A Study On Financial Performance Analysis in Preethi Engineering Enterprises, Coimbatore

A STUDY ON FINANCIAL PERFORMANCE
ANALYSIS IN PREETHI ENGINEERING

ENTERPRISES, COIMBATORE
PROJECT REPORT
Submitted by
V.KALAISELVI
Register No: 731511631024
In Partial Fulfillment for the Award of the Degree

Of
MASTER OF BUSINESS ADMINISTRATION
In
DEPARTMENT OF BUSINESS ADMINISTRATION
KSR COLLEGE OF ENGINEERING
TIRUCHENGODE - 637215.
JUNE
2013
DEPARTMENT OF BUSINESS ADMINISTRATION

PROJECT WORK
JUNE-2013
This is to certify that the project entitled
A Study on Financial Performance Analysis In Preethi Engineering Enterprises, coimbatore
Is the bonafide record of project work done by
V.KALAI SELVI
Register No: 731511631024
Of
MASTER OF BUSINESS ADMINISTRATION
During the year2013
__________________
____________________
Project Guide
Head of the Department
Submitted for the project viva-voce examination held on ...
__________________
____________________
Internal Examiner
External Examiner
CERTIFICATES
DECLARATION
DECLARATION
I affirm that the project work titled FINANCIAL PERFORMANCE ANALYSIS IN

PREETHI ENGINEERING ENTERPRISES, COIMBATORE being submitted in partial
fulfillment for award of MASTER OF BUSINESS ADMINISTRATION is the original
work carried out by me. It has not formed the part of any other project work submitted for
award of any Degree or Diploma, either in this or any other university.
Signature of the Candidate

V.KALAISELVI
Reg. No: 731511631024
I certify that the declaration made above by the candidate is true.
Signature of the Guide

MR.K. JOTHILINGAM
ASSISTANT PROFESSOR, (SR)
ACKNOWLEDGEMENT
ACKNOWLEDGEMENT
I would like to place my sincere thanks and gratitude to our chairman of KSR
COLLEGE OF ENGINEERING, Lion Dr.K.S.RANGASAMY,
MJF,for
providing
me the needed facilities to do my project work.

I express my sincere thanks to our principal Dr.N.RENGARAJAN, B.Sc., B.Tech.,
ME., Ph.D., andVice Principal Dr.K.KALIANNAN, BE, M.Tech. MS., MBA.
M.Phil., Ph.D., for their support given to me in carrying out the project work.
I like to express my thanks to our director Dr.K.MOORTHY,B.E (Hons), M.E., Ph.D., for
the encouragement given during the project work.
I like to express my sincere thanks to our Head of the Department of Business
Administration Dr. S.M.UVANESWARAN MBA., M.Com.M.Phil. (EDP), M.Phil.
(Commerce), PGDCA., Ph.D. for his support during the project work.
I
express
my
sincere
gratitude
to
my
guide
MR.K.JOTHILINGAM.,
M.COM.,MBA., M.phil., B.Ed.,[P.hd] Assistant Professor (SR), of department of

Business Administration, for her valuable guidance and suggestions during each stage
of this project work.
I express my sincere gratitude to my guide MR.K. KARTHICK, MBA for his
valuable guidance and suggestions during each stage of this project work.
Last but not least, I express my sincere thanks to my beloved teachers, friends and
family members who supported me in this endeavor.
(V.KALAISELVI)
731511631024
CONTENTS
Chapter No
Particulars
Page No
LIST OF TABLES
LIST OF CHARTS
ABSTRACT
INTRODUCTION
1.1 Introduction about the study
1.2 Introduction about the Industry
1.3 Introduction about the company
10
Main theme of the Project
15
2.1 Review of literature
15
2.2 Problem statement
18
2.3 Objectives of the study
19
2.4 Scope of the study
20
2.5 Research Methodology
21
2.6 Limitations of the study
22
2.7 Chapter scheme
23
Data Analysis and Interpretation
24
Findings, Suggestions & Conclusion
66
4.1 Findings
66
4.2 Suggestions
67
4.3 Conclusion
68
REFERENCES
69
LIST OF TABLE
Table No
Particulars
Page No
3:1:1
Current Ratio
28
3:1:2
Quick ratio
30
3:1:3
Proprietary ratio
32
3:1:4
Debt-equity ratio
34
3:1:5
Fixed asset turn over ratio
36
3:1:6
Average collection method
38
3:1:7
Debtors collection period
40
3:1:8
Creditors turn over ration
42
3:1:9
Absolute turn over ratio
44
3:2:1
Comparative Balance Sheet as on 2006 2007
46
3:2:2
Comparative Balance sheet as on 2007 2008
48
3:2:3
50
3:2:4
52
3:2:5
54
3:3:1
56
Common size balance sheet as on 2006-2007
3:3:2
58
3:3:3
60
3:3:4
62
3:3:5
64
LIST OF CHART
Chart No
3:1:1
Particulars
Current Ratio
Page No
29
3:1:2
3:1:3
3:1:4
3:1:5
3:1:6
3:1:7
3:1:8
3:1:9
Quick Ratio
Proprietary ratio
Debt-equity ratio
Fixed asset turnover ratio
Average collection method
Debtors collection period
Creditors turn over ration
Absolute turnover ratio
31
33
35
37
39
41
43
45
CHAPTER- 1
1. INTRODUCTION
1.1. INTRODUCTION ABOUT THE STUDY:

In our present day economy, finance is the provision of money at the time when it is
required. Every enterprise whenever big, medium or small needs finance to carry on its
operations and to achieve its target. In fact, finance is so indispensable today that it is rightly
said that, it is the life hood of an enterprise without adequate finance, no enterprise can
possible accomplish.
Finance guides and regulates investments decisions may be pertaining to capital
expenditure and revenue expenditure. To get the best out of the available funds is the major
task of financial management. The finance manager should perform his task most effectively.
Finance is the lifeblood of business. It is rightly termed as the science of money. We
hold finance for the production of goods and services as their distribution. The term business
finance indicates an activity or a process, which is concerned with acquisition of funds,
allocation of funds and finance controls.
The finance requirements of a company can be broadly classified into a long term,
medium term and short-term finance. Long term finance is needed for buying machinery and
equipment or for the provision of land, factory building and other fixed assets. Medium term
finance is needed for small tools, implements and major repairs. Short term finance is
required for new months for the purchase of raw materials for processing and meeting
expenses like wages, salaries etc. in order words to meet its working capital requirements.
Accounting and other business functions. The wastage of funds can be avoided. The
finance functions is not just a service function through it is generally viewed as one of the
most important decisions on the basic of availability of funds. In the finance function bended
with productions marketing, personal.
IMPORTANCE OF FINANCE
Finance is regarding as the lifeblood of a business enterprise. This is because in the
modern money-oriented economy. Finance is one of the basic foundation of all the sources
for being employed in manufacturing and merchandising activities. It has rightly been said
that business needs money to make more money. However, it is also true that money begets
more money only when it is properly managed. Hence, efficient management of every
business enterprise is closely linked with efficient management of its finances.
FINANCIAL STATEMENT:
A financial statement is an organized collection of data according to logical and
consistent accounting procedures. Its purpose is convey an understanding of some financial
aspects of a business firm. It may show position at a moment in time, as in the case of a
balance sheet or may reveal a series of activities over a given period of time, as in the case of
income statements. Thus the term financial statement generally refers to the two statements.
The position statement (or) the balance sheet.
The income statement (or) the profit & loss account.
FINANCIAL PERFORMANCE
INTRODUCTION
Analysis is the process of critically examining in detail 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 ton
have a better understanding of the information with the help of different techniques of tools
for the purpose. Interpretation means explaining the meaning and significance of the data so
simplified. However both analysis and interpretation are interlinked.
Financial analysis is the process of identifying the financial strengths and weakness of
the firm by properly establishing relationship between the items of the balance sheet and the
profit and loss account analysis and interpretation of financial statements refers to such a
treatment of data found in the financial statements so as to provide a full diagnosis of the
profitability and financial position of an enterprise.
Finance is a pre-requisite for mobilizing real resources to organize production and
marketing. Finance is rightly described as the life blood of any industry. Thus financial
analysis of any organization becomes very important.
Financial analysis is the starting point for making plans before using any sophisticated
forecasting and budgetary procedures. It is their overall responsibility to see that the
resources of enterprise are used more efficiently and effectively.
According to John .N.MYER, the balance sheet reflect the assets, liabilities and
capital as on a certain data and the income statement should the results of operation during a
certain period. Financial analysis is helpful in assessing the financial position and
profitability of a concern. This is done through comparison by ratios for the same concern.
This is done through comparison by ratios for the same concern over a period of years. For
one concern against of financial statements helps in assessing.
The present and future earning capacity or profitability of the concern.

The operation efficiency of the concern a sa whole.
The financial stability of a business concern.
Then real meaning and significance of financial data.
The long term liquidity of its funds etc.,
RATIO ANALYSIS
Ratio analysis is powerful tool of financial analysis. A ratio is a statistical yard stick
that provides a measures of relationship between two accounting figures. The term ratio
refers to a simple arithmetic expression of one number to another.
DEFINITION
According to Kennedy, ratio may be defined as the indicated quotient of two
mathematical expressions and as the relationship between two or more things.
According to wixon, kell and Bedford, a ratio is defined as an expression of the
quantitative relationship between two numbers.
FINANCIAL STATEMENT
There are number ratios, which can be calculated from the information given in the
profit and loss account and balance sheet. The selection of particular ratio dependents upon
the purpose of firm which it is calculated by the analyst.
RATIO ANALYSIS INVOLVES THE FOLLOWING STEPS:

Selection of relevant data from the financial statement depending upon the
analysis.
Calculation of calculated ratio with the standard ratio or with the past ratio of
the same Concern or projected ratio.
Interpretation based on comparison.
IMPORTANCE OF RATIOS
Importance of ratio analysis lies in the fact that it present facts on a comparative basic
and enables the sawing of inferences regarding the performance off a firm.
Difficulty in comparison
Impact of inflation
Conceptual diversity
TO TEST THE ASSOCIATION OF OVERHEADS AND TURNOVER:

To the association of overheads and turnover with the help of correlation table, which
shows both are in positive manner. The result of analyzing the overheads and turnover with
Karl Pearsons correlation model is given in the table.
BALANCE SHEET:
4
Balance sheet has been defined by kholer as a statement of financial position and an
economic unity disclosing as at a given movement of time its assets, at cost depreciated cost,
on their incited value; its liabilities; and its ownership equities usually, the balance sheet is
prospered by a firm to present a summary of financial position at the end of financial year. It
balances the assets of a firm against its financing.
CURRENT ASSESTS:
Current assets which are changed to liquid assets of the firm are convertible into cash
within an accounting period. Cash in hand, cash at bank and other short term investments
constitute these assets.
FIXED ASSESTS:
Assets acquired for utilization and not for resale are termed as fixed or permanent
assets, are those assets, which are intended to be held for a long period.
CURRENT LIABILITIES:
The current liabilities are those liabilities, which are expected to be discharged within
a period of one year.
LIABILITIES:
A liability is a amount which a business is legally bound to pay. It is a claim by an
outsider on the assets of a business.
RATIOS:
Ratio analysis is one of the techniques of financial analysis where ratio is used a sa
yardstick for evaluating for financial conditions and performance of a firm.
1.2. INTRODUCTION ABOUT THE INDUSTRY:
ABOUT THE INDUSTRY

HISTORY
The type of physics that I will be presenting is a branch of Fluid Mechanics. Fluid mechanics
studies the physics of gases and liquids.
Hydraulics is defined as:
"a branch of science that deals with practical applications of liquid in motion."
The science started over thousands of years ago with Aristotle (384-322 B.C.) and
Archimedes (287-212 B.C.).
Many European scientists also contributed to hydraulics, including da Vinci, Mariotte and
Boyle.
The scientist who discovered the main principle I will be talking about is Pascal.
A French scientist who studied math and physics. His work included studying atmospheric
pressure, conic sections and the principles of hydrostatics.
After Pascal there is Bernoilli, Franklin and Froud, who all also contributed to the science of
hydraulics.
ECONOMIC IMPACTS
Hydraulic fracturing has been seen as one of the key methods of extracting unconventional
oil and gas resources. According to the International Energy Agency the remaining
technically recoverable resources of shale gas are estimated to amount to 208 trillion cubic
meters (7.3 quadrillion cubic feet), tight gas to 76 trillion cubic meters (2.7 quadrillion cubic
feet), and coalbed methane to 47 trillion cubic meters (1.7 quadrillion cubic feet).
Although there are also other methods to extract these resources, such as conventional
drilling or horizontal drilling, hydraulic fracturing is one of the key methods making their
extraction technically viable.
Hydraulic fracturing will account for nearly 70% of natural gas development in the future.
Hydraulic fracturing and horizontal drilling apply the latest technologies and make it
6
commercially viable to recover shale gas and oil. In the United States, 45% of domestic
natural gas production and 17% of oil production would be lost within 5 years without usage
of hydraulic fracturing.
Development of shale resources supported 600,000 jobs in 2010. Affordable, domestic
natural gas is essential to rejuvenating the chemical, manufacturing, and steel industries.
The American Chemistry Council determined that a 25% increase in the supply of ethane (a
liquid derived from shale gas) could add over 400,000 jobs across the economy, provide over
$4.4 billion annually in federal, state, and local tax revenue, and spur $16.2 billion in capital
investment
by
the
chemical
industry.
They also note that the relatively low price of ethane would give U.S. manufacturers an
essential advantage over many global competitors. Similarly, the National Association of
Manufacturers estimated that high recovery of shale gas and lower natural gas prices will
help U.S. manufacturers employ 1,000,000 workers by 2025 while lower feedstock and
energy costs could help them reduce natural gas expenditures by as much as 11.6 billion by
2025. America's Natural Gas Association (ANGA) estimates that lower gas prices will add an
additional $926 of disposable household income annually between 2012 and 2015, and that
the amount could increase to $2,000 by 2035.
INDIA HYDRAULIC INDUSTRIES

7
Established in the year 1992, India Hydraulic Industries is a leading manufacturer and
exporter of durable range of hose assemblies and allied products. We offer hose assemblies,
rubber hose assemblies, Teflon hose assemblies, hydraulic hose assemblies, rubber hoses,
hydraulic rubber hoses, hydraulic hoses, industrial rubber hoses, hose fittings, hydraulic hose
fittings and stainless steel hose fittings. Additionally we provide stainless steel corrugated
flexible metal hose, jacketed hose and hose recommendation. All our products are known for
being corrosion resistant and heat resistant.
Our products are manufactured in our advanced manufacturing facility with the supervision
of experienced engineers and technicians. We can also customize our range based on the
exact specifications provided by our clients. Our products are packed in various products
specific packaging material in order to ensure the safety of our products while in transit. We
also offer our products in a range of sizes and dimensions so that these can be used for varied
applications. With the help of reliable product range we have been able to satisfy the
requirements of our clients all over India.
MARKETOVERVIEW
Demand from the Construction Industry to Propel the `19.72 Billion Indian Hydraulic
Components Market toward `50.43 Billion in 2017.
Indias Emergence as a Manufacturing Hub Attracts International Participants to its
Hydraulics Components Market
The rapid boom in Indian infrastructure industry, along with the more moderate growth of the
manufacturing sector, has stabilized the demand for hydraulic components in India. The
Government of Indias planned investment of `45 trillion in infrastructure in the 12th five
year plan (2012-2017) will be a major boost to construction equipment and thereby, hydraulic
components. Mirroring the twofold increase of sales in the construction equipment market by
2015, the market for hydraulic components in construction and bulk material handling will
also double during that period.
The increased investments and expansions in core sectors such as infrastructure, steel,
cement, mining, as well as oil and gas is driving the market for ancillary products such as
hydraulic components. Emphasis on the Indian power sector is also expected to give a leg up
to the hydraulic component market, says the analyst of this research. With rapid capacity
additions and expansions, the market is anticipated to grow by more than 15 percent over the
next five years.
Global and Chinese Hydraulic Industry Report, 2011-2012
Benefiting from the large-scale investment plan launched after the financial crisis, Chinas
hydraulic industry saw rapid development in 2010 and 2011. In 2011, the output value of the
hydraulic industry reached RMB43.6 billion, up 24.2% year on year. At present, China ranks
second in terms of hydraulic industry sales in the world, only second to the United States.
Since 2012, Chinese economy has undertaken the downward pressure, and the demand in
engineering machinery and other industries has been sluggish, which has led to the decline in
the growth rate of the hydraulic industry.
The total amount of Chinas hydraulic industry is in the global forefront, but some high-end
hydraulic parts are still imported in large scale. In 2011, the import value of Chinas hydraulic
industry reached USD3.6 billion, up 26% year on year. With the expansion of Chinese
hydraulic market, foreign hydraulic manufacturers have increased their investment in China;
in recent two years, Bosch-Rexroth, Parker-Hannifin, Kawasaki and other enterprises have
expanded their plants in China. On the other hand, major Chinese main engine enterprises
have also invested in the hydraulic industry in order to control the supply of key parts, so the
competition in Chinese hydraulic market will become more intense.
1.3. INTRODUCTION ABOUT THE COMPANY

COMPANY PROFILE
Set up 1983, with Allison transmission division of general motors, USA as technical
collaborators. The power product unit of PREETHI ENGINEERING ENTERPRISE
manufacturing hydraulic transmission. The products of this division are used in heavy duty
vehicles like dumpers, loaders, dozers, and mobile cranes that find application in mainly
infrastructure projects and in the mining industry.
The division is equipped with a range of facilities from sourcing/ manufacturing
critical components to assembly and testing of fully built transmission and their sub
assemblies having been certified QS9000 from underwriters laboratories, the plant complies
to quality standards, with capacity of 1500 units per annum and in-house capabilities of
produce a wide range of world-class precision- machined products, this division has
successfully manufacturing and put into operation more than 10000 automatic/ power shift
transmission ranging from 100HP to 600HP.
PREETHI ENGINEERING ENTERPRISE is committed to core values of quality,
safety, environmental care and holistic customer orientation.
The story of evolution revolves around the wheel, the single important invention that
propelled man kinds towards the Bronze Age and beyond.
The wheel itself did not evolve too much since then there was no need for it to however, it
became the pivotal point for most machines thereafter.
At PREETHI, was approach our business in the same way. While our core values have not
changed. We apply them to our innovations on a regular basis and our challenge is to perfect
them in the shortest possible time. We move forward, never resting in search of the next best
thing for our customers. This has in turn made us the chosen supplier for the worlds best
hydraulic manufactures.
10
BOARD OF DIRECTORS:
Mr. M.M.S. Khosla, -- Chairman
Mr. A. Sankaranarayanan
Mr. Naresh Chandra
Mr. Amal Ganguli
Mr. Haigreve Khaitan
Mr. J. M. Trivedi
Mr. Steven Enderby
Mr. Prabir Talati
Mr. Prabhakar Kadapa -- CEO & Managing Director
The story of evolution revolves around the wheel, the single important invention that
propelled mankind towards the Bronze Age and beyond. The wheel itself did not evolve too
much since then there was no need for it to. However, it became the pivotal point for most
machines thereafter.
At PREETHI, we approach our business in the same way. While our core values have not
changed, we apply them to our innovations on a regular basis. And our challenge is to perfect
them in the shortest possible time. We move forward, never resting, in search of the next best
thing for our customer. This has, in turn, made us the chosen supplier for the worlds best
hydraulic manufacturers.
11
ABOUT THE COMPANY

Preethi Private Limited was established in 1985 with strong vision to provide Sheet Metal
Solutions to the industry. Over the years, company has grown at a decent rate and today has
formidable presence in Indian & International markets. The products offered are of
International Quality Standards and comply with DIN & CE Norms. The organization has
been awarded ISO 9001:2000 certification due to its outstanding quality management
systems.
All products are backed up with continuous development and R&D efforts to meet customer
requirements.
Founder Mr. M.M.S. Khosla, in a business family manufacturing electrical accessories,
decided to start his own venture in early 1960s after completing his M.Tech. Started Preethi
in covai with a small ambition to achieve some distinction in next decade in the line of the
Hydraulic Press Manufacturing. With limited funds and resources, struggled initially because
of the location and lack of the vendors in this part of the country. In those days there was
shortage of confidence in this part to entrust with huge orders by the corporate groups. With
these limitations, small objectives were met on yearly basis to keep the momentum. After the
initial hiccups, the flow of the business and growth was evident from the fact; major business
houses started showing confidence by giving orders for big Hydraulic Presses.
Preethi manufactured number (80nos) of the Hydraulic Presses for different applications
such as trimming, coining, deep draw, forming, blanking, forging, molding, scrap bailing,
power compacting, die hobbling re-railing equipment, cylinder manufacturing, largest
hydraulic press has been 500ton with table size of 1500 mm x 1000 mm with daylight of
1000 mm.
In an effort to break away from the customized solutions in those days, Preethi had an
opportunity in 1995 to have a technical collaboration with M/s Darley b.v Holland to
manufacture the latest CNC hydraulic press brakes and NC hydraulic Shearing machines.
Preethi had difficult phase before the Indian Government opened the Imports in mid 90s.
Company had tough competition from the machine Giant like GODREJ who had similar
collaboration with LVD. But with the dedication of the committed team, Preethi always
enjoyed a market share of more than 40% in comparison to the next competitor for almost 10
years, till latter decided to close manufacturing activities. After the expiry of the
12
collaboration, Preethi used the opportunity to enter the market, which was a restriction till the
collaboration existed.
In India we have close to 180 machines in every quality fabrication unit including Larsen and
Tourbo, Telco, Kirloskar, Texmaco, Titagarh, Cebbco, Hyva, Kirby, Zamil, Jbm, Neel Metal,
Control, Caryaire, Zeco Aircon, Claas, Jindal Architecture, Pennar. We have been giving the
employment option to the local skilled and semi skilled options with opportunity to excel.
Many opportunities for the foreign training have been given to the locals. We have been
committed to the local society and community with obligations to education and general
upliftment.
In 2008-2009, company has achieved a business turnover of 1 Corers.
We have supported and assisted in the technical up gradation of the local vendors in the last
15 years. From a humble beginning, today Preethi under a leadership of Mr. M.M.S Khosla.
He has been guiding force and leader to the complete team of Preethi since its inception.
VISION
We shall create a value proposition for our customers, share holders, business partners and
employees through becoming first choice supplier in Power train and Precision Engineered
products & services.
MISSION
We aim to grow with profitability and continuously improve product quality and services
through employee involvement, adoption of best-in-class manufacturing systems and
processes. By forging mutually beneficial relationship with all stake holders we want to
achieve
Customer confidence
Benchmark level of Return on Invest
Growth in revenue in line with our long term strategy
13
RESEARCH & DEVELOPMENT

There is always a willingness and strong desire of the company to try different combinations
in the machines manufactured to match global and client requirements.
A team of 2 experienced engineers along with departmental professionals work on the
different areas of the Research and Development under the strong leadership of the Managing
Director.
In last five years, the team has given excellent results in the form of
Material handling solution on the shearing machines
Specially designed machines for Lighting poles and High mast.
Special Tooling solutions for the lighting fittings
Shearing machines of 1300 mm lengths
QUALITY POLICY
The complete effort is to deliver the best technological Sheet Metal solutions at par with the
International level. The company offers the machines with the latest components from the
European sources. The in house fabricated frames are machined with single set up boring
machines with stringent accuracies parameters. All the further parts of machines are done
with the best machining centers.
All the basic parameters and assembly levels are maintained to serve the client with the best
quality machine so that he is able to achieve the desired accuracies in his end products.
ENVIRONMENT & SAFTEY
We at Preethi continuously strive to protect atmosphere around us, by recycling the water,
ensuring increased green plants in the campus and using the solar system for the heating.
We continue to promote the local events related to the improvement of the healthy
environment all around.
14
CHAPTER- 2
2. MAIN THEME OF THE PROJECT
2.1 REVIEW LITERATURE:
In this chapter some of the earlier work on ratio analysis considered as a part of this
research work. Brief reviews of all those works are given below i.e., research name, his name
of university, his objectives methodology and his major finding and suggestions are referred.
P.V vasudeevan, in the research main objective is to analysis the financial
performance of the company, to study the funds the flow patterns, to judge the solvency of
the company. And to study the trends in financial performance analysis of the company. The
research adopted financial statement analysis, ratio analysis and comparative balance sheet
analysis.
The company need to reduce the funds locked up in inventory (application funds).
Then source for such finds awaited from the funds is constituted by financial performance
facilities availed from commercial banks.
The role of faster cash accuracy in the efficient management of financial performance
has been illustrated by the performance during 1986-86 crushing reasons. When deposits a
higher levels of inventory, the has still been as appreciable reduction in the interest cost.
K.Srinivas the researchers main objective are to critically examine and high lights the
financial performance of the company for the period 1981-82 to 1985-86 to study the
liquidity and profitability of the company and to study.
To the expected level. It needs to be improved by effective utilization and control of
current assets.
Dr.Sukumal it was found trident is the highest profit earning concern. It has sufficient
working capital all the year, their decrease in refer and surplus is mainly due to issue to bonus
shared.
This above the study was prepared Dr.Sumumal the management account I.C.WA.I in
(November 1995) vol, 30, number11, page 826.
15
Dr.Debasish banerjee and manish kumar from 1985-86 to 1989-90. It was observed
that the company has taken funds for financing performance analysis in all the years.
These are no consistent relation between the growth of sales and working capital. The
capital is efficient in working capital management.
Another study Dr.Debasish banerjee, financial performance analysis of Grasim
industries ltd. The management the cost volume profit analysis.
The researcher adopted financial statement analysis, break even analysis, trend
analysis, common-size balance sheet analysis, comparative balance sheet analysis.
For better earnings, the occupancy ration must be increased by rationalizations of
routes revision of time and efficient fleet utilization.
Dr.P.Indrasana reddy and K.Somaswar ratio. This study was based on the data and
information obtained from the annual report of the Hindustan company ltd 1989-90 to 199394. This study reveals that the liquidity position of HCL is satisfactory as if current ration that
the quick ratio remained above the standard norms throughout period of study.
The proportion of inventory to current assets. Increased and to after reserve trends is
observed. The financial performance analysis is not accounts of institute of cost and works
accounts of India may 1997, vol27, number5, page336.
Mr.M.P.Chakravarthy and A.K.Das this information is collected from journal on
accounting and financial research development association. it has been found that ECL
operate on a negative working capital and that the management should be careful to keep on
the positive trends otherwise it may sleep down again into trap to negative working capital,
which may referred the further progress of the company.
Mr.wasswa hannington on of the main objectives of this project study, to conduct risk
return analysis are financial performance position, to assess the financial liquidity position of
the company, to determine this structure and utilization of working capital and its various
components. And to assess the implementation of the London committee norms with regard
to working capital and also by doing analysis the financial performance.
16
Capital and cash management schedules of charges in working capital include funds
flow statement and fund flow cycle. And financial performance like trade credit working
capital advances by commercial bank, short-term financial institution.
Accounting to sec.58(a)of the component act 1956 a company can accept public
deposits amounting to 25 percent of it net worth which is the case of vantage leather (India)
ltd., amount to rs.1 core. So it is strongly recommended that the company explore this type of
financing as it does not request attaching any of the assets of the company as security.
Since over 90 percent of the companys are shipped to one single buyer in Germany,
the company can consider the option of making this major client and equity holders in the
company so that the problem of lack of funds can be made lights.
Vantage being exports with a international record, it can consider borrowing from
foreign commercial banks. Also instead of borrowing from banks with in India only.
Mr. Suresh the researchs main objectives of his project study is to determine the
amount of financial performance employed by the company and analysis the working capital
management by the company for specified period of four years (1985-86) to assess the
implementation of tendon committee norms in regard to working capital management by the
company. The company has not been able to maintain the desired stock level due to liquidity
problems which in term has affected the capacity utilization of machine and loss quality
production.
17
2.2 STATEMENT OF THE PROBLEM:

For every organization it is essential to assess the operating performance and financial
position of the firm. Because of improper recording of day to day transactions it is very
difficult to assess the overall financial position of the company. It guides the investigator to
understand the financial performance and workings of the company and also the quantitative
and qualitative performance of the company. The company is not able to meet its long term
publications because of its operational inefficiency.
18
2.3 OBJECTIVES OF THE STUDY

To find financial position by using balance sheet.
To know the liquidity position of the concern by considering the position of
current asset and current liabilities
To know the long term solvency position of the company.
2.4 SCOPE OF THE STUDY

19
The scope of this study is to provide an insight into concept of financial

performance analysis and illustrated it by actually financial performance. The
study also provides insight of the customer preference and its market share.
In our present day economics, finance is defined as the provision of money at the
when it is required every industry whether big medium or small needs finance to
carry on its operations and to achieve is target.
Finance is therefore viewed as the most important area in every industry therefore
the management requires giving special attention on this the conventional
approach to finance function in business high light the procurement of funds on the
most economic and favorable terms to concern.
The basic for financial planning and analysis financial information, financial need
to predict compare and evaluate the forms earning ability.
It contains summarized information of the firms financial affairs, organized
systematically.
2.5 RESEARCH METHODOLOGY

For every comprehensive research a proper research methodology is indispensable it has to
be properly conceived.
20
RESEARCH DESIGN
The research design refers to preplanning of what a researcher dose in his study. The design
adopted in the study comes under analytical research .since the data collected from the
financial statements of the company is analyzed under various financial and tactical tools.
SOURCES OF DATA:
The data require for the study have been collected from the secondary sources
ANALYTICAL TOOLS:
Comparative income statement

Comparative balance sheet
Ratio analysis
PERIOD OF THE STUDY:

The study covers a period of five year starting from 2008-2012. Accounting year ends
on 31st march. The present study was conducted at PREETHI ENGINEERING
ENTERPRISE. This study depends mainly on the secondary.
DATA COLLECTION METHOD:

Data may be classification into two types. There are primary data and secondary data.
Secondary data which are already collected for the same or other uses. Annual reports,
financial statement, prospects of the company, and information collected from journals,
magazine and articles comes under secondary data. For this study my project is used for
secondary data.
2.6 LIMITATIONS OF THE STUDY

This study is based on the secondary data basis.
The period of study is 5 years from 2007 2008 to 2011 2012.
21
2.7 CHAPTER SCHEME

CHAPTER-I
Introduction of the study
CHAPTER-II
22
Company and area Profile of the study
CHAPTER-III
Analysis and interpretation of the data
CHAPTER-IV
A Summary of Findings, Suggestions & Conclusions
CHAPTER- 3
3. DATA ANALYSIS & INTERPERTATION
RATIO ANALYSIS
The primary uses of financial statement are evaluating past performance and
predicting future performance and both of these are facilitated by comparison. Therefore the
focus of financial analysis is always on the crucial information contained in the financial
23
statements. This depends on the objectives and performance of such analysis. The purpose of
evaluating such financial statement is different from person to person depending on its
relationship. In other words, even though the business unit itself and shareholders, debentures
holders, investors, etc. all undertake the financial analysis, the purpose, means and extent of
such analysis differs. For example, trade creditors may be interested primarily in the liquidity
of the firm because the ability of the business unit to the business unit to pay their claims are
best judged by means of through analysis of its liquidity.
The shareholder and the potential investors may be interested in the present and the
further earnings per share, the stability of such earnings and comparison of these earnings
with other units in the industry. Similarly the debenture holders and the financial institution
lending long term loans term may be concerned with the cash flow ability of the business unit
to pay pack the debt in the long run. The management of the business unit, in contrast, looks
to the financial statement from various angles. These statement are required not only for the
management own evaluation and decision making but also for internal control and overall
performance of the firm. Thus the scope, extent and means of any financial analysis are a part
of the larger information processing system which from the very basic of any decision
making process.
The financial analysts always need certain yardstick to evaluate the efficiency and
performance of any business unit. The one of the most frequently used yardstick is ratio
analysis. Ratio analysis involves the use of various methods for calculating and interpreting
financial ratios of assess the performance and status of the business unit. It is a tool of
financial analysis, which studies the numerical or quantitative relationship between two
variables and item. A ratio can be worked out by dividing one of the variables of the
relationship with other variable and such ratio value is compared with standards/ norms.
In other words, ratio are relative figures reflection the relationship between variables
and enable the analysis to draw conclusion regarding the financial operations.
It is very important that the base(or denominator) selected for each ratio is relevant
with the numerator. The two must be such that one is closely connected with and is
influenced by the other.
This is the measure of inter relationship between different sections of the financial
statement which then is compared with the budgeted or forecasted results, prior year results
24
and or the industrial results. To be most important ratios must include a study of underlying
data. Ratios should be taken as guides that are useful in evaluating a companys financial
position and operations and making comparison with results in previous year of with other
companies. The primary purpose of ratios is to point out areas needing further investigations.
A part from the ratios other information which should be looked at includes.
TYPES OF RATIO
Several ratios calculated from the accounting data, can be grouped into various
classes according to financial activity or function to be evaluated, as stared earlier, the parties
interested in financial analysis are short-term and long-term creditors. Owners and
management interest is in liquidity position or the short-term solvency of the firm. Long-term
creditors, on the other hand, more interested in the long- term solvency and profitability of
the firm.
Similarly owners concentrate on the firm profitability and financial condition.
Management is interested in evaluating every aspect of the firms performance. In view of the
requirements of the various users of ratios, classifying into following four important
categories.
Current ratio
Proprietary ratio
Debt equity ratio
Return on total resources ratio
Return on capital employed
Reserve to equity share capital ratio
Equity ratio
Net working capital ratio
COMPARATIVE BALANCE SHEET

The single balance sheet shows assets and liabilities as on a particular data. The
comparative balance sheet shows the value of assets and liabilities on two different data if
helps in comparison a comparative balance sheet has two columns to record the record the
25
figures of the current year and the previous year. A third column is used to show the increase
or decrease in figures. A fourth column may be added for giving percentage of increase or
decrease.
Thus while in the balance sheet the emphasis is on status in the comparative balance sheet it
is on change comparative balance sheet indicates whether the business is moving in a
favorable or unfavorable direction. It is very useful for studying the trends in an enterprise.
COMMON-SIZE STATEMENT
Financial statement present absolutes figure. A comparisons of absolutes figure could be
misleading the statement which report the figure as a percentage of some common base are
called common size statement.
In the common-size balance sheet total of assets liabilities is taken as total common size
statements are useful to a financial analysis. They make comparison easy and meaningful.
ANALYSIS AND INTERPRETATION OF FINANCIAL PERFORMANCE

Analysis and interpretation of financial statement is the most important step in accounting.
To have a very clear understanding of profitability and financial position of a company. The
financial statements have to be analyzed and interpreted. Analysis refers to the
methodological classification of the data given in the financial statement.
The term interpretation means explaining the meanings and significance of the data so
arranged. It is the study of the relationship between various functional factors. The
relationship between profit and capital employed, current asset and current liabilities and
gross profit have to be explained further to make interpretation more meaningful comparisons
have to be made. Comparison of relationship between various financial factors of the same
company over a period of time can be made.
26
CURRENT RATIO:
Current ratio may be defined as the relationship between current assets an current
liabilities. This ratio also known as working capital ratio is a measure of general liquidity and
is most widely used to make the analysis of short-term financial position or liquidity of a
firm. It is calculated by dividing by the total of current assets by total of the current liabilities.
CURRENT RATIO =
CURRENT ASSETS
-------------------------------------CURRENT LIABILITIES
THE TABLE SHOWING CURRENT RATIO

TABLE NO - 3:1:1
Rupees in lacks
27
YEAR
CURRENT ASSETS
CURRENT
LIABILITIES
RATIO
2007-08
25555.09
21466.85
1.19
2008-09
19216.09
18261.97
1.05
2009-10
14569.45
16344.23
0.89
2010-11
16782.00
22403.06
0.74
2011-12
18755.29
23047.57
0.81
Sources: Annual report of the PREETHI limited
INTERPRETATION:
The table shows the current assets position of the company. The current ratio was not
fluctuation trend during the study period. The current ratios in all years satisfy the standard
norms of 2:1. Hence the position indicates that the current ratio not satisfactory during the
study from 2007 to 2012.
THE TABLE SHOWING CURRENT RATIO

TABLE NO - 3:1:1
30000
25000
20000
CURRENT ASSETS
15000
CURRENT LIABILITIES
10000
5000
0
2007-08
2008-09
2009-10
28
2010-11
2011-12
QUICK RATIO:
Quick ratio also known as acid test or liquid then the current ratio, term liquidity
refers to the ability of a firm to pay its short-term obligations as and when they become due.
Two determines of current ratio as, a measure of liquidity, are current assets and current
liability.
CURRENT ASSET - INVENTORY

QUICK RATIO =
----------------------------------------------CURRENT LIABILITIES
THE TABLE SHOWING QUICK RATIO

TABLE NO - 3:1:2
Rupees in lacks
29
YEAR
CURRENT
ASSETSINVENTORY
CURRENT
LIABILITIES
RATIO
2007-08
15278.89
21466.85
0.71
2008-09
11051.61
18261.97
0.61
2009-10
7076.92
16344.23
0.43
2010-11
9586.4
22403.06
0.43
2011-12
9181.47
23047.57
0.17
INTERPRETATION:
The liquid ratio does not satisfy the standard norms of 1: 1. So the short term financial
position not satisfactory during the period 2007 - 2012. It is stands at 0.71 in the year of
2007-2008 and decrease in the next all years.
THE CHART SHOWING QUICK RATIO

CHART NO - 3:1:2
30
25000
20000
15000
CURRENT ASSETSINVENTORY
CURRENT LIABILITIES
10000
5000
0
2007-08
2008-09
2009-10
2010-11
PROPRIETARY RATIO:
31
2011-12
A variant to the debt-equity ratio is the proprietary ratio which is also known as equity
ratio or share holders to total equities ratio or net worth to total assets ratio. The ratio of
proprietors funds (proprietors share holders fund) to total assets is an important ratio for
determining long-term solvency of a firm.
SHARE HOLDERS FUND

PROPRIETARY RATIO =
-----------------------------------TOTAL TANGIBLE ASSET
THE TABLE SHOWING PROPRIETARY RATIO

TABLE NO - 3:1:3
Rupees in lacks
YEAR
SHARE HOLDERS
FUND
TOTAL TANGIBLE
ASSET
RATIO
2007-08
17654.63
51364.07
0.34
2008-09
17449.04
43378.22
0.40
2009-10
17346.65
37357.96
0.46
2010-11
17244.38
38039.42
0.45
2011-12
8856.73
42047.67
0.21
INTERPRETATION:
The above table indicates proprietors ratio of the study period was at fluctuating
ratio. But in the period of 2009-2010 only satisfy in the profit ratio. Then another four years
profit ratio unsatisfactory during the study period.
THE CHART SHOWING PROPRIETARY RATIO:

CHART NO - 3:1:3
32
RATIO
0.5
0.45
0.4
0.35
0.3
RATIO
0.25
0.2
0.15
0.1
0.05
0
2007-08
2008-09
2009-10
2010-11
2011-12
DEBT EQUITY RATIO:

Debt-equity ratio, also known as external-internal equity ratio is calculated to measure
the relative claims of outsider and the owners (I, e,;) shareholders against the firms assets.
33
This ratio indicates the relationship between the external equities or the outsiders funds and
the internal equities or the shareholders funds.
OUTSIDERS FUND
DEBT EQUITY RATIO = ---------------------------------SHARE HOLDERS FUND
THE TABLE SHOWING DEBT EQUITY RATIO

TABLE NO - 3:1:4
Rupees in lacks
YEAR
OUTSIDER FUND
SHARE HOLDERS
FUND
RATIO
2007-08
21466.85
17654.63
1.22
2008-09
18261.97
17449.04
1.05
2009-10
16344.23
17346.65
0.94
2010-11
22403.06
17244.38
1.30
2011-12
23047.57
8856.73
2.60
INTERPRETATION:
The above table identifies the dept- equity ratio of the company was fluctuating
during the study period is lowest in the year 200910 of 0.94 and highest in the year
2011-12 of 2.60 in least two years the company debt- equity ratio was not to the standard
norms of the 2 : 1.
THE CHART SHOWING DEBT EQUITY RATIO

CHART NO - 3:1:4
34
EQUITY RATIO
3
2.5
2
EQUITY RATIO
1.5
1
0.5
0
2007-08
2008-09
2009-10
FIXED ASSET TURN OVER RATIO:

35
2010-11
2011-12
This ratio measures sale per rupee of is fixed assets. This ratio is supported to measure
the efficiency with fixed are employed a high ratio indicates a high degree of efficiency in
asset utilization and low ratio efficient use of assets.
NET SALES
FIXED ASSET TURN OVER RATIO =
----------------------------FIXED ASSET
THE TABLE SHOWING FIXED ASSET TURNOVER RATIO

TABLE NO - 3:1:5
Rupees in lacks
YEAR
NET SALES
FIXED ASSET
RATIO
2007-08
62705.83
18747.61
3.34
2008-09
66211.45
16982.41
3.89
2009-10
59118.21
15771.88
3.74
2010-11
57404.00
14313.90
4.01
2011-12
66152.71
13031.30
5.07
INTERPRETATION:
The above table shows the fixed assets turnover ratio during the study period the ratio
is decline from 2011-2012 of 5.07% to 2007-2008 of 3.34% the ratio is unsatisfactory.
THE CHART SHOWING FIXED ASSET TURNOVER RATIO

36
CHART NO - 3:1:5
FIXED ASSET TURNOVER RATIO

6
5
4
RATIO
3
2
1
0
2007-08
2008-09
2009-10
AVERAGE COLLECTION PERIOD:

37
2010-11
2011-12
DEBTORS
AVERAGE COLLECTION PERIOD = ---------------------------- * no of working days in year
CREDIT SALES
THE TABLE SHOWING AVERAGE COLLECTION PERIOD

TABLE NO - 3:1:6
Rupees in lacks
YEAR
DEBTORS
CREDIT SALES
RATIO
DAYS/365
2007-08
3866.47
62705.83
0.06
23
2008-09
4562.04
66211.45
0.07
25
2009-10
1603.52
59118.21
0.03
10
2010-11
1293.63
57404.00
0.02
2011-12
2164.85
66152.71
0.03
12
INTERPRETATION:
From the about table shows that average collection period of the company the ratio
has been fluctuating during the study the highest days is 25 in the year of 2008-09.the lowest
days in 8 in the year 2010-11.
THE CHART SHOWING AVERAGE COLLECTION PERIOD

CHART NO - 3:1:6
38
30
25
20
DAYS/365
15
RATIO
10
5
0
2007-08
2008-09
2009-10
DEBTORS TURNOVER RATIO:
39
2010-11
2011-12
CREDIT SALES
DEBTORS TURNOVER RATIO = ----------------------DEBTORS
THE TABLE SHOWING DEBTORS TURNOVER RATIO

TABLE NO - 3:1:7
Rupees in lacks
YEAR
CREDIT SALES
DEBTORS
TIMES
2007-08
62705.83
3866.47
16
2008-09
66211.45
4562.04
15
2009-10
59118.21
1603.52
37
2010-11
57404.00
1293.63
46
2011-12
66152.71
2164.84
30
INTERPRETATION:
The above table shows the debtors the turnover ratio shows at the fluctuating trend. It
shows the highest growth 46(days) in 2010-2011 and the lowest in 15 in 2007-2008.
THE CHART SHOWING DEBTORS TURNOVER RATIO

CHART NO - 3:1:7
40
DEBTORS TURNOVER RATIO

50
45
40
35
DEBTORS TURNOVER
RATIO
30
25
20
15
10
5
0
1
AVERAGE PAYMENT PERIOD
CREDITORS
41
AVERAGE PAYMENT PERIOD = ------------------------------ * no of working days in year

CREDIT PURCHASE
THE TABLE SHOWING AVERAGE PAYMENT PERIOD
TABLE NO - 3:1:8
Rupees in lacks
YEAR
CREDITORS
CREDIT
PURCHASE
RATIO
DAYS/365
2007-08
20497.32
41595.84
0.49
179
2008-09
17393.54
40382.86
0.43
157
2009-10
15871.33
39755.41
0.40
146
2010-11
21762.06
40923.28
0.53
193
2011-12
22228.56
47575.78
0.47
172
INTERPRETATION:
The above table shows the average payment period at the fluctuating trend. It
shows the highest growth 193 (days) in 2010-2011 and the lowest in 146 in 2009-2010.
THE CHART SHOWING AVERAGE PAYMENT PERIOD

CHART NO - 3:1:8
42
RATIO
0.6
0.5
0.4
RATIO
0.3
0.2
0.1
0
2007-08
2008-09
2009-10
ABSOLUTE TURN OVER RATIO:
43
2010-11
2011-12
CASH + MARKETABLE SECURITIES

ABSOLUTE TURNOVER RATIO =
---------------------------------------------------CURRENT LIABILITIES
THE TABLE SHOWING ABSOLUTE TURNS OVER RATIO

TABLE NO - 3:1:9
Rupees in lacks
YEAR
CASH
CURRENT LIA
RATIO
2007-08
6326.36
21466.85
0.29
2008-09
1377.52
18261.97
0.08
2009-10
761.51
16344.23
0.05
2010-11
4041.78
22403.06
0.18
2011-12
2890.57
23047.57
0.13
INTERPRETATION:
The above source that absolute turnover ratio of the company .absolute turnover
of the ratio 2008-09 and 2009-10 and 2011-12 normal increasing .the increasing ratio 0.29
.2007-08 compared increasing in the year. 2009-10, 0.05 to compare normal increasing
show the company takes steps to improve financial position in a better way.
THE CHART SHOWING ABSOLUTE TURNS OVER RATIO

CHART NO - 3:1:9
44
absolute turn over ratio

6
5
4
3
2
1
0
1
COMPARATIVE BALANCE SHEET AS ON 31ST MARCH 2007

31ST MARCH 2008
45
TABLE NO 3:2:1
Particulars
[a]sources of funds
Share capital
Reserve & surplus
[b] loans
Secured
unsecured
31st march 2007 31st march2008

(Rupees
(Rupees
in lacks)
In lacks)
Increase /
decrease
16125.68
1643.91
16125.68
1528.95
- 114.96
11602.42
4498.10
12320.77
6601.80
+ 718.35
+2103.07
33870.11
36577.20
2707.09
Application of fund:
[a]Fixed assets
Net block
[b]Investments
19957.69
7024.87
18747.61
7061.37
[c]Current assets loans & advances:

Inventories
Sundry debtors
Cash & bank balance
Other current assets
Loans & advances
-1210.08
+ 36.05
-1173.58
8586.78
5132.64
887.36
573.98
4497.31
10276.20
3866.47
6326.36
485.73
4600.33
[d] less: current liabilities:

Current liabilities
Deferred payment liabilities
Provisions
19966.23
970.23
734.10
20497.82
655.84
969.10
+1689.42
- 1266.17
+5439.00
- 88.02
+ 103.02
+5877.02
+ 531.59
314.39
+ 234.94
- 452.14
[e] net current assets

Miscellaneous Expenditure
Profit & loss account balance
234.41
8645.06
19.83
7315.99
- 214.58
- 1329.64
- 1544.22
33870.11
36577.20
2707.09
Total current assets
Total current liabilities
INTREPRETATION:
46
There is a negative change in the fixed asset in the year 2007-2008. The inventories
showed a normal positive changing compared to last year. The sundry debtors showed a big
negative change in the year of 2007-2008.the cash and bank balance showed a big positive
changing compare to last year. The percentage of loans has been increase. The liabilities
showed a positive change. The negative change the provisions increased.
COMPARATIVE BALANCE SHEET AS ON 31ST MARCH 2008 &

31ST MARCH 2009
47
TABLE NO 3:2:2
Particulars
[a]sources of funds
Share capital
Reserve & surplus
[b] loans
Secured
Unsecured
[c] deferred payment liabilities

(Rupees
(Rupees
in lacks)
in lacks)
Increase /
decrease
16125.68
1528.95
16125.68
1323.36
- 205.59
12320.77
6601.80
655.84
6307.48
4925.26
1587.35
-6013.29
-1676.54
+ 931.51
37233.04
30269.13
6963.91
[a]Fixed assets
Net block
[b]Investments
18747.61
7061.37
16982.41
7179.72

Inventories
Sundry debtors
Cash & bank balance
Loans & advances
-1765.02
+ 118.35
-1646.85
10276.20
3866.47
6326.36
485.73
4600.33
8204.76
4562.04
1377.52
475.48
4596.29
-2071.44
+ 695.57
-4948.84
- 10.25
3.71
-6338.67

Current liabilities
Provisions
20497.82
969.03
17393.54
868.43
+3104.28
+ 100.06
-3204.88

19.83
7315.99
921.04
4231.84
+ 901.21
-3084.15
-2182.94
37233.04
30269.13
6963.91
INTREPRETATION:
48
showed a big negative change in the year of 2008-2009. The sundry debtors showed a
negative changing compared to last year. The cash and bank balance showed a big negative
changing. The percentage of loans and advances has been decreased. The liabilities showed a
negative change. The provision is also showed negative change.

49
31ST MARCH 2010

TABLE NO 3:2:3
Rupees in lacks
Particulars
[a]sources of funds
Share capital
Reserve & surplus
[b] loans
Secured
Unsecured

[a]Fixed assets
Net block
[b]Investments
Inventories
Sundry debtors
Cash & bank balance
Loans & advances
Current liabilities
Provisions
31st march 2009 31stmarch2010

(Rupees
(Rupees
in lacks)
in lacks)
Increase /
decrease
16125.68
1323.36
16125.68
1220.97
-102.39
6307.48
4925.26
1587.35
4537.44
7324.47
1225.47
-1770.04
+2399.21
-361.88
30269.13
30434.03
164.09
16982.41
7179.72
15771.88
7016.63
-1210.53
- 163.09
8204.76
4562.04
1377.52
475.48
4636.57
7492.53
1603.52
761.51
84.21
4627.68
- 712.23
-2958.52
- 616.01
- 391.27
8.89
17433.82
868.43
15871.33
472.90
+1562.49
+ 395.53
921.04
4231.84
1302.80
8117.50
+ 381.76
+3885.66
30269.13
30434.03
INTREPRETATION:
50
164.09
showed that negative change in the year of 2009-2010. The sundry debtors shows that
decrease to compared with last year. The cash and bank balance shows that a big negative
change. The percentage of loans and advances has been decrease. The liabilities show that
positive change. The provision is also decrease.

51
31ST MARCH 2011

TABLE NO 3:2:4
Rupees in lacks
Particulars
[a]sources of funds
Share capital
Reserve & surplus
[b] loans
Secured
Unsecured
[d] deferred tax liability

[a]Fixed assets
Net block
[b]Investments
Inventories
Sundry debtors
Cash & bank balance
Loans & advances
Current liabilities
Provisions

(Rupees
(Rupees
in lacks)
in lacks)
Increase /
decrease
16125.68
1220.97
16125.68
1118.70
- 102.27
4043.18
7324.47
1225.47
3069.27
5933.25
837.61
1779.37
- 973.91
-1391.22
- 387.86
+1779.37
29939.77
28863.88
1075.89
15771.88
7016.63
14313.90
6943.52
- 1457.98
- 73.11
7492.53
1603.52
761.51
46.91
4664.98
7195.60
1293.63
4041.78
36.56
4214.43
- 296.93
- 309.89
+3280.27
- 10.35
- 450.55
15917.21
921.28
21762.06
641.00
-5844.85
+ 280.28
1302.80
8117.50
13227.52
- 1302.80
+5110.02
29939.77
28863.88
1075.89
INTREPRETATION:
52
There is a change in the fixed asset in the year 2010-2011.The inventories show that a
big negative change in the year of 20010-2011. The sundry debtors show that positive change
in compared with last year. The cash and bank balance show that a big positive change. The
percentage of loans and advance has been decrease.

31ST MARCH 2012
53
TABLE NO 3:2:5
Rupees in lacks
Particulars
[a]sources of funds
Share capital
Reserve & surplus
[b] loans
Secured
Unsecured
[d] deferred tax liability

[a]Fixed assets
Net block
[b]Investments
Inventories
Sundry debtors
Cash & bank balance
Loans & advances
Current liabilities
Provisions

(Rupees
(Rupees
in lacks)
in lacks)
Increase /
decrease
16125.68
1118.70
8067.08
789.65
-8058.6
-329.05
3069.27
5933.25
837.61
1779.37
4052.84
9063.89
563.05
1222.00
+983. 57
+3130.64
-274.56
-557.37
28863.88
23758.51
5105.37
14313.90
6943.52
13013.30
10261.08
-1300.6
+3317.56
7195.60
1293.63
4041.78
36.56
4214.43
9573.82
2164.85
2890.57
1.68
4124.37
+2378.22
+871.22
-1151.21
-34.88
-90.06
21762.06
641.00
2228.56
819.01
-466.5
-178.1
13277.52
4776.41
-8501.11
28863.88
23758.51
5105.37
INTREPRETATION:
The investments shows that a big negative change in the year of 2011-2012. The
inventory shows that increasing to compare with last year. The sundry debtors shows that
54
negative changing to compared with last year. The cash and bank balance shows that big
negative change. The percentage of loans and advances has been decrease. The liabilities
show that negative change.
COMMON SIZE BALANCE SHEET AS ON 31ST MARCH 2007 &

31MARCH 2008
55
TABLE NO 3:3:1
Rupees in lacks
Particulars
[a]sources of funds
Share capital
Reserve & surplus
[b] loans
Secured
Unsecured
[a]Fixed assets
Net block
[b]Investments
[c]Current assets loans &
advances:
Inventories
Sundry debtors
Cash & bank balance
Loans & advances
Current liabilities
Provisions
31stmarch2007
31stmarch2008
2007
(Rupees
(Rupees
%
in lacks)
in lacks)
2008
%
16125.68
16.43.91
16125.68
1528.95
47.61
4.85
44.08
4.18
11602.42
4498.10
12320.77
6601.80
34.25
13.28
33.68
18.04
33870.11
36577.02
100
100
19957.69
7042.87
18747.61
7061.37
58.92
20.74
51.25
19.30
8586.78
5132.78
887.36
573.98
4497.31
10276.20
3866.47
6326.36
485.73
4600.33
25.35
15.16
2.61
1.69
13.27
28.09
10.57
17.29
1.32
12.57
19966.23
970.23
734.10
20497.82
655.84
969.03
58.94
2.86
2.16
56.03
1.79
2.64
234.41
8645.63
19.83
7315.99
0.69
25.52
0.05
20.00
33870.11
36577.02
100
100
INTERPRETATION:
56
The percentage contribution of fixed assets has decreasing in the year of 2008 to
compare with 2007.the contribution of the inventories to the current assets has been
increasing. The contribution of the sundry debtors has been decreasing. The contribution the
cash and bank balance has been increasing. The percentage of the loans and advances lent has
been increased.

57
31MARCH 2009
TABLE NO 3:3:2
Rupees in lacks
Particulars
[a]sources of funds
Share capital
Reserve & surplus
[b] loans
Secured
Unsecured
[a]Fixed assets
Net block
[b]Investments
advances:
Inventories
Sundry debtors
Cash & bank balance
Loans & advances
Current liabilities
31stmarch2008
31stmarch2009
2008
(Rupees
(Rupees
%
in lacks)
in lacks)
2009
%
16125.68
1528.95
16125.68
1323.36
43.31
4.10
53.22
4.36
12320.77
6601.80
655.84
6307.48
4925.26
1587.35
33.09
17.73
1.76
20.81
16.25
5.23
37233.04
30269.13
100
100
18747..61
7061.37
16982.41
7179.72
50.35
18.96
56.05
23.69
10276.20
3866.47
6326.36
485.73
4600.33
8204.76
4562.04
1377.52
475.48
4596.29
27.59
10.38
16.99
1.30
12.35
27.08
15.05
4.54
1.56
15.17
20497.82
969.03
17393.54
868.43
55.05
2.60
57.4
2.86
19.83
7315.99
921.04
4231.84
0.05
19.64
3.04
13.96
37233.04
30269.13
100
100
INTREPRETATION:
58
The percentage contribution of fixed assets has decreasing. The contribution of the
inventories to the current assets has been decreasing to compare with last year. The
contribution of inventories to the current assets has been increasing it went down in 2009.
The contribution of sundry debtors has been increasing. The contribution of the cash and
bank balance has been increasing. The percentage of the loans and advances lent has been
decreasing.

59
31MARCH 2010
TABLE NO 3:3:3
Rupees in lacks
Particulars
[a]sources of funds
Share capital
Reserve & surplus
[b] loans
Secured
Unsecured
[a]Fixed assets
Net block
[b]Investments
advances:
Inventories
Sundry debtors
Cash & bank balance
Loans & advances
Current liabilities
31stmarch2009
31stmarch2010
2009
(Rupees
(Rupees
%
in lacks)
in lacks)
2010
%
15125.68
1323.36
16125.68
1220.97
53.27
4.37
52.98
4.01
6307.48
4925.26
1587.35
4537.44
7324.47
1225.47
20.83
16.27
5.24
14.90
24.06
4.02
30269.13
30434.03
100
100
16982.41
7179.72
15771.88
7016.63
56.10
23.71
51.82
23.05
8204.76
4562.04
1377.52
475.48
4636.57
7492.53
1603.52
761.51
84.21
4627.68
27.10
15.07
4.55
1.57
15.31
24.61
5.26
2.50
0.27
15.20
17433.82
868.43
15871.33
492.90
57.59
2.86
52.14
1.55
921.04
4231.84
1302.80
8117.50
3.04
13.98
4.29
26.67
30269.13
30434.03
100
100
INTREPRETATION:
60
inventories to the current assets has been decreasing. The contribution of the sundry debtors
has been decreasing. The contribution of the cash and bank balances to current assets is
fluctuating. The percentage of the loans and advances lent has been decreasing.

61
31MARCH 2011
TABLE NO 3:3:4
Rupees in lacks
Particulars
[a]sources of funds
Share capital
Reserve & surplus
[b] loans
Secured
Unsecured
[a]Fixed assets
Net block
[b]Investments
advances:
Inventories
Sundry debtors
Cash & bank balance
Loans & advances
Current liabilities
31stmarch2010
31stmarch2011
2010
(Rupees
(Rupees
%
in lacks)
in lacks)
2011
%
16125.68
1220.97
16125.68
1118.70
53.86
4.07
55.86
3.87
4043.18
7324.47
1225.47
-
3069.27
5933.25
837.61
1779.37
13.50
24.46
4.09
-
10.63
20.55
2.90
6.16
29939.77
28863.88
100
100
15771.88
7016.63
14313.90
6943.52
52.67
23.43
49.59
24.05
7492.53
1603.52
761.51
46.91
4664.98
7195.60
1293.63
4041.78
36.56
4214.43
25.02
5.35
2.54
0.15
15.58
24.92
4.48
14.0
0.12
14.60
15917.21
921.28
21762.06
641.00
53.16
3.07
75.39
2.22
1302.80
8117.50
13227.52
4.35
27.11
46.00
29939.77
28863.88
100
100
INTREPRETATION:
62
inventories to the current assets has been increasing it went down in 2011. The contribution
of the sundry debtors has been decreasing. The cash and bank balance has been increasing to
compare with last year. The percentage of the loans and advances has been decreasing.

63
31MARCH 2012
TABLE NO 3:3:5
Rupees in lacks
Particulars
[a]sources of funds
Share capital
Reserve & surplus
[b] loans
Secured
Unsecured
[a]Fixed assets
Net block
[b]Investments
advances:
Inventories
Sundry debtors
Cash & bank balance
Loans & advances
Current liabilities
31stmarch2011
31stmarch2012
2011
(Rupees
(Rupees
%
in lacks)
in lacks)
2012
%
16125.68
1118.70
8067.08
789.65
55.86
3.87
33.95
3.32
3069.27
5933.25
837.61
1779.37
4025.84
9063.89
563.65
1222.00
10.63
20.55
2.90
6.16
17.05
38.15
2.36
5.14
28863.88
23758.51
100
100
14313.90
6943.52
13031.30
10261.08
49.59
24.05
54.77
43.18
7195.60
1293.63
4041.78
36.56
4214.43
9573.82
2164.85
2890.57
1.68
4124.37
24.92
4.48
14.00
0.12
14.60
40.29
9.11
12.16
0.00
17.35
21762.06
641.00
22228.56
819.01
75.39
2.22
93.56
3.44
13227.52
4776.41
45.82
20.10
28863.88
23758.51
100
100
INTREPRETATION:
64
The percentage of fixed assets has decreasing. The investment has been increasing in
the year of 2012. The contribution of the inventories to the current assets has been increasing
in the year of 2012. The contribution of sundry debtors has been increasing. The contribution
of the cash and bank balances to current assets is fluctuating. The percentage of the loans and
advances has been decreased.
CHAPTER- 4
Findings, Suggestions & Conclusion
65
4.1 FINDINGS
Only in the year 2007-08, the current ratio of the company was 1.19 which 1.1 closed
to the standard and ratio 2:1.
The quick asset ratio has been increasing to 0.71 in the year of 2007-08.
The preparatory ratio of the company is to fluctuated.
The debt equity ratio has decrease from 2.60 to 0.94 it is a good indicate from
solvency of the company.
The fixed asset turnover ratio has been increasing from 1.20 to 1.38 from 2010-11 to
2011-12.
The debtors collection period has been increasing to 46 time from 2010-11
The creditors turnover ratio has been increasing to 0.49 from 2007-08.
Absolute turnover ratio has been decreasing from 0.05 in the year of 2009-10.
The fixed asset has been decreased in the year 2007-08. The cash and bank balance
has been increased.

In the year of 2008-09, an inventory has been decreased to compare with last year
2008-09.
The liabilities shows that a negative change in the year 2009-10. So to improving the
profitability of the company.
The sundry debtors shows that decrease to compared with last year.
The liability shows that positive change. So the company decreasing the unwanted
expenditure.
The cash and bank balance shows that a positive change. So improving the
profitability.
The percentage of loans and advances has been decrease. So increasing the profit.
The contribution of the inventories to the current assets has been increasing.
4.2 SUGGESTIONS
The growth rate in the net profit must be increased by reducing the non-operating
expenses.
The liquidity assets of the company are to be increased to improve the liquidity
position.
The current level of debt equity ratio shall be maintained in the future.
Steps must be taken the current ratio of the company to the standard norms 2:1.
66
The gross profit of the company can be increased by reducing operating expenses.
4.3 CONCLUSION
The present studies aim to new financial position of the company using ratio analysis.
The research used secondary data were collected from the company annual reports. Ratio
analysis was processed from the year 2007-2008 using the data. The research analyzed the
data by the method of the ratio analysis the provide that the company position was good.
67
Therefore the companies try to retain the position and also to improve it is financial
position further. The results show that inventory to current asset level and inventory turnover
ratio is good.
The firm must take steps to the cash in hand by the value of cash in hand at
maintained and the avoid fluctuation. Also the management is advised to the increasing the
turnover ratio to maintaining the financial trend of the company.
REFERENCES
1. KHAN.M.Y.JAIN P.K. Financial Management Text & Probs Tata Mc- Graw Hill
Publishing Company 2008.
2. PANDEY.I.M. Financial Management, New Delhi, Vikas Publishing House Pvt., Ltd.,
1995 ANNUAL & AUDITED REPORTS The India cements Ltd., 2005-2009.
3. Sreenivasan N.P Management Accounting.
68
4. Dr. R.Ramachandran & Dr. R. Srinivasan Management Accounting

5. T.S. Reddy & Y. Hari Prasad Reddy management Accounting.
69

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A STUDY ON FINANCIAL PERFORMANCE

ANALYSIS IN PREETHI ENGINEERING

In Partial Fulfillment for the Award of the Degree

DEPARTMENT OF BUSINESS ADMINISTRATION

Head of the Department

Submitted for the project viva-voce examination held on ...

I affirm that the project work titled FINANCIAL PERFORMANCE ANALYSIS IN

Signature of the Candidate

Signature of the Guide

me the needed facilities to do my project work.

M.COM.,MBA., M.phil., B.Ed.,[P.hd] Assistant Professor (SR), of department of

1.1 Introduction about the study

1.2 Introduction about the Industry

1.3 Introduction about the company

Main theme of the Project

2.1 Review of literature

2.2 Problem statement

2.3 Objectives of the study

2.4 Scope of the study

2.5 Research Methodology

2.6 Limitations of the study

2.7 Chapter scheme

Data Analysis and Interpretation

Findings, Suggestions & Conclusion

Fixed asset turn over ratio

Average collection method

Debtors collection period

Creditors turn over ration

Absolute turn over ratio

Comparative Balance Sheet as on 2006 2007

Comparative Balance sheet as on 2007 2008

Comparative Balance Sheet as on 2008 2009

Comparative Balance Sheet as on 2009 2010

Comparative Balance Sheet as on 2010 2011

1.1. INTRODUCTION ABOUT THE STUDY:

The present and future earning capacity or profitability of the concern.

RATIO ANALYSIS INVOLVES THE FOLLOWING STEPS:

TO TEST THE ASSOCIATION OF OVERHEADS AND TURNOVER:

1.2. INTRODUCTION ABOUT THE INDUSTRY:

ABOUT THE INDUSTRY

INDIA HYDRAULIC INDUSTRIES

1.3. INTRODUCTION ABOUT THE COMPANY

ABOUT THE COMPANY

RESEARCH & DEVELOPMENT

2.2 STATEMENT OF THE PROBLEM:

2.3 OBJECTIVES OF THE STUDY

2.4 SCOPE OF THE STUDY

The scope of this study is to provide an insight into concept of financial

2.5 RESEARCH METHODOLOGY

Comparative income statement

PERIOD OF THE STUDY:

DATA COLLECTION METHOD:

2.6 LIMITATIONS OF THE STUDY

2.7 CHAPTER SCHEME

Company and area Profile of the study

COMPARATIVE BALANCE SHEET

ANALYSIS AND INTERPRETATION OF FINANCIAL PERFORMANCE

THE TABLE SHOWING CURRENT RATIO