Dexterity Projects Pvt Limited (formerly R N Infratech Pvt Limited )
Polyhydron Pvt Ltd1final
-
Upload
anjum-ansh-khan -
Category
Documents
-
view
114 -
download
2
Transcript of Polyhydron Pvt Ltd1final
People’s Education Society and Trust’sBelgaum Institute of Management Studies,
MBA, Belgaum.
(Approved by AICTE & Affiliated to Karnatak University Dharwad)
“A STUDY ON ANALYSIS OF FINANCIAL STATEMENTS OF
POLYHYDRON PVT. LTD AND SUGGEST LONG TERM PLANNING”.
A Report Submitted in Partial Fulfillment of the
Requirement for the Award of
MASTER’S DEGREE IN BUSINESS ADMINISTRATION
2006-2007
Submitted by
Anuja R. MadhumathExam No: MBA05006004
Institute Guide: Company Guide: Mr. Vinay Bangare Miss. Tejashwini S. Hundre
Finance Faculty Management Trainee PEST’s BIMS, Polyhydron Pvt. Ltd. MBA, BELGAUM Macche,
Belgaum.
BELGAUM ISTITUTE OF MANAGEMENT STUDIES (MBA). BGM 1
1
People’s Education Society and Trust’sBelgaum Institute of Management Studies, MBA
Adjacent to KUD PG Center, Bhutramanhatti, Belgaum.
(Recognized by AICTE, New Delhi & Affiliated to Karnatak University Dharwad.)
This is to certify that Miss. Anuja R. Madhumath K.U.D.
Examination No. MBA05006004 of MBA 4th Semester has successfully
completed his Major Concurrent Project 2006-2007 for the period of 60
days from 2nd December 2006 to 31st December 2006 and 16 weeks (2 days
in a week from Jan 07 to April 07).
Project Guide Director
BELGAUM ISTITUTE OF MANAGEMENT STUDIES (MBA). BGM
CertificateCertificate
2
2
BELGAUM ISTITUTE OF MANAGEMENT STUDIES (MBA). BGM 3
3
ACKNOWLEDGEMENT
The completion and drafting is a solitary task but one which has been
made smoother with the help of many. Here I take this opportunity to thank
those who have made a vital contribution in shaping this study
I would like to express my profound gratuity to Mr. Suresh Hundre
(Chairman) and Miss. Tejashwini S. Hundre (Management Trainee) for giving
me an opportunity to take my Major Concurrent Project at Polyhydron Pvt.
Ltd, Macche, Belgaum.
Any accomplishment requires the efforts of many people. I am indebted
to all the Employees of Polyhydron Pvt. Ltd who extended their help and
cooperation in collecting data for my project
Regardless of the source I wish to express my gratitude to those who have
contributed to my project, even though anonymously
I extend my thanks to our Director, Dr. S. R. Bharamanaikar, and Mr.
Vinay Bhangare for providing me an opportunity to work for Polyhydron Pvt.
Ltd, Macche, Belgaum.
I would also like to thank my parent and friends for their infinite love,
valuable guidance, support and help during my project. This project wouldn’t
have seen the light of the day, if it wasn’t for the cooperation of all these people.
Place: Belgaum. Mahendrakumar. S. Konkane.
Date:
BELGAUM ISTITUTE OF MANAGEMENT STUDIES (MBA). BGM 4
4
Contents
Sl. No. Titles Page No.
I Chapter 1
Introduction
Literature Review
Statement of the Problem
Purpose of the Study
Scope of the study
Objectives of the Study
6
9
26
27
28
28
II Chapter 2
Organization Profile
Organization Chart
Research Design
Data Collection Method
Measuring tools
30
46
47
48
48
III Chapter 3
Results & discussion with Charts & graphs
Recommendations and Conclusion
50
91
IV Chapter 4
Appendix
Balance Sheets
Bibliography
94
107
BELGAUM ISTITUTE OF MANAGEMENT STUDIES (MBA). BGM 5
5
CHAPTER – 1
Introduction
Literature Review
Statement of the Problem
Purpose of the Study
Scope of the study
Objectives of the Study
BELGAUM ISTITUTE OF MANAGEMENT STUDIES (MBA). BGM 6
6
1 - INTRODUCTION:
This is brief summary of the project “A study on analysis of financial
statements of polyhydron pvt ltd and suggest long term planning”. Belgaum and to
find the financial position of the company. Polyhydron Pvt. Ltd is the flag ship
company of Polyhydron Group of Industries. Polyhydron is known for its “Ethical
management”. People from all over India visit the company to interact and understand
the systems. It has become a kind of “Pilgrimage centre” for the corporate world of
India.
The study was conducted with an objective of finding out the financial
standing and its managerial efficiency in generating adequate operating profits on the
firm’s assets and to study how the firm finances its assets.
The study of the financial position of a company was accomplished by various
tools and techniques like Cash flow and fund flow analysis, Financial planning with
financial ratios to support the above with the appropriate graphs and tables.
Title of the Study:
“A study on analysis of financial statements of polyhydron pvt ltd and suggest
long term planning”.
Statement of problem:
Financial analysis being an integral part of overall corporate management and
it is one of the powerful tools of financial performance analysis. The analysis of
financial statement of PPL is done in order to know the company’s financial position
of the year.
Management Problem:
BELGAUM ISTITUTE OF MANAGEMENT STUDIES (MBA). BGM 7
7
To gauge the adequacy of returns/cash flows with respect to investment,
liquidity and growth and ascertain the opportunity for expansion
Research Problem
“A study on analysis of financial statements of polyhydron pvt ltd and suggest
long term planning”.
Objectives:
1. To analysis the firm’s financial statements
2. Is management generating adequate operating profit on the firm’s assets.
3. To know how is the firm financing its assets
4. Are the owners getting adequate returns?
5. To determine the progress of the company.
Recommendations and Conclusion
Suggestions
The firm is performing well and its sales are increasing over the years. But
still the following is the suggestion if considered will prove to be beneficial to the
company.
There is huge investment in the current assets of the concern.
The current ratio of the firm is very much higher than the normal standards.
The firm should not unnecessarily block excess money in the current assets
than normal requirement of the business.
The cost of goods sold had increased continuously from 2004 to 2005. The
firm should give attention to maximize the sale and minimize the direct costs.
The company can invest in mutual funds, which is more promising for higher
yield.
BELGAUM ISTITUTE OF MANAGEMENT STUDIES (MBA). BGM 8
8
Polyhydron has net working capital more than requirements an unhealthy sign
of profitability of the company.
Under the light of the inferences drawn from the analysis, it is no exaggeration
to conclude with information that the over all the financial analysis is fair and
reasonably good and that promising future awaits the company.
Conclusion
Earning position of the company is continuously and positively increasing.
The gross, operating and net profit margins are favorable. It makes uses some
Japanese techniques, like kanban cards, net work system, jit etc. to manage its
inventories. Various discount schemes to control and manage the accounts receivable.
The company has to keep an eye on its liquidity position. As the liquidity
position shows funds are lying idle, since they are idle, they are not being properly
utilized. Thus profitability of the income may be affected. So high a liquidity position
should be avoided in order to maintain and improve the profitability.
BELGAUM ISTITUTE OF MANAGEMENT STUDIES (MBA). BGM 9
9
2 - LITERATURE REVIEW:
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 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 analysis and
interpretation of financial ratios and we show how to interpret financial ratio analysis,
Financial statements
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
BELGAUM ISTITUTE OF MANAGEMENT STUDIES (MBA). BGM 10
10
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 auditors report together with number of schedules,
annexure etc. 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 summary
of financial position at a given point of time, usually at the end of a financial year. It
shows the state of affairs of the firm and the contribution of the owners of the firm.
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: Assets and 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, assets includes a)
physical resources like land, machinery, plant, building, stocks etc. B) non physical
resources like cash, securities, accounts receivables etc.) Intangible resources like
BELGAUM ISTITUTE OF MANAGEMENT STUDIES (MBA). BGM 11
11
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 assets
Current assets
Fixed assets
Fixed assets are held in business for use not for sale. These assets provide
long-term 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, stock of work in progress, bank
balance, advance payment of expenses like taxes and insurance, loan and
advances to customers and employees.
BELGAUM ISTITUTE OF MANAGEMENT STUDIES (MBA). BGM 12
12
2) Liabilities
Liabilities are the obligations of the concern that is to pay to the outsiders.
Importance of the position statement
a. It helps to calculate the working capital of the concern.
b. It indicates the long term as well as short-term financial position of the
concern.
c. With the help of this the various ratios will be calculated.
d. It indicates the value of the concern and helpful in calculating the value of the
shareholders equity and total assets.
e. It helps to make the arrangement for losses, which are expected to occur in the
future.
The balance sheet is relevant at a particular point of time. It is like a financial
snapshot at a point of time, before and after which the position may be different. So,
the balance sheet is a status report
Contents of annual report:
The Polyhydron Pvt. Ltd annual report for the year 2004-2005 contains
a) Report of the board of directors
b) Auditors report
c) Accounting policies
Report of the board of directors: Director’s report provides a summary of profits
made and appropriated by the company and other relevant information such as
industrial relations, investments, financing, organization, appointment of auditors and
directors etc. The report of the PPL board of directors gives a brief account of the
company profit and dividend during the 2003-2004.
Auditors report: Auditors report to shareholders verifies whether the balance sheet
BELGAUM ISTITUTE OF MANAGEMENT STUDIES (MBA). BGM 13
13
and profit and loss account provides a true and fair view of the state of a company’s
affairs. Auditors should obtain all necessary information’s 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
This 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. This shows the
results of the operations of the firm during the period. The is therefore, is a flow
report against the balance sheet which is a stock report or a status report. This depicts
the earning capacity of the firm during the period under consideration. Profit and loss
account presents the summary of revenues, expenses and net income of a firm. It
serves as a measure of the firm’s profitability.
The main content of the income statement are: Net sales, Cost of goods sold,
Gross profit, operating expenses, Operating profit, Non operating surplus/deficit,
Profit before interest and tax, Interest, Profit before tax, Tax and Profit after tax.
Analysis of financial statement
Analysis of financial statement 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 Analysis of financial
BELGAUM ISTITUTE OF MANAGEMENT STUDIES (MBA). BGM 14
14
statement 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
balance sheet is, already discussed in the preceding section contain a whole lot of
historical data.
It is very important to analysis of financial statement to know the different
factors that are behind the change in the figures of the financial statement. Analysis of
financial statements contains comparison between different figures of different
periods, comparison.
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 and summarizes the accounting figures system that the
organization can provide information to the different parties.
Financial statement analysis is provides the management in basic functions like
forecasting, planning, directing, coordinating 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 analysis of financial statements provides important and useful information to
the management as well as other users. If this analysis in not done than it is
difficult to take decision concerned to financial matters.
Techniques/tools of the Analysis of financial statement
The methodology adopted for the Analysis of financial statement may vary from
one situation to another. However, the following are some of the common techniques
of the Analysis of financial statement:
BELGAUM ISTITUTE OF MANAGEMENT STUDIES (MBA). BGM 15
15
1. Comparative financial statements
2. Common-size financial statements
3. Trend percentage analysis , and
4. Ratio analysis.
The last technique i.e., Ratio analysis is the most common, comprehensive and
powerful tool of the Analysis of financial statement.
Statement of changes in financial position
Two basic financial statements important to owners, management and investors
are balance sheet and profit and loss account. Balance sheet gives a summary 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 summarize:
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 usage of firm’s financial resources during the period.
The statement of changes in financial position deals with the flow of funds during the
year i.e., the flow of funds in and 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, this
BELGAUM ISTITUTE OF MANAGEMENT STUDIES (MBA). BGM 16
16
concept of funds will report and include only those transactions which are
affecting the cash balance; this will be just a summary of the cash transactions.
Hence, non-monetary transaction such as purchase of fixed assets by issue of
debenture will not be reported in a seep.
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 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 sheet is 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 sheet. However, there may
be different transaction which do not affect the net working capital and therefore,
will be outside the scope of sheet.
Because of the limitation of the above two concepts, the term funds is also used to
denote all the financial resources of the firm. In such a case, the term funds are
used in the broadest possible sense and the inherent short-comings of the other
two concepts are eliminated. Based on the concept of total financial resources, the
sheet will report ail the important and relevant transactions during a year?
Based on these three concepts of the term funds, the sheet can be prepared as follows:
1. sheet ( cash basis ) also known as a cash flow statement
2. sheet net working capital ) also known as a fund flow statement
Cash flow statement
Cash flow statement provides information about the cash receipts and
payments of a firm for a given period. It provides important information that
compliments the profit and loss account and balance sheet. The information about the
BELGAUM ISTITUTE OF MANAGEMENT STUDIES (MBA). BGM 17
17
cash flows of a firm is useful in providing users or financial statements with a basis to
assess the ability of the enterprise to generate cash and cash equivalent and the needs
of the enterprise to utilize these cash flows. The economic decisions that are taken by
users require an evaluation of the ability of an enterprise to generate cash and cash
equivalents and the timing and certainty of their generation.
Scope
Cash flow statement provides information about the cash receipts and payments of
enterprises for a given period. It provides important information that supplements
the profit and loss account and balance sheet.
The statement of cash flow is required to be issued by the institute of chartered
accountants of India in March 1997 which replaces the ‘changes in financial
position as per as-3’.
There are certain changes in the preparation of cash flow statement from the
previous methods as a result of the introduction of as-3.
Cash comprises cash on hand and demand deposit with banks.
Cash equivalents are short term highly liquid investments that are readily
convertible into known amounts of cash and which are subject to an insignificant
risk of changes in value. Examples of cash equivalents are, treasury bills,
commercial paper etc.
Cash flows are inflows and outflows of cash and cash equivalents. It means the
movement of cash into the organization and movement of cash out of the
organization.
Classification of cash flows
The cash flow statement relating to a particular period is classified into the
following three main categories of cash inflows and cash outflows:
BELGAUM ISTITUTE OF MANAGEMENT STUDIES (MBA). BGM 18
18
1. Cash flows from operating activities
2. Cash flows from investment activities
3. Cash flows from financing activities
Cash flow from operating activity
Operating activity are the principle revenue producing activities of the enterprise
and other activities that are not investing or financing activities. Operating activities
include cash effects of those transactions and events that enter into the determination
of net profit or loss. Following are examples of cash flows from operating activities.
Cash receipt from the sale of goods and the rendering of services.
Cash receipt from royalties, fees, commission, and other revenue.
Cash payments to suppliers for goods and services.
Cash payments to and on behalf of employees.
Cash receipts and payments of an insurance enterprise for premiums and claims,
annuities and other policy benefits.
Cash payments or refunds of income tax unless they can be specifically identified
with financing other policy benefits.
Cash receipts and payments relating to future contracts, forward contracts, option
contracts and swap contracts are held for dealing or trading purposes.
Cash flows from investments activities
Investing activities are the acquisition and disposal of long terms assets and
other investments not included in cash equality. Investing activities include
transactions and events that involve the purchase and sale of long-term productive
assets not held for resale and other investments. The following are examples of cash
flows arising from investing activities:
BELGAUM ISTITUTE OF MANAGEMENT STUDIES (MBA). BGM 19
19
Cash payments to acquire fixed assets (including intangibles). These payments
include those relating to capitalized research and development costs and self-
constructed fixed assets.
Cash payments to acquire shares, warrants, or debt instruments of other
enterprises and interests in joint ventures.
Cash receipts from disposal of fixed assets.
Cash receipts from disposal of shares, warrants, or debt instruments of other
enterprises and interests in joint ventures.
Cash advances and loans made to third parties.
Cash receipts from the repayments of advances and loans made to third parties.
Cash receipts and payments relating to futures contracts, forward contracts, option
contracts, and swap contracts except when the contracts are held for dealing or
trading purposes, or the receipts and payments are classified as financing
activities.
Cash flows from financing activities
Financing activities are activities that result in changes in the size and composition
of the owner’s capital and borrowings of the enterprise. Following are the examples of
cash flows arising from financing activities:
Cash proceeds from issuing shares or other similar instruments.
Cash proceeds from issuing debentures, loans, notes, bonds and other short term
borrowings.
Cash repayments of amounts borrowed, i.e., redemption of debentures, bonds, etc.
Cash payments to redeem preference shares.
Payment of dividend
1) Ability to generate future cash flows.
BELGAUM ISTITUTE OF MANAGEMENT STUDIES (MBA). BGM 20
20
2) Ability to pay dividends and meet obligations.
3) Reasons for the difference between net income and net cash provided
(used) by operating activities.
4) Cash invested and financing transactions during the period.
Information to prepare this statement
Usually comes from 3 sources:
Comparative balance sheet.
Current income statement.
Additional information.
The state of cash flow deals with cash receipts and Payments, so the accrual
concept is not used in the preparation of the state of cash flow.
Fund flow statement
The profit and loss account and balance sheet statements are the common
important accounting statements of a business organization. The profit and loss
account provides financial information relating to only a limited range of financial
transactions entered into during an accounting period and which have impact on the
profits to be reported. The balance sheet contains information relating to capital or
debt raised or assets purchased. But both the above two statements do not contain
sufficiently wide range of information to make assessment of organization by the end
user of the information.
The fund flow statement is also called as the ‘ statement of sources and
application of funds’ and ‘ statements of changes in financial position’.
The fund flow statement contains all the details of the financial resources have been
used up. This statement discloses the amounts raise from various sources of finance
during a period and then explains how that finance has been used in the business.
BELGAUM ISTITUTE OF MANAGEMENT STUDIES (MBA). BGM 21
21
It is very useful tool in analysis of financial statements which analysis the
changes taking place between two balance sheet dates. The statement analysis the
changes between the opening and closing balance amounts of the all items of balance
sheet for the period.
A balance sheet sets out the financial position at a point of time, setting
liabilities from which funds have been raised against assets acquired by the use of
those funds. A fund flow statement analysis the changes which have taken place in the
assets and liabilities during certain period as disclosed by a comparison of the opening
and closing balance sheets.
Concept of fund
The term ‘fund’ has been defined and interpreted differently by the different
experts. The ‘fund’ refers to all the financial resources of the company. On the other
extreme, ‘fund’ has been understood as ‘cash’ only.
The most acceptable meaning of the fund is ‘working capital’.
Concept of flow
The flow of funds refers to transfer of economic values from one asset equity
to another. When funds mean working capital, flow of funds refers to movement of
funds which cause a change in working capital of the organization.
Identification of flow of funds:
A flow of funds takes place only if a current account is involved. To identify a
flow, journalize the transaction, identify the two accounts involved as ‘current’ and
‘non-current’ and apply the general rule.
General rule
Transactions which involve only current accounts do not result in a ‘flow’.
Transactions which involve only non-current accounts do not result in a flow.
BELGAUM ISTITUTE OF MANAGEMENT STUDIES (MBA). BGM 22
22
Transactions which involve one current account and one non-current account
results in a ‘flow’ of funds.
The sources and application of the working capital or the funds may be examined as
follows:
Sources of fund
A firm numerous transactions during a year and most of these transactions may
affect one or the other current account i.e., most of these transactions may result in the
flow of the working capital. Neither it is necessary nor practical to identify the effect
of each and every transaction on the working capital. These transactions, instead, are
considered and analyzed
In a collective forms and then their effect on the working capital is identified.
Some of the major sources of working capital can be noted down as follows.
The funds generated by the operation of funds in term of the profits. Issue of
additional share capital or debenture for cash. It may be noted that the funds
generated in this case, are equal to the issue price of the securities. The face value
of share/debenture is irrelevant.
Borrowings made by the firm for a long term.
Sale of fixed assets, investment or intangible assets such as goodwill, patent etc.
Non-operating incomes such as income from investment or profits from the sale of
assets/investments.
Any other source e.g. Subsidy received from the government, claims received
from insurance company for the loss of a property etc.
Applications of funds
As already noted in the above list of sources of funds, that if there is business loss to
the firm then this tantamount to decrease or use of funds.
BELGAUM ISTITUTE OF MANAGEMENT STUDIES (MBA). BGM 23
23
Purchase of new assets/investments/patent rights/trade marks or any other
property reduces the working capital of the firm.
The redemption of preference share capital or debentures during a year also
utilizes the funds.
Repayment of a long term loan during the year.
Payment of dividends to the shareholders.
Sources of funds
1. Increase in liabilities
2. Increase in capital
3. Decrease in assets and investments
Applications of funds
1. Decrease in liabilities
2. Decrease in capital
3. Increase in non-current assets and investments
Financial planning
Financial manger must be able to analyze the current position of their own
firms as well as that of their competition. They must also plan for the company’s
financial future. Growth in sales is an important objective of most firms. An increase
in a firm’s market share will lead to higher growth. The firm would need assets to
sustain the higher growth in sales. It may have to invest in additional plant and
machinery to increase its production capacity. Also, it would need additional current
assets to produce and sell more goods or services.
The firm would have to acquire raw materials and convert them into finished
goods after incurring manufacturing expenses. It may have to sell goods on credit
because of the industry norms or to push up sales. The supplier of raw materials may
BELGAUM ISTITUTE OF MANAGEMENT STUDIES (MBA). BGM 24
24
extend credit to the firm. The firm may use its internally generated funds to finance
current and fixed assets. When the firm grows at higher rate, internal, funds may not
be sufficient. The process of estimating the funds requirements of a firm and
determining the sources of funds is called financial planning.
Steps in financial planning
Financial forecasting is the basis for financial planning. Forecasts are merely
estimates based on the past data. Historical performance may not occur to the future,
planning means what a company would like to happen in the future and includes
necessary action plans for realizing the predetermined intensions. The following steps
are involved in financial planning:
Past performance: Analysis of the firm’s past performance to ascertain the
relationship between financial variables, and the firm’s financial strengths and
weaknesses.
Operating characteristics; Analysis of the firm’s operating characteristics-
product, market, competition, production and marketing policies, control systems,
operating risk etc. To decide about its growth objective.
Corporate strategy and investment needs: Determining the firm’s investments
needs and choices, given its growth objective and overall strategy.
Cash flow from operations Forecasting the firm’s revenues and expenses and
need for funds based on its investment and dividend policies.
Financial alternatives: Analyzing financial alternatives within its financial policy
and deciding the appropriate means of raising funds.
Consequences of financial plans
Analyze the consequences of its financial plans for the long-term health and
the survival to firm.
BELGAUM ISTITUTE OF MANAGEMENT STUDIES (MBA). BGM 25
25
Consistency
Evaluate the consistency of financial policies with each other and with the
corporate strategy.
Financial planning involves the questions of a firm’s long-term growth and
profitability and investments and financial decisions. It focuses on aggregative capital
expenditure programs and debt-equity mix rather than the individual projects and
sources of finance.
BELGAUM ISTITUTE OF MANAGEMENT STUDIES (MBA). BGM 26
26
3 - STATEMENT OF THE PROBLEM:
Financial analysis being an integral part of overall corporate management and
it is one of the powerful tools of financial performance analysis. The analysis of
financial statement of PPL is done in order to know the company’s financial position
of the year.
Management Problem:
To gauge the adequacy of returns/cash flows with respect to investment,
liquidity and growth and ascertain the opportunity for expansion
Research Problem
“A study on analysis of financial statements of polyhydron pvt ltd and suggest
long term planning”.
BELGAUM ISTITUTE OF MANAGEMENT STUDIES (MBA). BGM 27
27
4 - PURPOSE OF THE STUDY
The purpose of doing this project is mainly to make a thorough study of the
financial analysis of the company.
To assess the company’s trends for the last five years with regard to liquidity
performance.
The purpose also includes assessing the impact of financial analysis on
liquidity strength of the company.
BELGAUM ISTITUTE OF MANAGEMENT STUDIES (MBA). BGM 28
28
5 - SCOPE OF THE STUDY
The scope of the study is conducted is only for organizational level. It is done
through the Balance sheet of the company, for the periods 1999-2000, 2000-01, 2001-
02, 2002-03, 2003-04, 2004-05 and 2005-06.
6 - OBJECTIVES OF THE STUDY:
1. To analysis the firm’s financial statements
2. To know whether management generating adequate operating profit on the firm’s
assets.
3. To know how is the firm financing its assets
4. To know whether owners getting adequate returns?
5. To determine the progress of the company.
BELGAUM ISTITUTE OF MANAGEMENT STUDIES (MBA). BGM 29
29
CHAPTER – 2
Organization Profile
o Polyhydron Pvt. Ltd.
Organization Chart
Research Design
Data Collection Method
Measuring tools
BELGAUM ISTITUTE OF MANAGEMENT STUDIES (MBA). BGM 30
30
1 - ORGANIZATION PROFILE (POLYHYDRON PVT. LTD.)
POLYHYDRON is known for its “ETHICAL MANAGEMENT”. People
from all over India visit the company to interact and understand the systems. It has
become a kind is “PILGRIMAGE CENTRE” for the corporate world of India. It is
established in 1981.it is located in Belgaum’s new industrial area at Mache.
Polyhydron manufactures hydraulic equipments like hydraulic valves, radial
piston pumps etc. The range of products spans over 30 types and 700 models. PPL
have won a national award for entrepreneurship in 1985 and NACOSU-SIMA award
for excellence in management instituted by the national confederation of small
industry madras in 1992.
Polyhydron, ‘natural business’ is performed to the customer is offered a range
of products manufactured by the company. Polyhydron customer includes OEM’s and
Stockiest.
HISTORY
The Three young enthusiastic engineers Mr. S.B.Hundre, Mr. Chitins and Mr.
V.K Samant together started Hydrotechnic, a hydraulic tube fittings and accessories
manufacturing unit in the year 1974.
With the toe in the hydraulic market door began to pen for newer concept and
the next logical step was to sell valves and pumps. Sooner the expansion was
necessary to keep up with the demand.
Following table summarizes how Polyhydron Group of Companies has developed:
1974—M/s Hydrotechnic was established to manufacture, hydraulic tube coupling
for metric tubes, flanged fittings shut offs, needle valves, throttle check valves etc.
1981—M/s Polyhydron was set up for manufacturing radial piston pumps , relief
valves , directional control valves , check valves etc.
BELGAUM ISTITUTE OF MANAGEMENT STUDIES (MBA). BGM 31
31
1986—M/s Polyhydron System was started to manufacture oil hydraulic systems,
hydraulic actuators and piston type accumulators.
1989—Polyhydron become private limited company.
1991—Polyhydron Systems become private limited company.
1993—Polyhydron System Pvt. Ltd. went in collaboration with oil gear touter of
USA to become Oil gear touter Pvt. Ltd (OTPL)
M/s Polyhydron is considered to be one among the very few plants in India
which has been practicing JIT concept over last several years apart from employee
involvement and similar other quality management concepts. PPL is the only
company, which is manufacturing pumps and valves without any collaboration.
MISSION
We will nurture an ethically managed organization,
We will not exploit our customers,
Employees, suppliers, government, society and nature.
VISION
We will create an island of excellence
Through
Focus on customer,
Employee’s empowerment
And continuous improvement
The Vision and Mission at PPL came into being before ISO came to India.
The Vision statement emerged in 1995 and the Mission statement in 1996. the mission
statement is used as a ‘ constant guide’ for action of managers and workers.
MANUAL PROCEDURE
BELGAUM ISTITUTE OF MANAGEMENT STUDIES (MBA). BGM 32
32
When the order for the product is received from the customer, the assembly
Coordinator has to convey the ordered quantity of the product to the monitor of the
workstation where that particular product is assembled.
Then monitor has to start the assembling of the product of mentioned quantity.
At the evening (that is when working hours of the company are going to finish ) the
monitor has to inform the assembly coordinator about the quantity of the product
assembled throughout the day and the name and quantity of the items which are used
to assemble the product as well as the Stock of the items.
Then assembly coordinator has to see, how many items are below reorder
level on the workstation. If there are items below reorder level then he has to generate
the purchase orders to the suppliers. Since there is no any purchase department in the
company the assembly coordinator has to do all these things. There is only one
supplier for one item but one supplier may have many items to supply.
Again, the assembly coordinator has to see how many items are rejected from
the workstation and how many products are rejected from the customer; and he has to
update the stock of items and products on the workstation.
AWARDS AND ACHIVEMENTS
National award to small scale entrepreneur in the year 1984.
NACOSI-SIMA award in the year 1992 as certificate of excellence.
The president’s award for entrepreneurship in the year 1984.
The Belgaum chamber of commerce and industries conferred on them an award
for outstanding performance in the field of industry in the year 2002.
The Rotary club of Belgaum gave them vocational award for “HIGH ETHICAL
STANDARDS IN VOCATION” in the year 1993-1994. The commissioner of
commercial Taxes, Belgaum declared PPL as the ‘Deligent tax payer’.
BELGAUM ISTITUTE OF MANAGEMENT STUDIES (MBA). BGM 33
33
Rotary club, Bangalore, vijaynagar in July 2000 conferred vocational excellence
award to shri. Suresh B. Hundre for conviction in Ethical values and practicing these
values. They have said he has translated his industry into a temple of ethics, an
industrial pilgrimage may this honor people him to create further awareness of ethical
management practices, and hereby inducing in more and more people that ethics is the
only lasting measure of one’s success and satisfaction.
The institute of Engineers (India) local centre, Belgaum has honored shri. Suresh. B.
Hundre for excellence achieved and outstanding services rendered in the field of
Engineering on 15th Sep 1998.
PRODUCTION SYSTEM
QUALITY POLICY: We at polyhydron, strive to achieve Quality by increasing the
rate of Improvement better than the rise in Customer expectations
PPL emphasizes on the quality of the product. If any customer is dissatisfied
with the product, then every arrangement is made to replace that product with the new
one. Next comes into the pictures, the reason for the product failure which would be
either the fault of R and D
Types of Hydraulic systems and companies
Hydraulic systems Companies
1. SERVO TECH Moog controllers, Rexroth controllers, Vickers
controllers
2. Proportional technology Vickers, Rexroth, Yukers, Denfoss
3. Basic Hydraulic Vickers, Rexroth, Bosch, Herion, Yulker, Denfoss
MCKINSEY 7S MODEL
BELGAUM ISTITUTE OF MANAGEMENT STUDIES (MBA). BGM 34
34
The Seven-Ss is a framework for analyzing organizations and their
effectiveness. It looks at the seven key elements that make the organizations
successful, or not: strategy; structure; system’s, or not: strategy; structure; systems;
style; skill; staff; and shared values.
Consultants at McKinsey & Company developed the 7S model in the late
1970s to help managers address the difficulties of organizational change the model
shows that organizational immune systems and the many interconnected variables
involved make change complex, and that an effective change effort must address
many of these issues simultaneously
COMPANY PROFILE WITH RESPECT TO 7S MODEL
Strategy: The direction and the scope of the company over the long term.
Based on market research, competitive analysis and self analysis, the crucial
BELGAUM ISTITUTE OF MANAGEMENT STUDIES (MBA). BGM 35
35
differentiating competencies or strong sides of the company are identified and
formulated. Business strategy of PPL.“We shall develop and continuously improve
our products which shall be offered to our customers at reasonable price.
Structure: The basic organization of the company, its departments, reporting
lines, areas of expertise, and responsibility (and how they inter-relate).
Systems The Company safeguards its assets and ensuring that its usage is
authorized and is done in the right manner. The company also maintains proper
accounting records as statutorily required and as per pre prescribed accounting
standards and generally accepted accounting practices so as to ensure reliability of
financial information.
The company has the following general system in place.
Accounting (Accounts, Budgets etc.) Manuals, Administrative manuals and other
functional manuals have been complied and are updated periodically.
The company has a well organized management information system.
Skills: Skills include those characteristics company believes its members in a
key position. It includes such as:
Technical skill: (Sophisticated measuring and calibrating instruments, CAD
facility and special testing facility, Well equipped R and D center. Qualified
personnel.)
Management skills: (Just-in-time production system implemented has bourn
unimaginable, Benefits in spite of the non conductive environment in the country.
Holds a very good collection of technical (hydraulic) and management books
Temple of Ethics. Business Ashram.)
Shared Values: Originally called super ordinate goals; the guiding concepts and
principles of the organization – values and aspirations, often unwritten - that go
BELGAUM ISTITUTE OF MANAGEMENT STUDIES (MBA). BGM 36
36
beyond the conventional statements of corporate objectives; the fundamental ideas
around which a business is built; the things that influence a group to work together for
a common aim.
The Values shared by the employees of PPL are:
Respect for individuals, Customer orientation, Leveraging technological development,
Desire for excellence, Ethical way of doing business, Financial acumen , Passion for
excellence, Live quality, Integrity, Honesty, Trust, Transparency, Delegation of
authority.
Staff: Staff means that the company has hired able people, trained them well
and assigned them to the right jobs. Selection , training reward and recognition,
retention, motivation and assignment to appropriate work are all key issues.
Total employees: 60.
Style: “we will grow together we will provide you opportunities to learn, to be
involved, to practice new skills, to have responsibilities to be respected and valued,
and to be rewarded and recognized for your contribution”. In return we seek your
commitment to our company’s mission. Your association with our company will
certainly ensure that you will be a more talented, responsible, self confident and well-
mannered person. To encourage, Team spirit, Creativity, Ingenuity, Develop talent.
Thus the management aims at reducing direct control on individuals to
promote motivation, quality improvement and productivity
PRODUCT PROFILE
Polyhydron manufactures Hydraulic Radial Piston Pumps, Mobile Valves,
Directional Control Valves, Solenoid Valves, Pressure Controls, Manifolds, Covers,
Logic Cartridges, Pressure Switches, and Check Valves.Polyhydron products are
BELGAUM ISTITUTE OF MANAGEMENT STUDIES (MBA). BGM 37
37
priced at unbeatably low and PPL has changed the prices very marginally in last 15
years. The following products of Polyhydron
Hand Pumps – HP10
Heavy duty construction. Renewable internal parts by replacement. Integral Relief and Release valves.
Nominal flow and pressure ratings
ModelMax. working pr. (bar)
Flow capacity c.c./stroke
Oil tank capacity (cc)
HP10 350 1.25 250
Feed and Power Hand Pumps - HP5012 & HP5016
BELGAUM ISTITUTE OF MANAGEMENT STUDIES (MBA). BGM 38
38
Automatic change-over from high discharge at low pressure to low discharge at high pressure. Renewable internal parts by replacement. Collapsible Hand lever for compact size and short hand movement.
ModelMaximumworkingpr. (bar)
Flow capacity upto 30 barc.c./stroke
Flow capacityabove 30 bar c.c./stroke
Oil tank
capacity (ltrs.)
HP5012 700 49 2.813
HP5016 350 49 5
Radial Piston Pumps - 2R
Radial piston arrangement, with 3, 5 or 7 Pumping elements each per pump section. Fixed delivery, Oil immersed type, Open execution, face mounting, Valve controlled. Bi-directional rotation of shaft. Flows can be combined internally, externally to feed one circuit or used independently to feed Two circuit
Radial Piston Pumps - 2RC / 2RCE
Radial piston arrangement, with 3, 5 or 7 pumping elements. External mounting type. Face mounting, Valve controlled, Fixed delivery. Bi-directional rotation of shaft. Available with extension shaft for through drive. With extension bracket assembly for coupling a low pressure pump having standard flange.
Pumping Element - 1R / 2R
Pumping Element Assembly for 1R / 2R.Oil immersed type, open execution, face mounting, valve controlled, fixed delivery.
Radial Piston Pump - 12R
Radial piston arrangement, with 5 or 7 pumping
BELGAUM ISTITUTE OF MANAGEMENT STUDIES (MBA). BGM 39
39
elements each per pump section. Oil immersed face mounting. Valve controlled. Fixed delivery. Bi-directional rotation of shaft. With extension shaft for through drive. Available with extension bracket assembly for coupling a low pressure pump having standard flange.
Bell Housing Assembly (Factory Standard) - BHP
The bell housing series BHP are designed for coupling hydraulic pumps having flanges to electric motors having metric flanges. These bell housings are precisely machined to reduce misalignment of coupled shafts. The correct alignment of the shafts along with the cushioned power transmission through a resilient spider increases the life of the bearings of the pump/motor coupled. The construction also reduces the noise generation considerably.
Direct Operated Pressure Relief Valve - DPR
Direct acting with guided cushioned poppet. Available in Cartridge, Threaded and Subplate types.
Nominal pressure and flow ratings
ModelMax. workingpr. (bar)
Max. flow
in l / min
DPR 06 700 30
DPR 10 400 80
DPR 20 400 160
Direct Operated Pressure control Valve - DPC
Hydraulically cushioned valves, used to control sequencing, relieving, unloading or counter-balancing operations.
Nominal flow and pressure ratings
Max. flow handling capacity
160 l/min
Max. setting pressure 160 bar
Max. working pressure 350 bar
Pilot Operated Pressure Relief Valves (Cartridge Type) - PPR 06K
Two stage Spool type Relief / Reducing Valve Cartridge Low pressure override due to larger
BELGAUM ISTITUTE OF MANAGEMENT STUDIES (MBA). BGM 40
40
flow area.Two options for pressure adjustment, - With set screw and lock nut. - With hand knob and lock nut.Internal drain valves can be converted to external drain
Pilot Operated Pressure Relief cum Unloading Valve - PPRU
Two stage pilot operated construction. These valves are normally open type valves. When the pressure in the secondary port ( port B ) increases to set pressure, the valve closes against the spring.
PPM10
315adjustable upto5 to 315
80
PPM20 200
PPM30 300
Pressure Control Modules - PCM 06-06
Designed to control double pumps of a Hi-Low system. Unloads low pressure pump when system pressure rises above the pressure set on unloader valve. Relieves high pressure pump when system pressure reaches the value.
Nominal flow and pressure ratings
Model
Max. pr. for High pr. relief (bar)
High pr. Flow (l/min)
Max. pr. Forunloading (bar)
Low pr. Flow
(l/min)
PCM 06-06 400 25 50 25
Pressure Control Modules - PCM 20-16
Designed to control Double pumps of a Hi-Low system. Consists of a High pressure relief valve, a Check valve and a low pressure unloading valve. Unloading of pumps by Solenoid valve / Valves as an optional feature.
Nominal flow and pressure ratings
PCM20-16 315 100 100 160
Counter Balance Valve - CB Design series 30
Counter balance valves are seat type valves. They offer free-flow from their port B to A and give leak free closure in opposite direction upto a predetermined pressure. This predetermined cracking pressure can be adjusted within its
BELGAUM ISTITUTE OF MANAGEMENT STUDIES (MBA). BGM 41
41
maximum specified range.
Flow handling capacity 200 lpm
Max. Set Pressure 50 bar
Operating pressure 315 bar
Solenoid Operated Directional Control Valve (CETOP 03) - DE 06
Direct solenoid operated,spool type, mounting on ISO 4401-03-02. Five chamber body and spool design provides low-pressure drop, with maximum performance. Balanced spool design ensures proper shifting force for maximum reliability and long life. All spools and bodies are interchangable, simplifying maintenance. Wet pin DC solenoids ensure better heat dissipation, quitter operation, there by increasing solenoid life. Moulded solenoid coils eliminate moisture problems and ingress of dust. Plug-in-coils for ease of maintenance. Indicator lights are a standard option.
Lever Operated Directional Control Valve (Old Series) - DL10 ( Series 10 )
Completely encapsulated control mechanism for protection against dirt. Five chamber design. Flexibility in rotating the operating mechanism by 90° x 4. Wide variety of spools available in subplate model only.
Nominal flow and pressure ratings
Model
Max. working pr. (bar)Max. flow l/min.
4DL 10
Port P, A and B ..... 350 Port T ................ 100
100
Pilot Operated Directional Control Valve (New Series) - DP 10
Pilot operated directional control valves are hydraulically operated spool valves. They control the start, stop & direction of fluid flow. Available in 19 spool configurations. Available as spring centered and spring offset.
BELGAUM ISTITUTE OF MANAGEMENT STUDIES (MBA). BGM 42
42
Mounts on standard ISO 4401, IS10187.
Nominal flow and pressure ratings
Model
Max. working pr. (bar)Max. flow l/min.
4DP 10
Port P, A and B ...... 350 Port T ................... 250 Port X and Y .......... 150
120
Solenoid Pilot Operated Directional Control Valve - DEP 20
Available as spring centered, spring offset Valve mounting interface conforms to International and National standards. Minimum pilot pressure is 5 bar.
Lever Operated Pressure Holding D.C.V. - DLS 20
Specially designed to control Up-stroking, gravity return, single acting hydraulic cylinders, where pressure holding, smooth de-compression and quick return of the ram is desired. These valves are totally encapsulated for trouble-free operations. valves with quick exhaust feature has large return passage to achieve extra fast return of the ram.
Monoblock Directional Control Valve - MDL 10
Monoblock directional control valve consisting of body, the control spool, incorporated with built-in non-return valve ( Anti-cavitation ) and Direct acting pressure relief valve. The valve is available in spring centred or detented model.In order to have flexibility in mounting, the operating head can be rotated by 90ºx4 positions around the spool axis. Port configuration and valve mounting interface conforms to factory standards.
Pressure compensated flow control valve - PF
Pressure compensated. Check valve option for reverse-free flow. Four rotations of hand knob to facilitate the setting with ease. Thumb screw provision to retain valve setting. Stroke limiter
BELGAUM ISTITUTE OF MANAGEMENT STUDIES (MBA). BGM 43
43
available as an option.
Max. working pr. 315 bar
Flow controlling capacity
Min. 0.25 to 4, 8, 16 or 32 l/min.
Flow divider valve - FD
Flow divider valves provide dual flow from a single source at a predetermined ratio, regardless of load. Maximum dividing error is <5%, Threaded port body.
Max. Pr. (bar)
315
Dividing Ratio (%)
50 : 50
Check Valve, SCREW-IN CARTRIDGE - KSC / KSD
Two port screw-in cartridge valves that are designed to fit in a cavity confirming to ISO 7789 : 1998 (E). These are seat type vales, available in four different sizes and with five different cracking pressure in each size. Check valves allow free flow in one direction while providing leak-free closure in reverse direction.
Check Valve - C (ISO)
Seat type valves. Allow free flow from port A to port Band offer leakage free closure in opposite direction. Available in four sizes of standard interfaces conforming to ISO 5781IS 10187DIN 24340Each model available with options of four cracking pressures: 0.5, 1.5, 3 and 5 bar.
Check Valve - CL
BELGAUM ISTITUTE OF MANAGEMENT STUDIES (MBA). BGM 44
44
Seat type valves, CL with external drain. Threaded or Sub-plate mounting construction.
Nominal flow and pressure ratings
ModelMax. working pr. (bar)
Max. flow l/min.
CL10 315 80
CL20 315 160
CL30 315 350
Check Valve - 2CI
These valves are available with the pilot operated check valve facility on either A or B or both A and B threaded ports. The hydraulic opening operation for free flow in reverse direction is achieved by means of internal pilot pressure available from the other working port.
Check Valve (Modular) - CM 10
These are seat type valve in sandwich plate design for use in vertical stacking assemblies. Its hardened metallic seat ensures leakage free closure. Porting pattern conforms to ISO 4401-5, IS 10187, DIN 24340. Available in 8 configurations with 4 cracking options for each configurations.
Size Flow
10 100 lpm
Pilot operated check valve (Modular) - CIM 06
These modular valves are available with the pilot operated check valve facility on either 'A' or 'B' ports. The hydraulic opening operation for free flow in reverse direction is achieved by means of internal pilot pressure available from the other working port.
Shuttle Valves - SL
Seat type construction. Automatically connects it's P port to either A or B depending upon whichever of the two ports is at higher pressure level. Isolates port A and B from each other. Port P gets connected to tank, only if, port A and port B are connected to tank. Available both in Threaded and Sub-plate type.
BELGAUM ISTITUTE OF MANAGEMENT STUDIES (MBA). BGM 45
45
Prefill valve ( PV 40 - 80 )
Intended for prefilling and exhausting of large hydraulic cylinders. Can be used as anticavitation check valves. Decompression feature is optional up to size 80.
Prefill valve ( PV 100 - 200 )
Intended for prefilling and exhausting of large hydraulic cylinders. Can be used as anticavitation check valves.
Cartridge Valves - CV 16 to CV 40
These valves are suitable for mounting in manifold cavities machined as per ISO 7368. By selecting suitable cartridge and cover, it is possible to achieve functions like
BELGAUM ISTITUTE OF MANAGEMENT STUDIES (MBA). BGM 46
46
2 - ORGANIZATION CHART
3 - RESEARCH DESIGN:
BELGAUM ISTITUTE OF MANAGEMENT STUDIES (MBA). BGM
Shareholders Shareholders
Chairperson Chairperson
Managing DirectorManaging Director
FinanceFinance
SalesSales
Production Production
AdministrationAdministration
R & D DeptR & D Dept
Design Design
A/c OfficerA/c Officer
AccountantAccountant
Manager
Manager
Sales CoordinatorSales Coordinator
Sales AssistantSales Assistant
AssemblyAssembly
Machine ShopMachine Shop
ManagerManager
Administrative assistent
Administrative assistent
Excise sales Tax billingExcise sales Tax billing
Manager Manager
AssistantAssistant
Engineer Engineer
Design EngineerDesign Engineer
EngineerEngineer
Draft menDraft men
47
47
Title of the Study:
“A study on analysis of financial statements of polyhydron pvt ltd and suggest
long term planning”.
Statement of problem:
Financial analysis being an integral part of overall corporate management and
it is one of the powerful tools of financial performance analysis. The analysis of
financial statement of PPL is done in order to know the company’s financial position
of the year.
Management Problem:
To gauge the adequacy of returns/cash flows with respect to investment,
liquidity and growth and ascertain the opportunity for expansion
Research Problem
“A study on analysis of financial statements of polyhydron pvt ltd and suggest
long term planning”.
Objectives:
6. To analysis the firm’s financial statements
7. Is management generating adequate operating profit on the firm’s assets.
8. To know how is the firm financing its assets
9. Are the owners getting adequate returns?
10. To determine the progress of the company.
4 - DATA COLLECTION METHOD
BELGAUM ISTITUTE OF MANAGEMENT STUDIES (MBA). BGM 48
48
Secondary data: The major source of data for this project was collected from
annual reports, profit and loss account, manuals & some more information collected
through the internet.
5 - MEASUREMENT TOOLS:
This study is conducted with the help of statistics figures & techniques like
Graphs & charts for better comparison and interpretation.
This project is an analytical research where in the researcher has to use the
available facts as information and analyze these to make a critical evaluation of
materials. This is also an applied research with an aim to find a solution for immediate
problems facing industry or the firm.
The methodologies followed in the analysis of the financial statement are
comparative statement, Common size statement, Trend analysis and Ratio analysis.
The following are the methods of financial analysis used in general.
Comparative financial statements
Common-size financial statements
Trend percentage analysis
Ratio analysis
Limitations
The study is done only on the Balance sheet and Profit and loss account.
BELGAUM ISTITUTE OF MANAGEMENT STUDIES (MBA). BGM 49
49
Study is based on information provided by the company.
The limitation of ratio analysis is itself a limitation in achieving the set
objective
BELGAUM ISTITUTE OF MANAGEMENT STUDIES (MBA). BGM 50
50
CHAPTER – 3
Results & discussion with Charts &
graphs
Recommendations
BELGAUM ISTITUTE OF MANAGEMENT STUDIES (MBA). BGM 51
51
Comparative Financial Statement
In Comparative Financial Statement (CFS), two or more Balance Sheet and/ or
the Income Statement (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.
BELGAUM ISTITUTE OF MANAGEMENT STUDIES (MBA). BGM 52
52
Comparative Balance Sheet
Particulars 2004 2005 Increase/ Decrease (amount)
Increase/Decrease(percentage)
Liabilities and capitalCurrent liabilitiesDeferred liabilitiesShare capitalReserves and surplusTotal
Assets Current assetsNet fixed assetsInvestments Total
7498212.4514522346.003487500.00109107265.2
134615323.80
45873660.62 88669138.154500.00134615323.80
10450017.9015798239.003487500.00133134146.42
162869903.30
60072876.22102792527.104500.00162869903.30
(+) 2951805.45(+) 1275893.00 (+) 0.00(+)24026881.10
28254579.50
(+)14199215.60(+)14123388.95(+) 0.0028254579.50
(+) 39.36%(+) 8.78% (+) 0%(+) 22.02%
(+) 20.98%
(+) 30.95%(+) 15.92% (+) 0%(+) 20.98%
Comparative Balance Sheet
PARTICULARS 2005 2006Increase/ Decrease (Amount)
Increase/ Decrease (Percentage)
Liabilities and Capital
Current Liabilities 10450017.90 11913873.50 1463855.60 14.01
Deferred Liabilities 15798239.00 16340996.00 542757.00 3.44
Share Capital 3487500.00 3487500.00 0.00 0.00
Reserves and Surplus 133134146.42 181808939.28 48674792.86 36.56
TOTAL 162869903.32 213551308.78 50681405.46 31.12
Assets
Current Assets 60072876.22 90110670.72 30037794.50 50.00
Net Fixed Assets 102792527.10 123436138.06 20643610.96 20.08
Investment 4500.00 4500.00 0.00 0.00
TOTAL 162869903.32 213551308.78 50681405.46 31.12
INTERPRETATIONCurrent assets
The investments in the current assets are very high and it has increasing trend
over the period under study. The current assets have increased by Rs. 30037794.50
i.e., 50.00% in 2006 when compared to 2005. So it is significantly effects on the
BELGAUM ISTITUTE OF MANAGEMENT STUDIES (MBA). BGM 53
53
liquidity position of the company and it also increase the working capital of the
company. These shows there are huge investments in the inventories and debtors.
Net fixed assets
The net fixed assets increased by 14123388.95 i.e., almost 15.92% in 2005
when compared to 2004. In the year 2005-06 in has increased to 20.08%. This is due
to capacity expansion in Plant II.
Investments
There is no change in investments for comparing the previous year and the
current year. The company will spend lot of money on the current assets only. So
there is no change in investments in the company. For previous year it will be Rs.
4500 and for current year also it will be Rs. 4500.
Current liabilities
Current liabilities include current liabilities and provisions. Current liabilities
and provisions increased by 2951805.45 i.e., about 39.36% in 2005 when composed
to 2004. in the year 2005-06 current liabilities have increased by 14.01 Since the
increase in current assets is more than increase in current liabilities, therefore the net
working capital has increased.
Deferred liabilities
Deferred liabilities increased by 1275893.00 i.e., about 8.78% in current year
when compared to previous year i.e, in the year 2004-05. But in the year 2005-06 it
has just increased by only 3.44%.
Reserve and surplus
The Reserve and Surplus has increased by Rs. 24026881.10 i.e, about 22.02%
in 2005 as compared to 2004. In the year 2005-06 reserves and surplus have increased
by 36.56%.
BELGAUM ISTITUTE OF MANAGEMENT STUDIES (MBA). BGM 54
54
COMPARATIVE INCOME STATEMENT (CIS)
A CSI 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
Comparative income statement
Particulars 2004 2005 Increase/DecreaseInamount
Increase/ Decrease(%)
Net sales 136364336.3 167929269.9 31564934 23.24less: Cost of goods sold 91352117.1 120863073.7 29510957 32.3Gross profit 45012219.2 47066196.2 2053977 4.56Less: selling and administrative exp
11512089.16 9996610.74 -1515478.4 -13.16
Operating income 33500130.04 37069585.46 33719572 100.65Add: other income 1884091.8 3408823.66 1524731.9 80.92EBIT 35384221.84 40478409.12 5094187.3 14.39Less: interest 0 0 0 0PBT 35384221.84 40478409.12 5094187.3 14.39less: Taxes 11000000 13000000 2000000 18.18Deferred tax adjustments 1928195 1342918 -585277 30.35PAT 22456026.84 26134491.12 3678464.3 16.38
BELGAUM ISTITUTE OF MANAGEMENT STUDIES (MBA). BGM 55
55
Comparative income statement
PARTICULARS 2005 2006Increase/ Decrease (Amount)
Increase/ Decrease%
Net sales 167929269.9 219589944.9 51660674.96 30.76
Less: Cost of Goods Sold 110445067.7 125833343.3 15388275.57 13.93
Gross profit 57484202.18 93756601.57 36272399.39 63.10Less: Selling and Admin. exps 20414616.74 21024256 609639.26 2.99
Operating income 37069585.44 72732345.57 35662760.13 96.20
Add: Other Income 3408823.66 4149147.89 740324.23 21.72
EBIT 40478409.1 76881493.46 36403084.36 89.93
Less: Interest 0 0 0 0.00
PBT 40478409.1 76881493.46 36403084.36 89.93
Less: Taxes 13000000 25000000 12000000 92.31
Prov. for FBT for 2006 0 150000 150000 0.00
Deferred tax adjustments 1343918 542757 -801161 -59.61Add: Excess/short Prov. for I.T. 0 973553.9 973553.9 0.00
PAT 26134491.1 52162290.36 26027799.26 99.59
InterpretationOn the basis of comparative income statement it can be said that gross profit
for the year 2006 has increased by 63.10% over the profit for the year 2005. The Net
sales during the same period have increased by 30.76%. The cost of goods sold
increased by 13.93%. The selling and Administrative expenses increased by 2.96%.
Other income for the year 2006 is increased by 21.72. The EBIT is increased by
75.54% during the year 2006. The Net profit is increased 89.93%.
COMMON SIZE STATEMENT
The CCS represents the relationship of different items of a financial statement
with some common item by expressing each item as a percentage of the common
BELGAUM ISTITUTE OF MANAGEMENT STUDIES (MBA). BGM 56
56
item. In common size Balance sheet, each item of the Balance sheet is stated is stated
as a percentage of the total of the Balance sheet. Similarly in common size income
statement, each item is stated as percentage of the net sales. The percentage for
different items is computed by dividing the absolute amount of that item by the
common base and then multiplying by 100. The percentage so calculated can be easily
compared with the corresponding percentages in some other period.
BELGAUM ISTITUTE OF MANAGEMENT STUDIES (MBA). BGM 57
57
Common Size Income statement
PARTICULARS 2004 2005 2006
Net sales 100.00 100.00 100.00
Cost of Goods Sold 66.99 65.77 57.30
Gross Profit 33.01 34.23 42.70
Less: Selling and Admin. exps 8.44 12.16 9.57
Operating Income 24.57 22.07 33.12
Add: Other Income 1.38 2.03 1.89
EBIT 25.95 24.10 35.01
Less: Interest 0.00 0.00 0.00
PBT 25.95 24.10 35.01
Less: Taxes 9.48 7.74 11.70
PAT 16.47 16.36 23.31
BELGAUM ISTITUTE OF MANAGEMENT STUDIES (MBA). BGM 58
58
COMMON – SIZE BALANCE SHEET
Current liabilitiescurrent liabilitiesprovisionsTotal
Loan fundsecured loanUnsecured loanDeferred tax liability Total
Total liabilities
Net worthshare capitalreserves and surplus
Total
Total funds
Current assetsInventory Trade debtorsCash and Bank balanceOthersLoans and advancesTotal
Fixed assetsGross blockLess: depreciationNet blockCapital work-in-progress
Total
Total Assets
4.071.475.54
0.000.0011.8511.85
17.39
3.1579.9683.11
100.00
5.308.1015.860.031.77
31.06
83.8917.0566.842.0768.94
100.00
4.021.545.56
0.000.0010.7810.78
16.34
2.5981.0583.64
100.00
6.458.6922.930.052.63
40.75
97.2120.4476.772.0478.81
100.00
4.801.606.40
0.000.009.699.69
16.09
2.1481.7483.88
100.00
8.0310.9414.570.063.26
36.86
77.6615.7661.901.2063.10
100.00
2003 2004 2005
BELGAUM ISTITUTE OF MANAGEMENT STUDIES (MBA). BGM 59
59
COMMON – SIZE BALANCE SHEET
Liabilities 2004 2005 2006
CURRENT LIABILITIES 4.02 4.80 3.05
Provisions 1.54 1.60 2.53
Total 5.56 6.40 5.58
Loan Fund
Secured Loan 0.00 0.00 0.00
Unsecured loan 0.00 0.00 0.00
Deferred Tax Liability 10.78 9.69 7.65
Total Liabilities 16.34 16.09 13.23
NET WORTH21.71 45.94 93.21
Share Capital 2.59 2.14 1.63
Reserves & Surplus 81.05 81.74 85.14
Total 83.64 83.88 86.77
TOTAL FUNDS 100.00 100.00 100.00
Assets 2004 2005 2006
Inventory 6.45 8.03 8.07
trade Debtors 8.69 10.94 12.45
Cash & Bank Balance 22.93 14.57 19.10
Others 0.05 0.06 0.11
Loans & Advances 2.63 3.26 2.46
Total 40.75 36.86 42.20
Fixed Assets
Gross Block 77.65 77.66 67.74
Less: Accumulated Dep. 20.44 15.76 13.03
Net Block 57.21 61.90 54.71
Capital work in progress 2.04 1.20 3.09
Total 59.25 63.10 57.80
TOTAL ASSETS 100.00 100.00 100.00
INTERPRETATION
BELGAUM ISTITUTE OF MANAGEMENT STUDIES (MBA). BGM 60
60
The common size BS and the common size IS reveal that proportion of fixed
assets out of total assets has reduced from 63.10 to 57.80 whereas the proportion of
current assets has increased from 36.86 to 42.20. Out of total liabilities the proportion
of current liabilities has decreased from 6.40 to 5.58 and the proportion of deferred
tax liabilities has decreased from 9.69 to 7.65. The Net worth has increased from
83.88 to 134.77%.
Further, the cost of goods sold has decreased from 65.77% to 57.30%. The
Gross profit has increased from 34.23% to 42.70%. EBIT has also increased from
24.10% to 35.01% in the year 2005 to 2006. The Profit after tax has also increased
from 16.36 to 23.31%.
It can be observed that the CSS can be used for analyzing and comparing the
financial position of a firm for two different periods or between two firms for the
same year. This comparability was not available in the CFS because of difference in
firm’s sizes or in different years. Of course, in order to make the CSS more
meaningful, the analyst should ensure that accounting policies of different firm’s
being compared or for different year are unchanged or not significantly different.
TREND PERCENTAGE ANALYSIS
The TPA is a technique of studying several financial statements over a series
of years. In TPA the trend percentage are calculated for each item by taking the figure
of that item for some base year as RS. 100. So, the trend percentage is the percentage
relationship which each item of different years bears to the same item in the base year.
Any year may be taken as the base year, but generally the starting/initial year is taken
as the base year. So, each item for base year is taken as 100 and then the same item
for other years is expressed as a percentage of the base year.
BELGAUM ISTITUTE OF MANAGEMENT STUDIES (MBA). BGM 61
61
TREND ANALYSIS IN (AMOUNT)2003 2004 2005 2006
Net sales Gross profitOperating incomeEBIT PBT PAT Current assetsCurrent liabilitiesFixed assetsNet worthDividend
106434777.9038391735.2828474596.4529601699.3529584724.3518367679.3534366668.456134656.7576202825.74104439337.441220625.00
136364336.3445012219.2033500130.0435384221.8435384221.8422456026.8423749400.787498212.4588669138.15127117111.321569375.00
167929269.9147066196.2037069585.4640478409.1240478409.1226134491.1260072876.2210450017.90102792527.10152419885.421848375.00
219589944.8793756601.5772732345.5776881493.4676881493.4652162290.3684857213.726504252.88123436138.06201793598.903058537.50
Trend analysis (in percentages)2003 2004 2005 2006
Net sales Gross profitOperating incomeEBIT ( Earning before interest and Taxes)PBT ( Profit before taxes)PAT ( Profit after taxes)Current assetsCurrent liabilitiesFixed assetsNet .worthDividend
100100100100
100100100100100100100
128.12117.24117.64119.53
119.60123.31 69.10122.22116.35121.71128.57
157.77 122.59130.18136.74
136.82143.51174.79170.34134.89145.94151.42
120.63244.21255.42259.71
259.86283.98246.91106.02161.98193.21250.57
ANALYSIS OF PROFIT & LOSS ACCOUNT AND BALANCE SHEET
The Net sales of the company have been increased by 130.76 in the year 2005-
06 to Rs.219589944.87 being the highest sales in the last year. The increase in sales is
because of high prospects of the company.
The Gross profit of the company is increased from 122.59 in 2005 to 163.10 in
the year 2006.
BELGAUM ISTITUTE OF MANAGEMENT STUDIES (MBA). BGM 62
62
Operating income has increased by 192.92 in the year 2006 as compared to
130.18 in the 2005.
EBIT (earning before interest and taxes) has increased 119.53 in 2004 and
136.74 in the 2005.
ANALYSIS OF FINANCIAL STATEMENT
SALES:
sales
0
50000000
100000000
150000000
200000000
250000000
1 2 3 4 5
years
sale
s years
sales
Interpretation
There is an increase in the sales of a company compared to other sales
stations. The company registered a growth of 130.76 in 2005-2006 as compared
157.77 to the year 2004-05
The impact of turnover is indicated by the increased profits of the company.
BELGAUM ISTITUTE OF MANAGEMENT STUDIES (MBA). BGM 63
63
GROSS PROFIT:
Gross Profit
0
20000000
40000000
60000000
80000000
100000000
1 2 3
years
Gro
ss P
rofi
t
years
gross profit
Interpretation
The gross profit for the year 2003-2004 was 45012219.20 it has increased
93756601.57 in the year 2005-2006as compared to 2004-2005 was 47066196.20.
Gross profit includes sales- cost of goods sold.
The gross profit is increased because of increase in sales and service of the company..
BELGAUM ISTITUTE OF MANAGEMENT STUDIES (MBA). BGM 64
64
OPERATING INCOME:
operating profit
0
1000000020000000
30000000
40000000
5000000060000000
70000000
80000000
1 2 3
years
op
erat
ing
pro
fit
years
OI
Interpretation
The operating income of the company was Rs. 93756601.57 in the year 2005-
2006 and Rs.37069585.46 in the year 2004-2005. The company has increased its
incomes for the last few years. In the year 2003-2004 it was Rs.33500130.04.
The increase in operating income of the company is due to increase in sales.
BELGAUM ISTITUTE OF MANAGEMENT STUDIES (MBA). BGM 65
65
PROFIT BEFORE TAX:
Profit before Tax
0100000002000000030000000400000005000000060000000700000008000000090000000
1 2 3
years
PB
T years
pbt
Interpretation
The profit before tax is showing very good progress in their profit taxes during
the few years.
The companies profit before tax increased from Rs.35384221.84 in 2003-2004
& 40478409.12 in 2004-2005 and in 2005-2006 it was 76881493.46. That is increased
by 119.60, 136.82, and 259.86 in the year 2003-2004, 2004-2005 & 2005-2006
respectively.
BELGAUM ISTITUTE OF MANAGEMENT STUDIES (MBA). BGM 66
66
PROFIT AFTER TAX:
Profiit After Tax
0
10000000
20000000
30000000
40000000
50000000
60000000
1 2 3
years
PA
T years
pat
Interpretation
The company is showing very good progress in their net profit during the few
years. The company’s net profit increased from Rs. 22456026.84, 26134491.12,
52162290.36 in 2003-2004, 2004-2005 & 2005-2006. That is increased by 123.31,
143.51 & 283.98 in 2003-2004, 2004-2005 & 2005-2006 respectively.
BELGAUM ISTITUTE OF MANAGEMENT STUDIES (MBA). BGM 67
67
CURRENT ASSETS:
Current Assets
0100000002000000030000000400000005000000060000000700000008000000090000000
1 2 3
years
CA years
CA
Interpretation
The current assets and loans and advances all put together for the year 2004-
2005 were Rs. 60072876.22. In the year 2005-06 it amounts to 84857213.72, current
assets consists of inventories, cash & Bank balance and sundry debtors.
BELGAUM ISTITUTE OF MANAGEMENT STUDIES (MBA). BGM 68
68
CURRENT LIABILITIES:
current Liabilities
0
2000000
4000000
6000000
8000000
10000000
12000000
1 2 3
years
CL years
CL
Interpretation
The current liabilities and provisions of the company stood at Rs.
10450017.90 in 2004-2005. it was Rs. 6134656.75 in 2003-2004.
Compared to 2004-2005 the current liabilities have increased from 170.34 to
122.22 in 2003-2004.And in the year 2005-06 the liability have decreased to 106.02
BELGAUM ISTITUTE OF MANAGEMENT STUDIES (MBA). BGM 69
69
FIXED ASSETS:
020000000400000006000000080000000
100000000120000000
Fixed assets
1 2 3 4 5
years
Fixed Assets
year
fixed assets
Interpretation
The fixed assets needs of the company have increased from 116.35 to 134.89
in 2003-2004 & 2004-2005. For the year 2005-06 it is 161.98.
The total fixed assets are arrived after deducting depreciation from the gross
block & net block is calculated capital. Fixed assets include: land & building,
Furniture’s etc.
BELGAUM ISTITUTE OF MANAGEMENT STUDIES (MBA). BGM 70
70
NET WORTH:
Net Worth
0
50000000
100000000
150000000
200000000
250000000
1 2 3
Years
Net
Wo
rth
years
NW
Interpretation
The net worth has increased from 121.71 to 145.94 in the year 2003-2004 &
2004-2005. for the year 2005-06 it is 193.21
The net worth includes share capital, Reserves and loans.
BELGAUM ISTITUTE OF MANAGEMENT STUDIES (MBA). BGM 71
71
DIVIDEND:
Dividend
0
500000
1000000
1500000
2000000
2500000
3000000
3500000
1 2 3
Years
Div
iden
d
years
Dividend
Interpretation
The dividend of the company has increased from 1848375 in the year 2004-
2005. That is in 2003-2004 it was 128.57 & 151.42 in 2004-2005. In the last year the
dividend declare was 3058537.50 and the percentage increase is upto 250.57%.
BELGAUM ISTITUTE OF MANAGEMENT STUDIES (MBA). BGM 72
72
RATIO ANALYSIS
Meaning
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: Liquidity ratios, Leverage
ratios, Activity ratios and Profitability ratios.
Liquidity ratio
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 and
Quick ratio
Current Ratio: The current ratio is calculated by dividing current assets
by current liabilities:
BELGAUM ISTITUTE OF MANAGEMENT STUDIES (MBA). BGM 73
73
Current ratio = Current assets Current liabilities
Current assets include cash and those assets which can be converted into cash
within a year, such as marketable securities, debtors and inventories. The current ratio
gives the margin by which the value of the current assets may go down without
creating any payment problem for the firm. This represents a margin of safety for the
liabilities.
The higher the current ratio, the greater is the margin available and the less is
the chance of firm’s failure to meet its commitments in time. It must be noted that the
current ratio considers only the quantity of current assets ignores the quality of current
assets.
Chart showing current assets to current liabilities:
Interpretation
BELGAUM ISTITUTE OF MANAGEMENT STUDIES (MBA). BGM
0
1
2
3
4
5
6
7
8
year 1999-2000
2000-2001
2001-2002
2002-2003
2003-2004
74
74
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 PPL is excellent. That is 2.50 times in 2000, 3.09 times in 2001,
7.45 times in 2002, 5.60 times in 2003 and in 2004 it was 6.12 times.
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. Cash is the most liquid asset. Inventories are
considered to be less liquid. Inventories normally require some time for realizing into
cash; their value also has a tendency to fluctuate. The quick ratio is found out by
dividing quick asset by current liabilities.
Quick ratio = Current assets—Inventories _______________________ Current liabilities
A Chart Showing That Quick Assets To Current Liabilities
BELGAUM ISTITUTE OF MANAGEMENT STUDIES (MBA). BGM
0
1
2
3
4
5
6
1999-2000 2000-2001 2001-2002 2002-2003 2003-2004
Series1
75
75
Interpretation
As a rule of thumb or as a conversion, quick ratio of 1:1 is considered
satisfactory. The company having an excellent liquidity. That is in the years
2000,2001,2002,2003 and 2004 the quick conversion ratio is 1.97, 2.35, 5.54, 4.65
and 5.15 times respectively of the current liabilities. However the satisfaction or
unsatisfaction of the liquidity position will entirely depend on debtors the company
cannot be liquid in spite of its liquidity ratio if it has slow paying ratio.
Calculation of Liquidity Ratio’s
Explanation 1999-
2000
2000-
2001
2001-
2002
2002-
2003
2003-
2004
(a) CURRENT RATIOCurrent assets Current liabilities (b) QUICK RATIOCurrent assets-inventories Current liabilities
2.50
1.97
3.09
2.35
7.45
5.54
5.60
4.65
6.12
5.15
Fixed Assets to Net Worth
Fixed assets = Net fixed assets ______________ Net worth
Chart Showing Net Fixed Assets to Net Worth
62
64
66
68
70
72
74
76
78
80
year 1999-2000
2000-2001
2001-2002
2002-2003
2003-2004
Series1
BELGAUM ISTITUTE OF MANAGEMENT STUDIES (MBA). BGM 76
76
Interpretation
The fixed assets to net worth ratio are continuously decreasing. In 1999-2000
it was very high. In 2000-2001 it was constant. coming to 2001-2002, 2002-2003 and
2003-2004 it is come down.
Current Assets To Net Worth
Current assets = Current assets _____________ Net worth
Chart Showing Current Assets to Net Worth
Interpretation
The ratio of PPL is fluctuating for all this years. It was 30.00 for the year
ending 2000. In the year 2001 increased to 31.7 and for the year 2002 it was
decreased to 29.02 and it was increased to 32.90 for the year 2003.again it is largely
increased to 36.10 for the year ending 2004.maintaining the efficient utilization
current assets for this year.
BELGAUM ISTITUTE OF MANAGEMENT STUDIES (MBA). BGM
0
5
10
15
20
25
30
35
40
year 1999-2000
2000-2001
2001-2002
2002-2003
2003-2004
Series1
77
77
Current Liabilities To Net Worth
Current liabilities = Current liabilities To net worth _________________ Net worth
Chart Showing Current Liabilities To Net Worth
0
2
4
6
8
10
12
14
Series1
Interpretation
This ratio is higher in the year 1999-2000. It is continuously decreased it is a
good sign for the company. In the year 2001-2002 this ratio is very low i.e. 3.89.
Again it increased in the year 2002-2003 and 2003-2004 it was 5.87 and 5.90.
Calculation Of Ratio’sExplanation 1999-
20002000-2001
2001-2002
2002-2003
2003-2004
FIXED ASSETS TO NET WORTH Net fixed assets * 100 Net worth CURRENT ASSETS TO NET WORTH Current assets * 100 Net worth © CURRENT LIABILITIES TO NET WORTH Current liabilities * 100 Net worth
78.53
30.00
11.95
77.47
31.75
10.27
72.31
29.02
3.89
70.76
32.90
5.87
67.97
36.10
5.90
Activity Ratio
BELGAUM ISTITUTE OF MANAGEMENT STUDIES (MBA). BGM 78
78
Funds of creditors and owners are invested in various assets to generate sales
and profits. Better the management of assets, the larger the amount of sales. Activity
ratios are employed to evaluate the efficiency with which the firm manages and
utilizes its assets. This ratio also called turnover ratio because they indicate the speed
with which assets are being converted or turned over between sales and assets
generally reflects that assets are managed well.
Types of Activity Ratio
Cash turnover ratio, Debtors turnover ratio, Collection period, Working capital
ratio and Total asset ratio
Cash Turnover Ratio
Formula:
Cash turnover ratio = Net annual sales ______________ Cash
Chart Showing Net Annual Sales to Cash
Interpretation
BELGAUM ISTITUTE OF MANAGEMENT STUDIES (MBA). BGM
0
2
4
6
8
10
12
14
1
year
1999-2000
2000-2001
2001-2002
2002-2003
2003-2004
79
79
The ratio of PPL was 5.28 for the year ending 2004. It is increased to 12.62 for
the year ending 2000. Again it decreased to 9.51, 7.38 & 6.06 for the year ending
2001, 2002 and 2003 respectively. The cash turnover ratio is continuously decreasing.
Debtors Turnover Ratio
It indicates the velocity of debt collection of the firm. In simple words, it
indicates the number of times average debtors are turned over during a year.
Debtors turnover ratio = Net annual sales __________________ Average Debtors
Chart Showing Debtors To Sales
Interpretation
The PPL Debtors turnover ratio has been continuously decreasing from past
four years i.e. 2000, 2001, 2002 and 2003. This means that the company is not
realizing its money from its debtors or it can also mean that the company is not
generating more cash sales.
Working Capital Turnover Ratio
BELGAUM ISTITUTE OF MANAGEMENT STUDIES (MBA). BGM
0
2
46
8
10
1214
16
18
year 1999-2000
2000-2001
2001-2002
2002-2003
2003-2004
Series1
80
80
Working capital of a concern is directly related to sales. The current assets like
debtors, bills receivables, cash, stock etc. change with the increase or decrease in
sales. The working capital is taken as Working capital = current assets – current
liabilities.
Working capital = Net annual sales Turnover ratio ___________________ Working capital
Chart Showing Net Annual Sales To Working Capital
0
1
2
3
4
5
6
7
8
9
year 1999-2000
2000-2001
2001-2002
2002-2003
2003-2004
Series1
Interpretation
The working capital turnover ratio is 6.61 times in 2000 & the same is reduced
by 5.38 times in 2001. In 2002 and 2003 it is further reduced by 3.61 & 3.77. In 2004
it is increased from 8.39 times. The working capital turn over ratio is low in 2000,
2001, 2002, and 2003 when compared to 2004.
Total Assets Turnover
This ratio shows the firms ability in generating sales from all financial
resources committed to total assets.
Total assets turnover = Sales
BELGAUM ISTITUTE OF MANAGEMENT STUDIES (MBA). BGM 81
81
_________ Total asset
Chart Showing Sales To Total Asset
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
year 1999-2000
2000-2001
2001-2002
2002-2003
2003-2004
Series1
Interpretation
The Total assets turnover ratio of PPL has been increasing for the last two
years i.e. 2003 and 2004. The higher assets turnover ratio being in the year 2004 i.e.
1.40 & lowest being in the year 2002 i.e. 1.00. The company is utilizing its fixed
assets effectively than earlier years.
BELGAUM ISTITUTE OF MANAGEMENT STUDIES (MBA). BGM 82
82
Calculation Of Activity Ratio’sExplanation 1999-
2000 2000-2001
2001-2002
2002-2003
2003-2004
(b) CASH TURNOVER Net annual sales Cash(c ) WORKING CAPITAL TURNOVER Net annual sales Working capital (d) DEBTORS TURNOVER Net annual sales Debtors (e) TOTAL ASSETS TURNOVER Sales ________ Total assets
12.62
6.61
16.55
1.16
9.51
5.38
15.65
1.13
7.38
3.61
14.33
1.00
6.06
3.77
11.87
1.11
5.28
8.39
13.93
1.40
Profitability Ratio
Profit is the difference between Revenues and Expenses over a period of time.
Profit is the ultimate output of a company and it will have no future if it fails to make
sufficient profits. The profitability ratios are calculated to measure the operating
efficiency of the firm. Besides the management, the creditors and the owners are also
interested in the profitability of the firm. This is possible only when the company
earns enough profits.
Types Of Profitability Ratios
Gross profit margin, Net profit margin, Earning per share, Dividend payout
ratio, Dividend earning ratio and Price earning ratio
Gross profit margin
BELGAUM ISTITUTE OF MANAGEMENT STUDIES (MBA). BGM 83
83
The Gross profit ratio is also called the average mark up ratio. It is
calculated by comparing the Gross profit of the firm with the Net sales as
follows:
GP ratio = Gross profit ______________ * 100 Net sales
Chart Showing Gross Prof To Net Sales
Interpretation:
The operating profit margin is high in the year 2001 and 2003. and then the
operating profits has reduced in the year 2000, 2002, 2004 that is because of increase
in the inventory high cost of production and inefficient utilization of current as well as
fixed assets. The highest being in the year 2003 i.e. 31.19 & the lowest being in the
year 2002 is 27.94.
Net Profit Margin
Net profit margin ratio establishes between net profit and sales and indicates
Manufacturing, Administration and selling the products.
BELGAUM ISTITUTE OF MANAGEMENT STUDIES (MBA). BGM
0
5
10
15
20
25
30
35
year 1999-2000
2000-2001
2001-2002
2002-2003
2003-2004
Series1
84
84
Net profit margin = Profit after taxes _______________ Sales
Chart Showing Profit after Tax To Sales
ratio
02468
101214161820
1999-2000
2000-2001
2001-2002
2002-2003
2003-2004
ratio
Interpretation
The Net profit margin behaves same as the operating profits/Gross profits
margin. The higher operating expensive being in the year 2003 and the lowest in the
year 2000.
Earning Per Share
Earning per share shows the profitability of the firm on a per share basis,
it does not reflect how much is paid as dividend and how much is retained in the
business.
Earning per share = Profit after taxes ___________________ Number of common share
BELGAUM ISTITUTE OF MANAGEMENT STUDIES (MBA). BGM 85
85
Chart Showing Profit After Taxes To Number Of Common Shares
Interpretation
EPS as a measure of profitability of a firm from the owners point of view,
should used. The EPS is continuously increasing. In the year 1999-2000 it was 305. in
the year
Dividend Payout Ratio
Earnings not distributed to the shareholders are retained in the business.
Thus retention ratio is 1— payout ratio.
Dividend payout ratio = Dividend per share ___________________ Earnings per share
Chart Showing Dividend Per Share To Earning Per Share
BELGAUM ISTITUTE OF MANAGEMENT STUDIES (MBA). BGM
0
100
200
300
400
500
600
700
year 1999-2000
2000-2001
2001-2002
2002-2003
2003-2004
Series1
86
86
ratio
00.010.020.030.040.050.060.070.080.09
1999-2000
2000-2001
2001-2002
2002-2003
2003-2004
ratio
Interpretation
The dividend payout ratio is an important and widely used ratio. In the year
1999-2000 it was 0.077 it was continuously decreased for the year 2000-2001, 2001-
2002, 2002-2003, & 2003-2004. it was 0.072, 0.060, 0.066, & 0.069.
Dividend Earnings/Yield Ratio
The dividend yield and the earnings yield evaluate the shareholders return in
relation to the market value of the share. The earnings yield is called the earnings
price ratio.
Dividend earnings ratio = Dividend per share ____________________ Market value per share
BELGAUM ISTITUTE OF MANAGEMENT STUDIES (MBA). BGM 87
87
Chart Showing Dividend Per Share To Market Value Per Share
Interpretation
The dividend earning ratio is fluctuating. In the year 1999-2000 it was 0.061 it
was increased in the year 2000-2001 was 0.071, in the year 2001-2002, 2002-2003
and 2003-2004 it was 0.055, 0.090 & 0.116.
Price Earnings Ratio
The reciprocal of the earnings yield is called the price earning ratio.
Price earning ratio = Market value per share/ Book value per share _____________________________________ Earning per share
P/E Ratio reflects investor’s expectations about the growth in the firm’s earnings.
BELGAUM ISTITUTE OF MANAGEMENT STUDIES (MBA). BGM
0
0.02
0.04
0.06
0.08
0.1
0.12
0.14
year 1999-2000
2000-2001
2001-2002
2002-2003
2003-2004
Series1
88
88
Chart Showing Market Value Per Share To Earning Per
Interpretation
This ratio is popularly used by security analyst to assess a firm’s performance
as expected by the investors. It is continuously decreasing from the year 2000-2001 to
2003-2004.
BELGAUM ISTITUTE OF MANAGEMENT STUDIES (MBA). BGM
0
20
40
60
80
100
120
140
Year 1999-2000
2000-2001
2001-2002
2002-2003
2003-2004
Series1
89
89
Calculation Of Profitability Ratio’s
Explanation 1999-2000
2000-2001
2001-2002
2002-2003
2003-2004
Gross ProfitGross profit * 100 Net sales Net Profit Net profit * 100 Net salesEarning Per Share Profit after tax * 100 No of common sharesDividend Payout Ratio Dividend per share Earning per shareDividend Earning Ratio Dividend per share Market value per share Price Earning Ratio Market value per share/book Earning per share
28.82
14.24
305
0.077
0.061
126.14
30.69
15.48
384
0.072
0.071
100.19
27.94
15.87
356
0.060
0.055
108.07
31.19
17.25
526
0.066
0.090
73.14
28.55
16.46
644
0.069
0.116
59.74
Calculation Of Net Worth
Particulars 1999-2000 2000-2001 2001-2002 2002-2003Fixed Assets 51235135.49 58614758.98 6443831.90 76202825.74Investments 9500.00 9500.00 4500.00 4500.00Current Assets 18762894.52 23749400.78 24979849.06 34366668.45Less: Payment of Advance tax
0.00 0.00 0.00 0.00
70007530.01 82373659.76 89428180.96 110573994.2Less:Outside Liabilities Secured Loans 0.00 0.00 0.00 0.0
0Unsecured Loans
0.00 0.00 0.00 0.00
Current liabilities & provisions
7477234.04 7682954.36 3354562.37 6134656.75
Less: Provision for tax
0.00 107475.00 0.00 0.00
Net worth 62530295.97 74798180.40 86073618.09 104439337.5
BELGAUM ISTITUTE OF MANAGEMENT STUDIES (MBA). BGM 90
90
Findings
The sales of the company are increasing so is the profits. In 2003-2004 the
company earned the higher turnover. Profit in the last five years of comparison, the
major portion is contributed by sales of the company.
The company’s profit over the last few years is increasingly high. The income
of the company is increasing at a steady rate.
The Share capital of the company has remained constant. The current assets of
the company have decreased in 2002-2003 and it increased in the year 2001-2002 &
2003-2004.
BELGAUM ISTITUTE OF MANAGEMENT STUDIES (MBA). BGM
Particulars 2003-2004 2004-2005 2005-2006Fixed Assets 88669138.15 102792527.10 123436138.06Investments 4500.00 4500.00 4500.00Current Assets 45873660.62 54760716.02 84857213.72Less: Payment of Advance tax
0.00 0.00 0.00
134547298.80 157557743.12 208297851.78Less:Outside Liabilities Secured Loans 0.00 0.00 0.00Unsecured Loans
0.00 0.00 0.00
Current liabilities & provisions
7498212.45 7828695.91 6504252.88
Less: Provision for tax
0.00 0.00 0.00
Net worth 127049086.4 149729047.21 201793598.90
91
91
Debtors are the major current assets that the company holds. The debtor’s
turnover ratio is 13.93 times in 2003-2004.
The current ratio is increasing continuously. In the year 1999-2000 it was
2.50. It is increased to 7.45 in the year 2001-2002.
The profitability ratio has improved over the years due to increase sales and profits.
BELGAUM ISTITUTE OF MANAGEMENT STUDIES (MBA). BGM 92
92
2 - RECOMMANDATION AND CONCLUSSION
Suggestions
The firm is performing well and its sales are increasing over the years. But
still the following is the suggestion if considered will prove to be beneficial to the
company.
There is huge investment in the current assets of the concern.
The current ratio of the firm is very much higher than the normal standards.
The firm should not unnecessarily block excess money in the current assets
than normal requirement of the business.
The cost of goods sold had increased continuously from 2004 to 2005. The
firm should give attention to maximize the sale and minimize the direct costs.
The liquidity ratio of the company is too high, so the company can invest its
ideal funds in short-term securities, which can yield a favorable return to the
company.
The company can invest in mutual funds, which is more promising for higher
yield.
Polyhydron has net working capital more than requirements an unhealthy sign
of profitability of the company.
Under the light of the inferences drawn from the analysis, it is no exaggeration
to conclude with information that the over all the financial analysis is fair and
reasonably good and that promising future awaits the company.
BELGAUM ISTITUTE OF MANAGEMENT STUDIES (MBA). BGM 93
93
Conclusion
Earning position of the company is continuously and positively increasing.
The gross, operating and net profit margins are favorable. It makes uses some
Japanese techniques, like kanban cards, net work system, jit etc. to manage its
inventories. Various discount schemes to control and manage the accounts receivable.
The company has to keep an eye on its liquidity position. As the liquidity
position shows funds are lying idle, since they are idle, they are not being properly
utilized. Thus profitability of the income may be affected. So high a liquidity position
should be avoided in order to maintain and improve the profitability.
BELGAUM ISTITUTE OF MANAGEMENT STUDIES (MBA). BGM 94
94
CHAPTER - 4
Appendix
Bibliography
BELGAUM ISTITUTE OF MANAGEMENT STUDIES (MBA). BGM 95
95
APPENDIXPolyhydron Pvt. Ltd.Profit & Loss Account for the year ended 31st March 2000 Sch Amount (Rs)Income Sales Less: Trade Discount
Other Income
Expenditure : Material Consumed Emoluments to and Provisions for Employees Manufacturing Expenses Administrative & Selling Expenses Interest Depreciaton Profit before Taxation Provision for Taxation Net Profit Short provision for Income Tax Balance Brought Forward from Previous Year Profit available for appropriation
Appropriation : Transfer to General ReserveDividend Proposed(Final) Interim Dividend Provision for Corporate Dividend Tax Balanced Carried to Balance Sheet
I
J
KLMNO
81,455,069.806,782,668.4474,662,401.36492005.7575,154,407.11
43,986,206.48
4,973,424.142,221,983.475,551,158.605,580.002,463,515.45 59,201,868.14
15952538.975325000.0010627538.9719023.00495130.0011,103,645.97
9312500.000.00825000.0090750.00875395.9711,103,645.97
BELGAUM ISTITUTE OF MANAGEMENT STUDIES (MBA). BGM 96
96
Polyhydron Pvt. Ltd.Profit & Loss Account for the year ended 31st March 2001 Sch Amount (Rs)Income Sales Less: Trade Discount
Other Income
Expenditure : Material Consumed Emoluments to and Provisions for Employees Manufacturing Expenses Administrative & Selling Expenses Interest Depreciaton Profit before Taxation Provision for Taxation Net Profit Less: Short Provision for Income tax Balance Brought Forward from Previous Year Profit available for appropriation
Appropriation : Transfer to General Reserve Proposed Dividend Provision for Corporate Dividend Tax Balanced Carried to Balance Sheet
I
J
KLMNO
93,819,359.257,315,522.4486,503,836.81498,691.7387,002,528.54
49,584,125.39
5,964,329.602,154,133.995,621,735.001,357.003,041,673.63 66,367,354.6120,635,173.937,240,000.0013,395,173.93170,191.00
875,395.9714,100,378.90
12,000,000.00966,037.5098,536.001,035,805.40
14,100,378.90
BELGAUM ISTITUTE OF MANAGEMENT STUDIES (MBA). BGM 97
97
Polyhydron Pvt. Ltd.Profit & Loss Account for the year ended 31st March 2002 Sch Amount (Rs)Income Sales Less: Trade Discount
Other Income
Expenditure : Material Consumed Emoluments to and Provisions for Employees Manufacturing Expenses Administrative & Selling Expenses Interest Depreciaton Profit before Taxation Provision for Taxation Excess/ Short Provision for Income Tax Net Profit Balance Brought Forward from Previous Year Profit available for appropriation
Appropriation : Transfer to General Reserve Dividend Proposed(Final) Interim Dividend Provision for Corporate Dividend Tax Balanced Carried to Balance Sheet
I
J
KLMNO
90,176,177.5011,933,579.0078,242,598.50880,895.7279,123,494.22
44,779,400.33
6,274,616.001,989,378.564,736,170.331,605.003,615,369.81 613,965,540.03
17,726,954.19(5,500,000.00)191,501.0012,418,455.19
1,035,805.4013,454,260.59
12,000,000.00
209,250.00749,812.5076,480.00418,718.0913,454,260.59
BELGAUM ISTITUTE OF MANAGEMENT STUDIES (MBA). BGM 98
98
Polyhydron Pvt. Ltd.Profit & Loss Account for the year ended 31st March 2003Particulars Sch Amount (Rs)Income Sales Less: Trade Discount
Other Income
Expenditure : Material Consumed Emoluments to and Provisions for Employees Manufacturing Expenses Administrative & Selling Expenses Interest Depreciaton Profit before Taxation Provision for Taxation Deferred Tax Adjustment Excess/ Short Provision for Income Tax Net Profit Balance Brought Forward from Previous Year Profit available for appropriation
Appropriation : Transfer to General Reserve Dividend: Proposed(Final) Interim Dividend Provision for Corporate Dividend Tax Balanced Carried to Balance Sheet
I
J
KLMNO
123,058,719.9016,623,942.00106,434,777.901,127,102.90107,561,880.80
59,518,046.01
6,021,954.202,503,042.415,984,892.6916,975.003,932,246.14 77,977,156.45
29,584,724.35(10,000,000.00)1,375,058.00158013.0018,367,679.35
418,718.0918,786,397.44
16,000,000.00
1,220,625.000.00156,393.001,409,379.4418786,397.44
BELGAUM ISTITUTE OF MANAGEMENT STUDIES (MBA). BGM 99
99
Polyhydron Pvt. Ltd.Profit & Loss Account for the year ended 31st March 2004Particulars Sch Amount (Rs)Income Sales Less: Trade Discount
Other Income
Expenditure : Material Consumed Emoluments to and Provisions for Employees Manufacturing Expenses Administrative & Selling Expenses Interest Depreciaton Profit before Taxation Provision for Taxation Deferred Tax Adjustment Excess/short provision for Income tax Net Profit Balance Brought Forward from Previous Year Profit available for appropriation
Appropriation : Transfer to General Reserve Proposed Dividend Corporate dividend Tax Balanced Carried to Balance Sheet
I
J
KLMNO
157630517.3421266181.00136364336.341884091.80138248428.14
79956380.80
8019583.303376153.007087973.870.004424115.29 102864206.26
35384221.8811000000.001928195.000.0022456026.88
1409379.4423865406.32
20000000.001569375.00205098.002090933.32
23865406.32
BELGAUM ISTITUTE OF MANAGEMENT STUDIES (MBA). BGM 100
100
Polyhydron Pvt. Ltd.Profit & Loss Account for the year ended 31st March 2005
Particulars Sch Amount (Rs)Income Sales Less: Trade Discount
Other Income
Expenditure :
Material Consumed Emoluments to and Provisions for Employees Manufacturing Expenses Administrative & Selling Expenses Interest Depreciaton Profit before Taxation Provision for Taxation Deferred Tax Adjustment Excess/short provision for Income tax Net Profit Balance Brought Forward from Previous Year Profit available for appropriation Appropriation : Transfer to General Reserve Proposed Dividend Corporate dividend Tax Balanced Carried to Balance Sheet
I
J
KLMNO
194,391,257.9126,461,988.00167,929,269.913,408,823.66171,338,093.57
101613720.51
10418006.008831347.224904786.160.005091824.58130859684.4740478409.1013000000.001343918.00 0.0026134491.10
2090933.3228225424.42
23151068.001848375.00259235.002966746.4228225424.42
BELGAUM ISTITUTE OF MANAGEMENT STUDIES (MBA). BGM 101
101
Polyhydron pvt. Ltd.Balance Sheet as at 31st March 2000ParticularsSources of FundsShareholders Funds a) Share Capital b) Reserve & SurplusLoan FundSecured LoansUnsecured LoansTotal
Application of FundsFixed AssetsGross BlockDepreciationNet BlockCapital work in progress
Investments
Current Assets Loans & AdvancesInventorySundry DebtorsCash & Bank balanceOther current AssetsLoans & Advances
Current Liabilities & ProvisionsCurrent LiabilitiesProvision
Net Current AssetTotal
Sch.
AB
CD
E
F
Amount
3,487,500.0059,042,795.97
____
61,022,127.9111,914,795.8249,107,332.092127803.40
3,982,026.844509093.465913957.8028,341.774,329,474.6518,762,894.52
6438784.041038450.007,477,234.04
Amount
62,530,295.97
_____________62,530,295.97
51,235,135.49
9500.00
11285660.4862530295.49
BELGAUM ISTITUTE OF MANAGEMENT STUDIES (MBA). BGM 102
102
Polyhydron pvt. Ltd.Balance Sheet as at 31st March 2001ParticularsSources of FundsShareholders Funds a) Share Capital b) Reserve & SurplusLoan FundSecured LoansUnsecured LoansTotal
Application of FundsFixed AssetsGross BlockDepreciationNet BlockCapital work in progress
Investments
Current Assets Loans & AdvancesInventorySundry DebtorsCash & Bank balanceOther current AssetsLoans & Advances
Current Liabilities & ProvisionsCurrent LiabilitiesProvisionNet Current AssetTotal
Sch.
AB
CD
E
F
Amount
3,487,500.0071,203,205.40____
72,445,401.0614,492,454.9857,952,946.08661,812.90
5,636,731.455,524,714.279,092,050.5558,444.773437459.7423,749,400.78
6,358,245.861,324,708.507,682,954.36
Amount
74,690,705.40
_____________74,690,705.40
58,614,758.98
9500.00
16,066,446.4274,690,705.40
BELGAUM ISTITUTE OF MANAGEMENT STUDIES (MBA). BGM 103
103
Polyhydron pvt. Ltd.Balance Sheet as at 31st March 2002ParticularsSources of FundsShareholders Funds a) Share Capital b) Reserve & SurplusLoan FundSecured LoansUnsecured LoansTotal
Application of Funds
Fixed AssetsGross BlockDepreciationNet BlockCapital work in progressInvestments
Current Assets Loans & AdvancesInventorySundry DebtorsCash & Bank balanceOther current AssetsLoans & Advances
Current Liabilities & Provisionsa)Current Liabilitiesb)Provision
Net Current AssetTotal
Sch.
AB
CD
E
F
Amount
3,487,500.0082,586,118.09
____
78,535,008.9716,288,541.9762,246,467.002,197,364.90
6383108.915458492.5410,598,594.619024.002530629.0024,979,849.06
29,59,930.87394,632.003,354,562.87
Amount
86,073,618.09
_____________86,073,618.09
64,443,831.90
4500.00
21,625,286.1986,073,618.09
BELGAUM ISTITUTE OF MANAGEMENT STUDIES (MBA). BGM 104
104
Polyhydron pvt. Ltd.Balance Sheet as at 31st March 2003ParticularsSources of FundsShareholders Funds a) Share Capital b) Reserve & SurplusLoan FundSecured LoansUnsecured LoansDeferred Tax Balance Deferred Tax liabilities [less] Deferred Tax assets
Application of FundsFixed AssetsGross BlockDepreciationNet BlockCapital work in progressInvestmentsCurrent Assets Loans & AdvancesInventorySundry DebtorsCash & Bank balanceOther current AssetsLoans & Advances
Current Liabilities & ProvisionsCurrent LiabilitiesProvision
Net Current AssetTotal
Sch.
AB
CD
E
F
Amount
3,487,500.0088,425,711.44
____
13,106,352.00580,226.00
92,764,524.1618859757.3273904766.842298058.90
5,862,566.508,963,006.2917,539,009.8843,024.001,959,061.7834,366,668.45
4502472.751632184.006,134,656.75
Amount
91,913,211.44
12,526,126.00104,439,337.44
76,202,825.744500.00
28,232,011.70104,439,337.44
BELGAUM ISTITUTE OF MANAGEMENT STUDIES (MBA). BGM 105
105
Polyhydron pvt. Ltd.Balance Sheet as at 31st March 2004ParticularsSources of FundsShareholders Funds a) Share Capital b) Reserve & SurplusLoan FundSecured LoansUnsecured LoansDeferred Tax liabilities Total
Application of FundsFixed AssetsGross BlockDepreciationNet BlockCapital work in progress
Investments
Deferred Tax AssetCurrent Assets Loans & AdvancesInventorySundry DebtorsCash & Bank balanceOther current AssetsLoans & Advances
Current Liabilities & ProvisionsCurrent LiabilitiesProvisionNet Current AssetTotal
Sch.
AB
CD
E
F
Amount
3,487,500.00109107265.32
____
109361707.5222998420.2786363287.252305850.90
7257595.919785217.3625804229.2563930.002962688.1023,749,400.78
5421145.452077067.007498212.45
Amount
112594765.32
_____________112594765.32
14522346.00127117111.32
88669138.15
4500.00
68025.00
38375448.17127117111.32
BELGAUM ISTITUTE OF MANAGEMENT STUDIES (MBA). BGM 106
106
Polyhydron pvt. Ltd.Balance Sheet as at 31st March 2005ParticularsSources of FundsShareholders Funds a) Share Capital b) Reserve & SurplusLoan FundSecured LoansUnsecured LoansDeferred Tax liabilities Total
Application of FundsFixed AssetsGross BlockDepreciationNet BlockCapital work in progress
Investments
Current Assets Loans & AdvancesInventorySundry DebtorsCash & Bank balanceOther current AssetsLoans & Advances
Current Liabilities & ProvisionsCurrent LiabilitiesProvision
Net Current AssetTotal
Sch.
AB
CD
E
F
Amount
3,487,500.00133,134,146.42____
126,494,000.79 25,671,425.59100,822,575.20 1,969,951.90
13,089,152.0017,827,350.7323,739,746.57104,467.085312,159.8460,072,876.22
7,828,695.912621321.9910450017.90
Amount
136,621,646.42
15,798,239.00
152,419,885.42
102,792,527.104500.00
49622858.32152,419885.32
BELGAUM ISTITUTE OF MANAGEMENT STUDIES (MBA). BGM 107
107
2 - BIBLIOGRAPHY
1. Prasanna Chandra, “Financial management”
Tata MC Grew Hill Publishing. Pp – 557- 580
2. I.M pandey, “Financial management”
Vikas publishing, PP – 108 – 180.
3. R.P Rustagi, “Financial management”
Galgotia Publishing Company
4. M.Y Khan “Financial management”
BELGAUM ISTITUTE OF MANAGEMENT STUDIES (MBA). BGM 108
108