A PROJECT REPORT

ON
FUNDAMENTAL STATEMENT ANALYSIS
(As a partial fulfillment for the requirement in project as a part of MBA)

UNDER THE SUPERVISION OF

Dr.Mandeep Kaur

SUBMITTED BY:
NIVEDITA SINGH – 03815103917
(MBA-III SEM, BATCH: 2017-2019)

MANAGEMENT EDUCATION AND RESEARCH INSTITUTE

Affiliated to Guru Gobind Singh Indraprastha University, Delhi

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 TO WHOM SO EVER IT MAY CONCERN

This is to certify that NIVEDITA SINGH, a student of MBA 3rd sem. at MANAGEMENT
EDUCATION & RESEARCH INSTITUTE, has completed her project work entitled
FINANCIAL ANALSYIS at STALLION CAPITAL. Under my guidance I found her work
satisfactory and the same has not been submitted to any other university or college for the
award of any other degree.

MS MANDEEP KAUR

Associate Professor

Management Education & Research Institute, Janakpuri

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 DECLARATION

I NIVEDITA SINGH student of the “MANAGEMENT EDUCATION & RESEARCH

INSTITUTE” hereby declare that the Summer Training report entitled, “FINANCIAL
STATEMENT ANALYSIS” is an original work and the same has not been submitted to any
other institute for the award to any institute for the award of any other degree. The suggestions
as given by the faculty were duly incorporated.

I hereby certify that all the endeavors put in the fulfillment of the task are genuine and original
to the best of my knowledge and I have not submitted it earlier elsewhere.

The main objective of preparing this project report is to understand the scenario of financial
management. The feasible suggestions have been duly incorporated in consultation with the
Supervisor

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 PREFACE

There is a vast difference between theory and practical applicability of management concepts,
principles and theories in any industry. This practical training program in the course is
designed with an objective of bridging the gap between the theory and practical applicability of
management concepts and theories studied during the MBA program and their applicability in
an industry.

I am very fortunate to have an opportunity to undergo my project in on “STALLION

CAPITAL MANAGEMENT”.

This Project training has been indeed a great learning experience which has provided a lot of
exposure regarding corporate functional environment in an industry. It has been a great
pleasure for me to do my project work in such an esteemed organization.

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 ACKNOWLEDGEMENT

Training as learning is an essential part of an individual’s future career. The “learn while you
work” attitude is a very practical touch in the complete tenure of a person’s life. Training
bridges the gap between the learnt and the happening. During this phase the trainer or guide is
the one who can help most of this golden opportunity With a sense of great pleasure and
satisfaction, I present this Project report entitled “A study on FINANCIAL STATEMENT
ANALYSIS OF STALLION CAPITAL”. The Project Report is a product of invaluable
support & contribution from various people towards whom I wish to express my whole-hearted
gratitude. A project of this nature calls for intellectual nourishment, professional guidance,
encouragement and sincere criticism from various quarters associated with this project,
indirectly or directly.

I’m thankful to MS. ANNA GUPTA for their vital inputs and valuable suggestions and
continuous guidance, which have gone a long way in providing necessary impetus to my efforts
in consummating this report and other staff members for their support and cooperation.

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 TABLE OF CONTENT

S.NO. TOPIC PAGE NO.

1. INTRODUCTION 7

2. INDUSTRY OVERVIEW 8-9

3. COMPANY PROFILE 10-18

4. REVIEW LITERATURE 19-20

5. RESEARCH 21-28
METHOLOGY

6. DATA ANLAYSIS 29-52

7. CONCLUSION 53-54

8. REFERENCES 55

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 INTRODUCTION

FINANCIAL STATEMENT ANALSYIS

Financial Statement Analysis is a method of reviewing and analyzing a company’s accounting

reports (financial statements) in order to gauge its past, present or projected future performance.
This process of reviewing the financial statements allows for better economic decision making.
Globally, publicly listed companies are required by law to file their financial statements with the
relevant authorities. For example, publicly listed firms in America are required to submit their
financial statements to the Securities and Exchange Commission (SEC). Firms are also obligated
to provide their financial statements in the annual report that they share with their stakeholders.
As financial statements are prepared in order to meet requirements, the second step in the
process is to analyze them effectively so that future profitability and cash flows can be
forecasted. Therefore, the main purpose of financial statement analysis is to utilize information
about the past performance of the company in order to predict how it will fare in the future.
Another important purpose of the analysis of financial statements is to identify potential problem
areas and troubleshoot those. Financial Analysis involves he uses of Financial Statements like
balance sheet & Income statement. These statements attempt to do several things. First they
portray assets and liabilities of business firm at a moment in time, usually at the end of a year or
quarter. This portrayal is known us Balance Sheet. On the other hand Income Statement portrays
the revenues, expenses, taxes and profits of the firm for a particular period of time, again usually
a year or quarter. While the balance sheet represents a snap-shot of the firm’s financial position
at a moment in time and the income statements depicts its profitability over a period of time. We
selected this topic Financial Statement of PEC because of the reason this it is one of the wholly
owned Government company or being a star trading house. It provides ample scope for analysis
and interpretation of its financial statement.

Industry Overview
Indian financial services industry is the backbone of economic growth and development of a
nation. Finance industry enables creation of new business and expansion of existing ones.
Ultimately this facilitates more employment and job creation with the growth of other
mainstream industries. The financial services industry manages money for individuals and
corporations. Finance sector mainly comprises of commercial banks, insurance companies,
non-banking financial companies (NBFC), co-operatives, pension funds, mutual funds and
other smaller financial entities.

 The asset management industry in India is among the fastest growing in the world. As
of November 2017, 42 asset management companies were operating in the country
 At the end of March 2018, the assets under management of the mutual fund industry
stood at Rs 21.36 lakh crore (US$ 331.42 billion).
 India registered a record inflow of amount of US$ 51.02 billion in mutual funds in FY
2016-17. According to the Association of Mutual Funds in India (AMFI) data, this was
the highest investment in mutual fund schemes since the fiscal 1999-2000.
 The number of mutual fund (MF) portfolios has increased to 66.5 million as of
December 2017, backed by rising interest in MFs among investors.
 Mutual fund (MF) equity portfolios in India reached a 10-year high of 49.3 million, by
end of 2017.

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  The number of listed companies on NSE and BSE increased from 6,445 in FY10 to
7,501 in March 2018.
 The market capitalization of all the companies listed on the BSE reached a record Rs
150 lakh crore (US$ 2.33 trillion) backed by high gains in the broader market.
 The amount raised by IPOs in India increased from US$ 318 million in FY 2008-09 to
US$ 10,888 million in FY 2017-18*.
 Initial Public Offers (IPOs) by small and medium enterprises (SMEs) in India received
record funding of Rs 16.79 billion (US$ 259.35 million) in 2017 through 133 issues.
 The total amount of initial public offerings increased to Rs 84,357 crore (US$ 13,089
million) by the end of FY18.

Government incentives for financial services industry

SEBI has allowed exchanges in India to operate in equity and commodity segments
simultaneously, starting from October 2018. The banking regulator has recently allowed
inclusion of payments banks for better facility of fund transfer.
The Government and RBI have taken various measures to facilitate easy access to finance for
Micro, Small and Medium Enterprises. They have launched Credit Guarantee Fund Scheme for
Micro and Small Enterprises. Government has also set up Micro Units Development and
Refinance Agency (MUDRA) for small scale industries.

Road ahead for Indian financial services industry

India is today one of the most vibrant global economies, on the back of robust banking and
insurance sectors.
The Association of Mutual Funds in India (AMFI) is targeting nearly five fold growth in assets
under management (AUM) to Rs 95 lakh crore (US$ 1.47 trillion) and a more than three times
growth in investor accounts to 130 million by 2025.
India’s mobile wallet industry is estimated to grow at a Compound Annual Growth Rate (CAGR)
of 150 per cent to reach US$ 4.4 billion by 2022 while mobile wallet transactions to touch Rs 32
trillion (USD $ 492.6 billion) by 2022.

Indian financial services industry outlook for 2018

It is projected that national savings in India will reach US$ 1,272 billion by 2019. Over 95 per
cent of household savings in India goes to bank deposits and only 5 per cent in other financial
asset classes. But landscape is changing rapidly at present.
The relaxation of foreign investment rules has received a positive response from the insurance
sector. Many foreign companies announcing plans to increase their stakes in joint ventures with
Indian companies. Over the coming quarters there could be a series of joint venture deals between
global insurance giants and local players.
We are positive on brokerage industry, few holding companies, low cost housing finance
industry and insurance industry for 2018 and beyond. NBFC Industry is one of our favorite
industries at present where as we foresee challenges in Indian banking.

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 COMPANY PROFILE

ABOUT THE ORGANISATION

Stallion Capital is a wealth advisory firm, which work with successful people at different stages
of their lives and provide them with the expert strategic financial advice they require to achieve,
or maintain financial independence. Our clients want to take control of their financial future and
we help them achieve this goal. By leveraging our expertise to create and implement a strategic
financial roadmap we can assist them to protect, grow and manage their wealth.

Stallion was established in 2013, on the principles of delivering high returns to its clients through
the network of government sector banks like PNB, Etc. Though client base is spread across, BFSI
Sector & Telecom. Since the company have a large client base in Banking Sector consisting more
of Public Sector Banks. Few of the prominent Banks are Punjab National Bank, Bank of
Karnataka, Bank of Baroda, Andhra Bank, etc. Stallion capital Management is able to facilitate
various training and development programs / internships in India and abroad with top B-school
and has trained almost 52000 and above interns till date. Company is having asset under
management of 80cr.The operations of the company are spread beyond the national boundaries of
India.

MISSION- “To put all the financial transactions of client at one place for easy access and
planning.”

VISION - "To be most admired wealth management firm with best components.”

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PRODUCTS AND SERVICES OFFERED BY THE COMPANY
 Wealth Management:
The term Wealth Management refers to a professional investment and advisory service
that offers financial planning, investment management and other types of specialized
financial advice.

 Proprietary Financial Planning:

We offer property advisory services for all residential and commercial properties,
rendered by our expert team members having thorough market knowledge in residential,
industrial leading Prices.
We work on the following area:
1. Negotiate on Property valuation / deal on behalf of clients and get better value of
money.
2. To make appropriate proposal favoring our clients.
3. Projects offering assured return on investment.
4. Cash flow analysis & financial Modeling.
5. Legal documentation of properties in a methodical manner

 Portfolio Management:
A portfolio Management refers to the science of analyzing the strengths, weaknesses,
opportunities and threats for performing wide range of activities related to the one's
portfolio for maximizing the return at a given risk.

 Tax and retirement planning:

Tax planning is simply optimizing both the timing and strategy of your business tax
matters, to ensure that you pay as little tax possible. Those strategies should be geared to
optimize and improve business growth.
The goal of retirement planning is to achieve financial independence.So, we are here to
help you with the best advice regarding retirement savings.

o Mutual funds advisory:

Mutual Funds are measured on relative performance. Their performance is
compared to a relevant index such as the S&P 500 Index or to other Mutual Funds
in their same sector.

 Business loan assistance:

We deploy technology and apply innovation to create unique and compelling
propositions that help you do what you always with the Business Loans from Bank,
Financial Institutions & FDIs. We help in making and designing appropriate
project reports and presentations. Most of these features are industry firsts and
come only with our portfolio offerings.

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 CLIENTS

Client base of the company varies from Entrepreneur to service professionals, old to young
and seasoned to first time investor. Client list is such that it would entice anybody to opt
for their Services Company has decided to build a focused approach to selected specific
client only. Its aim is to serve serious client with the vision of long term relation.

CLIENTS AGE PROFILE:

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SWOT ANALYSIS OF STALLION CAPITAL

•Reputation oriented •Brand awareness

•multi tasking staff •Lack of track record
•strong management
team
•Large no. of clients
•Customization of
products

Strengths Weaknesses

Opportunities Threats

•Rising of insurance •High competition in

and banking sector investment sector.
•Rising need of •Strong reliance of
fianacial planning clients on external
among investors investment
consultants.

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 Accounting Policies

Basis of Preparation of Financial Statements

The financial statements of Stallion Capital Management pvt .Limited are prepared under the
historical cost convention adopting the accrual method of accounting in accordance with Indian
Generally Accepted Accounting Principles and in accordance with the provisions of the
Companies Act, 2013 (the “Act”).

Revenue Recognition

Income from services is accounted for on accrual basis and in conformity with Accounting
Standard – 9 of ICAI. Accordingly,

a)Revenue for all services is recognized when earned and are realizable at the time of billing.
Unearned revenues from the date of receipts to the end of the year are recorded as accrued
revenue during the period in which the services are provided. Provision is made in respect of
income considered to be disputed (by the management), debts outstanding for more than two years
and for debts due for less than 2 years, to the extent considered necessary by the management.

b)Wherever there is uncertainty in realization of income, such as liquidated damages, claims on

different clients& authorities etc., these are recognized on collection basis.

c)The claims on account of reimbursement for provision of infrastructure, operation and

maintenance. fund are accounted for as revenue on account of the fact that the claim for
infrastructure cannot be credited to the concerned asset account since the claim amount could not
be segregated asset wise.

d)Other income by way of interest on loans to employees, security deposi twith Government
Departments and local authorities, being not material, are accounted for on collection.

Fixed Assets

A )Fixed assets are carried at cost less depreciation. Cost includes directly related establishment
and other expenses including employee remuneration and benefits, directly identifiable to the
construction or creation of the assets.

b) Expenditure on replacement of assets, equipment’s, instruments and rehabilitation works is

capitalized if, in the opinion of the management, it results in enhancement of revenue generating
capacity.

c) Assets are capitalized to the extent completion certificates have been obtained ,wherever
applicable.

d) The cost of stores and materials at the time of issue to a project, is debited to CWIP.

e) Intangible assets are stated at cost of acquiring the same less accumulated depreciation /
amortization.

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Depreciation/Amortization

Depreciation is provided based on the Written Down Value method at threats prescribed in
Schedule XIV to the Companies Act, 2013. Assets costing up to Rs. 5,000 are depreciated fully
in the year of purchase. Similarly, partition works costing up to Rs. 2,00,000 are depreciated
fully in the year of construction. The depreciation on machinery & tools used both for project
and maintenance work is charged to profit and loss account instead of capitalization. All
administrative offices and captive consumption assembling premises/workshops are considered
as normal building and not as factory building. Accordingly, depreciation is charged uniformly.
Intangible assets are amortized over the license period (i.e. 20 years) and standalone computer
software applications are amortized over the license period subject to maximum of 10 years as
per straight line method.

Impairment of Assets

Assets, which are impaired by disuse or obsolescence, are segregated from the concerned assets
category and shown as ‘Decommissioned Assets’ and provision made for the loss, if any, due to
the difference between their net carrying cost and tenet realizable value.

Investments

Long-term investments are carried at cost, after providing for any diminution in value, if such
diminution is of a permanent nature.

Inventories

Inventories are valued at cost or net realizable value as the case may be – cost ascertained
generally on weighted average method; obsolete/non-moving inventories are valued at net
realizable value.

Foreign Currency Transactions

a)Transactions in foreign currency are recorded at the exchange rate prevailing on the date of the
transaction i.e. on the date of payment or receipt as the case may be.

b)All Foreign Currency Liabilities and monetary assets are stated at the exchange rate prevailing
as at the date of Balance Sheet and the difference taken to Profit and Loss Accounts as Exchange
Fluctuation Loss or Gain.

Extraordinary Items
Extra-ordinary items of income and expenditure, as covered by AS – 5, are disclosed separately.

Expenses incurred at Factory units are allocated to the cost of the manufactured products.

Prior Period Items

Items of Income/expenditure exceeding Rs. 5 lakhs are only considered for being treated as
'prior period items'.

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Taxes on Income

Taxes on Income for the current period are determined on the basis of taxable income and tax
credits computed in accordance with the provisions of the Income Tax Act, 1961.In accordance
with the AS-22, Deferred Tax Liability is recognized on the timing differences between
accounting income and the taxable income for the period taking into consideration the contents
of Accounting Standard Interpretations3 and quantified using the tax rates in force or
substantively enacted as on the Balance Sheet date. Deferred Tax Assets are recognized and
carried forward to the extent there is virtual certainty that such deferred tax assets can be
realized.

Provisions

Provisions are recognized when the Company has a present obligation as a result of past events;
it is more likely than not that an outflow of resources will be required to settle the obligation;
and the amount has been reliably estimated.

Contingent Liabilities

Liabilities, though contingent, are provided for if there are reasonable chances of maturing such
liabilities as per management. Other contingent liabilities, barring frivolous claims, not
acknowledged as debts, are disclosed by way of notes.

Earnings Per Share

Earnings Per Share ("EPS") comprises the Net Profit after tax (excluding extraordinary income
net of tax). The number of shares used in computing Basic & Diluted EPS isthe weighted
average number of shares outstanding during the year

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 NEED, OBJECTIVES AND SCOPE OF THE STUDY

NEED FOR THE STUDY

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.
The study on effectiveness of operational and financial performance of finance limited is
conducted to measure the overall performance of company. The financial analysis strengths the
firms to make their best use, and to be able to spot out financial weakness of the firm to state
suitable corrective actions.

OBJECTIVE OF THE STUDY

 To evaluate the performance of the company with Physical & Financial.
 To final out whether the organization is able to utilize its funds efficiently in the last going
years.
 To evaluate the efficiency with which the firm manager and utilizes its assets.
 To know whether the firm is able to meets its current maturing obligations.
 To find out debt-equity proportion of organization .

SCOPE OF THE STUDY

This project covers a period of 8 weeks and has been conducted in Stallion capital. The main
objective of this project is to analyze the financial performances of the company. The study is
confined to the analysis and interpretation of financial statements of stallion capital.

Finance Policy of Stallion Capital Management

Standards of Financial Proprieties Ever officer incurring or authorizing expenditure from public
funds should be guided by high standards of financial propriety. Every officer should also enforce
financial order and strict economy at every step and see that all relevant financial rules and
regulations are observed, by his own officer and by subordinates disbursing officers. Among the
principles on which emphasis is generally laid are the following:

1. Every officer is expected to exercise the same vigilance in respect of expenditure incurred from
public moneys as a person of ordinary prudence would exercise in respect of expenditure of his
own money.

2. The expenditure should be prima-facie more that the occasion demands.

16
3. No authority should exercise its powers of sanctioning expenditure to pass an order which be
directly or indirectly to its own advantages.

4. Expenditure from public moneys should not be incurred for benefit of a person or section of the
people unless-

a. A claim for the amount could be enforce in a Court of Law, or

b. The expenditure is in pursuance of a recognized policy or custom.
5. The amount of allowances granted to meet expenditure of a particular type should be so
regulated that the allowances are not on the whole a source of profit to the recipients.

6. The responsibility and accountability of every authority delegated with financial powers to
procure any item or service on co.’s account is total and indivisible. Company expects that the
authority a concerned will have the public interest uppermost in its mind while making a
procurement decision. The responsibility is not discharged merely by the selection of the cheapest
offer.

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 LITERATURE REVIEW

3.1 REVIEW OF LITERATURE

Literature Review was done by referring previous studies, articles and books to know the areas
of study and analyze the gap or study not done so far. There are various studies were conducted
relating to operational performance of the company from which most relevant literatures were
reviewed.

Kennedy and Muller (1999), has explained that “The analysis and interpretation of financial
statements are an attempt to determine the significance and meaning of financial statements
data so that the forecast may be made of the prospects for future earnings, ability to pay interest
and debt maturines (both current and long term) and profitability and sound dividend policy.”

T.S.Reddy and Y. Hari Prasad Reddy (2009), have stated that “The statement disclosing
status of investments is known as balance sheet and the statement showing the result is known
as profit and loss account”

Peeler J. Patsula (2006), he define that a sound business analysis tells others a lot about good
sense and understanding of the difficulties that a company will face. We have to make sure that
people know exactly how we arrived to the final financial positions. We have to show the
calculation but we have to avoid anything that is too mathematical. A business performance
analysis indicates the further growth and the expansion. It gives a physiological advantage to
the employees and also a planning advantage.

I.M.Pandey (2007), had stated that the financial statements contain information about the
financial consequences and sources and uses of financial resources, one should be able to say
whether the financial condition of a firm is good or bad; whether it is improving or
deteriorating. One can relate the financial variables given in financial statements in a
meaningful way which will suggest the actions which one may have to initiate to improve the
firm’s financial condition.
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 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

18
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 tha
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 company’s financial
data. The most obvious and readily available source of this information is the firm’s 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.

19
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 entity’s 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.

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 RESEARCH METHODOLOGY

INTRODUCTION:
Research methodology is the process used to collect information and data for the purpose of
making business decisions. Research refers to search for knowledge. Research comprises defining
and redefining problems solution, collecting, organizing and evaluating data, making deductions
and reaching conclusions. Research is an original contribution to the existing stock of knowledge
making for its advancements. It is the pursuit the truth with the help of study, observation,
comparisons and experiment. Business Research is systematic and objective process of collecting,
recording and analyzing data to facilitate business decisions. The activities and information
regarding this project were carried out in the corporate office of stallion capital located at Delhi.
Both primary and secondary data were acquired for the successful and smooth completion of this
study. The primary data were collected from the Finance Department of the stallion capital
DELHI were full freedom and cooperation was extended to me. On the hand, the secondary data
were collected from the annual report of stallion capital. For analyzing the data comparative
financial statement, trend analysis and ratio analysis which are most useful and common methods
are adopted.

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.

PRIMARY DATA
Primary data was collected by departmental survey for Stallion capital management.

SECONDARY DATA

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, journal, annual reports and websites.

 Thorough study of the information collected.

 Conclusions based on findings.

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Statistical Tools Used
The main statistical tools used for the collection and analyses of data in this project are:

 Bar Diagrams
 Line Charts

Limitations of Study
Financial analysis is a powerful mechanism of determining financial strengths and weaknesses of
a firm but, the analysis is based on the information available in the financial statements. We have
also careful about the impact of price level chances, windows-dressing of financial statements,
changes in accounting policies of Stallion capital management ,accounting concepts and
conventions, and personal judgments etc. Due to the following unavoidable and uncontrollable
factors the factors, the result might not be accurate. Some of the problems faced while conducting
the survey are as follows: -

 Chances of some biasness could not be eliminated.

 A majority of respondents show lack of cooperation and are biased towards their own
opinions.

Some of the important Limitations of financial analysis are however, summed up below:

 It is only a study of interim reports.

 Financial analysis is based upon only monetary information and non-monetary factors
are ignored.
 As the financial statements are prepared on the basis of a going concern, it does not give
exact position. Thus, accounting concepts and conventions cause a serious limitation to
financials analysis.
 Changes in accounting procedure by a firm may often make financial analysis
misleading.
 Analysis is only a means and not an end in itself. We have to make interpretation and
draw own conclusion.

22
CONCEPTUAL FRAMEWORK

FINANCIAL STATEMENT ANALYSIS

Financial Statement Analysis is a method of reviewing and analyzing a company’s accounting
reports (financial statements) in order to gauge its past, present or projected future performance.
This process of reviewing the financial statements allows for better economic decision making.
Globally, publicly listed companies are required by law to file their financial statements with the
relevant authorities. Firms are also obligated to provide their financial statements in the annual
report that they share with their stakeholders. As financial statements are prepared in order to
meet requirements, the second step in the process is to analyze them effectively so that future
profitability and cash flows can be forecasted. Therefore, the main purpose of financial
statement analysis is to utilize information about the past performance of the company in order
to predict how it will fare in the future. Another important purpose of the analysis of financial
statements is to identify potential problem areas and troubleshoot those.

A financial statement is a formal record of the financial activities and position of a business,
person, or other entity. Relevant financial information is presented in a structured manner and in
a form easy to understand. They typically include basic financial statements, accompanied by a
management discussion and analysis:

1. A balance sheet or statement of financial position, reports on a company's assets, liabilities,

and owner equity at a given point in time.
2. An income statement or statement of comprehensive income, statement of revenue &
expense, P&L or profit and loss report, reports on a company's income, expenses, and profits
over a period of time. A profit and loss statement provides information on the operation of the
enterprise. These include sales and the various expenses incurred during the stated period.

3. A Statement of changes in equity or equity statement or statement of retained earnings,

reports on the changes in equity of the company during the stated period.
4. A cash flow statement reports on a company's cash flow activities, particularly its operating,
investing and financing activities.

23
 OBJECTIVE
a. Knowing Profitability of Business: Financial statements are required to ascertain
whether the enterprise is earning adequate profit and to know whether the profits have
increased or decreased as compared to the previous year(s), so that corrective steps can
be taken well in advance.
b. Knowing the Solvency of the Business: Financial statements help to analyze the
position of the business as regards to the capacity of the entity to repay its short as well
as long term liabilities.
c. Judging the Growth of the Business: Through comparison of data of two or more
years of business entity, we can draw a meaningful conclusion as regard to growth of
the business. For example, increase in sales with simultaneous increase in the profits of
the business, indicates a healthy sign for the growth of the business.
d. Judging Financial Strength of Business: Financial statements help the entity in
determining solvency of the business and help to answer various aspects viz., whether it
is capable to purchase assets from its own resources and/or whether the entity can repay
its outside liabilities as and when they become due.
e. Making Comparison and Selection of Appropriate Policy: To make a comparative
study of the profitability of the entity with other entities engaged in the same trade,
financial statements help the management to adopt sound business policy by making
intra firm comparison.
f. Forecasting and Preparing Budgets: Financial statement provides information
regarding the weak-spots of the business so that the management can take corrective
measures to remove these short comings. Financial statements help the management to
make forecast and prepare budgets.
g. Communicating with Different Parties: Financial statements are prepared by the
entities to communicate with different parties about their financial position. Hence, it
can be concluded that understanding the basic financial statements is a necessary step
towards the successful management of a commercial enterprise.

24
TYPES OF FINANCIAL STATEMENTS:

These two basic financial statements viz:

(i) Income Statement, i.e., Trading and Profit & Loss Account
Positional Statement, i.e., Balance Sheet portrays the operational efficiency and solvency of
any business enterprise. The income statement shows the net result of the business operations
during an accounting period and positional statement, a statement of assets and liabilities,
shows the final position of the business enterprise on a particular date and time. So, we can
also say that the last step of the accounting cycle is the preparation of financial statements.
Income statement is another term used for Trading and Profit & Loss Account. It determines
the profit earned or loss sustained by the business enterprise during a period of time. In large
business organization, usually one account i.e., Trading and Profit & Loss Account is prepared
for knowing gross profit, operating profit and net profit.
On the other hand, in small size organizations, this account is divided into two parts i.e.
Trading Account and Profit and Loss Account. To know the gross profit, Trading Account is
prepared and to find out the operating profit and net profit, Profit and Loss Account is
prepared. Positional statement is another term used for Balance Sheet. The position of assets
and liabilities of the business at a particular time is determined by Balance sheet. Notes
forming part of Accounts:

 Balance Sheet:
 Cost of lease hold tunnel includes payment to the government of Orissa for acquisition
of land on lease basis.
 Contingent Liabilities i.e. outstanding letter of credits, claims against the company not
acknowledged as debts,
 Dues to various small scale industrial units amounting to Rs. 1.63 cores have been
grouped under current liabilities b) Profit and Loss account:
 As per the schedule XIV of companies Act, 1956, allocate the unamortized value over
the remaining life after retention of 5% residual value except for assets already written
of fully.
 Government of Orissa has improved Rural Infrastructure and Socioeconomic
Development tax from 18th February -2012 on mineral bearing land @ 20% of its
annual value.
 The cost under “power and fuel” consists of consumption of coal and fuel oil but does
not include other expenses of generation
 Deferred tax assets and liabilities assets, Provisions for proposed dividend and
dividend tax will be paid after being approved by shareholders in the Annual General
Meeting.Due to change in the accounting policies during the year have the effects on
the items in financial statement.
Unaudited Financial Reconciliation
Quarterly Unaudited financial results are published in some leading English Newspaper and
vernacular language daily newspapers. It reflects the quarterly result of the company. There are
slight variances in the quarterly unaudited and annually audited Financial Results

25
ANALYSIS AND INTERPRETATION OF FINANCIAL STATEMENTS:

Analysis and interpretation of financial statements are and attempt to determine the significance
and meaning of the financial statement data as so that a forecast can be made of the prospects for
future earnings ability to pay interest, debt and maturities (current and long term) and profitability
of a sound dividend policy.

Financial analysis main function is pinpointing of the strengths and weaknesses of a business
concerns by regrouping and analysis of figure contained in financial statements by making
comparison’s of various component and by examine their content. The financial manager uses this
as the basis to plan future financial requirements by means of forecasting and budgeting
procedures.

The analysis of and interpretation of financial statements represents the lost of the four measure
steps of accounting viz.

 Analysis of each transaction to determine the accounts to debited and credited and the
measurements and the valuation of each transactions to determine the amounts involved.

 Recording of the information in the journals. Summarization in largest and preparation of

work sheet.

 Preparation of financial statements.

 Analysis and interpretation of financial statements results in the presentation of

information that assets business managers, creditors and investors. This requires a clear
understanding of monitoring item of the items.

The analysis must group that represents sound and unsound relationships reflected by the financial
statements. Those, the data is more maintain full and it is placed in better perspective when it is
provision and by means of measurement, it’s relationship with others is established in terms of if
relative significance and it is ranked in terms of its relative significance. One can achieve this by
comparisons made between related items in the statements series of years.

26
Limitations of Financial Statements:
(i)Manipulation or Window Dressing: Some business enterprises resort to manipulate the
information contained in the financial statements so as to cover up their bad or weak financial
position. Thus, the analysis based on such financial statements may be misleading due to window
dressing.

(ii) Use of Diverse Procedures: There may be more than one way of treating a particular item
and when two different business enterprises adopt different accounting policies, it becomes very
difficult to make a comparison between such enterprises. For example, depreciation can be
charged under straight line method or written down value method. However, results provided by
comparing the financial statements of such business enterprises would be misleading.

(iii) Qualitative Aspect Ignored: The financial statements incorporate the information which can
be expressed in monetary terms. Thus, they fail to assimilate the transactions which cannot be
converted into monetary terms. For example, a conflict between the marketing manager and sales
manager cannot be recorded in the books of accounts due to its non-monetary nature, but it will
certainly affect the functioning of the activities adversely and consequently, the profits may suffer.
(iv)Historical: Financial statements are historical in nature as they record past events and facts.
Due to continuous changes in the demand of the product, policies of the firm or government etc,
analysis based on past information does not serve any useful purpose and gives only post-mortem
report.
(v) Price Level Changes: Figures contained in financial statements do not show the effects of
changes in the price level, i.e. price index in one year may differ from price index in other years.
Asa result, misleading picture may be obtained by making a comparison of figures of past year
with current year figures.
vi) Subjectivity & Personal Bias: Conclusions drawn from the analysis of figures given in
financial statements depend upon the personal ability and knowledge of an analyst. For example,
the term ‘Net profit’ may be interpreted by an analyst as net profit before tax, while another
analyst may take it as net profit after tax.

(vii) Lack of Regular Data/Information: Analysis of financial statements of a single year has
limited uses. The analysis assumes importance only when compared with financial statement.

Procedure of Financial Statements

There are three steps involved in the analysis of financial statements. These are:
(i) selection
(ii) classification
(iii) Interpretation, the first step involves selection of information (data) relevant to the
purpose of analysis of financial statements. The second step involved is the methodical

27
 classification of the data and the third step include drawing and conclusions. The
following procedure is adopted for the analysis and interpretation of financial
statements:

1. The analysis should acquaint himself with the principal and postulates of accounting. He should
know the plans and policies of the management so that he may be able to find out whether these
plans properly executed or not.

2. The extent of analysis should be determined so that the sphere of work may be decided. If the
aim is to find out the earning capacity of the enterprise than analysis of income statement will be
undertaken. On the other hand. If financial position is to be studied then balance sheet analysis
will be necessary.

3. The financial data given in the statement should be re-organized and re-arranged. It will involve
the grouping of similar data under same heads, breaking done of individuals components of
statements according to nature. The data is reduced to a standard form.

4. A relationship is established among financial among financial statements with the help tools and
techniques of analysis such as ratio, trends, common size, funds flow etc.

5. The information is interpreted in a simple and understandable way. The significance and utility
of financial data is explained for helping decision-talking.

6. The conclusions drawn from interpretation are presented to the management in the form if
reports

Types of Financial Analysis

I can classify various types of financial analysis into different categories depending upon
(i)The material used, and
(ii) the method of operation followed in the analysis or the modus operandi of analysis.

External Analysis
On the basis of
material used
Internal Analysis
Types of financial
analysis
Horizontal
Analysis
On the basis of
modus operandi
Vertical Analysis

28
(i) On the basis of material used:

According to material used, financial analysis can be of two types

(a) External analysis and

(b) Internal analysis.

a. External Analysis:
This analysis is done by outsiders who do not have access to the detailed internal accounting
records of the business firm. These outsiders include investors, potential investors, creditors,
potential creditors, government agencies, credit agencies and the general public. For financial
analysis, this external party to the firm depends almost entirely on the published financial
statement. External analysis, thus serves only a limited purpose. However, the changes in the
government regulations requiring business firm makes available more detailed information to
the public through audited accounts have considerably improved the position of the external
analysis.

b. Internal Analysis:

The analysis conducted by persons who have access to the internal accounting records of a
business firm is known as internal analysis. Such an analysis can, therefore, be performed by
executive and employees of the organization as well as government agencies which have
statutory powers vested in them.

Financial analysis for managerial purpose is the internal type of analysis that can be affected
depending upon the purpose to be achieved.

ii)On the basis of modus operandi:

According to the method of operation followed in the analysis financial can also be of two
types:

(a) horizontal analysis

(b) vertical analysis.

a. Horizontal Analysis:

Horizontal analysis refers to the comparison of financial data of a company for several years.
Thus, figure for this type of analysis are presented horizontally over a number of columns. The
figures of the various years are compared with standard or base years. A base year chosen as
beginning point. This type of analysis is also called ‘Dynamic Analysis’ as it is based on the
data from year to year rather than on data of any one year. The horizontal analysis makes it
possible to focus attention on items that have changed significantly during the period under

29
 review. Comparison of an item over several periods with a base year may show a trend
developing. Comparative statement and trend percentages are two tools employed in horizontal
analysis.

b.Vertical Analysis:

Vertical analysis refers to the study of relationship of the various items in the financial
statements of one accounting period. In this type of analysis, the figure from financial statement
of a year is compared with a base selected from the same year’s statement. It is also known as
‘Static Analysis’. Common-size financial analysis statement and financial ratio are the tools
employed in vertical analysis. Since vertical analysis considers data for one time period only, it
is not conducive to a proper analysis of financial statements. However, it may be used along
with horizontal analysis to make it more effective and meaningful.

TECHNIQUE OF FINANCIAL STATEMENT ANALYSIS

They are: Trend analysis and Ratio analysis, statement of changes in working capital, etc.

Comparative Balance Sheet:

This statements prepared on two or more different dates can be used; or comparing assets and
liabilities and to find out any increases or decreases in these items. This facilities the comparison
of figures of two or more period and provide necessary information which may be useful in
forming an opinion regarding the financial condition as well as progressive out look of the
concern. Guideline for interpretation of comparative Balance sheet.

The interpreter is expected to study the following aspects:

o Current financial position and liquidity position,

o Long term financial position.

o Comparative Financial Statements:

 It is an important method of analysis which is used to make comparison between two
financial statements. Being a technique of horizontal analysis and applicable to both
financial statements, income statement and balance sheet, it provides meaningful
information when compared to the similar data of prior periods. The comparative statement
of income statements enables to review the operational performance and to draw
conclusions, whereas the balance sheets, presenting a change in the financial position
during the period, show the effects of operations on the assets and liabilities. Thus, the
absolute change from one period to another may be determined.

 Absolute figures (rupee amounts)

 Changes in absolute figures i.e., increase or decrease in absolute figures.

30
  Data in terms of percentages.
 Increase or decrease in terms of percentages.

Comparative Balance Sheet of Stallion capital management 2018 & 20172018

Comparative Balance Sheet Chart

particulars 2018 2017 Inc/dec %

Comparative Balance Sheet In Rs

6000000
5000000
4000000
3000000
2000000
1000000
0

2018 2017
rse

Comparative Balance Sheet Chart

31
 Comparative Balance Sheet In Rs

6000000
5000000
4000000
3000000
2000000
1000000
0

2018 2017

Comparative Balance Sheet Chart

Comparative Balance Sheet In %

40

20

-20

-40

-60

-80

-100

-120

Percentage

Comparative Balance Sheet Chart in %

32
Interpretation of Comparative Balance Sheet (Table 3.1)
The comparative balance sheet of the company reveals that during 2008there has been on decrease
in fixed assets of Rs. 319894 lakhs i.e. -5.28% while long term liabilities to outsiders have
relatively decrease by Rs. 91008 lakh i.e.-0.97. This fact depicts the policy of the company is to
not purchase fixed assets from the long-term sources of finance there by not affect the working
capital.

Current assets have increased by Rs. 163,332 lakh and cash and bank balances also increased Rs.
309,862 i.e. 8.27%, investments not increased on the other hand there has been an increase in
inventories amountRs.79,159 lakhsi.e.32.60%. The current liabilities have increased by Rs.
163,332 lakhs i.e. 7.84 %. This further confirms that the company has revised long term finances.

The overall financial position of the company is satisfactor

33
 Comparative Balance Sheet of Stallion capital
management 2017 & 2016

Particulars 2017 2018 Inc/dec %

34
 Comparative Balance Sheet In Rs.
7000000

6000000

5000000

4000000

3000000

2000000

1000000

2017 2016

Comparative Balance Sheet Chart

Comparative Balance Sheet Chart in %

30
20
10
0
-10
-20
-30
-40
-50

Percentage

Comparative Balance Sheet Chart in %

35
Procedure of Comparative Balance Sheet

1. The Comparative balance sheet has two columns for the data of original balance sheet.

2. Third column is used to show increases in figures.

3. The Fourth column may be added for giving percentages of increase or decrease.

Interpretation of Comparative Balance Sheet (Table 3.2)

The comparative balance sheet of the company reveals that during 2007therehas been a decrease
in fixed assets of 351,549 i.e. -5.49% while long term liabilities to outsiders have increased by Rs.
399329 i.e. 4.45%. There has also been increase of Rs. 619151 lakhs, i.e. 9.07% in reserves and
surplus of the company. Thus, the company has used long-term resources to finance additional
working capital.

The current assets have increased by Rs. 420879 lakhs, i.e. 8.50% and cash and bank balance has
increased by Rs. 687348 lakhs, on the other hand, the current liabilities have increased only by Rs.
55595 lakhs, i.e. 3.45%. Inventories have decreased from Rs. 278922 lakhs to Rs. 242847 lakhs,
i.e.12.93% which shows that there have increased in demand. It is better for business.

36
 RATIO ANALYSIS
Ratio analysis is an attempt to derive quantitative measure or guides concerning the financial
health and profitability of business enterprises. Ratio analysis can be used both in trend and static
analysis. There are several ratios at the disposal of an analyst but their group of ratio he would
prefer depends on the purpose and the objective of analysis.
While a detailed explanation of ratio analysis is beyond the scope of this section, we will focus on
a technique, which is easy to use. It can provide you with a valuable investment analysis tool.
Ratio analysis isn’t just comparing different numbers from the balance sheet, income statement,
and cash flow statement. It's comparing the number against previous years, other companies, the
industry, or even the economy in general. Ratios look at the relationships between individual
values and relate them to how a company has performed in the past, and might perform in the
future.
Ratio analysis is a very important tool of financial analysis. It is the process of establishing a
significant relationship between the items of financial statements to provide a meaningful
understanding of the performance and financial position of the firm. They help us to draw certain
conclusions. Comparison with related facts is the basis of ratio analysis. Ratios may be used for
comparison in any of the following ways.

1. Comparison of a firm with its own performance in the past.

2. Comparison of one firm with its own performance in the past.

3. Comparison of one firm with another firm in the industry.

4. Comparison of one firm with the industry as a whole.

5. Comparison of an achieved performance with pre-determined standards.

37
 RATIO ANALYSIS

CURRENT RATIO
In order to measure the short-term liquidity or solvency of a concern, comparison of current assets
and current liabilities is inevitable. Current ratio indicates the ability of a concern to meet its
current obligations as and when they are due for payment.
Current asset
Current Ratio =
Current liabilities

YEAR 2016-2017 2017-2018

Current 7,505,610.00 8,059,640.00
assets
Current 7,209,370.00 6,988,100.00
liabilities

Current 1.04 1.15

ratio

CURRENT RATIO

1.16
1.14
1.12
2016-2017 7,505,610.00
1.1 7,209,370.00
1.08
2017-2018 8,059,640.00
1.06 6,988,100.00
1.04
1.02
1
0.98
Current ratio

38
TOTAL DEBT RATIO
This ratio gives same indication as the debt equity ratio as this is a variation of debt equity ratio.
This ratio is also known as solvency ratio. This ratio is the relationship between long term debts
and total long term funds.H S S

TJFDJKGHK

S Shareholders fund
Total debt Ratio =
Total debt

U
TOTAL DEBT RATIO
TOTAT 2017-
YEAR 2016-2017 2018

TTA Shareholder's fund 2,404,510.00 2978050

Total Debt Ratio 8182020 8712350
Ratio(in times) 3.4 2.92

TOTAL DEBT RATIO

9,000,000.00
8,000,000.00
7,000,000.00
6,000,000.00
5,000,000.00 Shareholder's fund
4,000,000.00 Total Debt Ratio
3,000,000.00
2,000,000.00
1,000,000.00
0.00
2016-2017 2017-2018

39
 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
Gross Profit Ratio = X100
Net Sales

GROSS PROFIT RATIO

YEAR 2016-2017 2017-2018
Gross profit 646630 651,190.00
2,313,910.0
Net sales 0 2,369,060.00
Gross profit
Ratio 27.94 27.48

2500000

2000000

1500000 Gross profit

Net sales
1000000

500000

0
2016-2017 2017-2018

40
NET PROFIT RATIO

It measures of management efficiency in operating the business successfully from the owner’s
point of view. It indicates the return on shareholder’s investment. Higher the ratio better is the
operational efficiency of business concern.

Net Profit after Tax

Net Profit Ratio = X 100
Net Sales

YEAR 2016-2017 2017-2018

NPAT 442,510.00 454,140.00
Net sales 231,910.00 2,369,060.00
Net profit ratio 19.12% 19.16%

NET PROFIT RATIO

2,500,000.00

2,000,000.00

1,500,000.00 NPAT
Net sales
1,000,000.00

500,000.00

0.00
2016-2017 2017-2018

41
 RETURN ON EQUITY OR RETURN ON NET WORTH

This ratio signifies the return on equity shareholders funds. The profit considered for computing
the ratio is taken after payment of preference dividend.

Net profit after interest and tax

Return on Equity = X 100
Shareholder fund

RETURN ON EQUITY

YEAR 2016-2017 2017-2018

NPAIT 442,510 454140
Shareholder's
fund 4,489,310.00 6,627,810.00
Ratio (in %) 9.85 6.85

RETURN ON EQUITY

7,000,000

6,000,000

5,000,000

4,000,000 NPAIT

3,000,000 Shareholder's fund

2,000,000

1,000,000

0
2016-2017 2017-2018

42
 WORKING CAPITAL TURNOVER RATIO

Working capital ratio measures the effective utilization of working capital. It also measures the
smooth running of business. The ratio establishes relationship between cost of sales and working
capital.
Sales
Working Capital Turnover Ratio =
Net Working Capital

WORKING CAPITAL TURNOVER RATIO

YEAR 2016-2017 2017-2018

Sales 2,313,910 2369060

Net working capital /

Net Current Assets ( in
Rs) 296,230 1071560
Ratio (in times) 7.81 2.21

WORKING CAPITAL TURNOVER RATIO

2,500,000

2,000,000

Sales
1,500,000

Net working capital / Net

1,000,000 Current Assets ( in Rs)

500,000

0
2016-2017 2017-2018

43
 CAPITAL TURNOVER RATIO

Managerial efficiency is also calculated by establishing the relationship between cost of sales or
sales with the amount of capital invested in the business.

Sales
Capital Turnover Ratio =
Capital Employed

CAPITAL TURNOVER RATIO

YEAR 2016-2017 2017-2018

Sales 2,313,910 2369060

Capital employed / Net

Assets ( in Rs.) 642,880 1382410
Ratio (in times) 3.59 1.71

CAPITAL TURNOVER RATIO

2,500,000

2,000,000

Sales
1,500,000

Capital employed / Net

1,000,000 Assets ( in Rs.)

500,000

0
2016-2017 2017-2018

44
FIXED ASSET TURNOVER RATIO

This ratio determines efficiency of utilization of fixed assets and profitability of a business
concern.
Sales
Fixed Asset Turnover Ratio =
Net Fixed asset

FIXED ASSET TURNOVER RATIO

2016- 2017-
YEAR 2017 2018
Sales 2,313,910 2369060
Net Fixed
Assets ( in Rs.) 346,640 310870
Ratio (in times) 6.67 7.62

FIXED ASSET TURNOVER RATIO

2,500,000

2,000,000

1,500,000
Sales
Net Fixed Assets ( in Rs.)
1,000,000

500,000

0
2016-2017 2017-2018

45
TOTAL DEBTS TO SHAREHOLDER FUND
The total debt to shareholder fund is determined to ascertain the soundness of the long term
financial policies of the company and also to measures the relatives’ proposition of outsider’s
funds and shareholders’ funds investments in the company.

Total debt
Total debt Ratio =
Capital employed

TOTAL DEBTS TO SHAREHOLDER FUND

YEAR 2016-2017 2017-2018

Total Debts (Rs.) 8,182,020 8712350

Shareholder's Funds/ Net

Worth ( in Rs.) 2,404,910 2978050
Ratio (in times) 3.4 2.92

TOTAL DEBTS TO SHAREHOLDER FUND

9,000,000
8,000,000
7,000,000
6,000,000 Total Debts (Rs.)
5,000,000
4,000,000 Shareholder's Funds/ Net
Worth ( in Rs.)
3,000,000
2,000,000
1,000,000
0
2016-2017 2017-2018

46
TOTAL DEBT TO CAPITAL EMPLOYED
The total debt to capital employed ratio is determined to ascertain the soundness of the long term
financial policies of the company and also to measures the relatives’ proposition of outsider’s
funds and investment of company.

total debt
To capital employed =
Shareholders’ Fund

TOTAL DEBT TO CAPITAL EMPLOYED

YEAR 2016-2017 2017-2018

Total Debts (Rs.) 8,182,020 8712350

Capital Employed/
Net Assets ( in Rs.) 10,586,940 11690400
Ratio (in times) 0.77 0.74

TOTAL DEBT TO CAPITAL EMPLOYED

12,000,000

10,000,000

8,000,000 Total Debts (Rs.)

6,000,000
Capital Employed/ Net
Assets ( in Rs.)
4,000,000

2,000,000

0
2016-2017 2017-2018

47
 EQUITY TO TOTAL FUND RATIO
Equity to total funds explains the relationship between equity and total funds.

Equity
Equity to Total Funds =
Total Funds

EQUITY TO TOTAL FUND RATIO

YEAR 2016-2017 2017-2018

Equity (in Rs.) 2,404,910 2978050

Total Fund's ( in Rs.) 10,586,940 11690400

Ratio (in times) 0.22 0.85

EQUITY TO TOTAL FUND RATIO

12,000,000

10,000,000

8,000,000
Equity (in Rs.)
6,000,000
Total Fund's ( in Rs.)
4,000,000

2,000,000

0
2016-2017 2017-2018

48
 CONCULSION
The present study was undertaken with an intention of finding out the financial management and
profitability position of, through the analysis of its financial statements. The study is based on both primary
data from Stallion capital office and secondary data obtained from the annual reports of 2015-16& 2017-
18published by the company and internet. The successful completion of this internship indicates that as I
was engaged in the making of the financial analysis I have come to the following facts that most of the
investors aren’t aware of the various investment avenues available in the country. Of which most of the
older investors mostly invest in order to save tax and want to have an average growth rate of their
investment and the main concern of their investment is tax-saving and they majorly have an apprehension
of the loss of their principal amount as this is one of the major factors that they think about before investing
is that of safeguarding of the principal amount, so in order to save money in order to meet their and
family’s future expenses and to be prepared for the retirement. In short, they aren’t quite interested in doing
investment and somewhat interested in debt market instruments to get a risk- free return out of their
investment when needed.

On the contrary, the new investors i.e. the ones who are in the age group of 20-30 years are showing
immense interest in doing investment in various securities that can not only benefitted them for tax saving
purposes but can also proves to be a measure of wealth creation, can provide for their future expenses and
also facilitate long and short term goals which can vary individual to individual.

These new investors also keep them aware about the various investment avenues in order to generate
wealth and attain high return by investing in these in these securities.

49
 SUGGESTIONS

Some of the recommendation and suggestion are as follows:

o The attention is required on the areas of growth, profitability, service level and building
talent.
o To increase the profit of company should decrease their operating expenses and increase
their income.
o To increase its liquidity, company should keep some more cash in its hand instead of
giving more and more advances.
o Introduce quality consciousness and standardization of the work system and procedures.
o Make manager competitive and introduce spirit of market-orientation and culture of
working for customer satisfaction.
o There is need to build the knowledge and skill base among the employees in the context of
technology.
o Performance measure should not only cover financial aspects i.e. quantitatively aspects but
also the qualitative aspects.
o It is high time to focus on work than the work-achieved.

50
 REFERENCES
 http://ourstockpick.com/indian-financial-services-industry/
 https://www.ibef.org/industry/financial-services-presentation
 https://economictimes.indiatimes.com/wealth/plan/5-golden-rules-of-financial-
planning/articleshow/50149594.cms
 www.karvy.com/sip-calculator
 www.iciciprulife.com/term-insurance-plans/iprotect-smart-term-insurance-calculator.html
 https://homeloans.sbi/calculators
 http://health.policybazaar.com/quotes?enquiryid=NjAzMzQwNDc&profileid=20654786&sifro
m=15&sito=15
 www.icicibank.com/calculator/car-loan-emi-calculator.page

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