COMPARATIVE ANALYSIS

INTRODUCTION

Comparative financial analysis is the process of analyzing the data found in a financial
report in comparison with similar data from other reports. This allows whoever is doing the
analysis to get some context which makes the raw numbers more meaningful. An individual can
do comparative financial analysis by studying several reports of the same company from different
time periods in an effort to spot trends. Another way to practice this type of analysis is to compare
the reports of different companies that compete with each other in the same industry.

There are several different reasons why an individual would want to analyze the financial
data of a certain companies. Investors analyze financial reports as a way of determining how they
should invest their capital. In addition, management within a company may study its own reports
to see how well the company is doing and whether any changes need to be made. Simply studying
raw data can be meaningless without some comparisons to provide useful context, which is why
comparative financial analysis is so helpful.

As time passes and companies age, their numbers may reflect their changing financial
standing. Since this is the case, comparative financial analysis can be used to study those changes
and to see if the company is trending upward or downward. Looking at reports from several past
time periods and comparing those numbers with the numbers from the current period can shed a
lot of light on a company's progress or lack thereof.

There are also times when it may be useful to see how a company is doing against its
competitors. For this, comparative financial analysis within a specific industry is effective. This
method of analysis is often used in conjunction with financial ratios, which are metrics that can be
used to measure debt levels, efficiency, cash flow, and many other pertinent aspects of a company's
operations. These ratios mean little on their own, but their relation to the ratios of similar
companies can tell a lot about financial strength.

When doing comparative financial analysis within one industry, the choice of which set of
numbers to use as the basis for comparison is an important one. One way to do this, again using
financial ratios, is to get the industry averages for these ratios and use these numbers as way to
judge one company within the industry. Since averages may be difficult to locate and cumbersome
to calculate, comparative analysis can be achieved using ratios from a single, financially strong
company as an industry benchmark, against which all other companies' ratios may be compared.

METHODS OF ANALYSIS

Financial statement analysis should focus primarily on isolating information useful for
making a particular decision. The information required can take many forms but usually involves
comparisons, such as comparing changes in the same item for the same company over a number
of years, comparing key relationships within the same year, or comparing the operations of several
different companies in the same industry. This chapter discusses three categories of analysis
methods: horizontal, vertical, and ratio.

Horizontal Analysis
Horizontal analysis, also called trend analysis, refers to studying the behavior of
individual financial statement items over several accounting periods. These periods may be several
quarters within the same fiscal year or they may be several different years. The analysis of a given
item may focus on trends in the absolute amount of the item or trends in percentages.

Absolute Amounts
The absolute amounts of particular financial statement items have many uses. Various
national economic statistics, such as gross domestic product and the amount spent to replace
productive capacity are derived by combining absolute amounts reported by businesses. Financial
statement users with expertise in particular industries might evaluate amounts reported for research
and development costs to judge whether a company is spending excessively or conservatively.
Users are particularly concerned with how amounts change over time. For example, a user might
compare a pharmaceutical company’s revenue before and after the patent expired on one of its
drugs. Comparing only absolute amounts has drawbacks, however, because materiality levels
differ from company to company or even from year to year for a given company.
The materiality of information refers to its relative importance. An item is considered
material if knowledge of it would influence the decision of a reasonably informed user. Generally
accepted accounting principles permit companies to account for immaterial items in the most
convenient way, regardless of technical accounting rules. For example, companies may expense,
rather than capitalize and depreciate, relatively inexpensive long-term assets like pencil sharpeners
or waste baskets even if the assets have useful lives of any years. The concept of materiality, which
has both quantitative and qualitative aspects, underlies all accounting principles.

Percentage Analysis
Percentage analysis involves computing the percentage relationship between two
amounts. In horizontal percentage analysis, a financial statement item is expressed as a percentage
of the previous balance for the same item. Percentage analysis sidesteps the materiality problems
of comparing different size companies by measuring changes in percentages rather than absolute
amounts. Each change is converted to a percentage of the base year.

Vertical Analysis
Vertical analysis uses percentages to compare individual components of financial
statements to a key statement figure. Horizontal analysis compares items over many time periods;
vertical analysis compares many items within the same time period.

Vertical Analysis of the Income Statement

Vertical analysis of an income statement (also called a common size income statement)
involves converting each income statement component to a percentage of sales. Although vertical
analysis suggests examining only one period, it is useful to compare common size income
statements for several years. This analysis discloses that cost of goods sold increased significantly
as a percentage of sales. Operating expenses and income taxes, however, decreased in relation to
sales. Each of these observations indicates a need for more analysis regarding possible trends for
future profits.

Vertical Analysis of the Balance Sheet

 Vertical analysis of the balance sheet involves converting each balance sheet component
to a percentage of total assets.

RATIO ANALYSIS

Ratio analysis involves studying various relationships between different items reported in
a set of financial statements. For example, net earnings (net income) reported on the income
statement may be compared to total assets reported on the balance sheet. Analysts calculate many
different ratios for a wide variety of purposes. The remainder of this chapter is devoted to
discussing some of the more commonly used ratios.

Objectives of Ratio Analysis

As suggested earlier, various users approach financial statement analysis with many
different objectives. Creditors are interested in whether a company will be able to repay its debts
on time. Both creditors and stockholders are concerned with how the company is financed, whether
through debt, equity, or earnings. Stockholders and potential investors analyze past earnings
performance and dividend policy for clues to the future value of their investments. In addition to
using internally generated data to analyze operations, company managers find much information
prepared for external purposes useful for examining past operations and planning future policies.
Although many of these objectives are interrelated, it is convenient to group ratios into categories
such as measures of debt-paying ability and measures of profitability.

MEASURES OF PROFITABILITY
Profitability refers to a company’s ability to generate earnings. Both management and
external users employ profitability ratios to assess a company’s success in generating profits and
how these profits are used to reward investors. Some of the many ratios available to measure
different aspects of profitability are discussed in the following two sections.
Measures of Managerial Effectiveness
The most common ratios used to evaluate managerial effectiveness measure what
percentage of sales results in earnings and how productive assets are in generating those sales. As
mentioned earlier, the absolute amount of sales or earnings means little without also considering
company size.

Stock Market Ratios

Existing and potential investors in a company’s stock use many common ratios to analyze
and compare the earnings and dividends of different size companies in different industries.
Purchasers of stock can profit in two ways: through receiving dividends and through increases in
stock value. Investors consider both dividends and overall earnings performance as indicators of
the value of the stock they own.

CHANGING ECONOMIC ENVIRONMENT

When comparing firms, analysts must be alert to changes in general economic trends from
year to year. Significant changes in fuel costs and interest rates in recent years make old rule-of-
thumb guidelines for evaluating these factors obsolete. In addition, the presence or absence of
inflation affects business prospects.

Accounting Principles
Financial statement analysis is only as reliable as the data on which it is based. Although
most firms follow generally accepted accounting principles, a wide variety of acceptable
accounting methods is available from which to choose, including different inventory and
depreciation methods, different schedules for recognizing revenue, and different ways to account
for oil and gas exploration costs. Analyzing statements of companies that seem identical may
produce non comparable ratios if the companies used different accounting methods. Analysts may
seek to improve comparability by trying to recast different companies’ financial statements as if
the same accounting methods had been applied.

REVIEW OF LITERATURE
 Rammohan Rao & et.al (1975) in this study how far the capital markets in India were
competitive. Their study examined the decisions about internal and external finance as interrelated
and consequent upon a choice of the structure of current and fixed assets. Secondly, they analyzed
the earnings pattern of different types of funds to see if the competitiveness hypothesis can sustain.

Vasanthamani (1982) in her study “The Financial Performance of Lakshmi Machine Works
Limited”. The objective of the study was to analyze the financial performance of Lakshmi machine
work with a view to analyze the future of performance potentials. The study covered the period
from 1978-1982. The liquidity position of the company showed that the company was able to meet
the creditors out of its own current assets. The quick ratio also revealed that the quick liabilities
were met at of quick assets without any difficulty.

Altman (1989) in his “A Study on Financial Risk Management in Textile Industry in India”
for a period of ten years from 1978-1988. The objective of the study was to find the structure and
utilization of financial risk management in textile mills. Around twenty mills were taken for study.
The findings of the study were total investment in all selected textile units showings increasing
trend. The conclusion was blacked amount of cash in current assets was utilized at right time to
purchase the inventory.

Rajeswary (1990) in her study entitled “Financial Performance of Precot Mills Limited”
has concluded that the financial position and operating efficiency of the company was satisfactory
where as the margin or safely was not stable solvency position was not satisfactory and the earning
capacity was minimum.

Parvathi (1990) in her “Financial Performance Analysis Hindustan Photos Films Ooty” for
the year 1990-1996,concluded that the gross profit has shown as increasing trends, long term
solvency of the company, debt equity ratio was not satisfactory
Sankar.T.L & et.al (1995) in their study entitled, “Financial Performance of State Level
Public Enterprises” suffers from staggering investment, poor profitability, unnecessary
investment, poor project planning and inadequate financial control.
 Kim & et.al (1996) in Profitability, growth and risk (optimization), an attempt was made
to understand the profitability differentials in terms of simultaneously determined inter-relational
among profitability, growth and risk. The variables are endogenous in firm profit maximization.

Gnanavelu.N (1996) in his study entitled “Case Study of Financial Performance of Sakthi
Sugars Limited” has proved the financial performance of the company passion is good. The
borrowing by the company was kept at the minimum level its profitability was expected to increase
further. Being the row material in seasonal the fluctuation in working capital cannot be avoided.

Roger M. Shelor & et.al (1998) .This study examines changes in “Operating Performance
Among Real Estate Investment Trusts” following an initial public offering (IPO). The purpose is
to determine whether there is an enhancement in the value of the underlying asset that is related to
the IPO. We separately analyze equity, mortgage and diversified REITs. We also compare the
operating performance of recent IPOs to those of earlier years to address the impact of the 1993
Revenue Reconciliation Act on institutional investors’ demand for REIT stock. Unlike previous
analyses of industrial firms, REITs were found to have significant increases in return on Assets
and selected measures of financial performance. The post-IPO cumulative stock price decline and
recovery is illustrated.

Pandey.I.M & et.al (1998) in their study, “Financial Ratio Pattern In Indian Manufacturing
Companies” they observed a declining trend in profitability relation to shareholders equity and
total investment, whose impact had been deepened by the increasing interest burden.

Rajalaksmi (1998) in his study “Financial Performance of Raghupathy Machine Works

Limited”.
The objective of this study was to evaluate the financial performance of Raghupathy machine
works with a view to analyze the future of performance potentials. The study covered the period
from 1982- 1998.The liquidity position of the company showed that the company was able to meet
the creditors out of its own current assets. The quick ratio also revealed that the quick liabilities
were met at quick assets without any difficulty.
 Sardeesh Babu (1999) in her study “A Study on Financial Performance of Fertilizers and
Chemicals Travancore Limited”. The cost on various overheads can be brought down by carefully
scrutinizing each item and applying cost cutting techniques. The profitability of the company can
be improved by reducing the expenses that do not contribute any productive use. The current assets
can be managed efficiently by examining the material holding and stock holding procedure and
pattern. If the company increase its turnover and reduces its cost, the profit will increase leading
to an increases in the growth rate of sales, profit before tax and profit after tax.

Mohammed Rafiqul Islam (2000) Studied the profitability of Fertilizer Industry in

Bangaladesh from 1985 – 1986 to 1994 – 1995. The sample included fire fertilizer interstices in
Bangladesh chemical industries corporation (BCIC). The findings of the study indicated that none
of the selected units were consistent and all the units were plagued with declining profits. The
study concluded with suggestions for improvement of the profitability of fertilizer industry in
Bangladesh.

Shergill G.S et.al (2000) examined the market structure and financial control. They found
that there was negative relationship exists between concentration to profitability, profitability to
capital intensity due to ideal capital and a positive relationship observe between risk and
profitability due to efficient management, an ideal management seeks to achieve high profitability
with low variation of earning.

MD Shan Alam (2001) analysed the cost and profitability of a public sector paper mill. The
study suggests that the monthly variance of material used, labour costs and overheads expenditure
should be prepared to control cost and improve profitability.

Anil Kumar (2000) in his study on “Financial Performance of Hindustan Motors Limited,
Cochin”, in his study found that the sales of the company were showing an upward trend which
reflected a growth in its profit. The tools use by him were ratio analysis, the company’s financial
position is favorable
 Karthikeyan (2000) “Financial performance of selected automobile companies, An
analytical Study” tried to identify the relationship between the financial performance variables and
to develop simple financial forecasting performance variables are analyzed to forecast the financial
performance a simple cross-section regression analysis was made. The financial analysis variables
considered were net sales, total assets, Gross profit, Profit before tax, Dividend,

Mohammed Rafiqul Islam (2000) in this study “The Profitability of Fertilizer Industry in
Bangladesh.” The findings of the study indicate that none of these selected units were plagued
with profit.

Sahu (2002) “A simplified model for liquidity analysis of paper companies” in his analysis
identified the effective of Liquidity Management with usefulness and develops a simple model for
current and quick ratios of 12 Indian paper companies for the period of 1989 – 1990 to 1996 –
1997. This study revealed the effective management of liquidity in the paper companies.

Padmaja Manoharan (2002) through the analytical study on “Profitability of Cement

Industry in India” has revealed the variation in profitability of Indian cement companies depending
on age, size and region. The study identified that quality of earning depends on management and
leverage management. Further, the analysis concludes that the profitability and quality of earnings
is influenced by the liquidity factor.

Dr. Singh P.K. (2002) examined the working capital management of Lupin Laboratories
Ltd from the year 1995 – 1996 to 2001 – 2002, objective of the study were (i) to assess the
significances of working capital (ii) to identify the lements responsible for changes in working
capital and (iii) to study liquidity position of the company the researcher observed position was
very much satisfactory and the increase in operations cycle indicated that there was a proper
utilization of working capital. He concluded that the company’s overall working position was
satisfactory and it was suggested that the debt collection policy was to be improved

Lilach Nachum (2002) in this study related to “The CBR Research Program on Industrial
Organisation, Competitive Strategy and Business Performance”. this study was inspired by the
observation that foreign financial service firms operating in the city of London do not suffer the
liability of foreignness to the extent suggested by theory, to examine the reasons for this departure
from theory, the study advances a theoretical framework that distinguishes between three types of
Advantages that together account for the competitive performance of MNEs relative to that of
indigenous firms.

Ashita Raveendran (2003) presented a survey of the Financial Structure and Performance
of the Engineering Industry in Kerala. In her survey data of four engineering groups, namely, metal
products, machinery, electrical and transport products were analysed. She concluded that the
liberalized policy should at the upgradation of the technology, therby improving the quality and
productivity of the engineering industry. Measures for cost control, modernization, upgradation,
computerization and the like. Will help in strengthening the forward and backward linkages of the
engineering industry within the state.

Dr.Sudarsana Reddy. G et.al (2003) Examined the Debtors Management of Andhra

Pradesh Paper Industry. The researcher undertook a Sample size of six mills during 1989- 1990 to
1998 -1999. They objective that the sample mills adopted a liberal credit policy, size of trade
debtors as a percentage of current assets shown a declining trends but the collection period of
debtors were showily increased which revealed the slackness in collection efforts of the mills.
They suggested that the aging scheduled of dues to be prepared at frequent interval like quarterly,
half, yearly and monthly to frame appropriated dept policy.

Shanmugam and Bhaduri Samitra (2003) in their study analysed growth of the Indian
Manufacturing companies taking a sample of 390 companies during 1990 – 1993. The age and
size of the companies were taken as independent variables and growth in sales as dependent
variable. The statistics techniques such as mean. Standard deviation and regression analysis were
used to study the growth of the companies. The study showed that the age was positively
influenced the growth and size had negative and significant impact on growth.

Dr. Khatik SK and Ruadeep Kumar Singh (2003) have undertaken a case study about the
liquidity management of eicher ltd. Mandideep Bhopal. The objective of the study were (i) to
assess the significance of current ratio, acid test ratio (ii) to examine and evaluate the liquidity
position during 95- 96 to 98 -99. The researchers observed that the short term liquidity position
was not stable but management of inventory and working capital were satisfactory. The company
was suggested to concentrate on management of current assets and debtors collection period to
improve their liquidity position.

COMPANY PROFILE

NATURAL CLOTHING COMPANY

35-1, COLLEGE ROAD,

TIRUPUR – 641 602. INDIA.

MAIL: mbm@ncctup.com
 Textile, and mainly garments, tend to be altered in its fashion, every minute of every hour
of day, Tirupur located in the district of Coimbatore, genuinely called as “THE MANCHESTER
OF SOUTH INDIA”, gives more than 60% of the industry income and brings in more foreign
exchange than any other industry in the country.

Garment Production, is termed as a manufacture and processing of knitwear products or

merchandise, including its design, treatment at various stages, and financial services contributed
by bankers. Various economic laws, price data, and available resources are among the factors in
production that must be considered by both private and governmental producers. Tirupur and
Chennai in Tamil Nadu is the bastion of garment export oriented industries, of which the former
is the prominent one.

SAVE organisation has been committed for the empowerment of garment workers in
Tirupur and had a discontentment in the irregularities existing in the garment production mobility,
and in this concern felt the necessities of analysing the mobility of garment production in the
garment industries in Tamil Nadu, and thus this research has been propelled.

NCC - a company which stands for its values. We are one of the leading manufacturers of knitted
garments in Tirupur, the Knit City of South India. We are commited to the delivery of quality
products meeting required standards and specifications backed by the state-of-the-art infrastructure
and skilled workforce, NCC is able to create the success story.

ABOUT US….

We are on the knitted Garment Manufacturers and Exporters from Tirupur, India.
Simultaneously play a vital role in the change of fashion and in the well being of the industry.

Incorporated in the year 1995, and has been promoted and guided by Mr. B. Murugaiyan
with 15 years experience in this field.
 We manufacture about 1, 25,000 knitted garments per month. We produce Garments for
Men, Women & Children such as T-Shirts, Pyjama sets, Night Wears etc.., The garments are
produced in various fabrics such as Single Jersey, Pique & co-ordinates, Rib knits , Auto eng
stripe knits , Terry – french teery knits, Interlock, Jacquards , Fleece & Co-ordinates, poly cotton,
Lycra fabrics, designed knits etc..,

We are very much concerned of the quality of our goods, and care for our valued
Customers, who are precious for us, in the long run.

CORE VALUES

Our core business is Textile Exports, but what drives us, is our commitment to our core values.
We believe that values are not only crucial, but an absolute necessity that no business can do
without. Which is why, our priority towards our Customers, Products, Team, Accountability,
Technology and Environment takes precedence over everything else.

EVOLUTION

CC was founded in the year 1993 with the vision to achieve excellence in product and process.
Over the last decade, NCC has made its mark not just as a manufacturer of quality garments, but
also as a responsible corporate with a commitment to its members and the society. It is this passion
that has propelled the organization to these heights in this competitive environment.

NCC – A company that believes in evolution coming from an orchestrated investment in men,
materials, methods and management, is adapting itself to the changing market scenario. Its
progress over a decade has helped the company understand that change is the only constant.

RESOURCE

NCC is a vertically integrated production house with the necessary infrastructure to process the
yarn to a finished garment. The company houses "state-of-the-art" machineries and latest
technologies to achieve an effective production of 50,000 Units / day in garments. It also has a
fabric processing capability of 10 Tonnes /day. The shop floors are ergonomically designed,
complying with the assembly line production methods.

Every process, right from the procurement till packing, is meticulously planned and executed until
it reaches the customer. Process enhancement is an ongoing and diligent exercise in NCC, with a
keen eye on the Industrial and Value engineering concepts. Also, NCC runs on SAP, making all
its processes accountable and analyzable. Every customer of NCC enjoys the value addition it
offers in every product that it delivers through the supply chain.

TEAM NCC

Every member of the NCC family has a defined and inevitable role in the process and progress.
The company holds fast to its Human Resource policies by ensuring decent working hours, work
environment, adequate training programmes to motivate and develop their capabilities.
Performance monitoring and appraisal is a vital function in NCC's HR Policy.

The company has been conferred with the SA 8000 and ETI-GSP certifications for its social
accountability – benchmarking the working hours, social security benefits and following Health &
Safety measures. Above all, this factor is evident from the smiles that have grown with the
company, over the years.

FABRIC

NCC manufactures knitted fabrics for its garment making needs and also supplies to apparel
manufacturers throughout the Asia-Pacific. It supplies fabrics for the manufacture of intimate
wear, casual wear and sports wear. The company has installed sophisticated European machines
that have the capability to knit, dye and finish fine fabrics.
This gives NCC the competitive advantage in serving its customers faster-better-cheaper, thereby
offering them the extra mileage of its lean manufacturing process. Also, this makes the company
a “Truly Vertically Integrated Unit “.

GARMENT

The garmenting unit is equipped with modern machineries for all the processes like cutting,
sewing, printing, embroidery and washing. NCC specialize in both basic and fashion garments.
The emphasis is on every detail of the product and the testing ensures the consistent quality of
garments. With the right blend of technology and team work, NCC has always delivered beyond
the customers' expectations in making world class garments.

COMMITMENT

There is no one factor that can be singled out as a key to achieving quality, it is all pervasive – an
attitude of mind that has transformed into a culture in NCC. It follows stringent norms executed
by an efficient quality assurance team. Rigorous testing on every property and attribute of the
product is carried out at all stages of production at the fully equipped in –house laboratories.

The ISO 9001:2000 certification for Quality Management Systems and the Oeko-Tex Standard to
certify that the quality products are free from harmful dyes and chemicals, are yardsticks for its
quality assurance initiatives. The company has also achieved the NABL-ISO/IEC 17025 Standard
for its in-house laboratory in order to provide reliable testing and calibration services.

MADE IN NCC

NCC differentiates itself in making better products by focusing on superior quality and innovation
in technology and processes. It is the passion towards the products it manufactures that has evolved
into an attitude, thus becoming the driving force for its team.
NCC manufactures intimate wear, sports wear and casual wear for Men, Women, Children and
Babies, meeting all the norms and standards for the specified category. It has the necessary
competencies to manufacture any type of knitted garment in a variety of fabrics and styles.

CARE

The company is well aware of the growing pollution and the depleting environment. Standing by
its commitment to the society, NCC adheres to stringent pollution control norms and effective
energy usage policies. Care has been taken to treat effluents and recycle the used water.

NCC efforts to Reduce, Recover, Recycle, Reverse, Reuse, Research the use of both natural and
manmade resources, endeavoring to restore harmony in the earth it owes to its successors.

HALLMARK

NCC believes that a satisfied customer brings better business than its best marketing effort. The
satisfied clientele stands testimony to its services. NCC has always taken relentless efforts to
ensure that it surpasses the expectations of every customer by quality, time and service.

Over the decade-long relationship with its customers, NCC has proven that it is not just products
what their customers get, but a long-term value addition that comes bundled always. NCC firmly
believes that nothing really brings more delight than a satisfied customer.

NCC is truly a place where competency, capacity and commitment meet customers.

MISSION

To become one of the leading manufacturer and exporter and computing solutions,
achieving the highest level of customer satisfaction, quality and business ethics, and contributing
towards the growth of the Garment Industry, the Economy of the country, and of the social needs.

CORPORATE DATA

Managing Director : B. Murugaiyan B.E.,

Administration Staff : 25

Factory Labours

Skilled : 120

Semi skilled : 40

Number of machines installed : 100

E-mail : mbm@ncctup.com

Address : 35-1, College Road,

Tirupur – 641 602.

India.

Office Premises : 1,000 sq.ft

Factory Premises : 9,000 sq.ft

Our Bankers : THE DHANALAKSHMI BANK LTD.,

318, SRI MUTHU PLAZA,

AVANASHI ROAD,

TIRUPUR – 641 602

INDIA.

MAJOR PRODUCTS

MENS

1. T-SHIRTS-VEST & CO-ORDINATES

2. POLO SHIRTS
 3. SWEATERS-JACKETS

4. BERMUDAS

5. TROUSERS – BOXER SHORTS

6. SPORTS WEAR – SETS

LADIES

1. T – SHIRT VESTS
2. BLOUSE
3. P.J.SETS
4. SWEAT SHIRTS
5. NIGHT WEAR & COORDINATES

KIDS

1. FANCIED -T – SHIRTS
2. BABY SUITS
3. SLEEP SUITS
4. SETS
5. BABY BODY

RESEARCH METHODOLOGY

INTRODUCTION
Research Design

Analytical research design is used for this study and researcher used the facts or

information already available, and analyzed these to make a critical evaluation of the Wealth of

the firms.

STATEMENT OF THE PROBLEM

The firm’s primary objective is maximizing the wealth of the shareholder. Due to the

fluctuations in the market price of the shares, it is essential to know what are all the factors

influencing the wealth and it is required to measure the wealth of the organization.

The researcher has compared the firm NCC and ALPHA CLOTHING for the better

understanding of wealth maximization of two organizations.

SCOPE OF THE STUDY

 The study covers the financial performance of the NCC and Alpha.

 The study is made by making comparison of five year of it operation.

 The study aims to reveal where the stands in respect to liquidity and an effective use of

asset.

OBJECTIVES OF THE STUDY

 To measure and compare the Wealth of the selected garment industries.

  To provide the suitable suggestion for the selected industries and for the investors for their

Wealth Maximization.

LIMITATION OF THE STUDY

 The study is based on secondary data

 The time span was limited only a period of five years.

 The study suffers all the limitation of ratio analysis, such as lack of adequate change,

income, price level change etc.

METHODOLOGY & SOURCE OF DATA

Secondary data has been used for the analysis, and for the analysis the financial statements

are collected through company annual reports, websites, journals, and books. The study is based

on secondary data. Data pertaining behavior of liquidity solvency and profitability position were

collection from the Balance Sheet and Profit & Loss account of NCC and Alpha. The necessary

data were obtained from published annual report.

ANALYTICAL TOOLS IN THE STUDY

1. Current ratio

Higher this ratio better for the Company, it reflects the Company's ability to pay off its

Current Liabilities, current ratio for Ashok Leyland has been more than 1 over the years. It shows

that its current assets are more than its current liabilities. But over the years this ratio has been

declining which means there is an increase in the current liabilities that is causing this ratio to
decrease, in order to maintain stability in its operations the company needs to maintain its Current

ratio as per industry standards which is 2:1.

2. Proprietary ratio

The Proprietary ratio is ideal since it’s a manufacturing unit company which is showing an

upward trend over the period of four years, the company's most of the Assets have been financed

by the proprietor itself, which means more satisfaction for lenders and creditors.

3. Debt equity Ratio

Lower the ratio better for the Company; the Company has a strong Equity and Long term

financial position which is clearly reflected over the past four years, hence higher degree of

protection enjoyed by the lenders.

4. Operating profit

Over the Years the Operating profit of the Company has remain stable (except for the year

2007-08 where it declined) which indicates the operational efficiency of the management as

against the net profit which reveals only overall efficiency

5. Net profit Ratio

Over the years the Net profit of the Company has remain consistent indicating stability in

profitability and efficiency of the business, In General terms higher this ratio better for the

Business..

6. Return on Net worth

 An Important Profitability Metrics. Over the years the Net worth of the company has been

showing an Increasing trend which Indicates that the company has been generating Cash Internally

and reinvesting the investor

Capital quite effectively.

7. Earnings per Share & Dividend per Share

The Company EPS and DPS has been showing an Increasing trend Year by Year which

Indicates Company's profitability and more return to its Share holder.

8. Dividend Payout ratio

The Company's Dividend Payout ratio has been slightly on the Higher note, which reflects

that the Company is matured as the major portion of its earnings are given to shareholders in the

form of dividends.

9. Price Earnings ratio

The Investors have been showing confidence in the company stocks as it is on the higher

note even though it has been fluctuating due to market sentiments , Also the market has high hopes

on its Stock Future and ready to bid up the price for its stocks

10. Inventory turnover ratio

For the last two years the management has been efficient in managing the Inventories of

the company and converting the stock into Sales quickly.

11. Debtors turnover ratio

 The Company is not Offering Lenient payment terms which is clearly reflected over the

years, since this ratio is on the higher note, the debts are been collected quickly and more Cash is

there in hand for the Company indicating the Efficiency of the Company.

12. Return on Capital Employed

Starting off with the Good ROCE, there has been sharp Decline in the ROCE of the

company but later it has recovered and the company has been efficiently utilizing its available

resources to generate Revenue, the Company has been continuously increasing its investments in

fixed Assets (Taking MONEY to Make MONEY).

13. Return on Investment

The Company’s ROI has a direct relationship with the ROCE since both the ratios had been

on the higher note indicating the overall performance and Efficiency of the Company

14. Interest Coverage Ratio

The Company has not been finding difficulties in paying Interest on its Outstanding Debt,

which means that the company has sufficient revenues to satisfy its Interest Payment Obligations

(The Standard Interest coverage ratio should be above 1 as per Industry standards)

15. Debt Capitalization

 The Debt Structure of the Company has been fluctuating over the years, about 32 % to 42%

of the Company's Total Capitalization is comprised of Long term Debt (Secured and Unsecured).

16. Capital turnover

The Company has been efficiently utilizing its capital and turns it into Sales, the company’s

Capital turnover has been showing an increasing trend for past 4 years and leading to higher

profitability of the company.

PERIOD OF THE STUDY

The study covered a period of five years from 2012-13 to 2016-17 accounting year ends

31st march every year.

DATA ANALYSIS AND INTERPRETATION

INTRODUCTION

This chapter is the main use of the report and details the analysis and Interpretation of the

study.

Economic Value Added (EVA)

EVA is an estimate of a company’s Economic profit or Residual income, which is the
amount by which the earnings exceed or fall short of the return that could get by investing in other
business of comparable risk. EVA is defined in monetary terms and is a period – based measure.

EVA FOR NCC

Year NOPAT WACC (%) Capital WACC*C EVA

2012-2013 552.94 0.0903 3036.48 274.19 278.74

2013-2014 347.30 0.1409 5435.87 765.91 -418.61

2014-2015 525.52 0.0905 5936.75 537.27 -11.75

2015-2016 820.22 0.1159 6621.15 767.39 52.82

2016-2017 821.23 0.0880 6607.30 581.44 239.78

Source: Annual reports

From the above table it is inferred that the Economic Value of Ncc is fluctuating from
290.33 crores to 155.46 crores from the year 2012-2013 to 2013-2014. After that it shows the
negative EVA of -418.61 crores and -11.75 crores for the next two years from 2012-2014 to 2014-
2015. Again it increased from 52.82 crores to 239.78 crores in the financial year 2014-2015.

EVA FOR NCC

 9000

8000

7000

6000
EVA
5000
WACC*C
4000 CAPITLA
WACC
3000
NOPAT
2000

1000

0
2012-2013 2013-2014 2014-2015 2015-2016 2016-2017
-1000

EVA OF ALPHA CLOTHING (RS IN CRORES)

Year NOPAT WACC (%) Capital WACC*C EVA

 2012-2013 2500.48 0.0894 14119.72 1262.30 1238.17

2013-2014 1706.18 0.1499 25560.43 3831.50 -2125.33

2014-2015 3486.33 0.1453 31429.69 4566.73 -1080.40

2015-2016 3195.61 01249 35908.99 4485.03 -1289.42

2016-2017 2460.85 0.1058 30379.29 3214.12 -753.27

Source: Annual reports

From the above table it is inferred that Economic value of Alpha are increasing from 796.73

crores to 1484.34 crores from the financial year. After that It show the negative EVA from the

financial year 2013-2014 to 2015-2016.

EVA OF ALPHA (RS IN CRORES)

 50000

40000

30000 EVA
WACC*C
20000 CAPITLA
WACC

10000 NOPAT

-10000

Market Value Added

The Market Value Added approach measures the change in the market value of the firm’s
equity and equity investment. Though the concept of market value added is normally used in the
concept of equity investment and, hence, is of greater relevance of equity shareholders. It can also
be adapted to measure value from the perspective of all invested funds including preference share
capital and dept. The market value added approach cannot be used for all type of firms whose
market prices are available.

MARKET VALUE ADDED FOR NCC (RS IN CRORES)

Source: Annual reports

The Market Value is being added for Ncc from10159.62 crores to 10590.12 crores from

Year Market Value Book Value MVA

2012-2013 10245.37 5030.92 5214.45
2013-2014 11856.84 7411.68 4445.16

2014-2015 14839.23 8126.73 6712.50

2015-2016 15029.89 9145.08 5884.81

2016-2017 15830.00 9238.95 6591.05

the financial year 2012-2013 to 2013-2014. After that it fluctuates from 2095.39 crores to 6712.50

crores for the financial year 2014-2015 to 2015-2016.

MARKET VALUE ADDED FOR NCC (RS IN CRORES)

35000

30000

25000

20000 MVA
Book Value
15000 Market Value

10000

5000

NCC RATIO ANALYSIS

CURRENT RATIO

Formula
Current ratio = Current Asset / Current Liabilities

Year Current Asset Current Liabilities Current Ratio

2012-2013 2374.91 2207.29 1.075
2013-2014 2849.22 3002.26 0.95
2014-2015 3573.64 3505.26 1.01
2015-2016 3493.56 4837.41 0.72
2016-2016 3329.37 4749.58 0.70

Interpretation

The current ratio of ncc increase during year 2012-13 of 1.075 and low during the year 2015-16 of
0.70 according to the source of table.

CURRENT RATIO
 Current Ratio

1.075 1.01
0.95
0.72 0.7

2008-2009 2013-2014 2014-2015 2015-2016 2016-2017

LIQUID RATIO
Formula
Liquid ratio = Quick assets /Quick liabilities

Year Quick Assets Quick Liabilities Liquid Ratio

2012-2013 720.32 2207.29 0.32
2013-2014 736.17 3002.68 0.26
2014-2015 365.22 3505.26 0.10
2015-2016 538.31 4837.41 0.11
2016-2017 348.52 4749.58 0.07

Interpretation

In the year 2012-13 the liquid ratio is high of 0.32 and low during the year of 2015-16 of 0.07 for
ncc according to the table.

LIQUID RATIO
 Liquid Ratio

0.32
0.26

0.11 0.1
0.07

2012-2013 2013-2014 2014-2015 2015-2016 2016-2017

PROPRIETARY RATIO
Formula

Proprietary Ratio = Share Holder’s Fund / Total Asset

Year Shareholders fund Total Asset Proprietary Ratio

2012-2013 133.03 5435.87 0.024
2013-2014 133.03 5936.76 0.022
2014-2015 133.03 6621.14 0.020
2015-2016 266.07 6607.32 0.040
2016-2017 266.07 7959.92 0.033

Interpretation

The proprietary ratio of Ncc increase during the year 2014-15 of 0.040 and low during the year
2016-17 of 0.020 according to the source of table.

PROPRIETARY RATIO
 Proprietary Ratio

0.04
0.033

0.022 0.024
0.02

2012-2013 2013-2014 2014-2015 2015-2016 2016-2017

STOCK WORKING CAPITAL RATIO

Formula

Stock working capital ratio = Stock /Working Capital

Year Stock Working Capital Stock Working

Capital Ratio
2012-13 1330.01 720.32 1.85
2013-14 1638.24 736.17 2.22
2014-15 2208.90 365.22 6.04
2015-16 2230.63 -538.31 4.14
2016-17 1896.02 -348.52 5.44

Interpretation

The stock working capital ratio of ncc increase during year 2014-15 of 6.04 and low during
the year 2016-17 of 1.85 according to the source of table.

STOCK WORKING CAPITAL RATIO

 Stock Working Capital

6.04
5.44
4.14

1.85 2.22

2012-2013 2013-2014 2014-2015 2015-2016 2016-2017

CAPITAL GEARING RATIO

Capital gearing ratio = (Preference capital+ secured loan) /

 Equity capital & reserve & surplus

Year Secured Loan Reserves & Surplus Capital Gearing Ratio

2012-13 304.41 1976.00 0.154
2013-14 788.12 2190.10 0.36
2014-15 1272.22 2523.65 0.51
2015-16 960.43 2632.34 0.37
2016-17 1903.46 4189.04 0.45

Interpretation

The source of table indicates that the capital gearing ratio of ncc increases during the year 2014-
15 of 0.51 and decreases during the year 2016-17 of 0.154.

CAPITAL GEARING RATIO

 Capital Gearing Ration

0.51
0.45
0.37 0.36

0.154

2012-2013 2013-2014 2014-2015 2015-2016 2016-2017

DEBT EQUITY RATIO

Formula
Debt equity ratio =Total long term debt /Total shareholders fund

Year Long Term Debt Share Holders fund Debt Equity Ratio
2012-2013 1961.98 2109.03 0.93
2013-2014 2280.45 2323.13 0.98
2014-2015 2658.19 2656.68 1.00
2015-2016 2395.53 2898.41 0.82
2016-2017 3504.82 4455.11 0.78

Interpretation

The dept equity ratio of ncc increase during year 2016-17 of 1.00 and low during the year 2015-
16 of 0.78 according to the source of table.

DEBT EQUITY RATIO

 Debt Equity Ratio

0.98 1
0.93
0.82 0.78

2012-2013 2013-2014 2014-2015 2015-2016 2016-2017

ALPHA RATIO ANALYSIS

CURRENT RATIO
Formula
Current ratio = Current Asset / Current Liabilities

Year Current Asset Current Liabilities Current Ratio

2012-2013 10332.93 12846.21 0.80
2013-2014 11188.38 19672.73 0.56
2014-2015 14350.14 19538.96 0.74
2015-2016 14969.54 23881.64 0.62
2016-2017 12039.84 18781.24 0.64

Interpretation

The current ratio of alpha increase during the year 2012-13 of 0.80 and low during the year 2016-
17 of 0.56 according to the source of table.

CURRENT RATIO
 Current Ratio

0.8
0.74
0.62 0.64
0.56

2012-2013 2013-2014 2014-2015 2015-2016 2016-2017

LIQUID RATIO
Formula
Liquid ratio = Quick assets /Quick liabilities

Year Quick Assets Quick Liabilities Liquid Ratio

2012-2013 2016.63 10968.95 0.18
2013-2014 7343.25 16909.30 0.44
2014-2015 5188.82 16271.85 0.31
2015-2016 8912.10 20280.82 0.44
2016-2017 6739.40 16580.47 0.40

Interpretation

In the year 2016-17 the liquid ratio is high of 0.44 and low during the year of 2012-13 of 0.18 for
alpha according to the table.

LIQUID RATIO
 Liquid Ratio

0.44 0.44
0.4
0.31

0.18

2012-2013 2013-2014 2014-2015 2015-2016 2016-2017

PROPRIETARY RATIO
Formula

Proprietary Ratio = Share Holder’s Fund / Total Asset

Year Shareholders fund Total Asset Proprietary Ratio

2012-13 514.05 14599.31 0.035
2013-14 570.60 16436.04 0.034
2014-15 637.71 17216.1 0.037
2015-16 634.75 19056.19 0.033
2016-17 638.07 20208.54 0.031

Interpretation

The proprietary ratio of Alpha increase during year 2014-15 of 0.037 and low during the year
2016-17 of 0.031 according to the source of table.

PROPRIETARY RATIO
 Proprietary Ratio

0.037
0.035
0.034
0.033
0.031

2012-2013 2013-2014 2014-2015 2015-2016 2016-2017

STOCK WORKING CAPITAL RATIO

Formula

Stock working capital ratio = Stock /Working Capital

Year Stock Working Capital Stock Working

Capital Ratio
2012-13 2229.81 2016.63 1.11
2013-14 2935.59 7343.25 0.40
2014-15 3891.39 5188.82 0.75
2015-16 4588.23 8912.10 0.51
2016-17 4455.03 6739.40 0.66

Interpretation

The stock working capital ratio of Alpha increase during year 2016-17 of 1.11 and low
during the year 2016-17 of 0.40 according to the source of table.

STOCK WORKING CAPITAL RATIO

 Stock Working Capital

1.11

0.75
0.66
0.51
0.4

2012-2013 2013-2014 2014-2015 2015-2016 2016-2017

CAPITAL GEARING RATIO

Formula

Capital gearing ratio = (Preference capital+ secured loan) /

Equity capital & reserve & surplus

Year Secured Loan Reserves & Surplus Capital Gearing Ratio

2012-13 5251.65 11855.15 0.44
2013-15 7742.60 14208.55 0.55
2015-14 7708.52 19375.59 0.40
2015-15 6915.77 18991.26 0.36
2016-17 5877.72 18496.77 0.31

Interpretation

The source of table indicates that the capital gearing ratio of Alpha increases during the year 2016-
17 of 0.55 and decreases during the year 2015-16 of 0.36.

CAPITAL GEARING RATIO

 Capital Gearing Ration

0.55
0.44
0.4
0.36
0.31

2012-2013 2013-2014 2014-2015 2015-2016 2016-2017

DEBT EQUITY RATIO

Formula

Debt equity ratio =Total long term debt /Total shareholders fund

Year Long Term Debt Share Holders fund Debt Equity Ratio
2012-13 13165.56 12369.2 1.06
2013-14 16625.91 14779.15 1.12
2014-15 14638.19 20013.3 0.73
2015-16 11011.63 19626.01 0.56
2016-17 14268.69 19134.84 0.74

Interpretation

The dept equity ratio of Alpha increase during year 2013-14 of 1.12 and low during the year 2015-
16 of 0.56 according to the source of table.

DEBT EQUITY RATIO

 Debt Equity Ratio

1.06 1.12

0.73 0.74
0.56

2012-2013 2013-2014 2014-2015 2015-2016 2016-2017

TREND ANALYSIS
 Trend analysis is one of the tools for the analysis of the company’s monetary statements

for the investment purposes. Investors use this analysis tool a lot in order to determine the financial

position of the business. In a trend analysis, the financial statements of the company are compared

with each other for the several years after converting them in the percentage. In the trend analysis,

the sales of each year from the 2013 to 2017 will be converted into percentage form in order to

compare them with each other.

Formula of calculating trends

Formula for converting the figures:

In order to convert the figures into percentages for the comparison purposes, the

percentages are calculated in the following way:

Trend analysis percentage = (figure of the previous period – figure of the current

period)/total of both figures

The percentage can be found this way and if the current-year percentages were greater than

previous year percentage, this would mean that current-year result is better than the previous year

result.

Trend analysis has a great advantage that it can also be used to predict the future events.

This is possible by forecasting the future cash flow based on the data available of the past. With

the help of trend analysis, you can predict the future and track the variances to add performance.

However, in management accountancy, the calculation of trends is based on the data of the past.

This is favorable in deducing the current situation of the company and the increase in the financial

position of the company and growth over the past years.

 Apart from investments and financial data of the company, the trend analysis is also a

useful tool that can be used effectively for the projections. This allows the company to conduct

market research and draw trends to forecast the demand of different products. This helps in the

marketing purposes, and company can deduce results to select the right marketing approach to

address the issues. Trend analysis can pretty much apply to all the techniques, which requires

forecasting therefore, that it is a very useful tool in business.

TABLE FOR TREND ANALYSIS

ALPHA 2017 2016 Amount Percentage

CLOTHING Change
Gross Profit 34807300 32679400 2127900 6.51
Operating 3014100 3064300 -50200 1.63
Income
Income Before 2371700 2378000 -6300 0.26
Tax
Income Tax 721800 924000 -202200 21.88
Expense
Net Income 1649900 2285600 -635700 27.81

NCC 2017 2016 Amount Percentage

Change
Gross Profit 30680000 31733000 -1053000 3.31
Operating 4964000 9055000 -4091000 45.19
Income
Income Before - - - -
Tax
Income Tax 370000 1240000 -870000 70.16
Expense
Net Income 4337000 5660000 -1323000 23.37

NCC COMPARATIVE BALANCE SHEET

FINANCIAL YEAR 2012 – 13 & 2013 – 14

 2012-2013 2013-2014 Increase Decrease
SHAREHOLDERS FUND
Share capital 133.03 133.03 0 0
Reserves and surplus 1,976.00 2,190.10 214.10
TOTAL 21,09.03 2323.13 214.10

LOANS
Secured 304.41 788.12 483.71
Unsecured 1,657.57 1,492.33 165.24
TOTAL 1961.98 2280.45

APPLICATION OF FUNDS
FIXED ASSETS
Gross block 4,953.27 6,018.63 1065.36
Less: depreciation 1,554.16 1,769.07 214.91
Net block 3,399.11 4,249.56 850.45
Capital work in progress 1,043.19 619.71 423.48
TOTAL 4442.3 4869.27

263.56 326.15 62.59

INVESTMENT
CURRENT ASSETS, LOANS
&
ADVANCES
Inventories 1,330.01 1,638.24 308.23
Sundry debtors 957.97 1,022.06 64.09
Cash & bank balances 86.93 188.92 101.99
Loan & advances 819.63 928.31 108.68
TOTAL 48,31,10 46,70,80
CURRENT LIABLITIES &
PROVISIONS
Current liabilities 2,207.29 3,002.68 795.39
Provisions 268.08 368.69 100.61
TOTAL 2,475.37 3,371.37 896

NET CURRENT 720.32 736.17 15.85

ASSETS
MISCELLANEOUS
9.69 5.17 4.52
EXPENDITURE
TOTAL 38,59,40 38,18,01

FINANCIAL YEAR 2013 – 14 & 2014 – 15

2013-2014 2014-2015 Increase Decrease

SHAREHOLDERS FUND
Share capital 133.03 133.03 0 0
Reserves and surplus 2,190.10 2,523.65 333.55
TOTAL 2323.13 2656.68

LOANS
Secured 788.12 1,272.22 484.1
Unsecured 1,492.33 1,385.97 106.36
TOTAL 2280.45 2658.19

APPLICATION OF FUNDS
FIXED ASSETS
Gross block 6,018.63 6,691.89 673.29
Less: depreciation 1,769.07 2,058.10 289.03
Net block 4,249.56 4,633.79 384.23
Capital work in progress 619.71 387.82 232.71
TOTAL 4869.27 5021.61

326.15 1,230.00 903.85

INVESTMENT
CURRENT ASSETS, LOANS
&
ADVANCES
Inventories 1,638.24 2,208.90 570.66
Sundry debtors 1,022.06 1,185.21 163.15
Cash & bank balances 188.92 179.53 9.39
Loan & advances 928.31 787.17 141.14
TOTAL 4869.27 51,02,42

CURRENT LIABLITIES &

PROVISIONS
Current liabilities 3,002.68 3,505.26 502.58
Provisions 368.69 490.33 121.64
TOTAL 3,371.37 3,995.59

NET CURRENT 736.17 365.22 370.95

ASSETS
MISCELLANEOUS
5.17 4.31 0.86
EXPENDITURE
TOTAL 38,18,01 37,23,11

FINANCIAL YEAR 2014 – 15 & 2015 – 16

2014-2015 2015-2016 Increase Decrease

SHAREHOLDERS FUND
Share capital 133.03 266.07 133.04
Reserves and surplus 2,523.65 2,632.34 108.69
TOTAL 2656.68 2898.41

LOANS
Secured 1,272.22 960.43 311.79
Unsecured 1,385.97 1,435.10 49.13
TOTAL 2658.19 2395.53

APPLICATION OF FUNDS
FIXED ASSETS
Gross block 6,691.89 7,174.30 482.41
Less: depreciation 2,058.10 2,147.77 89.97
Net block 4,633.79 5,026.53 392.74
Capital work in progress 387.82 577.31 189.49
TOTAL 5021.61 5603.84

1,230.00 1,534.48 304.48

INVESTMENT
CURRENT ASSETS, LOANS
&
ADVANCES
Inventories 2,208.90 2,230.63 21.73
Sundry debtors 1,185.21 1,230.37 45.42
Cash & bank balances 179.53 32.56 146.97
Loan & advances 787.17 1,302.48 515.31
TOTAL 51,02,42 53,98,08

CURRENT LIABLITIES &

CURRENT LIABLITIES &
PROVISIONS
Current liabilities 3,505.26 4,837.41 1332.15
Provisions 490.33 496.94 6.61
TOTAL 3,995.59 5,334.35

NET CURRENT 365.22 538.31 173.09

ASSETS
MISCELLANEOUS
4.31 7.31 3
EXPENDITURE
TOTAL 37,23,11 40,35,07

FINANCIAL YEAR 2015 – 16 & 2016 – 17

2015-2016 2016-2017 Increase Decrease

SHAREHOLDERS FUND
Share capital 266.07 266.07 0 0
Reserves and surplus 2,632.34 4,189.04 1556.7
TOTAL 2898.41 4455.11

LOANS
Secured 960.43 1,903.46 943.03
Unsecured 1,435.10 1,601.36 166.26
TOTAL 2395.53 3504.82

APPLICATION OF FUNDS
FIXED ASSETS
Gross block 7,174.30 8,117.64 943.34
Less: depreciation 2,147.77 2,709.45 561.68
Net block 5,026.53 5,408.19 381.66
Capital work in progress 577.31 562.62 14.69
TOTAL 5603.84 5970.38

1,534.48 2,337.63 803.15

INVESTMENT
CURRENT ASSETS, LOANS
&
ADVANCES
Inventories 2,230.63 1,896.02 334.61
Sundry debtors 1,230.37 1,419.41 189.04
Cash & bank balances 32.56 13.94 18.62
Loan & advances 1,302.48 1,458.89 156.41
TOTAL 53,98,08 58,48,21

CURRENT LIABLITIES &

PROVISIONS
Current liabilities 4,837.41 4,749.58 87.83
Provisions 496.94 387.20 109.94
TOTAL 5,334.35 5,136.78

NET CURRENT 538.31 348.52 189.79

ASSETS
MISCELLANEOUS
7.31 0.00 3 7.31
EXPENDITURE
TOTAL 40,35,07 47,66,94

ALPHA CLOTHING COMPARITIVE BALANCE SHEET

FINANCIAL YEAR 2012 – 13 & 2013 – 14

2012-13 2013-14 Increase Decrease

SHAREHOLDERS FUND
Share capital 514.05 570.60 56.55
Reserves and surplus 11855.15 14208.55 2353.4
TOTAL 12369.2 14779.15

LOANS
Secured 5251.65 7742.60 2490.95
Unsecured 7913.91 8883.31 969.3
TOTAL 13165.56 16625.91

APPLICATION OF FUNDS
FIXED ASSETS
Gross block 13,905.17 18,416.81 4511.64
Less: depreciation 6,259.90 7,212.92 953.02
Net block 7,645.27 11,203.89 3558.62
Capital work in progress 6,954.04 5,232.15 1721.89
TOTAL 14599.31 16436.04

12,968.13 22,336.90 9368.77

INVESTMENT
CURRENT ASSETS, LOANS
&
ADVANCES
Inventories 2,229.81 2,935.59 705.78
Sundry debtors 1,555.20 2,391.92 836.72
Cash & bank balances 638.17 612.16 26.01
Loan & advances 5,909.75 5,248.71 661.04
TOTAL 10332.93 11188.38
CURRENT LIABLITIES &
PROVISIONS
Current liabilities 10,968.95 16,909.30 5940.35
Provisions 1,877.26 2,763.43 886.17
TOTAL 12846.21 19672.73

NET CURRENT -2,009.63 -7,343.25 5333.62

ASSETS
MISCELLANEOUS
2.02 0.00 2.02
EXPENDITURE

FINANCIAL YEAR 2013 – 14 & 2014 – 15

2013-14 2014-15 Increase Decrease

SHAREHOLDERS FUND
Share capital 570.60 637.71 67.11
Reserves and surplus 14208.55 19375.59 5167.04
TOTAL 14779.15 20013.3

LOANS
Secured 7742.60 7708.52 34.08
Unsecured 8883.31 6929.67 1953.64
TOTAL 16625.91 14638.19

APPLICATION OF FUNDS
FIXED ASSETS
Gross block 18,416.81 21,002.78 2585.97
Less: depreciation 7,212.92 7,585.71 372.79
Net block 11,203.89 13,417.07 2213.18
Capital work in progress 5,232.15 3,799.03 1433.12
TOTAL 16436.04 17216.1

22,336.90 22,624.21 287.31

INVESTMENT
CURRENT ASSETS, LOANS
&
ADVANCES
Inventories 2,935.59 3,891.39 955.89
Sundry debtors 2,391.92 2,602.88 210.96
Cash & bank balances 612.16 2,428.92 1816.76
Loan & advances 5,248.71 5,426.95 177.3
TOTAL 11188.38 14350.14

CURRENT LIABLITIES &

PROVISIONS
Current liabilities 16,909.30 16,271.85 637.45
Provisions 2,763.43 3,267.11 503.68
TOTAL 19672.73 19538.96

NET CURRENT -7,343.25 -5,188.82 2154.43

ASSETS
MISCELLANEOUS
0.00 0.00 2.02
EXPENDITURE

FINANCIAL YEAR 2014 – 15 & 2015 – 16

2014-15 2015-16 Increase Decrease

SHAREHOLDERS FUND
Share capital 637.71 634.75 2.96
Reserves and surplus 19375.59 18991.26 384.33
TOTAL 20013.3 19626.01

LOANS
Secured 7708.52 6915.77 792.75
Unsecured 6929.67 4095.86 2833.81
TOTAL 14638.19 11011.63

APPLICATION OF FUNDS
FIXED ASSETS
Gross block 21,002.78 23,676.46 2673.68
Less: depreciation 7,585.71 8,656.94 1071.23
Net block 13,417.07 15,019.52 1602.45
Capital work in progress 3,799.03 4,036.67 237.64
TOTAL 17216.1 19056.19

22,624.21 20,493.55 2130.66

INVESTMENT
CURRENT ASSETS, LOANS
&
ADVANCES
Inventories 3,891.39 4,588.23 696.84
Sundry debtors 2,602.88 2,708.32 105.44
Cash & bank balances 2,428.92 1,840.96 587.96
Loan & advances 5,426.95 5,832.03 405.08
TOTAL 14350.14 14969.54

CURRENT LIABLITIES &

PROVISIONS
Current liabilities 16,271.85 20,280.82 4008.97
Provisions 3,267.11 3,600.82 333.71
TOTAL 19538.96 23881.64

NET CURRENT -5,188.82 -8,912.10 3723.28

ASSETS
MISCELLANEOUS
0.00 0.00 0
EXPENDITURE

FINANCIAL YEAR 2015 – 16 & 2016 – 17

2015-16 2016-17 Increase Decrease

SHAREHOLDERS FUND
Share capital 634.75 638.07 3.32
Reserves and surplus 18991.26 18496.77 494.49
TOTAL 19626.01 19134.84

LOANS
Secured 6915.77 5877.72 1038.05
Unsecured 4095.86 8390.97 4295.01
TOTAL 11011.63 14268.69

APPLICATION OF FUNDS
FIXED ASSETS
Gross block 23,676.46 25,190.73 1514.27
Less: depreciation 8,656.94 9,734.99 1078.05
Net block 15,019.52 15,455.74 436.22
Capital work in progress 4,036.67 4,752.80 716.13
TOTAL 19056.19 20208.54

20,493.55 19,934.39 559.16

INVESTMENT
CURRENT ASSETS, LOANS
&
ADVANCES
Inventories 4,588.23 4,455.03 133.2
Sundry debtors 2,708.32 1,818.04 890.28
Cash & bank balances 1,840.96 462.86 1378.1
Loan & advances 5,832.03 5,305.91 526.12
TOTAL 14969.54 12039.84

CURRENT LIABLITIES &

PROVISIONS
Current liabilities 20,280.82 16,580.47 3700.35
Provisions 3,600.82 2,200.77 1400.05
TOTAL 23881.64 18781.24

NET CURRENT -8,912.10 -6,739.40 2172.7

ASSETS
MISCELLANEOUS
0.00 0.00 0
EXPENDITURE

FINDINGS AND SUGGESTIONS

FINDINGS FOR NCC

From the study it is found that the Economic Value of NCC is fluctuating from 290.33

crores to 155.46 crores from the year 2012-2013 to 2016-2017. After that it shows the depressing

EVA of -418.61 crores and -11.75 crores for the next two years from 2013-2014 to 2014-2015.

After that it increased from 52.82 crores to 239.78 crores in the financial year 2014-2016. It may

be the reason that the net profit has been improved in the last two years.

The Market Value is being added for NCc from 10159.62 crores to 10590.12 crores from

the financial year 2003-2004 to 2004-2005. After that it fluctuates from 2095.39 crores to 6712.50

crores for the financial year 2005-2006 to 2015-2016.

The Cash Flow Return on Investment of NCc is increasing from 1.59% to 3.09% for the

year 2012-2013 to 2013-2014. After that it decreases from the 7.78% to 4.43% for the year from

2006- 2007 to 2012-2013. Again It is increasing from 4.91% to 9.64% for the year from 2014-

2015 to 2015-2016. In general it shows that the cash flow has been increased in these years.

From the study it is found that the total shareholders return of Alpha is very higher in the

years 2012-2013 and 2013-2014 by 212.5% and 125.2% correspondingly. But in the years 2014-

2015 and 2015-2016 the TSR is negative. During the year 2015-2016 to 2016-2017 TSR shows

the decreasing trend. It shows that the end market value of shares is lesser than the beginning

market value in the years where the TST is Negative.

From the analysis it is found that the total business return of Ncc is positive only in the

years 2012-2013, 2014-2015and 2016-2017 by 1.415, 0.504, and 0.615 correspondingly.

Other than that the TBR is negative in all the years.

From the analysis it is found that the Market to Book value ratio of the Ncc is increasing

from 1.98 times to 8.18 times from the year 2012-2013 to 2013-2014, it indicate that it is being
over priced in the market. After that it fluctuating from 2.50 times to 3.27 times for all the years

from 2014-2015 to 2015-2016. Marakon approach is greater than 1.Hence it infers that the Market

value to book value ratio of Ncc is optimum in all over the study period.

FINDINGS FOR ALPHA CLOTHING

From the study it is found that Economic value of Alpha are increasing from 796.73 crores

to 1484.34 crores from the financial year 2012-2017. After that it shows the negative EVA from

the financial year 2014-2015 to 2015- 2016. It indicates that the Net profit may be improved and

cost of capital is to be reduced in the future years.

The Market Value against the book value of Tata motors is being increased from 64058.7

crores to 216994.8 crores for the financial year 2013-2013 to 2013-2015. After that It is declining

from 200082.2 crores to 48167.9 crores for the next two years. From the financial year 2013-2014

to 2015- 2016 it shows the increasing trend.

From the study it is found that the Cash Flow Return on Investment of Tata Motors is

falling from 1.30% to 0.99% from the year 2012-2013. And it is increasing from 1.07% to 1.40%

from the year 2012-2013 to 2013-2014. Again it is diminishing from 1.40% to 0.65% from the

year 2014 to 2015. And it is growing from 0.65% to 1.06% from the year 2014-2015 to 2015-2016.

The total shareholders return of Tata Motors is very higher in the years 2012-2013 and

2013-2014 by 212.5% and 125.2% correspondingly. But in the years 2012-2013 and 2015-2016

the TSR is negative. During the year 2005-2006 to 2016-2014 TSR shows the decreasing trend.

The TBR of Tata Motors is Positive only in the years 2012-2013, 2013-2014, and 2014-

2015 by 1.926% 1.188 and 0.567 respectively. But in the remaining years the TBR is depressing

and variable every year.

SUGGESTIONS

FOR NCC

 The company may maintain the stable dividend policy and other policies connected to

improvement in the financial performance to maintain the good shareholder’s return every

year.

 The company may increase its free cash flows by improving its sales, so that the company

can keep the stable and positive business return. So it may help to maximize the wealth of

the shareholders.

 The company may reduce its cost of capital further by altering its capital structure to get

better the economic value of the shareholders.

 The company may reduce the operating expenses for the higher improvement in operating

income in the future years.

FOR ALPHA CLOTHING

 The company may maintain the stable dividend policy and bold decisions which affecting

market price of the share to maintain the better shareholder’s return in the future. · The

company may improve the cash flows by improving its sales performance, so that the

company may obtain the constant and positive return in the future.

 The company may reduce its cost of capital further by altering its capital structure to

improve the economic value of the shareholders.

FOR INVESTORS

Based on the analysis it is clear that the EVA, MVA, CFROI, and Market value to Book

Value Ratio is healthier in NCC than the Alpha, so the investors may be consider the their

investment in NCC for their Maximum Wealth in the future.

CONCLUSION
 As a whole the stock market is sometimes highly volatile. The share price of garment sector

is highly fluctuating; it depends upon the investors how they can make use of this in order to get

money which he has invested in shares. Investors should be in a position to analyze the companies

for investment in a particular sector to minimize the risk and maximize the return. The investors

should analyze the various aspects of a company such as economic value, market value, cash

returns to get a good return for the investor’s money. The study’s interpretations will help the

investors to take right investment decision in automobile industry.

BIBLIOGRAPHY

Book References

 Financial Management – I.M. Pandey

  Financial Management - Srivastava Ashish & Mishra Amit

 Advanced Accountancy – M.A.ARULANANDAM.

 Advanced Accountancy – R.L.GUPTA

ANNEXURE

BALANCE SHEET FOR NCC

 2012-2013 2013-2014 2014-2015 2015-2016 2016-
2017
SOURCES OF FUNDS
SHAREHOLDERS FUND
Share capital 133.03 133.03 133.03 266.07 266.07
Reserves and surplus 1,976.00 2,190.10 2,523.65 2,632.34 4,189.04
TOTAL 21,09.03 2323.13 2656.68 2898.41 4455.11

LOANS
Secured 304.41 788.12 1,272.22 960.43 1,903.46
Unsecured 1,657.57 1,492.33 1,385.97 1,435.10 1,601.36
TOTAL 1961.98 2280.45 2658.19 2395.53 3504.82

APPLICATION OF FUNDS
FIXED ASSETS
Gross block 4,953.27 6,018.63 6,691.89 7,174.30 8,117.64
Less: depreciation 1,554.16 1,769.07 2,058.10 2,147.77 2,709.45
Net block 3,399.11 4,249.56 4,633.79 5,026.53 5,408.19
Capital work in progress 1,043.19 619.71 387.82 577.31 562.62
TOTAL 10949.73 12656.97 18793.21 14925.91 16797.9

263.56 326.15 1,230.00 1,534.48 2,337.63

INVESTMENT
CURRENT ASSETS, LOANS
&
ADVANCES
Inventories 1,330.01 1,638.24 2,208.90 2,230.63 1,896.02
Sundry debtors 957.97 1,022.06 1,185.21 1,230.37 1,419.41
Cash & bank balances 86.93 188.92 179.53 32.56 13.94
Loan & advances 819.63 928.31 787.17 1,302.48 1,458.89
TOTAL 48,31,10 46,70,80 51,02,42 53,98,08 58,48,21
CURRENT LIABLITIES &
PROVISIONS
Current liabilities 2,207.29 3,002.68 3,505.26 4,837.41 4,749.58
Provisions 268.08 368.69 490.33 496.94 387.20
TOTAL 2,475.37 3,371.37 3,995.59 5,334.35 5,136.78

NET CURRENT 720.32 736.17 365.22 -538.31 -348.52

ASSETS
MISCELLANEOUS
9.69 5.17 4.31 7.31 0.00
EXPENDITURE
TOTAL 38,59,40 38,18,01 37,23,11 40,35,07 47,66,94

BALANCE SHEET FOR ALPHA

2012-2013 2013-2014 2014-2015 2015-2016 2016-

2017
SOURCES OF FUNDS
SHAREHOLDERS FUND
Share capital 514.05 570.60 637.71 634.75 638.07
Reserves and surplus 11855.15 14208.55 19375.59 18991.26 18496.77
TOTAL 12369.2 14779.15 20013.3 19626.01 19134.84

LOANS
Secured 5251.65 7742.60 7708.52 6915.77 5877.72
Unsecured 7913.91 8883.31 6929.67 4095.86 8390.97
TOTAL 13165.56 16625.91 14638.19 11011.63 14268.69

APPLICATION OF FUNDS
FIXED ASSETS
Gross block 13,905.17 18,416.81 21,002.78 23,676.46 25,190.73
Less: depreciation 6,259.90 7,212.92 7,585.71 8,656.94 9,734.99
Net block 7,645.27 11,203.89 13,417.07 15,019.52 15,455.74
Capital work in progress 6,954.04 5,232.15 3,799.03 4,036.67 4,752.80
TOTAL 14599.31 16436.04 17216.1 19056.19 20208.54

12,968.13 22,336.90 22,624.21 20,493.55 19,934.39

INVESTMENT
CURRENT ASSETS, LOANS
&
ADVANCES
Inventories 2,229.81 2,935.59 3,891.39 4,588.23 4,455.03
Sundry debtors 1,555.20 2,391.92 2,602.88 2,708.32 1,818.04
Cash & bank balances 638.17 612.16 2,428.92 1,840.96 462.86
Loan & advances 5,909.75 5,248.71 5,426.95 5,832.03 5,305.91
TOTAL 10332.93 11188.38 14350.14 14969.54 12039.84

CURRENT LIABLITIES &

PROVISIONS
Current liabilities 10,968.95 16,909.30 16,271.85 20,280.82 16,580.47
Provisions 1,877.26 2,763.43 3,267.11 3,600.82 2,200.77
TOTAL 12846.21 19672.73 19538.96 23881.64 18781.24

NET CURRENT -2,009.63 -7,343.25 -5,188.82 -8,912.10 -6,739.40

ASSETS
MISCELLANEOUS
2.02 0.00 0.00 0.00 0.00
EXPENDITURE

COMPARISON FOR NCC AND ALPHA

FINANCIAL YEAR 2012-2013
BALANCE SHEET NCC ALPHA PERCENTAGE
DATA ANALYSIS
SHARE HOLDERS 2109.03 12369.2 0.17
FUND
LOANS 1961.98 13165.56 0.14
APPLICATION OF 10949.73 14599.31 0.75
FUNDS
CURRENT ASSETS 483110.0 10332.93 46.74
CURRENT 2475.37 12846.21 0.19
LIABILITIES
NET CURRENT 720.32 2016.63 0.35
ASSETS

FINANCIAL YEAR 2013-2014

BALANCE SHEET NCC ALPHA PERCENTAGE

DATA ANALYSIS
SHARE HOLDERS 2323.13 14779.15 0.15
FUND
LOANS 2280.45 16625.91 0.14
APPLICATION OF 12656.97 16436.04 0.77
FUNDS
CURRENT ASSETS 467080 11188.38 41.74
CURRENT 3371.37 19672.73 0.17
LIABILITIES
NET CURRENT 736.17 7343.25 0.10
ASSETS
FINANCIAL YEAR 2014-2015

BALANCE SHEET NCC ALPHA PERCENTAGE

DATA ANALYSIS
SHARE HOLDERS 2656.68 20013.3 0.13
FUND
LOANS 2658.19 14638.19 0.18
APPLICATION OF 18793.21 17216.1 1.09
FUNDS
CURRENT ASSETS 510242.10 14350.14 35.55
CURRENT 3995.59 19538.96 0.20
LIABILITIES
NET CURRENT 365.22 5188.82 0.07
ASSETS

FINANCIAL YEAR 2015-2016

BALANCE SHEET NCC ALPHA PERCENTAGE

DATA ANALYSIS
SHARE HOLDERS 2898.41 19626.01 0.14
FUND
LOANS 2395.53 11011.63 0.21
APPLICATION OF 14925.91 19056.19 0.78
FUNDS
CURRENT ASSETS 539808.10 14969.54 36.05
CURRENT 5334.35 23881.64 0.22
LIABILITIES
NET CURRENT 538.31 8912.10 0.06
ASSETS
FINANCIAL YEAR 2016-2017

BALANCE SHEET NCC ALPHA PERCENTAGE

DATA ANALYSIS
SHARE HOLDERS 4455.11 19134.84 0.23
FUND
LOANS 3504.82 14268.69 0.24
APPLICATION OF 16797.9 20208.54 0.83
FUNDS
CURRENT ASSETS 584821.10 12039.84 48.58
CURRENT 5136.78 18781.24 0.27
LIABILITIES
NET CURRENT 348.52 6739.40 0.05
ASSETS