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A Study On Financial Performance Analysis of The Sundaram Finance LTD
A Study On Financial Performance Analysis of The Sundaram Finance LTD
INTRODUCTION
INTRODUCTION
The financial statement provides the basic data for financial performance analysis. The
financial statements provide a summarized view of the financial position and operations of a
firm. Financial analysis (also referred to as financial statement analysis or accounting analysis)
refers to an assessment of the viability, stability and profitability of a business. The analyst first
identifies the information relevant to the decision under consideration from the total information
contained in the financial statements. Therefore, much can be learnt about a firm from a careful
examination of its financial statements as invaluable documents and performance reports.
The analysis of financial statements is an important aid to financial analysis. They
provide information on how the firm has performed in the past and what is its current financial
position. Financial analysis is the process of identifying the financial strengths and weakness of
the firm from the available accounting data and financial statements. The analysis is done by
establishing relationship between the different items of financial statements.
The focus of financial analysis is on key figures in the financial statements and the
significant relationship that exists between them. The analysis of financial statements is a process
of evaluating relationship between component parts of financial statements to obtain a better
understanding of the firms position and performance.
The first task of financial analyst is to select the information relevant to the decision
under consideration from the total information contained in the financial statement. The second
step involved in financial analysis is to arrange the information in a way to highlight significant
relationships. The final step is interpretation and drawing of inferences and conclusions. In brief,
financial analysis is the process of selection, relation, and evaluation.
1.1
INDUSTRIAL PROFILE
A non-banking institution which is a company which has its principal business receiving
of deposits under any scheme of arrangement or in any other manner or lending in any
manner
The non-banking financial sector in India has tremendous growth in recent years. NBFCs
attracted a large number of small investors since the rate of return on deposits with them was
relatively high. NBFCs are quite flexible sectors like equipment leasing, hire-purchase, housing
finance, consumer finance and so on, where gaps between the demand and supply of funds have
been high. The growth in number of NBFCs was facilitated by the case of entry, limited fixed
assets and absence of any need to hold inventories.
or questioned how these moneys were deployed. Soon afterward, the stock market scam broke
claiming its first victim from the non-banking finance companies sector. With the capital market
in disarray, it was no longer possible for continue of fund flow, from investors who had burnt
their fingers in the stock markets. It was thus convenient fresh deposits. In July1996, the RBI,
perhaps the most sweeping changes in the non-banking finance companies regulation, virtually
pulled out all the stock, enabling companies to raise deposits with minimum number and more
significantly, removed the ceiling on interest rate.
At the point, when the government was faced with grim situation and responding to the
plea of the industry, the government set up a special task force headed by Mr. C.M. Vasudev to
recommend the steps for the orderly growth of finance companies while keeping investor
protection as its key priority. The committee in its final report recognized the important role
played by these companies and warned against the tendencies to tar all the companies with the
same brush. The silent recommendations of the Vasudev committee were
Higher capital adequacy ratio for non-banking finance companies seeking public deposits
without credit rating
Preview of prudential norms with ceiling for exposure to real estate and capital markets
Differential ceiling on public deposit acceptance for companies with and without credit
ratings
ii.
Loan Companies
ii.
Investment Companies
iii.
iv.
v.
vi.
Equipment leasing company Any company, which is a financial institution, carrying on its
principal business. The activities of leasing of equipment of the financing of such activity.
1. Hire purchase finance company A company, which is a financial institution, carrying
on its principal business, hire purchase transaction.
2. Investment Company A company, which deals with acquisition of securities.
3. Loan Company A company, which is a financial institution and carries on its principal
business of providing finance by any activities other than its own.
4. Mutual benefit finance company A company, which is a financial institution. This is
notified by the central government under section 620 (a) of The Companies Act 1956.
1.2
COMPANY PROFILE
Sundaram Finance Limited was incorporated in 1954 and has grown into one of the
most trusted financial services group in India and a part of TV Sundaram Iyengar and Sons group
of companies, one of Indias largest industrial conglomerates and diversified industrial
conglomerate with principal base in Chennai and Madurai. Almost all the companies in the
group are privately held. The company was started with a paid-up capital of Rs.2Lakhs and
later went public in 1972.
1.2.1 FOUNDER OF THE COMPANY
The Company was founded by Sri. T. S. Santhanam. He has a rich experience in the
automobile and road transport sector for nearly six decades. He was the founder, Director and
First managing director of Sundaram Finance Limited and has served on various committees
constituted by the Central Government and Reserve Bank of India on various aspects relating to
growth and development of the Road Transport and Non-Banking Financial Companies.
The company has been rated as MAA by the ICRA signifying the highest number of
deposits.
The Company mobilizes its funds from driver sources at competitive rates thus
achieving a reduction in overall cost of funds. The company gets its funds from the main sources
namely,
Deposits
Bank/Industrial Finance
Debentures
Commercial Papers
Easy financing schemes for all cars new and second hand cars.
No hidden costs.
Sundaram Finance
Second Best Tax Payer in the category of Private Sector Company for Assessment
Year 1994-95 in Tamil Nadu Region, from the Income Tax Department, Tamil Nadu.
Rolling Trophy by Rotary Club of Madras South West for Best Employer-Employee
Relationship for the year 1995-96.
Best Tax Payer in the category of Private Sector Company for Assessment Year 199596 in Tamil Nadu Region, from the Income Tax Department, Tamil Nadu.
Sarige Ratna Award to Shri T S Santhanam, Chairman, from the Bangalore City
Lorry Transporting Agents Association (Regd).
Most Valued Customer Award to Shri T S Santhanam Chairman, from the State
Bank of India.
The Best Financier of the New Millennium 2000 to Shri. G K Raman, Managing
Director, from the All India Motor Transport Congress.
10
2.1
The Financial Statements are mirror which reflects the financial position and strengths or
weakness of the concern. The Non- Banking Financial Company has been witnessed intense
competition from domestic banks and international banks. Every business needs to view the
financial performance analysis.
This study aims at analyzing the overall financial performance of the company by using
various financial tools like Comparative Analysis, common size statement analysis, Ratio
Analysis, and Cash Flow Analysis.
11
2.2
12
2.3
LIMITED, CHENNAI. The study covers the period of 2008-2010 for analyzing the financial
statement such as income statements and balance sheet.
The scope of the study involves the various factors that affect the financial efficiency
of the company. To increase the profit and sales growth of the company. This study finds out the
operational efficiency of the organization and allocation of resources to improve the efficiency of
the organization.
The data of the past three years are taken into account for the study. The performance
is compared within those periods. This study finds out the areas where Sundaram Finance Ltd
can improve to increase the efficiency of its assets and funds employed.
13
CHAPTER 3
LITERATURE
REVIEW
14
LITERATURE REVIEW
Chidambaram Rameshkumar & Dr. N. Anbumani (2006), he argue that Ratio Analysis
enables the business owner/manager to spot trends in a business and to compare its performance
15
and condition with the average performance of similar businesses in the same
industry. To do this compare your ratios with the average of businesses similar to yours and
compare your own ratios for several successive years, watching especially for any unfavorable
trends that may be starting. Ratio analysis may provide the all-important early warning
indications that allow you to solve your business problems before your business is destroyed by
them.
Jae K.Shim & Joel G.Siegel (1999), had explained that the financial statement of an enterprise
present the raw data of its assets, liabilities and equities in the balance sheet and its revenue and
expenses in the income statement. Without subjecting these to data analysis, many fallacious
conclusions might be drawn concerning the financial condition of the enterprise. Financial
statement analysis is undertaken by creditors, investors and other financial statement users in
order to determine the credit worthiness and earning potential of an entity.
Susan Ward (2008), emphasis that financial analysis using ratios between key values help
investors cope with the massive amount of numbers in company financial statements. For
example, they can compute the percentage of net profit a company is generating on the funds it
has deployed. All other things remaining the same, a company that earns a higher percentage of
profit compared to other companies is a better investment option.
M Y Khan & P K Jain (2011), have explained that the Financial statements provide a
summarized view of the financial position and operations of a firm. Therefore, much can be
learnt about a firm from a careful examination of its financial statements as invaluable
documents / performance reports. The analysis of financial statements is, thus, an important aid
to financial analysis.
Elizabeth Duncan and Elliott (2004), had stated that the paper in the title of efficiency,
customer service and financing performance among Australian financial institutions showed that
all financial performance measures as interest margin, return on assets, and capital adequacy are
positively correlated with customer service quality scores.
Jonas Elmerraji (2005), tries to say that ratios can be an invaluable tool for making an
investment decision. Even so, many new investors would rather leave their decisions to fate than
16
try to deal with the intimidation of financial ratios. The truth is that ratios aren't that intimidating,
even if you don't have a degree in business or finance. Using ratios to make informed decisions
about an investment makes a lot of sense, once you know how use them.
Carlos Correia (2007), had explained that any analysis of the firm, whether by management,
investors, or other interested parties, must include an examination of the companys financial
data. The most obvious and readily available source of this information is the firms annual
report. The financial statements shall, in conformity with generally accepted accounting practice,
fairly present the state of the affairs of the company and the results of operations for the financial
year.
Greninger et al.(1996), identified and refined financial ratios using a Delphi study in the areas
of liquidity, savings, asset allocation, inflation protection, tax burden, housing expenses and,
insolvency. Based on the Delphi findings, they proposed a profile of financial well-being for the
typical family and individual.
Rachchh Minaxi A (2011), have suggested that the financial statement analysis involves
analyzing the financial statements to extract information that can facilitate decision making. It is
the process of evaluating the relationship between component parts of the financial statements to
obtain a better understanding of an entitys position and performance.
Salmi, T. and T. Martikainen (1994), in his "A review of the theoretical and empirical basis of
financial ratio analysis", has suggested that A systematic framework of financial statement
analysis along with the observed separate research trends might be useful for furthering the
development of research. If the research results in financial ratio analysis are to be useful for the
decision makers, the results must be theoretically consistent and empirically generalizable.
John J.Wild, K.R.Subramanyam & Robert F.Halsey (2006), have said that the financial
statement analysis is the application of analytical tools and techniques to general-purpose
financial statements and related data to derive estimates and inferences useful in business
analysis. Financial statement analysis reduces reliance on hunches, guesses, and intuition for
business decisions. It decreases the uncertainty of business analysis.
17
CHAPTER 4
RESEARCH
METHODOLOGY
18
4.
RESEARCH METHODOLOGY
Research can be defined as A Scientific and Systemic Search for pertinent
4.1
RESEARCH DESIGN
Research Design is the arrangement of condition for collection and analysis of data in
manner that aims to combine relevance to the research purpose with the economy in procedure.
Research Design is important primarily because of the increased complexity in the market as
well as marketing approaches available to the researchers. A research design specifies the
methods and procedures for conducting a particular study.
Secondary Data refers to the information or facts already collected such data are collected with
the objectives of understanding the past status of any variable or the data collected and reported
by some source is accessed and used for the objective of a study. Normally in research, the
scholars collect published data, journals, annual reports and websites.
19
Profitability Ratio measured as a ability to make maximum profit from optimum utilization of
resources by a business concern is termed as profitability.
o GROSS PROFIT RATIO
This ratio is also known as Gross Margin or Trading Margin Ratio. Gross Profit Ratio includes
the difference between sales and direct costs.
Gross Profit Ratio = ( Gross Profit / Net Sales ) * 100
20
21
23
CHAPTER - 5
DATA ANALYSIS AND
INTERPRETATION
24
5.1
RATIO ANALYSIS
5.1.1
PROFITABILITY RATIOS
X100
Net Sales
Gross Profit
(Rs.)
30289.71
Net sales
(Rs.)
90176.44
Ratio
(In %)
33.58
2008-2009
21971.03
108277.62
20.29
2009-2010
32347.63
118189.37
27.37
RATIO (IN
PERCENTAGE)
2008-2009
2009-2010
YEARS
INFERENCES:
The Gross Profit for the financial year 2007-2008 was recorded as per the ratio is
33.58%, where as the years between 2008-2009 went through a change in the ratio of 20.29%
and the companies profit went upward in 2009-2010 with the ratio of 27.37%. Thus, it is
showing the steady growth in the company profile.
25
X 100
Net Sales
Net Profit
(Rs.)
Net sales
(Rs.)
Ratio
(In %)
2007-2008
21254.24
90176.44
23.56
2008-2009
15073.14
108277.62
13.92
2009-2010
22674.86
118189.37
19.18
RATIO (IN
PERCENTAGE)
25
20
15
10
5
0
2007-2008
2008-2009
YEARS
2009-2010
INFERENCES:
The Net Profit Ratio depicts that the company had a good profit in 2007-2008 where it
had a good yield profit. Comparing to the year 2008-2009 is 13.92%, the sales of the company
have a steady attitude and increase upwards to 19.18%. This indicates that there is an
improvement in the operational efficient of the business and it leads to the increase in the
profitability of the firm.
26
X 100
Shareholder fund
Shareholder
Fund (Rs.)
Ratio
(In %)
2007-2008
231280.81
9.18
2008-2009
15073.14
268538.97
5.61
2009-2010
22674.86
333318.07
6.80
RATIO (IN
PERCENTAGE)
10
8
6
4
2
0
2007-2008
2008-2009
2009-2010
YEARS
INFERENCES:
Return on shareholder fund determines the profitability from the shareholders point of
view. From the above, it shows that in the year 2008-2009, the company shows 5.61% of ratio
and it has risen to 6.80%. This is a clear indication of overall operation is efficient.
27
5.1.2
TURNOVER RATIO
Sales
(Rs.)
90176.44
Ratio
(In Times)
0.13
2008-2009
108277.62
666319.18
0.16
2009-2010
118189.37
898497.54
0.13
0.2
0.15
0.1
0.05
0
2007-2008
2008-2009
2009-2010
YEARS
INFERENCES:
A higher ratio is the indication of lower investment of working capital and more profit.
In 2007-2008, the sales of the company are low at 0.13 times but in the year 2008-2009, it gone
upward of sales to 0.16 times.
28
=
Capital Employed
Net Sales
(Rs.)
90176.44
Capital Employed
(Rs.)
536009.27
Ratio
(In Times)
0.16
2008-2009
108277.62
533288.26
0.20
2009-2010
118189.37
720052.92
0.17
0.25
0.2
0.15
0.1
0.05
0
2007-2008
2008-2009
2009-2010
YEARS
INFERENCES:
In the year 2007-2008, the sales comparing to 2008-2009 it is increased to 0.20 times and
it shows that efficient methods are adopted to use the capital employed. In 2009-2010, which
compares to the year 2007-2008 it indicates higher ratio of 0.17 times. The capital of the
company has utilized efficiently comparing to 2007-2008.
29
Sales
(Rs.)
Fixed Asset
(Rs.)
Ratio
(In Times)
2007-2008
90176.44
17264.30
5.22
2008-2009
108277.62
20241.05
5.35
2009-2010
118189.37
23237.80
5.09
5.4
5.35
5.3
5.25
5.2
5.15
5.1
5.05
5
4.95
2007-2008
2008-2009
2009-2010
YEARS
INFERENCES:
Higher the ratio is more than the efficiency in utilization of Fixed Assets. Lower ratio
indicates the under utilization of fixed assets. From the above table it indicates in the year 20082009, the sales have been increased comparing to the next year 2009-2010. And its gradually
declining over the next year 2009-2010 for 5.09 times.
30
Current Asset
(Rs.)
Current Liabilities
(Rs.)
Ratio
(In Times)
2007-2008
56187.53
53034.57
1.06
2008-2009
68876.04
50360.94
1.36
2009-2010
166489.36
55084.13
3.02
2008-2009
2009-2010
YEARS
INFERENCES:
A high current ratio is an assurance that the firm will have adequate funds to pays
current liabilities and other payment. During the year 2009-2010, the current ratio is 3.02 times
and it is more when compared with previous year 2008-2009 is 1.36 times.
31
Shareholders funds
(Rs.)
Ratio
(In Times)
2007-2008
431716.93
104292.34
4.13
2008-2009
418021.26
115267
3.62
2009-2010
588417.27
131635.65
4.47
4
3
2
1
0
2007-2008
2008-2009
2009-2010
YEARS
INFERENCES:
From the above table, during the year 2007-2008 the debt equity ratio is 4.13 times and it is
decreased to 3.62 times then it shows the uptrend from the year 2009-2010 as 4.47 times.
Suggest that the debt from the company has increased over the years with increase in shareholder
funds as well.
32
Total Funds
(Rs.)
Ratio
(In Times)
2007-2008
431716.93
712389.16
0.60
2008-2009
418021.26
742843.84
0.56
2009-2010
588417.27
981013.79
0.59
0.61
0.6
0.59
0.58
0.57
0.56
0.55
0.54
2007-2008
2008-2009
2009-2010
YEARS
INFERENCES:
During the year 2007-2008, the debt to total funds ratio is 0.60 times and it was
decreased. And in 2009-2010 again it had an increase in the companys sales comparing to
previous year 2008-2009 is 0.56 times to 0.59 times in 2009-2010.
33
Equity
Equity to Total Funds =
Total Funds
Table No 5.1.10 EQUITY TO TOTAL FUNDS
Years
Equity
(In Rs.)
Total Funds
(In Rs.)
Ratio
(In Times)
2007-2008
104292.34
712389.16
0.14
2008-2009
115267.00
742843.84
0.15
2009-2010
131635.65
981013.79
0.13
0.155
0.15
0.145
0.14
0.135
0.13
0.125
0.12
2007-2008
2008-2009
YEARS
2009-2010
INFERENCES:
In the year 2007-2008, the total funds was Rs.712389.16 (in lakhs) and it shows
upward trend of Rs.981013.79 (in lakhs) and during the year 2009-2010 comparing to the year
2008-2009 is Rs.742843.84 (in lakhs).
34
2009
(Rs.)
2010
(Rs.)
Amount Increase /
Decrease during
2009-2010 (Rs.)
Percentage
Increase / Decrease
during
2009-2010 (In %)
108277.62
118189.37
+9911.75
+9.15
64544.09
63379.55
(1164.54)
(1.80)
43733.53
54809.82
+11076.29
+25.33
3199.28
2538.90
4142.57
+943.29
+29.48
Total (B)
3199.28
6681.47
+3482.19
+108.84
46932.81
61491.29
14558.48
+134.17
7160.91
9407.97
4616.80
3776.10
6042.27
10011.23
8608.59
4481.57
(1118.64)
+603.26
+3991.79
+705.47
(15.62)
+6.41
+86.46
+18.68
Total Operating
Expense (D)
24961.78
29143.66
+4181.88
+16.75
Operating Profit
(C-D)
21971.03
32347.63
+10376.6
+47.23
Taxation
6897.89
9672.77
+2774.88
+40.23
Total Non-Operating
Expense (F)
6897.89
9672.77
+2774.88
+40.23
15073.14
22674.86
+7601.72
+50.43
Other Income:
Total Income
(A+B) = C
Expense:
Operating Expense:
Administration Expense
Establishment Expense
Provision
Depreciation
Non-Operating Expense:
35
INFERENCES:
The comparative income statement shows income from operation amount increase during
the year 2009-2010 was Rs.9911.75 and increase in percentage of 9.15.
For the year 2009-2010, the total income indicates Rs.14558.48 and percentage increase
during the year 2009-2010 was 134.17.
The operating profit has been increased is Rs.32347.63 in the year 2010 which is
comparing to the previous year was Rs.21971.03 and the percentage shows increase by 47.23.
The Net profit amount increases during 2009-2010 is Rs. 7601.72 and shows percentage
increase by 50.43.
36
Percentage
Increase /
Decrease during
2009-2010 (In %)
2009
(Rs.)
2010
(Rs.)
Current Assets
Loans & Advance
Deferred Tax Asset
Investment
Fixed Asset
68876.04
653955.77
5691.36
51188.87
20241.05
166489.36
799363.96
6124.40
53744.80
23237.80
+97613.32
+145408.19
+433.04
+2555.93
+2996.75
+141.72
+21.98
+7.61
+4.99
+14.80
Total Asset
799953.09
1048960.32
+249007.23
+31.13
Current Liability
Unsecured Loan
Secured Loan
58478.77
208479.20
417728.12
67946.53
260960.87
588417.27
+9467.76
+52481.67
+170689.15
+16.19
+25.17
+40.86
Total Liabilities
(A)
684686.09
917324.67
+232638.58
+33.98
5555.19
5555.19
109711.81
126080.46
+16368.65
+14.92
115267.00
131635.65
16368.65
+14.20
799953.09
==========
1048960.32
==========
249007.23
=============
+31.13
=============
Particulars
Assets:
Liabilities and
Capital:
Capital and
Reserve:
Share Capital
Reserve & Stock
Options
Total
Shareholders
Funds (B)
Total Liabilities
and Capital (A+B)
37
INFERENCES:
In the year 2009-2010, the investment it shows the uptrend for the year 2010 as
Rs.53744.80 and it has increased by 4.99%.
Fixed assets has been increased was Rs.23237.80 in the year 2010 which is comparing to
the previous year and the percentage shows increase by 14.80.
During the year 2009, the shareholders fund amount to Rs.115267.00 it has been increased
to the amount of Rs. 131635.65 and percentage increased was 14.20.
Secured loans shows uptrend by Rs.588417.27 over the previous year of Rs.417728.12 and
increase in percentage of 33.98.
38
90176.44
100
108277.62
100
49699.52
55.1
64544.09
59.6
40476.92
44.88
43733.53
40.39
3199.28
3.54
3199.28
2.95
Total (B)
3199.28
3.54
3199.28
2.95
43676.20
48.43
46932.81
43.34
7198.81
8821.90
3308.02
3012.19
7.98
9.78
3.66
3.34
7160.91
9407.97
4616.80
3776.10
6.61
8.68
4.26
3.48
Total Operating
Expense (D)
22340.92
24.77
24961.78
23.05
Operating Profit
(C-D) = E
21335.28
23.65
21971.03
20.29
Taxation
9035.47
10.01
6897.89
6.37
Total Non-Operating
Expense (F)
9035.47
10.01
6897.89
6.37
12299.81
13.63
15073.14
13.92
Other Income:
Total Income
(A+B) = C
Expense:
Operating Expense:
Administration Expense
Establishment Expense
Provision
Depreciation
Non-Operating Expense:
39
INFERENCES:
The operating profit of the Sundaram Finance Limited has been increased during the
year 2008-2009, the operating profit shows Rs.21335.28 in 2008 and Rs.21971.03 in the
financial year 2009.
For the year 2008, the establishment expense shows Rs.8821.90 and it has been
increased to Rs.9408.97 during the year 2009.
In 2008, provision is 3.66% and it indicates increase during the year 2009 was 4.26%.
The operating expenses incurred to the Sundaram Finance Limited during the financial
year 2008 which shows Rs.22340.92 and it has risen to Rs.24961.78 during the financial year
2009.
The net profit percentage recorded as 13.63 in 2008 where as in the year 2009 the
companies profit went upward with the percentage of 13.92.
40
Amount
(Rs.)
2009
Percentage
(%)
Amount
(Rs.)
Percentage
(%)
Assets:
Current Assets
Loans & Advance
Deferred Tax Asset
Investment
Fixed Asset
56187.53
652655.00
4263.67
45645.50
17264.30
7.24
84.10
0.54
5.88
2.22
68876.04
653955.77
5691.36
51188.87
20241.05
8.61
81.74
0.71
6.39
2.53
Total Asset
776016.00
100
===========
799953.09
100
=============
Current Liability
Unsecured Loan
Secured Loan
63626.84
176379.89
431716.93
8.19
22.72
55.63
58478.77
208479.20
417728.12
7.31
26.06
52.21
671723.66
86.56
684686.09
85.59
2777.60
0.35
5555.19
0.69
101514.74
13.08
109711.81
13.71
104292.34
13.43
115267.00
14.40
776016.00
==========
100
===========
Liabilities and
Capital:
Total Shareholders
Funds (B)
41
100
799953.09
============ =============
INFERENCES:
The current assets have increased during the financial year 2009 is 8.61% which is
comparing to 2008 was 7.24% of the Sundaram Finance Limited.
There was an increase in fixed assets of Rs.20241.05 comparing to the year 2009. Higher
the ratio is more than the efficiency in utilization of fixed assets.
The current liabilities have been decreased to 7.31% of the total liabilities of the
Sundaram finance Limited during the year 2009. The current liability was 8.91% of the total
liabilities during the year 2008.
Reserves and stock options has been increased was in the year 2009 which is
Rs.109711.81 comparing to the previous year and the percentage shows increase by 13.71%.
During the year 2008-2009, the shareholders fund amount to Rs.104292.34, it has been
increased to the amount of Rs.115267 and the percentage increased was 14.40% in 2009.
42
2009-2010
(In Rs.)
226,74.86
(91.85)
96,72.77
322,55.78
633,79.55
956,35.33
45,80.23
1,44.64
4,79.98
31,61.69
23.28
34.21
(53,36.95)
(22,00.38)
0.18
965,22.21
67,08.38
(60,87.57)
15,44.60
(32.25)
(1465,04.17)
13.29
(1079,89.81)
(22,40.77)
32,87.01
(619,43.37)
(90,05.16)
(709,48.53)
(A)
(2257,27.61)
(B)
(15,38.40)
96.09
(12677,85.28)
(18,33.50)
12746,00.34
2.75
21,97.65
57,39.65
(C)
3475,75.18
(2686,00.00)
869,13.98
154,84.84
417,96.83
(53,51.34)
2178,19.49
(D)
(0.18)
(21,68.65)
48,39.35
26,70.70
13,50.13
13,20.57
26,70.70
44
INFERENCES:
In the year 2009-2010, the operating profit before working capital changes show the
profit amount of Rs.96522.
The employee stock option compensation expenses of the Sundaram finance Limited
has shown 31,61.69 (Rs. in lakhs) during the year 2009-2010.
While the Net Cash from investing activities depicts Rs.5739.65 in the year 2009-2010.
There was a increase in net stock on hire during the financial year 2009-2010 of
67,08.38 (Rs. in lakhs).
The financial year 2009-2010 depicts the Net cash from financing activities amount of
Rs.217819.49 shows upward profit in the company.
Cash and cash equivalents at the end of the year were Rs.4839.35 it shows that the
company position in the year 2009-2010.
45
5.5
Year
2008
Sales
Rs
( in Lakhs )
Y
90176.44
2009
108277.62
2010
118189.37
118189.37
Total
x = 0
y= 316643.43
x y= 28012.93
X2 =2
XY
90176.44
Y=Na+bX
XY = a X + b X2
Y=a+bX
3 a + 0 b = 316643.43
--------------- ( 1 )
0 a + 2 b = 28012.93
--------------- ( 2 )
When X = 3,
46
X2
INFERENCE:
The net sales during the year 2008 were 90176.44 (Rs. in Lakhs) which has been
increased to 108277.62 (Rs. in Lakhs) during 2009 which also raised to 118189.37 (Rs. in
Lakhs) during 2010.
The projection is made for the fore coming years 2011 and 2012 where the net sales
would be 133560.73 (Rs. in Lakhs) during the year 2011 and the net sales during the financial
year 2012 will be 147567.19 (Rs. in Lakhs).
47
CHAPTER - 6
CONCLUSION
AND
SUGGESTIONS
48
6.1
FINIDNGS
The Gross Profit Ratio shows that increasing in sales has maintained the companies profit
level. In the year 2008-2009, the percentage shows 20.29 it has been increased during the
year 2009-2010 to 27.37.
The net profit ratio has been increased to 19.18 during the financial year 2009 2010 to
13.92 during 2008 2009 which indicates that there is an improvement in the operational
efficient of the business and it leads to the increase in the profitability of the firm.
It has found that the return on equity during the year 2008-2009, the company shows
5.61% of ratio and it has risen to 6.80%. This is a clear indication of overall operation is
efficient.
The Working capital in the year 2008-2009, the sales of the company is low at
Rs.666319.18 and it is increased to Rs.898497.54 in 2009-2010. It measures the effective
utilization of working capital.
The capital turnover of capital employed in the financial year 2008-2009 it shows
Rs.533288.26 and during the year 2009-2010 it is increased to Rs.720052.92. It has
effective utilization of capital employed under the current year.
Fixed asset turnover shows increase in sales of Rs.118189.37 comparing to the previous
year of Rs. 108277.62 and the firm should maintain this increasing trend in future also.
During the year 2009-2010, the current ratio is 3.02% and it is more when compared with
previous year 2008-2009 is 1.36 %. So the short term liquidity of a concern, comparison
of current assets and current liabilities is inevitable.
49
The debt equity ratio has shows 3.62% in 2008-2009 and it has been raised to 4.47%
during 2009-2010 which indicates that the company has increased over the years with
increase in shareholder funds as well.
It is found that the shareholders funds had increased by Rs.16368.65 over the percentage
of 14.20 in comparative income statement analysis. It determines the profitability from
the shareholders point of view.
The financial year 2009-2010 depicts the Net Cash from financing activities amount of
Rs.217819.49 shows upward profit in the company.
50
6.2 SUGGESTIONS
The current ratio is improving rapidly so the company wants to keep an eye on the
current assets flow. The company has been suggested to reduce the expenditure as it increases
every year. Decrease in expenses will increase the profitability.
By over viewing the working capital turnover ratio it is clear that the company
wants to utilize its working capital efficiently that is the excess current assets should be adjusted
according to current scenario. Though the net profit shows it is increased but we found that the
net profit ratio has been decreased. So the company should consider increasing the sales in turn
to increase the actual profit.
The debt equity ratio of the company is also increasing. The company should focus
on the debt and long term funds which are utilized in the company. The excess cash flow should
or can be utilized in any new ventures if the company wishes to do.
51
6.3
CONCLUSION
If the company utilizes its working capital then the company can go heights which it
wanted to achieve. The comparative income statement shows increase in the current year of net
profit and it depict the companies current profit position. To improve the efficiency the company
will strive for better performance and increase the market share the company.
The suggestions provided through the study will help the company to improve the
operational performance efficiently. The suggestions provided through the study will help the
company to improve the operational performance efficiently.
52
REFERENCES
53
REFERENCES
Carlos Correia, David Flynn, Enrico Uliana & Michael Wormald, Financial
Management, 6th Edition, 5.1 -5.34.
Chidambaram Rameshkumar, Anbumani N, An overview on financial statements and
ratio analysis,2006, Vol.1, p. 30
George Foster, Financial Statement Analysis, 2nd Edition, 57 94.
Greninger et al.(1996), Fundamentals of Financial Management, 5th Edition, 4.1-4.18.
Jae K.Shim, Joel G.Siegel, Schaums Outline of Theory and Problems of Financial
Accounting, 1999, 279-298.
Reddy T S & Hari Prasad Reddy Y, Management Accounting, 3rd Edition, 2008, 3.9 3.25
Salmi, T. and T. Martikainen (1994), "A review of the theoretical and empirical basis of
financial ratio analysis", The Finnish Journal of Business Economics 43:4, 426-448.
Susan ward, Financial Ratio Analysis For Performance Check, p.132
Websites:
www.google.com
www.sundaramfinance.in
http://scholar.google.com
www.managementparadise.com
55
APPENDICES
56