A STUDY ON FINANCIAL PERFORMANCE OF GOOGOLSOFT

TECHNOLOGIES

ABSTRACT

This project deals with the study on financial performance of GOOGOLSOFT

TECHNOLOGIES. The main objective of this project is to analyze the financial performance of
the company and the liquidity position of the company for each year. Secondary objectives are to
find out the efficiency of the company using financial ratios like profitability ratios, turnover
ratio & solvency ratio of the company and to apply the related ratios in order to analyze the
financial performance of the company and to suggest suitable suggestions.

This project is about the financial performance of the

GOOGOLSOFT TECHNOLOGIES. By calculating the important key ratios of the company
with the help of the financial statement for the 5 years, researcher analyze where the company is
standing in the market in order to predict the future, the project deals with the competitors in the
market. And what will be the opportunities and the threat for the company in the market. The
researcher not only considered the key ratios and also the current trend in the market to predict
the future.

For analyzing the financial performance of the GOOGOLSOFT TECHNOLOGIES,

secondary data such as balance sheet, the financial statements of the company are collected and
also the tools have been applied. Finally, from the analysis and interpretation of the study, it has
been concluded about the company performance as it is improving by increasing its capital.
Ratios are dynamic for every year. The study suggests that the company needs to improve its
capital position decisions to maximize its earnings for the forth coming years.

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 TABLE OF CONTENTS

CHAPTER NO. CONTENTS PAGE NO.

I INTRODUCTION

II INDUSTRY PROFILE
2.1 IT Industry Profile

2.2 Company profile

III REVIEW OF LITERATURE

IV RESEARCH METHODOLOGY

4.1 Research design

4.2 Objectives for the study

4.3 Need of the study

4.4 Limitation of the study

V DATA ANALYSIS AND INTERPRETATION

VI FINDINGS

VII SUGGESTIONS

VIII CONCLUSION

IX ANNEXURE

BIBLIOGRAPHY

BALANCESHEET

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 TABLE CONTENTS

SLNO CONTENTS PAGE NO.

1 CURRENT RATIO

2 LIQUID RATIO

3 WORKING CAPITAL TURNOVER RATIO

4 PROFITABILITY RATIO

5 CASH POSITION RATIO

6 OPERATING RATIO

7 DEBTORS TURNOVER RATIO

8 PROPREITORY RATIO

9 GROSS PROFIT RATIO

10 NET PROFIT RATIO

11 COMPARATIVE BALANCESHEET 2008

12 COMPARATIVE BALANCESHEET 2009

13 COMPARATIVE BALANCESHEET 2010

14 COMPARATIVE BALANCESHEET 2009-07

15 COMMON SIZE BALANCESHEET 2008

16 COMMON SIZE BALANCESHEET 2009

17 COMMON SIZE BALANCESHEET 2010

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18 COMMON SIZE BALANCESHEET 2009-06

19 TREND PERCENTAGE OF NET SALES

20 TREND PERCENTAGE OF NET PROFIT

21 TREND PERCENTAGE OF CURRENT LIABILITIES

22 TREND PERCENTAGE OF CURRENT ASSETS

4
 TABLE CONTENTS

SLNO CONTENTS PAGE NO.

1 CURRENT RATIO TABLE

2 LIQUID RATIO TABLE

3 WORKING CAPITAL TURNOVER RATIO TABLE

4 PROFITABILITY RATIO TABLE

5 CASH POSITION RATIO TABLE

6 OPERATING RATIO TABLE

7 DEBTORS TURNOVER RATIO TABLE

8 PROPREITORY RATIO TABLE

9 GROSS PROFIT RATIO TABLE

10 NET PROFIT RATIO TABLE

11 TABLE OF COMPARATIVE BALANCESHEET 2008

12 TABLE OF COMPARATIVE BALANCESHEET 2009

13 TABLE OF COMPARATIVE BALANCESHEET 2010

TABLE OF COMPARATIVE BALANCESHEET 2009-

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07

15 TABLE OF COMMON SIZE BALANCESHEET 2008

16 TABLE OF COMMON SIZE BALANCESHEET 2009

5
17 TABLE OF COMMON SIZE BALANCESHEET 2010

18 TABLE OF COMMON SIZE BALANCESHEET 2009-

06

19 TABLE OF TREND PERCENTAGE OF NET SALES

20 TABLE OF TREND PERCENTAGE OF NET PROFIT

21 TABLE OF TREND PERCENTAGE OF CURRENT

LIABILITIES

22 TABLE OF TREND PERCENTAGE OF CURRENT

ASSETS

6
 INTRODUCTION

FINANCIAL STATEMENT ANALYSIS

Every business concern wants to know the various financial aspects for effective decision
making. The main aim of preparing a financial statement is to achieve the objectives of the firm
as a whole. The term financial statement refers to an organized collection of data on the basis of
accounting principles and conventions to disclose its financial information.

DEFINITION

According to John N. Myer (1985), the financial statements provide a summary of the
accounts of a business enterprise, the balance sheet reflecting the assets, liabilities and capital as
on a certain date and the income statement showing the results of operations during a certain
period.

According to Anthony (1976), financial statements, essentially, are interim reports,

presented annually and reflect a division of the life of an enterprise into more or less arbitrary
Accounting period more frequently in a year.

Financial statements are broadly grouped into two groups.

1. Income Statements (Trading, Profit and loss Account)

2. Balance Sheets

NATURE OF FINANCIAL STATEMENTS

Financial statements are prepared on the basis of business transactions recorded in the books of
Original Entry or Subsidiary books, Ledger and Trial balance. Recording the transactions in
the books of primary entry is supported by document proofs such as vouchers, invoice notes etc.

7
 According to the American institute of certified Public Accountants, Financial statement
reflects a combination of recorded facts, accounting conventions and personal judgments; and
conventions applied affect them materially. It is, therefore concluded that the nature and
accuracy of the data included in the financial statements are in the financial statements are
influenced by the following factors:

1. Recorded facts concerning the business transactions.

2. Generally accepted accounting principles.
3. Personal judgments.
4. Accounting conventions adopted to facilitate the accounting technique.

CONCEPT OF FINACIAL STATEMENT

Financial statement also called financial report, refers to such statements as it

contains financial information of the enterprise. They are over all general purpose entity
statement as the report financial position and operation results of an enterprise business at
end of account period. As a matter of fact, these statements reflect the total of the
summary of the books of account.

FINANCIAL PERFORMANCE ANALYSIS

Financial performance analysis is the process of identifying the financial strengths and
weaknesses of the firm by properly establishing the relationship between the items of balance
sheet and profit and loss account. It also helps in short term and long term forecasting and
growth can be identified with the help of financial performance analysis.

The dictionary meaning of analysis is to resolve or separate a thing in to its element or

components parts for tracing their relation to the things as whole and to each other.

The analysis of financial statement is a process of evaluating the relationship between the
component parts of financial statement to obtain a better understanding of the firms position and
performance. This analysis can be undertaken by management of the firm or by parties outside
the namely, owners, creditors, investors and others.

MEANING OF FINANCIAL STATEMENT

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 A financial statement is a collection of data organized according to logical and consistent
Accounting procedures. Its purpose is to convey an understanding of some financial aspects of a
business firm. It may show a position at a moment in time as in the case of a balance sheet, or it
may reveal series of activities over a given period of time, as in the case of an income statement.

The statement disclosing status of investments is known as balance sheet and the statement
showing the result is known as profit and loss account. Thus, the term financial statement has
been widely used to represent two statements prepared by accountants at the end of specific
period. They are: (I) profit and loss account or income statement; and (ii) Balance sheet or
statement of financial position.

Financial statements are prepared as an end result of financial accounting and are the major
sources of financial information of an enterprise. Financial statements are also called as financial
reports.

The financial statements are prepared on the basis of recorded facts. The recorded facts are
those which can be expressed in monetary terms. The statements are prepared for a particular
period, generally for one year.

TYPES OF FINANCIAL STATEMENTS

Financial statements include

A Balance Sheet
An Income Statement
A Statement of changes
A Statement of changes in Financial Position: It is fund flow and cash flow statement.
The financial statements are prepared with a view to depict financial position of the
concern. A proper analysis and interpretation of these statements enables a person to judge the
profitability and financial strength of the business.

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IMPORTANCE OF FINANCIAL STATEMENTS

(a) For management: Till recently, the feeling was that financial statements are meant only for
owners of the concern and to satisfy legal requirements. Now it is realized that financial
statements are of utmost help to the management of a concern. Management will be able to take
effective decisions only when correct and reliable information is at its disposal. If information is
not available, management can neither plan nor fulfill the functions of operation and control.
(b) For the Financiers: Besides managements, financial statements are also of great importance
to the financiers and lenders. Lenders need information regarding customers financial position,
solvency, credit standing, profitability, etc. Financial statements help the bankers and lenders to
decide whether to extend loans to the customers.
(c) For the Creditors: A Trade creditor is another class for whom financial statements are
important. Trade credit implies extending facilities of deferred payment for credit purchases by
seller buyer. All these facts are revealed by financial statements with the help of solvency ratios,
cash and fund flow analysis, etc.
(d) For Investors: Present and prospective investors are interested in studying financial
statements to assess earning capacity, growth potential and efficiency of management. Financial
statements provide such information readily to shareholders and debenture.

LIMITATIONS OF FINANCIAL STATEMENTS

Financial statements are normally prepared on the basis of accounting principles,

conventions and past experiences. Therefore, they op not communicate much
about the profitability, solvency, stability, liquidity etc. of the undertakers to the
users of the statements.
Financial statement emphasis to disclose only monetary facts, i.e., quantitative
information, but qualitative information is ignored.
Financial statements disclose only the historical information. It does not consider
changes in money value, fluctuations of price level, etc. Thus, correct forecasting
for future is not possible.
Influences of personal judgments leads to opportunities for manipulation while
preparing financial statements.

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 Information disclosed by financial statements is based on accounting concepts and
conventions. It is unrealistic because of the difference in terms and conditions,
and changes in economic situations.

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 INDUSTRY PROFILE

IT Industry, Information Technology Industry

Information technology, and the hardware and software associated with the IT industry, are an
integral part of nearly every major global industry. The information technology (IT) industry has
become of the most robust industries in the world. IT, more than any other industry or economic
facet, has an increased productivity, particularly in the developed world, and therefore is a key
driver of global economic growth. Economies of scale and insatiable demand from both
consumers and enterprises characterize this rapidly growing sector.
The Information Technology Association of America (ITAA) explains 'information technology'
as encompassing all possible aspects of information systems based on computers. Both software
development and the hardware involved in the IT industry include everything from computer
systems, to the design, implementation, study and development of IT and management systems.
Owing to its easy accessibility and the wide range of IT products available, the demand for IT
services has increased substantially over the years. The IT sector has emerged as a major global
source of both growth and employment.
Features of the IT Industry at a Glance
Economies of scale for the information technology industry are high. The marginal cost of each
unit of additional software or hardware is insignificant compared to the value addition that
results from it. Unlike other common industries, the IT industry is knowledge-based. Efficient
utilization of skilled labor forces in the IT sector can help an economy achieve a rapid pace of
economic growth. The IT industry helps many other sectors in the growth process of the
economy including the services and manufacturing sectors.
The role of the IT Industry
The IT industry can serve as a medium of e-governance, as it assures easy accessibility to
information. The use of information technology in the service sector improves operational
efficiency and adds to transparency. It also serves as a medium of skill formation.

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MAJOR STEPS TAKEN FOR PROMTION OF IT INDUSTRY
Domain of the IT Industry
A wide variety of services come under the domain of the information technology industry. Some
of these services are as follows:
Systems architecture
Database design and development
Networking
Application development
Testing
Documentation
Maintenance and hosting
Operational support
Security services
Excerpt from Information Technology Industry Profile

The US information technology (IT) industry includes about 120,000 establishments (single-
location companies and branches of multi-location companies) with combined annual revenue of
about $250 billion. Major companies include Computer Sciences Corporation (CSC), Unisys,
and the technology consulting arms of IBM and Hewlett-Packard. The computer facilities
management segment of the industry is highly concentrated: the 50 largest companies hold more
than 80 percent of the market. The rest of the industry is fragmented: the 50 largest companies
hold less than half the market.

Related industries covered in separate profiles include manufacturers of computer

hardware, software, and telecommunications equipment, as well as providers of Internet
and telecommunications services.

COMPETITIVE LANDSCAPE

Demand for IT services is driven by rapid technological advances, but spending for these
expensive products depends on the health of the US economy. The profitability of companies
depends on offering technical expertise, innovative services, and effective marketing. Large
companies have advantages in broad service offerings and global reach, which give them the

13
ability to provide outsourcing services to big corporate customers. Small companies can compete
effectively by specializing in market niches or by partnering with larger companies that want to
broaden their mix of services.

PRODUCTS, OPERATIONS & TECHNOLOGY

IT companies mainly provide consulting, systems integration, data processing,

and technology outsourcing services to business customers. Computer systems design,
development, and integration services account for about 35 percent of industry revenue;
application design and development services, 25 percent.

IT Industry in India

IT Industry in India comprises hardware, software, and ITES (Information Technology Enabled
Services). As per McKinsey-NASSCOM report, India's annual revenue from the IT industry for
2008 has been projected at US $ 87 billion. This includes IT services, software products and
services, IT enabled services and e-businesses.

The distribution of US $ 87 billion has been worked out as:

IT Services generating revenue of US $ 38.5 billion

Software products and services contributing with revenue of US $ 19.5 billion

IT enabled services (ITES) generating a revenue of US $ 19 billion

E-business earning revenue of US $ 10 billion other vital observations of the NASSCOM-

McKinsey report about Indian IT industry are:

Of the total Indian exports, IT will constitute 35%

FDI (foreign direct investment) of almost US $ 5 billion will be attracted by the IT
industry

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 Software and services will account for 7.5 % of GDP growth

IT shares capitalization value will be almost US $ 225 billion

IT sector will create 2.2 million jobs within 2008.

IT hardware industry in India

GOOGOLSOFT TECHNOLOGIES Pvt Ltd, Wipro Ltd., Zenith Computers, PCS Industries
Ltd., Acer, TVS Electronics, D-link Industries, Microtek Devices are some of the renowned
Indian computer hardware and peripheral device manufacturers in India. IBM, Hewlett Packard,
Dell, Epson, Canon are multinational corporations in computer hardware and peripherals
operating in India.

IT Software Industry in India

IT software industry has witnessed phenomenal growth in the last decade. During the decade
1990-2000 the software industry in India grew from US $ 150 million to US $ 5.7 billion.
Satyam, Infosys, Wipro and TCS are some of the leading Indian software IT companies.

Other IT Industries in India

Other IT industries in India include organizations engaged in ITES (information technology
enabled services), and e-businesses. BPOs, and Web page developers and writers are doing
flourishing business in India. India is attracting huge FDIs (foreign direct investments) is these
two segments.

Some of the major reasons for the significant growth of the IT industry of India are -
* Abundant availability of skilled manpower
* Reduced telecommunication and internet costs
* Reduced import duties on software and hardware products
* Cost advantages
* Encouraging government policies
Some of the major companies in the IT industry of India are -
* Tata Consultancy Services (TCS)
* Infosys

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* Wipro
* IBM
* HP
* HCL
* Cognizant Technology Solutions (CTS)
* Patni
* Mahithir Satyam
* NIIT
India's IT industry caters to both domestic and export markets. Exports contribute around 75% of
the total revenue of the IT industry in India. The IT industry can be broadly divided into four
segments -
* IT services
* Softwares (includes both engineering and Research and Development)
* ITES-BPO
* Hardware
Obviously that every employee need successful career path and career development, which is
basically about job promotion and training. It is apparently that all of companies or organization
has career development for their staff. In general, many of us think about the ways that the
employer should take in consideration in order to let staff have opportunity to improve working
skills. However, in many industries, the career development schemes are pretty much the same
except several type of business that has different approach available to staffs.
Let me take you to the type of business, which is very important industry in the world, It and
technology industries. As we can see that this industry is very different from others. Normally we
can see that many types of business has clear picture of career promotion and training for
employees. But for IT industry, they normally have more than what other business has. That is,
they may have more attractive scheme for welfares and remunerations for staff that perform
excellent job. The reason behind this because IT industry is very important to the company
success as we can see now IT and technology has ruled the world, many traditional business has
turned out to have IT function for their sell and service, and the consequence is employees in IT
field are very expensive and many of IT company trying to keep the valuable staff to stay with

16
them as long as they can, otherwise these staffs will be collected by other company which
sometimes are Major competitors.
2.2 COMPANY PROFILE

Googolsoft Technologies is a software development and web development company which

offers world class application development services and an unparalleled business consulting
services. Our comprehensive portfolio of services includes Software Development, Web
Development, Web Designing, Web Hosting and Technology Staffing,

With our expertise developed through the profound experience, we help the businesses to
bridge the gap between their business and information technology driven goals. Periodical
workshops offer soft skills training programmes to our corporate executives. As a web
development and web designing company, we have been redefining the market standards with
utmost consistency.

Googolsoft Technologies is powered by skill professionals and driven by its mission to create
values to all its clients. Our forte is the well qualified programmers and the innovative
methodologies used to provide software development of international standards.

SERVICES:
1. Software development
2. Web development
3. Web designing
4. Web hosting
5. Technology staffing

SOFTWARE DEVELOPMENT:
Googolsoft creates custom software applications for the clients to meet their specific business
needs. Clients leverage our experience and knowledge base to improve their businesses with the

17
latest technologies. Our development team works with them to identify inefficiencies and
bottlenecks in their workflow processes, and create custom IT tools to address their needs.
At Googolsoft, our Java application development team takes full responsibility and
ownership of the entire project. Our expert team identifies the clients application development
needs and then delivers ready-to-use solutions.

Java Application Development

Googolsoft has a dedicated Java application development team with good proficiency across
various industry verticals. Our company offers a wide range of Java Development Services
which includes Java Application Development, Java Software Development, Java Web
Development, J2ME application Development, J2EE Application Development, Java Mobile
Application Development and Java Enterprise Portal Development.

Java Application Development Expertise

Googolsofts Java application development team develops world-class Java applications
which run across different platforms, adding value to our customers products and organizations.
As a Java development company, we help our clients realize the potential and benefits of J2EE
and J2ME applications and related technologies including Enterprise Java Application
Development, Web Portal Development and
Mobile Application Development.

Our Java Development expertise includes:

Enterprise Software Application Development
SaaS Application Development
Web Portal Development
Java Software Development
J2ME Mobile Application Development
Migration, Enhancement, and Integration of Java Applications
Java Application Maintenance

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 Java Application Testing

Technology Expertise:
Googolsofts Java application development team is well experienced in technologies and
tools necessary to design, develop, and test a robust and scalable Java application:
1. J2EE Application development
2. EJB, Servlets, JSP, JDBC, JNDI, RMI/IIOP, JTA/JTS, JMS, JavaMail, JSF, Struts,
Spring, Hibernate
3. Client/Desktop
4. HTML/XHTML, JavaScript, J2ME, J2SE, SWING, SWT, Macromedia Flex, ActiveX

Development Methodologies:
Our company follows CASE tools software methodology which leads to effective execution
of Java application development plans. Our Java development plans are geared towards flexible,
secure and portable Java application development.

Our technical Java software development team strives to do more than just application
programming. We make efforts to take complete ownership of your Java application
development project, to be your technology partner for Java development. Our Java application
development approach is a world-class experience for business in the following ways:
Our expert team focuses on a secure and scalable application architecture
Experienced professionals use the latest cutting-edge technology for Java application
development
Our analytical approach looks at the broader picture of your business objectives for Java
software development
Our priority is on overall security of the system
Unique development process and a global delivery model enable us to address your most
pressing technology needs

WEB DEVELOPMENT

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 Googolsoft specializes in various web technologies like PHP, ASP.NET, LAMP, Joomla and
back-end databases including MySQL and SQL Server. We generally follow the agile method for
project management. The entire project is first split up into several small milestones with
deliverables and time frame defined. Our team works on each milestone and the progress report
is sent on a daily basis. Modules once completed are uploaded to our test server for client
feedback. The project manager assigned communicates with the client and sends the status
reports.

An experienced web project manager is assigned for each project and holds the below
responsibilities:
- Act as a single point of contact between the client and the project team.
- Monitor the design and the development activities.
- Communicate the project updates and delivery milestones to the client regularly and
participate in project discussions.
- Update the internal project monitoring software on a daily basis
- Track all the bug reports in Mantis and update the Mantis accordingly
- Communicate with client for overall feedback and post launch support

We generally use the following tools for different aspects of a project development process:-
1. Bug Tracking Mantis
2. Feature Request Documentation GoogleDocs
3. Source Code Repository SVN

We use a development server for hosting the web portal during the entire development and
testing process. The URL to the web portal at this phase will not be crawlable by Google and it is
password protected. So only our development team and the client have access to it. We are
committed to create a successful and profitable website for our clients.

WEB DESIGNING
Googolsoft has one of the best web design teams in South India, a dedicated design team to
create professional Web2.0 designs for our clients. Our designs are targeted to the end users who

20
will use the website. We are creative, experimental and at the same time address the functional
specifications of the website. We believe that a great design is the key to making a successful
websites.

We study the client requirements and research other websites in terms of usability and
popularity. Based on outcome of the study, we prepare the design mockups which are sent to the
client for approval. Once the home page is approved by the client, we design the inner sections
based on the basic theme.

WEB HOSTING
Googolsoft offers affordable and cheap web hosting plans to all its clients. It includes all the
basics and the flexibility to customize with options tailored to your needs. Our hosting services
are perfect for small static websites to big dynamic portals. All this comes in an affordable price
that is packed with power features. Our company provides Linux & Windows based hosting
plans.

TECHNOLOGY STAFFING
Googolsoft specializes in providing the technology staffing services to all its IT clients on
any fixed duration basis. Our technology staffing services extends across all the verticals in the
IT sector. Clients leverage on our experience and knowledge base in the Information technology
sector to avail the best staffing resources with the least turn around time.

Our company strongly believes that human assets play a crucial part in the growth of an
organization. In this dynamic market, competitive advantage of every company depends upon the
competent and committed employees. Depending on the needs of our clients, we provide skilled
manpower on a temporary or contract basis.

Technology staffing ensures Just-in time recruitment for short-term or critical projects
without the overheads associated with a full time employee. It enables our clients to manage their
head count with ease. Technology staffing acts as a flexible, cost effective and a quick solution
for all our IT clients.

21
 Contract staffing service also provides an opportunity for our clients to evaluate the on the
job performance of a temporary staff and rewarding the good performance with a permanent job.
All of our professionals are guaranteed to meet or exceed our clients expectations.

BENEFITS OF OUR STAFFING SERVICES:

Our expertise in developing complex software applications enable us to understand the IT

staffing requirements and provide pre-screened candidates that best fit our clients technology
staffing needs. Googolsoft possesses a unique combination of time tested processes and
innovative recruitment techniques with the state of the art infrastructure. Technology
professionals who match both the job profile and the culture of the clients organization are only
suggested.
Our team of highly qualified recruiters with strong experience and expertise in recruitment
across all the domains acts as an extended partner for our clients.Flexibility for our clients to get
temporary staffing of qualified professionals on any fixed duration basis. Contract duration of
our professionals can also be extended based on the demand of the projects

CLIENTS:

A partial list of our IT clients:

1. HCL Technologies (CMMI Level 5)
2. Mascon Global Limited (CMMI Level 5)
3. CSC India (Fortune 500 company)
4. Calsoft Labs (CMM Level 5)
5. Bahwan Cybertek (CMMI Level 5)
6. Ness Technologies (CMM Level 5)

22
7. Cybernet Slash Support (CMM Level 5)
8. Sword Global (CMM Level 5)
9. GAVS Technologies (CMM Level 5)
10. Aspire Systems (CMMI Level 4)
11. Kumaran Systems (CMMI Level 3)
12. Photon InfoTech (CMM Level 3)

23
ORGANIZATION STRUCTURE

Managing Director

Human Business Finance Software

Resources Developme Manager Project
Manager nt Manager Manager

HR Team Business Finance Project Lead

Lead Developme Executive
nt Lead
HR
Executives Senior
Business
Software
Developme
Engineer
nt
Executives Software
Engineer

Software
Trainee

24
HR Team
Lead
 CHAPTER 3

REVIEW OF LITERATURE

1. In the article of financial analysis Dr.Kamm, Department of Finance. GSB

Financial Analysis is designed for finance majors in order to improve their skills at analyzing
companies and to advance their knowledge of finance theory and application. The overall
financial analysis includes: bond valuation, financial statement analysis, financial ratios,
financial forecasting, beta and the CAPM, the weighted average cost of capital, the Gordon
Growth model, discounted cash flow analysis and multiples. Students are expected to integrate
skills of finance, economics, and accounting in the course. The course is quantitative and
analytical in nature; we made use of the trading center throughout most of the term. Students
calculate and interpret financial data, build spreadsheet models, and make general conclusions
about the financial health of a company and its intrinsic value.

2. In the article of MEASURING FINANCIAL PERFORMANCE (A Critical Key to

Managing Risk)
Dr. Laurence M. Crane.

25
FINANCIAL STATEMENTS
Financial statements help assess the financial well-being of the overall operation.
Information about the financial results of each enterprise and physical asset is important for
management decisions, but by themselves are inadequate for some decisions because they do not
describe the whole business. An understanding of the overall financial situation requires three
key financial documents: the balance sheet, the income statement and the cash flow statement.

FINANCIAL PERFORMANCE MEASURES

The recommended measures for financial analysis are grouped into five broad categories:
liquidity, solvency, profitability, repayment capacity and financial efficiency.

Financial measures are intended to help operations analyze their activities from a
financial standpoint and provide useful information needed to make good management decisions.
By themselves, the financial measures discussed dont provide answersthey need to be
reviewed in relation to each other and to other non-operation activities. It is not possible to
control or predict all of the factors that influence the final outcome of any operational decision.
Nor is it possible to have available all of the information that would be ideal. But decision
making can be improved through using available information and through effective financial
planning and analysis.

3. ADVANCED FINANCIAL STATEMENTS ANALYSIS

By David Harper

The System
Financial statements paint a picture of the transactions that flow through a business. Each
transaction or exchange - for example, the sale of a product or the use of a rented a building
block - contributes to the whole picture.
Let's approach the financial statements by following a flow of cash-based transactions. In the
illustration below, we have numbered four major steps:

1. Shareholders and lenders supply capital (cash) to the company.

26
2. The capital suppliers have claims on the company. The balance sheet is an updated record of
the capital invested in the business. On the right-hand side of the balance sheet, lenders hold
liabilities and shareholders hold equity. The equity claim is "residual", which means
shareholders own whatever assets remain after deducting liabilities. The capital is used to buy
assets, which are itemized on the left-hand side of the balance sheet. The assets are current, such
as inventory, or long-term, such as a manufacturing plant.
3. The assets are deployed to create cash flow in the current year (cash inflows are shown in
green, outflows shown in red). Selling equity and issuing debt start the process by raising cash.
The company then "puts the cash to use" by purchasing assets in order to create (build or buy)
inventory. The inventory helps the company make sales (generate revenue), and most of the
revenue is used to pay operating costs, which include salaries.
4. After paying costs (and taxes), the company can do three things with its cash profits. One, it
can (or probably must) pay interest on its debt. Two, it can pay dividends to shareholders at its
discretion. And three, it can retain or re-invest the remaining profits. The retained profits increase
the shareholders' equity account (retained earnings). In theory, these reinvested funds are held for
the shareholders' benefit and reflected in a higher share price.

4. Financial Statements why its important for all business? By: john irron
Posted: Jun 15, 2007
Financial statements are a formal record of the financial activities of a business, person,
or other thing. Financial statements like a written statement which quantitatively describes the
financial strength of a company. This includes an income statement and a balance sheet, and
regularly also includes a cash flow statement. Financial statements are regularly compiled on a
quarterly and yearly basis.
Financial statements are important futures for each and every business. For a business venture,
all the appropriate financial information, offered in a structured way and in a form simple to
understand, are called the financial statements.
The purpose of financial statements is to give information regarding the financial
situation, performance and changes in financial situation of a venture that is helpful to a wide
range of users in making financial decisions. Financial statements should be comprehensible,
appropriate, reliable and comparable. Reported property, liabilities and equity are directly

27
connected to an organization's financial situation. Reported income and operating cost are
directly connected to an organization's financial performance.
5. THE PROFESSION OF PROFESSIONAL Financial Analysis By: Abdullah Mohammad Khan
WAHID Post on: October 4, 2007.

A financial analysis is responsible for a wide range of functions such as account

processing payable and receivable operations, taking into account the transfer of assets and the
closing of the books as soon as possible. Properly fulfill these functions is essential for a
company, on the basis of precise handling operations and accurate financial statements. These
activities are clearly on the basis of any successful career in financial analysis. However, the
organizer has exceptional skills in analyzing appropriate funding for success.

This article was calculated to facilitate analysis financial support for a breadth and depth
of the largest financial analysis.

Traditionally the main objective of the accounting department has been processing
transactions, customer billing, payments to suppliers, etc. These are routine activities that are
invisible, but vital. Most employees of the company, but it is always necessary for the success of
an organization.

However, the role of accounting staff that has been changed companies facing increasing
competition from organizations around the world. Now, managing a business needs advice and
transaction flow smoothly. Accordingly, the financial analyst is not only to fill the role of
traditional transaction processing, but also to continue to review company operations, evaluating
investments, relationship problems and recommendations for management, and respond to
requests by the management team of Special Investigations. All these new tasks can be
considered as financial analysis, because require the application of review procedures for
operational activities and financial investment in a company.

6. Financial Statement Analysis By: Rashid Javed

Posted: Jan 19, 2009

All financial statements are essentially historically historical documents. They tell what has
happened during a particular period of time. However most users of financial statements are
concerned about what will happen in the future. Stockholders are concerned with future earnings

28
and dividends. Creditors are concerned with the company's future ability to repay its debts.
Managers are concerned with the company's ability to finance future expansion. Despite the fact
that financial statements are historical documents, they can still provide valuable information
bearing on all of these concerns.

Financial statement analysis involves careful selection of data from financial statements for the
primary purpose of forecasting the financial health of the company. This is accomplished by
examining trends in key financial data, comparing financial data across companies, and
analyzing key financial ratios.

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. In this study the various
steps that are generally adopted by the researcher in studying his research problem along with the
logic behind them.

4.1 Research design

The proposed study is of DESCIRPTIVE IN NATURE. Research design is needed

because it facilitates the smooth sailing of the various research operations, thereby making
research as efficient as possible. A research design for a particular problem usually involves the
consideration of the following factors.

SOURCE OF INFORMATION

29
 Basically there are two sources of information. The researcher has collected secondary
data for his study.

PRIMARY DATA

Information was collected through this source comprises of discussions with the
personnel of GOOGOLSOFT TECHNOLOGIES.

SECONDARY DATA

The data was collected from sources like magazine, journals, company reports and
industrial magazines (annual reports).

RESEARCH TYPE

Research type is the basic frame work which provides guidelines for the research process.
The research design chosen for the study by the researcher was Analytical in nature. The
researcher has to use facts of information already available. The researcher has to analyze facts
to make critical evaluation of the material.

The choice of the research type depends on the depth and extent of data recording, the
cost and benefits of research, the urgency of work, the time availability of competing its research
and the blue print of the research project.

30
4.2OBJECTIVES OF THE STUDY

Primary Objectives

The main aim of the study is to ascertain financial performance of GOOGOLSOFT

TECHNOLOGIES PVT LTD for the past five years.

Secondary Objectives

To find out the financial position of the company overall five years
To find out the efficiency of the company using financial ratios like profitability ratios,
turnover ratio & solvency ratio of the company.
To find out the liquidity position of the company.
To study the performance of company through comparative analysis.
To find out possibilities to suggest better financial performance of the company.

4.3 NEED FOR THE STUDY:

Financial Analysis is a powerful mechanism which helps in ascertaining the strengths and
weakness in the operation and financial position of an enterprise. Financial performance
analysis refers to an assessment of the viability, stability and profitability of a business, sub-
business or project.

It is performed by professionals who prepare reports using ratios that make use of
information taken from financial statements and other reports. These reports are usually
presented to top management as one of their bases in making business decisions.

31
 Continue or discontinue its main operation or part of its business;
Make or purchase certain materials in the manufacture of its product;

Acquire or rent/lease certain machineries and equipment in the production of its goods;

Issue stocks or negotiate for a bank loan to increase its working capital;

Make decisions regarding investing or lending capital;

Other decisions that allow management to make an informed selection on various

alternatives in the conduct of its business.

The management wants to do a financial performance analysis to know the financial position of
this company based on its strengths and weakness.

4.4 SCOPE OF THE STUDY

The project is pertained to the companys data available for the past five years. The
conclusions are drawn from the analysis done with the ratios, comparative, common size study.
The study elucidates the financial position of the company with respect to the past five years. It
helps the company to place itself among various other competitive companies.

The study through the analysis reveals the pros and cons of the companys financial
status. It enables the reader to understand the various financial aspects of a company through
uncomplicated interpretation and findings for study purpose.

32
4.4 LIMITATIONS OF THE STUDY

The limitations of the study are as follows

1. The study is covered only to the past financial performance of Googolsoft Technologies.
2. The period of the study is restricted to five years from 2007 to 2011.
3. Some of the data has not given by the company due to maintenance of financial secrecy.

So the study cannot be covered to all the areas. The financial data cannot be estimated
accurately for the future period due to the financial crisis.

33
4.5 TOOLS USED FOR ANALYSIS

The following are major tools used in analysis and interpretation.

Ratio analysis
Common size balance sheet statement.
Comparative balance sheet statement.
Trend percentage analysis.

RATIO ANALYSIS

A ratio is a mathematical relationship between two items expressed in a quantitative

form. Ratio can be defined as Relationship expressed kin quantitative terms between figures
which have cause and effect relationship which are connected with each other in some manner or
the other. Ratio analysis involves the process of computing determining and presenting the
relationship of items or groups of items of financial statements.

CURRENT RATIO

The ratio of current assets to current liabilities is called current ratio. In order to measure
the short-term liquidity or solvency of a concern, comparison of current assets and current
liabilities is inevitable. Current ratio indicates the ability of a concern to meet its current
obligations as and when they are due for payment.

34
Current ratio = Current assets / Current liabilities

LIQUID RATIO

A measure of companys liquidity and ability to meet its obligations. Quick ratio, often
referred to as acid-test ratio, is obtained by subtracting inventories from current assets and then
dividing by current liabilities.

Liquid ratio = Liquid assets / current liabilities

WORKING CAPITAL TURNOVER RATIO

A measure comparing the depletion of working capital to the generation of sales over a
given period. This provides some useful information as to how effectively a company is using its
working capital to generate sales.

Working capital turnover ratio = Net sales / Working Capital

PROFITABILITY RATIO

Profit making is the main objective of business. Aim of every business concern is to earn
maximum profits in absolute term and also in relative terms i.e. profit is to be maximum in term
of risk undertaken.

Profitability Ratio =Profit after tax / Sales

CASH POSITION RATIO

This ratio also known as absolute liquidity ratio or super quick ratio. Its calculated when
liquidity is highly restricted in terms of cash and cash equivalents.

Cash position ratio= cash and bank balances + marketable securities/ current liabilities.

OPERATING RATIO

35
 Operating ratio represent the different between the cost of goods sold and sales.
Operating ratio measures the amount of expenditure incurred in production, sales and
distribution of output. It indicates operational efficiency of the concern.

OPERATING RATO= cost of goods sold + operating expenses / net sales *100

DEBTORS TURNOVER RATIO

It represents how quickly the debtors are converted into cash. This ratio is used to
measure the firms liquidity position. This ratio establishes the relationship between receivables
and credit sales.

Debtors turnover ratio = Net sales / Average debtors.

PROPRIETARY RATIO

This ratio is also termed as capital ratio or net worth to total asset ratio. This is one of the variant
of dept equity ratio. This shows the relationship between shareholders funds and total assets

Proprietary ratio = Net worth / Total Assets

GROSS PROFIT RATIO

Gross profit ratio establishes the relationship between gross profit and net sales. It also
reveals the amount of gross profit for each rupee of sale. This ratio is calculated by dividing the
gross profit by Net sales. It is usually indicated as a percentage.

Gross Profit Ratio = Gross Profit / Net sales * 100

NET PROFIT RATIO

Net profit ratio is also termed as sales margin ratio or profit margin ratio or net profit to
sales ratio. This ratio reveals the firms overall efficiency in operating the business. Net profit
ratio is used to measure the relationship between net profit (either before or after taxes) and
sales.

Net Profit Ratio = Net Profit / Net Sales * 100

36
COMPARETIVE BALANCE SHEET:

The comparative balance sheet analysis is the study of the trend of the same items, group of items and
computed items in two or more balance sheet of the same business enterprise on different dates. The changes in
periodic balance sheet items reflect the conduct of a business. The changes can be observed by
comparison of the conduct of a business the changes can be observed by comparison of the balance sheet at the
beginning at the end of period and these changes can help in forming an opinion about the progress of an enterprise.

Procedure of Comparative Balance Sheet:

The Comparative balance sheet has two columns for the data of original balance sheet.
Third column is used to show increases in figures.

The Fourth column is use to give percentages of increase or decrease.

Uses of comparative balance sheet:

comparative statement helps to comparing the figures with those of the previous
years event, it is possible to determine where expenses increased or decreased
Comparative balance sheet helps to how to plan the following years event.

COMMON SIZE BALANCE SHEET:

A balance sheet in which the items are expressed as percentages of total assets or total
liabilities. A common-size statement is most useful when one attempts to compare a company to
similar companies of different size or when one is comparing year-to-year variations in capital
structure in the same company. This type of financial statement can be used to allow for easy
analysis between companies or between time periods of a company.

TREND PERCENTAGE ANALYSIS

The next important tools of analysis are trend percentage which plays significant role in
analyzing the financial stature of the enterprise through base years performance ratio

37
computation. This not only reveals the trend movement of the financial performance of the
enterprise but also highlights the strengths and weaknesses of the enterprise

The following ratio is being used to compute the trend percentage.

Current year
= -------------- X 100
Base year

This trend ratio is being computed for every component for many numbers of years which not
only facilitates comparison but also guides the firm to understand the trend path of the firm.

CHAPTER 5

DATA ANALYSIS AND INTERPRETATION

TABLE NO: 5.1.1

TABLE SHOWING CURRENT RATIO

Year Current assets Current liabilities Ratio

(Rs in crs ) (Rs in crs)

38
 2011 3.61 2.35 1.53
2010 2.91 2.01 1.44
2009 2.70 1.71 1.57
2008 2.16 1.47 1.46
2007 1.54 1.14 1.34

CHART NO: 5.1.1

CHART SHOWING CURRENT RATIO

INTERPRETATION
From the table, it is inferred that the current ratio has increased as 1.57 during the year
2008. The current ratio has increased 1.53 during the year 2010. The current ratio has increased
1.46 during the year 2007. The current ratio has increased 1.44 during the year 2009. The current
ratio has increased 1.34 during the year 2007
This indicates that the company has mobilized the funds effectively.

39
 liquid asset Current liabilities Ratio
Year (Rs in crs ) (Rs in crs)
2011 .855 2.35 0.36
2010 .268 2.01 0.13
2009 .216 1.71 0.12
2008 .287 1.47 0.19
2007 .353 1.14 0.30

TABLE NO: 5.1.2

TABLE SHOWING LIQUID RATIO

CHART NO: 5.1.2

CHART SHOWING LIQUID RATIO

40
INTERPRETATION

41
 Year Net Sales working capital Ratio
(Rs in crs ) (Rs in crs)
2011 12114.44 1893 6.39

2010 12289.54 1133.36 10.84

2009 12294.56 1016.20 12.09

2008 11721.79 759.70 15.42

2007 11402.16 897.69 12.70

From the table, it is inferred that the liquid ratio has increased as 0.36 during the year
2011. The liquid ratio has decreased 0.30 during the year 2007. The liquid ratio has decreased
0.19 during the year 2008. The liquid ratio has decreased 0.13 during the year 2010. The liquid
ratio has decreased 0.12 during the year 2009.

TABLE NO: 5.1.3

TABLE SHOWING WORKING CAPITAL TURNOVER RATIO

CHAR T NO: 5.1.3

42
 CHART SHOWING WORKING CAPITAL TURNOVER RATIO

INTERPRETATION
From the table, it is inferred that the working capital turnover ratio has increased as
15.42 during the year 2008. The working capital turnover ratio has increased 12.70 during the
year 2007. The working capital turnover ratio has increased 12.09 during the year 2009. The
working capital turnover ratio has increased 10.84 during the year 2010. The working capital
turnover ratio has increased 6.39 during the year 2011

TABLE NO: 5.1.4

43
 Year Profit after tax Sales Ratio
(Rs in crs) (Rs in crs )
2011 242 12114.44 1.99

2010 240 12289.54 1.95

2009 300 12294.56 2.44

2008 316 11721.79 2.69

2007 280 11402.16 2.45

TABLE SHOWING PROFITABILITY RATIO

Source: secondary data

CHART NO: 5.1.4

CHART SHOWING PROFITABILITY RATIO

44
INTERPRETATION
From the table, it is inferred that the profitability ratio has increased as 2.69 during the
year 2007. The profitability ratio has increased 2.45 during the year 2007. The profitability
ratio has increased 2.44 during the year 2008. The profitability ratio has increased 1.99 during
the year 2010. The profitability ratio has increased 1.95 during the year 2009.

TABLE NO: 5.1.5

TABLE SHOWING CASH POSITION RATIO

45
 Year Cash-bank Current liabilities RATIO
(Rs in crs) (Rs in crs)
2011 300.19 2356 0.12

2010 210.07 2014 0.10

2009 319.20 1712 0.19

2008 197.65 1475 0.13

2007 214.92 1143 0.19

Source: secondary data

CHART NO: 5.1.5

CHART SHOWING CASH POSITION RATIO

INTERPRETATION
From the table, it is inferred that the cash position ratio has increased as .19 during the
year 2007. The cash position ratio has increased .19 during the year 2009. The cash position
ratio has increased0.13 during the year 2008. The cash position ratio has increased 0.12 during
the year 2011. The cash position ratio has increased 0.10 during the year 2009

46
 TABLE NO: 5.1.6
TABLE SHOWING OPERATING RATIO

Source: secondary data

47
Year Net sales Cost of goods sold Ratio
(Rs in crs) (Rs in crs)
2011 12114.44 10941.89 110.71

2010 12289.54 11160.87 110.11

2009 12294.56 11391.26 107.92

2008 11721.79 10794.80 108.58

2007 11402.16 10588 107.68

CHART NO: 5.1.6

CHART SHOWING OPERATING RATIO

48
INTERPRETATION
From the table, it is inferred that the operating ratio has increased as 110.71 during the
year 2010. The operating ratio has increased 110.11 during the year 2009. The operating ratio
has increased108.58 during the year 2008. The operating ratio has increased 107.92 during the
year 2008. The operating ratio has increased 107.68 during the year 2007

TABLE NO: 5.1.7

TABLE SHOWING DEBTORS TURNOVER RATIO

49
 CHART NO: 5.1.7

CHART SHOWING DEBTOR TURNOVER RATIO

Year Net Sales Average Debtors Ratio
(Rs in crs ) (Rs in crs )
2011 12114.44 1286.45 9.41

2010 12289.54 1286.45 9.55

2009 12294.56 1286.45 9.55

2008 11721.79 1286.45 9.11

2007 11402.16 1286.45 8.86

Source: secondary data

INTERPRETATION

50
 From the table, it is inferred that the debtors turnover ratio has increased as 9.55 during
the year 2009. The debtors turnover ratio has increased 9.55 during the year 2010. The
debtors turnover ratio has increased 9.41 during the year 2011. The debtors turnover ratio has
increased 9.11 during the year 2008. The debtors turnover ratio has increased 8.86 during the
year 2007
. TABLE NO: 5.1.8

TABLE SHOWING PROPRIETARY RATIO

Year Net worth Total Assets Ratio

(Rs in crs ) (Rs in crs )
2011 1893 4769.09 0.39
2010 1122 3362.48 0.33
2009 1016 3089.94 0.32
2008 860 2583.35 0.33
2007 698 1935.93 0.36

51
 CHART NO: 5.1.8
CHART SHOWING PROPRIETARY RATIO

INTERPRETATION

52
 From the table, it is inferred that the proprietary ratio has increased as 0.39 during the
year 2011. The proprietary ratio has increased 0.36 during the year 2007. The proprietary ratio
has increased 0.33 during the year 2010. The proprietary ratio has increased 0.33 during the
year 2007. The proprietary ratio has increased 0.32 during the year 2008.

TABLE NO: 5.1.9

TABLE SHOWING GROSS PROFIT RATIO

Year Gross Profit Net Sales Ratio

(Rs in crs ) (Rs in crs )
2011 1172.55 12114.44 9.68
2010 1128.67 12289.54 9.18
2009 903.30 12294.56 7.34
2008 927 11721.79 7.90
2007 814.16 11402.16 7.14
Source: secondary data
CHART NO: 5.1.9
CHART SHOWING GROSS PROFIT RATIO

53
INTERPRETATION
From the table, it is inferred that the gross profit ratio has increased as 9.68 during the
year 2010. The gross profit ratio has increased 9.18 during the year 2009. The gross profit ratio
has increased 7.90 during the year 2007. The gross profit ratio has increased 7.34 during the year
2008. The gross profit ratio has increased 7.14 during the year 2007

TABLE NO: 5.1.10

54
 TABLE SHOWING NET PROFIT RATIO

Year Net Profit Net Sales Ratio

(Rs in crs ) (Rs in crs )
2011 1033.33 12114.44 8.52
2010 951.18 12289.54 7.73
2009 903.72 12294.56 7.35
2008 791.64 11721.79 6.75
2007 640.58 11402.16 5.61

CHART NO: 5.1.10

CHART SHOWING NET PROFIT RATIO

55
Source: secondary data

INTERPRETATION
From the table, it is inferred that the net profit ratio has increased as 8.52 during the
year 2011. The net profit ratio has increased 7.73 during the year 2009. The net profit ratio has
increased 7.35 during the year 2009. The net profit ratio has increased 6.75 during the year 2008.
The net profit ratio has increased 7.14 during the year 2007.

TABLE NO: 5.2.1

TABLE SHOWING COMPARATIVE BALANCE SHEET (2007-2008) (Rs in crs )

56
PARTICULARS 2007 2008 Inc./Dec. Inc./Dec.(%)
LIABILITIES
Equity Funds 34 34 - -
Share warrant - - - -
Application money
Reserves and 664 826 162 24.39
surplus
Loan Funds 84 236 152 180.95
Deferred Tax 11 12 1 9.09
Liabilities(Net)
TOTAL 793 1108 315 39.72
ASSETS
Fixed assets 98 151 53 54.08
Investments 295 272 -23 -7.718
Deferred Tax - - - -
Assets(Net)
Current Assets 1543 2160 617 39.98
Current Liabilities 1143 1475 332 29.04
Net Current Assets 400 685 285 71.25
TOTAL 793 1108 315 39.72

Source: secondary data

INFERENCE:

57
 From the above table, it is inferred that the loan funds increased up to 180.95%, and
Reserve and surplus has increased up to 24.39%, Fixed assets increased up to 54.08%, and
investments decreased up to 7.71%, Current assets increased up to 39.98%, current liabilities
increased up to 29.04%, and equally Net current assets increased up to 71.25%, Assets and
liabilities increased up to 39.72 in the current year (2008) when compared with previous year
(2007).

TABLE NO: 5.2.2

58
 TABLE SHOWING COMPARATIVE BALANCE SHEET (2008-2009) (Rs in crs )

PARTICULARS 2008 2009 Inc./Dec. Inc./Dec.(%)

LIABILITIES

Equity Funds 34 34 - -

Share warrant - - - -
Application money
Reserves and surplus 826 982 156 18.88

Loan Funds 236 354 118 50

Deferred Tax 12 7 -5 -41.67

Liabilities(Net)
TOTAL 1108 1377 269 24.28

ASSETS

Fixed assets 151 170 19 12.58

Investments 272 215 -57 -20.95

Deferred Tax - - -
Assets(Net)
Current Assets 2160 2704 544 25.19

Current Liabilities 1475 1712 237 16.06

Net Current Assets 685 992 307 44.81

TOTAL 1108 1377 269 24.28

Source: secondary data

INFERENCE:

From the above table, it is inferred that the loan funds increased up to 50%, and Reserve
and surplus increased up to 18.88%, and deferred tax liabilities(Net) decreased up to 41.67%
Fixed assets increased up to 12.58%, and investments decreased up to 20.95%, Current assets
increased up to 25.19.%, current liabilities increased up to 16.06%, and equally Net current
assets increased up to 44.81%, Assets and liabilities increased up to 24.28 in the current year
(2008) when compared with previous year (2007).

59
 TABLE NO: 5.2.3

TABLE SHOWING COMPARATIVE BALANCE SHEET (2009-2010) (Rs in crs )

PARTICULARS 2009 2010 Inc./Dec. Inc./Dec.(%)

LIABILITIES
Equity Funds 34 34 - -
Share warrant - - - -
Application money
Reserves and surplus 982 1088 106 10.80

Loan Funds 354 227 -127 -35.87

Deferred Tax 7 - -7 -100
Liabilities(Net)
TOTAL 1377 1349 -28 -2.033
ASSETS
Fixed assets 170 185 15 8.823
Investments 215 260 45 20.93
Deferred Tax - 6 6 0
Assets(Net)
Current Assets 2704 2912 208 7.70
Current Liabilities 1712 2014 302 17.64
Net Current Assets 992 898 -94 -9.47
TOTAL 1377 1349 -28 -2.033

Source: secondary data

INFERENCE: From the above table, it is inferred that the loan funds decreased up to
35.87%, and Reserve and surplus increased up to 10.80%, and deferred tax liabilities(Net)
decreased up to 100%, Fixed assets increased up to 8.82%, and investments increased up to
20.93%, deferred tax assets (Net) it introduced balance sheet, Current assets increased up to

60
7.70.%, current liabilities increased up to 17.64%, and equally Net current assets decreased up to
9.47%, Assets and liabilities decreased up to 2.033 in the current year (2009) when compared
with previous year (2008). During the year 2010, the loans funds was decreased by when
compare to the previous 2009(-127)

TABLE NO: 5.2.4

TABLE SHOWING COMPARATIVE BALANCE SHEET (2010-2011) (Rs in crs )

PARTICULARS 2010 2011 Inc./Dec. Inc./Dec.(%)

61
LIABILITIES
Equity Funds 34 44 10 32.25
Share warrant - 18 18 -
Application money

Reserves and surplus 1088 1831 743 68.30

Loan Funds 227 520 293 129.07

Deferred Tax - - - -
Liabilities(Net)
TOTAL 1349 2413 1064 78.87
ASSETS
Fixed assets 185 287 102 55.13
Investments 260 854 594 228.46
Deferred Tax Assets(Net) 6 13 7 116.67

Current Assets 2912 3615 703 24.14

Current Liabilities 2014 2356 342 16.98

Net Current Assets 898 1259 361 40.20

TOTAL 1349 2413 1064 78.87
Source: secondary data

INFERENCE:

From the above table, it is inferred that the current assets increased up to 24.14%, current
liabilities increased up to 16.98%, Equally Net current assets increased up to 40.20%, Fixed
assets increased up to 55.13%, Investments increased up to 228.46 previous year 2007, Assets
and liabilities increased up to 78.87 during the year 2007, Liabilities equity funds increased up to
32.25%, Reserves and surplus increased up to 68.30, loans funds increased up to129.07% during
the year 2007.

TABLE NO 5.3.1.

TABLE SHOWING COMMONSIZE BALANCE SHEET 2007-2008(Rs in crs )

PARTICULARS 2007 PERCENTAGE 2008 PERCENTAGE

LIABILITIES

62
Equity Funds 34 4.28 34 3.06
Share warrant - - - -
Application money

Reserves and 664 83.73 826 74.55

surplus

Loan Funds 84 10.59 236 21.30

Deferred Tax 11 1.40 12 1.09
Liabilities(Net)

TOTAL 793 100 1108 100

ASSETS
Fixed assets 98 12.36 151 13.62
Investments 295 37.20 272 24.54
Deferred Tax - - - -
Assets(Net)

Net Current Assets 400 50.44 685 61.84

TOTAL 793 100 1108 100

Source: secondary data

INFERENCE:

From the above table, it is inferred that the equity funds decreased from 4.28 %( 2006) up
to 3.06 % (2008), Reserve and surplus decreased from 83.73 %(2007) up to 74.55 %(2008),
Loan funds increased from 10.59 %(2076) up to 21.30%(2008), Deferred tax liabilities decreased
from 1.40 % (200) to 1.09 % (2008), Fixed assets increased from 12.36 %(2010) up to 13.62
%(2009), Investments decreased from the 37.20 % (2008) up to 24.54 %(2008), Net current
assets increased from 50.44 %(2008)up to 61.84 %(2008).

TABLE NO 5.3.2.

TABLE SHOWING COMMONSIZE BALANCE SHEET 2009-2010(Rs in crs)

63
PARTICULARS 2008 PERCENTAGE 2009 PERCENTAGE
LIABILITIES
Equity Funds 34 3.06 34 2.46
Share warrant - - - -
Application money

Reserves and 826 74.55 982 71.34

surplus

Loan Funds 236 21.30 354 25.70

Deferred Tax 12 1.09 7 0.50
Liabilities(Net)

TOTAL 1108 100 1377 100

ASSETS
Fixed assets 151 13.62 170 12.35
Investments 272 24.54 215 15.61
Deferred Tax - - - -
Assets(Net)

Net Current Assets 685 61.84 992 72.04

TOTAL 1108 100 1377 100

Source: secondary data

INFERENCE:

From the above table, it is inferred that the equity funds decreased from 3.06 %( 2009) up
to 2.46 % (2010), Reserve and surplus decreased from 74.55 %(2009) up to 71.34 %(2010),
Loan funds increased from 21.30 %(2009) up to 25.70%(2010), Deferred tax liabilities decreased
from 1.09 % (2008) to .50 % (2009), Fixed assets decreased from 13.62 %(2008) up to 12.35
%(2009), Investments decreased from the 24.54 % (2008 up to 15.61 %(2009), Net current
assets increased from 61.84 %(2008) up to 72.04 %(2009).

TABLE NO 5.3.3.

TABLE SHOWING COMMONSIZE BALANCE SHEET 2010-2011(Rs in crs)

64
PARTICULARS 2009 PERCENTAGE 2010 PERCENTAGE
LIABILITIES
Equity Funds 34 2.46 34 2.52
Share warrant - - - -
Application money

Reserves and 982 71.34 1088 80.66

surplus

Loan Funds 354 25.70 227 16.82

Deferred Tax 7 0.50 -
Liabilities(Net)

TOTAL 1377 100 1349 100

ASSETS
Fixed assets 170 12.35 185 13.71
Investments 215 15.61 260 19.27
Deferred Tax - - 6 0.44
Assets(Net)

Net Current Assets 992 72.04 898 66.58

TOTAL 1377 100 1349 100

Source: secondary data

INFERENCE:
From the above table, it is inferred that the equity funds increased from 2.46 %( 2008) up
to 2.52 % (2009), Reserve and surplus increased from the 71.34 %(2008) up to 80.66 %(2009),
Loan funds decreased from the 25.70 %(2008) up to 16.82 %(2009), Deferred tax liabilities
decreased from .50 % (2008) to 0 % (2009), Fixed assets increased from 12.35 %(2008) up to
13.71 %(2009), Investments increased from the 15.61 % (2008) up to 19.27 %(2009), Net
current assets decreased from 72.04 %(2008) up to 66.58 %(2009).

TABLE NO 5.3.4

65
 TABLE SHOWING COMMONSIZE BALANCE SHEET 2011-2007(Rs in crs)

PARTICULARS 2010 PERCENTAGE 2011 PERCENTAGE

LIABILITIES
Equity Funds 34 2.52 44 1.83
Share warrant - - 18 0.75
Application money

Reserves and 1088 80.66 1831 75.88

surplus

Loan Funds 227 16.82 520 21.54

Deferred Tax - - - -
Liabilities(Net)

TOTAL 1349 100 2413 100

ASSETS
Fixed assets 185 13.71 287 11.90
Investments 260 19.27 854 35.39
Deferred Tax 6 0.44 13 0.53
Assets(Net)

Net Current Assets 898 66.58 1259 52.18

TOTAL 1349 100 2413 100

Source: secondary data

INFERENCE:
From the above table, it is inferred that the equity funds decreased from 2.52 %( 2009) up
to 1.83 % (2007), Reserve and surplus decreased from the 80.66 %(2009) up to 75.88 %(2007),
Loan funds increased from the 16.82 %(2009) up to 21.54 %(2007), Fixed assets decreased from
13.71 %(2009) up to 11.90 %(2007), Investments increased from the 19.27 % (2009) up to 35.39
%(2007), Deferred tax assets(Net) increased from 0.44 %(2009) up to 35.39 %(2007) Net current
assets decreased from 66.58 %(2009) up to 52.18 %(2007).

TREND ANALYSIS

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 TABLE NO: 5.4.1

TABLE SHOWING TREND PERCENTAGE OF NET SALES

Year NET SALES TREND %

(Rs in crs )
2011 11402.16 100
2010 11721.79 102.80
2009 12294.56 104.88
2008 12289.54 99.95
2007 12114.44 98.57
Source: secondary data

CHART NO: 5.4.1.

CHART SHOWING TREND PERCENTAGE OF NET SALES

67
INFERENCE:

From the above trend analysis showing, it is inferred as base year 2005-2006.Net
sales has been increased during the year 2009 Net sales is 12294.56 was 104.88. Its increases in
trend compared 4 year.

TABLE NO: 5.4.2.

TABLE SHOWING TREND PERCENTAGE OF NET PROFIT

68
 Year NET PROFIT TREND %
(Rs in crs )
2011 11454.97 100
2010 11855.43 103.49
2009 12402.62 104.61
2008 12378.49 99.80
2007 12158.59 98.22

Source: secondary data

CHART NO: 5.4.2

CHART SHOWING TREND PERCENTAGE OF NET PROFIT

69
INFERENCE:

From the above trend analysis showing, it is inferred as base year 2005-2006. Net profit
has been increased during the year 2009 current asset is 12402.62. Its increased in trend
percentage on 104.61.

TABLE NO: 5.4.3.

TABLE SHOWING TREND PERCENTAGE OF CURRENT ASSETS

70
 Year CURRENT ASSETS TREND %
(Rs in crs )
2011 1543 100
2010 2160 139.98
2009 2704 125.18
2008 2912 107.69
2007 3615 124.14

CHART NO: 4.4.3.

CHART SHOWING TREND PERCENTAGE OF CURRENT ASSETS

INTERPRETATION:

From the above table, it is inferred as base year 2005-2006.current asset has been
increased during the year 2011 Net sales is 3615. Its increased in trend percentage on 124.14.

TABLE NO: 5.4.4.

TABLE SHOWING TREND PERCENTAGE OF CURRENT LIABILITIES

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 Year CURRENT LIABILITIES TREND %
(Rs in crs )
2011 1143 100
2010 1475 129.04
2009 1712 116.06
2008 2014 117.64
2007 2356 116.98

CHART NO: 5.4.4.

CHART SHOWING TREND PERCENTAGE OF CURRENT LIABILITIES

INTERPRETATION:

72
 From the above trend analysis showing, it is inferred as base year 2005-
2006.current liabilities has been increased during the year 2011 Net sales is 2356. Its increased
in trend percentage on 116.98.

CHAPTER 6

73
 FINDINGS

The current asset was the increased trend during the year 2009 was 1.57.

The liquid ratio decreasing year by year that is 0.36 in the year of 2004-05 to 0.30 in the
year of 2007.

The highest working capital ratio was increased in sales 14.20 in the year of 2008.

The profitability ratio was always decreased comparing with previous years.

The cash position ratio shows that the highest cash management in the year 2009 and
2007 was increased to 0.19.

The operating ratio in 2007 was 108.20 gradually increased up to 2011 was 111.12.

The debtors turnover ratio was increasing during the year of 2007 to 2009, next two
years slowly decreased.

Proprietary ratio has been increased in the year of 2007 to2011.

The Gross profit ratio has been increased from the year of 2011 was 9.68

The Net profit ratio has been increased from the year of 2011 was 8.52

The Net sales trend percentage increased from the year of 2009 was 104.88.

The Net profit trend percentage increased from the year of 2009 was 104.61.

The current assets increased the year of 2011 were 3615.

The current liabilities constantly increased the year of 2007 to 2011.

The comparative balance sheet that the loan funds increased 180.95 % to compare 2006
& 2007.In the year 2009 & 2007 increased the loan funds 129.07%. 2009 & 2007.

The comparative balance sheet that the investments increased 228.46 to compare

74
 The comparative balance sheet increased the year 2009 & 2007 was 78.87% and
decreased the previous year 2008 & 2009 was -2.033% and increased the year of 2007 &
2008 was 24.28% and increased the year of 2006 & 2007 was 39.72%.

The common size balance sheet that Net current assets increased 2009 & 2007 was 52.18,
2008 & 2009 was 66.58 and 2007 & 2008 was 72.04, 2006 & 2007 was 61.84.

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 CHAPTER 7

SUGGESTIONS

Company may look into the measures how to reduce the loans and advances in the
coming periods.
Company may look into maintain the current assets and current liabilities. Current
liabilities may reduce coming periods.
It is suggested to the company can strongly focus on cost reduction strategy that will
make a company more profitability.
The company has a bright future if it concentrates more on its working capital short term,
investments, thus achieving the overall objectives of the company.
Thus it is essential to avoid excessive liquidity but to maintain sufficient liquidity to
ensure smooth running of the companys operation.
The company has better liquidity position and has to maintain same in the future.

76
 CHAPTER 7

CONCLUSION

The efficient and smooth functioning of all the activities of the company depends upon the
financial performance of the company. The financial performance analysis thus is a forward-
looking exercise as it is helpful in future financial planning decision making. It determine to
analysis forecasting future financial position. Through financial statement analysis, the present
position and operating efficiency of the firm as a whole and its different departments can be
identified. Further, the reasons for change in the profitability financial position of the firm can be
found and necessary measures can be taken.

Financial performance can improve the financial strength of company. The companys
liquidity position has to increase and it will solve future problem. The company is maintaining
the reserves and surplus better so it can face financial stress in the future. To proper maintain of
financial performance to achieve the company goal.

77
 CHAPTER 8
ANNEXURE

Balance sheet as at March 31, (2007 to 2011)

(Rupees in Crores)
Particulars 2007 2008 2009 2010 2011
Sources of Fund:
Share holders funds:
Capital 33.75 33.83 34.23 34.24 43.65
Share Warrant - - - - 17.67
Application Money
Reserves & surplus 663.93 825.85 981.96 1087.66 1831.35
Deferred Tax 10.76 12.48 6.72 - -
Liabilities (Net)
Loan Funds
Secured Loans 44.49 12.02 1.52 101.85 162.68
Un Secured Loans 40.15 223.87 353.00 125.00 357.91
Total 793.08 1108.05 1377.43 1348.75 2413.26
Application of funds:
Fixed Assets 98.39 151.22 169.81 185.21 287.28
Investments 294.96 271.59 215.61 260.04 853.73
Deferred Tax Assets - - - 5.64 13.51
Current Assets,
Loans & Advances
Inventories 469.61 791.88 898.53 889.09 839.57
Sundry debtors 705.30 1005.23 1248.08 1506.31 1967.31
Cash & Bank 214.92 197.65 319.20 210.07 300.19
Balances
Other Current Assets 97.25 97.95 95.20 104.68 252.51
Loans & Advances 55.49 67.82 143.51 201.44 254.99
Total 1542.57 2160.53 2704.52 2911.59 3614.57
Less: Current
Liabilities &
Provisions
Current Liabilities 1086.70 1394.41 1643.36 1935.40 2227.26
Provisions 56.14 80.88 69.15 78.33 128.57

78
Total 1142.84 1475.29 1712.51 2013.73 2355.83
Net Current Assets 399.73 685.24 992.01 897.86 1258.74
Total 793.08 1108.05 1377.43 1348.75 2413.26

Income Statement for the year (2007 to 2011)

(Rupees in crs)

Particulars 2007 2008 2009 2010 2011

Income:

Sales 11454.97 11855.43 12402.62 12378.49 12158.59

(Less) Excise duty 86.66 170.13 158.00 126.08 108.77

Other income 33.85 50.48 49.94 37.13 64.62

Net Sales 11402.16 11735.78 12294.56 12289.54 12114.64

Expenditure:

Cost of sales and 10587.98 10799.54 11188.62 11160.87 10941.89

goods
Depreciation 12.43 14.81 18.62 21.25 25.51
Other Expenditure 416.49 492.72 657.19 756.11 800.58

Total Expenditure 11016.90 11307.07 11864.43 11938.23 11767.98

Profit Before Tax 385.26 428.71 430.13 351.31 346.46

Less Tax expense 104.90 112.76 129.98 111.36 104.08

Profit After tax 280.36 315.95 300.15 239.95 242.38

Balance in Profit & 360.22 475.69 603.57 713.14 790.95
Loss
Profit Available For 640.58 791.64 903.72 951.18 1033.33
Appropriation
Dividends 164.89 188.07 190.57 160.23 229.57
Appropriations 475.69 603.57 713.14 790.95 803.76

79
BIBLIOGRAPHY

80
 FINANCIAL MANAGEMENT (NINTH EDITION), Author I M PANDEY Published
by VIKAS publishing house Pvt ltd.
FINANCIAL MANAGEMENT (SECOND EDITION), Author P PERIASAMY
Published by Mc Graw Hill Publishing.
FINANCIAL SERVICE, Author M Y KHAN, Fifth edition Mc Graw Hill Publishing.
www.Articlebase.com
www.wikepedia.com
www.scribd.com
www.FeeOnlyFinancial.net

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