Financial Statement Analysis With The Help of Ratios (Suyesh Metel Pressing pvt Ltd Ahmendnagar)

AA
PPRROOJJEECCTT RREEPPOORRTT
OONN
“FINACIAL STATEMENT ANALYSIS WITH THE HELP
OF RATIOS”
For
SUYASH METAL PRESSINGS PVT LTD, AHMADNAGAR
SSUUBBMMIITTTTEEDD TTOO
UUNNIIVVEERRSSIITTYY OOFF PPUUNNEE
IINN TTHHEE PPAARRTTIIAALL FFUULLFFIILLLLMMEENNTT OOFF TTHHEE RREEQQUUIIRREEMMEENNTT OOFF
MMAASSTTEERR OOFF BBUUSSIINNEESSSS AADDMMIINNIISSTTRRAATTIIOONN ((MM..BB..AA..))
UUNNDDEERR TTHHEE GGUUIIDDAANNCCEE OOFF
((PPrrooff.. PP.. SS.. KKAAWWLLEE))
--SSUUBBMMIITTTTEEDD BBYY--
((TTAAUUFFIIKK PPAATTHHAANN))
SSuubbmmiitttteedd ttoo
SS..RR..EE..SS.. CCoolllleeggee ooff EEnnggiinneeeerriinngg DDeeppaarrttmmeenntt ooff MMBBAA,, KKooppaarrggaaoonn
22001155--22001166

IInnssttiittuuttee cceerrttiiffiiccaattee

SANJIVANI RURAL EDUCATION SOCIETY’S, COLLEGE OF
ENGINEERING,
DEPT. OF MBA
Certificate
This is to certify that Mr./Ms. Taufik Firoz Pathan
has submitteda summer project on “Financial Statement Analysis
with the help of Ratios” to University of Pune for the partial
fulfillment of Master in Business Administration (M.B.A.).
We further certify that to the best of our knowledge and belief,
the matter presented in this project has not been submitted to any
other Degree or Diploma course.
(Prof.P. S. Kawle) Prof.B.M.Londhe
Internal Guide Head of Dept
External Examiner

Declaration
I undersigned hereby declares that, the project titled “Financial statement
analysis with the help of ratios” is executed as per the course requirement of
two year full time MBA program of University of Pune. This report has not
submitted by me or any other person to any other University or Institution for a
degree or diploma course. This is my own and original work.
Place: Kopargaon Sd.
Date:…………….. ( Mr. Taufik Firoz Pathan)
MBA-2015-16

ACKNOWLEDGEMENT
A project in an organization is an experience wherein the academic knowledge gained
from the institute is applied in a practical manner. I had an opportunity to complete
my summer project in “Suyash Metal Pressings Pvt. Ltd”.
The project is a great source of learning and a good experience as it made me aware
of professional culture and conducts that exists in an organization.
In this journey many people were influential without whom the task would have been
incomplete.
I hereby express heartfelt gratitude to Mr. Paithankar Sir (Suyash Metal Pressings
Pvt. Ltd.) who gave me opportunity to do project in Suyash Metal Pressings Pvt.
Ltd”. Also thanks to my project guide Prof. P. S. Kawle.
In addition, I thank to the staff members and all my seniors in Suyash Metal
Pressings Pvt. Ltd who helped me in the successful completion of this project.
The rich experience, which I gathered during my short stay with the company, will
act, as a valuable tool in my future. I will always carry very fond memories of these
training days.
I wish “Suyash Metal Pressings Pvt. Ltd”. To become a corporate giant and its
employees ‘All the Best’.

INDEX
Chapt
er No.
Chapter Name Page No.
1
Executive Summary
2 Introduction
3 Industry Profile
4 Company Profile
5 ProductProfile
6 Objective of Study
7
ResearchMethodology
(i) Primary Data
(ii) Secondary Data
(iii) Sampling
(iv) Scopeofthe study
(v) Limitations of the study
8 Theoretical Background of the study
9. Data Analysis and Interpretation
10. Findings
11. Conclusion
12. Suggestions
13. Learning through the Project.
14. Bibliography
Annexure

Introduction of the project:
The Savitribai Phule University of Pune had given the Subject of Summer internship
Project for Master of Business Administration [M.B.A.] Semester 3rd Our Project
Report subject is practical training for project work in Suyash metal pressing Pvt. Ltd.
Location:
This company located in nagapur MIDC, Nagapur, Ahmednagar.
Duration:
Duration of the project is 60 days.
Project title:
“Financial statement analysis with the help of ratios”. The accountant of the Suyash
metal pressing Pvt. Ltd is Mr.Ganesh bhangade sir who has all information Provide
about the company. I choose the Suyash metal pressing Pvt. Ltd. Because in this
company financial is well procedure. And my subject topic is financial statement
analysis with the help of ratio.
In the Suyash metal there are various produce i.e. Powder Coated Fan Cover SWJ
92mm, Rail assembly, Terminal Block Adopter Plate etc.
Ratio analysis is a major component of financial and taken a constructive decision for
future prospect of a company. Ratio analysis is also the process of determining &
interpreting numerical relationship based on financial statement of ratio to interpret
the financial statement. I have collected primary and secondary data from financial
statement of company and discussion with various staff member in organization.
Objective of the project:
 To study the financial health of “Suyash Metal Pressings Pvt. Ltd”.
 To understand and assess financial ratios based on the statements of the
company.
 To determine liquidity, profitability, turnover and solvency positions of the
company.

General Finding, Suggestion & conclusion:
Liquidity Position of company is week. There is a scope to Improve Company’s
Liquidity Position just like the way they have shown efficient Fund Management.
All the Companies assets are effective and efficient to generate the sales so company
in growth stage and it’s required more capital
Profitability position of company good and company give higher return on
investment.
Solvency position of company is good and it should maintain it.
Company should try to increase liquidity and capital and reduce operating expenses.

INTRODUCTION
The project title as “A study of financial statement analysis with the help of ratio”
with a view to study the different ratios of previous 3 years for financial &
constructive decision for “Suyash Metal Pressings Pvt. Ltd”. Ratio analysis is a major
component of financial and taken a constructive decision for future prospect of a
company. Ratio analysis is also the process of determining & interpreting numerical
relationship based on financial statement of ratio to interpret the financial statement. I
have collected primary and secondary data from financial statement of company and
discussion with various staff member in organization. I have completed summer
internship project from 15th may to 15th July.
Financial statement that present and organized collection of financial data from the
bases of financial analysis the highlight significance of financial ratio analysis, the
usefulness of the financial ratio to those who manage a firm as well as to those who
are related to it in any way, such as creditors, investors, financial analysis and so on in
order to avoid duplication, it is discussed here how the different ratios should be use
in order to arrive any one conclusion.
Our product range also includes, Power coated fan cover SWJ92mm, Machined stator
ASBG180S, Terminal block adopter plate, AUS 180L, etc.
Company manufactures industrial goods and supply to Automobile & Electrical
Industry. Customer of Suyash metal is ABB, L&T, Crompton & greaves ltd,
Marathon etc.
Ratios are known as language of a business so using profitability, solvency, turnover
ratio etc; throw that find financial strength and weakness of the company. This
information help to supplier, worker, investor, customer whether company’s financial
position good or bad. That’s why told that ratio is language of business.

Standards of comparison:
The ration analysis involves comparison for a useful interpretation of the financial
statements. A single ratio in itself does not indicate favorable or unfavorable
condition. It should be compared with some standard. Standards of comparison may
consist of:
 Past ratios, i.e. ratios calculated form the past financial statements of the
same firm;
 Competitors’ ratios, i.e., of some selected firms, especially the most
progressive and successful competitor, at the same pint in time;
 Industry ratios, i.e. ratios of the industry to which the firm belongs; and
 Protected ratios, i.e., developed using the protected or proforma, financial
statements of the same firm.
In this project calculating the past financial statements of the same firm does ratio
analysis.

GLOBAL SCENARIO:
The Asian countries have their respective dominance in the production of the steel all
over the world. India being one among the fastest growing economies of the world
has been considered as one of the potential global steel hub internationally. Over the
years, particularly after the adoption of the liberalization policies all over the world,
the World steel industry is growing very fast. Steel Industry is a booming industry in
the whole world. The increasing demand for it was mainly generated by the
development projects that has been going on along the world, especially the
infrastructural works and real estate projects that has been on the boom around the
developing countries. Steel Industry was till recently dominated by the United Sates
of America but this scenario is changing with a rapid pace with the Indian steel
companies on an acquisition spree. In the last one year, the world has seen two big
M&A deals to take place :-The Mittal Steel, listed in Holland, has acquired the
world's largest steel company called Arcelor Steel to become the world's largest
producer of Steel named Arcelor-Mittal. Tata Steel of India or TISCO (as listed in
BSE) has acquired the world's fifth largest steel company, Corus, with the highest
ever stock price. It has been observed that Steel Industry has grown tremendously in
the last one and a half decade with astrong financial condition. The increasing needs
of steel by the developing countries for its infrastructural projects has pushed the
companies in this industry near their operative capacity. The most significant growth
that can be seen in the Steel Industry has been observed during the period 1960 to
1974 when the consumption of steel around the whole world doubled. Between these
years, the rate at which the Steel Industry grew has been recorded to be 5.5 %. This
roaring market saw a phase of deceleration from the year 1975 which continued till
1982. After this period, the continuous fall slowed down and again started its upward
movement from the early 1990s.Steel Industry is becoming more and more
competitive with every passing day. During the period 1960s to late 1980s, the steel
market used to be dominated by OECD (Organization for Economic Cooperation and
Development) countries. But with the fast emergence of developing countries like
China, India and South Korea in this sector has led to slipping market share of OECD
countries. The balance of trade line is also tilting towards these countries.

The main demand creators for Steel Industry are Automobile industry, Construction
Industry, Infrastructure Industry, Oil and Gas Industry, and Container Industry. New
innovations are also taking place in Steel Industry for cost minimization and at the
same time production maximization. Some of the cutting edge technologies that are
being implemented in this industry are thin-slab casting, making of steel through the
use of electric furnace, vacuum degassing, etc. The Steel Industry has enough
potential to grow at a much accelerated pace in the coming future due to the
continuity of the developmental projects around the world. This industry is at present
working near its productive capacity which needs to be increased with increasing
demand. For more information on the subject please browse through the following
links. Production in Italy increased by 11.5per cent in comparison to the same month
in 2004. Italy produced 2.5 mmt of crude steel in January 2005. Austria produced
646,000 metric tones. In Russia it increased by 4.0 per centto reach at 5.5 mmt in
January. In case of the North America region particularly in it was 1.5 mmt of crude
steel in January 2005, up by 8.0 per cent compared to the same month in 2004.
Production in the United States was 8.3 mmt. Brazil had produced 2.6 mmt of crude
steel in January 2005. In South America region it was 3.7 mmt for January
2005.According to rating made by the “World Steel Dynamics", Indian HR Products
are categorized in the Tier II category quality of products. Both EU and Japan have
ranked the top. USA and South Korea comes as like India. World Steel Industries
World Steel Industries are undergoing a booming phase with all sorts of Mergers and
Acquisition staking place all around the world.

INDIAN SCENARIO:
The Indian steel industry has entered into a new development stage from 2007-08,
riding high on the resurgent economy and rising demand for steel.
Rapid rise in production has resulted in India becoming the 4th largest producer of
crude steel and the largest producer of sponge iron or DRI in the world.
As per the report of the Working Group on Steel for the 12th Five Year Plan, there
exist many factors which carry the potential of raising the per capita steel
consumption in the country. These include among others, an estimated infrastructure
investment of nearly a trillion dollars, a projected growth of manufacturing from
current 8% to 11-12%, increase in urban population to 600 million by 2030 from the
current level of 400 million, emergence of the rural market for steel currently
consuming around 10 kg per annum buoyed by projects like Bharat Nirman, Pradhan
Mantri Gram Sadak Yojana, Rajiv Gandhi Awaas Yojana among others. At the time
of its release, the National Steel Policy 2005 had envisaged steel production to reach
110 million tons (mt) by 2019-20. However, based on the assessment of the current
ongoing projects, both in Greenfield and Brownfield, the Working Group on Steel for
the 12th Five Year Plan has projected that domestic crude steel capacity in the county
is likely to be 140 mt by 2016-17 and has the potential to reach 149 mt if all
requirements are adequately met.
The National Steel Policy 2005 is currently being reviewed keeping in mind the rapid
developments in the domestic steel industry (both on the supply and demand sides) as
well as the stable growth of the Indian economy since the release of the Policy in
2005.

CURRENT SCENARIO:
Major competitors in INDIA:
1. TATA STEEL PVT. LTD
2. SAIL
3. JSW
The Demand for the Indian steel industry is expected to rise 7 percent in the next
financial year beginning April 1 as compared to the sluggish 5.5 percent projected
growth in 2012-13. The overall outlook for the steel sector is positive and the demand
was likely to pick up in the next financial year on the back of revival in economic
growth and the government’s measures to ease infrastructure investment rules.
In fiscal 2012-13, growth in domestic steel demand expected to be around percent,
total demand is expected to be around million tons up from 21 million tons in 2011-
12, in 2013-14, demand is expected to be higher at around seven percent.
India is currently the world’s fourth largest producer of crude steel after China, Japan
and the US.
Major public as well as private sector firms are including Tata steel, SAIL & JSW are
expanding production capacity. The steel production is expected to reach 200 million
tons by 2020 as compared to 71 million tons recorded last year. In steel production,
India is expected to leave behind USA and Japan in a couple of years. However, It
will substantially lag behind china that produces almost 700 million tons of steel per
year.

HISTORY:
Suyash Metal Pressings Pvt. Ltd. Established in 1987. It is a private sector company.
Company with annual crude steel capacity of over a 1500 tons per annum. Company
is two plants in nagapur MIDC. Suyash Metal Group, with turnover of 130458381.07
in FY 13, has over 150-170 employee across two plants in one ship. In the month of
January 2005 Company is shifted to his own premises at plot no. L-7 MIDC
Ahmednagar. There is shop space is about 300 sq.ft with 500sq.ft storage area and
500 sq.ft office at ground floor.
Suyash metal pressings Pvt. Ltd. Is a leading manufacturing and supplier of sheet
metal pressed components and assemblies to the automobile and electrical industry.
Renowned manufactures of all types of dies, Press tools, Jigs, Fixtures, Press
components and Fabricated assemblies. In its journey in pursuit of excellence suyash
engineering work developed into a full fledged manufacturing unit, evolving it self
from a press shop to a modern manufacturing facility having in house tool room and
CNC for speedy development. This transformation was done under the able guidance
of Mr. Abhay Mestry, Owner who always strove for excellence. M/s Suyash Metal
Pressings pvt. Ltd was formed in 1987 to support the growing expectation of the
valued customers who had showed their confidence in us..
Suyash metal pressings company is a small scale firm located in Nagapur MIDC area
under the Ahmadnagar. The work which is done in suyash firm is making various
product by processing metal they are making almost 476 product.
Suyash metal pressings are producing various verity. This work is done by 3 type of
machines that is Cutting machine, Compressor machine & Hydraulic Machine.
Suyash Metal Pressings having 20 compressor machine 4-5 hydraulic machine & 2-3
cutting machine.
There are various department are working in a company for gaining more profit with
minimum input like Finance, Accountancy Marketing & production department &
quality control department.

Suyash metal pressings are provide the material to the industrial area like Automobile
Sector And Electronic Sector such as, ABB, Marathon, L&T, Crompton and Greaves
etc. In short company are making product in Batch and Job production. Customer will
give the required quantity and company are making that product.
Vision:
“Future plans of the suyash metal works are to re-organize the building and
layout of machines to suit the mass production and minimum material
movement.”
Mission:
“Delivering professional, high- quality products using the full potential of the
latest technologies.”
Our mission is to excel in what we do to constantly explorer the boundaries of
technology and apply our expertise to the fullest benefit of the customer delivering
professional, high quality products using the full potential of the latest technologies.

Milestones:
1. In 2008-09: 3 Star rating for quality and cost effectiveness from Crompton greaves.
2. In 2009-10: ISO 9001 certification for quality management system.
3. In 2012-13: Quality management certification from Transpacific certification Ltd (TCL).

Organizational Structure:
P
STORES
INCHARGE
PRODUCTION
INCHARGE
QUALITY
INCHARGE
(MR)
ACCOUNT
INCHARGE
DIRECTOR
MAINANCENTE
WORKERS
DISPATCH
SUPERVISOR
MARKETING
INCHARGE
INSPECTOR

Product Profile
1) Powder Coated Fan Cover SWJ 92mm

4) Terminal Block Adopter Plate

Chapter -6
Objectives of Study

Objectives:
1. To study the financial health of “Suyash Metal Pressings Pvt. Ltd”.
2. To understand and assess financial ratios based on the statements of the
company.
3. To determine liquidity, profitability, turnover and solvency positions of the
company.

Chapter -7
Research
Methodology

Research Methodology
Research methodology is a way to systematically solve the research problem. It may
be understand as a science of studying how research is done scientifically. Why a
research study has been undertaken, how the research problem has been defined, in
what Way and why the hypothesis has been formulated, what data have been collected
and what way the hypothesis has been formulated, what data have been collected and
what particular technique of analyzing data has been used and a host of similar other
questions are usually answered when we talk of research methodology concerning a
research problem or study.
A research design serves as a bridge between what has been established (the research
objectives) and what is to done, in the conduct of the study. In this project research
done is of conclusive nature. Conclusive research information that helps in making
rational decision.
Methodology can be defined as a systemic way of approaching a problem to identify
the truth and for this certain step should be taken in a systematic order and these steps
are called methods.
“Research methodology is a process of planning, acquiring, analyzing and
disseminating relevant data and information”.
The use of right methodology is necessary because if the right methods are not
adopted and thoughts are not arrange in a logical order the exact truth might not be
expressed. Thus the methodology means correct arrangement of thoughts and
knowledge.
Research in common parlance refers to a search for knowledge. One can also define
research as a scientific and systematic search for pertinent information on a specific
topic. In fact research is an art of scientific investigation. Another meaning of
research is “a careful investigation or inquiry especially through for new facts in any
branch of knowledge.”
Redman and Morry define research as a “systemized effort to gain new knowledge.”
Some people consider as movement a movement from the known to the unknown it is
actually a voyage of discovery.

DATA COLLECTION METHODS:-
 PRIMARY DATA:- Primary data are those which are gathered specially for
the project at hand, directly – e.g. through questionnaires & interviews.
Primary data sources include company salesman, middleman, consumers,
buyers, trade association’s executives & other businessman & even
competitors.
There are many methods of collecting primary Data and primary Data Collection,
using methods such as Interviews and questionnaire. The key point here is that the
data we collected in unique to you and our research And until we publish no one else
had access to it.
The main methods of primary Data these Are followings.
1) Questionnaires.
2) Interviews
3) Focus Group Interviews.
4) Case Studies
5) Diaries
6) Critical Incidents.
7) Port Folios.
We are used the primary Data by questionnaire, interviews & Diaries.
 SECONDARY DATA:- These are generally published sources, which have
been collected originally for some other purpose. Source are internal company
records, government publication, reports & publication, reports & journals,
trade, professional and business associations publications & reports.
The secondary data is collected and possibly processed by people in question.
Common sources of secondary data include census, large survey and organization
records. Secondary data information relates to past periods. Through old may be only
possible source of desired data on the subject which cannot use following source of
secondary data.

1) Newspaper.
2) Magazines.
3) Internet.
4) Organizational records.
5) Company Website
 SAMPLING METHODS:-
Sampling may be defined as the selection of some part of an aggregate or totality on
the basis of which a judgment or interface about the aggregate or totality is made.
There are different types of sampling methods which are given below-
Simple random sampling
Systematic random sampling
Stratified random sampling
Multistage sampling
Multiphase sampling
Area sampling
Cluster sample
Convenience sampling
Quota sampling etc.
This data has been collected throw using area sampling method.
 Sampling area: Finance dept.

 SCOPE OF STUDY:
In order to carry out any business one must ensure finance, because finance is closely
related with production, marketing and other functions in an organization. For
example, a decision to build a new plant or to buy a new machine implies specific
way of financing that project. Ratios analyses shows you comparative result of the
any firm for that purpose we have calculate various ratio of Company. That ratio
shows us
 Short and long term solvency of the firm.
 Finical position of the company.
 Efficiency of the management of the company that help to share holder to
establish new plan for the next financial year.
 It also useful in the make financial budget of the company for next year.
 To compare of two different period performance of the firm.

 LIMITATIONS OF STUDY:
1. Time period for project is two month and it’s too short for
analyzing the financial health of company.
2. Financial information of company is provided only for a period of
three years which is not show the clear picture of company.
3. In company financial information is an internal information which
is not shown any company so this also barrier.

Chapter - 8
Theoretical
Background

Theoretical Background
Financial statement Analysis:
Financial Statement Analysis consist of the application of analytical tools and
techniques to the data in financial statements in order to derive from them
measurements and relationships that are significant and useful for decision making.
The process of financial analysis can be described in various ways depending on the
objectives to be obtained. Financial analysis can be used as a preliminary screening
tool in the selection of stocks in the secondary market. It can be used as a forecasting
tool for future financial conditions and results. It may be used as a process of
evaluation and diagnosis of managerial, operating or other problem areas. Above all,
financial analysis reduces reliance on intuition, guesses and thus narrows the areas of
uncertainty that is present in all decision.
Financial statements are used and analyzed by a different group of parties, these
groups consists of people both inside and outside a business. Generally, these users
are:
A. Internal Users: are owners, managers, employees and other parties who are
directly connected with a company:
1. Owners and managers require financial statements to make important business
decisions that affect its continued operations. Financial analysis is then performed on
these statements to provide management with more detailed information. These
statements are also used as part of management's report to its stockholders, and it
form part of the Annual Report of the company.
2. Employees also need these reports in making collective bargaining agreements with
the management, in the case of labor unions or for individuals in discussing their
compensation, promotion and rankings.
B. .External Users: are potential investors, banks, government agencies and other
parties who are outside the business but need financial information about the business
for numbers of reasons.

1. Prospective investors make use of financial statements to assess the viability of
investing in a business. Financial analyses are often used by investors and is prepared
by professionals (financial analysts), thus providing them with the basis in making
investment decisions.
2. Financial institutions (banks and other lending companies) use them to decide
whether to give a company with fresh loans or extend debt securities (such as a long-
term bank loan).
3. Government entities (tax authorities) need financial statements to ascertain the
propriety and accuracy of taxes and duties paid by a company.
4. Media and the general public are also interested in financial statements of some
companies for a variety of reasons.
Classification of Ratios:
In solution, a financial ratio is a useless piece of information. In context, however, a
financial ratio can give a financial analyst an excellent picture of a company's
situation and the trends that are developing. A ratio gains utility by comparison to
other data and standards.
Financial ratios quantify many aspects of a business and are an integral part of
financial statement analysis. Financial ratios are categorized according to the financial
aspect of the business which the ratio measures. Although these categories are not
fixed in all over the world however there are almost the same, just with different
names:
A. Profitability ratios which use margin analysis and show the return on sales and
capital employed.
1- Gross profit ratio-: This ratio indicates the relation between production cost and
sales and the efficiency with which goods are produced or purchased. If it has a very
high gross profit ratio it may indicate that the organization is able to produce or
purchase at a relatively lower cost. Gross profit is the profit we earn before we take
off any administration costs, selling costs and so on.

2- Net profit ratio-: This ratio is so important because it tells us the amount of net
profit of the turnover (sales) a business has earned. The net profit ratio indicates that’s
portion of sales available to the owners after the consideration of all types of expenses
& costs.
 Rate of Return Ratio (ROR) or Overall Profitability Ratio the rate of
return ratios are thought to be the most important ratios by some
accountants and analysts. One reason why the rate of return ratios are so
important is that they are the ratios that we use to tell if the managing
director is doing their job properly.
1- Return on assets-: this ratio shows the profitability of investment in the firm so
higher the ratio is better and more desirable while the company is earning less and
less profitability ratio. Although it is better than four years ago, however it is
generally earning less profitability.
2-Return on equity- This is so crucial ratio from the shareholders point of view. The
higher it is the better will be the position. While in this company the ratio is going
down ward which shows all the problems the company having and a not desirable
financial position.
B. Liquidity ratios measure the availability of cash to pay debt, which give a picture
of a company's short term financial situation.
1-Current ratio- This ratio measurers the solvency of the company in the short term.
current assets are those assets which can be converted into cash within a year. current
liabilities and provisions are those liabilities that are payable within a year. a current
ratio 2:1 indicate a highly solvent position.
2- Quick ratio- Liquid ratio indicates the backing available to liquid liabilities in the
form of liquid assets. Primarily because the current ratio includes inventory assets
which right not be able to term to cash immediately. A liquid ratio of 1:1 is supposed
to be standard &ideal.

C. Solvency or Gearing ratios measures the percentage of capital employed that is
financed by debt and long term finance. The higher the gearing, the higher the
dependence on borrowing and long term financing. The lower the gearing ratio, the
higher dependence on equity financing. Traditionally, the higher the level of gearing,
the higher the level of financial risk due to the increase volatility of profits. It should
be noted that the term “Leverage” is used in some texts.
1- Debt equity ratio-: In this ratio shareholders’ fund is the share capital plus reserve
and surpluses. In case of high debt equity it would be obvious that the investment of
creditors is more than owners. And if it is so high then makes the firm in a risky
position. Or if it is too low it might indicate that the organization has not utilized its
capacity of borrowing which must be utilized and that is because the borrowing from
outsiders is a good source of fund for business with lower returns in compare to
equity.
2-Proprietatry ratio-: This ratio indicates the relationship between the owner funds
& total assets, the assets can be basically fixed or current ratio can be further analyses
accordingly.
D. Turn over Ratios: or activity group ratios indicate efficiency of organization to
various kinds of assets by converting them to the form of sales.
1-Fixed assets turnover ratio- The level of sales generated due to investment in
fixed assets. the greater ratio it is inferred the more intensively the fixed assets have
been used.
2-Current assets turnover ratio- This ratio indicates the efficiency with which
current assets turn into sales. A higher ratio implies by and large a more efficient use
of funds. Thus, a high turnover rate indicates reduced lock-up of funds in current
assets. An analysis of this ratio over a period of time reflects working capital
management of a firm.
3-Working capital turnover ratio- A high working capital turnover ratio indicates
the capability of the organization to achieve maximum sales with the minimum
investment in working capital.

4-Capital employed turnover ratio- Capital employed can be expressed in different
terms, all generally refer to the investment required for a business to function. By
"employing capital" you are making an investment. So, capital employed indicated the
long term funds supplied by creditors and owners of the firms.
Which Ratio for whom:
As before mentioned there are varieties of people interested to know and read these
information and analyses, however different people for different needs. And it is
because each of these groups have different type of questions that could be answered
by a specific number and ratio. Therefore we can say there are different ratios for
different groups, these groups with the ratio that suits them is listed below:
1. Investors: these are people who already have shares in the business or they are
willing to be part of it. So they need to determine whether they should buy shares in
the business, hold on to the shares they already have or sell the shares they already
own. They also want to assess the ability of the business to pay dividends. As a result
the Return on Capital Employed Ratio is the one for this group.
2. Lenders: This group consists of people who have given loans to the company so
they want to be sure that their loans and also the interests will be paid and on the due
time. Gearing Ratios will suit this group.
3. Managers: managers might need segmental and total information to see how they
fit into the overall picture of the company which they are ruling. And Profitability
Ratios can show them what they need to know.
4. Employees: the employees are always concerned about the ability of the business
to provide remuneration, retirement benefits and employment opportunities for them,
therefore these information must be find out from the stability and profitability of
their employers who are responsible to provide the employees their need. Return on
Capital Employed Ratio is the measurement that can help them.

5. Suppliers and other trade creditors: businesses supplying goods and materials to
other businesses will definitely read their accounts to see that they don't have
problems, after all, any supplier wants to know if his customers are going to pay them
back and they will study the Liquidity Ratio of the companies.
6. Customers: are interested to know the Profitability Ratio of the business with
which they are going to have a long term involvement and are dependent on the
continuance of presence of that.
7. Governments and their agencies: are concerned with the allocation of resources
and, the activities of businesses. To regulate the activities of them, determine taxation
policies and as the basis for national income and similar statistics, they calculate the
Profitability Ratio of businesses.
8. Local community: Financial statements may assist the public by providing
information about the trends and recent developments in the prosperity of the business
and the range of its activities as they affect their area so they are interested in lots of
ratios.
9. Financial analysts: they need to know various matters, for example, the
accounting concepts employed for inventories, depreciation, bad debts and so on
therefore they are interested in possibly all the ratios.
10. Researchers: researchers' demands cover a very wide range of lines of enquiry
ranging from detailed statistical analysis of the income statement and balance sheet
data extending over many years to the qualitative analysis of the wording of the
statements depending on their nature of research.

Chapter -9
Data Analysis
and Interpretation

 Data Analysis and Interpretation:-
A. Liquidity ratios:
1. Current ratio: -
Current Assets
Current Ratio =
Current Liabilities
TABLE 8-1
Year Current Assets Current
Liabilities
Current Ratio
2011-12 62617592.49 42235826.41 1.48
2012-13 65299675.55 49566080.75 1.32
2013-14 68949748.61 59769788.66 1.15
(Source-FinancialStatement)
 Interpretation:-
Ideal Current ratio is 2:1 & Company’s current ratio not on to that liquidity position.
So company’s investment in current assets is less & current liabilities increases year
by year.
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
2011-12 2012-13 2013-14
Current Ratio
Current Ratio

2. Quick ratio: -
Quick Assets
Quick Ratio =
Quick Liabilities
TABLE 8-2
Year Quick Assets Quick
Liabilities
Quick Ratio
2011-12 46043018.29 42235826.41 1.09
2012-13 47320485.55 49566080.75 0.95
2013-14 48093288.61 59769788.66 0.80
Ideal Quick ratio is 1:1. In 2011-12 reach on that in next two year it shows decline
trend. So company is did not having sufficient quick assets or high quick liabilities.
0
0.2
0.4
0.6
0.8
1
1.2
2011-12 2012-13 2013-14
Quick Ratio
Quick Ratio

B. Turnover ratios:
1. Fixed Asset Turnover ratio: -
Net Sales
Fixed Assets turnover Ratio =
Fixed Assets
TABLE 8-3
Year Net Sales Fixed Assets Fixed Assets
Turnover Ratio
2011-12 109693902.00 21869645.79 5.01
2012-13 126272486.53 19411989.08 6.50
2013-14 141704938.70 18826233.54 7.52
In 2011-12 Ratio was 5.01 and it increased year by year so company are more
Efficient & its sales generating ability to investment in fixed assets is also high.
0
1
2
3
4
5
6
7
8
2011-12 2012-13 2013-14
Fixed Assets Turnover Ratio
Fixed Assets Turnover Ratio

2. Current Assets Turnover ratio: -
Net Sales
Current Assetturnover Ratio =
Current Assets
TABLE 8-4
Year Net Sales Current Assets Current Ratio
2011-12 109693902.00 62617592.49 1.75
2012-13 126272486.53 65299675.55 1.93
2013-14 141704938.70 68949788.61 2.06
In 2011-12 Ratio was 1.75 and increases next two years. So the firm’s sales
increases as increases the current assets and company’s current assets are efficient.
1.55
1.6
1.65
1.7
1.75
1.8
1.85
1.9
1.95
2
2.05
2.1
2011-12 2012-13 2013-14
Current Assets Turnover Ratio
Current Assets Turnover Ratio

3. Working Capital Turnover ratio: -
NetSales
Working CapitalTurnover Ratio =
Working Capital
TABLE 8-5
Year Net Sales Working
Capital
Working Capital
Turnover Ratio
2011-12 109693902.00 20381766.08 5.38
2012-13 126272486.53 15733594.80 8.03
2013-14 141704938.70 9179959.95 15.44
In 2012-13 ratio was 8.03 and increased in next year directly 15.44. So due
to that there is huge investment required in working capital for as high business
potential.
0
2
4
6
8
10
12
14
16
2011-12 2012-13 2013-14
WorkingCapital Turnover Ratio
Working Capital Turnover
Ratio

4. Inventory/Stock Turnover ratio: -
Cost of Goods Sold
Stock Turnover Ratio =
Average Inventory
TABLE 8-6
Year Cost of Goods
Sold
Average
Inventory
Stock Turnover
Ratio
2011-12 91409410 22063501 4.14
2012-13 111329128 17261519 6.44
2013-14 125913515 19417825 6.48
In 2011-12 ratio was 4.14 and its increases next two years. So ratio is not too high
or too low and inventory movement is also high due to that company’s carrying cost
decreases.
0
1
2
3
4
5
6
7
2011-12 2012-13 2013-14
Stock Turnover Ratio
Stock Turnover Ratio

5. Capital Turnover ratio: -
Net Sales
Capital Turnover Ratio =
Capital Employed
TABLE 8-7
Year Net Sales Capital
Employed
Capital
Turnover Ratio
2011-12 109693902.00 44528653.33 2.46
2012-13 126272486.53 37912825.23 3.33
2013-14 141704938.70 31748463.49 4.46
In 2011-12 ratio was 2.46 and its increases next two years although capital
investment decreases and sales increases.
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
2011-12 2012-13 2013-14
Capital Turnover Ratio
Capital Turnover Ratio

C. Solvency ratios:
1. Debt Equity ratio: -
Long Term Debt
Debt Equity Ratio =
Shareholder’s Equity
TABLE 8-8
Year Long Term
Debt
Shareholder’s
Equity
Debt Equity
Ratio
2011-12 31488676.65 13039976.68 2.41
2012-13 18667938.31 19244886.92 0.97
2013-14 13928628.94 17819834.55 0.78
In 2011-12 ratio was 2.41 and it shows decreased trend. Debts are more than equity,
so its means margin of safety for creditors or investors are more.
0
0.5
1
1.5
2
2.5
2011-12 2012-13 2013-14
Debt Equity Ratio
Debt Equity Ratio

2. Proprietary ratio: -
Fixed Assets
Proprietary Ratio =
Proprietary Funds
TABLE 8-9
Year Fixed Assets Proprietary
Funds
Proprietary
Ratio
2011-12 21869645.79 13039976.68 1.68
2012-13 19411989.08 19244886.92 1.01
2013-14 18826233.54 17819834.55 1.06
In 2011-12 ratio was 1.68 and still decline next two years. Because of owner
increases their share capital for future business potential.
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
1.8
2011-12 2012-13 2013-14
ProprietaryRatio
Proprietary Ratio

D. Profitability ratios:
1. Gross Profit ratio: -
Gross Profit
Gross Profit Ratio = x 100
Net Sales
TABLE 8-10
Year Gross Profit Net Sales Gross Profit
Ratio
2011-12 18284492 109693902.00 16.67%
2012-13 14943358 126272486.53 11.83%
2013-14 15791424 141704938.70 11.14%
In 2011-12 ratio was 16.67 and next two years it shows decline phase.
So the operating expenses of company increase year by year.
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
14.00%
16.00%
18.00%
2011-12 2012-13 2013-14
Gross Profit Ratio
Gross Profit Ratio

2. Net Profit ratio: -
Net profit
Net Profit Ratio = x 100
Net Sales
TABLE 8-11
Year Net Profit Net Sales Net Profit
Ratio
2011-12 1196837.47 109693902.00 1.09%
2012-13 2268970.61 126272486.53 1.80%
2013-14 2719008.00 142103276.15 1.91%
In 2011-12 ratio was 1.09 and increased year by year. So as sales increases
profit also increases and company are more efficient.
0.00%
0.20%
0.40%
0.60%
0.80%
1.00%
1.20%
1.40%
1.60%
1.80%
2.00%
2011-12 2012-13 2013-14
Net Profit Ratio
Net Profit Ratio

3. Return on Assets: -
Net Profit
Return on Assets = x 100
Total Assets
TABLE 8-12
Year Net Profit Total Assets Return on
Assets
2011-12 1196837.47 86764479.75 1.38%
2012-13 2268970.61 87478905.98 2.59%
2013-14 2719008.00 91518352.15 2.97%
In 2011-12 ratio was 1.38 and it increased year by year so assets are more efficient to
generate profit. But still is huge scope available.
0
0.5
1
1.5
2
2.5
3
2011-12 2012-13 2013-14
Return on Assets
Return on Assets

4. Return on Capital Employed: -
Return on Net Profit
Capital Employed = X 100
Capital Employed
TABLE 8-13
Year Net Profit Capital
Employed
Return on
Capital
Employed
2011-12 1196837.47 44528653.33 2.69%
2012-13 2268970.61 37912825.23 5.98%
2013-14 2719008.00 31748463.49 8.56%
In 2011-12 ratio was 2.69 and it increases next two year. So the management of
available capital in current assets and fixed assets are proper and company’s
investors get more returns out of their investment.
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
7.00%
8.00%
9.00%
2011-12 2012-13 2013-14
Return on Capital Employed
Return on Capital Employed

5. Return on Shareholders fund : -
Net Profit
Return on shareholderfund = X 100
Equity + Reserve &surplus
TABLE 8-14
Year Net Profit Equity +R&S Return on
shareholder
fund
2011-12 1196837.47 13039976 9.17%
2012-13 2268970.61 19244887 11.78%
2013-14 2719008.00 17819834 15.25%
In 2011-12 ratio was 9.17 and next two years’ increases. So the management
of equity fund is also efficient and return on shareholder funds also high.
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
14.00%
16.00%
2011-12 2012-13 2013-14
Return on shareholder fund
Return on shareholder fund

FINDINGS
 Liquid ratios:
1. Current Ratio: Ideal Current ratio is 2:1 & Company’s current ratio not on to
that liquidity position. So company’s investment in current assets is less &
current liabilities increases year by year.
2. Quick Ratio: Ideal Quick ratio is 1:1. In 2011-12 reach on that in next two
year it shows decline trend. So company is did not having sufficient quick
assets or high quick liabilities.
There is a scope to Improve Company’s Liquidity Position just like the
way they have shown efficient Fund Management.
 Turnover ratios:
1. Fixed Assets Turnover Ratio: In 2011-12 Ratio was 5.01 and it increased
year by year so company are more Efficient & its sales generating ability to
investment in fixed assets is also high.
2. Current Assets Turnover Ratio: In 2011-12 Ratio was 1.75 and increases
next two years. So the firm’s sales increases as increases the current assets and
company’s current assets are efficient.
3. Working Capital Turnover Ratio: In 2012-13 ratio was 8.03 and increased
in next year directly 15.44. So due to that there is huge investment required in
working capital for as high business potential.
4. Inventory Turnover Ratio: In 2011-12 ratio was 4.14 and its increases next
two years. So ratio is not too high or too low and inventory movement is also
high due to that company’s carrying cost decreases.
5. Capital Turnover Ratio: In 2011-12 ratio was 2.46 and its increases next two
years although capital investment decreases and sales increase.
Fund management of company is effective and efficient to generate the
sales.

 Solvency ratios:
1. Debt Equity Ratio: In 2011-12 ratio was 2.41 and it shows decreased trend.
Debts are more than equity, so its means margin of safety for creditors or
investors are more.
2. Proprietary Ratio: In 2011-12 ratio was 1.68 and still decline next two years.
Because of owner increases their share capital for future business potential.
Company’s capital structure is mostly depending on own or equity
sources.
 Liquidity ratios:
1. Gross Profit Ratio: In 2011-12 ratio was 16.67 and next two years it shows
decline phase. So the operating expenses of company increase year by year.
2. Net Profit Ratio: In 2011-12 ratio was 1.09 and increased year by year. So as
sales increases profit also increases and company are more efficient.
3. Return on Assets: In 2011-12 ratio was 1.38 and it increased year by year so
assets are more efficient to generate profit. But still is huge scope available.
4. Return on Capital Employed: In 2011-12 ratio was 2.69 and it increases
next two year. So the management of available capital in current assets and
fixed assets are proper and company’s investors get more returns out of their
investment.
5. Return on Shareholders Fund: In 2011-12 ratio was 9.17 and next two
years’ increases. So the management of equity fund is also efficient and return
on shareholder funds also high.
Profitability position of company good but Operating expenses of
company increases year by year.

SUGGESTIONS
1. Company current ratio is not in ideal position as 2:1 so company improve their
current assets investment or reduce current liability in order to improve their
current ratio.
2. Ideal quick ratio is 1:1 but company ratio are not on to that so company
increase their cash balance & other quick assets in order to increase their
liquidity position.
3. Fixed assets turnover ratio of company is increase year by year so company
maintain this position.
4. Current assets turnover ratio increases so company maintains this growth
continuously.
5. Working Capital investment should increase as ratio shown high increment.
6. Inventory turnover ratio is increases continuously so company saved their
carrying cost in order to maintain the progress.
7. Capital turnover ratio is increases as capital employed decreases so capital
structure of company is appropriate and company maintains it.
8. Solvency position of company is good because of their capital structure and
company maintains this.
9. Gross profit ratio of company is decreases year by year because of operating
expenses increases so company work on to that and reduce their operating
expenses.
10. Net profit ratio of company increases as sales increases so company use
different strategies to increases there sales or appoint person for that work.
11. Return on shareholder fund and capital employed is high so company reduce
their returns and kept some money to reserve for future course action in
business.

CONCLUSION
In project period all company member give many information in this project I
Calculate some ratio this ratio is useful interpret company financial position
with this study here I conclude that, liquidity position of company is not good
so company improve this.
Turnover ratios of company increases continuously and Fund management of
company is effective and efficient to generate the sales.
Solvency position of company are good and capital structure of company
mostly relay on equity or own sources and due to that capital more expensive.
Profitability position of company good but Operating expenses of company
increases year by year.
In overall financial position of company is good and some improvement are to
be needed.
This project definitely guides the company for formulating the financial
strategies in the future.

Chapter -13
Learning through
The Project

Learning from project
I have done my summer internships in the company which is Suyash metal pressing
Pvt. Ltd. This company is basically offering the industrial products like fan cover
&more metal products to companies like ABB, L&T, Crompton & greaves ltd,
Marathon etc.
I had joined Suyash metal as a intern on 15th may 2014 for 2 month. There my work
was to prepare a company profile and analyze there financial statement. They taught
me checking of the statements of balance sheet, profit loss account &various files.
There I came to know a brief information about various department like HR, Sales
dept., R&D dept., account dept, Quality dept. During my project they not only gave
me the information about sales & purchase the meter but also taught me how to deal a
customer’s &how to entries in tally.
I Study financial statement of company & I calculate various ratios which is mention
in data analysis. That shows the complete financial position of the company & I came
to know that the company needs to change its current financial planning &should
adopt sound financial position so company increased liquidity and reduce operating
expenses due to high returns to stakeholders.

BIBLIOGRAPHY
Books:
 Financial Management
Khan and Jain
 Research Methodology
C.R. Kothari.
Internet sites:
 http://en.wikipedia.org/wiki/Financial_statement
 http://en.wikipedia.org/wiki/Financial_ratios
 http://cpaclass.com/fsa/ratio-01a.htm
 http://beginnersinvest.about.com/od/financialratio/Financial_Ratios.htm
 www.suyashengg.com

PROFIT & LOSS ACCOUNT FOR THE YEAR 31-3-12 TO 31-3-14
Particular 2011-12 2012-13 2013-14
REVENUES
Sales/Turnover
Miscellaneous
Income
TOTAL
EXPENSES
Cost of material
Consumed
Changes in
Inventories of
finished goods work
-in-progress and
stock in trade
Employee benefit
Expenses
Financial costs
Depreciation and amortization
expenses
Other expenses
Net profit
TOTAL
109693902.00
345174.36
110039076.36
85358721.27
-6177108.00
4195157.00
4957027.56
4224124.35
16284316.71
1196837.47
110039076.36
126272486.53
535917.50
126808404.03
81743113.64
-938072.00
4687166.00
6046959.25
3414252.26
29586014.27
2268970.61
126808404.03
141704938.70
398337.45
142103276.15
91440051.31
-2307635.00
6797596.85
5100225.20
3880566.64
34473463.15
2719008.00
142103276.15

BAL SHEET AS ON 31-3-2012TO 31-3-2014
Particular 2011-12 2012-13 2013-14
EQUITY AND
LIABILITIES
Share capital
Reserves &
Surplus
Long term
Borrowings
Short-term
Borrowings
Trade payables
Other current
Liabilities
TOTAL
TOTAL ASSETS
Fixed Assets
(-) Depreciation
Non-current
Investments
Other non-current
Assets Investment
Current investment
Inventories
Trade receivables
4000000.00
9039976.68
31488676.65
17606211.03
24088717.38
540898.00
86764479.75
42566968.61
20697322.83
21869645.79
0.00
2277241.35
600200.00
16543848.00
36787905.12
12080000.00
7164886.92
18667938.31
19152159.75
29823924.00
589997.00
87478905.98
43523564.16
24111575.08
19411989.08
100000.00
2127241.35
600200.00
17979190.00
38436343.30
12080000.00
5739834.55
13928628.94
29588053.18
29533954.48
647781.00
91518252.15
46818375.26
27992141.72
18826233.54
100000.00
3642270.00
600200.00
20856460.00
35774611.60

Cash and cash
Equivalents
Short term loans
and advances
other current assets
TOTAL
2417872.99
1481344.20
4786422.30
86764479.75
3859149.52
2928843.00
2035949.73
87478905.98
2261725.03
6092591.60
3364160.38
91518252.15

Financial Statement Analysis With The Help of Ratios (Suyesh Metel Pressing pvt Ltd Ahmendnagar)

More Related Content

What's hot (20)

Viewers also liked (19)

Similar to Financial Statement Analysis With The Help of Ratios (Suyesh Metel Pressing pvt Ltd Ahmendnagar) (20)

Recently uploaded (20)

Financial Statement Analysis With The Help of Ratios (Suyesh Metel Pressing pvt Ltd Ahmendnagar)