Summer Training Report

On
A Financial Statement Analysis for RCI Industries & Technologies Ltd.

Submitted In Partial Fulfillment

Of the Requirement

Of Bachelor of Business Administration

Training Supervisor Submitted By

Name: POOJA CHAUDHARY Name of the student: VIKRANT DANI

Designation: FINANCE MANAGER ENR No./Batch: 04650501715

Submitted To:

Banarsidas Chandiwala Institute of Professional Studies, Dwarka, New Delhi

(Affiliated to Guru Gobind Singh Indraprastha University

 DECLARATION

I hereby declare that this Project Report titled A FINANCIAL STATEMENT ANALYSIS
FOR RCI INDUSTRIES & TECHNOLOGIES LTD. - A MANUFACTURING
COMPANY submitted by me to Banarsidas Chandiwala Institute of Professional Studies,
Dwarka is a bonafide work undertaken during the period from 12th June,2017 to 31st July,2017
by me and has not been submitted to any other University or Institution for the award of any
degree diploma / certificate or published any time before.

(Signature of the Student) Date: / / 2017

Name: VIKRANT DANI
Enroll. No.: 04650501715

BONAFIDE CERTIFICATE

This is to certify that as per best of my belief the project entitled “A FINANCIAL
STATEMENT ANALYSIS FOR RCI INDUSTRIES & TECHNOLOGIES LTD. - A
MANUFACTURING COMPANY ” is the bonafide research work carried out by VIKRANT
DANI student of BBA, BCIPS, Dwarka , New Delhi during June-July 2017, in partial fulfillment
of the requirements for the Summer Training Project of the Degree of Bachelor of Business
Administration.
He has worked under my guidance.

--------------------
Name: Mr. Jayant Sanyal
Project Guide (Internal)
Date:

Counter signed by

-------------
Name: Dr. Davindar Sharma
Director /HOD
Date:

ACKNOWLEDGEMENT

An undertaking of work life, this is never an outcome of a single person; rather it bears the
imprints of a number of people who directly or indirectly helped me in completing the present
study. I would be failing in my duties if I don‘t say a word of thanks to all those who made my
training period educative and pleasurable one.

I am thankful to RCI Industries & Technologies Ltd. for giving me an opportunity to do

summer training in the company. I have gained enriching experiences, learned a lot and become
more matured as an individual. I am deeply indebted to my project guide Ms. Pooja Chaudhary
(General Manager-Sales), for giving me his valuable time, advice, guidance, encouragement and
help during the course of my project.

My heart full thanks to the whole staff of RCI Industries & Technologies Ltd. who gave me
continuous support in every possible manner to gain practical knowledge in Industry.

Finally, I would like to thank all lecturers, friends and my family for the kind of support and to
all who directly or indirectly helped me in preparing this project report.

VIKRANT DANI

Enroll.No.:04650501715

 TABLE OF CONTENTS

Chapter no. Title Page no.

Chapter 1 Executive Summary 7

Chapter 2 Plan of Research 9

2.1 Introduction 10

2.2 Scope of Study 12

2.3 Objectives of the Study 13

2.4 Need and importance of study 13

2.5 Literature Review 14

Chapter 3 Company Profile 16

3.1 About Company 17

3.2 SWOT Analysis of RCI 23

Chapter 4 Research Methodology 24

3.2 Source of Data 25

3.3 Methodology 25

Chapter 5 Data Analysis 26

Chapter 6 Findings 45

Chapter 7 Recommendations/Suggestions 47

Chapter 8 Conclusion 49

Chapter 9 Bibliography 51

EXECUTIVE SUMMARY

 This project is specially designed to understand the subject matter of Financial Statement Analysis
through various ratios in the company. This project gives us information and report about company’s
Financial Position. Throughout the project the focus has been on presenting information and comments
in easy and intelligible manner.
The purpose of the training was to have practical experience of working in an organization and to have
exposure to the various management practices in the field of Finance. This training has also given me
an on the job experience of Financial Management. In the analysis, financial ratios were used to gain a
critical review of the specific areas of assessment of the company’s performance. The ratios were able
to provide a clear view of the overall performance of the company.

Analysis and interpretation of financial statements is an important tool in assessing company’s

performance. It reveals the strengths and weaknesses of a firm. It helps the clients to decide in which
firm the risk is less or in which one they should invest so that maximum benefit can be earned. It is
known that investing in any company involves a lot of risk. So before putting up money in any
company one must have thorough knowledge about its past records and performances. Based on the
data available the trend of the company can be predicted in near future.

This project of financial analysis & interpretation in the production concern is not merely a work of the
project but a brief knowledge and experience of that how to analyze the financial performance of the
firm. The study undertaken has brought in to the light of the following conclusions. According to this
project I came to know that from the analysis of financial statements it is clear that RCI INDUSTRIES
& TECHNOLOGIES LTD. have been incurring profit during the period of study. So the firm should
focus on getting of more profits in the coming years by taking care internal as well as external
factors. And with regard to resources, the firm is take utilization of the assets properly. And also the
firm has a maintained low inventory.

This project mainly focuses on the basics of different types of financial statements. Balance
Sheet and Profit & Loss statements of have been studied. From ratio analysis of Balance Sheet
and P & L Statement of RCI INDUSTRIES & TECHNOLOGIES LTD. of 2015-17 it was
concluded that liquidity position of the company is good. Current ratio, net profit margin,
operating profit margin, Return on assets , Return on working capital were found to be
unacceptable. The ratios that are found to be desirable are Inventory Turnover Ratio , Working
Capital Turnover Ratio , Return On Investment Ratio and Debt – Equity Ratio .

 II

PLAN OF RESEARCH

 2.1 INTRODUCTION

Analysis means establishing a meaningful relationship between various items of the two
financial statements with each other in such a way that a conclusion is being drawn. By financial
statements by means of two statements

Ø Profit and loss account or Income Statement

Ø Balance Sheet or Position Statement

These are prepared at the end of a given period of time. They are the indicators of
profitability and financial soundness of the business concern. The term financial analysis is also
known as analysis and interpretation of financial statements. It refers to the establishing
meaningful relationship between various items of the two financial statements i.e. Income
statement and Position statement. It determines financial strength and weakness of the firm.
Analysis of financial statements is an attempt to assess the efficiency and performance of an
enterprise. Thus, the analysis and interpretation of financial statements is very essential to
measure the efficiency, profitability , financial soundness and future prospects of the business
units. Financial analysis serves the following purposes.

Measuring the Profitability

The main objective of a business is to earn a satisfactory return on the funds

invested in it. Financial analysis helps in ascertaining whether adequate profits are being earned
on the capital invested in the business or not. It also helps in knowing the capacity to pay the
interest.

 Indicating the trend of achievements

Financial statements of the previous years can be compared and the trend regarding
various expenses, purchases, sales, gross profits and net profit etc can be ascertained. Value of
assets and liabilities can be compared and the future prospects of the business can be envisaged.

Assessing the growth potential of the business

The trend and other analysis of the business provides information indicating the
growth potential of the business.

Comparative position in relation to other firms

The purpose of financial statements analysis is to help the management to make a

comparative study of the profitability of various firms, engaged in similar businesses. Such
comparison also helps the management to study the position of their firm in respect of sales
expenses, profitability and utilising capital, etc.

Assess overall financial strength

The purpose of financial analysis is to assess the financial strength of the

business. Analysis also helps in taking decisions, whether funds required for the purchase of the
new machines and equipments are provided from internal sources of the business or not if yes,
how much? And also to assess how much funds have been received from external sources.

10

 2.2 Scope of study

The scope and period of the study is being restricted to the following.

1. The scope is limited to the operations of the RCI Industries & Technologies Ltd.

2. The information is obtained from the primary and secondary data was limited to the RCI
Industries & Technologies Ltd. .

3. The profit and loss, the balance sheet was on the last three years.

11

 2.3 OBJECTIVES OF THE STUDY

Ø To calculate the important financial ratio of the organization as a part of the ratio analysis
thereby to understand the changes the needs and trends in the firm’s financial position.
Ø To assess the performance of RCI INDUSTRIES & TECHNOLOGIES LTD. On the basis of
earnings and also to evaluate the solvency position of the company.
Ø To identify the financial strengths and weaknesses of the organization.
• To know about Liquidity Position
• To Know about Long- Term Solvency
• To Know about Operating Efficiency
• To know about Over-All Profitability
• To Know About Inter- firm Comparison

2.4 Need and importance of study

Financial performance of an enterprise will affect other types of performance and also the
productivity of finances is good, the productivity of men and material would be good.
Moreover the study of non-economic and qualitative performance, which studies the non -
economic factors like customer satisfaction, citizen satisfaction etc.

12

 2.5 LITERATURE REVIEW

1. Doron Nissim & Stephen H Penman (1999) :

In his Research article on financial performance he has pointed that this paper outlines a financial
statement analysis for use in equity valuation. Standard profitability analysis is incorporated, and
extended, and is complemented with an analysis of growth. The perspective is one of forecasting
payoffs to equities. So financial statement analysis is presented first as a matter of preform analysis
of the future, with forecasted ratios viewed as building blocks of forecasts of payoffs .

2. Kennedy and Muller (1999):

In his research article on financial performance he has pointed that the analysis and
inferences/interpretation of financial statement are an attempt to determine the significance and
meaning of financial statement data so that the forecast can be made of the prospects for future
earnings, ability to pay interest and Debt maturates (both current and long term) and profitability and
sound dividend policy.

3. Elizabeth Duncan and Elliott (2004) :

In his research article on financial performance he has pointed that he had stated that the paper in the
title of efficiency, customer service and financial performance among australian financial institutions
showed that all financial performance measures as interest margin, return on assets, and capital
adequacy are positively correlated with customer service quality scores.

4. Jonas Elmerraji (2005):

In his research article financial performance he has pointed that he tries to say that ratio can be an
invaluable tool for making an investment decision. Even so many new investors would rather leave
their decisions to fate them try to deal with the intimidation of financial ratios. the truth is that ratios
aren't intimidating, even if you don't have a degree in business or finance. Using Ratios to make
informed decisions about an investment makes a lot of sense, once you know how to use them.

5. John J.Wild, K.R.Subramanyam & Robert F.Halsey (2006) :

In his research article on financial performance he has pointed that he have said that the financial
Statement analysis is the application of analytical tools and techniques to general-purpose financial
statements and related data to derive estimates and inferences useful in business Analysis. Financial
statement analysis reduces reliance on hunches, guesses, and intuition for Business decisions. It
decreases the uncertainty of business analysis.

13

 6. I.M.Pandey (2007) :
In his research article on financial performance he has pointed that the financial statements contain
information about the financial consequences and sources and uses of financial resources, one should
be able to say whether the financial condition of a firm is good or bad; whether it is improving or
deteriorating. One can relate the financial variables given in financial statements in a meaningful way
which will suggest the actions which one may have to initiate to improve the firm’s financial condition
.

7. Susan Ward (2008):

In his research article on financial performance he has pointed that emphasis that financial analysis
using ratios between key values help Investors cope with the massive amount of numbers in company
financial statements. For Example, they can compute the percentage of net profit a company is
generating on the funds it has deployed. All other things remaining the same, a company that earns a
higher percentage of Profit compared to other companies is a better investment option.

8. Rachchh Minaxi A (2011):

In his research article on financial performance he has pointed & suggested that the financial statement
analysis involves analyzing the financial statements to extract information that can facilitate decision
making. It is the process of evaluating the relationship between component parts of the financial
statements to obtain a better understanding of an entity’s position and performance.

9. Priyaaks (Mar 2012): in his research article on financial performance he has pointed that Financial
statement analysis is the process of examining relationships among financial statement elements and
making comparisons with relevant information. It is a tool in decision-making processes related to
stocks, bonds, and other financial instruments.

From the above literature review, it is evident that, the financial performance depicts the efficiency of
organization. Along with that financial statements are very useful for decision making in the company
by Board of Directors and management. It also helps to know the prosperity of the company with the
profitability.

14

 III

COMPANY PROFILE

15

 3.1 COMPANY'S HISTORY

Incorporated in the year, 1992, RCI Industries & Technologies Limited is listed with BSE Ltd.
Further, we established our name in Indian Handicrafts specially made by Copper & Brass
metals. Since inception, our Company under the guidance of experienced promoters has
responded to changing economic conditions.

We are one of the leading companies engaged in the sphere of offering and exporting Copper
items such as Copper Wires which include Annealed Copper Wire, Bunched Copper Wires ropes
and copper ingots which are used in different electrical and industrial applications. With
experience of more than 25 years in the sphere of trading and exporting Copper Wires, we
understand current market trends and demand that has enabled us to cater various industries such
as manufacturing units, industries, automobile & engineering industry. Dedicated employees
forming the part of our Company, we have grown from strength to strength under the dynamic
leadership of our promoters and directors. The combined experience has propelled our Company
to source and cater to the specific needs of various customers.

Our Company is progressing rapidly and gaining trust of customers under the guidance of our
mentor & Managing Director, 'Mr. Rajeev Gupta'. His business skills, market knowledge,
extensive experience of metal trading & leadership enabled us to gain a successful position in the
market.

16

 PRODUCTS OF RCI

RCI manufactures a wide range of products which are as follows :-

1. Brass

2. Copper

3. Stainless Steel

4. Indian Handicraft

BRASS

We are pleased to inform you that we manufacturer close tolerance Copper and Brass Strips,
Coil/Foils 63/37, 65/35, 70/30 Alloy. The above alloys can be supplied in 4 to 366 mm width in
Soft, Half Hard, Full Hard and Spring Hard. Our Strips are precision rolled on imported
Sendzimir Mill to a close tolerance. We offer a Gauge tolerance of ±0.01 mm for thick material
(0.30 – 0.60) ±0.005 mm for thin strips (less than 0.30 mm). Our Strips are especially suited
manufacture of small precision components requiring bending, drawing and punching
operations. Using RCI quality Brass Strip, Coil/Foils is economical in terms of material saving,
fewer rejections as well as longer life of dies and punches all due to a very precise gauge
control.

Applications: Used in Automobiles Radiators, Bulb and Lamp Caps, Imitation Jewelry, Eyelets,
Thimbles, Clocks, Pens and Various sheet metal pressed components.

Ordering: Please mention the Alloy Grade, Temper, Thickness, Width & Quantity in your
enquiries.

17

 18

 COPPER
Electrolytic-Tough-Pitch (ETP)
is the most common copper. It is universal for electrical applications. ETP has a minimum
conductivity rating of 100% IACS and is required to be 99.9% pure. It has 0.02% to 0.04%
oxygen content (typical).
Typical Uses
Electrical engineering
Busbars, Conductors
Coaxial Cables
Transistor Components

Deoxidized High Phosphorus (DHP)

is commercially pure copper, which has been deoxidized with phosphorus, leaving relatively
high residual phosphorus content. Copper alloy 122 is not susceptible to hydrogen
embrittlement, but has relatively low electrical conductivity due to the amount of phosphorous
content.
Typical Uses
Roofing
Gaskets
Auto radiators

19

 STEEL

Stainless Steel: We are pleased to inform you that we manufacturer close tolerance Stainless
Steel Strips and Foils of 316, 304, 301 and 202 Grade. The above alloys can be supplied in 3 to
375 mm width in Soft, Half Hard, Full Hard and Spring Hard tempers.
Our Strips are precision rolled on imported Sendzimir Mill to a close tolerance. We offer a
Gauge tolerance of ±0.02 mm for thick material (0.30 – 0.60) and ±0.01 mm for thin strips (less
than 0.30 mm).
Our Strips are especially suited manufacture of small precision components requiring bending,
drawing and punching operations.
Using RCI quality Stainless Steel Strips is economical in terms of material saving, fewer
rejections as well as longer life of dies and punches all due to a very precise gauge
control.

Applications: Used in electrical, Computer, Watch, thermostat, Fountain Pen Nibs, Chemical
Industry, Battery Cell Contacts Flexible hoses etc.

Ordering: Please mention the Alloy Grade, Temper, Thickness, Width & Quantity in your
enquiries.

20

 PROCESS FLOW CHART

21

 3.4 SWOT ANALYSIS OF RCI

The strength, weakness, opportunities and threats which are being experienced by RCI as a
growing concern have been summarized up in the following lines.

Ø STRENGTH’S

1. Vast pool of trained man power.

2. Good working atmosphere.

3. Product manufactured of international quality .

4. Low labour cost and low manufacturing cost.

Ø WEAKNESS

1. Excess man power

2. Slippage in delivery commitments

3. System implementation adequate

4. Inadequate compensation package to employees.

Ø OPPORTUNITIES

1. Liberalization has opened up the market

2. Dominant player in domestic market.

Ø THREATS

1. Liberalization–entry of MNC’S or private sector-more competition.

2. MNC’S taking away good employees with attractive packages.

3. Government taxation policy-against manufacturing sector.

22

 IV

RESEARCH METHODOLOGY

23

 4.1 SOURCE OF DATA

The data is collected from the following sources.

Ø Three year annual report of RCI Industries & Technologies Ltd. from 2014-2017 .

Ø Interaction with the related finance department.

4.2 METHODOLOGY

The study carried with the cooperation of the management who permitted to carry on
the study and provided the requisite data collected from the following sources.

Ø Primary data

Ø Secondary data

PRIMARY DATA

The information collected directly without any reference is primary data. In the study it is
mainly through conversation with concerned officers or staff members either individually or
collectively. The data includes:

1. Individual observation and inferences.

2. From the people who are directly involved with the transaction of the firm.

SECONDARY DATA

Study has been taken from secondary sources i.e. published annual reports of the
company editing, classifying and tabulation of the financial data. For this purpose performance
data of RCI Industries & Technologies Ltd. for the last 3 years has been used.

24

DATA COLLECTION
AND
DATA ANALYSIS

25

 26

 27

 28

 29

 30

 31

 32

 5.1 Ratio analysis for 2015

Analysis of Financial Ratios for 2015

Sl. RATIOS PARTICULARS VALUE REMARKS

No.
1. Current Assets =
Working Capital = 2625795998 715585308 Liquidity position
is good.
Current assets-Current Current Liabilities =
liabilities 1910210690

2. Current Assets =
Current Ratio = 2625795998 1.38:1 It is not good

Current Assets Current Liabilities =

Current Liabilities 1910210690

3. liquid Assets =
Acid test or Quick ratio = 2017097997
1.06:1 It is good.
Liquid Assets Current Liabilities =
1910210690
Liquid Liabilities

4. Long term debt

Debt-Equity Ratio = =316756333

2.42:1 It is safe
Long term debt Capital A/C =

Capital A/C+ Net Profit 108994150

Net Profit= 21858930

Return On Investment Ratio Net Profit =

21858930 It is not
5. 16.71%
= Net Profit*100 satisfactory
Capital a/c+ Net Profit Capital A/C
=130853080

33

 6. Gross Profit=

Gross Profit Ratio = 4937980431

58.64% It is satisfactory
Gross Profit * 100 Sales=

Sales 8420604476

7. Net Profit
It is not
Net Profit Ratio = = 21858930
0.26% satisfactory
Net Profit * 100 Sales=
Sales
8420604476

8. Net Income

Return on Assets Ratio = 21858930

0.31% It is not good
Net Income*100 Fix. Assets=

Fix. Assets + Net Working 26183359

Capital
Net Working Capital=
7155855308

9. Return on working capital = Net profit = 21858930

0.30% It is not good
Net Profit ∗ 100 Net Working capital=
Working Capital
7155855308

10. Cost of Goods Sold Ratio = Cost of goods sold=

41.36% It is satisfactory
3482624045
Cost of Goods Sold*100
Sales Sales=

8420604476

11. Fixed Assets turnover = Sales a/c =

8420604476 321.6:1 It is good
Sales a/c
Fixed Assets
Fixed Assets =26183359

34

 12. Sales =
It is satisfactory
Working Capital Turnover= 8420604476 1.18:1

Sales a/c Working Capital =

working Capital 7155855308

13. Sales =
It is not good
Inventory Turnover= 8420604476 99.2:1

Sales a/c Closing Stock =

Closing stock 84868980

• Liquid Assets = Total Current Assets – Inventory – Prepaid Exp.

= 2625795998 - 608698001

= 2017097997

• Liquid Liabilities = Current Liabilities – Bank Overdraft

= 1910210690

• Long Term Debt = Secured Loans + Other Long Term liabilities

= 316756333

35

 5.2 Ratio analysis for 2016

Analysis of Financial Ratios for 2016

Sl. RATIOS PARTICULARS VALUE REMARKS

No.
1. Current Assets =
Working Capital = 2874031167 840701527 Liquidity position
is good.
Current assets-Current liabilities Current Liabilities =
2033329640

2. Current Assets =
Current Ratio = 2874031167 1.41:1 It is not good

Current Assets Current Liabilities =

2033329640
Current Liabilities
3. liquid Assets =
Acid test or Quick ratio = 2105548845 1.03:1 It is good.

Liquid Assets Current Liabilities =

2033329640
Liquid Liabilities
4. Long term debt

Debt-Equity Ratio = = 300000000

2.08:1 It is good
Long term debt Capital A/C =
108994150
Capital A/C+ Net Profit
Net Profit = 34679913

5. Net Profit =
Return On Investment Ratio 34679913 It is not
24.14%
Capital A/C = satisfactory
= Net Profit*100 108994150
Capital a/c+ Net Profit

36

 6. Gross Profit Ratio = Gross Profit =
49.22% It is satisfactory
Gross Profit * 100 5650392108

Sales Sales = 11478991527

7. Net Profit =
34679913 0.30% It is not satisfactory
Net Profit Ratio =
Sales =
Net Profit * 100
Sales 11478991527

8. Net Income =

Return on Assets Ratio = 34679913

4.05% It is not good
Net Income*100 Fix. Assets =

Fix. Assets + Net Working 42504587

Capital
Net Working Capital=
813701527

9. Return on working capital =

Net profit = 34679913 4.26% It is not good
Net Profit ∗ 100
Working Capital Net Working capital=

813701527

10. Cost of Goods Sold Ratio = Cost of goods sold=

50.78% It is not satisfactory
5828599419
Cost of Goods Sold*100
Sales Sales=

11478991527

11. Fixed Assets turnover = Sales a/c =

11478991527 270.06:1 It is good
Sales a/c
Fixed Assets=
Fixed Assets
42504587

37

 12. Sales =
It is good
Working Capital Turnover= 11478991527 14.11:1

Sales a/c Working Capital =

working Capital 813701527

13. Sales =
It is good
Inventory Turnover= 11478991527 34.59:1

Sales a/c Closing Stock =

Closing stock 331870797

• Liquid Assets = Total Current Assets – Inventory – Prepaid Exp.

= 2847031167 - 741482322

= 2105548845

• Liquid Liabilities = Current Liabilities – Bank Overdraft

= 2033329640

• Long Term Debt = Secured Loans + Other Long Term liabilities

= 300000000

38

 5.3 Ratio analysis for 2017

Analysis of Financial Ratios for 2017

Sl. RATIOS PARTICULARS VALUE REMARKS

No.
1. Current Assets = 889161681 Liquidity position
Working Capital = 3467609711 is good.

Current assets-Current liabilities Current Liabilities =

2578448030

2. Current Ratio = Current Assets =

3467609711 1.34:1 It is not good
Current Assets
Current Liabilities =
Current Liabilities
2578448030

3. liquid Assets =
Acid test or Quick ratio = 2747383652 1.06:1 It is good.

Liquid Assets Current Liabilities =

2578448030
Liquid Liabilities
4. Long term debt

Debt-Equity Ratio = = 300000000

1.46:1 It is safe
Long term debt Capital A/C =
134364150
Capital A/C+ Net Profit
Net Profit = 70716775

5. Return On Investment Ratio Net Profit =

70716775 It is satisfactory
52.63%
= Net Profit*100 Capital A/C =
Capital a/c+ Net Profit 134364150

6. Gross Profit Ratio = Gross Profit =

6110664690 44.15% It is good
Gross Profit * 100
Sales = 13839977093
Sales

39

 7. Net Profit =
70716775 0.51% It is not satisfactory
Net Profit Ratio =
Sales =
Net Profit * 100
Sales 13839977093

8. Net Income =

Return on Assets Ratio = 70716775

6.43% It is not good
Net Income*100 Fix. Assets =

Fix. Assets + Net Working 209780294

Capital
Net Working Capital=
889161681

9.
Return on working capital = Net profit = 70716775 7.95% It is not good

Net Profit ∗ 100 Net Working capital=

Working Capital
889161681

10. Cost of Goods Sold Ratio = Cost of goods sold =

55.84% It is not
7729312403
Cost of Goods Sold*100 satisfactory
Sales Sales =

13839977093

11. Fixed Assets turnover = Sales a/c =

13839977093 65.97:1 It is not
Sales a/c
Fixed Assets= satisfactory
Fixed Assets
209780294

40

 12. Sales =
It is safe
Working Capital Turnover= 13839977093 15.56:1

Sales a/c Working Capital =

working Capital 889161681

13. Sales =
It is good
Inventory Turnover= 13839977093 49.47:1

Sales a/c Closing Stock =

Closing stock 279749226

• Liquid Assets = Total Current Assets – Inventory – Prepaid Exp.

= 3467609711 - 720226059

= 2747383652

• Liquid Liabilities = Current Liabilities – Bank Overdraft

= 2578448030

• Long Term Debt = Secured Loans + Other Long Term liabilities

= 300000000

41

 5.4 Variation of Financial Ratios

Sl. RATIOS 2015 2016 2017

No.

1. Current Ratio 1.38:1 1.41:1 1.34:1

2. Acid test or Quick ratio 1.06:1 1.03:1 1.06:1

3. Debt-Equity Ratio 2.42:1 2.08:1 1.46:1

4. Return On Investment Ratio 16.71% 24.14% 52.63%

5. Gross Profit Ratio 58.64% 49.22% 44.15%

6. Net Profit Ratio 0.26% 0.30% 0.51%

7. Return on Assets Ratio 0.31% 4.05% 6.43%

8. Return on working capital 0.30% 4.26% 7.95%

9. Cost of Goods Sold Ratio 41.36% 50.78% 55.84%

10. Fixed Assets turnover 321.6:1 270.06:1 65.97:1

42

11. Working Capital turnover 1.18:1 14.11:1 15.56:1

12. Inventory Turnover 99.2:1 34.59:1 49.47:1

43

 VI

FINDINGS

44

 FINDINGS

This report work has identified how companies use financial statement analysis and interpretation in
making effective management decisions. Overall organizational profitability and achievement of
organizational objectives were discussed. Again the difference between the returns of a financial
statement analysis and interpretation based on management decisions were also discussed.

• Gross profits are decreased during the period of 2015-17, which indicates that firm’s
inefficient management in manufacturing and trading operations.
• Liquidity ratio of the firm is better liquidity position in over the three years. It shows that the
firm had sufficient liquid assets.
• Cost of goods sold ratio of the company has increased during the period .
• Working Capital Turnover Ratio has increased during the period.
• Net profit has increased by 0.25%.
• Return on Investment has increased by 35.92%.
• Gross Profit has decreased by 14.49%.

45

 VII

RECOMMENDATIONS
/ SUGGESTIONS

46

 Recommendations / Suggestions

This project of financial analysis & interpretation in the production concern is not merely a work of
the project but a brief knowledge and experience of that how to analyze the financial performance of
the firm. The study undertaken has brought in to the light of the following conclusions. According to
this project I came to know that from the analysis of financial statements it is clear that RCI
INDUSTRIES & TECHNOLOGIES LTD. have been incurring profit during the period of study. So
the firm should focus on getting of more profits in the coming years by taking care internal as well as
external factors. And with regard to resources, the firm is utilizing all its assets properly. And also the
firm has a maintained low inventory.

Limitations of study

1. The study is confined to a period of last 3 years.

2. As most of the data is from the secondary sources, hence the accuracy is limited.

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 XI

CONCLUSION

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 Analysis and interpretation of financial statements is an important tool in assessing company’s
performance. It reveals the strengths and weaknesses of a firm. It helps the clients to decide in which
firm the risk is less or in which one they should invest so that maximum benefit can be earned. It is
known that investing in any company involves a lot of risk. So before putting up money in any
company one must have thorough knowledge about its past records and performances. Based on the
data available the trend of the company can be predicted in near future.

This project mainly focuses on the basics of different types of financial statements. Balance Sheet and
Profit & Loss statements of have been studied.

From ratio analysis of Balance Sheet and P & L Statement of RCI INDUSTRIES &
TECHNOLOGIES LTD. of 2015-17 it was concluded that liquidity position of the company is good.
Current ratio, net profit margin, operating profit margin, Return on assets , Return on working capital
were found to be unacceptable. The ratios that are found to be desirable are Inventory Turnover Ratio ,
Working Capital Turnover Ratio , Return On Investment Ratio and Debt – Equity Ratio .

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 XI

BIBLIOGRAPHY

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 BIBLIOGRAPHY

• Standard Operating Procedure of the company

• Annual Reports
• http://www.rciind.com/index.html
• http://www.rciind.com/about-us.html
• Literature review collected from - www.ijemr.net

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