Professional Documents
Culture Documents
PROJECT REPORT
Submitted to
Jamia Millia Islamia, Delhi
For award of the degree of
CERTIFICATE
This is to certify that Hyder Amin has written this report on Financial
analysis of Sundaram finance ltd. under my supervision. The report
is submitted to the Jamia Millia Islamia, Delhi for award of the degree of
Bachelor of Business Studies (BBS),(Paper Code 6.5), 2016 .
(Gauhar Fatma)
Supervisor
Date:
DECLARATION
I hereby declare that the project work entitled FINANCIAL
ANALYSIS OF SUNDARAM FINANCE LTD. submitted to
Jamia Millia Islamia, is a record of an original work done by me
under the guidance of Ms. Gauhar Fatma, and this project work has
not performed the basis for the award of any Degree or diploma/
associateship/ fellowship and similar project if any.
Hyder Amin
14BBA1037
CHAPTER 1
INTRODUCTION
1
INTRODUCTION
The financial statement provides the basic data for financial performance analysis. The
financial statements provide a summarized view of the financial position and operations of a
firm. Financial analysis (also referred to as financial statement analysis or accounting analysis)
refers to an assessment of the viability, stability and profitability of a business. The analyst first
identifies the information relevant to the decision under consideration from the total information
contained in the financial statements. Therefore, much can be learnt about a firm from a careful
examination of its financial statements as invaluable documents and performance reports.
The analysis of financial statements is an important aid to financial analysis. They
provide information on how the firm has performed in the past and what is its current financial
position. Financial analysis is the process of identifying the financial strengths and weakness of
the firm from the available accounting data and financial statements. The analysis is done by
establishing relationship between the different items of financial statements.
The focus of financial analysis is on key figures in the financial statements and the
significant relationship that exists between them. The analysis of financial statements is a process
of evaluating relationship between component parts of financial statements to obtain a better
understanding of the firms position and performance.
The first task of financial analyst is to select the information relevant to the decision
under consideration from the total information contained in the financial statement. The second
step involved in financial analysis is to arrange the information in a way to highlight significant
relationships. The final step is interpretation and drawing of inferences and conclusions. In brief,
financial analysis is the process of selection, relation, and evaluation.
1.1
INDUSTRIAL PROFILE
The non-banking financial sector in India has tremendous growth in recent years. NBFCs
attracted a large number of small investors since the rate of return on deposits with them was
relatively high. NBFCs are quite flexible sectors like equipment leasing, hire-purchase, housing
finance, consumer finance and so on, where gaps between the demand and supply of funds have
been high. The growth in number of NBFCs was facilitated by the case of entry, limited fixed
assets and absence of any need to hold inventories.
1.1.2
ratings
A separate instrument to regulate and supervise non-banking finance companies.
1.
2.
3.
4.
5.
1.1.4
necessary to have a regulatory framework for NBFCs. RBI came out with set of guidelines for
NBFCs specifically aimed at protecting the depositors.
To encourage the NBFCs that is running on sound business principals, on July 24th
1996, NBFCs were divided into two classes,
1.1.5
i.
ii.
CATEGORIES OF NBFCs
i.
Loan Companies
ii.
Investment Companies
iii.
iv.
v.
vi.
Equipment leasing company Any company, which is a financial institution, carrying on its
principal business. The activities of leasing of equipment of the financing of such activity.
1. Hire purchase finance company A company, which is a financial institution, carrying on
its principal business, hire purchase transaction.
2. Investment Company A company, which deals with acquisition of securities.
3. Loan Company A company, which is a financial institution and carries on its principal
business of providing finance by any activities other than its own.
4. Mutual benefit finance company A company, which is a financial institution. This is
notified by the central government under section 620 (a) of The Companies Act 1956.
1.2
COMPANY PROFILE
Sundaram Finance Limited was incorporated in 1954 and has grown into one of the
most trusted financial services group in India and a part of TV Sundaram Iyengar and Sons group
of companies, one of Indias largest industrial conglomerates and diversified industrial
conglomerate with principal base in Chennai and Madurai. Almost all the companies in the
group are privately held. The company was started with a paid-up capital of Rs.2Lakhs and
later went public in 1972.
1.2.1 FOUNDER OF THE COMPANY
The Company was founded by Sri. T. S. Santhanam. He has a rich experience in the
automobile and road transport sector for nearly six decades. He was the founder, Director and
First managing director of Sundaram Finance Limited and has served on various committees
constituted by the Central Government and Reserve Bank of India on various aspects relating to
growth and development of the Road Transport and Non-Banking Financial Companies.
The company has been rated as MAA by the ICRA signifying the highest number of
deposits.
The Company mobilizes its funds from driver sources at competitive rates thus
achieving a reduction in overall cost of funds. The company gets its funds from the main sources
namely,
9
Deposits
Bank/Industrial Finance
Debentures
Commercial Papers
Faith
Depositors confidence
Institutional trust
Investor safety
Employee loyalty
CORPORATE PHILOSOPHY OF THE COMPANY
Truth and fairness guide the management of finance
Customer satisfaction through excellent service and reliability
Prudence and conservation in finance operations
Truth, honesty and efficiency in all dealings
Professional management with high standards of integrity
Full compliance with law and regulations.
10
A set of values have governed their growth over the years. Among them are transparent
in their business practices, dedicated customer service fair, efficient and safe financial policies.
1.2.7
STRENGTH
Easy financing schemes for all cars new and second hand cars.
No hidden costs.
1.2.8
SUBSIDARIES / GROUPS
Sundaram Finance
11
Second Best Tax Payer in the category of Private Sector Company for Assessment
Year 1994-95 in Tamil Nadu Region, from the Income Tax Department, Tamil Nadu.
Rolling Trophy by Rotary Club of Madras South West for Best Employer-Employee
Relationship for the year 1995-96.
Best Tax Payer in the category of Private Sector Company for Assessment Year 199596 in Tamil Nadu Region, from the Income Tax Department, Tamil Nadu.
Sarige Ratna Award to Shri T S Santhanam, Chairman, from the Bangalore City
Lorry Transporting Agents Association (Regd).
12
Most Valued Customer Award to Shri T S Santhanam Chairman, from the State Bank
of India.
The Best Financier of the New Millennium 2000 to Shri. G K Raman, Managing
Director, from the All India Motor Transport Congress.
13
weakness of the concern. The Non- Banking Financial Company has been witnessed intense
14
competition from domestic banks and international banks. Every business needs to view the
financial performance analysis.
The study on effectiveness of operational and financial performance of Sundaram finance
limited is conducted to measure the overall performance of company. The financial analysis
strengths the firms to make their best use, and to be able to spot out financial weakness of the
firm to state suitable corrective actions.
This study aims at analyzing the overall financial performance of the company by using
various financial tools like Comparative Analysis, common size statement analysis, Ratio
Analysis, and Cash Flow Analysis.
2.2
2.2.1
PRIMARY OBJECTIVE:
o To study the financial performance analysis of Sundaram Finance Limited,
Chennai.
15
2.2.2
SECONDARY OBJECTIVES:
o To compare and analyze the financial statements for the past three financial years
(2008,2009 and 2010)
o To know the profitability, liquidity and solvency position of Sundaram finance
limited.
o To compare and interpret financial statements of the Sundaram Finance Limited
with comparative and common-size statement analysis.
o To forecast the annual growth rate of income of the company with the help of
regression analysis.
o To provide suggestions for improving the overall finance performance of the
company.
2.3
LIMITED, CHENNAI. The study covers the period of 2008-2010 for analyzing the financial
statement such as income statements and balance sheet.
16
The scope of the study involves the various factors that affect the financial efficiency
of the company. To increase the profit and sales growth of the company. This study finds out the
operational efficiency of the organization and allocation of resources to improve the efficiency of
the organization.
The data of the past three years are taken into account for the study. The performance
is compared within those periods. This study finds out the areas where Sundaram Finance Ltd
can improve to increase the efficiency of its assets and funds employed.
17
CHAPTER 3
LITERATURE
REVIEW
LITERATURE REVIEW
Kennedy and Muller (1999), has explained that The analysis and interpretation of financial
statements are an attempt to determine the significance and meaning of financial statements data
so that the forecast may be made of the prospects for future earnings, ability to pay interest and
debt maturines (both current and long term) and profitability and sound dividend policy.
T.S.Reddy and Y. Hari Prasad Reddy (2009), have stated that The statement disclosing status
of investments is known as balance sheet and the statement showing the result is known as profit
and loss account
Peeler J. Patsula (2006), he define that a sound business analysis tells others a lot about good
sense and understanding of the difficulties that a company will face. We have to make sure that
people know exactly how we arrived to the final financial positions. We have to show the
calculation but we have to avoid anything that is too mathematical. A business performance
analysis indicates the further growth and the expansion. It gives a physiological advantage to the
employees and also a planning advantage.
I.M.Pandey (2007), had stated that the financial statements contain information about the
financial consequences and sources and uses of financial resources, one should be able to say
whether the financial condition of a firm is good or bad; whether it is improving or deteriorating.
One can relate the financial variables given in financial statements in a meaningful way which
will suggest the actions which one may have to initiate to improve the firms financial condition.
Chidambaram Rameshkumar & Dr. N. Anbumani (2006), he argue that Ratio Analysis
enables the business owner/manager to spot trends in a business and to compare its performance
and condition with the average performance of similar businesses in the same
industry. To do this compare your ratios with the average of businesses similar to yours and
compare your own ratios for several successive years, watching especially for any unfavorable
trends that may be starting. Ratio analysis may provide the all-important early warning
indications that allow you to solve your business problems before your business is destroyed by
them.
19
Jae K.Shim & Joel G.Siegel (1999), had explained that the financial statement of an enterprise
present the raw data of its assets, liabilities and equities in the balance sheet and its revenue and
expenses in the income statement. Without subjecting these to data analysis, many fallacious
conclusions might be drawn concerning the financial condition of the enterprise. Financial
statement analysis is undertaken by creditors, investors and other financial statement users in
order to determine the credit worthiness and earning potential of an entity.
Susan Ward (2008), emphasis that financial analysis using ratios between key values help
investors cope with the massive amount of numbers in company financial statements. For
example, they can compute the percentage of net profit a company is generating on the funds it
has deployed. All other things remaining the same, a company that earns a higher percentage of
profit compared to other companies is a better investment option.
M Y Khan & P K Jain (2011), have explained that the Financial statements provide a
summarized view of the financial position and operations of a firm. Therefore, much can be
learnt about a firm from a careful examination of its financial statements as invaluable
documents / performance reports. The analysis of financial statements is, thus, an important aid
to financial analysis.
Elizabeth Duncan and Elliott (2004), had stated that the paper in the title of efficiency,
customer service and financing performance among Australian financial institutions showed that
all financial performance measures as interest margin, return on assets, and capital adequacy are
positively correlated with customer service quality scores.
Jonas Elmerraji (2005), tries to say that ratios can be an invaluable tool for making an
investment decision. Even so, many new investors would rather leave their decisions to fate than
try to deal with the intimidation of financial ratios. The truth is that ratios aren't that intimidating,
even if you don't have a degree in business or finance. Using ratios to make informed decisions
about an investment makes a lot of sense, once you know how use them.
Carlos Correia (2007), had explained that any analysis of the firm, whether by management,
investors, or other interested parties, must include an examination of the companys financial
data. The most obvious and readily available source of this information is the firms annual
20
report. The financial statements shall, in conformity with generally accepted accounting practice,
fairly present the state of the affairs of the company and the results of operations for the financial
year.
Greninger et al.(1996), identified and refined financial ratios using a Delphi study in the areas
of liquidity, savings, asset allocation, inflation protection, tax burden, housing expenses and,
insolvency. Based on the Delphi findings, they proposed a profile of financial well-being for the
typical family and individual.
Rachchh Minaxi A (2011), have suggested that the financial statement analysis involves
analyzing the financial statements to extract information that can facilitate decision making. It is
the process of evaluating the relationship between component parts of the financial statements to
obtain a better understanding of an entitys position and performance.
Salmi, T. and T. Martikainen (1994), in his "A review of the theoretical and empirical basis of
financial ratio analysis", has suggested that A systematic framework of financial statement
analysis along with the observed separate research trends might be useful for furthering the
development of research. If the research results in financial ratio analysis are to be useful for the
decision makers, the results must be theoretically consistent and empirically generalizable.
John J.Wild, K.R.Subramanyam & Robert F.Halsey (2006), have said that the financial
statement analysis is the application of analytical tools and techniques to general-purpose
financial statements and related data to derive estimates and inferences useful in business
analysis. Financial statement analysis reduces reliance on hunches, guesses, and intuition for
business decisions. It decreases the uncertainty of business analysis.
21
CHAPTER 4
RESEARCH
METHODOLOGY
4. RESEARCH METHODOLOGY
Research can be defined as A Scientific and Systemic Search for pertinent
information on a specific topic. Therefore, research could be understood as an organized
activity with specific objectives on a problem or issues supported by compilation of related data
and facts, involving application of relevant tools of analysis and deriving logically on originality.
22
4.1
RESEARCH DESIGN
Research Design is the arrangement of condition for collection and analysis of data in
manner that aims to combine relevance to the research purpose with the economy in procedure.
Research Design is important primarily because of the increased complexity in the market as
well as marketing approaches available to the researchers. A research design specifies the
methods and procedures for conducting a particular study.
4.2 TYPE OF RESEARCH
ANALYTICAL RESEARCH
In this type of research has to use facts or information already available, and analyze
these to make a critical evaluation of the material. The researcher depends on existing data for
his research work. The analysis revolves round the material collected or available.
4.3 SOURCE OF DATA
SECONDARY DATA
Secondary Data refers to the information or facts already collected such data are collected with
the objectives of understanding the past status of any variable or the data collected and reported
by some source is accessed and used for the objective of a study. Normally in research, the
scholars collect published data, journals, annual reports and websites.
Activity ratios highlight the operational efficiency of the business concern. The term operational
efficiency refers to effective, profitable and rational use of resources available to the concern.
o WORKING CAPITAL TURNOVER RATIO
Working capital ratio measures the effective utilization of working capital. It also measures the
smooth running of business. The ratio establishes relationship between cost of sales and working
capital.
Working Capital Turnover Ratio = ( Sales / Net Working Capital )
25
assets and current liabilities is inevitable. Current ratio indicates the ability of a concern to meet
its current obligations as and when they are due for payment.
Current Ratio = ( Current asset / Current liabilities )
26
Common size statements indicate the relationship of various items with some common
items. In the income statements, the sales figure is taken as basis and all other figures are
expressed as percentage of sales. Similarly, in the balance sheet the total assets and liabilities is
taken as base and all other figures are expressed as percentage of this total.
4.4.4 CASH FLOW STATEMENT
Cash flow includes cash inflows and out flows - cash receipts and cash payments during a
period. A cash flow statement is a statement which portrays the changes in the position between
two accounting period. Cash flow analysis can reveal the causes for even highly profitable firms
experiencing acute cash shortages.
4.4.5 REGRESSION ANALYSIS
A fundamental and versatile research technique that seeks to explain an outcome variable
in terms of multiple predictor variables. This analysis reveals the nature and strength of the
relationship between each predictor variable and the outcome, independent of the influence from
all other predictors.
Regression Equation Y on X is given as:
Y = a + bX
Equations to find constants a and b are given as:
Y = Na + bX
XY = aX + b
27
CHAPTER - 5
DATA ANALYSIS AND
INTERPRETATION
5.1
RATIO ANALYSIS
5.1.1
PROFITABILITY RATIOS
Gross Profit
Gross Profit Ratio =
X100
Net Sales
Gross Profit
(Rs.)
30289.71
21971.03
Net sales
(Rs.)
90176.44
108277.62
Ratio
(In %)
33.58
20.29
2009-2010
32347.63
118189.37
27.37
YEARS
INFERENCES:
The Gross Profit for the financial year 2007-2008 was recorded as per the ratio is
33.58%, where as the years between 2008-2009 went through a change in the ratio of 20.29%
and the companies profit went upward in 2009-2010 with the ratio of 27.37%. Thus, it is
showing the steady growth in the company profile.
5.1.1.2
29
X 100
Net Sales
Table No 5.1.2 NET PROFIT RATIO
Years
2007-2008
2008-2009
Net Profit
(Rs.)
21254.24
15073.14
Net sales
(Rs.)
90176.44
108277.62
Ratio
(In %)
23.56
13.92
2009-2010
22674.86
118189.37
19.18
YEARS
INFERENCES:
30
The Net Profit Ratio depicts that the company had a good profit in 2007-2008 where it
had a good yield profit. Comparing to the year 2008-2009 is 13.92%, the sales of the company
have a steady attitude and increase upwards to 19.18%. This indicates that there is an
improvement in the operational efficient of the business and it leads to the increase in the
profitability of the firm.
5.1.1.3 RETURN ON EQUITY OR RETURN ON NET WORTH
This ratio signifies the return on equity shareholders funds. The profit considered for computing
the ratio is taken after payment of preference dividend.
Net profit after interest and tax
Return on Equity =
X 100
Shareholder fund
2007-2008
2008-2009
2009-2010
Shareholder
Fund (Rs.)
Ratio
(In %)
231280.81
268538.97
333318.07
9.18
5.61
6.80
YEARS
INFERENCES:
31
Return on shareholder fund determines the profitability from the shareholders point of
view. From the above, it shows that in the year 2008-2009, the company shows 5.61% of ratio
and it has risen to 6.80%. This is a clear indication of overall operation is efficient.
5.1.2
TURNOVER RATIO
Sales
(Rs.)
90176.44
108277.62
118189.37
Ratio
(In Times)
0.13
0.16
0.13
0.1
0.05
0
2007-2008
2008-2009
YEARS
32
2009-2010
INFERENCES:
A higher ratio is the indication of lower investment of working capital and more profit.
In 2007-2008, the sales of the company are low at 0.13 times but in the year 2008-2009, it gone
upward of sales to 0.16 times.
5.1.2.2
cost of sales or sales with the amount of capital invested in the business.
Sales
Capital Turnover Ratio
=
Capital Employed
Net Sales
(Rs.)
90176.44
108277.62
118189.37
Capital Employed
(Rs.)
536009.27
533288.26
720052.92
Ratio
(In Times)
0.16
0.20
0.17
0.1
0.05
0
2007-2008
2008-2009
2009-2010
YEARS
INFERENCES:
In the year 2007-2008, the sales comparing to 2008-2009 it is increased to 0.20 times and
it shows that efficient methods are adopted to use the capital employed. In 2009-2010, which
33
compares to the year 2007-2008 it indicates higher ratio of 0.17 times. The capital of the
company has utilized efficiently comparing to 2007-2008.
5.1.2.3
business concern.
Sales
Fixed Asset Turnover Ratio =
Net Fixed asset
Table No 5.1.6 FIXED ASSET TURNOVER RATIO
Years
Sales
(Rs.)
Fixed Asset
(Rs.)
Ratio
(In Times)
2007-2008
90176.44
17264.30
5.22
2008-2009
2009-2010
108277.62
118189.37
20241.05
23237.80
5.35
5.09
5.1
5
4.9
2007-2008
2008-2009
2009-2010
YEARS
INFERENCES:
Higher the ratio is more than the efficiency in utilization of Fixed Assets. Lower ratio
indicates the under utilization of fixed assets. From the above table it indicates in the year 200834
2009, the sales have been increased comparing to the next year 2009-2010. And its gradually
declining over the next year 2009-2010 for 5.09 times.
5.1.3 SOLVENCY OR FINANCIAL RATIOS:
5.1.3.1 CURRENT RATIO
In order to measure the short-term liquidity or solvency of a concern, comparison of
current assets and current liabilities is inevitable. Current ratio indicates the ability of a concern
to meet its current obligations as and when they are due for payment.
Current asset
Current Ratio =
Current liabilities
Table No 5.1.7 CURRENT RATIO
Years
2007-2008
2008-2009
2009-2010
Current Asset
(Rs.)
56187.53
68876.04
166489.36
Current Liabilities
(Rs.)
53034.57
50360.94
55084.13
Ratio
(In Times)
1.06
1.36
3.02
2007-2008
2008-2009
YEARS
INFERENCES:
35
2009-2010
A high current ratio is an assurance that the firm will have adequate funds to pays
current liabilities and other payment. During the year 2009-2010, the current ratio is 3.02 times
and it is more when compared with previous year 2008-2009 is 1.36 times.
5.1.3.2
financial policies of the company and also to measures the relatives proposition of outsiders
funds and shareholders funds investments in the company.
Total Long-term debt
Debt Equity Ratio =
Shareholders Funds
Table No 5.1.8 DEBT EQUITY RATIO
Years
Shareholders funds
(Rs.)
Ratio
(In Times)
2007-2008
2008-2009
2009-2010
431716.93
418021.26
588417.27
104292.34
115267
131635.65
4.13
3.62
4.47
2
1
0
2007-2008
2008-2009
YEARS
36
2009-2010
INFERENCES:
From the above table, during the year 2007-2008 the debt equity ratio is 4.13 times and it is
decreased to 3.62 times then it shows the uptrend from the year 2009-2010 as 4.47 times.
Suggest that the debt from the company has increased over the years with increase in shareholder
funds as well.
5.1.3.3
equity ratio. This ratio is also known as solvency ratio. This ratio is the relationship between long
term debts and total long term funds.
Long Term Debts
Debt to Total Funds Ratio =
Total Funds
Table No 5.1.9 DEBT TO TOTAL FUNDS RATIO
Years
Total Funds
(Rs.)
Ratio
(In Times)
2007-2008
2008-2009
2009-2010
431716.93
418021.26
588417.27
712389.16
742843.84
981013.79
0.60
0.56
0.59
37
0.62
0.6
0.58
RATIO (IN TIMES)
0.56
0.54
0.52
2007-2008
2008-2009
2009-2010
YEARS
INFERENCES:
During the year 2007-2008, the debt to total funds ratio is 0.60 times and it was
decreased. And in 2009-2010 again it had an increase in the companys sales comparing to
previous year 2008-2009 is 0.56 times to 0.59 times in 2009-2010.
5.1.3.4
Equity
Equity to Total Funds =
Total Funds
Table No 5.1.10 EQUITY TO TOTAL FUNDS
Years
2007-2008
2008-2009
2009-2010
Equity
(In Rs.)
104292.34
115267.00
131635.65
Total Funds
(In Rs.)
712389.16
742843.84
981013.79
38
Ratio
(In Times)
0.14
0.15
0.13
0.16
0.15
0.15
0.14
RATIO (IN TIMES) 0.14
0.13
0.13
0.12
2007-2008
2008-2009
2009-2010
YEARS
INFERENCES:
In the year 2007-2008, the total funds was Rs.712389.16 (in lakhs) and it shows
upward trend of Rs.981013.79 (in lakhs) and during the year 2009-2010 comparing to the year
2008-2009 is Rs.742843.84 (in lakhs).
Particulars
2009
(Rs.)
2010
(Rs.)
39
Amount Increase /
Decrease during
2009-2010 (Rs.)
Percentage
Increase / Decrease
during
2009-2010 (In %)
108277.62
118189.37
+9911.75
+9.15
64544.09
63379.55
(1164.54)
(1.80)
43733.53
54809.82
+11076.29
+25.33
3199.28
2538.90
4142.57
+943.29
+29.48
Total (B)
3199.28
6681.47
+3482.19
+108.84
46932.81
61491.29
14558.48
+134.17
7160.91
9407.97
4616.80
3776.10
6042.27
10011.23
8608.59
4481.57
(1118.64)
+603.26
+3991.79
+705.47
(15.62)
29143.66
+4181.88
32347.63
+10376.6
9672.77
+2774.88
+40.23
9672.77
+2774.88
+40.23
22674.86
+7601.72
+50.43
Other Income:
Total Income
(A+B) = C
Expense:
Operating Expense:
Administration Expense
Establishment Expense
Provision
Depreciation
Total Operating
Expense (D)
24961.78
Operating Profit
(C-D)
21971.03
+6.41
+86.46
+18.68
+16.75
+47.23
Non-Operating Expense:
Taxation
6897.89
Total Non-Operating
Expense (F)
6897.89
15073.14
40
INFERENCES:
The comparative income statement shows income from operation amount increase during
the year 2009-2010 was Rs.9911.75 and increase in percentage of 9.15.
For the year 2009-2010, the total income indicates Rs.14558.48 and percentage increase
during the year 2009-2010 was 134.17.
The operating profit has been increased is Rs.32347.63 in the year 2010 which is
comparing to the previous year was Rs.21971.03 and the percentage shows increase by 47.23.
The Net profit amount increases during 2009-2010 is Rs. 7601.72 and shows percentage
increase by 50.43.
41
Percentage
Increase /
Decrease during
2009-2010 (In %)
2009
(Rs.)
2010
(Rs.)
Current Assets
Loans & Advance
Deferred Tax Asset
Investment
Fixed Asset
68876.04
653955.77
5691.36
51188.87
20241.05
166489.36
799363.96
6124.40
53744.80
23237.80
+97613.32
+145408.19
+433.04
+2555.93
+2996.75
+141.72
+21.98
+7.61
+4.99
+14.80
Total Asset
799953.09
1048960.32
+249007.23
+31.13
Current Liability
Unsecured Loan
Secured Loan
58478.77
208479.20
417728.12
67946.53
260960.87
588417.27
+9467.76
+52481.67
+170689.15
+16.19
+25.17
+40.86
Total Liabilities
(A)
684686.09
917324.67
+232638.58
+33.98
Particulars
Assets:
Liabilities and
Capital:
Capital and
Reserve:
5555.19
5555.19
Share Capital
Reserve & Stock
Options
109711.81
126080.46
+16368.65
+14.92
Total Shareholders
Funds (B)
115267.00
131635.65
16368.65
+14.20
Total Liabilities
and Capital (A+B)
799953.09
1048960.32
249007.23
+31.13
42
==========
==========
=============
=============
INFERENCES:
In the year 2009-2010, the investment it shows the uptrend for the year 2010 as
Rs.53744.80 and it has increased by 4.99%.
43
Fixed assets has been increased was Rs.23237.80 in the year 2010 which is comparing to
the previous year and the percentage shows increase by 14.80.
During the year 2009, the shareholders fund amount to Rs.115267.00 it has been increased
to the amount of Rs. 131635.65 and percentage increased was 14.20.
Secured loans shows uptrend by Rs.588417.27 over the previous year of Rs.417728.12 and
increase in percentage of 33.98.
90176.44
100
44
108277.62
100
49699.52
55.1
64544.09
59.6
40476.92
44.88
43733.53
40.39
Other Income:
Profit on Sale of Shares
Other Income
3199.28
Total (B)
3199.28
Total Income
(A+B) = C
3.54
3.54
3199.28
3199.28
2.95
46932.81
43.34
48.43
43676.20
2.95
Expense:
Operating Expense:
Administration Expense
Establishment Expense
Provision
Depreciation
7.98
9.78
3.66
3.34
7198.81
8821.90
3308.02
3012.19
7160.91
9407.97
4616.80
3776.10
24.77
Total Operating
Expense (D)
22340.92
Operating Profit
(C-D) = E
21335.28
23.05
24961.78
23.65
20.29
21971.03
Non-Operating Expense:
Taxation
6.61
8.68
4.26
3.48
10.01
9035.47
6.37
6897.89
10.01
Total Non-Operating
Expense (F)
9035.47
13.63
12299.81
6897.89
13.92
15073.14
INFERENCES:
45
6.37
The operating profit of the Sundaram Finance Limited has been increased during the
year 2008-2009, the operating profit shows Rs.21335.28 in 2008 and Rs.21971.03 in the
financial year 2009.
For the year 2008, the establishment expense shows Rs.8821.90 and it has been
increased to Rs.9408.97 during the year 2009.
In 2008, provision is 3.66% and it indicates increase during the year 2009 was 4.26%.
The operating expenses incurred to the Sundaram Finance Limited during the financial
year 2008 which shows Rs.22340.92 and it has risen to Rs.24961.78 during the financial year
2009.
The net profit percentage recorded as 13.63 in 2008 where as in the year 2009 the
companies profit went upward with the percentage of 13.92.
2008
Particulars
Amount
(Rs.)
2009
Percentage
(%)
Amount
(Rs.)
Percentage
(%)
Assets:
Current Assets
Loans & Advance
Deferred Tax Asset
Investment
Fixed Asset
56187.53
652655.00
4263.67
45645.50
17264.30
7.24
84.10
0.54
5.88
2.22
68876.04
653955.77
5691.36
51188.87
20241.05
8.61
81.74
0.71
6.39
2.53
Total Asset
776016.00
100
===========
799953.09
100
=============
Current Liability
Unsecured Loan
Secured Loan
63626.84
176379.89
431716.93
8.19
22.72
55.63
58478.77
208479.20
417728.12
7.31
26.06
52.21
671723.66
86.56
684686.09
85.59
2777.60
0.35
5555.19
0.69
101514.74
13.08
109711.81
13.71
104292.34
13.43
115267.00
14.40
Liabilities and
Capital:
Total Shareholders
Funds (B)
776016.00
==========
100
===========
47
100
799953.09
=============
============
INFERENCES:
The current assets have increased during the financial year 2009 is 8.61% which is
comparing to 2008 was 7.24% of the Sundaram Finance Limited.
There was an increase in fixed assets of Rs.20241.05 comparing to the year 2009. Higher
the ratio is more than the efficiency in utilization of fixed assets.
The current liabilities have been decreased to 7.31% of the total liabilities of the
Sundaram finance Limited during the year 2009. The current liability was 8.91% of the total
liabilities during the year 2008.
Reserves and stock options has been increased was in the year 2009 which is
Rs.109711.81 comparing to the previous year and the percentage shows increase by 13.71%.
During the year 2008-2009, the shareholders fund amount to Rs.104292.34, it has been
increased to the amount of Rs.115267 and the percentage increased was 14.40% in 2009.
48
5.4
2009-2010
(In Rs.)
(A)
226,74.86
(91.85)
96,72.77
322,55.78
633,79.55
956,35.33
45,80.23
1,44.64
4,79.98
31,61.69
23.28
34.21
(53,36.95)
(22,00.38)
0.18
965,22.21
67,08.38
(60,87.57)
15,44.60
(32.25)
(1465,04.17)
13.29
(1079,89.81)
(22,40.77)
32,87.01
(619,43.37)
(90,05.16)
(709,48.53)
(2257,27.61)
(15,38.40)
96.09
(B)
(C)
(D)
(12677,85.28
)
(18,33.50)
12746,00.34
2.75
21,97.65
57,39.65
3475,75.18
(2686,00.00)
869,13.98
154,84.84
417,96.83
(53,51.34)
2178,19.49
(0.18)
(21,68.65)
48,39.35
26,70.70
13,50.13
13,20.57
26,70.70
50
INFERENCES:
In the year 2009-2010, the operating profit before working capital changes show the
profit amount of Rs.96522.
The employee stock option compensation expenses of the Sundaram finance Limited
has shown 31,61.69 (Rs. in lakhs) during the year 2009-2010.
While the Net Cash from investing activities depicts Rs.5739.65 in the year 2009-2010.
There was a increase in net stock on hire during the financial year 2009-2010 of
67,08.38 (Rs. in lakhs).
The financial year 2009-2010 depicts the Net cash from financing activities amount of
Rs.217819.49 shows upward profit in the company.
Cash and cash equivalents at the end of the year were Rs.4839.35 it shows that the
company position in the year 2009-2010.
51
5.5
Year
2008
2009
2010
Total
1
0
1
x = 0
Sales
Rs
( in Lakhs )
Y
90176.44
108277.62
118189.37
y= 316643.43
XY
X2
90176.44
0
118189.37
x y= 28012.93
1
0
1
X2 =2
Y=Na+bX
XY = a X + b X2
Y=a+bX
3 a + 0 b = 316643.43
--------------- ( 1 )
0 a + 2 b = 28012.93
--------------- ( 2 )
When X = 3,
INFERENCE:
The net sales during the year 2008 were 90176.44 (Rs. in Lakhs) which has been
increased to 108277.62 (Rs. in Lakhs) during 2009 which also raised to 118189.37 (Rs. in Lakhs)
during 2010.
The projection is made for the fore coming years 2011 and 2012 where the net sales
would be 133560.73 (Rs. in Lakhs) during the year 2011 and the net sales during the financial
year 2012 will be 147567.19 (Rs. in Lakhs).
53
CHAPTER - 6
CONCLUSION
AND
SUGGESTIONS
54
6.1
FINIDNGS
The Gross Profit Ratio shows that increasing in sales has maintained the companies profit
level. In the year 2008-2009, the percentage shows 20.29 it has been increased during the
year 2009-2010 to 27.37.
The net profit ratio has been increased to 19.18 during the financial year 2009 2010 to
13.92 during 2008 2009 which indicates that there is an improvement in the operational
efficient of the business and it leads to the increase in the profitability of the firm.
It has found that the return on equity during the year 2008-2009, the company shows
5.61% of ratio and it has risen to 6.80%. This is a clear indication of overall operation is
efficient.
The Working capital in the year 2008-2009, the sales of the company is low at
Rs.666319.18 and it is increased to Rs.898497.54 in 2009-2010. It measures the effective
utilization of working capital.
The capital turnover of capital employed in the financial year 2008-2009 it shows
Rs.533288.26 and during the year 2009-2010 it is increased to Rs.720052.92. It has
effective utilization of capital employed under the current year.
Fixed asset turnover shows increase in sales of Rs.118189.37 comparing to the previous
year of Rs. 108277.62 and the firm should maintain this increasing trend in future also.
55
During the year 2009-2010, the current ratio is 3.02% and it is more when compared with
previous year 2008-2009 is 1.36 %. So the short term liquidity of a concern, comparison
of current assets and current liabilities is inevitable.
The debt equity ratio has shows 3.62% in 2008-2009 and it has been raised to 4.47%
during 2009-2010 which indicates that the company has increased over the years with
increase in shareholder funds as well.
It is found that the shareholders funds had increased by Rs.16368.65 over the percentage
of 14.20 in comparative income statement analysis. It determines the profitability from
the shareholders point of view.
The financial year 2009-2010 depicts the Net Cash from financing activities amount of
Rs.217819.49 shows upward profit in the company.
56
6.2
SUGGESTIONS
The current ratio is improving rapidly so the company wants to keep an eye on the
current assets flow. The company has been suggested to reduce the expenditure as it increases
every year. Decrease in expenses will increase the profitability.
By over viewing the working capital turnover ratio it is clear that the company
wants to utilize its working capital efficiently that is the excess current assets should be adjusted
according to current scenario. Though the net profit shows it is increased but we found that the
net profit ratio has been decreased. So the company should consider increasing the sales in turn
to increase the actual profit.
The debt equity ratio of the company is also increasing. The company should focus
on the debt and long term funds which are utilized in the company. The excess cash flow should
or can be utilized in any new ventures if the company wishes to do.
57
6.3
CONCLUSION
58
REFERENCES
59
REFERENCES
Carlos Correia, David Flynn, Enrico Uliana & Michael Wormald, Financial
Management, 6th Edition, 5.1 -5.34.
Chidambaram Rameshkumar, Anbumani N, An overview on financial statements and
ratio analysis,2006, Vol.1, p. 30
George Foster, Financial Statement Analysis, 2nd Edition, 57 94.
Greninger et al.(1996), Fundamentals of Financial Management, 5th Edition, 4.1-4.18.
Jae K.Shim, Joel G.Siegel, Schaums Outline of Theory and Problems of Financial
Accounting, 1999, 279-298.
John J.Wild, K.R.Subramanyam & Robert F.Halsey (2006), Financial Statement
Reddy T S & Hari Prasad Reddy Y, Management Accounting, 3rd Edition, 2008, 3.9 3.25
Salmi, T. and T. Martikainen (1994), "A review of the theoretical and empirical basis of
financial ratio analysis", The Finnish Journal of Business Economics 43:4, 426-448.
60
Websites:
www.google.com
www.sundaramfinance.in
http://scholar.google.com
www.managementparadise.com
61
APPENDICES
62