Summer Training

Report

Title

Financial Analysis

Of

Submitted in partial fulfillment of the requirements for the degree of

Master of Business Administration (2009-2011) affiliated to Punjab
Technical University, Jalandhar

Project Guide Submitted

By

Mrs. Rosy Gulati

Ashish Mittal
Sign …………
90262233357

INTRODUCTION TO THE STUDY

Finance is one of the most primary requisites of a business and the modern
management obviously depends largely on the efficient management of the finance.

Financial statements are prepared primarily for decision making. They play a
dominant role in setting the frame work of managerial decisions. The finance manager has
to adhere to the five R’s with regard to money. This right quantity of money for liquidity
consideration of right quality. Whether owned or borrowed funds. at the right time to
preserve solvency from the right sources and at the right cost of capital.

The term financial analysis is also known as ‘analysis and interpretation of

financial statements’ refers to the process of determining financial strength and weakness
of the firm by establishing strategic relationship between the items of the Balance Sheet,
Profit and Loss account and other operative data.

The purpose of financial analysis is to diagnose the information contained in

financial statements so as to judge the profitability and financial soundness of the firm.

FINANCIAL ANALYSIS

Financial analysis contains absolute figures of assets, liabilities, revenues, expenses &
profit or loss of an enterprise. They do not reveal the earning capacity, liquidity &
financial soundness of the enterprise. They are not readily understandable to their
users. Hence they are analyzed to present them in simple & understandandable
form.

Various tools or devices employed for analyzing the financial statements are as
follows:
(1) Comparative statements.
(2) Common size statements.
(3) Trend analysis.
(4) Ratios Analysis.
(5 ) Cash flow statement.

JCBL Ltd. is a part of JCBL group which was incorporated in 1989 under
Companies Act 1956 as a company that would manufacture high quality Japanese
technology buses and load carriers for Swaraj Mazda; JCBL has today evolved into
a highly successful coach building.
By diversifying into the manufacture of several high quality luxury coaches, motor
homes, trailers, special utility vehicles and cargo boxes, JCBL has today become a
name to be reckoned with in the automobile industry.

The profits for the Company during the year 2004 was Rs.204Lacs, in the year 2005
was Rs.267Lacs, in the year 2006 was Rs.458Lacs and in the current year 2007 is
Rs.432Lacs.The company has achieved a handsome growth relatively proceeding
previous years.
The project title Financial Analysis of JCBL Ltd basically deals with finding the
profitability, growth and the risk profile of the Company. The various tools which
are used for this purpose are various liquidity and solvency ratios, Common-Size
and Comparative Statements, Cash Flow Statement and Trend Percentages. By
applying these tools we had found out that the Company is growing at a very fast
pace. It is also found that the assets of the Company are financed through outsider’s
funds and that the Company is using its resources of men, material and machinery
effectively. On the whole the Company is growing and expanding its activities to
increase the sales of the Company.

NEED FOR THE STUDY

1. The study has great significance and provides benefits to various parties whom
directly or indirectly interact with the company.

2. It is beneficial to management of the company by providing crystal clear picture

regarding important aspects like liquidity, leverage, activity and profitability.

3. The study is also beneficial to employees and offers motivation by showing how
actively they are contributing for company’s growth.

4. The investors who are interested in investing in the company’s shares will also get
benefited by going through the study and can easily take a decision whether to invest
or not to invest in the company’s shares.
OBJECTIVES OF THE STUDY
PRIMARY OBJECTIVE:
To analyze the overall financial position of JCBL LTD. interpret the same using
various financial tools.

SECONDARY OBJECTIVES:
 To study the profitability of the operations of the Company.
 To analyze the growth rate of the Company.
 To analyze the risk profile of the Company.
 To study the changes in the turnover of the Company over two years.
 To know about the financial position, risk bearing capacity of the
company.
 To analyse the profitability and solvency position of the unit with the
existing tools of financial analysis.
 To know the capacity of payment of interest and dividend

IMPROTANCE OF THE STUDY

 By “FINANCIAL ANALYSIS OF JCBL Ltd. we would be able to get a

fair picture of the financial position of JCBL.
 By showing the financial performance to various lenders and creditors it
is possible to get credit in easy terms if good financial condition is
maintained in the company with assets outweighing the liabilities.
 Protecting the property of the business.
 Compliances with legal requirement.

LIMITATIONS OF THE STUDY

 The analysis and interpretation are based on secondary data contained in

the published annual reports of JCBL for the study period.
 Ratio itself will not completely show the company’s good or bad financial
position.
 Inter firm comparison was not possible due to the non availability of
competitors data.
 The study of financial performance can be only a means to know about
the financial condition of the company and cannot show a through picture
of the activities of the company.
  Time is an important limitation. The whole study was conducted in a
period of 60 days, which is not sufficient to carry out proper
interpretation and analysis.

RESEARCH METHODOLOGY

Research methodology is a way to systematically solve the research problem. it

may be understood as a science of studying how research is done scientifically. So, the
research methodology not only talks about the research methods but also considers the
logic behind the method used in the context of the research study.

RESEARCH DESIGN:

Descriptive research is used in this study because it will ensure the minimization of
bias and maximization of reliability of data collected. The researcher had to use fact and
information already available through financial statements of earlier years and analyse
these to make critical evaluation of the available material. Hence by making the type of
the research conducted to be both Descriptive and Analytical in nature.

From the study, the type of data to be collected and the procedure to be used for
this purpose were decided.

DATA COLLECTION:
 . The required data for the study are basically secondary in nature and the data are
collected from the audited reports of the company.

SOURCES OF DATA:

The sources of data are from the annual reports of the company from the year2006-
2007 to 2008-2009.

Referring standard texts and referred books collected some of the information
regarding theoretical aspects.

METHODS OF DATA ANALYSIS:

The data collected were edited, classified and tabulated for analysis. The analytical

tools used in this study are:

ANALYTICAL TOOLS APPLIED:

The study employs the following analytical tools:

1 . Comparative statement.

2 . Common Size Statement.

3 . Trend Percentage.
4 . Ratio Analysis.