A<br />PROJECT ON<br /> <br />ANALYSIS OF FINANCIAL STATEMENTS USING THE TECHNIQUE OF RATIO ANALYSIS<br /> <br />Project By <br />Vineeth Poliyath<br />ID No. 107310592005<br />Project Guide <br />Prof. Syhamsunder Singh<br /> College :LAXMI INSTITUTE OF MANAGEMENT STUDIES<br />
About the company<br />Atul Ltd is a member of Lalbhai group, one of the oldest business houses of India, with interests mainly in textiles and chemicals. The group is strongly committed to serve the society in the field of education, health as well as culture.<br />Atul Ltd became the first private sector company of India to be inaugurated by Jawaharlal Nehru, the first Capital Minister of the country.<br />3 joint venture companies, namely, Cyanamid India Ltd, Atic industries Ltd and Cibatual Ltd were started which later merged into one entity- Atul Ltd in 1995.<br />Atul Ltd operates through six-business division, namely, Agrochemical bulk chemicals & Intermediates, Colors, Pharmaceuticals, Intermediates, and Polymers. Each business, in step with the company vision, develops and implements its growth plans.<br />
INTRODUCTION ABOUT THE TOPIC<br />What is financial statement?<br />Financial statements are summaries of the operating, financing, and investment activities of a business. Financial statements should provide information useful to both investors and creditors in making credit, investment, and other business decisions. <br />What is financial statement analysis?<br />Financial analysis is a tool of financial management. It consists of the evaluation of the financial condition and operating performance of a business firm, an industry, or even the economy, and the forecasting of its future condition and performance.<br />What is requirement of financial statement analysis?<br /> 1.financial statement<br />2. Profit and loss account<br />3. Cash flow statement<br />
Who uses these analyses? <br />INTERNAL USER<br />Owners and managers<br />Employees<br />EXTERNAL USER<br />Investor<br />Financial institutions<br />Government entities<br />Media<br />
Problem statement<br />The problem of the research is “To determine the financial position of ATUL LTD”???”<br /> Objectives of the study<br />Types of data which helped to prepare this report: <br />1. First type is the primary data which was collected personally to be used and studied to prepare and reach the objectives already mentioned. <br />2. The secondary data which was already prepared so these data was only used to reach the aims and objectives of this project. These data has been collected from the financial reports of the company. <br /> <br />How the data was collected: <br />The sources of collecting the primary data was collected from the financial statements already available to the employees of the company and some of which was published. <br /> <br />
<br />Different questions and information that was collected during these two methods are: <br />1. The beginning and history of the Atul Ltd. <br />2. Numbers of staff working for different departments. <br />3. The mission & vision of the company. <br />4. Areas of operations <br />5. Other company related information.<br />Data collected was through the study of the financial statements already existed in the company in form of printed files or digital files reserved in the company <br />These files consist of: <br />1. Annual report of the company <br />2. Financial balance sheets <br />3. Profit and Loss statements <br />
Data collection Methods/ sources<br /><ul><li>Primary data : Financial statements from Mr. Ankit Mankodi (Manager –Aromatics)
Secondary data: Comparison with competitor’s financial statement from internet.</li></li></ul><li>TOOLS OF ANALYSIS<br />
Secure loan and unsecured loan has been reduced though there is a slight increase in year 2011.
Deferred Tax liability has increased year by year.
Net block is some decreased in year 2011 because of the depreciation.
Investment in capital expenditure as well as in other investment is low since 2008.
Investment of the company has risen this year.
Company’s current assets and liabilities also increasing with the year passing.
Sales turnover of the company is increasing</li></li></ul><li>FINDINGS<br />The cost of goods sold and other expenses show a sharp instant increase in year 2011 compared to previous year.<br />Company sold a big investment in the last year so that profit and loss account shows big profit.<br />Current ratio and Quick ratio of the company is good than the ideal ratio although there has been slight decrease compared to year 2009.<br />Fixed and current asset turnover has been raised.<br />Working capital has been increased with the passing year which means The company has able to generated more sales<br />Moderate increase has been recorded in capital employed turnover ratio.<br />Debt has been reduced as compared with owner capital.<br />Proprietary ratio has slightly risen.<br />
FINDINGS<br />Rate of return of the company has been improved compared to previous year because company has got capital gain from its investments.<br />Dividend payout ratio has been reduced although the earning on individual share has increased.<br />Atul ltd has position 2nd among its peer competitor.<br />
CONCLUSION<br /> <br /><ul><li>From this study it can be concluded that the organization is efficient in respect of their systematic utilization of their resource.
Based on the figure of financial ratio of Atul Ltd, we can conclude that the company has continued to maintain its financial soundness and would expected to earn more profit margin for their shareholder.
The financial position of the Atul Ltd in comparison with their competitor , is very good.
The Company has high efficiency to receive cash faster, due to more liquidity. Hence the firm should not go for working capital loan.</li></li></ul><li> SUGGESTIONS<br />
The investment in the inventory must be kept in optimum so as to meet all requirements of the production, sales and demand pattern of the company. Because it is very important.<br />Atul Ltd. has improved in increasing its profitability as the company has managed to cut off the cost. In coming year the company will expect to improve better incoming year. However more attention should be given to improve the efficiency of the working capital and operational results. This will lead to the improvement of increasing profit earnings capacity.<br />Atul Ltd should improve to use its assets more efficiently in order to earn maximum sales with minimum investment in fixed assets.<br />Working capital has been increased. Thus the company should maintain its efficiently and should strive to maintain its financial health.<br />
<ul><li> I Sincerely Thanks Laxmi Institute of Management Studies and Mr. Shyamsunder Singh (mentor) for providing support and guidance throughout the project.
I am Very much thankful and oblige to following managers of Atul Limited for helping me in successful completion of the project.</li></ul> Mr. Tejal Patel Mr. Ankit Mankodi<br /> General Manager – Marketing Joint Manager - Finance<br /> Bulk Division – Atul Ltd. Aromatics Division - Atul Ltd<br />