a study on financial performance analysis at cee vee

S.NO TITLE PAGE NO

1.

Abstract

List of tables

List of figure

1 Introduction

1.1 Industry Profile

1.2 Company Profile

1.3 Objectives of the study

1.4 Scope of the study

1.5 Limitations of the study

1. 6Review of literature

01

04

11

16

17

17

18

2. Research Methodology 21

3. Data Analysis and Interpretation 23

4. Findings 72

5. Suggestion 74

6. Conclusion 75

Appendix 76

Bibliography 77

CONTENTS

LIST OF TABLES

TABLE NO PARTICULRS PAGE

NO3.1.1 Current ratio 24

3.1.2 Liquid ratio 263.1.3 Absolute liquidity ratio 283.2.1 Debt equity ratio

30

3.2.2 Proprietary ratio32

3.3.1 Stock turnover ratio34

3.3.2 Fixed assets turnover ratio36

3.3.3 Working capital turnover ratio38

3.3.4 Total assets turnover ratio40

3.3.5 Capital turnover ratio42

3.3.6 Return on total assets44

3.4.1 Gross profit ratio46

3.4.2 Net profit ratio 48

3.4.3 Expenses ratio50

3.5.1 Common Size Income Statement (2006, 2007)52




3.6.1 Common Size Balance Sheet (2006, 2007)56




3.7.1 Comparative income Statement (2006, 2007)60




3.8.1 Comparative Balance Sheet (2006, 2007)64



3.8.4 Comparative Balance Sheet (2009, 2010) 673.9.1 Trend income statement

68

3.9.2 Trend Balance sheet71

LIST OF CHARTS

FIGURE NO

PARTICULRS PAGE NO

3.1.1 Current ratio 25

3.1.2 Liquid ratio 27

3.1.3 Absolute liquidity ratio 29

3.2.1 Debt equity ratio 31

3.2.2 Proprietary ratio 33

3.3.1 Stock turnover ratio 35

3.3.2 Fixed assets turnover ratio 37

3.3.3 Working capital turnover ratio 39

3.3.4 Total assets turnover ratio 41

3.3.5 Capital turnover ratio 43

3.3.6 Return on total assets 45

3.4.1 Gross profit ratio 47

3.4.2 Net profit ratio 49

3.4.3 Expenses ratio 51

ABSTRACT

ABSTRACT

Finance has been described as a lubricant of economic activity, without which the

entire business will grind to a halt. And money has been aptly described by monitory

economist called Geoffrey Crowther, “Finance as the essential invitation on which all the

rest is based. With unlimited wants and limited financial resources, the financier is

concerned with what is produced, requirements of funds (liquid and illiquid ), allocation

of funds selection of developmental priorities, determination of gestation periods, proper

monitoring of accounts to avoid cash flow problems and to ensure the profitability of the

enterprises.

The main objective of financial performance analysis to judge the financial health

the undertaking and to judge the earning performance of the organization and to provide

the company with appraise for investment opportunity or potentiality. This analysis is

carried over about five years. This project deals with the financial performance analysis

in the organization. The ratio analysis, comparative analysis and trend analysis are the

tools to analyze the financial performance of the company.

The study reveals that the financial performance of the organization has been

better. But the company's profit over the last two years has been decreasing when

compared to previous years. So the management should take necessary steps to improve

their financial position

.

.

1

INTRODUCTION

2

CHAPTER-I

INTRODUCTION OF THE STUDY

Financial statement:

Financial statements contain a wealth of information, which if properly read,

analyzed or interpreted can provide valuable insights into a firm’s performance and

position. Also it is the starting point for making plan, before using any sophisticated

forecasting and planning procedure. By analyzing these statements, firm can evaluate its

past, present, projected performance etc.

Usually management would be particularly interested in knowing the financial

strength of firm to make their best use and to be able to spot out the financial weakness of

the firm to take suitable corrective action. The future plan of the firm should be laid down

in view of the firm’s financial strength and weakness. In short, through financial analysis

and interpretation it helps effectively the user for decision-making process

Meaning of financial managementFinancial management is that managerial activity which is concerned with the

planning and controlling of the company’s financial resources.

In other words the financial management is basically concerned with two important

aspects:

1) Raising of the required funds at the lower cost ;

2) Making optimum use of funds so raised

The finance manager has to ensure the rational decision making efforts at the each

any every successive stages of pre – investment and post investment. In the absence of

proper appraisal system and evaluation of managerial abilities, there will be misallocation

morality and lopsided growth in undesired way leading to holocaust of economic wealth

3

Financial statementA financial statement is an organized collection of data according to logical and

consistent accounting procedures. Its purpose is to convey an understanding of some

financial aspects of a business firm. It may show a position at a moment of time as in the

case of a balance sheet, or may reveal a series of activities over a given period of time, as

in the case of an income statement.

Thus, the term financial statement generally refers to the basis statements;

i) The income statement

ii) The balance sheet

iii) A statement of retained earnings

iv) A statement of charge in financial position in addition to the above two

statement.

Financial statement analysis:

It is the process of identifying the financial strength and weakness of a firm from

the available accounting data and financial statement. The analysis is done by properly

establishing the relationship between the items of balance sheet and profit and loss

account the first task of financial analyst is to determine the information relevant to the

decision under consideration from the total information contained in the financial

statement. The second step is to arrange information in a way to highlight significant

relationship. The final step is interpretation and drawing of inferences and conclusion.

Thus financial analysis is the process of selection relating and evaluation of the

accounting data/information.

Traditional approach to financial statementThe theory of finance, both on the corporate and on the individual investor level also

largely ignores financial statement analysis and interpretation. For example, the extensive

portfolio theory literature is practically devoid of studies integrating financial statement

information with the input requirements of the portfolio model. One of the major

contributors to portfolio theory, the financial analyst, Sharpe provides in this book that

none of which deals with financial statement analysis. It is also interesting to note that

regarding collection on theory on finance usually do not include studies \ related to

4

financial statement analysis. financial statement analysis remains in the initial state of

development of the science of financial management

New Approach to Financial statement AnalysisRecent research on the area signifies the beginning of a new approach which is

mainly characterized by the emphasis on development of financial analysis techniques

within the context of formal decision models. L. Financial statement is thus viewed as

information – processing system designed to provide Data for Decision making models,

such as the portfolio selection model. Bank lending decision models and corporate

financial management models. The purpose of financial statement analysis is to provide

the data required by the model (e.g., predictions of future returns) in the most efficient

(less costly) way.

Importance of Financial Analysis and InterpretationFinancial statements contain a wealth of information, which if properly read, analyzed or

interpreted can provide valuable insights into a firm’s performance and position. Also it

is the starting point for making plan, before using any sophisticated forecasting and

planning procedure. By analyzing these statements, firm can evaluate its past, present,

projected performance etc.

Usually management would be particularly interested in knowing the financial strength

of firm to make their best use and to be able to spot out the financial weakness of the firm

to take suitable corrective action. The future plan of the firm should be laid down in view

of the firm’s financial strength and weakness. In short, through financial analysis and

interpretation it helps effectively the user for decision-making process

This studying contain following analysis:1) comparative analysis statement

2) common-size analysis statement

3) Ratio analysis

4) Trend analysis.

5

INDUSTRY PROFILE

6

1.1 INDUSTRY PROFILE

Footwear is estimated to have started its long history of human use during the

“ICE AGE”, some five million years ago un kind weather conditions are said to have

created necessity for footwear. Other evidence shows that footwear came to use at the end

of the Paleolithic period at about the same time the early human learned the art of leather

training.

Early pieces of footwear were made of wrapping usually made of leather or dried

grasses later on the pieces were developed from an oval piece of leather, which is bound

by a piece of strong leather thongs, sandals which are the first crafted footwear, are the

success of this wrappings.

In Egyptian funeral champers, paintings show the different stages in the

preparation of leather and footwear. The images also show that in Egypt, footwear

depicted power and close the characteristics which are missing in commoner’s footwear.

Egyptian sandals were crafted using straw, papyrus or palm fiber. Later on Egyptian

women adorned their footwear with precious and jewels.

Material evidences shows that Greeks loved and took good care of their feet by

using different footwear for different activities. Greek women wearing sandals to signify

their social classes. Their footwear signified beauty, elegance, refinement and extra

vagance. Some Greek women used to wear elevated sandals, which created a clacking

sound when the wearer moves.

In Mesopotamia leather wrappings are tied to the feet by a strip of the same

material. Romans on the other hand created other durable leather thongs so their legions

can travel to place on foot. It also believed that foot fetishes began with the Romans.

In Roma, footwear also exhibition social class. The consults were white shoes, the

senators were brown shoes, and the uniform footwear for rest of the regions was a short

pair of books that uncovered the shoes.

But in all those early civilizations, footwear indicated social status. Footwear

consists of garments that are worn over the feet. They are worn mainly for protection and

hygienic, but also for fashion and adornment. Footwear items come from a wide range of

7

materials including leather, rubber canvas, wood and plastic. But early pieces are made

from available materials like straw, leather, crow hide and grasses. When footwear is

assembled, the main components are adhesive, cushion, counter fort heel, insole, laces,

sole, steel, shank, tack, teo puff, tread and welt. Generally footwear is classified in to

books, industrial footwear, shoes and sandals.

Boots are available as cowboy books, galoshes, ski boots, thigh, and length boots

and so on. Industrial footwear includes plastic and rubber loafers, which are used in

laboratories, construction sites and production lines.

Shoes include athletic shoes (or running shoes), climbing shoes, clogs, high heels, marry

janes, moccasins, maker loafers, tap shoes and cross training shoes, sandals on the other

hand includes espadrilles, flip fops thongs, slide one and slippers.

Footwear is considered as an extension of ones personality well maintained

footwear size things about the owner with cleanliness as the most important concern.

INDIAN FOOTWEAR INDUSTRY

India is engrossed with different civilizations, cultures, religious customers and

conversions, climate and socio economic conditions. The esteem conditions one tracks

may be the prime causes for footwear wearing habits.

All over the country, different types of traditional footwear are being produced to

meet the consumer’s preference.

In Maharashtra, ordinary chapels with leather soles and uppers or chapels made

out of leather uppers with leather source called as ‘kothapuri’, ‘gadag’, and

‘karundavadi’. In Gujarat and Rajasthan ‘leather juti’ and ‘Gujarat nagara’, in Orissa,

“kataki chapels”, and in Punjab “plain Panjabi juti” are popular traditional names.

In Punjab, the demand for traditional footwear called as “saadi” and “kisan juti” and the

ladies variety known as janana juti is quite popular. The plain juti type of artistic

footwear made out of tanned leather has great demand in urban and rural areas.

The second popular pattern of footwear in Punjab and Rajasthan is “khasida juti

or embroided upper juti” both the states are well known for this variety artistic footwear.

It is observe that though this pattern is attractive, the comfort is lacking because there is

difference in the contraction of the right or left of the footwear. However those who are

8

habituated to wear the local type from childhood do not express any difficulty since they

do not use any other type of footwear.

In Kerala, Tamilnadu and other parts of the country, customer’s preference for footwear

is mostly determined by fashion, conformability etc..rather than tradition.

INDIAN LEATHER INDUSTRY

The Indian leather industry occupies a place of prominence in the country’s

economy in view of its massive potential for employment, growth and exports. Thus has

been increasing emphasis on its planned development, aimed at optimum utilization of

available raw material for maximize returns especially from exports.

India is the largest livestock holding country 21 percentages, large animals and 11

percent small animals.

Annual production value over as 4 billion.

Annual export value over as 2 billion.

Export growth (AGR) 8.20 percent (2000-2004).

About 2.50 million workforces (30% women).

Promising technology inflow and foreign direct investment.

Top priority to occupied safety and work environment.

Material concern for consumer safety.

PRODUCTS EXPORTED

Leather footwear

Footwear component (shoes, uppers, soler etc.)

Leather garments

Leather goods

Finished leather

9

MAJOR ITEMS OF INDIAN FOOTWEAR

Hides

Skins

Leather footwear

Leather shoe uppers

Non leather footwear

Leather garments

Leather goods

Industrial gloves

Saddler

Indian footwear industry – A critical analysis

In India, the footwear production was in the hands of individual or small scale

sector. In olden day’s rural areas the footwear made was exchange under barter system.

The urbanization, mechanization and change in life style have demanded for mass

production resulted in whole sale and retail sales.

The footwear industry is a significant segment of the leather industry in India.

India ranks second among the footwear producing countries next to China. The industry

is a labour intensive and is concentrated in large scale units, the sandals and uppers

produced in the household and cottage sector.

India produces more of gent’s footwear while the world’s major production is

being ladies footwear. In the case of chapels and sandals, use of non leather material is

prevalent in the domestic market. The major production centers in India are Chennai,

Rainpet, Ambar in Tamilnadu, Mumbai, Kanpur in UP, Jalander in Punjab and Agra. The

following table indicating concentration of units in various parts of the country

10

Region Large & Medium scale industry

Small-scale industry House hold

Tamilnadu 64 31 7Delhi up north 4 8 2Agra, Kanpur 9 34 14

Calcutta 1 3 19Bangalore 6 3 4Mumbai 3 11 0Others 13 10 3

The estimated annual footwear production capacity 1736 million pairs (776

million pairs of leather footwear and 960 million pairs of non leather footwear).

Region using share of total estimated capacities are as follows

Region Leather shoes

Non leather shoes

Leather shoe upper

Leather sandals

Non leather sandals

Tamilnadu 26 5 54 1 0Delhi and up north

10 77 4 1 60

Agra, Kanpur

45 0 32 62 0

Calcutta 12 0 2 3 0Bangalore 3 3 4 0 0

Others 0 13 3 1 40Total 100 100 100 100 100

IMPORT

The global import of footwear (leather and non leather) in terms of value was

around US dolor 43278 billion, accounting a share 63.42 % in the total import of leather

product out of this, import of leather footwear alone accounted for US dolor 26379

million and non leather footwear US dolor 16899 million.

11

EXPORT

India’s export of leather footwear touched US $ 33/million, recording an increase

of 3.29 percent over the preceding year. India thus holds a share of 1.25 percent in the

global import of leather footwear. The major markets for India leather footwear one the

UK, USA, Germany, Italy, France, Middle east and Russia nearly 71 % of India’s exports

of leather footwear is to Germany, UK and Italy. The India’s footwear industry is

provided with institutional infrastructural support through premier institutions like central

leather research institute, Chennai footwear design and development institute, Nodia

national institute of fashion technology New Delhi etc..in the areas of technological

development, design and product development and human resource development.

Now a days wearing footwear is a necessity rather than a fashion for the human

beings. Hence the demand for footwear is also increasing day by day. The different

classes of people using different types of quality of footwear’s depending on their

purchasing power. The middle and lower income groups prefer low cost durable, wear

and tear resistant footwear that can be used in all domestic condition where as the high

income groups prefer the latest type of footwear which are highly costlier. The first

preference of the middle and lower income groups is the poly viny 1 (horide PVC

footwear) which will satisfy all their conditions with regard to the footwear’s.

Popularity of PVC chapels is increasing among the people and it will lead to the demand

for their chapels. As a result almost all footwear companies are trying to shift their

chapels from rubber to the PVC chapels

PVC CHAPPALS

Development in polymer technology coursed the invention of multi purpose raw

material, PVC is a very friendly material and we can convert it in to appropriate form and

size with suitable could comparing to their chemicals, their product has no harmfulness in

human body. At the same time, it is very attractive and becomes an essential product in

human life.

The leading of PVC chapels manufacture from North India especially Delhi, UP,

West Bengal, Bihar etc. in Kerala repressed PVC chapels are products in many part of the

state. Bata’s ,sandals and Actions micro all the alternatives in Kerala market.

12

The PVC footwear will provide longer life, low cost; wearing comfort and durability to

the footwear can be used in all seasons especially in rainy season. By considering all this,

one of the leading footwear company in Kerala, CV footwear manufactures PVC

footwear from virgin materials which after better style, comfort, colors, durability etc.

HILLWOOD GROUP of companies is a partnership firm which is constituted by

Mr.V.Shareef the chairman of the company at Chungam, Feroke. The manufacturing unit

is constituted by him with an investment of Rs.1, 80,000000. The company is concerned

with producing sofitel and soft pu footwear’s and in timber manufacturing, building

works and building materials. The unit is started with producing both Sofitel and Soft Pu

in 2005 itself. It is highly demanded by market.

13

COMPANY PROFILE

14

1.2 COMPANY PROFILEHILLWOOD group of companies is today a leading business entity in south India. This

group has been in the forefront of timber trading and manufacturing business for almost

30 years. The foresighted vision of its promoters and their commitment to quality and

customer satisfaction has been earned the group a reputation among its customers and

clients.

This company has branches in Pollachi and Selam at Tamilnadu which is managed by

Mr.Shareef. The HILLWOOD group of companies is one of the leading companies in

footwear manufacturing in the state of Kerala.

The rich legacy of the group is successfully carry forward by their third generation and

today the group has diversified interest in real estate, transportation and global trade.

HILLWOOD, the pioneering wood exporting company in Kerala located in Feroke near

Calicut. This business is exclusively exporting and importing wood. They have been

trusted world over by their valuable customers. Their commitment to quality and timely

delivery propelled their growth. This company is well experienced in timber logs and

distribution focused on dependable service and on filling the special needs of their

overseas customers.

They also cater to the requirements of customers in India too. Wood supplied by

HILLWOOD is widely used in India, abroad for quality furniture, interior decoration and

other constructions and is much sought after across the globe.

OTHER COMPANIES UNDER THE HILLWOOD GROUP OF COMPANIES

HILLWOOD IMPORT AND EXPORT PVT.LTD.

HILLWOOD FURNITURE PVT.LTD.

CONCORD POLYMERS

SAS POLYMERS

HILLWOOD BUILDING MATRIALS

HILLWOOD COLLANADE

15

DIVISIONS OF HILLWOOD GROUP OF COMPANIES

FOOTWEAR DIVISION

CEE VEE FOOTWEAR

It is the largest manufacturers and exporters of quality fashionable footwear for

men, women and kids especially in southern region of India. They have an extensive

network of reputed suppliers, who provide them with the finest quality of inputs and

material. They are always open to developing new range of footwear as required by their

customers, according to latest fashion trends and styles. They focus on quality and aim to

achieve total customer satisfaction. They use very advanced modern technologies for the

production process.

Their footwear is specially manufactured to face different climates and is

available in different styles types and sizes. In addition the attractive and affordable

prices of the footwear have made them a huge hit among the admirers of quality

footwear.

TIMBER DIVISION

HILLWOOD imports and exports, the pioneering wood exporting company in

Kerala, located in Feroke, Calicut. HILLWOOD is exclusively exporting and importing

wood. They are well experienced in timber logs and distribution focused on dependable

service and filling the special needs of their valuable customers.

Wood supplied by HILLWOOD is widely used in India and abroad for quality

furniture, interior decoration and other constructions.

HILLWOOD furniture is a company that continuous to lead the industry in

today’s home and office furnishings. They set new trends in life style with quality

benchmark products, redefining the wood piece of furniture to a life style product which

dictates pride of processing it.

BUILDERS DIVISION

HILLWOOD builders are one of the renowned names in the construction

segment. Their buildings are testimony for the quality and timely completion of projects

has enabled the HILLWOOD to become one of the sought after companies for all

16

construction requirements. HILLWOOD is backed by an in-house team of architects and

engineers, a dictated and thoroughly committed workforce. HILLWOOD builders follow

the best practices in the industry like producing quality raw materials, conformance to

international standards and a commitment to schedules.

Carefully chosen locations, their buildings are aesthetically appealing,

functionally efficient and decidedly up market. Comfortable abodes, countryside

aesthetics contemporary amenities. It offers a classic lifestyle to its customers.

BUILDING MATERIALS

HILLWOOD building materials is a one stop solution for all our building

construction needs. They help the customers to find the finest brand, trendy designs,

latest news and events in the construction industry.

Construction materials need to be well selected as it is an asset for a lifetime.

HILLWOOD provides all the sufficient details regarding the constructions in

HILLWOOD. Each of the building construction material includes as a separate category

as it makes easy to navigate through the essential construction material. HILLWOOD

group of companies furnishes the details of wooden tiles, window frames, door frames

and interior decorative woods.

PROFILE OF CEE VEE

The CEE VEE footwear has constituted a manufacturing unit by name SOFITEL

footwear’s proposed to be set up at Chungam, Feroke. Footwear manufacturing industries

is one of the flourishing industries in India. The demand for quality footwear is increasing

day by day. It is proposed to manufacture out of virgin PVC materials by using latest

technology. There are very similar units in south India. The market demand for such

quality footwear’s are met out of supply from manufacturing unit in Delhi. Therefore

there is an excellent scope for such units in Kerala. The promoters of the project

HILLWOOD group is headed by V. Shareef has already successfully established similar

units in Feroke by name “CEE VEE FOOTWEAR PVT.LTD”. The great success of this

project and inability to supply products as per market demand promoted by the promoters

to set up a similar new unit and adjacent to existing company.

17

LOCATION

The unit is located at land adjacent to National Highway, Chungam, and Feroke.

The land is owned by managing partner V.Shareef and his given to the firm on else. The

location is deal all infrastructural facilities like road, water, electricity, labour force

etc.are available. Since the unit is located adjacent to M/S CEE VEE footwear pvt.ltd.

This is similar to the proposed unit, promoters more operational, convenience and

economy.

CONSTITUTION

The unit SOEITEL footwear’s is constituted as a partnership firm with V.Shareef

as a managing partner and C.P. Najbudheen and C.P Suhara as co partners. They are the

promoters of CEE VEE footwear pvt.ltd as well as HILLWOOD group of companies.

INVESTMENT REQUIREMENTS

The working capital requirements works out 75,00,000 with building, plant and

machinery and other equipments including mould works 120 lakhs.

18

ORGANIZATIONAL CHART

Board of directors

Managing director Executive director

Personnel Production Finance Marketing

Sales promotion Advertisement

Office assisstantsSupervisor

Channel of distribution Market research

Un skilled laborsSemi skilled laborsSkilled labors

Accountants

Chairman

19

OBJECTIVES OF THE STUDY

20

1.3 OBJECTIVES OF THE STUDY

The basic objective of studying the ratios of the company is to know the financial position of the company.

To know the borrowings of the company as well as the liquidity position of the company.

To study the current assets and current liabilities so as to know whether the shareholders could invest in Foot wears Ltd or not.

To study the profits of the business and net sales of the business and to know the stock reserve for sales of the business.

To know the solvency of the business and the capacity to give interest to the long term loan lenders (debenture holders) and dividend to the share holders.

To study the balance of cash and credit in the organization

21

SCOPE AND LIMITATIONS OF

22

THE STUDY

SCOPE OF THE STUDY

The scope of the study involves the financial analysis of APCO SUZUKI Pvt ltd,

with the help of ratio analysis for 5 years. The study was extended to finance department

in particular and for the study confiner to APCO SUZUKI Pvt ltd the . The study also

includes Trend analysis

1.5 LIMITATIONS OF THE STUDY

The analysis was made with the help of the secondary data collected from the

company.

All the limitations of ratio analysis, common-size statement, comparative statements,

and trend analysis and interpret are applicable to this study.

The period study is only 5 years from 2005-06 to 2009-10

24

REVIEW OF LITERATURE

1.6 REVIEW OF LITERATURE

a) Environmental and Financial Performance Literature

"We review the growing literature relating corporate environmental

performance to financial performance. We seek to identify achievements and limitations

of this literature and to highlight areas for further research. Our primary interest is to

assess the adequacy of the literature in informing corporate managers how, when, and

where to make pro-environment investments that will pay off with financial returns for

long-term shareholders. To do so, we create a conceptual framework that maps the

influence of regulators, public health scientists, environmental advocates, consumers,

employees, and other interested parties upon corporate financial returns. Our discussion

has relevance to all parties interested in influencing corporate actions that affect the

environment."

By Donald P. Cram, on March 27, 2000

Source: http://web.mit.edu/doncram/www/environmental/envir-fin-literature.html

b) An Investigation of the Perceived Financial Performance

"This paper is primarily based on Rogers’ diffusion of innovations theory and

Auger’s empirical study. An empirical research study was conducted to investigate the

perceived financial performance of commercial printing firms for conducting business-to-

customer (B2C) activities using Web technology. Financial performance was measured

using four financial indicators: sales, profits, costs, and return-on-investment (ROI). The

diffusion of innovations theory states that an innovation brings changes to a company.

Web technology is an innovation that affects company’s performance. This paper

http://web.mit.edu/doncram/www/environmental/envir-fin-literature.html

25

investigates the effect of Web technology on commercial printing firms’ financial

performance."

Journal of Industrial Technology • Volume 19, Number 2 • February 2003 to April 2003 Page2, by Dr. Devang P. Mehta

Source: http://72.14.235.132/search?q=cache:EIGjtsUJQeEJ:www.nait.org/jit/Art

icles/mehta011603.pdf+review+of+literature+on+financial+performance&hl=en&ct

=clnk&cd=2

c) Strategic and Financial Performance Implications of Global Sourcing Strategy: A Contingency Analysis

"Using a contingency model of global sourcing strategy, this study investigated

the moderating effects of sourcing-related factors on the relationship between sourcing

strategy and a product's strategic and financial performance. The results lent some

support to the contingency model of global sourcing strategy in that product innovation,

process innovation and asset specificity were significant moderator variables for

financial, but not strategic, performance. However, the results provided no support for

bargaining power of suppliers and transaction frequency as moderator variables. In other

words, in achieving high financial performance for a product, whether a particular

sourcing strategy should be used for a particular product depended on the levels of

product innovation, process innovation and asset specificity."

Journal of International Business Studies (1995), Vol 26, Page 181–202, By Janet Y. Murray, Masaaki Kotabe & Albert R. Wildt

Source:http://www.palgrave-journals.com/jibs/journal/v26/n1/abs/8490171a.htm

d). Implications for financial performance and corporate social responsibility

"We investigate whether CEO implicit motives predict corporate social

performance and financial performance. Using longitudinal data on 258 CEOs from 118

firms, and controlling for country and industry effects, we found that motives significant

predicted both financial performance (Tobin's Q and the CAPM) and social

responsibility. In general, need for power and responsibility disposition were positively

predictive whereas need for achievement and affiliation were negatively predictive of

outcomes. Contrary to previous theorizing, corporate social responsibility had no link to

http://72.14.235.132/search?q=cache:EIGjtsUJQeEJ:www.nait.org/jit/Art

26

financial performance. Our findings suggest that executive characteristics have important

consequences for the top level outcomes.

Implications for financial performance and corporate social responsibility, by Philippe Jacquart, Catherine Ramus & John Antonakis, on May 23, 2004.Source: http://www1.icp2008.org/guest/AbstractView?ABSID=10821

e) Financial statement analysis: A data envelopment analysis approach

"Ratio analysis is a commonly used analytical tool for verifying the performance

of a firm. While ratios are easy to compute, which in part explains their wide appeal, their

interpretation is problematic, especially when two or more ratios provide conflicting

signals. Indeed, ratio analysis is often criticized on the grounds of subjectivity, that is the

analyst must pick and choose ratios in order to assess the overall performance of a firm.

In this paper we demonstrate that Data Envelopment Analysis (DEA) can

augment the traditional ratio analysis. DEA can provide a consistent and reliable measure

of managerial or operational efficiency of a firm. We test the null hypothesis that there is

no relationship between DEA and traditional accounting ratios as measures of

performance of a firm. Our results reject the null hypothesis indicating that DEA can

provide information to analysts that is additional to that provided by traditional ratio

analysis. We also apply DEA to the oil and gas industry to demonstrate how financial

analysts can employ DEA as a complement to ratio analysis

Journal of the Operational Research Society (2003) Vol-54,Pages 48–58, By E H FerozSource:http://www.palgrave-journals.com/jors/journal/v54/n1/abs/2601475a.html

http://www.palgrave-journals.com/jors/journal/v54/n1/abs/2601475a.html

http://www1.icp2008.org/guest/AbstractView?ABSID=10821

28

RESEARCH METHODOLOGY

CHAPTER-II

RESEARCH METHODOLOGY

2.1 Research

Research can be defined as the search for knowledge or any systematic

investigation to establish facts. The primary purpose for applied research (as opposed to

basic research) is discovering, interpreting, and the development of methods and systems

for the advancement of human knowledge on a wide variety of scientific matters of our

world and the universe.

According to Clifford woody research comprises defining and redefining

problems, formulating hypothesis or suggested solutions; collecting, organising and

evaluating data; making deductions and reaching conclusions; and at the last carefully

testing the conclusions to determine whether they fit the formulating hypothesis.

2.2 Research Methodology

Research is a diligent and systematic inquiry or investigation into a subject in order

to discover or revise facts, theories, applications, etc... Methodology is the system of

methods followed by a particular discipline. Thus Research methodology is the way how

we conduct our research.

2.3 Research problem

The research problem in this study is to analyse the financial performance of the

organization..

29

2.4 Research design:

The descriptive form of research method is adopted for study.

The major purpose of descriptive research is description of state of affairs of

the institution as it exists at present. The nature and characteristics of the financial

statements of CEE VEE PVT LTD have been described in this study.

2.5 Nature of data:

The data required for the study has been collected from secondary source .The

relevant information were taken from annual reports, journals and internet.

2.6 Methods of data collectionThis study is based on the annual report of CEE VEE Foot wears pvt Ltd. Hence

the information related to, profitability, short term and long term solvency and turnover

were very much required for attaining the objectives of the present study.

In order to fulfill the objectives of the study the data has been collected from both-

Primary Data

Secondary Data

a) Primary DataTo generate primary data for the analysis, direct personal interview and discussion

was made with company assistant manager of finance, accountants and other officials.

The data collected from the interview are coordinated and analyzed in an integrated

fashion throughout the dissertation.

b) Secondary DataFor gathering secondary data various other source were used, they are-

Different accounting records of the company.

Magazines and journals

Internets and other publication

2.7 Tools applied:

30

To have a meaningful analysis and interpretation of various data collected, the

following tools were made for this study.

Ratio analysis

Common-size statement

Comparative statement

Trend analysis

31

DATA ANALYSIS AND INTERPRETATION

3.1 RATIO ANALYSIS:

Ratio analysis is a widely used tool of financial analysis. The term ratio in it

refers to the relationship expressed in mathematical terms between two individual figures

or group of figures connected with each other in some logical manner and are selected

from financial statements of the concern. The ratio analysis is based on the fact that a

single accounting figure by it self may not communicate any meaningful information but

when expressed as a relative to some other figure, it may definitely provide some

significant information the relationship between two or more accounting figure/groups is

called a financial ratio helps to express the relationship between two accounting figures in

such a way that users can draw conclusions about the performance, strengths and

weakness of a firm.

Classification of ratios:A) Liquidity ratios

B) Leverage ratios

C) Activity ratios

D) Profitability rati0

32

3.1) Liquidity ratios

These ratios portray the capacity of the business unit to meet its short term

obligation from its short-term resources (e.g.) current ratio, quick ratio.

3.1.1) Current ratio:

Current ratio may be defined as the relation ship between current assets and

current liabilities it is the most common ratio for measuring liquidity. It is calculated by

dividing current assets and current liabilities. Current assets are those, the amount of

which can be realized with in a period of one year. Current liabilities are those amounts

which are payable with in a period of one year.

Current assets

Current assets = -------------------------

Current liabilities

TABLE -3.1.1

CURRENT RATIO

33

Year Current asset(Rs) Current liabilities(Rs)

Ratio

2005-2006 13,879,890.78 5,925,850 2.35

2006-2007 26,277,693 11,344,762.12 2.31

2007-2008 33,638,118.16 19,172,404.12 1.75

2008-2009 31,883,563.24 25,862,450.68 1.42

2009-2010 32,188,509.64 22,699,554.60 1.23

Interpretation

The above table shows that the current ratio in the year 2005-06 was 2.35 and

then it decreases to 2.16 in the year 2006-07, further move downwards to 1.75 and in the

year 2007-08 it slashed down to 1.42 and finally in the year 2007-08 it again decreases to

1.23. The normal current ratio is 2:1. The above table shows current ratio is more than

2% in all the first two years. But in the last three years the current ratio is lower than the

normal. This shows that the company is not enjoying credit worthiness.

CHART-3.1.1

CURRENT RATIO

34

3.1.2) LIQUID RATIO:

The term ‘liquidity’ refers to the ability of a firm to pay its short-term

obligation as and when they become due. The term quick assets or liquid assets refers

current assets which can be converted into cash immediately it comprises all current

assets except stock and prepaid expenses it is determined by dividing quick assets by

quick liabilities.

Liquid assets

Liquid ratio = -------------------------

Liquid liabilities

35

TABLE-3.1.2

LIQUID RATIO:

Year Liquid assets(Rs) Liquid liabilities(Rs) Ratio

2005-2006 11,586,553.78 5,925,850 1.96

2006-2007 24,243159.78 11,344,762.12 2.13

2007-2008 30,560,618.16 19,172,404.12 1.6

2008-2009 30,046,138.24 25,862,450.68 1.16

2009-2010 29,431,698.64 22,699,554.60 1.3

Interpretation :

The above table and shows the liquid ratio during the study period except.

In all the year the ratio is more than the normal (i.e.) 1:1.It was 1.96 in the year 2005-06

and reached the highest in 2006-07 to 2.13 and then came down to 1.13 in the year 2008-

09.Hence the firm is controlling its stock position because there linear relationship

between current ratio and liquid ratio

36

CHART-3.1.2

LIQUID RATIO:

.

3.1.3) ABSOLUTE LIQUIDITY RATIO:

Absolute liquid assets include cash, bank, and marketable securities. This ratio

obtained by dividing cash and bank and marketable securities by current liabilities.

Cash + bank +marketable securities

Absolute liquidity ratio = ----------------------------------------------

Current liabilities

37

TABLE-3.1.3

ABSOLUTE LIQUID RATIO:

Year Cash and securities(Rs) Current liabilities(Rs0 Ratio

2005-2006 88,887.75 5,925,850 0.02

2006-2007 2,26,895 11,344,762.12 0.02

2007-2008 5,75,172 19,172,404.12 0.03

2008-2019 5,17,249 25,862,450.68 0.02

2009-2010 1,134,977.7 22,699,554.64 0.05

Interpretation:

The above table shows the absolute ratio for the study period 2005-06 to 2009-10. There

is fluctuation in the absolute ratio. It was 0.02 in the year 2005-06&2006-07 In 2007-08

and it was 0.03 and it reaches .05 in the year 2009-10

CHART-3.1.3

ABSOLUTE LIQUID RATIO:

38

3.2 LEVERAGE RATIOS

Many financial analyses are interested in the relative use of debt and equity in

the firm. The term ‘solvency’ refers to the ability of a concern to meet its long-term

obligation. Accordingly, long-term solvency ratios indicate a firm’s ability to meet the

fixed interest and costs and repayment schedules associated with its long-term

borrowings. (E.g.) debt equity ratio, proprietary ratio, etc….

3.2.1 DEBT EQUITY RATIO:

It expresses the relationship between the external equities and internal equities

or the relationship between borrowed funds and ‘owners’ capital. It is a popular measure

of the long-term financial solvency of a firm. This relationship is shown by the debt

equity ratio. This ratio indicates the relative proportion of dept and equity in financing the

39

assets of a firm. This ratio is computed by dividing the total debt of the firm by its equity

(i.e.) net worth.

Outsider’s funds

Debt equity ratio = ------------------------------

Proprietor’s funds

TABLE-3.2.1

DEBT EQUITY RATIO:

Interpretation and Analysis:The above table shows the debt equity relationship of the company during the

study period. It was 2.38 in the 2005-06and then reached its highest in the next year3.52

and from there it began to slope downwards and in the year 2009-10 it again move

upwards to 2.38 in the year 2009-10

In all the years the equity is less when compared with borrowings. Hence the

company is not maintaining its debt position

CHART-3.2.1

DEBT EQUITY RATIO:

Year Outsider’s funds(Rs)

Proprietor’s funds(Rs)

Ratio

2005-2006 13950857 4958937.66 2.8

2006-2007 19996093 5674125.6 3.52

2007-2008 17253752.1 8814690,76 1.95

2008-2009 11956999.29 6847858.28 1.74

2009-2010 14851203.7 6218534.14 2.38

40

.

3.2.2 PROPRIETARY RATIO:

Proprietary ratio relates to the proprietors funds to total assets. It reveals the

owners contribution to the total value of assets. This ratio shows the long-time solvency

of the business it is calculated by dividing proprietor’s funds by the total tangible assets.

Proprietor’s funds

Proprietary ratio = ---------------------------

Total tangible assets

41

TABLE-3.2.2

PROPRIETARY RATIO

Year Proprietor’s funds(Rs) Total assets(Rs) Ratio

2005-2006 4,958,937.66 18,909,794.78 0.26

2006-2007 5,674,125.66 25,670,218.66 0.22

2007-2008 8,814,690.76 26,068,448.86 0.33

2008-2009 6,847,858.28 18,804,857.57 0.36

2009-2010 6,218,534.14 21,069,737.84 0.30

Interpretation:The above table shows the proprietary ratio during the study period. In all the years

the owner's contribution to the total assets was not appropriate and they maintain their share

in the company's assets.

In all the years the proprietor's contribution in to the total assets is less than 50%

CHART-3.2.2

PROPRIETARY RATIO

42

3.3 ACTIVITY RATIOS:

These ratios evaluate the use of the total resources of the business concern along

with the use of the components of total assets. They are intended to measure the

effectiveness of the assets management the efficiency with which the assts are used

would be reflected in the speed and rapidity with which the assets are converted into

sales. The greater the rate of turnover, the more efficient the management would be (E.g.)

stock turnover ratio, fixed assets turnover ratios etc….

3.3.1 STOCK TURNOVER RATIO:

43

This ratio indicates whether investment is inventory is efficiently used or not it

explains whether investment in inventories in with in proper limits or not. It also

measures the effectiveness of the firms’ sales efforts the ratio is calculated as follows.

Cost of goods sold

Stock turnover ratio = -----------------------------

Average stock

Opening Stock + Closing Stock

Average stock = -----------------------------------------

2

TABLE-3.3.1STOCK TURNOVER RATIO:

Year Cost of goods sold(Rs) Average stock(Rs) Ratio

2005-2006 23,590,125.12 2896130 8.14

2006-2007 34,579,881 2,163,930.5 15.98

2007-2008 38,256,374 2,556,012 14.96

2008-2009 66,238,872.02 4,673,236 14.17

2009-2010 47,477,950.98 3,567,604 13.30

Interpretation:The above table and diagram shows the relationship between costs of goods sold and

average stock. During the year 2006-07 it is 15.98% which shows higher position of cost

of goods sold. In the years of study it is shown above that the cost of goods sold are

almost 15-16times of the average stock. But at the same time during 2005-06 it is only

8.14 which shows that more stock was remaining in the company

44

CHART-3.3.1

STOCK TURNOVER RATIO:

..

3.3.2 FIXED ASSETS TURNOVER RATIO:

The ratio indicates the extent to which the investments in fixed assets contribute

towards sales. If compared with a pervious year. It indicates whether the investment

infixed assets has been judicious or not the ratio is calculated as follows.

Net sales

Fixed assets turnover ratio = -------------------

45

Fixed assets

TABLE-3.3.2

FIXED ASSET TURNOVER RATIO:

Year Net sales(Rs) Fixed assets(Rs) Ratio

2005-2006 30,419,045 10,818,040 2.81

2006-2007 40,743,308 10,437,346 3.90

2007-2008 50,283,776.88 11,340,101.82 4.43

2008-2009 73,789273.14 12,005,171.01 6.14

2009-2010 53,808,158.92 10,700,453.79 5.03

Interpretation: The above table shows the relationship between the fixed assets and sales. The

sale is2.81 times more than the fixed assets 2005-06 and in 2006-07 it increases into 4

times. It is more than 4 times during 2007-08 . It is more than 6 times during 2008-09 and

more than 5 times during the period of 2009-10. It can be observed that in the year

2008-09 the fixed assets value increased a lot and which shows that there is an additions

made to the fixed assets, similarly the sales was also increased from 50282776.88 (2008-

09) to 73789273.14 (2006-07).

46

CHART-3.3.2

FIXED ASSET TURNOVER RATIO:

3.3.3 WORKING CAPITAL TURNOVER RATIO:

Working capital turnover ratio indicates the velocity of the utilization of net

working capital. This ratio indicates the number of times the working capital is turned

over in the course of a year. It is a good measure over –trading and under-trading.

Net sales

Working capital turnover ratio = ----------------------------

Net working capital

47

TABLE-3.3.3.

WORKING CAPITAL TURNOVER RATIO:

Year Net sales(Rs) Net working capital9Rs) Ratio

2005-2006 30,419,045 7,954,040.78 3.82

2006-2007 40,743,308 14,932,931.66 2.72

2007-2008 50,283,776.88 14,465,714.04 3.48

2008-2009 73,789,273.14 6,021,112.56 12.26

2009-2010 53,808,158.92 9,488,955.04 5.68

Interpretation:The above table shows the relationship between net working capital and net sales.

During the years the sales is 2 to 12 times more than the working capital. It was 3.82 in

the year 2005-06 and as there was more working capital the ratio sloped downwards and

reached 2.72 in the year 2006-07. As the sales increased and working capital decreased

the ratio now moved up to 12.26 times and in the year 2008-09 as the sales slashed to

40% of the previous year the ratio again decreased.

48

CHART-3.3.3

WORKING CAPITAL TURNOVER RATIO

3.3.4 TOTAL ASSETS TURNOVER RATIO:

This ratio is an indicator of how the resources of the organization utilized

for increasing the turnover. It shows the ratio between the total assets and the net sales of

the company. From this ratio one can understand how the assets are performing and being

utilized in achieving the objectives of the company.

Total assets

49

Total assets turnover ratio = -------------------

Net assets

TABLE-3.3.4

TOTAL ASSETS TURNOVER RATIO:

Year Total assets(Rs) Net sales(Rs) Ratio

2005-2006 18,909,794.78 30,419,045 0.622006-2007 25,670,218.66 40,743,308 0.632007-2008 26,068,442.86 50,283,776.88 0.522008-2009 18,804,857.57 73,789,273.14 0.252009-2010 21,069,737.84 53,808,158.92 0.39

Interpretation: The above table shows the relationship between the total assets to net sales. The

relationship between sales to total assets is high. The ratio decreased from 0.62 (2005-06)

to 0.25 (2008-09) and then it was again decreasing and reached to again 0.39 in the year

2009-10. and raised to 0.81 in the year 2007-08 due to the heavy fall in the sales. Thus

the company's sales were almost directly disproportionate in the first three years of the

study and then started to perform well

50

CHART-3.3.4

TOTAL ASSETS TURNOVER RATIO

.

3.3.5 CAPITAL TURNOVER RATIO:

This is a ratio which shows how much sales are entertained from the

capital. It shows how the sales are attracted from the Proprietor's Fund.

Sales

Capital turnover ratio = -----------------------

Proprietor’s fund

51

TABLE-3.3.5

CAPITAL TURNOVER RATIO:

Year Sales Proprietor’s funds Ratio

2005-2006 30,419,045 4,958,937.66 6.13

2006-2007 40,743,308 5,674,125.66 7.18

2007-2008 50,283,775.88 8,814,690.76 5.70

2008-2009 73,789,273.14 6,847,858.28 10.8

2009-2010 53,808,158.92 6,218,534.14 8.65

Interpretation:

The above table shows the relationship between the sales and proprietors

funds. In the year 2005-06 the ratio 6.13 and it was increasing and reached 7.18 in the

year 2006-07 and then it was decreased into 5.70 in 2007-08 and it again increasing and

reached its highest 10.8 in the year 2008-09. In the final year i.e. 2009-10 it was 8.65.

The sales are in between 5.7 and 10.8 times more than the proprietor's funds. It shows the

firms is maintaining the better utilization of own fund

52

CHART-3.3.5

CAPITAL TURNOVER RATIO

.

3.3.6 RETURN ON TOTAL ASSETS

Profitability can be measured in terms of relationship between net profit and

total assets. It measures the profitability of investment. The overall profitability can be

known by applying this ratio.

Net profit

Return on total assets = ----------------------------- x100

Total assets

53

TABLE-3.3.6

RETURN ON TOTAL ASSETS RATIO

Year Net profit(Rs) Total assets(Rs) Ratio

2005-2006 2,054,342.88 18,909,794.78 1.08

2006-2007 1,674,l25.66 25,670,218.66 0.065

2007-2008 4,814,690.76 106,552,413 0.184

2008-2009 2,347,858.28 98,670,106 0.124

2009-2010 1,718,534.14 91,660,973 .0815

Interpretation:The above table shows the relationship between net profit and total assets

in percentage. The company earns a good return in the year 2005-06 i.e1.08 and i9 it was

decreasing into 0.065 in the year 2006-07.In the year 2008-09 it again increases into

0.184 and in the final year it was 0.085. Hence there is a fluctuation their return on asset.

CHART-3.3.6

RETURN ON TOTAL ASSETS RATIO

54

3.4 PROFITABILITY RATIOS

The profitability ratios of a business concern can be measured by the profitability

ratios. These ratios highlight the end result of business activities by which alone the over

all efficiency of a business unit can be judged, (E.g.) gross ratios, Net profit ratio.

3.4.1 GROSS PROFIT RATIO:

This ratio expresses the relationship between Gross profit and sales. It indicated

the efficiency of production or trading operation. A high gross profit ratio is a good

management as it implies that cost of production is relatively low.

55

Gross profit

Gross profit ratio = ----------------------------------- x 100

Net sales

TABLE-3.4.1

GROSS PROFIT RATIO:

Year Gross profit(Rs) Net sales(Rs) Ratio

2005-2006 3,011,231.02 30,419,045 9.892006-2007 2,983,846 40,743,308 7.322007-2008 3,931,358 50,283,776.88 7.812008-2009 2,003,806 73,789,273.14 2.702009-2010 4,333,251 53,808,158.92 8.05

Interpretation:The above table and shows the relationship between the gross profit and net sales

in percentage. During 2005-06 the gross profit position was 9.89% and in the very next

year it slashed down to 7.32% and again slightly raised to 7.81% and since then it was

decreasing and reached the lowest to 6.70% in the year 2008-09 and it was again

increasing and finally reached 8.05 However it can be noticed that the sales also reduced

to about 60% in 2008-09 when compared to other years

CHART-3.4.1

GROSS PROFIT RATIO:

56

3.4.2 NET PROFIT RATIO:

Net profit ratio establishes a relationship between net profit (after taxes) and sales.

It is determined by dividing the net income after tax to the net sales for the period and

measures the profit per rupee of sales.

Net profit

Net profit sales = ----------------- x 100

Net sales

TABLE-3.4.2

57

NET PROFIT RATIO:Year Net profit(Rs) Net sales(Rs) Ratio

2005-2006 2,054,342.88 30,419,045 6.75

2006-2007 1,674,125.66 40,743,308 4.10

2007-2008 4,814,690.76 50,283,776.88 9.57

2008-2009 2,347,858.28 73,789,273.14 3.18

2009-2010 1,718,534.14 53,808,158.92 3.19

Interpretation: The above table shows the relationship between the gross profit and net sales in

percentage. During 2005-06 the gross profit position was 9.89% and in the very next year

it slashed down to 7.32% and again slightly raised to 7.81% and since then it was

decreasing and reached the lowest to 6.70% in the year 2008-09 and it was again

increasing and finally reached 8.05 However it can be noticed that the sales also reduced

to about 60% in 2008-09 when compared to other years.

CHART-3.4.2

NET PROFIT RATIO:

58

3.4.3 EXPENSES RATIO:

This ratio establishes the relationship between various indirect expenses to net

sales.

A) ADMINISTRATIVE EXPENSES RATIO:

Administrative expenses

Administrative expenses ratio = ------------------------------- x 100

Sales

b) SELLING &DISTRIBUTION EXPENSES RATIO:

Selling &distribution expenses

Selling &distribution expenses ratio = ----------------------------------------- x 100

59

Sales

TABLE-3.4.3EXPENSES RATIO:

Administration expenses + selling expensesExpenses ratio = _______________________________________ x 100

Sales

Year Administration& Selling expenses(Rs)

Sales(Rs) Ratio

2005-2006 1,162,910 30,419,045 3.82

2006-2007 2,178,901 40,743,308 5.34

2007-2008 2,295,306.8 50,283,776.88 4.56

2008-2009 2,275,581.2 73,789,273.14 3.08

2009-2010 3,553,033.39 53,808,158.92 6.60

Interpretation:The above table shows the relationship between the administration and selling expenses

and sales. The administration and selling expenses during 2009-10 is very high when

compared to previous year's %age as they were in between 3-7% of sales. .

CHART-3.4.3

EXPENSE RATIO

60

3.5) Common size income statements

TABLE-3.5.1Common size income statement (2005-06 &2006-07)

Particulars 2005-2006 (Rs) % 2006-200(Rs) %

Income:

Sales 30,419,045 92.93 40,743,308 95.06

Other income 17,626 0.053 83,067 0.19

Closing stock 2,293,337 7.006 2,034,524 4.75

Total income 32,730,008 100 42,860,899 100

Expenditure:

Opening stock 3,498,923 11.3 2,293,337 5.93

61

Purchases 21,045,864 67.97 26,507,305 68.64

Direct expenses 2,446,415 5.05 5,367,094 11.15

Administration expenses

1,238,368 1.15 2,785,170 1.71

Selling Expenses 8,07,055 2.60 2,575,833 3.92

Depreciation 1,638,952 3.22 1,658,035 4.29

Total expenses 30,675,576 94.32 41,186,774 95.20

Net profit 2,054,342 5.68 1,674,125 4.34

Total 32,730,008 100 42,860,899 100

Inference: The common size income statement for the year 2005 to 2006 reveals the

following. The sales figure increasing year after year. It increased about Rs.40,324,263.

Administrative and other expenses were also increasing. The other income of the company

was increased year by year.

TABLE-3.5.2

Common size income statement (2006-07 & 2007-08)

Particulars 2006-2007 (Rs) % 2007-2008 (Rs) %Income:Sales 40,743,308 95.06 50,283,776 94.2Other income 83,067 0.19 2,999 0.006Closing stock 2,034,524 4.75 3,077,500 5.76Total income 42,860,899 100 53,364,275 100Expenditure:Opening stock 2,293,337 5.93 2,034,524 4.06Purchases 26,507,305 68.64 37,632,183 75.17Direct expenses 5,367,094 11.15 3,227,328 3.14Administration 2,785,170 1.71 2,503,321 1.7

62

expensesSelling Expenses 2,575,833 3.92 1,443,300 2.88Depreciation 1,658,035 4.29 1,708,929 3.41Total expenses 41,186,774 95.20 48,549,585 90.38Net profit 1,674,125 4.34 4,814,690 9.62Total 42,860,899 100 53,364,275 100

Inference:

The common size income statement for the year 2006 to 2007 reveals the

following. The sales figure increasing year after year. In the year 2006-07, cost of sales is

3.14% of the total expenditure. Administrative and other expenses are fluctuating. There

is heavy increase in the net profit of the organization. The net profit hiked from 4.34% to

9.62% . The company must adopt correct pricing and control the unnecessary expenses to

attain high profits.

TABLE-3.5.3


Particulars 2007-2008

(Rs)

% 2008-2009

(Rs)

%

Income:

Sales 50,283,776 94.2 73,789,273.14 94.35

Other income 2,999 0.006 36,832.42 0.05

Closing stock 3,077,500 5.76 4,378,388 5.6

Total income 53,364,275 100 78,204,493.56 100

Expenditure:

Opening stock 2,034,524 4.06 3,077,500 4.38

63

Purchases 37,632,183 75.17 57,996,976 83.2

Direct expenses 3,227,328 3.14 5,154,960 3.56

Administration expenses 2,503,321 1.7 4,484,750 1.38


Depreciation 1,708,929 3.41 1,852,595 2.54

Total expenses 48,549,585 90.8 75,856,635 96.88

Net profit 4,814,690 9.62 2,347,858 3.12

Total 53,364,275 100 78,204,493 100

Inference:

The common size income statement for the year 2008 to 2009 reveals the

following. The sales figure increased from Rs50,283776 to Rs.73,789,274. In the year

2006-07 cost of sales is 3.56%. There is heavy increase in the other incomes. In the year

2006-07 income decreased from Rs.4,814,690 to Rs.2,347,858.

TABLE-3.5.4


Particulars 2008-2009 (Rs) % 2009-2010 (Rs) %Income:

Sales 73,789,273.14 94.35 53,808,158 94.75

Other income 36,832.42 0.05 2,26,236 0.39

Closing stock 4,378,388 5.6 2,756,820 4.86

Total income 78,204,493.56 100 56,791,215 100Expenditure:

Opening stock 3,077,500 4.38 4,378,388 7.6

Purchases 57,996,976 83.2 46,609,738 80.9

64

Direct expenses 5,154,960 3.56 1,813,337 2.36


4,484,750 1.38 2,952,237 4.34


Depreciation 1,852,595 2.54 1,705,259 1.82

Total expenses 75,856,635 96.88 58,509,749 102.98Net profit 2,347,858 3.12 (1,718,534.14) -(2.98)

Total 78,204,493 100 56,791215 100

Inference:The common size income statement for the year 2009 to 2010 reveals the

following. The sales figure slashed down very. It decreased from Rs.73,789,273 to

Rs.53,808,158 which is almost 27.08% of the previous year. In the year 2009-10 cost of

sales is 2.36%. However in Administrative and other expenses there was a negligible

change due to which organization attained a loss of Rs.629324.

3.6 Common size balance sheet

TABLE-3.6.1Common size balance sheet (2005-06 &2006-07)

Particulars 2005-2006 (Rs)

% 2006-2007 (Rs) %

Sources of funds:Share capital 4,000,000 21.16 4,000,000 15.58Reserves & surplus 9,58,937 5.07 1,674,125 6.52

Loan funds:Secured loan 13,880,857 73.4 18,551,093 72.26Unsecured loan 70000 0.37 1,445,000 5.64Total 18,909,794 100 25,670,218 100Application of funds:

Fixed assets 10,818,040 57.21 10,437,346 40.66Current assets & Loan and

65

advancesCash & bank 2,220,782 11.74 3,941,653 15.32Sundry debtors 8,327,934 44.04 16,292,170 63.47Advances and deposits 3,331,174 17.61 6,043,870 23.54

Investments -----Other assetsTotal 13,879,890 73.39 26,277,693 102.37current liabilities & provisions:Less: Current liabilities 5,812,065 30.74 10,914,106 42.52

Expenses for provisions 1,13,785 0.6 4,30,656 1.68

Net Current assets 7,954,040 42.69 11,344,762 59.44Total 18,909,794 100 25,670,218 100

Inference:The common size balance sheet for the year 2006-2007 is as follows:

Share capital of the company is decreasing in %age of the net worth. In 2005-2006 in

21.16% to 15.58%.Secured loan for the company has decreasing trend. It decreases 73.4

to 72.26% of the net worth of the company. Fixed asset of the company is decreasing in

this year from 57.21% to 40.66%. Current liability and provisions is increasing 31.34% to

43.2 %.

TABLE-3.6.2Common size balance sheet (2006-07 & 2007-08)

Particulars 2006-2007 (Rs) % 2007-2008 (Rs)

%

Sources of funds:Share capital 4,000,000 15.58 4,000,000 15.34Reserves & surplus 1,674,125 6.52 4,814,690 18.47Loan funds:Secured loan 18,551,093 72.26 15,671,252 60.12Unsecured loan 1,445,000 5.64 1,582,500 6.07Total 25,670,218 100 106,552,413 100Application of funds:Fixed assets 10,437,346 40.66 11,340,102 43.5Current assets & Loan and advancesCash & bank 3,941,653 15.36 4,372,956 16.77Sundry debtors 16,292,170 63.47 21,192,014 81.29Advances and deposits 6,043,870 23.54 8,073,148 30.97Investments

66

Other assetsTotal 26,277,693 102.37 33,638,118 129.03current liabilities & provisions:Less: Current liabilities 10,914,106 42.52 16,984,534 65.15Expenses for provisions 4,30,656 1.68 2,187,870 8.39Net Current assets 14,932,931 59.44 14,465,714 56.5Total 25,670,218 100 26,068,442 100

Inference:The common size balance sheet for the year 2007 to 2008 is as follows: Share

capital of the company has increased from 15.58% to 15.34. Secured loan for the company has

decreasing trend. It increases 72.26% to 60.12. Fixed asset of the company is increasing in this

year of 40.66% to 43.5%. Current liability and a provision is increasing 43.2% to73.53 %.

TABLE-3.6.3

Common size balance sheet (2007-08 & 2008-09)Particulars 2007-2008 (Rs) % 2008-2009

(Rs)%

Sources of funds:Share capital 4,000,000 15.34 4,000,000 18.98Reserves & surplus 4,814,690 18.47 2,218,534 10.53Loan funds:Secured loan 15,671,252 60.12 14,362,723 68.17Unsecured loan 1,582,500 6.07 4,88,480 2.32Total 26,068,442 100 21,069,737 100Application of funds:Fixed assets 11,340,102 43.5 12,001,322 56.96Current assets & Loan and advancesCash & bank 4,372,956 16.77 5,460,046 25.9Sundry debtors 21,192,014 81.29 19,634,991 91.2Advances and deposits 8,073,148 30.97 7,.081472 33.61Investments

67

Other assets 12000 0.06Total Current Assets 33,638,118 129.03 32,188,509 150.77

current liabilities & provisions:Less: Current liabilities 16,984,534 65.15 22,597,799 107.25Expenses for provisions 2,187,870 8.39 1,01,755 .48Net Current assets 14,465,714 56.5 9,488,955 43.04Total 26,068,442 100 21,069,737 100

Inference:The common size balance sheet for the year 2008 to 2009 is as follows: Share

capital figure remained constant however their %age to net worth has increased from

15.34% to 18.98%. Some amount of the secured loans has been paid off. Fixed asset of

the company has been increased and there share is 56.96% to the total assets in the year

2008-09. Current liability and a provision is increasing 73.44% to 107.73%. It can be

noticed that the fixed assets are purchased on credit from the creditors and they both

increased

TABLE-3.6.4

Common size balance sheet (2008-09 & 2009-10)

Particulars 2008-2009 (Rs) % 2009-2010) (Rs) %Sources of funds:Share capital 4,000,000 18.98 4,000,000 21.27Reserves & surplus 2,218,534 10.53 2,847,858 15.15Loan funds:Secured loan 14,362,723 68.17 11,726,999 62.36Unsecured loan 4,88,480 2.32 230,000 1.22Total 21,069,737 100 18,804,857 100Application of funds:Fixed assets 12,001,322 56.96 12,783,542 67.98Current assets & Loan and advancesCash & bank 5,472,046 25.15 5,420,206 28.82Sundry debtors 19,634,991 91.2 19,448,973 103.43

68

Advances and deposits 7,.081472 33.61 7,014,384 37.3InvestmentsOther assetsTotal 32,188,509 150.77 31,883,563 169.55current liabilities & provisions:

Less: Current liabilities 22,597,799 107.25 25,321,640 134.67Expenses for provisions 1,01,755 0.48 540,810 2.87

Net Current assets 9,488,955 43.04 6,021,112 32.02Total 21,069,737 100 18,804,857 100s

InferenceThe common size balance sheet for the year 2009 to 2010 is as follows: Share

capital figure remained constant however their %age to net worth has increased from

18.98% to21.27 %. Some amount of the secured loans has been paid off. Current liability

and a provision is increased from 107.73% to 137.54% this means that a heavy amount is

yet to be paid to the creditors of the fixed assets.

3.7 Comparative income statement

TABLE-3.7.1Comparative income statement (2005-06 & 2006-07)


2006-2007 (Rs) INC/DCE %

Income:

Sales 30,419,045 40,743,30810324,263.00 33.94

Other income 17,626 83,06765441.00 371.27

Closing stock 2,293,337 2,034,524(258,813.00) (11.28)

Total income 32,730,008 42,860,89910,130,891.00 30.95

Expenditure:

Opening stock 3,498,923 2,293,337(1,205,586.00) (34.45)

Purchases 21,045,864 26,507,3055,461,441.00 25.95

69

Direct expenses 2,446,415 5,367,0942,920,679.00 119.38


1,238,368 2,785,1701,546802.00 124.9

Selling Expenses 8,07,055 2,575,8331,768778.00 219.16

Depreciation 1,638,952 1,658,035(19,083.00) (1.16)

Total expenses 30,675,576 41,186,77410,511,198.00 34.26

Net profit /Loss 2,054,342 1,674,125(380,217.00) (18.51)

Total 32,730,008 42,860,89910,130,891.00 30.95

Inference:The sales level has increased 2006 to 2007 in 33.94%.Other income of the company

has increased in 371.27%. The stock differential of the firm in the year of 2006 to 2007 is

decreased to 11.28%.The operating expenses has an increasing trend in both administration

and selling and the net profit of the year is decreased by 18.51%

70

TABLE-3.7.1Comparative income statement (2006-07 & 2007-08)

Particulars 2006-2007(Rs) 2007-2008(Rs) INC /DEC %

Income:

Sales 40,743,308 50,283,7769,540468.00 23.42

Other income 83,067 2,999(80068.00) (96.39)

Closing stock 2,034,524 3,077,5001042976.00 51.26

Total income 42,860,899 53,364,27510503376.00 24.5

Expenditure:

Opening stock 2,293,337 2,034,524(258813.00) (11.28)

Purchases 26,507,305 37,632,18311124878.00 41.97

Direct expenses 5,367,094 3,227,328(2139766.00) (39.87)

Administration expenses 2,785,170 2,503,321 ( 281849.00) (10.12)

Selling Expenses 2,575,833 1,443,300(1132333.00) (4.35)

Depreciation 1,658,035 1,708,92950894.00 3.07

Total expenses 41,186,774 48,549,5857362811.00 17.88

Net profit /Loss 1,674,125 4,814,6903140565.00 187.6

Total 42,860,899 53,364,27510503376.00 24.5

Inference:The sales level has increased 2007 to 2008 in 23.42% .Other income of the

company has decreased in 96.39%. The stock differential of the firm in the year of 2007 to

2008 is increased which is almost 51.26% of the last year. The operating expenses were

decreased by 39.87% in both administration and selling and the net profit of the year is

increased.

TABLE-3.7.3

71

Comparative income statement (2007-08 & 2008-09)Particulars 2007-2008(Rs) 2008-

2009(Rs)INC /DEC %

Income:

Sales 50,283,776 73,789,273.1446019549.00 25.68

Other income 2,999 36,832.42(10053611.00) (50.36)

Closing stock 3,077,500 4,378,38813155370.00 187.35

Total income 53,364,275 78,204,493.56 49121308.00 23.82Expenditure:

Opening stock 2,034,524 3,077,5001042976.00 51.26

Purchases 37,632,183 57,996,97620364793.00 54.11

Direct expenses 3,227,328 5,154,9601927632.00 59.73


2,503,321 4,484,75019,814,29.00 79.15

Selling Expenses 1,443,300 3,289,8541846554 127.93

Depreciation 1,708,929 1,852,595143666.00 8.41

Total expenses 48,549,585 75,856,63527307050.00 56.25

Net profit /Loss 4,814,690 2,347,858(2466832.00) (51.23)

Total 53,364,275 78,204,49349121308.00 23.82

InferenceThe sales level has increased 2008 to 2009 in 25.68% .Other income of the

company has decreased by 50.36%. The stock differential of the firm in the year of 2008 to

2009 is increased. The operating expenses are decreased in 59.73% in both administration

and selling and the net profit of the year is decreased.

TABLE-3.7.4

Comparative income statement (2008-09 & 2009-10)

72

Particulars 2008-2009(Rs)

2009-2010(Rs)

INC / DEC %

Income:

Sales 73,789,273 53,808,158(19981115.00) (27.08)

Other income 36,832 2,26,236189404.00 514.24

Closing stock 4,378,388 2,756,820(1621568.00) (37.03)

Total income 78,204,493 56,791,215(21413278.00) (27.38)

Expenditure:

Opening stock 3,077,500 4,378,3881300888.00 42.27

Purchases 57,996,976 46,609,738(11387238.00) (19.63)

Direct expenses 5,154,960 1,813,337(3341623.00) (64.82)


4,484,750 2,952,237(1532513.00) (34.17)

Selling Expenses 3,289,854 1,050,790(2239064.00) (68.06)

Depreciation 1,852,595 1,705,259(147336.00) (7.95)

Total expenses 75,856,635 58,509,749(17346886.00) (22.87)

Net profit /Loss 2,347,858 (1,718,534.14) (629324.00) (26.8)

Total 78,204,493 56,791215(21413278.00) (27.38)

Inference:The sales level has slashed down by 27.08% when compared to last year

sales .Other income of the company has increased. The stock differential of the firm in the

year of 2009 to 2010 also decreased. The operating expense is decreased in 64.82% in both

administration and selling. The company incurred a net loss of Rs.6,29,324.

3.8 Comparative balance sheet

TABLE-3.8.1

73

Comparative balance sheet (2005-06 & 2006-07)


2006-2007(Rs) INC / DEC %

Sources of funds:Share capital 4,000,000 4,000,000 0 0Reserves & surplus 9,58,937 1,674,125 7,151,188 74.58Loan funds:Secured loan 13,880,857 18,551,093 4,670,236 33.65Unsecured loan 70000 1,445,000 1,375,000 1964.28Total 18,909,794 25,670,218 6,760,424 35.75Application of funds:Fixed assets 10,818,040 10,437,346 -380694 -3.5Current assets & Loan and advancesCash & bank 2,220,782 3,941,653 1,720,871 77.49Sundry debtors 8,327,934 16,292,170 7,964,236 95.63Advances and deposits 3,331,174 6,043,870 2,712,696 81.43InvestmentsOther assetsTotal 13,879,890 26,277,693 12,397,803 89.32current liabilities & provisions:Less: Current liabilities 5,812,065 10,914,106 5,102,041 87.8Expenses for provisions 1,13,785 4,30,656 316,871 278.5Net Current assets 7,954,040 11,344,762 3,390,722 42.63Total 18,909,794 25,670,218 6,760,424 35.75

Inference: The comparative balance sheet of the year 2006-2007 is as follows

The share capital of the company has remain constant in the year of 2006-07 . The profit of

the company has increased the reserves and surplus by 74.58% The fixed assets of the

company has decreased in 3.5%. The cash position of the company has fluctuating increase

or decreases. The current liability and provisions of the company is increasing year after

year.

74

TABLE-3.8.2Particulars 2006-2007(Rs) 2007-2008(Rs) INC / DEC %Sources of funds:Share capital 4,000,000 4,000,000 0 0Reserves & surplus 1,674,125 4,814,690

3,140,565 187.6Loan funds:Secured loan 18,551,093 15,671,252 -2,879,841 -15.52Unsecured loan 1,445,000 1,582,500 1,37,500 9.51Total 25,670,218 26,068,442 3,98,224 1.55Application of funds:

Fixed assets 10,437,346 11,340,102 9,02,756 8.6Current assets & Loan and advancesCash & bank 3,941,653 4,372,956 4,31,303 10.94Sundry debtors 16,292,170 21,192,014 4,899,844 30.07Advances and deposits 6,043,870 8,073,148

2,029,278 33.57InvestmentsOther assetsTotal 26,277,693 33,638,118 7,360,425 28.01current liabilities & provisions:Less: Current liabilities 10,914,106 16,984,534

6,070,428 55.62Expenses for provisions 4,30,656 2,187,870

1,757,214 16.1Net Current assets 11,344,762 14,465,714 3,120952 27.51Total 25,670,218 26,068,442 3,98,224 1.55


Inference:The comparative balance sheet of the year 2007 to 2008 is as follows.

The share capital of the company has remain constant. The secured loan of the company

has decreased in this year by 15.52% .The fixed assets of the company has increased. The

cash position of the company has fluctuating increase or decreases. The current liability and

provisions of the company is fluctuating year after year.

75

TABLE-3.8.3Comparative balance sheet (2007-08 & 2008-09)

Particulars 2007-2008(Rs) 2008-2009(Rs) INC / DEC %Sources of funds:Share capital 4,000,000 4,000,000 0 0.00Reserves & surplus 4,814,690 2,218,534 -2,596,156 -53.92Loan funds:Secured loan 15,671,252 14,362,723 -1,308,529 -8.35Unsecured loan 1,582,500 4,88,480 -1,094,020 -69.13Total 26,068,442 21,069,737 -4,998,705 -19.17Application of funds:Fixed assets 11,340,102 12,001,322 6,61,220 5.83Current assets & Loans and advancesCash & bank 4,372,956 5,472,046 1,099,090 25.13Sundry debtors 21,192,014 19,634,991 -1,557,023 -7.34Advances and deposits 8,073,148 7,.081472 -9,91,676 -12.28Investments 0 0.00Other assetsTotal 33,638,118 32,188,509 -1,449,609 4.31current liabilities & provisions:Less: Current liabilities 16,984,534 22,597,799 5,613,265 33.05Expenses for provisions 2,187,870 1,01,755 -2,086,115 -95.35Net Current assets 14,465,714 9,488,955 -4,976,759 -34.4Total 26,068,442 21,069,737 -4,998,705 -19.17

Inference:The comparative balance sheet of the year 2008-2009 is as follows.

The share capital of the company remains same. The secured loan of the company has

decreased in this year by 8.35% .The fixed assets of the company has increased by

purchasing the new assets on credit. The cash position of the company has increased . The

current liability is also increasing as the fixed assets were purchased on credit and hence

they both increases.

76

TABLE-3.84


Particulars 2008-2009(Rs) 2009-2010(Rs) INC / DEC %Sources of funds:Share capital 4,000,000 4,000,000 0 0.00Reserves & surplus 2,218,534 2,847,858 6,29,324 28.36Loan funds:Secured loan 14,362,723 11,726,999 -2,635,724 -18.35Unsecured loan 4,88,480 230,000 -2,58,480 -52.91Total 21,069,737 18,804,857 -2,264,880 -10.75Application of funds:

Fixed assets 12,001,322 12,783,542 -7,82,220 -6.52Current assets & Loan and advancesCash & bank 5,472,046 5,420,206 -51840 -0.95Sundry debtors 19,634,991 19,448,973 -1,86,018 -0.94Advances and deposits 7,.081472 7,014,384 -67,088 -0.95InvestmentsOther assetsTotal 32,188,509 31,883,563 -3,04,946 -.095current liabilities & provisions:Less: Current liabilities 22,597,799 25,321,640 2,723,841 12.05Expenses for provisions

1,01,755 540,810-4,39,055 -4.31

Net Current assets 9,488,955 6,021,112 3,467,843 -36.55Total 21,069,737 18,804,857 -2,264,880 -10.75

Inference:The comparative balance sheet of the year 2009 to 2010 is as follows.

The share capital of the company remains same. The secured loan of the company has

decreased in this year .The fixed assets of the company has increased. The cash position of

the company has fluctuating increase or decreases. Large amount to the creditors has to be

paid.

3.9 TREND ANALYSIS

77

Table-3.9.1

Particulars2005-06 2006-07 2007-08 2008-09 2009-10

Trend Trend Trend Trend Trend

Sales 100 133.94 123.42 125.68 72.92

Total income 100 130.95 124.5 123.82 72.62

Total expenditure 100 134.26 117.88 156.25 77.13

Net profit 100 81.49 287.6 48.77 73.2

Trend Income Statement in the study period (2005-06 to 2009-10)

79

Inference:By taking 2005-06 as base year (100%) the sales, total income, total

expenditure, and net profit during the study period were analysis by taking trend as a tool.

The above table shows the movement of variables during the study period. The entire

variable shows the lower trend during the 2009-10.

80

TABLE-3.9.2

TREND BALANCE SHEET IN THE STUDY PERIOD (2005-06 to 2009-10)

Particulars2006 2007 2008 2009 2010

Trend Trend Trend Trend Trend

Share capital 100 100 100 100 100Reserves and

surplus100

174.8 287.6 46.08 71.64Secured loans 100

133.65 84.48 91.65 81.65Un secured

loans100

2064.28 109.51 30.87 47.09Fixed assets 100

96.5 108.6 105.83 93.48Debtors 100

195.63 130.07 92.66 99.5Cash and bank

balance100

177.49 110.94 125.13 99.5Advances and

deposits100

181.43 133.57 112.28 99.5Current

liability100

187.8 155.62 133.05 112.05Provisions 100

378.5 116.1 4.65 95.69

InferenceTrend Percentages of Balance Sheet is done by taking 100 as base for all financial

years 2006 to 2010. Fixed assets have been decreased during the period 2009-10.current

assets, Current liabilities and provisions were fluctuating during the study period. Therefore

the balance sheet total shows an increasing trend in the figures.

81

FINDINGS

82

CHAPTER-IV

FINDINGS

The current ratio is more than 2% in the first two years. But in all other years the

current ratio is slightly lower than the normal. This shows that the company is not

enjoying credit worthiness.

The liquid ratio is more than the normal (i.e.) 1:1in all the study periods. Hence the

firm is controlling its stock position because there is linear relationship between

current ratio and liquid ratio.

The absolute ratio is almost same for all the years except in the year 2009-10

In all the years the debt equity is less, when compared with borrowings. Hence the

company is not maintaining its debt position.

The proprietary ratio during the first two years is less than the 1/3. During the other

sudy period is it is more than 30%

During the year 2005-06 it is only8.14% which shows lower position of cost of goods

sold .But at the same time during 2009-10 it is 13.3.

The sale is almost 3 times more than the fixed assets 2005-06 and in 2006-07 and

2007-08 It is more than 4 times. During 2009-10 it is more than 5 times and reaches

its highest in the year2008-09 ie6.14 times.

During all the years of study period the sales is 2 to 12 times more than the working

capital.

During all the study period years the relationship between sales to total assets is high.

The sales are between 5.5 to 10.8 times more than proprietor's funds. It shows the

firms is maintaining the better utilization of own funds.

The Net profit from the year 2005-06 is very less and in the year 2009-10 the

company made a loss.

During 2009-10 the gross profit position is 8.05%. But in 2005-06 it was 9.89 %.and

it was fluctuating more than the base year in all other years of the study period.

During 2005-06 it was 6.75% on sales and in 2006-07 it was 4.10. It reaches its

highest in the year 2007-08 ie 9.57 But in the last two years it was just above3.. This

means that either there is any defect in pricing the product or excess non-value added

83

expenditures which reduces the net profit of the company. The sales of the

organization are also decreasing and hence management must take care of the quality

and market situations into consideration to resolve the issue so that it may bring good

profits to the organization.

The administration and selling expenses during 2008-09 is very high when compared

to previous year's %age as they were in between 3-5% of sales. This may also be one

of the reasons to a net loss in that year.

The sales figure increasing year after year. It increased about Rs.40,324,263.

Administrative and other expenses were increasing. The other income of the company

was increased year by year.

Net profit has been reduced from 100% to (0.25) %.

During the first four years period the total income was higher than the total

expenditure which is good for the company. But the total expenditure was high in the

period 2009-10. Hence the management has to find immediate remedies to reduce it.

Share capital has been remained constant.

Sundry debtor has been fluctuating over the years. It increased during the first two

years of the study period from 100% to 130.7% and then from there it decreased to

92.66% in the year 2008-09

84

SUGGESTIONS

85

CHAPTER-V

SUGGESTIONS The company's profit over the last two years has been decreasing when compared to

previous year and even it incurred loss in the last year. The company must increase

the profit in future. The company must take steps to increase the profit level. The Gross Profit ratio can be improved by increasing the gross profit and the factors

decreasing the gross profit ratio should be thoroughly checked timely whether they

are operating factors or any misleading factors. Non-operating expense of the company is high. So the management should take

necessary steps to reduce the non-operating expenses. The management should take

steps to reduce the borrowed capital.

Net fixed asset of the company has increased and even though they are not utilizing

the enhanced technology to increase sales. So the management should take initiative

steps for the proper utilization of the resources.

The liquidity position of the company is quite satisfactory. And this must be

improved further for the purpose of proper utilization of the liquid assets of the

company. The cash ratio position of the company is not satisfactory for the last five years. It is

fluctuating over the years and there is no standard ration maintained. So the

management should take steps to improving the cash position of the company. The sales of the organization can be further increased by improving the quality

through optimum utilization of company's resources (i.e. assets, raw materials, credit

system, etc.) and that in turn will increase the overall profits of the organization..

The Management must also study the market position and it also find the demand

prevailing in the market for the products and thus this will guide them to enhance

their sales volume.

86

CONCLUSION

87

CHAPTER-VI

CONCLUSION

On studying the financial performance of Cee vee Foot wear's Pvt. Ltd for a

period of five years from 2005-06 to 2009-10, the study reveals that the financial

performance is better. Cee Vee foot wear's Pvt. Ltd has been able to maintain optimal

cost positioning. Despite price drops in various products, the company has been able to

maintain and grow its market share to make strong margins in market, contributing to the

strong financial position of the company. The company was able to meet its entire

requirements for capital expenditures and higher level of working capital commitment

with higher volume of operations and from its operating cash flows.

.

88

APPENDIX

89

6.1 AppendixBalance sheet as on 31-3-2010

Particulars Schedule AmountSOURCES OF FUNDS

Share capital

RESERVES AND

SURPLUS

P/L A/C

LOANS AND FUNDS

Secured loans

Unsecured loans

A

B

C

4,00,000

2,218,534

14,362,723

488,480

Total 21,069,734

APLLICATION OF FUNDS

FIXED ASSETS

Gross Block

Less; Depreciation

Net Block

Differred Tax Assets

Current assets ,Deposits&

Advances

Less:Current liabilities and

provision

NET CURRENT ASSETS

D

E

F

G

20,990,142.22

10,289,699

32,188,509

22,699,554

10,700,453

880,329

9,488,955

Total 21,069,734

90

BIBLIOGRAPHY

91

6.2 BIBLIOGRAPHY

BOOKS

T.S Reddy and Y. Hariprasad Reddy, Financial management, New

Delhi: Tata McGraw hill Publishing company Ltd., 2005, 3rd edition

M.A Sahaf Management and Accounting 4th Edition, Tata McGraw Hill

Publishing Company Ltd, 5th Reprint - 2006 - New Delhi.

IM .Pandey, Financial Management 8th Edition, Vikas Publishing house

Pvt Ltd, 6th Reprint -2006- New Delhi.

IM .Pandey, Working capital Management 8th Edition, Vikas Publishing

house Pvt Ltd, 6th Reprint -2006- New Delhi

R.K. Sharma & S.K. Gupta, Financial Management

R.P. Rustagi, Financial Management

WEBSITE:http://money.newkerala.com/company-profile-id-16020114.00.html

www.hillwoodindia.com

JOURNALS AND ARTICLES:

Annual Reports Of CEE VEE FOOTWEARS PVT. LTD

General Articles and Magazines Of CEE VEE FOOTWEARS PVT .LTD Survey of Indian industry- The Hindu

http://www.hillwoodindia.com/

http://money.newkerala.com/company-profile-id-16020114.00.html

a study on financial performance analysis at cee vee

Economy & Finance

suitable corrective

apco suzuki

corporate

comparative

enjoying credit

global sourcing

perceived

provide valuable