FINANCIAL PERFORMANCE ANALYSIS using ratios,du pont analysis, common size statement,trend analysis & comparitive statment

1. “ A Summer Internship Project
Report on FINANCIAL
PERFORMANCE ANALYSIS of
ASAIN PAINTS INDUSTRIAL
COATINGS LTD.”
Submitted by :
YOGINI SHAH
(157310592031)
Batch : 2015-2017
Under the guidance of :
Mr. HIRAL TAILOR
Affiliated to :
Gujarat Technological University

2. 1. CLARITY OF THE TOPIC
FINANCIAL PERFORMANCE ANALYSIS
WHAT IS FINANCIAL PERFORMANCE ANALYSIS ?
- “Financial Performance Analysis includes analysis & interpretation of financial
statements in such a way that it undertakes full diagnosis of the profitability &
financial soundness of the business.”
- An analysis of financial performance can be possible through the use of one or
more tools / techniques of financial analysis:
* COMPARATIVE STATEMENT ANALYSIS
* COMMON-SIZE STATEMENT ANALYSIS
* TREND ANALYSIS
* RATIO ANALYSIS
CLARITY OF TOPIC

3. YEAR AUTHOR LITERATURE REVIEW
1982 Vasanthamani
In her study “The Financial Performance of Lakshmi Machine Works Limited”, she
found that, the liquidity position of the company showed that the company was
able to meet the creditors out of its own current assets. The quick ratio also
revealed that the quick liabilities were met at of quick assets without any difficulty.
1990 Rajeswary
In her study entitled “ Financial Performance of Precot Mills Limited” has
concluded that the financial position and operating efficiency of the company was
satisfactory where as the margin or safely was not stable solvency position was not
satisfactory and the earning capacity was minimum.
1999 Sardeesh Babu
In his study “A Study on Financial Performance of Fertilizers and Chemicals
Travancore Limited”, he found that, the current assets can be managed efficiently
by examining the material holding and stock holding procedure and pattern. If the
company increase its turnover and reduces its cost, the profit will increase leading
to an increases in the growth rate of sales, profit before tax and profit after tax.
2000 Anil Kumar
In his study on “Financial Performance of Hindustan Motors Limited, Cochin”, he
found that the sales of the company were showing an upward trend which
reflected a growth in its profit. The tools use by him were ratio analysis, the
company’s financial position is favourable.
LITERATURE REVIEW

4. A GLANCE OF THE PAINT INDUSTRY
One of the best model to analyze any industry is “PORTER’ S 5
FORCES MODEL”
UNDERSTANDING OF THE FIRM & ITS
BUSINESS

5. 2. UNDERSTANDING OF ORGANIZATION &
ITS BUSINESS :
- Founded in 1942. It was set up as a partnership firm by four friends who were
willing to take on the world's biggest, most famous paint companies operating in
India at that time.
- India’s largest & Asia’s second largest paint company.
- Turnover of ₹ 155.34 billion, operating in 19 countries & having 26 paint
manufacturing facilities in the world, servicing consumers in 65 countries.
- Asian Paints Industrial Coatings Limited has been set up to cater the powder
coatings market which is one of the fastest growing segments in the industrial
coatings market.
- "Asian Paints Industrial Coatings Limited" is a name given to a subsidiary stood
up by the joint venture of Asian Paints & PPG Industries. The company is 50:50
joint venture between Asian Paints Ltd. & PPG Industries, USA.
UNDERSTANDING OF THE FIRM & ITS
BUSINESS

6.  MAJOR COMPETITORS
- BERGER.
- NEROLAC PAINTS LTD.
- JENSON & NICHOLSON LTD.
- SHALIMAR PAINTS
- SNOWCEM PAINTS
- DULUX INDIA PAINTS
PRODUCTS OF APICL.
- EPOXY POWDERS
- EPOXY POLYSTER POWDERS (HYBRID)
- PURE POLYSTER POWDERS
- POLY URETHANE POWDERS
- LOW BAKE POWDERS
- GLASS COATINGS
UNDERSTANDING OF THE FIRM & ITS
BUSINESS

7. 3. PRACTICAL LEARNINGS :
 Learned about financial performance of the firm.
 It was an opportunity to know how a firm manages its daily
activities like Procurement of raw material, water supply etc.
 Learned as how the records of the employees can be
maintained.
 It has been observed that the firm follows 5 S Japanese
System.
PRACTICAL LEARNINGS

8. 4. OBJECTIVE OF THE STUDY :
 The primary objective of the study is to understand the functionality & importance of
various department of the company.
 The study aims to analyze the financial statements ( balance sheet & profit & loss
account ) of the company.
 To study changes in assets & liabilities structure of the organisation over the period.
 To study the profitability & turnover of the organisation.
 To analyse the various trend determining the balance sheet & profit & loss a/c of the
organisation.
 To study & understand the overall financial performance of the organisation.
 To study the changes in the financial performance of the organisation.
 To make recommendations based on the analysis of the financial statements.
OBJECTIVE OF THE STUDY

9. BENEFITS OF THE STUDY :
 Interest of various related groups is affected by the financial performance of a firm.
Therefore, these groups analyze the financial performance of the firm. The type of analysis
varies according to the specific interest of the party involved.
 Trade creditors: interested in the liquidity of the firm (appraisal of firm‘s liquidity)
 Bond holders: interested in the cash-flow ability of the firm (appraisal of firm‘s capital
structure, the major sources and uses of funds, profitability over time, and projection of
future profitability)
 Investors: interested in present and expected future earnings as well as stability of these
earnings (appraisal of firm‘s profitability and financial condition)
 Management: interested in internal control, better financial condition and better
performance (appraisal of firm‘s present financial condition, evaluation of opportunities in
relation to this current position, return on investment provided by various assets of the
company, etc)
BENEFITS OF THE STUDY

10. 5. RESEARCH METHODOLOGY :
 Research Design : Descriptive Study.
 Research Period : Three years ( 2013-14 to 2015-16)
 Data Collection : The details about the company has been collected by interaction with the
departmental managers as well as company's website.
- The data which is being used for this research is fully in secondary Natures. They have been
collected from :
Annual Report of the company.
Company website (mentioned in bibliography)
Books & Journals.
Internet websites (mentioned in bibliography)
 Scope of the Study : This study is conducted at ASIAN PAINTS INDUSTRIAL COATINGS
LTD. The topic selected is Analysis & Evaluation of Company's Financial Performance with the
help of Trend analysis, Common-size statement analysis, Comparative statement analysis &
Ratio analysis. Some findings & conclusions are also given.
RESEARCH METHODOLOGY

11. 6. DATA ANALYSIS :
DATA ANALYSIS
1.42
1.52
1.54
1.36
1.38
1.40
1.42
1.44
1.46
1.48
1.50
1.52
1.54
1.56
2014 2015 2016
Current Ratio
0.823
0.88
0.995
0
0.2
0.4
0.6
0.8
1
1.2
2014 2015 2016
Quick Ratio
0.37
0.40
0.52
0.00
0.10
0.20
0.30
0.40
0.50
0.60
2014 2015 2016
Cash Ratio
LIQUIDITY
RATIOS
FORMULAS REMARKS
Current Ratio = Current Assets / Current Liabilities
It shows good liquidity position
but it can be better.
Quick Ratio = Liquid Assets / Liquid Liabilities It is in safe position.
Cash Ratio
= Cash balance + Short term marketable
securities / Total Current Liabilities
It is consistently improving.

12. DATA ANALYSIS
11.33
11.87
12.28
10.80
11.00
11.20
11.40
11.60
11.80
12.00
12.20
12.40
2014 2015 2016
Accounts
Receivable
Turnover 32.21
30.75
29.72
28.00
28.50
29.00
29.50
30.00
30.50
31.00
31.50
32.00
32.50
2014 2015 2016
Days in Accounts
Receivable
5.18
5.29
6.17
4.60
4.80
5.00
5.20
5.40
5.60
5.80
6.00
6.20
6.40
2014 2015 2016
Inventory
Turnover
ACTIVITY RATIOS FORMULAS REMARKS
Accounts Receivable
Turnover
= Net Sales / Average Accounts Receivable It is Satisfactory.
Days in Accounts Receivable
= 365 or 360 or 300 / Accounts Receivable
Turnover
It is satisfactory.
Inventory Turnover = Cost of Sales / Average Inventory
It shows better
liquidity.
Days in Inventory = 365 or 360 or 300 / Inventory Turnover It is Good.
Operating Cycle
= No. of days in Receivable + No. of days in
Inventory
It is Satisfactory.
Fixed Assets Turnover = Sales / Fixed Assets It is good.

13. DATA ANALYSIS
70.50
69.00
59.20
52.00
54.00
56.00
58.00
60.00
62.00
64.00
66.00
68.00
70.00
72.00
2014 2015 2016
Days in Inventory
102.71
99.75
88.92
80.00
85.00
90.00
95.00
100.00
105.00
2014 2015 2016
Operating Cycle
5.05
5.37
4.62
4.20
4.40
4.60
4.80
5.00
5.20
5.40
5.60
2014 2015 2016
Fixed Assets Turnover

14. DATA ANALYSIS
37.74
39.08
42.47
35
36
37
38
39
40
41
42
43
2014 2015 2016
Gross Profit Margin
9.69
9.96
11.26
8.50
9.00
9.50
10.00
10.50
11.00
11.50
2014 2015 2016
Net Profit Margin
0.15
0.15
0.18
0.14
0.14
0.15
0.15
0.16
0.16
0.17
0.17
0.18
0.18
2014 2015 2016
Operating Income
to sales
0.15 0.16
0.34
0.00
0.05
0.10
0.15
0.20
0.25
0.30
0.35
0.40
2014 2015 2016
Return on Assets
PROFITABILITY RATIOS FORMULAS REMARKS
Gross Profit Margin = Sales - COGS / Sales * 100 It is Good.
Net Profit Margin = Net Income / Sales * 100 It is Good.
Operating Income to sales = EBIT / Net Sales It is Satisfactory.
Return on Assets = Net Income / Average Total assets It is Good.

15. DATA ANALYSIS
0.66 0.68
1.83
0.00
0.20
0.40
0.60
0.80
1.00
1.20
1.40
1.60
1.80
2.00
2014 2015 2016
Debt to Equity
0.04
0.03
0.04
0.03
0.03
0.03
0.03
0.03
0.03
0.04
0.04
0.04
0.04
0.04
0.04
2014 2015 2016
Debt Ratio
44.68
61.542
67.177
7
0
10
20
30
40
50
60
70
80
2014 2015 2016
Times Interest
Earned
SOLVENCY RATIOS FORMULAS REMARKS
Debt to Equity = Total Debt / Shareholder's Equity It is Safe.
Debt Ratio = Total Debt / Total Assets It is Good.
Times Interest Earned = EBIT / Interest Expense It is Good.

16. DATA ANALYSIS
12.71
14.54
18
0
2
4
6
8
10
12
14
16
18
20
2014 2015 2016
Earnings Per
Share
78.86
68.94
55.69
0.00
10.00
20.00
30.00
40.00
50.00
60.00
70.00
80.00
90.00
2014 2015 2016
P / E Ratio
37.5
44.1
51.7
0
10
20
30
40
50
60
2014 2015 2016
Book value per
share
48.43
50.03 50.08
47.5
48
48.5
49
49.5
50
50.5
2014 2015 2016
Dividend
Payout Ratio
VALUATION RATIOS FORMULAS REMARKS
Earnings Per Share
= Earnings available to common shareholders /
No. Of common shares outstanding
It is Good.
P / E Ratio = Market price per share / Earnings per share It is Desirable.
Book value per share
= Total Equity - Preferred Equity / Outstanding
common shares
It is good.
Dividend Payout Ratio = Dividend per share / NIAT It is Preferable.

17. DuPont Analysis
2014

18. DuPont Analysis2015 2016

19. DATA ANALYSISCOMMON SIZE ANALYSIS OF INCOME STATEMENT(rs in cr)
PARTICULARS
2014
(rs)
2015
(rs)
2016
(rs)
INCOME : -
Revenue from operation (gross) 110.39 110.48 110.54
Less : Excise duty -10.39 -10.48 -10.54
Revenue from operation (net) 100 100 100
Other Operating Revenue 1.058 1.27 1.33
Other income 1.07 1.21 1.31
TOTAL REVENUE 102.13 102.48 102.64
TOTAL EXPENSES 85.18 85.31 83.01
PROFIT AFTER TAX BUT BEFORE MINORITY
INTEREST FOR THE YEAR
10.04 10.19 11.61
NET PROFIT FOR THE YEAR 9.69 9.96 11.26
COMMON SIZE ANALYSIS OF BALANCE SHEET (rs in cr)
PARTICULARS 2014 2015 2016
EQUITY & LIABILITIES : -
1. Shareholders' Funds :
(a) Share Capital 1.187 1.076 0.946
(b) Reserves & Surplus 48.818 52.134 54.315
2. Minority Interest 3.046 2.958 2.901
3. Non-Current Liabilities 3.966 4.184 4.044
4. Current Liabilities 42.819 39.464 37.625
TOTAL LIABILITIES 100.000 100.000 100.000
ASSETS : -
1. Non-Current Assets 3162.390 3557.290 4282.700
2. Current Assets 60.850 60.086 57.778
TOTALASSETS 100.000 100.000 100.000

20. COMPARATIVE ANALYSIS OF INCOME STATEMENT (2015-16)
INCREASE (or) DECREASE INCREASE (or) DECREASE
PARTICULARS 2014-15 PERCENTAGE 2015-16 PERCENTAGE
TOTAL REVENUE 1503.49 10.475 1382.34 8.785
TOTAL EXPENSES 1230.48 10.299 778.12 6.115
NET PROFIT FOR THE YEAR 176.34 12.640 331.06 19.178
COMPARATIVE ANALYSIS OF BALANCE SHEET (2015-16)
INCREASE (or) DECREASE INCREASE (or) DECREASE
PARTICULARS 2015-16 PERCENTAGE 2014-15 PERCENTAGE
EQUITY & LIABILITIES : -
1. Shareholders' Funds
(a) Share Capital 0 0.000 0 0.000
(b) Reserves & Surplus 862.89 15.662 703.14 15.133
2. Minority Interest 30.54 10.380 17.65 6.694
3. Non-Current Liabilities 38.22 11.190 55.62 81.839
4. Current Liabilities 299.2 -5.643 1229.79 -766.0176495
TOTAL LIABILITIES 1230.85 12.135 834.89 9.368
ASSETS : -
1. Non-Current Assets 725.41 -10.432 394.9 -775.39
2. Current Assets 505.44 8.62 439.99 8.22
TOTALASSETS 1230.85 12.135 834.89 9.368

21. TREND ANALYSIS OF INCOME STATEMENT (rs in cr)
PARTICULARS 2014 2015 2016 2017 2018 2019
INCOME : -
TOTAL REVENUE 12849.03 14352.52 15734.86 17197.97 18640.88 20083.80
TOTAL EXPENSES 10,716.92 11,947.40 12,725.52 13805.21 14809.51 15813.81
NET PROFIT FOR THE YEAR 1,218.81 1,395.15 1,726.21 1954.12 2207.82 2461.52
Earnings Per Equity share (₹)
Basic & Diluted
12.71 14.54 18 20.37 23.02 25.66
0
5000
10000
15000
20000
25000
2014 2015 2016 2017 2018 2019
TOTAL REVENUE
TOTAL EXPENSES
NET PROFIT FOR THE
YEAR
Earnings Per Equity share
(₹) Basic & Diluted

22. TREND ANALYSIS OF BALANCE SHEET (rs in cr)
2014 2015 2016 2017 2018 2019
LIABILITIES :
TOTAL LIABILITIES 8077.59 8912.48 10143.33 11110.21 12143.08 13175.95
ASSETS : -
TOTAL ASSETS 8077.59 8912.48 10143.33 11110.21 12143.08 13175.95

23. FINDINGS
OTHER. . .
 The overall financial performance of the firm is satisfactory.
 Asian Paints is India’s largest paint company and ranked among the top ten
Decorative coatings companies in the world.
 The company has good working environment with highly talented &
qualified employees.
 The Company has it on magazine "UMANG" which gives a spaces for it's
employees to express their hidden talent like Poetry, Essay writing,
Drawing etc.
 The firm also applies 5 S Japanese system, to complement its work.
 Under the training period it has been observed that there is good co-
ordination among departmental heads & their work.

24.  Analyse the general & industry economic condition, for changes in
income.
 Set goals for Costs & Expenses as percentage of Sales.
 Reduce overall operating costs.
 Designing new products.
 Analyse Profit Margin on each product.
 Improve Current ratio for operating efficiency.
 Increase marketing efforts.
 Understand the role of women.
SUGGESTIONS

25.  By the research & findings, it can be concluded that if properly analyzed
& interpreted the financial statements i.e., Trend Analysis, Common-size
Statement analysis, Comparative Statement analysis & ratio analysis can
provide valuable insight into a firm's performance.
 It may be done for a variety of purpose. It helps the firm to know their
strength & weakness in various areas.
 It is helpful in an increasing corporate excellence, judging credit
worthiness as well as market risk.
 The firm has an increasing trend of Dividend Payout ratio which indicates
firm's sound earning capacity, thus from overall research it can be
concluded for the investors to consider Asian Paints for investment
purpose & make BUY decision for its share, as it show abounding future.
CONCLUSION

26.  REFERENCES : -
 M.Y.KHAN and P.K.JAIN, “financial management, Tata McGraw Hill, 5th Edition.
 DuPont Analysis, Mark T. Soliman, The Accounting Review, Vol. 83, No. 3, 2008 pp. 823 - 853
 Vasanthamani (1982), “The Financial Performance of Lakshmi Machine Works Limited”, Unpublished M.Com
dissertation PSG cas-1982.
 Rajeswary (1990), “Financial Performance of Precot Mills Limited”, Unpublished M.Phil Dissertation, Bharathiar
University, Coimbatore-46.
 Ms.Rajalaksmi K.S (1998), “Financial performance of Raghupathy machine works limited”, unpublished PhD thesis,
Bharathiar University, Coimbatore-46.
 Mr.Sardeesh Babu.B (1998-2000), “Financial performance of fertilizers and chemicals Travancore limited”,
Unpublished M.Phil Dissertation, Bharathiar University, Coimbatore-46.
 Mr. Anil Kumar A.S (2000),”Financial performance of Hindustan Motors Limited”, Cochin. Ph.D scholar, Bharathiar
University, Coimbatore-46.
 Hamsalakshmi and Manickam (2004) “financial performance analysis of selated software companies’ Finance India,
vol xix, no 3. pp 915 – 935 sep 2004.
BIBLIOGRAPHY
BOOKS : -
FINANCIAL MANAGEMENT - by M.Y. Khan & P.K. Jain.
FINANCIAL MANAGEMENT - by Dr. R.P. Rustagi.
FINANCIAL ACCOUNTING - by PRIN T.J.RANA.
COMPANY ANNUAL REPORTS : -
Annual Report - 2013-14.
Annual Report - 2014-15.
Annual Report - 2015-16.
WEBSITES : -
www.asianpaints.com
www.asianpaintsppg.com
www.marketresearch.com
www.wikiepedia.com
www.investopedia.com
www.scribd.com
www.indianmirror.com
www.starresearchjournal.com