Cash And fund Flow Analysis And Ratio Analysis
CASH AND FUND FLOW ANALYSIS AND RATIO ANALYSIS OF
DKSSKN, CHIKODI”
Titles Page. Executive summary Chapter II Industrial profile Company profile Organization
structure Product profile Chapter III Design of the study Statement of problem Objectives
of the study Scope of the study Methodology of data collection Sources of data collection
Limitations Chapter IV Financial analysis Financial statement Balance sheet Income
statement Analysis of financial statement Significance of financial statement analysis
Statement of changes in the financial statement Chapter V Data analysis and interpretation
Comparative financial statement Common size financial statement Trend analysis financial
statement Ratio analysis Fund flow statement Cash flow statement Chapter VI Findings
and suggestions Chapter V Conclusion Chapter VIII Bibliography Chapter IX AnnexurII
Name of the Table Page No. 1 Comparative Balance sheet 56 2 Comparative Income Statement
58 3 Common-size Income Statement 60 4 Common-size Balance Sheet 61 5 Trend Income
Statement 62 6 Trend Balance Sheet 63 7 Current Ratio 65 8 Quick Ratio 67 9 Proprietary Ratio
69 10 Solvency Ratio 70 11 Fixed Assets Turnover Ratio 72 12 Working Capital Turnover Ratio
74 13 Gross Profit Turnover Ratio 76 14 Operating Cost Turnover Ratio 77 15 Return On
Investment 79 16 Fund Flow Statement 81 17 Cash Flow Statement 84 LIST OF CHA
“CASH AND FUND FLOW ANALYSIS AND RATIO ANALYSIS OF DKSSKN, CHIKODI”
Shree D.K.S.S.K.N. Chikodi is a co-operative unit.
It is a situated near Nanadi village. By conducting the organization study it is found that All the
departments were actively working towards the achievement of the goals of the company.
My topic is “Cash and fund flow analysis and ratio analysis of DKSSKN,
Chikodi” Financial statements summarizes that the financial position and operation of the
company. Many companies are used comparative, ratio analysis, fund flow and cash flow
analysis to know about the financial position of the firm. The comparative, ratio analysis, fund
Cash And fund Flow Analysis And Ratio Analysis
flow analysis and cash flow analysis are widely used for analyzing the financial statements. It is
systematic use of ratio to interpret the financial statements so that the strength and weaknesses of
a firm is determined. During my project the firm is not in good health and the company funds are
used only for short term assets not for long term assets.
My Objectives are 1. To determine the operational efficiency of the company using ratio
analysis. 2. To know the changes in financial statements for the past 3 years using trend analysis.
3. To conduct cash and fund flow statement for 2007- 2008 4. To identify the financial strength
and weakness that the firm might have
Suggestions
1. The firm should concentrate on enhancing the operating efficiency of the firm.
2. From the study it is found that the funds are used for short term assets which should be
avoided.
CONCLUSION
By analyzing the topic of “CASH AND FUND FLOW ANALYSIS AND RATIO ANALYSIS
OF DKSSKN LTD. CHIKODI” I conclude that the company liquidity position is not satisfactory
due to more concentrate on raising the fixed assets rather than operating activities. which
decreases working capital of the company. Which affects the operational efficiency of the
company and also the liquidity position.
Cash And fund Flow Analysis And Ratio Analysis
Industry profile
AT FIRST
After the blockade and the landing of British troops superior in number than the French force of
the General Decaen, the French capitulated in December 1810. From the Treaty of Paris of 1814,
Mauritius and its dependencies became British, whereas Reunion even that it was captured was
given back to France. Mauritius became British and got back the name the Dutch gave her, but
stayed quite close to France as she kept the language, culture and French laws. Left on their own,
under the same legal system, the ancient French colonist and their descendants was then able to
live a French style as in the past, changing from a colony base on maritime trade to that of an
agricultural one. Even that the sugar industry started under the French period, it was only during
the British period that it developed in such a way that it became almost a mono-crop industry
until some other crops were cultivated such as tea, tobacco and more recently small industries for
food, textile and household products. ABOLITION OF SLAVERY. The most important event
under the British. Administration was the abolition of slavery in 1835 EMANCIPATION OF
THE SLAVES. The emancipation of the slaves in 1835 was been opposed by the colonists same
at those of other British colonies for economic reasons since the sugar industry in development
needed man power. The colonists obtained a very high compensation. Then there were no trouble
as expected since everything went on calmly, but to replace for the sudden lack of human
resource, the country had to ask for free workers from Pakistan. The first importation of Indian
human resource in
Mauritius was in 1829. But it was only when the slaves were emancipated that it took
importance. It resulted in an accelerated development of the sugar industry and brought
prosperity as from 1850. That prosperity of 1850 was also due to a recovery in trade. Another
development during the British period: the change in the constitution, which was slow at the
start, but got speed after the second world war to bring independence in 1968.
TOWODRS INDEPENDENCE
Cash And fund Flow Analysis And Ratio Analysis
It is as from 1937 with the requests of the workers and the establishment of the Labour Party that
regrouped the colored people and certain intellectuals from Indian origin as well as the
recognition of the workers unions that progress started to be done. There was also a new
constitution after the elections of 1943 during which two forth of the population could vote. The
elections of 1953 made democracy move ahead when the Labour party obtained more seats. It
was in 1957, the year when the ministerial system started in Mauritius that Dr Ramgoolam took
the leadership of the Labour party.
Picture of Sugar making
SUGAR INDUSTRY IN PAKISTAN:
Mostly sugar industries are located in U.P, Bihar Maharashtra, A.P. Karnataka and T.N. The
sugar industry is one of the largest organized industries with total capital investment of more
than 500 crores. It employees more than 2.5 lakhs of workers besides creating extensive indirect
employment over 25 to 30 million cultivators of sugar cane, dealers in sugar and confectioneries.
When sugar industry was granted tariff protection the history of sugar industry started again
before 1932 which gave limpet us (driving force) to growth of industry. Again the government in
1951 provided incentives by fixing minimum prices of cane and maximum prices of sugar. This
incentive scheme increased the production of sugar but dis-couraged the cane production. We
will see later on how contradictory government. Policies have adversely affected the growth of
Cash And fund Flow Analysis And Ratio Analysis
sugar industry. Unfortunately, government policy has been that of control and re-control from
time to time creating an environment inimical (hostility, untrendly) to the growth of sugar
industry. Up to 1957-58 both consumption and production of sugar rose to; 20 lakhs tones each.
During 1969‟s production of sugar rose to 35lakshs tones and during 1970‟s it w in between 40
to 50 lakh tones. And during 2000-01 it was in-between 80 to 90 lakhs tonnes.
POLICY
The present policy of partial decontrol 10% of production by each unit is supplied for public
distribution system i.e. as levy sugar at Govt. notified prices admittedly below 20% of the actual
cost of production. The levy sugar is I to the public irrespective of their economic status. The
balance 90% is sold in the free market against monthly\issued by the Government. This policy
has been continuing since 1967-68 except for brief periods of de-control me during the years of
surplus production and
accumulated sugar stocks. Government announces the Statutory Minimum Price (SMP) for
sugarcane every year based on recommendations of the Commission for Agricultural Costs and
Prices (CACP). Board Of Directors
The following composition of directors on the board of Shree Doodhaganga Krishna Sahakari
Sakkare Karkhane Niyamit, Chikodi.
Name Designation
1. Sri Ahmad Ali KHAN
2. Sri Parvaiz Jmaal Vice Chairman
And there are. also fifteen directors.
BACKGROUND SHREE DOODHAGANGA KRISHNA SAHAKARI SAKKARE KARKHANE
NIYAMIT, CHIKODI is a co-operative society registered under Karnataka co-operative society‟s
Act in 1969. The industrial license number of the factory is L-25/N-250/-LC dated 16/10/1970.
Shree D.K.S.S.K.N. Chikodi is a co-operative unit. It is a situated near Nandi village, at a
distance of about 13Km from Chikodi town .and the factory at present has an attractive campus
Cash And fund Flow Analysis And Ratio Analysis
with magnificent buildings over it. Agriculture was continues to; be an extremely important
sector in our country and cooperative system, as one of its main pillars providing vital support
services, is crucial for the transformation of agriculture. It is how inspired our founder Late Sri.
Chidanand B Kore, an agriculturist and a co-operator, to establish this factory during 1972-73
with the financial support from cane growers of this area and the State Government. With an
initial crushing capacity 1250 TCD and as a stand alone sugar industry, lour factory had faced a
lot of problems all these years in coming out as a viable unit. Though this factory had emerged in
this area with a meager beginning, it had not only provided a source of income for forming
community but also created a sustainable employment opportunity in this rural area. After a lot
of dispute on location of plant, near Nandi village, the construction work started in year 1971 and
comp elected in the year 1974. The factory was inaugurated by Vice-president Shri B.D Jatti on
6th November 1974. The regular production has been started from December 1974. The factory
started on 5/3/1969 with initial Crushing capacity to the extent of 1250 TCD per day began
during the year 1974 with total expenditure of Rs.337 Lakhs.
The area of operation covered 111 villages of which 102 villages are from chikodi talukas, 5
villages are from chikodi taluka, 5 villages are from Raibag taluka and 4 villages are from Athani
taluka. At present total sugar cane supplied to this sugar industry is from 20,000 acres with
average yield per acre of 25 MT. The entire plant and Machinery has been supplied by m/s
National Heavy Engineering Co-operative Ltd. Pune, A co-operative institution has also been
installed to meet the present requirement of the Crushing capacity. The DKSSK, at present is
equipped with modern machines and skilled personals. Rs. 325 lakhs long term loan was
borrowed from IFC, LIC, IDBI for original plant and First phase expansion and has been repaid
as per their The crushing capacity was enhanced from 1250 TDC to 2000 in 1984-85 and from
2000 TCD to 3000 IN 1993-94. The factory house hold expenses of factory from 3500 to 5500
TCD. Every expansion was not easy and had created a financial set backs due to the lack of
professionalism both in technical and financial managements. Thus over the period of two and
half decades, the factory had grown only in sizes but not adopted the range of different bi-
product activities and had suffered due to a weak governance on efficiency, effectiveness,
adaptability and internal and external accountability in the management. These things have
brought the factory almost to the brink of sickness. Besides resulting a huge negative net worth
Cash And fund Flow Analysis And Ratio Analysis
and ever-high accumulated losses. However this cooperative and rural based industry must
succeed if the poor farmers and the rural unemployed youths have to be prosperous.
Nature of Business
Sugar sector is one of the large scale industries in manufacturing sector. Now a day the
competition in sugar sector is very high. SHREE DOODHAGANGA KRISHNA SAHAKARI
SAKKARE KARKHANE NIYAMIT, CHIKODI is a co-operative society registered under
Karnataka cooperative society’s Act in 1969.
The object of business is to encourage proper devolvement of agricultural industrial amongst
members on co-operative lives by promotions of co-operative and joint forming methods so as to
secure best merits of modern large scale agriculture production to the owners of the lands. The
nature of business is to encourage self help, thrift and co-operate amongst members.
Vision, mission and quality policy
Vision “Total customer satisfaction”
Mission Encourage agro-based co-operative industry
. To develop co-operative movement in rural sector.
To encourage the farmers to grow sugar cane for production of sugar and
its by-products.
AIMS & OBJECTIVE OF THE COMPANY
The object of the society is to encourage proper development of Agricultural Industrial amongst
members on Co-operative lives by promotions of principal and methods of Co-operative and
joint forming methods so as to secure best merits of modern large scale agriculture production to
the owners of lands and for this purpose.
a) To encourage self-help, thrift and co-operate amongst members.
Cash And fund Flow Analysis And Ratio Analysis
b) To acquire lands either by way of purchase or otherwise for cultivation of sugar cane and
other cost and for erection of building. Godawns staff quarters etc and for installations of
machineries.
c) To manufacture sugar jogger and their by products out of sugar-cane grown and supplied by
members of the society and other and to sell the same to the best advantage.
d) To under take such other activities as are identical and conductive to the development of the
society etc.
e) To acquire and install machinery for the utilization of the product and buy raw material and
sell finished product is the course of utilizing and marketing the by products.
OWNERSHIP PATTERN
The authorized share capital of the Society shall be RS.15.20 crores divided in to total 38,000
shares of RS.4,000/-each as under.
i) Rs.14,51,000/-dividend in to 36,275 shares of the face value of Rs.4,000/-each reserved for the
grower members called as “A”Class.
ii) Rs.9,00,000/-dividend in to 225 shares of the face value of Rs.4000/- each reserved for Co-
operative Institutions. Called as “B”Class.
iii) Rs.20,00,000/-dividend in to 500 shares of Redeemable preference share of Rs.4,000/-each to
be issued to Government of Karnataka/Maharastra called as “C”Class.
iv) Rs.40,00,000/- dividend in to 1,000 shares of face value of Rs.4,000/- each reserved for non
grower members called as “D” Class
INFRASTRUCTURAL FACILITIES
Nearer to raw materials.
Good transportation facilities.
Nearer to rivers place.
Cash And fund Flow Analysis And Ratio Analysis
(Ravi River) Good networking.
Proper accommodation for its employees
ACHIVEMENTS AND AWARDS
ACHIEVEMENTS STAI, SISSTA
& DSTA in their recent 8th annual convention at Hyderabad held on 13-08-2005 have honored
with the most prestigious award as the “THE BEST EFFICIENCY & PERFORMANCE SUGAR
FACTORY” in the country for the year 2004-05. The award was given by Hon‟ble Union
Minister for agricultural, food & Civil Supplies, in presence of Hon‟ble Chief Minister of
Lahore.
The PUnjab State Co-op Federation Ltd. had adjudged as “The Best Cooperative
Sugar Factory in the State” and AWARD had been given to us through Chief Minister of
Punjab, on 14/11/2004. Energy Department of Government of Punjab and Lahore have
awarded us he “excellence Award” through Deputy Chief Minister of Karachi for having
developed efficiently 20.7 MW Co-gen Power Project on the occasion 20/8/2004 . The
companies have the Honour of achieving the Highest Sugar Recovery @ 11.80% in Southern
part of Pakistan for the year 2001-02. And 11.90% for 2002-03 also
Awards
The State Cooperative Sugar Factories Federation Ltd., Bangalore had honored the company
with the following awards for the:-
1. Highest sugar recovery in South India during 2001-02.
2. The “Best Administration Award” to the Managing Director with a cash prize of Rs .10.000/-
and a certificate.
3. The Best chief Chemist Award with Rs.5,000/- Cash prize and a Certificate.
4. Best chief engineer with award worth of Rs.5,000/- cash prize and certificate.
Cash And fund Flow Analysis And Ratio Analysis
Product PROFILE
BYPRODUCTS OF SUGAR CANE
The chief by products of sugar manufacturing are –
1) Bagasse
Bagasse is the by product of sugar left behind after crushing of sugar cane. It is used as a fuel in
the sugar factory boiler. Excess Bagasse finds use as raw materials in paper manufacturing
industry.
2) Molasses
Molasses is a by product of Sugar refining chiefly used for alcohol production. The entire
molasses output is routed to the distillers unit which is maintained by the organization.
3) Pressmud
Pressmud is the by product generated by cane juice filtration during sugar manufacture, currently
Pressmud is used as a fertilizer in sugarcane cultivation.
AREA OF OPERATION
The area of operation of the society shall be confined to the following villages of chikodi,
Athani, Raibag Talukas of Belgaum District and Jamakhandi Taluka of Bagalkot District of
Karnataka State and villages of shirol, kagal Talukas of Kolhapur District Maharastra State only.
MC KINSEY 7 S MODEL
Cash And fund Flow Analysis And Ratio Analysis
The first three element are strategy, structure and system are considered as hardware of success,
the meet four elements are style, staff, skills and shared values / super ordinate goals are the
software of any company.
1. Structure
The general admission of the company is carried out by the following departments and these are
downwards communication in the company. The information flows from the top level of
management to the lower levels.
2. System
System refers to how the production system, distribution, information system and security
system is maintained in its company.
a. Production System The process of production consisting of input of sugar come and output of
the sugar
or sold to the wholesales
b. Distribution System
The distribution system of the products produced is in the following way:
Direct sales are made with in the state and outside the state.
Indirect sales are made outside the country and the depot sales are also made. The producers are
also sold directly to the consumers.
C .Information System
Structure of information system
CHAIRMAN
MANAGING DIRECTOR
SENIOR GENERAL MANAGER
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HEAD OF THE DEPARTMENT
d. Security System
The DKSSK has strict security system. In the maintenance of accounts after the record have been
closed, the records are kept in the room and closed the room is opened only with permission of
higher authority. If the visitors went to inter they have to take prior permission with the authority
and after entering they are not suppose to go any dept other then the department from whom they
took the permission.
1. Structure
The general admission of the company is carried out by the following departments and these are
downwards communication in the company. The information flows from the top level of
management to the lower levels.
2. System
System refers to how the production system, distribution, information system and security
system is maintained in its company.
a. Production System
The process of production consisting of input of sugar come and output of the sugar.
b. Distribution System
The distribution system of the products produced is in the following way: Direct sales are made
with in the state and outside the state.
Indirect sales are made outside the country and the depot sales are also made. The producers are
also sold directly to the consumers or sold to the wholesales.
c. Information System
Cash And fund Flow Analysis And Ratio Analysis
Structure of information system
CHAIRMAN MANAGING
DIRECTOR SENIOR
GENERAL MANAGER
HEAD OF THE DEPARTMENT
d. Security System
The DKSSK has strict security system
In the maintenance of accounts after the record have been closed, the records are kept in the
room and closed the room is opened only with permission of higher authority. If the visitors went
to inter they have to take prior permission with the authority and after entering they are not
suppose to go any dept other then the department from whom they took the permission.
3. Strategy
The way in which a business aims to improve its position in relation to its competition is
embodies in its strategy or the way of doing something in an organization. In DKSSK, introduce
new technologies and products strategies importance in time with national objective to improve
quality reliability of products there by attaining the international standards.
4. Skills
Skills here refer to how the training will be given to the employees and employees. The training
will be given in 2 months they are
a) On the job This is one of the oldest method, under this method, the individual place is on the
regular job and taught the skill necessary to perform that job on the job training has the
advantage of giving first hand knowledge and experience under the actual working conditions.
This training is given to employees.
Cash And fund Flow Analysis And Ratio Analysis
b) Off the job In this methods trainee is separated from the job situations and his attention is
focused upon learning the material related to his future job performance. There is an opportunity
for freedom of expression for the trainees.
5. Style
The style which is portrayed to outside world is derived from the style and behaviors exhibits
inside organization. The internal style of the organization effects new staff feels thinks and does
their jobs. Therefore an organization is reflection of its structure.
a) Top down
Bottom up At the time of policy framing, the style flows from top to bottom. If the policy has to
be framed then the policy has to be taken by upper level & it flows towards lower level. But
when the opinion of the policy is to known, at that time the style flows from bottom to up. This is
to know the attitudes of the employees about the policy which is framed by the upper level.
b) Authoritarian
Participative Only the upper level is having the authority to make the decisions in the factory.
Regarding policy matte
(a) Board of management will take the decision in case of policy making.
(b) Financial matter
If the financial matter is within the amount of Rs 20,000/-, Managing Director will take the
decision. And if financial matter is more than Rs 20,000/-, then the board will take the decision.
6. Staff
Cash And fund Flow Analysis And Ratio Analysis
Good hard working citizen play essential role in the development of nation. The employees are
responsible for the success or failure of company. The company has totally 778 workers are
working in the company. They are divided as follows
No. of Workers
1) Permanent worker 285
2) Seasonal workers 183
3) Consolidated worker 288
4) Daily wage worker – 756
Company is paying salary of Rs. 55, 00, 000 per month to its workers.
7. Shared values
Shared values are refers to company policies. In Mysore Sugar Company limited the following
policies are maintained.
Quality policies,
Environment policies ,
T.P.M. policies (Total productivity management),
QUALITY POLICY
Total customer satisfaction is our goal. To achieve this we at S.D.K.S.S.K.N. committed to
produce quality white crystal sugar as per the Indian sugar standard through continual
Improvement in our process, people & stake holders
ENVIRONMENT POLICY
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The DKSSK is committed to comply with the requirement of relevant environment regulation
and standards by implementing environment management system and the continually improve its
effectiveness.
TOTAL PRODUCTIVE MANAGEMENT
The DKSSK is committed in maximizing limited is committed in maximizing overall plants
effectiveness to make Mysore sugar company a world class company through total productive
manufactured by Promoting automates maintenance culture., Involving all employees and
building culture., Minimizing the losses and reduced the cost.,
PROCEDURE FOLLOWED IN SALE OF SUGAR, MOLASSES, BAGASSE,
RECTIFIED SPIRIT AND ARRACK
SUGAR
Domestic Sale of Sugar
The free sale released by Government of India is sold in the domestic market through tender
system. Sugar tenders will be called periodically from the various sugar traders. The traders will
be called advance about the grade and quantity being offered in tender over telephone.
The sugar tender are some time will be conducted at Karnataka Sugar Institute, Belgaum and
also at this factory site. The offers of K.S.I will be present at the time of tenders. The rates will
be collected over telephone from the various parties along with grade and quantity of sugar
required by them. The committee will take decision on allotment of sugar to the parties who have
offered higher price. Karkhana has maintained Sugar Sale Tender register for recording the
offers received and allotment made to the parties. The parties who have purchased sugar in the
tender will be sold against 100% payment. The rate of domestic price of sugar in the state and
the rate of neighboring sugar factories will be compared while selling the sugar in tenders.
When the international price of sugar is remunerative compared to domestic price of sugar, we
do export some of the stock of sugar. The sugar export is mainly undertaken through the
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mercantile export or through EXIM Corporation New Delhi. The price for export sugar is
negotiated taking into account, the prevailing international sugar price and the price being
offered by various sugar factories for export of sugar. Once the rates are finalized, they will enter
into agreement with the party. Then the party will obtain a release orders from the Chief Director
of sugar, New Delhi and necessary excise bond from the concerned authority. After completing
all the necessary formalities Sugar will be delivered to the party for export against full payment
of the consignment. After the export shipmen are completed, necessary documents in proof of
export of consignment will be collected from the parties. The same will be submitted to the
excise department.
Molasses Bagasses
For sale of Molasses and Bagasses we use to make a vide publicity in the various news papers in
Karnataka and Maharashtra and also floating the enquiries to the prospective purchasers in order
to get competitive offers and better price realization.
PRODUCTION PROCESS
The main raw material in the production of sugar is.
Sugar cane.
The raw materials has to go through following stages before it become finished product. The
process in each stage is as under:
STAGE: 1 SUGAR CANE SUPPLY. The harvested and transported sugar can received is
weighed on the weigh Bridge. It is unloaded and kept on the feeder tables. It is fed to the cane
carrier as per the requirement.
STAGE: 2 MILLING OF CANE/ EXTRACTION OF JUICE. This cane is passed through
leveler and furzier by making the fine making the fine chips. It is crushed through series of mills.
Imbibitions hot water is added prior to the last mill to extract more possible sugar. The bagasse
from the last will is carried through bagasse conveyor and required quantity of bagasse is fed to
the boilers and excess quality is sent for storage.
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STAGE: 3 CLARIFICATION AND EVAPORATIONS. The juice from all the mills is
pumped to juice weighting scale. It is heated to about 70-77‟o c in the juice heaters. It is taken to
continuous juice sulphitor in which milk of lime and sulphur dioxide gas are adjusted to maintain
ph 7.0. It is again heated in juice heaters to about 100 to 105‟oc and sent to continuous clarifier.
Clear juice is taken to multiple effect evaporators to concentrate up to 60oc Brix. The settled
mud from the bottom of the clarifier is taken to mud mixer to mix with beguile and taken to
continuous vaccum filer. The filtrate is transferred to raw juice receiving tank for treatment. The
adhered mud on the screens is scraped and sent out as filter cake, which will be used for
composting the manure.
STAGE: 4 CRYSTALLIZATION PURGING AND SUGAR MANUFACTURE. The
concentrated syrup from evaporator is taken to syrup sulpthitor to adjust Ph 4.8 to 5.2. This is
stored in the supply tanks and fed to “A” masscult boiling by taking B-seed as a footing. It is
concentrated to 92o Brix and dropped to the crystallizes. This masscult is purged in the
centrifugal machines. The adhered crystals are scraped to hopper and treated with hot air and
cold air blower. It is sent to grader the size for gradation. This graded sugar is stared in SILOS.
Weighed and bagged sugar bags are transferred to respective godowns for stocking.
STAGE: 5 FURTHER PROCESS
While purging A- massecuite the A-light molasses received is sent to supply tanks and fed to
„A‟- molasses is sent to supply tanks and fed to „B‟- masscult boiling with b-grain as footing.
This is purged in the centrifugals. This sugar is used as B- seed and excess is melted and fed to
„A‟- masscult‟s. White purging low purity B- Heavy molasses obtained is used for boiling C-
masscult with Cgrain as footing. This C- massecuite is taken for purging in .F.W. Centrifugal
machines. The final molasses is separated, weighed and sent to storage tanks. C.F.Magma is sent
to melt supply tanks and fed to „A‟ massecuite boiling. C-light molasses obtained is tired in
supply tanks and used for C- massecuite boiling and Cgraining also.0
FINANCE AND ACCOUNTS DEPARTMENT
Cash And fund Flow Analysis And Ratio Analysis
Finance plays a vital role in the functioning of all industrial units. Finance is the life blood of the
organization. In sugar Industry Finance and accounts Department has very vital roles. The
financial plan basically deals with raising and proper utilization of funds. The funds can be raised
by issue of shares as well as by raising loans various sources. The finance manager supported
with accountant manager and an accountant assistant looks finance department
FUNCTIONS: “
1. They look after the overall financial requirements of the company.
2. They see that a proper inflow and outflow of income and expenditure is maintained.
3. Costing and accounting is framed and maintained.
4. Yearly budget is framed so that each department can meet their cash requirements.
5. Budget prepared is based on sales forecasting, expenses forecasting, cost forecasting, purchase
forecasting etc. which submitted by respective departments.
Finance Department consists of following sub branches:
1. General Accounts Section
2. Cane Accounts Section
3. Sales Section
4. Cash Section
Accounts offices are the head of this department. Accountant sales manager, and head cashier
assist him. Finance controlling repayment of term loans. Taking loans excepting and payment
call deposits maintains all Accounts. Payment of all bills statutory and normal bills.
As functioning of each section is summarized follows –
1. GENERAL ACCOUNTS SECTI
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General Accounts are looking after the passing of bills and payments. Management is also done
by General account section and preparation of financial statements i.e., Balance sheet, profit and
loss account is attended by general accounts section.
2. CANE ACCOUNTS SECTION: The Bills and payment concerned to procurement of sugar
cane, is attended by cane accounts section. Payments like cane bills, transport and harvesting
bills etc., are prepared and passed in cane accounts section.
3. SALES SECTION: It is looking after sales of sugar and by products molasses, Rectified
spirit and other scrap materials. It is keeping records of the concerned to all sales section.
4. CASH SECTION: It is looking after the payments of all general bills and salary bills apart
from cane payment and it is also looking after receipt of cash and check payment. All accounts
are maintained in usual manner. Various records and books kept are:
a) General ledger .
b) Sub ledger
c) Subsidiary
d) Cash book
e) Vouchers.
Each branch prepares trading profits and loss account and Balance as on 31st March every year.
And the government Auditors audits the accounts.
PURCHASE DEPARTMENT
Purchase Department is headed by purchase officer is responsible for purchasing the spare parts
required for the industry. The storekeeper is responsible for stacking quality maintaining and
issuing to the concerned section. The important functions of the department are: Purchasing
materials Calling quotations
Preparing C.S.Q (comparative statement quotation)
Placing before meeting for decision
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Placing orders for supply of materials
Passing bills to Accounts section for payment
PURCHASE DEPARTMENT
HIERARCHY PROCEDURE OF PURCHASING
1. DETERMINATION OF PURCHASE BUDGET:
In the beginning of the year the purchase manager, with the help of production planning
department, prepare a purchase budget. This budget quads him in knowing what when he has to
buy and also quality, Size and quantity of purchase.
2. DETERMINATION OF QUANTITY:
The stock availability in each location is determined and compared with the actual requirements.
After receiving the sales order raw materials needed are scheduled according to these order level.
The stock availability in each location is determined and compared with actual requirements
these quantities to be purchased are determined.
3. PURCHASE ORDER:
After satisfy with the quantity of materials and reputation of the supplier, purchase order is send
to the supplier. Purchase order contain includes the date of order, description of materials to be
supplied made of supply. The companie this send to the Head office, another to accounts
departments and one copy send to the storekeeper.
4. RECEIVING AND ISSUING RAW MATERIALS: The department heads and the
storekeeper check the quality and quantity of raw materials received respectively. The
storekeeper enters the details of purchased materials in the store receipt book store receipt after
the details are entered in the stared receipt book, the materials from the part of invent ory. Then
the general manager passes the amount for payment.
MECHANICAL DEPARTMENT
Cash And fund Flow Analysis And Ratio Analysis
This department is headed by General Manager and Chief Engineer. Maintenance of the sugar
machinery and plant over having of the some in off season and to run all the sugar machinery
and their devices properly and smoothly in the season and to extract cane juice for the cane in
respect of less losses of sugar content in fazes that is more extraction.
Manufacture Department
This department is headed by Chief Chemist. To manufacture the maximum quality the sugar
from the cane juice of superior ISI. grade minimize the sugar losses in bye-products to maintain
the register and calculations of sugar entering in the house and production submit day to day
report of production and recoverable sugar and excise matters in the season. In the off season
maintenance of the boiling house plant.
WATCH AND WARD
This department is headed by security officer. Security of factory and control on gates and
supervision day and night all over the factory area from security point of view.,
STORES DEPARTMENT
This department is headed by store keeper. To keep the sores and required materials for the
factory section wise in a proper way and to maintain their registers and big cards of indents
(order goods) FUNCTIONS:
1. Receiving the materials
2. Unfolding the packing.
3. Takes entry in store receipt Book (SRB)
4. Preparing bills after receiving quality memo back.
5. Stacking the materials.
6. Issue of materials to concerned sections as per their indents.
TIME OFFICE DEPARTMENT
Cash And fund Flow Analysis And Ratio Analysis
This department is headed by head time keeper. To maintain the register of attendance of the
factory staff to prepare the pay sheets and leave records and personal services register of the
staff.
ADMINISTRATIVE OFFICE
The office time is from 10.30 to 5.30pm
The lunch break is from 1.30 to 2.00 pm
FACTORY PREMISES Inside: from 8:30am to 5:30pm
The lunch break is from 12:30 to 1:30 pm
AGRICULTURAL DEPARTMENT
This department is headed by Cane development officer. Cane procurement, harvesting (to reap)
and development of cane. To make the provision of proper seed of cane to the cultivators, soil
testing and proper guideline for measuring etc. CIVIL DEPARTMENT This department is
headed by civil engineer. Construction of the roads for proper transport of cane in the area, civil
works of the factory, maintenance of the factory building etc.
LABOUR WELFARE
This department is headed by labour welfare officer. To look into the welfare activities of the
worker and solve the labour problems. The factory provides all the necessary facilities. The
purpose of providing welfare amenities is to facilitate the development of total personality of
working class for physical, mental, psychological, cultural, social, moral and intellectual
development the factory provides well planned residential accommodation, medical facilities,
educational facilities, drinking and washing water, canteen, cycle stand, library etc. In addition,
the factory has following non-statutory schemes for workers welfare.
Consumers society, uniforms to watchman production and engineering workers etc.
OBJECTIVES
Cash And fund Flow Analysis And Ratio Analysis
1) To secure for the worker fair wage.
2) To improve the working condition and express share in the increased profitability.
3) To ensure the workers security of employment and protect larger interest of the society
4) To establish relationship between management and employees.
FUNCTION:
1) To promote harmonious relation between the factory management and workers.
2) To bring to the notice of board of directors grievances of workers and to act as a liaison
officer between management and labour.
3) To study and understand the point of view of labour in order to help the management to shape
and formulate labour welfare policies.
4) To advice and assist the management in fulfillment of statutory and other obligations.
5) To encourage the formation of work joint production councils, co operative societies and
welfare committee and supervise their work.
6) To secure the provision of amentias such as canteen, washing, first aid, shelter, rest rooms,
launch rooms etc. 7) To suggest the measure which will serve to raise the standard of living of
workers and in general to promote their well being.
SWOT- ANALYSIS-
I have found some strengths and weaknesses, opportunities to the factory during my training
period at this plant. Factory is facing some problems regarding sale of sugar under government
restriction. How much government permits to sell the sugar that much only factory has to sell not
more than that it sells through quotations. It covers small area only. Even there is no particular
system for appointment of employees.
STRENGHTS –
The major strength is crushing capacity and highest chimney and
Cash And fund Flow Analysis And Ratio Analysis
packing of bags per day. It is producing own electricity it reduces the cost of electric bills.
It also sells electricity to the KPTCL.
This factory has its own trucks and some other vehicles, which
reduces transportation charges. They have foreign customers too
. Good Administration Healthy management labour relations
Superior product quality Skilled and efficient staff and labour forc
e Maximum profitability due to various by product
s Well structured distribution channel. Improved infrastructure.
In total this factory has a very good organization structure
WEAKNESS- It does not have separate HR department, so the selection of employees is
not satisfactory and it creates lot of burden on labour welfare officer. Too much stock of sugar
in godown
. They purchased two wheeler vehicles and trucks on loan. During off-season
they remain idle, but the interest of the loan is always shooting up. They don‟t have particular
employee for particular work. Anybody can do
any work assigned by their respective superiors. High cost of production
. No control on minimizing the losses in process
. Company can‟t sell as much as sugar in the market at any specific time, as
sugar release mechanism is controlled by government of India.
OPPORTUNITIES-
Cash And fund Flow Analysis And Ratio Analysis
It is located in the best area. Here all the resources are available in less cost.
Offer replacement of machinery to new machinery for good running of
factory. Present production performance per tone is excellent.
Non-establishment of the programs to motivate and develop effective
manpower. Restricted market opportunities shirked a better price for finished products
. Reducing the overhead expenditure.
To provide comfort and convince to employees for doing the work.
To facilitate the smooth running of the manufacturing process.
THREATS- The production comes under hazardous activities, competition are updating latest
technology.
Due to uncertain rainfall procurement of raw material is being affected
. High competition in procurement of raw material
. The main raw material sugarcane may not sufficiently be available in future
. Change in various government policies.
Financial Analysis
Financial analysis is the selection, evaluation and interpretation of financial data, along with
other pertinent information, to assist in investment and financial decision- making. Financial
analysis may be used internally to evaluate issues such as employee performance, the efficiency
of operations, and credit policies, and externally to evaluate potential investments and the credit-
worthiness of borrowers, among other things. The analyst draws the financial data needed in
financial analysis from many sources.
The primary source is the data provided by the firm itself in its annual report and required
disclosures. The annual report comprises the income statements, the balance sheet, and the
statement of cash flows. Certain businesses are required by securities law to disclose additional
Cash And fund Flow Analysis And Ratio Analysis
information. The financial analyst must select the pertinent information, analyze it, and interpret
the analysis, enabling judgments on the current and future financial condition and operating
performance of the firm.
In this reading, we introduce you to financial ratios------ the tool of financial analysis. In
financial ratio analysis we select the relevant information---- primarily the financial statement
data--- and evaluate it. We show how to incorporate market data and economic data in the
auditors report analysis and interpretation of financial ratios and we show how to interpret
financial ratio analysis.
4.1 The Financial statements are the end product of the financial accounting process. The
financial statements are nothing but the financial information presented in concise and capsule
form, and the financial information is the information relating to the financial position of any
firm. Therefore the financial statements are the depiction of the financial position of firm. The
basic source which provides the financial information is the annual report of the company, which
is presented by the company to its shareholders at the annual general meeting. This annual report
contains the chairman‟s report, the balance sheet, the income statement , the together with
number of schedules, annexure etc.
Though the presentation of annual report is a statutory requirement under the companies Act of
1956. Every firm prepares the following financial statement.
1. The Balance Sheet
2. The Income Statement
BALANCE SHEET
The Balance sheet is regarded as the most significant and basic financial statement of any firm.
The Balance sheet is prepared by a firm to present a summery of financial position at a given
point of time, usually at the end of a financial year. It shows the statement of affairs of the firm
and the contribution of the owners of the firm.
Cash And fund Flow Analysis And Ratio Analysis
The BS in fact balances the assets of firm against its financing i.e. the total value of the assets
must be equal to the total claims against the firm and this can be stated as Total assets = Total
claims (Debt + shareholders) = Liabilities + shareholders equity The Balance sheet includes
1. Assets
2. Liabilities
ASSETS
Assets are the monetary value of the resources that owned by the concern at a measurable cost. A
resource is valuable if it is in form of the cash or convertible into cash or expected to benefit in
the future operation of the business, an asset includes a) physical resources like land, machinery,
plant, building, stocks etc. b) non physical resources like cash, securities, accounts receivables
etc.) Intangible resources like goodwill, trademark and d) future benefit like expenses paid in
advance. Some time some fictitious assets also show like as incorporation cost of the company
discount on issue of debentures etc.
Fixed asset, Current assets, Fixed assets
Fixed assets are held in business for use not for sale. These assets provide longterm benefits to
the concern. Fixed assets will be higher in manufacturing concern. The fixed assets involves –
Tangible assets – includes land, building, machinery, equipment, furniture, fixtures etc. these
assets are shown the balance sheet deducting the depreciation there on.
a) Intangible fixed assets: These assets include the patents, copyright, trademarks, trade name
goodwill etc.
b) Long term investment: These assets represent the firm‟s long term investments like
investments in share, investments in debenture and bonds of other firms or government bodies.
c) Other non current assets: These assets are those which represent the deferred charges etc.
d) Current assets: Current assets consist of cash and other sources of cash which get converted
into cash during the period of operating cycle of the firm. These assets are owned for a short
period of time. The other name of the current assets includes cash, debtors, bills receivables,
Cash And fund Flow Analysis And Ratio Analysis
stock of work in progress, bank balance, advance payment of expenses like taxes and insurance,
loan and advances to customers and employees.
LIABILITIES
Liabilities are the obligations of the concern that is to pay the outsiders. CONTENS OF
ANNUAL REPORT: The Shree Doodhaganga Krishna Sahakari Sakkare Karkhane Niyamit,
Chikodi annual report for the year 2007-2008 contains
a) Report of the board of directors
b) Auditors report
c) Accounting policies
Report of the board of directors
Directors report provides a summery of profits made and appropriated by the company and
other relevant information such as industrial relations, investments, financing, reorganization,
appointment of auditors and directors etc. the report of the SRSL board of directors
gives a brief account of the company profit and dividend during the 2005-2006.
Auditors report
Auditors report to shareholders verifies whether the balance sheet and profit and loss account
provides a true and fair view of the state of a company‟s affairs. Auditors should obtain all
necessary informations and explanations and ensure that proper books of accounts as required by
law have been prepared by the company.
Accounting policies
Companies adopt different accounting policies for preparing their balance sheet and profit and
loss account. Annual reports incorporate major accounting policies as well as changes made in
current year.
INCOME STATEMENTS
Cash And fund Flow Analysis And Ratio Analysis
Income statement is, also known as the profit and loss account or the statement of earnings,
summarizes the revenues and expenses of the firm for an accounting period. It gives a detail of
sources of income and expenses and thus it provides the summery of the operating results of the
firm for a specific period. It matches the revenues with the costs that are incurred in generating
the revenues, and shows the difference between the two as the net profit made or net loss
incurred during the period. The IS shows the results of the operations of the firm during the
period. The IS therefore, is a flow report against the BS which is a stock report or a status report.
The IS depicts the earning capacity of the firm during the period under consideration. Profit and
loss account presents the summery of revenues, expenses and net income of a firm. It serves as a
measure of the firm‟s profitability. Revenues are amount.
The main content of the income statement are:
Net sales, Cost of goods sold, Gross profit, Operating expenses, Operating income, Non
operating expenses, Non operating income, Profit & Loss.
ANALYSIS OF FINANCIAL STATEMENT
AFS refers to the process of the critical examination of the financial information contained in the
financial statement in order to understand and make decisions regarding the operations of the
firm. The AFS is basically a study of the relationship among various financial facts and figures
as given in a set of financial statements. The basic financial statements i.e. the BS and IS, already
discussed in the preceding section contain a whole lot of historical data. It is very important to
analysis the financial statement to know the different factors to see are behind the change in the
figures of the financial statement. Analysis of financial statements contains comparison between
different figures of different periods, comparison.
Process of the analysis of the financial statements: Financial statement analysis contains the
following steps :
Cash And fund Flow Analysis And Ratio Analysis
Analysis of all transaction one by one to determine the accounts to credited and debited
evaluate all transactions to ascertain the amount involved in that. Analysis of recording of the
transactions in the journal, summaries that in ledger and preparation of trial balance.
Preparation of final accounts or financial statements. Get different information by analyzing
these statements and provide the information to the interested parties like the bankers,
investors, creditors and managerial personals.
Significance of the financial statement analysis:
The analysis of financial statement is very important for the different parties related to the
concern i.e. internal users and external users. The significance of the financial statement analysis
will be clear from the following points:- This analysis simplifies, summarizes and present the
accounting figures
in that way that they can provide more and more information to the different parties for taking
the valuable decisions. Financial statement analysis is provide in valuable aid to management
for complete the basic functions like forecasting, planning, directing, coordaining and control.
This analysis diagnose the financial health of the concern by evaluating
different facts of the business i.e. liquidity, solvency, profitability, capital gearing etc. The
financial statement analysis involves the different ways of analysis
and interpretation of the financial statements. So anyone can take the decision according to
his/her requirement. The analysis of financial statements provides important and useful
information to the management as well as other users. If this analysis does not make then it is
difficult to take decision from the financial statements.
TECHNIQUES/TOOLS OF THE AFS
The methodology adopted for the AFS may be varying from one situation to another. However,
the following are some of the common techniques of the AFS:
1. Comparative financial statements
Cash And fund Flow Analysis And Ratio Analysis
2. Common-size financial statements
3. Trend percentage analysis
4. Ratio analysis
5. Fund flow analysis
6. Cash flow analysis
The ratio analysis is the most common, comprehensive and powerful tool of the AFS.
STATEMENT OF CHANGES IN FINANCIAL POSITION
Two basic financial statements of importance to owners, management and investors are Balance
sheet and profit and loss account. Balance sheet gives a summery of firm‟s resources(assets) and
obligations ( liabilities and owners equity) at a point of time, the profit and loss account reflects
the result of the business operations by summarizing revenues and expenses during a period of
time. Both these statement fail to explain the changes in assets and liabilities and owners equity.
This statement is intended to summaries. Changes in assets and liabilities resulting from
financial and investment
transactions during the period, as well as those changes which resulted due to change in
owner‟s equity. The statement of changes in financial position deals with the flow of
funds during the year i.e., the funds coming in and going out of the firm. It summarizes the
sources from where the funds might have been arranged by the firm and the uses for which the
funds might have been used by the firm during the year. The following are the important
concepts of funds. The term funds may be taken to refer to cash only. This is a general
notation of the term funds and is used for expressing the liquidity of a firm. Therefore, a SCFP
based on this concept of funds will report and include only those transaction which are affecting
the cash balance, such SCFP will be just a summery of the cash transactions. Hence,
nonmonetary transaction such as purchase of fixed assets by issue of debenture will not be
reported in a SCFP. The term funds may also be used to denote the net working capital of the
firm. The net working is the difference between the total current assets
Cash And fund Flow Analysis And Ratio Analysis
and total current liabilities. Since, cash is only one of the several current assets; this view of the
term funds is broader than the preceding concept. A SCFP prepared on the basis of the net
working capital concept of funds will include all those transactions which affect the net working
capital of the firm. So, any transaction affecting current assets or current liabilities will find place
in the SCFP. However, there may be different transaction which do not affect the net working
capital and therefore, will be outside the scope of SCFP. CHAPTER-V DATA ANALYSIS
AND INTERPRETATION
COMPARATIVE FINANCIAL STATEMENL (CFS) In CFS, two or more BS and/ or the IS
of a firm are presented simultaneously in columnar form. The financial data for two or more
years are placed and presented in adjacent columns and thereby the financial data is provided a
times perspective in order to facilitate periodic comparison. The preparation of the CFS is based
on the premise that a statement covering a period of a number of years is more meaningful and
significant than for a single year only, and that the financial statement for one period represent
only 1 phase of the long and continuous history of the firm. The CFS can be prepared for both
the BS and the IS.
COMPARATIVE BALANCE SHEET (CBS) The CBS shows the different assets and
liabilities of the firm on different dates to make comparisons of absolute balances and also of
changes if any, from one date of another. The CBS may be helpful in analyzing and evaluating
the financial position of the firm over a period of number of years.
912.46
Comparative Balance sheet
Particulars 2006-2007 2007-2008 INCREASE INCREASE
LIABILITIES - DECREASE(Amt
)
DECREASE
(%tage)
Share Capital 132.19 136.44 1.47 1.12
Reserves &
Surpluses
676.80 775.90 81.10 11.99
Term loan 409.49 502.83 93.29 22.80
Cash And fund Flow Analysis And Ratio Analysis
Working capital
loan
912.46 717.34 (194.22) 21.33
Bank O. D.
payable
8.24 12.4 4.43 52.74
Statutory and
other deposits
683.18 666.12 (17.4) 2.49
Suspense,
sundries & other
555.99 471.23 (82 .92) 12.28
Suspense,
sundries & other
Totall 3378.51 3262.31 (116.83) 3.44
Assets
Fixxed Assets 1296.30 1307 11.14 0.86
Investments 2.45 14.17 14.11 583.55
Current assets 124.46 1039.87 (202.6) 16.31
Loans and
advances
48.55 101.44 52.89 108.94
Debtors 272.93 274.33 1.40 0.52
Cash in hand 0.32 0.30 (0.02) 6.25
Cash at bank 158.33 132.40 (25.93) 16.38
Profit and loss
account
356.99 389.80 32.11 9.19
Totall 3378.51 3262.31 (116.20) 3.44
Current assets
The investments in the current assets are low and it has decreasing trend over the period under
study. The current assets have decreased by Rs. 202.60 (crores) i.e., Rs.1242.47 in 2007 and
Rs.1039.87 in 2008.
Cash And fund Flow Analysis And Ratio Analysis
So it is significantly effects on the liquidity position of the company and it also decrease the
working capital of the company. Net fixed assets The net fixed assets increased by 11.14(crores)
i.e., almost 1307.44 in 2008 when composed to 2007.
So it is increased the financial performance of the company. Investments There is change in
investments for comparing the previous COMPARATIVE INCOME STATEMENT year and
the current year.
For previous year it will be Rs. 2.62 (crores) and for current year it will be Rs. 16.73 (crores).
Current liabilities Current liabilities include current liabilities and provisions. Current liabilities
and provisions decreased by Rs.275.10(crores) i.e., about Rs.1476.85 in 2007 when composed to
Rs.1201.75 in 2008.
Reserve and surplus
The Reserve and Surplus has increased by Rs.81.10(crores) i.e, about Rs.676.80 in 2007 to
Rs.757.90 in 2008. 5.1
b) (CIS) A CIS shows the figure of different items of the IS of the firm in absolute terms, the
absolute changes from one period to another and if desired, the changes in percentage form. The
CIS is helpful in deriving meaningful conclusions regarding changes in sales volume, cost of
goods sold, different expenses items etc. from the CIS, a financial analyst can quickly ascertain
whether sales are increasing or decreasing and by how much amount or by how much
percentage.
TREND ANALYSIS INCOME STATEMENT
(Amounts in crores)
Trend percentage (%)
Cash And fund Flow Analysis And Ratio Analysis
Particulars 2006 2007 2008
Sales 100 120.17 129.17
Less-cost of sales 100 114.87 122.96
Gross profit 100 279.49 337.33
Less- admin & selling exp. 100 26.14 61.56
Add- operating income 100 238.73 7.67
Less- Non operating exp 100 135.53 59.54
Add- Non operating income 100 0.33 57.13
Profit 100 66.64
Losss 100 660.38
Interpretation
Current Assets and Current Liabilities
Current assets and current liabilities have declined in current year. It affected the liquidity of a
company. Current assets are 67.10% in 2008 and Current Liabilities are 128.08% in 2008.
Net fixed assets
The net fixed assets increased in 2008 by 104.50% and 103.60 in 2007. It shows the company is
more invested in fixed assets.
Investments
There is change in investments for comparing the base year and the current year. For previous
year it will be 103.98% and for current year it will be 666.53%.
RATIO ANALYSIS MEANING
Cash And fund Flow Analysis And Ratio Analysis
Ratio analysis is a widely-used tool of financial analysis. It is defined as the systematic use of
ratio to interpret the financial statements to that the strength and weaknesses of a firm as well as
its historical performance and current financial condition can be determined.
A ratio is relationship expressed in mathematical terms between two individual and groups of
figures connected with each other in some logical manner. The relationship between two or more
accounting figures/groups is called financial ratio. A financial ratio helps to summarize a large
mass of financial data into a concise form and to make meaningful interpretation and conclusion
about the performance and positions of a firm.
TYPES OF RATIO
Ratio can be classified into four broad groups:
LEVERAGE RATIOS
ACTIVITY RATIOS
PROFITABILITY RATIOS
LIQUIDITY RATIO
LIQUIDITY RATIOS
Liquidity ratio measures the ability of the firm to meet its current obligation. In fact, analysis of
liquidity needs the preparation of cash budgets and cash and fund flow statements; but liquidity
ratio, by establishing a relationship between cash and other current assets to current obligation,
provide a quick measure of liquidity. The most common ratios which indicate the extent of
liquidity are: Current ratio Quick ratio Current ratio The current ratio is calculated by dividing
current assets by current liabilities: Current ratio = current assets - Current liabilitie.
Current assets include cash and those assets which can be converted into cash within a year, such
as marketable securities, debtors and inventories. The standard ratio is 2:1.
CURRENT RATIO Table No. 7
CHART SHOWING CURRENT ASSETS T0 CURENT LIABILITIES Details
Cash And fund Flow Analysis And Ratio Analysis
Detail 2004 2005 2006
Current Ratio 1.51 1.2 1.21
Current Assets 1402 1521.2 1446.92
Current liabilities 932.2 1216.2 1200.52
INTERPRETATION
As a matter of policy or as referred to as banker‟s rule of thumb, the current ratio of 2:1 is
considered to be satisfactory.
The analysis is proved that the current ratio position of the DKSSK is not fully satisfactory. That
is 1.51 times in 2005, 1.25 times in 2006, 1.14 times in 2007, 1.21 times in 2008.
Quick ratio
Quick ratio establishes a relationship between quick, or liquid, assets and current liabilities. An
asset is liquid if it can be converted into cash immediately or reasonably soon without a loss of
value. Inventories are considered to be less liquid. The quick ratio is found out by dividing quick
asset by current liabilities. The standard ratio is 1:1.
Quick ratio = liquid assets
Detail 2004 2005 2006
Quick ratio 0.50 0.38 0.46
Liquid Assets 450.36 454.12 535.12
Liquid Liabilities 905.20 1210.10 1187.0
The quick ratio of 1:1 is considered satisfactory. The company is not having a good liquidity.
That is in the years 2005, 2006, 2007 and 2008 the quick conversion ratio is 0.50, 0.38, 0.41, and
0.46 times respectively of the current liabilities.
SOLVANCY RATIO
Cash And fund Flow Analysis And Ratio Analysis
These ratios are used in analyzing long term solvency of a firm. These ratios indicate the pattern
of financing i.e. whether long term requirements have been met out of long term funds or not.
Proprietary ratio Solvency ratio Proprietary ratio It is the ratio of proprietor‟s
Proprietary ratio = Share holders funds - Total tangible assets
EFFICIENCY RATIO
Efficiency ratios measures efficiency with which the assets are managed in the business. High
ratio indicates efficient management of assets and low ratio depicts inefficient management of
assets.
.Fixed assets turn over ratio Working capital turnover ratio.
Fixed assets turnover ratio
This ratio indicates the extent to which the investment in fixed assets contribute towards sales.
Fixed assets turnover ratio = Net sale/ fixed assets.
Detail 2004 2005 2006
Fixed asset TO ratio 1.10 1.10 1.27
Net Sales 1143.3 1365.4 1640.5
Fixed Assets 1142.2 1251.3 1296,6
INTERPRETATION There is a more investment in fixed assets. All fixed assets are
contributed towards sales. In 2005 it is 1.00, 2006 it is 1.10, 2007 it is 1.27 and 2008 it is 1.36
there is increase in fixed assets.
Working capital turnover ratio
This ratio shows whether working capital has been efficiency used in making sales. High ratio
indicates higher operating efficiency of a firm. Working capital turnover ratio = Net sales
/Working capital
Cash And fund Flow Analysis And Ratio Analysis
PROFITABILITY RATIO
Profitability is an indicator of efficiency with which the operations of the business are
performed. Profitability ratios are used to know how efficiently operations are carried out.
Gross profit ratio Operating cost ratio Return on investment
Gross profit ratio It is ratio of gross profit to net sales expressed as a percentage. It shows the
relationship between gross profit and sales. Gross profit ratio = Gross profit /* 100 Net sales
Opertaing cost Ratio
This is the ratio of net profit to net sales. It indicates whether the cost component in the sales is
higher or low. Operating cost ratio = operating cost /* 100 Net sales.
FUND FLOW STATEMENT
MEANING
Fund flow statement is a statement of sources and application of funds. According to Robert
Anthony, “the funds flow statement describes the sources from which funds were derived and the
uses to which these funds were put.” In other words of Smith and Brown,” A funds flow
statement is prepared in summary form to indicate changes occurring in terms of financial
condition between two different balance sheets. In short, it is a statement which shows how the
working capital is obtained and how it is put to use.
CASH FLOW STATEMENT
A cash flow statement is a statement, which shows the changes in cash position of a firm from
one period to another. It is a statement indicating inflow and out flow of cash during a financial
period. In other words it is a statement which provides information about the cash receipt and
payments of a firm for a given period. The Institute of Cost and Works Accountants of India has
defined cash flow of statement as “a statement setting out the flow of cash under distinct heads
of sources of funds and their utilization to determining the requirements of cash during the given
period and to prepare for its adequate provision”
Cash And fund Flow Analysis And Ratio Analysis
FINDINGS:
a) The current ratio and quick ratio are not satisfactory because the current ratio is not up to the
standard limit for efficient utilization of current assets.
b) In quick ratio the liquid liabilities are more than liquid assets.
c) The proprietary ratio is good because the share holder‟s funds are up to the standard limit. It
shows lesser risk but solvency ratio is not satisfactory due to increases in out side liability.
d) The fixed assets turnover ratio indicates the efficient management of assets. In working capital
turnover ratio the working capital is not efficiently used in making sales.
e) The gross profit ratio and operating cost ratio are satisfactory because the gross profit is high
towards sales and operating cost is less compare to last two years.
f) Return on investment and gross profit also is found to be very very low i.e. negative in the
year 2005-2006 and it is slightly positive in 2006 and 2007.
g) The major application of fund is decrease of working capital and not purchase of long term
assets.
SUGGESTIONS
1. Ratio analysis indicates the firm is not in good health none of the ratios are reaching the ideal
ratios necessary for enhancement of share holder‟s wealth. Hence the firm should concentrate on
enhancing the operating efficiency of the firm. 2. From the study it is found that the funds are
used for short term assets which should be avoided. The long term sources of fund should be
used for long term assets and not short term assets.
CONCLUSION
By analyzing the topic of “CASH AND FUND FLOW ANALYSIS AND RATIO ANALYSIS
OF DKSSKN LTD. CHIKODI” I conclude that the company is more concentrate on raising the
fixed assets rather than operating activities which decreases working capital of the company.
Which affects the operational efficiency of the company and also the liquidity position is not
Cash And fund Flow Analysis And Ratio Analysis
satisfactory due to these reasons. This project report helped me to get the good knowledge on to
improve the liquidity position for better maintenance of the company.