A STUDY ON FINANCIAL STATEMENT ANALYSIS OF

LAKSHMIGRAHA WORLDWIDE INC

Submitted by
M. SUMEKA
19BCF101
Under the guidance of
DR.V. PRINCE MARTINE M.COM., MBA., PGDBA., MPHI., Ph.D.,
ASSOCIATE PROFESSOR IN COMMERCE (PA & AF)
Submitted in partial fulfillment of the requirements for the award of the degree of
BACHELOR OF COMMERCE WITH ACCOUNTING AND FINANCE
Bharathiyar University
Coimbatore-46

HINDUSTHAN COLLEGE OF ARTS AND SCIENCE (AUTONOMOUS)

(Affiliated to Bharathiyar University)
(ISO 9001:2008 Certified Institution)
Behind Nava India, Coimbatore-641028.
MAY -2022
CERTIFICATE
 CERTIFICATE

This to certify that the Project report, entitled

A STUDY ON FINANCIAL STATEMENT ANALYSIS

Submitted in partial fulfillment of the requirements for the award of the degree of

BACHELOR OF COMMERCE WITH ACCOUNTING & FINANCE

Is a bonafide record work done by

M. SUMEKA

19BCF101

During the period of his/her study (2021 - 2022)

DEPARTMENT OF COMMERCE WITH PROFESSIONAL ACCOUNTING

DEPARTMENT OF COMMERCE WITH ACCOUNTING & FINANCE

HINDUSTHAN COLLEGE OF ARTS AND SCIENCE (AUTONOMOUS)

COIMBATORE-28

________________ ____ ______

DR.V. PRINCE MARTIN Dr.M.NIRMALA

Submitted for the viva-voice examination held on . . . . . . . . . . . . . . .

______________ _________________

INTERNAL EXAMINER EXTERNAL EXAMINER

ACKNOWLEDGEMENT
 ACKNOWLEDGEMENT

I like to express my sincere gratitude and thanks to our PRINCIPAL

Dr. A. PONNUSAMY, MSW., MBA., DLL., M.Phil., Ph.D., and the management
for giving me an opportunity to do this project, during my course of study.

I am extremely thankful to Dr.M.NIRMALA, M.Com., M.Phil.,Ph.D.,

SETHEAD OF THE DEPARTMENT OF COMMERCE WITH
PROFESSIONAL ACCOUNTING AND ACCOUNTING & FINANCE.

I also express my gratitude to DR.V. PRINCE MARTINE M.COM., MBA.,

PGDBA., MPHI., Ph.D., for valuable support given for the project.

I also express my profound gratitude to the respondents for their generous help
provided for this work.

I also take an opportunity to thank all teaching and non-teaching staff for their
valuable distance provided in this project work.
DECLARATION
 DECLARATION

I M.SUMEKA hereby declare that the project report, entitled “A

STUDY OF FINANCIAL STATEMENT ANALYSIS OF LAKSHMIGRAHA
WORLDWIDE INC " in Coimbatore, submitted to the Bharathiyar University,
Coimbatore in partial fulfillment of the requirements for the awards of the degree of
BACHELOR OF COMMERCE – ACCOUNTING AND FINANCE is a record of
original and independent research work done by me during March 2021 under the
supervision and guidance of Dr.V.PRINCE MARTIN Associate Professor,
Department of Commerce - PROFESSIONAL ACCOUNTING &
ACCOUNTING FINANCE and it has not formed the basis for the award of any
Degree/Diploma/Associate ship/Fellowship or other similar title to any candidate of
any university.

DATE: Signature of the candidate

PLACE: M.SUMEKA

19BCF101
CONTENTS
 TABLE OF CONTENTS

CHAPTER CHAPTER NAME PAGE NO

NO

I 1.1 INTRODUCTION 1
1.2 :STATEMENT OF THE PROBLEM 1
1.3 :OBJECTIVE OF THE STUDY 2
1.4: METHODOLOGY 2
1.5 SOURCES OF DATA 2
1.6 : PERIOD OF STUDY 3

1.7 : SCOPE OF THE STUDY 3

1.8 : LIMITATION OF STUDY 3

1.9 : TOOLS 4

1.10 : CHAPTER SCHEME 4

II REVIEW OF LITERATURE
2.1 INTRODUCTION 4

2.2 REVIEW 4

9
2.3 : REFERENCE
III COMPANY PROFILE 13
IV DATA ANALYSIS AND
INTERPRETATION 22

V FINDINGS AND SUGGESTION AND

CONCLUSION
5.1 : FINDINGS 49

5.2 : SUGGESTIONS 50

5.3 : CONCLUSION 51

REFERENCE 52

ANNEXURE 53

LIST OF TABLES
 LIST OF CHARTS

CHART CHARTS PAGE NO.

NO.
1 CURRENT RATIO 23

2 LIQUID RATIO 25

3 CASH POSITION RATIO 27

4 DEBT RATIO 29

5 SHAREHOLDER EQUITY
31
RATIO
6 RETURN ON INVESTMENT
33
RATIO
7 NET PROFIT RATIO 35

8 RETURN ON ASSETS 37
LIST OF CHARTS
CHART CHARTS PAGE NO.
NO.
1 CURRENT RATIO 24

2 LIQUID RATIO 26

3 CASH POSITION RATIO 28

4 DEBT EQUITY RATIO 30

5 SHAREHOLDER EQUITY
32
RATIO
6 RETURN ON INVESTMENT
34
RATIO
7 NET PROFIT RATIO 36

8 RETURN ON ASSETS 38
 CHAPTER-1
INTRODUCTION
 CHAPTER-I

1.1 INTRODUCTION

Financial statement analysis and interpretation is a very vital instrument

of good management decision making to ensure business survival, profitability and
growth. They play a dominant role in setting the frame work of managerial decisions. But
the information provided is not an end in itself as no meaningful conclusions can be
drawn from these statements alone.

The purpose of financial analysis is to diagnose the information contained in

financial statement so as to judge the profitability and financial soundness of the
firm .Just like a doctor, it helps to treat and analysis the financial statement with various
tools of analysis before commenting upon the financial health and weakness of the
enterprise.

Financial performance is a subjective measure of how well a firm can use assets
from its primary mode of business and generate revenues. This term is also used general
measure of firm's overall financial health over a given period of time and can be used to
compare a similar firm's across the same industry or to compare industries or sectors in
aggregation. The financial performance of the company can be analyzed using the
company's balance sheet, income statement and cash flow. Financial statement analysis is
the process of analyzing a company's financial statement for decision making purposes
and to understand the overall health of an organization.
1
1.2 STATEMENT OF THE PROBLEM

Now a day’s finance plays a vital role in all industries. As this company faces
many financial problems regarding their business activities, this study has been taken to
solve the problems.

1.3 OBJECTIVES OF THE STUDY

 To analyze solvency of the company.

 To access the profitability of the company.

 To find the growth in overall production by comparing the present

And past year balance sheet.

1.4 METHODOLOGY

This study is focused on the profitability and solvency position of the company.
It is based on secondary source of data. This study covers the two years financial
performance of Lakshmigraha worldwide INC.

2
 1.5 SOURCES OF DATA

 Profit and loss account.

 Balance sheet.

1.6 PERIOD OF STUDY

The overall period of data collected for this study is 2018 to 2020.

1.7 SCOPE OF THE STUDY

The study entitled "A Study on the Financial Statement of Lakshmigraha worldwide
INC" is to analyze the financial performance for the past two years.

The study is based on the financial position of the firm by using Ratio
analysis. Financial statements help the management to analyze profit, liquidity and
efficiency and etc. This analysis will give the exact picture of the company. This study
will also help management to take managerial decisions.

1.8 LIMITATIONS OF THE STUDY

 The study is restricted for a period of 3 years.

3
  The data were derived only from the secondary sources so the
accuracy may not be ensured.

 Due to the inadequate time it is not possible to analyze all respects

relevant to the study.

1.9 TOOLS

The tools that are to be used in this study to analyze of the financial

Statement is,

 Short term and long term solvency ratios,

 Profitability ratio and

 Comparative statement.

1.10 CHAPTERIZATION

4
 The report of the present study - a study on FINANCIAL
STATEMENT ANALYSIS OF LAKSHMIGRAHA WORLDWIDE INC has been
organized and presented in five chapters.

CHAPTER - I : Introduction

CHAPTER - II : Review of literature.

CHAPTER - III : Company profile.

CHAPTER – IV : Data analysis and interpretation.

CHAPTER - V : Findings, suggestions and conclusion.

5
 CHAPTER-2
REVIEW AND LITERATURE

6
 CHAPTER-2

REVIEW AND LITEARTURE

2.1 INTRODUCTION

The studies relating to textile exports in India and other countries

highlighting the impact of globalization and liberalization have been
reviewed and summed up in this chapter. Some studies predict a
substantial increase in the size of exports as a result of phasing out of
quota regime while others predict a very cautious approach to be
undertaken by developing countries.

2.1REVIEW

William L. Megginson, Robert C. Nash, Mattthias Van Randen

Borgh (June 1994)1 in their study they compare the pre and post
privatization financial and operating position of 61 companies from 18
countries and 32 industries that experience full or partial privatization
through public share offerings during the period 1990 to 1994. Our
results document strong performance improvements, achieving
surprisingly without sacrificing employment security. Specifically, after
being privatized, firms increase real sales, become more profitable,
increase their capital investment spending, improve their operating
efficiency, and increase their work forces. Furthermore, these companies
significantly lower their debt levels and increase dividend payout. Finally,
document significant changes in the size and composition of corporate
boards of directors after privatization.

4
 Timo Salmi, Teppo Martikainen (March 1996)2 Moderator’s note :
Due to the limited circulation of Finnish journal of Business Economics,
This is an experiment that may or may not be continued as the newsgroup
matures. I would appreciate any comments from readers as to whether this
kind of interpretation should be considered in the future. This paper
provides a critical review of the theoretical and empirical basis of four
central areas of financial ratio analysis. The research areas reviewed are
the functional form of the financial ratios, distributional characteristics of
financial ratios, classification of financial ratios, and the estimation of the
internal rate of return from financial statements. It is observed that it is
typical of financial ratio analysis research that there are several
unexpectedly distinct lines with research seems to be that while
significant regularities can be observed, they are not necessarily stable
across the different ratios, industries and time periods. This leaves much
space for the development of a more robust theoretical basis and for
further empirical research.

Paul M. Hiyale, Professor J. M. Wahlen (August 2000)3 review the

academic evidence on earnings management and its implications for
accounting standard setters and regulators. We structure our review
around questions likely to be of interest to standardsetters. In particular,
we review the empirical evidence on which specific accruals are used to
manage earnings, the magnitude and frequency of any earnings
management, and whether earnings management affects resource
allocation in the economy. Our review also identifies a number of
opportunities for future research on earnings management.

Pepa Kraft (June 2000)4 have examined a dataset of both

5
quantitative adjustments to firms reported U.S GAAP financial statement
numbers and qualitative adjustments to firms credit ratings that Moody’s
develops and uses in its credit rating process. First document differences
between firms reported and Moody’s adjusted numbers that are both large
and frequent across firms. For example, primarily because of upward
adjustments to interest expense and debt attributable to firms off- balance
sheet debt, on average, adjusted coverage (cash flow- to-debt) ratios are 27
percent (8%) lower and adjusted leverage ratios are 70 percent higher than
the corresponding U.S. GAAP ratios. They then find that Moody’s hard
and soft rating adjustments are associated with significantly higher credit
spreads and flatter credit spread term structures. Overall, the results
indicate that Moody’s quantitative adjustments to financial statement
numbers and qualitative adjustments to credit ratings enable it to better
capture default risk, consistent with it effectively processing both hard and
soft information.

Beaver, William. H & Corrcia Maria & Mc Nicholas, Maureen F

(2011)5 Financial statement has been used to assess a company’s
likelihood of financial distress the probability that it will be not able to
repay its debts. Financial statement analysis was used by credit suppliers
to assess the credit worthiness of its borrowers. Today, financial statement
is ubiquitous and involves a wide variety of ratios and a wide variety of
users, including trade suppliers, banks, credit trading agencies, investors
and management, among others. Financial distress refers to the inability
of a company to pay its financial obligations as they mature. Empirically,
academic research in accounting and finance has focused on either bond
default or bankruptcy. The basic issue is whether the probability of
distress varies in a significant manner conditional upon the magnitude of
the financial statement ratios. This monograph discuss the evolution

6
within the financial distress prediction

7
 Kari Joseph Olsen (April 2011)6 investigates the relationship between
narcissistic personality characteristics in CEO’s of fortune 500 companies
and financial performance measures of earnings-per-share (EPS) and stock
valuation. Using panel data from 1992 through 2009, we show that firms
with narcissistic CEO’s have higher earnings-per-share and share price
than those with non- narcissistic CEO’s. We examine the mechanism
driving the observed results and find that narcissistic CEO’s are more
likely to increase reported EPS through real and operational activities
rather than accrual-based manipulations. The findings suggest that
narcissistic personality characteristics of top executives affect financial
performance measures through the executive’s decisions and influence
over the firm’s operational activities rather than through accrual and
accounting decisions.
Bruce K. Behn, Giorgio Gotti, Don Herrman (September 2011)7
Their research on publicly traded U.S firms provides evidence that
managers engage in classification shifting to opportunistically manage
“core” earnings. We extend this line of research in a border
international setting, by examining (1) whether the level of investor
protection affects managers decisions to engage in classification shifting
behaviour and (2) whether coverage by financial analysis mitigates this
behaviour. Based on an international sample of firms from 40 countries,
we observe evidence consistent with classification shifting in both strong
and weak investor protection countries using four separate measures of
investor protection. We then explore the potential monitoring role of
financial analysts in mitigating classification
Marshall Geiger, Joyee Van Der Laan Smith (February 2012)9. They
examine the effect of stakeholder orientation versus shareholders
orientation, and the level of cultural secrecy on individuals perceptions of
earnings management practices. Examining perceptions from 1,260

8
participants from 13 countries indicates that individuals from stakeholder-
oriented institutional backgrounds were less accepting of earnings
management, including both accounting earnings management and
operating earnings management activities, than participants from
shareholder- oriented institutional backgrounds, and that individuals from
secretive cultures were more accepting of both types of earnings
management activities. Our findings provide evidence of the anticipated
perpetual differences across countries with respect to earnings
management and suggest the need for further research linking
perceptions to reported earnings management resources.

9
2.2: REFERENCE

 William L. Megginson, Robert C. Nash, Mattthias

Van Randen Borgh (June 1994) “Comparision of pre
and post privatization of financial and operating
performance”.

 Timo salmi & Teppo Martikainen (1994) “The Finish

Journal of Business Economics”.

 Paul M. Hiyale, Professor J. M. Wahlen ( August 2000)

“ A Review of the Earings Management Literature & its
impaction for standard setting.

 Pepa Kraft ( June 2000) , Associate professor “Accounting

& Management control”

 Beaver, William. H & Corrcia Maria & Me Nicholas,

Maureen F (2011) “ Financial Statement Analysis & the
prediction of Financial Distren & Trends”

 Kari Joseph Olsen (April 2011) “CEO Narcissism &

Accounting” ( A Picture of profile)

 Bruce K. Behn. Giorgio Gotti, Don Herrman

(September 2011)” Research on U.S. trader firms engage
in classification and shifting to opportunistically.”

 Marshall Geiger, Joyee Van Der Laan Smith (February

2012)9 “Orphams Deserve Attention: Financial reporting

10
 in the Missing Month..,”

 Tom Clevenger, Gray Baker (August 2014) “Analysis

of balance sheet & income statement”.

 Mirela Monea (September 2013) “ A Proven plan for financial fitness”

 Jane. Ou, Stephen H. Penman (2013) “Financial

Statement Analysis & Security valuation”. “Earnings &
Book value in equality valuation”.

11
12
 CHAPTER-3

COMPANY PROFILE

13
 CHAPTER-III

2.1 PROFILE OF THE COMPANY

1. Name of the company : Lakshmigraha worldwide INC

2. Address : 26/3, Nehru street, Thottipalayam Pirivu,

Civil Aerodrome(P.O), Coimbatore- 641 014

3. Location : Thottipalayam pirivu

4. District : Coimbatore

5. Year of commencement : 2005

6. Proprietor : Mr.G.R.Gopikumar

7. Form : Private Company

8. Types of products : Home Textiles

14
9. Raw material : Bed covers, Bed, Pillows, Bed sheets and Cloths

10. No of shifts : 1 shift

11. No of working days : 300 days

12. Average no of employees : 30

13. Bank : Tamilnadu Mercantile Bank

14. Nature of business : Textile Company

2.2 ABOUT THE COMPANY

Lakshmigraha worldwide INC is a non-government company limited by
shares. The authorized capital of the company is 2. 00,000 and its paid up capital is also
the same It deals in producing home textile items. And, its register under MSME. The
company registration number is 33AACFL5500G1ZV and its register under the gst act
in 2018 form gst reg-06. The company engaged in Manufacturing and Exporting of
Home textile Products such as Kitchen Linen, Table linen, Bed linen, Bath Linen,
Curtains and Floor coverings, located in Coimbatore, a popular production center for
Home Textile Products in India and marching towards expanding the production
capacities & its customer base. The commodities & services of the company are mainly
structured to fulfill & satisfy the customer’s requirements.

15
OBJECTIVES OF THE COMPANY

The Textiles Committee's main objective is to ensure the quality of textiles and
textile machinery both for internal consumption and export purposes. It includes:

 To achieve overall quality improvement of the products of textile industry by

providing testing (including eco-parameters) and technical services.
 To estimate the domestic consumption of textiles in the household sector.
 To ensure the ultimate satisfaction of the customers.
 To encourage & recognize modernization of Ginning & Pressing factories and
to promote quality culture in ginning industry and supply clean cotton to the
user industry.
 To train technical personnel of SME's in Awareness of Quality Management
System, Statistical Process Control and Internal Quality Audit.
 Improving Internal Efficiency/ responsiveness for service delivery to the
Ministry / Department.

VISION OF THE COMPANY

The vision of the companies is,

 Promote quality and excellence in the Indian textile industry to make it

globally competitive.
 Provide basic infrastructure and guidance to support and enhance quality in
the textile industry.
 To ensure the ultimate satisfaction of the customers.
 To establish the branches of the company on more places.
 To earn a brand name for the products produced by the company.

16
  The company states its Vision as “TO BE THE BRAND WHICH STRIKES
THE MIND OF CUSTOMER FOR QUALITY”.

MISSION OF THE COMPANY

The mission of the companies is,

 Provide facilities for testing of textiles, chemicals, dyes and effluents to the
textile trade and industry.
 Generate consciousness about quality, especially eco-friendly textiles in the
industry.
 Assist the exporters by way of quality appraisal of the textile products and
certification.
 To raise its brand name.
 Undertake market research studies to assess the consumption and demand
of textiles in the country.
 Promote consumer awareness about textiles.
 Take up census/surveys useful to the industry, the Government and policy
planning bodies.

2.3 DEPARTMENTS INVOLVED IN THE COMPANY

1. Production Department,
2. Stores Department,
3. Finance Department,
4. Human Resources Department,
5. Quality Control Department.

17
1. Production Department

 Style Analysis 

The line supervisor analyzes the garment construction of the style to be

loaded to the line. He calculates the machine requirement for the style, based on the
garment construction.

 Estimating labor costs

Line supervisors calculate the estimated cost per operation. In the piece-
rate-production system, the supervisor sets piece rates for stitching operations.
Those factories that have industrial engineering departments calculate direct labor
costs based on the standard allowed minutes (SAM) to produce a garment.

 Planning and scheduling floor level production

The floor in-charge and line supervisors plan the daily production output.
They take information on upcoming orders from merchandisers or the planning
department and plan manpower and machine requirements in advance.
 Setting the line
Line supervisors set the sewing line for new orders. Line setting involves
the tasks of placing sewing in a sequence, by allocating operators to each machine,
giving work to operators and helpers and giving instructions to operators on how to
undertake operations and the required stitching quality.

 Stitching garments

18
 The sewing department stitches garments and makes clothes. Operators
sew garments using different types of sewing machines. An operator can be given
single or multiple operations to sew.

 Balancing the assembly line

To get maximum production from the line, line supervisors balance line
by adding additional operator, or by clubbing operations.

 Marking parts

Marking is done on the garment component needed to point a position

from where the stitching is to be done. Helpers mark on garment parts as per process
requirement by using marking chalk and magic marker.

 Ironing garment components

Garment components might need to be folded and ironed prior to

stitching to improve seam quality. Portable irons are used for ironing on garment parts.

 Checking stitched garments

Garments are checked in line and off the line. The purpose of checking
garments is to reduce defect generation from the line. The end-of-line checker
segregates defective pieces from the good pieces. Read quality checking
procedures in garment production.

 Stitching alteration

After segregation, defective garments are sent back to the stitching

section. Seams are repaired by re-stitching. If defects are related to the fabric, part
changing is done by replacing the defective component with the correct part.

19
 Managing documentation

The department maintains various logbooks and records. The sewing

department records the details of receiving cuttings from the cutting department and
issuing garments to the finishing department. They make reports of the daily
production on a line-wise basis and the manpower used in each line.

 Recruiting operators 

In most factories, line supervisors are responsible for bringing sewing

operators and recruiting operators through skill assessment tests.

2. STORES DEPARTMENT
A warehouse is a commercial building for the storage of goods;
stored goods can include any raw material like plastic covers, polyester fiber,
quilted cloth, cotton and PVC sheet.

3. FINANCE DEPARTMENT
Every business organization requires funds for operating its business.
The funds were obtained by issuing shares and debentures. The accounts were
audited as per the rules and regulations under Companies Act 1956.

4. HUMANCE RESOURCE DEPARTMENT

The human resource department is the entities of organization in
order to organize to top level, middle level, lower level and workers in a way that
supports the accomplishment of the organizational goals.

5.QUALITY DEPARTMENT
As the quality of the product is considered the force which draws
the customer to the company the quality of the edible oil produced were checked
efficiently by the quality control department.

2.4 MAIN SUPPLIERS

20
 Avenue Supermarts Private Limited,
 DAS Enterprises,
 Kumar Agencies.

21
 CHAPTER-4

ANALYSIS AND INTERPRETATION

22
 CHAPTER-4

ANALYSIS AND
INTERPRETATION

DATA ANALYSIS AND INTERPRETATION

In this chapter we are going to analysis the solvency ratio,
comparative analysis and liquidity ratio and to interpret the tools. Ratio is
expression of determining and interpreting the numerical relationship between
two items expressed in quantitative form. An absolute figure does not convey
much meaning. Generally with the help of other related information, the
signification of the absolute figure could be understood better.

4.1CURRENT RATIO:
The current ratio is a liquidity ratio that measures a company’s ability
to pay short-term obligations, or those due within one year. It tells investors
and analysts hoe a company can maximize the current assets on its balance
sheet to satisfy its current debt and other payables.

Formula:

Current Ratio = Current Assets/Current Liabilities

23
 TABLE NO: 4.1

TABLE SHOWING CURRENT RATIO

CURRENT CURRENT CURRENT

YEAR ASSETS LIABILITIES ASSETS
RATIO
IN LAKHS IN LAKHS IN TIMES
2017-2018 59994.43 10124.38 5.92

2018-2019 75767.52 48781.5 1.55

2019-2020 82509.32 19371.7 4.31

Source: Annual Report

INTERPRETATION:
The above table depicts the relation between current assets
and current liabilities. Current ratio is higher during the period 2017-18 at
5.92 and lower during the period 2018-19 at 1.55 and again it has increased
during the year 2019-20 at 4.31.

24
 CHART NO: 4.1

CHART SHOWING CURRENT RATIO

25
4.2: LIQUIDITY RATIO
Liquidity ratio measures the firm’s ability to pay off current dues
I.e., repayable within a year. Liquidity ratio is otherwise called as “short
term solvency ratios”.

FORMULA:

Liquid Ratio = Liquid Assets / Current Liabilities

TABLE NO: 4.2

TABLE SHOWING LIQUID RATIO

LIQUID CURRENT LIQUID

YEAR ASSETS LIABILITIES RATIO

IN LAKHS IN LAKHS IN TIMES

2017-2018 10588.73 10124.38 1.04

2018-2019 9901.95 48781.5 0.20

2019-2020 10731.32 19371.7 0.55

Source: Annual Report

INTERPRETATION:
The above table depict the relation between current assets and
current liabilities. Liquid ratio is higher during the period 2017-18 at
1.04 and lower during the period 2018-19 at 0.20 and again it has
increased during the year 2019-20 at 0.55.

26
 CHART NO: 4.2

CHART SHOWING LIQUID RATIO

27
4.3: CASH POSITION RATIO:
This measures the ability of an organization to cover its short-term
obligations. If the ratio is greater than one, it means that the company has adequate
cash on hand to continue to operate. A cash position can also be found by looking at
a company's free cash flow (FCF).

FORMULA:

Cash Position Ratio = Cash & Bank Balance + Marketable Securities /

Current Liabilities

TABLE NO: 4.3

TABLE SHOWING CASH POSITON RATIO

CASH& CURRENT CASH

YEAR BANK LIABILITIES POSITION
BALANCE RATIO
IN IN IN
THOUSANDS THOUSANDS TIMES
2017-2018 9686.72 10124.38 0.95

2018-2019 9895.27 48781.5 0.20

2019-2020 10729.07 19371.7 0.55

Source: Annual Report

INTERPRETATION:
The above table depicts the relation between cash& bank balance
and current liabilities. Cash position ratio is higher during the period
2017-18 at 0.95 and lower during the period 2018-19 at 0.20 and again it

28
has increased during the year 2019-20 at 0.55.

CHART NO: 4.3

CHART SHOWING CASH POSITION RATIO

29
4.4: DEBT EQUITY
The debt-to-equity ratio compares a company's total liabilities
to its shareholder equity and can be used to evaluate how much
leverage a company is using. Higher-leverage ratios tend to indicate a
company or stock with higher risk to shareholders.
FORMULAE:

Debt Equity = Total Liability / Total Shareholders Equity

TABLE NO: 4.4

TABLE SHOWING DEBT EQUITY

TOTAL TOTAL DEBT

YEAR LIABILY SHAREHOLDERS EQUIY
QUITY
IN IN IN
THOUSANDS THOUSANDS PERCENTAGE
2017-2018 10124.38 49870.05 0.20

2018-2019 48781.5 56349.02 0.86

2019-2020 19371.7 64137.62 0.30

Source: Annual Report

INTERPRETATION:
The above table depicts the relation between total liability and
total shareholders’ equity. Debt equity ratio is higher during the period
2017-18 at 0.20 and increased during the period 2018-19 at 0.86 and
again it has decreased during the year 2019-20 at 0.30.
30
 CHART NO: 4.4

CHART SHOWING DEBT EQUITY

31
4.5: SHAREHOLDER EQUITY RATIO
The shareholder equity ratio indicates how much of a company’s
assets have been generated by issuing equity shares rather than by taking
on debt. The shareholder equity ratio, expressed as a percentage, and is
calculated by dividing total shareholders ‘equity by the total assets of the
company.

FORMULAE:

Shareholder Equity Ratio = Total Shareholder Equity/ Total Asset

TABLE NO: 4.5

TABLE SHOWING SHAREHOLDER EQUITY RATIO

TOTAL TOTAL SHAREHOLDE

YEAR SHAREHOLDERS ASSET R EQUITY
EQUITY RATIO
IN IN IN
THOUSANDS THOUSANDS PERCENTAGS
2017-2018 49870.05 59994.43 0.83

2018-2019 56349.02 75767.52 0.74

2019-2020 64137.62 83509.32 0.76

Source: Annual Report

INTERPRETATION:
The above table depict the relation between total shareholders’ equity total
liability and total assets. shareholders equity ratio is higher during the period 2017-18

32
at 0.83 and decreased during the period 2018-19 at 0.74 and again it has increased
during the year 2019-20 at 0.76

CHART NO: 4.5

CHART SHOWING SHAREHOLDER EQUITY RATIO

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4.6: RETURN ON INVESTMENT RATIO
Return on investment is a simple ratio that divides the net profit (or loss)
from an investment by its cost. Because it is expressed as a percentage, you can
compare the effectiveness or profitability of different investment choices.

FORMULAE:

Return on Investment Ratio = Net Profit / Total Investment * 100

TABLE NO: 4.6

TABLE SHOWING RETURN ON INVESTMENT

NET PROFIT TOTAL RETURN ON

YEAR INVESTMET INVESTMENT
IN IN IN
THOUSANDS THOUSANDS PERCENTAGS

2017-2018 918.20 1344.89 0.68

2018-2019 2339.06 507.74 4.60

2019-2020 1401.47 741.22 1.89

Source: Annual Report

INTERPRETATION:

The above table depicts the relationship between net profit and total
investment. Return on investment ratio is lower during the period 2017-18 at 0.68
and increased during the period 2018-19 at 4.60 and again it has decreased during the
year 2019-20 at 1.89.
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 CHART NO: 4.6

CHART SHOWING RETURN ON INVESTMENT

35
 4.7: NET PROFIT RATIO

The net profit margin, or simply net margin, measures how much net
income or profit is generated as a percentage of revenue. It is the ratio of net
profits to revenues for a company or business segment. Net profit margin is
typically expressed as a percentage but can also be represented in decimal form.

FORMULAE:

Net Profit Ratio = Net Profit After Tax / Net Sales * 100

TABLE NO: 4.7

TABLE SHOWING NET PROFIT RATIO

YEAR NET PROFIT NET SALES NET PROFIT

AFTER TAX RATIO

IN IN IN
THOUSANDS LAKHS PERCENTAGES

2017-2018 6354.94 55992.49 11.34

2018-2019 7144.55 62927.58 11.35
2019-2020 10337.09 77839.77 13.27
Source: Annual Report

INTERPRETATION:

The above table depicts relationship between net profit tax and
net sales. Net profit ratio is lower during the period 2017-18 at 11.34 and

36
increased during the period 2018-19 at 11.35 and again it has gradually
increased during the year 2019-20 at 13.27.

37
 CHART NO: 4.7

CHART SHOWING NET PROFIT RATIO

38
 4.8: RETURN ON ASSETS

The return on assets shows the percentage on how profitable a

company’s assets are in generation revenue. ROA gives a manager,
investor or analyst an idea as to how efficient a company’s management is
at using its assets to generate earnings. It is displayed as a percentage.

FORMULAE:

Return on Assets = Net Income / Total Assets

TABLE NO: 4.8

TABLE SHOWING RETUEN ON ASSETS

YEAR NET TOTAL RETURN

INCOME ASSETS ON
ASSETS
ACCOUNTG IN LAKHS IN LAKHS IN
YEAR PERCENTAGS
2017-2018 55992.49 59994.43 0.93

2018-2019 62927.58 75767.52 0.83

2019-2020 77839.77 83509.32 0.93

Source: Annual Repot

INTERPRETATION:

The above table depict the relationship between net income and total
assets. Return on assets is higher during the period 2017-18 at 0.93 and
lower during the period 2018-19 at 0.83 and again it has gradually
39
increased during the year 2019-20 at 0.93.

40
 CHART NO: 4.8

CHART SHOWING RETURN ON ASSETS

41
 4.9COMPARATIVE BALANCE SHEET:

COMPARATIVE BALANCE SHEET FOR THE YEAR 2018-19

PARTICULARS 2019 2018 INCREASE/ PERCENTAGE

DECREASE
ASSETS

NON-CURRENT ASSETS

Property, plant and

equipment 21,389.13 17,129.78 4259.22 0.24
Capital work-in-progress
3,763.58 3,201.36 562.22 0.1756
Other intangible assets
49.93 34.51 15.42 0.44
Intangible asset
under development 223.25 200.28 22.97 0.114
FINANCIAL ASSETS

(i)Investments
6.68 902.01 -895.33 -0.99
(ii)other financial asset
225.13 166.93 58.2 0.348
Non-current tax assets
275.93 275.93 0 -
Other non-current asset
316.90 403.17 -86.27 0.213

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CURRENT ASSETS

Inventories 12,888.02 8,782.44 4,105.58 0.467

FINANCIAL ASSETS

Trade receivable
16,531.54 12,300.53 4231.51 0.344
Cash and cash equipment
9,406.27 9,268.03 138.24 0.0149
bank balance other than
above 489.00 418.69 71 0.169
Other financial asset
1,470.36 2,078.30 -607.94 -0.292
Other current asset
8,731.80 4,832.45 3899.35 0.806
Total assets
75,767.52 59.994.45
EQUITY AND LIABILITY
EQUITY
Equity share capital 665.00 665.00 00 0
Other equity 55,684.02 49,205.05 6,478.97 0.131
NON CURRENT
LIABILITY
FINANCIAL
LIABILITIES
Borrowings - 62.58 - -
Provision 777.92 676.26 101.66 0.150
Different tax liabilities (net) 1,338.94 1,572.48 233.54 0.148
Other non-current liability 669.59 824.56 -154.97 0.187

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CURRENT LIABILITIES
FINANCIAL
LIABILITIES
Borrowings 8,668.30 29.22 8,639.08 296.65
TRADE PAYABLE
i)Total outstanding dues
to micro enterprises
small enterprises 102.61 69.40 33.21 0.478
ii)Total outstanding dues to
credit or other than micro
enterprises and small
enterprises 4,107.98 4,182.88 -74.9 -0.017
Other financial liabilities 747.73 1, 101,13 -353.83 -0.320
Other current liabilities 401.73 478.73 -77 -0.160
Provision 265.07 208.94 56.13 0.268
Current liability(net) 2,339.06 981.20 1357.86 1.383
TOTAL
EQUITY AND
LIABILITIES 75,767.52 59,994.43 15,773.09 0.262

INTERPRETATION:

 The current assets of the company in the year 2019 is

increased as compared to the previous year 2018 at 0.95
 The current liabilities of the company in the year 2019 is
decreased as compared to the previous year 2018 at 0.88

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 COMPARATIVE BALANCE SHEET FOR THE YEAR 2019-20

PARTICULARS 2020 2019 INCREASE PERCENTAGE

/DECREASE

ASSETS

NON-CURRENT ASSETS

Property, plant and

equipment 23,340.76 21,389.13 1,951.63 0.091
Capital work-in-progress 2,031.0
8 3,763.58 -1,732.5 0.460
Other intangible assets 19.74 49.93 -30.19 -0.604
Intangible asset
under development 32.39 223.25 -190.86 -0.854
FINANCIAL ASSETS

(i)Investments 2.25 6.68 -4.43 -0.663

(ii)other financial asset 226.14 225.13 1.01 0.004

45
Non -current tax assets 512.83 275.93 236.9 0.858
Other non-current asset 1,793.01 716.90 1,076.11 1.501
CURRENT ASSETS

Inventories 13,032.87 12,888.02 144.85 0.112

FINANCIAL ASSETS

Trade receivable 25,156.79 16,531.54 8625.25 0.521

Cash and cash equipment 9,454.30 9,406.27 48.03 0.005
bank balance other than
above 1,274.77 489.00 785.77 1.606
Other financial asset 3,691.14 1,470.36 2,220.78 1.5103
Other current assets 2,941.25 8,731.80 -5790.55 0.663
TOTAL ASSETS 83,509.32 75,767.52 7,741.8 0.102
EQUITY AND LIABILITY
EQUITY
Equity share capital 665 665.00 - -
Other equity 63,472.62 55,684.02 7,788.6 0.139
NON CURRENT
LIABILITY
FINANCIAL
LIABILITIES
Borrowings - - - -
Provision 1,006.63 777.92 228.71 0.294
Different tax liabilities (net) 684.50 1,338.94 -654.44 -0.488
Other non-current liability 579.87 669.59 -89.72 -0.133

46
CURRENT LIABILITIES
FINANCIAL
LIABILITIES
Borrowings 9,612.57 8,668.30 944.27 0.108
TRADE PAYABLE
i)Total outstanding dues
to micro enterprises
small enterprises 57.43 102.61 -45.18 -0.440
ii)Total outstanding dues to
credit or other than micro
enterprises and small
enterprises 4,674.27 4,107.98 566.29 0.1378
Other financial liabilities 570.53 747.73 -177.2 -0.236
Other current liabilities 4,48.31 401.73 46.58 0.115
Provision 336.12 265.07 71.05 0.268
Current liability(net) 1,401.47 2,339.06 -937.59 -0.400
TOTAL
EQUITY AND
LIABILITIES 83,509.32 75,767.52 7741.8 0.102

INTERPRETATION:

 The current assets of the company in the year 2019 is

increased as compared to the previous year 2020 at 0.96.
 The current liabilities of the company in the year 2019 is
decreased as compared to the previous year 2020 at 0.93.

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48
 CHAPTER-5

49
 FINDINGS, SUGGESTIONS AND CONCLUSION

CHAPTER-V

FINDINGS AND SUGGESTIONS AND

CONCLUSION

5.1 : FINDINGS

SHORT-TERM SOLVENCY RATIO

 Current ratio is lower during the period 2018-19 at 1.55

and again highest during the year 2019-20 at 4.31.

 Liquid ratio is lower during the period 2018-19 at 0.20

and highest during the year 2019-20 at 0.55.

 Cash position ratio is lower during the period 2018-19 at

0.20 and highest during the year 2019-20 at 0.55.

LONG-TERM SOLVENCY RATIO

 Debt equity ratio is highest during the year 2018-19 at 0.86 and
decreased at 0.30.

 Shareholder equity ratio is lower during the years 2018-

19 at 0.74 and highest during the year 2019-20 at 0.76.

PROFITABILITY RATIO

50
 Return on investment ratio is increased during the
period 2018-19 at 4.60 and lowest during the year
2019-20 at 1.89.

 Net profit ratio is highest during the period 2018-19 at

11.35 and increased during the year 2019-20 at 13.27.

 Return on assets is lower during the period 2018-19 at 0.83

and highest during the year 2019-20 at 0.93.

5.2: SUGGESTIONS

 In order to increase the efficiency of the company, it is

suggested to control the cost of goods sold and operating
expenses.
 To strengthen the long-term solvency, long-term funds
have to be used to finance core current assets and a part
of temporary current assets. It is better if the company
can reduce the oversized short-term loans and advances
eliminate the risk arranging finance regularly.

 The company may have to maintain the high level

of the cash and bank balance to make efficient
working in the company.
 The investment in inventories should be reduced and
need to introduce the system of prompt collection of
debts.
 The company should use the internal funds efficiently

51
 instead of getting the funds from outside.

5.3: CONCLUSION

The project entitled as “A STUDY ON FINANCIAL

STATEMNT ANALYSIS” provides me an opportunity to
learn about the financial performance of LAKSHMIGRAHA
WORLDWIDE INC. Various ratios have been analyzed and
relevant findings have been listed. The ratios help us to know
the liquidity, solvency and profitability position of the
company. As comparing the balance sheet with the previous
year there is an increase in the profit of the company. This
study is done by the referring the financial statements based on
the ratio analysis and comparative balance sheet.

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 REFERENCE

BOOKS

1. Management Accounting – Shashi K. Gupta and R.K. Sharma

Neeti Gupta.
2. Principles of Management Accounting – Dr. S.N. Pillai and bahavathi.

WEBSITE

1. www.wikipedia.com

2. www.investopedia.com

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 ANNEXURE

BALANCE SHEET OF FOR THE YEAR 2020

54
PROFIT AND LOSS ACCOUNT FOR THE YEAR 2020

55
BALANCE SHEET FOR THE YEAR 2019

56
PROFIT AND LOSS ACCOUNT FOR THE YEAR 2019

57
BALANCE SHEET FOR THE YEAR 2018

58
PROFIT AND LOSS ACCOUNT FOR THE YEAR 2018

59