CHAPTER 1

INTRODUCTION

1.1 INTRODUCTION

Financial statements are prepared primarily for decision making. Financial statement
analysis refers to the process of determining financial strength and weakness of the firm by
properly establishing strategic relationship between the items of the balance sheet and profit
and loss account. There are various methods and techniques used in analysing financial
statements, such as comparative statements, trend analysis, common size statement, schedule
of changes in working capital, fund flow and cash flow analysis, cost volume profit analysis
and ratio analysis and other operative data the analysis of financial statement is used for
decision making by various parties.

In other words, business transactions are recorded on certain assumptions such as

‘going concern’, ‘stable value of rupees’ etc., these are reflected in the financial statements.
The objectives of financial statement are to provide information about the financial position,
performance and changes in financial position of the enterprise that is useful to a wide range
of users in making economic decisions.

Financial statements may be used by users for different purposes:

• Owners and managers require financial statements to make important business

decisions that affect its continued.
• Financial analysis is then performed on these statements to provide management with
a more detailed understanding of the figures.
• These statements are also used as art of management’s annual report to the
stockholders.
• Employees also need these reports in making collective bargaining agreements with the
management, in the case of labour unions or for individuals in discussing their
companion, promotion and rankings.
• Financial institutions use them to decide whether to grant a company with fresh working
capital or extend debt securities (such as long-term bank loan or debentures) to finance
expansion and other significant expenditures.

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Financial Statements

As mentioned, there are three main financial statements that every company creates and
monitors the balance sheet, income statement, and cash flow statement. Companies use these
financial statements to manage the operations of their business and also to provide reporting
transparency to their stakeholders. All three statements are interconnected and create different
views of a company’s activities and performance.

Balance Sheet

The balance sheet is a report of a company's financial worth in terms of book value. It
is broken into three parts to include a company’s assets, liabilities, and shareholders' equity.
Short-term assets such as cash and accounts receivable can tell a lot about a company’s
operational efficiency. Liabilities include its expense arrangements and the debt capital it is
paying off. Shareholder’s equity includes details on equity capital investments and retained
earnings from periodic net income. The balance sheet must balance with assets minus liabilities
equalling shareholder’s equity. The resulting shareholder’s equity is considered a company’s
book value. This value is an important performance metric that increases or decreases with the
financial activities of a company.

Income Statement

The income statement breaks down the revenue a company earns against the expenses
involved in its business to provide a bottom line, net income profit or loss. The income
statement is broken into three parts which help to analyses business efficiency at three different
points. It begins with revenue and the direct costs associated with revenue to identify gross
profit. It then moves to operating profit which subtracts indirect expenses such as marketing
costs, general costs, and depreciation. Finally, it ends with net profit which deducts interest and
taxes.

Basic analysis of the income statement usually involves the calculation of gross profit
margin, operating profit margin, and net profit margin which each divide profit by revenue.
Profit margin helps to show where company costs are low or high at different points of the
operations.

Cash Flow Statement

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 The cash flow statement provides an overview of the company's cash flows from
operating activities, investing activities, and financing activities. Net income is carried over to
the cash flow statement where it is included as the top line item for operating activities. Like
its title, investing activities include cash flows involved with firmwide investments. The
financing activities section includes cash flow from both debt and equity financing. The bottom
line shows how much cash a company has available.

Free Cash Flow and Other Valuation Statements

Companies and analysts also use free cash flow statements and other valuation
statements to analyses the value of a company. Free cash flow statements arrive at a net present
value by discounting the free cash flow a company is estimated to generate over time. Private
companies may keep a valuation statement as they progress toward potentially going public.

1.2 INDUSTRY PROFILE

The electronics industry is composed of organizations involved in the manufacture,

design and development, assembly, and servicing of electronic equipment and components.
Together, these organizations offer a wide variety of products that frequently have only one
thing in common: They depend upon electronic technology to operate. Electronics is one of the
fastest evolving and most innovative industries, and also one of the most competitive. The
research and development of new, better products is of great importance in electronics, where
companies often compete fiercely to bring the newest technology to market first.

Electronics is the branch of science and technology that deals with the study,
application, and control of the conduction of electricity in a vacuum, in gases, in liquids, in
semiconductors, and in conducting and superconducting materials. There are thousands of
electronic products with countless applications. These products consist of materials, parts,
components, subassemblies, and equipment that use the principles of electronics to perform
their major functions.

As a whole, the goal of the industry is to meet the needs of electronics producers by
providing electronic parts or products for sale. Much effort and money is put into research and
development in order to produce improved parts and products, as well as to improve the process
for producing them.

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 The electronics industry dates to the 1800s, when scientists first discovered that they
could pass electricity through gas from one metal electrode to another. The first commercial
vacuum tube was built in 1904 by John Ambrose Fleming, a British scientist, who used it to
detect radio signals. Vacuum tubes continued to be the standard in the industry until the 1950s,
when the first transistor and semiconductor diodes were invented and introduced.

During this time, integrated circuits were also introduced. By the mid-1980s, other
countries, such as Japan, had become serious competitors of U.S. companies when it came to
electronics manufacturing. Modern markets are global ones, and companies both buy and sell
parts and products to other countries. Many electronics manufacturing companies outsource
parts, allowing them to be more competitive on the global market.

The electronics manufacturing industry can be divided into four primary segments:
government products, industrial products, consumer products, and electronic components.
Each category serves a specific market, which allows it to focus on components and products
geared toward their customers. The government market is primarily developed for aircraft and
military products, as well as communication technology and medical devices.

Industrial products include large-scale computers, radio and television broadcasting

equipment, telecommunications equipment, and electronic office equipment, while consumer
products are the well-known televisions, cell phones, DVD players, smartphones, radios, video
game systems, personal computers, electronic ovens, and home intercommunication and alarm
systems. The final segment, that of components, are the manufacturers that produce and sell
electron tubes, semiconductors, and passive components.

According to a 2019 report published by IBISWorld, the global consumer electronics

manufacturing industry was valued at $1.3 trillion. As the 2010s concluded, the industry
consisted of about 9,269 businesses that collectively employed almost 16 million people.
Growth was especially strong in emerging markets.

1.2.1 An overview of the Indian market

With the exponential rise in demand and supportive demand conditions, the Indian
market is poised to grow considerably in the next five years, primarily on account of growing
per capita incomes, the consumption of electronics goods (such as smartphones, consumer
electronics, etc), and growing industrial demand.

Electronics Trade

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 Of the total electronics demand in India, around 50 per cent is fulfilled by imports,
whereas of the total local electronics production, 16 per cent is exported. The government of
India is very keen to reduce electronics imports by creating a local ecosystem for electronics
manufacturing.

Gradually, the growth rate in domestic production is outpacing growth in imports,

which underscores the government’s focus on endorsing new initiatives for the Indian
electronics manufacturing industry. Currently, semiconductors and integrated circuits (ICs) are
the major products being imported, as India lacks the required ecosystem and technical know-
how to produce them. Given the existing supply chain of electronics manufacturing in India,
domestic production of semiconductors and ICs is yet to gain traction.

Here are some key insights into electronics trade in the Indian market:

✓ In FY 19, for the first time, electronics imports declined as compared to the
previous year. In contrast, both electronics production and electronics exports
increased compared with the previous year.
✓ In FY 18, 75 per cent of the total electronics imports constituted components,
industrial electronics, strategic electronics and computer hardware. However, in
FY 2019, for the first time, domestic production overtook imports largely due
to the Make in India initiative and the reduction in mobile data costs.
✓ In the industrial electronics segment, the focus is shifting, particularly to solar
and cleaner energy. In this segment, imports fulfil 50 per cent of the local
demand.
✓ With India importing considerable volumes of medical electronic equipment
from the US, it is estimated that imports in this category reached US$ 5 billion
in FY 18. This segment is expected to see high growth for local manufacturing.
✓ Computer hardware and software imports are significant due to the large scale
commercial applications of PCs, laptops and enterprise solutions.
✓ With older lights such as CFLs and ILs becoming technologically obsolete, the
trend is to move towards more energy-efficient and environmentally conscious
products like LEDs.

India’s major exports are to the US, which constituted 14 per cent of total electronics
exports from the country in FY 19. India’s import dependence on China has reduced
significantly as imports from that country in FY 19 were 39 per cent of the total electronics

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imports, as compared to 59 per cent in FY 18.The major imports included semiconductors, ICs,
products for defence electronics, and mobile phones, in both FY 18 and FY 19.

1.2.2 Market Segment Analysis

The growth in the electronics industry in India is driven by the growth in specific
segments. The growth of each segment is, in turn, dependent on the dynamics of the existing
ecosystem, the number of organised players, the level of imports, and the government’s focus
on the respective segment.

Currently, communication and broadcast devices (mobile phones) as well as consumer

electronics together contribute over 50 per cent of the Indian electronics industry’s revenues.
The other major segments include industrial electronics (18 per cent) and electronic
components (15 per cent).

The industrial electronics segment has been growing on account of the increasing
automation of manufacturing facilities coupled with an increasing focus on harnessing
renewable energy. Strategic electronics is a closely guarded segment with few significant
players and high barriers to entry. The segment focuses on products like defence equipment,
radars, satellites, etc.

The computer hardware segment is a small but growing segment, and the growth can
be attributed to the demand from SMEs and educational institutions. LED products have
constantly been growing on account of the increasing focus on energy-efficient lighting
products. There has been a proliferation of brands in this segment focusing on residential,
commercial, and industrial products.

The Indian market growth has predominantly seen consumption-driven growth in the
last several years. However, the government’s support for the industry has been strong, with
numerous conducive policies. Growth in our electronics manufacturing industry will establish
India among the leading economies of the world. With this goal, it is expected that the growth
momentum will be sustained over the coming decade.

As per a report published by the World Economic Forum, “The vision for the future of
consumption in India is anchored in the growth of the upper-middle-income and high-income

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segments, which will grow from being one in four households today to one in two households
by 2030.”

These new consumers will drive the demand for consumer appliances, such as air
conditioners, washing machines, and others. These product categories are also the cornerstone
of the boom in consumer electronics sales. While the growth is predominantly consumer-
driven, the industry is also expected to drive innovation to increase the share of electronics
across several applications. In the automotive industry, the government has released a draft
notification to ban all internal combustion engine powered two-wheelers and three-wheelers
by 2023 and 2025, respectively.

The proposed change has created the momentum to attract EV companies

(manufacturers and their suppliers) to explore investments in Indian manufacturing. Similarly,
a newer technology like 5G is likely to drive growth and consumption of the Indian electronics
industry.

With future investments in semiconductors, electronic components and ICs, India is

looking set to welcome another wave of growth in the electronics sector. This transition will
be fuelled by a large young population, increasing research initiatives, and favourable
investment policies. The impetus provided by the government will give further encouragement
to domestic manufacturing as India prepares to be the next global hub for electronics
production and exports.

1.2.3 Challenges

A complex value chain: The electronics industry is constantly changing due to

disruptive innovation, thereby increasing the pressure on the value chain to upgrade
continuously. The sourcing and contractual interdependencies between OEMs and suppliers
are now more complex due to the highly advanced technology of the components, the number
of components required for a single finished product, the level of aggregation or assembly
required, and the need to adapt to changes in product design. The Indian ecosystem for
electronic components is still evolving and has a long way to go.

A capital-intensive industry with inadequate raw material availability: The

electronics industry is primarily dependent on the number and competence of domestic chip
fabrication centres (fab centres). Fab centres require a dedicated ecosystem, which involves
investment, the know-how of chip fabrication, raw material supplies, continuity of demand,

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and unit upgradation competence. Given the current scenario, India lacks most of the necessary
ammunition for the development of domestic chip fabrication units. Thus, the design and
development of electronic products are often outsourced to ODMs (original design
manufacturers) in other countries with stronger designing and manufacturing capabilities.

Sustainability: Emerging regulations and standards for cleaner and greener technology
are forcing companies to be accountable for the manufacturing process as well as the final
product. The entire recycling and disposal process for electronics needs to be considered as a
vital part of the product life cycle.

E-waste management: India ranks fifth globally among top e-waste producing nations.
The exponential increase in the quantum of e-waste is driven by the rise in usage as well as the
growing pace of upgrades. Consumers are discarding old PCs, mobiles, tablets, and other
electronics a lot sooner than before. However, with the awareness campaigns by Meity, e-waste
management is gradually being taken seriously in the industry.

1.3 COMPANY PROFILE

Incorporated in the year 1990, Pride India Private Limited (Chennai) has created a
dignified position in the market. They are based out as a Private Limited Company and
performing entire business activities from Chennai, Tamil Nadu (India). It is an equipment
manufacturing company based in India (Chennai). It is a technology- oriented company who
focus on R&D and High-tech Industrial Applications. It is one of the world’s leading
manufacturers of highly precise time stamping technologies, solutions for industrial
instrumentations. It also has the distinct honour of being the first Indian company to
manufacture GPS based time management systems.

They have grown as a unit ever since then to become market leaders in India. They
tailor their solutions for industry verticals such as power sectors, chemical industries, Oil &
Gas, Telecom, Defence, civilian networks etc. They support customers with solutions in
different parts of the world to monitor, generate, distribute and apply time.

The company is engaged in a wide gamut of Digital Slave Clock, NTP Server, Alarm
Annunciator, GPS Master Clock and many more. With their extensive product and service,
they have successfully engraved a niche in the market and are serving their valued clients with
qualitative products and services. They deliver these products and services to their customers
at competitive prices.

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 Their offered products are manufactured by using premium quality material and
advanced technologies in strict adherence with the several set norms. They also render the
services by using the latest methodologies. They make sure that the services are quality
approved and efficient. Further, their experienced quality examiners verify each product and
services in detail prior to the final approval so as to ensure maximum benefits in favour of the
customers. They serve their clients attentively and so as to attain their complete satisfaction.

1.3.1 QUALITY ASSURANCE

Their aim is to set benchmarking standards in the industry and they are doing this by
adhering to the rigid quality norms. All their products are designed and developed by keeping
the clients’ best interest in mind and their diligent team members make sure to abide the robust
set of rules to be on the clients’ side. They make sure to source the quality tested grades of raw
materials and conduct rigorous tests and inspections on the finished product to outperform the
competition.

1.3.2 INFRASTRUCTURE

Their core strength lays in their next generation research and development capabilities
which are the most important element of their infrastructure. Besides, their in-house
manufacturing setup is strategically designed to uphold the desired levels of productivity. They
have invested in highly productive and high-speed machines that are installed at their R&D
units, and product testing, packaging and distribution departments.

1.3.3 TEAM

They are the most preferred equipment manufacturing company and due to the diligent
perspectives of their team members they have become a preferred brand in the industry. Their
mission to become a customer-oriented firm is strengthened by the collaborative efforts of their
assiduous professionals who are engaged in exploring the scope of innovation. Further, their
team comprises highly experienced technology specialists, R&D experts, inventory managers
and quality assurance officers.

1.3.4 VISION:

Electronic Manufacturing Company will provide competitive, high quality electronic

manufacturing services and individualized customer service, while encouraging employee
creativity, motivation, and team work in a continuously improving environment.

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1.3.5 MISSION

1. Develop customer relationships which provide services tailored to specific customer

needs;

2. Provide employees with on-going training to enhance knowledge and skills, develop
problem solving and decision-making abilities, and offer opportunities for
advancement;

3. Apply cost effective production systems and sound fiscal planning;

4. Utilize Continuous Process Improvement strategies to ensure the highest quality

products and services

VALUES:

1. Work closely with our customers to understand their needs and provide high quality
products services.

2. Recognize the strengths of those we work with and focus our efforts on helping them
overcome their weaknesses.

3. Treat all individuals with courtesy, dignity, and respect.

4. Work together as a team to provide quality services.

5. Recognize the value of all employees in attaining our goals.

6. Work cooperatively to solve problems and develop solutions.

7.Provide a work environment which motivates our employees and encourages

independence, cooperation, respect, and humour.

1.4 OBJECTIVES OF THE STUDY

❖ To Identify the Various Assets of Pride India private limited With Respect to Annual
Reports of The Company
❖ To Analysis Comparative Study of Annual Reports

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 ❖ To Evaluate the Profitability Position of Industry.
❖ To Make Suggestion for Improve of Financial Statement.

1.5 STATEMENT OF THE PROBLEM

In today’s competitive and dynamic business environment, stakeholders such as

investors, creditors, management, and regulatory bodies rely heavily on financial statements to
make informed decisions. However, raw financial data alone is insufficient without proper
interpretation. The challenge lies in analyzing and interpreting financial statements effectively
to assess an organization’s financial health, operational efficiency, profitability, and long-term
solvency. This project aims to address the problem of understanding how financial analysis
tools—such as ratio analysis, trend analysis, and comparative statements—can be used to
extract meaningful insights from financial statements, thereby aiding stakeholders in making
sound financial decisions.

1.6 SCOPE OF THE STUDY

❖ The information relevant to the decision under consideration from total information
contained in the financial statements
❖ The information in a way to highlight significant.
❖ Interpretation and drawing if interfaces and conclusion.

1.7 LIMITATIONS OF THE STUDY

The study is based on secondary data, obtained from the published report and as its
findings depends entirely on the accuracy of such data. Financial statement does not keep pace
with the changing price level.

1.8 PERIOD OF THE STUDY

The project has been done during the period of 21.02.2025 to 23.05.2025 in Pride
India Private Limited Chennai.

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 CHAPTER 2

REVIEW OF LITERATURE

2.1 REVIEW OF LITERATURE

Marllyn B. Misch, Carolyn A. Galantine (2009)

In their study on A Financial Statement Analysis Project for Introductory

Financial Accounting found that this paper describes a financial statement analysis project
useful in both prepared based and user-based introductory courses in financial accounting.

Gaur Jighyasu (2010)

In their study on the financial performance measures of India’s Non-Metallic Mineral

Products Industries They examined the firm’s financial performance measures using
performance measures using operating profit and return on net worth, the size, leverage,
working capital ratio and age of the firm are included as determinants of firm’s performance

Bansal And Gupta (2011)

In their study entitled Financial Ratio Analysis and Statistics found that enlightened
that the co-efficient of variation in the study period had a wide gap varying between 7.1 percent
and 51.3 percent for the current ratio and ratio of fixed assets to sale. The correlation of
components of short- term liquidity ratio generally possesses low correlation as against long
term satisfactory correlation in cotton textile industry as compared to synthetic industry.

Goutam Chandra Saha (2012)

In their study on Financial Analysis of Mining Projects found that financial statements
are official records of the financial actions of a company, firm or other unit over a period of
time which provide a general idea of a company or person's financial situation in mutually short
and long term. They give a precise representation of a company’s condition and working results
in a reduced form. Financial statements are used for supervision tool mainly by company
executives and investor’s in assess the overall situation and working results of the company.

Esha Sharma (2012)

In their study on Financial Analysis of ICICI Bank found that the liberalized policy of
the government of India permitted entry to the ICICI in banking; the industry has witnessed a
generation of private players. The focus of these banks has always been centred on the

12
customer. But to satisfy the customers and to operate other activities, the bank must have
sufficient funds in its accounts. That’s why, in the present paper special emphasis has been laid
down on the financial analysis of the bank by using different research and statistical tools.

Akash Dixit (2013)

In their study on Financial Statement Analysis of State Bank of India found that the
banking system of India is featured by a large network of bank branches, serving many kinds
of financial services of the people. The purpose of the study is to examine the financial
performance of SBI, public sector bank. The research is descriptive and analytical in nature.
The data used for the study was entirely secondary in nature. The present study is conducted to
analyse the financial performance of SBI on the basis of ratios such as credit deposit, net profit
margin etc. The period of study taken is from the year 2007-08 to 2011-12. The study found
that SBI is performing well and financially sound.

Manish Roy Tirkey & Naeem Sabah Khilkhal (2014) in their study on

FINANCIAL STATEMENT ANALYSIS OF ONGC LTD found that it is purely based on

secondary data obtained through website of the specified private banks. By using the ratio
analysis tool, we can analyse the performance of ONGC Ltd and we can easily find out the
strength and weakness of the company and their position in the market. Different ratios are
used in this study and particularly those which are related to the financial statement for this
purpose balance sheet of 2010-2013 of ONGC Ltd. are used and from them ratios are calculated
so according to which we can easily compare the performance.

Anupa Jayawardhana (2016)

In their study on Financial Performance Analysis of Adidas Ag found that the financial
statement indicates the balance sheet, income statement and the cash flow statement. Financial
performance has been studied using horizontal analysis, vertical analysis, trend analysis and
mainly ratio analysis to suggest improvements to increase finance flow, improve dividend and
reduce liabilities. Main analysis is based on 2014 and 2013 financial years which are ending
on 31st of December in every year. The latest performance being compared with company’s
statements over the last five years starting 2010 for showing trends. Finally, recommendations
and suggestions have been made to ensure the revenue of the company and reduce the liabilities
while improving the stability of the company.

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Dr. Ashok Kumar Rath (2016)

In their study on Financial Statement Analysis Of Tata Steel Odisha Project, Kalinga
Nagar found that India is one of the developing nations of the World. Globalization provides
ample of opportunity to the Companies to expand overseas and enrich India with high Quality
and World Class products by implementing state-of –art-technology. The Steel Giants of India
are namely, Arcell or Mitttal, Tata Steel Ltd. & Steel Authority of India presenting India on
the Global front. Tata steel is expanding its production capacity in India and has some
Greenfield Steel Projects under implementation, including one at the Kalinga Nagar Industrial
Complex at Duburi in Jajpur district. This project report is an effort to suggest the best
financing option for the project expenditure of Rs.21200 Cr and to identify its financial strength
and weaknesses with the help of various financial statement analysis tools and techniques.

Dusan Baran, Andrej Pastyr, Daniela Baranova (2016)

In their study on Financial Analysis of a Selected Company found that the success of
every business enterprise is directly related to the competencies of business management. The
business enterprise can, as a result, create variations of how to approach the new complex and
changing situations of success in the market. Therefore, managers are trying during negative
times to change their management approach, to ensure long-term and stable running of the
business enterprise. They are forced to continuously maintain and obtain customers and
suppliers. By implementing these measures, they have the opportunity to achieve a competitive
advantage over other business enterprises.

Omar Abdi Dahir (2016)

In their study on Financial Ratio Analysis of Axis Bank found that in today’s financial
world, financial performance is a requirement amongst the perspective of various stakeholders,
be it in the management, lenders, owners and investors’ perspective, and it is out of analysis of
financial statements. Axis Bank today is a leading player in Indian banking industry and is
deeply engaged in human and economic development at the national level. The Bank works
closely with although it is private. bank emerged as a pioneer venture on the horizon of offering
an expanded range of banking products and financial services for corporate and retail customers
through its diverse delivery channels and specialized subsidiaries in the areas of investment
banking, asset management, venture capital and insurance. In the light of its strategic
importance in the nation interest, it is crucial to evaluate the financial performance of the Axis
Bank. And the present study focused on operational control of the asset, profitability and

14
solvency etc. This research paper is aimed to analyse and compare the Financial Performance
of Axis Bank in five years period and offer suggestions for the improvement of efficiency in
the Bank

Singh And Hamid (1992) And Singh (1995)

Have analysed the financing pattern of nine developing countries like India, Korea,
Jordan, Pakistan, Thailand, Mexico, Malaysia, Turkey and Zimbabwe and found that in all
these developing countries' corporations rely in general, very heavily on external funds and
new issues of shares to finance their growth of net assets. They have also concluded that there
were important differences between the two groups of corporations. Specifically, they
suggested that less developed Corporations used both external finance and particularly equity
finance to a much greater extent than their counterparts in advanced economies. Their findings
were almost reverse of the Pecking Order pattern of finance observed for advanced country
corporations. Corbett and Jenkinson (1994, 1997) have found that there is no market-based
Anglo-US pattern of financing of industry. The corporations in Germany, the United Kingdom
and the United States are internally financed with small or negative contributions from market
sources, while Japanese corporations are more externally financed with both banks and markets
contributing larger shares than in the former group. They have also found that there is little
evidence to support the view that Germany is a bank financed system and that the UK or US
are market financed. Over the period of 1980s, all countries, except Japan, have become more
internally and less market financed.

A Study By Opler, Saron and Titman (1997)

Highlights the importance of corporate liability management for creating value for
shareholders. Their study covered analysis of optimal capital structure (debt equity mix) in
such a way that the sum of taxes paid by the firm and the costs of financial distress are
minimized.

Miller And Modigliani (1961)

Have found dividend as irrelevant in a world without taxes, transaction cost or other
market imperfections and added that the investment decision of the firm is not affected by the
dividends because investors can homebrew their own dividends by selling a part from or
borrowing against their portfolio. The firms that issue dividends would incur flotation costs on
new securities they have to issue to keep their investment policy intact.

15
 Robert Anthony, Professor of Accounting and Financial Control at Harvard University
has written many authoritative books on accounting and financial management. He defines
Accounting as a means of collecting, summarizing, analysing and reporting in monetary terms,
information about the business.

Another well-known publication on Financial Management, Financial Decision

Making by John Hampton (1983) covers authoritative and lucid exposition on the subject
covering: Financial accounting, Financial Statements, Financial analysis, Leverage, Working
capital, capital Budgeting, valuation of the Firm, Mergers, acquisitions and reorganization And
Financial decisions. Financial health will decide the repayment capacity of the debt sought by
any business enterprise. William Beaver studied important ratios of 79 Companies. These ratios
were important ratios which decided the success and failure of the concerned Companies. In
the Indian context, LC Gupta attempted a refinement of Beaver’s method with the objective of
building a forewarning system of corporate sickness. A simple non-parametric test of
measuring the relative differentiating power of the various financial ratios was used. The study
covered cross section of companies falling under various industries. Another important
research was carried out by E.I. Altman which is referred to as Multiple Discriminated Analysis
(MDA). After studying 66 Companies, Altman concluded that a set of ratios can be developed
which has failure predictive power. The mixed result of these five ratios was Z score, on the
basis of which the firms can be classified either financially sound or otherwise. Eltman found
that a score above 2.675 was believed to be healthy. The score below this, warranted overall
financial weakness. In Eltman’s study, half of the firms became bankrupt. Eltman’s study was
refined later on in 1977 which is more broad and 70 % accurate. Many studies have taken place
on the issue of methods, tools, techniques and practices of business performance appraisal of
companies. This is critical, since this system plays a key role in developing strategic plans and
evaluating the achievements of the firm.

Singh and Hamid (1992) and Singh (1995)

Have analysed the financing pattern of nine developing countries like India, Korea,
Jordan, Pakistan, Thailand, Mexico, Malaysia, Turkey and Zimbabwe and found that in all
these developing countries' corporations rely in general, very heavily on external funds and
new issues of shares to finance their growth of net assets. They have also concluded that there
were important differences between the two groups of corporations. Specifically, they
suggested that less developed Corporations used both external finance and particularly equity

16
finance to a much greater extent than their counterparts in advanced economies. Their findings
were almost reverse of the Pecking Order pattern of finance observed for advanced country
corporations.

Corbett and Jenkinson (1994, 1997)

Have found that there is no market-based Anglo-US pattern of financing of industry.

The corporations in Germany, the United Kingdom and the United States are internally
financed with small or negative contributions from market sources, while Japanese
corporations are more externally financed with both banks and markets contributing larger
shares than in the former group. They have also found that there is little evidence to support
the view that Germany is a bank financed system and that the UK or US are market financed.
Over the period of 1980s, all countries, except Japan, have become more internally and less
market financed.

According to many industry experts the basic reason why many successful
companies have collapsed is due to improper cash management. Having surplus cash in the
current accounts are considered as a sign of efficiency of the companies but sitting on such
large cash bank balance can turn out to be a disaster if not handled properly.

Sarah Fitz Patrick (2008)

He stated “cash flow planning is basically defined as anticipating the flow of cash into
and out of an events budget. This enables to find expenditure such as marketing collateral and
registrations in line with event timetable”. Managing the cash flow is vital to the success of any
event and is an important way of foreseeing any event problems or possible cash shortages.

The Finance Editor Jill Andresky Fraser’s classic article on the topic “ the art of
cash management” dive into forecasting your business- cash needs and learning how to handle
a cash crisis assembled here are practical pieces of advice, tips and tricks from CEOs, and tools
that you can use to get a handle on business Cash.

Michael F. Barnes in his book called cash management stated that Cash management
should be considered as a profit center rather than a cost center, according to the author. He
admits that this view is controversial among professional cash managers and can lead to
excesses when expectations become unrealistic

17
 Pindado (2001) argues that basic cash management refers to that part of the working
capital that makes up the optimal level needed by a company treasury. However, if the profit
opportunities available in the process of cash flow creation are to be maximized, this scope
must be broadened to take in more operational decisions, since optimum cash levels are
influenced by other factors outside the restrictive concept of "treasury". Linking these concepts
with the concepts of monetary theory reveals that the initial reasons for cash management were
transaction and precaution, and those reasons were then joined by speculation, taking it closer
to the overall concept of treasury management in the broad sense of the term.

18
 CHAPTER 3

RESEARCH METHODOLOGY

3.1 Research Methodology

Research methodology simply refers to the practical “how” of any given piece of
research. More specifically, it’s about how a researcher systematically designs a study to ensure
valid and reliable results that address the research aims and objectives.

Definition of research

According to Clifford Woody research is defined as comprises defining and refined

problems formulating hypothesis or suggested solutions, collecting, organizing and evaluating
data, making detections and researching conclusion and at last carefully testing the conclusion
to determine when they fit the formulating hypothesis.

Meaning of Research Methodology

Research Methodology is a way to systematically solve the research problem it may be

understood as a science of study how research is done scientifically. Research methods may be
understood as all those methods or techniques that are used for conduction of researchers use
in performing research operations. Research methodology is the systematic gathering and
analysing of data about problems, formulating hypothesis and suggested solutions collecting,
organizing and evaluating data, making deduction and reaching conclusion and carefully
testing the conclusion to determine whether they fit the formulating hypothesis.

3.2 Research Design:

Choosing a design for the study is crucial step because, if a wrong decision is made the
whole study may be criticized on the grounds of an appropriate design are even worse as been
unscientific or illogical. It is descriptive in nature. It is difficult to generalize about research
design because of wide variety of types of research. Basically however, research studies fall
into broad categories empirical and analytical, empirical or experimental studies are conducted
mainly in the quantitative type (science) subjects, whereas analytical or literary studies are
generally conducted in the qualitative (arts) subject.

3.3 Source of data:

Secondary data:

19
 It includes information gathered from financial report balance sheets and other
accounts, archives, and several other relevant records kept by the company and cited by
journals, business broachers, textbooks, and other publication data.

3.4 Tools Used for Analysis

1. Comparative statement

2. Common size statement

3. Ratio analysis

20
 CHAPTER 4

DATA ANALYSIS AND INTERPRETATION

4.1.1 COMPARATIVE BALANCE SHEET 2019-2020

Table 4.1.1
% IN
PARTICULAR 2019 2020 INC /DEC CHANGE
S
ASSETS(A)
1.non current assets
Fixed assets
Tangible asset 10957179 8771848 2185331 19.94
Deferred tax asset 187615 229980 -42365 -22.58
Long-term loan and barrowing 10580294 10751328 -171034 -1.62
Other current asset 80153 79693 460 0.57
(A) 21805241 19832849 1972392 9.05
CURRENT ASSETS
Inventories 937580 884710 52870 5.64
Trade receivable 22030445 11214393 10816052 49.10
Cash and cash equipment 950280 833340 116940 12.31
other current asset 6207814 4095233 2112581 34.03

(B) 30126119 17027676 13098443 43.48

TOTAL(A+B) 51931360 36860525 15070835 29.02
EQUITY AND LIABAILITIES
1. SHAREHOLDER'S FUND
Share Capital 2500000 2500000 0 0.00
Reserve and Surplus 17657166 17340479 316687 1.79
(C) 20157166 19840479 316687 1.57
2. NON CURENT LIABILITIES
Long-Term Borrowing 4518926 4736422 -217496 -4.81
(D) 4518926 4736422 -217496 -4.81
3.CURRENT LIABILITIES
Short Term Borrowing 5498161 2421505 3076656 55.96
Trade Payable 20836248 6322589 14513659 69.66
Other Current Liabilities 920859 3155390 -2234531 -242.66
Short Term Provisions 0 384140 -384140 0.00
(E) 27255268 12283624 14971644 54.93

TOTAL (C+D+E) 51931360 36860525 15070835 29.02

21
INTERPRETATION

From the above table we can see the current assets have decreased by Rs 13098443 in
the year 2020 over 2019. On the other hand, the current liabilities have decreased by Rs
14971644. Now, such a change does not have a negative impact on the liquidity position. This
is because current assets have decreased by 43.48% whereas current liabilities have declined
by 54.93%.

4.1.2 COMPARATIVE BALANCE SHEET 2020-2021

Table 4.1.2

% IN
PARTICULAR 2020 2021 INC /DEC
CHANGES
ASSETS
1.NON CURRENT ASSETS
Fixed Assets
Tangible Asset 8771848 9191268 -419420 104.78
Deferred Tax Asset 229980 260707 -30727 113.36
Long-Term Loan And Barrowing 10751328 13669067 -2917739 127.14
Other Current Asset 79693 55556 24137 69.71
(A) 19832849 23176598 -3343749 116.86
CURRENT ASSETS
Inventories 884710 747680 137030 84.51
Trade Receivable 11214393 17694057 -6479664 157.78
Cash And Cash Equipment 833340 870592 -37252 104.47
Other Current Asset 4095233 6459375 -2364142 157.73
(B) 17027676 25771704 -8744028 151.35
TOTAL(A+B) 36860525 48948302 -12087777 132.79
EQUITY AND LIABAILITIES
1. SHAREHOLDER'S FUND
Share Capital 2500000 2500000 0 100.00
Reserve and Surplus 17340479 16622202 718277 95.86
(C) 19840479 19122202 718277 96.38
2. NON CURENT LIABILITIES
Long-Term Borrowing 4736422 12547088 -7810666 264.91
(D) 4736422 12547088 -7810666 264.91
3.CURRENT LIABILITIES
Short Term Borrowing 2421505 1113785 1307720 46.00
Trade Payable 6322589 12572484 -6249895 198.85
Other Current Liabilities 3155390 2885895 269495 91.46
Short Term Provisions 384140 706848 -322708 184.01
(E) 12283624 17279012 -4995388 140.67
TOTAL (C+D+E) 36860525 48948302 -12087777 132.79

22
INTERPRETATION

From the above table we can see the current assets have decreased by Rs 8744028 in
the year 2020 over 2021. On the other hand, the current liabilities have decreased by Rs
4995388. Now, such a change does not have a negative impact on the liquidity position. This
is because current assets have decreased by 151.35% whereas current liabilities have declined
by 140.67%.

4.1.3 COMPARATIVE BALANCE SHEET 2021-2022

Table 4.1.3

% IN
PARTICULAR 2021 2022 INC /DEC
CHANGES
ASSETS
1.NON CURRENT ASSETS
Fixed Assets
Tangible Asset 9191268 3246338 5944930 35.32
Deferred Tax Asset 260707 14677 246030 5.63
Long-Term Loan And Barrowing 13669067 12493324 1175743 91.40
Other Current Asset 55556 55556 0 100.00
(A) 23176598 15809895 7366703 68.21
CURRENT ASSETS
Inventories 747680 1214400 -466720 162.42
Trade Receivable 17694057 21970146 -4276089 124.17
Cash And Cash Equipment 870592 1059203 -188611 121.66
Other Current Asset 6459375 3385982 3073393 52.42
(B) 25771704 27629731 -1858027 107.21
TOTAL (A+B) 48948302 43439626 5508676 88.75
EQUITY AND LIABAILITIES
1. SHAREHOLDER'S FUND
Share Capital 2500000 2500000 0 100.00
Reserve and Surplus 16622202 10223707 6398495 61.51
(D) 19122202 12723707 6398495 66.54
2. NON CURENT LIABILITIES
Long-Term Borrowing 12547088 4522219 8024869 36.04
Deferred Tax Liability 0 34911 -34911 0.00
(D) 12547088 4557130 7989958 36.32
3.CURRENT LIABILITIES
Short Term Borrowing 1113785 3266042 -2152257 293.24
Trade Payable 12572484 9351394 3221090 74.38
OTHER
CURRENT 2885895 13389545 -10503650 463.97
LIABILITIES
Short Term Provisions 706848 151808 555040 21.48
(E) 17279012 26158789 -8879777 151.39
TOTAL (C+D+E) 48948302 43439626 5508676 88.75

23
INTERPRETATION:

From the above table we can see the current assets have decreased by Rs 1858027 in
the year 2021 over 2022. On the other hand, the current liabilities have decreased by Rs
8879777. Now, such a change does not have a negative impact on the liquidity position. This
is because current assets have decreased by 107.21% whereas current liabilities have declined
by 151.39%

4.1.4 COMPARATIVE BALANCE SHEET 2022 - 2023

Table 4.1.4

% IN
PARTICULAR 2022 2023 INC /DEC
CHANGES
ASSETS
1.NON CURRENT ASSETS
Fixed Assets
Tangible Asset 3246338 55811075 -52564737 1719.20
Deferred Tax Asset 14677 18540 -3863 126.32
Long-Term Loan and 12493324 13279809 -786485 106.30
Barrowing
Other Current Asset 55556 0 55556 0.00
(A) 15809895 69109424 -53299529 437.13
CURRENT ASSETS
Inventories 1214400 965538 248862 79.51
Trade Receivable 21970146 30549957 -8579811 139.05
Cash And Cash Equipment 1059203 2524749 -1465546 238.36
Other Current Asset 3385982 907750 2478232 26.81
(B) 27629731 34947994 -7318263 126.49
TOTAL (A+B) 43439626 104057418 -60617792 239.54
EQUITY AND LIABAILITIES
1. SHAREHOLDER'S FUND
Share Capital 2500000 2500000 0 100.00
Reserve and Surplus 10223707 68840826 -58617119 673.35
(D) 12723707 71340826 -58617119 560.69
2. NON CURENT LIABILITIES
Long-Term Borrowing 4522219 10636382 -6114163 235.20
Deferred Tax Liability 34911 1365512 -1330601 3911.41
(D) 4557130 12001894 -7444764 263.37
3.CURRENT LIABILITIES
Short Term Borrowing 3266042 0 3266042 0.00
Trade Payable 9351394 2579575 6771819 27.58
Other Current Liabilities 13389545 16731807 -3342262 124.96
Short Term Provisions 151808 1403316 -1251508 924.40
(E) 26158789 20714698 5444091 79.19
TOTAL (C+D+E) 43439626 104057418 -60617792 239.54

24
INTERPRETATION:

From the above table we can see the current assets have decreased by Rs 7318263 in
the year 2022 over 2023. On the other hand, the current liabilities have increased by Rs
5444091. Now, such a change does not have a negative impact on the liquidity position. This
is because current assets have decreased by 126.49% whereas current liabilities have declined
by 79.19%.

4.1.5 COMPARATIVE BALANCE SHEET 2023 – 2024

Table 4.1.5

INC % IN
PARTICULAR 2023 2024
/DEC CHANGES
ASSETS
1.NON CURRENT ASSETS
Fixed Assets
Tangible Asset 55811075 62064196 -6253121 111.20
Deferred Tax Asset 18540 15600 2940 84.14
Long-Term Loan and Barrowing 13279809 14205776 -925967 106.97
Other Current Asset 0 0 0 0.00
(A) 69109424 76285572 -7176148 110.38
CURRENT ASSETS
Inventories 965538 1050519 -84981 108.80
Trade Receivable 30549957 24397984 6151973 79.86
Cash And Cash Equipment 2524749 55831 2468918 2.21
Other Current Asset 907750 1853908 -946158 204.23
(B) 34947994 27358242 7589752 78.28
TOTAL(A+B) 104057418 103643814 413604 99.60
EQUITY AND LIABAILITIES
1. SHAREHOLDER'S FUND
Share Capital 2500000 2500000 0 100.00
Reserve and Surplus 68840826 69441327 -600501 100.87
(C) 71340826 71941327 -600501 100.84
2. NON CURENT LIABILITIES
Long-Term Borrowing 10636382 8206134 2430248 77.15
Deferred Tax Liability 1365512 1091341 274171 79.92
(D) 12001894 9225475 2776419 76.87
3.CURRENT LIABILITIES
Short Term Borrowing 0 284324 -284324 0.00
Trade Payable 2579575 4662636 -2083061 180.75
Other Current Liabilities 16731807 17494598 -762791 104.56
Short Term Provisions 1403316 35453 1367863 2.53
(E) 20714698 22477012 -1762314 108.51
TOTAL (C+D+E) 104057418 103643814 413604 99.60

25
INTERPRETATION:

From the above table we can see the current assets have increased by Rs 7589752 in
the year 2023 over 2024 . On the other hand, the current liabilities have decreased by Rs
1762314. Now, such a change does not have a negative impact on the liquidity position. This
is because current assets have decreased by 78.28% whereas current liabilities have declined
by 108.51%.

4.2 COMMON SIZE BALANCE SHEET 2019-2020

Table 4.2.1

% in % in
PARTICULAR 2019 2020 2019 2020
ASSETS
1.NON CURRENT ASSETS
Fixed Assets
Tangible Asset 10957179 8771848 21.10 23.80
Deferred Tax Asset 187615 229980 0.36 0.62
Long-Term Loan And Barrowing 10580294 10751328 20.37 29.17
Other Current Asset 80153 79693 0.15 0.22
CURRENT ASSETS
Inventories 937580 884710 1.81 2.40
Trade Receivable 22030445 11214393 42.42 30.42
Cash And Cash Equipment 950280 833340 1.83 2.26
Other Current Asset 6207814 4095233 11.95 11.11
TOTAL ASSETS 51931360 36860525 100.00 100.00
EQUITY AND LIABAILITIES
1. SHAREHOLDER'S FUND
Share Capital 2500000 2500000 4.81 6.78
Reserve and Surplus 17657166 17340479 34.00 47.04
2. NON CURENT LIABILITIES
Long-Term Borrowing 4518926 4736422 8.70 12.85
3.CURRENT LIABILITIES
Short Term Borrowing 5498161 2421505 10.59 6.57
Trade Payable 20836248 6322589 40.12 17.15
Other Current Liabilities 920859 3155390 1.77 8.56
Short Term Provisions 0 384140 0.00 1.04
TOTAL LIABILITIES 51931360 36860525 100 100

26
INTERPRETATION:

From the table above, we can deduce that cash represents 2.26% of the total assets while
inventory represents 2.40% of the total assets. In the liabilities section, we can deduce that trade
payable represents 17.15%, Other Current Liabilities 8.56%, Short Term Provisions 1.04% of
the total liabilities. Therefore, the assets and liabilities are being increased satisfactorily.

4.2.2 COMMON SIZE BALANCE SHEET 2020 – 2021

Table 4.2.2

% in % in
PARTICULAR 2020 2021 2020 2021
ASSETS
1.NON CURRENT ASSETS
Fixed Assets
Tangible Asset 8771848 9191268 23.80 18.78
Deferred Tax Asset 229980 260707 0.62 0.53
Long-Term Loan And Barrowing 10751328 13669067 29.17 27.93
Other Current Asset 79693 55556 0.22 0.11

CURRENT ASSETS
Inventories 884710 747680 2.40 1.53
Trade Receivable 11214393 17694057 30.42 36.15
Cash And Cash Equipment 833340 870592 2.26 1.78
Other Current Asset 4095233 6459375 11.11 13.20
TOTAL ASSETS 36860525 48948302 100.00 100.00
EQUITY AND LIABAILITIES
Share Capital
Share Capital 2500000 2500000 6.78 5.11
Reserve and Surplus 17340479 16622202 47.04 33.96
2. NON CURENT LIABILITIES
Long-Term Borrowing 4736422 12547088 12.85 25.63
3.CURRENT LIABILITIES
Short Term Borrowing
Trade Payable 2421505 1113785 6.57 2.28
Other Current Liabilities 6322589 12572484 17.15 25.69
Short Term Provisions 3155390 2885895 8.56 5.90
2. NON CURENT LIABILITIES 384140 706848 1.04 1.44
TOTAL LIABILITIES 36860525 48948302 100.00 100.00

27
INTERPRETATION:

From the table above, we can deduce that cash represents 1.78% of the total assets while
inventory represents 1.53% of the total assets. In the liabilities section, we can deduce that trade
payable represents 2.28%, Other Current Liabilities 25.69%, Short Term Provisions 5.90% of
the total liabilities. Therefore, the assets and liabilities are being increased satisfactorily.

4.2.3 COMMON SIZE BALANCE SHEET 2021 – 2022

Table 4.2.3

% in % in
PARTICULAR 2021 2022 2021 2022
ASSETS
1.NON CURRENT ASSETS
Fixed Assets
Tangible Asset 9191268 3246338 18.78 7.47
Deferred Tax Asset 260707 14677 0.53 0.03
Long-Term Loan And Barrowing 13669067 12493324 27.93 28.76
Other Current Asset 55556 55556 0.11 0.13
CURRENT ASSETS
Inventories 747680 1214400 1.53 2.80
Trade Receivable 17694057 21970146 36.15 50.58
Cash And Cash Equipment 870592 1059203 1.78 2.44
Other Current Asset 6459375 3385982 13.20 7.79
TOTAL ASSETS 48948302 43439626 100.00 100.00
EQUITY AND LIABAILITIES
1. SHAREHOLDER'S FUND
Share Capital 2500000 2500000 5.11 5.76
Reserve and Surplus 16622202 10223707 33.96 23.54
2. NON CURENT LIABILITIES
Long-Term Borrowing 12547088 4522219 25.63 10.41
Deferred Tax 0 34911 0.00 0.08
3.CURRENT LIABILITIES
Short Term Borrowing 1113785 3266042 2.28 7.52
Trade Payable 12572484 9351394 25.69 21.53
Other Current Liabilities 2885895 13389545 5.90 30.82
Short Term Provisions 706848 151808 1.44 0.35
TOTAL LIABILITIES 48948302 43439626 100.00 100.00

28
INTERPRETATION:

From the table above, we can deduce that cash represents 2.44% of the total assets while
inventory represents 2.80% of the total assets. In the liabilities section, we can deduce that trade
payable represents 21.53%, Other Current Liabilities 30.82%, Short Term Provisions 0.35% of
the total liabilities. Therefore, the assets and liabilities are being increased satisfactorily.

4.2.4 COMMON SIZE BALANCE SHEET 2022-2023

Table 4.2.4

% in % in
PARTICULAR 2022 2023 2022 2023
ASSETS
1.NON CURRENT ASSETS
Fixed Assets
Tangible Asset 3246338 55811075 7.47 53.63
Deferred Tax Asset 14677 18540 0.03 0.02
Long-Term Loan And
Barrowing 12493324 13279809 28.76 12.76
Other Current Asset 55556 0 0.13 0.00
CURRENT ASSETS
Inventories 1214400 965538 2.80 0.93
Trade Receivable 21970146 30549957 50.58 29.36
Cash And Cash Equipment 1059203 2524749 2.44 2.43
Other Current Asset 3385982 907750 7.79 0.87
TOTAL ASSETS 43439626 104057418 100.00 100.00
EQUITY AND LIABAILITIES
1. SHAREHOLDER'S FUND
Share Capital 2500000 2500000 5.76 2.40
Reserve and Surplus 10223707 68840826 23.54 66.16
2. NON CURENT LIABILITIES
Long-Term Borrowing 4522219 10636382 10.41 10.22
Deferred Tax 34911 1365512 0.08 1.31
3.CURRENT LIABILITIES
Short Term Borrowing 3266042 0 7.52 0.00
Trade Payable 9351394 2579575 21.53 2.48
Other Current Liabilities 13389545 16731807 30.82 16.08
Short Term Provisions 151808 1403316 0.35 1.35

TOTAL LIABILITIES 43439626 104057418 100.00 100.00

29
INTERPRETATION:

From the table above, we can deduce that cash represents 2.43% of the total assets while
inventory represents 0.93% of the total assets. In the liabilities section, we can deduce that trade
payable represents 2.48%, Other Current Liabilities 16.08%, Short Term Provisions 1.35% of
the total liabilities. Therefore, the assets and liabilities are being increased satisfactorily.

4.2.5 COMMON SIZE BALANCE SHEET 2023-2024

Table 4.2.5

% in % in
PARTICULAR 2018 2019 2018 2019
ASSETS
1.NON CURRENT ASSETS
Fixed Assets
Tangible Asset 55811075 62064196 53.63 59.88
Deferred Tax Asset 18540 15600 0.02 0.02
Long-Term Loan And Barrowing 13279809 14205776 12.76 13.71
Other Current Asset 0 0 0.00
CURRENT ASSETS
Inventories 965538 1050519 0.93 1.01
Trade Receivable 30549957 24397984 29.36 23.54
Cash And Cash Equipment 2524749 55831 2.43 0.05
Other Current Asset 907750 1853908 0.87 1.79
TOTAL ASSETS 104057418 103643814 100.00 100.00
EQUITY AND LIABAILITIES
1. SHAREHOLDER'S FUND
Share Capital 2500000 2500000 2.40 2.41
Reserve and Surplus 68840826 69441327 66.16 67.00
2. NON CURENT LIABILITIES
Long-Term Borrowing 10636382 8206134 10.22 7.92
Deferred Tax 1365512 1019341 1.31 0.98
3.CURRENT LIABILITIES
Short Term Borrowing 0 284324 0.00 0.27
Trade Payable 2579575 4662636 2.48 4.50
Other Current Liabilities 16731807 17494598 16.08 16.88
Short Term Provisions 1403316 35454 1.35 0.03
TOTAL LIABILITIES 104057418 103643814 100.00 100.00

30
INTERPRETATION:

From the table above, we can deduce that cash represents 0.05% of the total assets while
inventory represents 1.01% of the total assets. In the liabilities section, we can deduce that trade
payable represents 4.50%, Other Current Liabilities 16.88%, Short Term Provisions 0.03% of
the total liabilities. Therefore, the assets and liabilities are being increased satisfactorily.

4.3 RATIO ANALYSIS

Net Profit Ratio

TABLE 4.3.1

YEAR 2020 2021 2022 2023 2024

Net Profit 59433889 35222787 47217728 52559937 65567971

Sales 12468764 73677687 99327523 108753178 140463969

Net Profit Ratio 47.67% 47.81% 47.54% 48.33% 46.68%

CHART 4.3.1

NET PROFIT
48.50% 48.33%

48.00% 47.81%
47.67%
47.54%
47.50%

47.00% 46.68%

46.50%

46.00%

2015 2016 2017 2018 2019

31
INTERPRETATION:

Table- 4.3.1 clearly indicates that there is a decreasing and increasing trend in the net
profit ratio level. In the year 2020 the ratio was 47.67% and it decreased to 48.68% by the year
2024, a decrease of 0.98% over five years. The net sales have been increased sharply but the
reason for decrease in net profit is due to the increase in credit sales, increase in debt.

Gross profit

Table 4.3.2

YEAR 2020 2021 2022 2023 2024

Gross Profit 65254875 38454900 52109795 56193241 74895998

Sales 12468764 73677687 99327523 108753178 140463969

Gross Profit
ratio 52.33% 52.19% 52.46% 51.67% 53.32%

GROSS PROFIT
53.50%
53.32%

53.00%

52.50% 52.46%
52.33%
52.19%
52.00%

51.67%
51.50%

51.00%

50.50%

50.00%
2015 2016 2017 2018 2019

32
INTERPRETATION
Table- 4.3.1 clearly indicates that there is a increasing trend in the gross profit ratio
level. In the year 2020 the ratio was 52.33% and it decreased to 51.67% to the 2023 year. The
profit has been increased sharply to the next year.

Inventory Turnover Ratio

Table 4.3.3

Year 2019-20 2020-21 2021 -22 2022 -23 2023-24

Net Sales 35222787 47217728 52559937 65567971 65660584

Closing
Inventories 884710 747680 1214400 965538 1050519

Inventory
Turnover Ratio 39.81 63.15 43.28 67.91 62.5

Chart 4.3.3

Inventory Turnover Ratio

80

70

60

50

40

2014-15 2015-16 2016-17 2017-18 2018-19

33
INTERPRETATION:

It is seen from the above chart that During the year 2014-15 the Inventory t/o ratio is
39.81 times, in the year 2020 -21 it increased to 63.15 times, but in the year 2021 -22 it
decreased to 43.28 times. There was a subsequent increase in the year 2022-23 and 2023-24 to
67.91 times and 62.5 times respectively. This shows the company has more sales.

Debtor’s turnover ratio.

Table 4.3.4

Year 2019-20 2020-21 2021 -22 2022 -23 2023-24

Net Sales 35222787 47217728 52559937 65567971 65660584

Avg. Debtors 11214393 17694057 21970146 30549957 24397984

Debtors
Turnover Ratio 3.14 2.66 2.39 2.14 2.69

Chart 4.3.4

34
INTERPRETATION:

It is clear that the debtor turnover ratio fluctuated over the years. It was 3.14 times in
the year 2019-20. It decreased to 2.66 times in the year 2020-21, It again decreased to 2.39
times in the year 2021-22 and it decreased to 2.14 times in the year 2017-18 and it increased to
2.69 Times in the year 2023-24. This shows the company is not collecting debt rapidly.

Creditors Turnover Ratio:

Table 4.3.5

Year 2019-20 2020-21 2021 -22 2022 -23 2023-24

Net Purchases 14831551 20418775 18400133 14023328 17327945

Avg. Creditors 6322589 12572484 9351394 2579575 4662636

Creditors
Turnover Ratio 2.34 1.62 1.96 5.43 3.71

Chart 4..3.5

Creditors turnover ratio

6

0
2014-15 2015-16 2016-17 2017-18 2018-19

Creditors Turnover Ratio

35
INTERPRETATION:

It is clear that the creditor turnover ratio changed over the years. It was 2.34 times in
the year 2019-20. It decreased to 1.62 times in the year 2020-21, there was a subsequent
increase in the year 2021-22 and 2022-23 to 1.96 times and 5.43 times respectively. In the year
2023-24 it decreased to 3.71. It shows that the company has made prompt payment to the
creditors.

Working Capital Turnover Ratio:

Table 4.3.6

Year 2019-20 2020-21 2021 -22 2022 -23 2023-24

Net Sales 35222787 47217728 52559937 65567971 65660584

Net Working
Capital 4744052 8492692 1470942 14233296 4881231

Working Capital
Turnover Ratio 7.42 5.55 35.73 4.6 13.45

Chart 4.3.6

36
INTERPRETATION:

The working capital turnover ratio is fluctuating year to year that was high in the year
2019-20, 7.42 times; there was a subsequent decrease in the year 2020-21 and increase in the
year 2021-22 to 5.55 times and 35.73 times. But it decreased in the year 2022-23 and increased
in the year 2023-24 to 4.6 and 13.45 times respectively. This shows the company is utilizing
working capital effectively

37
 CHAPTER – 5

FINDINGS, SUGGESTIONS AND CONCLUSION

5.1 FINDINGS

❖ The Pride India Limited 2019-20, it has been found that the current assets
53.81% and current liabilities 33.2 %.
❖ The Pride India Limited 2020-21 it has been found that the current assets
52.65% current liabilities are 35.30 %
❖ The Pride India Limited 2021-22 it has been found that the current assets
63.60% current liabilities are 60.22 %.
❖ The Pride India Limited 2022-23 it has been found that the current assets
33.59% current liabilities are 19.91 %.
❖ The Pride India Limited 2023-24 it has been found that the current assets
26.40% current liabilities are 21.69 %.
❖ Company do not have consistent they is a fluctuation in the assets and
liabilities. In the year 2021-22 liabilities are increase at 60%.
❖ The sertel electronics 2019 - 2020 it has been found that the current assets
43.48% current liabilities are 54.93 % shareholders fund was decreased in
2015 when compare to previous year 2019.
❖ The Pride India Limited 2020 - 2021 it has been found that the current
assets 151.35% current liabilities are 140.67% shareholders fund was
decreased in 2021 when compare to previous year 2020.
❖ The Pride India Limited 2021-2022 it has been found that the current assets
13.14% current liabilities are 151.39% shareholders fund was decreased in
2022 when compare to previous year 2021.
❖ The Pride India Limited 2022 - 2023 it has been found that the current
assets 3.29% current liabilities are 79.19% shareholders fund was
increased in 2023 when compare to previous year 2022.

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❖ The Pride India Limited 2023-2024 it has been found that the current
assets 5.30% current liabilities are 108.51% shareholders fund was
increased in 2024 when compare to previous year 2023.
❖ The company comparative statement in the year of 2019-20, 2020-2021
assets and liabilities are all most same, 2021-2022,2022-2023,2023-2024
assets are less when compare to liabilities.
❖ The company non- current assets 2019-20 is decreased in 43.48% and non-
current liabilities is also decreased in 54.93%
❖ The company non- assets 2020-2021 is increased in 11.6 % and non-
current liabilities is also increased in 14.6%
❖ The company non- assets 2021-2022is decreased in 68.21 % and non-
current liabilities is increased in 36.6%
❖ The company non- assets 2022-2023 is increased in 43.7 % and non-
current liabilities is decreased in 79%
❖ The company non- assets 2023-2024 is increased in 11% and non-current
liabilities is increased in 10.5%
❖ The Operating Profit ratio is fluctuating year to year. In 2019-20 it was 98
times; it was constant in the year 2020-21, 2021-22 and 2022-23 to 99
times
❖ The working capital turnover ratio is fluctuating year to year that was high
in the year 2019-20, 7.42 times; there was a subsequent decrease in the year
2020-21and increase in the year 2021-22 to 5.55 times and 35.73 times

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5.2 SUGGESTIONS

❖ Company needs to maintain more cash balances for its working capital needs.
❖ It may be suggested that the financial services limited should utilize limited funds for
the purchase of fixed assets it affects the growth of the company.
❖ It is suggested to raise the funds by issuing more shares.
❖ The company should concentrate more on the current assets.
❖ The company is maintaining more reserves, so it is suggested to utilize optimum
reserves
❖ Fixed assets do not make major impact in financial business as it not a manufacturing
concern hence decrease in fixed assets can be omitted, it does not bring any major
changes in the profits of the company but however it is good to have more fixed assets.
❖ Hence the overall performance of the company is good but need to improve for
excellence. Improvement is always necessary for a growing company, achieving
excellence is a long term process the company has to plan for every current year and if
it succeeds automatically the company will become a benchmark for all other
companies.
❖ In order to increase the profitability of the company, it is suggested to control the cost
of goods sold and operating expenses.
❖ The quantum of sales generated should be improved impressively in order to enjoy
better growth rate in assets and capital employed.
❖ The company has to increase its Earning per share by issuing debenture capital

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5.3 CONCLUSIONS

Financial statement analysis is largely a study of relationship among the various

financial factors in a business as disclosed by a single set of statements and statements. It 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.

Financial statements analysis is an attempt to determine the significance and meaning

of the financial statement data so that forecast may be made of the future earnings, ability to
pay interest and debt maturities (both current and long term) and profitability of a sound policy.

A number of methods or devices are used for the analysis the balance sheet and income
statements of the PRIDE INDIA for a period of 5 years (2019-2024). The analysis was done
by using various financial tools, statistical tools. The graphs were used accordingly to support
the analysis.

This project entitled financial performance analysis helped in knowing the firm’s
financial strengths and weakness which helps the company to make better utilization of its
resources.

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 REFERENCES

BOOKS

❖ Management Accounting – Dr. Nisar Ahmad, Anmol Publications, Chapter-2 Analysis

and Interpretation of financial statements.
❖ Management and Financial Accounting – Dr.S. N. Maheshwari, Sultan Chand
Publishers.
❖ Management and Financial Accounting – T. S. Reddy and Y. Hari Prasad Reddy,
Margham Publications.
❖ Management Accounting and Financial Management – R. K. Sharma and Shashi K.
Gupta, Kalyani Publishers.

WEBSITE

www.accountingcoach.com

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 APPENDIX

Pride India private limited

❖ Balance sheet (2019 -2024)

❖ Statement of Profit and loss account (2019-2024)

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