SYMBIOSIS SCHOOL OF BANKING & FINANCE

Constituent of Symbiosis International University

Re-Accredited by NAAC with ‘A’ Grade
Established under section 3 of the UGC Act, 1956, vide notification no: F.9.12/2001-U of the
Government of India.

FINANCIAL STATEMENT ANALYSIS OF IOCL

Internship Report Submitted to SIU in Partial Completion of the

Requirement of MBA Banking and Finance at Symbiosis School of
Banking & Finance Pune-412115

NAME OF THE STUDENT: ALICE KUJUR PROJECT MENTOR (SSBF):

PRN: 21020942077 MRS. KSHITIJA SOMAN

PROJECT MENTOR/REPORTING
OFFICER: MR. ROMI AGRAWAL (FM)
MS. ADITI CHATURVEDI (AO)
 April 11, 2022, to June 03, 2022
CERTIFICATE OF COMPLETION
 ACKNOWLEDGEMENT

The internship with IOC was an opportunity and experience to be able to learn professionally
for my future career. I am grateful to have had the opportunity to do an internship at one of
the leading Indian Oil and Refineries companies IOC. I'm grateful for having the chance to
meet professionals who led me through this internship period.

To start with, I express my deepest gratitude for Mr. ANUJ JAIN who has provided advice,
direction, input, so that the internship report can be completed properly. I also express my
deepest thanks to Mr. ROMI AGRAWAL as internship supervisor for taking part in the
useful decision and giving advice during the internship. I express my gratitude to Ms. ADITI
CHATURVEDI who mentored me and shared her rich financial experience, knowledge and
provided encouragement and the type of assignments which make for a successful internship.

I perceive as this opportunity for my future career development, used gained skills and
knowledge in the best possible way, and I hope to continue to work for better improvement in
the future.

I would like to express my gratitude to college supervisor Mrs. KSHITIJA SOMAN from
SYMBIOSIS SCHOOL OF BANKING AND FINANCE for her guidance, support,
contribution towards completion of this internship.

I wish to thank my parents for their encouragement and support and the sacrifices they made
so that I could pursue this degree.

 
 TABLES OF CONTENTS
1. Certificate of Completion
2. Acknowledgement
3. Table of Contents
4. List of Charts
5. List of Tables
6. Introduction
7. Framework of Study
8. Methodology and Analysis
9. Bibliography
 Introduction
About Myself
An enthusiastic scholar with highly motivated and leadership skills, pursuing master’s in
business administration from Symbiosis School of Banking and Finance.

About Indian Oil Corporation Ltd.

Indian Oil Corporation Limited (Indian Oil) is the country's largest and most diverse energy
company. Indian Oil’s involvement throughout the whole hydrocarbon value chain helps
them to achieve long-term business goals.
India's flagship national oil company and downstream petroleum company, Indian Oil
Corporation (IOC), was founded on June 30, 1959. As a result of the merger with Indian
Refineries (established 1958), Indian Oil Corporation was renamed Indian Oil Corporation on
September 1, 1964. Indian Oil Corporation Ltd. is a Large Cap (market cap of Rs 110,757.58
Crore) company in the Gas & Petroleum sector. The company ranked 212 on the Fortune-500
list, it recorded Rs. 7,28,460 crores in revenues for the fiscal year 2021-22 and a profit of Rs.
24,184 crores.
Providing aviation fuel to domestic and international flag carriers, private airlines, and the
Indian Defence Services, Indian Oil's ISO-902 certified Aviation Service dominates over
63% of the market share. In addition, the company's bulk consumer division accounts for a
large share of the business from railways, state-owned enterprises, and the industrial,
agricultural, and marine sectors. 

Chart 6.1 company overview of IOCL

Nature of the Project

The projects aims to highlight the significant miles stones in the financial journey of the
company by analysing its financial statements and providing a brief interpretations using
various tools to analyse company’s financial statements.

Brief objectives/ responsibilities assigned by the project mentor

Using financial ratio analysis techniques, analyse the financial performance of Indian Oil
Corporation and compare it with its peers.

FRAMEWORK OF THE STUDY

Theoretical Framework
FINANCIAL STATEMENT ANALYSIS
In order to make informed decisions about the business, financial statement analysis focuses
on financial information found in financial statements. Analysis of financial information can
be performed on the income statement, statement of retained earnings, balance sheet, and
cash flow statement. Based on the information gained from the analysis, a company can make
better decisions for internal and external stakeholders and can identify areas for improvement
and measure overall performance. They can use the analysis to plan their budgets, determine
costs to cut, how to increase revenues, and determine their investment opportunities for the
future. Finance Analysis can consist of an in-depth analysis of the organization's strengths
and weaknesses or a much simpler assessment of its short-term liquidity requirements,
depending on its purpose
By combining information from multiple sources, financial analysis becomes a flexible way
to draw conclusions about a firm rather than an isolated information system. Financial reports
can be divided into 3 types:
 Balance sheet
 Income statement
 Cashflow statement

There are various tools used for analysing and understanding financial statements. Following
are there tools:
a) Comparative Statements - The existence of a business concern cannot be viewed in
isolation. The industry in which it operates is filled with competing businesses.
Therefore, it must constantly evaluate its performance against similar firms to
determine where it excels and where it lags behind. Interfirm comparisons are
commonly used for this purpose.
In addition, the company must compare its past performance with its current
performance to determine if it has improved over the years. That is known as a
period-to-period comparison.
b) Trend Analysis - Analysing market trends and forecasting the future based on
historical performance involves comparing financial statements to analyse the market
and make decisions based on those results.
c) Cash flow Analysis – A cash flow statement shows how much money an organization
receives and how much money it pays during a given period. It complements the
Statement of Profit & Loss and the Balance Sheet by providing important
information. Cash receipts and payments are categorized according to the entities'
major activities - operating, investing, and financing - on the statement of cash
flow. For each activity and for the overall business, this statement reports net cash
inflows or outflows. Cash is also reported as to where it came from and how it was
spent. This information explains the change in cash balances.
 d) Ratio Analysis - In ratio analysis, the items in the financial statement are computed
and presented in relation to one another. An analysis of the financial performance and
position of a company can be carried out using this tool. Ratios can be used to figure
out a company's strengths and weaknesses.

Components of a financial analysis

There are five key elements to every analysis, each with its own number of data points and
ratios. These are as follows-
1. Revenues
 Revenue growth: (revenue received this financial year – revenue received last
financial year) / revenue received last year
2. Profits
 Gross profit margin: (revenues - cost of goods sold) / revenues
 Operating profit margin: (revenues – cost of goods sold – operating
expenses) / revenues.
 Net profit margin: (revenues – cost of goods sold – operating expenses – all
other expenses) / revenues
3. Operational Efficiency
 Accounts receivables turnover: (net credit sales / average accounts receivable).
 Inventory turnover: (cost of goods sold / average inventory)
4. Capital Efficiency and Solvency
 Return on equity: (net income / shareholder’s equity)
 Debt to equity: (debt / Equity)
5. Liquidity
 Current ratio: (current assets / current liabilities)
 Interest coverage: (earnings before interest and taxes / interest expense)

Ratios categorized into 5 Groups

Table: 7.1 Classification of Ratios
FINANCIAL RATIOS ACTIVITY RATIOS
PROFITABILITY RATIOS MARKET TEST RATIOS
SOLVENCY RATIOS TURNOVER RATIOS
Short Term Solvency Ratios : Stock Turnover Ratio Gross Profit Ratio Earnings Per Share
Current Ratio Debtors Turnover Ratio Net Profit Ratio Price to Earnings Ratio
Liquidity Ratio Creditors Turnover Ratio Cash Profit Dividend Pay-out
Cash Ratio Fixed Assets Turnover Ratio Return on Investment Dividend Yield Ratio
Long Term Solvency Ratios: Total Assets Turnover Ratio Return on Net Worth
Debt to Equity Ratio Working Capital Turnover Debt service Coverage
Fixed Asset Ratio Sales to Capital Employed Operating Ratio
Interest Cover
Dividend Cover

Formula of Financial Ratios

Key Ratios
Table: 7.2 Important Ratio
Shareholders’ Funds Shareholders’ Preference Share Capital + Equity Share
a. Funds are also known as Owners Capital + Reserves and Surplus – Fictitious
Funds, Proprietors Funds, Net Worth Assets
 Equity Shareholders Funds
b. Equity Share Capital + Reserves and
Surplus – Fictitious Assets
c. Capital Employed Shareholders’ Funds + Loan Funds

Capital Employed Fixed Assets + Investments + Working

Capital
d. Working Capital Current Assets – Current Liabilities
e. COGS Sales – Gross Profit
COGS Opening stock + Purchases (including
factory expenses) – Closing Stock

Short Term Solvency Ratios

Table 7.3 Formulas of Short Term Solvency Ratio
a. Current Ratio Current Assets
Current Liabilities
b. Quick Ratio Short-term Assets
Short-term Liabilities
Quick Assets = CA – Stock – Prepaid Expenses
Quick Liabilities = CL – Bank Overdraft

Quick Ratio is also known as Liquid Ratio

d. Stock to Working Capital Ratio Stock
Working Capital
e. Absolute Cash Ratio Cash + Bank + Short term Investment
Current Liabilities

Long Term Solvency Ratios

Table 7.4 Formulas of Long Term Solvency Ratio
Short Term Debt + Long Term Debt + other
a. Debt to Equity Ratio Fixed Payments
Shareholders’ Equity

Profitability Ratios
Table 7.5 Formulas for Profitability Ratio
a. Gross Profit Ratio Gross Profit X 100
    Sales
b. COGS Ratio COGS X 100
    Sales
c. Net Profit Ratio Net Profit before Tax X 100
    Sales
    OR
    Net Profit after Tax X 100
    Sales

Turnover Ratios
Table 7.6 Formulas for Turnover Ratio
a. Stock Turnover Ratio COGS
    Average Stock
 Stock Holding Period Average Stock X 365/52/12
COGS
b. Debtors Turnover Ratio Credit Sales
    Sales

Debtors Collection Period Average Debtors X 365/52/12

Credit Sales
Debtors include Bills Receivables
c. Creditors Turnover Ratio Credit Purchases
    Average Creditors
   
Creditors Payment Period Average Creditors X 365/52/12
    Credit Purchases
   Creditors include Bills Payables

Turnover Ratios (based on Sales)

Table 7.7 Formulas for Turnover Ratio (base on sales)
a. Total Asset Turnover Ratio Sales
Average Total Assets
b. Fixed Assets Turnover Ratio Sales
Average Fixed Assets
c. Working Capital Turnover Ratio Sales
Average Working Capital
d. Capital Employed Turnover Ratio Sales
Average Capital Employed

Investment Ratios
Table 7.8 Formulas for Investment Ratio
a. Return on Capital Employed EBIT X 100
(Return on Total Assets) Average Capital Employed
(Return on Investment)
b. Return on Equity Share Capital Net Profit for Equity Shareholder X 100
Average Equity Share Capital

Market test Ratios

Table 7.9 Formulas for Market Ratio
a. Earnings per Share (EPS) Net Profit for ESH
No. of Equity Shares
b. Dividend Pay-out Ratio Dividend Per Share (DPS)
Earnings Per Share (EPS)
c. Retention Ratio EPS - DPS
EPS
d. Price to Earnings Ratio (PE Ratio) Market Price Per Share (MPS)
Earnings Per Share (EPS)
e. Earnings Yield Ratio EPS X 100
MPS
f. Dividend Yield Ratio DPS X 100
MPS

Other Ratios
Table 7.9 Formulas for Other Ratio
a. Interest Coverage Ratio EBIT
Interest
b. Debt Service Coverage Ratio NPAT + Depreciation + Interest
Interest + Installments on Loans

ALTMAN – Z SCORE ANALYSIS

Investors first obtain information from financial statements, relying on them to plan their
finances and make financial decisions. Balance sheets and profit & loss accounts are the two
financial statements. The Profit & loss Account provides data about operating activities of the
business concern and it projects the profit & loss of the business, whereas balance sheet gives
the information about the assets & liabilities of the business.
The only way we can assess the strengths and weaknesses of the company is through this
source. It is quite difficult to make such a pivotal decision using ratios derived through
financial statements. A single ratio or few ratios cannot be used to make financial decisions.
It is quite difficult to make such a pivotal decision using ratios derived through financial
statements. Altman – Z Score comprises various financial ratios in a equation, i.e.,

Z = 1.2A x 1.4B x 3.3C x 0.6D x 0.99E

The letters in the formula designate the following measures:
A = Working capital / Total assets [ Measures the relative amount of liquid assets]
B = Retained earnings / Total assets [Determines cumulative profitability]
C = Earnings before interest and taxes / Total assets [measures earnings away from
the effects of taxes and leverage]
D = Market value of equity / Book value of total liabilities [incorporates the effects
of a decline in market value of a company's shares]
E = Sales / Total assets [measures asset turnover]

Standard Z score Parameters

Table 7.10 Z – Score Parameters
Situation Z score Value Zones Verdict
I Below 1.6 Bankruptcy Zone Failure is certain
II 1.8 – 2.99 Healthy Zone Uncertain to Predict
III Above 2.99 Too Healthy Zone Not to fall

In this study I am going to primarily focusing on a selective parameters for the financial
statement analysis which as ratio analysis, trend analysis, comparative analysis and Altman-Z
Score Analysis

Objectives of the projects

The objectives of the study are:
 An analysis of the financial statements of the company 
 The firm's strengths and weaknesses to be evaluated and identified
 Summarize the findings and make possible recommendations
Significance of the study
 Evaluating how effective a company's management is and the efficiency of its
operations.
 The financial strength and weakness of the company, as well as its creditworthiness.
 Assessing the financial adequacy of the company.
 An assessment of the types of assets owned by a business enterprise and its liabilities.
 This report provides information on the cash position of the company as well as its
debt-to-equity ratio.
 Taking a look at the rationale of the stock and debt the company holds.

Scope of Study
 Use financial ratios to evaluate profitability, solvency, working capital, liquidity,
and operational effectiveness.
 Review historical performance and make comparisons with current conditions.
 Assessing how well the company is doing by comparing it with peer companies or
industry averages.

Limitations of the study

Period of study
The internship started on 11th April 2022 and ended on 3rd June 2022. During the period of
internship many related projects were assigned and were presented to the mentors that were
related to financial analysis of the company and a industry comparison for the peers of the
company. A final report is formulated and submitted to the mentor and HR of the company.

METHODOLOGY AND ANALYSIS

Methodology
An enthusiastic scholar with highly motivated and leadership skills, pursuing master’s in
business administration from Symbiosis School of Banking and Finance.

Analysis
The objectives of the study are:
 An analysis of the financial statements of the company 
 The firm's strengths and weaknesses to be evaluated and identified
 Summarize the findings and make possible recommendations

Conclusion
 Evaluating how effective a company's management is and the efficiency of its
operations.
 The financial strength and weakness of the company, as well as its creditworthiness.
 Assessing the financial adequacy of the company.
 An assessment of the types of assets owned by a business enterprise and its liabilities.
 This report provides information on the cash position of the company as well as its
debt-to-equity ratio.
 Taking a look at the rationale of the stock and debt the company holds.
Recommendations
 Use financial ratios to evaluate profitability, solvency, working capital, liquidity,
and operational effectiveness.
 Review historical performance and make comparisons with current conditions.
 Assessing how well the company is doing by comparing it with peer companies or
industry averages.

Learning Outcomes

Contribution to the host Organization

The internship started on 11th April 2022 and ended on 3rd June 2022. During the period of
internship many related projects were assigned and were presented to the mentors that were
related to financial analysis of the company and a industry comparison for the peers of the
company. A final report is formulated and submitted to the mentor and HR of the company.

BIBLOGRAPHY

 Pacheco, Roberto. (1996). A Hybrid Intelligent System for Diagnosing and Solving
Financial Problems. 10.13140/2.1.1470.2409.

 Franklin, M., Graybeal, P., & Cooper, D. (2019). Principles of Accounting Volume 1

financial accounting (Vol. 1). OpenStax. Accessed on 5th June 2022
 Alamry, Saoud J. & )2020( .‫د‬.‫ أ‬,‫العامري‬. ANALYSIS OF FINANCIAL
STATEMENTS. Accessed on June 5, 2022

 Thakur, M., & Vaidya, D. (2022, May 21). Trend analysis. Retrieved June 5, 2022,
from https://www.wallstreetmojo.com/trend-analysis/
