Financial Statement Analysis

CHAPTER-I
INTRODUCTION
INTRODUCTION:
Financial statements are prepared primarily for decision making. 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. Financial analysis the process of identifying the financial strengths
and weaknesses of the firm by properly establishing relationship between the items of the
balance sheet and the profit and loss account There are various methods or techniques
used in analyzing financial statements financial statements are an important source of
information for evaluating the performance and prospects of firm, if properly analyzed
and interpreted these statements can provide valuable insights into firms performance.
Analysis of financial statements is if interest to lenders, investors, security analyst,
manager and others.
Financial statements analysis may be done for a variety of purposes, which may range
from simple
analysis of short term liquidity position of the form to a comprehensive
assessment of the strengths and weakness of the firm in various areas, it is helpful in
assessing corporate excellence, judging credit worthiness forecasting bond rating,
evaluating intrinsic value of equity shares predicting bankruptcy and assessing market
risk.
Financial statements:
Managers, shareholders, creditors and other interested groups seek answer to the
following question about firm:
What is the financial position of the firm at a given point of time?

How has the firm performed financially over a given period of time?
What have been the sources an d uses of cash over a given period?
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To answer these questions, accountant prepares two principle statements, the Balance
sheet and the profit and loss account, ancillary statement, the Cash Flow statement.
Analysis of financial statement

Analysis refers to the process of critical examination of the financial information
contained in the financial statement in order to understand and make decisions regarding
the operations of the firm. The analysis is basically study of the relationship among
various financial facts and figure as given in a set of financial statements. Complex figure
as given in this statements are dissected\broken up into simple and variable element and
significant relationship are established between the elements of the same statements are
different financial statements.
This process of dis section, establishing and identifying the financial weaknesses and
strengths of the firm. It is indicative of two aspects of a firm i.e. the profitability and the
financial position and it are what are known as the objectives of the analysis.
Procedure of Financial Statements Analysis

Broadly speaking there are three steps involved in the analysis of financial statements.
There are:
Selection,
Classification,
Interpretation.
The first step involves selection of information (data). The second step involved is the
methodical classification of the data and the third step includes drawing of internees and
conclusions.
The following procedure is adopted for the analysis and Interpretation of financial
statements:
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The analyst should acquaint himself with the principles and postulates of
accounting.
The extent of analysis should be determined so that the sphere of work may be
decided.
The financial data given in the statements should be re-organized and re-arranged.
A relationship is established among financial statements with the help of tools and
techniques of analysis such as ratios, trends, common size, funds flow etc.
The information is interpreted in a simple and understandable way.
The
significance and utility of financial data is explained for helping decision-taking.
The conclusions drawn from interpretation are presented to the management in

the form of reports.
Objectives of the study:

To analysis the financial statements and present its financial positions.
To assess and evaluate the performance of the company.
To determine the efficiency of operations as reflected in the financial statements.
To offer appropriate suggestions for better performance of the company.
Need and importance of the study:
Financial analyst analyses the financial statements with various tools of analysis
before commanding upon the financial health of the firm.
Essential to bring out the history of Yeluri formulations Pvt.Ltd

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Significance and meaning of the financial statements.
Scope of the study:

Analysis of financial statement can be undertaken by different persons and for different
purposes, therefore, the scope of the AFS may be varying from one situation to another.
However, the following are some the techniques of the AFS:
Comparative financial statements.

Common-size financial statements.
Trend percentage analysis.
Statement of changes in financial position.
Cost-volume-profit relations, and
Ratio analysis and others.
Research methodology:
Research design
This is a systematic way to solve the research problem and it is important component for
the study without which researches may not be able to obtain the format. A research
design is the arrangement of conditions for collection and analysis of data in a manager
that aims to combine for collection and analysis of data relevance to the research purpose
with economy in procedure.
Meaning of research design
The formidable problem that follows the task of defining the research problem is the
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preparation of design of the research project, popularly known as the research design,
decision regarding what, where, when, how much, by what means concerning an inquiry
of a research study constitute a research design. A research design is the arrangement of
conditions for collection and analysis of data in a manager that aims to combine for
collection and analysis of data relevance to the research purpose with economy in
procedure.
Sources of data
The process of research work done the present project work is financial statement
analysis in this project the methodology adopted is the two steps.
Data collection
Data analysis
Data collection:Data means the information regarding the topic so researched this can be done using two
sources.
Primary data
Secondary data
Primary data:
The Primary data are those informations, which are collected afresh and for the first
time, and thus happen to be original in character.
Secondary Data:
The Secondary data are those which have already been collected by some other
agency and which have already been processed. The sources of Secondary data are
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Annual Reports, browsing Internet, through magazines.
It includes data gathered from the annual reports of Yeluri formulations Pvt.Ltd
Articles are collected from official website of Yeluri formulations Pvt.Ltd.
Data analysis:Data analysis is the time series analysis where tables and graphs have been used to
analysis the data the following tools has been applied.
Comparative financial statements.

Common-size financial statements.
Trend percentage analysis.
Statement of changes in financial position.
Cost-volume-profit relations, and
Ratio analysis and others.
Limitation of the study:
It is only a study of interim reports.
Financial analysis is based upon only monetary information and non monetary
factors are ignored.
Different people may interpret the same analysis in different ways.

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It does not consider the changes in prices level.

Changes in accounting procedure by firm may often make financial analysis
misleading.
CHAPTER-II
REVIEW OF LITERATURE
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Financial Statement Analysis

Introduction:
The term financial analysis also known as analysis and interpretation of financial
statements , refers to the process of determining financial strength and weaknesses of the
firm by establishing strategic relationship between the items of the balance sheet , profit
and loss account and other operative data.
Analyzing financial statements by Metcalf and Titard
Financial analysis is a process of evaluating the relationship between component parts of
a financial statement to obtain a better understanding of a firms position and
performance by Myers
The purpose of financial analysis is to diagnose the information contained in financial
statements so as to Jude the profitability and financial soundness of the firm. Just like a
doctor examines his patient by recording his body temperature, blood pressure, etc.
Before making his conclusion regarding the illness and before giving his treatment, a
financial analyst analysis the financial statements with various tools of analysis before
commenting upon the financial health or weaknesses of an enterprise.
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The analysis and interpretation of financial statements is essential to bring out the
mystery behind the figures in financial statements. Financial statements analysis is an
attempt to determine the significance and meaning of the financial statement data so that
forecast may be made of the future earnings, ability to pay interest and debt maturities
(both current and long term) and profitability of a sound divided policy.
OBJECTIVES OF FINANCIAL STATEMENT
Broadly the objective of the Analysis of Financial statement is to understand the
information contained in the financial statement with a view to the weakness and
strengths of the firm and to make forecast about the future prospects of the firm and their
by enabling the financial analyst to take different decision regarding the operation of the
firm. The objectives of the analysis can be identified as:
To assess the present profitability and operating efficiency of the firm as a whole
as well as for its different departments.
To find out the relative importance of different components of the financial

position of the firm.
To identify the reasons for change in the profitability\financial position of the

firm.
To assess the short-term as well as the long-term liquidity position of the firm.
To examine the solvency of the firm.
To find out the ability of the firm to meet its current obligations.
Significance of Financial Analysis
Analysis of financial statement is carried out to measure the enterprises liquidity,
profitability, solvency and other indicators to assess its operating efficiency, financial
position and performance. Financial Analysis serves the following purpose.
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To know the operational efficiency of the business: The financial analysis

enables the management to find out the overall efficiency of the firm.
Department-wise efficiency can also be judged from the available data. This will
enable the management to locate weak spots of the business and take necessary
remedial action.
Helpful in measuring the solvency of the firm: The firm must know its
financial soundness. It should satisfy itself that its current resources are sufficient
to meet its current liabilities. This is possible through the calculations of liquid
ratios. On the other hand, the long term financial position can be measured by
calculated debt equity, proprietary and fixed assets ratios. Thus, the financial
analysis helps the decision makers in taking appropriate decisions for
strengthening the short-term as well as long-term solvency of the firm.
Comparison of past and present results: Financial statement of the previous

years can be compared and the trend regarding various expenses, purchases, sales
gross profit can be ascertained. The cost of goods sold, values of assets and
liabilities can be compared and the future prospects of the business can be
indicated.
Help in measuring the profitability: Financial statements show the gross profit,
net profit, and other expenses. The relationship of these items can be established
with sales by calculating operating ratios. This type of analysis helps the
managers in taking certain decisions for improving the profitability or reducing
the losses of the firm.
Inter-firm comparison: The financial analysis makes easy to inter-firm

comparison. Various financial characteristics like profitability, liquidity, solvency
of different firms can be compared. This comparison can also be made for various
time periods.
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Helps in judging the solvency of the undertaking: creditors are always

interested in knowing the solvency i.e, the capacity of the business to repay their
loans. Through
Financial statement it is possible to known:
Whether current assets are sufficient to meet current liabilities.

Proportion of liquid assets to current assets.
Futures prospects of the business.
Whether debentures and other loans are secured or not.
Managerial efficiency of the company.
Bankruptcy and failure: Financial statement analysis is a significant tool in
predicting the bankruptcy and failure of the business enterprises. Financial
statement analysis accomplishes this through the evaluation of solvency position.
Helps in forecasting: The financial analysis will help in assessing future

development by making forecasts and preparing budgets. Capital budgets are
prepared after taking into account the profitability of various alternative
proposals. The trend shown by financial analysis will pave way for the future.
Types of financial analysis:Financial analysis into different categories depending upon
The material used and

The method of operation followed in the analysis or the modus operandi of
analysis
Types of financial analysis
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On the basis of material used on the basis of modus operandi
External
Internal
Horizontal
Vertical
Analysis
Analysis
Analysis
Analysis
On the basis of material used:

According to material used, financial analysis can be of two types
External analysis
Internal analysis
External analysis:This analysis is done by outsiders who do not have access to the detailed internal
outsiders include investors, potential investors , Creditors, Potential Creditors,
Government Agencies , Credit agencies and General Public for financial analysis,
these external parties to the firm depend almost entirely on the published financial
statements.
Internal analysis:The analysis conducted by persons who have access to the internal accounting records
of a business firm is known as internal analysis.
On the basis of modus operandi:

According to the modus operandi financial analysis can also be of two types
Horizontal analysis
Vertical analysis
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Horizontal analysis:Horizontal analysis refers to the comparison of financial data of a company for
several years. The figures for this type of analysis are presented horizontally over a
number of columns. The figures of the various years are compared with standard or
base year a base year is year chosen as beginning point. This type of analysis is also
called dynamic analysis as it is based on the data from year to year rather than on
data of any one year. The horizontal analysis makes it possible to focus attention on
items that have changed significantly during the period under view
Vertical analysis:-
Vertical analysis refers to the study of relationship of the various items in the financial
statements of one accounting period in this types of analysis the figures from financial
statement of a year are compared with a base selected from the same years statement.
Parties interested in financial analysis:

Financial Executives:The first party interested in the financial analysis in the financial department of the
business concern who have a deep insight into the financial condition of the enterprise
and view of the past performance, which help in future decisions making.
Management:The management of the concern is also interested in the analysis of the statements
because it helps them in reaching conclusion regarding the overall operation of the
business. The management is interested in every aspects of the financial analysis it is
there overall responsibility to see that the resources of the firm are used effectively and
efficiently and the firms financial position is sound. As such, return on analysis is very
important for them.
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Creditors:Creditors also evaluate the financial statements and on the basis of these financial
statements they come about the credit worthiness of the business enterprise and chosen to
extend, maintain of restrict credit. Creditors will be interested to give credit for those
business enterprises having sound financial position and having capable of being
repayments of their credit. Some of the aspects of enterprise operations that are of
interested of the creditors are liquidity of funds, soundness of the financial structure,
profitability of the operations, effectiveness of working capital management etc. The
bankers and trade creditors of a business enterprise are interested in its cash generation
and credit worthiness. They want to assess whether the enterprise will be as interested
payments due as per agreed schedules. The get all this information from the analysis of
balance sheet and income statement of the company.
Investors:Investors present as well as prospective, are interested in the business in the

measurements of earning capital of securities. Every investor has the tendency to get fair
return on his or her investment. Investors have been increased concerned with the cash
generation capability of an enterprise primarily in terms of the flexibility availability to
such enterprises to acquire other business and new assets on an advantageous basis. For
this purpose each cash flow analysis and funds flow analysis are very useful.
Government:The financial statements are used to assess the tax liability of the business enterprise. The
government studies economic situation of the country from these statements enable the
government to find out whether business is following various rules and regulations or not.
Bankers:The banker is interested to see that the loan amount is secure and the customer is also
able to take the interest regularly. The bankers will analysis the balance sheet to
determine financial strength of the concern and profit and loss account will also be
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studied to find out earning position.

The information provided by the analysis and interpretation of various financial
statements is important and useful to those groups also that are interested in working of
the business due to one or other motive.
Procedures for financial analysis:

The following is the procedure to be followed by the interested parties in analyzing the
financial statements.
Determination of nature and extent of analysis: First of all, the depth, object
and extent of analysis is to be determined by the financial analyst. The nature of
analysis will differ depending on the purpose of the analysis. For example, trade
creditors and bankers are interested in knowing whether the firm can pay back their
debt in short period. Their analyses will, therefore, confidence to the evaluation of the
firms liquidity position. The suppliers of interested in knowing its ability to generate
cash to be able to pay interest and return their claims. Similarly, investors, who have
invested their money in long-term debt, on the other hand, are interested in the firms
profitability over time. They are the firms shares, are most concerned about the firms
earnings. As such, they concentrate on the analysis of the firms financial position to
the extent it influences the firms earnings ability. Finally, management of the firm
would be interest red in every aspect of the financial analysis.
Vertical of the financial statements: Before analyzing and preparing any

statement or composing financial ratios, it is necessary for the analyst to go through
the various financial statements of the firm.
Collection of necessary statements: The analyst should collect other useful

information from the management useful for analysis. This includes any other
information not being revealed from the published financial statements.
Rearrangement of financial data: Before making actual analysis and

interpretation, the analyst must rearrange the data provided by these statements in
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useful manner. The approximation of figures, re-classification of consolidation of

items etc., is done in this step.
Methods of analysis: Now the financial analyst may use one or multiple methods
of financial analysis. The methods of financial analysis are: comparative statements,
common size statements, trend analysis, ratio analysis, funds flow statements, cash
flow statements and cost volume profit analysis (CVP analysis).
Interpretation
and
presentation: After
analyzing
the
statements
the
interpretation is to be made. The interference drawn from the analysis are presented in
the scope of reports to the management.
Limitations of financial analysis :

Historical data: Analysis of the financial statements indicates about the
performance of the business in the processing period or periods. It does not
indicate the present position of the business. Financial statements are prepared on
historical facts and do not throw light on the current and present position of the
business.
Lack of standard terminology: Accounting is not an exact science. It does not

universally accepted terminology. Different meanings are given to a particular
term. There are different methods of providing depreciation. Interest may be
charged on different rates. In this way, there is sufficient possibility of
manipulation and the financial statements have to suffer. As a consequence
financial analysis also proves to be defective. However, in the recent past the
international accounting board is taking interest and taking measures for
standardizing the accounting terminology as well as bringing standards for being
uniformity in accounting system.
Affects of prices level changes: The results shown by financial statements may
be misleading, if price level changes have not been accounted for. The ratio may
improve with the increase in price, where as actual efficiency may not improve.
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Ratios of the two years will not be meaningful for comparison, if the prices of
commodities are different. Change in price affects cost of production, sales and
value of assets and as a consequent comparability of ratios also suffers.
Non-consideration qualitative aspect: financial analysis does not measure the

qualitative aspects of the business it does not show the skill, technical know how
and the efficiency of its employees and managers. It is the quantitative
measurement of the performance. It means that analysis of financial statements
measures only one sided performance of the business. It completely ignores
human resources.
Misleading results: Results shown by financial analysis may be misleading in the

absence of absolute date. For example, the analysis of one firm reveals that the
increase in profits from Rs.20,000 to Rs.80,000 shows that the profit has
increased by four times. In case of another firm the analysis reveals that the profit
of this firm als increased from Rs.100 crores toRs.400 crores, showing four fold
increases. But this analysis ignored the size of the firms. As such, the results may
mislead.
Methods of financial analysis:The following methods of analysis are generally used:-
Comparative Statements.
Trend Analysis.
Common-Size Statements.
Funds flow Analysis.
Cash Analysis
Ratio Analysis
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Cost-volume-Profit Analysis
COMPARATIVE STATEMENTS:The comparative financial statements are statements of the financial position at
different periods of time .the elements of financial position are show in a comparative
Statement provides an idea of financial position at two or more periods. Generally two
financial statements (balance sheet and income statement) are prepared in comparative
form for financial analysis.
THE COMPARATIVE STATEMENT MAY SHOW: Absolute figures (rupee amounts)

Changes in absolute figures i.e. increase or decrease in absolute figures.
Absolute data in terms of percentages.
Increase or decrease in terms of percentages.
THE TWO COMPARATIVE STATEMENTS ARE:-
Comparative balance sheet, and
Income statement.
COMPARATIVE BALANCE SHEET:Comparative balance sheet as on two or more different dates can be used for comparing
assets and liabilities and finding out any increase or decrease on those items. Thus, while
in a single balance sheet the emphasis is on present position, it is on change in the
comparative balance sheet. Such a balance sheet is very useful in studying the trends in
an enterprise.
Comparative financial statements can be prepared for more than 2 periods or on more
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than two dates. However, it becomes very cumbersome to study the trend with more than
2 periods data. Trend percentages are more useful in such cases.
Acc to American institute of certified public accountant the presentation of comparative
financial statements in annual and other reports enhances the usefulness of such reports
and brings out more clearly the nature and trend of current changes affecting the
enterprise. Such presentation emphasis the fact that statements for series of periods are
far more significant than those of a single period and that the accounts of 1 period are but
an installment of what is essentially a continuous history. In any one year, it is ordinary
desired that the balance sheet, the income statement and surplus statement be give for 1
or more proceeding year as well as for the current year.
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 change in periodic balance sheet items reflect the
conduct of a business the change can be observed by comparison of the balance sheet at
the beginning and at the end of a period and these changes can help in forming an opinion
about the progress of an enterprise.
Guide lines for interpretation of comparative balance sheet:While interpreting comparative balance sheet the interpreter is expected to study the
following aspects:-
Current financial position and liquidity position

Long-term financial position
Profitability of the concern.
COMMON SIZE STATEMENT:The common-size statements, balance sheet and income statement are show in analytical
percentages. The figures are shown as percentages of total assets, total liabilities and total
sales. The total assets are taken as 100 and different assets are expressed as a percentage
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of the total similarly, various liabilities are taken as a part of total liabilities.
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. The common size balance sheet can be used to compare companies
of differing size. The comparison of figures in different periods is not useful because total
figures may be affected by a number of factors. It is not possible to establish standard
norms for various assets. The trends of figures from year to year may not be studied and
even they may not give proper results.
Common size balance sheet is prepared by stating the total assets as 100 and reducing
individual assets into % of the total. Likewise, individual liability items are expressed as
percentage of the total liabilities. Thus, the common size balance sheet percentage shows
the relation the of each asset item to total assets and of each liability and owners equity.
A closer scrutiny of the common size balance sheet discloses that this statement focuses
on two important aspects.
Distribution pattern of liabilities as between current liabilities, long-term

liabilities and equity capital.
Distribution pattern of assets as between current assets, fixed assets and others.
The common size balance sheet analysis can, of course, be carried further and extended
to the study of what portion of a sub-group, rather than the total, an item is. Thus, in
assessing the liquidity of current assets, it may be of interest to know not only what
proportion of total assets are inventories, but also what proportion of current assets is
represented by this asset. A study of common size statement of the company with that of
a competitive company or the industry would show whether or not the company is the
managing assets efficiently. An analysis of the pattern of distribution of liability reveals
the debt--equity position of the company too large a % of liabilities. And a relatively low
margin of safety for creditors.
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While common size statements do not focus light on the relative sizes of individual
companies which are compared, the problem of actual comparability between them is a
matter to be resolved by the analyst judgment. Comparison of common size statement of
single enterprise over the years valuable in that reveals the changing proportions of
components within groups of assets and liabilities. However, care must exercise in
interpreting such changes and the trend which discloses.
Trend analysis :
Trend analysis depicts behavior of the ratios over a period of time and the trends in the
operation of the enterprise. The trend figure are index figures giving a birds eye view of
the comparative data by presenting its over a period of time. Thus is horizontal analysis
of financial statement, often called as pyramid method of ratio analysis- a guide to yearly
changes. Under this form of analysis, generally financial ratios are studied for a specified
number if years. It is a dynamic analysis depicting the changes over a stated period. Their
method of analysis is one of direction.
TREND ANALYSIS OF BALANCE SHEET:Trend analysis is Very important tool of horizontal financial analysis.
This analysis enables to known the change in the financial function and operating
efficiency in between the time period chosen.
By studding the trend analysis of each item we can known the direction of changes and
based upon the direction of changes, the options can be changed.
Trend = Absolute Value of item in the statement understudy *100
Absolute Value of same item in the base statement
Fund flow statements

Cash flow analysis is a valuable aid to the financial executive and creditors for evaluating
the uses of funds by the firm and in determining how these uses were financed. A cash
flow statement indicates where funds came from and where it was used during the period
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under review. They are important tools for communication and very helpful for financial
executives in planning the intermediate and long-term financing of the firm.
RATIO ANALYSIS
INTRODUCTION:
Ratio analysis is one of the techniques of financial analysis where ratios are used as a
yardstick for evaluating the financial condition and performance of a firm. Analysis and
interpretation of various accounting ratios gives skilled and experienced analysis, a better
understanding of the financial condition and performance of the firm than what he could
have obtained only through a perusal of financial statements.
MEANING OF RATIOS:
Ratios are relationships expressed in mathematical terms between figures which are
connected with each other in some manner. Obviously, no purpose will be served by
comparing two sets of figures which are not at all connected with each other. Moreover,
absolute figures are also unfit for comparison.
There are various techniques or models for analyzing information contained in the
financial statements viz. Comparative statements, common size statements, trend
percentages, funds flow analysis, cash flow analysis and ratio analysis.
Financial
analysis is undertaken by the management of the firm or by parties outside to it viz.

owners, creditors, investors, etc.
Ratio analysis is most widely used and powerful tool or technique of financial analysis.
The term ratio refers to the numerical quantitative relationship between two variables. It
shows arithmetical relationship between two figures, which can be expressed in three
ways.
Percentage
Fraction
Proportion
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A study of the trend of strategic ratios helps the management in planning, forecasting and
decision making. It helps in identifying specific work areas. In short, though the
technique of ratio analysis, the firms solvency, efficiency and profitability can be
assessed.
IMPORTANCE OF RATIO ANALYSIS
Ratio analysis helps in simplifying the financial statement for easy understanding.
It helps in drawing out meaningful conclusion from the information provided in
the financial statements which is useful for decision making and framing sound
policies for business in future.
It helps in assessing the financial strength and weakness of the firm and this
enhances the value of the financial statements.
Comparative study of the ratios between the competing firms helps to know the
efficiency of the firm.
It helps the investor to assess the financial position of the concern in which he is
going to invest.
Ratio analysis helps the employees interested in wage increase and fringe benefits
that are related the volume of profits earned by the concern.
Ratio analysis provides data for inter-firm comparison. Ratios highlight the
factors associated with successful and unsuccessful firms. They also reveal strong
firms and weak firms, over valued and under valued firms.
Ratio analysis helps in planning and forecasting. Over a period of time a firm or
industry develops certain norms that may include future success or failure. If
relationship changes in firms data over different time periods, the ratios may
provide clues on trends and future problems.
Ratio analysis also makes possible comparison of the performance of the different
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divisions of the firm. The ratios are helpful in deciding about their efficiency or
otherwise in the past and likely performance in the future.
Thus, ratios can assist management in its basic function of forecasting, planning,
coordination, control and communication.
LIMITATIONS OF RATIO ANALYSIS
Ratios are of limited use and thus single ratio may not be useful. Better
interpretation is possible with the calculation of number of ratios, which may lead
to confusion to the analyst in making any meaningful conclusion.
Ratios are calculated on the basis of past results, which may not necessarily true
indicators of the future, if the business policies are constantly changing.
Change in accounting procedure may be misleading for ratio analysis. For

example, change in inventory valuation methods from LIFO to FIFO may also
influence in the analysis.
Ratio analysis considers only quantitative aspects, but not qualitative factors.
Ratio analysis may give misleading results If the effects of price level changes are
not considered.
Ratio analysis when interpreted by different people in different way may

encounter with the personal bias or prejudice of the analyst.
Ratios are classified as:
liquidity ratios
leverage ratios
coverage ratios
activity ratios (or) turnover ratios
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profitability ratios
LIQUIDITY RATIOS:
A liquidity ratio is also known as short-term solvency. These ratios are used to measure
the firms ability to meet short term obligations. They compare short-term obligation to
short term (or current) resources available to meet these obligations. From these ratios,
much insight can be obtained into the present cash solvency of the firm and firms ability
to remain solvent in the event of adversity. The creditors of the firm are primarily
interested in the short term solvency of the firm. A firms liquidity should be neither too
high nor too low but adequate.
Low liquidity implies the firms inability to meet its maturing obligations. This will
result in bad credit rating, loss of creditors confidence or even technical insolvency,
ultimately leading to the closure of the firm.
A very high liquidity position is also bad. It means that the firms current assets are too
high in proportion to maturing obligations. Idle assets earn nothing to the firm. The
firms funds will be unnecessarily locked up in current assets, which if, released can be
used to generate profits to the firm.
The ratios, which measure, and indicate the extent of a firms liquidity, are known as
liquidity ratios or short-term solvency ratios. Commonly used liquidity ratios include.
current ratio (or) working capital ratio

quick ratio (or) acid test ratio
cash position ratio (or) super stock quick ratio
LEVERAGE RATIO:
These ratios are also known as capital structure ratios or solvency ratios or capital gearing
ratios. The long-term creditors are more concerned with the firms long-term financial
position. They judge the financial soundness of the firm in the firm in term of the ability
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to pay interest promptly as well as making repayment of the principal. The long-term
solvency of the firm can be examined with the help of leverage ratios. They measure the
funds supplied by owners as compared with the financial provided only a small
proportion of total financing, the risks of the business are borne mainly by the creditors.
Firm with low leverage have less risk of loss, but they also have lower expected returns.
Conversely, firm with high leverage ratios have the risk of large losses but also have a
chance of earning huge profits. Therefore, before deciding whether a firm should have
debt, it must balance higher expected returns against increased risks. The most commonly
examined leverage: ratios are
debt equity ratio

proprietor ratio
debt to capital ratio
gross fixed assets to shareholders funds
fixed assets ratio
COVERAGE RATIOS:
These ratios indicate the extent to which the interest of the persons entitled to get a fixed
return (i.e. interest or dividend) or a scheduled repayment as per agreed terms is safe. The
higher the cover the better it is. Under this category the following ratios are calculated.
fixed interest coverage ratio

fixed dividend coverage ratio
debt service coverage ratio
ACTIVITY RATIO (OR) TURNOVER RATIO:
The finances obtained by the firm from its owners and creditors will be inverted in assets,
27
which the firm uses to generate sales and profits. The amount of sales generated and the
profit earned depend on the effective and efficient management of these assets by the
firm. Activity ratios measure the efficiency with which the firm manages and uses its
assets. That is why activity ratios are known as efficiency ratios, because these ratios are
converted or turned over in to sales.
Thus the turnover or activity ratios measure the relationship between sales on one side
and various assets on the other side. Higher the turnover ratio, the better the profitability
and use of capital.
Many activity ratios can be calculated to measure the efficiency of assets utilization.
Following are some of the important activity ratios.
total assets turnover ratio

capital employed turnover ratio
fixed assets turnover ratio
current assets turnover ratio
working capital turnover ratio
stock turnover ratio
debtors turnover ratio
creditors turnover ratio
PROFITABILITY RATIOS:
Profitability is the ability to make profits. Every firm should earn adequate profits in
order to survive in the immediate present and grow in future. In fact, profit is what makes
the business run. Profitability is the net results of large number of policies and decisions.
Profitability ratios give final answers about how efficiency the firm is managed. The
28
profitability ratio relates profits earned by a firm by its parameters like sales, capital
employed and net worth. But while making ratio analysis relating to profits, it should be
remembered that there are different concepts of profit such as concepts of profit such as
contribution, gross profits, net profits, EBIT, operating profits, profits before depreciation
and before tax etc. Profitability ratios are important for a concern. These ratios are
calculated to enlighten the end results of business activities, which is the sole criterion of
the overall efficiency of a business concern. The following are the important profitability
ratio, which are based on.
Sales
Investment
gross profit ratio
operating ratio
operating profit ratio
net profit ratio
return on capital employed
return on shareholders equity
return on total assets
earnings per share
dividend payout ratio
29
CHAPTER-III
COMPANY & INDUSTRY PROFILE
30
31
32
Yeluri formulations Pvt.Ltd, one of the leading formulations manufactures and exporter
based at Hyderabad, bulk drug capital of India. Yeluri is having two manufacturing units
Both situated at Hyderabad. Both the units are equipped with ulta modern state-of-the-art
Technology and conform to WHO GMP. At Yeluri, stringent quality assurance procedure
for our entire product range as made us synonymous with quality in total. This is
reflected in our commitment in meeting the challenges of the International and domestic
Market for formulations.
Yeluris core competence stands out in formulating many new drugs which makes us to
Build good trust among our loyal associated included orchid health care, aurobindo
pharma, hetero drugs etc. and thus it has become one of the leading contract manufacturer
from Hyderabad. Yeluri leverages its strength in formulating new drugs like aztreonam,
cefepime, meropenam etc. We are proud to be one of the leading cephalosporin
manufacturer form India.
Our Strengths
WHO-GMP manufacturing facilities
Well versed in handling contract manufacturing projects for large companies.
Commitment to quality and excellence.
Dedicated and committed team of professionals.
Experts in manufacturing, Q.C and Q.A.
Large capacities to produce bulk quantities.
Innovative and sophisticated packaging facilities.
33
INFRASTRUCTURE:
The plant has built up area of 35,000 sft. In one and a half acre premises It is equipped
with sophisticated machinery for the production of wide range of injectables, and the
complete plant has got the latest version of
clean room facility backed up with
decentralized clean air-conditioning and ventilation systems to the respective sections.

Also equipped with complete automatic lines for powder injectables, Liquid vials &
Ampoules in the latest version of clean room facility as per WHO GMP Standards.
MANUFACTURINGFACILITIES:
Following are the sophisticated manufacturing facilities the plant has acquired:
1. Autoline sterile dry powder filling machine(120 Vials per minute)
2. Autoline for small volume parentarels (80 Vials per minute)
3. Automatic Ampoule filling and sealing machines..
4. Automatic Labeling Machine with batch printing device
5. The activity of the autoline filling stations are carried out under the laminar air
Flow (LAF) units.
6. Individual production line has got its dedicated PUF paneled doubled skinned air
handling units fitted with terminal HEPA filter down to 0.3 microns levels to
ensure perfection.
Tablets/capsules&Liquids:
Yeluri is also having manufacturing facilities for tablets, capsules and liquids also. These
facilities are under M/s. Supra Pharmaceuticals Pvt Ltd, sister concern of Yeluri. These
facilities are having both Beta-lactam and Non Beta-Lactam sections.
CENTRALISED AIR VENTILATION & AIR CONDITIOINING SYSTEM:
The products of HEMAIR, Switzerland, manufactured in India by using their imported
plant and machinery is established in the dedicated service floor on and above the clean
rooms having dedicated section wise air handling units with individual condensing units
for air conditioning and ventilation systems which contains 20 micron, 10 micron and
micron pre filters and filtered air enters into ducting and 0.3 micron HEPA terminal
34
filters, S.S. grills there by enter into the clean rooms, which ensures adequate air changes
and positive pressure and will have control on cross contamination.
Quality
We believe that quality is the foremost important aspect and a parameter of success. Our
Q.A and Q.C departments are the backbone of our company which makes us to withstand
35
a long relationship with many Indian international companies in formulating their new
drugs. Internal Audits will be done at regular intervals which includes people from all the
departments including high level management.
Our Quality Objectives:
1. To manufacture the safest formulation in different dosage forms.
2. To keep updating our manufacturing facilities according to International
Standards.
3. To satisfy our customer needs by timely deliver and with zero defect products.
4. To ensure cost effective operations in every stage of formulating a product and
thus achieving quality and productivity.
5. To enhance productivity through improved working methods and by motivating
the employees.
6. To provide good service to our customers.
Quality Assurance:
1. Monitoring good manufacturing practices at each and every stage of
manufacturing and quality control departments.
2. Selection and control of Raw Material and Packing Material.
Internal Audits
A Team of five will be auditing our manufacturing and quality control departments at a
regular interval of to ensure good manufacturing practices and to maintain in house
documentation. These internal audited reports will be maintained by our Quality
Assurance department
36
CONTRACT MANUFACTURING SERVIECES

YELURI has proven expertise in developing and manufacturing that achieve the most
effective therapeutic results. This has earned the group tremendous goodwill and trust
among MNCs and leading Indian companies. Complemented by its abilities to ensure
compliance with international norms, YELURI leverages its strength its strengths to
undertake contract manufacturing of formulating from pharmaceutical leaders like
Lupin laboratories Ltd
Alembic Ltd.
Nicholas Piramal India Ltd.
Hetero Drugs
Zuventus Ltd
Wander pharma
Wallace Pharma
Zydus Cadila Health Care Ltd
ORCHID Healthcare Ltd
Unichem Laboratories Ltd

37
Indian Immunological ltd
Intervet India
Products:
Yeluri to serve the requirements of various importers and to be at par in the business in
ready to procure the COPP for the following products for which the dossiers are already
available to meet the standards of various countries.
Sterile Powder Injectables:
Exports:
Yeluri is thriving to serve with quality products are preparing to extend its services
to various countries. Yeluri had already started the registrations of its products in
Philippines and in the pipeline are the other countries like sri lanka, Thailand,
Malaysia, Vietnam, and Nigeria which are expected to be completed by August 2007.
Contractmanufacturing:Along with its own product registration yeluri is also extended its services for other
countries though contract manufacturing for various companies like M/S Brilliant
Industries etc,.
38
WHO-GMP Products:
Sterile
Powder
CEPHALOSPORINS and other Antibiotics

1. Ceftriaxone 250 mg
2. Ceftriaxone 1000mg
3. Ceftoxime 250mg
4. Ceftoxime 1000mg
5. Ceftoxime 500mg
6. Ceftoxime and sulbactum 750mg
7. Ceftoxime and sulbactum 1500m
8. Ceftazidime 250mg
9. Ceftazidime 1000mg
10. Cefuroxime 250mg
11. Cefuroxime 750mg
12. Cefeperazone & sulbactum 750mg
13. Cefeperazone & sulbactum 1gm
14. Cefeperazone & sulbactum 2gm
15. Cefepime 500mg
16. Cefepime 1000mg
17. Cefepime 2gm
18. Cefepirome 500mg
19. cefazolin 1gm
20. Pipracillin and Tazobactum 4.5gm
21. Pipracillin and Tazobactum 2.25gm
22. Meropenam 500mg
23. Meropenam 1000mg
24. Ampicillin 250mg
25. Ampicillin 500mg
26. Ampicillin & cloxacillin 500mg
27. Ampicillin & cloxacillin 250mg
28. Amoxicillin & cloxacillin 250mg
39
injectables
29. Amoxicillin & cloxacillin 1000mg

30. Ampicillin 250mg& Sulbactam 125mg
33. Amoxycillin 250mg& Sulbactam 125mg
40
CHAPTER-IV
DATA ANALYSIS
AND
INTERPRETATION
41
COMPARATIVE STATEMENT ANALYSIS 2013 OF YELURI FORMULATIONS

PVT.LTD
Balance Sheet of Yeluri formulations Pvt.Ltd
Mar '13
ABSOLUTE
INCREASE/
DECREAES
CHANGE
IN %
0
0
0
0
1333.77
0
1333.77
-463.6
-32.71
-496.31
837.46
0
0
0
0
45.74
0.00
45.12
-31.79
-100.00
-33.28
18.83
5,538.46
1,458.18
4,080.28
125.14
5,128.75
524.93
130.59
47.75
703.27
783.48
23.77
1,510.52
0
5,316.40
1,081.07
6,397.47
-4,886.95
0
769.8
1064.57
-294.77
68.81
-1164.49
150.64
141.72
8.35
300.71
143.51
-3.05
441.17
0
-1795.74
9
-1786.74
2227.91
0
13.90
73.01
-7.22
54.99
-22.71
28.70
108.52
17.49
42.76
18.32
-12.83
29.21
0
-33.78
0.83
-27.93
-45.59
0.00
4,447.22
837.46
18.83
Mar '12
Mar '11
Rs. Cr
12 mths
12 mths
Sources Of Funds
39.94
Total Share Capital
39.94
Equity Share Capital
0.00
Share Application Money
0.00
Preference Share Capital
4,966.30
Reserves
0.00
Revaluation Reserves
5,006
Networth
302.16
Secured Loans
0.00
Unsecured Loans
302.16
Total Debt
5,308.40
Total Liabilities
Mar '13
39.94
39.94
0
0
4,249.89
0
4,289.83
994.85
0
994.85
5,284.68
Mar '12
39.94
39.94
0
0
2,916.12
0
2,956.06
1,458.45
32.71
1,491.16
4,447.22
Mar '11
12 mths
12 mths
6,308.26
2,522.75
3,785.51
193.95
3,964.26
675.57
272.31
56.1
1,003.98
926.99
20.72
1,951.69
0
3,520.66
1,090.07
4,610.73
-2,659.04
0
5,284.68
12 mths
Application Of Funds
Gross Block
4,427.29
Less: Accum. Depreciation
1,356.31
Net Block
3,070.98
Capital Work in Progress
62.09
Investments
3,623
Inventories
636.76
Sundry Debtors
665.00
Cash and Bank Balance
181.04
1,482.80
Total Current Assets
1,401.95
Loans and Advances
0.00
Fixed Deposits
2,884.75
Total CA, Loans & Advances
0.00
Deffered Credit
2,893.39
Current Liabilities
1,439.86
Provisions
4,333.25
Total CL & Provisions
-1,448.50
Net Current Assets
0.00
Miscellaneous Expenses
5,308.40
42
Interpretation:1. Total share holders fund are decreased by 18.83% in 2012 to 2013.
2. Reserves & surplus are decreased by 45.12 % in 2012 to 2013. It shows that company
must concentrate on profitability to increase reserves.
3. Fixed assets are decreased by -12.83 % in 2012 to 2013. It points towards expanding
business operations.
4. Debtors are increased by 108.52 % and loans & advances are also increased by
18.32% in 2012 to 2013.
5. Net current assets are decreased by -45.59% from 2012 to 2013.
6. Total application fund are increased by change in percentage of 18.83%.

PVT.LTD
SOURCES OF FUNDS
Shareholders' funds
share capital
reserves and surplus
Loan funds
unsecured
deferred payment credits
deferred tax liabilities
March 31,
2011
ABSOLUTE
INCREASE/
DECREAES
CHANGE IN %
March 31,
2012
39.94
4,249.89
4,289.83
39.94
2.916.12
2,956.06
0
-508.96
-508.96
0
-14.86
-14.69
0.00
994.85
252.72
32.71
1,458.45
252.72
-33.32
1458.45
92.09
-50.46
43
57.33
TOTAL
APPLICATION OF FUNDS
Fixed assets
gross block
less: depreciation
net block
capital work in progress
Investments
deferred tax assets
Current assets, loans and advances
inventories
sundry debtors
cash and bank balances
other current assets
loans and advances
less: current liabilities and provisions
current liabilities
provisions
Net current assets
TOTAL
5,537.40
4,699.94
1008.26
27.31
6,308.26
2,522.75
3,785.51
193.95
4,205.42
3,964.26
5.95
5,538.46
1,458.18
4,699.94
125.14
4,205.42
5,128.75
5.95
2787.48
365.98
3041.16
77
2498.5
-3874.42
-1.93
101.33
33.51
183.34
159.95
146.38
-98.70
-24.50
675.57
272.31
48.87
926.99
1,504.57
524.93
130.59
47.75
48.87
783.48
1,504.57
88.53
22.2
-1835.7
24.05
322.9
-2876.53
20.29
20.48
-96.25
96.90
79.58
-99.48
5,063.68
1,505
6,144.75
2,659.04
5,284.68
5,063.68
1,505
6,144.75
4,886.95
4,447.22
1258.62
-1377.6
1313.34
2691.35
2751.11
33.08
-47.79
27.18
138.10
141.17
56.10
44

PVT.LTD
45
SOURCES OF FUNDS
Shareholders' funds
share capital
Loan funds
unsecured
TOTAL
Fixed assets
gross block
less: depreciation
net block
Investments
deferred tax assets
inventories
sundry debtors
loans and advances
current liabilities
provisions
Net current assets
TOTAL
March 31,
2010
ABSOLUTE
INCREASE/
DECREAES
CHANGE IN %
March 31,
2011
39.94
2.916.12
2,956.06
39.94
3,425.08
3,465.02
0
-508.96
-508.96
0
-14.86
-14.69
32.71
1,458.45
252.72
4,699.94
66.03
-50.46
160.63
3,691.68
-33.32
1458.45
92.09
1008.26
5,538.46
1,458.18
4,699.94
125.14
4,205.42
5,128.75
5.95
2,750.98
1,092.20
1,658.78
48.14
1,706.92
3,925.71
7.88
2787.48
365.98
3041.16
77
2498.5
-3874.42
-1.93
101.33
33.51
183.34
159.95
146.38
-98.70
-24.50
524.93
130.59
71.52
48.87
728.66
1,504.57
436.40
108.39
1,907.21
24.82
405.76
2,882.58
88.53
22.2
-1835.7
24.05
322.9
-2876.53
20.29
20.48
-96.25
96.90
79.58
-99.48
5,063.68
1,505
6,144.75
4,640.18
4,699.94
3,805.06
2,882.58
4,831.41
1,948.83
1,948.83
1258.62
-1377.6
1313.34
2691.35
2751.11
33.08
-47.79
27.18
138.10
141.17
46
57.33
27.31
TOTAL SOURCES OF FUND

5000
amount
4000
2956.06
3465.02
3000
2000
1000
0
2010
year
2011
TOTAL APPLICATION FUND

5000
4699.94
4000
amount
3000
2000
1948.83
1000
0
2010
year
2011
47
RESERVES AND SURPLUS

3500
3425.08
2916.12
3000
amount
2500
2000
1500
1000
500
0
2010
year
2011
8. Reserves & surplus are decreased by 14.86% in 2010 to 2011. It shows that company
9. Fixed assets are increased by 146.37% in 2010 to 2011. It points towards expanding
business operations.
10. Debtors are increased by 20.48% and loans & advances are also increased by 79.57%
in 2010 to 2011.
11. Net current assets are increased by 138.101% from 2010 to 2011.
12. Total application fund are increased by change in percentage of 141.67%.

PVT.LTD
48
March 31,
2010
March 31,
2009
share capital
39.94
39.94
3,425.08
3,760.81
3,465.02
3,800.75
unsecured
66.3
78.49
160.63
153.08
TOTAL
3,691.68
4,032.32
gross block
2,750.98
2,516.27
less: depreciation
1,092.20
942.56
net block
1,658.78
1,573.71
48.14
120.54
1,706.92
1,694.25
Investments
3,925.71
3,368.75
deferred tax assets
7.88
8.65
inventories
436.40
326.83
sundry debtors
108.39
149.94
1,907.21
219.57
24.82
5.89
loans and advances
405.76
311.26
1,504.57
2,882.58
current liabilities
3,805.06
1,525.85
provisions
1,026.35
526.97
4,831.41
2,052.82
Net current assets
1,948.83
1,039.33
TOTAL
3.691.68
4,032.32
ABSOLUTE
INCREASE/
DECREAES
CHANGE IN
%
-335.73
-8.93
-335.73
-8.83
-12.19
-15.53
7.55
4.93
-340.64
-8.45
234.71
9.33
149.64
15.88
85.07
5.41
-72.4
-60.06
12.67
0.75
556.96
16.53
-0.77
-8.90
109.57
33.53
-41.55
-27.71
1687.64
768.61
18.93
321.39
94.5
30.36
-286753.43
-99.48
2279.21
149.37
499.38
94.76
2778.59
135.35
909.5
87.51
-340.64
-8.48
SOURCES OF FUNDS
Shareholders' funds
Loan funds
Fixed assets
49
TOTAL SOURCES OF FUND

4000
4032.32
3691.68
3500
3000
amount
2500
2000
1500
1000
500
0
2009
2010
year
NET CURRENT ASSETS

1948.83
2000
amount
1500
1000
1039.33
500
0
2009
year
2010
50
SUNDRY DEBTORS
160
149.94
140
120
108.39
amount
100
80
60
40
20
0
2009
year
2010
2. Reserves & surplus are increased by 8.92% in 2009 to 2010. It shows that company
3. There is a slight increase of 0.74% in fixed assets from 2009 to 2010. It shows that
company trying to expand business operations.
4. Debtors are decreased by 27.71% and loans & advances are increased by 30.36% in
2009 to 2010.
5. Net current assets are increased by 87.50% in 2009 to 2010.
6. Total application fund increased by 8.44% in 2009 to 2010.

PVT.LTD
51
March 31,
2009
March 31,
2008
ABSOLUTE
INCREASE/
DECREAES
CHANGE
IN %
share capital
39.94
39.94
3,760.81
2,946.30
814.51
27.65
2,986.24
814.51
27.28
SOURCES OF FUNDS
SHAREHOLDERS' FUNDS
3,.800.75
loan funds
unsecured
78.49
132.00
-53.51
-40.54
153.08
130.59
22.49
17.22
TOTAL
4,032.32
3,248.83
783.49
24.12
gross block
2,516.27
1,938.78
577.49
29.79
less: depreciation
942.56
782.52
160.04
20.45
net block
1,573.71
1,156.26
417.45
36.10
120.54
392.44
-271.9
-69.28
1,694.25
1,548.70
145.55
9.40
16.05
-100
FIXED ASSETS
pre operative expenses

(pending allocation)
16.05
investments
3,368.75
2,566.82
801.93
31.24
deferred tax assets

current assets, loans
advances
8.65
5.22
3.43
65.71
inventories
326.83
317.10
9.73
3.07
sundry debtors
149.94
297.44
-147.5
-49.59
219.57
131.09
88.48
67.50
5.89
5.69
0.2
3.51
loans and advances
311.26
185.46
125.8
67.83
1,013.49
913.27
76.71
8.19
CURRENT LIABILITIES
1,525.85
1,324.98
200.87
15.16
provisions
526.97
499.76
27.21
5.44
2,052.82
1,824.74
228.08
12.50
Net current assets
1,039.33
887.96
151.37
17.05
TOTAL
4,032.32
3,248.83
783.49
24.17
and
less: current liabilities and

provisions
52
TOTAL SHARE HOLDER'S FUND

4000
3800.75
3500
3000
2986.24
amount
2500
2000
1500
1000
500
0
2008
2009
year
TOTAL INVESTMENTS
3500
3368.75
3000
amount
2500
2566.82
2000
1500
1000
500
0
2008
year
2009
53
Interpretation:1. Total share holders fund are increased by 27.27% in 2008 to 2009.
2. Reserves & surplus are increased by 27.64% in 2008 to 2009. It shows company
efficiency in maintaining the share profits.
3. Fixed assets are increased by 9.39% in 2008 to 2009. It shows that company trying to
expand business operations.
4. Debtors are decreased by 49.58% and loan & advances are increased by 67.83% in
2008 to 2009.
5. There is a slight increase in net current assets by 17.04% from 2008 to 2009.
6. Total application fund are increased by 24.11%in 2008 to 2009.

PVT.LTD
54
March 31,
2008
March31
,
2007
ABSOLUTE
INCREASE/
DECREAES
CHANGE
%
Share Capital
39.94
39.94
Reserves And Surplus
2,946.30
2,430.12
516.18
21.24
516.18
20.90
2,986.24
2,470.06
Unsecured
132
165.17
-33.17
-20.08
Deferred Tax Liabilities
130.59
129.58
1.01
0.78
Total
3,248.83
2,764.81
484.02
17.51
Gross Block
1,938.78
1,800.63
138.15
7.67
Less: Depreciation
782.52
635.1
147.42
23.21
Net Block
1,156.26
1,165.53
-9.27
-0.80
Capital Work In Progress
392.44
189.92
202.52
106.63
1,548.70
1,355.45
193.25
14.26
Sources Of Funds
Shareholders' Funds
Loan Funds
Fixed Assets
Pre Operative
Allocation)
Expenses
(Pending
16.05
16.05
Investments
2,566.82
1,973.87
592.95
30.03
Deferred Tax Assets
5.22
1.38
3.84
278.26
Inventories
317.1
275.58
41.52
15.07
Sundry Debtors
297.44
335.25
-37.81
-11.28
Cash And Bank Balances
131.09
35.78
95.31
266.38
Other Current Assets
5.69
3.6
2.09
58.06
Loans And Advances
185.46
263.06
-77.6
-29.50
936.78
913.27
23.51
2.57
Current Liabilities
1,324.98
1,041.92
283.06
27.18
Provisions
499.76
1,479.16
-979.4
-66.21
1,824.74
1,479.16
345.58
23.36
Net Current Assets
887.96
585.89
302.07
51.56
Total
3,248.83
2,764.81
484.02
17.51
Current Assets, Loans And Advances
Less: Current Liabilities And Provisions
55
IN
SUNDRY DEBTORS
350
335.25
297.44
300
amount
250
200
150
100
50
0
2007
year
2008
TOTAL APPLICATION FUND

3500
3000
3248.83
2764.81
amount
2500
2000
1500
1000
500
0
2007
year
2008
56
Interpretation:1. Total share holder fund are increased by 20.89% in2007 to 2008.
2. Reserves & surplus are increased by 21.24% in 2007 to 2008. It shows that company
efficiency in maintaining the share profits.
3. Fixed assets are increased by 14.25%. It shows that company expanding business
operations.
4. Debtors are increased by 11.27% and loan & advances are increased by 29.47% in
2007 to 2008.
5. Net current assets are increased are increased by 51.55% in 2007 to 2008.
6. Total application fund are increased by 17.50% in 2007 to 2008.
57
COMMON SIZE STATEMENT ANALYSIS 2013 OF YELURI FORMULATIONS

PVT.LTD
Mar '13
Change
in %
Mar '12
Rs CR
Sources Of Funds
12 mths
12 mths
Total Share Capital

Reserves
Networth
Secured Loans
Unsecured Loans
Total Debt
Total Liabilities
39.94
39.94
0
0
4,966.30
0.00
5,006
302.16
0.00
302.16
5,308.40
0.76
0.76
83.67
81.17
18.83
18.83
100.00
12 mths
Gross Block
Net Block
Investments
Inventories
Sundry Debtors
Loans and Advances
Fixed Deposits
Deffered Credit
Current Liabilities
Provisions
Net Current Assets
Total Assets
58
39.94
39.94
0
0
4,249.89
0
4,289.83
994.85
0
994.85
5,284.68
12 mths
0.90
0.90
124.54
32.79
91.75
2.81
115.32
10.80
3.44
1.07
15.81
12.73
0.45
28.58
4,427.29
1,356.31
3,070.98
62.09
3,623
636.76
665.00
181.04
1,482.80
1,401.95
0.00
2,884.75
0.00
2,893.39
1,439.86
4,333.25
-
119.37
47.74
71.63
3.67
75.01
14.65
6.75
1.06
19.00
16.34
0.39
36.93
66.62
20.63
87.25
6,308.26
2,522.75
3,785.51
193.95
3,964.26
675.57
272.31
56.1
1,003.98
926.99
20.72
1,951.69
0
3,520.66
1,090.07
4,610.73
1,448.50
0.00
-50.32
0.00
100.00
2,659.04
0
5,284.68
5,308.40
Change
in %
66.27
66.47
32.79
0.44
33.53
100.00
100.60
20.46
121.06
-92.47
0.00
100.00
Interpretation:1.
2.
3.
4.
5.
6.
There is no change in share capital

In 2012 reserves & surplus was 66.27% but in 2013 it was decreased to 83.67%.
Unsecured loan are increased from 0% to 0.44% 2012 to 2013.
In 2012 inventories was 14.65% and it has increased to 10.80% in 2013.
Sundry debtors in 2012 were 3.44% and it decreased to 6.75% in 2013.
Loans & advances in 2012 was 12.73% but in 2013 it was increased to 16.34%.
59

PVT.LTD
Mar '12
Change
in %
Mar '11
Rs CR
Sources Of Funds
12 mths
12 mths
Total Share Capital

Reserves
Networth
Secured Loans
Unsecured Loans
Total Debt
Total Liabilities
39.94
39.94
0
0
4,249.89
0
4,289.83
994.85
0
994.85
5,284.68
12 mths
0.76
0.76
6,308.26
2,522.75
3,785.51
193.95
3,964.26
675.57
272.31
56.1
1,003.98
926.99
20.72
1,951.69
0
3,520.66
1,090.07
4,610.73
2,659.04
0
5,284.68
119.37
47.74
71.63
3.67
75.01
12.78
5.15
1.06
19.00
17.54
0.39
36.93
Gross Block
Net Block
Investments
Inventories
Sundry Debtors
Loans and Advances
Fixed Deposits
Deffered Credit
Current Liabilities
Provisions
Net Current Assets
Total Assets
60
80.42
81.17
18.83
18.83
100.00
66.62
20.63
87.25
-50.32
0.00
100.00
Change
in %
39.94
39.94
0
0
2,916.12
0
2,956.06
1,458.45
32.71
1,491.16
4,447.22
12 mths
0.90
0.90
5,538.46
1,458.18
4,080.28
125.14
5,128.75
524.93
130.59
47.75
703.27
783.48
23.77
1,510.52
0
5,316.40
1,081.07
6,397.47
4,886.95
0
4,447.22
124.54
32.79
91.75
2.81
115.32
11.80
2.94
1.07
15.81
14.83
0.45
28.58
65.57
66.47
32.79
0.74
33.53
100.00
100.60
20.46
121.06
-92.47
0.00
100.00
Interpretation:7. There is no change in share capital

8. In 2011 reserves & surplus was 65.57% but in 2012 it was decreased to 80.42%.
9. Unsecured loan are increased from 0% to 0.74% 2011 to 2012.
10. In 2011 inventories was 12.78% and it has increased to 11.80% in 2012.
11. Sundry debtors in 2011 were 2.94% and it decreased to 5.15% in 2012.
Loans & advances in 2011 was 14.83% but in 2012 it was increased to 17.54%.
61

PVT.LTD
March 31, 2011
Change in %
March 31,
2010
Change in %
SOURCES OF FUNDS
Shareholders' funds
share capital
39.94
0.85
39.94
1.082
2,916.12
2,956.06
62.05
92.78
62.90
3,425.08
3,465.02
unsecured
32.71
0.70
66.03
1.79
1,458.45
31.03
252.72
5.38
160.63
4.35
TOTAL
4,699.94
100
3,691.68
100.00
gross block
5,538.46
117.84
2,750.98
74.52
less: depreciation
1,458.18
31.06
1,092.20
29.59
net block
4,699.94
100
1,658.78
44.93
125.14
2.66
48.14
1.30
4,205.42
89.48
1,706.92
46.23
Investments
5,128.75
109.12
3,925.71
106.34
deferred tax assets
5.95
0.13
7.88
0.21
inventories
524.93
11.17
436.40
11.82
sundry debtors
130.59
2.78
108.39
2.94
71.52
1.52
1,907.21
51.66
48.87
1.04
24.82
0.67
loans and advances
728.66
15.50
405.76
10.99
1,504.57
32.01
2,882.58
78.08
5,063.68
107.74
3,805.06
103.07
1,505
32.02
2,882.58
78.08
93.86
Loan funds
Fixed assets
Less: current liabilities and provisions

current liabilities
provisions
62
Net current assets

TOTAL
6,144.75
130.74
4,831.41
130.87
4,640.18
4,699.94
98.73
1,948.83
3691.68
52.79

100
92.77
80
62.04
amount
60
40
20
0
2010
year
2011
63
100
100
UNSECURED LOANS
1.8
1.79
1.6
1.4
amount
1.2
1.0
0.8
0.69
0.6
0.4
0.2
0.0
2010
year
2011
Interpretation:12. There is slight increase in share capital

13. In 2010 reserves & surplus was 92.77% but in 2011 it was decreased to 62.04%.
14. Unsecured loan are decreased from 1.78% to 0.69% 2010 to 2011.
15. In 2010 inventories was 11.82% and it has decreased to 11.16% in 2011.
16. Sundry debtors in 2010 were 2.93% and it decreased to 2.77% in 2011.
17. Loans & advances in 2010 was 10.99% but in 2011 it was increased to 15.50%.
64
65

PVT.LTD
March 31,
2010
Change in
%
March 31,
2009
Change in
%
SOURCES OF FUNDS
Shareholders' funds
1.08
39.94
0.99
share capital
39.94
3,425.08
92.78
3,760.81
93.27
3,465.02
93.86
3,800.75
94.26
unsecured
66.3
1.80
78.49
1.95

TOTAL
160.63
3,691.68
4.35
3.80
100
153.08
4,032.32
gross block
2,750.98
74.52
2,516.27
62.40
less: depreciation
1,092.20
29.59
942.56
23.36
net block
1,658.78
44.93
1,573.71
39.03
48.14
1.30
120.54
2.10
1,706.92
46.24
1,694.25
42.02
3,925.71
106.34
3,368.75
83.54
7.88
0.21
8.65
0.21
436.40
11.82
326.83
8.11
sundry debtors
108.39
2.94
149.94
3.72
1,907.21
51.66
219.57
5.45
24.82
0.67
5.89
0.15
loans and advances
405.76
10.99
311.26
7.72
1,504.57
40.76
2,882.58
71.48
current liabilities
3,805.06
103.07
1,525.85
37.84
provisions
1,026.35
27.80
526.97
13.07
Loan funds
100
Fixed assets
Investments
deferred tax assets
Current assets,
advances
loans
and
inventories
less: current
provisions
liabilities
and
66
4,831.41
130.87
2052.82
50.91
Net current assets
1,948.83
52.79
1,039.33
25.77
TOTAL
3.691.68
100
4,032.32
100
CURRENT LIABILITIES
103.07
100
amount
80
60
40
37.84
20
0
2009
2010
year
DUNDRY DEBTORS
4.0
3.71
3.5
2.93
3.0
amount
2.5
2.0
1.5
1.0
0.5
0.0
2009
year
2010
67
Interpretations:1.
2.
3.
4.
5.
6.
In 2009 share capital was 0.99% and in 2010 it was increased to 1.08%.
Reserves & surplus in 2009 was 93.26% but in 2010 it was decreased to 92.77%.
Unsecured loan are decreased from 1.94% in 2009 to 1.79% in 2011.
In 2009 inventories was 8.10% and in 2010 it was increased to 11.82%.
Sundry debtors in 2009 were 3.71% and it is decreased to 2.93% in 2010.
Loans & advances in 2009 was 7.71% and in 2010 it is increased to 10.99%
68

PVT.LTD
Change in %
March
2008
39.94
3,760.81
3,800.75
0.99
93.27
94.26
39.94
2,946.30
2,986.24
1.23
90.69
91.92
78.49
153.08
4,032.32
1.95
3.80
100
132.00
130.59
3,248.83
4.06
4.02
100
2,516.27
942.56
1,573.71
120.54
1,694.25
62.40
23.38
39.03
2.99
42.02
1,938.78
782.52
1,156.26
392.44
1548.70
59.68
24.09
35.59
12.08
47.67
0.49
3,368.75
8.65
83.54
2.00
16.05
2,566.82
5.22
79.00
0.16
326.83
149.94
219.57
5.89
311.26
1,013.49
8.12
3.72
5.45
0.15
7.72
25.13
317.10
297.44
131.09
5.69
185.46
936.78
9.76
9.16
4.03
0.18
5.71
28.83
1,525.85
526.97
2,052.82
37.84
13.07
50.91
1,324.98
499.76
1,824.74
40.78
15.38
56.17
March 31,2009
SOURCES OF FUNDS
Shareholders' funds
share capital
Loan funds
unsecured
TOTAL
fixed assets
gross block
less: depreciation
net block
pre operative expenses
Investments
deferred tax assets
Current assets, loans and
advances
inventories
sundry debtors
loans and advances
less: current liabilities
provisions
current liabilities
provisions
31, Change in %
and
69
Net current assets

TOTAL
25.77
100
1,039.33
4,032.32
INVENTORIES
10
9.76
8.11
amount
0
2008
year
2009
70
887.96
3,248.83
27.33
100
LOANS AND ADVANCES

8
7.72
7
6
5.71
amount
5
4
3
2
1
0
2008
2009
year
Interpretation:1.
2.
3.
4.
5.
6.
In 2008 share capital was 1.22% and in 2009 it is decreased to 0.99%

Reserves & surplus was 90.68% in 2008 but in 2009 it was increased to 93.26%.
Unsecured loans are decreased from 4.06% in 2008 to 1.94% in 2009.
In 2008 inventories was 9.76% and in 2009 it was decreased to 8.10%.
Sundry debtors in 2008 were 9.15% and it is decreased to 3.71% in 2009.
Loans & advances in 2008 was 5.70% and in 2008 it increases to 7.71%.
71

PVT.LTD
March 31,
2008
Change in
%
March 31,
2007
Change in
%
share capital
39.94
1.23
39.94
1.44
2,946.30
90.69
2,430.12
87.89
2,9862.4
91.92
2,470.06
89.34
unsecured
132.00
4.06
165.17
5.97
130.59
4.02
129.58
4.69
TOTAL
3,248.83
100
2,764.81
100
SOURCES OF FUNDS
Shareholders' funds
Loan funds
Fixed assets
72
gross block
1,938.78
59.68
1,800.63
65.13
less: depreciation
782.52
24.09
635.10
22.97
net block
1,156.26
35.59
1,165.53
42.16
392.44
12.08
189.92
6.87
1,548.70
47.67
1,355.45
49.03
pre operative
expenses
0.49
16.05
Investments
2,566.82
79.00
1,973.87
71.39
deferred tax assets

Current assets,
advances
5.22
0.16
1.38
0.05
inventories
317.10
9.76
275.58
9.98
sundry debtors
297.44
9.16
335.25
12.13
131.09
4.03
35.78
1.29
5.69
0.18
3.60
0.13
loans and advances
185.46
5.71
263.06
9.51
936.78
28.83
913.27
33.03
current liabilities
1,324.98
40.78
1,041.92
37.69
provisions
499.76
15.38
1,479.16
53.50
1,824.74
56.17
1,479.16
53.50
Net current assets
887.96
27.33
585.89
21.19
TOTAL
3,248.83
100
2,764.81
100
less: current
provisions
loans
liabilities
and
and

90.69
87.89
80
amount
60
40
20
0
2007
year
2008
73
OTHER CURRENT ASSETS

0.16
0.16
0.14
0.13
0.12
amount
0.10
0.08
0.06
0.04
0.02
0.00
2007
year
2008
Interpretation:1.
2.
3.
4.
5.
6.
In 2007 share capital was 1.44% and in 2008 it decreases to 1.22%.

In 2007 reserves & surplus was 87.89% but in 2008 it was increased to 90.68%.
Unsecured loans are decreased from 5.97% in 2007 to 4.06% in 2008.
In 2007 inventories was 9.96% and in 2008 it was slightly decreased to 9.76%.
Sundry debtors on 2007 were 12.12% but in 2008 it decreased to 9.15%.
Loans & advances in 2007 was 9.51% and it decreases to 5.70% in 2008.
74
CHAPTER-V
FINDINGS SUGGESTIONS
CONCLUSION
75
FINDINGS
1. Net working capital and negative for all the three years. So company should
thoroughly look into increase the current assets and decreases the current
liabilities.
2. Gross profit 63.33% in 2007-08, 86.26% in 2008-09, 88.79% in 2009-10 and
98.79% in 2010-11& 82.32 in 2011-12. So gross profit is showing an increasing

trend.
3. The current liabilities more than current assets the working capital is negative
4. The company has turned up with a minimum profit in the years 2006-2010 and
within the remaining financial years over all financial Position is satisfactory.
5. The comparative balance sheet of the reveals that during the year 2008, fixed
assets increased by RS. 2589.36crores.While long term liability from outsides

(loans) has increased by 5663.68crores and there is neither increase nor decrease
in share capital. The pattern of investment towards Fixed Assets reveals that long
term sources of funds are utilized for fixed assets.
6. The percentage of current assets to total assets was increased in 2012. The
percentage of current liabilities to total liabilities has also decreased in 2008.Thus
the proportion of current assets has decreased by 27.82 %, where as decrease in
the current liabilities is 30.54 % in the years the company liquidity position is
satisfactory
76
CONCLUSION
Even though company is utilizing its own funds there is very need that company should
improve its liquidity position, debtors collection period and proper management of its
current assets and current liabilities.
The external debt of the company decreased gradually. This is mainly due to repayment
of a portion of term loans. Another reason for decrease in external debt is due to increase
in reserves and surplus.
The year was 356.24crores this indicates there is possible growth of the company in the
market during 2011-2012.
Yeluri formulations Pvt.Ltd. has under taken research program, modernization and
technology up gradation, for the above said expansion programs it has made use of
surplus funds only and did not go for outsiders debts, which is one of the good long-term
financial policy of Yeluri formulations Pvt.Ltd.
77
SUGGESTIONS
1. Company may look into increasing various forms of currents assets and
decreasing current liabilities to effective manage working capital requirement.
2. Company may maintain current gross profit in the coming financial years.
3. To meet the short term requirements the company has to raise short term as well
as long term loans.
4. To attract to the new customers the company has to adapt new products and new
technology.
78
BIBLIOGRAPHY
Quality Strategy putting people at the heart of our NHS. The Scottish
Government. May 2010. www.scotland.gov.uk/Publications/2010/ 05/10102307/0
Safe Use of Medicines Policy and Procedures. NHS Lothian. July 2012.
http://intranet.lothian.scot.nhs.uk/NHSLothian/NHS%20Lothian/
Board Committees/Area Drug Therapeutics/ Documents/Forms/AllItems.aspx
The Lothian Joint Formulary. NHS Lothian. www.ljf.scot.nhs.uk
The Patient Rights (Scotland) Act. 2011.www.legislation.gov.uk/asp/2011/5/
Contents/enacted The Right Medicine: A Strategy for Pharmaceutical Care in
Scotland Scottish Executive 2002. www.scotland.gov.uk/Resource/ Doc/158742/
0043086.pdf
The Scottish Management of Antimicrobial Resistance Action Plan [ScotMARAP].
Healthcare Associated Infection Task Force. The Scottish Government. March
2008. www.scotland.gov.uk/Publications/2008/ 03/12153030/0
WEBSITES:
http://www.yeluri.net/
79

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Financial Statement Analysis - Yeluri Formulations PVT - LTD

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CHAPTER-I

analysis of short term liquidity position of the form to a comprehensive

What is the financial position of the firm at a given point of time?

Analysis of financial statement

Procedure of Financial Statements Analysis

The information is interpreted in a simple and understandable way.

significance and utility of financial data is explained for helping decision-taking.

The conclusions drawn from interpretation are presented to the management in

Objectives of the study:

Essential to bring out the history of Yeluri formulations Pvt.Ltd

Significance and meaning of the financial statements.

Scope of the study:

Comparative financial statements.

Annual Reports, browsing Internet, through magazines.

Comparative financial statements.

Different people may interpret the same analysis in different ways.

It does not consider the changes in prices level.

To find out the relative importance of different components of the financial

To identify the reasons for change in the profitability\financial position of the

To know the operational efficiency of the business: The financial analysis

Comparison of past and present results: Financial statement of the previous

Inter-firm comparison: The financial analysis makes easy to inter-firm

Helps in judging the solvency of the undertaking: creditors are always

Whether current assets are sufficient to meet current liabilities.

Helps in forecasting: The financial analysis will help in assessing future

The material used and

On the basis of material used on the basis of modus operandi

On the basis of material used:

On the basis of modus operandi:

Parties interested in financial analysis:

Investors:Investors present as well as prospective, are interested in the business in the

studied to find out earning position.

Procedures for financial analysis:

Vertical of the financial statements: Before analyzing and preparing any

Collection of necessary statements: The analyst should collect other useful

Rearrangement of financial data: Before making actual analysis and

useful manner. The approximation of figures, re-classification of consolidation of

Limitations of financial analysis :

Lack of standard terminology: Accounting is not an exact science. It does not

Non-consideration qualitative aspect: financial analysis does not measure the

Misleading results: Results shown by financial analysis may be misleading in the

Methods of financial analysis:The following methods of analysis are generally used:-

THE COMPARATIVE STATEMENT MAY SHOW: Absolute figures (rupee amounts)

Comparative balance sheet, and

Current financial position and liquidity position

Distribution pattern of liabilities as between current liabilities, long-term

Fund flow statements

analysis is undertaken by the management of the firm or by parties outside to it viz.

Change in accounting procedure may be misleading for ratio analysis. For

Ratio analysis when interpreted by different people in different way may

current ratio (or) working capital ratio

debt equity ratio

fixed interest coverage ratio

total assets turnover ratio

WHO-GMP manufacturing facilities

Well versed in handling contract manufacturing projects for large companies.

Commitment to quality and excellence.

Dedicated and committed team of professionals.

Experts in manufacturing, Q.C and Q.A.

Large capacities to produce bulk quantities.

Innovative and sophisticated packaging facilities.