SUMMER TRAINING PROJECT

PRESENTATION
ON
FINANCIAL ANALYSIS

NAME- PALLAVI DWIVEDI

PROGRAM MBA III SEMESTER
ENROLL NO. - 01218003915
INTRODUCTION
FINANCIAL ANALYSIS - Financial analysisis the process of evaluating
businesses, projects, budgets and other finance-related entities to determine
their performance and suitability.
Financial analysis is done using the following ratios-
1. LIQUIDITY RATIO
. Current Ratio
. Quick Ratio
2. Solvancy Ratio
. Proprietary Ratio
. Debt-Equity Ratio
. Total assets to debt Ratio
3. Profitability Ratio
Operating Ratio
Net Profit Ratio
4. Efficiency Ratio
Fixed asset turnover Ratio
Working capital turnover Ratio
 OBJECTIVES OF STUDY

To study and analyze the financial performance

of the company
To analyze the solvency position of the company.
To study the liquidity position of the company.
To study the performance of the company on
the basis of selected ratios.
 RESEARCH METHODOLOGY
RESEARCH TYPE: Quantitative Data
SAMPLING UNIT: Financial Statement
SAMPLE SIZE : Last five Year financial statement
TOOL : MS excel has been used to create charts and calculation.
Ratio analysis has been used to measure financial performance
of the company.

DATA ANALYSIS
TYPES OF RATIO
Ratio can be classified into four broad groups:
LIQUIDITY RATIOS
SOLVENCY RATIOS
PROFITABILITY RATIOS

LIQUIDITY RATIO
Liquidity ratio measures the ability of the firm to meet its current obligation. In fact, analysis of liquidity
needs the preparation of cash budgets and cash and fund flow statements; but liquidity ratio, by
establishing a relationship between cash and other current assets to current obligation, provide a quick
measure of liquidity.
The most common ratios which indicate the extent of liquidity are:
Current ratio
Quick ratio
 CURRENT RATIO
INTERPRETATION
Details 2015 2014 2013 2012 2011
1.46
CURRENT RATIO 1.69 1.55 1.45 1.49 The current ratio of 2:1 is considered
24696.4 18435.6 13520.68
Current Assets 8 18639.57 18143.54 7 to be satisfactory. The analysis is proved that the
14547.8 12323.7 9216.34
Current Liabilities 7 11983.30 12444.30 3 current ratio position of the company is not fully

satisfactory. That is 1.46 times in 2011, 1.49 times

FIGURE SHOWING CURRENT ASSETS TO CURRENT LIABILITIES

in 2012, 1.45 times in 2013, 1.55 times in 2014 and
45000
40000
1.69 times in 2015.
35000
30000
25000
20000
15000
10000
5000
0
2015 2014 2013 2012 2011

CURRENT RATIO Current Assets Current Liabilities

 QUICK RATIO
YEAR 2015 2014 2013 2012 2011
INTERPRETATION
QUICK 1.07 1.32 1.21 1.16 1.11
RATIO The quick ratio of 1:1 is considered
Quick 15686.99 15835.46 15165.82 14407.87 10237.37
Asset satisfactory. The company is not having a good
Current 14547.87 11983.30 12444.30 12323.73 9216.34
Liabilities liquidity. That is in the years 2011 2012, 2013, 2014

FIGURE SHOWING QUICK ASSETS TO CURRENT LIABILITIES and 2015 the quick ratio is 1.11, 1.16, 1.21,1.32and
35000

30000
1.07 times respectively of the current liabilities.
25000

20000

15000

10000

5000

0
2015 2014 2013 2012 2011

QUICK RATIO Quick Asset Current Liabilities

PROPRIETARY RATIO
YEAR 2015 2014 2013 2012 2011
PROPRIET 0.42 0.36 0.39 0.42 0.32 INTERPRETATION
ARY
RATIO This ratio shows the risk means, high

Sharehold 18201.4 13500.18 13133.78 12103.75 9194.81 ratio shows the lesser risk to the creditors. In 2011
ers
it is 0.32, 2012 it is 0.42, 2013 it is 0.39 , 2014 it is
Funds
Total 42521.46 36868.26 33549.04 28420.59 28337.69 0.36 and 2015 it is 0.42 . The proprietary ratio will
Assets
be satisfactory.
FIGURE SHOWING SHAREHOLDER'S FUNDS TO TOTAL ASSETS
70000

60000

50000

40000

30000

20000

10000

0
2015 2014 2013 2012 2011

PROPRIETARY RATIO Shareholders Funds Total Assets

 DEBT-EQUITY RATIO
YEAR 2015 2014 2013 2012 2011
INTERPRETATION
Debt- 1.32 1.71 1.49 1.33 2.05
Equity Debt- Equity Ratio indicates proportion between
Ratio
Debt 24125.61 23171.55 20216.71 16116.29 18940.32 shareholders funds and the long-term borrowed
Equity 18201.4 13500.18 13133.78 12103.75 9194.81 funds. A higher ratio indicates risky financial position
while a lower ratio indicate safer financial position.In
FIGURE SHOWING DEBT TO EQUITY 2011 it is 2.05, 2012 it is 1.33,2013 it is 1.49 , 2014 it
45000
40000 is 1.71 and 2015 it is 1.32.
35000
30000
25000
20000
15000
10000
5000
0
2015 2014 2013 2012 2011

Debt- Equity Ratio Debt Equity

TOTAL ASSETS TO DEBT RATIO
YEAR 2015 2014 2013 2012 2011
Total 1.76 1.59 1.65 1.763 1.49
Assets to
FIGURE SHOWING TOTAL ASSETS TO LONG TERM DEBTS
Debt
70000
Ratio 60000
Total 42521.46 36868.26 33549.04 28420.59 28337.69
50000
Assets 40000
Long- 24125.61 23171.55 20216.71 16116.29 28337.69
30000
term 20000
Debts 10000
0
2015 2014 2013 2012 2011
INTERPRETATION-It measures the safety margin available to the
Total Assets to Debt Ratio Total Assets

provider of long-term debt.A higher ratio represents higher security to

lenders for extending long term loan to the business .On the other hand,
a low ratio represents a risky financial position as it means that the
business depends heavily on the outside loans for its existence.In 2011
it is1.49, 2012 it is 1.763, 2013 it is 1.65, 2014 it is 1.59 and 2015 it is
1.76.
 OPERATING RATIO
YEAR 2015 2014 2013 2012 2011

Operating 0.80 0.75 0.75 0.73 0.76

Ratio
FIGURE SHOWING OPERATING COST TO NET SALES
25000

Operating 8875.41 9865.16 10033.15 9413.47 10010.52 20000

Cost
15000
Net Sales 11050.31 13116.11 13358.37 12853.12 13092.79
10000

5000

0
2015 2014 2013 2012 2011

INTERPRETATION- The operating cost ratio shows the Operating Ratio Operating Cost Net Sales

operating efficiency of a firm. The ratio is, 0.76, 0.73, 0.75,

0.75 and 0.80 in 2011 , 2012, 2013, 2014 and 2015 respectively.
 NET PROFIT RATIO
YEAR 2015 2014 2013 2012 2011

FIGURE SHOWING PROFIT AFTER TAX TO NET SALES

NET 0.11 0.031 0.37 0.079 0.089
16000
PROFIT
14000
RATIO 12000
Profit -1278.74 413.89 501.28 1026.38 1167.78 10000
8000
After Tax
6000
Net Sales 11050.31 13116.11 13358.37 12853.12 13092.79
4000
2000
0
2015 2014 2013 2012 2011
-2000
INTERPRETATION- Net Profit Ratio is an indicator of overall -4000

NET PROFIT RATIO Profit After Tax Net Sales

efficiency of the business. Higher the Net profit better the
business .The ratio is 0.089, 0.079 , 0.37 , 0.031 , 0.11 in 2011,
2012, 2013, 2014 and 2015 respectively.
 FIXED ASSETS TURNOVER RATIO
YEAR 2015 2014 2013 2012 2011

Fixed 0.62 0.89 1.03 1.19 1.11 FIGURE SHOWING NET SALES TO FIXED ASSET
assets 35000
30000
turnover
25000
Ratio 20000
Net Sales 11050.31 13116.11 13358.37 12853.12 13092.79
15000
10000
Fixed 17551.30 14665.39 12959.07 10744.11 11754.32 5000

Asset 0
2015 2014 2013 2012 2011

INTERPRETATION- There is a more investment in fixed Fixed assets turnover Ratio Net Sales
Fixed Asset

assets. All fixed assets are contributed towards sales. In 2011 it

is 1.11, 2012 it is 1.19, 2013 it is 1.03 , 2014 it is 0.89 and 2015
it is 0.62.There is decrease in net sales.
FINDINGS
The current ratio and quick ratio are not satisfactory because the
current ratio is not up to the standard limit for efficient utilization of
current assets.
In quick ratio the current liabilities are more than liquid assets.
The proprietary ratio is not good because the shareholders funds are
up to the standard limit. It shows lesser risk but solvency ratio is not
satisfactory due to increase in out -side liability.
The Net profit ratio are not satisfactory because the net profit is less
towards sales.
The Operating Ratio is satisfactory because net sales are more than
operating cost.
CONCLUSION
By analyzing the topic of FINANCIAL Analysis,
I conclude that the company is more concentrate on raising the fixed assets
rather than operating activities which decreases net sales of the company.
Which affects the operational efficiency of the company and also the liquidity
position is not satisfactory due to these reasons.
Based on ratio analysis the current ratio, liquidity and ratio slightly increases. It
shows the company liquidity.
Based on ratio analysis the solvency ratio shows the insolvent of the company.

This project report helped me to get the good knowledge on to

improve the liquidity position for better maintenance of the company.
 BIBLIOGRAPHY
Article
Bird, R.G., and McHugh A.J. (1977), "Financial ratios - an empirical study", Journal of
Business Finance and Accounting 4/1, 29-45.
Timo Salmi and Teppo Martikainen (1994), "A Review of the Theoretical and Empirical Basis
of Financial Ratio Analysis", The Finnish Journal of Business Economics 4/94, 426-448.
Books referred
Maheshwari, S.N.;Financial Management,Principles and Practice, Sultan Chand & sons,
9thEdition 2004.
Maheshwari, S.N.;Elements of Financial Management, Sultan Chand & Sons, 2003
7thEdition.
Websites references
www.jalindia.com
www.slideshare.com