Review 3 Analysis

8/3/2019 Review 3 Analysis

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CHAPTER-IV

DATA ANALYSIS AND INTERPRETATION

TABLE NO:4.1.1

SCHEDULE OF CHANGES IN WORKING CAPITAL 2005-2006

Rs in Crores

INTERPRETETION

The working capital shows a decrease in working capital at Rs 14.44 (inCrores) For the year 2005-2006. The main contribution is Debtors, Stock,Current

Liability are increasing in trend ,and cash& bank balance are decreased in trend.

Particular 2005 2006 Increase Decrease

Current Asset

149.79

165.72

15.93

Inventores

Debtors 288.11 206.35 81.76Cash&Bank balance 20.14 91.91 71.77

Advances 58.87 61.92 3.05

Current Liabilities

302.49

325.92

23.43Current Liabilities

Net decrease in working

capital

14.44

14.44

TOTAL 214.42 214.42 105.19 105.19


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TABLE NO:4.1.2


Rs in Crores

Particular 2006 2007 Increase Decrease

Current Asset

165.72

205.8

40.08

Inventores

Debtors 206.35 277.23 70.88

Cash&Bank balance 91.91 17.25 74.66

Advances 61.92 83.2 21.28

Current Liabilities

325.92

339.68


Net Increase in working capital

43.82

43.82

TOTAL 243.8 243.8 132.24 132.24

INTERPRETETION

The working capital shows a increase in working capital at Rs.43.82 (in

crores) for the year 2006-2007 .The main contributions are inventories ,cash& bank

balances,are increasing in trend,Debtors are decreased in trend.


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TABLE NO:4.1.3


Rs in Crores

Particular 2007 2008 Increase decrease

Current Asset

205.8

277.04

71.24

Inventores

Debtors 277.23 287.94 10.71

Cash&Bank balance 17.25 18.02 0.77Advances 83.2 105.16 21.96

Current Liabilities

339.68

385.79

46.11

Current Liabilities

Net Increase in working capital58.57

58.57

TOTAL

302.37 302.37 104.68 104.68

INTERPRETETION





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TABLE NO:4.1.4


Rs in Crores


Current Asset

277.04

233.81

43.23Inventores

Debtors 287.94 243.97 43.97


Advances 105.16 90.01 15.15

Current Liabilities

385.79

395.56


Net Decrease in workingcapital

TOTAL

118.07

118.07

302.37 302.37 118.07 118.07

INTERPRETETION

The working capital shows a decrease in working capital at Rs118.07 (in

Crores) For the year 2008-2009. The main contribution is Debtors, Stock,Current

Liability are increasing in trend ,and cash& bank balance are decreased in trend.

TABLE NO:4.1.5


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Rs in Crores


Current Asset

233.81

294.39

60.58

Inventores

Debtors 243.97 325.78 81.81


Advances 90.01 99.36 9.35

Current Liabilities

395.56

484.12


Net Increase in working capital

59.73

59.73

TOTAL

244.03 244.03 151.74 151.74

INTERPRETETION




TABLE NO:4.1.6 CASHFLOW STATEMENT FOR THE YEAR 2005-2006


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Rs in Crores

Particulars 2005-2006

Rs

A.Cash Elow from Operating Activities

Net Profit Before Tax 245.63

Adjustment for:

Depreciation 48.56

Interest and finance charges 13.18

Profit on Sale of Assets -21.21

profit on Sale of Investment -89.06

Provision For Doubtful Debt &advances 2.18

Interest received -0.24

Dividend income -12.84

Operating profit before working capital changes

186.2Adjustment for:

Increase in inventories -15.93

Decrease in sundry debtors 79.58

Increase in loans & Advances -2.78

Decrease incurrent liabilities -46.56

Direct Tax paid -54.18

Net cash flow from operating activities 146.35

B.Cash Floe from investing Activiting:

Capital Expenditure -131.77

Sale of fixed Assets 27.25

Investment in subsidiary -26.3

Investment in joint ventures -3.49

Purchase of other investments -50

Sale of investment in Associates 101.63

Sale of other investment 21.07

Dividend received 12.84

Interest received 0.24

Net Cash flow from investing activities -48.53

C.Cash floe from financing activiting:Borrowings 66.52

Repayments on brrowings -50.34

Dividends paid -29.32

Interest paid -12.91

Net Cash flow from financing activities -26.05

Net Increase/(decrease) in cash 71.77

INTERPRETATION


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In this above table the cashflow statement shows that the opening cash

balance isRs.20.14.(in crores) closed balance is increased.Rs91.91(incrores). also our

net cash also increased this year only most higher net cash will be hold . the

borrowing amount increased. That is one of the reason. Repayment ,dividend

paid,and interst paid so increase the financial activity.

CASHFLOW STATEMENT FOR THE YEAR 2006-2007


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Rs in Crores

Particulars

2006-2007

Rs



Adjustment for:

Depreciation 50.39







Operating profit before working capital changes 175

Adjustment for:Increase in inventories -40.08

Increase in sundry debtors -74.2


Increase incurrent liabilities 86.77







Investment in joint ventures

Purchase of other investments



Dividend recevied 4.77



C.Cash floe from financing activiting:

Borrowings 27.91Repayments on brrowings -65.76



Net Cash flow from financing activities -148.65

Net increase/(Decrease) in cash -74.66

INTERPRETATION


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In this above table the cash flow statement shows that the opening cash

balance is Rs91.91.(in crores)and closing balance is Rs.17.25 (in crores).The net cash

is the decreased cash will more utilize for operatin activities . the company has to

increase their cash position to meet their requirement and the company has to increase

the investing activities in the securities and it has to borrow the loan from others.


Rs in CroresParticulars 2007-2008


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Rs



Adjustment for:

Depreciation 53.15Interest and finance charges 18.15




provision For contingencies 0.7



Operating profit before working capital changes 143.33

Adjustment for:


Increase in sundry debtors -12.86


Increase incurrent liabilities 52.29






Investment in subsidiary -18.99Investment in joint ventures -61.63

Purchase of other investments -50.01







Borrowings 159.21




Net Cash flow from financing activities 71.24

Net increase/(Decrease) in cash 0.77

INTERPRETATION


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This accountintng year will be net cash is increase in Rs.0.77( in crores) it was

borrowing cash source banks or others and our company capital expenditure

increase . At the same time amount will borrowing so cash will be increased.


Rs in Crores

Particulars

2008-2009

Rs



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Adjustment for:

Depreciation 59.12


Profit on Sale of Assets -0.25Profit on Sale of Investment -46.76

Provision For Doubtful Debt &advances -2.66

Bad debts written off 3.21

provision For contingencies 4.83




Adjustment for:


Decrease in sundry debtors 43.48


Decrease incurrent liabilities -23.65





Sale of fixed Assets 3


Investment in joint ventures -191.82proceeds from sale of own shares heldd through trust 32.93






Borrowings 98.94



Interest paid 21.59

Net Cash flow from investing activities 11.29


INTERPRETATION


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balance is Rs.18.02 (in crores).and its closing balance is Rs.12.07 (in crores). The

cashfrom operation also increases and the company has to increase their cash postion

to meet their requirements and the company has to investment in the securities and it

has to borrow the loan from others.


Rs in Crores

Particulars

2009-2010

RsA.Cash Elow from Operating Activities


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Adjustment for:

Depreciation 66.81


Profit on Sale of Assets 1.36Provision For Doubtful Debt &advances -4.18

Bad debts written off 4.03

Provision For Doubtful advances 5.18

Provision for diminution in value of investment 34.77

Unrealised losses on foreign currency borrowing 0.74




Adjustment for:


Decrease in sundry debtors -81.68


Decrease incurrent liabilities 106.9

Direct Tax paid 53.98





Investment in subsidiary -137.94Purchase of other investments 191.98


Dividend recevied 1.99




Borrowings 367.79




Net Cash flow from investing activities 266.43


INTERPRETATION


balance is Rs.12.07 (in crores).and its closing balance is Rs.8.62 (in crores). The cash


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from operation also increases and the company has to increase their cash postion to

meet their requirements and the company has to investment in the securities and it has

to borrow the loan from others.

OVER ALL CASHFLOW STATEMENT


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Rs in Crores

S.NO PARTICULARS

2005-

06

Rs

2006-

07

Rs

2007-

08

Rs

2008-

09

Rs

2009-

10

Rs

1

Net cash flow from operating

activities 146.35 79.3 146.49 109.58 151.5

2

Net Cash flow from investing

activities -48.53 -5.31-216.96

-126.82

-421.38

3

Net Cash flow from Financing

activities -26.05-148.65 71.24 11.29 266.43

Net Increase/decrease in cash 71.77 -74.66 0.77 -5.95 -3.45

Opening cash balance 20.14 91.91 17.25 18.02 12.07

Closeing cash balance 91.91 17.25 18.02 12.07 8.62

INTERPRETATION

From the above table its understood that the study unit has a positive cash

flow during 2005-2006 . A year of 2008-2009 also fund from investing activity. Last

year closeing cash balance is vary low.but that year should be involve in financing

activity..


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RATIO ANALYSIS

CURRENT ASSET RATIO

Current ratio may be defined as the relationship between current asset and

current liability. This ratio is know as working capital ratio. Is a measure of general

liquidity and is most widely used to make the analysis of short term financial

position.

Current asset

CURRENT ASSET RATIO = -----------------------

Current liability

TABLE SHOWS CURRENT ASSET RATIO

Rs in crores

Year

Current Asset

(Rs)

Current Liability

(Rs) Current Ratio

2005-2006 525.9 325.92 1.61

2006-2007 596.62 352.82 1.70

2007-2008 638.03 385.66 1.65

2008-2009 579.86 395.56 1.46

2009-2010 728.15 484.12 1.50


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INTERPRETATION

From the above table the current asset ratio is below the norms 2:1 the study

states that the current asset is below the standard level.

1 . 3 5

1 . 4

1 . 4 5

1 . 5

1 . 5 5

1 . 6

1 . 6 5

1 . 7

C u r r e n t R a

20 05-2 00 620 06-2 00 720 07-2 00 820 08-2 00 9200 9-20 10

Y e a r

C u rr e n t A s s e t

Cur ren t Ra


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QUICK RATIO.

Quick ratio also know as acid test or liquid ratio established a relationship

between quick(or)liquid liabilities . An asset is said to be liquid if it can be converted

into within a short period without loss of value. The other liquid asset are bills

receivables,such debtors,marketable securities and temporary investment.

Current asset-(stock)

QUICK RATIO=----------------------------

Current liabilities-(bod)

TABLE SHOWS QUICK RATIO

Rs in crores

INTERPRETATION

From the above table the quick ratio stisfy the norms 1.5:1. In 2008-2009

The quick ratio is not satsfy the norms 1.5:1. the investment in quick asset is less

during that year.

Year

Quick Assets

(Rs)

Current Liability

(Rs) Quick Ratio

2005-2006 360.18 325.92 1.10

2006-2007 444.02 352.82 1.26

2007-2008 410.99 385.66 1.07

2008-2009 396.06 395.56 1

2009-2010 628.47 484.12 1.29


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0

0.2

0.4

0.6

0.8

1

1.2

Quick Rati

2005-2006 2006-2007 2007-2008 2008-2009 2009-2010

Year

Quick Asset Rati

Quick Ratio


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CASH POSITION RATIO

When liquidity is highly restricted in terms of cash and cash equivalents, This

ratio should be calculated, liquidity ratio measures the relationship between cash and

near cash items on one hand ,and immediately maturing obligations on the other .The

inventory and the debtors are excluded from current asset ,to calculate this ratio.

Cash + marketable securities

Cash position= -----------------------------------

Current liability

TABLE SHOWS CASH POSITION RATIO

Rs in crores

Year

Cash&Marketable securities

Rs

Current Liability

Rs Cash position

2005-2006 149.28 325.92 0.46

2006-2007 74.62 352.82 0.21

2007-2008 71.22 385.66 0.18

2008-2009 62.08 395.56 0.16

2009-2010 203.33 484.12 0.42

INTERPRETATION

Generally ,0.75:1 ratio is recommended to ensure liquidity. But our company

maintain in the year of 2005-2006 is 0.46:1 this is only a top most liquidity position.

And lowest liquidity position is in the year of 2008-2009 is 0.16:1.


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0

0.05

0.1

0.15

0.20.25

0.3

0.35

0.4

0.45

0.5

Cash position

2005-2006 2006-2007 2007-2008 2008-2009 2009-2010

Years

Cash position Ratio

Cash position


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NET PROFIT RATIO

This ratio is used to measure the over all profitability and hence it is very useful

to proprietors. It is also called Net profit to sales ratio (=profit ratio).

Net profitNet profit ratio = --------------100

Net sales

TABLE SHOWS NET PROFIT RATIO

Rs in crores

Year

Net Profit

Rs

Net sales

Rs Profit margin

Margin in

%

2005-2006 182.93 1460.94 0.13 13

2006-2007 155.78 1615.04 0.1 10

2007-2008 56.5 1762.33 0.03 3

2008-2009 72.18 2061.09 0.04 4

2009-2010 81.21 2345.64 0.03 3

INTERPRETATION

This Net profit ratio is very high fluctuating trend. The top most value of the

net profit ratio in the year of 2005-2006 is 13%and lowest net profit is 2007-2008 and

2009-2010 is 3% .


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0

2

46

8

10

12

14

P r o f i t Ma r g in

p e r c e n t a g e

200 5-20 06200 6-20 07200 7-20 0820 08-2 00 9200 9-20 10

Year

N e t P r o f it M a r

M argin in


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OPERATING RATIO

This ratio establishes the relationship between total operating expense and

sales .Total operating expenses include cost of goods ,administrative ,financial

expenses and selling expenses.cost of goods sold are also know as direct operating

expenses and the rest are know as other operating expenses.operating ratio aregenerally expressed in percentages.

Operating Ratio= cost of good sold+operating expenses

----------------------------------------------100

Net sales

TABLE SHOWS OPERATING RATIO

Rs in crores

Year

Cost of good

sold& Operating

exp (Rs)

Net Sales

(Rs)

Operating Ratio in

%

2005-2006 1196.52 1460.94 81.90

2006-2007 1309.46 1615.04 81.07

2007-2008 1460.18 1762.33 82.85

2008-2009 1781.7 2061.09 86.44

2009-2010 1800.83 2345.64 76.77

INTERPRETATION

The operating ratio is fluctuating trend . The top most value of the operating

ratio in the year 2008-2009 is 86.85% and lowest operating ratio in the year 2009-

2010 is 76.77%.


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7 0

7 2

7 4

7 6

7 8

8 0

8 2

8 4

8 6

8 8

O p e r a t in g R a

in %

2 0 0 5 -

2 0 0 6

2 0 0 6 -

2 0 0 7

2 0 0 7 -

2 0 0 8

2 0 0 8 -

2 0 0 9

2 0 0 9 -

2 0 1 0

Y e a r

Ope rating Ra

Ope ra t ing R a t io i


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TREND ANALYSIS

INVENTORIES

Yc=a+bx

Where a=y/n ; b=xy/x2

Rs in crores

(source: Annual report)

A = 1126.76/5

=225.35

B =285.35/10

=28.53

Trend Value =310.94

INTERPRETATION:

From the table inventories value during the study period this is noted.

Hence it is found that the inventories value in 2010-2011 is found to be

Rs.310.94(in crores).

Year X X2

Inventories in

Rs

Y XY

Trend

Value

2005-2006 -2 4 165.72 -331.44 168.29

2006-2007 -1 1 205.8 -205.8 196.82

2007-2008 0 0 227.04 0 225.35

2008-2009 1 1 233.81 233.81 253.89

2009-2010 2 4 294.39 588.78 282.42

TOTAL 5 10 1126.76 285.35


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INVENTORIES

0

50

100

150

200

250

300

350

2005-2006 2006-2007 2007-2008 2008-2009 2009-2010

Years

ValueInRs

Inventories

Trend Value


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CASH / BANK

Rs in Crores

Year X X2Cash/Bank

(Rs)Y XY(Rs)

Trend

value

2005-2006 -2 4 91.91 -183.82 4.77

2006-2007 -1 1 17.25 -17.25 12.4

2007-2008 0 0 18.02 0 29.57

2008-2009 1 1 12.07 12.07 46.74

2009-2010 2 4 8.62 17.24 63.91

TOTAL 5 10 147.87 -171.76

(source: Annual report)

A = 147.87/5

=29.57

B =171.76/10

=17.17

Trend Value =81.08

INTERPRETATION:

From the table cash/bank balance trend during the study period this is noted.

Hence it is found that the cash and bank value in 2010-2011 is found to be



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CASH/BANK

0

10

20

30

40

50

60

70

80

90

100

2005-2006 2006-2007 2007-2008 2008-2009 2009-2010

Years

Cash/Bank (Rs)Y

Trend value


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CURRENT LIABILITIES

Rs in Crores

Year X X2

Current Liabilities

(Rs)

Y

XY

(Rs)

Trend

Value

2005-2006 -2 4 325.92 -651.84 311.73

2006-2007 -1 1 339.68 -339.68 348.96

2007-2008 0 0 385.66 0 386.19

2008-2009 1 1 395.56 395.56 423.42

2009-2010 2 4 484.12 968.24 460.65

TOTAL 5 10 1930.94 372.28

A = 1930.94/5

=386.19

B =372.28/10

=37.23

Trend Value =497.88

INTERPRETATION:

From the above current liabilities trend during the study period this is noted.

Hence it is found that the current liabilities value in 2010-2011 is found to be



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C U R R E N T L IA B IL IT

0

10 0

20 0

30 0

40 0

50 0

60 0

2005-2006 2006-2007 2007-2008 2008-2009 2009-2010

Year

Valuesin

Rs

Current Liabil i t ies(R

Trend Value


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CASH CONVERSION CYCLE

CASH CONVERSION CYCLE = Inventory conversion period+ Receivable

Collection period - Payment deferral period

Particulars

2005-

2006

2006-

2007

2007-

2008

2008-

2009

2009-

2010

A.inventory conversion

period 5.53 5.04 5.01 5.78 4.92

B.receivable collection

period 11.06 11 10.96 11.16 11.48

A+B 16.59 16.04 15.97 16.94 16.4

C.payment deferral period 11.26 11.59 12.04 10.68 14.44

5.33 4.45 3.93 6.26 1.96

CASH BUDET


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Rs in crores

Particulars

2005-

2006

2006-

2007

2007-

2008

2008-

2009

2009-

2010

a. OPENING WORK IN

PROGRESS 25.25 33.08 36.31 39.32 51.55

b.Receipts 1595.01 1707.78 1788.29 2136.94 2361.92

c.payments 1349.35 1512.47 1704.85 2052.08 2192.47

d.Net cash flow (b-c) 245.66 195.31 83.44 84.86 169.45

f(a+e) 182.93 155.78 56.5 72.18 81.21

g.Minimum cash balance Requirement 20 20 20 20 20

SURPLUS RELATION TO THE

MINIMUM CASHBALANCE

REQUIREMENT(F-G) 162.93 135.78 36.5 52.18 61.21


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0

20

40

60

80

100120

140

160

180

CASH

REQUIREMENT

2005-

2006

2006-

2007

2007-

2008

2008-

2009

2009-

2010

YEAR

SURPLUS RELATION TO THE MINIMUM CASHBALANCE

REQUIREMENT(F-G)

SURPLUS RELATION TO THEMINIMUM CASHBALANCEREQUIREMENT(F-G)

Review 3 Analysis

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