A Project Report

(SUBMITTED IN PARTIAL FULFILMENT OF REQUIREMENT FOR THE DEGREE OF B.COM

HONOURS IN ACCOUNTING & FINANCE/MARKETING UNDER THE UNIVERSITY OF CALCUTTA)

AN ANALYTICAL STUDY ON THE FINANCIAL PERFORMANCE ANALYSIS OF

ICICI PRUDENTIAL LIFE INSURANCE USING RATIO ANALYSIS

Submitted by
Name of the candidate : SHUBHADIP PAUL
C.U. Registration No. : 058-1111-0538-21
C.U. Roll No. : 211058-21-0048
College Roll No. : 20211064

Supervised by
Dr. Mitashi Das Pyne

VIJAYGARH JYOTISH RAY COLLEGE

Month & Year of Submission
JULY 2024
 ACKNOWLEDGEMENT

The success and final outcome of this project required a lot of guidance,
inputs and assistance from many people and I am extremely privileged to
have got this all along the completion of my project. All that I have done is
possible only due to such supervision and assistance and I would not forget to
thank them.
I would firstly like to express my gratitude towards our VIJAYGARH
JYOTISH RAY COLLEGE which has given us an opportunity to do project
on “AN ANALYTICAL STUDY ON THE FINANCIAL PERFORMANCE ANALYSIS
OF ICICI PRUDENTIAL LIFE INSURANCE USING RATIO ANALYSIS.”

I wish to put to record the heartfelt gratitude and immense respect to Prof.
DR. MITASHI DAS PYNE for his encouraging words, suggestions,
monitoring and individual care. I wish to thank him for the valuable time he
gave us and the immense patience he had, in answering even the seemingly
trivial queries we had to ask. The project preparation would not have been
possible without his constant support and guidance. Also, he had explained
the concepts so minutely to us that even while analyzing the annual reports of
companies we encountered very few problems.
Last but not the least; I am grateful to all my friends, family members and
many well-wishers who helped me in numerous ways in conducting the
project.
 SUPERVISOR’S CERTIFICATE

This is to certify that Mr. SHUBHADIP PAUL, a student of B. Com

6th Semester Honours in Accounting & Finance of VIJAYGARGH
JYOTISH RAY COLLEGE under the University of Calcutta has worked
under my supervision and guidance for his Project Work and
prepared a Project Report with the title AN ANALYTICAL STUDY
ON THE FINANCIAL PERFORMANCE ANALYSIS OF ICICI
PRUDENTIAL LIFE INSURANCE USING RATIO ANALYSIS.
The project report, which he/she is submitting, is his/her genuine
and original work to the best of my knowledge.

Place: Kolkata Signature:

Date: Name: Dr. Mitashi Das Pyne
Designation: Associate Professor
Name of the college: Vijaygarh Jyotish
Ray College
 STUDENT’S DECLARATION

I hereby declare that the Project work with the title “AN ANALYTICAL STUDY
ON THE FINANCIAL PERFORMANCE ANALYSIS OF ICICI PRUDENTIAL
LIFEINSURANCE USING RATIO ANALYSIS.” submitted by me for the partial
fulfillment of the degree of Bachelor of Commerce (Hons.) in Accounting &
Finance under the University of Calcutta is my original work and has not
been submitted earlier to any other University/Institution for the fulfillment
of the requirement for any course of study.

I also declare that no chapter of this manuscript in whole or in part has been
incorporated in this report from any earlier work done by others or by me.
However, extracts of any literature which has been used for this report has
been duly acknowledged providing details of such literature in the references.

Signature:
Place: Kolkata Name: Shubhadip Paul
Date: C.U. Roll No. : 211058-21-0048

C.U. Registration No.: 058-1111-0538-21

Name of the College: Vijaygarh Jyotish
Ray College
 CONTENT
PAGE
DESCRIPTION NO.
➢ CHAPTER-1 INTRODUCTION 1

• Short Background of The Project 2

• Scope of The Study 3

• Objective of The Study 4

• Data & Methodology 5

• Limitations of The Study 6

➢ CHAPTER-2 CONCEPTUAL FRAMEWORK 7

• Definition, Importance, Limitation of Financial Statement 8 - 10

Analysis
• Tools of Financial Statement Analysis 10

• Definition, Importance and Limitation of Ratio Analysis 11-12

13
➢ CHAPTER-3 COMPANY PROFILE
• Company History 14
• Promoters of company 14
• Vision of the company 15
• Policy plans of the company 16

➢ CHAPTER-4 DATA PRESENTATION, ANALYSIS &

17
FINDINGS
• Statement of Balance Sheet of the company 18
• Statement of Profit and Loss of the company 19
• Project Analysis with the help of collected data 20-30
• Project findings 31

➢ CHAPTER-5 CONCLUSION AND RECOMMENDATIONS 32-35

➢ CHAPTER-6 BIBLIOGRAPHY 36-37

INTRODUCTION

Page 1 of 37
 • SHORT BACKGROUND OF THE PROJECT

Company performance is very essential to the management as it is an

outcome which has been achieved by an individual or a group of individuals
in an organization related to its authority and responsibility in achieving goal
legally, not against the law.

Finance is the life blood of any business. An organization communicates

the financial statements and reports. There are two types of performance of
any business- one is financial performance and another one is non-financial
performance. Financial performance emphasizes on items related directly to
financial report. This helps to present organization's financial situation to the
users.
When we think about the future its often not top-of-mind to think about
the possibility of our untimely death or what will happen to our families in the
event of our demise while it may be uncomfortable to plan for it in advance.
Life insurance is all about securing a person and his or her family financially. It
makes sure the loved ones won't suffer financially in his or her absence. Again,
we all have some goals in our life. It helps to start a habit of disciplined savings.
Also, having life insurance will give a person peace of mind. Life is uncertain
and life insurance can offer financial assistance to the family when a person is
no longer around. Overall life insurance plans are financial support for any
contingency like death, disabilities, accident, retirement etc. so, for such kinds
things we need good life insurance companies which will protect the savings
of public with trust and not doing any frauds. A sound growth in insurance
company is also needed. A well-planned, well-organized, efficient and variable
insurance industry is a necessary condition for people of a country that's
require periodic analysis for its financial position and assessing its
performance fairly
Page 2 of 37
 • SCOPE OF THE STUDY

▪ It is useful for the management.

▪ It gives information to the investors about the earning capacity of the

business.

▪ With the help of Ratio Analysis comparison of profitability and financial

soundness can be made.

▪ Current year's ratios are compared with those of previous years and if
some weak spots are located remedial measures are taken to correct them.

▪ It gives information to the financial institution for providing the finance to

the company

▪ It gives information to the taxation authorities.

Page 3 of 37
 • OBJECTIVE OF THE STUDY

▪ The main aim of the study is to prepare a five years' comparative ratio
analysis of an insurance company naming ‘ICICI PRUDENTIAL LIFE
INSURANCE’. This aim will be achieved by the following objectives-

▪ An overview of the performance of the company ICICI Prudential Life

insurance for 4 years.

▪ To provide recommendations of the company in respect of liquidity,

solvency, profitability, use of asset and capital structure.

Page 4 of 37
 • DATA & METHODOLOGY

• PRIMARY DATA: Data that has been collected from first-hand

experience
is known as Primary Data. Primary Data has not been published yet and
is more reliable, authentic and objective.

• SECONDARY DATA: Data collected from the source that has already
been published in any form is called as Secondary Data. It includes
books, journals, periodicals, E-journal, general websites and weblogs etc.

▪ METHODOLOGY USED: My Project is based on Secondary Data due to

the current pandemic situation it was not possible to visit an and collect
data. I've collected all the information digitally thrown different websites
and weblogs.

In this project the Secondary Data are collected from the following
sources-

• Annual Report i.e., Statement of Balance Sheet and Income Statement of

the particular company.

• Text Books

• E-Books

• Other material and report published by the company

Page 5 of 37
 • LIMITATIONS OF THE STUDY

▪ The study conducted and done is analytical subject to following some

limitations.

▪ The study fully depends upon reliability of data information collected

from the secondary source. It is not possible to collect the data on all
detailed activities taken place over the years.

▪ The overall performance is taken into consideration without taking into

the account of individual values.

▪ There may be some fractional differences in the calculated ratios.

▪ Different definitions of capital employed may cause confusion.

▪ Changes in external environment will affect the comparison.

▪ Insufficient time available for the study and submission of the project.

▪ Only last 5 years data are considered.

▪ Only the case study had been done for the project and therefore,
the conclusions drawn based on this may not be reflection of the
entire industry

Page 6 of 37
CONCEPTUAL FRAMEWORK

Page 7 of 37
 CONCEPTUAL FRAMEWORK OF FINANCIAL STATEMENT ANALYSIS

• DEFINITION: Financial statements are prepared primarily for decision

making. But the data reported in the financial statements are not directly
usable in decision making. They need to be analyzed and interpreted.
Financial Statement Analysis is the process of identifying the strength and
weakness of an organization by properly establishing relationship between
the items of financial statements.

Financial Statement Analysis ascertains the significance of data contained in

the financial statements with a view to understanding the different aspects of
the organization such as liquidity, solvency, leverage effect and profitability
of the organization.

However, the Modern Financial Statement Analysis is not only restricted to

financial statement but also it covers the study of environment both internal
and external of the organization. Thus, Financial Statement Analysis means
the analysis of relevant financial data included financial statements along with
non-financial factors affecting the firm such as competitive business
environment, customer reaction, risk involved, employee ethics etc. On the
basis of these all such information the users predict its overall position and
simultaneously take different decisions.

Page 8 of 37
• OBJECTIVE OF FINANCIAL STATEMENT ANALYSIS:

The main objectives of Financial Statement Analysis are as follows-

▪ To evaluated the financial position of the business.

▪ To assess the financial risk and business risk associated with the business.
▪ To assess the short term as well as long term solvency of the firm.
▪ To assess the operational efficiency and managerial effectiveness with
which various resources of the firm are being utilized.
▪ To assess the earning capacity or profitability of the firm.
▪ To identify the reasons for change in profitability and financial position of
the firm.
▪ To make inter firm comparison.
▪ To forecast the future prospect of the firm.
▪ To assess the progress of the firm over a period of time.
▪ To help in decision making and determine the dividend action.

• ADVANTAGES OF FINANCIAL STATEMENT ANALYSIS:

The different advantages of Financial Statement Analysis are as follows-

▪ The most important benefit of Financial Statement Analysis is that it

provides an idea to the investors about deciding on investing their funds
in a particular company.
▪ Financial Statement Analysis is helpful to the Government agencies in
analyzing the taxation owed to the firm.
▪ Liquidity i.e. short-term debt paying capacity
▪ Above all, the company is able to analyze its own performance over a
specific time period.

Page 9 of 37
LIMITATIONS OF FINANCIAL STATEMENT ANALYSIS:

Financial statement Analysis helps different stakeholders of the

firm evaluate its performance and financial status. However, this analysis
is not free from some limitations. These limitations are as follows-

▪ Qualitative factors like efficiency of the employees, sound

organizational structure, efficiency of management, confidence of the
customer etc. are not considered in analysis of financial statement but
these factors have an outstanding impact on financial results.

▪ Financial statements are prepared with past events. So, they are
historical in nature. For this, it is not possible to reach the perfect
conclusion about future prospects of the business through analysis of
these statements.

❖ TOOLS AND TECHNIQUES OF FINANCIAL STATEMENT ANALYSIS:

Following are the most important tools and techniques of financial

statement analysis-

1. Comparative Financial Statement Analysis.

2. Common-Size Statement Analysis.
3. Trends Analysis.
4. Cash Flow Statement.
5. Fund Flow Statement.
6. Ratio analysis.

NOTE: [FROM THE GIVEN TOOLS & TECHNIQUES IN MY PROJECTS I HAVE

DECIDED TO WORK WITH RATIO ANALYSIS. MY PROJECT IS ABOUT RATIO
ANALYSIS OF A COMPANY NAMED "HDFC LIFE INSURANCE" UNDER THE TOPIC
FINANCIAL STATEMENT ANALYSIS]

Page 10 of 37
 RATIO ANALYSIS

Ratio Analysis is the process of identifying strength and weakness in the various
areas of an organization with the help of ratios of relevant accounting figures.
Accounting Ratio is the mathematical expression of relationship between two
figures and the expression may be either in the form of pure ratio or rate or
percentage. Financial ratios help to arrive at the conclusion regarding the
profitability, liquidity, operating efficiency and long-term solvency of the
company.

IMPORTANCE OF RATIO ANALYSIS

• Liquidity Position: With the help of ratio analysis can know the liquidity
position of the firm. We can know whether it is able to meet its short-term
liabilities. This ability is reflected in the liquidity ratios of the firm.

• Long Term Solvency: Ratio analysis is useful to assessing the long-term

financial viability of the firm. This aspect of the financial position is concerned
to the long-term creditors, security analyst and present and potential owners
of a business. The long-term solvency is measured by leverage ratios.

• Operating Efficiency: It throws light on the degree of efficiency in the

management and utilization of assets. The activity ratios measure the
efficiency of the management.

• Over-All Profitability: The management is constantly concerned about the

overall growth in the enterprise. It to meet short- and long-term
obligations to creditors

• Trend Analysis: It shows whether the financial position of the firm is improving
or deteriorating over the years. Significance of trend analysis ratios lies in the
fact to know the direction of the financial position.

Page 11 of 37
 LIMITATIONS OF RATIO ANALYSIS

• Differences in the basis of inventory valuation.

• Different depreciation methods.

• Estimated life of assets

• Amortization of intangible assets like goodwill, Patents.

• Amortization of deferred revenue expenditure such as preliminary

expenditure and discount on issue of shares.

Page 12 of 37
COMPANY PROFILE

Page 13 of 37
 COMPANY HISTORY
Incorporated on 20 July 2000 it is a joint venture between ICICI (74% Prudential
LICI (26%) of U.K. In November 2000, ICICI Prudential Life Insurance was
granted Certification of Registration for carrying out life insurance business by
the Insurance Regulatory & Development Authority of India. The Company
issued its first policy on 12 December 2000.ICICI Prudential Life Insurance is a
joint venture between the ICICI Group and Prudential Policy of the UK. ICICI
started off its operations in 1955 with providing finance for industrial
development, and since then it has diversified into housing finance, consumer
finance, mutual funds to being a Virtual Universal Bank and its latest venture
Life Insurance.

PROMOTER OF COMPANY
ICICI and Prudential came together in 1993 to form Prudential ICICI Asset
Management Company, which has today emerged as one of the leading mutual
funds in India. The two companies bring together two of the strongest financial
service brands in Asia, known for their professionalism, excellent quality of
service and long-term commitment to YOU. Riding on the success of this
relationship, the two companies joined hands once more in 2000, to form ICICI
Prudential Life Insurance, with a commitment to provide leading-edge life
insurance solutions.

Page 14 of 37
 VISION OF COMPANY
The company's vision is to make ICICI Prudential the dominant life and pension
player built on trust by world-class people and services. Hope to achieve this
by:

• Understanding the needs of customers and offering them superior

Products and services.

• Leveraging technology to service the customers quickly, efficiently and

conveniently. Developing and implementing superior Ur deal in risk

• Management and Investing strategies to offer sustainable and stable

return to the Policy holders.

• Providing an environment to foster growth and learning of our employees.

Page 15 of 37
 COMPANY POLICY PLANS

The company offers services in life insurance, pensions and health insurance to
individuals and group and conducts operations in participating, non-
participating and unit linked lines of businesses and for segments which include
par life, par pension, non-par, annuity non par, health, linked life, linked
pension, linked health and linked group. The organization offers various
products on retail, mortgage and group platforms and its current products are:

1. ICICI Pru Guaranteed Income for Tomorrow (GIFT).

2. ICICI Pru Signature - a Unit Linked Insurance Plan (ULIP).

3. ICICI Pru iProtect Smart plan.

4. ICICI Pru Precious Life.

5. ICICI Pru Guaranteed Pensions Plan.

Page 16 of 37
DATA PRESENTATION OF
COMPANY

Page 17 of 37
 STATEMENT OF BALANCE SHEET

BALANCE SHEET OF ICICI PRUDENTIAL LIFE INSURANCE COMPANY (in Rs. Cr.)
PARTICULAR March-24 March-23 March-22 March-21 March-20
ACCOUNTING PERIOD 12 Months 12 Months 12 Months 12 Months 12 Months
EQUITIES AND LIABILITIES
SHARE HOLDER’S FUNDS
Equity Share Capital 1440.62 1438.57 1437.31 1435.97 1435.86
Reserve and Surplus 9563.64 8650.76 7720.67 10734.89 5842.12
NON- CURRENT LIABILITIES
Long Term Borrowings 1200.00 1200.00 1200.00 1200.00 0.00
Other Long-Term Liabilities 123401.06 103635.02 88285.79 72347.49 57383.98
Long Term Provisions 157917.27 135232.35 140541.41 127770.40 88036.75
CURRENT LIABILITIES
Others Current Liabilities 5441.78 5668.55 5226.26 3707.36 3304.58
Short Term Provisions 35.94 25.86 26.00 23.23 27.53
TOTAL CAPITAL AND LIABILITIES 299000.66 255851.30 244437.43 217219.89 156030.82
ASSETS
NON-CURRENT ASSETS
Tangible Assets 583.55 409.99 387.61 435.62 441.19
Intangible Assets 86.35 69.11 45.78 0.00 16.15
Capital Work-In-Progress 49.48 117.21 54.37 21.23 20.42
Non-Current Investment 289727.92 248215.78 238101.18 212202.42 151250.52
Deferred Tax Assets [Net] 1.34 0.30 0.85 0.00 0.00
Long Term Loans and Advances 1760.64 1314.12 940.12 662.82 463.09
CURRENT ASSETS
Cash and Cash Equivalents 837.74 775.22 607.93 558.34 811.92
Short Term Loans and Advances 5953.63 4949.57 4236.58 3338.97 3027.54
TOTAL ASSETS 299000.66 255851.30 244437.43 217219.89 156030.82
Contingent Liabilities 1181.89 811.66 1086.44 1340.38 702.55

Page 18 of 37
 STATEMENT OF PROFIT AND LOSS

PROFIT AND LOSS ACCOUNT OF ICICI PUDENTIAL LIFE INSURANCE COMPANY (in Rs. Cr.)
PARTICULARS March-24 March-23 March-22 March-21 March-20
ACCOUNTING PERIOD 12 Months 12 Months 12 Months 12 Months 12 Months
INCOME
REVENUE FROM OPERATIONS [GROSS] 41759.67 38559.53 36321.27 34973.37 32878.95
REVENUE FROM OPERATIONS [NET] 41759.67 38559.53 36321.27 34973.37 32878.95
TOTAL OPERATING REVENUES 89683.05 49404.08 62305.15 83181.86 21024.95
Other Income 2029.40 1967.87 2285.46 1669.33 1578.36
TOTAL REVENUE 91712.45 51371.95 64590.61 84851.19 22603.30
EXPENSES
Employee Benefit Expenses 1641.21 1451.35 1202.91 15.47 11.88
Finance Costs 122.60 113.18 113.92 12.88 0.12
Depreciation and Amortization Expenses 113.23 83.50 66.90 59.86 0.02
Other Expenses 89203.52 48205.57 62071.33 83366.58 21148.05
TOTAL EXPENSES 91066.81 50001.46 63599.54 83511.42 21206.63
PROFIT/LOSS BEFORE EXCEPTIONAL,
645.64 1370.49 991.06 1339.77 1396.67
EXTRAORDINARY ITEMS AND TAX
PROFIT/LOSS BEFORE TAX 645.64 1370.49 991.06 1339.77 1396.67
TAX EXPENSES CONTINUED OPERATION
Current Tax 178.71 270.50 202.57 263.10 131.39
Deferred Tax (1.04) 0.55 (0.85) 0.00 0.05
TOTAL TAX EXPENSES 177.67 271.05 201.72 263.10 131.44
PROFIT/LOSS AFTER TAX AND BEFORE 467.97 1099.45 789.35 1076.67 1265.23
EXTRAORDINARY ITEMS
PROFIT/LOSS CONTINUTING OPERATIONS 850.66 813.49 759.20 956.16 1066.98
PROFIT/LOSS FROM THE PERIOD 850.66 813.49 759.20 956.16 1066.98

Page 19 of 37
ANALYSIS & FINDINGS

Page 20 of 37
 RATIO ANALYSIS

The ratios which determine the financial performance of the company

are:
➢ LIQUIDITY RATIO

➢ SOLVENCY RATIO

➢ PROFITABILITY RATIO

➢ TURNOVER OR VELOCITIES RATIO

LIQUIDITY RATIO: Liquidity or Short-term solvency means ability of the

business to pay its short-term liabilities. Inability to pay-off short term
liabilities affects its credibility as well as its credit rating. It includes expenses
such as payment to creditors, payment of wages and salaries and other
operating expenses.

Page 21 of 37
 CURRENT RATIO

The current ratio is a liquidity ratio that measures a company's ability to pay
short-term obligations or those due within one year. It tells investors and
analysts how a company can maximize the current assets on its balance sheet
to satisfy its current debt and other payables.

CURRENT ASSETS
CURRENT RATIO =
CURRENT LIABILITIES
COMPUTATION OF CURRENT RATIO

CURRENT RATIO

PARTICULARS March-24 March-23 March-22 March-21 March-20

Total Current Assets 6791.37 5724.79 4907.52 3897.31 3839.46

Total Current Liabilities 5477.72 5694.41 5252.26 3730.59 3332.11

CURRENT RATIO 1.24 1.01 0.93 1.04 1.15

Current Ratio

1.15 1.24

1.04 1.01

0.93

Mar-24 Mar-23 Mar-22 Mar-21 Mar-20

Source: http://money.control.in & organized by MS Excel

Page 22 of 37
ANALYSIS:
From the above table the Current Ratio in the year 2020 was 1.15, in the year
2021 it was decreased to 0.11, in 2022 it was little bit decreased to 0.11 and
again it was increased to 0.08 in 2023. Lastly, also there was again increase of
0.23 in 2021

INTEREPRETATION:
It shows rupee value of current asset for each rupee of current liabilities. The
higher the current ratio, the larger is the amount of rupees available per rupee of
current liability and therefore more is the firm's ability to meet current obligations
and greater is the safety of funds of short-term liabilities. Current assets of 1.24
are available to meet the current liabilities. In the previous year current ratio is
1.01:1 signifies that current asset are 1.01 times its short-term obligations. The
liquidity position is better in previous year as compared to current year.

QUICK RATIO

Quick ratio is also known as Acid test ratio or Liquid ratio. Quick Ratio is more
effective than Current Ratio as the current assets don't include stock in it.
Because of this, it can more effectively measure the short-term debt paying
capacity. As a convention, Quick Ratio 1:1 is standard which means each rupee
of quick liabilities should be backed by quick assets of equal value.

CURRENT ASSETS – INVENTORIES – PREPAID EXPENSES

QUICK RATIO =
CURRENT LIABILITIES – BANK OVERDRAFT
COMPUTATION OF LIQUIDITY RATIO

LIQUIDITY RATIO

PARTICULARS March-24 March-23 March-22 March-21 March-20

CA – INVENTORIES –PREPAID EXPENSES 6791.37 5724.79 4907.52 3897.31 3839.46

CL – BANK OVERDRAFT 5477.72 5694.41 5252.26 3730.59 3332.11

LIQUIDITY RATIO 1.24 1.01 0.93 1.04 1.15

Page 23 of 37
 Quick Ratio

1.15 1.24

1.04 1.01

0.93

Mar-24 Mar-23 Mar-22 Mar-21 Mar-20

Source: http://money.control.in & organized by MS Excel

ANALYSIS:
From the above table the Quick Ratio in the year 2020 was 1.15:1, in the year
2021 it was decreased to 0.11:1, in 2022 it was little bit decreased to 0.11:1 and
again it was increased to 0.08 in 2023. Lastly, also there was a rise of 0.23:1 in
2024.

INTERPRETATION:
We know Quick Assets mean-[Current Assets- (Inventory + Pre-Paid Expense)]
and Quick Liabilities mean-[Current Liabilities-Bank Overdraft]. As here is no
Inventory or Pre-Paid Expenses Bank Overdraft Quick Ratio will remain same as
Current Ratio. It shows rupee value of Quick asset for each rupee of Quick
liabilities. The higher the Quick ratio, the larger is the amount of rupees available
per rupee of Quick liability and therefore more is the firm's ability to meet current
obligations and greater is the safety of funds of short-term liabilities. Quick
assets of 1.24 are available to meet the quick liabilities. In the previous year
quick ratio is 1.01:1 signifies that quick asset are 1.01 times its short-term
obligations. The liquidity position is better in previous year as compared to
current year.

SOLVENCY RATIO: The leverage ratios may be defined as those ratios which
measures the long-term stability and structure of the firm. These ratios indicate
the mix of funds provided by owners and lenders and assure the lenders of the
long-term funds with regard to-Periodic payment of interest and Repayment of
principle amount on the maturity.
Page 24 of 37
 DEBT EQUITY RATIO

This ratio expresses the relationship between debt capital and shareholder’s
fund. Debt equity ratio indicates the respective claim of outsiders and owner
i.e., shareholders in the asset of the firm. So, it reflects the financial soundness
of the firm. The debt equity ratio shows the safety margin of the firm. This is
an important tool of financial analysis to appraise the financial structure of a
firm.

Total long-term Debt

DEBT EQUITY RATIO =
Proprietors / Shareholders fund
COMPUTATION OF DEBT EQUITY RATIO

DEBT EQUITY RATIO

PARTICULARS March-24 March-23 March-22 March-21 March-20

TOTAL LONG-TERM DEBT 1200.00 1200.00 1200.00 1200.00 0.00

PROPRIETORS / SHAREGOLDERS FUND 11004.26 10089.33 9157.98 12170.86 7277.98

DEBT EQUITY RATIO 0.11 0.12 0.13 0.10 0.00

DEBT EQUITY RATIO

0.1 0.11

0.13 0.12

Mar-24 Mar-23 Mar-22 Mar-21 Mar-20

Source: http://money.control.in & organized by MS Excel

Page 25 of 37
ANALYSIS:
Above chart shows that debt equity ratio is increasing simultaneously 2021 to
2022 by comparing previous years. Again, debt equity ratio is decrease in 2023
and short fall in 2024

INTERPRETATION:
It shows rupee value of Total Long-Term Debit for each rupee of
Proprietors/Shareholders Fund. We know Debt Equity Ratio means (Total long-
term Debt divided by Proprietors/Shareholders Fund). The liquidity position is
better in previous year as compared to current year.

PROFITABILITY RATIO:

Profitability ratios are a type of accounting ratio that helps in determining the
financial performance of business at the end of an accounting period.
Profitability ratios show how well a company is able to make profits from its
operations.

RETUEN ON CAPITAL EMPLOYED

It measures the overall efficiency with which the firm is being run by the
management. The Return on Capital employed indicates how much return the
company is earning on the resources deployed in the firm.
Earning before interest and tax
RETURN ON CAPITAL EMPLOYED = X 100
Capital employed
COMPUTATION OF RETURN ON CAPITAL EMPLOYED

RETURN ON CAPITAL EMPLOYED

PARTICULARS March-24 March-23 March-22 March-21 March-20

EBIT 645.64 1370.49 991.06 1339.77 1396.67

TOTAL ASSETS 299000.66 255851.30 244437.43 217219.89 156030.82

TOTAL CURRENT LIABILITIES 5477.72 5694.41 5252.26 3730.59 3332.11

CAPITAL EMPLOYED 293522.94 250156.89 239185.17 213489.30 155698.71

RETURN ON CAPITAL EMPLOYED 0.22% 0.55% 4.14% 6.28% 0.90%

Page 26 of 37
 RETURN ON CAPITAL EMPLOYED
0.90% 0.55%

4.14%

6.28%

Mar-23 Mar-22 Mar-21 Mar-20

Source: http://money.control.in & organized by MS Excel

ANALYSIS:
The above table shows that Return on Capital was 0.90% in 2020, then in 2021
it was 6.28%, then in 2022, 2023 and 2024 it was 4.14%, 0.55%, 0.22%
respectively.

INTERPRETATION:
Return on capital employed is decreased in 2023 i.e., 0.55%. As the EBIT
decreases Return on capital employed automatically decreases.

EARNING PER SHARE

It measures the profit available to the equity share holders on a par share basis,
is the share they can gave on every share holder. This ratio indicates
profitability per equity share basis and widely used by the prospective equity
share holders as guide to investment decision in the particular company.
Earning Available to Equity Shareholders
EARNING PER SHARE =
No. of Equity Shares

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 COMPUTATION OF EARNING PER SHARE

EARNING PER SHARE

PARTICULARS March-24 March-23 March-22 March-21 March-20

Net Profit as per Statement of Profit & Loss 467.97 1099.45 789.35 1076.67 1265.23

No. of Equity Shares 79.0489865 194.937943 1483.68571 160.93722 170.057796

EARNING PER SHARE 5.92 5.64 5.25 6.69 7.44

EARNING PER SHARE

5.92
7.44

5.64
6.69

5.25

Mar-24 Mar-23 Mar-22 Mar-21 Mar-20

Source: http://money.control.in & organized by MS Excel

ANALYSIS:
From the above table it shown that decrease in the Earning per Share.

INTERPRETATION:
As the current year’s profit increases automatically earning per share also increases.

TURNOVER OR VELOCITIES RATIO:

A turnover ratio in business is a measurement of the firm's efficiency. It is

calculated by dividing annual income by annual liability. It can be applied to
the cost of inventory or any other business cost. Unlike in investing, a high
turnover ratio in business is almost always a good sign.

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 WORKING CAPITAL TURNOVER
Working capital turnover is a ratio that measures how efficiently a company is
using its working capital to support sales and growth. Also known as net sales
to working capital, working capital turnover measures the relationship between
the funds used to finance a company's operations and the revenues a company
generates to continue operations and turn a profit.
A high turnover ratio shows that management is being very efficient in using a
company’s short- term assets and liabilities for supporting sales. In other words,
it is generating a higher dollar amount of sales for every dollar of working
capital used.

Net Revenue from Operations

WORKING CAPITAL TURNOVER RATIO=
Net Working Capital
COMPUTATION OF WORKING CAPITAL TURNOVER RATIO

WORKING CAPITAL TURNOVER RATIO

PARTICULARS March-24 March-23 March-22 March-21 March-20

NET REVENUE FROM OPERATIONS 41759.67 38559.53 36321.27 34973.37 32878.95

NET WORKING CAPITAL 1313.65 30.38 (344.74) 166.72 507.35

WORKING CAPITAL TURNOVER RATIO 31.79 1269.24 (105.36) 209.77 64.81

WORKING CAPITAL TURNOVER RATIO

64.81 31.79

209.77
-105.36

1269.24

Mar-24 Mar-23 Mar-22 Mar-21 Mar-20

Source: http://money.control.in & organized by MS Excel

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ANALYSIS:
The above table shows that Working Capital Turnover Ratio was 64.81 in 2020,
then in 2021 it was 209.77, then in 2022, 2023 and 2024 it was (105.36),
1269.24, 31.79 respectively.

INTERPRETATION:
It can be seen from the chart that the ratio is continuously fluctuating. The year
2023 had the highest working capital turnover ratio amongst the other years. A
high turnover ratio shows that management is being very efficient in using a
company’s short-term assets and liabilities for supporting sales. Over the years,
the ratio has come to 1269.24 in 2022-23 which signifies a shortage of working
capital in the company which is not favourable. A low ratio indicates that a
business is investing in too many accounts receivable and inventory assets to
support its sales, which could eventually lead to an excessive amount of bad
debts and obsolete inventory.

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 FINDINGS

1. The Liquidity position of the firm has deteriorated which is significant

from the decrease and again increase in current ratio.

2. In the current year company has taken Debt capital, so the company is
taking risk. It is very good to the company. Company has to bear fixed
interest on such debt capital.

3. The company is on the path of becoming stable and this is evident from
the increase in the Proprietary ratio.

4. The company's asset turnover ratio is too low.

5. Profit margin ratio is decreased. This means the company is not

efficiently converting revenue in profits.

6. Return on Equity has increase and again decreased compared to

previous year. This is happened for two reasons on one hand Profit has
decreased and on the other hand Shareholders' fund also has increased.

7. In current year company is not keeping any retain earnings and that is
why it would not get the benefit of investment of retain earning.

8. Contingent liability portion increased.

9. Total expense portion is continuously increasing year to year. This

causes in reduction of Net Profit Margin.

10. Earnings per share is also decreasing due to decrease in profits.

11. The Working Capital Turnover Ratio of the company was decreasing in a
high rate and it goes to negative in march-22.

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 CONCLUSION
AND
RECOMMENDATIONS

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 CONCLUSION

A study on financial statement analysis was carried out in ICICI Prudential.

Financial Statement Analysis is one of the important factors in analyzing
company's performance hence while knowing the company's growth and
profitability financial analysis would be helpful.
The data was collected from various sources and also through tools like
company's annual report and relevant transactions with the company staffs.
They were identified in the form of findings and suitable suggestions were put
forth to the concerned authorities for further discussion.

RECOMMENDATIONS

➢ RECOMMENDATIONS REGADING LIQUIDITY POSITION:

a) Company's liquidity position is not good according to the analysis. A

company should have 2:1 current ratio. But this company does have a
huge portion of current liabilities compared to its current assets. From
above table also we've seen that some of the years company had more
current liabilities than its current assets. Though in current year the
current liabilities portion is less than the current assets but this is not
sufficient to cover up its current liabilities. The company should increase
its current assets and working capital as well.

➢ RECOMMENDATIONS REGARDING SOLVENCY POSITION:

a) The above analysis shows that the company hasn't been using any long-
term debt capital since 2020. During those years the company was sure
about shareholders' return on their capital. But in current year 2021 it took
Debt capital. It is a very good thing. Company is taking risk. From 2021
company has to pay fixed interest on borrowed capital and it will help the
company to get Trading on Equity benefit and Tax benefit as well.

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➢ RECOMMENDATIONS REGARDING PROFITABILITY:

a) Company should increase its profit margin. The company was making
huge amount of profit in 2024 i.e.,93.65%. but gradually it loses its profit
margin due to increase in costs in previous years.

b) Company's total expense has to be controlled in order to get more margin

of net profit.

c) Company should look forward to increase the Earning per Share. For this
company has to increase earnings available to equity shareholders. In
2024 the shareholders have got more amount of dividend compared to
last 4 years because in this this year debt capital is taken and the owners
have got trading on benefit. It would be beneficial to have debt capital in
the capital structure in order to get such benefit. But too high debt capital
also is not recommended.

d) Last year company's shareholders fund increases, so the company can

increase the unit price, increasing the price of their share they will
generate more profit and wealth.

➢ RECOMMENDATIONS REGARDING TURNOVER OR VELOCITIES RATIO:

A higher working capital turnover ratio is better because it indicates that a

company can generate a larger amount of sales. It could suggest that a
company must raise additional capital to support future growth if working
capital turnover rises too high.

• OTHER QUALITATIVE RECOMMENDATIONS

a) Risk management techniques should be adopted so that the company

can avoid in investing in risky projects.

b) The company should take steps in training and development program in

upgrading the technological knowledge for their employees.
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c) Company should also follow some qualitative techniques in order to
overcome the future risk.

d) If the company is not able to satisfy the appraisals of their employees, at

least should look forward for a "Rewards and Recognitions" program to
motivate the employees.

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BIBLIOGRAPHY

Page 36 of 37
 BIBLIOGRAPHY
REFERENCE BOOKS:

1. FINANCIAL REPORTING AND FINANCIAL STATEMENT ANALYSIS -DR.

JATANTA GHOSH.

2. FINANCIAL MANAGEMENT-KAR, BAGCHI

WEBSIDE:

1. https://www.moneycontrol.com/financials/iciciprudentiallifeinsurancecompany/balance-
sheetVI/IPL01

2. https://en.wikipedia.org/wiki/ICICI_Prudential_Life_Insurance

3. https://www.iciciprulife.com/

4. https://www.iciciprulife.com/term-insurance.html#

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