L&T FINANCE 2012 ASSIGNMENT-2 Accounting for managerANALYSIS MADE ON L&T FINANCE IPO USING RATIOANALYSIS , PROFIT AND LOSS A/C AND BALANCESHEETINTRODUCTION: Larsen and Tourbo which is having a Head quarter inMumbai. It is a engineering & construction based company and one of the largestcompanies in India. It is a Multi National company having a office located allaround the country & having wide marketing and distribution channel. L&T has amarket share in all the fields like oil , gas , bridges. They are also in ship building& nuclear tie up to achieve profit in the future period. L&T finance is incorporatedin 2008 . It is Finance Holding company offers a diverse range of financialproducts and services in the field of corporate, retail and infrastructure financesector.What is IPO and Reasons for raising it?Initial Public Offer means offering is made by company/promoter in term ofselling there equity to the public. To procure funds & capital for the expansion of the project/plans. The existing promoters starts taking out of the money from the company so for maintaining the required amount of money. Company raises ipo. To build an image among society & for advertisement of the company.ANALYSIS BASED ON BALANCESHEET,PROFIT AND LOSS A/C ANDRATIOS OF COMPANYCompany is having 56.65 crores in 2007 as total share capital as compares to121.77 crores in 2011 showing that company is increasing 2 times growth.Company is not issuing a preference share for raising a capital they always believein issuing equity shares.Reserves of the company is increases by 568.35 in 2001 to 21334.15 in 2011showing that company is in position to take risk and having a good amount ofmoney as surplus to them. And requirement can be fulfilled as need arises.
L&T FINANCE 2012The company work in progress in 2009 is 1040.99 which showing company isinvesting in business/ projects as of there commencement of new projects andexpansion of the new factory.The inventory of the company in 2009 is 5805.05 crore as compares to 2011 is1577.15 crore. It showing that company is having a ample amount of raw material,labor, and then can fulfill the demand as they arises. But in 2011 the companyinventory decreases to 1577.15 showing that company are making the inventoryadequately . by using various methods like EOQ and just in time.Cash and bank balance of company in 2011 is 1518.98 crore as compare to6937.13 in 2009 because company is investing more money in 2009 for setting upthere new project & they are not believing to keeping the money or amount ofmoney idle with them.Book value of share is showing fluctuation continuously. If we talk about thegrowth l&T is achieving 20% of year on year earning before interest & tax isdipping by 130 base points to13.9%.The company total income is increases 45997.9 in 2011 as compare to 18226.8 in2007 showing a drastic change as company is getting a good amount of money byusing the resources efficiently such as men, labor, material & strategy.If company has to earn more profit they have to invest more and increases thereexpenditure. As company total expenditure in 2011 is 38337.63 crore. As toincrease the production more amount of employee cost, power & fuel cost &various selling expenses bear up by the company.Company is having a maximum earning per share in 2008 of 74.55 rs as no. ofshare is also low compare to 2011 where eps is only 49.53 showing how the no. ofshare is increases in 2011 to get more amount of money from the public.While seeing the liquidity rate of the company it is showing that company is nothaving ample amount of current assets with them and current ratio of company isdoing better year on year and total debt of firm is decreasing which helping thecompany to make there position strong.
L&T FINANCE 2012Profitability ratio of company in 2007 to 2011 is showing that profit percentage isdeceased earlier & than gradually increased .Solvency ratio of the company shows some improved performance as companydebt were decreasing in comparison of the total capital. A performance of thecompany is improving day by day showing that investors can invest money in thiscompany with more reliable and assurance.Company turnover ratio is 28.93 in 2011 as compare to 27.09 in 2010 showinghow the how faster the inventory are coveting into sales showing a positive signthat firm is doing well.Exports as percent of total sales ratio is 14.50 in 2011 as compare in 18 in 2010showing that company exports volume of trade ha been affected due tointernational market fluctuation slowdown the economy growth.Import component as raw material consumed showing that company in 2010 it is54% as compared to 2011 is only 37% showing how the demand for production issuffer due to slowdown of the world economy .Conclusion we can say that L & T finance is growing tremendously in five yearscompany has created a good name in the investors minds. It is good to invest in thecompany as company fundamentals are really strong in the point of view of equityinvestors. The liquidity and solvency position of the company is equally good sothere is no harm to lend money to this L & T finance company. The company isgrowing there market internationally also they are coming with new offers for thepublic. It helping them to image building. Constantly growing there profits andrevenues interprets that how financial sound company is it.