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1. INTRODUCTION TO STUDY
1.1 INTRODUCTION:Financial Statements are prepared primarily for decision-making. They play a dominant role in setting framework of managerial decisions. But the information provided in the financial statements is not an end in itself as no meaningful conclusions can be drawn from these statements alone. However, the information provided in the financial statements is of immense use in making decisions through analysis and interpretation of financial statements. Financial analysis is the Process of identifying the financial strengths and weaknesses of the firm by properly establishing relationship between the items of the balance sheet and the profit and loss account. There are various methods or techniques used in analyzing financial statements, such as comparative statements, trend analysis, common-size statements, ratio analysis and schedule of changes in working capital etc. The project report on A Study on Financial Statement Analysis is based on live experience of work. The project research was carried out in the tenure of 60 days form 1st June 2010 to 30th July 2010 with special reference to Thirumala Precicasts Pvt. Ltd, Sholapur under the guidance of Mr. Bagwan Sir. The main objective of the study is to understand various statements used to financial Analysis of TPPL. The term financial statements are used in business refers to two statement the balance sheet or statement of financial position reflecting the assets, liabilities, capital and reserve as on a particular date and income statement or profit and loss statement showing the results achieved during a certain period which are prepared at the end of accounting period for a business enterprises. i.e. 1) Comparative Statement 2) Trend Analysis 3) Common Size Statement 4) Ratio Analysis

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MBA PROGRAMME 1.2 OBJECTIVES OF THE STUDY:-

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There are different objectives for which the study has been completed. They are as follows:1) To understand the Importance of various Financial Statement Analysis. 2) To study the Thirumala Precicasts Pvt. Ltd. financial position through the ratio analysis. 3) To find out profitability, liquidity of Thirumala Precicasts Pvt. Ltd.

1.3 NEED OF THE STUDY:- The main objective of the study is to understand various statements used to financial Analysis of TPPL. - The term financial statements are used in business refers to two statement the balance sheet or statement of financial position reflecting the assets, liabilities, capital and reserve as on a particular date and income statement or profit and loss statement showing the results achieved during a certain period which are prepared at the end of accounting period for a business enterprises.

1.4 STATEMENT OF THE PROBLEM:The study entitled A study on Financial Statement Analysis and The main objective of the study is to understand various statements used to analyze the financial state of TPPL. 1.5 SCOPE OF THE STUDY:For any research work it is essential to understand boundaries within which the research is to be carried out the scope of the research has two dimensional. 1. Conceptual Scope:The conceptual scope of the research is limited to the firm of the various financial statements. 2. Geographical Scope:The geographical scope is restricted to Sholapur city.

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MBA PROGRAMME 1.6 MEHODOLOGY OF THE STUDY:-

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The main objective of the study is to determine and analyze the financial position and of the Thirumala Precicasts Pvt. Ltd. For this purpose, METHODS USED IN RESEARCH:The information was collected by two ways
I. Primary data:-

Primary data is that which is not published but it is very useful data. A) The information was collected by discussion held with the executives of accounts and finance department. II Secondary data:-

Secondary data consist of the information that already exists or someone has collected it for specific purpose. This data was collected by: A) The company profile was collected from website of Thirumala Precicasts Pvt. Ltd. (TPPL), www.thirumalacastings.com B) The other analytical information was collected from Auditors Report, Annual Report and Books and discussion with Finance Manager and Sr. Accounts Executive.

1.7 LIMITATIONS :-

1. The ratios differ from industry to industry and their types too. 2. The ratios are only for assumption and actual data may varied. 3. The project was completed in 60 days which was a very short period. 4. The study limited to only Financial Statements. 5. The Company was not provided practical information to me.

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2 .COMPANY PROFILE 2.1 INTRODUCTION TO THE ORGANISATION:-

THIRUMALA PRECICAST PRIVATE LIMITED. In a world where precision of the components of paramount importance Thirumala Precicasts Private Limited. TPPL was established in 1995 at ULEGAON, near Sholapur located in Maharashtra, India. In a short time it has achieved reputation of being one of the leading investment castings foundries specialized in manufacturing parts for Defense, Small fire arms, Medical equipments and surgical implants. TPPL at present is manufacturing investment castings from few grams upto 10.0 kgs in all types of ferrous, nickel base and cobalt base alloys.

2.2 Introduction of The Company

THIRUMALA PRECICAST PRIVATE LIMITED OWNER NAME OFFICE ADDRESS G. S. REDDY. Balaji Bhavan 165/A, Railway Lines, Solapur - 413001. (INDIA) Tel.No. 0091-217-2734522/23/24 Fax.No. 0091-217-2734521&2310821 Email: [email protected]/ Website: www.thirumalacastings.com FACTORY ADDRESS LOGO Ulegaon, Near Solapur City, Solapur.

COMPANY NAME

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MBA PROGRAMME

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2.3 ORGANIZATION STRUCTURE

CHAIRMAN

EXECUTIVE DIRECTOR

COMMERCIAL DIRECTOR

DIRCETOR / MR / HRD

SUPERVISOR
FINISHING

COMMERCIA L MANAGER

DIE SECTION HEAD SUPERVISOR WAX AND SHARE

WORKERS WORKERS

PURCHASE IN-CHARGE

SUPERVISOR FOUNDRY

WORKERS

MARKETING ASSISTANT (INLAND)

MAINTENANCE SUPERVISOR

WORKERS

MARKETING ASSISTANT (EXPORT)

ENGGR. Q. A. INLAND / WAI

SUP. LABORATORY

ENGGR. Q. A. EXPORT

WORKERS

INCHARGE STORES

WORKERS

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Estimate/Techn ical Resources Verification

2.4

COMPANY PROCESS:Customer Marketing

Purchasing

Manufacturing
Technology
Method

Die Section
Waxing Pattern Making

V
Receiving Inspection

NC R NC R NC R NC R NC R NC R NC R

Quality and Proces s

Assembly
Stores
Shell Building De waxing Pre Heating Of Shells

Contro l Customer
Complaint

Melting Pouring Fettling

Heat Treatment

NC R NC R

SCRAP

Finishing
Dispatch Customer

NCR

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2.5 Mission: TO BE THE LEADER IN QUALITY INVESTMENT CASTING BY DELIVERING TOTAL CUSTOMER SATISFACTION AND ADDRESSING ALL THE CUSTOMER SPECIFICATIONS WITHIN THE BUDGETED COSTS AND DEADLINES.

2.6 Financial Progress:A] Annual turnover:Year 2007-08 2008-09 2009-10 Annual Turnover 50302775 65614158 69508775

1st April 2007 to 31st march 2008 1st April 2008 to 31st march 2009 1st April 2009 to 31st march 2010

Annual Turnover
80000000 60000000 40000000 20000000 0 2007-08 2008-09 2009-10 Annual Turnover

B]
st

Profit:st

1 April 2007 to 31 march 2008 1st April 2008 to 31st march 2009 1st April 2009 to 31st march 2010

Year 2007-08 2008-09 2009-10

Annual Profit 180876 1994287 1800135

Annual Profit
2000000 1500000 1000000 500000 0 2007-08 2008-09 2009-10 Annual Profit

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2.7 Historical Background: 1995 1996 2002 Three young brothers came together for starting joint venture. They started providing products to the local customer. Started with Exporting their precious Investment Castings to Multinational Companies. 2003 Started supplying precision castings to BHARAT HEAVY ELECTRICALS LIMITED 2004 Certificate of Approval in recognition of having established Quality System as per GREAVES COTTON LIMITED. 2004 Vendor Registration in BHARAT DYNAMICS LIMITED (A Govt. of India Enterprise) Bhanur (A.P.) India. 2005 Dividend distribution first time in the companys history for their shareholders. 2006 2007 Agreement with Dun & Bradstreet Information India Pvt. Ltd. TUV CERT- Certification Body for Pressure Equipment of TUV NORD Systems GMbH & Co. KG. 2007 Vendor Registration in SMALL ARM FACTORY (A Govt. of India Ministry of Defence) Kanpur (U.P.) India. 2008 Vendor Registration in ORDNANCE FACTORY (A Govt. of India Ministry of Defence) Tiruchirapalli (T.M..) India. 2008 Vendor Registration in HEAVY VEHICLE FACTORY (A Govt. of India Ministry of Defence) Avadi (T.M...) India.

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2.7

PRODUCT:-

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3.

FINANCIAL STATEMENT ANALYSIS

The term financial statements are used in business refers to two statement the

balance sheet or statement of financial position reflecting the assets, liabilities, capital and reserve as on a particular date and income statement or profit and loss statement showing the results achieved during a certain period which are prepared at the end of accounting period for a business enterprises. Financial statement also called, as financial reports are account balances arranged in effective and meaningful order so that the facts and concepts they portray may be readily interpreted and used as bases for decision by all who are interested in the affairs of business. The purpose of preparing financial statement is to convey to owners, creditors and the general public about the financial position of the enterprises. Financial statement used by the management as the basis for decision making, planning & operations like procurement of adequate financial and as a means exercising control over financial position of the business and efficient and profitable use of assets. According to American Institute of Certified Public Accounts the financial statement have been declared to process the following nature: the financial statements are prepared for the purpose of presenting a periodical reviews or report on the progress by the managements and deal with the status of investment in the business and results achieved during the period under review. They reflect a combination of recorded facts; accounting conventions applied affect them materially.

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MBA PROGRAMME BASIC CONCEPTS:3.1) THE USEFULNESS OF FINANCIAL STATEMENT

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The usefulness statement is the business mirror, which reflects the financial position and operating strength and weakness of the concern. These statements are useful to management, investors, bankers, workers, and government and public at large. The major uses of financial statements are: 1 2 3 4 5 6 As a basis of fiscal policies. As a basis of granting credit. As an information to prospective investors. As a basis for price As an aid government As a basis for taxation.

3.2). TOOLS AND TECHNIQUES OF FINANCIAL STATEMENT The analysis of financial statement consists of a study of relationship and trends to determine whether or not the financial position and results of operating as well as the financial progress of the company are satisfactory or unsatisfactory. The analysis of facts and related data was important and a number of techniques of analysis are: i) Comparative statement ii) Trend analysis iii) Common size statement iv) Ratio analysis

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3.2 ( i ) COMPARATIVE STATEMENT:Introduction:The comparative financial statements of the financial position at different periods; of time. The elements of financial position are shown in a comparative form so as to give and idea of financial position at two or more periods. Any statement prepared in comparative statements. From practical point of view, generally, two financial statements (Balance Sheet and Income Statement) are prepared in comparative form for financial analysis purposes. Not only the comparison of the figures of two periods but also be relationship between balance sheet and Income Statement enables an in-depth study of financial position and operative results. The comparative statement may show; i) ii) iii) iv) Absolute figures (Rupee amounts). Changes in absolute figures i.e. increase or decrease in absolute figures. Absolute data in terms of percentages. Increase or decrease in terms of percentages.

The analyst is able to draw useful conclusions when figures are given in a comparative position. The figures of sales for a quarter, half-year or one year may tell only the present position of sales efforts. When sales figures of previous periods are given along with the figures of current periods then the analyst will be able to study the trends of sales over different periods of time. Similarly, comparative figures will indicate the trend and direction of financial position and operating results. The financial data will be comparative only when same accounting principles are used in preparing these statements. In case of any deviation in the use of as accounting principles this fact must be mentioned at the foot of financial statements and the analyst should be careful in using these statements.

3.2 ( i-a ) The two comparative statements are:I. II. Comparative Balance Sheet. Comparative Income Statement.

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MBA PROGRAMME I.

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Comparative Balance Sheet:The comparative balance sheet analysis is the study of the trend of the same

items, groups of items and computed items in two or more balance sheets of the same business enterprise on different dates. The changes in periodic balance sheet items reflect the conduct of a business. The changes can help in forming an opinion about the progress of an enterprise. The comparative balance sheet has two columns for the data of original balance sheets. A third column is used to show increases in figures. The fourth column may be added for giving percentages of increases or decreases. Guidelines for Interpretation of Comparative Balance sheet: While interpreting Comparative Balance sheet the interpreter is expected to study the following aspects: 1. Current financial position and liquidity position. 2. Long term finance position 3. Profitability of the concern.

II.

Comparative Income Statement:The Income statement gives the results of the operation of a business. The

comparative income statement gives an idea of the progress of a business over a period of time. The changes in absolute data in money values and percentages can be determined to analyze the profitability of the business. Like comparative balance sheet, income statement also has four columns, First two years column give figures of various items for two years. Third and fourth columns are used to show increase or decrease in figures in absolute and percentage respectively.

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MBA PROGRAMME Guidelines for Interpretation of Income Statements:

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The analysis and interpretation of income statement will involve the following steps: 1. The increases decrease or decrease should be compared with increase or decrease in cost of goods sold. An increase in sales will not always mean an increase in profit. The profitability will improve if increase in sales is more than the increase in cost of goods sold. The amount of gross profit should be studied in the first step. 2. The second step of analysis should be the study of operational profits. The operating expenses such as office and administrative expenses, selling and distribution expenses should be deducted from gross profit to find out operating profits. An increase in operating profit may be due to an increase in sales position and control of operating expenses or decrease in sales. The change in individual expenses should also be studies. Some expenses may increase due to the expansion of business activities while others may go up due to managerial inefficiency. 3. The increase or decrease in net profit will give an idea about the overall profitability of the concern. Non-operating expenses such as interest paid, losses from sale of assets, writing off of deferred expenses, payment of tax, etc. decrease the figure of operating profit, we get a figure of net profit. When all non-operating expenses are deducted from operational profit, we get a figure of net profit. Some non-operating incomes may also be there which will increase net profit. An increase in net profit will gave us an idea about the progress of the concern. 4. An opinion should be formed about profitability of the concern and it should be given at the end. It should be mentioned whether the overall profitability is good or not.

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MBA PROGRAMME 3.2 ( ii ) TREND ANALYSIS:

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Introductions
Trend percentage is very helpful in making a comparative study of the financial statements for several years. Trend in general term signifies a tendency. In other words the reviews and appraisal of tendency in accounting variables are nothing but trends analysis. Such an analysis of business facts is very significant from the point of view of forecasting or budget. Analysis of the trend in business facts may be made in by calculating the trend ratio or percentage or by plotting points on a graphs paper or chart. Trend analysis is calculated only for some important items, which can be logically connected with each other. Unless the figure is connected with each other figures they are not as much meaningful. For example, trend analysis for sales, though shows a clear-cut increasing or decreasing tendency. Becomes meaningful in the real sense when it is compared.

Procedure for calculating Trends:1. One year is taken as a base year. Generally, the first or the last is taken as base year. 2. 3. The figures of base year are taken as 100. Trend percentages are calculated in relation to base year. If a figure in other year is less than the figure in base year the trend percentage will be less than 100 and it will be more than 100 if figures is more that base year figure. Each years figure is divided by the base years figure.

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3.2 ( iii ) COMMON SIZE STATEMENT: Introduction:The common-size statements, balance sheet and income statement, are shown are in analytical percentages. The figures are shown as percentages of total assets, total liabilities and total sales. The total assets are taken as a 100 and different assets are expressed as a percentage of the total. Similarly, various liabilities are taken a part of total liabilities. These statements are also known as component percentage or 100 per cent statements because every individual item is stated as a percentage of the total 100. The short-comings in comparative statements and trend percentage where changes in items could not be compared with the total have been covered up. The analyst is able to assess the figures in relation to total values

The common-size statements may be prepared in the following way:a) The totals of assets or liabilities are taken are 100. b) The individual assets are expressed as a percentage of total assets, i.e., 100 and different liabilities are calculated in relation to total liabilities.

Common Size Statements are Two types:A. Common Size Balance Sheet:A statement in which balance sheet items are expressed as the ratio of each asset to total assets and the ratio of each liability is expressed as a ratio of total liabilities is called common-size balance sheet. shown in a common size balance sheet. B. Common Size Income Statement:The items in income statement can be shown as percentage of sales to show the relation of each item to sales. A significant relationship can be established between items of income statement and volume of sales. So, a relationship is established between sales and other items in income statement and this relationship is helpful in evaluating operational activities of the enterprise. For example, following assets are

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3.2 ( iv ) RATIO ANALYSIS: Introduction:Fundamental Analysis has a very broad scope. One aspect looks at the general (qualitative) factors of a company. The other side considers tangible and measurable factors (quantitative). This means crunching and analyzing numbers from the financial statements. If used in conjunction with other methods, quantitative analysis can produce excellent results. Ratio analysis isn't just comparing different numbers from the balance sheet, income statement, and cash flow statement. It's comparing the number against previous years, other companies, the industry, or even the economy in general. Ratios look at the relationships between individual values and relate them to how a company has performed in the past, and might perform in the future.

Meaning of Ratio:A ratio is one figure express in terms of another figure. It is a mathematical yardstick that measures the relationship two figures, which are related to each other and mutually interdependent. Ratio is express by dividing one figure by the other related figure. Thus a ratio is an expression relating one number to another. It is simply the quotient of two numbers. It can be expressed as a fraction or as a decimal or as a pure ratio or in absolute figures as so many times. As accounting ratio is an expression relating two figures or accounts or two sets of account heads or group contain in the financial statements.

Meaning of Ratio Analysis:Ratio analysis is the method or process by which the relationship of items or group of items in the financial statement are computed, determined and presented. Ratio analysis is an attempt to derive quantitative measure or guides concerning the financial health and profitability of business enterprises. Ratio analysis can be used both in trend and static analysis. There are several ratios at the disposal of an annalist but their group of ratio he would prefer depends on the purpose and the objective of analysis.
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While a detailed explanation of ratio analysis is beyond the scope of this section, we will focus on a technique, which is easy to use. It can provide you with a valuable investment analysis tool. This technique is called cross-sectional analysis. Cross-sectional analysis compares financial ratios of several companies from the same industry. Ratio analysis can provide valuable information about a company's financial health. A financial ratio measures a company's performance in a specific area. For example, you could use a ratio of a company's debt to its equity to measure a company's leverage. By comparing the leverage ratios of two companies, you can determine which company uses greater debt in the conduct of its business. A company whose leverage ratio is higher than a competitor's has more debt per equity. You can use this information to make a judgment as to which company is a better investment risk. However, you must be careful not to place too much importance on one ratio. You obtain a better indication of the direction in which a company is moving when several ratios are taken as a group.

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CLASSIFICATION OF RATIOS:The Ratio analysis classified in following way: Liquidity Ratio Investment / Shareholders Ration Gearing Ratio Profitability Ratio

Financial Ratio

LIQUIDITY RATIO:

Liquidity refers to the ability of a firm to meet its short-term (usually up to 1 year) obligations. The ratios, which indicate the liquidity of a company, are Current ratio, Quick/Acid-Test ratio, and Cash ratio. These ratios are discussed below

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i.

CURRENT RATIO:Meaning: This ratio compares the current assets with the current liabilities. It is also

known as working capital ratio or solvency ratio. It is expressed in the form of pure ratio. Formula: Current ratio = Current assets Current liabilities The current assets of a firm represents those assets which can be, in the ordinary course of business, converted into cash within a short period time, normally not exceeding one year. The current liabilities defined as liabilities which are short term maturing obligations to be met, as originally contemplated, within a year.

ii.

LIQUID RATIO:
Meaning: Liquid ratio is also known as acid test ratio or quick ratio. Liquid ratio

compares the quick assets with the quick liabilities. It is expressed in the form of pure ratio. E.g. 1:1 The term quick assets refer to current assets, which can be converted into, cash immediately or at a short notice without diminution of value. Formula: Liquid ratio = Quick liabilities QR indicates the extent to which a company can pay its current liabilities without relying on the sale of inventory. This is a fairly stringent measure of liquidity because it is based on those current assets, which are highly liquid. Inventories are excluded from the numerator of this ratio because they are deemed the least liquid component of current assets. Generally, a quick ratio of 1:1 is considered good. One drawback of the quick ratio is that it ignores the timing of receipts and payments. Quick assets

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iii.

CASH RATIO:Meaning: This is also called as super quick ratio. This ratio considers only the absolute

liquidity available with the firm. Formula: Cash Ratio = Total current liabilities Since cash and bank balances and short term marketable securities are the most liquid assets of a firm, financial analysts look at the cash ratio. If the super liquid assets are too much in relation to the current liabilities then it may affect the profitability of the firm. Cash + Bank + Marketable securities

INVESTMENT / SHAREHOLDER RATIO:-

i.

EARNING PER SHRE:Meaning: Earnings per Share are calculated to find out overall profitability of the

organization. An earnings per Share represents earning of the company whether or not dividends are declared. If there is only one class of shares, the earning per share are determined by dividing net profit by the number of equity shares. EPS measures the profits available to the equity shareholders on each share held.

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MBA PROGRAMME Formula: Earnings per share = Number of equity share NPAT

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The higher EPS will attract more investors to acquire shares in the company as it indicates that the business is more profitable enough to pay the dividends in time. But remember not all profit earned is going to be distributed as dividends the company also retains some profits for the business

ii.

DIVIDEND PER SHARE:Meaning:

DPS shows how much is paid as dividend to the shareholders on each share held. Formula: Dividend per Share = Number of Ordinary Share Dividend Paid to Ordinary Shareholders

iii.

DIVIDEND PAYOUT RATIO:Meaning:

Dividend Pay-out Ratio shows the relationship between the dividend paid to equity shareholders out of the profit available to the equity shareholders. Formula: Dividend Payout ratio = Earning per share D/P ratio shows the percentage share of net profits after taxes and after preference dividend has been paid to the preference equity holders. Dividend per share

*100

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GEARING RATIO:-

i)

CAPITAL GEARING RATIO:-

Meaning: Gearing means the process of increasing the equity shareholders return through the use of debt. Equity shareholders earn more when the rate of the return on total capital is more than the rate of interest on debts. This is also known as leverage or trading on equity. The Capital-gearing ratio shows the relationship between two types of capital via: - equity capital & preference capital & long term borrowings. It is expressed as a pure ratio. Formula: Capital gearing ratio = Equity capital & reserve & surplus Capital gearing ratio indicates the proportion of debt & equity in the financing of assets of a concern.
Preference capital+ secured loan

PROFITABILITY RATIO:These ratios help measure the profitability of a firm. A firm, which generates a substantial amount of profits per rupee of sales, can comfortably meet its operating expenses and provide more returns to its shareholders. The relationship between profit and sales is measured by profitability ratios. There are two types of profitability ratios: Gross Profit Margin and Net Profit Margin.

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i.

GROSS PROFIT RATIO:Meaning: This ratio measures the relationship between gross profit and sales. It is

defined as the excess of the net sales over cost of goods sold or excess of revenue over cost. This ratio shows the profit that remains after the manufacturing costs have been met. It measures the efficiency of production as well as pricing. This ratio helps to judge how efficient the concern is I managing its production, purchase, selling & inventory, how good its control is over the direct cost, how productive the concern , how much amount is left to meet other expenses & earn net profit. Formula: Gross profit ratio = Net Sales Gross profit * 100

ii.

NET PROFIT RATIO:Meaning: Net Profit ratio indicates the relationship between the net profit & the sales

it is usually expressed in the form of a percentage. Formula: Net profit ratio = Net sales. NPAT * 100

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iii.

RETURN ON CAPITAL EMPLOYED:Meaning: The profitability of the firm can also be analyzed from the point of view of

the total funds employed in the firm. The term fund employed or the capital employed refers to the total long-term source of funds. It means that the capital employed comprises of shareholder funds plus long-term debts. Alternatively it can also be defined as fixed assets plus net working capital. Capital employed refers to the long-term funds invested by the creditors and the owners of a firm. It is the sum of long-term liabilities and owner's equity. ROCE indicates the efficiency with which the long-term funds of a firm are utilized.

Formula: Return on capital employed =

NPAT

*100 Capital employed

FINANCIAL:-

These ratios determine how quickly certain current assets can be converted into cash. They are also called efficiency ratios or asset utilization ratios as they measure the efficiency of a firm in managing assets. These ratios are based on the relationship between the level of activity represented by sales or cost of goods sold and levels of investment in various assets. The important turnover ratios are debtors turnover ratio, average collection period, inventory/stock turnover ratio, fixed assets turnover ratio, and total assets turnover ratio. These are described below:

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i. DEBTORS TURNOVER RATIO:Meaning:DTO is calculated by dividing the net credit sales by average debtors outstanding during the year. It measures the liquidity of a firm's debts. Net credit sales are the gross credit sales minus returns, if any, from customers. Average debtors are the average of debtors at the beginning and at the end of the year. This ratio shows how rapidly debts are collected. The higher the DTO, the better it is for the organization. Formula: Credit sales Debtors turnover ratio = Average debtors

ii. INVENTORY OR STOCK TURNOVER RATIO (ITR):Meaning: ITR refers to the number of times the inventory is sold and replaced during the accounting period. Formula: Stock Turnover Ratio = Average stock
COGS

iii.

FIXED ASSETS TURNOVER (FAT):Meaning:

The FAT ratio measures the net sales per rupee of investment in fixed assets. Formula: Net sales Fixed assets turnover = Net fixed assets This ratio measures the efficiency with which fixed assets are employed. A high ratio indicates a high degree of efficiency in asset utilization while a low ratio reflects an inefficient use of assets. However, this ratio should be used with caution because when the fixed assets of a firm are old and substantially depreciated, the fixed assets turnover ratio tends to be high (because the denominator of the ratio is very low).
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iv.

PROPRIETORS RATIO:Meaning:

Proprietary ratio is a test of financial & credit strength of the business. It relates shareholders fund to total assets. This ratio determines the long term or ultimate solvency of the company. In other words, Proprietary ratio determines as to what extent the owners interest & expectations are fulfilled from the total

investment made in the business operation. Proprietary ratio compares the proprietor fund with total liabilities. It is usually expressed in the form of percentage. Total assets also know it as net worth. Formula: Proprietary fund Proprietary ratio = Total fund Shareholders fund Proprietary ratio = Fixed assets + current liabilities OR

v.

STOCK WORKING CAPITAL RATIO:Meaning: This ratio shows the relationship between the closing stock & the working

capital. It helps to judge the quantum of inventories in relation to the working capital of the business. The purpose of this ratio is to show the extent to which working capital is blocked in inventories. The ratio highlights the predominance of stocks in the current financial position of the company. It is expressed as a percentage. Formula: Stock Stock working capital ratio = Working Capital

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vi.

DEBT EQUITY RATIO:Meaning: This ratio compares the long-term debts with shareholders fund. The

relationship between borrowed funds & owners capital is a popular measure of the long term financial solvency of a firm. This relationship is shown by debt equity ratio. Alternatively, this ratio indicates the relative proportion of debt & equity in financing the assets of the firm. It is usually expressed as a pure ratio. E.g. 2:1 Formula: Total long-term debt Debt equity ratio =

Total shareholders fund vii. RETURN ON PROPRIETOR FUND:

Meaning: Return on proprietors fund is also known as return on proprietors equity or return on shareholders investment or investment ratio. This ratio indicates the relationship between net profits earned & total proprietors funds. Return on proprietors fund is a profitability ratio, which the relationship between profit & investment by the proprietors in the concern. Its purpose is to measure the rate of return on the total fund made available by the owners. This ratio helps to judge how efficient the concern is in managing the owners fund at disposal. This ratio is of practical importance to prospective investors & shareholders. Formula:NPAT Return on proprietors fund = Proprietors fund * 100

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viii. CREDITORS TURNOVER RATIO:Meaning: It is same as debtors turnover ratio. It shows the speed at which payments are made to the supplier for purchase made from them. It is a relation between net credit purchase and average creditors Formula: Net credit purchase Credit turnover ratio = Average creditors Months in a year Average age of accounts payable = Credit turnover ratio Both the ratios indicate promptness in payment of creditor purchases. Higher creditors turnover ratio or a lower credit period enjoyed signifies that the creditors are being paid promptly. It enhances credit worthiness of the company. A very low ratio indicates that the company is not taking full benefit of the credit period allowed by the creditors Or

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1. Comparative Statement of the Company:There are two types of Comparative statement:i. Comparative Balance Sheet ii. Comparative Income Statement i. Comparative Balance Sheet of the Company:Comparative Balance Sheet of a Company For the year ending December 31st Mar,2009 and 2010 Year Ending 31st December 2008 2009 Increased/ Decreased(amt) ASSETS:Current Assets: Cash in hand and at Bank Bills Receivable Sundry Debtors Prepaid Expenses Inventories Tools & Spares Total Current Assets: Fixed Assets (Manufacturing):Land Factory Building Plant &Machinery Lab Equipment Storage Tank(LDO) Dies & Pattern Bore well Pump 503420 3957840 5829050 150625 50600 8960 89520 429675 3856835 5531250 148720 47175 1 78150 1403630 -73745 -101005 -298000 -1905 -3425 -8959 -11370 -27010 - 14.64% - 2.55% - 5.11% - 1.26% - 6.76% - 99.98% - 12.70% - 1.88% 116200 3239490 13024220 61840 7210420 89560 23741730 364430 2230700 14253080 419000 6972690 89560 24329460 +248232 -1008790 +1228860 +357520 -237730 +587730 +213.62% -31.14% +9.43% +578.13% -3.29% 0.00% +2.47% Rs. Increased/ Decreased(per) Rs.

Other Fixed Assets (Other 1430640 Manu.):Total Fixed Assets:Total Assets:12020655 35762385

11495436 35824896

-525219 +62511

- 4.36% + 0.17%

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LIABILITIES & CAPITAL

Current Liabilities: Trade creditors Other Creditors Advance from Customer Outstanding Liabilities Provision for Income tax Total Current Liabilities: Debenture Long Term Loans on Mort age Total Liabilities:Equity Share Capital Reserve &Surplus Total:15022760 6922000 4833540 11755540 12209821 7422000 6827830 14249830 -2812939 500000 1994290 +2494290 - 18.72% + 7.22% + 41.25% + 21.21% 5778590 500385 532140 2541895 500000 9853010 750260 14272500 5537540 364170 777550 2633230 1300000 10612490 110071 12099750 -241050 -136215 +245410 +91335 +800000 +759480 640189 2172750 - 4.17% - 27.22% - 46.11% + 3.59% + 160.% + 7.70% + 85.32% + 15.22%

Interpretation:1)
The comparative Balance Sheet of the Company reveals that during 2009 there has been an increase in Current Assets of Rs.587730 i.e. 2.47% because cash has increased by Rs. 248232 and also increased in sundry debtors by 9.43%.

2) 3)

But Decrease in fixed Assets by 4.36% due to this its affects on total assets. The main reason of the decrease in fixed assets is depreciation of the assets. The Current liabilities have increased by Rs.759480 i.e. 7.70% due to increase in outstanding liabilities and advance from customer this further confirm that the company has raised long term finance even for the current assets resulting into an improvement in the liquidity position of the company.

4)

The total liabilities have decreased by Rs.2812989 because a long term loan on mortgage has decreased by 15.22%. Equity share capital has increased by rs.500000.Reserve and surplus has increased from Rs.4833540 to Rs.6827830 i.e. 41.25% which shows that the company has not utilized reserve & Surplus.

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MBA PROGRAMME ii. Comparative Income Statement:-

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Comparative Income Statement of a Company For the year ending December 31st ,2009 and 2010 Year Ending 31st December 2008 2009 Increased/ Decreased(amt) Net Sales: Less: Cost of goods Sold (a)Gross Profit: Operating Expenses: General & Admin. Selling 4814960 Exp. (b)Total Operating Exp. Operating Profit(a)-(b):Less: Other 4814960 6951945 5724060 11287860 1898260 +909100 +4335915 -189875 + 18.88% + 62.36% - 9.09% 5724060 +909100 + 18.88% 50302775 48165790 2136985 65614150 60050350 5563800 +10311375 +11884560 +3426815 Increased/ Decreased(per) + 20.49% + 24.67% + 160.35%

Deduction 2088135

Interest paid Net Profit Before Tax Less: Income Tax Net Profit After Tax 4863810 115840 4747970 9389600 8748 9380852 +4525790 -107092 +4632882 + 93.05% - 92.44% + 97.57%

Interpretation:1) The Comparative income statement reveals that there has been increase in gross profit by Rs.3426815 because of increasing in net sales by 20.49%. 2) The Operating expenses have increased due to increased in expenses of Administration and general expenses so its affects in net profit.
3) Cost of goods sold is more as compare to previous year because of increasing is direct labor and expenditure of repairs & maintains and other manufacturing expenses.

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The following Trend analyses of balance sheet and profit and loss A/c: Trend analyses of Profit and Loss A/C (Rs. in cores)

Particulars I. INCOME :

2007-08

2008-09

2009-10

Sales (Gross) Less- Excise Duty

5.819 0.789 5.030

7.380 0.820 6.560 0.070 6.630 (-) 0.050 5.170 6.580

7.603 0.652 6.951 0.006 6.957 (+) 0.654 7.611

Add- Other Income

0.136 5.166

Increase & decrease in stock GROSS REVENUE II. EXPENDITURE :

0.004

Raw Material Consumed Power & fuel Direct Labor Repairs & Maintains Other Manufacturing Expenditure Selling, Administration & General Expenses Interest & Financial Charges Depreciation

1.866 0.785 1.061 0.267 0.252

2.200 0.990 1.290 0.510 0.330

2.314 1.231 1.952 0.315 0.438

0.482 0.210 0.102 5.025 0.145 0.000 0.145 0.006 0.151

0.590 0.190 0.090 6.190 0.390 0.000 0.390 0.014 0.404

0.666 0.174 0.116 7.206 0.405 0.000 0.000 0.405 0.000 0.405
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Gross Expenditure
Profit ( I - II ) Less: Preliminary Exp. Profit Before Tax Add: Deferred Tax Liability

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MBA PROGRAMME Less: Provision for deferred tax Liability Provision for Taxation Fringe Benefit Tax Income Tax 0.000 0.050 0.007 0.011 0.068 0.083 Less: Provision Available for App. A) Propose div. on Equity Share B) Div. distribution Tax Net Profit Balance After App. 0.055 0.009 0.064 0.059 0.010 0.000 0.130 0.006 0.001

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0.000 0.120 0.000 0.137 0.267 0.003 0.123 0.280

0.086 0.069 0.014 0.100

0.018

0.198

0.180

Calculating the trend percentage from the above figures of TPPL ltd taking 2008 as the base and interpret them:-

Rs. In Crores Year 2008 2009 2010 Sales 5.030 6.560 6.951 Stock 0.004 (-)0.050 (+)0.654 Profit Before Tax 0.145 0.390 0.405

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Solution:Trend Percentages (Base Year 2008=100) Year Sales Stock Profit Before Tax

Amt(Rs.cr)

Trend Per.

Amt(Rs.cr)

Trend Per.

Amt(Rs.cr)

Trend Per.

2008

5.030

100

0.004

100

0.145

100

2009

6.560 6.951

128

(-)0.050 (+)0.654

-92.0%

0.390 0.405

168

2010

138

99.38%

210

Interpretation:1. The Sales have continuously increased in all the three years up to 2010. The

year of 2008 is considered as base year. (Base Year=100).The percentage in 2010 is 138 as compared to 100 in 2008.the increase in sales is quite satisfactory.
2. The expenditure of goods sold is also increased because expenditure relating to

the power & fuel, Direct Labor .Repairs & maintains also administration expenses increased.
3. Due to increasing in manufacturing expenditure, its affect on gross profit.

Profit has increased from 2008 to 2010 because of increasing in sales.

The expansion of the firm is good and it has doubled its sales and profit in just three year time. The profits have increased more than a sale which shows that there is a proper control over cost of goods sol

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The following Trend analyses of balance sheet and profit and loss A/c: Trend analyses of Balance sheet A/C (Rs. in cores)
Particulars I. SOURCES OF FUNDS 1.SHAREHOLDERS FUNDS (A) Equity Capital (B) Reserves & Surplus 2.LOAN FUNDS (a) Secured (b) Unsecured 3.DEFERRED TAX LIBILITIES ( NET) Total Rs. II.APPLICATION OF FUNDS 4.FIXED ASSETS (a) GROSS BLOCK (b) Less: DEPRICIATION NET BLOCK 5.INVESTMENTS 7.CURRENT ASSETS, LOAN AND ADVANCES Gross Current Assets Less: CURRENT LIABILITIESAND PROVISIONS Total Rs. 2.561 0.985 1.576 2.871 2.073 0.778 1.295 0.000 2.112 0.875 1.237 0.000 2.495 0.992 1.503 0.000 1.427 0.075 1.502 0.193 2.871 1.209 0.011 1.220 0.179 2.824 1.304 0.056 1.360 0.179 3.264 0.692 0.484 1.176 0.742 0.683 1.425 0.862 0.863 1.725 2007-08 2008-09 2009-10

2.648 1.061 1.587 2.824

3.798 2.037 1.761 3.264

Interpretation: 1. In sources of funds, shareholder funds increased due to increased in Equity capital by 24.56 % and also due to reserve & surplus. 2. The comparative balance sheet of the company reveals that there has been an increased in current assets by 2.47 % but decrease in fixed assets by 4.36 due to this affects on total assets.

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1. Current Ratio:Meaning: The current assets of a firm represents those assets which can be, in the ordinary course of business, converted into cash within a short period time, normally not exceeding one year. The current liabilities defined as liabilities which are short term maturing obligations to be met, as originally contemplated, within a year. Formula: Current ratio = Table 5.1 Year Current Asset 2007-2008 2008-2009 2.561 2.648 Current liabilities (Rs. In crore) Current Liabilities 0.985 1.061 Current Ratio 2.6% 2.5% Current assets

Graph 5.1
3 2.5 2 Current Asset 1.5 1 1.5 0.5 0 2007-2008 2008-2009 1 2 Current Liabilities Current Ratio 2.6 3

2.5

2.5

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COMMENTS:
1) In Thirumala Precicasts Pvt. Ltd, the current ratio is 2.5:1 in 2008-2009 .It means that for One rupee of current liabilities and current assets are 2.5 Rupee is available to the them. 2) The difference between of two years current ratio is 0.1%.it is decreased due to changes in current liabilities. 3) Current liabilities have increased by 7.70% (Rs. 759480) due to the increased in outstanding liabilities and Advance from customer. Also cash has increased in the year of 2009 by Rs.248232 as compare to the year of 2008.

2) Quick Ratio / Liquid Ratio:Meaning: The term quick assets refer to current assets, which can be converted into cash immediately or at a short notice without diminution of value. Formula: Liquid ratio = Quick liabilities Table no. 5.2 Year Current Assetstock 2007-2008 2008-2009 1.840 1.951 Current Liabilities BOD 0.985 1.061 1.8% 1.8% (Rs. In crore) Quick Ratio Quick assets

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Graph 5.2
2.5

3 2.8

2.6 2.4

1.5

2.2 2 1.86 1.83 1.8 1.6

Current Assetstock Current Liabilities BOD Quick Ratio

0.5

1.4 1.2

1 2007-2008 2008-2009

COMMENTS:1) The liquid or quick ratio indicates financial position of an enterprise. Almost in all years the liquid ratio is same, which is better for the Company in Working Capital Management. 2) The liquid ratio of the Thirumala Precicasts Pvt. Ltd. has decreased from 1.86% to 1.83% in 2007-09. This indicates that the dependence on the short-term liabilities & creditors are more & the company is following a conservative working capital policy. 3) The main reason of decreasing the liquid ratio in 2009 is increasing in current liabilities by 7.70%.

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3.Debt-Equity Ratio: Meaning:Capital is derived from two sources shares and loans. it is quite likely for only shares to be issued when the company is formed but loans are invariably raised at some later date .There are numerous reasons for issuing loan capital. The formula is that:-

Formula:-

Long Term Debt Shareholders funds

Table no. 5.3

(Rs. In crore)

Year

Total Debt

Owners Equity

Debt Ratio

Equity

2007-2008 2008-2009
Graph 5.3

0.075 0.011

1.176 1.425

0.06 0.007

12 10 8 6 0.06

0.07 0.06 0.05 0.04 0.03 Total Debt Owners Equity Debt Equity Ratio 0.02 0.007 0.01 0 2007-2008 2008-2009

4 2 0

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COMMENTS:
1) The debt equity ratio is important tool of financial analysis to appraise the financial structure of the company. It expresses the relation between the external equities & internal equities. This ratio is very important from the point of view of creditors & owners. 2) The rate of debt equity ratio is decreased from 0.06 to 0.007 during the year 20072008 to 2008-2009. This shows that with the decrease in debenture by 85% from the year of 2008 to 2009 3) But in the Owners Equity, equity share capital and reserve & surplus are increased by 7.22% and 41.25% orderly. This shows long term capital structure. 4) The lower ratio of TPPL viewed as favorable from long term creditors point of view.

4 Shareholders Equity Ratio: Meaning:It is assumed that larger the proportion of the shareholder Equity, the stronger is the financial position of the firm. This ratio will supplement the debtequity ratio. Formula Shareholders equity Total asset

Table no.5.4 Year Shareholders Equity 2007-2008 2008-2009 1.175 1.425 3.576 3.582 Total Assets

(Rs. In crore) Proprietors Ratio

0.32% 0.39%

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Graph 5.4
4 3.5 3 2.5 2 1.5 1 0.5 0 2007-2008 2008-2009 0.32 0.39 0.45 0.4 0.35 0.3 0.25 0.2 0.15 0.1 0.05 0 Proprietors Ratio Shareholders Equity Total Assets

COMMENTS: 1) The Proprietary ratio of the company is 0.39% in the year 2008-2009. It means that the for every one rupee of total assets contribution of 0.039 paise has come from owners fund & remaining balance is contributed by the outside creditors. 2) This shows that the contribution by outside to total assets is more than the owners fund. 3) This Proprietary ratio of the Company shows a upward trend. As the Proprietary ratio is not favorable to the Companys long-term solvency

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5 Gross Profit Ratio:Meaning:Gross profit is the difference between the net sales (Sales Sales Returns) and the cost of goods sold. This ratio is calculated with the help of the following Formula:Table no. 5. Year 2007-2008 2008-2009 Gross Profit 0.145 0.391 Net Sales 5.030 6.561 Gross Profit Ratio = Gross Profit

/ Net Sales*100
(Rs. In crore)

G.P. Ratio 2.88% 5.95%

Graph 5.5
7 6 5 4 3 2 1 0 2007-2008 2008-2009 2.88 5.95 7 6 5 4 3 2 1 0 Gross Profit Net Sales G.P. Ratio

COMMENTS:1) The gross profit is the profit made on sale of goods. It is the profit on turnover. In the year 2007-2008 the gross profit ratio is 2.88%. It has increased to 5.95% in the year 2008-2009. 2) Net sales of the company have been increased by 20% from the year of 2008 to 2009.

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6 Net Profit Ratio:Meaning:This ratio shows the earnings left for shareholders (Equity and Preference) as a percentage of net sales. It measures overall efficiency of all the functions of a

business firm like production, administration, selling, financing, pricing, tax management etc. This ratio is very useful for prospective investors because it reveals the overall profitability of the firm. Formula: Net Profit Ratio = Net Profit / Net Sales*100

Table no.5.6- Net Profit Ratio (Rs. In crore) Year 2007-2008 2008-2009
Graph 5.6

Net Profit 0.018 0.198

Net Sales 5.030 6.561

N.P. Ratio 0.35% 3.01%

7 6 5 4 3 2 1 0 2007-2008 2008-2009 0.35 3.01

3.5 3 2.5 2 1.5 1 0.5 0 Net Profit Net Sales N.P. Ratio

COMMENTS:1. The net profit ratio of the company is high as compare to 2008-09 .i.e. increased by 3.01%in 2009 2. It has been observed that Net sales of the company have been increased by 20% from the year of 2008 to 2009. 3. But deduction of interest and tax are reduced by 9.09% so net profit is increased.
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MBA PROGRAMME 7. Operating Ratio:Meaning:-

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This ratio is reciprocal to the operating net profit to sales to ratio. The costs of goods sold operating expenses are compared to net sales. Non-operating expenses and Non-operating incomes are excluded from this ratio. The calculation of this ratio is as follows: Formula:Operating Ratio = Cost of Goods Sold + Operating Expenses / Net Sales*100 Thus, higher this ratio, the lower is the margin of operating profit. This ratio can be further analyzed to find out the percentage of each type of expenses to sales. Table no.5.7 Year 2007-2008 2008-2009 COGS + Operating Exp. 52980750 65774410 Net Sales 50302775 65614150 (Rs. In crore) Operating Ratio 1.05 1.00

Graph 5.7
70000000 60000000 50000000 1.03 40000000 30000000 20000000 10000000 0 2007-2008 2008-2009 1 1.02 1.01 Operating Ratio 1 0.99 0.98 0.97 1.05 1.06 1.05 1.04 COGS + Operating Exp. Net Sales

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COMMENTS:1) The operating ratio shows the relationship between costs of activities & net sales. Operating ratio over a period of 2 years when compared that indicate the change in the operational efficiency of the company. The operating ratio of the company has decreased in 2 year. This is due to increase in the cost of goods sold, which in 2007-2008 was 4.81(Rs. in crore), in 2008-2009 was 6.00(Rs. In crore). 2) The main reason of decreasing the ratio in the year of 2009 is due to increasing in selling expenses and adminisratative expenses. 3).Also in the year of 2009, there is increase in cost of goods sold by 24% as compared to previous year. So its affects on operating ratio.

8 Return on Capital Employed:Meaning:The strategic aim of the business enterprise is to earn a return on capital . If any particular case, the return in long run is not satisfactory, then the deficiency should be corrected or the activity be abandoned for a more favorable one .The rate of return on investment is determined by dividing net profit or income by the capital employed or investment made to achieve that profit. Formula:= Net Profit Before interest & tax/Capital employed* 100

Table no. 5.8 Year EBIT

(Rs. In crore)

Total Funds Return On Capital Employed Employed 25.96% 55.15%

2007-2008 2008-2009

0.695 1.128

2.677 2.045

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MBA PROGRAMME Graph 5.8

3 55.15% 2.5 2 1.5 25.96% 1 0.5 0 2007-2008 2008-2009 20.00% 10.00% 0.00% 50.00% 40.00% 30.00% EAT 60.00%

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Shareholders Equity Return on Equity

COMMENTS:1) The company has come up from crisis by using many measures like cost reduction. ROCE has shown good result from 25.96% in 2007-08 to 55.15% in 2008-09. 2) ROCE has increased due to one of the following way: - increase profit margin, decrease in capital employed. ROI can be improved by boosting sales, reducing invested capital or reducing cost.

9 Return on Equity:Meaning:-

This ratio, also known as return on shareholder funds or return on proprietors funds or return on net worth, indicates the percentage of the available for shareholder funds. In other words, this ratio measures the return only equity shareholder funds and not on total capital employed like ratio number. The formulas for calculation is as follows Formula:Return on Equity = Earnings after Tax / Equity Shareholders Funds*100

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Table no. 5.9

Year 2007-2008 2008-2009 EAT 0.475 0.938 Shareholders Equity 1.175 1.424

(Rs. In crore)
Return on Equity 40.42% 65.47%

Graph No. 5.9

1.6 1.4 1.2 1 0.8 0.6 0.4 0.2 0 2007-2008 2008-2009 30.00% 20.00% 10.00% 0.00% 40.42% 65.47% 60.00% 50.00% 40.00% EAT Shareholders Equity Return on Equity 70.00%

COMMENTS:1) This ratio shows the relationship between profit & equity shareholders fund in the company. It is used by the present / prospective investor for deciding whether to purchase, keep or sell the equity shares 2) In the year 2007-2008 the return on proprietors fund is 40.42%, which means the net return of Rs.40 is earned on the each Rs.100 of the funds contributed by the equity shareholders. 3) The rate of return on equity share capital is increased from40.42% to 65% during the year 2007-2008 to 2008-2009. This shows that the company has very large returns available to take care of high equity dividend, large transfers to reserve, & also company has a great scope to attract large amount to fresh funds by issue of equity share & also company has a very good price for equity shares.
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10 Earnings Per Share (EPS):Meaning:This is one of the important indicators of performance of a company. Earnings per share indicate the amount of profit available for distribution amongst the equity shareholders. This ratio is calculated as shown below: Formula:EPS = EAT / No. of Equity Share Table no.5.10 Year Earnings After Tax No. of Equity EPS Share 2007-2008 2008-2009 4747970 9380852 692200 742200 Rs.6.85 Rs.12.63
(Rs. In crore)

Graph 5.10
10000000 9000000 8000000 7000000 6000000 5000000 4000000 3000000 2000000 1000000 0 2007-2008 2008-2009 2 0 6.85 6 4 10 8 Earnings After Tax No. of Equity Share EPS 12.63 14 12

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COMMENTS:1) It is one of the most important factors, which affects the dividend policy of the firm and market price of shares of company. The shareholders are particularly interested in knowing this ratio. 2) The Earning per share is 6.85 means shareholder gets Rs. 6.85 for each share of Rs. 10/-. In other words the shareholder earned Rs. 6.85 per share. 3) The Earning per Share has increased from 6.85. in FY 2007-08 to 12.63 rupees in the year of 2009. It is showing increase in the Earning Per share. It is a sign of efficient way of managing the business.

11.

Dividend Per Share:-

Meaning:It is amount declare as dividend for each equity share

Formula:Dividend Per Share = Total Dividend Declared / No. of Equity Shares

Table no. 5.11

(Rs. In crore)

Year

Total Declared

dividend No. of Equity Dividend Shares 692200 742200 Share

Per

2007-2008 2008-2009

553760 593760

0.80 % 0.80 %

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MBA PROGRAMME Graph 5.11

800000 700000 600000 500000 400000 300000 200000 100000 0 2007-2008 2008-2009 0.80% 0.90% 0.80% 0.80% 0.70% 0.60% 0.50% 0.40% 0.30% 0.20% 0.10% 0.00%

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Total dividend Declared No. of Equity Shares Dividend Per Share

COMMENTS:The amount declare as dividend to share holder as same in both year because there is same frequency in number of equity share.

12. Dividend Payout Share:Meaning:EPS described above indicates the amount of profit available for equity shareholders. Dividend payout ratio indicates the percentage of profit distributed as dividends to the shareholders. A higher ratio indicates that the organization is following a liberal policy regarding the dividend while a lower ratio indicates a conservative approach of the management towards the dividend. The ratio is calculated as shown below: Formula:DPyS = Dividend per Share / EPS*100 Table no. 5.12 Year 2007-2008 2008-2009
C.I.M.D.R. Sangli

(Rs. In crore) Dividend Per Share 0.80 0.80 EPS 6.85 12.63 DPyS 11.67% 6.33%
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Graph 5.12
14 12 10 8 6 4 2 0 2007-2008 2008-2009 6.33% 11.67% 14.00% 12.00% 10.00% 8.00% 6.00% 4.00% 2.00% 0.00%

Dividend Per Share EPS DPyS

COMMENTS:1) In the year 2007-2008 and 2008-2009 the Dividend payout ratio is 11.67 and

6.33 respectively. In the year 2007-2008 the company has declared the dividend 11.67 and the balance 88.33 is retained with them for the expansion.
2) The year of 2007-08 is indicates that the organization is following a liberal

policy regarding the dividend while 2008-09 indicates a conservative approach of the management towards the dividend.

13.

Debtors Turnover Ratio:Meaning:One of the important decisions regarding financial management is about the

credit to be granted to the customers. There should be well-defined credit policy, which should be followed carefully by a firm. The credit policy followed by a firm is indicated by this ratio. This ratio is calculated with the help of the following formula:

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MBA PROGRAMME Formula:-

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Debtors Turnover Ratio = Credit Sales / Avg. Accounts Receivables Avg. Accounts Receivables = Opening Bal. of Drs. + Closing Bal. of Drs. / 2 And Opening Bal. of Bills Receivables + Closing Bal. of Bills Receivables / 2

Table no . 5.13 Year Credit Sales Average Accounting Receivables 2007-2008 2008-2009 6.30 7.57 91.96 89.77

(Rs. In crore) Debtors Turnover Ratio

09.06times 11.84times

Graph 5.13
100 90 80 70 60 50 40 30 20 10 0 2007-2008 2008-2009 2 0 6 4 9.06 8 Average Accounting Receivables Debtors Turnover Ratio 11.84 14 12 10 Credit Sales

COMMENTS:1. The graph has shown upward movement from the FY 2007-08 to 2008-09. Through Graphical presentation of Debtors turnover Ratio, we can observe that it has increasing consistently from 9.06 to 11.84 in FY 2008-09. it has resulted from efficient credit management system.

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2. The Debtors turnover ratio of 9.06 indicates that the debtors are being turned over 9.06 times during the year. It means that the credit cycle of debtors makes 9.06 rounds during the year. It helps to work out the debt collection period i.e. 40 days [365/ 9.06 = 40]. This indicates that it take 40 days on an average for the debtors to be settled. Debt collection period indicates the duration of the credit cycle of the debtors.

14. Creditors Turnover Ratio:Meaning:Credit Turnover ratio indicates the credit period allowed by the creditors to the firm. In other words, it is exactly opposite the above ratio. The formula for calculation is as follows:

Formula:Creditors Turnover Ratio = Cr. Purchases / Avg. Accounts Payable Avg. Accounts Payable = Opening Bal. of Crs. + Closing Bal. of Crs. / 2 And Opening Bal. of Bills Payables + Closing Bal. of Bills Payables / 2

Table no. 5.14

(Rs. In crore)

Year

Credit Purchases

Average Accounting Payables

Creditors Turnover Ratio

2007-2008 2008-2009

2.780 3.630

0.295 0.313

9.42times 11.59times

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MBA PROGRAMME Graph 5.14

4 3.5 3 2.5 2 1.5 1 0.5 0 2007-2008 2008-2009 6.00% 4.00% 2.00% 0.00% 9.42% 11.59% 14.00% 12.00% 10.00% 8.00%

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Credit Purchases

Average Accounting Payables Creditors Turnover Ratio

COMMENTS:1. The creditors turnover ratio shows the relationship between the credit purchase and average trade creditors. It shows the speed with which the payments are made to the suppliers for the purchase made from them. 2. The credit turnover ratio of 9, indicate that the creditors are being turned over 9 times during the year. It indicates the number of rounds taken by the credit cycle of payables during the year. 15..

Inventory Turnover Ratio:Meaning:Inventory turnover ratio measures how many times the company inventory

has sold .A considerable amount of a company capital may be tied up in the financing of raw materials, work-in-progress and finished goods .It is important to ensure that the level of stock is kept as low as possible, consistent with the need to fulfilling customers order in time Formula:Inventory Turnover Ratio = COGS / Avg. Stock during that period

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Shivaji University

(Rs. In crore)
COGS Average Inventory during Inventory that period Turnover Ratio 7.17 8.46

Year

2007-2008 2008-2009

4.816 6.005

0.671 0.709

Graph 5.15
7 6 5 4 3 2 1 0 2007-2008 COGS Average Inventory during that period Inventory Turnover Ratio 2008-2009 7.17 8.46 9 8.5 8 7.5 7 6.5

COMMENTS:1. It shows increasing trend, which is good for TPPL. Inventory Turnover Ratio has increased from 7.17 in 2007-08 to 8.46 in 2008-09 It indicates that inventory is handled efficiently by the company. As it is higher inventory ratio, it indicates positive impact on liquidity position of company.

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FINDING, SUGGESTIONS & CONCLUSION:FINDING

1. The expansion of the firm is good and it has doubled its sales and profit in just three year time. The profits have increased more than a sale which shows that there is a proper control over cost of goods sol 2. In Sources of funds, Shareholder funds increased due to increased in Equity capital by 24.56% and also due to reserve & surplus 3. The amount declare as dividend to share holder is same in both year because there is same frequency in number of equity share.

SUGGESTIONS:-

1. In current ratio, investment in inventory should be reduced or should maintain economically so that the current ratio will increase.

2. Company should reduce the expenditure on goods sold with increasing in net sales so that Company can improve in gross profit.

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CONCLUSION:The focus of financial analysis is on key figures contained in the financial statements and the significant relationship that exits. The reliability and significance attach to the ratios will largely on hinge upon the quality of data on which they are best. They are as good for as bad as the data itself. Financial ratios are a useful by product of financial statement and provide standardized measures of firms financial position, profitability and riskiness. It is an important and powerful tool in the hands of financial analyst. By calculating one or other ratio or group of ratios he can analyze the performance of a firm from the different point of view. The ratio analysis can help in understanding the liquidity and short-term solvency of the firm, particularly for the trade creditors and banks. Long-term solvency position as measured by different debt ratios can help a debt investor or financial institutions to evaluate the degree of financial risk. The operational efficiency of the firm in utilizing its assets to generate profits can be accessed on the basis of different turnover ratios. The profitability of the firm can be analyzed with the help of profitability ratios.

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BIBLIOGRAPHY
Books 1. N.M. Vechlekar (2009) Financial Management of Nirali Prakashan 2. I.M. Pande (2008)Financial Management of Vikas Publishing. 3. C.R.Kothari(2nd Edition)Research Methodology of International publishers

Websites www.thirumalacastings.com

Reports 1. ANNUAL REPORT 2007 2008 2. ANNUAL REPORT 2008 - 2009 3. ANNUAL REPORT 2009 2010

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ANNEXURE I. Company Reports

1. ANNUAL REPORT 2007 2008 2. ANNUAL REPORT 2008 - 2009 3. ANNUAL REPORT 2009 2010 Profit and Los Account
Particulars III. Sales (Gross) Less- Excise Duty INCOME : 5.819 0.789 5.030 Add- Other Income 0.136 5.166 Increase & decrease in stock GROSS REVENUE IV. EXPENDITURE : 1.866 0.785 1.061 0.267 0.252 General 0.482 0.210 0.102 5.025 0.145 0.000 0.145 0.006 0.151 0.000 0.390 0.014 0.404 0.590 0.190 0.090 6.190 0.390 0.000 0.666 0.174 0.116 7.206 0.405 0.000 0.405 0.000 0.405 2.200 0.990 1.290 0.510 0.330 2.314 1.231 1.952 0.315 0.438 0.004 5.170 7.380 0.820 6.560 0.070 6.630 (-) 0.050 6.580 7.603 0.652 6.951 0.006 6.957 (+) 0.654 7.611 2007-08 2008-09 2009-10

Raw Material Consumed Power & fuel Direct Labor Repairs & Maintains Other Manufacturing Expenditure Selling, Expenses Interest & Financial Charges Depreciation Gross Expenditure Profit ( I - II ) Less: Preliminary Exp. Profit Before Tax Add: Deferred Tax Liability Administration &

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Less: Liability Provision for Taxation Fringe Benefit Tax Income Tax Provision for deferred tax 0.000 0.050 0.007 0.011 0.068 0.083 Less: Provision Available for App. C) Propose div. on Equity Share 0.055 D) Div. distribution Tax 0.009 Net Profit Balance After App. 0.018 0.064 0.010 0.059 0.000 0.130 0.006 0.001

Shivaji University

0.000 0.120 0.000 0.137 0.267 0.003 0.123 0.280

0.086 0.069 0.198 0.014 0.100 0.180

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MBA PROGRAMME Balance Sheet

Shivaji University

Particulars I. SOURCES OF FUNDS 1.SHAREHOLDERS FUNDS (A) Equity Capital (B) Reserves & Surplus 2.LOAN FUNDS (a) Secured (b) Unsecured 3.DEFERRED TAX LIBILITIES ( NET) Total Rs. II.APPLICATION OF FUNDS 4.FIXED ASSETS (a) GROSS BLOCK (b) Less: DEPRICIATION NET BLOCK 5.INVESTMENTS 7.CURRENT ASSETS, LOAN AND ADVANCES Gross Current Assets Less: CURRENT LIABILITIESAND PROVISIONS Total Rs. Particulars I. SOURCES OF FUNDS 1.SHAREHOLDERS FUNDS (A) Equity Capital (B) Reserves & Surplus 2.LOAN FUNDS (a) Secured (b) Unsecured
C.I.M.D.R. Sangli

2007-08

2008-09

2009-10

0.692 0.484 1.427 0.075 1.502 0.193 2.871 1.176

0.742 0.683 1.209 0.011 1.220 0.179 2.824 1.425

0.862 0.863 1.304 0.056 1.360 0.179 3.264 1.725

2.073 0.778 1.295 0.000

2.112 0.875 1.237 0.000

2.495 0.992 1.503 0.000

2.561

2.648

3.798

0.985

1.576 2.871

1.061

1.587 2.824

2.037

1.761 3.264

2007-08

2008-09

2009-10

0.692 0.484 1.427 0.075 1.502 1.176

0.742 0.683 1.209 0.011 1.220 1.425

0.862 0.863 1.304 0.056 1.360

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1.725

MBA PROGRAMME 3.DEFERRED TAX LIBILITIES ( NET) Total Rs. II.APPLICATION OF FUNDS 4.FIXED ASSETS (a) GROSS BLOCK (b) Less: DEPRICIATION NET BLOCK 5.INVESTMENTS 7.CURRENT ASSETS, LOAN AND ADVANCES Gross Current Assets Less: CURRENT LIABILITIESAND PROVISIONS Total Rs. 2.561 2.073 0.778 1.295 0.000 2.112 0.875 1.237 0.000

Shivaji University

0.193 2.871

0.179 2.824

0.179 3.264

2.495 0.992 1.503 0.000

2.648

3.798

0.985

1.576 2.871

1.061

1.587 2.824

2.037

1.761 3.264

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