Executive summary

Reliance is one of India’s largest companies in a sector that has rapidly grown over the last few
years and a company where leaders like Mr. Dhirubhai Ambani, or rather, a company that has
been made by Mr. Dhirubhai Ambani.

Through this report, I try and analyze the financial environment in which Reliance Industry
Limited is operating. Through a thorough financial analysis, my aim to understand the financial
factors is influencing the company and its decision making. Later, I try and evaluate the various
ratios to appreciate their impact on company’s performance over the last five years.

The financial statements of last five years are identified, studied and interpreted in light of
company’s performance. Critical decisions of distributing dividends, Issue of bonus
Debentures and other current news are analyzed and their impact on the bottom line of the
company is assessed.

Finally, I used ratio analysis, fund flow analysis and cash flow analysis of the company for
analyzing the financial position of the company in last five years. Through ratio analysis I
analyse the debt, equity, assets and liabilities of the company. I analysed the solvency and the
company’s ability to pay back its debt. Through the fund flow statement and cashflow
statements to the know flow of fund in the firm. I also analysed the profit and loss for the past
5 years to know the increase in the profit and gave suggestions to improve the business.

Financial ratios are an important technique of the financial analysis of a business organization.
Effective financial management is the key to running a financially successful business. Ratio
analysis is critical for helping you understand financial statements, for identifying trends over
time, and for measuring the overall financial health of your business. Lenders and potential
investors often rely on ratio analysis for making lending and investing decisions. This book
aims to not only develop an understanding of the concepts of financial ratios but also to provide
the students a practical insight into the application of financial ratios for decision making and
control. It analyzes the financial statements of corporate enterprises.

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 INTRODUCTION

Financial statement analysis is a process of selection, relation and evaluation of a financial

statement. The first procedure is to select from the total information available about a business
enterprise. The second procedure is to arrange the information in a way that will bring out
significant relationships. The final procedure is to study these relationships and interpret the
results. Financial ratio analysis is the calculation and comparison of ratios, which are derived
from the information in a company’s financial statements. The level and historical trends of
these ratios can be used to make inferences about a company’s financial condition, its
operations and attractiveness as an investment. Modern technology has provided opportunities
to investors move their funds from one market to another market around the world. Strong
financial position of a company helps to attract investors. The more the financially strong a
company, the more company is wealthy. There are two kinds of users of financial statement.
Those are internal and external user. Management of a company evaluates their financial
statement end of each accounting period to understand their business activity. Even each
division of a company frequently compares the performance of those divisions by using
financial statement information. Based on the financial statements analysis management take
decision about financing, investing and future planning decision. Financial statements analysis
is also important to external users. These external users are short term creditors, long time
creditors, investors, supplier, customers, Government, agencies. financial statements are a
primary source of information about a firm's financial health and its future prospects Investors
and creditors make their investing and credit decision after analysing. company's financial
statements. financial statements are prepared at the end of the financial year usually march 31.
During preparing the project all information has been collected from library research, internet
sources, and accounting lecture notes.

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History of Reliance
Reliance Commercial Corporation was founded by Dhirubhai Ambani in 1966 asa
polyester firm. It was renamed to Reliance Industries on 8 May 1973. Reliance later entered
into financial services, petroleum refining, power sector. By 2002 Reliance had grown into a
U$15 billion conglomerate. After the death of Dhirubhai Ambani on 6 July 2002, Reliance was
headed by his two sons. The Reliance ADA Group was formed in 2006 after the two brothers
Mukesh Ambani and Anil Ambani, split Reliance Industries in December 2005. Anil Ambani
got the responsibility of Reliance Infocomm, Reliance Energy and Reliance Capital. Reliance
Group entered the power sector through Reliance Power, and the entertainment sector by
acquiring Adlabs. In October 2010, Reliance power placed world's largest order worth $8.29
billion to Shanghai Electric Group to supply power equipment based on Supercritical steam
generator technology. On 28 October 2017, the group launched construction of a defence
production unit in Mihan-SEZ region. The unit will be part of a joint venture between Reliance
Group, led by Anil Ambani, and its JV partner French major Dassault Aviation. The production
at Mihan-SEZ will begin with components for the Rafale warplanes and Falcon business jet
produced by Dassault. It is expected to fully assemble both the aircraft in the Nagpur unit in
the coming years.

The Reliance group, founded by Dhirubhai H Ambani (1932-2002), is India’s largest private
sector enterprise, with businesses in the energy and material value chain. The flagship
company, Reliance Industries Limited, is a Fortune Global 500 company and is the largest
private sector company in India. The chairman of the company is Mukesh Ambani.

The company is India’s largest petrochemical firm and among the country’s largest companies
(along with the likes of Indian Oil and Tata Group). Oil refining and the manufacture of
polyfines account for nearly all of Reliance’s sales. It also makes textiles and explores for oil
and gas, though those businesses are relatively small. In 2009 the company merged with its oil
and gas refining subsidiary (Reliance Petroleum) in order to boost the operational and financial
synergies of Reliance as a major refining company.

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Reliance Industries Limited (NSE: RELIANCE) is India's largest private sector conglomerate
(by market value) , with an annual turnover of US $ 35.9 billion and profit of US$ 4.85 billion
for the fiscal year ending in March 2008 making it one of India's private sector Fortune Global
500 companies, being ranked at 206th position (2008). It was founded by the Indian
industrialist Dhirubhai Ambani in 1966. Ambani has been a pioneer in introducing financial
instruments like fully convertible debentures to the Indian stock markets. Ambani was one of
the first entrepreneurs to draw retail investors to the stock markets. Critics allege that the rise
of Reliance Industries to the top slot in terms of market capitalization is largely due to
Dhirubhai's ability to manipulate the levers of a controlled economy to his advantage. Though
the company's oil-related operations form the core of its business, it has diversified its
operations in recent years. After severe differences between the founder's two sons, Mukesh
Ambani and Anil Ambani, the group was divided between them in 2006. In September 2008,
Reliance Industries was the only Indian firm featured in the Forbes's list of "world's 100 most
respected companies.
1960–1980

The company was co-founded by Dhirubhai Ambani and Champaklal Damani in 1960's as
Reliance Commercial Corporation. In 1965, the partnership ended and Dhirubhai continued the
polyester business of the firm. In 1966, Reliance Textile Industries Pvt. Ltd. was incorporated
in Maharashtra. It established a synthetic fabrics mill in the same year at Naroda in
Gujarat.On 8 May 1973, it became Reliance Industries Limited. In 1975, the company
expanded its business into textiles, with "Vimal" becoming its major brand in later years. The
company held its Initial public offering (IPO) in 1977.The issue was over- subscribed by seven
times.In 1979, a textiles company Sidhpur Mills was amalgamated with the company.In 1980,
the company expanded its polyester yarn business by setting up a Polyester Filament Yarn Plant
in Patalganga, Raigad, Maharashtra with financial and technicalcollaboration with E. I. du Pont
de Nemours & Co., U.S.

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1981–2000

In 1985, the name of the company was changed from Reliance Textiles Industries Ltd.
to Reliance Industries Ltd.During 1985 to 1992, the company expanded its installed capacity
for producing polyester yarn by over 145,000 tonnes per annum.

The Hazira petrochemical plant was commissioned in 1991–92.

In 1993, Reliance turned to the overseas capital markets for funds through a global depository
issue of Reliance Petroleum. In 1996, it became the first private sector company in India to be
rated by international credit rating agencies. S&P rated Reliance "BB+, stable outlook,
constrained by the sovereign ceiling". Moody's rated "Baa3, Investment grade, constrained by
the sovereign ceiling".

In 1995/96, the company entered the telecom industry through a joint venture with NYNEX,
USA, and promoted Reliance Telecom Private Limited in India.

In 1998/99, RIL introduced packaged LPG in 15 kg cylinders under the brand name Reliance
Gas.

The years 1998–2000 saw the construction of the integrated petrochemical complex at
Jamnagar in Gujarat,the largest refinery in the world.

2001 onwards

In 2001, Reliance Industries Ltd. and Reliance Petroleum Ltd. became India's two largest
companies in terms of all major financial parameters.In 2001–02, Reliance Petroleum was
merged with Reliance Industries.

In 2002, Reliance announced India's biggest gas discovery (at the Krishna Godavari basin) in
nearly three decades and one of the largest gas discoveries in the world during 2002. The in-
place volume of natural gas was more than 7 trillion cubic feet, equivalent to about 120 crore
(1.2 billion) barrels of crude oil. This was the first-ever discovery by an Indian private sector
company.

In 2002–03, RIL purchased a majority stake in Indian Petrochemicals Corporation Ltd. (IPCL),
India's second largest petrochemicals company, from the government of India,RIL took over
IPCL's Vadodara Plants and renamed it as Vadodara Manufacturing Division (VMD).IPCL's
Nagothane and Dahej manufacturing complexes came under RIL when IPCL was merged with
RIL in 2008.

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In 2005 and 2006, the company reorganised its business by demerging its investments in power
generation and distribution, financial services and telecommunication services into four
separate entities.

In 2006, Reliance entered the organised retail market in India with the launch of its retail store
format under the brand name of 'Reliance Fresh'.By the end of 2008, Reliance Retail had close
to 600 stores across 57 cities in India.

In November 2009, Reliance Industries issued 1:1 bonus shares to its shareholders.

In 2010, Reliance entered the broadband services market with acquisition of Infotel Broadband
Services Limited, which was the only successful bidder for pan-India fourth-generation (4G)
spectrum auction held by the government of India.

In the same year, Reliance and BP announced a partnership in the oil and gas business. BP took
a 30 per cent stake in 23 oil and gas production sharing contracts that Reliance operates in
India, including the KG-D6 block for $7.2 billion.Reliance also formed a 50:50 joint venture
with BP for sourcing and marketing of gas in India.

In 2017, RIL set up a joint venture with Russian Company Sibur for setting up a Butyl rubber
plant in Jamnagar, Gujarat, to be operational by 2018.

In August 2019, Reliance added Fynd primarily for its consumer businesses and mobile phone
services in the e-commerce space.

On the 18th of August 2021, Reliance Industries Limited (RIL) stated that it had shut down its
manufacturing units at Nagothane town in Maharashtra.

In December 2022, Reliance Industries Market cap stood at Rs.17,59,017.23 crore.

Stock

According to the company website "1 out of every 4 investors in India is a Reliance
shareholder.”. Reliance has more than 3 million shareholders, making it one of the world's most
widely held stocks. Reliance Industries Ltd, subsequent to its split in January 2006 has
continued to grow. Reliance companies have been among the best performing in the Indian
stock market.

Products

Reliance Industries Limited has a wide range of products from petroleum products,
petrochemicals, to garments (under the brand name of Vimal), Reliance Retail has entered into

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the fresh foods market as Reliance Fresh and launched a new chain called Delight Reliance
Retail and NOVA Chemicals have signed a letter of intent to make energy-efficient structures.
The primary business of the company is petroleum refining and petrochemicals. It operates a
33 million tone refinery at Jamnagar in the Indian state of Gujarat. Reliance has also completed
a second refinery of 29 million tons at the same site which started operations in December
2008. The company is also involved in oil & gas exploration and production. In 2002, it struck
a major find on India's eastern coast in the Krishna Godavari basin. Gas production from this
find was started on April 2, 2009. As of the end of 3rd quarter of 2009-2010, gas production
from the KG D6 ramped up to 60 MMSCMD. Jio soft launched on 27 December 2015 with a
beta for partners and employees, and became publicly available on 5 September 2016. It is the
largest mobile network operator in India and the third largest mobile network operator in the
world with over 42.62 crore (426.2 million) subscribers.

In September 2019, Jio launched a fiber to the home service, offering home broadband,
television, and telephone services. As of September 2020, Reliance Industries has raised ₹1.65
lakh crore (US$21 billion) by selling nearly 33% equity stake in Jio Platforms.

Subsidiaries

Major Subsidiaries & Associates

 Reliance Petroleum Limited (RPL) was a subsidiary of Reliance Industries Limited

(RIL) and was created to exploit the emerging opportunities, creating value in the

refining sector worldwide. Currently, RPL stands amalgamated with RIL.

 Reliance Life Sciences is a research-driven, biotechnology-led, life sciences

organization that participates in medical, plant and industrial biotechnology

opportunities. Specifically, these relate to Biopharmaceuticals, Pharmaceuticals,

Clinical Research Services, Regenerative Medicine, Molecular Medicine, Novel

Therapeutics, Bio-fuels, Plant Biotechnology and Industrial Biotechnology.

 Reliance Industrial Infrastructure Limited (RIIL) is engaged in the business of

setting up / operating Industrial Infrastructure that also involves leasing and providing

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 services connected with computer software and data processing.

 Reliance Institute of Life Sciences (Rils) established by Dhirubhai Ambani

Foundation, is an institution of higher education in various fields of life sciences and

related technologies.

 Reliance Logistics (P) Limited is a single window solutions provider for

transportation, distribution, warehousing, logistics, and supply chain needs, supported

by in house state of art telemetric and telemetry solutions.

 Reliance Clinical Research Services (RCRS), a contract research organization (CRO)

and wholly owned subsidiary of Reliance Life Sciences, has been set up to provide

clinical research services to pharmaceutical, biotechnology and medical device

companies.

 Reliance Solar, The solar energy initiative of Reliance aims to bring solar energy

systems and solutions primarily to remote and rural areas and bring about a

transformation in the quality of life.

 Relicord is the first and one of the most dependable stem-cell banking services of South

East Asia offered by Mukesh Ambani controlled Reliance Industries.

 Reliance jio infocomm limited, Jio is an Indian telecommunications company and a

subsidiary of Jio Platforms, headquartered in Navi Mumbai, Maharashtra, India. It

operates a national LTE network with coverage across all 22 telecom circles. Currently,

Jio offers 4G and 4G+ services all over India and 5G service in selected cities.

Its 6G service is in the works.

Reliance's Oil & Gas find

Andhra Pradesh near Vishakhapatnam. It was the largest discovery of natural gas in world in

financial year 2002-2003. On 2 April 2009, Reliance Industries (RIL) commenced natural gas

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production from its D-6 block in the Krishna-Godavari (KG)

The gas reserve is 7 trillion cubic feet in size. Equivalent to 1.2 billion barrels (165 mil in 2002,

Reliance found natural gas in the Krishna Godavari basin off the coast of lion tonnes) of crude

oil, but only 5 trillion cubic feet are extractable.

On 2008 Oct 8, Anil Ambani's Reliance Natural Resources took Reliance Industries to the

Bombay High Court to uphold a memorandum of understanding that said RIL will supply the

natural gas at $2.34 per million British thermal units to Anil Ambani.

Reliance Retail

Reliance Retail is the retail business wing of the Reliance business. Many brands like Reliance

Fresh, Reliance Footprint, Reliance Time Out, Reliance Digital, Reliance Wellness, Reliance

Trends, Reliance AutoZone, Reliance Super, Reliance Mart, Reliance iStore, Reliance Home

Kitchens, and Reliance Jewel come under the Reliance Retail brand. Reliance saw opportunity

in retailing chicken, mutton and other meat products (halal and non-halal) through one of its

retail arms called "Delight Non Veg." One of the Delight outlets has been shut down due to

protest by anti-animal cruelty activists at Gandhi Nagar, Delhi who want Reliance to close its

non-veg food marketing.

Environmental record
Reliance Industry is the world’s largest polyester producer and as a result one of the largest
producers of polyester waste in the world. In order to deal with this large amount of waste they
had to create a way to recycle the waste. They operate the largest polyester recycling center
that uses the polyester waste as a filling and stuffing. They use this process to develop a strong
recycling process which won them a reward in the Team Excellence competition.

Reliance Industries backed a conference on environmental awareness in New Delhi in 2006.

The conference was run by the Asia Pacific Jurist Association in partnership with the Ministry
of Environment & Forests, Govt. of India and the Maharashtra Pollution Control Board. The
conference was to help bring about new ideas and articles on various aspects of environmental
protection in the region. Maharashtra Pollution Control Board invited various industries

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complied with the pollution control norms to take active part in the conference and to support
as a sponsor. The conference proved effective as a way to promote environmental concern in
the area.

Employees

As of 31 March 2018, the company had 29,533 permanent employees of which 1,521 were
women and 70 were employees with disabilities. It also had 158,196 temporary employees on
the same date which makes a total of 187,729 employees.As per its Sustainability Report for
2011–12, the attrition rate was 7.5%. But currently, the same attrition rate has gone up to 23.4%
in March 2015 as per latest report released by the organisation.

In its 39th Annual General Meeting, its chairman informed the shareholders of the investment
plans of the company of about ₹1,500 billion (US$19 billion) in the next three years. This
would be accompanied by increasing the staff strength in Retail division from existing strength
of 35,000 to 120,000 in next 3 years and increasing employees in Telecom division from
existing 3,000 to 10,000 in 12 months.

Awards & Recognition

 International Refiner of the Year in 2005 at the 23rd Annual Hart's World Refining and
Fuels Conference.

 International Refiner of the year in 2017 at Global Refining and Petrochemicals

Congress 2017.
 International Refiner of the Year in 2013 at the HART Energy's 27th World Refining
& Fuel Conference. This is the second time that RIL has received this Award for
its Jamnagar Refinery, the first being in 2005.
 The Brand Trust Report ranked Reliance Industries as the 7th most trusted brand in
India in 2013 and 9th in 2014.
 RIL was certified as 'Responsible Care Company' by the American Chemistry Council
in March 2012.
 RIL was ranked at 25th position across the world, on the basis of sales, in the ICIS Top
100 Chemicals Companies list in 2012.
 The company was selected as one of the world's 100 best managed companies for the
year 2000 by Industry Week magazine.

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  From 1994 to 1997, the company won National Energy Conservation Award in the
petrochemical sector.

Awards for managers

 Mukesh D. Ambani received the United States of America-India Business Council

(USIBC) leadership award for "Global Vision" 2007 in Washington in July 2007.

 Mukesh D. Ambani was conferred the Asia Society Leadership Award by the Asia
Society, Washington, USA, May 2004.

 Mukesh D. Ambani ranked 13th in Asia's Power 25 list of The Most Powerful People
in Business published by Fortune magazine, August 2004.

 Mukesh D. Ambani is Economic Times Business Leader of the Year.

 • RIL Chairman, Shri Mukesh D. Ambani, ranked among Top 5 World’s Most Famous,
Most Reputable CEOs

 Smt Nita Mukesh Ambani and Reliance Foundation recognised among top COVID-19
philanthropists of 2020

 RIL debuts on Great Place To Work® ‘India’s Best Workplaces in Manufacturing

2021’ list

 RIL ranked among LinkedIn’s ‘Top 25 best workplaces to grow your career in India’,
featuring in ‘companies that invest in their talent’ and ‘help employees build a
professional foundation that sets them up for success both at the company and beyond’

 RIL ranked 81 on Forbes ‘World’s Best Employers’ list among 750 multinational and
large corporations headquartered in 45 countries

 RIL recognised by the Great Place to Work® Institute as Great Place to Work –
Certified™, based on their two-step evaluation process of Culture Audit© and Trust
Index© assessments

 • Reliance ranked among Dare2Compete’s ‘Top 25 Dream Companies to Work for’

among the top 30 B-schools in their 2020 list

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Current composition of the Board and Category of Directors are as Follows:

"Between my past, the present and the future, there is one common Factor: Relationship and
Trust. This is the foundation of our growth."

Shri Dhirubhai H. Ambani

Chairman Reliance Group
December 28, 1932 - July 6, 2002

Board of Directors of Reliance Industries Limited

Shri Mukesh D Ambani

Chairman & Managing Director

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Nita M Ambani Hital R Meswani
Non-executive, non-independent director executive director

Nikhil R Meswani P.M.S.Prasad

executive director executive director

P.K.Kapil R.A.Mashelkar
executive director independent director

Adil Zainulbhai Mansingh L. bhakta

independent director independent director

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 Dipak C. Jain Dharam Vir Kapur
independent director independent director

Mahesh P. Modi Yogendra P. Trivedi

independent director independent director

Ashok Misra
independent director

Motto

“Growth is Life”

MISSION & VISION

“Continuously innovate to remain Partners in human progress by Harnessing science &

technology in the petrochemicals domain”

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OUR MISSION

“Be a globally preferred Business associate with responsible Concern for ecology, society,
and stakeholder’s value”.

VALUES & QUALITY POLICY YOUR VALUES

“Integrity, Respect for People, Unity of Purpose, Outside-in Focus, Agility and Innovation”.

QUALITY POLICY

“Bare committed to meet customers’ requirements through continual improvement of our

quality management systems. We shall sustain organizational excellence through visionary
leadership and innovative efforts”.

Definitions

Meaning of Financial Statement

Financial statements refer to such statements which contains financial information about an
enterprise. They report profitability and the financial position of the business at the end of
accounting period. The team financial statement includes at least two statements which the
accountant prepares at the end of an accounting period. The two statements are: -

 The Balance Sheet

 Trading & Profit And Loss Account

They provide some extremely useful information to the extent that balance Sheet mirrors the
financial position on a particular date in terms of the structure of assets, liabilities and owner’s
equity, and so on and the Profit and Loss account shows the results of operations during a
certain period of time in terms of the revenues obtained and the cost incurred during the year.
Thus, the financial statement provides a summarized view of financial position and operations
of a firm.

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Ratio analysis

Ratio analysis is referred to as the study or analysis of the line items present in the financial
statements of the company. It can be used to check various factors of a business such as
profitability, liquidity, solvency and efficiency of the company or the business.

Ratios are worked out to analyse the following aspects of business organization-

A) Solvency-
1) Long term
2) Short term
3) Immediate
B) Stability
C) Profitability
D) Operational efficiency
E) Credit standing
F) Structural analysis
G) Effective utilization of resources
H) Leverage or external financing

Fund Flow Analysis-

Fund may be interpreted in various ways as

(a) Cash,

(b) Total current assets,

(c) Net working capital,

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(d) Net current assets.

For the purpose of fund flow statement, the term means net working capital. The flow of fund
will occur in a business, when a transaction results in a change i.e., increase or decrease in the
amount of fund.

According to Robert Anthony the funds flow statement describes the sources from which
additional funds were derived and the uses to which these funds were put.

In short, it is a technical device designed to highlight the changes in the financial condition of
a business enterprise between two balance sheets.

Cash Flow Analysis

Cash is a life blood of business. It is an important tool of cash planning and control. A firm
receives cash from various sources like sales, debtors, sale of assets investments etc. Likewise,
the firm needs cash to make payment to salaries, rent dividend, interest etc.

Cash flow statement reveals that inflow and outflow of cash during a particular period. It is
prepared on the basis of historical data showing the inflow and outflow of cash.

Objectives of the study

 To know the financial position of the firm.

 To know the solvency and the ability to payback debt of the firm.

 To know the cash flow in the firm.

 To assess the progress of the firm over a period of time.

 To make intra firm comparison.

Scope of the study

This study will help us to understand the financial position and performance of the firm in the
past 5 years i.e., from 2018-2022. It helps to know the fund flow as well as cash flow of the

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firm. The ratio analysis helps to know the solvency, profitability and other such information of
the firm. This study helps us in intra firm comparison for the past 5 years.

Recent Innovations

The Jio 5G Plans are going to be pocket friendly so that the public of India can have their hands
on the fastest ever internetwork. The Reliance Telecom Company installed all new towers
starting from the metropolitan cities followed by small cities and towns and then in remote
villages. The Jio 5G Post-paid and Prepaid Plans are going to start from Rs 239/- and will offer
internet speeds up to 1 Gbps. As per the trials the Jio 5G Plans speed is recorded upto 42.02
Mbps, 485.22 Mbps, and 513.76 Mbps.

It is now available in more than 72 cities and will reach all over India
in the near future. The Jio 5G Area Wise Availability will be conducted in three different levels.
Unlike Airtel, Jio is installing new towers nationwide to ensure high-speed internet
connectivity to the nook and corners of India. If you are living in a metropolitan city then you
can use the Jio 5G network any time soon. But if you are living in a small city or town then
you have to wait till the end of the upcoming year 2023.

Benefits of study

Cash Flow Review

A cash flow statement is one of the financial statements used in financial analysis. As the name
implies, it accounts for money in and money out. It shows the financial solvency of a company
to pay its liabilities at any point in time.

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Some companies have cyclical revenues but consistent expenses. Knowing that the Christmas
rush needs to fund a slow first quarter of expenses is important for business owners to manage
financial resources.

Company Liability Review

The financial statements show the existing liabilities. These include business loans, lines of
credit, credit cards and credit extended from vendors. A business owner who is planning to
apply for a business expansion loan can look at the financial statements and determine if he
needs to reduce existing liabilities before applying. Lenders look at the financial statements
and consider the revenues, assets and existing liabilities.

Review Assets and Inventory

The balance sheet is a component of the financial statement. Assets are included on the balance
sheet. Analyzing whether there is too much inventory or too little helps business owners
prepare for upcoming sales months. Keeping too much inventory on hand is a potential problem
that ties up money, while not having enough inventory can lead to losing customers and market
share.

Identify Trends and Determine Steps Needed

Analyzing the financial statements from quarter to quarter and year to year help business
owners see trends in growth. A young business might have losses in the early years while it is
developing products and a customer base. At the same time, statements show whether the
business owner is meeting projected estimates.

If a business is projecting a 10 percent annual growth but only achieving 7 percent, business
leaders need to look for ways to either cut costs or increase revenues. The financial statement
identifies the information to explore further.

Seeking Investment Capital

When a business seeks partners or investors, the financial statements are critical. Analyzing
the statements not only helps investors determine if a company is making money, but it also
helps to identify a reasonable cost per share. Shareholders usually invest capital in a company
for growth; thus, shareholder equity is defined based on the capital investment added to assets,
with liabilities subtracted, to define total shareholder equity.

For example, if a company has $1 million in assets with $500,000 in liabilities and gets

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another $500,000 in investment capital, the total shareholder equity is $1 million ($1,000,000
assets + $500,000 investment - $500,000 liabilities = $1,000,000).

Statement of the problem

Financial statement is a systematic technique to analysis the financial position. It is an

important to indicate the information in a company financial statement in assessment and
evaluate its financial strength. Including this there are various factors which can affect the
manufacturing industry as well as performance of the company, shareholders return .it is very
difficult analysis the balance sheet to find out complete image of the financial statement. Hence
there is an access to exact the financial statement by using the financial ratios and fund flow
and cash flow statements. Maintaining the division of difficulties in mind the study is carried
out and by paying attention on financial statement of analysis of reliance industries. The main
core objective of this study is to find out the past financial statement, profitability along in the
midst of recognized the effect of various financial ratios on company future.

Limitations

❖ The required data which are obtained for the study are all secondary data; no primary data
was used.

❖ Company has its own secrecy, so the interpretation given may not be accurate.

❖ Information provided in the project is limited to five years.

❖ Due to change in accounting policies during the year, the data may not be comparable from
year to year

❖ Due to lack of adequate information, approximate values have been taken.

The required data which are obtained for the study are all secondary data; no primary
data was used.

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❖ Company has its own secrecy, so the interpretation given may not be accurate.
❖ Information provided in the project is limited to five years.
❖ Due to change in accounting policies during the year, the data may not be comparable
from year to year.
❖ Due to lack of adequate information, approximate values have been taken.
The required data which are obtained for the study are all secondary data; no primary
data was used.
❖ Company has its own secrecy, so the interpretation given may not be accurate.
❖ Information provided in the project is limited to five years.
❖ Due to change in accounting policies during the year, the data may not be comparable
from year to year.
❖ Due to lack of adequate information, approximate values have been taken.

Chapterization scheme

This study is divided into 5 different chapters. They are as follows:

• Chapter 1 – Introduction

• Chapter 2 – Review of literature

• Chapter 3 – Research methodology

• Chapter 4 – Data analysis and interpretation

• Chapter 5 – Findings, Suggestions & conclusions

21
1) Name of the researcher-Gunnar Friede, Timo Busch & Alexander Bassen (2015)

Reference-
https://www.researchgate.net/deref/http%3A%2F%2Fdx.doi.org%2F10.1080%2F20430795.2
015.1118917

Topic- ESG and financial performance

Review-The main conclusion is the orientation towards long term responsible investing should
be important for all kinds of rational investors in order to fulfil their fiduciary duties and may
better align investors interests with the broader objectives of society.

2) Name of researcher- Elisabeth Albertini(2013)

Reference- https://journals.sagepub.com/doi/10.1177/1086026613510301

Topic- Environmental Management Improve Financial Performance

Review- she conducted a meta-analysis of 52 studies over a 35-year period that confirms a
positive relationship between environmental performance and financial performance.
Moderators’ analysis reveals that the relationship is significantly influenced by the
environmental and financial performance measures, the regional differences, the activity sector
and the duration of the studies.

3) Name of the researcher- SHAWN L. BERMAN (Boston University),

ANDREWC.WICKS, SURESH KOTHA, THOMAS M. JONES (University of
Washington) (1999)

Reference- https://www.jstor.org/stable/256972

Topic- The Relationship between Stakeholder Management Models and Firm Financial
Performance.
Review- The current results support the idea that managerial attention to multiple stakeholder
interests can affect firm financial performance, providing concrete support for an argument
long advanced by stakeholder theorists (e.g., Free- man, 1984; Freeman & Gilbert, 1988). This
study provides a foundation future empirical researchers can use to further explore the

22
relationships between attention to stakeholders and firm performance, an agenda that has
considerable significance for theorists and managers alike.

4) Name of the researcher- Felipe Arias Fogliano De Souza Cunha (2021)

Reference- https://onlinelibrary.wiley.com/doi/10.1002/bse.2842

Topic- Sustainable finance and investment

Review- We conclude that SFI players have worked together to promote positive social and
environmental impacts through their financial and investment activities. However, the under-
theorization of the SFI concept, the traditional short-term nature of financial logic, and the lack
of evidence on the SFI impacts on society and the environment are the greatest challenges
facing the field.

5) Name of the researcher- Marc Orlitzky, Frank L. Schmidt, Sara L. Rynes (2016)

Reference- https://journals.sagepub.com/doi/10.1177/0170840603024003910

Topic- Corporate Social and Financial Performance: A Meta-Analysis

Review- The meta-analytic findings suggest that corporate virtue in the form of social
responsibility and, to a lesser extent, environmental responsibility is likely to pay off, although
the operationalizations of CSP and CFP also moderate the positive association.

6) Name of the researcher- Mohamed Gaber Ibrahim Ismail, Ahmed Sakr (2022)

Reference- https://www.scirp.org/journal/paperinformation.aspx?paperid=117966

Topic- The Extent of the Effect of Voluntary Disclosure on the Firm Performance

Review- Voluntary disclosure is left to management’s discretion. As, majority of the Egyptian
listed firms are relatively small enterprises that are not keen on the matter of disclosing their
information voluntarily. Also, this moderate degree gives empirical evidence that large firms
have more desire to disclose its information voluntarily in their annual reports than other small

23
ones, in order to gain the investors’ confidence and to boost widely its image across the
Egyptian stock market.

7) Name of the researcher- Ameer, R., Othman, R. (2012)

Reference- Journal of Business Ethics 108, 61–79 (2012). https://doi.org/10.1007/s10551-

011-1063-y

Topic-Sustainability Practices and Corporate Financial Performance: A Study Based on the

Top Global Corporations.

Review- His findings show that the higher financial performance of sustainable companies has
increased and been sustained over the sample. Notwithstanding sample limitation, causal
evidence reported in this paper suggests that, there is bi-directional relationship between
corporate social responsibilities practices and corporate financial performance.

8) Name of the researcher- N.Sabarisudha (2013)

Reference-
https://www.academia.edu/8741291/A_STUDY_ON_FINANCIAL_PERFORMANCE_USI
NG_RATIO_ANALYSIS_AT_ING_VYSYA_BANK_PROJECT_REPORT_Submitted_To
_UNDER_THE_GUIDANCE_OF

Topic- A STUDY ON FINANCIAL PERFORMANCE USING RATIO ANALYSIS AT ING

VYSYA BANK

Review- The bank should make efforts to increase the earning retention ratio for its further
business growth and development. Banks should take necessary steps to increase the capital
adequacy ratio. Banks need to have adequate current assets and liquid assets to meet the current
obligations and need to have a good liquidity position.

9) Name of the researcher- Mohsen Ejrami , Nader Salehi (2022)

Reference- Journal: ScienceOpen Preprints https://www.scienceopen.com/hosted-

document?doi=10.14293/S2199-1006.1.SOR-.PPJI5NI.v1

24
Topic- The Effect of Big Data on Firm Value: The Mediation Roles of Innovation and
Financial Performances

Review- Maximizing the firm's financial and operational performance is one of the
management's key objectives because it will have an impact on the share price, market value,
wealth of the owners, and the number of investors. Big data helps businesses operate more
efficiently in this way.

10) Name of the researcher- Achmad Achsan Zainul Mafakhir Shaleh, Augustina Kurniasih
(2021)

Reference- https://j.ideasspread.org/index.php/rfm/article/view/894

Topic- The Determinants of Insurance Firm Value with Enterprise Risk Management (ERM)
as Intervening Variable

Review-The results of the research show that firm size has a significant positive effect on ERM,
DER and ROA has a significant negative effect on ERM, and institutional ownership were
found to have no effect on ERM. Meanwhile, DER(debt to equity ratio) and institutional
ownership have a significant negative effect on firm value, while firm size, ROA(return on
assets)
and ERM have no effect on firm value. Using the Sobel Test it was found that ERM as
intervening variable was unable to mediate the effect of firm size, DER, ROA, institutional
ownership on firm value.

11) Name of the researcher- Zaher Abdel Fattah Al-Slehat (2020)

Reference- international business research journal Vol. 13, No. 1 (2020)

https://www.ccsenet.org/journal/index.php/ibr/article/view/0/41545

Topic- Impact of Financial Leverage, Size and Assets Structure on Firm Value: Evidence
from Industrial Sector, Jordan

Review- The study concluded the non-existence of the impact of financial leverage on the firm
value and the relationship between the financial leverage and Tobin’s q scale was negative.

25
However, there was an impact of each size and asset structure on firm value and the relationship
between the natural logarithm of size and asset structure was positive with Tobin’s q. The study
recommends that Companies must achieve an optimal mixture of debt and equity, for long-
term survival and hence the growth of the company.

12) Name of the researcher- Mohammed Saleh Alosani, Rushami Yusoff, Hassan Al
Dhaafri (2020)

Reference- https://www.emerald.com/insight/content/doi/10.1108/INMR-06-2018-
0039/full/html

Topic- The effect of innovation and strategic planning on enhancing organizational

performance of Dubai Police

Review- High-quality performance is the most important factor that organizations are looking
for and striving to achieve. To achieve the best organizational performance, they need to
implement innovative strategies and practices. Innovation and strategic planning are
considered as the most important drivers in enhancing overall performance, and the effects of
both were examined in this study, with various results.

13) Name of the researcher- Bahtiar Effendi, Bahtiar Effendi (2021)

Reference- Published by Atlantis Press https://www.atlantis-press.com/proceedings/kra-

20/125955602

Topic- The Impact of Environmental Performance on Firm Value: Evidence from Indonesia

Review- By using multiple linear regression analysis the results obtained in this study: (i)
environmental performance through input material dimensions has a significant negative effect
on firm value, (ii) environmental performance through non-product output dimensions has a
significant positive effect on firm value, (iii) environmental performance through dimensions
of compliance aspects has a positive effect but are not significant to firm value, (iv)
environmental performance through the transportation aspect has a negative effect but are not
significant to firm value, (v) environmental performance through input material, non-product
output, compliance aspects, and transportation aspects simultaneously effect on firm value.

26
14) Name of the researcher- Madhusudan Gautam (2021)

Reference- Management Dynamics, 24(1), 95–106.

https://www.nepjol.info/index.php/md/article/view/47548

Topic- Perception towards Firm Value in Nepalese Banking Sector

Review- The findings revealed that depositors and investors perceive that deposit, profitability,
capital adequacy and good governance affect bank value. Publication of financial reports is one
of the major influencing factors of bank value. Credit risk has a negative effect on firm value
in banks. Finally, the study concludes that firm value primarily depends on managerial
efficiency followed by market information, strong liquidity position, credit risk, earnings
position, use of the loan, leverage and size, respectively, in Nepalese commercial banks.

15) Name of the researcher- Osman Gök, Sinem Peker (2017)

Reference- Rev Manag Sci 11, 605–631 (2017).

Topic- Understanding the links among innovation performance, market performance and
financial performance.

Review- Research results reveal a suppression effect of market performance on the innovation–
financial performance relationship. We find a negative direct relationship between innovation
and financial performance; however, market performance reverses this negative effect to a
positive total influence through its suppression effect. This result indicates the vital role of
market performance in converting innovation to positive financial outcomes. The proposed
mediation model is relevant regardless of the set of firm-level and environmental contingency
variables.

16) Name of the researcher- Irwan Mangara Harahapa, Ivana Septiania, and Endri Endria
(2020)

Reference- https://www.growingscience.com/ac/Vol6/ac_2020_81.pdf

Topic- Effect of financial performance on firms’ value of cable companies in Indonesia

27
Review- Taken together all financial performance variables affect the value of the company.
The results of the study have implications that the value of the company can be improved if the
company still maintains a balanced capital structure between debt and equity, provided that
debt is used to finance assets that are productive and efficient so that they can generate profits.

17) Name of the researcher- Zhi-xiong Huang, K.S. Savita, Jiang Zhong-jie (2022)

Reference- Information Processing & Management Volume 59, Issue 1, January 2022,
102761

https://www.sciencedirect.com/science/article/abs/pii/S0306457321002429?via%3Dihub

Topic- The Business Intelligence impact on the financial performance of start-ups

Review- The results indicated that Business Intelligence did not impact Network Learning in
startups, however, business Innovativeness enhanced startups intelligence on Network
Learning by 0.537, Network Learning on enhancing Innovativeness in startups by 0.632, and
Network Learning on financial performance enhancement in startups by 0.397. The impact of
Business Intelligence on Innovativeness as well as Network Learning confirmed, also, the
impact of Innovativeness and Network Learning on financial performance confirmed. Thus,
it can be concluded that the impact of Business Intelligence on financial performance has
been studied indirectly through the mediating role of Innovativeness and Network Learning
in startups. Surprisingly, these two factors are necessary to enhance financial performance.

18) Name of the researcher- Elon Manurung, Effrida Effrida, Andreas James Gondowonto
(2019)

Reference- International Journal of Economics and Financial Issues, 9(6), 100–105.

https://www.econjournals.com/index.php/ijefi/article/view/8828

Topic- Effect of Financial Performance, Good Corporate Governance and Corporate Size on
Corporate Value in Food and Beverages

Review- Based on the results of regression in the company used as a sample in this study
showed the adjusted R ^ 2 value of 0.977623. This means that 97.7623% of the dependent
variable is the value of the company can be explained by the independent variables, namely

28
financial performance, institutional ownership, managerial ownership and company size.
While the remaining 2.2377% is explained by other factors outside the independent variables
in the study.

19) Name of the researcher- Bedman Narteh (2018)

Reference- Marketing Intelligence & Planning, Vol. 36 No. 3, pp. 381-395.

https://www.emerald.com/insight/content/doi/10.1108/MIP-05-2017-0098/full/html

Topic- Brand equity and financial performance: The moderating role of brand likeability

Review- The study found out that service quality, brand association, brand loyalty, and brand
relevance positively and significantly predicted financial performance of the retail banks. In
addition, brand likeability also moderates the relationship between brand equity and financial
performance.

20) Name of the researcher- Setiadharma S and Machali M (2017)

Reference- Setiadharma and Machali, Journal of Business & Finance Affair 2017, 6:4

https://www.hilarispublisher.com/open-access/the-effect-of-asset-structure-and-firm-size-on-
firm-value-with-capitalstructure-as-intervening-variable-2167-0234-1000298.pdf

Topic- The Effect of Asset Structure and Firm Size on Firm Value with Capital Structure as
Intervening Variable

Review- 1. There is a direct effect of asset structure on the firm value of firms of property and
real estate which are registered in Indonesia Stock Exchange period 2010-2014. 2. There is no
indirect effect of asset structure on the firm value of firms of property and real estate which are
registered in Indonesia Stock Exchange period 2010-2014. 3. There is no direct effect of firm
size on the firm value of firms of property and real estate which are registered in Indonesia
Stock Exchange period 2010-2014. 4. There is no indirect effect of firm size on the firm value
of firms of property and real estate which are registered in Indonesia Stock Exchange period
2010-2014. 5. Capital structure as intervening variable doesn’t have any effect on the firm value
and cannot mediate the variable of asset structure and firm size on the firm value of firms

29
of property and real estate which are registered in Indonesia Stock Exchange period 2010-
2014.

21) Name of the researcher- William Sucuahi, Jay Mark Cambarihan (2016)

Reference- Sciedu press Vol 5, No 2 (2016)

https://www.sciedu.ca/journal/index.php/afr/article/view/9564

Topic- Influence of Profitability to the Firm Value of Diversified Companies in the

Philippines

Review- One of the duties of the firm management is to create value for their stockholders.
Research on value creation must be prioritized to help the companies enhance their competitive
advantage. Based on the result, profitability can influence the firm value using Tobin’s Q. This
means that improving firm performance can create value to the firm. The result signifies that
having a good firm value attracts more investors and other parties’ interests to take part of the
company. Thus, it is important to determine first a company’s firm value for a reliable
investment.

22) Name of the researcher- Iman Sofian Suriawinata, Denty Melatijati Nurmalita (2022)

Reference- journal on management and entrepreneurship Vol. 24 No. 1 (2022): MARCH

2022 https://jurnalmanajemen.petra.ac.id/index.php/man/article/view/23915

Topic- Ownership structure, firm value and the moderating effects of firm size: empirical
evidence from Indonesian consumer goods industry

Review- This present study finds that firm size moderates the effect of share ownership
structure on firm value. As firm size increases, managerial conducts are more inclined to
conform with shareholders’ interest. But on the other hand, as firm size increases, institutional
investors tend to side with managers in extracting more value at the expense of other
shareholders. These findings corroborate anecdotal evidence in empirical corporate finance that
size does matter, and provides insights for policy makers relating to corporate governance
implications of institutional ownership in large firms.

30
23) Name of the researcher- Neneng Susanti, Nanda Gyska Restiana (2018)

Reference- journal of finance and banking Vol 22, No 2 (2018)

https://jurnal.unmer.ac.id/index.php/jkdp/article/view/1529

Topic- What's the Best Factor to Determining Firm Value?

Review- The result of the research shows that company size will negatively affect firm value
will have an adverse effect on the company's growth so that investor interest will tend to
decrease. Company age influences firm value so that it can increase trust for an investor to
invest. Capital structure influences firm value so it can reduce the impact on company expense
and the level of debt. The financial performance affects the firm value will have an impact on
the increase of investors in the company, corporate profits negatively affect the firm value so
it should be able to increase further the company sales in generating profits to be distributed to
shareholders.

24) Name of the researcher- Mehdi Tajpour, Elahe Hosseini and Aidin Salamzadeh (2020)

Reference- International Journal of Public Sector Performance Management Vol. 6, No. 6

https://www.inderscienceonline.com/doi/abs/10.1504/IJPSPM.2020.110987

Topic- The effect of innovation components on organisational performance: case of the

governorate of Golestan Province

Review- A 32-item structured questionnaire was adapted from the literature for hypotheses
testing. The statistical population of the research consists of the management and staff members
of the Golestan provincial government. According to Cochran's formula, the research
questionnaire was randomly distributed among 94 individuals in the research population. The
data were then analysed with the SmartPLS 3 software using the structural equation modelling
technique. Based on research findings, “service innovation, administrative process innovation
and technological process innovation have a significant impact on organisational
performance”.

31
25) Name of the researcher- Zuhroh, I. (2019)

Reference- KnE Social Sciences, 3(13), 203–230. https://knepublishing.com/index.php/Kne-

Social/article/view/4206

Topic- The Effects of Liquidity, Firm Size, and Profitability on the Firm Value with
Mediating Leverage

Review- The results of the research showed that it was merely profitability variable which
directly gave a significant and positive effect on the firm value. Whereas liquidity and size
variables directly gave a negative, although insignificant effect. The results of the testing
proved that leverage is a variable which mediates the effect of liquidity, size and profitability
on the firm value.

26) Name of the researcher- Sang-Lyul Ryu, Yeong-wha Sawang, Seunglak Park, Jayoun
Won (2021)

Reference- Journal of Korea Trade (JKT) Vol.25 No.7

https://scholar.kyobobook.co.kr/article/detail/4010028622713

Topic-Exploring the Relationship between Foreign Ownership, Innovation and Firm Value:
A Korean Perspective

Review- The study found that foreign ownership and innovation are positively related to firm
value (Tobin's Q). Foreign ownership moderates’ innovation's contribution to firm value,
implying that foreign ownership may enhance the value relevance of firm innovation. In
addition, we found that firm innovation partially mediates the relationship between foreign
ownership and firm value. Originality/value – This highlights the important role of foreign
investors' monitoring; wherein foreign investors enhance firm value by facilitating firm
innovation. Our results suggest that foreign ownership can be crucial for innovation and may
serve to address weak ownership structures.

32
27) Name of the researcher- Richard Nyerges (1992)

Reference- International Journal of Production Economics Volume 26, Issues 1–3, February
1992, Pages 193-201
https://www.sciencedirect.com/science/article/abs/pii/092552739290063D?via%3Dihub#prev
iew-section-abstract

Topic-- The inventory investment decision and firm value: A conceptual framework

Review- This approach views the inventory investment decision as a series of problems to be
resolved using a wide range of tools, many of which are borrowed from different functional
area applications. All decisions are made within the context of firm valuation using a standard
risk/return format. By approaching the decision in this way, it is possible for the manager to
move closer to optimal decision making and to add greater value to the firm.

28) Name of the researcher- Jia-Lang Seng, Kuan-Ying Huang & Hsiao-Fang Yang (2017)

Reference- Part of the Studies in Computational Intelligence book series (SCI, volume 710)
https://link.springer.com/chapter/10.1007/978-3-319-56660-3_29#citeas
Topic- Financial Reports and Financial News—An Information Content Gap Analysis

Review-The content analysis technique used to find the information content to stock market
reactions and compare the information content gap between financial news articles and
footnotes to financial statements. Then, we find that optimistic sentiment expressed in financial
news articles positively relates to the stock price movement. However, we are unable to reach
a conclusion that information disclosed in the footnotes to financial statements is significantly
enough to represent the existence of information content gap as compared to financial news
articles.

29) Name of the researcher- Hawkar Anwer Hamad, Akar Omar Mhammad, Wafa Rashid
Mahmood, Hero Hassan Khzir (2021)

Reference- QALAAI ZANIST JOURNAL Vol. 6 No. 4 (2021)

https://journal.lfu.edu.krd/ojs/index.php/qzj/article/view/845

Topic-The Effect of Board Characteristics on Financial Performance: Case of Erbil

33
Review- The results revealed a positive relationship between board independence and board
ownership with financial performance. However, increase in board meetings was found to
negatively affect the company’s Return on Assets. The paper recommended that the
management of listed companies maintain having more non-executive directors and
independent directors with ownership as this enhanced objectivity and ensured alignment of
interests between shareholders and the directors.

30) Name of the researcher- Surbhi and Priti Sharma (2022)

Reference- Orissa Journal of Commerce Vol. 43, Issue 2, April-June 2022

https://doi.org/10.54063/ojc.2022.v43i02.08

Topic- Debt Financing and Capital Structure Influencing the Firm’s Financial Performance:
A Bibliometric Analysis

Review- While deciding about the sources and proportion of sources in a capital structure, it is
essential to take decision regarding the proportion of debt and equity financing as well. Debt
financing is considered as the foremost component of outer funding for any corporation which
is in need of raising additional capital for its business. As sources of debt carry a fixed charge
as interest on them, thus it is imperative to take such decisions with utmost care. Because High
leverage may jeopardize the survival and low leverage may prevent a firm from having tax
benefit. The decision regarding, whether to opt debt or not, falls under the category of financing
decisions. Thus, debt financing and capital structure influences the firm’s financial
performance.

34
 Research Methodology

Research Methodology

Research is a logical and systematic search for new and useful information on a particular topic.
Research methodology is a systematic way to solve a problem. It is a science of studying how
research is to be carried out. Essentially, the procedures by which researchers go about their
work of describing, explaining and predicting phenomenon are called research methodology.

About my Research Problem:

The present research is Diagnostic in nature. I analyse the financial statements of reliance for
the past 5 years to know their financial performance and position. Financial statement analysis
is important to both internal and external users for decision making and develop ideas to
improve the firm.

METHODOLOGY IMPLEMENTED:

Ratio Analysis

Ratio analysis is a quantitative method of gaining insight into a company's liquidity, operational
efficiency, and profitability by studying its financial statements such as the balance sheet and
income statement. Ratio analysis is a cornerstone of fundamental equity analysis.

 Ratio analysis compares line-item data from a company's financial statements to reveal
insights regarding profitability, liquidity, operational efficiency, and solvency.
 Ratio analysis can mark how a company is performing over time, while comparing a
company to another within the same industry or sector.
 Ratio analysis may also be required by external parties that set benchmarks often tied
to risk.
 While ratios offer useful insight into a company, they should be paired with other
metrics, to obtain a broader picture of a company's financial health.
 Examples of ratio analysis include current ratio, gross profit margin ratio, inventory
turnover ratio.

35
What Does Ratio Analysis Tell You?
Investors and analysts employ ratio analysis to evaluate the financial health of companies by
scrutinizing past and current financial statements. Comparative data can demonstrate how a
company is performing over time and can be used to estimate likely future performance. This
data can also compare a company's financial standing with industry averages while measuring
how a company stacks up against others within the same sector.

Investors can use ratio analysis easily, and every figure needed to calculate the ratios is found
on a company's financial statements.

Ratios are comparison points for companies. They evaluate stocks within an industry.
Likewise, they measure a company today against its historical numbers. In most cases, it is also
important to understand the variables driving ratios as management has the flexibility to, at
times, alter its strategy to make its stock and company ratios more attractive. Generally, ratios
are typically not used in isolation but rather in combination with other ratios. Having a good
idea of the ratios in each of the four previously mentioned categories will give you a
comprehensive view of the company from different angles and help you spot potential red flags.

Types of Ratios used

The various kinds of financial ratios available may be broadly grouped into the following six
silos, based on the sets of data they provide:

1. Liquidity Ratios

Liquidity ratios measure a company's ability to pay off its short-term debts as they become
due, using the company's current or quick assets. Liquidity ratios include the current ratio,
quick ratio, and working capital ratio.

2. Solvency Ratios

Also called financial leverage ratios, solvency ratios compare a company's debt levels with
its assets, equity, and earnings, to evaluate the likelihood of a company staying afloat over the
long haul, by paying off its long-term debt as well as the interest on its debt. Examples of
solvency ratios include: debt-equity ratios, debt-assets ratios, and interest coverage ratios.

36
3. Profitability Ratios

These ratios convey how well a company can generate profits from its operations. Profit
margin, return on assets, return on equity, return on capital employed, and gross margin ratios
are all examples of profitability ratios.

4. Efficiency Ratios
Also called activity ratios, efficiency ratios evaluate how efficiently a company uses its assets
and liabilities to generate sales and maximize profits. Key efficiency ratios include: turnover
ratio, inventory turnover, and days' sales in inventory.

Cash flow statement

A cash flow statement is an important tool used to manage finances by tracking the cash flow
for an organization. This statement is one of the three key reports (with the income statement
and the balance sheet) that help in determining a company’s performance. It is usually helpful
for making cash forecast to enable short term planning.

The cash flow statement shows the source of cash and helps you monitor incoming and
outgoing money. Incoming cash for a business comes from operating activities, investing
activities and financial activities. The statement also informs about cash outflows, expenses
paid for business activities and investment at a given point in time. The information that you
get from the cash flow statement is beneficial for the management to take informed decisions
for regulating business operations.

Companies generally aim for a positive cash flow for their business operations without which
the company may have to borrow money to keep the business going.

RESEARCH DESIGN:

A good research design has characteristics viz, problem definition, time required for research
project and estimate of expenses to be incurred the function of research design is to ensure that
the required data are collected and they are collected accurately and economically. A research
design is purely and simply the framework for a study that guide the collection and analysis
data. In this project the two basic types of research designs

37
Quantitative research: It is for cases where statistical conclusions to collect actionable
insights are essential. Numbers provide a better perspective for making critical business
decisions. Quantitative research methods are necessary for the growth of any organization.
Insights drawn from complex numerical data and analysis prove to be highly effective when
making decisions about the business’s future.

Explanatory research: Explanatory design uses a researcher’s ideas and thoughts on a subject
to further explore their theories. The study explains unexplored aspects of a subject and details
the research questions’ what, how, and why.

Sources of collecting data:

Secondary Data:
I used secondary data in my project for analysing the financial performance of the reliance
group. I collected data’s from the internet for my research.

Types of data:
The data used in the research is quantitative data

Quantitative data
Quantitative data seems to be the easiest to explain. It answers key questions such as “how
many, “how much” and “how often”.

Quantitative data can be expressed as a number or can be quantified. Simply put, it can be
measured by numerical variables.

Quantitative data are easily amenable to statistical manipulation and can be represented by a
wide variety of statistical types of graphs and charts such as line, bar graph, scatter plot, and
etc.

38
Statistical tools used for analysis:

1) Simple Percentage Analysis:

It refers to a special kind of rates, percentage are used in making comparison between two
or more series of data. A percentage is used to determine relationship between the series.

2) Comparative Statement:

A comparative statement is a document used to compare a particular financial statement with

prior period statements. Previous financials are presented alongside the latest figures in side-
by-side columns, enabling investors to identify trends, track a company’s progress and compare
it with industry rivals

3) Ratio Analysis:

Ratio analysis is a quantitative method of gaining insight into a company's liquidity, operational
efficiency, and profitability by studying its financial statements such as the balance sheet and
income statement. Ratio analysis is a cornerstone of fundamental equity analysis.

39
 BALANCE SHEET OF RELIANCE GROUP FROM 2018-22
BALANCE SHEET OF MAR 22 MAR 21 MAR 20 MAR 19 MAR 18
RELIANCE
INDUSTRIES (in Rs.
Cr.)

12 mths 12 mths 12 mths 12 mths 12 mths

EQUITIES AND
LIABILITIES

SHAREHOLDER'S
FUNDS

Equity Share Capital 6,765.00 6,445.00 6,339.00 6,339.00 6,335.00

TOTAL SHARE 6,765.00 6,445.00 6,339.00 6,339.00 6,335.00

CAPITAL

Reserves and Surplus 464,762.00 468,038.00 384,875.00 398,983.00 308,297.00

TOTAL RESERVES 464,762.00 468,038.00 384,875.00 398,983.00 308,297.00

AND SURPLUS

TOTAL 471,527.00 474,483.00 391,214.00 405,322.00 314,632.00

SHAREHOLDERS
FUNDS

NON-CURRENT
LIABILITIES

Long Term Borrowings 167,231.00 160,598.00 194,402.00 118,098.00 81,596.00

Deferred Tax Liabilities 30,832.00 30,788.00 50,556.00 47,317.00 27,926.00

[Net]

Other Long Term 6,504.00 4,518.00 3,434.00 504.00 504.00

Liabilities

40
Long Term Provisions 1,598.00 1,499.00 1,410.00 2,483.00 2,205.00

TOTAL NON- 206,165.00 197,403.00 249,802.00 168,402.00 112,231.00

CURRENT
LIABILITIES

CURRENT
LIABILITIES

Short Term Borrowings 27,332.00 33,152.00 59,899.00 39,097.00 15,239.00

Trade Payables 134,005.00 86,999.00 71,048.00 88,241.00 88,675.00

Other Current 38,749.00 80,735.00 198,662.00 73,900.00 85,815.00

Liabilities

Short Term Provisions 896.00 901.00 1,073.00 783.00 918.00

TOTAL CURRENT 200,982.00 201,787.00 330,682.00 202,021.00 190,647.00

LIABILITIES

TOTAL CAPITAL AND 878,674.00 873,673.00 971,699.00 775,745.00 617,525.00

LIABILITIES

ASSETS

NON-CURRENT
ASSETS

Tangible Assets 223,824.00 292,092.00 297,854.00 194,895.00 191,879.00

Intangible Assets 15,802.00 14,741.00 8,624.00 8,293.00 9,085.00

Capital Work-In- 19,267.00 20,765.00 15,638.00 105,155.00 92,581.00

Progress

Other Assets 0.00 0.00 0.00 0.00 0.00

41
FIXED ASSETS 274,288.00 339,668.00 334,443.00 314,745.00 300,447.00

Non-Current 330,493.00 252,620.00 421,793.00 272,043.00 171,945.00

Investments

Deferred Tax Assets 0.00 0.00 0.00 0.00 0.00

[Net]

Long Term Loans and 41,951.00 65,698.00 44,348.00 31,806.00 17,699.00

Advances

Other Non-Current 9,544.00 4,968.00 4,461.00 4,287.00 3,522.00

Assets

TOTAL NON- 656,276.00 662,954.00 805,045.00 622,881.00 493,613.00

CURRENT ASSETS

CURRENT ASSETS

Current Investments 78,304.00 94,665.00 70,030.00 59,640.00 53,277.00

Inventories 45,923.00 37,437.00 38,802.00 44,144.00 39,568.00

Trade Receivables 14,394.00 4,159.00 7,483.00 12,110.00 10,460.00

Cash And Cash 21,714.00 5,573.00 8,485.00 3,768.00 2,731.00

Equivalents

Short Term Loans and 161.00 993.00 15,028.00 4,876.00 3,533.00

Advances

Other Current Assets 61,902.00 67,892.00 26,826.00 28,326.00 14,343.00

TOTAL CURRENT 222,398.00 210,719.00 166,654.00 152,864.00 123,912.00

ASSETS

TOTAL ASSETS 878,674.00 873,673.00 971,699.00 775,745.00 617,525.00

42
OTHER ADDITIONAL
INFORMATION

CONTINGENT
LIABILITIES,
COMMITMENTS

Contingent Liabilities 30,426.00 25,921.00 45,924.00 111,869.00 66,970.00

CIF VALUE OF
IMPORTS

Raw Materials 0.00 0.00 0.00 0.00 0.00

Stores, Spares And 0.00 0.00 0.00 0.00 0.00

Loose Tools

Trade/Other Goods 0.00 0.00 0.00 0.00 0.00

Capital Goods 0.00 0.00 0.00 0.00 0.00

EXPENDITURE IN
FOREIGN
EXCHANGE

Expenditure In Foreign 321,119.00 134,436.00 260,280.00 307,558.00 221,977.00

Currency

REMITTANCES IN
FOREIGN
CURRENCIES FOR
DIVIDENDS

Dividend Remittance In -- -- -- -- --
Foreign Currency

EARNINGS IN
FOREIGN
EXCHANGE

43
FOB Value Of Goods -- -- -- -- --

Other Earnings 245,752.00 179,929.00 284,196.00 214,337.00 169,763.00

BONUS DETAILS

Bonus Equity Share 5,188.89 5,188.89 5,188.89 5,188.89 5,188.89

Capital

NON-CURRENT
INVESTMENTS

Non-Current 62,401.00 21,240.00 27,475.00 12,937.00 12,182.00

Investments Quoted
Market Value

Non-Current 273,377.00 235,348.00 394,521.00 259,314.00 160,045.00

Investments Unquoted
Book Value

CURRENT
INVESTMENTS

Current Investments 21,471.00 36,303.00 31,814.00 24,017.00 13,133.00

Quoted Market Value

Current Investments 56,833.00 58,362.00 38,216.00 35,623.00 40,144.00

Unquoted Book Value

44
 Profit &Loss account for 2018-22

PROFIT & LOSS MAR 22 MAR 21 MAR 20 MAR 19 MAR 18

ACCOUNT OF
RELIANCE
INDUSTRIES (in Rs.
Cr.)

12 mths 12 mths 12 mths 12 mths 12 mths

INCOME

REVENUE FROM 466,425.00 278,940.00 366,177.00 401,583.00 315,357.00

OPERATIONS
[GROSS]

Less: Excise/Service 42,722.00 33,273.00 29,224.00 29,967.00 25,315.00

Tax/Other Levies

REVENUE FROM 423,703.00 245,667.00 336,953.00 371,616.00 290,042.00

OPERATIONS [NET]

TOTAL OPERATING 423,703.00 245,667.00 336,953.00 371,616.00 290,042.00

REVENUES

Other Income 13,872.00 14,818.00 13,566.00 8,822.00 8,220.00

TOTAL REVENUE 437,575.00 260,485.00 350,519.00 380,438.00 298,262.00

EXPENSES

Cost Of Materials 320,852.00 168,262.00 237,342.00 265,288.00 198,029.00

Consumed

Purchase Of Stock-In 10,691.00 7,301.00 7,292.00 8,289.00 7,268.00

Trade

45
Operating And Direct 27,155.00 18,375.00 21,424.00 24,839.00 0.00
Expenses

Changes In Inventories -7,962.00 610.00 77.00 -3,294.00 -3,232.00

Of FG,WIP And Stock-
In Trade

Employee Benefit 5,426.00 5,024.00 6,067.00 5,834.00 4,740.00

Expenses

Finance Costs 9,123.00 16,211.00 12,105.00 9,751.00 4,656.00

Depreciation And 10,276.00 9,199.00 9,728.00 10,558.00 9,580.00

Amortisation Expenses

Other Expenses 15,951.00 13,565.00 14,306.00 14,252.00 31,496.00

TOTAL EXPENSES 390,789.00 237,577.00 305,958.00 333,071.00 252,537.00

PROFIT/LOSS 46,786.00 22,908.00 44,561.00 47,367.00 45,725.00

BEFORE
EXCEPTIONAL,
EXTRAORDINARY
ITEMS AND TAX

Exceptional Items 0.00 4,304.00 -4,245.00 0.00 0.00

PROFIT/LOSS 46,786.00 27,212.00 40,316.00 47,367.00 45,725.00

BEFORE TAX

TAX EXPENSES-
CONTINUED
OPERATIONS

Current Tax 787.00 0.00 7,200.00 9,440.00 8,953.00

Less: MAT Credit 0.00 0.00 0.00 0.00 0.00

Entitlement

46
Deferred Tax 6,915.00 -4,732.00 2,213.00 2,764.00 3,160.00

Tax For Earlier Years 0.00 0.00 0.00 0.00 0.00

TOTAL TAX 7,702.00 -4,732.00 9,413.00 12,204.00 12,113.00

EXPENSES

PROFIT/LOSS AFTER 39,084.00 31,944.00 30,903.00 35,163.00 33,612.00

TAX AND BEFORE
EXTRAORDINARY
ITEMS

PROFIT/LOSS FROM 39,084.00 31,944.00 30,903.00 35,163.00 33,612.00

CONTINUING
OPERATIONS

PROFIT/LOSS FOR 39,084.00 31,944.00 30,903.00 35,163.00 33,612.00

THE PERIOD

OTHER ADDITIONAL
INFORMATION

EARNINGS PER
SHARE

Basic EPS (Rs.) 59.24 49.66 48.42 55.48 53.08

Diluted EPS (Rs.) 58.49 48.90 48.72 55.47 53.04

VALUE OF
IMPORTED AND
INDIGENIOUS RAW
MATERIALS
STORES, SPARES
AND LOOSE TOOLS

Imported Raw 0.00 0.00 0.00 0.00 0.00

Materials

47
Indigenous Raw 0.00 0.00 0.00 0.00 0.00
Materials

STORES, SPARES
AND LOOSE TOOLS

Imported Stores And 0.00 0.00 0.00 0.00 0.00

Spares

Indigenous Stores And 0.00 0.00 0.00 0.00 0.00

Spares

DIVIDEND AND
DIVIDEND
PERCENTAGE

Equity Share Dividend 4,297.00 3,921.00 3,852.00 3,554.00 3,255.00

Tax On Dividend 0.00 0.00 732.00 728.00 661.00

Equity Dividend Rate 80.00 70.00 65.00 65.00 60.00

(%)

48
RATIO ANALYSIS (AMT IN CRORES):
1) SOLVENCY RATIOS:
A) Debt to equity ratio:
FORMULA:
Debt to equity ratio = Long term debt / shareholders’ equity
Table 4.1
2022 2021 2020 2019 2018

DEBT 167231 160598 194402 118098 81596

EQUITY 6765 6445 6339 6339 6335

RATIO 24.72:1 24.92:1 30.67:1 18.63:1 12.88:1

Interpretation:

 An ideal debt to equity ratio is 2:1.

 The above ratio shows that the firm is very much dependant on debt which is not good.

 The debt to equity ratio increases from 2018-20 which shows that the company got
more debt in that period compared to the equity which is not good.

 After 2020 the the debt to equity ratio reduces which is good as the company depends
less on debts compared to equity.

49
B) Debt-to-Assets Ratio

The debt-to-assets ratio is calculated as follows:

Debt-to-Assets Ratio = Debt / ASSET

DEBT= total non-current liabilities

Table 4.2

2022 2021 2020 2019 2018

Debt 206165 197403 249802 168402 112231

Asset 878674 873673 971699 775745 617525

Ratio 0.23 or 0.23 or 0.26 or 0.22 or 0.18 or

23% 23% 26% 22% 18%

Interpretation:

 The company has a good debt to asset ratio as it does not exceed 1 or 100% of the
assets, which shows that their solvency is good. The less the ratio the better.

 In 2018 the company had the lowest debt to asset ratio which is good for the company.

 From 2018-20 the debt to asset ratio increased a little bit but it was still under the safe
zone.

 After 2020 till 2022 the ratio decreased a bit which is a positive change for the company.

50
C) Equity Ratio:

Formula:

Shareholder equity ratio = Total shareholder equity / Total assets

Table 4.3

2022 2021 2020 2019 2018

Share 471527 474483 391214 405322 314632

holder’s
equity
Total asset 878674 873673 971699 775745 617525

Ratio 0.54 0.54 0.40 0.52 0.51

Interpretation:

 Any company with an equity ratio value that is .50 or below is considered a leveraged
company. The higher the value, the less leveraged the company is. Conversely, a
company with an equity ratio value that is .50 or above is considered a conservative
company because they access more funding from shareholder equity than they do from
debt.

 From the above, we can know that from 2018-19 the firm maintained the ratio above
0.50 which shows that they are not a leveraged company.

 Only in the year 2020 the ratio went below 0.50 which means it became leveraged firm.

 Once again they regained their status and increased their ratio above 0.50 which shows
that the firms running good and performing well.

51
2) PROFITABILITY RATIOS:

A) GROSS PROFIT RATIO:

Gross Profit Ratio = Gross Profit/Net Revenue of Operations (net sales) ×

100

Gross profit = total revenue- cost of material consumed- purchase of stock in

trade- operating and direct expenses- changes in inventories

Table 4.4

2022 2021 2020 2019 2018

Gross 86839 65937 84384 85316 96197

profit

Net sales 423703 245667 336953 371616 290042

Ratio 20.50% 26.84% 25.04% 22.96% 33.17%

Interpretation:

 Gross profit is the profit we get after deducting all direct expenses from the net revenue
from operation (net sales). The more the gross profit the better the firms performing.

 In 2018 the firm had the highest gross profit, after that the gross profit started to decline.

 The current year which is 2022 has the lowest gross profit, which shows that the firms
performing poorly as compared to the past years.

 The firm needs to find a way to increase its sales as well as decrease its direct expenses
to increase its gross profit.

52
B) NET PROFIT RATIO:

Formula:

Net profit ratio = Net profit after tax / Net revenue from operations (net
sales)

Table 4.5

2022 2021 2020 2019 2018

Net profit 39084 31944 30903 35163 33612

after tax

Net sales 423703 245667 336953 371616 290042

Ratio 9.22% 13.01% 9.17% 9.46% 11.59%

Interpretation:

 Net profit is the profit we get after deducting all the direct and indirect expenses from
the revenue of operation. The more the net profit the better for the firm.

 The net profit starts reducing from 2018-2020, which means the firms performing
poorly.

 Only in the year 2021 the net profit increased.

 Again in the current year the net profit declined meaing the firm performance was not
good.

 This means the firms needs to work on reducing both the direct and indirect expenses
and increase the sales.

53
C) Return on capital employed:

Formula:

Roce= Ebit / capital employed * 100

Ebit= earning before interest and tax or profit before interest and tax

Capital employed = total assets – current liabilities

Table 4.6

2022 2021 2020 2019 2018

Ebit 46786 27212 40316 47367 45725

Capital 677692 671886 641017 573724 426878

employed

Ratio 6.90% 4.05% 7.03% 8.26% 10.71

Interpretation:

 This shows the return we get for the capital that is invested in the firm. Therfore the
more the return the better for the firm.

 The return in 2018 was the highest and it starts to decrease in the coming years.

 From 2021 to 2022 there is increase in the return on capital which is good but still not
as good as the 2018.

 Thus, the firm needs to work on how to increase the return for the capital invested.

54
D) Return On Networth:

Return on networth = profit after tax / shareholders fund *100

Table 4.7

2022 2021 2020 2019 2018

Profit after 39084 31944 30903 35163 33612

tax

Shareholders 471527 474483 391214 405322 314632

fund

Ratio 8.29 6.73 7.90 8.67 10.68

Interpretation:

 This is also known as Return on Shareholders funds and is used for determining whether
the investment done by the shareholders are able to generate profitable returns or not. It
should always be higher than the return on investment which otherwise would indicate
that the company funds are not utilised properly.

 From the above we can see that the return on networth was lower than the return on
capital employed from 2018-20, which means the firm was not performing properly
and shareholders cannot generate profitable returns.

 But after 2020 i.e, from 2021-22 the return on networth was higher than the return on
capital employed which means the shareholders can generate profitable returns on their
investments.

55
E) Dividend Payout Ratio (Rs):

Dividend payout ratio = dividend per share / earnings per share

Table 4.8

2022 2021 2020 2019 2018

Dividend 8 7 6.5 6.5 6

per share

Earnings 58.49 48.90 48.72 55.47 53.04

per share

Ratio 13.68% 14.31% 13.34% 11.72% 11.31%

Interpretation:

 Dividend payout ratio calculates the amount paid to shareholders as dividends in

relation to the amount of net income generated by the business.

 The dividend paid to the share holders increased from 2018-21. Therefore, the
shareholders get more return on their investments.

 In the current year 2022, the dividend payout reduced compared to the previous year
2021 as the earnings per share reduced.

 Therefore, the firm needs to work on their earnings to increase the dividend payout.

56
F) Return on assets ratio:
Formula:
Return on assets = Net income / Total assets
Table 4.9

2022 2021 2020 2019 2018

Net 39084 31944 30903 35163 33612

income

Total 878674 873673 971699 775745 617525

assets

Ratio 4.45% 3.66% 3.18% 4.53% 5.44%

Interpretation:

 The term return on assets (ROA) refers to a financial ratio that indicates how profitable
a company is in relation to its total assets. Corporate management, analysts, and
investors can use ROA to determine how efficiently a company uses its assets to
generate a profit.

 The more the ratio, the better it is for the company. In 2018 the firm had the highest
return on assets.

 It slowly declined over the years from 2019-2021. After 2021, in the current year 2022
there is a increase in the return on asset but not as much as in the year 2018.

 This shows that the firm needs to work more efficiently and increase their return on
assets.

57
3) LIQUIDITY RATIOS:

A) Current ratio:

Current ratio = current assets / current liabilities

Table 4.10

2022 2021 2020 2019 2018

Current 222398 210719 166654 152864 123912

assets

Current 200982 201787 330682 202021 190647

liabilities

Ratio 1.11:1 1.04:1 0.50:1 0.76:1 0.65:1

Interpretation:

 A strong current ratio greater than 1.0 indicates that a company has enough short-term
assets on hand to liquidate to cover all short-term liabilities if necessary. The current
asset needs to be more than current liabilities.

 From above we can know that the position of the firm was not good during 2018-2020
as the current assets were less than current liabilities.

 After 2020, from 2021-22 the currents assets were more than the current liabilities, thus
the firm is in a better position and performing well than the previous years.

58
B) Quick or acid test ratio:

Quick Ratio = (Cash + Marketable securities + Accounts receivable) /

Current liabilities (OR)

Quick Ratio = [Current Assets – Inventory – Prepaid expenses] / Current

Liabilities

Table 4.11

2022 2021 2020 2019 2018

Quick 176475 173282 127852 108720 84344

assets

Current 200982 201787 330682 202021 190647

liabilities

Ratio 0.88:1 0.86:1 0.39:1 0.54:1 0.44:1

Interpretation:

 A ratio above 1 indicates that a business has enough cash or cash equivalents to cover
its short-term financial obligations and sustain its operations.

 From above we can know that the quick assets increased from 2018-22, still it was
below the current liabilities i.e, below 1.

 This indicates that the firm does not have enough cash or cash equivalents to pay off its
short term obligations.

 Thus, the firm needs to work on to increase their quick assets.

59
C) Cash ratio or Absolute liquidity ratio:

Cash ratio = cash & cash equivalents / current liabilities

Table 4.12

2022 2021 2020 2019 2018

cash & 21714 5573 8485 3768 2731

cash
equivalents

current 200982 201787 330682 202021 190647

liabilities

Ratio 0.11:1 0.028:1 0.026:1 0.019:1 0.014:1

Interpretation:

 Cash ratio is a measure of a company’s liquidity in which it is measured whether the

company has the ability to clear off debts only using the liquid assets (cash and cash
equivalents such as marketable securities). It is used by creditors for determining the
relative ease with which a company can clear short term liabilities.

 As mentioned above, the cash & cash equivalent does not cross the current liabilities,
thus it cannot pay its current liabilities by the cash & cash equivalent.

 Thus, the firm needs to work on increasing the cash & cash equivalents.

60
D) Earning retention ratio:

Earning retention ratio = Retained earnings / net income

Table 4.13

2022 2021 2020 2019 2018

Retained 34787 28023 27051 31609 30357

earnings

net income 39084 31944 30903 35163 33612

Ratio 89.01% 87.73% 87.54% 89.90% 90.32%

Interpretation:

 The company after paying dividend retains the remaining profit for future use, such
profits are called retained earnings.

 From the year 2018-22 the firm retained earning reduces a little bit, which means they
payout more amount as dividend.

 This is decided by the shareholders(bod) i.e, the amount to be retained and the amount
to be paid as dividend.

61
4) Valuation ratios:
Table 4.14
Enterprise value

2022 2021 2020 2019 2018

Enterprise 1954716.18 1479239.40 950998.06 1017464.40 653357.80

value (in cr)

A) Enterprise value to Ebitda ratio

Enterprise to Ebitda = enterprise value / Ebitda

Table 4.15

2022 2021 2020 2019 2018

Enterprise 1954716.18 1479239.40 950998.06 1017464.40 653357.80

value

Ebitda 66185 48318 66394 67676 59961

Ratio 29.53 30.61 14.32 15.03 10.90

NOTES:

 As a general guideline, an EV/EBITDA value below 10 is commonly interpreted as

healthy and above average by analysts and investors. A high EV/EBITDA means that
there is a potential the company is overvalued.

 Only in 2018 the ratio was nearby to 10. After 2018 the ratio started to increase, which
shows the company maybe overvalued.

 It also denotes that such a huge company with huge enterprise value only produces a
lesser amount of ebitda. Which may indicate that the firm performance is not upto the
point for such a huge value.

62
 Cash flow statement
CASH FLOW OF MAR 22 MAR 21 MAR 20 MAR 19 MAR 18
RELIANCE
INDUSTRIES (in Rs. Cr.)

12 mths 12 mths 12 mths 12 mths 12 mths

NET PROFIT/LOSS 46,786.00 27,212.00 40,316.00 47,367.00 45,725.00

BEFORE
EXTRAORDINARY ITEMS
AND TAX

Net Cashflow from 67,491.00 -512.00 77,533.00 29,191.00 62,000.00

Operating Activities

Net Cash Used In Investing -45315 74,257 -143625 -53,949 -59,109

Activities

Net Cash Used from -6,035.00 -76,657 70,767 25,795 -1,914

Financing Activities

Foreign Exchange Gains / 0.00 0.00 0.00 0.00 0.00

Losses

Adjustments On 0.00 0.00 42.00 0.00 0.00

Amalgamation Merger
Demerger Others

NET INC/DEC IN CASH 16,141.00 -2,912.00 4,717.00 1,037.00 977.00

AND CASH
EQUIVALENTS

Cash And Cash 5,573.00 8,485.00 3,768.00 2,731.00 1,754.00

Equivalents Begin of Year

Cash And Cash 21,714.00 5,573.00 8,485.00 3,768.00 2,731.00

Equivalents End of Year

63
Analysis of cash flow statement:

 Net increase in cash and cash equivalents has increased from the year 2018-2020.

 But only in the year 2021, there is a decrease in the cash flow showing a negative cash
inflow.

 In the current year there is a huge increase in the cash inflow compared to the past 5
years.

 As for as operating activities are concerned all the years the firm performed well and
had inflows except 2021.

 As for the investing activities are concerned, the case totally reversed only in the year
2021 the firm had used cash is in positive ,remaining are in negative which means
withdrawl of the investments.

 As for as the financing activities are concerned, the year 2018, 2021, 2022 had negative
value which may mean that the company may have paid out capital siuch as paying off
long term debt or making dividends to shareholders etc.

 The net profit was similar in all the years except in the year 2021, the net profit was
very low, which led to decrease in cash.

64
 Findings
 The firm is very much dependent on debts rather than equity for its capital requirements.

 The company has very good debt to asset ratio as it does not exceed 1 or 100%.

 The firm maintained a equity ratio above 0.5, which shows that they are not leveraged
company.

 The gross profit and net profit for the current year is less compared to the past years,
thus the firm needs to work on increasing their profits.

 The firm had best return on capital in the year 2018 and the least in 2021. The firm
needs to improve its return on capital.

 The firm had the best retun on networth in the yaer 2018 and least in 2021. In the current
year 2022 it increased but still needs to work more on increasing the return on networth.

 The firm had the most dividend payout ratio in the year 2021, the current is a little lesser
than it.

 The return on asset was more in the year 2018 and slowly declined but in the current
year it raised once again.

 The company did not have a good current ratio in the years 2018-2020 as it was less
than 1, indicating that the company do not have enough short term assets to meet its
short term obligations. But slowly it increased and the company had good current ratio
from the year 2021-22.

 The firm do not have enough quick assets to pay off its short term obligations in any of
the years.

 The firm do not have enough cash to pay off its short term obligations as indicated by
the cash ratio.

 The retention ratio was highest in the year 2018 and it slowly declined but once again
in the current year 2022 the ratio increased.

 The company may be overvalued as the enterprise to ebitda ratio is more than 10, which
indicates that the firm does not make as much profit compared to its huge enterprise
value.

65
  The cash flow statement indicates that in the year 2021 there was a decrease in the cash
and cash equivalents. But in the next year i.e, the current year 2022 they had a major
increase in the cash and cash equivalents.

Suggestions
 The company needs to depend more on equity rather than debt.

 The company needs to have more quick assets to pay off its debt.

 The company needs to have more cash in hand.

 The company need to work on their returns for the asset, capital employed and
enterprise value.

 The company needs to work on their current ratio by increasing the current assets.

Conclusion
The company’s overall position is at a very good position. The company achieves sufficient
profit in past years. The long-term solvency position of the company is very good. The
company maintains low liquidity to achieve the high profitability. The company distributes
dividends every year to its shareholders. The profit of the company decreased in the last year
due to maintaining the comparatively high liquidity. The company dependents mostly on debts
as its capital.

66
Biblography

Books
 Management Accounting book by Kulkarni

Author: Kulkarni, M. A.

Edition: 9th revised edition

Publisher: Everest Publishing House

 Financial Accounting For Managers by Ghosh

Author: Ghosh, T. P.

Edition: 4th ed

Publisher: Taxman Allied Service

Websites

 https://www.moneycontrol.com/financials/relianceindustries/balance-sheetVI/RI

 https://en.m.wikipedia.org/wiki/Reliance_Industries

 https://www.investopedia.com/terms/r/ratioanalysis.asp

 https://www.researchgate.net/publication/353306609_A_Review_of_Corporate_Finan
cial_Performance_Literature_A_Mini-Review_Approach_Keywords

 https://www.investopedia.com/terms/c/cashflowstatement.asp#:~:text=A%20cash%20
flow%20statement%20is,investments%20during%20a%20given%20period.

 https://www.ril.com/OurCompany/Leadership/BoardOfDirectors.aspx

 https://www.questionpro.com/blog/research-design/

 https://www.intellspot.com/data-types/

67