FINANCIAL RATIO ANALYSIS

OF SAIL
Summer Training Project Report
Submitted for fulfilment of
the requirement for the MBA...
Under Gangadhar Meher University, Sambalpur.

Submitted By:
SIBANANDA SAHOO
ROLL NO. - PC20MBA030

For the Session

2020-2022

GANGADHAR MEHER UNIVERSITY

Fatak, Over Bridge, Amruta Vihar, Sambalpur, Odisha, 768001
 DECLARATION

I hereby declare that, the project entitled “FINANCIAL RATIO

ANALYSIS OF SAIL” is an outcome of my own efforts. The project is
submitted to the GANGADHAR MEHER UNIVERSITY for the partial
fulfillment of the Masters of Business Administration “Summer training
project”. I also declare that this project report has not been previously
submitted to any other university.

SIBANANDA SAHOO
GANGADHAR MEHER UNIVERSITY
Fatak, Over Bridge, Amruta Vihar,
Sambalpur-768001, Odisha

CERTIFICATE

This is to state and certify that the STP report entitled “FINANCIAL
RATIO ANALYSIS OF SAIL” is carried out by SIBANANDA
SAHOO, Roll No.- PC20MBA030 under my supervision.

This report is submitted in fulfillment of the requirements of Summer

Training Project of Subject code: CP-304 for the award of the degree of
Masters of Business Administration from Gangadhar Meher University,
Sambalpur, Odisha, India.

Dr. Srinibash Dash

HOD, GMU College Seal
 ACKNOWLEDGEMENT
Making this project wasn’t easy but with the guidance and assistance of all
our teachers and friends we have tried our best to make this project a
success.

I am very much thankful to Dr. Srinibash Dash, HOD of school of

management, Gangadhar Meher University, Sambalpur for giving me
opportunity to submit my summer training project.

I am also very much thankful to Miss Shibani Sharma, asst. professor,

Gangadhar Meher University, under whose guidance, I have completed
this summer training project report.

I am also very much thankful to Mr. Sadashib Sahoo, Guest faculty,

Gangadhar Meher University, Sambalpur for grateful help in supplying
adequate knowledge and materials during my project work.

Finally, I am also indebted to Mr. Khageswar Sahoo, for his help and
guidance to make this project report.

And finally, a grateful thanks to Prof. N. Nagaraju, Vice Chancellor,

Gangadhar Meher University, Sambalpur for his continued drive for better
quality in everything that happens at GMU. This report is a dedicated
contribution towards that greater goal.

SIBANANDA SAHOO
 CONTENT
Chapter 1 INTRODUCTION PAGE NO.
1.1. Introduction 1
1.2. Objective of study 1
1.3. Importance of the study 1
1.4. Limitation of the study 2
Chapter 2 COMPANY PROFILE
2.1. History of the industry 4
2.2. Present status of the steel industry 5
2.3. Way forward for the Indian steel industry 6
2.4. Structural weakness of Indian steel industry 8
2.5. Strength of Indian steel industry 9
2.6. About SAIL 9
Chapter 3 REVIEW OF LITERATURE 12
Chapter 4 CONCEPT & THEORY OF STUDY
4.1. Ratio analysis 17
4.2. Steps of ratio analysis 17
4.3. Basis or standard of comparison 18
4.4. Nature of ratio analysis 18
4.5. Interpretation of ratios 18
4.6. Guidelines or precautions for use of ratios 19
4.7. Importance of ratio analysis 19
4.8. Limitation of ratio analysis 19
4.9. Classifications of ratios 20
4.10. Types of ratios 21
4.10.1. Liquidity ratio 21
4.10.2. Leverage ratio 22
4.10.3. Activity ratio 24
4.10.4. Profitability ratio 25
Chapter 5 RESEARCH DESIGN
5.1. Meaning of research 30
5.2. Research problem 30
5.3. Research design 31
5.4. Types of research design 31
5.5. Sampling design 32
5.6. Data collection 32
Chapter 6 ANALYSIS & THEORY OF STUDY
6.1. Analysis and interpretation of financial statement 35
6.2. Standalone balance sheet 37
6.3. Current ratio 39
6.4. Liquid ratio 41
6.5. Absolute liquid ratio 42
6.6. Proprietary ratio 43
6.7. Working capital turnover ratio 44
6.8. Fixed asset turnover ratio 45
6.9. Capital turnover ratio 46
6.10. Current asset to fixed asset ratio 47
6.11. Net profit ratio 48
6.12. Earnings per share 49
Chapter 7 CONCLUSION 51
Chapter 8 BIBLIOGRAPHY 53
 LIST OF TABLES
TABLES PAGE NO.
Table No. 6.1 (Standalone Profit and Loss Account) 35
Table No. 6.2 (Standalone Balance Sheet) 37
Table No. 6.3 (Current Ratio) 40
Table No. 6.4 (Liquid Ratio) 41
Table No. 6.5 (Absolute Liquid Ratio) 42
Table No. 6.6 (Proprietary Ratio) 43
Table No. 6.7 (Working Capital Turnover Ratio) 44
Table No. 6.8 (Fixed Asset Turnover Ratio) 45
Table No. 6.9 (Capital Turnover Ratio) 46
Table No. 6.10 (Current Asset to Fixed Asset Ratio) 47
Table No. 6.11 (Net Profit Ratio) 48
Table No. 6.12 (Earning Per Share) 49
CHAPTER 1
INTRODUCTION
1.1 INTRODUCTION
Finance is one of the most primary requisites of a business and the modern management
obviously depends largely on the efficient management of the finance.
Financial statements are prepared primarily for decision making. They play a dominant
role in setting the frame work of managerial decisions. The finance manager has to
adhere to the five R’s with regard to money. This right quantity of money for liquidity
consideration of right quality. Whether owned or borrowed funds. at the right time to
preserve solvency from the right sources and at the right cost of capital.
The term financial analysis is also known as ‘analysis and interpretation of financial
statements’ refers to the process of determining financial strength and weakness of the
firm by establishing strategic relationship between the items of the Balance Sheet, Profit
and Loss account and other operative data.
The purpose of financial analysis is to diagnose the information contained in financial
statements so as to judge the profitability and financial soundness of the firm.
1.2 OBJECTIVES OF THE STUDY
❖ To study the financial position of the company.
❖ To analyze the financial stability and overall performance of SAIL in general.
❖ To analyze and interpret the trends as revealed by various ratios of the company
in particular.
❖ To analyze the profitability and solvency position of the unit with the existing
tools of financial analysis.
❖ To study the changes in the assets, liabilities structure of the company during
the period of study.
1.3 IMPROTANCE OF THE STUDY
❖ By “FINANCIAL PERFORMANCE ANALYSIS OF SAIL” we would be able
to get a fair picture of the financial position of SAIL.
❖ By showing the financial performance to various lenders and creditors it is
possible to get credit in easy terms if good financial condition is maintained in the
company with assets outweighing the liabilities.
❖ Protecting the property of the business.
❖ Compliances with legal requirement,

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1.4 LIMITATIONS OF THE STUDY
❖ The analysis and interpretation are based on secondary data contained in the
published annual reports of SAIL for the study period.
❖ Due to the limited time available at the disposable of the researcher the study
has been confined for a period of 7 years (2001-2007).
❖ Ratio itself will not completely show the company’s good or bad financial
position.
❖ Inter firm comparison was not possible due to the non availability of
competitors data.
❖ The study of financial performance can be only a means to know about the
financial condition of the company and cannot show a through picture of the activities
of the company.

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 CHAPTER 2
COMPANY PROFILE

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2.1 HISTORY OF THE INDUSTRY
The Indian Steel industry is almost 100 years old now. Till 1990, the Indian steel
industry operated under a regulated environment with insulated markets and large-scale
capacities reserved for the public sector. Production and prices were determined and
regulated by the Government, while SAIL and Tata Steel were the main producers, the
latter being the only private player. In 1990, the Indian steel Industry had a production
capacity of 23 MT. 1992 saw the onset of liberalization and the Indian economy was
opened to the world. Indian steel sector also witnessed the entry of several domestic
private players and large private investments flowed into the sector to add fresh
capacities.
Steel Industry in India is on an upswing because of the strong global and domestic
demand. India's rapid economic growth and soaring demand by sectors like
infrastructure, real estate and automobiles, at home and abroad, has put Indian steel
industry on the global map. According to the latest report by International Iron and
Steel Institute (IISI), India is the seventh largest steel producer in the world.
The origin of the Indian steel industry can be traced back to 1953 when a contract for
the construction of an integrated steelworks in Rourkela, Orissa was signed between
the Indian government and the German companies Fried Krupp und Demag AG. The
initial plan was an annual capacity of 500,000 tons, but this was subsequently raised to
1 million tons. The capacity of Rourkela Steel Plant (RSP), which belongs to the SAIL
(Steel Authority of India Ltd.) group, is presently about 2 million tons. At a very early
stage the former USSR and a British consortium also showed an interest in establishing
a modern steel industry in India. This resulted in the Soviet-aided building of a steel
mill with a capacity of 1 million tons in Bhilai and the British-backed construction in
Durgapur of a foundry which also has a million-ton capacity.
The Indian steel industry is organized in three categories i.e., main producers, other
major producers and the secondary producers. The main producers and other major
producers have integrated steel making facility with plant capacities over 0.5 MT and
utilize iron ore and coal/gas for production of steel. The main producers are Tata Steel,
SAIL, and RINL, while the other major producers are ESSAR, ISPAT and JVSL. The
secondary sector is dispersed and consists of:
(1) Backward linkage from about 120 sponge iron producers that use iron ore and non-
coking coal, providing feedstock for steel producers;

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(2) Approximately 650 mini blast furnaces, electric arc furnaces, induction furnaces
and energy optimizing furnaces that use iron ore, sponge iron and melting scrap to
produce steel; and
(3) Forward linkage with about 1,200 re-rollers that roll out semis into finished steel
products for consumer use.
2.2 PRESENT STATUS OF THE STEEL INDUSTRY
1. Indian economy growing @ 8 to 9 %, is one of the fastest growing economies in
the world.
2. Industrial prodn. Showing encouraging trends. Index of industrial production for
Capital goods is growing @ 8.4% CAGR and growth in index for consumer durables
was @10.5% CAGR during 2005-06.
3. The 10th plan investment in infrastructure has been envisaged at around
Rs.880,550 crores.
4. The major sector wise anticipated investment is likely to be Rs.292000 crores in
Power, Rs.145000 crores in Roads & Bridges, irrigation Rs. 111000 crores.
5. During 11th plan (2007-08 to 2011-12), the projected investment towards
infrastructure is likely to be Rs. 2027000 crores, an increase of 180% over 10th plan.
6. Per capita steel consumption at 35 kg low as compared to world average of 150
kg. And 300kg for china.
7. National Steel Policy, as formulated by Indian Ministry of Steel envisages the
following -
i.Crude steel production of 110 million tons by 2019-20 at CAGR of 7.1% from 2004-
05.
ii.The demand of steel by 2020 is likely to be 90 million tones at CAGR of 6.9% from
04-05.
iii.Steel exports by 2020 are likely to grow at CAGR of 13.3% from 04-05 to 26 million
tones.
iv.Steel imports to the country by 2020 shall grow at CAGR of 7.1% from 04-05 to 6
million tones.
8. Lot of steel projects both Brownfield and Greenfield likely to come up and are in
various stage of execution.

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9. As per the newspaper reports (Eco. Times dt.14-11-07), Steel Minister has
projected India's steel production to be around 124 million tons by 2012 and a capacity
of around 275 million tons by 2019-20.
10. During the year 06-07, India produced around 49 million tons of finished steel
which was higher by 11 % over 05-06.
11. Imports at 4.1 million tons during 06-07 were higher by 6.5%. Exports at 4.7
million tones grew by 6.1% during 06-07.
12. During 05-06 Iron ore exports at 84 million tones was almost at the previous
year's level of 87 million tones.
13. During April - Sept.'07 following has been the performance-
i. Crude steel production at 25.7 million tones, exhibited a growth of 5 % over
corresponding period last year
ii. Exports at 2.6 million tones shows an increase by around 8% over the same period
of last year.
iii. Imports were around 3.2 million tones which was an increase by 63% over April-
Sept'06.
14. Due to infrastructure focus, production of long products is gradually increasing
and ratio of flat to long products is narrowing.
15. During Ap-Sept'07 non flat steel produced at 12.4 million tones showed an
increase of around 9% over April-Sept'06.
16. In case of flat products prodn. during April-Sept'07 at 12.2 million tones was
almost at same level of last year.
17. Apparent Consumption of steel during April-Sept'07 was 22 million tones
which was an increase by 11 % over April-Sept'06. While long products (excl. semis)
at 12.3 million tones registered a growth of 9%, the flat products consumption at 12.5
million tones indicated an increase of 12%.
18. With due focus on infrastructure development and strong economic indicators,
the demand for steel in India shall continue to remain robust.
2.3 WAY FORWARD FOR THE INDIAN STEEL INDUSTRY
"We still have a number of persons in our country in SAIL, TISCO and other big and
small steel plants who have the capabilities. They have the will to excel and transform
the country, given a long-term vision."

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"We should be ready to compete in outside markets…...If our steel industry gears up in
about 3 to 4 years, Indian steel can be both in Indian and foreign markets. Our vision
should be towards this."
- Indian 2020: A vision for the new millennium by APJ Abdul Kalam and YS
Rajan
The Government envisions India becoming a developed nation by 2020 with a per
capita GDP of $1540. For a nation that is economically strong, free of the problems of
underdevelopment and plays a meaningful role in the world as befits a nation of over
one billion people, the groundwork would have to begin right now. The Indian Steel
Industry will be required and is willing to play a critical role in achieving this target.
With abundant iron ore resources and well-established base for steel production in the
country, steel is poised for growth in the coming decades. Production has increased
from 17 MT in 1990 to 36 MT in 2003 and 66 MT is targeted for 2011. While steel will
continue to have a stronghold in traditional sectors such as construction, housing,
ground transportation, special steels will be increasingly used in hi-tech engineering
industries such as power generation, petrochemicals, fertilizers etc. Steel will continue
to be the most popular, versatile and dominant material for wide ranging applications.
While India may not become a leader in world steel market, it can become a powerful
force.
To help the Indian Steel Industry achieve its potential and play a meaningful role in
India’s development some steps need to be taken:
❖ Steel is yet to touch the lives of millions of people in India. Per capita
consumption of steel in India is only 29 kg and has to go a long way to reach
consumption levels of around 400 kg in developed countries like USA and world
average of 140 kg.
❖ There is a need to continue the current thrust on infrastructure related activities
and extend them to rural India. Rural Indian today presents a challenge for development
of the country and the opportunity to increase usage of steel in these areas through
projects such as rural housing etc.
❖ Current shortage of inputs has pushed up the costs for the steel industry.
Government should ensure that quality raw material such iron-ore and coke are
available to the industry. With Ministry of Steel targeting an output of 100 MT of steel
by 2020 there is an urgent need to develop raw material resources for inputs like iron-

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ore and coal within or outside the country. Countries like Japan have already taken
similar steps to safeguard their industries.
❖ Adequate enabling infrastructure such as power, ports, roads, rail transport is
pre-requisite for the Indian steel industry to remain competitive.
❖ Government should not regulate prices and free market forces should prevail.
Intervention by the Government is only a short-term solution to the issue of steel prices
in the country. Once left alone, market dynamics will automatically ensure price
corrections and determine the optimum price of steel.
❖ The Indian steel Industry is amongst the least protected in the world. While
developed countries have put numerous tariff and non-tariff barriers on steel exports
from the country, the domestic industry is exposed to cheaper imports from competing
nations. As in case of other important industries, the Government should give
reasonable levels of protection to the domestic steel industry, which is just starting to
get back on its feet.
❖ Industry should be allowed to have a fair return on investment and contribute to
the overall health of the Indian manufacturing segment. The steel industry has invested
a capital of over Rs 90, 000 crores. CRISIL in a recent study has concluded that given
the large exposure that banks and financial institutions have to the steel industry.
❖ Today, Indian producers employ world-class standards of technology. Steel
from Indian finds growing acceptability in international markets. But despite this
India’s share in world trade steel is a miniscule 2%. Given the capabilities of the Indian
steel industry there is tremendous scope to increase this share further. While the steel
industry will continue servicing the domestic demand there is a lot of untapped export
potential with the industry. The Government, in line with EXIM policy 2002-07, should
take steps to make Indian exports more competitive.
2.4 STRUCTURAL WEAKNESSES OF INDIAN STEEL INDUSTRY
• Although India has modernized its steelmaking considerably, however, nearly
6% of its crude steel is still produced using the outdated open-hearth process.
• Labour productivity in India is still very low. According to an estimate crude
steel output at the biggest Indian steelmaker is roughly 144 tons per worker per year,
whereas in Western Europe the figure is around 600 tons.
• India has to do a lot of catching in the production of stainless steel, which is
primarily required by the plant and equipment, pharmaceutical and chemical industries.

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• Steel production in India is also hampered by power shortages.
• India is deficient in raw materials required by the steel industry. Iron ore
deposits are finite and there are problems in mining sufficient amounts of it. India's hard
coal deposits are of low quality.
• Insufficient freight capacity and transport infrastructure impediments to hamper
the growth of Indian steel industry.
2.5 STRENGTHS OF INDIAN STEEL INDUSTRY
• Low labor wage rates.
• Abundance of quality manpower.
• Mature production base.
• Positive stimuli from construction industry.
• Booming automobile industry.
2.6 ABOUT STEEL AUTHORITY OF INDIA
HISTORY OF THE SAIL:
THE PRECURSOR: SAIL traces its origin to the formative years of an emerging
nation - India. After independence the builders of modern India worked with a vision -
to lay the infrastructure for rapid industrialization of the country. The steel sector was
to propel the economic growth. Hindustan Steel Private Limited was set up on January
19, 1954. The President of India held the shares of the company on behalf of the people
of India.
EXPANDING HORIZON (1959-1973):
Hindustan Steel (HSL) was initially designed to manage only one plant that was coming
up at Rourkela. For Bhilai and Durgapur Steel Plants, the preliminary work was done
by the Iron and Steel Ministry. From April 1957, the supervision and control of these
two steel plants were also transferred to Hindustan Steel. The registered office was
originally in New Delhi. It moved to Calcutta in July 1956 and ultimately to Ranchi in
December 1959.
A new steel company, Bokaro Steel Limited, was incorporated in January 1964 to
construct and operate the steel plant at Bokaro. The 1 MT phases of Bhilai and Rourkela
Steel Plants were completed by the end of December 1961. The 1 MT phase of
Durgapur Steel Plant was completed in January 1962 after commissioning of the Wheel
and Axle plant. The crude steel production of HSL went up from .158 MT (1959-60) to
1.6 MT. The second phase of Bhilai Steel Plant was completed in September 1967

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after commissioning of the Wire Rod Mill. The last unit of the 1.8 MT phase of
Rourkela - the Tandem Mill - was commissioned in February 1968, and the 1.6 MT
stage of Durgapur Steel Plant was completed in August 1969 after commissioning of
the Furnace in SMS. Thus, with the completion of the 2.5 MT stage at Bhilai, 1.8 MT
at Rourkela and 1.6 MT at Durgapur, the total crude steel production capacity of HSL
was raised to 3.7 MT in 1968-69 and subsequently to 4MT in 1972-73.
The Ministry of Steel and Mines drafted a policy statement to evolve a new model for
managing industry. The policy statement was presented to the Parliament on December
2, 1972. On this basis the concept of creating a holding company to manage inputs and
outputs under one umbrella was mooted. This led to the formation of Steel Authority
of India Ltd. The company, incorporated on January 24, 1973 with an authorized capital
of Rs. 2000 crore, was made responsible for managing five integrated steel plants at
Bhilai, Bokaro, Durgapur, Rourkela and Burnpur, the Alloy Steel Plant and the Salem
Steel Plant. In 1978 SAIL was restructured as an operating company.
Since its inception, SAIL has been instrumental in laying a sound infrastructure for the
industrial development of the country. Besides, it has immensely contributed to the
development of technical and managerial expertise. It has triggered the secondary and
tertiary waves of economic growth by continuously providing the inputs for the
consuming industry.
SAIL Today
SAIL today is one of the largest industrial entities in India. Its strength has been the
diversified range of quality steel products catering to the domestic, as well as the export
markets Anda large pool of technical and professional expertise. Today, the accent in
SAIL is to continuously adapt to the competitive business environment and excel as a
business organization, both within and outside India.
TYPE OF ORGANISATION:
Steel Authority of India' - a Government of India Enterprise and one of the largest
and profit-making public-sector steel products manufacturing company.
Steel Authority of India produces for both basic and special steels for construction,
engineering, power, railway, automotive and defense industries and caters to Indian and
International markets. Steel Authority of India has five steel plants, one subsidiary,
three special steel plants, multi marketing units at all regions and nine other specialized
units to support growth and development of the Steel Industry in India. Its produces
are Blooms, Billets, Slabs, Crane Rails, Bars, Rods & Re-bars, Wire Rods, HR Coils,

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Sheets, Plates, CR Coils & Sheets and Coils, Tin plates, Electrical Steel, Tubular
Products, Pipes, Railway Products, Rails, Wheels, Axles, Wheel Sets.
Activities: Steel Authority of India production lines are -
• Hot Rolled Coils, Sheets
• Cold Rolled Products.
• Bars and Rods.
• Semi-Finished Products.
• Railway Products.
• Specialty Products.
• Plates.
• Structural.
• Alloy and Stainless Products.
Moreover, Steel Authority of India offers technological services in the following
domains -
• Know-how transfer of technologies developed by its R&D wing.
• Consultancy services.
• Specialized testing services.
• Contract research.
• Training

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CHAPTER 3
REVIEW OF
LITERATURE

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Review of Literature refers to the collection of the results of the various researches
relating to the present study. It takes into consideration the research of the previous
researchers which are related to the present research in any way. Here are the reviews
of the previous researches related with the present study:
Bollen (1999) conducted a study on Ratio Variables on which he found three different
uses of ratio variables in aggregate data analysis: (1) as measures of theoretical
concepts, (2) as a means to control an extraneous factor, and (3) as a correction for
heteroscedasticity. In the use of ratios as indices of concepts, a problem can arise if it
is regressed on other indices or variables that contain a common component. For
example, the relationship between two per capita measures may be confounded with
the common population component in each variable. Regarding the second use of ratios,
only under exceptional conditions will ratio variables be a suitable means of controlling
an extraneous factor. Finally, the use of ratios to correct for heteroscedasticity is also
often misused. Only under special conditions will the common form forgers soon with
ratio variables correct for heteroscedasticity. Alternatives to ratios for each of these
cases are discussed and evaluated.
Cooper (2000) conducted a study on Financial Intermediation on which he observed
that the quantitative behaviour of business-cycle models in which the intermediation
process acts either as a source of fluctuations or as a propagator of real shocks. In
neither case do we find convincing evidence that the intermediation process is an
important element of aggregate fluctuations. For an economy driven by intermediation
shocks, consumption is not smoother than output, investment is negatively correlated
with output, variations in the capital stock are quite large, and interest rates are
procyclical. The model economy thus fails to match unconditional moments for the
U.S. economy. We also structurally estimate parameters of a model economy in which
intermediation and productivity shocks are present, allowing for the intermediation
process to propagate the real shock. The unconditional correlations are closer to those
observed only when the intermediation shock is relatively unimportant.
Gerrard (2001) conducted a study on The Financial Performance on which he found
that Using ratio analysis the financial performance of a sample of independent single-
plant engineering firms in Leeds is examined with regard to structural and locational
differences in establishments. A number of determinants of performance are derived
and tested against the constructed data base. Inner-city engineering firms perform
relatively less well on all indicators of performance compared with outer-city firms.

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The study illustrates the importance of using different measures of performance since
this affects the magnitude and significance of the results. Financial support is necessary
to sustain engineering in the inner city in the long run.
Schmidgall (2003) conducted a study on Financial Analysis Using the Statement of
Cash Flows on which he observed that Managers use many financial ratios to judge the
health of their businesses. With the recent requirement of a statement of cash flow
(SCF) by the Financial Accounting Standards Board, managers now have a new set of
ratios that will give a realistic picture of the business. The ratios include cash flow-
interest coverage, cash flow-dividend coverage, and cash flow from operations to cash
flow in investments. These ratios are particularly useful because they show changes in
a hotel or restaurant's cash position over time, rather than at a given moment, as is the
case with many other ratios.
Murinde (2003) conducted study on Corporate Financial Structures on which he
observed that the financial structure of a sample of Indian non-financial companies
using a new and unique dataset consisting of a panel containing the published accounts
of almost 900 companies that published a full set of accounts every year during 1989-
99. In a new departure in the literature, the dataset includes quoted and unquoted
companies. We compare the sources-uses approach to analysing company financial
structures with the asset-liability approach. We use both approaches to characterize and
to compare the financial structures of Indian companies over time; between quoted and
unquoted companies; and between companies which belong to a business group and
those that do not. Finally, we compare our results to those obtained previously for India
and for the industrial countries.
McMahon (2005) conducted a study on Financial Information on which he found that
financial statements mean little to the uninitiated. This paper, explains, in layman's
terms, how to understand financial information. It covers measures of profitability. The
second article will cover measures of company liquidity and the use of financial ratios.
This paper continues to explain how to interpret and understand financial information.
It deals with measures of liquidity, solvency and fund flows and describes how to
establish standards against which a company's financial ratios can be compared.
Lee (2008 conducted a study on Financial Risk on which he observed that Financial
researchers, including those concentrating on the lodging industry, use various financial
risk measures for their studies. Examples of those risk measures are beta, earnings
variability, bankruptcy probability, debt-to-equity ratio and book-to-market ratio. The

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purpose of this study is, first, to descriptively investigate various financial risk measures
used in the lodging financial literature by performing factor analysis and identifying
four distinct risk groups. Second, this study examines the predictive ability of the four
risk groups for lodging firm performance. The findings of this study suggest that
strategic and stock performance risk factors better represent a lodging firm's financial
risk than do bankruptcy and firm performance risk factors, and also, ROA than ROE
better estimates lodging firm performance in terms of their relationships with financial
risk factors.
Johnson (2009) conducted a study on Financial Ratio patterns on which he found that
the properties and characteristics of financial ratios have received considerable
attention in recent years with interest primarily focused on determining the predictive
ability of financial ratios and related financial data. Principal areas of investigation have
included the prediction of corporate bond ratings, and the anticipation of financial
impairment]. Related studies have examined the characteristics of merged firms the
differences in financial ratio averages among industries whether firms seek to adjust
their financial ratios toward industry averages the relationship between accounting-
determined and market-determined risk measures, and the influence of financial ratios
on analysts' judgments about impending bankruptcy The general conclusion to emerge
from these various research efforts is that a number of financial ratios have predictive
and descriptive utility when properly employed. To summarize the literature, Ratio
analysis is a key dimension of financial management, suggesting a relationship between
profit and loss as mentioned in the balance sheet of an organization. Its appropriate use
will go toward giving a true picture of the financial health of the unit. Its benefits can
be seen in areas of management, production, marketing, personnel management etc.

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 CHAPTER 4
CONCEPT AND
THEORY OF STUDY

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 Financial analysis is the process of identifying the financial strengths and
weaknesses of the firm and establishing relationship between the items of the balance
sheet and profit & loss account.
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. The information
in the statements is used by
• Trade creditors, to identify the firm’s ability to meet their claims i.e. liquidity
position of the company.
• Investors, to know about the present and future profitability of the company and
its financial structure.
• Management, in every aspect of the financial analysis. It is the responsibility of
the management to maintain sound financial condition in the company.
4.1 RATIO ANALYSIS
The term “Ratio” refers to the numerical and quantitative relationship between
two items or variables. This relationship can be exposed as
• Percentages
• Fractions
• Proportion of numbers
Ratio analysis is defined as the systematic use of the ratio to interpret the
financial statements. So that the strengths and weaknesses of a firm, as well as its
historical performance and current financial condition can be determined. Ratio reflects
a quantitative relationship helps to form a quantitative judgment.

4.2 STEPS IN RATIO ANALYSIS

• The first task of the financial analysis is to select the information relevant to the
decision under consideration from the statements and calculates appropriate ratios.
• To compare the calculated ratios with the ratios of the same firm relating to the
pas6t or with the industry ratios. It facilitates in assessing success or failure of the firm.
• Third step is to interpretation, drawing of inferences and report writing
conclusions are drawn after comparison in the shape of report or recommended courses
of action.

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4.3 BASIS OR STANDARDS OF COMPARISON
Ratios are relative figures reflecting the relation between variables. They enable
analyst to draw conclusions regarding financial operations. They use of ratios as a tool
of financial analysis involves the comparison with related facts. This is the basis of ratio
analysis. The basis of ratio analysis is of four types.
• Past ratios, calculated from past financial statements of the firm.
• Competitor’s ratio, of the some most progressive and successful competitor firm
at the same point of time.
• Industry ratio, the industry ratios to which the firm belongs to
• Projected ratios, ratios of the future developed from the projected or pro forma
financial statements
4.4 NATURE OF RATIO ANALYSIS
Ratio analysis is a technique of analysis and interpretation of financial
statements. It is the process of establishing and interpreting various ratios for helping
in making certain decisions. It is only a means of understanding of financial strengths
and weaknesses of a firm. There are a number of ratios which can be calculated from
the information given in the financial statements, but the analyst has to select the
appropriate data and calculate only a few appropriate ratios. The following are the four
steps involved in the ratio analysis.
• Selection of relevant data from the financial statements depending upon the
objective of the analysis.
• Calculation of appropriate ratios from the above data.
• Comparison of the calculated ratios with the ratios of the same firm in the past,
or the ratios developed from projected financial statements or the ratios of some other
firms or the comparison with ratios of the industry to which the firm belongs.

4.5 INTERPRETATION OF THE RATIOS

The interpretation of ratios is an important factor. The inherent limitations of
ratio analysis should be kept in mind while interpreting them. The impact of factors
such as price level changes, change in accounting policies, window dressing etc., should
also be kept in mind when attempting to interpret ratios. The interpretation of ratios can
be made in the following ways.
• Single absolute ratio

- 18 -
• Group of ratios
• Historical comparison
• Projected ratios
• Inter-firm comparison

4.6 GUIDELINES OR PRECAUTIONS FOR USE OF RATIOS

The calculation of ratios may not be a difficult task but their use is not easy.
Following guidelines or factors may be kept in mind while interpreting various ratios
are
• Accuracy of financial statements
• Objective or purpose of analysis
• Selection of ratios
• Use of standards
• Caliber of the analysis
4.7 IMPORTANCE OF RATIO ANALYSIS
• Aid to measure general efficiency
• Aid to measure financial solvency
• Aid in forecasting and planning
• Facilitate decision making
• Aid in corrective action
• Aid in intra-firm comparison
• Act as a good communication
• Evaluation of efficiency
• Effective tool
4.8 LIMITATIONS OF RATIO ANALYSIS
• Differences in definitions
• Limitations of accounting records
• Lack of proper standards
• No allowances for price level changes
• Changes in accounting procedures
• Quantitative factors are ignored
• Limited use of single ratio

- 19 -
• Background is over looked
• Limited use
• Personal bias
4.9 CLASSIFICATIONS OF RATIOS
The use of ratio analysis is not confined to financial manager only. There are different
parties interested in the ratio analysis for knowing the financial position of a firm for
different purposes. Various accounting ratios can be classified as follows:
1. Traditional Classification
2. Functional Classification
3. Significance ratios
1. Traditional Classification
It includes the following.
• Balance sheet (or) position statement ratio: They deal with the relationship
between two balance sheet items, e.g. the ratio of current assets to current liabilities
etc., both the items must, however, pertain to the same balance sheet.
• Profit & loss account (or) revenue statement ratios: These ratios deal with the
relationship between two profit & loss account items, e.g. the ratio of gross profit to
sales etc.,
• Composite (or) inter statement ratios: These ratios exhibit the relation between
a profit & loss account or income statement item and a balance sheet items, e.g. stock
turnover ratio, or the ratio of total assets to sales.
2. Functional Classification
These include liquidity ratios, long term solvency and leverage ratios, activity ratios
and profitability ratios.
3. Significance ratios
Some ratios are important than others and the firm may classify them as primary and
secondary ratios. The primary ratio is one, which is of the prime importance to a
concern. The other ratios that support the primary ratio are called secondary ratios.
Industry Analysis
To determine the financial conditions and performance of a firm. Its ratio may be
compared with average ratios of the industry of which the firm is a member. This type
of analysis is known as industry analysis and also it helps to ascertain the financial

- 20 -
standing and capability of the firm & other firms in the industry. Industry ratios are
important standards in view of the fact that each industry has its characteristics which
influence the financial and operating relationships.
4.10 TYPES OF RATIOS
Management is interested in evaluating every aspect of firm's performance. In view of
the requirement of the various users of ratios, we may classify them into following four
important categories:
1. Liquidity Ratio
2. Leverage Ratio
3. Activity Ratio
4. Profitability Ratio
4.10.1 Liquidity Ratio
It is essential for a firm to be able to meet its obligations as they become due. Liquidity
Ratios help in establishing a relationship between cast and other current assets to current
obligations to provide a quick measure of liquidity. A firm should ensure that it does
not suffer from lack of liquidity and also that it does not have excess liquidity. A very
high degree of liquidity is also bad, idle assets earn nothing. The firm's funds will be
unnecessarily tied up in current assets. Therefore, it is necessary to strike a proper
balance between high liquidity. Liquidity ratios can be divided into three types:
4.10.1 Current Ratio
4.10.2 Quick Ratio
4.10.3 Cash Ratio
4.10.1 .1. Current Ratio
Current ratio is an acceptable measure of firm’s short-term solvency Current
assets includes cash within a year, such as marketable securities, debtors and inventors.
Prepaid expenses are also included in current assets as they represent the payments that
will not made by the firm in future. All obligations maturing within a year are included
in current liabilities. These include creditors, bills payable, accrued expenses, short-
term bank loan, income-tax liability in the current year.
The current ratio is a measure of the firm's short-term solvency. It indicated the
availability of current assets in rupees for every one rupee of current liability. A current
ratio of 2:1 is considered satisfactory. The higher the current ratio, the greater the
margin of safety; the larger the amount of current assets in relation to current liabilities,

- 21 -
the more the firm's ability to meet its obligations. It is a cured -and -quick measure of
the firm's liquidity. Current ratio is calculated by dividing current assets and current
liabilities. Generally, a quick ratio of 1:1 is considered to represent a satisfactory
current financial condition. Quick ratio is a more penetrating test of liquidity than the
current ratio, yet it should be used cautiously. A company with a high value of quick
ratio can suffer from the shortage of funds if it has slowed- paying, doubtful and long
duration outstanding debtors. A low quick ratio may really be prospering and paying
its current obligation in time

4.10.1.2. Cash Ratio

Cash is the most liquid asset; a financial analyst may examine Cash Ratio and
its equivalent current liabilities. Cash and Bank balances and short-term marketable
securities are the most liquid assets of a firm, financial analyst stays look at cash ratio. Trade
investment is marketable securities of equivalent of cash. If the company carries a small
amount of cash, there is nothing to be worried about the lack of cash if the company has
reserves borrowing power. Cash Ratio is perhaps the most stringent Measure of liquidity.
Indeed, one can argue that it is overly stringent. Lack of immediate cash may not matter if
the firm stretch its payments or borrow money at short notice.
4.10.1.3. Quick Ratio
Quick Ratio establishes a relationship between quick or liquid assets and current
liabilities. An asset is liquid if it can be converted into cash immediately or reasonably
soon without a loss of value. Cash is the most liquid asset, other assets that are
considered to be relatively liquid asset and included in quick assets are debtors and bills
receivables and marketable securities (temporary quoted investments). Inventories are
converted to be liquid. Inventories normally require some time for realizing into cash; their
value also has a tendency to fluctuate. The quick ratio is found out by dividing quick assets
by current liabilities.

4.10.2. LEVERAGE RATIOS

Financial leverage refers to the use of debt finance while debt capital is a cheaper source
of finance: it is also a riskier source of finance. It helps in assessing the risk arising
from the use of debt capital. Two types of ratios are commonly used to analyze financial
leverage.

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1. Structural Ratios
2. Coverage ratios.
Structural Ratios are based on the proportions of debt and equity in the financial
structure of firm. Coverage Ratios shows the relationship between Debt Servicing,
Commitments and the sources for meeting these burdens the short-term creditors like
bankers and suppliers of raw material are more concerned with the firm's current debt-
paying ability. On the other hand, long-term creditors like debenture holders, financial
institutions are more concerned with the firm's long-term financial strength. To judge
the long-term financial position of firm, financial leverage ratios are calculated. These
ratios indicated mix of funds provided by owners and lenders. There should be an
appropriate mix of Debt and owner's equity in financing the firm's assets. The process
of magnifying the shareholder's return through the use of Debt is called "financial
leverage" or "financial gearing" or "trading on equity". Leverage Ratios are calculated
to measure the financial risk and the firm's ability of using Debt to shareholder’s
advantage.
Leverage Ratios can be divided into five types.
Debt equity ratio.
• Debt ratio.
• Interest coverage ratio
• Proprietary ratio.
It indicates the relationship describing the lenders contribution for each rupee of the
owner's contribution is called debt-equity ratio. Debt equity ratio is directly computed
by dividing total debt by net worth. Lower the debt-equity ratio, higher the degree of
protection. A debt-equity ratio of 2:1 is considered ideal. The debt consists of all short
term as well as long-term and equity consists of net worth plus preference capital plus
Deferred Tax Liability.

4.10.2.1. Debt ratio

Several debt ratios may use to analyze the long-term solvency of a firm. The
firm may be interested in knowing the proportion of the interest-bearing debt in the
capital structure. It may, therefore, compute debt ratio by dividing total total debt by
capital employed on net assets. Total debt will include short and long-term borrowings
from financial institutions, debentures/bonds, deferred payment arrangements for

- 23 -
buying equipment, bank borrowings, public deposits and any other interest-bearing
loan. Capital employed will include total debt net worth
4.10.2.2. Interest Coverage Ratio

The interest coverage ratio or the time interest earned is used to test the firms’
debt servicing capacity. The interest coverage ratio is computed by dividing earnings before
interest and taxes by interest charges. The interest coverage ratio shows the number of times
the interest charges are covered by funds that are ordinarily available for their payment.
We can calculate the interest average ratio as earnings before depreciation, interest and
taxes divided by interest.

4.10.2.3. Proprietary ratio

The total shareholder's fund is compared with the total tangible assets of the
company. This ratio indicates the general financial strength of concern. It is a test of the
soundness of financial structure of the concern. The ratio is of great significance to creditors
since it enables them to find out the proportion of shareholders funds in the total investment
of business

4.10.3. ACTIVITY RATIOS

Turnover ratios also referred to as activity ratios or asset management ratios,
measure how efficiently the assets are employed by a firm. These ratios are based on the
relationship between the level of activity, represented by sales or cost of goods sold and
levels of various assets. The improvement turnover ratios are inventory turnover,
average collection period, receivable turn over, fixed assets turnover and total assets
turnover. Activity ratios are employed to evaluate the efficiency with which the firm
manages and utilize its assets. These ratios are also called turnover ratios because they
indicate the speed with which assets are being converted or turned over into sales.
Activity ratios thus involve a relationship between sales and assets. A proper balance
between sales and assets generally reflects that asset utilization.
Activity ratios are divided into four types:
4.10.4. Total capital turnover ratio
4.10.5. Working capital turnover ratio
4.10.6. Fixed assets turnover ratio
4.10.7. Stock turnover ratio

- 24 -
4.10.3.1. Total capital turnover ratio:
This ratio expresses relationship between the amounts invested in this asset and
the resulting in terms of sales. This is calculated by dividing the net sales by total sales.
The higher ratio means better utilization and vice-versa.
4.10.3.2. Working capital turnover ratio:
This ratio measures the relationship between working capital and sales. The ratio
shows the number of times the working capital results in sales. Working capital as usual
is the excess of current assets over current liabilities. The following formula is used to
measure the ratio
4.10.3.3. Fixed asset turnover ratio:
The firm may which to know its efficiency of utilizing fixed assets and current
assets separately. The use of depreciated value of fixed assets in computing the fixed assets
turnover may render comparison of firm's performance over period or with other firms.
The ratio is supposed to measure the efficiency with which fixed assets employed a high
ratio indicates a high degree of efficiency in asset utilization and a low ratio reflects
inefficient use of assets. However, in interpreting this ratio, one caution should be borne in
mind, when the fixed assets of firm are old and substantially depreciated, the fixed assets
turnover ratio tends to be high because the denominator of ratio is very low
4.10.3.4. Stock turnover ratio
Stock turnover ratio indicates the efficiency of firm in producing and selling its
product. It is calculated by dividing the cost of goods sold by the average stock. It measures
how fast the inventory is moving through the firm and generating sales.
The stock turnover ratio reflects the efficiency of inventory management. The higher the
ratio, the more efficient the management of inventories and vice versa. However, this may
not always be true. A high inventory turnover may be caused by a low level of inventory
which may result if frequent stock outs and loss of sales and customer goodwill.
4.10.4. PROFITABILITY RATIOS
A company should earn profits to survive and grow over a long period of time.
Profits are essential but it would be wrong to assume that every action initiated by
management of a company should be aimed at maximizing profits. Profit is the
difference between revenues and expenses over a period of time.
Profit is the ultimate 'output' of a company and it will have no future if it fails to
make sufficient profits. The financial manager should continuously evaluate the

- 25 -
efficiency of company in terms of profits. The profitability ratios are calculated to
measure the operating efficiency of company. Creditors want to get interest and
repayment of principal regularly. Owners want to get a required rate of return on their
investment.
Generally, two major types of profitability ratios are calculated:
• Profitability in relation to sales
• Profitability in relation to investment

Profitability Ratios can be divided into six types:

• Gross profit ratio
• Operating profit ratio
• Net profit ratio
• Return on investment
• Earns per share
• Operating expenses ratio

4.10.4.1. Gross profit ratio

First profitability ratio in relation to sales is the gross profit margin the gross
profit margin reflects.

The efficiency with which management produces each unit of product. This ratio
indicates the average spread between the cost of goods sold and the sales revenue. A high
gross profit margin is a sign of good management. A gross margin ratio may increase due
to any of following factors: higher sales prices cost of goods sold remaining constant,
lower cost of goods sold, sales prices remaining constant. A low gross profit margin may
reflect higher cost of goods sold due to firm's inability to purchase raw materials at
favorable terms, inefficient utilization of plant and machinery resulting in higher cost of
production or due to fall in prices in market

This ratio shows the margin left after meeting manufacturing costs. It measures
the efficiency of production as well as pricing. To analyze the factors underlying the
variation in gross profit margin, the proportion of various elements of cost (Labor,
materials and manufacturing overheads) to sale may studied in details.

- 26 -
4.10.4.2. Operating profit ratio
This ratio expresses the relationship between operating profit and sales. It is
worked out by dividing operating profit by net sales. With the help of this ratio, one can
judge the managerial efficiency which may not be reflected in the net profit ratio

4.10.4.3. Net profit ratio

Net profit is obtained when operating expenses, interest and taxes are subtracted
from the gross profit. Net profit margin ratio established a relationship between net
profit and sales and indicates management's efficiency in manufacturing, administering
and selling products.
This ratio also indicates the firm's capacity to withstand adverse economic
conditions. A firm with a high net margin ratio would be in an advantageous position
to survive in the face of falling selling prices, rising costs of production or declining
demand for product
This ratio shows the earning left for shareholders as a percentage of net sales. It
measures overall efficiency of production, administration, selling, financing. Pricing
and tax management. Jointly considered, the gross and net profit margin ratios provide
a valuable understanding of the cost and profit structure of the firm and enable the
analyst to identify the sources of business efficiency / inefficiency
4.10.4.4. Return on investment:
This is one of the most important profitability ratios. It indicates the relation of net
profit with capital employed in business. Net profit for calculating return of investment
will mean the net profit before interest, tax, and dividend. Capital employed means long
term funds.
4.10.4.5. Earnings per share:
This ratio is computed by earning available to equity shareholders by the total amount
of equity share outstanding. It reveals the amount of period earnings after taxes which
occur to each equity share. This ratio is an important index because it indicates whether
the wealth of each shareholder on a per share basis as changed over the period.
4.10.4.6. Operating expenses ratio:
It explains the changes in the profit margin ratio. A higher operating expenses ratio is
unfavorable since it will leave a small amount of operating income to meet interest,
dividends. Operating expenses ratio is a yardstick of operating efficiency, but it should be

- 27 -
used cautiously. It is affected by a number of factors such as external uncontrollable
factors, internal factors. This ratio is computed by dividing operating expenses by sales.
Operating expenses equal cost of goods sold plus selling expenses and general
administrative expenses by sales.

- 28 -
 CHAPTER 5
RESEARCH DESIGN

- 29 -
 The procedure adopted for conducting the research requires a lot of attention as
it has direct bearing on accuracy, reliability and adequacy of results obtained. It is due
to this reason that research methodology, which we used at the time of conducting the
research, needs to be elaborated upon. Research Methodology is a way to systematically
study and solve the research problems. If a researcher wants to claim his study as a
good study, he must clearly state the methodology adapted in conducting the research
the research so that it may be judged by the reader whether the methodology of work
done is sound or not.

The Research Methodology here includes.

1. Meaning of Research.
2. Research Problem.
3. Research Design.
4. Sampling Design.
5. Data Collection method.
6. Analysis and interpretation of Data.

5.1. MEANING OF RESEARCH

Research is defined as “a scientific and systematic search for pertinent
information on a specific topic”. Research is an art of scientific investigation.
Research is a systematized effort to gain now knowledge. It is a careful investigation
or inquiry especially through search for new facts in any branch of knowledge.
Research is an academic activity and this term should be used in a technical sense.
Research comprises defining and redefining problems, formulating hypothesis or
suggested solutions. Making deductions and reaching conclusions to determine whether
they if the formulating hypothesis. Research is thus, an original contribution to the
existing stock of knowledge making for its advancement. The search for knowledge
through objective and systematic method of finding solutions to a problem is research.
5.2. RESEARCH PROBLEM
The first step while conducting research is careful definition of Research
Problem. “To ERR IS THE HUMAN” is a proverb which indicates that no one is
perfect in this world. Every researcher has to face many problems which conducting
any research that’s why problem statement is defined to know which type of problems

- 30 -
a researcher has to face while conducting any study. It is said that, “Problem well
defined is problem half solved.” Basically, a problem statement refers to some
difficulty, which researcher experiences in the context of either a theoretical or practical
situation and wants to obtain the solution for the same. The problem statement here is:
“To make a Financial Analysis of Financial statements of HDFC BANK
LUCKNOW.
5.3. RESEARCH DESIGN
A research designs is the arrangement of conditions for collection and analysis
data in a manner that aims to combine relevance to the research purpose with economy
in procedure. Research Design is the conceptual structure with in which research in
conducted. It constitutes the blueprint for the collection measurement and analysis of
data. Research Design includes and outline of what the researcher will do form writing
the hypothesis and it operational implication to the final analysis of data. A research
design is a framework for the study and is used as guide in collection and analyzing the
data. It is a strategy specifying which approach will be used for gathering and analyzing
the data. It also includes the time and cost budget since most studies are done under
these two-cost budget since most studies are done under theses tow constraints.
The design is such studies must be rigid and not flexible and most focus attention on
the following.
1. What is the study about?
2. Why is the study being made?
3. Where will the study be carried out?
4. What type of data is required?
5. Where can be required data be found?
6. What period of time will the study include?
7. What will be sample design?
8. What techniques of data collection will be used?
9. How will the data be analyzed?
10. In what style will the report be prepared?

5.4. TYPES OF RESEARCH DESIGN

▪ Experimental research design
▪ Exploratory research design

- 31 -
▪ Descriptive& diagnostic research
Exploratory Research Design: This research design is preferred when researcher has
a vague idea about the problem the researcher has to explore the subject.
Experimental Research Design – The research design is used to provide a strong basis
for the existence of casual relationship between two or more variables.
Descriptive Research Design – It seeks to determine the answers to who, what, where,
when and how questions. It is based on some previous understanding of the matter.
Diagnostic Research Design It determines the frequency with which something occurs
or its association with something else.
Research Design Used in this Project
Research Design chosen for this study is Descriptive Research Design. Descriptive
study is based on some previous understanding of the topic. Research has got a very
specific objective and clear-cut data requirements.
5.5. SAMPLING DESIGN
Sampling is necessary because it is almost impossible to examine the entire
parent population (i.e. the entire universe) various factors such as time available cost,
purpose of study etc. make it necessary for the researchers to choose a sample. It should
neither be too small nor too big. It should be manageable. THE sample size of past 3
years is taken for present study due to time limitation.
5.6. DATA COLLECTIONS
The process of data collection begins after a research problem has been defined
and research design has been chalked out. There are two types of data –
Methods of primary data
❖ Observation method
❖ Interview methods
❖ Questionnaire method
❖ Schedule method
Primary data - It is first hand data, which is collected by researcher itself. Primary
data is collected by various approaches so as to get a precise, accurate, realistic and
relevant data. The main tool in gathering primary data was investigation and
observation. It was achieved by a direct approach and observation from the officials of
the company.

- 32 -
Secondary data - it is the data which is already collected by someone else.
Researcher has to analyze the data and interprets the results. It has always been
important for the completion of any report. It provides reliable, suitable, adequate and
specific knowledge.
I took data comprise annual reports and post records. Bank has provided me
annual reports from 2004-05 to 2007-08 by help of which, I prepared my report.
The valuable cooperation extended by staff members contributed a lot to fulfill
the requirements in the collection of data in order to complete the project. Various
statistical tools are applied depending on the research problem. In this study ratio
analysis, comparative financial statements analysis, common size statements and Trend
Analysis has been used for analyzing and interpreting the result.

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CHAPTER 6
ANALYSIS AND
FINDINGS

- 34 -
 Financial statement is an organized collection of data according to logical and
consistent accounting procedures. It purposes is to convey an understanding of some
financial aspects of a business firm. It may show a position at a moment of time as in
the case of a balance sheet, or may reveal a series of activities over a given period of
time, as in the case of an Income Statement. Thus, the term “Financial Statement
“generally refers to two basic statements: (i) the Income Statement and (ii) the Balance
sheet.
6.1. ANALYSIS AND INTERPRETATION OF FINANCIAL
STATEMENT
The financial statements are indicators of the two significant factors:
1. Profitability
2. Financial soundness
Analysis and interpretation of financial statement therefore, refers to such a
treatment of the information contained in the Income Statement and Balance Sheet so
as to afford full diagnosis of the profitability and financial soundness of the business.

STEEL AUTHORITY OF INDIA

STANDALONE PROFIT & LOSS ACCOUNT
Mar-17 Mar-18 Mar-19 Mar-20 Mar 21
12 months 12 months 12 months 12 months 12 months
INCOME
Revenue From Operations [Gross] 49,212.13 58,320.82 66,295.83 61,047.77 68,472.91
Less: Excise/Sevice Tax/Other
5,314.69 1,403.90 0 0 0
Levies
Revenue From Operations [Net] 43,897.44 56,916.92 66,295.83 61,047.77 68,472.91
Other Operating Revenues 554.97 641.54 671.48 612.78 637.11
Total Operating Revenues 44,452.41 57,558.46 66,967.31 61,660.55 69,110.02
Other Income 535.61 484.45 532.82 985.22 1,011.69
Total Revenue 44,988.02 58,042.91 67,500.13 62,645.77 70,121.71
EXPENSES
Cost Of Materials Consumed 21,125.70 26,678.81 32,290.91 29,212.87 23,136.17
Changes In Inventories Of FG,WIP
120.63 1,135.49 -2,716.62 -5,555.82 4,268.58
And Stock-In Trade
Employee Benefit Expenses 8,947.83 8,850.07 8,830.34 8,781.32 10,445.94
Finance Costs 2,527.82 2,822.75 3,154.92 3,486.76 2,817.14
Depreciation And Amortisation
2,679.95 3,064.92 3,384.72 3,755.05 4,102.00
Expenses
Other Expenses 14,220.21 16,276.24 18,828.57 19,023.17 18,531.28
Total Expenses 49,622.14 58,828.28 63,772.84 58,703.35 63,301.11
Profit/Loss Before Exceptional,
-4,634.12 -785.37 3,727.29 3,942.42 6,820.60
ExtraOrdinary Items And Tax
Exceptional Items -216.74 26.43 -389.4 -771.76 58.43
Profit/Loss Before Tax
-
-4,850.86
35 --758.94 3,337.89 3,170.66 6,879.03
TAX EXPENSES-CONTINUED OPERATIONS
Current Tax 0 0 0 224.14 12.05
Less: MAT Credit Entitlement 0 0 0 214.75 0
Employee Benefit Expenses 8,947.83 8,850.07 8,830.34 8,781.32 10,445.94
Finance Costs 2,527.82 2,822.75 3,154.92 3,486.76 2,817.14
Depreciation And Amortisation
2,679.95 3,064.92 3,384.72 3,755.05 4,102.00
Expenses
Other Expenses 14,220.21 16,276.24 18,828.57 19,023.17 18,531.28
Total Expenses 49,622.14 58,828.28 63,772.84 58,703.35 63,301.11
Profit/Loss Before Exceptional,
-4,634.12 -785.37 3,727.29 3,942.42 6,820.60
ExtraOrdinary Items And Tax
Exceptional Items -216.74 26.43 -389.4 -771.76 58.43
Profit/Loss Before Tax -4,850.86 -758.94 3,337.89 3,170.66 6,879.03
TAX EXPENSES-CONTINUED OPERATIONS
Current Tax 0 0 0 224.14 12.05
Less: MAT Credit Entitlement 0 0 0 214.75 0
Deferred Tax -2,032.76 -312.96 1,154.23 1,073.73 3,016.96
Tax For Earlier Years 15.14 35.73 4.84 66 0
Total Tax Expenses -2,017.62 -277.23 1,159.07 1,149.12 3,029.01
Profit/Loss After Tax And Before
-2,833.24 -481.71 2,178.82 2,021.54 3,850.02
ExtraOrdinary Items
Profit/Loss From Continuing
-2,833.24 -481.71 2,178.82 2,021.54 3,850.02
Operations
Profit/Loss For The Period -2,833.24 -481.71 2,178.82 2,021.54 3,850.02
OTHER ADDITIONAL INFORMATION
EARNINGS PER SHARE
Basic EPS (Rs.) -6.86 -1.17 5.27 4.89 9.32
Diluted EPS (Rs.) -6.86 -1.17 5.27 4.89 9.32
number of equity share 413.01 411.72 413.44 413.40 413.09
VALUE OF IMPORTED AND
INDIGENIOUS RAW
MATERIALS
STORES, SPARES AND LOOSE
TOOLS
DIVIDEND AND DIVIDEND
PERCENTAGE
Equity Dividend Rate (%) 0 0 5 0 28

TABLE NO. 6.1 (STANDALONE PROFIT AND LOSS ACCOUNT)

- 36 -
6.2. STANDALONE BALANCE SHEET
STEEL AUTHORITY OF INDIA
STANDALONE BALANCE SHEET
Mar-17 Mar-18 Mar-19 Mar-20 Mar 21
12 months 12 months 12 months 12 months 12 months
EQUITIES AND LIABILITIES
SHAREHOLDER'S FUNDS
Equity Share Capital 4,130.53 4,130.53 4,130.53 4,130.53 4,130.53
Total Share Capital 4,130.53 4,130.53 4,130.53 4,130.53 4,130.53
Reserves and Surplus 31,878.53 31,583.14 34,021.04 35,646.85 39,364.35
Total Reserves and Surplus 31,878.53 31,583.14 34,021.04 35,646.85 39,364.35
Total Shareholders Funds 36,009.06 35,713.67 38,151.57 39,777.38 43,494.88
NON-CURRENT LIABILITIES
Long Term Borrowings 19,087.48 29,777.16 30,802.66 34,560.03 19,725.96
Other Long Term Liabilities 1,524.58 1,324.07 1,590.63 1,699.76 6,196.93
Long Term Provisions 3,593.94 3,973.28 4,295.41 4,108.80 1,253.16
Total Non-Current Liabilities 24,206.00 35,074.51 36,688.70 40,368.59 27,176.05
CURRENT LIABILITIES
Short Term Borrowings 19,813.04 12,244.32 10,631.22 16,640.78 15,850.24
Trade Payables 5,219.20 7,540.50 7,257.99 6,320.38 7,014.41
Other Current Liabilities 18,377.40 21,312.62 21,399.48 19,635.75 21,584.24
Short Term Provisions 2,914.77 2,304.18 2,308.77 2,354.93 2,039.84
Total Current Liabilities 46,324.41 43,401.62 41,597.46 44,951.84 46,488.73
Total Capital And Liabilities 1,06,539.47 1,14,189.80 1,16,437.73 1,25,097.81 1,17,159.66
ASSETS
NON-CURRENT ASSETS
Tangible Assets 48,762.03 57,156.09 59,907.26 67,574.50 66,169.39
Intangible Assets 1,522.58 1,454.63 1,450.86 1,443.42 1,429.28
Capital Work-In-Progress 23,275.39 18,395.43 16,013.50 8,751.56 8,878.48
Other Assets 0.86 0.83 1.09 1.12 1.09
Fixed Assets 73,560.86 77,006.98 77,372.71 77,770.60 76,478.24
Non-Current Investments 1,395.48 1,491.30 1,584.75 1,584.98 1,595.01
Deferred Tax Assets [Net] 4,005.84 4,185.27 2,898.38 2,078.99 0
Long Term Loans And Advances 453.52 451.46 563.98 664.59 756.23
Other Non-Current Assets 1,578.35 1,416.59 1,768.64 2,080.20 2,117.80
Total Non-Current Assets 80,994.05 84,551.60 84,188.46 84,179.36 80,947.28
CURRENT ASSETS
Inventories 15,711.35 16,996.67 19,441.80 23,747.20 19,508.30
Trade Receivables 2,921.69 3,869.94 4,495.05 8,812.39 7,124.00
Cash And Cash Equivalents 289.09 254.06 219.42 363.25 680.52
Short Term Loans And Advances 61.47 63.41 53.24 49.67 50.47
OtherCurrentAssets 6,561.82 8,454.12 8,039.76 7,945.94 8,849.09
Total Current Assets 25,545.42 29,638.20 32,249.27 40,918.45 36,212.38
Total Assets 1,06,539.47 1,14,189.80 1,16,437.73 1,25,097.81 1,17,159.66
OTHER ADDITIONAL INFORMATION
CONTINGENT LIABILITIES,
COMMITMENTS
Contingent Liabilities 0 0 37,336.25 50,723.81 47,462.92
CIF VALUE OF IMPORTS
Raw Materials 0 3,771.22 25,857.51 22,734.24 16,533.80
EXPENDITURE IN FOREIGN
EXCHANGE
Expenditure In Foreign Currency 0 180.62 259.23 139.67 137.05
REMITTANCES IN FOREIGN
CURRENCIES FOR
DIVIDENDS
Dividend Remittance In Foreign
- - - - -
Currency
EARNINGS IN FOREIGN
EXCHANGE
FOB Value Of Goods - - 37 -- - - -
Other Earnings - 2,243.70 2,872.64 3,619.68 6,109.57
BONUS DETAILS
Bonus Equity Share Capital - - - - -
NON-CURRENT
EXPENDITURE IN FOREIGN
EXCHANGE
Expenditure In Foreign Currency 0 180.62 259.23 139.67 137.05
REMITTANCES IN FOREIGN
CURRENCIES FOR
DIVIDENDS
Dividend Remittance In Foreign
- - - - -
Currency
EARNINGS IN FOREIGN
EXCHANGE
FOB Value Of Goods - - - - -
Other Earnings - 2,243.70 2,872.64 3,619.68 6,109.57
BONUS DETAILS
Bonus Equity Share Capital - - - - -
NON-CURRENT
INVESTMENTS
Non-Current Investments Quoted
13.3 15.8 22.34 5.06 -
Market Value
Non-Current Investments
1,382.18 1,475.50 1,583.14 1,579.92 1,622.54
Unquoted Book Value
CURRENT INVESTMENTS
Current Investments Quoted
- - - - -
Market Value
Current Investments Unquoted
- - - - -
Book Value

TABLE NO. 6.2 (STANDALONE BALANCE SHEET)

RATIO ANALYSIS
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.
Financial ratios are calculated from one or more pieces of information from a
company's financial statements. For example, the "gross margin" is the gross profit
from operations divided by the total sales or revenues of a company, expressed in
percentage terms. In isolation, a financial ratio is a useless piece of information. In
context, however, a financial ratio can give a financial analyst an excellent picture of a
company's situation and the trends that are developing.
A ratio gains utility by comparison to other data and standards. Taking our
example, a gross profit margin for a company of 25% is meaningless by itself. If we
know that this company's competitors have profit margins of 10%, we know that it is
more profitable than its industry peers which are quite favorable. If we also know that
the historical trend is upwards, for example has been increasing steadily for the last few
years, this would also be a favorable sign that management is implementing effective
business policies and strategies.

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CLASSIFICATION OF RATIOS
Financial ratio analysis involves the calculation and comparison of ratios which
are derived from the information given in the company's financial statements. The
historical trends of these ratios can be used to make inferences about a company's
financial condition, its operations and its investment attractiveness.
Financial ratio analysis groups the ratios into categories that tell us about the different
facets of a company's financial state of affairs. Some of the categories of ratios are
described below:
• Liquidity Ratios give a picture of a company's short-term financial situation or
solvency
• Turnover Ratios show how efficient a company's operations and how well it
is using its assets.
• Profitability Ratios: show the quantum of debt in a company's capital structure.

LIQUIDITY RATIOS
Liquidity Ratios are ratios that come off the Balance Sheet and hence measure
the liquidity of the company as on a particular day i.e. the day that the Balance Sheet
was prepared. These ratios are important in measuring the ability of a company to meet
both its short term and long-term obligations.

1. Current Ratio
2. Liquid Ratio
3. Net working capital ratio

6.3 CURRENT RATIO

An indication of a company's ability to meet short-term debt obligations; the
higher the ratio, the more liquid the company is. Current ratio is equal to current assets
divided by current liabilities. If the current assets of a company are more than twice the
current liabilities, then that company is generally considered to have good short-term
financial strength. If current liabilities exceed current assets, then the company may
have problems meeting its short-term obligations.
CURRENT RATIO = CURRENT ASSETS / CURRENT LIABILITY

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 PARTICULAR 2017 2018 2019 2020 2021
Total Current
25,545.42 29,638.20 32,249.27 40,918.45 36,212.38
Assets

Total Current
46,324.41 43,401.62 41,597.46 44,951.84 46,488.73
Liabilities

Current Ratio 0.55 0.68 0.78 0.91 0.78

TABLE NO. 6.3(CURRENT RATI0)

INTERPRETATION:
As a rule, the current ratio with 2:1 (or) more is considered as satisfactory position of
the firm.
Total Current asset of all year are less than the total Current liability. It cannot satisfy
the thumb rule. But the current ratio is increased up to 2020 but in 2021 the current ratio
is reduced due to Covid-19 pandemic.

CURRENT RATIO
1.00
0.90
0.80
0.70
0.60
0.50
0.40
0.30
0.20
0.10
0.00
2017 2018 2019 2020 2021

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6.4 LIQUID RATIO
Liquid ratio is also known as ‘quick’ or ‘Acid test ‘ratio. Liquid assets refer to
assets which are quickly convertible into cash. Current Assets other stock and prepaid
expenses are considered as quick assets. The ideal liquid ratio accepted ‘norm’ for
liquid ratio ‘1’.

Quick Ratio = Total Quick Assets/ Total Current Liabilities

Quick Assets = Total Current Assets (minus) Inventory

PARTICULAR 2017 2018 2019 2020 2021

Total Current
25,545.42 29,638.20 32,249.27 40,918.45 36,212.38
Assets

Inventories 15,711.35 16,996.67 19,441.80 23,747.20 19,508.30

quick asset 9,834.07 12,641.53 12,807.47 17,171.25 16,704.08

Total Current
46,324.41 43,401.62 41,597.46 44,951.84 46,488.73
Liabilities

Liquid Ratio 0.21 0.29 0.31 0.38 0.36

TABLE NO. 6.4(LIQUID RATIO)
INTERPRETATION:
Quick assets are those assets which can be converted into cash within a short period of
time, say to six months. So, here the inventory and prepaid expenses which are with the
long period does not include in the quick assets.
Quick asset of SAIL company is increased year by year up to 2020 but 2021 the Quick
asset is decreased and current liabilities increased and decreased year by year. Quick
ratio is increased up to 2020 but in 2021 quick ratio is decreased due to covid-19
pandemic.

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 QUICK RATIO
0.45

0.40

0.35

0.30

0.25

0.20

0.15

0.10

0.05

0.00
2017 2018 2019 2020 2021

6.5 ABSOLUTE LIQUID RATIO

PARTICULAR 2017 2018 2019 2020 2021
Cash and Cash
289.09 254.06 219.42 363.25 680.52
Equivalents
Other Current Assets 6,561.82 8,454.12 8,039.76 7,945.94 8,849.09
absolute liquid asset 6,850.91 8,708.18 8,259.18 8,309.19 9,529.61
Total Current
46,324.41 43,401.62 41,597.46 44,951.84 46,488.73
Liabilities
Absolute Liquidity
Ratio 0.15 0.20 0.20 0.18 0.20
TABLE NO. 6.5(ABSOLUTE LIQUID RATIO)
INTERPRETATION:
Above the table the absolute liquid asset is increased year by year and the current
liabilities increased and decreased year by year. So Absolute liquid ratio is in 5 years
increased, decreased and remain constant.

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 ABSOLUTE LIQUIDITY RATIO
0.25

0.20

0.15

0.10

0.05

0.00
2017 2018 2019 2020 2021

6.6 PROPRIETORY RATIO

PROPRIETORY RATIO

PARTICULAR
Total
Shareholders’
Funds 2017 2018 2019 2020 2021
Total Assets 36,009.06 35,713.67 38,151.57 39,777.38 43,494.88
Proprietary
1,06,539.47 1,14,189.80 1,16,437.73 1,25,097.81 1,17,159.66
Ratio

TABLE NO. 6.6(PROPRIETORY RATIO)

INTERPRETATION:
Proprietary fund includes Equity Share Capital, Preference Share Capital and Reserve
& Surplus. Total assets exclude fictitious assets and losses. It indicates the proportion
of total assets financed by shareholders. Higher the ratio, less risky scenario it shall be.
Here, Shareholders fund increased year by year but it is slightly decreased in
2018 and total Assets also increased year by year but in 2021, it is slightly decreased.

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 PROPRIETORY RATIO
0.38
0.36
0.34
0.32
0.30
0.28
2017 2018 2019 2020 2021

6.7 WORKING CAPITAL TURNOVER RATIO

Working capital refers to investment in current assets. This is also known as
gross concept of working capital. There is another concept of working capital known
as net working capital. Net working capital is the difference between cur-rent assets
and current liabilities. Analysts intend to establish a relationship between working
capital and salsas the two are closely related. Through this ratio we are attempting to
see that one rupee blocked by the organization in net working capital is generating how
much sales. Higher the ratio better it is.
WORKING CAPITAL TURNOVER RATIO = NET SALES / NET WORKING CAPITAL
In recent years for operating an industry have not only become scarce, but also costly
in the wake of macro level policies on credit squeeze an increase in Interest rate. So,
the working capital can be defined either as a gross working capital, which include
funds invested in all current assets, or as net working capital, which denotes the
difference between the current assets’ current liabilities of an organization.
PARTICULAR 2017 2018 2019 2020 2021
Total Revenue 44,988.02 58,042.91 67,500.13 62,645.77 70,121.71
Total Current Assets 25,545.42 29,638.20 32,249.27 40,918.45 36,212.38
Total Current
46,324.41 43,401.62 41,597.46 44,951.84 46,488.73
Liabilities
working capital -20,778.99 -13,763.42 -9,348.19 -4,033.39 -10,276.35
Working Capital
Turnover Ratio -2.17 -4.22 -7.22 -15.53 -6.82

TABLE NO. 6.7(WORKING CAPITAL TURNOVER RATIO)

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INTERPRETATION:
In Working Capital turnover ratio, Total Revenues are increased and decreased
year by year and Working Capital are negatively increased and decreased year by year,
it is also shown negative result.

WORKING CAPITAL TURNOVER RATIO

0.00
2017 2018 2019 2020 2021
-2.00

-4.00

-6.00

-8.00

-10.00

-12.00

-14.00

-16.00

-18.00

6.8 FIXED ASSETS TURNOVER RATIO

PARTICULAR 2017 2018 2019 2020 2021

Total Revenue 44,988.02 58,042.91 67,500.13 62,645.77 70,121.71
Fixed Assets 73,560.86 77,006.98 77,372.71 77,770.60 76,478.24
Fixed Asset
Turnover Ratio 0.61 0.75 0.87 0.81 0.92

TABLE NO. 6.8(FIXED ASSET TURNOVER RATIO)

INTERPRETATION:
Fixed Assets are used in the business for producing the goods to be sold. This
ratio shows the firm’s ability in generating sales from all financial resources committed
to total assets. The ratio indicates the account of one-rupee investment in fixed assets.
This ratio is also increased year by year but in 2020 the ratio is slightly decreased.

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 FIXED ASSET TURNOVER RATIO
1.00
0.90
0.80
0.70
0.60
0.50
0.40
0.30
0.20
0.10
0.00
2017 2018 2019 2020 2021

6.9 CAPITAL TURNOVER RATIO

PARTICULAR 2017 2018 2019 2020 2021

Total Revenue 44,988.02 58,042.91 67,500.13 62,645.77 70,121.71
Total Shareholders’
36,009.06 35,713.67 38,151.57 39,777.38 43,494.88
Funds
Total Non-Current
24,206.00 35,074.51 36,688.70 40,368.59 27,176.05
Liabilities
capital employed 60,215.06 70,788.18 74,840.27 80,145.97 70,670.93
Capital Turnover
Ratio 0.75 0.82 0.90 0.78 0.99

TABLE NO. 6.9(CAPITAL TURNOVER RATIO)

INTERPRETATION:
This is another ratio to judge the efficiency and effectiveness of the company
like profitability ratio.
The total revenue is more increased as compared as the previous year and the
total capital employed includes Capital, reserves, surplus and non-current liabilities.
Due to huge increase in the net profit the capital employed is also increased along with

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total revenues. Both are affected in the increment of the ratio of current year. But in
2021 both are decreased.

CAPITAL TURNOVER RATIO

1.20

1.00

0.80

0.60

0.40

0.20

0.00
2017 2018 2019 2020 2021

6.10 CURRENT ASSETS TO FIXED ASSETS RATIO

PARTICULAR 2017 2018 2019 2020 2021

Total Current Assets 25,545.42 29,638.20 32,249.27 40,918.45 36,212.38
Fixed Assets 73,560.86 77,006.98 77,372.71 77,770.60 76,478.24
Current Asset to Fixed
Asset Ratio 0.35 0.38 0.42 0.53 0.47

TABLE NO. 6.10(CURRENT ASSET TO FIXED ASSET RATIO)

INTERPRETATION:
Current Assets are increased due to the increase in the Sundry Debtors and the Net
Fixed Assets of the firm are decreased due to the charge of depreciation and there is no
major increment in the fixed assets.
The increment in Current Assets and decrease in Fixed Assets resulted an increase in
the ratio as compared to the previous year.

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 CURRENT ASSET TO FIXED ASSET RATIO
0.60

0.50

0.40

0.30

0.20

0.10

0.00
2017 2018 2019 2020 2021

6.11 NET PROFIT RATIO

PARTICULAR 2017 2018 2019 2020 2021

Profit/Loss for The
-2,833.24 -481.71 2,178.82 2,021.54 3,850.02
Period
Total Revenue 44,988.02 58,042.91 67,500.13 62,645.77 70,121.71
Net Profit Ratio -0.06 -0.01 0.03 0.03 0.05

TABLE NO. 6.11(NET PROFIT RATIO)

INTERPRETATION:
The net profit ratio is the overall measure of the firm’s ability to turn each rupee of
income from services in net profit. If the net margin is inadequate the firm will fail to
achieve return on shareholder’s funds. High net profit ratio will help the firm service in
the fall of total revenue, rise in cost of production or declining demand.
The net profit is firstly decreased and then increased with negative and positive value
year by year but Total Revenues are increased and decreased year by year. In the above
table the net Profit Ratio is slightly negative in 2017 and 2018, then it is rapidly growth
with positive value.

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 NET PROFIT RATIO
0.08
0.06
0.04
0.02
0.00
-0.02 2017 2018 2019 2020 2021

-0.04
-0.06
-0.08

6.12. EARNING PER SHARE

In order to avoid confusion on account of the varied meanings of the term capital
employed, the overall profitability can also be judged by calculating earnings per share
with the help of the following formula:
Earning Per Equity Share = Net Profit after Tax / Number of Equity Shares X 100
The earning per share of the company helps in determining the market price of
the equity shares of the company. A comparison of earning per share of the company
with another will also help in deciding whether the equity share capital is being
effectively used or not. It also helps in estimating the company’s capacity to pay
dividend to its equity shareholders.
PARTICULAR 2017 2018 2019 2020 2021
Profit/Loss for The
-2,833.24 -481.71 2,178.82 2,021.54 3,850.02
Period
number of equity share 413.01 411.72 413.44 413.4 413.09
Earnings Per Share (in ₹) -6.86 -1.17 5.27 4.89 9.32

TABLE NO. 6.12(EARNING PER SHARE)

.
INTERPRETATION:
Earnings per share ratio are used to find out the return that the shareholders earn from
their shares. After charging depreciation and after payment of tax, the remaining
amount will be distributed by all the shareholders.

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In the first two-year 2017 and 2018 there is no profit but losses are arises but in 2019
to 2021 there is a profit in these years. So, in first two year the EPS is negative, then
in the next three-year EPS is positively and rapidly increase and decrease.

EARNINGS PER SHARE (in ₹)

12
10
8
6
4
2
0
2017 2018 2019 2020 2021
-2
-4
-6
-8

- 50 -
CHAPTER 7
CONCLUSION

- 51 -
CONCLUSION
The company’s overall position is at a good position. Particularly the current
year’s position is well due to raise in the profit level from the last year position. It is
better for the organization to diversify the funds to different sectors in the present
market scenario.
Using financial statements to summarize the operating results of an enterprise
in the past period, to evaluate the current financial situation, and to predict the future
operating performance plays a particularly important role in the process of business
decision-making and enterprise development. However, the traditional financial
analysis and valuation models may or may not meet the needs of strategic decision-
making and operation management in the context of the rapid development of
information and data due to insufficient correlation with enterprise goals and neglect of
internal and external connections of enterprises.

- 52 -
 BIBLIOGRAPHY

REFFERED BOOKS
• Financial management - I. M. Pandey
• Management accountancy - Pillai & Bagavati
• Management accounting – Sharma & Gupta
INTERNET SITE
• www.SAIL.co.in
• www.wikipedia.com

• www.moneycontrol.com
NEWS PAPER & MAGAZINES
• The Economics Times
• CNBC (TV Channel)

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