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I MOHIT BBA 3rd YEAR ( 5th SEMESTER ) of HINDU COLLEGE , SONEPAT hereby
declare that the project report entitled „A STUDY OF FINANCIAL PERFORMANCE
ANALYSIS‟ is an original work and the same has not been submitted to any other
institute for the award of any degree/diploma.
MOHIT
BBA 3rd YEAR
First of all, I would like to thank the almighty for having given me the opportunity to work under
the table supervision and constructive guidance of my mentor and guide Mr. Atul Kumar Jain.
His encouragement, inspiration and expert and valuable advice instilled in me the faith and
confidence to achieve the end result which is presented herewith.
Finally, I would like to thank the officials of the Vaksons Automobiles Pvt. Ltd. for providing
me with all the information for completing the submitted venture.
MOHIT
BBA 3rd YEAR
The successful completion of the project was a unique experience for us because by
visiting many place and interacting various persons. I achieved a better knowledge
about this project. The experience which i gained by doing this project was essential at
this turning point of my carrier this project is being submitted which content detailed
analysis of the research under taken by me.
The research provides an opportunity to the student to devote her skills knowledge and
competencies required during the technical session.
Data Sources:
Research is totally based on secondary data. Secondary data can be used for the reference.
Research has been done by secondary data collections. The secondary data has been collected
through various journals and websites.
Duration of study:
The study was carried out for a period of 45 days, from 22th May to 8th July 2018.
TYPE OF RESEARCH
ANALYTICAL RESEARCH
In this type of research to use facts or information already available, and analyze these to make a
critical evaluation of the material. The researcher depends on existing datafor his research work.
The analysis revolvesround the material collected or available.
Sources of Data
Secondary Data
Secondary data refers to the information or facts already collected such data are collected with
the objectives of understanding the past status of any variable or the data collected and reported
by some source is accessed and used for the objectives of the study. Normally in research, the
scholars collectedpublished data, journals, annual reports and websites.
Sampling Procedure
The sample is selected of them who are the customers/visitors of Vaksons Force, irrespective of
them being investors or not or availing the services or not. It was also collected through personal
visits to persons, by formal and informal talks and through filling up the questionnaire prepared.
The data has been analyzed by using mathematical/statistical tool.
Tools used for analysis:
1.Ratio analysis
5.Trend Analysis
Company
Profile
COMPANY PROFILE
Today the company operates three different showrooms of Force Motors Ltd. namely at Sonepat,
Panipat and Gohana within the state of Haryana. The company also operates an in house service
center/workshop at Sonepat for the servicing and other after sales needs of the customers. The
company has over a decade of experience in distributing all types of vehicles on behalf of Force
Motors Ltd. including but not limited to commercial transports (Traveller) MUV Vehicles (Trax
Crusier Trax School Van Trax Kargo King) small commercial Vehicles (Trump-40 and Trump-
15).
Apart from the vehicle dealership business the company has been involved in trading of vehicle
spare parts and utilities of branded as well as generic products forming part of the auto value
chain. The company has recently incorporated a subsidiary company in the name and style of
Vaksons Metaplast Private Limited in order to undertake trading in auto parts HDPE and LDPE
Polymer aluminium scrap and other metal and plastic items on a larger scale with good trading
margins. Over the years the company has developed a philosophy for quality and has also
obtained an ISO (9001:2008) certification for the quality management system. The company has
also been awarded a Certification of Appreciation in February 2015 by Force Motors Ltd. for
best dominance in the MUV market category.
MANAGEMENT TEAM
Atul Jain
Mahak Bajaj
Satinder Jain
Vijender Singh
Head-Sales
Monika Kant
Christopher
Sales Manager
Manoj Kumar
Supervisor
Ravi Kumar
Manager – Service
Sumeet Alakh
Pankaj Bhai
Mahesh Pandey
Vaksons Automobiles limited announces unaudited standalone financial results for the half year
ended September 30, 2017. For the half year, the company‟s total income was INR 63.37 million
against INR 71.18 million for the same period last year. Profit before exceptional items and tax
was INR 0.12 million against INR 0.49 million for the same period last year. Profit from
ordinary activities before tax was INR 0.12 million against INR 0.49 million for the same period
last year. Net profit for the last year INR 0.08 million against INR 0.34 million for the same
period last year. Earnings per share, basic and diluted, were INR 0.01 against INR 0.05 for the
same period last year.
Vaksons automobiles limited, Board meeting, May 30, 2018, at 16:00 Indian standard time.
Agenda: TO consider the audited standalone and consolidated financial results of the company
for the year ended March 31, 2018 and report of auditor on the same; and to consider any other
business with the permission of Chair.
Vaosons Automobiles limited to Report Fiscal year 2018 results on May 30, 2018
Vaksons Automobiles limited announced that they will report fiscal year 2018 results on May
30, 2018.
Major events in the History of the Company
2003
2006
-New dealership with Force Motors Ltd. (formed out of Bajaj Tempo), a commercial vehicle
manufacturer, was started.
2011
2012
2014
-With intent of diversification, the company started the business of trading of spare parts in 2014.
-The company was awarded the status of “No. 1 dealer” in Haryana state during 2010-2013 by
Force Motors.
-Obtained ISO 9001:2008 Certification for Sales, Services & Spare parts of vehicles.
-Conversion of the company into a Public limited company and change of name from Vaksons
Automobiles Pvt. Ltd. to Vaksons Automobiles Ltd.
2015
-Our company received “Certification of Appreciation” from Force Motors Limited for best
dominance MUV market category.
Introduction
Introduction
The term financial performance analysis means “manage” funds very well i.e. breaking down a
complex set of facts contained financial position in to simple elements, in such a way that proper
evaluation about the past and present financial position and liquidity position can be done and
forecast about future position can be made. With liberalization and globalization in the world
today, financial management is most important matter for the every one because of its used by
various classes of people who are directly or indirectly related and interested in the concern in
order to know short-term liquidity, long-term liquidity, profitability, solvency, operational
efficiency and growth potential of activity. Such analysis is done by using different tools and
techniques of financial management such as ratio analysis like financial leverage analysis,
profitability analysis, liquidity analysis as well as activity analysis. Thus, financial management
in the automobile industry is important not only for managerial personnel but also for creditors,
investors, government, employees and researcher as well as for all those who have interest
regarding financial and liquidity in the automobile industry.
FORCE MOTORS
Late Shri N.K.Firodia, a dedicated Gandhian and Visionary Industrialist, was the Founder-
Managing Director of Force Motors. Having participated in the freedom struggle for India in
1932 and 1942 he was determined to achieve Industrial modernization for India. He established,
starting in 1950, in Collaboration with Vidal & Sohn, Hamburg, Germany the import and later
progressive manufacture in India of the Tempo 3-Wheeler.
On 15th August 1957, the 10th anniversary of Indian independence, Mr. N.K. Firodia signed a
collaboration with Vidal & Sohn Tempo Werke GmbH for phased manufacturing of TEMPO 3-
WHEELER & manufacturing was started in a small plant at Goregaon, Bombay. The initial
licensed capacity granted by the government was 1000 vehicles per year and 80 vehicles per
month.
Expanding the business in 1961, the Company acquired about 150 acres of land in Akurdi near
Pune. The production was transferred to Pune by the end of 1964. Ambitious plans for producing
Light Commercial Vehicles for the growing industrial economy of India were drawn up. The
manufacture of TEMPO VIKING 4-Wheeled Trucks & Vans commenced in November 1964.
The licensed capacity was increased to 6000 vehicles per year.
The VIKING vehicle subsequently was upgraded with a diesel engine and the MATADOR was
born. The production of Matador commenced in 1969. In 1975, the manufacturing capacity of
the company was increased to 12,000 vehicles per year, in addition to 6,000 diesel engines for
other purposes. The collaborator company in Germany, in the wave of mergers during the 70s
merged eventually with Daimler-Benz. In July 1982, the company in a new collaboration - with
the then Daimler Benz - produced the Mercedes Benz OM 616 engine under license for fitting on
its line of vehicles.
The TRAX Vehicle, specifically designed for the rough roads of rural India was developed by
the Company's Research & Development department, to cater to the growing mechanisation of
passenger transport in rural India.
To further modernise its LCV product range, the Company took up the production of the
TRAVELLER, under license from Daimler-Benz. A new Plant was set up in 1987, on a
greenfield site in Central India at Pithampur in Madhya Pradesh. This modern facility was
developed in close co-operation with Daimler-Benz. The plant is equipped with a modern
conveyorised body welding and Electrophoretic dip painting shop. The Plant has been expanded
to house a new Press Shop in 1997.
Today, Force Motors makes a full family of vehicles - the New Trump, Traveller Shaktiman,
Trax and Citiline range of Buses & the Balwan and Orchard range of Tractors. These are
products born out of Force Motor's own Research & Development activity. The Product designs
for these ranges of most modern vehicles were created in our most capable Computer
Engineering Environment.
The Force Motor's R & D centre is among the most advanced in the country with a 150 terminal
(CAD) Computer Aided Design network. Over 90% of the vehicles currently manufactured and
sold by Force Motors are the latest designs, where, introduction is less than 5 years old. Further
these are the products of most modern Computer Aided Design efforts. The company spends
over 5% of its annual turnover on new Product Development. It employs 850 people for its R &
D, tooling & project activity - 450 of which are Engineers. Latest software such as IDEAS,
CATIA, and ADAMS are used for design & validation. The engines designed by Force Motors
are fully proven for emission and for fuel efficiency. The vehicles offer Green engines meeting
BS III norms.
Force Motors Ltd., is a Company that has reinvented itself. Four decades ago, Force Motors
started production of the HANSEAT 3- Wheelers. Today, Force Motors stands on the threshold
of a new era in the automobile industry in India, with a stake in Five Product segments:
TRACTORS- OX and Balwan- Modern Tractors, sporting synchromesh transmission, Bosch
hydraulics, excellent ergobomics and fuel efficient engines. Designed for demanding farmers of
developing countries.
THREE WHEELERS- Minidor. A family of new engineered three- wheelersEconomical, rugged
and environment friendly- very efficient transport for people and goods.
LIGHT COMMERCIAL VEHICLES- Traveller and Excel range of passenger and goods
carriers. Powered by a family of DI and IDI engines including the legendary Mercedes derived
OM 616 engines. A range of high reliability axles and transmissions add value.
MULTI UTILITY VEHICLES- Complete range of multi- utility vehicles including the Trax
Judo, Trax GAMA, Trax Cruiser, Trax Kargo King, range of single cabin and double cabin
pickups; and the 4 X 4 cross country vehicle- Trax Gurkha.
HEAVY COMMERCIAL VEHICLES- In technical collaboration with MAN AG, Germany,
Force Motors will be introducing shortly, a range of heavy commercial vehicles with a payload
capacity ranging from 16 to 50 tonnes. Five areas of excellence support the five market
segments: Research and Develepment- Using a 150 terminal CAD installation and modern
testing facilities, staffed by 400 young engineers and technicians.
Power Pack Manufactuting- State of art facilities, for in house manufacturing of engines and
transmission components.
Vehicle Manufacturing - Complete, with in-house foundry, press shops, robotized body welding,
electrophoretic dip painting and high quality assembly facilities.
SPORTS UTILITY VEHICLES- Force Motors wants to make a giant leap into the passenger
vehicle segment. And for beginners, Force Motors want to manufacture sports utility vehicles.
Force Motors, which will mark its entry into the passenger vehicle segment with its sports utility
vehicle (SUV). In line with its passenger vehicle plans, the company is setting up a separate
division called personalised vehicle division to cater to its plans in the segment. It has roped in
people from various other automakers to steer the new division. "We have a new vertical formed
called the personalised vehicle division, which, on the front end, is being headed by Sanjeev
Garg, as president (SUV sales, service and marketing) of the company. He comes from General
Motors,‖ Prasan Firodia, managing director of the company told Financial Express.
Company chairman, AN Firodia, has quoted in a leading newspaper, ―We will launch a sports
utility vehicle (SUV) sometime this year. We do not have a product in this segment, but we have
developed a new platform which will allow us to launch a stylish new vehicle in a segment
which is very popular. We are in the rural market with the Trax , which is rural multi-utility
vehicle used as a rural taxi in those states that allow it. The SUV is a completely different
segment from the Trax, though‖.
So far, Force Motors has had three platforms, Trump, a small commercial vehicle, the Trax a
multi-utility vehicle for rural markets and the Traveller, a city coach, which is mainly targeted at
the rural, multi-utility or mass transport markets. Force Motors has its manufacturing plant in
Akurdi near Pune and Pithampur, Madhya Pradesh.
The company is a low profile, commercial vehicle maker, but has the capacity to make its own
engines, chassis, gear boxes, axles, etc for its entire product range. You would find it interesting
to note that Force Motors is the sole supplier of engines to Mercedes Benz India for its passenger
cars, and makes the cab and nine-speed gear boxes for its joint venture, MAN Force Trucks.
TRAINING & DEVELOPMENT POLICIES OF FORCE MOTORS LTD.
MANAGEMENT PHILOSOPHY IN TRAINING & DEVELOPMENT OF HUMAN
ASSETS
1) Management firmly believes that human assets unlike other asset cannot be depreciated and
must necessarily be appreciated over entire tenure.
2) Training is regarded as investment and not a cost. Even long-term intangible gains such as
attitude change, are to be considered as valuable returns.
3) Training is considered as vehicle for effective communication and coordination.
4) Training is catalytic in any man management matrix for cohesiveness, compatibility and
cooperation in every organizational endeavor.
5) Management proclaims training and development direction as permanent part and parcel of
operational process and not some experiment in isolation.
6) Management is fully committed to lend its total support to training tasks and is dedicated
through intense involvement in every phase of this activity.
3.Prevents obsolescence:
Through training and development the employee is up to date with new technology and the fear
of being thrown out of the job is reduced.
(S.M. Tariq Zafar, Sep. 2012) The author made study to explored the truth that the ratios are
calculated from the financial statements‟ which are prepared as desired by the management and
policies adopted on depreciation and stock values and thus produce only a collection of facts
expressed in monetary term and cannot produce complete and authentic picture of the business
and also may not highlight other factors which affects performance. They found that to control
manager‟s management often overuse ratio and concentrate more on improving the ratios and
also known fact that ratio is simple comparison of numerator and a denominator and in
comparing ratios it become difficult to adjudicate whether differences are due to change in the
numerator or denominator or in both. It is also found that ratios are interconnected but are often
treated by management in isolation and also found that analysis of ratios lack authenticity as data
used in calculation are not accurate but manipulated presentation by the promoters.
(Manoj Kumara N V, August 2015) The author had made attempt to determine the financial
performance of selected automobile companies in India by using financial performance
parameters, It can be concluded that the anticipated inputs to this study to the firm is to assist
strategic thinkers pay attention to the appropriate actions that apply latent and strong affect on
their automobile performance. This research facilitates a comprehensive model for examining the
financial performance of automobile performance and the major findings of this research will
give a important parameters and helps to fill a similar gaps in the literature. This analytical
strong fit model that R-square results 54% indicates variation of independent variable on
dependent variable. Further research, need to focus on important parameters like Economic
Value added and Refined Economic Value Added to Reveal & evaluate the overall
organizational development performance
(Dr.K.Jothi, june 2015) The author made study on financial performance analysis of HONDA &
TOYOTA companies and made have discussed that both companies have comfortable short term
liquidity position and therefore not likely to encounter to any major difficulties in paying /
discharging their short term obligations in time. As far as cash ratio is concerned it is
encouraging to note that the Honda is having sound cash management practice. Toyota Company
had made use of more borrowed funds than the capital. From the profitability perspective it is
found that Honda Company has high earning potential. In conclusion it appears safe to
summarize that the Honda & Toyota seems to be sound financial management practice.
. (Vidya, October 2015) The Author had discussed that the standard current ratio of automobile
industry is matched with Tractor and the four sectors like gears, engine parts, lamps and
ancillaries others are matched with standard norms. It is inferred that other sectors have to
improve the repaying capacity to strengthen the financial aspects. The standard liquidity ratio is
matched with tractor in the automobile sector and all the sectors are standard in the auto
ancillary. In order to meet the financial obligation, the lcv/hcv, motor cycle, scooters have to
make arrangement to meet the standards.
(PAL, June 2015) The author had discussed that the individual ratios which are affecting the
profitability of the industry. Another objective of the study is to identify and categorized the
financial ratios into a small number of latent variable to represent a compact view of financial
performance for a specified time period. Initially the study was started with 36 ratios of 9 Indian
automobile companies for a period of 15 years classified in 7 traditional categories. Statistical
techniques like factor analysis, regression analysis are applied to the data set to facilitate the
objectives of the study. Factor analysis extracted three factors „solvency asset and cash flow
management‟, „profitability management‟ and „operating efficiency‟ which represents the most
prevailing factor during the study period. On the other hand regression analysis shows that three
individual variables WCTA, ITR and DPRCP have significant effect on the profitability of the
industry.
Objective of the study
1. To study and analyze financial performance of Force Motors Ltd.
2. To know the earning capacity or profitability, solvency and the financial strength
by evaluating financial statement.
3. To compare the financial performance and to analyze the financial changes over a
period of five years.
4. To know about all over profitability.
5. Study the risk of operation.
6. Evaluate current operations.
7. Compare performance against other firms or industry standards.
8. To know about liquidity position.
9. To provide suggestions for improving the overall finance performance of the
company.
10. To compare and interpret financial statements of the Force Motors Ltd. with
comparative and common-size statement analysis.
Need for the study
1. One of the most fundamental facts about business is that the financial performance of the
firm shapes its financial structure. Therefore in order to obtain a favourable financial
structure it is necessary to study the efficiency of the firm.
2. Efficiency measurements imply prior knowledge of the inputs and outputs of an
organization to increase the level output for a company it is necessary to study the
operating efficiency of the firm.
3. The main problem in business that of making correct estimates for the future which
cannot be done unless data representing changes over a period are systematically
analyzed.
4. Financial analysis is a powerful mechanism which helps in ascertain the strength and
weakness in the operation and financial position of the enterprise.
5. Financial analysis is the process of identifying the financial strength and weakness of the
firm by properly establishing relationship between the items of the balance sheet and the
profit and loss accounts.
Financial
Performance
Financial Performance
The performance of the firm can be measured by its financial results, i.e., by its size of earnings
Riskiness and profitability are two major factors which jointly determine the value of the
concern. Financial decisions which increase risks will decrease the value of the firm and on the
other hand, financial decisions which increase the profitability will increase value of the firm.
Risk and profitability are two essential ingredients of a business concern.
There has been a considerable debate about the ultimate objective of firm performance, whether
it is profit maximization or wealth maximization. It is observed that while considering the firm
performance, the profit and wealth maximization are linked and are effected by one-another.
Ratio Analysis:
1.Liquidity Ratio
2.Solvency Ratio
3.Turnover Ratio
4.Profitability Ratio
1.Liquidity Ratio:- To meet its commitments, business needs liquid funds. The ability of the
business to pay the amount due to stakeholders as and when it is due is known as liquidity, and
the ratios calculated to measure it are known as „Liquidity Ratios‟. These are essentially short-
term in nature.
i.Current Ratio
ii.Quick Ratio
i.Current Ratio:- Current ratio is the proportion of current assets to current liabilities. It is
expressed as follows:
v. Interest Coverage Ratio:- It is a ratio which deals with the servicing of interest on loan. It is
a measure of security of interest payable on long-term debts. It expresses the relationship
between profits available for payment of interest and the amount of interest payable. It is
calculated as follows:
It reveals the number of times interest on long-term debts is covered by the profits available for
interest. A higher ratio ensures safety of interest on debts.
3.Activity or Turnover Ratio:- These ratios indicate the speed at which, activities of the
business are being performed. The activity ratios express the number of times assets employed,
or, for that matter, any constituent of assets, is turned into sales during an accounting period.
Higher turnover ratio means better utilisation of assets and signifies improved efficiency and
profitability, and as such are known as efficiency ratios. The important activity ratios calculated
under this category are
i. Inventory Turnover
i. Inventory Turnover Ratio:- It determines the number of times inventory is converted into
revenue from operations during the accounting period under consideration. It expresses the
relationship between the cost of revenue from operations and average inventory. The formula for
its calculation is as follows:
ii. Trade Receivables Turnover Ratio:- It expresses the relationship between credit revenue
from operations and trade receivable. It is calculated as follows :
Trade Receivable Turnover Ratio = Net Credit Revenue from Operations/Average Trade
Receivable
236.05
= 14.37
Where Average Trade Receivable = (Opening Debtors and Bills Receivable + Closing Debtors
and Bills Receivable)/2
It needs to be noted that debtors should be taken before making any provision for doubtful debts.
The liquidity position of the firm depends upon the speed with which trade receivables are
realised. This ratio indicates the number of times the receivables are turned over and converted
into cash in an accounting period. Higher turnover means speedy collection from trade
receivable. This ratio also helps in working out the average collection period. The ratio is
calculated by dividing the days or months in a year by trade receivables turnover ratio.
High turnover of capital employed, working capital and fixed assets is a good sign and implies
efficient utilisation of resources. Utilisation of capital employed or, for that matter, any of its
components is revealed by the turnover ratios. Higher turnover reflects efficient utilisation
resulting in higher liquidity and profitability in the business.
i.Gross Profit Ratio:- Gross profit ratio as a percentage of revenue from operations is computed
to have an idea about gross margin. It is computed as follows:
Cost of operation is determined by excluding non-operating incomes and expenses such as loss
on sale of assets, interest paid, dividend received, loss by fire, speculation gain and so on.
iii. Operating Profit Ratio:- It is calculated to reveal operating margin. It may be computed
directly or as a residual of operating ratio.
Operating ratio is computed to express cost of operations excluding financial charges in relation
to revenue from operations. A corollary of it is „Operating Profit Ratio‟. It helps to analyse the
performance of business and throws light on the operational efficiency of the business. It is very
useful for inter-firm as well as intra-firm comparisons. Lower operating ratio is a very healthy
sign.
iv. Net Profit Ratio:- Net profit ratio is based on all inclusive concept of profit. It relates
revenue from operations to net profit after operational as well as non-operational expenses and
incomes. It is calculated as under:
= 5.92
In this context, earnings refer to profit available for equity shareholders which is worked out as
This ratio is very important from equity shareholders point of view and also for the share price in
the stock market. This also helps comparison with other to ascertain its reasonableness and
capacity to pay dividend.
Equity shareholder fund refers to Shareholders‟ Funds – Preference Share Capital. This ratio is
again very important from equity shareholders point of view as it gives an idea about the value of
their holding and affects market price of the shares.
ix.Dividend Payout Ratio:- This refers to the proportion of earning that are distributed to the
shareholders. It is calculated as –
INFERENCES:
In the year 2017-2018, the investment it shows the uptrend for the year 2018 as Rs.9,67,00,000
and it has increased by 686.18%.
Loans & Advances has been increased was Rs.769.31 (Rs. in cr.) in the year 2018 which is
comparing to the previous year and the percentage shows increased by 175.58%.
During the year 2017, the shareholders fund amount to Rs.1480.44 (Rs. in cr.) it has been
increased to the amount of Rs.1665.41(Rs. in cr.) and percentage increased was 12.49%.
Provision shows uptrend by Rs.53.65(Rs. in cr.) over the previous year of Rs.50.95(Rs. in cr.)
and increase in percentage of 5.30%.
A common size financial statement displays all items as percentages of a common base figure
rather than as absolute numerical figures. This type of financial statement allows for easy
analysis between companies or between time periods for the same company. The values on the
common size statement are expressed as ratios or percentages of a statement component, such as
revenue.
While most firms don't report their statements in common size format, it is beneficial for analysts
to compute it to compare two or more companies of differing size or different sectors of the
economy. Formatting financial statements in this way reduces bias that can occur and allows for
the analysis of a company over various time periods, revealing, for example, what percentage of
sales is the cost of goods sold and how that value has changed over time. Common size financial
statements commonly include the income statement, balance sheet and cash flow statement.
The income statement, also referred to as the profit and loss (P&L) statement, provides an
overview of flows of sales, expenses and net income during the reporting period. The income
statement equation is sales minus expenses and adjustments equals net income. This is why the
common size income statement defines all items as a percentage of sales. The term "common
size" is most often used when analyzing elements of the income statement, but the balance sheet
and the cash flow statement can also be expressed as a common size statement.
COMMON SIZE STATEMENT OF FORCE MOTORS LTD.
INFERENCES:
The Capital work in progress have decreased during the financial year 2018 is 12.64% which is
comparing to 2017 was 13.63% of the Force Motors Ltd.
There was an increase in Loans & Advances of Rs. 769.31 (Rs. in Cr.) comparing to the year
2018. Higher the ratio is more than the efficiency in utilization of loans & advances.
Reserve & Surplus has been increased was in the year 2018 which is Rs.1652.23(Rs. in Cr.)
comparing to the previous year and the percentage shows increase by 99.21%.
During the year 2017-2018, the shareholders fund amount to Rs.1480.44(Rs. in Cr.), it has been
increased to the amount of Rs.1665.41(Rs. in Cr.) and the percentage increased was 100% in
2018.
Cash Flow Statement Analysis
Cash plays a very important role in the economic life of a business. A firm needs cash to make
payment to its suppliers, to incur day-to-day expenses and to pay salaries, wages, interest and
dividends etc. In fact, what blood is to a human body, cash is to a business enterprise. Thus, it is
very essential for a business to maintain an adequate balance of cash. For example, a concern
operates profitably but it does not have sufficient cash balance topay dividends, what message
does it convey to the shareholders and public in general. Thus, management of cash is very
essential. There should be focus on movement of cash and its equivalents. Cash means, cash in
hand and demand deposits with the bank. Cash equivalent consists of bank overdraft, cash credit,
short term deposits and marketable securities.
Cash Flow Statement deals with flow of cash which includes cash equivalents as well as cash.
This statement is an additional information to the users of Financial Statements. The statement
shows the incoming and outgoing of cash. The statement assesses the capability of the enterprise
to generate cash and utilize it. Thus a Cash-Flow statement may be defined as a summary of
receipts and disbursements of cash for a particular period of time. It also explains reasons for the
changes in cash position of the firm. Cash flows are cash inflows and outflows. Transactions
which increase the cash position of the entity are called as inflows of cash and those which
decrease the cash position as outflows of cash. Cash flow Statement traces the various sources
which bring in cash such as cash from operating activities, sale of current and fixed assets, issue
of share capital and debentures etc. and applications which cause outflow of cash such as loss
from operations, purchase of current and fixed assets, redemption of debentures, preference
shares and other long-term debt for cash. In short, a cash flow statement shows the cash receipts
and disbursements during a certain period.
Cash flow statement aims at highlighting the cash generated from operating activities.
Cash flow statement helps in planning the repayment of loan schedule and replacement of
fixed assets, etc.
Cash is the centre of all financial decisions. It is used as the basis for the projection of
future investing and financing plans of the enterprise.
Cash flow statement helps to ascertain the liquid position of the firm in a better manner.
Banks and financial institutions mostly prefer cash flow statement to analyse liquidity of
the borrowing firm.
Cash flow Statement helps in efficient and effective management of cash.
The management generally looks into cash flow statements to understand the internally
generated cash which is best utilised for payment of dividends.
Cash Flow Statement based on AS-3 (revised) presents separately cash generated and
used in operating, investing and financing activities.
It is very useful in the evaluation of cash position of a firm.
Cash and relevant terms as per AS-3 (revised)
i.)Cash in hand
iii.)Cash equivalents.
(b) Cash equivalents are short-term, highly liquid investments, readily convertible into cash
and which are subject to insignificant risk of changes in values.
2.Cash Flows are inflows and outflows of cash and cash equivalents.
The statement of cash flow shows three main categories of cash inflows and cash outflows,
namely : operating, investing and financing activities.
(a) Operating activities are the principal revenue generating activities of the enterprise.
(b) Investing activities include the acquisition and disposal of longterm assets and other
investments not included in cash equivalents.
(c) Financing activities are activities that result in change in the size and composition of the
owner‟s capital (including Preference share capital in the case of a company) and borrowings of
the enterprise.
1.Operating Activities
Cash flow from operating activities are primarily derived from the principal revenue
generating activities of the enterprise. A few items of cash flows from operating
activities are :
(i) Cash receipt from the sale of goods and rendering services.
(ii) Cash receipts from royalties, fee, Commissions and other revenue.
(iii) Cash payments to suppliers for goods and services. (iv) Cash payment to
employees
(iv) Cash payment or refund of Income tax.
2.Investing Activities
Investing Activities refer to transactions that affect the purchase and sale of fixed or long term
assets and investments. Examples of cash flow arising from Investing activities are
4. Cash receipts from the repayment of advances and loans made to third parties.
– Cash sale of plant and machinery, land and Building, furniture, goodwill etc.
– Cash sale of investments made in the shares and debentures of other companies
– Cash receipts from collecting the Principal amount of loans made to third parties.
3.Financing Activities
The third section of the cash flow statement reports the cash paid and received from activities
with non-current or long term liabilities and shareholders Capital. Examples of cash flow arising
from financing activities are
– Cash proceeds from issue of debentures, loans, notes, bonds, and other short-term borrowings
Mar 18 Mar 17
12 mths 12 mths
Trend analysis is a technique used in technical analysis that attempts to predict the future stock
price movements based on recently observed trend data. Trend analysis is based on the idea that
what has happened in the past gives traders an idea of what will happen in the future. There are
three main types of trends: short-, intermediate- and long-term.
Trend analysis tries to predict a trend such as a bull market run, and ride that trend until data
suggests a trend reversal, such as a bull-to-bear market. Trend analysis is helpful because moving
with trends, and not against them, will lead to profit for an investor.
A trend is the general direction the market is taking during a specified period of time. Trends can
be both upward and downward, relating to bullish and bearish markets, respectively. While there
is no specified minimum amount of time required for a direction to be considered a trend, the
longer the direction is maintained, the more notable the trend.
Trend analysis is the process of trying to look at current trends in order to predict future ones and
is considered a form of comparative analysis. This can include attempting to determine whether a
current market trend, such as gains in a particular market sector, is likely to continue, as well as
whether a trend in one market area could result in a trend in another. Though an analysis may
involve a large amount of data, there is no guarantee that the results will be correct.
In order to begin analyzing applicable data, it is necessary to first determine which market
segment will be analyzed. An example of sectors can include a focus on a particular industry,
such as the automotive or pharmaceuticals sector, as well as a particular type of investment, such
as the bond market. Once the sector has been selected, it is possible to examine the general
performance of the sector. This can include how the sector was affected by internal and external
forces. For example changes in a similar industry or the creation of a new governmental
regulation would qualify as forces impacting the market. Analysts then take this data and attempt
to predict the direction the market will take moving forward.
Trend Following
Trend following is a trading system based on using trend analysis and following the
recommendation produced to determine which investments to make. Often, the analysis is
conducted via computer analysis and modeling of relevant data, and is tied to market momentum.
Limitations
Limitations
There are certain limitations in understanding this research work. As it is understood that the
limitations are a part of the project, they have been over shadowed by the study.
1.) The statement that are studied are historical past cannot be the index for future estimation.
2.) Performance analysis of company is done only for past 2 years due to the constraint.
3.) The study is done with the help of secondary data obtained from the annual reports of the
organization.
6.) Then financial statement analysis provides only quantitative information about the company's
financial affairs.
7.) The accuracy of financial information largely depends on how accurately financial statements
are prepared.
The limitations mentioned above about financial statement analysis make it clear that the
analysis is a means to an end and not an end to itself. The users and analysts must understand the
limitations before analyzing the financial statements of the company.
Suggestions
and
Recommendations
Suggestions and Recommendations
1. The company should try to increase the production so as to get economies of large-scale
production. It will assist in raising the rate of return on capital employed.
2. In order to increase the profitability of the companies, it is suggested to control the cost of
goods sold and operating expenses.
3. The management should try to adopt cost reduction techniques in their companies to get over
this critical situation. At the same way, to reduce power and fuel Cost Company should find out
other alternative for this.
4. The quantum of sales generated should be improved impressively in order better to enjoy
better per of the assets and capital employed.
5. The selected automobile companies should try to match the amount of working with the sales
trends. Where there is a deficit of working capital, they should try to build on adequate amount
of working capital. Where, there is an excessive working capital, it should be invested either in
trade securities or should be used to repay borrowings.
6. The management should try to utilize their production capacity fully in order to reduce factory
overheads and to utilize their fixed assets properly.
7. The burden of interest has produced a deteriorating effect and reduced the percentage of net
profit. It is suggested that the companies should try to reduce the interest burden gradually by
increasing the owner‟s fund.
8. To strengthen the financial efficiency, long-term funds have to be used to finance core current
assets and a part of temporary current assets. It is better if the companies can reduce the over
sized short- term loans and advances eliminates the risk arranging finance regularly.
9. The policy of borrowed financing in selected automobile companies under study was not
proper. So the companies should use widely the borrowed funds and should try to reduce the
fixed charges burden gradually by decreasing borrowed funds and by enhancing the owner‟s
fund. For this purpose companies should enlarge their equity share capital by issuing new equity
shares.
10. For regular supply of raw materials and the final product infrastructure facilities are required
further improvement.
11. Cost accounting and cost audit should be made mandatory for this units and cost sheet along
with annual financing statement should be prepared.
12. The public sector enterprises set up in backward areas were not guided by commercial
considerations. They were set up to fulfil the aim of balanced regional development.
13. There has been too much of government interference in policy and day- today working and
decisions. This leads to delays in decision-making. This should be abolished.
14. Improper planning and delays in implementation of projects lead to rise in their cost. So
properly planning should be made.
15. There is overstaffing in public enterprises. The number of persons employed is more than
what is required to run the public enterprises efficiently. This increases the cost and reduces
profitability of these enterprises.
16. The automobile companies should reduce power and fuel consumption by using low as
content coal (imported coal), lignite, agro waste product especially ground nut husk, and beggars
should be used as coal substitute.
17. To regularize and optimize the use of cash balance proper techniques may be adopted for
planning and control of cash. The investments in inventories should be reduced and need to
introduce a system of prompt collection of debts.
18. Selected automobile companies should try to use properly their operating assets and should
try to minimize their non-operating expenses.
Conclusion
Conclusions
The analysis of financial performance includes growth analysis on selected terms such as net
sales, total assets, current liabilities, current assets etc, performance of profitability, liquidity,
solvency and activity ratios, relationship among ratios, and comparison between them. The study
reveals that the financial performance of the Indian automobile sector is fairly satisfactory during
the study period.
Similarly, the analysis of profitability of the selected automobile companies shows that their
performance during the study period is satisfactory. The study of all the three company groups
(commercial vehicles, passenger car & multi utility vehicle and two & three wheelers) shows
that the performance of these companies are fairly good. The financial performance plays a
significant role in the successful functioning of a firm. Therefore, the financial stability and
operational performance of all the three sectors shows that all are at the satisfactory level.
From the present study, it is observed that there is no significant difference between the growth
of the companies and the industry except profit before tax and net profit. The profitability
performance of the selected automobile companies has significant influence by other related
factors such as return on capital employed, return on networth for all the groups (Low, Moderate
and high). The comparison of profitability and other ratios do not have significant influence.
However, further improvement in profitability by cost concentration, innovative marketing
techniques and modern advertising will lead to at the satisfactory level.
Annexure
Questionnaire
Name:
1.Age
a) 20-30
b) 31-40
c) 41-50
d) 50& above
2.Gender
a) Male
b) Female
3.Annual Income
a) Below 1,00,000
b) 1,00,000-5,00,000
c) 5,00,000-10,00,000
d) Above 10,00,000
4.Are timesheets, a record of working hours of full-time and part-time employees, maintained for
each paid employee.
Yes
No
5.Do you issue an employement letter or contract which includes the employee‟s salary?
Yes
No
Yes
No
Yes
No
8.Does your organization have written accounting policy and procedures?
Yes
No
9. Do you keep invoices, vouchers and receipts for all payments made from grant funds?
Yes
No
Yes
No
Yes
No
13.Are you satisfied with the present performance measurement system in your company in this
competitive era?
a) Highly satisfied
b) Satisfied
c) Reasonably satisfied
d) Dissatisfied
e) Can‟t say
Bibliography
NEWSPAPER (BUSINESS STANDARD)
OUTLOOK MONEY
WWW.GOOGLE.COM
WWW.FORCE MOTORS.COM
WWW.ONLINERESEARCHONLINE.COM
WWW.SCRIBD.COM
WWW.SLIDESHARE.COM
STUDY OF BOOKS-
Agarwal R.N.,„Financial Liberalization in India‟:Banking system and stock
market‟.
INFERENCES:
In the year 2017-2018, the investment it shows the uptrend for the year 2018 as Rs.9,67,00,000
and it has increased by 686.18%.
Loans & Advances has been increased was Rs.769.31 (Rs. in cr.) in the year 2018 which is
comparing to the previous year and the percentage shows increased by 175.58%.
During the year 2017, the shareholders fund amount to Rs.1480.44 (Rs. in cr.) it has been
increased to the amount of Rs.1665.41(Rs. in cr.) and percentage increased was 12.49%.
Bibliography
NEWSPAPER (BUSINESS STANDARD)
OUTLOOK MONEY
WWW.GOOGLE.COM
WWW.FORCE MOTORS.COM
WWW.ONLINERESEARCHONLINE.COM
WWW.SCRIBD.COM
WWW.SLIDESHARE.COM
STUDY OF BOOKS-
Agarwal R.N.,„Financial Liberalization in India‟:Banking system and stock
market‟.