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INTRODUCTION

Financial statement are the basics for decision making by the management as well as
all other outside investors, creditors, customers, suppliers, financial institutions, employees.
Potential inventories, government and the public.

MEANING

A financial statement is collection of data organized according to logical and


consistent accounting procedures. It’s purpose to convey an understanding of some financial
aspects of a business firm. It may show a position at a movement in time, as in the case of a
balance sheet, or may reveal a series of activities over a given period of time, as in the case of
an income statement thus the term “financial statements”. General refers to the two
statements.

 The position statement [or] The balance sheet.


 The income statement [or] The profit and loss account.

These statements are used to convey to management and other interested out siders
the profitability and financial position of a firm. Financial statements are the outcome
summarizing process of accounting.

DEFINATIONS

“The financial statement provides a summary of the accounts of the business


enterprise the balance sheet reflecting the assets, liabilities and capital as on certain data and
the income statement showing the result of operations during a current period”.

“JOHNNMYER”

“Financial statement are the end product of financial accounting prepared by the
accountant that purpose to reveal the financial position of the enterprise the result of its recent
activities and an analysis of what has been done with earnings”.

“SMITHANDASHBUGF”
NEED FOR THE STUDY

Financial statement provides data from knowing the financial position of the
company. The information provided in financial statement serves the purpose of different
groups such as investors, creditors, general public.

The financial statement has been taken as the base for analyzing the financial position
of the concern through comparative statements analyzing for accomplishment of the project.

OBJECTIVES OF THE STUDY

The study ends at evaluating the financial analysis of “SIVA STONES INC”.

 To analyze the financial position of “SIVA STONES INC” through Comparative,

Common size & ratio analysis.


 To determine the financial strengths and weakness of the firm.
 To diagnose the information contained in the financial statement so as to judge the

profitability and soundness of the firm.


 To determine the short-term solvency of the firm.
 To determine the long-term solvency of the firm.
 To establish relationship between various figure [or] the income statement and

balance sheet.

SCOPE OF THE STUDY

The study is limited to “SIVA STONES INC”, . It is limited to a span of “5” years i.e.,
2013-14 to 2017-18

The study was carried in “SIVA STONES INC”, , for a period of “7” weeks.

The study is based on the quantitative data available.

METHODOLOGY OF THE DATA


The period selected for the study is “5” years from 2013-14 to 2017-18. The
methodology adopted for this study includes both primary data and secondary data.

 PRIMARY DATA
 SECONDARY DATA

PRIMARY DATA

Primary data will be through regular interaction to the officials of “SIVA STONES
INC”. The data is available through theoretical literature from finance textbooks and
company balance sheets and profit and loss account.

SECONDARY DATA

Annual reports of the company from “2013-14” to “2017-18” Collecting the relevant
information from the standard textbooks and financial magazines.

Financial statements of the company.

SECONDARY DATA SOURCE COMPRISES AS:

 ANNUAL REPORTS

LIMITATIONS OF THE STUDY

 The study is only pertaining to “SIVA STONES INC”.

 The period of study is of five years and performance evaluation is also limited to
5years.
 The study is purely based on the data available in the form of annual reports.

 It does not consider charges in price levels.

 It is based only monitory and nonmilitary facts are ignored.

 Analysis is only means and not an end it self, different people interpret the same
analysis in different ways.

INDUSTRY PROFILE

STONE INDUSTRY IN INDIA


India is a country which is endowed with high quality natural tones like marble, sandstone,
granite etc.

India has more than 11% export share in total world's total stone export. It produces more
than 27% of the total stones produced in throughout the world. India is recognized as one of
the largest raw stone material producer. India is a place of different types of dimensional
stones which include marble, granite, sandstone, slate, limestone and quartzite that are
widespread in every corner of the nation. As per an estimation Indian stone industry is
estimated to be more than Rs 3,200 crore processing stones.

Indian monuments are supplied in more than 25 nations throughout the world. India
encompasses around 32 various varieties of granite for monuments and more than 90% of
them can be find in 3 southern states- Tamil Nadu, Andhra Pradesh and Karnataka.

More than 95 per cent monument factories are situated in Tamil Nadu, Andhra Pradesh and
Karnataka. Tamil Nadu shares around 75 per cent. There are around 150 units located in
Tamil Nadu. India is a renowned producer of natural dimensional stones, possessing excellent
physical and chemical characteristics. One can find out the enormous opportunities waiting to
be geared in the stone industry. Stones like granites, marbles, sandstones, limestones, slate
stones etc. are characterized as one of the best quality stones in all over world. In present date
stone industry is recognized as one of the fastest growing sector in the Indian economy.
STONES AVAILABLE IN INDIA

There are various types of stones with sparkling appearance and fine finishing available in
different places of India. Have a look on some types of stones which are found within the
Indian Territory.

Marble deposits can be found in various parts of India with economically high deposits
concentrated in the states of Gujarat, Madhya Pradesh, Rajasthan, Haryana, Telangana and
Andhra Pradesh. New varieties of marbles are found and are gradually being developed in
Bihar, Jammu & Kashmir, Sikkim, Maharashtra, Uttar Pradesh and West Bengal

Rajasthan has a huge concentration of marble with reserves dissipated in various districts of
Nagaur, Udaipur, Rajsamand, Banswara, Dungarpur, Jaipur, Sirohi, Bhilwara, Ajmer, Bundi,
Alwar and Pali. The different colors found in Rajsthan marbles are Makrana Albeta White,
Green, Makrana Kumari White, Makrana Dungri White, Jhiri Onyx, Phalodi Pink, Ambaji
White, Indo-Italian, Babarmal Pink, Bhainslana Black, Forest Green, Forest Brown, Agaria
White.

Granite multicolor varieties of granite can be easily seen in the states of Karnataka, Andhra
Pradesh, Tamil Nadu and Uttar Pradesh. India has a huge reserves of one of the best quality
of granite with varied varieties, having more than 200 shades. More than 20% of world's
granite is found in India. The nation holds the no.1 rank as a largest granite and granite
products exporter.

Sandstone deposits are available in the states of Assam, Andhra Pradesh, Bihar, Gujarat,
Haryana, Madhya Pradesh, Meghalaya, Mizoram, Karnataka, Orissa, Punjab, Rajasthan,
Uttar Pradesh, Tamil Nadu and West Bengal. More than 90% of sandstone deposits are
available in Rajasthan, which are spread in the districts of Dholpur, Bharatpur, Kota, Jodhpur,
Sawai-Madhopur, Bundi, Chittorgarh, Bikaner, Jhalawar, Pali, and Jaisalmer.

Slate deposits are available in Haryana, Rajasthan, Himachal Pradesh, Andhra Pradesh, and
Madhya Pradesh. Slate depository in Rajasthan are found in Alwar, Ajmer, Bharatpur, Tonk,
Sawai Madhopur, Pali, Udaipur, Churu, and Chittorgarh.

Limestone deposits are found in large quantity in state Andhra Pradesh. It accounts to more
than 32% of country's total limestone reserves. The state's limestone reserve is calculated to
be nearly 93,623 million tonnes.

Physical and Chemical Properties of stone

Sandstone is a sedimentary rock group which is mostly made up of tiny grains of quartz.
Most sandstone is formed in oceans, lakes and rivers where tiny bits of rock and dirt settle to
the bottom. Year after year, these layers of sand get buried under tons of more sand and dirt
until it is turned into solid rock. Sandstone can be found in many colors.

Physical Properties of Sandstone

Physically, they are very Hard, Compact, Fine grained, equi-granular homogeneous rocks of
sedimentary nature (Sandstone)
Chemical Properties of Sandstone

Chemically they are very resistant Mono-Mineralic rocks, principally composed of silica. The
other minor constituents vary from origin to origin.

They are highly resistant to acids, alkalies and thermal impact. Insolubility in acids and
alkalies is about 97%.

Teakwood and Rainbow sandstones differ from above physical properties

Varieties of Sandstone

Kandla Gray

Also known as Bhilwara-GREY has quartz grains cemented together by secondary silica
calcite. This sandstone is available in three different shades of bluish gray, dark gray, and
light gray.

Rajpura Green

Also known as Bhilwara-GREEN is a commonly used building stone. Rajpura stone can be
easily carved and dressed into various attractive shapes. It finds various applications
including - roofing, flooring, paving and paneling.

Marson Copper

Also known as Bhilwara-BROWN sandstone is a smooth round stone. This stone is made up
of grains of quartz and other minerals of fairly uniform size.

Chocolate
This sandstone has high content of iron oxide making it buff to brownish; and sometimes
reddish. The most important usage of this stone is exterior cladding and is available in
natural, sawn as well as polished surface finishes.

Gwalior Greenish White

Also known as GWL-MINT, Gwalior Mint is most suitable for use in flooring, wall fixing
and lining due to its physical and chemical properties. It is the smooth natural split surface
which makes it commensurate for flooring. This highly useful stone is also suitable for
carving and making stone handcrafted items.

Lalitpur Yellow

Also known as LLP - YELLOW this stone is especially meant for exterior cladding in sea
shore buildings due to acid & thermal resistant properties. The saline winds have negligible
effect on LLP Yellow stone(Lalitpur sandstone).

Dholpur-BEIGE
This buff white colored sandstone is one of the highly used sandstone variety. The peculiarity
of the stone is the attractive, minor purple veins that are visible when the stone is wet. Owing
to its regular bedding, uniform grain size, suitable nature and durability, it has been used from
over centuries and is a constituent of a large number of historical buildings and monuments.

Dholpur PINK

From Dholpur origin in Rajasthan, this stone is available in form of tiles, slabs, blocks in
either natural, sawn or polished surfaces. The stone is mostly used for exteriors and has
regular bedding, uniform grain size, suitable nature and durability.

Agra Red

Also known as Dholpur-RED is one of the most famous varieties of sandstone ever since its
use in Agra Fort and Delhi Fort. The stone has high degree of tolerance that does not show
weathering effects even for ages. The stone being smooth and soft is easy to be carved and
cut and is therefore used in stone handicrafts.

Khatu Teak

This creamish colored stone is fine grained and bears brown veins through out the surface.
This brownish touch gives the look of wooden finish and hence is also named as teakwood
sandstone. This stone is available only in the form of tiles with sawn surface finish, since this
stone can not be polished.

Khatu Rainbow
Rainbow stone is made of fine grained quartz and various other minerals. The presence of
other minerals lend attractive color to the stone. Depending on the percentage of constituent
minerals the color varies in the form of brown, violet and sometimes reddish veins. It is
because of the regular color variation that this stone has been named Rainbow. Like Khatu
Teak, rainbow is also available in tiles in sawn finish only.

STANDARD SPECIFICATIONS

Quality

Minor color tonal variations exist but within the tolerance limit Availability -Tiles, Slabs,
Blocks, Cobbles.

Edges

» Both hand chiseled and machine cut (sawn)

Tiles Size in cms » 30x30, 40x40, 60x30, 60x60, 60x40, 60x90 Cut to size Tiles

Thickness

» 15mm to 50mm with a tolerance of ±5mm» 18mm to 22mm with a tolerance of ±2mm (for
Both sides Sawn)

Slab Size in cms

» Cut to size slabs Upto 200cm length and 60cm width.

PRODUCTION

Gantry Crane

The Big Block are unloaded in the vicinity of huge Gantry Crane of capacity 40 MT. These
big sandstone block are lifted on the dressing Machine

Block Dressing Machine


The Big random size blocks are lifted on the trolley of the dressing machine for proper
dimensional size.

Gang Saw

After cutting in dimensional size the blocks are lifted with the help of Gantry Crane on the
trolley of Gang Saw Machine for slabs cutting.

Edge Cutting Machine

The Slabs produces on the Gang Saw Machine are cut into tiles of required size and thickness
on the Edge Cutting Machine.

Block Cutting Machine

The Block Cutter is used to cut large dimensional sized stone, known as blocks are being
produced on this machine.

Polishing Machine

The tiles and slabs are being polished on this machine. The requires bfinish such as brushing
(antique) finish and shine polish are preformed on this machine.

Shot Blasting

The shot blasting or sand blasting is performed on the tiles, slabs, locks is done by the Shot
Blaster.

Flaming

Columns and Pillars that gives and outstanding looks to a building are designed on the high
capacity Lathe Machine.
PACKING AND DELIVERY OF SAND STONE

Packing

Stone's packaging is very important. Items are carefully packaged for shipment, and should
be checked for external damage on receipt, where sign-off will be requested. Boxes of tiles
are packed in polystyrene and then secured together on a pallet for delivery. Note some items
such as slate are sold in crates rather than boxes.

Crate Packing - Standard Packaging

Each wooden crate is first in lined with polythene to protect stones from staining from
wooden planks or from any other feature, then it is in lined with foam-sheet along horizontal
planks to protect stones against damage from wooden planks or nails. This is a fundamental
preliminary packing used for all our wooden crates irrespective of the type of stone packed.

STAND PACKING

PALETTE PACKING

In case of polished stones, surface of each slab/tile is protected by using a paper cloth or
2mm-foam while tightly stacking them in a wooden crate. This protects the polished surface
of stones from scratching due to abrasion of dust particles between two tiles.

We consider that the quality of packing is as important as the quality of product. We never try
to save cost on wood or other packing materials. Stone is normally available in various
textures and finishes:

Polished:

The Most popular finish – One side is Finished by the action of the Abrasives on polishing
head, gives a mirror finish on Granite, and diminishing in the reflective properties, as we go
from Granite to marble and slate etc.

Shade:
We strictly maintain the shade of the merchandise as desired by the client. While producing
cut to size tiles, careful batching is done even when the material is cut from the same slab /
block.
Thickness:
While sawing, especially marble we take a lot of care, for the best result as it is a very brittle
and pasty material. A little less carefulness and the result is taper slabs.

Squarness :

Maintain Perfect square ness in cut to size materials; thanks to the automatic bridge cutting
machine from Peddrine SPA & Breton SPA, Italy. We never use locally made bridge cutting
machines or conventional hand driven edge cutting machines as it is far than difficult to
maintain.

Shipping:
Even in F.O.B. & C.& F. shipments consider it as our duty to investigate and inform the
buyer with various options of suitable shipping lines offering best freight along with shortest
transit time and satisfactory service. Our job does not just end upon loading the container. We
maintain the track of container till it reaches the destination and keep the client advised of
various movements/trans shipments.

Quality Control & Inspection

Should have an in-house designed three stage quality control system which does not leave
any room for mistakes or carelessness. The first stage starts at quarry level where every
individual block is carefully inspected. A 3D picture is drawn displaying all the
characteristics. The second stage inspection is conducted upon sawing where the material is
closely inspected & various findings are properly recorded with drawings. At the final stage
the polished finished product is inspected using various gadgets. A proper recording is done
at this level also. Before shipping, a photograph is taken of the material and the packing of
every container and a proper record is maintained.
USES OF THE SANDSTONE

Sandstone is uses as building and paving stone which is mainly used in Houses, Gardens,
Ofiices, for Flooring,Paving and in walls.

Sandstones are used for variety of purposes. They are mainly used in paving, roofing,
flooring etc. They are also used in making beams, pillars, doors and window sills, wall
facing, fence posts etc.

 Sandstones are resistant to saline air, which make it perfect for exterior cladding in
sea-shore buildings.

 They are also acid and alkali resistant. So, they are used in chemical industry for
flooring, wall-covering.

 They are thermal resistant so used for making fireplaces.

Some common uses of sandstone are given below:

 Sandstone Flooring

Sandstone is a wonderful material for flooring purposes. Its high strength make it
perfect for making floors of shopping markets, offices, residences, monuments, parks
and many more. The different colors and patterns make it easy to choose from that
suits your need.

 Sandstone Wall

Sandstone walls have been a tradition for years. Be it Red fort, hawa mahal,
Rashtrapati Bhawan or any other historical monument the sandstone walls have added
a great value to their beauty. The durability and long lasting of these walls show that
sandstone is an ideal material for wall construction. Walls made with white sandstones
shows the impact of serenity and purity. Red sandstones are largely in demand.
 Sandstone Pavers

The high strength of sandstone tiles, blocks, and slabs make it suitable for paving
floors. The different shades and patterns of sandstone make your garden pavement
gorgeous. Sandstone enhance the style and look of pavements making it attractive.

Different type of sandstone tiles and chips are used to create patterns which enhance
the beauty of these pavements.

 Sandstone Fireplace

The thermal resistant property of sandstones make it idle for building fireplaces. Its
natural rugged look impart unique look to the fireplace. Red and yellow sandstones
matching with fire waves make it alive and feels realistic.

Sandstone Properties

 High mechanical strength

 Resistant to acids and alkalies

 Resistant to air and Saline water

 Low water absorption ability

 Resistant to Corrosion and weathering

 Excellent binding with cement

HS CODES FOR SAND STONE

HS Codes of Heading 2516 : Granite, porphyry, basalt, sandstone and other monumental or
building stone, whether or not roughly trimmed or merely cut, by sawing or otherwise,
into blocks or slabs of a rectangular (including square) shape.

Sandstone-25162000
COMPANY PROFILE

About Siva Stones Inc

Established in 2012, Siva Stones Inc has gained immense expertise in supplying & trading of
Granite slabs etc. The supplier company is located in Ongole, Andhra Pradesh and is one of
the leading sellers of listed products. Buy Granite slabs in bulk from us for the best quality
products and service.

Granite Slabs - Exporter From Ongole

Siva Stones Inc is a quality driven organization offering a wide range of Granite slabs , , .
Established in 2012, the firm supplies Granite slabs , within preset time limit.

ABOUT THE COMPANY & PRODUCTS

Siva Stones Inc with a desire and intention to manufacture/produce crushed stones (size
35mm, 20mm, 12mm). The stone crusher will crush the stone daily except in the rainy
season. This is because it is difficult & risky to transport the stones and also very less
construction work is carried. Work will be carried for seven months while two months will be
the period of storing raw materials because after rainy season the price increases.

As construction and road building is booming in India, Stone crushing mills have proliferated
throughout India to accommodate the huge demand for stone used in Construction of roads,
bridges, housing, industrial building construction and other cement based products like RCC
pipes, PSC poles, pre-molded slabs, frames and beams, etc for fabrication.

Housing is a basic need of the human being as well as society. Hence, it is receiving
increased focus towards crushed stones. This company wants to put its maiden step into
crushed stone. Simultaneously, the wastage from the stone industry will be of much use to the
crushed stone and it is in the form of sand.

CRUSHED STONES:-

The demand for crushed stone will continue to grow with the Growth of its user industry. The
unit can be set up depending availability of raw Material and major commercial centre.
 Crushed stone is segregated into various sizes like 35mm, 20mm, 12mm, etc for
different uses.

 Crushed stone aggregates are used for construction of roads, bridges, housing,
industrial building construction and other cement based products like RCC pipes,
PSC poles, pre-molded slabs, frames and beams, etc for fabrication.

 It is advantageous if the crushed stone unit is set up near the quarries where the
granite boulders of various sizes are available for the crushing unit.

 The wastage from the stone industry will be of much use of the crushed stone unit.

Wastage of Stone:-

The wastage of the stone is in the form of sand. It has followings features & advantages.

 Best material used in construction rather than sand.

 Rare to purchase as it is the wastage of stones.

 Costly than sand & crushed stones.

PROCESS OF MANUFACTURING

 The granite stones of various sizes are fed into the jaw crushers for size reduction.

 Depending on the desired output size of the crushed stone, the raw materials are fed to
one or two jaw crushers in a sequence.

 Then these crushed stones re passed onto the rotary screen for size gradation.

 Material is handled through a belt conveyor to the different

Places of operation i.e. from jaw crusher to the rotary screen.

The whole process of crushing stones or granite stones shall be automatic except the process
of placing the stones into the jaw crusher for the size reduction. The sizes vary when the
stones are crushed. The sizes of stones is segregated into various sizes like 35mm, 20mm,
12mm, etc. these sizes are used in different purposes.
The installed machinery has the capacity to crush one truck daily of each various sizes i.e. 1
tucks daily of each sizes like 35mm, 20mm, 12mm etc except the wastage of stones in the
form of sand. It reaches 1 truck in a month.

FACTORS OF PRODUCTION

Raw Material:-

The raw material required for crushed stones is stones from the river and the small hills or
mountains.

The raw materials are transported from the river and other small hills or mountains to the
installed plant & machinery.

Labor:-

Labor is available at reasonable rates. On holiday labor are available on the basis of hour at
the reasonable rates.

Marketing profile

The unit is basically producing crushed stones for construction activities. Hence the demand
for crushed stones would be always rising due to the fact of population explosion in India.
This is because as population grows, there will be the demand for house and in order to make
house or any constructive work crushed stones are required.

Housing is a basic need of the society. Hence, it is receiving increased focus. All the building
constructions whether it is housing or industrial construction activities requires crushed stone.
Crushed stone is also required for cement based products like RCC pipes, PSC poles; cement
concrete hollow blocks, precast cement concrete slabs, well rings, window & door frames and
road Laing. The demand for crushed stone will continue to grow with the growth of its user
industry.

Moreover the director of the unit is well experienced, rather he is experts in the field of
marketing and finance too. The company will be planning to expand it activities in other
adjoining places too. Hence there will always be a healthy market for the units produced. The
company has studied and analyzed the market thoroughly.
Basic Assumptions

 The property or land on which the crusher will be established its own property which
is 2 acre.
 The work shed will be constructed on 100 sq. meters while. The office will be
constructed on 5 sq. meters.
 The working period will be 9 months in a year, which include 26 days in a month.
Two days will be holiday while 2 days will be working time on time basis in a month.
 The working hours will be 8 hours per day while on holiday 4 hours per day.
 It is considered that in 1 truck of boulders contains 4 ft. of boulders (1truck=4 ft.).
The ft. is considered as the height of the truck from the boulders to be load.

Loan is sanctioned on the basis of fixed deposits kept in bank. It is assumed that 80% loan is
sanctioned out of total deposits. But loan is taken only 60% of fixed deposits that are kept.
The loan is sanctioned by the State Bank Of India.
FINANCIAL STATEMENT ANALYSIS

“Financial analysis is a process of evaluating the relationship between component


parts of a financial statement to obtain better understanding of a firm’s positions and
performance.”

By Metcalf and Tirard

“Financial statement analysis is largely study of relationship among various financial


factors in a business as a disclosed by single set of statements. And a study of the firm of
these factors in a series of statement”

By Myers

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.

NATURE

The financial statement is prepared on the basis of recorded facts. The recorded facts
are those that can be expressed in monitory terms. The accounting records and financial
statements prepared from those records are based on historical costs. The financial statements
are prepared periodically generally for the accounting period.

 Financial statements as composed of data, which are the result of combination of


 Recorded facts concerning business transaction.
 Convention adopted to facilitate the accounting technique.
 Postulates or assumptions made to personal judgment used in the application of the
correction and postulates.
TYPES OF FINANCIAL ANALYSIS

We can classify various types of financial analysis into different categories depending
upon

 The material use


 The method of operation/ modes operandi of analysis
According to material use of financial analysis is of two types

 External Analysis
 Internal Analysis
EXTERNAL ANALYSIS

The analysis is not done by outsiders who do not have access to the detailed internal
accounting records of the business firm do not do the analysis. These outsiders include
investors, potential investors, creditors, potential creditors, government agencies, credit
agencies and the general public for financial analysis these external parties is to the firm
depend almost entirely on the published financial statements. Thus surveys only limited
purpose. However, the recent changes the government regulation requiring business firm to
make available more detailed information to the public through audited publish account has
considerably improved the position of the external analysis.

INTERNAL ANALYSIS

The analysis conducted by the persons who have access to the internal accounting
records of a business firm is known as internal analysis. Such an analysis can therefore be
performed by executives and employee of the organization as well as government agencies
which have statutory powers vested in them. Financial analysis that can be affected
depending upon the purpose to be achieved.

ON THE BASIS OF METHODS OF OPERATION

According to the methods of operation followed in the analysis, financial analysis


can also of two types.

 Horizontal analysis
 Vertical analysis
HORIZONTAL ANALYSIS

This makes to possible to focus attention on items have changed significantly during
period under review. It is also called as dynamic analysis. It refers the comparison of
financial data of company several years. The figures for this type of analysis are present
horizontally over a number of columns. The figures of various years compared with standard
base year. A base year chooses as beginning point.
VERTICAL ANALYSIS

It refers to the study of relationship of the various items in the financial statements of
one accounting period. In this type of analysis the figures from financial statements of a one
year compared with a base selected from the same years statements. It is also known as
“static analysis”.

PROCEDURE OF FINANCIAL STATEMENT ANALYSIS

There are three steps involved in the analysis of financial statements those are

(1)Selection
(2) Classification
(3) Analysis
The first step involves selection of information relevant to the purpose of analysis of
financial statements. The second step involved in the methodical classification of the data and
third step included drawing of interest and conclusions.
The following procedure is adopted for the analysis and Analysis of financial statements

 The analyst should acquaint himself with the principles and postulates of accounting.
He should know the plans and policies of the management so that he may be able to
find out whether these plans are properly executed or not.
 The extent of analysis should be determined so that the spear of work may be decided.
The aim is to find out the earning capacity of the enterprise then analysis income
statement will be under taken on the other hand if financial position is to be studied
then balance sheet analysis is required.
 The financial data given in the statement should be reorganized and re-arranged. It
will involve the grouping of similar data under same heads, breaking down of
individual components of statements according to nature. The data is reduced to a
standard form.
 A relationship is established among financial statements with the help of tools and
techniques of analysis such as ratios, trends.
 The information interpreted in a simple and understandable way. The significance and
utility of financial data is explained for helping in decision making.
 The conclusions drawn from Analysis are presented to be management the form of
report.
OBJECTIVES OF FINANCIAL STATEMENT

The Financial Statement are the source of information on the basis of which conclusion
are drawn about the profitability and financial position of a concern. They are the major
means employed by firms to present their financial position of owners, creditors and the
general public. The primary objective of principles Board of America State the following
objectives of financial statements.

 Obligations of a business firm. To provide reliable information about changes such


economic resources and obligations to provide reliable financial information about
economic resources and.
 To provide financial information that assists in estimating the earning potentials of
business.
 To disclose to the extent possible other information to the financial statements that is
relevant to the needs of the users of these statements.
 To provide reliable information about changes in net resources arising out of business
activities.
CHARACTERISTICS OF IDEAL FINANCIAL STATEMENTS

The financial statements are prepared with a view to depict financial position of the
concern. A proper analysis and Analysis of these statements enables a person to judge the
profitability of financial strength of the business. The financial statement should be prepared
in such a way that they are able to give a clear and orderly picture of the concern. The ideal
financial statements have the following characteristics.

DEPICT THE FINANCIAL POSITION


The information contained in the financial statements should be such the true and
correct idea is taken about the financial positions of the concern. No material should be with
held while preparing these statements.
EFFECTIVE PRESENTATION
The financial statements should be relevant to the objectives of the enterprise. This
will be possible when the person preparing these statements is able to properly utilize the
account information. The information, which is not relevant to the statement, should be
avoided. Otherwise it will be difficult to make a distinction between relevant and irrelevant
data.
ATTRACTIVE

The financial statement should be prepared in such a way the important information is
underlined so that it attracts the eye of the reader.

EASINESS

Financial statements should be easily prepared. The balances of different ledger


accounts should be easily taken to these statements. The calculation work should be
minimum possible while preparing these statements. The size of the statements should not be
very large will enable the saving of time in preparing the statements.

COMPARABILITY

The results of financial analysis should be in a way that can also be in compared
with the figures of other concerns of the same nature.

ANALYTICAL PRESENTATION

The information should be analyzed in such a way that similar data is presented at the
same place a relationship can be established in similar type of information. This will be
helpful in analysis and Analysis of data.

BRIEF

Possible, the financial statements should be presented in brief. The reader will be able
to form an idea about the figures. On the other hand, if figures are given in details then it will
become difficult to judge the working of the business.

PROMPTNESS

The financial statement should be prepared and presented at the earliest possible,
immediately at the close financial year, statements should be ready.

IMPORTANCE OF FINANCIAL ANALYSIS

The financial statements are mirrors, which reflect the financial position operating
strength or weakness of the concern. The statements are useful to Management, Investor,
Creditors, Bankers, Workers, and Government and public and large. George O may points out
the following major uses of financial statements-
 As a report of steward ship
 As basis of fiscal policy
 To determine the legality of dividends
 As guide to advice divided action
 As a basis for the granting of credit
 As information for prospect investors in an enterprise
 As a guide to the value of investment already
 As a aid to government supervision
 As a basis for price or rate regulation
 As basis for taxation

THE UTILITY OF FINANCIAL STATEMENT TO DIFFERENT


PARTIES
MANAGEMENT
The financial statements are useful for assessing the efficiency for different cost
centers. The management is able to exercise cost control through these statements. The
efficient is able to decide the notice of the management. The Management is able to decide
the course of action to be adopted in future.

CREDITORS

The trade creditors are to be paid in a short period this liability is met over of current
assets. The creditors will be interested in current solvency of the concern. The calculation of
current ratio and liquid ratio will enable the creditors to assess urgent financial position of the
concern in relation to their debts.

BANKERS

The Bankers are interest to see the loan amount is secure and the customer is also able
to pay the interest regularly. The bankers will analysis the balance sheet to determine
financial strength of the concern and P&L A/c will also be studied to find out the earning
position. These statements also help the bankers to determine the amount of securities it will
ask from the customers as a cover for the loans.
INVESTOR

The investors include both short term and long-term investors. They are interested
payments in the security of principle amount of loan and regular interested payments in the
concern. The investors will study the long-term solvency of the concern will the help of
financial position but it will also study future prospects and expansion of the concern. The
possibility of paying back the loan amount in the fact of liquidation of the concern is also
taken into consideration.

TRADE ASSOCIATION

This association provides service and protection to the member. They may analysis
the financial statements for the purpose of providing facilities to these members. They may
develop standard ratios and design uniform system of accounting.

STOCK EXCHANGE

The stock exchange deals in purchase and sale of different securities of different
companies. The financial statement enables the stockbrokers to judge the financial position of
different concerns. The fixation of prices for securities etc., are also based on this statement.

METHODS OF DEVICES OF FINANCIAL ANALYSIS

The analysis and Analysis of financial statements issued to determine the financial
position and result of operations as well. A numbers of method of devices are used to study
the relationship between different statements. An effort is made to use those devices, which
clearly analyze the position of the enterprise. The following methods of analysis are generally
used.

 Comparative Statements
 Tend Analysis
 Common Size Statements
 Fund flow Analysis
 Cash flow Analysis
 Ratio Analysis
The methods we are using in this study are Comparative balance sheet and Common-Size
statements, these two are suitable to our study. If you go briefly about these methods.
COMPARATIVE STATEMENTS

The comparative financial statements are statements of the financial position at different
periods of time. The elements of financial position are shown in comparative forms so as to
give an idea of financial position at two on more periods. Any statements prepared in a
comparative form for financial analysis purposes.

Not only the comparison of the figures of two periods but also be relationship
between balance sheet and income statement enables an in depth study of financial position
and operative results. The comparative statements may show.

 Absolute figures (rupees amount)


 Changes in absolute figure that is increase or decrease in absolute figures.
 Absolute data in term of percentages.
The analysis is able to draw useful conclusions when figures are given in a comparative
position. The figures of sales for a quarter, half-year or one year may tell only the present
position of sales efforts. When sales figures of current periods of time, similarly, comparative
figures will indicates the trend and direction of financial position and operating results.

The financial data will be comparative only when same accounting principles are used
in preparing these statements. In case of any deviation in the use of accounting principles this
fact must be mentioned at the foot of financial statements and the analysis should be careful
in using these statements.

The two comparative statements are

 Balance Sheet
 Income Statement
COMPARATIVE 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 sheets of the same business
enterprise on different dates. The changes in periodic balance sheet items reflect the conduct
of business.
The changes can be observed by comparison of the balance sheet at the beginning and
at the end of a period and these changes can help in forming an opinion about the progress of
an enterprise. The comparative balance sheet has two columns for the data of original balance
sheet. A third column is used to shown increased in figures. The fourth column may be added
for giving percentages of increases or decreases.

GUIDE LINES FOR ANALYSIS OF COMPARATIVE BALANCE SHEET

While interpreting Comparative Balance Sheet the interpreter is expected to study the
following aspects

 Current financial position and liquidity position.


 Long-term financial position.
 Profitability of the concern.
For studying current financial position or short-term financial position of a concern,
one should the working capital in both the years. The excess of current assets over current
liabilities will give the figures of working capital. The increase in working capital will mean
improvement in the current financial position of the business. An increase in current assets
complained by the increase in current liabilities of the same amount will not shown by
provement in the short-term financial position. The long-term financial position of the
concern can be analyzed by studying the changes in fixed assets, long-term liabilities and
capital. The proper financial policy of concern will be to financial fixed assets by the
financial institutions or issue of fresh share capital. An increase in fixed assets should be
compared to the increase in long-term loans and capital.

It is the increase in fixed assets is more the increase in long-term securities then part
of fixed assets has been financed from the working capital. On the other hand, if the increase
in long-term securities is more than the increase in fixed assets the fixed assets have not only
been financed from long-term sources but part of working capital has also been financed from
long-term sources. A wise policy will be finance fixed assets by raising long-term funds.

The next aspect to be studied in comparative balance sheet question is the


profitability of the concern. The study of increase or decrease in retained earnings various
resources and surpluses will enable the interpreter to see whether the profitability has
improved or not. An increase the balance sheet of profit and loss accounting and other
resources created from profits will means an increase in profitability to the concern. After
studying various assets and liabilities an opinion should be formed about the financial
position of the concern. One cannot say if short-term financial position is good then long-
term financial position must be given at the end.

COMPARATIVE INCOME STATEMENT

The comparative income statement gives and idea of the progress of a business over a
period of time. The changes in absolute data in money values and percentages can be
determined to analyze the profitability of the business like comparative balance sheet income
statement also has four columns. First two columns give figures of various items for two
years third and fourth columns are used to show increase or decrease in figures in absolute
amounts and percentages respectively.

FINANCIAL ANALYSIS
The term “financial analysis”, also known as analysis and Analysis of financial
statements, Refers to the process of determining financial strengths and weaknesses of the
firm by establishing Strategic relationship between the items of the profit and loss account,
balance sheet 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 statements Analysis is an attempt to determine the
significance and meaning of the 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 sound dividend policy.
FUND FLOW ANALYSIS
Funds flow management is a method by which we study changes in the financial
position of business enterprises between beginning and ending financial statements dates.
Hence, the funds flow management is prepared by comparing two balance sheets and with the
help of such other information derived from the accounts as may be needed. Broadly
speaking, the preparation of a funds flow management.
TREND ANALYSIS
Trend analysis involves computation of index numbers of movements of various
financial items in the financial statement for a number of periods. It helps in understanding
the nature and rate of movements in various financial factors.

However, conclusions should not be drawn on the basis of a single trend. Trends of
related items should be carefully studied. Due weight age should be given to extraneous
factors such as government policy, economic conditions etc. they can affect the trend
significantly.
CASH FLOW ANALYSIS
Cash Flow statement is a statement which describes the inflows (sources) and out
flows (uses) of cash and cash equivalents in an enterprise during a specified period of time.
Such a statement enumerates net effects of the various business transactions on cash and its
equivalents and takes in to account receipts and disbursements of cash.
A cash flow statement summary the cases of changes cash position of business
enterprise between dates of two balance sheets. According to AS- 3 (Revised), an enterprise
should prepare a cash flow statement and should present it for each period for which financial
statements are prepared. The terms cash, cash equivalents and cash flows are used in this
statement with the following meanings.
RATIO ANALYSIS
Ratio analysis is a widely – used tool of financial analysis. It is defined as the
systematic used of ratio to interpret the financial statement so that the strengths and
weaknesses of a firm as well as its historical performance and current financial condition can
be determined.
DATA ANALYSIS

COMPARATIVE STATEMENT ANALYSIS OF SIVA STONES INC FOR THE YEAR 2013-14
(AMOUNT IN RS.)
Particulars 2012-13 2013-14 I/D % change
I) Current Assets (A)
Cash and bank 788897 1790372 1001475 126.95
Debtors 83535915 84471633 935718 1.12
Loans and advances 26004556 23694079 -2310477 -8.88
Inventory 45301116 61815967 16514851 36.46
*Total Current Assets 155630484 171772052 16141568 10.37
II) Fixed assets (B) 0
Net block of Fixed assets 114059407 105178279 -8881128 -7.79
Capital in work in process 2132230 127955 -2004275 -94.00
Total fixed assets (B) 116191637 105306234 -10885403 -9.37

III ) Intangible Assets

Miscellaneous expenditure 242858 150000 -92858 -38.24


Profit and loss 11013460 16440323 5426863 49.27
Total intangible assets © 11256318 16590323 5334005 47.39

*TOTAL ASSETS (A+B+C) 283078439 293668609 10590170 3.74


LIABILITIES
Current liabilities and
Provisions 41317913 41545861 227948 0.55

Deferred tax liabilities 4150064 4150064


TOTAL OF A 45467977 45695925 227948 0.50
Loans and advances(B)
Secured loans 95172454 82395269 -12777185 -13.43
Unsecured loans 102410495 115549901 13139406 12.83
Total of B 197582949 197945170 362221 0.18
Capital& reserves and surplus
Shared capital 35000000 45000000 10000000 28.57
Reserves and surplus 5985944 11412809 5426865 90.66
Total of C 40027513 50027513 10000000 24.98
TOTAL OF
LIABILITIES(A+B+C) 283078439 293668609 10590170 3.74

Source: Annual Reports of SIVA STONES INC

INTERPRETATION:
 During the year 2013-14 there has been a rise of 10.37% in the current assets of the
company. This in spite of fail in loans and advances. The mainly on account of
increase in inventories and increased to 0.55%

 The fixed assets has been decreased to 116191637 to 105306234 i.e. – 9.37% and on
the other hand there has been a rise in current liabilities i.e. 0.77%.

 The reserves and surplus has been remained same, it is so because they had not
utilized.

 Overall financial position of the company appears to be satisfactory.

COMPARATIVE STATEMENT ANALYSIS OF SIVA STONES INC FOR THE YEAR 2014-15
(AMOUNT IN RS.)
Particulars 2013-14 2014-15 I/D % change
I) Current Assets (A)
Cash and bank 1790372 1139163 -651209 -36.37
Debtors 84471633 88110242 3638609 4.31
Loans and advances 23694079 29491695 5797616 24.47
Inventory 61815967 60066678 -1749289 -2.83
*Total Current Assets 171772052 178807779 7035727 4.10
II) Fixed assets (B) 0

Net block of Fixed assets 105178279 111512696 6334417 6.02

Capital in work in process 127955 -127955 -100.00


Total fixed assets (B) 105306234 111512696 6206462 5.89

III ) Intangible Assets ©

Miscellaneous expenditure 150000 -150000


Profit and loss 16440323 -16440323 -100.00

Total intangible assets © 16590323 -16590323 -100.00

*TOTAL ASSETS (A+B+C) 293668609 290320475 -3348134 -1.14


LIABILITIES

Current liabilities and Provisions 41545861 25412444 -16133417 -38.83

Deferred tax liabilities 4150064 9165872 5015808 120.86


TOTAL OF A 45695925 34578316 -11117609 -24.33

Loans and advances(B)


Secured loans 82395269 80471245 -1924024 -2.34
Unsecured loans 115549901 129869003 14319102 12.39
Total of B 197945170 210340248 12395078 6.26

Capital& reserves and surplus©


Shared capital 45000000 45000000
Reserves and surplus 11412809 401911 -11010898 -96.48
Total of C 50027513 45401911 -4625602 -9.25

TOTAL OF LIABILITIES(A+B+C) 293668609 290320475 -3348134 -1.14

Source: Annual Reports of SIVA STONES INC

INTERPRETATION:

 During the year 2014-15 there has been a rise of 4.09% in the current assets of the
company. This in spite of all in cash and bank balance. The risk is mainly on the
account of increased in debtors and loans and advances.
 The fixed assets of the company compare favorably with the loan funds of the
company. The funds are used to fund the current assets of the company. Fixed assets
and loans and advances has been increased.

 The reserves and surplus of the company has been decreased from 5027513 to 401911
i.e.92%

 The financial position of the company is satisfactory.


COMPARATIVE STATEMENT ANALYSIS OF SIVA STONES INC FOR THE YEAR 2015-16
(AMOUNT IN RS.)
Particulars 2014-15 2015-16 I/D % change
I) Current Assets (A)
Cash and bank 1139163 2566773 1427610 125.32
Debtors 88110242 61059292 -27050950 -30.70
Loans and advances 29491695 33150167 3658472 12.41
Inventory 60066678 83865136 23798458 39.62
*Total Current Assets 178807779 1806413268 1627605489 910.25
II) Fixed assets (B) 0

Net block of Fixed assets 111512696 130215649 18702953 16.77

Capital in work in process 0


Total fixed assets (B) 111512696 130215649 18702953 16.77

III ) Intangible Assets ©

Miscellaneous expenditure
Profit and loss

Total intangible assets ©

*TOTAL ASSETS (A+B+C) 290320475 310857017 20536542 7.07


LIABILITIES

Current liabilities and Provisions 25412444 36576323 11163879 43.93

Deferred tax liabilities 9165872 10637627 1471755 16.06


TOTAL OF A 34578316 47213950 12635634 36.54

Loans and advances(B)


Secured loans 80471245 80798769 327524 0.41
Unsecured loans 129869003 123403014 -6465989 -4.98
Total of B 210340248 204201783 -6138465 -2.92

Capital& reserves and surplus©


Shared capital 45000000 45000000
Reserves and surplus 401911 14441284 14039373 3493.15
Total of C 45401911 59441284 14039373 30.92

TOTAL OF LIABILITIES(A+B+C) 290320475 310857017 20536542 7.07


Source: Annual Reports of SIVA STONES INC
INTERPRETATION:

 During the year 2015-16 there has been a rise of 1.02% in the current assets of the
company. This in spite of all in cash and bank balance. The risk is mainly on the
account of increased in debtors and loans and advances.
 The fixed assets of the company compare with favorable in year 2016 increased in
111512696 to 130215649 i.e. 16.77% . The funds are used to fund the current assets
of the company. Fixed assets and loans and advances has been increased.

 The reserves and surplus of the company has been decreased from 401911 to
14441284

 The financial position of the company is satisfactory.

COMPARATIVE STATEMENT ANALYSIS OF SIVA STONES INC FOR THE YEAR 2016-17 (AMOUNT
IN RS.)
Particulars 2015-16 2016-17 I/D % change
I) Current Assets (A)
Cash and bank 2566773 3690856 1124083 43.79
Debtors 61059292 67093201 6033909 9.88
Loans and advances 33150167 31729190 -1420977 -4.29
Inventory 83865136 61966693 -21898443 -26.11
*Total Current Assets 1806413268 164479941 -1641933327 -90.89
II) Fixed assets (B) 0

Net block of Fixed assets 130215649 138615525 8399876 6.45

Capital in work in process 0


Total fixed assets (B) 130215649 138615525 8399876 6.45

III ) Intangible Assets ©

Miscellaneous expenditure
Profit and loss

Total intangible assets ©

*TOTAL ASSETS (A+B+C) 310857017 303095466 -7761551 -2.50


LIABILITIES
Current liabilities and
Provisions 36576323 36736699 160376 0.44

Deferred tax liabilities 10637627 11158085 520458 4.89


TOTAL OF A 47213950 47894784 680834 1.44

Loans and advances(B)


Secured loans 80798769 79595439 -1203330 -1.49
Unsecured loans 123403014 117614485 -5788529 -4.69
Total of B 204201783 197209924 -6991859 -3.42
Capital& reserves and
surplus©
Shared capital 45000000 45000000
Reserves and surplus 14441284 12990758 -1450526 -10.04
Total of C 59441284 57990758 -1450526 -2.44
TOTAL OF
LIABILITIES(A+B+C) 310857017 303095466 -7761551 -2.50

Source: Annual Reports of SIVA STONES INC

INTERPRETATION:

 During the year 2016-17 there has been a rise of 7092% in the current assets of the
company. This in spite of all in cash and bank balance. The risk is mainly on the
account of increased in debtors and loans and advances.
 The fixed assets of the company compare favorably with the loan funds of the
company. The funds are used to fund the current assets of the company. Fixed assets
and loans and advances have been increased.

 The reserves and surplus of the company has been decreased from 14441284 to
12990758 i.e. 10.04%

 The financial position of the company is satisfactory.

COMPARATIVE STATEMENT ANALYSIS OF SIVA STONES INC FOR THE YEAR 2017-18
(AMOUNT IN RS.)
Particulars 2016-17 2017-18 I/D % change
I) Current Assets (A)
Cash and bank 3690856 9103763 5412907 146.66
Debtors 67093201 64363179 -2730022 -4.07
Loans and advances 31729190 29136284 -2592906 -8.17
Inventory 61966693 91271473 29304780 47.29
*Total Current Assets 164479941 193874698 29394757 17.87
II) Fixed assets (B) 0
Net block of Fixed assets 138615525 153460534 14845009 10.71
Capital in work in process 21622299 21622299
Total fixed assets (B) 138615525 175082833 36467308 26.31
III ) Intangible Assets ©
Miscellaneous expenditure
Profit and loss
Total intangible assets ©
*TOTAL ASSETS (A+B+C) 303095466 368959531 65864065 21.73
LIABILITIES

Current liabilities and Provisions 36736699 80088422 43351723 118.01


Deferred tax liabilities 11158085 12518590 1360505 12.19
TOTAL OF A 47894784 92607012 44712228 93.36
Loans and advances(B)
Secured loans 79595439 76948093 -2647346 -3.33
Unsecured loans 117614485 131297553 13683068 11.63
Total of B 197209924 208245646 11035722 5.60
Capital& reserves and surplus©
Shared capital 45000000 45000000
Reserves and surplus 12990758 23104872 10114114 77.86
Total of C 57990758 68104872 10114114 17.44
TOTAL OF
LIABILITIES(A+B+C) 303095466 368957530 65862064 21.73
Source: Annual Reports of SIVA STONES INC
INTERPRETATION:

 The year 2017-18 there has been a rise of 1.84% in the current assets of the
company.This in spite of all in cash and bank balance. The risk is mainly on the
account of increased in debtors and loans and advances.

 The fixed assets of the company compare with favorable in year 2018 increased in
138615525 to 175082833 i.e. 26.31% . The funds are used to fund the current assets
of the company. Fixed assets and loans and advances has been increased.

 The reserves and surplus of the company has been decreased from 12990758 to
23104872

 The financial position of the company is satisfactory.


COMMONSIZE STATEMENT ANALYSIS OF SIVA STONES INC FOR THE YEAR 2013-14 (AMOUNT
IN RS.)
Particulars 2012-13 % 2013-14 %
I) Current Assets (A)
Cash and bank 788897 0.28 1790372 0.61
Debtors 83535915 29.51 84471633 28.76
Loans and advances 26004556 9.19 23694079 8.06
Inventory 45301116 16.00 61815967 21.04

*Total Current Assets 155630484 54.98 171772052 58.49


#DIV/0
II) Fixed assets (B) !
Net block of Fixed assets 114059407 40.29 105178279 35.81

Capital in work in process 2132230 0.75 127955 0.04


Total fixed assets (B) 116191637 41.05 105306234 35.85
III ) Intangible Assets ©

Miscellaneous expenditure 242858 0.09 150000 0.05


Profit and loss 11013460 3.89 16440323 5.59
Total intangible assets © 11256318 3.97 16590323 5.64
*TOTAL ASSETS (A+B+C) 283078439 100 293668609 100.00
LIABILITIES
Current liabilities and Provisions 41317913 14.59 41545861 14.14

Deferred tax liabilities 4150064 1.46 4150064 1.41


TOTAL OF A 45467977 16.05 45695925 15.55
Loans and advances(B)
Secured loans 95172454 33.62 82395269 28.05
Unsecured loans 102410495 36.17 115549901 39.34
Total of B 197582949 69.79 197945170 67.39
Capital& reserves and surplus©
Shared capital 35000000 12.36 45000000 15.32
Reserves and surplus 5985944 1.77 11412809 1.71
Total of C 40027513 14.14 50027513 17.03
TOTAL OF LIABILITIES(A+B+C) 283078439 100 293668609 100.00
Source: Annual Reports of SIVA STONES INC

INTERPRETATION:
 The percentage of current assets is more than the percentage of current liabilities in
both the years. It shows that the company has diversifies the long term source for
improving liquidity position.

 In 2013 fixed assets account 41.04%, which as long term funds account 71.26% of
total fund. In 2014 fixed assets account 35.85% where long term funds for working
capital purpose company have used working capital for purchasing fixed assets.

 In both the years the company has used short-term funds for the investment of fixed
assets which influences the working capital position.

COMMONSIZE STATEMENT ANALYSIS OF SIVA STONES INC FOR THE YEAR 2014-15
(AMOUNT IN RS.)
Particulars 2013-14 % 2014-15 %
I) Current Assets (A)
Cash and bank 1790372 0.6 1139163 0.39
Debtors 84471633 28.76 88110242 30.34
Loans and advances 23694079 8.06 29491695 10.15
Inventory 61815967 21.04 60066678 20.68
*Total Current Assets 171772052 58.49 178807779 61.58

II) Fixed assets (B)


Net block of Fixed assets 105178279 35.81 111512696

Capital in work in process 127955 0.04

Total fixed assets (B) 105306234 35.85 111512696

III ) Intangible Assets ©

Miscellaneous expenditure 150000 0.05


Profit and loss 16440323 5.59
Total intangible assets © 16590323 5.64

*TOTAL ASSETS (A+B+C) 293668609 100 290320475 100


LIABILITIES

Current liabilities and Provisions 41545861 14.14 25412444 8.75


Deferred tax liabilities 4150064 1.41 9165872 3.15
TOTAL OF A 45695925 15.55 34578316 11.9
Loans and advances(B)

Secured loans 82395269 28.05 80471245 27.71

Unsecured loans 115549901 39.34 129869003 44.73


Total of B 197945170 67.39 210340248 72.44

Capital& reserves and surplus©


Shared capital 45000000 15.32 45000000 15.5
Reserves and surplus 11412809 1.71 401911 0.13
Total of C 50027513 17.03 45401911 15.63

TOTAL OF LIABILITIES(A+B+C) 293668609 100 290320475 100

Source: Annual Reports of SIVA STONES INC

INTERPRETATION:
 The company is able to maintain the working capital needs. The common size
balance sheet reveals that the current assets percentage is 58.49% in 2014 and 61.58%
in 2015. although the firms current liabilities are less than the current assets.

 In both the year SIVA STONES INC has short fund and long term funds for the
investment of the fixed assets, which influences the working capital position of the
company.

 The overall financial position of the company in both the years is satisfactory.
COMMONSIZE STATEMENT ANALYSIS OF SIVA STONES INC FOR THE YEAR 2015-16
(AMOUNT IN RS.)
Particulars 2014-15 % 2015-16 %
I) Current Assets (A)
Cash and bank 1139163 0.39 2566773 0.82
Debtors 88110242 3034 61059292 19.64
Loans and advances 29491695 10.15 33150167 10.66
Inventory 60066678 20.68 83865136 26.97
*Total Current Assets 178807779 61.58 1806413268 58.11
II) Fixed assets (B)
Net block of Fixed assets 111512696 38.41 130215649 41.88

Capital in work in process

Total fixed assets (B) 111512696 38.41 130215649 41.88

III ) Intangible Assets ©


Miscellaneous expenditure
Profit and loss
Total intangible assets ©
*TOTAL ASSETS (A+B+C) 290320475 100 310857017 100
LIABILITIES

Current liabilities and Provisions 25412444 8.75 36576323 11.76


Deferred tax liabilities 9165872 3.15 10637627 3.42
TOTAL OF A 34578316 11.9 47213950 15.18
Loans and advances(B)

Secured loans 80471245 27.71 80798769 25.99


Unsecured loans 129869003 44.73 123403014 39.69
Total of B 210340248 72.44 204201783 65.68
Capital& reserves and surplus©
Shared capital 45000000 15.5 45000000 14.47
Reserves and surplus 401911 0.13 14441284 4.64
Total of C 45401911 15.63 59441284 19.12

TOTAL OF LIABILITIES(A+B+C) 290320475 100 310857017 100

Source: Annual Reports of SIVA STONES INC

INTERPRETATION:
 The company is able to maintain the working capital needs the common size balance
sheet reveals that the current assets percentages 61.58% and 58.11% although the
firms current liabilities are not sufficient i.e.8.75% in 2015 and 11.76% in 2016. the
company has diversified the long term sources for improving liquidity position.

 In both the years the company has used short-term funds for the investment of fixed
assets, which influences the working capital position of the company.

 The overall financial position of the company in both the years is satisfactory.

COMMONSIZE STATEMENT ANALYSIS OF SIVA STONES INC FOR THE YEAR 2016-
(AMOUNT IN RS.)
Particulars 2015-16 % 2016-17 %
I) Current Assets (A)
Cash and bank 2566773 0.82 3690856 1.21
Debtors 61059292 19.64 67093201 22.13
Loans and advances 33150167 10.66 31729190 10.46
Inventory 83865136 26.97 61966693 20.44
*Total Current Assets 1806413268 58.11 164479941 54.26
II) Fixed assets (B)
Net block of Fixed assets 130215649 41.88 138615525 45.73

Capital in work in process


Total fixed assets (B) 130215649 41.88 138615525 45.73
III ) Intangible Assets
Miscellaneous expenditure
Profit and loss
Total intangible assets ©

*TOTAL ASSETS (A+B+C) 310857017 100 303095466 100


LIABILITIES
Current liabilities and
Provisions 36576323 11.76 36736699 12.12
Deferred tax liabilities 10637627 3.42 11158085 3.68
TOTAL OF A 47213950 15.18 47894784 15.88
Loans and advances(B)

Secured loans 80798769 25.99 79595439 26.26


Unsecured loans 123403014 39.69 117614485 38.8
Total of B 204201783 65.68 197209924 65.06
Capital& reserves and
surplus©
Shared capital 45000000 14.47 45000000 14.84
Reserves and surplus 14441284 4.64 12990758 4.28
Total of C 59441284 19.11 57990758 19.12
TOTAL OF
LIABILITIES(A+B+C) 310857017 100 303095466 100
Source: Annual Reports of SIVA STONES INC

INTERPRETATION:
 The company is able to maintain the working capital needs the common size balance
sheet reveals that the current assets percentages 1.02% and 8.94%

 In both the years the company has used short-term funds for the investment of fixed
assets, which influences the working capital position of the company.

 The overall financial position of the company in both the years is satisfactory.
COMMONSIZE STATEMENT ANALYSIS OF SIVA STONES INC FOR THE YEAR 2017-
(AMOUNT IN RS.)
Particulars 2016-17 % 2017-18 %
I) Current Assets (A)
Cash and bank 3690856 1.21 9103763 2.46
Debtors 67093201 22.13 64363179 17.44
Loans and advances 31729190 10.46 29136284 7.89
Inventory 61966693 20.44 91271473 24.73
*Total Current Assets 164479941 54.26 193874698 52.54
II) Fixed assets (B)
Net block of Fixed assets 138615525 45.73 153460534 41.59

Capital in work in process 21622299 5.86

Total fixed assets (B) 138615525 45.73 175082833 47.45

III ) Intangible Assets ©


Miscellaneous expenditure
Profit and loss
Total intangible assets ©
*TOTAL ASSETS (A+B+C) 303095466 100 368959531 100
LIABILITIES

Current liabilities and Provisions 36736699 12.12 80088422 21.7


Deferred tax liabilities 11158085 3.68 12518590 3.39
TOTAL OF A 47894784 15.88 92607012 25.09
Loans and advances(B)

Secured loans 79595439 26.26 76948093 20.85


Unsecured loans 117614485 38.8 131297553 35.58
Total of B 197209924 65.06 208245646 56.44
Capital& reserves and surplus©
Shared capital 45000000 14.84 45000000 12.19
Reserves and surplus 12990758 4.28 23104872 6.26
Total of C 57990758 19.12 68104872 18.45

TOTAL OF LIABILITIES(A+B+C) 303095466 100 368957530 100


Source: Annual Reports of SIVA STONES INC

INTERPRETATION:
 The company is able to maintain the working capital needs the common size balance
sheet reveals that the current assets percentages 8.94% and 0.78% although the firms
current liabilities are not sufficient i.e.54.12% in 2017 and 118.01% in 2018 the
company has diversified the long term sources for improving liquidity position.

 In both the years the company has used short-term funds for the investment of fixed
assets, which influences the working capital position of the company.

 The overall financial position of the company in both the years is satisfactory.
LIQUDITY RATIOS

CURRENT RATIO:

Current assets
Current Ratio = ______________________
Current Liabilities
Year Current Assets Current liabilites Ratio

2013-2014 155630484 41317913 3.77

2014-2015 171772052 41545861 4.13

2015-2016 178807779 25412444 7.04

2016-2017 180641369 36576323 4.94

2017-2018 164479941 36736699 4.48

Graph

Ratio

8 7.04
7
6
4.94
5 4.48
4.13
Ratio

4 Ratio
3 3.77
2
1
0

Year

Interpretation:

As a rule the current ratio 2:1 or more is considered as satisfactory position of the firm The
Current Ratio for the year 2016-17 is 4.94 which is very high than ideal on i.e. 2:1. it
indicates that there is much licking of capital in current assets which is not a good sign.
Where as the year 2017-18 it has been decreasing and it has been come down 2.42.The huge
increase in sundry debtors resulted an increase in the ratio which is above the benchmark
level of 2:1 Which shows the comfortable position of the firm.
QUICK RATIO:

Quick or liquid assets


Quick Ratio = __________________________________
Current liabilities
Year

Current Assets Current liabilities Ratio

2013-2014 109956085 41545861 2.65


2014-2015 118741101 25412444 2.86

2015-2016 96776233 36576323 3.81

2016-2017 102513248 36736699 2.80

2017-2018 102603225 80088422 2.79


GRAPHICAL PRESENTATION

QUICK RATIO

4.5
3.81
4
3.5
2.86 2.8 2.79
3 2.65
Ratio

2.5
Ratio
2
1.5
1
0.5
0

Years

Interpretation:

Quick assts which can be converted into cash with in a short period of time say to six
months. The bench mark level of quick ratio 1:1 a high ratio of more than 1 indicated that is
having ideal founds and had invested that properly.

From the above calculation we find that in the year 2013-14 the ratio is 2.65 in the
year 2014-15 the ratio is 2.86 in the year 2015-16 the ratio is 3.81 in the year 2016-17 the
ratio is 2.8 and in the year 2017-18 the ratio is 2.79. it has started declining since then, but
again in the final year 2016-17 it has raised to 2.80
ABSOLUTE LIQUID RATIO (SUPER QUICK RATIO):

ABSOLUTE LIQUID RATIO


Year Absolute Liquid Assets Current liabilities Ratio
2013-2014 1790372 41545861 0.04
2014-2015 1139163 25412444 0.04
2015-2016 2566773 36576323 0.07
2016-2017 3690856 36756699 0.1
2017-2018 9103763 80088422 0.11

GRAPHICAL PRESENTATION:

ABSOLUTE LIQUID RATIO

0.12 0.11
0.1
0.1
0.08 0.07
RATIO

Series1
0.06
0.04 0.04 Series2
0.04
0.02
0
0
Years

Interpretation:

The current assets which are ready in the form of cash considered as absolute liquid
assets. Here, the cash and bank balance and the interest on fixed assets are Absolute liquid
assets. The bench mark level of quick ratio is 0.51:1 (or) 1:2.

It is low in all the year of study. It 0.045 for the year 2013-14 for the year 2017-18
has increased to 0.11 still in lower that the ideal one. Because the cash and bank balance
were used to purchase assets.
ACTIVITY RATIOS

INVENTORY TURNOVER RATIO:

INVENTORY TURNOVER RATIO = SALES / INVENTORY

INVENTORY TURNOVER RATIO

Year Sales Inventory Ratio


2013-2014 343569199 61815967 5.56
2014-2015 530075768 60066676 8.82
2015-2016 619914304 83865136 7.39
2016-2017 676010638 61966693 10.90
2017-2018 736296569 91271473 8.06

GRAPHICAL REPRESENTATION:

Inventory Turnover Ratio

12 10.9

10 8.82
8.06
8 7.39
Ratios

5.56
6 Ratio

0
2015-2016
Years

Interpretation:

The above table shows the Inventory turnover or stock velocity of the unit i.e. the no.
of times the stock has been turned over during the period. In the year 2002-13 the ratio is
8.82 and in the year 2016-17 the ratio is 10.91 the velocity of the stock is more compared to
the other ratios.

DEBTORS TURNOVER RATIO:


Debtor turnover ratio = Net Sales / Debtors

DEBTOR TURNOVER RATIO

Year Sales Debtors Ratio


2013-2014 343569199 83535915 4.11
2014-2015 530075768 88110242 6.02
2015-2016 619914304 61059292 10.15
2016-2017 676010638 67093201 10.08
2017-2018 736296569 64363179 11.44

GRAPHICAL REPRESENTATION:

Debtors turnover Ratio

14
11.44
12
10.15 10.08
10
Ratios

8
6.02 Raatio
6
4.11
4
2
0

Years

Interpretation:

Is the indicated the number of times debtors turnover each year generally. A high
ratio is considered congenial for the business as it empties better cash flow. This ratio shows
debtors and converted into cash.

In case of this company the debtors get convert into four or five times in each year.
The last year is 11.44.

WORKING CAPITAL TURNOVER RATIO:


Working capital turnover ratio:

WORKING CAPITAL TURNOVER RATIO


Year Sales
Networking capital Ratio
343569199
2013-2014 130226190 2.64
530075768
2014-2015 153395335 3.46
619914304
2015-2016 144065045 4.30
676010638
2016-2017 127743242 5.29
736296569
2017-2018 113786276 6.47

Graphical presentation:

Working Capital Turnover Ratio

7 6.47
6 5.29
5 4.3
4 3.46
Ratio

2.64 Ratio
3
2
1
0

year

Interpretation:

Net sales are greatly increased due to the extra invoice for Operation and Maintenance
fee and the working capital is also increased greater due to the increase in sales because the
huge increase in current assets.

Net sales are raised and the current assets are also raised together resulted in the
decrease of the ratio of 2015 compared with 2016.

PROFITABILITY RATIOS
OPERATING PROFIT RATIO:
Operating profit
Operating profit ratio = _______________ * 100
Sales
(Amount in Lakhs)

OPERATING PROFIT RATIO


Year Operating Profit Sales
Ratio
8.97 343569199
2013-2014 0.26
7.35 530075768
2014-2015 0.17
11.43 619914304
2015-2016 0.22
14.57 676010638
2016-2017 0.25
73.71 736296569
2017-2018 0.01
GRAPHICAL PRESENTATION:

OPERATING PROFIT RATIO

0.3
0.26 0.25
0.25 0.22
0.2 0.17
Ratio

0.15 Ratio

0.1
0.05
0.01
0

Year

Interpretation:

The operating profit is used to measure the relationship between net profits and sales
of a firm. Depending on the concept, it will decide. The operating profit ratio is increased
compared with the last year. The earnings are increased due to the increase in the net sales
because of Operating and Maintenance fee. So, the ratio is increased slightly compared with
the previous year. The operating for the year 2013-14 is high i.e. 0.26% for the year 2014-15
if has decreased to 0.17% for the year 2015-16 it is 0.25, this current year 2016-17 it is 0.1%

OPERATING RATIO:
Operating cost
Operating ratio = ___________________ * 100
Net Sales

OPERATING RATIO
Year Operating Profit Sales
Ratio
2714.47 2868.47
2013-2014 0.95
3127.41 3434.69
2014-2015 0.91
4041.71 4362.3
2015-2016 0.93
4519.33 5102.38
2016-2017 0.88
4721.57 5763.58
2017-2018 0.82

GRAPHICAL PRESENTATION:

OPERATING RATIO

1
0.95
0.95 0.93
0.91
Ratio

0.9 0.88
Ratio
0.85 0.82

0.8

0.75

Year

Interpretation:

The ratios wear kept on fluctuations through the year. In the last two year control the
Operating Research. Initially in the year 2017-18 it is low which a good high is.

FIXED ASSETS TURNOVER RATIO:

Fixed assets turnover ratio = sales / Fixed assets


Fixed assets turnover ratio:
Year Sales Fixed Assets Ratio
2013-2014 343569199 235682425 1.46
2014-2015 530075768 234526823 2.26
2015-2016 619914304 268736827 2.31
2016-2017 676010638 296297338 2.28
2017-2018 736296569 332095902 2.22
Graph presentation:

Fixed Assest Turnover Ratio

2.5 2.26 2.31 2.28 2.22

2
1.46
1.5
Ratio

Ratio
1

0.5

Year

INTERPRETATION:

Fixed assets are used in the business for producing the goods to be sold. This ratio shows the
firm’s ability in generating sales from all financial resources committed to total assets. The
ratio indicates the account of one rupee investment in fixed assets.

The net sales is increased in the current year due to the increase in the Operation and
Maintenance fee due to the increase in net fixed assets because of increased charge of
depreciation. Finally, that effected a small increase in the ratio compared with the previous
year’s ratio.The above table shows the fixed assets turnover ratios for the year 2013-14 the
ratio is 1.46 and the 2017-18 the ratio is 2.22 . The ratios between the years also slowly
increasing from the year 2013-14 over all performance of the ratios is improved from the
starting period.

FINDINGS
1. The current ratio is increase slowly the assessment year 2013-14 to 2015-16 and it is
the decreased in present assessment year 2017-18 ratio is 2.42%

2. Quick ratio decreased in the assessment year 2013-14 the ratio is 2.64:1 and it is high
in the assessment year 2013-14 the ratio is 1.29

3. The absolute liquid ratio is decreased in the assessment year 2014-15 the ratio is
0.043 it is high in the assessment year 2017-18 that ratio is 0.11

4. Net profit ratio is decreased in the assessment year 2013-14 the ratio is 1.58 and it is
high in the assessment year 2017-18 . The ratio is 4.70

5. Turnover ratio is decreased in the assessment year 2013-14 the ratio is 5.56 and it is
high assessment year 2015-16 the ratio is 9.30

6. Operating ratio is increased in the assessment year 2014-15 the ratio is .17 and it is
low in the assessment year 2013-14 the ratio is .26

7. Debtor’s turnover ratio is decreased in the assessment year 2013-14 the ratio is 4.98
and it high assessment year 2017-18 the ratio is 10.15

8. Proprietary ratio is decreased in the year 2013-14 the ratio is 0.2 and it is low
assessment year 2017-18 the ratio is 0.07

9. Fixed assets turnover ratio is decreased in the year 2013-14 the ratio is 3.26 and it is
high assessment year 2017-18 the ratio is 4.20
SUGGESTIONS

1. The industry is not marinating current assets every year. To be improve to participate
more current assets to be helpful the both of the organization 2015-16 years their
maintaining good current assets and sales. From income statement.

2. I found that the sales were increased every year on an average which is a good sign
for the company. Hence my advice to the company is to maintain the same trend in
future by minimizing the selling and distribution and administration expenses of the
enterprise.

3. I would like to advise to the management to minimize the expense cost of production
in future and the profits of a company may increases.

4. Sales are increased and the inventory was increasing. Nor a better situation to firm
more volatile in sales. Please concentrate on the sales.

5. Company debtor’s position is very favorable so try to maintain this position in future.

6. Company given a much importance to fixed assets and maintain less importance to
current assets. So it’s not good sign for the organization better to maintain a moderate
importance to fixed assets as well as current assets.

7. All levels of the company are increasing year by the year it’s a better indication for
the organization

8. it is suggested that the firm should improve its sales volume to a great extent. To
improve the liquidity position of the company it is suggested that the company shall
finance more in current assets or pay off parts of the current liability from long-term
funds
CONCLUSIONS

 The company’s overall position is at a good position. Particularly the current


year’s position is well due to raise in the profit level from the last year position.
It is better for the organization to diversify the funds to different sectors in the
present market scenario.

 The company is utilizing the fixed assets, which major help to the growth of the
organization. The company should maintain that perfectly.

 After the analysis of Financial Statement the company status is better, because
the Net Working capital of the company is increased from the last year’s
position. Company is maintaining adequate ratios as its earning performance is
satisfactory.

 Part for the fixed assets has been financed from working capital of the company.

 Company is maintaining adequate ratios as its earning performance is


satisfactory.
BILIOGRAPHY

Name Author Publisher Edition

Financial S N Maheshwari & Vikas Publishing 3rd – 2006


Accounting S K Maheshwarii, House Pvt. Ltd.,

Financial M Y Khan & PK Tata Mc Graw-Hill 2nd - 2003


Management Jain Publishing
(Theory and Company Limited
Problems)

Financial Asish K Prentice-Hall of 2nd – 2005


Accounting (For Bhattacharyya India Private
Business Limited
Managers)

Advanced S P Jain & K L Kalyani Publishers 13th – 2003


Accounting Narang

Management Shashi k, Gupta, Kalyani Publishers 10th - 2005


Accounting, R.K Sharma
principles and
practices

Annual Reports of Sudhakar Polymers Ltd.,

Web site : www.sudhakarpipes.com