CHAPTER-I

1.1 INTRODUCTION
Finance is one of the most primary requisites of a business and the modern
management obviously depends largely on the efficient management of the finance. Sound
financial management is essential in both profit and non- profit organization. The financial
management helps in meriting the effective development of funds in fixed assets and working
capital. It also helps in ascertaining how the company would perform in future. It is essentially
optimizing the output from a given amount of funds.
In this project, A Study on Financial Performance Analysis of Dee Pee Granatile was
made to know, the organizations ability to meet its current obligations and the liquidity position
of the firm. The study is made with the financial data of last five years i.e. (2010 2014).
According to I.M. PANDEY, Financial Performance Analysis is the process of
identifying the financial strength and weakness of the firm by properly establishing relationship
between the item of balance sheet and profits and loss account.
The balance sheet and profit and loss account are the basic financial performance of a
business enterprise. They undoubtedly provide useful financial data regarding the operations of a
firm. Financial performance contain a wealth of informations which if properly analyzed and
interpreted can provide valuable insights into a firms performance and position.
The analysis of financial statements is an important aid to financial analysis. One of the
various methods of financial performance analysis is ratio analysis. The ratio analysis is based on
different ratios which are calculated from the accounting data contained in the financial
statements.
Different ratios are used for different purposes. Financial analysis depends to a very
large extend on the use of ratios as compared to other financial tools for analysis. The ratio
analysis provides a useful conclusion about various aspects of the working of an enterprise. The
1

needs for ratios arise due to the fact that absolute figures are often misleading. Absolute figures
are certainly valuable, but their value increases, if they are studied with another through ratio
analysis.
Ratio analysis is an instrument for diagnosis of the financial health of an enterprise.
Ratios in fact are full of meaning and communicate the relative importance of various items
appearing in the balance sheet and profit and loss account. Ratios are also relative form of
financial data and very useful techniques to check up the efficiency of a firm. Some ratios
indicate the trend or progress or down fall of the firm.
The study of the trend percentage determined the direction upwards or downwards and
involves the computations of the percentage relationship that each statement item bears to the
same item in the base years. The study is conducted during in the financial years from 2010 to
2014 and trend percentage of various head items has been computed and the projection of these
items value for the next year is also computed.
A financial performance is an organized collection of data according to logical and
consistent accounting procedures. Its purpose is to cover an understanding of some financial
aspects of a business firm. It may show a position at a moment of time as in the case of a balance
sheet or may reveal a series of activities over a period of time, as in the case of income
statement.

1.2 NEED FOR THE STUDY

This project will be useful to know the current position of the company.
It may give appropriate suggestions to increase the performance level.
It is helpful to study about the financial conditions of the company.
It helps to understand the level of financial position and how effectively utilizing the

resources.
The study finds out the operational efficiency of the organization and suggests the proper
utilization.

1.3 OBJECTIVES OF THE STUDY

Primary objective:

The main objective of the project is A Study On Financial Performance Analysis of DEE
PEE GRANATILE at Sedarapet, Pondicherry .

Secondary objectives:

To study and analyze the financial position of the company.

To determine the liquidity position of the company.
To determine the solvency position of the company.
To ability of the company to meet its current obligations.
To suggest measures for improving the financial performance of organizations.

1.4 SCOPE OF THE STUDY

4

This study belongs to financial management area in management science.

This study has been used to analyze the financial position of the company.
This study financial performance analysis is an attempt to analysis various financial
aspect of business organization. It analyses various aspect such as liquidity, gross profit

etc., it is a specific study which is confined to financial aspect only.

The study highlights the present financial policies and financial position of the company.
It covers the major strength and weakness of the company at macro level.

1.5 LIMITATIONS OF THE STUDY

The study is limited to five years; hence the result obtained can be applied for the period of

analysis only.
The figures for analysis have been taken from the annual reports. So, all limitations of

these statements will have to be applied to the results of the study

The study is based on the secondary data alone; therefore the reliability of the data may

not be accurate.
The findings of this study may not be applicable to other sectors.

CHAPTER II
2.1 INDUSTRY PROFILE
History:
6

India is one among the leading countries in mining and export of granite and is rich in
granite reserves. Geologically, the southern and eastern belts of the Nation are abundant in
granite deposits. Different shades of granites are available in abundance in Tamil Nadu, Andhra
Pradesh, Karnataka, Maharashtra, Assam, Bihar, Rajasthan, Odessa, Meghalaya and Madhya
Pradesh. Indian Granite Stone has become the most sought-after and extensively used stone
material in building construction and massive structural works throughout the world, and it is
well known in the International market, not only for its elegance and aesthetic quality, but also
for its durability.

The Granite Industry has received a wider publicity and corporate importance in the last
few years. The industry is emerging now as a thrust-export-area with several corporate houses,
supported by expert professionals trained in all aspects, entering the sector with sophisticated
world-class machinery and making it an organized one. Many overseas buyers, including the
Japanese, are the regular importers of the Jet Black Material, which is considered to be the
world's best variety and is found in abundance in Tamil Nadu, Andhra Pradesh and Karnataka.
Bu they have, of late, lost confidence in the supply of materials owing to its interrupted schedule.
This was because of inconsistent policies of the Governments towards the industry, together with
political interference in mining lease and other procedures.
India is one of the leading nations in the production and export of Granite and other
stones. Granite is a very hard crystalline, igneous or metamorphic rock primarily composed of
feldspar, quartz and lesser amounts of dark minerals. India has vast resources of granite with
about 110 varieties of different colors and textures such as black, grey, pink, multi colored, etc.

These varieties are used to produce monuments, building slabs, titles, surface plates etc.
However, popular varieties are mainly found in South India.
Brief Introduction:
Granite in the form of slabs and tiles has several attractive features, which, inter alia,
includes extra-fine mirror-polish, scratch-free glossy surface and durability. Granite can be
compared very well with other floor and wall application materials such as ceramics and marble.
Mining for granite is done manually. For drilling and channeling hand chisels and hammers are
used. There are very few quarries that have mining machinery, such as compressors and drilling
machines for drilling and blasting, cranes for lifting big blocks, and dampers and trucks for
transport.
Operations that are involved in the processing of granite are:

Dressing
Cutting/Sawing
Surface Grinding and Polishing
Edge-Cutting-Trimming

Granites are now mined in most of the Indian states for use as construction material and
road metal but production of dressed granite blocks and slabs from Andhra Pradesh, Karnataka,
Rajasthan and Tamil Nadu are highly priced. In India there are 43 granite processing units of
which 12 are in Andhra Pradesh, 13 in Karnataka, 3 in Rajasthan, 14 in Tamil Nadu and 1 in
Odessa. During the last 5 years exports have grown steadily by about 10% a year but this growth

rate may increase even more in the near future. New companies may not be entering the industry
but many existing companies are steadily increasing their production capacity to meet demand.
New technology investments are being made with the aim of increasing sales and
reducing costs. In the last few years CNC machines have been employed in many factories for
making complicated designs. Usually the diamond tools and other consumables are imported, to
the extent of 80% of total demand, and amounting to between 5 & 6 million US dollars per year.
Size of the Industry:
Size of the Industry
Geographical distribution
Output per annum
Market Capitalization
There are 100 manufacturers in India for Granites and there are also a few trading
companies. In the last 5 years the capacity of these companies has increased by about 10%
annually, suggesting a certain stability and sustainability. Big companies are considered to be
those that have the capacity of manufacturing seven or more containers per month- and there are
about 20 such companies. On an average about 75 workers are employed in a company. Total the
direct employment in the Indian Granite industry is about 10000 people. Indirect employment
comes to another 10000 people. About 80% of the manufacturers are located in the state of Tamil
Nadu while the rest are located in the neighboring states of Karnataka and Andhra Pradesh. The
entire gravestone industry is located in the south of the country which is where most of the
granite quarries are to be found.
Total Contribution to the Economy/ Sales:
Total Granite production in the Indian industry is estimated to be about 350 to 400
containers a month. (A curious unit - when referring to blocks the normal term used is cubic
meters, in slabs, the measurement unit is square meters or square feet, while in the gravestones
the reference point tends to be containers). As mentioned before, the entire production is
exported. Presently about 180 to 200 containers are exported to Europe, approximately 50
9

containers a month are exported to United States, 40 containers to Japan while the rest are sent to
Australia, New Zealand, South Africa and other countries. The months of November, December
and most of January are considered to be the low season when monthly production drops to
about half. An average container has a price of US$ 18000 to US$ 24000, depending on the
materials used and the complexity of the designs, thus the total industry size is estimated to be
approximately US $ 85 million.
Domestic and Export Share:
Granite importing countries such as the US, China, Italy have reduced their requirements.
India's granite and natural stone exports could be down by 15-20 per cent per year according to
CAPEXIL (formerly Chemicals & Allied Products Export Promotion Council).
Latest Developments:

India has one of the largest reserves of granite in the world and exported Rs 2,600 crores
(Rs 26 billion) worth of the stone in the past years. Granite exports this fiscal are
expected to touch Rs 2,800 crores (Rs 28 billion) and nearly one-fourth of these exports

is accounted for by monument stones.

About 85-90 % of the total granite production in the country is for exports. So after the

recession period is over the industry will again regain its demand.
Last fiscal, the total exports of granite and marble from India had crossed the Rs 4,000

crores marks with the US accounting for the bulk of the consumption (40%).
The All India Granite and Stones Association (AIGSA), which estimated a 10 % increase

in overseas sales for 2007-08, found the export market no more lucrative.
The granite industry in Rajasthan has been growing at 50% annually. But this growth has
serious social and environmental costs. As the water sources are being depleted, forcing
farmers to become laborers in the granite industry.
Rajasthan Granite mining is an approximately Rs 800 crores industry today; it forms 95%

of India's dimension stone exports.

Indian Industries:

10

Classified under RED category

Classified under ORANGE category
Classified under GREEN category

2.2 COMPANY PROFILE

Name of the company

DEE PEE GRANATILE

Year of establishment

1989

Type of company

Private Limited

Area of operation

A 12A, 2nd Cross, PIPDIC Industrial Estate, Sedarapet,

Pondicherry 605111.

Number of employees

127

Annual turnover

In lacks

Number of working days

6 days in a week

Contact number

0413 2677026 / 2203357

11

Dee Pee Granatile is engaged in the manufacturing and supply of Indian natural stones.
It is one of the fastest growing organizations in this business category. We have built on the trust
of our clients by providing them with finest quality natural stones like granite, and many other
natural stones in all colors. Be it office, residence, commercial complex or any other architectural
project, our product line of building stones defines beauty of each of the company.
Dee Pee Granatile was established in the year 1989 with a motto of providing world class
Indian natural stones at a competitive price throughout the world. We are proud to say that we are
successful in achieving our motto and have been supplying international quality natural stones
since then. The set up of Dee Pee Granatile was initiated in order to cater to the specific
requirements of our clients and to propagate an innovative idea of service in the stone market.
We strengthen our roots even after facing stiff competition from our competitors.
We have acquired one of the most sophisticated Granite & Marble line polisher imported
from Germany. It was 1991 when we started our first granite project. Later on, after gaining
some experience in the market, we have earned global recognition for our quality natural stones.
OUR QUARRIES:
We have acquired one of the leading chains of operational quarries of Granite in India.
We have the ability to extract the maximum quantity of our regular requirements from our well
developed and accessible pits situated in different provinces of the country. They are our true
asset in all respects.

12

All of our 6 mines are well equipped with the latest and most required techniques of
mining and operation. We can deliver demands of any quantity without any problem. We have
enough recourses and facilities for large scale quarrying for instant and wholesale delivery.

OUR EXPERTISE:
We are producing blocks of various dimensions according to the requirements and
demand of our clients. Our clients can discuss their requirement with our professionals and
achieve specific solutions. Our produced material is well dressed in cuboids shape, free of any
cracks and visible and prominent variation. In case, there are some special requirements, we have
resources and facility to deliver with perfection.
MARKET REPUTE:
Through the course of time, we have increased our sales consistently in all the nations
that we supply specially in the past decade. We have been trading with every industrial sector
that makes use of natural stones in any form. In a survey conducted recently, the figure shows a
35% growth in the market of our company. Every year, we plan out business plans to enter a new
country and we are pleased with our performance and the rate at which we have been achieving
our targets.
OUR CLIENTELE:
The results of our consistent efforts have paid and therefore, we are experiencing good
market repute. Our area of sales, our market and the number of national and international clients
is increasing rapidly. At present, we are supplying our products to the Eastern and Southern
Europe, The United States, Canada, the complete Gulf sector, China, Japan, South Korea,
13

Singapore, Thailand, Australia and Ukraine. We have further plans to expand our business base
to newer countries.

CHAPTER III
3.1 CONCEPTUAL REVIEW
3.1.1 FINANCIAL PERFORMANCE ANALYSIS
Financial Performance refers to formal and original statement prepared by a business
concern to disclose its financial information.
According to AICPA (American Institute of Certified Public Accountants) says
Financial statements are prepared for the purpose of presenting a periodical review or report on
progress by the management and deal with (i) the status of investment in the business (ii) the
result achieved during the period under review.
According to Hampton J.J. The statement disclosing status of investment is known as
balance sheet and statement showing the result is known as profit and loss account.
A financial performance is an organized collection of data according to logical and
consistent accounting procedures. Its purpose is to cover an understanding of some financial
aspects of a business firm. It may show a position at a moment of time as in the case of a balance
sheet or may reveal a series of activities over a period of time, as in the case of income
statement.
3.1.2 NATURE OF FINANCIAL PERFORMANCE
The nature and accuracy of the data shown in the financial performance are affected by
the following facts:
Based on Recorded Facts
The transactions affecting the business are recorded in the books and shown in the
financial performances at the same values. For e.g.: fixed assets are recorded in the books at cost
14

price and shown in the business at cost price less depreciation. Facts which cannot be recorded in
books are not disclosed by the financial performances. However, recently such facts are
mentioned as foot notes to make the financial statement more meaningful and useful.
Accounting Conventions
The financial performances are prepared by following certain accounting conventions and
principles. Accounting itself is a dynamic science of accountants has developed, from time to
time, a member of conventions on the basis of experience.
When accounts are finalized, some conventions are followed: for e.g. A part of particular
expenses is charged to profit & loss account (revenue) and the rest may be capitalized. A number
of conventions have been developed for valuation of stock, debtors, etc. Therefore data shown in
the financial performances are subject to the validity of conventions used in their preparation.
Postulates
Accountants always take some facts as accepted or Postulates. In other words, business
transactions are recorded on certain assumptions such as going concern, stable value of rupee,
profit accrual, etc. These postulates or assumptions are reflected in the financial statements.
Personal Judgments
Even though a number of conventions and assumption have been propounded in
accountancy, their use is affected by the personal judgment of accountants. That is why financial
statements prepared by two different persons of the same concerns give dissimilar results and
this is due to different personal judgments in using or applying particular conventions. Personal
judgments of accountants affects the amount kept as reserve for doubtful debts, amount of
depreciation on fixed assets, valuation of stock, etc. The financial statements are affected by the
personal judgments of accountants and as such they are subjective documents.
3.1.3 TYPES OF FINANCIAL ANALYSIS
Financial analysis can be classified into different categories depending upon

The material used or information.

15

The modus operandi of analysis.

ON THE BASIS OF MATERAL USED:

According to this basis, financial analysis can be of two types.
A. External analysis:
Those who are outsiders for the business do this analysis. The term outsiders include
investors, credit agencies, outsiders, government agencies and to her creditors who have no
access to the internal records of the company. These persons mainly depend upon the published
financial statements.
B. Internal analysis:
This analysis is done by the persons who have access to the books of account and other
information related to the business. Executives and employees of the organization or by officers
appointed for this purpose by the government or the court under powers vested in them can
therefore, do such an analysis.
ON THE BASIS OF MODUS OPERANDI:
According to this, financial analysis can also be of two types.
A. Horizontal analysis:
In case of this type of analysis, financial statements for a number of years are reviewed
and analyzed. The current years figures are compared with the standard or base years. The
analysis statement usually contains figures for two or more years and the changes are shown
regarding each item from the base year usually in the form of percentage. It is also known as
dynamic analysis.
B. Vertical analysis:
In case of this type of analysis a study is made of the quantitative relationship of the
various items in the financial statements on a particular date. For example, the ratios of different

16

items of costs for a particular period may be calculated with the sales for the period. Simply we
can say that the percentage of each elements of cost to sales.

3.1.4 PROCEDURE FOR FINANCIAL PERFORMANCE ANALYSIS

The objectives of analysis of statement have to be thought about has the techniques of

analysis to be selected on the basis of objectives.

The assumptions, principles, practices, etc.,
Additional data and information required has to be collected.
The data collected has to be presented in a logical sequence by rearranging and

readjusting the different items.

The data is to be analyzed for making comparative statements, for computation of ratios

and for ascertaining averages and for estimating trends.

The interpreted data and information has to be presented in a suitable form.

3.1.5 SIGNIFICANCE OF FINANCIAL PERFORMANCEANALYSIS

Disclosure of Facts
With the help of financial analysis, all facts relating to liquidity position, financing of
fixed assets, credit policy, quantum of working capital, solvency and valuation of assets are made
available. Thus as a result of analysis, all undisclosed facts come to light for the benefit of all
concerned parties.
Effective decision making
Decision based on intuition are of personal nature and carry either no meaning or
negligible value to the other persons. Such decisions are not effective and impartial, but are
defective and baseless. On the other hand, analysis and interpretation is based on some logical
and scientific methods, hence decision taken on these bases seldom proves to be miss leading
and wrong.
Effective planning and control

17

The analysis and interpretation of financial statement provides adequate information for
planning and controlling the affairs of the business. Future forecast can easily be made analysis
the past date with the help of these information. The management can take corrective action by
drawing inferences about routine activities.
Measures operational efficiency
The management and the owner are interest in knowing about the operational efficiency
of different activities of the concern. These can be judged by calculating different activities and
profitability ratios.
Comparative study
With the help of financial analysis, business information and facts can be presented
comparatively. Such presentation is made either in the form of last few years position of the
business or comparison of operating activities with other business units engaged in the same
industry. Thus, financial analysis is helpful in the comparative study of business efficiency.
Serving the need of interested parties
Different parties (management, creditors, investors, etc.,) have varied interest in the
performance of the business. The information is relating to their interest in the financial
performance. Financial analysis provides necessary information on timely bases to these varies
parties.

18

3.2. REVIEW OF PAST LITERATURE

The history of financial statement analysis dates far back to the end of the previous
century (see Horrigan, 1968). However, the modern, quantitative analysis has developed into its
various segments during the last two decades with the advent of the electronic data processing
techniques. The empiricist emphasis in the research has given rise to several, often only loosely
related research trends in quantitative financial statement analysis. Theoretical approaches have
also been developed, but not always in close interaction with the empirical research.
Technically, A Financial ratios can be divided into several, sometimes overlapping
categories. A financial ratio is of the form X/Y, where X and Y are figures derived from the
financial performances or other sources of financial information. One way of categorizing the
ratios is on the basis where X and Y come from (see Foster, 1978, pp. 36-37, and Salmi, Virtanen
and Yli-Olli, 1990, pp. 10-11). In traditional financial ratio analysis both the X and the Y are
based on financial performances. If both or one of them comes from the income statement the
ratio can be called dynamic while if both come from the balance sheet it can be called static (see
ibid.). The concept of financial ratios can be extended by using other than financial statement
information as X or Y in the X/Y ratio. For example, financial performance has the items and
market based figures can be combined to constitute the ratio analysis.
In this paper we review the existing trends in financial performance analysis literature by
focusing primarily on the theoretical and empirical basis of financial ratio analysis. This is an
important task to carry out since the ratios are often used intuitively, without sufficient
consideration to their theoretical meaning and statistical properties. It is our purpose to pinpoint
the different directions taken in quantitative ratio based research. By critically considering
financial ratio literature, we also aim to help the decision makers to use ratios in an efficient way.

19

We review four of the research areas listed above. In our opinion the primary areas of the
literature concerning the theoretical and empirical basis of financial ratio analysis are the
functional form of the financial ratios, distributional characteristics of financial ratios, and
classification of financial ratios. These three research avenues are reviewed in Section 2. All the
major financial ratio research avenues cannot be tackled within the limited space of this paper.
This study develops and empirically tests a number of methods of analyzing financial
ratios to predict small business failure. Although not all of the methods and ratios are predictors
of failure, many ratio variables are found which do predict failure of Small Business
Administration borrowers and guarantee recipients. Using step-wise multiple discriminated
analysis with a restriction on the simple correlation of the entering variable with the included
variables, a function of independent ratio variables, which is highly accurate in classifying
borrowers in the test sample, is developed.
Methods of analysis found useful are (1) classification of a borrower's ratio into quartiles
relative to other borrowers in the sample, (2) observation of an up- or down-trend for a threeyear period, (3) combinatorial analysis of a ratio's trend and recent level, (A) calculation of the
three-year average, and (5) division of a ratio by its respective RMA industry average ratio. The
discriminate function demonstrates ability as great as those functions recently estimated for
much larger firms. However, the small business function fails to discriminate when only one
statement is available whereas Altman [1] and Beaver [4, 5] show that one financial statement is
sufficient for a highly discriminate function for large businesses. This leads the author to qualify
his conclusion above with the provision that at least three consecutive financial statements be
available for analysis of a small business.
*Purdue University, This paper is based on the author's doctoral dissertation completed at
Ohio State University in 1970. The author gratefully acknowledges the assistance of John Pfahl,
his dissertation advisor, and Robert Johnson, David Cole, and Roger Harvey. The research was
supported by a grant from Robert Morris Associates and was conducted in cooperation with the
Small Business Administration, but the author assumes sole responsibility for the results and

conclusions presented here.

20

The traditionally stated major purpose of using financial data in the ratio form is making
results comparable across firms and over time by controlling for size. This basic assertion gives
rise to one of the fundamental trends in financial ratio analysis (or FRA for short, in this paper).
The usually stated requirement in controlling for size is that the numerator and the denominator
of a financial ratio are proportional.
The seminal paper is this field is Lev and Sunder (1979). They point out, using theoretical
deduction, that in order to control for the size effect, the financial ratios must fulfill very
restrictive proportionality assumptions (about the error term, existence of the intercept, linearity,
and dependence on other variables in the basic financial variables relationship models Y = bX +
e and its ratio format Y/X = b + e/X). It is shown that the choice of the size deflator (the ratio
denominator) is a critical issue. Furthermore, Lev and Sunder bring up the problems caused in
multiple regression models where the explaining variables are ratios with the same denominator.
This is a fact that has been discussed earlier in statistics oriented literature like in Kuh and Meyer
(1955).
Two interrelated trends are evident. Theoretical discussions about the ratio format in FRA
and empirical testing of the ratio model. While mostly tackling the former Whittington (1980)
independently presents illustrative results finding the ratio specification inappropriate in a
sample of U.K. firms. Whittington also discusses the usage of a quadratic form in FRA.
Significant instability in the results was reported.
The proportionality considerations have implications on various facets of FRA. Barnes
(1982) shows how the non-normality of financial ratios can result from the underlying
relationships of the constituents of the financial ratios. He is able to tie in the ratio format aspects
with the distributional properties of financial ratios (to be discussed later in this review). In the
discussion on Barnes's paper (Horrigan, 1983, Barnes, 1983), Horrigan puts forward that
financial ratio research should be more interested in the role of financial ratios themselves than
in "the nature of the ratios' components or to the ratios' incidental role as data size deflators".
To extrapolate from Horrigan's critique, in our own interpretation the validity of financial
ratio analysis should be determined by its usefulness to the decision making process of the
21

different interested parties (owners, management, personnel). To illustrate, consider the potential
impact of economics of scale. To assess the efficiency of management a direct comparison of
financial ratios of small and big firms would have to be adjusted for the size effect. On the other
hand, an investor evaluating different investment targets might be more interested in the level of
profitability regardless whether or not it is a result of the size effect.
McDonald and Morris (1984, 1985) present the first extensive empirical studies of the
statistical validity of the financial ratio method. The authors use three models with two samples,
one with a single industry the other with one randomly selected firm from each (four-digit SIC)
industry branch to investigate the implications of homogeneity on proportionality. Dropping the
intercept from the model is not always enough to treat the heteroscedasticity (see Berry and Nix,
1991). The third model applies a (Box-Cox) transformation on the first model to tackle nonlinearity. While they find support for financial ratio analysis for comparisons within industry
branches, in inter-industry comparisons proportionality of financial ratios is not supported.
Berry and Nix (1991), however, cast doubt on the generality of McDonald and Morris
result over time, over ratios and over industries. Similar results were obtained for Finnish data in
Pertinence and Martikainen (1989) and for Spanish data by Garcia-Ayuso (1994). By comparing
value and equal weighted aggregate financial ratios McLeay and Fieldsend (1987) find evidence
based on samples of French firms that "the departure from proportionality varies from ratio to
ratio, from size class to size class and from sector to sector".

22

CHAPTER - IV
4. RESEARCH METHODOLOGY
4.1 RESEARCH:
Research means defining and redefining problems, formulating hypothesis of suggested
solution; Research is common parlance refers to a search for knowledge. Research is a scientific
search and systematic search for pertinent information on a specific topic. In fact research is an
art of science investigation.
The advance learners dictionary of current English lays down the meaning of research as
a careful investigation or inquiry through search for new facts in any branch of knowledge.
REDMAN and MORY define research as a systematical effort to gain new knowledge.
4.2 RESEARCH DESIGN:
A research design is the arrangement of conditions for collection and analysis of data in a
manner that aims to combine relevance to the research purpose with economy in procedure.
Hence this study is a descriptive study. A research design is the arrangement of
conditions for collection and analysis of data in a manner that aims to combine relevance to the
research purpose with economy in procedure.
4.3 TYPES OF DATA
There are two types of data are,

Primary Data
Secondary Data
23

Secondary Data:
The Secondary data are that information which have already been collected by someone
else and recorded. This information is those have already been passed the statistical process. The
secondary information that is collected for the study is their financial statement. Company and
industry profile should be collected by primary data.
4.4 TOOLS FOR ANALYSIS

Common size statements,

Comparative financial statements,
Ratio analysis.

4.4.1 Common size statements:

Common size financial statements are those statements in which items reported in the
financial statement are converted into percentages taking some common base. It is also called as
Component Statements or 100 percent Statement because each statement is reduced to the
total of 100 and each individual item is expressed as a percentage of this total.
A Statement in which each asset is shown as a percentage of total asset and each liability
and a capital as a percentage of total liability and capital is called a common size balance sheet.
Common size balance sheet shows relationship between each asset to total asset and each
liability and capital to the total liability and capital.
4.4.2 Comparative financial statements:
Comparative financial statements refers to the statements of financial position of a
business, which are prepared in such a way as to provide a time perspective to the various
elements embodied in the financial statements. These statements include two types of analytical
statements. They are comparative balance sheets and comparative income statement.
24

Comparative balance sheet indicates whether the business is moving in a favorable or

Unfavorable direction. A comparative balance sheet has two columns to records the figures of the
current year and the previous year. The changes in the balance sheet items are the result of acquisition
or sale of asset, change in current asset and current liabilities, issue of shares profit or loss etc., They
are comparative balance sheets and comparative income statement.
4.4.3 Ratio analysis:
The term Ratio refers to the numerical and quantitative relationship between two items
or variables from the financial statements. An analysis of financial statements based on the ratios
is known as ratio analysis. It is a technique of analyzing and interpreting the financial statements.
Ratio analysis is the process of computing, determining, and presenting the relationship of items.
A. CURRENT RATIO
Current ratio may be defined as the relationship between current assets and current
liabilities.
Formula:
Current Ratio =

Current Assets
Current Liabilities

B. CASH POSITION RATIO

It is to be calculated together with current ratio and quick ratio so as to exclude even
receivables from the current assets and find out the absolute liquid assets.
Formula:
Cash Position Ratio =

Cash And Bank Balance

Current Liabilities

25

C. SOLVENCY RATIO
Debt ratio is by dividing total debt by total tangible assets.
Total debt will include short and long-term borrowings from financial institutions,
debentures/bonds, deferred payment arrangements for buying equipments, bank borrowings,
public deposits and any other interest-bearing loan. Capital employed will include total debt net
worth.
Formula:
Debt Ratio =

Total Debts
Total Tangible Assets

26

CHAPTER V
ANALYSIS AND INTERPRETATION
The term Analysis refers to the re-arrangement of the data given in the financial
statements.
The term Interpretation refers to explaining the meaning and significance of the data
so simplified.
Both analysis and interpretation are closely connected and inter-related. They are
complementary to each other. Hence, both analysis and interpretation are to be considered such
that presentation of information becomes more purposeful and meaningful.

27

TABLE 5.1
I. COMMON SIZE BALANCE SHEETS
COMMON SIZE BALANCE SHEET FOR 2010-2011
Particulars
Current Asset:
Cash balance
Bank balance
Advances
Investments
Total Current Asset (A)
Gross Block
(-)Accumulated
Depreciation
Net Block (B)
Other Assets (C)
TOTAL ASSETS
(A+B+C)
(+) Reserve
(+) Revaluation Reserves
Net Worth (A)
Current Liabilities
Deposit
(+)Borrowing
Total Debt (B)
Other Liabilities
& Provisions (C)
TOTAL LIABILITIES
(A+B+C)

2010

Percentage

2011

Percentage

(In Lacks)

(%)

(In Lacks)

(%)

13,364.79
4,513.25
107,238.04
49,811.57
174,927.65

7.403%
2.500%
59.402%
27.592%
96.897%

10,036.79
6,622.99
138,219.40
57,776.90
212,656.08

4.569%
3.015%
62.928%
26.304%
96.816%

4,254.33

4,440.07

1,337.46
2,916.87
2,684.17

1.615%
1.486%

1,510.61
2,929.46
4,060.26

1.334%
1.848%

180,528.69

100%

219,645.80

100%

7,885.63
2,204.86
10,500.49

4.368 %
1.221%
5.589%

9,629.61
2,168.16
12,207.77

4.384%
0.987%
5.371%

154,072.42
2,517.23
156,589.65
13,438.55

85.345%
1.394%
86.739%
7.443%

186,892.51
7,056.61
193,949.12
13,488.91

85.088%
3.212%
88.30%
6.141%

180,528.69

100%

219,645.80

100%

INTERPRETATION
In the above the common size percentage statement of 2010-2011, it is clearly shows that
the total assets and liabilities were increased in 2011 compared to 2010. The other assets in 2010
were 1.486% but it increased in 2011 as 1.848%. Deposits are slightly decreased in 2011 as
85.088% from 85.345% in 2010. The solvency position was not good in 2011.

TABLE 5.2
28

COMMON SIZE BALANCE SHEETS FOR 2011-2012

Particulars
Current Asset:
Cash balance
Bank balances
Advances
Investments
Total Current Asset (A)
Gross Block
(-)Accumulated
Depreciation
Net Block
(B)
Other Assets (c)
Total Assets (A+B+C)
(+) Reserve
(+) Revaluation Reserves
Net Worth
(A)
Current Liabilities
Deposit
(+)Borrowing
Total Debt
(B)
Other Liabilities
& Provisions (C)
Total Liabilities (A+B+C)

2011

Percentage

2012

Percentage

(In Lacks)

(%)

(In Lacks)

(%)

10,036.79
6,622.99
138,219.40
57,776.90

4.569%
3.015%
62.928%
26.304%

15,719.46
3,933.75
169,334.63
69,676.95

5.937%
1.485%
63.962%
26.318%

212,656.08
4,440.07

96.816%

258,664.79
4,480.37

97.702%

1,510.61
2,929.46
4,060.26
219,645.80
9,629.61
2,168.16
12207.77

1.334%
1.848%
100%
4.384%
0.987%
5.371%

1,620.99
2,859.38
3,216.92
264,741.09
12,129.11
2,132.68
14671.79

1.080%
1.215%
100%
4.581%
0.805%
5.540%

186,892.51
7,056.61
193,949.12
13,488.91

85.088%
3.212%
88.30%
6.141%

234,651.44
8,440.56
243,092.00
6,977.30

88.654%
3.188%
91.822%
2.635%

219,645.80

100%

264,741.09

100%

INTERPRETATION
In the above common size percentage of 2011-2012, it is clearly shows that the company
had to increase the current assets, current liabilities. The current assets were 96.816% to
97.702%, so the companys liquidity position was good in that financial year.

TABLE 5.3
COMMON SIZE BALANCE SHEETS FOR 2012-2013
29

Particulars

2012

Percentage

2013

Percentage

(In Lacks)

(%)

(In Lacks)

(%)

Current Asset:
Cash balance
Bank balances
Advances
Investments

15,719.46
3,933.75
169,334.63
69,676.95

5.937%
1.485%
63.962%
26.318%

22,014.79
8,693.32
212,467.17
836,99.92

6.550%
2.586%
63.219%
24.904%

Total Current Asset(A)

258,664.79

97.702%

326,875.20

97.259%

Gross Block
(-)Accumulated
Depreciation
Net Block
(B)
Other Assets (c)
Total Assets (A+B+C)
(+) Reserve
(+) Revaluation Reserves
Net Worth
(A)
Current Liabilities
Deposit
(+)Borrowing
Total Debt
(B)
Other Liabilities
& Provisions (C)
Total Liabilities (A+B+C)

4,480.37

4,686.15

1,620.99
2,859.38
3,216.92
264,741.09
12,129.11
2,132.68
14671.79

1.080%
1.215%
100%
4.581%
0.805%
5.540%

1,841.74
2844.41
6,359.15
336,078.76
17,498.46
2098.36
20,039.82

0.084%
1.892%
100%
5.20%
0.624%
5.96%

234,651.44
8,440.56
243,092.00
6,977.30

88.654%
3.188%
91.822%
2.635%

293,972.65
14261.65
308,234.30
7804.64

87.471%
4.243%
91.714%
2.322%

264,741.09

100%

336078.76

100%

INTERPRETATION
In the above common size percentage of 2012-2013, it is clearly shows that the company
had to increase the current assets, current liabilities. And to increases in bank balance from
1.485% to 2.586%. Also increases its cash balance from 5.937 % to 6.550%. Bank financial
position was good.

TABLE 5.4
COMMON SIZE BALANCE SHEETS FOR 2013-2014

30

Particulars
Current Asset:
Cash balance
Bank balances
Advances
Investments
Total Current Asset (A)
Gross Block
(-)Accumulated
Depreciation
Net Block
(B)
Other Assets(c)
Total Assets (A+B+C)
(+) Reserve
(+) Revaluation Reserves
Net Worth
(A)
Current Liabilities
Deposit
(+)Borrowing
Total Debt
(B)
Other Liabilities
& Provisions(C)
Total Liabilities (A+B+C)

2013

Percentage

2014

Percentage

(In Lacks)

(%)

(In Lacks)

(%)

22,014.79
8,693.32
212,467.17
836,99.92

6.550%
2.586%
63.219%
24.904%

17,795.14
10,384.27
232,489.82
102,057.43

4.75%
2.77%
62.13%
27.27%

326,875.20
4,686.15

97.259%

362,726.66
4,858.37

96.92%

1,841.74
2,844.41
6,359.15
336,078.76
17,498.46
2,098.36
20,039.82

0.084%
1.892%
100%
5.20%
0.624%
5.96%

2,000.84
2,857.53
8,576.01
374,160.20
20,181.82
2,065.14
22,689.96

0.763%
2.29%
100%
5.39%
0.551%
6.06%

293,972.65
14,261.65
308,234.30
7,804.64

87.471%
4.243%
91.714%
2.322%

327,053.73
15,525.39
342,579.12
8,891.12

87.41%
4.15%
91.56%
2.37%

336,078.76

100%

374,160.20

100%

INTERPRETATION
In the above common size percentage of 2013-2014, it is clearly shows that the company
had to increase the current assets, current liabilities. And reduce in advances from 63.219 % to
62.13%, at the same time increased its investments from 24.904% to 27.27%.

TABLE 5.5
II. COMPARATIVE BALANCE SHEETS
COMPARATIVE BALANCE SHEET FOR 2010-2011

31

Particulars
Current Asset:
Cash balance
Bank Balance
Advances
Investments
Total Current Asset (A)
Gross Block
(-)Accumulated
Depreciation
Net Block
(B)
Other Assets(c)
Total Assets (A+B+C)
(+) Reserve
(+) Revaluation Reserves
Net Worth
(A)
Current Liabilities
Deposit
(+)Borrowing
Total Debt
(B)
Other Liabilities
& Provisions (C)
Total Liabilities (A+B+C)

2010
(In Lacks)

2011
(In Lacks)

Increase/
Decrease

Percentage
(%)

13,364.79
4,513.25
107,238.04
49,811.57
174,927.65
4,254.33

10,036.79
6,622.99
138,219.40
57,776.90
212,656.08
4,440.07

- 3,328
+ 2,109.74
+ 30,981.36
+ 7,965.33
+ 37,726.43
+ 185.74

-24.90%
+ 46.74%
+ 28.89%
+ 15.99%
+ 21.56%
+ 4.36%

1,337.46
2,916.87
2,684.17
180,528.69
7,885.63
2,204.86
10,500.49

1,510.61
2,929.46
4,060.26
219,645.80
9,629.61
2,168.16
12,207.77

154,072.42
2,517.23
156,589.65
13,438.55

186,892.51
7,056.61
193,949.12
13,488.91

+ 32,820.09
+ 4,539.38
+ 37,359.47
+ 50.36

+ 21.30%
+ 1.80%
+ 23.85%
+ 0.37%

180,528.69

219,645.80

+ 39,117.11

+ 21.66%

+12.94%
+ 173.15
+ 12.59
+ 0.43%
+ 1,376.09
+ 51.26%
+ 39117.11
+ 21.66%
+ 1,743.98
+ 22.11%
- 36.7 -1.66%
+ 1,707.28
+ 16.25%

INTERPRETATION
In the above table the comparative percentage of 2010-2011, it is clearly shows that the
21.66%. Reserve, Other Assets, Deposit were increased whereas the comparative percentage of
Cash and Revaluation Reserves were decreased.

TABLE 5.6
COMPARATIVE BALANCE SHEETS FOR 2011-2012
Particulars

2011
(In Lacks)

2012
(In Lacks)

Increase/
Decrease

Percentage
(%)
32

Current Asset:
Cash balance
Bank Balance
Advances
Investments
Total Current Asset (A)
Gross Block
(-)Accumulated
Depreciation
Net Block
(B)
Other Assets(c)
Total Assets (A+B+C)
(+) Reserve
(+) Revaluation Reserves
Net Worth
(A)
Current Liabilities
Deposit
(+)Borrowing
Total Debt
(B)
Other Liabilities
& Provisions(C)
Total Liabilities (A+B+C)

10,036.79
6,622.99
138,219.40
57,776.90

15,719.46
3,933.75
169,334.63
69,676.95

+ 5,682.67
-2,289.24
+ 31,115.23
+ 11,900.05

+ 56.61%
- 36.78%
+22.51%
+ 20.59%

212,656.08
4,440.07

258,664.79
4,480.37

+ 46,008.71
+ 40.3

+ 21.63%
+ 0.90%

1,510.61
2,929.46
4,060.26
219,645.80
9,629.61
2,168.16
12207.77

1,620.99
2,859.38
3,216.92
264,741.09
12,129.11
2,132.68
14671.79

+110.38
- 70.08
- 843.34
+ 45,095.29
+ 2,499.5
-35.48
+ 2,464.02

+7.30%
- 2.39%
- 20.77%
+20.53%
+25.95%
- 1.63%
+ 20.18%

186,892.51
7,056.61
193,949.12
13,488.91

234,651.44
8,440.56
243,092.00
6,977.30

+ 47,758.93
+ 1,383.95
+ 49,142.88
- 6,511.61

+ 25.55%
+ 19.61%
+ 25.33%
- 48.27%

219,645.80

264,741.09

+ 45,095.29

+20.53%

INTERPRETATION
In the above table comparative percentage of 2011-2012, it is clearly shows that the
20.53%. Total current assets (cash balance & Advances, Investments) were increased. The
comparative percentage of other liabilities & provisions were decreased.

TABLE 5.7
COMPARATIVE BALANCE SHEETS FOR 2012-2013
Particulars

2012
(In Lacks)

2013
(In Lacks)

Increase/
Decrease

Percentage
(%)
33

Current Asset:
Cash balance
Bank balances
Advances
Investments
Total Current Asset (A)
Gross Block
(-)Accumulated
Depreciation
Net Block
(B)
Other Assets (c)
Total Assets (A+B+C)
(+) Reserve
(+) Revaluation Reserves
Net Worth (A)
Current Liabilities
Deposit
(+)Borrowing
Total Debt (B)
Other Liabilities
& Provisions (C)
Total Liabilities (A+B+C)

15,719.46
3,933.75
169,334.63
69,676.95

22,014.79
8,693.32
212,467.17
836,99.92

+ 6,295.33
+ 4,759.57
+ 43,132.54
+ 14,022.97

+ 40.04%
+ 120.99%
+ 25.57%
+ 20.12%

258,664.79
4,480.37

326,875.20
4,686.15

+ 68,210.41
+ 205.78

+ 26.37%
+ 4.59%

1,620.99
2,859.38
3,216.92
264,741.09
12,129.11
2,132.68
14671.79

1,841.74
2844.41
6,359.15
336,078.76
17,498.46
2098.36
20,039.82

+ 220.75
- 14.97
+ 3,142.23
+ 71,337.67
+5,369.35
-34.32
+ 5,368.03

+13.61
- 0.52%
+97.67%
+26.94%
+ 44.26%
-1.60%
+ 36.58%

234,651.44
8,440.56
243,092.00
6,977.30

293,972.65
14261.65
308,234.30
7804.64

+59,321.21
+ 5,821.09
+6,5142.3
+ 827.34

+ 25.28%
+ 68.96%
+ 26.79%
+ 11.85%

264,741.09

336078.76

+71,337.67

+ 26.94%

INTERPRETATION
In the above table the comparative percentage of 2012-2013, it is clearly shows that the
26.94%. Total current assets, (Other Assets & cash balance) were increased. The comparative
percentages of net block were decreased.

TABLE 5.8
COMPARATIVE BALANCE SHEETS FOR 2013-2014
Particulars

2013
(In Lacks)

2014
(In Lacks)

Increase/
Decrease

Percentage
(%)
34

Current Asset:
Cash balance
Bank balance
Advances
Investments
Total Current Asset (A)
Gross Block
(-)Accumulated
Depreciation
Net Block
(B)
Other Assets(c)
Total Assets (A+B+C)
(+) Reserve
(+) Revaluation Reserves
Net Worth
(A)
Current Liabilities
Deposit
(+)Borrowing
Total Debt
(B)
Other Liabilities
& Provisions (C)
Total Liabilities (A+B+C)

22,014.79
8,693.32
212,467.17
836,99.92
326,875.20
4,686.15

17,795.14
10,384.27
232,489.82
102,057.43
362,726.66
4,858.37

-4,219.65
+ 1,690.95
+ 20,022.65
+ 18,357.51
+ 35,851.46
+ 172.22

- 19.16%
+ 19.45%
+9.42%
+21.93%
+ 10.96%
+ 3.67%
+ 8.63%

1,841.74
2,844.41
6,359.15
336,078.76
17,498.46
2,098.36
20,039.82

2,000.84
2,857.53
8,576.01
374,160.20
20,181.82
2,065.14
22,689.96

+ 159.1
+ 13.12
+ 0.46%
+ 2,216.86
+ 34.86%
+ 38,081.44
+ 11.33%
+ 2,683.36
+ 15.33%
- 33.22 -1.58%
+2,650.14
+ 13.22%

293,972.65
14,261.65
308,234.30
7,804.64

327,053.73
15,525.39
342,579.12
8,891.12

+33,081.08
+ 1,263.74
+ 34,344.82
+ 1,086.48

+ 11.25%
+ 8.86%
+ 11.14%
+ 13.92%

336,078.76

374,160.20

+ 38,081.44

+ 11.33%

INTERPRETATION
In the above table the comparative percentage of 2013-2014, it is clearly shows that the
11.33%. Total current assets (Bank balance), net block and total current liabilities (net worth,
total debt & Other Liabilities & Provisions) were increased.

III. RATIO ANALYSIS

TABLE NO 5.9
CURRENT RATIO
Year

Current Assets
(In Lacks)

Current Liabilities
(In Lacks)

Ratio
35

20092010

174,927.65

156,589.65

1.117

2010-2011
2011-2012
2012-2013
2013-2014

212,656.08
258,664.79
326,875.20
362,726.66

193,949.12
243,092.00
308,234.30
342,579.12

1.096
1.064
1.060
1.058

INTERPRETATION
The above table shows that the current ratios are 2009 2010 the financial year are 1.17,
2010 2011 are 1.096, 2011 2012 are 1.064, 2012 2013 are 1.060, and the last financial year
2013 2014 are decreased in 1.058.
Inference:
It shows that current ratio is maximum in the year 2010 i.e. 1.117 and decreased in the
year of 2014 i.e., 1.058.

CHART NO 5.9
CURRENT RATIO
Current Ratio
1.12
1.1
1.12

1.08
1.06

Ratio
1.1
1.06

1.06

1.06

2011-2012

2012-2013

2013-2014

1.04
1.02
20092010

2010-2011

TABLE NO 5.10
CASH POSITION RATIO
Year
20092010

Cash and Bank

(In Lacks)
17878.04

Current Liabilities
(In Lacks)
156,589.65

Ratio
0.114
36

2010-2011
2011-2012
2012-2013
2013-2014

16659.78
19653.21
30708.11
28179.41

193,949.12
243,092.00
308,234.30
342,579.12

0.085
0.080
0.099
0.082

INTERPRETATION
The above table shows that the cash position ratio are 2009 2010 the financial year are
0.114, 2010 2011 are 0.085, 2011 2012 are 0.080, 2012 2013 are 0.099, and the last
financial year 2013 2014 are 0.082.
Inference:
It shows that cash position ratio is maximum in the year 2010 i.e., 0.114 and decreased in
the year of 2012 i.e., 0.080.

CHART NO 5.10
CASH POSITION RATIO

Cash Position Ratio

0.12
0.1
0.08
0.06
0.04
0.02
0

0.11

Ratio
0.09

0.08

0.1

0.08

20092010 2010-2011 2011-2012 2012-2013 2013-2014

TABLE NO 5.11
SOLVENCY RATIO
Year
20092010

Total Debt
(In Lacks)
156,589.65

Total Tangible
Assets (In Lacks)

Ratio

174927.65

0.895
37

2010-2011
2011-2012
2012-2013
2013-2014

193,949.12
243,092.00
308,234.30
342,579.12

212656.08
258664.79
326875.20
362726.66

0.912
0.939
0.942
0.944

INTERPRETATION
The above table shows that the solvency ratio are 2009 2010 the financial year are
0.895, 2010 2011 are 0.912, 2011 2012 are 0.939, 2012 2013 are 0.943, and the last
financial year 2013 2014 are 0.944.

Inference:
It shows that solvency ratio are maximum in the year 2011 i.e., 0.944 and decreased in
the year of 2010 i.e., 0.895.

CHART NO 5.11
SOLVENCY RATIO

Solvency Ratio
0.96
0.94
0.92

Ratio

0.9
0.88

0.9

0.94

0.94

0.94

2011-2012

2012-2013

2013-2014

0.91

0.86
20092010

2010-2011

CHAPTER VI
6.1 FINDINGS

The common size percentage statement of 2010-2011, it is clearly shows that the total
assets and liabilities were increased in 2011 compared to 2010. The other assets in 2010
38

were 1.486% but it increased in 2011 as 1.848%. Deposits are slightly decreased in 2011
as 85.088% from 85.345% in 2010. The solvency position was not good in 2011.

The common size percentage of 2011-2012, it is clearly shows that the company had to
increase the current assets, current liabilities. The current assets were 96.816% to
97.702%, so the companys liquidity position was good in that financial year.

The common size percentage of 2012-2013, it is clearly shows that the company had to
increase the current assets, current liabilities and to be increased in company balance
from 1.485% to 2.586%. Also increases its cash balance from 5.937% to
6.550%.company financial position was good.

The common size percentage of 2013-2014, it is clearly shows that the company had to
increased the current assets, current liabilities. And reduce in advances from 63.219 % to
62.13%, at the same time increased its investments from 24.904% to 27.27%.

The comparative percentage of 2010-2011 was 21.66%, it is clearly shows that the
Reserve, Other Assets, Deposit were increased whereas the comparative percentage of
Cash and, Revaluation Reserves were decreased.

The comparative percentage of 2011-2012 was 20.53%, it is clearly shows that the Total
current assets were increased. The comparative percentage of other liabilities &
provisions were decreased.

The comparative percentage of 2012-2013 was 26.94%, it is clearly shows that the Total
current assets, were increased. The comparative percentages of net block were decreased.

The comparative percentage of 2013-2014 was 11.33%, it is clearly shows that the Total
current assets net block and total current liabilities (net worth, total debt & Other
Liabilities & Provisions) were increased.

39

The current ratio it is clearly shows that the maximum in the year of 2010 i.e. 1.117 and
decreased in the year of 2014 i.e., 1.058.

The cash position ratio it is clearly shows that the maximum in the year of 2010 i.e.,
0.114 and decreased in the year 2012 i.e., 0.080.

The solvency ratio it is clearly shows that the maximum in the year 2014 i.e., 0.944 and
decreased in the year of 2010 i.e., 0.895.

6.2 SUGGESTIONS

40

Deposits are slightly decreased so company long term solvency position was not good in
2011.

The current assets and current liabilities are increased when compare to the previous
years, so the company liquidity position was good in that financial year. And the
company should take a necessary step to maintain this level to attain a good financial
position in the upcoming years.

The 2013-14 advances are slightly reduced, so the company as to concentrate on this
advances.

The company should try to follow a matching policy for financing current Assets (i.e.)
using both long term and short-term sources of finances.

The company should obtain optimum cash balance to meet their current obligations either
by investing in marketable securities or short term investments in shares, debentures,
bonds and other securities.

The company should try to prepare a proper ageing schedule of debtors. This will help
them to reduce the bad debts and speed up collection efforts.

6.3 CONCLUSION
The present study is conducted for evaluating under the title of financial statement
analysis of the company for the years from 2009-2010 to 2013-2014 with the help of ratio
analysis. In that the Current Ratio, Cash Position Ratio, solvency ratio, comparative statement
41

analysis and common size statement analysis are used for analysis of financial statement of the
DEE PEE GRANATILE.
The companys overall position is at a good position. Particularly the current years
position is well due to raise in the profit level from the last year position. It is better for the
organization to diversify the funds to different sectors in the present market scenario.
This project will be a guide to the management to interpret its weakness and problems
this will certainly helps the concern in its financial decision making for the future. The various
financial and statistical tools were used for the analysis.

CHAPTER VII
ANNEXURE
7.1 BIBLIOGRAPHY
1. C.R. KOTHARI Research Methodology Willay Eastern Ltd., 1992, New Delhi.
42

2. Dr. S.N. MAHESWARI (2000) Principles of Management Accounting Tenth edition

Sultan Chand & Sons, Delhi-53.
3. I.M. PANDEY Financial Management Eighth Edition Vikas Publishing House Pvt
Ltd., New Delhi-110014.
4. T.S. REDDY and Y. HARI PRASAD REDDY: Financial and Management Accounting,
Margham Publications, 2005.

WEBSITES:

www.google.com

www.wikipedia.com
www.granties.com

7.2 BALANCE SHEET

BALANCE SHEET OF DEE PEE GRANATILE (2010 - 2014) ---- in Rs. Lacks. ---Particulars
Capital and
Liabilities:
Add: Reserves

Mar '2014
12 months
20,181.82

Mar '2013
12 months
17,498.46

Mar '2012
12 months
12,129.11

Mar '2011
12 months
9,629.61

Mar '2010
12 months
7,885.63
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Add: Revaluation
Reserves
Net Worth
Deposits
Add: Borrowings
Total Debt
Other Liabilities &
Provisions
Total Liabilities
Assets :
Cash Balance
Bank balance

Advances
Investments
Gross Block
less: Accumulated
Depreciation
Net Block
Other Assets
Total Assets
Contingent
Liabilities
Bills for collection
Book Value (Rs)

2,065.14

2,098.36

2,132.68

2,168.16

2,204.86

22,689.96
327,053.73
15,525.39
342,579.12

20,039.82
293,972.65
14,261.65
308,234.30

14,671.79
234,651.44
8,440.56
243,092.00

12,207.77
186,892.51
7,056.61
193,949.12

10,500.49
154,072.42
2,517.23
156,589.65

8,891.12

7,804.64

6,977.30

13,488.91

13,438.55

374,160.20

336,078.76

264,741.09

219,645.80

180,528.69

17,795.14
10,384.27
232,489.82
102,057.43
4,858.37

22,014.79
8,693.32
212,467.17
83,699.92
4,686.15

15,719.46
3,933.75
169,334.63
69,676.95
4,480.37

10,036.79
6,622.99
138,219.40
57,776.90
4,440.07

13,364.79
4,513.25
107,238.04
49,811.57
4,254.33

2,000.84

1,841.74

1,620.99

1,510.61

1,337.46

2,857.53
8,576.01
374,160.20

2,844.41
6,359.15
336,078.76

2,859.38
3,216.92
264,741.09

2,929.46
4,060.26
219,645.80

2,916.87
2,684.17
180,528.69

166,419.96

111,805.73

110,627.02

136,851.39

95,710.87

36,132.91
465.57

29,041.74
405.00

21,206.47
305.83

25,757.73
244.87

25,299.63
202.33

Sources: DEE PEE GRANATILE Annual report

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