INTRODUCTION

Garden Vareli group of company is one of the leading industry groups in India. Plays of fashion fabrics; with annual sales exceed over $90 million. We sell our products under a single banner of quality garden. Since our inception we have been delivering excellent financial result year after year. This statement year the financial statement was placed before the board of directors and taken on record at their meeting. The company has three production plans: one at village vareli; near kadodara junction, N/H no.8. The second at village jolva, near bardoli, and another at garden at garden moll complex Sahara gate Surat. Today the company has total 293 its own retail & authorized outlets all over India. The company has achieved a very good brand name in India & international Market of saree & dress material.

COMPANY

HISTORY OF THE

The company belongs to Garden vareli groups, which is one of the preceding manufacturers of synthetic textiles in the country. This Textiles House originated before 75 years. To the early beginning of the Art Silk Industry in Surat. Garden Silk Weaving Factory, as it was then named, manufactured viscose become leader in jacquard fabric for years to come. The present Chairman Managing Directors of garden Silk Mills Ltd. Mr.Praful Shah taken qualification in USA in 1965 after which he join the company up to that date Garden Silk Mills Ltd. had concentrated on weaving quality fabrics .Mr.Praful Shah extended the activities of the company to include processing cloth by introduction dying, printing and finishing processes. As a result of this, the company was able to supply finished textiles for the first time. This move in the early 1970s coincided with the opening of the first retail shop in Surat. The extension of the policy of vertical integration into the retailing sector had advantages of uniform pricing close market monitoring improving communication between manufacturer and consumer , all exerting downward pressure on the final selling price, The dedicated retail network now extend to some 293 authorized outlets.

In the late 1970s, the company started exporting its products to European Market, Given the size of the domestics market, the proportion of the product that are exported remain low at approximately two percent. The Company is in the process of further developing market in Africa, Central and Eastern Asia. Today, the company is one of the largest manufacturers in India of high fashioned, premium quality, dyed and printed textiles fabrics, both polyester and viscose comprising a range of chiffon and georgettes,chupbrag and crepes and faithful ladies, fashion as well as Indian sarees, The company also manufacturers an exclusive range of pure silk and cotton fabrics. The fabrics are marketed under the famous names Garden and Vareli.

ACHIVEMENTS
The company is the first to set up a polyester filament yarn project in south Gujarat. The project is capable of producing multifilament and microfilament yarn having capacity of 5000 tons p.a. in collaboration with NOYVALLESIVA AG of Switzerland. Now a days company increase POY Spinning capacity from 7200 metric tones to 32200 metric tones per annum and secondly company increase Draw Extrusion from 13 to 17 i.e. 4 machine are installment, and also increase Draw Warping machine from 7 to 9 machine. The project has a special significance for the company, as polyester filament yarn is the basic raw material for the product for manufacturing man made textile.

ACTIVIES OF THE COMPANY

The company is main produce the synthetic textile, saree and dress material with the help of yarn and certain intermediate products. From the starting and continues the garden silk mill, has been inspiration for the majority of new textile verities woven and proceed in Surat. The company current printed 200 different types of design each month to get a success against the compete the company putting great emphasis on marking different type of and improve fabric construction and that income statement the main key of its success. The company has a small engineering div income statement ion, which assembles limited rang of textile manufacturing machines.

CORPORATE INFORMATION OF COMPANY

Board of Directors:Praful A. Shah Chairman & Managing Director Executive Directors:S. J. Bhesania Shilpa P. Shah Sanjay S. Shah Alok P. Shah Directors:Rajen P. Shah J. P. Shah Yatish Parekh Sunil S. Shah Smita J. Shah Madanlal U. lankapati Y. N. Rammurthy (Nominee of LIC of India) Company Secretary:Kamlesh B. Vyas Auditors:Messrs Natvarlal Vepari & Co. Chartered Accountants, Surat Plants:6

(1) Vareli Complex, Village Vareli Taluka Palsana, Dist. Surat 394 327 Tel: (02622) 271241-47 (2) Village Jolwa, Taluka Palsana, Dist. Surat 394 305 Tel: (02622) 271287-89 Bankers:Bank of Baroda Allahabad Bank State Bank of Saurashtra Bank of India State Bank of Patiala Corporation Bank Union Bank of India Registered Office:Sahara Gate, Surat 395 010. Tel: (0261) 2311197-98, 2311615 Fax: (0261) 2311029/502 Email: sharedepartment@gardenvareli.com Website: www.gardenvareli.com Corporate Office:Manek Mahal, 90, Veer Nariman Road, Chrchgate, Mumbai 400 020 Tel: (022) 2287 3117-19 Fax: (022) 2204 8112 Registrar & Transfer Agent:MCS Limited, Neelam Apartment,

88, Sampatro colony, alkapuri Baroda 390 007

Distribution of shareholding as on 30th june,2008

No.of share No.of % of No.of % of shareholders shareholder shares held shareholding s UPTO 5000 4511472 11.78 81451 98.09 5001-10000 710606 1.86 875 1.05 10001-20000 566275 1.48 372 0.45 20001-30000 261536 0.68 99 0.12 30001-40000 139693 0.36 39 0.05 40001-50000 144622 0.38 31 0.04 50001-100000 538843 1.41 71 0.08 100001 and 31417513 82.05 102 0.12 above TOTAL 38290560 100.00 83040 100.00

Shareholding pattern as on 30th june,2008 :

Sr no. 1 2 3 4 5 Category Promoters Mutual funds & UTI. Banks financial institutions & insurance Companies. FIIs Private bodies corporate. No. of Flowing shareholder strength 21006972 54.86 14050 0.04 1540746 4.02 115066 3961160 0.30 10.35

6 7 8 9

NRIS / OCBS. Indian public GDR Other; Trust Clearing members TOTAL

3400622 7929046 314275 8623 38290560

8.88 20.71 0.82 0.02 100.00

INDUSTRY PROFILE:

World polyester production grew by 11.7% in 2007of which polyester filament yarn grew by 14.1% and polyester staple fiber grew by 8.3%. Raw cotton production on the other hand fell by 2%. PFY continues to only china in cost competitiveness in the entire polyester textile chain up to apparel. Yet in the china up to texturised yarn, the segment in which most of companys sales are generated, India competitiveness vis--vis china, continues improve as the Chinese Yuan continues to appreciate significantly against the Rupee, and the Chinese labor cost have increased much faster than Indian labor costs. Globally, polyester manufacturing base is being sifted to china and India. Indias economic has been growing at around 9% in recent year and even after slowdown it is expected to grow by 7%which is a healthy growth. Polyester is only fiber which

can substitute cotton to some extent and, give its growth potential, can satisfy the demand of the burgeoning middle class of India. Import duty of PTA and MEG is now 5%, making PFY attractively priced in the domestic market. Indias economic slowdown is expected to decelerate corporate investment owing to the high cost and reduced availability of credit as well as poorer returns

expectations. Export, too, are likely to be badly affected owing to the global downturn. India is expected to rely primarily on domestic consumer demand to fuel its

GDP growth. Among manufacturer product, we expect demand for consumer non- durables- like polyester apparel to be relative stronger than durables as has already been witnessed lately. According to center for monitoring Indian economic, PFY production in India increased by 11.6%in 2007-2008, much faster than GDP. This year, we expected lower growth owing to the sudden decline in raw material costs that have put a brake on demand by weavers, waiting for prices to drop further. In the medium term, waiting for prices to drop further. In the medium term, however, we are hopeful that lower prices, once stabilized, will stimulate demand.

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REASEARCH METHODOLOGY

Research is an organized inquiry designed and carried out to provide information for solving problems. Research is careful inquiry or examination to discover new information or relationships and to existing knowledge.

RESEARCH COMPONENTS:4.1 Research design:Research design is the plan for collecting the information related to the study. Research design explains the methods that are used for collecting the information. The research design will focus attention on the different methods that are used for collection of

11

the data. Also it will help to solve the problem. Different forms of collecting the data will be tasted in the research design. In this case, survey method is used to collect the necessary data in the survey method, the personal interview is used to collect the information from the respondents, and questionnaires are used. The respondents are visited personally, and the detail information is collected related to the study. The question mainly focuses attention on the consumer behavior to fulfill the objective of the study. Choice of the research design:A research design specifies the methods and procedure for conducting a particular study. Broadly the research can be grouped in to three categories. Exploratory research Descriptive research Casual research In my study, I have used descriptive research method to collect necessary information related to the study. 4.2 DATA COLLECTION METHODS:There are two types of methods used data collection i.e secondary data & primary data. (1) Primary Data:-

12

Primary data are those, which are collected for the first time and they are original in character. The researcher he to study a particular problem collects there. Questionnaire carrying various questions regarding research method. Researchers personally visited to the consumer and ask the questions and sub questions to him and recorded the answer in the questionnaire. During the visit to consumer the researcher observe that the consumers are frightened to disclose of information due to the income tax and sales tax authority. For this study the researcher did not simply relied on the questionnaire but also adopted the observation method for collecting real facts. (2) Secondary Data:The secondary data are those, which are already collected by someone for some purpose and are available for the present study. Without referring various books, magazines, news paper, hand books, bulletins, the real facts and information cannot be collected. The books like modern marketing management, international marketing & also from important marketing websites. The data regarded to the subject is gain from:WWW.GARDENVARELI.com

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4.3 SAMPLING PLAN:Sampling plan includes. (A) Sampling unit (B) Sample size (C) Sampling method (A) Sampling Unit:In my study the market survey was conducted in surat city. Conducted I have covered different areas under my study. Different areas like kamrej, amroli, varachha & other areas of the city are covered by me during the study. (B) Sample Size:One of the most important part for the research is to decide sample size. The sample size explains how many consumers are covered in the study? (C) Sampling Method:Sampling methods are also one of the important parts of the research for my topic i.e the consumer buying behavior towards hero Honda CD deluxe I have used simple random sampling.

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INTRODUCTION OF FINANCE:
Finance is that administrative area or set of administrative function in an organization which relates the arrangement of cash and credit so that organization may have the means to carry out its objects as satisfactory as possible. Howard and Upton Business finance income statement that business activity to the acquisition and conversion of capital funds in meeting the financial needs of overall object of enterprise. The above definition reveals that finance income statement that life hold of business organization finance income statement the key to all activities in business. The role of money has hardly altered a firm success or failure income statement depend upon how efficiency it income statement able to generate funds. It would not proper pass the entire credit to the business enterprise. It depends upon production money is the organization. Finance defined as issuance of, distribution of and purchase of liability, and equity claim issued for the purpose of generating revenue for producing assets. Finance is the management affaire of the company.
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INTRODUCTION OF FINANCICAL STATEMENT

The financial statements are the end product of the financial accounting process. The financial statement information presented in concise and capsule form and the financial information relating to the financial position of the firm. Therefore, the financial statements are the depiction of the financial position of a firm. The financial statements are prepared by the firm. 1. To communication with different parties about the Financial position of the firm (These other parties who Are the user of financial information include the Shareholder, creditors, bank financial institutions, Financial analysts, investors, etc.), and 2. To analyze the operation and performance of the firm for Further planning. The basic source which provides the financial Information is the annual report of the company which is presented by the company to its the shareholder at the annual general

16

meeting. This annual report contains the balance sheet, report, the income statement, the auditors report together with number of schedules, annexure, key operation statistics for last few years etc. Though the presentation of annual report is a statutory requirement under the companies act 1956, However, it is also medium of communication with the present as well as prospective investors and creditors of the company besides the annual report Quarterly or half yearly unaudited results may also be announced by the company clause 43-A of the listing agreement(with the stock exchange) requires every listed company public unaudited quarterly result but it does mean that the non corporate firms do not prepare the financial statement. Every firm big or small prepares the following financial statement.

1. BALANCE SHEET 2. THE INCOME STATEMENT Two other key financial statements which are usually prepared by corporate firm are. a. Statement of appropriate of profit b. Statement of change in financial position

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1. BALANCE SHEET:The balance sheet is regarded as the most significance and basic financial statement of a firm. The balance sheet is prepared by a firm to present a summary of financial position at a given point of time, usually at the end of a financial year. It shows the state of affairs of the firm a point of time. It presents the assets of the firm (i.e. the resources of the firm), the liabilities of the firm (i.e. obligations) and the contribution of the owners of the firm. The Balance sheet in fact balance the assets of the firm against its financing (which can be debt and owners funds) i.e. the total value of the assets must be equal to total claim against the firm and the income statement can be stated as TOTAL ASSETS = TOTAL CLAIMS (DEBTS + SHAREHOLDER) = LIABILITIES + SHAREHOLDER EQUITY. It may be noted that the balance sheet relevant at a particular point of time. It is like a financial snapshot at a point of time. Before and after which the position may be different. So, the balance sheet is a status report.

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2. INCOME STATEMENT
The INCOME STATEMENT is, also known as the profit and loss account or the statement of earning summarizes the revenue, and expenses of the firm for an accounting period. It gives details of sources of income and expenses and thus it provides the summery of the operating result of the firm for a specific period. It match the revenue with the costs that are incurred in generating the revenue and shows the different between the two as the net profit made net loss incurred during the period. The INCOME STATEMENT shows the results of the operation of the firm doing a period. The INCOME STATEMENT therefore it a show report or a status report. The INCOME STATEMENT depicts the earning capacity of firm in terms of the net profit it helps understanding the performance of the firm during the period under considerations. The companies act 1956 does not provide any Performa for the INCOME STATEMENT. However, 211 of the companies act, 1956 provides that the INCOME STSTEMENT of a company shall gives true and fair view of the profit or loss of company during a financial year. The part 2 of the 6 to the

19

companies act 1956, provide some requirements as to the INCOME STATEMENT of the company.

3. STATEMENT OF THE APPROPRIATION OF PROFIT

It is also called the profit & loss appropriation though it is not necessary as per the provision of the companies act, 1956 to prepare the statement, still most of the companies sprit the INCOME STATEMENT into two parts i.e. the INCOME STATMENT and P & L appropriate account where in it income statement bifurcated in to two main parts i.e. the dividend to the share holders and the profits retained in the firm. If there income statement a prior period item e.g. excess provision of income tax or providing statement ion for tax for a previous year than it is also known in the P & L appropriation account. It may be observed that the purpose of preparing account is to show separately the preposition of profit.

4.

STATEMENT

OF

CHANGE

IN

FINANCE POSITION (SCFP)

The BALANCE SHEET and the INCOME STATEMENT are two common financial statements and are also known as traditional
20

financial statement. The BALANCE SHEET depicts the financial position at a point of time and the INCOME STATEMENT shows the net results of operations of the firm during a particular period but both the information regarded the change in financial position ever the period for a meter understanding of the financial position, it income statement essential to know the movement of the funds/cash during the period for the income statement purpose, another financial statement may be prepare and it income statement known as the SECP, the SCFP shows how the firm generated the funds during the period. It is historical record of where the funds came from and how they were used there can be different sources of funds from where the firm might have procured the funds and these can be different out lets use where the funds might have been used a comparative review of these sources and uses of funds is known as the SCFP, The SCFP can be prepared on two basic i.e. the working capital basic income statement and the cash basic. When SCFP prepare on the working capital basic, it is also termed as the funds flow statement. The SCFP prepare on the cash basic is also shown as the cash flow statement. The techniques of preparation of the SCFP (both working capital basic and basic and cash basic) have been discussed in the next chapters. Thus, the four financial statements discussed above give and describe the financial position of the firm the change in financial position during the year and the reasons for change in the SE during the year. The information control in the BALANCE SHEET

21

and INCOME STATEMENT can be further analyzed in order to make the financial analysis of the firm and to take decision regarding operation of the firm.

OBJECTIVES OF FINANCIAL STATEMENTS

1) Useful Information
The financial statement of business enterprise should provide information, within the limits if financial accounting, that is useful to present and potential investors and potential investors and creditors in making rational investment and credit decision. Financial statement should be comprehensible to investors and creditors who have a reasonable understanding of business and economic activities. In a financial accounting and who are willing to spend the time effort needed to study financial statement.

2)

Required

and

sufficient

information

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Financial statement of business enterprise should provide information that help investors and creditors assess the prospects of receiving cash from dividend of interest and form the proceeds from the sale, redemption or maturely of securities or loans there prospects are ability to obtain enough cash through its earning and financial activities to meet its obligations when due and its other cash operating needs, to reinvesting earning resources and activity and pay cash dividend and (2) By perceptions of investors and creditors generally about that ability, which affects market price of the enterprise income statement ES securities relative to those of others enterprise. Thus financial account and financing statement should provide information that helps investors and creditors assess the enterprise prospects of obtaining net cash inflows through its earning and financing activities.

3) Primary Information
The financial statement of a business enterprise should provide information about the economics resources of an enterprise which are sources of prospective cash Inflows to the enterprise to its obligation to transfer economics resources to other , which are causes of prospective cash outflows from the enterprise and its earning which are the financial results, which are the financial results of its operation and other events and conditions that effects the enterprise since that information income statement useful to investors and creditors in assessing and enterprise income
23

statement ability to pay cash dividends, and interest and to settle obligation when they mature it should be the focus of financial accounting and financial statements.

LIMITATION OF FINANCIAL STATEMENT

1) They are essentially internal reports and therefore, can not be final because the actual gain or loss of a business can be determined only when it is sold or liquidated. The allocation of revenue and costs to an account. Periods involves personal judgment. The problem involves the achievement of a satisfactory matching of cost with revenue and cost transactions flow continuously thought the life of a business enterprise yet they must be cut off at each balance sheet. 2) The financial statements shows exacts amounts, which gives an impression of finality and which gives impression may ascribe to those amount the is own concepts of value where as the statement may nave been set up on the basis of value different value standards. Passels does the stated quay of an assets represent the amounts of cash that would realized on liquidation even the cash balance would be reduce in the expenses incidental to the liquidity process. The balance sheet income statement prepared on the basin come

24

statement of a going concern concepts where it income statement assumed that the enterprise statement will continue in business. Fixed asset are customarily stated at historical revenue in the income statement by why of depreciation. 3) Both the BALANCE SHEET and INCOME STATEMENT reflects transactions that involve money value of many dates under in factionary condition. The depreciation against current revenue by companies may be inactive of current economy realities and increase in sales volume stated in rupees may or may not be the result of a larger no. or units. 4) Financial statement do not reflect many factors which affects financial condition and operating results, because they cannot be stated in terms of money such factors includes materials merchandise and supplier, the reputation and pressing of company with the public the crediting rating of the company and the efficiency, loyalty , and integrity of management continents liabilities customarily are not and usually cannot be stated definitely in rupees similarly, some items that involves obligation by the corporation to make future payments are not shown as liabilities and the reflected in financial statement. debt of unconsolidated affiliated companies are often not fully

25

TOOLS/TECHNIQUES OF ANALYSIS STATEMENT OF FINANCIAL STATEMENT

The AFS can be undertaken in different persons and for different purposes, therefore the methodology adopted for the AFC may be varying form one situation to another however the following some of the common techniques of AFC. 1. Fund flow statement 2. Cash flow statement 3. Comparative financial statement 4. Common size statement 5. Trend analysis 6. Ratio analysis statement

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INTRODUCTION
Every business may be big or small, final accounts are prepared to know the financial position of that specific period. The financial statement, income statements disclose the income of particular period where as the balance sheet disclose the value of various assets and liabilities. The assets and liabilities are always changed from time to time during a specific period a specific period. Some funds are generated and some are spent. The surplus of inflow over outflows is known as increase or decrease of funds. The balance sheet shows increase or decrease in fixed as current assets and liabilities but how these changes have come is not explained, for this a separate statement is prepared. This statement is known as funds flow statement, which clearly shows how fund have come in and how the some are used.

Definition:-

27

The fund flow statement described the sources from which additional were derived and used to which these sources where put to use. - R.N. Anthony

Importance of fund flow statement

Fund flow statement determines the financial consequences

of business operation. It shows how the funds were obtained and used in the past. Financial manager can take corrective action. The management can formulated its financial policy dividend, reserve etc. on the basis of the statement. It serves as a control device, when comparing with budgeted figures. The financial manager can take remedial steps if there is any deviation. It points out the causes for changes in working capital. It enables the bankers, creditors or financial institution in assessing the degree of risk involved in granting credit to the business. The mgt. can rearrange the firms financing more effectively on the basis of the statement.
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 Various uses of funds can be known and after comparing them with the use of previous year, investment or downfall in the firm can be assessed. The statement compared with the budget concerned will show to what extent the utilization was unplanned. It cells whether sources of funds are increasing or decreasing or decreasing or constant.

Limitation of fund flow statement

The statement lake originality because it is only rearrangement of data oppressing account books. It indicate only the past position and not future. It indicates funds flow in a summary form and it does not show various changes, which takes place continuously. When both aspects of transaction are current, they are not considered. When both aspects of a transaction are non-current even then they are not included in this statement.

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INTRODUCTION
Every businessman needs capital for successful implementation of business capital is needed for acquiring fixed assets while cash is needed for acquiring current assets or payment of current liabilities. Cash acquirement or cash planning is very important in every business mgt. Cash flow statement shows the movement of cash between two periods. This statement shows various causes of various cash balance like fund flow statement, cash flow statement is like highlights only total cash inflow and closing cash in the end. It speaks about the speed of cash being collected from debtors, stock and other current assets, on the other hand the use of cash in paying current liabilities.

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Advantages of cash flow statement

A cash flow statement is of primary importance to the financial mgt. It is an essential tool o short loan financial analysis. Its main uses are as follow: 1) It helps the mgt. in taking short term financial decision. 2) Cash flow statement facilitates to prepare sounds financial policies. It also helps to evaluate the current cash position. 3) A projected cash flow statement can be prepared in order to know the future cash position of a concern as to enables a firm to plan and co0ordinate its financial operations properly.

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4) It helps in taking loan form banks and other financial institutions. They repayment capacity of the firm can understood by going through the cash flow statement. 5) Cash is the soul and heart of the business cash is the pivot business activity. Business is a source while cash is the end. Therefore, it is very useful.

Limitations of Cash flow Statement

Cash flow statement is a useful tool of financial analysis however it suffers from some limitations, which are as follow: 1) A cash flow statement only reveals the inflow and outflow of cash balance disclosed by this statement may not depict the true liquid position. There are controversies over a number of items like cheque, stamps, postal order etc. to be included in cash. 2) A cash fund statement cannot be equated with the income statement. An income statement takes into

32

accounts both cash and non-cash items. Hence a cash fund does not mean net income of the business. 3) Working capital being a wider concept of funds, a fund flow statement present more complete picture than cash flow statement.

INRODUCTION
The RA has emerged as the principle technique of the AFS. A ratio is a relationship expressed in mathematical terms between two individual or groups of figures commented with each other in some logical manners. The RA is based on the premise that a single accounting figure in it self may not communication any meaningful information but when express as a relative to some other figure, it many refinishers give some significant information the relationship between to or more account figures group is called a financial ratio. A financial ratio helps to summarize a large mass to financial data in to a concise form and to make meaningful interspersion and conclusion about the performance and position of the firm.

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IMPORTANCE OF RATIO ANALYSIS 1. Liquidity Position

with the help of ratio analysis conclusions can be drawn regarding the liquidity position of a firm would be satisfactory if it is able to meet its current obligation when they became due firm can be said to have the ability to meet its short term liabilities it has sufficient liquid fund to pay the interest on its short making debt usually within a year as well as to ability is reflect principle the ability of firm in the liquidity the ratio of firm.

2. Long Term Solvency

Ratio analysis is quality useful for assessing the long term financial viability of am firm this aspect of the financial

34

position of a borrower is of concern to the long term creditors security analysis and the potential owner of a business.

3. Operating Efficiency
Yes another dimension of usefulness of the ratio analysis relevant from the view point of management is that it throws on the degree of efficiency in the management utilization of its assets.

4. Overall Profitability
Unlike the out side parties which are interested in one aspect of the financial position of a firm. The management is constant concerned about the overall the profitability of the enterprise that is they are concerned about the ability of firm to meet its short term as well as long term obligation to its creditors.

5. Inter Firm Comparison

Ratio analysis not only throws light only on the financial position of the firm but also serves as a stepping stone to remedial measures this is made possible due to inter firm comparison and comparison often industry averages a single figures a particular ratio is meaningless unless it is related to some popular technique with the industry average.

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LIMITATION OF RATIO ANALYSIS 1. Difficulty in Comparison

One serious limitation of ratio analysis arise out of difficulty associated with their capability one technique that is employed is inter firm comparison but such comparison are defatted in different procedure adopted by firm. - Different in the basis of inventory valuation - Different depiction methods. - Estimated working life of assets particularly of plant and equipment. - Capitalization of lease.

36

2. Impact of Inflation
The second major limitation of the ratio analysis as a tool of financial analysis is associate with price level changes. This I fact is a weakness of the traditional financial statement which are based on history recall costs. An implication of this feature of the financial statement as regard ratio analysis is that assets acquired at different periods are in effect shown at different at prizes in the balance sheet as they are not adjusted for changes in price level.

3. Conceptual Diversity
Yet another factor which influence the usefulness of ratio is that there is different of opinion regarding the various concepts used to compact the ratio there is always room for diversity of opinion as to what constitutes shareholders equity debt assets profit and so on.

37

LIQUIDITY & SOLVENCY RATIO Interested Parties:1. Current Ratio:

Creditors (short term), Investors, money-lenders, Social Investigators etc. The ability of a company to meet its short-term commitment is normally assessed by comparing current assets with current liabilities. The current ratio establishes the relation between the current assets and the current liabilities. The ideal ratio is 2:1. Current Assets Current Ratio = ----------------------Current liabilities Years 2004-05 2005-06 2006-07 2007-08 Current assets (a) Current Lia. (b) 12648.83 17397.31 21418.57 36982.74 4627.25 5426.15 4774.93 7476.21 Ratio (a/b) 2.74 3.20 4.47 4.95

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Current Ratio
5 4 Ratio 3 2 1 0 2004-05 2005-06 Year 2006-07 2007-08
Ratio

Interpretation:- The Current Ratio of the

company is continuously increase. So it is good sign for the company image.

2. Liquid Ratio:A Liquidity ratio is also known as acid-test ratio, therefore, used as a complementary ratio to the Current Ratio. The ratio is concerned with the establishment of relationship between the liquid assets & the liabilities. The ideal ratio is 1:1. Liquid Assets Liquid Ratio = ----------------------Current liabilities Years 2004-05 2005-06 2006-07 2007-08 Liquid assets (a) 9939.40 13432.12 20198.81 23553.47 Current Lia. (b) 4627.25 5426.15 4774.93 7476.21 Ratio (a/b) 2.15 2.48 4.23 3.15

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Liquid Ratio
4.5 4 3.5 3 2.5 Ratio 2 1.5 1 0.5 0

Ratio

2004-05

2005-06

2006-07
Year

2007-08

Interpretation:-

The Liquid Ratio between 0.16 % to 2.48 % which is satisfactory for the company.

3. Proprietary Ratio:This Ratio shows the relationship between shareholders fund and total assets. The result clearly shows the owners in the total assets of the company. When the proprietary ratio is subtracted from one, the resultant figure represents the share of outsiders claim on the assets of the company. Shareholder fund Proprietary Ratio = ----------------------Total Assets Years 2004-05 2005-06 2006-07 2007-08 Shareholder Fund (a) 32687.84 34243.37 35897.37 39225.77
40

Total assets (b) 84540.59 92403.13 99063.08 120707.28

Ratio (a/b) 0.39 0.37 0.36 0.33

Proprietary Ratio
0.39 0.38 0.37 0.36 0.35 Ratio 0.34 0.33 0.32 0.31 0.3

Ratio

2004-05

2005-06

2006-07
Year

2007-08

Interpretation:-

The Ratio between 0.65 to 0.37 which shown the weakness of the company. Basically an acceptance norm of the ratio is 1:3.

4. Debt Equity Ratio:This Ratio is calculated to measure the relative proportion of shareholders fund invested in the company. This Ratio determine to ascertain the soundness of long term financial policies of that company and is also known as external internal ratio. Long Term debt Debt Equity Ratio = ----------------------Shareholder fund Years 2004-05 2005-06 2006-07 2007-08 Long Term Fund (a) 41094.33 41403.65 40450.65 63208.60 Shareholder Fund (b) 32687.84 34243.37 85897.37 39225.77 Ratio (a/b) 1.26 1.20 1.13 1.61

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Debt Equity Ratio

1.8 1.6 1.4 1.2 1 Ratio 0.8 0.6 0.4 0.2 0

Ratio

2004-05

2005-06

2006-07
Year

2007-08

Interpretation:-

In last four year debt equity ratio is between 0.31 to 1.20 which shows that the clam of the creditors are less than that of owners but the clam to creditors is increase last four year. Company can get more debt fund from outside.

5. Capital Gearing Ratio:The term capital gearing is used to describe the relationship between fixed interest bearing securities, and the shareholders funds. Therefore this ratio establishes a meaningful relationship between the funds bearing fixed interest on the equity shareholders funds on the other. Fixed Interest Bearing Fund Capital Gearing Ratio = ------------------------------------Equity Share Capital Years 2004-05 2005-06 2006-07 Fixed Int.Fund (a) 41094.33 41403.65 40450.65 Equity Capital (b) 3829.06 3829.06 3829.06 Ratio (a/b) 10.73 10.81 10.56

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2007-08

63208.60

3829.06

16.51

Capital Gearing Ratio

18 16 14 12 10 Ratio 8 6 4 2 0

Ratio

2004-05

2005-06

2006-07
Year

2007-08

Interpretation: -

Capital gearing ratio is increase between years 2002-03 to 2005-06 from 2.52 to 10.81, which is good sign for the company.

PROFITABILITY RATIO Interested Parties:Creditors, Shareholder Government, Social Investigators

This Ratio establishes the relationship between Gross Profit on sales & Net sales terms of percentage indicating the percentage of Gross Profit earned on sales. Gross Profit Gross Profit Ratio = ------------------ * 100 Net Sales Years 2004-05 2005-06 Gross Profit (a) 6219.03 12073.95
43

1. Gross Profit Ratio:

Net Sales (b) 76509.36 107923.86

Ratio (a/b) 8.12% 11.18%

2006-07 2007-08

15915.53 18316.07

151341.92 182338.89

10.52% 10.04%

Gross Profit Ratio

12 10 8 Ratio 6 4 2 0 2004-05 2005-06 2006-07 Year 2007-08
Ratio

Interpretation:-

Gross Profit of the company continuously decrease but in 2005-06 it increase from 8.12% to 11.18%

2. Net Profit Ratio:This Ratio establishes the relationship between the amount of net profit or net income and the amount of sales revenue. Net Profit Net Profit Ratio = ---------------- * 100 Net Sales Years 2004-05 2005-06 2006-07 2007-08 Net Profit (a) 878.96 2210.45 2325.97 4000.37 Net Sales (b) 76509.36 107923.86 151341.92 182338.89 Ratio (a/b) 1.14% 2.04% 1.54% 2.19%

44

Net Profit Ratio

2.5 2

Ratio

1.5 1 0.5 0
Ratio

2004-05

2005-06
Year

2006-07

2007-08

Interpretation:-

The net profit of the company is decrease in 2004-05 & 2005-2006 compared to 2002-03 & 2003-04 to from 7.36 % & 5.68 % to 1.14 % & 2.04%.

3. Operating Ratio:This Ratio takes into account the aggregate of manufacturing cost of goods sold and other operating expenses on the one hand, and the net sales revenue on the other. Cost of sale Operating Ratio = ---------------- * 100 Sales Revenue Years 2004-05 2005-06 2006-07 2007-08 Cost of Sale (a) 59275.83 83945.06 127492.01 154424.49 Sales Revenue (b) 76509.36 107923.89 151341.92 182338.89 Ratio (a/b) 77.47 77.78 84.24 84.69

45

Operating Ratio
86 84 82 80 78 76 74 72
Ratio

Ratio

2004-05

2005-06

2006-07
Year

2007-08

Interpretation:-

The net sale on the company decrease by 77.78 % compare to 83.10 % ,So the company must need to take right action to improve sales.

4. Return on Capital employed Ratio:

This Ratio is an indicator of the earning capacity of the capital employed in the business. This Ratio reflects the overall efficiency with which capital is used. Profit after int. & tax Return on capital Ratio = ----------------------------- * 100 Capital Employed Years 2004-05 2005-06 2006-07 PATI (a) 2213.83 2081.96 4318.44
46

Capital Employed (b) 73782.17 75647.02 77511.95

Ratio (a/b) 4.81% 6.48% 5.57%

2007-08

5852.44

90178.64

6.49%

7 6 5

Return on Capital Employed Ratio

Ratio

4 3 2 1 0

Ratio

2004-05

2005-06 Year

2006-07

2007-08

Interpretation:-

Return on capital Employed is decrease from 2002-03 to 2005-06. This is not good for the company.

5. Return on Proprietary Fund Ratio:This is an important ratio as it shows the amount of profit available to the shareholders which determine the rate of dividend. Earning after Tax Return on proprietary fund Ratio = ----------------------------- * 100 Share holder fund Years 2004-05 2005-06 EAT (A) 878.96 2210.45 Shareholder Fund (b) 32687.87 34243.37 Ratio 2.68 6.46

47

2006-07 2007-08

2325.97 4000.37

35897.37 39225.77

6.48 10.20

12 10 8

Return on Proprietary Fund Ratio

Ratio

6 4 2 0

Ratio

2004-05

2005-06

2006-07 Year

2007-08

Interpretation: -

The return on proprietary fund ratio of last two years shows that share holder get 2.68% and 6.46% which is not good for the company image.

6. Net Profit to Total Assets Ratio:This ratio establishes the relationship between the net profit & total assets. This ratio tries to find out how efficient a company was in utilizing the funds to generate or earn profit. Net Profit Net Profit to Total Assets Ratio = ------------------Total Assets Years Net Profit Total Assets Ratio

48

2004-05 2005-06 2006-07 2007-08

878.96 2210.45 2325.97 4000.37

84570.59 92403.13 99063.08 120707.28

0.01 0.02 0.02 0.03

0.03 0.025 0.02 Ratio 0.015 0.01 0.005 0

Net Profit to Total Assets Ratio

Ratio

2004-05

2005-06 Year

2006-07

2007-08

Interpretation:-

Net profit to total assets ratio is decline which is not good for the company. Company must improve their ability.

EFFICIENCY RATIO Interested Parties: Management

1. Stock Turnover Ratio:

Inventory turn over ratio which is also called stock turnover ratio or stock velocity establishes the relationship between the cost of goods sold during a given period and the average of the costs of opening and closing stocks. Cost of goods sold Stock turnover Ratio = -----------------------Average Inventory
49

Years 2004-05 2005-06 2006-07 2007-08

Cost of goods sold (a) 70290.33 95849.91 135426.39 162627.70

Avg. Inventory (b) 7614.25 8146.74 8545.74 9050.24

Ratio (a/b)(times) 9.23 11.77 15.85 17.97

Stock Turnover Ratio

18 16 14 12 10 Ratio 8 6 4 2 0

Ratio

2004-05

2005-06 Year

2006-07

2007-08

Interpretation: -

Stock turn over ratio is increase from 9.23 to 11.77 which is good for the company.

2. Creditors Turnover Ratio:

This Ratio, also known as payable Turnover Ratio establishes the relationship between the net credit purchases and the avg. trade creditors. Creditor Creditors turnover Ratio = -------------------------- *365 Net Credit Purchase Years 2004-05 2005-06 Creditors (a) 3865.65 4596.09
50

Net Credit Purchase (b) 4384.02 1299.29

Ratio (a/b) (Days) 322 1291

2006-07 2007-08

3930.71 6570.18

4558.21 4447.02

314.75 539.26

Creditors Turnover Ratio

1400 1200 1000

Ratio

800 600 400 200 0

Ratio

2004-05

2005-06 Year

2006-07

2007-08

Interpretation: -

Creditor turn over ratio 1291 in 2005-06which shows that disbursement of money is faster but it was very slow in 2004-05 when ratio was 322. Suppliers offer good credit period to company.

3. Debtors Turnover Ratio:

This Ratio, also known as receivables Turnover Ratio or debtors velocity establishes the relationship between the net credit sales of the year and the avg. receivable. Debtors + Bills Receivable Debtors Turnover Ratio = --------------------------------- *365 Net Credit Sales Years 2004-05 2005-06 Debtors (a) 4844.93 2693.00
51

Net Credit Sales Ratio (b) (a/b) (Days) 76509.36 23.11 107923.89 10.02

2006-07 2007-08

6474.15 10790.29

151341.92 182338.89

15.62 21.60

Debtors turnover Ratio

25 20 15

Ratio
10 5 0

Ratio

2004-05

2005-06

2006-07
Year

2007-08

Interpretation: - Company can collect obligation

from the debtors. In the debtor turnover ratio is good.

4. Turnover to Working Capital Ratio:

This Ratio measures the no. of times the working capital is turned over during the year. In a way this ratio also throws light on the duration of operating cycle of the company. A low Ratio indicates slow moving operating cycle & it is a sign of inefficiency. Whereas a high level implies that the companys current assets are being utilized efficiently. Turnover Turnover to Working capital Ratio = ---------------------Working Capital

52

Years 2004-05 2005-06 2006-07 2007-08

Turnover (a) 76509.36 107923.86 135426.39 162627.70

Working Capital (b) 8057.58 11971.16 13542.18 15899.31

Ratio (a/b) 9.50 9.02 10.1 10.23

Turnover to working capital Ratio

10.4 10.2 10 9.8 9.6 Ratio 9.4 9.2 9 8.8 8.6 8.4

Ratio

2004-05

2005-06
Year

2006-07

2007-08

Interpretation: -

Working capital management is satisfactory because of such length of operating cycle. & it is quite stable.

INTRODUCTION
In CFS, two or more BALANCE SHEET and/or the INCOME STATEMENT of a firm are present financial data for two or more years are placed and presented adjacent columns and thereby the financial data I provided a time perspective in order to facilities data is statement on. In CFS, the BALANCE SHEET and the INCOME
53

STATEMENT for number of years are presented in condensed form for years to Year Company and to exhibit the magnitude and direction of changes. The preparation of the CFS is based on that a statement covering a period of a number of years more meaningful and significant than for a single year only and that the financial statement for one period represent only 1 phase of the long and continues his statement history of the firm. Nowadays most of the published, annual report of the companies provides important of statically information about the company in considered from for the last so many years. The presentation of such data enhances the usefulness of these reports and brings out more clearly the nature and trends of changes affecting the profitability and financial position of the firm. So the CFS helps a financial analyst in horizontal analysis statement of the firm and in established operating and position trend of the firm the CFS may be prepared to show. The CFS can be prepared for both the INCOME STATEMENT and BALANCE SHEET.

Comparative Income Statement

A COMPERATIVE INCOME STATEMENT shows the figures

different items of the INCOME STATEMENT s of the firm in a balance sheet terms the a balance sheet changes from one period to another and if desires, the changes in diving

54

meaningful concludes regarding changes in sales of item cost of goods sold different expense item etc form the INCOME STATEMENT a financial analysis statement can quickly ascertain whether sales are increasing or decreasing and how much percentage similarly analysis statement can be made for other items also.

Comparative Balance sheet

The COMPERATIVE BALANCE SHEET shows the assets and liabilities of the firm on different dates to make comparison statement of a balance sheet of balances and also of changes if any from on dated to anothers. The COMPARATIVE BALANCE SHEET may be helpful in analyzing and evaluating the financial position of the firm over a period of number of years.

Advantages
1) These statements indicate trends in sales, cost of production, profits etc., and helping the analyst to evaluate the performance, efficiency and financial condition of the undertaking. For example, if the sales are financial condition of the undertaking. For example, if the

55

sales are increasing coupled with it or better profit margins, it indicates healthy growth.
2) Comparative Statement can also be used to compare the

position of the firm with the average performance of the industry or with other firms. Such a comparison facilitates the identification of weaknesses and remedying the situation.

Disadvantages
1) Inter-firm comparison may be misleading if the firms are not of the same age and size, follow different accounting polices in relation to depreciation, valuation of stock, etc., and do not care to the same market. 2) Inter-period comparison will also be misleading of the period has witnessed frequent changes in accounting policies.

COMPERATIVE STATEMENT ANALYSIS

COMPERATIVE PROFIT & LOSS ACCOUNT FOR THE YEAR ENDING JUNE 2004-05 & 2005-06

56

Particulars Income Sales & Job Charges - Exercise Duty + Financial Operation + Other Income Expenditure Consumption of RM + Stock + Purchases + Other Exp. Profit Before Financial Charges, Depreciation & Tax Profit Before Dep.& Tax Net Profit Before Tax Net Profit After Tax + Balance B/F Total

2004-05

2005-06

Amount % Increase/ Increase/ Decrease Decrease 36.47

64131.94 96019.01 31887.07

58196.13 86224.07 28027.94

48.16

6219.03 4593.31 976.20 878.96 2708.87 3587.83

12073.95 8053.84 3187.71 2210.45 2882.95 5093.36

5854.92 3460.53 2211.51 1331.49 174.08 1505.53

94.15 75.34 226.54 151.48 6.43 41.96

COMPARATIVE BALANCE SHEET AS ON 30TH JUNE 2004-05 & 2005-06

Particular 2004-05 2005-06 Amount Increase/ Decrease % Increase/ Decrease

57

Sources Of 3 Fund 829.06 1. Shareholder 28858.78 Fund Share Capital Reserve & Surplus 32687.84 2. Loan Funds Secured Loan 48496.87 Unsecured Loan 10672.30 59169.17 Total 96227.47 Applicationof fund 71885.76 1. Fixed assets 2. Investment 7473.02 3.Currentasset s currentassets Loan & AdvancesCurrent Lia. & Prov. Misleading Expenses Total 12684.83 9914.399 5929.51

38 29.06 30414.31

1555.53

5.39

34243.37 49 321.99 14585.87 63907.86 103363.95 75005.82 7286.35 17397.31 10329.64 6824.90

1555.53 825.07 3913.57 4738.69 7136.48 3120.06 186.67 4712.48 415.25 895.38

4.76 1.70 36.67 8.01 7.42 4.34 2.50 63.06 4.19 15.10

228.98 96227.47

169.73 103363.95

59.25 7136.48

25.88 7.42

COMPERATIVE PROFIT & LOSS ACCOUNT FOR THE YEAR ENDING JUNE 2005-06 & 2006-07

58

Particulars

2005-06

2006-07

Amount % Increase/ Increase/ Decrease Decrease

Income Sales & Job Charges - Exercise Duty + Financial Operation + Other Income Expenditure Consumption of RM + Stock + Purchases + Other Exp. Profit Before Financial Charges, Depreciation & Tax Profit Before Dep.& Tax Net Profit Before Tax Net Profit After Tax + Balance B/F Total

96019.01 143408.04 47389.03 38.46

86224.07 127492.51 41268.44 47.14

12073.95 5915.53 8053.84 3187.71 2210.45 2882.95 5093.36 10766.27 5009.22 2325.97 4318.44 6644.41

3841.58 2712.43 1821.51 115.52 1435.49 98584

95.14 74.40 225.60 154.34 7.4 42.90

COMPARATIVE BALANCE SHEET AS ON 30TH JUNE 2005-06 & 2006-07

Particular

2005-06

2006-07

Amount % Increase/ Increase/

59

Decrease Decrease Sources Of Fund 1. Shareholder 3829.06 Fund 30414.31 Share Capital Reserve & Surplus 34243.37 2. Loan Funds Secured Loan Unsecured Loan 49321.99 14585.87 3829.06 32068.31 0 1654 0 5.6

35897.37 63491.84 5631.61

1654 14169.85 8954.26

4.68 1.4 35.40 8.03 9.3 4.23 3.6

Total Application of fund 75005.82 1. Fixed assets 2. Investment 7286.35 3. Current assets current assets Loan & Advances - Current Lia. & Prov. 4. Misleading Expenses Total

63907.86 69123.45 5215.59 103363.95 112093.79 8729.84 72220.46 12936.30 2785.36 5649.95

17397.31 10329.64 6824.90 169.73

19481.51 12452.78 7028.73 94.41

20842 2123.14 203.83 75.32

64.97 4.97 16.54 26.45 9.3

103363.95 112093.79 8729.84

COMPERATIVE PROFIT & LOSS ACCOUNT FOR THE YEAR ENDING JUNE 2006-07 & 2007-08

60

Particulars

2006-07

2007-08

Amount % Increase/ Increase/ Decrease Decrease

Income Sales & Job Charges - Exercise Duty 143408.04 172740.56 29332.52 20.45 + Financial Operation + Other Income Expenditure Consumption of RM + Stock + Purchases + Other Exp. Profit Before Financial Charges, Depreciation & Tax Profit Before Dep.& Tax

127492.51 154424.49 26931.98 21.12

1 5915.53 10766.27 18316.07 12614.06 6873.94 4000.37 5852.44 9852.81 2400.54 1847.79 1864.72 1674.4 1534 3208.4 15.08 17.16 37.23 41.85 35.52 48.29

Net Profit Before 5009.22 Tax Net Profit After Tax 2325.97 + Balance B/F Total 4318.44 6644.41

COMPARATIVE BALANCE SHEET AS ON 30TH JUNE 2006-07 & 2007-08

Particular

2006-07

2007-08

Amount % Increase/ Increase/

61

Decrease Decrease Sources Of Fund 1. Shareholder Fund Share Capital 3829.06 Reserve& 32068.31 Surplus 35897.37 2. Loan Funds Secured Loan Unsecured Loan 63491.84 5631.61

3829.06 35396.71 39225.77 67986.85 12227.95

0 3328.40 3328.4 4495.01

0 10.38 9.27 7.08

Total Application of fund 1. Fixed assets 72220.46 2. Investment 3. Current assets current assets Loan & Advances -Current Lia. &Pro. 4. Misleading Expenses Total 12936.30 19481.51 12452.78 7028.73 94.41

69123.45 80214.80 6596.34 112093.79 128572.09 11091.35 78834.08 7818.38 16478.3 6613.62

15435.57 10545.04 46.43

112093.79 128572.09

INTRODUCTION
The COMMON SIZE STATEMENT represent the relationship of different item of financial statement with some item by
62

expressing each item as percentage of the common items. In common size balance sheet each item of the BALANCE SHEET is stated as a percentage of the total of the balance sheet similarly each item is stated as percentage of the net sale the percentage for the different item are computed In dividing the a balance sheet solute amount of that item by the common base (i.e. the BALANCE SHEET total or the net sales as case may be ) and them multiplying by 100. The percentages to calculated can be easily compared at with the corresponding percentage in some other period thus, the COMMON SIZE STATEMENT is useful not only in intra firm comparison on over a series of afferent year but also in making inter firm comparison income statement on for the same years or several years.

Interpretation:
In profit & Loss account sales figure is assumed to be equal to 100 & all other figures are expressed as percentage to sales. Similarly, in Balance sheet the total of assets or liabilities is taken as 100 and all the figures are expressed as percentage of the total its called Common-size statement.

COMMON SIZE STATMENT ANALYSIS

COMMON SIZE PROFIT& LOSS ACCOUNT FOR YEAR
63

ENDING 30TH JUNE, 2006

Particulars Income Sales & Job Charges - Excise Duty Income From Financial Operation Other Income Total Expenditure Consumption of RM Increase/decrease In Stock Purchases Mfg. & Other Exp. Profit Before Financial Charges, Depreciation & Tax Total 57.12 0.59 4.27 21.90 16.12 52.89 3.05 4.75 28.90 10.50 100.92 2.48 98.44 0.69 0.87 100.00 120.79 22.14 98.55 0.80 0.55 100.00 2004-05 2005-06

100.00

100.00

COMMON SIZE BALANCE SHEET AS ON 30TH JUNE, 2006

64

Particulars Sources of Fund 1. Share holder Fund Share Capital Reserve & Surplus

2004 - 05

2005 - 06

7.97 56.33

5.55 44.72

2. Loan Fund Secured Loan Unsecured Loan Total Application of Fund 1. Fixed Assets 2. Investment 3. Current Assets - Current Liabilities 4. Deferred Tax Liability 5.Misleading Expenses Total

20.68 15.03 100.00

32.06 17.72 100.00

77.68 6.83 35.93 11.90 8.66 0.12 100.00

72.21 12.60 33.64 11.96 11.96 0.32 100.00

65

COMMON SIZE PROFIT& LOSS ACCOUNT FOR YEAR ENDING 30TH JUNE, 2008

Particulars Income Sales & Job Charges - Excise Duty Income From Financial Operation Other Income Total Expenditure Consumption of RM Increase/decrease In Stock Purchases Mfg. & Other Exp. Profit Before Financial Charges, Depreciation & Tax Total

2006-07 116.82 17.75 99.07 0.22 0.71 100.00 61.72 2.30 6.84 20.19 9.70

2007-08 112.39 12.95 99.44 0.07 0.49 100.00 65.37 (1.27) 1.35 21.80 12.75

100.00

100.00

66

COMMON SIZE BALANCE SHEET AS ON 30TH JUNE, 2008

Particulars Sources of Fund 1. Share holder Fund Share Capital Reserve & Surplus 2. Loan Fund Secured Loan Unsecured Loan Total Application of Fund 1. Fixed Assets 2. Investment 3. Current Assets - Current Liabilities 4.Misleading Expenses Total

2006-07

2007-08

4.16 31.42

3.90 30.99

52.80 11.62 100.00

50.25 14.86 100.00

74.66 7.77 23.48 - 6.16 0.25 100.00

72.56 7.05 26.82 - 6.60 0.17 100.00

67

INTRODUCTION
The Comparative and common size statement suffer from a major limitation i.e. absence of a basic standard to indicate weather the proportion of an item is normal or abnormal. Trend analysis overcomes this limitation. This method is also an important a useful technique of financial statement analysis. The calculation of trend ratio involves the ascertainment of arithmetical relationship which each item of several years to the same item of base year. Thus, one particular year out of many years is taken as base. The values of one particular item out of several items shown in the financial statements are converted into ratio or percentage taking of that item in base year as equal to 100.

68

TREND ANALYSIS OF THE PROFIT & LOSS A/C FOR THE YEAR ENDING 30TH JUNE, 2008

Particulars

2005

2006

2007

2008

Income Sales & Job Charges - Exercise Duty + Financial Operation + Other Income Expenditure Consumption of RM + Stock + Purchases + Other Exp. Profit Before Financial Charges, Depreciation & Tax Profit Before Dep.& Tax Net Profit Before Tax Net Profit After Tax + Balance B/F Total

100

96.87

123.45

184.83

100

96.42

133.56

197.88

100 100 100 100 100 100

99.18 101.90 84.45 89.42 378.11 91.53

74.24 64.40 20.66 22.78 9531.56 92.29

144.14 112.91 67.47 57.28 10144.09 131.02

69

TREND ANALYSIS OF BALANCE SHEET ON 30TH JUNE, 2008

Particular 2005 Sources Of Fund 1. Shareholder Fund Share Capital 100 Reserve & Surplus 100 100 2. Loan Funds Secured Loan Unsecured Loan Total Application of fund 1. Fixed assets 2. Investment 3. Current assets current assets Loan & Advances - Current Lia. & Prov. 4. Misleading Expenses Total 100 100 100 100 100 100 100 100 100 100 100

2006 100 105.75 105.03 208.48 158.54 187.46 134.46 124.69 249.78 152.90 88.51 85.39 200.90 134.46

2007 100 106.57 105.76 487.93 147.73 344.74 200.18 192.03 227.52 127.86 134.83 414.93 225.48 200.18

2008 100 112.32 110.79 496.23 201.90 372.35 215.02 200.37 221.83 175.36 140.48 477.59 167.14 215.02

70

In last five year the current ratio is between 2.31 to 3.20 which was very good for company . In last four year, the liquidity ratio is continously

increase.which is satisfactory for the company..

The propritory ratio was decreasing from last four year which the weakness of the company. The capital gearing ratio is increase from 2.52 to 10.81 which is good sign for the company.

The return on propritory fund ratio of last four years shows that sharholders get low profit but it increase suddenly in 2008.

In last four years the net profit is between 0.08 to 0.02 which was very poor performance for the company.

Creditors turn over ratio is high in 2007-08 which shows the disbursement of money is faster in the company.

71

Debt equity ratio is determine to acertain the soundness of long term financial policy of the company. In case the ratio is lower than 1.

As far as cash management is concerned, cash inflow is efficiently undertaken, but improvement in cash out flow is payment & disbursement of cash required condrable attention. Company have to reduce differ tax liabilities which is continuously increase in last two years for the better result of the company. Manfacturing & other expences which is continuously rise in last four years should reduced. The company should give good dividend on share to attract the share holder. Company should not invest more in non performing assets because it blocks money. Company should try to increase the debt equity ratio. Compamny should development modern technology because of producing good quality of product.

72

BIBLIOGRAPHY
Books

Financial management By m.y.khan & p.k.jain

Financial Management and Policy By V. K. Bhalla

Annual report of garden silk mills limited Websites www.gardenvareli.com www.corporateinformation.com

73

Annexure A: Profit & Loss A/c (Rs.in Lacs)

Particulars Income Sales & Job Charges -Excise Duty Income From Financial Operation Other Income Total 2003-04 60786.12 11143.48 404.99 275.77 50323.40 2004-05 76509.36 11622.60 141.36 466.74 65494.86 2005-06 107923.9 12437.94 64.00 469.06 96019.01 2006-07 151341.92 12010.53 124.73 3289.15 143408.04 2007-08 182338.89 14711.19 106.00 1278.79 172740.56

74

Expenditure Consumption Of RM (Increase)/Decrease In Stock Purchases Mfg.& Other Expenses Total Profit Before Financial Charges, Depreciation & Tax - Financial Charges Profit before Dep. & Tax - Depreciation Net Profit Before Tax - Provision For Tax Current Deferred Earlier Years Net Profit After Tax + Balance B/F Balance For Appropriation

26617.44 (1532.69) 2388.64 14541.21 42014.60 8308.80 1040.87 4523.40 1245.62 3990.15 296.00 181.09 62.23 3450.83 107.46 3558.29

39388.18 1475.99 4384.02 14027.64 59275.83 6219.03 1625.72 3617.11 0.00 976.20 103.60 (21.36) 15.00 878.96 2708.87 3587.83

62771.75 1299.29 20933.27 83945.06 12073.95 4020.11 8053.84 4866.13 3187.71 65.00 852.26 60.00 2210.45 2882.91 5093.36

99296.16 4558.21 23638.14 127492.51 15915.53 5149.26 10766.27 5757.05 5009.22 783.00 1860.25 40.00 2325.97 4318.44 6644.41

122403.54 3728.07 4447.02 27573.93 154424.49 18316.07 5702.01 12614.06 5740.12 6873.94 760.03 2058.54 55.00 4000.37 5852.44 9852.81

(1219.76) 3289.15

Annexure B : Balance Sheet

Particulars Sources Of Fund 1. Shareholder Fund Share Capital Reserve & Surplus 2003-04 3829.06 28634.7 4 2004-05 3829.06 28858.7 8 2005-06 3829.06 30414.31 2006-07 3829.06 32068.31 2007-08 3829.06 35396.71

75

32463.8 0 2. Loan Funds Secured Loan Unsecured Loan Deferred tax liability Total Application Of Fund 1. Fixed Assets Gross Block Less : Depreciation Net Block Less : Lease Adjs. A/C Capital Wip 68787.4 4 25348.5 4 43438.9 0 0.00 3237.18 46676.0 8 8204.32 8643.11 4806.76 1719.20 6508.06 21677.1 3 Less : Current Liabilities Provision 6511.41 1220.23 7731.64 13945.4 9 204.01 64638.0 8 20721.2 6 11453.0 2 32174.2 8 64638.0 8

32687.8 4 48496.8 7 10672.3 0 59169.1 7 91857.0 1 71929.6 3 28865.6 2 43064.0 1 0.00 28791.7 5 71855.7 6 7473.02 6585.39 2963.00 3136.44 9914.39 22599.2 2 4627.25 1302.26 5929.51 16669.7 1 228.98 91857.0 1

34243.37 49321.99 14585.87 63907.86 98151.23

35897.37 63491.84 5631.61 7072.97 112093.7 9 109609.5 4 38986.55 70622.99 0.00 1597.47 72220.46 12936.30 13002.59 6474.15 1941.83 12452.78 33871.35 4774.93 2253.80 7028.73 26842.62 94.41 112093.7 9

39225.77 67986.85 12227.95 93131.52 128572.09

106157.8 6 33648.12 72509.74 0.00 2496.08 75005.82 7286.35 9708.08 4844.93 2844.30 10329.64 27726.95 5426.15 1398.75 6824.90 20902.05 169.73 98151.23

112888.35 44407.21 68481.14 0.00 10352.87 78834.01 7818.38 18575.89 10790.29 7616.56 15435.57 52418.31 7476.21 3068.83 10545.04 41873.27 46.43 128572.09

2. Investment 3. Current Assets Inventories Sundry Debtors Cash & Bank Balance Loan & Advances Other Current Assets

4. Deferred Tax Liability 5. Misleading Expenses

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77