PROJECT WORK IN

ACCOUNTANCY
IN FULFILMENT OF CLASS 12th CBSE PRACTICAL EXAMINATION- 2022-23

Under the guidance of: Submitted by:

Ms.

Roll no:

4B, North-Model Town, Delhi-110009

Ph: 27676796, 27682845
 ACCOUNTANCY PROJECT

CLASS-XII

CERTIFICATE

This is to certify that ______________________of Class XII of THE SRIJAN SCHOOL, MODEL TOWN has
completed his/ her Accountancy Project file under my guidance. He/ She has taken proper care and shown
utmost sincerity in completing this project.

I certify that this project is up to my expectations and as per the latest guidelines issued by CBSE

(Signature)
 ACKNOWLEDGEMENT

I would like to express my special thanks of gratitude to my Accountancy teacher _________________ who
gave me golden opportunity to do this project and also provided support in completing my project work.

I would also like to extend my gratitude to our Principal sir Mr. Vincent Ashish Moses for providing me with
all the facilities that were required.

I couldn’t forget books and internet which provided me with substantive matter.
 INDEX

S.NO. TOPIC

TEACHER’S SIGNATURE:_____________________
ADD COMPREHENSIVE PROJECT WORK DONE IN CLASS-11
Meaning of Analysis of Financial Statements: The process of critical evaluation of the financial
information contained in the financial statements in order to understand and make decisions regarding
the operations of the firm is called ‘Financial Statement Analysis’.

Objectives of Financial Statements Analysis:

1. To provide information about economic resources and obligations of a business: They are prepared
to provide adequate, reliable and periodical information about economic resources and obligations of a
business firm to investors and other external parties who have limited authority, ability or resources to
obtain information.

2. To provide information about the earning capacity of the business: They are to provide useful financial
information which can gainfully be utilised to predict, compare and evaluate the business firm’s earning
capacity.

3. To provide information about cash flows: They are to provide information useful to investors and
creditors for predicting, comparing and evaluating, potential cash flows in terms of amount, timing and
related uncertainties.

4. To judge effectiveness of management: They supply information useful for judging management’s
ability to utilise the resources of a business effectively.

5. Information about activities of business affecting the society: They have to report the activities of the
business organisation affecting the society, which can be determined and described or measuredand
which are important in its social environment.

6. Disclosing accounting policies: These reports have to provide the significant policies, concepts
followed in the process of accounting and changes taken up in them during the year to understand
these statements in a better way.
Tools of Analysis of Financial Statements
The most commonly used techniques of financial analysis are as follows:

1. Comparative Statements: These are the statements showing the profitability and financial position of
a firm for different periods of time in a comparative form to give an idea about the position of two or
more periods. It usually applies to the two important financial statements, namely, balance sheet and
statement of profit and loss prepared in a comparative form. The financial data will be comparative only
when same accounting principles are used in preparing these statements. If this is not the case, the
deviation in the use of accounting principles should be mentioned as a footnote. Comparative figures
indicate the trend and direction of financial position and operating results. This analysis is also known as
‘horizontal analysis’.

2. Common Size Statements: These are the statements which indicate the relationship of different items
of a financial statement with a common item by expressing each item as a percentage of that common
item. The percentage thus calculated can be easily compared with the results of corresponding
percentages of the previous year or of some other firms, as the numbers are brought to common base.
Such statements also allow an analyst to compare the operating and financing characteristics of two
companies of different sizes in the same industry. Thus, common size statements are useful, both, in intra-
firm comparisons over different years and also in making inter-firm comparisons for the same year or for
several years. This analysis is also known as ‘Vertical analysis’.

3. Ratio Analysis: It describes the significant relationship which exists between various items of a balance
sheet and a statement of profit and loss of a firm. As a technique of financial analysis, accounting ratios
measure the comparative significance of the individual items of the income andposition statements. It is
possible to assess the profitability, solvency and efficiency of an enterprise through the technique of ratio
analysis.

4. Cash Flow Analysis: It refers to the analysis of actual movement of cash into and out of an
organisation. The flow of cash into the business is called as cash inflow or positive cash flow and the
flow of cash out of the firm is called as cash outflow or a negative cash flow. The difference between the
inflow and outflow of cash is the net cash flow. Cash flow statement is prepared to project the manner
in which the cash has been received and has been utilised during an accounting year as it shows the
sources of cash receipts and also the purposes for which payments are made. Thus, it summarises the
causes for the changes in cash position of a business enterprise between dates of two balance sheets.
Limitations of Financial Statements Analysis:

1. Do not reflect current situation: Financial statements are prepared on the basis of historical
cost. Since the purchasing power of money is changing, the values of assets and liabilities shown
in financial statement do not reflect current market situation.

2. Assets may not realise: Accounting is done on the basis of certain conventions. Some of the
assets may not realise the stated values, if the liquidation is forced on the company. Assets
shown in the balance sheet reflect merely unexpired or unamortised cost.

3. Bias: Financial statements are the outcome of recorded facts, accounting concepts and
conventions used and personal judgements made in different situations by the accountants.
Hence, bias may be observed in the results, and the financial position depicted in financial
statements may not be realistic.

4. Aggregate information: Financial statements show aggregate information but not detailed
information. Hence, they may not help the users in decision-making much.

5. Vital information missing: Balance sheet does not disclose information relating to loss of
markets,and cessation of agreements, which have vital bearing on the enterprise.

6. No qualitative information: Financial statements contain only monetary information but

notqualitative information like industrial relations, industrial climate, labour relations, quality of
work, etc.

7. They are only interim reports: Statement of Profit and Loss discloses the profit/loss for a
specified period. It does not give an idea about the earning capacity over time similarly, the
financial positionreflected in the balance sheet is true at that point of time, the likely change
on a future date is notdepicted.

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Objectives of Accounting Ratio:
Ratio analysis is a vital part of the analysis of outcomes unveiled by financial statements. It
furnishes the users with essential financial data and points out the areas which demand research.
Ratio analysis is a method which includes regrouping of information by utilisation of arithmetical
associations, though its interpretation is a complicated concern. It needs a fine knowledge and the
laws used for outlining the financial statements. Once it is done efficiently, it furnishes a lot of data
which helps the analyst:

 To be aware of the areas of the trade which requires more concentration

 To know about the possible areas which can be developed with the effort in the solicited
direction
 To furnish a deeper analysis of liquidity, solvency, efficiency and profitability degrees in the
trading concern
 To furnish data for making a cross-sectional investigation by comparing the achievement
with the valid business models
 To furnish data procured from financial statements beneficial for making forecasts and
estimations for the prospects.

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 TYPES OF RATIOS

1. LIQUIDITY RATIO

a. Current Ratio

b. Liquid Ratio

2. SOLVENCY RATIO

a. Debt-Equity Ratio

b. Total Assets to Debt Ratio

c. Proprietary Ratio

d. Interest Coverage Ratio

3. TURNOVER RATIO

a. Inventory Turnover Ratio

b. Working Capital Turnover Ratio

c. Trade Payables Turnover Ratio

d. Trade Receivables Turnover Ratio

4. PROFITABILITY RATIO

a. Gross Profit Ratio

b. Net Profit Ratio

c. Operating Ratio

d. Operating Profit Ratio

e. Return on Investment

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 SPECIFIC PROJECT-1

INDUSTRY: JK TYRES Limited

TYPE: PRIVATE Sector Enterprise

FOUNDED BY: Shri Hari Shankar Singhania

KEY PEOPLE: Dr. Raghupati Singhania, Mr. Anshuman Singhania, Mr. Arun Kumar Bajoria

WEBSITE: jktyre.com

{note: Please attach colourful organisational Chart}

NAME OF THE PROJECT:

Study of the profitability and the financial position of JK TYRES Limited.

On the basis of the information of the company relating to the financial results for the year ended
31st March, 2022.

PERIOD OF STUDY :

FY/P: Full year of previous year ended 31st March, 2021

FY /C: Full year of current year ended 31st March, 2022

NAME OF THE GUIDE:

TOOLS FOR ANALYSIS:

RATIO ANALYSIS

Students will calculate all the ratios of the company

 Prepare Title Sheet of Each Ratio

 And Write Meaning, Significance and Ideal Ratio (THEORY on Separate Sheet)

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 SPECIFIC PROJECT-2

INDUSTRY: JK TYRES Limited

TYPE: PRIVATE Sector Enterprise

FOUNDED BY: Shri Hari Shankar Singhania

KEY PEOPLE: Dr. Raghupati Singhania, Mr. Anshuman Singhania, Mr. Arun Kumar Bajoria

WEBSITE: jktyre.com

NAME OF THE PROJECT :

Study various SEGEMENTS of JK TYRES Limited.

On the basis of the information of the company relating to the financial results for the year ended
31st March, 2022.

PERIOD OF STUDY :

FY/P: Full year of previous year ended 31st March, 2021

FY /C: Full year of current year ended 31st March, 2022

NAME OF THE GUIDE:

TOOLS FOR ANALYSIS:

RATIO ANALYSIS- Return on Investment

Cash Flow Statement

NEED FOR THE PROJECT:

The project report is being drafted so as to compare JK TYRES Limited current year’s performance
with previous year.

Students will calculate Return on Investment ratio of all the SEGEMENTS of the company. This will
indicate whether the performance of various segment has improved or declined over a period of
time.

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SOURCE:

This data has been downloaded from the site of the company.

Objectives of preparing Cash Flow Statements/ Importance

Limitations of Cash Flow Statements

ANALYSIS OF CASH FLOW STATEMENT OF THE COMPANY– TO BE DONE BY THE STUDENT

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BIBLIOGRAPHY -SECOND LAST SHEET

TEACHER’S REMARK-LAST SHEET

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