A

Summer Training Project Report on

“FINANCIAL ANALYSIS"

SUBMITTED TO UTTARAKHAND TECHNICAL UNIVERSITY IN

THE PARTIAL FULFILMENT OF
“MASTER OF BUSINESS ADMINISTRATION”

(TWO YEAR’S REGULAR DEGREE PROGRAMME)

SUBMITTED BY UNDER THE SUPERVISION OF

LAXMI THAKUR MS. PARMINDER KAUR

M.B.A (3rd SEMESTER)

SESSION- 2018-2020

PHONICS GROUP OF INSTITUTION, ROORKEE

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 ACKNOWLEDGEMENT

Preparing a project of this nature is an arduous task and I was fortunate enough to
get support from a large number of people to whom I shall always remain grateful.

I would like to record my gratitude to C&S Electric Ltd. for allowing me to undertake
this project.

I take this opportunity to thank Mr. Tarun Pratap (Sr. Executive HR) for providing us
an opportunity to work for C&S Electric Ltd.

I am also desirous of placing on record profound indebtedness to Ms. Parminder

Kaur (Asst. prof.) of Phonics Group of Institution, for the valuable advice, guidance,
precious time and support that he offered.

I would be failing in my duty if I do not acknowledge the gratitude to Dr. Krishan

Kumar Gautam, Director Phonics Group of Institution, who motivated us a lot in
carrying out this project.

Last but not least, I would also like to thank all the respondents for giving us their
precious time and relevant information and experience, as and when required
without which this project would not have been possible.

Laxmi Thakur

Date:

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 EXECUTIVE SUMMARY

This project is an attempt to provide a detailed analysis of the process of the training
program done by C&S Electric Ltd. and its benefits.

The first part of the project tells about the company’s profile, what the company is
really about, its history, what kind of products it makes and the new products it has
launched recently in the market. The company has four Joint Venture projects with
four different companies trying to come up with new ideas and products.

In my complete student internship programme was able to do data analysis and

interpretation, making reports, learn about commercial forms used in dealings with
other parties, fill up forms online, make Reconciliation Accounts, profit and loss
account etc. During this student internship programme I came to know that,
knowledge based economy, training helps people to learn how to do things
differently or to do different things.

I have learned from the future projection of solar power plant that it will succeed in
upcoming five years. The company is using the material of high standard quality in
making electrical equipments for power generation which will be beneficial for our
nation.

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 OBJECTIVE OF THE STUDY

The objective of this study is to provide basic knowledge about financial analysis of
C&S electric Ltd. subsequently to evaluate the business subject progress in an area
of activity, liquidity profitability and indebtedness, to reveal strengths and
opportunities that the business subject should rely on. Furthermore, it also aims to
determine weaknesses and threats that could lead them to difficult situations and
based on the results to provide measures to improve the system of financial
economic analysis of the business subject.

 To calculate the important financial ratio of the organization as a part of the

ratio analysis thereby to understand the changes the needs and trends in the
firm’s financial position.

 To assess the performance of C&S electric on the basis of earnings and also
to evaluate the solvency position of the company.

 To identify the financial strengths and weaknesses of the organization.

 To give the appropriate suggestions to the investors. To help them to make

more informed decisions.

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 TABLE OF CONTENTS

SR NO. PARTICULARS PAGE NO.

1. OBJECTIVE OF THE STUDY 4

2. INTRODUCTION TO THE COMPANY 6-17

3. INTRODUCTION TO THE TOPIC 18-34

4. RESEARCH METHODOLOGY 35

5. ANALYSIS AND FINDINGS 36-46

6. RECOMMENDATIONS 47

7. CONCLUSION 48

8. LIMITATIONS AND SCOPE OF THE STUDY 49

9. BIBLIOGRAPHY 50

10 ANNEXURE 51-54

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 INTRODUCTION TO THE COMPANY

C&S Electric Ltd. is amongst the leading suppliers of electrical equipment in India
and is India’s largest exporter of industrial switchgear. Its wide range of electrical and
electronic products find application in power generation, distribution, control,
protection and final consumption. C&S Electric is amongst the top 4 players in the LV
switchgear business & the market leader in the Power Busbar Business. In addition
the company also has product offerings for MV switchgear, Energy Efficient Lighting
solutions and Diesel Generating Sets. C&S Electric along with Solar EPC business,
also has an electrical contracting business which performs turnkey solutions for
industrial and commercial electrification, substations and power plants. C&S Electric
was also the 2nd company in India to design and execute a grid connected solar PV
power plant in India.

The business operations of C&S Electric are divided in the following strategic
business units (SBUs).

 LV Switchgear SBU
 Power Busbar SBU
 Protection and Measurement
 Devices SBU
 Lighting & Wiring Accessories SBU
 MV Switchgear SBU
 Diesel Gensets
 Electrical EPC SBU
 Solar EPC SBU

C&S employs over 4000 people including 400 engineers, and has 17 state-of-
the art manufacturing plants in India, Belgium & China. It has 23
sales/marketing offices across India and its products are exported to 83
countries. C&S Electric also has several joint venture companies.

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 OUR VISION

 C&S shall be the most trusted, respected and preferred brand, for electrical
and electronic equipment that finds application in power generation,
distribution, control and final consumption.
 In its major businesses C&S shall not only command a domestic market share
ranging from 12% to 50% or more, but be known widely as the company
“closest to its customers”
 C&S products shall be used to manage power in India’s biggest industries, in
its highest buildings, in its most critical infrastructure and in millions of its
homes.
 The C&S name shall be recognized widely as a benchmark, and shall serve
as a role model and an inspiration to other Indian engineering products
companies.
 C&S shall be cited as a company that played an important role in making
“Made in India” a label that is trusted and respected the world over

OUR MISSION

 To create a unique alchemy of outstanding products, operational excellence,

path breaking customer service, and compelling marketing.
 To create and relish a vibrant workplace where employees are empowered,
cared for, developed, and most of all, provided unlimited opportunity to
discover their full potential.
 To continuously enhance our core technologies, and develop new world class
technologies and products to expand our offering to customers.
 To consolidate and strengthen our position as India’s largest exporter of
Industrial power distribution and control equipment.
 To earn a healthy return on investment for the shareholders.
 To everyday experience, the sheer joy of delighting our internal and external
customers, and to relish the thrill of participation in India’s infrastructure boom.

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 OUR VALUES

STRETCH FOR YOUR CUSTOMER

 Fully understand and fulfill needs of internal and external customers
 Do not tolerate mediocrity. Stretch, Excel and Exceed
BE FRANK, BE HONEST
 Be frank, fair and non-political and expect the same treatment for yourself
 Do not be afraid of conflict, when it is required and is just
BE OBSESSED WITH QUALITY
 Display attention to quality every single day, from the very top down, and from the
bottom up
 Remember and teach that small things lead to perfection, but perfection is not a
small thing

WORK HARD, SMART & SWIFT

 Nurture a culture of tenacity, perseverance and sheer hard work Be innovative
 Opportunities to innovate are everywhere, everyday. Grab them
 Take responsibility for your own agenda and priorities
 Take some risks. If you are not making mistakes, you are not trying hard
enough
SUCCEED AS A TEAM AND AS AN INDIVIDUAL
 Strike a balance between people and task orientation
 Empower and delegate, but don't over delegate
DISCOVER YOUR STRENGTHS & THOSE OF OTHERS
 While we are bonded by shared values we must encourage and respect rich
diversity in skills, experiences, knowledge, talents and personal styles
 Success comes more from exploiting strengths than from overcoming
weaknesses

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 JOINT VENTURES

C&S Himoinsa (P) Ltd., a 50:50 joint venture company of C&S Electric Ltd.,
India and Himoinsa, S.L. Murcia Spain, is the pioneer of Silent DG sets in
India.
C&S Electric is the India's leading electrical and electronic equipment
manufacturer & largest exporter of switchgear products. Himoinsa is a
renowned name worldwide in generating sets with more than 60% production
being exported across the globe, its installed annual capacity is 60,000 DG
sets of ratings 6~2500kVA.
C&S Himoinsa manufactures environment friendly generating sets from
10~2000kVA, suitable for small & medium Industries, Rice Mills, Cold
storages, Stone Crushers, Railways, Defence, Telecom, IT Segment,
Hospitals, Clinics, Schools, Colleges, Cinema Halls, Shopping Malls,
Residential Apartments etc.

DG Set Range:-
 Generating sets with Ashok Leyland powered engine series 10~500kVA
 Generating sets with Volvo Penta powered engine series 600~625kVA
 Generating sets with Perkins powered engine series 750~2000kVA

Salient Features:-
 Silent DG sets
 Fuel efficient
 International design

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 Environmental friendly
 Low maintenance cost

MEDIUM VOLTAGE SWITCHGEAR

 3.6kV to 36kV Air Insulated Switchgear

 12kV & 24kV SF6 Insulated Ring Main Units
Medium Voltage Switchgear products are manufactured in state-of-the-art
production facility set up at Greater Noida in National Capital Region.
MV Switchgear products find use in growing market for Medium Voltage
Switchgear in India, both for primary and secondary distribution segments.
Primary distribution switchgear are used in power plants and heavy industries
likewise, secondary distribution switchgear are used in light industries and
distribution network of power utilities and real estate projects.
It would be worthwhile to state that we are one of the leading suppliers of
11kV & 22kV Ring Main Units to various power utilities in India and are
contributing in big way to strengthen the power distribution network in various
states in India.

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 Unrivalled product range, Unmatched quality, Unbeatable services RS
Components & Controls (India) Ltd. formed in 1994 is an Indo-British joint
venture between RS Components of U.K. and the Controls & Switchgear
Group of India. RS Components is the reputed global leader for distribution of
the widest range of Industrial products to Research & Development,
Maintenance and Prototype development engineers in all types of business
around the world. RS is the single source of over 2,00,000 products from
2000 leading supplier brands, for 1.8 million customers worldwide.
It fulfills small volume needs for a wide range of electrical, electronic,
mechanical, test & measurement and automation products. Through
catalogues, e-commerce and CD-ROMs, RS offers high service distribution
for all small volume purchases of industrial and technical products.

 Over 200,000 quality products

 2000 leading brand names
 Free door delivery within 48 hours (from Indian Stocks) & 7 days (from
International Warehouses)
 RS Branch network-18 Key locations across India
 Free technical support
 30,000 technical datasheet
 12 Months warranty
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 Free 2000 page coloured catalogue - the engineers’ encyclopedia
 Simple products selection by catalogue or online
 Fast ordering options - by Phone / Fax / E-mail / online
 No minimum order value

MARKET SERVED

Industry
 Power  Petrochemical  Metals
 Paper  F&B  Others

Buildings
 IT Parks  Hotels  Others
 Hospitals  Group Housing

Infrastructure
 Railway  Telecom  Others
 Water  Airports

OEMs
 Material Handling  Compressors  Machine Tools
 Lifts  Telecom Power  Others
Supplies

Homes
 Apartments
 Villas

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13
PAST, PRESENT, FUTURE

1966 Control Panels for Cranes & Lifts,

Steel & Petrochemicals Industry, Sugar
Centrifuges and sophisticated Machine
Tools.

1967 Manufacture of Line up Terminal Blocks,

Push Buttons & Pilot Lamps;

1968 Manufacture of Automatic & Synchronized

Road Traffic Signals and Systems;

1970 Manufacture of Shock hardened Marine

Switchgear Panels and Components for the
firstLeander class warship manufactured in
India at MDL-Bombay;

1972 Manufacture of Motor & Power Control

Centres for thermal, nuclear and hydro
electric
power stations duly tested and approved by
CPRI;

1974 Manufacture of Fully Drawout Motor &

Power Control Centres for thermal, nuclear
and hydro power stations duly tested and
approved by CPRI;
Telephone Relays for the entire telephone
network in addition to ITI-Bangalore.

1980 Manufacture of Medium Voltage Isolated

and Segregated busbars and busducts for
thermal, hydro & nuclear power plants from
250 MW – 1000 MW. Today, C&S is the
largest manufacturer of such equipment in
India and 2nd largest in the world.

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1982 Manufacture of full range of Air Circuit Breakers from
630A – 6300A under technical collaboration with Terasaki
of Japan;
Introduction with first complete switchgear package
supplied, erected and commissioned by C&S to NTPC’s
Farrakha Super Thermal Power Project;

1983 Manufacture of full range of Modular Switches, Switch

Fuse Units and Load Break Switches and Fuses under
technical collaboration with Stromberg of Finland;

1984 Manufacture of complete world class range of Contactors,

Motor Starters, Push Buttons, Pilot Lamps in joint venture
originally with Telemecanique-France. Now on our own
with exports worldwide.

1990 Manufacture of full range of 500g Shock Hardened Circuit

Breakers and Switch Boards for the 1st Nuclear
Submarine of the Indian Navy under technical
collaboration with Whipp& Borne, U.K;

1991 Manufacture of full range of Protection Relays and Relay

Panels originally in joint venture with SEG-Germany. Now
on our own;

1993 Manufacture of full range of world class Terminal Blocks

and accessories with WAGO-Germany;

1994 Manufacture of full range of Brushless Alternators from

7.5 KVA to 5000 KVA in joint venture with AVK-Germany;

2003 Manufacture of full range of Packaged Sound Proof Diesel

Gensets from 7.5 KVA – 2500 KVA in joint venture with
Himoinsa of Spain;

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2004 Manufacture of Comprehensive range of world class
Lighting Accessories, Modular Switches, Plugs & Sockets
etc. originally in joint venture with GEWISS-Italy. Now on
our own.

2007 Manufacture of full range of Medium Voltage Switchgear,

Circuit Breakers, RMUs & Switchboards in joint venture
with EFACEC of Portugal.

2011 Entry into Solar power by successfully installing and

synchronizing our own 1 MW PV Solar Power Plant in the
State of Haryana thereby providing C&S an excellent
base to tap the Solar Power plants EPC Business portfolio
in the domain of clean energy in the future. In this year,
C&S acquired Netherland based Etacom, with this
acquisition C&S Electric offers the widest range of Power
Busbars amongst any manufacturer in the world.

2014 Acquires 50% shareholding of Efacec in Medium Voltage

joint venture and merged the business into the main C&S
Electric Limited entity.

CSR & EHS

Save Carbon Foot Print

Just reducing AC temperature by 20 will help in saving a lot of carbon
footprint. Reducing temperature will help in saving energy & reducing your
electricity bill.

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World Environment Day
World Environment Day is commemorated every year on June 5 to promote
awareness on the importance of preserving our biodiversity. It also aims to
identify issues related to environment and ways to take corrective action. All
the employees of C&S took pledge to give back to Mother Nature. Programs
were conducted at factories, offices & Project (EPC) sites of C&S Electric
Limited.

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 INTRODUCTION TO THE TOPIC

The financial situation of the business subject is considered to be a complex output

of their whole performance. This output is presented through the ratio indicators of
activity, profitability, liquidity, indebtedness and market value. These indicators are
based on the synthetic indicators of financial accounting and they demonstrate the
complexity of the business subject’s performance interpretation.

Financial analysis involves using financial data to assess a company’s performance

and make recommendations about how it can improve going forward.

The process of reviewing and analyzing a company’s financial statements to make

better economic decisions is called analysis of financial statements. In other words,
the process of determining financial strengths and weaknesses of the entity by
establishing the strategic relationship between the items of the balance sheet, profit
and loss account, and other financial statements.

The term ‘analysis’ means the simplification of financial data by methodical

classification of the data given in the financial statements, ‘interpretation’ means,
‘explaining the meaning and significance of the data so simplified.’ However, both’
analysis and interpretation’ are interlinked and complementary to each other.

A financial situation analysis is the foundation of the company’s economic

performance analysis and usually proceeds down to primary fields and results as
effectivity, efficiency, production capacity utilisation, supplement management and the
like. Financial analysis detects weaknesses and strengths of the company, is the tool
of “health” diagnostics and provides essential information to business management
and to owners

The company’s financial situation is diverse and a multifaceted complex phenomenon;

consequently this diversity is transferred also into the financial analysis process. The
user of the financial analysis results decides which indicator’s to select and the priority
of utilisation of individual parts of the financial analysis according to demand and
intention.

Among primary users of the financial analysis we might include various subjects
mainly asowners, managers,employees, lenders (suppliers, banks), debtors etc.

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Significance of Financial Analysis

Finance Manager

Analysis of financial statements helps the finance manager in:

 Assessing the operational efficiency and managerial effectiveness of the

company.

 Analyzing the financial strengths and weaknesses and creditworthiness of the

company.

 Analyzing the current position of financial analysis,

 Assessing the types of assets owned by a business enterprise and the liabilities
which are due to the enterprise.

 Providing information about the cash position company is holding and how much
debt the company has in relation to equity.

 Studying the reasonability of stock and debtors held by the company.

Top Management

Financial analysis helps the top management

 To assess whether the resources of the firm are used in the most efficient
manner

 Whether the financial condition of the firm is sound

 To determine the success of the company’s operations

 Appraising the individual’s performance

 evaluating the system of internal control

 To investigate the future prospects of the enterprise.

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Trade Payables

Trade payables analyze of financial statements for:

 Appraising the ability of the company to meet its short-term obligations

 Judging the probability of firm’s continued ability to meet all its financial
obligations in the future.

 Firm’s ability to meet claims of creditors over a very short period of time.

 Evaluating the financial position and ability to pay off the concerns.

Lenders

Suppliers of long-term debt are concerned with the firm’s long-term solvency and
survival. They analyze the firm’s financial statements

 To ascertain the profitability of the company over a period of time,

 For determining a company’s ability to generate cash, to pay interest and repay
the principal amount

 To assess the relationship between various sources of funds (i.e. capital

structure relationships)

 To assess financial statements which contain information on past performances

and interpret it as a basis for forecasting future rates of return and for assessing
risk.

 For determining credit risk, deciding the terms and conditions of a loan if
sanctioned, interest rate, and maturity date etc.

Investors

Investors, who have invested their money in the firm’s shares, are interested in the
firm’s earnings and future profitability. Financial statement analysis helps them in
predicting the bankruptcy and failure probability of business enterprises.

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Objectives of Financial Analysis
Let us look at some of the main objectives of financial analysis,

1. Reviewing the performance of a company over the past periods: To predict

the future prospects of the company, past performance is analyzed. Past
performance is analyzed by reviewing the trend of past sales, profitability, cash
flows, return on investment, debt-equity structure and operating expenses, etc.

2. Assessing the current position & operational efficiency: Examining the

current profitability & operational efficiency of the enterprise so that the financial
health of the company can be determined. For long-term decision making,
assets & liabilities of the company are reviewed. Analysis helps in finding out the
earning capacity & operating performance of the company.

3. Predicting growth & profitability prospects: The top management is

concerned with future prospects of the company. Financial analysis helps them
in reviewing the investment alternatives for judging the earning potential of the
enterprise. With the help of financial statement analysis, assessment and
prediction of the bankruptcy and probability of business failure can be done.

4. Loan Decision by Financial Institutions and Banks: Financial analysis helps

the financial institutions, loan agencies & banks to decide whether a loan can be
given to the company or not. It helps them in determining the credit risk, deciding

the terms and conditions of a loan if sanctioned, interest rate, maturity date etc.

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TYPES OF FINANCIAL STATEMENTS:
Financial statements primarily comprise two basic statements:

1. The position statements of the balance sheet.

2. The income statements or the profit and loss account.

Accounting principles specify that a complete set of financial statements must

include:

1. A balance sheet

2. An income statement

3. A statement of change in owners accounts.

4. A statement of changes in financial position.

BALANCE SHEET:

The balance sheet is one of the important statements depicting the financial strength
of concern. It shows the properties that are owned on one hand and on the other
hand the sources of the assets owned by the concern and all the liabilities and
claims it owes to owners and outsiders. The balance sheet is prepared on a
particular date. The right hand shows properties and assets and the left hand shows
liabilities.

INCOME STATEMENT OR PROFIT AND LOSS ACCOUNT:

Income statement is prepared to determine the operation position of the concern. It

is a statement of revenues. The income statement may be prepared in the form of
manufacturing account to find out the cost of the production in the form of trading
accounts to determine gross profit or loss, in the form of profit and loss account to
determine net profit or net loss.

STATEMENT OF CHANGES IN OWNERS EQUITY:

The term owners equity refers in the claims of the owners of the business against the
assets of the firm. It consist of two elements.

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 1. Paid up share capital i.e. the initial amount of funds invested by the
shareholders.

2. Retained earnings/reserves and surplus representing undistributed profits.

The statement of changes in owners equity simply shows the

beginning balance of each owners equity account, the reasons of increases
and decreases in each, and its ending balance. However, in most cases the
owners equity account changes significantly in retain earnings and hence the
statement of changes in owners equity becomes merely a statement of
retained earnings.

STATEMENT OF CHANGES IN FINANCIAL POSITION:

The basic financial statement i.e. the balance sheet and profit and loss
account and income statement of a business reveals the net effect of various
transactions on the operational position of the company. But there are many
transactions that do not operate through profit and loss account. Those for a better
understanding another statement of changes in financial position has to be prepared
to show the changes in assets and liabilities from the end of another point of time.
The statement of changes in financial position may take any of the two forms. They
are:

 Funds statements

 Cash flow statements

TOOLS OF FINANCIAL ANALYSIS USED IN THE STUDY:

MEANING OF COMPARATIVE STATEMENT:

The comparative financial statements are the statements of the

financial position of different periods; the elements of financial positions are then in a
comparative form to give idea of financial position of two or more periods. The
comparative statement may show:

 Absolute figures

 Changes in absolute figures i.e. increase or decrease in absolute figures.

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  Absolute data in terms of percentage.

 Increase or decrease in terms of percentage.

COMPARATIVE BALACE SHEET:

It is a statement of financial position of a business at a specific movement of time. It
represents all assets owned by the business at a particular movement of time and
the claims of the owners and outsiders against those assets at the time. It is a way
they shape the financial condition of the business at that time.

The important distinction between an income statement and balance sheet is that the
income statement is for a period where as balance sheet is on a particular date.

COMPARATIVE INCOME STATEMENT:

The comparative income statement gives the results of the operation of a business.
The comparative income statement gives an idea of the program of a business over
a period of time. The changes in absolute data in money values and percentages
can be determined to analyze the profitability of the business.

GUIDELINES FOR INTERPRETATION OF INCOME STATEMENT:

The analysis and interpretation of income statement will involve the following steps:

1. The increase or decrease in sales should be compared with the increase or

decrease in cost of goods sold. An increase in sales will not always mean an
increase in profit. The profitability will improve if increase in sales promotion
and the control of operating expenses.
2. The second step of analysis should be the study of operation profit. The
operating expenses such as office and administrative expenses. Selling and
distribution expenses should be deducted from gross profit to find out
operating profit which will result from the increase in sales position and control
of operating expenses.
3. The increase or decrease in net profit give an idea about overall profitability of
the concern, non-operating expenses such as interest paid, loss from sale of
assets, writing off to deferred expenses or deducted from operational profit we
get the figure of operating profit.

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 4. An opinion should be formed about profitability of the concern and it should be
given at the end. This should be mentioned whether the overall profitability is
good or not.

COMMON SIZE STATEMENTS:

The common size statement, balance sheet and income statement are shown in
analytical percentages. The figures are shown as percentages of total assets, total
liabilities and total sales. The total assets are taken as of and different assets are
expressed as a percentage of the total.

1. Common size balance sheet: A statement in which balance sheet items are
expressed as the ration of each asset to total assets and the ratio of each
liability is expressed as a ratio of total liabilities is called common sized
balance sheet.

2. Common size income statement: The items in income statement can be

shown as percentage of sales to show the relation of each item to sales. A
significant relationship can be established between item of income statement
and value of the sales. The increase in sales will certainly increase selling
expenses and not administrative are financial expenses.

ANALYSIS AND INTERPRETATION OF FINANCIAL STATEMENT:

An attempt has been made to analyze and interpret the financial statements of C&S
ELECTRIC for the period of 2018-2019. These statements were prepared on the
basis of the data in the balance sheets and profit and loss accounts of the C&S
ELECTRIC for the above period.

RATIO ANALYSIS:
A ratio is a simple mathematical expression. It is a number expressed in terms of
another number, expressing the quantitative relationship between the two, ratio
analysis is the technique of interpretation of financial statements with the help of
various meaningful ratios. Ratios do not add to any information that is already
available, but they show the relationship between two items in a more meaningful
way.

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Ratio analysis is a very important tool of financial analysis. It is the process of
establishing a significant relationship between the items of financial statements to
provide a meaningful understanding of the performance and financial position of the
firm. They help us to draw certain conclusions. Comparison with related facts is the
basis of ratio analysis. Ratios may be used for comparison in any of the following
ways.

1. Comparison of a firm with its own performance in the past.

2. Comparison of one firm with its own performance in the past.

3. Comparison of one firm with another firm in the industry.

4. Comparison of one firm with the industry as a whole.

5. Comparison of an achieved performance with pre-determined standards.

6. Comparison of one department of a concern with other departments.

TYPES OF RATIOS

 Liquidity ratio

 Capital structure/leverage ratio

 Profitability ratio

 Activity ratio.

 LIQUIDITY RATIOS: it measures the short-term solvency of the firm. In

a short period of a firm should be able to meet all its short-term
obligation i.e. current liabilities and provisions. It is current assets that
yield funds in the short period. Current assets are those, which the firm
can convert it into cash within one year or short run. Current assets
should not only yield sufficient funds to meet current liabilities as they
fall due but also to enable the firm to carry on its day-to-day activities.

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The following are the important liquidity ratios:

1. Current ratio

2. Acid test/quick ratio.

3. Cash ratio

4. Net working capital ratio

1.Current ratio: Current ratio is the ratio of current assets to current liabilities.
Current assets are the assets that are expected to be realized in cash or sold or
consumed during the normal operating cycle of the business or with in one year,
which ever is longer, they include cash in hand and bank, bills receivable, net sundry
debtors, stock of raw materials, finished goods and working in progress, prepaid
expenses, outstanding incomes, assured incomes and short term or temporary
investments. Current liabilities are the liabilities that are to be repaid within a period
of one year. They include bills payable, sundry creditors, bank overdrafts,
outstanding expenses, income receivable in advance, proposed dividend, provision
for taxation, unclaimed dividends and short term loans and advanced repayable
within one year.

CURRENT RATIO= CURRENT ASSETS/ CURRENT LIABILITIES

Generally 2 : 1 ratio is considered ideal for the company.

2. ACID TEST/QUICK RATIO: the acid test ratio is the ratio between quick current
assets and current liabilities and calculated by dividing the quick assets by current
liabilities. Quick assets mean those which can be converted into cash immediately by
exclusion of inventory and prepaid expenses from current assets.

Acid test Ratio=Quick assets/Current liabilities.

Generally 1: 1 ratio is considered to be ideal for the company.

3. CASH RATIO: The cash ratio is the ratio of cash and bank balance, it is
calculated dividing cash and bank balance by current liabilities.

CASH RATIO= Cash and Bank balances/Current liabilities.

27
Generally 1 : 2 ratio is considered to be ideal for a company.

4. NET WORKING CAPITAL RATIO: Working capital ratio refers to comparing

current assets to current liabilities and serve as the liquidity reserve avail. To satisfy
contingencies and uncertainties. It is calculated by dividing net working capital by
capital employed.

Net Working Capital Ratio = net working capital/capital employed.

Generally higher ratio is considered ideal for a company.

 CAPITAL STRUCTURE/LEVERAGE RATIO: These ratios indicate the

relative interests of owners and creditors in a business by showing long term
financial solvency and measure the enterprise’s ability to pay the interest
regularly and to repay the principal on maturity or in pre-determined
instalments at due dates.

The significant leverage ratios are:

1. Debt Equity Ratio

2. Proprietary Ratio

3. Capital Gearing Ratio.

4. Fixed assets Ratio

5. Interest coverage Ratio

6. Dividend Coverage Ratio

7. Debt Service coverage Ratio.

1.Debt Equity Ratio: It reflects the relative claim of creditors and shareholders
against the assets of the business. Debt usually refers to long-term liability. Equity
includes equity and preference share capital and reserves.

Debt Equity Ratio=long term liabilities/share holders funds.

Ideal debt equity ratio is 2 : 1

28
2.Propreitary ratio:It expresses the relationship between the net worth and total
assets. A high proprietary ratio is indicative of strong financial position of business.

Proprietary ratio = Net worth/ Total Assets

Net worth = Equity share capital + fictitious Assets

Total assets= fixed assets + Current Assets

Generally higher the ratio the ideal it is.

3. Capital Gearing Ratio: A company is said to be highly geared if it has a high

capital gearing ratio and lowly geared if the capital gearing ratio is low. The extent of
gearing determined the future financial structure of the business. A company that is
highly geared will have to raise funds by issuing fresh equity shares, whereas a lowly
geared company would find it attractive to raise funds by way of term loans and
debentures.

Capital Gearing Ratio = funds bearing fixed interest and fixed dividend/equity
.share holder’s funds

Funds bearing fixed interest and capital=Debentures + term loans +preference .

. share capital.

Equity share holder funds=Equity share capital +reserves-fictitious funds.

4.Fixed Assets Ratio: This ratio indicates the mode of financial the fixed assets. It
is calculated as

Fixed assets Ratio= Fixed assets/capital employed

Capital employed= equity share capital + preference share capital +reserves + long
term Liabilities – Fictitious Assets.

Generally a ratio of 0.67 : 1 is considered ideal for a company.

5.Interest Coverage Ratio: This ratio is called as “debt service ratio”. This ratio
indicates whether a business is earning sufficient profits to pay the interest charges.
It is calculated as
29
Interest coverage ratio=PBIT/Fixed interest charges

PBIT=Profit before interest and taxes=PAT + Interest + Tax

Generally a ratio of around 6 is normally considered as ideal for a company.

6.Dividend coverage ratio: It indicates the ability of a business to pay and maintain
the fixed preference dividend to preference shareholders.

Dividend coverage ratio=PAT/Fixed preference dividend.

PAT= Profit After Taxes

7.Debt service coverage Ratio: It indicates whether the business is earning

sufficient profits to pay not only the interest charges, but also the instalments due to
the principal amount. It is calculated as

Debt service Coverage Ratio =(PBIT/Interest + Periodic Loan Installation)/(1- Rate of

income Tax)

Generally greater the ratio, the better is the servicing ability of company.

 PROFITABILITY RATIO: Profitability ratios measure the profitability of a

company. Generally they are calculated either in relation to sales or in relation
to investments. The various profitability ratios are discussed under the
following heads.

(A) GENERAL PROFITABILITY RATIO’S:

1.Gross Profit Ratio:Gross profit is one of the most commonly used ratios. It
reveals the result of trading operations of the business. In other words, it indicates to
us the profitability of the business. It is calculated as

Gross Profit Ratio=(Gross Profit/Net sales)*100

Gross Profit=net sales-cost of goods sold.

Net Sales=Total Sales- Sales Returns

Cost of Goods Sold=Opening Stock + Purchases + Manufacturing expenses-closing

Stock.

30
Generally the higher the ratio, the better will be the performance of the company.

2.NET PROFIT RATIO: It indicates the results of overall operations of the firm. While
the gross profit ratio indicates the extent of profitability of core operations. Net profit
ratio tells us about overall profitability. It is called as

Net Profit Ratio=(Net Profit after Tax/Net Sales)*100

Generally higher the ratio, the more profitable to the company.

3.OPERATING RATIO: It expresses the relationship between expenses incurred for

running the business, and the resultant net sales. It is calculated as

Operating Ratio=cost of goods sold + Office and Administrative expenses + selling

and distribution Expenses.

Generally lower the ratio, the better it is to the company.

4.OPERATING PROFIT RATIO: It establishes the relationship between operating

profit and sales. It is calculated as

Operating Profit Ratio=(Operating Profit/Net Sales)*100

Generally higher the ratio, the better it is to the company.

5.EXPENSES RATIO: Expenses ratios are the ratios that supplement the
information given by the operating ratio. Each of the expense rations highlights the
relationship given by the particular expense and net sales. For example, factory
expenses ratio is of factory expenses to net sales any expenditure can be shown as
a ratio to sales. All such ratios fall under the broad head of expenses ratios.

(B) OVERALL PROFITABILITY RATIOS:

1.RETURN ON CAPITAL EMPLOYED RATIO(ROCE) OR RETURN ON

INVESTMENT RATIO(ROD):
This ratio reveals the earning capacity of the capital employed in the business. In
other words, capital employed is permanent capital invested in the business. It is
also called capital and hence, the ratio is also known as return on invested capital

31
ROCE= (Profit before interest and taxes/capital employed) *100

2.RETURN ON NET WORTH(RONW): It indicates the return, which the

shareholders are earning on their resources invested in the business. It is calculated
as

RONW=(Profit after Tax/Net Worth)*100

Generally higher the ratio, the better it is to the shareholders.

3.RETURN ON EQUITY CAPITAL:It expresses the return earned by the owners of

the business, after adjusting for debt and preference capital. It is calculated as

RETURN ON EQUITY= PAT- Preference dividend/equity shareholders funds.

Generally higher the ratio, the better it is to the company.

4.RETURN ON ASSETS RATIO(ROA): Return on assets reflects the return earned

by the firm for the company for the shareholders of the business on the investment of
all the financial resources committed to the business. It is calculated as

ROA=PAT/TOTAL SALES

Generally higher the ratio, the better it is to the shareholders.

5.EARNINGS PER SHARE(EPS): It is the earning accruing to the equity

shareholders on every share held by them. It is calculated as

EPS= PAT-Preference dividend/number of equity shares.

Generally the ratio, the better is the performance of the company.

6.Dividends per share (DPS): It is the amount of dividend payable to the holder of
one equity share. It is calculated as

DPS=Dividend on equity share capital/number of equity shares

Generally from investors point of view, the higher the ratio, the happier the investor.

32
7.DIVIDEND PAY OUT RATIO: It is the ratio of dividend per share to earning per
share. It is calculated as

Dividend Pay Out Ratio=DPS/EPS

8.PRICE EARNING RATIO(P/E Ratio): It expresses the relationship between

market price of one share of a company and earnings per share of that company.

P/E Ratio=Market Price of Equity share/EPS

There is no ideal P/E ratio.

9.DIVIDEND YIELD RATIO: It expresses the relationship between dividend earned

per share and the market price per share. In other words, it expresses the return on
investment by purchasing a share in the stock market , without accounting for any
capital appreciation. It is calculated as

DIVIDEND YIELD RATIO- Dividend per share/Market price of share.

10.BOK VALUE: It is the fraction of the net worth of the business as depicted in the
balance sheet, which is attributable to one equity share of the business . it is
calculated as

BOOK VALUE=Equity share holders funds/number of equity shares.

Generally higher the book value of the share, the more strong the business is
assumed to be.

 ACTIVITY RATIO: Activity ratios measures the efficiency or effectiveness with

which a firm managers its resources or assets. They calculate the speed with
which various assets, in which funds are blocked up, get converted into sales.
The significant activity or turnover ratios are

1.INVENTORY TURN OVER RATIO OR STOCK TURN OVER RATIO: Stock

turnover ratio indicates the number of items the stock has turned over into sales in a
year. It indicates to us the extent of stock required to be held in order to achieve a
desired level of sales.

Inventory Turn Over Ratio = Cost of Goods Sold/Average Stock

33
Cost of Goods Sold=Sales-Gross Profit.

Average Stock=(Opening Stock + Closing Stock)/2

Generally 8 is considered ideal ratio of the company.

2.DEBTORS TURN OVER RATIO: Debtors Turn Over Ratio expresses the
relationship between debtors and net credit sales. It is calculated as

Debtors Turn Over ratio= Net Credit Sales/Average Debtors.

Generally the ratio between 10-12 an ideal value for the company.

3.CREDITORS TURN OVER RATIO:Creditors turn over ratio expresses the

relationship between creditors and net credit purchases. It is calculated as

Creditors Turn Over Ratio= Net Credit Purchases/Average Creditors.

Generally the ratio 12 is an ideal for the company.

4.WORKING CAPITAL TURN OVER RATIO: This ratio is defined as Working

Capital Turn Over Ratio= Cost of Goods Sold/Working Capital

Working Capital=Current Assets- Current Liabilities.

Generally higher ratio indicates efficient utilization of firm’s funds.

5.Fixed Assets Turn Over Ratio: It is Defined as ratio of Net Sales to the Fixed

Assets.

Generally the ratio of around 5 is considered ideal for the company.

34
 RESEARCH METHODOLOGY

The study carried with the cooperation of the management who permitted to carry on
the study and provided the requisite data collected from the following sources.

 Primary data

 Secondary data

Primary Data

The information collected directly without any reference is primary data. In the study
it is mainly through conversation with concerned officers or staff members either
individually or collectively. The data includes:

1. Conducting personal interview with the officers of the company.

2. Individual observation and inferences.

3. From the people who are directly involved with the transaction of the
firm.

Secondary Data

Study has been taken from secondary sources i.e. published annual reports of the
company editing, classifying and tabulation of the financial data. For this purpose
performance data of C&S Electrics for the years 2016-2017 to 2018-2019 has been
used.

Source of data

The data is collected from the following sources.

 Three year annual report of C&S Electrics from 20016-2019

 Interaction with the related finance department.

35
 ANALYSIS AND FINDINGS

Current Asset Liability Ratio

year current assets current liability Ratios
2009-10 155792 73129 2.13
2010-11 166669 74427 2.23
2011-12 155652 84990 1.83
2012-13 192697 116644 1.65
2013-14 235062 143200 1.64
2014-15 276062 208869 1.32
2015-16 310002 243220 1.27
2016-17 453597 376332 1.2
2017-18 580804 397574 1.46
2018-19 771519 502024 1.54

800000
700000
600000
500000 Current asset liabilities ratio Current
Asset
400000
Current asset liabilities ratio Current
300000 Liability

200000 Current Asset Liability Ratio

100000
0
2009- 2010-2011 2012-2013-2014- 2015-2016- 2017-2018-
10 11 12 13 14 15 16 17 18 19

Interpretation –The ideal ratio for the concern is 2:1 i.e. current assets doubled for
the current liabilities considered to be satisfactory. The current ratio of C&S is less
than.Thus it has to maintain its efficient current assets.

36
Net working capital
Net working Capital
year capital employed Ratios
2009-10 82663 90522 0.9131
2010-11 92242 99337 0.93
2011-12 70662 79114 0.8931
2012-13 76053 85026 0.894
2013-14 91862 102462 0.89
2014-15 67193 79459 0.84
2015-16 96410 107986 0.89
2016-17 77265 96894 0.797
2017-18 183230 207051 0.884
2018-19 269495 305907 0.881

350000

300000

250000

200000
Net working capital
150000 Capital employed
Ratios
100000

50000

0
2009- 2010- 2011- 2012- 2013- 2014- 2015- 2016- 2017- 2018-
10 11 12 13 14 15 16 17 18 19

NET WORKING CAPITAL = NET WORKING CAPITAL / CAPITAL EMPLOYED

A higher networking capital ratio indicates efficient utilization of working capital

.Therefore the company should concentrate more on working capital management

37
Debt equity ratio
year Total debt Equity Ratios
2009-10 497 3252 0.15
2010-11 573 3252 0.17
2011-12 386 3252 0.11
2012-13 513 3252 0.15
2013-14 1053 3252 0.32
2014-15 607 3252 0.18
2015-16 587 3252 0.18
2016-17 2566 3252 0.789
2017-18 2034 3252 0.62
2018-19 2265 3252 0.70

3500

3000

2500

2000 Total debt

Equity
1500
Ratios
1000

500

0
2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19

Debt Equity Ratio :

The debt equity ratio has been increasing over the years and it has been maintained
at a level of .62 for the financial year 2017-189

38
Fixed assets ratio
Capital
year Fixed Assets employed Ratios
2009-10 7859 90522 0.07
2010-11 7095 99337 0.08
2011-12 8360 79114 0.07
2012-13 8896 85026 0.1
2013-14 10600 102462 0.1
2014-15 12347 79459 0.15
2015-16 9909 107986 0.09
2016-17 17699 96894 0.18
2017-18 22595 207051 0.11
2018-19 31830 305907 0.10

350000

300000

250000

200000
Fixed assets
150000 Capital employed
`
100000 Ratios

50000

0
2009- 2010- 2011- 2012- 2013- 2014- 2015- 2016- 2017- 2018-
10 11 12 13 14 15 16 17 18 19

Fixed Assets Ratio = Fixed Assets / Capital Employed

Generally financially well managed company will have its fixed assets financed by
long term funds. Therefore , the fixed assets ratio should never be more than !.A
ratio of .67 is considered ideal. The results for C&S is much less at 0.11

39
Gross profit
year Gross profit Net sales Ratios
2009-10 13500 153205 0.088
2010-11 13420 137838 0.097
2011-12 15821 174490 0.07
2012-13 33122 174668 0.189
2013-14 60867 267217 0.227
2014-15 63290 289241 0.218
2015-16 68916 310235 0.2224
2016-17 68478 414816 0.165
2017-18 86483 500342 0.172
2018-19 130330 665323 0.196

700000

600000

500000

400000
Gross profit
300000 Net sales
Ratio
200000

100000

0
2009- 2010- 2011- 2012- 2013- 2014- 2015- 2016- 2017- 2018-
10 11 12 13 14 15 16 17 18 19

Gross Profit = Gross /net sales

Generally the higher gross profit ratio , the better for the performance of the concern
.In C&S , the company has started to increase from the year on year which is a very
good sign for the company.

40
Operating ratio
year Operating cost Net sales Ratios
2009-10 131006 153205 0.85
2010-11 116708 137838 0.84
2011-12 149823 174490 0.85
2012-13 136630 174668 0.78
2013-14 201962 267217 0.75
2014-15 221227 289491 0.76
2015-16 234677 310235 0.76
2016-17 338382 414816 0.81
2017-18 404647 500342 0.8
2018-19 524531 665323 0.79

700000

600000

500000

400000 Operating cost

300000 Net sales

Ratios
200000

100000

0
2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19

Operating Ratio : Operating Cost / Net Sales

Generally the lower the Operating Cost , the better for the concern. The ratio should
be below1 which is satisfactory for the concern.

41
Debtors turnover ratio
Average
year Net credit sales debtors Ratios
2009-10 153205 85001 1.8
2010-11 137838 81237 1.69
2011-12 174490 82829 2.1
2012-13 174668 112238 1.55
2013-14 267217 135322 1.97
2014-15 289491 177301 1.63
2015-16 310235 215291 1.44
2016-17 414816 287414 1.44
2017-18 500342 328201 1.53
2018-19 665323 537364 1.24

700000

600000

500000

400000
Net credit sales
300000 Average debtors
Ratio
200000

100000

0
2009- 2010- 2011- 2012- 2013- 2014- 2015- 2016- 2017- 2018-
10 11 12 13 14 15 16 17 18 19

Debtors Turnover Ratio = Net Credit Sales / Average Debtors

The C&S’s debtor turnover ratio was below 2 .It has been increasing since 2015-16
from 1.44 to 1.53 in 2017-18, the increasing trend Implies the efficient management
of Debtor and credit sales.

42
Creditors turnover ratio
Net credit Average
year purchases creditors Ratios
2009-10 12060 29738 0.4
2010-11 16646 27610 0.6
2011-12 16350 20467 0.79
2012-13 16727 24225 0.81
2013-14 19656 39495 0.49
2014-15 21772 46452 0.48
2015-16 25459 54586 0.4664
2016-17 31900 58078 0.54926
2017-18 60293 88228 0.68
2018-19 65700 103305 0.64

120000

100000

80000

60000 Net credit purchases

Average creditors
40000 Ratio

20000

0
2009- 2010- 2011- 2012- 2013- 2014- 2015- 2016- 2017- 2018-
10 11 12 13 14 15 16 17 18 19

Creditors Turnover Ratio : Net Credit Purchases /Average Creditors

Interpretation : The C&S`s creditors Turn Over Ratio is at 0.68 , it has been on the
increasing trend since past two financial years. The management should try to
reduce this by adopting proper payment policies.

43
Fixed asset turnover ratio
year Net sales Fixed assets Ratios
2009-10 153205 7859 19.49
2010-11 137838 7095 19.42
2011-12 174490 8360 20.87
2012-13 174668 8896 19.63
2013-14 267217 10600 25.2
2014-15 289491 12247 23.63
2015-16 310235 9909 31.3
2016-17 414816 17699 23.43
2017-18 500342 22595 22.14
2018-19 665323 31830 20.90

700000

600000

500000

400000 Net sales

Fixed assets
300000
Ratio
200000

100000

0
2009-10 2010-11 2011-12 2012--13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19

Fixed Assets Turnover Ratio. = Net Sales / Fixed Assets

At high fixed assets turnover ratio indicates better utilization of the firms fixed assets.
A ratio around 5 is considered ideal for the concern .In C&S it is more than 22.This
is a very good sign for the company.

44
Total asset turnover ratio
year Total debt Equity Ratios
2009-10 497 3252 0.15
2010-11 573 3252 0.17
2011-12 386 3252 0.11
2012-13 513 3252 0.15
2013-14 1054 3252 0.32
2014-15 607 3252 0.18
2015-16 587 3252 0.18
2016-17 2566 3252 0.78
2017-18 2034 3252 0.62
2018-19 2265 3252 0.70

3500

3000

2500

2000
Total debt
1500 Equity
Ratio
1000

500

0
2009- 2010- 2011- 2012- 2013- 2014- 2015- 2016- 2017- 2018-
10 11 12 13 14 15 16 17 18 19

Total Assets Turnover Ratio : Net Sales / Total Assets

The Total Assets turnover ratio of the C&S is below 1 . This shows greater ability of
the firm to utilize the investment in the business

45
 FINDINGS OF THE STUDY

1. The net working capital was Rs 91021 lac’s in 2009-2010. This decreased to
Rs 82663 lac’s in the year 2010-2011. In the year 2015-2016 the net working
capital is Rs 67193 lac’s.

2. The current ratio of C&S electric was 2.41 in the year 2009-2010. There was
decrease in the ratio up to the year 2016-2017. The ratio is decreasing year
by year. But the C&S electric is maintaining current ratio more than the
standard norms of 2.

3. The organization is able to maintain both current ratio and quick ratio above
the standard norms. i.e. the ideal current ratio for the concern is 2:1 and the
quick ratio is 1:1 but the cash ratio is fluctuating.

4. The quick ratio of the organization is in decreasing trend year by year.

5. Investment in current assets has been increasing from Rs 155302 lacs in

2009-2010 to Rs 310002 in 2016-2017.

6. The inventory turnover ratio of C&S electric is fluctuating i.e., showing

decreasing trend during the years 2009-2010 to 2012-2013. But there
onwards it has slowly increased till the financial year.

7. The debtors turnover ratio has decreased from the year 2010-2011 to 2011-
2012. It was 2.10 in the year 2012-2013. There was decrease in

debtorsturnover ratio till the financial year.

46
 RECOMMENDATIONS

1. The current ratio of C&S electric is decreasing year by year. In the year 2009-
2010 it was 2.41 and during the year 2017-2018 it has gone down to 1.2 later
in the next financial year 2018-2019 it has gone up to 1.46, so the company
should concentrate effectively on the management of Current Assets and
Current Liabilities.

2. The Net Working Capital of C&S electric is good for almost in range for each
and every year. It is always in the ideal ratio for every organization.

3. The C&S electric is using the moving average method in valuation of stock.

4. The debtors constitute nearly 50% of the Total Current Assets. For the
Company it is difficult to manage the accounts receivables. The company
should collect debts as quickly as possible.

5. The company has to exercise cost of control and cost of reduction techniques
to increase its profitability.

6. The debtors turn over ratio in 2014-2015 is 1.97. the ratio has increased than
previous years except for 2015-2016, which had 2.10. the decreasing ratio
shows the inefficient management. They should concentrate more on the
collection of the debts.

7. The return on investment ratio of the C&S electric is 59.40 in 2014-2015. It

has increased when compared to previous year’s ratios. It is beneficial to
investors who are interested to know the profits earned by the company.

8. The investment in loans and advances should be minimized to possible

extent.

9. Effective internal control system should be established. So that it can have

control over all aspects of the company.

47
 CONCLUSION

The company’s overall position is at a very good position. The company achieves
sufficient profit in past four years. The long-term solvency position of the company is
very good. The company maintains low liquidity to achieve the high profitability. The
company distributes dividends every year to its share holders. The profit of the
company decreased in the last year due to maintaining the comparatively high
liquidity. The net working capital of the company is maximum in the last year shows
the maximum liquidity

48
 LIMITATIONS AND SCOPE OF THE STUDY

LIMITATIONS OF STUDY

1. The study is confined to a period of last 4 years.

2. As most of the data is from the secondary sources, hence the accuracy is
limited.

SCOPE OF THE STUDY:

The scope and period of the study is restricted to the following.

1. The scope is limited to the operation in the C&S Electric.

2. The information obtained from the primary and secondary data was limited to
the C&S Electric.

3. The key information performance indicated is taken from 2016-2019.

4. The profit and loss, the balance sheet was on the last 4 years.

5. Comparison analysis was done in comparison of the sister units.

49
 BIBLOGRAPHY

 www.c&selectrics.ac.in

 http://www.studyfinance.com/lessons/workcap

 www.bizsearchpapers.com

 http://www.antiessays.com/free-essays/9076.html

 https://cselectric.co.in

 https://www.tofler.in

 Financial Management –I M Pandey.

 Accounting for Managers-Jelsy Joseph Kuppapally.

 Financial statement analysis - Gokul Sinha.

50
 ANNEXURE

FINANCIAL QUESTIONNAIRE

CHECK THE BOX NEXT TO THE DOCUMENTS YOU ARE SENDING TO NED:

COPY OF YOUR ORGANIZATION'S MOST RECENT AUDIT

IF NO AUDIT IS AVAILABLE, SUBMIT THE "BALANCE SHEET" AND "REVENUE AND EXPENSE
STATEMENT" FOR THE MOST RECENT FISCAL YEAR

IF YOU PLAN TO PROVIDE NED FUNDS TO ANOTHER ORGANIZATION (SUBRECIPIENT) AS PART OF THIS
PROJECT:

COPY OF YOUR ORGANIZATION’S SUBGRANT AGREEMENT (IF YOU HAVE ONE)

COPY OF YOUR ORGANIZATION’S PROCEDURES TO MONITOR SUBRECIPIENTS

SUBRECIPIENT QUESTIONNAIRE COMPLETED BY ANY SUBRECIPIENT EXPECTED TO RECEIVE $10,000 OR MORE

FROM YOUR NED GRANT

Important:THE FINANCIAL QUESTIONNAIRE MUST BE CERTIFIED AND

DATED BY AN AUTHORIZED PERSON WHO HAS EITHER COMPLETED OR
REVIEWED THE QUESTIONNAIRE.

By checking this box, I agree that I have read and understood the directions and
completed all of the applicable information on this form. I certify that all of the
information on this form is accurate and complete to the best of my knowledge.
NAME:

TITLE:

ORGANIZATION:

DATE:

51
 INTERNAL CONTROLS

1. LIST ALL INDIVIDUALS WHO ARE RESPONSIBLE FOR ACCOUNTING, INCLUDING BUDGETING
AND BANKING.

Name Position Title Staff, Consultant, or Volunteer?

2. IDENTIFY THE INDIVIDUAL(S) RESPONSIBLE FOR THE FOLLOWING TASKS:

Task Name Position Title

Managing cash

Maintaining bank accounts

Approving expenses

Keeping all invoices and

expense documentation

Signing checks

Maintaining accounting records

Reconciling bank statements to

the accounting records

Preparing financial reports

52
 3. ARE ANY MEMBERS OF THE STAFF OR BOARD RELATED? Yes No

If yes, identify and state relationship (spouse, child, parent, sibling, cousin, etc.)

Name Name of relative Relationship

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 EMPLOYMENT LETTER OR CONTRACT WHICH INCLUDES THE EMPLOYEE’S

SALARY?

Yes No

6. DO YOU HAVE A WRITTEN PROCUREMENT POLICY? Yes No

7. DO YOU KEEP INVENTORY RECORDS FOR EQUIPMENT? Yes No

8. IS YOUR ORGANIZATION FAMILIAR WITH OMB CIRCULAR A-122? Yes

No

THE ACCOUNTING SYSTEM

9. DOES YOUR ORGANIZATION HAVE WRITTEN ACCOUNTING POLICIES AND PROCEDURES?

Yes:No:

10. COMPLETE THE FOLLOWING INFORMATION CONCERNING THE PERSON WHO WILL
MAINTAIN YOUR ACCOUNTING
RECORDS:

a. HOW MANY YEARS OF EXPERIENCE DOES THIS PERSON HAVE?

b. HOW MANY YEARS HAS THIS PERSON BEEN WITH YOUR ORGANIZATION?

c. DOES THIS PERSON KNOW HOW TO USE EXCEL? Yes No

d. DOES THIS PERSON KNOW HOW TO USE A COMPUTERIZED ACCOUNTING SYSTEM? Yes No

53
 e. DOES THIS PERSON HAVE A DEGREE IN ACCOUNTING OR FINANCE? Yes No

f. CAN THIS PERSON COMMUNICATE IN ENGLISH? Yes No (State preferred languages below)

11. BRIEFLY DESCRIBE YOUR ORGANIZATION'S ACCOUNTING SYSTEM INCLUDING: A) ANY

MANUAL LEDGERS USED TO RECORD TRANSACTIONS (GENERAL LEDGER, CASH
DISBURSEMENTS LEDGER, ETC.); B) ANY COMPUTERIZED ACCOUNTING SYSTEM
USED (PLEASE INDICATE THE NAME OF THE ACCOUNTING PROGRAM); AND C) HOW
TRANSACTIONS ARE SUMMARIZED IN YOUR FINANCIAL REPORTS.

12. DOES YOUR ACCOUNTING SYSTEM HAVE THE CAPACITY TO SEPARATE ALL RECEIPTS AND
PAYMENTS FOR A NED GRANT FROM THE RECEIPTS AND PAYMENTS FOR
ACTIVITIES FUNDED BY NON-NED SOURCES?

YesNo

54