Subodha Accounts Term Paper

8/7/2019 Subodha Accounts Term Paper

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ACCOUNTING FOR MANAGERS

TERM PAPERBASED ON FINANCIAL STATEMENT

ANALYSIS AND INTERPRETATION.

SUBMITTED TO:- SUBMITTED BY:-

Mrs.Manu kalia Subodh kumar singh

Regd.no- 11008039

Roll.no-A19

M.B.A- S1003


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Steel Authority of India Limited (SAIL) is the leading steel-making company in

India. It is a fully integrated iron and steel maker, producing both basic and special

steels for domestic construction, engineering, power, railway, automotive and

defense industries and forsale in export markets.

Ranked amongst the top ten public sector companiesin India in terms of turnover,

SAIL manufactures and sells a broad range ofsteel products, including hot and

cold rolled sheets and coils, galvanized sheets, electrical sheets, structurals,

railway products, plates, bars and rods, stainlesssteel and other alloy steels. SAIL

producesiron and steel at five integrated plants and three special steel plants,located principally in the eastern and central regions of India and situated close to

domestic sources of raw materials, including the Company'siron ore, limestone

and dolomite mines. The company has the distinction of being Indiassecond

largest producer ofiron ore and of having the countryssecond largest mines

network. This gives SAIL a competitive edge in terms of captive availability ofiron ore, limestone, and dolomite which are inputs forsteel making.

SAIL's wide range of long and flat steel productsis much in demand in the

domestic as well as the international market. Thisvital responsibility is carried out

by SAIL's own Central Marketing Organization (CMO) that transacts businessthrough its network of 37 Branch Sales Officesspread across the four regions, 25

Departmental Warehouses, 42 Consignment Agents and 27 Customer Contact

Offices. CMOs domestic marketing effort issupplemented by its ever widening

network of rural dealers who meet the demands of the smallest customersin the

remotest corners of the country. With the total number of dealers over 2000 ,


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SAIL's wide marketing spread ensures availability of quality steel in virtually allthe districts of the country.

SAIL's International Trade Division ( ITD), in New Delhi- an ISO 9001:2000

accredited unit of CMO, undertakes exports of Mild Steel products and Pig Iron

from SAILs five integrated steel plants.

With technical and managerial expertise and know-how in steel making gained

over four decades, SAIL's Consultancy Division (SAILCON) at New Delhi offersservices and consultancy to clients world-wide.

SAIL has a well-equipped Research and Development Centre for Iron and Steel

(RDCIS) at Ranchi which helps to produce quality steel and develop new

technologies for the steel industry. Besides, SAIL hasits own in-house Centre for

Engineering and Technology (CET).

Major Units

Integrated Steel Plants

y Bhilai Steel Plant (BSP) in Chhattisgarh

y Durgapur Steel Plant (DSP) in West Bengal

y Rourkela Steel Plant (RSP) in Orissa

yBokaro Steel Plant (BSL) in Jharkhand

y IISCO Steel Plant (ISP) in West Bengal

Special Steel Plants

y Alloy Steels Plants (ASP) in West Bengal

y Salem Steel Plant (SSP) in Tamil Nadu

y Visvesvaraya Iron and Steel Plant (VISL) in Karnataka

Subsidiary

y Maharashtra Elektrosmelt Limited (MEL) in Maharashtra


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VISION

y To be a respected world class corporation and the leader in Indian steel business in quality,

productivity, profitability and customer satisfaction

MISSION

To be a respected world class corporation and the leader in Indian steel business in quality, productivity,

profitability and customer satisfaction.

CREDO

y We build lasting relationships with customers based on trust and mutual benefits.

y We uphold highest ethical standards in conduct of our business.

y We create and nurture a culture that supports flexibility, learning and is

proactive to change.

y We chart a challenging career for employees with opportunities for advancement

and rewards.

y We value the opportunity and responsibility to make a meaningful difference in

people's lives.


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Companyprofile:

Type State-owned enterprise

Public (BSE: 500113)

Industry Steel

Founded 1954

Headquarters Ispat Bhawan, NewDelhi, India[1]

Key people C.S Verma (Chairman)

Revenue 41,356.50 crore (US$9.31 billion)[2]

Net income 6,791.09 crore (US$1.53 billion)[2]

Total assets US$10.54 billion (2008)

Employees 131,910 (2006)

Website www.sail.co.in


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It facilitates both type of analysis , i.e, horizontal as well asvertical. Thisstatement

indicate the relationship ofvariousitemsin terms of with some common or basic

items . In Income statement the common item ids Net Sales and in Position

statement the common item is total of assets and liabilities.

Individual items / net sales * 100

Trend analysis :-

This analysisis an important tool of horizontal financial analysis . Under this

method trend ratio are calculated from selected items of financial year taking the

figure of the base year as 100 .

Trend Ratio = Current Year Amount / Base Year Amount *100

Ratio Analysis :

It is Used to establish meaning full mathematical relationship between two items

or two group ofitemsshown in financial statement. This relationship issimply

Expressed in ratio like 1:1or percentage orin times.

Cash Flow statement :-

This technique isvery useful in the management of cash and analysis ofshort term

liquidity . Under this method a statement is prepared to show the inflow or outflow

of cash related to various activitiesin the concern during a specific period. There is

a perfect format that was followed to make this analysis

Fund Flow Statement ;-

It is prepared to reveals the sources from which funds are obtained and the uses to

which they are being put. Here the term fundsstand for working capital . It

always accompanied by schedule of working capital changes.. There is a perfect

format that was followed to make this analysis


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OBJECTIVE:

y To analyze the financial position of SAIL.

yTo attain the liq

u

idity and the solvency position of the company in respectto the past twoyears.

y To compare the performance of sail in the past twoyears.

y To identify the financial weaknesses of the firm and to suggest remedial

measures

y To determine the long term as well as short term solvency, which decide

the credit worthiness of the firm also.

y To determine and examine the earning capacity of the firm and to

estimates the future prospects.y It helps in identifying the financial strength and weakness of the firm by

properly establish the relation between the items of balance sheet and

profit & loss account.


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IMPORTANCE OF FINANCIAL STATEMENT ANALYSIS

Financial Statement contains a bundle of useful and valuable informationwhich is not used by only owners but by various parties have interest in the

business concern. The main users of financial statements are as ;-

y Investors

y Lenders

y Trade creditors

y Employees

y Government and its agencies

y Management

y Stock Exchange

METHODOLOGY:

y We had collected all the relevant information from the secondary

source i.e. from the annual report of the company. . The income

statement, Position statement, fund flow statement and cash flow

statement ,these all are extracted from the annual report of sail.


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Balance Sheet :

Steel Authority of India

Balance Sheet

Mar '09 Mar '10

12 mths 12 mths

Sources Of Funds

Total Share Capital 4,130.40 4,130.40

Equity Share Capital 4,130.40 4,130.40

Share Application Money 0 0

Preference Share Capital 0 0

Reserves 23,853.70 29,186.30

Revaluation Reserves 0 0

Networth 27,984.10 33,316.70

Secured Loans 1,473.60 7,755.90

Unsecured Loans 6,065.19 8,755.35

Total Debt 7,538.79 16,511.25

Total Liabilities 35,522.89 49,827.95

Mar '09 Mar '10

12 mths 12 mths

Application Of Funds

Gross Block 32,728.69 35,396.19

Less: Accum. Depreciation 20,459.86 21,780.91

Net Block 12,268.83 13,615.28

Capital Work in Progress 6,544.24 15,026.13

Investments 652.7 668.83

Inventories 10,121.45 9,027.46

Sundry Debtors 3,024.36 3,493.90

Cash and Bank Balance 347.94 22,436.37

Total Current Assets 13,493.75 34,957.73

Loans and Advances 4,292.50 4,123.43


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Fixed Deposits 17,880.59 0

Total CA, Loans & Advances 35,666.84 39,081.16

Deffered Credit 0 0

Current Liabilities 10,201.51 12,351.78

Provisions 9,408.21 6,211.67

Total CL & Provisions 19,609.72 18,563.45

Net Current Assets 16,057.12 20,517.71

Miscellaneous Expenses 0 0

Total Assets 35,522.89 49,827.95

Contingent Liabilities 32,193.13 28,382.46

Book Value (Rs) 67.75 80.66


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Profit and loss :

Profit & Loss account of Steel Authority of India

In rs croreParticulars

Mar '09 Mar '10

12 mths 12 mths

Income

Sales Turnover 49,331.47 43,934.70

Excise Duty 5,532.89 3,386.88

Net Sales 43,798.58 40,547.82

Other Income 2,002.77 2,768.23

Stock Adjustments 1,872.87 -1,157.45

Total Income 47,674.22 42,158.60

Expenditure

Raw Materials 23,915.45 20,506.40

Power & Fuel Cost 3,119.42 3,369.35

Employee Cost 8,401.73 5,416.81

Other Manufacturing

Expenses

643.35 287.66

Selling and Admin

Expenses

1,587.61 0

Miscellaneous Expenses 992.85 719.99

Preoperative Exp

Capitalised

-1,930.40 0

Total Expenses 36,730.01 30,300.21

Mar '09 Mar '10

12 mths 12 mths


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Operating Profit 8,941.44 9,090.16

PBDIT 10,944.21 11,858.39

Interest 253.24 402.01PBDT 10,690.97 11,456.38

Depreciation 1,285.12 1,337.24

Other Written Off 128.02 10.33

Profit Before Tax 9,277.83 10,108.81

Extra-ordinary items 181.26 98.45

PBT (Post Extra-ord Items) 9,459.09 10,207.26

Tax 3,284.28 3,452.89

Reported Net Profit 6,174.81 6,754.37

Total Value Addition 12,814.56 9,793.81

Preference Dividend 0 0

Equity Dividend 1,073.90 1,363.03

Corporate Dividend Tax 181.26 227.52

Per share data (annualised)

Shares in issue (lakhs) 41,304.01 41,304.01

Earning Per Share (Rs) 14.95 16.35

Equity Dividend (%) 26 33


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Cash Flow Statement

Steel Authority of India

Cash Flow statement

Particulars

Mar '08 Mar '09

12 mths 12 mths

Net Profit Before

Tax

11468.73 9403.45

Net Cash From

Operating

Activities

8378.18 6124.26

Net Cash (used

in)/from

-1139.89 -4406.47

Investing Activities

Net Cash (usedin)/from Financing

Activities

-3088.68 2751.3

Net

(decrease)/increase

In Cash and Cash

Equivalents

4149.61 4469.09

Opening Cash &

Cash Equivalents

9609.83 13759.44

Closing Cash &

Cash Equivalents

13759.44 18228.53


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Fund Flow Statement

Sources of funds

YEAR 09 YEAR 10

Total Share Capital 4,130.40 4,130.40

Equity Share Capital 4,130.40 4,130.40

Share Application Money 0 0

Preference Share Capital 0 0

Reserves 23,853.70 29,186.30

Revaluation Reserves 0 0

Networth 27,984.10 33,316.70

Secured Loans 1,473.60 7,755.90

Unsecured Loans 6,065.19 8,755.35

Total Debt 7,538.79 16,511.25

Total Liabilities 35,522.89 49,827.95


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Application of funds

Gross Block 32,728.69 35,396.19

Less: Accum. Depreciation 20,459.86 21,780.91

Net Block 12,268.83 13,615.28

Capital Workin Progress 6,544.24 15,026.13

Investments 652.7 668.83

Inventories 10,121.45 9,027.46

Sundry Debtors 3,024.36 3,493.90

Cash and Bank Balance 347.94 22,436.37

Total Current Assets 13,493.75 34,957.73

Loans and Advances 4,292.50 4,123.43

Fixed Deposits 17,880.59 0

Total CA, Loans & Advances 35,666.84 39,081.16

Deffered Credit 0 0

Current Liabilities 10,201.51 12,351.78

Provisions 9,408.21 6,211.67

Total CL & Provisions 19,609.72 18,563.45


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Net Current Assets 16,057.12 20,517.71

Mis

cellaneous

Expenses

0 0

Total Assets 35,522.89 49,827.95

Contingent Liabilities 32,193.13 28,382.46

Book Value (Rs) 67.75 80.66


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ANALYSIS OF STATEMENTS

RATIO ANALYSIS

It is the important tool of Financial Statement Analysis. It is a process

through which various ratios are calculated and on that basis

conclusions are drawn which become the base of managerial decision.

Objective Of Ratio Analysis

Ratio Analysis is an important technique of financial analysis. It also

provide useful indications related to financial health and operational

efficiency of the concern.

The following are the objective or advantages of ratio analysis:-

1.It is useful in Financial Position Analysis

2.It is helpful in Financial Forecasting and Planning.

3.It is useful in assessing the Operational efficiency.

4.It help in Comparative study

5.It is Useful in Control

6.It help in locating the weak spots of the Business


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Classification Of Ratios

1.Liquidity Ratio

2.Profitability Ratio

3.Turnover/Activity/efficiency Ratio

4.Solvency Ratio

1.LIQUIDITY RATIO :-

1.Current Ratio :- Current Assets

Current Liabilities

Rule of Thumb :- 2:1

2.Quick Ratio / Acid Test Ratio :- Quick Assets

Current Liabilities

Where ,Quick Assets = Current assets Inventory (stock) Prepaid

expenses

Rule of Thumb : 1:1

3 Absolute Liquid Ratio / Cash Ratio :- Absolute Quick Assets

Current Liabilities

It is also known as a Super Quick Ratio because it is very - very liquid.

2.PROFITABILITY RATIO


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Gross Profit Ratio :- Gross Profit * 100

Net Sales

Where , Gross Profit = Sales Cost of goods sold (COGS)

COGS = opening stock + purchases + direct expenses closing stock

Net Sales = Sales Sales Return (Return Inward)

1.Net Profit Ratio :- Net profit * 100

Net Sales

Where , Net Sales = Gross Profit indirect expenses

2. Operating Ratio :- Operating cost * 100

Net Sales

Where , operating cost = cost of good sold + operating expenses

(selling & distribution expenses , administration expenses )

3.Return On Investment : Net profit * 100

Share holder funds

This ratio is determine the earning capacity related to owners capital

and investment

4.Return on Equity :- Net Profit Preference Dividend

Share holder funds


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It is very important from the view point of equity shareholders because

dividend on equity shares depends upon the profit available for equity

shareholders.

5.Earning Per Share :- Net profit Preference dividend

Number of shares equity

3.Turnover Ratio/ Activity Ratio / Efficiency Ratio

.

1.Inventory Turnover Ratio :- Cost ofGoods sold

Average Stock

Where , Average stock = opening stock + closing stock

2

2.Debtor Turnover Ratio :- Net Annual Credit Sales

Average Debtors

Where, Debtors includes Bills Receivables , Accounts Receivables.

3.Creditors Turnover Ratio :- Net Annual Credit Purchase

Average Creditors

4. Solvency Ratio

It means ability of firm to pay its liabilities on due date.


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1.Debt Equity Ratio :- Debt

Equity

It reflect the long term financial position of the firm.

2.Interest Coverage Ratio ; Earnings Before Interest & Tax

Interest Charges

This ratio indicates the ability of concern to pay the interest due.

Whenever any concern procures loans, the creditors wants to satisfied

that interest will be received regularly and easily.

FOR 2009:-

Preference share dividend=0

Share holder fund= 1135.19

Return on equity =Net profit-Preference dividend/Shareholder fund*100

= 228.16 -0 / 1135.19 *100

= 20 %*LIQUIDITYRATIO

1. Current ratio (rupees in crores)

Current assets = 533.22

Current liability= 367.32

Current ratio = current assets/current liability

= 533.22/367.32

= 1.45

Interpretation


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As a rule of thumb a ratio of2:1 is consideredsound enough however it is not

universally applicable. In Havells India limited. The current ratio is very high .it is

1.45 which indicates that the enterprise has not enough finance to meet their

current obligation.

2 .Acid test ratio/Quick ratio


Current liability = 367.32

Quick ratio =current assets (investment +prepaid expense)/current liability

=533.22-207.53/367.32

= 325.69/367.32

=0.89

INTERPRETATION

Current ratio and test ratio indicate the ability of the enterprise to meet its

current liability however the acid test ratio is better indicator of liquidity. Acid test

ratio of Havells India limited is 0.89.the acid test ratio of company is not too

much .it means company has not too much financial resources .so Company

cannot easily meet their current liability.

3. Absolute liquid ratio

Absolute liquid assets =cash in hand + cash in bank +marketable securities

Cash and bank =157.37

Current liability=367.32

Absolute liquid ratio =absolute liquid assets/current liability


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=157.37/533.22

=0.29

INTERPRETATION

Absolute liquidity is represented by cash and near cash item .the absolute liquid

ratio are cash, bank and marketable securities .A standard of 0.5:1 absolute

liquidty is considered. The ratio of absolute liquid ratio is 0.29 which show that

company has too much liquidty assets which is good for the company .it show a

good financial position in the market.

*profitability ratio

1. Gross profit ratio

Gross profit =185.06

Net sales = 2195.15

Gross profit ratio =gross profit/net sales*100

=185.06/2195.15*100

=8.43%

INTERPRETATION

Gross profit ratio indicates what extent the selling price of goods per unit

may be reduced without incurring losses on operation. It reflects the

efficiency with which a firm produced its product. The ratio of company is8.43 which show that company production is good according to their ratio.

2. Net profit ratio

Net profit= 145.23


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Net sales =2195.15

Net profit ratio=net profit/net sales*100

=145.23/2195.15*100

=6.6%

INTERPRETATION

Actually the business totally depends on the profit of the company.

Business is only run success if it earns profit. So net profit ratio of this

company is 6.6% which show that company is not earns a huge net profit.

3. Operating ratio

Operating cost =COGS + operating expenses

=2010.09+361.74+14.56=2386.39

Net sales = 2195.15

Operating ratio=operating cost /net sales*100

=2386.39/2195.15*100

=108.7%INTERPRETATION

Operating ratio indicate the relationship between operating expenses and

sales. The ratio indicates operating efficiency of the organisation and it is

important to the management to evaluating its own efficiency.

The ratio of reliance power is 108.7%which indicate the

efficiency of the organisation is good but not better management should

take more steps towards their utilisation of their resources.

4. Return on investment

Net profit =145.23

Shareholder fund=934.33


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Return on investment=net profit/shareholder fund*100

=145.23/934.33*100

=15.54%

INTERPRETATION

Through this ratio company can measure the percentage return to the

company on the fund .it is also a good indication of the profitability of the

organisation.

The company has ratio of RETURN OF INVESTMENT is 15.54% this

percentage sufficient for the company because profit is a function of

accounting and operating policies of an enterprise.

5. Return on equity

Net profit=145.23

Preference share dividend=0

Share holder fund=934.33

Return on equity =Net profit-Preference dividend/Shareholder fund*100

=145.23-0/934.33*100=15.54%

INTERPRETATION

Return on equity measure a corporation ,s profitability by revealing how much

profit a company generate with the money shareholder have invested. The ratio

of ROE is15.54% indicating good performance in generating profit from that

amount which is invested by the shareholder.

6. Earnings per share =Net profit-preference dividend/No. Of equity

share outstanding


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*Activity /turnover ratio

1. Inventory turnover ratio

COGS=net sales-gross profit

=2195.15-185.06

=2010.09

Average stock= 207.53

Inventory turnover ratio=COGS/average stock

= 2010.09/ 207.53 =10

INTERPRETATION

Inventory turnover ratio indicate that how many times a company, s inventory is

sold and replaced over a period. A high ratio implies either strong sales or

effective buying. But company ITR is 10 which show that company has good

turnover implies good sales.

2. Debtors turnover ratio=net credit annual sales/average debtors

Net credit sales= 2195.15

Average debtor= 86.74

Debtor turnover ratio=2195.15/86.74

=25.31

3. Creditors turnover ratio =net credit purchase/average creditor


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Average payment period=365/CTR

NOTE there is no any credit purchase by the company so we could not find.

*solvency ratio

1. Debt to equity ratio

Debt=70.28

Equity= 30.08

Debt to equity ratio= total debt/equity

=70.28/30.08

=2.3

INTERPRETATION

Through this ratio company find out financial power of the company. Ahigh debt to equity ratio generally means that a company has been aggressive in

financial its growth with debt. If company debt may increase more than it may

lead to bankruptcy.

Company debt to equity ratio is not much which indicates that company

took debt according to their need.

*coverage ratio


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1. Interest coverage ratio

EBIT=167.20

Interest charges= 25.03

Interest coverage ratio=earnings before interest tax/interest charges

=167.20/25.03

=6.7

INTERPRETATION

Interest coverage ratio determines that how easily a company can pay interest on

outstanding debt. The lower the ratio, the company is burden by debt expense.

But the Havells India limited has interest coverage ratio is 6.7. Which show that

company has not much debt or if company has any debt it can easily met by thecompany.

CALCULATION FOR 2010

*LIQUIDITYRATIO

1. Current ratio (rupees in crores)



Current ratio = current assets/current liability

= 561.25 / 416.17

= 1.35

Interpretation


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Generally as a rule of thumb a ratio of2:1 is consideredsound enough however it

is not universally applicable. In Havells India limited. The current ratio is very

low .it is 1.35 which indicates that the enterprise has not more finance than it

need .the ratio show that company has not much finance.

Thus, a high current ratio means the enterprise has more finance so they can use

efficiently. But company has low current ratio.

2 .Acid test ratio/Quick ratio


Current liability = 416.17

Quick ratio =current assets (investment +prepaid expense)/current liability

=561.25-330.65/416.17

= 231/416.17

= 0.56

INTERPRETATION

Current ratio and test ratio indicate the ability of the enterprise to meet its

current liability however the acid test ratio is better indicator of liquidity. Acid test

ratio of havells India limited is 0.56.the acid test ratio of company is not too

much. It means company has not too much finance available.

2. Absolute liquid ratio

Cash and bank = 68.31


Absolute liquid assets =cash in hand + cash in bank +marketable securities


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=68.31

Absolute liquid ratio =absolute liquid assets/current liability

= 68.31 / 416.17

= 0.16

INTERPRETATION

Absolute liquidity is presented by cash and near cash item .the absolute liquid

ratio are cash, bank and marketable securities .A standard of 0.5:1 absolute

liquidity is considered. The ratio of absolute liquid ratio is 0.16. Which show that

company has not good liquid assets.

*profitability ratio

3. Gross profit ratio

Gross profit = 313.53

Net sales = 2468.77

Gross profit ratio =gross profit/net sales*100

= 313.53 / 2468.77 * 100

= 12.7%

INTERPRETATION

Gross profit ratio indicate what extent the selling price of goods per unit

may be reduced without incurring losses on operation .it reflect theefficiency with which a firm produced its product. The ratio of company is

12.7%. Which show that company production is good according to their

ratio.


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4. Net profit ratio

Net profit= 228.16

Net sales =2468.77

Net profit ratio=net profit/net sales*100

= 228.16 / 2468.77 * 100

= 9.24%

INTERPRETATION

Actually the business totally depend on the profit of the company .Business is only

run success if it earn profit. So net profit ratio of this company is 9.24% which

show that company earn a normal net profit .it is good for the company.

3. Operating ratio

Operating cost =COGS+ operating expenses

=2155.24+424.52+16.56

= 2596.32

Net sales = 2468.77

Operating ratio=operating cost /net sales*100= 2596.32 / 2468.77 *100

= 105%

INTERPRETATION

Operating ratio indicate the relationship between operating expenses and

sales. The ratios indicate operating efficiency of the organisation and it is

important to the management to evaluating its own efficiency.

The ratio of havells India limited is 105%which indicate the

efficiency of the organisation is good but not better management should

take more steps towards their utilisation of their resources.

4. Return on investment


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Net profit =228.16

Shareholder fund= 1135.19

Return on investment=net profit/shareholder fund*100

= 228.16 / 1135.19 *100

= 20 %

INTERPRETATION

Through this ratio company can measure the percentage return to the

company on the fund .it is also a good indication of the profitability of the

organisation.

The company has ratio of RE

TURN OFINV

ESTME

NT is 20% this percentagesufficient for the company because profit is a function of accounting and

operating policies of an enterprise.

5. Return on equity

Net profit=228.16

INTERPRETATION

Return on equity measure a corporation ,s profitability by prevailing how

much profit a company generate with the money shareholder have

invested. The ratio of ROE is indicating good performance in generating

profit from that amount which is invested by the shareholder.

6. Earnings per share =Net profit-preference dividend/No. Of equity

share outstanding


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*Activity /turnover ratio

1. Inventory turnover ratio

COGS=net sales-gross profit

= 2468.77 313.53

= 2155.24

Average stock= 330.65

Inventory turnover ratio=COGS / average stock

= 2155.24 / 330.65 = 6.5

INTERPRETATION

Inventory turnover ratio indicate that how many times a company, s inventory is

sold and replaced over a period. A high ratio implies either strong sales or

effective buying. But company ITR is 6.5 which show that company has high

turnover implies good sales.

3. Debtors turnover ratio=net credit annual sales/average debtors

Net credit sales= 2468.77

Average debtor= 79.47

Debtor turnover ratio=2468.77 / 79.47

= 31

3. Creditors turnover ratio =net credit purchase/average creditor

Average payment period=365/CTR

NOTE there is no any credit purchase by the company so we could not find.


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*solvency ratio

1. Debt to equity ratio

Debt= 115.81

Equity= 31.19

Debt to equity ratio= total debt/equity

= 115.81 / 31.19

= 3.7

INTERPRETATION

Through this ratio company find out financial power of the company. A high debt

to equity ratio generally means that a company has been aggressive in financial its

growth with debt. If company debt may increase more than it may lead to

bankruptcy.

Company debt to equity ratio is not much which indicates that company

took debt according to their need.

*coverage ratio

3. Inertest coverage ratio

EBIT= 290.26

Interest charges= 11.74

Interest coverage ratio=earnings before interest tax/interest charges


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=290.26 / 11.74

= 24.7

INTERPRETATION

Interest coverage ratio determine that how easily a company can pay interest on

outstanding debt .the lower the ratio ,the company is burden by debt expense.

But the reliance power company has interest coverage ratio is 24.7 which show

that company has no any debt or if company has any debt it can easily meet by

the company.


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TREND ANALYSIS

BALANCE SHEET :

Particulars Mar '09 Mar '10

Trend Analysis=

Current year*100 /

Base year(2009)

Total Share Capital 4,130.40 4,130.40 100

Equity Share Capital 4,130.40 4,130.40 100

Share Application

Money 0 0 0

Preference Share

Capital 0 0 0

Reserves 23,853.70 29,186.30 122.3554417

Revaluation Reserves 0 0 0

Networth 27,984.10 33,316.70 119.055821

Secured Loans 1,473.60 7,755.90 526.3232899

Unsecured Loans 6,065.19 8,755.35 144.3540928

Total Debt 7,538.79 16,511.25 219.0172428

Total Liabilities 35,522.89 49,827.95 140.269978

Assets

Gross Block 32,728.69 35,396.19 108.1503415

Less: Accum.

Depreciation 20,459.86 21,780.91 106.456789

Net Block 12,268.83 13,615.28 110.9745591

Capital Work in 6,544.24 15,026.13 229.6084801


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Progress

Investments 652.7 668.83 102.4712732

Inventories 10,121.45 9,027.46 89.1913708

Sundry Debtors 3,024.36 3,493.90 115.5252682Cash and Bank

Balance 347.94 22,436.37 6448.344542

Total Current Assets 13,493.75 34,957.73 259.0660862

Loans and Advances 4,292.50 4,123.43 96.06126966

Fixed Deposits 17,880.59 0 0

Total CA, Loans &

Advances 35,666.84 39,081.16 109.5728133

Deffered Credit 0 0 0

Current Liabilities 10,201.51 12,351.78 121.0779581

Provisions 9,408.21 6,211.67 66.02393016

Total CL & Provisions 19,609.72 18,563.45 94.66453371

Net Current Assets 16,057.12 20,517.71 127.7795146

Miscellaneous

Expenses 0 0 0

Total Assets 35,522.89 49,827.95 140.269978

Contingent Liabilities 32,193.13 28,382.46 88.16309567

Book Value (Rs) 67.75 80.66 119.0553506

Profit and Loss:


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Miscellaneous Expenses 992.85 719.9972.5175

Preoperative Exp Capitalised -1,930.40 0

0Total Expenses 36,730.01 30,300.21

82.49442

Mar '09 Mar '10

12 mths 12 mths

Operating Profit 8,941.44 9,090.16 101.6633

PBDIT 10,944.21 11,858.39108.3531

Interest 253.24 402.01158.7466

PBDT 10,690.97 11,456.38107.1594

Depreciation 1,285.12 1,337.24104.0557

Other Written Off 128.02 10.338.069052

Profit Before Tax 9,277.83 10,108.81108.9566

Extra-ordinary items 181.26 98.4554.31424

PBT (Post Extra-ord Items) 9,459.09 10,207.26107.9095

Tax 3,284.28 3,452.89105.1338

Reported Net Profit 6,174.81 6,754.37109.3859

Total Value Addition 12,814.56 9,793.8176.4272


Equity Dividend 1,073.90 1,363.03126.9234

Corporate Dividend Tax 181.26 227.521255.214


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Per share data (annualised)

Shares in issue (lakhs) 41,304.01 41,304.01100


109.3645Equity Dividend (%) 26 33

126.9231

Common sizeStatement


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Balance sheet

Sources Of Funds YEAR 09 YEAR 10% change in

2009

% change

in 2010

Total Share Capital 4,130.40 4,130.40 11.627432 8.2893236

Equity Share Capital 4,130.40 4,130.40 11.627432 8.2893236

Share Application

Money 0 0 0 0

Preference Share

Capital 0 0 0 0

Reserves 23,853.70 29,186.30 35,208.41 36184.354

Revaluation Reserves 0 0 0

Networth 27,984.10 33,316.70 78.78 66.863477

Secured Loans 1,473.60 7,755.90 4.15 15.56536

Unsecured Loans 6,065.19 8,755.35 17.07 17.571162

Total Debt 7,538.79 16,511.25 21.22 33.136523

Total Liabilities 35,522.89 49,827.95 100.00 100

Application Of Funds

Gross Block 32,728.69 35,396.19 92.13 71.036818

Less: Accum.

Depreciation 20,459.86 21,780.91 57.60 43.712234


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Net Block 12,268.83 13,615.28 34.54 27.324584

Capital Work in

Progress 6,544.24 15,026.13 18.42 30.156027

Investments 652.7 668.83 1.8374068 1.3422788

Inventories 10,121.45 9,027.46 28.49 18.117261

Sundry Debtors 3,024.36 3,493.90 8.5138343 7.011928

Cash and Bank Balance 347.94 22,436.37 0.98 45.02768

Total Current Assets 13,493.75 34,957.73 37.99 70.15687

Loans and Advances 4,292.50 4,123.43 12.083758 8.2753354

Fixed Deposits 17,880.59 0 50.34 0

Total CA, Loans &

Advances 35,666.84 39,081.16 100.41 78.432205

Deffered Credit 0 0 0 0

Current Liabilities 10,201.51 12,351.78 28.72 24.788858

Provisions 9,408.21 6,211.67 26.48 12.466236

Total CL & Provisions 19,609.72 18,563.45 55.20 37.255095

Net Current Assets 16,057.12 20,517.71 45.20 41.17711

Miscellaneous Expenses 0 0 0 0


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Raw Materials 23,915.45 20,506.4054.6032543 50.5733

Power & Fuel Cost 3,119.42 3,369.357.12219437 f13/f7*10

Employee Cost 8,401.73 5,416.81

19.1826539 13.3590Other Manufacturing

Expenses

643.35 287.66

1.46888324 0.70943

Selling and Admin

Expenses

1,587.61 0

3.62479788

Miscellaneous

Expenses

992.85 719.99

2.26685431 1.77565

Preoperative Exp

Capitalised

-1,930.40 0

-4.4074488

Total Expenses 36,730.01 30,300.21 83.8611891 74.727

Mar '09 Mar '10

12 mths 12 mths

Operating Profit 8,941.44 9,090.1620.4149084 22.4183

PBDIT 10,944.21 11,858.3924.9875909 29.2454

Interest 253.24 402.010.57819226 0.99144

PBDT 10,690.97 11,456.3824.4093987 28.25

Depreciation 1,285.12 1,337.242.93415905 3.29793

Other Written Off 128.02 10.330.29229258 0.02547

Profit Before Tax 9,277.83 10,108.81

21.182947 24.9305Extra-ordinary items 181.26 98.45

0.41384903 0.242

PBT (Post Extra-ord

Items)

9,459.09 10,207.26

21.5967961 25.1733

Tax 3,284.28 3,452.897.49859927 8.515


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Reported Net Profit 6,174.81 6,754.3714.0981968 16.6577

Total Value Addition 12,814.56 9,793.8129.2579348 24.1537


0 Equity Dividend 1,073.90 1,363.03

470352.951 3.36153

Corporate Dividend

Tax

181.26 227.52

0.41384903 0.56111

Per share data

(annualised)

Shares in issue (lakhs) 41,304.01 41,304.0194.3044501 101.864


0.03413353 0.04032Equity Dividend (%) 26 330.05936266 0.08138

ComparativeStatement


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Net Block 12,268.83 13,615.28 1,346.45 10.974559

Capital Work in

Progress 6,544.24 15,026.13 8,481.89 129.60848

Investments 652.7 668.83 16.13 2.4712732

Inventories 10,121.45 9,027.46 -1,093.99 -10.808629

Sundry Debtors 3,024.36 3,493.90 469.54 15.525268

Cash and Bank

Balance 347.94 22,436.37 22,088.43 6348.3445

Total Current Assets 13,493.75 34,957.73 21,463.98 159.06609

Loans and Advances 4,292.50 4,123.43 -169.07 -3.9387303

Fixed Deposits 17,880.59 0 -17,880.59 -100

Total CA, Loans &

Advances 35,666.84 39,081.16 3,414.32 9.5728133

Deffered Credit 0 0 0 0

Current Liabilities 10,201.51 12,351.78 2,150.27 21.077958

Provisions 9,408.21 6,211.67 -3,196.54 -33.97607

Total CL &

Provisions 19,609.72 18,563.45 -1,046.27 -5.3354663

Net Current Assets 16,057.12 20,517.71 4,460.59 27.779515

Miscellaneous

Expenses 0 0 0 0

Total Assets 35,522.89 49,827.95 14,305.06 40.269978


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Contingent Liabilities 32,193.13 28,382.46 -3,810.67 -11.836904

Book Value (Rs) 67.75 80.66 12.91 19.055351

Profit and Loss

Particulars Mar '09 Mar '10

Increase ordecrease % change

12 mths 12 mths

Income

Sales Turnover 49,331.47 43,934.7043,934.70 89.0602

Excise Duty 5,532.89 3,386.88-45,944.59 -830.39

Net Sales 43,798.58 40,547.82

35,014.93 79.9454Other Income 2,002.77 2,768.23

-41,030.35 -2048.7

Stock Adjustments 1,872.87 -1,157.45-3,160.22 -168.74

Total Income 47,674.22 42,158.6040,285.73 84.5021

Expenditure

Raw Materials 23,915.45 20,506.40-3,409.05 -14.255

Power & Fuel Cost 3,119.42 3,369.35 249.93 8.01207

Employee Cost 8,401.73 5,416.81-2,984.92 -35.527

Other Manufacturing

Expenses

643.35 287.66

-355.69 -55.287


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Selling and Admin

Expenses

1,587.61 0

-1,587.61 -100

Miscellaneous Expenses 992.85 719.99-272.86 -27.482

Preoperative ExpCapitalised

-1,930.40 0

1,930.40 -100

Total Expenses 36,730.01 30,300.21-6,429.80 -17.506

Mar '09 Mar '10

12 mths 12 mths

Operating Profit 8,941.44 9,090.16148.72 1.66327

PBDIT 10,944.21 11,858.39914.18 8.35309

Interest 253.24 402.01148.77 58.7466

PBDT 10,690.97 11,456.38765.41 7.15941

Depreciation 1,285.12 1,337.2452.12 4.05565

Other Written Off 128.02 10.33-117.69 -91.931

Profit Before Tax 9,277.83 10,108.81830.98 8.95662

Extra-ordinary items 181.26 98.45-82.81 -45.686

PBT (Post Extra-ord

Items)

9,459.09 10,207.26

748.17 7.90953

Tax 3,284.28 3,452.89168.61 5.13385

Reported Net Profit 6,174.81 6,754.37 579.56 9.38588

Total Value Addition 12,814.56 9,793.81-3,020.75 -23.573

Preference Dividend 0 00.00 0

Equity Dividend 1,073.90 1,363.03289.13 26.9234


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Corporate Dividend Tax 181.26 227.5246.26 25.5214

Per share data

(annualised)

Shares in issue (lakhs) 41,304.01 41,304.01 0.00 0

Earning Per Share (Rs) 14.95 16.351.40 9.36455

Equity Dividend (%) 26 337.00 26.9231

Subodha Accounts Term Paper

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