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CONTENTS

S.NO CHAPTERS PAGE

NO.1 INTRODUCTION OF THE RESEARCH

PROBLEMS2

2 RATIONALE OF THE STUDY 3

3 REVIEW OF LITERATURE 3-5

4 RESEARCH OBJECTIVE 6

5 RESEARCH METHODOLOGY 7

6 ANALYSIS 8

7 LIMITATION OF STUDY 8

8 BIBLOGRAPHY 9

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INTRODUCTION OF THE RESEARCH PROBLEMS

In the present scenario real estate company facing many problem like increasing price of raw

material, various government policies ,increasing completion etc. which affect the profitability of

the company. In this research report profitability is analyze during this period.

Profitability Analysis enables you to evaluate market segments, which can be classified

according to products, customers, orders or any combination of these, or strategic business units,

such as sales organizations or business areas, with respect to your company's profit or

contribution margin.

The aim of the system is to provide your sales, marketing, product management and corporateplanning departments with information to support internal accounting and decision-making. Twoforms of Profitability Analysis are supported: costing-based and account-based.

1. Costing-based Profitability Analysis is the form of profitability analysis that groups costs andrevenues according to value fields and costing-based valuation approaches, both of which you

can define yourself. It guarantees you access at all times to a complete, short-term profitability

report.

2. Account-based Profitability Analysis is a form of profitability analysis organized in accounts

and using an account-based valuation approach. The distinguishing characteristic of this form is

its use of cost and revenue elements. It provides you with a profitability report that ispermanently reconciled with financial accounting.

In the business cycle, the achievement of an appropriate profit level, or profitability, is

very important for a firm's survival and growth. Profitability is said to be a function of three

factors.(1)sales volume (or work done), sometimes called turnover.

(2)the capital investment necessary to support.

(3)the margin of profit earned.

Profitability may be expressed as a profit percentage of turnover (POT) or return on capitalinvestment (ROI). (Turnover here has the same meaning as sales volume while the return is gross

profit).

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RATIONALE OF THE STUDY

The study is based on the analysis of the balance sheet and ABC analysis of the company and

techniques are also accounting based ratio analysis, data are collected from a tally record and

also collected the data from different department of Supertech (real estate company) so it have

hundred per cent accuracy.

REVIEW OF LITERATURE

Profitability analysis

Profitability analysis involves examining the relationships between revenues, costs, and profits.Performing profitability analysis requires an understanding of selling prices and the behavior of

activity cost drivers. (Activity cost driveris often referred to as cost driverwhen the context is

clear that we are discussing activity, rather than structural or organizational, cost drivers.)Profitability analysis is widely used in the economic evaluation of existing or proposed products

or services. Typically, it is performed before decisions are finalized in the operating budget for a

future period.

Paralleling our examination of cost behavior, we examine two approaches to profitabilityanalysis.

1. A unit-level approach based on the assumption that units sold or sales dollars is the only

activitycost driver.

2. A cost hierarchy approach that incorporates no unit and unit-level activity cost drivers.

The traditional approach to profitability analysis, which considers only unit-level activity cost

drivers, is identified as cost-volume-profit (CVP) analysis. It is a technique used to examine the

relationships among the total volume of an independent variable, total costs, total revenues, and

profits for a time period (typically a quarter or year). With CVP analysis, volume refers to a

single unit-level activity cost driver, such as unit sales, that is assumed to correlate with changesin revenues, costs, and profits.

Cost-volume-profit analysis is useful in the early stages of planning because it provides an easily

understood framework for discussing planning issues and organizing relevant data. CVP analysisis widely used by for-profit as well as not-for-profit organizations. It is equally applicable to

service, merchandising, and manufacturing firms.

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Profit FormulaThe profit associated with a product, service, or event is equal to the difference between total

revenues and total costs as follows:

Profit = R - Y

where

R = Total revenuesY = Total costs

The revenues are a function of the unit sales volume and the unit selling price, while total costs

for a time period are a function of the fixed costs per period and the variable costs of unit sales asfollows:

R = pXY = a - bX

where

p =Unit selling pricea =Fixed costs

b = Unit variable costs

X = Unit sales

In determining the break-even point, the equation for total revenues is set equal to the equation

for total costs and then solved for the break-even unit sales volume. Using the general equations

for total revenues and total costs, the following results are obtained. Setting total revenues equalto total costs:

Total revenues = Total costs

pX =a + bX

Break-even unit sales volume = Fixed costs

Selling price per unit -Variable costs per unit

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FINANCIAL STATEMENTS

Financial statements (or financial reports) are formal records of the financial activities of a

business, person, or other entity. Financial statements provide an overview of a business or

person's financial condition in both short and long term. All the relevant financial information of

a business enterprise, presented in a structured manner and in a form easy to understand is calledthe financial statements. There are four basic financial statements:

1. Balance sheet: It is also referred to as statement of financial position or condition, reports on a

company's assets, liabilities, and Ownership equity as of a given point in time.

2. Income statement: It is also referred to as Profit and Loss statement (or "P&L"), reports on a

company's income, expenses, and profits over a period of time. Profit & Loss account provide

information on the operation of the enterprise. These include sale and the various expenses

incurred during the processing state.

3. Statement of Retained Earnings: It explains the changes in a company's retained earningsover the reporting period.

4. Cash Flow Statement: It reports on a company's cash flow activities, particularly its

operating, investing and financing activities.

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RESEARCH OBJECTIVE

1. Explain the meaning, need and purpose of Profitability analysis.

2. To analysis the production activity.

3. To prescribe the financial accounting design to provide the financial informationnecessary to manage the profitability analysis of organization.

a) To find out Expenses of company.b) To find out Depreciation.c) To find out Costing of Project.d) To find out Revenue of company.e) Break-even analysis.

4. Prepare the profit and loss account.5. To focus on financial annual report of profitability analysis.

a) Net sales profitabilityb) Profitability ratioc) Assets turnoverd) Equity ratio

6. Analyze the risk associate with profitability analysis.7. To provide the guidelines for development of capital budget.8. Policies and planning set out by the help of profitability analysis within which the

transaction are made.

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RESEARCH METHODOLOGY

EXPLORATORY RESEARCH

It is used here in the study as we know the symptoms and do not know the factors. This type of

research will help us to find out the root cause and its affects for the symptoms. The findings ofthe research can be used for making interpretations or can be used in future researches.

DETAILS AT DATA COLLECTION:

The data for this work were obtained mainly from a tally record and also collected the data from

different department of Supertech (real estate company) .

Basically types of data collected are-.Primary Data

Primary research consists in research to collect original primary data. It is often undertaken after

the researcher has gained some insight into the issue by collecting secondary data. This can bethrough numerous forms, including questionnaires, direct observation and telephone interviews

amongst others.

The term primary research is widely used in academic research, market research and competitive

intelligence.

Secondary data

It means the already available i.e. they refer to the data which has already been collected and

analyzed by someone else. Various publications, books, newspapers, journals, magazines,Internet, have done the collection of secondary data. By way of caution the researcher before

using data must see that they possess following characteristics

Reliability of data

Suitability of data

Adequacy of data

http://en.wikipedia.org/wiki/Questionnaireshttp://en.wikipedia.org/wiki/Academic_researchhttp://en.wikipedia.org/wiki/Market_researchhttp://en.wikipedia.org/wiki/Competitive_intelligencehttp://en.wikipedia.org/wiki/Competitive_intelligencehttp://en.wikipedia.org/wiki/Competitive_intelligencehttp://en.wikipedia.org/wiki/Competitive_intelligencehttp://en.wikipedia.org/wiki/Market_researchhttp://en.wikipedia.org/wiki/Academic_researchhttp://en.wikipedia.org/wiki/Questionnaires

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ANALYSIS

PROFITABILITY ANALYSIS

Ratio analysis is a very important tool of profitability analysis. It is the process of establishing asignificant relationship between the items of financial statements to provide a meaningful

understanding of the performance and financial position of a firm.

Financial statement analysis tend to figure out the FINANCIAL HEALTH ofOrganization by using ratio analysis techniques. These techniques are used by investorsto find

out the operational effectiveness and efficiency with which resources are being utilized by a

firm. This in turn lets the investors find out whether a venture or an investment in that firm's

stock would be profitable.

Software Use

I will use the following software for this analysis.1. Tally 92. Microsoft Office

LIMITATIONS OF STUDY:-

The limitations of the study are:

Time constraint.

confidential data due to privacy and secrecy of the organization.

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Bibliography:-

Khan, M.Y. (1988). Financial Management, Tata Mc-Graw Hill , New Delhi,

Bhattacharya, Asish. K. (2007). Introduction to Financial Statement Analysis, Elsevier,

New Delhi ,

Web References:

1.www.vvipspaces.com

1. http://en.wikipedia.org/wiki/Asset

2. http://en.wikipedia.org/wiki/Liability_%28financial_accounting%29

3. http://en.wikipedia.org/wiki/Secured_loan4. http://en.wikipedia.org/wiki/Financial_statement

5 . http://en.wikipedia.org/wiki/Unsecured_loan