1 - INTRODUCTION:

This is brief summary of the project “A study on analysis of financial statements of polyhydron

pvt ltd and suggest long term planning”. Belgaum and to find the financial position of the company.

Polyhydron Pvt. Ltd is the flag ship company of Polyhydron Group of Industries. Polyhydron is known for

its “Ethical management”. People from all over India visit the company to interact and understand the

systems. It has become a kind of “Pilgrimage centre” for the corporate world of India.

The study was conducted with an objective of finding out the financial standing and its

managerial efficiency in generating adequate operating profits on the firm’s assets and to study how the

firm finances its assets.

The study of the financial position of a company was accomplished by various tools and

techniques like Cash flow and fund flow analysis, Financial planning with financial ratios to support the

above with the appropriate graphs and tables.

Title of the Study:

“A study on analysis of financial statements of polyhydron pvt ltd and suggest long term

planning”.

Statement of problem:

Financial analysis being an integral part of overall corporate management and it is one of the

powerful tools of financial performance analysis. The analysis of financial statement of PPL is done in

order to know the company’s financial position of the year.

Management Problem:

To gauge the adequacy of returns/cash flows with respect to investment, liquidity and growth

and ascertain the opportunity for expansion

Research Problem

“A study on analysis of financial statements of polyhydron pvt ltd and suggest long term

planning”.

Objectives:

1. To analysis the firm’s financial statements

2. Is management generating adequate operating profit on the firm’s assets.

3. To know how is the firm financing its assets

4. Are the owners getting adequate returns?

5. To determine the progress of the company.

Recommendations and Conclusion

Suggestions

The firm is performing well and its sales are increasing over the years. But still the following is

the suggestion if considered will prove to be beneficial to the company.

 There is huge investment in the current assets of the concern.

 The current ratio of the firm is very much higher than the normal standards.
  The firm should not unnecessarily block excess money in the current assets than normal

requirement of the business.

 The cost of goods sold had increased continuously from 2004 to 2005. The firm should give

attention to maximize the sale and minimize the direct costs.

 The company can invest in mutual funds, which is more promising for higher yield.

 Polyhydron has net working capital more than requirements an unhealthy sign of profitability of

the company.

Under the light of the inferences drawn from the analysis, it is no exaggeration to conclude with

information that the over all the financial analysis is fair and reasonably good and that promising future

awaits the company.

Conclusion

Earning position of the company is continuously and positively increasing. The gross, operating

and net profit margins are favorable. It makes uses some Japanese techniques, like kanban cards, net

work system, jit etc. to manage its inventories. Various discount schemes to control and manage the

accounts receivable.

The company has to keep an eye on its liquidity position. As the liquidity position shows funds

are lying idle, since they are idle, they are not being properly utilized. Thus profitability of the income

may be affected. So high a liquidity position should be avoided in order to maintain and improve the

profitability.
 2 - LITERATURE REVIEW:

Financial analysis

Financial analysis is the selection, evaluation and interpretation of financial data, along with

other pertinent information, to assist in investment and financial decision- making. Financial analysis

may be used internally to evaluate issues such as employee performance, the efficiency of operations,

and credit policies, and externally to evaluate potential investments and the credit-worthiness of

borrowers, among other things.

The analyst draws the financial data needed in financial analysis from many sources. The

primary source is the data provided by the firm itself in its annual report and required disclosures. The

annual report comprises the income statements, the balance sheet, and the statement of cash flows.

Certain businesses are required by securities law to disclose additional information.

The financial analyst must select the pertinent information, analyze it, and interpret the analysis,

enabling judgments on the current and future financial condition and operating performance of the

firm. In this reading, we introduce you to financial ratios------ the tool of financial analysis. In financial

ratio analysis we select the relevant information---- primarily the financial statement data--- and

evaluate it. We show how to incorporate market data and economic data in the analysis and

interpretation of financial ratios and we show how to interpret financial ratio analysis,

Financial statements

The financial statements are the end product of the financial accounting process. The financial

statements are nothing but the financial information presented in concise and capsule form, and the
financial information is the information relating to the financial position of any firm. Therefore the

financial statements are the depiction of the financial position of firm.

The basic source which provides the financial information is the annual report of the company,

which is presented by the company to its shareholders at the annual general meeting. This annual report

contains the chairman’s report, the balance sheet, the income statement , the auditors report together

with number of schedules, annexure etc. Every firm prepares the following financial statement.

1. The balance sheet

2. The income statement

Balance sheet

The balance sheet is regarded as the most significant and basic financial statement of any firm.

The balance sheet is prepared by a firm to present a summary of financial position at a given point of

time, usually at the end of a financial year. It shows the state of affairs of the firm and the contribution

of the owners of the firm. The total value of the assets must be equal to the total claims against the firm

and this can be stated as

Total assets = total claims (debt + shareholders)

= liabilities + shareholders equity

The balance sheet includes: Assets and Liabilities

Assets:

Assets are the monetary value of the resources that owned by the concern at a measurable cost.

A resource is valuable if it is in form of the cash or convertible into cash or expected to benefit in the

future operation of the business, assets includes a) physical resources like land, machinery, plant,
building, stocks etc. B) non physical resources like cash, securities, accounts receivables etc.) Intangible

resources like goodwill, trademark and d) future benefit like expenses paid in advance. Some time some

fictitious assets also show like as incorporation cost of the company discount on issue of debentures etc.

 Fixed assets

 Current assets

Fixed assets

Fixed assets are held in business for use not for sale. These assets provide long-term benefits to

the concern. Fixed assets will be higher in manufacturing concern. The fixed assets involves – tangible

assets – includes land, building, machinery, equipment, furniture, fixtures etc. These assets are shown

the balance sheet deducting the depreciation there on.

a) Intangible fixed assets: These assets include the patents, copyright, trademarks, trade name

goodwill etc.

b) Long-term investment: These assets represent the firm’s long term investments like

investments in share, investments in debenture and bonds of other firms or government bodies.

c) Other non current assets: These assets are those which represent the deferred charges etc.

d) Current assets: Current assets consist of cash and other sources of cash which get converted

into cash during the period of operating cycle of the firm. These assets are owned for a short

period of time. The other name of the current assets includes cash, debtors, bills receivables,

stock of work in progress, bank balance, advance payment of expenses like taxes and insurance,

loan and advances to customers and employees.

2) Liabilities
 Liabilities are the obligations of the concern that is to pay to the outsiders.

Importance of the position statement

a. It helps to calculate the working capital of the concern.

b. It indicates the long term as well as short-term financial position of the concern.

c. With the help of this the various ratios will be calculated.

d. It indicates the value of the concern and helpful in calculating the value of the shareholders

equity and total assets.

e. It helps to make the arrangement for losses, which are expected to occur in the future.

The balance sheet is relevant at a particular point of time. It is like a financial snapshot at a point

of time, before and after which the position may be different. So, the balance sheet is a status report

Contents of annual report:

The Polyhydron Pvt. Ltd annual report for the year 2004-2005 contains

a) Report of the board of directors

b) Auditors report

c) Accounting policies

Report of the board of directors: Director’s report provides a summary of profits made and

appropriated by the company and other relevant information such as industrial relations, investments,

financing, organization, appointment of auditors and directors etc. The report of the PPL board of

directors gives a brief account of the company profit and dividend during the 2003-2004.

Auditors report: Auditors report to shareholders verifies whether the balance sheet and profit and loss

account provides a true and fair view of the state of a company’s affairs. Auditors should obtain all

necessary information’s and explanations and ensure that proper books of accounts as required by law

have been prepared by the company.

Accounting policies: Companies adopt different accounting policies for preparing their balance sheet

and profit and loss account. Annual reports incorporate major accounting policies as well as changes
made in current year.