A Study On Financial Strength and Weakness of Sree Ranga Foods (Rainbow Masala)

INTRODUCTION OF FINANCIAL MANAGEMENT:
Finance is regarded as the life blood of a business enterprise. Finance is one of the
basic foundations of all kinds of economic activities. It is the master keys which provide access
to all the sources for being employed in manufacturing and merchandising activities. It has
rightly been said that business needs money to make more money. However, it is also true that
money be gets more money only when it is properly managed. Hence efficient management of
every business enterprise is closely linked with efficient management of its finance.
Financial management is concerned with procurement and use of funds. Its main
is to use business funds in such a way that the earnings are maximized. It provides a frame work
for selecting a proper course of action and deciding a viable commercial energy. The main
objective of business is to maximize the owner's welfare, which can be achieved by profit
maximization and wealth maximization.
The finance is expected to know about the profitability, liquidity position both
long term and short term and solvency position of the firm. For this purpose, he has to prepare a
number of ratios from the data obtained from the financial statements and interpretation of these
ratios is also essential to reach certain conclusion.
A financial statement is a collection of data organized according to logical and

consistent accounting procedures. The end products of business transactions are the financial
statements comprising primarily, the position statement and income statement. Financial
statement are the source of information on the basis of which conclusion are drawn about the
profitability and financial position of concern.
Financial statements are prepared primarily for decision making. The information
in the financial statements is of immense use in making decisions through analysis and
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interpretations of financial statements. The analysis and interpretation of financial statements
show the forecast may be made of the future earnings.
Financial analysis is useful to the financial executives to have deep insight in to

the financial conditions of the enterprise, to the top management in reaching conclusions
regarding performance appraisal of overall business activities, question concerning the
relationship of earnings, trend in sales and questions concerning the relationship of earnings to
investment. To the creditors it provides information about the enterprises ability to pay interest
amount promptly and repayment of principal amount and it provides information to investors and
others about the cash generation capability of an enterprise and earnings capacity of the security
FINANCIAL STATEMENT ANALYSIS
A financial statement paints a picture of the transactions that flow through a

business. Each transaction or exchange — for example, the sale of a product or a use of a rented
a building block-contributes to the whole picture. Financial statement is an organized collection
of data. Its purpose is to convey an understanding of various financial aspects of business firm. It
may show a position at a moment as in the case of activities over a given period of time in the of
an income statements.
The firm's financial statements include:
· Balance sheet
· Income statement
· Statement of retained earning
Meaning of Business Finance
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In general, finance may be defined as the provision of money at the time it is
wanted. However as a management function, it has a special meaning. Finance function may be
defined as the procurement of funds and their effective utilization. Some of the authority's
definition as follows.
"Business finance is that business activity which is concerned with the acquisition
and conversion of capital funds in meaning financial needs and overall objectives of a business
enterprise".
"Business finance can broadly be defined as the activity concerned with planning,
controlling and administrating of the funds used in the business".
Performance:
The literary meaning of ‘performance’ is “an entertainment presented before an

audience
The portrayal of a character on the stage, the aft or manner of exhibiting and act, skill
or capacity, an action, deed or thing done: the act performing or condition of being performed".
According to Robert Albanese, “the word performance is used to mean the efforts
extended to achieve the target efficiently and effectively, the achievement of target involves the
integrated use of human, financial and natural resources”.
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Statement of the problem:
Financial analysis involves the assessment of companies past, present and

anticipated future conditions. They determine the operational efficiency and ultimate success of a
business. A financial analysis reveals that where a company stands in respects provide the
framework within which sciences of planning take place. Hence research was made to analysis
the answer for the following questions.
Financial Analysis
The financial management process, the initial stage in the process is a financial
analysis or view of the firm. Financial analysis is essentially the first steps towards gaining a
sound understanding of a business (e.g. one's won or competitor's financial strengths and
weakness, its financial opportunities and risk etc,)
Financial analysis is the evaluation of the firm's past, present and anticipated
future financial condition. Itsobjectives are to identify the firm financial strengths and weakness
and to provide the essential foundation for financial decision-making and planning.
Features of finance
1. Investment Opportunities
In Finance, Investment can be explained as a utilization of money for profit or returns.
Investment can be done by:-
 Creating physical assets with the money (such as development of land, acquiring
commercial assets, etc.),
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Carrying on business activities (like manufacturing, trading, etc.), and
Acquiring financial securities (such as shares, bonds, units of mutual funds, etc.).
Investment opportunities are commitments of monetary resources at different times with
an expectation of economic returns in the future.
2. Profitable Opportunities
In Finance, Profitable opportunities are considered as an important aspiration (goal).
Profitable opportunities signify that the firm must utilize its available resources most efficiently
under the conditions of cut-throat competitive markets.
Profitable opportunities shall be a vision. It shall not result in short-term profits at the expense of
long-term gains.
For example, business carried on with non-compliance of law, unethical ways of acquiring the
business, etc., usually may result in huge short-term profits but may also hinder the smooth
possibility of long-term gains and survival of business in the future.
3. Optimal Mix of Funds
Finance is concerned with the best optimal mix of funds in order to obtain the desired and
determined results respectively.
Primarily, funds are of two types, namely,
1. Owned funds (Promoter Contribution, Equity shares, etc.), and

2. Borrowed funds (Bank Loan, Bank overdraft, Debentures, etc).
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The composition of funds should be such that it shall not result in loss of profits to the
Entrepreneurs (Promoters) and must recover the cost of business units effectively and efficiently.
4. System of Internal Controls
Finance is concerned with internal controls maintained in the organization or workplace.
Internal controls are set of rules and regulations framed at the inception stage of the organization,
and they are altered as per the requirement of its business.
However, these rules and regulations are monitored at various intervals to accomplish the same
which have been consistently followed.
5. Future Decision Making
Finance is concerned with the future decision of the organisation
A "Good Finance” is an indicator of growth and good returns. This is possible only with the
good analytical decision of the organisation. However, the decision shall be framed by giving
more emphasis on the present and future perspective (economic conditions) respectively.
Financial plan
Financial plan is generally prepared during promotion stage. It is prepared by the

Promoters (entrepreneurs) with the help of experienced (practicing) professionals. The promoters
must be very careful while preparing the financial plan. This is because a bad financial plan will
lead to over-capitalization or under-capitalization. It is very difficult to correct a bad financial
plan. Hence immense care must be taken while preparing a financial plan
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There are three types of financial plans, viz.,
1. Short-term financial plan is prepared for maximum one year. This plan looks after the
working capital needs of the company.
2. Medium-term financial plan is prepared for a period of one to five years. This plan looks
after replacement and maintenance of assets, research and development, etc.
3. Long-term financial plan is prepared for a period of more than five years. It looks after
the long-term financial objectives of the company, its capital structure, expansion
activities, etc.
Scope of financial management

Financial management has a wide scope. According to Dr. S. C. Saxena, the scope of
financial management includes the following five 'A's.
Financial management estimates the financial needs of the company. That is, it finds
much finance is required by the company.
Acquisition : It collects finance for the company from different sources.
Allocation : It uses this collected finance to purchase fixed and current assets for the company.
Appropriation : It divides the company's profits among the shareholders, debenture holders, etc.
It keeps a part of the profits as reserves.
Assessment : It also controls all the financial activities of the company. Financial management is
the most important functional area of management. All other functional areas such as production
management, marketing management, personnel management, etc. depends on Financial
management. Efficient financial management is required for survival, growth and success of the
company or firm.
What Corporate Finance Includes?
Corporate finance includes planning, raising, investing and monitoring of finance in order
to achieve the financial objectives of the company
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The followings are included in corporate finance.
1. Planning the finance : The finance manager plans the finance of the company.
He takes decisions on questions like:-
How much finance is required by the company?
What are the sources of finance?
How to use the finance profitably?
2. Raising the finance : The finance manager raise (collects) finance for the company.
Finance can be collected from many sources, viz., shares, debentures, banks, financial
institutions, creditors, etc.
3. Investing the finance : The finance manager uses the finance to achieve the objectives of
the company. There are two types of corporate finance, viz., fixed capital and working
capital. Fixed capital is used to purchase fixed assets like land, buildings, machinery, etc.
While working capital is used to purchase raw materials. It is also used to pay the day-to-
day expenses like salaries, rent, taxes, electricity bills, etc.
4. Monitoring the finance : The finance manager monitors (i.e. controls and
manages) the finance of the company. He has to minimise the cost of finance. He has to
minimize the wastage and misuse of finance. He has to minimise the risk of investment of
finance. He also has to get maximum return on the finance. Monitoring the finance is an art
and science. It is a very complex job. There are new tools & techniques for monitoring funds.
1.2 NEED FOR THE STUDY
Financial performance is used to identify the trends and relationships between financial
statement items. Both internal management and external users such as analysts, creditors, and
investors of the financial performance need to evaluate a company's profitability, liquidity, and
solvency. The most common methods used for financial statement analysis are comparative
8
statement, common-size statements, and ratio analysis. These methods include calculations and
comparisons of the results to historical company data, competitors, or industry averages to
determine the relative strength and performance of the company being analyzed.
9
1.4 OBJECTIVES OF THE STUDY
The general objective of the study is to identify the financial performance of SREE
RANGA FOODS (RAINBOW MASALA) by properly establishing between the concerns
figures in their financial statement accurate in the form of ratio. The specific objectives are
1. To analyze the financial performance of the company

2. To ascertain the profitability position of SREE RANGA FOODS (RAINBOW
MASALA)
3. To study the long term solvency position of SREE RANGA FOODS (RAINBOW
MASALA)
4. To find out the liquidity position of SREE RANGA FOODS (RAINBOW MASALA)
5. To study the turn over position of SREE RANGA FOODS (RAINBOW MASALA)
6. To study the income and expenditure statement of SREE RANGA FOODS

(RAINBOW MASALA)
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1.5 SCOPE OF THE STUDY
The study helps for planning and implementing the important factors of SREE
RANGA FOODS (RAINBOW MASALA)and summit overall creditability of the company. It
also helps to know about the financial performance and find out the future operation performance
of SREE RANGA FOODS (RAINBOW MASALA)
Analysis and interpretation of financial statement for an attempt to determine

the significance and meaning of the financial statements data so that a forecast may be made of
the prospects for future earnings, ability to pay interest, etc,.
Financial statement analysis is largely a study of the relationship among the

various financial factors in a business as disclosed by single set of statement and study if the
trend of these factors as shown in a series of statements
Therefore when analysis comprises resolving the statements by a process of

rearranging, regrouping and the calculation of ratios, interpretation of the mental process of
understanding the terms of such statement and forming opinions are inferences about the
financial health, profitability, efficiency & other such aspects of the undertaking.
Such a type of financial analysis provides information essential for the

purpose of control.
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The information made available in the shape of accounting data which may be
form of statements and accounting statements. Management may review the company's progress
up to date and decide up to the course of action takes in future on the basis of information in
those reports.
Creditors may chooses to extent, maintain our restrict credit employee groups
may form judgements as in the ability of the company in pay higher wages and the general
public may appraise the effectiveness of the economic and from which it buys goods or services.
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1.6 LIMITATIONS OF THE STUDY
 The study cannot be generalized as it prevents only to the company

 The study mainly depends on the secondary data, annual reports of SREE RANGA
FOODS (RAINBOW MASALA)
 The financial performance of the company is analyzed by using 5 years data alone
 The study is confined to single organization hence the findings of this study may not be
applied to any other organization
 The validity of the analysis and suggestion depends on the financial statement and reports
alone provided by the company
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CHAPTER-II
COMPANY PROFILE
ABOUT THE COMPANY:
SREE RANGA FOODS,
MFRS: RAINBOW MASALA & SPICES PRODUCTS
34/1, MOOGAMBIKA COMPLEX, AGILMEDU 6TH STREET, ERODE-638001
Since 1956, a tradition is set at RAINBOW to cater pure & quality spices which make us one of
the oldest brands in the palate tickling industry. Since then, every product we offer comes with a
promise - a promise that each ingredient is carefully and responsibly sourced.
Unique and distinct application of spices always had a strong bond with Indian culture. Gone are
those days when Granny use to select amongst varieties of spices and make their blends to give
an authentic touch of taste, aroma and colour to their cuisine. This required knowledge of spices,
their characteristic and their proportion to be used.
RAINBOW’s range of blended & grounded spices comes with finest and traditional formulations
that help you adding the original and authentic flavours to your dish.
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Later, he entered into the arena of pure spice powders like Turmeric, Chilli and Coriander. His
inquisitiveness let him to enter into masala world with dauntless. He encountered a lot of
hurdles, since selling masala powders during those days to the oriental women who are
traditionally conservative, was not that easy. It was the concept selling on "Easy Cooking" rather
than marketing food products. With self -determination and persistent attempts he was able to get
into the kitchens of our country and the rest of the world.
The story may look like a miracle, but the hard work, the pot holes and the bumps on the way
and the stormy inclement weather are known only to him.
Now RAINBOW MASALA manufactures over 50 varieties of Spice and Masala powders, over a
dozen varieties of Pickles, Flour varieties, Appalams, Ghee and Sunflower Oil. RAINBOW
Masala gives value addition to the agricultural products which helps and encourages the farming
community to market their produces. Furthermore, they generate a lot of employment
opportunities to the agricultural labours and rural people.
The Company employs mostly women and differently abled persons from the rural areas and
makes them to lead an honorary life. The company has bagged with IS/ISO 9001:2008
certification from Bureau of Indian Standards, New Delhi.
The customers of RAINBOW MASALA are the house wives and those who need easy and quick
cooking solutions. Restaurants, hostels, hotels, canteens are the other prominent consumers.
RAINBOW MASALA reaches the houses located in every nook & corner of the country through
its strong marketing network.
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Success of RAINBOW MASALA lies in the innovation of manufacturing procedures, as there
were no definite machineries for specific production of spice and spice mixes. With the growing
experience, suitable changes were made in order to match the requirements that made all the
differences in manufacturing spice powders and spice mixes which retain the aroma and flavour.
'Tradition and Technology perfectly blended' is the shibboleth of RAINBOW MASALA. With
all the quality of being humble (humility), we can declare that RAINBOW MASALA is
qualitatively a superior product because the raw materials used are the best and are processed
and packed hygienically.
The company uses modern technology in drying the raw materials. The largest Solar heating
channels by a masala company in Asia, are used to dry the raw materials without losing its
natural quality, flavor & aroma. RAINBOW Masala is serving the society through Sakthi Devi
Charitable trust, as extented arm RAINBOW Masala...
EXPORTS:
India can now boast of a global presence in the International Spices Markets, commanding more
than 20% of volume traded. No other country has such a wide array of Spices ranging from
cumin and Fenugreek to Cardamom & Pepper.. This exotic spread has fetched us good money
too.
Indian exports have achieved a milestone in catering to the International demands, for this
segment, Indian curry powders ( with truly South Indian, North Indian flavour) perhaps give
them the feeling of " home away from the home".
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To fulfil the needs of the Indian Community outside Indian as well as the International
Community, the company Product are made available in the Market in many Countries of the
World. ' Rainbow Masala' Products are exported to Countries like USA, UK, Singapore, Kuwait,
Australia, New Zeeland, Hongkong, France, South Korea, Muscat and Canada.
PRODUCTION:
Sorted for excellence
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Authentic blend of choicest spices:
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RAINBOW MASALA DISTRIBUTOR NETWORK - INDIA:
In case you don't find our distributor in your area, do contact our corporate office and place your
order (For details, scroll down). We shall be happy to deliver your requirements without any
delivery charges across India*
ANDAMAN & NICOBAR ISLANDS

P. ARUMUGAM & SONS PORTBLAIR 0319 2233199

ANDHRA PRADESH

MADDULA SAMBASIVA RAO & SONS GUNTUR 9949401342

CHHATISGARH

LAXMAN PATEL BILASPUR 9827170883
GANESHLAL TIWARI RAIPUR 9827978051

DELHI

VIJAYA ENTERPRISE DELHI 011 23624472

GOA

JAI AMBE TRADERS MAPUSA 96743868232

GUJARAT

MEENA AGENCY ANKLESHWAR
DAIMOND M.SUPER MART BHARUCH
VASUDEO STORES JAMNAGAR 0288 2558397
ABBABHAI Y. DUDHANI UPLETA 9825937643
KALIM KHAN PATHAN VADODARA
NATIONAL AGENCIES VERAVAL 02876 224616

KARNATAKA

BAGMAR GEN. STORES GADAG 0837 2238021
SHRI SATYANARAYAN TRADERS HUBLI 0836 2213389
S. S. DISTRIBUTORS BANGALORE 9844174336

KERALA
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GIRISH AGENCIES EARNAKULAM 0484 2374587

MADHYA PRADESH

GIRRAJ TRADELINK GWALIOR 0751 2434535

MAHARASHTRA

AMRUT AGENCIES AHMEDNAGAR 0241 2343436
P.SANJAY KU.JAIN ALIBAG 9422493382
DARAK TRADERS AURANGABAD 0240 2327959
SHREE DEVIKRIPA ENT BADLAPUR 9322236176
GUPTA AGENCIES BEED 02442 224321
SHEETAL TRADING CO BHAYANDER
YOGESH TRADERS BHAYANDER
PRAMUKH MARCKTING BHIWANDI 9823224189
SHIV TRADING BHIWANDI
VAISHNAVI TRADERS BHIWANDI 9850272399
MUSTAFA MKTG. PVT. LTD. CHANDRAPUR 0717 2251182
SHAH PROVISION STORES DAHANU
MALDE TRADERS DAHISAR 9867688348
MALDE BRO DAHISAR 022 28284362
VISAT TRADING DAHISAR 022 28977387
VISHAL TRADERS DAHISAR
S.S. ENTERPRISE DOMBIVALI 9819054068
SAHAKAR GRAIN STORE DOMBIVALI 2512431237
SANGITA ENTERPRISE DOMBIVALI 9820353310
NEW BHARAT GAS & E.MART ICHALKARAJI 9422044920
A. K. BHAVNAGARWALA JALGAON 0257 2237852
MASTER FOODS JALGAON 0257 2234255
RAJENDRAPRASAD RAMGOPAL JALNA 0248 2230971
NAMITA ENTERPRISE KALWA 9820249991
ROSHNI KIRANA KALYAN 9322687107
SHREE HANUMAN TRADERS KALYAN
SWASTIK KIRANA KALYAN 0251-2306518
SHREE ODHOKRIPA KALYAN 9819242051
SHAH. C.P KALYAN 9821345346
SUBHASH WADILAL SHAH KARAD 9822297563
SH.CHAGANLAL TRILOKCHAN JAIN KARAJ
RATHI TRADING CO KARJAT
RAMANLAL S. SHAH KARJAT 9422664559
SH.KANTILAL SARDARMAL KARJAT
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SHREE RUSHAB SALES KARJAT 9850138866
PANKAJ TRADERS KARJAT
PADMAVATI TRADERS KHOPOLI 2192269111
RATHI BROS KHOPOLI 9822662686
SHREE RAJENDRA TRADERS KHOPOLI
SUNIL KIRANA KHOPOLI
MAHARASHTRA GAS & ESS KOLHAPUR 0231 2542024
AGARWAL & SONS KOLHAPUR 9326616069
S MAHOMAD BROTHERS KOLHAPUR 9422628789
SHREE KRISHNA TRADING CO KOLHAPUR 9850167891
VISHWAS PRO & BK KOLHAPUR 9960620866
RAHUL TRADING KURDHUS
RAJU TRADERS MALAD
PRAVIN MASALA MIRA.RD 9967004848
RAMESH TRADING MIRA.RD
SHEETAL SHAYOG BHANDAR MIRA.RD
SHIV KRIPA HOUSE MIRA.RD
MAHARASHTRA GAS & ESS MIRAJ 0233 3209095
SHAH GABHARUBHAI UTTAMCHAND(RETAIL
MUMBAI 022 23425539
OUTLET)
SHREE SADGURU ENTERPRISES MUMBAI-NORTH 022 25118704
ROMA ENTERPRISES MUMBAI-SOUTH 022 23744451
S. R. ENTERPRISES NAGPUR 0712 2766083
PUROHIT TRADING CO NALASOPARA 9324892976
TRIBHUVANDAS DAIRY NALASOPARA 9028667000
VEER CORPORATION NALASOPARA 9323076066
MAHARASTRA PROV. & GEN STORES NANDED 0246 2234216
ABHAY AGENCIES NANDED 0246 2250535
SHREE JALARAM AGENCY NANDEN 9403522225
SUMIT FOODS & PROVISION NASIK 0253-2502858
PRAKASH KIRANA NERAL 9881441202
SHREE GAJANAN KIRANA NERAL 238412
NAMAN TRADING CO PALGHAR
SH.CHAGANLAL DEVICHAN PALGHAR 9022931392
SH.CHANDMAL RAMLALJI PALGHAR 9867709488
WINNERS DISTRIBUTORS PANCHAGANI 2168241139
NILKAMAL TRADERS PANVEL
NANKRAM ISHWARDAS PANVEL 9869801333
NEW KUBER OIL DEPOT PANVEL
PHULCHAND JUHARMAL GANDHI PANVEL 022-32534331
VARAHI PRO & GEN STORE PANVEL
PANKAJ KIRANA STORE PEN
PARSHAW KIRANA PEN
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SH.SHANKARLAL BHUTAJI PEN 02143-253124
SH.TULSIDAS PARMANAD PEN 02143-252150
SH.GULABCHAND SHESHMAL JAIN POINAD 2141252039
C. D. SHAH PUNE 020 24262628
NEW MAHARASHTRA GAS & ESS SANGLI 0233 2377244
KUMBHOJKAR TUP VYAPARI SANGLI 0233 2373494
NAVRATNA DIST SANGLI 9372141253
NEW PATEL KIRANA SHAHPUR 8600520234
SH.RAMESHCHANDRA MANILAL SHAHPUR 02527-272054
THAKKRAL MKTG. SHRIRAMPUR 0242 2223362
NAUSHAD GEN AGENCY SOLAPUR 9422068306
N.R KOLA SOLAPUR 9423588674
PADMA FOODS SOLAPUR 9890006109
NABEEL GEN STORE SOLAPUR 9822339596
VYANKATESH FOOD SOLAPUR 9423065151
MARUTI TRADING CO. THANE 99209 38370
PATEL TRADING CO THANE 9867204777
R.N TRADING CO THANE 9819095018
SHREE GANESH DRYFRUIT & MASALA THANE 2225360433
SHREEJI TRADERS THANE 9892506401
SATGURU TRADERS THANE 9702490617
VAIBHAV TRADING THANE 25366576
VISHAL TRADING CO THANE 25431620
SACHIN SUBHASH AGRAWAL TULJAPUR 02471 242182
RAMESH KIRANA ULHASNAGAR 9324364696
SUMIT MASALA URAN 9930976706
SH.MANOHARLAL SHANKARLAL VARSAI 9423931463
MITHUN AGENCY VASAI
M.J OIL CENTER VASAI 0250 2334033
PARMAR TRADING CO VASAI
RAJ TRADING VASAI
SHREE MAHALAXMI TRADERS VASAI
SHREE SIDHHIVINAYAK TRADERS VASAI
SOHIL GEN STORE VASAI
SAI POOJA BHANDAR VASAI
NAKODA SUPER MARKET VIRAR 0250 2511766
SHREE NATH SALES WARDHA 9823497833

RAJASTHAN

DAULAL LAXMINARAYAN NATHDWARA 02953 232386

TAMILNADU
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S. B. TRADERS CHENNAI 044 42805914
MANISHA FOODS COIMBATORE 0422 2455566
SREE RANGA FOODS ERODE 0424230553
UNION TERRITORY

SRI VIJAYA GANAPATHY STORES PONDICHERY 0413 2227546
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CHAPTER-III
3.1 REVIEW OF LITERATURE
Financial statements of a business entity contain information relating to its financial

position and results at the end of an accounting period. They are presented in accordance with
the logical and consistent accounting principles. The significance of these statement lies not only
in their preparation and presentation but in their analysis and interpretation. Dr.S.P.Gupta rightly
pointed out, “it is only by interpreting the financial reports one can make the figure appearing
there at to tell the story of actual progress and financial position of a business concern in a clear
and simple language easily understand by the layman.
Financial statement analysis is a method of analyzing and interpreting information, the

financial statement contain. In doing so, our goal is to determine whether a company is going or
loosing ground in an unending struggle for profitability and solvency.
Thus it is clear that financial statement analysis the process of identifying the financial
strengths and weakness of the firm by properly establishing relationship between the item of
balance sheet and profit and loss account.
Accounting to G.Foster” (1984) financial analysis can be undertaken by management of

the firm or by parties outside the firms, viz owners, creditors, inventors and others”.
The American institute of certified public accountants (AICPA) (1970) explains that the
“financial statement reflect a combination of recorded facts, accounting principles and personal
judgment and con venations applied will affect them materially.
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The financial statement-balance sheet and profit and loss account are basic instrument of
an accounting system to communicate financial condition of the state of the firm at a particular
point of time, more specifically balance sheet contains detailed information about the firm’s
fixed assets used in business for an accounting period of one year, while current assets are
converted into cash within an accounting period.
F.M is a mix of debt and equity capital maintained by a firm F.M. is also refereed as
financial structure of a firm. The F.M if a firm is very important since is related is related to the
ability of the firm to meet the needs of its stake holders.
Modigliani and miller (1963) showed that their model is no effective if tax was taken into
consideration since tax subsidies on debt interest payments will cause a rise in film value when
equity is traded for debt.
In mane recent literatures authors have shamed that are less interested in how F.M.
attests the fire value. Instead they lay more emphasis on how F.M. Imports on the ownership /
grove name strung there by influencing top management of the firms to make strategic decisions.
(Hitt, Hoskission and Harrison, 1991).
Now a days, the main issue for F.M. is how to resole the conflict on the firm’s resources
b/w managers and where (Jersey, 1989).
F.M is very important decision for firms so that they can maximize returns to their
various stakeholders. more over as it will help in dealing is also important to firm as it will help
in dealing with the competitive environment within which the firm operates.
Modigliani and miller (1985) agreed that an ‘optimal’ F.M. exits when the risks of going
bankrupt is offset by the tax savings if debt. one this optimal F.M. is established, a firm mould be
able maximize retimes to its stake holders and these rectums would be higher then returns
obtained atriums whose capital is made up of equity only (all quit times).
27
It can be argued that leverage is used to discipline managers but it can lead to the levies
of the firm. Modigliani and miller (1963) argued that the capital structure of a firm should
compose entirely of debt due to tax deductions on interest payments. Howere, Brigham in
practice, bankruptcy costs exist and directly proportional to the debt level of the firm. Heme, an
increase in debt level of the firm.Home and bankruptcy costs. There fine, they argue that an
optimal F.M can only be attained it the tax sheltering benefits provided an increase in debt level
is equal to the bankruptcy costs. In this case, managers of firms should be able to identify
whenthis optimal F.M is attained and my to maintain it at the same level. This is the only way
that the financing costs and the weighted average cost of capital (WACC) are minimized thereby
increasing firm value and Corporate performance.
Holland,lockeet,g,Richard,JM AND BLACK (1964) in their article> the evolution of finacial

performance explore the effect of inter organizational information syswtem on cash from a
managerial perspective and present a case study of motorola and citibank.The key results are
just-in-time money and the integration of financial process thoughout the cash supply
chain.Finally,the authors compare the results with existing management.
Yaire.Orgler (1967) his article “An Unequal-period model for financial performance”
develops an applicable method for solving the cash problems by deriving a linear progamming
model that is divided into unequal periods.The model determines the optimal values of these
variables subject to institutional constraints ana within a framework of managerial risk
perferences.
Keith C.Brown and scottL.Lummer(1980) in their article the

Finacialperfomancedetermines,atheroretical demonstration and empirical evidence of the
efficacy of such a hedged dividend capture plan.It shows that the proposal strategy can
dramatically increase the after tax returns offered by the usual short-term investment.
28
Henk von Eije and Wimwestwrn, (1990) in their article,Multinational financial
perfomanceexplore,We discuss the impact of liberalizaton,deregulation and the introduction of a
single currency on cash within multinational in the euro zone.By exploiting these options
multinational in the euro zone can start to reap additional benefits of internal financing and
conglomerate discounts of euro zone multinationals may diminish.
Fischer,Mary L, Ostrom,John.s(1995) in their article”finacial performance “ five

important purpose of an effective program of financial performance are
indentified;developingaccurate cash projections,managing cash receipts,controlling cash
disbursements, establishing sound banking relationship, and investing funds.Finally, the result
indicate benefits of pooling cash in a minimal number of short-term investments; and
developments in banking and finance,including rates of inflation.
ErkkiK.Laitinen&TeijaLaitinen(1988) in their article “financial performance ,The

purpose of this study is to evaluate the information contained in static and dynamic inventory
model to predict failure in a sample of 41 small and middle-sized finish bankrupt
counterparts.The results indicate that the estimates of the elasticity of cash balance with respect
to the volume of transactions is significantly lower for the failed firms.
Eli Bartov,Stepen r. Goldberg &Myung-sun(2001) in their article “The valuation-

Relevance of earnings and cash flows; An international perspective” Investigate which vaiable,
earnings or cash flows, provides greater information for equity valuation within the United
states, the United kingdom, Canada germany and Japan. They regress returns on earnings and
cash flow metrics. second and more importantly, our findings demonstrate that the superiority of
earnings over cash flows is not universal.
Barbose, P.S.F. Pimentel, P.R(2001) in their article “ A Linear programming Model for
financial performance “explore, at evaluating the potential benefits from using the linear
programming model. Different changes to the basic structure of the model allow and establish
29
the consistency of the results. Optimal results have yet to be achieved in a real life situation, but
a better view of whole cash flow management is provided when using the model.
The financial crisis and financial reporting are closely linked as the crisis was in essence a crisis
of liquidity and credit (Langley 2010). Joshua Rosner, managing director at Graham Fisher &
Co. in New York said: “It’s not a liquidity problem, it’s a valuation problem”,
Capturing the essence of linking the financial crisis to financial reporting (Ivry 2008).
Valuations of complex financial instruments lead to information asymmetries within the system
when assets were first valued at a higher price than was realistic and at a lower price when the
economy experienced a downturn. Falling asset prices lead to liquidity and credit problems for
banks and the financial problems of banks lead to the failure of other institutions (Turner 2010).
Also, information asymmetries feed the uncertainty and imbalance in the system and
aggravate the initial problem. This problem is referred to as procyclicality (Catarineu- Rabell,
Jackson &Tsomocos(2005). Investors could not make informed decisions in the midst of the
confusion about valuations. This is a problem of both reliability andrelevance as financial reports
that are not consistent and clear in their valuation cannot give reliable information nor can they
be relevant to decision making.
Flegm (2008) says that relevance in financial reports requires for them to be reliable. He
criticises the way reliability has had to give way for relevance, especially through the use of fair
value accounting.
Barth and Landsman (2010) discuss the role of financial reporting by banks in the
financial crisis. They discuss such financial reporting features as fair values, asset securitisations,
derivatives and loan loss provisioning. They conclude that a lack of transparency on derivative
financial instruments and the pooling of debt resulted in problems in determining the real
financial position of a bank. Determining the real position of a bank through financial reports is
the key to reliability, which in turn affects the usefulness of the reports in decision making.
30
Miller and Bahnson (2009) state that the role of financial reporting is “to reveal the truth
honestly, openly, completely, clearly, unambiguously, and with sufficient frequency to be
timely.” They say that financial reporting should fulfil this role before, during and after a crisis.
Before a crisis, transparent financial reporting would give signs of trouble ahead and give a
forewarning to investors. During a crisis, financial reporting should provide information about
where the problem areas are and how future cash flow prospects are affected. According to
Miller and Bahnson, in the recent crisis information flowed too slowly and was misinterpreted to
indicate credit risks of other debt instruments. After a crisis, the role of financial reporting is to
signify when the economy starts improving and by how much. In Miller's and
Bahnson's view, this positive information should not be artificially created but should
reflect the actual situation. Miller and Bahnson (2009) also recommend that reporting
frequencies should be shortened as to provide information that is as up to date as possible.
Timeliness is related to the relevance of the reports as relevant information has to be timely in
order to be useful. Miller and Bahnson argue that financial information during the crisis was not
available to decision makers early enough and was not useful to the decision making process.
Miller and Bahnson require both relevance and reliability of financial reports and say that
both aspects have failed in the crisis. Their point of view is in agreement with Barth and
Landsman (2010), who view transparency and disclosure as being key in preventing crises.
James Turley (2009), CEO of Ernst & Young, sees the key causes of the crisis being too
much leverage, misuse of financial instruments, bad loans, unrealistic expectations, improper
handling of risk and gaps in regulatory systems. He states that normal lending from banks will
not continue until statements of financial position are sorted.
Martin Taylor (2009) blamed bankers for the crisis stating that banks paid out bonuses
that did not consist of actual cash but unrealised profits derived from “booking revenues”.
Giving out cash that did not exist then led to a crisis in liquidity. Taylor concludes that the crisis
was a result of the bankers’ inability to count. The same concern about remuneration is repeated
in a study conducted by Ernst and Young (2011). The study showed that executive remuneration
31
was quoted by 80% (U.S) and 69% (U.K.) of interviewed retail bank customers as being one of
the reasons for loss of trust in banks. Still, only 40% of the 500 surveyed senior executives in
another report by Ernst and Young (2010) answered that bonuses should be regulated and
capped.
Adair Turner (2010) commented on Martin Taylor’s article by saying that it was not
merely a criticism of bankers but concerned accounting standards and their application. He
agreed that executive remuneration would have an effect on customer confidence aposition
when, in reality, there were no cash funds to give out. He says that accounting standards are
designed to reflect a company’s position in a certain point of time. This has caused some bank
regulators and central banks to argue that banks are different from other institutions and
accounting standards should reflect that. Turner argues that the current accounting standards for
banks can intensify volatility. This happens when the use of the incurred loss model leads to
over-optimistic results.
32
CHAPTER-III
RESEARCH METHODOLOGY
33
MEANING
Research methodology refers to the methods you are going to take during research. If a
project requires research you probably need to dedicate a section of your written project to
explaining what your research methodology will be. This should be detailed, so you need to keep
track of all your research throughout the project.
This is all the different ways you have carried out your research. You should try to think
of some new and unique ways to conduct your research. Your original research methods may not
get all the results you need but you can conduct a variety of experiments. You will be rewarded
for thinking of original ideas but you should also use traditional research methods to ensure you
collect sufficient and accurate data.
Remember that your research must always be ethical and you if you have any participants
involved in the research they must be aware of what they are doing. If you have a reason that
your participants are not fully aware of all aspects of the experience, such as it may affect the
results if they know what you are looking for, you must brief them in full afterwards and clearly
outline this in your research methodology.
Types of research methodology
There are two main types of research methodology,
Quantitative methodology
34
Qualitative methodology
Quantitative methodology is the type by which you test the significance of your
hypothesis, in other words you answer the words: How much? Is there a relationship?
Quantitative methods tend to be systematic and use numbers... Actually it is a deep sea.
However, Qualitative methodology is the type by which you are depending on your observations
and descriptions.
It is subjectively and descriptive, no facts.... This kind of method is used to assess

knowledges, attitudes, behaviours, and opinions of people depending on the topic of your
research. Researcher, in this type of method use his opinion and experience which are not
allowed to be used in quantitative method at all. About the types of sample and sample size, I
think they are apart of research design not apart of the methodology.
RESEARCH PROCESS
Any research involves several chronological steps, but that does not mean each step must
be completed before the next step is undertaken. Furthermore, the process of research is dynamic
and the process may change as the research progresses
DATA COLLECTION
Data collection is the process of gathering the specific information used to answer the
research questions. There are a number of issues associated with data collection, including the
use of primary or secondary data, survey design, sampling, survey administration, and increasing
response rates.
PRIMARY DATA AND SECONDARY DATA:
35
Data can be primary or secondary, and whether one or both are used, and which is used,
depends largely on the research question and the availability of these data sources. Secondary
data refer to data gathered by others or from other studies. Secondary data is generally less costly
and less time consuming than gathering primary data, typically is accumulated before primary
data is gathered, and may even help determine the course by which primary data is pursued. An
example of secondary data is if a company uses data from the U.S. Census or data collected for
another organizational activity (e.g., performance information for individuals from the
company's annual performance appraisal)
Primary data is that which is collected by the researcher to address the current research
question. Types of primary data include subject demographics, lifestyle characteristics, attitudes,
knowledge, intentions, motivations, and behavior. Demographic data includes statistics regarding
populations, such as age, sex, income, level of education, and so forth. Lifestyle characteristics
describe a respondent's activities, interests, and opinions. Attitudes refer to views and opinions
about things, events, or ideas. Knowledge is the degree to which respondents are aware of these
things, events, or ideas. Intentions generally refer to a respondent's planned future behavior.
Motivations describe the reasons behind a respondent's behavior
RESEARCH DESIGN
Once the proposal is approved, the researcher has a foundation for development of the
research design. The plan for conducting the research is the research design. There are two
general forms of research design, namely non-experimental (ex-post-facto) and experimental. In
a non-experimental design, the researcher does not control or alter any of the independent
variables. The researcher merely studies existing situations, variables, and the interrelation
among variables and reports the results of his or her findings. The two major non-experimental
designs are field studies and surveys. Field studies combine literature review and possibly
analysis of some case studies.
DATA ANALYSIS
36
Research provides data, and it is the task of the researcher to transform the collected data
into useful information for management. The first step in data analysis is preparing the data by
editing it for several factors, including:
 completenesshecking for any omission
 legibilityaking sure that handwriting is understandable so that answers will be
coded cor
 comprehensibilityaking sure the answer is understandable
 consistencyhecking for consistent answers from the respondent
 uniformityhecking to see that responses are recorded in the same ma
Tools and Techniques Used For Analysis:
 Ratio analysis
 Comparative Balance Sheet
 Common size Balance sheet
 Trend analysis
 Production budget
CHAPTER-V
RATIO ANALYSIS
37
Financial ratio analysis is one of the most popular financial analysis techniques for
companies and particularly small companies. Ratio analysis provides business owners with
information on trends within their own company, often called trend or time-series analysis,
and trends within their industry, called industry or cross-sectional analysis.
Financial ratio analysis is useless without comparisons. In doing industry analysis, most
business use benchmark companies.Benchmark companies are those considered most
accurate and most important and are those used for comparison regarding industry average
ratios. Companies even benchmark different divisions of their company against the same
division of other benchmark companies.
There are other financial analysis techniques to determine the financial health of their
company besides ratio analysis, with one example being common size financial statement
analysis. These techniques fill in the gaps left by the limitations of ratio analysis discussed
below.
Advantages and Uses of Ratio Analysis
There are various groups of people who are interested in analysis of financial position of a
company. They use the ratio analysis to workout a particular financial characteristic of the
company in which they are interested. Ratio analysis helps the various groups in the following
manner: -
1. To workout the profitability: Accounting ratio help to measure the profitability of the
business by calculating the various profitability ratios. It helps the management to know
about the earning capacity of the business concern. In this way profitability ratios show
the actual performance of the business.
38
2. To workout the solvency: With the help of solvency ratios, solvency of the company
can be measured. These ratios show the relationship between the liabilities and assets. In
case external liabilities are more than that of the assets of the company, it shows the
unsound position of the business. In this case the business has to make it possible to
repay its loans.
3. Helpful in analysis of financial statement: Ratio analysis help the outsiders just like
creditors, shareholders, debenture-holders, bankers to know about the profitability and
ability of the company to pay them interest and dividend etc.
4. Helpful in comparative analysis of the performance: With the help of ratio analysis a
company may have comparative study of its performance to the previous years. In this
way company comes to know about its weak point and be able to improve them.
5. To simplify the accounting information: Accounting ratios are very useful as they
briefly summarise the result of detailed and complicated computations.
6. To workout the operating efficiency: Ratio analysis helps to workout the operating
efficiency of the company with the help of various turnover ratios. All turnover ratios are
worked out to evaluate the performance of the business in utilising the resources.
39
7. To workout short-term financial position: Ratio analysis helps to workout the short-
term financial position of the company with the help of liquidity ratios. In case short-term
financial position is not healthy efforts are made to improve it.
8. Helpful for forecasting purposes: Accounting ratios indicate the trend of the business.
The trend is useful for estimating future. With the help of previous years’ ratios,
estimates for future can be made. In this way these ratios provide the basis for preparing
budgets and also determine future line of action.
Limitations of Ratio Analysis
In spite of many advantages, there are certain limitations of the ratio analysis
techniques and they should be kept in mind while using them in interpreting financial
statements. The following are the main limitations of accounting ratios:
1. Limited Comparability: Different firms apply different accounting policies. Therefore

the ratio of one firm can not always be compared with the ratio of other firm. Some firms
may value the closing stock on LIFO basis while some other firms may value on FIFO
basis. Similarly there may be difference in providing depreciation of fixed assets or
certain of provision for doubtful debts etc.
2. False Results: Accounting ratios are based on data drawn from accounting records. In
case that data is correct, then only the ratios will be correct. For example, valuation of
40
stock is based on very high price, the profits of the concern will be inflated and it will
indicate a wrong financial position. The data therefore must be absolutely correct.
3. Effect of Price Level Changes: Price level changes often make the comparison of
figures difficult over a period of time. Changes in price affects the cost of production,
sales and also the value of assets. Therefore, it is necessary to make proper adjustment for
price-level changes before any comparison.
4. Qualitative factors are ignored: Ratio analysis is a technique of quantitative analysis

and thus, ignores qualitative factors, which may be important in decision making. For
example, average collection period may be equal to standard credit period, but some
debtors may be in the list of doubtful debts, which is not disclosed by ratio analysis.
5. Effect of window-dressing: In order to cover up their bad financial position some

companies resort to window dressing. They may record the accounting data according to
the convenience to show the financial position of the company in a better way.
6. Costly Technique: Ratio analysis is a costly technique and can be used by big business
houses. Small business units are not able to afford it.
41
7. Misleading Results: In the absence of absolute data, the result may be misleading. For
example, the gross profit of two firms is 25%. Whereas the profit earned by one is just
Rs. 5,000 and sales are Rs. 20,000 and profit earned by the other one is Rs. 10,00,000 and
sales are Rs. 40,00,000. Even the profitability of the two firms is same but the magnitude
of their business is quite different.
8. Absence of standard university accepted terminology: There are no standard ratios,

which are universally accepted for comparison purposes. As such, the significance of
ratio analysis technique is reduced.
42
DATA ANALYSIS AND INTERPRETATION
Ratio analysis is a statistical tool used to find the relationship between two
or various figures can be compared or measured. Ratio can be calculated by
dividing one number by another number. Ratio show how one number is
related to another.
Current Ratio:
Current ratio is between current assets and current liabilities. The firm is said to be
comfortable in its liquidity position if the current ratio is 2:1. In other words,.for every
rupee of current liability there should be 2 rupees worth current assets. This ratio, also
known as working capital ratio, is measure of general liquidity and is most widely used to
make the analysis is a short-term financial position or liquidity of a firm
Formula:
Current assets
Current ratio =
Current liabilities
43
CURRENT RATI O
TABLE.NO:1.1
Current assets Current liabilities
Year In Crores Ratio
In Crores
2009-10 549.92 265.90 2.07
2010-11 530.63 373.95 1.42
2011-12 593.86 457.28 1.30
2012-13 848.85 294.62 2.88
2013-14 1251.59 756.35 1.65
INTERPRETATION:
The thumb rule for the current ratio is 2:1 the relatively high current ratio is an indication
that the firm is liquid and has the ability to pay it current obligations in time as and when they
become due. From the above table, the current ratio in the year 2011 is recorded high than the
other years.
44
NET WORKING CAPITAL TURNS OVER RATIO:
Working capital turnover ratio indicates the velocity of the utilization of net working
capital. This ratio indicates the number of times the working capital is turned over in the course
of a year. It measures the efficiency with which the working capital is being used by a firm.
Formula
Cost of sales
Working capital Turnover Ratio =

Net working capital
45
NET WORKING CAPITAL TURNOVER RATIO
TABLE.NO:1.2
Year Cost of sales Net working capital
In Crores Ratio
In Crores
2009-10 677.16 284.02 2.4
2010-11 679.38 156.68 4.33
2011-12 968.38 156.68 7.08
2012-13 1245.70 554.23 2.24
2013-14 1509.51 495.24 3.04
INTERPRETATION:
The working capital turnover ratio satisfies for the first three years because it gradually
increases year by year. This indicates that the company efficiently uses their working capital in
the year 2011-2012 the ratio comes down when compared to the previous year.
46
PROFITABILITY RATIOS:
GROSS PROFIT RATIO:
It is also called as gross margin. This is the ratio of gross profit to net sales. It is usually
expressed in percentage. It indicates the efficiency of production or trading operations. It is
computed as follows.
Gross profit
GROSS PROFIT RATIO = ----------------------- * 100
Net sales
47
GROSS PROFIT RATIO
TABLE.NO:1.3
SALES
GROSS PROFIT
YEAR In Crores RATIO
In Crorcs
2009-10 26.27 650.87 4.03
2010-11 105.86 785.24 13.48
2011-12 179.32 1147.32 15.63
2012-13 9.99 1255.69 0.79
2013-14 23.94 1533.45 1.56
INTERPRETATION:
The gross profit of the company increases year by year. This is due to their high earnings
of profit corresponding to their sales made. In the year 2008, the ratio was only 0.81%. This is
due to low profit earned out of their sales.
48
NET PROFIT RATIO:
Net profit ratio is the ratio of net profit to net sales. It is known as profit margin and
usually expressed in percentage. It indicates the efficiency of the overall operations of the firm. It
shows what percentage of sales is left to the owners after meeting all costs. Increase in the net
profit ratio year after year is an indication of improving working condition and vice versa. It is
calculated as follows
Formula:
Net profit
Net profit ratio= --------------------------- *100
Net sales
49
PROPRIETORY RATIO
YEARS SHAREHOLDERS TOTAL ASSETS RATIO

FUND(RS) (RS)
2009-2010 1551.943 5766.482 26.913
2010-2011 1569.421 9190.584 17.076
2011-2012 1566.956 7566.280 20.709
2012-2013 1560.111 1090.475 143.067
2013-2014 1651.335 1295.448 127.472
Share holders’ funds
Proprietary ratio = ........................................
Total assets
Mean = 67.047
SD = 56.009
CV% = 83.537
50
PROPRIETORY RATIO
While analyzing the proprietary ratio, the mean value is (67.047), Standard deviation (56.009)
and co-efficient of variation (83.537%). During the study period, the ratio shows positive result for five
ie., (2007-11) shows high degree of variation the study period. The result of the ratio exhibited in the
following chart.
2010-2011
2009-2010
2008-2009
RATIO
TOTAL ASSETS
2007-2008 SHAREHOLDERS FUND(RS)
2006-2007
51
TREND ANALYSIS FOR NET PROFIT
C YEAR PROFIT X X2 XY
1 2009-2010 -788.938 -2 4 1574.876
2 2010-2011 -2106.384 -1 1 2106.384
3 2011-2012 809.392 0 0 0
4 2012-2013 3042.587 2 4 6085.174
5 2013-2014 693.227 1 1 693.227
1649.884 10 10462.661
∑y
a = .....................
1649.884
a = ............................... = 329.977
∑XY
a = ...................
∑X2
52
10462.661
a = ……………….
10
= 10462.266
Y = a+bx
= 326.977 + 10462.266
= 1376.243
Compound Growth Rate (CGR)
CGR = (Antilog b x value – 1) x 100
= (1046.266 – 1) x 100
= 1046.266
Since the value of b is 1046.266, it is controlled that the average that the average annual growth
rate of Net profit during the study periods was found to be Rs.1046.266 in lakhs.
53
TREND ANALYSIS FOR CURRENT ASSETS
S.NO YEARS CURRENT X X2 XY
1 2009-2010 5393.689 -2 4 -10787.378
2 2010-2011 8767.834 -1 1 -8767.834
3 2011-2012 7526.711 0 0 0
4 2012-2013 1053.564 2 4 2107.128
5 2013-2014 1261.916 1 1 1261.913
24003.711 10 -16186.171
∑Y
a = ...................
24003.711
a = ......................... = 4800.472
∑XY
bx = ........................
∑X2
-16186.171
54
a = ........................
10
= -1618.617
Y = a+bx
= 4800.742 + (-) 1618.617
= 3182.125
CGR = (Antilog b x value -1) x 100
= (-1618.617 – 1) x 100
= 1618.617
Since the value of b is -1618.617, it is controlled that the average that the average annual growth
rate of current asset during the study periods was found to be Rs.-1618.617 in lakhs.
55
TREND ANALYSIS FOR CURRENT LIABILITY
S.NO YEARS CURRENT X X2 XY
1 2009-2010 8478.446 -2 4 -16956.892
2 2010-2011 1386.209 -1 1 -1386.209
3 2011-2012 1042.279 0 0 0
4 2012-2013 1045.742 2 4 2091.484
5 2013-2014 1201.468 1 1 1201.468
Total 13154.144 10 -15050.140
∑Y
a = ...................
13154.144
a = ............................ = 2630.829
∑XY
bx = .................
∑X2
-15050.149
56
a = .............................
10
= -1505.015
Y = a + bx
= 2630.829 + (-) 1505.015
= 1125.814
CGR = (Antilog bx value – 1) x 100
= (-1505.015 -1) x 100
= 1505.015
Since the value of b is -1505.015, it is controlled that the average that the average annual growth
rate of current liability during the study periods was found to be Rs. -1505.015 in lakhs.
COMPARITIVE BALANCE SHEET
Comparative study of financial statement is the comparison of the financial statement of the
business with the previous year's financial statements and with the performance of other
57
competitive enterprises, so that weaknesses may be identified and remedial measures applied.
Comparative statements can be prepared for both types of financial statements i.e., Balance sheet
as well as profit and loss account.
The comparative profits and loss account will present a review of operating activities of the
business. The comparative balance shows the effect of operations on the assets and liabilities that
change in the financial position during the period under consideration
Comparative analysis is the study of trend of the same items and computed items into or more
financial statement of the same business enterprise on different dates. The presentation of
comparative financial statements, in annual and other reports.
Enhances the usefulness of such report and brings out more clearly the nature and trends of
current changes affecting the enterprise. While the single balance sheet represents balances of
accounts drawn at the end of an accounting period, the comparative balance sheet represent not
nearly the balance of accounts drawn on two different dates, but also the extent of their increase
or decrease between these two dates.
The single balance sheet focuses on the financial status of the concern as on a particular date,
the comparative balance sheet focuses on the changes that have taken place in one accounting
periods. The changes are the direct outcome of operational activities, conversion of assets,
liabilities and capital from into others as well as various interaction among assets, liabilities and
capital.
THE TABLE SHOWING ANALYSIS OF COMPARITIVE BALANCE

SHEET AS ON MARCH 2009-2010
58
TABLE.NO:1.11
2009 2010 % Increase / % Increase/

Particulars
Decrease Decrease
.
Sources of funds:
Owns fund /equity share capital 17.85 17.22 -0.63 -3.529
Reserves & surplus 488.33 946.28 457.95 93.778
Lo funds:
Secure loan
446.53 383.25 -63.28 14.171
Unsecured loan 134.85 155.00 20.15 14.942
Total 1087.56 1501.7 414.19 38.084
Application of funds:
Net fixed assets 528.75 789.33 260.58 -49.282
Capital working in progress 91.24 70.09 -21.15 23.180
Investment 183.44 485.61 320.17 164.724
Net current assets:
Total net current asset 284.02 156.68 -127.34 -44.834
Miscellaneous expenses 0.11 0.04 -0.07 -63.636
Total 1087.56 1501.75 414.19 38.084
THE TABLE SHOWING ANALYSIS OF COMPARITIVE BALANCE SHEET
AS ON MARCH 2010-2011
59
TABLE.NO:1.12
Particulars % Increase/ % increase/

2010 2011
Decrease Decrease
Sources of funds:
Owns fund /equity share capital 17.22 17.27 0.05 0.290
Reserves & surplus 946.28 1073.39 127.11 13,432

Loan funds:
Secured loan 383.25 486.63 103.38 26.974
Unsecured loan 155.00 88.61 -66.39 -42.832
Total 1501.75 1665.9 164.15 10.930

Net fixed assets 789.33 810.72 21.39 2.709
Capital working in progress 70.09 35.78 -34.31 -48.951

Investment 485.61 682.82 197.21 40.610
Net current assets:
Misce1laneous expenses 0.04 Nil 0.04 100
Total 1501.75 1665.9 164.15 10.930
THE TABLE SHOWING ANALYSIS OF COMPARITIVE BALANCE SHEET
60
AS ON MARCH 2011-12
TABLE.NO:1.13
Particulars % Increase/ % increase/

2011 2012
Decrease Decrease
Sources of funds:

Loan funds:
Secured loan 486.63 456.80 -29.83 -6.129
Unsecured loan 88.61 196.66 108.08 121.972
Total 1665.9 1789.23 132.33 7.943

Net fixed assets 810.78 777.36 -33.42 -4.121
Capital working in progress 35.78 32.50 -3.28 -9.167

Investment 682.82 434.14 -248.68 -36.419
Net current assets:
Total net current asset 136.58 554.23 417.65 305.791
Misce1laneous expenses Nil Nil Nil Nil
Total 1665.9 1798.23 132.27 7.943
THE TABLE SHOWING ANALYSIS OF COMPARITIVE BALANCE SHEET AS ON
61
MARCH 2012-2013
TABLE.NO:1.14
% Increase/ % increase/
2012 2013
Particulars Decrease Decrease
Sources of funds:

Loan funds:
Secured loan 456.80 422.07 -34.73 -7.602
Unsecured loan 196.69 367.28 170.59 86.730
Total 1798.23 2001.58 203.35 11.30

Net fixed assets 777.36 759.59 -18.36 -2.361
Capital working in progress 32.50 63.97 31.47 96.830

Investment 434.14 682.78 248.64 57.271
Net current assets:
Misce1laneous expenses Nil Nil Nil Nil
Total 1798.23 2001.58 203.35 11.30
TREND ANALYSIS
62
The comparative and common size statements suffer from a major limitation e.,
absence of a basic standard to indicate whether the proportion of an item is normal or abnormal.
Trend analysis overcomes this limitation. This method is also an important and useful technique
off financial statement analysis. The calculation of trend ratio involves the ascertainment of
arithmetical relationship which each item of several years to the same item of base year. Thus,
one particular year out of many years is taken as base. The value of one particular item out of
many years is taken as base. The value of one particular item out of several items shown in the
financial statements are converted into ratio or percentage taking of that item in base year as
equal.
Procedures for trend analysis build on those in previous chapters on regression and
hypothesis testing. The explanatory variable of interest is usually time, though spatial or
directional trends (such as downstream order or distance downdip) may also be investigated.
Tests for trend have been of keen interest in environmental sciences over the last 10-15 years.
Detection of both sudden and gradual trends over time with and without adjustment for the
effects of confounding variables have been employed. In this chapter the various tests are
classified, and their strengths and weaknesses compared.
63
SALES TREND ANALYSIS
TABLE.NO:1.15
Year Rs.cr Trend% Growth rate
2009-10 650.87 100 _
2010-11 785.24 120 20
2011-12 1147.32 176 56
2012-13 1255.69 192 16
2013-14 1533.45 235 43
64
COMMON SIZE STATEMENTS
Financial statements when read with absolute figures are not easily understandable. They
are even misleading. Each item of assets is converted into Percentage to total assets and each
item of capital and liabilities is expressed to total liabilities and capital fund. Thus the whole
balance sheet is converted into percentage form. Such converted balance sheet is known as
common size balance sheet. Thus the whole balance sheet is converted into percentage form.
Such converted balance sheet is known as common size balance sheet when balance sheet of the
same concern for several years or when balance sheet of two or more than two concerns for the
same year are converted into percentage form and presented as such, they are known as
comparative common size balance sheet.
65
Particulars 2009 2010 2011 2012 2013
Sources of funds:
Own 1.6 1.1 1.03 1.8 1.7

funds/equity
share capital
Reserves & 44.9 63.1 65.43 62.7 59.6

surplus
Loan funds:
Secure loan 41.1 25.52 29.2 25.4 21.1
Unsecure loan 12.41 10.32 5.3 11.9 18.3
Total 100 100 100 100 100
Application of
funds:
Net fixed assets 48.6 56.5 48.8 43.2 38.8
Capital working 8.4 4.6 2.1 1.81 3.2

in progress
Investments 16.9 32.3 40.9 24.1 34.1
Net current
asset:
Total net current 26.1 10.4 8.2 31.7 24.7

asset
Miscellaneous 0.01 2.5 _ _ _

expenses
Total 100 100 100 100 100
COMMON SIZE STATEMENT
66
TABLE.NO:1.16
BUDGET
A budget has been defined as a “financial or quantitative statement “ prepared and

approved prior to a defined period of time, of the policy to be pursued during that period for the
purpose of attaining a given objective. In short, it may be considered as a guide.
Production budget
Generally, the production budget is built up in terms of quantities and money. The
67
Quantities are entered at the beginning and, when the remainder of the budget have been built up
and the cost of production calculated, the costs are entered to compile a production cost budget.
In preparing the production budget, consideration should be given to the following:
 Principal budget factor, e.g., if sales be the budget factor then it should be the sales
budget, otherwise other budgets.
 Production planning and determination of optimum factory capacity.
 The opening stocks and stocks required to be carried at the end of the period.
 The policy of the management regarding manufacture or purchase of components.
The production budget may be classified under the following heads:
 Products
 Manufacturing departments
 Months, quarters, etc.
Advantages and Disadvantages of Budget Control
Like other control methods, budgets have the potential to help organizations and their
members reach their goals. Budget control offers several advantages to managers. Some of
these are:
 The major strength of budgeting is that it coordinates activities across departments.

 Budgets translate strategic plans into action. They specify the resources, revenues, and
activities required to carry out the strategic plan for the coming year.
 Budgets provide an excellent record of organizational activities.
 Budgets improve communication with employees.
68
 Budgets improve resources allocation, because all requests are clarified and justified.
 Budgets provide a tool for corrective action through reallocations.

However, budgets control can also create problems. The disadvantages of budgets are:
 The major problem occurs when budgets are applied mechanically and rigidly.
 Budgets can demotivate employees because of lack of participation. If the budgets are
arbitrarily imposed top down, employees will not understand the reason for budgeted
expenditures, and will not be committed to them.
 Budgets can cause perceptions of unfairness.
 Budgets can create competition for resources and politics.
 A rigid budget structure reduces initiative and innovation at lower levels, making it
impossible to obtain money for new ideas.
These dysfunctional aspects of budgets systems may interfere with the attainment of the
organization's goals. One generally accepted guideline for effective budgeting is to establish
goals that are difficult but attainable.
Therefore, skilled managers who understand budgets and how to use them have a
powerful control tool with which to attain departmental and organizational goals.
Types of Budgets
There are many types of budgets. They may be classified into several basic types. Most
organizations develop and make use of three different types of budgets: operating budgets,
capital expenditures budgets, and financial budgets.
Operating Budgets
An operating budget is a statement that presents the financial plan for each responsibility
centre during the budget period and reflects operating activities involving revenues and
69
expenses. The most common types of operating budgets are expense, revenue, and profit
budgets.
Financial Budgets
Financial Budgets outline how an organization is going to acquire its cash and how it
intends to use the cash. Three important financial budgets are the cash budget, capital
expenditure budget and the balance sheet budget.
Variable Budgets
Because of the dangers arising from inflexibility in budgets and because of maximum
flexibility consistent with efficiency underlines good planning, attention has been increasingly
given to variable or flexible budgets. To deal with this difficulty, many managers resort to a
variable budget.
Zero-Base Budgets
Zero-base budgeting (ZBB), in contrast, enables the organization to look at its activities
and priorities a fresh. Zero-base budgeting assumes that the previous year's budget is not a valid
base from which to work. It forces department managers to thoroughly examine their operations
and justify their departments activities based on their direct to the achievement of
organizational goal
PRODUCTION BUDGET
TABLE.NO:1.17
Particulars 2009-10 2010-11 2011-12 2012-13
Sales 785.24 1147.32 1255.69 1533.45
70
Add: 149.22 190.59 190.46 255.43
Closing stock
934.46 1337.97 1446.15 1788.88
Less: opening 181.03 149.22 190.56 190.46

stock
Production 753.43 1188.69 1255.56 1598.42
RETURN ON TOTAL ASSETS RATIO
YEARS NET TOTAL RATIO

PROFIT(RS) ASSETS(RS)
2009-2010 -788.938 17312.078 -4.556
71
2010-2011 -2106.384 22051.97 -9.552
2011-2012 809.392 28685.72 2.821
2012-2013 3042.587 1090.478 27.901
2013-2014 693.227 12954.477 5.351
-21.965
Net Profit after Tax
RETURN ON TOTAL ASSETS RATIO = .............................................. x 100
Total Assets
Mean = -4.393
SD = 11.4014
CV% = 250.717
INTERPRETATION
By analyzing the return on total assets ratio. The mean value of the ratio is (-43/518), standard
deviation (11/014) and co-efficient of variation (-250/717%) during the study period, the ratio shows
positive result for three years ie., For the year(2009/11) it shows high degree of co-efficient of variation.
It indicates wider variation in its value during the study period. The result of the ratio exhibited in the
following chart.
72
RETURN ON CAPITAL EMPLOYED
YEARS NET CAPITAL RATIO

PROFIT(RS) EMPLOYED(RS)
2009-2010 -788.938 6992.96 -11.282
2010-2011 -2106.384 7631.86 -27.599
2011-2012 809.392 8864.88 9.130
2012-2013 3042.587 321.542 928.915
2013-2014 693.227 293.169 236.458
-1135.622
Net Profit After interest tax
Return on Capital Employed Ratio = ...................................................... x 100
Capital Employed
Mean = -227.124
SD = 363.33
CV% = -31.994
73
INTERPRETATION
The above analysis the return on capital employed ratio, the mean value of the ratio is (-
227/124), standard deviation (363/33) and co-efficient of variation is (-31.9943%). It is observed from co-
efficient of variation in return on capital employed ratio shows wider variation. In the 2009 the return on
capital employed ratio is 9,130, which is very lower and 2001 it is 928.915 which is higher. The reason
for this lower ratio is due to installation of additional capacity, which affects production. In the year 2007
and 2008 the ratio shows negative due to loss of the company. The result of the ratio exhibited in the
following chart.
RETURNS ON SHARE HOLDERS EQUALITY
YEARS NET PROFIT SHARE HOLDERS RATIO

(RS) FUNDS(RS)
2009-2010 -788.938 458.5 -172.069
2010-2011 -2106.384 459.2 -458.707
2011-2012 809.392 459.4 176.185
2012-2013 3042.587 1506.111 195.024
74
2013-2014 693.227 1651.334 41.979
TOTAL -217.588
Net Profit After interest tax
Return on share holders = ............................................................ x 100
Share holders fund
Mean = -43.518
SD = 245.515
CV% = -564.169
INTERPRETATION
While analyzing the return on share holders equity ratio, the mean value of the ratio is (-43.518).
Standard deviation (245.515) and co-efficient of variation is (-564.169%) during the study period, the
ratio shows positive high degree of co-efficient of variation. If indicates wider variation in its value
during the study period. The result of ratio exhibited in the following chart.
75
FINDINGS
 The firm is liquid and has the ability to pay it current obligations in time as and when
they become due. The current ratio of the company is satisfactory.
 The company has efficiently uses their working capital .In the year 2011-2012 the ratio
comes down when compared to the previous year.
 The gross profit of the company increases. This is due to their high earnings of profit
corresponding to their sales made.
 The company has made better sales and gained a profit. The company shows a good
76
profit ratio when compared to other years
 The operating expenses ratio of the company increases. This is due to the increase in the
factory expenses.
 The financial expenses ratio of the company deceases. This is due to the decrease
in the factory expenses.
 The debt equity ratio of the company decreases. This is due to when the
Company is maintaining a constant position in its capital structure.
 The proprietary equity ratio is below the standard norms. It is because of the
Decrease in long term borrowings. Hence it is reasonable for the company.
 The long term creditability of the firm is good.
 The production of the company every year increasing it shows the growth of the
company.
 The sales of the company also increasing every year, its shows good financial position of
the company.
SUGGESTIONS AND RECOMMANDATIONS
 The company has to increase the sales and it will earn high profits in future.
 The company has to increase the sales and bank balance for future development and to
maintain the standard norm.
 The company has to take proper steps to adequate investment in current assets.
 The company has to increase long term debt proportionate to shareholders fund.
 The company has to reduce the expenses.
 The company has to reduce the cost of production of goods sold and at the same time
good quality can be maintained.
 The company can reduce the amount of reserve for taxation etc,.
77
 The company has to take adequate measure to avoid over capitalization.
CONCLUSION
The study was undertaken on the financial performance of the company. Tools
such as ratio analysis and comparative balance sheet have been used to find out the company's
efficiency in performing all its function. The analysis reveals the short term solvency position
was not good. The long term solvency position is satisfactory. So the firms long term financial
position is good.
78
REFERENCES
G. Foster(1984), and F. Engels. “Sviatoesemeistvo.”Soch., 2nd ed., vol. 2.AICPA (1970)

Nishchetafilosofii.Soch., vol. 4.
Modigliani and miller (1963).godov.” Soch., vol. 46, part 1.
Hitt, Hoskission and Harrison, 1991).”Soch., vol. 20.
Jersey, (1989).Poln.sobr. soch., 5th ed., vol. 18.
Modigliani and miller (1985).”Poln.sobr. soch., vol. 29.
Engels, F. “Dialektikaprirody.”(1963.” Poln.sobr. soch., vol. 45.
Holland,lockeet,g,Richard,JM AND BLACK (1964). (Translated from English.)
Yaire.Orgler (1967)(Translated from English.)
Keith C.Brown and scottL.Lummer(1980)(Translated from English.)
Henk von Eije and Wimwestwrn, (1990) (Translated from English.)
Fischer,Mary L, Ostrom,John.s (1995)problemy empiricheskogoobosnovaniianauki. Moscow,
1966.
79
ErkkiK.Laitinen&TeijaLaitinen (1988) O filosofskomanalizeiazykanauki. Kiev, 1966.
L Eli Bartov,Stepen r. Goldberg &Myung-sun(2001)ogicheskieosnovynauki. Kiev, 1968.
Barbose, P.S.F. Pimentel, P.R(2001)Osnovylogicheskoiteoriinauchnykhznanii. Moscow, 1967.
(Langley 2010)Ocherki metodologiibiologicheskogoissledovaniia.Moscow, 1965.
Turner 2010)rmy i soderzhaniemyshleniia.Moscow, 1969.
Jackson &Tsomocos (2005)Kurs lektsiipologikenauki.Moscow, 1971.
Flegm (2008)ilosofiia, metodologiia, nauka.Moscow, 1972.
Rakitov, A. I. Metodologicheskieosnovynauchnogopoznaniia.Moscow, 1972.
Shtoff, V. A. Vvedenie v metodologiiunauchnogopoznaniia.Leningrad, 1972.
Blauberg, I. V., and E. G. ludin.Stanovlenie i sushchnost’sistemnogopodkhoda.Moscow, 1973.
(Catarineu- Rabell,Popper, K. R. The Logic of Scientific Discovery.London [1959].
Boston Studies in the Philosophy of Science, 8 vols. New York-Dordrecht [1963–71].
BIBLIOGRAPHY
 S.N.Maheswari, Principles of Management Accounting 13th Edition, Sultan Chand &
Sons Newdelhi 2002.
 N.M. Singhvi, Ruzbeth j. Bodhanwala, Management Accounting, PHILearning PVT
LTD, Newdelhi 2011.
 Annual Report of SREE RANGA FOODS (RAINBOW MASALA)
 “FINANCIAL MANAGEMENT PRINCIPLES AND PRACTICES” written
byDr.S.N.Maheshwari published by sultan chand and sons educational publishers, New
Delhi.
 FINANCIAL MANAGEMENT THEORY AND PRACTICES" Written by prasanna
Chandra published by Tata McGraw hill, New Delhi.
 “FUNDAMENTALS OF COST AND MANAGEMENT ACCOUNT"Written by
Dr.S.N.Maheshwari published by sultan chand and sonseducational publishers. New
Delhi.
80
 “FINANCIAL MANAGEMENT” (theory and practices) Written bySudarshan,
K.P.Kapur and published by S.K Publisher.
 “FINANCIAL MANAGEMENT” Written by R.K.SharmaShhashi, K.Gupta and
published by Kalyani publishers.
WEBSITES :
www.google.corn
APPENDIX
Balance Sheet of SREE RANGA FOODS (RAINBOW MASALA)------------------in Rs. Cr.

-------------------
Mar ’123 Mar ’12 Mar ‘11 M ar ‘10 M ar ‘09
12 mths 12 mths 12 mths 12 mths 12 mths
Sources Of Funds
Total Share Capital 17.37 17.32 17.27 17.22 17.85
Equity Share Capital 17.37 17.32 17.27 17.22 17.85
Share Application Money 0.00 0.00 0.00 0.00 0.00
Preference share Capital 0.00 0.00 0.00 0.00 0.00
Reserves 1,194.861 61,127.42 1,073.39 946.28 488.33
Revaluation Reserves 5.40 5.54 5.68 5.82 5.96
Net worth 1,217.631 1,150.28 1,096.34 969.32 512.14
Secured Loans 422.07 456.80 486.63 383.25 446.53
Unsecured Loans 367.28 196.69 88.61 155.00 134.85
Total Debt 789.35 653.49 575.24 538.25 581.38
Total Liabilities 2,006.981 1,803.77 1,671.58 1,507.57 1,093.52
81
Application Of funds
Gross Block 1,306.831 1,266.60 1,229.05 1,141.55 835.77
Less: Accum. Depreciation 541.84 483.70 412.65 346.40 301.06
Net Block 764.99 782.90 816.40 795.15 534.71
Capital Work in Progress 63.97 32.50 35.78 70.09 91.24
Investments 682.78 434.14 682.82 485.61 183.44
Inventories 255.43 190.46 190.59 149.22 181.03
Sundry Debtors 229.99 129.10 117.10 134.74 104.39
Cash and Bank Balance 24.72 7.55 7.69 10.90 14.62
Total Current Assets 510.14 327.11 315.38 294.86 300.04
Loans and Advances 731.60 479.89 212.14 160.76 153.78
Fixed Deposits 9.85 41.85 66.34 75.01 96.10
Total CA, Loans & Advances 1,251.59 848.85 593.86 530.63 549.92
Deffered Credit 0.00 0.00 0.00 0.00 0.00
Current Liabilities 432.96 287.37 406.18 303.44 260.68
Provisions 323.39 7.25 51.10 70.51 5.22
Total CL & Provisions 756.35 294.62 457.28 373.95 265.90
Net Current Assets 495.24 554.23 136.58 156.68 284.02
Miscellaneous Expenses 0.00 0.00 0.00 0.04 0.11
Total Assets 2,006.98 1,803.77 1,671.58 1,507.54 1,093.52
Contingent Liabilities 168.37 100.24 54.39 88.23 128.60
Book Value (Rs) 69.80 66.09 126.29 111.89 56.72
SREE RANGA FOODS (RAINBOW MASALA) Profit & Loss account ------------------in Rs. Cr.
-------------------
Income
Sales Turnover 1,574.92 1,291.15 1,185.76 813.51 679.75
Excise Duty 41.47 35.46 38.44 28.27 28.88
Net Sales 1,533.45 1,255.69 1,147.32 785.27 650.87
Other Income 167.99 172.94 146.73 891.74 64.10
Stock Adjustments 72.07 -5.77 27.98 -32.47 -3.80
Total Income 1,773.51 1,422.86 1,322.03 1,644.51 711.17
Expenditure
Raw Materials 1,156.31 965.33 685.03 463.19 507.70
Power & Fuel Cost 24.27 22.06 61.23 19.51 14.45
Employee Cost 82.97 67.85 59.50 52.29 44.66
Other Manufacturing Expenses 26.26 23.17 21.41 22.27 22.26
Selling and Admin Expenses 163.40 111.91 87.30 66.24 71.67
Miscellaneous Expenses 56.30 55.38 53.53 55.88 16.42
Preoperative ExpCapitalised 0.00 0.00 0.00 0.00 0.00
Total Expenses 1,509.51 1,245.70 968.00 679.38 677.16
82
Operating Profit 96.01 4.22 207.30 73.39 -30.09
PBDIT 264.00 177.16 354.03 965.13 34.01
Interest 57.03 42.43 38.57 26.82 32.52
PBDT 206.97 134.73 315.46 938.31 1.49
Depreciation 73.97 73.70 69.33 50.17 44.03
Other written Off 0.00 0.00 0.00 0.00 0.00
Profit Before Tax 133.00 61.03 246.13 888.14 -42.54
Extra-ordinary items 3.20 6.62 1.71 0.50 4.14
PBT (Post Extra-ord Items) 136.20 67.65 247.84 888.64 -38.40
Tax -1.25 -11.86 42.18 196.44 -21.92
Reported Net Profit 137.32 79.26 205.28 691.96 -16.58
Total Value Addition 353.20 280.37 282.97 216.19 169.46
Preference Dividend 0.00 0.00 0.00 0.00 0.00
Equity Dividend 69.47 34.66 86.35 173.48 4.46
Corporate Dividend Tax 0.00 -5.74 -0.24 15.32 0.76
Per Share data (annualized)
Shares in issue (lakhs) 1,736.62 1,731.98 863.58 861.14 892.49
Earnings Per share (Rs) 7.91 4.58 23.77 80.35 -1.86
Equity Dividend (%) 400.00 200.00 500.00 1,000.00 25.00
Book Value (Rs) 69.80 66.09 126.29 111.89 56.72
83

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INTRODUCTION OF FINANCIAL MANAGEMENT:

A financial statement is a collection of data organized according to logical and

Financial analysis is useful to the financial executives to have deep insight in to

FINANCIAL STATEMENT ANALYSIS

A financial statement paints a picture of the transactions that flow through a

The firm's financial statements include:

· Statement of retained earning

Meaning of Business Finance

The literary meaning of ‘performance’ is “an entertainment presented before an

Financial analysis involves the assessment of companies past, present and

In Finance, Investment can be explained as a utilization of money for profit or returns.

Investment can be done by:-

In Finance, Profitable opportunities are considered as an important aspiration (goal).

3. Optimal Mix of Funds

Primarily, funds are of two types, namely,

1. Owned funds (Promoter Contribution, Equity shares, etc.), and

4. System of Internal Controls

Finance is concerned with internal controls maintained in the organization or workplace.

5. Future Decision Making

Finance is concerned with the future decision of the organisation

Financial plan is generally prepared during promotion stage. It is prepared by the

Scope of financial management

Acquisition : It collects finance for the company from different sources.

What Corporate Finance Includes?

How much finance is required by the company?

What are the sources of finance?

How to use the finance profitably?

1.2 NEED FOR THE STUDY

1. To analyze the financial performance of the company

6. To study the income and expenditure statement of SREE RANGA FOODS

Analysis and interpretation of financial statement for an attempt to determine

Financial statement analysis is largely a study of the relationship among the

Therefore when analysis comprises resolving the statements by a process of

Such a type of financial analysis provides information essential for the

 The study cannot be generalized as it prevents only to the company

ABOUT THE COMPANY:

SREE RANGA FOODS,

MFRS: RAINBOW MASALA & SPICES PRODUCTS

34/1, MOOGAMBIKA COMPLEX, AGILMEDU 6TH STREET, ERODE-638001

Sorted for excellence

ANDAMAN & NICOBAR ISLANDS

3.1 REVIEW OF LITERATURE

Financial statements of a business entity contain information relating to its financial

Financial statement analysis is a method of analyzing and interpreting information, the

Accounting to G.Foster” (1984) financial analysis can be undertaken by management of

Holland,lockeet,g,Richard,JM AND BLACK (1964) in their article> the evolution of finacial

Keith C.Brown and scottL.Lummer(1980) in their article the

Fischer,Mary L, Ostrom,John.s(1995) in their article”finacial performance “ five

ErkkiK.Laitinen&TeijaLaitinen(1988) in their article “financial performance ,The

Eli Bartov,Stepen r. Goldberg &Myung-sun(2001) in their article “The valuation-

Types of research methodology

There are two main types of research methodology,

It is subjectively and descriptive, no facts.... This kind of method is used to assess

PRIMARY DATA AND SECONDARY DATA:

Tools and Techniques Used For Analysis:

Advantages and Uses of Ratio Analysis

Limitations of Ratio Analysis