Analysis Final 1 (Repaired)

A STUDY ON FINANCIAL STATEMENT
1.1 INTRODUCTION
FINANCE
Finance is a task of providing funds required by an enterprise on the
terms most favorable to it. Mobilizing and supply of funds in the most
appropriate way and at the least cost is the main theme of the business
function. BUT, in modern sense finance includes determining what has to
be paid for raising the money on the best terms available and devoting
available funds to the best use.
Financial requirements of a business enterprise are of two type’s long
period requirements. Long period requirements come in the form of holding
permanent assets required for running the business. Investments in plant
and machinery, furniture, land, other permanent infrastructure facilities are
all the permanent expenditure and come under long -term requirements. On
the other hand, a short- term requirements help the firm in allocating funds
for current asset.
Present day economic finance is complex and multi faced. Finance
may be defined as provision of money at the time when it is required to
meet the business requirement. All the business enterprise irrespective of
the size and nature of the business need to carry out their operations to meet
organizational goals efficiently and effectively.
Of all the factors of production i.e. land, capital, organization,
capital is the most important factor. All economic activities of their base in
the finance and aim at facilitating generation of more finance. Finance, is
therefore regarded as “LIFE BLOOD OF BUISNESS”.
Seshadripuram Institute Of Commerce & Management Page 1

MEANING:
Finance refers to management of flows of money through an organization.
It concerns with the application of skills on the manipulation, use and
control of money. However there are three main approaches to finance:
 The first approach views finance as to providing funds needed by a
business on most suitable terms. These approaches confines finance to
rising of funds and to the study of financial institutions and
instruments from where funds can be procured.
 The second approach relates finance to cash.
 The third approach views, finance as being consider with raising of
funds and there effective utilization.
FINANCE may be DEFINED as the provision of money at the time when it
is required.
CLASSIFICATION OF FINANCE:
The subject matter of the finance has been classified in to:-
 Private finance.
 Public finance.
NEED AND IMPORTANCE OF FINANCE:

Finance is the life blood of business. It is one of the basic
requirements of a business. The plans of a business concern would remain
mere dreams unless adequate finance is available to convert them in to
reality.
A business requires finance at every stage for example; fiancé is need
for brining a business into existence. Finance is required for financing the

fixed capital (i.e. for financing for acquisition of fixed assets like building,
plants and machinery, patents etc).
Finance is needed for expansion and modernization of business. It is also
needed for financing the working capital (i.e. for financing the acquisition
of raw materials finished goods etc, and for the payment of wages and
the other day- to -day running expenses of the business).
Finance is the life blood of every business. The major object of any
business is to make profit for its owner by producing goods or services for
sales in the market. To reach the goal, the firm purchases the various factors
of population and then produces the output and sells. This all process
requires funds. Finance may be very aptly said to circulatory system of the
economic body of a firm. THUS, finance is very much essential for the
business activity of any firm.
FINANCIAL MANAGEMENT:
Financial management refers to that part of the management activity,
which is concerned with planning, & controlling of firms financial
recourses of raising funds for the need of the business, appropriate
employment of funds thereof and all business has financial management is
applicable to every type of organization, irrespective of size kind of nature.

DEFINITIONS:
“Financial management is the operational activity of a business that is
responsible for obtaining and effectively utilizing the funds necessary for
efficient operation.”
-Joseph & Massie
“Business finance deals primarily with raising administering & disbursing
funds by privately owned business units operating in non-financial fields of
industry.”
-By Prather & Wert
“Financial management is an area of financial decision making,
harmonizing individual motive s & enterprise goals.”
-By Weston & Brigham.”
FINANCIAL STATEMENTS
Meaning of Financial Statements
Financial Statements are records that provide an indication of an
individual’s, organizations, or business’ financial status. There are four
basic types of financial statements: balance sheets, income statements,
A Financial Statement is a collection of data organized according to
logical and consistent accounting procedures. Its purpose is to convey an
understanding of some financial aspects of a business firm. It may show a
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 an
income statement.

Thus, the term ‘Financial Statement’ generally refers to the two

statements: (1) the position statement or balance sheet (2) the income
statement or the profit and loss account.
Definition
Financial Statement is the outcome of summarizing process of
accounting. In the words of John N Myer, “the financial statements
provide a summary of the accounts of a business enterprise, the balance
sheet reflecting the assets, liabilities and capital as on a certain date and the
income statement showing the results of operations during a certain
period.”
According to Smith & Asburne, define “Financial statements as, “the
end product of financial accounting in set of financial statements prepared
by the accountant of a business enterprise-that purport to reveal the
financial position of the enterprise, the result of its recent activities, & an
analysis of what has been done with earnings.”
According to Anthony, defines “Financial statements, essentially, are
interim reports, presented annually & reflect a division of the life of an
enterprise onto more or less arbitrary accounting period-more frequently a
year.”

Objectives of Financial Statements

Financial Statements are the sources of information on the basis of
which conclusions are drawn about the profitability and financial position
of a concern. The accounting principles Board of America (APB) states the
following objectives of financial statements:
 To provide reliable financial information about economic resources
and obligations of a business firm.
 To provide other needed information about changes in such economic
resources and obligations.
 To provide reliable information about changes in net resources arising
out of business activities.
 To provide financial information that assists in estimating the earning
potentials of business.
 To disclose, to the extent possible, other information related to the
financial statements that is relevant to the needs of the users of these
statements.
Characteristics of Financial Statement

The financial statement should be prepared in such a way that they
are able to give a clear and orderly picture of the concern. The ideal
financial statements have the following characteristics:
1. Depict True financial Position: The information contained in the
financial statements should be such that a true and correct idea is taken
about the financial position of the concern.

2. Effective Presentation: The financial statements should be presented

in a simple and lucid way so as to make them easily understandable.
3. Relevance: Financial statements should be relevant to the objective of
the enterprise.
4. Attractive: The financial statements should be prepared in such a way
that important information is underlined so that it attracts the eye of
the reader.
5. Comparability: The results of financial should be in a way that can be
compared to the previous year’s statements. The statements can also be
compared with the figures of other concerns of the same nature.
Importance of Financial Statement

The financial statements are mirror which reflects the financial
position and operating strength or weakness of the concern. The following
major uses of financial statements are:
1. It helps as a report of stewardship
2. It helps as a basis for fiscal policy
3. It helps to determine the legality of dividends
4. It helps as a guide to advise dividend action
5. It helps as a basis for the granting of credit
6. It helps as informative for prospective investors in an enterprises
7. It helps as a guide to the value of investment already made
8. It helps as a basis for price or rate regulation
9. It helps as a basis for taxation
10.It helps as an aid to government supervision

Limitations of Financial Statements

Though financial statements are relevant and useful for concern, still
they do not present a final picture of the concern. The utility of these
statements is dependent upon number of factor. The financial statements
suffer from the following limitations:
1. Only Interim Reports: These statements do not give a final picture of
the concern. The data given in these statements is only approximate.
The actual position can only be determined when the business is sold
or liquidated.
2. Do Not Give Exact Position: The financial statements are expressed
in monetary values, so they appear to give final and accurate position.
3. Historical Costs: the financial statements are prepared on the basis of
historical costs or original costs. The value of assets decreases with the
passage of time current price changes are not taken into account.
4. Impact Of Non-Monetary Factors Ignored: There are certain factors
which have a bearing on the financial position and operating results of
the business but they so not become a part of these statements because
they cannot be measured in monetary terms.

Types of financial statements

1.2 FINANCIAL STATEMENT ANALYSIS

Meaning
Financial statement analysis is defined as the process of identifying
financial strengths and weaknesses of the firm by properly establishing
relationship between the items of the balance sheet and the profit and loss
account.
In the words of Kennedy and Memullar, “ The analysis and

interpretation of financial statements are an attempt to determine the
significance and meaning of the financial statements data so that a forecast
may be made of the prospects for future earnings, ability to pay interest
and debt maturities (both current and long term), and probability of a
sound dividend policy.”
The process of reviewing and evaluating a company’s financial

statements (such as the balance sheet or profit and loss statement), thereby
gaining an understanding of the financial health of the company and
enabling more effective decision making. Financial statements record
financial data; however, this information must be evaluated through
financial statement analysis to become more useful to investors,
shareholders, managers and other interested parties.
Financial statements are prepared to meet external reporting

obligations and also for decision making purposes. They play a dominant
role in setting the framework of managerial decisions. But the information
provided in the financial statements is not an end in itself as no meaningful
conclusions can be drawn from these statements alone. However, the

information provided in the financial statements is of immense use

in making decisions through analysis and interpretation of financial
statements.
There are various methods or techniques that are used in analyzing

financial statements, such as comparative statements, schedule of changes
in working capital, common size percentages, funds analysis, trend
analysis, and ratios analysis.
These reports are usually presented to top management as one of

their bases in making business decisions. Based on these reports,
management may:
 Continue or discontinue its main operation or part of its business;

 Make or purchase certain materials in the manufacture of its product;
 Acquire or rent/lease certain machineries and equipment in the
production of its goods;
 Issue stocks or negotiate for a bank loan to increase its working
capital;
 Make decisions regarding investing or lending capital;
 Other decisions that allow management to make an informed selection
on various alternatives in the conduct of its business.

Goals / Objectives
Financial Analysts often assess the firm's:
1. Profitability - its ability to earn income and sustain growth in both

short-term and long-term. A company's degree of profitability is usually
based on the income statement, which reports on the company's results of
operations
2. Solvency - its ability to pay its obligation to creditors and other third
parties in the long-term.
3. Liquidity - its ability to maintain positive cash flow, while satisfying

immediate obligations.
4. Stability- the firm's ability to remain in business in the long run,

without having to sustain significant losses in the conduct of its business.
Assessing a company's stability requires the use both of the income
statement and the balance sheet, as well as other financial and non-
financial indicators.

Advantages of Financial Statement Analysis:
There are various advantages of financial statements analysis.
1. The major benefit is that the investors get enough idea to decide about
the investments of their funds in the specific company.
2. Regulatory authorities like International Accounting Standards Board
can ensure whether the company is following accounting standards or
not.
3. Financial statements analysis can help the government agencies to

analyze the taxation due to the company.
4. Company can analyze its own performance over the period of time
through financial statements analysis
Disadvantages of Financial Statements Analysis
1. Strong financial statement analysis does not necessarily mean that the
organization has a strong financial future.
2. Financial statement analysis might look good but there may be other
factors that can cause an organisation to collapse.

Types of Financial Analysis
Types of Financial
Analysis
On the Basis of On the basis of Modus

Material Used operandi
Horizontal
External Internal Analysis Analysis Vertical Analysis
Analysis
1. On The Basis of Material Used: according to material used, financial

analysis can be of two types
A. External Analysis: This analysis is done by outsiders who do not have
access to the detailed internal accounting records of the business firm.
These outsiders include investors, potential investors, creditors, potential
creditors, government agencies, credit agencies, and the general public.
For financial analysis, these external parties to the firm depend almost
entirely on the published financial statement.

B. Internal Analysis: The analysis conducted by persons who have access
to the internal accounting records of a business firm is known as internal
analysis. Such as analysis can, therefore, be performed by executives and
employees of the organisation as well as government agencies which have

statutory powers vested in them. Financial analysis for managerial is the
internal type of analysis that can be effected depending upon the purpose
to be achieved.
2. On The Basis of Modus Operandi:
A. Horizontal Analysis: A horizontal analysis compares two or more

years of a company's financial statements. The analyst can find the same
information from different years by reading across the page. In comparing
dollar figures and percentages in this way, differences from year to year
are easy to find. A variation of the horizontal analysis is called the trend
analysis. The trend analysis starts with the first year a company is in
business, also known as the base year. The base year percentages are
shown as 100 percent, and the increase or decline in percentages can be
easily shown.
B. Vertical Analysis: Vertical analysis is called such because the

corporation's financial figures are listed vertically on the financial
statement. This type of analysis involves the calculation of percentages of
a single financial statement. The figures on this financial statement are
taken from the company's income statement and balance sheet. Vertical
financial statement analysis is also known as component percentages.

Methods Of financial Analysis:
A number of methods or devices are used to study the relationship between

different statements. The following methods of analysis are generally used:
1. Comparative Statement
2. Common Size Statements
3. Trend Analysis
4. Funds Flow Statement
5. Cash Flow Statement
6. Ratio Analysis
7. Cost-Volume-Profit Analysis.
1. Comparative Statement: Comparative statements are financial

statements that cover a different time frame, but are formatted in a
manner that makes comparing line items from one period to those of a
different period an easy process. This quality means that the
comparative statement is a financial statement that lends itself well to
the process of comparative analysis. Many companies make use of
standardized formats in accounting functions that make the generation

of a comparative statement quick and easy. Not only the comparison of
the figures of two periods but also be relationship between balance sheet
and income statement enable and in depth study of financial position
and operative results. The comparative statements may show
 Absolute figures
 Changes in absolute figures i.e., increase or decrease in absolute
figures.
 Absolute data in terms of percentage
 Increase or decrease in terms of percentages.
The two comparative statements are:
A. Comparative Balance Sheet: The comparative balance sheet

analysis is the study of the trend of the same items, group of items and
computed items in two or more balance sheets of the same business
enterprise on different dates. The changes in periodic balance sheet items
reflect the conduct of a business. The comparative balance sheet has two
columns for the data of original balance sheets. A third column I used to
show increase in figures. The fourth columns may be added for giving
percentages of increase or decreases.
Before interpreting comparative balance sheets as to study the following

aspects:

1. Current financial position and liquidity position.
2. Long term financial position
3. Profitability of the concern.
B. Comparative Income Statements: The income statement gives the

results of the operations of a business. The comparative income statement
gives an idea of the progress of 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. Like comparative
balance sheet, income statement also has four columns.
2. Common size statement: The common size statement, balance sheet

and income statement are shown in analytical percentages. The figures are
shown as percentages of total liabilities and total sales. The total assets are
taken as 100 and different assets are expressed as a percentage of the total.
Similarly, various liabilities are taken as a part of total liabilities. These
statements are also known as component percentages or 100% statements
because every individual item is stated as a percentage of the total 100.
The common size statements may be prepared in the following way:
a. The total of assets or liabilities is taken as 100.
b. The individual assets or liabilities are expressed as percentages

A. Common size balance sheet: A statement in which balance sheet
items are expressed as the ratio of each asset to total assets and the ratio of
each liability is expressed as a ratio of total liabilities is called common
size balance sheet. The common size balance sheet can be used to compare
companies of different size. The comparison of figures in different periods
is not useful because total figures may be affected by a number of factors.
B.Common size income statements: The items in income statements can

be shown as percentages of sales to show the relation of each item to sales.
A significant relationship can be established between items of income
statement and volume of sales. The increase in sales will certainly increase
selling expenses and not administrative or financial expenses. In case the
volume of sales increases to a considerable extent, administrative and
financial expenses may go up. In case the sales are declining; the selling
expenses should be reduced at once. A relationship is established between
sales and other items in income statement and this relationship is helpful in
evaluating operational activities of the enterprise

TITLE OF THE STUDY

The study on financial statements with special refrence to
sonata software ltd.
STATEMENT OF THE PROBLEM

This study entitled “FINANCIAL STATEMENT
ANALYSIS” conducted at SONATA SOFTWARE LTD, the problem
statement is that whether the Organization is practicing “Comparative &
common Size System to analysis his financial statements” and to check
Whether the financial position and overall performance of the company
has viewed by creditors and investors is satisfactory or not.
OBJECTIVES OF THE STUDY

1. To prepare and interpret financial statements in comparative, trend
analysis and common size form.
2. To assess the short as well as long term liquidity position of the firm.
3. To assess the current profitability position and operating efficiency of
the firm.

4. To identify the reasons for change in the profitability position of the
firm.
5. To find out the relative importance of different components of the
financial position of the firm.
6. To offer conclusions and the recommendations
SCOPE OF THE STUDY
1. The study of “Financial Statement Analysis” was restricted to a

period of One Month.
METHODOLOGY
SOURCES OF DATA
PRIMARY DATA:
By interviewing the staff members
SECONDARY DATA:
From companys websites
Annual reports
SAMPLING TECHNIQUES
The method used in drawing samples from a population usually in
such a manner that the sample will facilitate determination of some
hypothesis concerning the population.

There is no need of sampling techniques
PLAN OF ANALYSIS
Simple Percentage Analysis was adopted for this study. The data was
classified and tabulated for the purpose of analysis. Percentages were
calculated for the purpose of generalizations. Charts, Graphs and
Diagrams have been drawn based on the tabulation. Inferences were
drawn and conclusions were made.
LIMITATIONS OF THE STUDY

1. The study covered a vast concept, hence wide collection and
coverage of information was not easily possible.
2. Analysis of data collected has been done on the assumptions that
the information provided by the respondents is genuine.
3. Due to time constraints, the study was limited to1 month.
4. Confidential matters would not be revealed easily.

SCHEME OF THE CHAPTERS
Chapter-1:Introduction
It provides a theoretical exposure to the nature of the topic and highlights
the definition, importance , objectives and relevant aspects of the subject.
Chapter-2: Research design
It brings the significance of the study, explaining the statement of the
problem, scope and limitation of the study, and methodology used for
collecting the data.
Chapter-3: Company profile
It briefly highlights the profile of the company like history, nature, board of
directors, financial reports, development, milestone etc. of the bank.
Chapter-4:Data analysis and interpretation

It analyses and interprets the financial position through the companys
financial statements
Chapter-5:Summary of findings and suggestions and
conclusion
It brings out the findings of the study, suggestion to the problems and
conclusion of the project to justify the objectives of the study.
Bibliography
list of source materials that are used or consulted in the preparation of a
work or that are referred to in the text.
Annexure
It should always be at the end of the report. Basically this is additional
information to our report which can be part of the report.

INDUSTRY PROFILE
Service sector is the lifeline for the social economic growth of a

country. It is today the largest and fastest growing sector globally
contributing more to the global output and employing more people than any
other sector.
The real reason for the growth of the service sector is due to the increase in
urbanization, privatization and more demand for intermediate and final
consumer services. Availability of quality services is vital for the well
being of the economy.
In advanced economies the growth in the primary and secondary sectors are
directly dependent on the growth of services like banking, insurance, trade,
commerce, entertainment etc.
The Software Industries in India
With the huge success of the software companies in India, the Indian
software industry in turn has become successful in making a mark in the
global arena. This industry has been instrumental in driving the economy of
the nation on to a rapid growth curve. As per the study of NASSCOM-

Deloitte, the contribution of IT/ITES industry to the GDP of the country has
soared up to a share of 5% in 2007 from a mere 1.2% in 1998. Besides, this
industry has also recorded revenue of US$ 64 billion with a growth rate of
33% in the fiscal year ended in 2008.
The export of software has also grown up, which has been
instrumental in the huge success of the Indian software companies as well
as the industry. In fact, software export from India accounts for more than
65% of the total software revenue. The domestic software market largely
depends upon sale of software packages and products, which constitute
major part of revenues. Products account for almost 40% of the domestic
market. On the other hand, more than 80% of revenue from software
exports comes from software services like custom software development
and consultancy services etc
Reasons behind Success of Indian software companies
There are a number of reasons why the software companies in India

have been so successful. Besides the Indian software companies, a number
of multinational giants have also plunged into the India IT market.
India is the hub of cheap and skilled software professionals, which

are available in abundance. It helps the software companies to develop cost-
effective business solutions for their clients. As a result, Indian software
companies can place their products and services in the global market in the
most competitive rate. This is the reason why India has been a favorite

destination for outsourcing as well. Many multinational IT giants also have
their offshore development centers in India.
IT Business Sectors
Most of the software companies in India are into varied types of business.
There can be several types of business in the IT sectors:
 Infrastructure Software: These include OS, middleware and

databases.
 Enterprise Software: These automate business process in diverse
verticals like finance, sales and marketing, production and
logistics.
 Security Software
 Industry-specific Software
 Contract Programming
India's domestic IT Market
India's domestic IT Market over the years has become one of the
major driving forces of the industry. The domestic IT infrastructure is
developing contexts of technology and intensity of penetration.

In the FY 2010-11, the domestic IT sector attained revenues worth
US$ 24.3 billion as compared to US$ 23.1 billion in FY 2009-10,
registering a growth of 5.4%. Moreover, the increasing demand for IT
services and goods by India Inc has strengthened the expansion of the
domestic market with agreements worth rising up extraordinarily to US$
100 million. By the FY 2014, the domestic sector is estimated to expand to
US$ 1.7 billion against the existing from US$ 1 billion
Top Software Companies in India
There are plenty of software companies in India which have been doing
well. However, some of the top Indian software companies can be listed as:
 Tata Consultancy Services

 Wipro Limited
 Infosys
 HCL Technologies
 Tech Mahindra
 Patni Computer Systems
 i-flex Solutions
 MphasiS
 L&T InfoTech
 IBM India

COMPANY PROFILE
Sonata Software, headquartered in Bangalore, India, is a leading IT

consulting and services company. Sonata's customers are located across the
US, Europe, Middle East and the Asia-Pacific region. Its portfolio of
services includes IT Consulting, Product Engineering Services, Travel
Solutions, Application Development, Application Management, Managed
Testing, Business Intelligence, Infrastructure Management and Packaged
Applications. As per the industry rankings released
by NASSCOM for 2009-10, Sonata Software figured among the Top 20 IT
Software Services Exporters in India for the third consecutive year.
Sonata Software has also been ranked Global #2 in the 2008 Top Ten
ESO: Outsourced Software Development in The Black Book of
Outsourcing.
Sonata Software is a leading provider of IT consulting and software
services globally. Combining unparalleled experience, domain expertise,
best practices and comprehensive capabilities across various industries and
business functions, Sonata collaborates with customers to help them

effectively address their operational challenges and grow their businesses
stronger.

Headquartered in Bangalore, India, and with a customer base spread
across the globe, you will find Sonata offices in the US, Europe, Middle-
East and the Asia-Pacific. With a broad set of capabilities and a proven
Global Delivery Model, Sonata is poised to be the perfect partner of global
firms in their outsourcing initiatives. We bring together a unique

combination of breadth of capabilities, strong management focus and
flexibility in engagement required to make our customer relationships a
success.

Sonata's services range from IT Consulting to Product Engineering
Services, Application Development, Application Management, Managed
Testing, Business Intelligence, Infrastructure Management, Packaged
Applications and Travel Solutions. Our partnerships with global leaders
enable us to work on the latest technologies that we leverage to ensure
enhanced business efficiencies for our customers. Our proficiency and
commitment, combined with our partners’ strength and knowledge, makes
us a trusted organization to work with.
Having started off as a product company, Sonata has been delivering

consistent business benefits to customers through innovative solutions. It
has also been building continually profitable relationships with its partners,
enhancing the shareholder value, and sustaining a rich and rewarding
environment for employees.


Innovation at Sonata is pursued with a passion. Be it the design of
solutions aligned with customer needs or the creation of robust processes
that form our foundation or our unique growth strategy, quality-driven
innovation is at the heart of everything we do at Sonata. It is a commitment
that unites our employees across geographies in a common mission to put
customers first: listening, understanding and executing to address

their business requirements.

The one pervasive force that binds employees at Sonata is its
allegiance to the Sonata values. This is ably complemented by our ability to
think innovatively, and to come up with solutions that are both ingenuous
and inspired. Empowerment is a way of life at Sonata. We are committed to
building value-based enduring relationships with our each stakeholder.
Mission
Provide Information Technology solutions globally, enhancing

competitive advantage of customers, founded on contemporary
technologies, and practices, innovation, empowered people and enduring
relationships.
“Think Customer”
Growing markets, constantly evolving technologies, changing market
dynamics and ever demanding customers -- how do companies today

address these fluid situations? “Think Customer” is Sonata's answer to this
increasingly competitive scenario. “Think Customer” is the core of Sonata's
business philosophy that helps our customers retain the competitive edge in
their respective markets. Using our industry knowledge, service offering
expertise and technology capabilities, we identify new business and
technology trends, and develop solutions to help our customers quickly
respond to emerging challenges and opportunities. We help them

enter new markets, improve their operational performance, and deliver their
products and services more effectively and efficiently.

Built around the latest technologies, our Centers of Excellence
(CoEs) are focused on proactively building competencies and providing
cutting-edge solutions to its customers. The swiftness to learn, the
smartness to innovate and the ability to bring out the best software
engineering services makes Sonata an intellectual partner to work with.
Services
1. Product engineering services :
1A. commercial software services
1a.1. Product management
1a.2. Product engineering
1a.3. Product support
1a.4. Product QA service
1a.5. Captive
1a.6. Quantified agile+
1a.7. Progress migration

1a.8. Intersystem cache
1B. Embedded services
2. Enterprise IT service :
2A. Services
2a.1. Enterprise solution
2a.2. Application management

2a.3. Web application services
2a.4. Testing services
2a.5. Infrastructure management
2B. Industries
2b.1. Manufacturing
2b.2. Telecom
2b.3. Insurance
Product engineering: Having architected and delivered several
software products successfully, both independently and with the
backing of Outsourced Product Development engagements with
motley of software companies, Sonata has achieved a deep
understanding of the critical engineering needs of a software
product company

Competitors Information
 HP
 Symantec
 Capgemini
 Infosys

 HCL Technologies
 Tech Mahindra
 Patni Computer Systems
 i-flex Solutions
 MphasiS
 L&T InfoTech
 IBM India
 Polaris Software Lab Ltd
 Satyam Computer Services Ltd
 Tata Consultancy Services
 Cranes Software
 Encore Software
 DSQ Software
 Digital Global soft
 Danlaw Technologies
Awards and Certifications

 Featured in Top Outsourced Product Development Vendors by
Global Services for FY 2011-2012
 Listed among Top 100 Companies that define Global Outsourcing by
Global Services for FY 2011-2012
 As per the industry rankings released by NASSCOM for 2009-10,
Sonata Software figured among the Top 20 IT Software
 Services Exporters in India for the third consecutive year.
 Ranked among Top 50 companies by Dataquest for FY 2009 – 2010

 Sonata Software has also been ranked Global #2 in the 2008 Top Ten
ESO: Outsourced Software Development in the Black Book of
Outsourcing.
 Ranked among Top 10 R&D Services players globally by Zinnov
Management Consulting Pvt. Ltd.
 Ranked 6th in the Software Products segment by Zinnov
Management Consulting Pvt. Ltd.
 Winner in the Deloitte Technology Fast 500 Asia Pacific 2009
Program
 Microsoft Gold Certified Partner
4.1 Comparative Balance sheet for the year ending
March 31st 2009-10
Year ending 31 March Increase/ Increase/
Particulars Decrease Decrease
2009 2010
(Rs) (%)
Sources Of Funds
Share holder fund
1. Share Capital 105,159,306 105,159,306 ---- ----
2. Reserves & surplus 1,680,154,393 1,887,167,619 207,013,226 12.32
Total Long Term Liabilities 1,785,313,699 1,992,326,925 207,013,226 11.59
Current liabilities and provisions
Less: Current Liabilities 94,127,319 111,471,680 17,344,361 18.42
Provision 73,818,678 82,833,972 9,015,294 12.21
Total Current Liabilities 167,945,997 194,305,652 26,359,655 15.69

Total Liabilities 1,953,259,696 2,186,632,577 233,372,881 11.94

Fixed Assets
Gross block 605,272,660 681,718,513 76,445,853 12.62
Less : Depreciation 341,077,152 431,820,862 90,743,710 26.60
Net Block 264,195,508 249,897,651 (14,297,857) -5.41
Capital work-in-progress & advances 49,471,811 43,204,992 (6,266,819) -12.66
Investments 752,748,813 1,018,195,501 265,446,688 35.26

Deferred Tax Asset 118,641,096 104,306,830 (14,334,266) -12.08
A. Total fixed Assets(A+B+C+D) 1,185,057,228 1,415,604,974 230,547,746 19.45
Current Asset, Loans & Advances
Inventory 31,361,961 15,680,980 (15,680,981) -50.00

Sundry debtors 362,072,988 380,652,678 18,579,690 5.13
other current assets 37,926,594 40,136,211 2,209,617 5.82
Cash & bank balance 186,247,235 138,355,466 (47,891,769) -25.71
Loans & advances 150,593,690 196,202,268 45,608,578 30.28
Total current asset 768,202,468 771,027,603 2,825,135 0.36

Total Assets 1,953,259,696 2,186,632,577 233,372,881 11.94
Interpretation:
1. The company balance sheet of the company reveals that during 2010
there has been increase in investment i.e. 35.26%, while reserves &
surplus and current liability has relatively increased i.e.12.32% &
18.42% respectively. This fact depicts that the policy of the company
is to make investment in other assets from reserves & surplus & other
liability.
2. The reserve & surplus is increasing during the year 2010 by 12.32%
this shows that the company is transferring huge portion of net profit
to reserves & surplus to overcome the future uncertainties & also it
indicates that the net profit is increasing year by year.
3. During the year the cash or bank balance has decreased by -25.71%, so
this indicates that the company has given loans and advances and
purchases other current assets from cash.
4. Company has withdrawn the capital W.I.P & advances from outside
projects and decrease in deferred tax asset.

5. The current liabilities have increased by 18.42% so this indicates that
the company raised borrowing fund from creditors.
6. There is an increase in provision during the year by 12.21% this
indicates that they are transferring good portion from income.
7. Sundry debtors has increased by 5.13%, this indicates that the
company had increases services on credit basis.
8. During the year Net fixed assets of the company is decreased by
-5.41% it indicates, the part of fixed assets are sold during the year.
4.2 Comparative Balance sheet for the year ending March 31st
2010 and 2011
2010 2011
(Rs) (%)
Sources Of Funds
Share holder fund

1. Share Capital 105,159,306 105,159,306 ------ ------
Total Long term Liabilities 1,992,326,925 2,238,263,000 245,936,075 12.34
Current liabilities and Provisions
Less: Current Liabilities 111,471,680 240,310,123 128,838,443 115.57
Provision 82,833,972 11,855,519 (70,978,453) -85.68
Total current Liabilities 194,305,652 252,165,642 57,859,990 29.77


Fixed Assets
Gross block 681,718,513 732,222,034 50,503,521 7.40
Net Block 249,897,651 242,299,532 (7,598,119) -3.04
Investments 1,018,195,501 1,262,628,341 244,432,840 24.00

A. Total Fixed Assets(A+B+C+D) 1,415,604,974 1,611,806,324 196,201,350 13.85
Inventory 15,680,980 ----- (15,680,980) -----
Sundry debtors 380,652,678 428,502,168 47,849,490 30.93
other current assets 40,136,211 37,161,410 (2,974,801) -30.26
Cash & bank balance 138,355,466 139 ,627,852 1,272,386 77.76
Loans & advances 196,202,268 273,330,888 77,128,620 204.90
Total current asset 771,027,603 878,622,318 107,594,715 89.90

Total Assets 2,186,632,577 2,490,428,642 303,796,065 13.89
Interpretation:
1. The company balance sheet of the company reveals that during 2011
there has been increase in investment i.e. 24.00%, while reserves &
surplus and has relatively increased 13.03%. This fact depicts that the
policy of the company is to make investment in other assets from
reserves.
2. The reserve & surplus is increasing during the year 2011 by 24.00%
this shows that the company is transferring huge portion of net profit
to reserves & surplus to overcome the future uncertainties & also it
indicates that the net profit is increasing year by year.
3. During the year the cash or bank balance have increase by 77.76%, so
this indicates that the company had sold the portion of other current
assets.
4. Loans & advances have increased during the year 2012, by 204.90% &
relatively Current Liability also increased by 115.15%. This indicates
that the company is utilizing Current Liability to give loans &
advances to the outsiders.

5. There is decrease in provision during the year 2011 this indicates that
profit of the company is less so the company is transferred less portion
to provision.
6. Sundry debtors have increased by 30.93%, this indicates that the
company had increased services on credit basis.
7. During the year Net fixed assets of the company is decreased by
-3.04% it indicates part of fixed assets are sold during the year.
4.3 Comparative Balance sheet for the year ending March

31st 2011 and 2012
Particulars Decrease
2011 2012 Decrease (Rs)
(%)
Sources Of Funds
Share holder fund
1. Share Capital 105,159,306 105,159,306 0 0
Total Long Term Liabilities 2,238,263,000 2,921,692,042 683,429,042 30.53
Current Liabilities And Provisions
Less: Current Liabilities 240,310,123 202,450,397 (37,859,726) (15.75)
Provision 11,855,519 113,613,160 101,757,641 858.31
Total Current Liabilities 252,165,642 316,063,557 63,897,915 25.33


Fixed assets
Gross block 732,222,034 861,970,163 129,748,129 17.71
Net Block 242,299,532 312,242,833 69,943,301 28.86
Investments 1,262,628,341 1,198,082,482 (64,545,859) -5.11
A. Total Fixed Assets(A+B+C+D) 1,611,806,324 1,569,180,401 -42,625,923 -2.64

Inventory ----- ------- ----- -----
Sundry debtors 428,502,168 561,056,772 132,554,604 30.93
other current assets 37,161,410 25,913,177 (11,248,233) -30.26
Cash & bank balance 139 ,627,852 248,208,986 108,581,134 77.76
Loans & advances 273,330,888 833,396,263 560,065,375 204.90
Total Current Asset 878,622,318 1,668,575,198 789,952,880 89.90

Total Assets 2,490,428,642 3,237,755,599 747,326,957 30.00
Interpretation:
1. The comparative balance sheet of the company reveals that during

2012 there has been increase in fixed assets by 28.86% while the
Reserves & surplus have relatively increased by 32.05% .This fact
depicts that the policy of the company is to purchase fixed assets from
the reserves & surplus.
2. The reserve & surplus is increasing during the year 2012 this shows
that the company is transferring huge portion of net profit to reserves
& surplus to overcome the future uncertainties & also it indicates that
the net profit is increasing year by year.
3. During the year the cash or bank balance have increase by to 77.76%,
so this indicates that the company had sold the portion of other current
assets & also they withdraw the investment & capital W.I.P &
advances.
4. Loans & advances have increased by 204.90%, this indicates that the
company is utilizing reserve & surplus to give loans & advances to the
outsiders.

5. The current liability has decreased by 15.75% so this indicates that the
company has repaid their portion of borrowing fund.
6. There is an increase in provision during the year 2012 this indicates
that they are transferring good portion from income.
7. Sundry debtors has increased by 30.94%, this indicates that the
company had increased services on credit basis.
4.4 Table showing comparative Income Statement for the

Year Ending March 31st 2009 and 2010
2009 2010
(Rs) (%)
INCOME
Services (Net) 1,858,290,195 1,988,196,736 129,906,541 6.99
Other Income 24,051,802 22,831,166 -1,220,636 -5.07
Total Income 1,882,341,997 2,011,027,902 128,685,905 6.83
EXPENDITURE 0
Operating and Other Expenses 1,398,523,420 1,503,897,289 105,373,869 7.53
Interest 5,007,870 1,149,861 -3,858,009 -77.03
Depreciation 91,064,811 94,525,720 3,460,909 3.80
Provision for Doubtful Debts 3,613,203 - 3,613,203 -100.00
1,498,209,304 1,599,572,870 101,363,566 6.76
Add/(Less) : (Increase)/ Decrease in Stocks 36,690,968 15,680,981 -21,009,987 -57.26
1,534,900,272 1,615,253,851 80,353,579 5.23
Profit Before Tax 347,441,725 395,774,051 48,332,326 13.91
Provision for Tax -3,849,369 75,138,720 78,988,089 2051.97
MAT credit - -46,257,892 -46,257,892 0
Profit After Tax 351,291,094 366,893,223 15,602,129 4.44

Add : Balance of Profit brought forward from
649,011,515 826,529,982 177,518,467 27.35
previous year

Disposable Surplus 1,000,302,609 1,193,423,205 193,120,596 19.30
Proposed Dividend 63,095,584 63,095,584 0 0
Interim Dividend 52,579,653 52,579,653 0 0
Provision for Dividend Tax 18,097,390 19,659,006 1,561,616 8.62
Transfer to General Reserve 40,000,000 40,000,000 0 0
Balance carried to Balance Sheet 826,529,982 1,018,088,962 191,558,980 23.17
1,000,302,609 1,193,423,205 193,120,596 19.30
Interpretation:
1. The comparative income statement given above reveals that there has
been an increase in total income by 6.83%. Other income is
decreased by -5.07%but it does not affect total income. It depicts that
company can able to maintain a good income.
2. The operating expenses of the company has increased by 7.53%
3. Depreciation is increased by 3.80% it shows that the company has
purchase additional fixed assets
4. Interest, provision for doubtful debts has decreased by 77.03% &
-100% it shows during the year company has repaid his part of
borrowed fund and due to decrease in credit sales company has not
transferred huge amount to provision.
5. During the year the tax paid by the company is very huge. It shows
that the company profit is increased so the company had paid more
tax.
6. The balance carried to the balance sheet 23.17%. It indicates that
company profit is increasing year by year.

7. During the year company has paid same rate of proposed and interim
dividend and transferred the same level of reserves from profit & loss
Account.
8. It may be conclude that there is a sufficient progress in the company
& overall profitability of the company is satisfactory.
4.5 Table showing comparative Income Statement for the

Year Ending March 31st 2010 and 2011
2010 2011
(Rs) (%)
INCOME
Services (Net) 1,988,196,736 2,435,768,787 447,572,051 22.51
Other Income 22,831,166 10,530,957 -12,300,209 -53.87
Total Income 2,011,027,902 2,446,299,744 435,271,842 21.64
EXPENDITURE
Operating and Other Expenses 1,503,897,289 1,768,528,728 264,631,439 17.59
Interest 1,149,861 3,881,623 2,731,762 237.57
Depreciation 94,525,720 81,316,414 -13,209,306 -13.97
Provision for Doubtful Debts - 11,537,756 11,537,756 100.00
1,599,572,870 1,865,264,521 265,691,651 16.61
Add/(Less) : (Increase)/ Decrease in Stocks 15,680,981 15,680,980 -1
1,615,253,851 1,880,945,501 265,691,650 16.44
Provision for Tax 75,138,720 93,002,493 17,863,773 23.77
MAT credit -46,257,892 -61,237,382 -14,979,490 32.38
Profit After Tax 366,893,223 533,589,132 166,695,909 45.43
826,529,982 1,018,088,962 191,558,980 23.17
previous year

Proposed Dividend 63,095,584 0 -63,095,584 -100.00
Interim Dividend 52,579,653 157,738,959 105,159,306 200.00
Transfer to General Reserve 40,000,000 60,000,000 20,000,000 50.00
Balance carried to Balance Sheet 1,018,088,962 1,307,131,399 289,042,437 28.39
1,193,423,205 1,551,678,094 358,254,889 30.01
Interpretation:
been increased in total income by 21.64%. Other income is decreased
by -53.87% but it does not affect the total income. It depicts that
company can able to maintain a good income.
3. Depreciation has decreased by -13.97% it shows that the company
has sold portion of fixed assets
4. Interest, provision for doubtful debts has increased by 237.57% &
100% it shows that, during the year company has borrowed fund and
due to the increase in profit the company has transferred some
amount to provision.
5. During the year the tax paid by 23.77%. It shows that company profit
is increased so the company had paid more tax.
6. The balance carried to the balance sheet is 28.39%. It indicates that

7. During the year interim dividend has increased by 200% and Profit
transferred to reserve also increase by 50% it shows that the profit of
the company is increased.
4.6 comparative Income Statement for the Year Ending

March 31st 2011 and 2012
2011 2012
(Rs) (%)
INCOME
Services (Net) 2,435,768,787 2,360,942,195 -74,826,592 -3.07
Other Income 10,530,957 52,802,059 42,271,102 401.39
Total Income 2,446,299,744 2,413,744,254 -32,555,490 -1.33
EXPENDITURE
Operating and Other Expenses 1,768,528,728 1,697,872,063 -70,656,665 -3.99
Interest 3,881,623 ---- -3,881,623 -100.00
Depreciation 81,316,414 77,664,907 -3,651,507 -4.49
Provision for Doubtful Debts 11,537,756 21,073,432 9,535,676 82.64
1,865,264,521 1,796,610,402 -68,654,119 -3.68
Add/(Less) : (Increase)/ Decrease in Stocks 15,680,980 0 -15,680,980 -100.00
1,880,945,501 1,796,610,402 -84,335,099 -4.48
Provision for Tax 93,002,493 104,996,236 11,993,743 12.89
MAT credit -61,237,382 -89,892,126 -28,654,744 46.79
Profit After Tax 533,589,132 602,029,742 68,440,610 12.82
Add : Balance of Profit brought forward 1,018,088,962 1,307,131,399 289,042,437 28.39

from previous year
Proposed Dividend --- 84,127,445 84,127,445 100.00
Interim Dividend 157,738,959 94,643,375 -63,095,584 -40.00
Transfer to General Reserve 60,000,000 70,000,000 10,000,000 16.66
Balance carried to Balance Sheet 1,307,131,399 1,630,332,952 323,201,553 24.72
1,551,678,094 1,909,161,141 357,483,047 23.03
Interpretation:
been decrease in total income by 1.33% even the other income has
increased by 401.39% because there is a drastic decrease in service
(Net) i.e. 3.07%. It depicts that company can able to maintain a good
income.
2. The depreciation & operating expenses has decreased to 4.49% &
3.99%. So company can able to make good profit during the year and
it also reveals that company has sold portion of assets during the year
and the company had not paid any interest during the year.
3. Provisions for doubtful debt, provision for tax, & proposed dividend
has been increased by 82.64%, 12.89%, and 100.00 it indicates that
the profit of the company is also increased because the company had
reduced operating expenses during the year.
4. The balance carried to the balance sheet & transfer to general reserve
has increase to 24.72% & 16.66% respectively it indicates that

5. The company can able to transfer to 24.72% of balance to balance
sheet & even the total income has decreased by 1.33% this fact
depicts that the company can able to reduced operating expenses &
depreciation during the year.
4.7 Table showing Total Long Term Liabilities under

comparative Percentages
Particulars 2009 – 2010 2010 - 2011 2011 – 2012
Share Capital 0% 0% 0%
Reserves & Surplus 12.32% 13.03% 32.03%
Total Long term liabilities 11.54% 12.34% 30.53%
Analysis: The Above Table Shows that long term liability during the year
2012-11 is 30.53%, 2011-10 is 12.34% & in 2010-09 is 11.54%. Reserves
and surplus are 32.03%, 13.03% & 12.32% respectively.

4.7 Graph Showing Total Long Term Liabilities under

Interpretation:
The Above Comparative Graph reveals that there is an increase in Reserves
and Surplus of the company year by year, i.e., 12.32% in 2010-09, 13.03%
in 2011 -10 and 32.03% in 2012-11. And company is maintaining constant

share capital. The total liability of the company is also increased to 30.53%
from 11.24%.This fact depicts that company is transferring huge portion net
profit to reserves & surplus year by year to overcome from future
uncertainty & to purchase fixed assets & current asset also. Graph indicates
that the company liability is satisfactory.
4.8 Table showing Total Fixed Assets under comparative

Percentages
Particulars 2009 – 2010 2010 - 2011 2011 – 2012
Net Fixed Asset 5.41% -3.04% 28.86%
Capital W.I.P & Advances 12.66% -30.42% -86.85%
Investments 35.26% 24% -5.11%
Deferred Tax Assets -12.08% -26.35% -28.52%
Total Fixed Assets 19.45% 13.85% -2.64%
Analysis: The above table shows that the fixed asset during the year 2012 –
2011 is -2.64%, 2011 – 10 is 13.85% 2010 – 2009 is 19.45% & the net
fixed assets during the year 2010 – 2009 is 5.41%, 2011 – 2010 is -3.04%,

2010-2009 is 5.41%. The WIP & Advances are -86.85%, -30.42%, 12.66%
in 2012-11, 2011-10, 2010-09 respectively. Investments are -5.11%,
24.00%, 35.26% respectively and deferred tax assets are -28.52%, -26.35%
& -12.08% respectively.
4.8 Graph Showing Total Fixed Assets under comparative

Percentages
Interpretation:
The above Graph reveals that the net assets of the company is increasing
year by year it shows that company is investing good amount in fixed asset
to make financial position strong.

Capital WIP & Advances are decreasing continuously it depicts that
company had withdrawn the invested money from his work.
Investment is decreasing drastically it shows that the company had been
withdrawn his investments who made in outside assets.
Deferred tax is also decreasing every year
Finally this graph depicts that there is a drastic decrease in assets because of
withdraw of investment, WIP & advances & deferred tax even increase of
net assets cannot be able to increase the company total assets.
4.9 Table showing Total Current Assets under comparative

Percentages
Particulars 2009 - 2010 2010 - 2011 2011 – 2012
Inventory 50% -- --
Sundry Debtors 5.13% 12.57% 30.93%
Other Current Assets 5.82% -7.41% -30.26%
Cash & Bank Balance 25.70% 0.91% 77.76%
Loans & Advances 30.28% 39.31% 204.90%
Total Current Assets 0.36% 13.95% 89.90%
Analysis: The Above table shows that the total current asset is 89.90%,
13.95% & 0.36% in 2012-11, 2011-10, & 2010-09 respectively. Inventory
is 50% in 2010-09. Sundry debtors are 30.93%, 12.57% & 5.13% other

current Assets are -30.26%, -7.41%, 5.82%. Cash & bank balance is
77.76%, 0.91% & 25.70% and Loans & Advances are 204.90%, 39.31%,
30.28% in 2009-2010, 2010-2011 & 2011-2012 respectively.
4.9 Graph Showing Total Current Assets under comparative

Percentages
Interpretation:
After 2009 company has not maintained any inventory.
Sundry debtor of the company is increasing continuously it clearly indicates
that company is providing some services in credit basis & also to improve
his sales as well as income. It is good sign

During the year the cash or bank balance have increase by 77.76%,
relatively other current assets are decreased so this indicates that the
company had sold the portion of other current assets & maintaining good
liquidity position.
Loans and advances of the company is increased drastically it indicates that
company had given more importance towards giving loans and advances to
outsiders.
The overall current asset of the company is satisfactory.
4.10 Table showing Total Current Liabilities under

Particulars 2009 - 2010 2010 - 2011 2011 – 2012
Current liabilities 18.42% 115.57% -15.75%
Provision 12.21% 85.68% 858.31%
Total Current Liability 105.69% 358.28% 25.33%
Analysis: The above Table shows that total current liability is 25.33, 358%,
105.69%. Provision is 858.31%, 85.68%, 12.21% and Current liabilities are
-15.75%, 115.57%, and 18.42% in 2012-2011, 2011-2010 & 2010-2009
respectively.

4.10 Graph Showing Total Current Liabilities under

Interpretation:
The current liability is decreased in 2012 i.e. -15.75% it indicates that the
company has repaid their portion of borrowing fund.

There is an increase in provision during the year 2012 this indicates that
they are transferring good portion from income to meet future uncertainties
in form of bad debts etc.
The total current liability position indicates that the company is not
maintaining stable current liability position.
4.11 Table showing Total Income under comparative

Percentages
Particulars 2009 - 2010 2010 - 2011 2011 – 2012
Services(Net) 6.99% 23% -3.07%
Other Income -5.07% -54% 401.39%
Total Income 6.83% 26.60% -1.33%
Analysis: The above Table shows that total Income is -1.33%, 26.60%,
6.83%, other income 401.39%, -54.00% & -5.07% and Services ( Net) is
-3.07%, 23.00% & 6.99% in 2012-2011, 2011-2010 & 2010-2009
respectively.

4.11 Graph showing Total Income under comparative

Percentages

Interpretation: the above comparative income statement Graph revels that
service (net) income is decreased in the year 2012-11 is -3.07%, it indicates
that during the year company sales is less than last year’s but Other income
of the company is increased 401.39% in 2012-11 it is a satisfactory part for
company even though during the year company had not increase total
income. It is not good sign.
4.12 Table Showing Operating profit under comparative

percentages
2011 –
Particulars 2009 – 10 2010 -11
12
Total Income 6.83% 21.64% -1.33%
Less: 1. Operating Expenses 7.53% 17.59% -3.99%
Operating Profit 4.81% 33.64% 5.61%
Analysis: The above table shows that the total income is 6.83%, 21.64%,
-1.33% , operating expenses is 7.53%, 17.59%, -3.99% & operating profit
is 4.81%,33.64%, 5.61% in 2009-10, 2010-11,2011-12 respectively.

4.12 Graph Showing Operating profit under comparative

percentages
Interpretation:
The above Graph show that the Operating expenses of the company have
decreased during the year even company was not able to increase its profit
because of drastic decrease in Total income of the company.

4.13 Table showing Profit before Tax under comparative

percentage
Particulars 2009 - 10 2010 -11 2011 – 12

Operating Profit 4.81% 33.64% 5.61%
Less: A. Interest -77.03% 237.57% -100.00%
B. Provision For bad debts 100% 100% 82.64%
C. Depreciation 3.80% -13.97% -4.49%

Profit Before Tax 13.91% 42.84% 9.15%
Analysis: The above table shows that the operating profit is 4.81%, 33.64%,
5.61%, interest is -77.03%, 237.57%, -100%, provision for bad debts is
100%, 100%, 82.64%, depreciation is 3.80%, -13.97%, -4.49% and profit
before tax in 2009-10, 2010-11, 2011-12 respectively.

4.13 Graph showing Profit before Tax under comparative

percentage
Interpretation:
From the above graph we can interpret that during the operating profit of
the company is decreased relatively profit before tax also decreased it
indicates that because of less income profit of the company is decreased.

Depreciation of the company is decreased during the year it indicates the
company had sold portion of fixed assets and the company also reduces
interest during the year it shows company had cleared portion of
borrowings.
4.14 Table showing Profit after Tax under comparative

Percentage
Particulars 2009 - 10 2010 -11 2011 – 12
Profit before Tax 13.91% 42.84% 9.15%
Less: Tax -251.97% 23.77% 12.89%
Profit after Tax 4.44% 45.43% 12.82%
Analysis: The above table shows that profit before tax is 13.91%, 42.84%,
9.15%, tax is -251.97%, 23.77%, 12.82% and profit after tax is 4.44%,
45.43%,12.82% in 2009-10, 2010-11, 2011-12 respectively.

4.14 Graph showing Profit after Tax under comparative

Percentage
Interpretation:
The above Graph shows that Profit before tax of the company is decreasing
year by year and also profit after tax during the year 2012 increased it
shows that company is paid more tax in the year 2012.

In the above graph we can find that profit after tax is decreased drastically
in 2012 compare to 2011 it indicates during the year company Gross profit
is decreased due to various reasons.
4.15 Table showing Balance Transfer to B/S
Particulars 2009 - 10 2010 -11 2011 – 12

Profit after Tax 4.44% 45.43% 12.82%
Less: Proposed Dividend --- -100% 100.00%
Interim Dividend --- 200% -40.00%
Balance Transfer To B/S 23.17% 28.39% 24.72%
Analysis: The above table shows that profit after tax is 4.44%, 45.43%,
12.82%, proposed dividend is -100%, 100%, interim dividend is 200%,
-40.00% and balance transfer to B/S is 23.17%, 28.39%, 24.72% and there
is no interim dividend & proposed dividend during the year 2009-10.

4.15 Graph showing Balance Transfer to Balance sheet

under comarative percentages
Interpretation:
From the above graph we can interpret that the company is not paying
stable interim dividend to his share holders throughout the year. Proposed
and interim dividend is fluctuating year by year it is not good for company.

Balance transfer to balance sheet is also decreased during the year it shows
that in 2012 company profit rate is less compare to 2011.
4.16 Common-Size Balance sheet for the year ending March

31st 2009 and 2010
% of % of
Particulars 2009 2010
changes changes
sources of funds
Share holder fund
1. Share Capital 105,159,306 5.38% 105,159,306 4.80%
2. Reserves & surplus 1,680,154,393 86.01% 1,887,167,619 86.30%
Total Long term Liabilities 1,785,313,699 91.40% 1,992,326,925 91.11%
Less: Current Liabilities 94,127,319 4.81% 111,471,680 5.09%
Provision 73,818,678 3.77% 82,833,972 3.78%
Total current Liabilities 167,945,997 8.59% 194,305,652 8.88%

Total Liabilities 1,953,259,696 100.00% 2,186,632,577 100.00%

Fixed assets
Gross block 605,272,660 30.98% 681,718,513 31.17%
Less : Depreciation 341,077,152 17.46% 431,820,862 19.74%
Net Block 264,195,508 13.52% 249,897,651 11.42%
Capital work-in-progress & advances 49,471,811 2.53% 43,204,992 1.97%
Investments 752,748,813 38.53% 1,018,195,501 46.56%
Deferred Tax Asset 118,641,096 6.07% 104,306,830 4.77%
A. Total fixed Assets(A+B+C+D) 1,185,057,228 60.67% 1,415,604,974 64.73%

Current asset, Loans & advances
Inventory 31,361,961 1.60% 15,680,980 0.71%
Sundry debtors 362,072,988 18.53% 380,652,678 17.40%
other current assets 37,926,594 1.94% 40,136,211 1.83%
Cash & bank balance 186,247,235 9.53% 138,355,466 6.32%
Loans & advances 150,593,690 7.70% 196,202,268 8.97%
Total current asset 768,202,468 39.32% 771,027,603 35.26%

Total Assets 1,953,259,6962 100.00% 2,186,632,577 100.00%
Interpretation:
1. The above common size balance sheet reveals that In 2010 share
holder fund consist of 91.11% total investments while the percentage
is 91.40% in 2009. In 2010 share holders fund is decreased.
Generally, if shareholders investment is 50% of total investments
even then it is considered to be a safe financial planning. So financial
structure in both the years is safer.
2. The company has followed the policy of financing fixed assets from
long term funds. In 2010 investments in fixed assets are 64.73% and
in 2009 i.e. 60.67%. This shows that the both year company has
financed working capital from long term fund also.
3. Fixed asset of the company is increased by 64.73%. It indicates that
company had given importance to fixed asset investment
continuously.
4. Investment of the company is increased in the year 2010 i.e, 46.56%
from 38.53% it indicates that company has increased investment
made in outside assets.

5. The working capital position of the company is good. In 2010
investment in current assets are 35.39% and in 2009 i.e., 39.32%.
This fact depicts that the company has reduced the fund allocation to
current assets.
6. The current liability in the year 2010 is increased to 8.88% from
8.59% it shows that company borrowed additional money from
suppliers/ outsiders.
4.17 Common-Size Balance sheet for the year ending 2010- 11

% of % of
changes changes
sources of funds
Share holder fund
1. Share Capital 105,159,306 4.80% 105,159,306 4.22%

Provision 82,833,972 3.78% 11,855,519 0.47%


Fixed assets
Gross block 681,718,513 31.17% 732,222,034 29.40%
Net Block 249,897,651 11.42% 242,299,532 9.72%
Capital work-in-progress &
43,204,992 1.97% 30,059,564 1.20%
advances
Investments 1,018,195,501 46.56% 1,262,628,341 50.69%

Inventory 15,680,980 0.71% --- ---
Sundry debtors 380,652,678 17.40% 428,502,168 17.20%
Cash & bank balance 138,355,466 6.32% 139 ,627,852 5.60%
Loans & advances 196,202,268 8.97% 273,330,888 10.97%
Total current asset 771,027,603 35.26% 878,622,318 35.27%

Total Assets 2,186,632,577 100.00% 2,490,428,642 100.00%
Interpretation:
is 91.11% in 2010. In 2010 share holders fund is decreased.
Generally, if shareholders investment is 50% of total investments
even then it is considered to be a safe financial planning. So financial
structure in both the years is safer.
long term funds. In 2011 investments in fixed assets are 64.72% and
in 2010 i.e. 64.73%. This shows that the both year company has
financed working capital from long term fund also.
3. Fixed asset of the company is stable i.e. 64.72%. It indicates that
company had given importance to fixed asset investment
continuously.
4. Investment of the company is increased in the year 2010 i.e, 50.69%
from 46.56% it indicates that company has increased investment
made in outside assets.

investment in current assets are 35.26% and in 2011 i.e., 35.27%.
This fact depicts that the company has reduced the fund allocation to
current assets.
6. The current liability in the year 2010 is increased to 10.12% from
8.88% it shows that company borrowed additional money from
suppliers/ outsiders.
7. The fund allocation is made in the proportion of fixed asset 6.5: 3.5
current asset it is good proportion.
4.18 Table Showing Common-Size Balance sheet for the year

ending March 31st 2011 and 2012
% of % of
changes changes
sources of funds
Share holder fund
1. Share Capital 105,159,306 4.22% 105,159,306 3.24%
Provision 11,855,519 0.47% 113,613,160 3.50%


Fixed assets
Gross block 732,222,034 29.40% 861,970,163 26.62%
Net Block 242,299,532 9.72% 312,242,833 9.64%
Capital work-in-progress & advances 30,059,564 1.20% 3,950,001 1.22%
Investments 1,262,628,341 50.69% 1,198,082,482 37.00%

Inventory
Sundry debtors 428,502,168 17.20% 561,056,772 17.32%
Cash & bank balance 139 ,627,852 5.60% 248,208,986 7.66%
Loans & advances 273,330,888 10.97% 833,396,263 25.73%
Total current asset 878,622,318 35.27% 3,237,755,599 51.53%

Total Assets 2,490,428,642 100.00% 2,490,428,642 100.00%
Interpretation:
is 89.87% in 2011. In 2012 share holders fund is increased. Generally,
if shareholders investment is 50% of total investments even then it is
considered to be a safe financial planning. So financial structure in
both the years is safer.
long term funds. In 2012 investments in fixed assets are 48.46% and in
2011 i.e. 64.72%. This shows that the both year company has financed
working capital from long term fund also.
3. Investment of the company is reduced in the year 2012 i.e, 37.00%
from 50.69% it indicates that company has reducing investment made
in outside assets.
investment in current assets are 51.53% and in 2011 35.27%. This fact

depicts that in 2012 company has given more importance to liquidity
position.
5. The current liability in the year 2012 is decreased to 9.76% from
10.12% it shows that company reduced outside borrowings.
6. The analysis of various figures shows that both the year company has
satisfactory long term and short term financial position.
4.19 Table Showing Common-Size Income Statement for the

year ending March 31st 2009 and 2010
Year ended % of Year ended % of
Particulars
2009 change 2010 change
INCOME
Services (Net) 1,858,290,195 98.72% 1,988,196,736 98.86%

Other Income 24,051,802 1.27% 22,831,166 1.13%
Total Income 1,882,341,997 100.00% 2,011,027,902 100.00%

EXPENDITURE
Operating and Other Expenses 1,398,523,420 74.29% 1,503,897,289 74.78%

Interest 5,007,870 0.26% 1,149,861 0.05%
Depreciation 91,064,811 4.83% 94,525,720 4.70%

Provision for Doubtful Debts 3,613,203 0.19% -
1,498,209,304 79.59% 1,599,572,870 79.54%

Add/(Less) : (Increase)/ Decrease in Stocks 36,690,968 1.94% 15,680,981 0.77%
1,534,900,272 81.54% 1,615,253,851 80.31%

Profit Before Tax 347,441,725 18.45% 395,774,051 19.68%
Provision for Tax -3,849,369 -0.20% 75,138,720 3.73%

MAT credit --- --- -46,257,892 -2.30%
Profit After Tax 351,291,094 18.66% 366,893,223 18.24%

Add : Balance of Profit brought forward
649,011,515 34.47% 826,529,982 41.09%
from previous year
Disposable Surplus 1,000,302,609 53.14% 1,193,423,205 59.34%
Proposed Dividend 63,095,584 3.35% 63,095,584 3.13%

Interim Dividend 52,579,653 2.79% 52,579,653 2.61%
Provision for Dividend Tax 18,097,390 0.96% 19,659,006 0.97%

Transfer to General Reserve 40,000,000 2.12% 40,000,000 1.98%
Balance carried to Balance Sheet 826,529,982 43.90% 1,018,088,962 50.62%

1,000,302,609 53.14% 1,193,423,205 59.34%
Interpretation:
1. The common size income statement given above reveals that there
has been increase in service income by 98.86% & other income is
increased by 1.13% but it does not affect the total income which
depicts that company can able to maintain good income.
but it does not affect overall profit due to the income rate is high.
3. Depreciation is decreased by 4.70% it depicts that company has
sold portion of fixed assets
4. Interest has increased by 0.05% it shows the company had paid
loan borrowed.
5. During the year tax paid is increased by 19.68% it depicts the
company has increased the profit & paid more tax.
6. Proposed dividend, interim dividend has decreased 3.13%, 2.61%
so this indicates during the year the company has paid fewer
dividends to his shareholders.

7. Balance carried to balance sheet is 50.62% it indicates that the
company is transferring good portion to balance sheet.
8. It may be conclude that there is a sufficient progress in the
company & the overall profitability of the company is satisfactory.
4.20 Table Showing Common-Size Income Statement for the

year ending March 31st 2010 and 2011

Particulars
INCOME
Services (Net) 1,988,196,736 98.86% 2,435,768,787 99.56%
Other Income 22,831,166 1.13% 10,530,957 0.43%
Total Income 2,011,027,902 100.00% 2,446,299,744 100.00%
EXPENDITURE
Interest 1,149,861 0.05% 3,881,623 0.15%
Depreciation 94,525,720 4.70% 81,316,414 3.32%
Provision for Doubtful Debts - 11,537,756 0.47%
1,599,572,870 79.54% 1,865,264,521 76.24%
Add/(Less) : (Increase)/ Decrease in Stocks 15,680,981 0.77% 15,680,980 0.64%
1,615,253,851 80.31% 1,880,945,501 76.88%
Provision for Tax 75,138,720 3.73% 93,002,493 3.80%
MAT credit -46,257,892 -2.30% -61,237,382 -2.50%
Profit After Tax 366,893,223 18.24% 533,589,132 21.81%
826,529,982 41.09% 1,018,088,962 41.61%
previous year

Proposed Dividend 63,095,584 3.13% --- ---
Balance carried to Balance Sheet 1,018,088,962 50.62% 1,307,131,399 53.43%
1,193,423,205 59.34% 1,551,678,094 63.42%
Interpretation:
1. The common size income statement given above reveals that there
has been increase in service income by 99.56% & other income is
decreased by 0.43% but it does not affect the total income which
depicts that company can able to maintain good income.
2. The operating & other expenses, depreciation has decreased to
72.29%, 3.32%. It indicates that the company can able to make good
profit during the year & also it reveals that the company has sold
portion of fixed assets during the year.
3. The interest has increased by 0.15% it shows that during the year
company had borrowed the fund & because of good profit made by
company they transferred some amount to provision.
4. During the year the tax paid has increased by 3.80%. It shows that
company profit is increased so the company has paid more tax during
the year.
5. The company had maintained provision for doubtful debts.

6. Interim dividend has increased 6.44% it shows that during the year
the company had paid better dividend to his shareholders & there is
no proposed dividend during the year.
7. The balance carried to the balance sheet 53.42% it indicates that the
8. The overall profitability of the company is satisfactory.
4.21 Common-Size Income Statement for the year 2011 12

Particulars
INCOME
Services (Net) 2,435,768,787 99.56% 2,360,942,195 97.81%
Other Income 10,530,957 0.43% 52,802,059 2.18%
Total Income 2,446,299,744 100.00% 2,413,744,254 100.00%
EXPENDITURE
Interest 3,881,623 0.15% ---- ----
Depreciation 81,316,414 3.32% 77,664,907 3.21%
Provision for Doubtful Debts 11,537,756 0.47% 21,073,432 0.87%
1,865,264,521 76.24% 1,796,610,402 74.43%
Add/(Less) : (Increase)/ Decrease in
15,680,980 0.64% 0 0
Stocks
1,880,945,501 76.88% 1,796,610,402 74.43%
Provision for Tax 93,002,493 3.80% 104,996,236 4.34%
MAT credit -61,237,382 -2.50% -89,892,126 -3.72%
Profit After Tax 533,589,132 21.81% 602,029,742 24.94%
Add : Balance of Profit brought forward 1,018,088,962 41.61% 1,307,131,399 54.15%

from previous year
Proposed Dividend --- --- 84,127,445 3.48%
Balance carried to Balance Sheet 1,307,131,399 53.43% 1,630,332,952 67.54%
1,551,678,094 63.42% 1,909,161,141 79.09%
Interpretation:
1. The common size income statement given above reveals that there has
been decrease in service income by 97.81% & other income is
increased by 2.18% but it does not affect the total income which
depicts that the company can able to maintain good income.
2. The operating & other expenses, depreciation has decreased to
70.34%, 3.21%. It shows that the company has sold portion of fixed
assets during the year & the company had not paid any interest during
the year.
3. During the year the tax paid has increased by 4.34%. It shows that
company profit is increased so the company has paid more tax during
the year.
4. The company had maintained provision for doubtful debts.
5. Interim dividend has decreased 3.92% it shows that during the year the
company had paid less dividend to his shareholders & the proposed
dividend has increased during the year.

6. The balance carried to the balance sheet 67.54% it indicates that the
7. The overall profitability of the company is satisfactory.
4.22 Table showing Total Liabilities under common size

Percentages
Particulars 2009 2010 2011 2012
Fixed Liabilities 91.40% 91.11% 89.87% 90.23%
Current Liabilities 8.59% 8.88% 10.12% 9.76%
Total Liabilities 100% 100% 100% 100%
Analysis: The above table reveals that current liabilities 9.67%, 10.12%
8.88% & 8.59% and fixed liabilities are 90.23%, 89.87%, 91.11% &
91.40% in 2012, 2011, 2010 & 2009 respectively.

4.22 Graph showing Total Liabilities under common size

Percentages
Interpretation: the above common size total liability Graph reveals that
company is maintaining 1:9 proportion of current liability and fixed

liability. There is no drastic increase or decrease in the proportion of total
liability.
The company is maintaining stable fixed and current liability during all
these years.
The overall total liability position is satisfactory.
4.23 Table showing Total Assets under common Size

Percentages
Particulars 2009 2010 2011 2012
Fixed Assets 60.67% 64.73% 64.72% 48.46%
Current Assets 39.32% 35.26% 35.27% 51.53%
Total Assets 100% 100% 100% 100%
Analysis: The above table shows that fixed is 48.46%, 64.72%, 64.73% &
60.67% and Current Assets are 51.535, 35.27%, 35.26% & 39.32% in 2012,
2011, 2010 & 2009 respectively.

4.23 Graph showing Total Assets under common Size Percentages
Interpretation:
The above common size total asset Graph revels that there is a decrease in
fixed asset by 48.46% in 2012 compared to last three years i.e.,64.72%,

64.73% and 60.67%. It indicates the company is giving more importance to
maintain liquidity position and also to maintain good working capital.
The total Current assets of the company is increased year by year that
51.53% in 2012 compare to 35.27% in 2011, 35.26% in 2010, & 39.23% in
2009. It is a good sign & the company is maintaining good liquidity
position. But we can infer that the company is investing huge portion of
funds into this rather than maintaining more fixed assets.
4.24 Table showing Total Income under common Size

Percentages
Particulars 2009 2010 2011 2012
Services(Net) 98.72% 98.86% 99.56% 97.81%
Other Income 1.27% 1.13% 0.43% 2.19%
Total Income 100% 100% 100% 100%
Analysis: The Services (Net) is 97.81%, 99.56%, 98.86% & 98.72% and
other Income is 2.19%, 0.43%, 1.13% & 1.27% in 2012, 2011, 2010 &
2009 respectively.

4.24 Graph showing Total Income under common Size

Percentages

Interpretation:
The above common size income Graph reveals that service income is
decreased to 97.81% in the years 2012 compare to 99.56% in 2011 and
other two years i.e., 98.86% and 98.72% it reveals that during the year
company income goes down due to some reasons.
Other income of the company increased to 2.19% in the year 2012 but this
increase is not satisfactory because company entire income is depending on
service income.
4.25 Table showing Expenses under common size Percentages
Particulars 2009 2010 2011 2012

Operating & Other
74.29% 74.78% 72.29% 70.34%
expenses
Interest 0.26% 0.05% 0.15%
Depreciation 4.83% 4.70% 3.32% 3.21%
Provision for Tax -0.20% 3.73% 3.80% 4.34%
Analysis: Provision for tax is 4.34%, 3.80%, 3.73% & -0.20%.

Depreciation is 3.21%, 3.32%, 4.70% & 4.83%. Operating & other
Expenses is 70.34%, 72.29%, 74.78% & 74.29% in 2012, 2011, 2010, and
2009 respectively. Investment is 0.15%, 0.05% & 0.26% in 2011, 2010 &
2009 respectively.

4.25 Graph showing Expenses under common size

Percentages
Interpretation:
The above common size expenses Graph shows that the operating and other
expenses are decreased to 70.34% from 72.29% in 2011 to 2012. It is a
good indication that the company is trying.

The company has not paid interest in the year 2012. Depreciation also
decreasing year by year i.e. 3.21% in 2012 compare to 3.32% in 2011,
4.70% in 2010 and 4.83% in 2009. Provision for Tax is increase to 4.34%
in 2012, compare to 3.80 in 2011, 3.73% in 2010 and -0.20% in 2009. It
indicates that during the year company reduces the operating & other
expenses and also depreciation so it made the company to earn good profit.
SUMMARY OF FINDINGS
It was necessary to point out the strength and weakness of the company
after making analytical study. Financial performance will reveal all the
strength and weakness of an organisation with regard to the Financial
Statement analysis. The findings are shown below:
1. Reserves & surplus of the company is increasing year by year this
shows that company is transferring huge portion of net profit to
reserves & surplus to overcome from future problems / uncertainty &
also it indicates that the net profit is increasing year by year.
2. The balance sheet of the company reveals that company is utilizing
reserves and surplus to purchase fixed assets.
3. The company policy shows that using reserves & surplus and current
liability to maintain good working capital position.
4. During the year the cash or bank balance have increase by 77.76%,
so this indicates that the company had sold the portion of other

current assets & also they withdraw the investment & capital W.I.P
& advances.
5. During the year Current assets of the company is increased when
compare to last three years it shows that company is giving more
importance to maintain better liquidity position.
6. Company is maintaining constant share capital.
7. In the year 2012 company has not paid interest it shows that
company has not having any debt to pay any interest or they are
reduced his borrowing fund.
8. 2012 balance sheet analysis depicts that company is investing 52% of

capital in current assets and remaining 47% of capital in fixed assets
it shows that, the more importance is given to current assets.
9. Balance sheet analysis of company depicts 90% of capital is
shareholder fund and remaining 10% of capital is borrowing funds.
10.Depreciation of the company is reduced during the year it shows that
company is sold part of fixed asset.
11.25% of reserves and surplus are investing in provisions and
advances.
12.Company is maintaining good cash & bank balance to meet his day
to day requirements.
13.During the year 2012 provisions is increased o 858.31%. It is huge
increase compare to last year. It shows that company is transferring
better amount to his provision to meet doubtful debt.
14.Net profit of the company is increasing year by year, it is good
indication to company.

15.Sundry debtor of the company is increasing continuously; it indicates
company is increasing service on credit to attract the customers.
16.During the year 2012 company paid EPS of Rs 5.72 to his
shareholder. Last year company has paid EPS of Rs 5.07.
SUGGESTIONS
1. The proportion between Fixed Asset and current assets is 48.46% &
51.53%. It shows that the company is giving more preference to
current assets rather than Fixed assets it is not good, so company
needs to change this policy and they need to give more importance to
fixed asset.
2. Company Current asset ratio 5:1 approximately. It is more than
standard ratio i.e. 2:1 it indicates that the current assets has blocked,
which the company was not utilizing properly. The company should
try to reduce this high ratio to the standard one.
3. Provision for doubtful debts of the company is increased in the year
i.e. 82.64% compare to last year, it is not a good sign. So company
needs to take remedial actions to reduce doubtful debts.

4. Company is utilizing 25.73% of capital to give loans & advances to
outsiders it shows that the company is taking risk but here company
needs to take some actions in future to avoid such risk.
5. Loss on sale of Fixed Assets are more during the year compare to last
year so company need to give some importance to sell fixed assets at
good price.
6. Total income of the company is decreased during the year compare
to last year if company will take some action regarding this then
company will enjoy good return in future.

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A STUDY ON FINANCIAL STATEMENT

Seshadripuram Institute Of Commerce & Management Page 1

NEED AND IMPORTANCE OF FINANCE:

Seshadripuram Institute Of Commerce & Management Page 2

Seshadripuram Institute Of Commerce & Management Page 3

Seshadripuram Institute Of Commerce & Management Page 4

Thus, the term ‘Financial Statement’ generally refers to the two

Seshadripuram Institute Of Commerce & Management Page 5

Objectives of Financial Statements

Characteristics of Financial Statement

Seshadripuram Institute Of Commerce & Management Page 6

2. Effective Presentation: The financial statements should be presented

Importance of Financial Statement

Seshadripuram Institute Of Commerce & Management Page 7

Limitations of Financial Statements

Seshadripuram Institute Of Commerce & Management Page 8

Types of financial statements

Seshadripuram Institute Of Commerce & Management Page 9

1.2 FINANCIAL STATEMENT ANALYSIS

In the words of Kennedy and Memullar, “ The analysis and

The process of reviewing and evaluating a company’s financial

Financial statements are prepared to meet external reporting

Seshadripuram Institute Of Commerce & Management Page 10

information provided in the financial statements is of immense use

There are various methods or techniques that are used in analyzing

These reports are usually presented to top management as one of

 Continue or discontinue its main operation or part of its business;

Seshadripuram Institute Of Commerce & Management Page 11

Financial Analysts often assess the firm's:

1. Profitability - its ability to earn income and sustain growth in both

3. Liquidity - its ability to maintain positive cash flow, while satisfying

4. Stability- the firm's ability to remain in business in the long run,

Seshadripuram Institute Of Commerce & Management Page 12

Advantages of Financial Statement Analysis:

There are various advantages of financial statements analysis.

3. Financial statements analysis can help the government agencies to

Disadvantages of Financial Statements Analysis

Seshadripuram Institute Of Commerce & Management Page 13

Types of Financial Analysis

On the Basis of On the basis of Modus

1. On The Basis of Material Used: according to material used, financial

Seshadripuram Institute Of Commerce & Management Page 14

employees of the organisation as well as government agencies which have

2. On The Basis of Modus Operandi:

A. Horizontal Analysis: A horizontal analysis compares two or more

B. Vertical Analysis: Vertical analysis is called such because the

Seshadripuram Institute Of Commerce & Management Page 15

Methods Of financial Analysis:

A number of methods or devices are used to study the relationship between

4. Funds Flow Statement

5. Cash Flow Statement

1. Comparative Statement: Comparative statements are financial

Seshadripuram Institute Of Commerce & Management Page 16

The two comparative statements are:

A. Comparative Balance Sheet: The comparative balance sheet

Before interpreting comparative balance sheets as to study the following

Seshadripuram Institute Of Commerce & Management Page 17

B. Comparative Income Statements: The income statement gives the

2. Common size statement: The common size statement, balance sheet