Acknowledgement I am thankful to Mr. Subhash Agarwal (Vice- Persident,Finance and Taxation) for providing me with an opportunity conducting this project to hone my skills at management by undergoing management training at R.K.Marble Pvt. Ltd. I express heartly thank to Mr. Madan Lal Lodha (Manager, HRD) And I also thank to all staff member at R.K. Marble who helped me to complete my training and gave me knowledge of practical aspect. I also want to thank to Mr. Pradeep Morani Sir who is the prestigious faculty of “Management and Commerce Institute of Global synergy ” for gave me direction during my training and Report. My project report is on ‘Financial Statement Analysis’ of R.K.Marble Pvt Ltd. 1
Transcript
Acknowledgement
I am thankful to Mr. Subhash Agarwal (Vice-Persident,Finance and Taxation)
for providing me with an opportunity conducting this project to hone my skills at
management by undergoing management training at R.K.Marble Pvt. Ltd.
I express heartly thank to Mr. Madan Lal Lodha (Manager, HRD) And I also
thank to all staff member at R.K. Marble who helped me to complete my
training and gave me knowledge of practical aspect.
I also want to thank to Mr. Pradeep Morani Sir who is the prestigious faculty
of “Management and Commerce Institute of Global synergy” for gave me
direction during my training and Report. My project report is on ‘Financial
Statement Analysis’ of R.K.Marble Pvt Ltd.
At last, I also want to thank all the faculty member of the institute.
1
PREFACE
A professional course like Business Management and other management courses
demands in depth theoretical as well as practical knowledge. For the same, the
course design includes summer training. The course aims to provide chance to
work in the real environment of the corporate world, so as to have an opportunity
to gain experience on aspects and additional theoretical & practical knowledge.
I was fortunate to closely watch and learn the working, during my summer
training at the esteemed organization R.k. Marble.Pvt. Ltd.
The project assigned was based on training and analyze them on the basis of
view of various respondents, it was all through a systematic process. The project
dealt with “Financial Statement Analysis” of R.K.Marble.Pvt.Ltd.
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PROJECT SUMMARY
Marble is compact crystalline carbonate of limestone. The most popular choice
with architects, interior designers for flooring and wall lading. Marble is found
mainly in India, Greek, Italy, Brazil and Iran etc. Rajasthan produces 95%
marble produced in India.
R.K. Marble came into existence when Ashok Patni group laid the foundation
stone of the company 25th may 1989. The company started its operation at
Madanganj-Kishangarh with an installed capacity of 1,00,000 cubic feet per
annum of marble slabes. The strategic location of the unit along the highway
leading to Makrana (the world fame marble mandi which provide white marble
for Taj Mahal) also attracted a lot of attention from customers.
We will also arrange knowledge about the process of marble. It can be said in
this way how marble are received from mines and processing. so that we can
receive the slab or cut size marble for decorating our houses, hotels and other
things so that they look attractive and beautiful.
And after knowing all that system we will reach at the documentation and
softwares used in different type of system and their uses. And in last other
facilities that are provided by the R.K. Marble pvt. Ltd. And suggestion that may
be applied in improving of that system and functioning of R.K Marble
pvt. Ltd. Because it should be remember what they are holding today will not
remain same because environment is the changing with a full pace.
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Introduction
Name of the company:- R.K. Marble Pvt. Ltd.
Date of Establismeant:- 25 May 1989.
Business carried by the Company
R.K. Marble Pvt. Ltd. is probably one of the largest integrated marble mining
and processing unit in the world . A Guinness world record holder company for
the highest productiom of the marble and has taken ISO 9002 and ISO 14000
certification.
Originally a grain trader, diversified into marble processing in the year 1989 and
mining in the year 1993.
R.K. Marble Pvt. Ltd. has always been a rapidly growing company engaged in
Excavation, mining of marble block and to manufacture of marble slabs and tiles.
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HISTORY
R. K. Marble Group was established in 1989 by Patni group to help serve
increasing national and international demand for Indian marble. Since then we
have enjoyed exponential growth and export too many markets worldwide
including European Union countries, the Middle East, Japan, China,
Malaysia, other parts of Asia, North America and various African countries.
Our success is based upon our ability to respond flexibly to our customer's
individual needs for both large and small projects, our experience and detailed
knowledge of the marble industry, our competitive prices and the excellent
comprehensive service we provide for a very wide range of materials.
We have supplied marble for many major projects including palaces, temples,
mosques, embassies, international hotel chains and office buildings as well as
commercial works requiring large quantities of competitively priced materials in
standard sizes. R. K. Marble Group, started off as an-
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initiative in providing flooring solutions in 1989 as and in a modest warehouse in
Kishangarh, District Ajmer, Rajasthan. The modest beginning
gave shape to a dream of mining marble-still considered very upper class and
distant for many millions all around the country.
Luck strikes when the people behind the company, Mr. Ashok Patni, Mr. Suresh
Patni and Mr. Vimal Patni win a mining lease in Dharmeta and then follow it up
with mines at Morwad. The Patni brothers realized the importance of using the
latest technology for marble mining and visited Italy a number of times to gain
the technological edge. With dramatic effect the production rose multifold as the
recoveries per unit of land grew.
Ingenuity in the usage of various state of the art machinery such as rock drill,
wire/chain saws, hydraulic pusher arms etc ensured easy usage with a number of
semi skilled work force. Scores of mining engineers and professionals from all
walks of life were picked up to build a company – which now is known for its
quality production and processing strength. The total manpower strength is over
3500 today with three fourths of them working in the three mines of the company
and the rest at the processing plant in Kishangarh.
Achievements of the Company:
1. Guinness Book of World Record holder since 1999
2. Company’s name is also entered in Limca Book of world record.
3. Company has been awarded by the Model Marble Quarry award-Best
merchandised quarry first Prize.
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Directors
Chairman - Mr. Ashok Patni
Managing Director - Mr. Suresh Patni
Joint Managing Director - Mr. Vimal Patni
Director - Mr. R.S. Mahanot
Director Public Relations - Mr. M.P. Kothari
Director Business Development - Mr. Vineet Patni
Director Commercial - Mr.Vikas Patni
Director Sales & Administration - Mr. Sanjay Bakliwal
Director Marketing - Mr. Kamal Kumar Sogani
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People
A successful company is one led by world-class leaders. Our board is
dedicated to serving the interests of not only the shareholders, but also
every other body associated with the company. A highly motivated team of
professionals, a team with a spirit to give in their best every time. Needless
to say, the growth of R. K. Marble Group has been spurred by the spirit of
the individuals who work at various levels to keep ahead of the rest and
constantly rise to the challenges that beckon them at the frontiers of
technology.
The three Patni brothers have been instrumental in shaping up the destiny
of the mining industry/processing technology used in India. They are
backed up by a Board of Directors which includes seasoned finance,
investment and marketing professionals-all groomed for global competition
from the family and industry.
Mr. Ashok Patni Mr. Suresh Patni Mr. Vimal Patni
Chairman Managing Director Joint Managing Director
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Awards
AWARD NAME AWARDED BY YEAR
Guinness World Records Guinness World Records1998, 2000, 2001
Highest Income tax payer Award (Individually to Syt. Ashok Patni,Syt. Suresh Patni, Syt.Vimal Patni) Income Tax Department, Ajmer
2000
Udyog Patra Award Institute of trade and Industrial Development, New Delhi
2001
State Level Bhamashah Award Education Department, Bikaner2001
Best Annual Report Award for Rajasthan Based Companies Institute of Chartered Accountants
of India, Jaipur2001
Indira Priyadarshini Award National Publication, New Delhi2001
Social Welfare & Development Lions Club. Udaipur2001
Appeared in Guinness WorldRecord Books
Guinness World Records2003...
ISO 9001 : 2000 BVQI, USA 2003
ISO 14001BVQI, USA 2003
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Model Marble Quarryaward - Best MechanisedQuarry- First Prize
Federation of Indian Mineral Industry (FIMI) & All India Granite
& Stone Association (AIGSA) 2003
LAFP Award Directorate General of Mines Safety
2003
The Best Stall for Stone &Stone Products (Outdoor)
Centre for Development of Stones (CDOS) 2003
Certificates
1. 2.
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3.
Resources of raw material
The term marble is derived from the Latin word "Marmor" which has the root in
Greek "Marmaros", meaning a shining stone. Marble is a crystalline
metamorphic rock, a carbonate of lime, compact and polishable and is used for
decoration and building purposes.
Resources
Dharwar, Cuddapah and Vindhyan group of rocks mainly host marble deposits of
India. Marble is known to occur in Jurassic and Cretaceous systems as well. But
these occurrences are of less importance. Though distribution of marble deposits 11
is widespread in India, deposits of economic importance are limited to the states
of Rajasthan, Gujarat, Haryana and Andhra Pradesh. Inferior grades of marble
are known to occur in the states of Bihar, Jammu & Kashmir, Madhya Pradesh,
Maharashtra, Sikkim, Uttar Pradesh and West Bengal. Rajasthan is renowned for
its marble resources with respect to quality and quantity and accounts for about
91 per cent of the total all-India reserves. Eighteen districts out of 32 districts
contain marble deposits.
Mines
World famous Morwad Mines of the R. K. Marble Group are situated 15 Kms
from Rajnagar on Udaipur - Rajnagar - Ajmer National Highway No.8. It is well
connected by metalled road from Rajnagar. The nearest Airport is at Dabok
which is 68 Kms from the mines and 19 Kms from Udaipur. Nearest Railway
station is at Kankroli, which is 20 Kms from the mines. Electrical power line of
11KV from State Viduyat Nigam is extended up to mines. Captive Power
generation to the tune of 2500 KVA is on stand-by.
Four Captive Diesel Dispensing Pumps with 80 KL storage capacity An
overhead tank of 1.5 lac liters capacity along with a filter plant is maintained for
meeting the requirement of drinking water and domestic use. The quality of
water is potable. Requirement of water for industrial use is met with the help of
water tanks filled from tube wells from the nearby areas.
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A four-bed dispensary with Para medical staff and Doctor along with an
ambulance is available at mines.A well-equipped Group Vocational Training
Center is established at site to provide initial training to new entrants,
refreshers and special training to existing employees OEMS and other service
agencies.
WONDER MARBLE: ( An adventure of R.K.Marble pvt. Ltd.)
Zoom in to the corner stone of majoli, in Madhya Pradesh, India to scale the
magnetic fascination of an ISO 9002 adorned Guinness record holder,
Engaged as the largest producer of marble in the world . bedecked with the most
sought after gadgets, the exotic majoli mine is most coveted breeding group of
world’s choicest WONDER MARBLE that’s wonderous and
Awesome in myriad hues .Wonder marbles, color panorama and innate design
makes it the right choice for flamboyant user . its fascinating range can be
floored to encompass living rooms drawing arrangements dinning spaces, hotel
lobbies, pool sites ,wall cladding , special lounges and many more .Yes, the
WONDER MARBLE produced at the majoli mines comes in heat warming
shades of deep and dark red , brown to rose patches in creamy base coupled with
abrasion resistant fine grained form, luster and reflective gloss , which makes it
truly a masterpiece for lifetime.
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Stones which are exported1. Wonder Marble
1. 2.
2. Morwad White
1. 2. 3. 4.
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INDUSTRY PROFILE
A marble is compact crystalline carbonate of limestone. Limestone’s gets
converted into marble when heated without the escape of co2 and on subsequent
cooling. Marble and allied rocks are of different geological ages and have
variegated beautiful colors like black, white, grey pink etc. it is the most popular
choice with architects, interior designers for flooring and wall lading. Marble is
found mainly in India, greek, italy, brazil and iran etc.
Rajasthan in India produces 95% of marble product. Marble is pride of India with
practically inexhaustible deposits of over 1200 million tones. Today India is one
of the lading countries of export of marble and other natural stones. The domestic
market is also growing at phenomenal rate.
The total investment in dimensional sector is estimated at about rs. 5000 crore.
The present export – import trade in natural stone is estimated at US $3 billion
and it is likely to grown at an annual rate of 70%. From a meager export of
50,000 to 60,000 tonnes of stones in 1985. Growth of stone industries has come
to 70, 00,000 tonnes.
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Affuent gulf countries namely UAE, SAUDI ARABIA, KUWAIT, EGYPT etc
are emerging as the most potential future market , specially for India , because of
its proximity to this area and quality of Indian marble.
India has location advantage to cater to important markets like Japan, for east
Europe and Middle East. The country boasts of about 1100 modern gang saw
units and 50 automatic tiling plants and 5000 trading companies of marble. The
industry is well equipped with fast developing modern mechanized quarries.
ORGANIZATION PROFILE
RK Marble Pvt. Ltd. Is acknowledged as the biggest marble company in the world and they hold certificate from Guinness World Records to buttress their claim. Today RK Marble Pvt. Ltd. Is most successful in the business but it is worth that still they have are holding today will not remain same because environment is changing with pace. When RK Marble Pvt. Ltd. came into existence with Ashok Patni chairman, Patni Group on 25 May 1989. The company started its operations at Madanganj-Kishangarh with installed capacity of 100000 cubic feet per annum of marble slabs. And the location was makrana. Makrana is that mandi of marbles which supplied marbles for Taj mahal . So it automatically has attraction of potential customers. The state Government of Rajasthan allotted a virgin marble-minimizing lease to company in Nov. 1993. And the promoters visited Italy to study their mining equipments and techniques at that year. After visiting several mines it was concluded that Italy is dominating the world in the mining sector because of massive investment in the mining this motivated them to develop the mines in a systematic way and to invest heavily on mechanization. It was felt that Indian marbles was such superior in quality and if mined properly, it could leave countries like Italy behind. This thinking promotes the way for adoption of innovative and modem techniques, which helped the mines to develop as the highest producers of marble blocks in the world. The company generated a favorable responses and goodwill in a very short span of time. It steadily increased its capacity to 13,75,000 cubic feet per annum in India to cater to the increased demand. Mr. Suresh Patni, Managing
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Director of RK Marble Pvt. Ltd. is the backbone for the development at the factory.
According to Ashok Patni chairman of RK Marble Pvt. Ltd. " our endeavor at becoming the best in the marble industry and to reach the world leader position was been achieved by sheer hard work, dedication and determination. If we focus on the present position of the RK Marble Pvt. Ltd. We will find that today, the company employs work force of over 2500 persons. It also provides shopping centers, free mass, adult education and medical facilities at its mining site and slab has a modern layout and a fully automation marble slurry treatment plant. Its production linked incentives scheme is unique to the industry which drives not only the production section but also ensures the partnership of administration accounts and marketing sector in the profits of the company. In the consideration of mining equipments we can see that the company has made extensive use of wireless communication to synergies all activities from drilling to loading of the end product. The optimum utilization so the country natural resources can be seen here. Due to latest technologies used, the recovery ratio of marbles blocks is amongst the highest. The company also keeping with the trends, the company has adopted state of the art technology in streamlining its operations in the factory and its various offices. It is also the first marble mining company, which has very high level of mechanization and computerization with investments worth's Rs. 36.54 crore in equipments for mining purpose.
The company also strives to provide quality by imbibing the latest international mining technologies. This can be gauged from the fact that the entire mine operations are controlled by sophisticated internally developed software on oracle which tracks and evaluates all possible functions, cost areas and productivity of all mines. In the consideration of Kishangarh for the marbles, there are more than 500 Gang saw machines. So it automatically becomes large potential market of world. The growth of the company can be gauged from the fact that initial share capital of 12 lacs has now become Rs.63, 15, 57,000 and the fixed assets have also increase from the last year. According to the records of the Directors mines and geology, Udaipur - the company quarries yield the highest per hectare production of marble among all the mines in country. The fully mechanized and automated mines at village mowed bear testimony to the above with round the clock work by qualified and the highly trained technicians and workman producing the best quality marbles. And marble is not all the company has been contributing too.
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There is also the social enlistment and development of the region. The approach road to the mines developed by the company to facilitate smooth transport for its vehicles are now also being used by the miners and surrounding villages. The company has assisted in providing drinking water, electricity, telephones and employment to the surrounding villagers. It has being donating freely for the upcoming hospitals, educational institutions and social causes. In the consideration of water plant we can see that the company is very conscious of its commitment towards maintaining the ecology and environment. It has established the first fully automatic water treatment plant in India for removing the slurry. The automatic filter press converter slurry in to dry cakes thus minimizing any chance of pollution. Similarly, the overburden and waste generated at mines is properly stacked and tress planted on it. The company has taken ISO 9002 certification in 2001. Objective of the company remains to produce excellent quality products and adopt leadership stance RK Marble Pvt Ltd.
Is dedicated to maintain the highest standards of quality and excellence through constant innovation and up-gradation of technology. The name of RK Marbles ltd has changed to RK Marble Pvt. Ltd. Since July 2003. The company's endeavor is to remain the world's largest mining company and is poised for aggressive growth in the coming years within India and abroad. Firstly we have to consider the relevance of marble. Marble is the pride of India, with practically inexhaustible deposits of over 1200 million tones. Today India is one of the leading countries in the export of marble and other natural stones. The domestic market is growing at a phenomenal rate. The total investment in dimensional stone sector is estimated at about Rs. 5,000 crore. The present export-import trade in natural stones is estimated at US $3 billion and it is likely to grow at an annual rate of 7% from a meager export of 50,000 to 60,000 tones of stones in 1985, growth of stone industry has come to 70,00,000 tones.
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Need for the StudyTo know about the different types of system manual being used in RK marble at present.
Objective of the Study To know about the basic financial system in company. To analysis the financial statement of a company. Preparation of comparative statements. Analysis of cash flow. Analysis of trend of net profit and sales.
Research MethodologyResearch method which are conventionally being used for financial analysis of comparative study of previous data of Balance Sheets, Profit & Loss A/C and Cash Flow.
Data Collection : Data collection from the secondary source (data)
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ANALYSIS OF STUDY
Financial system
Financial statement
Financial Analysis
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THE FINANCIAL SYSTEM
When a business starts, it needs some type of fund in the form of its capital. Then from where it will gets funds, become a problem. When it is on small scale the funds of the owner will be sufficient but in the condition of large company own funds will not be sufficient. So in that condition there is other option of borrowing funds. Borrowing funds can be received from many parties like - government, financial institutions, and other non-recognized institutions. So the requirement of company can be fulfill by the OWN + BORROWED FUNDS. After getting funds the second most problem will be allocation of fund. In which thing this fund should be invested. Mainly in business field 2 major things are there -
FIXED ASSETS WORKING CAPITAL
Working capital is used for the smoothing flow the use of fixed assets. In working capital use, sincerity should be there. Working capital is used for the operational activities like-
PURCHASE PRODUCATION PROCESS CONTROL SALES ACCOUNTING PAYMENT & COLLECTIONS
So, there should be such type of system so that working capital will not be blocked. After getting employed of working capital and fixed assets, here may be profit or loss. If there is profit, then the next problem will be that - how much part of profit should be distributed or how much part of the profit should be kept in reserves of the company. So these decisions are called:
DIVIDENT DECISION RESERVE KEEPING DECISION
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After discussion of all above matter on Financial System we may find that there are three main decisions:
FUNDS REQUIREMENT DECISION FUNDS ALLOCATION DECISION PROFITS DISTRIBUTION DECISION
But according to the scope of the project we will mainly focus on the operational part of Financial System only. In this project mainly question arises which should be answered.
WHAT ARE THE STATEMENTS MADE IN THE FINANCIAL SYSTEM AND THEIR USEFULNESS?
WHAT ARE THE SYSTEM MANNUAL ARE CURRENTLY BEING USED IN R.K. MARBLE PVT. LTD.?
WHAT ARE THE ANALYSIS TECHNIQUES SHOULD BE USED?
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FINANCIAL STATEMENTS
Financial information is the basis of financial planning and analysis. With the help of financial information, we can evaluate the earning power and financial postion of the firm. Financial information is also useful for the different parties like - owner, management, creditors, investors, employees, research team, and other institutions. So if we find the way, which passes the information to these parties that will be financial statements. Financial statements contain summarized information about the financial matters.
"Financial statement means a statement that shows the financial position and result of business activities at the end of the accounting period."
— R.N.ANTHONY
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Meaning and Objectives of Financial Statements-
Financial statements means that statements which shows result of commercial functions and financial position of business. In practical life there are mainly two types of statements:-
Balance sheet. Profit and Loss account. Cash Flow.
Objectives of Statements –
It gives information about cash flow of firm. It gives information about the utilization of resources. It gives information about the earning capacity of firm and their
analysis.
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BALANCE SHEET
Balance Sheet is the most important statements in the financial statements. It shows information about liabilities and assets of the firm.
“The Balance Sheet is a statement which reports the values owned by the enterprise and the claims of creditors and owners against these properties."
Howard and Upton
"The Balance Sheet is a screen picture of the financial position of a going concern at a certain moment."
Francis R. Stead
Functions of Balance Sheet –
It gives information about liabilities and assets of the firm. It gives information about working capital of the firm. It gives information about solvency position of the firm.
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Classification of Balance Sheet Items –
Assets
Current Assets Fixed Assets Investments Miscellaneous Expenditure
Liabilities
Current Liabilities Long Term Liabilities
Owner's Equity
Share Capital Reserve and Surplus
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Assets –
"Assets have been defined as tangible objects of intangible rights owned by an enterprise and carrying probable benefits."
-Accounting Standard Board, India.
Current Assets -
Current asset is used to designate cash and other assets or resources commonly identified as those which are reasonably expected to be realized in cash or sold or consumed during the normal operating cycle of the business." –
Fixed Assets –
"Fixed assets are the assets of a relatively permanent nature used in the operations of business and not intended for sale."
Fixed Assets may be of two types -
Tangible Fixed Assets are those assets which have physical existence and that can be seen. Like - building, furniture, tools, etc.
Intangible Fixed Assets are those assets which do not have any physical existence and that cannot be seen. Like - goodwill, patent, franchise, etc.
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Investment –
Investing in the shares and debentures of government institutions or other institutions for making control on profit or ownership is called Investment.
Miscellaneous Assets –
Miscellaneous Assets are that Deferred Expenditure, which give profit to the firm for coming so many years. Like -preliminary expenditure, discount on issue of share or debentures, etc.
Liabilities –
Liabilities can be described in the claims of outsider parties over firm. Or we can say that firm is the debtors of the outsider parties.
Current Liabilities
"Current Liabilities from the view point of an analyst are all short term obligations generally due and payable within a year." -Roy. A. Foulke.
Long Term Liabilities
Long-term liabilities are those liabilities, which will be paid after one or more year. So for the payment of these liabilities we do not need any working capital.
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Owner Equity
In the case of company the owner of the company will be the shareholder of the company. So the owner equity wills the part of total sources of the company which were supplied by the owner of the company.
Paid Up Capital
It includes the funds, which are supplied by the shareholders. It includes both equity share capital and preference share capital.
Reserves & Surplus
It's other name is retained earnings also. It is the part of profits of the firm, which does not distribute among shareholders.
Revenue Reserves Capital Reserves
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BALANCE SHEET
LIABILITES AMOUNT ASSETS AMOUNT
SHARE CAPITAL
Authorized share
FIXED ASSETS
Goodwill
Capital Land Issued share Capital Building Paid up share Capital Plant Machinery Furniture RESERVE AND SURPLUS
INVESTMENT (at cost)
Capital reserve Revenue reserve CURRENT ASSETS SECURED LOANS Stock Debentures Bills Receivable Mortgage Loan Debtors Advances UNSECURED LOANS Deposits Fixed deposits Cash at bank CURRENT LIABLITIES
Cash in hand
Creditors MISCELLEANEOUS EXPENDITURE
Bills Payable Preliminary expenditure Customers Discount on issue of
Debenture
Advances
Unclaimed Dividend
Provision for Taxation Provision for Dividend
TOTAL TOTAL
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PROFIT AND LOSS ACCOUNT
OR
INCOME STATEMENT -
"The statements of profit and loss is the condensed and classified record of the gains and losses causing change in the owners interest in the business for a period of time."
Gulhman H.G.
Some item should be described in the profit and loss account
Source of income Cost of goods sold Administrative expenses Sales and distribution expenses Depreciation Other income - income from investment Income tax Net profit or loss
According to the business firm, Income statement or P& L Account have two types
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I. SINGLE-STEP INCOME STATEMENT
In this statement all the expenses and cost are deducted from the sales revenue.
In this statement incomes are distributed in multiple head. So according to the requirement that income can be calculated.
P&L ACCOUNT or INCOME STATEMENT
PARTICULARS DETAILS NET AMOUNT
SALES
Less: Cost of Goods Sold
GROSS PROFIT LESS :
OPERATING EXPENSES
Administrative expenses Selling expenses Depreciation OPERATING PROFIT Add: other revenue Less: Non-Operating expenses PROFIT BEFORE TAX Less: Provision for Tax NET PROFIT AFTER TAX Less: Proposed Dividend RETAINED SURPLUS
CASH FLOW
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Cash flow statement is additional information to user of financial statement
This statement exhibits the flow of incoming and outgoing cash
This statement assesses the ability of the enterprise to generate cash and cash equivalents
It also assesses the needs of the enterprise to utilise the cash and cash equivalents generated
It also assesses the liquidity and solvency of the enterprise.
So financial statements are the useful for the all the parties related to a business firm. But with this there are some limitations of financial statements, which are as follows –
Lack of Precision 34
Lack of Exactness or completion Incomplete Information Interim report Hiding the Real Position Lack of comparability Historical Costs
“These limitations are generated due to old concept and conventions. But in the modern age these limitation can be finished. So on the basis
of these limitations it cannot be concluded that these financial statements are not important for the business firm. In real, these
financial statements gives information's about various facts. On the basis of this information we can take accurate decision about the
business environment”
FINANCIAL ANALYSIS35
Financial statements are only the informer, which provides information about financial position of the firm. But they are only the figures. For understanding them, we have to do financial analysis. By analysis of statements we can find conclusions like - management efficiency, future growth etc.
"The science of financial analysis is assuming an increasingly important role as a tool for appraising the real worth of a going concern. It helps in drawing out the implications of which is contained in the statements themselves."
Naveen Chandra Joshi
"Analyzing financial statements is a process of evaluating the relationship between component parts of a financial statement to obtain a better understanding of a firm's position and performance."
Metcaffand Titard
OBJECTIVE OF ANALYSIS
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Profitability Solvency Ownership Financial strength Trend Gearing and cover
IMPORTANCE OF FINANCIAL ANALYSIS
Disclosure of facts Effective Decision-making Effective operation and control Planning tool Comparative study of efficiency Serving the need of interested parties
TECHNIQUES OF FINANCIAL ANALYSIS
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"Methods employed to examine the vertical as well as horizontal relationship of different financial variables with a view to studying profitability and financial position of a business enterprises are called tools of Financial Analysis.”
There may be different techniques, but these techniques should be used according to the requirements. These techniques may be -
COMPARATIVE FINANCIAL STATEMENTS :
Comparative financial statements are those statements which are prepared according to consider on different facts in respective of time.
Generally in a business firm, there are two most important statements, which show the financial position of firm –
Balance sheet Profit and loss account
So, firm may make two comparative statements
COMPARATIVE BALANCE SHEET38
(Rupees in Crores )
PARTICULARS 2007
In Rs.
2008
In Rs.
INCREASE
Amount
DECREASE
Amount
% Change
ASSETS
Fixed assets 60.08 45.52 14.56 -24.23Investment 3.27 6.31 3.04 +92.96 Current assets 77.57 130.57 90.54 +116.72 Other assets 1.00 5.23 4.23 +423.00 TOTAL 141.92 187.63 CAPITAL & LIABILITIES
It is the process of determining changes in successive years from the fixed time or the initial year. This type of analysis will called trend analysis. Mainly, 3 methods are used in this technique -
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Trend percentage Trend ratio Graphic presentation
1. SALES
The data are as follows –
(in Crores)
171.69190.9
233.62
0
50
100
150
200
250
Sales
2007 2008 2009
Year
Graph of Sales
TREND PERCENTAGE OF SALES
YEAR SALES BASE YEAR- INCREASE/DECREASE IN
YEAR 2007 2008 2009
SALES 171.69 190.90 233.62
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2007 SALES
2007 171.69
2008 190.90 +19.21 11.19%
2009 233.62 +42.72 22.38%
TREND RATIO
The base year 2007 will be taken as trend ratio 100 and other year will be calculated by this formula -
Trend ratio = sales of year / sales of base year * 100
YEAR 2007 2008 2009
SALES 171.69 190.90 233.62
TREND RATIO
100 111.19 136.07
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GRAPHICAL PRESENTATION
We can see trend ratio on graphic also, so any person can understand that there is growth or decline. On the base of above example's trend ratio, the graph will be as follow –
Trend Ratio of Sales in Graphical Presentation
100111.19
136.07
020
4060
80100
120140
160
2007 2008 2009
Year
Tre
nd
Rat
io o
f S
ales
2. NET PROFIT
The data are as follows –
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(in Crores)
22.37
38.99
48.82
0
10
20
30
40
50
Net Profit
2007 2008 2009
Year
Graph of Net Profit
TREND PERCENTAGE OF NET PROFIT
YEAR NET PROFIT BASE YEAR-2007
INCREASE/DECREASE IN NET PROFIT
2007 22.37
2008 38.99 +16.62 74.30%
2009 48.82 +09.83 25.21%
TREND RATIO
The base year 2007 will be taken as trend ratio 100 and other year will be calculated by this formula -
YEAR 2007 2008 2009
NET PROFIT 22.37 38.99 48.82
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Trend ratio = net profit of year / net profit of base year * 100
GRAPHICAL PRESENTATION
We can see trend ratio on graphic also, so any person can understand that there is growth or decline. On the base of above example's trend ratio, the graph will be as follow –
Trend Ratio of Net Profit in Graphical Presentation
100
174.3
218.24
0
50
100
150
200
250
2007 2008 2009
Year
Tre
nd
Rat
io o
fN
et P
rofi
t
3. INVENTORY
The data are as follows –
YEAR 2007 2008 2009
NET PROFIT 22.37 38.99 48.82
TREND RATIO
100 174.30 218.24
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(in Crores)
8.015.95
16.29
0
5
10
15
20
Inventory
2007 2008 2009
Year
Graraph of Inventory
TREND PERCENTAGE OF INVENTORY
YEAR INVENTORY BASE YEAR-2007
INCREASE/DECREASE IN INVENTORY
2007 08.01
2008 05.95 -02.06 -25.72%
2009 16.29 +10.34 173.78%
TREND RATIO
The base year 2007 will be taken as trend ratio 100 and other year will be calculated by this formula -
YEAR 2007 2008 2009
INVENTORY 08.01 05.95 16.29
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Trend ratio = inventory of year / inventory of base year * 100
GRAPHICAL PRESENTATION
We can see trend ratio on graphic also, so any person can understand that there is growth or decline. On the base of above example's trend ratio, the graph will be as follow –
Trend Ratio of Inventory in Graphical Presentation
10074.28
203.37
0
50
100
150
200
250
2007 2008 2009
Year
Tre
nd
Rat
io o
f In
ven
tory
OTHER TECHNIQUES
YEAR 2007 2008 2009
INVENTORY 08.01 05.95 16.29
TREND RATIO
100 74.28 203.37
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RATIO ANALYSIS
"Ratio is simply a means of highlighting in arithmetical terms the relationship between figures drawn from financial statements.”
Ratio analysis of statements is “The process of determining and presenting the relationship of items and groups of items in the statements."
FUND FLOW ANALYSIS
Fund flow analysis are called by three names
Statements of sources and application of funds Statement of changes in financial position Funds statement
Funds flow statement is a statement prepared to indicate the increase in the cash resources and the utilization of such resources of a business during the accounting period. A statement of source and application of funds is a technical device designed to analyze the changes in the financial condition of business enterprises between two dates.The funds flow statement is a statement summarizing the significant financial changes, which were occurred between the beginning and the end of a company's accounting period.
BREAK EVEN ANALYSIS
Profit is depend on different factors like - sales volume, sales price per unit,
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different costs like - fixed cost and variables costs. Or we can say that profit is based on the sales and costs. So we can make internal relationship of sales, costs, and profits. Where costs and sales are equal and profits are nil. This technique is called break-even analysis.
There are four method used in this technique-
Contribution Profit Volume Ration Break even point Margin of safety
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COMPETATIVES OF R.K. MARBLE PVT. LTD.
R.K. Marble has although captured the whole market business.
But in this marble business world has some competitive, these
are as follows.
In state level Digvijay marble industries is his major competitive .Because
he produce the same Marble as Wonder Marble and his cost of Marble is
also very low.
In national & international level the china marble is the competitive of
R.K. Marble.
Marbo Tiles which is cheaper and looks very nice is also the competitive
of R.K. Marble’s product.
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All these facts, which are associated with R.K. MARBLE PVT. LTD. should be consider as its weakness or strengths or opportunities or threats. By the SWOT analysis we may find following factors –
STRENGTHS-
They have strong financial position. They have huge capital. They have the certificate of higher taxpayer, so they have
good financial image in the market. Mr. Ashok Patni, Chairman of R.K. Marble Pvt. Ltd., because
of his good leadership R.K. is growing faster, leads R.K. MARBLE PVT. LTD.
R.K. Marble Pvt. Ltd. has Guinness record of producing highest marble slabs.
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WEAKNESS-
There financial investment based only in one product. This is not growing market and they have very much investment on
this product.
OPPORTUNITIES-
They have huge capital so they invest in other field also. They have good financial position in the market so they take more
loans easily from banks. They have enough chances to export the product which
shows the business in dollar.
THREATS-
The uses of ceramic tiles are also increasing very much. Importing of marble is also a threat for marble industries
in India.
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CONCLUSION
R.K. Marble Pvt. Ltd., Kishangarh, Ajmer is acknowledged as the biggest Marble Company in the world and they hold the certificate from Guinness Book of World records to buttress their claim.
Today RK Group is the most successful in this business but it is worth that they have no bigger competitor in front of them. If we analysis all the we will find some following points –
Net profit of the company is continuously increasing. The company’s financial position is continuously increasing. Balance sheet and Profit & Loss Accounts are maintained properly. They have good financial image in the market. The total turnover of the company has registered a growth of 11.1
where as the operating profits after tax for the year were higher by 18%.
The cash earning of the company improved substantially to Rs.190.9
cores as against Rs.179.69 crores in the last financial year.
The debts doubtful have been doubled over the years but their
percentage on the debts has almost become half this implies a sales and
collection policy that get along with the receivables management of the
firm.
• The various ratios calculated are an indicator as to the fact that the
profitability of the firm and sales are on a rise and also the deletion of
the inefficiencies in the working capital management
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Bibliography
News papers1. Times of India.
2. Economic times.
3. Financial time
Books
1. Dr. M.D.Agrawal, Dr N.P. Agrawal "Financial Management",Ramesh
