DATA ANALYSIS AND INTERPRETATION

4.1 PROJECT ANALYSIS

Annual report of GNA Duraparts for two year used to analyze the project and schedules, graphs are used for interpret the result. The various tools are used for presentation and analysis that are:
Tables Bar graphs Schedule of changes in working capital

In this procedure firstly we can calculate the or estimate the working capital requirements in the year 2008 to 2010...

1.) ESTIMATION OF WORKING CAPITAL REQUIREMENTS IN YEAR 2008 to 2010

GNA DURAPARTS PVT LTD.

Statement of Working Capital requirements as on 31.03.2010

Current Assets: Cash and bank balances Cash in hand of Mehtiana Cash in hand of branch Cash at banks In current a/c and others Sundry debtors Advances to vendors inventories loan and advances securities deposits advance income tax expenses pre-paid employee accounts excise duty rent advances interest accrued 3686921.60 26222027.55 1265513.96 1659165.74 8480359.92 267000.00 20313.36 4866912.86 208221954.88 4756880.16 515568532.81 4421602.51 32276.13

excise duty (pending claim) income tax refund group gratuity Amount recoverable D.E.P.B recoverable Fringe benefit taxes Service tax cenvat Commission receivable Excise duty recoverable Deposits with GNA UDYOG Advances against land Vat recoverable Insurance recoverable Freight clearing Advances against fixed assets Insurance claim employee Customer clearing

4643713.71 53566.00 88496.00 6000.00 804749.00 2994474.00 1148012.10 353440.00 8701.00 _ 70000.00 1137470.16 31407.00 _ 483024.75 3543.00 475717.10 _______________

Total of current Assets : (CA)

791771775.30

Less current liabilities: Sundry creditors Advance received from customer Sundry payable Sundry expenses payables Income tax debt. At recourses I.T.C.S on scrap Bonus payable Leave with wages payables Share application money Service tax payable 20080039.14 1629975.00 12095.00 3497655.00 20816.00 343.52 4483.00 _______________ Total of current liabilities: ( CL) 265103651.53 237321451.79 2536793.08

_______________ Net working capital required ( CA-CL ) 526668123.77

Statement of Working Capital requirements as on 31.03.2009

Current Assets: Cash and bank balances Cash in hand of Mehtiana Cash in hand of branch Cash at banks In current a/c and others Sundry debtors Advances to vendors inventories loan and advances securities deposits advance income tax expenses pre-paid employee accounts excise duty 3798721.10 42851469.55 1106850.16 1603772.27 2712528.98 7943463.65 211378426.43 6109885.23 400060868 2409340.47 21051.63

rent advances interest accrued excise duty (pending claim) income tax refund group gratuity Amount recoverable D.E.P.B recoverable Fringe benefit taxes Service tax cenvat Commission receivable Excise duty recoverable Deposits with GNA UDYOG Advances against land Vat recoverable Insurance recoverable Freight clearing Advances against fixed assets Insurance claim employee Customer clearing

267000.00 20313.36 5212500.00 578171.00 23557.84 _ 967305.00 2994474.00 1345842.81 _ 41249.00 5480000.00 70000.00 4527817.29 29803.00 29320.46 _ _ _ _______________

Total of current Assets : (CA)

701583830.44 _______________

Less current liabilities: Sundry creditors Advance received from customer Sundry payable Sundry expenses payables Income tax debt. At recourses I.T.C.S on scrap Bonus payable Leave with wages payables Share application money Service tax payable 20104843.00 1814654.78 4449.11 3190708.00 26236.00 343.52 80729.00 177513567.84 10790539.95

_______________ Total of current liabilities: ( CL) 232894071.24 468689759.24 Net working capital required ( CA-CL ) _______________

2.) MEASURE THE CHANGES IN THE AMOUNT OF WORKING CAPITAL OF TWO BALANCE SHEET DATES

IN this statement we can calculate and measure the changes in the working capital of the two year and find out where the working capital increased and where it decreased so we can prepare the following statement.

Statement Showing Changes in Working Capital

Previous Particulars Year 2009 (in Rs) Current Year 2010(in Rs) Increase In Working Capital (In Rs.) Decrease In Working Capital (In Rs.)

Current Assets: Cash and bank balances Cash in hand of Mehtiana Cash in hand of branch Cash at banks In current a/c and others Sundry debtors Advances to vendors inventories loan and advances securities deposits advance income tax expenses pre-paid employee accounts excise duty rent advances interest accrued excise duty (pending claim) income tax refund group gratuity Amount recoverable D.E.P.B recoverable Fringe benefit taxes Service tax cenvat Commission receivable Excise duty recoverable 3798721.10 42851469.55 1106850.16 1603772.27 2712528.98 267000.00 20313.36 5212500.00 578171.00 23557.84 _ 967305.00 2994474.00 1345842.81 _ 41249.00 3686921.60 26222027.55 1265513.96 1659165.74 8480359.92 267000.00 20313.36 4643713.71 53566.00 88496.00 6000.00 804749.00 2994474.00 1148012.10 353440.00 8701.00 353440.00 __ 64938.16 6000.00 162556.00 158663.8 55393.47 5767830.94 __ __ 568786.29 524605.00 111799.5 16629442.00 7943463.65 4866912.86 3076550.79 3156471.55 13530050.07 115507664.81 2409340.47 21051.63 4421602.51 32276.13 2012262.04 11224.5

211378426.43 208221954.88 6109885.23 400060868 4756880.16 515568532.81

197830.71

32548.00

Deposits with GNA UDYOG Advances against land Vat recoverable Insurance recoverable Freight clearing Advances against fixed assets Insurance claim employee Customer clearing

5480000.00 70000.00 4527817.29 29803.00 29320.46 _ _ _

_ 70000.00 1137470.16 31407.00 _ 483024.75 3543.00 475717.10 __ __ __ 1604.00 __ 483024.75 3543.00 5480000.00 __ 3390347.13 __ 29320.46 __ __ __

____________ _____________ 475717.10 Total of current Assets : (CA) 701583830.44 791771775.30 ____________ Less current liabilities: Sundry creditors Advance received from customer Sundry payable Sundry expenses payables Income tax debt. At recourses I.T.C.S on scrap Bonus payable Leave with wages payables Share application money Service tax payable 20104843.00 1814654.78 4449.11 3190708.00 26236.00 343.52 80729.00 20080039.14 1629975.00 12095.00 3497655.00 20816.00 343.52 4483.00 24804.00 184679.78 --5420.00 -177513567.84 237321451.79 10790539.95 2536793.08 -8253746.87

59807883.95 --

--7645.89 306947.00 ----

____________ _____________ 76246.00 Total of current liabilities(CL) Net working capital required (CA-CL) 232894071.24 265103651.53_ 468689759.24_ 526668123.77

Interpretation:

This Schedule shows the changes in the amount of Working Capital in year 2009 and 2010. In year 2010 the working capital is 468689759.24 and in year 2010 it increases i.e. 468689759.24 it means the Net Working Capital increases by 57978364.53 in year 2010... So its shows the company have average working capital to carry out its working expenses..

3.) TO

ANALYSE

SHORT

TERM

FINANCIAL

POSITION

OF

GNA

DURAPARTS THROUGH RAITOS ANALYSIS

RATIO ANALYSIS:

Ratio analysis is a technique of analysis and interpretation of financial statements. It is the process of establishing and interpreting various ratios for helping in making decisions. The main emphasis has been on calculating the ratios related to a working capital management.

MAINLY TWO TYPES OF RATIOS ARE CALCULATED TO KNOW THE SHORT TERM FINANCIAL POSITION OF THE COMPANY
1. Liquidity Ratios 2. Current Assets Movement or Efficiency/Activity Ratios

The diagram of the different types of ratio is given below

ANALYSIS OF SHORT TERM FINANCIAL POSITION

Liquidity Ratios
1. Current Ratio 2. Quick or Acid Test or Liquid Ratio

Current Assets Movement or Efficiency/Activity Ratios

1. 2. 3. 4. Stock Turnover Ratio Debtors/Receivables Turnover Ratio Creditors/Payables Turnover Ratio Working Capital Turnover Ratio

(A) LIQUIDITY RATIOS

Liquidity ratios measure the ability of the unit to meet its short-term or current (generally one year) obligations as and when these become due. The short term obligations are met by realizing amounts from current assets.

If current assets can pay off current liabilities, then liquidity position will be satisfactory. If current liabilities may not be easily met out of current assets then liquidity position will be bad.
To measure the liquidity of a firm, the following ratios can be calculated:

I. CURRENT RATIO:
It may be defined as the relationship between current assets and current liabilities. This ratio is also known as working capital ratio and measures the ability of the firm to meet current liabilities.

High current ratio indicates firm is liquid and has the ability to pay its current obligations
in time as and when they become due.

RULE OF THUMB IS 2:1

It means the current assets should be two times more than current liabilities. A ratio equal or near to the rule of thumb of 2:1 i.e. current assets double the current liabilities is considered to be satisfactory.

Current Ratio

Current Assets Current Liabilities

Year

Details 701583830.44 232894071.20

Current Ratio 3.012

2009

2010

791771775.30 265103651.53

2.987

3.015 3.01 3.005 3 2.995 2.99 2.985 2.98 2.975 2.97

3.012

2.987

Current Ratio

2009

2010

Interpretation: The current ratio of GNA DURAPART in 2009 is 3.012 and it is decreased in
2010 and that is 2.987 and current ratios in both years satisfied rule of thumb. This shows current ratio of GNA DURAPART quite satisfactory

II. LIQUID RATIO:

This ratio is also known as quick ratio or acid test ratio. It is a more important test of liquidity than the current ratio. The ratio indicates that how much the concern has liquid assets as compare to the current liabilities.

 A high quick ratio is the indication that the firm is liquid and has the ability to meet its current liabilities in time. Low ratio represents liquidity position is not good.

Quick/Liquid or Acid Test Ratio = Liquid Assets Current liabilities

Liquid or Quick Assets = Current Assets Inventory Prepaid Expenses

RULE OF THUMB: Rule of thumb for acid test ratio is1:1 i.e. It is better to have current assets equal to current liabilities however the little lower is also acceptable depending on certain factors.