AURORA’S POST-GRADUATE COLLEGE (MCA)

Accredited by NAAC with‘ A+’ Grade

PROJECT SYNOPSIS

Name of the Student : MD. GOUSUDDIN

Course : MBA

Academic Year : 2021-2023

Hall Ticket No : 1325-21-672-190

Title of the Project : FINANCIAL STATEMENT ANALYSIS

NAME OF THE COMPANY: KESORAM CEMENT LTD

Name of the Guide :

Date of Submission :

Signature of the Student Signature of the Guide

College Seal
 A
SYNOPSIS ON
FINANCIAL STATEMENT ANALYSIS

AT

KESORAM CEMENT LTD

Project Synopsis submitted in partial fulfillment for the award of the

Degree of
MASTER OF BUSINESS ADMINISTRATION
By
MD. GOUSUDDIN
1325-21-672-190

AURORA’S POST-GRADUATE COLLEGE (MCA)

Accredited with ‘A+’Grade by NAAC
Ramanthapur, Hyderabad – 500 013

(2021-23)
 TABLE OF CONTENTS

S. No Description Page No
1 INTRODUCTION 1
1.1 Definition of Expatriate -
1.2 Need for the Study -
1.3 Problem Statement -
1.4 Significance of the Study -
1.5 The Objectives of the Study -
1.6 The Hypotheses of the Study -
1.7 Scope of the study -
2 REVIEW OF LITERATURE
2.1 Theoretical Reviews -
2.2 Articles -
3 RESEARCH METHODOLOGY
3.1 Research Design -
3.2 Sampling Procedure -
3.3 Sample Size -
3.4 Methods of Data Collection -
3.5 Questionnaire Design -
3.6 Reliability test -
3.7 Statistical Tools -
CHAPTERIZATION -
BIBLIOGRAPHY -
1.1 INTRODUCTION

Financial statement analysis can be referred as a process of understanding the risk and profitability

of a company by analyzing reported financial info, especially annual and quarterly reports. Putting

another way, financial statement analysis is a study about accounting ratios among various items

included in the balance sheet. These ratios include asset utilization ratios, profitability ratios,

leverage ratios, liquidity ratios, and valuation ratios. Moreover, financial statement analysis is a

quantifying method for determining the past, current, and prospective performance of a company.

ADVANTAGES OF FINANCIAL STATEMENT ANALYSIS

The different advantages of financial statement analysis are listed below:

 The most important benefit if financial statement analysis is that it provides an idea to the

investors about deciding on investing their funds in a particular company.

 Another advantage of financial statement analysis is that regulatory authorities like IASB

can ensure the company following the required accounting standards.

 Financial statement analysis is helpful to the government agencies in analyzing the taxation

owed to the firm.

 Above all, the company is able to analyze its own performance over a specific time period.

Financial statements are prepared primarily for decision making. They play a dominant role in

setting the framework of managerial decisions. But the information provided in the financial

statements is not an end in itself as no meaningful conclusions can be drawn from these statements

alone. However, the information provided in the financial statements is of immense use in making

decisions through analysis and interpretation of financial statements. Financial analysis ‘the process

of identifying the financial strengths and weaknesses of the firm by properly establishing

relationship between the items of the balance sheet and the profit and loss account’. There are

various methods or techniques used in analyzing financial statements financial are an important

source of information for evaluating the performance and prospects of firm, if properly analyzed and
interpreted these statements can provide valuable insights into firm’s performance. Analysis of

financial statements is if interest to lenders, investors, security analyst, manager and others.

Financial statements analysis may be done for a variety of purposes, which may range from

simple analysis of short term liquidity position of the form to a comprehensive assessment of

the strengths and weakness of the firm in various areas, it is helpful in assessing corporate

excellence , judging credit worthiness forecasting bond rating, evaluating intrinsic value of equity

shares predicting bankruptcy and assessing market risk.

FINANCIAL STATEMENTS

Managers, shareholders, creditors and other interested groups seek answer to the following

question about firm:

 What is the financial position of the firm at a given point of time?

 How has the firm performed financially over a given period of time?

 What have been the sources and uses of cash over a given period?

To answer these questions, accountant prepares two principle statements, the Balance sheet

and the profit and loss account, ancillary statement, the Cash Flow statement.

ANALYSIS OF FINANCIAL STATEMENT

Analysis refers to the process of critical examination of the financial information contained

in the financial statement in order to understand and make decisions regarding the operations of

the firm. The analysis is basically study of the relationship among various financial facts and

figure as given in a set of financial statements. Complex figures as given in this

statements are dissected\broken up into simple and variable elements and significant

relationship are established between the elements of the same statements are different financial

statements.

This process of dissection, establishing and identifying the financial weaknesses and

strengths of the firm. It is indicative of two aspects of a firm i.e. The profitability and the financial
position and it are what are known as the objectives of the analysis.

STATEMENT OF PROBLEM
India is the second largest Banks and the largest banking in the world. kesoram cement ltd is

one of India‘s largest integrated sugar manufacturing companies. What makes kesoram

cement ltd special is that it is more than a sugar company. it is also engaged in the ancillary

businesses of ethanol manufacture and co-generation. Financial statement analysis is used to

identify the trends and relationships between financial statement items. Both internal

management and external users (such as analysts, creditors, and investors) of the financial

statements need to evaluate a company's profitability, liquidity, and solvency. The most

common methods used for financial statement analysis are trend analysis, common‐size

statements, and ratio analysis. These methods include calculations and comparisons of the

results to historical company data, competitors, or industry averages to determine the relative

strength and performance of the company being analyzed. This study analyses last 5 year

financial statements of kesoram cement ltd.

1.4 SIGNIFICANCE OF THE STUDY

This study assists investors in understanding the current situation (strength & weaknesses) of
Private banks in Hyderabad which in turn will help investors to make information based
decisions. The outputs of the study are expected to have the following importance:
It assists the government body to rank the private banks based on results. It helps for decision
making of the new investors in the private banking industry.
1.2 NEED FOR STUDY

The necessity for studying the topic of financial performance of a company is

very certain for any organization because it reflects or shows the financial position and

the overall outcome or result it derives from its performance. It also helps in

overcoming pitfalls if any by taking effective decisions. It needs to assay or size up a

company’s performance, liquidity, profitability and solvency. Different tools and

techniques used to analyse financial statement are balance sheet, common size

statement, trend analysis, Cash flow, ratio analysis etc. are used for ascertaining a

company data and also determine the pros and cons of company’s performance.

1.3 OBJECTIVES OF THE STUDY

 To know the growth in the company by its financial statement analysis.

 To analyse the financial performance of the company with the help of the

Balance Sheet, Income Statements and trend analysis etc.

 To examine the liquidity position of the company concern through ratio analysis.

 To know current market status of the organization by its financial analysis

using the past 5 years financial data.

 To analyse and compare the financial statements.

1.6 THE HYPOTHESES OF THE STUDY

H0: To calculate the important financial ratio of the organisation as a part of the ratio
analysis thereby to understand the changes the needs and trends in the firm’s financial
position.
H1: To assess the performance of KESORAM CEMENT LTD on the basis of earnings
and also to evaluate the solvency position of the company.
H2: To identify the financial strengths and weaknesses of the organization.

1.4 SCOPE OF THE STUDY

We can interpret scope of the study briefly. To thoroughly understand the core

concept of financial statement analysis primarily we should understand the distinction

between roles of financial statements and financial reports. Financial statements are used

to analyse historical data of company performance with the present performance so that

the company can predict its future circumstances. Financial reports are used to provide

information regarding financial status of the organization, it tells us about how a

company is performing, major and minor changes that happened in financial position of

the company for example balance sheet, income statement. The acquisition of data is

limited to balance sheet and income statement of the axis banks.

 LIMITATION

 Difficulty in data collection.

 Limited knowledge about the bank in the initial stages.

 Branch manager was reluctant for giving financial data of the bank.

 The analysis and interpretation are based on secondary data contained in the published

annual reports of AXIS Bank for the study period.

 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
 THEORETICAL REVIEWS

REVIEW OF LITERATURE
FINANCIAL STATEMENT ANALYSIS

INTRODUCTION:-

The term ‘financial analysis also known as analysis and interpretation of financial statements’ ,

refers to the process of determining financial strength and weaknesses of the firm by establishing

strategic relationship between the items of the balance sheet , profit and loss account and other

operative data.

“Analyzing financial statements” by Metcalf and Titard

“Financial analysis is a process of evaluating the relationship between component parts of a

financial statement to obtain a better understanding of a firms position and performance” by Myers

The purpose of financial analysis is to diagnose the information contained in financial statements

so as to Jude the profitability and financial soundness of the firm. Just like a doctor examines his

patient by recording his body temperature, blood pressure , ect. Before making his conclusion

regarding the illness and before giving his treatment, a financial analyst analysis the financial

statements with various tools of analysis before commenting upon the financial health or weaknesses

of an enterprise .

The analysis and interpretation of financial statements is essential to bring out the mystery behind

the figures in financial statements. Financial statements analysis is an attempt to determine the

significance and meaning of the financial statement data so that forecast may be made of the future

earnings, ability to pay interest and debt maturities (both current and long term) and profitability of a

sound divided policy.

METHODS / TECHNIUQES OF FINANCIAL ANALYSIS:-

The following methods of analysis are generally used:-

1. Comparative Statements.

2. Trend Analysis.

3. Common-Size Statements.

4. Ratio Analysis

5. Statement Of Changes In Working Capital

COMPARATIVE STATEMENTS

COMMON SIZE STATEMENT:-

The common-size statements, balance sheet and income statement are show in analytical

percentages. The figures are shown as percentages of total assets, total liabilities and total sales. The

total assets are taken as 100 and different assets are expressed as a percentage of the total similarly,

various liabilities are taken as a part of total liabilities.

COMMON SIZE BALANCE SHEET:-

A statement in which balance sheet items are expressed as the ratio of each asset to total assets and the
ratio of each liability is expressed as a ratio of total liabilities is called common size balance. The
common size balance sheet can be used to compare companies of differing size. The comparison of
figures in different periods is not useful because total figures may be affected by a number of factors.
It is not possible to establish standard norms for various assets. The trends of figures from year to year
may not be studied and even they may not give proper results.
2.2 ARTICLES

Article - 1

Title : Financial Statement Analysis and Beta and Size Effect

Author : Lianzan xu
Journal :
International Journal of Commerce and Management
(Vol.13, Issue 1)

Year : 2003

ABSTRACT

This study examines the ability of fundamental summary measure to predict earnings change

for the subsequent year, the association of and stock returns, and the relationship between and risk

factors beta and size. is a probability index generated by logistic model and financial statement data.

Beta effect is minimized by grouping firms into beta portfolios while size is controlled through

incorporating size as an independent variable in the regression models. Evidence from the study

indicates that has a strong ability to predict future earnings change and has a positive and significant

association with adjusted market returns, after controlling for beta. Association with adjusted market

returns is mitigated when beta and size are controlled simultaneously.

Article- 2

Title : A Study on Financial Statement Analysis

Author : Sassikala

Journal : Junral of Business and Financial Affairs 07 (02).

Year : January, 2021

ABSTRACT

This project report entitled as “A Study on Financial Statement Analysis. In Tamil Nadu

Newsprint and Papers Limited, Kagithapuram” is done as a part of MBA curriculum. The

objective of the study is to analysis the financial statement of Tamil Nadu Newsprint and Papers

Limited, Kagithapuram. The study is carried for a period of five years from 2012-2014 to 2017-

2018. Data were collected from the secondary sources. To identify the financial statements of

the company and also understand the liquidity position. The tools used for analysis, Comparative

Balance Sheet, Common Size Balance Sheet, Ratio Analysis.

 Article -3

Title : Dog Concierges, LLC: Transaction Analysis and Statement of

Cash Flows Preparation

Author : Mark E. Haskins

Journal : Darden Business publishing cases, ISSN: 2474-7890

Year : 20th January, 2019.

ABSTRACT

This case is appropriate in a MBA module for the accounting process and is also an excellent exam

case. It provides a diagram of the three basic financial statements (Balance Sheet, income Statement,

and Statement of Cash Flows) used to capture, codify, and communicate the effects of a series of

typical business events. The case also gives students the opportunity to prepare a simple statement of

cash flows using two sequential balance sheets and to work backward from a balance sheet and

statement of cash flows to craft the beginning of the year's balance sheet.
Article- 4

Title : Working Capital Management through Financial Statements

Author : Sukamal Datta

Journal : Management Accountant: Vol.30, No.11, PP 826-832.

Year : 2013

ABSTRACT

In his study entitled "Working Capital Management through Financial Statement: Analysis of

Paper Industry in West Bengal" found that most of the firms were suffering from shortage of working

capital. One of the primary causes of such shortage of working capital was that most of the firms

under study were not capable of earning adequate profit and were also suffering from losses. The

expansion of fixed assets also caused the working capital crisis. The utilization of fund had not been

covered by sufficient amount of fund by way of long-term investment

Article- 5

Title : The prediction of stock returns using financial statement

information
Author : Robert Wholthausen, DavidFlarcker
Journal : Journal of Accounting & Economics Vol.15
Year : 2015

ABSTRACT

We examine the profitability of a trading strategy which is based on a model

designed to predict the sign of subsequent twelve-month excess returns from

accounting ratios. Over the 1978–1988 period, the average annual excess return

produced by the trading strategy ranges between 4.3% and 9.5%, depending on the

specific measure of excess return and weighting scheme involved. However, our

implementation of the and Penman (1989) trading strategy in the 1978–1988 period,

which is based on a model that predicts subsequent unexpected earnings- per-share

from accounting ratios, does not earn excess returns.

 1.5 RESEARCH METHODOLOGY

RESEARCH DESIGN

This is a systematic way to solve the research problem and it is important component for the study

without which researches may not be able to obtain the format. A research design is the arrangement

of conditions for collection and analysis of data in a manager that aims to combine for collection and

analysis of data relevance to the research purpose with economy in procedure.

MEANING OF RESEARCH DESIGN

The formidable problem that follows the task of defining the research problem is the preparation of

design of the research project, popularly known as the research design, decision regarding what,

where, when, how much, by what means concerning an inquiry of a research study constitute a

research design. A research design is the arrangement of conditions for collection and analysis of

data in a manager that aims to combine for collection and analysis of data relevance to the research

purpose with economy in procedure.

SOURCES OF DATA

Data we collected based on two sources.

 Secondary data.

SECONDARY DATA:

The Secondary data are those which have already been collected by some other agency and

which have already been processed. The sources of Secondary data are Annual Reports, browsing

Internet, through magazines.

 It includes data gathered from the annual reports of KESORAM CEMENT LTD

 Articles are collected from official website of KESORAM CEMENT LTD

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.

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.

 BIBLIOGRAPHY

BOOKS:-

 Khan, M Y and P K Jain, Financial Management, Tata McGraw-Hill Publishing Co., New
Delhi, 2008.

 I M Pandey, Essentials of Financial Management, Vikas Publishing House Pvt Ltd, New
Delhi, 2009.

 Ramesh, S and A Gupta, Venture Capital and the Indian Financial Sector, Oxford university
press, New Delhi, 2016.

JOURNALS:-
 Lianzan xu, International Journal of Commerce and Management (Vol.13, Issue 1), 2003.

 Sassikala, Journal of Business & Financial Affairs 07 (02),

DOI:- 10.4172/2167-0234.1000337, January, 2018.

 Mark E. Haskins, Darden Business Publishing cases. ISSN: 2474-7890,

20th January, 2017.

 Sukamal Datta, Working Capital Management through Financial Statements Analysis of

Paper Industries in West Bangal Management Accountant,
Vol.30 No.11, PP 826-832, 2013.

NEWS-PAPERS:-

 The Times of India

 Business Line

 The Hindu

WEBSITES:-

 www.googlefinance.com

 www.axisbank.com

 www.icicibank.com

 www.autoindia.com