PROFESSIONAL TRAINING

at

ALLOYSYS EXTRUSION Pvt Ltd

Submitted in partial fulfillment of the requirements for the award of

Bachelor of Commerce - Financial Accounting

By

ASHISH. N
Reg. No.41920011

SCHOOL OF MANAGEMENT STUDIES

SATHYABAMA
INSTITUTE OF SCIENCE AND TECHNOLOGY
(DEEMED TO BE UNIVERSITY)
CATEGORY-1 UNIVERSITY BY UGC
Accredited with Grade “A++” by NAAC I 12B Status by UGC I Approved by AICTE
JEPPIAAR NAGAR, RAJIV GANDHI SALAI, CHENNAI - 600 119

MAY 2024
 BONAFIDE CERTIFICATE

This is to certify that this Professional Training Report is the bonafide work of ASHISH.N
(41920011) at ALLOYSYS EXTRUSION Pvt Ltd. under my supervision from __________
To ___________.

Dr. Thamilselvan R Dr. Palani. A

Internal Examiner HOD

Dr. Bhuvaneswari G
Dean

Submitted for Viva voce Examination held on ____________.

Internal Examiner External Examiner

 DECLARATION

I ASHISH. N (41920011) hereby declare that the Professional Training done by me under
the guidance of CMA MUTHUVALAVAN R (Internal Guide) and Mr. FRANCIS XAVIER
(External Guide) at ALLOYSYS EXTRUSION Pvt Ltd is submitted in partial fulfillment of
the requirementsfor the award of Bachelor of Commerce.

DATE:

PLACE:
ASHISH. N
 ACKNOWLEDGEMENT
.

I am pleased to acknowledge my sincere thanks to The Board of Management of

Sathyabama Institute of Science and Technology for their encouragement in doing
this project and for completing it successfully. I am grateful to them.

I convey my thanks to Dr. Bhuvaneswari G., Dean, School of Management

Studiesand Dr. Palani A., Head of the Department, for providing me necessary
support during the progressive reviews.

I would like to express my sincere and deep sense of gratitude to my Project Guide
CMA.R. MUTHUVALAVAN Visiting Faculty, School of Management Studies for his
valuable guidance, suggestions and constant encouragement paved way for the
successful completion of my Professional Training

I wish to express my thanks to all Teaching and Non-teaching staff members

of the School of Management Studies who were helpful in many ways for the
completion of the project.
 ABSTRACT

This study was done at ALLOYSYS EXTRUSION CHENNAI, “A Study of Financial

Performance” conducted in Alloysys Extrusion Pvt Ltd. is to analysis the Financial
Positions of the company. The objective in this project is to find out the efficiency
of the company using financial ratios like profitability ratios, turnover ratio &
solvency ratio of the company, to find out the liquidity positions of the company,
to study the performance of company through comparative analysis and to provide
suitable suggest improving the financial performance of the company.
 TABLE OF CONTENTS

CHAPTER TITLE PAGE NO.

NO.
ABSTRACT 6
TABLE CONTENTS 8
CHART CONTENTS 9
INTRODUCTION 10
1.1 Financial statement analysis 10
1 1.2 Financial performance measurement 11
1.3 Objectives 11
1.4 Limitations 12
1.5 Usefulness 13
PROFILE OF THE STUDY 15
2 2.1 Industry profile 15
2.2 Company profile 19
FINANCIAL RATIO ANALYSIS 23
3 3.1 Types of ratios 25
3.2 Formulas 25
3.3 Comparative Balance sheet 27
FINANCIAL RATIO CALCULATIONS 29
4.1 Table 29
4 4.2 Significance 30
4.3 Charts 39
5 CONCLUSION. 43
REFERENCE 44

1
 TABLE CONTENTS

S.NO TITLE PAGE

NO
1 Proprietary ratio 29

2 Current ratio 31

3 Earning per share 33

4 Debt-Equity ratio 35

5 Fixed asset ratio 37

6 Comparative balance sheet for the year 2018-2019 39

7 Comparative balance sheet for the year 2019-2020 40

8 Comparative balance sheet for the year 2020-2021 41

9 Comparative balance sheet for the year 2021-2022 42

2
 CHART CONTENTS

S.NO TITLE PAGE NO

1 Proprietary ratio 30

2 Current ratio 32

3 Earning per share 34

4 Debt-Equity ratio 36

5 Fixed asset ratio 38

3
 CHAPTER 1

INTRODUCTION

Financial Performance in broader sense refers to the degree to which financial

objectives being or has been accomplished and is an important as financial
management. It is the process of measuring the results of a firm's policies and
operations in monetary terms. It is used to measure firm's overall financial health over
a given period of time and can also be used to compare similar firms across the same
industry or to compare industries or sectors in aggregation.

Financial statements are primarily prepared for decision-making. They play a dominant
role in setting the framework of managerial decision. The published
financial statements of business may be of considerable interest to present the same
to their respective potential shareholders, managers, moneylenders, banks, financial
institutions, trade organization and many others.

1.1 MEANING OF FINANCIAL STATEMENT ANALYSIS DEFINATION

Financial analysis is the process of identifying the financial strengths and weakness of
firm by properly establishing relationship between the items of the balance sheet and
profit and loss account. The purpose of financial analysis is to diagnose the information
contained in the financial statements so as to judge the profitability and financial
soundness of the firm. A financial analyst, analyses the financial statements with various
tools of analysis before commenting upon the financial position of the enterprises

4
1.2 Significance of Financial Performance Measurement

The interest of various related groups is affected by the financial performance of a

firm. The type of analysis varies according to the specific interest of the party Involved:

• Trade creditors: interested in the liquidity of the firm (appraisal of firm’s

liquidity)
• Bond holders: interested in the cash-flow ability of the firm (appraisal of firm’s
capital structure, the major sources and uses of funds, profitability over time,
and projection of future profitability)
• Investors: interested in present and expected future earnings as well as stability
of these earnings (appraisal of firm’s profitability and financial condition)
• Management: interested in internal control, better financial condition and better
performance (appraisal of firm’s present financial condition, evaluation of
opportunities in relation to this current position, return on investment provided
by various assets of the company etc.)

1.3 OBJECTIVES OF FINANCIAL ANALYSIS

Financial statement analysis is very much helpful in assessing the financial position and
profitability of a concern. The main objectives of analyzing the financial statements are
as follows:
1. The analysis would enable the present and the future earning capacity and the
profitability of the concern.
2. The operational efficiency of the concern as a whole as well as department wise
can be assessed. Hence the management can easily locate the areas of
efficiency and inefficiency.

5
 3. The solvency of the firm, both short-term and long-term, can be determined with
the help of financial statement analysis which is beneficial to trade creditors and
debenture holders.
4. The comparative study in regard to one firm with another firm or one department
with another department is possible by the analysis of financial statements.
5. Analysis of past results in respects of earning and financial position of the
enterprise is of great help in forecasting the future results. Hence it helps in
preparing budgets.
6. It facilitates the assessments of financial stability of the concern.
7. The long-term liquidity position of funds can be assessed by the analysis of
financial statements.

1.4 LIMITATIONS OF FINANCIAL ANALYSIS

1. Owing to the fact that financial statements are compiled on the basis of historical
costs, while there is a market decline in the value of the monetary unit and
resultant rise in prices, the figures in the financial statement loses its functions as
an index on current economic realities. Again the financial statements contain
both items. So an analysis of financial statements cannot be taken as an indicator
for future forecasting and planning.
2. Analysis of financial statements is a tool which can be used profitably by an expert
analyst but may lead to faulty conclusions if used by unskilled analyst. So the
result cannot be taken as judgments or conclusions.
3. Financial statements are interim reports and therefore cannot be final because
the final gain or loss can be computed only at the termination of the business.
Financial statement reflects the progress of the position of the business so
analysis of these statements will not be conclusive evidence of the performance
of the business.
4. Financial statements though expressed in exact monetary terms are not
absolutely final and accurate and it depends upon the judgment of the
management in respect of various accounting methods. If there is change in

6
 accounting methods, the analysis may have no comparable basis and the result
will be biased.
5. The reliability of analysis depends on the accuracy of the figures used in the
financial statements. The analysis will be vitiated by manipulations in the income
statement or balance sheet and accounting procedure adopted by the accountant
for recording.
6. The results for indications derived from analysis of financial statements may be
differently interpreted by different users.
7. The analysis of financial statement relating to a single year only will have limited
use. Hence the analysis may be extended over a number of years so that results
may be compared to arrive a meaningful conclusion.
8. When different firms are adopting different accounting procedures, records,
policies and different items under similar headings in the financial statements, the
comparison will be more difficult. It will not provide reliable basis to access the
performance, efficiency, profitability and financial condition of the firm as
compared to industry as a whole.
9. There are different tool of analysis available for the analyst. However, which tool
is to be used in a particular situation depends on the skill, training, and expertise
of the analyst and the result will vary accordingly

1.5 Usefulness of financial performance to various stakeholders

The analysis of financial performance is used by most of the business communities.

They include the following.
1. Trade Creditors The creditors provide goods / services on credit to the firm. They
always face concern about recovery of their money. The creditors are always keen to
know about the liquidity position of the firm. Thus, the financial performance parameters
for them evolve around short term liquidity condition of the firm.
2. Suppliers of long-term debt the suppliers of long-term debt provide finance for the on-
going / expansion projects of the firm. The long-term debt providers will always focus
upon the solvency condition and survival of the business. Their confidence in the firm is

7
of utmost importance as they are providing finance for a longer period of time. Thus, for
them the financial performance parameters evolve around the following:
i) Firm’s profitability over a period of time.
ii) Firm’s ability to generate cash - to be able to pay interest and
iii) Firm’s ability to generate cash – to be able to repay the principal and iv) The
relationship between various sources of funds.
The long-term creditors do consider the historical financial statements for the financial
performance.
However, the financial institutions \ bank also depends a lot on the projected financial
statements indicating performance of the firm. Normally, the projections are prepared on
the basis of expected capacity expansion, projected level of production \ service and
market trends for the price movements of the raw material as well as finished goods.
3. Investors are the persons who have invested their money in the equity share capital
of the firm. They are the most concerned community as they have also taken risk of
investments – expecting a better financial performance of the firm. The investors’
community always put more confidence in firm’s steady growth in earnings. They judge
the performance of the company by analyzing firm’s present and future profitability,
revenue stream and risk position.
4. Management for a firm is always keen on financial analysis. It is ultimately the
responsibility of the management to look at the most effective utilization of the resources.
Management always tries to match effective balance between the asset liability
management, effective risk management and short-term and long-term solvency
condition.

8
 CHAPTER 2

2.1 INDUSTRY PROFILE

▪ Aluminium is the second most used metal in the world after steel with an annual
consumption of approximately 65 million tones (including scrap). It is also the
fastest growing metal which has grown by nearly 20 times in the last sixty years
(compared to 6 to 7 times for other metals).
▪ India is the fourth largest producer of aluminium in the world with a share of
around 5.3% of the global aluminium output. It has nearly 10% of the world’s
bauxite reserves and a growing aluminium sector that leverages this.
▪ India also holds a fair advantage in cost of production and conversion costs in
alumina. Moreover, rise in infrastructure development and automotive production
are encouraging development in this sector within the country.
▪ The Indian aluminium industry mainly consists of - primary aluminium, aluminium
extrusions, aluminium rolled products and alumina chemicals. The industry
meets the requirements of a wide range of industries including engineering,
electrical and electronics, automobile and automobile components, etc.
▪ The principal user segment of the aluminium industry in India continues to be the
electrical and electronics sector followed by automotive, transportation, building,
construction, packaging, consumer durables, industrial and defence.
▪ 100% FDI is allowed in the mining sector under the automatic route to explore
and exploit all non-fuel and non-atomic minerals. According to data released by
Department for Promotion of Industry and Internal Trade (DPIIT), Indian

9
metallurgical industries attracted Foreign Direct Investment (FDI) to the tune of
US$ 13.4 billion in the period April 2000–March 2020.

Supply

Supply of primary aluminum is in excess as India is one of the largest producers of

primary aluminium. However, due to limited scope of value addition within the
country, primary aluminium producers export large quantities of primary aluminium
products and companies import a sizeable quantity of downstream products.

Demand

Aluminum consumption in India at 2.7 kg per capita is much below the global
average of 11 kg per capita. Demand for the metal is expected to pick up as the
scenario improves for user industries, like power, infrastructure and transportation.

Barriers to entry

Large economies of scale, high capital costs, scarcity of power, land and labour
issues.

Bargaining power of suppliers

Most domestic players operate integrated plants. Bargaining power is limited in

case of power purchase, as Government is the only supplier. However, increasing
usage of captive power plants (CPP) will help to rationalize power costs to a certain
extent in the long-term.

Bargaining power of customers

10
 Being a commodity, customers enjoy relatively high bargaining power, as prices are
determined on demand and supply.

Competition

Competition is primarily on quality and price, as being a commodity, differentiation

is difficult. However, the recent spate of consolidation has reduced the competitive
pressure in the industry. Further, increasing value addition to aluminium products
has helped some companies protect themselves from the high volatilities witnessed
in this industry.

Threat of Substitutes

Copper can replace aluminium in electrical applications, magnesium, titanium and

steel can substitute for aluminium in structural and ground transportation uses.
Glass, plastic, paper and steel can substitute for aluminium in packaging.

FINANCIAL YEAR 20

▪ In FY20, global economic growth slowed down despite accommodative

monetary and expansionary fiscal policies in developed and emerging
markets. The prolonged US-China trade war dampened global economic
sentiments with most of the major economies experiencing a slowdown in
economic growth. This in turn affected aluminium consumption.
▪ World production of aluminium during the year FY20 was 63.1 million tonnes
(MnT), registering a fall of 1.3% compared to production figures of 63.9 MnT
achieved in FY19. At the same time, worldwide consumption of Aluminium also
declined by 1.8% from 65.2 MnT in FY20 to 64.1 MnT in FY19.

11
▪ In FY20, NALCO readied about US$ 3.7 billion investment for increasing its
alumina, aluminium and power production capacities.

PROSPECTS

▪ Rise in infrastructure development is expected to drive growth in the aluminium

sector. Demand for aluminium is expected to pick up as the scenario improves
for user industries like power, infrastructure and transportation.
▪ The Government of India’s “National Mineral Policy” is expected to bring more
transparency, better regulation and enforcement, balanced socio-economic
growth along with sustainable mining practices in the aluminium sector.
▪ Domestic demand is likely to remain robust driven by construction and
packaging. However, in the short term, due to lockdown and recovery from
Covid-19, domestic demand is likely to decline by 20-25% at the closing of
FY21, due to slowdown in Transportation, Building & Construction, Industrial
Equipment, and Consumer Durables. The only green shoot is a marginal growth
in the packaging and pharma sectors.
▪ The increasing share of imports of aluminium products, including scrap, will
continue to be a major concern for domestic aluminum producers. Over the last
few years, the domestic rolled products industry has been witnessing an
increase in dumping of imports especially from China, at unfair prices leading to
the pricing pressure.
▪ The adoption of strong, lightweight and formable aluminium sheets in vehicle
parts and structures is driving growth in the automotive body sheet
segment. This market is expected to record growth, despite some recent
softening in European and Chinese demand.
▪ The Indian government has plans to invest over US$ 1 billion in its "Make in
India" initiative. The aluminium industry will benefit from this as there is great
demand to build new production facilities. India's annual aluminium consumption
is expected to double to 7.2 MnT by 2023.

12
2.2 COMPANY PROFILE

Alloysys Extrusion [P] Ltd came into existence in 2005. The journey from manufacturing
aluminium extrusion to becoming one of the best makers of Quality Aluminium
Extrusions have been filled with accomplishments and accolades. Alloysys Extrusion
aims to have a global presence as a leading global manufacturer of high-quality
Aluminium extruded products. The endeavors of the organization are focused towards
achieving all-round excellence. The organization seeks to accomplish a fusion of
traditional methods and innovative concepts to supply the best quality extruded product.
Alloysys Extrusion manufactures wide variety Aluminium extrusions like extruded
channel, extruded section or extruded profile that meet diversified usage.

Alloysys Extrusion has been maintaining its utmost standards of precision and quality
and founded on the philosophy of ensuring uncompromising satisfaction to our
customers. We have excellent time delivery of all the versatile extrusion products and
these products are adding a new dimension to the modern building construction
technology and to our business. Alloysys Extrusion [P] Ltd as the acknowledged market
leaders have set up benchmarks for quality, timely delivery and client satisfaction. We
have a unique combination of being flexible and an ability to react very quickly to
changes in designs and specifications. This has ensured that our products and services
to all our customers have been acclaimed internationally. From the beginning, we have

13
 always had a strong foundation of adaptability and experience.

WHAT WE CAN OFFER YOU

ALLOYSYS EXTRUSION currently has automatic hydraulic presses with a production

capacity of 3,000 MT per annum. The company offers the standard aluminium extrusions
profiling and also is able to take care of specific designs and requirements.

OUR CAPABILITIES
• Automated Hydraulic Extrusion Presses

14
• Capacity: 3000 MT per annum
• Die Library: 1000
• profiles ranging from 10mm - 150 mm CCD
• Section weight up to 17 kg per piece
• Wall thicknesses minimum 0 .5mm - 20 mm
• Cut lengths up to 6-7m
• Standard alloy ranges

MISSION

To become the most preferred aluminium extrusion company, focusing on

manufacturing the high-quality extruded products with excellent service consistently.

VISION

We shall be producing high quality aluminium extrusions with our organizational

expansion so that we shall always be able to meet the expectations of our all business
associated people and specially our consumers.

THE EXTRUSION PROCESS

Extrusion is a plastic deformation process in which a block of metal (billet) is forced to

flow by comparison through the die opening of a smaller cross - sectional area than that
of the original billet. Extrusion is an indirect - compression process. Indirect -
compressive forces are developed by the reaction of the work piece (billet) with the
container and die results in high values. The reaction of the billet with the container and

15
 die results in high compressive stresses that many breakdowns from the billet. Extrusion
is the best method because the billet is subjected to compressive forces only. Extrusion
can be cold or hot, depending on the alloy and the method used. In hot extrusion, the
billet is preheated to facilitate plastic deformation. Conventional Direct Extrusion: The
most important and common method used on aluminium extrusion is the direct process.
In this process, the principle of direct extrusion, the billet is placed in the container and
pushed through the die by the ram pressure. Direct extrusion finds application in the
manufacture of aluminium solid rods, aluminium bars, hollow tubes, and hollow and solid
sections according to the design and shape of the die. In the same direction as ram
travel. During this process, the billet slides relative to the walls of the container. The
resulting frictional force increases the ram pressure considerably.

During the direct extrusion, the load or pressure - displacement curve most commonly.
Traditionally, the process has been described as having three distinct regions:
• The billet is upset, and pressure rises rapidly to its peak value.
• The pressure decreases, and what is termed "steady state" extrusion proceeds.

USES

Aluminium is almost always alloyed, which markedly improves its mechanical properties,
especially when tempered. For example, the common aluminium foils and beverage
cans are alloys of 92% to 99% aluminium. The main alloying agents are copper, zinc,
magnesium, manganese, and silicon (e.g., duralumin) and the levels of these other
metals are in the range of a few percent by weight. With completely new metal products,
the design choices are often governed by the choice of manufacturing technology.
Extrusions are particularly important in this regard, owing to the ease with which
aluminium alloys, particularly the Al-Mg-Si series, can be extruded to form complex
extruded profiles.

16
 CHAPTER 3

FINANCIAL STATEMENTS

Financial statements help assess the financial well-being of the overall operation.
Information about the financial results of each enterprise and physical asset is important
for management decisions, but by themselves are inadequate for some decisions
because they do not describe the whole business. An understanding of the overall
financial situation requires three key financial documents: the balance sheet, the income
statement and the cash flow statement.

FINANCIAL PERFORMANCE MEASURES

The recommended measures for financial analysis are grouped into five broad
categories: liquidity, solvency, profitability, repayment capacity and financial efficiency.

17
 Financial measures are intended to help operations analyze their activities from
a financial standpoint and provide useful information needed to make good management
decisions. By themselves, the financial measures discussed don’t provide answers—
they need to be reviewed in relation to each other and to other non-operation activities.
It is not possible to control or predict all of the factors that influence the final outcome of
any operational decision. Nor is it possible to have available all of the information that
would be ideal. But decision making can be improved through using available information
and through effective financial planning and analysis.

ADVANCED FINANCIAL STATEMENTS ANALYSIS

The System
Financial statements paint a picture of the transactions that flow through a
business. Each transaction or exchange - for example, the sale of a product or the use
of a rented a building block - contributes to the whole picture.
Let's approach the financial statements by following a flow of cash-based transactions.
In the illustration below, we have numbered four major steps:

1. Shareholders and lenders supply capital (cash) to the company.

2. The capital suppliers have claims on the company. The balance sheet is an updated
record of the capital invested in the business. On the right-hand side of the balance
sheet, lenders hold liabilities and shareholder’s hold equity. The equity claim is
"residual", which means shareholders own whatever assets remain after deducting
liabilities. The capital is used to buy assets, which are itemized on the left-hand side of
the balance sheet. The assets are current, such as inventory, or long-term, such as a
manufacturing plant.
3. The assets are deployed to create cash flow in the current year (cash inflows are
shown in green, outflows shown in red). Selling equity and issuing debt start the process
by raising cash. The company then "puts the cash to use" by purchasing assets in order
to create (build or buy) inventory. The inventory helps the company make sales
(generate revenue), and most of the revenue is used to pay operating costs, which
include salaries.
4. After paying costs (and taxes), the company can do three things with its cash profits.

18
One, it can (or probably must) pay interest on its debt. Two, it can pay dividends to
shareholders at its discretion. And three, it can retain or re-invest the remaining profits.
The retained profits increase the shareholders' equity account (retained earnings). In
theory, these reinvested funds are held for the shareholders' benefit and reflected in a
higher share price.

3.1 RATIO ANALYSIS

A ratio is a mathematical relationship between two items expressed in a
quantitative form. Ratio can be defined as “Relationship expressed kin quantitative terms
between figures which have cause and effect relationship which are connected with each
other in some manner or the other. Ratio analysis involves the process of computing
determining and presenting the relationship of items or groups of items of financial
statements.

3.2 RATIOS AND FORMULAS

CURRENT RATIO
The ratio of current assets to current liabilities is called current ratio. In order to
measure the short-term liquidity or solvency of a concern, comparison of current assets
and current liabilities is inevitable. Current ratio indicates the ability of a concern to meet

19
its current obligations as and when they are due for payment.
Current ratio = Current assets / Current liabilities

LIQUID RATIO
A measure of Company’s liquidity and ability to meet its obligations. Quick ratio,
often referred to as acid-test ratio, is obtained by subtracting inventories from current
assets and then dividing by current liabilities.
Liquid ratio = Liquid assets / current liabilities

WORKING CAPITAL TURNOVER RATIO

A measure comparing the depletion of working capital to the generation of sales
over a given period. This provides some useful information as to how effectively a
Company is using its working capital to generate sales.
Working capital turnover ratio = Net sales / Working Capital

PROFITABILITY RATIO
Profit making is the main objective of business. Aim of every business concern is
to earn maximum profits in absolute term and also in relative terms i.e. profit is to be
maximum in term of risk undertaken.
Profitability Ratio =Profit after tax / Sales

CASH POSITION RATIO

This ratio also known as absolute liquidity ratio or super quick ratio. It’s calculated
when liquidity is highly restricted in terms of cash and cash equivalents.
Cash position ratio= cash and Company balances + marketable securities/ current
liabilities.

20
OPERATING RATIO
Operating ratio represent the different between the cost of goods sold and sales.
Operating ratio measures the amount of expenditure incurred in production, sales and
distribution of output. It indicates operational efficiency of the concern.
OPERATING RATO= cost of goods sold + operating expenses / net sales *100

DEBTORS TURNOVER RATIO

It represents how quickly the debtors are converted into cash. This ratio is used
to measure the firm’s liquidity position. This ratio establishes the relationship between
receivables and credit sales.
Debtors turnover ratio = Net sales / Average debtors.

PROPRIETARY RATIO
This ratio is also termed as capital ratio or net worth to total asset ratio. This is one of
the variants of dept equity ratio. This shows the relationship between shareholders funds
and total assets
Proprietary ratio = Net worth / Total Assets

GROSS PROFIT RATIO

Gross profit ratio establishes the relationship between gross profit and net sales.
It also reveals the amount of gross profit for each rupee of sale. This ratio is calculated
by dividing the gross profit by Net sales. It is usually indicated as a percentage.
Gross Profit Ratio = Gross Profit / Net sales * 100

NET PROFIT RATIO

Net profit ratio is also termed as sales margin ratio or profit margin ratio or net
profit to sales ratio. This ratio reveals the firm’s overall efficiency in operating the

21
business. Net profit ratio is used to measure the relationship between net profit (either
before or after taxes) and sales.
Net Profit Ratio = Net Profit / Net Sales * 100

3.3 COMPARETIVE BALANCE SHEET

The comparative balance sheet analysis is the study of the trend of the
same items, group of items and computed items in two or more balance sheet of the
same business enterprise on different dates. The changes in periodic balance sheet
items reflect the conduct of a business. The changes can be observed by comparison of
the conduct of a business the changes can be observed by comparison of the balance
sheet at the beginning at the end of period and these changes can help in forming an
opinion about the progress of an enterprise.

Procedure of Comparative Balance Sheet

➢ The Comparative balance sheet has two columns for the data of original
balance sheet.
➢ Third column is used to show increases in figures.
➢ The Fourth column is use to give percentages of increase or decrease.

Uses of comparative balance sheet

22
 ➢ comparative statement helps to comparing the figures with those of the
previous year’s event, it is possible to determine where expenses
increased or decreased
➢ Comparative balance sheet helps to how to plan the following year’s event.

CHAPTER 4

4.1 RATIO ANALYSIS

PROPRIETARY RATIO
Proprietary Ratio shows the relationship between shareholders’ funds to total assets of
the concern. The shareholders’ funds are equity share capital, preference share capital,
undistributed profits, reserves and surpluses.

23
TABLE: PROPRIETARY RATIO
Year Shareholder Total Asset Ratio (Times)
fund
2018 49032.66 721526.32 0.067957
2019 57947.70 964432.08 0.060085
2020 65949.20 1053413.74 0.062605
2021 64986.04 1223736.20 0.053105
2022 83951.20 1335519.24 0.062860

SIGNIFICANCE
It shows that proprietary ratio was high in the year 2018 with 0.067957 and low in the
year 2021 with 0.053105. Thus, it can be said that the company is maintaining the long-
term solvency. The current year (2022) proprietary ratio is found to be 0.06286 it is in an
increasing position.
The Proprietory ratio which shows the relationship between the shareholder’s funds to
total tangible assets. The ratio is in the decreasing manner due to the fluctuation in the
total assets.

CHART: PROPRIETARY RATIO

24
 Ratio
0.08
0.07
0.07
0.06 0.06 0.06
0.06
0.05
0.05

0.04
Ratio
0.03

0.02

0.01

0
2018 2019 2020 2021 2022

25
CURRENT RATIO

Current ratio is an index of the concern’s financial stability. If a higher current ratio is an
indication of in adequate employment of funds, a poor current ratio is a danger signal to
the management.

TABLE: CURRENT RATIO

Year Current Asset Current Liability Current Ratio
2018 484234.54 83362.30 5.81
2019 646907.00 110697.57 5.84
2020 728098.00 80336.70 9.06
2021 879593.60 105248.39 8.36
2022 964742.06 80915.09 11.92

SIGNIFICANCE

It shows that current ratio was high in the year 2022 with 11.92and low in the year 2018
with 5.81. The current year (2022) current ratio is found to be the highest (11.92) due to
the decrease in the liabilities.

From the above table and chart the current ratio of the company is fluctuating in manner.
Although the company has an increasing current asset the current liabilities is also
fluctuating. Proper steps should be taken as such the ratio is less than 2 the company
may get difficult in paying the creditors.

26
CHART: CURRENT RATIO

Ratio
14
11.92
12
10 9.06
8.36
8
5.81 5.84
6
4
2
0
2018 2019 2020 2021 2022

27
EARNING PER SHARE

Earning per share is a small variation of return on equity capital. It provides a view of the
comparative earnings when it compares with that of similar other companies. Thus, the
earnings per share are a good measure of profitability.

Net Profit After Preference Dividend

Earning Per Share = -------------------------------------------------
No. of Equity Shares

TABLE - EARNING PER SHARE

Years Net Profit After No. of equity shares Ratio (Times)
Preference Dividend
2018 6,729.46 631.47 10.656
2019 9,121.57 634.88 14.367
2020 9,166.39 634.88 14.437
2021 7,370.69 635.00 11.607
2022 11,713.34 671.04 17.415

SIGNIFICANCE
The earning per share shows was found to be high in the year 2022 with 174.15
and low in the year 2019 with 143.67. The current year (2022) earnings per share ratio
is found to be increasing with 174.15 when compared to the previous year with 116.07.
This is due to the increase in the net profit

28
CHART- EARNING PER SHARE

Ratio
20
17.415
18
16 14.367 14.437
14
11.607
12 10.656
10
8
6
4
2
0
2018 2019 2020 2021 2022

29
DEBT-EQUITY RATIO

This ratio helps to ascertain the soundness of the long-term financial position of
the company. It indicates the proportion between total long-term debt and the
shareholders funds. This also indicates the extent to which the firm depends upon
outsiders for its existence.

Total long-term debt

Debt-equity Ratio = -----------------------------
Shareholders funds

TABLE- DEBT-EQUITY RATIO

Year Total Long-Term Shareholders Debt-Equity Ratio

Debt Fund
2018 51727.41 631.47 81.91586
2019 53731.68 634.88 84.63281
2020 103011.60 634.88 162.2537
2021 119568.96 635.00 188.2976
2022 127005.57 671.04 189.2668

30
CHART – DEBT-EQUITY RATIO

DEBT-EQUITY RATIO
200
180
160
140
120
100
188.2976 189.2668
80 162.2537
60
40 81.91586 84.63281
20
0
2018 2019 2020 2021 2022

INFERENCE:
The debt-equity ratio is another leverage ratio that compares a Company's total
liabilities to its total shareholders' equity. In the debt ratio, a lower the percentage
means that a Company is using less leverage and has a stronger equity position. In
the year 2022 the debt equity ratio is higher which means that the company is having a
higher leverage

31
FIXED ASSET RATIO
This ratio establishes the relationship between fixed assets and long-
term funds. The objective of calculating this ratio is to ascertain the proportion of long-
term funds invested in fixed assets. The ratio is calculated as given below

Fixed asset
Fixed asset ratio = -----------------------------
Long term Funds

TABLE: FIXED ASSET RATIO

Year FIXED ASSET LONG TERM FUND FIXED ASSET

RATIO
2018 3139.22 51727.41 6.068775
2019 3574.41 53731.68 6.652332
2020 4117.73 103011.60 3.997346
2021 4431.95 119568.96 3.706606
2022 5133.87 127005.57 4.04224

32
CHART: FIXED ASSET RATIO

FIXED ASSET RATIO

7

4
6.652332
3 6.068775

2 3.997346 3.706606 4.04224

0
2018 2019 2020 2021 2022

INFERENCE:
From the above chart it is inferred that the company has invested same amount
in both long term fund and the fixed asset. Even though the current year (2022) fixed
assets are in the increasing rate that the ratios are equal to 0.002. This means that the
company’s fixed asset position is satisfactory

33
3.3 COMPARATIVE BALANCESHEET

COMPARATIVE BALANCESHEET FOR THE YEAR 2018-2019

Inc\ Dec
PARTICULARS 2018 2019 Inc\ Dec
%
Fixed Asset: Gross block-
3139.22 3574.41 435.19 13.86
Depreciation
Capital work-in-progress 234.26 263.44 29.18 12.46
Investments 189501.27 275953.96 86452.69 45.62

Other assets 44417.03 37733.27 (6683.76) (15.05)

Current assets

Cash & Balances 51534.62 55546.17 4011.55 7.78

Balance in Company 15931.72 48857.63 32925.91 206.67

Advances 416768.20 542503.20 125735.00 30.17

TOTAL ASSETS 721526.32 964432.08 242905.76 33.67

Current Liabilities

Other liabilities & provisions 83362.30 110697.57 27335.27 32.79

Equity share capital 631.47 634.88 3.41 0.54

Reserves & surplus 48401.19 57312.82 8911.63 18.41

34
Debts

Deposits 537403.94 742073.13 204669.19 38.08

Borrowings 51727.41 53713.68 1986.27 3.84

TOTAL LIABILITIES 721526.31 964432.08 242905.77 33.67

COMPARATIVE BALANCESHEET

COMPARATIVE BALANCESHEET FOR THE YEAR 2019-2020

Inc\ Dec
PARTICULARS 2019 2020 Inc\ Dec
%
Fixed Asset: Gross block-
3574.41 4,117.73 543.32 15.20
Depreciation
Capital work-in-progress 263.44 295.18 31.74 12.05
Investments 275953.96 285790.07 9836.11 3.56

Other assets 37733.27 35112.76 (2620.51) (6.94)

Current assets

Cash & Balances 55546.17 61290.87 5744.70 10.34

Balance in Company 48857.63 34892.98 (13964.65) (28.58)

Advances 542503.20 631914.15 89410.95 16.48

TOTAL ASSETS 964432.08 1053413.74 88981.66 9.23

Current Liabilities

Other liabilities & provisions 110697.57 80336.70 (30360.87) (27.43)

Equity share capital 634.88 634.88 0.00 0.00

35
Reserves & surplus 57312.82 65314.32 8001.50 13.96

Debts

Deposits 742073.13 804116.23 62043.10 8.36

Borrowings 53713.68 103011.60 49297.92 91.78

TOTAL LIABILITIES 964432.08 1053413.73 88981.65 9.23

COMPARATIVE BALANCESHEET

COMPARATIVE BALANCESHEET FOR THE YEAR 2020-2021

Inc\ Dec
PARTICULARS 2020 2021 Inc\ Dec
%
Fixed Asset: Gross block-
4117.73 4431.95 314.22 7.63
Depreciation
Capital work-in-progress 295.18 332.23 37.05 12.55
Investments 285790.07 295600.57 9810.50 3.43

Other assets 35112.76 43777.85 8665.09 24.68

Current assets

Cash & Balances 61290.87 94395.50 33104.63 54.01

Balance in Company 34892.98 28478.65 (6414.33) (18.38)

Advances 631914.15 756719.45 124805.30 19.75

TOTAL ASSETS 1053413.74 1223736.20 170322.46 16.17

Current Liabilities

Other liabilities & provisions 80336.70 105248.39 24911.69 31.01

36
Equity share capital 634.88 635.00 0.12 0.02

Reserves & surplus 65314.32 64351.04 (963.28) (1.47)

Debts

Deposits 804116.23 933932.81 129816.58 16.14

Borrowings 103011.60 119568.96 16557.36 16.07

TOTAL LIABILITIES 1053413.73 1223736.20 170322.47 16.17

COMPARATIVE BALANCESHEET

COMPARATIVE BALANCESHEET FOR THE YEAR 2021-2022

Inc\ Dec
PARTICULARS 2021 2022 Inc\ Dec
%
Fixed Asset: Gross block-
4431.95 5133.87 701.92 15.84
Depreciation
Capital work-in-progress 332.23 332.68 0.45 0.14
Investments 295600.57 312197.61 16597.04 5.61

Other assets 43777.85 53.113.02 9335.17 21.32

Current assets

Cash & Balances 94395.50 54075.94 (40319.56) (42.71)

Balance in Company 28478.65 43087.23 14608.58 51.30

Advances 756719.45 867578.89 110859.44 14.65

TOTAL ASSETS 1223736.20 1335519.24 111783.04 9.13

Current Liabilities

37
 Other liabilities & provisions 105248.39 80915.09 (24333.30) (23.12)

Equity share capital 635.00 671.04 36.04 5.68

Reserves & surplus 64351.04 83280.16 18929.12 29.42

Debts

Deposits 933932.81 1043647.36 109714.55 11.75

Borrowings 119568.96 127005.57 7436.61 6.22

TOTAL LIABILITIES 1223736.20 1335519.22 111783.02 9.13

CHAPTER- 5

CONCLUSION

The efficient and smooth functioning of all the activities of the company depends upon
the financial performance of the company. The financial performance analysis thus is a
forward-looking exercise as it is helpful in future financial planning decision making. It
determines to analysis forecasting future financial position. Through financial statement
analysis, the present position and operating efficiency of the firm as a whole and its
different departments can be identified. Further, the reasons for change in the profitability
financial position of the firm can be found and necessary measures can be taken.
Financial performance can improve the financial strength of Company. The
company’s liquidity position has to increase and it will solve future problem. The
company is maintaining the reserves and surplus better so it can face financial stress in
the future. To proper maintain of financial performance to achieve the company goal.

By analyzing the financial performance of the company of the company it is inferred that
the company’s financial position is found to be good. The ratios of the company are

38
satisfactory. The profitability of the company is satisfactory but does not show a higher
change in the profit when compared with the previous years.

REFERENCE

❖ www.Articlebase.com
❖ www.wikepedia.com
❖ www.scribd.com
❖ www.FeeOnlyFinancial.net

39