios
2003 2004 2005 2006 2007
Years
OPERATING PROFIT RATIO
Ratios
11 RETURN ON TOTAL ASSETS RATIO
(Amount in Rs)
Return on Total Assets Ratio
Year Net Profit After Tax Total Assets Ratio
2003 21123474 78572171 027
2004 16125942 88438107 018
2005 16929227 89158391 019
2006 18259580 106385201 017
2007 40586359 129805102 031
Interpretation
This is the ratio between net profit and total assets The ratio indicates the return
on total assets in the form of profits
The net profit is increased in the current year because of the increment in the
income from services due to the increase in Operations amp Maintenance fee The
fixed assets are reduced due to the charge of depreciation and no major
increments in fixed assets but the current assets are increased because of sundry
debtors and that effects an increase in the ratio compared with the last year ie
2006
GRAPHICAL REPRESENTATION
027
018 019017
031
000
005
010
015
020
025
030
035
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON TOTAL ASSETS
Ratios
12 RESERVES amp SURPLUS TO CAPITAL RATIO
(Amount in Rs)
Reserves amp Surplus To Capital Ratio
Year Reserves amp Surplus Capital Ratio
2003 65599299 2079920 31542004 34582554 18719280 1852005 51511781 18719280 2752006 37754372 18719280 2022007 78340733 18719280 419
Interpretation
The ratio is used to reveal the policy pursued by the company a very high ratio
indicates a conservative dividend policy and vice-versa Higher the ratio better
will be the position
The reserves amp surplus is decreased in the year 2006 due to the payment of
dividends and in the year 2007 the profit is increased But the capital is
remaining constant from the year 2004 So the increase in the reserves amp surplus
caused a greater increase in the current yearrsquos ratio compared with the older
GRAPHICAL REPRESENTATION
3154
185 275 202419
-
500
1000
1500
2000
2500
3000
3500
Ratios
2003 2004 2005 2006 2007
Years
RESERVES amp SRUPLUS TO CAPITAL RATIO
Ratios
OVERALL PROFITABILITY RATIOS
13 EARNINGS PER SHARE
(Amount in Rs)
Earnings Per Share
Year Net Profit After Tax No of Equity Shares Ratio
2003 21123474 207992 101562004 16125942 1871928 8612005 16929227 1871928 9042006 18259580 1871928 9752007 40586359 1871928 2168
Interpretation
Earnings per share ratio are used to find out the return that the shareholderrsquos earn
from their shares After charging depreciation and after payment of tax the
remaining amount will be distributed by all the shareholders
Net profit after tax is increased due to the huge increase in the income from
services That is the amount which is available to the shareholders to take There
are 1871928 shares of Rs10- each The share capital is constant from the year
2004 Due to the huge increase in net profit the earnings per share is greaterly
increased in 2007
GRAPHICAL REPRESENTATION
10156
861904 975
2168
000
2000
4000
6000
8000
10000
12000
Ratios
2003 2004 2005 2006 2007
Years
EARNINGS PER SHARE
Ratios
14 PRICE EARNINGS (PE) RATIO
(Amount in Rs)
Price Earning (PE) Ratio
Year Market Price Per Share Earnings Per Share Ratio
2003 3254 10156 0322004 2847 861 3302005 3752 904 4152006 3017 975 3092007 5185 2168 239
Interpretation
The ratio is calculated to make an estimate of application in the value of share of
a company
The market price per share is increased due to the increase in the reserves
amp surplus The earnings per share are also increased greaterly compared
with the last year because of increase in the net profit So the ratio is
decreased compared with the previous year
GRAPHICAL REPRESENTATION
032
330
415
309
239
000
050
100
150
200
250
300
350
400
450
Ratios
2003 2004 2005 2006 2007
Years
PE RATIO
Ratios
15 RETURN ON INVESTMENT
(Amount in Rs)
Return on Investment
Year Net Profit After Tax Share Holders Fund Ratio
2003 21123474 67679219 031
2004 16125942 53301834 03
2005 16929227 70231061 024
2006 18259580 56473652 032
2007 40586359 97060013 042
Interpretation
This is the ratio between net profits and shareholders funds The ratio is
generally calculated as percentage multiplying with 100
The net profit is increased due to the increase in the income from services ant
the shareholders funds are increased because of reserve amp surplus So the ratio
is increased in the current year
GRAPHICAL REPRESENTATION
031 030
024
032
042
000
005
010
015
020
025
030
035
040
045
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON INVESTMENT RATIO
RatioS
DATA COLLECTION
The data can be of two types
Primary Data
Secondary Data
Primary Data
Primary data are those data which is originally collected afresh
Secondary Data
Secondary data are those data which are already collected and stored and which has
been passed through statistical research
In this project Secondary data has been collected from following sources-
Annual report
Books
MIS
Other material and report published by company There are two methods to prepare
the Cash flow Statement
ndirect Method
I
The indirect method (or reconciliation method) starts with net income and converts it
to net cash flow from operating activities In other words the indirect method adjusts
net income for items that affected reported net income but did not affect cash To
compute net cash flow from operating activities non-cash charges in the income
statement are added ack to net income and non-cash credits are deducted
b
Direct Method
Under the direct method the statement of cash flows reports net cash flow from
operating activities as major classes of operating cash receipts (eg cash collected from
customers and cash received from interest and dividends) and cash disbursements (eg
cash paid to suppliers for goods to employees for services to creditors for interest and
to government authorities for taxes)
INDIRECT VERSUS DIRECT METHOD
The most contentious decision that the FASB faced in issuing Statement No 95 was
choosing between the direct method and the indirect method of determining net cash
flow from operating activities Companies lobbied against the direct method urging
adoption of the indirect method Commercial lending officers expressed a strong
preference to the FASB hat the direct method be required
tCF-Page 3 of 5
In Favor of the Direct Method
The principal advantage of the direct method is that it shows operating cash receipts and
payments That is it is more consistent with the objective of a statement of cash flows to
provide information about cash receipts and cash payments than the in-direct method
which does not report operating cash receipts and payments
Supporters of the direct method contend that knowledge of the specific sources of
operating cash receipts and the purposes for which operating cash payments were made
in past periods is useful in estimating future operating cash flows Furthermore in-
formation about amounts of major classes of operating cash receipts and payments is
more useful than information only about their arithmetic sum (the net cash flow from
operating activities) Such information is more revealing of an enterprises ability (1) to
generate sufficient cash from operating activities to pay its debts (2) to reinvest in its
operations and (3) to make distributions to its owners
Many corporate providers of financial statements say that they do not currently collect
information in a manner that allows them to determine amounts such as cash received
from customers or cash paid to suppliers directly from their accounting systems But
supporters of the direct method contend that the incremental cost of assimilating such
operating cash receipts and payments data is not significant
In Favor of the Indirect Method
The principal advantage of the indirect method is that it focuses on the differences
between net income and net cash flow from operating activities That is it provides a
useful link between the statement of cash flows and the income statement and balance
sheet
Many providers of financial statements contend that it is less costly to adjust net income
to net cash flow from operating activities (indirect) than it is to report gross operating
cash receipts and payments (direct) Supporters of the indirect method also state that the
direct method which effectively reports income statement information on a cash rather
than an accrual basis may erroneously suggest that net cash flow from operating
activities is as good as or better than net income as a measure of performance
Special Rules Applying to Direct and Indirect Methods
Companies that use the direct method are required at a
minimum to report separately the following classes of
operating cash receipts and payments
Receipts
1048713 Cash collected from customers (including lessees licensees etc)
1048713 Interest and dividends received
1048713 Other operating cash receipts if any
Payments
1048713 Cash paid to employees and suppliers of goods or services (including
suppliers of
insurance advertising etc)
1048713 Interest paid
1048713 Income taxes paid
1048713 Other operating cash payments if any
Companies using the indirect method are required to disclose separately changes in
inventory receivables and payables to reconcile net income to net cash flow from
operating activities In addition interest paid (net of amount capitalized) and income
taxes paid must be disclosed elsewhere in the financial statements or accompanying
notes
The FASB requires these separate and additional disclosures so that users
may approximate the direct method Also an acceptable alternative presentation
of the in-direct method is to report net cash flow from operating activities as a
single line item in the statement of cash flows and to present the reconciliation
details elsewhere in the financial statements
FINDING OF SUDY
According to cash flow statement of the company The finding of the study are as
follows-
The company has not taken any loans secured or unsecured from companies
firms or other parties
The company has not accepted any deposit from the public during the year
The company is not a sick industrial company
The company has not granted any loan secured or unsecured to company firms
or other parties
The company has paid the entire long term and short term borrowing during the
year
The company has buy back the companyrsquos own share this year
The interest paid in 2008 is more than the
There has been a significant decline in volume over the years from 2001-02
to 2005-06 as can be seen in the graph below
Table 43
The Net sales of Tractor has increased considerably from 2004-05 to 2007-08
This can be mainly attributed to changes in Variable and material costs and in
the price
The Net sale of Tractor has increased considerably from 2004-05 to 2007-08
that is an decrease of Rs7216 per tractor This can be mainly attributed to
changes in
Variable and material costs and in the prices
RECOMMENDATIONS
According to cash flow statement of the company The suggestions of the study
are as follows-
The time durations for training program have to increase
Buy regular review and consultations develop a career progression
which is sensitive to performance and ability
Create an environment where by people are trend developed to enable
The to take advantages of opportunities that arise
The jab can be redesigned where the work man stay in what is normally
the same job but has elements of it changed
The principle amount must be paid in time which can be reducing the
interest the out flow
The purchase of the fixed asset must be made only when there is extreme
requirement
In order to avoid taxes the company should go for more investment
The companyrsquos borrowings should go for more investment
o The company should try to reduce the depreciations as maximum
as possible
CONCLUSION
The study on competency level of employees at ESCORTS PVTLTD gave an
insight about the acceptance of competency mapping by employees
The employees at Ymi welcome the introduction of competency mapping in their
organization as they felt it was very much essential in enhancing their skills and
organizational development
The organization has provided the recourses guidance and support to facilitate the
introduction of competency level easily and develop the employees in such a way
that they can face any kind of challenge
However the level of competency in employees is found to be satisfactory
Providing proper training education and guidance to the employees can enhance
the level
This study was mainly carried out to find out whether thee competency mapping
being followed by the company is effective till date If the competency mapping
and fitment to the organization
By looking at the graphs and tables it is quite that the employees still are not up to
the level of competent pool they still have to be trained and made competent in
order to fill the gap As the organization has just applied the mapping it has to see
to that it meets all the requirements for competency mapping
Therefore the graphs make it quite clear that the potential of the employees is not
up to the mark and ie they are not competent enough to meet the competency-
mapping requirement Hence by further training and counseling this gap can be
closed
This report includes the training requirements of employees and it highlights skills
possessed by each employee and skill required All employees get training so that
skill can be improved and maintain balance between standard performance with
their actual performance to avoid gap
APPENDIX
QUESTIONNAIRE
Consumer Survey
Name _____________________________
Age _____________________________
Sex
Male
Female
Occupation
Businessman
Service man
Professional
Others
Monthly income brackets
Below 15000
15000- 20000
20000-30000
30000 and above
of your savings _________
Do you invest
Yes
No
If yes then where do you invest your money
Bank
Insurance
funds
Others
Why do you made that statement
Return
Risk hedging
Tax benefits
Other reasons (specify) _______
Who influence your cash decision
Relatives and friends
Family members
Advisors experts
You yourself
If no then why
Do not know where to invest
Satisfied with your current investment return
Donrsquot want take risk
Other reasons
__________________________________________________________________
___________________
Do you know about CF statement
Yes
No
If yes then from where you have come to know about an cash statement
Advertisements on newspapers
Friends and relative
Agents experts
Other source
What do you think about cash statement
It means investing only in share market
Constant watch must be kept always
Return is not satisfactory
Other perception
__________________________________________________
Can you recall any cash flow of company
___________________________
Would you want to made CF of an org
Yes
No
If yes then why
_______________________________________________________
If no then why
_______________________________________________________
BIBLIOGRAPHY
List of Books
1 PANDEY IM - FINANCIAL MANAGEMANT
2 KHAN MY AND JAIN PK -FINANCIAL MANAGEMANT
3 SMITH KV ndash MANAGEMANT OF WORKING CAPITAL
3 COMPANY RECORDS
4 JOURNAL
5 REPORTS
WEBLIOGRAPHY
1 wwwescortspvtltdcom
2 wwwgooglecom
PROFITABILITY RATIOS
GENERAL PROFITABILITY RATIOS
9 NET PROFIT RATIO
(Amount in Rs)
Net Profit Ratio
Year Net Profit After Tax Income from Services Ratio
2003 21123474 36039834 059
2004 16125942 53899084 030
2005 16929227 72728759 023
2006 18259580 55550649 033
2007 40586359 96654902 042
Interpretation
The net profit ratio is the overall measure of the firmrsquos ability to turn each rupee
of income from services in net profit If the net margin is inadequate the firm
will fail to achieve return on shareholderrsquos funds High net profit ratio will help
the firm service in the fall of income from services rise in cost of production or
declining demand
The net profit is increased because the income from services is increased The
increment resulted a slight increase in 2007 ratio compared with the year 2006
GRAPHICAL REPRESENTATION
059
030
023
033
042
000
010
020
030
040
050
060
Ratios
2003 2004 2005 2006 2007
Years
NET PROFIT RATIO
Ratios
10 OPERATING PROFIT
(Amount in Rs)
Operating Profit
Year Operating Profit Income From Services Ratio
2003 36094877 36309834 099
2004 27576814 53899084 051
2005 29540599 72728759 041
2006 31586718 55550649 057
2007 67192677 96654902 070
Interpretation
The operating profit ratio is used to measure the relationship between net profits
and sales of a firm Depending on the concept it will decide
The operating profit ratio is increased compared with the last year The earnings
are increased due to the increase in the income from services because of
Operations amp Maintenance fee So the ratio is increased slightly compared with
the previous year
GRAPHICAL REPRESENTATION
099
051
041
057
070
000
010
020
030
040
050060
070
080
090
100
Ratios
2003 2004 2005 2006 2007
Years
OPERATING PROFIT RATIO
Ratios
11 RETURN ON TOTAL ASSETS RATIO
(Amount in Rs)
Return on Total Assets Ratio
Year Net Profit After Tax Total Assets Ratio
2003 21123474 78572171 027
2004 16125942 88438107 018
2005 16929227 89158391 019
2006 18259580 106385201 017
2007 40586359 129805102 031
Interpretation
This is the ratio between net profit and total assets The ratio indicates the return
on total assets in the form of profits
The net profit is increased in the current year because of the increment in the
income from services due to the increase in Operations amp Maintenance fee The
fixed assets are reduced due to the charge of depreciation and no major
increments in fixed assets but the current assets are increased because of sundry
debtors and that effects an increase in the ratio compared with the last year ie
2006
GRAPHICAL REPRESENTATION
027
018 019017
031
000
005
010
015
020
025
030
035
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON TOTAL ASSETS
Ratios
12 RESERVES amp SURPLUS TO CAPITAL RATIO
(Amount in Rs)
Reserves amp Surplus To Capital Ratio
Year Reserves amp Surplus Capital Ratio
2003 65599299 2079920 31542004 34582554 18719280 1852005 51511781 18719280 2752006 37754372 18719280 2022007 78340733 18719280 419
Interpretation
The ratio is used to reveal the policy pursued by the company a very high ratio
indicates a conservative dividend policy and vice-versa Higher the ratio better
will be the position
The reserves amp surplus is decreased in the year 2006 due to the payment of
dividends and in the year 2007 the profit is increased But the capital is
remaining constant from the year 2004 So the increase in the reserves amp surplus
caused a greater increase in the current yearrsquos ratio compared with the older
GRAPHICAL REPRESENTATION
3154
185 275 202419
-
500
1000
1500
2000
2500
3000
3500
Ratios
2003 2004 2005 2006 2007
Years
RESERVES amp SRUPLUS TO CAPITAL RATIO
Ratios
OVERALL PROFITABILITY RATIOS
13 EARNINGS PER SHARE
(Amount in Rs)
Earnings Per Share
Year Net Profit After Tax No of Equity Shares Ratio
2003 21123474 207992 101562004 16125942 1871928 8612005 16929227 1871928 9042006 18259580 1871928 9752007 40586359 1871928 2168
Interpretation
Earnings per share ratio are used to find out the return that the shareholderrsquos earn
from their shares After charging depreciation and after payment of tax the
remaining amount will be distributed by all the shareholders
Net profit after tax is increased due to the huge increase in the income from
services That is the amount which is available to the shareholders to take There
are 1871928 shares of Rs10- each The share capital is constant from the year
2004 Due to the huge increase in net profit the earnings per share is greaterly
increased in 2007
GRAPHICAL REPRESENTATION
10156
861904 975
2168
000
2000
4000
6000
8000
10000
12000
Ratios
2003 2004 2005 2006 2007
Years
EARNINGS PER SHARE
Ratios
14 PRICE EARNINGS (PE) RATIO
(Amount in Rs)
Price Earning (PE) Ratio
Year Market Price Per Share Earnings Per Share Ratio
2003 3254 10156 0322004 2847 861 3302005 3752 904 4152006 3017 975 3092007 5185 2168 239
Interpretation
The ratio is calculated to make an estimate of application in the value of share of
a company
The market price per share is increased due to the increase in the reserves
amp surplus The earnings per share are also increased greaterly compared
with the last year because of increase in the net profit So the ratio is
decreased compared with the previous year
GRAPHICAL REPRESENTATION
032
330
415
309
239
000
050
100
150
200
250
300
350
400
450
Ratios
2003 2004 2005 2006 2007
Years
PE RATIO
Ratios
15 RETURN ON INVESTMENT
(Amount in Rs)
Return on Investment
Year Net Profit After Tax Share Holders Fund Ratio
2003 21123474 67679219 031
2004 16125942 53301834 03
2005 16929227 70231061 024
2006 18259580 56473652 032
2007 40586359 97060013 042
Interpretation
This is the ratio between net profits and shareholders funds The ratio is
generally calculated as percentage multiplying with 100
The net profit is increased due to the increase in the income from services ant
the shareholders funds are increased because of reserve amp surplus So the ratio
is increased in the current year
GRAPHICAL REPRESENTATION
031 030
024
032
042
000
005
010
015
020
025
030
035
040
045
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON INVESTMENT RATIO
RatioS
DATA COLLECTION
The data can be of two types
Primary Data
Secondary Data
Primary Data
Primary data are those data which is originally collected afresh
Secondary Data
Secondary data are those data which are already collected and stored and which has
been passed through statistical research
In this project Secondary data has been collected from following sources-
Annual report
Books
MIS
Other material and report published by company There are two methods to prepare
the Cash flow Statement
ndirect Method
I
The indirect method (or reconciliation method) starts with net income and converts it
to net cash flow from operating activities In other words the indirect method adjusts
net income for items that affected reported net income but did not affect cash To
compute net cash flow from operating activities non-cash charges in the income
statement are added ack to net income and non-cash credits are deducted
b
Direct Method
Under the direct method the statement of cash flows reports net cash flow from
operating activities as major classes of operating cash receipts (eg cash collected from
customers and cash received from interest and dividends) and cash disbursements (eg
cash paid to suppliers for goods to employees for services to creditors for interest and
to government authorities for taxes)
INDIRECT VERSUS DIRECT METHOD
The most contentious decision that the FASB faced in issuing Statement No 95 was
choosing between the direct method and the indirect method of determining net cash
flow from operating activities Companies lobbied against the direct method urging
adoption of the indirect method Commercial lending officers expressed a strong
preference to the FASB hat the direct method be required
tCF-Page 3 of 5
In Favor of the Direct Method
The principal advantage of the direct method is that it shows operating cash receipts and
payments That is it is more consistent with the objective of a statement of cash flows to
provide information about cash receipts and cash payments than the in-direct method
which does not report operating cash receipts and payments
Supporters of the direct method contend that knowledge of the specific sources of
operating cash receipts and the purposes for which operating cash payments were made
in past periods is useful in estimating future operating cash flows Furthermore in-
formation about amounts of major classes of operating cash receipts and payments is
more useful than information only about their arithmetic sum (the net cash flow from
operating activities) Such information is more revealing of an enterprises ability (1) to
generate sufficient cash from operating activities to pay its debts (2) to reinvest in its
operations and (3) to make distributions to its owners
Many corporate providers of financial statements say that they do not currently collect
information in a manner that allows them to determine amounts such as cash received
from customers or cash paid to suppliers directly from their accounting systems But
supporters of the direct method contend that the incremental cost of assimilating such
operating cash receipts and payments data is not significant
In Favor of the Indirect Method
The principal advantage of the indirect method is that it focuses on the differences
between net income and net cash flow from operating activities That is it provides a
useful link between the statement of cash flows and the income statement and balance
sheet
Many providers of financial statements contend that it is less costly to adjust net income
to net cash flow from operating activities (indirect) than it is to report gross operating
cash receipts and payments (direct) Supporters of the indirect method also state that the
direct method which effectively reports income statement information on a cash rather
than an accrual basis may erroneously suggest that net cash flow from operating
activities is as good as or better than net income as a measure of performance
Special Rules Applying to Direct and Indirect Methods
Companies that use the direct method are required at a
minimum to report separately the following classes of
operating cash receipts and payments
Receipts
1048713 Cash collected from customers (including lessees licensees etc)
1048713 Interest and dividends received
1048713 Other operating cash receipts if any
Payments
1048713 Cash paid to employees and suppliers of goods or services (including
suppliers of
insurance advertising etc)
1048713 Interest paid
1048713 Income taxes paid
1048713 Other operating cash payments if any
Companies using the indirect method are required to disclose separately changes in
inventory receivables and payables to reconcile net income to net cash flow from
operating activities In addition interest paid (net of amount capitalized) and income
taxes paid must be disclosed elsewhere in the financial statements or accompanying
notes
The FASB requires these separate and additional disclosures so that users
may approximate the direct method Also an acceptable alternative presentation
of the in-direct method is to report net cash flow from operating activities as a
single line item in the statement of cash flows and to present the reconciliation
details elsewhere in the financial statements
FINDING OF SUDY
According to cash flow statement of the company The finding of the study are as
follows-
The company has not taken any loans secured or unsecured from companies
firms or other parties
The company has not accepted any deposit from the public during the year
The company is not a sick industrial company
The company has not granted any loan secured or unsecured to company firms
or other parties
The company has paid the entire long term and short term borrowing during the
year
The company has buy back the companyrsquos own share this year
The interest paid in 2008 is more than the
There has been a significant decline in volume over the years from 2001-02
to 2005-06 as can be seen in the graph below
Table 43
The Net sales of Tractor has increased considerably from 2004-05 to 2007-08
This can be mainly attributed to changes in Variable and material costs and in
the price
The Net sale of Tractor has increased considerably from 2004-05 to 2007-08
that is an decrease of Rs7216 per tractor This can be mainly attributed to
changes in
Variable and material costs and in the prices
RECOMMENDATIONS
According to cash flow statement of the company The suggestions of the study
are as follows-
The time durations for training program have to increase
Buy regular review and consultations develop a career progression
which is sensitive to performance and ability
Create an environment where by people are trend developed to enable
The to take advantages of opportunities that arise
The jab can be redesigned where the work man stay in what is normally
the same job but has elements of it changed
The principle amount must be paid in time which can be reducing the
interest the out flow
The purchase of the fixed asset must be made only when there is extreme
requirement
In order to avoid taxes the company should go for more investment
The companyrsquos borrowings should go for more investment
o The company should try to reduce the depreciations as maximum
as possible
CONCLUSION
The study on competency level of employees at ESCORTS PVTLTD gave an
insight about the acceptance of competency mapping by employees
The employees at Ymi welcome the introduction of competency mapping in their
organization as they felt it was very much essential in enhancing their skills and
organizational development
The organization has provided the recourses guidance and support to facilitate the
introduction of competency level easily and develop the employees in such a way
that they can face any kind of challenge
However the level of competency in employees is found to be satisfactory
Providing proper training education and guidance to the employees can enhance
the level
This study was mainly carried out to find out whether thee competency mapping
being followed by the company is effective till date If the competency mapping
and fitment to the organization
By looking at the graphs and tables it is quite that the employees still are not up to
the level of competent pool they still have to be trained and made competent in
order to fill the gap As the organization has just applied the mapping it has to see
to that it meets all the requirements for competency mapping
Therefore the graphs make it quite clear that the potential of the employees is not
up to the mark and ie they are not competent enough to meet the competency-
mapping requirement Hence by further training and counseling this gap can be
closed
This report includes the training requirements of employees and it highlights skills
possessed by each employee and skill required All employees get training so that
skill can be improved and maintain balance between standard performance with
their actual performance to avoid gap
APPENDIX
QUESTIONNAIRE
Consumer Survey
Name _____________________________
Age _____________________________
Sex
Male
Female
Occupation
Businessman
Service man
Professional
Others
Monthly income brackets
Below 15000
15000- 20000
20000-30000
30000 and above
of your savings _________
Do you invest
Yes
No
If yes then where do you invest your money
Bank
Insurance
funds
Others
Why do you made that statement
Return
Risk hedging
Tax benefits
Other reasons (specify) _______
Who influence your cash decision
Relatives and friends
Family members
Advisors experts
You yourself
If no then why
Do not know where to invest
Satisfied with your current investment return
Donrsquot want take risk
Other reasons
__________________________________________________________________
___________________
Do you know about CF statement
Yes
No
If yes then from where you have come to know about an cash statement
Advertisements on newspapers
Friends and relative
Agents experts
Other source
What do you think about cash statement
It means investing only in share market
Constant watch must be kept always
Return is not satisfactory
Other perception
__________________________________________________
Can you recall any cash flow of company
___________________________
Would you want to made CF of an org
Yes
No
If yes then why
_______________________________________________________
If no then why
_______________________________________________________
BIBLIOGRAPHY
List of Books
1 PANDEY IM - FINANCIAL MANAGEMANT
2 KHAN MY AND JAIN PK -FINANCIAL MANAGEMANT
3 SMITH KV ndash MANAGEMANT OF WORKING CAPITAL
3 COMPANY RECORDS
4 JOURNAL
5 REPORTS
WEBLIOGRAPHY
1 wwwescortspvtltdcom
2 wwwgooglecom
GRAPHICAL REPRESENTATION
059
030
023
033
042
000
010
020
030
040
050
060
Ratios
2003 2004 2005 2006 2007
Years
NET PROFIT RATIO
Ratios
10 OPERATING PROFIT
(Amount in Rs)
Operating Profit
Year Operating Profit Income From Services Ratio
2003 36094877 36309834 099
2004 27576814 53899084 051
2005 29540599 72728759 041
2006 31586718 55550649 057
2007 67192677 96654902 070
Interpretation
The operating profit ratio is used to measure the relationship between net profits
and sales of a firm Depending on the concept it will decide
The operating profit ratio is increased compared with the last year The earnings
are increased due to the increase in the income from services because of
Operations amp Maintenance fee So the ratio is increased slightly compared with
the previous year
GRAPHICAL REPRESENTATION
099
051
041
057
070
000
010
020
030
040
050060
070
080
090
100
Ratios
2003 2004 2005 2006 2007
Years
OPERATING PROFIT RATIO
Ratios
11 RETURN ON TOTAL ASSETS RATIO
(Amount in Rs)
Return on Total Assets Ratio
Year Net Profit After Tax Total Assets Ratio
2003 21123474 78572171 027
2004 16125942 88438107 018
2005 16929227 89158391 019
2006 18259580 106385201 017
2007 40586359 129805102 031
Interpretation
This is the ratio between net profit and total assets The ratio indicates the return
on total assets in the form of profits
The net profit is increased in the current year because of the increment in the
income from services due to the increase in Operations amp Maintenance fee The
fixed assets are reduced due to the charge of depreciation and no major
increments in fixed assets but the current assets are increased because of sundry
debtors and that effects an increase in the ratio compared with the last year ie
2006
GRAPHICAL REPRESENTATION
027
018 019017
031
000
005
010
015
020
025
030
035
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON TOTAL ASSETS
Ratios
12 RESERVES amp SURPLUS TO CAPITAL RATIO
(Amount in Rs)
Reserves amp Surplus To Capital Ratio
Year Reserves amp Surplus Capital Ratio
2003 65599299 2079920 31542004 34582554 18719280 1852005 51511781 18719280 2752006 37754372 18719280 2022007 78340733 18719280 419
Interpretation
The ratio is used to reveal the policy pursued by the company a very high ratio
indicates a conservative dividend policy and vice-versa Higher the ratio better
will be the position
The reserves amp surplus is decreased in the year 2006 due to the payment of
dividends and in the year 2007 the profit is increased But the capital is
remaining constant from the year 2004 So the increase in the reserves amp surplus
caused a greater increase in the current yearrsquos ratio compared with the older
GRAPHICAL REPRESENTATION
3154
185 275 202419
-
500
1000
1500
2000
2500
3000
3500
Ratios
2003 2004 2005 2006 2007
Years
RESERVES amp SRUPLUS TO CAPITAL RATIO
Ratios
OVERALL PROFITABILITY RATIOS
13 EARNINGS PER SHARE
(Amount in Rs)
Earnings Per Share
Year Net Profit After Tax No of Equity Shares Ratio
2003 21123474 207992 101562004 16125942 1871928 8612005 16929227 1871928 9042006 18259580 1871928 9752007 40586359 1871928 2168
Interpretation
Earnings per share ratio are used to find out the return that the shareholderrsquos earn
from their shares After charging depreciation and after payment of tax the
remaining amount will be distributed by all the shareholders
Net profit after tax is increased due to the huge increase in the income from
services That is the amount which is available to the shareholders to take There
are 1871928 shares of Rs10- each The share capital is constant from the year
2004 Due to the huge increase in net profit the earnings per share is greaterly
increased in 2007
GRAPHICAL REPRESENTATION
10156
861904 975
2168
000
2000
4000
6000
8000
10000
12000
Ratios
2003 2004 2005 2006 2007
Years
EARNINGS PER SHARE
Ratios
14 PRICE EARNINGS (PE) RATIO
(Amount in Rs)
Price Earning (PE) Ratio
Year Market Price Per Share Earnings Per Share Ratio
2003 3254 10156 0322004 2847 861 3302005 3752 904 4152006 3017 975 3092007 5185 2168 239
Interpretation
The ratio is calculated to make an estimate of application in the value of share of
a company
The market price per share is increased due to the increase in the reserves
amp surplus The earnings per share are also increased greaterly compared
with the last year because of increase in the net profit So the ratio is
decreased compared with the previous year
GRAPHICAL REPRESENTATION
032
330
415
309
239
000
050
100
150
200
250
300
350
400
450
Ratios
2003 2004 2005 2006 2007
Years
PE RATIO
Ratios
15 RETURN ON INVESTMENT
(Amount in Rs)
Return on Investment
Year Net Profit After Tax Share Holders Fund Ratio
2003 21123474 67679219 031
2004 16125942 53301834 03
2005 16929227 70231061 024
2006 18259580 56473652 032
2007 40586359 97060013 042
Interpretation
This is the ratio between net profits and shareholders funds The ratio is
generally calculated as percentage multiplying with 100
The net profit is increased due to the increase in the income from services ant
the shareholders funds are increased because of reserve amp surplus So the ratio
is increased in the current year
GRAPHICAL REPRESENTATION
031 030
024
032
042
000
005
010
015
020
025
030
035
040
045
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON INVESTMENT RATIO
RatioS
DATA COLLECTION
The data can be of two types
Primary Data
Secondary Data
Primary Data
Primary data are those data which is originally collected afresh
Secondary Data
Secondary data are those data which are already collected and stored and which has
been passed through statistical research
In this project Secondary data has been collected from following sources-
Annual report
Books
MIS
Other material and report published by company There are two methods to prepare
the Cash flow Statement
ndirect Method
I
The indirect method (or reconciliation method) starts with net income and converts it
to net cash flow from operating activities In other words the indirect method adjusts
net income for items that affected reported net income but did not affect cash To
compute net cash flow from operating activities non-cash charges in the income
statement are added ack to net income and non-cash credits are deducted
b
Direct Method
Under the direct method the statement of cash flows reports net cash flow from
operating activities as major classes of operating cash receipts (eg cash collected from
customers and cash received from interest and dividends) and cash disbursements (eg
cash paid to suppliers for goods to employees for services to creditors for interest and
to government authorities for taxes)
INDIRECT VERSUS DIRECT METHOD
The most contentious decision that the FASB faced in issuing Statement No 95 was
choosing between the direct method and the indirect method of determining net cash
flow from operating activities Companies lobbied against the direct method urging
adoption of the indirect method Commercial lending officers expressed a strong
preference to the FASB hat the direct method be required
tCF-Page 3 of 5
In Favor of the Direct Method
The principal advantage of the direct method is that it shows operating cash receipts and
payments That is it is more consistent with the objective of a statement of cash flows to
provide information about cash receipts and cash payments than the in-direct method
which does not report operating cash receipts and payments
Supporters of the direct method contend that knowledge of the specific sources of
operating cash receipts and the purposes for which operating cash payments were made
in past periods is useful in estimating future operating cash flows Furthermore in-
formation about amounts of major classes of operating cash receipts and payments is
more useful than information only about their arithmetic sum (the net cash flow from
operating activities) Such information is more revealing of an enterprises ability (1) to
generate sufficient cash from operating activities to pay its debts (2) to reinvest in its
operations and (3) to make distributions to its owners
Many corporate providers of financial statements say that they do not currently collect
information in a manner that allows them to determine amounts such as cash received
from customers or cash paid to suppliers directly from their accounting systems But
supporters of the direct method contend that the incremental cost of assimilating such
operating cash receipts and payments data is not significant
In Favor of the Indirect Method
The principal advantage of the indirect method is that it focuses on the differences
between net income and net cash flow from operating activities That is it provides a
useful link between the statement of cash flows and the income statement and balance
sheet
Many providers of financial statements contend that it is less costly to adjust net income
to net cash flow from operating activities (indirect) than it is to report gross operating
cash receipts and payments (direct) Supporters of the indirect method also state that the
direct method which effectively reports income statement information on a cash rather
than an accrual basis may erroneously suggest that net cash flow from operating
activities is as good as or better than net income as a measure of performance
Special Rules Applying to Direct and Indirect Methods
Companies that use the direct method are required at a
minimum to report separately the following classes of
operating cash receipts and payments
Receipts
1048713 Cash collected from customers (including lessees licensees etc)
1048713 Interest and dividends received
1048713 Other operating cash receipts if any
Payments
1048713 Cash paid to employees and suppliers of goods or services (including
suppliers of
insurance advertising etc)
1048713 Interest paid
1048713 Income taxes paid
1048713 Other operating cash payments if any
Companies using the indirect method are required to disclose separately changes in
inventory receivables and payables to reconcile net income to net cash flow from
operating activities In addition interest paid (net of amount capitalized) and income
taxes paid must be disclosed elsewhere in the financial statements or accompanying
notes
The FASB requires these separate and additional disclosures so that users
may approximate the direct method Also an acceptable alternative presentation
of the in-direct method is to report net cash flow from operating activities as a
single line item in the statement of cash flows and to present the reconciliation
details elsewhere in the financial statements
FINDING OF SUDY
According to cash flow statement of the company The finding of the study are as
follows-
The company has not taken any loans secured or unsecured from companies
firms or other parties
The company has not accepted any deposit from the public during the year
The company is not a sick industrial company
The company has not granted any loan secured or unsecured to company firms
or other parties
The company has paid the entire long term and short term borrowing during the
year
The company has buy back the companyrsquos own share this year
The interest paid in 2008 is more than the
There has been a significant decline in volume over the years from 2001-02
to 2005-06 as can be seen in the graph below
Table 43
The Net sales of Tractor has increased considerably from 2004-05 to 2007-08
This can be mainly attributed to changes in Variable and material costs and in
the price
The Net sale of Tractor has increased considerably from 2004-05 to 2007-08
that is an decrease of Rs7216 per tractor This can be mainly attributed to
changes in
Variable and material costs and in the prices
RECOMMENDATIONS
According to cash flow statement of the company The suggestions of the study
are as follows-
The time durations for training program have to increase
Buy regular review and consultations develop a career progression
which is sensitive to performance and ability
Create an environment where by people are trend developed to enable
The to take advantages of opportunities that arise
The jab can be redesigned where the work man stay in what is normally
the same job but has elements of it changed
The principle amount must be paid in time which can be reducing the
interest the out flow
The purchase of the fixed asset must be made only when there is extreme
requirement
In order to avoid taxes the company should go for more investment
The companyrsquos borrowings should go for more investment
o The company should try to reduce the depreciations as maximum
as possible
CONCLUSION
The study on competency level of employees at ESCORTS PVTLTD gave an
insight about the acceptance of competency mapping by employees
The employees at Ymi welcome the introduction of competency mapping in their
organization as they felt it was very much essential in enhancing their skills and
organizational development
The organization has provided the recourses guidance and support to facilitate the
introduction of competency level easily and develop the employees in such a way
that they can face any kind of challenge
However the level of competency in employees is found to be satisfactory
Providing proper training education and guidance to the employees can enhance
the level
This study was mainly carried out to find out whether thee competency mapping
being followed by the company is effective till date If the competency mapping
and fitment to the organization
By looking at the graphs and tables it is quite that the employees still are not up to
the level of competent pool they still have to be trained and made competent in
order to fill the gap As the organization has just applied the mapping it has to see
to that it meets all the requirements for competency mapping
Therefore the graphs make it quite clear that the potential of the employees is not
up to the mark and ie they are not competent enough to meet the competency-
mapping requirement Hence by further training and counseling this gap can be
closed
This report includes the training requirements of employees and it highlights skills
possessed by each employee and skill required All employees get training so that
skill can be improved and maintain balance between standard performance with
their actual performance to avoid gap
APPENDIX
QUESTIONNAIRE
Consumer Survey
Name _____________________________
Age _____________________________
Sex
Male
Female
Occupation
Businessman
Service man
Professional
Others
Monthly income brackets
Below 15000
15000- 20000
20000-30000
30000 and above
of your savings _________
Do you invest
Yes
No
If yes then where do you invest your money
Bank
Insurance
funds
Others
Why do you made that statement
Return
Risk hedging
Tax benefits
Other reasons (specify) _______
Who influence your cash decision
Relatives and friends
Family members
Advisors experts
You yourself
If no then why
Do not know where to invest
Satisfied with your current investment return
Donrsquot want take risk
Other reasons
__________________________________________________________________
___________________
Do you know about CF statement
Yes
No
If yes then from where you have come to know about an cash statement
Advertisements on newspapers
Friends and relative
Agents experts
Other source
What do you think about cash statement
It means investing only in share market
Constant watch must be kept always
Return is not satisfactory
Other perception
__________________________________________________
Can you recall any cash flow of company
___________________________
Would you want to made CF of an org
Yes
No
If yes then why
_______________________________________________________
If no then why
_______________________________________________________
BIBLIOGRAPHY
List of Books
1 PANDEY IM - FINANCIAL MANAGEMANT
2 KHAN MY AND JAIN PK -FINANCIAL MANAGEMANT
3 SMITH KV ndash MANAGEMANT OF WORKING CAPITAL
3 COMPANY RECORDS
4 JOURNAL
5 REPORTS
WEBLIOGRAPHY
1 wwwescortspvtltdcom
2 wwwgooglecom
10 OPERATING PROFIT
(Amount in Rs)
Operating Profit
Year Operating Profit Income From Services Ratio
2003 36094877 36309834 099
2004 27576814 53899084 051
2005 29540599 72728759 041
2006 31586718 55550649 057
2007 67192677 96654902 070
Interpretation
The operating profit ratio is used to measure the relationship between net profits
and sales of a firm Depending on the concept it will decide
The operating profit ratio is increased compared with the last year The earnings
are increased due to the increase in the income from services because of
Operations amp Maintenance fee So the ratio is increased slightly compared with
the previous year
GRAPHICAL REPRESENTATION
099
051
041
057
070
000
010
020
030
040
050060
070
080
090
100
Ratios
2003 2004 2005 2006 2007
Years
OPERATING PROFIT RATIO
Ratios
11 RETURN ON TOTAL ASSETS RATIO
(Amount in Rs)
Return on Total Assets Ratio
Year Net Profit After Tax Total Assets Ratio
2003 21123474 78572171 027
2004 16125942 88438107 018
2005 16929227 89158391 019
2006 18259580 106385201 017
2007 40586359 129805102 031
Interpretation
This is the ratio between net profit and total assets The ratio indicates the return
on total assets in the form of profits
The net profit is increased in the current year because of the increment in the
income from services due to the increase in Operations amp Maintenance fee The
fixed assets are reduced due to the charge of depreciation and no major
increments in fixed assets but the current assets are increased because of sundry
debtors and that effects an increase in the ratio compared with the last year ie
2006
GRAPHICAL REPRESENTATION
027
018 019017
031
000
005
010
015
020
025
030
035
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON TOTAL ASSETS
Ratios
12 RESERVES amp SURPLUS TO CAPITAL RATIO
(Amount in Rs)
Reserves amp Surplus To Capital Ratio
Year Reserves amp Surplus Capital Ratio
2003 65599299 2079920 31542004 34582554 18719280 1852005 51511781 18719280 2752006 37754372 18719280 2022007 78340733 18719280 419
Interpretation
The ratio is used to reveal the policy pursued by the company a very high ratio
indicates a conservative dividend policy and vice-versa Higher the ratio better
will be the position
The reserves amp surplus is decreased in the year 2006 due to the payment of
dividends and in the year 2007 the profit is increased But the capital is
remaining constant from the year 2004 So the increase in the reserves amp surplus
caused a greater increase in the current yearrsquos ratio compared with the older
GRAPHICAL REPRESENTATION
3154
185 275 202419
-
500
1000
1500
2000
2500
3000
3500
Ratios
2003 2004 2005 2006 2007
Years
RESERVES amp SRUPLUS TO CAPITAL RATIO
Ratios
OVERALL PROFITABILITY RATIOS
13 EARNINGS PER SHARE
(Amount in Rs)
Earnings Per Share
Year Net Profit After Tax No of Equity Shares Ratio
2003 21123474 207992 101562004 16125942 1871928 8612005 16929227 1871928 9042006 18259580 1871928 9752007 40586359 1871928 2168
Interpretation
Earnings per share ratio are used to find out the return that the shareholderrsquos earn
from their shares After charging depreciation and after payment of tax the
remaining amount will be distributed by all the shareholders
Net profit after tax is increased due to the huge increase in the income from
services That is the amount which is available to the shareholders to take There
are 1871928 shares of Rs10- each The share capital is constant from the year
2004 Due to the huge increase in net profit the earnings per share is greaterly
increased in 2007
GRAPHICAL REPRESENTATION
10156
861904 975
2168
000
2000
4000
6000
8000
10000
12000
Ratios
2003 2004 2005 2006 2007
Years
EARNINGS PER SHARE
Ratios
14 PRICE EARNINGS (PE) RATIO
(Amount in Rs)
Price Earning (PE) Ratio
Year Market Price Per Share Earnings Per Share Ratio
2003 3254 10156 0322004 2847 861 3302005 3752 904 4152006 3017 975 3092007 5185 2168 239
Interpretation
The ratio is calculated to make an estimate of application in the value of share of
a company
The market price per share is increased due to the increase in the reserves
amp surplus The earnings per share are also increased greaterly compared
with the last year because of increase in the net profit So the ratio is
decreased compared with the previous year
GRAPHICAL REPRESENTATION
032
330
415
309
239
000
050
100
150
200
250
300
350
400
450
Ratios
2003 2004 2005 2006 2007
Years
PE RATIO
Ratios
15 RETURN ON INVESTMENT
(Amount in Rs)
Return on Investment
Year Net Profit After Tax Share Holders Fund Ratio
2003 21123474 67679219 031
2004 16125942 53301834 03
2005 16929227 70231061 024
2006 18259580 56473652 032
2007 40586359 97060013 042
Interpretation
This is the ratio between net profits and shareholders funds The ratio is
generally calculated as percentage multiplying with 100
The net profit is increased due to the increase in the income from services ant
the shareholders funds are increased because of reserve amp surplus So the ratio
is increased in the current year
GRAPHICAL REPRESENTATION
031 030
024
032
042
000
005
010
015
020
025
030
035
040
045
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON INVESTMENT RATIO
RatioS
DATA COLLECTION
The data can be of two types
Primary Data
Secondary Data
Primary Data
Primary data are those data which is originally collected afresh
Secondary Data
Secondary data are those data which are already collected and stored and which has
been passed through statistical research
In this project Secondary data has been collected from following sources-
Annual report
Books
MIS
Other material and report published by company There are two methods to prepare
the Cash flow Statement
ndirect Method
I
The indirect method (or reconciliation method) starts with net income and converts it
to net cash flow from operating activities In other words the indirect method adjusts
net income for items that affected reported net income but did not affect cash To
compute net cash flow from operating activities non-cash charges in the income
statement are added ack to net income and non-cash credits are deducted
b
Direct Method
Under the direct method the statement of cash flows reports net cash flow from
operating activities as major classes of operating cash receipts (eg cash collected from
customers and cash received from interest and dividends) and cash disbursements (eg
cash paid to suppliers for goods to employees for services to creditors for interest and
to government authorities for taxes)
INDIRECT VERSUS DIRECT METHOD
The most contentious decision that the FASB faced in issuing Statement No 95 was
choosing between the direct method and the indirect method of determining net cash
flow from operating activities Companies lobbied against the direct method urging
adoption of the indirect method Commercial lending officers expressed a strong
preference to the FASB hat the direct method be required
tCF-Page 3 of 5
In Favor of the Direct Method
The principal advantage of the direct method is that it shows operating cash receipts and
payments That is it is more consistent with the objective of a statement of cash flows to
provide information about cash receipts and cash payments than the in-direct method
which does not report operating cash receipts and payments
Supporters of the direct method contend that knowledge of the specific sources of
operating cash receipts and the purposes for which operating cash payments were made
in past periods is useful in estimating future operating cash flows Furthermore in-
formation about amounts of major classes of operating cash receipts and payments is
more useful than information only about their arithmetic sum (the net cash flow from
operating activities) Such information is more revealing of an enterprises ability (1) to
generate sufficient cash from operating activities to pay its debts (2) to reinvest in its
operations and (3) to make distributions to its owners
Many corporate providers of financial statements say that they do not currently collect
information in a manner that allows them to determine amounts such as cash received
from customers or cash paid to suppliers directly from their accounting systems But
supporters of the direct method contend that the incremental cost of assimilating such
operating cash receipts and payments data is not significant
In Favor of the Indirect Method
The principal advantage of the indirect method is that it focuses on the differences
between net income and net cash flow from operating activities That is it provides a
useful link between the statement of cash flows and the income statement and balance
sheet
Many providers of financial statements contend that it is less costly to adjust net income
to net cash flow from operating activities (indirect) than it is to report gross operating
cash receipts and payments (direct) Supporters of the indirect method also state that the
direct method which effectively reports income statement information on a cash rather
than an accrual basis may erroneously suggest that net cash flow from operating
activities is as good as or better than net income as a measure of performance
Special Rules Applying to Direct and Indirect Methods
Companies that use the direct method are required at a
minimum to report separately the following classes of
operating cash receipts and payments
Receipts
1048713 Cash collected from customers (including lessees licensees etc)
1048713 Interest and dividends received
1048713 Other operating cash receipts if any
Payments
1048713 Cash paid to employees and suppliers of goods or services (including
suppliers of
insurance advertising etc)
1048713 Interest paid
1048713 Income taxes paid
1048713 Other operating cash payments if any
Companies using the indirect method are required to disclose separately changes in
inventory receivables and payables to reconcile net income to net cash flow from
operating activities In addition interest paid (net of amount capitalized) and income
taxes paid must be disclosed elsewhere in the financial statements or accompanying
notes
The FASB requires these separate and additional disclosures so that users
may approximate the direct method Also an acceptable alternative presentation
of the in-direct method is to report net cash flow from operating activities as a
single line item in the statement of cash flows and to present the reconciliation
details elsewhere in the financial statements
FINDING OF SUDY
According to cash flow statement of the company The finding of the study are as
follows-
The company has not taken any loans secured or unsecured from companies
firms or other parties
The company has not accepted any deposit from the public during the year
The company is not a sick industrial company
The company has not granted any loan secured or unsecured to company firms
or other parties
The company has paid the entire long term and short term borrowing during the
year
The company has buy back the companyrsquos own share this year
The interest paid in 2008 is more than the
There has been a significant decline in volume over the years from 2001-02
to 2005-06 as can be seen in the graph below
Table 43
The Net sales of Tractor has increased considerably from 2004-05 to 2007-08
This can be mainly attributed to changes in Variable and material costs and in
the price
The Net sale of Tractor has increased considerably from 2004-05 to 2007-08
that is an decrease of Rs7216 per tractor This can be mainly attributed to
changes in
Variable and material costs and in the prices
RECOMMENDATIONS
According to cash flow statement of the company The suggestions of the study
are as follows-
The time durations for training program have to increase
Buy regular review and consultations develop a career progression
which is sensitive to performance and ability
Create an environment where by people are trend developed to enable
The to take advantages of opportunities that arise
The jab can be redesigned where the work man stay in what is normally
the same job but has elements of it changed
The principle amount must be paid in time which can be reducing the
interest the out flow
The purchase of the fixed asset must be made only when there is extreme
requirement
In order to avoid taxes the company should go for more investment
The companyrsquos borrowings should go for more investment
o The company should try to reduce the depreciations as maximum
as possible
CONCLUSION
The study on competency level of employees at ESCORTS PVTLTD gave an
insight about the acceptance of competency mapping by employees
The employees at Ymi welcome the introduction of competency mapping in their
organization as they felt it was very much essential in enhancing their skills and
organizational development
The organization has provided the recourses guidance and support to facilitate the
introduction of competency level easily and develop the employees in such a way
that they can face any kind of challenge
However the level of competency in employees is found to be satisfactory
Providing proper training education and guidance to the employees can enhance
the level
This study was mainly carried out to find out whether thee competency mapping
being followed by the company is effective till date If the competency mapping
and fitment to the organization
By looking at the graphs and tables it is quite that the employees still are not up to
the level of competent pool they still have to be trained and made competent in
order to fill the gap As the organization has just applied the mapping it has to see
to that it meets all the requirements for competency mapping
Therefore the graphs make it quite clear that the potential of the employees is not
up to the mark and ie they are not competent enough to meet the competency-
mapping requirement Hence by further training and counseling this gap can be
closed
This report includes the training requirements of employees and it highlights skills
possessed by each employee and skill required All employees get training so that
skill can be improved and maintain balance between standard performance with
their actual performance to avoid gap
APPENDIX
QUESTIONNAIRE
Consumer Survey
Name _____________________________
Age _____________________________
Sex
Male
Female
Occupation
Businessman
Service man
Professional
Others
Monthly income brackets
Below 15000
15000- 20000
20000-30000
30000 and above
of your savings _________
Do you invest
Yes
No
If yes then where do you invest your money
Bank
Insurance
funds
Others
Why do you made that statement
Return
Risk hedging
Tax benefits
Other reasons (specify) _______
Who influence your cash decision
Relatives and friends
Family members
Advisors experts
You yourself
If no then why
Do not know where to invest
Satisfied with your current investment return
Donrsquot want take risk
Other reasons
__________________________________________________________________
___________________
Do you know about CF statement
Yes
No
If yes then from where you have come to know about an cash statement
Advertisements on newspapers
Friends and relative
Agents experts
Other source
What do you think about cash statement
It means investing only in share market
Constant watch must be kept always
Return is not satisfactory
Other perception
__________________________________________________
Can you recall any cash flow of company
___________________________
Would you want to made CF of an org
Yes
No
If yes then why
_______________________________________________________
If no then why
_______________________________________________________
BIBLIOGRAPHY
List of Books
1 PANDEY IM - FINANCIAL MANAGEMANT
2 KHAN MY AND JAIN PK -FINANCIAL MANAGEMANT
3 SMITH KV ndash MANAGEMANT OF WORKING CAPITAL
3 COMPANY RECORDS
4 JOURNAL
5 REPORTS
WEBLIOGRAPHY
1 wwwescortspvtltdcom
2 wwwgooglecom
GRAPHICAL REPRESENTATION
099
051
041
057
070
000
010
020
030
040
050060
070
080
090
100
Ratios
2003 2004 2005 2006 2007
Years
OPERATING PROFIT RATIO
Ratios
11 RETURN ON TOTAL ASSETS RATIO
(Amount in Rs)
Return on Total Assets Ratio
Year Net Profit After Tax Total Assets Ratio
2003 21123474 78572171 027
2004 16125942 88438107 018
2005 16929227 89158391 019
2006 18259580 106385201 017
2007 40586359 129805102 031
Interpretation
This is the ratio between net profit and total assets The ratio indicates the return
on total assets in the form of profits
The net profit is increased in the current year because of the increment in the
income from services due to the increase in Operations amp Maintenance fee The
fixed assets are reduced due to the charge of depreciation and no major
increments in fixed assets but the current assets are increased because of sundry
debtors and that effects an increase in the ratio compared with the last year ie
2006
GRAPHICAL REPRESENTATION
027
018 019017
031
000
005
010
015
020
025
030
035
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON TOTAL ASSETS
Ratios
12 RESERVES amp SURPLUS TO CAPITAL RATIO
(Amount in Rs)
Reserves amp Surplus To Capital Ratio
Year Reserves amp Surplus Capital Ratio
2003 65599299 2079920 31542004 34582554 18719280 1852005 51511781 18719280 2752006 37754372 18719280 2022007 78340733 18719280 419
Interpretation
The ratio is used to reveal the policy pursued by the company a very high ratio
indicates a conservative dividend policy and vice-versa Higher the ratio better
will be the position
The reserves amp surplus is decreased in the year 2006 due to the payment of
dividends and in the year 2007 the profit is increased But the capital is
remaining constant from the year 2004 So the increase in the reserves amp surplus
caused a greater increase in the current yearrsquos ratio compared with the older
GRAPHICAL REPRESENTATION
3154
185 275 202419
-
500
1000
1500
2000
2500
3000
3500
Ratios
2003 2004 2005 2006 2007
Years
RESERVES amp SRUPLUS TO CAPITAL RATIO
Ratios
OVERALL PROFITABILITY RATIOS
13 EARNINGS PER SHARE
(Amount in Rs)
Earnings Per Share
Year Net Profit After Tax No of Equity Shares Ratio
2003 21123474 207992 101562004 16125942 1871928 8612005 16929227 1871928 9042006 18259580 1871928 9752007 40586359 1871928 2168
Interpretation
Earnings per share ratio are used to find out the return that the shareholderrsquos earn
from their shares After charging depreciation and after payment of tax the
remaining amount will be distributed by all the shareholders
Net profit after tax is increased due to the huge increase in the income from
services That is the amount which is available to the shareholders to take There
are 1871928 shares of Rs10- each The share capital is constant from the year
2004 Due to the huge increase in net profit the earnings per share is greaterly
increased in 2007
GRAPHICAL REPRESENTATION
10156
861904 975
2168
000
2000
4000
6000
8000
10000
12000
Ratios
2003 2004 2005 2006 2007
Years
EARNINGS PER SHARE
Ratios
14 PRICE EARNINGS (PE) RATIO
(Amount in Rs)
Price Earning (PE) Ratio
Year Market Price Per Share Earnings Per Share Ratio
2003 3254 10156 0322004 2847 861 3302005 3752 904 4152006 3017 975 3092007 5185 2168 239
Interpretation
The ratio is calculated to make an estimate of application in the value of share of
a company
The market price per share is increased due to the increase in the reserves
amp surplus The earnings per share are also increased greaterly compared
with the last year because of increase in the net profit So the ratio is
decreased compared with the previous year
GRAPHICAL REPRESENTATION
032
330
415
309
239
000
050
100
150
200
250
300
350
400
450
Ratios
2003 2004 2005 2006 2007
Years
PE RATIO
Ratios
15 RETURN ON INVESTMENT
(Amount in Rs)
Return on Investment
Year Net Profit After Tax Share Holders Fund Ratio
2003 21123474 67679219 031
2004 16125942 53301834 03
2005 16929227 70231061 024
2006 18259580 56473652 032
2007 40586359 97060013 042
Interpretation
This is the ratio between net profits and shareholders funds The ratio is
generally calculated as percentage multiplying with 100
The net profit is increased due to the increase in the income from services ant
the shareholders funds are increased because of reserve amp surplus So the ratio
is increased in the current year
GRAPHICAL REPRESENTATION
031 030
024
032
042
000
005
010
015
020
025
030
035
040
045
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON INVESTMENT RATIO
RatioS
DATA COLLECTION
The data can be of two types
Primary Data
Secondary Data
Primary Data
Primary data are those data which is originally collected afresh
Secondary Data
Secondary data are those data which are already collected and stored and which has
been passed through statistical research
In this project Secondary data has been collected from following sources-
Annual report
Books
MIS
Other material and report published by company There are two methods to prepare
the Cash flow Statement
ndirect Method
I
The indirect method (or reconciliation method) starts with net income and converts it
to net cash flow from operating activities In other words the indirect method adjusts
net income for items that affected reported net income but did not affect cash To
compute net cash flow from operating activities non-cash charges in the income
statement are added ack to net income and non-cash credits are deducted
b
Direct Method
Under the direct method the statement of cash flows reports net cash flow from
operating activities as major classes of operating cash receipts (eg cash collected from
customers and cash received from interest and dividends) and cash disbursements (eg
cash paid to suppliers for goods to employees for services to creditors for interest and
to government authorities for taxes)
INDIRECT VERSUS DIRECT METHOD
The most contentious decision that the FASB faced in issuing Statement No 95 was
choosing between the direct method and the indirect method of determining net cash
flow from operating activities Companies lobbied against the direct method urging
adoption of the indirect method Commercial lending officers expressed a strong
preference to the FASB hat the direct method be required
tCF-Page 3 of 5
In Favor of the Direct Method
The principal advantage of the direct method is that it shows operating cash receipts and
payments That is it is more consistent with the objective of a statement of cash flows to
provide information about cash receipts and cash payments than the in-direct method
which does not report operating cash receipts and payments
Supporters of the direct method contend that knowledge of the specific sources of
operating cash receipts and the purposes for which operating cash payments were made
in past periods is useful in estimating future operating cash flows Furthermore in-
formation about amounts of major classes of operating cash receipts and payments is
more useful than information only about their arithmetic sum (the net cash flow from
operating activities) Such information is more revealing of an enterprises ability (1) to
generate sufficient cash from operating activities to pay its debts (2) to reinvest in its
operations and (3) to make distributions to its owners
Many corporate providers of financial statements say that they do not currently collect
information in a manner that allows them to determine amounts such as cash received
from customers or cash paid to suppliers directly from their accounting systems But
supporters of the direct method contend that the incremental cost of assimilating such
operating cash receipts and payments data is not significant
In Favor of the Indirect Method
The principal advantage of the indirect method is that it focuses on the differences
between net income and net cash flow from operating activities That is it provides a
useful link between the statement of cash flows and the income statement and balance
sheet
Many providers of financial statements contend that it is less costly to adjust net income
to net cash flow from operating activities (indirect) than it is to report gross operating
cash receipts and payments (direct) Supporters of the indirect method also state that the
direct method which effectively reports income statement information on a cash rather
than an accrual basis may erroneously suggest that net cash flow from operating
activities is as good as or better than net income as a measure of performance
Special Rules Applying to Direct and Indirect Methods
Companies that use the direct method are required at a
minimum to report separately the following classes of
operating cash receipts and payments
Receipts
1048713 Cash collected from customers (including lessees licensees etc)
1048713 Interest and dividends received
1048713 Other operating cash receipts if any
Payments
1048713 Cash paid to employees and suppliers of goods or services (including
suppliers of
insurance advertising etc)
1048713 Interest paid
1048713 Income taxes paid
1048713 Other operating cash payments if any
Companies using the indirect method are required to disclose separately changes in
inventory receivables and payables to reconcile net income to net cash flow from
operating activities In addition interest paid (net of amount capitalized) and income
taxes paid must be disclosed elsewhere in the financial statements or accompanying
notes
The FASB requires these separate and additional disclosures so that users
may approximate the direct method Also an acceptable alternative presentation
of the in-direct method is to report net cash flow from operating activities as a
single line item in the statement of cash flows and to present the reconciliation
details elsewhere in the financial statements
FINDING OF SUDY
According to cash flow statement of the company The finding of the study are as
follows-
The company has not taken any loans secured or unsecured from companies
firms or other parties
The company has not accepted any deposit from the public during the year
The company is not a sick industrial company
The company has not granted any loan secured or unsecured to company firms
or other parties
The company has paid the entire long term and short term borrowing during the
year
The company has buy back the companyrsquos own share this year
The interest paid in 2008 is more than the
There has been a significant decline in volume over the years from 2001-02
to 2005-06 as can be seen in the graph below
Table 43
The Net sales of Tractor has increased considerably from 2004-05 to 2007-08
This can be mainly attributed to changes in Variable and material costs and in
the price
The Net sale of Tractor has increased considerably from 2004-05 to 2007-08
that is an decrease of Rs7216 per tractor This can be mainly attributed to
changes in
Variable and material costs and in the prices
RECOMMENDATIONS
According to cash flow statement of the company The suggestions of the study
are as follows-
The time durations for training program have to increase
Buy regular review and consultations develop a career progression
which is sensitive to performance and ability
Create an environment where by people are trend developed to enable
The to take advantages of opportunities that arise
The jab can be redesigned where the work man stay in what is normally
the same job but has elements of it changed
The principle amount must be paid in time which can be reducing the
interest the out flow
The purchase of the fixed asset must be made only when there is extreme
requirement
In order to avoid taxes the company should go for more investment
The companyrsquos borrowings should go for more investment
o The company should try to reduce the depreciations as maximum
as possible
CONCLUSION
The study on competency level of employees at ESCORTS PVTLTD gave an
insight about the acceptance of competency mapping by employees
The employees at Ymi welcome the introduction of competency mapping in their
organization as they felt it was very much essential in enhancing their skills and
organizational development
The organization has provided the recourses guidance and support to facilitate the
introduction of competency level easily and develop the employees in such a way
that they can face any kind of challenge
However the level of competency in employees is found to be satisfactory
Providing proper training education and guidance to the employees can enhance
the level
This study was mainly carried out to find out whether thee competency mapping
being followed by the company is effective till date If the competency mapping
and fitment to the organization
By looking at the graphs and tables it is quite that the employees still are not up to
the level of competent pool they still have to be trained and made competent in
order to fill the gap As the organization has just applied the mapping it has to see
to that it meets all the requirements for competency mapping
Therefore the graphs make it quite clear that the potential of the employees is not
up to the mark and ie they are not competent enough to meet the competency-
mapping requirement Hence by further training and counseling this gap can be
closed
This report includes the training requirements of employees and it highlights skills
possessed by each employee and skill required All employees get training so that
skill can be improved and maintain balance between standard performance with
their actual performance to avoid gap
APPENDIX
QUESTIONNAIRE
Consumer Survey
Name _____________________________
Age _____________________________
Sex
Male
Female
Occupation
Businessman
Service man
Professional
Others
Monthly income brackets
Below 15000
15000- 20000
20000-30000
30000 and above
of your savings _________
Do you invest
Yes
No
If yes then where do you invest your money
Bank
Insurance
funds
Others
Why do you made that statement
Return
Risk hedging
Tax benefits
Other reasons (specify) _______
Who influence your cash decision
Relatives and friends
Family members
Advisors experts
You yourself
If no then why
Do not know where to invest
Satisfied with your current investment return
Donrsquot want take risk
Other reasons
__________________________________________________________________
___________________
Do you know about CF statement
Yes
No
If yes then from where you have come to know about an cash statement
Advertisements on newspapers
Friends and relative
Agents experts
Other source
What do you think about cash statement
It means investing only in share market
Constant watch must be kept always
Return is not satisfactory
Other perception
__________________________________________________
Can you recall any cash flow of company
___________________________
Would you want to made CF of an org
Yes
No
If yes then why
_______________________________________________________
If no then why
_______________________________________________________
BIBLIOGRAPHY
List of Books
1 PANDEY IM - FINANCIAL MANAGEMANT
2 KHAN MY AND JAIN PK -FINANCIAL MANAGEMANT
3 SMITH KV ndash MANAGEMANT OF WORKING CAPITAL
3 COMPANY RECORDS
4 JOURNAL
5 REPORTS
WEBLIOGRAPHY
1 wwwescortspvtltdcom
2 wwwgooglecom
11 RETURN ON TOTAL ASSETS RATIO
(Amount in Rs)
Return on Total Assets Ratio
Year Net Profit After Tax Total Assets Ratio
2003 21123474 78572171 027
2004 16125942 88438107 018
2005 16929227 89158391 019
2006 18259580 106385201 017
2007 40586359 129805102 031
Interpretation
This is the ratio between net profit and total assets The ratio indicates the return
on total assets in the form of profits
The net profit is increased in the current year because of the increment in the
income from services due to the increase in Operations amp Maintenance fee The
fixed assets are reduced due to the charge of depreciation and no major
increments in fixed assets but the current assets are increased because of sundry
debtors and that effects an increase in the ratio compared with the last year ie
2006
GRAPHICAL REPRESENTATION
027
018 019017
031
000
005
010
015
020
025
030
035
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON TOTAL ASSETS
Ratios
12 RESERVES amp SURPLUS TO CAPITAL RATIO
(Amount in Rs)
Reserves amp Surplus To Capital Ratio
Year Reserves amp Surplus Capital Ratio
2003 65599299 2079920 31542004 34582554 18719280 1852005 51511781 18719280 2752006 37754372 18719280 2022007 78340733 18719280 419
Interpretation
The ratio is used to reveal the policy pursued by the company a very high ratio
indicates a conservative dividend policy and vice-versa Higher the ratio better
will be the position
The reserves amp surplus is decreased in the year 2006 due to the payment of
dividends and in the year 2007 the profit is increased But the capital is
remaining constant from the year 2004 So the increase in the reserves amp surplus
caused a greater increase in the current yearrsquos ratio compared with the older
GRAPHICAL REPRESENTATION
3154
185 275 202419
-
500
1000
1500
2000
2500
3000
3500
Ratios
2003 2004 2005 2006 2007
Years
RESERVES amp SRUPLUS TO CAPITAL RATIO
Ratios
OVERALL PROFITABILITY RATIOS
13 EARNINGS PER SHARE
(Amount in Rs)
Earnings Per Share
Year Net Profit After Tax No of Equity Shares Ratio
2003 21123474 207992 101562004 16125942 1871928 8612005 16929227 1871928 9042006 18259580 1871928 9752007 40586359 1871928 2168
Interpretation
Earnings per share ratio are used to find out the return that the shareholderrsquos earn
from their shares After charging depreciation and after payment of tax the
remaining amount will be distributed by all the shareholders
Net profit after tax is increased due to the huge increase in the income from
services That is the amount which is available to the shareholders to take There
are 1871928 shares of Rs10- each The share capital is constant from the year
2004 Due to the huge increase in net profit the earnings per share is greaterly
increased in 2007
GRAPHICAL REPRESENTATION
10156
861904 975
2168
000
2000
4000
6000
8000
10000
12000
Ratios
2003 2004 2005 2006 2007
Years
EARNINGS PER SHARE
Ratios
14 PRICE EARNINGS (PE) RATIO
(Amount in Rs)
Price Earning (PE) Ratio
Year Market Price Per Share Earnings Per Share Ratio
2003 3254 10156 0322004 2847 861 3302005 3752 904 4152006 3017 975 3092007 5185 2168 239
Interpretation
The ratio is calculated to make an estimate of application in the value of share of
a company
The market price per share is increased due to the increase in the reserves
amp surplus The earnings per share are also increased greaterly compared
with the last year because of increase in the net profit So the ratio is
decreased compared with the previous year
GRAPHICAL REPRESENTATION
032
330
415
309
239
000
050
100
150
200
250
300
350
400
450
Ratios
2003 2004 2005 2006 2007
Years
PE RATIO
Ratios
15 RETURN ON INVESTMENT
(Amount in Rs)
Return on Investment
Year Net Profit After Tax Share Holders Fund Ratio
2003 21123474 67679219 031
2004 16125942 53301834 03
2005 16929227 70231061 024
2006 18259580 56473652 032
2007 40586359 97060013 042
Interpretation
This is the ratio between net profits and shareholders funds The ratio is
generally calculated as percentage multiplying with 100
The net profit is increased due to the increase in the income from services ant
the shareholders funds are increased because of reserve amp surplus So the ratio
is increased in the current year
GRAPHICAL REPRESENTATION
031 030
024
032
042
000
005
010
015
020
025
030
035
040
045
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON INVESTMENT RATIO
RatioS
DATA COLLECTION
The data can be of two types
Primary Data
Secondary Data
Primary Data
Primary data are those data which is originally collected afresh
Secondary Data
Secondary data are those data which are already collected and stored and which has
been passed through statistical research
In this project Secondary data has been collected from following sources-
Annual report
Books
MIS
Other material and report published by company There are two methods to prepare
the Cash flow Statement
ndirect Method
I
The indirect method (or reconciliation method) starts with net income and converts it
to net cash flow from operating activities In other words the indirect method adjusts
net income for items that affected reported net income but did not affect cash To
compute net cash flow from operating activities non-cash charges in the income
statement are added ack to net income and non-cash credits are deducted
b
Direct Method
Under the direct method the statement of cash flows reports net cash flow from
operating activities as major classes of operating cash receipts (eg cash collected from
customers and cash received from interest and dividends) and cash disbursements (eg
cash paid to suppliers for goods to employees for services to creditors for interest and
to government authorities for taxes)
INDIRECT VERSUS DIRECT METHOD
The most contentious decision that the FASB faced in issuing Statement No 95 was
choosing between the direct method and the indirect method of determining net cash
flow from operating activities Companies lobbied against the direct method urging
adoption of the indirect method Commercial lending officers expressed a strong
preference to the FASB hat the direct method be required
tCF-Page 3 of 5
In Favor of the Direct Method
The principal advantage of the direct method is that it shows operating cash receipts and
payments That is it is more consistent with the objective of a statement of cash flows to
provide information about cash receipts and cash payments than the in-direct method
which does not report operating cash receipts and payments
Supporters of the direct method contend that knowledge of the specific sources of
operating cash receipts and the purposes for which operating cash payments were made
in past periods is useful in estimating future operating cash flows Furthermore in-
formation about amounts of major classes of operating cash receipts and payments is
more useful than information only about their arithmetic sum (the net cash flow from
operating activities) Such information is more revealing of an enterprises ability (1) to
generate sufficient cash from operating activities to pay its debts (2) to reinvest in its
operations and (3) to make distributions to its owners
Many corporate providers of financial statements say that they do not currently collect
information in a manner that allows them to determine amounts such as cash received
from customers or cash paid to suppliers directly from their accounting systems But
supporters of the direct method contend that the incremental cost of assimilating such
operating cash receipts and payments data is not significant
In Favor of the Indirect Method
The principal advantage of the indirect method is that it focuses on the differences
between net income and net cash flow from operating activities That is it provides a
useful link between the statement of cash flows and the income statement and balance
sheet
Many providers of financial statements contend that it is less costly to adjust net income
to net cash flow from operating activities (indirect) than it is to report gross operating
cash receipts and payments (direct) Supporters of the indirect method also state that the
direct method which effectively reports income statement information on a cash rather
than an accrual basis may erroneously suggest that net cash flow from operating
activities is as good as or better than net income as a measure of performance
Special Rules Applying to Direct and Indirect Methods
Companies that use the direct method are required at a
minimum to report separately the following classes of
operating cash receipts and payments
Receipts
1048713 Cash collected from customers (including lessees licensees etc)
1048713 Interest and dividends received
1048713 Other operating cash receipts if any
Payments
1048713 Cash paid to employees and suppliers of goods or services (including
suppliers of
insurance advertising etc)
1048713 Interest paid
1048713 Income taxes paid
1048713 Other operating cash payments if any
Companies using the indirect method are required to disclose separately changes in
inventory receivables and payables to reconcile net income to net cash flow from
operating activities In addition interest paid (net of amount capitalized) and income
taxes paid must be disclosed elsewhere in the financial statements or accompanying
notes
The FASB requires these separate and additional disclosures so that users
may approximate the direct method Also an acceptable alternative presentation
of the in-direct method is to report net cash flow from operating activities as a
single line item in the statement of cash flows and to present the reconciliation
details elsewhere in the financial statements
FINDING OF SUDY
According to cash flow statement of the company The finding of the study are as
follows-
The company has not taken any loans secured or unsecured from companies
firms or other parties
The company has not accepted any deposit from the public during the year
The company is not a sick industrial company
The company has not granted any loan secured or unsecured to company firms
or other parties
The company has paid the entire long term and short term borrowing during the
year
The company has buy back the companyrsquos own share this year
The interest paid in 2008 is more than the
There has been a significant decline in volume over the years from 2001-02
to 2005-06 as can be seen in the graph below
Table 43
The Net sales of Tractor has increased considerably from 2004-05 to 2007-08
This can be mainly attributed to changes in Variable and material costs and in
the price
The Net sale of Tractor has increased considerably from 2004-05 to 2007-08
that is an decrease of Rs7216 per tractor This can be mainly attributed to
changes in
Variable and material costs and in the prices
RECOMMENDATIONS
According to cash flow statement of the company The suggestions of the study
are as follows-
The time durations for training program have to increase
Buy regular review and consultations develop a career progression
which is sensitive to performance and ability
Create an environment where by people are trend developed to enable
The to take advantages of opportunities that arise
The jab can be redesigned where the work man stay in what is normally
the same job but has elements of it changed
The principle amount must be paid in time which can be reducing the
interest the out flow
The purchase of the fixed asset must be made only when there is extreme
requirement
In order to avoid taxes the company should go for more investment
The companyrsquos borrowings should go for more investment
o The company should try to reduce the depreciations as maximum
as possible
CONCLUSION
The study on competency level of employees at ESCORTS PVTLTD gave an
insight about the acceptance of competency mapping by employees
The employees at Ymi welcome the introduction of competency mapping in their
organization as they felt it was very much essential in enhancing their skills and
organizational development
The organization has provided the recourses guidance and support to facilitate the
introduction of competency level easily and develop the employees in such a way
that they can face any kind of challenge
However the level of competency in employees is found to be satisfactory
Providing proper training education and guidance to the employees can enhance
the level
This study was mainly carried out to find out whether thee competency mapping
being followed by the company is effective till date If the competency mapping
and fitment to the organization
By looking at the graphs and tables it is quite that the employees still are not up to
the level of competent pool they still have to be trained and made competent in
order to fill the gap As the organization has just applied the mapping it has to see
to that it meets all the requirements for competency mapping
Therefore the graphs make it quite clear that the potential of the employees is not
up to the mark and ie they are not competent enough to meet the competency-
mapping requirement Hence by further training and counseling this gap can be
closed
This report includes the training requirements of employees and it highlights skills
possessed by each employee and skill required All employees get training so that
skill can be improved and maintain balance between standard performance with
their actual performance to avoid gap
APPENDIX
QUESTIONNAIRE
Consumer Survey
Name _____________________________
Age _____________________________
Sex
Male
Female
Occupation
Businessman
Service man
Professional
Others
Monthly income brackets
Below 15000
15000- 20000
20000-30000
30000 and above
of your savings _________
Do you invest
Yes
No
If yes then where do you invest your money
Bank
Insurance
funds
Others
Why do you made that statement
Return
Risk hedging
Tax benefits
Other reasons (specify) _______
Who influence your cash decision
Relatives and friends
Family members
Advisors experts
You yourself
If no then why
Do not know where to invest
Satisfied with your current investment return
Donrsquot want take risk
Other reasons
__________________________________________________________________
___________________
Do you know about CF statement
Yes
No
If yes then from where you have come to know about an cash statement
Advertisements on newspapers
Friends and relative
Agents experts
Other source
What do you think about cash statement
It means investing only in share market
Constant watch must be kept always
Return is not satisfactory
Other perception
__________________________________________________
Can you recall any cash flow of company
___________________________
Would you want to made CF of an org
Yes
No
If yes then why
_______________________________________________________
If no then why
_______________________________________________________
BIBLIOGRAPHY
List of Books
1 PANDEY IM - FINANCIAL MANAGEMANT
2 KHAN MY AND JAIN PK -FINANCIAL MANAGEMANT
3 SMITH KV ndash MANAGEMANT OF WORKING CAPITAL
3 COMPANY RECORDS
4 JOURNAL
5 REPORTS
WEBLIOGRAPHY
1 wwwescortspvtltdcom
2 wwwgooglecom
GRAPHICAL REPRESENTATION
027
018 019017
031
000
005
010
015
020
025
030
035
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON TOTAL ASSETS
Ratios
12 RESERVES amp SURPLUS TO CAPITAL RATIO
(Amount in Rs)
Reserves amp Surplus To Capital Ratio
Year Reserves amp Surplus Capital Ratio
2003 65599299 2079920 31542004 34582554 18719280 1852005 51511781 18719280 2752006 37754372 18719280 2022007 78340733 18719280 419
Interpretation
The ratio is used to reveal the policy pursued by the company a very high ratio
indicates a conservative dividend policy and vice-versa Higher the ratio better
will be the position
The reserves amp surplus is decreased in the year 2006 due to the payment of
dividends and in the year 2007 the profit is increased But the capital is
remaining constant from the year 2004 So the increase in the reserves amp surplus
caused a greater increase in the current yearrsquos ratio compared with the older
GRAPHICAL REPRESENTATION
3154
185 275 202419
-
500
1000
1500
2000
2500
3000
3500
Ratios
2003 2004 2005 2006 2007
Years
RESERVES amp SRUPLUS TO CAPITAL RATIO
Ratios
OVERALL PROFITABILITY RATIOS
13 EARNINGS PER SHARE
(Amount in Rs)
Earnings Per Share
Year Net Profit After Tax No of Equity Shares Ratio
2003 21123474 207992 101562004 16125942 1871928 8612005 16929227 1871928 9042006 18259580 1871928 9752007 40586359 1871928 2168
Interpretation
Earnings per share ratio are used to find out the return that the shareholderrsquos earn
from their shares After charging depreciation and after payment of tax the
remaining amount will be distributed by all the shareholders
Net profit after tax is increased due to the huge increase in the income from
services That is the amount which is available to the shareholders to take There
are 1871928 shares of Rs10- each The share capital is constant from the year
2004 Due to the huge increase in net profit the earnings per share is greaterly
increased in 2007
GRAPHICAL REPRESENTATION
10156
861904 975
2168
000
2000
4000
6000
8000
10000
12000
Ratios
2003 2004 2005 2006 2007
Years
EARNINGS PER SHARE
Ratios
14 PRICE EARNINGS (PE) RATIO
(Amount in Rs)
Price Earning (PE) Ratio
Year Market Price Per Share Earnings Per Share Ratio
2003 3254 10156 0322004 2847 861 3302005 3752 904 4152006 3017 975 3092007 5185 2168 239
Interpretation
The ratio is calculated to make an estimate of application in the value of share of
a company
The market price per share is increased due to the increase in the reserves
amp surplus The earnings per share are also increased greaterly compared
with the last year because of increase in the net profit So the ratio is
decreased compared with the previous year
GRAPHICAL REPRESENTATION
032
330
415
309
239
000
050
100
150
200
250
300
350
400
450
Ratios
2003 2004 2005 2006 2007
Years
PE RATIO
Ratios
15 RETURN ON INVESTMENT
(Amount in Rs)
Return on Investment
Year Net Profit After Tax Share Holders Fund Ratio
2003 21123474 67679219 031
2004 16125942 53301834 03
2005 16929227 70231061 024
2006 18259580 56473652 032
2007 40586359 97060013 042
Interpretation
This is the ratio between net profits and shareholders funds The ratio is
generally calculated as percentage multiplying with 100
The net profit is increased due to the increase in the income from services ant
the shareholders funds are increased because of reserve amp surplus So the ratio
is increased in the current year
GRAPHICAL REPRESENTATION
031 030
024
032
042
000
005
010
015
020
025
030
035
040
045
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON INVESTMENT RATIO
RatioS
DATA COLLECTION
The data can be of two types
Primary Data
Secondary Data
Primary Data
Primary data are those data which is originally collected afresh
Secondary Data
Secondary data are those data which are already collected and stored and which has
been passed through statistical research
In this project Secondary data has been collected from following sources-
Annual report
Books
MIS
Other material and report published by company There are two methods to prepare
the Cash flow Statement
ndirect Method
I
The indirect method (or reconciliation method) starts with net income and converts it
to net cash flow from operating activities In other words the indirect method adjusts
net income for items that affected reported net income but did not affect cash To
compute net cash flow from operating activities non-cash charges in the income
statement are added ack to net income and non-cash credits are deducted
b
Direct Method
Under the direct method the statement of cash flows reports net cash flow from
operating activities as major classes of operating cash receipts (eg cash collected from
customers and cash received from interest and dividends) and cash disbursements (eg
cash paid to suppliers for goods to employees for services to creditors for interest and
to government authorities for taxes)
INDIRECT VERSUS DIRECT METHOD
The most contentious decision that the FASB faced in issuing Statement No 95 was
choosing between the direct method and the indirect method of determining net cash
flow from operating activities Companies lobbied against the direct method urging
adoption of the indirect method Commercial lending officers expressed a strong
preference to the FASB hat the direct method be required
tCF-Page 3 of 5
In Favor of the Direct Method
The principal advantage of the direct method is that it shows operating cash receipts and
payments That is it is more consistent with the objective of a statement of cash flows to
provide information about cash receipts and cash payments than the in-direct method
which does not report operating cash receipts and payments
Supporters of the direct method contend that knowledge of the specific sources of
operating cash receipts and the purposes for which operating cash payments were made
in past periods is useful in estimating future operating cash flows Furthermore in-
formation about amounts of major classes of operating cash receipts and payments is
more useful than information only about their arithmetic sum (the net cash flow from
operating activities) Such information is more revealing of an enterprises ability (1) to
generate sufficient cash from operating activities to pay its debts (2) to reinvest in its
operations and (3) to make distributions to its owners
Many corporate providers of financial statements say that they do not currently collect
information in a manner that allows them to determine amounts such as cash received
from customers or cash paid to suppliers directly from their accounting systems But
supporters of the direct method contend that the incremental cost of assimilating such
operating cash receipts and payments data is not significant
In Favor of the Indirect Method
The principal advantage of the indirect method is that it focuses on the differences
between net income and net cash flow from operating activities That is it provides a
useful link between the statement of cash flows and the income statement and balance
sheet
Many providers of financial statements contend that it is less costly to adjust net income
to net cash flow from operating activities (indirect) than it is to report gross operating
cash receipts and payments (direct) Supporters of the indirect method also state that the
direct method which effectively reports income statement information on a cash rather
than an accrual basis may erroneously suggest that net cash flow from operating
activities is as good as or better than net income as a measure of performance
Special Rules Applying to Direct and Indirect Methods
Companies that use the direct method are required at a
minimum to report separately the following classes of
operating cash receipts and payments
Receipts
1048713 Cash collected from customers (including lessees licensees etc)
1048713 Interest and dividends received
1048713 Other operating cash receipts if any
Payments
1048713 Cash paid to employees and suppliers of goods or services (including
suppliers of
insurance advertising etc)
1048713 Interest paid
1048713 Income taxes paid
1048713 Other operating cash payments if any
Companies using the indirect method are required to disclose separately changes in
inventory receivables and payables to reconcile net income to net cash flow from
operating activities In addition interest paid (net of amount capitalized) and income
taxes paid must be disclosed elsewhere in the financial statements or accompanying
notes
The FASB requires these separate and additional disclosures so that users
may approximate the direct method Also an acceptable alternative presentation
of the in-direct method is to report net cash flow from operating activities as a
single line item in the statement of cash flows and to present the reconciliation
details elsewhere in the financial statements
FINDING OF SUDY
According to cash flow statement of the company The finding of the study are as
follows-
The company has not taken any loans secured or unsecured from companies
firms or other parties
The company has not accepted any deposit from the public during the year
The company is not a sick industrial company
The company has not granted any loan secured or unsecured to company firms
or other parties
The company has paid the entire long term and short term borrowing during the
year
The company has buy back the companyrsquos own share this year
The interest paid in 2008 is more than the
There has been a significant decline in volume over the years from 2001-02
to 2005-06 as can be seen in the graph below
Table 43
The Net sales of Tractor has increased considerably from 2004-05 to 2007-08
This can be mainly attributed to changes in Variable and material costs and in
the price
The Net sale of Tractor has increased considerably from 2004-05 to 2007-08
that is an decrease of Rs7216 per tractor This can be mainly attributed to
changes in
Variable and material costs and in the prices
RECOMMENDATIONS
According to cash flow statement of the company The suggestions of the study
are as follows-
The time durations for training program have to increase
Buy regular review and consultations develop a career progression
which is sensitive to performance and ability
Create an environment where by people are trend developed to enable
The to take advantages of opportunities that arise
The jab can be redesigned where the work man stay in what is normally
the same job but has elements of it changed
The principle amount must be paid in time which can be reducing the
interest the out flow
The purchase of the fixed asset must be made only when there is extreme
requirement
In order to avoid taxes the company should go for more investment
The companyrsquos borrowings should go for more investment
o The company should try to reduce the depreciations as maximum
as possible
CONCLUSION
The study on competency level of employees at ESCORTS PVTLTD gave an
insight about the acceptance of competency mapping by employees
The employees at Ymi welcome the introduction of competency mapping in their
organization as they felt it was very much essential in enhancing their skills and
organizational development
The organization has provided the recourses guidance and support to facilitate the
introduction of competency level easily and develop the employees in such a way
that they can face any kind of challenge
However the level of competency in employees is found to be satisfactory
Providing proper training education and guidance to the employees can enhance
the level
This study was mainly carried out to find out whether thee competency mapping
being followed by the company is effective till date If the competency mapping
and fitment to the organization
By looking at the graphs and tables it is quite that the employees still are not up to
the level of competent pool they still have to be trained and made competent in
order to fill the gap As the organization has just applied the mapping it has to see
to that it meets all the requirements for competency mapping
Therefore the graphs make it quite clear that the potential of the employees is not
up to the mark and ie they are not competent enough to meet the competency-
mapping requirement Hence by further training and counseling this gap can be
closed
This report includes the training requirements of employees and it highlights skills
possessed by each employee and skill required All employees get training so that
skill can be improved and maintain balance between standard performance with
their actual performance to avoid gap
APPENDIX
QUESTIONNAIRE
Consumer Survey
Name _____________________________
Age _____________________________
Sex
Male
Female
Occupation
Businessman
Service man
Professional
Others
Monthly income brackets
Below 15000
15000- 20000
20000-30000
30000 and above
of your savings _________
Do you invest
Yes
No
If yes then where do you invest your money
Bank
Insurance
funds
Others
Why do you made that statement
Return
Risk hedging
Tax benefits
Other reasons (specify) _______
Who influence your cash decision
Relatives and friends
Family members
Advisors experts
You yourself
If no then why
Do not know where to invest
Satisfied with your current investment return
Donrsquot want take risk
Other reasons
__________________________________________________________________
___________________
Do you know about CF statement
Yes
No
If yes then from where you have come to know about an cash statement
Advertisements on newspapers
Friends and relative
Agents experts
Other source
What do you think about cash statement
It means investing only in share market
Constant watch must be kept always
Return is not satisfactory
Other perception
__________________________________________________
Can you recall any cash flow of company
___________________________
Would you want to made CF of an org
Yes
No
If yes then why
_______________________________________________________
If no then why
_______________________________________________________
BIBLIOGRAPHY
List of Books
1 PANDEY IM - FINANCIAL MANAGEMANT
2 KHAN MY AND JAIN PK -FINANCIAL MANAGEMANT
3 SMITH KV ndash MANAGEMANT OF WORKING CAPITAL
3 COMPANY RECORDS
4 JOURNAL
5 REPORTS
WEBLIOGRAPHY
1 wwwescortspvtltdcom
2 wwwgooglecom
12 RESERVES amp SURPLUS TO CAPITAL RATIO
(Amount in Rs)
Reserves amp Surplus To Capital Ratio
Year Reserves amp Surplus Capital Ratio
2003 65599299 2079920 31542004 34582554 18719280 1852005 51511781 18719280 2752006 37754372 18719280 2022007 78340733 18719280 419
Interpretation
The ratio is used to reveal the policy pursued by the company a very high ratio
indicates a conservative dividend policy and vice-versa Higher the ratio better
will be the position
The reserves amp surplus is decreased in the year 2006 due to the payment of
dividends and in the year 2007 the profit is increased But the capital is
remaining constant from the year 2004 So the increase in the reserves amp surplus
caused a greater increase in the current yearrsquos ratio compared with the older
GRAPHICAL REPRESENTATION
3154
185 275 202419
-
500
1000
1500
2000
2500
3000
3500
Ratios
2003 2004 2005 2006 2007
Years
RESERVES amp SRUPLUS TO CAPITAL RATIO
Ratios
OVERALL PROFITABILITY RATIOS
13 EARNINGS PER SHARE
(Amount in Rs)
Earnings Per Share
Year Net Profit After Tax No of Equity Shares Ratio
2003 21123474 207992 101562004 16125942 1871928 8612005 16929227 1871928 9042006 18259580 1871928 9752007 40586359 1871928 2168
Interpretation
Earnings per share ratio are used to find out the return that the shareholderrsquos earn
from their shares After charging depreciation and after payment of tax the
remaining amount will be distributed by all the shareholders
Net profit after tax is increased due to the huge increase in the income from
services That is the amount which is available to the shareholders to take There
are 1871928 shares of Rs10- each The share capital is constant from the year
2004 Due to the huge increase in net profit the earnings per share is greaterly
increased in 2007
GRAPHICAL REPRESENTATION
10156
861904 975
2168
000
2000
4000
6000
8000
10000
12000
Ratios
2003 2004 2005 2006 2007
Years
EARNINGS PER SHARE
Ratios
14 PRICE EARNINGS (PE) RATIO
(Amount in Rs)
Price Earning (PE) Ratio
Year Market Price Per Share Earnings Per Share Ratio
2003 3254 10156 0322004 2847 861 3302005 3752 904 4152006 3017 975 3092007 5185 2168 239
Interpretation
The ratio is calculated to make an estimate of application in the value of share of
a company
The market price per share is increased due to the increase in the reserves
amp surplus The earnings per share are also increased greaterly compared
with the last year because of increase in the net profit So the ratio is
decreased compared with the previous year
GRAPHICAL REPRESENTATION
032
330
415
309
239
000
050
100
150
200
250
300
350
400
450
Ratios
2003 2004 2005 2006 2007
Years
PE RATIO
Ratios
15 RETURN ON INVESTMENT
(Amount in Rs)
Return on Investment
Year Net Profit After Tax Share Holders Fund Ratio
2003 21123474 67679219 031
2004 16125942 53301834 03
2005 16929227 70231061 024
2006 18259580 56473652 032
2007 40586359 97060013 042
Interpretation
This is the ratio between net profits and shareholders funds The ratio is
generally calculated as percentage multiplying with 100
The net profit is increased due to the increase in the income from services ant
the shareholders funds are increased because of reserve amp surplus So the ratio
is increased in the current year
GRAPHICAL REPRESENTATION
031 030
024
032
042
000
005
010
015
020
025
030
035
040
045
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON INVESTMENT RATIO
RatioS
DATA COLLECTION
The data can be of two types
Primary Data
Secondary Data
Primary Data
Primary data are those data which is originally collected afresh
Secondary Data
Secondary data are those data which are already collected and stored and which has
been passed through statistical research
In this project Secondary data has been collected from following sources-
Annual report
Books
MIS
Other material and report published by company There are two methods to prepare
the Cash flow Statement
ndirect Method
I
The indirect method (or reconciliation method) starts with net income and converts it
to net cash flow from operating activities In other words the indirect method adjusts
net income for items that affected reported net income but did not affect cash To
compute net cash flow from operating activities non-cash charges in the income
statement are added ack to net income and non-cash credits are deducted
b
Direct Method
Under the direct method the statement of cash flows reports net cash flow from
operating activities as major classes of operating cash receipts (eg cash collected from
customers and cash received from interest and dividends) and cash disbursements (eg
cash paid to suppliers for goods to employees for services to creditors for interest and
to government authorities for taxes)
INDIRECT VERSUS DIRECT METHOD
The most contentious decision that the FASB faced in issuing Statement No 95 was
choosing between the direct method and the indirect method of determining net cash
flow from operating activities Companies lobbied against the direct method urging
adoption of the indirect method Commercial lending officers expressed a strong
preference to the FASB hat the direct method be required
tCF-Page 3 of 5
In Favor of the Direct Method
The principal advantage of the direct method is that it shows operating cash receipts and
payments That is it is more consistent with the objective of a statement of cash flows to
provide information about cash receipts and cash payments than the in-direct method
which does not report operating cash receipts and payments
Supporters of the direct method contend that knowledge of the specific sources of
operating cash receipts and the purposes for which operating cash payments were made
in past periods is useful in estimating future operating cash flows Furthermore in-
formation about amounts of major classes of operating cash receipts and payments is
more useful than information only about their arithmetic sum (the net cash flow from
operating activities) Such information is more revealing of an enterprises ability (1) to
generate sufficient cash from operating activities to pay its debts (2) to reinvest in its
operations and (3) to make distributions to its owners
Many corporate providers of financial statements say that they do not currently collect
information in a manner that allows them to determine amounts such as cash received
from customers or cash paid to suppliers directly from their accounting systems But
supporters of the direct method contend that the incremental cost of assimilating such
operating cash receipts and payments data is not significant
In Favor of the Indirect Method
The principal advantage of the indirect method is that it focuses on the differences
between net income and net cash flow from operating activities That is it provides a
useful link between the statement of cash flows and the income statement and balance
sheet
Many providers of financial statements contend that it is less costly to adjust net income
to net cash flow from operating activities (indirect) than it is to report gross operating
cash receipts and payments (direct) Supporters of the indirect method also state that the
direct method which effectively reports income statement information on a cash rather
than an accrual basis may erroneously suggest that net cash flow from operating
activities is as good as or better than net income as a measure of performance
Special Rules Applying to Direct and Indirect Methods
Companies that use the direct method are required at a
minimum to report separately the following classes of
operating cash receipts and payments
Receipts
1048713 Cash collected from customers (including lessees licensees etc)
1048713 Interest and dividends received
1048713 Other operating cash receipts if any
Payments
1048713 Cash paid to employees and suppliers of goods or services (including
suppliers of
insurance advertising etc)
1048713 Interest paid
1048713 Income taxes paid
1048713 Other operating cash payments if any
Companies using the indirect method are required to disclose separately changes in
inventory receivables and payables to reconcile net income to net cash flow from
operating activities In addition interest paid (net of amount capitalized) and income
taxes paid must be disclosed elsewhere in the financial statements or accompanying
notes
The FASB requires these separate and additional disclosures so that users
may approximate the direct method Also an acceptable alternative presentation
of the in-direct method is to report net cash flow from operating activities as a
single line item in the statement of cash flows and to present the reconciliation
details elsewhere in the financial statements
FINDING OF SUDY
According to cash flow statement of the company The finding of the study are as
follows-
The company has not taken any loans secured or unsecured from companies
firms or other parties
The company has not accepted any deposit from the public during the year
The company is not a sick industrial company
The company has not granted any loan secured or unsecured to company firms
or other parties
The company has paid the entire long term and short term borrowing during the
year
The company has buy back the companyrsquos own share this year
The interest paid in 2008 is more than the
There has been a significant decline in volume over the years from 2001-02
to 2005-06 as can be seen in the graph below
Table 43
The Net sales of Tractor has increased considerably from 2004-05 to 2007-08
This can be mainly attributed to changes in Variable and material costs and in
the price
The Net sale of Tractor has increased considerably from 2004-05 to 2007-08
that is an decrease of Rs7216 per tractor This can be mainly attributed to
changes in
Variable and material costs and in the prices
RECOMMENDATIONS
According to cash flow statement of the company The suggestions of the study
are as follows-
The time durations for training program have to increase
Buy regular review and consultations develop a career progression
which is sensitive to performance and ability
Create an environment where by people are trend developed to enable
The to take advantages of opportunities that arise
The jab can be redesigned where the work man stay in what is normally
the same job but has elements of it changed
The principle amount must be paid in time which can be reducing the
interest the out flow
The purchase of the fixed asset must be made only when there is extreme
requirement
In order to avoid taxes the company should go for more investment
The companyrsquos borrowings should go for more investment
o The company should try to reduce the depreciations as maximum
as possible
CONCLUSION
The study on competency level of employees at ESCORTS PVTLTD gave an
insight about the acceptance of competency mapping by employees
The employees at Ymi welcome the introduction of competency mapping in their
organization as they felt it was very much essential in enhancing their skills and
organizational development
The organization has provided the recourses guidance and support to facilitate the
introduction of competency level easily and develop the employees in such a way
that they can face any kind of challenge
However the level of competency in employees is found to be satisfactory
Providing proper training education and guidance to the employees can enhance
the level
This study was mainly carried out to find out whether thee competency mapping
being followed by the company is effective till date If the competency mapping
and fitment to the organization
By looking at the graphs and tables it is quite that the employees still are not up to
the level of competent pool they still have to be trained and made competent in
order to fill the gap As the organization has just applied the mapping it has to see
to that it meets all the requirements for competency mapping
Therefore the graphs make it quite clear that the potential of the employees is not
up to the mark and ie they are not competent enough to meet the competency-
mapping requirement Hence by further training and counseling this gap can be
closed
This report includes the training requirements of employees and it highlights skills
possessed by each employee and skill required All employees get training so that
skill can be improved and maintain balance between standard performance with
their actual performance to avoid gap
APPENDIX
QUESTIONNAIRE
Consumer Survey
Name _____________________________
Age _____________________________
Sex
Male
Female
Occupation
Businessman
Service man
Professional
Others
Monthly income brackets
Below 15000
15000- 20000
20000-30000
30000 and above
of your savings _________
Do you invest
Yes
No
If yes then where do you invest your money
Bank
Insurance
funds
Others
Why do you made that statement
Return
Risk hedging
Tax benefits
Other reasons (specify) _______
Who influence your cash decision
Relatives and friends
Family members
Advisors experts
You yourself
If no then why
Do not know where to invest
Satisfied with your current investment return
Donrsquot want take risk
Other reasons
__________________________________________________________________
___________________
Do you know about CF statement
Yes
No
If yes then from where you have come to know about an cash statement
Advertisements on newspapers
Friends and relative
Agents experts
Other source
What do you think about cash statement
It means investing only in share market
Constant watch must be kept always
Return is not satisfactory
Other perception
__________________________________________________
Can you recall any cash flow of company
___________________________
Would you want to made CF of an org
Yes
No
If yes then why
_______________________________________________________
If no then why
_______________________________________________________
BIBLIOGRAPHY
List of Books
1 PANDEY IM - FINANCIAL MANAGEMANT
2 KHAN MY AND JAIN PK -FINANCIAL MANAGEMANT
3 SMITH KV ndash MANAGEMANT OF WORKING CAPITAL
3 COMPANY RECORDS
4 JOURNAL
5 REPORTS
WEBLIOGRAPHY
1 wwwescortspvtltdcom
2 wwwgooglecom
GRAPHICAL REPRESENTATION
3154
185 275 202419
-
500
1000
1500
2000
2500
3000
3500
Ratios
2003 2004 2005 2006 2007
Years
RESERVES amp SRUPLUS TO CAPITAL RATIO
Ratios
OVERALL PROFITABILITY RATIOS
13 EARNINGS PER SHARE
(Amount in Rs)
Earnings Per Share
Year Net Profit After Tax No of Equity Shares Ratio
2003 21123474 207992 101562004 16125942 1871928 8612005 16929227 1871928 9042006 18259580 1871928 9752007 40586359 1871928 2168
Interpretation
Earnings per share ratio are used to find out the return that the shareholderrsquos earn
from their shares After charging depreciation and after payment of tax the
remaining amount will be distributed by all the shareholders
Net profit after tax is increased due to the huge increase in the income from
services That is the amount which is available to the shareholders to take There
are 1871928 shares of Rs10- each The share capital is constant from the year
2004 Due to the huge increase in net profit the earnings per share is greaterly
increased in 2007
GRAPHICAL REPRESENTATION
10156
861904 975
2168
000
2000
4000
6000
8000
10000
12000
Ratios
2003 2004 2005 2006 2007
Years
EARNINGS PER SHARE
Ratios
14 PRICE EARNINGS (PE) RATIO
(Amount in Rs)
Price Earning (PE) Ratio
Year Market Price Per Share Earnings Per Share Ratio
2003 3254 10156 0322004 2847 861 3302005 3752 904 4152006 3017 975 3092007 5185 2168 239
Interpretation
The ratio is calculated to make an estimate of application in the value of share of
a company
The market price per share is increased due to the increase in the reserves
amp surplus The earnings per share are also increased greaterly compared
with the last year because of increase in the net profit So the ratio is
decreased compared with the previous year
GRAPHICAL REPRESENTATION
032
330
415
309
239
000
050
100
150
200
250
300
350
400
450
Ratios
2003 2004 2005 2006 2007
Years
PE RATIO
Ratios
15 RETURN ON INVESTMENT
(Amount in Rs)
Return on Investment
Year Net Profit After Tax Share Holders Fund Ratio
2003 21123474 67679219 031
2004 16125942 53301834 03
2005 16929227 70231061 024
2006 18259580 56473652 032
2007 40586359 97060013 042
Interpretation
This is the ratio between net profits and shareholders funds The ratio is
generally calculated as percentage multiplying with 100
The net profit is increased due to the increase in the income from services ant
the shareholders funds are increased because of reserve amp surplus So the ratio
is increased in the current year
GRAPHICAL REPRESENTATION
031 030
024
032
042
000
005
010
015
020
025
030
035
040
045
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON INVESTMENT RATIO
RatioS
DATA COLLECTION
The data can be of two types
Primary Data
Secondary Data
Primary Data
Primary data are those data which is originally collected afresh
Secondary Data
Secondary data are those data which are already collected and stored and which has
been passed through statistical research
In this project Secondary data has been collected from following sources-
Annual report
Books
MIS
Other material and report published by company There are two methods to prepare
the Cash flow Statement
ndirect Method
I
The indirect method (or reconciliation method) starts with net income and converts it
to net cash flow from operating activities In other words the indirect method adjusts
net income for items that affected reported net income but did not affect cash To
compute net cash flow from operating activities non-cash charges in the income
statement are added ack to net income and non-cash credits are deducted
b
Direct Method
Under the direct method the statement of cash flows reports net cash flow from
operating activities as major classes of operating cash receipts (eg cash collected from
customers and cash received from interest and dividends) and cash disbursements (eg
cash paid to suppliers for goods to employees for services to creditors for interest and
to government authorities for taxes)
INDIRECT VERSUS DIRECT METHOD
The most contentious decision that the FASB faced in issuing Statement No 95 was
choosing between the direct method and the indirect method of determining net cash
flow from operating activities Companies lobbied against the direct method urging
adoption of the indirect method Commercial lending officers expressed a strong
preference to the FASB hat the direct method be required
tCF-Page 3 of 5
In Favor of the Direct Method
The principal advantage of the direct method is that it shows operating cash receipts and
payments That is it is more consistent with the objective of a statement of cash flows to
provide information about cash receipts and cash payments than the in-direct method
which does not report operating cash receipts and payments
Supporters of the direct method contend that knowledge of the specific sources of
operating cash receipts and the purposes for which operating cash payments were made
in past periods is useful in estimating future operating cash flows Furthermore in-
formation about amounts of major classes of operating cash receipts and payments is
more useful than information only about their arithmetic sum (the net cash flow from
operating activities) Such information is more revealing of an enterprises ability (1) to
generate sufficient cash from operating activities to pay its debts (2) to reinvest in its
operations and (3) to make distributions to its owners
Many corporate providers of financial statements say that they do not currently collect
information in a manner that allows them to determine amounts such as cash received
from customers or cash paid to suppliers directly from their accounting systems But
supporters of the direct method contend that the incremental cost of assimilating such
operating cash receipts and payments data is not significant
In Favor of the Indirect Method
The principal advantage of the indirect method is that it focuses on the differences
between net income and net cash flow from operating activities That is it provides a
useful link between the statement of cash flows and the income statement and balance
sheet
Many providers of financial statements contend that it is less costly to adjust net income
to net cash flow from operating activities (indirect) than it is to report gross operating
cash receipts and payments (direct) Supporters of the indirect method also state that the
direct method which effectively reports income statement information on a cash rather
than an accrual basis may erroneously suggest that net cash flow from operating
activities is as good as or better than net income as a measure of performance
Special Rules Applying to Direct and Indirect Methods
Companies that use the direct method are required at a
minimum to report separately the following classes of
operating cash receipts and payments
Receipts
1048713 Cash collected from customers (including lessees licensees etc)
1048713 Interest and dividends received
1048713 Other operating cash receipts if any
Payments
1048713 Cash paid to employees and suppliers of goods or services (including
suppliers of
insurance advertising etc)
1048713 Interest paid
1048713 Income taxes paid
1048713 Other operating cash payments if any
Companies using the indirect method are required to disclose separately changes in
inventory receivables and payables to reconcile net income to net cash flow from
operating activities In addition interest paid (net of amount capitalized) and income
taxes paid must be disclosed elsewhere in the financial statements or accompanying
notes
The FASB requires these separate and additional disclosures so that users
may approximate the direct method Also an acceptable alternative presentation
of the in-direct method is to report net cash flow from operating activities as a
single line item in the statement of cash flows and to present the reconciliation
details elsewhere in the financial statements
FINDING OF SUDY
According to cash flow statement of the company The finding of the study are as
follows-
The company has not taken any loans secured or unsecured from companies
firms or other parties
The company has not accepted any deposit from the public during the year
The company is not a sick industrial company
The company has not granted any loan secured or unsecured to company firms
or other parties
The company has paid the entire long term and short term borrowing during the
year
The company has buy back the companyrsquos own share this year
The interest paid in 2008 is more than the
There has been a significant decline in volume over the years from 2001-02
to 2005-06 as can be seen in the graph below
Table 43
The Net sales of Tractor has increased considerably from 2004-05 to 2007-08
This can be mainly attributed to changes in Variable and material costs and in
the price
The Net sale of Tractor has increased considerably from 2004-05 to 2007-08
that is an decrease of Rs7216 per tractor This can be mainly attributed to
changes in
Variable and material costs and in the prices
RECOMMENDATIONS
According to cash flow statement of the company The suggestions of the study
are as follows-
The time durations for training program have to increase
Buy regular review and consultations develop a career progression
which is sensitive to performance and ability
Create an environment where by people are trend developed to enable
The to take advantages of opportunities that arise
The jab can be redesigned where the work man stay in what is normally
the same job but has elements of it changed
The principle amount must be paid in time which can be reducing the
interest the out flow
The purchase of the fixed asset must be made only when there is extreme
requirement
In order to avoid taxes the company should go for more investment
The companyrsquos borrowings should go for more investment
o The company should try to reduce the depreciations as maximum
as possible
CONCLUSION
The study on competency level of employees at ESCORTS PVTLTD gave an
insight about the acceptance of competency mapping by employees
The employees at Ymi welcome the introduction of competency mapping in their
organization as they felt it was very much essential in enhancing their skills and
organizational development
The organization has provided the recourses guidance and support to facilitate the
introduction of competency level easily and develop the employees in such a way
that they can face any kind of challenge
However the level of competency in employees is found to be satisfactory
Providing proper training education and guidance to the employees can enhance
the level
This study was mainly carried out to find out whether thee competency mapping
being followed by the company is effective till date If the competency mapping
and fitment to the organization
By looking at the graphs and tables it is quite that the employees still are not up to
the level of competent pool they still have to be trained and made competent in
order to fill the gap As the organization has just applied the mapping it has to see
to that it meets all the requirements for competency mapping
Therefore the graphs make it quite clear that the potential of the employees is not
up to the mark and ie they are not competent enough to meet the competency-
mapping requirement Hence by further training and counseling this gap can be
closed
This report includes the training requirements of employees and it highlights skills
possessed by each employee and skill required All employees get training so that
skill can be improved and maintain balance between standard performance with
their actual performance to avoid gap
APPENDIX
QUESTIONNAIRE
Consumer Survey
Name _____________________________
Age _____________________________
Sex
Male
Female
Occupation
Businessman
Service man
Professional
Others
Monthly income brackets
Below 15000
15000- 20000
20000-30000
30000 and above
of your savings _________
Do you invest
Yes
No
If yes then where do you invest your money
Bank
Insurance
funds
Others
Why do you made that statement
Return
Risk hedging
Tax benefits
Other reasons (specify) _______
Who influence your cash decision
Relatives and friends
Family members
Advisors experts
You yourself
If no then why
Do not know where to invest
Satisfied with your current investment return
Donrsquot want take risk
Other reasons
__________________________________________________________________
___________________
Do you know about CF statement
Yes
No
If yes then from where you have come to know about an cash statement
Advertisements on newspapers
Friends and relative
Agents experts
Other source
What do you think about cash statement
It means investing only in share market
Constant watch must be kept always
Return is not satisfactory
Other perception
__________________________________________________
Can you recall any cash flow of company
___________________________
Would you want to made CF of an org
Yes
No
If yes then why
_______________________________________________________
If no then why
_______________________________________________________
BIBLIOGRAPHY
List of Books
1 PANDEY IM - FINANCIAL MANAGEMANT
2 KHAN MY AND JAIN PK -FINANCIAL MANAGEMANT
3 SMITH KV ndash MANAGEMANT OF WORKING CAPITAL
3 COMPANY RECORDS
4 JOURNAL
5 REPORTS
WEBLIOGRAPHY
1 wwwescortspvtltdcom
2 wwwgooglecom
OVERALL PROFITABILITY RATIOS
13 EARNINGS PER SHARE
(Amount in Rs)
Earnings Per Share
Year Net Profit After Tax No of Equity Shares Ratio
2003 21123474 207992 101562004 16125942 1871928 8612005 16929227 1871928 9042006 18259580 1871928 9752007 40586359 1871928 2168
Interpretation
Earnings per share ratio are used to find out the return that the shareholderrsquos earn
from their shares After charging depreciation and after payment of tax the
remaining amount will be distributed by all the shareholders
Net profit after tax is increased due to the huge increase in the income from
services That is the amount which is available to the shareholders to take There
are 1871928 shares of Rs10- each The share capital is constant from the year
2004 Due to the huge increase in net profit the earnings per share is greaterly
increased in 2007
GRAPHICAL REPRESENTATION
10156
861904 975
2168
000
2000
4000
6000
8000
10000
12000
Ratios
2003 2004 2005 2006 2007
Years
EARNINGS PER SHARE
Ratios
14 PRICE EARNINGS (PE) RATIO
(Amount in Rs)
Price Earning (PE) Ratio
Year Market Price Per Share Earnings Per Share Ratio
2003 3254 10156 0322004 2847 861 3302005 3752 904 4152006 3017 975 3092007 5185 2168 239
Interpretation
The ratio is calculated to make an estimate of application in the value of share of
a company
The market price per share is increased due to the increase in the reserves
amp surplus The earnings per share are also increased greaterly compared
with the last year because of increase in the net profit So the ratio is
decreased compared with the previous year
GRAPHICAL REPRESENTATION
032
330
415
309
239
000
050
100
150
200
250
300
350
400
450
Ratios
2003 2004 2005 2006 2007
Years
PE RATIO
Ratios
15 RETURN ON INVESTMENT
(Amount in Rs)
Return on Investment
Year Net Profit After Tax Share Holders Fund Ratio
2003 21123474 67679219 031
2004 16125942 53301834 03
2005 16929227 70231061 024
2006 18259580 56473652 032
2007 40586359 97060013 042
Interpretation
This is the ratio between net profits and shareholders funds The ratio is
generally calculated as percentage multiplying with 100
The net profit is increased due to the increase in the income from services ant
the shareholders funds are increased because of reserve amp surplus So the ratio
is increased in the current year
GRAPHICAL REPRESENTATION
031 030
024
032
042
000
005
010
015
020
025
030
035
040
045
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON INVESTMENT RATIO
RatioS
DATA COLLECTION
The data can be of two types
Primary Data
Secondary Data
Primary Data
Primary data are those data which is originally collected afresh
Secondary Data
Secondary data are those data which are already collected and stored and which has
been passed through statistical research
In this project Secondary data has been collected from following sources-
Annual report
Books
MIS
Other material and report published by company There are two methods to prepare
the Cash flow Statement
ndirect Method
I
The indirect method (or reconciliation method) starts with net income and converts it
to net cash flow from operating activities In other words the indirect method adjusts
net income for items that affected reported net income but did not affect cash To
compute net cash flow from operating activities non-cash charges in the income
statement are added ack to net income and non-cash credits are deducted
b
Direct Method
Under the direct method the statement of cash flows reports net cash flow from
operating activities as major classes of operating cash receipts (eg cash collected from
customers and cash received from interest and dividends) and cash disbursements (eg
cash paid to suppliers for goods to employees for services to creditors for interest and
to government authorities for taxes)
INDIRECT VERSUS DIRECT METHOD
The most contentious decision that the FASB faced in issuing Statement No 95 was
choosing between the direct method and the indirect method of determining net cash
flow from operating activities Companies lobbied against the direct method urging
adoption of the indirect method Commercial lending officers expressed a strong
preference to the FASB hat the direct method be required
tCF-Page 3 of 5
In Favor of the Direct Method
The principal advantage of the direct method is that it shows operating cash receipts and
payments That is it is more consistent with the objective of a statement of cash flows to
provide information about cash receipts and cash payments than the in-direct method
which does not report operating cash receipts and payments
Supporters of the direct method contend that knowledge of the specific sources of
operating cash receipts and the purposes for which operating cash payments were made
in past periods is useful in estimating future operating cash flows Furthermore in-
formation about amounts of major classes of operating cash receipts and payments is
more useful than information only about their arithmetic sum (the net cash flow from
operating activities) Such information is more revealing of an enterprises ability (1) to
generate sufficient cash from operating activities to pay its debts (2) to reinvest in its
operations and (3) to make distributions to its owners
Many corporate providers of financial statements say that they do not currently collect
information in a manner that allows them to determine amounts such as cash received
from customers or cash paid to suppliers directly from their accounting systems But
supporters of the direct method contend that the incremental cost of assimilating such
operating cash receipts and payments data is not significant
In Favor of the Indirect Method
The principal advantage of the indirect method is that it focuses on the differences
between net income and net cash flow from operating activities That is it provides a
useful link between the statement of cash flows and the income statement and balance
sheet
Many providers of financial statements contend that it is less costly to adjust net income
to net cash flow from operating activities (indirect) than it is to report gross operating
cash receipts and payments (direct) Supporters of the indirect method also state that the
direct method which effectively reports income statement information on a cash rather
than an accrual basis may erroneously suggest that net cash flow from operating
activities is as good as or better than net income as a measure of performance
Special Rules Applying to Direct and Indirect Methods
Companies that use the direct method are required at a
minimum to report separately the following classes of
operating cash receipts and payments
Receipts
1048713 Cash collected from customers (including lessees licensees etc)
1048713 Interest and dividends received
1048713 Other operating cash receipts if any
Payments
1048713 Cash paid to employees and suppliers of goods or services (including
suppliers of
insurance advertising etc)
1048713 Interest paid
1048713 Income taxes paid
1048713 Other operating cash payments if any
Companies using the indirect method are required to disclose separately changes in
inventory receivables and payables to reconcile net income to net cash flow from
operating activities In addition interest paid (net of amount capitalized) and income
taxes paid must be disclosed elsewhere in the financial statements or accompanying
notes
The FASB requires these separate and additional disclosures so that users
may approximate the direct method Also an acceptable alternative presentation
of the in-direct method is to report net cash flow from operating activities as a
single line item in the statement of cash flows and to present the reconciliation
details elsewhere in the financial statements
FINDING OF SUDY
According to cash flow statement of the company The finding of the study are as
follows-
The company has not taken any loans secured or unsecured from companies
firms or other parties
The company has not accepted any deposit from the public during the year
The company is not a sick industrial company
The company has not granted any loan secured or unsecured to company firms
or other parties
The company has paid the entire long term and short term borrowing during the
year
The company has buy back the companyrsquos own share this year
The interest paid in 2008 is more than the
There has been a significant decline in volume over the years from 2001-02
to 2005-06 as can be seen in the graph below
Table 43
The Net sales of Tractor has increased considerably from 2004-05 to 2007-08
This can be mainly attributed to changes in Variable and material costs and in
the price
The Net sale of Tractor has increased considerably from 2004-05 to 2007-08
that is an decrease of Rs7216 per tractor This can be mainly attributed to
changes in
Variable and material costs and in the prices
RECOMMENDATIONS
According to cash flow statement of the company The suggestions of the study
are as follows-
The time durations for training program have to increase
Buy regular review and consultations develop a career progression
which is sensitive to performance and ability
Create an environment where by people are trend developed to enable
The to take advantages of opportunities that arise
The jab can be redesigned where the work man stay in what is normally
the same job but has elements of it changed
The principle amount must be paid in time which can be reducing the
interest the out flow
The purchase of the fixed asset must be made only when there is extreme
requirement
In order to avoid taxes the company should go for more investment
The companyrsquos borrowings should go for more investment
o The company should try to reduce the depreciations as maximum
as possible
CONCLUSION
The study on competency level of employees at ESCORTS PVTLTD gave an
insight about the acceptance of competency mapping by employees
The employees at Ymi welcome the introduction of competency mapping in their
organization as they felt it was very much essential in enhancing their skills and
organizational development
The organization has provided the recourses guidance and support to facilitate the
introduction of competency level easily and develop the employees in such a way
that they can face any kind of challenge
However the level of competency in employees is found to be satisfactory
Providing proper training education and guidance to the employees can enhance
the level
This study was mainly carried out to find out whether thee competency mapping
being followed by the company is effective till date If the competency mapping
and fitment to the organization
By looking at the graphs and tables it is quite that the employees still are not up to
the level of competent pool they still have to be trained and made competent in
order to fill the gap As the organization has just applied the mapping it has to see
to that it meets all the requirements for competency mapping
Therefore the graphs make it quite clear that the potential of the employees is not
up to the mark and ie they are not competent enough to meet the competency-
mapping requirement Hence by further training and counseling this gap can be
closed
This report includes the training requirements of employees and it highlights skills
possessed by each employee and skill required All employees get training so that
skill can be improved and maintain balance between standard performance with
their actual performance to avoid gap
APPENDIX
QUESTIONNAIRE
Consumer Survey
Name _____________________________
Age _____________________________
Sex
Male
Female
Occupation
Businessman
Service man
Professional
Others
Monthly income brackets
Below 15000
15000- 20000
20000-30000
30000 and above
of your savings _________
Do you invest
Yes
No
If yes then where do you invest your money
Bank
Insurance
funds
Others
Why do you made that statement
Return
Risk hedging
Tax benefits
Other reasons (specify) _______
Who influence your cash decision
Relatives and friends
Family members
Advisors experts
You yourself
If no then why
Do not know where to invest
Satisfied with your current investment return
Donrsquot want take risk
Other reasons
__________________________________________________________________
___________________
Do you know about CF statement
Yes
No
If yes then from where you have come to know about an cash statement
Advertisements on newspapers
Friends and relative
Agents experts
Other source
What do you think about cash statement
It means investing only in share market
Constant watch must be kept always
Return is not satisfactory
Other perception
__________________________________________________
Can you recall any cash flow of company
___________________________
Would you want to made CF of an org
Yes
No
If yes then why
_______________________________________________________
If no then why
_______________________________________________________
BIBLIOGRAPHY
List of Books
1 PANDEY IM - FINANCIAL MANAGEMANT
2 KHAN MY AND JAIN PK -FINANCIAL MANAGEMANT
3 SMITH KV ndash MANAGEMANT OF WORKING CAPITAL
3 COMPANY RECORDS
4 JOURNAL
5 REPORTS
WEBLIOGRAPHY
1 wwwescortspvtltdcom
2 wwwgooglecom
GRAPHICAL REPRESENTATION
10156
861904 975
2168
000
2000
4000
6000
8000
10000
12000
Ratios
2003 2004 2005 2006 2007
Years
EARNINGS PER SHARE
Ratios
14 PRICE EARNINGS (PE) RATIO
(Amount in Rs)
Price Earning (PE) Ratio
Year Market Price Per Share Earnings Per Share Ratio
2003 3254 10156 0322004 2847 861 3302005 3752 904 4152006 3017 975 3092007 5185 2168 239
Interpretation
The ratio is calculated to make an estimate of application in the value of share of
a company
The market price per share is increased due to the increase in the reserves
amp surplus The earnings per share are also increased greaterly compared
with the last year because of increase in the net profit So the ratio is
decreased compared with the previous year
GRAPHICAL REPRESENTATION
032
330
415
309
239
000
050
100
150
200
250
300
350
400
450
Ratios
2003 2004 2005 2006 2007
Years
PE RATIO
Ratios
15 RETURN ON INVESTMENT
(Amount in Rs)
Return on Investment
Year Net Profit After Tax Share Holders Fund Ratio
2003 21123474 67679219 031
2004 16125942 53301834 03
2005 16929227 70231061 024
2006 18259580 56473652 032
2007 40586359 97060013 042
Interpretation
This is the ratio between net profits and shareholders funds The ratio is
generally calculated as percentage multiplying with 100
The net profit is increased due to the increase in the income from services ant
the shareholders funds are increased because of reserve amp surplus So the ratio
is increased in the current year
GRAPHICAL REPRESENTATION
031 030
024
032
042
000
005
010
015
020
025
030
035
040
045
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON INVESTMENT RATIO
RatioS
DATA COLLECTION
The data can be of two types
Primary Data
Secondary Data
Primary Data
Primary data are those data which is originally collected afresh
Secondary Data
Secondary data are those data which are already collected and stored and which has
been passed through statistical research
In this project Secondary data has been collected from following sources-
Annual report
Books
MIS
Other material and report published by company There are two methods to prepare
the Cash flow Statement
ndirect Method
I
The indirect method (or reconciliation method) starts with net income and converts it
to net cash flow from operating activities In other words the indirect method adjusts
net income for items that affected reported net income but did not affect cash To
compute net cash flow from operating activities non-cash charges in the income
statement are added ack to net income and non-cash credits are deducted
b
Direct Method
Under the direct method the statement of cash flows reports net cash flow from
operating activities as major classes of operating cash receipts (eg cash collected from
customers and cash received from interest and dividends) and cash disbursements (eg
cash paid to suppliers for goods to employees for services to creditors for interest and
to government authorities for taxes)
INDIRECT VERSUS DIRECT METHOD
The most contentious decision that the FASB faced in issuing Statement No 95 was
choosing between the direct method and the indirect method of determining net cash
flow from operating activities Companies lobbied against the direct method urging
adoption of the indirect method Commercial lending officers expressed a strong
preference to the FASB hat the direct method be required
tCF-Page 3 of 5
In Favor of the Direct Method
The principal advantage of the direct method is that it shows operating cash receipts and
payments That is it is more consistent with the objective of a statement of cash flows to
provide information about cash receipts and cash payments than the in-direct method
which does not report operating cash receipts and payments
Supporters of the direct method contend that knowledge of the specific sources of
operating cash receipts and the purposes for which operating cash payments were made
in past periods is useful in estimating future operating cash flows Furthermore in-
formation about amounts of major classes of operating cash receipts and payments is
more useful than information only about their arithmetic sum (the net cash flow from
operating activities) Such information is more revealing of an enterprises ability (1) to
generate sufficient cash from operating activities to pay its debts (2) to reinvest in its
operations and (3) to make distributions to its owners
Many corporate providers of financial statements say that they do not currently collect
information in a manner that allows them to determine amounts such as cash received
from customers or cash paid to suppliers directly from their accounting systems But
supporters of the direct method contend that the incremental cost of assimilating such
operating cash receipts and payments data is not significant
In Favor of the Indirect Method
The principal advantage of the indirect method is that it focuses on the differences
between net income and net cash flow from operating activities That is it provides a
useful link between the statement of cash flows and the income statement and balance
sheet
Many providers of financial statements contend that it is less costly to adjust net income
to net cash flow from operating activities (indirect) than it is to report gross operating
cash receipts and payments (direct) Supporters of the indirect method also state that the
direct method which effectively reports income statement information on a cash rather
than an accrual basis may erroneously suggest that net cash flow from operating
activities is as good as or better than net income as a measure of performance
Special Rules Applying to Direct and Indirect Methods
Companies that use the direct method are required at a
minimum to report separately the following classes of
operating cash receipts and payments
Receipts
1048713 Cash collected from customers (including lessees licensees etc)
1048713 Interest and dividends received
1048713 Other operating cash receipts if any
Payments
1048713 Cash paid to employees and suppliers of goods or services (including
suppliers of
insurance advertising etc)
1048713 Interest paid
1048713 Income taxes paid
1048713 Other operating cash payments if any
Companies using the indirect method are required to disclose separately changes in
inventory receivables and payables to reconcile net income to net cash flow from
operating activities In addition interest paid (net of amount capitalized) and income
taxes paid must be disclosed elsewhere in the financial statements or accompanying
notes
The FASB requires these separate and additional disclosures so that users
may approximate the direct method Also an acceptable alternative presentation
of the in-direct method is to report net cash flow from operating activities as a
single line item in the statement of cash flows and to present the reconciliation
details elsewhere in the financial statements
FINDING OF SUDY
According to cash flow statement of the company The finding of the study are as
follows-
The company has not taken any loans secured or unsecured from companies
firms or other parties
The company has not accepted any deposit from the public during the year
The company is not a sick industrial company
The company has not granted any loan secured or unsecured to company firms
or other parties
The company has paid the entire long term and short term borrowing during the
year
The company has buy back the companyrsquos own share this year
The interest paid in 2008 is more than the
There has been a significant decline in volume over the years from 2001-02
to 2005-06 as can be seen in the graph below
Table 43
The Net sales of Tractor has increased considerably from 2004-05 to 2007-08
This can be mainly attributed to changes in Variable and material costs and in
the price
The Net sale of Tractor has increased considerably from 2004-05 to 2007-08
that is an decrease of Rs7216 per tractor This can be mainly attributed to
changes in
Variable and material costs and in the prices
RECOMMENDATIONS
According to cash flow statement of the company The suggestions of the study
are as follows-
The time durations for training program have to increase
Buy regular review and consultations develop a career progression
which is sensitive to performance and ability
Create an environment where by people are trend developed to enable
The to take advantages of opportunities that arise
The jab can be redesigned where the work man stay in what is normally
the same job but has elements of it changed
The principle amount must be paid in time which can be reducing the
interest the out flow
The purchase of the fixed asset must be made only when there is extreme
requirement
In order to avoid taxes the company should go for more investment
The companyrsquos borrowings should go for more investment
o The company should try to reduce the depreciations as maximum
as possible
CONCLUSION
The study on competency level of employees at ESCORTS PVTLTD gave an
insight about the acceptance of competency mapping by employees
The employees at Ymi welcome the introduction of competency mapping in their
organization as they felt it was very much essential in enhancing their skills and
organizational development
The organization has provided the recourses guidance and support to facilitate the
introduction of competency level easily and develop the employees in such a way
that they can face any kind of challenge
However the level of competency in employees is found to be satisfactory
Providing proper training education and guidance to the employees can enhance
the level
This study was mainly carried out to find out whether thee competency mapping
being followed by the company is effective till date If the competency mapping
and fitment to the organization
By looking at the graphs and tables it is quite that the employees still are not up to
the level of competent pool they still have to be trained and made competent in
order to fill the gap As the organization has just applied the mapping it has to see
to that it meets all the requirements for competency mapping
Therefore the graphs make it quite clear that the potential of the employees is not
up to the mark and ie they are not competent enough to meet the competency-
mapping requirement Hence by further training and counseling this gap can be
closed
This report includes the training requirements of employees and it highlights skills
possessed by each employee and skill required All employees get training so that
skill can be improved and maintain balance between standard performance with
their actual performance to avoid gap
APPENDIX
QUESTIONNAIRE
Consumer Survey
Name _____________________________
Age _____________________________
Sex
Male
Female
Occupation
Businessman
Service man
Professional
Others
Monthly income brackets
Below 15000
15000- 20000
20000-30000
30000 and above
of your savings _________
Do you invest
Yes
No
If yes then where do you invest your money
Bank
Insurance
funds
Others
Why do you made that statement
Return
Risk hedging
Tax benefits
Other reasons (specify) _______
Who influence your cash decision
Relatives and friends
Family members
Advisors experts
You yourself
If no then why
Do not know where to invest
Satisfied with your current investment return
Donrsquot want take risk
Other reasons
__________________________________________________________________
___________________
Do you know about CF statement
Yes
No
If yes then from where you have come to know about an cash statement
Advertisements on newspapers
Friends and relative
Agents experts
Other source
What do you think about cash statement
It means investing only in share market
Constant watch must be kept always
Return is not satisfactory
Other perception
__________________________________________________
Can you recall any cash flow of company
___________________________
Would you want to made CF of an org
Yes
No
If yes then why
_______________________________________________________
If no then why
_______________________________________________________
BIBLIOGRAPHY
List of Books
1 PANDEY IM - FINANCIAL MANAGEMANT
2 KHAN MY AND JAIN PK -FINANCIAL MANAGEMANT
3 SMITH KV ndash MANAGEMANT OF WORKING CAPITAL
3 COMPANY RECORDS
4 JOURNAL
5 REPORTS
WEBLIOGRAPHY
1 wwwescortspvtltdcom
2 wwwgooglecom
14 PRICE EARNINGS (PE) RATIO
(Amount in Rs)
Price Earning (PE) Ratio
Year Market Price Per Share Earnings Per Share Ratio
2003 3254 10156 0322004 2847 861 3302005 3752 904 4152006 3017 975 3092007 5185 2168 239
Interpretation
The ratio is calculated to make an estimate of application in the value of share of
a company
The market price per share is increased due to the increase in the reserves
amp surplus The earnings per share are also increased greaterly compared
with the last year because of increase in the net profit So the ratio is
decreased compared with the previous year
GRAPHICAL REPRESENTATION
032
330
415
309
239
000
050
100
150
200
250
300
350
400
450
Ratios
2003 2004 2005 2006 2007
Years
PE RATIO
Ratios
15 RETURN ON INVESTMENT
(Amount in Rs)
Return on Investment
Year Net Profit After Tax Share Holders Fund Ratio
2003 21123474 67679219 031
2004 16125942 53301834 03
2005 16929227 70231061 024
2006 18259580 56473652 032
2007 40586359 97060013 042
Interpretation
This is the ratio between net profits and shareholders funds The ratio is
generally calculated as percentage multiplying with 100
The net profit is increased due to the increase in the income from services ant
the shareholders funds are increased because of reserve amp surplus So the ratio
is increased in the current year
GRAPHICAL REPRESENTATION
031 030
024
032
042
000
005
010
015
020
025
030
035
040
045
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON INVESTMENT RATIO
RatioS
DATA COLLECTION
The data can be of two types
Primary Data
Secondary Data
Primary Data
Primary data are those data which is originally collected afresh
Secondary Data
Secondary data are those data which are already collected and stored and which has
been passed through statistical research
In this project Secondary data has been collected from following sources-
Annual report
Books
MIS
Other material and report published by company There are two methods to prepare
the Cash flow Statement
ndirect Method
I
The indirect method (or reconciliation method) starts with net income and converts it
to net cash flow from operating activities In other words the indirect method adjusts
net income for items that affected reported net income but did not affect cash To
compute net cash flow from operating activities non-cash charges in the income
statement are added ack to net income and non-cash credits are deducted
b
Direct Method
Under the direct method the statement of cash flows reports net cash flow from
operating activities as major classes of operating cash receipts (eg cash collected from
customers and cash received from interest and dividends) and cash disbursements (eg
cash paid to suppliers for goods to employees for services to creditors for interest and
to government authorities for taxes)
INDIRECT VERSUS DIRECT METHOD
The most contentious decision that the FASB faced in issuing Statement No 95 was
choosing between the direct method and the indirect method of determining net cash
flow from operating activities Companies lobbied against the direct method urging
adoption of the indirect method Commercial lending officers expressed a strong
preference to the FASB hat the direct method be required
tCF-Page 3 of 5
In Favor of the Direct Method
The principal advantage of the direct method is that it shows operating cash receipts and
payments That is it is more consistent with the objective of a statement of cash flows to
provide information about cash receipts and cash payments than the in-direct method
which does not report operating cash receipts and payments
Supporters of the direct method contend that knowledge of the specific sources of
operating cash receipts and the purposes for which operating cash payments were made
in past periods is useful in estimating future operating cash flows Furthermore in-
formation about amounts of major classes of operating cash receipts and payments is
more useful than information only about their arithmetic sum (the net cash flow from
operating activities) Such information is more revealing of an enterprises ability (1) to
generate sufficient cash from operating activities to pay its debts (2) to reinvest in its
operations and (3) to make distributions to its owners
Many corporate providers of financial statements say that they do not currently collect
information in a manner that allows them to determine amounts such as cash received
from customers or cash paid to suppliers directly from their accounting systems But
supporters of the direct method contend that the incremental cost of assimilating such
operating cash receipts and payments data is not significant
In Favor of the Indirect Method
The principal advantage of the indirect method is that it focuses on the differences
between net income and net cash flow from operating activities That is it provides a
useful link between the statement of cash flows and the income statement and balance
sheet
Many providers of financial statements contend that it is less costly to adjust net income
to net cash flow from operating activities (indirect) than it is to report gross operating
cash receipts and payments (direct) Supporters of the indirect method also state that the
direct method which effectively reports income statement information on a cash rather
than an accrual basis may erroneously suggest that net cash flow from operating
activities is as good as or better than net income as a measure of performance
Special Rules Applying to Direct and Indirect Methods
Companies that use the direct method are required at a
minimum to report separately the following classes of
operating cash receipts and payments
Receipts
1048713 Cash collected from customers (including lessees licensees etc)
1048713 Interest and dividends received
1048713 Other operating cash receipts if any
Payments
1048713 Cash paid to employees and suppliers of goods or services (including
suppliers of
insurance advertising etc)
1048713 Interest paid
1048713 Income taxes paid
1048713 Other operating cash payments if any
Companies using the indirect method are required to disclose separately changes in
inventory receivables and payables to reconcile net income to net cash flow from
operating activities In addition interest paid (net of amount capitalized) and income
taxes paid must be disclosed elsewhere in the financial statements or accompanying
notes
The FASB requires these separate and additional disclosures so that users
may approximate the direct method Also an acceptable alternative presentation
of the in-direct method is to report net cash flow from operating activities as a
single line item in the statement of cash flows and to present the reconciliation
details elsewhere in the financial statements
FINDING OF SUDY
According to cash flow statement of the company The finding of the study are as
follows-
The company has not taken any loans secured or unsecured from companies
firms or other parties
The company has not accepted any deposit from the public during the year
The company is not a sick industrial company
The company has not granted any loan secured or unsecured to company firms
or other parties
The company has paid the entire long term and short term borrowing during the
year
The company has buy back the companyrsquos own share this year
The interest paid in 2008 is more than the
There has been a significant decline in volume over the years from 2001-02
to 2005-06 as can be seen in the graph below
Table 43
The Net sales of Tractor has increased considerably from 2004-05 to 2007-08
This can be mainly attributed to changes in Variable and material costs and in
the price
The Net sale of Tractor has increased considerably from 2004-05 to 2007-08
that is an decrease of Rs7216 per tractor This can be mainly attributed to
changes in
Variable and material costs and in the prices
RECOMMENDATIONS
According to cash flow statement of the company The suggestions of the study
are as follows-
The time durations for training program have to increase
Buy regular review and consultations develop a career progression
which is sensitive to performance and ability
Create an environment where by people are trend developed to enable
The to take advantages of opportunities that arise
The jab can be redesigned where the work man stay in what is normally
the same job but has elements of it changed
The principle amount must be paid in time which can be reducing the
interest the out flow
The purchase of the fixed asset must be made only when there is extreme
requirement
In order to avoid taxes the company should go for more investment
The companyrsquos borrowings should go for more investment
o The company should try to reduce the depreciations as maximum
as possible
CONCLUSION
The study on competency level of employees at ESCORTS PVTLTD gave an
insight about the acceptance of competency mapping by employees
The employees at Ymi welcome the introduction of competency mapping in their
organization as they felt it was very much essential in enhancing their skills and
organizational development
The organization has provided the recourses guidance and support to facilitate the
introduction of competency level easily and develop the employees in such a way
that they can face any kind of challenge
However the level of competency in employees is found to be satisfactory
Providing proper training education and guidance to the employees can enhance
the level
This study was mainly carried out to find out whether thee competency mapping
being followed by the company is effective till date If the competency mapping
and fitment to the organization
By looking at the graphs and tables it is quite that the employees still are not up to
the level of competent pool they still have to be trained and made competent in
order to fill the gap As the organization has just applied the mapping it has to see
to that it meets all the requirements for competency mapping
Therefore the graphs make it quite clear that the potential of the employees is not
up to the mark and ie they are not competent enough to meet the competency-
mapping requirement Hence by further training and counseling this gap can be
closed
This report includes the training requirements of employees and it highlights skills
possessed by each employee and skill required All employees get training so that
skill can be improved and maintain balance between standard performance with
their actual performance to avoid gap
APPENDIX
QUESTIONNAIRE
Consumer Survey
Name _____________________________
Age _____________________________
Sex
Male
Female
Occupation
Businessman
Service man
Professional
Others
Monthly income brackets
Below 15000
15000- 20000
20000-30000
30000 and above
of your savings _________
Do you invest
Yes
No
If yes then where do you invest your money
Bank
Insurance
funds
Others
Why do you made that statement
Return
Risk hedging
Tax benefits
Other reasons (specify) _______
Who influence your cash decision
Relatives and friends
Family members
Advisors experts
You yourself
If no then why
Do not know where to invest
Satisfied with your current investment return
Donrsquot want take risk
Other reasons
__________________________________________________________________
___________________
Do you know about CF statement
Yes
No
If yes then from where you have come to know about an cash statement
Advertisements on newspapers
Friends and relative
Agents experts
Other source
What do you think about cash statement
It means investing only in share market
Constant watch must be kept always
Return is not satisfactory
Other perception
__________________________________________________
Can you recall any cash flow of company
___________________________
Would you want to made CF of an org
Yes
No
If yes then why
_______________________________________________________
If no then why
_______________________________________________________
BIBLIOGRAPHY
List of Books
1 PANDEY IM - FINANCIAL MANAGEMANT
2 KHAN MY AND JAIN PK -FINANCIAL MANAGEMANT
3 SMITH KV ndash MANAGEMANT OF WORKING CAPITAL
3 COMPANY RECORDS
4 JOURNAL
5 REPORTS
WEBLIOGRAPHY
1 wwwescortspvtltdcom
2 wwwgooglecom
GRAPHICAL REPRESENTATION
032
330
415
309
239
000
050
100
150
200
250
300
350
400
450
Ratios
2003 2004 2005 2006 2007
Years
PE RATIO
Ratios
15 RETURN ON INVESTMENT
(Amount in Rs)
Return on Investment
Year Net Profit After Tax Share Holders Fund Ratio
2003 21123474 67679219 031
2004 16125942 53301834 03
2005 16929227 70231061 024
2006 18259580 56473652 032
2007 40586359 97060013 042
Interpretation
This is the ratio between net profits and shareholders funds The ratio is
generally calculated as percentage multiplying with 100
The net profit is increased due to the increase in the income from services ant
the shareholders funds are increased because of reserve amp surplus So the ratio
is increased in the current year
GRAPHICAL REPRESENTATION
031 030
024
032
042
000
005
010
015
020
025
030
035
040
045
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON INVESTMENT RATIO
RatioS
DATA COLLECTION
The data can be of two types
Primary Data
Secondary Data
Primary Data
Primary data are those data which is originally collected afresh
Secondary Data
Secondary data are those data which are already collected and stored and which has
been passed through statistical research
In this project Secondary data has been collected from following sources-
Annual report
Books
MIS
Other material and report published by company There are two methods to prepare
the Cash flow Statement
ndirect Method
I
The indirect method (or reconciliation method) starts with net income and converts it
to net cash flow from operating activities In other words the indirect method adjusts
net income for items that affected reported net income but did not affect cash To
compute net cash flow from operating activities non-cash charges in the income
statement are added ack to net income and non-cash credits are deducted
b
Direct Method
Under the direct method the statement of cash flows reports net cash flow from
operating activities as major classes of operating cash receipts (eg cash collected from
customers and cash received from interest and dividends) and cash disbursements (eg
cash paid to suppliers for goods to employees for services to creditors for interest and
to government authorities for taxes)
INDIRECT VERSUS DIRECT METHOD
The most contentious decision that the FASB faced in issuing Statement No 95 was
choosing between the direct method and the indirect method of determining net cash
flow from operating activities Companies lobbied against the direct method urging
adoption of the indirect method Commercial lending officers expressed a strong
preference to the FASB hat the direct method be required
tCF-Page 3 of 5
In Favor of the Direct Method
The principal advantage of the direct method is that it shows operating cash receipts and
payments That is it is more consistent with the objective of a statement of cash flows to
provide information about cash receipts and cash payments than the in-direct method
which does not report operating cash receipts and payments
Supporters of the direct method contend that knowledge of the specific sources of
operating cash receipts and the purposes for which operating cash payments were made
in past periods is useful in estimating future operating cash flows Furthermore in-
formation about amounts of major classes of operating cash receipts and payments is
more useful than information only about their arithmetic sum (the net cash flow from
operating activities) Such information is more revealing of an enterprises ability (1) to
generate sufficient cash from operating activities to pay its debts (2) to reinvest in its
operations and (3) to make distributions to its owners
Many corporate providers of financial statements say that they do not currently collect
information in a manner that allows them to determine amounts such as cash received
from customers or cash paid to suppliers directly from their accounting systems But
supporters of the direct method contend that the incremental cost of assimilating such
operating cash receipts and payments data is not significant
In Favor of the Indirect Method
The principal advantage of the indirect method is that it focuses on the differences
between net income and net cash flow from operating activities That is it provides a
useful link between the statement of cash flows and the income statement and balance
sheet
Many providers of financial statements contend that it is less costly to adjust net income
to net cash flow from operating activities (indirect) than it is to report gross operating
cash receipts and payments (direct) Supporters of the indirect method also state that the
direct method which effectively reports income statement information on a cash rather
than an accrual basis may erroneously suggest that net cash flow from operating
activities is as good as or better than net income as a measure of performance
Special Rules Applying to Direct and Indirect Methods
Companies that use the direct method are required at a
minimum to report separately the following classes of
operating cash receipts and payments
Receipts
1048713 Cash collected from customers (including lessees licensees etc)
1048713 Interest and dividends received
1048713 Other operating cash receipts if any
Payments
1048713 Cash paid to employees and suppliers of goods or services (including
suppliers of
insurance advertising etc)
1048713 Interest paid
1048713 Income taxes paid
1048713 Other operating cash payments if any
Companies using the indirect method are required to disclose separately changes in
inventory receivables and payables to reconcile net income to net cash flow from
operating activities In addition interest paid (net of amount capitalized) and income
taxes paid must be disclosed elsewhere in the financial statements or accompanying
notes
The FASB requires these separate and additional disclosures so that users
may approximate the direct method Also an acceptable alternative presentation
of the in-direct method is to report net cash flow from operating activities as a
single line item in the statement of cash flows and to present the reconciliation
details elsewhere in the financial statements
FINDING OF SUDY
According to cash flow statement of the company The finding of the study are as
follows-
The company has not taken any loans secured or unsecured from companies
firms or other parties
The company has not accepted any deposit from the public during the year
The company is not a sick industrial company
The company has not granted any loan secured or unsecured to company firms
or other parties
The company has paid the entire long term and short term borrowing during the
year
The company has buy back the companyrsquos own share this year
The interest paid in 2008 is more than the
There has been a significant decline in volume over the years from 2001-02
to 2005-06 as can be seen in the graph below
Table 43
The Net sales of Tractor has increased considerably from 2004-05 to 2007-08
This can be mainly attributed to changes in Variable and material costs and in
the price
The Net sale of Tractor has increased considerably from 2004-05 to 2007-08
that is an decrease of Rs7216 per tractor This can be mainly attributed to
changes in
Variable and material costs and in the prices
RECOMMENDATIONS
According to cash flow statement of the company The suggestions of the study
are as follows-
The time durations for training program have to increase
Buy regular review and consultations develop a career progression
which is sensitive to performance and ability
Create an environment where by people are trend developed to enable
The to take advantages of opportunities that arise
The jab can be redesigned where the work man stay in what is normally
the same job but has elements of it changed
The principle amount must be paid in time which can be reducing the
interest the out flow
The purchase of the fixed asset must be made only when there is extreme
requirement
In order to avoid taxes the company should go for more investment
The companyrsquos borrowings should go for more investment
o The company should try to reduce the depreciations as maximum
as possible
CONCLUSION
The study on competency level of employees at ESCORTS PVTLTD gave an
insight about the acceptance of competency mapping by employees
The employees at Ymi welcome the introduction of competency mapping in their
organization as they felt it was very much essential in enhancing their skills and
organizational development
The organization has provided the recourses guidance and support to facilitate the
introduction of competency level easily and develop the employees in such a way
that they can face any kind of challenge
However the level of competency in employees is found to be satisfactory
Providing proper training education and guidance to the employees can enhance
the level
This study was mainly carried out to find out whether thee competency mapping
being followed by the company is effective till date If the competency mapping
and fitment to the organization
By looking at the graphs and tables it is quite that the employees still are not up to
the level of competent pool they still have to be trained and made competent in
order to fill the gap As the organization has just applied the mapping it has to see
to that it meets all the requirements for competency mapping
Therefore the graphs make it quite clear that the potential of the employees is not
up to the mark and ie they are not competent enough to meet the competency-
mapping requirement Hence by further training and counseling this gap can be
closed
This report includes the training requirements of employees and it highlights skills
possessed by each employee and skill required All employees get training so that
skill can be improved and maintain balance between standard performance with
their actual performance to avoid gap
APPENDIX
QUESTIONNAIRE
Consumer Survey
Name _____________________________
Age _____________________________
Sex
Male
Female
Occupation
Businessman
Service man
Professional
Others
Monthly income brackets
Below 15000
15000- 20000
20000-30000
30000 and above
of your savings _________
Do you invest
Yes
No
If yes then where do you invest your money
Bank
Insurance
funds
Others
Why do you made that statement
Return
Risk hedging
Tax benefits
Other reasons (specify) _______
Who influence your cash decision
Relatives and friends
Family members
Advisors experts
You yourself
If no then why
Do not know where to invest
Satisfied with your current investment return
Donrsquot want take risk
Other reasons
__________________________________________________________________
___________________
Do you know about CF statement
Yes
No
If yes then from where you have come to know about an cash statement
Advertisements on newspapers
Friends and relative
Agents experts
Other source
What do you think about cash statement
It means investing only in share market
Constant watch must be kept always
Return is not satisfactory
Other perception
__________________________________________________
Can you recall any cash flow of company
___________________________
Would you want to made CF of an org
Yes
No
If yes then why
_______________________________________________________
If no then why
_______________________________________________________
BIBLIOGRAPHY
List of Books
1 PANDEY IM - FINANCIAL MANAGEMANT
2 KHAN MY AND JAIN PK -FINANCIAL MANAGEMANT
3 SMITH KV ndash MANAGEMANT OF WORKING CAPITAL
3 COMPANY RECORDS
4 JOURNAL
5 REPORTS
WEBLIOGRAPHY
1 wwwescortspvtltdcom
2 wwwgooglecom
15 RETURN ON INVESTMENT
(Amount in Rs)
Return on Investment
Year Net Profit After Tax Share Holders Fund Ratio
2003 21123474 67679219 031
2004 16125942 53301834 03
2005 16929227 70231061 024
2006 18259580 56473652 032
2007 40586359 97060013 042
Interpretation
This is the ratio between net profits and shareholders funds The ratio is
generally calculated as percentage multiplying with 100
The net profit is increased due to the increase in the income from services ant
the shareholders funds are increased because of reserve amp surplus So the ratio
is increased in the current year
GRAPHICAL REPRESENTATION
031 030
024
032
042
000
005
010
015
020
025
030
035
040
045
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON INVESTMENT RATIO
RatioS
DATA COLLECTION
The data can be of two types
Primary Data
Secondary Data
Primary Data
Primary data are those data which is originally collected afresh
Secondary Data
Secondary data are those data which are already collected and stored and which has
been passed through statistical research
In this project Secondary data has been collected from following sources-
Annual report
Books
MIS
Other material and report published by company There are two methods to prepare
the Cash flow Statement
ndirect Method
I
The indirect method (or reconciliation method) starts with net income and converts it
to net cash flow from operating activities In other words the indirect method adjusts
net income for items that affected reported net income but did not affect cash To
compute net cash flow from operating activities non-cash charges in the income
statement are added ack to net income and non-cash credits are deducted
b
Direct Method
Under the direct method the statement of cash flows reports net cash flow from
operating activities as major classes of operating cash receipts (eg cash collected from
customers and cash received from interest and dividends) and cash disbursements (eg
cash paid to suppliers for goods to employees for services to creditors for interest and
to government authorities for taxes)
INDIRECT VERSUS DIRECT METHOD
The most contentious decision that the FASB faced in issuing Statement No 95 was
choosing between the direct method and the indirect method of determining net cash
flow from operating activities Companies lobbied against the direct method urging
adoption of the indirect method Commercial lending officers expressed a strong
preference to the FASB hat the direct method be required
tCF-Page 3 of 5
In Favor of the Direct Method
The principal advantage of the direct method is that it shows operating cash receipts and
payments That is it is more consistent with the objective of a statement of cash flows to
provide information about cash receipts and cash payments than the in-direct method
which does not report operating cash receipts and payments
Supporters of the direct method contend that knowledge of the specific sources of
operating cash receipts and the purposes for which operating cash payments were made
in past periods is useful in estimating future operating cash flows Furthermore in-
formation about amounts of major classes of operating cash receipts and payments is
more useful than information only about their arithmetic sum (the net cash flow from
operating activities) Such information is more revealing of an enterprises ability (1) to
generate sufficient cash from operating activities to pay its debts (2) to reinvest in its
operations and (3) to make distributions to its owners
Many corporate providers of financial statements say that they do not currently collect
information in a manner that allows them to determine amounts such as cash received
from customers or cash paid to suppliers directly from their accounting systems But
supporters of the direct method contend that the incremental cost of assimilating such
operating cash receipts and payments data is not significant
In Favor of the Indirect Method
The principal advantage of the indirect method is that it focuses on the differences
between net income and net cash flow from operating activities That is it provides a
useful link between the statement of cash flows and the income statement and balance
sheet
Many providers of financial statements contend that it is less costly to adjust net income
to net cash flow from operating activities (indirect) than it is to report gross operating
cash receipts and payments (direct) Supporters of the indirect method also state that the
direct method which effectively reports income statement information on a cash rather
than an accrual basis may erroneously suggest that net cash flow from operating
activities is as good as or better than net income as a measure of performance
Special Rules Applying to Direct and Indirect Methods
Companies that use the direct method are required at a
minimum to report separately the following classes of
operating cash receipts and payments
Receipts
1048713 Cash collected from customers (including lessees licensees etc)
1048713 Interest and dividends received
1048713 Other operating cash receipts if any
Payments
1048713 Cash paid to employees and suppliers of goods or services (including
suppliers of
insurance advertising etc)
1048713 Interest paid
1048713 Income taxes paid
1048713 Other operating cash payments if any
Companies using the indirect method are required to disclose separately changes in
inventory receivables and payables to reconcile net income to net cash flow from
operating activities In addition interest paid (net of amount capitalized) and income
taxes paid must be disclosed elsewhere in the financial statements or accompanying
notes
The FASB requires these separate and additional disclosures so that users
may approximate the direct method Also an acceptable alternative presentation
of the in-direct method is to report net cash flow from operating activities as a
single line item in the statement of cash flows and to present the reconciliation
details elsewhere in the financial statements
FINDING OF SUDY
According to cash flow statement of the company The finding of the study are as
follows-
The company has not taken any loans secured or unsecured from companies
firms or other parties
The company has not accepted any deposit from the public during the year
The company is not a sick industrial company
The company has not granted any loan secured or unsecured to company firms
or other parties
The company has paid the entire long term and short term borrowing during the
year
The company has buy back the companyrsquos own share this year
The interest paid in 2008 is more than the
There has been a significant decline in volume over the years from 2001-02
to 2005-06 as can be seen in the graph below
Table 43
The Net sales of Tractor has increased considerably from 2004-05 to 2007-08
This can be mainly attributed to changes in Variable and material costs and in
the price
The Net sale of Tractor has increased considerably from 2004-05 to 2007-08
that is an decrease of Rs7216 per tractor This can be mainly attributed to
changes in
Variable and material costs and in the prices
RECOMMENDATIONS
According to cash flow statement of the company The suggestions of the study
are as follows-
The time durations for training program have to increase
Buy regular review and consultations develop a career progression
which is sensitive to performance and ability
Create an environment where by people are trend developed to enable
The to take advantages of opportunities that arise
The jab can be redesigned where the work man stay in what is normally
the same job but has elements of it changed
The principle amount must be paid in time which can be reducing the
interest the out flow
The purchase of the fixed asset must be made only when there is extreme
requirement
In order to avoid taxes the company should go for more investment
The companyrsquos borrowings should go for more investment
o The company should try to reduce the depreciations as maximum
as possible
CONCLUSION
The study on competency level of employees at ESCORTS PVTLTD gave an
insight about the acceptance of competency mapping by employees
The employees at Ymi welcome the introduction of competency mapping in their
organization as they felt it was very much essential in enhancing their skills and
organizational development
The organization has provided the recourses guidance and support to facilitate the
introduction of competency level easily and develop the employees in such a way
that they can face any kind of challenge
However the level of competency in employees is found to be satisfactory
Providing proper training education and guidance to the employees can enhance
the level
This study was mainly carried out to find out whether thee competency mapping
being followed by the company is effective till date If the competency mapping
and fitment to the organization
By looking at the graphs and tables it is quite that the employees still are not up to
the level of competent pool they still have to be trained and made competent in
order to fill the gap As the organization has just applied the mapping it has to see
to that it meets all the requirements for competency mapping
Therefore the graphs make it quite clear that the potential of the employees is not
up to the mark and ie they are not competent enough to meet the competency-
mapping requirement Hence by further training and counseling this gap can be
closed
This report includes the training requirements of employees and it highlights skills
possessed by each employee and skill required All employees get training so that
skill can be improved and maintain balance between standard performance with
their actual performance to avoid gap
APPENDIX
QUESTIONNAIRE
Consumer Survey
Name _____________________________
Age _____________________________
Sex
Male
Female
Occupation
Businessman
Service man
Professional
Others
Monthly income brackets
Below 15000
15000- 20000
20000-30000
30000 and above
of your savings _________
Do you invest
Yes
No
If yes then where do you invest your money
Bank
Insurance
funds
Others
Why do you made that statement
Return
Risk hedging
Tax benefits
Other reasons (specify) _______
Who influence your cash decision
Relatives and friends
Family members
Advisors experts
You yourself
If no then why
Do not know where to invest
Satisfied with your current investment return
Donrsquot want take risk
Other reasons
__________________________________________________________________
___________________
Do you know about CF statement
Yes
No
If yes then from where you have come to know about an cash statement
Advertisements on newspapers
Friends and relative
Agents experts
Other source
What do you think about cash statement
It means investing only in share market
Constant watch must be kept always
Return is not satisfactory
Other perception
__________________________________________________
Can you recall any cash flow of company
___________________________
Would you want to made CF of an org
Yes
No
If yes then why
_______________________________________________________
If no then why
_______________________________________________________
BIBLIOGRAPHY
List of Books
1 PANDEY IM - FINANCIAL MANAGEMANT
2 KHAN MY AND JAIN PK -FINANCIAL MANAGEMANT
3 SMITH KV ndash MANAGEMANT OF WORKING CAPITAL
3 COMPANY RECORDS
4 JOURNAL
5 REPORTS
WEBLIOGRAPHY
1 wwwescortspvtltdcom
2 wwwgooglecom
GRAPHICAL REPRESENTATION
031 030
024
032
042
000
005
010
015
020
025
030
035
040
045
Ratios
2003 2004 2005 2006 2007
Years
RETURN ON INVESTMENT RATIO
RatioS
DATA COLLECTION
The data can be of two types
Primary Data
Secondary Data
Primary Data
Primary data are those data which is originally collected afresh
Secondary Data
Secondary data are those data which are already collected and stored and which has
been passed through statistical research
In this project Secondary data has been collected from following sources-
Annual report
Books
MIS
Other material and report published by company There are two methods to prepare
the Cash flow Statement
ndirect Method
I
The indirect method (or reconciliation method) starts with net income and converts it
to net cash flow from operating activities In other words the indirect method adjusts
net income for items that affected reported net income but did not affect cash To
compute net cash flow from operating activities non-cash charges in the income
statement are added ack to net income and non-cash credits are deducted
b
Direct Method
Under the direct method the statement of cash flows reports net cash flow from
operating activities as major classes of operating cash receipts (eg cash collected from
customers and cash received from interest and dividends) and cash disbursements (eg
cash paid to suppliers for goods to employees for services to creditors for interest and
to government authorities for taxes)
INDIRECT VERSUS DIRECT METHOD
The most contentious decision that the FASB faced in issuing Statement No 95 was
choosing between the direct method and the indirect method of determining net cash
flow from operating activities Companies lobbied against the direct method urging
adoption of the indirect method Commercial lending officers expressed a strong
preference to the FASB hat the direct method be required
tCF-Page 3 of 5
In Favor of the Direct Method
The principal advantage of the direct method is that it shows operating cash receipts and
payments That is it is more consistent with the objective of a statement of cash flows to
provide information about cash receipts and cash payments than the in-direct method
which does not report operating cash receipts and payments
Supporters of the direct method contend that knowledge of the specific sources of
operating cash receipts and the purposes for which operating cash payments were made
in past periods is useful in estimating future operating cash flows Furthermore in-
formation about amounts of major classes of operating cash receipts and payments is
more useful than information only about their arithmetic sum (the net cash flow from
operating activities) Such information is more revealing of an enterprises ability (1) to
generate sufficient cash from operating activities to pay its debts (2) to reinvest in its
operations and (3) to make distributions to its owners
Many corporate providers of financial statements say that they do not currently collect
information in a manner that allows them to determine amounts such as cash received
from customers or cash paid to suppliers directly from their accounting systems But
supporters of the direct method contend that the incremental cost of assimilating such
operating cash receipts and payments data is not significant
In Favor of the Indirect Method
The principal advantage of the indirect method is that it focuses on the differences
between net income and net cash flow from operating activities That is it provides a
useful link between the statement of cash flows and the income statement and balance
sheet
Many providers of financial statements contend that it is less costly to adjust net income
to net cash flow from operating activities (indirect) than it is to report gross operating
cash receipts and payments (direct) Supporters of the indirect method also state that the
direct method which effectively reports income statement information on a cash rather
than an accrual basis may erroneously suggest that net cash flow from operating
activities is as good as or better than net income as a measure of performance
Special Rules Applying to Direct and Indirect Methods
Companies that use the direct method are required at a
minimum to report separately the following classes of
operating cash receipts and payments
Receipts
1048713 Cash collected from customers (including lessees licensees etc)
1048713 Interest and dividends received
1048713 Other operating cash receipts if any
Payments
1048713 Cash paid to employees and suppliers of goods or services (including
suppliers of
insurance advertising etc)
1048713 Interest paid
1048713 Income taxes paid
1048713 Other operating cash payments if any
Companies using the indirect method are required to disclose separately changes in
inventory receivables and payables to reconcile net income to net cash flow from
operating activities In addition interest paid (net of amount capitalized) and income
taxes paid must be disclosed elsewhere in the financial statements or accompanying
notes
The FASB requires these separate and additional disclosures so that users
may approximate the direct method Also an acceptable alternative presentation
of the in-direct method is to report net cash flow from operating activities as a
single line item in the statement of cash flows and to present the reconciliation
details elsewhere in the financial statements
FINDING OF SUDY
According to cash flow statement of the company The finding of the study are as
follows-
The company has not taken any loans secured or unsecured from companies
firms or other parties
The company has not accepted any deposit from the public during the year
The company is not a sick industrial company
The company has not granted any loan secured or unsecured to company firms
or other parties
The company has paid the entire long term and short term borrowing during the
year
The company has buy back the companyrsquos own share this year
The interest paid in 2008 is more than the
There has been a significant decline in volume over the years from 2001-02
to 2005-06 as can be seen in the graph below
Table 43
The Net sales of Tractor has increased considerably from 2004-05 to 2007-08
This can be mainly attributed to changes in Variable and material costs and in
the price
The Net sale of Tractor has increased considerably from 2004-05 to 2007-08
that is an decrease of Rs7216 per tractor This can be mainly attributed to
changes in
Variable and material costs and in the prices
RECOMMENDATIONS
According to cash flow statement of the company The suggestions of the study
are as follows-
The time durations for training program have to increase
Buy regular review and consultations develop a career progression
which is sensitive to performance and ability
Create an environment where by people are trend developed to enable
The to take advantages of opportunities that arise
The jab can be redesigned where the work man stay in what is normally
the same job but has elements of it changed
The principle amount must be paid in time which can be reducing the
interest the out flow
The purchase of the fixed asset must be made only when there is extreme
requirement
In order to avoid taxes the company should go for more investment
The companyrsquos borrowings should go for more investment
o The company should try to reduce the depreciations as maximum
as possible
CONCLUSION
The study on competency level of employees at ESCORTS PVTLTD gave an
insight about the acceptance of competency mapping by employees
The employees at Ymi welcome the introduction of competency mapping in their
organization as they felt it was very much essential in enhancing their skills and
organizational development
The organization has provided the recourses guidance and support to facilitate the
introduction of competency level easily and develop the employees in such a way
that they can face any kind of challenge
However the level of competency in employees is found to be satisfactory
Providing proper training education and guidance to the employees can enhance
the level
This study was mainly carried out to find out whether thee competency mapping
being followed by the company is effective till date If the competency mapping
and fitment to the organization
By looking at the graphs and tables it is quite that the employees still are not up to
the level of competent pool they still have to be trained and made competent in
order to fill the gap As the organization has just applied the mapping it has to see
to that it meets all the requirements for competency mapping
Therefore the graphs make it quite clear that the potential of the employees is not
up to the mark and ie they are not competent enough to meet the competency-
mapping requirement Hence by further training and counseling this gap can be
closed
This report includes the training requirements of employees and it highlights skills
possessed by each employee and skill required All employees get training so that
skill can be improved and maintain balance between standard performance with
their actual performance to avoid gap
APPENDIX
QUESTIONNAIRE
Consumer Survey
Name _____________________________
Age _____________________________
Sex
Male
Female
Occupation
Businessman
Service man
Professional
Others
Monthly income brackets
Below 15000
15000- 20000
20000-30000
30000 and above
of your savings _________
Do you invest
Yes
No
If yes then where do you invest your money
Bank
Insurance
funds
Others
Why do you made that statement
Return
Risk hedging
Tax benefits
Other reasons (specify) _______
Who influence your cash decision
Relatives and friends
Family members
Advisors experts
You yourself
If no then why
Do not know where to invest
Satisfied with your current investment return
Donrsquot want take risk
Other reasons
__________________________________________________________________
___________________
Do you know about CF statement
Yes
No
If yes then from where you have come to know about an cash statement
Advertisements on newspapers
Friends and relative
Agents experts
Other source
What do you think about cash statement
It means investing only in share market
Constant watch must be kept always
Return is not satisfactory
Other perception
__________________________________________________
Can you recall any cash flow of company
___________________________
Would you want to made CF of an org
Yes
No
If yes then why
_______________________________________________________
If no then why
_______________________________________________________
BIBLIOGRAPHY
List of Books
1 PANDEY IM - FINANCIAL MANAGEMANT
2 KHAN MY AND JAIN PK -FINANCIAL MANAGEMANT
3 SMITH KV ndash MANAGEMANT OF WORKING CAPITAL
3 COMPANY RECORDS
4 JOURNAL
5 REPORTS
WEBLIOGRAPHY
1 wwwescortspvtltdcom
2 wwwgooglecom
DATA COLLECTION
The data can be of two types
Primary Data
Secondary Data
Primary Data
Primary data are those data which is originally collected afresh
Secondary Data
Secondary data are those data which are already collected and stored and which has
been passed through statistical research
In this project Secondary data has been collected from following sources-
Annual report
Books
MIS
Other material and report published by company There are two methods to prepare
the Cash flow Statement
ndirect Method
I
The indirect method (or reconciliation method) starts with net income and converts it
to net cash flow from operating activities In other words the indirect method adjusts
net income for items that affected reported net income but did not affect cash To
compute net cash flow from operating activities non-cash charges in the income
statement are added ack to net income and non-cash credits are deducted
b
Direct Method
Under the direct method the statement of cash flows reports net cash flow from
operating activities as major classes of operating cash receipts (eg cash collected from
customers and cash received from interest and dividends) and cash disbursements (eg
cash paid to suppliers for goods to employees for services to creditors for interest and
to government authorities for taxes)
INDIRECT VERSUS DIRECT METHOD
The most contentious decision that the FASB faced in issuing Statement No 95 was
choosing between the direct method and the indirect method of determining net cash
flow from operating activities Companies lobbied against the direct method urging
adoption of the indirect method Commercial lending officers expressed a strong
preference to the FASB hat the direct method be required
tCF-Page 3 of 5
In Favor of the Direct Method
The principal advantage of the direct method is that it shows operating cash receipts and
payments That is it is more consistent with the objective of a statement of cash flows to
provide information about cash receipts and cash payments than the in-direct method
which does not report operating cash receipts and payments
Supporters of the direct method contend that knowledge of the specific sources of
operating cash receipts and the purposes for which operating cash payments were made
in past periods is useful in estimating future operating cash flows Furthermore in-
formation about amounts of major classes of operating cash receipts and payments is
more useful than information only about their arithmetic sum (the net cash flow from
operating activities) Such information is more revealing of an enterprises ability (1) to
generate sufficient cash from operating activities to pay its debts (2) to reinvest in its
operations and (3) to make distributions to its owners
Many corporate providers of financial statements say that they do not currently collect
information in a manner that allows them to determine amounts such as cash received
from customers or cash paid to suppliers directly from their accounting systems But
supporters of the direct method contend that the incremental cost of assimilating such
operating cash receipts and payments data is not significant
In Favor of the Indirect Method
The principal advantage of the indirect method is that it focuses on the differences
between net income and net cash flow from operating activities That is it provides a
useful link between the statement of cash flows and the income statement and balance
sheet
Many providers of financial statements contend that it is less costly to adjust net income
to net cash flow from operating activities (indirect) than it is to report gross operating
cash receipts and payments (direct) Supporters of the indirect method also state that the
direct method which effectively reports income statement information on a cash rather
than an accrual basis may erroneously suggest that net cash flow from operating
activities is as good as or better than net income as a measure of performance
Special Rules Applying to Direct and Indirect Methods
Companies that use the direct method are required at a
minimum to report separately the following classes of
operating cash receipts and payments
Receipts
1048713 Cash collected from customers (including lessees licensees etc)
1048713 Interest and dividends received
1048713 Other operating cash receipts if any
Payments
1048713 Cash paid to employees and suppliers of goods or services (including
suppliers of
insurance advertising etc)
1048713 Interest paid
1048713 Income taxes paid
1048713 Other operating cash payments if any
Companies using the indirect method are required to disclose separately changes in
inventory receivables and payables to reconcile net income to net cash flow from
operating activities In addition interest paid (net of amount capitalized) and income
taxes paid must be disclosed elsewhere in the financial statements or accompanying
notes
The FASB requires these separate and additional disclosures so that users
may approximate the direct method Also an acceptable alternative presentation
of the in-direct method is to report net cash flow from operating activities as a
single line item in the statement of cash flows and to present the reconciliation
details elsewhere in the financial statements
FINDING OF SUDY
According to cash flow statement of the company The finding of the study are as
follows-
The company has not taken any loans secured or unsecured from companies
firms or other parties
The company has not accepted any deposit from the public during the year
The company is not a sick industrial company
The company has not granted any loan secured or unsecured to company firms
or other parties
The company has paid the entire long term and short term borrowing during the
year
The company has buy back the companyrsquos own share this year
The interest paid in 2008 is more than the
There has been a significant decline in volume over the years from 2001-02
to 2005-06 as can be seen in the graph below
Table 43
The Net sales of Tractor has increased considerably from 2004-05 to 2007-08
This can be mainly attributed to changes in Variable and material costs and in
the price
The Net sale of Tractor has increased considerably from 2004-05 to 2007-08
that is an decrease of Rs7216 per tractor This can be mainly attributed to
changes in
Variable and material costs and in the prices
RECOMMENDATIONS
According to cash flow statement of the company The suggestions of the study
are as follows-
The time durations for training program have to increase
Buy regular review and consultations develop a career progression
which is sensitive to performance and ability
Create an environment where by people are trend developed to enable
The to take advantages of opportunities that arise
The jab can be redesigned where the work man stay in what is normally
the same job but has elements of it changed
The principle amount must be paid in time which can be reducing the
interest the out flow
The purchase of the fixed asset must be made only when there is extreme
requirement
In order to avoid taxes the company should go for more investment
The companyrsquos borrowings should go for more investment
o The company should try to reduce the depreciations as maximum
as possible
CONCLUSION
The study on competency level of employees at ESCORTS PVTLTD gave an
insight about the acceptance of competency mapping by employees
The employees at Ymi welcome the introduction of competency mapping in their
organization as they felt it was very much essential in enhancing their skills and
organizational development
The organization has provided the recourses guidance and support to facilitate the
introduction of competency level easily and develop the employees in such a way
that they can face any kind of challenge
However the level of competency in employees is found to be satisfactory
Providing proper training education and guidance to the employees can enhance
the level
This study was mainly carried out to find out whether thee competency mapping
being followed by the company is effective till date If the competency mapping
and fitment to the organization
By looking at the graphs and tables it is quite that the employees still are not up to
the level of competent pool they still have to be trained and made competent in
order to fill the gap As the organization has just applied the mapping it has to see
to that it meets all the requirements for competency mapping
Therefore the graphs make it quite clear that the potential of the employees is not
up to the mark and ie they are not competent enough to meet the competency-
mapping requirement Hence by further training and counseling this gap can be
closed
This report includes the training requirements of employees and it highlights skills
possessed by each employee and skill required All employees get training so that
skill can be improved and maintain balance between standard performance with
their actual performance to avoid gap
APPENDIX
QUESTIONNAIRE
Consumer Survey
Name _____________________________
Age _____________________________
Sex
Male
Female
Occupation
Businessman
Service man
Professional
Others
Monthly income brackets
Below 15000
15000- 20000
20000-30000
30000 and above
of your savings _________
Do you invest
Yes
No
If yes then where do you invest your money
Bank
Insurance
funds
Others
Why do you made that statement
Return
Risk hedging
Tax benefits
Other reasons (specify) _______
Who influence your cash decision
Relatives and friends
Family members
Advisors experts
You yourself
If no then why
Do not know where to invest
Satisfied with your current investment return
Donrsquot want take risk
Other reasons
__________________________________________________________________
___________________
Do you know about CF statement
Yes
No
If yes then from where you have come to know about an cash statement
Advertisements on newspapers
Friends and relative
Agents experts
Other source
What do you think about cash statement
It means investing only in share market
Constant watch must be kept always
Return is not satisfactory
Other perception
__________________________________________________
Can you recall any cash flow of company
___________________________
Would you want to made CF of an org
Yes
No
If yes then why
_______________________________________________________
If no then why
_______________________________________________________
BIBLIOGRAPHY
List of Books
1 PANDEY IM - FINANCIAL MANAGEMANT
2 KHAN MY AND JAIN PK -FINANCIAL MANAGEMANT
3 SMITH KV ndash MANAGEMANT OF WORKING CAPITAL
3 COMPANY RECORDS
4 JOURNAL
5 REPORTS
WEBLIOGRAPHY
1 wwwescortspvtltdcom
2 wwwgooglecom
Other material and report published by company There are two methods to prepare
the Cash flow Statement
ndirect Method
I
The indirect method (or reconciliation method) starts with net income and converts it
to net cash flow from operating activities In other words the indirect method adjusts
net income for items that affected reported net income but did not affect cash To
compute net cash flow from operating activities non-cash charges in the income
statement are added ack to net income and non-cash credits are deducted
b
Direct Method
Under the direct method the statement of cash flows reports net cash flow from
operating activities as major classes of operating cash receipts (eg cash collected from
customers and cash received from interest and dividends) and cash disbursements (eg
cash paid to suppliers for goods to employees for services to creditors for interest and
to government authorities for taxes)
INDIRECT VERSUS DIRECT METHOD
The most contentious decision that the FASB faced in issuing Statement No 95 was
choosing between the direct method and the indirect method of determining net cash
flow from operating activities Companies lobbied against the direct method urging
adoption of the indirect method Commercial lending officers expressed a strong
preference to the FASB hat the direct method be required
tCF-Page 3 of 5
In Favor of the Direct Method
The principal advantage of the direct method is that it shows operating cash receipts and
payments That is it is more consistent with the objective of a statement of cash flows to
provide information about cash receipts and cash payments than the in-direct method
which does not report operating cash receipts and payments
Supporters of the direct method contend that knowledge of the specific sources of
operating cash receipts and the purposes for which operating cash payments were made
in past periods is useful in estimating future operating cash flows Furthermore in-
formation about amounts of major classes of operating cash receipts and payments is
more useful than information only about their arithmetic sum (the net cash flow from
operating activities) Such information is more revealing of an enterprises ability (1) to
generate sufficient cash from operating activities to pay its debts (2) to reinvest in its
operations and (3) to make distributions to its owners
Many corporate providers of financial statements say that they do not currently collect
information in a manner that allows them to determine amounts such as cash received
from customers or cash paid to suppliers directly from their accounting systems But
supporters of the direct method contend that the incremental cost of assimilating such
operating cash receipts and payments data is not significant
In Favor of the Indirect Method
The principal advantage of the indirect method is that it focuses on the differences
between net income and net cash flow from operating activities That is it provides a
useful link between the statement of cash flows and the income statement and balance
sheet
Many providers of financial statements contend that it is less costly to adjust net income
to net cash flow from operating activities (indirect) than it is to report gross operating
cash receipts and payments (direct) Supporters of the indirect method also state that the
direct method which effectively reports income statement information on a cash rather
than an accrual basis may erroneously suggest that net cash flow from operating
activities is as good as or better than net income as a measure of performance
Special Rules Applying to Direct and Indirect Methods
Companies that use the direct method are required at a
minimum to report separately the following classes of
operating cash receipts and payments
Receipts
1048713 Cash collected from customers (including lessees licensees etc)
1048713 Interest and dividends received
1048713 Other operating cash receipts if any
Payments
1048713 Cash paid to employees and suppliers of goods or services (including
suppliers of
insurance advertising etc)
1048713 Interest paid
1048713 Income taxes paid
1048713 Other operating cash payments if any
Companies using the indirect method are required to disclose separately changes in
inventory receivables and payables to reconcile net income to net cash flow from
operating activities In addition interest paid (net of amount capitalized) and income
taxes paid must be disclosed elsewhere in the financial statements or accompanying
notes
The FASB requires these separate and additional disclosures so that users
may approximate the direct method Also an acceptable alternative presentation
of the in-direct method is to report net cash flow from operating activities as a
single line item in the statement of cash flows and to present the reconciliation
details elsewhere in the financial statements
FINDING OF SUDY
According to cash flow statement of the company The finding of the study are as
follows-
The company has not taken any loans secured or unsecured from companies
firms or other parties
The company has not accepted any deposit from the public during the year
The company is not a sick industrial company
The company has not granted any loan secured or unsecured to company firms
or other parties
The company has paid the entire long term and short term borrowing during the
year
The company has buy back the companyrsquos own share this year
The interest paid in 2008 is more than the
There has been a significant decline in volume over the years from 2001-02
to 2005-06 as can be seen in the graph below
Table 43
The Net sales of Tractor has increased considerably from 2004-05 to 2007-08
This can be mainly attributed to changes in Variable and material costs and in
the price
The Net sale of Tractor has increased considerably from 2004-05 to 2007-08
that is an decrease of Rs7216 per tractor This can be mainly attributed to
changes in
Variable and material costs and in the prices
RECOMMENDATIONS
According to cash flow statement of the company The suggestions of the study
are as follows-
The time durations for training program have to increase
Buy regular review and consultations develop a career progression
which is sensitive to performance and ability
Create an environment where by people are trend developed to enable
The to take advantages of opportunities that arise
The jab can be redesigned where the work man stay in what is normally
the same job but has elements of it changed
The principle amount must be paid in time which can be reducing the
interest the out flow
The purchase of the fixed asset must be made only when there is extreme
requirement
In order to avoid taxes the company should go for more investment
The companyrsquos borrowings should go for more investment
o The company should try to reduce the depreciations as maximum
as possible
CONCLUSION
The study on competency level of employees at ESCORTS PVTLTD gave an
insight about the acceptance of competency mapping by employees
The employees at Ymi welcome the introduction of competency mapping in their
organization as they felt it was very much essential in enhancing their skills and
organizational development
The organization has provided the recourses guidance and support to facilitate the
introduction of competency level easily and develop the employees in such a way
that they can face any kind of challenge
However the level of competency in employees is found to be satisfactory
Providing proper training education and guidance to the employees can enhance
the level
This study was mainly carried out to find out whether thee competency mapping
being followed by the company is effective till date If the competency mapping
and fitment to the organization
By looking at the graphs and tables it is quite that the employees still are not up to
the level of competent pool they still have to be trained and made competent in
order to fill the gap As the organization has just applied the mapping it has to see
to that it meets all the requirements for competency mapping
Therefore the graphs make it quite clear that the potential of the employees is not
up to the mark and ie they are not competent enough to meet the competency-
mapping requirement Hence by further training and counseling this gap can be
closed
This report includes the training requirements of employees and it highlights skills
possessed by each employee and skill required All employees get training so that
skill can be improved and maintain balance between standard performance with
their actual performance to avoid gap
APPENDIX
QUESTIONNAIRE
Consumer Survey
Name _____________________________
Age _____________________________
Sex
Male
Female
Occupation
Businessman
Service man
Professional
Others
Monthly income brackets
Below 15000
15000- 20000
20000-30000
30000 and above
of your savings _________
Do you invest
Yes
No
If yes then where do you invest your money
Bank
Insurance
funds
Others
Why do you made that statement
Return
Risk hedging
Tax benefits
Other reasons (specify) _______
Who influence your cash decision
Relatives and friends
Family members
Advisors experts
You yourself
If no then why
Do not know where to invest
Satisfied with your current investment return
Donrsquot want take risk
Other reasons
__________________________________________________________________
___________________
Do you know about CF statement
Yes
No
If yes then from where you have come to know about an cash statement
Advertisements on newspapers
Friends and relative
Agents experts
Other source
What do you think about cash statement
It means investing only in share market
Constant watch must be kept always
Return is not satisfactory
Other perception
__________________________________________________
Can you recall any cash flow of company
___________________________
Would you want to made CF of an org
Yes
No
If yes then why
_______________________________________________________
If no then why
_______________________________________________________
BIBLIOGRAPHY
List of Books
1 PANDEY IM - FINANCIAL MANAGEMANT
2 KHAN MY AND JAIN PK -FINANCIAL MANAGEMANT
3 SMITH KV ndash MANAGEMANT OF WORKING CAPITAL
3 COMPANY RECORDS
4 JOURNAL
5 REPORTS
WEBLIOGRAPHY
1 wwwescortspvtltdcom
2 wwwgooglecom
In Favor of the Direct Method
The principal advantage of the direct method is that it shows operating cash receipts and
payments That is it is more consistent with the objective of a statement of cash flows to
provide information about cash receipts and cash payments than the in-direct method
which does not report operating cash receipts and payments
Supporters of the direct method contend that knowledge of the specific sources of
operating cash receipts and the purposes for which operating cash payments were made
in past periods is useful in estimating future operating cash flows Furthermore in-
formation about amounts of major classes of operating cash receipts and payments is
more useful than information only about their arithmetic sum (the net cash flow from
operating activities) Such information is more revealing of an enterprises ability (1) to
generate sufficient cash from operating activities to pay its debts (2) to reinvest in its
operations and (3) to make distributions to its owners
Many corporate providers of financial statements say that they do not currently collect
information in a manner that allows them to determine amounts such as cash received
from customers or cash paid to suppliers directly from their accounting systems But
supporters of the direct method contend that the incremental cost of assimilating such
operating cash receipts and payments data is not significant
In Favor of the Indirect Method
The principal advantage of the indirect method is that it focuses on the differences
between net income and net cash flow from operating activities That is it provides a
useful link between the statement of cash flows and the income statement and balance
sheet
Many providers of financial statements contend that it is less costly to adjust net income
to net cash flow from operating activities (indirect) than it is to report gross operating
cash receipts and payments (direct) Supporters of the indirect method also state that the
direct method which effectively reports income statement information on a cash rather
than an accrual basis may erroneously suggest that net cash flow from operating
activities is as good as or better than net income as a measure of performance
Special Rules Applying to Direct and Indirect Methods
Companies that use the direct method are required at a
minimum to report separately the following classes of
operating cash receipts and payments
Receipts
1048713 Cash collected from customers (including lessees licensees etc)
1048713 Interest and dividends received
1048713 Other operating cash receipts if any
Payments
1048713 Cash paid to employees and suppliers of goods or services (including
suppliers of
insurance advertising etc)
1048713 Interest paid
1048713 Income taxes paid
1048713 Other operating cash payments if any
Companies using the indirect method are required to disclose separately changes in
inventory receivables and payables to reconcile net income to net cash flow from
operating activities In addition interest paid (net of amount capitalized) and income
taxes paid must be disclosed elsewhere in the financial statements or accompanying
notes
The FASB requires these separate and additional disclosures so that users
may approximate the direct method Also an acceptable alternative presentation
of the in-direct method is to report net cash flow from operating activities as a
single line item in the statement of cash flows and to present the reconciliation
details elsewhere in the financial statements
FINDING OF SUDY
According to cash flow statement of the company The finding of the study are as
follows-
The company has not taken any loans secured or unsecured from companies
firms or other parties
The company has not accepted any deposit from the public during the year
The company is not a sick industrial company
The company has not granted any loan secured or unsecured to company firms
or other parties
The company has paid the entire long term and short term borrowing during the
year
The company has buy back the companyrsquos own share this year
The interest paid in 2008 is more than the
There has been a significant decline in volume over the years from 2001-02
to 2005-06 as can be seen in the graph below
Table 43
The Net sales of Tractor has increased considerably from 2004-05 to 2007-08
This can be mainly attributed to changes in Variable and material costs and in
the price
The Net sale of Tractor has increased considerably from 2004-05 to 2007-08
that is an decrease of Rs7216 per tractor This can be mainly attributed to
changes in
Variable and material costs and in the prices
RECOMMENDATIONS
According to cash flow statement of the company The suggestions of the study
are as follows-
The time durations for training program have to increase
Buy regular review and consultations develop a career progression
which is sensitive to performance and ability
Create an environment where by people are trend developed to enable
The to take advantages of opportunities that arise
The jab can be redesigned where the work man stay in what is normally
the same job but has elements of it changed
The principle amount must be paid in time which can be reducing the
interest the out flow
The purchase of the fixed asset must be made only when there is extreme
requirement
In order to avoid taxes the company should go for more investment
The companyrsquos borrowings should go for more investment
o The company should try to reduce the depreciations as maximum
as possible
CONCLUSION
The study on competency level of employees at ESCORTS PVTLTD gave an
insight about the acceptance of competency mapping by employees
The employees at Ymi welcome the introduction of competency mapping in their
organization as they felt it was very much essential in enhancing their skills and
organizational development
The organization has provided the recourses guidance and support to facilitate the
introduction of competency level easily and develop the employees in such a way
that they can face any kind of challenge
However the level of competency in employees is found to be satisfactory
Providing proper training education and guidance to the employees can enhance
the level
This study was mainly carried out to find out whether thee competency mapping
being followed by the company is effective till date If the competency mapping
and fitment to the organization
By looking at the graphs and tables it is quite that the employees still are not up to
the level of competent pool they still have to be trained and made competent in
order to fill the gap As the organization has just applied the mapping it has to see
to that it meets all the requirements for competency mapping
Therefore the graphs make it quite clear that the potential of the employees is not
up to the mark and ie they are not competent enough to meet the competency-
mapping requirement Hence by further training and counseling this gap can be
closed
This report includes the training requirements of employees and it highlights skills
possessed by each employee and skill required All employees get training so that
skill can be improved and maintain balance between standard performance with
their actual performance to avoid gap
APPENDIX
QUESTIONNAIRE
Consumer Survey
Name _____________________________
Age _____________________________
Sex
Male
Female
Occupation
Businessman
Service man
Professional
Others
Monthly income brackets
Below 15000
15000- 20000
20000-30000
30000 and above
of your savings _________
Do you invest
Yes
No
If yes then where do you invest your money
Bank
Insurance
funds
Others
Why do you made that statement
Return
Risk hedging
Tax benefits
Other reasons (specify) _______
Who influence your cash decision
Relatives and friends
Family members
Advisors experts
You yourself
If no then why
Do not know where to invest
Satisfied with your current investment return
Donrsquot want take risk
Other reasons
__________________________________________________________________
___________________
Do you know about CF statement
Yes
No
If yes then from where you have come to know about an cash statement
Advertisements on newspapers
Friends and relative
Agents experts
Other source
What do you think about cash statement
It means investing only in share market
Constant watch must be kept always
Return is not satisfactory
Other perception
__________________________________________________
Can you recall any cash flow of company
___________________________
Would you want to made CF of an org
Yes
No
If yes then why
_______________________________________________________
If no then why
_______________________________________________________
BIBLIOGRAPHY
List of Books
1 PANDEY IM - FINANCIAL MANAGEMANT
2 KHAN MY AND JAIN PK -FINANCIAL MANAGEMANT
3 SMITH KV ndash MANAGEMANT OF WORKING CAPITAL
3 COMPANY RECORDS
4 JOURNAL
5 REPORTS
WEBLIOGRAPHY
1 wwwescortspvtltdcom
2 wwwgooglecom
Receipts
1048713 Cash collected from customers (including lessees licensees etc)
1048713 Interest and dividends received
1048713 Other operating cash receipts if any
Payments
1048713 Cash paid to employees and suppliers of goods or services (including
suppliers of
insurance advertising etc)
1048713 Interest paid
1048713 Income taxes paid
1048713 Other operating cash payments if any
Companies using the indirect method are required to disclose separately changes in
inventory receivables and payables to reconcile net income to net cash flow from
operating activities In addition interest paid (net of amount capitalized) and income
taxes paid must be disclosed elsewhere in the financial statements or accompanying
notes
The FASB requires these separate and additional disclosures so that users
may approximate the direct method Also an acceptable alternative presentation
of the in-direct method is to report net cash flow from operating activities as a
single line item in the statement of cash flows and to present the reconciliation
details elsewhere in the financial statements
FINDING OF SUDY
According to cash flow statement of the company The finding of the study are as
follows-
The company has not taken any loans secured or unsecured from companies
firms or other parties
The company has not accepted any deposit from the public during the year
The company is not a sick industrial company
The company has not granted any loan secured or unsecured to company firms
or other parties
The company has paid the entire long term and short term borrowing during the
year
The company has buy back the companyrsquos own share this year
The interest paid in 2008 is more than the
There has been a significant decline in volume over the years from 2001-02
to 2005-06 as can be seen in the graph below
Table 43
The Net sales of Tractor has increased considerably from 2004-05 to 2007-08
This can be mainly attributed to changes in Variable and material costs and in
the price
The Net sale of Tractor has increased considerably from 2004-05 to 2007-08
that is an decrease of Rs7216 per tractor This can be mainly attributed to
changes in
Variable and material costs and in the prices
RECOMMENDATIONS
According to cash flow statement of the company The suggestions of the study
are as follows-
The time durations for training program have to increase
Buy regular review and consultations develop a career progression
which is sensitive to performance and ability
Create an environment where by people are trend developed to enable
The to take advantages of opportunities that arise
The jab can be redesigned where the work man stay in what is normally
the same job but has elements of it changed
The principle amount must be paid in time which can be reducing the
interest the out flow
The purchase of the fixed asset must be made only when there is extreme
requirement
In order to avoid taxes the company should go for more investment
The companyrsquos borrowings should go for more investment
o The company should try to reduce the depreciations as maximum
as possible
CONCLUSION
The study on competency level of employees at ESCORTS PVTLTD gave an
insight about the acceptance of competency mapping by employees
The employees at Ymi welcome the introduction of competency mapping in their
organization as they felt it was very much essential in enhancing their skills and
organizational development
The organization has provided the recourses guidance and support to facilitate the
introduction of competency level easily and develop the employees in such a way
that they can face any kind of challenge
However the level of competency in employees is found to be satisfactory
Providing proper training education and guidance to the employees can enhance
the level
This study was mainly carried out to find out whether thee competency mapping
being followed by the company is effective till date If the competency mapping
and fitment to the organization
By looking at the graphs and tables it is quite that the employees still are not up to
the level of competent pool they still have to be trained and made competent in
order to fill the gap As the organization has just applied the mapping it has to see
to that it meets all the requirements for competency mapping
Therefore the graphs make it quite clear that the potential of the employees is not
up to the mark and ie they are not competent enough to meet the competency-
mapping requirement Hence by further training and counseling this gap can be
closed
This report includes the training requirements of employees and it highlights skills
possessed by each employee and skill required All employees get training so that
skill can be improved and maintain balance between standard performance with
their actual performance to avoid gap
APPENDIX
QUESTIONNAIRE
Consumer Survey
Name _____________________________
Age _____________________________
Sex
Male
Female
Occupation
Businessman
Service man
Professional
Others
Monthly income brackets
Below 15000
15000- 20000
20000-30000
30000 and above
of your savings _________
Do you invest
Yes
No
If yes then where do you invest your money
Bank
Insurance
funds
Others
Why do you made that statement
Return
Risk hedging
Tax benefits
Other reasons (specify) _______
Who influence your cash decision
Relatives and friends
Family members
Advisors experts
You yourself
If no then why
Do not know where to invest
Satisfied with your current investment return
Donrsquot want take risk
Other reasons
__________________________________________________________________
___________________
Do you know about CF statement
Yes
No
If yes then from where you have come to know about an cash statement
Advertisements on newspapers
Friends and relative
Agents experts
Other source
What do you think about cash statement
It means investing only in share market
Constant watch must be kept always
Return is not satisfactory
Other perception
__________________________________________________
Can you recall any cash flow of company
___________________________
Would you want to made CF of an org
Yes
No
If yes then why
_______________________________________________________
If no then why
_______________________________________________________
BIBLIOGRAPHY
List of Books
1 PANDEY IM - FINANCIAL MANAGEMANT
2 KHAN MY AND JAIN PK -FINANCIAL MANAGEMANT
3 SMITH KV ndash MANAGEMANT OF WORKING CAPITAL
3 COMPANY RECORDS
4 JOURNAL
5 REPORTS
WEBLIOGRAPHY
1 wwwescortspvtltdcom
2 wwwgooglecom
FINDING OF SUDY
According to cash flow statement of the company The finding of the study are as
follows-
The company has not taken any loans secured or unsecured from companies
firms or other parties
The company has not accepted any deposit from the public during the year
The company is not a sick industrial company
The company has not granted any loan secured or unsecured to company firms
or other parties
The company has paid the entire long term and short term borrowing during the
year
The company has buy back the companyrsquos own share this year
The interest paid in 2008 is more than the
There has been a significant decline in volume over the years from 2001-02
to 2005-06 as can be seen in the graph below
Table 43
The Net sales of Tractor has increased considerably from 2004-05 to 2007-08
This can be mainly attributed to changes in Variable and material costs and in
the price
The Net sale of Tractor has increased considerably from 2004-05 to 2007-08
that is an decrease of Rs7216 per tractor This can be mainly attributed to
changes in
Variable and material costs and in the prices
RECOMMENDATIONS
According to cash flow statement of the company The suggestions of the study
are as follows-
The time durations for training program have to increase
Buy regular review and consultations develop a career progression
which is sensitive to performance and ability
Create an environment where by people are trend developed to enable
The to take advantages of opportunities that arise
The jab can be redesigned where the work man stay in what is normally
the same job but has elements of it changed
The principle amount must be paid in time which can be reducing the
interest the out flow
The purchase of the fixed asset must be made only when there is extreme
requirement
In order to avoid taxes the company should go for more investment
The companyrsquos borrowings should go for more investment
o The company should try to reduce the depreciations as maximum
as possible
CONCLUSION
The study on competency level of employees at ESCORTS PVTLTD gave an
insight about the acceptance of competency mapping by employees
The employees at Ymi welcome the introduction of competency mapping in their
organization as they felt it was very much essential in enhancing their skills and
organizational development
The organization has provided the recourses guidance and support to facilitate the
introduction of competency level easily and develop the employees in such a way
that they can face any kind of challenge
However the level of competency in employees is found to be satisfactory
Providing proper training education and guidance to the employees can enhance
the level
This study was mainly carried out to find out whether thee competency mapping
being followed by the company is effective till date If the competency mapping
and fitment to the organization
By looking at the graphs and tables it is quite that the employees still are not up to
the level of competent pool they still have to be trained and made competent in
order to fill the gap As the organization has just applied the mapping it has to see
to that it meets all the requirements for competency mapping
Therefore the graphs make it quite clear that the potential of the employees is not
up to the mark and ie they are not competent enough to meet the competency-
mapping requirement Hence by further training and counseling this gap can be
closed
This report includes the training requirements of employees and it highlights skills
possessed by each employee and skill required All employees get training so that
skill can be improved and maintain balance between standard performance with
their actual performance to avoid gap
APPENDIX
QUESTIONNAIRE
Consumer Survey
Name _____________________________
Age _____________________________
Sex
Male
Female
Occupation
Businessman
Service man
Professional
Others
Monthly income brackets
Below 15000
15000- 20000
20000-30000
30000 and above
of your savings _________
Do you invest
Yes
No
If yes then where do you invest your money
Bank
Insurance
funds
Others
Why do you made that statement
Return
Risk hedging
Tax benefits
Other reasons (specify) _______
Who influence your cash decision
Relatives and friends
Family members
Advisors experts
You yourself
If no then why
Do not know where to invest
Satisfied with your current investment return
Donrsquot want take risk
Other reasons
__________________________________________________________________
___________________
Do you know about CF statement
Yes
No
If yes then from where you have come to know about an cash statement
Advertisements on newspapers
Friends and relative
Agents experts
Other source
What do you think about cash statement
It means investing only in share market
Constant watch must be kept always
Return is not satisfactory
Other perception
__________________________________________________
Can you recall any cash flow of company
___________________________
Would you want to made CF of an org
Yes
No
If yes then why
_______________________________________________________
If no then why
_______________________________________________________
BIBLIOGRAPHY
List of Books
1 PANDEY IM - FINANCIAL MANAGEMANT
2 KHAN MY AND JAIN PK -FINANCIAL MANAGEMANT
3 SMITH KV ndash MANAGEMANT OF WORKING CAPITAL
3 COMPANY RECORDS
4 JOURNAL
5 REPORTS
WEBLIOGRAPHY
1 wwwescortspvtltdcom
2 wwwgooglecom
Table 43
The Net sales of Tractor has increased considerably from 2004-05 to 2007-08
This can be mainly attributed to changes in Variable and material costs and in
the price
The Net sale of Tractor has increased considerably from 2004-05 to 2007-08
that is an decrease of Rs7216 per tractor This can be mainly attributed to
changes in
Variable and material costs and in the prices
RECOMMENDATIONS
According to cash flow statement of the company The suggestions of the study
are as follows-
The time durations for training program have to increase
Buy regular review and consultations develop a career progression
which is sensitive to performance and ability
Create an environment where by people are trend developed to enable
The to take advantages of opportunities that arise
The jab can be redesigned where the work man stay in what is normally
the same job but has elements of it changed
The principle amount must be paid in time which can be reducing the
interest the out flow
The purchase of the fixed asset must be made only when there is extreme
requirement
In order to avoid taxes the company should go for more investment
The companyrsquos borrowings should go for more investment
o The company should try to reduce the depreciations as maximum
as possible
CONCLUSION
The study on competency level of employees at ESCORTS PVTLTD gave an
insight about the acceptance of competency mapping by employees
The employees at Ymi welcome the introduction of competency mapping in their
organization as they felt it was very much essential in enhancing their skills and
organizational development
The organization has provided the recourses guidance and support to facilitate the
introduction of competency level easily and develop the employees in such a way
that they can face any kind of challenge
However the level of competency in employees is found to be satisfactory
Providing proper training education and guidance to the employees can enhance
the level
This study was mainly carried out to find out whether thee competency mapping
being followed by the company is effective till date If the competency mapping
and fitment to the organization
By looking at the graphs and tables it is quite that the employees still are not up to
the level of competent pool they still have to be trained and made competent in
order to fill the gap As the organization has just applied the mapping it has to see
to that it meets all the requirements for competency mapping
Therefore the graphs make it quite clear that the potential of the employees is not
up to the mark and ie they are not competent enough to meet the competency-
mapping requirement Hence by further training and counseling this gap can be
closed
This report includes the training requirements of employees and it highlights skills
possessed by each employee and skill required All employees get training so that
skill can be improved and maintain balance between standard performance with
their actual performance to avoid gap
APPENDIX
QUESTIONNAIRE
Consumer Survey
Name _____________________________
Age _____________________________
Sex
Male
Female
Occupation
Businessman
Service man
Professional
Others
Monthly income brackets
Below 15000
15000- 20000
20000-30000
30000 and above
of your savings _________
Do you invest
Yes
No
If yes then where do you invest your money
Bank
Insurance
funds
Others
Why do you made that statement
Return
Risk hedging
Tax benefits
Other reasons (specify) _______
Who influence your cash decision
Relatives and friends
Family members
Advisors experts
You yourself
If no then why
Do not know where to invest
Satisfied with your current investment return
Donrsquot want take risk
Other reasons
__________________________________________________________________
___________________
Do you know about CF statement
Yes
No
If yes then from where you have come to know about an cash statement
Advertisements on newspapers
Friends and relative
Agents experts
Other source
What do you think about cash statement
It means investing only in share market
Constant watch must be kept always
Return is not satisfactory
Other perception
__________________________________________________
Can you recall any cash flow of company
___________________________
Would you want to made CF of an org
Yes
No
If yes then why
_______________________________________________________
If no then why
_______________________________________________________
BIBLIOGRAPHY
List of Books
1 PANDEY IM - FINANCIAL MANAGEMANT
2 KHAN MY AND JAIN PK -FINANCIAL MANAGEMANT
3 SMITH KV ndash MANAGEMANT OF WORKING CAPITAL
3 COMPANY RECORDS
4 JOURNAL
5 REPORTS
WEBLIOGRAPHY
1 wwwescortspvtltdcom
2 wwwgooglecom
RECOMMENDATIONS
According to cash flow statement of the company The suggestions of the study
are as follows-
The time durations for training program have to increase
Buy regular review and consultations develop a career progression
which is sensitive to performance and ability
Create an environment where by people are trend developed to enable
The to take advantages of opportunities that arise
The jab can be redesigned where the work man stay in what is normally
the same job but has elements of it changed
The principle amount must be paid in time which can be reducing the
interest the out flow
The purchase of the fixed asset must be made only when there is extreme
requirement
In order to avoid taxes the company should go for more investment
The companyrsquos borrowings should go for more investment
o The company should try to reduce the depreciations as maximum
as possible
CONCLUSION
The study on competency level of employees at ESCORTS PVTLTD gave an
insight about the acceptance of competency mapping by employees
The employees at Ymi welcome the introduction of competency mapping in their
organization as they felt it was very much essential in enhancing their skills and
organizational development
The organization has provided the recourses guidance and support to facilitate the
introduction of competency level easily and develop the employees in such a way
that they can face any kind of challenge
However the level of competency in employees is found to be satisfactory
Providing proper training education and guidance to the employees can enhance
the level
This study was mainly carried out to find out whether thee competency mapping
being followed by the company is effective till date If the competency mapping
and fitment to the organization
By looking at the graphs and tables it is quite that the employees still are not up to
the level of competent pool they still have to be trained and made competent in
order to fill the gap As the organization has just applied the mapping it has to see
to that it meets all the requirements for competency mapping
Therefore the graphs make it quite clear that the potential of the employees is not
up to the mark and ie they are not competent enough to meet the competency-
mapping requirement Hence by further training and counseling this gap can be
closed
This report includes the training requirements of employees and it highlights skills
possessed by each employee and skill required All employees get training so that
skill can be improved and maintain balance between standard performance with
their actual performance to avoid gap
APPENDIX
QUESTIONNAIRE
Consumer Survey
Name _____________________________
Age _____________________________
Sex
Male
Female
Occupation
Businessman
Service man
Professional
Others
Monthly income brackets
Below 15000
15000- 20000
20000-30000
30000 and above
of your savings _________
Do you invest
Yes
No
If yes then where do you invest your money
Bank
Insurance
funds
Others
Why do you made that statement
Return
Risk hedging
Tax benefits
Other reasons (specify) _______
Who influence your cash decision
Relatives and friends
Family members
Advisors experts
You yourself
If no then why
Do not know where to invest
Satisfied with your current investment return
Donrsquot want take risk
Other reasons
__________________________________________________________________
___________________
Do you know about CF statement
Yes
No
If yes then from where you have come to know about an cash statement
Advertisements on newspapers
Friends and relative
Agents experts
Other source
What do you think about cash statement
It means investing only in share market
Constant watch must be kept always
Return is not satisfactory
Other perception
__________________________________________________
Can you recall any cash flow of company
___________________________
Would you want to made CF of an org
Yes
No
If yes then why
_______________________________________________________
If no then why
_______________________________________________________
BIBLIOGRAPHY
List of Books
1 PANDEY IM - FINANCIAL MANAGEMANT
2 KHAN MY AND JAIN PK -FINANCIAL MANAGEMANT
3 SMITH KV ndash MANAGEMANT OF WORKING CAPITAL
3 COMPANY RECORDS
4 JOURNAL
5 REPORTS
WEBLIOGRAPHY
1 wwwescortspvtltdcom
2 wwwgooglecom
CONCLUSION
The study on competency level of employees at ESCORTS PVTLTD gave an
insight about the acceptance of competency mapping by employees
The employees at Ymi welcome the introduction of competency mapping in their
organization as they felt it was very much essential in enhancing their skills and
organizational development
The organization has provided the recourses guidance and support to facilitate the
introduction of competency level easily and develop the employees in such a way
that they can face any kind of challenge
However the level of competency in employees is found to be satisfactory
Providing proper training education and guidance to the employees can enhance
the level
This study was mainly carried out to find out whether thee competency mapping
being followed by the company is effective till date If the competency mapping
and fitment to the organization
By looking at the graphs and tables it is quite that the employees still are not up to
the level of competent pool they still have to be trained and made competent in
order to fill the gap As the organization has just applied the mapping it has to see
to that it meets all the requirements for competency mapping
Therefore the graphs make it quite clear that the potential of the employees is not
up to the mark and ie they are not competent enough to meet the competency-
mapping requirement Hence by further training and counseling this gap can be
closed
This report includes the training requirements of employees and it highlights skills
possessed by each employee and skill required All employees get training so that
skill can be improved and maintain balance between standard performance with
their actual performance to avoid gap
APPENDIX
QUESTIONNAIRE
Consumer Survey
Name _____________________________
Age _____________________________
Sex
Male
Female
Occupation
Businessman
Service man
Professional
Others
Monthly income brackets
Below 15000
15000- 20000
20000-30000
30000 and above
of your savings _________
Do you invest
Yes
No
If yes then where do you invest your money
Bank
Insurance
funds
Others
Why do you made that statement
Return
Risk hedging
Tax benefits
Other reasons (specify) _______
Who influence your cash decision
Relatives and friends
Family members
Advisors experts
You yourself
If no then why
Do not know where to invest
Satisfied with your current investment return
Donrsquot want take risk
Other reasons
__________________________________________________________________
___________________
Do you know about CF statement
Yes
No
If yes then from where you have come to know about an cash statement
Advertisements on newspapers
Friends and relative
Agents experts
Other source
What do you think about cash statement
It means investing only in share market
Constant watch must be kept always
Return is not satisfactory
Other perception
__________________________________________________
Can you recall any cash flow of company
___________________________
Would you want to made CF of an org
Yes
No
If yes then why
_______________________________________________________
If no then why
_______________________________________________________
BIBLIOGRAPHY
List of Books
1 PANDEY IM - FINANCIAL MANAGEMANT
2 KHAN MY AND JAIN PK -FINANCIAL MANAGEMANT
3 SMITH KV ndash MANAGEMANT OF WORKING CAPITAL
3 COMPANY RECORDS
4 JOURNAL
5 REPORTS
WEBLIOGRAPHY
1 wwwescortspvtltdcom
2 wwwgooglecom
APPENDIX
QUESTIONNAIRE
Consumer Survey
Name _____________________________
Age _____________________________
Sex
Male
Female
Occupation
Businessman
Service man
Professional
Others
Monthly income brackets
Below 15000
15000- 20000
20000-30000
30000 and above
of your savings _________
Do you invest
Yes
No
If yes then where do you invest your money
Bank
Insurance
funds
Others
Why do you made that statement
Return
Risk hedging
Tax benefits
Other reasons (specify) _______
Who influence your cash decision
Relatives and friends
Family members
Advisors experts
You yourself
If no then why
Do not know where to invest
Satisfied with your current investment return
Donrsquot want take risk
Other reasons
__________________________________________________________________
___________________
Do you know about CF statement
Yes
No
If yes then from where you have come to know about an cash statement
Advertisements on newspapers
Friends and relative
Agents experts
Other source
What do you think about cash statement
It means investing only in share market
Constant watch must be kept always
Return is not satisfactory
Other perception
__________________________________________________
Can you recall any cash flow of company
___________________________
Would you want to made CF of an org
Yes
No
If yes then why
_______________________________________________________
If no then why
_______________________________________________________
BIBLIOGRAPHY
List of Books
1 PANDEY IM - FINANCIAL MANAGEMANT
2 KHAN MY AND JAIN PK -FINANCIAL MANAGEMANT
3 SMITH KV ndash MANAGEMANT OF WORKING CAPITAL
3 COMPANY RECORDS
4 JOURNAL
5 REPORTS
WEBLIOGRAPHY
1 wwwescortspvtltdcom
2 wwwgooglecom
Insurance
funds
Others
Why do you made that statement
Return
Risk hedging
Tax benefits
Other reasons (specify) _______
Who influence your cash decision
Relatives and friends
Family members
Advisors experts
You yourself
If no then why
Do not know where to invest
Satisfied with your current investment return
Donrsquot want take risk
Other reasons
__________________________________________________________________
___________________
Do you know about CF statement
Yes
No
If yes then from where you have come to know about an cash statement
Advertisements on newspapers
Friends and relative
Agents experts
Other source
What do you think about cash statement
It means investing only in share market
Constant watch must be kept always
Return is not satisfactory
Other perception
__________________________________________________
Can you recall any cash flow of company
___________________________
Would you want to made CF of an org
Yes
No
If yes then why
_______________________________________________________
If no then why
_______________________________________________________
BIBLIOGRAPHY
List of Books
1 PANDEY IM - FINANCIAL MANAGEMANT
2 KHAN MY AND JAIN PK -FINANCIAL MANAGEMANT
3 SMITH KV ndash MANAGEMANT OF WORKING CAPITAL
3 COMPANY RECORDS
4 JOURNAL
5 REPORTS
WEBLIOGRAPHY
1 wwwescortspvtltdcom
2 wwwgooglecom
Advertisements on newspapers
Friends and relative
Agents experts
Other source
What do you think about cash statement
It means investing only in share market
Constant watch must be kept always
Return is not satisfactory
Other perception
__________________________________________________
Can you recall any cash flow of company
___________________________
Would you want to made CF of an org
Yes
No
If yes then why
_______________________________________________________
If no then why
_______________________________________________________
BIBLIOGRAPHY
List of Books
1 PANDEY IM - FINANCIAL MANAGEMANT
2 KHAN MY AND JAIN PK -FINANCIAL MANAGEMANT
3 SMITH KV ndash MANAGEMANT OF WORKING CAPITAL
3 COMPANY RECORDS
4 JOURNAL
5 REPORTS
WEBLIOGRAPHY
1 wwwescortspvtltdcom
2 wwwgooglecom
List of Books
1 PANDEY IM - FINANCIAL MANAGEMANT
2 KHAN MY AND JAIN PK -FINANCIAL MANAGEMANT
3 SMITH KV ndash MANAGEMANT OF WORKING CAPITAL
3 COMPANY RECORDS
4 JOURNAL
5 REPORTS
WEBLIOGRAPHY
1 wwwescortspvtltdcom
2 wwwgooglecom