Date post: | 09-Apr-2018 |
Category: |
Documents |
Upload: | kunal-priyadarshi |
View: | 214 times |
Download: | 0 times |
of 44
8/8/2019 TERM PAPER of Accounts
1/41
TERM PAPER
MGT515
ONIDA
COMPANY
SUBMITTED TO: SUBMITTED BY:
Mrs. Manu Kalia Manpreet Kaur Hundal
Lovely School of 11003503
Management S1003A06
MBA I SEM
8/8/2019 TERM PAPER of Accounts
2/41
ACKNOWLEDGEMENT
First of all I would like to thank the Lovely Professional University to give me this opportunityto do this project as a part of the M.B.A.
Many people have influenced the shape and content of this project, and many supported methrough it. I express my sincere thanks to Prof. Manu Kalia for assigning me a project on
ANALYSIS OF FINANCIAL STATEMENTS OF ONIDA COMPANY. She has been aninspirational and role model for this topic. Her guidance and support has made it possible to
complete the assignment.
I would like to thank the Almighty for always helping me.
Manpreet Kaur Hundal
8/8/2019 TERM PAPER of Accounts
3/41
CONTENTS
1 Introduction of company
2 Companys History
3 Companys profile
4 Board of Directors
5 Various Innovations which also includes various products
6 Objectives of the study
7 Comparative statements
8 Common size statements
9 Trend Analysis
10 Ratio Analysis
11 Fund flow statements
12 Cash flow statements
13Cost analysis
8/8/2019 TERM PAPER of Accounts
4/41
INTRODUCTION OF COMPANY
Onida was started by G.L. Mirchandani and Vijay Mansukhani in 1981 in Mumbai. In 1982,
Onida started assembling television sets at their factory in Andheri, Mumbai. Since then, Onidahas evolved into a multi-product company in the consumer durables and appliances sector. Onida
achieved a 100% growth in ACs and microwave ovens and a 40% growth in washing machineslast year. ONIDA came out with the famous caption "Neighbour's envy, Owner's Pride", another
popular theme of the ads was a devil complete with horns and tail. The devil was replaced by amarried couple- Siddharth and Ritu.
Onida Today
Onida is a popular electronics brand in India. Onida has a network of 33 branch offices, 208
Customer Relation Centers and 41 depots spread across India. As on 31 March 2005, Onida hada market capitalization of Rs.301.46 crore.
Mirc Electronics won an Award for Excellence in Electronics in 1999, from the Ministry ofInformation Technology, Government of India.
[7]
Onida with its Sales & Marketing office in Dubai reported a 215 per cent export growth in two
years, setting the base for an increased robust international presence.
The shipments to the Gulf contribute almost 65 per cent of Onida's export revenue, whileshipments to the fast growing East African market (Uganda, Tanzania, Kenya and Ethiopia) andthe SAARC countries accounted for 16 per cent of export revenues.
Home Theatres and DVD players have been introduced in these markets to strengthen the Onida
brand presence. These products have customized models with local language user interfaces inline with its geographies of focus. Onida models are now available with Arabic, Persian and
Russian OSD (menu).
In addition to the Gulf countries ONIDA has now a sizeable presence in Russia, Ukraine andneighboring CIS countries. ONIDA has already crossed 100000 mark in CTV exports to Russia
in a span of just 2 years and plans to grow in these markets at a much faster pace.
Apart from Television Exports to Russia, Onida also exports DVD Players and High end LCD
Televisions.
8/8/2019 TERM PAPER of Accounts
5/41
Network
Onida has a network of 33 branch offices, 208 Customer Relation Centers and 41 depots spread
across India. MIRC Electronics shares are listed on the National and Mumbai Stock Exchanges.
The company enjoyed a market capitalization of Rs.301.46 Cr. as on 31st March 2005.
The transition of Onida from a family-owned business to a professionally managed company has
largely been made possible by the vision of the Chairman & Managing Director,
Mr.G.L.Mirchandani.
Company History
To think of the future, you need to think of your past
It all began with just a vision. In the year of 1981, Mr. GL Mirchandani and Mr. VijayMansukhani started a company called Onida with just a goal of manufacturing television sets and
going beyond convention. By the end of that year, we started assembling television sets at ourfactory in Andheri, Mumbai. With the passage of time, superior products and the combination of
a distinctive voice, a cutting-edge advertising strategy, and purposeful marketing ensured thatOnida became a household name.
It wasnt about consumer electronics. It was always about the consumer.
What really sets Onida distinct from others are that we have always tried to pave our own roadand create a niche by understanding what exactly does the consumer need.
Company Profile of Onida Ltd.
CHIEF EXECUTIVE
Chief Executive Name Mr. Sonu L Mirchandani
Secretary Name Mr. Avneesh Chopra
Face Value 10
Market Lot 1
Business Group Name Onida Group
Incorporation Date 26/02/1987
Industry Name Consumer Goods Electronic
Registrar of Company Not Available
8/8/2019 TERM PAPER of Accounts
6/41
Board of Directors
Name Designation
Mr. Sonu L Mirchandani Managing Director
Mr. Sunil K Sharma Director
Mr. Nalinikant Mohanty DirectorMr. Manmohan Agarwal Director
Key Executives
Name Designation
Mr. S R Pereira V P [F and As]
Mr. Avneesh Chopra Company Secretary
Mr. R K Nayyar Vice President [Operations]
Board of Directors of ONIDA Company
Mr. G. L. Mirchandani
Mr. Vijay Mansukhani
Mr. Manoj Maheshwari
Mr. Vimal Bhandari
Mr Ranjan Kapur
8/8/2019 TERM PAPER of Accounts
7/41
Some of the innovations that surprised the world.
After having established a reputation for being an intelligent and pioneering innovator in theapplication of technologies: we were the first to launch the Web cruiser TV, the worlds first
built-in Internet TV which offers the benefits of a personal computer and a TV, and that too,
equipped with a a modem, printer port and a cordless keyboard with it; the first to launch theultimate in Flat TV technology with Onida Black with a high picture clarity with DVMC whichensures uniform scanning at the centre and corners of the TV screen.
Again, the Onida Twister was the first TV that turned to face the viewer; we were the first tointroduce SRS technology for surround sound in Audioport. In 1999, we were the first to
introduce the pure flat TV in the country. The Candy was the first instance of any brandproviding a multi-coloured cabinet option to its customers.
The common perception was that we were a focused TV manufacturer. But then with a knack for
spotting a gap in the market, we realized that there were undiscovered needs and wants in other
categories of consumer durables as well. So we recognized latent synergies which enabled us toprovide customers with a wider range of products under the ONIDA brand.
Washing Machines:
In 2003-04 we launched the washing machine with Hydrofall technology which addressed theneed of having a more powerful cleaning system. Then we realized that people still used their
hands for cleaning so we launched the Triomatic technology which gives the perfect hand wash.Then we realized that people still keep bending to wash clothes so we launched a washing
machine with a higher and wider vent so you dont have to bend.
Air conditioners:
With the soaring summer heat, we saw a need for an AC with powerful cooling. And in additiondue to the raising electricity consumption, the need for energy efficiency as well. Hence, the
thought of an ultra slim powerful AC with unique APM cooling technology that cools even at48oc and is the most energy efficient in the country which constantly keeps your electricity bills
in check.
DVDs:
With todays technology boom, theres a need for a single multimedia interface as most people
now download movies, music and click pictures through mobiles. Hence the need for USB andcard reader. We also saw that most DVDs are rented hence are scratched. Which is why, wedeveloped a DVD player with USB and Card Reader which also play scratched discs effortlessly.
8/8/2019 TERM PAPER of Accounts
8/41
Microwave Ovens:
We saw that people used Microwave primarily to heat food and not to cook. We also noticed that
its difficult to cook food in a microwave. Especially Indian food. So to make cooking simplerwe introduced 123 Indian auto cook menus. So all you need to make Indian dishes is a finger.
We later gave it a sleek, black look with a mirror finish so that it looks stunning too.
LCDs:
What began as a TV became the window to the future. With the advent of televisionsincreasing popularity, there were many players with a wide foray of our models. To make
matters interesting, there were several foreign players with technology that seemed futuristic andwith a sleek look. However we mainly focused on picture clarity. So instead of just aping what
the offering was, we asked ourselves, Why not give a complete audio / video experience athome as well? And the result was obvious: Our CTV had up to 3500 Watts of sound. This was
our first milestone which others followed. However, this held true twenty years later as well.
LCD technology came in, in a bigger way. Onida once again took the onus to remind everyone,that sound is equally important to complete the viewing experience. So we made our Xaria withmore than twice the sound output of other LCDs in the market.
Then later on, we got onto its drawing board a pseudo home theatre with a 5.1 amplifier system
and 1000-watt PMPO speakers, thereby putting a theatres soul inside a TVs body.
We took the future by its horns and went on to make Indias first fully developed indigenizedXaria LCD with more than twice the sound output of other LCDs in the market.
Mobiles:
With the cell phone market already heavily penetrated, there was a need for a mobile that could
stand apart. So what we sought to do was make every single Onida Mobile do so much morethan what an ordinary cell phone does. So the moment you turn it on, you would realize that its
fully-loaded. So many features. So many things. And so easy. But all these features are there in itfor a reason. All of them to help you do better, enjoy better, listen better, work better or simply
talk better.
8/8/2019 TERM PAPER of Accounts
9/41
Products
Onida brand has following range of products.
1. LCD TVs2. Plasma TVs3. Televisions4. DVD and Home Theater Systems5. Air Conditioners6. Washing machines7. Microwave Ovens8. Presentation Products9. Inverters10.Mobile Phones
OBJECTIVES OF STUDY
1 To analyze the financial position of the company.
2 To compare the financial reports of the company.
3 To know the goodwill of the company.
4 To solve common size of the years.
5 To know the cost used in the manufacturing product.
6 To analyze the fund and cash inflow and outflow.
7 Ratios of the company helps in knowing the strengths and weaknesses of the company
8 Trend analyses also helps in knowing the position of the company.
8/8/2019 TERM PAPER of Accounts
10/41
An effort has been made to check the overall financial position of the company by using thefollowing financial instruments:
1. Ratio analysis
2. Comparative statements
3. Common size statements
4. Trend analysis
5. Cost analysis
6. Cash flow analysis
7. Fund flow analysis
An explanation to these financial instruments is as below:
1. RATIO ANALYSISRatio analysis is a tool used by individuals to conduct a quantitative analysis of information in a
company's financial statements. Ratios are calculated from current year numbers and are then
compared to previous years, other companies, the industry, or even the economy to judge the
performance of the company.
2. COMPARATIVE STATEMENTStatement on which balance sheets, income statements, or statements of changes in
financial position are assembled side by side for review purposes. In this type of
statement changes that have occurred in individual categories from year to year and over
the years are easily noted.
3. COMMON SIZE STATEMENT
8/8/2019 TERM PAPER of Accounts
11/41
It is the companys financial statement that displays all items as percentages of a common
base figure. This type of financial statement allows for easy analysis between
companies or between time periods of a company.
4. TREND ANALYSISThe term "trend analysis" refers to the concept of collecting information and attempting
to spot a pattern, or trend, in the information. It usually gives an idea of companys
upward or downward growth.
5. COST ANALYSISThis analysis is based on knowing the cost element of the company. To compare the
actual cost with that of the estimated one, the analysis is of great help.
6. CASH FLOW ANALYSISIt is a financial statement that shows how changes in balance sheet accounts and income
affect cash and cash equivalents, and divides the analysis into operating, investing, and
financing activities. Essentially, the cash flow statement is concerned with the flow of
cash in and cash out of the business.
7. FUND FLOW ANALYSISThe term flow means inflow and outflow. The term flow of funds means transfer of
economic values from one asset of equity to another. Flow of fund occurs when a
transaction changes on the one hand with movement of inflow and on the other hand
outflows of funds.
For interpreting the fund flow statement of the company the two things which are studied
are:
1. Sources of funds2. Application of funds
8/8/2019 TERM PAPER of Accounts
12/41
RESEARCH METHODOLOGY
The secondary data is used in the research which comprises of:
1. Balance sheet of ONIDA limited.2. Income statement of the company.
PERIOD OF STUDY
Data of two years that is year ending 31st
December 2008 and 31st
December 2009 has
been taken into consideration for making out the financial comparisons related to the
study.
Comparative financial statement or analysis: -
It is an important horizontal Technique in which financial data of two or more period (year) are
presented in a comparative from.
a) A comparative income statement show the comparison of various items of cost ,expensesand final the result in form of net profit and net loss.
Percent change =absolute change /figure of the previous year *100
b) A comparative balance sheet reveals the position of assets and liabilities on two or moredifferent data along with changes in these items.
8/8/2019 TERM PAPER of Accounts
13/41
Common size statement or analysis:-
Common size financial statement facilities both of analysis i.e.; horizontal as well as vertical.
This statement indicates the relationship of various items in terms of percentage with somecommon or basis items .it expressed the net sale in term of percentage.
Trend analysis:-
This analysis is an important tool of horizontal financial analysis .under this method ratio are
calculated for selected items of the financial statement taking the figure of the base year as 100
and for this purpose the following formula may be used
Trend ratio =current year amount /base year amount *100
Ratio analysis:-
Ratio analysis is also an important method of analysis of financial statement .it is adopted to
establish meaningful mathematical relation between two items or two group of items show in
financial statement.
Fund flow statement:-
Financial statement can also be analyzed by preparing fund flow statement and in that case it is
known as fund flow analysis .This statement is prepared in order to reveal the source from which
funds are obtained the uses to which they are being put. Here fund stand for working capital.
Cash flow statement:-
This technique is very useful in the management of cash and analysis of short term liquidity
.under this method a statement is prepared to show the inflow and outflow of cash related to
various activities in the concern during a specific period.
8/8/2019 TERM PAPER of Accounts
14/41
BALANCE SHEET FOR THE YR.2008-09 AND 2009-10
PARTICULARS
2008-
09
2009-
10
Sources of funds
Equity sharecapital 6.7 14.19
Share capital suspense a/c 26.4 30.14
Reserves and Surplus 239.47 241.5
Net worth 272.57 255.69
Unsecured loans 130.33 76.38
secured loans 74.89 57.27
Total loans 205.22 133.65Deferred tax liability 15.51 15.53
Total liabilities 493.3 404.87
Application of funds
Gross block 354.93 405.93
Depreciation 171.42 191.15
Net block 183.51 214.78
Capital WIP 25.55 0.29
Net block+CWIP 209.06 215.07
Investment 26.78 40.14
Deferred tax liability
Current assets
Inventories 210.41 249
Debtors 106.81 87.76
cash and bank balance 9.3 27.64Loans and
advances 95.84 112.67Total current
assets 422.36 477.07
Current liabilities
Liabilities 155.14 309.47
Provisions 9.76 17.94
Total current liabilities 164.9 327.41
net current assets 257.46 149.66
Total assets 493.3 404.87
8/8/2019 TERM PAPER of Accounts
15/41
PROFIT AND LOSS ACCOUNT
Particulars
2008-
09
2009-
10
Sales 1517.72 1568.35
Excise 87.29 66.37
Net sales 1430.43 1501.98
Service income
other income 4.18 3.02
Total income 1434.61 1505
material consumed 553.83 535.99
Cost of traded goods sold 561.96 619.81
Personnel expenses 67.15 75.41
Freight and forwardedexpense 53.3 51.26
Advertising expenses 51.86 74.35
Other expenses 89.32 88.41
total cost 1377.42 1445.23
PBDIT 57.19 59.77
Interest 28.49 17.35
PBDT 28.7 42.42
Depreciation 18.55 19.77
PBT 10.15 22.65Tax 1.2 4.28
PAT 8.95 18.37
Equity Divident 5.68 13.46
Preference Divident 0.67 0.51
Yr. end prices 8.98 16.35
Net capital 127.52 231.76
EPS 0.58 1.25
8/8/2019 TERM PAPER of Accounts
16/41
COMPARATIVE
BALANCE
SHEET
PARTICULARS
2008-
09 2009-10 CHANGE %
Sources of funds
Equity share capital 6.7 14.19 7.49 111.79
Share capital suspense a/c 26.4 30.14 3.74 14.16
Reserves and Surplus 239.47 241.5 2.03 0.84
Net worth 272.57 255.69 -16.88 -6.19
Unsecured loans 130.33 76.38 -17.62 -23.52
secured loans 74.89 57.27 -53.95 -41.39
Total loans 205.22 133.65 -71.57 -34.87
Deferred tax liability 15.51 15.53 0.02 0.128
Total liabilities 493.3 404.87 -88.43 -7.92
Application of funds
Gross block 354.93 405.93 51 14.36
Depreciation 171.42 191.15 19.73 11.5
Net block 183.51 214.78 31.27 17.03
Capital WIP 25.55 0.29 -25.26 -98.8
Net block+CWIP 209.06 215.07 6.01 2.87
Investment 26.78 40.14 13.36 49.88
8/8/2019 TERM PAPER of Accounts
17/41
Deferred tax liability
Current assets
Inventories 210.41 249 38.59 18.34
Debtors 106.81 87.76 -19.05 -17.8
cash and bank balance 9.3 27.64 18.34 197.2
Loans and advances 95.84 112.67 16.83 17.56
Total current assets 422.36 477.07 54.71 12.95
Current liabilities
Liabilities 155.14 309.47 154.33 99.47
Provisions 9.76 17.94 8.18 83.8
Total current liabilities 164.9 327.41 162.51 98.55
net current assets 257.46 149.66 -107.8 -41.8
Total assets 493.3 404.87 -88.43 -17.9
INTERPRETATION:
ONIDA company comparative balance sheet statement shows that there is a much change in
equity share capital which is by 111.79% and equity share suspense account is also increasing
by14.19% reducing, reserves and surplus has increased only by few percent that is just .89%. Net
worth, secured and unsecured loans has decreased. These all are the sources of the company but
when these sources decrease, it affects the total income or earning of the company. There are
many applications of funds; it means the company has to pay these amounts. Net block of Onida
Company has increased by 17.03% and capital work in progress has decreased. Investments has
increased by49.88%. Current assets and current liabilities also show the financial position of the
company.
8/8/2019 TERM PAPER of Accounts
18/41
COMPARATIVE INCOME
STATEMENT FOR THE
YEAR 2009 AND 2010
Particulars 2008-09 2009-10 Change %
Sales 1517.72 50.63 3.33
Excise 87.29 66.37 -20.92 -23.96
Net sales 1430.43 1501.98 71.55
Service income
other income 4.18 3.02 -1.16 -27.75
Total income 1434.61 1505 70.39 4.9
material consumed 553.83 535.99 -17.84 -3.22
Cost of traded goods sold 561.96 619.81 57.85 10.29
Personnel expenses 67.15 75.41 8.26 12.3
Freight and forwarded expense 53.3 51.26 -2.04 -3.82
Advertising expenses 51.86 74.35 22.49 43.36
Other expenses 89.32 88.41 -0.91 -1.01
total cost 1377.42 1445.23 67.81 4.92
PBDIT 57.19 59.77 2.58 4.51
Interest 28.49 17.35 -11.14 -39.1
PBDT 28.7 42.42 13.72 47.8
Depreciation 18.55 19.77 1.22 6.5
PBT 10.15 22.65 12.5 123.15
Tax 1.2 4.28 3.08 256.67
PAT 8.95 18.37 9.42 105.25
Equity Divident 5.68 13.46 7.78 136.97
Preference Divident 0.67 0.51 -0.16 23.88
Yr. end prices 8.98 16.35 7.37 82.07
Net capital 127.52 231.76 104.24 81
EPS 0.58 1.25 0.67 115.5
INTERPRETATION: ONIDA company income statement shows that there is only a few
change in sales which is by 3.33% and excise tax is reducing which is a benefit to the company,total income has increased which helps in increasing the assets of the company by 4.9%,
material consumed has decreased and cost of traded goods sold has increased as it helps inincreasing the sales and to generate more revenue. Personnel expenses and advertising expenses
has increased which creates a liability for the company, freight and forwarded expenses and
8/8/2019 TERM PAPER of Accounts
19/41
other expenses has decreased as it automatically helps to reduce the liability. Net capital of thecompany has increased and helps to increase the assets of the company.
COMMON SIZE PROFIT AND LOSS ACCOUNT
Particulars
2008-
09 %
Sales 1517.72 100
Excise 87.29 5.75
Net sales 1430.43 94.24
Service income
other income 4.18 0.27
Total income 1434.61 94.52
material consumed 553.83 36.49
Cost of traded goods sold 561.96 37.02
Personnel expenses 67.15 4.42Freight and forwarded
expense 53.3 3.51
Advertising expenses 51.86 3.42
Other expenses 89.32 5.88
total cost 1377.42 90.75
PBDIT 57.19 3.768
Interest 28.49 1.87
PBDT 28.7 1.89
Depreciation 18.55 1.22PBT 10.15 0.668
Tax 1.2 0.079
PAT 8.95 0.589
Equity Divident 5.68 0.374
Preference Divident 0.67 0.044
Yr. end prices 8.98 0.59
Net capital 127.52 8.4
EPS 0.58 0.038
INTERPRETATION: ONIDA company common size statement shows that the companys
sales is 100% and the net sales is 94.24% and total income is 94.52%, these helps to create more
revenue. Advertising and other expenses are just 3.42% and 5.88% are helping to reduce theliability of the company.Depreciation is also very less, it is 1.22% as it means that the assets of
the company are very much beneficial to the company.
8/8/2019 TERM PAPER of Accounts
20/41
COMMON SIZE PROFIT AND LOSS ACCOUNT FOR THE YR 2009-10
Particulars
2009-
10 %
Sales 1568.35 100
Excise 66.37 4.23
Net sales 1501.98 95.76
Service income
other income 3.02 0.19Total income 1505 95.96
material consumed 535.99 34.17
Cost of traded goods sold 619.81 39.5
Personnel expenses 75.41 4.8
Freight and forwardedexpense 51.26 3.26
Advertising expenses 74.35 4.74
Other expenses 88.41 5.63
total cost 1445.23 92.14
PBDIT 59.77 3.81Interest 17.35 1.1
PBDT 42.42 2.7
Depreciation 19.77 1.26
PBT 22.65 1.44
Tax 4.28 0.27
PAT 18.37 1.17
Equity Divident 13.46 0.858
Preference Divident 0.51 0.03
Yr. end prices 16.35 1.04
Net capital 231.76 14.77
EPS 1.25 0.079
INTERPRETATION: ONIDA company common size statement of the year 2009-10 showsthat the companys sales is 100% and the net sales is 94.76% and is more than the previous year
which is 94.24% and total income is 95.96% and is more than previous year which is 94.52%,these helps to create or generate more revenue. Advertising and other expenses are just
8/8/2019 TERM PAPER of Accounts
21/41
4.74%and 5.63% are helping to reduce the liability of the company.Depreciation is also veryless, it is 1.26% but it is little more than the previous year which is 1.22% but that the assets of
the company are very much beneficial to the company.
COMMON SIZE BALANCE SHEET
2008-09
PARTICULARS 2008-09 %
Sources of funds
Equity share capital 6.7 1.017928
Share capital suspensea/c 26.4 10.25402
Reserves and Surplus 239.47 28.23173
Net worth 272.57 159.0071
Unsecured loans 130.33 71.02065
secured loans 74.89 293.1115
Total loans 205.22 98.16321
Deferred tax liability 15.51 57.91636
Total liabilities 493.3
Application of funds
Gross block 354.93Depreciation 171.42 81.46951
Net block 183.51 171.8098
Capital WIP 25.55 274.7312
Net block+CWIP 209.06 218.1344
Investment 26.78 6.340563
Current assets
Inventories 210.41 0.309508
Debtors 106.81 0.216521
cash and bank balance 9.3 0.059946
Loans and advances 95.84 9.819672
Total current assets 422.36 2.56131
Current liabilities 0
Liabilities 155.14 0.314494
Provisions 9.76 0.014828
Total current liabilities 164.9 0.640488
8/8/2019 TERM PAPER of Accounts
22/41
net current assets 257.46 0.281174
Total assets 493.3 0.725633
INTERPRETATION: ONIDA companys common size balance sheet shows that there is very
low equity share capital but the share capital suspence account is very much more than equityshare capital but these both are our assets. Reserves and surplus are 28.23% and net worth is159.007% , secured loans are 293.115%, deferred tax liability is 57.91% , these all are
companys sources and is having a greater % of common size statement. These all are thesources of funds because the company earn from these.Investment, capital work in progress , net
block all are the applications of companys and helps to increase the assets of the company.Current assets and liabilities also shows the position of the company.
8/8/2019 TERM PAPER of Accounts
23/41
COMMON SIZE
STATEMENT OF
BALANCE SHEET
PARTICULARS 2009-10 %
Sources of fundsEquity share capital 14.19 0.019378Share capital suspense
a/c 30.14 0.20139
Reserves and Surplus 241.5 0.297854
Net worth 255.69 1.337641
Unsecured loans 76.38 0.35562
secured loans 57.27 197.4828
Total loans 133.65 0.621426
Deferred tax liability 15.53 0.386896
Total liabilities 404.87 0.55289
Application of funds
Gross block 405.93 0.460269
Depreciation 191.15 0.261034
Net block 214.78 0.694025
Capital WIP 0.29 0.016165
Net block+CWIP 215.07 0.656883
Investment 40.14 0.268208
Deferred tax liability
Current assets
Inventories 249 0.282332Debtors 87.76 0.140028
cash and bank balance 27.64 0.089314
Loans and advances 112.67 6.280379
Total current assets 477.07 1.457103
Current liabilities
Liabilities 309.47 0.422612
Provisions 17.94 0.119872
Total current liabilities 327.41 0.403811
net current assets 149.66 0.169694
Total assets 404.87 0.459068
INTERPRETATION: ONIDA companys common size balance sheet shows that there is very
low equity share capital and the share capital suspence account is also very much low than equityshare capital but these both are our sources. Reserves and surplus are .2975% and net worth is
1.337% , secured loans are 197.48%, deferred tax liability is .38% , these all are companyssources and is having a less % of common size statement. These all are the sources of funds, the
8/8/2019 TERM PAPER of Accounts
24/41
company earn from these. but the companys current year liabilities are low than the previousyear so it is beneficial to the company that it has less liabilities. Investment, capital work in
progress , net block all are the applications of company and helps to increase the assets of thecompany. Current assets and liabilities also shows the position of the company
8/8/2019 TERM PAPER of Accounts
25/41
TREND ANALYSIS OF PROFIT AND LOSS
ACCOUNT
Particulars 2008-09
2009-
10 %
Sales 1517.72 1568.35 103.3359Excise 87.29 66.37 76.03391
Net sales 1430.43 1501.98 105.002
Service income
other income 4.18 3.02 72.2488
Total income 1434.61 1505 104.9066
material consumed 553.83 535.99 96.77879
Cost of traded goods sold 561.96 619.81 110.2943
Personnel expenses 67.15 75.41 112.3008
Freight and forwardedexpense 53.3 51.26 96.17261
Advertising expenses 51.86 74.35 143.3668
Other expenses 89.32 88.41 98.98119
total cost 1377.42 1445.23 104.923
PBDIT 57.19 59.77 104.5113
Interest 28.49 17.35 60.89856
PBDT 28.7 42.42 147.8049
Depreciation 18.55 19.77 106.5768
PBT 10.15 22.65 223.1527
Tax 1.2 4.28 356.6667
PAT 8.95 18.37 205.2514
Equity Divident 5.68 13.46 236.9718Preference Divident 0.67 0.51 76.1194
Yr. end prices 8.98 16.35 182.0713
Net capital 127.52 231.76 181.744
EPS 0.58 1.25 215.5172
INTERPRETATION: ONIDA company trend analysis of income statement shows that the
companys sales has increased by 103.33% and excise reduces to 76.03%, the other income hasalso reduced to 72.24%, total income has increased to 104.9%. Material consumed has decreased
but cost of traded goods has increased which increases the liability of the company. Personneland advertising expenses has increased by 112.3% and 143.3% and freight and forwarded
expenses has reduced to some extent.Total cost has increased by104.92%, tax is also a liabilityfor the company because the company has to pay the tax, the tax has increased by 356.67%.
Earning per share has increased which creates an assets for the company. Preference divident hasalso reduced, it means that the company has to pay less interest to the debentureholders.
8/8/2019 TERM PAPER of Accounts
26/41
TREND ANALYSIS OF BALANCE SHEET
PARTICULARS
2008-
09
2009-
10 %Sources of fundsEquity share
capital 6.7 14.19 211.79104
Share capital suspense a/c 26.4 30.14 114.16667
Reserves and Surplus 239.47 241.5 100.84771
Net worth 272.57 255.69 93.807095
Unsecured loans 130.33 76.38 58.605079
secured loans 74.89 57.27 76.472159
Total loans 205.22 133.65 65.125231
Deferred tax liability 15.51 15.53 100.12895
Total liabilities 493.3 404.87 82.073789
Application of funds
Gross block 354.93 405.93 114.36903
Depreciation 171.42 191.15 111.50974
Net block 183.51 214.78 117.03994
Capital WIP 25.55 0.29 1.1350294
Net block+CWIP 209.06 215.07 102.87477
Investment 26.78 40.14 149.88798
Current assetsInventories 210.41 249 118.34038
Debtors 106.81 87.76 82.164591
cash and bank balance 9.3 27.64 297.2043
Loans andadvances 95.84 112.67 117.56052
Total currentassets 422.36 477.07 112.9534
Current liabilities
liabilities 155.14 309.47 199.47789
Provisions 9.76 17.94 183.81148Total current liabilities 164.9 327.41 198.55064
net current assets 257.46 149.66 58.129418
Total assets 493.3 404.87 82.073789
8/8/2019 TERM PAPER of Accounts
27/41
INTERPRETATION : ONIDA company trend analysis shows that the company is havinghigh % of equity share capital than share capital suspence account. Reserves and surplus have
93.8%and net worth is 58.6%. Secured and unsecured loans is also having a high % of trendanalysis of balance sheet.The company earn from these as these are the sources of the funds as
the company is earning from these.Deferred tax liability is just the same, it has just increased
with certain points.Applications of funds includes investment, capital work in progress, net block,gross block.
8/8/2019 TERM PAPER of Accounts
28/41
RATIOS
MEANING OF ACCOUNTING RATIO:
A ratio is a mathematical relationship between two related items expressed in quantitative form.
Two numbers are needed to calculate a Ratio. One number is put as a numerator and the other asa denominator. Ratio refers to relationship between two variables expressed in either percentage
or in multiples or in periods. Ratio helps in analyzing the financial performance of firm. The
performance of the firm can be gauged from four angles
1. Profitability2. Liquidity3. Asset Efficiency4. Solvency
The overall performance of firm is a function of these factors and we can say that profitability
depends upon liquidity and liquidity depends upon efficient utilization of asset, which is
managed only through well formulated capital structure.
OBJECTIVES OF RATIO ANALYSIS
1 Helps in identification of significant accounting data relationship
2 Simplifies financial statements
3 Helps in planning and forecasting
4 Helps in simplifying accounting figures
5 Helps in Inter-firm comparison
6 Helps the investor to evaluate their investment
7 Helps the marketing manager to evaluate the sale and return from it
CLASSIFICATION OF RATIOS
The particular purpose of a user is determining the particular ratios that might be used forfinancial analysis. Ratios are generally classifieds are as under:
1 LIQUIDITY RATIOS
Current ratio
Quick ratio
8/8/2019 TERM PAPER of Accounts
29/41
Absolute liquid ratio
2 PROFITABILITY RATIOS
Gross Profit Ratio
Net Profit Ratio
Operating Ratio
Return on Investment
Return on Equity
Earning per share
3 TURNOVER/ACTIVITY/EFFICIENCY RATIOS
Inventory Turnover Ratio
Debtors Turnover Ratio
Creditors Turnover Ratio
4 SOLVENCY RATIOS
Debt to equity ratio
Interest Coverage Ratio
LIQUIDITY RATIOS: The liquidity refers to the maintenance of cash, bank balance and those
assets which are easily convertible into cash in order to meet the current liabilities as and when
arise.
1 CURRENT RATIO: The current ratio measures short time solvency, i.e., its ability to meet
short term obligations. A current ratio represents short term assets which are just sufficient to
meet short term obligations.
8/8/2019 TERM PAPER of Accounts
30/41
Current ratio = current assets/current liability
2008-09 2009-10
=422.36/164.90 =477.07/327.41
=2.56 =1.45
INTERPRETATOIN:- The current ratio measure the short term solvency . Current ratio 2:1 is
considered an ideal ratio. Higher ratio in, more than 2:1 indicates sound solvency position. In thisthe company current assets in the year 2008-09 are sufficient to meet its current liability but in
the current year Onida company assets are not able to meet its current liability
2 QUICK RATIO: It is a relationship of liquid assets with current liabilities and is computed to
assets which are either in the form of cash or cash equivalents or can be converted into cash
within a very short period.
Quick ratio = quick assets/current liability
Quick assets =current assts except inventory and prepaid expenses
2008-09 2009-10
=211.95/164.90 =228.07/327.41
=1.28 =.69
INTERPRETATION:- It is true test of business solvency. Higher ratio more than 1:1 indicates
sound financial position. So in year 2010 company does not having sound financial position in
year 2010 in which company had very less quick ratio but in the past year the company has
sufficient quick assets to meet its current liabilities.
3 ABSOLUTE LIQUID RATIO: It is also known as Cash Ratio. The ratio gives the idea of
immediate liquidity
Absolute liquid ratio = absolute liquid asset/current liability
8/8/2019 TERM PAPER of Accounts
31/41
2008-09 2009-10
=105.14/164.9 =140.31/327.41
=.63 =.428
Interpretation: - When the company has a .5:1 absolute liquid ratio, it means company has
enough liquid assets to meet its all current liability. But from above ratio it is clear that company
does not have enough absolute liquid assets to meet its current liability in the current year.
PROFITABILITY RATIO: The profitability of the firm can be easily measured by
1. GROSS PROFIT RATIO: It is used to test the profitability and management efficiency.
The higher the ratio the better it is.
Gross profit ratio= gross profit/net sales*100
2008-09 2009-10
=225.32/1430.43*100 =257.77/1501.98*100
=15.75% =17%
Interpretation: Higher Gross profit ratio always preferable and the company is having a 17%
profit in the current gross profit ratio. The company is in a very good position from the previous
year.
2. NET PROFIT RATIO: This ratio indicates the net results of the working of the company
during the period and reveals the overall profitability of the concern.
Net profit ratio= net profit/ net sales*100
2008-09 2009-10
=57.19/1430.43*100 =59.77/1501.98*100
=3.99% =3.97%
8/8/2019 TERM PAPER of Accounts
32/41
Interpretation: It is the ratio which is use to measure overall profitability. The companys net
profit ratio is very less than the previous year, which shows that company is not very much
strong.
3. OPERATING PROFIT RATIO: This ratio establishes the relationship betweenoperating profit and net sales.
Operating profit ratio= operating cost/net sales*100
2008-09 2009-10
=330.48/1430.43*100 =383.38/1501.98*100
=23% =25.5%
Interpretation: It tells us about the relationship between total operating cost and sales. It tells
us about the operational efficiency of the firm. Higher operating ratio indicates that company had
incurred high operating cost.
4. RETURN ON INVESTMENT: This ratio expresses the relationship between net profit and
shareholders fund and multiplied by hundred.
Return on investment =net profit/shareholder fund*100
2008-09 2009-10
=57.19/272.57*100 =59.77/255.69*100
=20.98% =23.37%
Interpretation: High return on shareholders funds means company has enough profit after tax
which is available for distribution as dividends to shareholders. Here the company has just
sufficient returns so, thats why return on shareholders funds is not so much.
8/8/2019 TERM PAPER of Accounts
33/41
5 RETURN ON EQUITY: The return from the point of view of equity shareholders can be
calculated by comparing by comparing the net profit less preference dividend with the equity
share funds.
Return on equity=net profit-preference dividend/equity share funds*100
2008-09 2009-10
=56.52/272.57*100 =59.26/255.69*100
=20.7% =23.17%
Interpretation: Higher the ratio implies, the efficient use of capital employed. Return on
investment of the company is satisfactory and is more than the previous year .
6 Earning per share: It is calculated as:
Earning per share =net profit-preference dividend/no. of equity shares
2008-09 2009-10
=56.52/33.1 =59.26/44.33
=1.70 =1.336
Interpretation : The earning per share is very less from the previous year.
TURNOVER/ACTIVITY/EFFICIENCY RATIOS: Activity ratios are concerned with how
efficiently the assets of the firm are managed
1 INVENTORY TURNOVER RATIO: This ratio indicates the number of times inventory orstock is replaced during the year.
Inventory turnover ratio=net sales/average stock
2008-09 2009-10
=1430.43/553.83 =1501.98/535.99
8/8/2019 TERM PAPER of Accounts
34/41
=2.58 times =2.80 times
Inventory conversion period=number of days in a year\inventory turnover ratio
=365/2.58 =365/2.8
=141 days =130 days
Interpretation: Stock turnover ratio measure how quickly inventory is sold. This ratio helps in
measuring profitability. Due to high stock ratio company had enough profit.
2 DEBTORS TURNOVER RATIO: It represents the number of times the cash is collectedfrom debtors.
Debtor turnover ratio=net credit sales/average debtors
2008-09 2009-10
=1430.43/106.81 =1501.98/87.76
=13.39 times =17.1 times
Average collection period=number of days In a year/debtor turnover ratio
2008-09 2009-10
=365/13.39 =365/17.1
=27 days =21 days
Interpretation: Debtors turnover ratio is a benefit for the company, as it an asset for the
company because debtors have to pay to the company.
8/8/2019 TERM PAPER of Accounts
35/41
3 CREDITORS TURNOVER RATIO: It represents the number of times average dues to
supplier is settled. Higher the turnover ratio, lower the payment period granted by supplier.
Creditor turnover ratio=net credit purchase/average creditors
Interpretation: The Company is in a good position that it does not have any creditors
SOLVENCY RATIOS: It indicates the long term solvency position of the company.
1 DEBT-EQUITY RATIO: This ratio develops relationship between owned funds and
borrowed funds.
Debt quity ratio =debt/equity
2008-09 2009-10
=205.22/272.57 =133.65/255.69
=.75 =.52
Interpretation: High debt equity ratio shows that the debts are higher than those of owners. A
high ratio is unfavorable from company point of view. A low ratio implies claim of owners are
greater than the debts. It shows the good position of the company that the company has more
equity than debts.
2 INTEREST COVERAGE RATIO: This ratio shows how many times interest charges are
covered by net profit before interest and taxes.
Interest coverage ratio=earning before interest and taxes/ interest charges
2008-09 2009-10
=57.19/28.49 =59.77/17.35
=2.00 =3.44
8/8/2019 TERM PAPER of Accounts
36/41
Interpretation: It refers to the capacity of the business to meet its short term and long term
obligation. If the company is in position to pay its long term liabilities, it is said to possess long
term solvency. If company financial position strong to pay current liability, it is regarded as short
term solvency.
8/8/2019 TERM PAPER of Accounts
37/41
FUND FLOW
STATEMENT
1 SCHEDULE OF
CHANGE IN WORKING
CAPITAL
PARTICULARS
2008-
09
2009-
10 INCREASE DECREASE
Current Assets
Inventories 210.41 249 38.59
Debtors 106.81 87.76 19.05
cash and bank balance 9.3 27.64 18.34loans and
advances 95.84 112.67 16.83
Total currentassets 422.36 477.07
Current
liabilities
Liabilities 155.14 309.47 154.33
Provisions 9.76 17.94 8.18
Total of current liabilities
164.9 327.41
WC=CA-CL 257.46 149.66 107.8
107.8
Decrease in WC 257.46 257.46 181.56 181.56
2 Calculation of funds from operations
2009-10
Net profit 59.77
Add depreciation 19.77
Interest 17.35
Tax 4.28
funds fromoperations 101.17
8/8/2019 TERM PAPER of Accounts
38/41
fund flow statement
sources of funds application of funds
issue of share 7.49 payment of secured loan 17.62
reseves and surplus 2.03payment of unsecuredloans 53.95
Deferred tax liability 0.02 capital WIP 25.26
gross block 51 net worth 16.88
Investment 13.36 funds from operations 101.17dec in
wc 107.8
total 216.71 total 216.71
INTERPRETATION: ONIDA Companysfund flow statement shows that the companys cash
balance, inventories and loans and advances has increased from the previous year, its debtorshas decreased from the previous but the companys total current assets increased it shows the
company is in a good position. The companys current liabilities has increased from the previous.So by solving the companys schedule of change in working capital, the company is having
decrease in working capital which is 107.8. The companys calculation of funds from operationsshows the amount of 101.17 and the company is having various sources and applications of
funds. The total of sources and applications stands equals to 216.71.
8/8/2019 TERM PAPER of Accounts
39/41
CASH FLOW STATEMENT FOR THE YEAR 2010 AND 2009
31-Mar-10
31-
Mar-09
Cash flow from operating activities
Net profit before tax and extra items 2265.06 1015.57
adjustment for depreciation 1977.15 1855.17unrealised foreign exchange fluctuation -242.8 541.52
(value of investment -29.86 23.92
interest expense 1735.23 2848.88
interest income -172.22 -83.17
divident income 25.32 5.02
loss on sale of fixed asset 0.05 2.97
operating profit before WC changes 5507.29 6199.84
adjustments for:
trade and other receivables 583.07 196.11Inventories -3858.41 8215.59
trade payables 15327.4 9243.95
cash generated from operations 17559.35 4975.37
direct taxes paid/refund received -427.98 -128.29
net cash used in operating activities 17131.37 4847.08
cash from investing activities
payments for purchase of fixed assets -5105.98 -1237.6 purchase of investment -1306.03 101.85
proceeds from sale of fixed assets 1.63 1.81
movements of capital advances 2525.33-2360.75
interest received 172.22 83.17
divident received 25.33 5.02
net cash used in investing activities -3687.51 -3610.2
net cash for financing activities
issue of equity shares 0.02
issue/redemption of preference shares -1891.51 1891.51
amalgamation adjustment -210.4
movements in term loans -8000 2392
movements in short term loans 843.03-1826.51
interest paid -1759.96 -
8/8/2019 TERM PAPER of Accounts
40/41
2864.56
divident paid -801.26-1634.76
net cash used in financing activities -11609.68
-
2252.72
net inc/dec in cash and cash equivalents 1834.18-1015.84
cash and cash equivalent as1.1.2009 930.21 1946.05
cash and cash equivalent as at 31.3.2010 2764.39 930.21
INTERPRETATION: ONIDA company cash flow statement shows that the companys net
profit has increased from the previous year, interest expense has decreased which is a benefit tothe company as it helps to reduce the liability but the interest income has negatively increased
which automatically increases the liability of the company. Trade and other receivables hasincreased from the previous year as it helps to generate revenue for the company. Net cash used
in operating activities is very much high than the previous year. Payments for purchase of fixedassets and purchase of investment has negatively increased from the previous year. Proceeds
from sale of fixed assets has decreased which reduces the companys revenue from the previousyear.Net cash used in investing activities has negatively incrreased from the previous year. Issue
and redemption of shares has a negative impact on the financial position of the company.Divident and interest paid has negatively increased. Net cash used in financing has negatively
increased from the previous year which affects the financial position of the company.Cash andcash equivalents has positively increased.
8/8/2019 TERM PAPER of Accounts
41/41
COST SHEET FOR THE YEAR 2009 AND
2010
Particulars 2009 2010
material consumed 553.83 535.99
Prime cost 553.83 535.99
Freight and forwardedexpense 53.3 51.26
Advertising expenses 51.86 74.35Other expenses 89.32 88.41
travelling and conveyance 79.72 79.8
Cost of sales 828.03 829.01
INTERPRETATION: ONIDA company cost sheet for the year 2009 and 2010 shows that the
companys material consumed has decreased from the previous year so its prime cost is also lessthan the previous year.There are no factory and office cost of onida company so its cost of
production is as same the prime cost. Freight and forwarded expenses and other expenses hasdecreased from the previous year which helps to reduce the cost of travelling expenses. The
companys adverttising expenses has increased from the previous year.The total cost of sales ofthe company has increased to some extent only.