Term Paper of Accounting for Managers

8/8/2019 Term Paper of Accounting for Managers

1/48

TERM PAPER OF ACCOUNTING FOR

MANAGERS

ON

ANALYSIS OF FINACIAL POISITION OF S.KUMARS

COMPANY

Submitted to lovely professional

university

Submitted to:

submitted by:

Mrs. Gagandeep BhatraGautam Singh

Sec: - RR1011


2/48

Roll no: - A13

INTRODUCTION:

(Textile) the branch of industry involved in the

manufacture of cloth or relating to fabric or weaving the:the textile industry.

The textile industry (known colloquially in the United

Kingdom and Australia as the rage trade) is a term used

for industries primarily concerned with the design or

manufacture of clothing as well as the distribution and

use of textiles.

COMPANY PROFILE:-

SKNL is one of Indias leading textile and Apparel Company withexpertise in multi-fiber manufacturing. The company hasextended its presence in multiple product categories from Fabricsto Apparels and Home Textiles.


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From a turnover of Rs.5 million in 1948, today, the group hascome a long way in achieving a turnover of Rs. 17 billion. SKNLhas set standards of excellence, acquiring many "firsts" to itscredit and crossing a number of "milestones" in its journey.

As a company that caters to the entire spectrum of the socio-economic segment in the Indian market, SKNL takes upon itselfthe unique distinction of being the Clothiers to the Nation

TodayThe World Tomorrow'.

SKNL's mission is to make the vision a reality.

To keep pace with brisk growth in business, teams were

strengthened and infrastructure modernized. Offices, plants,

machinery were updated in line with the growth outlined for thecompany.

COMMON SIZE STATEMENT:-

(1) statement in which all items are expressed as a percentage

of a base figure, useful for purposes of analyzing trends andchanging relationship among financialstatement items. Forexample, all items in each year's incomestatement could bepresented as a percentage ofnetsales.

(2) A financial statement that has variables expressed inpercentage rather than in dollar amounts. For example,items on an income statement are shown as a percentage of

revenue or sales, and balance sheet entries are displayed asa percentage of total assets. Common-size statements areused primarily for comparative purpose so that firms ofvarious sizes can be equated. Also called one hundredpercent statement.


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COMMON SIZE= ENTERY/TOTAL*100

Balance Sheet for the years ending 31st March 2007,08,09common size

Particulars 2007 2008 2009 2007 2008 20

SOURCES OF FUNDS

Shareholders Funds

Equity Capital 192.7 210.05223.3

99.6514

568.84573

766.068

Preference Share Capital169.0

1 169.79 86.948.4649

337.15028

72.361

Amount to be converted into PreferenceShares 0 65.59 0 0

2.762161

Share Application Money (Equity) 20 20 01.0017

080.84225

07

Reserves & Surplus421.9

2 510.021325.

3121.132

0321.4782

3436.00

Total803.6

3 975.451635.

6440.250

1341.0786

744.43

Minority interest 0 0230.3

9 0 06.258

Loan Funds

Secured Loans871.0

61,182.

101621.

7443.627

3849.7812

2544.05

Unsecured Loans 321.9 212.92182.4

916.122

498.96660

054.957

Total1192.

961,395.

021804.

2359.749

8758.7478

2649.01

Deferred tax liabilities 0 4.12 11.03 00.17350

360.299


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TOTAL LIABILITIES1996.

592,374.

593681.

29 100 100 1

APPLICATION OF FUNDS

Fixed Assets

Gross Block638.8

1 561.69851.6

931.995

0523.6541

8923.13

Less: Depreciation355.5

8 180.19217.4

417.809

367.58825

735.906

Net Block283.2

3 381.5634.2

514.185

6916.0659

3117.22

Add: Capital Work-in Progress295.8

6 540.38665.7

614.818

2722.7567

7118.08

Total Fixed Assets579.0

9 921.881300.

0129.003

9538.8227

0235.31

Investments 1.38 1.37 3.750.0691

180.05769

420.101

good will 0 0

101.1

4 0 0

2.747

Current Assets, Loans & Advances

Inventories503.6

5 579.45807.9

525.225

5124.4021

0721.94

Sundry Debtors 608.7 801.41204.

4630.486

9833.7489

8432.71

Cash & Bank Balances 14.52 11.23109.0

30.7272

40.47292

372.961

Loans & Advances256.9

8 289.05634.4

812.870

9412.1726

2817.23

Total Current Assets1383.

851681.1

32755.

9269.310

6770.7966

4374.86

Less: Current Liabilities & Provisions

Current Liabilities143.6

1 152.02230.3

27.1927

646.40194

736.256

Provisions 23.24 77.77249.2

11.1639

853.27509

176.769

Total Current Liabilities166.8

5 229.79479.5

38.3567

489.67703

913.02

Net Current Assets 12171,451.

342276.

3960.953

9361.1196

0461.83

Miscellaneous Expenditure (not written off) 0.94 0 0

0.0470

8 0

Profit & Loss Account198.1

8 0 09.9259

24 0

Defferred Tax Assets 0 0 0 0 0

TOTAL ASSETS1996.

592,374.

593681.

29 100 100 1


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INTERPRETATION OF COMMON SIZE OF BALANCE

SHEET:-

In the 2009 source of funds is increasing as compare

to 2008 & 2007 which shows the relative changes in

source of funds at a specific date which is increasing.

The assets which are remain same in all the year

shows that company is in a balanced position.

profit and loss A/c for the year ending 31st march2007,2008 & 2009commonsize

Particulars 2007 2008 2009 2007 2008 2009

INCOME

Sales and Services charges1229.

541,748.

652260.

3692.733

18100.333

9495.9080

11

Other Income 9.9 10.51 15.850.7466

680.60304

220.67252

21


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Increase/(Decrease) in Stock 86.45 -16.33 80.596.5201

49

-0.93698

183.41946

71

Total1325.

891,742.

832356.

8 100 100 100

EXPENDITURERaw MaterialConsumed/Purchased

886.84

1,112.32

1541.61

66.88639

63.822633

65.411151

Manufacturing Expenses 49.1 51.54 77.513.7031

732.95725

923.28878

14

Payment to & for Employees 30.16 42.05 73.062.2746

992.41274

253.09996

61

Administrative Expenses 30.13 43.95 61.892.2724

362.52176

062.62601

83

Selling & Distribution Expenses 79.85 88.71113.8

86.0223

75.08999

734.83197

56Miscellaneous ExpenditureWritten 10.53 10.21 13.71

0.794184

0.5858288

0.581721

Interest 60.92 89.33138.8

24.5946

55.12557

165.89019

01

Depreciation 43.87 42.61 44.213.3087

212.44487

411.87584

86

Total1191.

41,480.

722064.

6989.856

6284.9606

6787.6056

52

PROFIT/ ( LOSS)134.4

9 262.11292.1

110.143

3815.0393

3312.3943

48expense & income on settlementof cdr dues 0 0 57.2 0 0

2.4270197

PRIOR PERIOD ADJUSTMENT 0.37 -0.46 -0.760.0279

06

-0.0263939

-0.0322471

PROVISION FOR TAXATION net -11.34 -51.94 -88.42

-0.8552

75

-2.98021

03

-3.75169

72

deferred tax assets/(liabilities) 0 -4.12 -3.48 0

-0.23639

71

-0.14765

78

taxation for earlier years 0 0 61.51 0 02.60989

48

EXTRAORDINARY INCOME/(LOSS) -16.05 0 0

-1.2105

08 0 0AMOUNT AVAILABLE

FOR APPROPRIATION107.4

7 205.59176.5

88.1054

9911.7963

317.49236

25

APPROPRIATION


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Capital Redemption Reserve 2 0 40.030.1508

42 01.69848

95

BALANCE AFTER APPROPRIATION105.4

7 205.59115.6

77.9546

5711.7963

314.90792

6

BALANCE BROUGHT FROM Pre.

YEAR

-303.6

5

-

198.18 7.41

-22.901

6

-11.3711

61

0.31440

94

BALANCE CARIED OVER TO BAL.SHEET

-198.1

8 7.41123.0

8

-14.946

940.42517

065.22233

54

INTERPRETATION OF COMMON SIZE OF PROFIT &

LOSS ACCOUNT:

One most important assumption for the common size of

profit & loss account is that sales are considered as the base

value for finding common size of all other values. Hence

sales contribute to be the most important factor for thechanges in common size values.


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The total income remains same in 2008 & 2009 which shows

the no change in the two years. So the company needs to be

improvement in its financial position.

COMPARATIVE STATEMENT:-

A simple method of tracing periodic changes in the financialperformance of a company is to prepare comparative statements.Comparative financial statements will contain items at least fortwo periods. Changes increase and decrease- in incomestatement and balance sheet over period can be shown in twoways:

(1) Aggregate changes and (2) proportional changes.

Drawings special columns for aggregate amount orpercentage, or both, of increases and decreases, can indicate

aggregate changes. Recording percentage calculated in relationto a common base in special columns, on the other hand, showsrelative, or proportional, changes.

(1) COMPARATIVE STATEMENT= CURRENT YEAR- PREVIOUSYEAR (ABSOLUTE CHANGE)

(2) ABSOLUTE CHANGE/PREVIOUS YEAR*100


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Balance Sheet for the years ending 31st March 2007,08,09

Particulars 2007 2008 2009

AbsoluteChange 08

%Change08

AbsoluteChange 09

%Cha09

SOURCES OF FUNDS

Shareholders Funds


9 17.59.00363

26 13.346.3

Preference Share Capital 169.01 169.79 86.94 0.78 0.4615112 -82.85 48.

Amount to be converted intoPreference Shares 0 65.59 0 65.59 0 -65.59

Share Application Money (Equity) 20 20 0 0 0 -20


2 510.021325.

31 88.120.8807

36 815.29159

Total803.6

3 975.451635.

64 171.8221.3804

86 660.1967.


9 0 0 230.39

Loan Funds

Secured Loans871.0

61,182.

101621.

74 311.0435.7082

18 439.6437.


9-

108.98

-33.8552

35 -30.4314.

Total1192.

961,395.

021804.

23 202.0616.9377

01 409.2129.

Deferred tax liabilities 0 4.12 11.03 4.12 0 6.91167


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592,374.

593681.

29 37818.9322

8 1306.755.


Fixed Assets

Gross Block638.8

1 561.69851.6

9 -77.12

-12.0724

47 29051.


8 180.19217.4

4-

175.39

-49.3250

46 37.2520.

Net Block283.2

3 381.5634.2

5 98.2734.6961

83 252.7566.


6 540.38665.7

6 244.5282.6471

98 125.3823.


9 921.881300.

01 342.7959.1945

98 378.1341.

Investments 1.38 1.37 3.75 -0.01

-

0.7246377 2.38 173

good will 0 0101.1

4 0 0 101.14


Inventories503.6

5 579.45807.9

5 75.815.0501

34 228.539.


46 192.731.6576

31 403.0650.


3 -3.29

-22.6584

02 97.8870


8 289.05634.4

8 32.0712.4795

7 345.43119


851681.1

32755.

92 297.2821.4820

971074.7

963.

Less: Current Liabilities &Provisions


1 152.02230.3

2 8.415.85613

82 78.351.

Provisions 23.24 77.77249.2

1 54.53234.638

55 171.44220


5 229.79479.5

3 62.9437.7225

05 249.74108


342276.

39 234.3419.2555

46 825.0556.

Miscellaneous Expenditure (notwritten off) 0.94 0 0 -0.94 -100 0


8 0 0-

198.18 -100 0

Deferred Tax Assets 0 0 0 0 0 0


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TOTAL ASSETS1996.

592,374.

593681.

29 37818.9322

8 1306.755.

INTERPRETATION OF COMPARATIVE STATEMENT OF

BALANCE SHEET:-

Balance sheet shows the fluctuation in the comparative

statement since 2007 to 2009.

The value for beginning is found to be decreasing in 2007 &2008 and it is increasing in 2009. That show more

investments in the company for business.

The highest value for liabilities is increasing in 2009 by 31%

as compare to other years which shows company needs to

be increasing its profit.

The assets are increasing in 2009 which shows more liquidity

and company in sound position.

profit and loss A/c for the year ending 31st march 2007,2008,2009

Particulars 2007 2008 2009absolutechange

2008%

absolutechange 2009%

INCOME


541,748.

652260.

36 519.1142.19

9 511.71 29.26

Other Income 9.9 10.51 15.85 0.616.161

62 5.34 50.81


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Increase/(Decrease) in Stock 86.45 -16.33 80.59 -102.78

-118.8

9 96.92 -593.51

Total1325.

891,742.

832356.

8 416.9431.44

6 613.97 35.23

EXPENDITURE

Raw Material Consumed/Purchased886.8

41,112.

321541.

61 225.4825.42

51 429.29 38.59

Manufacturing Expenses 49.1 51.54 77.51 2.444.969

45 25.97 50.39

Payment to & for Employees 30.16 42.05 73.06 11.8939.42

31 31.01 73.75

Administrative Expenses 30.13 43.95 61.89 13.8245.86

79 17.94 40.82

Selling & Distribution Expenses 79.85 88.71113.8

8 8.8611.09

58 25.17 28.37

Miscellaneous Expenditure Written 10.53 10.21 13.71 -0.32

-3.038

94 3.50 34.28

Interest 60.92 89.33

138.8

2 28.41

46.63

49 49.49 55.40

Depreciation 43.87 42.61 44.21 -1.26

-2.872

12 1.60 3.75

Total1191.

41,480.

722064.

69 289.3224.28

4 583.97 39.44


9 262.11292.1

1 127.6294.89

18 30.00 11.45expense & income on settlements ofcdr dues 0 0 57.2 0.00 0 57.20 0.00

PRIOR PERIOD ADJUSTMENT 0.37 -0.46 -0.76 -0.83

-224.3

24 -0.30 65.22

PROVISION FOR TAXATION net -11.34 -51.94 -88.42 -40.60358.0

25 -36.48 70.23

deferred tax assets/(liabilities) 0 -4.12 -3.48 -4.12 0 0.64 -15.53

taxation for earlier years 0 0 61.51 0.00 0 61.51 0.00

EXTRAORDINARY INCOME/(LOSS) -16.05 0 0 16.05 -100 0.00 0.00

AMOUNT AVAILABLE

FOR APPROPRIATION107.4

7 205.59176.5

8 98.1291.29

99 -29.01 -14.11

APPROPRIATION

Capital Redemption Reserve 2 0 40.03 -2.00 -100 40.03

BALANCE AFTER APPROPRIATION105.4

7 205.59115.6

7 100.1294.92

75 -89.92 -43.74

BALANCE BROUGHT FROM Pre. YEAR

-303.6

5-

198.18 7.41 105.47

-34.73

41 205.59 -103.74

BALANCE CARIED OVER TO BAL. SHEET

-198.1

8 7.41123.0

8 205.59

-103.7

39 115.67 1,561.00


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INTERPRETATION OF COMPARATIVE STATEMENT OF

PROFIT & LOSS ACCOUNT:-

The income in 2008 is 31% which is increasing by 4% in

2009 which shows the company is in profit & in sound

position also.

The sales in 2008 is 6.1% & in 2009 is 50.8% which shows

company is earning profit in the earlier years.


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TREND ANALYSIS:-

Trend analysis of ratios indicates the direction of change.This kind of analysis is particularly applicable to the items

of profit & loss account. It is advisable that trends of salesand net income may be studied in the light of two factors:the rate of fixed expansion or secular trend in the growthof the business and the general price level. It might befound in practice that a number of firms would show apersistent growth over a period of years. But to get a truetrend of growth, the sales figures should be adjusted by asuitable index of general prices.

For trend analysis, the use of index numbers isgenerally advocated. The procedure followed is to assignthe number 100 to items of the base year and tocalculate percentage changes in each item of other yearsin relation to the base year. This procedure may be calledas trend-percentage method.

TREND ANALYSIS = CURRENT YEAR/BASE YEAR*100

Balance Sheet for the years ending 31st March 2007,2008,2009


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Particulars 2007 2008 2009 2007 2008 2009

SOURCES OF FUNDS

Shareholders Funds


9 100109.003

63115.926

31


1 169.79 86.94 100100.461

5151.4407

43Amount to be continuo PreferenceShares 0 65.59 0 100 0 0

Share Application Money (Equity) 20 20 0 100 100 0


2 510.021325.

31 100120.880

74314.114

05

Total803.6

3 975.451635.

64 100121.380

49203.531

48


9 0 0

Loan Funds

Secured Loans871.0

61,182.

101621.

74 100135.708

22186.180

06


9 10066.1447

6556.6915

19

Total1192.

961,395.

021804.

23 100116.937

7151.239

77

Deferred tax liabilities 0 4.12 11.03 100 0 0


592,374.

593681.

29 100118.932

28184.378

87


Fixed Assets

Gross Block638.8

1 561.69851.6

9 10087.9275

53133.324

46


8 180.19217.4

4 10050.6749

5461.1507

96

Net Block283.2

3 381.5634.2

5 100134.696

18223.934

61


6 540.38665.7

6 100182.647

2225.025

35


9 921.881300.

01 100159.194

6224.491

88

Investments 1.38 1.37 3.75 10099.2753

62271.739

13

good will 0 0101.1

4 100 0 0


Inventories503.6

5 579.45807.9

5 100115.050

13160.418

94


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46 100131.657

63197.874

16


3 10077.3415

98750.895

32


8 289.05634.4

8 100112.479

57246.898

59

Total Current Assets 1383.85 1681.13 2755.92 100 121.4821 199.14875

Less: Current Liabilities & Provisions


1 152.02230.3

2 100105.856

14160.378

8

Provisions 23.24 77.77249.2

1 100334.638

551072.33

22


5 229.79479.5

3 100137.722

51287.401

86


342276.

39 100119.255

55187.049

3Miscellaneous Expenditure (notwritten off) 0.94 0 0 100 0 0


8 0 0 100 0 0

Deferred Tax Assets 0 0 0 100 0 0

TOTAL ASSETS1996.

592,374.

593681.

29 100118.932

28184.378

87

INTERPRETATION OF TREND ANALYSIS OF BALANCESHEET:-

Source of funds is increasing in 2009 is 203% and

121% in 2008 & 100 in 2007 which shows more trend

of sale.

Total assets are increasing by 66% in 2009 as

compare to other years and show persistent growth

over a period of years.


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profit & los a/c for year 2007,08,09

trendanalysis

Particulars 2007 2008 2009 2007 2008 2009

INCOME

Sales and Services charges 1229.541,748.6

5 2260.36 100142.219

85183.837

86

Other Income 9.9 10.51 15.85 100106.161

62160.101

01

Increase/(Decrease) in Stock 86.45 -16.33 80.59 100

-18.889532

93.221515

Total 1325.891,742.8

3 2356.8 100131.446

05177.752

3

EXPENDITURE

Raw Material Consumed/Purchased 886.841,112.3

2 1541.61 100125.425

1173.831

81

Manufacturing Expenses 49.1 51.54 77.51 100104.969

45157.861

51

Payment to & for Employees 30.16 42.05 73.06 100139.423

08242.241

38

Administrative Expenses 30.13 43.95 61.89 100145.867

91205.409

89

Selling & Distribution Expenses 79.85 88.71 113.88 100111.095

8142.617

41

Miscellaneous Expenditure Written 10.53 10.21 13.71 10096.9610

64130.199

43

Interest 60.92 89.33 138.82 100146.634

93227.872

62

Depreciation 43.87 42.61 44.21 10097.1278

78100.775

02


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Total 1191.41,480.7

2 2064.69 100124.284

04173.299

48

PROFIT/ ( LOSS) 134.49 262.11 292.11 100194.891

81217.198

3expense & income on settlement ofcdr dues 0 0 57.2 100 0 0

PRIOR PERIOD ADJUSTMENT 0.37 -0.46 -0.76 100

-124.324

32

-205.405

41

PROVISION FOR TAXATION net -11.34 -51.94 -88.42 100458.024

69779.717

81

deferred tax assets/(liabilities) 0 -4.12 -3.48 100 0 0

taxation for earlier years 0 0 61.51 100 0 0

EXTRAORDINARY INCOME/(LOSS) -16.05 0 0 100 0 0

AMOUNT AVAILABLE

FOR APPROPRIATION 107.47 205.59 176.58 100191.299

9164.306

32

APPROPRIATION

Capital Redemption Reserve 2 0 40.03 100 0 2001.5

BALANCE AFTER APPROPRIATION 105.47 205.59 115.67 100194.927

47 109.671

BALANCE BROUGHT FROM Pre. YEAR -303.65 -198.18 7.41 10065.2659

31

-2.44030

96

BALANCE CARIED OVER TO BAL.SHEET -198.18 7.41 123.08 100

-3.73902

51

-62.1051

57

INTERPRETATION OF TREND ANALYSIS OF PROFIT

& LOSS ACCOUNT:-

For trend analysis, the use of index numbers is

generally advocated. The procedure followed is to

assign the number 100 to items of the base year and

to calculate percentage changes in each item of

other years in relation to the base year.


20/48

Profit in 2008 is 194% and 217% in 2009 which

shows company earning profit and sales figures is

going high.

Ratio Analysis:-A tool used by individuals to conduct a quantitative

analysis of information in a company's financial

statements. Ratios are calculated from current year

numbers and are then compared to previous years, other

companies, the industry, or even the economy to judgethe performance of the company. Ratio analysis is

predominately used by proponents of fundamental

analysis. There are many ratios that can be calculated

from the financial statements pertaining to a company's


21/48

performance, activity, financing and liquidity. Some

common ratios include the price-earnings ratio, debt-

equity ratio, earnings per share, asset turnover and

working capital.Current Ratio:-A Liquidity ratio that measures a company's ability to

pay short-term Obligations. The ratio is mainly used to

give an idea of the company's ability to pay back its

short-term liabilities (debt and payables) with its short-

term assets (cash, inventory, receivables). The higher the

current ratio, the more capable the company is of payingits obligations. A ratio under 1 suggests that the

company would be unable to pay off its obligations if they

came due at that point. While this shows the company is

not in good financial health, it does not necessarily mean

that it will go bankrupt - as there are many ways to

access financing - but it is definitely not a good sign.

The current ratio can give a sense of the efficiency of a

company's operating cycle or its ability to turn its product

into cash. Companies that have trouble getting paid on

their receivables or have long inventory turnover can run

into liquidity problems because they are unable to

alleviate their obligations. Because business operationsdiffer in each industry, it is always more

useful to compare companies within the same industry.


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Quick Ratio:-This is a ratio between quick current assets and current

liabilities. Quick ratio of 1:1 is considered satisfactory.The Higher the quick

Ratio,the better the position of the Company.

The quick ratio is calculated as:

Cash Ratio:-

Since cash is the most liquid asset, a financial analysismay examine cash ratio and its equivalent to currentliabilities. Trade investment or marketable securities areequivalent to cash; therefore, they may be included inthe computation of cash ratio:

Cash ratio = cash + marketable securitiesCurrent liabilities

Liquidity Ratio 2007 2008 2

Current Ratio 1.13 1.15 1

Quick Ratio 0.72 0.75 0

Cash Ratio 0.01 0.19 0


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Interpretation:-Current ratio:This ratio shows Insufficient Utilization ofcurrent Assets in the business. In year 07 ratio is 1.13 &in year 08 ratio is 1.15 & in year 09 ratio is 1.21 Whichis insufficient Ratio Which seems that company need to

be improvement.

Quick ratio: Quick ratio of 1:1 is considered as Ideal.Higher ratio shows efficient utilization of assets inbusiness. In the Year 2009 ratio is 0.85 is Efficientbecause lower ratio is more profitability in the business.

Cash ratio: -The Company carries a small amount of

cash. The company case Ratio Is 0.01 & 0.19 & 0.04 inthe Year 07, 08 & 09 which is insufficient in all years. Socompany need to be improvement in cash because inbusiness 2:1:1 cash ratio is good &ideal.


24/48

Activity ratio:- funds of creditors and owner are

invested in varies assets to generate sale and profit. The

better the management of assets,the larger the amount

of sale. Activity ratios are employed to evaluate the

efficiency with which the firm manager and utilized its

assets. These ratios are also called turnover ratio

because they indicate the speed with which assets are

being covered or turned over into sales. Activity ratio,

thus, involve a relationship between sales and assets. A

proper balance between sales and assets generally

reflects that assets are managed well.

ACTIVITY RATIO

2007 2008 2009

Debtors turnover 2.01 2.18 1.87

Assets turnover 1.01 1.2 0.99

Working capital turnover 0.68 0.73 6.32


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Debtors turnover:- A firm sells goods cash and credit.

Credit is used as a marketing tool by a number of

companies. When the firm extends credit to its customer,debtors are created in the firms accounts. Debtors are

convertible into cash over a short period and, therefore,

are include in current assets. The liquidities position of

the firm depends on quality of the debtors to a great

extant.

Debtors turnover is found out by dividing credit sale by

average debtors:

Debtors turnover =

ITERPRETATION: Lower ratio shows sufficient

utilization of debt in business. It is also shows morebusiness. In the year 2009 lower ratio is best because It

is sufficient for business.

Working capital turnover:- Afirm may also like to

relate net current assets(or net working capital gap) to

sale. It may thus compute net working capital turnover bydividing sale by net working capital.

INTERPRETATION:


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Ratio shows no. of times the working capital has been

employed in the process of carrying on of business. The

Ratio in year 2009 is 6.32 which is higher as compare to

the other year. Higher the ratio, better the efficiency inthe utilization of working capital. So company used his

working capital in year 2009 efficiently.

Assets turnover :- Asset turnover ratio are that

ratio which shows the relationship between sales &assets. Assets are used to generate sales.

ASSESTS TURN OVER =

SALES / NET ASSESTS

INTERPRETATION: IN This ratio higher Ratio shows

Better utilization of assets in business and goodOperational Efficiency. In this ratio 2008 is sufficient ratio

because It Is higher ratio. But it is not sufficient because

It is less as compare to year 2007 IF we have less assets

then we cant earn more profit. So company needed to

improve in his assets turnover.


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Profitability Ratio:-

PROFITABLITY RATIO

2007 2008 2009

Net profit ratio 0.23 0.21 0.28

Return on equity 0.35 0.39 0.38

Net profit ratio:-IT is ratio which establishes relationship between netprofit and sales. Net profit is how much percentage ofnet sales is known by this ratio.

Objective of net profit ratio is todetermine the overall efficiency of business.

NET PROFIT RATIO = PROFITAFTER TAX/ SALES

INTERPRETATION: Higher the net profit ratio, better itis for the business. Higher ratio shows more profit.


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2009 is high ratio year shows more earnings for theyear is more earn profit to the business. Company didnot earn more profit during three years so companyneeds to improve net profit.

Return on equity:-(ROE) and return on capital (ROC)

measure very similar concepts, but with a slight

difference in the underlying formulas. Both measures are

used to decipher the profitability of a company based on

the money it had to work with.

Return on equity =

Interpretation:- The year 2008 more efficiency

because the year is higher rate it is better for business.

The company with higher return on equity is favored by

investors. If the investors are more company will be in

great profit.

SOLVENCY RATIO: THESE Ratios indicate maximum

funds provided by owners, as a general rule, there should

be an appropriate mix of debt and owners equity in

financing the firms assets. It is also called capitalstructure ratio.

SOLVENCY RATIO

2007 2008 2009

Total debt ratio 0.6 0.53 0.44


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Debt equity ratio 1.86 2.48 2.11

Capital equity ratio 3.07 4.63 4.76

Proprietary ratio 0.4 0.41 0.44

TOTAL DEBT RATIO: Debt ratio shows comparison

between total debt and capital employed or net assets.Total debt will include short and long term borrowing

from financial institutions.

TOTAL DEBT RATIO = TOTAL

DEBT/ CAPITAL EMPLOYEED

INTERPRETATION: Higher ratio shows sufficientutilization of debt in the business. 2008 ratio is sufficient

to the business. it is more profitability to business. But

company less profit as compare to the 2007 so the

company needs to be improvement.


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DEBT EQUITY RATIO: DEBT equity ratio is that ratio

which relationship between the debt and equity. The

relationship describing the lenders contribution for eachrupee of the owners contribution is called debt equity

ratio.

DEBT EQUITY RATIO= TOTAL DEBT/ NET

WORTH

INTERPRETATION: LOWER debt equity is always goodfor business. In the year 2007 debt equity is 1.86 which is

lower as compare to year 2008 & 2009. Which is good

because lower debt equity ratio higher degree of

protection enjoyed by lenders.

CAPITAL EQUITY RATIO: Thee ratio shows relationshipbetween debt and equity. One way wants to know how

much funds are being contributed together by lenders

and owners for each rupee of the owners contribution.

C. EQUITY RATIO = NET ASSESTS/

NET WORTH

INTERPRETATION: HIGHER ratio shows more profit.

Capital equity ratio is higher for the year 2009 is 4.76 as

compare to the ratio of year 2008 which is 4.63. Higher


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ratio is the profitability for the business. Company has

more profit in the year 2009.

PROPRIETARY RATIO: The ratio shows the extent to

which the total assets have been financed by theproprietary. Higher the Ratio,Greater the Satisfaction for

Lenders and Creditors.

PROPRIETARY RATIO = SHREHOLDERS

FUND / TOTAL ASSETS

INTERPRETATION: If the proprietary ratio is high then it

is good for lenders and creditors. Because if it is high

then shareholders funds will be high if the funds high

company will be in great profit and using his assets in

very effectively. The company has higher ratio in the year

in 2009 so company has great profit in this year but it isless as compare to year 2007 & 2008. So company need

to be work hard to earn more profit.

CASH FLOW STATEMENT:-

A statement of changes in financial position on cash basis,

commonly known as the cash flow statement, summarizes the

causes of changes in cash position between dates of the two

balance sheets. It indicates the sources and uses of cash. The


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cash flow statement is similar to the funds flow statement except

that it focuses attention on cash (immediate or near term

liquidity) instead of working capital or funds (potential or medium

term liquidity). Thus, this statement analyses changes in non

current accounts as well as current accounts (other than cash) todetermine the flow of cash.

The easiest and the direct method of preparing a

statement of changes in cash position is to only record inflows

and outflows of cash, and find out the net change during a given

period. The rupees received minus the rupees paid during a

period are the cash balance at the end of period. If the net

change in the cash position has to be found out from the income

statement and comparative balance sheets, these adjustments

for the no cash items are made. These adjustments are made in

the same way as in preparing funds flow statement.

cash flow statement for year ended31 march ,2007

CurrentYear

PreviousYear

endedon31.03.2007

endedon31.03.2006

A) Cash Flow Statement fromOperating Activities

Net Profits Before Tax andExtraordinary Items

13,449.43

5,519.65

Adjustments for:

a)depreciation

4,387.51

4,091.85

b)Deferred Revenue Expenditure

1,052.63

1,135.50

c)Profit/Loss on sale of fixed assets(net) 5.94 2.53

d)Sundry balances written back -176.17 -135.5

e)Sundry balances written off 11.89 10.72

f) Long term publicity 0 -26.52

g)Bad debts 3.98 41.49

h)Interest Expenses

6,092.39

4,506.61


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i)Interest Income -82.22 -66.26

j)Profit on Sale of Investment -394.7 0

Operating Profit before Working CapitalChanges

24,350.68

15,080.07

Adjustments for

a)Trade & Other Receivables

-15,177.

07

-11,616.

07

b)Inventories

-12,374.

03

-3,921.9

2

c)Trade payables

3,401.11 664.1

Cash Generated from /in OperatingActivities 200.69 206.18

a)Direct Taxes -68.53 -19.63

Cash Inflow/(outflow) before ExtraordinaryItems 132.16 186.55

a)Prior Period Adjustments (gross) 37.22 5.83

b)Restructuring Gains on Borrowings 0 5,503.04

c)Transfer of Assets on Demerger(1,605.12)

-1,605.1

2 0

Net cash Flow from /in OperatingActivities

Total(A)

-1,435.7

45,695.4

2

B) Cash Flow arising from Investing

Activities

a)Acquisition of F. assets (Including Capital work-in-progress)

-24,425.

89

-1,548.7

1

b)Sale of Fixed Assets 107.54 10.56

c)Investments

1,044.65 -100

d)Interest Income 82.22 66.26


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Net cash Flow from /in InvestingActivities

Total(B)

-23,191.

48

-1,571.8

9

C) Cash Flow arising from financingactivity

a)Proceeds from Secured Loans (Net ofrepayment)

-10,765.

2811,212.

64

b)Proceeds from Unsecured Loans (Net ofrepayment)

12,306.71

-21,676.

71

c)Proceeds from Equity Shares/ Shares to bealloted

27,062.56

10,284.00

d)Proceeds from Preference Shares (Net of

Redemption)

1,795.8

5 0.00

e)Interest

-6,092.3

9

-2,971.8

6

Net cash Flow from FinancingActivities

Total(C)

24,307.45

-3,151.9

3

Net Increase in Cash and CashEquivalents (A+B+C) -319.77 971.6

cash & cash equivalent (OpeningBalance)

1,771.33 799.73

cash & cash equivalent (Closing Balance)

1,451.56

1,771.33

Net Change in Cash & CashEquivalent -319.77 971.6


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cash flow statement for the year ended 2008

CurrentYear

PreviousYear

endedon31.03.2008

endedon31.03.2007

A) Cash Flow Statement from OperatingActivities

Net Profits Before Tax & Extraordinary Items

21,866.58

13,449.43

Adjustments for:

a) Depreciation

3,566.54

4,387.51

b) Deferred Revenue Expenditure

1,001.26

1,052.63

c) Profi t/Loss on sale of fixed assets(net) -32.91 5.94

d) Sundry balances written back -44.9 -176.17

e) Sundry balances written off 119.35 11.89

f) ESOP Compensation debited to P&L a/c 171.8 0

g) Bad debts 0 3.98

h) Interest Expenses8,310.9

66,092.3

9

i) Interest Income -222.53 -82.22

j) Profit on sale of Investment 0 -394.7


34,736.15

24,350.68

Adjustments for:

a) Trade & Other Receivables2,717.0

3

-

15,177.07

b) Inventories

2,113.75

-12,374.

03

c) Trade payables

-3,108.8

93,401.1

1


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Cash Generated from /(Used)in OperatingActivities

36,458.04 200.69

a) Direct Taxes

-

2,971.39 -68.53

Cash Inflow/(outflow) before ExtraordinaryItems

33,486.65 132.16

a) Prior Period Adjustments (gross) -45.62 37.22

b) Transfer of Assets on Demerger 0

-1,605.1

2

Net cash Flow from /(Used)in OperatingActivities

Total(A)

33,441.03

-1,435.74

B) Cash Flow arising from InvestingActivities

a) Acquisition of F. assets Including Capital w.-in-progress

-38,701.

32

-24,425.

89

b) Sale of Fixed Assets

9,349.37 107.54

c) Investments

-4,003.5

21,044.6

5

d) Interest Income 222.53 82.22

Net cash Flow from /(Used)in InvestingActivities

Total(B)

-33,132.

94

-23,191.

48

C) Cash Flow arising from financingactivities

a) Proceeds from Secured Loans (Net ofrepayment)

-2,229.8

2

-10,765.

29

b) Proceeds from Unsecured Loans (Net ofrepayment)

-6,896.9

612,306.

71

c) Proceeds from Equity Shares/ Shares to beallotted

16,445.56

27,062.56


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d) Proceeds from Preference Shares (Net ofRedemption) 77.26

1,795.85

e) Interest Expenses

-8,310.9

6

-6,092.3

9

Net cash Flow from Financing ActivitiesTotal(C) -914.91

24,307.44

Net Increase in Cash and Cash Equivalents(A+B+C) -606.83 -319.77

Cash & Cash Equivalent (Opening Balance)

1,451.56

1,771.33

Cash & Cash Equivalent (Closing Balance) 844.731,451.5

6

Net Change in Cash & Cash Equivalent -606.83 -319.77

cash flow statement for the year ended 2009

ParticularsCurrent

YearPreviou

s Yearendedon31.03.2009

endedon31.03.2008

A) Cash Flow Statement fromOperating Activities

Net Profits Before Tax and Exceptional 14,253. 21,866.


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Items 70 58

Adjustments for:

a) Depreciation

2,654.49

3,566.54

b) Deferred revenue expenditure

1,261.4

9

1,001.2

6c) Profit/Loss on sale of fixed assets (net) -65.51 -32.91

d) Sundry balances written back -12.46 -44.9

e) Sundry balances written off 5.75 119.35f) ESOP Compensation debited to P&Laccount 308.75 171.8

g) Bad debts 10.02 0

h) Interest expenses

13,461.26

8,310.96

i) Interest income -97.72 -222.53

j) Income on CDR exit

-5,779.7

5 0


26,000.01

34,736.15

Adjustments for:

a) Trade & other receivables

-28,145.

812,717.0

3

b) Inventories

-9,521.0

82,113.7

5

c) Trade payables

1,311.49

-3,108.8

9

Cash Generated from /in OperatingActivities

-10,355.

3836,458.

04

a) Direct taxes

-8,877.1

5

-2,971.3

9

Cash Inflow/(outflow) before Prior PeriodItems

-19,232.

5333,486.

65


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a) Prior period adjustments (gross) -54.52 -45.62

Net cash Flow from/(Used)inOperating Activities

Total(A)

-19,287.

0533,441.

03

B) Cash Flow arising from InvestingActivities

a)Acquisition of f. assets (Including capital w.-in-progress)

-28,707.

63

-38,701.

32

b) Sale of fixed assets 211.159,349.3

7

c) Investments

-16,490.

29

-4,003.5

2

d) Interest income 97.72 222.53

Net cash Flow from/in InvestingActivities

Total(B)

-44,889.

05

-33,132.

94

C) Cash Flow arising from financingactivity

a) Proceeds from secured loans (Net ofrepayment) 86,638.68

-

2,229.82

b) Proceeds from unsecured loans (Net ofrepayment)

-3,043.3

7

-6,896.9

6

c) Proceeds from equity shares/ shares to beallotted 0

16,445.56

d) Proceeds from preference shares Net ofRedemption

-8,284.5

7 77.26

e) Interest expenses

-

13,461.26

-

8,310.96

f) Income on CDR exit

5,779.75 0.00

Net cash Flow from FinancingActivities

Total(C)

67,629.24 -914.92


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Net Increase in Cash and CashEquivalents

(A+B+C)

3,453.14 -606.83

Cash & Cash Equivalent (OpeningBalance) 844.73

1,451.56

Cash & Cash Equivalent (Closing Balance)4,297.8

7 844.73

Net Change in Cash & Cash Equivalent

3,453.14 -606.83

INTERPRETATION:-

CASH FROM OPERTING ACTIVITIES:-

In the 2007 the cash from operating activities is morethan in 06 & it reduced in 07. And in 2008 cash is more

than in 2007 then it shows the profit. It shows the profit.

It shows the loss in 2009 as compare to 2008.

CASH FROM INVESTING ACTIVITIES:-

IN 07, no more investment as compare to 2006 and noinvestments and loss in 08 as compare to 07.

CASH FROM FINACING ACTIVITIES:-


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It shows profit in 2007, which is 24307.45 as compare to

06. It shows the financial strong. And shows looks in 2008

and 2009 shows a profit a 67629.24.

CONCLUSION:-

The equity shares held by promoters, as mentioned above, have

been predged to the lenders of company for borrowings made by

the company. The security thus created is an additional security

in addition to the primary charge created on fixed assets &

current assets of the company which are sufficient to cover the

borrowing of the company.

During the year under review, a total of 14 complaints werereceived by the Company from the Shareholders / Investors. Allthe complaints were resolved by the Company to the satisfactionof the investors and as on 31st March 2009, there were nopending letters or complaints All the Subsidiary and Step down


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Subsidiary Companies are managed with their Boards in the bestinterest of their stakeholders.

ANNEXATURE:- BALANCE SHEET

Balance Sheet for the years ending 31st March2007,08,09


SOURCES OF FUNDS

Shareholders Funds


9


1 169.79 86.94Amount to be converted intoPreference Shares 0 65.59 0Share Application Money(Equity) 20 20 0


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2 510.021325.

31

Total803.6

3 975.451635.

64


9

Loan Funds

Secured Loans871.0

61,182.

101621.

74


9

Total1192.

961,395.

021804.

23

Deferred tax liabilities 0 4.12 11.03


592,374.

593681.

29


Fixed Assets

Gross Block638.8

1 561.69851.6

9


8 180.19217.4

4

Net Block283.2

3 381.5634.2

5


6 540.38665.7

6

Total Fixed Assets 579.09 921.88 1300.01

Investments 1.38 1.37 3.75

good will 0 0101.1

4

Current Assets, Loans &Advances

Inventories503.6

5 579.45807.9

5


46


3


8 289.05634.4

8


851681.1

32755.

92

Less: Current Liabilities &


44/48

Provisions


1 152.02230.3

2

Provisions 23.24 77.77249.2

1


5 229.79479.5

3


342276.

39Miscellaneous Expenditure (notwritten off) 0.94 0 0


8 0 0

Defferred Tax Assets 0 0 0

TOTAL ASSETS1996.

592,374.

593681.

29

PROFIT & LOSS ACCOUNT:

profit & loss a/c for year2007,2008,2009


INCOME


54 1,748.652260.3

6

Other Income 9.9 10.51 15.85

Increase/(Decrease) in Stock 86.45 -16.33 80.59

Total1325.

89 1,742.83 2356.8


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EXPENDITURERaw MaterialConsumed/Purchased

886.84 1,112.32

1541.61

Manufacturing Expenses 49.1 51.54 77.51Payment to & for Employees 30.16 42.05 73.06

Administrative Expenses 30.13 43.95 61.89

Selling & Distribution Expenses 79.85 88.71 113.88Miscellaneous ExpenditureWritten 10.53 10.21 13.71

Interest 60.92 89.33 138.82

Depreciation 43.87 42.61 44.21

Total1191.

4 1,480.722064.6

9


9 262.11 292.11expense & income on stelmentof cdr dues 0 0 57.2

PRIOR PERIOD ADJUSTMENT 0.37 -0.46 -0.76

PROVISION FOR TAXATION net -11.34 -51.94 -88.42

deferred tax assest/(liablities) 0 -4.12 -3.48

taxation for earlier years 0 0 61.51EXTRAORDINARY INCOME/(LOSS) -16.05 0 0

AMOUNT AVAILABLE

FOR APPROPRIATION

107.4

7 205.59 176.58

APPROPRIATION

Capital Redemption Reserve 2 0 40.03BALANCE AFTERAPPROPRIATION

105.47 205.59 115.67

BALANCE BROUGHT FROM Pre.YEAR

-303.6

5 -198.18 7.41

BALANCE CARIED OVER TOBAL. SHEET

-

198.18 7.41 123.08


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BIBLOGRAPHY & REFERENCES:-

www.finacialdictionary.com

www.sknl.co.in

www.investopedia.com

I.m panday reference book (356,357)
http://www.finacialdictionary.com/http://www.sknl.co.in/http://www.investopedia.com/http://www.finacialdictionary.com/http://www.sknl.co.in/http://www.investopedia.com/


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Term Paper of Accounting for Managers

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