42608686 project-report-on-financial-performance


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42608686 project-report-on-financial-performance

  2. 2. Raghavendra YadavCONTENTSFINALCIAL PERFORMANCE ANALYSIS 2CHAPTERS PARTICULARS PAGE-NOPreliminaryindexAbstractList of tablesList of chartsChapter –IIntroductionIntroduction to studyObjectives of studyNeed of studyResearch methodologyScope of the studylimitations1-345678Chapter –IIprofileCompany profile 9-23Chapter –IIIAnalysis and interpretation of studyIntroduction of analysisComparative income statementComparative balance sheetCommon size income statementCommon size balance sheetWorking capital changesRatio analysisBalance sheet24-3839-4243-464748-5152-5556-6667Chapter- IV Findingssuggestionsconclusion686970Chapter- V Bibliography
  4. 4. Raghavendra YadavABSTRACTFinancial analysis is the process of identifying the financialstrengths and weakness of the firm by properly establishing the relationsship between the items of the balance sheet and profit loss account.Financial analysis can be undertaken by management of the firm, or byparties outside the firm, viz. owners, creditors, investors and others. Thenature of analysis will differ depending on the purpose of analyst.Management, creditors, investors and others to formjudgment about the operating performance and financial position of thefirm use the information contained in this statements can get furtherinsight about the financial strengths and weakness of the firm to maketheir best use and to be able to spot out financial weakness of the firm totake suitable corrective actions.Thus financial analysis is the starting point for makingplans, before using any sophisticated forecasting and planningprocedures. Understanding the past is a prerequisite for anticipatingfuture.FINALCIAL PERFORMANCE ANALYSIS 4
  9. 9. Raghavendra YadavINTRODUCTIONIn our present day economy, finance is defined as the provision ofmoney at the time when it is required. Every enterprise, whether big, medium ofFINALCIAL PERFORMANCE ANALYSIS 9
  10. 10. Raghavendra Yadavsmall, needs finance to carry its operations and to achieve its targets. In fact,finance is so indispensable today that it is rightly said to be the lifeblood of anenterprise. Without adequate finance, no enterprise can possibly accomplish itsobjectives.Financial management is applicable to every type of organization,irrespective of its size kind of nature. It is as useful to a small concern as to a bigunit. A trading concern gets the same utility from its application as amanufacturing unit may expect. This subject is important and useful for all types ofownership organizations. Where there is a use of finance. Financial management ishelpful. Every management aims to utilize its funds in a best possible andprofitable way. So this subject is acquiring a universal applicability.It is indispensable in any organization as helps in:(I) Financial planning and successful promotion of an enterprise;(II) Acquisition of funds as and when required at the minimum possiblecost;(III) Proper use and allocation of funds;(IV) Taking sound financial decisions ;(V) Improving the profitability through financial controls;(VI) Increasing the wealth of the investors and the nation; and(vii) Promoting and mobilizing individual and corporate savings.OBJECTIVES OF FINANCIAL MANAGEMENTFinancial management is concerned with procurement and use offunds. Its main aim is to use business funds in such a way that the firm’sFINALCIAL PERFORMANCE ANALYSIS 10
  11. 11. Raghavendra Yadavvalue/earnings are maximized. There are various alternatives available for usingbusiness funds. Each alternative course has to be evaluated in detail.The pros and cons of various decisions have to look into beforemaking a final selection. The decisions will have take into consideration thecommercial strategy of the business. Financial management provides a frameworkfor selecting a proper course of action and deciding a viable commercial strategy.The main objective of a business is to maximize the owner’s economic welfare.This objective can be achieved by:1. Profit Maximization2. Wealth maximization1. Profit maximization:Profit earning is the main aim of every economic activity. A businessbeing an economic institution must earn profit to cover its costs and provide fundsfor growth. No business can service without earning profit. Profits are a measure ofefficiency of a business enterprise. Profits also serve as a protection against riskswhich cannot be ensured. The accumulated profits enable a business to face riskslike fall in prices, competition from other units, adverse government policies etc.Thus, profit maximization is considered as the main objective of business:(i) When profit – earning is the aim of business then profit maximization shouldbe the obvious objective.(ii) Profitability is a barometer for measuring efficiency and economic prosperityof a business enterprise, thus, profit maximization is justified on the groundsof rationality.(iii) Economic and business conditions do not remain same at all the times. Theremay be adverse business conditions like recession, depression, severecompetition etc. A business will be able to service under unfavorable situationFINALCIAL PERFORMANCE ANALYSIS 11
  12. 12. Raghavendra Yadavonly if it has some past earnings to rely upon. Therefore a business should tryto earn more and more when situation is favorable.(iv) Profits are the main sources of finance for the growth of a business. So, abusiness should aim at maximization of profits for enabling its growth anddevelopment.(v) Profitability is essential for fulfilling social goals also. A firm by pursuing theobjective of profit maximization also maximizes socio- economic welfare.2. Wealth maximizationWealth maximization is the appropriate objective of an enterprisefinancial theory asserts that wealth maximization is the single substitute forstockholder’s utility. When the firm maximizes the stockholder’s wealth, theindividual stockholder can use this wealth to maximize his individual utility. Itmeans that by maximizing stockholder’s wealth firm is operating consistentlytowards maximizing stockholder’s utility.OBJECTIVES OF STUDY1. To understand, to analyze and to suggest methods of improving profitabilitymanagement.2. To identify the key factors affecting the profitability.3. To have an insight into the management of profit in an organization.FINALCIAL PERFORMANCE ANALYSIS 12
  13. 13. Raghavendra Yadav4. To examine the financial performance of the company for the period from 2003to 2007.5. To assess the working capital employed by the company.6. To highlight the short comings in the area of finance with the aid ofcomparative analysis and common size analysis funds flow analysis and to giverecommendations with a view to increase efficiency of the company.7. To identifying the financial strength and weakness of the company.8. Analyze the future earnings of the company , based on these givethe various suggestions.NEED FOR THE STUDYFinancial statement analysis is used to identify the trends andrelationships between financial statement items. Both internal management andexternal users (such as analysts, creditors, and investors) of the financial statementsneed to evaluate a companys profitability, liquidity, and solvency. The mostcommon methods used for financial statement analysis are comparative statements,FINALCIAL PERFORMANCE ANALYSIS 13
  14. 14. Raghavendra Yadavcommon-size statements, funds flow analysis and ratio analysis. These methodsinclude calculations and comparisons of the results to historical company data,competitors, or industry averages to determine the relative strength andperformance of the company being analyzed.Financial statement analysis is to diagnose the information containedin financial statements so as to judge profitability and financial soundness of thefirm. Just like a doctor examines his patient by recording hi body temperature,blood pressure, etc. before making conclusion regarding the illness and beforegiving his treatment, a financial analyst analysis before commenting up on thefinancial health or weakness of an enterprise.RESEARCH METHODOLOGYThe research design refers to preplanning of what a researcher does inhis study. The design adopted in the study comes under exploratory andevaluatory research. Since the data collected from the financial statements of thecompany is analyzed under various financial and tactical tools.FINALCIAL PERFORMANCE ANALYSIS 14
  15. 15. Raghavendra YadavData collection;The study is based on the two types data is obtained from the chittoorco-operative sugars ltd., chittoor.They are: Primary data Secondary dataPrimary Data;Primary Data is obtained through the discussion with officials of the chittoorco-operative sugars ltd., chittoor.Secondary Data;Secondary data is based on the past data i.e. [five years Annual Reports2003-2007]SCOPE OF THE STUDY In our present day economics, finance is defined as the provision of money atthe time when it is required. Every enterprise whether big medium or smallneeds finance to carry on its operations and to achieve its target. In fact financeFINALCIAL PERFORMANCE ANALYSIS 15
  16. 16. Raghavendra Yadavis so indispensable today that it is rightly said that it is the life blood of industrywithout adequate finance no enterprise can possible accomplish it objectives Finance is therefore viewed as the most important area in every enterprise.Therefore the management requires giving special attention on this .Theconventional approach to finance function in business high light theprocurement of funds on the mot economic and favorable terms to concern. Butit ignores the efficiency and prepares of the same for the successful running ofthe enterprise. In every organization funds are needed for various ventures andprojects. The basis for financial planning and analysis is financial information, financialneed to Predict compare and evaluate the forms earning ability. It is alsorequired to aid in economic decision making., Investment and financialstatements or accounting reports It contains summarized information of the firm’s financial affairs,. Organizedsystematically. They are the means to present the firm’s situation to owners,creditors and general public, preparation of the statements is the responsibilityof top management. They should be prepared very carefully and contain asmuch information a possible because they are very useful to judge the financialefficiency of the company.LIMITATIONS Financial statements are prepared on the basis of certain accounting conceptsand conventions.FINALCIAL PERFORMANCE ANALYSIS 16
  17. 17. Raghavendra Yadav Any change in the methods or procedures of accounting systems limits theutility of financial statements. Ratios of the past are not true indicators of future. Financial analysis is based on monetary information and non monetaryinformation ignored. Liquidity ratio can mislead since current assets and current liabilities canchange quickly. Their utility become more doubtful for firms with seasonalbusiness.FINALCIAL PERFORMANCE ANALYSIS 17
  19. 19. Raghavendra YadavCOMPANY PROFILEThe irrigation in Chittoor district mostly depends on openwells, recharge of water in the wells depends on ground water level andrainfall. However, rainfall depends on monsoon, which is uncertain. Thesoils in the district are almost suitable for sugarcane. In the good oldendays, total quantity of sugarcane produced in the district was converted asFINALCIAL PERFORMANCE ANALYSIS 19
  20. 20. Raghavendra Yadavjaggery by Ganugas (bullock crushers) and power crushers. The jaggerymaking was very difficult to the small farmers due to lack of crushers andunfavorable prices. The big farmers also faced brought to the Chittoor &Pakala, which are the market places with railway transportation. Therewas a lot of exploitation of farmers by the jaggery mundi owners byadvancing the money with high interest rates, commission and also notwith proper weighing. The price fluctuation created by the traders wasalso a reason for poor realization, but there was no other choice to thefarmersEVOLUTION OF THE FACTORYUnder the above circumstances, the farmers and leaders of the districtfelt the need for the establishing a factory in co-op sector to enable the sugarcanefarmers to get good returns. The Chittoor co-operative sugars ltd., Chittoor is thefirst agro-based major industry in Rayalaseema area. It was first registered on22.08.1955 under the APCS act. Its area of operation comprises of 192 villages in21 mandals. Factory is located along Cudalore-Kurnool national high way no.18, 3kms towards Kurnool from Chittoor town. It owns 85.96 acres of land. It wasfirst commissioned on 18.01.1963 with a licensed and installed capacity of 1000tones cane crushing per day.During 1974 its cane crushing capacity has been expanded to 1600tones per day. Since 1989, modernization is being done in phases. Presentlyfactory is working at an average cane crushing of 1800-2000 tones per day.CAPITAL STRUCTUREOriginal project cost was Rs.128.50 lakhs. It has been funded from followingsources:Rs. LakhsFINALCIAL PERFORMANCE ANALYSIS 20
  21. 21. Raghavendra YadavI. Share capital froma. Cane grower members 8.50b. State Government 25.00II. Loansa. IFCI New Delhi 75.00b. LICI Bombay 20.00Total 128.50III .Capital outlayLand 2.38Buildings 5.90Plant and Machinery 109.34Other assets 5.77Pre-operative expenses 4.00Vehicles 0.96Total 128.35IV. Present Value of the Assets as on 31.03.2000V. Land 497.19a. Buildings 423.85b. Plant & Machinery 1155.70c. Other assets 34.73d. Transport vehicles 19.94e. Total 2131.41FINALCIAL PERFORMANCE ANALYSIS 21
  22. 22. Raghavendra YadavMembership Share Capital No amount (in. lakhs)a. Members 13448.00 185.57State Government 1 1208.4413449.00 1394.01b. NRD & NRFD of members 213.69c. Accumulated Loss of on 31.03.03 1782.39(As per perform accounts)3390.09WORKING CAPITAL ARRANGEMENTSUnder Sugar cane control order (1966) of Government of India, caneprice is payable with in 14 days from the date of purchase where as sugar producedis released for sale monthly over a period of 16 to 18 months. More than 70% ofcost of production is covered by sugar to comply with statutory provision in regardto payment of sugar cane price with in 14 days. Hither to financing banks i.e.,(District coop Central Bank) have been allowing loan @ 90% of levy sugar valueand 8 on open market sugar value. First time for this 99-2000 season, NABARDhave laid down, in their new credit policy guide lines, to compute and allowpledge loan on sugar stocks restricting to statutory minimum cane price notified byGovernment of India.With this new guide line, though huge sugar stocks with abundantloan drawing power are available, factory cannot draw loan to pay state advisedcane price to growers. The SMP notified by Government would not cover evencultivation costs. The difference between state advisory price and statutoryFINALCIAL PERFORMANCE ANALYSIS 22
  23. 23. Raghavendra Yadavminimum cane price is about Rs.250 per MT. To receive the difference amount ofcane price cane suppliers have to wait till the entire sugar stocks are sold whichwould take about 16 to 18 months. This particular condition introduced first timethis season is to be with drawn oilier wised cane growers would go in forcultivation of alternate crops as the SMP would not cover even cultivation costs.This issue is taken up by State Government with NABARD and Ministry offinance, government of India.MODERNISATIONDuring 1993-94 factory has planned to increase its cane crushingcapacity from 1600 TCD to 2500 TCD in phases. As a part of the program, under1stphase, factory has spent Rs.341.80 lakh and carried out 1 phase modernization.During 1997 purchase of a new 3 MW Power Turbine has been finalized. It iscommissioned during this 99-2000 cane crushing season. The New Power turbineand attending Electrical and Civil works put together is Rs.160 lakh. At a cost ofabout Rs.90 lakh, installation of TRF system to Mills, modification of a boilers toincrease the capacity and modification of return biogases carrier areexecuted/being executed to achieve a daily cane crushing of 2200 tones cane.WAGE STRUCTUREThe wages of the workers are covered by “sugar wage board”recommendations at “All India Level”.The minimum monthly wage of an unskilledworker at stalling of the time scale is Rs.3, 901. Sugar year (season) is reopenedfrom 1stOct to 30thSep next year. Generally cane crushing operations arecommenced during 3 week of November and continued up to end of April of nextyear. From May-Oct is off season.FINALCIAL PERFORMANCE ANALYSIS 23
  24. 24. Raghavendra YadavCANE DEVELOPMENT AND INCENTIVES TO CANE GROWERSThere is a separate agriculture wing in factory headed by a chiefAgriculture officer. Total area of operation is divided into 36 circles. For eachcircle, there is one field men 36 field men’s work is supervised by 8 agriculturalofficers. Following are developmental activities being implemented. Arrange soil testing at factory’s soil laboratory. A supply of improved varieties of seed in consultations with regionalagricultural research stations. Arrange survey and extend loans and subsides for drilling of surface and in wellbores. Arrange educational tours, to selected cane suppliers, within and outside thestate.INCENTIVES PAID TO GROWERS 50% of actual cane transport charges up to 40kms distances are subsidized. Cane transport charges beyond 40kms are subsidized 100%. Over and above state advised cane price, an incentive price of Rs.25 per MT ispaid to improved varieties supplied to factory. Fertilizers are supplied on loan, free of interest.FINALCIAL PERFORMANCE ANALYSIS 24
  25. 25. Raghavendra Yadav Pesticides & Feticides are supplied at subsidized rates. At ½ kg per tone of sugarcane supplied for cane crushing, sugar is suppliedsubject to a minimum of 120 kegs & maximum of 100 kegs at subsidized rates.WELFARE SCHEMES TO CANE GROWTH A marriage hall is constructed in factory’s premises with Rs.56.51lakhscontributions from cane supply members. Rs.4,200 per day is charged as rentfrom cane supply members and employees. Rs.7,350 per day is charged fromnon members. 5002 cane supply members are covered under Janata personal accident policyfor a period of 12 years commencing from Jan 98. Family of any deceasedmember covered under this policy gets Rs.1,00,000 as compensation. 50% ofpremium i.e., Rs.3.51 lakhs is subsidized by factory. 5002 cane supply members are covered under “Janarogya Bhima Policy”.Reimbursement charges up to a maximum of Rs.5,000 per year is expendedunder this scheme. 50% of premium i.e., Rs.2.05lakhs is subsidized by factory.MANAGEMENTAt present the elected board has assumed charge on 06.04.2000. Thepresent Board of Directors as detailed below:President 1Board of Directors 14Employees Director 1FINALCIAL PERFORMANCE ANALYSIS 25
  26. 26. Raghavendra YadavTotal 16CHIEF EXECUTIVE & FUNCTIONING OF VARIOUSDEPARTMENTSa. Chief executive of the society is Managing Director having a seat on the Board.b. There are five major departments1. Administrative2. Engineering3. Manufacturing4. Agriculture5. Accounts & Financec. All aspects of Accounting, sugar cane weightiest and laboratory analysis reportsare computerized during 1989-90. For better cane regulation. Wireless Systemwas also introduced during 1989. At all 8 division Head Quarters and atAdministrative Office Wireless Stations and sets are installed.d. All policy mater are decided by Board/Person-in-charge.e. Cane priceBefore commencement of sugar cane crushing season, Government ofIndia notifies statutory minimum cane price payable by each sugar factory.This is to be paid within 14 days from the date of purchases. Over and abovethe statutory minimum cane price state Government announces a State advisoryprice payable by each Sugar factory. This SAP is being paid by us. We haveFINALCIAL PERFORMANCE ANALYSIS 26
  27. 27. Raghavendra Yadavcrushed cane for the season 1999-2000 is 2,82,202.592 Mts with an averagerecovery 9.038f. Sugar :Out of total sugar production of each season, 30% shall be delivered toGovernment nominees for public distribution system at notified levy price. Forevery season Government of India notifies levy sugar price application to eachSugar Factory. Every month Government of India releases the Quantity of levysugar and open market sugar to be sold during each month. Open market sugaris sold on tender system and is delivered against payment of cost plus duties.g. MolassesMolasses is a by product in the course of manufacture of Sugar.From 1993 June molasses prices are decontrolled. Molasses is sold by invitingtenders on All India basis by publishing Tender notice.h. Engineering & Manufacturing DepartmentsDuring off season engineering and manufacturing departments attendto overhauling and preventive maintenance and keep ready the plant for CaneCrushing. During season factory works round the clock in three shifts.i. Cane DepartmentCane department is provided with sufficient executive staff. Theycollect cane supply offers, from cane growers. Offers are being acceptedrestricting the quantities to individual member’s 5 years supply average. Croploans are sanctioned by Banks under tie up arrangement with factory. Onemonth before commencement of cane crushing, prepares maturity survey isconducted by drawing cane samples from agreement Cane fields. They areFINALCIAL PERFORMANCE ANALYSIS 27
  28. 28. Raghavendra Yadavanalyzed in Factory’s laboratory. Based on the analysis, cane harvest & supplypermits are issued to cane supply members limiting to Factory’s daily canecrushing capacity. Factory provides about 60 to 80 hired Lorries to needygrowers. 50% of transport charges up to 40KM distance are subsidized byfactory. Transport charges beyond 40KM are subsidized 100%.j. Liaison FarmFactory is having a sugar cane liaison farm in an extend 4.80 Hec.Factory brings improved varieties from sugar cane research stations multipliesin its farm and supplies seed to growers.(I) Total Strength of the establishment is1. Permanent (Non Seasonal) 682. Seasonal Permanent 943. Consolidate Wagers (Seasonal) 1674. Daily Wager(NMR) 244Total 573(II) Wage StructureThe Wages of workers are covered by “Sugar Wage Board”Recommendations at “All India Level. The minimum monthly wage of anunskilled worked at starting of time scale is Rs.3901/-INVESTMENT ON FIXED ASSETSFINALCIAL PERFORMANCE ANALYSIS 28
  29. 29. Raghavendra Yadav• The capital expenditure proposals are ascertained by the government of A.P.prior A.P.Prior to this Accounts officer of the accounts department has toprepare budget of the concern (through departmental heads.)• Board of directors (BODs)/ director of sugar are authorized to decideInvestment on fixed assets.• There is no limit fixed on the size of the investment on fixed assets. Theconcern is having machinery’s worth 1 crore also. Some times in purchase oflarge assets the procedure is resolutions are kept before MID or Director ofsugar if they feel to have the resolutions passed then it is kept and makes itaccepted in Board meeting.• No officers of the undertaking exceeded the authorized limits of the fixedassets.• Based on the need & necessity of the firm the investment on the fixed asserts ismade. The MD or Director of sugar must approve it.• No special techniques have been adopted for evaluating investment proposalson the fixed assets. According to the decisions of the board various investmentproposals are made on the fixed assets.• Based on Tender system & state level purchase co decisions fixed assets arepurchased.• Tenders are scrutinized based on the viewing company’s past Performance,quotation made, and standard of the asset.• The method of depreciation is Straight-line method and based on IT Act.Depreciation rates for the different assets are fixed at different Rates like onmachinery’s 10%• On loose tools @ 6% & some assets doesn’t carry depreciation.• No depreciation reserve fund has been maintained.FINALCIAL PERFORMANCE ANALYSIS 29
  30. 30. Raghavendra YadavCASH MANAGEMENT• No Separate Organization For cash management is maintained in the society.• Major things in the concern are the sugarcane. The sugarcane is a seasonal cropand of course this is treated as main important thing for the firm. Tenders areinvited in purchasing the cane. Based on the availability of the sugar caneworking capital requirements are made.• Tender are procedure adopted for this purpose.• Liquidity question doesn’t arise because the society deals almost all each &every transaction through bank, DD’s and Cheques.• No policy has been followed regarding optimal cash balance in the society.• Working capital requirements are mainly from the sugarcane growers.• Through unsecured short-term loans & over drafts short-term loans are raised.• Cash credit limits doesn’t arise.• The head of the department regulates cash balances.• Adequacy of cash balance doesn’t rise.• There is no case were surplus/in adequacy of cash balances in the society.INVENTORY MANAGEMENTThere is no question of setting up of the organization for maintenanceof materials & stores. Usually store keeper looks after the maintenance of thematerials & stores of the concern. Yes, there is a separate department forpurchases. Usually at the very beginning of the season sugarcane is purchased inbulk. If needed further purchase is made by inviting tenders & quotations.Usually purchase committee goes for the lower tender for purchase of sugarcane.FINALCIAL PERFORMANCE ANALYSIS 30
  31. 31. Raghavendra YadavThe members of the purchasing committee are:Chairman, Managing Director, Accounts Officer & other 2 membersselected by Director of Sugar.The role of purchasing committee is it usually meets 4 times in a year i.e., forevery 3 months or according to the need and urgency of the firm. The role ofPC usually has a vital essence in the finalizing of pending indents. The PCexamines the various quotations made by growers and selects those tenders,which are beneficial to the concern.The methods of purchase department are:• No delegation is made to lower level employees incase of purchase.• There is no particulars policy made regarding the value of stock limits whateverit may be likeRaw materials, work in progress, supplies and constructionmaterials, stores and spares, packing materials, process materials and othermaterials if any. As agreements are made keeping in view our needs. Sothere is no limits raise.The Raw material used in the production is: Sugarcane. Sulphar. lime & other chemicals.The Raw material requirements are estimated by:FINALCIAL PERFORMANCE ANALYSIS 31
  32. 32. Raghavendra YadavChief chemist & stores manager.Raw materials are purchased in bulk.By means of factories contract Lorries or by private Lorries raw materials aretransported.A raw material for the society is sugarcane usually chief engineerestimates the raw materials agreement is making incase of purchase of rawmaterials.The basis for estimating raw material requirements is:Sugarcane is a seasonal crop so this will be usually estimated byCAGO (chief agriculture officer).How much production of sugarcane is there inthe state. The chief chemist& chief engineer prepare a statement in requirement ofraw materials of the concern and purchase it through direct method or makingtenders.Once in year the purchase was made i.e. before starting of the seasonraw materials are purchased. Therefore the raw materials for the whole year arepurchased once.The spare pails requirements are estimated by:Chief engineer. Based on the requests of the departmental heads sparepails requirements are fulfilled. Storekeeper stores and spares control inventories.Classification & codification technique has been adopted.FINALCIAL PERFORMANCE ANALYSIS 32
  33. 33. Raghavendra YadavBy classification & codifications the inventory of the concern are made goodand gives maximum output to the concern.Yes, there is overstocking of stores and spares in the society. Thecause for overstocking is:Huge purchases with out consumption.Though over stocking is there it is kept as dead stock in the stores but it can beused in the production and it is not treated as waste stock.For e.g.: if lime is 500/- per bag before 3 months it will be purchasedand stored. After 3months if its price went up to 800/- per bag then the stored oneis dead stock it can be used in the production of sugar it is not treated as waste.The materials are purchased on both cash & credit.If small payment to be made it will be paid immediately.If larger amounts they can be paid according to the financial position of theconcern.BILLS RECEIVABLES MANAGEMENTBills receivables arise only when the product is sold on credit basisi.e., when credit sales take place bills came to the show. But the society sells thesugar on cash & DD. Sale of sugar is mad by receiving cash/DD. So billsreceivable doesn’t arise. Society directly sells the sugar to government sometimes.PROFITABILITY MANAGEMENTVarious products of the society are:• Sugar, molasses, press mud contains sulphur used as fertilizers.• The nature of the market is competitive.• The size of the market is National wide.The close competitors are:FINALCIAL PERFORMANCE ANALYSIS 33
  34. 34. Raghavendra YadavS.V.Sugar factory in ReniguntaVani sugars in PunganurVellore Sugar Factory & Mayura Sugars in B.N.Kandriga.The pricing practice followed by the enterprise is:• Competitive pricing in case of sugar.• Prices based on government award in case of cane.• The enterprise products are priced correctly.• The government for the fixation of prices of the products has fixed noguideline.• Profit motive is the primary objective in the fixation of the prices.• Yes the enterprise adopting the system for profit planning & control.Profit target is determined by:• Minimizing the cost of production to achieve more profits.The department involved in the profit planning is:Accounts department.For achieving the profits the management has been reviewing on cost ofproduction. To get good recovery in sugar frequent enlightenment program hasbeen done with members by agricultural experts and receive instructions to thehead of the institution.FINALCIAL PERFORMANCE ANALYSIS 34
  37. 37. Raghavendra YadavA financial statement is a collection of data organized according to logical andconsistent accounting procedures. Its purpose is to convey an understanding ofsome financial aspects of a business firm. It may show a position at a movementin time, as in the case of balance sheet, or may reveal a series of activities overa given period of time, as in the case of an income statement.Financial statements are the outcome of summarizing process ofaccounting. In the words of John N. Myer “the financial statements providesummary of accounts of a business enterprise, the balance sheet reflecting theassets, liabilities and capital as on a certain date and the income statement showingthe results of operations during a period.” financial statements are prepared as anend result of accounting and are the major sources of financial information of anenterprise. Smith and Asburne define financial statements as, “the end product offinancial accounting in a set of final statements prepared by the accountant of abusiness enterprise that purport to reveal the financial position of the enterprise, theresult of its current activities, and an analysis what has been done with earnings.”Financial statements are also called financial reports. In the words ofAnthony “financial statements, essentially are interim reports, presented annuallyand reflect a division of the life of an enterprise into more or less arbitraryaccounting period more frequently a year.”Nature of financial statements:The financial statements are prepared on the basis of recordedfacts. The recorded facts are those which can be expressed in monetary terms.FINALCIAL PERFORMANCE ANALYSIS 37
  38. 38. Raghavendra YadavThe statements are prepared for a particular period, generally one year. Thetransactions are recorded in a chronological order, as and when the events happen.The accounting records and financial statements prepared from these records arebased on historical costs. The financial statements, by nature, are summaries of theitems recorded in the business and these statements are prepared periodically,generally for the accounting period.The American Institute of Certified Public Accountants states thenature of financial statements as “Financial Statements are prepared for thepurpose of presenting a periodical review of report on progress by themanagement and deal with the status of investment in the business and theresults achieved during the period under review. They reflect a combination ofrecorded facts, accounting principles and personal judgments.” The AmericanAccounting Association expresses in its statement. “Every corporate statementshould be based on accounting principles which are sufficiently uniform,objective and well understood to justify opinions as to the condition andprogress of business enterprise. Its basic assumption was that the purpose ofperiodic financial statements of a corporation is to furnish information that isnecessary for the formation of dependable judgments.”Objectives of financial statements:Financial statements are the sources of information on the basis of whichconclusions are drawn about the profitability and financial position of aFINALCIAL PERFORMANCE ANALYSIS 38
  39. 39. Raghavendra Yadavconcern. They are the major means employed by firms to present their financialsituation of owners, creditors and the general public. The primary objective offinancial statements is to assist in decision making. The Accounting PrinciplesBoard of America (APB) states the following objectives of financial statements:(i) To provide reliable financial information about economic resources andobligations of business firm.(ii) To provide other needed information about changes in such economicresources and obligations.(iii) To provide reliable information about changes in net resources (resources lessobligations) arising out of business activities.(iv) To provide financial information that assists in estimating the earningpotentials of business.(v) To disclose, to the extent possible, other information related to the financialstatements that is relevant to the needs of the users of these statements.FINANCIAL STATEMENT ANALYSISFINALCIAL PERFORMANCE ANALYSIS 39
  40. 40. Raghavendra YadavFinancial analysis is the process of determining financial strengthsand weakness of the firm by establishing strategic relationship between the itemsof the items of the balance sheet, profit and loss account and other operative data.In the words of Myers, “financial statements analysis is largely a study ofrelationship among various financial factors in a business as disclosed by a singleset of statements, and a study of the trend of these factors as shown in series ofstatementsThe purpose of financial analysis is to diagnose the informationcontained in financial statements so as to judge the profitability and financialsoundness of the firm. The analysis and interpretation of financial statements isessential to bring out the mystery behind the figures in financial statements.Financial statements analysis is an attempt to determine the significance andmeaning of the financial statement data so that forecast may be made of the futureearnings, ability to pay interest and debt maturities (both current and long term)and profitability of a sound dividend policy.The term financial statement analysis includes both ‘analyses, and‘interpretation’. A distinction should be made between the two terms. While theterm ‘analysis’ is used to mean the simplification of financial data by methodicalclassification of the data given in financial statements, ‘interpretation’ means‘explaining the meaning and significance of the data so simplified’. However, both‘analysis and interpretation’ are interlinked and complementary to each other.Analysis is useless without interpretation and interpretation without analysis isdifficult or even impossible.Methods of Financial Analysis:FINALCIAL PERFORMANCE ANALYSIS 40
  41. 41. Raghavendra YadavThe analysis and interpretation of financial statements is used todetermine the financial position and results of operations as well. A number ofmethods or devices are used to study the relation ship between different statements.An effort is made to use those devices which clearly analyze the position of theenterprise. The following are the methods of analysis are generally used:1. Comparative statements;2. Common-size statements;3. Funds flow analysis;4. Ratio analysis;1. Comparative Statements:The Comparative financial statements are statements of financialposition at different periods; of time. The elements of financial position are shownin comparative form so as to give an idea of financial position at two or moreperiods. Any statement prepared in comparative form will be converted intocomparative statements. From practical point of view, generally, two financialstatements (balance sheet and income statement) are prepared in comparative formfor financial analysis purpose. Not only the comparison of the figures of twoperiods but also be relationship between balance sheet and income statementenables an in depth study of financial position and operative results.i) Comparative Income Statement:FINALCIAL PERFORMANCE ANALYSIS 41
  42. 42. Raghavendra YadavThe income statement gives the results of the operations of business.The comparative income statement gives an idea of the progress of a business overa period of time. The changes in absolute data in money values and percentage canbe determined to analyse the profitability of the business.ii) Comparative Balance Sheet:The comparative balance sheet analysis is the study of the trend of thesame items, group of items and computed items in two or more balance sheets ofthe same business enterprise on different dates. The changes in periodic balancesheet items reflect the conduct of a business. The changes can be observed bycomparison of the balance sheet at the beginning and at the end of a period andthese changes can help in forming an opinion about the progress of an enterprise.2. Common-size Statements:The common-size statements, balance sheet and income statement areshown analytical percentages. The figures are shown as percentages of total assets,total liabilities and total sales. The total assets are taken as 100 and different assetsare expressed as percentage of the total. Similarly, various liabilities are taken aspart of total liabilities, these statements also known as component percentagebecause every individual item is stated as percentage of the total 100.FINALCIAL PERFORMANCE ANALYSIS 42
  43. 43. Raghavendra YadavThe short comings in comparative statements and trend percentageswhere changes in items could not be compared with the totals have been coveredup. The analyst is able to asses the figures in relation to total values.i) Common-size Income Statement:The items in income statement can be shown as percentages of salesto show the relation of each item to sales. A significant relationship can beestablished between items of income statement and volume of sales. The increasein sales will certainly increase selling expenses and not administrative andfinancial expenses. In case the volume of sales increases to considerable extent,administrative and financial expenses may go up. In case total sales are declining,the selling expenses should be reduced at once. So, a relationship is establishedbetween sales and other items in income statement and this relationship is helpfulin evaluating operational activities of the enterprise.ii) Common-size Balance Sheet:A statement in which balance sheet items are expressed as the ratio ofeach asset to total assets and the ratio of each liability is expressed as a ratio oftotal liabilities is called common size balance sheet. The common size balancesheet can be used to compare companies of different size. The comparison offigures in different periods is not useful because total figures may be affected by anumber of factors. It is not possible to establish standard norms for various assets.FINALCIAL PERFORMANCE ANALYSIS 43
  44. 44. Raghavendra Yadav3. Funds flow analysis:Funds flow statement shows the movement of funds and is areport of the financial operations of the business undertaking. It indicates variousmeans by which funds were obtained during a particular period and the ways inwhich these funds were employed. The flow of funds occur when a transactionchanges on the one hand and non-current account and on the other a currentaccount & vice- versa.Flow of funds:Various sources from which funds were raised and the uses to which thesefunds were put. Funds flow statement is formulated on the basis of workingcapital basis and on Cash basisSteps in pre preparation of funds flow statement:1. Increase or decrease of working capital2. Funds from operations3. Funds flow statementFINALCIAL PERFORMANCE ANALYSIS 44Current LiabilitiesNon-CurrentNon-Current LiabilitiesCurrent
  45. 45. Raghavendra YadavImportance of Funds flow statement :1. It helps in the analysis of financial operations2. It throws light on many perplexing questions of general interest3. It helps in formation of a realistic dividend policy.4. It acts as future guide5. It helps in the proper allocation of resources6. It helps in appraising the use of working capital7. It helps in knowing the overall credit-worthiness of a firmFunds flow statement:1. It should be remembered that a funds flow statement is a substitute to theincome statement or a balance sheet. It provides only some additionalinformation as regards changes in working capital.2. It cannot reveal continuous changes.3. It is not an original statement but simply arrangement of data given in theFinancial statement.4. Ratio analysis:Ratio analysis is a powerful tool of financial analysis. It is usedas benchmark for calculating the financial position and performance of a firm. Theabsolute accounting figure reported in the financial statements does not providethe meaningful performance of financial position in the firm, ratio helps tosummarize the large quantity of data to make qualitative judgment about the firm’sperformance.FINALCIAL PERFORMANCE ANALYSIS 45
  46. 46. Raghavendra YadavTypes of ratios:Ratios are calculated from the accounting data are grouped intovarious classes according to financial activity. In view of the requirement ofvarious users of ratios it is classified into four important categories:1. Liquidity Ratio2. Leverage Ratio3. Activity Ratio4. Profitability Ratio1. LIQUIDITY RATIO:It means the ability of the firm to meet its current obligations. Theratio establishers the relationship between cash and other current assets to currentobligations. The most common ratios are:i. Current ratioii. Quick ratioiii. Net Working Capital ratioi. Current ratio:The current ratio indicates the availability of current assets in rupee for everyone of currentliability. If ratio is greater than it means that the firm has more current assets than currentliabilities against them.Current AssetsCurrent Ratio = ----------------------Current LiabilitiesStandard Ratio is 2:1FINALCIAL PERFORMANCE ANALYSIS 46
  47. 47. Raghavendra Yadavii. Quick ratio:The ratio establishes a relationship between liquid assets and liquidliabilities. Inventories are considered to be less liquid a sit normally requiredsame time for realizing in cash and their values have tendency to fluctuate.Hence quick ratio is found out by dividing the total of quick assets by totalcurrent liabilities.Quick AssetsQuick Ratio = ---------------------Current Liabilitiesiii. Networking capital ratio:The difference between current assets and current liabilitiesexcluding short-term bank borrowing is called net working capital or netcurrent assets is sometimes used as a measure of a firm’s liquidity. It isconsidered that, between two firms, the one having the larger NWC has thegreater ability to meet its current obligations. This is not necessarily so; themeasure of liquidity is a relationship, rather than the difference between currentassets and current liabilities. NWC, however, measures the firm’s potentialreservoir of funds. It can be related to net assets (or capital employed).Net Working CapitalNWC Ratio =Net AssetsFINALCIAL PERFORMANCE ANALYSIS 47
  48. 48. Raghavendra Yadav2. LEVERAGE RATIO:Leverage ratio may be calculated from the balance sheet items todetermine the proportion of debt in total financing. It is also calculated formincome statement items to determine the extent to which operating profits aresufficient to cover fixed charges. Leverage ratios are calculated to measure thefinancial risk and the firm’s ability of using debt.I. Debt ratioii. Debt-Equity ratioIII. Capital employed to net worthi. Debt ratio:Debt ratio used to analyses the long-term solvency of a firm.The firm may be interested in knowing the proportion of the interest-bearing debt in the capital structure. It may, therefore, compute debt ratioby dividing total debt by capital employed or net assets. Total debt willinclude short and long-term borrowing from financial institutions,debentures/bonds, deferred payment arrangements for buying capitalequipments, bank borrowings, public deposits and any other interest-bearing loan. Capital employed will include total debt and net worth.Total DebtDebt Ratio =Capital EmployedFINALCIAL PERFORMANCE ANALYSIS 48
  49. 49. Raghavendra Yadavii. Debt equity ratio:Relationship between borrowed funds and owners equity a highratio shows a large share of financing by creditors relative to owners a low ratioinputs in smaller claim of creditors. If the debtors equity ratio is high owners areputting up relatively less money of there own it is danger signal for creditors.iii. Capital employed to net worth ratio:There is yet another alternative way of expressingthe basic relationship between debt and equity one may want toknow: How much funds are being contributed together bylenders and owners for each rupee of the owner’s contribution?This can be found out by calculating the ration of capitalemployed or net assets to net worth.Capital EmployedCE-to-NW Ratio =Net Worth3. ACITIVITY RATIO:Activity ratios are employed to evaluate the efficiencywith which the firm managers and utilizes its assets. These arealso known as turnover rations. These ratio’s starts therelationship between sales and assets. Some of the importantratios are:i. Inventory turnover ratioii. Debtors turnover ratioIII. Collection periodFINALCIAL PERFORMANCE ANALYSIS 49
  50. 50. Raghavendra YadavI. Inventory turn over ratio:The inventory turnover reflects the efficiency of inventory managementindicates the efficiency of the firm in producing and selling its product. A highinventory turnover is indicative of good inventory management. It is calculatedby dividing the cost of goods sold by the average inventory. The higher theinventory turnover larger the amount of profitCost of Goods SoldInventory Turn Over =Average inventoryii. Debtors turnover ratio:Debtor’s turnover ratio explains the number of times the debt areconverted into cash within a short period of time. This ratio establishes the relationbetween credit sales and debtors.SalesDebtor’s Turnover Ratio =Total debtorsiii. Collection Period:The average number of days for which debtors remain outstanding iscalled the average collection period (ACP). The average collection periodmeasures the quality debtors since it indicated the speed of their collection.debtorsCollection Period = x 360 daysSalesFINALCIAL PERFORMANCE ANALYSIS 50
  51. 51. Raghavendra Yadav4. PROFITABILITY RATIO:The profitability ratios are used to calculate the efficiency of operatingof the company. Profits are ultimate goal of every company and it should becontinuously evaluated in terms of profits. Generally two major profits arecalculated, they arei. Gross profit ratioii. Net profit ratioi.Gross profit ratio:The first profitability ratio in relation to sales reflects the efficiencywith which management produces each unit of product. It is calculated by dividingthe Gross Profit with Sales.Gross profitGross Profit ratio = x 100Salesii. Net profit ratio:Net profit ratio explains the net profit of the company after payingtaxes of particular period. It establishes relation between net profit and sales.Net ProfitNet profit ratio=SalesFINALCIAL PERFORMANCE ANALYSIS 51
  53. 53. Raghavendra YadavComparative inCome statement ofchittoor co-operative sugars ltd., 2003-2004Particulars 31-3-2003 31-4-2004 ChangeperCentageSales 201486573 130517437 -70969136 -35.22%Less: Cost of goods sold 239132131 155574480 -83557651 -34.94%Gross profit/loss -37645558 -25057043 12588515 -33.44%Less: Operating expenses 12609835 10532587 -2077248 -16.47%Operating profit/loss -50255393 -35589630 14665763 -29.18%Add: Other incomeMiscellaneous income 9500299 1639130 -7861169 -82.75%Interest received 118481 129866 11385 9.61%Profit/loss before interest -40636613 -33820634 6815979 -16.77%Less: Interest paid 26777116 28813070 2035954 7.60%Profit/loss after interest -67413729 -62633704 4780025 -7.09%Less: Loss up to last year 231799275 299213004 67413729 29.08%Net loss cumulative -299213004-361846708 -62633704 20.93%Source: Annual Reports of CCSL.Interpretation:From the above table it was analyzed that sales and cost of goods sold weredecreased so gross loss also decreased, and there was high decrease inmiscellaneous income (i.e. 82.75%) loss increased due to lack of operationalefficiency.FINALCIAL PERFORMANCE ANALYSIS 53
  54. 54. Raghavendra YadavComparative inCome statement ofchittoor co-operative sugars ltd., 2004-2005Particulars 31-3-2004 31-4-2005 ChangeperCentageSales 130517437 96920394 -33597043 -25.74%Less: Cost of goods sold 155574480 102243876 -53330604 -34.28%Gross profit/loss -25057043 -5323482 19733561 -78.75%Less: Operating expenses 10532587 11133862 601275 5.71%Operating profit/loss -35589630 -16457344 19132286 -53.76%Add: Other incomeMiscellaneous income 1639130 4383327 2744197 167.42%Interest received 129866 143577 13711 10.56%Profit/loss before interest -33820634 -11930440 21890194 -64.72%Less: Interest paid 28813070 23326176 -5486894 -19.04%Profit/loss after interest -62633704 -35256616 27377088 -43.71%Less: Loss up to last year 299213004 361846708 62633704 20.93%Net loss cumulative -361846708-397103324 -35256616 9.74%Source: Annual Reports of CCSL.Interpretation:From the above table it was analyzed that the percentage decrease in cost ofgoods sold is more than the decrease in sales so gross loss also decreased due toreduce in the cost of raw materials. Even though increase in operating expensesoperating loss decreased due to effective control of raw material cost.FINALCIAL PERFORMANCE ANALYSIS 54
  55. 55. Raghavendra YadavComparative inCome statement ofchittoor co-operative sugars ltd., 2005-2006Particulars 31-3-2005 31-4-2006 ChangeperCentageSales 96920394 124629657 27709263 28.59%Less: Cost of goods sold 102243876 72877770 -29366106 -28.72%Gross profit/loss -5323482 51751887 57075369 -1072.14%Less: Operating expenses 11133862 35468649 24334787 218.57%Operating profit/loss -16457344 16283238 32740582 -198.94%Add: Other incomeMiscellaneous income 4383327 4664988 281661 6.43%Interest received 143577 172981 29404 20.48%Profit/loss before interest -11930440 21121207 33051647 -277.04%Less: Interest paid 23326176 29320178 5994002 25.70%Profit/loss after interest -35256616 -8198971 27057645 -76.74%Less: Loss up to last year 361846708 397103324 35256616 9.74%Net loss cumulative -397103324-405302295 -8198971 2.06%Source: Annual Reports of CCSL.Interpretation:From the above table it was analyzed that sales percentage increasedand at the same time cost of goods sold decreased so the firm earned gross profitdue to high control in purchase of raw materials. Due to increase in operatingexpenses loss increased (2.06%) the firm has no control over the operatingactivities.FINALCIAL PERFORMANCE ANALYSIS 55
  56. 56. Raghavendra YadavComparative inCome statement ofchittoor co-operative sugars ltd., 2006-2007Particulars 31-3-2006 31-4-2007 ChangeperCentageSales 124629657 368853567 244223910 195.96%Less: Cost of goods sold 72877770 406536335 333658565 457.83%Gross profit/loss 51751887 -37682768 -89434655 -172.81%Less: Operating expenses 35468649 17197408 -18271241 -51.51%Operating profit/loss 16283238 -54880176 -71163414 -437.03%Add: Other incomeMiscellaneous income 4664988 26265 -4638723 -99.44%Interest received 172981 1056277 883296 510.63%Profit/loss before interest 21121207 -53797634 -74918841 -354.71%Less: Interest paid 29320178 39840441 10520263 35.88%Profit/loss after interest -8198971 -93638075 -85439104 1042.07%Less: Loss up to last year 397103324 405303195 8199871 2.06%Net loss cumulative -405302295-498941270 -93638975 23.10%Source: Annual Reports of CCSL.Interpretation:From the above table it was analyzed that cost of goods sold increasedby (457.83%) but sales increased only (195.96) i.e. less than increase in cost ofgoods sold so the firm incurred loss. Even though operating expenses decrease itgot operating loss due to high cost of production.FINALCIAL PERFORMANCE ANALYSIS 56
  58. 58. Raghavendra YadavComparative balanCe sheet for the years2003-04Particulars 31-3-2003 31-3-2004 ChangeperCentageShare capital 140,958,700 140,960,300 1,600 0.00%Reserves 219,357,188 228,727,884 9370696 4.27%U.D.P 64,227 64,227 0 0.00%Reserves to be invested 24,703 24,703 0 0.00%Audit fund 9,696 9,696 0 0.00%Profit/loss -299,213,003 -361,846,708 -62633705 20.93%A. Net worth 61,201,511 7,940,102 -53261409 -87.03%Borrowings 235,616,210 223,822,462 -11793748 -5.01%Deposits 28,836,536 28,812,457 -24079 -0.08%B.Borrowings 264,452,746 252,634,919 -11817827 -4.47%C. Capital employed (A+B) 325,654,257 260,575,021 -65079236 -19.98%F.D.S with banks 250,000 2,250,000 2000000 800.00%Shares in other co-operative institutions 228,550 228,550 0 0.00%Loans to other co-operative factories 3,000,000 1,000,000 -2000000 -66.67%Fixed assets 222,136,732 222,136,732 0 0.00%Deficits 47,944 47,944 0 0.00%D. Fixed assets 225,663,226 225,663,226 0 0.00%Cash on hand 1,283,980 22,575 -1261405 -98.24%Cash at bank 4,095,240 15,881,189 11785949 287.80%Deposits with various agencies 1,254,826 1,261,226 6400 0.51%Loans and advances to members 6,461,883 6,386,630 -75253 -1.16%Debtors 54,412,361 54,894,708 482347 0.89%Interest receivable 1,826,488 1,826,489 1 0.00%Closing stock 219,662,805 96,849,740-122813065 -55.91%E. Current assets 288,997,583 177,122,557-111875026 -38.71%Creditors 182,912,074 115,020,074 -67892000 -37.12%Outstanding interest 6,094,478 27,190,688 21096210 346.15%F. Current liabilities 189,006,552 142,210,762 -46795790 -24.76%G. Net current assets (E-F) 99,991,031 34,911,795 -65079236 -65.09%H. Net assets (D+G) 325,654,257 260,575,021 -65079236 -19.98%Source: Annual Reports of CCSL.Interpretation:From the above table it was analyzed that fixed deposits wereincreased by 800% current assets and current liabilities were sufficiently decreaseddue to current liabilities were paid out of current assets.FINALCIAL PERFORMANCE ANALYSIS 58
  59. 59. Raghavendra YadavComparative balanCe sheet for the years2004-05Particulars 31-3-2004 31-3-2005 ChangeperCentageShare capital 140,960,300 140,961,400 1,100 0.00%Reserves 228,727,884 248,088,004 19360120 8.46%U.D.P 64,227 64,227 0 0.00%Reserves to be invested 24,703 24,703 0 0.00%Audit fund 9,696 9,696 0 0.00%Profit/loss-361,846,708 -397103323 -35256615 9.74%A. Net worth 7,940,102 -7,955,293 -15895395 -200.19%Borrowings 223,822,462 266,073,588 42251126 18.88%Deposits 28,812,457 29,154,179 341722 1.19%B.Borrowings 252,634,919 295,227,767 42592848 16.86%C. Capital employed (A+B) 260,575,021 287,272,474 26697453 10.25%F.D.S with banks 2,250,000 2,750,000 500000 22.22%Shares in other co- operative institutions 228,550 228,550 0 0.00%Loans to other co- operative factories 1,000,000 1,000,000 0 0.00%Fixed assets 222,136,732 222,577,781 441049 0.20%Deficits 47,944 47,944 0 0.00%D. Fixed assets 225,663,226 226,604,275 941049 0.42%Cash on hand 22,575 1,878,931 1856356 8223.06%Cash at bank 15,881,189 18,140,037 2258848 14.22%Deposits with various agencies 1,261,226 1,271,226 10000 0.79%Loans and advances to members 6,386,630 9,085,236 2698606 42.25%Debtors 54,894,708 67,056,512 12161804 22.15%Interest receivable 1,826,489 1,826,489 0 0.00%Closing stock 96,849,740 110,043,158 13193418 13.62%E. Current assets 177,122,557 209,301,589 32179032 18.17%Creditors 115,020,074 108,107,592 -6912482 -6.01%Outstanding interest 27,190,688 40,525,798 13335110 49.04%F. Current liabilities 142,210,762 148,633,390 6422628 4.52%G. Net current assets (E-F) 34,911,795 60,668,199 25756404 73.78%H. Net assets (D+G) 260,575,021 287,272,474 26697453 10.25%Source: Annual Reports of CCSL.Interpretation:From the above table it was analyzed that the cash on handincreased by 8223.06% current assets, current liabilities increased, net assetsincreased by 10.25% and no change in fixed assets.FINALCIAL PERFORMANCE ANALYSIS 59
  60. 60. Raghavendra YadavComparative balanCe sheet for the years2005-06Particulars 31-3-2005 31-3-2006 ChangeperCentageShare capital 140,961,400 141,140,700 179,300 0.13%Reserves 248,088,004 264,309,028 16221024 6.54%U.D.P 64,227 64,227 0 0.00%Reserves to be invested 24,703 24,703 0 0.00%Audit fund 9,696 9,696 0 0.00%Profit/loss -397103323 -405303195 -8199872 2.06%A. Net worth -7,955,293 245,159 8200452 -103.08%Borrowings 266,073,588 404,340,806 138267218 51.97%Deposits 29,154,179 31,024,046 1869867 6.41%B.Borrowings 295,227,767 435,364,852 140137085 47.47%C. Capital employed (A+B) 287,272,474 435,610,011 148337537 51.64%F.D.S with banks 2,750,000 250,000 -2500000 -90.91%Shares in other co-operativeinstitutions 228,550 228,550 0 0.00%Loans to other co-operative factories 1,000,000 1,000,000 0 0.00%Fixed assets 222,577,781 225,127,858 2550077 1.15%Deficits 47,944 47,944 0 0.00%D. Fixed assets 226,604,275 226,654,352 50077 0.02%Cash on hand 1,878,931 141,219 -1737712 -92.48%Cash at bank 18,140,037 7,249,943 -10890094 -60.03%Deposits with various agencies 1,271,226 1,267,226 -4000 -0.31%Loans and advances to members 9,085,236 10,624,987 1539751 16.95%Debtors 67,056,512 73,209,660 6153148 9.18%Interest receivable 1,826,489 1,826,489 0 0.00%Closing stock 110,043,158 304,641,448 194598290 176.84%E. Current assets 209,301,589 398,960,972 189659383 90.62%Creditors 108,107,592 140,980,325 32872733 30.41%Outstanding interest 40,525,798 49,024,988 8499190 20.97%F. Current liabilities 148,633,390 190,005,313 41371923 27.83%G. Net current assets (E-F) 60,668,199 208,955,659 148287460 244.42%H. Net assets (D+G) 287,272,474 435,610,011 148337537 51.64%Source: Annual Reports of CCSL.Interpretation:From the above table it was analyzed that the net worth decreased by103.08%, no change in fixed assets percentage and both current assets and currentliabilities were increased.FINALCIAL PERFORMANCE ANALYSIS 60
  61. 61. Raghavendra YadavComparative balanCe sheet for the years2006-07Particulars 31-3-2006 31-3-2007ChangeperCentageShare capital141,140,700 142,553,600 1,412,900 1.00%Reserves264,309,028 268,006,835 3697807 1.40%U.D.P 64,227 64,227 0 0.00%Reserves to be invested 24,703 24,703 0 0.00%Audit fund 9,696 9,696 0 0.00%Profit/loss -405303195 -498,941,043 -93637848 23.10%A. Net worth 245,159 -88,281,982 -88527141 -36110.09%Borrowings404,340,806 405,702,422 1361616 0.34%Deposits 31,024,046 35,201,887 4177841 13.47%B.Borrowings435,364,852 440,904,309 5539457 1.27%C. Capital employed (A+B)435,610,011 352,622,327 -82987684 -19.05%F.D.S with banks 250,000 250,000 0 0.00%Shares in other co-operative institutions 228,550 228,550 0 0.00%Loans to other co-operative factories 1,000,000 1,000,000 0 0.00%Fixed assets225,127,858 235,857,585 10729727 4.77%Deficits 47,944 47,944 0 0.00%D. Fixed assets226,654,352237,384,079 10729727 4.73%Cash on hand 141,219 95,083 -46136 -32.67%Cash at bank 7,249,943 17,849,583 10599640 146.20%Deposits with various agencies 1,267,226 1,270,226 3000 0.24%Loans and advances to members 10,624,987 13,174,873 2549886 24.00%Debtors 73,209,660 75,541,003 2331343 3.18%Interest receivable 1,826,489 1,826,489 0 0.00%Closing stock 304,641,448 281,582,197 -23059251 -7.57%E. Current assets398,960,972391,339,454 -7621518 -1.91%Creditors 140,980,325 229,172,905 88192580 62.56%Outstanding interest 49,024,988 46,928,301 -2096687 -4.28%F. Current liabilities190,005,313276,101,206 86095893 45.31%G. Net current assets(E-F)208,955,659115,238,248-93717411 -44.85%H. Net assets (D+G) 435,610,01 352,622,32-82987684 -19.05%FINALCIAL PERFORMANCE ANALYSIS 61
  62. 62. Raghavendra Yadav1 7Source: Annual Reports of CCSL.Interpretation:From the above table it was analyzed that capital employed decreasedby 19.05% , current assets decreased and current liabilities increased due to fundsraised to short term borrowings and fixed assets increased by 4.73% due additionalassets purchased.COMMON SIZEINCOMESTATEMENTFINALCIAL PERFORMANCE ANALYSIS 62
  63. 63. Raghavendra YadavCommon size inCome statement ofchittoor co-operative sugars ltd., 2003-2007Particulars 31-3-03 31-3-04 31-3-05 31-3-06 31-3-07Sales 100% 100% 100% 100% 100%Less: Cost of goods sold 119% 119% 105% 58% 110%Gross profit/loss -19% -19% -5% 42% -10%Less: Operating expenses 6% 8% 11% 28% 5%Operating profit/loss -25% -27% -17% 13% -15%Add: Other income 0% 0% 0% 0% 0%Miscellaneous income 5% 1% 5% 4% 0%Interest received 0% 0% 0% 0% 0%Profit/loss before interest -20% -26% -12% 17% -15%Less: Interest paid 13% 22% 24% 24% 11%Profit/loss after interest -33% -48% -36% -7% -25%Less: Loss up to last year 115% 229% 373% 319% 110%Net loss cumulative -149% -277% -410% -325% -135%Source: Annual Reports of CCSL.Interpretation:From the above common size income statement it was analyzed thatcost of goods sold is more than the sales except the year 2006 due to high cost ofproduction due to in efficiency in controlling cost of production so, it got gross lossin all the years except the year 2006. Operating loss had been decreasing from theFINALCIAL PERFORMANCE ANALYSIS 63
  64. 64. Raghavendra Yadavyears 2003-05, in the year 2006 it got operating profit (13%) and again it gotoperating loss in the year 2007 due to inefficiency in controlling expenses. Net losshad been incasing over the years due to the firm proved that over all inefficiency inearning profitsCOMMON SIZEBALANCE SHEETFINALCIAL PERFORMANCE ANALYSIS 64
  65. 65. Raghavendra YadavCommon size balanCe sheet ofchittoor co-operative sugars ltd.,2003-04Particulars 2003 2004 Particulars 2003 2004Share capital 27% 35%F.D.S withbanks 0% 1%Reserves to beinvested 0% 0%Shares in otherco-operative institutions 0% 0%U.D.P 0% 0%Loans to otherco-operative factories 1% 0%Reserves 0% 0% Fixed assets 43% 55%Audit fund 43% 57% Deficits 0% 0%Profit/loss -58% -90% Total fixed assets 44% 56%Net worth 12% 2% Cash on hand 0% 0%Cash at bank 1% 4%Borrowings 46% 56%Deposits withvarious agencies 0% 0%Deposits 6% 7%Loans and advancesto members 1% 4%Fixed liabilities 63% 65% Debtors 0% 0%Outstanding interest 1% 7% Interest receivable 1% 2%Creditors 36% 29% Closing stock 11% 14%current liabilities 37% 35% Current Assets 56% 44%Total 100% 100% Total 100% 100%Source: Annual Reports of CCSL.Interpretation:FINALCIAL PERFORMANCE ANALYSIS 65
  66. 66. Raghavendra YadavFrom the above table it was analyzed that fixed assets increased from44% to 56% and fixed liabilities also increased from 63% to65% due toadditional fixed assets were acquired through borrowings. Current assets andcurrent liabilities are considerably decreased it may due to current liabilities arepaid out of current assets.Common size balanCe sheet ofchittoor co-operative sugars ltd.,2004-05Particulars 2004 2005 Particulars 2004 2005Share capital 35% 32% F.D.S with banks 1% 1%Reserves to beinvested 0% 0%Shares in otherco-operative institutions 0% 0%U.D.P 0% 0%Loans to otherco-operative factories 0% 0%Reserves 0% 0% Fixed assets 55% 51%Audit fund 57% 57% Deficits 0% 0%Profit/loss -90% -91% Total fixed assets 56% 52%Net worth 2% -2% Cash on hand 0% 0%Cash at bank 4% 4%Borrowings 56% 61%Deposits withvarious agencies 0% 0%Deposits 7% 7%Loans and advancesto members 4% 4%Fixed liabilities 65% 66% Debtors 0% 0%Outstanding interest 7% 9% Interest receivable 2% 2%Creditors 29% 25% Closing stock 14% 15%current liabilities 35% 34% Current Assets 44% 48%Total 100% 100% Total 100%100%Source: Annual Reports of CCSL.Interpretation:FINALCIAL PERFORMANCE ANALYSIS 66
  67. 67. Raghavendra YadavFrom the above table it was analyzed that fixed assets were decreaseddue to fixed assets were sold and hold in current assets so, current assetsincreased . Fixed liabilities were increased due to additional funds borrowed.Current liabilities were decreased due to payment made to short term creditors.Common size balanCe sheet ofchittoor co-operative sugars ltd.,2005-06Particulars 2005 2006 Particulars 2005 2006Share capital 32% 23% F.D.S with banks 1% 0%Reserves to beinvested 0% 0%Shares in otherco-operative institutions 0% 0%U.D.P 0% 0%Loans to otherco-operative factories 0% 0%Reserves 0% 0% Fixed assets 51% 36%Audit fund 57% 42% Deficits 0% 0%Profit/loss -91% -65% Total fixed assets 52% 36%Net worth -2% 0% Cash on hand 0% 0%Cash at bank 4% 1%Borrowings 61% 65%Deposits withvarious agencies 0% 0%Deposits 7% 5%Loans and advancesto members 4% 1%Fixed liabilities 66% 70% Debtors 0% 0%Outstanding interest 9% 8% Interest receivable 2% 2%Creditors 25% 23% Closing stock 15% 12%current liabilities 34% 30% Current Assets 48% 64%Total 100% 100%Total 100% 100%Source: Annual Reports of CCSL.Interpretation:FINALCIAL PERFORMANCE ANALYSIS 67
  68. 68. Raghavendra YadavFrom the above table it was analyzed that fixed assets were decreasedfrom 52% to 36% due to most of the fixed assets were converted into cash socurrent assets were increased from 48% to 64%. Fixed liabilities were increasedfrom 66% to 70% due to additional funds were borrowed. Current liabilities weredecreased due to payment made to short term creditors.Common size balanCe sheet ofchittoor co-operative sugars ltd.,2006-07Particulars 2006 2007 Particulars 2006 2007Share capital 23% 23% F.D.S with banks 0% 0%Reserves to beinvested 0% 0%Shares in otherco-operative institutions 0% 0%U.D.P 0% 0%Loans to otherco-operative factories 0% 0%Reserves 0% 0% Fixed assets 36% 38%Audit fund 42% 43% Deficits 0% 0%Profit/loss -65% -79% Total fixed assets 36% 38%Net worth 0% -14% Cash on hand 0% 0%Cash at bank 1% 3%Borrowings 65% 65%Deposits withvarious agencies 0% 0%Deposits 5% 6%Loans and advancesto members 1% 3%Fixed liabilities 70% 56% Debtors 0% 0%Outstanding interest 8% 7% Interest receivable 2% 2%Creditors 23% 36% Closing stock 12% 12%current liabilities 30% 44% Current Assets 64% 62%Total 100% 100% Total 100% 100%Source: Annual Reports of CCSL.Interpretation:FINALCIAL PERFORMANCE ANALYSIS 68
  69. 69. Raghavendra YadavFrom the above table it was analyzed that fixed assets were fixedassets were increased from 36% to 38% and current assets were decreased from64% to 62% due to additional assets were purchased from current assets. Fixedliabilities were decreased from 70% to 56% current liabilities were increased dueto repaid long term borrowings through current liabilities.WORKINGCAPITALCHANGESFINALCIAL PERFORMANCE ANALYSIS 69
  70. 70. Raghavendra Yadavstatement of Changes in working Capitalof chittor co-operative sugars ltd. 2003-2004Particulars 2003 2004inCreaseDeCreaseCurrent assetsCash on hand 1283980 22575 1261405Cash at bank 4095239 15881189 11785950Deposits with various agencies 1254826 1261226 6400loans and advances to members 6461883 6386630 75253Debtors 54412361 54894708 482347Interest receivable 1826489 1826489 0 0Closing stock 219662803 96849740 122813063Total current assets (A) 288997581 177122557Current liabilitiesCreditors 182912074 115020074 67892000Outstanding interest 6094478 27190688 21096210Total current liabilities (B) 189006552 142210762Working capital (A-B) 99991029 34911795Increase in working capital 65079234145245931 145245931Funds flow statement 2003-2004FINALCIAL PERFORMANCE ANALYSIS 70
  71. 71. Raghavendra YadavSources Amount Applications AmountDecrease in working capital 65079234Funds lost in operation 53263007loans to sugar factories 2000000Fixed deposits made 2000000Issue of shares 1600Borrowings 11793748Deposits collected 2407967080834 67080834Source: Annual Reports of CCSL.Interpretation:From the above table it was analyzed that most of the funds were lost inoperations and decrease in working capital, loans are the major sources offunds.statement of Changes in working Capitalof chittor co-operative sugars ltd. 2004-2005Particulars 2004 2005inCreaseDeCreaseCurrent assetsCash on hand 22575 1878931 1856356Cash at bank 15881189 18140037 2258848Deposits with various agencies 1261226 1271226 10000loans and advances to members 6386630 9085236 2698606Debtors 54894708 67056512 12161804Interest receivable 1826489 1826489 0 0Closing stock 96849740110043158 13193418Total current assets (A)177122557209301589Current liabilitiesCreditors115020074108107592 6912482Outstanding interest 27190688 40525798 13335110Total current liabilities (B)142210762148633390Working capital (A-B) 34911795 60668199Increase in working capital 2575640439091514 39091514FINALCIAL PERFORMANCE ANALYSIS 71
  72. 72. Raghavendra YadavFunds flow statement 2004-2005Sources Amount Applications AmountShare capital 1100Increase in working capital 25756404Deposits collected 341722Funds lost in operation 15896495Borrowings 42251126Fixed deposits made 500000Purchase of fixed assets 44104942593948 42593948Source: Annual Reports of CCSL.Interpretation:From the above table it was analyzed that funds were mostly loosed inoperations, additional funds required to meet the working capital needs of thefirm. Major sources of funds were deposits, long term borrowings.statement of Changes in working Capitalof chittor co-operative sugars ltd. 2005-2006Particulars 2005 2006inCreaseDeCreaseCurrent assetsCash on hand 1878931 141219 1737712Cash at bank 18140037 7249943 10890094Deposits with various agencies 1271226 1267226 4000loans and advances to members 9085236 10624987 1539751Debtors 67056512 73209660 6153148Interest receivable 1826489 1826489 0 0Closing stock110043158304641448 194598290Total current assets (A)209301589398960972Current liabilitiesCreditors108107592140980325 32872733Outstanding interest 40525798 49024988 8499190Total current liabilities (B)148633390190005313Working capital (A-B) 60668199208955659FINALCIAL PERFORMANCE ANALYSIS 72
  73. 73. Raghavendra YadavIncrease in working capital 148287460202291189 202291189Funds flow statement 2005-2006Sources Amount Applications AmountFixed deposits withbanks 2500000Increase in workingcapital 148287460Issue of shares 179300Fixed assets purchased 2550077Deposits collected 1869867Borrowings 138267218Funds from operation 8021152150837537 150837537Source: Annual Reports of CCSL.Interpretation:From the above table it was analyzed that most of the funds were usedfor increase in working capital, to purchase fixed assets. Deposits, borrowings,funds from operation are major sources of fundsstatement of Changes in working Capitalof chittor co-operative sugars ltd. 2006-2007Particulars 2006 2007inCreaseDeCreaseCurrent assetsCash on hand 141219 95083 46136Cash at bank 7249943 17849583 10599640Deposits with various agencies 1267226 1270226 3000loans and advances to members 10624987 13174873 2549886Debtors 73209660 75541003 2331343Interest receivable 1826489 1826489 0 0Closing stock 304641448 281582197 23059251Total current assets (A) 398960972 391339454Current liabilitiesCreditors 140980325 229172905 88192580Outstanding interest 49024988 46928301 2096687Total current liabilities (B) 190005313 276101206Working capital (A-B) 208955659 115238248FINALCIAL PERFORMANCE ANALYSIS 73
  74. 74. Raghavendra YadavDecrease in working capital 93717411111297967 111297967Funds flow statement 2006-2007Sources Amount Applications AmountDecrease in working capital 93717411Funds lost in operation 89940041Issue of shares 1412900Fixed assets purchased 10729727Deposits collected 4177841Borrowings 1361616100669768 100669768Source: Annual Reports of CCSL.Interpretation:From the above table it was analyzed that most of the funds were lostin operations and remaining funds are used to purchase fixed assets. Deposits,borrowings, decrease in working capital were major sources of funds.RATIOFINALCIAL PERFORMANCE ANALYSIS 74
  75. 75. Raghavendra YadavANALYSISLIQUIDITY RATIOSTable1: Current ratioYears Current assets Current liabilities Ratio2003 288,997,580 189,006,552 1.532004 177,122,556 142,210,762 1.252005 206,490,630 148,633,390 1.392006 398,960,970 190,005,314 2.102007 391,339,953 276,101,207 1.42Source: Annual Reports of CCSLFINALCIAL PERFORMANCE ANALYSIS 75
  76. 76. Raghavendra YadavInterpretation:From the above graph it was analyzed that current ratio was decreasedfrom 1.53 to 1.25, increased to 1.39 and increased to 2.10 and again decreased to1.42 .The current ratio is less than the rule of thumb 2:1 except the year 2006.Table2: Quick ratioYears Quick assets Current liabilities Ratio2003 69,334,778 189,006,552 0.372004 80,262,817 142,210,762 0.562005 99,258,431 148,633,390 0.672006 94,319,524 190,005,313 0.502007 109,757,257 276,101,206 0.40Source: Annual Reports of CCSLFINALCIAL PERFORMANCE ANALYSIS 76
  77. 77. Raghavendra YadavInterpretation:From the above graph it was analyzed that quick ratio was increasedfrom 0.37 to 0.67 and decreased to 0.40 it was due to improper maintenance ofquick assets. The quick ratio was below the rule thumb of 1:1 i.e. quick assets wereless than current liabilities.Table3: Net working capitalFINALCIAL PERFORMANCE ANALYSIS 77Years Net working capital Net assets Ratio2003 99,991,031 325,654,257 0.312004 34,911,795 260,575,021 0.132005 60,668,199 287,272,474 0.212006 208,955,659 435,610,011 0.482007 115,238,248 352,622,327 0.33
  78. 78. Raghavendra YadavSource: Annual Reports of CCSLInterpretation:From the above graph it was analyzed that net working capital ratiohad decreased from 0.31 to 0.13 in 2004, increased to 0.21 in 2005, increased to0.48 and again decreased to 0.33. it was due to the changes in working capitalrequirements.LEVERAGE RATIOSTable1: Debt ratioFINALCIAL PERFORMANCE ANALYSIS 78
  79. 79. Raghavendra YadavSource: Annual Reports of CCSLFINALCIAL PERFORMANCE ANALYSIS 79Years Total debt Capital employed Ratio2003 264452746 325654257 0.812004 452550346 260575021 1.742005 514161592 287272474 1.792006 668649834 435610011 1.532007 673709257 352622327 1.91
  80. 80. Raghavendra YadavInterpretation:From the above graph it was analyzed that the debt ratio mostlyincreased. It is due to increase in additional funds required year by year.Table2: Debt equity ratioYears Total debt Net Worth Ratio2003 264452746 61201511 4.322004 452550346 7940102 57.002005 514161592 -7955293 -64.632006 668649834 245159 2727.412007 673709257 -88281982 -7.63Source: Annual Reports of CCSLInterpretation:FINALCIAL PERFORMANCE ANALYSIS 80
  81. 81. Raghavendra YadavFrom the above graph it was analyzed that the lenders contribution ismore than the owners contribution, in the years 2005 and 2006 there is no owner’scontribution. So, the debt equity ratio became negative.Table3: Capital employed to net worthYears Capital employed Net Worth Ratio2003 325654257 61201511 5.322004 260575021 7940102 32.822005 287272474 -7955293 -36.112006 435610011 245159 1776.852007 352622327 -88281982 -3.99Source: Annual Reports of CCSLInterpretation:From the above graph it was analyzed that capital employed to networth was 5.32%, increased to 32.83% in 2004, became negative in 2005,2007 andFINALCIAL PERFORMANCE ANALYSIS 81
  82. 82. Raghavendra Yadavin the year 2006 increased to 1776.85% due to changes in the value of net worth ofthe firm.ACTIVITY RATIOSTable1: Inventory turnoverYears Cost of goods sold Average inventory Ratio2003 239132131 234147889 1.022004 155574480 137597980 1.132005 102243876 83065442 1.232006 72877770 182464926 0.402007 406536335 264313376 1.54Source: Annual Reports of CCSLInterpretation:FINALCIAL PERFORMANCE ANALYSIS 82
  83. 83. Raghavendra YadavFrom the above graph it was analyzed that the inventory turnover ratiowas very low in all the years, due to excess inventory levels in all the years.Table2: Debtors turnoverYears Sales Debtors Ratio2003 201486573 51412361 3.922004 130517437 54894708 2.382005 96920394 67056512 1.452006 124629659 73209660 1.702007 368853567 75541003 4.88Source: Annual Reports of CCSLInterpretation:FINALCIAL PERFORMANCE ANALYSIS 83
  84. 84. Raghavendra YadavFrom the above graph it was analyzed that in 2005 and 2006 debtorsturnover ratio is very low due to most of the goods were sold on credit.Table3: Collection periodYears Debtors Sales Ratio2003 51412361 201486573 91.862004 54894708 130517437 151.412005 67056512 96920394 249.072006 73209660 124629659 211.472007 75541003 368853567 73.73Source: Annual Reports of CCSLInterpretation:FINALCIAL PERFORMANCE ANALYSIS 84
  85. 85. Raghavendra YadavFrom the above graph it was analyzed that collection periodincreased up to 2005 and then decreased, due to most of the goods were soldon credit debts are outstanding.PROFITABILITY RATIOSTable1: Gross profit ratioYears Gross profit/loss Sales Ratio2003 -37645558 201486573 -18.68%2004 -25057043 130517437 -19.20%2005 -5323482 96920394 -5.49%2006 51751887 124629659 41.52%2007 -37682768 368853567 -10.22%Source: Annual Reports of CCSLInterpretation:FINALCIAL PERFORMANCE ANALYSIS 85
  86. 86. Raghavendra YadavFrom the above graph it was analyzed that gross profit ratio wasnegative for most of the years except the year 2006 it is due to inefficiency inproducing goods.Table2: Net profit ratioYears Net profit/loss Sales Ratio2003 -67413729 201486573 -33.46%2004 -62633704 130517437 -47.99%2005 -35256615 96920394 -36.38%2006 -8199872 124629659 -6.58%2007 -93637848 368853567 -25.39%Source: Annual Reports of CCSLInterpretation:FINALCIAL PERFORMANCE ANALYSIS 86
  87. 87. Raghavendra YadavFrom the above graph it was analyzed that in all the years the netprofit ratio is negative due to over all inefficiency in the firm.Balance sheetFINALCIAL PERFORMANCE ANALYSIS 87
  88. 88. Raghavendra YadavFINALCIAL PERFORMANCE ANALYSIS 88Balance sheet of chittoor co-operative sugars ltd chittoor.for the years 2003-2007LIABILITIES 31-3-2003 31-3-2004 31-3-2005 31-3-2006 31-3-2007 ASSETS 31-3-2003 31-3-200Sharecapital 140,958,700 140,960,300 140,961,400 141,140,700 142,553,600 F.D.S with banks 250,000 2,250Reserves 219,357,188 228,727,884 248,088,004 264,309,028 268,006,835Shares in otherco-operativeinstitutions 228,550 228U.D.P 64,227 64,227 64,227 64,227 64,227Loans to otherco-operativefactories 3,000,000 1,000Reserves tobe invested 24,703 24,703 24,703 24,703 24,703 Fixed assets 222,136,732 222,136Auditfund 9,696 9,696 9,696 9,696 9,696 Deficts 47,944 47Borrowings 235,616,210 223,822,462 266,073,588 404,340,806 405,702,422 Cash on hand 1,283,980 22Deposits 28,836,536 28,812,457 29,154,179 31,024,046 35,201,887 Cash at bank 4,095,240 15,881Creditors 182,912,074 115,020,074 108,107,592 140,980,325 229,172,905Deposits withvarious agencies 1,254,826 1,261Outstandinginterest 6,094,478 27,190,688 40,525,798 49,024,989 46,928,301Loans andadvances tomembers 6,461,883 6,386Debtors 54,412,361 54,894Interestreceivable 1,826,488 1,826Closing stock 219,662,805 96,849Loss 299,213,003 361,846Total 813,873,812 764,632,491 833,009,187 1,030,918,520 1,127,664,576 Total 813,873,812 764,632
  89. 89. Raghavendra YadavfindingsFINALCIAL PERFORMANCE ANALYSIS 89
  90. 90. Raghavendra YadavFINDINGS Cost of goods sold was more than the sales except the year 2006. So, thechittoor co-operative sugars ltd. got gross loss in most of the years. Operating loss decreased up to the year 2006 and then increased in theyear 2007. The chittoor co-operative sugars ltd. did not earned net profit in all theyears. It had been maintaining high inventory levels for all the years. In most of the years debtor’s collection period was very high. Most of the funds rose through debts with high interest rates. Most of the funds were lost in operations.FINALCIAL PERFORMANCE ANALYSIS 90
  91. 91. Raghavendra YadavSuggestionsFINALCIAL PERFORMANCE ANALYSIS 91
  92. 92. Raghavendra YadavSUGGESSIONS CCSL should adopt cost control measures by drawing inspiration fromprospering sugar factories. CCSL should reduce operating and administrative expenses, it willincrease over all efficiency of the firm. A high level of debt introduces inflexibility in the firms operations dueto increaseasing interference and pressures from creditors. A high debtcompany is able to borrow funds on very restrictive terms andconditions. So, it should raise owners funds. CCSL can adopt forward integration strategy by opening retail outletswhere its own sugar can be sold. It increases revenues one hand andcash position on the other.FINALCIAL PERFORMANCE ANALYSIS 92
  93. 93. Raghavendra YadavConclusionFINALCIAL PERFORMANCE ANALYSIS 93
  94. 94. Raghavendra YadavCONCLUSION The present study of “FINANCIAL PERFORMANCE ANALYSIS INCHITTOOR CO-OPERATIVE SUGARS LTD,.” Was conducted withthe help of annual report. Various financial tools are used in thestudy from the ratio analysis it has been found out that the averagecollection period of the company is high and capital gearing is low.To extent possible the study has achieved its stated objectives. It is onthe part of the company to accept the suggestions. CCSL Profitability position was deteriorated year by year, liquidityposition also moderate, long term solvency of the firm is alsomoderate due to high debts, the firm’s efficiency in utilizing assets isalso very low. Finally the study helped me to acquire practical knowledge that wasonly over by books and papers alone. I take up this opportunity tothank one and all for making this study a complete one.FINALCIAL PERFORMANCE ANALYSIS 94
  96. 96. Raghavendra YadavBIBILOGRAPHYBOOKS Financial Management I. M. Pandey Ninth Edition Vikash Publishing housePvt ltd. Financial Management Theory and Practice Prasanna Chandra SixthEdition Tata Mc Graw Hill Publishing company. Management Accounting Principles and Practice R. K. Sharma Sahashi K.Guptha Eigth edition kalyani publishiers. Dr .S.N. Maheswari-financial management G.G.S. Indraprasatha university ,new delhi.WEBSITES www.cliffsnotes.com www.financial-education.comFINALCIAL PERFORMANCE ANALYSIS 96