Accounting Term Paer Abhishek

SUBMITTED TO:-
Shelly Mam
SUBMITTED BY:-
Abhishek Kumar
Roll
No -. B 57
Reg.No. -11009320
Section- R1003
Abhishek Kumar, MBA- 3501, B-57, Reg. No. 11009320

Date :-
12-Nov-2010
CONTENTS
 INTRODUCTION
 OBJECTIVE
 BALANCE SHEET
 PROFIT AND LOSS STATEMENT
 COMPARATIVE STATEMENTS
 Interpretation
 COMMON SIZE STATEMENTS
 Interpretation
 TREND ANALYSIS
 Interpretation
• RATIO ANALYSIS
• Interpretation
• CASH FLOW STATEMENT

• Interpretation
• FUND FLOW STATEMENT
• Interpretation
• COST ANALYSIS
• Research Methodology
• OVERALL INTERPRETATION
• REFERENCES
INTRODUCTION
Voltas Limited is an engineering, air conditioning and refrigeration company based in

Mumbai, India. It offers engineering solutions for a wide spectrum of industries in areas such
as heating, ventilation and air conditioning, refrigeration, electro-mechanical projects, textile
machinery, machine tools, mining and construction equipment, materials handling, water
management, building management systems, indoor air quality and chemicals.
Voltas is a part of the Tata Group.
Voltas’ operations have been organized into four independent business-specific clusters. Each
of these has its own facilities for market coverage and service to customers:
Electro-Mechanical Projects & Services

• Electrical, Mechanical, HVAC & Refrigeration Solutions
• Electrical, Mechanical & HVAC Solutions (International)
• Water Management & Treatment
• Engineering products & Services
Textile Machinery
• Mining & Construction Equipment

• Machine Tools
• Materials Handling Solutions
Unitary Cooling Products for Comfort & Commercial Use
• Cooling Appliances
• Commercial Refrigeration
Others
• Chemicals Trading
Voltas possesses total capability in the manufacture of room/split air conditioners,

industrial air conditioning and refrigeration equipment, water coolers, commercial
refrigerators, visicoolers, freezers and fork-lift trucks. All these products bear the stamp
of state-of-the-art automated manufacturing plants resulting in consistently high quality
and reduced costs.
Furthermore,the Company is partnered with FeddersnInternational Inc. of USA for

‘manufacture only’ alliances producing low cost,high quality room air conditioners.
Over the years, Voltas has built up a substantial reputation and is actively engaged in turnkey
projects in fields such as electro-mechanical works comprising electrical building services,
HVAC, plumbing, public Health, fire fighting, ELV & specialised systems; electrical power

projects; environmental and water pollution control; pumping stations and water supply; water
& waste water treatment projects. The Company has ISO 9001 – 2000 standards certification
in this business, and has successfully undertaken and executed project works in the Middle
East, Far East and South East Asia, CIS countries and Africa.
Voltas’ sourcing and marketing operations cover air conditioners, textile machinery, machine
tools, mining & construction equipment and industrial chemicals. In these sectors, the
company demonstrates its specialised engineering expertise, as well as its extensive network
for global sourcing.

• Voltas Air Conditioner Price List India – Videocon AC Price List:
Voltas Air Conditioners for Home and offices: Voltas AC Prices in India – Voltas
Window AC Price and Voltas Split AC price
Voltas Window AC Price list
• Voltas Vertis Premium 1.5 Ton Window Air Conditioner Price – Rs. 16,800
• Voltas Vertis Premium 1.0 Ton Window Air Conditioner Price – Rs. 14,600
• Voltas Vertis Plus 0.75 Ton Window Air Conditioner Price – Rs. 12,500
• Voltas Vertis Elite 0.75 Ton Window Air Conditioner Price – Rs. 13,490
Voltas Split AC Price list
• Voltas Vertis Plus 0.75 Ton Split Air Conditioner Price – Rs. 15,570
• Voltas Vertis Elite 0.75 Ton Split Air Conditioner Price – Rs. 16,579
• Voltas Vertis Gold 0.75 Ton Split Air Conditioner Price – Rs. 17,650
• Voltas Vertis Gold 1.0 Ton Split Air Conditioner Price – Rs. 24,490
Corporate Office:
Voltas Limited Voltas House, “A” Block,

Dr. Babasaheb Ambedkar Road, Chinchpokli,

Mumbai – 400 033
India.
Tel: +91-22-66656666
Fax: +91-22-66656311
EMAIL:ccd@voltas.com
WEBSITE: www.voltas .com
• WHAT ARE FINANCIAL ANALYSIS ?
Financial statements are prepared for decision making. It refers to a process of

determining financial strengths and weaknesses of the firms 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
statements so as to judge the profitability and financial soundness of the firm.
• TYPES OF FINANCIAL ANALYSIS :-
1. on the basic of material used is internal or external analysis
2. on the basis of modus operandi is two-(a) horizontal and (b) vertical.
• COMPARATIVE STATEMENT:
The comparative financial statement is a statements of the financial position at different

periods, of the time .The elements of financial position are shown in a comparative form

so as to given an idea of financial position at two or more periods. The comparative may
show -
A. absolute figures( rupee amount)
B. changes in absolute figures i.e increase or decrease in figures
C. absolute data in terms of percentages
D. increase or decrease in terms of percentages.
• COMMON- SIZE STATEMENT:
The common – size statements, balance sheet and income statement are shown in
analytical percentages. The percentage of total assets, total liabilities and total sales we
compare the total amount whit individual amount. Find out what percentage increase or
decrease of individual items.
• TREND ANALYSIS:-
The financial statements may be analysed by computing trends of series of information.

This method determines the direction upwards or downwards and involves the computing
of the percentage relationship that each statement items bears to the same items in base
year.
• RATIOS
A ratio is simply one number expressed in terms of another. It is found by dividing one
number into another. In other words the relationship between two figures, expressed in
arithmetical terms is called a ratio.
ADVANTAGES OF ACCOUNTING RATIO

1. It is helpful in analysis of financial statement
2. simplification of accounting data
3. helpful in comparative study
4. helpful in locating the weak spots of the business
5. helpful in forecasting
6. estimate about the trend of the business
CLASSIFICATION OF RATIOS:-
RATIO may be classified into four categories
A. LIQUIDITY RATIOS:
LIQUADITY refers to the ability of the firm to meet its current liabilities. The liquidity
ratios’ are called short term solvency ratios . These ratios are used to assess the short
term financial position of the company.Tthey indicate the firm’s ability to meet its
current obligation out of current resources. It is of three types –(1) current ratios (2)
quick ratios and (3) cash ratio.
B. SOLVENCY RATIOS:
These ratios are calculated to assess the ability of the firm to meet its long term liabilities
as when they become due. These ratios reveal as to how much amount in a business has
been invested by proprietors(owners) and how much amount has been raised from
outside sources. There are four types -(1) debt equity ratios (2) total debt ratios (3)

capital equity ratio (4) interest coverage ratio.
C. EFFICIENCY RATIOS/TURNOVER RATIOS:
These ratios are calculated on the basis of cost of sales or sales. These ratios indicate low
efficiency the working capital and stock is being used to obtain sales. A higher turnover
ratio is better use of capital or resources and in turn lead to higher profitability. Example-
inventory turnover ratio, debtors turnover ratio, creditors turnovers ratio, fixed assets
turnover ratio,working capital ratio.
D. PROFITABILITY RATIOS :
These ratios are main ratios of the business because all the business concerns is to earn
profit. Profit is the measurement of the efficiency of the business. Profitabily ratios
measure the various aspects of the profitability of a company. such as - what is the rate
of profit on sale !! whether the profit are increase or decrease and the cause of their
decrease? Some important profitability ratios. Ex- gross profit ratios , net profit ratio,
operating profit ratio, operating ratio, expense ratio.
 FUND FLOW STATEMENT:
Fund flow statements is a method by we study changes in the financial position of a

business enterprise between beginning and ending financial statements dates. It is
showing sources and uses of funds for a period of time. By this statement we calculate
the changes in working capital.
Fund Flow is a summary of a firm’s changes in financial position from one period to
another; it is also called a sources and uses of funds statement or a statement of changes
in financial position.

 CASH FLOW STATEMENT:
The cash flow statement provides information about a firm’s operating, investing
and financing activities.The CFS allows investors to understand how a company's
operations are running, where its money is coming from, and how it is being
spent. The cash flow statement is distinct from the income statement and balance sheet
because it does not include the amount of future incoming and outgoing cash that has
been recorded on credit.
OBJECTIVES OF MY RESEARCH

 To know the earning capacity of the business:- It helps us to ascertain the financial
position of the company. It helps us to know whether the profits are increasing or
decreasing over the year.
 To know the solvency position of the company:- It helps us to know that, whether the
business in a position to pay its long term and short term liabilities in time.
Debt Equity Ratio is calculated to ascertain the liquidity of the business.
 To make comparative study with other firms:- The purpose of financial analysis is
compare the financial position of the firm with the other firms engaged in the same
business.
 To know the efficiency of the business:- The purpose of a financial analysis is to

judge the financial policies adopted by the management are proper or not.
E.g, If actual ratios are, as were the standards fixed then managent policies are said proper and
efficient.
 To provide useful information to the management:- The objective of the financial

analysis is to find out the shortcomings of the business, so that the management can take
the remedial measures to remove those shortcomings.
 To know the trend of the business:- It helps the management to compare the
performance of the two or more financial years of a same firm. It helps in ascertaining
the performance of the business over a period of time.
My Research explores the every aspect regarding the financial statements of the company. It
reveals the operating, financial position and the cash inflow- out flow of the company. It also
gives the reasons for the changes in the overall position of the company.
I have tried my level best to explore the every financial statement of the company to get the
more important information and have done analysis and interpretation of every financial
statement so that to make decision making easy.

My Research of the financial statements of the Asian Paints Ltd is very much helpful to every
Stakeholder whether GOVT, CREDITORS, SUPPLIERS, OWNERS, SHAREHOLDERS,
and to society and SEBI also.

BALANCE SHEET of the year 2009 and
2010
Sources Of Funds 2009 2010
Total Share Capital 95.92 95.92
Equity Share Capital 95.92 95.92
Share Application Money 0 0

Preference Share Capital 0 0
Reserves 998.55 1,461.30
Revaluation Reserves 0 0
Net worth 1,094.47 1,557.22
Secured Loans 24.59 25.59
Unsecured Loans 40.7 40.7

Total Debt 65.29 66.29
Total Liabilities 1,159.76 1,623.51
Application Of Funds
Gross Block 1,116.93 1,194.39
Less: Accum. Depreciation 494.02 486.93

Net Block 622.91 707.46
Capital Work in Progress 164.64 380.72

Investments 234.77 703.69
Inventories 546.71 763.14
Sundry Debtors 311.02 331.43

PROFIT AND LOSS A/C for the year 2009 and 2010
PARTICULARS 2009 2010
Sales Turnover 5,042.40 5,794.09

Excise Duty 532.28 426.37
Net Sales 4,510.12 5,367.72
Other Income 23.86 150.61
Stock Adjustments 0.61 130.83

4,534.
Total Income 59 5,649.16
Raw Materials 2,641.09 2,966.23
Power & Fuel Cost 45.78 47.03
Employee Cost 239.77 262.73
Other Manufacturing Expenses 40.45 52.3
Selling and Admin Expenses 939.16 1,119.89
Miscellaneous Expenses 10.55 17.41
Preoperative Exp Capitalised 0 0

3,916.8
Total Expenses 0 4,465.59
Operating Profit 593.93 1,032.96
PBDIT 617.79 1,183.57
Interest 15.91 19.1
PBDT 601.88 1,164.47

Depreciation 57.15 60.74

Other Written Off 0 0
Profit Before Tax 544.73 1,103.73
Extra-ordinary items 3.6 7.23
PBT 548.33 1,110.96
Tax 185.97 336.46
Reported Net Profit 362.36 774.5

Total Value Addition 1,275.71 1,499.36
Preference Dividend 0 0
Equity Dividend 167.86 258.98
Corporate Dividend Tax 28.53 43.33
Shares in issue (lakhs) 959.2 959.2
Earnings Per Share (Rs) 37.78 80.74
Equity Dividend (%) 175 270
Book Value (Rs) 114.1 162.35
COMPARATIVE BALANCE SHEET for year 2009 and 2010
Particulars Mar,200 Mar,201 Absolute %

9 0 change chang
e

• Cr. • C
r
.
Gross Block 1,116.93 1,194.39 77.46 6.93
Less:-Depreciation 494.02 486.93 -7.09 -1.43
TOTAL FIXED ASSET(A) 622.91 707.46 84.55 13.57
INVESTMENTS(B) 234.77 703.69 468.92 199.7
CAPITAL WORK IN PROGRES ( 216.08 131.24

164.64 380.72
C)
WORKING CAPITAL :-
Inventories 546.71 763.14 216.43 39.58
Sundry Debtors 311.02 331.43 20.41 0.06
Cash and Bank Balance 128.05 28.58 -99.47 -77.68
Loans and Advances 186.37 241.68 55.31 29.67
Fixed Deposits 0.21 0.02 -0.19 -90.47
Total CA, Loans & Advances
1,172.36 1,364.85 192.49 16.41
(i)
Deffered Credit 0.00 0.00 0.00 0.00

Current Liabilities 849.08 1,229.04 379.96 44.74
Provisions 185.84 304.17 118.33 63.67
Total CL & Provisions (ii) 1,034.92 1,533.21 518.29 50.08
-305.8 -
WORKING CAPITAL ( D ) 137.44 -168.36
222.49
CAPITAL EMPLOYED(A+B+C+D) 1159.76 1623.51 463.75 39.98
Less:-Long Term Debt
Secured Loans 24.59 25.59 1.00 16.26

Unsecured Loans 40.70 40.70 0.00 0.00
Shareholders' Funds 1094.47 1557.22 462.75 42.28
Represented By:-
Equity Share Capital 95.92 95.92 0.00 0.00

Preference Share Capital 0.00 0.00 0.00 0.00
Reserves 998.55 1,461.30 462.75 42.28
TOTAL:- 1094.47 1557.22 462.75 42.28
ANALYSIS:-
1. Total Fixed Assets have increased by Rs.84.55 Cr. i.e, 13.57 %
increase.
2. Purchases of fixed Assets are financed partly by raising secured
loans of Rs. 1.0 cr. And partly from the reserves i.e,Rs.83.55
Cr.
3. Current Assets have increased by 16.41% and the current

liabilities have increased by 50.08%.
4. Reserves have been increased by 42.28%.
5. Company has raised secured loan of Rs.1.0 Cr.
INTERPRETATION:-

1. Company has purchased Fixed Assets of Rs 84.55Cr., and these
have been financed partly by reserves and by secured loans
also.
2. No matter the current assets have increased by 16.41% but

there is more increase in current liabilities by 50.08%. This
decreases the working capital as well.
3. As the current assets of the company are less than that of

current liabilities, it shows that the short term financial position
of the company is weak.
COMPARATIVE INCOME STATEMENT for year 2009 and

2010
Particulars Mar,200 Mar,201 Chang %age

9 0 e (+/-) chang
e
• Cr. • C •
r
.
Net Sales 4,510.12 5,367.72 857.6 19.01
Less:- Cost of Goods Sold

Raw Materials 2,641.09 2,966.23 325.14 12.31
Power & Fuel Cost 45.78 47.03 1.25 2.73
Employee Cost 239.77 262.73 22.96 9.57

Other Manufacturing 11.85 29.29
40.45 52.30
Expenses
Gross Profit 1543.03 2039.43 496.4 32.17

Less:- Selling and Admns 180.73 19.24
939.16 1,119.89
Expenses
Miscellaneous Expenses 10.55 17.41 6.85 65.02
388.8 75.74
OPERATING PROFIT 513.32 902.13
1
Other Income 23.86 150.61 126.75 531.22
130.22 21347.
Stock Adjustments 0.61 130.83
4
565.7 91.58
NET PROFIT 617.79 1183.57
8
ANALYSIS:-
1. In 2010, the sales of the company have increased by 19.1%, but the
cost of the sales has also increased by 12%.
2. The Gross profit of company has increased by 32.17%.
3. Operating Profits have increased by 75.74%.
4. Increases in other income and stock adjustments has increased the

Net Profit by 91.58% .
ITERPRETATION:-

1. Cost of goods sold has increased by 12% due to increase in the cost
of the Raw Material by 12%. And with an increasing sale by 19.1%
which increases the Operating profit of the company by 75.74%.
This indicates that the operating efficiency of the company is not

satisfactory as the profit has increased only because increase in SALES not
by decrease in cost.
COMMON SIZE BALANCE SHEET for the year 2010

Mar,20 Mar,201
09 0
%of %of
Particulars Amount 2009 Amount 2010

ASSETS
TOTAL FIXED ASSET 622.91 34.69 707.46 34.13
CURRENT ASSETS 1172.36 65.3 1364.85 65.86
TOTAL ASSETS 1795.27 100 2072.31 100
LIABILITIES
Equity Share Capital 95.92 4.37 95.92 3.03
Preference Share Capital 0 0 0

Reserves 998.55 45.49 1,461.30 46.29
Secured Loans 24.59 1.12 25.59 0.08
Unsecured Loans 40.7 1.85 40.7 1.28
Total CL & Provisions (ii) 1,034.92 47.15 1,533.21 48.56
TOTAL LIABILITIES 2194.68 100 3156.72 100
ANALYSIS:-
1. In 2009, Current Assets were 65.3% of total assets. In 2010, these have increased to
65.86%.
2. Current liabilities have increased from 47.15% to 48.56%.
3. Reserves have been created.
COMMON SIZE INCOME STATEMENT for the year 2009 and 2010
Particulars Mar,200 Mar,201

9 0
%of %of
Amount Amount
total total
100
Net Sales 4,510.12 100 5,367.72
Less:- Cost of Goods Sold 62.01
2967.09 65.78 3328.29
37.99
Gross Profit 1543.03 34.12 2039.43
Less:- Selling and Admns 20.86
Expenses 939.16 20.82 1,119.89
0.20
Miscellaneous Expenses 10.55 0.26 17.41
16.8
OPERATING PROFIT 513.32 12.78 902.13
2.8
Other Income 23.86 0.59 150.61
2.43
Stock Adjustments 0.61 0.015 130.83
22.04
NET PROFIT 617.79 15.38 1183.57
ANALYSIS:-
1. Gross Profit has increased with a reduction in cost of goods sold’
2. Operating Profit has increased from 12.78% to 16.80% in 2010.
3. Net Profit Increased 15.38%to 22.04%.
INTERPRETATION:-
1. The gross profit has increased in 2010 because of the company has been able to reduce
the cost of goods sold fom 65.8% to 62.01% in 2010.
2. The company has been able to reduce to operating expenses too, which has increased
the operating profit of the company.

3. The Net profit of the company has increased due to an increase in the stock adjustments
and other incomes.
Here, the increase in gross profit with a reduction in the operating expences indicates the
operating efficiency of the concern.
TREND ANALYSIS
(Base Year 2006=100%)
Cost of profit before current current
Sales Stock Goods Sold tax liabilities assets
Rs.
Yea Rs.In In Rs. In Rs. In Rs. In Rs. In
r Cr. % Cr. % Cr. % Cr. % Cr. % Cr. %
200 2,447. 348.7 2,080. 1,229.
6 78 100 9 100 27 100 303.85 100 04 100 562.07 100
200 2,953. 120.6 434.0 124. 2,588. 124. 69.0 126.
7 37 5 7 5 59 4 412.02 136 849.08 8 712.5 8

200 3,595. 146.8 538.9 154. 3,059. 147. 69.2 148.
8 53 8 7 5 94 1 561.86 184.9 850.79 2 832.2 1
200 4,510. 184.2 546.7 156. 3,916. 188. 175.
9 12 5 1 7 80 3 548.33 180.5 649 52.8 985.78 4
201 5,367. 219.9 763.1 218. 4,465. 214. 1,110. 365.6 1123.1 199.
0 72 8 4 8 59 7 96 2 489.11 39.8 5 8
ANALYSIS:-
1. In 2006, Sales were 100% and increases continuously to 219.98% in 2010. It has been
doubled only in 5years.
2. In 2006, Inventory has been increased continuously to 218.79% in 2010. It has been
doubled only in 5years.
3. Profit Before Tax has increased to 365.62%, it has been tripled in 5years only.
4. Current Assets has increased has doubled in 5 years only
5. Current Liabilities has decreased from 100% to 39.8%.
INTERPRETATION:-
1. Sales have been increased with an annual increase in cost of goods sold. It means that
the company has weak operating efficiency and could not decrease its cost to increase
its operating efficiency.
2. Profit before tax has tripled just in 5years only, as sales has been increased by two
times.

3. Current Assets have doubled in 5years and the current liabilities has decreased
tremendously, which shows that the short term financial position of the company is very
sound. And the company can pay off its liabilities in short period.
RATIO ANALYSIS
Definition:- A Ratio is simply one number expressed in terms of another. It is found by

dividing one number into another.
Expressions:-
1. Proportion or Pure Ratio or Simple ratio:- It is expressed by the simple division of one
number by another.
2. Rate or So Many Times:- It is calculated how many times the figure is in comparison with
another figure.
3. Percentage:- The relation between two figures is expressed in hundredth.
4. Fraction:- Say Net Profit is one fifth of capital.
TYPES:-
1. LIQUIDITY RATIOS(SHORT TERM FINANCIAL POSITION).
A. Current Ratio.
B. Quick Ratio.

C. Absolute Liquid Ratio/Cash Ratio.
2. SOLVENCY RATIOS.
A. Debt Equity Ratio.
B. Total Asset to Debt Ratio.
C. Proprietary Ratio.
3. EFFICIENCY RATIO/TURNOVER RATIOS
A. Inventory Turnover Ratio.
B. Debtors or Receivables Turnover Ratio.
C. Creditors or Payables Turnover Ratio.
D. Working Capital Ratio.
4. PROFITIBILITY RATIOS
A. Gross Profit Ratio.
B. Operating Profit Ratio
C. Net Profit Ratio
1. Liquidity Ratios.
 A. Current Ratio = Current Assets/Current Liabilities.
Here, Current Assets
Inventories 763.14
Sundry Debtors 331.43
Cash and Bank Balance 28.58
1123.1
Current Assets 5
Current Liabilities=1,229.04

Current Ratio = 1123.15/1229.04 = 0.91:1
 B. Quick Ratio = Quick Assets/Current Liabilities.
Here, Quick Assets are
Sundry Debtors 331.43

Quick Assets 360.01
Quick Assets = 360.01/1229.04 = 0.29:1
 C. Cash Asset Ratio = Absolute Liquid Ratio /Current Liabilities
Here, Cash and Equivalents are

Cash Ratio = 28.58/1229.04 = 0.02:1
2. SOLVENCY RATIOS.
 A. Debt Equity Ratio = Debt/Equity
 Debt
Equity Share Capital 95.92

Preference Share Capital 0
Reserves 998.55

Here, Equity is

Reserves 1,461.30
1557.2
Equity 2
Debt Equity Ratio=998.55/1557.22=0.64:1
 B. Total Asset to Debt Ratio.
Here, Total Assets are
TOTAL FIXED ASSET 622.91

INVESTMENTS 234.77
Total CA, Loans & Advances 1,172.36
TOTAL ASSET 2030.04
Debt

Reserves 998.55
DEBT 1094.47
Total Asset to Debt Ratio = 2030.04/1094.47 =

1.85:1
 C. Proprietary Ratio = Equity/Total Assets
Here, Equity is

Reserves 1,461.30
1557.2
Equity 2
Total Assets
TOTAL FIXED ASSET 622.91

INVESTMENTS 234.77
Total CA, Loans & Advances 1,172.36
TOTAL ASSET 2030.04
Proprietary Ratio = 1557.22/2030.04 = 0.76:1
3. EFFICIENCY RATIOS.
 A. Stock Turnover Ratio = Cost Of Goods Sold/Avg.
stock
Here, COGS= Net Sales – Gross Profit
= 5367.72 - 2039.43
= 3328.29
Inventory(Stock) Turnover Ratio = 3328.29/ 763.14=4.36:1
4. PROFITIBILITY RATIOS
a. Gross profit Ratio
Gross Profit Ratio=Gross Profit/Net Sales*100

= 2039.43/5367.72=38%
Interpretation:-
The gross Profit ratio indicates that to which extent the selling per unit may decline without
resulting in loses on operations of business.
This ratio indicates the excess of sales over COGS..Here in this it shows that sales are 38%
over the cost and the cost is 62% of the total sales…
It is satisfactory.
b. Operating Profit Ratio
=Operating Profit/Net Sales*100
Operating Profit Ratio= 388.81/5367.72=70%
Interpretation:-
This ratio shows that 70% of the sales have been consumed by the operating cost, i.e., COGS
and Operating expenses and only 30% is left to cover interest charge, income tax payment,
dividend and the retention of profits as reserves.
c. Return on Investment= Net profit (after interest & taxes)/Shareholder’s Funds.
= 774.5/1557.22*100 = 50%

d. Return on Equity = Net Profit After Tax-Preference dividend/Equity Share
Capital(paid up) *100
= 774.55-0/95.92*100= 80.74%
CASH FLOW STATEMENT
Particulars 2009 2010

Net Profit Before Tax 304.89 409.92
Net Cash From Operating
Activities 218.69 312.25
Net Cash (used in)/from
Investing Activities -105.97 -110.92

Net Cash (used in)/from
Financing Activities -110.06 -187.23
Net (decrease)/increase
In Cash and Cash
Equivalents 2.66 14.11

Opening Cash & Cash
Closing Cash & Cash
INTERPRETATION:-
1. Net cash inflow from operating activities has increased from 218.69Cr. to 312.25Cr. due to
increase of current assets, reserves and decrease in current liabilities.
2. Company purchases Fixed assets more in 2010 than 2009 i.e, Net cash outflow from
Investing activities increases from ( 105.97) to (187.23).
3. Net Cash outflow from financing activities increases from (110.06Cr.) to (187.23Cr.)
because of increase in dividend paid.
FUND FLOW STATEMENT
WORKING CAPITAL CHANGES

Working Capital
Increas Decreas
Particulars 2009 2010 e e
Current assets
Inventories 546.71 763.14 216.43
Sundry Debtors 311.02 331.43 20.41
Cash and Bank Balance 128.05 28.58 99.47

55.31
Loans and Advances 186.37 241.68
1172.1 1364.8
(A) 5 3
Current Liabilities
1,229.0
Current Liabilities 849.08 4 379.96
1,229.0
(B) 849.08 4
Working Capital (A-B) 323.07 135.79

Net decrease in Working capital
Changes 187.28 187.28
323.07 323.07 479.43 479.43
STATEMENT OF SOURCES AND APPLICATION OF FUNDS

FOR THE YEAR 2010
Rs. In
SOURCES cr. APPLICATION Rs. In cr.
Funds from purchase of fixed
operations 462.75 assets 84.55
Capital work in
Net Working capital 242.59 progress 216.08
Raising of secured
loan 1 Investment 468.92

Provisions 118.71 Fixed deposit 0.19
Loans and Advances 55.31
825.05 825.05
INTERPRETATION:-
1. Fund flow statement shows how the profits of the company have been used. It
reveals the facts and reasons about the changes in currents assets with current
liabilities between two consecutive years.
2. Here, sources of funds are Retained earnings, provisions, raising of secured loan.
And these funds have been utilized for purchase of fixed assets, investment etc.
3. This statement reveals that the financial position of the company is satisfactory.
COST SHEET OF VOLTAS LTD. for 2009 and 2010

Particulars • 2009 • 2010
Raw Materials 2,641.09 2,966.23
PRIME COST 2,641.09 2,966.23

Add:- Factory Overheads
Power & Fuel Cost 45.78 47.03

Depreciation
494.02 486.93
FACTORY COST 3,180.89 3,500.19

Add:-Office and Adm. Overheads
Employee Cost 239.77 262.73
Other Manufacturing Expenses 40.45 52.3
COST OF PRODUCTION 3,461.11 3,815.22

Selling and Admns Expenses 939.16 1,119.89
Miscellaneous Expenses 10.55 17.41
COST OF GOODS SOLD 4,410.82 4,952.52

OPERATING PROFIT 513.32 902.13
SALES 4,924.14 5,854.65
ANALYSIS:-
1. The Prime cost of the concern has increased as compared to previous year. It is due to
increase in the consumption of the raw material in 2010.
2. Cost of goods sold increases from 4410.82cr. to 4952.52cr. in 2010.
3. Operating Profit has increases from 513.32Cr. to 902.13Cr.
INTERPRETATION:-
1. The Cost of goods sold has increased because of increase in both of the variable as
well as fixed assets, which adds to the cost of the goods.
2. Despite of increase in the COGS, operating profit is nearly 50% of increase in sales,
which reveals the Operating performance of the company.

RESEARCH METHODOLOGY
Research Methodology is considered as the nerve of the project. Without a proper organized
research plan, it is impossible to complete the project and reach to any conclusion. The
Research is based on the various information collected from internet, (Google search engine).
Therefore, Research Methodology is the way to systematically solve the research problem.
Research Methodology not only talks about the methods but also logic behind the methods
used in the context of a research study and it explain why a particular method has been used in
preference of the other methods.
I have downloaded two statements of the Voltas ltd. from the internet i.e, Balance sheet, Profit
and loss A/c . So my entire Research is based on these two statements. As these statements
have been downloaded from the internet these may not be considered to be true. But my entire
analysis on the basis of these two is true and is reliable.
OVERALL INTERPRETATION

The company’s position is quite satisfactory because company’s profits are increasing
from15.38 % in 2009 to 22.04 % in 2010 and cost of goods sold is decreasing. So, the
profits are increasing and cost is decreasing which is a good sign for the company. Its debtors
are decreasing which means company’s sales are less on credit basis and there is least chance
of bad debts, indirectly the company will not face losses in future. Profit before tax has tripled
just in 5 years only, as sales has been increased by two times.
Current Assets have doubled in 5 years and the current liabilities has decreased tremendously,
which shows that the short term financial position of the company is very sound. And the
company can pay off its liabilities in short period.
The gross profit has increased in 2010 because of the company has been able to reduce the
cost of goods sold fom 65.8% to 62.01% in 2010.The company has been able to reduce to
operating expenses too, which has increased the operating profit of the company.
The Net profit of the company has increased due to an increase in the stock adjustments and
other incomes.
Overall we can say that the company “VOLTAS LTD.” is earning profit and the company is in
good position.
REFERENCES:-
1. http://www.capitaline.com
2. http://www.moneycontrol.com/financials/voltas ltd./balance-
sheet/AP31
3. http://www.moneycontrol.com/

4. http://www.voltas.com/index.asp
5. http://www.google.com
BOOKS:
1. Cost Accounting
-Manash Dutta.
2. Financial Accounting
-Paresh Shah.
3. Accounting for decision making
-Needles.
THANKS….
- Abhishek Kumar

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Abhishek Kumar, MBA- 3501, B-57, Reg. No. 11009320

 PROFIT AND LOSS STATEMENT

 COMMON SIZE STATEMENTS

• CASH FLOW STATEMENT

Abhishek Kumar, MBA- 3501, B-57, Reg. No. 11009320

• FUND FLOW STATEMENT

Voltas Limited is an engineering, air conditioning and refrigeration company based in

Electro-Mechanical Projects & Services

Abhishek Kumar, MBA- 3501, B-57, Reg. No. 11009320

• Mining & Construction Equipment

Unitary Cooling Products for Comfort & Commercial Use

Voltas possesses total capability in the manufacture of room/split air conditioners,

Furthermore,the Company is partnered with FeddersnInternational Inc. of USA for

Abhishek Kumar, MBA- 3501, B-57, Reg. No. 11009320

Abhishek Kumar, MBA- 3501, B-57, Reg. No. 11009320

Voltas Window AC Price list

Voltas Split AC Price list

Voltas Limited Voltas House, “A” Block,

Abhishek Kumar, MBA- 3501, B-57, Reg. No. 11009320

WEBSITE: www.voltas .com

• WHAT ARE FINANCIAL ANALYSIS ?

Financial statements are prepared for decision making. It refers to a process of

• TYPES OF FINANCIAL ANALYSIS :-

1. on the basic of material used is internal or external analysis

2. on the basis of modus operandi is two-(a) horizontal and (b) vertical.

The comparative financial statement is a statements of the financial position at different

Abhishek Kumar, MBA- 3501, B-57, Reg. No. 11009320

A. absolute figures( rupee amount)

B. changes in absolute figures i.e increase or decrease in figures

C. absolute data in terms of percentages

D. increase or decrease in terms of percentages.

• COMMON- SIZE STATEMENT:

The financial statements may be analysed by computing trends of series of information.

ADVANTAGES OF ACCOUNTING RATIO

Abhishek Kumar, MBA- 3501, B-57, Reg. No. 11009320

2. simplification of accounting data

3. helpful in comparative study

4. helpful in locating the weak spots of the business

6. estimate about the trend of the business

RATIO may be classified into four categories

Abhishek Kumar, MBA- 3501, B-57, Reg. No. 11009320

C. EFFICIENCY RATIOS/TURNOVER RATIOS:

 FUND FLOW STATEMENT:

Fund flow statements is a method by we study changes in the financial position of a

Abhishek Kumar, MBA- 3501, B-57, Reg. No. 11009320

Abhishek Kumar, MBA- 3501, B-57, Reg. No. 11009320

Debt Equity Ratio is calculated to ascertain the liquidity of the business.

 To know the efficiency of the business:- The purpose of a financial analysis is to

 To provide useful information to the management:- The objective of the financial

Abhishek Kumar, MBA- 3501, B-57, Reg. No. 11009320

Abhishek Kumar, MBA- 3501, B-57, Reg. No. 11009320

Total Share Capital 95.92 95.92

Equity Share Capital 95.92 95.92

Share Application Money 0 0

Reserves 998.55 1,461.30

Net worth 1,094.47 1,557.22

Secured Loans 24.59 25.59

Unsecured Loans 40.7 40.7

Total Liabilities 1,159.76 1,623.51

Gross Block 1,116.93 1,194.39

Less: Accum. Depreciation 494.02 486.93

Capital Work in Progress 164.64 380.72

Inventories 546.71 763.14