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INTRODUCTION

Funds constitute prime importance in starting and operating any business Enterprise
the most significant of all financial activities is the raising and management of funds financial
decisions are those which concern the generation and flow of funds various sources and the
use of these funds.

The accounting standards state that in many countries the approach to provide a
statement of changes in financial position as a part of audited accounts is the trend in India
companies are under no legal obligation to publish a statement of changes in financial
position statements along with financial statements especially in the case of companies listed
on the stock exchanges and other large commercial industrial and business enterprise in
public and private sectors.

The funds flow statement which shows the movement of funds and is the part of
financial operation of the business under taking. It indicates various means by which funds.
Where obtained during a particular period and the ways in which there funds were employed
in simple words. It is a statement of sources and application of funds.

Funds flow analysis refers to the process of determining the financial strengths and
weakness of the by establishing relationship between the items of balance sheet and profit
and loss account. Funds flow statement serves as a handy tool in financial analysis making
financial planning preparation of budget through this analysis firm group the change in the
allocation resources between the two balance sheets.

The Funds flow statement expresses the changes in working capital and assesses the
impact upon liquidity position of the undertaking with the help of this statement. The
financial management can plan the intermediate and long term financial of the concern
repayment of loans, expansions of business and distribution of resources. It is helpful in the
crucial decision making process in case of expansion. Diversification of conservation of
more funds for profitable utilization of sound projects in the sequent year. It is useful to
economize financial institution, investors and owners for analyzing performance of the firm.
NEED OF THE STUDY

The basic financial statements i.e. the “Balance sheet”, “Profit and income statement”
reveal the net effect of the various transaction on the operational and “Financial position of
the company”. But these statements do not disclose the cases for changes in the ‘assets’ and
‘liabilities’ between two different points of time.

Even the ‘profit & loss account’ indicates the resources provided by operations. But there are
many transactions that take place in an undertaking which do not operate through ‘profit &
loss account’. Thus another statements has to be prepared show the change in the ‘assets and
liabilities’ from the end of one period of time to the end of another period of time. That
statement is called Funds flow statement.

So, I have undertaken this study to examine the changes which are occurring in the
financial operation of the organization and to the “Funds management system” in “SIVA
STONE INC”.

OBJECTIVES OF THE STUDY

 To identify the source of funds of the Siva Stone Inc.

 To identify the application funds of the Siva Stone Inc.

 To identify the changes in “working capital”.

 It pinpoints the mobilization of resources and the further utilization of resources

 It highlights the financing of the general expansion of the business firms

 It exemplifies the utilization of debt finance in the structure of financing

 It portrays the relationship between the financing, investments, liquidity and dividend
decision of the firm during the given point of time.
SCOPE OF THE STUDY

 Only the funds flow has been taking to measure the financial performance.

 The study confines to the funds management at “Siva Stone Inc” only.

 This study can not reflect the Overall Industry’s funds management system.

METHODOLDY UNDER STUDY

RESEARCH:

Research is an academic activity and as such term should be used in a technical sense.
According to Clifford woody research comprises defining and redefining problems,
formulating Hypothesis or suggested solutions; collecting, organizing and evaluating data,
making deduction and reaching conclusion; and At last carefully testing the conclusions to
determine whether they fit the formulating the hypothesis.

DATA COLLECTION METHODS

PRIMARY DATA:

Primary data refers to information on that is generated to meet the specific


requirements of the investigation at hand it consist observation method; interview method;
through questionnaires; through schedules methods.

SECONDRY DATA:

 The information that is collected for a purpose other than to solve the specific
problem under investigation is known as secondary data.

 The data has been collected form primary as well as secondary sources. Primary data
has been collected through interaction with company managers.

 Secondary data has been collected from books publications, websites, and annual
reports.
LIMITATIONS

 The analysis made on the basis of secondary data.

 The availability of date is only is pertaining to five years.

 It is a major constraint for this project.

 The project duration i.e. 45 days is also a constraint to give realistic interpretations.

 This analysis has done based on the information provided by the bank. If any
mistakes published in this reports, the same information has taken into consideration.

 This project is not a basis for further research.


INDUSTRY PROFILE

STONE INDUSTRY IN INDIA

India is a country which is endowed with high quality natural tones like marble, sandstone, granite
etc.

India has more than 11% export share in total world's total stone export. It produces more than 27%
of the total stones produced in throughout the world. India is recognized as one of the largest raw
stone material producer. India is a place of different types of dimensional stones which include
marble, granite, sandstone, slate, limestone and quartzite that are widespread in every corner of the
nation. As per an estimation Indian stone industry is estimated to be more than Rs 3,200 crore
processing stones.

Indian monuments are supplied in more than 25 nations throughout the world. India encompasses
around 32 various varieties of granite for monuments and more than 90% of them can be find in 3
southern states- Tamil Nadu, Andhra Pradesh and Karnataka.

More than 95 per cent monument factories are situated in Tamil Nadu, Andhra Pradesh and
Karnataka. Tamil Nadu shares around 75 per cent. There are around 150 units located in Tamil Nadu.
India is a renowned producer of natural dimensional stones, possessing excellent physical and
chemical characteristics. One can find out the enormous opportunities waiting to be geared in the
stone industry. Stones like granites, marbles, sandstones, limestones, slate stones etc. are
characterized as one of the best quality stones in all over world. In present date stone industry is
recognized as one of the fastest growing sector in the Indian economy.
STONES AVAILABLE IN INDIA

There are various types of stones with sparkling appearance and fine finishing available in different
places of India. Have a look on some types of stones which are found within the Indian Territory.

Marble deposits can be found in various parts of India with economically high deposits concentrated
in the states of Gujarat, Madhya Pradesh, Rajasthan, Haryana, Telangana and Andhra Pradesh. New
varieties of marbles are found and are gradually being developed in Bihar, Jammu & Kashmir,
Sikkim, Maharashtra, Uttar Pradesh and West Bengal

Rajasthan has a huge concentration of marble with reserves dissipated in various districts of Nagaur,
Udaipur, Rajsamand, Banswara, Dungarpur, Jaipur, Sirohi, Bhilwara, Ajmer, Bundi, Alwar and Pali.
The different colors found in Rajsthan marbles are Makrana Albeta White, Green, Makrana Kumari
White, Makrana Dungri White, Jhiri Onyx, Phalodi Pink, Ambaji White, Indo-Italian, Babarmal Pink,
Bhainslana Black, Forest Green, Forest Brown, Agaria White.

Granite multicolor varieties of granite can be easily seen in the states of Karnataka, Andhra Pradesh,
Tamil Nadu and Uttar Pradesh. India has a huge reserves of one of the best quality of granite with
varied varieties, having more than 200 shades. More than 20% of world's granite is found in India.
The nation holds the no.1 rank as a largest granite and granite products exporter.

Sandstone deposits are available in the states of Assam, Andhra Pradesh, Bihar, Gujarat, Haryana,
Madhya Pradesh, Meghalaya, Mizoram, Karnataka, Orissa, Punjab, Rajasthan, Uttar Pradesh, Tamil
Nadu and West Bengal. More than 90% of sandstone deposits are available in Rajasthan, which are
spread in the districts of Dholpur, Bharatpur, Kota, Jodhpur, Sawai-Madhopur, Bundi, Chittorgarh,
Bikaner, Jhalawar, Pali, and Jaisalmer.

Slate deposits are available in Haryana, Rajasthan, Himachal Pradesh, Andhra Pradesh, and Madhya
Pradesh. Slate depository in Rajasthan are found in Alwar, Ajmer, Bharatpur, Tonk, Sawai Madhopur,
Pali, Udaipur, Churu, and Chittorgarh.

Limestone deposits are found in large quantity in state Andhra Pradesh. It accounts to more than 32%
of country's total limestone reserves. The state's limestone reserve is calculated to be nearly 93,623
million tonnes.

Physical and Chemical Properties of stone

Sandstone is a sedimentary rock group which is mostly made up of tiny grains of quartz. Most
sandstone is formed in oceans, lakes and rivers where tiny bits of rock and dirt settle to the bottom.
Year after year, these layers of sand get buried under tons of more sand and dirt until it is turned into
solid rock. Sandstone can be found in many colors.

Physical Properties of Sandstone

Physically, they are very Hard, Compact, Fine grained, equi-granular homogeneous rocks of
sedimentary nature (Sandstone)

Chemical Properties of Sandstone

Chemically they are very resistant Mono-Mineralic rocks, principally composed of silica. The other
minor constituents vary from origin to origin.
They are highly resistant to acids, alkalies and thermal impact. Insolubility in acids and alkalies is
about 97%.

Teakwood and Rainbow sandstones differ from above physical properties

Varieties of Sandstone

Kandla Gray

Also known as Bhilwara-GREY has quartz grains cemented together by secondary silica calcite. This
sandstone is available in three different shades of bluish gray, dark gray, and light gray.

Rajpura Green

Also known as Bhilwara-GREEN is a commonly used building stone. Rajpura stone can be easily
carved and dressed into various attractive shapes. It finds various applications including - roofing,
flooring, paving and paneling.

Marson Copper

Also known as Bhilwara-BROWN sandstone is a smooth round stone. This stone is made up of grains
of quartz and other minerals of fairly uniform size.

Chocolate
This sandstone has high content of iron oxide making it buff to brownish; and sometimes reddish. The
most important usage of this stone is exterior cladding and is available in natural, sawn as well as
polished surface finishes.

Gwalior Greenish White

Also known as GWL-MINT, Gwalior Mint is most suitable for use in flooring, wall fixing and lining
due to its physical and chemical properties. It is the smooth natural split surface which makes it
commensurate for flooring. This highly useful stone is also suitable for carving and making stone
handcrafted items.

Lalitpur Yellow

Also known as LLP - YELLOW this stone is especially meant for exterior cladding in sea shore
buildings due to acid & thermal resistant properties. The saline winds have negligible effect on LLP
Yellow stone(Lalitpur sandstone).
Dholpur-BEIGE
This buff white colored sandstone is one of the highly used sandstone variety. The peculiarity of the
stone is the attractive, minor purple veins that are visible when the stone is wet. Owing to its regular
bedding, uniform grain size, suitable nature and durability, it has been used from over centuries and is
a constituent of a large number of historical buildings and monuments.

Dholpur PINK

From Dholpur origin in Rajasthan, this stone is available in form of tiles, slabs, blocks in either
natural, sawn or polished surfaces. The stone is mostly used for exteriors and has regular bedding,
uniform grain size, suitable nature and durability.

Agra Red

Also known as Dholpur-RED is one of the most famous varieties of sandstone ever since its use in
Agra Fort and Delhi Fort. The stone has high degree of tolerance that does not show weathering
effects even for ages. The stone being smooth and soft is easy to be carved and cut and is therefore
used in stone handicrafts.

Khatu Teak

This creamish colored stone is fine grained and bears brown veins through out the surface. This
brownish touch gives the look of wooden finish and hence is also named as teakwood sandstone. This
stone is available only in the form of tiles with sawn surface finish, since this stone can not be
polished.

Khatu Rainbow

Rainbow stone is made of fine grained quartz and various other minerals. The presence of other
minerals lend attractive color to the stone. Depending on the percentage of constituent minerals the
color varies in the form of brown, violet and sometimes reddish veins. It is because of the regular
color variation that this stone has been named Rainbow. Like Khatu Teak, rainbow is also available in
tiles in sawn finish only.

STANDARD SPECIFICATIONS

Quality

Minor color tonal variations exist but within the tolerance limit Availability -Tiles, Slabs, Blocks,
Cobbles.
Edges

» Both hand chiseled and machine cut (sawn)

Tiles Size in cms » 30x30, 40x40, 60x30, 60x60, 60x40, 60x90 Cut to size Tiles

Thickness

» 15mm to 50mm with a tolerance of ±5mm» 18mm to 22mm with a tolerance of ±2mm (for Both
sides Sawn)

Slab Size in cms

» Cut to size slabs Upto 200cm length and 60cm width.

PRODUCTION

Gantry Crane

The Big Block are unloaded in the vicinity of huge Gantry Crane of capacity 40 MT. These big
sandstone block are lifted on the dressing Machine

Block Dressing Machine

The Big random size blocks are lifted on the trolley of the dressing machine for proper dimensional
size.

Gang Saw

After cutting in dimensional size the blocks are lifted with the help of Gantry Crane on the trolley of
Gang Saw Machine for slabs cutting.

Edge Cutting Machine

The Slabs produces on the Gang Saw Machine are cut into tiles of required size and thickness on the
Edge Cutting Machine.

Block Cutting Machine

The Block Cutter is used to cut large dimensional sized stone, known as blocks are being produced on
this machine.
Polishing Machine

The tiles and slabs are being polished on this machine. The requires bfinish such as brushing (antique)
finish and shine polish are preformed on this machine.

Shot Blasting

The shot blasting or sand blasting is performed on the tiles, slabs, locks is done by the Shot Blaster.

Flaming

Columns and Pillars that gives and outstanding looks to a building are designed on the high capacity
Lathe Machine.

PACKING AND DELIVERY OF SAND STONE

Packing

Stone's packaging is very important. Items are carefully packaged for shipment, and should be
checked for external damage on receipt, where sign-off will be requested. Boxes of tiles are packed in
polystyrene and then secured together on a pallet for delivery. Note some items such as slate are sold
in crates rather than boxes.

Crate Packing - Standard Packaging

Each wooden crate is first in lined with polythene to protect stones from staining from wooden planks
or from any other feature, then it is in lined with foam-sheet along horizontal planks to protect stones
against damage from wooden planks or nails. This is a fundamental preliminary packing used for all
our wooden crates irrespective of the type of stone packed.

STAND PACKING

PALETTE PACKING

In case of polished stones, surface of each slab/tile is protected by using a paper cloth or 2mm-foam
while tightly stacking them in a wooden crate. This protects the polished surface of stones from
scratching due to abrasion of dust particles between two tiles.

We consider that the quality of packing is as important as the quality of product. We never try to save
cost on wood or other packing materials. Stone is normally available in various textures and finishes:
Polished:

The Most popular finish – One side is Finished by the action of the Abrasives on polishing head, gives
a mirror finish on Granite, and diminishing in the reflective properties, as we go from Granite to
marble and slate etc.

Shade:
We strictly maintain the shade of the merchandise as desired by the client. While producing cut to size
tiles, careful batching is done even when the material is cut from the same slab / block.

Thickness:
While sawing, especially marble we take a lot of care, for the best result as it is a very brittle and
pasty material. A little less carefulness and the result is taper slabs.

Squarness :

Maintain Perfect square ness in cut to size materials; thanks to the automatic bridge cutting machine
from Peddrine SPA & Breton SPA, Italy. We never use locally made bridge cutting machines or
conventional hand driven edge cutting machines as it is far than difficult to maintain.

Shipping:
Even in F.O.B. & C.& F. shipments consider it as our duty to investigate and inform the buyer with
various options of suitable shipping lines offering best freight along with shortest transit time and
satisfactory service. Our job does not just end upon loading the container. We maintain the track of
container till it reaches the destination and keep the client advised of various movements/trans
shipments.

Quality Control & Inspection

Should have an in-house designed three stage quality control system which does not leave any room
for mistakes or carelessness. The first stage starts at quarry level where every individual block is
carefully inspected. A 3D picture is drawn displaying all the characteristics. The second stage
inspection is conducted upon sawing where the material is closely inspected & various findings are
properly recorded with drawings. At the final stage the polished finished product is inspected using
various gadgets. A proper recording is done at this level also. Before shipping, a photograph is taken
of the material and the packing of every container and a proper record is maintained.
USES OF THE SANDSTONE

Sandstone is uses as building and paving stone which is mainly used in Houses,Gardens,Ofiices,for
Flooring,Paving and in walls.

Sandstones are used for variety of purposes. They are mainly used in paving, roofing, flooring etc.
They are also used in making beams, pillars, doors and window sills, wall facing, fence posts etc.

 Sandstones are resistant to saline air, which make it perfect for exterior cladding in sea-shore
buildings.

 They are also acid and alkali resistant. So, they are used in chemical industry for flooring,
wall-covering.

 They are thermal resistant so used for making fireplaces.

Some common uses of sandstone are given below:

 Sandstone Flooring

Sandstone is a wonderful material for flooring purposes. Its high strength make it perfect for
making floors of shopping markets, offices, residences, monuments, parks and many more.
The different colors and patterns make it easy to choose from that suits your need.

 Sandstone Wall

Sandstone walls have been a tradition for years. Be it Red fort, hawa mahal, Rashtrapati
Bhawan or any other historical monument the sandstone walls have added a great value to
their beauty. The durability and long lasting of these walls show that sandstone is an ideal
material for wall construction. Walls made with white sandstones shows the impact of
serenity and purity. Red sandstones are largely in demand.

 Sandstone Pavers

The high strength of sandstone tiles, blocks, and slabs make it suitable for paving floors. The
different shades and patterns of sandstone make your garden pavement gorgeous. Sandstone
enhance the style and look of pavements making it attractive.

Different type of sandstone tiles and chips are used to create patterns which enhance the
beauty of these pavements.
 Sandstone Fireplace

The thermal resistant property of sandstones make it idle for building fireplaces. Its natural
rugged look impart unique look to the fireplace. Red and yellow sandstones matching with
fire waves make it alive and feels realistic.

Sandstone Properties

 High mechanical strength

 Resistant to acids and alkalies

 Resistant to air and Saline water

 Low water absorption ability

 Resistant to Corrosion and weathering

 Excellent binding with cement

HS CODES FOR SAND STONE

HS Codes of Heading 2516 : Granite, porphyry, basalt, sandstone and other monumental or
building stone, whether or not roughly trimmed or merely cut, by sawing or otherwise, into
blocks or slabs of a rectangular (including square) shape.

Sandstone-25162000
COMPANY PROFILE

About Siva Stones Inc

Established in 2012, Siva Stones Inc has gained immense expertise in supplying & trading of Granite
slabs etc. The supplier company is located in Ongole, Andhra Pradesh and is one of the leading sellers
of listed products. Buy Granite slabs in bulk from us for the best quality products and service.

Granite Slabs - Exporter From Ongole

Siva Stones Inc is a quality driven organization offering a wide range of Granite slabs , , . Established
in 2012, the firm supplies Granite slabs , within preset time limit.

ABOUT THE COMPANY & PRODUCTS

Siva Stones Inc with a desire and intention to manufacture/produce crushed stones (size 35mm,
20mm, 12mm). The stone crusher will crush the stone daily except in the rainy season. This is
because it is difficult & risky to transport the stones and also very less construction work is carried.
Work will be carried for seven months while two months will be the period of storing raw materials
because after rainy season the price increases.

As construction and road building is booming in India, Stone crushing mills have proliferated
throughout India to accommodate the huge demand for stone used in Construction of roads, bridges,
housing, industrial building construction and other cement based products like RCC pipes, PSC poles,
pre-molded slabs, frames and beams, etc for fabrication.

Housing is a basic need of the human being as well as society. Hence, it is receiving increased focus
towards crushed stones. This company wants to put its maiden step into crushed stone.
Simultaneously, the wastage from the stone industry will be of much use to the crushed stone and it is
in the form of sand.

CRUSHED STONES:-

The demand for crushed stone will continue to grow with the Growth of its user industry. The unit can
be set up depending availability of raw Material and major commercial centre.

 Crushed stone is segregated into various sizes like 35mm, 20mm, 12mm, etc for
different uses.
 Crushed stone aggregates are used for construction of roads, bridges, housing,
industrial building construction and other cement based products like RCC pipes,
PSC poles, pre-molded slabs, frames and beams, etc for fabrication.

 It is advantageous if the crushed stone unit is set up near the quarries where the
granite boulders of various sizes are available for the crushing unit.

 The wastage from the stone industry will be of much use of the crushed stone unit.

Wastage of Stone:-

The wastage of the stone is in the form of sand. It has followings features & advantages.

 Best material used in construction rather than sand.

 Rare to purchase as it is the wastage of stones.

 Costly than sand & crushed stones.

PROCESS OF MANUFACTURING

 The granite stones of various sizes are fed into the jaw crushers for size reduction.

 Depending on the desired output size of the crushed stone, the raw materials are fed to one or
two jaw crushers in a sequence.

 Then these crushed stones re passed onto the rotary screen for size gradation.

 Material is handled through a belt conveyor to the different

Places of operation i.e. from jaw crusher to the rotary screen.

The whole process of crushing stones or granite stones shall be automatic except the process of
placing the stones into the jaw crusher for the size reduction. The sizes vary when the stones are
crushed. The sizes of stones is segregated into various sizes like 35mm, 20mm, 12mm, etc. these sizes
are used in different purposes.

The installed machinery has the capacity to crush one truck daily of each various sizes i.e. 1 tucks
daily of each sizes like 35mm, 20mm, 12mm etc except the wastage of stones in the form of sand. It
reaches 1 truck in a month.
FACTORS OF PRODUCTION

Raw Material:-

The raw material required for crushed stones is stones from the river and the small hills or mountains.

The raw materials are transported from the river and other small hills or mountains to the installed
plant & machinery.

Labor:-

Labor is available at reasonable rates. On holiday labor are available on the basis of hour at the
reasonable rates.

Marketing profile

The unit is basically producing crushed stones for construction activities. Hence the demand for
crushed stones would be always rising due to the fact of population explosion in India. This is because
as population grows, there will be the demand for house and in order to make house or any
constructive work crushed stones are required.

Housing is a basic need of the society. Hence, it is receiving increased focus. All the building
constructions whether it is housing or industrial construction activities requires crushed stone.
Crushed stone is also required for cement based products like RCC pipes, PSC poles; cement concrete
hollow blocks, precast cement concrete slabs, well rings, window & door frames and road Laing. The
demand for crushed stone will continue to grow with the growth of its user industry.

Moreover the director of the unit is well experienced, rather he is experts in the field of marketing and
finance too. The company will be planning to expand it activities in other adjoining places too. Hence
there will always be a healthy market for the units produced. The company has studied and analyzed
the market thoroughly.

Basic Assumptions

 The property or land on which the crusher will be established its own property which is 2
acre.
 The work shed will be constructed on 100 sq. meters while. The office will be constructed on
5 sq. meters.
 The working period will be 9 months in a year, which include 26 days in a month. Two days
will be holiday while 2 days will be working time on time basis in a month.
 The working hours will be 8 hours per day while on holiday 4 hours per day.
FUNDS FLOW STATEMENT

INTRODUCTION

The basis for financial planning, analysis and decision-making is the financial
information. Financial information is needed to project, compare and evaluate the firm’s
earning ability. It is also required to aid in economic decision-making investment and
financial decision-making. The financial information of an enterprise is contained in the
financial statements or accounting reports. Three basic financial statements of great
significance to owners, management and investors are balance sheet, profit and loss account
and cash flow statement.

BALANCE SHEET

Balance sheet is the most significant financial statement. It indicates the financial
condition or the state of affairs of a business at a particular moment of time. More specially,
balance sheet contains information about resources and obligations of a business entity and
about its owner’s interest in the business at a particular point of time. Thus, the balance sheet
communicates information about assets, liabilities and owner’s equity for a business firm as
on a specific date. It provides a snapshot of the financial position of the firm at the close of
the firm’s accounting period.

Assets are valuable economic resources owned by the firm. They embody future
benefits and are measured in monetary terms. Assets represent: (a) stored purchasing power
(e.g., cash), (b) money claims (e.g., receivables stock ) and (c) tangible and intangible items
that can be sold or used in business to generate earning. Tangible items that include land,
building, plant, equipment or stocks of materials and finished goods and all such other items
do not have any physical existence, but they have value to a firm. They include patents,
copyrights, trade name or goodwill.

Assets are classified as: (1) current assets and (2) fixed (long term) assets.

Current assets sometimes called liquid assets are those of a firm which are either held
in the form of cash within the accounting period are of one-year duration. Current assets
include cash, tradable (marketable) securities, and debtors (accounts receivables) and stock of
raw material, work-in process and finished goods.
Fixed assets are long-term in nature; they are held for periods longer than the
accounting period. They include tangible fixed assets like land, building, machinery,
equipment, furniture etc. Intangible fixed assets represent the firm’s rights and include
patents, copyrights franchises, trademarks, trade names and goodwill.

Firm’s obligations are called liabilities. Liabilities represent debts payable in future
by the firm to its lenders and creditors. They represent economic obligations to pay cash or
pay cash or to provide goods services in some future period. Examples of liabilities are
creditors, bills payable, wages, salaries payable, taxes payable, bonds, debentures,
borrowings from banks and financial institutions, public deposits etc…

Liabilities are of two types: (1) current liabilities; and (2) long-term (fixed)

Liabilities. Current liabilities are debts payable within an accounting period. Current assets
are converted into cash to pay current liabilities. Long-term liabilities are the obligations or
debts payable in a period of time greater than the accounting period. Long-term liabilities
include debentures, bonds, and secured long-term loans from financial institutions.

The financial interest of the owner’s are called owner’s equity or simply Equity. The
owner’s interest is residual in nature, reflecting the excess of the firm’s assets over its
liabilities. As liabilities are the claims of outside parties, equity represents owner’s equity has
two parts (a) paid-up share capital and (b) reserves and surplus. Paid-up share capital is the
amount of funds directly contributed by the shareholders through purchase of shares.
Reserves and surplus or obtained earning are undistributed profits. Paid up share capital and
reserves and surplus together are called net worth.

PROFITS AND LOSS ACCOUNTS

Balance sheet is considered as a very significant statement by bankers and other


lender because it indicates the firm’s financial solvency and liquidity, as measured by its
resources and obligations. However, creditors, particularly bankers and financial analysis in
India have recently started paying more attention to the firm’s earning capacity as a measure
of its financial strength. The earning capacity and potential of a firm are reflected by its
profit and loss account. The profit and loss account is a “score-board” of the firm’s
performance during a period of time.
Profit and loss account presents the summary of revenues, expenses, net income or net
loss of a firm. It serves as measure of firm’s profitability. Revenues are amounts that the
customers. The cost of the firm for providing them goods and services to customers. The
cost of the economic resources used to earn revenues during a period of time is called
Expenses.

Revenues and expenses are sometimes categorized as operating and non-operating


business of the firm are called operating revenues (operating expenses). Revenues (expenses)
which are incidental or indirect to the main operations of the firm are called non-operating
revenues (expenses).
THE SOURCE OF FUNDS OF THE
SIVA STONE INC
MEANING OF FINANCIAL STATEMENTS
Financial statements at least refer to the two statements which are prepared by a business
concern at the end of the year. These are

Income statement or trading and profit and loss account which is prepared by business
concern in order to know the profit earned and loss sustained during a specified period.

Position statement or Balance sheet which is prepared by a business concern on a particular


date in order to know its financial position.

Concern on a particular dare in order to know its financial position.

To these statements are added the statement of Retained Earnings and some other
statements such as (Funds flow statement, Cash flow statement etc…) and schedules of fixed
assets, investments, current assets etc… to give a full the package of financial statements.

Statement of Retained Earnings (When prepared separately ) or profit and loss


appropriation account shows the utilization of profits of the company i.e., dividend declared,
amount transferred to general reserve or any other reserve as shows in this account.

Funds flow statement summarizes the changes in working capital in a specified period
and indicates the various sources and applications of funds. Cash flow statement gives the
various items of inflow and outflow of cash.

Various schedules of fixed assets, investments, current assets etc, are prepared by
companies to show as to how the figures shown in the balance sheet have been arrived at.

NATURE OF FINANCIAL STATEMENTS

Financial statements are prepared for the purpose of presenting a periodical review or
report by the management and deal with the state of investment in business and result
achieved during the period under review. They reflect a combination of recorded facts,
accounting conventions and personal judgments. From this it is clear that financial
statements are affected by three things i.e. recorded facts, accounting conventions and
personal judgments.
IMPORTANCE OF FINANCIAL STATEMENTS

The information given in the financial statement is very useful to a number of parties
as given below:

1. OWNERS: Owners provide funds for the operation of business and they want to know
whether their funds are being properly utilized or not. The financial statement prepared from
time to time to satisfy their curiosity.

2. CREDITORS: Creditors (i.e. suppliers of goods and services on credit, bankers and
other lenders of money) want to know the financial position of a concern before giving loans
or granting credit. The financial statements help them in judging such positions.

3. INVESTORS: Prospective investors, who want to invest money in a firm, would like to
make an analysis of the financial statements of that firm to know how safe proposed
investment would be.

4. EMPLOYEES: Employees are interested in the financial position of a concern they


serve, particularly when payment of bonus depends upon the size of the profit earned. They
would like to know that the bonus being paid to them is correct; so they became interested in
the preparation of correct profit and loss account.

5. GOVERNMENT: Central and State Governments are interest in the financial statements
because they reflect the earnings for a particular period for purpose of taxation. Moreover,
these financial statements are used for compiling statistics concerning business which in turn,
help in compiling national accounts.

6. RESEARCH SCHOLARS: The financial statements being a mirror of the financial


position of a financial position of a firm are of immense value to the research scholars who
wants to make a study into financial operations of a particular firm.

7. CONSUMERS: Consumers are interested in the establishment of good accounting


control so that cost of production may be reduced with the resultant of the prices of goods
they buy.

8. MANAGERS: Management is the art of getting things done through others. This
requires that the subordinates are doing work properly. Financial statements are an aid in this
respect because they serve manager in appraising the performance of the subordinates by
comparing the actual results with the standards established and identifying the deviations, if
any and taking remedial measures to remove deviations.

MEANING OF ANALYSIS OF FINANCIAL STATEMENTS

Analysis is the process of critically examining in details accounting information given


in the financial statements. For the purpose of analysis, individual items are studied their
interrelationship with other related figures established, the data is sometimes rearranged to
have better understanding of the information with the help different techniques or tools for
the purpose. In the words of MYNR, “financial statement analysis is largely a study of
relationship among the various financial factors in a business as disclosed by a single set of
statements and a study of the trend of these factors as shown in a series of statements”.

MEANING OF INTERPRETATION

Analysis and interpretation are closely related. Interpretation is not possible without
analysis and with interpretation analysis has no value.

In the words KENNDY AND MEMULLAR, “The analysis and interpretation of


financial statements data so that a forecast may be made of the prospects for future earning,
ability to pay interest and debt maturities (both current and long-term) and profitability of a
sound dividend policy”.
THE MOBILIZATION OF RESOURCES AND THE FURTHER
UTILIZATION OF RESOURCES

TYPES OF FINANCIAL STATEMENT ANALYSIS

Different types of financial statements analysis can be made on the basis of

1. The nature of the analysis and the material used by him.

2. The objectives of the analysis.

3. The Modus operandi of the analysis.

These are discussed one by one.

ON THE BASIS OF NATURE OF THE ANALYST AND THE MATERIAL USED BY


HIM:

 EXTERNAL ANALYSIS: It is made by those persons who are not connected with
the enterprise. They do not have access to the enterprise. They do not have access to the
detailed record of the company and have to depend mostly on published statements. Such
type of analysis is made by investors, credit agencies, governmental agencies and research
scholars.

 INTERNAL ANALYSIS: The internal analysis is made by those persons who have
access to the books of accounts. They are members of the organization. Analysis of financial
statements or other financial data for managerial purpose is the internal type of analysis. The
internal analysis can give more reliable result than the external analysis.

ON THE BASIS OF OBJECTIVE OF THE ANALYSIS:

On the basis the analysis can be long-term and short-term analysis.

 LONG-TERM ANALYSIS: This analysis is made in order to study the long-term


earning capacity of a business concern. The purpose of making such type of analysis is to
know whether in the long-run the concern will be able to earn a minimum amount which will
be sufficient to maintain a reasonable rate of return on the investment so as to provide the
funds required for modernization, growth and development of the business and to meet its
costs of capital.
 SHORT-TERM ANALYSIS: This is made to determine the short – term solvency,
stability and liquidity as well as earning capacity of the business. The purpose of this analysis
is to know whether in the short –run a business concern will have adequate funds readily
available to meet its

Short-term requirements and sufficient borrowing capacity to meet contingencies in


the near future.

ON THE BASIS OF ANALYSIS:

On this basis, the analysis may be horizontal and vertical analysis.

 HORIZONTAL (OR DYNAMIC) ANALYSIS: This analysis is made to review


and analyze financial statements of a number or years and therefore based on financial data
year from several years. This is very useful for long-term trend analysis and planning. It is
also termed as dynamic analysis.

 VERTICAL (OR STATIC) ANALYSIS: This analysis is made to review and


analyze the financial statement of one particular year only. Ratio analysis of the financial
year relating to a particular year is an example of this type of analysis.

TECHINIQUES (TOOLS OR METHODS) OF ANALYSIS AND INTERPRETATION:

The following techniques can be used in connection with analysis and


interpretation of financial statements:

1. Comparative financial statements (or Analysis).

2. Common measurement statements (or Analysis).

3. Trend percentages (or Analysis).

4. Funds flow statements (or Analysis).

5. Net working capital (or Analysis).

6. Cash flow statements.

7. Ratio Analysis.
FUNDS FLOW STATEMENTS INTRODUCTION

The basis financial statement i.e. the balance sheet and profit & loss account or
income statements of business reveal the net effect of the various transactions on the
operational and financial position of the company. The balance sheet gives a summary of the
assets and liabilities of an undertaking at a particular point of time; it reveals status of the
company.

The asset side of a balance sheet shows the deployment of resources of an under
taking while the liabilities side indicates its obligation financial activities of a business for a
period of time and financial activities if a business but their usefulness is limited for analysis
and planning purpose. But they are many transactions that take place in an under taking and
which do not operate though profit & loss account. Another statement has to be prepared to
show the change in the assets & liabilities from the end of one period of time to the end of
another period of time. The statement is called a statement of changes in financial position of
a fund flow statement.

MEANING & CONCEPT OF FUND

The term fund has been defined in a number of ways.

 IN A NARROW SENCE: It means cash only and funds flow statement prepared on
this basic is called a cash flow statement. Such statement enumerates net effects of the
various business transactions on cash and takes into account receipts and disbursement of
cash.

 IN A BORDER SENCE: The term funds refers to money values in whatever form in
may exits, here funds means all financial resources, used in business whether in the form of
men, material, money, machinery and others.

 IN A POPULAR SENCE: The term funds means working capital, i.e. the excess of
current over current liabilities. The working capital concept of funds has emerged due to the
fact that total resources are invested partly in fixed assets in the form of capital and kept in
form of liquid or near liquid form as working capital.
THE APPLICATION FUNDS OF THE SIVA STONE INC

MEANING & CONCEPT OF FLOW OF FUNDS

The term ‘FLOW’ means ‘movement’ and includes both ‘inflow’ & ‘outflow’. The term
‘FLOW OF FUNDS’ means transfer of economic values from one asset of equity to another.
FLOW OF FUNDS is said to have taken place when any transaction makes changes in the
amount of funds available before happening of the transaction. Effect on transaction resulted
in the ‘FLOW OF FUNDS’.

According to the working capital concept of funds the term ‘FLOW OF FUNDS’
refers to the movements of funds in the working capital, it is said to be an application or out
of funds.

RULE: The flow of funds occurs when a transaction on the one hand a non-current and on
the other a current account and vice-versa.

When a change in a non-current account

E.g. Fixed assets, long term liabilities, reserve and surplus, fictitious assets etc… is followed
by a change in another non-current account, it does not amount to “flow of funds”. This is
because of the fact that in such cases neither the working capital increases nor decreases.
Similarly, when a change in one current account results in change in another current. It does
not affect funds.

Funds move from non-current transactions or vice-versa only. In simple language


funds move when a transaction affects.

1. A current assets and fixed assets.

2. A fixed liabilities and current liabilities.

3. A current asset and a fixed asset.

4. A fixed liabilities and current liabilities.

And funds do not move when the transaction affects fixed assets and fixed liabilities or
current assets and current liabilities.
CURRENT AND NON-CURRENT ASSETS

To understand flow of funds, it is essential to classify various accounts and balance sheet
items into current and noncurrent categories.

 Current accounts can either be current assets or current liabilities. Current assets are
those assets which in the ordinary course of business can be or will be converted into cash in
a short period of normally one accounting year.

 Current liabilities which are intended to be paid in the ordinary courses of business
within a short period of normally one accounting year out of the current assets or the income
of the business.

The following is list of current working capital accounts

List of current or working capital accounts


Current liabilities Current assets
1. Bills payable. 1. Cash in hand.
2. Sundry creditor’s (or) account 2. Cash at bank.
payable.
3. Accrued (or) outstanding expenses. 3. Bills Receivable.
4. Dividends payable. 4. Short tern (or) Account Receivable.
5. Bank over drafts. 5. Short term loans & Advances.
6. Short term loans advances & deposits. 6. Temporary (or) Marketable
7. Provision against current assets. investment.
7. Inventories or stock such as
a) Raw material.
8. Provision for taxation, if it does not b) Working process
amount to Appropriation of profit. c) Stores and pares.
d) Finished goods.
9. Proposed dividend (may be a current 8. Prepaid expenses.
(or) non current Liability). 9. Accord income.
Procedure for knowing a transaction resulting in the flow of funds

 Analysis the transaction and find out the two accounts in valued

 Makin journal entry of the transaction

 Determine whether the account in valued in the transaction are current or non-current

 If the both account in valued are non current i.e. either permanent assets or permanent
liabilities, it does not result in the flow of funds.

 If both the account invalid are non-current.

 If he accounts in valued are such that one is a current account while the other is a non-
current account i.e. current assets and permanent and fixed assets or current liabilities and
fixed assets or current liability and permanent liability & fixed assets or current liability &
permanent liability then it result in the flow of funds.

DIAGRAMS DEPICTING FLOW OF FUNDS

Flow of Funds

No Yes

When Both current


(or) Non current a/c When One current and other
Are in valued non current A/c isin valued
FLOW OF FUNDS

Current
Current Assets No Liabilities

Yes
Yes Yes

Current Assets Current Assets


No

FUNDS FLOW statement, Income statement & Balance sheet

Funds flow statement is not a substitute an income, i.e. a profit and loss account and
balance sheet. The profit and loss account is a document which indicates the extent of
success achieved b y a business in earning profits. It reports the result of business activities
and indicates the reasons for the profitability of a business. It does not reveal the inflow and
outflow of funds in business during a particular period.

Hence funds flow statement is not competitor to financial statements. The funds
statement provides additional information as regards changes in working capital, derived
from financial statements at two point of time. It is a tool of management for financial
analysis and helps in making decisions
Difference between funds flow statement and income statement

Funds flow statement Income statement


1. It highlights the changes in the 1. It does not reveal the inflow and
financial position of a business and indicates outflows of fund but depicts the items of
the various mean by which funds were expenses and incomes arrive at the figure of
obtained during a particular period and the profit or loss.
ways to be which these funds were
employed.
2. It is complementary to income
statement income statement helps the 2. Income statement is not prepared from
preparation of funds flow statement. funds flow statement.
3. While preparing funds flow
statement both capital and revenue items are
considered. 3. Only revenue items are considered.
4. There is no prescribed format for 4. It is preparing in prescribed format.
preparing a funds flow statement.

Difference between funds flow statement and balance sheet

Funds flow statement Balance sheet


1. It is a statement of changes in 1. It is a statement of financial position
financial position and hence is dynamic on particular data and hence is static in
nature. nature.
2. It shows the sources and use of funds 2. It depicts the assets and liabilities at
in a particular period of time. particular point of time.
3. It is a total of management for 3. It is not of much help to
financial analysis and helps in decisions. management in making
4. Usually, schedule of changes in decisions.
working capital has to be prepared before 4. No such of changes in
preparing funds flow statement. working capital is required. Rather profit &
loss account is prepared.
Significant and importance of funds flow statement

A funds flow statement is an essential tool for the financial tool for the financial
analysis and is of primary importance to the financial management. Now a days it is being
widely used by the financial analysis, credit granting institution and financial manages. The
basic purpose of funds flow statement is to reveal the changes in the working capital on the
two balance sheets data.

It also describes the sources from which additional working capital has been financed
and the uses to which working capital has been applied. Such a statement is particularly
useful in assessing the growth of the firm. It resulting financial needs and in determining the
best way of financial these needs. These significance or importance of funds flow statement
can be well followed one can plan the intermediate and long term financing of the firm.

USES OF FUNDS FLOW STATEMENT

1. Helps in analysis of financial statement.


2. Throes light or preplanning questions.
3. Helps in formulation of dividend policy.
4. Helps in the proper allocation of resources.
5. Acts as a future guide.
6. Helps appraising the use of working capital.
7. Helps knowing the credit worthless.

LIMITATIONS OF FUNDS FLOW STATEMENT

The funds flow statement has a number of users; however, it has creation limitations
also, which are listed below.

1. It should be remembered that a funds flow statement is not a substitute of an income


statement or a balance sheet. It provides only some additional information as regards
changes in working capital.

2. It can not reveal continuous changes.

3. It is not an original statement but simply is arrangement of data given in the financial
statement.
4. It is essentially historical in nature and relevant for financial management in that the
working capital.

PROCEDURE FOR PREPARING A FUNDS FLOW STATEMENT

Funds flow statement is method by which we study changes in the financial position of a
business. Enterprise between beginning and ending financial statement dates. Hence the
funds flow statement is prepared by comparing two balance sheets and with the help of such
other information derived from the accounts as may be needed. Broadly speaking the
preparation of a funds flow statement consists of two parts.

1. Statement of schedule of changes in working capital.


2. Statement of sources and application of funds.

1. Statement of schedule of changes in working capital


Working capital means the excess of current assets over current liabilities. Statement of
changes in working capital is prepared to show the changes in the working capital between
the two balance sheet dates. This statement is prepared with the help of current assets &
current liabilities derived from the 2 balances.

Working capital = current assets – current liabilities


Statement of schedule of changes in working capital

Particulars Previous year Current Effect on working capital


year
Current assets: Increase Decrease

Cash in hand xxx Xxx


Cash at bank xxx Xxx
Bills receivable xxx Xxx
Sundry debtors xxx Xxx
Temporary Xxx Xxx
Investment Xxx Xxx
Stock Xxx Xxx
Prepaid expenses Xxx Xxx
Accrued incomes Xxx Xxx

Total current assets Xxx Xxx Xxx xxxx

Current liabilities:
Xxx Xxx
Bills payable Xxx xxx
Sundry creditors Xxx Xxx
Outstanding expenses
Bank overdraft Xxx Xxx
Short advantages Xxx xxx
Dividend payable Xxx xxx
Provision for taxation Xxx Xxx

Total current liabilities Xxx Xxx

Working capital (CA-CL) Xxx Xxx


Net increase (or) decrease in
working capital. Xxx Xxx
Statement of sources and application of funds

Funds flow statement is a statement which indicates various sources from which funds
(working capital) have been obtained during a certain period and the users or applications to
which these funds have been put during the period. Generally this statement prepared two
formats.

a. Report form

b. T form or an account form or self balancing type.

Specification of reports form of funds flow statement

particulars Rs
Source of funds
Funds from operation. Xxx
Issue of share capital. Xxx
Raising of long term loans. Xxx
Receipts from partly paid shares, called up. Xxx
Sales of non current assets. Xxx
Non trading receipts, such as dividends received. Xxx
Sales of investment(long term) Xxx
Decrease in working capital (as per schedule of change in Xxx
working capital). Xxx
Total:
Application (or) uses of funds Xxx
Funds lost in operation. Xxx
Redemption of debentures. Xxx
Repayment of long term loans. Xxx
Purchase of long term investment. Xxx
Purchase of non current assets. Xxx
Non trading payments. Xxx
Payment of dividends. Xxx
Payment of tax. Xxx
Increase in working capital. xxx
Total:
Forms an account form or self balancing type funds flow statements

Sources Rs Applications Rs
Funds from operation Issue of Xxx Funds in Operation. Redemption of Xxx
Share Capital xxx preference share capital xxx
Issue of debentures. xxx Redemption of debentures.
Raising of long term loans. Xxx Repayment of long term loans xxx
Receipts from partly paid hares. Xxx Purchase of non current (fixed) Xxx
Sales of non current (fixed) assets.
assets. xxx Purchase of long term investment. Xxx
Non trading receipts such as Non trading Payment
dividends. Xxx Payment of dividends Xxx
Sales of long term investments Payment of tax
Net decrease in working capital Xxx Net increasing in working capital. Xxx
Total Xxx
Total xxx Xxx
Xxx

Xxx xxx

NOTE:- Payment of dividend and tax will appear as an application of funds only when these
items are appropriations of profit and not current liabilities.
STATEMENT OF CHANGING WORKING CAPITAL FOR THE YEAR

PARTICULARS YEAR1 YEAR2 INCREASE DECREASE


CURRENT ASSETS
Inventories xxx Xxx xxx
Sunday Debtors xxx xxx xxx
Cash & Bank balance xxx xxx
Others Current Assets (A) xxx Xxx
Current Liabilities:-
Current Liabilities
Provisions xxx Xxx
xxx xxx
Total Current Liabilities (T.S)
xxx xxx
Working Capital = (A+B)
Decrease / Increase in
working Capital (+- (+-
xxx xxx
xxx xxsx xxx

\
STATEMENT SOWING SOURCES AND APPLICSATION OF FUNDS:-

Amount Application of funds Amount


Sources of funds
Issue of shares xxx Preferences of Shares xxx

Issue of Debentures xxx Redemption of Debentures xxx

Long term Borrowings xxx Payment of other Long Term Loans


xxx
Purchase of Fixed Assets
Sales of Fixed Assets
xxx Payment of Fixed Assets xxx
Operating profit
Increase in working Capital xxx
Decrease in working xxx
Capital xxx
xxx
TOTAL
TOTAL

xxx xxx
STATEMENT OF CHANGING IN WORKING CAPITAL FOR THE YEAR 2013-
2014 OF SIVA STONE INC.

EFFECT ON WORKING
PARTICULARS 2013 2014 CAPITAL
INCREASE DECREASE
A) Current Assets:-

a) Inventories 13,60,13,824 9,39,57,410 4,20,56,414


b) Sundry Debtors 40,97,718 153226 39,44,492
c) Cash and Bank Balance 8,98,720 388272 5,10,448
d) Loans and Advances
e) Other current assets 2,62,000 2,65,37,258 2,39,17,258
2,42,665 3,84,172 1,41,507
Total current Assets:
14,38,72,927 12,14,20,338
B) Current Liabilities &
Provisions:-

a) Current Liabilities
b) Other current 3,65,77,367 78,87,613 2,86,89,754
Liabilities 48,460 16,478 31,982

Total current Liabilities


3,66,25,827 79,04,091
NETWORKING
CAPITAL (A-B) 10,72,47,100 11,35,16,247

Net increase in Working 62,69,147 62,69,147


Capital
1,13,51,627 1,13,56,247 5,27,80,501 5,27,80,501
FUNDS FLOW STATEMENT FOR YEAR 2013-14 OF SIVA STONE INC

Source of funds Amount Application of funds Amount


(Rs)
Sale of factory buildings 27,07,908 Purchase of furniture & 1,66,750
fixtures
Sale of other fixed assets Purchase other fixed assets 11,40,902
38,15,939
Increase in Reserves & Decrease in un secured loans
Surplus 9,64,002
36,55,878 increase in working capital
Increase in secure loans
62,69,147
Funds from operation 69,14,784

Total → Total →
1,22,302

1,72,16,811 1,72,16,811
INTERPRETATION:-

 The above calculation that in 2013-2014 total current assets amount to Rs.
14,38,72,927 has been decreased to Rs. 12,14,20,338. The decrease in current assets amount
Rs. 2, 24, 52,589.

 Cash and bank balance has lower i.e. from (8,98,720 to 3,88,272) Rs. 610448 loans
and advances also increase from 26,20,000 to 2,65,37,258 i.e., Rs 2,39,17,258.

 At the same time the current liabilities also decreased from Rs. 36625827 to Rs.
7904091 i.e. Rs. 28721736.

 The net working capital increase during the study period amount to Rs 62699147. So
this is a healthy sign that the company able to manage current assets and liabilities.
STATEMENT OF CHANGING IN WORKING CAPITAL FOR THE YEAR 2014-
2015 OF SIVA STONE INC

PARTICULARS 2014 2015 EFFECT ON WORKING


CAPITAL
Current Assets: Increase Decrease
a) Sundry Debtors 1,53,226 63,467 89,759
b) Cash and Bank Balances 2,88,272 14,70,425 11,82,153
c) Loans and Advances 2,65,37,258 3,88,38,127 1,23,00,869
d) Other current assets 9,44,41,582 14,89,79,468 54,53,788
Total current Assets(A): 12,14,20,338 18,93,51,487

Current Liabilities & Provisions:


a) Current Liabilities 6,23,100 2,70,29,530 2,07,94,430
b) Other current liabilities 16,68,991 71,30,214 54,61,223
Total Current Liabilities (B) 79,04,091 3,41,59,744

NETWORKING CAPITAL (A-B) 11,35,16,247 15,51,91,743

4,16,75,496 41,67,55,496

Net increase in Working Capital


Total 155191743 155191743 6,80,20,908 6,80,20,908
FUNDS FLOW STATEMENTS FOR YEAR 2014-15 OF SIVA STONE INC

Sources of funds Amount (Rs) Application of funds Amount (Rs)


Sales of factory 25,83,834 Purchase of Land 66,21,525
buildings
Increase in un secured 1,27,96,060 Purchase of Plant and 1,14,21,497
loans Machinery

Increase in Reserves & 74,39,073 Increase in working capital 4,16,75,496


Surplus

Increase in secure loans 3,67,77,251

Funds from operations 1,22,300

Total→ 5,97,18,518 Total→ 5,97,18,518


INTERPRETATION:-

 The above calculation that in 2014-2015 total current assets amount to Rs.
12,14,20,338 has been decreased to Rs. 18,93,51,487. The increased in current assets amount
Rs. 6, 79, 31,149.

 Cash and bank balance has higher i.e. from (288272 to 1470425) Rs. 1182143 loans
and advances also increased from 26537258 to 3583127 i.e. 12300869.

 At the same time the current liabilities also decreased from Rs. 6235100 to 27029530
i.e. Rs. 20794430.

 The net working capital increased during the study period amount to Rs. 416755496.
So this is a healthy sign that the company able to manage current assets and liabilities
STATEMENT OF CHANGING IN WORKING CAPITAL FOR THE YEAR 2015-
2016 OF SIVA STONE INC.

EFFECT ON working
PARTICULARS 2015 2016 Capital
INCREASE DECREASE

Current Assets:
a) Inventories 74,48,79,734 6,09,82,074 1,35,07,660
b) Sundry Debtors 63,467 65,10,948 64,47,481
c) Cash and Bank Balances 14,70,425 1,41,21,860 12,61,435
d) Loans and Advances 3,88,38,127 5,99,92,347 2,11,54,220
e) Other current assets 7,44,89,734 6,09,82,074 1,35,07,660
Total current Assets (A) 18,93,51,487 20,25,89,303

Current Liabilities & Provisions:


a) Current Liabilities 3,65,467
b) Other current liabilities 2,70,29,530 3,00,94,997 1,11,12,150
Total Current Liabilities (B) 71,30,214 1,82,42,364
3,41,59,744 4,83,37,361
NETWORKING CAPITAL(A-B) 15,51,91,743 1,54,25,942

9,39,801
9,39,801

Total 15,51,91,743 15,51,91,743 1,90,98,916 1,90,98,916


FUNDS FLOW STATEMENT FOR YEAR 2015-2016 OF SIVA STONE INC.

Source of funds Amount (Rs) Application of funds Amount (Rs)


Sales of factory buildings 27,33,270 Purchased of Furniture 82,932
and other fixed assets & Fixtures

Decrease in working Purchase of plant


capital 9,39,801 &Machinery 1,38,60,146

Increase in Reserves &


Surplus 2,34,68,817 Purchase of computers 2,84,216

Increase in un secured Purchase of other fixed


loans 1,25,45,805 assets 13,48,674

Funds from operations Decrease in secured


1,22,300 loans 24,23,425

Total 3,98,09,993 Total 3,98,09,993


INTERPRETATION:-

The above calculation that in 2015-2016 total current assets amount to Rs. 189351487
has been increased to Rs. 202589303. The increased in current assets amount Rs. 13237816.

Cash and bank balance has shown higher i.e. from (147425-14121860) Rs.
12651435 loans and advances also increased from 38838127 to 59992347 i.e. Rs. 21154550.

At the same time the current liabilities also increased from Rs. 34159799 to
4833736 i.e. 14177617.

The net working capital decreased during the study period amount to Rs. 939801. so
this is a healthy sigh that the company able to manage current assets and liabilities.
STATEMENT OF CHANGING IN WOKRING CAPITAL FOR THE YEAR 2016-
2017 OF SIVA STONE INC.

Particulars 2016 2017 Effect on working capital


Increase Decrease
Current Assets:-
Inventories 10,95,70,320 15,03,55,335 4,37,85,015
Sundry Debtors 68,02,874 23,74,408 44,28,466
Cash & Advantages 14121860 14,56,882 1,26,64,978
Loans & Advantages 5,99,92,347 3,22,56,108 2,77,36,239
Other current Assets 41,23,820 86,58,335 4,53,44,515
Total current Assets (A)
1,94,11,221 19,37,83,874

Current liabilities &


Provisions:-
3,27,75,006 5,98,13,506
Current liabilities
48,81,795 58,97,969
Other current liabilities

Total current liabilities (B)

3,76,56,801 6,57,11,475
Working Capital (A-B)
15,69,54,420 12,80,78,399

Decrease in working capital 2,88,76,021


2,88,76,021

Total 185830441 185830441 73705704 73705704


FUNDS FLOW STATEMENT FOR YEAR 2016-2017 OF SIVA STONE INC.

Particulars Rs Particulars Rs
Source of funds Application of funds

Share holder funds 80,000 Purchase of fixed assets


1,68,399
Reserve & surplus 12,761

Unsecured loans 14,27,570

Secured loans 60,098

Differed tax liability 34,093

Preliminary Expenses 1,223

Total 1,68,399 Total 1,68,399


INTERPETATION:-

The above calculation that in 2016-2017 total current assets amount to Rs 1946111221 has
been decreased Rs 193789874. The decreased in current assets Rs 821347.

Cash & Bank balance has shown lower i.e. from (14121860 to 1456882) Rs 12664978
loans and Advances also decreased from 59992347 to 32256108 i.e. 2854674.

At the same time the current liabilities also decreased from Rs. 37656801 i.e.
28054674.

The net working capital decreased during the study period amount to Rs 28876021.
The decline in net working capital resulted from decrease sundry debtors. Cash & Bank
balances loans & Advances.
STATEMENT OF CHANGING IN WORKING CAPITAL FOR THE YEAR 2017-
2018 OF “SIVA STONE INC”.

Particulars 2017 2018 EFFECT ON working Capital

Increase Decrease

Current Assets:-
Inventories 15,03,55,335 19,06,69,403 403,14,068
Sundry Debtors 15,46,938 21,33,751 5,86,813
Cash & Advantages 14,56,882 2,57,37,490 2,42,80,608
Loans & Advantages 3,22,56,108 3,59,80,085 37,23,977
Other current Assets 94,85,805 11,95,85,076 11,00,99,271

Total current Assets (A) 19,51,01,068 37,41,05,885

Current liabilities &


Provisions:- 6,01,40,091 14,93,30,012
Current liabilities 58,97,968 87,89,433
Other current liabilities
Total current liabilities (B) 6,60,38,008 15,81,19,445

Working Capital (A-B)


Decrease in working capital 12,90,63,008 21,59,86,440
8,69,23,432 8,69,23,432

Total 21,59,86,440 21,59,86,440 17,20,86,122 17,20,86,122


FUNDS FLOW STATEMENT FOR YEAR 2017-2018 OF SIVA STONE INC.

Particulars Amount (Rs) Particulars Amount (Rs)

Sources of FUNDS Application of FUNDS

Secured loans 9,55,799.5 Reserve & Surplus 7,056.19

Unsecured loans 4,18,527.6 Differed tax liability 346.8

Purchase of fixes assets 12,75,569.3

Miscellaneous Expenditure 2,606

Net current Asset


88,407.9
Total 13,74,327.1 Total 13,74,327.1

INTERPETATION:

The total current assets value for the year 2017-2018 is 195101068. It increased to
37410585 for the year ending 2017-2018.

Cash & Bank balance showed an increase of 24280608. Which is derived from a sea
change in company’s cash balances? The cash & Bank balance for the year 2017-2018 are
1456882 and 25733490 respectively.

At the same time the current liabilities also increased from Rs 6603860 to
158119445 i.e. Rs 92081385.

The net working capital increased during the study period amount to Rs.
86923432. So this is a healthy sighs that the company able to manage good liquidity.
FINDINGS

1. In the year 2013-2014 the total source of funds is Rs. 1,70,94,509. The main source
of the fund is secured loans amounted to Rs 69,14,784. Total applications of funds for the
year 2013-2014 are Rs 1,72,16,811. The main application component is purchase of other
fixed assets Rs 11,40,902.

2. In the year 2014-2015 the total source of funds is Rs 5,95,96,218. The main source of
fund is secured loans amounted to Rs 3,67,77,252. Total applications of funds for the year
2014-2015 are Rs 5,97,18,518. The main application component is purchase of plant and
machinery Rs 1,14,21,497.

3. In the year 2015-2016 the total source of funds is Rs 3,96,87,693. The main source of
funds is Reserves & Surplus amounted Rs 2,34,68,817. Total applications of funds for the
year 2015-2016 are Rs 39,80,993. The main application component is secured loans Rs
24,23,24,025.

4. In the year 2016-2017 the total source of fund is Rs 9,49,26,638. The main source of
the fund is unsecured loans amounted to Rs 14,27,570. Total applications of funds for the
year 2016-2017 are 168399000. The main application component is purchase of fixed assets
Rs 168399000.

5. The year 2017-2018 the total source of fund are Rs 1,37,43,271. The main source of
the fund is secured loans amounted to Rs 95,57,99.5. Total applications of funds for the year
2017-2018are 13,74,327.1. The main application component is purchase of fixed assets Rs
12,75,569.3.
SUGGESTION

 There is lot of pretension consistence demand the cement industry as a cement


producer the company can able to source, their funds throw more share holders funds.

 Company is maintaining in inventories a part of current assets for the entire study
period. At shows that excessive inventory level are not good for any organization and any
company. Si the company has to concentrate much more on inventory maintains.

 The company has to main super quick assets in order to maintain sound liquidity.

 During study period there are negative working capital levels for the company so the
company must maintained enough current assets the keep working capital, figure positively.

 A company has to recollect their standing amount from the debtor’s regularly.

 The company has to maintain same funds long-term investment.

 The company has to monitory from liability position, in regular intervals.

 The company must be conscious about their working capital position.


CONCLUSION

The company always maintains sound level of funds. Company maintains adequate
level of working capital during the study period except the year 2014-15, 22015-16. The
company paid the amount of unsecured loans. For meeting working capital requirement the
company has cash credit arrangement from various banks. Depreciation calculates from
beginning of the month for all the assets. Investment is carried at market value without
providing any provision.

The company maintained their fixed assets at book value and providing depreciation
where is necessary. The company has taken loans from Government of India. The company
maintains their reserves and surplus consistently.
BIBILIOGRAPHY

Author Name of the book Edition

RK Sharma shashi K Gupth Management of accounting 8th edition

Dr.S.N.Maheshwari Financial management 6th edition

I.M pandey Financial management 9th edition

SOURCES:

 Company reports.

WEB SITES:

www.scribd.com

www.google.com

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