TIRUMALA DIARY PRJ Modified by Working Capital

CHAPTER - I
INTRODUCTION
INTRODUCTION
A financial statement is a collection of data organized according 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 an income statement, thus the term financial statements generally refers to the two
statements, these are:
Financial Statements
Income Statements
(or) Profit and Loss
Account
Position Statement
(or) Balance Sheet
These statements are used to convey to management and other interested outsiders
the profitability and financial position of the firm Financial statements are the outcome of
summarizing process of accounting. In the words of john N.Her, the financial statements
provide a summary of the accounts of a business enterprise, the balance sheet reflecting
the asset, liabilities and capital as on a certain date and the income statement showing the
results of operations .
Financial Statements, as used incorporate business, refers to a set of reports and
schedules, which an accountant prepares at the period at the period of time for a business
enterprise. These comprise balance sheet and profit and loss account. In India, even,
company has to present its financial statements in the form and contents as prescribed
under section 21 of the companies Act 1956.
2
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. they are
the major means employed by firms to present their financial situation of owners,
creditors and the general public, the primary objective of financial statements is to assist
in decision making,. The accounting principles board of America (APB) sates 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 (resources less

obligations) arising out of business activities.
TYPES OF FINANCIAL STATEMENTS:Financial statements primarily comprise two basic statements: (1) the position
statement or the balance sheet and (2) the income statement or the profit and loss account.
However, (Generally Accepted Accounting Principles (GAAP) specifies that a complete
set of financial statements must include:
A Balance Sheet.
An Income Statement (Profit and Loss Account).
Statement of Changes in Owners Equity (Retained Equity).
A Statement of Changes in Financial Position.

3
NEED FOR THE STUDY:The study is conducted for the needs.

1. The Basic need is to complete3 a project work for the partial fulfillment of my
master degree.
2. To know various procedure and patterns followed for the computation of
Financial Statements in the organization.
3. To have a personal exposure by visiting the organization.
4. To develop the communication skills by preparing the project report.
5. To study the role of Financial Statements in the organization.
6. To know the more information about the Financial Analysis both theoretically and
partially.
SCOPE OF THE STUDY

The study of significance help to the following groups
1. The study provides an inside into the various aspects of Financial Statements.
2. Hence the company can make a necessary changes in the policy relating to it.
3.Study of the types are more useful to competitors to make a necessary steps to
Financial position
OBJECTIVES OF THE STUDY
The main aim of the study is to analyze the financial statement analysis of
TIRUMALA MILK PRODUCTS PRIVATE LTD
.
To provide reliable financial information about economic resources and

obligations.
To Know the present and future earning capacity or profitability of the concern.
To study and analysis the financial performance of the company.
To offer findings, suggestions & conclusions of the study.
METHODOLOGY OF THE STUDY

Methodology is a systematic process of collecting
information in order to analyze and verifies a phenomenon. The collection of data is two
principle sources. They are discussed as
I. Primary data
II. Secondary data
PRIMARY DATA:The primary data needed for the study is gathered through
interview with concerned officers and staff, either individually or collectively, sum of the
information has been verified or supplemented with personal observation conducting
personal interviews with concerned officers of finance department of TIRUMALA
MILK PRODUCTS PRIVATE LTD.
SECONDARY DATA:The secondary data needed for the study was
collected from published sources such as, pamphlets of annual reports, returns and
internal records, reference from text books and journal management.
Further data needed for the study was collected from: Collection of required data from annual records of the company.
Reference from text books and journals relating to financial management.
7
DIAGRAMATIC REPRESENTATION OF RESEARCH

METHODOLOGY
DATA
SOURCES
SECONDARY
SOURCES
PRIMARY
SOURCES
MANAGEMENT
RESPONDENTS
INSIDE
THE
COMPANY
PERSONAL
OBSERVANCE
ANNUAL
REPORTS
OUT SIDE
THE
COMPANY
TEXT
BOOKS
JOURNALS
LIMITATIONS OF THE STUDY

Financial statements do not depict the exact position and are essentially interim
reports.
The Financial statements contain historical information. This information is useful
but an investor should be concerned more about the present and future.
The financial statements are prepared on the basis of certain accounting concepts
and conventions. An investor should know them.
The statements contain only information that can be measured in monitory units.
The financial statements are sometimes prepared according to the needs of the
situation or the whims of the management.
As an adequate data was not able to pool because of the secrecy maintained by the
firm proper justification for the project was not done.
The study is limited to financial analysis or TIRUMALA MILK PRODUCTS

PRIVATE LTD
The study is confined to the figures available on paper and files and no physical
verification has been done.
As time and money is limited so it is not possible to collect adequate information

for the study.
CHAPTER II
INDUSTRY
&
COMPANY
PROFILE
10
INDUSTRY PROFILE
Dairying has been of life in India since the ancient times. The modern diary
Industry took roots in 1950 with the sale of bottled milk in Bombay from Array milk
colony. The first large scale milk products factory was started in 1945 at Anand a Cooperative venture, with the assistance of UNICEF, for the production of milk powder,
table butter and ghee. These products were making from the buffalo milk.
The worlds largest development program over undertaken, the operation flood
undertook and gigantic task of upgrading and modernizing with production, procurement,
processing and marketing with the assistance provided by the World Bank and other
external agencies, designed and implemented by the National Diary Development Board
(NDDB) and the Indian Diary Corporation. The project was launched in July, 1970. Its
basic concept compromises the establishment of co-operative structure on Anand pattern.
India enters an era of economic resources of agriculture, particularly the livestock
sector, is positioned to be a major growth area. The fact that dairying could play a more
constructive role in promoting rural welfare and reducing poverty is increasingly being
recognized. For example, milk production alone involves more than 70 million producers,
each raising one or two cows/buffaloes. Cow dung is an
important input as organic
fertilizer for crop production and is also widely used as fuel inn rural areas. Cattle also
serve as an insurance cover for the poor households, being sold during times of distress.
There was an increasing demand for milk from the urban areas. There arose a
need for the farmers to increase the production of milk. Since the demand in the urban
scenario is rapidly increasing so do the farmers generate the supply? Further the new
dairy plant capacity approved under the Milk and Milk products order (MMPO) has
11
exceeded 100 million l/p/d. The new capacity would surpass the projected rural
marketable surplus of milk by about 40 percent by 2005.
HISTORY
The origin of dairy farms under public management dates back to 1886 when the
department of Defense established a few dairy farms in that year to supply milk and milk
products to the British troops. The next step was initiated during the First World War. In
1914, the Department of Defense on the advice of the Board of Agriculture advised the
Government in 1916, to appoint imperial dairy expert. The next important step was the
decision to conduct a census of livestock. The Board of Agriculture carried out the
livestock census in 1919 as a preparatory action for planned dairy development. In 1920,
the imperial expert recommended to the Government for the establishment of a training
center to meet the manpower requirements for managing the Defiance Dairy Farms. By
this time there were three dairy farms and until 1923 the British Governments approach
towards dairying was confined to milk requirements of the military only. After 1923,
diploma course in dairy were started at Bangalore.
Dr. N.C. Wright, Director, Dairy Research institute, Scotland who was invited to
India in 1936 for reviewing the progress of dairying in the country has made two
recommendations: 1. Industry needs have to be solved by developing own technology and technologists in
the country.
2. India is country of villages, of which most inhabitants are small, marginal farmers and
landless laborers. Development should be promoted only on co-operative lines.
In 1937, the Lucknow Milk producers co-operative Union limited was
established paving the way for the organization of such union in districts and state.
In 1945, the Famine enquiry commission in its report emphasized the need for
developing fodder supply for increasing milk production and recommended the adoption
of mixed farming with a place for fodder and crop rotation. As a sequel to this, under the
Greater Bombay Milk Scheme, milk was procured from kaira district, Gujarat by the
12
private dairy. That gave way to the idea of creating an institutional structure for dairying
on co-operative lines.
DEVELOPMENTS OF INDUSTRY
National Dairy Development Board (NDDB):The Government of India had established the National Dairy Development Board
(NDDB), an autonomous body headquartered at Anands Co-operative in India. In order
to develop dairy in India, NDDN drew plans for operation flood.
OPERATION FLOOD:In the late sixties, the board drew up a project called Operation Flood (OF)
meant to crate a flood of milk in Indias villages with funds mobilized from foreign
donations. Producers co-operatives, which sought to link dairy development with milk
marketing, were central plank of this project. The Operation Flood, which started in 1970,
concludes its third phase in 1996 and has to its credit these significant results:-
1. The enormous urban market stimulus has led to sustained.

2. Production increases, raising per capita availability of milk to early 200 grams per day.
3. The dependence on commercial imports of milk solids are alone away with.
4. Modernization and expansion of the dairy industry and its infrastructure, activating
milk grid.
5. Marketing expanded to supply hygienic and fair priced milk to some 300 million
consumers in 550 cities and towns.
6. A nationwide network of multi-tier producers co-operative, democratic in structure
and professionally managed, has come into existence. Millions of small producers
participate in an economic enterprise and improve the quality of their life and
environment.
7. Dairy equipment manufacture has expanded to meet most of the
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industrys needs.
THREE PHASES OF DEVELOPMENT

The scheme sought to establish milk produces co-operatives in the villages and
make modern technology available to them. The broad objectives are to increase milk
productions (a flood of milk) augment rural incomes and transfer to milk producers the
profits of milk producers the profits of milk, marketing which are hitherto enjoyed by
well-to-do-middlemen.
PHASE1:Phase 1 of Operation Flood was financed by the sale within India of skimmed
milk powder and butter oil gifted by the EC countries via the world food program. As
founder-chairman of the National Dairy Development Board (NDDB) of India Dr.Kurien
finalized the plans and negotiated the details of EEC assistance. He looked after the
administration of the scheme as found-chairman of the erstwhile Indian Dairy Cooperation, the project authority for Operation Flood. During its first phase, the project
aimed at linking Indias 18 best milk sheds with the milk markets of the four metropolitan
cities of Delhi, Mumbai, Calcutta and Madras.
PHASE2:Phase 2 of the project, implemented during 1981-85 raised this to some 136 milk
sheds linked to over 290 urban markets. The seed capital rose from the sale of WFP/EEC
gift products and World Bank loan had created, by end 1985, a self-sustaining system of
43,000 villages co-operatives covering 4.25 million milk producers. Milk powder
production went up from 22,000 tons in the pre project year to 1, 40,000 tons in 1989,
thanks to dairies set up und Operation Flood. The EEV gifts thus helped to promote selfreliance. Direct marketing of milk by producers co-operatives resulting inn the transfer
of profits from milk contracts increased by several million liters per day.
PHASE3:-
14
Phase 3 of Operation Flood (1985-1996) enabled dairy co-operatives to rapidly

build to the basic up the basic infrastructure required to procure and market more and
more milk daily. Facilities were created by the co-operatives to provide better veterinary
first-aid health care services to their producers members.
ANAND PATTERAN DIARY DEVELOPMENT

The information Anand pattern of milk co-operative was launched with the
organization of Krishna District Co-operative Milk producers Union Limited. In this
pattern the function of diary is milk procurement, processing and marketing are
controlled by the milk producers themselves.
PLANNING INVESTMENT: 33.43 Crores

247.53 Crores
187.00 Crores
349.00 Crores
116.00 Crores
600.00 Crores
15
INDUSTRY PROFILE IN ANDHRA PRADESH:The program Dairy Industry was mooted with commendable help of the United
National International Childrens Emergency Fund, Food and Agriculture Organization
and Freedom from Hunger Company campaign organization of the U.K. These
organization insisted a lot of the establishment of the dairy units at Hydria and
Vijayawada in 1967 and 1969 respectively, which lead to pioneer dairy development in
Andhra Pradesh later to set cooling and chilling centers have been setup to feed these two
gigantic units.
The Government of Andhra Pradesh started dairy development corporation to
interest of milk producers and ensuring adequate supply of fresh milk at reasonable price
to the urban consumers as A.P.D.D.C., come in to the existence on 2 nd April 1974.
A.P.D.D.C., providing employment to nearly 20 employees and organism easy many as
87 dairy units including seven milk factories, 13 district dairies, 22 chilling centers, 18
cooling centre and 15 mini cooling centers.
In addition to that the private units have been contributing their little mite in the
development of dairy industry M/s. Hindustan milk foods that has started a malted milk
product factory in Rajahmundry. Further to enhance working efficiency and to increase
the turnover, the Government has constituted on autonomous dairy development.
Corporation on the recommendation measure the dairy industry improving towards
massive milk production and milk collections.
16
DAIRY DEVELOPMENT:In 1960 pilot milk supply scheme was started in the state for the dairy
development. Its initial capacity was 100 liters a day in the time of starting. Now its daily
collection increased to 11 lakhs liters per day. It is also working as alien between milk
producers of the towns by providing reasonable price to the producers to maintain stable
market.
A.P. Diary development co-operative federation (A.P.D.D.C.F):

A.P.D.D.C.F. was formed in October,1981 to implement Operation Flood-2
program through active involvement of producers in organization milk production,
procurements, processing and marketing on three-tier. Co-operative structure as per the
National Government of India. The three-tier system consists of primary dairy cooperatives societies 13 village level, co-operative unions at district level and federation
at state level.
OPERATION FLOOD:In our state operation flood was divided in three types Anand Level.
Village level - D.C.S.
District level - M.P.C.V.
State level
- A.P.D.D.C.
17
Operation flood programmer:Indian diary Development Corporation own the responsibility of implementation
of operation flood programs, which provides money assistance, put 70 % towards loans
and 30 % as subsidy. National Diary Development Corporation selected district of the
State for implementation of operation fold.
Development of dairy in Nineties:The momentum gained in the dairy through co-operatives during the last 20 years
will now take India into nineties as major dairying country of the world. The countrys
milk production in the early sixties which was about 20 million tons has touched a record
of 56 million tons. It is likely to reach about 80 million tons by 2000 AD. India which one
time was dependant on other countries for products such as milk powder, table butter and
cheese has now become self sufficient. It has even started exporting some of them in
small quantities simultaneously efforts are made to expand milk procurement, processing
and marketing to meet the growing demand for milk products.
Growth of the Industry:Before the independence of India, in the first half of the 20 th century dairying in
the country was largely unorganized. Fluid milk and its products were generally not
easily marketable commodities and there was no transport of these products to far
distances. Organized dairying, as well understood in the west started in a small way when
military dairy farms and creameries were established towards the end of the 20th century
to meet the demands of the armed forces and their hospitals. Some private dairies, such as
Kaveters and poisons' with encouraged making pasteurized butter, primarily for the use of
the British army. As a result the imperial institute of animal Husbandry and dairying was
established in 1923 at Bangalore. There has been another major effort in the early 1940's
where milk produced in rural areas of kaira district was collected in bulk Pasteurized and
18
transported by distributing in Bombay by " the Bombay milk scheme" operated by the
Bombay municipality. When India become independent in 1947, one of the major milk
schemes to be included the country was "the Greater Bombay milk scheme (GBMS)".
MILK SHEDS/UNIONS:Operation flood programmer has been identified into milk sheds/unions.
NO
1
2
3
4
5
6
7
8
MILK SHEDS / UNIONS

Visakha
Godavari
Guntur-Prakasam
Chittoor
Cuddapha
Kurnool
Nalgonda-Ranga Reddy
Medak-Nizamabad
DISTRICTS
Srikakulam, Vizianagaram, Vizag
East and West Godavari
Guntur-Prakasam
Chittoor
Cuddapah
Kurnool
Nalgonda-Ranga Reddy
Medak-Nizamabad
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COMPANY PROFILE
TIRUMALA MILK PRODUCTS Private Limited is a professionally managed
company engaged in the manufacture of a wide range of Dairy Products which include
Milk in Sachets, Sweets, Flavored Milk, Curd in Cups and Sachets, Milk Powder, Butter,
Ghee and Butter Oil both in bulk as well as in consumer packs...
Established in 1998, TIRUMALA MILK PRODUCTS (P) Ltd. is one of the
fastest growing Private Sector Enterprises in India with a team of dedicated professionals.
The company has one of the most modern and versatile plants in the Indian Dairy
Industry with state-of-the-art technology. TIRUMALA MILK PRODUCTS (P) Ltd.
Products meet stringent quality control tests and cater to the premium segment of the
market for Dairy Products. TIRUMALA MILK PRODUCTS (P) Ltd. is presently
implementing an expansion programme and proposes to launch new products in the near
future.
Presently TIRUMALA MILK PRODUCTS market presence in Andhra Pradesh,
Karnataka and Tamil Nadu. It handle 13 Lakh liters of milk per day in packing stations
and dairy plant, which is the single largest plant in the state of Andhra Pradesh. Its
Registered Office is located at NarasaraoPet, Gutur Dist and Corporate Office is located
at Kavurihills, Hyderabad.
TIRUMALA MILK PRODUCTS (P) Ltd. sells a rich, varied offering of
nutritious, tasty and healthy food products under well-known brand. Taste, health,
convenience, reliability and vitality for consumers are key characteristics. Milk comes
from cattle herd that receive the best care along with healthy and nutritious diet in the
form of quality feed to ensure that they produce wholesome, high-quality milk. The major
contributors to the success of TIRUMALA MILK PRODUCTS (P) Ltd. are: Milk Procurement Network
Superior sales and marketing prowess
Strategic technological & infrastructural advantage
Efficient human investments
20
BRIEF INTRODUCTION ABOUT COMPANY:We have established a dairy unit named Tirumala Milk products (P) Limited, at
Kadivedu
Village,
Chillakur
Mandal,
Nellore
District, Andhra
Pradesh
and
commissionered for commercial production for mareting during sepetember 1999 to

handle 2,25,000 litres of milk per day. The plant is located on Calcutta-Chennai National
High way, 9kms from Gudur town towards Chennai, in an are of 13.00 acres.
Inception
Vision
Mission
Policies
INCEPTION:The unit is registered under S.S.I. The milk is bulk is being purchased from other
dairies processed, homogenized, packed and marketed mainly in Chennai, Bangalore and
Mysore cites. The milk is being also sold in Guduru, Tirupathi and Nellore towns basing
on consumers demand. By marketing the milk in various towns, assured market. Out let
is provided to large number of village milk producers for their surplus are applied before
machinery is installed in the dairy. Strict quality standards are applied before marketing
the milk for which well equipped laboratory is established. In order to deliver quality
milk to the consumers insulted trucks are used to transport milk from the dairy to various
destinations.
VISION:Tirumala Milk Products (P) Limited is a dream come true to the dynamic young
entrepreneurs who have jointly efforted to convert their skills, knowledge and experience
in the field of processing and producing milk and milk products.
Realizing the Milk Product Potentialities of the inversion track of the
Government of Andhra Pradesh and Government of India, with self managed financial
resources and established the Tirumala Dairy in the year 1995 at Narasaraopet, Guntur
District and erected new plant at Kadivedu in the year 1999. Today, the dairy has posd to
21
equate major dairies int eh southern region which has not only captured the market but
also has mode Thirumala an accepted Brand and preference of the consumers.
MISSION:Tirumala Milk Product (P) Limited is a dream come true to the dynamic young
entrepreneurs who have jointly efforted to convert their skills, knowledge and experience
in the field of processing and producing milk products.
POLICIES:Realizing the milk product potentialities of the inversion track of the Government
of Andhra Pradesh and Government of India, with self managed financial resources and
established the Tirumala Dairy in the year 1995, at Narasaraopet District, Guntur and
erected new plant at Kadivedu in the year 1999. today, the dairy has posed to equate
major dairies in the southern region which has not only captured the market but also has
mode TIRUMALA an accepted Brand and preference of the consumers.
22
AREAS OF OPERATION:Tirumala distributes milk to various parts of Tamil Nadu, Andhra Pradesh, and
Karnataka. Gudur is the main source for delivering milk and milk products to Chennai
and other major parts of Tamil Nadu. The procurement and processing section located at
Pasupattur village of Chitoor district in Andhra Pradesh is the source of milk, curd and
products which are supplied in Bangalore and Mysore Markets. The packing station
located at Vellacheruvu, 20 KM away from Registered Office and plant at Singavaram
West Godavari District, Wadiyaram in Medak District and Gunagal in Rangareddy
District supplie milk curd and other products to major markets of Andhara Pradesh which
includes Hyderabad, Vijayawada, Guntur, Rajamandry, Kakinada, Visakhapatnam,
Mahabubnagar and Karim Nagar. Skim Milk Powder, Butter and Butter oil produced at
Gudur plant are supplied to major Industrial and Institutional customers located across
India.
CERTIFICATES AND AWARDS:-
In recognition of its efforts and achievements in the dairy foods industry, and in
acknowledgment of all the challenges surmounted, TIRUMALA MILK
PRODUCTS (P) Ltd. has won many awards and certificates.
More enduring than any public recognition for our contributions is the satisfaction
we enjoy by creating a superior product and giving back to our communities.
TIRUMALA MILK PRODUCTS (P) Ltd. is an ISO 9001:2000 and an ISO 2000:
2005 Certified company. The dairy is following Quality Management System and
Food Safety Standards.
23
Apart from ISO certification, It has Certificate from SGS on SMP Analysis too.
TIRUMALA MILK PRODUCTS (P) Ltd. has ISI Licence, Agmark Licence and
adheres to all other statutory standards as per requirements.
PRODUCTS:TIRUMALA MILK PRODUCTS (P) Ltd. covers the entire spectrum of

dairy products sold in markets. The complete range of TIRUMALA MILK PRODUCTS
(P) Ltd. are highly nutritious, healthy and bring you a world of goodness.
TIRUMALA MILK PRODUCTS (P) Ltd. pasteurizes and packages all
fresh dairy products in technologically superior and hygienic conditions to ensure pure
natural freshness.
TIRUMALA MILK PRODUCTS (P) Ltd., Handles 6.5 Lakhs Liters of
Milk per day in all their packing Stations and main dairy plant which is the highest in the
state of Andhra Pradesh.
TIRUMALA MILK PRODUCTS (p) ltd. Handles milk in the

following locations:Pacing Locations
Handling Capacity per day

4.0 Lakh litres
Gudur
2.0 Lakh litres
Vellala Cheruvu
1.0 Lakh litres
Bhimadolu
2.0 Lakh litres
Palamaner
4.0 Lakh litres

24
Gungal
Procurement of Milk:TIRUMALA MILK PRODUCTS (P) Ltd. established 25 Chilling centers in

Andhra Pradesh and 8 chilling centers in Tamilnadu to procure both Cow & Buffalo milk.
Best quality milk is procured and chilled at chilling centers, to retain freshness of milk.
The strength of the TIRUMALA MILK PRODUCTS (P) Ltd. is to procure more than 6.0
lakh liters of milk directly from agents/farmers using state-of-the-art machinery and
professionally trained staff.
PRODUCTION: TIRUMALA MILK PRODUCTS (P) Ltd. has its main dairy plant at Kadivedu
with handling capacity of 4.0 lakhs lts of milk per day from various chilling
centers and local units.
Main plant processes 3.0 Lakhs Lts of milk per day in automatic sachet filling
machines for supply and distribution to Chennai, Tirupati, Nellore, etc in
insulated puffs.
There is continuous growth in sale of milk from 50000 ltrs to 350000 ltr with in a
span of one-decade.
TIRUMALA MILK PRODUCTS (P) Ltd. has its own supply chain management,
which is the key to timely distribution.
At Palamaner unit processes and supplies 1.00 lakh liters of milk and 20000 liters
of curd to Bangolore city.
25
Vellalacheruvu & Bhimadolu packing stations processes and supplies 2.0 lakh
liters of milk to Vijayawada., Guntur , Eluru, Visakhapatnam, Kakinada and
Rajahmundry.
Wadiyaram plant has capacity of 50000 Liters milk to cater to the markets of
Medak, Nizambad, Adilabad and Karim Nagar Districts of A.P
Butter: Is made from pure cow & Buffalo fat under hygienically processed through
continuous butter making machine.
Ghee:Is made from pure cow & Buffalo butter under supervision 30 years granulation,
colour and aroma of ghee with a capacity of 8 tonnes per day. Ghee is packed in a wide
range of 7 ml to 15 Kgs.
Milk Powder:Is made from fresh cow & buffalo milk, plant is capable of marketing all
type of milk powders with a capacity of 15 tonnes per day.
By-Products: Flavored Milk,

Lassi, Khava,
Milk Cake,
Panner,
Ice Cream,
Curd,
Buttermilk.
26
CHAPTER- III
THEORITICAL FRAMEWORK
27
FINANCIAL STATEMENTS ANALYSIS

Financial statements are prepared primarily for decision making. They play a
dominant role in setting the frame work of managerial decision. 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 is the process of identifying the financial strengths and
weakness of the firm by properly establishing relationship between the items of the
balance sheet and the profit and loss amount. There are various methods or techniques
used in analyzing financial statements, such as comparative statements, trend analysis,
common-size statements, schedule of changes in working capital, funds flow and
analysis, cost volume profit analysis and ratio analysis.
MEANING OF FINANCIAL STATEMENT ANALYSIS:The term financial analysis also known as analysis and
interpretation of financial statements, refers to the process of determine financial strength
and weakness of the firm by establishing strategic relationship between the items of the
balance sheet, profit and loss account and oilier operative data.
28
In the words of Myers, financial statements analysis is

largely study of relationship among the various financial factors in a business as disclosed
by a single- set of statements and study of the trend of these factors as shown in a series
of statements.
The analysis and interpretation of financial statements is
essential to bring out the mystery behind the figures in financial statements.
DEFINITION OF FINANCIAL STATEMENT ANALYSIS:According to Myers:Financial Statements Analysis is largely a study of relationship
among the various financial factors in a business as disclosed by a single set of the trend
of these factors as shown in a series of statements.
According to Kennedy and Muller:The analysis and interpretations of financial statements reveal each and every aspect
regarding the well-being financial soundness, operational efficiency and creditworthiness
of the concerned
CHARACTERISTICS OF IDEAL FINANCIAL STATEMENTS:The financial statements are prepared with a view to depict financial position of
the concern. A proper analysis and interpretation of these statements enables a person to
judge the profitability and financial strength of the business. The financial statements
should be prepared in such away 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. No material information
29
should be with held while preparing position of the concern. No material information
should be with held while preparing these statements.
2. Effective Presentation:The financial statements should be presented in a simple and lucid way so as to make
them easily understandable. A person who is not well versed with accounting terminology
should also be able to understand the statements without much difficulty. This
characteristic will enhance the utility of these statements.
3. Relevance: Financial statements should be relevant to the objectives of the enterprises. This will be
possible when the person preparing these statements is able to properly utilize the
accounting information. The information which is not relevant to the statements should
be avoided; otherwise it will be difficult to make a distinction between relevant and
irrelevant data.
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. Easiness:Financial statements should be easily prepared. The balances of different ledger accounts
should be easily taken to these statements. The calculation work should be minimum
possible while preparing these statements. The size of the statements should not be very
large. The columns to be used for gibing the information should also be less. This will
enable the saving of time in preparing the statements.
6. Comparability:The results of financial analysis should be in a way that can be compared to the previous
years statements. The statement can also be in compared with the figures of other
30
concerns of the same nature. Sometimes budgeted figures are given along with the
present figures. The comparable figures will make the statements more useful. The Indian
companies Act. 1956 has made it obligatory to give previous years figures in the balance
sheet. The comparison of figures will enable a proper assessment for the working of the
concern.
7. Analytical representation:The information should be analyzed in such a way that similar date is presented at the
same place. A relationship can be established in similar type of information. This will be
helpful in analysis and interpretation.
8. Brief:If possible, the financial statements should be presented in brief. The reader will be able
to form an idea about the figures. On the other hand, it figures are given in details then it
will become difficult to judge the working of the business.
9. Promptness:The financial statements should be prepared and presented at the earliest possible.
Immediately at the close of the financial year, statements should be ready.
LIMITATIONS OF FINANCIAL STATEMENTS:Though financial statements are relevant and useful for the concern, still they do
not present a final picture of the concern. The utility of these statements is dependent
upon a number of factors. The analysis and interpretation of these statements should be
done very carefully otherwise misleading conclusions may be drawn; the financial
statements suffer from the following limitations:
1. Only interim reports:31
These statements don 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. However, the statements have to be prepared for
different accounting periods, generally one year, during the life time of the concern. The
costs and incomes are apportioned to different periods with a view to determine profits
etc. the allocation of expenses and incomes will depend upon the personal judgment of
the accountant. The existence of cotangent assets and liabilities also makes the statements
imprecise. So financial statements do not give the final picture and they are the most
interim reports.
2. Do not give exact position:The financial statements are expressed in momentary values so they appear to
give final and accurate position. The value of fixed assets in the balance sheet neither
represents the value for which fixed assets can be sold nor did the amount, which will lie,
require replacing these assets. The balance sheet is prepared on the presumption of a
going concern. The concern is expected to continue in the figure. So fixed assets are
shown all cost less accumulated depreciation. There are certain assets in the balance sheet
such as preliminary expenses, goodwill, discount on issue of shares which will realize
nothing at the time of liquidation through they are shown in the balance sheet.
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. The statements are not prepared keeping in view the present economic
conditions. The balance sheet losses the significance of being an index of current
economic realities. Similarly, the profitability shown by the income statement may not
represent the earning capacity of the concern. The increase I profits may be due to an
increase in prices or due to sonic abnormal causes and not due to increase in efficiency.
The conclusions drawn from financial statements may not give a lair picture of the
concern.
32
4. Impact of Non-Monetary Factors Ignored:There are certain f actors which have a bearing on the financial position and
operating results of the business but they do not become a pan of these statement s
because they cannot be measured I monetary terms. Such factors may include the
reputations of the management, credit worthiness of the concern, sources and
commitments for purchases and sales, co-operation of the employees, etc. The financial
statements only show the position of the financial accounting for business and not the
financial position.
5. No Precision:The precision of financial statement data is not possible because the statement
deal with matters which cannot be precisely stated. The data are recorded by convention
procedure is followed over the years. Various conventions, postulates personal judgments
etc, are used for developing the data.
METHODS OR DEVICES OF FINANCIAL ANALYSIS:The analysis and interpretation of financial statement is used to determine
the financial position and results of operations as well. A number of methods or devices
are used to study the relationship between different statements. An effort is made to use
those devices, which clearly analyze the position of the enterprise. The following
methods of analysis are generally used:
Comparative Statements
Trend Analysis
Common sized statements
Funds flow statements
Cash flow statement
Cost-Volume-Profit Analysis
33
Ratio Analysis.
COMPARATIVE STATEMENTS:The comparative financial statements are statements of the financial position at
different periods of time. The elements of financial position are shown in a comparative
form so as to give an idea of financial position at two or more periods. Any statements
prepared in a comparative term will be covered in comparative statements. From practical
point of view, generally two financial statements (balance sheet and income statement)
are prepared in comparative form for financial analysis purposes.
Not only the comparison of the figures of two periods but also be relationship
between balance sheet and income statement enables an in-depth study of financial
position a cooperative results. 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.

The analyst is able to draw useful conclusions when figures are given
in a comparative position. The figures of sales for a quarter, half-year or one year may tell
only the present position of sales efforts. When sales figures of previous periods, are
given along with the figures of current periods then the analyst will be able to study the
trends of sales over different periods of time. Similarly, comparative figures will indicate
the trend and direction of financial and operating results.
The financial data will be comparative only when same accounting
principles are used in preparing these statements. In case of a deviation in the use of
accounting principles this fact must be mentioned at the foot of financial statements and
the analyst should be careful in using these statements. The two comparative statements
are (I) balance sheet and (ii) income statement.
34
COMPARATIVE INCOME STATEMENT:The income statement gives the results of the operation of a
business. The comparative income statement gives an idea of the progress of a business
over a period of time. The changes in absolute data in money values and percentages can
be determined to analyze the profitability of the business. Like comparative balance
sheet, income statement also has four columns. First two columns give figures of various
items for two years. Third and fourth columns are used to show increase is decrease in
figures in absolute amounts and percentages respectively.
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 sheet of the
same business enterprise on different dates. The changes in periodic balance sheet items
reflect the conduct of a business. The changes 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. The comparative balance sheet
has two columns for the data of original valance sheets. A third column is used it show
increases in figures. The fourth column may be added for giving percentages of increases
or decreases. The balance sheet shows the financial condition of a business at a given
point of time. It consists of mainly two objects these are as fallows
Assets
Liabilities
35
The balance sheet is also called statement of financial position. Its shows the
assets, liabilities and capital as a particular date. It indicates what the firm owns and how
these assets are financed in the form of liabilities or owner ship interest.
FEATURES OF BALANCE SHEET:
Balance sheet is prepared as specific date. Hence, it shows financial

position of the enterprise on that date.
Balance sheet is usually in two columns which illustrate relation ship

between the assets and liabilities,
Financial position of the firm is shown in the balance sheet on going

concern value.
TREND ANALYSIS:The financial statements may be analyzed by computing trends of

series of information; this method determines the direction upwards of downwards and
involves the computation of the percentage relationship that each statement item bears to
the same item in base year. The information for a number of years is taken rp and one
year, generally the first year, is taken as a bade year. The figures of the base year are
taken as 100 and trend ratios for other years are calculated on the bases of base year. The
analyst is able to see the trend of figures, whether upward or downward.
COMMON- SIZE STATEMENT:The common size statements, balance sheet and income statement
are shown in analytical percentages. The figures are shown as percentages of total assets,
total liabilities and total sales. The total assets ate taken as 100 and different assets are
expressed as a percentage of the total. Similarly various liabilities are taken as a part of
36
total liabilities. These statements are also known as component percentage or 100 percent
statement because every individual item is stand as a percentage of the total 100. The
short-comings in comparative statements and tend percentages where changes in items
could not be compared with the totals have been covered up. The analyst is able to assess
the figures in relation lo total values.
FUNDS FLOW STATEMENT:The funds flow statement is a statement is a statement which shows
the movement of funds and is a report of the financial operations of the business under
king. It indicates various means by which funds were obtained during a particular period
and the ways, in which these funds were employed, in simple words, it is a statement of
sources and applications of funds.
CASH FLOW STATEMENT:Cash flow is of vital importance to the financial management. It is an essential tool of
financial analysis for short-term planning. The chief advantages of cash flow statement
are as follows:
1. Since cash flow statement is based on the cash basis of accounting, it is very useful in
the evaluation of cash position of a firm.
2. A projected cash flow statement can be prepared in order to know the future cash
position of a concern so as to enable a firm to plan and coordinate its financial operations
properly. By preparing this statement, a firm can come to know as to how much cash will
be generated into the firm and how much cash will be needed to make various payments
and hence the firm can well plan to arrange for the future requirements of cash.
3. A comparison of the historical and projected cash flow statements can be made so as to
find the variations and deficiency or otherwise in the performance so as to enable the firm
to take immediate and effective action.
37
4. A series of intra-firm and inter-firm cash statement reveals whether the firms liquidity
(short-term paying capacity) is improving or deteriorating over a period of time and in
comparison to other firms over a given period of time.
5. Cash flow statement helps in planning the repayment of loans, replacement of fixed
assets and other similar long-term planning of cash. It is also significant of capital
budgeting decisions.
6. Cash flow analysis is more useful and appropriate than funds flow analysis for shortterm financial analysis as in a very short period it is cash which is more relevant then the
working capital for forecasting the ability of the firm to meet its immediate obligation.
RATIO ANALYSIS:One of the techniques of analysis of financial statements is to

calculate ratios. Ratio is the numerical or an arithmetical relationship between two
figures. It is expressed when one figure is divided by another. If 4000 is divided by
10,000 the ration can be expressed as 4 or 2:5 or 40%.
Absolute figures are valuable but they standing alone convey no
meaning unless compared with another. Accounting ration inter-relationships, which exist
among various accounting data? When relationships among various accounting data
supplied by financial statements are worked out, they are known as accounting ratios.
ACCOUNTING RATIOS CAN BE EXPRESSED IN VARIOUS WAYS

SUCH AS:-
38
i. A pure ratio say ratio of current assets to current liabilities is 2:1 or

ii. A rate say current assets are two times of current liabilities or
iii. A percentage say current assets are 200% of current liabilities.
Each method of expression has distinct advantage over the other. The analyst will select
that mode which wills best-suit his convenience and purpose.
CLASSIFICATION OF RATIOS
Ratios may be classified in a number of ways keeping in view the
particular purpose. Ratios indicating profitability are calculated on the basis of the
profit and loss account, those indicating financial position are computed on the basis
of the balance sheet and those which operating efficiency or productivity or effective
use of resources are calculate on the basis of figures in the profit and loss account and
the balance sheet. This classification is rather crude and unsuitable to determine the
profitability and financial position of the business. To achiever this purpose
effectively ratios may be classified as:
Profitability Ratios
Turnover Ratios
Financial Ratios
Leverage Ratios
PROFITABILITY RATIOS:Profitability Ratios are of outmost importance 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.
TURNOVER (PERFORMANCE OR ACTIVITY) RATIOS:-
39
These ratios are very important for a concern to judge how well
facilities at the disposal of the concern are being used or to ratios are usually calculated
on the basis of sales or cost of sales and are expressed in integers rather than as
percentage. Such ratios should be calculated separately for each type of asset. Higher the
turnover ratio, the profitability and use of capital or resources will be. The following are
the important turnover ratios usually calculated by a concern
FINANCIAL RATIOS:These ratios are calculated to judge the financial position of the concern
from long-term as well as short-term solvency point of view. The following are the
ratios, which are calculated in the respect.
LEVERAGE RATIOS:Leverage Ratios to an increased means of accomplishing some purpose. In

financial management it refers to employment of funds to accelerate rate of return to
owners. It may be favorable or unfavorable. An unfavorable leverage exists if the rate of
return remains to however. It can be used as a tool of financial planning by the finance
manager
COMPARATIVE INCOME STATEMENT OF TIRUMALA MILK

PRODUCTS PRIVATE LIMITED AS ON 2006-07 TO 2007-08
Particulars
A)sales & other income

B)Expenditure on :
Raw materials and packing
material consumed
Processing and operating
expenses
Salaries, wages and other
payments to staff
Administrative and marketing
expenses
Interest and financial charges
2006-2007
2007-2008
Increase
/decrease
Increase
/decrease
in %
1244355560.00
1490617137.00
246261577.00
19.79%
1023506571.00
1174717128.03
151210557
14.77%
938319927.00
119458344.49
(818861582.60)
87.26%
13783556.00
16813493.80
3029937.80
21.98%
66013137.00
83389660.33
17376523.33
26.32%
10242362.00
12858460.00
2616098
25.54%
40
Depreciation
19701377.00
29759420.00
(16725435)
cost of production
Decrease /increase in stock
2071566930.00
(504947.00)
1436996507.00
(31851606.00)
(634570423.00)
(31346659.00)
30.63%
(6207.91%)
cost of goods sold
2071061983.00
1405144901.00
(665917082.00)
(32.15%)
830661202.00
78323306.00
(752337896.00)
(90.57%)
Profit before tax

Add: Earlier year income
Less: provision for taxation
16771683.00
142680.00
(4341000.00)
21769024.73
0.00
(5088074.00)
4997341.73
(142680.00)
747074.00
29.79%
0.17%
Profit after tax
12573363.00
16680950.73
4107587.73
32.66%
Gross profit
84.89%
INTERPRETATION:o The Sales & other income has been increase by 246261577.00 i.e. 19.79%
o The cost of production has been decreased by (634570423.00) i.e. 30.63%

Particulars
2007-2008
2008-2009
Increase
/decrease
Increase
/decrease
in %
1490617137.00 2861014275.00 1370397138.00
91.93%
B)Expenditure on :
material consumed
1174717128.03 2338261619.00 1163544491.00
99.04%

expenses
payments to staff
Administrative and
marketing expenses
Interest and financial
charges
Depreciation
119458344.49
213408096.00
93949751.60
78.64%
16813493.80
29470626.00
12657132.20
75.27%
83389660.33
167759794.00
84370133.67
101.17%
12858460.00
23599654.00
10741194.00
83.53
29759420.00
40369063.00
37393121.00
125.65%
41
cost of production
1436996507.00 2812868852.00 1375872345.00

(31851606.00)
12664933.00 (19186673.00)
95.74%
(60.23%)
cost of goods sold
1405144901.00 2825533785.00 1420388884.00
101.08%
Gross profit
78323306.00
27200525.00
(51122781.00)
(65.27%)
Profit before tax
21769024.73
60810356.00
39041331.27
179.34%
Profit after tax
16680950.73
46467460.00
29786509.27
178.56%
INTERPRETATION: The the Sales & other income has been increase by 1370397138.00 i.e. 91.93%
The cost of production has been increased by 1375872345.00 i.e. 95.74%
The the cost of goods sold has been increased by 1420388884.00 i.e. 101.08

Particulars
2008-2009
2009-2010
Increase
/decrease
Increase
/decrease in
%
2861014275.00 3758037218.00 897022943.00
31.35%
2338261619.00 3003522365.00 665260746.00
28.45%
B)Expenditure on :
Raw materials and
packing material
consumed
expenses
payments to staff
Administrative and
marketing expenses
213408096.00
299487356.00
86079260.00
40.33%
29470626.00
43541860.00
14071234.00
47.74%
167759794.00
213490288.00
45730494.00
27.25%
42

charges
Depreciation
23599654.00
37111286.00
13511632.00
57.25%
40369063.00
52675282.00
12306219.00
30.48%
cost of production
Decrease /increase in
stock
2812868852.00 3602420437.00 789551585.00

12664933.00
24192668.00 11527735.00
28.06%
91.02%
cost of goods sold
2825533785.00 3626613105.00 801079320.00
28.35%
Gross profit
27200525.00
111410654.00
84210129.00
309.59%
Profit before tax
60810356.00
132401449.00
71591093.00
117.72%
Profit after tax
46467460.00
98786932.00
52319472.00
112.59%
Interpretation: The Sales & other income has been increase by 897022943.00 i.e. 31.35%
The cost of production has been increased by 789551585.00 i.e. 28.06%
Comparative Income statement of Tirumala milk products

private Limited as on 2009-10 to 2010-11
Particulars
2009-2010
2010-2011
Increase
/decrease
3758037218.00
4729107872
971070654
25.83%
B)Expenditure on :
material consumed
3003522365.00
3704017569
700495204
23.32%
299487356.00
366521333
67033977
22.38%
43541860.00
66503436
22961576
52.73%

expenses
43
Increase
/decrease in
%
payments to staff
Administrative and
marketing expenses
charges
Depreciation
213490288.00
264456756
50966468
23.87%
37111286.00
31881963
(5229323)
(14.09%)
52675282.00
75380244
22704962
43.10%
cost of production
3602420437.00
24192668.00
4508761301
(28874089)
906340864
(4681421)
25.15%
19.35%
cost of goods sold
3626613105.00
4479887212
853274107
23.52%
Gross profit
111410654.00
228060527
116649873
104.70%
Profit before tax
132401449.00
191472483
59071034
44.61%
98786932.00
134736951
35950019
36.39%
Profit after tax
INTERPRETATION:-
The Sales & other income has been increase by 971070654 i.e. 25.83%
The cost of production has been increased by 906340864 i.e. 25.15%
The profit after Tax has been increased by 35950019 i.e. 36.39%

Particulars
2010-2011
2011-2012
Increase
/decrease
Increase
/decrease in
%
4729107872
5876445462
1147337590
24.26%
B)Expenditure on :
material consumed
3704017569
4752723438
1048705869
28.31%
366521333
459801451
93280118
25.45%
44
expenses
payments to staff
Administrative and marketing
expenses
Interest and financial charges
66503436
106475699
39972263
60.10%
264456756
341971419
77514663
29.31%
31881963
53709353
21827390
68.46%
75380244
107637511
32257267
42.79%
cost of production
4508761301
(28874089)
5822318871
196863066
1313557570
167988977
29.13%
581.79%
cost of goods sold
4479887212
6019181937
1539294725
34.36%
Gross profit
228060527
160085103
(67975424)
29.80%
Profit before tax
191472483
250989658
59517175
31.08%
Profit after tax
134736951
164190338
29453387
21.85%
Depreciation
INTERPRETATION: The cost of production has been increased by 1313557570 i.e. 29.13%
The gross profit has been decreased by (67975424) i.e. 29.80%
The profit before interest & tax has been increased by 59517175 i.e. 31.08%
COMPARATIVE BALANCE SHEET OF TIRUMALA MILK

PRODUCT -07 TO PRIVATELIMITED AS ON 20062007-08
2006-2007
Sources of Funds
Shareholders
Funds:
Share Capital
Reserves & Surplus
Loan Funds
2007-2008
23050000
48579189
45
23050000
64515839.95
Absolute
Increase/
(Decrease)
% Increase/
(Decrease)
- 15936650.95
32.80 %
Secured Loans
Un Secured Loans
Current Liabilities
Current Liabilities
Provisions
Other Liabilities
Differed Tax Liability
Total Funds
Application
of
Funds
Net Fixed Assets
Investments
Current
Assets,
Loans & Advances
Inventories
Sundry Debtors
Deposits
Cash
&Bank
Balances
Loans, Advances and
prepaid expenses
Miss expenses to the
extent not written off
Total Assets
183326618 104256408.06
0
80543944.00
(79070210)
80543944.00
(43.13 %)
80.54 %
43492221
7087149
60299284.76
8349907.96
16807063.76
1262758.96
38.64%
17.81 %
305535177
341015384.70
35480207.70
11.61%
131380085
2610000
162309893.97
2610000
30929808.90
-
23.54%
-
109075147
6358113
4321650
26367433
100760856
6844432.02
7347643.00
38838401.96
(8314291)
486319.02
3025993
12470968.96
7.62%
7.64 %
70%
47.29%
25367449
22284157.78 (3083291.22)
(121.54%)
55300
20000
(35300)
63.83%
305535177
341015384.70
35480207.70
11.61%
INTERPRETATION:-
The total assets have been increased by 35480207.70/- i.e. 11.61% in the
year 2007-08 when compared to previous year.

Share capital has no changed in comparing to previous years. It has been
constant for in this year 2007-08.
Reserves & surplus has been increased by 15936650.95 i.e. 32.80% in the
46
The secured loans have been decreased by (79070210). i.e (43.13 %) and The
Unsecured loans have been increased by 80543944.00 i.e. 80.54 % in the

It was observed that the current asset has been decreased by 45856987/- i.e.
2.67% in the year 2007-08 when compared to previous year.

PRODUCT PRIVATE LIMITED AS ON 2007-08 TO 2008-09
Sources of Funds
Shareholders Funds:
Share Capital
Reserves & Surplus
Loan Funds
Secured Loans
Un Secured Loans
Current Liabilities
Current Liabilities
Provisions
Other Liabilities
2007-2008
2008-2009
23050000
64515839.95
82032382.00
121127284.00
58982382.00
56611444.05
255.88%
87.74 %
104256408.06
80543944.00
383547595.00
-
279291187
(80543944.00)
267.88%
-
60299284.76
8349907.96
153837804.00
19897427.00
93538519.24
11547519.04
155.12%
138.29%
47
Absolute
Increase/
(Decrease)
% Increase/
(Decrease)
Total Funds
Application of Funds
Net Fixed Assets
Investments
Current Assets, Loans
& Advances
Inventories
Sundry Debtors
Deposits
341015384.70
760442492.00
419427107.30
122.99%
162309893.97
2610000
275112195.00
3330520.00
112802301.10
1170520.00
69.49%
44.84%
100760856
6844432.02
7347643.00
258935801.00
23666599.00
6990208.00
158174945.00
16822166.98
(357435.00)
156.98%
245.77%
4.86%
Cash &Bank Balances

Loans, Advances and
prepaid expenses
Total Assets
38838401.96
22284157.78
144273003.00
48086695.00
105434601
25802537.22
271.46%
115.78%
20000
47471.00
27471.00
137.35%
341015384.70
760442492.00
419427107.30
122.99%
INTERPRETATION: The total assets have been increased by 419427107.30/- i.e. 122.99% in the year 2008-09
when compared to previous year.
The Share capital of the Tirumala milk product private limited has been increased by
58982382.00/- i.e. 255.88% in the year 2008-09 when comparing to previous years.
Reserves & surplus has been increased by 56611444.05/- i.e. 87.74 %in the year 2008-09
From the study it was observed that the investment has increased 1170520.00/- i.e.
44.84% in the year 2008-09 when compared to previous year.
Comparative Balance Sheet of Tirumala milk product private

Limited as on 2008-09to 2009-10
2008-2009
Sources of Funds
Shareholders
Funds:
Share Capital
Reserves & Surplus
Loan Funds
Secured Loans
Current Liabilities
Current Liabilities
Provisions
Total Funds
2009-2010
Absolute
Increase/
(Decrease)
% Increase/
(Decrease)
82032382.00
121127284.00
82021809
220125849
(10573)
98998565
0.01%
81.73%
383547595.00
336847834
298490239
778.17%
153837804.00
19897427.00
760442492.00
187019585
18442538
844457615
33181781
(1454889)
84015123
21.56%
7.31%
11.04%
48
Application
of
Funds
Net Fixed Assets
Investments
Deferred tax assts
Current
Assets,
Loans & Advances
Inventories
Sundry Debtors
Deposits
Cash
&Bank
Balances
Loans, Advances and
prepaid expenses
Total Assets
275112195.00
3330520.00
-
341840410
3330520
34333
66728215
34333
258935801.00
23666599.00
6990208.00
144273003.00
271428799
18113070
7787309
129569540
12492998
(5553529)
797101
(14703463)
4.82%
23.46%
11.40%
30.57%
48086695.00
72333257
24246562
50.42%
47471.00
20376
(27095)
57.07%
760442492.00
844457615
84015123
11.04%
100%
INTERPRETATION: The total assets have been increased by 84015123/- i.e. 11.04% in the year 2009-10
The Share capital of the Tirumala milk product private limited has been decreased
by (10573)/- i.e. 0.01% in the year 2009-10 when comparing to previous years.
The current asset has been increased by 17279669/- i.e. 3.58% in the year 200910 when compared to previous year.

PRODUCT PRIVATE LIMITED AS ON 2009-10 TO 2010-11
2009-2010
Sources of Funds
Shareholders
Funds:
Share Capital
Reserves & Surplus
Loan Funds
Secured Loans
Current Liabilities
2010-2011
Absolute
Increase/
(Decrease)
%
Increase/
(Decrease)
82021809
220125849
82021809
352852415
132726566
60.29%
336847834
448032058
112184224
33.30%
49
Current Liabilities
Provisions
Total Funds
Application
of
Funds
Net Fixed Assets
Investments
Deferred tax assts
Current
Assets,
Loans & Advances
Inventories
Sundry Debtors
Deposits
Cash
&Bank
Balances
Loans,
Advances
and
prepaid
expenses
Miss expenses to
the
extent
not
written off
Total Assets
187019585
18442538
844457615
194101605
25341237
1102349124
7082020
6898699
25789509
3.78%
37.40%
3.05%
341840410
3330520
34333
501178925
3730520
107579
159338515
40000
73246
46.61%
12.01%
213.33%
271428799
18113070
7787309
129569540
309192143
16504157
9927806
166447388
37763344
(1608913)
2140497
3677848
13.91%
8.88%
27.48%
28.46%
72333257
95244304
22911047
0.31%
20376
16301
(4075)
19.99%
844457615
1102349124
25789509
3.05%
INTERPRETATION: From the study it was observed that the total assets have been increased
25789509/- i.e. 3.05% in the year 2010-11 when compared to previous year.
The Share capital of the Tirumala milk product private limited has no change in
the year 2010-11 when comparing to previous years.
Reserves & surplus has been increased by 132726566/- i.e. 60.29% in the year
2010-11 when compared to previous year.

The study observed that secured loans have been increased by 112184224/-. i.e
33.30%in the year 2010-11 when compared to previous year.
The the total fixed assets has been increased by 159338515/- i.e. 46.61% in the
The study it was observed that the investment has increase 40000/- i.e. 12.01% in
the year 2010-11 when compared to previous year.
The current asset has been increased by 98083824/- i.e. 19.64% in the year 201011 hen compared to previous year.
50

PRODUCT PRIVATE LIMITED AS ON 2010-11TO 2011-12
2010-2011
Sources of Funds
Shareholders
Funds:
Share Capital
Reserves & Surplus
Loan Funds
Secured Loans
Current Liabilities
Current Liabilities
Provisions
Total Funds
Application
of
Funds
Net Fixed Assets
2011-2012
Absolute
Increase/
(Decrease)
% Increase/
(Decrease)
82021809
352852415
221590809
377469702
139569000
24617287
170.16%
6.97%
448032058
1125855826
677823768
151.285%
194101605
25341237
1102349124
259812204
34391806
2019120347
65710599
9050569
916771223
33.85%
35.71%
83.16%
501178925
792780605
291601680
58.18%
51
Investments
Deferred tax assts
Current
Assets,
Loans & Advances
Inventories
Sundry Debtors
Deposits
Cash
&Bank
Balances
Loans,
Advances
and
prepaid
expenses
Total Assets
3730520
107579
3730520
107579
309192143
16504157
9927806
166447388
630516341
19477152
11240757
236089263
321324198
2972995
1312951
69641875
103.92%
18.01%
13.22%
41.84%
95244304
325165903
229921599
2.41%
16301
12226
4075
24.99%
1102349124
2019120347
916771223
83.16%
INTERPRETATION: The total assets have been increased 916771223/- i.e. 83.16% in the year 2011-12
The Share capital of the Tirumala milk product private limited has increased
139569000/- i.e. 170.16% in the year 2011-12 when comparing to previous years.
Reserves & surplus has been increased by 24617287/- i.e. 6.97% in the year 2011-
12 when compared to previous year.

The secured loans have been increased by 677823768/-. i.e 151.285% in the year
52
The total fixed assets has been increased by 291601680/- i.e. 58.18% in the year
The investment has no change in the year 2011-12 when compared to previous
year.
COMMON SIZE STATEMENTS:The common size statements, balance sheet and income
statement are shown in analytical percentages. The figures are shown as percentages of
total assets, total liabilities and total sales. The total assets ate 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 percentage or 100
percent statement because every individual item is stand as a percentage of the total 100.
The short-comings in comparative statements and tend percentages where changes in
items could not be compared with the totals have been covered up. The analyst is able to
assess the figures in relation lo total values.
53
COMMON SIZE INCOME STATEMENT OF TIRUMALA MILK

PRODUCTS PRIVATE LIMITED AS ON 2007-08
54
INTERPRETATION:Particulars
2007-2008
1490617137.00
100%
B)Expenditure on :
consumption of raw materials
purchase of finished goods
payments & benefits to employees
manufacturing exp
taxes % licenses
1174717128.03
119458344.49
16813493.80
83389660.33
12858460.00
78.80%
8.01%
1.12%
7.09%
0.86%
29759420.00
1.99%
Depreciation
cost of production
1436996507.00
(31851606.00)
96.40%
(2.13%)
cost of goods sold
1405144901.00
94.26%
Gross profit
78323306.00
5.25%
Profit before tax

Less: Provision for tax
Profit after tax
Less: Earlier year income tax
Fringe benefit tax paid
21769024.73
(5088074.00)
16680950.73
(409833.00)
(334467.00)
1.46%
(0.34%)
1.11%
(0.02%)
(0.02%)
Add: Balance brought forward balance

BALANCE AVAILABLE FOR
APPROPRIATION
48579189.22
64515839.95
3.25%
4.32%
The cost of production of the company constitutes 96.40% i.e. 1436996507.00
The profit after tax of the company constitutes 1.11%i.e. 16680950.73
55

2008-2009
2861014275.00
B)Expenditure on :
100%
81.72%
2338261619.00
213408096.00
29470626.00
7.45%
1.03%
167759794.00
4.79%
taxes % licenses
23599654.00
0.82%
Depreciation
40369063.00
1.41%

manufacturing exp
cost of production
2812868852.00
12664933.00
98.31%
0.44%
cost of goods sold
2825533785.00
98.75%
Gross profit
27200525.00
0.95%
Profit before tax
60810356.00
2.12%
Profit after tax
46467460.00
1.62%
121127284.00
4.23%

APPROPRIATION
The study results reveals that the gross profit of the company constitutes 0.95%
i.e. 27200525.00 and The profit after tax of the company constitutes
46467460.0
56
1.62% i.e.

Particulars
2009-2010
3758037218.00
100%
3003522365.00
79.92%
299487356.00
7.96%

manufacturing exp
taxes % licenses
43541860.00
213490288.00
37111286.00
1.15%
5.68%
0.98%
52675282.00
1.40%
B)Expenditure on :
Depreciation
cost of production
3602420437.00
24192668.00
95.85%
0.06%
cost of goods sold
3626613105.00
96.50%
Gross profit
111410654.00
2.96%
Profit before tax
132401449.00
35.23%
98786932.00
2.62%
220125849.00
5.85%
Profit after tax

APPROPRIATION
INTERPRETATION: The study results reveals that the cost of production of the company constitutes
95.85% i.e. 3602420437.00 and cost of goods sold of the company constitutes
96.50% i.e. 3626613105.00 and gross profit of the company constitutes 2.96%
i.e. 111410654.00 and profit before tax of the company constitutes
132401449.00.
57
35.23% i.e.

2010-2011
4729107872
100%
3704017569
78.32%
366521333
7.75%
66503436
1.40%
264456756
5.59%
taxes % licenses
31881963
0.67%
Depreciation
75380244
95.34%
cost of production
4508761301
(28874089)
95.34%
(0.61%)
cost of goods sold
4479887212
94.73%
Gross profit
228060527
4.82%
Profit before tax
191472483
4.04%
Profit after tax
134736951
2.84%
352852415
7.46%
B)Expenditure on :
manufacturing exp

APPROPRIATION
The cost of production of the company constitutes 95.34% i.e. 4508761301And cost of
goods sold of the company constitutes 94.73%

58
INTERPRETATION: The cost of production of the company constitutes 99.00% i.e. 5822318871 and
Particulars
2011s-2012
5876445462
100%
B)Expenditure on :
4752723438
80.87%
459801451
7.82%
106475699
1.81%
manufacturing exp
341971419
5.81%
53709353
0.91%
107637511
1.83%
cost of production
5822318871
196863066
99.00%
3.35%
cost of goods sold
6019181937
95.80%
Gross profit
160085103
2.72%
Profit before tax
250989658
4.27%
Profit after tax

APPROPRIATION
164190338
2.79%
377469702
6.42%
taxes % licenses
Depreciation
the profit after tax of the company constitutes 2.79% i.e. 164190338
COMMON SIZE BALANCE SHEET OF TIRUMALA MILK

PRODUCT PRIVATE LIMITED AS ON 31-03-2008
2007-08
Sources of Funds
59
Percentage in
Liabilities/Assets
Shareholders Funds:
Share Capital
Reserves & Surplus
Loan Funds
Secured Loans
Un Secured Loans
Current Liabilities
Current Liabilities
Provisions
Total Funds
Net Fixed Assets
Investments
Current Assets, Loans & Advances
Inventories
Sundry Debtors
Deposits
Cash &Bank Balances
Loans& Advances
Miss expenses to the extent not written
off
Total Assets
23050000
64515839.95
6.75%
18.91%
104256408.06
80543944.00
30.57%
23.61%
60299284.76
8349907.96
341015384.70
17.68%
2.44%
100%
162309893.97
2610000
47.59%
0.76%
100760856
6844432.02
7347643.00
38838401.96
22284157.78
20000
29.54%
2.00%
2.15%
11.38%
6.53%
5.86%
341015384.70
100%
INTERPRETATION: The Reserves &surplus of the constitutes 18.91% i.e.64515839.95/- of the
total liabilities of the company and The Secured loans constitutes

30.57% i.e. 64515839.95/- of the total liabilities of the company.

2008-09
60
Percentage in
Liabilities/Assets
Sources of Funds
Shareholders Funds:
Share Capital
Reserves & Surplus
Loan Funds
Secured Loans
Current Liabilities
Current Liabilities
Provisions
Total Funds
Net Fixed Assets
Investments
Inventories
Sundry Debtors
Deposits
Cash &Bank Balances
Loans& Advances
off
Total Assets
82032382.00
121127284.00
10.78%
15.93%
383547595.00
50.44%
153837804.00
19897427.00
760442492.00
20.24%
2.61%
100%
275112195.00
3330520.00
36.17%
0.43%
258935801.00
23666599.00
6990208.00
144273003.00
48086695.00
47471.00
34.05%
3.11%
0.91%
18.97%
6.32%
6.24%
760442492.00
100%
INTERPRETATION: The Reserves &surplus of the Tirumala milk product private limited
constitutes 15.93% i.e. 121127284.00/-of the total liabilities of the company.

And The investments constitutes 0.43% i.e. 3330520.00/- of the total Assets of the
company.

2009-10
Sources of Funds
61
Percentage in
Liabilities/Assets
Shareholders Funds:
Share Capital
Reserves & Surplus
Loan Funds
Secured Loans
Current Liabilities
Current Liabilities
Provisions
Total Funds
Net Fixed Assets
Investments
Differed tax assets
Inventories
Sundry Debtors
Deposits
Cash &Bank Balances
Loans& Advances
off
Total Assets
82021809
220125849
9.71%
26.07%
336847834
39.89%
187019585
18442538
844457615
22.15%
2.18%
100%
341840410
3330520
34333
40.48%
0.39%
4.06%
271428799
18113070
7787309
129569540
72333257
20376
32.14%
2.14%
0.92%
15.34%
8.56%
2.41%
844457615
100%
INTERPRETATION: The study results indicate that the Reserves &surplus of the Tirumala milk
product private limited constitutes 26.07% i.e. 220125849/- of the total
liabilities of the company and The Secured loans of the constitutes 39.89%
i.e. 336847834/- of the total liabilities of the company.
The study results reveals that The Share capital of the Tirumala milk
products pvt limited constitutes 9.71% i.e. 82021809/- of the total liabilities
of the company.

2010-11
Sources of Funds
Shareholders Funds:
62
Percentage in
Liabilities/Assets
Share Capital
Reserves & Surplus
Loan Funds
Secured Loans
Current Liabilities
Current Liabilities
Provisions
Total Funds
Net Fixed Assets
Investments
Differed tax assets
Inventories
Sundry Debtors
Deposits
Cash &Bank Balances
Loans& Advances
off
Total Assets
82021809
352852415
7.44%
32.01%
448032058
40.65%
194101605
25341237
1102349124
17.61%
2.29%
100%
501178925
3730520
107579
45.46%
0.33%
9.75%
309192143
16504157
9927806
166447388
95244304
16301
28.04%
1.49%
0.90%
15.09%
8.64%
1.47%
1102349124
100%
INTERPRETATION: The Reserves &surplus of the constitutes 32.01% i.e. 352852415/- of the
total liabilities of the company.
The secured loans he Tirumala milk
products pvt limited constitutes
40.65% i.e. 448032058/- of the total liabilities of the company.

2011-12
Sources of Funds
Shareholders Funds:
Share Capital
Reserves & Surplus
221590809
377469702
63
Percentage in
Liabilities/Assets
10.97%
18.70%
Loan Funds
Secured Loans
Current Liabilities
Current Liabilities
Provisions
Total Funds
Net Fixed Assets
Investments
Differed tax assets
Inventories
Sundry Debtors
Deposits
Cash &Bank Balances
Loans& Advances
off
Total Assets
1125855826
55.76%
259812204
34391806
2019120347
12.87%
1.70%
100%
792780605
3730520
107579
39.26%
0.18%
5.32%
630516341
19477152
11240757
236089263
325165903
12226
31.22%
0.96%
0.55%
11.69%
16.10%
6.05%
2019120347
100%
INTERPRETATION: The study results reveals that the fixed assets of the Tirumala milk pvt
limited constitutes 39.26% i.e. 792780605/- of the total Assets of the
company.
From the study it was observed that investments of the Tirumala milk
products pvt limited constitutes 0.18% i.e. 3730520/- of the total Assets of
the company
Trend Percentage (%) 2007-08 to 2011-12 (Base Year 2011-12:100)

2007-2008
percentage
2008-2009
percentage
64
2009-2010
percentage
2010-2011
percentage
2011-2012
Percentage
Sources of Funds
Shareholders Funds:
Share Capital
Reserves & Surplus
Secured Loans
Un Secured Loans
Current Liabilities
Current Liabilities
Provisions
Other Liabilities
Total Funds
Net Fixed Assets
Investments
Differed tax assets
Current Assets, Loans
& Advances
Inventories
Sundry Debtors
Deposits
Cash &Bank Balances
Loans, Advances and
prepaid expenses
Total Assets
10.40
17.09
9.26
37.01
32.08
34
37.04
58.31
29.91
37.04
93.47
.39.87
100
100
100
23.20
24.27
59
57.85
71.98
53.62
74.70
73.68
100
100
16.88
37.66
41.82
54.59
100
55.66
94.34
117.22
171.87
100
31.35
230.22
559.62
55.76
9.6
80.58
796.05
532.40
207.16
20.91
84.47
609.3
593.11
186.05
31.45
96.22
555.13
756.14
239
41.42
100
100
100
100
100
490.79
1164.93
500
400
100
16.88
37.66
41.82
54.59
100
ANALYSIS OF RATIOS IN TIRUMALA MILK PRODUCTS

PRIVATE LIMITED
Ratio Analysis is a powerful tool of financial analysis. A ratio is
defined as the indicated quotient of two mathematical expressions and as the
65
relationship between two or more things. In financial analysis, a ratio is used to as a

benchmark for evaluating the financial position and performance of a firm. The absolute
accounting figures reported in the financial statements do not provide a meaningful
understanding of the performance and financial position of a firm. Ratios help to
summarize large quantities of financial data and to make Qualitative Judgment about the
firms financial performance.
TYPES OF RATIOS:Several ratios Calculated from the accounting data can be grouped into various
classes according to financial activity or function to be evaluated. As stated earlier, the
parties interested in financial analysis are short- and long-term creditors, owners and
managements. Short-term creditors main interest is in the liquidity position or the shortterm solvency of the firm.
Liquidity ratios
Leverage ratios
Activity ratios
Profitability ratios
Liquidity ratios measure the firms ability to meet current obligations;
Leverage ratios show the proportions of debt and equity in financing the
firms assets;
Activity ratios reflect the firms efficiency in utilizing its assets, and
Profitability ratios measure overall performance and effectiveness of the
firm.
I.LIQUIDITY RATIOS:It is extremely essential for a firm to be able to meet its obligations as
they become due. Liquidity ratios measure the ability of the firm to meet its current
66
obligations (liabilities). In fact, analysis of liquidity needs the preparation of cash budgets
and cash and fund flow statements.
The most common ratios, which indicate the extent of liquidity or
lack of it, are: (i) current ratio and (ii) quick ratio. Other ratios include cash ratio, interval
measure and net working capital ratio.
CURRENT RATIO:A liquidity ratio that measures a company's ability to pay short-term
obligations. The ratio is mainly used to give an idea of the company's ability to pay back
its short-term liabilities (debt and payables) with its short-term assets (cash, inventory,
receivables). If the current assets of a company are more than twice the current liabilities,
then that company is generally considered to have good short-term financial strength. If
current liabilities exceed current assets, then the company may have problems meeting its
short-term obligations. The conventional current ratio is 2:1.
Current ratio = Current assets / Current liabilities.

Year
Current Assets
Current Liabilities
Ratio
2007-08
2008-09
2009-10
2010-11
2011-12
176075490.76/481952306.00/499231975.00/597315799.00/1222489416.00/-
68649192.72/173735231.00/205462123.00/219442842.00/294204010.00/-
2.56:1
2.77:1
2.42:1
2.72:1
4.15:1
INTERPRETATION: The current ratio in 2007-08was 2.56; it has been decreased to comparison of in
the year 2008-09.
67
The current ratio had increased to 2.77 in the year 2007-08. At present the current
ratio of the company was 4.15 i.e. in the year 2011-12.The current ratio had
decreased to comparison of last year 2.42 in the year 2009-10. At present the
current ratio of the company was 4.15 i.e. in the year 2011-12.
The current ratio had increased to comparison of last year 2.72 in the year 201011. At present the current ratio of the company was 4.15 i.e. in the year 2011-12.
It is maximum (4.15) in the year 2011-12, the reason for maximum current ratio
(in 2011-12) is due to decrease in current liabilities and increase in current assets
when compared to 2007-08.
BAR GRAPH SHOWING
QUICK RATIO:-
Quick ratio is an indicator of a company's short-term liquidity. The quick

ratio measures a company's ability to meet its short-term obligations with its most liquid
68
assets. The higher the quick ratio, the better the position of the company. It is also known
as the "acid-test ratio" or the "quick assets ratio". It is obtained by subtracting inventories
from current assets and then dividing by current liabilities. The conventional quick ratio
is 1:1.
Quick asset ratio
= Quick assets / Current liabilities.
Year
Quick Assets
Current Liabilities
Ratio
2007-08
2008-09
2009-10
2010-11
2011-12
75314634.70/223016505.00/227803176.00/288123656.00/591973075.00/-
68649192.72/173735231.00/205462123.00/219442842.00/294204010.00/-
1.09:1
1.28:1
1.10:1
1.31:1
2.01:1
BAR GRAPH SHOWING:-
INTERPRETATION: The quick ratio of the company in 2007-08 was 1.09; it has been slightly
increased.The quick ratio had increased to 1.28, in the year 2008-09. At present
the current ratio of the company was 2.01 i.e. in the year 2011-12.
69
The quick ratio had decreased to 1.10, in the year 2009-10. Comparison of the last
year. At present the current ratio of the company was 2.01 i.e. in the year 2011-12.
The quick ratio had increased to 1.31, in the year 2010-11. Comparison of the last
It is maximum (2.01) in the year 2011-12, the reason for maximum quick ratio (in
2010-11) is due to decrease in current liabilities when compared to 2007-08.
II. LEVERAGE RATIOS:The short-term creditors, like bankers and suppliers of raw
material, are more concerned with the firms current debt-paying ability. On the other
hand, long-term creditors, like debenture holders, financial institutions etc. To judge the
long-term financial position of the firm, financial leverage, or capital structure ratios
are calculated.
These ratios indicate mix of funds provided by owners and lenders. As a
general rule, there should be an appropriate mix of debt and owners equity in financing
the firms assets.
The firm may be interested in knowing the proportion of the interest-bearing
debt (also called funded debt) in the capital structure. It may, therefore, compute debt
ratio.
DEBT RATIO:-
Debt ratio =
Total Debt (TD)

---------------------Net Assets(NA)
70
Year
Total Debt
Net Assets
RATIO
(Secured +UnsecuredLoans)
(Net Fixed Assets +Net Current
(C)=A/B
(A)
2007-08
2008-09
2009-10
2010-11
2011-12
(B)
Assets)
{104256408.06 + 80543944}
{162309893.97+107426298.04}
= 184800352
= 269736191.90
{383547595 + 0}
{275112195 + 308217075}
0.65
= 383547595
{336847834 + 0}
= 583329270
{341840410 + 293769853}
0.52
= 336847834
{448032058 + 0}
= 635610263
{501178925+377872957}
0.50
=448032058
{1125855826+0}
=879051882
{792780605+928285406}
0.65
=1125855826
=1721066011
BAR GRAPH SHOWING :-
71
0.68
INTERPRETATION: The debt ratio of the company in 2007-08 was 0.68; it has been slightly
increased.The debt ratio had decreased to 0.65, in the year 2008-09. At present the
debt ratio of the company was i.e. 0.65 in the year 2011-12.
The debt ratio had decreased to 0.52, in the year 2009-10. Comparison of the last
and 0.50, in the year 2010-11. Comparison of the last year. At present the current
ratio of the company was 0.65 i.e. in the year 2011-12.
The debt ratio had increased to 0.65 in the year 2011-12 when compared to the
last year.
72
DEBT-EQUITY RATIO:The relationship describing the lenders contribution for each

rupee of the owners contribution is called Debt-Equity ratio. Debt-equity (DE) ratio is
directly computed by dividing total debt by net worth:
Debt-Equity ratio
Year
= Total Debt (TD)

Net Worth (NW)
Total Debt
Net Worth
Ratio
(Secured Unsecured Loans)
(Share Capital + Reserves
(C) = A/B
(A)
and Surplus)
2007-08
{104256408.06 + 80543944}
(B)
{23050000 + 64515839.95}
2.11:1
2008-09
= 184800352
{383547595 + 0}
= 87565839.95
{82032382 + 121127284}
1.88:1
2009-10
= 383547595
{336847834 + 0}
= 203159666
{82021809 + 220125849}
0.89:1
2010-11
= 336847834
{448032058 + 0}
= 302147658
{82021809 + 352852415}
1.03:1
2011-12
=448032058
{1125855826+0}
= 434874224
{221590809+377469702}
1.87:1
=1125855826
=599060511
INTERPRETATION:-
The study results reveal that the Debt Equity Ratio of Tirumala milk
products private limited is fluctuating under the period of study from one
year to another year & the above table shows relationship between Long
Term Liabilities and Share holders fund.
73
It was observed that the debt-equity ratio of the Tirumala milk products
private limited in the year 2007-08. Were 2.11 it has been increased to 1.88
in the year 2008-09 and further year ratio was decreased to 0.89 in the year
2009-10. The debt-equity ratio had increased to 1.03 in the year2010-11. At
present the debt-equity ratio of the company was 1.87 in the year 2011-12.
The maximum (2.11) the reason for decrease in share holders funds and
increase in long term liabilities in the year 2007-08.and minimum(0.89)
the reason for increase in long term liabilities and decrease in share holders
funds in the year 2009-10.
The study results indicate that the over all trend of the debt-equity ratio
shows that it is in decreasing pattern.
74
BAR GRAPH SHOWING
III. ACTIVITY RATIOS:Activity ratios are employed to evaluate the efficiency with which the firm
manages and utilizes its assets. These ratios are also called turnover ratios because they
indicate the speed with which assets are being converted or turned over into sales.
Activity ratios, thus, involve a relationship between sales and assets. A proper
balance between sales and assets generally reflects that assets are managed well. Several
activity ratios can be calculated to judge the effectiveness of asset utilization.
INVENTORY TURNOVER RATIO:75
Inventory turnover ratio indicates the efficiency of the firm in producing

and selling its product. It is calculated by dividing cost of goods sold by average
inventory. Average inventory consists of opening stock plus closing stock divided by 2. A
high inventory turnover ratio indicated that the product is selling well. A low turnover
ratio implies poor sales and, therefore, excess inventory.
Inventory turnover ratio= Sales / Average inventory
Avg. Inventory = Opening Stock + Closing Stock
2
Year
2007-08
2008-09
2009-10
2010-11
2011-12
Sales
1483468207.19/2852734310.00/3738023759.00/4707947739.00/5859096834.00/-
Avg. Inventory
71916066.50/153420512.50/169411008.00/88243120.50/172237609.00/-
Ratio
20.62:1
18.59:1
22.06:1
53.35:1
34.01:1
INTERPRETATION: During the period 2007-08 the inventory turnover ratio of the company was 20.62.
It is satisfactory one as the company is able to generate sales around 6 times.
The inventory turnover ratio had been decreased to 18.59 in the year 2008-09. The
reason for this is decrease in turnover which is mainly due to prevailing
conditions in the industry.
76
The inventory turnover ratio in the year 2009-10 was increased hugely to 22.06.
The reason for this due to increase in turnover, which is mainly due to increase in
demand for milk in the industry.
In the year 2010-11, the inventory turnover ratio has been increased to 53.35. The
main reason for this is due to increase in turnover and due to fall in average
inventory. The reason for fall in average inventory is due minor purchases of the
company in the year thus leading to low closing stock.
The inventory turnover ratio in the year 2011-12 was decreased to 34.01 in the
year. His main fall in average inventory is due to management decision to dispose
opening stock of the year and only to make minor purchases.
BAR GRAPH SHOWING
77
INVENTORY HOLDING PERIOD:Inventory holding period is the period taken conversion of

Inventories into Sales.
360
Inventory Holding Period = ----------------------------Inventory Turnover ratio
Year
360 / Inventory turn

over Ratio
78
Inventory Holding
Period
2007-08
360/20.62
17 days
2008-09
360/18.59
19days
2009-10
360/22.06
16 days
2010-11
360/53.35
6days
2011-12
360/34.01
9days
INTERPRETATION: The inventory holding period of the company in 2007-08 was 17 days.
The inventory holding period 19 days in the year 2008-09. At present the
inventory holding period of the company 9 days in the year 2011-12.
The inventory holding period 16 days in the year 2008-09. Comparison of the last
year. At present the inventory holding period ratio of the company was 9 days i.e.
in the year 2011-12.
The inventory holding period 6 days in the year 2010-11. Comparison of the last
year. At present the inventory holding period ratio of the company was 9 days i.e.
in the year 2011-12. The inventory holding period decreased to 9 days in the year
2011-12when compared to the last year.
79
IV. PROFITABILITY RATIOS:Profit is the difference between revenues and expenses over a period of time
(usually one year). Profit is the ultimate output of a company, and it will have no future
if it fails to make sufficient profits. Therefore, the financial manager should continuously
evaluate the efficiency of the company in term of profits.
The profitability ratios are calculated to measure the operating efficiency of the
company. Besides management of the company creditors and owners are also interested
in the profitability of the firm.
Generally, two major types of profitability ratios are calculated:
Profitability in relation to sales

Profitability in relation to investment.
80
GROSS PROFIT MARGIN RATIO:The gross profit margin reflects the efficiency with which management
produces each unit of product. This ratio indicates the average speed between the cost of
goods sold and the sales revenue.
Year
2007-08
2008-09
2009-10
2010-11
2011-12
Gross Profit Margin =
Gross Profit
Sales
Gross Profit
Sales
Ratio
(Sales Cost of Goods Sold)
(B)
(percentage)
1483468207.19
2852734310.00
3738023759.00
4707947739.00
5859096834.00
(C) = A/B*100
5.27:1
0.95:1
2.98:1
4.84:1
2.73:1
(A)
78323306.00
27200525.00
111410654.00
228060527.00
160085103.00
INTERPRETATION:-
81
The Gross profit margin ratio of the company 5.27 in the year of 2007-08. Present
gross profit margin ratio 2.73.and 0.95 in the year 2008-09. Ratio was decreased
when compared to last year. At present the gross profit margin ratio of the
company is 2.73 in the year 2011-12.
The Gross profit margin ratio of the company 2.98 in the year 2009-10. Ratio was
increased when Comparison of the last year. At present the gross profit margin
ratio of the company was i.e. 2.73 in the year 2011-12.
The Gross profit margin ratio of the company 4.84 year 2010-11. Ratio was
increased Comparison of the last year. At present the gross profit ratio of the
company was i.e.2.73 in the year 2011-12.
The gross profit margin ratio of the company decreased to 2.73 in the year 201112 when compared to the last year.
NET PROFIT RATIO:Net profit is obtained expenses, interest and taxes are subtracted from
the Gross profit. Net profit margin ratio establishes a relationship between net profit
and sales and indicates managements efficiency in manufacturing, administrating and
selling the products.
This ratio also indicates the firms capacity to withstand adverse
economic conditions. A firm with a high net margin ratio would be in an
advantageous position to survive in the face of falling selling prices rising costs of
production or declining demand for the product.
Net Profit Margin Ratio =

82
Profit After Tax
Sales
Year
Profit after tax
Sales
Ratio
(A)
(B)
(percentage)
(C) = A/B*100
2007-08
2008-09
2009-10
2010-11
2011-12
16680950.73
46467460.00
98786932.00
134736951.00
164190338.00
1483468207.19
2852734310.00
3738023759.00
4707947739.00
5859096834.00
1.12:1
1.62:1
2.64:1
2.86:1
2.80:1
BAR GRAPH SHOWING:-
INTERPRETATION: The Net profit margin ratio of the company 1.12 in the year of 2007-08. Present
net profit margin ratio 2.80.
83
The Net profit margin ratio of the company 1.62 in the year 2008-09. Ratio was
increased when compared to last year. At present the net profit margin ratio of the
company is 2.80 in the year 2011-12.
The Net profit margin ratio of the company 2.64 in the year 2009-10. Ratio was
increased when Comparison of the last year. At present the net profit margin ratio
of the company was i.e. 2.80 in the year 2011-12.
The net profit margin ratio of the company 2.86 year 2010-11. Ratio was
increased Comparison of the last year. At present the net profit ratio of the
company was i.e.2.80 in the year 2011-12.
The net profit margin ratio of the company increased to 2.80 in the year 2011-12
when compared to the last year.
FINDINGS
84
From the study it has been observed that the Current ratio of Tirumala milk
products pvt., ltd. has been fluctuating in all years. The ratio is satisfactory in the
year 2010-11 when compared to last years.
From the study it has been observed that the Quick ratio has been in a fluctuating
pattern between the periods 2007-08 to 2010-11. The ratio is satisfactory in the
year 2011-12 when compared to last years.
It is found that the debt ratio of Tirumala milk products pvt., ltd. is
fluctuating for the period of 2008 to 2012. The ratio is satisfactory in the year
2007-2008 when compared to next years.
It was observed that the debt equity ratio of Tirumala milk products pvt.,
ltd. is fluctuating for the period of 2008-2012. The ratio is satisfactory in

the year 2007-2008.
The study results indicate that the inventory turnover ratio of Tirumala milk
products pvt., ltd. is fluctuating for the period of 2007 to 2009 and 20112012. The ratio is satisfactory in the year 2010-2011.
The study results indicate that the inventory holding period ratio of
Tirumala milk products pvt., ltd. is very high fluctuating for the period of
2007-2008 and 2010 to 2012. The ratio is satisfactory in the year 20082009.
The study results indicate that the gross profit margin ratio of Tirumala
milk products pvt., ltd. is fluctuating for the period of 2008 to 2012. The
ratio is satisfactory in the year 2007-2008.
The study results indicate that the net profit margin ratio of Tirumala milk
products pvt., ltd. is increasing level for the period of 2008 to 2012.
SUGGESTIONS
85
The performance of the company is up to the mark in each aspect. But, it has a few
more suggestions for its best performance.
Firstly, the company is suggested to the concentrate on sales, as the sales figures
seem to decline over the last three years, the increase in sales lead to increase in
Gross profit as well Net Profit figures.
The company is as well suggested to involve debt in its capital structure as debt
not only reduces the taxable portion of the income but also the cost of using the
debt is low when compared with the cost of equity.
It is realized that the company has been maintaining large amounts of profit as
reserves. It is not advisable to keep that much of reserves in idle form. It is
suggested to invest these reserves for productive purpose so that the return would
be enhanced.
It has also been realized that there is much deviation between Gross Profit and
Net profit of the company. This shows that the operating expenditure is high. So,
it is suggested that the company should concentrate on reducing the operating
expenditure.
The average collection period has been high and is still increasing. It is not at all a
desirable average collection period. It shows the inefficiency on reducing the
average collection period.
It is suggested t maintain the same payout ratio as the company is concentrating
on the expansion programme.
CONCLUSION
86
The economic life of any organization depends on some important financial

aspects like profits, expenses, turnover etc. A careful analysis of these areas is very much
essential for the success and survival of these organizations. For this purpose financial
statement analysis with the help of the technique like ratios, funds flow etc. is to be
carried out. A study of this type is very much useful for nay organization to keep into the
different financial aspects and to take some measures to improve in the above areas.
The company under study Tirumala milk products pvt., ltd., being a unit of the
milk industry as to carefully watch the trends in the milk industry as should come
forward with innovative marketing strategies.
87
BALANCE SHEET OF TIRUMALA MILK PRODUCT

PRIVATE LIMITED AS ON 2006-07
LIABILITIES
AMOUNT
ASSETS
Shareholders Funds:
Net Fixed Assets
Share Capital
23050000 Investments
Reserves & Surplus
48579189 Current Assets, Loans &

Advances
Loan Funds
Secured Loans
Inventories
183326
618
Un Secured Loans
0 Deposits
Current Liabilities
Current Liabilities
Provisions
Sundry Debtors
Cash &Bank Balances
AMOUNT
131380085
2610000
109075147
6358113
4321650
26367433
43492221 Loans, Advances and prepaid

expenses
25367449
7087149 Miss expenses to the extent

not written off
55300
Other Liabilities
Total liabilities
305535177 Total assets
88
305535177

LIABILITIES
AMOUNT
ASSETS
Shareholders Funds:
Share Capital
Reserves & Surplus
Net Fixed Assets

Un Secured Loans
104256408.06
Provisions
2610000
Inventories
100760856
Sundry Debtors
6844432.02
80543944.00 Deposits
Current Liabilities
Current Liabilities
162309893.97
64515839.95 Current Assets, Loans &

Advances
Loan Funds
Secured Loans
AMOUNT
Cash &Bank Balances
7347643.00
38838401.9
60299284.76 Loans, Advances and prepaid

expenses
22284157.78
8349907.96 Miss expenses to the extent

not written off
20000
Other Liabilities
Total liabilities
341015384.70 Total Assets

89
341015384.70
LIABILITIES
AMOUNT
Shareholders Funds:
Share Capital
Reserves & Surplus
Net Fixed Assets
Provisions
Total liabilities
3330520.00
121127284.00 Deferred tax assts
Current Assets, Loans &

Advances
383547595.00 Inventories
Current Liabilities
Current Liabilities
AMOUNT
275112195.00
82032382.00 Investments
Loan Funds
Secured Loans
ASSETS
258935801.00
Sundry Debtors
23666599.00
153837804.00 Deposits
6990208.00
19897427.00 Cash &Bank Balances
760442492.00
Loans, Advances and prepaid

expenses
48086695.00
Total Assets
760442492.00

90
144273003.00
LIABILITIES
AMOUNT
Shareholders Funds:
Share Capital
Reserves & Surplus
Net Fixed Assets

220125849 Deferred tax assts
Loan Funds
Secured Loans
Provisions
Total liabilities
AMOUNT
341840410
3330520
34333

Advances
336847834 Inventories
Current Liabilities
Current Liabilities
ASSETS
Sundry Debtors
187019585 Deposits
18442538 Cash &Bank Balances
18113070
7787309
129569540

expenses
72333257
Miss expenses to the extent

not written off
20376
844457615 Total Assets

91
271428799
844457615
LIABILITIES
AMOUNT
Shareholders Funds:
Share Capital
Reserves & Surplus
Net Fixed Assets

Loan Funds
Secured Loans
Provisions
Total liabilities
AMOUNT
501178925
3730520
107579

Advances
Current Liabilities
Current Liabilities
ASSETS
Sundry Debtors
194101605 Deposits
16504157
9927806
166447388

expenses
95244304

not written off
16301

92
309192143
1102349124
LIABILITIES
AMOUNT
Shareholders Funds:
ASSETS
Net Fixed Assets
Share Capital
Reserves & Surplus
Loan Funds
Secured Loans
Provisions
Total liabilities
792780605
3730520
107579

Advances
Current Liabilities
Current Liabilities
AMOUNT
Sundry Debtors
259812204 Deposits
19477152
11240757
236089263

expenses
325165903

not written off
12226
BIBLIOGRAPHY
93
630516341
2019120347
BOOOKS:
Accounting for Managers (Jai Bharat Publications) by G. Prasad.
Financial Accounting and Analysis (Vikas Publications) by
Prof.v. Subbarayudu.
Financial Management (Vikas Publications) by I. M. Panday.
Financial management theory and Practice (Tata McGraw Hill) by
Prasanna Chandra
WEBSITES:
www.coromandel agro products & oils ltd chirala.com
www. Financial management. Com
94

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CHAPTER - I

To provide reliable financial information about economic resources and

To provide other needed information about changes in such economic resources

To provide reliable information about changes in net resources (resources less

An Income Statement (Profit and Loss Account).

Statement of Changes in Owners Equity (Retained Equity).

A Statement of Changes in Financial Position.

NEED FOR THE STUDY:The study is conducted for the needs.

SCOPE OF THE STUDY

OBJECTIVES OF THE STUDY

To provide reliable financial information about economic resources and

To study and analysis the financial performance of the company.

To offer findings, suggestions & conclusions of the study.

METHODOLOGY OF THE STUDY

SECONDARY DATA:The secondary data needed for the study was

DIAGRAMATIC REPRESENTATION OF RESEARCH

LIMITATIONS OF THE STUDY

The study is limited to financial analysis or TIRUMALA MILK PRODUCTS

As time and money is limited so it is not possible to collect adequate information

important input as organic

1. The enormous urban market stimulus has led to sustained.

THREE PHASES OF DEVELOPMENT

Phase 3 of Operation Flood (1985-1996) enabled dairy co-operatives to rapidly

ANAND PATTERAN DIARY DEVELOPMENT

PLANNING INVESTMENT: 33.43 Crores

A.P. Diary development co-operative federation (A.P.D.D.C.F):

MILK SHEDS / UNIONS

commissionered for commercial production for mareting during sepetember 1999 to

CERTIFICATES AND AWARDS:-

PRODUCTS:TIRUMALA MILK PRODUCTS (P) Ltd. covers the entire spectrum of

TIRUMALA MILK PRODUCTS (p) ltd. Handles milk in the

Handling Capacity per day

2.0 Lakh litres

1.0 Lakh litres

2.0 Lakh litres

4.0 Lakh litres

Procurement of Milk:TIRUMALA MILK PRODUCTS (P) Ltd. established 25 Chilling centers in

By-Products: Flavored Milk,

FINANCIAL STATEMENTS ANALYSIS

In the words of Myers, financial statements analysis is

1. Only interim reports:31

Absolute Figures (rupee amounts)

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

Absolute data in terms of percentages.

FEATURES OF BALANCE SHEET:

Balance sheet is prepared as specific date. Hence, it shows financial

Balance sheet is usually in two columns which illustrate relation ship

Financial position of the firm is shown in the balance sheet on going

TREND ANALYSIS:The financial statements may be analyzed by computing trends of

RATIO ANALYSIS:One of the techniques of analysis of financial statements is to

ACCOUNTING RATIOS CAN BE EXPRESSED IN VARIOUS WAYS

i. A pure ratio say ratio of current assets to current liabilities is 2:1 or

PROFITABILITY RATIOS:Profitability Ratios are of outmost importance for a concern;

TURNOVER (PERFORMANCE OR ACTIVITY) RATIOS:-

LEVERAGE RATIOS:Leverage Ratios to an increased means of accomplishing some purpose. In

COMPARATIVE INCOME STATEMENT OF TIRUMALA MILK

A)sales & other income

cost of goods sold

Profit before tax

Profit after tax

COMPARATIVE INCOME STATEMENT OF TIRUMALA MILK

A)sales & other income