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Summer Internship Project On Cash Flow Analysis
Summer Internship Project On Cash Flow Analysis
SUBMITTED BY
SWORANJALI JENA
M.COM 2018-20
BHUBANESWAR
DECLARATION
I Sworanjali Jena hereby declare that the project report entitled “Cash Flow Statement Analysis
Of Odisha Power Generation Corporation (OPGC)” is the record of authentic work carried out
by me during the academic year 2018-2020 and has not been submitted to any other university or
institute towards the award of any degree.
All the details and analysis provided in the report hold true to the best of my knowledge.
This is to certify that the project work done on is a bonafide work carried out by Ms. Sworanjali Jena
under my supervision and guidance. The project report is submitted of 2 - year, full time Master of
Commerce.
This work has not been submitted anywhere else for any other degree. The original work was carried
during 6th may 2019 to 7 July 2019 in Odisha Power Generation Corporation (OPGC).
Prof.LopamudraNayak
Date:
Student Name & Sign
Ms. Sworanjali Jena
Roll No.: 031801005
ACKNOWLEDGEMENT
I would like to express deepest gratitude and thanks to our dean Dr. Samson Moharana for
giving us this opportunity of doing this summer internship program. He has been a source of
encouragement support and guidance in all our endeavors.
I would like to sincerely acknowledge thanks to Mr. Saroj Kumar Samal, Sr.Manager (finance)
of Odisha Power Generation Corporation (OPGC) for his moral support during the research
work.
I express our profound thanks to Prof. Lopamudra Nayak, my project guide, for her consistent
encouragement and invaluable suggestion in completing this project, without her effort the
completion of this project would be practically difficult.
Sworanjali Jena
EXECUTIVE SUMMARY
CONTENTS
10
CHAPTER 1:
INTRODUCTION
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And we can summaries the importance of this study in the following points:
1- To determine the relevance of the cash flow statement (CFS), also known as statement of
cash flows, for analyzing a company’s financial statements.
2- To know Liquidity measures tools and how they could reflects the level of liquidity in the
company
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Secondary data includes figures concerning cash inflow and cash outflow in cash flow statement
accounted in annual report of the company for three years i.e.2015-16, 2016-17 & 2017-18 .
Also some main information is gathered by various sources of secondary data such as books,
company website, and other websites.
13
14
CHAPTER 2:
REVIEW OF LITERATURE
15
16
17
CHAPTER 3:
THEORETICAL FRAMEWORK
18
3.1.Meaning:
Cash flow is basically the movement of cash into and out of the business; it's the
sequence of cash inflows and outflows that conclude the business' solvency. Cash flow analysis
is the study of the order of your business' cash inflows and outflows, with the intention of
sustaining an sufficient cash flow for the business, and to present the basis for cash flow
management. Cash flow analysis include examining the components of the business that
influence cash flow, such as inventory, accounts receivable, credit terms, and accounts payable.
By performing a cash flow analysis, you'll be able to easily discover cash flow problems and get
ways to progress your cash flow.
Cash Flow analysis is made with the help of the cash flow statement of the company. The
statement is given with the other financial statements in the yearly reports of the business. The
cash flow statement comprise all cash inflows a company receives from its continuing operations
and external investment sources, and all cash outflows that is given for business activities
throughout a given quarter. In this study, it give of the cash flow statement and how it helps to
analyze a business for investing.
Cash Flow Analysis is allocated into three parts – Cash flow from Operating activities, Cash
flow from Investment activities and Cash flow from financing activities.
a] Cash Flow from Operating Activities: Cash generated by production and sales of business is
reflected under this head. It comparatively denotes inflow of cash from operating activities and
outflow of cash for business operating expenses. E.g. cash from operation is the revenue net of
expenses.
b] Cash Flow from Financing Activities: This section of Cash flow statement denotes cash
generated from activities to finance the business operation. E.g. cash receipt on account of issue
of equity shares or debentures etc. and cash paid to such stake holders. Dividend to equity shares
or interest on debenture etc.
c] Cash Flow from Investing Activities: This section denotes cash invested in long term assets
e.g. purchase of machinery and other long term assets as well as other current assets such as
purchase of equity shares of other company etc. and cash receipts from such investing activities
e.g. dividend received, interest received sales of machinery and scrap etc.
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- direct method, which shows all receipts and payments flows for the three typesof
activities,
- indirect method, which shows the operational flow starting from the net result of the exercise,
which is corrected with changes registered capital, as well as adjustments for non-cash items and
other items included in investment and financing activities.
It provides Information about an firm’s capacity to meet its obligations as they become
owed.
The statement allows users to read why assets and liabilities are increased and decreased
during an accounting period.
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CHAPTER 4:
CASE STUDY AND DATA COLLECTION
21
It has also undertaken the construction of seven Mini Hydel stations having a total
capacity of 5075 KW as a technological demonstration.
The entire generation from these units id committed to GRIDCO on the basis of a long
term Power Purchase Agreement. Payment is secured through an Escrow Account and revolving
Letter of Credit.
22
(In Lakhs)
23
EQUITY AND
LIABILITIES
Equity
1. a)Equity Share Capital 18 158,049.74 97,521.74 49,021.74
b)Other Equity 19 112,980.85 114,765.83 111,513.91
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a)Financial liabilities
i)Borrowings 20 548,040.93 378,681.12 162,141.26
ii)Other financial
liabilities 21 1,123.18 511.76 725.87
b)Provisions 22 5,974.83 3,829.39 3,863.98
2. c)Deferred tax liabilities
(Net) 23 590.23 1,342.41 1.131.28
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(In Lakhs)
Adjustments for:
Trade receivable 2,902.29 (3,785.20) (4,644.92)
Inventory (145.94) 637.47 1,052.94
Other financial assets 24,594.66 9,981.05 52,640.58
Trade and other payables 3,622.25 (2560.23) 3,284.86
Other financial and non-financial
(125,878.54) 5,214.87 1,07,464.49
liabilities
26
27
CHAPTER 5:
DATA ANALYSIS AND INTERPRETATION
28
55,000.00
50,000.00
2015-16 2016-17 2017-18
Figure 1
Interpretation: Figure 1 denotes fluctuation of Revenue from operations during the three years
that is 2015-16, 2016-17 & 2017-18. : Revenue from operation of the Company for FY 2017–18
stood at 60,719.50 lakhs as against 72,178.28 lakhs for FY 2016–17 showing a decrease of
around 16%. The revenue is lower in FY 2017–18 mainly due to reduction in quantum of power
sold. The Company has sold 2,511.80 million units of electricity during FY 2017–18 as against
2,885.67 million units in FY 2016–17 with decrease in Plant Load Factor (PLF) from 87.92% in
the previous year to 77.25 % in FY 2017–18.
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140,000.00
120,000.00
100,000.00
80,000.00
Cash Operating Expenses
60,000.00
Cash from Operations
40,000.00
20,000.00
0.00
2015-16 2016-17 2017-18
Interpretation: Figure 2 denotes comparative weight of cash generated from operating activity
and total cash operating expenses. Total cash operating expenses is total operating expenses net
of depreciation and amortization. Total cash operating expenses includes unpaid expenses. This
figure reflects that total cash from operations is 14.22, 05.25 and 86.21 times more than cash
operating expenses during 2015-16 , 2016-17 & 2017-18 respectively. It is small if compared
with cash from operation. As well as in 2017-18 firm has suffered loss of Rs. 92.15 Lakhs. It
denotes that cash earning is not sufficient.
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Current Liabilities
45,000.00
40,000.00
35,000.00
30,000.00
25,000.00
20,000.00
15,000.00 2015-16
10,000.00
5,000.00 2016-17
0.00
2017-18
31
70000
60000
50000
40000 2015-16
30000 2016-17
20000 2017-18
10000
0
Trade and other Other financial Other current Provisions Current Tax
payables liabilities liabilities Liabilities (Net)
Interpretation: Table 3.1 & 3.2 denotes working capital is negative in all the years. it typically
indicates that the company have incurred a large cash outlay or a substantial increase in its
Financial Liabilities.
Received
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300,000.00
250,000.00
200,000.00
150,000.00 Inflow
Outflow
100,000.00
50,000.00
0.00
2015-16 2016-17 2017-18
Interpretation: Figure 4 indicate the relative weight of cash inflow and cash outflow from
investing activities. During the three years of 2015-16, 2016-17 & 2017-18 cash outflow is 8.85,
57.68 & 79.99 times more than cash inflow. In 2015-16, Cash outflow is mostly associated with
payment for purchase of fixed assets. In 2016-17, cash outflow is also mostly associated with the
payment of purchase of fixed assets and advances. And in 2017-18 cash outflow is associated
with purchase of fixed asset, dividend distribution tax and other advances.
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300,000.00
250,000.00
200,000.00
150,000.00 Inflow
Outflow
100,000.00
50,000.00
0.00
2015-16 2016-17 2017-18
Interpretation: Figure 5 indicate the proportional weight of cash inflow and cash outflow from
financing activities. During the year of 2015-16 cash inflow is more than cash outflow. Cash
inflow of 2015-16 is associated with borrowings. Cash inflow in 2016-17 is significantly higher
than the cash outflow. The cash inflow of this year is attributed to issue of shares and borrowings
and cash outflow is primarily associated with Interest and Dividend paid. In 2017-18 cash inflow
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is thrice as compared to cash outflow. Cash inflow is marginally associated with issue of shares
and proceed from borrowings cash outflow is primarily associated with payment of Interest,
Dividend and other Financial Liabilities.
200,000.00
100,000.00
2015-16
0.00 2016-17
2017-18
-100,000.00
-200,000.00
-300,000.00
Interpretation: Figure 6 shows the comparative weight of cash flow of all 3 activities i.e.,
Operating activities, Investing activities and Financing activities. The net cash flow from
operating activities is decreased by 9.60 times in 2016-17 as compared to 2015-16 and is
negative in 2017-18 by 1.77 times. Net cash flow used in investing activities is highest among
the 3 years. The lowest cash flow used is in 2017-18 by 2.82 times. Net cash flow from financing
activities is inclined by 28.03% in 2016-17 and declined by 37.53% in 2017-18 as compared
with 2015-16. Net cash balance is decreased 1.83 times in 2016-17 and 2015 times in 2017-18.
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(In Lakhs)
Table 5.2.1
Interpretation:
The cash flow coverage ratio analysis says more than one is a good ratio as that specify the
company’s fund is more than its current liabilities. This 3 years’ cash flow coverage ratio of
OPGC prove that the company doesn’t have enough cash to meet its liabilities. In 2015-16, it has
the largest ratio comparable to all other years. In the year 2016-2017, it has the lowest ratio.
OPGC shows weak liquidity position and does not have good financial health to meet its
obligations.
Figure 5.2.1
36
Operating Cash Flow Margin = Cash Flow from Operating Activities / Revenue
Table. 5.2.2
Interpretation:
The cash flow margin ratio tells a company how well it converts sales to cash. The higher the
percentage, the more cash is available from sales For the year 2015-16, OPGC has the highest
cash flow margin ratio of 234.87% in 2015-16 and the second highest FY is 2017-18 with
149.61%.
200.00%
150.00%
50.00%
0.00%
2017-18 2016-17 2015-16
Figure 5.2.2
37
Current Liability Coverage Ratio = Net Cash from Operating Activities / Average Current
Liabilities
Interpretation:
1.2
0.8
Current liability coverage ratio
0.6
0.4
0.2
0
2017-18 2016-17 2015-16
Figure 5.2.3
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Cash Generating Power Ratio = CFO / (CFO + Cash from Investing Inflows + Cash from
Financing Inflows)
Interpretation:
In calculation of Cash Generating power Ratio, higher the ratio higher the ability to generate
cash from its operations. From all the 3 years’ FY2015-16 has the highest ratio which means that
year generated much cash from its operation and the lowest ratio is 0.06 i.e., of 2016-17.
0.6
0.5
0.4
0.2
0.1
0
2017-18 2016-17 2015-16
Figure 5.2.4
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CHAPTER 6:
CONCLUSION
40
6.1. Findings:
1. OPGC during the period of Analysis has raised additional fund from issue of equity shares
and marginally and borrowings to finance the working capital and expansion of the
business.
2. Most of the funds is utilized for purchasing fixed assets for expansion of power plants
3. The business firm has shown negative working capital but is still sustainable in long term
period but currently it is facing a short term uncertainty.
4. During the period of analysis, business firm is facing a liquidity crunch indicating
inadequate cash flow to meet its liabilities
5. Most of the cash flow is associated with external borrowings and payment of fixed assets
which is excessive in nature.
6.2. Conclusions:
Cash flow analysis is significant to recognize weaknesses in business activities that can lead the
company towards liquidity situation. Through cash flow analysis, company can see the
unproductive use of funds as well as to determine and plan for future cash flow. The study
established that cash flow analysis has a huge effect in the working capital of the business which
further affect the future decisions of the company. This study shows a direct relationship of cash
flow statement analysis with the liquidity position of OPGC.
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CHAPTER 6:
BIBLIOGRAPHY
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