Cashflow Analysis

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Cash flow statement analysis

Transcript of Cashflow Analysis

INTRODUCTION Finance is the lifeblood of every business activity without which the wheels of modern business organization system cannot be greased. Finance management is managerial activity, which is concerned with planning and controlling of the firms financial Resources. Finance is a scarce resource and it has to be managed efficiency for the successful functioning of any company. Several companies have come to grief mainly because of inefficient management of finance, in spite of other favorable conditions.

Cash flow statement is an important tool and is widely used in the hands of financial analysts and managers for analyzing the financial management of a company. Cash keep on moving in a business, which itself based on going concern concept. In a narrow sense, it means inflow and out flow of

cash only and a flow statement prepared on this basis is called as cash flow statement. Such a statement enumerates net effects of the various business transactions on cash and takes into account receipts and disbursement of cash. In a broader sense, the term fund refers to money values in whatever form it may exists. Here, cash mean. All financial resources. But in a popular sense, the term cash means working capital i.e., excess of current assets over current Liabilities. The word fund here means net working capital.


A statement of sources and Application of Cash is a technical device designed to analyze the changes in the financial condition of a business enterprise between two dates.

NEED FOR THE STUDYThe sources of cash for a business could be from both the long term and short term. Any business to survive and growth in the competitive market, cash are needed not only to meet its long-term financial needs but also short-term requirements. The long-Term sources comprising of share capital, long term debt inclusive of debentures etc., while the short term sources comprises of the short term loans, working capital collection from commercial banks, loans from the call money market and among these fall the sales which has two phases the cash sales and the credit sales.The study is aimed at analyzing the financial position of panyam cements Private Limited and also identifying the inflow and outflows of cash i.e., source and application of cash.

This study will evaluate the way of the firms financial condition how effectively the cash are mobilized and utilized in the company for the financial year ending 31-03-06,31.3.07, 31.3.08 ,31-03-09, 31.3.10,and31-03-2011. This study will thus help the company in maintaining better financial performance, which is followed by a blend of findings and suggestions.


Cash is the basic input needed to keep the operations of the business going on the continuous basis. So every business unit should always try to keep sufficient cash, neither more nor less because shortage of cash will threaten the firms liquidity and solvency, whereas excessive cash will not be fruitfully utilized will simply remain idle and will effect the profitability of a concern. Cash flow analysis reveals the various outflows and inflows of cash during a particular period. With the help of the cash analysis, one can determine

What are the sources of cash inflows and outflows?

The cash ability and position of the firm.

How the firm utilizing the cash and cash equivalents.So the cash flow analysis helps to determine the future cash flows and the ability to pay dividends and other commitments and the efficiency of cash management. So I choose the cash flow analysis in Zuari cement limited.

Scope of Study:Firm create manufacturing capacities for production of goods some provide service to customers. They sell their goods or services to earn profit. They raise funds to acquire manufacturing and other facilities. Thus the three most important activities of business firm are:




A firm as wheat ever capital it needs and employees it (finance activity) in activities which generate returns on invested capital (production and marketing activities). So financial management helps to the firm to take the correct decisions. And also helpful to firm how to utilize the economic resources likely capital funds in the proper way. It is also controlling tool to control the financial functions of the firm. So it is very important aspect in every organization.

STATEMENT OF THE PROBLEM & HYPOTHESISIt is proposed to analyze the liquidity position of the company and also the timing of availability and requirement of cash to match or not.

The problem of the statement is difference between the two shows (i.e., sources and applications of study) the net change in the working capital during the period.

It is assumed that bad payment collection system do not lead to optimization of inflow & outflow of cash and profits in the company.

It is general principal followed by the financial managers all over the world that the inflows of cash are classified as long- term and short term. It is imperative that the business enterprise uses long term cash for long term purpose and short-term cash for short-term purposes.

However a firm, which uses long term cash for long term purposes, will have lot of business problem. The reason for this is the long term cash proposed by the company generally as a fixed cost to it.

In case, if this cash are not utilized for long -term purpose to generate cash, the company will have to pay interest without matching income thus leading to mismatch of cash inflow and cash outflows .Objectives of the study:1. To review the literature of cash flow analysis;

2. To evaluate the sources and applications of cash of Zuari cement limited;

3. To study the operating, financing activities of cash inflows and outflows of the firm.

4. To find out the operating efficiency of the organization.

5. To measure the overall financial performance of Zuari cements Private Limited.

6. To offer suitable suggestions for better performance of the company.


1. Sources of data:

1. Primary data.

The study of cash flow analysis is basis on primary data as well as secondary data.

2. Secondary data:

The secondary data are those which have been already collected by some agency on which have been processed. The secondary data is obtained from manual reports and financial statements i.e., balance sheet and profit and loss account, annual reports and additional data.LIMITATIONS:

In spite of various uses of cash flow statement, it has the following limitations:

1. Cash flow statement gives the main of inflow and outflow of cash only and does not

Show the liquidity position of the company.2. This statement is not a substitute of income statement which shows both cash and non- items. Therefore, net cash flow does not necessary mean net income of the business.3. It cannot replace funds flow statement as it cannot show the financial position of the concern in totally.


1. INTRODUCTION Cement industry has been decontrolled from price and distribution on 1st march and de-licensed on 25th July 1991. However, the performance of the industry, the constraints faced by the industry are interviewed in the infrastructure co-ordination committee meeting held in the cabinet secretariat under the chairmanship of secretary. The committee on infrastructure also reviews its performance. The industry is subject to equality order issued on 17-02-2003 to ensure quality standards.


Cement industry is one of the major and oldest established manufacturing industries in the modern sector of Indian economy. It is an indigenous industry in which the company is well endowed with the necessary raw materials, skilled manpower and equipment & machinery technology.

Firms, bridges, buildings, water supply projects, dams, roads, hydroelectric power projects, seaports, airports, and irrigation schemes require cement. It is thus a vital industry, which assumes a crucial part in the economic development of the country, thus it regards as major nation building industry whose importance in a developing economy never be over emphasized. The Greek civilizations use some of mortar but Romans has developed it. When one speaks about the cement industry, it invariably refers to Portland cement, which has its origin in England, but until the 19th century a mixture of limestone with Pozzoland of volcanic earth was known as cement. The first cement factory was established around 1890 in both Canada and Australia, while it was invented in 1884 in New Zealand.

The Cement industry occupies a position of predominance not only an infrastructure for development but also it is 8th largest in the world, which directly employs about millions of persons. CEMENT INDUSTRY IN INDIA

In India it came to be establishing during the beginning of 20th century. In fact the cement era in India commenced with the establishment of a small cement factory at WASHERMANPET in 1904 by south India industry Ltd, a company that dates to 1879. There was sufficient demand for that product, but because of technological defects and inadequate supply of raw materials, the plant did not operate economically, a later on collapsed. India is ranked 4th in the world after China, Japan and USA in cement production. Yet the per-capital consumption of cement in India however low at 70 to 80 kgs against