Page | 1

Acknowledgements
I would like to express my deep gratitude to all those who have helped me in completing this
summer project to the best of my ability. Thanks who give constructive suggestion during the
project.
Working on this project has certainly been a unique and a very productive experience on my part.
I got to practically see, work on finance department in the Hind smachar Ltd (punjab kesari
group).I am very thanks to all those under whose expert guidance I was able to bring this report
of mine into its real shape.
I am very much thankful to Mr Sanjay Kumar Gupta (G.M. Finance Department) of the company
who providing me a guideline, enthusiastic encouragement and useful critiques of this project
work. Who gave me a great learning experience and acquainting me with real life project
financing. His systematic way of working and incomparable guidance has inspired the pace of
the project to a great extent. And I am very thanks to Mr sunil tondon (H.R. Head) for providing
me a useful guidance and their precious time for the completion of my report.
I would also like to extend my thanks to my mentor Mr Afzal Rehman always guiding and
helping me. In the last I would like to thank all the employees of The Hind Samachar Ltd.
(Punjab Kesari Group) who have directly or indirectly helped me with their moral support for the
completion of my project.
Sandeep Sharma

Page | 2

Preface
In business management subject theoretical or bookish knowledge is not enough, practical
knowledge of the subject is also very important. Practical knowledge helps in building up the
knowledge and managerial skill of a person. Theoretical knowledge is incomplete with its
practical implication. In class room, we get all the basic knowledge of a subject, but still the
knowledge is incomplete without its practical implication. I have done my summer internship in
Punjab kesari and am able to say all this because of my personal experience of working there. We
should not rely just on the theoretical knowledge but should also include practical implication of
that knowledge. I am very much happy to present y summer internship report on Ratio
Analysis in front of the esteemed management and faculty of our university. This training has
helped me allot in improving my knowledge and explore the working of finance department in
an organisation.

Page | 3

Declaration
I am Sandeep Sharma student of lovely professional university, phagwara here by solemnly
declare that the project report is Ratio analysis it is original report made by me. I took some of
the information related to my report from:

Internet
www.punjabkesari.com
www.hindsamacharltd.com
Text book
Financial management
Rajiv Sriwastav
I.M.Pandey
Balance sheet, from the company

This all report is based on my own experience and practical work learning during summer
training in punjab kesari.
Sandeep Sharma

Page | 4

Content
Acknowledgement
Preface
Declaration
1. Abstract
2. Introduction

Role of financial management

Purpose of study
Objective
Methodology

3. Industry profile

4.
5.
6.
7.

Introduction of company
Types of company
Hind samachar
Punjab kesari
Jagbani
Hind samchar ltd
Managing director of piunjab kesari group
Marketing department
Working of management department
Technology used in Punjab kasseri
Financial department
High department on the advertisement revenue
Chart
Managing the revenue in the organization
H.R.M. Department PKG
Editorial department
Video department and social networking
SWOT analyses of the company
Punjab Kesari Group: An Unbroken Linage since 1948
Analysis and interpretation.
Conclusion

Page | 5

Abstract
This project is based on the study of Ratio Analysis in Hind Samachar Ltd. (Punjab Kesari
Group). An insight view of the project will encompass what it is all about, what it aims to
achieve, what is its purpose and scope, the various methods used for collecting data and their
sources, including literature survey done, further specifying the limitations of our study and in
the last, drawing inferences from the learning so far.
In the early independent India it was the need of the hour to have a medium that would represent
people. Amar Shaheed lala jagat narayan founded the hind samachar group on 1948 to voice
every concern of people. The north of india full of activity and Urdu was the language people use
to relish, Hind Samachar was the first news paper by the group the evolved to become the
legendary Punjab Kesari Group of present time. The Punjab kesari Group present publishes four
of countrys leading newspapers .i.e. Punjab Kesari (Hind), narayan times(Hind),

Page | 6

jagbani(Punjabi), Hind Samachar(Urdu) from its state of the art facilities at jalandhar,
Chandigarh, Ludhiana, Bathinda, Palampur, Shimla, Hisar, Panipat, Rohtak, Jammu and Delhi
The Hind Samachar Ltd. Is a public limited company incorporated in the year 1949. Presently
Mr. Vijay Kumar Chopra is the chairmain-cum-managing Director of the company. THSL is
engaged in the printing and publishing of the three daily newspaper .i.e. Punjab kesari (Hindi),
jagbani (Punjabi) and Hind samchar (Urdu) with average combined daily circulation of more
than 10 lakh copies. The newspapers of the company are circulated in Punjab, Haryana,
Chandigarh, Jammu and Kashmir and Himachal Pradesh. Around 80% printing is done by the
companys group entities and the balance 20% is done by THSL. Itself through its printing
presses in Chandigarh, Jalandhar and Ludhiana

Page | 7

Introduction
Chapter-2

Page | 8

Introduction
Financial Management is the specific area of finance dealing with the financial decision
corporations make, and the tools and analysis used to make the decisions. The discipline as a
whole may be divided between long-term and short-term decisions and techniques. Both share
the same goal of enhancing firm value by ensuring that return on capital exceeds cost of capital,
without taking excessive financial risks.
Capital investment decisions comprise the long-term choices about which projects receive
investment, whether to finance that investment with equity or debt, and when or whether to pay
dividends to shareholders. Short-term corporate finance decisions are called working capital
management and deal with balance of current assets and current liabilities by managing cash,
inventories, and short-term borrowings and lending (e.g., the credit terms extended to
customers).
Corporate finance is closely related to managerial finance, which is slightly broader in scope,
describing the financial techniques available to all forms of business enterprise, corporate or not.

Role of Financial Managers:

The role of a financial manager can be discussed under the following heads:

Nature of work
Working conditions
Employment
Training, Other qualifications and Advancement
Job outlook
Earnings
Related occupations
Let us discuss each of these in a detailed manner.

Purpose of study

Page | 9

The study has great significance and provides benefits to various parties whom directly or
indirectly interact with the company.
It is beneficial to management of the company by providing crystal clear picture
regarding important aspects like liquidity, leverage, activity and profitability.
The study is also beneficial to employees and offers motivation by showing how actively
they are contributing for companys growth.
The investors who are interested in investing in the companys shares will also get benefited by
going through the study and can easily take a decision whether to invest or not to invest in the
companys shares

OBJECTIVES
The major objectives of the resent study are to know about financial strengths and weakness of
Punjab Kesari Group through FINANCIAL RATIO ANALYSIS.
The main objectives of resent study aimed as:
To evaluate the performance of the company by using ratios as a yardstick to measure the
efficiency of the company. To understand the liquidity, profitability and efficiency positions of
the company during the study period. To evaluate and analyze various facts of the financial
performance of the company. To make comparisons between the ratios during different periods.
OBJECTIVES
1. To study the present financial system at Punjab Kesari Group.
2. To determine the Profitability, Liquidity Ratios.
3. To offer appropriate suggestions for the better performance of the organization

METHODOLOGY

P a g e | 10

The information is collected through secondary sources during the project. That information was
utilized for calculating performance evaluation and based on that, interpretations were made.

Sources of secondary data:

Most of the calculations are made on the financial statements of the company
provided statements.
Referring standard texts and referred books collected some of the information
regarding theoretical aspects.
Method- to assess the performance of he company method of observation of the
work in finance department in followed.

P a g e | 11

Industry Profile
Chapter- 3

P a g e | 12

The Punjab Kesari Group (PKG)

The Punjab kesari group is originated from the fertile soil of Jalandhar, the former capital of
Punjab (1947-1953), is constantly illuminating the huge Hindi, Urdu and Punjabi speaking belt
of northern India with knowledge and awareness through their three bright moons, including
Punjab Kesari, Hind Samachar and Jag Bani. The group initiated their perpetual operation in
1948 with the launch of the Urdu daily Hind Samachar, and later added Hindi daily Punjab
Kesari in 1965 and Punjabi daily Jag Bani in 1978 to their spinning compass. Now, the three
dailies are well established with a combined circulation of around 10,29,995 copies on weekdays
and founder of Punjab kesari group by Late Sh. Lala jagat Narayan on 1899 to 1981.

Late Sh Lala Jagat Narayan founder of Punjab Kesari Group

P a g e | 13

Founded by Lala Jagat Narain and nourished by his elder son Romesh Chander (both were
assassinated in 1981 and 1984 respectively),
The plant of PKG has become a mature banyan tree. Succeeding these icons, the leadership triad
VijayChopra, Avinash chopra , Amit chopra , Abhijay chopra , Aroosh chopra now altogether
engage in bringing the group to a prominent platform in Indias newspaper publishing industry.
While Padma Shri Vijay Kumar Chopra contributes the group with his sublime ideas through
authoring a regular editorial for the three newspapers besides supervising the entire group
performance,
Being editor-in-chief & chairman-cum managing director; his elder son Avinash Chopra has
been shouldering the responsibilities of administration, distribution, and editorial department
since 1983 and Amit Chopra is responsible for finance, modernisation, expansion/ new projects
as well as advertising promotion, apart from editorial for supplements since 1984.

There are three type of Punjab kesari group newspaper

Hind samachar
Punjab kesari
Jagbani

P a g e | 14

Hind Samchar
Founded

Lala jagat narayan (1889- sep 9,1981) was the founder of the Hind Samachar Ltd

Location

Pakka Bagh near company bag, jalandhar, india 1100440

Mission

In 80s urdu the language of the salaried urben men of Punjab, the people who
could afford the time and money for newspaper.

About

An Urdu newspaper with average circulation of 26,034 copies daily and 27,999
Copies on Sunday

Email

[email protected]

Phone

18130673205030000

Website

http://www.hindsamachar.in

P a g e | 15

Punjab kesari

21 july 1978

Founded

1967

Location

ER 129 civil lines, jalandhar, india, 144001

About

Punjab Kesari Aap ke dil ke dhadkan is Hindi newspaper in punjab,

india with circulation of 6,93,571 copies daily

Mission

To provide the public with credible and factual news

Product

Punjab Kesari

Phone

1813067200

Website

http://www.punjabkesari.in

Founded

P a g e | 16

Location

Er 129 civil lines, jalandhar, india 144022

About

jagbani (www.jagbani.in) and www.jagbani.com) is a Punjab

Newspaper in punjab, India with circulation of 3,10,390 copies
daily.

Company overview

The Punjab Kesari Group's Punjabi daily, Jag Bani was

launched on July 21, 1978. At a time when all Punjabi
newspapers favoured some religious or political group, Jag
Bani was the first newspaper with a secular approach that
represented the common man. In the short period of its
existence Jag Bani has created its own place in the society. It
has a wide readership base which is diverse in religion and
caste. Even today Jag Bani strives to innovate and widen the

Website

Jagbani

spectrum of Punjabi journalism.

http://www.jagbani.com

P a g e | 17

Hierarchy:

M
r
AV
bvarm
hiyo
jnKot
yausC
Csmh
haCo
pCh
ohr
poa
rp
ar
a

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Chairman of Hind Samachar Group ltd:

Padamshree Vijay Kumar chopra ji is the head of hind Samachar group of limited
which is now known as Punjab kesari group of publications .
He is currently the editor in chief cum managing director of the Punjab Kesari Group of
newspapers.

P a g e | 18

A well known social worker too leading Prime minister relief fund , Shaheed Parivar fund
etc .Due to which he has been awarded with oddles of honours like : Padamshree
Award , FFI Award , samaj rattan award , lifetime achievement award etc. He is an
Iron man of Punjab kesari .

Managing director of Punjab Kesari Group

Mr Avinash chopra is the managing director of Punjab kesari group and a well
renowned Public figure too .
He handles all affairs of editorial, administration and marketing department since 1983.
Also known as a GREAT KING OF MEDIA.
Role Model for Media persons.
A man of Discipline, Dignity, Intellectualness.
Director Hind Samchar Limited
MR ABHIJAY CHOPRA
Sales & Marketing Department
MR AROOSH CHOPRA
Editorial Department

Marketing Department
The Marketing Department of this group is grappled by the young Icon Mr Abhijay
Chopra .
Marketing is the prime department of Punjab Kesari as all their major Revenue
Generations are from this department .

P a g e | 19

During the Tenure 2010 their revenue out of their advertisement business was Rs 1.70
crore and the target for the year 2011 has been decided 2.20 crores .
Their Marketing Department Presently consists of

Mr Atul Sharma & Mr Kapoor ( Senior Marketing Manager )

Mrs Ruchika Vatsa ( Zonal marketing manager )

Mr Sumit Sharma ( Marketing executive )

Mr Parul Chokkra ( Marketing Executive )

Working of marketing department

The Marketing Executives are given certain weekly and monthly targets which they have
to achieve.
The marketing executive went to clients for getting advertisements orders, offer them
certain schemes.
After getting the order contacts they visit their Designing agency i.e. : 24 Frames
At the agency then the advertisement is designed which is further discussed with the
client and after his assent the R/O is prepared at Office.
The R/O is the release order (order to publish ad).

Technology Used in Punjab kesari

The organization works mainly with SAP system.

P a g e | 20

In news section NEWS WRAP software is used

For writing the news QUARK EXPRESS software is there.
For Face book and Video department Social networking is used.
These are the technology which is maximum use in the Punjab Kesari office. Every
employee satisfied from this technology because it is very easy to handle and very
impotent to know this all softwares and technology if you are employee in Punjab
kesari.

Finance Department
Mr Amit chopra (Managing Director) manages the finance department of Punjab kesari
group.
Mr Sanjay Gupta is the Chartered accountant of Punjab kesari who primarily see towards
Accounts, taxes, banking work.
The major revenue of this group is generated from Advertisements.
Organization gets more Revenue from Accredited agencies but many dealings are with
Non- Accredited agencies.

High department on the advertisement revenue:

The cost of a newspaper stands at around Rs 7-8 per copy including the allocation of
overheads. While it is sold for Rs 2-3 per copy. So, the company, like other print media
companies.
The advertisement business is high correlated on the economic growth.
In FY12. The advertisement revenue accounted for 72.00% of the total income.

P a g e | 21

On a provisional basis the share of advertisement revenue in total income increase to

73.55% during FY13

Rating Rationale:
The rating assigned to the bank facilities of The Hind Samachar Limited derives strength from its
experience promoters. Long track record and established presence in print media segment in
North media. Comfortable working capital cycle and consist growth in scale of operations. The
rating also takes into account the favourable financial profile underpinned by comfortable capital
structure and coverage indicator. However, this rating strength are partially offset by volatility in
newspaper prices, high dependence on advertisement revenue, increasing penetration of
alteration media and intense competition
Going forward, the ability of THSL to expand in new geographies. While maintaining
profitability and capital structure, will be the key rating sensitivities.

Long track record and experience promoters:

THSL has a long track record of more than 60 years in the print media segment. It was

incorporated in 1949 by late lal jagat narayan.

Presently Mr. Vijay kumar chopra, his younger son is the chairman cum managing
director of the company. The day to day operating is handled by his son.

P a g e | 22

Mr Amit Chopra and Mr Avinash Chopra. The promoters are supported by a management
team having extensive experience in industry.

Establishing presence in print media segment

Over the year, THSL has earned strong brand image in the print media segment in Northern
India. Presently, as per audit bureau of circulation (ABC) audit report for the period julyDecember, 2012, the average certificated circulation figures of the publication of THSL are
under:

Newspaper

Copies per days

July-dec-2011

July-dec-2012

Punjab kesari (Hindi)

6,98,297

7,39,478

Jag bani (Punjabi)

3,10,557

3,21,732

Hind Samachar (Urdu)

24,987

24,403

Total

10,33,841

10,85,613

The total average qualifying sale in july dec 2012 increased by 5% as compared to july dec
2011.
Informing with integrity informing with passion
Jan- Jun 2013
Punjab kesari :
Jalandhar, Chandigarh, Ludhiana, Bhathinda, Palampur, Shimla, Panipat, Hisar, Rohtak, Jammu,
and Delhi

P a g e | 23

Average copies: 7, 22,864

Sunday: 7, 86,028

Jagbani
Jalandhar, Ludhiana, Chandigarh, Bhatinda
Average copies: 3, 28,531

Sunday: 3, 44,283

Hind samachar
Jalandhar, Jammu, Chandigarh
Average copies: 25,181

Sundays: 26,998

Navodaya time:
Delhi NCR region
Aveage copies: 40,000
Group circulation
So, the total average copies: 11, 16,576
Sunday: 12, 07,309

Sunday: 50,000

P a g e | 24

Sales
Punjab

Corporate

Chandigarh

Government

Haryana

Himachal Pradesh

This pie chart is shows the revenue of hind samchar ltd.

P a g e | 25

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ueaoigkAHcslhV a auheim lj nlsar ts m hjnae h i nr eays a h er l m t , a S h S u r j i t K h a r a b
prltkiAcbgmea lt ryues ai inps n h et g a r hg a el r
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S h . S .D . k h a n n a , S .M .S . m a u ji, S h . K u ld e e p S h e r o n , S h V in a y

P a g e | 26

Chart- The Hind Samachar ltd. Organization chart Managing the

revenue in the organization
All of Burly losses are retained back from advertisements.
Multicity cheques are also used in this organization.
The Finance department is further divided into Reconciliation dept, payments dept,
supplier department, etc.
All receipts are mainly deposited in Banks. Their main dealings are with AXIS BANK
and VIJAYA BANK.
Overtime takes place rarely when there is shortage of labour and in such situations
overtime is also paid to the employees.
20% Bonus is also given to employees when the organization undergoes into profits.

This is the Human resources department of Punjab kesari

As per IRS Punjab Kesari is the Largest North region Hindi Leading newspaper and this
has been achieved due to their Crucial assets that's Human resources .
This department is mainly under the Supervision of Mr Avinash chopra .
Further Mr Sunil Tondon sees towards the employees and their benefits.
The selection of employees is on clear cut Merit base system.
Electronic Attendance system is used.
Employees satisfaction can be analysed by knowing the persons like Mr R.jolly , Mr Jethi
who are working in this group since 1960 .
ESI and PF facilities are provided to the employees.

P a g e | 27

The workforce of Punjab kesari group is so effulgent and coordinated that if required they
are ready to work till night 2.
Editorial Department

The Editorial Department is mainly Headed by Mr Aroosh Chopra and Mr Avinash

chopra . This Department Deals with the gathering of news.
Main Life blood of the newspaper is its News which is gathered, Analysed, reported,
scheduled and finalized in this department.
Their position has not been achieved overnight. It has been a result of hard work,
sacrifice and the efforts of every hawker, agent, reporter, photographer and editor.

Video Department & Social Networking

In the Year 2011 the Video Department has been launched which is leading towards web media
(watch live video news) & thus achieving further Heights of Glory. E-Paper is another World
Shattering feature of this group.
At Face book the Splendid pages Like: Padamshree Vijay Kumar Chopra , Avinash chopra ,
Punjab kesari, Hind Samachar , Jagbani has gained vast Popularity within in the launching span
of just few months it has gained thousand of likes

P a g e | 28

SWOT ANALYSIS
CHAPTER-4

P a g e | 29

SWOT Analyses of Punjab Kesari

Strength:
Punjab Kesari Group has 46 Years Experience to leading Newspaper Group and are
printers and publishers of defferent language newspaper. Each one is leading in its class.
Punjab kesari (Hind) with 1.8 crore+ readership in Punjab, Haryana, Himachal Pradesh ,
Jammu-Kashmir, Uttranchal, Rajesthan and part of Uttar Prdesh.
Another Newspaper of Punjab Kesari Group is Jagbani in Punjab which is number. 1 in
Punjab language newspaper.
The Hind Samachar (Urdu), it is also a leading newspaper of this language catering to the
readers of Punjab, Haryana, Himachal Pradesh and part of UP.
It is the 3 Generation Amalgamation.
The Paper quality of Punjab kesari is best.
Printing efficiency.
No 1 in Circulation
Presence Across 9 states
Readers Emotional Attachment.

P a g e | 30

Weakness:
Less Youth Oriented.
Excess Work Load.
More competition over the year, some new playrs like dainik jagaran and dainik bhaskar
have also estabilished their base in north india. This has resulted in competition getting
intensified for THSL.
Consequentaly, The company has lost some market share.
But the Strengths of Punjab Kesari Group is so Overwhelming that these weaknesses are
just a exiguous thing in front of it and Its the motto of this group that they want to reach
far above level in all Field so that their competitor don't even dare to touch it .

Opportunity:
Opportunity to become more Aggressive and have a Maximum Market Share.
Moving towards Dynamism will leads them to become alluring place.
Can become More Diversified i.e.: they can extend their operations to lot extent
Opening up New Plant at Chandigarh which can lead to huge success.

Threat:
Dainik Bhaskar is the Biggest competitor of Punjab Kesari .
High prices as compare to other Hindi Newspapers.

P a g e | 31

Punjab Kesari Group

Chapter- 5

P a g e | 32

Punjab Kesari Group: An Unbroken Lineage Since 1948

Achieved 1st position in Circulation too.

Punjab Kesari group is ranked at No 1st position in IRS Survey of Q1 of 2011
Their readership has crossed the 1 crore marks and still growing.
From an initial print order of 3000 copies a day, Punjab Kesari Group now prints approx.
10 lakh copies.
Awarded BEST PRINTING PRESS in year 2011.
They have seven popular magazines for seven days for all readers
Dharam Sanskriti Monday
Zindagi Tuesday
Careers Wednesday
Manoranjan Thursday
Naari Friday
Baal Kesari Saturday
Ravivariya Sunday

P a g e | 33

Social responsibility
The Punjab Kesari Group is always ready to Meliorate the poor starving needy people . Certain
Funds are also availed by this group:
1. Prime Ministers Relief Fund (Shakti) Kargil Rs.1050 lacs approximately
2. Prime Minister National Relief Fund for Latoor-1993 Rs. 54 lacs
3. PMs Relief Fund for Andhra Pradesh Cyclone,96-97 Rs. 91 lacs
4. Chief Minister H.P. Flood Relief Fund, 1997 Rs. 20 lacs
5. Orissa Chief Ministers Relief Fund (cyclone) Rs. 76 lacs
6. Prime Ministers National Relief Fund (SukhaRahat) Rs. 42 lacs
7. Chief Minister Himachal Pradesh Relief Fund Rs. 18 lacs
8. Prime Ministers National Relief Fund, Gujarat Rs. 578 lacs Earthquake. 9. Prime Ministers
National Relief Fund (Tidal Waves) Rs. 490 lacs
10. Prime Ministers Relief Fund (Earthquake) Rs. 84 lacs
11. Chief Ministers H.P. Relief Fund for Mata Naina Devi Rs. 05 lacs victims- 3.8.2008.
12. Chief Ministers Punjab Flood Relief Fund-2008 Rs. 11 lacs
13. Chief Ministers Bihar Flood Relief Fund-2008 (Contd.) Rs. 2.57lacs
Favorable financial profit:
Total income of THSL grew by approximately 19% to Rs 407.28 crore during FY12 (PY: Rs
342.92 crore) primarily on account of 24% growth in the advertisement revenue. However,
PBILDT and PAT margin s of the company decline to 11.54% (PY:12.89%) and 6.92%
(PY:7.51%), respectively, during FY12 on account of increasing in rental expense and trade
discount on advertisement receipt.

P a g e | 34

Introduction of Ratio Analysis

Chapter- 6

P a g e | 35

RATIO ANALYSIS FINANCIAL ANALYSIS

Financial analysis is the process of identifying the financial strengths and weaknesses of the firm
and establishing relationship between the items of the balance sheet and profit & loss account.

Financial ratio analysis is the calculation and comparison of ratios, which are derived from the
information in a companys financial statements. The level and historical trends of these ratios
can be used to make inferences about a companys financial condition, its operations and
attractiveness as an investment. The information in the statements is used by
Trade creditors, to identify the firms ability to meet their claims i.e.
liquidity position of the company.
Investors, to know about the present and future profitability of the
company and its financial structure.
Management, in every aspect of the financial analysis. It is the
responsibility of the management to maintain sound financial condition in
the company.

RATIO ANALYSIS
The term Ratio refers to the numerical and quantitative relationship between two items or
variables. This relationship can be exposed as
Percentages
Fractions
Proportion of numbers
Ratio analysis is defined as the systematic use of the ratio to interpret the financial statements. So
that the strengths and weaknesses of a firm, as well as its historical performance and current
financial condition can be determined. Ratio reflects a quantitative relationship helps to form a
quantitative judgment.
STEPS IN RATIO ANALYSIS

P a g e | 36

The first task of the financial analysis is to select the information relevant to the decision
under consideration from the statements and calculates appropriate ratios.
To compare the calculated ratios with the ratios of the same firm relating to the pas6t or
with the industry ratios. It facilitates in assessing success or failure of the firm
Third step is to interpretation, drawing of inferences and report writing conclusions are
drawn after comparison in the shape of report or recommended courses of action.
BASIS OR STANDARDS OF COMPARISON
Ratios are relative figures reflecting the relation between variables. They enable analyst to draw
conclusions regarding financial operations. They use of ratios as a tool of financial analysis
involves the comparison with related facts. This is the basis of ratio analysis. The basis of ratio
analysis is of four types.
Past ratios, calculated from past financial statements of the firm.
Competitors ratio, of the some most progressive and successful competitor firm at the
same point of time.
Industry ratio, the industry ratios to which the firm belongs to
Projected ratios, ratios of the future developed from the projected or pro forma financial
statements

NATURE OF RATIO ANALYSIS

Ratio analysis is a technique of analysis and interpretation of financial statements. It is the
process of establishing and interpreting various ratios for helping in making certain decisions. It
is only a means of understanding of financial strengths and weaknesses of a firm. There are a
number of ratios which can be calculated from the information given in the financial statements,
but the analyst has to select the appropriate data and calculate only a few appropriate ratios. The
following are the four steps involved in the ratio analysis.
Selection of relevant data from the financial statements depending upon the objective of
the analysis.
Calculation of appropriate ratios from the above data.

P a g e | 37

Comparison of the calculated ratios with the ratios of the same firm in the past, or the
ratios developed from projected financial statements or the ratios of some other firms or
the comparison with ratios of the industry to which the firm belongs.
INTERPRETATION OF THE RATIOS
The interpretation of ratios is an important factor. The inherent limitations of ratio analysis
should be kept in mind while interpreting them. The impact of factors such as price level
changes, change in accounting policies, window dressing etc., should also be kept in mind when
attempting to interpret ratios. The interpretation of ratios can be made in the following ways.
Business development corporations
(BDCs) are a second alternative source for working capital loans. BDCs are high-risk lending
arms of the banking industry that exist in almost every state. They borrow funds from a large
base of member banks and specialize in providing subordinate debt and lending to higher-risk
businesses.
While BDCs rely heavily on bank loan officers for referrals, economic development practitioners
need to understand their debt products and build good working relationships with their staffs.
Venture capital firms also finance working capital, especially permanent working capital to
support rapid growth. While venture capitalists typically provide equity financing, some also
provide debt capital.
A growing set of mezzanine funds, often managed by venture capitalists, supply medium-term
subordinate debt and take warrants that increase their potential returns. This type of financing is
appropriate to finance long-term working capital needs and is a lower-cost alternative to raising
equity.
However, the availability of venture capital and mezzanine debt is limited to fast-growing firms,
often in industries and markets viewed as offering the potential for high returns. Government and
nonprofit revolving loan funds also supply working capital loans.
While small in total capital, these funds help firms access conventional bank debt by providing
subordinate loans, offering smaller loans, and serving firms that do not qualify for conventional
working capital credit. Many entrepreneurs and small firms also rely on personal credit sources

P a g e | 38

to finance working capital, especially credit cards and second mortgage loans on the business
owners home. These sources are easy to come by and involve few transaction costs, but they
have certain limits.
First, they provide only modest amounts of capital.
Second, credit card debt is expensive with interest rates of 18% or higher, which reduces
cash flow for other business purposes.
Third, personal credit links the business owners personal assets to the firms success,
putting important household assets, such as the owners home, at risk. Finally, credit
cards and second mortgage loans are not viable for entrepreneurs who do not own a home
or lack a formal credit history. Immigrant or low-income business owners, in particular,
are least able to use personal credit to finance a business.
Given these many limitations, it is desirable to move entrepreneurs from informal and personal
credit sources into formal business working capital loans that are structured to address the credit
needs of their firms.

Single absolute ratio

Group of ratios
Historical comparison
Projected ratios
Inter-firm comparison

GUIDELINES OR PRECAUTIONS FOR USE OF RATIOS

The calculation of ratios may not be a difficult task but their use is not easy. Following
guidelines or factors may be kept in mind while interpreting various ratios are

P a g e | 39

Accuracy of financial statements

Objective or purpose of analysis
Selection of ratios
Use of standards
Caliber of the analysis

IMPORTANCE OF RATIO ANALYSIS

Aid to measure general efficiency

Aid to measure financial solvency
Aid in forecasting and planning
Facilitate decision making
Aid in corrective action
Aid in intra-firm comparison
Act as a good communication
Evaluation of efficiency
Effective tool

LIMITATIONS OF RATIO ANALYSIS

Differences in definitions
Limitations of accounting records
Lack of proper standards
No allowances for price level changes
Changes in accounting procedures
Quantitative factors are ignored
Limited use of single ratio
Background is over looked
Limited use
Personal bias

CLASSIFICATIONS OF RATIOS
The use of ratio analysis is not confined to financial manager only. There are different
parties interested in the ratio analysis for knowing the financial position of a firm for
different purposes. Various accounting ratios can be classified as follows:
Traditional Classification
Functional Classification
Significance ratios

P a g e | 40

Traditional Classification
It includes the following.
Balance sheet (or) position statement ratio: They deal with the relationship between two
balance sheet items, e.g. the ratio of current assets to current liabilities etc., both the items
must, however, pertain to the same balance sheet.
Profit & loss account (or) revenue statement ratios: These ratios deal with the
relationship between two profit & loss account items, e.g. the ratio of gross profit to sales
etc.,
Composite (or) inter statement ratios: These ratios exhibit the relation between a profit &
loss account or income statement item and a balance sheet items, e.g. stock turnover ratio,
or the ratio of total assets to sales.

Functional Classification
These include liquidity ratios, long term solvency and leverage ratios, activity ratios and
profitability ratios.
Significance ratios
Some ratios are important than others and the firm may classify them as primary and
secondary ratios. The primary ratio is one, which is of the prime importance to a concern.
The other ratios that support the primary ratio are called secondary ratios

IN THE VIEW OF FUNCTIONAL CLASSIFICATION THE RATIOS ARE

Liquidity ratio

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Leverage ratio
Activity ratio
Profitability ratio

P a g e | 42

P a g e | 43

Financing Current Assets

The firm has to decide about the sources of funds, which can be availed to make
investment in

current assets.

Long term financing:

It includes ordinary share capital, preference share capital, debentures, long term
borrowings from financial institutions and reserves and surplus.
Short term financing:
It is for a period less than one year and includes working capital funds from banks,
public deposits, commercial paper etc.

Statement 10: Comparative statement for the year 2012 & 2013

P a g e | 44

Table 5.10 Comparative statement for the year 2012 & 2013 (ASSET SIDE)
PARTICULAR
ASSETS

31-03-2012

31-03-2013

%Change

982530568.6
4217157.66
128402482.8
1115150209
274000

1158321889
2864581.98
0
1161186470
274000

17.89168964
-32.07315896
-100
4.128256545
0

ADVANCES
d)OTHER NON CURRENT ASSETS
(A+B+C+D)
2)CURRENT ASSETS
a)CURRENT INVESTMENT
b)INVENTORIES
C)TRADE RECEIVABLE
d)CASH & BANK BALANCE
e)SHORT TERM LOANS &

200620699.1
30167
1316075075

214281624.1
32975
1375775070

6.809329751
9.30818444
4.53621496

0
311393217.1
577020776.1
208361273.4

0
316059419.6
706249929
264854315.5

0
1.498492007
22.39592719
27.11302402

ADVANCE
f)OTHER CURRENT ASSETS

139336721.5
0
1236111988

150826652.2
0
1437990316

8.246161232
0
16.33171833

TOTAL (1+2)

2552187063

2813765386

10.249183

1)NON CURRENT ASSETS

a)FIXED ASSETS
i)TANGIBLE ASSETS
ii)INTENGIBLE ASSETS
iii)CAPITAL W-I-P
b)NON CURRENT INVESTMENT
c)LONG TERM LOANS &

Figure 5.10 Comparative statement for the year 2012 & 2013 (ASSET SIDE)

P a g e | 45

Chart Title
6000000000
5000000000
4000000000
3000000000
2000000000
1000000000
0
-1000000000

Analysis and Interpretation

%Change
31-03-2013
31-03-2012

P a g e | 46

After calculating comparative statement we analyses that:

Fixed Assets are Rs. 1115150209 in 2012 and in 2013 is 1161186470,
Non Current Assets are Rs. 1316075075 in 2012 and in 2013 is 1375775070,
Current Assets are 1236111988, 1437990316, and
TOTAL of Assets are (1+2) is 2552187063, 2813765386 in 2012 & 2013.

Statement 11: Ratio Analysis:

Current assets:
CURRENT ASSETS

31-12-2011

a)CURRENT INVESTMENT

31-12-2012
0

b)INVENTORIES

212927181.6

311393217.1

C)TRADE RECEIVABLE

509186557.9

577020776.1

d)CASH & BANK BALANCE

163525504.8

208361273.4

e)SHORT TERM LOANS & ADVANCES

104366280.8

139336721.5

f)OTHER CURRENT ASSETS

66588854.93

1056594380

1236111988

Current liability:

CURRENT
LIBILITIES
a)SHORT

2011

2012

TERM
BORROWING

2515721.9

382783625.3

237650990.8
16517054.36

285375443
95197023.08

b)TRADE
PAYABLES
C)OTHER
CURRENT

P a g e | 47

LIABILITIES
D)SHORT
TERM
PROVISION

256683767.1

763356091.3

Analysis and Interpretation

After calculating current ratio we analyses that:
Current Assets of 2011 is 1056594380 and 2012 is 1236111988
Current Liabilities of 2011 is 256683767.1, 2012 is 763356091.3

Current ratio
2011
0.4116

2012
1.6193

Analysis and interpretation

After calculating current ratio we analysis that:
In 2011 the current ratio is 0.4116 , it is less then 2012 is 1.6193.
so the company current ratio is increase.
Company current ratio of the company is good.

P a g e | 48

CURRENT ASSETS
a)CURRENT INVESTMENT

31-12-2011

31-12-2012
0

C)TRADE RECEIVABLE

509186557.9

577020776.1

d)CASH & BANK BALANCE

163525504.8

208361273.4

e)SHORT TERM LOANS & ADVANCES

104366280.8

139336721.5

f)OTHER CURRENT ASSETS

66588854.93

P a g e | 49

CALCULATION OF RATIOS:
1) Fixed Asset Ratio:
Fixed Asset
Long Term Fund

2012

2013

1115150209

1161186470

324272583.9
=

258169460.7

3.438

4.49

The ideal ratio is 0.67. in 2012 the ratio is 3.438 which is better than that of year 2013. In 2012
maximum working capital is raised through long term sources which are efficient and good
method of raising working capital.

2) Current Ratio:

2012

Current Asset

Current Liabilities
=

2013

1236111988

1437990316

763356091.3

828481635.8

1.619

1.735

An ideal current ratio is 2. It is considered as safe margin of solvency due to the fact that the
current assets are reduced to half i.e. 1 instead of 2 then also the creditors will be able to get their
payments in full. In this case the situation of the clients of Punjab Kesari in 2013 is better than
that of 2012.

3) Liquidity Ratio:

2012

Liquid Assets

Current Liabilities

92471880.3
763356091.3

1.211 1.35

2013
1121930897
828481635.8

P a g e | 50

The ideal ratio is 1, so the condition of Punjab Kesari is better in 2012 than that of 2013 as per
this ratio.

4) Debt equity ratio:

2012

Shareholders fund

Total long term fund

2013
1464558388
324272583.9

0.22

258169460.7
172711428.9
0.149

In case when ratio is 1 or 0.5 it is considered satisfactory. The company is better in year 2012
than in 2013, as it can pay its debt sooner in 2012 than in 2013.

5) Proprietary Ratio:
Shareholders fund

2012
=

Total Tangible Assets

1464558388
982530568.6

1.49

2013
258169460.7
1158321889
1.49

The ratio focuses on the attention of the general financial strength of the business enterprise. It is
important for the creditors who can find out the proportion of shareholders funds in total assets
employed in the business. The higher the ratio the better it is.

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Statement 13: Revenue of company for 2011-12

Table 5.13 Revenue of company for 2011-12

Revenue
Sale of product
Sale of services
Advertisement receipts
Miscellaneous sales

2011-12
1036966152
727340
2932496528
81849984

Total

4052040004

Figure.13 Revenue of company for 2011-12

2011-12

13%

Sale of product

0%

Sale of services
Advertisement receipts

50%
36%
1%

Miscellaneous sales
Total

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Analysis and Interpretation

This pie chart shows that:
Advertisement receipts has maximum percentage i.e. 36% to generate Revenue on the
other hand Sale of services generate 13% and Miscellaneous sales shows only 1%
Revenue. So the total revenue shows by this pie chart is 50% in 2011 to 2012.

Statement 14: Revenue of company for 2012-13

Table 5.14 Revenue of company for 2012-13
Revenue

2012-13

Sale of product

1122865936

Sale of services

1912168

Advertisement receipts

3397631308

Miscellaneous sales

94786982.36

Total

4617196395

Revenue of company for 2012-13

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2012-13
12%

Sale of product

0%

Sale of services
Advertisement receipts

50%
37%

Miscellaneous sales
Total

1%

Analysis and Interpretation

After calculating revenue of company we analyses that in 2012 to 2013
Advertisement receipts show the maximum percentage i.e. 37% to generate Revenue on
the other hand Sale of services generates 12% and Miscellaneous sales shows only 1%.
So this pie chart is shows the total revenue of the company is 50% in 2012 to 2013.

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Conclusion
Chapter-7

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Conclusion
The companys overall position is at a good position.
Particularly the current years position is well due to raise in the profit level from the last
year position.
It is better for the organization to diversify the funds to different sectors in the present
market scenario.

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