This document provides an overview of the Odisha State Cooperative Milk Producers' Federation Limited (OMFED). It discusses OMFED's profile, background, vision, objectives, activities and 35-year journey. Key points include: - OMFED is the leading milk producer cooperative in Odisha, with over 5,350 member societies and 275,000 farmer members. - It was established in 1980 based on the Anand model to ensure fair prices for milk producers and market their milk. - Over 35 years, OMFED has expanded milk procurement from 39 litres/day to modern processing plants across Odisha.

3. FINANCIAL STATEMENT ANALYSIS OF
RAJENDRAAUTONOMOUSCOLLEGE,
BALANGIR ODISHA
Submitted By: Under Guidance of:
Satya Narayan Mishra Dr. R.S Pandia
6th year U.G. in Commerce (Accountancy) Associate Professor
College Roll No.: BC-15-141 U.G. Department of Commerce
Examination Roll No.: RCCOM112

4. CERTIFICATE
This is to certify that the candidateSATYANARAYAN MISHRAof 2015 admission
batch isa bonafide student of RAJENDRA (AUTONOMOUS) COLLEGE, BALANGIR. The project
entitled“FINANCIALSTATEMENTANALYSIS OF OMFED”ishis original pieceof work and to
the best ofour knowledge, noother candidate has submittedthe sameproject for theaward of Under
Graduate Degree in Commerce under Rajendra(A) College, Balangir
SignatureoftheH.O.D
Dr. D.P Mohapatra
U.G.DepartmentofCommerce

6. DECLARATION
I doherebydeclarethatthisprojectworkhas been submitted by me in
the U.G.DepartmentofCommerce of Rajendra(A) College, Balangir as per the
partial fulfillment for the Undergraduate Degree of Commerce with the
Specialisation in Accountancy. It is further declared that this project work is
exclusivelytheproductofmyselfeffortsandendeavourandhasnotbeencopied from
anyoneoranyotherthathasbeensubmittedinanyinstitutebyanycandidate at any
time before.
SATYANARAYANMISHRA
6th SEMU.G.inCommerce
CollegeRollNo-BC-15COM-112
Exam.RollNo-RC-COM-112

7. ACKNOWLEDGEMENT
I gratefullyacknowledgemyindebtednesstoDr.R.SPANDIA Lecturer.
of U.G. DepartmentofCommerceinRajendra (Autonomous) College, Balangir,
under whose proper guidance this project has been prepared.
I am highly indebted to Sr. Lecturer in the U.G. Department of
CommerceofRajendra(Autonomous)College,Balangirfortheir sincere assistance
in providingmewitha lotofdatawhichhelpedme in giving flesh and blood to my
project.
I alsoexpressmydeepregardsandreverence to my parents, who have
givenmetheirfull-fledgedsupportandco-operationwhile preparing this project.
Ultimately,Iexpressmydeeploveand devotion Lord Jagannath who
bestow uponmehisblessingswhichenabledmetopreparethisproject satisfactorily.
SATYANARAYANMISHRA

8. CONTENTS
SerialNo Topic
Chapter I: INTRODUCTION
1.1 Introductionto the Project
1.2 Scope of the Study
1.3 Limitations of the Study
1.4 Chapter Plan
Chapter II: ORGANIZATION OVERVIEW
2.1 OMFED: Profile
2.2 About OMFED
2.3 Background
2.4 Vision of OMFED
2.5 Major Objectivesof OMFED
2.6 PrimaryActivities of OMFED
2.7 OMFED: The Journey
Chapter III: RESEARCH METHODOLOGY
3.1 Objective of the Research
3.2 ResearchPlan
3.3 Basic Information aboutthe Survey
3.4 Sample
3.5 Data collection
3.6 Data Interpretation
Chapter IV: FINANCIAL STATEMENT ANALYSIS
4.1 Introduction
4.2 Objectives ofFinancialstatements
4.3 Significanceof Financialstatements
4.4 Ratio Analysis
4.5 ComparativeStatements
4.6 Common Size Statements
Chapter V: CONCLUSION
5.1 Findings and Recommendation

9. 5.2 Conclusion
Chapter VI : BIBLIOGRAPHY
Chapter-1
introduction

10. 1.1 Introductionto the Project
The product abundanceis visible in the overcrowded shelves. Thereis virtual
productexplosion in various categories. The reality is only few of them win
consumer’s heartand soul. The rest languish to be later on pulled out. The
productmay startas productand die at storeshelves as products. Butsuccessful
productstarts as product in the factory and goes on to become brands in
consumer’s hearts and minds. Brands are bridges between the factories where
assembly take place and the consumer who seek end goals and values. It is this
connection makes them true generator of corporatewealth and power. The
value of a business is now determined by the brands it holds rather than the
conventional assets it possess. Every company’sproductportfolio contains
products with different margins. The main point is that companies should
Recognize that these items differ in their potential for being priced higher or
advertised more as ways to increase their sales, margins, or both. The
companies’ must review how the line is positioned against competitors’ lines.
Productand brand management comes up as important aspect of management
to understand the customer needs and relate them to the productso that
productcan be positioned in a distinctive way.
1.2 Scope of the Project
As the projecttitle suggests, this projectfocuses on Productand Brand
Management of OMFED for Competitive Advantage.This projectwas carried out
through detailed study of the organisation, observations, and discussions with the
organisation’s executives along with Survey. ProductManagementis the voice of
the marketinside the company. ProductManagement is instrumentalin achieving
business goals across theproductlifecycle, which includes the following stages:
Pre-Development, Development, Introduction, Growth, Maturity, Decline, and

11. End of Life.Proper brand management involves making surethat each
promotional piece, touch point and every usage of your name, logo and message
supports your organization and goals by reinforcing your brand in the way you
intended.
1.3 Limitations of the Study
Though sufficientcare has been taken, this research has a number of
limitations that must be acknowledged.


First, thesampleused for this study consisted mostly of Bhubaneswar city
only. Therefore, these results may not be applicable to the wider population
in general.
Secondly, theresults of this study are limited becauseonly 91 sample sizehas
been selected for the study fromthe whole Bhubaneswar city.
Only method of questionnairehas been used for the collecting primary data
apartfrom focus group and other methods for the study.
Timeconstraintwas another limitation of the study. Time taken for survey is
only a month and for the study 45days.
Sufficientcarehas been taken to avoid biasedness in the primary data
collection. Even then sometimes biasedness could not be eliminated
completely.
Lastly, itmustbe acknowledged that there may be numerous other variables
that contribute to the Productand brand awareness which are briefly
touched upon.

12. 1.4 Chapter Plan
The entire research work willrun into seven chapters.
CHAPTER I: INTRODUCTION
This chapter contains the complete introduction that brings out the importance of
the study and states its scopeand analysis with respectto its limitations.
CHAPTER II: ORGANISATIONOVERVIEW
This chapter contains company’s profile, its approach towards dairy market, its
objectives, primary activities and 35 years of its journey.
CHAPTER III: RESEARCH METHODOLOGY
This chapter discusses aboutthe objective of the research along with the research
plan,data collection and interpretation techniques.
Chapter IV: FINANCIAL STATEMENT ANALYSIS
This Chapter analyses the results obtained.
Chapter V: CONCLUSION
This chapter contains the findings, recommendations and Conclusion the
Research.
Chapter VI : BIBLIOGRAPHY

13. CHAPTER- 2
ORGANISATION
OVERVIEW

14. 2.1 OMFED: PROFILE
Organization Name : OMFED
Industry : DAIRY
Founded : 1981
Corporate Office : D-2, Saheed Nagar,
Bhubaneswar-751007.
Area coverage : Odisha
Chairman : Shri Bishnupada Sethi
Owner : Government of Odisha
Products : Milk, Milk Products,
Horticulture Products,
Kandhamal Organic
Products, Cattle Feed.

15. LOGO:
Tagline : “A Taste Of Pure Joy”,
“Your Health Our Care”.
Website : http://www.OMFED.com
2.2 About OMFED:
The Odisha State CooperativeMilk Producers'Federation Limited (OMFED)
is an apex level Dairy Cooperative Society registered under Cooperative Society
Act –1962. Itis the leading organized milk producer of Odisha and has come into
existence to integrate the milk producers in ruralareas with consumers in the
urban areas with an enterprising aptitude. Itgot registered in 1980 and started
working since1981. Ittook over OMPACin 1988.Itsmain activities includes
promoting, production, procurement, processing and marketing of milk & milk
products along with other horticultural and agriculturalproducts for economic
development of the ruralfarming community in Odisha.
2.3 Background:
Odisha can be considered as one of the pooreststates in India from
the perspectiveof industrialdevelopment. In Odisha, wecan find the majority of
the population being dependent on agriculture, animal husbandry and other such
related activities as its primary means of occupation cum livelihood and chief
sourceof income.But the poor irrigational facilities and frequently witnessed
natural calamities pose a serious threat and barrier to sustainableagriculture. If

16. situations can turn to be favourable, it can render a decent and dramatically
changed lifestyle to the dependent population. But owing to the persistent
problems and countless miseries, the crowd migrates heavily from villages to
cities in search of somegreener pastures. Incidentally though there is a large
concentration of milch cattle such as cows and buffaloes in rural areas of Odisha,
but the per capita ownership of cattle isn’t large enough to justify organized milk
generation and selling. Therefore, this was never considered as a feasible and
viable alternative to providemeans of livelihood to the ruralmasses. Farmers in
Odisha producemilk at competitive costs due to lower land costs and lower wage
rates.Theavailability of grazing land in Odisha and cheaper feed also contributes
to lowering the costs of milk production. Smallholders using buffalo for milk
production in Odisha were found to be more costcompetitive. Italso appears
that there is a large potential to reduce milk production costs of smallholder dairy
farming and increase family farm income through milk production by better
breed, feed and herd management.OMFED came into existence after conceiving
the novelidea to start a collective work with farmers/milk producers through milk
generation and marketing. So, OMFED,to shortly describe, forms a rural urban
development continuum by providing livelihood to ruralOdisha and offering the
urban middle class with a safe, secured and hygienic sourceof milk.
2.4 Vision of OMFED:
To be a leading milk producing organization at international level of efficiency
with widestand satisfied customer base, maximising wealth of stakeholders and
continuing to the state economy.
Mission:

Advancementof dairying, encouraging and educating people, through mutual
participation.
Continuous endeavour to increaseproductivity and per capita consumption.
To promote clean milk production and distribution with state-of-arttechnology.
Customer satisfaction with reliable, uninterrupted service and quality products.

17. To foster a performanceoriented culture encouraging innovation.
To promote a congenial work climate encouraging employees to participate and
contribute for organizationalgrowth.
To be a learning organisation and responsiveto changing environment.
Continuous upgradation of skills and competence of employees and their career
advancement.
To enrich quality of life of people and preserveecological balance.
2.5 Major Objectives of OMFED
To carry out activities for promoting production, procurement, processing and
marketing of milk and milk products for economic development of the rural
farming community.

Developmentand expansion of such allied activities as may be conducivefor the
promotion of the dairy industry. Improvementand protection of milch animals
and economic betterment of thoseengaged in milk production. In particular and
without prejudiceto the generality of the forgoing objective, the federation may
purchaseand/or erect building, plant machinery and other ancillary objects to
carry out business.

Study problems of mutual interest related to procurement, marketing of dairy
and allied products.

Purchasecommodities fromthe members of other sources withoutaffecting
the interests of the members, process, manufacture, distributeand sell them
same,arrangeto manufacture/purchaseand distribute balanced cattle feed and
for the purposeto set up Milk collection and chilling centers. Milk Processing
Plants,Productfactories etc., in any of the district covered under its area of
operation.

18. Provideveterinary aid and artificial insemination services and to undertake
animal husbandry activities so as to improveanimal health care diseasecontrol
facilities.
Advice, guide and assistthe Milk Union in all respects of management,
supervision
audit functions.
Render technical, administrative, financial and other necessary assistanceto the
member unions and enter in to collaboration agreement with someone, if the
need arises.
Advisethe member unions on price fixations, public relations and allied matters.
2.6 Primary Activities of OMFED
1. Procurementof milk
2. Providing technical inputs to milk producers
3. Providing training in new and scientific methods to increaseproductivity of
milk in the state.
4. Proper storing/chilling of milk.
5. Processing and marketing of milk.
2.7 OMFED: The Journey
The Odisha State CooperativeMilk Producers'Federation Limited (The
OMFED®) was established by the government of Odisha in the year 1980 with a
vision to ensuremilk producers get a lion's shareof the price paid by the
consumers and to providemarketing supportto the milk producers in the state in
order to develop their social and financial status. Headquartered in Bhubaneswar,
the capital of Odisha, OMFED is an apex level Dairy Cooperative Society registered
under Cooperative Society Act – 1962. Itadopted the Anand Pattern also known
as Amul model of National Dairy Development Board (NDDB) and started helping
villagers to formMilk cooperative societies and asked them to supply their
surplus milk to the OMFED.

19. (Fig 1: ANAND Pattern of Dairy Development)
During initial period it motivated people to take up dairy farming as a profession
and helped the formation of about 55 ruralprimary cooperative societies
involving merely about 2500 farmers.
Within a period of last 35 years, the number of ruralprimary
cooperative societies has gone up to 5350 and more than 275,000farmers
registered in such societies are earning their livelihood by selling milk to the
OMFED.
The procurementof milk for day one in the year 1980 was only
39 litres from four undivided districts of Odisha, that is, Cuttack, Puri, Dhenkanal
and Keonjhar .The milk was collected at the village level and was transported
through trucks in 40 litre aluminium cans for processing at5000 litre capacity

20. chilling plant at Liquid Milk Plant, Phulnakhara near Bhubaneswar. Atthat time it
was under the jurisdiction of Odisha Agro Industries Corporation. Later, the plant
was taken over by OMFED.OMFED wasfiltering the milk and sending it to the
market especially in Bhubaneswar and Cuttack towns in small vehicles. The
consumers werebuying the milk fromloose cans at the rate
Rs.2.50 per litre. National Dairy DevelopmentBoard (NDDB) was also supplying
butter oil and skimmed milk powder (SMP) for reconstituting milk in order to
cater to the demand of the consumers.
After production of poly pack milk in the year 1983,
consumers reposed their faith on OMFED and the sale of liquid milk per day was
enhanced to 30,000 litres. Farmers after their own consumption increased their
supply of surplus milk to the Chilling Plants for getting remunerativeprice and
severalother benefits including cattle feed. This was the time when the
exploitation of farmers by the vendors was over.
At that time someof the vendors or gwallas were
purchasing the milk fromthe farmers and were selling the same by adding water
into it. As a result, the milk became sour, curdled and adulterated. Looking at this
scenario, OMFED set up an modern plant in the year 1984-85, to produce
processed homogenized, pasteurized and fortified with Vitamin-A pouch milk of
500 ml and milk productsuch as Chhena(cheese),Gheeand Curd.
At that time marketing people were receiving heavy
protest fromlocal vendors. In courseof time consumers realized OMFED milk is
pure, fresh and affordable. For the interest of the farmers’ Cattle Feed Plant of
100 tons was established in the year 1984 to supply cattle feed to farmers at
subsidized rate and another plant was established at Rourkela in the year 1986 to
supply milk to SAIL, industrialhubs and consumers.
OMFED has nine dairy plants at Bhubaneswar, Rourkela,
Sambalpur, Balasore,Dhenkanal, Bhawanipatna, Jeypore, Berhampur and
Keonjhar to process milk received from farmers through chilling centres of District
Milk Producers Union. Under the brand "OMFED" thesedairies are involved in
processing of milk products in various packing sizes for marketing the sameinside
and outside the state of Odisha.

21. (Fig 2: Operational Areas)

22. (Fig 3: Milk Unions of OMFED)
(Fig 4: Plants of OMFED)
OMFED as a brand name has become an integral partits existence. OMFED is
organizing marketing facilities for whatever milk is produced in villages and hence
to give the farmers and incentive to producemore milk. The farmer producer is
paid on the basis of quality of milk i.e. two axis milk pricing structurebased on fat
(Ghee) and Solid not fat (cheese) contain of milk. Thus its effectiveness as a co-
operative organization in handling ruralmilk -procurement, processing and
marketing has been proved beyond doubt in the state of Odisha. OMFED is
providing good, fresh pasteurized, homogenized and clean milk, both toned and
double toned in hygienic polythene sachets of half litre to the consumer at
reasonableprice fromtheir modern hygienic dairy plants. OMFED is practicing
high ethical standards in its business. OMFED milk and milk products arevery
nutritive, tasteful, delicious, digestive, and adds to satiety. Itis sweet and
appetizing and can be consumed directly. Itis also good for brain development of
growing children. The Odisha state co-operativeMilk Producers federation Ltd.
(OMFED), its affiliated Dist. Cooperative Milk Producers Union and hundreds of
village Milk Producers Co-operativeSocieties provides a 3-tier o-operative

23. organizationalset up for milk production,procurementand marketing of milk and
milk products in a large scale.
Over the year, OMFED has become a household name
and it has developed trustof farmers. Now OMFED is procuring 5.5 lakh litre milk
from3,72,000 members to whomOMFED gives Rs. 2.60 crores daily at the rate of
26 rupees per litre of milk. No doubt, the Procurementversus Marketing in the
initial year and at present provides a clear picture how consumers havemade
trustwith the OMFED Brand.
The members depend upon OMFED for their social and
economic development.Farmers areprovided with medicines, plants and fodder,
subsidized cattle feed, various types of training and paymentfor their produceat
10 days interval without any sortexploitation/harassment by the vendors.
OMFED is one of the best Cooperative profits making
organization in Odisha. The entire profitpass on to the farmers. OMFED is
providing all types of milk products such as Ghee, Paneer, Curd, Buttermilk,
Lassi,Chhenapoda, Ice-cream, Flavoured milk, Rabidi apartfrommilk. OMFED is
also supplying milk to Hospitals and Defence establishments.TheMilk marketing
pricing is cheaper if compared with other states.
OMFED is currently procuring an average of 5 lakh
50 thousand litres of milk per day from farmers of all the 30 districts of Odisha
and the milk and product marketing is around 5.51 lakh litres per day. The
procurementof milk is increasing day by day due to establishment of milk
cooperative societies across thestate. As regards marketing,OMFED has
appointed 5,000 retailers/distributors to sell milk and milk products. The
averageper day milk procurement during 2014-15 increased by 14% compared to
an averageprocurement of 3.9 lakh litres per day during 2013-14.Thepeak
procurementof milk during 2014-15 in a day was 519211 litres per day. The
turnover of OMFED during 2014-15 reached the highestlevel of Rs.650 crores
with an increaseby 9% over the preceding year. The gross profitearned by the
organization during 2014-15 was Rs.45.00crores (alltime record) with an increase
of 28% over the previous period.

24. CHAPTER - 3
RESEARCH
AND
METHODOLOGY

25. 3.1 Objective of the Research
The main aim of the research work is to understand the management of product
and brand of OMFED. So basically the objective of the research can be categorized
into the follow segments

To Understand the Productand Brand Management in OMFED.
To understand awareness and perception of Customers regarding OMFED and
OMFED Product.
3.2 Research Plan
1. Gain knowledge about OMFED and products of the organization
2. Understanding the processing of differentProducts
3. Understanding Quality Control Process of OMFED Bhubaneswar Dairy
4. Understanding OMFED as the Brand
5. Preparation of the questionnairefor the respondents
6. Collection of the data
7. Segmentation of the data collected
8. Analysis of the data collected
9. Identify the strategies of the Competitors

26. 10. Development of appropriatestrategies for improving Productand Brand
Management
11. Preparation of the report
3.3 Sample
The area of survey was the Bhubaneswar city. The data collected from91
units across thewhole city so the sample sizewas 91. The samples are collected
byvisiting the units by convenience of the researcher and no biasing was done
while selecting the samples. To take responsefromall age groups many times
researcher has collected the responsefromthe respondents personally.
3.4 Data Collection
Data Types: Both Primary data and Secondary data
Primary data: Thecollection of data was mainly done fromprimary sources
through questionnaire fromrespondents. Respondentwereapproached by the
researcher and data collected fromthem by interviewing them and through
questionnaire.
Secondary Data: Thesecondary data is collected through the following
sources:
PastReports
Data through internet source
AnnualSales reports of the OMFED.
Secondary data wereused only for theoretical use of the project and nothing to
do with the findings of the research.
3.5 Data Interpretation

27. Interpretation of the data was done by using MS excel applications and other
statistical tools like bars, graphs and pie charts etc. The responses of the units
were represented through these diagrams which can clearly state their views.
CHAPTER - 4

28. financial
statement analysis

29. 4.1 Introduction
Financial statements as used in business houses refer to set of reports and
schedules which an account prepared at the end of a period of time for a business enterprise. The
financial statements are the means with the help of which the accounting system performs its
main function of providing summarise information about the financial affairs of the business.
These statements comprise balance sheet and profit & loss account. In India every company has
to present its financial statements in the form and contents as prescribed under section 211 of the
companies’ act 1956.
4.2 Significance of Financial
Statements
Balance sheet
Balance sheet is a statement showing the nature and amount of a companies asset
on one side and liabilities and capital on the other. In other words balance sheet shows the
financial position on a particular date usually at the end of one period. Balance sheet shows how
the money has been made available to the business of the company and how the money is
employed in the business.
Profit and loss account
Earning profit is the principal objective of all the business enterprise and profit and
loss account is the document which indicates the extent of success achieved by the business in
meeting this objective. Profits are of primary importance to the board of director in evaluating
the management of a business, to banks and other creditor in judging the loan repayment

30. capabilities and ability of the business. It is prepared for a particular period which is mentioned
along with the title of these statements, which include the name of the firm also.
4.3 Objective of financial statements
Financial statements analysis is highly essential for both internal and external stake holders in
addition to management and creditors.
1. The balance sheet lists the assets held by and the obligations (or liabilities) of the
enterprise. The balance sheet also summarizes the capital invested in the business.
2. The income statement provides a recap of the operating results by listing the revenues
and deducting the expenses of the company to arrive at a net income or loss for the period.
3. The statement of cash flows quantifies the cash inflows and outflows of the business
for the reporting period.
4. The explanatory notes provide additional details to aid in understanding the amounts
reported in the financial statements and the basis under which the financial statements have been
prepared. Usually, explanatory notes are prepared only when the financial statements will be
provided to external users.
5. To provide financial information that assist in estimating the earning potential of a
business.
Tools
Here we have taken the financial statement of five years those are 2012-13,

31. 2013-14, 2014-15, 2015-16 and 2016-17. The tools we have taken to analyse the financial
statement are as follows:
1. Ratio analysis
2. Common size statement analysis
3. Comparative analysis
4.4 Ratio Analysis
Introduction
The term ratio is used to describe significant relationships which exist between
figures shown in a balance sheet, profit and loss account of an organisation.
Financial statements contain much information relating to profit or loss and
financial position of the business. If these items in financial statements are considered
independently it will not be of much use. To make a meaningful reading of financial statements,
these items found in financial statements have to be compared with one another. Ratio analysis,
as a technique or analysis of financial statement uses this method of comparing the various items
found in financial statements.
Ratio analysis creates a relationship between figures or factors or variables. This
relationship helps to analyse and interpret the financial condition and performance when applied
to the financial data. The accounting ratio indicates a quantitave relationship which is used for
analysis and decision making.
Importance of ratio analysis

32. There are various kinds of benefits arising from ratio analysis are as follows:
1. Ratio analysis is a very important tool used for measuring performance of an
organisation.
2. It concentrates on the inter-relationship among the figures appearing in the financial
statement.
3. Ratio makes comparison easy. The said ratio is compared with the standard ratio and
this shows the efficiency utilisation of assets, etc.
4. Ratio analysis helps the management to analyse the past performance of the firm and to
make further projections.
5. Position can be easily ascertained with the help of ratio analysis.
6. Effective use of ratio can provide the details of the growth or decline of an enterprise
so that future action can be taken.
7. The appraisal of the ratios will make proper analysis about the strengths and weakness
of the firms operations.
Classification of Ratios

33. According to the requirement of different ratios it has been classified into four
important categories.
Liquidity Ratios
Activity Ratios
Profitability Ratios
Trend Ratios
1. Liquidity Ratios
The liquidity ratios measure the liquidity of the firm and its ability to meet its
maturing short term obligations. Liquidities defined as the ability to realise value in money, most
liquid of assets.
Liquidity refers to the ability to pay in cash, the obligation that are due. Liquidity
has two dimensions quantitative and qualitative concepts. The quantitative aspect includes the
quantum, structure and utilisation of liquid assets. In qualitative aspect it is the ability to meet all
present and potential demands on cash from any source in a manner that minimises cost and
maximises the value of the firm. Thus liquidity is a vital factor in business. Excess liquidity,
through a guarantor of solvency would reflect lower profitability, and ineffective managerial
efficiency, increased speculation and unjustified expansion, extension of too liberal credit
policies. Too little liquidity then may lead to frustration, reduced rate of return, missing of
profitable business opportunities and weakening of morale.
The important ratios in measuring short term solvency are as follows:
a. Current ratio

34. b. Quick liquid ratio
c. Absolute liquid ratio
d. Stock to working capital ratio
a. Current ratio
This ratio measures the solvency of the firm in the short term. The constituents of
the current ratio are as important as the current assets themselves for evaluation of the company's
solvency position. The higher or lower current ratio will have the adverse impact on the
profitability of the organisation.
Advantages of current ratio
1. This ratio indicates the extent of current assets available to meet the current obligation.
2. This margin also leaves sufficient amount as working capital to carry out day to day
transactions.
3. This is useful in assessing the solvency and liquidity position of the company.
Current assets, loans and advances
Current Ratio =
Current liabilities and provision
(Table 3.1.1)
YEARS 2012-13 2013-14 2014-15 2015-16 2016-17

35. Current
assets, loans
and
advances
788154.50 10030349.75 14614717.55 12162818.48 19933030.16
Current
liabilities
and
provision
744756.36 1101126.47 1505636.56 2107718.47 1139982.97
Current
ratio
10.58 9.10 9.70 5.77 17.48
Interpretation
A current ratio 2:1 shows a highly solvent position. The current ratio of this
organisation is always higher than the recommended level, so it can meet its entire current
obligation effectively. The ratios in the year 2012-13, 2013-14, 2014-15 shows high liquidity
position which is around 10. It is not a good sign of using current asset effectively. In the year
2015-16 the solvency position has improved but still it is higher than the recommended level. In
the year 2016-17 the ratio goes up to 17.48 which is very high than the recommended one. It is
due to the piling up of inventory and idle cash level.
b. Quick liquid ratio
Quick ratio is used as a measure of the company's ability to meet its current
obligations since bank overdraft is secured by the inventories, the other current assets must be
sufficient to meet other current liabilities. This ratio serves as a supplement to the current ratio in
analysing liquidity.
Advantages of the quick ratio

36. This ratio is very useful in cross checking the performance in other areas of
economic management of an enterprise. This ratio focuses on the inventory accumulation and on
certain aspects of inventory management which will be pointed out later.
1. It is an improved variant of the current ratio in arriving at a liquidity index for an
enterprise.
Current assets, loans and advances- inventories
Quick liquid ratio =
Current liabilities and provisions - bank overdraft
(Table 3.1.2)
YEARS 2012-13 2013-14 2014-15 2015-16 2016-17
Current
assets,loans
and advances
inventories
5859671.10 691146.49 7507781.29 5865755.70 7329857.33
Current
liablities and
provisions
bank
overdraft
744756.36 1101126.47 1505636.56 2107718.47 1139982.97
Quick liquid
ratio
7.86 6.27 4.98 2.78 6.42
Interpretation
A recommended ratio of acid test ratio is 1:1 but all the year starting from 2012-13
to 2016-17 shows much higher than this recommended level. In the year 2015-16 it came nearer
to the recommended level. This higher level indicates a high solvency state of the organisation.
c. Absolute liquid ratio

37. Absolute liquid assets
Absolute liquid ratio =
Current liabilities
Absolute liquid assets = cash in hand + cash at bank + short term investments
(Table 3.1.3)
Interpretation
The ideal absolute liquid ratio is taken as 1:2. In all the respective year it has gone
up then the recommended level. It shows the over accumulation of cash at bank and in hand.
d. Stock to working capital ratio
Here stock refers to inventory as the rupee value of raw materials. It may be noted
that stock is valued at cost price or market price whichever is lower. Working capital generally
means net working capital.
Inventory
Stock to working capital ratio = X 100
Working capital
Working capital = current assets - current liabilities
(Table 3.1.4)
YEARS 2012-13 2013-14 2014-15 2015-16 2016-17
Absolute
liquid assets
5759806.08 5636638.80 6737981.23 4327624.22 6313411.63
Current
liabilities
608024.11 771652.72 1004547.26 1671330.17 701932.67
Absolute
liquid ratio
9.47 7.30 6.70 2.58 8.98

38. Interpretation
In 2012-13 the stock level was 28.23% which is quite beneficial for the organisation but it
start increasing in rest of the year and reach a peak of 70.20% in 2015-16. It reflects over
accumulation of stock.
2. Activity Ratio
Activity ratio measures how effectively the firm employees its resources. These
ratios are also called 'turn over or asset management ratio' which involve comparison between
the level of sales and investment in various accounts like inventories, debtors, fixed assets, etc.
Asset management ratios are used to measure the speed with which various accounts are
converted into sales or cash. The following activity ratios are calculated for analysis. These ratios
also analyse the use of resources and the utility of each component of total assets.
a. Inventory turnover ratio.
b. Inventory ratio.
c. Fixed asset turnover ratio.
d. Total asset turnover ratio.
e. Working capital turnover ratio.
f. Sales to capital employed ratio.
a. Inventory turnover ratio
YEARS 2012-13 2013-14 2014-15 2015-16 2016-17
Inventory 2028483.40 3119203.26 7106936.26 6297062.78 12603172.83
Working
Capital
7791203.80 9205540.33 13382748.79 8957775.75 18402353.59
Stock to
Working
capital ratio
26.03 33.88 53.10 70.2 68.48

39. A considerable amount of a company's capital may be tied up in the financing of
raw materials, work in process and finished goods. It is important to ensure that the level of
stocks is kept as low as possible, consistent with the need to fulfill customer’s orders in time.
The inventory turnover ratio measures how many times a company's inventory
has been sold during the year. Low liquidity turnover has impact on the liquidity of the business.
Sales
Inventory turnover ratio =
Average inventory
Opening stock + Closing stock
Average inventory =
2
(Table 3.2.1)
Interpretation
The inventory turnover ratio shows that there is a decrease in the ratio from the
year 2012-13 to 2016-17. This is due to the piling up of stock because the selling has increased
substantially.
b. Inventory ratio
YEARS 2012-13 2013-14 2014-15 2015-16 2016-17
Sales 116423937.66 131212359.47 157091720.33 208711920.52 262757676.68
Average
Inventory
2017156.13 2573843.33 5113069.76 6701999.51 9450117.79
Inventory
turnover
ratio
57.71 50.17 30.72 31.14 27.80

40. The level of inventory in a company may be assessed by the use of the inventory
ratio, which measures how much has been tied up in the inventory.
Inventory
Inventory ratio = X 100
Current assets
(Table 3.2.2)
YEARS 2012-13 2013-14 2014-15 2015-16 2016-17
Inventory 2028483.40 3119203.26 7106936.26 6297062.78 12603172.83
Current
Assets
7791203.80 9977193.05 7480359.79 10629105.92 19104286.26
Inventory
Ratio
26.03 31.26 95.00 59.24 65.97
Interpretation
In the year 2012-13 the ratio was 26.03 which increased up to 95.00 in the year
2014-15 it shows that the how much inventory is tied up in current assets. Then it was reduced
up to 59.24 in 2015-16 and again marks an increase up to 65.97 in the year 2016-17.
c. Fixed assets turnover ratio
This ratio will be analysed further with ratios for each categories of assets
this is a difficult set of ratios to interpret. As asset value are based on historic cost. An increase in
the fixed asset figure may result from the replacement of an asset at an increased price or the
purchase of an additional asset intended to increase production capacity.
Sales
Fixed assets turnover ratio =
Fixed asset

41. (Table 3.2.3)
Years 2012-13 2013-14 2014-15 2015-16 2016-17
Sales 116423937.66 131212359.47 157091720.33 208711920.52 262757676.68
Fixed Assets 17644666.01 20440688.17 26896351.90 23061271.28 23794369.28
Fixed Assets
turnover
ratio
6.59 6.41 5.84 9.05 11.04
Interpretation
It reflects that there is installation of plant machinery and building to increase the
productivity of the plant. The depreciation rate also shows the same. In the year 2012-13 it was
6.59 and starts decreasing up to 5.84 in the year 2015-16 and again starts increasing and reaches
up to 11.04 in 2016-17. This also helps in the increase in production which reflects in terms of
increase in sales.
d. Total assets turnover ratio
The ratio indicates the number of times total assets are being turned over in a
year.
Sales
Total assets turnover ratio =
Total assets
(Table 3.2.4)
Years 2012-13 2013-14 2014-15 2015-2016 2016-17
Sales 116423937.66 131212359.47 157091720.33 208711920.52 262757676.68
Total Assets 27402592.29 32442753.04 43566468.04 37279488.35 40782798.06
Total Assets
turnover
ratio
4.24 4.04 3.60 5.59 6.44
Interpretation

42. It is showing that there is a good utilisation of total asset in every year but again
the rate goes down in the year 2014-15 and again goes up to 6.44 in 2016-17 which indicates a
good sign for the organisation.
e. Working capital turnover ratio
This ratio indicates the extent of working capital turned over in achieving sales of
the firm.
Sales
Working capital turnover ratio =
Working capital
(Table 3.2.5)
Years 2012-13 2013-14 2014-15 2015-16 2016-17
Sales 116423937.66 131212359.47 157091720.33 208711920.52 262757676.68
Working
Capital
7791203.80 9205540.33 13382748.79 8957775.75 18402353.59
Working
capital
turnover
ratio
6.490 26.97 11.73 23.29 14.27
Interpretation
In the year 2012-13 the working capital that is turned over is only 6.49 but the next
year it goes up to 26.97 it shows excess use of working capital to meet the sales. But there is an
improvement can be observed in utilising working capital effectively in rest of the year. That’s
why the ratio starts declining but the sale has gone up.

43. f. Sales to capital employed ratio
This ratio indicates efficiency in utilisation of capital employed in generating
revenue.
Sales
Sales to capital employed ratio =
Capital employed
(Table 3.2.6)
Interpretation
We can observe a zigzag motion in sales to capital employed ratio. It was 4.57 in
the year 2012-13, it was increased up to 5.18 then again decline up to 3.90, again mark an steep
increase up to 8.71 and in the year 2016-17 it came to 6.22. It shows that the efficiency in using
capital is improving to generate higher revenue.
3. Profitability ratios
These ratios are to help assessing the adequacy of profits earned by the company
and also to discover whether profitability in increasing or declining the profitability of the firm is
the net result of a large number of policies and decisions. The profitability ratios show the
combined effects of liquidity, asset management and debt management on operating results.
Profitability ratios are measured with the reference to sales, capital employed total assets
employed etc. These ratios are very important from the point of view of different set of people
Years 2012-13 2013-14 2014-15 2015-16 2016-17
Sales 116423937.66 131212359.47 15709100.33 208711920.52 262757676.68
Capital
Employed
25435869.80 25306674.25 40279100.69 23957047.03 42196722.87
Sales to
Capital
Employed
ratio
4.57 5.18 3.90 8.71 6.22

44. who are interested in the business organisation like owners, creditors, employees, suppliers,
government organisation.
Gross profit margin
The gross profit represents the excess of sales proceeds during the period under
observation over their cost, before taking into account administration, selling and distribution
and financing charges. The ratio measures the efficiency of the company’s operations and this
can also be compared with the previous year's result to ascertain efficiency. This ratio also shows
the gap between revenue and expenses at a point after which an enterprise has to meet the
expenses related to non manufacturing activities. It acts as an index of the mobility of an
enterprise to meet different expenses.
Gross profit
Gross profit margin = X 100
Sales
(Table 3.3.1)
Interpretation
It shows that there is an increase and decrease prevails in this ratio it stands
around 14%. It is due to the fluctuation in the price of raw material and other expenses related to
production. We can say that the efficiency in operation is following a trend.
Net profit ratio
Years 2012-13 2013-14 2014-15 2015-16 2016-17
Gross
Profit
17967174.10 21055028.32 20241173.57 29096271.67 43820261.38
Sales 116423937.66 131212359.47 157091720.33 208711920.52 262757676.68
Gross
profit
Margin
15.43 16.04 12.88 13.94 16.67

45. Net profit ratio express net profit as a percentage of sales. This ratio indicates the
profitability and efficiency of the business.
Net profit
Net profit ratio = X 100
Net sales
(Table 3.3.2)
Years 2012-13 2013-14 2014-15 2015-16 2016-17
Net Profit 10350896.20 12724976.70 11411004.56 18435097.91 30574501.72
Net Sales 116423937.66 131212359.47 157091720.33 208711920.52 262757676.68
Net profit
Ratio
8.89 9.69 7.26 8.83 11.63
Interpretation
It is showing the efficiency of the organisation in earning profit. It stand around 9%
but in the year 2016-17 it goes up to 11.63% it reflects that the organisation is growing in an apt
manner in earning profit.
Cash profit ratio
Cash profit ratio measure the cash generation in the business as a result of the
operation before tax and net profit from year to year owing to differences in depreciation
charged. This ratio is more reliable indicator of performance where there is sharp volatility in the
profit.
Cash profit
Cash profit ratio = X 100
Sales
Cash profit= net profit + depreciation
(Table 3.3.3)

46. Interpretation
This ratio is also fluctuating a little bit from its trend which is around 11%. It is
following the same path as the gross profit and net profit ratios are following. There is seen an
increase up 13.53% in the year 2016-17 which is sowing a hike in earning cash profit.
Operating cost ratio
Operating cost ratio expresses the relationship of cost of goods sold plus operating
expense to net sales. It may be expressed as
Operating cost
Operating cost ratio = X 100
Net sales
(Table 3.3.4)
Interpretation
Years 2012-13 2013-14 2014-15 2015-16 2016-17
Cash
Profit
129623.95 15052165.00 13692108.81 22247548.13 35574501.72
Sales 116423937.66 131212359.47 157091720.33 208711920.52 262757676.68
Cash
profit
ratio
11.13 11.47 8.71 10.65 13.53
Years 2012-13 2013-14 2014-15 2015-16 2016-17
Operating
Cost
98177801.99 109159181.33 134111568.23 178914326.43 217233461.63
Net Sales 116423937.66 131212359.47 157091720.33 208711920.52 262757676.68
Operating
Cost ratio
84.32 83.19 85.37 85.72 82.67

47. The operating ratio following a trend of around 83%. It is showing the operational
efficiency of the organisation. In 2016-17 the organisation is able to reduce the operating cost so
the net profit has increased.
Expense ratio
Expense ratio shows the relationship between operating costs and expenses on the
one hand and volume of sale on the other. In other words, these ratios express each element of
cost and expenses as percentage of sales.
Advantages:-
1. These ratios are useful in knowing the following aspects relating to profit and help the
management to know the position of profit. That is whether the profit is on the increase or on the
decrease.
i. Higher the expense ratio lowers the profit and vice-versa.
ii. Higher the non manufacturing expenses ratio (marketing, administration) lower
the net profit.
Expenses
Expense ratio = X100
Net sales
(Table 3.3.5)
Interpretation
Years 2012-13 2013-14 2014-15 2015-16 2016-17
Expense 98479418.10 121578161.06 140838279.66 178805775.37 225243525.35
Net Sales 116423937.66 131212359.47 157091720.33 208711920.52 262757676.68
Expense
ratio
84.58 92.65 89.65 85.67 85.72

48. The expense ratio in terms of sale in the year 2013-14 was higher than any other
year which is 92.65. It is showing the reduced in the profit level. But the condition starts
improving in the respective year and reach up to 85.72 in the year 2016-17.
Administrative cost of sales ratio
The expense-to-sales ratio measures the operating expenses of a business shown on the profit
and loss statement, with the gross sales of the business that are also shown on the profit and loss
statement. This ratio is a quick indicator of rising or decreasing costs or rising or declining sales.
Administrative cost of sales
Administrative cost of sales ratio= X 100
Sales
Interpretation
The administrative cost is increased heavily in the year 2013-14 due to increase in expenses of
different items and usage of the items which was 6.31. Again it goes down to 0.71 and again
goes up to 2.71 and finally reaches to 0.60 in 2016-17 which was lower than all the respective
year.
Years 2012-13 2013-14 2014-15 2015-16 2016-17
Administrative
cost
863204.20 8289130.42 1118133.10 5664158.79 1583528.20
Sales 116423937.66 131212359.47 157091720.33 208711920.52 262757676.68
Administrative
cost of sales
ratio
0.74 6.31 0.71 2.71 0.60

49. Selling and distribution cost to sales ratio
The expense-to-sales ratio measures the operating expenses of a business shown on the profit and
loss statement, with the gross sales of the business that are also shown on the profit and loss statement.
This ratio is a quick indicator of rising or decreasing costs or rising or declining sales.
Selling and distribution cost
Selling and distribution cost to sales ratio = X 100
Sales
(Table 3.3.6)
Interpretation
The selling and distribution cost was 3.25 in the year 2012-13 it increase slowly
and reach up to 4.19 in the year 2014-15 and then decrease up to 2.63 in the year 2016-17. It is
due to the effective distribution channel. It also helps in the rate of selling of products.
Years 2012-13 2013-14 2014-15 2015-16 2016-17
Selling and
distribution
cost
3790646.03 5139544.72 6596742.93 4908238.63 7174298.03
Sales 116423937.66 131212359.47 157091720.33 208711920.52 262757676.68
Selling and
distribution
cost to
sales ratio
3.25 3.91 4.19 2.35 2.63

50. Cost of goods sold to net sale ratio
Cost of goods sold
Cost of goods sold to net sale ratio = X 100
Net Sales
(Table 3.3.7)
Interpretation
It is following a trend of around 81%. It is not deviating more from its trend but it
has been decreased down to 80.59 in 2016-17 which increase in profit level.
Return on capital employed
The rate of return on investment is determined by dividing net profit by the capital
employed. It consists of two components that is profit margin and investment turnover.
Advantages:-
1. It helps in measuring the profitability of the firm.
2. It indicates how effectively the operating assets are used in earning return.
Years 2012-13 2013-14 2014-15 2015-16 2016-17
Cost of
good
sold
94666117.53 105017786.43 130253803.73 174707410.22 211763117.27
Net sales 116423937.66 131212359.47 157091720.33 208711920.52 262757676.68
Cost of
goods
sold to
net sale
ratio
81.31 80.03 82.91 83.70 80.59

51. 3. It focuses the attention on efficiency of management in managing the investments
made into the business.
Net profit
Return on capital employed ratio = X 100
Capital employed
(Table 3.3.8)
Years 2012-13 2013-14 2014-15 2015-16 2016-17
Net profit 10350896.20 12724976.70 11411004.56 18435097.91 30574501.72
Capital
Employed
25435869.80 25305674.25 40279100.69 23957047.03 42196722.87
Return on
capital
employed
ratio
40.69 50.28 28.32 76.95 72.45
Interpretation
In the year 2012-13 the return on capital employed was 40.69. By following a
zigzag motion it goes up to 50.28. In 2014-15 it was reduced to 28.32 it is due to increase in
amount of work in progress and other fixed assets. But again it gained momentum and the return
reach up to 72.45 in the year 2016-17.

52. 4.5. COMPARATIVE STATEMENTS
These financial systems are so designed as to provide time perspective to the
various elements of financial position contained therein. These statements give the data for all
the periods stated so as to show.
A. absolute money values of each item separately for each of the periods stated.
B. increase and decrease in absolute data in terms of money values.
C. increase and decrease in terms of percentage.
D. comparison expressed in ratios.
E. percentage of totals.
Such comparative statements are necessary for the study of trends and direction of
movements in the financial position and operating results. This call for a consistency in the
practice of preparing these statements, otherwise comparability may be distorted.
Comparative profit and loss account shows the operating results for a number of
accounting period and changes in the data significantly. In absolute period and changes in the
dan significantly in absolute money terms as well as relative percentage.
Comparative balance sheet shows the balance of account of asset and
liability in different dates and also the extent of their increase and decrease between these dates
showing light on the trends and direction of changes over the period.

53. Comparativeincomestatement
As at 31St
,march,2016-17
Particulars 2016
(InLakhs)
2017
(InLakhs)
Absolute change
(InLakhs)
Percentage
change
Sales 5000 8000 +3000 60%
Less:- Costof
goodssold
600 1000 +400 66.67%
GrossProfit 4400 7000 +2600 59.09%
Less:- Expenses
Purchase of Crate 240 540 +300 125%
Processing
expenses
100 160 +60 60%
Sellingexpenses 580 980 +400 68.97%
Staff welfare and
canteenexpenses
80 100 +20 25%
Entertainment
expenses
10 15 +5 50%
Marketing
expenses
90 180 +90 100%
Buildingand
gardeningcost
80 100 +20 25%
Depreciation 300 500 200 66.67%
Insurance charges 82 98 +16 19.5%
Advertising
expenses
100 142 +42 42%
Printingand
stationery
7.5 10 +2.5 33.33%
SalesPromotion 178 200 +22 12.35%
Bonus ------ ------ ------ ------
Otherexpenses ------ ------ ------ ------
Total Expenses 1847.5 2796 +948.5 51.33%
Net Profit 2552.5 4204 +1651.5 64.70%

54. Interpretation
Study of income statement reveals that there has been an increase of Rs 3000
(lakhs) in sales, but at the same time cost of goods sold has also increased by Rs.400 (lakhs). In
relative term sales increased by 60% while cost of good sold 66.67%. It means due to the
operational efficiency the rate of increase in cost of goods sold is lesser then the rate of increase
in sales. The rate of advertising is 42% which is lower then the rate of increase in sales and also
in absolute term it is only increased 42 (lakhs) , which is quite negligible as compared to sales
volume. Processing expense has been increased Rs.60(lakhs) but in relative term the rate of
increase in processing expense is quite nearer to the rate of increase in sales.
There has been a substantial decrease in other incomes both in relative term and
absolute term. It reflects that the management is giving more emphasis on its core business rather
than other miscellaneous activity. There has been an increase in selling expenses in absolute term
which is Rs. 400(lakhs) and it helps in the increase in sales up to Rs. 3000(lakhs). in relative term
the rate is much higher then the rate of increase in sales. It is due to the increase in the rate of
expense in marketing expense and purchase of crate for distribution at a rate of 100% and
125%respectively.
There is a 59.09% increase in gross profit which is due to the less
increase in the rate of cost of goods sold and processing expenses which is 66.67% and 60%
respectively. The depreciation rate is increase up to 200(lakhs) in absolute terms and 66.67% in
relative term which indicates that improved plant machinery has been installed which helps in
the increase of the productivity, and the productivity reflects in the sales volume. Insurance
charges have been increased 19.5% in the relative term which will impart a secure operational
function. Printing and stationary is increased up to Rs.2.5 (lakhs) which is 33.33% then the

55. previous year. It indicates that there must be wastage or improper handling of this material. Sales
promotion has been decreased by 12.35% which is not a good sign for the organisation. As the
sales promotion is an inevitable part of a good business. The sales have been increased and the
sales promotion should also increase accordingly. Staff welfare and canteen expense has been
increased by Rs.20(lakhs) which is 25% higher than the previous year. It is helpful in motivating
the staff. The entertainment expense has been increased by Rs.(5lakhs) from its previous year. In
absolute term it is less but in relative term the increase is 50% which is not a favourable
condition. Building and gardening cost has been increasing soaringly which is 25% higher than
the previous year and rupees 20 (lakhs) in absolute terms which is due to the development and
maintenance of the infrastructure. Bonus is hike up to 66.43% then the last year which indicates
the profitability and transparency of the organisation which leads to organisational efficiency.
Other expense has been increased by Rs 105402.21 in absolute term and 24.67% in relative term
then the previous year.

56. Comparative balance sheet
As at 31St
March,2017
Particulars 2016 2017 Absolute
change
Percentage
change
I. Equity and Liabilities
1.Shareholder’s funds
(a)Share Capital
Equity Share capital ------ ------ ------ ------
Preference share capital ------ ------ ------ ------
(b)Reserve and surplus 72793442.74 42154682.69 30638760.05 42.09%
Government and other grants 511185.02 12209603.1 12720788.12 2488.49%
2.Non current Liabilities :
(a)Long term Borrowings ------ ------ ------ ------
(b)Long term Provisions ------ ------ ------ ------
Total Non – Current Liablities 73304627.76 54364285.79 18940341.97 25.84
3.Current Liabilities
(a)Short term Borrowings ------ ------ ------ ------

57. (b)Trade Payables
Sundry creditors ------ ------ ------ ------
(c)Other Current Liabilities ------ ------ ------ ------
(d)Short term Provisions ------ ------ ------
Total Current Liabilities 96333144.2 52973595.95 43359548.17 45.01%
(1)Non –Current Assets :
(a)Fixed Assets
(i)Tangible Assets
Computer 211547.62 122697.62 88850 42%
Provision for depreciation 205542424.6
9
202597823.2
8
2944601.41 143.26%
(ii)Intangible Assets
(b)Non-current Investment ------ ------ ------ ------
(c)Long – term loans and advances ------ ------ ------ ------
Total Non current assets
(2)Current Assets :
(a)Current Investment ------ ------ ------ ------
(b)Inventories ------ ------ ------ ------
(c)Trade Receivables
Sundry Debtors 4418.92 178855.96 183274.88 4147.50%
(d)Cash and cash Equivalents

58. Cash in Hand ------ ------ ------ ------
Cash at Banks ------ ------ ------ ------
(e)Short – term loans and advances 1533913.51 828926.86 704986.65 45.96%
(f)Other Current assets ------ ------ ------ ------
Total Current Assets 1318286.63 430025.1 888261.53 67.38%
Interpretations:-
The current asset has been increased by 67.38% and the current liability
has been decreased drastically by -45.01% which is showing over solvency of the organisation. It
is severely affecting the current ratio by increasing it to a very high level then the recommended
one. Cash in hand and bank, inventories has been increased which is due to the improper
investment of the funds. Loans and advances have been decreased by 45.96% in relative term
and Rs. 704986.65 in absolute term which is a good sign for the organisation. There is a soaring
hike can be seen in case of sundry debtors which is 183274.88 in absolute term and 4147.50 % I
relative term. It is showing the inefficient use of current assets. Government and other grants
have been increased by 12720788.12 in absolute term and 2488.49% in relative term which is
enhancing the strength of the organisation. The computer expenses are increased by Rs.
88850.00 due to installation of new computers and printers. All these increase in fixed asset is
reflecting in the provision for depreciation which is increased 2944601.41 and 143.26% in
relative term. The share holders fund, reserve & surplus have been increased by 42.90% and Rs.
30638760.05 in absolute term which is showing high financial viability of the organisation.

59. 4.6 COMMON SIZE STATEMENT
ANALYSIS
Common size financial statements are those in which figures reported are converted into
percentages to some common base. For this, items in the financial statement are presented as
percentages or ratios to total of the item and a common base for the comparison is provided.
Each percentage shows the relation of the individual item to its respective total. In a common
size income statement the sales figure is assumed to be equal to 100 and all other figures of cost
or expenses are expressed as percentage of sales. A common size income statement for different
periods helps to reveal the efficiency or otherwise of incurring any cost or expense. In a common
size balance sheet total of assets and liability are taken as 100 and all the respected figures are
expressed as the percentage of total. Comparative common size balance sheet for different period
helps to highlight the trends in different items.
Interpretation
The cost of goods sold has been decreased from 93.43% to 83.96% in the year
2016-17. Which increase in the gross profit level up to 17.37% which was previously 15.56% in
2015-16. Other expense like selling expenses is increased. It is due to the increase in sale but
effective use of funds as the increase in relative term then the previous year is very little.
Despite of increase in sales the processing expenses was less then the previous year
it is indicating the operational efficiency of the firm. Other income has been declined as the firm
is concentrating only upon its core activity.
Omfed appears to be a traditionally financed with share holders fund and reserve
& surplus. It doesn’t have any long term liability. In the year 2016-17, 50% of the reserve and
surplus and shareholders fund has been invested which was 97.13 % in the year 2015-16. Total
liability also constitutes of 50% of total liability and capital which is very high then the previous
year 2015-16. Out of total assets, fixed asset constitute the major part which is 63.66% in 2015-
16 and 64.20% in the year 2016-17. It shows the fixed productive asset of the firm. Piling up of
inventories increased up to 22.17%. Cash in hand and bank was reduced to 11.85% which shows
investment of funds. Loans and advances also decreased which is 1.46% in 2016-17 then 4.58 %
in 2015-16 which shows healthy financial system of OMFED.

60. Chapter-5
CONCLUSIONS

61. 5.1 FINDINGS AND RECOMMENDATIONS
The financial statement of OMFED has given a broad idea about the organization. The tools that
we used to analyse the financial statement reveals many vital information regarding the
organisation’s financial strength. The findings of this analysis show that the financial strength of
this organization is very healthy. It is earning profit at a higher rate. The accounts of reserve and
surplus, share holders fund is very high. As the organization is enhancing the livelihood, socio
economic condition of poor people so government is providing huge grants to it.
The labour cost in this area is very low; availability of raw material in this area is
more. There persists a technological, product, raw material transfer among the different unit of
OMFED.
The entire above factor helping the organization to grow at a faster rate. We have found out a
small weak link in the organization. Despite of huge asset possessed by the organization the
investment opportunity is very thin. The liquidity ratio shows that asset remain idle without any
proper investment. So we would like to add that if sophisticated machinery will be installed or
the capacity of the plant will be enhanced and maintaining a high level of distribution channel
would hike the quality of the product and easy availability of product to the customer. So it will
lead to increase in the profitability up to many folds.
The financial statement also shows that the expenditure on sales promotion and
advertising is very depressing as compared to the sales. Yes it is very eloquent that the rate of
sales is very high but there is a huge potential for increase the sales in dairy product. This can

62. only be achieved by sales promotion. Inventory management is not satisfactory as it is seen on
the balance sheet that inventory is piling up heavily.Rest we can say that the organization is
developing since inception. It has also gained a momentum of incurring profit. They are moving
from the stage of maximum utilization of resource to optimum utilization of resource which is
very important for the organization.
CHAPTER-6
Bibliography
Financial Management-By Basanta kumar
Sahu
Financial Statement Analysis: - By Asibala
Rout
Financial Management: - By Rudra Mishra
www.omfed.org

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