Final project dabur
- 1. Session 2012-13 CONTENTS Sl. No. Topics Pg. No. 1. Introduction 2 2. Objectives of the Study 3 3. Research Design of the Study 4 4. Methodology 4 5. Tools used for Analysis of Financial Statements 4 6. Limitation of the Study 5 7. Company Profile 6 8. Financial Statements Analysis 9-20 9. Ratio Analysis 21 10. Findings (Interpretation) 23 11.Suggestions 24 12.Conclusion 25 13.References 1 | P a g e Roll No.: 68203U09038
- 2. Session 2012-13 INTRODUCTION Financial analysis is the starting point for making plans, before using any sophisticated forecasting and planning procedures. Understanding the past is a prerequisite for anticipating the future. Financial analysis is the process of identifying the financial strength and weakness of the firm by properly establishing relationship between the items of the balance sheet and the profit and loss account. Financial analysis can be undertaken by management of the firm, or by parties outside the firm, viz. owners, creditors, investors and others. The nature of analysis will differ depending on the purpose of the analyst. The story of Dabur began with a small, but visionary endeavour by Dr. S. K. Burman, a physician tucked away in Bengal. His mission was to provide effective and affordable cure for ordinary people in far-flung villages. With missionary zeal and fervour, Dr. Burman undertook the task of preparing natural cures for the killer diseases of those days, like cholera, malaria and plague. Soon the news of his medicines traveled, and he came to be known as the trusted 'Daktar' or Doctor who came up with effective cures. And that is how his venture Dabur got its name - derived from the Devanagri rendition of Daktar Burman. Dr. Burman set up Dabur in 1884 to produce and dispense Ayurvedic medicines. Reaching out to a wide mass of people who had no access to proper treatment. Dr. S. K. Burman's commitment and ceaseless efforts resulted in the company growing from a fledgling medicine manufacturer in a small Calcutta house, to a household name that at once evokes trust and reliability. 2 | P a g e Roll No.: 68203U09038
- 3. Session 2012-13 OBJECTIVES TO THE STUDY The objectives of the study are to evaluate the financial position and performance of the “TATA Consultancy Services” The purpose of the study aims at a critical analysis of the financial statements of the Company. And makes attempt to get better insight about the financial strength and weakness of the organisation by analyzing and interpreting the data for a period of 2 years i.e. 2010 and 2011. To study the financial performance of “TATA Consultancy Services”. To determine the profitability or earning capacity of the concern To analyze the strength and weakness of the organisation on the basis of its financial position. To suggest solution, if any, to the unfavorable financial conditions and financial performance. To act of analysis may also reveal areas where control is deficit and desirable for the efficient operating of the organisation which in turn help to achieve organizational goals. To know the solvency of the company. To make comparative study with other year performance. To know the capability of payment of dividend and interest. To know the profitability of the company in the form of ratios 3 | P a g e Roll No.: 68203U09038
- 4. Session 2012-13 RESEARCH DESIGN OF THE STUDY Research design means a search of facts, answers to question and solution to the problems. It is a prospective investigation. Research is a systematical logical study of an issue or problem through scientific method. It is a systematic and objective analysis and recording of controlled observation that may lead to the development of generalization, principles, resulting in prediction ultimate control of events. Research design is the arrangement of conditions for the collection and analysis of data in manner that aims to combine relevance to the research purpose with relevance to economy. There are various designs, which are descriptive and helpful for analytical research. METHODOLOGY Sources of data can be classified into two groups they are: • Primary data and • Secondary data In this project all the data are analyzed on the basis of secondary data. Secondary Sources: The investigation relied on books, documents, annual report, financial assessments, literature, files and personal observation to have an idea about the organizational set up, functions of financial department and other groups. 4 | P a g e Roll No.: 68203U09038
- 5. Session 2012-13 TOOLS USED FOR ANALYSIS OF FINANCIAL STATEMENTS: The numbers given in the financial statement are not of much use to the decision maker. These numbers are to be analysed over a period of time or relation to other numbers so that significant conclusions could be drawn regarding the strengths and weakness of a business enterprise. The tools of financial analysis help in this regard. These tools include: Comparative Statements; Common-size Statements; Comparative Balance Sheet; Common Size Balance Sheet; Ratio Analysis; Cash flow Statements; Changes in Financial Position. In this project we show or discuss: 1. Profit & Loss Account 2. Balance Sheet 3. Comparative Statements. 4. Common-Size Statements & 5. Comparative Balance Sheet; 6. Common Size Balance Sheet; 7. Ratio Analysis of financial statement of “TATA Consultancy Services” Limitation of the Study: Every work has its own limitation. During the process of conducting the research study the following limitations may be faced:- ♦ Due to insufficient time I have analyzed only two years financial analysis of this company. ♦ Statistical tools used limits the testing and findings ♦ Findings are general. ♦ Due to non-availability of sufficient time and money a detailed study could not be made. 5 | P a g e Roll No.: 68203U09038
- 6. Session 2012-13 COMPANY PROFILE Tata Consultancy Services started in 1968. Mr.F.C Kohli who is presently the Deputy Chairman was entrusted with the job of steering TCS. The early days marked TCS resonsibility in managing the punch card operations of Tisco. The company, which was into management consultancy from day one, soon felt the need to provide solutions to its clients as well.TCS was the first Indian company to make forays into the US market with clients ranging from IBM, American Express, Sega etc. TCS is presently the top software services firm in Asia. During the Y2K buildup, TCS had setup a Y2Kfactory in Chennai as a short-term strategy. Now, with E-business being the buzzword, the factory is developing solutions for the dotcom industries. Today, about 90 percent of TCS' revenue comes from consulting, while the rest from products. TCS has great training facilities. In addition to training around 5 percent of the revenue is spent upon its R&D centres like the Tata Research Design and Development Centre at Pune, along with a host of other centres at Mumbai and Hyderabad. It benchmarked its quality standing, invested heavily in software engineering practices and built intellectual property-in terms of patents,code and branded products. At the same time, it expanded its relationships with technology partners and organisations, increased linkages with academic institutions and incubated technologies and ideas of people within TCS and outside. TCS has already patented 12 E-Commerce solution product packages and has filed six more applications for patent licences. Over $25 million were spent on enhancing hardware and software infrastructure. The company now has 72 offices worldwide. As many as seven centres were assessed at SEI CMM Level 5 last year(3.4 mistakes in a million oppurtunities).These include Chennai, Mumbai, Bangalore, Calcutta, Hyderabad and Lucknow.Several business and R&D relationship with global firms like IBM, General Electric, Unigraphics Solutions have been made. 6 | P a g e Roll No.: 68203U09038
- 7. Session 2012-13 The present CEO of the company is Mr.S.Ramadorai. The companies strength is about 14,000. Tata Consultancy Services Limited (TCS) is engaged in providing information technology (IT) services, business solutions and outsourcing. The Company’s services portfolio consists of application development and maintenance, business intelligence, enterprise solutions, assurance, engineering and industrial services, IT infrastructure services, business process outsourcing, consulting and asset leveraged solutions. TCS also services several other industries, such as life sciences and healthcare, hi-tech, energy, resources and utilities, media and entertainment and travel, transportation and hospitality. On August 31, 2010, Diligenta Limited acquired Unisys Insurance Services Limited (UISL). On October 4, 2010, Tata America International Corporation acquired MS CJV Investments Corporation. On October 8, 2010, the Company acquired SUPERVALU Services India Private Limited. History • 1968 to 2000 Tata Consultancy Services (TCS) was founded in 1968. Its early contracts included providing punched card services to sister company TISCO (now Tata Steel), working on an Inter-Branch Reconciliation System for the Central Bank of India, and providing bureau services to Unit Trust of India. In 1975, TCS conducted its first campus interviews, held at IISc, Bangalore. The recruits comprised 12 Indian Institutes of Technology graduates and three IISc graduates, who became the first TCS employees to enter a formal graduate trainee programme. In 1979, TCS delivered an electronic depository and trading system called SECOM for the Swiss company SIS SegaInterSettle. TCS followed this up with System X for the Canadian Depository System and automating 7 | P a g e Roll No.: 68203U09038
- 8. Session 2012-13 the Johannesburg Stock Exchange. TCS associated with a Swiss partner, TKS Teknosoft, which it later acquired. In 1981, TCS established India's first dedicated software research and development center, the Tata Research Development and Design Center (TRDDC) in Pune. In 1985 TCS established India's first client-dedicated offshore development center, set up for client Tandem. In the early 1990s the Indian IT outsourcing industry grew rapidly due to the Y2K bug and the launch of a unified European currency, Euro. TCS created the factory model for Y2K conversion and developed software tools which automated the conversion process and enabled third-party developer and client implementation. • 2000 to present By 2004, TCS's e-business activities were generating over US$500 million in annual revenues. On 25 August 2004 TCS became a publicly listed company. In 2005 TCS became the first India-based IT services company to enter the bioinformatics market. In 2006 TCS designed an ERP system for the Indian Railway Catering and Tourism Corporation. In 2008 TCS undertook an internal restructuring exercise which aimed to increase the company's agility. TCS entered the small and medium enterprises market for the first time in 2011, with cloud-based offerings. On the last trading day of 2011, TCS overtook RIL to achieve the highest market capitalisation of any India- based company. In the 2011/12 fiscal year TCS achieved annual revenues of over U$10 billion for the first time. 8 | P a g e Roll No.: 68203U09038
- 9. Session 2012-13 Full Services Portfolio Our full services portfolio enables us to provide integrated solutions that help you recognize value quickly by reducing costs and improving business agility. Our full services portfolio combines traditional IT and Remote Infrastructure services with knowledge-based services such as Consulting and Business Process Outsourcing. The efficiency and seamlessness of our engagements makes TCS an excellent partner to companies looking for an integrated approach to managing all IT and operational programs. Our intellectual property—from software products, to technology and business components, to service and process frameworks—is the culmination of our business knowledge, technology excellence and process innovation and helps transform businesses around the world. Industry specific software products in Banking and Financial Services, Insurance, Retail,Healthcare, Telecom, Government and High Tech sectors provide our customers with a competitive edge. Our library of Technology and Domain components enable us to build high quality solutions and bring them to market faster. Our service and process frameworks improve operational efficiencies and business agility. Corporate Facts Who We Are: Tata Consultancy Services is an IT services, business solutions and outsourcing organization that delivers real results to global businesses, ensuring a level of certainty that no other firm can match. What We Offer: TCS offers a consulting-led integrated portfolio of IT and IT- enabled services delivered through its unique Global Network Delivery Model™ (GNDM™), recognized as the benchmark of excellence in software development. 9 | P a g e Roll No.: 68203U09038
- 10. Session 2012-13 Lineage: TCS is part of the Tata group, one of India’s largest industrial conglomerates and most respected brands. History: TCS was established in 1968 as a division of Tata Sons Limited. TCS Ltd. got incorporated as a separate entity on January 19, 1995. Mission: To help customers achieve their business objectives by providing innovative, best-in-class consulting, IT solutions and services. To make it a joy for all stakeholders to work with us. Values: Leading change, Integrity, Respect for the individual, Excellence, Learning and sharing. Workforce: TCS has over 254,000 of the world’s best-trained IT consultants in 44 countries. Full Services Portfolio: Application Development and Maintenance, Business Intelligence,Enterprise Solutions, Assurance Services, Engineering and Industrial Services, IT Infrastructure Services, Business Process Outsourcing, Consulting and Asset Leveraged Solutions. Newer services include Mobility, Connected Marketing, Social Computing, Big Data and Cloud. Industries Serviced: Banking, Financial Services and Insurance, Retail and Consumer Packaged Goods, Telecom, Media and Information Services, High Tech, Manufacturing, Life Sciences and Healthcare, Energy, Resources and Utilities, and Travel, Transportation and Hospitality. Financial Information: Revenue of $10.17 billion, up 24.2% over prior year; operating margin of 27.6% and net income margin of 21.8% (fiscal year ending March 31, 2012). For detailed financial information quarterly statements, annual reports and operating metrics, visit the Financial Information page. Stock Symbols • NSE (National Stock Exchange of India): TCS • BSE (Bombay Stock Exchange of India): 532540 10 | P a g e Roll No.: 68203U09038
- 11. Session 2012-13 Quality Framework: We are the world’s first organization to achieve an enterprise-wide Maturity Level 5 on CMMI® and P-CMM® based on SCAMPISM , the most rigorous assessment methodology. TCS Integrated Quality Management System (iQMS) integrates processes, people and technology maturity through various established frameworks and practices, including IEEE, ISO 9001: 2000, CMMi, SW-CMM, P-CMM and Six- Sigma. Board of Directors: TCS has 11 non-executive and two executive board members. Leadership Team: • N Chandrasekaran, Chief Executive Officer and Managing Director • S Mahalingam, Chief Financial Officer and Executive Director The TCS Advantage: Features like TCS’ GNDM™, Customer-centric Engagement Model, Full Services Portfolio, and Innovation Labs and Co-innovation Network (COIN™) set us apart. Read more about the TCS advantage here. Alliances: TCS has a strong network of strategic and solution partners with a joint objective of helping its customers become high-performance businesses by maximizing the value of their technology investments. Visit TCS’ Global Alliances. Subsidiaries: TCS has 58 subsidiaries. 11 | P a g e Roll No.: 68203U09038
- 12. Session 2012-13 12 | P a g e Roll No.: 68203U09038
- 13. Session 2012-13 COMPARATIVE STATEMENT: It refers to the comparison of financial statements of an enterprise for two consecutive periods. It measures the efforts of the farm by giving a clear sight of the performance. Comparative statements are of two types. • Comparative Income Statement • Comparative Balance Sheet. The comparative income statements. The comparative income statements reflect the operating activities of the business where as the comparative. Balance Sheet reflects the finance & investing activities of the enterprise. In such statement the figures are shown as. 1) In terms of absolute monetary value. 2) Increase/Decrease in absolute value. 3) Proportionate changes by way of Percentage. 13 | P a g e Roll No.: 68203U09038
- 14. Session 2012-13 PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED As At 31ST MARCH, 2011 Rs. in Crores For the year ended on 31.03.2011 For the year ended on 31.03.2010 INCOME Sales Less Returns 329536.00 287954.00 Less : Excise Duty 3099.00 2358.00 Net Sales 326437.00 285596.00 Other Income 4946.00 4164.00 Total Income 331383.00 289760.00 EXPENDITURE Cost of Materials 165065.00 137393.00 Manufacturing Expenses 8891.00 7618.00 Payments to and provision for Employees 23084.00 21234.00 Selling and Administrative expenses 67991.00 65706.00 Financial Expenses 1293.00 1349.00 Miscellaneous expenditure written off 1660.00 566.00 Depreciation 3773.00 3191.00 Total Expenditure 271757.00 237057.00 Balance being Operating Net Profit before Taxation 59626.00 52703.00 Provision for Taxation Current 11940.00 8966.00 Deferred 545.00 404.00 Net Profit after Taxation 47141.00 43333.00 Balance brought forward 52691.00 42894.00 Provision for Taxation of earlier years written back (19.00) (21.00) Provision for Taxation of earlier years 19.00 2.00 99832.00 86208.00 APPROPROATIONS Interim Dividend 8704.00 6498.00 Proposed Final Dividend 11315.00 10862.00 Final Dividend (for earlier year) 15.00 0.00 Corporate Tax on Interim Dividend 1446.00 1104.00 Corporate Tax on Proposed Dividend 1836.00 1846.00 Excess Corporate Tax dividend of earlier year provided written back (40.00) 0.00 Transferred to Capital Reserve 134.00 207.00 Transferred to General Reserve 5000.00 13000.00 Balance carried over to Balance Sheet 71422.00 52691.00 99832.00 86208.00 Earning Per Share (in Rs.) after consideration of extraordinary item Basic 2.71 2.50 Diluted 2.69 2.49 Earning per Share (In Rs) without consideration of extraordinary items Basic 2.71 2.50 Diluted 2.69 2.49 14 | P a g e Roll No.: 68203U09038
- 15. Session 2012-13 BALANCE SHEET FOR THE YEAR ENDED As At 31ST MARCH, 2011 Rs. in Crores As on 31.03.2011 As on 31.03.2010 FUNDS EMPLOYED Shareholder's Funds Capital 17407 8690 Reserves & Surplus 92709 66248 Loan funds 110116 74938 Secured Loans 1757 2427 Unsecured loans 23987 8570 25744 10997 Deferred tax liability (Net) 1740 1195 Total 137600 87130 APPLICATION OF FUNDS Fixed assets Gross Block 76688 68723 Less : Depreciation 26932 23628 Net Block 49756 45095 Capital work in progres (including capital advances) 1192 2331 50948 47426 Investments 51923 34851 Current Assets , Loans and Advances Inventories 46058 29844 Sundry Debtors 20246 13048 Cash & Bank Balances 19241 16391 Loans and Advances 44053 32512 129598 91795 Less : Current Liabilities and Provisions Liabilities 49628 43206 Provisions 53536 44010 103164 87216 Net current Assets 26434 4579 Miscellaneous Expenditure 8295 274 Total 137600 87130 15 | P a g e Roll No.: 68203U09038
- 16. Session 2012-13 COMPARATIVE INCOME STATEMENT A Comparative Income Statement gives the reader a frame of reference for comparing the current year amounts. Comparative income statement presents both the current period (typically current month or current year to date) compared to normally a prior year same period. comparative income statement consist of two columns of amounts (one is of current year and another is of prior year) appearing to the right of the account titles or descriptions. The amounts are shown side by side to make it easy to compare the two periods presented. Comparative income statement may also refer to this same type of comparison for current period to budget for the same period. 16 | P a g e Roll No.: 68203U09038
- 17. Session 2012-13 COMPARATIVE INCOME STATEMENT For the Year 2010 & 2011 In comparison to Absolute Change Rs. in Crores Particulars Absolute Amount 2012 Absolute Amount 2011 Absolute Change % Change INCOME Gross Sales 329536.00 Less: Excise Duty 3099.00 Net sales 326437.00 Other Income 4946.00 Total(Rs.) 331383.00 EXPENDITURE Manufacturing and other expenses 266691.00 Depreciation 3773.00 financial expenses 1293.00 Total 271757.00 Profit for the year before Tax 59626.00 Provision for Taxation Current 11940.00 Deferred 545.00 Profit After Tax 47141.00 Balance of profit brought forward 52691.00 provision for Taxation of earlier years written back (19.00) provision for Taxation of earlier years 19.00 Balance available for appropriation 99832.00 Appropriations Interim Dividend 8704.00 Proposed Final Dividend 11315.00 Final Dividend (for earlier year) 15.00 Corporate Tax on Interim Dividend 1446.00 Corporate Tax on Proposed Dividend 1836.00 Excess Corporate Tax dividend of earlier year provided written back (40.00) Transferred to Capital Reserve 134.00 Transferred to General Reserve 5000.00 Balance carried over to Balance Sheet 71422.00 99832.00 Earning Per Share (in Rs.) after consideration of extraordinary item Basic 2.71 Diluted 2.69 Earning per Share (In Rs) without consideration of extraordinary items Basic 2.71 2.50 Diluted 2.69 2.49 17 | P a g e Roll No.: 68203U09038
- 18. Session 2012-13 COMPARATIVE BALANCE SHEET A comparative balance sheet presents side-by-side information about an entity's assets, liabilities, and shareholders' equity as of multiple points in time. For example, a comparative balance sheet could present the balance sheet as of the end of each year for the past three years. Another variation is to present the balance sheet as of the end of each month for the past 12 months on a rolling basis. In both cases, the intent is to provide the reader with a series of snapshots of a company's financial condition over a period of time, which is useful for developing trend line analyses (though this works better when the reader has the entire set of financial statements to work with and not just the balance sheet). 18 | P a g e Roll No.: 68203U09038
- 19. Session 2012-13 COMPARATIVE BALANCE SHEET For the Year 2010 & 2011 In comparison to Absolute Change Rs. In Crores Particulars Amount 2011 Amount 2010 Absolute Change % Change SOURCES OF FUNDS Shareholder’s Funds Share Capital 17421 17407.00 8717.00 100.31 Reserves & Surplus 112906 92709.00 26461.00 39.94 Total 110116.00 35178.00 46.94 Loan Funds Secured Loans 1757.00 (670.00) (27.61) Unsecured loans 23987.00 15417.00 179.89 deferred tax liability (Net) 1740.00 545.00 45.61 Total 137600.00 50470.00 57.92 APPLICATION OF FUNDS Fixed Assets Gross Block 76688.00 7965.00 11.59 Less: Depreciation 26932.00 3304.00 13.98 Net Block 49756.00 4661.00 10.34 Capital Work-in-progress 1192.00 (1139.00) (48.86) 50948.00 3522.00 7.43 INVESTMENTS 51923.00 17072.00 48.99 Current Assets, Loans & Advances Inventories 46058.00 16214.00 54.33 Sundry Debtors 20246.00 7198.00 55.17 Cash & Bank Balances 19241.00 2850.00 17.39 Loans & Advances 44053.00 11541.00 356.04 129598.00 37803.00 41.18 Less: CURRENT LIABILITIES & PROVISIONS Current Liabilities 49628.00 43206.00 6422.00 14.86 Provisions 53536.00 44010.00 9526.00 21.65 103164.00 87216.00 15948.00 18.29 Net Current Assets 26434.00 4579.00 21855.00 477.29 Miscellaneous Expenditure 8295.00 274.00 8021.00 2927.37 Total 137600.00 87130.00 50470.00 57.92 19 | P a g e Roll No.: 68203U09038
- 20. Session 2012-13 COMMON SIZE INCOME STATEMENT Common size income statements are basically used for analysis purposes where each item on the face of income statement is expressed in relation to revenue so that users can easily understand that how different expenses and other incomes and gains adds up to gross profit and net profit. This is widely used in ratio analysis and serve as a vital tool start up a financial analysis of the key areas of performance and then detailed ratios are applied on each item afterwards. Although common size income statements do not provide a detailed financial analysis of income statement and its items but it does help in comparing the financial performance of the company with the preceding accounting periods known as trend-analysis or time-series analysis. We can also compare financial information of one company with other companies in the industry which is known as cross-sectional analysis. The good thing about common-size analysis is that it is really easily to do and also interpreting the results is not so difficult. Even the users who are not proficient in analysis techniques can gain insight of company’s financial performance to some extent from common size financial statements i.e. income statement and statement of financial position. 20 | P a g e Roll No.: 68203U09038
- 21. Session 2012-13 COMMON SIZE INCOME STATEMENT FOR YEAR 2010 & 2011 Rs. in Crores. Amount 2011 Amount 2010 % of Sales 2011 % of Sales 2010 % Change Net Sales 326437.00 285596.00 100.00 100.00 0.00 (-) Operating Expenses 197040.00 166245.00 60.36 58.21 2.15 Operating Profit 129397.00 119351.00 39.64 41.79 (2.15) (-) Non Operating Expenses 70944.00 67621.00 21.73 23.68 (1.94) (+) Non Operating Income 4946.00 4164.00 1.52 1.46 0.06 Net Profit Before Tax & Depreciation 63399.00 55894.00 19.42 19.57 (0.15) (-) Depreciation 3773.00 3191.00 1.16 1.12 0.04 Net Profit Before Tax 59626.00 52703.00 18.27 18.45 (0.19) Tax (Net of Deferred Tax) 12485.00 9370.00 3.82 3.28 0.54 Net Profit 47141.00 43333.00 14.44 15.17 (0.73) 21 | P a g e Roll No.: 68203U09038
- 22. Session 2012-13 COMMON SIZE BALANCE SHEET A common size balance sheet presents not only the standard information contained in a balance sheet, but also a column that notes the same information as a percentage of the total assets (for asset line items) or as a percentage of total liabilities and shareholders' equity (for liability or shareholders' equity line items). It is extremely useful to construct a common size balance sheet that itemizes the results as of the end of multiple time periods, so that you can construct trend lines to ascertain changes over longer time periods. The common size balance sheet is also useful for comparing the proportions of assets, liabilities, and equity between different companies, particularly as part of an industry analysis or an acquisition analysis. 22 | P a g e Roll No.: 68203U09038
- 23. Session 2012-13 COMMON SIZE BALANCE SHEET For the Year 2010 & 2011 In comparison to Capital Employed Rs. in Crores Particulars Amount 2011 Amount 2010 % of capital Employed 2011 % of capital Employed 2010 % Change Fixed Asset 50948.00 47426.00 37.73 54.43 (16.70) Investment 51923.00 34851.00 37.73 40.00 (2.26) Working Capital i. Current Asset 129598.00 91795.00 94.18 105.35 (11.17) ii. Current Liability 103164.00 87216.00 74.97 100.10 74.97 Working Capital (i-ii) 26434.00 4579.00 19.21 5.26 13.96 Miscellaneous Expenditure 8295.00 274.00 6.03 0.31 5.71 Capital Employed (A+B+C) 137600.00 87130.00 100.00 100.00 0.00 (-)Deferred Tax Net 1740.00 1195.00 1.26 1.37 (0.11) (-) Long Term Loan 25744.00 10997.00 18.71 12.62 6.09 110116.00 74938.00 80.03 86.01 (5.98) Shares Holders Fund Share Capital 17407.00 8690.00 12.65 9.97 2.68 Reserve & Surplus 92709.00 66248.00 67.38 76.03 (8.66) Total Share Holders Fund 110116.00 74938.00 80.03 86.01 (5.98) 23 | P a g e Roll No.: 68203U09038
- 24. Session 2012-13 RATIO ANALYSIS: Ratio analysis is a powerful tool of financial analysis. A ratio is defined as ‘the indicated quotient of two mathematical expressions’ and “The relationship between two or more things.” In financial analysis, a ratio is used as a benchmark for evaluating the financial position and performance of a firm. The absolute accounting figures reported in the financial statements do not provide a meaningful understanding of the performance and financial position of firm. A. Short term Solvency:- Current Ratio: It is an indicator used to measure the Short term Solvency of a company. The ideal ratio is 2:1 Current ratio = Current Asset/ Current Liability = 129598/103164= 1.25:1 It indicates that the current ratio of the company is above the norm & hence the short term solvency of the company is sound enough to meet the short term obligations of the company. B. Long Term Solvency: Debt equity Ratio: It is a measure to ascertain the long term financial policies of Company. The ideal ratio is 1:1 Debt equity ratio= Long Term Debt/Share Holders Funds = 25744/ 110116=0.23:1 The company does have a debt equity ratio higher than the standard for the company. Or in other words the company has enough share holders funds to repay the debts. C. Capital Turnover Ratio: It shows whether the capital utilization leads to higher profit or not. Capital Turnover Ratio= Sales / Capital Employed = 326437/ 137600=2.37:1 The capital has been utilized properly as indicated from the above ratio. 24 | P a g e Roll No.: 68203U09038
- 25. Session 2012-13 D. Fixed asset Turnover ratio: It shows the extent to which the investment of the fixed assets contributes to words sales: Fixed asset turnover ratio: Net Sales/Net Fixed Assets = 326437/ 50948 = 6.41:1 It indicates that fixed assets contribute a much to the sales in the current year. E. Net Working Capital Turnover Ratio: It shows the unit utilized in the working capital to which extent it generates sales. Net working capital turnover ratio= Sales / Net Working Capital = 326437/ 26434= 12.25:1 It shows the working capital was properly utilized. F. Net profit Ratio: It measures the relationship between Net Profit & Net Sales. It determines the overall probability due to various factors such as operational efficiency, trading on equity etc. Higher the ratio greater is the capacity of the firm to withstand adverse economic condition. Net Profit Ratio = Net Profit x 100/ Net Sales = 47141/ 326437X 100= 14.44% The company does maintain a healthy net profit ratio, however there has been an decrease in net profit ratio as the company had a net profit ratio of 14.44% in the previous year. Therefore it can be said that the company has not been able to hold on to the previous year results during the current year. 25 | P a g e Roll No.: 68203U09038
- 26. Session 2012-13 FINDINGS: (INTERPRETATION) Analysis of Comparative Income Statement On comparison of the above two years figures it is observed that the sales of the company has increased by 14.30% over previous year and other incomes have increased by 18.78%. Direct costs have increased by 14.70% and interest (net) has decreased by 4.15% over previous year. Profit before tax has increased by 13.14% and profit after tax has increased by 8.79% over previous year. The company performed better during the current year. Dividend proposed is Rs.11315 crores in the current year against Rs.10862 Crores in the previous year. The earnings per share have also increased by 8.40% over previous year. It can therefore be said that the company has been able to satisfy both the customers and the share holders during the current fiscal. Analysis of Comparative Balance Sheet On comparison of balance sheet of above two years it is observed that the fixed assets have increased by 10.34% over previous year. The capital work in progress has decreased by Rs.1139 Crores which shows that few of the capital works in progress has been completed during the current year. The loan funds have increased by 134.10% which implies that the company has raised a further long term loan. Sundry debtors have increased by 55.17% which means that the company has not been able to decrease the credit sales. Cash & bank balance have increased by a whooping Rs. 2850 crores which implies that the company is having surplus funds unutilized. The total current assets have increased by 41.18% over previous year where current liabilities has been increased by a 18.29% over previous year. Analysis of Common Size Income Statement On comparison of the income statement figures in relation to sales it is observed that the operating expenses have increased by 2.15% which is reflected in the decrease in operating profit by the equal amount. There has also been an increase in non operating income by 0.06% over previous year. The profit before tax has also decreased by 0.19% over previous year and the profit after tax has decreased by 0.73 over previous year. It can therefore be said that the company has not performed better than the level operation of previous year during the current year. Analysis of Common Size Balance Sheet On comparison of the balance sheet figures in relation to the total capital employed it is observed that fixed assets have increased by 10.34% and investments have increased by 48.99% over previous year. Current assets have increased by 41.18% and current liabilities have increased by 18.29% over previous year in relation to the total capital employed. The total capital has increased by 50470 crores over previous year. It can be said that the short term solvency of the company is in dire straits. 26 | P a g e Roll No.: 68203U09038
- 27. Session 2012-13 SUGGESTIONS: In my opinion and to the best of my knowledge , It can be said that although the company has fared up well on basis of operations in the current but the financial status of the company is not well. So in order to increase the performance of the company there should be an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchases of inventory and fixed assets and the sale of goods and services. However the working capital of the company is in a positive which is a good sign and the only weak link of the company as a result of increase in short term loans. Sundry debtors have increased significantly as compared to its previous year figure .So there should be an adequate internal control over it’s credit sales. 27 | P a g e Roll No.: 68203U09038
- 28. Session 2012-13 CONCLUSION: The company has been able to increase its sales but there was a decrease in profit during the year as there was a significant increase in operating expenses during the year. The operations of the company has not therefore improved as compared to the previous year. The net profits ratio has not increased which proves that the company has not been able to control the costs effectively. The depreciation has been increased significantly as a result of huge addition in fixed asset. Cash & bank balance have increased by a whooping which implies that the company is having surplus funds unutilized. The current assets of the company are enough to meet the current liabilities. The loan funds have been increased which implies that the company has been raised further loan. Dabur holding the highest share market and does enjoy a good credibility which is evident in the amount of current liabilities held at the balance sheet date but the current ratio should be at least 1:1 keeping in view the size of the company and its activities. From the share holder’s point of view the company has been a profitable venture as the proposed dividend has increased. The earning per share has increased in comparison to previous year as a result of decrease in profit after tax. 28 | P a g e Roll No.: 68203U09038
- 29. Session 2012-13 References: 1. General Accountancy by Gupta and Agarwal 2. Fundamental of Accounting By S PAUL 3. Advanced Accounting by Paul M. Fischer, William J. Taylor, Rita H. Cheng, 4. Accounting Information Systems by Marshall B. Romney, Paul John Steinbart 5. Management Accounting by Tata McGraw Hill – Khan & Jain Newspapers & Magazines: 1. Economics Times 2. India Today 3. Business Times Websites: 1. www.dabur.com 2. www.equitymaster.com 3. www.moneycontrol.com 4. www.google.com 29 | P a g e Roll No.: 68203U09038