1.

1 INTRODUCTION

Financial statements are prepared primarily for decision making. Financial statement
analysis refers to the process of determining financial strength and weakness of the firm by
properly establishing strategic relationship between the items of the balance sheet and
profit and loss account. There are various methods and techniques used in analyzing
financial statements, such as comparative statements, trend analysis, common size
statement, schedule of changes in working capital, fund flow and cash flow analysis, cost
volume profit analysis and ratio analysis and other operative data the analysis of financial
statement is used for decision making by various parties. In other words, business
transactions are recorded on certain assumptions such as ‘going concern’, ‘stable value of
rupees’ etc., these are reflected in the financial statements. The objectives of financial
statement are to provide information about the financial position, performance and changes
in financial position of the enterprise that is useful to a wide range of users in making
economic decisions.

Financial statements may be used by users for different purposes:

• Owners and managers require financial statements to make important business decisions
that affect its continued.

• Financial analysis is then performed on these statements to provide management with a

more detailed understanding of the figures.

• These statements are also used as art of management’s annual report to the stockholders.

• Employees also need these reports in making collective bargaining agreements with the
management, in the case of labour unions or for individuals in discussing their companion,
promotion and rankings.

• Financial institutions use them to decide whether to grant a company with fresh working
capital or extend debt securities (such as long-term bank loan or debentures) to finance
expansion and other significant expenditures.

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Financial Statements

As mentioned, there are three main financial statements that every company creates and
monitors the balance sheet, income statement, and cash flow statement. Companies use
these financial statements to manage the operations of their business and also to provide
reporting transparency to their stakeholders. All three statements are interconnected and
create different views of a company’s activities and performance.

Balance Sheet

The balance sheet is a report of a company's financial worth in terms of book value. It is
broken into three parts to include a company’s assets, liabilities, and
shareholders' equity. Short-term assets such as cash and accounts receivable can tell a lot
about a company’s operational efficiency. Liabilities include its expense arrangements and
the debt capital it is paying off. Shareholder’s equity includes details on equity capital
investments and retained earnings from periodic net income. The balance sheet must
balance with assets minus liabilities equaling shareholder’s equity. The resulting
shareholder’s equity is considered a company’s book value. This value is an important
performance metric that increases or decreases with the financial activities of a company.

Income Statement

The income statement breaks down the revenue a company earns against the expenses
involved in its business to provide a bottom line, net income profit or loss. The income
statement is broken into three parts which help to analyses business efficiency at three
different points. It begins with revenue and the direct costs associated with revenue to
identify gross profit. It then moves to operating profit which subtracts indirect expenses
such as marketing costs, general costs, and depreciation. Finally, it ends with net profit
which deducts interest and taxes.

Basic analysis of the income statement usually involves the calculation of gross profit
margin, operating profit margin, and net profit margin which each divide profit by revenue.
Profit margin helps to show where company costs are low or high at different points of the
operations.

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Cash Flow Statement

The cash flow statement provides an overview of the company's cash flows from operating
activities, investing activities, and financing activities. Net income is carried over to the
cash flow statement where it is included as the top line item for operating activities. Like
its title, investing activities include cash flows involved with firmwide investments. The
financing activities section includes cash flow from both debt and equity financing. The
bottom line shows how much cash a company has available.

Free Cash Flow and Other Valuation Statements

Companies and analysts also use free cash flow statements and other valuation statements
to analyses the value of a company. Free cash flow statements arrive at a net present value
by discounting the free cash flow a company is estimated to generate over time. Private
companies may keep a valuation statement as they progress toward potentially going
public.

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 1.2 OBJECTIVES OF STUDY
Primary Objectives
 A study on financial statement analysis of sertel electronics private limited

Secondary Objectives
 To Identify the Various Assets of sertel electronics private limited With Respect to Annual
Reports of The Company.
 To Analysis Comparative Study of Annual Reports,
 To Evaluate the Profitability Position of Industry,
 To Make Suggestion for Improve of Financial Statement.

4
 1.3 SCOPE OF STUDY
 The information relevant to the decision under consideration from total information
contained in the financial statements
 The information in a way to highlight significant
 Interpretation and drawing if interfaces and conclusion

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 1.4 LIMITATIONS OF STUDY
 The study is based on secondary data, obtained from the published report and
as its findings depends entirely on the accuracy of such data.
 Financial statement does not keep pace with the changing price level.
 Based on past data
 It cannot be a substitute for judgment
 Reliability of figures • Different interpretations
 Changes in accounting methods • Price level changes
 Balance sheet reveals the financial position of a firm on a particular day at the
end of the accounting year
 Financial statement reflected the recorded facts and figures
 Financial statements do not keep with changing price levels

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 2.1 COMPANY PROFILE
Incorporated in the year 1990, Sertel Electronics (pvt) Limited (Chennai) has created a
dignified position in the market. They are based out as a Private Limited Company and
performing entire business activities from Chennai, Tamil Nadu (India). It is an equipment
manufacturing company based in India (Chennai). It is a technology- oriented company
who focus on R&D and High-tech Industrial Applications. It is one of the world’s leading
manufacturers of highly precise time stamping technologies, solutions for industrial
instrumentations. It also has the distinct honour of being the first Indian company to
manufacture GPS based time management systems. They have grown as a unit ever since
then to become market leaders in India. They tailor their solutions for industry verticals
such as power sectors, chemical industries, Oil & Gas, Telecom, Defence, civilian
networks etc. They support customers with solutions in different parts of the world to
monitor, generate, distribute and apply time.

The company is engaged in a wide gamut of Digital Slave Clock, NTP Server, Alarm
Annunciator, GPS Master Clock and many more. With their extensive product and service,
they have successfully engraved a niche in the market and are serving their valued clients
with qualitative products and services. They deliver these products and services to their
customers at competitive prices. Their offered products are manufactured by using
premium quality material and advanced technologies in strict adherence with the several
set norms. They also render the services by using the latest methodologies. They make sure
that the services are quality approved and efficient. Further, their experienced quality
examiners verify each product and services in detail prior to the final approval so as to
ensure maximum benefits in favour of the customers. They serve their clients attentively
and so as to attain their complete satisfaction.

QUALITY ASSURANCE

Their aim is to set benchmarking standards in the industry and they are doing this by
adhering to the rigid quality norms. All their products are designed and developed by
keeping the clients’ best interest in mind and their diligent team members make sure to
abide the robust set of rules to be on the clients’ side. They make sure to

7
source the quality tested grades of raw materials and conduct rigorous tests and inspections
on the finished product to outperform the competition

INFRASTRUCTURE

Their core strength lays in their next generation research and development capabilities
which are the most important element of their infrastructure. Besides, their in-house
manufacturing setup is strategically designed to uphold the desired levels of productivity.
They have invested in highly productive and high-speed machines that are installed at their
R&D units, and product testing, packaging and distribution departments.

TEAM

They are the most preferred equipment manufacturing company and due to the diligent
perspectives of their team members they have become a preferred brand in the industry.
Their mission to become a customer-oriented firm is strengthened by the collaborative
efforts of their assiduous professionals who are engaged in exploring the scope of
innovation. Further, their team comprises highly experienced technology specialists, R&D
experts, inventory managers and quality assurance officers.

VISION:

Electronic Manufacturing Company will provide competitive, high quality electronic

manufacturing services and individualized customer service, while encouraging employee
creativity, motivation, and team work in a continuously improving environment.

MISSION:

1. Develop customer relationships which provide services tailored to specific customer

needs;

2. Provide employees with on-going training to enhance knowledge and skills, develop
problem solving and decision-making abilities, and offer opportunities for advancement;

3. Apply cost effective production systems and sound fiscal planning;

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4. Utilize Continuous Process Improvement strategies to ensure the highest quality
products and services.

VALUES:

1. Work closely with our customers to understand their needs and provide high quality
products services.

2. Recognize the strengths of those we work with and focus our efforts on helping them
overcome their weaknesses.

3. Treat all individuals with courtesy, dignity, and respect.

4. Work together as a team to provide quality services.

5. Recognize the value of all employees in attaining our goals.

6. Work cooperatively to solve problems and develop solutions.

7. Provide a work environment which motivates our employees and encourages

independence, cooperation, respect, and humor.

COMPANY INFORMATION:

TABLE 2.1

1 Company Name Sertel Electronics Pvt Ltd

2 Nature of Business Electronics Manufacturer & Exporter

3 Additional Business Electronics Service Provider

4 Class of Company Private

5 Company Sub-Category Private Limited

6 Legal Status of The Firm Private Limited Company

7 Year of Establishment 1990

8 Age of The Company 31 Years

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 9 Company CEO & Director R.Gopalan

10 Annual Turnover Rs.6-7 Crores

11 ROC ROC-Chennai

Total Number of
12 Employees 200-300

Packaging/Payment And Shipment Details

1. Payment Mode

● Cash
● Cheque/DD
● NEFT/RTGS
● Credit 45 days

2. shipment mode

● By road
● By sea
● By air

Share Capital Details

Table 2.2

1 Authorised Capital Rs.4000000

2 Paid-up Capital Rs.2500000

Listing and Annual Compliance Details

Table 2.3

1 Date of Last Annual General Meeting 31.12.2022

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 2 Date of Latest Balance Sheet 31.03.2022

Director Details

Table 2.4

APPOINTMENT
S.NO NAME DIN DESIGNATION
DATE

RAMACHANDRA
1 247976 CEO 18-04-1990
N GOPALAN

2 GOPALAN LALITHA 248034 Director 18-04-1990

3 SRINATH GOPALAN 2549599 Director 01-05-2009

GOPALAN
4 5187918 Director 02-04-2012
SRIKANTH

Symbol:

Fig 2.1

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Certificates:

The national small industries corporation limited

Fig 2.2

Certificate of registration

Fig 2.3

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 2.2 INDUSTRY PROFILE

SERTEL RANGE OF PRODUCTS

They have a team of world-class professionals who are engaged in presenting custom made
and cost-effective product range. Thereby, they have established lasting alliances with a vast
number of clients from diverse industrial terrains. They are a technology-oriented company
backed with state of art advancements at their well-integrated setup that enables them to
fulfil the demanding needs of timely delivery and best in class product range.
The following are the various products manufactured by the company:
1.GPSTime Synchronization System:
They are engaged in offering a wide series of GPS Time Synchronization Systems that are
widely applauded for their optimum performance, robust construction and precise
dimensions. The offered range Global Positioning System (GPS) Time Synchronization
Systems is available in different configurations so as to cater to the diverse client needs.

Fig:2.4

FEATURES:
● Generates time stamp signals that synchronizes various network of electrical,
computer, communication devices such as DCS, PLC, LAN, Computer Buses,
RTU’s etc and also various sizes of display units with different inputs such as
NTP/IRIG-B/RS 232/RS 485 to many locations for time synchronization.
● Equipped with high precision and high stability OCXO, GPS is capable of
performing with greater accuracy and tenacity during temporary signal loss.
● Provides output protocols such as IRIG-B, NTP/SNTP, RS 232, Pulse, DCF- 77,
BCD etc with accuracy of better than one microsecond

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 2. Alarm Annunciator:
Being one of the renowned organizations in the industry, they are highly engaged in offering
a unique range of Alarm Annunciator. Offered product is well- manufactured under the
guidance of their highly experienced professionals using the qualitative grade factor inputs
and high-end technology. Provided product finds its best usage in various alarm systems for
some specific purposes. Further, in order to avoid any flaws, this product is rigorously tested
by their experienced quality experts against various quality parameters.

Fig:2.5

FEATURES:
● Fault Audio/Alarm Annunciator window of DIN standard and 30 x 50 window size.
● Any number of channels 8,16,32,64,128 to 600.
● Supports IEC 61850 Protocol on Ethernet Network, DNP3 protocol, RS 485 and
Modbus Communication.
● GPS time stamped window with the accuracy of 1micro sec to replace SoE
sequence recorder, Inbuilt SOE application.
3. SIGNAL ISOLATORS:
SERTEL Signal Isolators also called Instrumentation Isolators or field instruments are used
to galvanically or optically separate the Input circuits from the output circuits. Moreover, if
power-supply is separately provided, in some models, the power circuits also have no
electrical connection to either the Input circuits or the Output circuits. Isolators are important
bridges between the Transducers, such as Thermocouples, RTDS or other instruments and
data collecting and control equipment like SCADA, DCS, Computers etc.

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 Fig 2.6
FEATURES:
● Process parameters with Auxiliary Power Isolator & Loop Power Isolator: Signal
Isolator / Multiplexer with DIN Rail mount.
● Available with three Port Isolations: I/P to P/S, I/P to O/P, O/P to P/S.
● All ports are 2 KV isolated & Multiplies the signal of both power/process Industry
to communicate current output over long distance to PLC, DCS,SCADA and
Indicator, controller, Recorder.
● Maintains accuracy level of 1%, 0.5%, 0.125%,0.05%, 0.025% & 0.01%
4. DISPLAY PANEL METER/INDICATOR:
A Display Panel Indicator digitally processes measurement data, such as an analog signal
from a linear sensor (including a voltage and current), or a pulse signal. It then converts and
displays the data. They can also act as interfaces by performing operations such as
comparisons with user-set values, and transmitting data to computers and PLCs.

Fig: 2.7

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FEATURES:
● Microcontroller based design with 24 bit Sigma-Delta ADC
● Maintains accuracy level of 0.01% without any fluctuations with low power
consumption
● Available in various sizes of 24x48 mm, 24x72 mm, 24x96 mm, 48x96 mm,
48x144mm with Professional Alarm contacts and four relay outputs (L, LL, H, HH)
and jumper selectable decimal point
● Energizing unit programmable at site (DIN Standard) Applications – Power sector,
Railways, Navy and All Industries.
5. Furnace Flame Viewing Camera:
Leveraging on the competence of our skilled workforce, we have been engrossed in
presenting to our customers a wide assortment of OFT12 Furnace Television System which
is designed for installation in Reheating Furnaces, Incinerators and similar plants where the
operating conditions does not necessarily demand the extra performance of water cooling
and allows the cost benefits of a simpler system to be enjoyed.

Fig:2.8

FEATURES:

● Displays the high temperature furnace flame to monitor the scaling inside the
furnace which consists of an air-cooling system and automatic retraction system.
● Used in Power generation boiler, installation in Reheating Furnaces, Incinerators
with the state of art design customizable as per site condition.

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 ● Automatic retraction system to prevent damage and provided with time
stamping on DVR Systems.
6. Furnace Thermal Viewing IR Camera:
We are offering a wide range of Furnace Viewing Camera Television System which is a
miniature solids state colour television camera contained within a water-cooled housing that
is inserted through the furnace wall or roof to view the interior from a position that is
effectively at the hot face of the refractory. A special lens views directly into the furnace
through a small aperture in the housing, which is provided with a refrigerated air purge
which exhausts through the viewing aperture and provides front end cooling for the lens as
well as keeping it clean.

Fig: 2.9

FEATURES:
● Represents the current state of art in furnace and boiler viewing with Thermal
analysis and temperature gradients at various points in a flame.
● HD IR camera with software to slow different temperatures at different colour
points of the flame with Stainless steel triple flow design.
● Highly efficient air-cooling system and has a multilayer air jacket which
provides cooling for operation at 2000 Deg Celsius and low-cost maintenance
7. Event Alarm Communicator:
Event Alarm Communicator gathers information from DCS, SCADA, IED’s, DAP server,
RTU Gateway and communicates them through MODBUS TCP/IP (or) RS
485 protocol. It can also collect data from Modbus data concentrator at user customizable
intervals and is configurable through PC. MEAC-300 gathers all the event failures occurred
and intimates those details through SMS / Email to key personnel for immediate action. The
inputs will be in the form of Analog/ Digital values. In which if the analog value exceeds
the maximum permissible value, that

17
corresponding event will be recorded and communicated through E-Mail /SMS. Provisions
will be provided for the configuration of the MEAC System, for entering the user details
such as Mobile No, Name, Mail ID etc. Options for setting the critical Parameters of
SCADA has been included in the software. Status of MEAC such as GSM signal, MODBUS
connection can be monitored through remote (MODBUS TCP/IP (or) RS 485) keeping
MEAC as Server. LED status indication will be provided for SMS, EMail output. These are
easily configurable, high speed communication, high resolution, and high accuracy and are
highly secured with password.

Fig 2.10

FEATURES:
● It gathers data from Modbus database concentrator at intervals - 5sec/10 sec/20 sec
etc. configurable through PC.
● Publishes it through SMS / Email which can intimate key personnel on an urgent
basis for immediate action with Modbus RTU/ASCII/TCP/IP input signals. Input
connection up to 16 DIO’s, Analog Signals.
● Communication over Internet/GSM/3G networks with input connection up to 16
DIO’s and Analog Signals.
8. Transformer Alarm Communicator:
This system transmits a general alarm signal to a central location in response to one of a
plurality of alarm conditions without blocking the signal path, so that in the event of system
failure the alarm signal will still be transmitted as a transformer alarm. The device provides a
means to disable a particular alarm condition while allowing the remaining alarms to be
monitored.

18
 Fig 2.11

FEATURES:
● It gathers data from Master DM&NA panel collect various field inputs, it will
process and transmit the status of each critical parameters through SMS
● Collects various fields on inputs such as potential free contacts and analog inputs
from file devices and has in built signal conditioner with isolation for critical field
inputs
● Applications – Transformer, Circuit Breaker, Production panel, Transformer tap
changer panel
9. Grid Ex:
It is a digital mustimeters and analyser for Smart Grid applications; it bridges the gap
between the traditional power technology and digital communication. Network digital data is
translated into upfront and intuitive information to support decisions for increased reliability
and improved system utilization.
Entirely embedded stand-alone solution for secure connection to your IEC 61850 network,
easy to use, versatile connections, instant start-up, error and inconsistencies detection,
warning explanation, proactive analysis.

Fig: 2.12

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FEATURES:
● A digital multimeter for Smart Grid, bridges the gap between traditional power
technology and new digital communication.
● Complex data is translated into easily understandable information to support
decisions for increased reliability and improved system utilization.
● Advanced aid and support error detection, inconsistencies, warning explanation,
helpful comments and recommendations, intelligent, proactive analysis, valuable
information with customized and robust embedded systems.
10. Online Display System:
The Online display system is used to displaying various data on Matrix LED display and
LCD display for Power Plant. The parameter value receiving from the DCS system through
OPC protocol and MODBUS RS485 protocol. The Online display system is used to display
various data on Matrix LED display and LCD display for Power Plant. The parameter value
receiving from the DCS system through OPC protocol and MODBUS RS485 protocol. The
Online display system involved a Personal computer, interface unit, signal distribution unit,
Matrix LED display unit for outdoor and LCD Display for indoor. Matrix LED display unit
and LCD display is displayed parameter name and value in four pages with scrolling each
page having four rows each row having 40 characters long. Personal computer is used to
communicate with The user’s DCS system and interfacing unit, file configuration of the OPC
server / client, mathematical calculation of Received data. These product applications are
Power sectors, Railways, Industries, Public Places like Playground, Bus Terminus, etc

Fig 2.13

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FEATURES:
● Integration of Analog signal and digital signal to distance view LED/LCD Large
screen 52” inch, LED Display, configuration of display as master/slave to have the
entire plant uniform display of parameter of time, frequency, Data of engineering
units.
● OPC data can also be integrated.
11. DISPLAY UNITS:
Time is an important factor in all organizations. A unique time displayed at all places in a
working environment produces effective results.
Responding at the right instance of time to a critical operation saves machinery losses,
finance and many other valuable assets.
SERTEL manufactures GPS based time display units that altogether are in synchronous with
the UTC and always shows the right time at all places and at all instances.
Synchronized to the atomic clock in the satellites with very high accuracy, the level of
reliability upon this time display units is enormous.

21
 3. REVIEW OF LITERATURE
 MARLLYN B. MISCH, CAROLYN A. GALANTINE (2009) in their study
on A FINANCIAL STATEMENT ANALYSIS PROJECT FOR INTRODUCTORY
FINANCIAL ACCOUNTING found that this paper describes a financial statement
analysis project useful in both prepared based and user-based introductory courses in
financial accounting.
 GAUR JIGHYASU (2010) in their study on the financial performance measures of
INDIA’S NON-METALLIC MINERAL PRODUCTS INDUSTRIES They examined
the firm’s financial performance measures using performance measures using
operating profit and return on net worth, the size, leverage, working capital ratio and
age of the firm are included as determinants of firm’s performance
 BANSAL AND GUPTA (2011) in their study entitled FINANCIAL RATIO
ANALYSIS AND STATISTICS found that enlightened that the co-efficient of
variation in the study period had a wide gap varying between 7.1 percent and 51.3
percent for the current ratio and ratio of fixed assets to sale. The correlation of
components of short- term liquidity ratio generally possesses low correlation as
against long term satisfactory correlation in cotton textile industry as compared to
synthetic industry.
 GOUTAM CHANDRA SAHA (2012) in their study on FINANCIAL ANALYSIS
OF MINING PROJECTS found that Financial statements are official records of the
financial actions of a company, firm or other unit over a period of time which provide
a general idea of a company or person's financial situation in mutually short and long
term. They give a precise representation of a company’s condition and working
results in a reduced form. Financial statements are used for supervision tool mainly
by company executives and investor’s in assess the overall situation and working
results of the company.
 ESHA SHARMA (2012) in their study on FINANCIAL ANALYSIS OF ICICI
BANK found that the liberalized policy of the government of India permitted entry to
the ICICI in banking; the industry has witnessed a generation of private players. The
focus of these banks has always been centred on the customer. But to satisfy the
customers and to operate other activities, the bank must have sufficient funds in its
accounts. That’s why, in the present paper special emphasis has been laid down on the
financial analysis of the bank by using different research and statistical tools.

22
 AKASH DIXIT (2013) in their study on FINANCIAL STATEMENT ANALYSIS
OF STATE BANK OF INDIA found that the banking system of India is featured by a
large network of bank branches, serving many kinds of financial services of the
people. The purpose of the study is to examine the financial performance of SBI,
public sector bank. The research is descriptive and analytical in nature. The data used
for the study was entirely secondary innature. The present study is conducted to
analyse the financial performance of SBI on the basis of ratios such as credit deposit,
net profit margin etc. The period of study taken is from the year 2007-08 to 2011-12.
The study found that SBI is performing well and financially sound.
 MANISH ROY TIRKEY & NAEEM SABAH KHILKHAL (2014) in their
study on FINANCIAL STATEMENT ANALYSIS OF ONGC LTD found that it is
purely based on secondary data obtained through website of the specified private
banks. By using the ratio analysis tool, we can analyse the performance of ONGC Ltd
and we can easily find out the strength and weakness of the company and their
position in the market. Different ratios are used in this study and particularly those
which are related to the financial statement for this purpose balance sheet of 2010-
2013 of ONGC Ltd. are used and from them ratios are calculated so according to
which we can easily compare the performance.
 ANUPA JAYAWARDHANA (2016) in their study on FINANCIAL
PERFORMANCE ANALYSIS OF ADIDAS AG found that the financial statement
indicates the balance sheet, income statement and the cash flow statement. Financial
performance has been studied using horizontal analysis, vertical analysis, trend
analysis and mainly ratio analysis to suggest improvements to increase finance flow,
improve dividend and reduce liabilities. Main analysis is based on 2014 and 2013
financial years which are ending on 31st of December in every year. The latest
performance being compared with company’s statements over the last five years
starting 2010 for showing trends. Finally, recommendations and suggestions have been
made to ensure the revenue of the company and reduce the liabilities while improving
the stability of the company.
 DR. ASHOK KUMAR RATH (2016) in their study on FINANCIAL STATEMENT
ANALYSIS OF TATA STEEL ODISHA PROJECT, KALINGA NAGAR found
that India is one of the developing nations of the World. Globalization provides
ample of opportunity to the Companies to expand overseas and enrich India with high
Quality and World Class products by implementing state-of –art-technology. The

23
 Steel Giants of India are namely, Arcell or Mitttal, Tata Steel Ltd. & Steel Authority
of India presenting India on the Global front. Tata steel is expanding its production
capacity in India and has some Greenfield Steel Projects under implementation,
including one at the Kalinga Nagar Industrial Complex at Duburi in Jajpur district.
This project report is an effort to suggest the best financing option for the project
expenditure of Rs.21200 Cr and to identify its financial strength and weaknesses with
the help of various financial statement analysis tools and techniques.
 DUSAN BARAN, ANDREJ PASTYR, DANIELA BARANOVA (2016) in their
study on FINANCIAL ANALYSIS OF A SELECTED COMPANY found that the
success of every business enterprise is directly related to the competencies of
business management. The business enterprise can, as a result, create variations of
how to approach the new complex and changing situations of success in the market.
Therefore managers are trying during negative times to change their management
approach, to ensure long-term and stable running of the business enterprise. They are
forced to continuously maintain and obtain customers and suppliers. By
implementing these measures they have the opportunity to achieve a competitive
advantage over other business enterprises
 OMAR ABDI DAHIR (2016) in their study on FINANCIAL RATIO ANALYSIS
OF AXIS BANK found that In today’s financial world, financial performance is a
requirements amongst the perspective of various stakeholders, be it in the
management, lenders, owners and investors’ perspective, and it is out of analysis of
financial statements. Axis Bank today is a leading player in Indian banking industry
and is deeply engaged in human and economic development at the national level. The
Bank works closely with although it is private. bank emerged as a pioneer venture on
the horizon of offering an expanded range of banking products and financial services
for corporate and retail customers through its diverse delivery channels and
specialized subsidiaries in the areas of investment banking, asset management,
venture capital and insurance. In the light of its strategic importance in the nation
interest, it is crucial to evaluate the financial performance of the Axis Bank. And the
present study focused on operational control of the asset, profitability and solvency
etc. This research paper is aimed to analyse and compare the Financial Performance
of Axis Bank in five years period and offer suggestions for the improvement of
efficiency in the Bank
 SINGH AND HAMID (1992) AND SINGH (1995) have analysed the financing

24
 pattern of nine developing countries like India, Korea, Jordan, Pakistan, Thailand,
Mexico, Malaysia, Turkey and Zimbabwe and found that in all these developing
countries' corporations rely in general, very heavily on external funds and new issues
of shares to finance their growth of net assets. They have also concluded that there
were important differences between the two groups of corporations. Specifically, they
suggested that less developed Corporations used both external finance and
particularly equity finance to a much greater extent than their counterparts in
advanced economies. Their findings were almost reverse of the Pecking Order pattern
of finance observed for advanced country corporations. Corbett and Jenkinson (1994,
1997) have found that there is no market-based Anglo-US pattern of financing of
industry. The corporations in Germany, the United Kingdom and the United States
are internally financed with small or negative contributions from market sources,
while Japanese corporations are more externally financed with both banks and
markets contributing larger shares than in the former group. They have also found
that there is little evidence to support the view that Germany is a bank financed
system and that the UK or US are market financed. Over the period of 1980s, all
countries, except Japan, have become more internally and less market financed.
 A STUDY BY OPLER, SARON AND TITMAN (1997) highlights the importance
of corporate liability management for creating value for shareholders. Their study
covered analysis of optimal capital structure (debt equity mix) in such a way that the
sum of taxes paid by the firm and the costs of financial distress are minimized.
 A STUDY WAS CONDUCTED BY ECONOMIC TIMES OF 348
COMPANIES (which include Engineering companies also) for a period of 8 years. It
was found that the net profit growth rate is not substantially different from growth
rate of nominal GDP. The expectations during 2003 of nominal GDP growth over
the next 3 to 4 years are about 10 to 12 %, with the real growth of about 6 to 7 %.
And inflation of 4 to 5 %. The dividend yield of sample companies is about 3.5 %
having increased from a less than 2 %, 5-6 years ego. Adding this to the expected
earnings growth, the expected stock market investor mental programming of high
return on equity investments.
 MILLER AND MODIGLIANI (1961) have found dividend as irrelevant in a world
without taxes, transaction cost or other market imperfections and added that the
investment decision of the firm is not affected by the dividends because investors can
homebrew their own dividends by selling a part from or borrowing against their

25
 portfolio. The firms that issue dividends would incur flotation costs on new securities
they have to issue to keep their investment policy intact.
 Robert Anthony, Professor of Accounting and Financial Control at Harvard
University has written many authoritative books on accounting and financial
management. He defines Accounting as a means of collecting, summarizing,
analyzing and reporting in monetary terms, information about the business.

26
 4. RESEARCH METHODOLOGY
Research methodology simply refers to the practical “how” of any given piece of research.
More specifically, it’s about how a researcher systematically designs a study to ensure
valid and reliable results that address the research aims and objectives.

Definition of research

According to Clifford Woody research is defined as comprises defining and refined

problems formulating hypothesis or suggested solutions, collecting, organizing and
evaluating data, making detections and researching conclusion and at last carefully testing
the conclusion to determine when they fit the formulating hypothesis.

Meaning of research methodology

Research Methodology is a way to systematically solve the research problem it may be

understood as a science of study how research is done scientifically. Research methods
may be understood as all those methods or techniques that are used for conduction of
researchers use in performing research operations. Research methodology is the systematic
gathering and analyzing of data about problems, formulating hypothesis and suggested
solutions collecting, organizing and evaluating data, making deduction and reaching
conclusion and carefully testing the conclusion to determine whether they fit the
formulating hypothesis.

RESEARCH DESIGN

Choosing a design for the study is crucial step because, if a wrong decision is made the
whole study may be criticized on the grounds of an appropriate design are even worse as
been unscientific or illogical. It is descriptive in nature. It is difficult to generalize about
research design because of wide variety of types of research. Basically however, research
studies fall into broad categories empirical and analytical, empirical or experimental
studies are conducted mainly in the quantitative type (science) subjects, whereas analytical
or literary studies are generally conducted in the qualitative (arts) subject.

27
Exploratory research is one which is largely intercept and already available information and its lays
particular emphases on analysis and interpretation of the existing and available information

Period of study
The project work was carried out during the period January 2024 to April 2024

Method of Data Collection

Secondary Data: Secondary data are collected from the company records, magazines and through
websites.

TOOLS OF FINANCIAL ANALYSIS

1.Comparative balance sheet
2.Common size balance sheet
3.Trend analysis
4.Working capital ratio
5. Fund flow and cash flow analysis
6.Ratio analysis

1. Comparative balance sheet

In this statement summaries and present related data for a number of years, incorporating therein
changes in individual items of financial statements.

2. Common Size Statement:

It indicates the relationship of various items with some common items. In the income statements,
the sale figure is taken as basis and all other figures are expressed as percentage of sales

3. Trend analysis:
Trend analysis is significant for forecasting and budgeting. Trend analysis discloses the changes
in financial and operating data between specific periods

4. Working capital ratio:

The working capital ratio is a measure of liquidity, revealing whether a business can pay its
obligations. The ratio is the relative proportion of an entity's current assets to its current liabilities,
and shows the ability of a business to pay for its current liabilities with its current assets.

28
5. Fund flow and cash flow statement analysis:
A cash flow statement is a financial statement that summarizes the amount of cash
and cash equivalents entering and leaving a company. The cash flow statement measures how
well a company manages its cash position, meaning how well the company generates cash to pay
its debt obligations and fund its operating expenses.

A fund flow statement is a statement prepared to analyse the reasons for changes in the financial
position of a company between two balance sheets. It portrays the inflow and outflow of funds i.e.
sources of funds and applications of funds for a particular period.

6. Ratio analysis:
An analysis of financial statements based on ratio is known as ratio analysis. Ratio is a
mathematical relationship between two or more items taken from the financial statements

TOOLS ARE USED

 Comparative statement
 Common size statement
 Ratio analysis

29
 5. DATA ANALYSIS AND INTERPRETATION
4.1.1 COMPARATIVE BALANCE SHEET 2014-2015

Table 4.1.1

% IN
PARTICULAR 2014 2015 INC CHANG
/DEC ES
ASSETS(A)
1.non current assets
Fixed assets
Tangible asset 10957179 8771848 2185331 19.94
Deferred tax asset 187615 229980 -42365 -22.58
Long-term loan and barrowing 10580294 10751328 -171034 -1.62
Other current asset 80153 79693 460 0.57
(A) 21805241 19832849 1972392 9.05
CURRENT ASSETS
Inventories 937580 884710 52870 5.64
Trade receivable 22030445 11214393 10816052 49.10
Cash and cash equipment 950280 833340 116940 12.31
other current asset 6207814 4095233 2112581 34.03

(B) 30126119 17027676 13098443 43.48

TOTAL(A+B) 51931360 36860525 15070835 29.02

EQUITY AND LIABAILITIES
1. SHAREHOLDER'S FUND
Share Capital 2500000 2500000 0 0.00
Reserve and Surplus 17657166 17340479 316687 1.79
(C) 20157166 19840479 316687 1.57
2. NON CURENT LIABILITIES
Long-Term Borrowing 4518926 4736422 -217496 -4.81
(D) 4518926 4736422 -217496 -4.81
3.CURRENT LIABILITIES
Short Term Borrowing 5498161 2421505 3076656 55.96
Trade Payable 20836248 6322589 14513659 69.66
Other Current Liabilities 920859 3155390 -2234531 -242.66
Short Term Provisions 0 384140 -384140 0.00
(E) 27255268 12283624 14971644 54.93

TOTAL (C+D+E) 51931360 36860525 15070835 29.02

30
INTERPRETATION

From the above table we can see the current assets have decreased by Rs 13098443 in the
year 2015 over 2014. On the other hand, the current liabilities have decreased by Rs
14971644. Now, such a change does not have a negative impact on the liquidity position.
This is because current assets have decreased by 43.48% whereas current liabilities have
declined by 54.93%.

31
 COMPARATIVE BALANCE SHEET 2015-2016

Table 4.1.2

% IN
PARTICULAR 2015 2016 INC /DEC
CHANGE
S
ASSETS
1.NON CURRENT ASSETS
Fixed Assets
Tangible Asset 8771848 9191268 -419420 104.78
Deferred Tax Asset 229980 260707 -30727 113.36
Long-Term Loan And Barrowing 10751328 13669067 -2917739 127.14
Other Current Asset 79693 55556 24137 69.71
(A) 19832849 23176598 -3343749 116.86
CURRENT ASSETS
Inventories 884710 747680 137030 84.51
Trade Receivable 11214393 17694057 -6479664 157.78
Cash And Cash Equipment 833340 870592 -37252 104.47
Other Current Asset 4095233 6459375 -2364142 157.73
(B) 17027676 25771704 -8744028 151.35
TOTAL(A+B) 36860525 48948302 -12087777 132.79
EQUITY AND LIABAILITIES
1. SHAREHOLDER'S FUND
Share Capital 2500000 2500000 0 100.00
Reserve and Surplus 17340479 16622202 718277 95.86
(C) 19840479 19122202 718277 96.38
2. NON CURENT LIABILITIES
Long-Term Borrowing 4736422 12547088 -7810666 264.91
(D) 4736422 12547088 -7810666 264.91
3.CURRENT LIABILITIES
Short Term Borrowing 2421505 1113785 1307720 46.00
Trade Payable 6322589 12572484 -6249895 198.85
Other Current Liabilities 3155390 2885895 269495 91.46
Short Term Provisions 384140 706848 -322708 184.01
(E) 12283624 17279012 -4995388 140.67
TOTAL (C+D+E) 36860525 48948302 -12087777 132.79

INTERPRETATION
From the above table we can see the current assets have decreased by Rs 8744028 in the year
2015 over 2016. On the other hand, the current liabilities have decreased by Rs 4995388. Now,
such a change does not have a negative impact on the liquidity position. This is because current
assets have decreased by 151.35% whereas current liabilities have declined by 140.67%.

32
 COMPARATIVE BALANCE SHEET 2016-2017

Table 4.1.3

% IN
PARTICULAR 2016 2017 INC /DEC
CHANGE
S
ASSETS
1.NON CURRENT ASSETS
Fixed Assets
Tangible Asset 9191268 3246338 5944930 35.32
Deferred Tax Asset 260707 14677 246030 5.63
Long-Term Loan And Barrowing 13669067 12493324 1175743 91.40
Other Current Asset 55556 55556 0 100.00
(A) 23176598 15809895 7366703 68.21
CURRENT ASSETS
Inventories 747680 1214400 -466720 162.42
Trade Receivable 17694057 21970146 -4276089 124.17
Cash And Cash Equipment 870592 1059203 -188611 121.66
Other Current Asset 6459375 3385982 3073393 52.42
(B) 25771704 27629731 -1858027 107.21
TOTAL (A+B) 48948302 43439626 5508676 88.75
EQUITY AND LIABAILITIES
1. SHAREHOLDER'S FUND
Share Capital 2500000 2500000 0 100.00
Reserve and Surplus 16622202 10223707 6398495 61.51
(D) 19122202 12723707 6398495 66.54
2. NON CURENT LIABILITIES
Long-Term Borrowing 12547088 4522219 8024869 36.04
Deferred Tax Liability 0 34911 -34911 0.00
(D) 12547088 4557130 7989958 36.32
3.CURRENT LIABILITIES
Short Term Borrowing 1113785 3266042 -2152257 293.24
Trade Payable 12572484 9351394 3221090 74.38
OTHER CURRENT
LIABILITIES 2885895 13389545 -10503650 463.97
Short Term Provisions 706848 151808 555040 21.48
(E) 17279012 26158789 -8879777 151.39
TOTAL (C+D+E) 48948302 43439626 5508676 88.75
INTERPRETATION:
From the above table we can see the current assets have decreased by Rs 1858027 in the year
2016 over 2017. On the other hand, the current liabilities have decreased by Rs 8879777.
Now, such a change does not have a negative impact on the liquidity position. This is
because current assets have decreased by 107.21% whereas current liabilities have declined
by 151.39%

33
 COMPARATIVE BALANCE SHEET 2017-2018

Table 4.1.4

% IN
PARTICULAR 2017 2018 INC /DEC
CHANGE
S
ASSETS
1.NON CURRENT ASSETS
Fixed Assets
Tangible Asset 3246338 55811075 -52564737 1719.20
Deferred Tax Asset 14677 18540 -3863 126.32
Long-Term Loan and Barrowing 12493324 13279809 -786485 106.30
Other Current Asset 55556 0 55556 0.00
(A) 15809895 69109424 -53299529 437.13
CURRENT ASSETS
Inventories 1214400 965538 248862 79.51
Trade Receivable 21970146 30549957 -8579811 139.05
Cash And Cash Equipment 1059203 2524749 -1465546 238.36
Other Current Asset 3385982 907750 2478232 26.81
(B) 27629731 34947994 -7318263 126.49
TOTAL (A+B) 43439626 104057418 -60617792 239.54
EQUITY AND LIABAILITIES
1. SHAREHOLDER'S FUND
Share Capital 2500000 2500000 0 100.00
Reserve and Surplus 10223707 68840826 -58617119 673.35
(D) 12723707 71340826 -58617119 560.69
2. NON CURENT LIABILITIES
Long-Term Borrowing 4522219 10636382 -6114163 235.20
Deferred Tax Liability 34911 1365512 -1330601 3911.41
(D) 4557130 12001894 -7444764 263.37
3.CURRENT LIABILITIES
Short Term Borrowing 3266042 0 3266042 0.00
Trade Payable 9351394 2579575 6771819 27.58
Other Current Liabilities 13389545 16731807 -3342262 124.96
Short Term Provisions 151808 1403316 -1251508 924.40
(E) 26158789 20714698 5444091 79.19
TOTAL (C+D+E) 43439626 104057418 -60617792 239.54

INTERPRETATION:
From the above table we can see the current assets have decreased by Rs 7318263 in the year
2017 over 2018. On the other hand, the current liabilities have increased by Rs 5444091.
Now, such a change does not have a negative impact on the liquidity position. This is
because current assets have decreased by 126.49% whereas current liabilities have declined
by 79.19%.

34
 COMPARATIVE BALANCE SHEET 2018-2019

Table 4.1.5

INC % IN
PARTICULAR 2018 2019
/DEC CHANGE
S
ASSETS
1.NON CURRENT ASSETS
Fixed Assets
Tangible Asset 55811075 62064196 -6253121 111.20
Deferred Tax Asset 18540 15600 2940 84.14
Long-Term Loan and Barrowing 13279809 14205776 -925967 106.97
Other Current Asset 0 0 0 0.00
(A) 69109424 76285572 -7176148 110.38
CURRENT ASSETS
Inventories 965538 1050519 -84981 108.80
Trade Receivable 30549957 24397984 6151973 79.86
Cash And Cash Equipment 2524749 55831 2468918 2.21
Other Current Asset 907750 1853908 -946158 204.23
(B) 34947994 27358242 7589752 78.28
TOTAL(A+B) 104057418 103643814 413604 99.60
EQUITY AND LIABAILITIES
1. SHAREHOLDER'S FUND
Share Capital 2500000 2500000 0 100.00
Reserve and Surplus 68840826 69441327 -600501 100.87
(C) 71340826 71941327 -600501 100.84
2. NON CURENT LIABILITIES
Long-Term Borrowing 10636382 8206134 2430248 77.15
Deferred Tax Liability 1365512 1091341 274171 79.92
(D) 12001894 9225475 2776419 76.87
3.CURRENT LIABILITIES
Short Term Borrowing 0 284324 -284324 0.00
Trade Payable 2579575 4662636 -2083061 180.75
Other Current Liabilities 16731807 17494598 -762791 104.56
Short Term Provisions 1403316 35453 1367863 2.53
(E) 20714698 22477012 -1762314 108.51
TOTAL (C+D+E) 104057418 103643814 413604 99.60

INTERPRETATION:
From the above table we can see the current assets have increased by Rs 7589752 in the year
2018 over 2019. On the other hand, the current liabilities have decreased by Rs 1762314.
Now, such a change does not have a negative impact on the liquidity position. This is
because current assets have decreased by 78.28% whereas current liabilities have declined
by 108.51%.

35
 COMMON SIZE BALANCE SHEET 2014-2015

Table 4.2.1

% in % in
PARTICULAR 2014 2015 2014 2015
ASSETS
1.NON CURRENT ASSETS
Fixed Assets
Tangible Asset 10957179 8771848 21.10 23.80
Deferred Tax Asset 187615 229980 0.36 0.62
Long-Term Loan And Barrowing 10580294 10751328 20.37 29.17
Other Current Asset 80153 79693 0.15 0.22
CURRENT ASSETS
Inventories 937580 884710 1.81 2.40
Trade Receivable 22030445 11214393 42.42 30.42
Cash And Cash Equipment 950280 833340 1.83 2.26
Other Current Asset 6207814 4095233 11.95 11.11
TOTAL ASSETS 51931360 36860525 100.00 100.00
EQUITY AND LIABAILITIES
1. SHAREHOLDER'S FUND
Share Capital 2500000 2500000 4.81 6.78
Reserve and Surplus 17657166 17340479 34.00 47.04
2. NON CURENT LIABILITIES
Long-Term Borrowing 4518926 4736422 8.70 12.85
3.CURRENT LIABILITIES
Short Term Borrowing 5498161 2421505 10.59 6.57
Trade Payable 20836248 6322589 40.12 17.15
Other Current Liabilities 920859 3155390 1.77 8.56
Short Term Provisions 0 384140 0.00 1.04
TOTAL LIABILITIES 51931360 36860525 100 100

INTERPRETATION:
From the table above, we can deduce that cash represents 2.26% of the total assets while
inventory represents 2.40% of the total assets. In the liabilities section, we can deduce that
trade payable represents 17.15%, Other Current Liabilities 8.56%, Short Term Provisions
1.04% of the total liabilities. Therefore, the assets and liabilities are being increased
satisfactorily

36
 COMMON SIZE BALANCE SHEET 2015-2016
Table 4.2.2
% in % in
PARTICULAR 2015 2016 2015 2016
ASSETS
1.NON CURRENT ASSETS
Fixed Assets
Tangible Asset 8771848 9191268 23.80 18.78
Deferred Tax Asset 229980 260707 0.62 0.53
Long-Term Loan And Barrowing 10751328 13669067 29.17 27.93
Other Current Asset 79693 55556 0.22 0.11

CURRENT ASSETS
Inventories 884710 747680 2.40 1.53
Trade Receivable 11214393 17694057 30.42 36.15
Cash And Cash Equipment 833340 870592 2.26 1.78
Other Current Asset 4095233 6459375 11.11 13.20
TOTAL ASSETS 36860525 48948302 100.00 100.00
EQUITY AND LIABAILITIES
Share Capital
Share Capital 2500000 2500000 6.78 5.11
Reserve and Surplus 17340479 16622202 47.04 33.96
2. NON CURENT LIABILITIES
Long-Term Borrowing 4736422 12547088 12.85 25.63
3.CURRENT LIABILITIES
Short Term Borrowing
Trade Payable 2421505 1113785 6.57 2.28
Other Current Liabilities 6322589 12572484 17.15 25.69
Short Term Provisions 3155390 2885895 8.56 5.90
2. NON CURENT LIABILITIES 384140 706848 1.04 1.44
TOTAL LIABILITIES 36860525 48948302 100.00 100.00

INTERPRETATION:
From the table above, we can deduce that cash represents 1.78% of the total assets while
inventory represents 1.53% of the total assets. In the liabilities section, we can deduce that
trade payable represents 2.28%, Other Current Liabilities 25.69%, Short Term Provisions
5.90% of the total liabilities. Therefore the assets and liabilities are being increased
satisfactorily

37
 COMMON SIZE BALANCE SHEET 2016-2017

Table 4.2.3

% in % in
PARTICULAR 2016 2017 2016 2017
ASSETS
1.NON CURRENT ASSETS
Fixed Assets
Tangible Asset 9191268 3246338 18.78 7.47
Deferred Tax Asset 260707 14677 0.53 0.03
Long-Term Loan And Barrowing 13669067 12493324 27.93 28.76
Other Current Asset 55556 55556 0.11 0.13
CURRENT ASSETS
Inventories 747680 1214400 1.53 2.80
Trade Receivable 17694057 21970146 36.15 50.58
Cash And Cash Equipment 870592 1059203 1.78 2.44
Other Current Asset 6459375 3385982 13.20 7.79
TOTAL ASSETS 48948302 43439626 100.00 100.00
EQUITY AND LIABAILITIES
1. SHAREHOLDER'S FUND
Share Capital 2500000 2500000 5.11 5.76
Reserve and Surplus 16622202 10223707 33.96 23.54
2. NON CURENT LIABILITIES
Long-Term Borrowing 12547088 4522219 25.63 10.41
Deferred Tax 0 34911 0.00 0.08
3.CURRENT LIABILITIES
Short Term Borrowing 1113785 3266042 2.28 7.52
Trade Payable 12572484 9351394 25.69 21.53
Other Current Liabilities 2885895 13389545 5.90 30.82
Short Term Provisions 706848 151808 1.44 0.35
TOTAL LIABILITIES 48948302 43439626 100.00 100.00

INTERPRETATION:
From the table above, we can deduce that cash represents 2.44% of the total assets while
inventory represents 2.80% of the total assets. In the liabilities section, we can deduce that
trade payable represents 21.53%, Other Current Liabilities 30.82%, Short Term Provisions
0.35% of the total liabilities. Therefore, the assets and liabilities are being increased
satisfactorily.

38
 COMMON SIZE BALANCE SHEET 2017-2018

Table 4.2.4

% in % in
PARTICULAR 2017 2018 2017 2018
ASSETS
1.NON CURRENT ASSETS
Fixed Assets
Tangible Asset 3246338 55811075 7.47 53.63
Deferred Tax Asset 14677 18540 0.03 0.02
Long-Term Loan And
Barrowing 12493324 13279809 28.76 12.76
Other Current Asset 55556 0 0.13 0.00
CURRENT ASSETS
Inventories 1214400 965538 2.80 0.93
Trade Receivable 21970146 30549957 50.58 29.36
Cash And Cash Equipment 1059203 2524749 2.44 2.43
Other Current Asset 3385982 907750 7.79 0.87
TOTAL ASSETS 43439626 104057418 100.00 100.00
EQUITY AND LIABAILITIES
1. SHAREHOLDER'S FUND
Share Capital 2500000 2500000 5.76 2.40
Reserve and Surplus 10223707 68840826 23.54 66.16
2. NON CURENT LIABILITIES
Long-Term Borrowing 4522219 10636382 10.41 10.22
Deferred Tax 34911 1365512 0.08 1.31
3.CURRENT LIABILITIES
Short Term Borrowing 3266042 0 7.52 0.00
Trade Payable 9351394 2579575 21.53 2.48
Other Current Liabilities 13389545 16731807 30.82 16.08
Short Term Provisions 151808 1403316 0.35 1.35

TOTAL LIABILITIES 43439626 104057418 100.00 100.00

INTERPRETATION:
From the table above, we can deduce that cash represents 2.43% of the total assets while
inventory represents 0.93% of the total assets. In the liabilities section, we can deduce that
trade payable represents 2.48%, Other Current Liabilities 16.08%, Short Term Provisions
1.35% of the total liabilities. Therefore, the assets and liabilities are being increased
satisfactorily

39
 COMMON SIZE BALANCE SHEET 2018-2019

Table 4.2.5

% in % in
PARTICULAR 2018 2019 2018 2019
ASSETS
1.NON CURRENT ASSETS
Fixed Assets
Tangible Asset 55811075 62064196 53.63 59.88
Deferred Tax Asset 18540 15600 0.02 0.02
Long-Term Loan And Barrowing 13279809 14205776 12.76 13.71
Other Current Asset 0 0 0.00
CURRENT ASSETS
Inventories 965538 1050519 0.93 1.01
Trade Receivable 30549957 24397984 29.36 23.54
Cash And Cash Equipment 2524749 55831 2.43 0.05
Other Current Asset 907750 1853908 0.87 1.79
TOTAL ASSETS 104057418 103643814 100.00 100.00
EQUITY AND LIABAILITIES
1. SHAREHOLDER'S FUND
Share Capital 2500000 2500000 2.40 2.41
Reserve and Surplus 68840826 69441327 66.16 67.00
2. NON CURENT LIABILITIES
Long-Term Borrowing 10636382 8206134 10.22 7.92
Deferred Tax 1365512 1019341 1.31 0.98
3.CURRENT LIABILITIES
Short Term Borrowing 0 284324 0.00 0.27
Trade Payable 2579575 4662636 2.48 4.50
Other Current Liabilities 16731807 17494598 16.08 16.88
Short Term Provisions 1403316 35454 1.35 0.03
TOTAL LIABILITIES 104057418 103643814 100.00 100.00

INTERPRETATION:
From the table above, we can deduce that cash represents 0.05% of the total assets while
inventory represents 1.01% of the total assets. In the liabilities section, we can deduce that
trade payable represents 4.50%, Other Current Liabilities 16.88%, Short Term Provisions
0.03% of the total liabilities. Therefore, the assets and liabilities are being increased
satisfactorily.

40
 RATIO ANALYSIS
Net Profit Ratio
TABLE 4.3.1

YEAR 2015 2016 2017 2018 2019

Net Profit 59433889 35222787 47217728 52559937 65567971

Sales 12468764 73677687 99327523 108753178 140463969

Net Profit Ratio 47.67% 47.81% 47.54% 48.33% 46.68%

CHART 4.3.1

NET PROFIT
48.50% 48.33%

48.00 47.81
47.67
47.54
47.50
%

46.68

46.50
%

46.00
201 201 201 201 201

INTERPRETATION:
Table- 4.3.1 clearly indicates that there is a decreasing and increasing trend in the net profit
ratio level. In the year 2015 the ratio was 47.67% and it decreased to 48.68% by the year
2019, a decrease of 0.98% over five years. The net sales have been increased sharply but the
reason for decrease in net profit is due to the increase in credit sales, increase in debt.

41
 Gross profit

Table 4.3.2

YEAR 2015 2016 2017 2018 2019

Gross Profit 65254875 38454900 52109795 56193241 74895998

Sales 12468764 73677687 99327523 108753178 140463969

Gross Profit
ratio 52.33% 52.19% 52.46% 51.67% 53.32%

CHART 4.3.2

GROSS
53.50% PROFIT
53.32%

53.00%

52.50% 52.46%
52.33%
52.19%
52.00%

51.67%
51.50%

51.00%

50.50%

50.00%
2015 2016 2017 2018 2019

INTERPRETATION
Table- 4.3.1 clearly indicates that there is a increasing trend in the gross profit ratio level. In
the year 2015 the ratio was 52.33% and it decreased to 51.67% to the 2018 year. The profit
has been increased sharply to the next year.

42
Inventory Turnover Ratio

Table 4.3.3

Year 2014-15 2015-16 2016-17 2017-18 2018-19

Net Sales 35222787 47217728 52559937 65567971 65660584

Closing
Inventories 884710 747680 1214400 965538 1050519

Inventory
Turnover Ratio 39.81 63.15 43.28 67.91 62.5

Chart 4.3.3

Inventory Turnover
80 Ratio
67.9
1
70 63.1
5 62.5

60 43.2
8
39.8
1

50

40

2014-15 2015-16 2016-17 2017-18 2018-19

INTERPRETATION:
It is seen from the above chart that During the year 2014-15 the Inventory t/o ratio is 39.81
times, in the year 2015-16 it increased to 63.15 times, but in the year 2016-17 it decreased to
43.28 times. There was a subsequent increase in the year 2017-18 and 2018-19 to 67.91
times and 62.5 times respectively. This shows the company has more sales.

43
Debtor’s turnover ratio.

Table 4.3.4

Year 2014-15 2015-16 2016-17 2017-18 2018-19

Net Sales 35222787 47217728 52559937 65567971 65660584

Avg. Debtors 11214393 17694057 21970146 30549957 24397984

Debtors
Turnover Ratio 3.14 2.66 2.39 2.14 2.69

Chart 4.3.4

INTERPRETATION:
It is clear that the debtor turnover ratio fluctuated over the years. It was 3.14 times in the
year 2014-15. It decreased to 2.66 times in the year 2015-16, It again decreased to 2.39
times in the year 2016-17 and it decreased to 2.14 times in the year 2017-18 and it increased
to 2.69 Times in the year 2018-19 This shows the company is not collecting debt rapidly.

Creditors Turnover Ratio:

44
 Table 4.3.5

Year 2014-15 2015-16 2016-17 2017-18 2018-19

Net Purchases 14831551 20418775 18400133 14023328 17327945

Avg. Creditors 6322589 12572484 9351394 2579575 4662636

Creditors
Turnover Ratio 2.34 1.62 1.96 5.43 3.71

Chart 4..3.5

Creditors turnover ratio

6
5.43
5

4
3.71

3
2.34
2 1.96
1.62

0
2014-15 2015-16 2016-17 2017-18 2018-19

Creditors Turnover Ratio

INTERPRETATION:
It is clear that the creditor turnover ratio changed over the years. It was 2.34 times in the year 2014-
15. It decreased to 1.62 times in the year 2015-16, there was a subsequent increase in the year 2016-
17 and 2017-18 to 1.96 times and 5.43 times respectively. In the year 2018-19 it decreased to 3.71.
It shows that the company has made prompt payment to the creditors

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. Working Capital Turnover Ratio:

Table 4.3.6

Year 2014-15 2015-16 2016-17 2017-18 2018-19

Net Sales 35222787 47217728 52559937 65567971 65660584

Net Working
Capital 4744052 8492692 1470942 14233296 4881231

Working Capital
Turnover Ratio 7.42 5.55 35.73 4.6 13.45

Chart 4.3.6

INTERPRETATION:
The working capital turnover ratio is fluctuating year to year that was high in the year 2014-15, 7.42
times; there was a subsequent decrease in the year 2015-16 and increase in the year 2016-17 to 5.55
times and 35.73 times. But it decreased in the year 2017-18 and increased in the year 2018-19 to 4.6
and 13.45 times respectively. This shows the company is utilizing working capital effectively

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Return on Capital Employed:

Table 4.3.7

Year 2014-15 2015-16 2016-17 2017-18 2018-19

EBIT 3107974 2716693 1628327 9266067 5143469

Capital Employed 4744052 8492692 1470942 14233296 4881231

ROCE 65% 32% 110% 65% 105%

Chart 4.3.7

Return on Capital Employed

120%
110%
105%

100%

80%

65% 65%

60%

40%
32%

20%

0%
2014-15 2015-16 2016-17 2017-18 2018-19

INTERPRETATION:
The Return on Capital Employed ratio is fluctuating year to year. In 2014-15 it was 65 times;
there was a subsequent decrease in the year 2015-16 and increase in the year 2016-17 to 32
times and 110 times. But it decreased in the year 2017-18 and increased in the year 2018-19
to 65 and 105 times respectively. This shows the company is utilizing Return on Capital
Employed effectively to generate profits.

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Operating Profit ratio:

Table 4.3.8

Year 2014-15 2015-16 2016-17 2017-18 2018-19

Operating
profit 34719741 46872166 52222849 65112764 64812470

Net Sales 35222787 47217728 52559937 65567971 656605584

OPR 98% 99% 99% 99% 98%

Chart 4.3.8

INTERPRETATION:

The Operating Profit ratio is fluctuating year to year. In 2014-15 it was 98 times; it was constant in the year
2015-16, 2016-17 and 2017-18 to 99 times, 99 times and 99 times. Decreased in the year 2018-19 to 98
times. This shows the company is utilizing Operating Profit and is used effectively to generate profits.

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 6. FINDINGS
 The sertel electronics 2014-2015, it has been found that the current assets 53.81%
and current liabilities 33.2 %.
 The sertel electronics 2015 - 2016 it has been found that the current assets 52.65%
current liabilities are 35.30 %
 The sertel electronics 2016 - 2017 it has been found that the current assets 63.60%
current liabilities are 60.22 %.
 The sertel electronics 2017 - 2018 it has been found that the current assets 33.59%
current liabilities are 19.91 %.
 The sertel electronics2018 - 2019 it has been found that the current assets 26.40%
current liabilities are 21.69 %.
 Company do not have consistent they is a fluctuations in the assets and
liabilities. In the year 2016 -2017 liabilities are increase at 60%.
 The sertel electronics 2014 - 2015 it has been found that the current assets 43.48%
current liabilities are 54.93 % shareholders fund was decreased in 2015 when
compare to previous year 2014.
 The sertel electronics 2015 - 2016 it has been found that the current assets
151.35% current liabilities are 140.67% shareholders fund was decreased in 2016
when compare to previous year 2015.
 The sertel electronics 2016 - 2017 it has been found that the current assets 13.14%
current liabilities are 151.39% shareholders fund was decreased in 2017 when
compare to previous year 2016.
 The sertel electronics 2017 - 2018 it has been found that the current assets 3.29%
current liabilities are 79.19% shareholders fund was increased in 2018 when
compare to previous year 2017.
 The sertel electronics 2018 – 2019 it has been found that the current assets 5.30%
current liabilities are 108.51% shareholders fund was increased in 2019 when
compare to previous year 2018.
 The company comparative statement in the year of 2014-2015, 2015-206 assets
and liabilities are all most same, 2016-2017,2017-2018,2018-2019 assets are less
when compare to liabilities.
 The company non- current assets 2014-2015 is decreased in 43.48% and non-
current liabilities is also decreased in 54.93%

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 The company non- assets 2015-2016 is increased in 11.6 % and non-current
liabilities is also increased in 14.6%
 The company non- assets 2016-2017 is decreased in 68.21 % and non- current
liabilities is increased in 36.6%
 The company non- assets 2017-2018 is increased in 43.7 % and non-current
liabilities is decreased in 79%
 The company non- assets 2018-2019 is increased in 11% and non-current liabilities
is increased in 10.5%
 The Operating Profit ratio is fluctuating year to year. In 2014-15 it was 98 times; it
was constant in the year 2015-16, 2016-17 and 2017-18 to 99 times
 The working capital turnover ratio is fluctuating year to year that was high in the
year 2014-15, 7.42 times; there was a subsequent decrease in the year 2015-16 and
increase in the year 2016-17 to 5.55 times and 35.73 times

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 7. SUGGESTIONS

❖ Company needs to maintain more cash balances for its working capital needs.
❖ It may be suggested that the financial services limited should utilize limited funds
for the purchase of fixed assets it affects the growth of the company.
❖ It is suggested to raise the funds by issuing more shares.
❖ The company should concentrate more on the current assets.
❖ The company is maintaining more reserves, so it is suggested to utilize optimum
reserves

❖ Fixed assets do not make major impact in financial business as it not a

manufacturing concern hence decrease in fixed assets can be omitted, it does not
bring any major changes in the profits of the company but however it is good to
have more fixed assets.
❖ Hence the overall performance of the company is good but need to improve for
excellence. Improvement is always necessary for a growing company, achieving
excellence is a long term process the company has to plan for every current year
and if it succeeds automatically the company will become a benchmark for all other
companies.
❖ In order to increase the profitability of the company, it is suggested to control the
cost of goods sold and operating expenses.
❖ The quantum of sales generated should be improved impressively in order to enjoy
better growth rate in assets and capital employed.
❖ The company has to increase its Earning per share by issuing debenture capital

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 8. CONCLUSION

Financial statement analysis is largely a study of relationship among the various

financial factors in a business as disclosed by a single set of statements and
statements. It is a process of evaluating the relationship between component parts
of a financial statement to obtain a better understanding of a firm's position and
performance.

Financial statements analysis is an attempt to determine the significance and

meaning of the financial statement data so that forecast may be made of the future
earnings, ability to pay interest and debt maturities (both current and long term) and
profitability of a sound policy.

A number of methods or devices are used for the analysis the balance sheet and
income statements of the SERTEL ELECTRONICS for a period of 5 years (2014-
2019). The analysis was done by using various financial tools, statistical tools. The
graphs were used accordingly to support the analysis.

This project entitled financial performance analysis helped in knowing the firm’s
financial strengths and weakness which helps the company to make better
utilization of its resources.

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 BIBLIOGRAPHY

 Management Accounting – Dr. Nisar Ahmad, Anmol Publications, Chapter-2

Analysis and Interpretation of financial statements.
 Management and Financial Accounting – Dr.S. N. Maheshwari, Sultan Chand
Publishers.
 Management and Financial Accounting – T. S. Reddy and Y. Hari Prasad Reddy,
Margham Publications.
 Management Accounting and Financial Management – R. K. Sharma and Shashi K.
Gupta, Kalyani Publishers.

WEBSITE
www.info@sertelelcetronics.com
www.accountingcoach.com

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