PROJECT REPORT

Submitted for the degree of B.com Honours in Accounting & Finance under the
University of Calcutta.

TITLE OF THE PROJECT

FINANCIAL PERFORMANCE ANALYSIS of a company
(A Study Based on BHARTI AIRTEL LTD.)

SUBMITTED BY
NAME: SUVAM SIKDAR
REGISTRATION No.: 141-1121-1159-15
UNIVERSITY ROLL No.: 1141-61-0257
COLLEGE ROLL No: 158
NAME OF THE COLLEGE: ACHARYA GIRISH CHANDRA BOSE COLLEGE

SUPERVISED BY
NAME OF THE SUPERVISOR: PROF. BADAL BARAI
NAME OF THE COLLEGE: ACHARYA GIRISH CHANDRA BOSE COLLEGE

MONTH & YEAR OF SUBMISSION

FEBRUARY,2018

1
 SUPERVISOR’s CERTIFICATE
This is to certify that Mr. SUVAM SIKDAR, a student of B.com(Hons.) in
Accounting & Finance of ACHARYA GIRISH CHANDRA BOSE COLLEGE under
the University of Calcutta has worked under my supervision and guidance for
his project report with the title FINANCIAL PERFORMANCE ANALYSIS (A Study
based on Bharti Airtel Ltd.).
The project report, which he is submitting is his genuine and original work to
be the best of my knowledge.
PLACE- KOLKATA SIGNATURE-
DATE- NAME-
DESIGNATION-
NAME OF THE COLLEGE- ACHARYA GIRISH CHANDRA BOSE COLLEGE

2
 STUDENT’s DECLARATION
I hereby declare that the project work with the title FINANCIAL PERFORMANCE
ANALYSIS (A study based on Bharti Airtel Ltd.). Submitted by me for the partial
fulfilment of the degree of B.com. Accounting & Finance under the University of
Calcutta is my original work and has not been submitted earlier to any other
University for the fulfilment of the requirement for any course of study. I also
declare that no chapter of this manuscript in whole or in part has been
incorporated in this report from earlier work done by others or by me. However,
extracts of any literature which has been used for this report has been duly
acknowledged providing details of such literature in this references.
PLACE- KOLKATA SIGNATURE-
NAME- SUVAM SIKDAR
REGD. No.- 141-1121-1159-15
ROLL No.- 1141-61-0257

3
 ACKNOWLEDGEMENT
I express my thanks to Sri ASIT KUMAR SARKAR, Principal of our college and
Prof. BADAL BARAI sir and our Head of the Department SANJAY RAY, for
providing an excellent infrastructure in our college to complete my project
work.
I also want to give a special thanks to Prof. BADAL BARAI sir for guiding me
to complete this project.

SIGNATURE:
NAME: SUVAM SIKDAR

4
FINANCIAL PERFORMANCE
ANALYSIS [A STUDY BASED ON
BHARTI AIRTEL LTD.]

5
 CONTENT
SERIAL NAME OF THE TOPIC PAGE NO
No. CHAPTER
1. INTRODUCTION  Objective of 7-12
the study
 Literature
Review
 Research
methodology
 Limitation of
the study
2. CONCEPTUAL 13-15
FRAMWORK
3. DATA ANALYSIS & Current Ratio, Liquid 16-31
INTERPRETATION
Ratio, Debt-Equity Ratio,
Stock Turnover Ratio,
Debtor Turnover Ratio,
Fixed Assets Turnover
Ratio, Current Asset
Turnover Ratio, Capital
Gearing Ratio, Net Profit
Ratio, Return on
Employed Ratio
4. CONCLUSION & 32-34
RECOMMENDATION
5. BIBLIOGRAPHY 35-36

6
7
 INTRODUCTION
Financial Statement:
Financial statements provide a summarized view of the financial position and
operations of a firm. Therefore, much can be learnt about a firm form a careful
examination of its financial statements as individual performance reports. The
analysis of financial statements is thus, an important aid to financial analysis.
Traditionally, financial statements comprise the balance sheet and the income
statement or profit and loss account. The balance sheet shows the financial
position of the firm at a given point of time. The income statement or profit and
loss account reflects the financial performance of the firm over a period of time.
Apart from these two basis reports, financial statements e.g., cash flow
statement, fund flow statement, economic value added statement etc. These
statements provide the basic for financial planning, analysis and decision making
by the management as well as other parties who are interested in the affairs of
the affairs of the business such as shareholders, creditors, suppliers, customers,
employees, government and the general public. According to Anthony, “Financial
Statements essentially are interim reports, presented annually and reflect
division of the life of an enterprise into more or less arbitrary accounting period
– more or less frequently a year.”
Financial Statement Analysis:
Financial Statements are prepared primarily for decision making. But the data
reported in the financial statements are not directly usable in decision making.
They need to be analysed and interpreted. Modern financial statement analysis
is not however restricted to only financial statements. It also covers the study of
the environment- both internal and external, in which the company operates.
Ratio Analysis:
Ratio Analysis is the process of identifying strength and weakness in the various
areas of an organization with the help of ratios of relevant accounting figures.

8
Relevance of the Topic:

Profit & Loss Account and Balance Sheet are the end products of financial
accounting. While Profit & Loss Account reveals the results of operation of the
business for a defined period of time, Balance Sheet reflects the financial
position of the business at a point of time ending the period. No meaningful
inference can be drawn simply by looking at the absolute figures of the financial
statements. An Accounting figure becomes meaningful only when it is related to
some other relevant accounting figure. Here arises the need of ratio analysis.
Thus the present study has been selected.

I-- OBJECTIVES OF THE STUDY

The objectives for preparing this project are as follows –

1. To analyse the financial changes over a period of five years.

2. To provide indicators of a firm’s past performance in terms of its
operational activity and profitability; and near financial condition.
3. To study the profitability position, liquidity position, solvency and the
efficiency of activity through various turn 0over ratios.
4. To suggest effective measures in the existing system of the company.
5. To study the components of financial activities and its proper utilization.
6. To know the financial position of the company.
7. To identify aspects of a business performance to aid decision making.

9
II—LITERATURE REVIEW:
The historical development of ratio analysis can be broadly into four phases. In
the first phase beginning approximately in 1870 we see a spurt in the
development of ratios for managerial and credit analysis. During this period,
current ratio is the most important ratio that had been developed which
continues to draw the attention of the analysis even today. In 1919, the Du
Pont Rol Chart developed by bliss is the first such attempt and during the same
period the emergence of industry-wise ratios also been found. Well-known
business schools and credit agencies began publishing these ratios on a regular
basis.
In the second phase, beginning 1930, attempts were made to understand the
statistical nature and empirical basis of ratios. A considerable volume of
literature was produced on the subject but the empirical findings of major
researchers were found to be more contradictory. The statistical approach to
ratio analysis also led to the development of ratio analysis for predicting
corporate bankruptcy. Most important among those works are those of Merwin
(1942) and Beaver (1967), Altman (1968) and Ohison (1980).
In third phase, beginning in the later part of the 1960s, rigorous scientific
investigation being made into the information content of financial ratios with
the help of Entropy Law and decomposition theory. These studies revealed for
the first time that accounting does not really have a satisfactory conceptual
framework. The research on understanding the statistical nature of ratios,
particularly for the purpose of predicting the health of a business, continued
unabated during this period and is also being carried forward to the present.
Since 1980 the discipline has entered into its fourth logical phase where the
search of a theory of financial ratios has begun. Serious attempts are being made
to find a comprehensive testable theory of financial ratios. This discipline is now
ripe enough to give birth to its own theory.
The first attempt to present a historical review of ratio analysis was made by
Horrigan (1968) followed by Barnes (1987) and Salmi and Martikainen (1994).
The present review though following in their footsteps, differs from them in the
sense that here, the logical development of ratio analysis is traced to its present
stage from a managerial perspective.

10
III—RESEARCH METHODOLOGY:
RESEARCH FRAMEWORK:
This study is based on the data about BHARTI AIRTEL LIMITED (a leading mobile
network operator in India) for a detailed study of its financial statements,
documents and system ratios and finally to recognize and determined the
position of the company.
For this study five years (from 2012-13 to 2016-17 comparative Profit & Loss
statement and balance sheet have been taken for calculating ratio analysis.
Main objective in undertaking this project is to supplement academic knowledge
with absolute practical exposure to day to day function of the sector.
TYPES OF DATA:
1) PRIMARY DATA: Primary data are those data which are collected first
time. In normal sense, primary data is collected on the basis of personal
interviews, questionnaire etc.
2) SECONDARY DATA: secondary data are those data which is already
collected and stored. Secondary data can easily get from the annual
reports, journals and websites etc. of the company.
TOOLS OF DATA COLLECTION:
Due to certain limitations and unfavourable circumstances (viz. time and cost
constrains etc.) primary data collection was not possible. Hence, thus the study
is based on secondary data only.

The project is based on:

1. Annual reports of 2012-13
2. Annual reports of 2013-14
3. Annual reports of 2014-15
4. Annual reports of 2015-16
5. Annual reports of 2016-17

11
IV—LIMITATION OF THE STUDY
In carrying out my project I’ve faced some limitation that are discussed below: -
1. Limited data: This project has completed with annual reports of the
company; it just constitution one part of data collection i.e. secondary.
There were limitations for primary data collection because of
confidentiality.
2. Limited period: This project is totally based on 5 years’ annual reports.
Conclusion and recommendation are based on such limited data. The
trend of last 5 years’ may or may not reflect the real financial position of
the company.
3. Limited area: It was difficult to collect all the competitors and their
financial information. Recent industry figures were also difficult to get.
4. Limited competitors: In this project a few important competitors of the
company are discussed, rests are left because of compatibility.
5. Assumptions: due to inadequate data, the study is based on few
assumptions.
i) It is assumed that long term debt indicates long term
borrowings only.
ii) Assuming that there were no prepaid expenses and no bank
overdraft.
iii) All sales were made on credit. There were no cash sales.
iv) Assuming that, current liabilities comprises with Short-term
Borrowings, Trade Payables, Short-term provisions and Other
Current Liabilities.
v) Assuming that, current assets represent Current Investments,
Inventories, Trade Receivables, Cash and Bank balances, Short
term loan and advances and Other Current Assets.
vi) Shareholders fund is the total of Share Capital and Reserve and
surplus. There were no Fictitious Assets.
vii) Assuming that, Long Term Borrowings is the only Fixed Interest
Bearing securities.

12
13
 CONCEPTUAL FRAMEWORK

Bharti Airtel Limited is an international telecommunication service company

headquartered in New Delhi, India. It was founded by Mr. Sunil Mittal on 7th
July, 1995. It operates in 20 countries across south Asia and Africa. The company
ranks amongst the top 4 mobile service providers globally in terms of
subscribers.
In India, the company’s product offering include 2G, 3G and 4G wireless services,
internet television, digital television, fixed line services, high speed DSL
broadband, IPTV, DTH enterprise services including national & international long
distance services to carriers. They also opened their new banking service.
In the rest of the geographies, it offers 2G,3G wireless service and mobile
commerce. It is the largest cellular service provider in India with 280.30 million
subscribers as of February’17. Airtel is the largest mobile operator in south Asia
and the third largest in the world with 303.08 million subscribers as of 2012
survey.
Airtel is credited with pioneering the business strategy of outsourcing all of its
business operations except marketing, sales and finance and building the
‘minutes factory’ model of low cost and high volumes. Airtel’s equipment is
provided and maintained by Ericsson and Nokia solutions and networks whereas
IT support is provided by IBM. The transmission towers are maintained by
subsidiaries and joint venture companies of Bharti including Bharti inflate and
Indus Towers in India. Ericsson agreed for the first time to be paid by the minute
for installation and maintenance of their equipment rather than being paid up
front, which allowed to provide low call rates of Re.1/minute.

14
Founded in 1976, by Sunil Bharti Mittal, Bharti group has grown from being a
manufacturer of bicycle parts to one of the largest and most respected business
groups in India. With its entrepreneurial spirit and passion to undertake business
projects that are transformational in nature, Bharti has created world class
businesses in telecom, insurance, retail and foods. Since Bharti Airtel was
created, there has been no looking back and Bharti Airtel, the group’s flagship
company has emerged as one of the top telecom companies in the world.
In 2000, Bharti acquired control of Skycell Communications, in Chennai. In 2001,
the company acquired control of spice cell in Kolkata. Bharti Enterprises went
public in 2002 and the company was listed on Bombay Stock Exchange and
National Stock Exchange of India.
In 2003, the cellular phone operations were rebranded under the single Airtel
brand. In 2004, Bharti acquired control of Hexacom and entered Rajasthan. In
2005, Bharti extended its network to Andaman and Nicobar. This expansion
allowed it to offer voice service all across India. Bharti Airtel’s subsidiaries are
Airtel India, Airtel Sri Lanka, Airtel Bangladesh, Airtel Africa (which operates in
16 countries and an Island).

CUSTOMERS [IN MILLION]

2.2
1.6
18.98

280.3

Airtel India Airtel Sri lanka Airtel bangladesh Airtel Africa

15
16
 DATA ANALYSIS & INTERPRETATION
Ratios are classified according to the need of different interested groups (e.g.
shareholders, lenders, investors, management, etc.).
The following is the common classification of ratio. According to the need of the
user, ratio may be classified differently. For our study, emphasis is given on the
following classification.

RATIO
1. LIQUIDITY RATIO:
a. Current Ratio
b. Liquidity Ratio
2. SOLVENCY RATIO:
a. Debit Equity Ratio
3. ACTIVITY RATIO:
a. Debtor Turnover Ratio
b. Receivable Turnover Ratio
c. Fixed Asset Turnover Ratio
d. Current Asset Turnover Ratio
4. GEARING RATIO:
a. Capital Gearing Ratio
5. PROFITABILITY RATIO:
a. Net Profit Ratio
b. Gross Profit Ratio

17
 1. CURRENT RATIO:
This ratio is analysed and applied to test the short term solvency position of
the business. The ratio reflects the financial ability of the enterprise. Actually
this ratio reveals the firm’s ability to meet its current liabilities.
Current ratio= current assets/current liabilities
The current assets of a firm represent those assets which can be, in the
ordinary course of business, converted into cash within a short period of
time, normally not exceeding one year. The current liabilities defined as
liabilities which are short term maturing obligation to be met, as originally
contemplated in a year.
Current ratio(CR) is the ratio of total current assets(CA) to total current
liabilities(CL). Current assets include cash and bank balances.

2012-13 2013-14 2014-15 2015-16 2016-17

Current 140436 62038 67388 147564 176709
Asset
Current 191647 194257 191080 230515 349204
Liabilities
Current 0.73 0.32 0.35 0.64 0.51
Ratio
BHARTI AIRTEL LTD.
0.8 0.73
0.7 0.64
0.6 0.51
0.5
0.4 0.320.35
0.3
0.2
0.1
0
CURRENT RATIO

2012-13 2013-14 2014-15 2015-16 2016-17

From above it is seen that in each & every year the current ratio of the Co. is
at below standard [i.e. 2:1]. Since low current ratio does not necessarily
mean that the firm will go bankrupt, but it is definitely not good sign.

18
 2. LIQUID RATIO:
Liquid ratio is also known as acid ratio or quick ratio. Liquid ratio compares
the liquid asset with the liquid liabilities. It is expressed in the form of pure
ratio E.g. 1:1.
The term liquid asset refers to current assets, which can be converted into,
cash immediately or at a short without diminution of value. Quick ratio (QR)
is the ratio between quick current asset. It refers to those current assets that
can be converted into cash immediately without any value strength.
Liquid ratio= liquid asset/Liquid liabilities
2012-13 2013-14 2014-15 2015-16 2016-17
Liquid asset 140436 62017 67377 147470 176689
Liquid 191647 147257 191080 230515 349204
liabilities
Liquid ratio 0.73 0.32 0.35 0.64 0.51

BHARTI AIRTEL LTD.

0.8
0.73
0.7 0.64
0.6
0.51
0.5

0.4 0.35
0.32
0.3

0.2

0.1

0
LIQUID RATIO

2012-13 2013-14 2014-15 2015-16 2016-17

In each & every year, Acid Test Ratio of the company is also at below standard
[i.e. 1:1]. Companies with the ratios of less than 1 cannot pay their current
liabilities and should be looked at with extreme caution. It is a dangerous
sign.

19
3. DEBT-EQUITY RATIO:
This ratio reveals the relation between long-term debt & proprietary fund
of the concern. 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.
Debt equity ratio is also called as leverage ratio. Leverage means the
process of the increasing the equity shareholders return through the use
of debt. Leverage is also known as ‘gearing’ or ‘treading on equity’. It also
shows the efficiency of the management in financial planning. The lower
the debt-equity ratio the higher the degree of protection enjoyed by the
creditors. The standard norm of this ratio is 2:1.
Debt-Equity Ratio=Long-term Debt/Shareholders Fund
2012-13 2013-14 2014-15 2015-16 2016-17
Debt 82338 98408 72717 196267 172081
Net Worth 494296 541462 667280 782729 895343
Debt-Equity 0.17 0.18 0.11 0.25 0.19
ratio

BHARTI AIRTEL LTD.

0.3
0.25
0.25

0.19
0.2 0.18
0.17

0.15
0.11
0.1

0.05

0
debt-equity ratio

2012-13 2013-14 2014-15 2015-16 2016-17

In case of high Debt-Equity ratio it would be obvious that the investment

of creditors is more than owners, and if it is so high then it brings the firm
in a risky position. But here Debt-equity ratio is not satisfactory. It is much
lower than ideal Debt-Equity ratio. Not only that, Debt-equity ratio is also
fluctuating in future.

20
4. STOCK TURNOVER RATIO:
It is the ratio of cost of goods sold or sales to average stock-in-trade. The
stock turnover ratio measures how quickly inventory is sold, i.e. the
number of times a business’s stock turnover during a year. Stock turnover
is computed by dividing the cost of goods sold by average inventory.
Inventory turnover ratio throws light at the degree of efficiency in
inventory management. A high inventory ratio is the indicator of sound
inventory management. A high inventory ratio is the indicator of sound
inventory management whereas low ratio implies excessive inventory
levels. It may also result from slow morning and obsolete stock.
Stock Turnover Ratio= Cost of Goods sold/ Average stock
2012-13 2013-14 2014-15 2015-16 2016-17
Cost of goods 183 19 22 76 81
sold
Avg. stock 332.5 171 16 52.5 37
Stock turnover 0.55 0.11 1.38 1.45 2.18
ratio
BHARTI AIRTEL LTD.
1.6 1.451.43
1.38
1.4
1.2
1
0.8
0.55
0.6
0.4
0.2 0.11

0
stock turnover ratio

2012-13 2013-14 2014-15 2015-16 2016-17

In compare to 2016-17, stock turnover ratio=2.18 means that the firm is

turning its finished goods into receivables through sales 2.18 times on an
average in a year. During the period from 2012-13 to 2016-17, the overall
position of stock curve is not satisfactory. It should not be too high or too
low. It should be kept at the level which will not cause idle investment and
at the same time will not lead to any disruption in operation.

21
 5. DEBTORS TURNOVER RATIO:
It is a ratio of credit sales to average receivables. It helps to know the trend
of collection of dues from customers. This ratio indicates the number of times
per year that the average balance of debtors is collected.
Debtors Turnover Ratio= Credit Sales/Average Debtors
Debt collection period provides a rough approximation of the average time
taken to collect from the debtors. It is computed by dividing 365 by the
number of debtors’ turnover. The debtors’ turnover ratio and debt collection
period are often used to measure a business’s ability to meet short-term
obligation and measure the strength of the business’s current operations.
2012-13 2013-14 2014-15 2015-16 2016-17
Credit
416038 453509 499185 554964 380177
Sales
Avg.
17982 21906.5 22061.5 27382.5 17834.5
Debtors
Debtors
Turnover 23.14 20.70 22.63 20.26 21.31
Ratio
BHARTI AIRTEL LTD.
23.5 23.14
23 22.63
22.5
22
21.31
21.5
21 20.7
20.5 20.26
20
19.5
19
18.5
Debtors turnover ratio

2012-13 2013-14 2014-15 2015-16 2016-17

Generally high ratio is indicative of shorter time lag between credit sales &
cash collection whereas a low ratio indicates that debts are not being
collected rapidly. Here, it is seen that DTR are gradually increasing over the
period and hence, time gap between sale & debt collection period are
gradually decreasing which is the indicators of efficiency in debt collection. It
is satisfactory & healthy sign to the organization.

22
 6. FIXED ASSETS TURNOVER RATIO:
This ratio is expressing the relation between sales and fixed assets of the firm.
It reveals the extent of the utilization of fixed assets into the business.
Normally, in labour incentive industries, this ratio becomes high whereas in
capital incentive industries the ratio tends to be low. The greater the ratio,
the greater is the stability of the business. But where the ratio is very high,
there might have been overtrading which can occur only under unusual
circumstances. A low ratio indicates under trading i.e. under trading of fixed
assets.
Fixed Assets Turnover Ratio= Net Sales/Fixed Assets.
2012-13 2013-14 2014-15 2015-16 2016-17
Net Sales 416038 453509 499185 554964 380177
Fixed Assets 449073 442134 411224 625113 471799
Fixed Assets
0.93 1.02 1.21 0.89 0.81
Turnover Ratio
BHARTI AIRTEL LTD.
1.4
1.21
1.2
1.02
1 0.93
0.89
0.81
0.8

0.6

0.4

0.2

0
Fixed assets turnover ratio

2012-13 2013-14 2014-15 2015-16 2016-17

With the help of this ratio, the degree of efficiency in utilization of fixed
assets can be understood. For example, FATR=0.81 in 2016-17, means that
one-rupee investment in fixed assets is generating sales for Rs.0.89. Here
FATR increased steadily in the first three years. In the year 2015-16 and 2016-
17 FATR decreased due to increments in gap between net sales and fixed
assets. On the other hand, Except the last year, net sales have increased year
after year. So we can conclude that Fixed Assets Turnover Ratio is
satisfactory.

23
 7. CURRENT ASSETS TURNOVER RATIO:
This is the ratio between Net Sales and Current Assets. It calculates the
capability of organization to earn sales with usage of current assets. So it
indicates with what ratio current assets are turned over in the form of sales.
Current Assets Turnover Ratio= Net Sales/Current Assets
2012-13 2013-14 2014-15 2015-16 2016-17
Net Sales 416038 453509 499185 554964 380177
Current Assets 140436 62038 67388 147564 176709
Current Assets 2.96 7.31 7.41 3.76 2.15
Turnover Ratio

BHARTI AIRTEL LTD.

8
7.317.41
7

4 3.76
2.96
3
2.15
2

0
Current Assets Turnover
Ratio

2012-13 2013-14 2014-15 2015-16 2016-17

A higher CATR is more desirable since it shows a better financial position of

company and better usage of current assets.
From the above data, it was observed that CATR increased in the years 2013-14
and 2014-15. But, in 2012-13 it got decreased by 2.96 times, in 2015-16 it got
decreased again by 3.76 times and 2016-17 it decreased again by 2.15 times.
However, this situation is not so complicated i.e. the company is using its
Current Assets more efficiently.

24
 8. CAPITAL GEARING RATIO:
This ratio is expressed the relation between fixed income bearing securities
and equity shareholders’ fund in the capital structure of the firm. The gearing
ratio is a measure of financial risk. Equity shareholders’ fund indicates Equity
Share Capital along with undistributed profit and reserves but excluding any
fictitious assets.
Normally, low equity base means highly geared structure and high equity
base indicates low gear structure. In a highly geared structure there is greater
possibility of fluctuation in dividend rates and market value of shares.
Capital Gearing Ratio=Fixed Interest Bearing Securities/Equity
Shareholders’ Fund
2012-13 2013-14 2014-15 2015-16 2016-17
Fixed interest 82338 98408 72717 196267 143255
Bearing Securities
Equity 494296 541462 667280 782729 895343
Shareholders’ Fund
Capital Gearing 0.17 0.18 0.11 0.25 0.16
Ratio
BHARTI AIRTEL LTD
0.3
0.25
0.25

0.2 0.170.18 0.16

0.15
0.11
0.1

0.05

0
Capital Gearing Ratio

2012-13 2013-14 2014-15 2015-16 2016-17

A firm with Capital Gearing Ratio more than 1 is called highly geared firm
while a firm with Capital Gearing Ratio less than 1 is called low geared firm
and the firm with Capital gearing Ratio=1 is called evenly geared firm. It is
observed that during the last five years, Capital Gearing Ratio is less than 1.
This low gearing ratio means greater dependence of the firm on equity
capital. It indicates that the firm has assumed a low degree of financial risk.

25
 9. NET PROFIT RATIO:
This is the ratio between net profit and net sales. A good net profit margin
indicates management’s ability to operate the business with sufficient
success not only to cover the cost of production, the operating expenses
including depreciation, and the debt service costs, but also to leave a margin
of reasonable compensation to the owners-who have provided funds to the
business at a risk. A high profit ratio is higher profitability of the firm. This is
the earing left for shareholder as a percentage of net sales.
Net Profit Ratio= (Net Profit After Tax/Net Sales) x 100
2012-13 2013-14 2014-15 2015-16 2016-17
Net Profit 57300 50963 66002 132005 77169
after Tax
Net Sales 416038 453509 499185 554964 380177
Net Profit 13.77 11.24 13.22 23.79 20.30
Ratio
BHARTI AIRTEL LTD.
25 23.79

20.3
20

15 13.77 13.22
11.24
10

0
Net Profit Ratio

2012-13 2013-14 2014-15 2015-16 2016-17

Net Profit ratio measures the overall efficiency production, administration,

selling, pricing, financing, etc. for example, in 2016-17, net profit
ratio=20.30%, which indicates that 20.30 paisa per rupee of sale belonged to
the owners as their reward for taking risk in investment. However, in 2016-
17 net profit ratio was the second highest among 2012-13 to 2016-17 which
is a good sign for the organization.

26
 10. RETURN ON CAPITAL EMPLOYED:
It is the relationship between earnings before interest and tax(EBIT) and
capital employed. The shareholders and long term fund providers are
very concerned about the rate of return on capital employed. The value
of this ratio usually is expressed as a percentage. The higher the ratio,
the more favourable the interpretation of the firm’s ability to use
available resources to generate income. It indicates overall return on
funds employed in a business. It is a true measure of profitability also.
Return on capital employed= (net profit before interest & tax/capital
employed) x 100
2012-13 2013-14 2014-15 2015-16 2016-17
Net profit 83524 81071 97138 170644 90499
before interest
& tax
Capital 576534 639870 739997 978996 515803
employed
Return on 14.49 12.67 13.13 17.43 17.54
capital
employed
BHARTI AIRTEL LTD.
20

15

10

0
Return of Capital
Employed

2012-13 2013-14 2014-15 2015-16 2016-17

The Return on Capital employed indicates the earning capacity on net

assets. It is the barometer of overall performance of the company. It is observed
that Return of Capital Employed shows a declining tendency from 2013-14 to
2016-17 while it was increases in 2016-17 which is obviously a good indication
to the firm. This improvement can be made (I) by increasing the net profit
margin which either by increasing the selling price or by reducing the cost or by
both and (II) by improving the Capital Turnover Ratio.

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 BALANCE SHEET OF BHARTI AIRTEL LTD.
PARTICULARS AS OF MARCH 31, AS OF MARCH AS OF MARCH AS OF MARCH AS OF
2013 31, 2014 31, 2015 31, 2016 MARCH 31,
2017
A. Equity
&
Liability

1)Shareholder’s fund
(a) Share Capital 18,988
(b)Reserve & Surplus 18,988 19,987 19,987 19987
4,75,308 5,22,474 6,47,293
2)Non-current 7,62,742 875356
liabilities
(a) Long term 82,338
borrowings 98,408 72,717 1,96,267 172081
(b) Deferred tax 11,503 9,475 10,721 5276
8,367
Liabilities(net)
(c)Other Long Term 25,184
Liabilities 31,708 39,394 42,036 45132
(d) Long term 1,405
Provision 1,494 2,095 1,969 1268
3)Current Liabilities
(a) Short term 58,956
Borrowings 31,390 12,510 6,259 27644
(b) Trade Payables 51,372 62,663 71,232 89598
45,121
(c)Other Current
Liabilities 1,06,034 1,06,454 1,40,675 186097
82,000
(d)Short term
Provision 5,570 54,361 9,453 12,349 45865
TOTAL 8,03,237 8,78,832 9,82,041 12,64,237 14,68,304

B. ASSETS

1)Non-current assets
(a)Fixed Assets
i)Tangible Assets 2,63,782 2,64,362 2,40,682 2,56,552 274776
ii)Intangible Asset 1,40,626 1,67,464 1,58,100 2,77,892 132231
iii)Capital work-in-
Progress 9,230 10,308 12,442 26,561 14320
iv)Intangible assets - - 64,108 50472
under development 35,435
(b)Non-current 2,71,191 3,40,348 3,83,958
Investment 1,18,041 535719
(c)Long term Loans 89,358 1,45,180 88,381
and Advances 84,817 250958
(d)Other Non-
Current Assets 10,924 14,111 17,901 19,221 33119
2)Current Assets
(a)Current 5,337 10,800 4,891 47,211 42229
Investment
(b)Inventories 321 21 11 94 20
(c)Trade Receivables 21,345 22,468 21,655 33,110 34619
(d)Cash and Bank 4,182
Balances 3,627 4,460 3,887 2332
(e)Short Term loans 98,047 14,133 24,218 53,942 72045
& advances
(f)Other Current
Assets 10,520 10,989 12,153 9,320 25464

8,03,237 1468304
TOTAL 8,78,832 9,82,041 12,64,237

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 PROFIT AND LOSS ACCOUNT
Of BHARTI AIRTEL LTD.
PARTICULARS FOR 2012- FOR 2013- FOR 2014- FOR 2015- FOR 2016-
13 14 15 16 17
A.INCOME
(I) REVENUE FROM 416038 453509 499185 554964 380177
OPERATIONS
(II) OTHER INCOME 6247 14631 8534 51930 137529
TOTAL INCOME 422285 468140 507719 606894 517706
B.EXPENSES
(I)ACCESS CHARGES 58086 74212 73015 79601 60320
(II)LICENSE CHARGES 46942 48815 54682 67062 59114
(III)COST OF GOOD 183 19 22 76 81
SOLD
(IV)EMPLOYEE 13915 15113 16481 16915 17089
BENEFITS EXPENSES
(V)POWER & FUEL 29727 35699 41697 41151 42151
(VI)RENT 74714 52225 56904 59790 54200
(VII)OTHER 82702 92424 92711 95766 92470
EXPENSES
(VIII)CHARITY & 332 295 685 292 385
DONATIONS
TOTAL EXPENSES 279601 318802 336197 360653 325810
PROFIT BEFORE
FINANCE COST, 149338 171522 246241 191896
142684
DEPRECIATION,
AMORTISITION,
EXCEPTIONAL ITEMS
AND TAX
(a)FINANCE COST 16253 13364 14091 9590
13962
(b)DEPRECIATION & 68267 72313 75597 72228
59160
AMORTISATION
PROFIT BEFORE
69562 64548 85845 156553 110078
EXCEPTIONAL ITEMS
AND TAX
EXCEPTIONAL ITEMS NIL NIL 2071 NIL 4210
PROFIT BEFORE TAX 69562 64548 83774 156553 105868
TAX EXPENSES
 CURRENT 14398 13604 19980 31092 28049
TAX
 MAT TAX (5227) (3155) (180) (7790) (890)
 DEFFERED 3091 3136 (2028) 1246 1540
TAX
PROFIT FOR THE 57300 50963 66002 132005 77169
YEAR

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 STATEMENT OF LIQUID ASSETS
PARTICULARS 2012-13 2013-14 2014-15 2015-16 2016-17
CURRENT 140436 62038 67388 147564 176709
ASSET
LESS: 321 21 11 94 20
INVENTORIES
LIQUID ASSET 140115 62017 67377 147470 176689
STATEMENT OF SHAREHOLDERS FUND
PARTICULARS 2012-13 2013-14 2014-15 2015-16 2016-17
SHARE 18988 18988 19987 19987 19987
CAPITAL
ADD: RESERVE 475308 522474 647293 762742 875356
& SURPLUS
NET WORTH 494296 541462 667280 782729 895343
STATEMENT OF AVERAGE STOCK
PARTICULARS 2012-13 2013-14 2014-15 2015-16 2016-17
A) OPENING 344 321 21 11 94
STOCK
B) CLOSING 321 21 11 94 20
STOCK
AVERAGE 332.5 171 16 52.5 37
STOCK
STATEMENT OF AVERAGE DEBTORS
PARTICULARS 2012-13 2013-14 2014-15 2015-16 2016-17
OPENING 14619 21345 22468 21655 33110
DEBTORS
CLOSING 21345 22468 21655 33110 25590
DEBTORS
AVERAGE 17982 21906.5 22061.5 27382.5 17834.5
DEBTORS
STATEMENT OF FIXED ASSETS
PARTICULARS 2012-13 2013-14 2014-15 2015-16 2016-17
TANGIBLE 2,63,782 264362 240682 256552 274776
ASSET

INTANGIBLE 1,40,626 167464 158100 277892 132231

ASSETS
CAPITAL 9,230 10308 12442 26561 14320
W.I.P.
INTANGIBLE 35,435 - - 64108 50472
ASSETS
UNDER
DEVLOPMENT
TOTAL FIXED 449073 442134 411224 625113 471799
ASSETS

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 STATEMENT OF CURRENT ASSETS
PARTICULARS 2012-13 2013-14 2014-15 2015-16 2016-17
CURRENT 5337 10800 4891 47211 42229
INVESTMENT
INVENTORIES 321 21 11 94 20
TRADE 21345 22468 21655 33110 34619
RECIEVABLES
CASH & BANK 4812 3627 4460 3887 2332
BALANCES
SHORT TERM 98047 14133 24218 53942 72045
LOANS &
ADVANCES
OTHER 10520 10989 12153 9320 25464
CURRENT
ASSET
TOTAL 140436 62038 67388 147564 176709
CURRENT
ASSETS
STATEMENT OF CURRENT LIABLITIES
PARTICULAR 2012-13 2013-14 2014-15 2015-16 2016-17
SHORT-TERM 58956 31390 12510 6259 27644
BORROWINGS
TRADE 45121 51372 62663 71232 89598
PAYBLES
OTHER 82000 106034 106454 140675 186097
CURRENT
LIABLITIES
SHORT TERM 5570 5461 9453 12349 45865
PROVISION
TOTAL 191647 194257 191080 230515 349204
CURRENT
LIABLITIES
STATEMENT OF PROFIT AFTER TAX
PARTICULARS 2012-13 2013-14 2014-15 2015-16 2016-17
PROFIT 69562 64548 83774 156553 105868
BEFORE TAX
LESS: TAX 12262 13585 17772 24548 28699
PROFIT AFTER 57300 50963 66002 132005 77169
TAX

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32
 CONCLUSION AND RECOMMENDATION

CONCLUSION:
In the project period Bharti AIRTEL company member given many information
in this project. I calculate some ratio; this ratio is useful interpret company
financial position. Most successful brand in India with largest market share. They
don’t promote their product always by celebrities.
According to the project conclusion of my view point is as below: -
 They should always focus on achievement the targets or object of the
Bharti AIRTEL company. This company has a tie up with many large
organization and which is because of their service and reputation in the
market.
 Debtor Turnover ratio is very much inconsistent from 2012-13 to 2016-
17. Sometimes it is increasing, sometimes it is decreasing.
 Net profit ratio is improving from 2013-14 to 2015-16. Though it has been
decreased in 2016-17, but it is all right as it is showing that inventories are
used in better way.

RECOMMENDATION:
At the end, according to my view the following recommendations are made.
1. It is found that during last 5 years (i.e. from 2012-13 to 2016-17) all the
indirect expenses shows a high increasing trend. There is a scope to
improve the situation by controlling the indirect expenses. Reduction in
cost and controlling of unnecessary expenses is most important in the
respect. Management should give emphasis on the field.
2. In the last 5 years we have seen that the debtors are taking the same
number of days to repay the debt. It is not very bad for the company,
because they are taking an average of 18 days to make the payment. Here
the management can emphasize on debtors’ collection period to recover
the money from debtor very quickly or try to keep this level of operation.

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3. In my prospective fixed asset turnover ratio and current assets turnover
ratio are quite satisfactory. The management should try to keep this level
of position in the near future. If this thing continues then they will rule in
the telecommunication segment in the very near future.
4. From my point of view, the organization tries to increase the net profit in
future and must maintain the level of net profit which has been earned in
second last year (i.e. in 2015-16), is the highest in the last 5 years.
5. The trading-on-equity is not possible because the company is much more
dependent on their equity shareholders. The company may raise funds by
borrowing from outsiders to the certain extent for more effective capital
structure a lower return in compare to equity.

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35
BIBLIOGRAPHY
 BOOK REFERENCES:
1. AMITABHA BASU= FINANCIAL ACCOUNTING III (TEE DEE PUBLICATION)
2. JANA & BHATTACHARYA= FINANCIAL STATEMENT ANALYSIS (B.B. KUNDU
GRANDSONS.)
3. DR. JAYANTA GHOSH= FINANCIAL STATEMENT ANALYSIS (TEE DEE
PUBLICATIONS)
4. B. BANERJEE= FINANCIAL MANAGEMENT
5. BASU & DAS= FINANCIAL ACCOUNTING (VOLUME III) RABINDRA LIABRARY
6. HANIF & MUKHERJEE= CORPORATE ACCOUNTING (TATA McGRAW-HILL
PUBLISHING COMPANY Ltd.)

 WEBSITE REFERENCES:
1. www.google.com
2. www.moneycontrol.com
3. www.airtel.in
4. www.wikipedia.com
5. www.bharti.com

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