PROJECT

1. [1]
Project Report on
RATIO ANALYSIS ON LIC & ICICI PRUDENTIAL
LIFE INSURANCE
Submitted by
HEMANT DHANRAJ SONAWANE
MASTERS IN COMMERCE SEM-II
(ADVANCE ACCOUNTANCY)
ACADEMIC YEAR 2013-2014
Roll No.6272
Submitted to
UNIVERSITY OF MUMBAI
MULUND COLLEGE OF COMMERCE
S.N ROAD, MULUND (W)-MUMBAI 400 080

2. [2]
DECLARATION
I, Mr. HEMANT DHANRAJ SONAWANE, the student of MULUND
COLLEGE OF COMMERCE, S.N Road, Mulund (W), Mumbai 400 080,
studying in M.Com part-I (ADVANCE ACCOUNTANCY) here by
declaring that I have completed this project “RATIO ANALYSIS ON LIC &
ICICI PRUDENTIAL LIFE INSURANCE ” during the academic year 2013-
14. The information submitted is true and original of best of my knowledge.
Date: Signature:
Place: MUMBAI

3. [3]
CERTIFICATE
I, Prof. Mr. S. V. RANE / Mrs. ANURADHA GANESH, here by certify that
Mr. HEMANT DHANRAJ SONAWANE of MULUND COLLEGE OF
COMMERCE, S.N Road, Mulund (W), Mumbai 400 080, studying in M.Com
part-I (ADVANCE ACCOUNTANCY) here by declaring that I have completed this
project “RATIO ANALYSIS ON LIC & ICICI PRUDENTIAL LIFE
INSURANCE” during the academic year 2013-14. The information submitted
is true and original of best of my knowledge.
Signature: (Project Guide) Signature (Principal)
Signature: (Co-Ordinator) Signature: (External Examiner)

4. [4]
ACKNOWLEDGEMENT
I would like to express my sincere gratitude to Principal of Mulund College of
Commerce DR. (Mrs.) Parvathi Venkatesh, Course - Coordinator Prof. Rane and our
project guide Prof. M. S. GANAGI, for providing me an opportunity to do my project
work on “RATIO ANALYSIS ON LIC & ICICI PRUDENTIAL LIFE INSURANCE”.
I also wish to express my sincere gratitude to the non - teaching staff of our college.
I sincerely thank to all of them in helping me to carrying out this project work. Last
but not the least, I wish to avail myself of this opportunity, to express a sense of
gratitude and love to my friends and my beloved parents for their mutual support,
strength, help and for everything.
Date: Name: HEMANT DHANRAJ SONAWANE
Reg. No. Signature:

5. [5]
CONTENTS
Sr. No. TITLE Page No
1
CHAPTER 1 :
 Introduction 6
 A Study of Unit Lined Insurance Plans of ICICI Prudential
Life Insurance
7
 Objectives of Study 11
 Scope of Study 12
 Statement of Problem 13
 Research Methodology 14
2 CHAPTER 2 :
 About the Company 15
 ICICI Prudential Life Insurance 17
 Objectives of LIC 20
3 CHAPTER 3 :
 Ratio Analysis 22
4 CHAPTER 4 :
 Ratios- What do they tell us? 25
5 CHAPTER 5 :
 Balance Sheet 28
 Profit and Loss Statement 29
6 CHAPTER 6 :
 Calculation of Ratios 30
7 CHAPTER 7 :
 Conclusion 35
 Bibliography 36

6. [6]
CHAPTER 1
INTRODUCTION
Life insurance in India made its debut well over 100 years ago. In our country, which is
one of the most populated in the world, the prominence of insurance is not as widely
understood, as it ought to be.
What Is Life Insurance?
Life insurance is a contract that pledges payment of an amount to the person assured (or his
nominee) on the happening of the event insured against. The contract is valid for payment of
the insured amount during:
 The date of maturity, or
 Specified dates at periodic intervals, or
 Unfortunate death, if it occurs earlier.
Among other things, the contract also provides for the payment of premium periodically to
the Corporation by the policyholder. Life insurance is universally acknowledged to be an
institution, which eliminates 'risk', substituting certainty for uncertainty and comes to the
timely aid of the family in the unfortunate event of death of the breadwinner.
By and large, life insurance is civilization’s partial solution to the problems caused by death.
Life insurance, in short, is concerned with two hazards that stand across the life-path of every
person:
1. That of dying prematurely leaving a dependent family to fend for itself.
2. That of living till old age without visible means of support.

7. [7]
A Study of Unit Linked Insurance Plans of ICICI Prudential Life
Insurance
Human life is subject to risks of death and disability due to natural and accidental causes.
When human life is lost or a person is disabled permanently or temporarily, there is a loss of
income to the household. The family is put to hardship. Sometimes, survival itself is at stake
for the dependants. Risks are unpredictable. Death/disability may occur when one least
expects it. An individual can protect himself or herself against such contingencies through
life insurance.
Life insurance is insurance on human beings. Though Human life cannot be valued, a
monetary sum could be determined which is based on loss of income in future years. Hence
in life insurance, the Sum Assured (or the amount guaranteed to be paid in the event of a loss)
is by way of a ‘benefit’ in the case of life insurance. Life insurance products provide a
definite amount of money to the dependants of the insured in case the life insured dies during
his active income earning period or becomes disabled on account of an accident causing
reduction/complete loss in his income earnings.
 Unit Linked Insurance Plans (ULIP)
ULIP are a category of goal-based financial solutions that combine the safety of insurance
protection with wealth creation opportunities. In ULIPs a part of the investment goes towards
providing you life cover. The residual portion of the ULIP is invested in a fund which in turn
is invested in stocks or bonds; the value of such investments alters with the performance of
the underlying fund chosen by the policyholder. The dynamics of the capital market have a
direct bearing on the performance of ULIP. Thus, in ULIPs the investment risk is generally
borne by the investor.

8. [8]
Contract Of Insurance:
A contract of insurance is a contract of utmost good faith technically known as uberrima
fides. The doctrine of disclosing all material facts is embodied in this important principle,
which applies to all forms of insurance.
At the time of taking a policy, policyholder should ensure that all questions in the proposal
form are correctly answered. Any misrepresentation, non-disclosure or fraud in any document
leading to the acceptance of the risk would render the insurance contract null and void.
Protection:
Savings through life insurance guarantee full protection against risk of death of the saver.
Also, in case of demise, life insurance assures payment of the entire amount assured (with
bonuses wherever applicable) whereas in other savings schemes, only the amount saved (with
interest) is payable.
Aid To Thrift:
Life insurance encourages 'thrift'. It allows long-term savings since payments can be made
effortlessly because of the 'easy installment' facility built into the scheme. (Premium payment
for insurance is either monthly, quarterly, half yearly or yearly).
For example: The Salary Saving Scheme popularly known as SSS, provides a convenient
method of paying premium each month by deduction from one's salary.
In this case the employer directly pays the deducted premium to LIC. The Salary Saving
Scheme is ideal for any institution or establishment subject to specified terms and conditions.

9. [9]
Liquidity:
In case of insurance, it is easy to acquire loans on the sole security of any policy that has
acquired loan value. Besides, a life insurance policy is also generally accepted as security,
even for a commercial loan.
Tax Relief:
Life Insurance is the best way to enjoy tax deductions on income tax and wealth tax. This is
available for amounts paid by way of premium for life insurance subject to income tax rates
in force. Assesses can also avail of provisions in the law for tax relief. In such cases the
assured in effect pays a lower premium for insurance than otherwise.
Money When You NeedIt:
A policy that has a suitable insurance plan or a combination of different plans can be
effectively used to meet certain monetary needs that may arise from time-to-time.
Children's education, start-in-life or marriage provision or even periodical needs for cash over
a stretch of time can be less stressful with the help of these policies.
Alternatively, policy money can be made available at the time of one's retirement from
service and used for any specific purpose, such as, purchase of a house or for other
investments. Also, loans are granted to policyholders for house building or for purchase of
flats (subject to certain conditions).

10. [10]
Who Can Buy A Policy?
Any person who has attained majority and is eligible to enter into a valid contract can insure
himself/herself and those in whom he/she has insurable interest. Policies can also be taken,
subject to certain conditions, on the life of one's spouse or children. While underwriting
proposals, certain factors such as the policyholder’s state of health, the proponent's income
and other relevant factors are considered by the Corporation.
Insurance For Women
Prior to nationalization (1956), many private insurance companies would offer insurance to
female lives with some extra premium or on restrictive conditions. However, after
nationalization of life insurance, the terms under which life insurance is granted to female
lives have been reviewed from time-to-time. At present, women who work and earn an
income are treated at par with men. In other cases, a restrictive clause is imposed, only if the
age of the female is up to 30 years and if she does not have an income attracting Income Tax.
Medical And Non-Medical Schemes
Life insurance is normally offered after a medical examination of the life to be assured.
However, to facilitate greater spread of insurance and also to avoid inconvenience, LIC has
been extending insurance cover without any medical examination, subject to certain
conditions.

11. [11]
OBJECTIVES OF STUDY
1) To study the growth of ICICI Prudential Life Insurance since its inception
2) To study the penetration of ICICI Prudential Life Insurance vis-à-vis that of its
competitors over the period of 10 years from 2000-01 to 2009-10
3) To study whether return of ULIP is related to stock market return
4) To study investors preference for ULIPs and Equity
Fundamental analysis has a very broad scope. One aspect looks at the general (qualitative)
factors of a company. The other side considers tangible and measurable factors (quantitative).
This means crunching and analyzing numbers from the financial statements. If used in
conjunction with other methods, quantitative analysis can produce excellent results.
Ratio analysis isn't just comparing different numbers from the balance sheet, income
statement and cash flow statement. It's comparing the number against previous years, other
companies, the industry or even the economy in general. Ratios look at the relationships
between individual values and relate them to how a company has performed in the past, and
how it might perform in the future. For example, current assets alone don't tell us a whole lot,
but when we divide them by current liabilities we are able to determine whether the company
has enough money to cover short-term debts. In this project report, we'll see how to use ratio
analysis to analyze financial reports. Comparing these ratios against numbers from previous
years, other companies, industry averages and the economy in general can tell you a lot about
where a company might be headed. Valuing a company is no easy task. This project report
will shed some light on how it can be done and, ultimately, help you to make more informed
choices as an investor.

12. [12]
SCOPE OF STUDY
ICICI Prudential Life Insurance Co offers Life Insurance and Medical Insurance plans. Life
Insurance plans are issued by the company in the following categories:
1) Education solutions
2) Wealth creation plans
3) Premium guarantee plan
4) Protection plans
5) Retirement plans.
The protection plans are purely traditional life insurance plan and hence is beyond the scope
of this study. The researcher has taken one unit linked plan from each category as follows:
a. Education solutions – Smart Kid New Unit linked Regular Premium
b. Wealth creation plans – ICICI Peru Life Stage Assure
c. Premium guarantee plans – Invest Shield Cash Back
d. Retirement plans – Life Stage Pension
The researcher studied performance (i.e. NAV) of above for the period 1st January 2008 to
30th June 2011 at monthly intervals

13. [13]
STATEMENT OF PROBLEM
ULIP is of recent origin. Over the last few years ULIP have emerged as major players in
savings mobilization. Investors have been showing keen interest by subscribing to various
ULIP Schemes anticipating higher returns and capital gains.
The year 2008 had witnessed the global recessionary trend, whereby the performance of
ULIP had been drastically affected. The BSE Sensex which shot up to 21000 points came
crashing down and stood at 8335 points(12th March 2009) and had greatly affected the Net
Asset Value (NAV) across all the plans of various financial institutions.
There is a relationship of ULIP returns to the general economic environment that directly
affects the investors. Considering these factors the study intends to analyze the Performance
of Unit Linked Insurance Plans of ICICI Prudential with special reference to Pune city.

14. [14]
RESEARCH METHODOLOGY
Data Collection
The study had used both primary and secondary data.
 Primary data was collected from investors by questionnaire method. The study area
refers to Aundh and the areas in its vicinity like Baner and Balewadi in Central Pune. The
researcher undertook Random Sampling for choosing the respondents from Aundh,
Baner and Balewadi region of Pune city. Data was collected from 300 investors which
consisted of 195 from Aundh, 75 from Baner and 30 from Balewadi.
 Secondary data was collected from books, journals, websites (www.iciciprulife.com,
www.bseindia.com, www.irda.org, www.swissre.org, www.ssrn.org, www.rbi.org,
www.mospi.gov.in, www.traderji.com), articles and annual reports.
Hypotheses
1) Ho = Fluctuations in stock market do not adversely affect the NAV of ULIP
2) Ho = Income of the investors does not affect the fund option selected by the investors.
3) Ho = Age does not affect the preference for type of insurance (traditional or unit – linked)
selected by the investors.
Statistical Tools for Analysis
The collected data were analyzed through:
1) Net Asset Value (NAV)
2) Karl Pearson’s Coefficient of Correlation
3) Chi-square Test

15. [15]
CHAPTER 2
ABOUT THE COMPANY
The story of insurance is probably as old as the story of mankind. The same instinct
that prompts modern businessmen today to secure themselves against loss and disaster
existed in primitive men also. They too sought to avert the evil consequences of fire and
flood and loss of life and were willing to make some sort of sacrifice in order to achieve
security. Though the concept of insurance is largely a development of the recent past,
particularly after the industrial era – past few centuries – yet its beginnings date back almost
6000 years.
Life Insurance in its modern form came to India from England in the year 1818. Oriental Life
Insurance Company started by Europeans in Calcutta was the first life insurance company on
Indian Soil. All the insurance companies established during that period were brought up with
the purpose of looking after the needs of European community and Indian natives were not
being insured by these companies. However, later with the efforts of eminent people like
Babu Muttylal Seal, the foreign life insurance companies started insuring Indian lives. But
Indian lives were being treated as sub-standard lives and heavy extra premiums were being
charged on them. Bombay Mutual Life Assurance Society heralded the birth of first Indian
life insurance company in the year 1870, and covered Indian lives at normal rates. Starting as
Indian enterprise with highly patriotic motives, insurance companies came into existence to
carry the message of insurance and social security through insurance to various sectors of
society. Bharat Insurance Company (1896) was also one of such companies inspired by
nationalism. The Swadeshi movement of 1905-1907 gave rise to more insurance companies.

16. [16]
The United India in Madras, National Indian and National Insurance in Calcutta and the Co-
operative Assurance at Lahore were established in 1906. In 1907, Hindustan Co-operative
Insurance Company took its birth in one of the rooms of the Jorasanko, house of the great
poet Rabindranath Tagore, in Calcutta. The Indian Mercantile, General Assurance and
Swadeshi Life (later Bombay Life) were some of the companies established during the same
period. Prior to 1912 India had no legislation to regulate insurance business. In the year 1912,
the Life Insurance Companies Act, and the Provident Fund Act were passed.
The Life Insurance Companies Act, 1912 made it necessary that the premium rate
tables and periodical valuations of companies should be certified by an actuary. But the Act
discriminated between foreign and Indian companies on many accounts, putting the Indian
companies at a disadvantage.The first two decades of the twentieth century saw lot of growth
in insurance business. From 44 companies with total business-in-force as Rs.22.44 crore, it
rose to 176 companies with total business-in-force as Rs.298 crore in 1938. During the
mushrooming of insurance companies many financially unsound concerns were also floated
which failed miserably. The Insurance Act 1938 was the first legislation governing not only
life insurance but also non-life insurance to provide strict state control over insurance
business. The demand for nationalization of life insurance industry was made repeatedly in
the past but it gathered momentum in 1944 when a bill to amend the Life Insurance Act 1938
was introduced in the Legislative Assembly. However, it was much later on the 19th of
January, 1956, that life insurance in India was nationalized. About 154 Indian insurance
companies, 16 non-Indian companies and 75 provident were operating in India at the time of
nationalization. Nationalization was accomplished in two stages; initially the management of
the companies was taken over by means of an Ordinance, and later, the ownership too by
means of a comprehensive bill.

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The Parliament of India passed the Life Insurance Corporation Act on the 19th of
June 1956, and the Life Insurance Corporation of India was created on 1st September, 1956,
with the objective of spreading life insurance much more widely and in particular to the rural
areas with a view to reach all insurable persons in the country, providing them adequate
financial cover at a reasonable cost.
ICICI PRUDENTIAL LIFE INSURANCE
The company started with a capital base of Rs. 150 corers and as on 31st December
2009 it stands at Rs. 4780 corers with ICICI Bank holding 74% and Prudential plc holding
26% of the shares. Its growth since incorporation is measured in terms of the following
parameters:
1) Number of new policies
2) Premium income – including first year premium, renewal premium and single
premium.
3) Sum assured on basic policy
4) APE – annualized premium equivalent. The premium collected by the life insurance
company is in the form of regular premium and single premium policies. The single
premium policies involve the payment of premium only at the commencement of policy.
Thus, the total premium collected by a company includes regular premium paid by the
policyholder for one year and single premium paid for a tenure depending upon the
duration of the policy. The comparison between different companies on the basis of such
figures may not give a fair picture of the position of the company. Hence annualized

18. [18]
premium equivalent is calculated which normalizes the single premium payments to
recurring premium payment equivalent. This helps in comparison of sales accurately.
From Table 1 it can be observed that the number of new policies has shown a steady
increase till 2008. In 2009 on account of fall in the stock markets and global recession it
decreased by 9.5%, while in 2010 it decreased by 33.18%. However, premium income
increased by 13.24% and 7.14% during the same period. This could be on account of the top-
ups paid by the policy holders and high sum assured policies sold during the year. The
annualized premium equivalent increased 15 times in 2002, 2.7 times in 2003 and by 48% in
2008. This amount then reduced by 18.67% in 2009 and in 2011 it stood at Rs. 3975.
For the year ending 31st March 2011 the total new business premium received by the
company is Rs. 7862 corers as compared to Rs. 6334 corers in the preceding year. It has
underwritten over 12.74 million policies since inception and has assets under management
(AUM) of over Rs. 68150 corers.
Penetration of ICICI Prudential Life Insurance in Life Insurance Industry
LIC of India is the market leader amongst all life insurers all through the 10 years (Table 2).
However its share is coming down over the year with the entry of private players. ICICI
Prudential was the market leader with 92.59% share amongst the private life insurance
companies. As more and more players entered the life insurance market, share of ICICI
Prudential came down to 42% in 2001-02 and stood at 20.83% in 2009-10. (Table 3)
The private life insurers have played a major role in increasing the popularity of linked plans.
Of the total business, 82.3% was contributed by ULIPs and rest by way of traditional plans.

19. [19]
They consolidated their position in 2006-07 by increasing it further to 88.75% and 90.33% in
2007-08.
LIC which predominantly sold the traditional plans had only 29.76% of its overall business
coming from ULIP. However with the growing popularity they also introduced new policies
which helped them to increase the share of linked business to 62.31% in 2007-08.
Thus for the industry as a whole the linked business accounted for around 70% of total
business in 2007-08. (Table 4)
Performance evaluation of four unit linked insurance plans
To analyze the performance, Karl Pearson’s coefficient of correlation is calculated by taking
into consideration the independent variable - BSE SENSEX as variable ‘X’ and the
dependent variable - NAV under the scheme for various fund options as variable ‘Y’. (Table
5)
Hypothesis – 1:
Ho = Fluctuations in stock market do not adversely affect the NAV of ULIP
The NAV under Equity based fund options e.g. flexi-balancer, flexi-growth, maximiser,
multiplier and R.I.C.H were approximately 0.99. Hence we can say that the fluctuations in
stock market will adversely affect the NAV. The upward movement in Sensex will increase
the NAV under equity based options and vice-versa. Thus the hypothesis was rejected.
However, the NAV for Debt based options like preserver, protector and Investshield Cashbak
was showing a consistent increase over a period of time irrespective of movement in Sensex.
Hence for debt based fund options we can say that a fluctuation in stock market does not
affect the NAV. Hence the hypothesis was accepted.

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OBJECTIVESOF LIC:
 Spread Life Insurance widely and in particular to the rural areas and to the socially
and economically backward classes with a view to reaching all insurable persons in
the country and providing them adequate financial cover against death at a
reasonable cost.
 Maximize mobilization of people's savings by making insurance-linked savings
adequately attractive.
 Bear in mind, in the investment of funds, the primary obligation to its policyholders,
whose money it holds in trust, without losing sight of the interest of the community
as a whole; the funds to be deployed to the best advantage of the investors as well as
the community as a whole, keeping in view national priorities and obligations of
attractive return.
 Conduct business with utmost economy and with the full realization that the moneys
belong to the policyholders.
 Act as trustees of the insured public in their individual and collective capacities.
 Meet the various life insurance needs of the community that would arise in the
changing social and economic environment.
 Involve all people working in the Corporation to the best of their capability in
furthering the interests of the insured public by providing efficient service with
courtesy.
 Promote amongst all agents and employees of the Corporation a sense of

21. [21]
participation, pride and job satisfaction through discharge of their duties with
dedication towards achievement of Corporate Objective.

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CHAPTER 3
RATIO ANALYSIS
A financial ratio (or accounting ratio) is a relative magnitude of two selected
numerical values taken from an enterprise's financial statements. Often used in accounting,
there are many standard ratios used to try to evaluate the overall financial condition of a
corporation or other organization. Financial ratios may be used by managers within a firm, by
current and potential shareholders (owners) of a firm, and by a firm's creditors. Financial
analysts use financial ratios to compare the strengths and weaknesses in various companies.If
shares in a company are traded in a financial market, the market price of the shares is used in
certain financial ratios.
Ratios can be expressed as a decimal value, such as 0.10, or given as an equivalent
percent value, such as 10%. Some ratios are usually quoted as percentages, especially ratios
that are usually or always less than 1, such as earnings yield, while others are usually quoted
as decimal numbers, especially ratios that are usually more than 1, such as P/E ratio; these
latter are also called multiples. Given any ratio, one can take its reciprocal; if the ratio was
above 1, the reciprocal will be below 1, and conversely. The reciprocal expresses the same
information, but may be more understandable: for instance, the earnings yield can be
compared with bond yields, while the P/E ratio cannot be: for example, a P/E ratio of 20
corresponds to an earnings yield of 5%.
Values used in calculating financial ratios are taken from the balance sheet, income
statement, statement of cash flows or (sometimes) the statement of retained earnings. These
comprise the firm's "accounting statements" or financial statements. The statements' data is
based on the accounting method and accounting standards used by the organization.

23. [23]
Financial ratios quantify many aspects of a business and are an integral part of the
financial statement analysis. Financial ratios are categorized according to the financial aspect
of the business which the ratio measures. Liquidity ratios measure the availability of cash to
pay debt.Activity ratios measure how quickly a firm converts non-cash assets to cash assets.
Debt ratios measure the firm's ability to repay long-term debt. Profitability ratios measure
the firm's use of its assets and control of its expenses to generate an acceptable rate of return.
Market ratios measure investor response to owning a company's stock and also the cost of
issuing stock. These are concerned with the return on investment for shareholders, and with
the relationship between return and the value of an investment in company’s shares.
Financial ratios allow for comparisons
 between companies
 between industries
 between different time periods for one company
 between a single company and its industry average
Ratios generally are not useful unless they are benchmarked against something else, like
past performance or another company. Thus, the ratios of firms in different industries, which
face different risks, capital requirements, and competition are usually hard to compare.
Financial ratios may not be directly comparable between companies that use different
accounting methods or follow various standard accounting practices. Most public companies
are required by law to use generally accepted accounting principles for their home countries,
but private companies, partnerships and sole proprietorships may not use accrual basis
accounting. Large multi-national corporations may use International Financial Reporting
Standards to produce their financial statements, or they may use the generally accepted

24. [24]
accounting principles of their home country. There is no international standard for calculating
the summary data presented in all financial statements, and the terminology is not always
consistent between companies, industries, countries and time periods.
It refers to the systematic use of ratios to interpret the financial statements in terms of
the operating performance and financial position of a firm. It involves comparison for a
meaningful interpretation of the financial statements. In view of the needs of various uses of
ratios the ratios, which can be calculated from the accounting data are classified into the
following broad categories
A. Liquidity Ratio
B. Turnover Ratio
C. Solvency or Leverage ratios
D. Profitability ratios

25. [25]
CHAPTER 4
RATIOS – WHAT DO THEY TELL US?
 CURRENT RATIO
The current ratio measures the short-term solvency of the firm. It establishes the relationship
between current assets and current liabilities. It is calculated by dividing current assets by
current liabilities. Current assets include cash and bank balances, marketable securities,
inventory, and debtors, excluding provisions for bad debts and doubtful debtors, bills
receivables and prepaid expenses. Current liabilities includes sundry creditors, bills payable,
short- term loans, income-tax liability, accrued expenses and dividends payable.
Current Ratio = Current Asset
Current Liabilities
 DEBTOR TURNOVER RATIO
This indicates the number of times average debtors have been converted into cash during a
year. It is determined by dividing the net credit sales by average debtors.
Debtor Turnover Ratio = Net Credit Sales
Average Trade Debtors
Net credit sales consist of gross credit sales minus sales return. Trade debtor includes sundry debtors
and bill’s receivables. Average trade debtors (Opening + Closing balances / 2). When the

26. [26]
information about credit sales, opening and closing balances of trade debtors is not available
then the ratio can be calculated by dividing total sales by closing balances of trade debtor.
Debtor Turnover Ratio = Total Sales
Trade Debtors
 EXPENSES RATIO
While some of the expenses may be increasing and other may be declining to know the
behavior of specific items of expenses the ratio of each individual operating expenses to net
sales should be calculated. The various variants of expenses are
Cost of goods sold = Cost of goods sold X 100
Net Sales
Administrative Expenses Ratio = Administrative Expenses X 100
Net sales
Selling and distribution expenses ratio = Selling and distribution expenses X 100
Net sales
 DEBT EQUITY RATIO
Debt equity ratio shows the relative claims of creditors (Outsiders) and owners (Interest)
against the assets of the firm. Thus this ratio indicates the relative proportions of debt and
equity in financing the firm’s assets. It can be calculated by dividing outsider funds (Debt)
by shareholder funds (Equity)
Debt equity ratio = Outsider Funds (Total Debts)
Shareholder Funds or Equity

27. [27]
The outsider fund includes long-term debts as well as current liabilities. The shareholder
funds include equity share capital, preference share capital, reserves and surplus including
accumulated profits. However fictitious assets like accumulated deferred expenses etc should
be deducted from the total of these items to shareholder funds. The shareholder funds so
calculated are known as net worth of the business.
 PROPRIETARY (EQUITY) RATIO
This ratio indicates the proportion of total assets financed by owners. It is calculated by
dividing proprietor (Shareholder) funds by total assets.
Proprietary (equity) ratio = Shareholder funds
Total assets

28. [28]
CHAPTER 5
BALANCE SHEET
PARTICULARS MARCH 2013 MARCH 2012
SOURCES OF FUNDS
Owners' Fund
Equity Share Capital 101.00 101.00
Share Application Money 0.00 0.00
Preference Share Capital 0.00 0.00
Reserves & Surplus 6,380.29 5,581.21
Loan Funds
Secured Loans 54,975.35 44,614.54
Unsecured Loans 3,729.83 3,255.37
Total 65,186.47 53,552.12
USES OF FUNDS
Fixed Assets
Gross Block 115.25 108.15
Less: Revaluation Reserve 0.00 0.00
Less: Accumulated Depreciation 52.88 45.92
Net Block 62.37 62.24
Capital Work-in-progress 0.00 14.53
Investments 184.63 164.03
Net Current Assets
Current Assets, Loans & Advances 80,313.23 64,191.79
Less : Current Liabilities &
Provisions
15,373.76 10,880.45
Total Net Current Assets 64,939.47 53,311.34
Miscellaneous Expenses not written 0.00 0.00
Total 65,186.47 53,552.12

29. [29]
PROFIT AND LOSS STATEMENT
PARTICULARS MARCH 2013 MARCH 2012
Income :
Operating Income 7,575.92 6,114.86
Expenses
Material Consumed 0.00 0.00
Manufacturing Expenses 0.00 0.00
Personnel Expenses 90.41 72.44
Selling Expenses 0.00 110.85
Administrative Expenses 262.78 202.46
Expenses Capitalized 0.00 0.00
Cost Of Sales 353.18 385.75
Operating Profit 7,222.74 5,729.11
Other Recurring Income 82.96 23.09
Adjusted PBDIT 7,305.70 5,752.21
Financial Expenses 5,924.60 4,591.07
Depreciation 7.53 7.42
Other Write offs 0.00 0.00
Adjusted PBT 1,373.57 1,153.72
Tax Charges 350.36 316.72
Adjusted PAT 1,023.21 837.00
Non Recurring Items 0.00 77.09
Other Non Cash adjustments 0.00 0.11
Reported Net Profit 1,023.21 914.20
Earnings Before Appropriation 1,712.14 1,445.03
Equity Dividend 191.77 181.68
Preference Dividend 0.00 0.00
Dividend Tax 32.35 29.42
Retained Earnings 1,488.02 1,233.93

30. [30]
CHAPTER 6
CALCULATION OF RATIOS
 Current Ratio = Current Assets
Current Liabilities
Current Year = 80313.23
15373.36
= 5.22:1
Previous Year = 64191.79
10880.45
= 5.89: 1
COMMENTS – Current ratio is also known as Bankers Ratio/Working Capital Ratio.
This ratio shows the relationship between current assets and current liabilities. It also shows
the short term solvency position of the organization. Ideal current ratio should be 2:1.
 Proprietary ratio = Proprietors funds × 100
Total Assets
Current Year = 55209.68 × 100
101876.93
= 54.09 %

31. [31]
Previous Year = 52216.46 × 100
95802.99
= 54.50 %
COMMENTS :- This ratio shows the relationship between proprietors fund and total
assets. It also shows long tern stability and solvency position of the organization. Ideally it
should be between 65 % to 70 %.
 Debt Equity Ratio = Borrowed funds
Proprietor’s funds
Current Year = 23636.51
55209.68
= 42.82: 100
Previous Year = 21418.82
55216.46
= 38.79 : 100
COMMENTS: - This ratio shows the relationship between borrowed funds and
proprietors funds. It also shows the composition and structure of the capital invested in the
business. Standard ratio should be 2:1

32. [32]
 Debtors Turn Over Ratio = Net Credit Sales
Average Receivables
= Net Credit Sales
Average (Debtors + Bills receivables)
Current Year = 38199.43
796.92
= 47.93 times
Previous Year = 33933.46
904.08
= 37.53 times
Comments :- This ratio is an activity ratio which shows the number of times good sold
to debtors and payment received from them. HIGHER the ratio is FAVAROUBLE and vice
versa.
 Creditors Turn Over Ratio = Net Credit Purchases
Average Payables
= Net Credit Purchases
Average (Creditors + Bills payables)
Current Year = 9877.40

33. [33]
6369.91
= 1.55 times
Previous Year = 8014.37
5883.92
= 1.36 times
Comments:- This ratio is an activity ratio which shows the number of times goods
purchased on credit basis and payments made to creditors. HIGHER the ratio is
FAVOURABLE and vice versa.
 Expense Ratio : Employee Benefit Expense Ratio × 100
Net Sales
Current Year = 90.41 × 100
7575.92
= 1.19 %
Previous Year = 72.44 × 100
6114.86
= 1.18 %

34. [34]
 Gross Profit Ratios :- Gross Profit ×100
Net sales
= Sales – COGS × 100
Net sales
Current year = 7575.92 – 353.18 ×100
7575.92
= 95.33%
Previous year = 6114.86-385.75 ×100
6114.86
= 93.69%
Comments : This ratio indicates the relationship between gross profit and net sales. It is
a profitability ratio which shows the efficiency of the company to earn trading surplus.

35. [35]
CHAPTER 7
CONCLUSION
The study was conducted to study the performance of ULIP of ICICI Prudential Life
Insurance Co Ltd. It was found that the schemes where the investors have chosen equity
based fund the returns are directly proportional to the stock market. However the debt based
fund has shown increasing returns over the time. They are neutral to the volatility shown by
the stock market.
The survey showed that around 40% of the investors had invested in ULIP of ICICI
Prudential Life Insurance Co Ltd. The company’s brand image has captured the attention of
investors in Pune. The primary objective for investing in such plans was found to be capital
appreciation and children education. The investors found the allocation charges to be average
and the consequent returns also to be average. It was observed that the switch option was not
exercised by nearly half the investors. Thus, it can be said that the investors are not
monitoring their investment properly. The investors have to understand the working of ULIP
in a better way to maximize their returns.

36. [36]
BIBLIOGRAPHY
 http://economictimes.indiatimes.com/lic-housing-finance-ltd/stocks/companyid-
10823.cms
 http://www.investopedia.com/terms/r/ratioanalysis.asp
 http://en.wikipedia.org/wiki/Financial_ratio
 http://www.demonstratingvalue.org/resources/financial-ratio-analysis
 http://www.moneycontrol.com/financials/lichousingfinance/ratios/LIC
 www.iciciprulife.com
 www.bseindia.com
 www.irda.org
 Newspapers:
The Times of India
The Indian Express
Economic Times