Summer Training Report

ON

FINANCIAL STATEMENT ANALYSIS

AT
RELIANCE SECURITITES
Submitted in partial fulfillment of the requirement of the degree of
BACHELORS OF BUSINESS ADMINISTRATION
Affiliated from
H.N.B. Garhwal University, Srinagar

Submitted by-

(RISHAB VISHNOI )
2014-17

Internal Guide: External Guide:

Mr. Jayant Mahajan MR. PRADEEP ZALA
Lecturer FINANCE MANAGER
ITM Reliance security
Dehradun

DEPARTMENT OF MANAGEMENT
INSTITUTE OF TECHNOLOGY & MANAGEMENT
DEHRADUN
 ACKNOWLEDGEMENT

At the very outset, I would like to acknowledge with immense gratitude the
support and guidance of some people without whom the project could not have been
completed. Also thanks to them, I learnt a lot more additional things than that just
restricted to my project.

First of all I would like to thank my project guide Mr. Jayant Mahajan for his
support and patience with me despite him being hard pressed for time.

I am thankful to Reliance Securitites for providing me with the wonderful

opportunity and allowing me to take this study.

Also I would like to thank the faculty guide of my college Mr Ankit Pathak who
guided me in my project.

I would also like to thank (other members of your training institute who helped
you out in completion of your project report.)

Last but not the least I would like to thank my parents who have always showed
their full faith in me, and are the biggest source of my encouragement and guidance.

Rishabh Vishnoi
 CANDIDATES
DECLARATION

I hereby declare that the work for the project Report entitled FINANCIAL
STATEMENT AT RELIANCE SECURITITES is completely done by me, based on
my own work conducted in training institute for the partial fulfillment of my
Bachelors of Business Administration.
Admittedly I have received suggestions and guidance from my guides.

Date-

BBA
Place-
(2014-2017)
 CONTENTS

Title i
To whom so ever it may concern ii
Acknowledgement iii
Preface
iv
Candidates declaration v

CHAPTER No. DESCRIPTION

PAGE No.

Chapter- ABOUT FINANCIAL STATEMENT

1.1 An Introduction
1.2 Mission
1.3 Goals

Chapter-2 Topic undertaken

2.1 an introduction
2.2 definitions by different authors

Chapter-3 Research Methodology

3.1 Research Problem
3.2 Research Objective
3.3 Types of research
3.4 Methods of data collection
3.5 data analysis & interpretation
3.6 Findings

Chapter-4 Recommendations & Suggestions

Chapter-5 Conclusions
Chapter-6 annexure

Chapter-7 bibliography

COMPANY PROFILE

ABOUT RELIANCE SECURITIES

Reliance Securities, the broking arm of Reliance Capital, is one of the Indias leading
retail broking houses, providing customers with access to equities, derivatives,
currency, IPOs, mutual funds, bonds, and corporate FDs amongst others. The large
array of financial offerings helps customers fulfilling their investment objectives on
one platform.

Reliance Securities offers secure online trading platform & investment activities in a
cost effective and convenient manner. To enable wider participation, it also provides
the convenience of trading offline through variety of means including Call and Trade,
Branch Dealing Desks and network of affiliates.

Focus on timely & error-free execution represents its core strength. Our best in class
research offerings, high degree of compliance with stock exchange regulations, ethical
business standards, & strong risk management capabilities; Reliance Securities
positions itself amongst strong & innovative brands in the financial services space.

Reliance Securities has over 8 lakh customers; having strong affiliate network with
over 1000 offices across India.

RELIANCE CAPITAL

Reliance Capital, a constituent of CNX Nifty Junior and MSCI India, is a part of the
Reliance Group. It is one of India's leading and amongst most valuable financial
services companies in the private sector.
Reliance Capital has interests in asset management and mutual funds, life and general
insurance, commercial finance, equities and commodities broking, wealth
management services, distribution of financial products, private equity, asset
reconstruction, proprietary

WHY US

At Reliance Securities, weve changed the way people look at investing in stock
markets and take investment decisions.

Our revolutionized equity trading solutions, best-in-class research, competitive

brokerage plans and exclusive reward program equips you with the best-in-class
trading experience.

Welcome to the world of an unrivalled trading experience!

OUR OFFERINGS
One Stop Shop for All Trading Needs

We cater to all kinds of investors. We offer a bouquet of financial products, including

cutting-edge and innovative products, aimed at boosting your investment returns. We
help you make informed choices with the help of our research reports, tools and up-
to-date market news.

Superior Research- Our highly qualified and trained equity research cell offers you
comprehensive research reports, trading strategies, daily calls and stock picks,
enabling you to make the right investment decisions and maximizing your
profitability. In addition, we offer you tools such as the R-Model portfolio where the
decision to pick the right stocks for you will rest with our highly qualified research
team.

Wide range of investment options- Our investment options include equity,

derivatives, currency, IPO, mutual funds, bonds and corporate fixed deposits. Our
innovative products, which include delivery and leveraged intraday products, regular
stock purchase plans, and after market orders, maximise your buying power and help
you boost your returns.
High-speed and user friendly trading platforms- Our state-of-the-art, super-fast,
user-friendly and secure trading platforms such as Insta Plus and Insta Xpress, offer
seamless, hassle-free and enhanced trading experience to customers.

Support services- We have a dedicated Call and Trade desk at your disposal, so you
can place orders even when you are not online. Our tracking system enables you to
track your portfolio with ease.

Reliance Securities is a broking arm of Reliance Capital.[1] It is one of Indias

largest retail broking houses with over 7 lakh customers and a pan-Indiapresence at
more than 1700 locations. The company is a corporate member of both the Bombay
Stock Exchange (BSE) and the National Stock Exchange(NSE), and provides access
to equities, derivatives, IPOs, mutual funds, bonds and corporate FDs.
Introduction

Financial statements are prepared primarily for decision making. They play a
dominant role in setting the framework of managerial decisions. But the information
provided in the financial statement is not an end in itself as no managerial can be
drawn from these statement alone. However, the information provided in the financial
statement is of immense use in making decision through analysis and interpretation of
financial statements. Financial analysis is the process of identifying the financial
strengths and weaknesses of the firm by properly establishing relationship between
the item of the balance sheet and the profit and loss account. There are various
methods used in analyzing financial statements, such as comparative statements, trend
analysis, common-size statement, schedule of change in working capital, funds flow
and cash flow analysis, cost-volume-profit analysis and ratio analysis.
The term financial analysis, also know as analysis and interpretation of
financial statement, refers to the process of determining financial strengths and
weaknesses of the firm of the firm by establishing strategic relationship between the
item the balance sheet, profit and loss account and other operative data.

Financial analysis is a process of evaluating the relationship

between component parts of a financial statement to obtain a
better understanding of a firms position and performances
According to Matclf and Titard
Financial statement analysis is largely a study of relationship
among the various financial factors in a business as disclosed
by single set-of statements and a study of the trend of these
factors as shown in a series of statement.
According to Myers
The term financial statement analysis include both analysis and interpretation.
The analysis and interpretation of financial analysis statements is essential to bring
out the mystery behind the figure in financial statements. Financial statement is an
attempt to determine the significance and meaning of the financial statement data so
the forecast may be made of the future earning, ability to pay interest and maturities
and profitability of a sound dividend policy.
Types of Financial Analysis
I can classify various types of financial analysis into different categories
depending upon (i) the material used, and (ii) the method of operation followed in the
analysis or the modus operandi of analysis.

(i) On the basis of material used: According to material used, financial

analysis can be of two types (a) external analysis and (b) internal analysis.

a. External Analysis: This analysis is done by outsiders who do not have

access to the detailed internal accounting records of the business firm.
These outsiders include investors, potential investors, creditors,
potential creditors, government agencies, credit agencies and the
general public. For financial analysis, this external party to the firm
depends almost entirely on the published financial statement. External
analysis, thus serves only a limited purpose. However, the changes in
the government regulations requiring business firm makes available
more detailed information to the public through audited accounts have
considerably improved the position of the external analysis.

b. Internal Analysis: The analysis conducted by persons who have

access to the internal accounting records of a business firm is known as
internal analysis. Such an analysis can, therefore, be performed by
executive and employees of the organization as well as government
agencies which have statutory powers vested in them. Financial
analysis for managerial purpose is the internal type of analysis that can
be effected depending upon the purpose to be achieved.
 (ii) On the basis of modus operandi: According to the method of
operation followed in the analysis financial can also be of two types: (a)
horizontal analysis (b) vertical analysis.

a. Horizontal Analysis: Horizontal analysis refers to the comparison of

financial data of a company for several years. Thus figure for this type
of analysis are presented horizontally over a number of columns. The
figures of the various years are compared with standard or base years.
A base year chosen as beginning point. This type of analysis is also
called Dynamic Analysis as it is based on the data from year to year
rather than on data of any one year. The horizontal analysis makes it
possible to focus attention on items that have changed significantly
during the period under review. Comparison of an item over several
periods with a base year may show a trend developing. Comparative
statement and trend percentages are two tools employed in horizontal
analysis.

b. Vertical Analysis: Vertical analysis refers to the study of relationship

of the various items in the financial statements of one accounting
period. In this types of analysis the figure from financial statement of a
year are compared with a base selected from the same years statement.
It is also knows as Static Analysis. Common-size financial analysis
statement and financial ratio are the tools employed in vertical
analysis. Since vertical analysis considers data for one time period
only, it is not conducive to a proper analysis of financial statements.
However, it may be used along with horizontal analysis to make it
more effective and meaningful.

Procedure of Financial Statements

There are three steps involved in the analysis of financial statements. These
are: (i) selection (ii) classification (iii) interpretation, the first step involves selection
of information (data) relevant to the purpose of analysis of financial statements. The
second step involved is the methodical classification of the data and the third step
include drawing and conclusions.
The following procedure is adopted for the analysis and interpretation of financial
statements:
1. The analysis should acquaint himself with the principal and postulates of
accounting. He should know the plans and policies of the management so that
he may be able to find out whether these plans properly executed or not.
2. The extent of analysis should be determined so that the sphere of work may be
decided. If the aim is to find out the earning capacity of the enterprise than
analysis of income statement will be undertaken. On the other hand. If
financial position is to be studied then balance sheet analysis will be
necessary.
3. The financial data given in the statement should be re-organized and re-
arranged. It will involve the grouping of similar data under same heads,
breaking done of individuals components of statements according to nature.
The data is reduced to a standard form.
4. A relationship is established among financial among financial statements with
the help tools and techniques of analysis such as ratio, trends, common size,
funds flow etc.
5. The information is interpreted in a simple and understandable way. The
significance and utility of financial data is explained for helping decision-
talking.
6. The conclusions drawn from interpretation are presented to the management in
the form if reports.

Methods or Devices of Financial Analysis

The analysis and interpretation of financial statements is used to determine the
financial position and result of operation 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 analysis position of the enterprise.
The following methods of analysis are generally used:
Comparative Statement
Trend analysis
Common Size Statement
Cash Flow Analysis
Ratio analysis

Comparative Statement: Comparative balance sheet analysis is the study of the

trend of the same items, group of item and computed item in two or more balance
sheets of the same business enterprise on different data.

Trend analysis: This method determines the direction upwards and involves the
computation of the percentage relationship that each statement item bears to the same
item in base year.

Common size Statement: The common size statements balance sheet statements
are shown in analytical percentages. The figures are shown as percentages of total
assets, total liabilities and total sales. Total assets are taken as 100 and different assets
are expressed as a percentage of the total, similarly various liabilities are taken as a
part of total liabilities.

Cash flow Statement: Cash flow statement is a statement which describes the
inflow (sources) and outflow (uses) of cash and cash equivalent in an enterprise
during a specified period of time.

Ratio Analysis: Ratio is a simple arithmetical expression of the relationship of one

number to another. It may be defined as the indicated quotient of two mathematical
expressions.
3.2 Comparative Statement of RELIANCE SECURITIES
year 2013 & 2014

Table 3.1
Comparative Balance Sheet
for the year ended 2013 and 2014
as at 31 March as at 31 March Increase/ Increase/
Particulars Decrease Decrease
2013 (Rs. In Lakh) 2014 (Rs. In Lakh)
(Rs. In Lakh) (Percentages)
SOURCES OF FUNDS
Shareholder's Funds
Capital 1,250,000 1,250,000 - 0
Reserves and Surplus 7,444,802 7,562,825 118,023 1.59

Loans Funds
Unsecured Loans 554,366 338,887 (215,479) -38.87
Deferred Tax liability 124,605 131,053 6,448 5.17
TOTAL 9,373,773 9,282,765 (91,008) -0.97
APPLICATION OF FUNDS
Fixed Assets
Gross block 11,864,901 12,457,823 592,922 5.00
Less: Depreciation 6,071,511 6,987,974 916,463 15.09
Net Block 5,793,390 5,469,849 (323,541) -5.58
Capital Working-in-Progress 256,860 266,562 9,702 3.78
Decommissioned Assets 6,444 389 (6,055) -93.96
6,056,694 5,736,800 (319,894) -5.28

Investments 20,000 20,000 - 0.00

Current, Assets, Loans and Advances
Inventories 242,847 322,006 79,159 32.60
Sundry Debtors 558,066 546,551 (11,515) -2.06
Cash and Bank Balances 3,745,296 4,055,158 309,862 8.27
Other Current assets -Accrued Interest 114,148 137,687 23,539 20.62
Loans and Advances 714,431 744,441 30,010 4.20
5,374,788 5,805,843 431,055 8.02
Less: Current Liabilities and Provisions
Current Liabilities 1,667,919 1,739,788 71,869 4.31
Provision 514,858 606,321 91,463 17.76
2,182,777 2,346,109 163,332 7.48
Net Current Assets 3,192,011 3,459,734 267,723 8.39
Inter/Intra Circle Remittance 105,068 66,231 (38,837) -36.96
TOTAL 9,373,773 9,282,765 (91,008) -0.97
 Figure 3.1: Comparative Balance Sheet chart

Figure 3.2 Comparative Balance Sheet in % Chart

Procedure of Comparative Balance Sheet
1. The Comparative balance sheet has two columns for the data of original
balance sheet.
2. Third column is used to show increases in figures.
3. The Fourth column may be added for giving percentages of increase or
decrease.

Interpretation of Comparative Balance Sheet

The comparative balance sheet of the company reveals that during 2014
there has been on decrease in fixed assets of Rs. 319894 lakh i.e. -5.28% while
long term liabilities to outsiders have relatively decrease by Rs. 91008 lakh i.e.
-0.97. This fact depicts the policy of the company is to not purchase fixed assets
from the long-term sources of finance there by not affect the working capital.

Current assets have increased by Rs. 163,332 lakh and cash and bank
balances also increased Rs. 309,862 i.e. 8.27%, investments not increased on the
other hand there has been an increase in inventories amount Rs. 79,159 lakh
i.e.32.60%. The current liabilities have increased by Rs. 163,332 lakh i.e. 7.84 %.
This further confirms that the company has revised long term finances.

The overall financial position of the company is satisfactory.

3.3 Trend Analysis (Profit of RELIANCE SECURITIES )
Table 3.2
Profit before Tax
Years Amount (Rs.) in
Percentages
Lakh
2011 792,008.00 100.00
2012 844,698.00 106.65
2013 815,381.00 102.95
2014 445,155.00 56.21

2012 2013 2014

Figure 3.3: Trend Profit chart

Procedure of Calculation Trends

4. One year is taken as a base: year 2010 taken as a base year
5. The figure of base year are taken 100
6. Trend percentages are calculated in relation to base year. Figure in other year
is less than the figure in base year trend percentage will be less than 100 and it
will be more than 100 if figure is more than base year figure. Each years
figure is dived by the base years figure.

Interpretation
Profit before tax has substantially decreased. In four year period it has more
than doubled. The comparative decrease in profit is much lower in 2014 as compared
to 2012 and 2013.
The expansion of the firm is not possible. The overall performance of the
concern is not good on the basis of profit.
3.4 Common Size Balance Sheet of RELIANCE SECURITIES
year 2013 and 2014
Table 3.3
Common Size Balance Sheet
for the year ended 2013 and 2014

as at 31 March as at 31 March
Particulars 2013 (Rs. In Lakh)
%
2014 (Rs. In Lakh)
%

SOURCES OF FUNDS
Shareholder's Funds
Capital 1,250,000 13.34 1,250,000 13.47
Reserves and Surplus 7,444,802 79.42 7,562,825 81.47

Loans Funds
Unsecured Loans 554,366 5.91 338,887 3.65
Deferred Tax liability 124,605 1.33 131,053 1.41
TOTAL 9,373,773 100.00 9,282,765 100.00
APPLICATION OF FUNDS
Fixed Assets
Gross block 11,864,901 126.58 12,457,823 134.20
Less: Depreciation 6,071,511 64.77 6,987,974 75.28
Net Block 5,793,390 61.80 5,469,849 58.92
Capital Working-in-Progress 256,860 2.74 266,562 2.87
Decommissioned Assets 6,444 0.07 389 0.00
6,056,694 64.61 5,736,800 61.80

Investments 20,000 0.21 20,000 0.22

Current, Assets, Loans and Advances
Inventories 242,847 2.59 322,006 3.47
Sundry Debtors 558,066 5.95 546,551 5.89
Cash and Bank Balances 3,745,296 39.96 4,055,158 43.68
Other Current assets -Accrued Interest 114,148 1.22 137,687 1.48
Loans and Advances 714,431 7.62 744,441 8.02
5,374,788 57.34 5,805,843 62.54
Less: Current Liabilities and Provisions
Current Liabilities 1,667,919 17.79 1,739,788 18.74
Provision 514,858 5.49 606,321 6.53
2,182,777 23.29 2,346,109 25.27
Net Current Assets 3,192,011 34.05 3,459,734 37.27
Inter/Intra Circle Remittance 105,068 1.12 66,231 0.71
TOTAL 9,373,773 100.00 9,282,765 100.00
 2014
2013

Figure 3.4 Common size Balance Sheet chart

Procedure of Common-Size Balance Sheet

1. The total assets are taken as 100 and different assets are expressed as a
percentages of the total
2. Similarly, various liabilities are taken as a part of total liabilities.
3. This statement is also known as component percentages or 100 percent
statement because every individual item is stated as a percentage of the total
100.

The short comings in comparative statement and trend percentage where

changes in items could not be compared with the totals have been covered up.
Interpretation
An analysis of patter of financing of both the years shows that year 2013is
more traditionally financed as compared to year 2014. The RELIANCE SECURITIES
has depended more on its own reserves and surplus as is shown by balance sheet. Out
of total reserve 81.47% of the funds are proprietors funds. In year 2013 funds are
79.42% which shows that this company has depend more upon outsider funds. In the
present day economic world generally, companies depend more on outsiders funds. In
this context both years have good finical planning but year 2014 is more financed on
traditional lines.
Both years are suffering from adequacy of working capital. The percentage of
current assets is more than the percentage of current liabilities in both the year. In
the year 2014 RELIANCE SECURITIES is suffering more form working capital
position than the second than the second year because current assets are more then
current liabilities i.e. 25.27% and this percentage is 23.29% in the 2013.
A close look at the balance sheet shows that investments in fixed asset have
been not financed from working capital in both years. In 2013 fixed account for
64.61% of the total assets while long-term funds account for 5.91% of total funds. In
year 2014 fixed account for 61.80 whereas long term funds account for 3.65% of total
instead of using long-term funds.
Both the year RELIANCE SECURITIES is not facing working capital
problem.
 3.5 Cash Flow Statement of RELIANCE SECURITIES
Table 3.4
BHARAT SANCHAR NIGAM LIMITED
CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH 2014

Year ended 31st Year ended 31st Year ended 31st Year ended 31st
PARTICULARS March 2012 March 2013 March 2014 March 2015
(Rs. in Lakh) (Rs. in Lakh) (Rs. in Lakh) (Rs. in Lakh)
A. Cash flow from operating
activities:
Net (loss)/profit before tax but after
Prior period and Extraordinary
items 445155 815381 844698 792014
Adjustments for:
Depreciation 969610 914931 937669 962486
Prior period depreciation 5106 8288 21231 54293
Interest/Finance charges 86254 77941 108980 2929
Interest Income (403324) (281123) (173340) (80052)
Loss/(Profit) on Fixed Assets sold (2002) (800) (851) (618)
Debts / Advances Written off 70926 35340 47059 (73437)
Provision for Bad and Doubtful
Debts 47899 127875 159518 26403
Excess provision written back (80829) (21676) (19133) (39532)
Prior Period item other than
depreciation (8565) 1276 19320 (855)
Other Provision 147595 832670 102518 964570 123646 1224099 229227 1080844
Operating profit before working
capital changes 1277825 1779951 2068797 1872852

Adjustments for changes in

working capital :
- Inter Circle Remittance 38837 (12229) 1663 (4202)
- Sundry Debtors (62838) (131465) (94637) (77517)
- Other Receivables (54335) (67776) (170397) (59867)
- Trade and Other Payables 65923 (12413) (685) (212155) 145474 (117897) (44174) (185760)
Cash generated from operations 1265412 1567796 1950900 1687092

-Taxes paid (175793) (152524) (118971) (117576)

- Prior Period item other than
depreciation 8565 (167228) (1276) (153800) 38976 (79995) 177444 59868
Net cash from operating
activities 1098184 1413996 1870905 1746960

B. Cash flow from Investing

activities:
Inventories Purchased (76049) 24723 (54539) (572)
Purchase of fixed assets (717309) (815313) (882441) (976301)
Capital Work in Progress (9231) 125505 78066 125689
Proceeds from Sale of fixed assets 50319 107795 84750 133273
Interest Received 379785 230602 124081 70094
Net cash used in investing
activities (372485) (326688) (650083) (647817)
C. Cash flow from financing
activities:

Proceeds from long term

borrowings (300000) (174027) (93696) (3679)
Interest Paid (1767) (77700) (108358) (3068)
Interim Dividend Paid (30000) (50000) (42759) (22614)
Dividend Paid (67500) (80000) (111174) (31800)
Dividend Distribution Tax Paid (16570) (18233)
Net cash used in financing
activities (415837) (399960) (355987) (61161)

Net Increase/(Decrease) in Cash

and Cash Equivalents 309862 687348 864835 1037982

Opening Cash and cash

equivalents 3745298 3057950 2193115 1155133

Cash and cash equivalents as at

31.03.2014 4055160 3745298 3057950 2193115

Cash and cash equivalents

comprise
Cash, Cheques and Drafts
(in hand) 2569 2704 3094 179993
Balances with banks 4052589 4055158 3742592 3745296 3054854 3057948 2013120 2193113

2011 2012 2013 2014

Figure 3.5 Net Increase/Decrease in cash and cash equivalents

 Procedure of Cash Flow Statement
Cash flow statement is not a substitute of income statement, i.e. a profit and loss
account, and a balance sheet. It provides additional information and explain the
reasons for changes in cash and cash equivalent.
The basic information required for the preparation of cash flow statements is
obtained from the following sources:
i. Comparative balance sheets as two points of time, i.e. in the beginning
and at the end of accounting period.
ii. Income statement of the current accounting period or the profit and loss
account.
iii. Some selected additional data to extract the hidden transaction.
Step I. Compute the net increase or decrease in cash and cash equivalents by making
a comparison of these accounting given in the comparative balance sheet.
Step II. Calculate the net cash flow provided operating activities by analysis the profit
and loss account balance sheet and additional information.
Step III. Calculate the net cash flow from investing activities.
Step IV. Calculate the net cash floe from financing activities.
Step V. Prepare a formal cash flow statement highlighting the net cash flow from
operating.
Step VI. Make an aggregate of net cash flow the three activities and ensure that the
total net cash flow is equal to the net increase or decrease in cash and cash
equivalent as calculated in step I.
Step VII. Repot significant non-cash flow statement e.g., purchase of machinery against
issue of share capital or redemption of debenture in exchanges fro share
capital.

Interpretation
Cash Flow from Operating Activities
Operating activities are the principal revenue-producing activities of the
enterprise and other activities that are not investing or financing activities.
 The operating activities are calculates 2011 to 2014. This activity is shown
that the cash flow of operating activities. The year of 2011 net cash is Rs. 1746960 in
lakh, year 2012 cash Rs. 1870905 lakh, year 2013 cash from operating Rs. 1413996
lakh and year 2014 cash from operating activities Rs. 1098184 laks. This operating
shown cash shown is reduction of cash flow of operating activity. In 2014 operating
goes down because net profit is goes down in comparison year 2012 and tax paid is
goes high so net cash from operating activities goes down in comparison year 2012.

Cash Flow from Investing Activities

This activity disclose of cash flows arising from investing activities is
important because the cash flows represent the extent to which expenditures have
been made for resources intend to generate future income and cash flow.
This activity is shown that the cash flow of investing activities. The year of
2011 net cash is Rs. -647817 in lakh, year 2012 cash Rs. -650083 lakh, year 2013
cash from investing Rs. -326688 lakh and year 2014 cash from investing activities Rs.
-372485 laks. This calculation shown investing payments. In 2014 investing activities
goes down because purchase of fixed assets is Rs. 717309 laks. In this year investing
money is goes down in comparison year 2012 and interest receiving is goes high so
net cash using in investing activities goes down in comparison year 2012.

Cash Flow from Financing Activities

This activity disclose of cash flows arising from financing activities is
important because the claim on future cash flows by providers of funds (both capital
and borrowings) to the enterprises.
This activity is shown that the cash flow of financing activities. The year of
2011 net cash is Rs. -61161 in lakh, year 2012 cash Rs. -355987 lakh, year 2013 cash
from financing Rs. -399960 lakh and year 2014 cash from financing activities Rs.
-415837 laks. This calculation shown investing payments. In 2014 financing activities
goes upward because taking long term borrowing is Rs. 300000 laks comparison year
2012 because in this year borrowing is Rs. 3676 lakh.

Overall cash flow net cash and cash equivalent is decreased in comparison
previous year
 (RATIO ANALYSIS)

Ratio analysis is an important technique of meaningful analysis of financial

statements. It implies financial analysis of a business by establishing relationship
between items or group of items of the same financial statements.
In the words of Wixon, Kell and Bedford, Ratio analysis is a process of
determining and presenting the relationship of items and group of items in the
statements.
It involves calculation, comparison and interpretation of ratios between two or
more items of financial statements for some specified purpose. As compared to
other tools of financial analysis, the ratio analysis highlights more useful facts
about various aspects of the working (i.e. financial position, solvency, stability,
liquidity, and profitability) of an enterprise.
The term ratio` refers to the numerical or quantitative relationship between two
items/variables. As such, ratios are simply a means of highlighting in arithmetical
term the relationship between two or more figures drawn from the financial
statements.

Methods of Expressing Accounting Ratios:-

Accounting ratios can be expressed in the following forms:

(1) Percentage Method: In this method, a quotient obtained by dividing one

figure with another figure is multiplied by one hundred and it becomes the
percentage form of expression. Ex. Profitability ratios

(2) Rate Method: In this method, a quotient obtained by dividing one figure with
another figure is taken as unit of expression of how many times a figure is in
comparison to another figure. Ex., Activity ratios.

(3) Proportionate Method: In this method, relationship of two items is directly

expressed in proportion. It is also known as Ratio Method or Pure Ratio or Simple
Ratio. eg Liquidity Ratios
 (4) Fraction: Sometimes ratio relationship is expressed in fraction. Sometimes
ratio relationship may be expressed in terms of months or days.

Steps for ratio analysis:-

1. Arrangement of data.
2. Calculation of appropriate ratios from the above data.
3. Comparison of the calculated ratios with predetermined standards or norms set
for the purpose.
4. Interpretation of ratios.

Objectives of Ratio Analysis:-

Financial ratios are true test of the profitability, efficiency and financial soundness
of the firm. These ratios have following objectives:

1. To measure the profitability of the business. Profitability is the profit earning

capacity of the business. This can be measured by Gross Profit, Net Profit, and
Other Ratios.
2. To determine the operational efficiency: Operational efficiency of the business
can be determined by calculating operating / activity ratios.

3. To measure the financial position: Short-term and long-term financial position

of the business can be measured by calculating liquidity and solvency ratios.

4. To facilitate comparative analysis with past performance to discover the plus

and minus points. Comparison with the performance of other competitive firms
can also be made.

5. To indicate the overall efficiency of the business.

6. Budgeting and forecasting: Ratio analysis is of much help in financial

forecasting and planning.
Advantages and Uses of Ratio Analysis:-
1. To workout the profitability: Accounting ratio help to measure the profitability
of the business by calculating the various profitability ratios.
2. To workout the solvency: With the help of solvency ratios, solvency of the
company can be measured.
3. Helpful in analysis of financial statement: Ratio analysis helps the outsiders to
know about the profitability and ability of the company.
4. Helpful in comparative analysis of the performance: With the help of ratio
analysis a company may have comparative study of its performance to the
previous years.
5. To simplify the accounting information: Accounting ratios are very useful as
they briefly summarize the result of detailed and complicated computations.
6. To workout the operating efficiency: Ratio analysis helps to workout the
operating efficiency of the company with the help of various turnover ratios.
7. To workout short-term financial position: Ratio analysis helps to workout the
short-term financial position of the company with the help of liquidity ratios.
8. Helpful for forecasting purposes: Accounting ratios indicate the trend of the
business. The trend is useful for estimating future. With the help of previous years
ratios, estimates for future can be made.

Limitations of Ratio Analysis:-

1. Limited Comparability: Different firms apply different accounting policies.

Therefore the ratio of one firm can not always be compared with the ratio of
other firm.
2. False Results: Accounting ratios are based on data drawn from accounting
records. In case that data is correct, then only the ratios will be correct.
3. Effect of Price Level Changes: Price level changes often make the
comparison of figures difficult over a period of time. Changes in price affect
the cost of production, sales and also the value of assets.
4. Qualitative factors are ignored: Ratio analysis is a technique of quantitative
analysis and thus, ignores qualitative factors, which may be important in
decision making.
5. Effect of window-dressing: In order to cover up their bad financial position
some companies resort to window dressing.
6. Costly Technique: Ratio analysis is a costly technique and can be used by big
business houses. Small business units are not able to afford it.
7. Misleading Results: In the absence of absolute data, the result may be
misleading.

Parties interested in Ratio Analysis:-

1. Short-term creditors:
They are interested in knowing whether the amounts owing to them will be paid as
and when fall due for payment or not.
2. Long-term creditors:-
They are interested in knowing whether the principal amount and interest thereon
will be paid on time or not.
3. Shareholders:-
They are interested in profitability, return and capital appreciation
4. Management:-
The management is interested in the financial position and performance of the
enterprise as a whole and of its various divisions.
5. Trade unions:-
They are interested in financial statements for negotiating the wages or salaries or
bonus agreement with the management.
6. Taxation authorities:-
These taxation authorities are interested in financial statement for determining the
tax liability.
7. Employees:-
They are interested as it enables them to justify their demands for bonus and
increase in remuneration.
Types of ratio:-

(1)Liquidity ratio:-
The ratios which indicate the liquidity of a firm are known as liquidity ratios. These
ratios are also termed as working capital ratio. Liquidity is basic requirement to
continuous operations of the firm. In fact, it is a pre-requisite for the very survival of a
firm. The object of liquidity analysis is to examine the firms ability to meet its
current obligations out of short-term resources. The short-term creditors of the firm
are primarily interested in the short-term solvency. This analysis enables the
shareholders and long-term creditors of the company in assessing the companys
capacity to pay dividend and interest on time. Liquidity ratios include following
ratios.
Current ratio
Current ratio is the most common and widely used ratio for measuring liquidity. It
indicates the rupees of current assets available for each rupee of current assets. A ratio
of 2:1 is considered satisfactory as a rule of thumb.
Liquid ratio
This ratio is calculated for assessing the capacity of the firm to make immediate
payment of its liabilities. A liquid ratio of 1:1 is considered satisfactory.
Absolute liquid ratio
It is a more rigorous test of liquidity of a firm. Generally, 0.5:1 is ratio is
recommended to ensure liquidity.

(2)Leverage or Capital structure ratio:-

These ratios are calculated to study the long term solvency position of the company.
The term solvency refers to the ability of the concern to meet its long-term
commitments. Long-term solvency is examined with reference to the firms capacity
to pay interest regularly and eventually repay on maturity the sum borrowed. Long-
term creditors as well as present and prospective shareholders are interested in the
analysis of long-term solvency of a company. It includes following ratios.

Debt equity ratio

This ratio indicates the relationship between external equities and internal equities.
This ratio indicates the cushion available to the creditors on liquidation of the
borrower concern. Lower the ratio, greater is security for the creditors. Ordinarily, a
1:1 ratio is considered satisfactory.

Proprietary ratio
It indicates the relationship of owners funds to total assets. There is no generally
accepted norm for this ratio. Higher the ratio lesser the dependence for working
capital on outside sources, better the long-term solvency and stability and greater the
protection to the creditors of the firm.

Solvency ratio
This is also known as debt ratio. It is a difference of 100 and proprietary ratio. The
higher the ratio, the greater is the dependence of the firm on outsiders for its
financing.

Ratio of Fixed Assets to Proprietors Funds

An important aspect of financial soundness is that all fixed assets of the business are
financed out of shareholders funds. Hence, if owners funds exceed the fixed assets, it
is treated as a good proof of firms long-term solvency. Usually a ratio of 0.67:1 is
considered satisfactory.

Ratio of current assets to proprietors Funds

This ratio indicates the extent to which proprietors funds are invested in current
assets. This ratio indicates the financial capability of the firm. There is no rule of
thumb for this ratio.

(3)Profitability Ratios :
The main objective of every business concern is to earn profits. A business must be
able to earn adequate profit in relation to the risk and capital invested in it. The
profitability is generally treated as an indicator of efficiency of business efficiency.
Profitability is analyzed by different parties according to their interest. To the
management, profits are the test of efficiency and a measure of control; to the
owners , a measure of worth of their investments; to the creditors, the margin of
safety; to the employees, a source of fringe benefits; to government, a measure of tax
paying capacity, to customers a hint to demand for price cut. These ratios are
expressed in percentage. Profitability ratios include the following ratios.

Gross profit ratio

This ratio establishes relationship between gross profit and net sales. Gross profit is a
very important ratio of measuring the profitability of an enterprise. It indicates the
margin of the profit left to cover indirect expenses. Higher the ratio, better it is. But
there is no rule of thumb for this ratio. It may vary from business to business, industry
to industry and also for different units within the same industry.

Net profit Ratio

Net profit margin ratio establishes a relationship between net profit and sales and indicates
managements efficiency in manufacturing, administering and selling the products. This ratio
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. It would really be
difficult for a low net margin firm to withstand these adversities.

Return on Equity capital

Common or ordinary shareholders are entitled to the residual profits. The rate of dividend is
not fixed; the earnings may be distributed to shareholders or retained in the business. A return
on shareholders equity is calculated to see the profitability of owners investment. The
shareholders equity or net worth will include paid up share capital, share premium and
reserves and surplus less accumulated losses.

Return on total investment

This is a measure of managerial efficiency of utilizing funds invested in the firm.
Total investment implies shareholders funds plus long-term liabilities. Higher the
ratio, greater is the profitability of the company.

(4)Activity ratio or Turnover ratio:-

Activity ratios, also known as efficiency ratios or sales ratios are concerned with
measuring efficiency with which the resources are available to firm are utilized. They
indicate the rapidity with which the resources available to the concern are being used
to produce sales. As these ratios calculated on the basis of sales, they are also called as
turnover ratios. These ratios are expressed in number of times. The following
ratios are included in this category.
Stock turnover ratio
This ratio is calculated to consider the justification of amount of capital employed in
stock. Under it, rate of conversion of stock into sales is calculated. This ratio is an
indicator of flow of inventory in business.

Fixed assets turnover ratio

This ratio measures managements ability of efficient and profitable use of fixed
assets. This ratio has more significance in manufacturing concerns because of higher
investment in fixed assets in these concerns.
Debtors turnover ratio
This ratio is a qualitative analysis of a firms marketing and credit policy and debtors
realizations. It is calculated to know the uncollected portion of credit sales in the form
of debtors by establishing relationship between trade creditors and net credit sales of
the business.

Creditors Turnover Ratio

Alike debtors turnover ratio, creditors turnover ratio may be calculated. The short-
term creditors are very much interested in this ratio, as it shows the firms trend of
payment to its short-term creditors.

Working Capital Turnover Ratio

This ratio is a measure of efficiency of working capital utilization. A high working
capital turnover ratio shows the efficient utilization of working capital. But too high
or too low ratio indicates over trading or under trading respectively.
Findings
According to my survey and calculation the noteworthy points are:
Mostly year RELIANCE SECURITIES suffers in losses.
RELIANCE SECURITIES build fixed assets; these assets will give effect in
profit of RELIANCE SECURITIES .
Highly dues of intra/inter circle transfer of funds which is leave our effect in
liabilities side in balance sheet.
Coordinations of departments are not satisfactory.
Qualification of employees is not match his posts.
Revenues policies of RELIANCE SECURITIES are not properly implied.
Departmental process so long.
Proper computerizing of department are not satisfactory.

Analysis:
From the calculation it was found that amongst year 2012 to 2014.
In year 2012 is good for RELIANCE SECURITIES because in this year profit
goes 106% on base of year 2011.
In year 2013 is fine for RELIANCE SECURITIES because in this year profit
goes approximately 103% on base of year 2011.
In year 2014 is underprivileged for RELIANCE SECURITIES because in this
year profit will be only 56.21% on base of year 2011. In this year RELIANCE
SECURITIES suffer payments liabilities. The current liabilities will increase
25%.
In year 2012 to 2014 cash position is goes decrease. We saw the graph of cash
I analysis the cash position are not satisfactory at this time. RELIANCE
SECURITIES is a 6th largest telecom company in the world but at this time
RELIANCE SECURITIES suffers cash, capital problems.
Conclusion
After overhauling the all situation that boosted a number of Pvt. Companies
associated with multinational in the Telecom Sector to give be relevant competition to
the other established company in private sector, we come at the conclusion that

There are very cut tough competitions among the private telecom companies
on the level of new trend of advertising to silence a major part of Customers.
RELIANCE SECURITIES is not left behind in the present race of
advertisement.
The entry of more Pvt. players in the telecom Sector have expanded the
product segment to meet the different level of the requirement like 3G,
Broadband, phone line, cable connection in on wire line to provide of the
customers. It has brought about greater choice to the customers.
Over all in RELIANCE SECURITIES facing short of employees and present
employees are not working properly.
Some employees working faith full for RELIANCE SECURITIES but
retirement of RELIANCE SECURITIES employees is too much. Each month
large number of employees will retired by RELIANCE SECURITIES .
RELIANCE SECURITIES facing of over capitalization problem. This
problem generated by decommissioned assets.
This organization paid large amount of taxes. This taxes leave over effect
earning per shares (EPS).
Suggestions
The study has provided with the useful data from the respondents. There has a lot to
be recommended. Following are the recommendations:
There is a need for better promotion for the investment & services.
More returns should be provided on revenues policies.
As the RELIANCE SECURITIES provides the telecom facility to its
customers. It should provide this facility by tie up with the other organizations
as well.
Recruit new qualified employees technical or non technical.
Working hour will increase to employees.
Create new accounting or finance policies. This policies will provide help
generate revenues.
Launch better plans for according to customers. Plans will be flexible nature
Maintain Communication of each department.
RELIANCE SECURITIES is computerized but today some department work
with papers. These employees are not handle computer because they cant that.
Departmental processes so long I suggest make a short process of work to
departmental.
Bibliography
Management Accounting Shashi K. Gupta & R.K. Sharma
Financial Management I.M. Pandey.
Research Paper: Financial Analysis Hampton John J. Financial Decision
Making, Second Ed p.75
Web sites
o www.RELIANCE SECURITIES .co.in
o www.google.com
o www.mpRELIANCE SECURITIES .com

Annual Reports of RELIANCE SECURITIES 2012-2014.

Departmental Records.
Cash Flow of Reliance Industries ------------------- in Rs. Cr. -------------------
Mar '16 Mar '15 Mar '14 Mar '13 Mar '12

12 mths 12 mths 12 mths 12 mths 12 mths

26284.0
Net Profit Before Tax 35701.00 29468.00 27818.00 25750.00
0
32995.0
Net Cash From Operating Activities 44082.00 35285.00 42160.00 26974.00
0
-
Net Cash (used in)/from
-42329.00 -55998.00 -64013.00 14797.0 -3046.00
Investing Activities
0
Net Cash (used in)/from Financing
-6432.00 -940.00 5530.00 -8249.00 -11465.00
Activities
Net (decrease)/increase In Cash
-4679.00 -21653.00 -16323.00 9949.00 12463.00
and Cash Equivalents
39598.0
Opening Cash & Cash Equivalents 11571.00 33224.00 49547.00 27135.00
0
49547.0
Closing Cash & Cash Equivalents 6892.00 11571.00 33224.00 39598.00
0

Source : Dion Global Solutions Limited

Profit & Loss account of Reliance
------------------- in Rs. Cr. -------------------
Se
Mar 16 Mar 15 Mar 14 Mar 13 Mar 12

12 mths 12 mths 12 mths 12 mths 12 mths

INCOME
Revenue From
4,047.00 3,924.00 3,138.00 36966996666,797.00 3,240.00
Operations [Gross]
Revenue From
4,047.00 3,924.00 3,138.00 3,797.00 3,240.00
Operations [Net]
Other Operating
29.00 24.00 31.00 31.00 28.00
Revenues
Total Operating
4,076.00 3,948.00 3,169.00 3,828.00 3,268.00
Revenues
Other Income 69.00 40.00 85.00 40.00 49.00
Total Revenue 4,145.00 3,988.00 3,254.00 3,868.00 3,317.00
EXPENSES
Employee Benefit
194.00 194.00 148.00 165.00 141.00
Expenses
Finance Costs 2,297.00 2,357.00 2,279.00 2,179.00 2,065.00
Depreciation And
37.00 31.00 34.00 29.00 26.00
Amortisation Expenses
Other Expenses 441.00 562.00 329.00 791.00 464.00
Total Expenses 2,969.00 3,144.00 2,790.00 3,164.00 2,696.00
Mar 16 Mar 15 Mar 14 Mar 13 Mar 12

12 mths 12 mths 12 mths 12 mths 12 mths

Profit/Loss Before
Exceptional,
1,176.00 844.00 464.00 704.00 621.00
ExtraOrdinary Items
And Tax
Profit/Loss Before Tax 1,176.00 844.00 464.00 704.00 621.00
Tax Expenses-Continued
Operations
Current Tax 114.00 99.00 50.00 33.00 78.00
Deferred Tax 0.00 -12.00 5.00 9.00 24.00
Tax For Earlier Years 11.00 0.00 0.00 0.00 0.00
Total Tax Expenses 125.00 87.00 55.00 42.00 102.00
Profit/Loss After Tax
And Before 1,051.00 757.00 409.00 662.00 519.00
ExtraOrdinary Items
Profit/Loss From
1,051.00 757.00 409.00 662.00 519.00
Continuing Operations
Total Tax Expenses
74.00 0.00 0.00 0.00 0.00
Discontinuing Operations
Net Profit Loss From
-74.00 0.00 0.00 0.00 0.00
Discontinuing Operations
Profit/Loss For The
977.00 757.00 409.00 662.00 519.00
Period
Mar 16 Mar 15 Mar 14 Mar 13 Mar 12

12 mths 12 mths 12 mths 12 mths 12 mths

OTHER ADDITIONAL
INFORMATION
EARNINGS PER SHARE
Basic EPS (Rs.) 38.67 30.77 16.67 26.95 21.14
Diluted EPS (Rs.) 38.67 30.77 16.67 26.95 21.14
VALUE OF IMPORTED AND
INDIGENIOUS RAW MATERIALS
STORES, SPARES AND LOOSE
TOOLS
DIVIDEND AND DIVIDEND
PERCENTAGE
Equity Share Dividend 253.00 227.00 209.00 319.00 184.00
Tax On Dividend 26.00 30.00 16.00 36.00 7.00
Equity Dividend Rate (%) 100.00 90.00 85.00 130.00 75.00

Balance Sheet of Reliance Security ------------------- in Rs. Cr. -------------------

Mar 16 Mar 15 Mar 14 Mar 13

12 mths 12 mths 12 mths 12 mths

EQUITIES AND LIABILITIES

SHAREHOLDER'S FUNDS
Equity Share Capital 253.00 253.00 244.00 246.00
Total Share Capital 253.00 253.00 244.00 246.00
Reserves and Surplus 13,028.00 12,330.00 11,390.00 11,266.00
Total Reserves and Surplus 13,028.00 12,330.00 11,390.00 11,266.00
Total Shareholders Funds 13,281.00 12,583.00 11,634.00 11,512.00
NON-CURRENT LIABILITIES
Long Term Borrowings 13,615.00 14,101.00 12,128.00 12,402.00
Deferred Tax Liabilities [Net] 0.00 0.00 12.00 6.00
Other Long Term Liabilities 121.00 125.00 82.00 14.00
Long Term Provisions 59.00 36.00 36.00 30.00
Total Non-Current Liabilities 13,795.00 14,262.00 12,258.00 12,452.00
CURRENT LIABILITIES
Short Term Borrowings 3,812.00 3,772.00 6,754.00 4,190.00
Trade Payables 6.00 17.00 9.00 1.00
Other Current Liabilities 5,167.00 4,784.00 5,620.00 5,171.00
Short Term Provisions 293.00 284.00 240.00 231.00
Total Current Liabilities 9,278.00 8,857.00 12,623.00 9,593.00
Total Capital And Liabilities 36,354.00 35,702.00 36,515.00 33,557.00
ASSETS
NON-CURRENT ASSETS
Tangible Assets 155.00 183.00 150.00 131.00
Intangible Assets 24.00 31.00 32.00 20.00
Intangible Assets Under Development 0.00 0.00 0.00 3.00
Fixed Assets 179.00 214.00 182.00 154.00
Non-Current Investments 11,109.00 11,381.00 13,103.00 13,309.00
Deferred Tax Assets [Net] 0.00 0.00 0.00 0.00
Long Term Loans And Advances 16,426.00 11,945.00 12,738.00 10,199.00
Other Non-Current Assets 743.00 1,343.00 1,756.00 1,344.00
Total Non-Current Assets 28,457.00 24,883.00 27,779.00 25,006.00
CURRENT ASSETS
Current Investments 137.00 994.00 467.00 366.00
Trade Receivables 0.00 0.00 5.00 0.00
Cash And Cash Equivalents 1,670.00 731.00 1,848.00 745.00
Short Term Loans And Advances 5,643.00 8,694.00 5,932.00 7,025.00
OtherCurrentAssets 447.00 400.00 484.00 415.00
Total Current Assets 7,897.00 10,819.00 8,736.00 8,551.00
Total Assets 36,354.00 35,702.00 36,515.00 33,557.00
OTHER ADDITIONAL INFORMATION
CONTINGENT LIABILITIES, COMMITMENTS
Contingent Liabilities 3,503.00 2,653.00 3,198.00 1,829.00
CIF VALUE OF IMPORTS
Capital Goods 2.00 0.00 0.00 2.00
EXPENDITURE IN FOREIGN EXCHANGE
Expenditure In Foreign Currency 2.00 2.00 2.00 3.00
REMITTANCES IN FOREIGN CURRENCIES FOR DIVIDENDS
Dividend Remittance In Foreign Currency 0.02 0.02 0.02 0.03
EARNINGS IN FOREIGN EXCHANGE
FOB Value Of Goods - - - -
Other Earnings - - - -
BONUS DETAILS
Bonus Equity Share Capital - - - -
NON-CURRENT INVESTMENTS
Non-Current Investments Quoted Market Value 345.00 397.00 915.00 515.00
Non-Current Investments Unquoted Book Value 10,687.00 11,031.00 12,410.00 12,669.00
CURRENT INVESTMENTS
Current Investments Quoted Market Value 6.00 6.00 283.00 150.00
Current Investments Unquoted Book Value 131.00 988.00 184.00 216.00