this is report on fiancial analysis.docx

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A
Study to assess
The financial performance of
DELUXE ENTERTAINMENT PVT. LTD PUNE

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ACKNOWLEDGEMENT
It is with the sense of gratitude; I acknowledge the efforts of several people
who have helped me directly or indirectly to conduct this project work. I
would like to thank my project guide Mr. Shailendra Mishra (Accounts
Manger, Deluxe Entertainment Pvt. Ltd Pune without whom I would
have not got this exposure of learning. Words fail to express adequately my
feeling of deep sense of gratitude which I owe from depth of my heart to
Mr. Abhyut Chakrawarty, Director , Deluxe Entertainment Pvt. Ltd
Pune and all the staff of Deluxe Entertainment Pvt. Ltd Pune for their
valuable support and counseling, constant help and guidance without which
the completion of this project would not have been possible. I am grateful
to my parents who brought me up with love and encouragement to this
stage and have always stood beside me as my pillars of strength and
guidance. Last but not the least I would like to thank almighty who has
always guided me to walk on the right path of life.

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INDEX
Table of contents
S.No. Particulars
1 Objective of the Study
2 Scope of the project
3 Executive Summary
4 Introduction
5 Research Methodology
6 Data Collection and Analysis
7 Findings
8 Suggestions
9 Conclusion
10 Bibliography
11 Annexure

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Objective of the study
 To evaluate short term and long term financial position of Deluxe
Entertainment Pvt. Ltd Pune over the period of 3 years.
 To highlight the concept of financial analysis and learn its importance
 To understand the meaning of ratio analysis and learn its importance,
advantages and disadvantages to any business organization.
 To evaluate the short term and long term financial position of Deluxe
Entertainment Pvt. Ltd. Pune over the period of Last 3 years.

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SCOPE OF THE STUDY:
Financial statement analysis is the process of reviewing and analyzing a
company's financial statements to make better economic decisions.
These statements include the income statement, balance sheet, statement
of cash flows, and a statement of retained earnings.
Scope of the present project will be to evaluate the company’s financial
performance which includes
 Analyze financial ratios to assess profitability, solvency, working capital
management, liquidity, and operating effectiveness.
 Compare current performance with historical conditions using trend
analysis.
 Compare with peer companies or industry averages to find out how well
companies are performing

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EXECUTIVE SUMMARY
Deluxe Entertainment has been managing the various aspect of working capital through
continuous efforts over a long period of time. The present study is trying to investigate the
on Short term-Long Term Financial Position. Ratio Analysis is generally the financial
analysis of the statement to assess companies financial performance and position. So an
attempt to understand as to how the company manages the financial heads has been done.
In my project work we are trying to identify the 8 ratios to assess the Short term-Long Term
Financial Position.
The term “Financial analysis” ,also known as analysis and interpretation
of financial statement, refers to the process of determining financial strength
and weakness of the firm by establishing strategies relationship between the
items of the balance sheet ,profit and loss account and other operative data.
It is performed by professionals who prepare reports using ratios that make
use of information taken from financial statements and other reports. These
reports are usually presented to top management as one of their bases in
making business decisions. Financial analysis may determine if a business
will:
 Continue or discontinue its main operatio or part of its business;
 Make or purchase certain materials in the manufacture of its product;
 Acquire or rent/lease certain machineries and equipment in the
production of its goods;
 Issue stocks or negotiate for a bank loan to increase its working capital;

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 Make decisions regarding investing or lending capital;
 Make other decisions that allow management to make an informed
selection on various alternatives in the conduct of its business.
According to John N. Myer, ‘Financial Statement Analysis is largely a
study of relationships among the various financial factors in a business,
as disclosed by a single set of statements, and study of these factors as
shown in a series of statements.’
OBJECTIVES AND IMPORTANCE OF FINANCIAL STATEMENT ANALYSIS
 To assess the earning capacity or profitability of the firm.
 To assess the operatioal efficiency and managerial effectiveness.
 To provide important information for granting credit.
 To guide or determine the dividend action.
 To help in decision making and control.
 To assess the progress of the firm over a period of time.
 To make forecasts about future prospects of the firm.
 To make inter-firm comparision
The data content Provide an overall conceptual aspect of “Ratio Analysis For Delux
Entertainment Ltd” Research is defined as human activity based on intellectual application
in the investigation of matter. Data for analysis was collected in the form of secondary from
other sources and is readily available sources of the company. Balance sheet of three
consecutive years was used to obtained financial analysis of the company, analysis showed In
case of liquidity ratios, their current ratio is decreased than the previous year but it is higher

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than the industry average. Side by side their quick ratio is decreased than the previous year
and the industry average. So we can say that for current ratio their have some little idle
money. But in case of quick ratio at the present rate it is not possible for the company to pay
its bills as they come due.

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INTRODUCTION
INTRODUCTION TO FINANCIAL ANALYSIS
TYPES OF FINANCIAL ANALYSIS
 EXTERNAL ANALYSIS:-This analysis is done by outsiders who do not
have access to the detailed internal accounting records of the
business firm. These outsiders include investors, potential investors,
creditors, potential creditors, government agencies, credit agencies,
and the general public.
For financial analysis, these external parties to the firm depend almost
entirely on the published financial statements. External analysis, thus
serves only a limited purpose. However, the recent changes in the
government regulations requiring business firms to make available more

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detailed information to the public through audited published accounts have
considerably improved the position of the external analysis.
 Internal Analysis:
The analysis conducted by persons who have access to the internal
accounting records of a business firm is known as internal analysis. Such
an analysis can, therefore, be performed by executives and employees of the
organisation as well as government agencies which have statutory powers
vested in them. Financial analysis for managerial purposes is the internal
type of analysis that can be effected depending upon the purpose to be
achieved.
 Horizontal Analysis:
Horizontal analysis refers to the comparison of financial data of a company
for several years. The figures for this type of analysis are presented
horizontally over a number of columns. The figures of the various years are
compared with standard or base year. A base year is a year chosen as
beginning point.
This type of analysis is also called ‘ Dynamic Analysis’ as it is based on the
data from year to year rather than on data of any one year. The horizontal
analysis makes it possible to focus attention on items that have changed
significantly during the period under review. Comparison of an item over
several periods with a base year may show a trend developing. Comparative
statements and trend percentages are two tools employed in horizontal
analysis.

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 Vertical Analysis:
Vertical analysis refers to the study of relationship of the various items in
the financial statements of one accounting period. In this types of analysis
the figures from financial statement of a year are compared with a base
selected from the same year’s statement.
It is also known as ‘Static Analysis’. Common-size financial statements and
financial ratios are the two tools employed in vertical analysis. Since vertical
analysis considers data for one time period only, it is not very conducive to a
proper analysis of financial statements. However, it may be used along with
horizontal analysis to make it more effective and meaningful.
The different advantages of financial statement analysis are listed below:
 The most important benefit if financial statement analysis is that it
provides an idea to the investors about deciding on investing their funds
in a particular company.
 Another advantage of financial statement analysis is that regulatory
authorities like IASB can ensure the company following the required
accounting standards.
 Financial statement analysis is helpful to the government agencies in
analyzing the taxation owed to the firm.
 Above all, the company is able to analyze its own performance over a
specific time period.

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LIMITATION OF FINANCIAL ANALYSIS
 It is only a study of interim reports.
 Financial analysis is Based upon only monetary information and non-
monetary factors are ignored.
 It does not consider changes in price levels.
 As the financial statements are prepared on the basis of a going
concern, it does not give exact position. Thus accounting concepts and
conventions cause a serious limitation to financial analysis.
 Changes in accounting procedure by a firm may often make financial
analysis misleading.
 Analysis is only a means and not an end in itself. The analyst has to
make interpretation and draw his own conclusios. Different people
may interpret the same analysis in different ways.
INTRODUCTION OF RATIO ANALYSIS
Ratio analysis refers to the comparisons between different pieces of
financial information in the financial statements of a business. They are
mainly used by external analysts to determine various aspects of a
business such as its profitability, liquidity, and solvency.

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Analysts rely on the current and past financial statements to obtain the
correct data to evaluate the financial performance of a company. They
also use the data to determine if a company’s financial health is on an
upward or downward trend and draw a comparison against other
competing firms.
NEEDS AND IMPORTANCE OF RATIO ANALYSIS
1. Aid to Measure General Efficiency:
Ratios enable the mass of accounting data to be summarised and simplified.
They act as an index of the efficiency of the enterprise. As such they serve as
an instrument of management control.
2. Aid to Measure Financial Solvency:

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Ratios are useful tools in the hands of management and other concerned to
evaluate the firms performance over a period of time by comparing the
present ratio with the past ones. They point out firm’s liquidity position to
meet its short term obligations and long term solvenc
3. Aid in Forecasting and Planning:
Ratio analysis is an invaluable aid to management in the discharge of its
basic function such as planning, forecasting, control etc. The ratios that are
derived after analysing and scrutinizing the past result, helps the
management to prepare budgets to formulate policies and to prepare the
future plan of action etc.
4. Facilitate Decision-Making:
It throws light on the degree of efficiency of the management and utilisation
of the assets and that is why it is called surveyor of efficiency. They help
management in decision-making.
y.
5. Aid in Corrective Action:
Ratio analysis provides inter-firm comparison. They highlight the factors
associated with successful and unsuccessful firms. If comparison shows an
unfavourable variance, corrective actions can be initiated. Thus, it helps the
management to take corrective action.
6. Aid in Intra Firm Comparison:
Intra firm comparisons are facilitated. It is an instrument for diagnosis of
financial health of an enterprise. It facilitates the management to know

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whether the firm’s financial position is improving or deteriorating by setting
a trend with the help of ratios.
7. Act as a Good Communication:
Ratios are an effective means of communication and play a vital role in
informing the position of and progress made by the business concern to the
owners and other interested parties. The communications by the use of
simplified and summarised ratios are more easy and understandable.
8. Evaluation of Efficiency:
Ratio analysis is an effective instrument which, when properly used, is
useful to assess important characteristics of business—liquidity, solvency,
profitability etc. A study of these aspects may enable conclusions to be
drawn relating to capabilities of business.
9. Effective Tool:
Ratio analysis helps in making effective control of the business- measuring
performance, control of cost etc. Effective control is the keynote of better
management. Ratio ensures secrecy.
10. Detection of Unfavourable Factors:
Analysis of financial statements enables the analyst to find out the
soundness or otherwise of a business. If the analysis reveals financial

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unsoundness, the factors responsible for such unsoundness can be
separated and corrective action taken without loss of time.
Objectives of ratio analysis
Following are the objectives of ratio analysis:
To simplify accounting figures
To facilitate analysis of financial statements
To analyse the operatioal efficiency of a business
To help in budgeting and forecasting
To facilitate intra firm and inter firm comparison of performance

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ADVANTAGES OF RATIO ANALYSIS
1. Forecasting and Planning:
The trend in costs, sales, profits and other facts can be known by computing
ratios of relevant accounting figures of last few years. This trend analysis
with the help of ratios may be useful for forecasting and planning future
business activities.
2. Budgeting:
Budget is an estimate of future activities on the basis of past experience.
Accounting ratios help to estimate budgeted figures. For example, sales
budget may be prepared with the help of analysis of past sales.
3. Measurement of Operating Efficiency:
Ratio analysis indicates the degree of efficiency in the management and
utilisation of its assets. Different activity ratios indicate the operatioal
efficiency. In fact, solvency of a firm depends upon the sales revenues
generated by utilizing its assets.
4. Communication:
Ratios are effective means of communication and play a vital role in
informing the position of and progress made by the business concern to the
owners or other parties.
5. Control of Performance and Cost:
Ratios may also be used for control of performances of the different divisions
or departments of an undertaking as well as control of costs.

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6. Inter-firm Comparison:
Comparison of performance of two or more firms reveals efficient and
inefficient firms, thereby enabling the inefficient firms to adopt suitable
measures for improving their efficiency. The best way of inter-firm
comparison is to compare the relevant ratios of the organisation with the
average ratios of the industry.
7. Indication of Liquidity Position:
Ratio analysis helps to assess the liquidity position i.e., short-term debt
paying ability of a firm. Liquidity ratios indicate the ability of the firm to pay
and help in credit analysis by banks, creditors and other suppliers of short-
term loans.
8. Indication of Long-term Solvency Position:
Ratio analysis is also used to assess the long-term debt-paying capacity of a
firm. Long-term solvency position of a borrower is a prime concern to the
long-term creditors, security analysts and the present and potential owners
of a business. It is measured by the leverage/capital structure and
profitability ratios which indicate the earning power and operating efficiency.
Ratio analysis shows the strength and weakness of a firm in this respect.
9. Indication of Overall Profitability:

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The management is always concerned with the overall profitability of the firm.
They want to know whether the firm has the ability to meet its short-term as
well as long-term obligations to its creditors, to ensure a reasonable return to
its owners and secure optimum utilisation of the assets of the firm. This is
possible if all the ratios are considered together.
10. Aid to Decision-making:
Ratio analysis helps to take decisions like whether to supply goods on credit
to a firm, whether bank loans will be made available etc.
DISADVANTAGE OF RATIO ANALYSIS
1. Limitations of Financial Statements:
Ratios are calculated from the information recorded in the financial
statements. But financial statements suffer from a number of limitations
and may, therefore, affect the quality of ratio analysis.
2. Historical Information:
Financial statements provide historical information. They do not reflect
current conditions. Hence, it is not useful in predicting the future.
3. Different Accounting Policies:
Different accounting policies regarding valuation of inventories, charging
depreciation etc. make the accounting data and accounting ratios of two
firms non-comparable.
4. Lack of Standard of Comparison:

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No fixed standards can be laid down for ideal ratios. For example, current
ratio is said to be ideal if current assets are twice the current liabilities. But
this conclusion may not be justifiable in case of those concerns which have
adequate arrangements with their bankers for providing funds when they
require, it may be perfectly ideal if current assets are equal to or slightly
more than current liabilities.
5. Quantitative Analysis:
Ratios are tools of quantitative analysis only and qualitative factors are
ignored while computing the ratios. For example, a high current ratio may
not necessarily mean sound liquid position when current assets include a
large inventory consisting of mostly obsolete items.
6. Window-Dressing:
The term ‘window-dressing’ means presenting the financial statements in
such a way to show a better position than what it actually is. If, for instance,
low rate of depreciation is charged, an item of revenue expense is treated as
capital expenditure etc. the position of the concern may be made to appear
in the balance sheet much better than what it is. Ratios computed from
such balance sheet cannot be used for scanning the financial position of the
business.
7. Changes in Price Level:
Fixed assets show the position statement at cost only. Hence, it does not
reflect the changes in price level. Thus, it makes comparison difficult.
8. Causal Relationship Must:

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Proper care should be taken to study only such figures as have a cause-and-
effect relationship; otherwise ratios will only be misleading.
9. Ratios Account for one Variable:
Since ratios account for only one variable, they cannot always give correct
picture since several other variables such Government policy, economic
conditions, availability of resources etc. should be kept in mind while
interpreting ratios.
10. Seasonal Factors Affect Financial Data:
Proper care must be taken when interpreting accounting ratios calculated
for seasonal business. For example, an umbrella company maintains high
inventory during rainy season and for the rest of year its inventory level
becomes 25% of the seasonal inventory level. Hence, liquidity ratios and
inventory turnover ratio will give biased picture.
ROLE OF RATIO ANALYSIS IN FINANCIAL STATEMENTS
1. Analyzing Financial Statements:- Ratio analysis is an important
technique of financial statement analysis. Accounting ratios are useful
for understanding the financial position of the company. Different users
such as investors, management. Bankers and creditors use the ratios to
analyze the financial situation of the company for their decision making
purpose.
2. Judging Efficiency

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Accounting ratios are important for judging the company's efficiency in
terms of its operatios and management. They help judging how well the
company has been able to utilize its assets &earn profits using
Accounting, Financial Statements, Selection, Accountancy.
3. Locating Weakness
Accounting ratios can also be used in locating weakness of the
company's operatios even though its overall performance may be quite
good. Management can then pay attention to the weakness and take
remedial measures to overcome them.
4. Formulating Plans
Although accounting ratios are used to analyze the company's past
financial performance, they can also be used to establish future trends
of its financial performance. As a result, they helpsin formulating the
company's future plans for knowing efficiencies, Financial position and
for reaching companies goals and objectives.
5. Comparing Performance
It is essential for a company to know how well it is performing over the
years and as compared to the other firms of the similar nature. Besides,
it is also important to know how well its different divisions are
performing among themselves in different years. Ratio analysis
facilitates such comparison.

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Introduction to the Company
Deluxe is the world’s leading video creation to distribution company
offering end-to-end services and technology to the media and entertainment
industry. With operatios in 38 key media markets worldwide, the company
relies on the talents of more than 7,500 of the industry’s premier artists,
experts, engineers and innovators to create and deliver to clients and
audiences around the world.
Deluxe is the world’s leading video creation to distribution company offering
global, end-to-end services and technology. Through unmatched scale,

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technology and capabilities, Deluxe enables the worldwide market for
professionally created video. The world’s leading content creators,
broadcasters, OTTs and distributors rely on Deluxe’s experience and
expertise. With headquarters in Los Angeles and New York and operatios in
38 key media markets worldwide, the company relies on the talents of more
than 7,500 of the industry’s premier artists, experts, engineers and
innovators.
About Deluxe Platform & Technologies
Growing global demand for digital content has fostered increasing industry
complexity. Deluxe Platform & Technologies leverages the Deluxe One cloud-
based software platform to serve the needs of the market and make video
creation and distribution efficient, smarter and more secure. Our Platform

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and Technologies organization enables customers to monetize content more
effectively through our collaboratio with Deluxe’s best-in-class post,
preparatio and distribution services. We offer the scale, relationships and
content flow to create efficiency and bring the market together. Deluxe
Platform & Technologies builds on our storied history of developing and
mainstreaming innovation.
About Deluxe Distribution
1 Deluxe Distributor
Deluxe Distribution offers scaled, end-to-end solutions for delivering content
in any format to any window, screen or destination. With more experience
and expertise than any other company on the globe, we’re relied upon by the

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world’s leading content creators, aggregators and distributors for the
transformation, localization and distribution of their content.
About Deluxe Creative
Deluxe creative brands provide visual effects, post production and 2D-3D
conversion services for film, TV, advertising and immersive experiences. Our
creative artists, color scientists, supervisors, and technologists are pioneers
and leaders of the industry who realize the creative visions of the world's
greatest creators

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Deluxe Leadership
Eric Cummins
Chief Executive Officer
Justin Beaudin
Chief Operating Officer, Distribution
Daniel Gray
Chief Commercial Officer
Jamie Haggarty
President, Deluxe Creative Services
Stefanie Liquori
Executive Vice President, General Counsel and Chief Administrative Officer
Cindy McKenzie
Chief Information Officer
Andy Shenkler
Chief Product Officer

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Methodology
Sources of Data:
The information I needed to complete this report were collected from the
following sources:
Primary Sources:
Primary data are collected through sample survey and interviews with the
concerned party. It included the fresh or completely new data sources
collected for a specified purpose, such as interviews, observations etc.
Practical work exposures from different sections of the company
Secondary Sources:
Secondary data are collected through gathering of the published materials
(annual report) of the company, industry sales report from the concerned
authority. It included sources of existing/published data.
Limitation
During the study of the report we have faced following problems-

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 Time is not enough for such an extensive study.
 Information relating to the survey is very sensitive that is why
secondary data have been used in some extent.
 Sometimes it is difficult to understand a few accounting and financial
terms which could otherwise be incorporated sufficiently in preparing
the report.
Research plan
The entire project plan is based on the concept of right methodology. More
over through methodology the external! environment constitutes the
research by giving a depth idea on setting the right research objective,
followed by literature point of view, based on that chosen analysis through
interviews or questionnaires findings will be obtained and finally concluded
message by this research.
Research design
In this research report, I took exploratory research, A research design is the overall plan on
programming of research. It includes an outline of what the investigator will do from writing
the hypothesis and their operatioal implications to the final analysis of data. I used
exploratory research.
Data collection method
1. Primary
2. Secondary

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I collected my data regarding research report thought Secondary Data, balance sheet and
other financial reports were considered

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Data Collection and Analysis
Balance Sheet
(` in lacs)
Note No. 2016 2017 2018
EQUITY AND LIABILITIES
SHAREHOLDERS’ FUNDS
Share Capital 2.1 7100 7700.89 7700.89
Reserves and Surplus 2.2 215214 254710.48 244906.76
NON-CURRENT LIABILITIES 222314 262411.37 252607.65
Long-Term Borrowings 2.3 61078 110178.17 91630.9
Deferred Tax Liabilities (Net) 2.4 20921 24293.75 23421.38
Other Long-Term Liabilities 2.5 35845 35317.3 28862.26
Long-Term Provisions 2.6 3132 3117.06 2714.46
CURRENT LIABILITIES 120976 172906.28 146629
14423
Short-Term Borrowings 2.7 18112 14082.74 16310.49
Trade Payables 2.8 23676 18808.55 15474.23
Other Current Liabilities 2.9 63425 23547.43 49968.27
Short-Term Provisions 2.6 119636 7369.87 6865.97
63808.59 88618.96
TOTAL 462926 499126.24 487855.61
ASSETS
NON-CURRENT ASSETS
Fixed Assets 19145
Tangible Assets 2.1 182.7 192067.03 186121.62
Intangible assets 2.1 102342 189.73 363.34
Capital Work-In-Progress 12269.87 14166.77
121669.7
36123 204526.63 200651.73
Non-Current Investments 2.11 22134 36253.96 35202.55
Long-Term Loans and Advances 2.12 2912 22423.75 20335.36
Other Non-Current Assets 2.13 182838.7 2907.78 3006.5
CURRENT ASSETS 266112.12 259196.14

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63254.25
Current Investments 2.14 21231.25 95535.95 98197.36
Inventories 2.15 8700.5 55211.02 51510.71
Trade Receivables 2.16 45331.84 8812.5 7471.14
Cash and Bank Balances 2.17 10325.21 46677.06 50108.27
Short-Term Loans and
Advances 2.12 11608.25 10368.32 8055.39
Other Current Assets 2.13 160451.3 16409.27 233014.12 13316.6 228659.47
TOTAL 462926 499126.24 487855.61
Significant Accounting Policies 1
The Notes are an integral part of
the Financial Statements

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Current Ratio
Current Assets / current liabilities = Current Ratio
Year
Current Assets /
current liabilities =
Current Ratio
Ratio
2016 160451.3 1.34
119636
2017
233014.4
3.65
63808.59
2018
228659.5
2.58
88618.96
Now if we analyze the three years data it can be predicted that it did not
holds a stable position all throughout period but it is seen that current ratio
was in higher position(3.65) in 2017 with a little short fall (2.58) however
the company’s current ratio was 1.34 in the year 2016 which improved in
later years. The company is in better position to payoff its liabilities in
coparison with 2016.

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Current Ratio
1.34
3.65
2.58
0.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
4.00
2016 2017 2018
Ratio

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Absolute Liquid Ratio
Absolute Liquid Assets / Current Liabilities
Year
Absolute Liquid Assets / Current
Liabilities
Ratio
2016
120194.34
1.00
119636
2017
158622.28
2.49
63808.59
2018
161622.2
1.82
88618.96
Above analysis shows that the absolute liquid ratio in the year 2016 was
highest 2.49, in the year 2017 it was 1.82 and in the year it was least by
1.00. In all the three years analysis it is found that the company was always
in a better position as compared to rule of thumb standard of absolute
liquid ratio which is 0.50.

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ABSOLUTE LIQUID RATIO
1.00
2.49
1.82
0.00
0.50
1.00
1.50
2.00
2.50
3.00
Year 2016 2017
Ratio

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Ratio of current liabilities to proprietors funds
Current Liabilities / Share holders funds
Year
Current Liabilities /
Share holders funds
Ratio
2016
119636
0.54
222314
2017
63808.53
0.24
262411.4
2018
88618.96
0.35
252607.7
The above graphical presentation shows that the ratio of current liabilities to
proprietor funds was at the highest in the year 2016 which reduced in 2017
to 0.24 and again in the year 2018 it rises to 0.35. Since there is no rule of
thumb for this ratio it indicates the extent to which proprietors’ funds are
invested in current assets and the analysis showed that the company highly
invested proprietors fund in the year 2016.

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RATIO OF CURRENT LIABILITIES TO PROPRIETORS FUNDS
0.54
0.24
0.35
0.00
0.10
0.20
0.30
0.40
0.50
0.60
2016 2017 2018
Ratio

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1. Current assets to fixed assets ratio.
Year
Share holders funds Ratio
2016
160451.3
0.72
222314
2017
233014.1
1.14
204526.6
2018
228659.5
1.14
200651.7
Assuming a constant level of fixed assets, a higher CA/FA ratio indicates a
conservative current assets policy and a lower CA/FA ratio means an
aggressive current assets policy assuming other factors to be constant. A
conservative policy i.e. higher CA/FA ratio implies greater liquidity and
lower risk; while an aggressive policy i.e. lower CA/FA ratio indicates
higher risk and poor liquidity. Now if we analyze the three year data we
find the CA TO FA Ratio in increasing pattern, so we can say that company
is following the conservative policy to finance its short term capital
requirement

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CURRENT ASSETS TO FIXED ASSETS RATIO.
0.72
1.14 1.14
0.00
0.20
0.40
0.60
0.80
1.00
1.20
2016 2017 2018
Ratio

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Ratio of current assets to proprietors funds
(Current assets / shareholder funds) x 100
Year
(Current assets /
shareholder funds) x 100
Ratio
2016
160451.3
72.17
222314
2017
233014.12
88.80
262411.37
2018
228659.47
90.52
252607.65
The above analysis indicates the extent to which proprietors’ funds are
invested in current assets. Data depicted in above table revealed that the
company is consistently improving the current assets to proprietors funds
as the ratio in the year was 72.17 which increased to 88.80 in the year
2017 and in the year 2018 it was in its highest point of 90.52.

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RATIO OF CURRENT ASSETS TO PROPRIETORS FUNDS
72.17
88.80
90.52
0.50
10.50
20.50
30.50
40.50
50.50
60.50
70.50
80.50
90.50
100.50
2016 2017 2018
Ratio

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Return on share holders investment
(Net profit (after interest & tax)) / Share holder funds ) X 100
Year
Share holders funds Ratio
2016
17544.01
7.89
222314
2017
17544.01
6.69
262411.37
2018
12976.02
5.14
252607.65
Figure depicted in above table revealed return on shareholders’ investment ratio.
And the data revealed that the ratio is consistently decreasing year by year, in the
year 2016 it was 7.89 which decreased to 6.69 in the year 2017 and it was at its
lowest in the year 2018. The ratio of the last three years indicates that the
efficiency of the management in not using the resources of the business.

44
7.89
6.69
5.14
0.00
1.00
2.00
3.00
4.00
5.00
6.00
7.00
8.00
9.00
2016 2017 2018
Ratio

45
Fixed Assets net worth ratio
Fixed Assets / Share holder funds
Year
Fixed Assets / Share
holder funds
Ratio
2016
121669.7
0.55
222314
2017
204526.63
0.78
262411.37
2018
200651.73
0.79
252607.65
From the above analysis it can be interpreted that the fixed assets net worth
ratio of the company was not good in the year 2017 (0.78) and 2018 (0.79),
in the year 2016 it was in better position of 0.55. results revealed that the
less funds are available to meet current obligations and the firm is
vulnerable to solvency problems. As per the rule of thumb A ratio 0.75 or
higher is usually undesirable

46
PROPRIETARY RATIO
0.55
0.78
0.79
0.00
0.10
0.20
0.30
0.40
0.50
0.60
0.70
0.80
0.90
2016 2017 2018
Ratio

47
Shareholders funds / total assets
Year
Shareholders funds /
total assets
Ratio
2016
222314
0.48
462926
2017
262411.37
0.53
499126.24
2018
252607.65
0.52
487855.61
The above analysis shows that the proprietary ratio in the year 0.48, in the
year 2017 it was 0.53 and in 2018 it was 0.52 It means stockholders’ has
contributed almost more than 50% of the total tangible assets. The
remaining have been contributed by creditors. High proprietary ratio,
indicates a strong financial position of the company and greater security for
creditors.

48
SHAREHOLDERS FUNDS / TOTAL ASSETS
0.48
0.53
0.52
0.45
0.46
0.47
0.48
0.49
0.50
0.51
0.52
0.53
2016 2017 2018
Ratio

49
(Current assets / shareholder funds) x 100
2016
160451.3
72.17
222314
2017
233014.12
88.80
262411.37
2018
228659.47
90.52
252607.65
The above analysis indicates the extent to which proprietors’ funds are
invested in current assets. Data depicted in above table revealed that the
company is consistently improving the current assets to proprietors funds
as the ratio in the year was 72.17 which increased to 88.80 in the year
2017 and in the year 2018 it was in its highest point of 90.52.

50
0.00
10.00
20.00
30.00
40.00
50.00
60.00
70.00
80.00
90.00
100.00
2016
2017
2018
72.17
88.80 90.52
Ratio

51
(Net profit (after interest & tax)) / Share holder funds ) X 100
2016
17544.01
7.89
222314
2017
17544.01
6.69
262411.37
2018
12976.02
5.14
252607.65
Figure depicted in above table revealed return on shareholders’ investment
ratio. And the data revealed that the ration is consistently decreasing year
by year, in the year 2016 it was 7.89 which decreased to 6.69 in the year
2017 and it was at its lowest in the year 2018. The ratio of the last three
years indicates that the efficiency of the management in not using the
resources of the business.

52
0.00
1.00
2.00
3.00
4.00
5.00
6.00
7.00
8.00
2016
2017
2018
7.89
6.69
5.14
Ratio

53
Fixed Assets / Share holder funds
2016
121669.7
0.55
222314
2017
204526.63
0.78
262411.37
2018
200651.73
0.79
252607.65
From the above analysis it can be interpreted that the fixed assets net worth
ration of the company was not good in the year 2017 (0.78) and 2018 (0.79),
in the year 2016 it was in better position of 0.55. results revealed that the
less funds are available to meet current obligations and the firm is

54
0.00
0.10
0.20
0.30
0.40
0.50
0.60
0.70
0.80
2016
2017
2018
0.55
0.78
0.79
Ratio

55
Shareholders funds / total assets
2016
222314
0.48
462926
2017
262411.37
0.53
499126.24
2018
252607.65
0.52
487855.61
The above analysis shows that the proprietary ratio in the year 0.48,
in the year 2017 it was 0.53 and in 2018 it was 0.52 It means
stockholders’ has contributed almost more than 50% of the total
tangible assets. The remaining have been contributed by creditors.
High proprietary ratio, indicates a strong financial position of the
company and greater security for creditors.

56
0.45
0.46
0.47
0.48
0.49
0.50
0.51
0.52
0.53
2016
2017
2018
0.48
0.53
0.52
Ratio

57
FINDINGS
 Current ration was in higher position(3.65) in 2017 with a little short fall
(2.58) however the company’s current ration was 1.34 in the year 2016
which improved in later years.
 Absolute liquid ratio in the year 2016 was highest 2.49, in the year 2017 it
was 1.82 and in the year it was least by 1.00.
 In all the three years analysis it is found that the company was always in a
better position as compared to rule of thumb standard of absolute liquid
ratio which is 0.50.
 Ratio of current liabilities to proprietor funds was at the highest in the year
2016 which reduced in 2017 to 0.24 and again in the year 2018 it rises to
0.35.
 Ratio is consistently decreasing year by year, in the year 2016 it was 7.89
which decreased to 6.69 in the year 2017 and it was at its lowest in the
year 2018.
 Fixed assets net worth ratio of the company was not good in the year 2017
(0.78) and 2018 (0.79), in the year 2016 it was in better position of 0.55.
 Proprietary ratio in the year 0.48, in the year 2017 it was 0.53 and in 2018
it was 0.52 It means stockholders’ has contributed almost more than 50%
of the total tangible assets. The remaining have been contributed by
creditors. High proprietary ratio, indicates a strong financial position of the
company and greater security for creditors.

58
Suggestion
The company is in better position to pay off its liabilities in comparison with
2016. Still some precautionary measures needs to be taken to prevent the
fluctuation in the current ratio.
Since there is no rule of thumb for current liabilities to proprietor funds it
indicates the extent to which proprietors’ funds are invested in current
assets and the analysis showed that the company high investment
proprietors fund should be maintained.
Shareholders’ investment ratio management needs to use their efficiency to
use the resources of the business as the shareholders investment ratio did
not show significant performance.
Initiatives should be taken to make funds available to meet current
obligations and the firm is vulnerable to solvency problems and reduce the
fixed assets net worth ration should be reduces below the rule of thumb
0.75.
To be in much stronger financial position of the firm needs to maintain
proprietary ratio above 50% to ensure greater security for creditors.

59
CONCLUSION
The company is in better position to payoff its liabilities in comparison with
previous years performance.
In all the three years analysis it is found that the company was always in a
better position as compared to rule of thumb standard of absolute liquid
ratio which is 0.50.
Since there is no rule of thumb for ratio of current liabilities to proprietor
funds it may be concluded on the basis of the last three years performance
that the company had highly invested proprietors fund.
The return on shareholders’ investment ratio of the last three years
indicates that the efficiency of the management in not using the resources of
the business.
Less funds are available to meet current obligations and the firm is
It may also be concluded that firm had a strong financial position since high
proprietary ratio was satisfactory.

60
BIBLIOGRAPHY
1. Kothari C.R, “Research Methodology: Methods and
Techniques”, New Age International Publications (P) Ltd., New
Delhi,2014
2. Anil Kumar Dhagat “Financial management ”Dreamtech management
textbook publishers, 2008
3. Prasanna Chandra “Financial Management” Tata McGraw-Hill
publishing com. Ltd.,, 2001
4. Shashi K. Gupta “Financial Management” Kalyani Publishers , 2009
5. Kothari.C.R ”Research Methodology Vishwa Prakashan
Publishers,2004

61
Annexure
Balance Sheet
(` in lacs)
Note No. 2016 2017 2018
EQUITY AND LIABILITIES
SHAREHOLDERS’ FUNDS
Share Capital 2.1 7100 7700.89 7700.89
Reserves and Surplus 2.2 215214 254710.48 244906.76
NON-CURRENT LIABILITIES 222314 262411.37 252607.65
Long-Term Borrowings 2.3 61078 110178.17 91630.9
Deferred Tax Liabilities (Net) 2.4 20921 24293.75 23421.38
Other Long-Term Liabilities 2.5 35845 35317.3 28862.26
Long-Term Provisions 2.6 3132 3117.06 2714.46
CURRENT LIABILITIES 120976 172906.28 146629
14423
Short-Term Borrowings 2.7 18112 14082.74 16310.49
Trade Payables 2.8 23676 18808.55 15474.23
Other Current Liabilities 2.9 63425 23547.43 49968.27
Short-Term Provisions 2.6 119636 7369.87 6865.97
63808.59 88618.96
TOTAL 462926 499126.24 487855.61
ASSETS
NON-CURRENT ASSETS
Fixed Assets 19145

62
Tangible Assets 2.1 182.7 192067.03 186121.62
Intangible assets 2.1 102342 189.73 363.34
Capital Work-In-Progress 12269.87 14166.77
121669.7
36123 204526.63 200651.73
Non-Current Investments 2.11 22134 36253.96 35202.55
Long-Term Loans and Advances 2.12 2912 22423.75 20335.36
Other Non-Current Assets 2.13 182838.7 2907.78 3006.5
CURRENT ASSETS 266112.12 259196.14
63254.25
Current Investments 2.14 21231.25 95535.95 98197.36
Inventories 2.15 8700.5 55211.02 51510.71
Trade Receivables 2.16 45331.84 8812.5 7471.14
Cash and Bank Balances 2.17 10325.21 46677.06 50108.27
Short-Term Loans and
Advances 2.12 11608.25 10368.32 8055.39
Other Current Assets 2.13 160451.3 16409.27 233014.12 13316.6 228659.47
TOTAL 462926 499126.24 487855.61
Significant Accounting Policies 1
The Notes are an integral part of
the Financial Statements

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