INTRODUCTION

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 INTRODUCTION

Financial Statements report what actually happened to assets, earnings

and dividends. Investors use financial statements to predict future

earnings/dividends. Management uses financial statements to help

anticipate future conditions and as starting point for planning actions that

will affect future event.

A Complete set of Financial Statements (Decision Tool), including the

beginning and ending net worth statements, the income statement, the

cash flow statement, the statement of owner equity and the financial

performance measures can help you to do a comprehensive financial

analysis of your business. To help you assess the financial health of

your business, Financial Performance Measures allows you to give your

business a check-up. Interpreting Financial Performance Measures

helps you to understand what these performance measures mean for

your business.

As I have already mentioned analysis of financial statement is a study of

relationship among various financial facts and figures which actually

contain a whole lot of historical data. The complex figures as given in

these financial statements are broken up into simple and valuables

elements and significant relationships are established between the

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elements of the same statements or different financial statements. This

process of dissection, establishing relationships and interpretation

thereof to understand the working and financial position of a firm is

called the analysis of financial statements.

As in all things financial, beauty is often in the eye of the beholder. It

pays to do your own work! Making good investment decisions does not

require scholars. It requires financial analysis.

I have chosen ‘Analysis of Financial Statements’ as my project title. This

report analyzes the different financial statements of ADANI WILMAR and

compares the trends over the past 4 years. The data in this report

provides useful way to analyze financial statements and evaluate the

firm’s performance over the period. Financial statements which mainly

consist of Balance Sheet, Income Statement, Cash Flow Statement and

Statement of Retained Earnings summarize the results of the firm’s

activities at a point in time and on operations over some past period

which is very helpful in analyzing the performance of the company during

past.

"Analysis of Financial Statements" is a powerful business handbook for

investors, bankers, and other professionals who rely on financial

statement understanding and analysis. For investors who need to

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evaluate why increased sales didn't lead to higher stock prices...for

bankers who need to know the underlying reasons a customer wants to

borrow funds...for any business person who needs to analyze and

understand financial statements...Let "Analysis of Financial Statements"

be your guide to understanding the language of financial statements.

Analysis of financial statement is the systematic numerical calculation of

the relationship between one fact with the other to measure the

profitability, efficiency, solvency and the growth potential of the business.

It is just a heart of industry. No doubt, fixed tangible asset like land and

building, plant & equipment provide a strong structural base but working

capital is all the more needed as a 'motor force' to make the fixed

tangible more effective and turn out what is mostly needed.

There might be many business in the world, where besides investment in

fixed assets, funds would not be needed for carrying on day to day

operations of the business. But in most companies, it is essential that a

certain proportion of funds be kept invested in the form of different

current assets like inventories, receivables, cash and marketable

securities.

The mode of administration of finance and working capital determines to

a very large extent to overall success or failure of the operations of an

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enterprises. The analysis of financial performance is of vital importance

for the success of a business. The manner of management of finance to

a very large extent determines the success of operation of a concern

because problem of trade off between risk and return is involved.

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 RESEARCH
METHODOLOGY

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 RESEARCH METHODOLOGY

Research Methodology may be defined as a way to systematically solve

the research problem. Research Methodology constitutes of research

method, used in context of research study and explanation of using a

particular method or technique and way other techniques are not used.

It also includes the reasons for taking up a particular problem, the data

collection, its analysis and interpretation.

For this particular project the steps followed or the Methodology followed

is as given below :

 State of Problem

 Extensive Literature Survey

 Designing of Study

 Data Collection

 Analysis of data

 Conclusion & Interpretation of Research

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1. Problem Defined :

Finance management is one of the important part of business.

Presently in a very tough competitive scenario every business

organisation wants to reduce costs in manufacturing their products

so that they can offer quality product at competitive rates to the

consumers. Also every business concern try to manage their

receivables not making very much human efforts. Working capital

management is one of the problem areas of many organisations as

it affects their profitability as well as their present operations. I

personally feel that many small Indian organisations are facing

working capital problems and so they are even struggle for their

survival. In my project I try to analyse the working capital

management of the company ADANI WILMAR.

2. Extensive Literature Survey :

For the purpose I made a through study of the topic to get in depth

knowledge of the subject. I concerned various books and

newspapers like Economic Times, Business Standard, Magazines,

Journals etc., to get a first head view regarding the problem.

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3. Designing of Study :

We know that to get the best output from the research it has to be

conceptually so that minimum difficulties arise during the conduct

of the research. To make my research successful I planned the

methodology that I have to adopt while doing my project.

4. Collection of Data :

This is the fourth step in the research process. This consisted of

actually gathering the data from various primary and secondary

sources. The methods used for collection of data are as follows:

a) For the collecting of primary data I decided to meet different

managers of different levels of the company and others employees

from different departments and collected related information from

them. I tried to take their views on the various subject matters.

b) Documented Sources of Data: The secondary data was

collected from various documented sources. I referred profit and

loss account, balance sheet, stock register, debtors and creditors

registers of the company and take the required data from that. I

also collected various documents of the company, like various

pamphlets of the company, quality policy, product details and

relevant information was extracted from them. I also referred were

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 Business India, Business World, Business Today and Newspapers

Economic Times, Financial Express, Business Standard to

understand the current scenario of working capital management.

5. Analysis of Data :

Data Analysis may be defined as the process of computation of

certain parameters along with identification of relationship pattern

that may exist among data groups.

For analysis of data, the following steps were undertaken:

a) Data Editing: A thorough scrutiny of raw collected as done and

was detected in this step.

b) Classification of Data: In this the data was arranged in groups or

classes according to the resemblance and similarities. This

process has made the comparative analysis an easier take.

c) Calculation: From the various figures collected from different

sources I calculate the required results.

d) Tabulation of Graphical Depiction: As we know tabulation is an

orderly arrangement of data in columns and rows. This tabulation

was done to identify the frequency of occurrence of data. In the

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 end graphical depiction of this tabulated data is made to amplify

the study further.

6 Conclusion :

The last step in the research was putting down the conclusion and

its interpretation as based on the study of primary and secondary

data and its analysis.

The research methodology followed is in such manner that it will make

the study informative and interesting at all the levels.

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 OBJECTIVES OF THE STUDY

The present study, which is under taken as a summer training for the

partial fulfillment of B.B.A. course is aimed to accomplish the following

objectives.

1. To Know about the meaning importance of financial statement.

2. To Analysis the financial position of the company on the basis of

different ratio .

3. To study about the financial position for past 3 years of the

company .

4. To Suggest how to improve the profit & liquidity of the company

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 Company Profile

Adani Wilmar Limited (AWL) is a joint venture incorporated in January 1999 between Adani
Group, the leaders in International trading & Private Infrastructure with businesses in key
industry verticals - resources, logistics and energy. The group was created with a vision of
‘Nation Building’ by developing assets of national economic significance. Wilmar
International Limited - Singapore, Asia's leading Agri-business group & its business
activities include oil palm cultivation, oilseed crushing, edible oil refining, sugar milling and
refining, specialty fat,oleochemical, biodiesel and fertilizer manufacturing and grain
processing. It has over 450 manufacturing plants and an extensive distribution network
covering China, India, Indonesia and some 50 other countries. 

The joint venture kicked off with the commissioning of India's first port-based refinery at
Mundra, Gujarat and later on other such units were setup across other locations.

Capacity

Today, AWL owns refineries in 17 strategic locations across India, has 8 crushing units and
18 toll packing units. Cumulatively, this translates to a refining capacity of over 10400 tonnes
per day, seed crushing capacity of 7400 tonnes per day and packaging capacity of 9000
tonnes per day.

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Distribution

AWL has the largest distribution network among all branded edible oil players in India, with
more than 93 stock points, 3500 distributors and *10% Retail Penetration which spans across
approx. 1 Million outlets all over India.

*Source Nielsen Retail Index

Leading the Way

At Adani Wilmar, we are committed towards working for a healthy growing India. We
believe that the future of a nation rests on its people. People, who don’t just dream, but
aspire. With our wide range of products we spread the goodness and health. We nourish the
dreams of our fellow Indians.

With a vision to be a global admired leader in integrated agri-business, we shall be known for
our scale of ambition, speed of execution and quality of operation, Adani Wilmar is poised to
lead the growth story of Indian Food Industry. 

Brands

Fortune is the most prestigious brand in the Adani Wilmar portfolio. Fortune became the no.1
brand in the market within just 2 years of its launch and still continues to be a leader.
Reader’s Digest honoured Fortune as the Most Trusted brand for 4 years, most recently in
2014, and it was adjudged as a ‘The Economic Times Best Brands 2014’. Besides these it has
also won “Mint Strategy Award” in 2014 & 2015. Fortune has grown from strength to
strength and continues to deliver the ‘joy of eating’ to Indian households. 

Adani Wilmar has a range of premium edible oils, vanaspati, packed basmati rice, pulses,
soya chunks and also the first national brand in besan. It also has a range of customized
specialty fats for institutional customers. The product portfolio of Adani Wilmar spans under
various brands such as - Fortune, King’s, Bullet, Raag, Avsar, Pilaf, Jubilee, A-Kote, Fryola,
Alpha and Aadhaar.

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It has the largest portfolio of brands in the Indian edible oil industry. It goes to great lengths
to deliver its brand promise ‘For a healthy growing India’.

Following the success in India, AWL introduced branded Edible oil to Middle-East and is
now exporting its products to more than 19 countries in the Middle-East, South East Asia &
East Africa including Singapore, Australia & New Zealand

Managing Director's Message

Since its inception in 1999, Adani Wilmar Limited (AWL) has undertaken path breaking
changes in the unorganised food products and agri sectors in India. Adani group has been a
pioneer and leader in all its area of operations and AWL has maintained the trend. It has
consistently strove for excellence, with the flagship brand Fortune cooking oils becoming the
number one edible oil brand in India within twenty months of launch, a position it has
retained ever since.  
 
Today as India sprints ahead, there is growth in multiple sectors each requiring infrastructure
development to sustain the growth. This holds true for the agriculture sector as well. With
over a billion lives to sustain, food security is of paramount importance to the nation. We at
Adani Wilmar are committed to playing a significant role in this regard. The company has
developed integrated processing infrastructure at several strategic locations across the country
both at ports & seed producing hinterland and combined with a seamless supply chain
management, it is able to pass on the cost advantage of most optimally produced offerings to
its invaluable consumers.      
India as a nation has a large number of young people, nurturing a huge workforce.

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Traditionally we have been an agrarian society and there is immense potential for us to
modernise the agriculture sector and be counted among the leading agrarian economies of the
world. At Adani Wilmar we remain committed to make this a reality.

Adani Wilmar is leading the way with quality agri products which are trendsetters and
lifestyle definers in the ever changing socio-economic scenario. We have carved a niche for
ourselves in the Indian society as manufacturers of world class healthy food products.
Encouraged by the warmth and loyalty of our patrons, we would be expanding our portfolio
in the near future, bringing varied food products into our fold. We look forward to touching
the life of every Indian and enabling everyone to live life fully, thereby making India
stronger, healthier and more productive.

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 Awards & recognition
 
 Adani Wilmar Limited has won the IFC-Mint Strategy award in 'Food and Beverage'
category for consecutive years 2014 & 2015
 Economic Times awarded Fortune as Promising 'FMCG - Food Products" Brand    
 Fortune gets the "Superbrand Award" - 2014    
 The Economic Times Best Brands 2014 awarded ‘Fortune’ the title “No.1 in the
FMCG – Food Products – Edible Oil”     
 The Economic Times Best Brands 2014 ranked ‘Fortune’ in the Top 200 brands
listing for 2014 
 Globoil awarded Fortune Rice Bran Health Oil as 'Emerging Brand of the Year 2014'.
- 2014     
 Adani Wilmar Limited received Globoil Diamond award under 'Highest Importer of
Edible Oil' category. - 2014       
 Adani Wilmar Limited received Globoil Gold award under 'Highest Exporter of Oil
Meals' category. - 2014          
 Fortune's Ghar Ka Khana TV commercial was awarded 'The Longest Duration TV
Commercial' by Limca Book of Records - 2014     
 Fortune was judged the 'No.1 Brand in Edible Oil Category' by Economic Times Best
Brands - 2014      
 Fortune won 'Best New Launch' award by Aditya Birla Retail - 2014      
 Fortune was awarded 'Readers Digest Trusted Brand of the Year' for the third
consecutive year from 2012 - 2014       
 Fortune was listed in '100 Most Valuable Brands' of the year by KPMG - 2013       
 Fortune adjudged 'Readers Digest Trusted Brand of the Year' - 2013       
 Fortune was presented with 'The Master Brand Award' by the CMO Council and
CMO Asia - 2012       
 Fortune gets the 'Superbrand Award' - 2010       
 Fortune was awarded 'Readers Digest Trusted Brand of the Year' for the fourth
consecutive year from 2006 - 2009         
 Fortune was judged 'The Fastest Growing Oil Brand' by Globoil – 2006

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Consumer Essentials
Adani Wilmar has a number of products for the consumer segment. Thsese can be
categorized in to edible oils, Rice, Besan & Pulses. 

Fortune has been voted as "India's No. 1 Edible oil brand" as per Nielsen Retail Index Report.

ADANI WILMAR PRODUCT

Fortune

Fortune Vivo
Diabetes Care Oil

A revolutionary product, Fortune VIVO is India's first diabetes-care cooking oil. It has been
developed through years of rigorous R&D and is clinically proven to regulate blood sugar
levels. Along with helping manage diabetes, it also offers a host of other health benefits. This
makes Fortune VIVO the perfect cooking oil for all-round health of your family.

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 Health benefits 
 It helps reduce high blood sugar level
 Improves insulin sensitivity
 Lowers high blood pressure
 An oil for the entire family
Sizes available
SKU’s:  Pouches - 1 ltr , Jar - 5 Ltr

Fortune Rice Bran Health

Refined 100% Rice Bran Oil
Rice Bran Oil benefits:
 Heart friendly
 Improves HDL/LDL ratio. Healthier heart
 Cleaner blood vessels
 Balanced nutrition, balanced health
 Anti-cancer properties
 Improves skin tone and delays wrinkle formation
 Helps in maintaining the balance of the nervous system
 Protection against disease
 Stimulates hormonal secretion, rejuvenates health 
 Healthier food  
Sizes available
SKU’s:  Pouches - 1 ltr , Jar - 2 Ltr, 5 Ltr, 15 Ltr,

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 Fortune Soya health
Refined Soyabean Oil
 Light, odourless, and healthy oil
 Contains Omega 3 – an essential fatty acid
 for the human body
 Helps maintain a healthy heart
Sizes available
 Pouches - 500 ml, 1 Ltr, | Pet bottles - 500 ml, 1 Ltr, | Jerry cans - 2 Ltr, 5 Ltr, 15 Ltr,| Tins -
15 Ltr, 15 kg, |  Also available ‘Mahafortune’in select markets.

Fortune Sunlite
Refined Sunflower Oil
 A light, healthy and nutritious oil that is easy to digest
 Consists mainly of polyunsaturated fatty acids
 Low in saturated fats and rich in natural Vitamins
 Goes through a highly specialised process of winterisation that removes almost all the
wax content in the oil
Sizes available

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 Pouches - 200 ml, 500 ml, 1 Ltr, | Pet bottles - 500 ml, 1 Ltr | Jerry cans - 5 Ltr, 15 Ltr | Tins -
15 Ltr, 15 kg

Fortune Kachi Ghani

Pure Mustard Oil
 Made from the first press of mustard in the traditional way of slowly crushing the best
mustard seeds in a temperature-controlled environment to retain its pungency and natural
properties
 Its high pungency level enhances the taste of the food and helps stimulate your
appetite
 Also helps in keeping pickles fresh for a longer duration while retaining their
traditional flavour
Sizes available
Pouches - 500 ml, 1 Ltr | Pet bottles  - 200ml, 500ml, 1 Ltr | Jerry cans - 2 Ltr, 5 Ltr, 15 Ltr |
Tins - 5 Ltr, 15 Ltr, 15 kg | Barni (wide mouth) - 2 Ltr, 5 Ltr

Fortune Goldnut
Refined Groundnut Oil
 Preferred for deep frying as it preserves the natural aroma of food

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 Sourced from the best raw groundnuts available in the country
 Crystal clear, light and one of the most preferred oils in the country
Sizes available
Pouches - 1 Ltr | Pet bottles - 1 Ltr | Jerry cans - 5 Ltr , 15 Ltr | Tins - 15 Ltr

Fortune Filtered - Groundnut Oil

 Has the rich flavor of peanuts.
 The extraction of oil from seeds is done by traditional & organic cold processing to
maintain its purity.
 It can be heated to high temperatures, making it ideal for deep-frying and sautéing. 
Sizes available
Pouches - 1 Ltr | Pet bottles - 1 Ltr | Jerry cans - 5 Ltr, 15  Ltr | Tins - 15 Kgs

Fortune Filtered - Mustard Oil

 Offers you a fine balance between great tasting food and good health
 Gives you the goodness of fatty acids, extremely important for the human body in the
right proportions
 The acids reduce bad cholesterol while preserving good cholesterol
 Acts as a digestive aid in neutralising toxins and wards off indigestion

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 Sizes available
Pouches - 500 ml, 1 Ltr | Pet bottles - 200 ml, 500 ml, 1 Ltr | Jerry cans -  2 Ltr, 5 Ltr, 15 Ltr |
Tins  -  15 kg 

Fortune Plus Soya Health

Refined Soyabean Oil

Fortune Plus is specially formulated keeping in mind the health conscious populace of India.
It absorbs up to 17% less oil in comparison with the other refined oils thus making it lighter
and easier to digest. Enriched with vital vitamins A and D, it significantly reduces the smoke
production while cooking. Very economical as it evaporates considerably slower making the
oil useable number of times. All the oils in this range do not stick to the fingers or blacken
utensils.

 17% less absorption, non-sticky, less smoke

 Infused with Omega 3 fatty acids, essential for cardiovascular health, in addition to
Vitamins A and D
 Its formulation assures slower evaporation while cooking
Sizes available
Pouches- 1 litre | PET Bottles - 1 litre | Jerry Cans - 5 litres, 15 litres

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 Fortune Plus CottonLite
Refined Cottonseed Oil
 Very stable with a long shelf life
 Does not deteriorate even at high temperatures
 Its bland flavour retains the taste of the food in which it is used
Sizes available
Pouches - 1 litre | Jerry Cans - 5 litres, 15 litres | Tins - 15 litres, 15 kgs

Fortune Plus SunLite

Refined Sunflower Oil
 Light, healthy and easy to use
 A special process of winterisation rids the oil of its wax content, ensuring its lightness
 Fortified with Vitamins A and D
 Easy to use as it does not blacken or stick to the utensil

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Loadability
Loadalibity(In
Oil Type SKU Units in each Box Cartons)(Approx.)
Fortune Refined 500 ML 24 1050
Soya / Sun / 1 LTR 12 1421
Groundnut / 2 LTR(6*2) 6 1260
Cottonseed Oil 3LTR 6 863
Pet Bottles 5LTR 4 818
Fortune Filtered
Groundnut Oil Jar 5LTR 4 700
2LTR 8 900
Fortune RBH Jar 5LTR 4 700
Raag Vanaspati
Ghee Tin 5KG 4 720
200ML 30 1670
Fortune Kachi 500ML 24 1050
Ghani Pet 1LTR 12 1151

Exports

Adani Wilmar Limited's Export division was started in 2004, and our exports markets are the
Middle East Countries, South-East Asian Countries, Africa, Ukraine, etc. AWL has been
awarded the status of Trading House, by the Government of India.
Our refined oils meet the CODEX, WHO and FAO standards. We also meets the standards
set by AOCS, and have also applied for HACCP and ISO9001 certification.
We were the first to launch Soyabean oil in a packed form in Middle East Countries. Fortune
and Raag brands are registered in all Middle East Countries. Today, we have distributors set
all across the Middle East, covering all A / B class outlets. AWL is actively engaged in
contract manufacturing / private labeling for numerous international and Indian companies.
With our automated state-of-art computer controlled machinery and large manufacturing
capacity, we have the capability to meet customer demand time after time.

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Life at Adani

Growth and Speed is a way of life at Adani. Exponential growth, diversification into new
businesses and international ventures, have created a wide range of career opportunities at
domestic as well as at international levels, which not only fulfill the aspirations of people but
also meet their passion and professional needs.

Adani provides an open and dynamic work environment where organisation believes in
people and also recognises that its success and growth are driven by people and is dependent
on people capabilities.

The organisation recognises the critical role that employees play in the success and growth of
each of our businesses. It is the competence and drive of our people that set us apart from
other industries and lend us the competitive edge in building tomorrow's enterprise.

As a group, we understand the strategic importance of Organisational and Employee

Capability building in achieving vision and business results. Therefore all systems, processes
and people practices are designed and executed to enhance organisational performance.
Integrated frameworks are developed that.

Work Environment & Culture

At Adani, we have a judicious blend of a strong value system and evolving best practices for
enhancing and improving - Organisational & Employee Capability for maximising

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organisational objectives. People processes / practices have been designed and executed to
facilitate these in a conducive work environment.

We strive to be not merely another employer but a Group that empowers its people to
experience & celebrate success of businesses. We offer you not just a job but also a satisfying
career and a work-place of the future.

Adani is young and vibrant company with an average workforce age is 34 years. We are a
Group that respects its people and values the strength of each and every employee. The strong
Adani team has people from different culture, background who speak different languages.

Our work culture enables employees to;

 Keep the nations, stakeholders, customers' & employees need in mind and constantly
grow.
 
 Sustain and strengthen the group's spirit of entrepreneurship — taking ownership and
accountability for their actions
 
 Integrate and leverage synergies to create impact, learn and build on the diverse
experiences and required competencies of our various businesses and teams.
 
 Create high performing organisation through meritocracy with a commitment to
transparent systems and processes.
 
 Be enterprising with a professional approach. Appropriate systems, processes, open &
transparent culture, engagement help in this endeavour.

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 THEORITICAL ASPECT OF STUDY

 CONCEPT OF FINANCIAL STATEMENT

 TYPES OF FINANCIAL ANALYSIS

 IMPORTANCE OF FINANCIAL ANALYSIS

 TECHNIQUES OF FINANCIAL STATEMENT

 CONCEPT OF RATIO ANALYSIS

 TYPES OF RATIO

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 THEORY OF FINANCIAL STATEMENT

A financial statement is an organized collection of data according to logical and

consistent accounting procedures. Its purpose is conveying an understanding of
some financial aspect of a business firm. It may show a position at a moment of
time as in the case of a balance sheet, or may reveal a series of activities over a
given period of time, as in the case of an income statement.
The term financial statements generally refer to 4 basic statements;
(1) The income statement,
(2) The balance sheet. Of course, a business may also prepare
(3) A statement of retained earnings, and
(4) A statement of changes in financial position.

FINANCIAL STATEMENTS

STATEMENT
INCOME BALANCE STATEMENT OF OF
STATEMENT SHEET RETAINED CHANGES IN
EARNINGS FINANCIAL
POSITION

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INCOME STATEMENT

The income statement is generally considered to be the most useful of all

financial statement. the nature of the ‘income” which ie focus of the income
statement can be well understood if a business is taken as an organization that
uses ‘inputs” to ‘produce” output. The outputs are the goods and services that
the business provides to its customers. The values of these outputs are the
amounts paid by the customers for them. These amounts are called “revenues”
in accounting. The inputs are the economic resources used by the business in
providing these goods & services.

BALANCE SHEET

It is a statement of financial position of a business at a specified moment of

time it represent all assets owned by the business at a particular moment of
time. The important distinction between an income statement and a balance
sheet is that the income statement is for a period while balance sheet is on a
particular date. Income statement is a flow report, as contrasted with the balance
sheet which is a static report. However, both are complementary to each other.

STATEMENT OF RETAINED EARNINGS

The term retained earning means the accumulated excess of earning over losses
and dividend. it is fundamentally a display of things that have caused the
beginning-of- the- period retained earning balance to be changed into the one
shown in the end-of –the- period balance sheet.
The statement is also termed as profit and loss appropriation account in case of
companies.

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STATEMENT OF CHANGES IN FINANCIAL
POSITION

The balance sheet shows the financial condition of the business at a particulars
moment of time while the income statement discloses the result of operations of
business a period of time. This information is available in the statement of
changes in financial position of the business.

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 TYPES OF FINANCIAL ANALYSIS

 ON THE BASIS OF MATERIAL USED: According to this basis, financial

analysis can be of two types.

 External analysis: This analysis is done by those who are Outsider for the
business. The position of these analysis has improved in recent times on
account of increased governmental control over companies and governmental
regulations requiring more detailed disclosure of information by the companies
in their financial statement

 Internal analysis: This analysis is done by persons who have Access to the
books of account & other Information related to the business.

 ON THE BASIS OF MODUS OPERANDI : According to this basis,

Financial analysis can also be of two types:

 Horizontal analysis: financial statement for a number of years are reviewed

and analyzed. Te current year’s figures are compared with the standard or base
year. Such an analysis gives the management considerable insight into levels
and areas of strength and weakness. It is also termed as “dynamic analysis”.

 Vertical analysis: Analysis a study is made of the quantitative Relationship of

the various items in the financial statement on a particular date. It is also called
“static analysis”.

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 IMPORTANCE OF FINANCIAL STATEMENT

The information given in the financial statement is very useful to a number of

parties as given below;

 OWNERS; The owners provide funds for the operations of a business and
they want to know whether their funds are being properly utilized or not. The
financial statements prepared from time to time satisfy their curiosity
.
 CREDITORS; The creditors want to know the financial position of a
concern before giving loans or granting credit. The financial statement helps
them in judging such position.

 INVESTORS: prospective investors, who want to invest money in a firm,

would like to make an analysis of the financial statement of what firm to know
how safe proposed investment will be.

 EMPLOYEES: employees are interested in the financial position of a

concern they serve, particularly when payment of bonus depend upon the size of
the profit earned.

 GOVERNMENT: Central and state governments are interested in the

financial statement because they reflect the earnings for a particular period for
purpose of taxation.

 RESEARCH SCHOLARS: the financial statements, being a mirror of the

financial position of a firm, are of immense value to the research scholars who
wants to make a study into financial operations of a particular firm.

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 CONSUMERS: consumers are interested in the establishment of good
accounting control so that cost of production may be reduced with the resultant
reduction of the prices of goods they buy.

 MANAGERS: management is the art of getting things done through

others. This requires that the subordinates are doing work properly. Financial
statements are an aid in this respect because they serve the manager is
appraising the performance of the subordinates.

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STAGES OF FINANCIAL STATEMENT ANALYSIS

The following are the stages of financial statement analysis.

1. ESTABLISHED RELATIONSHIP: A relationship is established

among financial statements with the help of tools and techniques of
analysis such as ratio, trend, common-size, fund flow etc.

2. RE-ARRANGEMENT: Whatever information is available must be re-

arrangement with a view to derive the maximum information from the
analysis of financial statement. Re-arrangement depends upon the
purpose of analysis.

3. COMPARISION: It is also required to connect data in such a from

whereby comparison is done easily. For this purpose data of some more
years is required.

4. ANALYSIS AND INTERPRETATION: Data is analyzed as per

purpose and them interpreted. Interpretation should be precise.

5. CONCULUSION: The conclusion draws from interpretation are

presented to the management in the form of report.

35
 LIMITATION OF ANALYSIS OF FINANCIAL
STATEMENT

Analysis of financial statement is most important device but the person using
this device must keep in mind its limitation. The following are the main
limitation of the analysis:

 HISTORICAL NATURE OF FINANCIAL STATEMENT: The basic nature of

these statements is historical, i.e., relating to the past period. Past can never be a
precise and infallible index of the future and can never be hundred per cent
helpful for the future forecast and planning.

 FINANCIAL ANALYSIS IS ONLY A MEANS: Financial analysis is a means

to an end and not the end itself. The analysis should be used as a starting point
and the conclusion should be drawn not in isolation, but keeping in overall
picture and the prevailing economic and political situation.

 FINANCIAL STATEMENT IS ESSENTIALLY INTERIM REPORT: The

profit shown by profit and loss account and the financial position as depicted by
the balance sheet is not exact. The exact position can be known only when the
business is closed down.

 CHANGE IN ACCOUNTING METHOD: Analysis will be effective if the

figures derived from the financial statement are comparable. Due to change in
accounting methods, the figures of the current period may have no comparable

36
 base, and then the whole exercise of analysis will become futile and will be of
little value.

 SHORTCOMING OF THE TOOL OF ANALYSIS: There are different tools

of analysis available to the analyst. Which tool is to be used in a particular
situation depends on the skill, training, and expertise of the analyst.

 IGNORING QUALITATIVE ASPECT: Financial analysis does not

measure the qualitative aspect of the business. It is the quantitative
measurement of performance. It means that analysis of financial statement
measures only the one sided performance of the business.

 IGNORING PRICE LEVEL CHANGE: The comparability of ratio suffers

if the prices of the commodities in two different years are not the same. Change
in price affects the cost of production, sales and also the value of assets.

 FINANCIAL STATEMENTS IS ONLY A TOOL, NOT THE FINAL

REMEDY: Analysis of financial statement is a tool to measure the profitability,
efficiency and financial soundness of the business. It should be noted that
personal judgment of the analyst are most important in financial analysis. We
should not rely on single ratio.

37
 TECHNIQUES OF FINANCIAL ANALYSIS

A financial analysis can adopt one or more of the following techniques/tools

of financial analysis:

FINANCIAL ANALYSIS
TECHNIQUES

COMPARATIVE CASH FLOW RATIO

STATEMENT ANALYSIS ANALYSIS

38
 COMPARATIVE STATEMENT: A Comparatives statement is those in
which figures reported are converted into percentages to some common base. In
the income statement the sale figure is assumed to be 100 and all figures are
expressed as a percentage of this total.

The comparative statements show the percentages of each item to the total in
each period but not variations in respective items from period to period. On
account of this reason comparative statement are not much useful for financial
analysis. However, comparative statements are useful for studying the
comparative financial position of two or more business.

39
 Advantages of comparative statement

 Such statements are easily understandable;

 It helps in the comparison between two or more years or two or more

firms

 Variations are in proportions instead of being absolute

 Analysis becomes qualitative instead of qualitative

 Qualitative analysis helps in the formulation of future financial

policies.

 CASH FLOW STATEMENT: cash plays very important role in the

entire economic life of business. It is very essential for a business to maintain an
adequate balance of cash. Cash flow statement is a statement of changes of
financial position in business due to inflow or outflow of cash and their
statement is required for short-range business premises. A cash flow statement
summarizes the causes of change in cash position of a business enterprise
between dates of two balance sheets. A cash flow statement is useful for short-
term planning. Cash flow analysis is an important financial tool for the
management.

Advantages of cash flow statement:

 Helps in efficient cash management

 Helps in internal financial management
 Discloses success or failure of cash planning
 Helps in declaring dividends etc.

40
 CONCEPT OF RATIO ANALYSIS

This is most important tool available to financial Analysis for this work. An
accounting ratio shows the relationship in mathematical terms between two
interrelated accounting figures. Ratio analysis is a technique of analysis and
interpretation of financial statements. It is the process of establishing and
interpreting various ratios for helping in making certain decisions. Thus, ratio
analysis measures the profitability, efficiency and financial soundness of the
business.

Objective of ratio analysis:

 Measuring the profitability

 Judging the operational efficiency of business
 Assessing the solvency of the business
 Measuring short and long-term financial position of the company
 Facilitating comparative analysis of the performance

Advantages of ratio analysis:

 Helpful in financial analysis

 Helpful in explaining financial health of the enterprise
 Helpful in locating shortcomings/weaknesses
 Helpful in future forecasting
 Helpful in comparing inter-firm performance
 Helpful in simplifying accounting figure
 Helpful in assessing operating efficiency of the business

41
 TYPES OF RATIOS

 CURRENT RATIO: Current Ratio depicts the relationship between

Current Assets and Current Liability. Current ratio is required to evaluate
the ability of a firm to meet its short term obligations in time. It helps to
access the short term financial position of the business enterprise. It
shows how many times current assets are in excess of current liability.
CURRENT RATIO = Current Assets
Current liability
 QUICK RATIO: Also known as Liquid Ratio or Acid Test Ratio. Quick
Ratio establishes the relationship between Liquid Assets and Current
Liability. In current assets, a rupee of cash is considered equal to a rupee
of inventory but in fact a rupee of cash is more liquid to meet obligations
than a rupee of inventory. Considering this fact, liquid ratio offers a better
measure to immediately evaluate the short-term liquidity of the firm.
Here liquid assets refers to those current assets which can be immediately
converted into cash without any loss.

QUICK RATIO = Liquid Assets

Current Liabilities
 DEBTORS TURNOVER RATIO: Debtors Turnover Ratio establishes
the relation between Receivables and Net Credit Sales . It shows with
which debtors or receivables are converted into cash. Its tests the liquidity
of debtors of a firm.
DEBTORS TURNOVER RATIO = Net credit sales
Average Debtors

42
 AVERAGE COLLECTION PERIOD: It is a step further for measuring
the liquidity of firms debtors. Average age of receivables is the time
margin between credit sales and its conversion into cash.

AVERAGE COLLECTION PERIOD = Days in a year

Debtors Turnover
 WORKING CAPITAL TURNOVER RATIO: This ratio shows the
number of times working capital is turned over in a stated period. Also, it
indicates the extent to which the working capital funds have been
employed in the business towards sales. This ratio indicates the
efficiency in the utilization of short-term funds in making the sales.
Interestingly, amount of capital employed can be easily reduced by
handling short-term assets with due care, thereby improving the resulting
turnover.
WORKING CAPITAL TURNOVER RATIO = Net Sales
Net Working Capital

 CURRENT ASSETS TURNOVER RATIO: This ratio measures the

relationship between net sales and current assets. This ratio shows how
efficiently the current assets are utilised in achieving the targetted sales of
the business enterprise.

CURRENT ASSETS TURNOVER RATIO = Net Sales

Current Assets

43
 NET PROFIT RATIO: This ratio establishes the relationship between
net profit and net sales. Increase in net profit ratio indicates better
efficiency of the business enterprise. It shows the net results of
operational activities of business enterprise.

NET PROFIT RATIO = Net Profit × 100

Net Sales

INVENTORY TURNOVER RATIO: It indicates the number of

times inventory is replaced during the year. It shows the
relationship between the cost of goods sold and the inventory level.
It is also called Stock or Merchandise Turnover Ratio. The point to
be noted here is that cost of goods sold is considered as against
sales because stock account is maintained at cost price.

INVENTORY TURNOVER RATIO = Sales

Average Inventory
 CREDITORS TURNOVER RATIO: It establishes the relation
between Payables and Net Credit Purchases. It shows the speed with
which creditors or payable are to be paid. The entities, to whom amount
is owed by the business enterprise, on account of credit purchases of
goods and services are known as creditors and when bills are accepted in
lieu of such credit purchases such bills are known as bills payables.
CREDITORS TURNOVER RATIO = Net Credit Purchases
Average Creditors

44
 STRUCTURE OF CURRENT ASSETS AND CURRENT
LIABILITIES

CURRENT ASSETS :-
1. Cash & Bank Balances.
2. Investment held for short-term purposes and also securities which are
easily marketable (Money Market Securities and other like
Instruments).
3. Short - term Fixed Deposit (with in one year maturity).
4. Sundry Debtors or Receivables (Bill purchasing & discounting by Bank /
non-banking financial institutions included).
5. Deferred receivables limited to installments due with in one year.
6. Raw Material in transit.
7. Raw materials / components in stock and is used in course of normal
production.
8. Stock of work - in - progress.
9. Finished goods and goods in transit.
10. Consumable stores.
11. Pre-paid expenses including advance payment of tax.
12. Advances to suppliers for raw materials, consumables etc.
13. Security / Earnest Money Deposit returnable within reasonable
production cycle.

45
CURRENT LIABILITIES :-
1. Creditors for raw materials, consumables etc.
2. Advance payment or stage payment received from customers.
3. Deposit from authorized agents and the like.
4. Deferred installment payable within a year whether for repayment of
term loan / debenture or deferred payment for credit.
5. Interest / other charges payable.
6. Public deposit repayable within a year.
7. Unsecured loans payable within a year.
8. Statutory liabilities like ESI, Co-operative Dues, P.E., Sales Tax,
Excise Duty, Salaries and Wages.
9. Other current liabilities like dividend, gratuity payable yearly, other
similar liabilities for expenses.

46
 MANAGEMENT OF ACCOUNTS RECEIVABLE

Meaning of Account Receivable :-

Selling goods is the most prominent force of modern business. Modern firms
resort to credit sales for increasing the volume of their sales and earning
maximum profits. Selling goods on deferred payment basis is termed as 'trade
credit'. Trade credit is also known as account receivables or book debts or
sundry debtors. Thus, accounts receivables, popularly termed as receivables, are
a direct consequence of trade credit which become an inevitable marketing tool
in modern business. Receivable constitute a significant portion of the total
current assets of the firm, next to inventories and cash. Generally, 5 to 25
percent of the total assets of the companies account for the investment in
account receivables, depending upon the nature of business. This percentage
varies between 5 to 10 percent in case of manufacturing companies, and 20 to
25 percent in cash of trading companies.

It is, therefore, necessary on the part of the financial manager to pay to due
attention to the management of account receivables. A contant vigilance in
respect of the level of receivables, credit policy and procedures is essential for
the growth and expansion of the firm.

Receivables or account receivable are the asset account representing amount

receivable by the firm on account of sale of goods and services on deferred
payment basis.

Receivable therefore, represent the claim of the firm against its customers, and
are carried to the assets sides of the balance sheet under titles such as book
debts, account receivables, trade receivables or customer receivables.

47
Trade credit is a very useful source of finance. Controlling trade credit requires
different techniques which are different from those applies to assets because the
decision process is different.

It we presume that a discount is offered by supplier at 2% if payment is made

with 10 days as against usual period of payment of 45 days. Here the buyer will
have to take decision whether he will pay within 10 days and avail of 2%
discount or he will pay on 45 days. In such cases, the simplest way is to
compare the rate of investment opportunity the buyer may get by not paying
within 10 days with the rate of discount offered if payment is made within 10
days. Thus if the amount of trade credit Rs.100, the buyer will have to pay latest
on 10th day Rs.98 (Rs.100-Rs.2)

The rate come to 2/98*100% = 2.04%

This 2.04% return on investment applies for 35 days and hence to find out
annual rate equivalent we get :

2.04*365/35% = 21%

This 21% is the annual before tax cost of trade credit for the supplier who has
offered this discount.

This rate is compared with buyer's investment rate to take the discount' If he
can earn more than 21% on the comparable low risk investment, it will be
advisable to delay the payment till 45 days and reject the offer of discount.

In case where there is a problem of cash flow and the suppler cannot be paid
within 10 days for availing of discount of 2%, it will be wise to arrange a Bank
overdraft of 10% interest than forego a discount of 21%.

48
 MANAGEMENT OF INVENTORIES

MEANING OF INVENTORIES :-
Inventories are the stock of goods held by a firm for eventual sale or use in
manufacturing goods meant for sale. It includes raw materials, work in progress
and finished goods. Raw Materials are those goods, which have not yet been
committed to production in a manufacturing concern. They consist of basic raw
materials or components, 'work in progress' includes those materials which have
been committed to production process but have not yet been converted to
finished products. 'Finished goods' are the completed products awaiting sale.
They are the final output of the production process In a manufacturing concern.
In case of wholesale and retail trade the finished goods inventory is referred to
as merchandise inventory.

49
 ANALYSIS AND
INTERPRETATION

50
 FINANCIAL STATEMENT OF

RAMA SHYAMA DUPLEX Ltd.

PARTICULARS 2011-12 2013-14 2011-12 2013-14
Sales & Other Income 1012.23 856.26 1077.06 1088.76
Profit before Dep. & 175.96 133.41 138.36 156.90
Financial Charges
Less :
Depreciation Financial 18.31 22.46 35.05 39.38
charges
31.45 34.91 65.26 70.01
Profit before Tax 126.20 76.04 380.50 47.51
Less : Provision for
Tax 32.93 0.99 0.81 0.50
Profit after Tax 93.27 66.15 29.97 42.52
Add : Profit brought
from last year 179.75 251.20 298.50 328.50
Profit available for 273.02 317.35 328.50 371.03
Appropriation

51
 ADANI WILMAR
BALANCE SHEET AS AT 31ST MARCH 2014

PARTICULARS SCHEDULE CURRENT YEAR PREVIOUS YEAR

NUMBER FIGURES (Rs.) FIGURES (Rs.)

SOURCES OF FUNDS
SHARE HOLDER’S FUNDS
Share Capital 1 66.600,000.00 66,600,000.00
Reserves & Surplus 2 37,800,000.00 104,400,000.00 37,800,.000.00 104,400,000.00
LOAN FUNDS
Secured Loans 3 157,163,026,.35 129,717,131.35
Unsecured Loans 4 56,167,769.00 213,330,975.35 43,117,769.00 172,834,900.35

DEFERRED TAX LIABILITY 2,261,000.00

TOTAL Rs. 319,991,795.35 277,234,900.35

APPLICATION OF FUNDS
FIXED ASSETS
Gross Block 5 210,753,113.15 205,833,993.31
Less : Depreciation 07,188,208.62 143,584,904.53 56,581,672.62 149,252,320.69

CURRENT ASSETS, LOAMS & ADVANCES

Inventories 6 73,155,394.04 47,716,234.24
Sundry Debtors 7 108,021,793.00 68,370,049.00
Cash & Bank Balances 8 2,416,249.45 4,016,407,35
Loans & Advances 9 15,747,180.63 9,361,492.94
199,340,617312 129,464,183.53
Less: Current Liabilities & Provisions 10 32,300,661.65 167,039,955.47 15,898,002.01 113,566,181.52

PROFIT & LOS ACCOUNT

(As per Profit & Loss Account Annexed) 9,366,935.35 14,416,398.14

TOTAL Rs. 319,991,795.35 277,234,900.35

NOTES ON ACCOUNTS
Schedule 1 to 11 and 17 form an 17
integral part of Balance Sheet

ADANI WILMAR

52
 PROFIT & LOSS ACCOUNT FOR THE YEAR ENDING 31ST MARCH 2014

PARTICULARS SCHEDULE CURRENT YEAR PREVIOUS YEAR

NUMBER FIGURES (Rs.) FIGURES (Rs.)

INCOME
Turnover -- 237,740,448.00 198,010,097.00
Less: Excise Duty Recovered 2,794,863.00 234,945,585.00 5,326,496.00 192,683,601.00
Increase\(Decrease) in Stock 11 8,448,249.84 5,038,509.42
243,393,834.84 197,722,110.42
EXPENDITURE
Goods Purchases 57,022,142.00 18,966,448.00
Raw Material Consumed 12 88,414,768.89 74,340,730.20
Manufacturing Expenses 13 52,513,793.19 65,332,280.24
Payments to and Provisions for Employees 14 2,704,357.00 2,527,141.00
Administrative & Selling Expenses 15 1,989,220.22 2,669,460.50
Finance Charges 16 22,845,176.75 18,053,809.01
Depreciation 5 10,586,536.00 8,918,195.72
236,076,004.05 190,808,064.67
PROFIT FOR THE YEAR 7,317,830.79 6,914,045.76
Provision for Tax
Income Tax 1,133,,731,.00 712,123.00
Fringe Benefit Tax 4,242.00 43,044.00
Mat Credit Entitlement (1,130,605.00) (712,147.00)
Deferred Tax 2,261,000.00 2,268,368.00 -- 43,020.00
PROFIT AFTER TAX 5,049,462.79 6,871,025.76
Less : Loss brought forward from previous
year 14,416,398.14 21,287,423.90
BALANCE BEING LOSS CARRIED OVER TO
BALANCE SHEET 9,366,935.35 14,416,398.14

NOTES ON ACCOUNTS 17
Schedule 5 and 12 to 17 form an integral
part of Profit & Loss Account

53
 CONSOLIDATED FIGURES

(AS ON 2011-12 TO 2013-14)

PARTICULARS 2009-10 2010-11 2011-12 2013-14

Current Assets 281.16 295.63 306.65 358.90
Current Liabilities 230.36 135.74 133.74 212.31
Quick Current Asset 199.56 195.08 209.03 217.26
Inventory 81.60 100.05 97.62 141.64
Average Inventory 48.00 50.27 48.81 78.20
Debtors 142.64 105.02 133.81 161.84
Average Debtors 71.32 52.81 66.91 80.92
Net Working Capital 50.80 159.89 172.91 146.59
Sales 992.88 833.91 1063.25 1080.91

CALCULATION OF CURRENT ASSETS &

CURRENT LIABILITIES
(Rs. In Lacs)

54
PARTICULAR 2009-10 2010-11 2011-12 2013-14
S
Current Assets :
Inventory 81.60 100.53 97.26 141.64
Debtors 142.64 105.62 133.81 161.84
Cash & Bank 1.28 7.02 14.31 16.42
Balance
Loans & 55.63 82.42 61.26 38.99
Advances
Total (A) 281.16 295.63 306.65 358.90

Current Liabilities :
Sundry Creditors 2.53 0.99 4.92 27.68
Advances from 1.26 - 1.98 5.98
Customers
Other Liabilities 220.70 131.28 123.48 178.05
Provisions 5.87 3.47 3.36 0.69
Total (B) 230.36 135.74 133.74 212.31

55
 CALCULATION OF CURRENT RATIO

Current Ratio = Current Assets

----------------------
Current Liabilities

(Rs. In Lacs)

PARTICULARS 2010-11 2011-12 2012-13 2013-14

Current Assets 281.16 295.63 306.65 358.90
Current Liabilities 230.36 135.74 133.74 212.31

56
 GRAPH SHOWING
CURRENT RATIO

2.5
2.29
2.18

1.69

1.5
CURRENT RATIO

1.22

0.5

0
2010-11 2011-12 2012-13 2013-14

FIG. –2 - Graph showing current ratio of last 4 years.

57
 INTERPRETATION

Current Ratio is also a measure of the firm's short solvency. It indicates the
availability of current liabilities. The current ratio represents a margin of safety
i.e., a "cushion" of protection for creditors. Higher the ratio the greater the
margin of safety. Larger amount of working capital shows more favourable
position. Normally 2:1 ratio is preferable.

The current ratio is calculated by dividing current assets by current liabilities.

This ratio, no doubt improved from 1.22:1 in 2010.11 to 2011-12 is an
increasing trend but got deteriorated in 2002-03 to 1.91:1. The volume of other
liabilities has increased in 2010-11. The working capital in the year 2011-12 is
50.80 Lacs compared to 146.57 Lacs in the year 2010-11. it has been seen that
in the year 2010-11 inventory increases to 141.64 Lacs. Due to increase in
inventory other liabilities increases, which leads to decrease in of current ratio
in 2010-11.

The current assets is a test of quantity and not quality. In general the firm's
keeping more current assets is not good. This is because it will affect the
company's profitability. Actually current assets are non-producing ones. The are
needed only for the day-to-day dealings. Therefore keeping more current assets
is non-productive.

58
 CALCULATION OF

INVENTORY TURNOVER RATIO

Inventory Turnover Ratio = Sales

-------------
Inventory

(Rs. In Lacs)

PARTICULARS 2010-11 2011-12 2012-13 2013-14

Sales 992.28 833.91 1063.25 1082.91
Inventory 81.60 100.55 97.26 141.64

59
 GRAPH SHOWING
INVENTORY TURNOVER RATIO

14
12.16
12 11.24
inventory turnover ratio

10
8.29
8 7.63

6
4
2
0
2010-11 2011-12 2012-13 2013-14

FIG. –4 - Graph showing inventory turnover ratio of last 4 years.

60
 INTERPRETATION

This is a test of inventory to discover possible trouble in the form of

overstocking or overvaluation. Generally, a high inventory turnover ratio is an
indication of good inventory management. If there is decreasing trend of ratio of
net sales and inventory would become excessive, any sudden drop in inventory
value would involve losses. If the inventory will be excessive, it can result into
bankruptcy.

Company is maintaining high inventory turnover ratio in 2009-10 but it is

showing decreasing trend which company has to control to prevent the
overstocking. In not shall company is having satisfactory inventory turnover
ratio according to the industry.

61
CALCULATION OF AVERAGE

COLLECTION PERIOD

Average Collection Period = 360

------------------------
Debtors Turnover

(Rs. In Lacs)

PARTICULARS 2010-11 2011-12 2012-13 2013-14

No. of Days 360 360 360 360
Debtors Turnover 13.92 15.79 15.89 15.24
Ratio
Average Collection 25.86 22.80 22.60 23.62
Period

GRAPH SHOWING

AVERAGE COLLECTION PERIOD

62
 14
12.16
12 11.24
inventory turnover ratio

10
8.29
8 7.63

6
4
2
0
2010-11 2011-12 2012-13 2013-14

FIG. –5 - Graph showing Average collection period of last 4 years.

INTERPRETATION

Average collection period measure the quality of debtors since it indicates the
rapidly or slowness of their collectively. The shorter the average collection

63
period the better the quality of debtors, as short collection period implies the
prompt payment by debtors.

In case of ADANI WILMAR period is 25.80 days in 1997-98 which decreased

to 22.8 days in 2010-11 and after that the average collection period is almost
same which shows the company has good credit policy and company is making
effort for the collection of the account receivables and in formulating credit
policy.

CALCULATION OF

DEBTORS TURNOVER RATIO

64
 Debtors Turnover Ratio = Sales
------------------------
Average Debtors

(Rs. In Lacs)

PARTICULARS 2010-11 2011-12 2012-13 2013-14

Sales 992.88 933.91 1063.25 1080.91
Average Debtors 71.32 52.81 66.90 70.92
Debtors Turnover 13.92 15.79 15.89 15.24
Ratio

16.5

16 15.79 15.89
DEBTORS TURNOVER RATIO

GRAPH SHOWING
15.5 15.24
DEBTORS TURNOVER RATIO
15

14.5

14 13.92

13.5

13
65
12.5
2010-11 2011-12 2012-13 2013-14
 Fig. 6 - Graph showing debtors turnover ratio of last 4 years.

INTERPRETATION

The liquidity position of the firm depends on quality of debtors. The debtor’s
turnover ratio indicates the number of items, as the average debtors turnover
each year. Generally, higher the value of the debtor’s turnover the more
efficient is the management of credit.

66
Company is maintaining it’s debtor turnover at the constant level of 15.7 from
2012 it shows that the company has efficient credit management and company
is able to realize from debtor, expected.

CALCULATION OF

CURRENT ASSET TURNOVER RATIO

Current Asset Turnover Ratio = Sales

------------------------
Current Assets

67
 (Rs. In Lacs)

PARTICULARS 2010-11 2011-12 2012-13 2013-14

Sales 992.88 933.91 1063.25 1080.91
Current Assets 281.16 295.63 306.65 358.90
Current Assets 3.53 2.82 3.47 3.01
Turnover Ratio

GRAPH SHOWING
CURRENT ASSET TURNOVER RATIO

CURRENT ASSET TURNOVER RATIO

4
3.53 3.47
3.5
3.01
3 2.82
2.5
2
1.5
1
0.5
0
2010-11 2011-12 2012-13 2013-14

68
 Fig. 7 - Graph Showing Current asset turnover ratio of last 4 years.

INTERPRETATION

A firm’s ability to produce large volume of sales for a given amount of current
assets is the more important aspect of operating performance. It indicates
whether the investment in current assets or net assets has been properly utilized.

Company is operating almost at the same level of efficiency, which is 3.53 in

2010-11 and 3.01 in 2009 but company needs to improve its efficiency to
further its performance.

69
CALCULATION OF

NET PROFIT TO NET SALES RATIO

Net Profit to Net Sales Ratio = Net Profit

----------------------- X 100
Net Sales

(Rs. In Lacs)

PARTICULARS 2010-11 2011-12 2012-13 2013-14

Net Profit 126.20 76.04 38.05 47.51
Net Sales 992.80 833.90 1063.20 1080.90
Net profit 12.71 9.10 3.50 4.39
70
Net Sales Ratio (%)

GRAPH SHOWING NET PROFIT TO NET

SALES RATIO
net profit to net net sales ratio

14 12.71
12
10 9.1
8
6 4.39
4 3.5
2
0
2010-11 2011-12 2012-13 2013-14

71
 Fig. –9 - Graph showing Net profit to net sales ratio of last 4 years.

INTERPRETATION

This is the ratio of net profit to net sales and also expressed as percentage. It
indicates the amount of sales left for shareholders after all costs and expenses
had been met. The higher the ratio, the greater will be the profitability and
higher the return to the shareholders, 5% to 10% may be considered normal. It
is a very useful tool to control the cost of production as well as increased sales.

The ratio was 12.7% in 2010-11 after that it has declined upto 3.5% in 2011-12
but after 2012-13 company has improved it’s operating efficiency and ratio
starts increasing 4.39% in 2010-11.

72
FINDINGS AND
SUGGESTIONS

73
 FINDINGS & SUGGESTIONS

Findings :

After analysis the financial statements of ADANI WILAMR for 4 years

following findings can be put forward.

1. After comparing the financial statement of last 4 years there is a decrease

in working capital requirement due to the payment of loans & advances
as well as increase in current liability that was a positive sign to company
for managing working capital.

2. Company has good credit profile policy but in the year 2010-11 there is a
decrease in debtors turnover ratio.

3. Net Profit Ratio of the company is considerable decrease during the last 3
years.

Burden of financial charges has increased due to rise in short term

borrowings.

74
 4. There is considerable rise in creditors during 2010-11 due to fall in
profitability and diversification of funds to long term.

5. There is considerable increase in interest burden due to the modernization

of plant & machinery in 2010-11 and 2011-12.

6. Company’s stock turnover ratio has a declining trend which has declined
from 12.16 in 2010-11 to 7.63 in 2011-12.

7. Company has marinating sound, liquid position, as its quick ratio is

1.02:1.

Suggestions :

1- Net profit has decreased abruptly the company has to take steps to
increase the operating efficiency.

2- Stock Turnover of the company quite low at 7.63 in 2011-12 as

compared 12.16 in 2010-11. Therefore company must take steps to
increase the inventory turnover.

3- There has to be on optimization of investment in inventory.

4- The company has to check its increasing creditors.

5- The company improved its profitability.

From the above findings we can say that ADANI WILMAR is in good financial
position. Above analysis shows that company has adopted sound financial
policies and it require to improve its efficiency to increase its profitability.

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BIBLIOGRAPHY

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 BIBLIOGRAPHY

Books------

M K William

L M Bhole, Financial Institutions

Nalini Prava Tripathy, Financial Services

Preeti Singh, Dynamics of Indian Financial System Markets

Internet Sites------

www. managementstudyguide.com
www.books.google.com.in
www.scribd.com
www.wikipedia.org

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