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TABLE OF CONTENT
S.NO
CONTENTS
PAGE NO.
01
INTRODUCTION
03
02
COMPANY PROFILE
21
03
30
04
RESEARCH METHODOLOGY
32
05
DATAANALYSIS &INTERPRETATION
36
06
FINDINGS
55
07
SUGGESTION
57
08
CONCLUSION
59
09
BIBLIOGRAPHY
61
INTRODUCTION
FINANCIAL ANALYSIS
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 companys financial statements.
The level and historical trends of these ratios can be used to make inferences
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.
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.
and calculate only a few appropriate ratios. The following are the four steps involved in the
ratio analysis.
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
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
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.
1. LIQUIDITY RATIOS
Liquidity refers to the ability of a concern to meet its current
obligations as & when there becomes due. The short term obligations of a firm
10
can be met only when there are sufficient liquid assets. The short term
obligations are met by realizing amounts from current, floating (or) circulating
assets The current assets should either be calculated liquid (or) near liquidity.
They should be convertible into cash for paying obligations of short term
nature. The sufficiency (or) insufficiency of current assets should be assessed by
comparing them with short-term current liabilities. If current assets can pay off
current liabilities, then liquidity position will be satisfactory.
To measure the liquidity of a firm the following ratios can be
calculated
Current ratio
Quick (or) Acid-test (or) Liquid ratio
Absolute liquid ratio (or) Cash position ratio
CURRENT LIABILITIES
Out standing or accrued expenses
Bank over draft
Bills payable
11
Inventories
Work-in-progress
Marketable securities
Short-term investments
Sundry debtors
Prepaid expenses
Short-term advances
Sundry creditors
Dividend payable
Income-tax payable
CURRENT LIABILITIES
Out standing or accrued expenses
Bank over draft
Bills payable
Short-term advances
Sundry creditors
Dividend payable
Income tax payable
12
CURRENT LIABILITIES
Out standing or accrued expenses
Bank over draft
Bills payable
Short-term advances
Sundry creditors
Dividend payable
Income tax payable
2. LEVERAGE RATIOS
The leverage or solvency ratio refers to the ability of a concern to
meet its long term obligations. Accordingly, long term solvency ratios indicate
13
firms ability to meet the fixed interest and costs and repayment schedules
associated with its long term borrowings.
The following ratio serves the purpose of determining the solvency
of the concern.
Proprietory ratio
(a) PROPRIETORY RATIO
A variant to the debt-equity ratio is the proprietory ratio which is
also known as equity ratio. This ratio establishes relationship between share
holders funds to total assets of the firm.
Shareholders funds
Proprietory ratio =
Total assets
TOTAL ASSETS
Fixed Assets
Current Assets
Cash in hand & at bank
Bills receivable
Inventories
Marketable securities
Short-term investments
Sundry debtors
Prepaid Expenses
3. ACTIVITY RATIOS
Funds are invested in various assets in business to make sales and
earn profits. The efficiency with which assets are managed directly effect the
volume of sales. Activity ratios measure the efficiency (or) effectiveness with
which a firm manages its resources (or) assets. These ratios are also called
14
Turn over ratios because they indicate the speed with which assets are
converted or turned over into sales.
Working capital turnover ratio
Fixed assets turnover ratio
Capital turnover ratio
Current assets to fixed assets ratio
CURRENT LIABILITIES
Out standing or accrued expenses
Bank over draft
Bills payable
Short-term advances
Sundry creditors
Dividend payable
Income-tax payable
15
the intensive utilization of fixed assets. Lower ratio means underutilization of fixed assets.
Cost of Sales
Fixed assets turnover ratio =
Net fixed assets
16
FIXED ASSETS
Machinery
Buildings
Plant
Vehicles
4. PROFITABILITY RATIOS
The primary objectives of business undertaking are to earn profits.
Because profit is the engine, that drives the business enterprise.
17
Net Profit after Tax = Net Profit () Depreciation () Interest () Income Tax
Net profit
Return on assets =
Total assets
Reserves& surplus
Reserves & surplus to capital =
Capital
19
20
Generally, higher the price-earning ratio, the better it is. If the price
earning ratio falls, the management should look into the causes that have
resulted into the fall of the ratio.
21
COMPANY
PROFILE
22
Bharti airtel
bharti airtel limited is a leading global telecommunications company with
operations in 19 countries across Asia and Africa. The company offers
mobile voice & data services, fixed line, high speed broadband, IPTV,
DTH, turnkey telecom solutions for enterprises and national &
international long distance services to carriers. bharti airtel has been
ranked among the six best performing technology companies in the
world by business week. bharti airtel had 200 million customers across
its operations.
Award
airtel has won the Most Preferred Cellular Service Provider Brand award at the
CNBC Awaaz Consumer Awards in Mumbai. This is 6th year in a row that airtel
has won the award in this category. This year, the awards were based on an
exhaustive consumer survey done by The Nielsen Company. Over 3,000
consumers, spanning 19 cities and 16 states in India, rated brands across
different categories to choose brands which delivered true value for money.
bharti airtel has received the prestigious Businessworld-FICCI-SEDF Corporate
Social Responsibility Award 2009-2010. The FICCI Socio Economic
Development Foundation (FICCI-SEDF) and Businessworld CSR award was
instituted in 1999 to recognize exemplary responsible business practices by the
Indian industry.
23
Organization chart
business description
Provides GSM mobile services in all the 22 telecom circles in India,
Srilanka, Bangladesh and now in 16 countries of Africa.
Provides telemedia services (fixed line and broadband services through
DSL) in 87 cities in India.
Provides an integrated suite of Enterprise solutions, in addition to
providing long distance connectivity both Nationally and Internationally.
We also offer DTH and IPTV Services
established
July 07, 1995, as a Public Limited Company
24
ISIN
INE397D01024
proportionate revenue
Rs. 172,698 million
Rs.
152,310
(ended
million
ended
September
September
30,
2011-Audited)
30,
2010-Audited)
proportionate EBITDA
Rs. 58,151million (
Rs.
51,377
million
ended
(
September
ended
30,
September
30,
2011
Audited)
2010-
Audited)
shares in issue
3,797,530,096 as at September 30, 2011
listings
Bombay
Stock
Exchange
Limited
(BSE)
BHARTIARTL
BSE 532454
Corporate governance
25
The board of directors of the company has an optimum mix of executive and
non-executive directors, which consists of two executive and fourteen nonexecutive directors. The chairman and managing director, Mr. Sunil Bharti
Mittal, is an executive director and the number of independent directors on the
board is 50% of the total board strength. The independence of a director is
determined on the basis that such director does not have any material pecuniary
relationship with the company, its promoters or its management, which may
affect the independence of the judgment of a director. The board members
possess requisite skills, experience and expertise required to take decisions,
which are in the best interest of the company.
transoceanic
Global
IP
Network.
Support on variety of CE-PE routing protocol like Static, OSPF and BGP
Flexible physical access port ranging from T1/ E1, DS3, STM1 to FE
3G
Embrace the next generation of mobile communications - the generation
of 3G.airtel brings to you a world class 3G network capable of delivering
amazing access speeds to keep you ahead, increasing bandwidth on
your mobile to broadband speeds. 3G not only promises faster web
browsing and file downloads but also empowers demanding multimedia
applications such as video conferencing, Voice-over-IP (VoIP), full
motion video and streaming music. Experience a whole new world of
applications with amazing speed on airtel 3G.
what you get from airtel 3G on Mobile:
28
by
simply
pressing
and
anytime
during
the
video conferencing
airtel video conference service lets you enjoy the benefit of a real time meeting
by providing an end-to-end, bug free video conversation with your business
partners at different locations.
Reservation-based video conference is of two types:
30
airtel provides State-of-the-Art Tier III and Tier III+ data centers to co-locate
and operate your business critical IT & telecom equipments and applications.
We own an extensive global and domestic network infrastructure. You could
drive significant operational efficiencies by having a single partner for your
managed co-location and network connectivity needs. Our MPLS POPs at select
data Center locations provide you network redundancy, resilience & low
latency.
Managed Services
1.
2.
Response times
a. Business hours : 2 hrs
b. Out of hours : 4 hrs Business hours : 9 AM-5PM, Mon-Fri.
3.
4.
31
OBJECTIVE OF STUDY
32
33
To analyse and interpret the trends as revealed by various ratios of the company in
particular.
To analyse 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.
34
RESEARCH METHODOLOGY
RESEARCH METHODOLOGY
Research methodology is a way to systematically solve the research problem. it may
be understood as a science of studying how research is done scientifically. So, the research
35
methodology not only talks about the research methods but also considers the logic behind
the method used in the context of the research study.
RESEARCH DESIGN:
Descriptive research is used in this study because it will ensure the minimization of
bias and maximization of reliability of data collected. The researcher had to use fact and
information already available through financial statements of earlier years and analyse these
to make critical evaluation of the available material. Hence by making the type of the
research conducted to be both Descriptive and Analytical in nature.
From the study, the type of data to be collected and the procedure to be used for this
purpose were decided.
DATA COLLECTION:
The required data for the study are basically secondary in nature and the data are
collected from the audited reports of the company.
SOURCES OF DATA:
The sources of data are from the annual reports of the company from the year 20092010.
36
1.
Comparative statement.
2.
3.
Trend Percentage.
4.
Ratio Analysis.
37
38
DATA ANALYSIS
&
INTERPRETATION
39
Year
2010
2009
Current
39935.57
38026.00
23696.97
21686.07
1.69:1
1.75:1
assets
Current
liabilitie
s
Ratio
40
Interpretation:
In 2009 current ratio was 1.75 which is decreased to 1.69 in the
year 2010. As compared to last year Current Assets has increased
because of increase in Inventories, Cash and Bank balance and
other Current Assets but Current Ratio has decreased because of
excess advance received from debtor , decrease in Cost of
Removal of over burden, and increase in current liability .
2)
the
to pay its
Current liabilities
Calculation :
Year
2010
2009
Quick
3406.48
1458.94
23696.97
21686.07
0.14:1
0.07:1
assets
Current
liabilitie
s
Quick
ratio
42
Interpretation:
In 2009 quick ratio was 0.07 which has increased to 0.14 in 2010.
Quick assets has increased by 133% and Current liabilities has
increased only by 9% Due to which quick ratio has increased by
100%. The management has taken a great effort in maintaining
high quick assets as compared to last year.
2010
2009
43
COGS
Avg.
57147.72
6294.255
50738.36
4994.18
inventor
y
Ratio
9.08
10.16
Times
Times
Interpretation:
In 2009 inventory turn over ratio was 10.16 times which is
reduced to 9.08 times. Reduction of Inventory turn over ratio in
2010 may be due to increase in cost of goods sold with increase in
44
Calculation :
Year
Sales
Debtor
Ratio
2010
135235.59
Nil
Nil
2009
123719.15
219.19
564 Times
45
Interpretation:
Debtor turn over ratio in the year 2009 is extremely high i.e 564
times . The ratio is too high because the entire sale done by the
project is according to the agreement with customer. The debtor
shown on the closing day of financial year is not received by the
customer because customer has time to pay his liability in near
future. So the project is not worried about the Bad debts.
46
* 100
Calculation :
Year
Gross
2010
78087.87
2009
72980.79
profit
Net sales
Ratio
135235.59
58 %
123719.15
59 %
47
Interpretation:
In the year 2009 gross profit ratio was 59 % which is decreased to
58% in the year 2010. The project gross profit has increased with
increase in sales as compared to last year. The project gross profit
ratio has decreased by 1% due to increase in direct expenses. The
company has sound position to meet its non-operating expenses
and also enough capable to pay taxes and royalty to the
government.
48
6) OPERATING RATIO:
Meaning :
Operating ratio establishes the relationship between cost of goods
sold and other operating expenses on the one hand and sales on the
other hand. Operating ratio indicates the percentage of net sales
that is consumed by operating cost. Higher the operating ratio is
less favourable for the company because it would have small
margin to cover interest, income tax , dividend and reserve.
Operating ratio = Operating Cost*100
Net Sales
Calculation :
YEAR
Operating Cost
Net Sales
Ratio
2010
59747.87
135235.59
44.18%
2009
55732.54
123719.15
45.05%
49
Interpretation:
In the year 2009 operating ratio was 45.05% which is reduced to
44.18% in the year 2010. Reduction in operating ratio will
contribute more to net profit . Reduction in operating ratio may be
possible due to reduction in cost per tones.
50
Year
2010
2009
Net profit
82105.48
67010.72
Net sales
135235.59
123719.15
Ratio
60.71%
54.16%
51
Interpretation:
The net profit of the company has been increased by 6.55% as
compared to last year. In 2009 project net profit was 54.16%
which increased to 60.71% in 2010. Net profit of the project has
been increased due to increase in sales/ production, reduction in
cost per tonnes, and better control on operating expenses. The net
profit of the project reveals sound business of the project and
strong financial position.
52
Calculation :
YEAR
COGS*
WORKING CAP.
RATIO
2010
57147.72
16238.6
3.52 times
2009
50738.36
16339.93
3.11 imes
53
54
2010
38301.77
2009
39152.12
PURCHASE
AVG.
22691.52
21686.07
CREDITORS
RATIO
1.69 times
1.81times
55
Interpretation :
A high creditors turnover ratio indicates that creditors not paid
in time while a low ratio gives an idea that the business is not
taking full advantages of credit period allowed by the creditors.
Since creditors turnover ratio has decreased from 1.81 times to
1.69 times which represents that creditors are paid in time. Its a
good sign for the company.
56
FINDINGS
57
Finding
I came across following findings during undergoing the project work on topic
FINANCIAL ANALYSIS OF BHARTI AIRTEL SERVICES LTD...
1.
2.
3.
4.
During the study I find that their is no huge variation in budget decided
and the actual one.
5.
6.
7.
Monthly return filling is not on line process, hence sales and excise
department face problem.
8.
9.
59
SUGGESTION
4. The company may strike a balance between the current assets and current liabilities to
maintain the solvency position.
5. Optimum utilization of Working Capital can be planned so as to result in sound
financial position.
6. There is an urgent need to upgrade and modernize the plants for improving the
profitability of BHARTI AIRTEL SERVICES LTD..
61
CONCLUSION
CONCLUSION:
After analyzing the Financial Analysis of the BHARTI AIRTEL SERVICES
LTD. Ltd .I found that the Company is really in Good financial condition
because the management has taken a great effort in managing the funds like
acquiring and allocation of the funds, optimum utilization of the available
resources. The analysis shows that the profitability of the company is increases
as compared to the last years due to high production and sells with lesser
62
expenses. The organization is in sound position which is good for the company,
stakeholders as well as the Country also.Good financial position not just
beneficial for the company stake holders but it helps to improves the GDP as
well as the per capita income of the entire country.
Finance is the life blood of every business. Without effective financial management a
company cannot in this competitive world. A Prudent financial Manager has to measure the
working capital policy followed by the company.
BHARTI AIRTEL SERVICES LTD. continues to play an important role in the
industrial development of country. There is every possibility that BHARTI AIRTEL
SERVICES LTD. would establish for itself a permanent and unshakable position in the
industrial map of India and also in the emerging international market for steel.
63
64
BIBLIOGRAPHY
BIBLIOGRAPHY:
Books:
Dr. S. N. Maheshwari, Financial Management, English Revised
Edition.
M.Y. Khan and P. K. Jain, Financial Management,
Ravi M. Kishore, Financial Management, 6th Edition.
65
66
ANNEXURE
PARTICULARS
DETAILS
AS AT 31ST
MARCH2010
(RS IN LAKH)
DETAILS
AS AT
31ST
MARC
H2009
(RS IN
LAKH)
67
SOURCES OF FUND:
SHAREHOLDERS FUNDS:
Share capital
Share money pending allotment
Reserves & surplus
LOAN FUND:
Secured
Unsecured
Current Account with HQ
APPLICATION OF FUND:
A. Fixed Assets
Gross Block
Less: Depreciation
Net Block
0.00
0.00
82105.48
82105.48
0.00
0.00
67025.47
67025.4
7
0.00
0.00
(27184.43)
54921.05
92891.74
58620.37
34271.37
4170.97
240.11
38682.45
0.00
0.00
(24918.
57)
42106.9
0
82890.74
57996.99
24893.75
677.51
195.71
B. Capital work-in-Progress
C. Surveyed off Fixed Assets
Awaiting disposal
25766.9
7
0.00
Investment
Current Assets , Loans & Advances:
Debtors
Inventories
Cash & Bank Balances
Loans& Advances
Other current Assets
(594.18)
7594.33
36.32
600.58
3363.76
28934.76
39935.57
23696.97
219.19
4994.18
0.14
607.01
632.60
31572.88
38026.00
21686.07
0.00
16238.60
0.00
54921.05
16339.9
3
0.00
42106.9
0
68
INCOME:
Sales
Coal issued for other purposes
Accretion/ Decretion in Stock
Workshop jobs for own purposes
Other income
EXPENDITURE:
Consumption of Stores & Spares
Employees Remuneration & Benefits
Social Overhead
Power & Fuel
Repairs
Contractual Expenses
Miscellaneous Expenses
Overburden Removal Adjustment Existing Mines
Total Expenditure
GROSS OPERATING PROFIT/ LOSS
Interest
Financial/Commitment Charges
Depreciation
Provisions
Write Off
PROFIT / LOSS FOR THE YEAR
Overburden Removal Adjust. For Closed Mines
Provision written Back
Prior Period Adjustment
Extra Ordinary Items
PROFIT / LOSS BEFORE TAXATION
Provision for income tax for earlier years
PROFIT AFTER TAX
Provision for Dividend on Preference Shares
Provision for proposed Dividend of Equity shares
Provision for income tax on proposed Dividend
Net profit After Tax & Proposed Dividend
Retained Profit After Trans. To Reserve
BALANCE CARRIED TO BALANCE SHEET
31ST
MARCH2009
(RS IN
LAKHS)
135235.59
0.00
2292.77
0.00
7511.49
145039.85
19900.27
13336.93
3459.46
3814.22
4090.72
7037.10
5471.05
2638.12
59747.87
85291.88
192.86
175.76
2856.35
111.87
0.00
81955.14
0.00
131.65
18.69
0.00
82105.48
0.00
82105.48
0.00
0.00
0.00
82105.48
82105.48
82105.48
123719.15
0.00
854.39
0.00
4735.80
129309.34
20644.35
16093.00
3392.10
3903.61
5392.11
5819.95
6196.99
5709.57
55732.54
73576.80
324.94
312.29
5853.00
268.48
0.00
66818.09
0.00
29.04
163.59
0.00
67010.72
0.00
67010.72
0.00
0.00
0.00
67010.72
67010.72
67010.72
69
70