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INTRODUCTION
MEANING OF FINANCE
Finance may be defined as the provision of money at the time. When it is required
finance refers to the management of flows of Money through an organization. It
concerns with the application of skills in the manipulation used and control of money.
However there are three main approaches to finance.
he first approach views finance as to providing of funds need by a business on
most suitable terms.
The second approach relates finance to cash.
The third approach views finance as being concerned with rising of funds and
their effective utilization.
FINANCIAL MANAGEMENT
Financial management can be defined as the process of rising, providing and
administrating of all money funds to be used in a business enterprise.
DEFINITIONS
That business activity which is concerned in meeting the financial needs the overall
objectives of business enterprise."
- Mr. WHEELER
Financial Management on be broadly defined as activity concerned with planning,
raising, controlling and administering the funds Used in business."
-Mr. GUTHAMANN & DOUGALL
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FINANCIAL STATEMENTS
Financial statements are financial products of accounting work done during the
accounting period financial statement normally includes balance sheet and profit and
loss account. The financial statements are historical documents and relates to a fast
period balance sheet is a statement of assets and liabilities indicating the financial
position of enterprise on a certain data. Trading and profit and loss account is the report
of business activities for a given period and is preparing to ascertain profits are loss for
the enterprise for that period.
The preparation of financial statement is not the end aim. The purposes of preparing
this statement is to use for future planning and for casting and analysis and
Interpretation of these financial statement is to judge there meaning and significance
and an opinion is formed in respect to financial condition of concern.
NEED FOR THE STUDY
The purpose of financial analysis is to diagnose the information contained in financial
statement so as to judge the profitability and financial soundness of the firm. Just like a
doctor examines his patient by recording his body temperature, blood pressure, etc.
before making his conclusion regarding the illness and before giving his treatment, a
financial analysis the financial statements with various tools of analysis before
commenting upon the financial health or weakness of an enterprise. The analysis and
interpretation of financial statements is essential to bring out the mystery behind the
figures in financial statements.
OBJECTIVES OF THE STUDY
Financial analysis is the process of identifying the financial strategies' and weakness of
the firm by properly establishing relationship between the items of the balance sheet
and the profit and loss account.
1. To study the firms long term solvency and survival
2. To ascertain the firms present and future profitability
3. To study the source s of funds and applications and sources of cash and their
uses during the period from 2006-2010
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RESEARCH METHODOLOGY
For this study Mahindra Tractors, karimnagar has been selected. The period of study
covers 5 years (2006-2010) the study covers with the following. The present study is
based on the data collected primary and secondary sources.
Primary data
The primary data is collected from various departments' chiefs and personnel of
Mahindra Tractors, karimnagar.
Secondary data
The data was also collected from books of banking and annual reports of Mahindra
Tractors, karimnagar.
LIMITATIONS
The data which has been used for the study is of only the period of 5 years. This
analysis has been made purely depend on the data.
The methodology for the study includes only the statement analysis.
The analysis has been done from past data financial statements of Mahindra
Tractors, Karimnagar.
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INDUSTRY PROFILE:
As commercialization of agriculture grew in intensity in the mid to late1800s the
British Raj and the local legislatures and provinces began investing in agricultural
development through support and establishment agricultural research farms and
colleges and large scale irrigation schemes yet the level of mechanization was low at the
time of independence in 1947. The socialist oriented five year plans of the 1950s and
60s aggressively promoted rural mechanization via joint ventures and tie-ups between
local industrialists and international tractor manufacturers.
Despite this aggressiveness the first three decades after independence local
production of 4-wheel tractors grew slowly. Yet, by the late 1980s tractor production
was nearly 140,000 units per year and by the late 1990s with production approaching
270,000 per year, India over-took the United States as the world's largest producer of
four-wheel tractors with over 16 national and 4 multi-national corporations producing
tractors today. Despite these impressive numbers FAO statistics estimate that of total
agricultural area in India, less than 50% is under mechanized land preparation,
indicating large opportunities still exist for agricultural mechanization.
1945 to 1960
War surplus tractors and bulldozers were imported for land reclamation
and cultivation 1940's. In 1947 central and state tractor organizations were set up to
develop and promote the supply and use of tractors in agriculture and up to 1960, the
demand was met entirely through imports. There were 8,500 tractors in use in 1951,
20,000 in 1955 and 37,000 by 1960.
1961 to 1970
Local production began in 1961 with five manufacturers producing a total of 880
units per year. By 1965 this had increased to over 5000 units per year and the total in use
had risen to over 52,000. By 1970 annual production had exceeded 20,000 units with
over 146,000 units working in the country.
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1971 to 1980
Six new manufacturers were established during this period although three
companies (Kirloskar Tractors, Harsha Tractors and Pattie Tractors) did not survive.
Escorts Ltd. began local manufacture of Ford tractors in 1971 in collaboration with
Ford, UK and total production climbed steadily to 33,000 in 1975 reaching 71,000 by
1980. Credit facilities for farmers continued to improve and the tractor market expanded
rapidly with the total in use passing the half million mark by 1980.
1981 to 1990
A further five manufacturers began production during this period but only one of
these survived in the increasingly competitive market place. Annual production
exceeded 75,000 units by 1985 and reached 140,000 in 1990 when the total in use was
about 1.2 million. Then India - a net importer up to the mid-seventies - became an
exporter in the 1980s mainly to countries in Africa.
1991 to 1997
Since 1992, it has not been necessary to obtain an industrial license for tractor
manufacture in India. By 1997 annual production exceeded 255,000 units and the
national tractor population had passed the two million mark. India now emerged as one
of the world leaders in wheeled tractor production.
1997 to 1999
Five new manufacturers have started production since 1997. In 1998 Bajaj
Tempo, already well established in the motor industry, began tractor production in Pune.
In April of the same year New Holland Tractor (India) Ltd launched production of 70 hp
tractors with matching equipment. The company is making a $US 75 million initial
investment in a state of the art plant at Greater Noida in Uttar Pradesh state with an
initial capacity of 35000 units per year. Larsen and Toubro have established a joint
venture with John Deere, USA for the manufacture of 35-65 hp tractors at a plant in
Pune, Maharashtra and Grieves Ltd will produce tractors under similar arrangements
with Same Deutz-Fahr of Italy.
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Looking to South American export markets Mahindra and Mahindra are also
developing a joint venture with Case for tractors in the 60-200 hp range. Total annual
production was forecast to reach 300,000 during the following year.
1999 to Present
Facing market saturation in the traditional markets of the North West (Punjab,
Haryana, and eastern Uttar Pradesh) tractors sales began a slow and slight decline. By
2002 sales went below 200,000. Manufacturers scrambled to push into eastern and
southern India markets in an attempt to reverse the decline, and began exploring the
potential for overseas markets. Sales remained in a slump, and added to the market
saturation problems also came increased problems of "prestige" loan defaults, where
farmers who were not financially able took tractors in moves to increase their families
prestige.
Government and private banks have both tightened their lending for this sector
adding to the industry and farmers woes. By 2004 a slight up tick in sales once again due
to stronger and national and to some extent international markets. But by 2006 sales
once again were down to 216,000 and now in 2007-08 have slid further to just over
200,000.
MAHINDRA STORY:
In 1962, M&M formed a joint venture with International Harvester to make
tractors carrying the name Mahindra name-plate for the Indian market. Armed with
engineering, tooling and manufacturing know-how gained from this relationship,
M&M-a major auto maker- developed its first tractor, the B-275. This successor to
International Harvester's incredibly popular B-414 is still the basis for some current
Mahindra models.
Today, Mahindra is the third largest tractor manufacturer in the world with sales
of nearly 85,000 units annually in 10 countries. This places them ahead of John Deere &
Kubota. In India, Mahindra has been the number one selling brand since 1983.
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Mahindra & Mahindra Ltd. (M&M)
Mahindra & Mahindra is the most respected company in India. For its SUV
model 'Scorpio,' the company won the National Award for outstanding in-house
research and development. Bolero, Commander, Voyager is the popular brands of the
company in automotive segment. .
Quick Facts
Founder The two brothers, J.C. Mahindra and K.C. Mahindra an
Country India
Year of Establishment October 2, 1945
Listings & its codes NSE: M&M; BSE: 500520
Plants Mumbai
Company Flashback:
Mahindra & Mahindra Limited (M&M), the flagship company of US $ 2.59
billion Mahindra Group, has a significant presence in key sectors of the Indian
economy. M&M is one of the most respected companies in India. The Company over
the years has transformed itself into a Group that caters to the Indian as well as foreign
markets with a presence in vehicles, farm equipment, information technology, trade and
finance related services, and infrastructure development. Now, they have started with a
separate Sector, Mahindra Systems and Automotive Technologies (MSAT) in order to
focus on developing components as well as offering engineering services.
Mahindra & Mahindra currently employs around 11,600 people and has eight
manufacturing facilities spread over 500,000 square meters. The company has 49 sales
offices that are supported by a network of over 780 dealers across the country. The
company's outstanding manufacturing and engineering skills allow it to innovate and
launch new products constantly for the Indian market. The "Scorpio", a SUV developed
by the company from the ground up, resulted in the Company winning the National
Award for outstanding in-house research and development from the Department of
Science and Industry of the Government in theyear2003.
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In the community development sphere, M&M has implemented several
programs that have benefited the people and institutions in its areas of operations. On
the auspicious occasion of its 60th anniversary, the Company announced a range of CSR
activities supported by a commitment of 1% of Profit after Tax for its CSR initiatives.
Mahindra & Mahindra Ltd.
Mahindra & Mahindra Limited (M&M) is the flagship company of US $ 2.59
billion Mahindra Group (F04 - US$ 1.96 billion, which has a significant presence in
key sectors of the Indian economy. A consistently high performer, M&M is one of the
most respected companies in the country.
Set up in 1945 to make general-purpose utility vehicles for the Indian market,
M&M soon branched out into manufacturing agricultural tractors and light commercial
vehicles (LCVs). The company later expanded its operations from automobiles and
tractors to secure a significant presence in many more important sectors.
M&M has two main operating divisions - Automotive Division manufactures
utility vehicles, light commercial vehicles and three wheelers. Tractor (Farm
Equipment) Division makes agricultural tractors and implements that are used in
conjunction with tractors, and has also ventured into manufacturing of industrial
engines.
Tractor Division has won the coveted Deming Application Prize 2003, making
it the only tractor manufacturing company in the world to secure this prize. The
Company has recently entered into a JV with Renault of France for the manufacture of
a mid-sized sedan, the Logan, and with International Truck & Engine Corporation,
USA, for manufacture of trucks and buses in India.
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Project Sankraman - SAP R/3 Enterprise (4.7) Implementation on Centralized
Architecture
M&M entered into a new phase in technology initiatives from April 2005 by
virtue of two important events:
Implementation of SAP R/3 Enterprise 4.7 on single instance and centralized
architecture
Centralization of all servers located across various units to a single server at
secure data centre located at Kandivli
Although the implementation work of the project was completed in F05, thepost-launch and benefit realization were major activities in F06. This signified M&M
moving closer towards being a real-time organization. It provided access to new
functionalities directly catering to the Indian taxation and auto industry requirements.
It also facilitated standardization of business processes, harmonized master data
and better system compliance. Single sign-on and role-based authorization features
provided enhanced user experience. Organization-wide information now being
available on single server resulted in on-line availability of consolidated information
with drill-down up to transaction level.
Implementation of SAP APO (Advance Planner and Optimizer) for Automotive
Sector
Implemented SAP APO at Farm Equipment Sector in F04, and rolled-out at
Automotive Sector in F06. SCM processes are streamlined using SAP APO.
Forecasting, planning, and decision support has been facilitated through on PPDS
(Production Planning Demand Scheduling) & SNP (Supply Network Planning)
modules. APO-DP (Demand Planning) facilitated collaborative planning between
dealers and sales offices.
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Roll - out of SAP SRM (Supplier Relationship Management)
The objective of this project was to extend visibility of supply end of the value
chain. The supplier portal - www.mahindrasrm.com - enables suppliers to do
transactions and also track material supplied to M&M from the stages of receiving, bill
passing & payment.
M&M buyers get online information about e-invoice created by suppliers.
Suppliers are also able to view analysis related to their supplies. As a result of the
roll-out, all major suppliers are now accessing SRM portal. Implementation of Strategic
Sourcing supporting sourcing module is now under process.
Implementation of SAP DMS-CRM (Dealer Management System - Customer
Relationship Management)
It is essential for Auto OEMs to keep in close contact with the end consumers,
build brand loyalty and provide total customer experience. Implementation of centrally
hosted Mahindra Dealer Management System (DMS) covers - Marketing, Pre-sales,
Sales, Services, Spares, Warranty, Dealer Financials, Analytics, CRM and Business
Intelligence.
The pilot involving 50+ dealer locations initiated last year is in the final phase
of implementation, to be followed by roll-out across Mahindra Dealer Community.
Appropriate infrastructure including dealer connectivity is being established.
Implementation of SAP DMS-CRM has provided an additional opportunity to
ensure process standardization and compliance across all dealers of M&M. Enhanced
the ability to integrate a change more easily across the entire dealer chain. Facilitated
better customer information management, end-customer database, along with seamless
integration with back-end SAP systems.
Bar-coding Enabled Warehouse Management System at Spares Business Unit
The Spares Business Unit (SBU) has a Warehouse at Wagholi. The spare parts
required for Automotive & Farm Equipment Sector dealers are managed through this
warehouse. Wireless hand-held terminals are used to scan the bar-codes on the
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All the above business solutions are effectively delivered through state-of-art
Mahindra IT Infrastructure (MahindraNet) connecting all manufacturing plants,
Corporate Office, regional offices, sales offices and Data Centers with the best in class
security architecture, Network Operations Center to monitor and manage this network.
Redundancy for power, network, bandwidth, hardware, Data Center and DRS
set-up ensure almost 100% availability of applications to users. The whole organisation
is geared towards complying with the BS 7799 information security standard, which
adds to the confidence of M&M customers and partner organisations. M&M will be the
first BS: 7799 certified organization in India, in the manufacturing sector, with such
comprehensive scope.
M&M users are using various value-added IT Services such as VPN, Desktop
Web Conferencing - Video & Audio interaction from desktop, Video Conferencing -
Video & Audio interaction and conferencing between multiple locations, Live Chats
and FTP.
Live Interactive chats have been a successful platform for M&M employees to
communicate with Mahindra Senior Management. Senior executives share their vision,
thoughts and also answer to queries from employees. This technology is used
successfully for interaction between senior executives and subject experts during
Finance Minister's Union Budget speech.
The adoption of Information Technology has moved up the value chain, from
cost savings to business enablement. The business benefits of various business
solutions implemented have resulted in standardization, synergistic operations,
inventory reduction, easier consolidation, and cycle time reduction and optimized
business processes leading to faster operations and informed decision-making.
However more importantly, IT has impacted all the business functions and
processes in the organization, the value of which can be seen more in creation strategic
capabilities - such as anytime, anywhere availability of secured information, facilitating
collaboration and improved communication within and outside the organization,
effective leveraging knowledge within the organization for business benefits, enabling
organization to be more customer centric and agile.
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PROFILE OF MAHINDRA SHOWROOM
M/s. Panchasheel Enterprises, Karimnagar was established 1s1 April. 1987. By
nature it is a sole proprietorship:A.J . Anatha Rao
It is a not manufacturing unit and on the other hand it is a showroom for the
products of MAHINDRA & MAHINDRA limited, this showroom is located at
Karimnagar.
Objectives of the Organization
To sell the Mahindra Sc Mahindra products.
To provide services to the ultimate consumers of the vehicle.
To provide efficient & effective services to its consumers in time.
To facilitate financial assistance to the consumers.
BRIEF HISTORY OF MAHINDRA TRACTORS
1945: On October 2, Mahindra & Mohammed formed.
1945: The Company was renamed Mahindra & Mahindra Limited (M & M)
Steel Trading business was started in association with suppliers in U.
1945: Business connections in USA through Mahindra Wallace
1950: The first business with Mitsubishi Corporation (for 5000 Tons) for
building plates for supply from Yawata Iron & Steel
1953: Otis Elevator Co. (India) established 1956: Shares listed on the Bombay
Stock Exchange Dr. 'Beck & Co. formed - a JV with Dr. Beck & Co. Germany
1957: Mahindra Owen formed - a JV with Ruble)' Owen & Co. Ltd., UK
1958: Machine Tools Division started
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1963: International Tractor Co. of India (ITCI) formed - a JV with International.
Harvester Co., USA
1970: Mahindra Engineering & Chemical Products Ltd.(MECP) Commenced
operations.
1971: International Harvester collaboration ended
1979: License from Automobiles Peugeot, France for manufacture of XDP
4.90 Diesel Engines
1982: License from KIA for manufacture of 4 Speed Transmissions
Mahindra brand of tractors born Siro Plast formed
1983: M&M becomes market leader in Indian Tractor Market.
(Position retained ever since)
1984: Mahindra Hellenic Auto Industries S.A. formed - a JV in
Greece to assemble and market utility vehicles in Europe.
Mahindra British Telecom (MBT) formed - a JV with British Tele
communications plc (BT), UK
Acquired International instruments Ltd.
1989: Automotive Pressing Unit (now MUSCO Stampings) acquired from
GKW
Introduction of Commander series.
Triton Over water Transport Agency Ltd., formed implementation of the Service
Center project at Kahn Merged diverse activities of Steel, Machine Tools,
Graphics into Inter trade Division.
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1994: Mahindra Realty & Infrastructure Developers Ltd. (MRIDL) formed
Mahindra USA Inc., formed for distribution of Tractors in the USA EAC
Graphics (India) Ltd., formed in collaboration with The East Asiatic Company
Ltd. A/S, Denmark Reorganization of the Group creating six Strategic Business
Units MSL Division (Auto Components) hived off to form Mahindra Sona ltd.
Mahindra Nissan Aileen Limited merged with tile Company.
1996:Mahindra Ford India Ltd. (MFIL) - a JV with Ford, Motor Co. USA to
manufacture passenger cars. The Company made a Foreign Currency
Convertible Bond (FCCB) issue of US$ 115 million.
1997: A new die shop was inaugurated at Nasik Inauguration of the MahindraUnited World College of India.
1999: Launch of 'Bijlee' a battery operated, 3-wheeler environmental-friendly
vehicle. The largest online used vehicle website in India launched by Mahindra
Network Services. The business of Inter trade Division and Mahindra Exports
Ltd. combined and renamed Mahindra Inter trade ltd.. The Company acquired
major stake in Gujarat Tractors. Mahindra & Mahindra Financial Services
Limited becomes a subsidiary of M& M.
2001: A 3-wheeler diesel vehicle "Champion" is launched. The Company
launches Mahindra MaXX a MUV positioned with the caption Maximum Space,
Maximum Comfort. M&M ties up with Renault for petrol engines. M&M
established a separate division to provide Defense Solutions.
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About Farm Equipment Manufacturers leaders in India. Poised to take on the
world.
For over two decades, Mahindra Tractors is the undisputed leader of the Indian
tractor market, which is the largest tractor market in the world. A division of over US$
6 billion conglomerate, Mahindra & Mahindra, we began as a joint venture with
International Harvester. And with that began a new era in power, control and reliability
in farm equipment manufacturing.
Today, with the largest manufacturing set up in India, Mahindra Tractors is
among the top three players in the global market. And as we step into the 27th year of
excellence, we continue on our journey of cultivating golden harvests across the globe.
Mahindra Tractors conferred with the global honour.
In the year 2003, Mahindra Tractors bagged the Deming Prize, a global honour
for quality practices. Three years later, the company was eligible to qualify for the
Japan Quality Medal, the highest honour for excellence in Total Quality Management
practices. In 2007, Mahindra Tractors became one of the 20 companies worldwide to
receive this rare honour. Till date, we are the only tractor company in the world to bag
this prestigious award.
Mahindra Tractors goes global.
Mahindra Tractors have reached all four corners of the world. And wherever we
went, weve proved ourselves nothing less than the best. That explains the great
demand for Mahindra tractors across the United States, Australia, Brazil, Turkey, South
Africa & Syria etc among many more.
In the US market, Mahindra USA, a subsidiary company of Mahindra tractors,
sells more than 10,000 tractors annually. A nationwide network of over 300 dealers,
total product support and prompt after sales service ensure that every tractor functions
for years without any hassles.
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Another big leap took us past the Great Wall of China. We acquired Jiangling
Motor Co., to form Mahindra China Tractor Company Ltd. (MCTCL). Started
operation with Jiangsu Yueda Yancheng Tractor Manufacturing Co. in the year 2008 &
formed MYYTCL.The 18-35 HP tractors manufactured here cater to domestic as well
as overseas markets.
From China, we crossed the Pacific Ocean and entered the Australian farms.
Assembled at Mahindra Australia, these tractors are sold all over the Australian
continent. The variety includes a range of 2WD and 4WD compact tractors (20-30 HP
range) and utility tractor models (45-85 HP range) along with attachments like loaders
and mowers. These attachments can also be put to multiple uses with utmost reliability
and ease.
Heading eastwards from Australia, we entered the European continent and
launched Mahindra Tractors at the Novi Sad fair in May 2005. Today, we have a
significant presence in Turkey, Macedonia and Serbia.
In the massive African continent we have already spread across 20 countries
that include Angola, Tchad, Democratic Republic of Congo, Mali, Morocco, Nigeria,
Sudan, The Gambia, Zambia, Egypt, Algeria, Ghana, Niger, Uganda, Tanzania,
Mallawi, Mozambique, Zimbabwe, Botswana & South Africa. Besides that we have set
up assembly plants in Ghana, The Gambia, Nigeria Mali & Tchad, which were
technically guided and commissioned along with our channel partners in these
countries. And it wont be too long before our brand of red tractors are found across the
rest of the African continent.
But the journey doesn?t end here. We look forward to tapping the remotest
farms of the globe and continue to cultivate countless smiles.
Various products of Mahindra & Mahindra available in this showroom are:
Tractors, Autos, and other Agricultural implements.
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Models in Tractors
MAHINDRA 275 DI
BHOOMIPUTRA - 265 Dl
BHOOMIPUTRA - 275 DI
BHOOMIPUTRA - 475 DI
BHOOMIPUTRA - 575 DI
SARPANCH - 265 DI
SARPANCH - 275 DI
SARPANCH - 475 DI
SARPANCH - 575DI
ARJUN - 605 DI
ARJUN - ULTRA
ARJUN - CRPTO
Others agricultural implements available in Panchasheel Enterprises are:
Disk plough,
Cultivators,
Harvesters,
Spring cultivators etc.
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MAHINDRA TRACTORS
NBP SERIES
MODEL : 235 DI ENGINE HP: 24 HP
This single cylinder air cooled tractor is tough, economical and reliable. With 8
forwards speeds and maximum road speed of 30 Km per hour, these tractors are
especially suitable for road operations as well.
MODEL : 245 DI ENGINE HP: 27 HP
This particular line of tractors is tough, economical and reliable. With 8 forwards
speeds and maximum road speed of 30 Km per hour, these tractors are especially
suitable for road operations as well.
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MODEL : 275 DI ENGINE HP: 39 HP
This particular line of tractors is tough, economical and reliable. With 8
forwards speeds and maximum road speed of 30 Km per hour, these tractors are
especially suitable for road operations as well.
MODEL : 475 DI ENGINE HP: 42 HP
This particular line of tractors is tough, economical and reliable. With 8 forwards
speeds and maximum road speed of 30 Km per hour, these tractors are especially
suitable for road operations as well.
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MODEL : 575 DI ENGINE HP: 45 HP
This particular line of tractors is tough, economical and reliable. With 8
forwards speeds and maximum road speed of 30 Km per hour, these tractors are
especially suitable for road operations as well.
MODEL : 585 DI ENGINE HP: 50 HP
This particular line of tractors is tough, economical and reliable. With 8
forwards speeds and maximum road speed of 30 Km per hour, these tractors are
especially suitable for road operations as well.
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NST SERIES
MODEL : 265 DI ENGINE HP: 32 HP
A complete package of a large capacity engine, heavy-duty transmission, high
lift capacity hydraulics and a very robust cast iron chassis. These machines perfectly
suit almost all kinds of farming operations ranging from basic chores to commercial
landscaping.
MODEL : 275 DI ENGINE HP: 39 HP
A complete package of a large capacity engine, heavy-duty transmission, high
lift capacity hydraulics and a very robust cast iron chassis. These machines perfectly
suit almost all kinds of farming operations ranging from basic chores to commercial
landscaping.
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MODEL : 475 DI ENGINE HP: 42 HP
A complete package of a large capacity engine, heavy-duty transmission, high
lift capacity hydraulics and a very robust cast iron chassis. These machines perfectly
suit almost all kinds of farming operations ranging from basic chores to commercial
landscaping.
MODEL : 575 DI ENGINE HP: 45 HP
A complete package of a large capacity engine, heavy-duty transmission, high
lift capacity hydraulics and a very robust cast iron chassis. These machines perfectly
suit almost all kinds of farming operations ranging from basic chores to commercial
landscaping.
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MODEL : 595 DI ENGINE HP: 52 HP
A complete package of a large capacity engine, heavy-duty transmission, high
lift capacity hydraulics and a very robust cast iron chassis. These machines perfectly
suit almost all kinds of farming operations ranging from basic chores to commercial
landscaping.
MODEL : 585 DI ENGINE HP: 50 HP
A complete package of a large capacity engine, heavy-duty transmission, high
lift capacity hydraulics and a very robust cast iron chassis. These machines perfectly
suit almost all kinds of farming operations ranging from basic chores to commercial
landscaping.
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Ultra SERIES
MODEL : 445 DI ENGINE HP: 42 HP
These tough and reliable tractors are designed to perform multiple tasks and
take on the rigors of work with ease. They specialise in all kinds of farming operations,
ranging from secondary tillage to crop protection and mowing.
MODEL : 555 DI ENGINE HP: 52 HP
These tough and reliable tractors are designed to perform multiple tasks and
take on the rigors of work with ease. They specialise in all kinds of farming operations,
ranging from secondary tillage to crop protection and mowing.
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MODEL : 605 DI ENGINE HP: 59 HP
These tough and reliable tractors are designed to perform multiple tasks and
take on the rigors of work with ease. They specialise in all kinds of farming operations,
ranging from secondary tillage to crop protection and mowing.
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FINANCIAL STATEMENT ANALYSIS
Financial statements, as normally understood, refer to a set of reports are schedules that
an accountant prepares at the end of a period of time for business enterprise. According
to Smith and Ashburn, financial statement are the end products of financial accounting
prepared by the accountant, the purport to reveal the financial position of the enterprise,
the result of activities and an analysis of what has been done with the earnings.
There are six basic financial statements of special importance. They are
1. The Income statement (or profit and loss Account)
2. The position statement (or Balance Sheet)
3. The Funds Flow Statement (or The statement of Source and Application of
Funds)
4. The Cash Flow statement
5. The Statement of Retained Earnings
6. Schedules
1. The income Statement: The Income statement, also called the Profit and Loss
Account, is the accounting statement that summarizes the revenues expenses and the
difference between them for an accounting period. The construction of an Income
statement is in accordance with the concept of Accrual, Accounting Period, Matching,
materiality and Realization. There is no statutory format in which the Income Statement
is to be presented, for certain organization such as Banking and Insurance companies.
However, Sec. 211 of the Companies Act. 1956 prescribes the contents to be disclosed
in this statement.
2. The Position Statement: The 'Position Statement' or the Balance sheet shows the
financial status of a business at a given point of time. All the assets owned by the
business and all the liabilities and claims it owes to outsiders and owners are listed. The
Balance Sheet must always be in balance i.e., the total assets should always be equal to
total liabilities. The Balance Sheet of a joint stock company must be prepared as per
Part a of Schedule VI of Companies Act. Separate statutory formats exist for the
preparation of the Balance Sheet of Banking and Insurance Companies.
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3. The Funds Flow Statement: The term ''fund' normally means working capital. The
funds flow statement reveals the sources from which funds are received and the uses to
which these have been put. It is a valuable tool to analyze the changes in the financial
condition of the business between two periods and helps the management in policy
formulation and performance appraisal.
4. The Cash Flow Statement: The cash flow statement is a statement of changes in the
financial position of a firm on 'Cash basis'. It is very much similar to the 'Funds Flow'
statement, except that the cash flow statement lays emphasis on cash changes only.
5. The statement of Retained Earnings: The statement of retained earnings, also
known as the Profit and Loss Appropriation Account, is a continuation of the Income
Statement. It reveals the Profits freely available, after deduction of all expenses,
including tax and how it has been appropriated. The balance after all appropriations is
shown on the liabilities side of the Balance Sheet. Thus, the statement of retained
earnings is the link between the Income statement and the Balance Sheet
6. Schedules: Schedules are statements that describe the summarized information
presented in the Income Statement and the Balance Sheet in greater detail. Schedules
are a part of the financial statements. They enable a better understanding of the
financial position of a business
FORMATS OF FINANCIAL STATEMENTS
The two main financial statements, viz. Income Statement and Balance Sheet, can
either be presented in the Horizontal form or the Vertical form. Where statutory
provisions are applicable, the statement has to be prepared in accordance with such
provisions.
The Income Statement: There is no legal format for the Profit and Loss A/c.
Therefore, it can be presented in the traditional "T" form, or vertically, in statement
form. An example of the two formats is given as under.
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Manufacturing, Trading and Profit and Loss A/c of for the year ending:
Dr. Cr.
Particulars Particulars
To Opening Stock
Raw Materials
Work in progress
To Purchases of Raw Material
To Manufacturing Wages
To Carriage Inwards
To Other Factory Expenses
To Opening Stock of
Finished goods
To Cost of finished Goods b/d
To Gross Profit c/d
To Gross Loss b/d
To Office and Administration
Expenses
" Interest and Financial
xxx
xxx
xxx
xxx
xxx
xxx
By Cost of Finished Goods c/d
By Closing Stock
Raw Materials
Work in progress
By Sales
By Closing Stock Finished
Goods By Gross Loss c/d
By Gross Profit b/d
By Miscellaneous Receipts
By Net Loss c/d
xxx
xxx
Xxx xxx
xxx
xxx
xxx
xxx
xxx
xxx
Xxx xxx
xxx
xxx
xxx
xxx
xxx
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Expenses
" Provision for Income Tax
To Net Profit b/d
To Net Loss b/d
To General Reserve
To Dividend
To Balance c/f
xxx
xxx
xxx
By Balance b/d
(from previous year)
By Net Profit b/d
Xxx xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxxXxx
Note: The first part of (he statement, the Manufacturing A/c. is prepared only by
Manufacturing concerns. In such cases, all expenses pertaining to manufacturing
including depreciation on Plant and Machinery used in the factory depreciated on
factory building, salary to works manager etc. will be included in the Manufacturing
A/c.
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ii) Vertical or Statement Form: The vertical form can again be prepared in two forms.
A. Single step method: All revenues are listed at one place and totaled similarly, all
expenses are listed at one place and totaled. The difference between the two totals gives
the net profit and net loss.
Statement of Profit and Loss of -----------for the year ending-------
Particulars Rs. Rs.
Incomes / Revenues
Sales
Interest and Dividends
Discounts and Commissions received
Miscellaneous Receipts
Expenses
Cost of Goods sold
Office and Administration Expenses
Selling and Distribution Expenses
Financial Charges
Provision for Tax
Net Profit/Loss
xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx
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b) Multiple step method: In multiple step method, each item of revenue and expense
is taken up step by step. Items of operating revenue and cost of goods sold are
considered first, which gives the gross profit. Next, all operating expenses are deducted
from gross profit, which leads to operating profit. Financial expenses are next deducted
to result in Profit before tax. Tax is deducted to arrive at Profit after tax. Lastly,
appropriations arc made from the available Profits and the surplus is carried to the
Balance Sheet.
Income statement of...........for the year ending-------
Particulars Rs. Rs.
Sales
Less: Sales Returns
Sales Tax/Excise Duty
Net Sales
Cost of Goods Sold
(1)
Materials Consumed
Direct Labor
Manufacturing Expenses
Add/Less Adjustment for change in stock
(2)
Gross Profit = (1)-(2)
Less: Operating Expenses
xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx
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Office and Administration Expenses
Selling and Distribution Expenses
Operating Profit
Add: Non - Operating Income
Less: Non-Operating income(including Interest)
Profit Before Tax
Less: Tax
Profit After Tax
Appropriations
Transfer to Reserves
Dividends declared/ Paid
Surplus earned to Balance Sheet
xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx
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Balance Sheet: The companies Act. 1956 stipulates that the Balance Sheet of a joint
stock company should he prepared as per Part I of Schedule VI of the Act. However, the
statement form has been emphasized upon by accountants for the purpose of analysis
and interpretation. The permission of the Central Government is necessary for adoption
of 'Statement' form.
It must be noted that the format used by Management Accountants differs from the
vertical form of Balance Sheet. The format used is a flexible statement, wherein
necessary calculations can be clearly presented. For example working Capital can be
shown separately as difference between Current Assets and Current Liabilities. The
purpose of the statement is to ensure that its user can grasp the essential message
quickly. The three forms in which Balance Sheet can be presented arc shown below:
Statement form or Vertical form: Balance Sheet of---- as on---
Schedule
No.
Current
year Rs.
Previous
year No.
I SOURCE OF FUNDS
1. Share Holder's Funds
a) Capital
b) Reserves and Surplus
2. Loan Funds
a) Secured Loans
b) Unsecured Loans
TOTAL
II APPLICATION OF FUNDS
1. Fixed Assets
xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx
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a) Gross Block
b) Less Depreciation
c) Net Block
d) Capital work in progress
2. Investments
3. Current Assets. Loans and Advances
a) Inventories
b) Sundry Debtors
c) Cash and Bank balances
d) Other Current Assets
e) Loans and Advances
Less: Current Liabilities and Provisions
a) Current Liabilities
b) Provisions
Net Current Assets
4. a) Miscellaneous Expenditure to the extent
not written off or adjusted
b) Profit and Loss Account (debit)
xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx
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TOTAL
xxx
xxx
xxx
xxx
xxx
xxx
xxx
The details of various items have to shown separately in schedules and the schedule
number has to be mentioned in the statement.
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ii) Horizontal Form: A brief sketch of Horizontal form is being presented below. For a
detailed statement, the students are advised to refer to the text of Financial Accounting.
Schedule VI Part I
Balance Sheet of ----------- as on ----
Liabilities Rs. Assets Rs.
Share Capital
Reserves and Surplus
Secured Loans
Unsecured Loans
Current liabilities and
Provisions
Current Liabilities
Provisions
xxxx
xxxx
xxxx
xxxx
xxxx
xxxx
Fixed Assets
Investments
Current Assets. Loans and
Advances
Current Assets
Loans and Advances
Miscellaneous Expenditure
Profit & Loss A/c
xxxx
xxxx
xxxx
xxxx
xxxx
xxxx
xxxx Xxxx
iii) Form used by Management Accountants The vertical form of the statement is more
convenient for the purpose of analysis and interpretation. As such, in all our problems,we shall use the vertical format unless instructions exist to the contrary. However, the
format used by Management Accountants differs from the vertical form. The form
followed by them generally is as under:
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Balance sheet of----- as on ----
Particulars
ASSETS
Current Assets
Cash and Bank Balances
Debtors
Stock
Other Current Assets
(1)
Fixed Assets
Less: Depreciation
Investments
(2)
TOTAL (1)+(2)
LIABILITIES:
Current Liabilities:
Bills Payable
Creditors
Other Current Liabilities
xxxx
xxxx
xxxx
xxxx
Xxxx
xxxx
xxxx
xxx
xxx
xxxx
xxxx
xxxx
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(3)
Long Term Debt
Debentures
Other Long term Debts
(4)
Capital and Reserves
Share Capital
Reserves and Surplus
(5)
Total Long Term Funds (4)+(5)
TOTAL (3)+(4)+(5)
xxxx
xxxx
xxxx
xxxx
xxxx
xxxx
xxxx
xxxx
xxxx
xxxx
FINANCIAL STATEMENT ANALYSIS
The significance of financial statements lies not in their preparation and presentation,
but in their analysis and interpretation. This involves a study of relationship among
various financial factors and an ability to judge their meaning and significance. Thefinancial analyst must understand the plans and policies of management, determine the
extent of analysis, reorganize data available as per requirements, establish relationship
among financial figures and make interpretations in a simple unbiased way.
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TYPES OF ANALYSIS:
The process of analysis may be classified based on the nature of information used and
on the basis of 'methodology' of operations.
1) On the basis of Nature of Information used:
a) External analysis: The information used is that which is freely available to
anybody. Published Financial Statements are an example of such information. There is
no access to internal records of an organization. With increasing emphasis on
disclosures in recent times, the quality of external analysis is likely to improve in the
future.
b) Internal Analysis: The source of information in Internal Analysis is the internal or
unpublished records and books. Such analysis is undertaken for use of management or
for other internal needs of the organization.
2) On the basis of Methodology of Operations:
a) Horizontal Analysis: It involves analysis and review of financial statements
pertaining to a number of years. An attempt is made to identify the Periodical trend ofvarious items in the financial statements. Percentage increase/decrease is calculated for
all such items. Alternatively, a base year is fixed and figures pertaining to other years
are indexed to that of base period. It is also known as 'dynamic' analysis or 'trend'
analysis.
b) Vertical Analysis: Vertical Analysis involves analyzing a single set financial
statement by expressing various items of the statement as a percentage of a particular
item. Quantitative relationship is established amongst various items at a particular data.
It is also known as 'Static analysis or 'Structural' analysis.
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Methods of Financial Statement Analysis: The following methods of analysis are
generally used:
1) Comparative Statements
2) Trend Analysis
3) Common Size Statements
4) Funds Flow Analysis
5) Ratio Analysis
The first three methods will be discussed in this chapter, while the fifth method will be
taken up separately in the next chapter. Funds Flow analysis has been separately dealt
with in the text book on Advanced Management Accounting.
COMPARATIVE STATEMENT ANALYSIS
Comparative financial analysis refers to comparison of financial statements pertaining
to two different periods by putting them side by side and finding out the changes in
absolute and relative changes.
Points to be noted
1. The financial date that is to be compared should be properly defined. A
particular account head must have the same connotation for all the periods of
comparison.
2. The accounting policies followed during the years of comparison should be
uniform. If there are any changes in any Policy, the figures should be adjusted toensure uniformity.
3. It is preferable to present financial information in 'Vertical' or 'Statement' form.
4. The Comparative financial statement must reveal changes in both 'absolute' and
'relative' measures.
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Interpretation:
1. A change in sales is meaningful only if it is compared with a change in cost of
goods sold.
2. A change in operating expenses might be due to change in scale Operations or
on account of change in degree of managerial efficiency.
3. A change in net Profit is a good indicator of overall profitability of the
organization.
4. A change in retained earnings can be on account of change in profitability, or on
account of change in dividend policy, capitalization of free reserves or change
in amounts transferred to various funds.
5. A change in working capital is a good indicator of the change in current
financial position, or short-term solvency of the business.
6. A change in liquid assets is a better indicator of the short-term solvency of the
business.
7. A change in fixed assets must be balanced by a change in long-term funds.
8. The nature of assets, which have increased or decreased, must be studied to
understand its implications in the future.
9. Relative measures provide a sharper picture than absolute measures.
TREND ANALYSIS
Trend Analysis involves computation of index numbers of movements of vinous
financial items in the financial statements for a number of periods. It helps in
understanding the nature and role of movements in various financial factors. However,
conclusions should not be drawn on the basis of a single trend. Trends of related items
should be carefully studied. Due weightage should be given to extraneous factors suchas Government policy, economic conditions etc... As they can affect the trend
significantly.
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Steps in computation of Trend Values:
1. Select one of the periods for which financial statements are available as the base
period. The selected period should be a 'normal' period.
2. Every item is the base period is taken as '100'.
3. Trend values of each item for any other period can be calculated as under
Absolute value of the item for the period x 100
Absolute value of the item in the base period
Points to be noted:
1. The accounting policies for the entire period should be uniform.
2. Trend values must be read along with absolute values.
3. Non-financial factors should be considered while interpreting the trend.
COMMON SIZE STATEMENTS
A common size statement facilitates comparison of financial statements of not only a
single firm over a time period, but also comparison of financial statements of different
companies for any given time. Under this method, all the items of die statement are
presented as percentages or ratios of a particular item. Therefore, even if the related
absolute figures are in respect of vastly different scale of operations, a common hate for
comparison is created
In case of a Common Size Income Statement, all items are presented as a percentage of
net sales. A Common Size Balance Sheet shows each item as a percentage of totalassets or total liabilities. A common size statement helps in determining the relative
efficiency and soundness of a firm and helps in understanding its financial strategy.
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RATIO ANALYSIS
A ratio is a simple mathematical expression. It is a number expressed in terms of
another number, expressing the quantitative relationship between the two. Katie
Analysis is the technique of interpretation of financial statements with the help of
various meaningful ratios. Ratios do not add to any information that is already
available, hut they show the relationship between two items in a more meaningful way.
They help us to draw certain conclusions. Comparison with related facts is the basis of
ratio analysis. Ratios may be used for comparison in any of the following ways.
1. Comparison of a firm with its own performance in the past.
2. Comparison of one firm with another firm in the industry.
3. Comparison of one firm with the industry as a whole
4. Comparison of an achieved performance with pre determined standards.
5. Comparison of one department of a concern with other departments.
Advantages of Ratio Analysis
Ratio Analysis has the following advantages;
1. Ratio Analysis simplifies the understanding of financial statements.
2. Ratios bring out the inter relationship among various financial figures and bring
to light their financial significance. Ratio Analysis is a device to analyze and
interpret the financial health of the enterprise.
3. Ratios contribute significantly towards effective planning and forecasting. A
study of a trend in the past works as a helpful guide for the future
4. Ratios facilitate inter firm and intra firm comparison. They bring out the
strengths, weaknesses and efficiency of firms and their departments.
5. Ratios serve as effective control tools. They also facilitate establishment of a
standard costing system and budgetary control.
6. Ratios cater to the particular information need of a particular person, depending
on his interest in the business for which ratios arc to he calculated. A creditor
may be interested in liquidity ratios, while an investor may want to study
profitability ratios.
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Limitations
Ratio Analysis has the following limitations:
1.
Ratios may not prove to be the ideal tool for inter-firm comparisons. The twofirms may adopt different accounting policies and hence the result might not be
comparable. Similarly, a change in accounting policies by a firm will make intra
firm comparisons meaningless.
2. A study of ratios in isolation, without studying the actual figures, may lead to
wrong conclusions. Ratios arc only supplementary to, and not substitutes for
absolute figures.
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COMPARATIVE INCOME STATEMENT OF MAHINDRA
TRACTORS for the Year 2005-06
PARTICULARS YEAR
2005
YEAR
2006
ABSOLUTE
CHANGE
RELATIVE
PERCENTAGE
CHANGE
NET SALES 12384750 12468934 84184 0.67
{-) COST OF GOODS SOLD 9897850 10235789 337939 3.41
GROSS PROFIT (A) 2486900 2233145 253755 10.20
(-) OPERATING
EXPENSES
PRINTING & STATIONERY 23587 24985 1398 5.92
VEHICLE MAINTANENCE 59840 57452 2388 3.99
ELECTRICITY CHARGES 34875 40258 5383 15.43
TRANSPORT EXPENSES 68741 65780 2961 4.3
POOJA EXPENSES 3485 2458 1027 29.46
PAPER AND MAGAZINES 3480 2450 1030 29.59
AUDITOR FEES 4510 4258 252 5.58
LICENSE RENEWAL 4980 4500 480 9.63
SALES TAX 187450 198752 11302 6.02
EDDA EXPENSES 34874 25875 8999 25.80
SHOW ROOMMAINTENANCE
78541 68574 9967 12.69
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INSURANCE 9741 8500 1241 12.73
TELEPHONE CHARGES 34751 28751 6000 17.26
SADARA EXPENSES 42841 46875 4034 9.41
TRAVELLING EXPENSES 67410 66785 625 0.92
POSTAGE ANDTELEPHONE
3412 3485 73 2.13
MUNICIPAL TAXES 3874 3485 389 10.041
ADVERTISEMENT 42480 48520 6040 14.21
DEPRECIATION 168741 158971 9770 5.78
BONUS 27450 28410 960 3.49
INTEREST (OTHERS) 60150 56011 4139 6.88
SALES PROMOTION 397450 384975 12475 3.13
COMMISSION 34870 35784 914 2.62
DEBIT NOTES 26780 29874 3094 11.55
CHIT LOSS 19870 24874 5004 25.18
DIFFERENCE IN BOOKS 196 150 46 23.46
TOTAL OPERATING
EXPENSES (B) 1444379 1421092 23287 1.61
OPERATING PROFIT (A-B) 1042521 812053 230468 22.10
(+) NON-OPERATINGINCOME
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WORKSHOP 28741 27854 887 3.08
DEBIT AND CREDITNOTES
12540 14200 1660 13.23
WARRANTAGE EXPENSES - -
INTEREST (ESCORTS) 34102 29854 4248 12.45
WARRANTY INSTANTCREDIT NOTES 31540 34152 2612 8.28
SUBSIDY 4875 9400 4525 92.84
INTEREST (OBC) 39780 35784 3996 10.045
TOTAL NON-OPERATINGINCOME (C)
151578 151244 334 0.22
TOTAL INCOME
(A-B) +C = D.1194099 963297 230802 19.32
(-) NON-OPERATING
EXPENSES
SALARIES 298741 358700 59960 20.07
BANK CHARGES ANDCOMMISSION
78450 87540 9090 11.58
INTEREST 204510 198751 5759 2.81
INCOME TAX 4580 5540 960 20.96
TOTAL NON-OPERATINGINCOME (E)
586281 650531 64520 10.95
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INTERPRETATION (2005-2006):
Net sales in the year 2005 are 12384750 and in the year 2006 are 12468934. It means
increase in the year 2006 by 84184. Gross Profit in the year 2005 is 2486900. It
decreases to 2233145 by 253755 in 2006. Therefore the profitability position of thecompany is not satisfactory.
PROFIT BEFORE TAX (D-E) 611305 312766 298539 48.83
(-) T D S 3487 2485 1002 28.37
PROFIT AFTER TAX 607818 310281 397537 48.15
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COMPARATIVE INCOME STATEMENT OF MAHINDRA
TRACTORS for the Year 2006-07
PARTICULARSYEAR
2006
YEAR
ABSOLUTE
CHANGE
RELATIVE
PERCENTAGE
CHANGE2007
NET SALES 12468934 12630967 162033 1.29
{-) COST OF GOODS SOLD 10235789 10586900 351111 3.43
GROSS PROFIT (A) 2233145 2044067 189078 8.46
(-) OPERATING EXPENSES
PRINTING & STATIONERY 24985 25898 913 3.65
VEHICLE MAINTANENCE 57452 58286 834 1.45
ELECTRICITY CHARGES 40258 38913 1345 3.34
TRANSPORT EXPENSES 65780 66996 1216 1.84
POOJA EXPENSES 2458 2159 299 12.16
PAPER AND MAGAZINES 2450 NIL 2450 100
AUDITOR FEES 4258 5200 942 22.121
LICENSE RENEWAL 4500 NIL 4500 100
SALES TAX 198752 299584 100832 50.73
EDDA EXPENSES 25875 19840 6035 23.32
SHOW ROOMMAINTENANCE
68574 62697 5877 8.57
INSURANCE 8500 NIL 8500 100
TELEPHONE CHARGES 28751 29501 750 2.60
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SADARA EXPENSES 46875 45984 891 1.9008
TRAVELLING EXPENSES 66785 65888 897 1.343
POSTAGE AND TELEPHONE 3485 5849 2364 67.83
MUNICIPAL TAXES 3485 4696 1211 34.74
ADVERTISEMENT 48520 79987 31467 64.85
DEPRECIATION 158971 198459 39488 24.83
BONUS 28410 28500 90 0.31
INTEREST (OTHERS) 56011 60292 4281 7.64
SALES PROMOTIONEXPENSES
384975 445868 60890 15.81
COMMISSION 35784 37532 1748 4.88
DEBIT NOTES 29874 25195 4679 15.66
CHIT LOSS 24874 53307 28433 114.30
DIFFERENCE IN BOOKS150
10149 32.66
TOTAL OPERATING
EXPENSES (B)1421092 1660734 239642 16.86
OPERATING PROFIT (A-B)812053 383333 428720 52.79
(+) NON-OPERATING
INCOME
WORKSHOP 27854 25969 1885 6.76
DEBIT AND CREDIT NOTES 14200 14700 500 3.52
WARRANTAGE EXPENSES - NIL - -
INTEREST (ESCORTS) 29854 24066 5788 19.38
WARRANTY INSTANTCREDIT NOTES
3415236305
2153 6.30
SUBSIDY 9400 9100 300 3.191
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COMPARATIVE INCOME STATEMENT OF MAHINDRA
TRACTORS for the Year 2007-08
PARTICULARS ABSOLUTECHANGE
RELATIVE
PERCENTAGE
CHANGE
YEAR
2007
YEAR
2008
NET SALES 12630967 19398955 6767988 53 58
{-) COST OF GOODS SOLD 10586900 17480980 6894080 65.12
GROSS PROFIT (A) 2044067 1917975 126092 6.17
(-) OPERATING EXPENSES
PRINTING & STATIONERY 25898 37256 11358 43.86
VEHICLE MAINTANENCE 58286 85116 26830 46.03
ELECTRICITY CHARGES 38913 42058 3145 8.08
TRANSPORT EXPENSES 66996 68912 1916 2.86
POOJA EXPENSES 2159 1461 698 32.33
PAPER AND MAGAZINES NIL 1458
AUDITOR FEES 5200 8250 3050 58.65
LICENSE RENEWAL NIL 100
SALES TAX 299584 322111 22527 7.52
EDDA EXPENSES 19840 NIL
SHOW ROOMMAINTENANCE
62697 65218 2521 4.02
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INSURANCE NIL 12351
TELEPHONE CHARGES 29501 37045 7544 2557
SADARA EXPENSES 45984 39088 6896 15.00
TRAVELLING EXPENSES 65888 84850 18962 28.78
POSTAGE AND TELEPHONE 5849 7315 1466 25.06
MUNICIPAL TAXES 4696 6349 1651 35.14
ADVERTISEMENT 79987 44523 35464 44.34
DEPRECIATION 198459 92125 106334 53.58
BONUS 28500 26850 1650 5.79
INTEREST (OTHERS) 60292 65582 5290 8.77
SALES PROMOTION
EXPENSES 44586S 482750 36882 8.27
COMMISSION 37532 39115 1583 4.22
DEBIT NOTES 25195 29392 4197 16.66
CHIT LOSS 53307 35121 18186 34 12
DIFFERENCE IN BOOKS101 NIL
TOTAL OPERATINGEXPENSES (B)
1660734 1634396 26338 1.59
OPERATING PROFIT (A-B)383333 283579 99754 26.02
(+) NON-OPERATINGINCOME
SERVICE INCENTIVES
337734 354585 16851 4.99
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WORKSHOP 25969 36638 10669 41.08
DEBIT AND CREDIT NOTES 14700 9566 5134 34.93
WARRANTAGE EXPENSES NIL 9069 - -
INTEREST (ESCORTS) 24066 34213 10147 42.16
WARRANTY INSTANTCREDIT NOTES 36305
351211184 3.26
SUBSIDY 9100 12266 3166 34.79
INTEREST (OBC) 36016 45666 9650 26 79
TOTAL NON-OPERATINGINCOME (C)
483890 537124 53234 11.00
TOTAL INCOME(A-B) +C = D.
867223 820703 46520 5.36
(-) NON-OPERATINGEXPENSES
`
SALARIES 342000 375000 33000 9.65
BANK CHARGES ANDCOMMISSION
88608 19421 69187 78.08
INTEREST 182432 201474 19042 10.44
INCOME TAX 6600 27467 20867 316.17
TOTAL NON-OPERATINGINCOME (E)
619640 623362 3722 0.60
PROFIT BEFORE TAX (D-E) 247583 197341 50242 20.29
(-) T D S 2648 2400 248 9.37
PROFIT AFTER TAX 244935 194941 49994 20.41
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INTERPRETATION (2007-2008):
Net sales in the year 2007 are 1.26,30,967 and in the year 2008 is 1, 9398,955. It means
increase in the year 2008 by 67.67,988. Gross Profit in the year 2007 is 20, 44,067. It is
decreased to 19, 17,975 by 1, 26,092 in 2008.Operating Profit is also decreased from
3.83,333 to 2, 83,579 in the year 2008 by 99,754. Therefore profitability position of the
company is not satisfactory.
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COMPARATIVE INCOME STATEMENT OF MAHINDRA TRACTORS, for
the year 2008-09
PARTICULARSYEAR2008
YEAR2009
ABSOLUTECHANGE
RELATIVEPERCENTAGE
CHANGE
NET SALES 19398955 27030590 7631635 39 34
(-) COST OF GOODS SOLD 17480980 25426017 7945037 45.45
GROSS PROFIT (A) 1917975 1604573 313402 16.34
(-) OPERATINGEXPENSES
PRINTINGS STATIONERY 37256 18194 19062 51.16
VEHICLE MAINTANENCE 85116 84859 257 0.30
ELECTRICITY CHARGES 42058 60918 18860 44.84
TRANSPORT EXPENSES 68912 15611 53301 77.35
POOJA EXPENSES 1461
PAPER AND MAGAZINES 1458 750 708 48 56
AUDITOR FEES 8250 8100 150 1.82
LICENSE RENEWAL 100 100 100.00
SALES TAX 322111 73966 248145 77.04
SHOW ROOMMAINTENANCE
65218 92802 27584 42.30
INSURANCE 12351 43697 31346 253.79
TELEPHONE CHARGES 37045 92471 55426 149.62
SADARA EXPENSES 39088 21354 17734 45.37
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INTEREST (OBC) 45666 45666 100.00
DIFFERENCE IN BOOKS217 217
TOTAL NON-OPERATINGINCOME (C)
537124 884344 347220 64.64
TOTAL INCOME(A-B)+C = D
020703 1100482 279779 34.09
(-) NON-OPERATINGEXPENSES
SALARIES 375000 576000 201000 53.60
BANK CHARGES ANDCOMMISSION
19421 43110 23689 121.98
INTEREST 201474 - 201474 100.00
INCOME TAXTADFL 27467 166576 139109 506.46
TOTAL NON-OPERATINGINCOME (E)
623362 828056 204694 32.84
PROFIT BEFORE TAX(D-E)
197341 272426 75085 38.05
(-) T D S 2400 28574 26174 1090 58
PROFIT AFTER TAX 194941 243852 48911 25.09
INTERPRETATION (2008-2009):
Net sales in the year 2008 are 1.93, 98.955 and in the year 2009 is 2, 70.30.590. It
means increase in the year 2009 by 76, 31,635. Gross Profit in the year 2008 is 19,
17,975, it decreases to 16, 04,573 by 3, and 13,402 in 2009. Operating Profit is also
decreased from 2, 83,579 to 2, and 16,138 in the year 2009 by 67,441. Therefore
profitability of the company is satisfactory.
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COMPARATIVE INCOME STATEMENT OF MAHINDRA
TRACTORS, for the year 2009-10
PARTICULARSYEAR
2009
YEAR
2010
ABSOLUTE
CHANGE
RELATIVE
PERCENTAGE
CHANGE
NET SALES 27030590 28408532 1377942 5.10
(-) COST OF GOODS SOLD 25426017 26066725 640708 252
GROSS PROFIT (A) 1604573 2341807 737234 45.95
(-) OPERATING EXPENSES
PRINTINGS STATIONERY 18194 73641 55447 304.75
VEHICLE MAINTANENCE 84859 152003 67144 79.12
ELECTRICITY CHARGES 60918 47350 13568 22.27
TRANSPORT EXPENSES 15611 57461 41850 268.08
CAR 1506 1505
PAPER AND MAGAZINES 750 5418 4668 622.40
AUDITOR FEES 8100 8100 0 0.00
PROFESSIONAL TAX 2500 2500
SALES TAX 73966 80650 6684 9.04
SHOW ROOMMAINTENANCE
92802 67840 24962 26.90
INSURANCE 43697 29378 14319 32.77
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TELEPHONE CHARGES 92471 32335 60136 65.03
SADARA EXPENSES 21354 30558 9204 4310
TRAVELLING EXPENSES 62215 11304 50911 81.83
POSTAGE AND TELEPHONE 2220 12099 9879 445.00
LAND REVENUE - 2269 2269 100
ADVERTISEMENT 37450 264101 226651 605.21
DEPRECIATION 312487 282966 29521 9.45
BONUS 48000 48000 0 0 00
COMMISSION ANDDISCOUNT 413341 30519 382822 92.62
DEBIT NOTES- 255678 255678 100
CHIT LOSS- 91160 91160 100
SALES PROMOTIONEXPENSES-
262830 262830 100
HIRE CHARGES -7603 7603 100
REPAIRS-
15145 15145 100
TOTAL OPERATINGEXPENSES (B)
1388435 1872413 483978 34.86
OPERATING PROFIT (A-B) 216138 469394 253256 117.17
(+) NON-OPERATINGINCOMESERVICE INCENTIVES
129470 145430 15960 12.33
INTEREST ON SECURITYDEPARTMENT
86895 86895
DEBIT AND CREDIT NOTES 711737 - 711737 100.00
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INTEREST (ESCORTS) 42920 - 42920 100.00
WARRANTY INSTANTCREDIT NORES
- 482506 482506 100
PUBLICITY CREDIT NOTE - 81935 81935 100
DIFFERENCE IN BOOKS217 217 100 00
TOTAL NON-OPERATINGINCOME (C)
884344 796766 87578 9.90
TOTAL INCOME(A-B)+C = D
1100482 1266160 166678 15.06
(-) NON -OPERATINGEXPENSES
SALARIES 676000 576000 0 0.00
BANK CHARGES ANDCOMMISSION
43110 24665 18445 42.79
INCOME TAX 9600 9600
BANK INTEREST166576 147174 19402 11.65
TADFL42370 295418 253048 597.23
TOTAL NON-OPERATINGINCOME (E)
828056 1052857 224801 27.15
PROFIT BEFORE TAX (D-E)272426 213303 59123 21.70
(-)TDS28574 9052 19522 68.32
PROFIT AFTER TAX243852 204251 39601 16.24
INTERPRETATION (2009-2010):
Net sales in the year 2009 are 2, 70, and 30,590 and in the year 2010 is 2, 84, and
08,532. It means increase in the year 2010 by 13, 77,942. Gross Profit in the year 2009
is 16, 04.573. It increases to 23, 41,807 by 7, and 37,234 in 2010. Operating Profit is
also increased from 2.16,138 to 4, 69,394 in the year 2010 by 2, 53,256. Therefore the
profitability position of the company is satisfactory
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COMPARATIVE BALANCE SHEET OF MAHINDRA
TRACTORS., for the Year - 2005 06
PARTICULARSYEAR
2005
YEAR
2006
ABSOLUTE
CHANGE
RELATIVEPERCENTAGE
CHANGE
I ASSETS
(A)CURRENT ASSETS
CASH ON HAND 43852 44852 1000 2.28
CLOSING STOCK 1258940 1298200 39260 3.11
SUNDRY DEBTORS 1059781 1167850 108069 10.19
RENT ADVANCE 159740 148000 11740 7.34
SECURITY DEPOSIT 34850 24580 10000 28.69
CASH AT BANK 10547 9875 672 6.37
TOTAL CURRENT ASSETS
(A)2567710 2693357 125647 48.75
(B) FIXED ASSETS
NET BLOCK 1234520 721850 512670 41.52
TOTAL FIXED ASSETS (B) 1234520 721850 512670 41.52
TOTAL ASSETS (A+B) 3802230 3415207 387023 10.17
II. LIABILITIES
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(C) CURRENT LIABILITIES
OUTSTANDING-PAYABLE 11587 12587 1000 8.63
SUNDRY CREDITORS 1258970 1048750 1154120 91.67
TOTAL CURRENT
LIABILITIES (C)1258970 1061337 1154120 91.67
(D) LONG TERM
LIABILITIES
SUBDEALER DEPOSIT 155980 145870 10110 6.48
BANK LOAN 728540 659480 69060 9.47
TOTAL LONG TERM
LIABILITES (D)884520 805350 79170 8.95
(E) OWNER FUNDS
SHARE CAPITAL 1658740 1548520 110220 6.64
TOTAL OWNER FUNDS (E) 1658740 1548520 110220 6.64
TOTAL LIABILITIES
(C+D+E) 3802230 3415207 387023 10.17
NET WORKING CAPITAL(A-C)
1308740 1632020 323280 24.70
LONG TERM FUNDS (D+E) 254320 2353870 189390 74.46
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INTERPRETATION (2005-2006):
The total Current Assets in 2007 is 2697037 and in the year 2008 is 4034714. It means
that there is an increase in the year 2008 i.e., 1337677. The Total Assets in 2007 is
3340481 and in the year 2008 it is 4755600. Current Liabilities in 2007 is 1054825 and
in 2008 it is 1813623. Net Working Capital in 2007 is 1642212 and in 2008 it is
2221091. Long term Funds in 2007 is 2285656 and in 2008 it is 2941977.
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COMPARATIVE BALANCE SHEET OF MAHINDRA
TRACTORS., for the Year - 2006 07
PARTICULARSYEAR
2006
YEAR
2007
ABSOLUTE
CHANGE
RELATIVEPERCENTAGE
CHANGE
I ASSETS
(A)CURRENT ASSETS
CASH ON HAND 44852 45574 722 1.60
CLOSING STOCK 1298200 1226960 71240 5.48
SUNDRY DEBTORS 1167850 1246647 78797 6.74
RENT ADVANCE 148000 150000 2000 1.35
SECURITY DEPOSIT 24580 19903 4677 19.02
CASH AT BANK 9875 7953 1922 19.64
TOTAL CURRENT ASSETS
(A) 2693357 2697037 3680 0.13
(B) FIXED ASSETS
NET BLOCK 721850 643444 78406 10.86
TOTAL FIXED ASSETS (B) 721850 643444 78406 10.86
TOTAL ASSETS (A+B) 3415207 3340481 74726 2.18
II. LIABILITIES
(C) CURRENT LIABILITIES
OUTSTANDING-PAYABLE 12587 10015 2572 20.43
SUNDRY CREDITORS 1048750 1044810 3940 0.37
TOTAL CURRENT
LIABILITIES (C)1061337 1054825 6512 0.67
(D) LONG TERM
LIABILITIES
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INTERPRETATION (2006-2007):
The total Current Assets in 2007 is 2697037 and in the year 2008 is 4034714. It means
that there is an increase in the year 2008 i.e., 1337677. The Fixed Assets in the year
2007 is 643444 and in the year 2008 it is 720886. It has been increased when compared
with 2007 i.e., 77442. Current Liabilities in 2007 is 1054825 and in 2008 it is 1813623.
There is an increase in the year 2008 when compared to the previous year i.e., 758798.
Net Working Capital in 2007 is 1642212 and in 2008 it is 2221091. Long term Funds in
2007 is 2285656 and in 2008 it is 2941977.
SUBDEALER DEPOSIT 145870 166227 20357 13.95
BANK LOAN 659480 595730 63750 9.66
TOTAL LONG TERM
LIABILITES (D) 805350 761957 43393 5.38
(E) OWNER FUNDS
SHARE CAPITAL 1548520 1523699 24821 1.60
TOTAL OWNER FUNDS (E) 1548520 1523699 24821 1.60
TOTAL LIABILITIES(C+D+E)
3415207 3340481 74726 2.1810
NET WORKING CAPITAL
(A-C)1632020 1642212 10192 0.62
LONG TERM FUNDS (D+E) 2353870 2285656 68214 2.89
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COMPARATIVE BALANCE SHEET OF MAHINDRA
TRACTORS., for the Year - 2007 08
PARTICULARSYEAR2007
YEAR2008
ABSOLUTECHANGE
RELATIVEPERCENTAGE
CHANGE
I ASSETS
(A)CURRENT ASSETS
CASH ON HAND 45574 54866 9292 20.39
CLOSING STOCK 1226960 2914305 1687345 137.52
SUNDRY DEBTORS 1246647 531043 715604 5740
RENT ADVANCE 150000 300000 150000 100.00
SECURITY DEPOSIT 19903 34500 14597 73.34
CASH AT BANK 7953 200000 192047 2414.77
TOTAL CURRENT ASSETS (A) 2697037 4034714 1337677 49.60
(B) FIXED ASSETS
NET BLOCK 643444 720886 77442 12.04
TOTAL FIXED ASSETS (B) 643444 720886 77442 12.04
TOTAL ASSETS (A+B) 3340481 4755600 1415119 42.36
II. LIABILITIES
(C) CURRENT LIABILITIES
OUTSTANDING-PAYABLE 10015 26715 16700 166.75
SUNDRY CREDITORS 1044810 1786908 742098 71.03
TOTAL CURRENT LIABILITIES(C)
1054825 1813623 758798 71.94
(D) LONG TERM LIABILITIES
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COMPARATIVE BALANCE SHEET OF MAHINDRA
TRACTORS, for the year 2008-09
PARTICULARS
YEAR
2008
YEAR
2009
ABSOLUTE
CHANGE
RELATIVE
PERCENTAGECHANGE
I. ASSETS
(A) CURRENT ASSETS
CASH ON HAND 54866 107645 52779 96.20
CLOSING STOCK 2914305 78567S8 4942493 169.59
SUNDRY DEBTORS 531043 1451138 920095 173 26
RENT ADVANCE 300000 260000 40000 13.33
SECURITY DEPOSIT 34500 1224354 1189854 344885
CASH AT BANK 200000 1013679 813679 406.84
TOTAL CURRENT ASSETS (A) 4034714 11913614 7878900 195.28
(B) FIXED ASSETS
NET BLOCK 720886 137503 583383 80.93
TOTAL FIXED ASSETS (B) 720886 137503 583383 80.93
TOTAL ASSETS (A+B) 4755600 12051117 7295517 153.41
II. LIABILITIES
(C) CURRENT LIABILITIES
OUTSTANDING PAYABLE 26715 44287 17572 65.78
SUNDRY CREDITORS 1786908 8473741 6686833 374.21
TOTAL CURRENT LIABILITIES (C) 1813623 8518028 6704405 369.67
(D) LONG TERM LIABILITIES
SUBDEALER DEPOSIT 668777 1050000 381223 57 00
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COMPARATIVE BALANCE SHEET OF MAHINDRA TRACTORS
for the year 2009-10
PARTICULARSYEAR
2009
YEAR
2010
ABSOLUTE
CHANGE
RELATIVE
PERCENTAGE
CHANGE
I. ASSETS
(A) CURRENT ASSETS
CASH ON HAND 107645 222013 114368 106.25
CLOSING STOCK 7856798 1115335 6741463 85 80
SUNDRY DEBTORS 1451138 1254567 196571 13.55
RENT ADVANCE 260000 100000 160000 61.54
SECURITY DEPOSIT 1224354 11213 1213141 99 08
CASH AT BANK 1013679 50787 962892 94.99
TOTAL CURRENT ASSETS (A) 11913614 2753915 9159699 76.88
(B) FIXED ASSETS
NET BLOCK 137503 585907 448404 326 10
TOTAL FIXED ASSETS (B) 137503 585907 448404 326.10
TOTAL ASSETS (A+B) 12051117 3339822 8711295 72.29
II. LIABILITIES
(C) CURRENT LIABILITIES
OUTSTANDING PAYABLE 44287 27667 16620 37.53
SUNDRY CREDITORS 8473741 1306791 7166950 84.58
TOTAL CURRENT LIABILITIES (C) 8518028 1334458 7183570 84.33
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INTERPRETATION 2009-2010
The total Current Assets in 2009 is 11913614 and in 2010 it is 2753915. There is a
decrease in the current assets in the current year i.e., 9159699. The Fixed Assets in the
year 2009 is 137503 and in the year 2010 it is 585907. There is an increase in the fixed
assets in the current year i.e., 448404. The Total Assets in 2009 is 12051117 and in the
year 2010 it is 3339822. There is a decrease in the total assets in the current year i.e.,
8711295. Current Liabilities in 2009 is 8518028 and in 2010 it is 1334458. There is a
decrease in the current liabilities in the current year i.e., 7183570. Net Working Capital
in 2009 is 3395586 and in 2010 it is 1419457. Long term Funds in 2009 is 3533089 andin 2010 it is 2005364.
(D) LONG TERM LIABILITIES
SUBDEALER DEPOSIT 1050000 74600 975400 92.90
BANK LOAN 1809391 612621 1196770 66.14
TOTAL LONG TERM LIABILITES (D) 2859391 687221 2172170 75.97
(E) OWNER FUNDS
SHARE CAPITAL 673698 1318143 644445 95.66
TOTAL OWNER FUNDS (E) 673698 1318143 644445 95.66
TOTAL LIABILITIES (C+D+E) 12051117 3339822 8711295 72.29
NET WORKING CAPITAL (A-C) 3395586 1419457 1976129 58.20
LONG TERM FUNDS (D+E) 3533089 2008364 1527725 43.24
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CONCLUSIONS
A marketing function is an art of transformation of goods; operations are
services by which producer and final consumer are linked together. It consists of
services of operations which may be performed several times either by producer or
middlemen till the commodity reaches into the hands of customers.
The following conclusions have been drawn from the analysis.
1) Many of the customers purchased the Mahindra Tractors newly.
2) Performance is the stimulating factor in purchasing the Mahindra Tractors.
3) Customers are satisfied with the quality, physical appearance and features of
Mahindra Tractors.
4) Durability of all the brands in Mahindra Tractors is medium.
5) The fuel consumption in Mahindra Tractors is medium.
6) The maintenance cost of Mahindra Tractors is low.
7) The price of the Mahindra Tractors is high.
8) The liquidity position of the company shows that the company is not meeting
their requirements at the expected levels.
9) The fixed assets of the company show better position.
10) The profits of the company shows targeted results in the last before years.
11)Customers purchase Mahindra Tractors on installment basis.
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BIBLIOGRAPHY
S.NOAUTHOR
NAME
BOOK TITLE PUBLICATIONS EDITION/YEAR
1 IM Pandey Financialmanagement
Vikas PublishingHouses Pvt ltd
2006 9th edition
2R.P. Trivedi &Manoj Trivedi
Cost andmanagementaccounting
PankajPublications first edition 2002
3Magnus school
of business Financialmanagement Vikas PublishingHouses Pvt ltd 2006
ANNUAL REPORTS OF MAHINDRA TRACTORS. KARIMNAGAR