TERM PAPER ON

HERO HONDA MOTORS LTD. ACCOUNTING FOR MANAGERS

SUBMITTED TO: SUBMITTED BY:

Ms .Anushital sinha DIPENDRA KUMAR

REG NO:-11000781

ROLL NO:-B32

MBA- I.T

HERO HONDA

Hero Honda Motors Ltd. is the world's largest manufacturer of two – wheelers, based in India.

The company is a joint venture between India's Hero Group and Honda Motor Company, Japan that began in 1984.

In 2001, the company achieved the coveted position of being the largest two-wheeler manufacturing company in India and the ‘World No.1’ two-wheeler company in terms of unit volume sales in a calendar year by a single company. Hero Honda has retained that coveted position till date.

Today, every second motorcycle sold in the country is a Hero Honda bike. Every 30 seconds, someone in India buys Hero Honda's top-selling motorcycle – Splendor.

These are some glorious years in Hero Honda history:

1985 CD-100

1989 SLEEK

1991 CD-100 SS

1994 Splendor

1997 Street

1999 CBZ

2001 PASSION

2002 DAWN, AMBITION

2003CD-DAWN, SPLENDOR +, PASSION +,KARIZMA

2005SUPER-SPLENDOR, CD-DELUX, GLAMOUR, ACHIEVER

Vision

The Hero Honda story began with a simple vision – the vision of a mobile and an empowered India,

powered by Hero Honda. This vision was driven by Hero Honda’s commitment to customer, quality and

excellence, and while doing so, maintaining the highest standards of ethics and societal responsibilities.

Hero Honda believes that the fastest way to turn that dream into a reality is by remaining focused on that

vision.

Strategy

Hero Honda’s key strategy has been driven by innovation in every sphere of activity – building a robust

product portfolio across categories, exploring new markets, aggressively expanding the network and

continuing to invest in brand building activities.

Manufacturing

Hero Honda bikes are manufactured across three globally benchmarked manufacturing facilities. Two of

these are based at Gurgaon and Dharuhera which are located in the state of Haryana in northern India. The

third and the latest manufacturing plant is based at Haridwar, in the hill state of Uttrakhand.

Technology

In the 1980’s Hero Honda pioneered the introduction of fuel-efficient, environment friendly four-stroke

motorcycles in the country. Today, Hero Honda continues to be technology pioneer. It became the first

company to launch the Fuel Injection (FI) technology in Indian motorcycles, with the launch of the Glamour

FI in June 2006.

Products

Hero Honda's product range includes variety of motorcycles that have set the industry standards across all

the market segments. The company also started manufacturing scooter in 2006. Hero Honda offers large

no. of products and caters to wide variety of requirements across all the segments.

Distribution

The company's growth in the two wheeler market in India is the result of an intrinsic ability to increase

reach in new geographies and growth markets. Hero Honda's extensive sales and service network now

spans close to 4500 customer touch points. These comprise a mix of authorized dealerships, Service &

Spare Parts outlets, and dealer-appointed outlets across the country.

Brand

The company has been continuously investing in brand building utilizing not only the new product launch

and new campaign launch opportunities but also through innovative marketing initiatives revolving around

cricket, entertainment and ground- level activation.

Hero Honda has been actively promoting various sports such as hockey, cricket and golf. Hero Honda was

the title sponsor of the Hero Honda FIH Hockey World Cup that was played in Delhi during Feb-March

2010. Hero Honda also partners the Commonwealth Games Delhi 2010.

2009-10 Performance

Total unit sales of 46,00,130 two-wheelers, growth of 23.6 per cent

Total net operating income of Rs. 15860.51 Crores, growth of  28.1 per cent

Net profit after tax at Rs. 2231.83 Crores, growth of 74.1 per cent

Final dividend of 1500% or Rs. 30 per share on face value of each share of Rs. 2

EBIDTA margin for the year 17.4  per cent

EPS of Rs. 111.77, growth of 74.1  per cent

These are some big personalities of hero Honda:

No.

Name of the Directors

Designation

1 Mr. Brijmohan Lall Munjal Chairman & Whole-time Director

2 Mr. Pawan Munjal Managing Director & CEO

3 Mr. Toshiaki Nakagawa Joint Managing Director

4 Mr. Sumihisa Fukuda Technical Director

5 Mr. Om Prakash Munjal Non-executive Director

6 Mr. Sunil Kant Munjal Non-executive Director

7 Mr. Masahiro Takedagawa Non-executive Director

8 Mr. Satoshi Matsuzawa

(Alternate Director to Mr.

Takashi Nagai)

Non-executive Director

9 Mr. Pradeep Dinodia Non-executive & Independent Director

10 Gen.(Retd.) V. P. Malik Non-executive &

Independent Director

11 Mr. Analjit Singh Non-executive & Independent Director

12 Dr. Pritam Singh Non-executive & Independent Director

13 Ms. Shobhana Bhartia Non-executive & Independent Director

14. Mr. Meleveetil Damodaran Non-executive & Independent Director

15. Mr. Ravi Nath Non-executive & Independent Director

16. Dr. Anand C. Burman Non-executive & Independent Director

COMPARATIVE BALANCE SHEET

      Mar '09     Mar '10    absolute change % change

           Total Share Capital 39.94 39.94     0 0Equity Share Capital 39.94 39.94     0 0Share Application Money 0 0     0 0Preference Share Capital 0 0     0 0

Reserves 3,760.81 3,425.08     -335.73 -8.93Revaluation Reserves 0 0     0 0Networth 3,800.75 3,465.02 -335.73 -8.83Secured Loans 0 0     0 0Unsecured Loans 78.49 66.03     -12.46 -15.87Total Debt 78.49 66.03 -12.46 -15.87Deffered Credit 0 0     0 0Current Liabilities 1,678.93 3,965.69     2286.76 136.2Provisions 526.97 1,026.35     499.38 94.76Total CL & Provisions 2,205.90 4,992.04     2786.14 126.3    total liabilities 6,085.14 8,523.09     2437.95 40.06

     Mar '09 Mar '10                          Gross Block 2,516.27 2,750.98     234.71 9.33Less: Accum. Depreciation 942.56 1,092.20     149.64 15.88Net Block 1,573.71 1,658.78 85.07 5.41Capital Work in Progress 120.54 48.14     -72.40 -60.06Investments 3,368.75 3,925.71 556.96 16.53Inventories 326.83 436.4     109.57 33.52Sundry Debtors 149.94 108.39     -41.55 -27.71Cash and Bank Balance 217.49 1,863.48     1,645.99 756.81Total Current Assets 694.26 2,408.27 1,714.01 246.88Loans and Advances 325.8 438.46     112.66 34.58Fixed Deposits 2.08 43.73     41.65 2002.4Total CA, Loans & Advances 1,022.14 2,890.46 1,868.32 182.78Miscellaneous Expenses 0 0     0.00 0Total Assets 6,085.14 8,523.09 2,437.95 40.06Contingent Liabilities 100.54 73.04     -27.50 -27.35Book Value (Rs) 190.33 173.52     -16.81 -8.83         

COMPARATIVE PROFIT & LOSS A/C

31/3/2009 31/3/2010ABSOLUTE CHANGES % CHANGES

Sales Turnover 13,553.23 16,856.43 3,303.20 24.37205006

Excise Duty 1,227.85 1,016.85 -211.00-

17.18450951Net Sales 12,325.38 15,839.58 3,514.20 28.51189984Other Income 222.14 290.69 68.55 30.8589178Stock Adjustments 22.09 -11.54 -33.63 -152.240833Total Income 12,569.61 16,118.73 3,549.12 28.23572092

Raw Materials 8,842.14 10,822.99 1,980.85 22.40238223Power & Fuel Cost 73.7 81.05 7.35 9.972862958Employee Cost 448.65 560.32 111.67 24.89022623Other Manufacturing Expenses 354.08 454.36 100.28 28.32128333Selling and Admin Expenses 669.98 885.03 215.05 32.09797307Miscellaneous Expenses 205.9 280.64 74.74 36.29917436Preoperative Exp Capitalised 0 0 0.00 0Total Expenses 10,594.45 13,084.39 2,489.94 23.50230545

Operating Profit 1,753.02 2,743.65 990.63 56.50990861PBDIT 1,975.16 3,034.34 1,059.18 53.62502278

Interest 13.04 11.14 -1.90-

14.57055215PBDT 1,962.12 3,023.20 1,061.08 54.0782419Depreciation 180.66 191.47 10.81 5.983615632Other Written Off 0 0 0.00 0Profit Before Tax 1,781.46 2,831.73 1,050.27 58.95557576Extra-ordinary items 0 0 0.00 0PBT (Post Extra-ord Items) 1,781.46 2,831.73 1,050.27 58.95557576Tax 499.7 599.9 100.20 20.05203122Reported Net Profit 1,281.76 2,231.83 950.07 74.12230059Total Value Addition 1,752.31 2,261.40 509.09 29.05250783Preference Dividend 0 0 0.00 0Equity Dividend 399.38 2,196.56 1,797.18 449.9924884Corporate Dividend Tax 67.87 371 303.13 446.6332695

Shares in issue (lakhs) 1,996.88 1,996.88 0.00 0Earning Per Share (Rs) 64.19 111.77 47.58 74.12369528Equity Dividend (%) 1,000.00 5,500.00 4,500.00 450

Book Value (Rs) 190.33 173.52 -16.81-

8.832028582

COMMON SIZE BALANCE SHEET

                  Mar '09             % Share                  Mar '10           % Share

       

Total Share Capital 39.94                           - 39.94                                   -                 -

Equity Share Capital 39.94 0.66 39.94 0.47Share Application Money 0 0 0 0Preference Share Capital 0 0 0 0Reserves 3,760.81 61.8 3,425.08 40.19Revaluation Reserves 0 0 0 0

Networth 3,800.75                           - 3,465.02                                    -

Secured Loans 0 0 0 0Unsecured Loans 78.49 1.29 66.03 0.78

Total Debt 78.49                           - 66.03                                    -

Deffered Credit 0 0 0 0Current Liabilities 1,678.93 27.6 3,965.69 46.53Provisions 526.97 8.66 1,026.35 12.05

Total CL & Provisions 2,205.90                           - 4,992.04                                    -

total liabilities 6,085.14 100 8,523.09 100

                Mar '09                    Mar '10

       

Gross Block 2,516.27                           -        2,750.98                                    -

Less: Accum. Depreciation 942.56                           - 1,092.20                                    -

Net Block 1,573.71 25.87 1,658.78 19.46Capital Work in Progress 120.54 1.99 48.14 0.57Fixed Deposits 2.08 0.034 43.73 0.51Investments 3,368.75 55.36 3,925.71 46.06Inventories 326.83 5.38 436.4 5.12Sundry Debtors 149.94 2.46 108.39 1.27Cash and Bank Balance 217.49 3.58 1,863.48 21.86

Total Current Assets 694.26                           - 2,408.27                                    -

Loans and Advances 325.8 5.35 438.46 5.14Total CA, Loans & Advances 1,020.06                           - 2,846.73

                                    -

Miscellaneous Expenses 0 0 0 0Total Assets 6,083.06 100 8,479.36 100

Contingent Liabilities 100.54                           - 73.04                                    -

Book Value (Rs) 190.33                           - 173.52                                   -

\ COMMON SIZE PROFIT & LOSS A/C

    

31/3/2009 % 31/3/2010 %

Sales Turnover 13,553.23 0.00 16,856.43 0.00Excise Duty 1,227.85 0.00 1,016.85 0.00Net Sales 12,325.38 100.00 15,839.58 100.00Other Income 222.14 1.8 290.69 1.85Stock Adjustments 22.09 0.18 -11.54 0.07Total Income 12,569.61 0 16,118.73 0

Raw Materials 8,842.14 71.74 10,822.99 68.33Power & Fuel Cost 73.7 0.60 81.05 0.52Employee Cost 448.65 3.64 560.32 3.54Other Manufacturing Expenses 354.08 2.82 454.36 2.87Selling and Admin Expenses 669.98 5.44 885.03 5.58Miscellaneous Expenses 205.9 1.67 280.64 1.77Preoperative Exp Capitalised 0 0.00 0 0Total Expenses 10,594.45 0.00 13,084.39 0

Operating Profit 1,753.02 0.00 2,743.65 0.00PBDIT 1,975.16 0.00 3,034.34 0.00Interest 13.04 0.11 11.14 0.07PBDT 1,962.12 0 3,023.20 0Depreciation 180.66 1.47 191.47 1.21Other Written Off 0 0 0 0Profit Before Tax 1,781.46 0 2,831.73 0Extra-ordinary items 0 0 0 0PBT (Post Extra-ord Items) 1,781.46 0 2,831.73 0Tax 499.7 4.05 599.9 3.79Reported Net Profit 1,281.76 10.4 2,231.83 14.09Total Value Addition 1,752.31 0 2,261.40 0Preference Dividend 0 0 0 0Equity Dividend 399.38 0 2,196.56 0Corporate Dividend Tax 67.87 0 371 0

Shares in issue (lakhs) 1,996.88 0.00 1,996.88 0.00Earning Per Share (Rs) 64.19 0 111.77 0Equity Dividend (%) 1,000.00 0.00 5,500.00 0.00Book Value (Rs) 190.33 0 173.52 0

TREND PROFIT & LOSS A/C

31/3/2009 % 31/3/2010 %

Sales Turnover 13,553.23 100.00 16,856.43 124.37Excise Duty 1,227.85 100.00 1,016.85 82.82Net Sales 12,325.38 100.00 15,839.58 128.511Other Income 222.14 100.00 290.69 130.82Stock Adjustments 22.09 100.00 -11.54 -52.24Total Income 12,569.61 100.00 16,118.73 128.24

Raw Materials 8,842.14 100.00 10,822.99 122.4Power & Fuel Cost 73.7 100.00 81.05 110Employee Cost 448.65 100.00 560.32 124.9Other Manufacturing Expenses 354.08 100.00 454.36 128.32Selling and Admin Expenses 669.98 100.00 885.03 132.1Miscellaneous Expenses 205.9 100.00 280.64 136.3Preoperative Exp Capitalised 0 100.00 0 0Total Expenses 10,594.45 100.00 13,084.39 123.5

Operating Profit 1,753.02 100.00 2,743.65 156.51PBDIT 1,975.16 100.00 3,034.34 153.6Interest 13.04 100.00 11.14 85.43PBDT 1,962.12 100.00 3,023.20 154.07Depreciation 180.66 100.00 191.47 105.98Other Written Off 0 100.00 0 0Profit Before Tax 1,781.46 100.00 2,831.73 158.95Extra-ordinary items 0 100.00 0 0PBT (Post Extra-ord Items) 1,781.46 100.00 2,831.73 158.95Tax 499.7 100.00 599.9 120Reported Net Profit 1,281.76 100.00 2,231.83 174.12Total Value Addition 1,752.31 100.00 2,261.40 129.05Preference Dividend 0 100.00 0 0Equity Dividend 399.38 100.00 2,196.56 550Corporate Dividend Tax 67.87 100.00 371 546.33

Shares in issue (lakhs) 1,996.88 100.00 1,996.88 100Earning Per Share (Rs) 64.19 100.00 111.77 174.12Equity Dividend (%) 1,000.00 100.00 5,500.00 550Book Value (Rs) 190.33 100.00 173.52 91.17

TREND BALANCE SHEET

         Mar '09           Mar '10       Total Share Capital 39.94 100 39.94 100Equity Share Capital 39.94 100 39.94 100Share Application Money 0 100 0 0Preference Share Capital 0 100 0 0Reserves 3,760.81 100.00 3,425.08 91.07Revaluation Reserves 0 100 0 0Networth 3,800.75 100.00 3,465.02 91.17Secured Loans 0 100 0 0Unsecured Loans 78.49 100 66.03 84.14Total Debt 78.49 100 66.03 84.14Deffered Credit 0 100 0 0Current Liabilities 1,678.93 100.00 3,965.69 236.2Provisions 526.97 100 1,026.35 194.76Total CL & Provisions 2,205.90 100.00 4,992.04 226.3

total liabilities 6,085.14 100.00 8,523.09 140.06   Mar '09   Mar '10              Gross Block 2,516.27 100.00 2,750.98 109.33Less: Accum. Depreciation 942.56 100 1,092.20 115.88Net Block 1,573.71 100.00 1,658.78 105.40Capital Work in Progress 120.54 100 48.14 39.94Investments 3,368.75 100.00 3,925.71 116.53Inventories 326.83 100 436.4 133.52Sundry Debtors 149.94 100 108.39 72.29Cash and Bank Balance 217.49 100 1,863.48 856.8Total Current Assets 694.26 100.00 2,408.27 346.88Loans and Advances 325.8 100 438.46 134.58Fixed Deposits 2.08 100 43.73 2102.4Total CA, Loans & Advances 1,022.14 100.00 2,890.46 282.7Miscellaneous Expenses 0 100 0 0Total Assets 6,085.14 100.00 8,523.09 140.06Contingent Liabilities 100.54 100 73.04 72.65Book Value (Rs) 190.33 100 173.52 91.17       

RATIO ANALYSIS

Ratio analysis is the calculation and comparison of ratios which are derived from the information in

a company's financial statements. The level and historical trends of these ratios can be used to make

inferences about a company's financial condition, its operations and attractiveness as an investment.

Financial ratios are calculated from one or more pieces of information from a company's financial

statements. For example, the "gross margin" is the gross profit from operations divided by the total sales or

revenues of a company, expressed in percentage terms. In isolation, a financial ratio is a useless piece of

information. In context, however, a financial ratio can give a financial analyst an excellent picture of a

company's situation and the trends that are developing.

A ratio gains utility by comparison to other data and standards. Taking our example, a gross profit

margin for a company of 25% is meaningless by itself. If we know that this company's competitors have

profit margins of 10%, we know that it is more profitable than its industry peers which is quite favourable. If

we also know that the historical trend is upwards, for example has been increasing steadily for the last few

years, this would also be a favourable sign that management is implementing effective business policies and

strategies.

Financial ratio analysis groups the ratios into categories which tell us about different facets of a

company's finances and operations. An overview of some of the categories of ratios is given below.

Leverage Ratios which show the extent that debt is used in a company's capital structure. Liquidity Ratios which give a picture of a company's short term financial situation or solvency.

Operational Ratios which use turnover measures to show how efficient a company is in its operations

and use of assets

Profitability Ratios which use margin analysis and show the return on sales and capital employed.

Solvency Ratios which give a picture of a company's ability to generate cash flow and pay it financial obligations.

Although financial ratio analysis is well-developed and the actual ratios are well-known, practicing

financial analysts often develop their own measures for particular industries and even individual companies.

Analysts will often differ drastically in their conclusions from the same ratio analysis.

RATIO ANALYSIS

1) LIQUIDITY RATIOS:

a) Current ratio: Current assets Current liabilities

2009 = 1,020.06 2205.9 =.46

2010 = 2846.73 4992.04 =.57

b) Quik ratio : liquid assets Current liabilities

2009 = Liquid assts = current assets – stock

1020.06 – 326.83 = 693.23

QR = 693.23 2205.9 = .31

2010 = liquid assets = 2846.73– 436.4 = 2410.33

QR = 2410.33 4992.04 =.48

INTERPRETATION OF LIQUDITY RATIOS:

A) The ideal current ratio is 2:1.

B) In 2009 it was .46:1 which does not match with ideal.

C) In 2010 CR is .57:1 which is very & comparative low.

D) According to this ratio the financial position of Hero Honda is not good.

E) Current assets should be double of current liabilities.

F) Quik ratio is good(.31:1) in 2009. The ideal QR is 1:1.

G) In 2010 QR is 0.48:1 which is below desirable level.

H) The main reason for this situation is raising more current liabilities.

2) SOLVENCY RATIOS :

A) Bebt equity ratio : debt Equity

2009 = 78.49 3800.75 = .021

2010 = 66.03 3465.02 = .019

B) Debt to total fund ratio : debt Total funds

2009 = 78.49 6085.14 =.013 * 100 = 1.3

2010 = 66.03 8523.09 = .008 * 100 = .8

C) Interest coverage ratio : NPBIT Interest charges

2009 = 1975.16 13.04 = 151.47 times

2010 = 3034.34 11.14 = 272 times

INTERPRETATION OF SOLVENCY RATIOS :A) The ideal DEBT EQUITY RATIO is 2:1. It means co. should arrange funds from debt twice than equity.B) In 2009 DER is .021 & in 2010 this is .19. Which is less than desirable level.C) The DEBT TO TOTAL FUNDS RATIO should be under 50%.D)If it is more than 50% it would be risky for any organization because in that condition it will depends

on outside liabilities. Which leads to higher interest.E) This ratio is under control in both years.

3) ACTIVITY RATIO :

A) Stock turnover ratio : cost of goods sold Average stock

2009 = 12325 . 38 259.48 = 47.5 times

2010 = 15839. 58

381.615 = 41.51 times

B) Capital turnover ratio(CTR) : cost of goods sold Total capital employed

Total capital employed (TCE) = Fixed assets + working capital

2009 = TCE = 1573.71 + (1020.06– 2205.9) =1573.71 – 1185.84 = 387.87 CTR = 12325.38 387.87 = 31.77 times

2010 = TCE = 1658.78 + (2846.73 – 4992.04) = 1658.78 – 2145.31 = - 486.53

CTR = 15839.58 -486.53 = - 32.56 times

C) Fixed assets turnover ratio : sales Total fixed assets2009 = 12325.38 1573.71 = 7.83

2010 = 15839 .58 1658.78 = 9.55

D)Working capital turnover ratio : cost of sales Working capital

2009 = 12325.38 1185.84 = 10.4

2010 = 15839.58 2145.31 = 7.38

INTERPRETATION OF ACTIVITY RATIOS:

A) STOCK TURNOVER RATIO means how many times the inventories/ stock of a company is rotated in a year.

B) It was 47.5 times in 2009 & 41.51 in 2010.C) CAPITAL TURNOVER RATIO shows that how efficiently the capital is being used in the business.D)It is decreasing in last financial year. That shows inefficiency of this companyE) FIXED ASSETS TURNOVER RATIO shows how we are using our assets for generating sale. It also

shows whether adequate investment in fixed assets.F) FATR is7.83 & 9.55 in respectively years.

G) WORKING CAPITAL TURNOVER RATIO tells the velocity of the utilization of net working capital.H) This ratio has decreased from 10.4 to 7.38 times in last year. This kind of changes may be dangerous

for an organization.

4) PROFITABILITY RATIOS :

A) Net profit ratio : net profit sales

2009 = 1281.76 12325.38 = .104 * 100 = 10.4

2010 = 2231.83 15839.58 = .141 * 100 = 14.1

B)Operating profit ratio : operating profit Sales

2009 = 1753.76 12325.38 = .142 * 100 = 14.2

2010 = 2743.65 15839.58 = .173 * 100 = 17.3

C) Earning per share : net profit after preference dividend No of Equity shares

2009 = 1281.76 1996.88 = .642

2010 = 2231.83 1996.88 = 1.12

D)Dividend per share : equity dividend No. of equity

2009 = 399.38 1996.88 =.20

2010 = 2196.56 1996.88 = 1.1

E) Payout ratio = dividend per share

Earning per share

2009 = 0.20 0.642 = .31 * 100 = 31

2010 = 1.1 1.12 = .98 * 100 = 98

INTERPRETATION OF PROFITABILITIES RATIOS:

1) THE NET PROFIT & OPERATING PROFIT OF HERO HONDA HAS INCREASED IN LAST 2 YEARS WHICH IS THE STAGE COMPANY WANTS IT.

2) IN 2009 THEY WERE EARNING .642 ON EVERY SHARE BUT IN 2010 THIS HAS INCREASED TO 1.12.

3) THE DIVIDEND HAS ALSO INCREASED IN LAST TWO CONSECTIVE YEARS.4) HERO HONDA IS PAYING DIVIDEND AT 98 % OUT OF THEIR EARNING PER SHARE.

CASH FLOW STATEMENT OF 2010

CASH FROM OPERATING ACTIVITIES = 2686.64

NET PROFIT BEFORE TAX = 2831.73

(+) INTEREST = 11.14

(+) INCREASE IN CURRENT LIABILITIES = 2602.84

(-)INCREASE IN CURRENT LIABILITIES = 1826.67

(-) INCOME TAX PAID = 1100.00

CASH FLOW FROM INVESTING ACTIVITIES = ( 527.9)

PURCHASE OF FIXED ASSETS = (85.07)

PURCHASE OF INVESTMENTS = (556.96)

WORK IN PROGRESS = 72.4

FIXED DEPOSITES = 41.65

CASH FLOW FROM FINANCING ACTIVITIES = (2109.3)

DIVIDEND PAID = (2085.7)

INTEREST PAID = (11.14)

LOAN PAID = (12.46)

NET DECREASE IN CASH & CASH EQUILANTS = 49.44

(+) OPENING BALANCE OF CASH & CASH EQUILANTS = 13.45

CLOSING BALANCE OF CASH & CASH EQUILANTS = 63.15

FUND FLOW STATEMENT

Fund Flow Statements summarize a firm’s inflow and outflow of funds. Simply put, it tells investors

where funds have come from and where funds have gone. The statements are often used to determine

whether companies efficiently source and utilize funds available to them.

This statement shows the flow of funds, flow of funds means movement of working capital over a

period of time. In other words , increase or decrease in the working capital reflects the flow of funds.

When a transaction increases the working capital , it is known as a source of fund and when it decreases

the working capital, it is termed as use of funds. When a business transaction does affect the working

capital, no flow of funds take place. So we can say that a statement which depicts the various sources and

uses of fund is known as fund flow statement.

CHANGES IN WORKING CAPITAL

PARTICULARS2009 2010 INCREAS

E IN W.CDECREASE IN W.C

CURRENT ASSETS:InventoriesDebtorsCashLoans & AdvancesFIXED DEPOSITES

CURRENT LIABILITIES:Current liabilitiesProvisionsChanges in WC

Net decrease in WC

326.83149.94217.49325.82.08

1678.93526.97

436.4108.391863.48438.4643.73

3965.691026.35

1645.99112.6641.65

1800.3

109.5741.55

2286.76499.382937.26

1136.96

Fund flow statement

Sources amount application amountTo decrease in work in progressTo decrease in work in capitalTo funds from operation

72.4

1136.96

3023.2

To sale of fixed assetBy payment of unsecured loansBy Uses of reservesBy payment of interestBy payment of tax By purchase of investments

85.07

12.46335.73

11.141100

556.96

Fund from operation

Net profit before tax as on 31mar 2010 2831.73

Add: depreciation 191.47

3023.2

INTERPRETATION OF FUNDS FLOW STATEMENT

Inventories have increased from 326.83 to 436.4. Because of this working capital also increased.

Debtors are current assets that is why decreases in debtors leads to same results in working capital.

Here cash & bank balance is increases by 1645.99. This is the reason to increase in WC. Loans & advances & fixed deposits are increasing by 154.31. These are giving same impact

on WC. The current liabilities of jet airways are increasing in comparison of last year & that is why

WC is decreasing by 2286.76 by this transaction. The provisions also our current liabilities & these are increasing by 499.38 in a financial

year. The decrement in WORKING CAPITAL is 1136.96. The jet airways have sold its fixed assets of 85.07 in last year to create sources of money. They paid some unsecured loans (12.46) in last financial year.

COST SHEET

Cost sheet is a statement of cost. In other words, when costing information are set out in the form of a statement, it is called cost sheet. It is usually adopted when there is only one product is produced and all costs are incurred for that product only. Cost sheet may be prepared for a week, monthly, quarterly

or yearly indicating various components of cost as prime cost, works cost, cost of production, cost of goods sold, total cost and also profitability on a production.

The preparation of cost sheet depends on the cost data provided by cost accounting. Due to differences in the nature of cost data there are three different cost sheet Performa may be used.

(a) Cost sheet with break up cost: These types of cost sheet contains two column as total cost, cost per unit of out put. A specimen of cost sheet with imaginary figure.

(b) Cost Sheet with treatment of Stock: This type of cost sheet is maintained in case of manufacturing concern. Generally there are three types of stock as (1) Stock of Raw material, (2) Stock of work in progress and (3) Stock of finished goods. The treatment of stock in cost sheet has been given in a separate Performa.

(c) Estimated cost sheet or price quotation: Price quotation means quoting the minimum price for obtaining a specific order. The quotation is send in the form or estimated cost sheet having one column. In estimated cost sheet all elements of cost and overhead expenses are calculated in the following manner. Estimated direct materialEstimated labor costEstimated overhead

Interpretation: -

This is the cost sheet of HERO HONDA MOTORS LTD.. This shows the overall cash flow for the year 2009 and

2010. As we see the total prime cost of the company increase this year this shows that company use more direct

material this year as compare with previous year. There is also increase in total factory over head this include

interconnect and port change, installation, power and fuel, rent and repairs and maintenance this all increase the

cost of factory overhead cost. This is all incurred within the factory while production. The salaries and sales and

marketing expenses also decrease this year as compare with previous year. This because of huge cutting in

employee’s cost. Because of total increase in prime cost, total factory cost, and decrease in administration

overhead and also selling and distribution overhead and total factory overhead, total increase is less than total

decrease for that it decrease the cost of sales of the company. It decreases the total profit of the company as

compare with this year that is 2010.

REFERENCES:

1) www.google.com 2) Wikipedia3) www.herohonda.com 4) Text book5) www.moneycontrol.com