INDEX

Sr.No. Topic Page No.

CHAPTER 1 INTRODUCTION
1.1 Introduction of Topic
1.2 Objectives of Study
1.3 Scope of the study
1.4 Limitation of the study
CHAPTER 2 PROFILE OF THE FIRM
2.1 Organisation profile
2.2 History of the Firm
2.3 Organizational Structure
2.4 Product of the firm
CHAPTER 3 CONCEPTUAL BACKGROUND
CHAPTER 4 RESEARCH METHODOLOGY

4.1 Introduction
4.2 Data source and Data Collection
CHAPTER 5 ANALYSIS & INTERPRETATION OF
FINANCIAL STATEMENTS
CHAPTER 6 CONCLUSION & SUGGESTION
CHAPTER 7 ANNEXURE
CHAPTER 8 BIBLIOGRAPHY
 CHAPTER I
INTRODUCTION

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 INTRODUCTION TO THE TOPIC

This project is prepared for the analysis and interpretation of financial statements of M/S

SATYAJEET MEDICAL AND GENERAL STORES. It deals with the various different types of

medicines and other cosmetic items.

It is prepared to know the financial position of the shop. It also helps to know the proper

utilisation of the resources and other different positions of the shop such as Liquidity, solvency,

profitability etc..

The financial statements are prepared for a particulars period to review & report the periodical

progress by the shop. It will also help to find out any weakness or threats of the current business

planning.

It will help to give the practical knowledge, information about the business transactions. Also

help in finding out the Profit & Loss A/C or Income & Expenditure A/C occurred during

particular period. The financial statements are also needed for decision making & planning for

the procurement of adequate funds & the efficient & adequate use of resources.
 1.2 OBJECTIVES OF THE STUDY

• To study the concept of “analysis of financial statement by using the techniques

of ratio analysis.”

• To study of focus on facts on a comparative basis relating to the performance of a

firm.

• To know the future opportunities and threats for firm.

 1.3 SCOPE OF THE STUDY

1) The scope of the study is to understand the actual working and analysis of
financial statement.

2) The project will help to study the relationship between the items of the balance
sheet and of profit and loss account.

3) Ratio analysis is one of the popular tools of financial statement analysis 


 1.4 LIMITATION OF THE STUDY

1) Generally firm do not provide financial statements to any outside person or for
any project work.

2) Some of the information is not accurate, due to which approximate values were
used for the analysis. Hence, the results also reveal approximate values.

3) The project is based on theoretical guidelines and as per situations. Hence, it

may not be applicable to different situations.
 CHAPTER – 2

PROFILE OF THE FIRM



 ORGANISATION PROFILE

❖ NAME OF ORGANISATION-

SHREETULA FOOD AND AGRO IND.

❖ ADDRESS-

Gut. no.-541, Janori , old Janori- Jaulke Rd, Tan. Dindori, Dist-Nashik-422006

❖ STATUS-

New Organisation formed for Packaged Drinking Water (Other than Mineral

Water ) Manufacturing & Marketing.

❖ Permanent Account Number (PAN)- ABZFS3136R

 HISTORY OF FIRM

Established in 2013 , SHREETULA FOOD AND AGRO INDUSTRIES has made a name for
itself in the list of top service providers of Drinking Water in India. SHREETULA FOODS
AND AGRO INDUSTRIES is listed in Trade India’s list of verified companies offering wide
array of Clean Drinking Water , Packaged Drinking Water , Pure Drinking Water , etc.
Mr. T D More , a former Indian Army EME , established SHREETULA FOOD
AND AGRO INDUSTRIES with a vision of providing clean drinking water services. He holds a
total Industrial experience of 23 years and counting. He looks out for all the technical aspects of
the company.
 PRODUCT DETAILS AND PROCESS

MANUFACTURING SETUP

RO: Reverse Osmosis technology is used to process the raw water collected from
ground source. This is supplied by Offering Clean-tech Pvt.Ltd. Chhatisgargh, a
reputed RO supplier in India. The water is passed Sand Filter, Activated Carbon
Filter, EMF, Softener, Bag Filter, Hydranautics Membranes, Ultraviolet System, 1µ,
0.45µ, 0.2µ cartridge filters. Final product water is treated with Ozone. This water
is directly fed to the fully automatic bottle washing, filling & capping machine
without any contamination and human interface thru SS 316 grade pipeline. The
quality of treated water is equal to-
Total Hardness – 6-10 ppm, PH – 6.9 to 7.7 & TDS- 30 to 45
Total dissolved solids – 45 to 60 Mg/Ltr.

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PET Bottles Manufacturing:

The PET bottles required for Packaged Drinking Water is manufactured in house
with 2 cavity of Fully Automatic Blow Molding Machines 40 bpm & Semi
Automatic Blow Molding Machine 20 bpm. Both machine can produce 2 bottles
at one time. We can get about 60 bottles per minute through these 2 machines.
The machine capacity is intentionally kept different to handle peak and off-
peak demands by optimum utilisation of air and electricity. The bottles
manufactured on each machine are combined on the single air conveyor by
automated gating system. The quality and consistency of the blown bottles are
evaluated at fixed intervals by applying best manufacturing practices. Preforms
required for these are purchased from reputed manufacturers in Maharashtra
and Gujarat using Virgin Reliance PET compound. These preforms is fed to the
blow moulding machine. The blown bottle is carried by a fully automated air
conveyor to filling machine without any human intervention. The air conveyor is
fitted with 99.98% efficient air filters to avoid ambient air contamination getting
into the bottles while travelling through the air conveyor.
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Utility: The auxiliary machines required for the complete plant are procured from
reputed manufacturers delivering the best products in India. The High pressure
and low pressure compressed air required for blowing bottles is delivered by
Ingersoll Rand Oil Free air compressor that delivers 99.999% oil free air. This avoids
the highest contamination that the traditional packaged drinking water
manufacturers have. The water chiller and cooling towers required for
compressor and moulds cooling are procured from best suppliers that are
certified for quality.

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Bottle Filler & Capper:

This is a fully automatic bottle washing, filling and capping machine. The RO
water is used to invert (Rinsing )and wash the blown bottles

before filling. The filling is based on the volume and avoids overflow of water
from bottle after filling. The caps are fed thru an automated hopper and are
washed with RO water before capping the filled bottles. The filled & capped
bottles are taken further through an automated conveyor to inspection table
having white light screen to check the suspended impurities, volume and bottle
capping quality to avoid leakage.
"

Ink Coding:
Filled bottles are passed to the Ink coding machine through SS slat conveyor.
The ink-coding machine prints the batch code, date and price on the neck /
body of the bottle. Further these bottles are passed to the inspection screen and
automatic BOPP labelling machine.

Bottle Labelling:

The filled bottles are labeled with an automatic BOPP labeller without human
interface maintaining the quality and consistency of labels wrapped. This
machine helps to achieve the high productivity being the last stage in bottle
handling. The labeled bottles are further passed to the packing table. The
bottles are manually put in the carton boxes and these boxes are further fed to
the automatic strapping machine.
" Test
Labs:
Plant is fully equipped with in-house testing facility having chemical and Micro
Labs that are meeting all the BIS standards requirements. The processed water is
tested for PH and TDS first the then the filling process is started. The random
batch is kept for Microbiological evaluation in by preparing samples in the
incubator. The product is
dispatched only after the micro lab results are available and are negative for all
the essential parameters evaluated as per BIS norms. The 48 hrs incubation is
thoroughly followed. The technical staff in labs is highly qualified to deliver best
product to the end customer. The product water is sent for external lab testing
as per the BIS requirements in monthly, bimonthly and quarterly basis.
 Chemical Laboratory

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 Micro Biology Laboratory

Packing:
The box strapping machine straps the boxes on top and bottom at a time and
passes the box to holding area.

Material Handling & Storage:

The packed boxes are stacked on the PU pallets that are lifted with Hydraulic
operated pallet trucks to shift the pallets too desired location / delivery vehicles.
This ensures the minimum handling of boxes and the hydraulic pallet trucks help
to maintain the pollution free environment even during dispatch. The roof of the
plant is made of Galvanised Aluminum sheet that is anchored on the RCC
beams. This sheet helps to erect the obstacle free space with clean interior
space avoiding dust accumulation and bird pitting on the packed cases.

This way the complete process is fully automated to provide the best yield with
minimum hold time and achieve the quality product with reduced cost.
 CHAPTER 3
CONCEPTUAL BACKGROUND

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 INTRODUCTION

OF

FINANCIAL STATEMENTS

❖ A Financial Statement is a compilation of data, which is logically and consistently

organised according to accounting principles. Its purpose is to convey an

understanding of some financial aspects of a business firm. It shows a position at a

movement in time, as in the case of balance sheet, or reveals a series of activities

over a given period of time, as in the case of an income statement.

❖ Financial statements are the major means through which firms present their

financial situation to stock holders, creditors and general public. The majority of

firms which include extensive financial statements in their annual reports, which

receive wide distribution.

 TOOLS &TECHNIQUES OF FINANCIAL ANALYSIS

TOOLS &
TECHNIQUE

RATIO FUND CASH TREND

ANALYSIS FOLW FLOW ANALYSIS
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RATIO ANLAYSIS

Ratio analysis a technique of analysis and interpretation of financial statements. It is a

process of establishing and interpreting various ratios for helping in making certain
decisions.

For example- Liquidity, Profitability, Turnover and Solvency ratio.

CONCEPTUAL FRAMEWORK OF RATIO ANALYSIS

A ratio is a simple arithmetical expression of the relationship of one number to another. It

may be defined as the indicated quotient of two mathematical expressions.

According to Kohler,

“A ratio is the relation, of the amount, a, to another, b, expressed as the ratio of a to b; a:b (
a is to b); or as a simple fraction, integer, decimal fraction or percentage”.
 Meaning of Ratio Analysis

Ratio analysis is a technique of analysing the financial statements by computing ratios.

In other words, ratio analysis is a process of determining and interpreting relationships

between the items of financial statements to provide a meaningful understanding of
performance and financial position of an enterprise. Ratio analysis is an accounting tool to
present accounting variables in a simple, concise, intelligible and understandable form.

According to Myers, “Ratio analysis is a study of relationship among the various financial
factors in a business”.

Types of Ratios

(A) Liquidity Ratio :

These are the ratios, which measures the short-term solvency and financial

position of a firm. These ratios are calculated to comment upon the short-term

paying capacity of a concern or the firm’s ability to meet its current obligations.

The sufficiency or insufficiency of current assets should be assessed by comparing

them with short-term liabilities.

 ✓ Current Ratio :

The current ratio is the ratio of total current asset to total current

liabilities.

Current Assets
Current Ratio =
Current Liabilities

Current Assets are the assets that are either in the form of cash or cash

equivalents in a short time (say, within a year’s time) and Current Liabilities

are liabilities repayable in a short time.

(B) Profitability Ratio :

The primary objective of a business is to earn profits. A business need profit not

only for its existence but also for its expansion and diversification.

Profitability Ratios are calculated to measure the overall efficiency of the business.

Generally, profitability ratios are calculated either in relation to sales or in relation

to investment to measure the profitability of the firm.

 ✓ Gross Profit Ratio :
This ratio establishes the relationship of gross profit on sales to net sales of
a firm, which is calculated in percentage.
This ratio is computed by dividing gross profit by the net sales.

Gross Profit X 100

Gross Profit Ratio = ________________

Net Profit

This ratio indicates the degree to which the selling price of goods per unit may
decline without resulting in losses from operations to the firm.

✓ Net Profit Ratio :

This ratio measures the relationship between net profit and net sales.
The main objective of computing this ratio is to determine the overall
profitability due to various factors such as operational efficiency, trading on
equity etc.

Net Profit X 100

Net Profit Ratio = ________________
Net Sales
(C) Turnover Ratio :

Profit depends on the rate of turnover and the net margin. Turnover ratios also

termed as Activity or Performance Ratio, judges how well the facilities at the

disposal of enterprise are being utilised.

In other words, these ratios measure the effectiveness with which a concern uses

resources at its disposal. Higher turnover ratio means, better use of capital or

resources, which in turn, means better profitability ratio.

✓ Working Capital Turnover Ratio :

This ratio establishes a relationship between Net Sales and Working
Capital. Its objective is to indicate the velocity of utilisation of Net Working
Capital and the number of times the working capital is turned over in the
course of year.

Net Sales
Working Capital Turnover Ratio = _____________________
Working Capital
✓ Stock/ Inventory Turnover Ratio :
This ratio establishes a relationship between Costs of Goods Sold and
Average Inventory. This ratio is computed to determine the efficiency with
which the inventory is utilised.

Costs of Goods Sold

Stock Turnover Ratio = ________________________
Average Inventory

Opening Stock + Closing Stock

Average Inventory = _______________________________
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 CHAPTER 4
RESEARCH METHODOLOGY
 INTRODUCTION

“A careful investigation or enquiry especially through search for new facts in any branch
of knowledge.”

MEANING-

Research methodology is a way to systematically solve the research problem. It may be

understood as a science of the study how research is done scientifically. The various steps that

are generally adopted by researcher in study his research problem along with the logic behind

them. It is necessary for the researcher to know not only the research method or techniques but

also the methodology. Thus when we talk of research methodology we not only talk at the

research methods but also consider the logic behind the methods we use in the contest of our

research and explain why we are using particular method or techniques and why we are not using

other so that research are capable of being evaluate either by research himself or by other.

DATA SOURCE AND DATA COLLECTION

The task of data collection begins after a research problem has been defined. While deciding
about the method of data collection to be used for the study, the researcher should keep in mind
two types of data viz. Primary & Secondary.
 Sources of Data

Primary Data Secondary Data

PRIMARY DATA-

Primary data are original and first hand information. The source of such information is the
individuals and the incidents around them generally.

• Information relating to the project was collected during formal and informal discussions with
the proprietor of shop.

• Queries arising in due course of the project brought into the notice of concerned authority
and necessary explanation and solutions are adapted.
SECONDARY DATA-

The source of information through documents concerning individuals and institutions are
known as secondary data or documentary source
.
Secondary data is generated with the help of following:

Annual Report: Majority of information gathered from the annual reports of the company.
These reports consist of Trading And Profit & Loss A/c; Balance Sheet of 3 years.
Reference Books: Theory relating to the subject matter and various concepts taken up from
various financial reference books published by University of Pune.
 CHAPTER 5

ANALYSIS

AND INTERPRETATION OF

FINANCIAL STATEMENTS
 Classification of Ratios

Liquidity Profitability Turnover Solvency

Ratios Ratios Ratios Ratios

Current Gross profit Fixed Asset Debt

Ratio Ratio Turnover Turnover
Ratio Ratio

Quick Ratio Net Profit Working Total Asset

Ratio Capital to Debt Ratio
Turnover
Ratio

Absolute Operating Stock Proprietary

liquidity Ratio Turnover Ratio
Ratio Ratio

Operating Profit Ratio Debtor Turnover Ratio

Return Total Creditors

Asset Turnover
Ratio

Return on Capital
Employed
 LIQUIDITY RATIO

➢ Current Ratio :

Current Assets
Current Ratio =
Current Liabilities

Year Current Current Ratio

Assets Liabilities

2016-2017 1825201.29 234985.74 7.76 :1

2017-2018 2654408.54 398779.36 6.6:1

2018-2019 2175251.29 350846.98 6.2:1

Interpretation

The current ratio has been decreasing year after year which shows decreasing
working capital. As a conventional rule, a current ratio of 2:1 is consider satisfactory.
Hence the liquidity position of Mohave Medical & General Store is satisfactory because
all the three years current ratio is not below the standard ratio 2:1
 PROFITABILITY RATIOS

✓ Gross Profit Ratio:

Gross Profit X 100

Gross Profit Ratio = ________________

Net Profit

Year Gross Net Sales Ratio

Profit
2016-2017 2102728 9194259.8 22.8%

2017-2018 1166097.92 8358418 13.95%

2018-2019 1802074.9 11033111.8 16.33%

Gross Profit Ratio

23.00%

17.25%
Ratio

11.50%

5.75%

0.00%
! 2016-2017 2017-2018 2018-2019

Interpretation

In the year 2016-2017 the gross profit ratio was 22.80% but in 2017-2018 it is

decreased to 13.95% which shows lower earning capacity of the business with

reference to its sales.

But in 2018-2019 , the ratio increased to 16.32%. due to sale at higher price.

Therefore the gross profit ratio for 3 years reveals satisfactory condition.
 ✓ Net Profit Ratio:

Net Profit X 100

Net Profit Ratio = ________________
Net Sales

Year Net Profit Net Sales Ratio

2016-2017 1542347.47 9194259.8 16.77%

2017-2018 611219.09 8358418 7.31%

2018-2019 1196371.74 11033111.8 10.84%

Net Profit Ratio

17.00%

12.75%
Ratio

8.50%

4.25%

0.00%
! 2016-2017 2017-2018 2018-2019

Interpretation

Net profit is the measure of overall profitability. In the year 2016-2017 net

profit is 16.77% which is decreased to 7.31% in 2017-2018. Which shows that the

profitability is decreased. But in 2018-2019 there is a slight increased in the profit

which shows appreciation in the profitability of the firm.

 TURNOVER RATIOS

✓ Working Capital Turnover Ratio:

Net Sales
Working Capital Turnover Ratio = _____________________
Working Capital

Year Net Sales Working Ratio

Capital
2016-2017 9194259.8. 1590215.55 5.78Times

2017-2018 8358418 2255629.18 3.7Times

2018-2019 11033111.8 1824404.31 6.04Times

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Interpretation

Working Capital Turnover Ratio indicates the firm’s ability to generate sales per rupee of
working capital. In general, higher the ratio, the more efficient the management and
utilisation of working capital and vice versa.

Hence in the year, 2018-2019, the ratio was 6.04 Times. Which was higher as compared to
preceding 2 years, that shows firm’s effective utilisation of working capital.
 ✓ Stock Turnover Ratio:

Costs of Goods Sold

Stock Turnover Ratio = ________________________
Average Inventory

Opening Stock + Closing Stock

Average Inventory = _______________________________
2

Year Cost of Average Ratio

Goods Sold Inventory
2016-2017 7091531.8 1706914 4.15Times

2017-2018 7192320.08 1465843 4.9Times

2018-2019 9231036.9 1360750.45 6.78Times

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Interpretation

Stock/ Inventory Turnover Ratio indicate the speed with which the inventory is converted
into sales. A high ratio indicates efficient performance since an improvement in the ratio
shows same volume of sales has been maintained with a lower investment in stocks.

In the year 2018-2019, the ratio was 6.78 Times, which was higher as compared to
preceding 2 years. Thus the Stock Turnover Ratio of Mohave Medical And General Store is
satisfactory.
 CHAPTER-6
CONCLUSION

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 Conclusion

From this project we learn application of theory into practical. By this project I learn to
apply ratio in practical. The firm is gaining profit and they are trying to increase their profit. By
analysing the financial statement of company we are able to determine the company’s current
financial position. From the project we have concluded that a Mohave Medical and General
Stores have a good financial position and has been able to pay their liabilities.

1. Current ratio is in a better condition, which shows good current position. and is
used to repay short term debt promptly and it shows better ability to repay short
term commitment.

2. After computing gross profit ratio in the first year gross profit is maximum, but
after that its falls, hence company needs to improve gross profit.

3. As per the net profit ratio, the firm needs to improve net profit in order to
maintain the overall profitability.
 CHAPTER - 7
SUGGESTION

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❖ Firm has to improve its overall profitability by improving the Gross
Profit and Net Profit.

❖ There is a more use of debt than equity in the firm. This will be
maintained in the future.

❖ Operating cost should be maintained by the firm.

 CHAPTER - 8
BIBLIOGRAPHY

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 Bibliography

✓ Analysis of Financial Statements (Thicker Publications, Pune).

✓ Analysis of Financial Statements (T.S. Grewal, C.B.S.E, New Delhi).

✓ Financial Management Accounting, Dr Suhas Mahajan

✓ Financial Management Dr. S.N.Maheshwari.

Websites

www.google.com

www.wikipedia.com

www.tradeindia.com
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