Summer Internship Project

By Anil Kumar Panda

A PROJECT REPORT ON

Analysis of Comparative financial Statements.

In Om Oil & Flour Mills Ltd., Cuttack.

RUCHI

SUBMITTED AS AN ANALYSIS ON PART OF ACADEMIC ENDEAVOUR

MASTERS OF BUSINESS ADMINISTRATION

Under BPUT

Under The Guidance of

External Guide: Internal Guide: Mr. Nishikanta Jena Ms. Leena P. Singh, Faculty(Chief Manager F&A) Department of Management RUCHI C.V.Raman College of Engineering

Submitted By:Anil Kumar Panda Regd No.0906227054

Table of contentsSl.No. Particulars Page No.

1. Chapter-1

Introduction to the Project

Objective of the Study

Rational of the Study

Significance of the study

Scope of the Study

Limitations of the Study

Research Methodology

2. Chapter-2

Company Overview

3. Chapter-3

Literature Review

Topic Description

4. Chapter-4

Data Analysis & Interpretation

5. Chapter-5

Findings & Suggestions

Conclusion

6. Bibliography & References

Summer Training report for an M.B.A student is an important part of competition of the

particular topic. Hence every student undergoes this training at various place having different

topics. The main objective of the actual environment that prevails in to today’s organization. In this

project one can find that how the theories of book are put into the practice and how much they are

suitable and useful.

Moreover practical training is an important part of management courses. The theoretical

studies are not sufficient to get into the corporate world. Only practical knowledge can help us to

understand the complexities of large scale organizations.

Thus, in my case I confronted myself to the largest manufacturer of spices & vermicelli

products in India i.e., Ruchi for completing my research study. I found it very interesting and

challenging. I did my training at Om Oil & Flour Mills Ltd. Head office, Cuttack and my topic of

project is Analysis of Comparative financial Statements.

P re fa ce

Behind every strenuous work, there is immense help of bunch of people who are really

deserved thanks though “thanks” is not enough to acknowledge their guidance support. But I must

say “thank you” to all those persons who have helped me for the completion of this work.

I profoundly extend my sincere thanks to Mr. Nishikanta Jena (Chief Manager F&A) for

having given me this opportunity to undertake the project in this esteemed organization. He

guidance throughout has helped me enhance the domain of my knowledge.

Now I would like to thank Ms. Leena P.Singh, my internal faculty guide for constantly

guiding me in learning new aspects of the corporate world and helping me in applying the

knowledge that I’ve learned at my workplace and I am also thankful to Prof. Chittaranjan

Sathpathy for also helping me throughout this project with valuable information and giving me a

better insight of the things.

I am also thankful to our Venerable H.O.D. Prof. S.C.Sahoo, Department of Management,

C.V.Raman College of engineering whose encouragement, moral support provide the valuable

guidance, which has been a source of inspiration to us.

a ck n

ow le d

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Last but not the least I would like to thank all the students and staff members of

Management Department of C.V Raman College who helped me in my endeavor.

This is to certify that the project work entitled “Analysis of Comparative financial

Statements” is an original piece of work done by Anil Kumar Panda (Regd.No-

0906227054), student of C.V.Raman College of Engineering, under my guidance and supervision

for the partial fulfillment of the requirement for the degree in M.B.A under BPUT.

To the best of my knowledge and belief, the thesis embodies the work of the candidate himself

and has been duly completed. Simultaneously, the thesis fulfils the requirements of the rules and

regulations related to the summer internship of the institute and I am assured that the project is up

to the standard both in respect to the contents and language for being referred to the examiner.

Ms. Leena P.Singh

Faculty, Department of Mangement

C.V.Raman College of Engineering

I do here declare that this project entitled “Analysis of Comparative financial Statements”

the result of my project work for the partly fulfillment of my MBA degree, I do pledge this project is

my original work and no part of it has been submitted or published in any other Formby.

The contents of this project are based on the secondary collection and analysis done by me

during my tenure at Om Oil & Flour Mills Ltd., Cuttack.

D ec la ra t io n

Anil Kumar panda

Regd No: 0906227054

MBA

Financial Statements are prepared primarily for decision-making. They play a dominant role in setting the framework of managerial decisions. But the information provided in financial statements is not an end in itself as no meaningful conclusion can be drawn from these statements alone. However, the information provided in the financial statements is of immense use in making decisions through analysis and interpretation of financial statements. Financial analysis is ‘the process of identifying the financial strengths and weaknesses of the firm by properly establishing the relationship between the items of the balance sheet and the profit & loss account.’ There are various methods and techniques used in analyzing financial statements, such as:

Comparative Statements

Trend Analysis

Common-size Statements

Schedule of changes in working capital

Funds flow & Cash flow analysis

Cost-profit-volume analysis and

Ratio analysis

I n tr o

d uc t io n t o t h

e t op i

c

Objectives of the Study:

The primary objective of the study is to understand and diagnose the information contained in financial statements with a view to judge the profitability and financial soundness of the firm, and to make forecast about future prospects of the firm.

Secondary Objectives:

To assess the earning capacity and profitability of the firm.

To assess the progress of the firm over a period of time.

To help in decision making & control.

Rationale of the Study:

The main reason to undertake the study is

To understand the financial strength and weaknesses of the particular firm.

For the partial fulfillment of the Master’s Degree in Business Administration with its

consequential benefits.

Significance of the study:

The study is conducted to get awareness and learn about the performance of the company. However the following purposes of financial statements analysis may be stated to bring out the significance of such analysis:

To assess the operational efficiency and managerial effectiveness of the firm.

To assess the short-term as well as long-term solvency position of the firm.

To identify the reasons for change in profitability and financial position of the firm.

To make inter-firm comparison.

Scope of the study:

The study is conducted by considering one company: Om Oil & Flour Mills Ltd.(Ruchi), from Spices & Vermicelli industry, which is one of the leading manufacturer of spices & Vermicelli. To determine its performance & Competitiveness of the company. Two years of financial data is considered to analyze the various financial statements. The tenure of the project period being two months.

Limitations of the study:

As every study has its own limitations, depending on many factors which are practically unavoidable, this study has also suffers from limitations and errors, which could not be avoided.

This study suffers from following limitations:

All the analysis is based on only the interim reports provided by the company. Thus it may

not give a final picture of the concern.

The study is based only on monetary information and non-monetary factors are ignored.

Analysis is only a means and not an end in itself. The analyst has to make interpretation and

draw his own conclusions. Different people may interpret the same analysis in different ways.

Research methodology

Type of research

Type of data

Source of data collection

Statistical tools used

Methods & instruments used for data analysis

Type of Research

This research is purely of analytical type where, the company’s past four years data & financial statements has been collected, analyzed and interpreted to make a critical evaluation out of it.

Type of data

The theoretical data of this report was gathered from the companies own website:

And the technical part of this report was collected from the company’s annual reports as a secondary source provided by the company’s Chief Manager (F&A).

Sources of Data Collection

The data collected for the purpose of this study is of secondary type which have been collected from the company’s two years annual reports i.e., from 2005-06 to 2006-07.

Statistical instruments used

The analysis and interpretation of financial statements is used to determine the financial position and results of operations as well. A no. of methods or devices are used to study the relationship between different statements. The following are some of the instruments used for analysis of data:

Comparative Statements

Trend Analysis

Common-size Statements

An ISO 9001:2000 & HACCP Certified Company :

Originating from Om Oil & Flour Mills Ltd., "RUCHI SPICES" has bloomed into a fragrant flower of international horizon. Its golden glorious past urges it to forge forward against the encircling gloom and numberless odds. Orissa's ancient maritime traditions inspire it further to be the beacon light in a number of productive fields.

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Tag L ine

Our identity : orig in : orig inal quality : uniqueness

Ruchi Food-Craft Institute, a sister concern of Om Oil & Flour Mills Ltd., has endeared itself in the households of Orissa, through its spices and vermicelli. It has initiated a revolutionary step in the food processing industry in the state.

A Unique Wave of Transformation :

Introduction of packed food/processed food by this premier institute has dawned a glittering hope for busy people in all walks of life. An All-Women Self Help Group ( Ruchi Food Craft Institute ) has been the burning example of women employment through a series of bio-products with a competitive spirit. It has completely changed the concept of marketing strategy.

Channel for a Dignified Earning :

The hygienic, processed food packets of this concern has opened up vast possibilities of earning with dignity. Serving mankind with an open approach, basing on values both practical and moral, has been the guiding spirit of this concern. Winning over the heart and confidence of numberless customers through genuine products and exemplary quality have been its motto.

A Star Trendsetter :

Being one among millions has been the dream of Ruchi. Being different, unique and far better than others in production, marketing as well as customer care has been its passion. Supreme quality, untiring labour, transparency and latest technology are the fundamental elements behind the dazzling success of this industrial house. It has already set a landmark trend in its field through whole hearted endeavour, perseverance and honesty. Besides unstinted devotion, ceaseless work, correct selection of the product have transformed "RUCHI" into a house of success, hope and inspiration for others.

The Architect Behind This Empire :

Yes, it's the story of a single man, determined, dedicated, dashing, dynamic and daring - Sarat Kumar Sahoo, Managing Director, OFML ( RUCHI ), Cuttack. With the initial investment of a paltry capital of Rs.5000/-, he led "RUCHI" to the dizzy heights of giant success. Today it has grown to a Rs.50 crore business house - through ideal work culture and progressive mindset. Acclamation, appreciation and covet recognitions have been showered on it, as a natural result.

Beyond the National Frontiers :

Ruchi products have a great demand in Singapore, Tanzania, Muscat, Dubai, Kuwait, Nepal,

Bangladesh and Australia. Obtaining vermicelli technology from Italy and South Korea, it has added another feather to its cap. Global business has been its significant venture, demolishing several competitive odds in its path. Foreigners particularly conscious and careful of quality have bestowed their much value confidence on Ruchi.

Centre of Excellence :

Set up in the Industrial Estate of the millennium Silver City-Cuttack in 1976, Om Oil & Flour Mills Ltd. has carved out a glorious place in the domestic and foreign industrial area. With 32 years expertise in manufacturing and exporting quality spices, vermicelli and pasta - it has built up an image of excellence in this field.

Guiding Motto - "No Compromise with Quality and Hygiene" :

This noble principle has been moving RUCHI for decades. Following the foot prints of Utkal Gaurav Madhusudan Das, it prefers loss to profit - without ever compromising with the desirable quality from all points of view. This has obviously resulted in the phenomenal growth of this concern, basing on the capital "Customer-Confidence".

The Nectar of Nature :

"Go Organic"- this is the call of RUCHI. It has innovated a special technique of developing organic spices and pasta, adopting twin Italian and South Korean technology. Modern customers, conscious of their latest regimen, for sound health, demand the use of organic spices throughout the world. Phulbani district has been earmarked for producing organic spices, in Orissa. Ruchi has already joined this useful venture, ahead of others. Its research and production has time and again proved its efficacy by retaining the original aroma of spices.

Care of Specific Requirements :

Ruchi has brought cheers for diabetic patients through its "Ruchi Rice", made of pure wheat - which has been a boon for persons suffering from High BP and Over Weight. On the other hand, its "Raw Hand Pounded Rice" has high calorific value with vitamin-B - a must for good health. Ruchi Millets - rich calcium - is useful for infants, invalids and has a magical effect in the treatment of liver disorders. Ruchi Horse Gram - an effective organic product is particularly useful in treating gallstones, kidney-stones and provides relief from joint and muscular pain and common cold.

Mission Statement :

Since 1976 our love affair with spices continues. Today we have the spices of the world at our finger

tips and we use them to create the dishes of many culture. We are a pioneer in seasonings technology and innovation. Our state of the art culinary center-with a huge staff, including talented food technologists - is dedicated to customization and process optimisation. We custom formulate seasonings to your applications, assuring quality control, care in blending and innovative production process. We understand proprietary nature of the business, and go a long way to protect customer secrets. Our mission is to harness fresh ideas, global control of spices and dynamic product development team to deliver tastes that delight consumers.

Product Focus

We are focused our fidelity of spices and vermicelli which is evaluated by the following three techniques.

Physical or sensory evaluation. Physical-chemical analysis and Nutritional assessment.

Packaging Superiority :

We market acceptable & high quality spices and spice products. Before it reaches sales counter or the consumer we look into various factors like proper cultivator, optimum maturity at harvest, best drying and storage practices, efficient methodology of pre cleaning and improved processing techniques .Better Packaging using flexible films, thermoplastic polyester (PET), and multi layered packaging. As a means of increasing the shelf -life of foods in general and of spices and condiments in particular, our packaging guidelines follow the world standard new and improved transparent plastic films, foils, laminations, high-speed film sealing machines, gas flushers for packaging food, spices, condiments and for new spices products.

We provide an endless variety of containers of thermoplastic polyester (PET); co extruded, metalized and coated films of all shapes and sizes for packaging.Food grade plastic (HDPE)Multi-layered films of HDPE are a good material to carry spices in most hygienic condition to users.

   

   

 

The Man Behind Ruchi:

 

 

Leading manufacturers & Exporters of renowned quality Spices, Vermicelli & Pasta products of Orissa (INDIA) with 30 years of experience & expertise having large network all over India and abroad in the Brand name "RUCHI".

 

       1. Company : M/s. Om Oil & Flour Mills Ltd - RUCHI Asia's foremost food processing company,

aims to revolutionize the food processing industry in India.

2. Motto : "Quality & Customer Service is our priority."

3. The Man Behind : Shri Sarat Kumar Sahoo, the eminent entrepreneur of Spices and Vermicelli was born on 22.7.1950 to his lucky parents Late Banamali Sahoo and Late Maina Devi at Cuttack, Orissa.

4. Vision :Mr. Sahoo had started a humble Spices grinding unit with a mere amount investment in 1976, which gradually blossomed to "Ruchi Spices" industry, thus he could realize his dreams. It was nothing but his sheer, sincerity, selfless endeavor and perseverance that made him today a Giant among entrepreneurs. The seed of Om Oil & Flour Mills Ltd., which was sown on the

 

barren land of industrially backward Orissa in the year 1976, has culminated into full-grown tree spreading the aroma of the Ruchi Spices to different parts of the globe.

5. Certifications : Equipped with state-of-the-art equipment and managed according to international food standards, the Ruchi Spices and Vermicelli company's factory is regarded as one of the best of its kind in the spice world. It has been certified by several food safety companies and audited regularly by the concern authority. Ruchi is an ISO 9001 and HACCP Certified Company which is a model for quality assurance in production, installation and servicing and applicable for all its quality clauses. Through ISO and HACCP, Ruchi intends to satisfy the customer's needs and expectations by having standardized systems, procedures and work ethics compared with the best in industry. Ruchi's achievement include prestigious AGMARK from Govt. of India and Exports Registration Certificate from Spices Board, also Govt. of India.

6. Strength: The installed capacity of SPICES DIVISION is 4950 MT per annum.     

  Infrastructure: The Company has imported and installed an Italian Pasta Plant having 5400 MT production capacity per annum. The technology adopted for production of Pasta and Vermicelli is purely Italian.

 

   

 

7. Nationawide Customer Support Network :

After sales service being a key aspect to serve customers in this segment, a constant thrust is given at Ruchi to make the dealers infrastructure best class and make them competent to cope with growing customer expectations and demand. Ruchi has an excellent dealer network coverage throughout the country, which helps them serve their customers better. Regular training program are conducted for both internal and external Ruchi employees, dealer and others to improve their skill level, which helps in providing better customer support.

8. Expanding Manufacturing Base :

Ruchi's vision extends to improving the product design and utility, expand product range, and to invest latest technology and manufacturing process in order to improve quality and capacity. Ruchi has set up a plant at Cuttack to manufacture Noodles and Pasta food products. The new plant will blow Ruchi to expand manufacturing capacity and meet the growing demand of the Indian market.

9. Social Activities : The Company's extra activities, social, cultural and welfare are noteworthyMeritorious/poor students, social workers, eminent scientists, artists and athletes are annually honored with suitable awards and scholarships.

 

 

  

Spices Pasta Frozen Foods

Laurels & Awards bagged by Ruchi:

1 1986 & 1988 Award for the Best Successful Enterprises & Industrial Peace and Promotion Unit by OASME (Orissa Assembly of Small and Medium Enterprises)

1988 Rotary International Award (R.R. Sikka Memorial Award) for the Best Maintained Factory by Sri Narendra Kumar Mishra, I.A.S

2 1989 Quality Award by State Bank of India & Orissa Small Industries Corporation (OSIC)

3 1996 Chalachitra Jagat Prativa Award by Sri Hemananda Biswal, Deputy Chief Minister of Orissa

4 1997 Best Export Award from OASME by His Excellency Sri Gopal Ramanujam, Hon’ble Governor of Orissa

5 1998 Best Export Award from EPM, Govt. of Orissa by Sri Niranjan Pattnaik, Industry Minister, Govt. of Orissa.

6 24.4.98 Spices House certificate from Spices Board, Govt. of India by Sri Sudhansu Bhusan Mishra, IAS, Chief Secretary of Orissa.

7 1999 First SWAVIMAN Samman from Govt. of Orissa by Dr. Giridhara Gomango, Chief Minister of Orissa.

8 19.04.00 ‘Chinta-O-Chetana’ Award by Sri Sarat Kumar Kar, Hon’ble Speaker and Sri Biswa Bhusan Harichandan, Hon’be Revenue Minister, Orissa.

22.04.00 Rotary International Award (Gopal Pattnaik Memorial Award) by Rotary Club of Cuttack.

12.08.00 Biju Pattnaik Memorial Award from OASME by His Excellency Sri M. M. Rajendran, Hon’ble Governor of Orissa.

24.12.00 Chala Chitra Jagat Millennium Award by Sri Sarat Kumar Kar, Hon’ble Speaker, Orissa.

9 01.01.01  AGMARK Certification by Ministry of Agriculture, Govt. of India.

10 06.05.01 Best Enterpreneur Award-2001 from New Thinking Forum, Khurdha by Sri Janaki Ballava. Pattnaik, Former Chief Minister of Orissa.

11 19.08.01 ISO-9002 Certification, presented by Sri Debi Prasad Bagchi, I.A.S. Chief Secretary of Orissa.

12 Nov’ 2001 Best Export Award 2001 by Sri Biswa Bhusan Harichandan, Revenue Minister, Govt. of Orissa.

13 Mar’ 2002 Best Successful & Proven Enterpreneur Award from Orissa State Financial Corporation (OSFC) by Sri Kanak Bardhan SinghDeo, Hon’ble Minister, Industry, Govt. of Orissa.

14   Mar’ 2002  Rajiv Gandhi Award-2002 in the Field of Commercial Business Organisation by Rajiv Gandhi Forum, Orissa.

15 16.10.2003 Best Enterpreneur Award by Orissa Union of Working Journalists by Hon’ble Justice Sri Laxmikanta Mohapatra, Judge, Orissa High Court.

16 30.12.2003 Utkal Sammilani Satabddi Samman-2004 by Utkal Sammilani Centenary Committee, Orissa from Sri Sarat Kumar Kar, Hon’ble Speaker, Orissa Legislative Assembly

17 04.01.2004 Vaish Shree Samman by All India Vaish Federation by Sri Beda Prakash Agarwal, Hon’ble  Minister, Rural Development, Govt. of  Orissa.

18 30.9.2004 Best Enterpreneur Award in Golden Jubilee Celebration of SISI, Govt. of India.

19 04.01.2004 State Safety Award by Govt. of Orissa by Sri Danda Nirodha Mishra, I.A.S.,

Labour Commissioner.

20 26.09.2005 HACCP Certification, presented by General Manager, “The Samaja”

21 02.11.2007 Expo-Orissa-2007 award for Excellence in Entrepreneurship from M.S.M.E., Govt. of India.by Sri Naveen Pattnaik, Hon’ble Chief Minister, Orissa.

22 10.03.2008 Best Enterpreneur Award from Matrubhasa Prachar Samiti by Sri Prafulla Chandra Ghadei, Hon’ble Finance Minister, Orissa

23 14.08.2008 Think Odisha Leadership Award-2008 by Shri Naveen Patnaik, Hon’ble Chief Minister, Orissa

24 28.09.2008 Best Social Activist Award from Khurdha District Deaf Association by Shri Murlidhar Chandrakant Bhandare, Hon’ble Governor, Orissa on 51st International Deaf Day.

    

Activities:

Social Responsibility Strive for the greater good of humanity and the world not only through our business but also through our social contributions. At Ruchi Spices, contributing to the realization of sustainable development through our operations is an important goal. We have a clean commitment to meeting the demands of the society today as well as those future generations. Since its inception, Ruchi has demonstrated the value it places on people by helping the poor student and awarding them, as well as recognized the talent.

RUCHI PRATIVA FOUNDATION Off : Type-II/8, Industrial Estate Post : MadhupatnaCity : Cuttack Fax : 0671-2344538

         

Aim:          

The Prativa foundation is a resource for innovative people and institutions countrywide. Its goals are to promote education, sports, literature and to other social causes.

Ruchi Prativa Foundation has always recognized the importance of its corporate social responsibility, due to that our corporate social responsibility has become one of the highlights of the company's history and culture. Voluntary services and contributions of its employees to the local society have become part of its corporate culture and are sustained with the voluntary participation of all its executives and employees based on their continuing interest and affection. Such activities are even enhancing the solidarity of our organization.

    Ruchi Prativa Samman to Eminent Pesonalities     Ruchi Prativa Samman to H.S.C Toppers          

                  

ORGANIZATION STRUCTURE

OFM are managed by Managing Directors & Executive Officer from the following categories:

1. 3 (Three) whole time Directors2. 1 (ONE) EXECUTIVE OFFICER  

Managing DirectorMr. Sarat Kumar Sahoo

Whole time Directors

Mrs. Sangita Sahoo

Mr. Arbind Sahoo

Mrs. Rashmi Sahoo

Executive Directors

Mr.S.N.JENA

KEY PERSONAL

Products:

Ruchi Product

sSpices

Pasta & Vermicelli

Frozen Foods

AUDITORS

STATUTORY

M/S. BAJORIA & CO.

INTERNAL

M/S.H.K.MORE

& CO.

Spices:

Basic Spices Blended Spices Whole Spices Other than Spices

BASIC SPICES

CORIANDER POWDER KASHMIRI CHILLI POWDER

CHILLI POWDER CUMIN POWDER TURMERIC POWDER

BLENDED SPICES

BIRYANI MASALA BLACK PAPPER POWDER CHANA MASALA CHAT MASALA CHICHKEN MASALA

                    DUM ALOO DUM DUM MASALA MEAT MASALA

DALMA POWDER EGG CURRY MASALA CURRY POWDER

. FISH MASALA GARAM MASALA SUNDAY MASALA SAMBAR MASALA

WHOLE SPICES   

   

BLACK PAPPER GOTA DHANIA CUMMIN SEEDS KALA JEERA JUANI         

CHILLI WHOLE METHI PANCH PHUTAN  MADHURI KASOORI METHI Pack Size:100gm Pack Size:100gm Pack Size:100gm Pack Size:100gm Pack Size:100gm

      POSTAK GARLIC GRANULES Pack Size: Small Sachet50gm, 100gm Pack Size: 50gm, 100gm

MUSTARD TEJ PATTA

Pack Size: smallsachet50gm, 100gm, Pack Size: 50gm SAFFRON200gm, 250gm, 500gm, 1kg Pack Size: 3gm

GINGER GRANULES CHILLI FLAKES SPICE COLLECTION ONION FLAKES Pack Size: 75gm Pack Size: 75gm Pack Size: 250gm Pack Size: 75gm

    QUEEN’S COLLECTION

OTHER THAN SPICES

AMCHUR POWDER BAKING POWDER BLACK SALT EDIBLE SODA Pack Size: 50gm Pack Size: 25gm Pack Size: 100gm, 250gm Pack Size: 10gm, 100gm, 500gm

ISABGOL HUSK CORNFLOUR CUSTARD POWDER

JAL JEERA

Pack Size: 100gm Pack Size: 100gm Pack Size: 10gm, 20gm, and 100gm   NOODLE

Pack Size: 50gm, 100gm                              

HING PAPAD ASSORTED MASALA PAPAD PALM CANDY NOODLES (FLOUR)Pack Size: 10gm, 50gm Pack Size: 250gm Pack Size: 100gm, 1200gm Pack Size: 300gm, 700gm

                  PALAK NOODLES Pack Size: 50gm, 200gm, 400gm .               SATTU PackSize: 200gm, 500gm

PASTA & VERMICELLI:

CLUB VERMICELLI A TO Z VERMICELLI DIET RICE EXPORT VERMICELLI Pack Size: 200gm, 500gm, 1kg Pack Size: 500gm, Pack Size: 350gm,

500gm Pack Size: 200, 50gm

KHEER MIX LONG VERMICELLI MACARONI NASTA KA PASTA

Pack Size: 50-400gm Pack Size: 200gm, 400gm Pack Size: 175-500gm Pack Size: 250gm, 400gm 

ROASTED VERMICELLI SHORT VERMICELLI STAR VERMICELLI  Pack Size: 175gm--5kg Pack Size: 100gm, 250gm, 500gm, 1kg Pack Size: 100gm,200gm,1kg        

SUNMADE VERMICELLI Pack Size: 175gm, 400gm RICE (RISO) from CHAKI ATTA Pack Size: 500gm  

JUMBO VERMICELLI Pack Size: 200gm

LITTLE CLAMS Pack Size: 200gm

 

Frozen Food:

Literature Review

The history of financial statement analysis dates far back to the end of the previous century (see Horrigan, 1968). However, the modern, quantitative analysis has developed into its various segments during the last two decades with the advent of the electronic data processing techniques. The empiricist emphasis in the research has given rise to several, often only loosely related research trends in quantitative financial statement analysis. Theoretical approaches have also been developed, but not always in close interaction with the empirical research.

According to Metcalf and Titard, “is a process of evaluating the relationship between component parts of a financial statement to obtain a better understanding of a firm’s position and performance.”

In the words of Myers, “ Financial statement analysis is largely a study of relationship among the various financial factors in a business as disclosed by a single set of statements, and a study of the trend of these factors as shown in a series of statements.”

Shillinglaw Gordon et al (1979), asserts that the basic building block in financial statement analysis is the ratio, a percentage or decimal relationship of one number to another. Swanson Ross et al (1988), is of the idea that, “Financial analysis is crucial to managers in order to make decisions about operating a business”.

Definition and Explanation of Financial Statement Analysis:

Financial statement analysis is defined as the process of identifying financial strengths and weaknesses of the firm by properly establishing relationship between the items of the balance sheet and the profit and loss account.

There are various methods or techniques that are used in analyzing financial statements, such as comparative statements, schedule of changes in working capital, common size percentages, funds analysis, trend analysis, and ratios analysis.

Financial statements are prepared to meet external reporting obligations and also for decision making purposes. They play a dominant role in setting the framework of managerial decisions. But the information provided in the financial statements is not an end in itself as no meaningful conclusions can be drawn from these statements alone. However, the information provided in the financial statements is of immense use in making decisions through analysis and interpretation of financial statements.

Tools and Techniques of Financial Statement Analysis:

Following are the most important tools and techniques of financial statement analysis:

Comparative Statements

Trend Analysis

T op i

c D es c

r i pt i o

n

Common-size Statements

Schedule of changes in working capital

Funds flow & Cash flow analysis

Cost-profit-volume analysis and

Ratio analysis.

Advantages of Financial Statement Analysis:

There are various advantages of financial statements analysis. The major benefit is that the investors get enough idea to decide about the investments of their funds in the specific company. Secondly, regulatory authorities like International Accounting Standards Board can ensure whether the company is following accounting standards or not. Thirdly, financial statements analysis can help the government agencies to analyze the taxation due to the company. Moreover, company can analyze its own performance over the period of time through financial statements analysis. 

Financial Statement Analysis Limitations

Many things can impact the calculation of ratios and make comparisons difficult. The limitations include:

The use of estimates in allocating costs to each period. The ratios will be as accurate as the estimates.

The cost principle is used to prepare financial statements. Financial data is not adjusted for price changes or inflation/deflation.

Companies have a choice of accounting methods (for example, inventory LIFO vs FIFO and depreciation methods). These differences impact ratios and make it difficult to compare companies using different methods.

Companies may have different fiscal year ends making comparison difficult if the industry is cyclical.

Diversified companies are difficult to classify for comparison purposes. Financial statement analysis does not provide answers to all the users' questions. In fact, it

usually generates more questions!

1. Comparative Statements:

The Comparaive financial statements are statements of the financial position at different periods; of time. The elements of financial position are shown in a comparative form so as to give an idea of financial position at two or more periods. From practical point of view, generally, two

financial statements ( Balance sheet and Income statements) are prepared in comparative form for financial analysis purposes.

The comparative statements may show:

Absolute figures (rupee amounts)

Changes in absolute figures

Absolute data in terms of percentages.

Increase or decrease in terms of percentage.

Comparative balance sheet:

A comparative balance sheet is designed to show financial differences between several accounting periods. A balance sheet is a detailed account of everything lost and gained financially during a certain time, containing both physical and abstract data. A comparative balance sheet is useful because a business can instantly compare profits and losses between different time periods. Most businesses use comparative balance sheets to help increase profits and functionality of a company.

Features

1. A comparative balance sheet will include several different types of accounting data. First there will be the income received and money spent. There will also be a list of credits and debits to the company. A list of assets and liabilities is also included. All of these factors are necessary to see what the total worth of the company is through the balance sheet. The comparative balance sheet allows the company or business to see at a glance how its profits differ from one year to another. These comparative balance sheets are aligned so that business people can see at a glance the financial differences from year to year.

Function

2. A balance sheet is designed to help keep a business or company aware of every expense and profit that it is receiving. It also allows the company to see which times of the year are most profitable, and which years they did the best. This knowledge is important so that the company can adapt to the information to build the best business possible. If the business did better three years ago, they can look at that data and try to decide what it was that made them do so well that year. Then they can change what they are doing in the present to help boost current profits.

Benefits

3. The main benefit of a comparative balance sheet is that profits and losses can be seen at a glance. It is also possible to see the increase or decrease of assets that the business has. The company will

be able to tell what the biggest money suckers in the business are, and try to think of ways to cut down losses in that area.

Significance

4. Without a comparative balance sheet, businesses would not know how to change their strategy from year to year. All they would have to go on would their current balance statements. This would be detrimental to most businesses. It is very important to be able to look at past profit information to judge how to act for the future.

The comparative balance sheet analysis can be of two types:

Horizontal Balance Sheet Analysis

Horizontal Balance Sheet Analysis is the side-by-side comparison of two time periods for the same company, usually comparing one year to another. Analysis asks the following questions: Has inventory increased or decreased? If it has increased, is it due to higher anticipated sales or a unanticipated reduced sales, resulting in a stockpile? Has accounts receivable increased? If so, is the increase due to increase sales last year, or are current customers taking longer to pay? Has the company increased its long-term debt? If so, is it due to anticipated growth or to fund current obligations it is unable to pay? Answers to these questions assist the analyst in determining whether the company is growing or struggling.

Vertical Balance Sheet Analysis

Vertical Balance Sheet Analysis shows the balance sheet in terms of percentage. Each balance sheet item is shown as a percentage of total assets. This is also called a common-size balance sheet. The purpose of a vertical balance sheet is most often used to compare two companies of different size. The following questions may be answered in a vertical analysis: What proportion of total assets are in liquid form (i.e. in short-term assets)? The answer indicates which company has more flexibility in paying its obligations.

Comparative Income statement:

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

TREND ANALYSISIn financial analysis the direction of changes over a period of years is of crucial importance. Time series or tend analysis of ratios indicates the direction of change. This kind of analysis is particularly applicable to the items of profit and loss account. It is advisable that trends of sales and net income may be studied in the light of two factors: the rate of fixed expansion or secular trend in the growth of the business and the general price level. In other words, sales figures should be defaulted for rising price level.

The financial statements may be analyzed by computing trends of series of information. This method determines the direction upwards or downwards and involves the computation of the percentage relationship that each statement items bears to the same item in base year. The information for a no. of years is taken up and one year, generally the first year, is taken as a base year. The figures of the base year are taken as 100 and trend ratios for other years are calculated on the basis of the base year. For example, if sales figures for the year 2003 to 2008 are to be studied, then sales of 2003 will be taken as 100 and the percentage of sales for all other years will be calculated in relation to the base year, i.e., 2003. Suppose the following trends are determined:

2003 100

2004 120

2005 110

2006 125

2007 135

2008 140

The trend of sales shows that sales have been more in all the years since 2003. The sales have shown an upward trend except in 2005 when sales were less than the previous year. Though the sales are more as compared to the base year but still the rate of increase has not been constant and requires a study by comparing these trends to other items like cost of production, etc.

Common size Statements:

The common-size statements, balance sheet and income statement are shown in analytical percentages. The figures are shown as percentages of total assets, total liabilities and total sales. The total assets are taken as 100 and different assets are expressed as percentage of the total. Similarly, various liabilities are taken as a part of total liabilities. These statements are also known as component percentage or 100 percent statements because every individual item is stated as a percentage of the total 100. The common-size statements may be prepared in the following way:

1. The total assets or liabilities are taken as 100.2. The individual assets are expressed as a percentage of total assets, i.e., 100 and different

liabilities are calculated in relation to total liabilities.

Common-size Balance sheet:

A statement in which balance sheet items are expressed as the ratio of each asset to total assets and the ratio of each liability is expressed as a ratio of total liabilities is called common-size balance sheet. For example, following assets are shown in a common-size balance sheet:

Rs. Percentage __________________________________________________________________

Cash in hand and at bank 5000 2.50

Sundry debtors 20000 10.00

Stock 25000 12.50

Land & building 50000` 25.00

Plant & machinery 100000 50.00

______________________________

Total Assets: 200000 100.00

The common-size balance sheet can be used to compare companies of different size. The comparison of figures in different periods is not useful because total figures may be affected by a no. of factors. It is not possible to establish standard norms for various assets. The trends of figures from year to year may not be studied and even they may not give proper results.

Common-size Income Statement:

The items in income statement can be shown as percentages of sales to show the relation of each item to sales. A significant relationship can be established between items of income statement and volume of sales. The increase in sales will certainly increase selling expenses and not administrative or financial expenses. In case the volume of sales increases to a considerable extent, administrative & financial expenses may go up. In case the sales are declining, the selling expenses should be reduced at once. So, a relationship is established between sales and other items in income statement and this relationship is helpful in evaluating operational activities of the enterprise.

COMPARATIVE BALANCE SHEET (for the year ending 2006 & 2007)

  Year Endings increase/Decrease % of Change  2007(Rs.) 2006(Rs.) (Rs.)  

Assets  

Fixed Assets:  

Land & Site development 12945378.46 2343878.46 10601500 45.2305876Land (Staff Quarter) 300000 300000 0 0Building (Factory & Office)

33231883.14 22793656.2 10438226.94 45.79443881

Building ( Staff Quarter) 393248.62 409819.62 -16571 -4.043486254Plant & machinery (Imp.) 42613449.39 58433647.39 -15820198 -27.07378147Plant & machinery ( Ind.) 37566415.07 29136136.07 8430279 28.93410087Electrical Installation 2996311.71 2716946.96 279364.75 10.28230415Panel Board 315074.13 268748.13 46326 17.23770134Transformer 453113.1 247113.1 206000 83.3626384Boiler 414171.61 336555.41 77616.2 23.061938Air Compresser 72222.66 77440.66 -5218 -6.738062408Water supply installation 449598.11 480775.11 -31177 -6.484736699Furniture & Fixture 2525038.37 1848355.37 676683 36.61000536Office equipment 970576.1 960368.1 10208 1.062925768Computer System 864949.85 609731.85 255218 41.8574165Labrotary Equipment 103087.19 109888.19 -6801 -6.189018128Tools & Impliments 12545.66 13678.66 -1133 -8.282975087Telephone Installation 114925.83 123257.83 -8332 -6.759813961Vehicles 10184256.22 8426100.22 1758156 20.86559564   Capital Work in Progress 5437824     Total Fixed Assets 146526245.2 135073921.3 16890147.89 12.5043737

Current Assets:     Inventories 84710332 47485057.67 37225274.33 78.3936593

a na l ys i s

& i n te rp r

e t at i o

n

Sundry Debtors 17073904.67 19147420.22 -2073515.55 -10.82921629Cash & bank balance 21663277.02 21776215.31 -112938.29 -0.518631398Loans & Advances 7430881.54 8152558.76     Total Current Assets 130878395.2 96561251.96 35038820.49 36.28662613   Investments 100000 100000 0 0Preliminary Expenses 2520     

Total Assets 277504640.5 231737693.3 45766947.16 19.74946178   

   

Current liabilities & Capital:  

   Sundry Creditors 77212974.85 91572146.05 -14359171.2 -15.68071932   Share Capital 41049330 37366000 3683330 9.857437242Reserve & Surplus 59873911.65 29173719.04 30700192.61 105.2323585   Loans Funds:  Secured loans 70257595.95 64713791.2 5543804.75 8.566651168Unsecured loans 29110828 8912037 20198791 226.6461753      

Total Liabilities 277504640.5 231737693.3 45766947.16 19.74946178

Interpretation: The above Comparative Balance sheet can be interpreted with respect to the following 3 aspects:

A. Current Financial position & Liquidity position.B. Long-term Financial Position.C. Profitability of the concern.

a) The Comparative Balance sheet of the Company reveals that, the working capital of the company has increased in 2007 as compared to the previous year. In current assets only the Inventories shows an increment of 78% in 2007, whereas the Sundry Debtors decreased to a low of 10% as compared to the previous year. However the total current assets shows an increment of 36%.Like-wise in Current Liabilities the Sundry Creditors decreased by 15%. From the above analysis it is clear that the liquidity position of the company is not good both the liquid assets shows a decrement. An increase in inventories may increase working capital of the company but it will not be good for the company.

b) In this aspect it reveals that the company’s fixed assets has been increased up to 12%, whereas its long-term loans and share capital has increased to a percent of 8 & 10 respectively, which shows that the part of fixed assets has been financed from the working capital. It is a wise policy of the Company to finance the fixed assets.

c) The reserves & surplus of the Company shows a drastic increment of 105% which will mean an increase in the profitability of the concern.

d) Overall, The Financial Position of the Company is Satisfactory.

Comparative Income Statement:

Comparative Income Statement of Om Oil & Flour mills Ltd.(For the year ending 2006 & 2007)

    2007 2006 Absolute Change

(Rs.)

Percentage (%)

    Sales 386497788.1 323978877 62518911.06 19.29721827      Less: Cost of Goods sold 283309375.4* 235522246* 47787129.49 20.2898581     Gross Profit 103188412.7 88456631.09 14731781.57 16.65424218     Operating expenses:    Administrative & Operative

Exp34655021.89 27899196.53 6755825.36 24.21512517

  Selling & Distribution exp 31937763.23 24900858.86 7036904.37 28.25968538  Depreciation 7896794 7353199 543595 7.392632785   Less: Total Operating exp 74489579.12 60153254.39 14336324.73 23.83299935     Operating Profit 28698833.54 28303376.7 395456.84 1.397207281   Add: Non Operating Income(Other

income)1387080.4 899798 487282.4 54.1546436

      Less: Other Expenses:    Preliminary Exp. 2520 2520 0 0     Profit before interest & Tax 30083393.94 29200654.7 882739.24 3.023011809   Less: interest 8538934.33 9135046.83 -596112.5 -6.525554943     Profit Before Tax 21544459.61 20065607.87 1478851.74 7.370081931   

Less: Provision for taxation 3710073 1688521 2021552 119.7232371  Provision For Fringe benefit tax 200854 123576 77278 62.5347964     Profit After tax 17633532.61 18253510.87 -619978.26 -3.396487746   Less: Prior period adjustment 244353.7    Provision for Deferred Tax 843409 1257678 -414269 -32.93919429     Net Profit after interest & Tax 16790123.61 16751479.17 38644.44 0.230692702

* See the working note below

Working Note 2006 2007

   

Raw material consumed 149790704.1 207047257.1

Packing Material 62868817.06 65065574.61

Prime Cost 212659521.2 272112831.7

Manufacturing Exp 19727012.55 26225501

Prime Cost 232386533.7 298338332.7

op WIP 2957629 2311447.3

Cl. WIP 2311447.3 3002917

  646181.7 -691469.7

work Cost 233032715.4 297646863

   

Op Finished goods 18318281 15828750.48

  251350996.4 313475613.5

   

Cl Finished goods 15828750.48 30166238

   

Cost of goods sold 235522246 283309375.5

Interpretation:

a) The Comparative Income Statement of the Company reveals that there has been increase in net sales of 19% while the cost of goods sold has increased proportionately by 20% resulting in increment of Gross profit of 16%.

b) Though the Operating Expenses of the company increased by 23.89%, the company’s operating profit increased just only 1.39% from the previous year, which shows that the company should try to control its operating expenses for its further increase in operating profit.

c) The net profit of the concern is increased just about 0.39% from the previous year i.e. from 2006. But it will be a good indicator for the increase in net profit of the concern that the non-operating income has been increased by 54%. The non-operating expenses like interest and

tax also decreased over the period which will result the increase in profitability of the concern.

d) Thus the overall profitability of the Company is in a good position, but it needs improvement.

Trend Analysis:

Trend Percentages for the four years considering Sales, Stock & Profit before tax.:

Trend Percentages of Om Oil & Flour mills Ltd.(RUCHI) for four years

Base year 2006=100

Year Sales Stock Profit before Tax

Amount(Rs.)Trend

percentageAmount(Rs.)

Trend percentage

Amount(Rs.)Trend

percentage

2006 323978877 100 47485057.67 100 20065607.87 100

2007 386497788.1 119.2972183 84710332 178.3936593 21544459.61 107.3700819

2008 463840905.5 143.1701072 83106371.76 175.0158383 16088921.82 80.18158196

2009 631826365.6 195.0208518 107942570.6 227.3190261 22344838.65 111.3588923

2006 2007 2008 2009

Sales Trend 100 119.2972183 143.1701072 195.0208518

Stock trend 100 178.3936593 175.0158383 227.3190261

Profit Trend 100 107.3700819 80.18158196 111.3588923

25

75

125

175

225

Trend Analysis

Interpretation:

a) The Sales has been increased continuously in all the year up to 2009. The percentage in 2009 is 195% as compared to 100% in 2006. Thus, the increase in sales is quite satisfactory.

b) The trend of the Stock also shows an increment in all the years. The increase in stock is more in 2007 i.e. 178% as compared to 2008 i.e. 175%. Overall, the stock has been increased up to a high of 227% currently as compared to the base year i.e. 2006.

c) The profit before tax has substantially increased in 2007 and in the next year it decreased to 80% & again it increased to a percent of 111 in the year 2009. The comparative increase in profits is much higher in 2009 as compared to 2006.

d) Thus, the expansion of the company is good and it has doubled its sales & stock in just four years time. While the profit is increasing in a very slow trend over the all years.

e) The overall performance of the company is good.

Common-size Statements:

1. Common size balance sheet of Om oil & flour mills Ltd. For two years.

Common-size Balance sheet of OFM Ltd. For the years 2006-07

  2006 2007  Amount(Rs.) Percentage (%) Amount(Rs.) Percentage (%)

Assets        

Fixed Assets:        Land & Site development 2343878.46 1.011436002 12945378.46 4.664923238Land (Staff Quarter) 300000 0.129456713 300000 0.1081063Building (Factory & Office) 22793656.2 9.835972679 33231883.14 11.97525313Building ( Staff Quarter) 409819.62 0.176846336 393248.62 0.141708845Plant & machinery (Imp.) 58433647.39 25.21542636 42613449.39 15.35594119Plant & machinery ( Ind.) 29136136.07 12.57289466 37566415.07 13.5372205Electrical Installation 2716946.96 1.172423407 2996311.71 1.079733912Panel Board 268748.13 0.115970832 315074.13 0.113538328Transformer 247113.1 0.106634832 453113.1 0.16328127Boiler 336555.41 0.14523119 414171.61 0.149248535Air Compresser 77440.66 0.033417378 72222.66 0.026025749Water supply installation 480775.11 0.207465218 449598.11 0.162014628Furniture & Fixture 1848355.37 0.797606701 2525038.37 0.909908521Office equipment 960368.1 0.414420324 970576.1 0.349751304Computer System 609731.85 0.263112937 864949.85 0.311688427Labrotary Equipment 109888.19 0.047419213 103087.19 0.037147916

Tools & Impliments 13678.66 0.005902648 12545.66 0.004520883Telephone Installation 123257.83 0.053188512 114925.83 0.041414021Vehicles 8426100.22 3.636050787 10184256.22 3.669940871         Capital Work in Progress 5437824 2.346542732             Total Fixed Assets 135073921.3 58.28741946 146526245.2 52.80136757Current Assets:                 Inventories 47485057.67 20.49086491 84710332 30.5257353Sundry Debtors 19147420.22 8.262540266 17073904.67 6.152655553Cash & bank balance 21776215.31 9.396924169 21663277.02 7.806455771Loans & Advances 8152558.76 3.518011526 7430881.54 2.677750371         

Total Current Assets 96561251.96 41.66834087 130878395.2 47.162597         Investments 100000 0.043152238 100000 0.036035433Preliminary Expenses 2520 0.001087436             

Total Assets 231737693.3 100 277504640.5 100

                  Current liabilities & Capital:                 Sundry Creditors 91572146.05 39.51543003 77212974.85 27.82403016         Share Capital 37366000 16.1242651 41049330 14.79230399Reserve & Surplus 29173719.04 12.58911255 59873911.65 21.57582358         

Loans Funds:        Secured loans 64713791.2 27.92544893 70257595.95 25.31762922Unsecured loans 8912037 3.845743381 29110828 10.49021305                  

Total Liabilities 231737693.3 100 277504640.5 100

Interpretation:

a) The Common-size balance sheet of the Company reveals that the total fixed assets during the year 2006 constitutes 58% of the total assets, while in 2007 it constitutes only 52%, thus it shows a decrease in fixed assets.

b) The total current asset constitutes 41% of the total assets during 2006, whereas in 2007 it constitutes 47%, thus it indicates an increment in current assets over the period.

c) A close look at the Balance sheet shows that the current liabilities has constituted 39% of the total liabilities in 2006, while in 2007 it decreased to 27% of the total liabilities, which is a good indicator for the growth of the concern.

d) The increase in reserves & surplus from 12% to 21% shows that the profitability of the firm is increasing over the period.

1%

0%

10%

0%

25%13%

1%

0%

0%

0%

0%0%

1%

0%

0%

0%

0%

0%

4%2%

20%8% 9%

4%0%

0%

Total Asstes & Liabilities(Proportion) 2006Land & Site development Land (Staff Quarter) Building (Factory & Office) Building ( Staff Quarter)

Plant & machinery (Imp.) Plant & machinery ( Ind.) Electrical Installation Panel Board

Transformer Boiler Air Compresser Water supply installation

Furniture & Fixture Office equipment Computer System Labrotary Equipment

Tools & Impliments Telephone Installation Vehicles Inventories

Preliminary Expenses

Sundry Creditors

40%

Share Capital16%

Reserve & Surplus

13%

Secured loans28%

Unsecured loans4%

Total Liabilities 2006

Sundry Creditors

Share Capital

Reserve & Surplus

Secured loans

Unsecured loans

5%0%

12% 0%

15%

14%

1%0%0%0%0%0%1%0%0%0%0%0% 4%

31%

6% 8%3%0%

Total assets-2007

Land & Site development Land (Staff Quarter) Building (Factory & Office) Building ( Staff Quarter)

Plant & machinery (Imp.) Plant & machinery ( Ind.) Electrical Installation Panel Board

Transformer Boiler Air Compresser Water supply installation

Furniture & Fixture Office equipment Computer System Labrotary Equipment

Tools & Impliments Telephone Installation Vehicles Capital Work in Progress

Inventories Sundry Debtors Cash & bank balance Loans & Advances

Investments

Sundry Creditors28%

Share Capital15%

Reserve & Surplus22%

Secured loans25%

Unsecured loans10%

Total Liabilities-2007

Sundry Creditors

Share Capital

Reserve & Surplus

Secured loans

Unsecured loans

2. Common-size Income Statement

Common-size Income Statement of OFM Ltd. For the years 2006-07

    2006 2007    Percentage

of TotalAmount

(rs.)Amount

(rs.)Percentage

of Total            Sales 100 323978877 386497788.

1100

                      Less:

Cost of Goods sold 72.69679064

235522246 283309375.4

73.30168093

             Gross Profit 27.3032093

688456631.0

9103188412.

726.6983190

7             Operating expenses:          Administrative & Operative Exp 8.61142454

327899196.5

334655021.8

98.96642179

  Selling & Distribution exp 7.685951346

24900858.86

31937763.23

8.263375422

  Depreciation 2.269653833

7353199 7896794 2.043166673

           Less:

Total Operating exp 18.56702972

60153254.39

74489579.12

19.27296389

             Operating Profit 8.73617964

228303376.7 28698833.5

47.42535518

3           Add: Non Operating Income(Other

income)0.27773353

9899798 1387080.4 0.35888443

4                      Less:

Other Expenses:        

  Preliminary Exp. 0.000777828

2520 2520 0.000652009

             Profit before interest & Tax 9.01313535

229200654.7 30083393.9

47.78358760

8           Less:

interest 2.819642723

9135046.83 8538934.33 2.209310012

             Profit Before Tax 6.19349262

920065607.8

721544459.6

15.57427759

6           

Less:

Provision for taxation 0.521182435

1688521 3710073 0.959920888

  Provision For Fringe benefit tax 0.038143227

123576 200854 0.051967697

             Profit After tax 5.63416696

718253510.8

717633532.6

14.56238901

           Less:

Prior period adjustment 0.075422726

244353.7    

  Provision for Deferred Tax 0.38819753 1257678 843409 0.218218325

             Net Profit after interest & Tax 5.17054671

116751479.1

716790123.6

14.34417068

5

Interpretation:

a) The sales and gross profit has increased in absolute figures in 2007 as compared to 2006 but the percentage of gross profit to sales has gone down in 2007.

b) The increase in cost of goods sold as a percentage of sales has brought the profitability from 27.3 to 26.69%.

c) The operating expenses have slightly increased in 2007 from 18.56 to 19.27%. While the non-operating expenses i.e. interest have slightly decreased from 2.81 to 2.21%. However, the non-operating income increased over the period which a god news for the company to increase its profitability.

d) Net profits have increased in absolute figures but decreased as a percentage in 2007 as compared to 2006.

e) The overall profitability has decreased slightly in percentage in 2007 and the reason is a rise in cost of goods sold. The company should take immediate steps to control its cost of goods sold, otherwise the company will be in trouble.

The Company’s overall financial statements reveals the following findings from the complete analysis and interpretation and suggestions are also provided for the company to increase its profitability and its performance.

a) The Comparative Balance sheet of the Company reveals that, the working capital of the company has increased in 2007 as compared to the previous year. From the above analysis it is clear that the liquidity position of the company is not good both the liquid assets shows a decrement. An increase in inventories may increase working capital of the company but it will not be good for the company.

b) The Comparative Income Statement of the Company reveals that there has been increase in net sales of 19% while the cost of goods sold has increased proportionately by 20% resulting in increment of Gross profit of 16%. Thus the overall profitability of the Company is in a good position, but it needs improvement.

c) The trend analysis shows that the expansion of the company is good and it has doubled its sales & stock in just four years time. While the profit is increasing in a very slow trend over the all years.

d) Net profits have increased in absolute figures but decreased as a percentage in 2007 as compared to 2006.

fi nd i

n gs

& s ug ge s

t i on s

e) The overall profitability has decreased slightly in percentage in 2007 and the reason is a rise in cost of goods sold. The company should take immediate steps to control its cost of goods sold, otherwise the company will be in trouble.

Financial statements are useful, because they show the financial condition of a company at a given period. There are many types of financial statements uses and purposes, measuring different financial aspects of the company. They can be used for both internal-, and external uses.

The new Accounting Standards for Enterprises allows enterprises to accounting policies and accounting methods to choose to make similar statements of different enterprises lack of data comparability. Even if the actual operating two businesses are identical, the financial analysis of the two companies may also be differences in the conclusions.

Financial statements of some of the data is not very accurate, some of the projects accounting personnel data is based on Experience and actual conditions is estimated to be measured.

The trend analysis method's limitations. First, trend analysis method is based on the information, mainly data on the financial statements, with certain limitations; 2 is due to inflation or the impact of various causal factors and accounting conversion methods change, so that the financial statements

c on cl us i

o n

of different periods may not be comparable.

Books:

1. Gupta Shashi k., Financial management, New Delhi, Kalyani Publishers, 2010(Revised Edition).

2. Pandey I.M., Financial management, Vikash Publication Housing Pvt.ltd., 2009.3. Jones H. Martin, Financial statements Analysis, PHI Publications Pvt.Ltd.,2009.

Web References:

1. www.accountingform management.com2. www.investopedia.com 3. en.wikipedia.org4. www.oppapers.com

b ib l io gr a

p hy