Study on financial statement analysis

A PROJECT REPORT
ON
“TO STUDY OF FINANCIAL STATEMENTS & BOOKS OF ACCOUNTS
OF S.K COMPUPRINT PVT. LTD.”
S.K. COMPUPRINTS PVT. LTD.
In partial fulfilment of the requirement of
MASTER OF BUSINESS ADMINISTRATION –
In Rani Duragvati Vishwavidyalaya Jabalpur
UNDER THE GUIDANCE OF SUBMITTED BY
CHANDRA PRAKASH CHATURVEDI SHUBHAM JAIN
MBA IIIrd SEM
BG 3550
SHRI RAM INSTITUTE OF TECHNOLOGY
JABALPUR (M.P.)
Batch 2016-2018

SHRI RAM INSTITUTE OF TECHNOLOGY,JABALPUR (M.P.)
CERTIFICATE
This is to certify that Mr. SHUBHAM JAIN MBA III Sem student of SHRI RAM
INSTITUTE OF TECHNOLOGY entitled the project of “STUDY OF
FINANCIAL STATEMENTS & BOOKS OF ACCOUNTS OF S.K
COMPUPRINTS PVT. LTD” at S.K COMPU PRINTS PVT. LTD which is being
submitted herewith for the practice of Partial fulfillment of Masters in Business
Administration RDVV Jabalpur for the year 2017
It has been duly completed as record of bonafide work in practice of FINANCE &
MARKETING SRIT Jabalpur ,(M.P.)
Date Dr. ATUL DUBAY
SHRI RAM INSTITUTE OF TECHNOLOGY

CERTIFICATE
This is to certify that the Project Report entitled “STUDY OF FINANCIAL
STATEMENTS & BOOKS OF ACCOUNTS OF S.K COMPUPRINTS PVT.
LTD”” which is being submitted herewith for the award of the degree of Masters in
Business Administration, RDVV Jabalpur by SHBUHAM JAIN (MBA III Sem)
under my supervision and guidance.
Date:- MR.CHANDRA PRAKASH CHATURVEDI
Place: JABALPUR (Assistant Professor)

DECLARATION
I SHUBHAM JAIN do hereby declare that the project entitled “STUDY OF
FINANCIAL STATEMENTS & BOOKS OF ACCOUNTS OF S.K
COMPUPRINTS PVT. LTD” Carried at “S.K COMPUPRINTS PVT. LTD” is an
original work carried out by me under the guidance of CHANDRA PRAKASH
CHATURVEDI in partial fulfillment of Master Of Business Administration during
academic year, All the data represented in this project is true and correct to the best
of my knowledge and belief. This work has not been submitted for any other degree
exam elsewhere.
Place: JABALPUR MR.SHUBHAM JAIN
Date:

ACKNOWLEDGEMENT
It gives me pleasure in expressing my heartfelt gratitude and indebtedness for the
kind blessing showered upon me by honorable Mr. R. KARSOLIYA Chairman Shriram
Group of Institutions of Jabalpur (M.P.)
I would like to express my gratitude towards Principal for their kind cooperation and
encouragement which help me to completing the project.
I am highly indebted to Mr. CHANDRA PRAKASH CHATURVEDI for his guidance and
constant supervision as well as for providing necessary information regarding the
project and also for support in completing the project.
I am thankful to all the faculty members of Shri ram Institute of Management for
their help and valuable suggestion.
Date:- MR.SHUBHAM JAIN
Place: JABALPUR MBA III Sem

TABLE OF CONTENTS
S. No. Topic Page no.
1 EXECUTIVE SUMMARY 1
2 INTRODUCTION 2
3 COMPANY PROFILE 3
4 OBJECTIVE OF THE STUDY 5
5 CONCEPTUAL BACKGROUND 6
6 RESEARCH METHODOLOGY 18
7 DATA ANALYSIS AND INTERPRETATION 19
8 FINDINGS, SUGGESTIONS 29
9 CONCLUSION 31
10 BIBLIOGRAPHY 32
11 ANNEXURE 33

[1]
EXECUTIVE SUMMRY
Subject Matter: This Project report provides an analysis and interpretation of the
year 2015-16 and 2016-17 profitability, liquidity and financial stability of S.K
COMPUPRINTS PVT. LTD.
Methods of Analysis: Methods of analysis include horizontal and vertical
analyses as well as ratios such as Debt, Current and Quick ratios. Other calculations
include Total Assets and earnings before interest & Tax to name a few. Many other
calculation of can be found in this project.
Conclusion: The report finds the prospects of the company in its current position
are not positive. The major areas of weakness require further investigation and
remedial action by management.
Recommendations:
Recommendations discussed include:
• Improving the average collection period for accounts receivable·
• Improving/increasing inventory turnover·
• Reducing Prepayments and perhaps increasing inventory levels.
• Increase in purchase and Production activity.
Limitations of the report: two problems involved in such report are:
1. That firms use different accounting principles and methods.
2. That it is often difficult to define what industry and firm is really a part of and

[2]
INTRODUCTION
Financial statements are formal record of the financial activities of a business, person
or other entity and provide an overview of a business or person’s financial condition
in both short and long term. They give an accurate picture of a company’s condition
and operating results in a condensed form. Financial statements are used as a
management tool primarily by company executive and investor’s in assessing the
overall position and operating results of the company.
Analysis and Interpretation of financial statements help in determining the liquidity
position, long term solvency, financial viability and profitability of a firm. Ratio
analysis shows whether the company is improving or deteriorating in past years.
Moreover, comparison of different aspects of all the firms can be done effectively
with this. It helps the clients to decide in which firm the risk is less or in which one
they should invest so that maximum benefit can be earned.
Industries are capital intensive; hence a lot of money is invested in it. So before
investing in companies one has to carefully study its financial condition and
worthiness. An attempt has been carried out in this project to analyze and interpret the
financial statements of a company.
This project mainly focuses in detail the basic types of financial statements of S.K.
COMPUPRINTS PVT. LTD and calculation of financial ratios.
TECHNIQUES AND TOOLS OF FINANCIAL STATEMENT ANALYSIS
1.Comparative financial statements
2.Common size statements
3.Trend analysis
4.Ratio analysis
5.Funds flow analysis
6.Cash flow analysis

[3]
COMPANY PROFILE
S.K.COMPU PRINTS PVT.LTD. is one of the former companies which were
engaged in printing papers even when the printing technology is newly introduced
this company was Incorporated & Registered on 17-05-1988, And registered under
The Companies Act ,1956 within the Registrar office of Gwalior. S.K.COMPU
PRINTS PVT. LTD. is 30 year old company and it is known for its brand. It is the
medium size small scale manufacturing industry. No. of Employees work in this
company is 35 (30 Unskilled, and 5 Skilled).
The Manufacturing unit of the company is situated at STATION ROAD
GOTEGAON Distt. NARSINGHPUR Madhya Pradesh India and COMPANYS
Registered office is situated 990/99, Opp. D.N. JAIN COLLEGE Wright Town,
Jabalpur, M.P.
Company's Corporate Identification Number (CIN) is U21012MP1988PTC004596.
The Registration number is 004596.
S.K.COMPU PRINTS PVT.LTD. is Limited Liability Company with Authorized
capital Rs.2000000, Shareholders of S.K.COMPU PRINTS PVT.LTD. cannot sell or
transfer their shares without offering them first to other shareholders for purchase in
company.
Some of the Associated companies of S.K.COMPU PRINTS PVT.LTD. are
PARAS ROLLS
PARAS FORMS
The Former Members and Directors of S.K.COMPU PRINTS PVT.LTD. is
Mr. SUMATI KUMAR JAIN
Mr. SUNIL KUMAR JAIN
Mr. MANOJ CHAUHAN is one of the key person in the company who is managing
the accounts of the company
List of the product in which company deals.
• Media Kraft Paper: This is used in corrugated box manufacturing and by all
the industrial packaging units.
• Plain/Ribbed Kraft Paper: This is used as wrappers for books and notebooks
and also in all packaging industries.

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• White Poster and Color Poster: These are consumed by the printing presses
for wall posters and also for printing tickets, vouchers, etc.
• Manila paper: This is made out of No.1 white cutting, used for making
envelope
Some of their biggest clients are
• Indian railways
• Banks
• Electricity companies
SK COMPUPRINT produces bill papers for electricity companies. And A3 size
paper used for bank statement ticket list printing
Competitors
Some other players in this industry are:-
➢ ORIENTAL PAPERS
➢ SYNCO PVT. LTD.
➢ J.K PAPER MILLS
➢ ALPHA PAPERS

[5]
OBJECTIVES
The role objective of this project is to help the management of the organizations in
decision making regarding to subject matter.
Calculation of financial statement and ratio is only the clerical task whereas the
interpretation of its need immense skill intelligence foresightedness. One of the
easiest ways of evaluating performance of the organization is to compare its present
ratios with its past ones called comparison and through development action plans.
It gives the indication of the direction of change and reflects weather the
organization’s financial position is predominance has improved, deteriorated or
remain constant over the period of time.
Here much emphasis is given to historical comparison and on forecasting the
immediate future trends.
The importance of ratio analysis lies in the fact that it presents data on a comparative
basis and enables the drawing of inferences regarding the performance of the firm.
Purpose
The present study is made as a part of the MBA programme for training in the form
of on the job training
1. To know the financial position of S.K COMPUPRINTS PVT. LTD.
2. To know the liquidity position of S.K COMPUPRINTS PVT. LTD.
3. Know the overall profitability of S.K COMPUPRINTS PVT. LTD.
4. Performance of S.K COMPUPRINTS PVT. LTD. for gathering credit
providing loans and making investment.
5. Growth rate of S.K COMPUPRINTS PVT. LTD.

[6]
CONCEPTUAL BACKGROUND
Financial statements (or financial reports) are formal records of the financial activities
of a business, person, or other entity. Financial statements provide an overview of a
business or person's financial condition in both short and long term. All the relevant
financial information of a business enterprise, presented in a structured manner and in
a form easy to understand is called the financial statements.
The analysis of financial statement is a process of evaluating the relationship between
component parts of financial statement to obtain a better understanding of firm
financial position.
A complete set of financial statement comprises:
1)A statement of financial position as at the end of the period:
2)A statement of comprehensive income for the period;
3)A statement of changes in equity for the period:
4)A statement of cash flow for the period.
5) Notes of Account comprising a summary of significant accounting policies and
other explanatory information.
There are four basic financial statements:
1. Balance sheet: It is also referred to as statement of financial position or
condition, Reports on a company's Assets, Liabilities, and Ownership equity as of
a given point in time. The Balance Sheet shows the health of a business from day
one to the date on the balance sheet.
2. Income statement: It is also referred to as Profit and Loss statement (or
"P&L"), reports on a company's income, expenses, and profits over a period

[7]
of time. Profit & Loss account provide information on the operation of the
enterprise. These include sale and the various expenses incurred during the
processing state. The income statement shows a presentation of the sales, the
main expenses and the resulting net income over the period. Net income is
based on accounting principles which gives guidance/rules on when to
recognize revenues and expenses, whereas cash from operating activities,
obviously is cash based.
3. Cash Flow Statement: It reports on a company's cash flow activities,
particularly its operating, investing and financing activities. The statement of
cash flows the ins and outs of cash during the reporting period. The statement
of cash flows takes aspects of the income statement and balance sheet and kind
of crams them together to show cash sources and uses for the period.
2.1 BALANCE SHEET
In financial accounting, a balance sheet or statement of financial position is a
summary of a person's or organization's balances. A balance sheet is often described
as a snapshot of a company's financial condition. It summarizes a company's assets,
liabilities and shareholders' equity at a specific point in time. These three balance
sheet segments give investors an idea as to what the company owns and owes, as well
as the amount invested by the shareholders. Of the four basic financial statements, the
balance sheet is the only statement which applies to a single point in time.
A company balance sheet has three parts: assets, liabilities and ownership equity. The
main categories of assets are usually listed first and are followed by the liabilities.
The difference between the assets and the liabilities is known as equity or the net
assets or the net worth or capital of the company. It's called a balance sheet because
the two sides balance out. A typical format of the balance sheet has been given in
Table 2.1. It works on the following formula:
Assets = Liabilities + Shareholders' Equity

[8]
1 FORMAT OF BALANCE SHEET
ASSETS Amount
1. Fixed Assets
Tangible fixed assets
Intangible fixed assets
2. Investment
3. Current Assets, Loan and Advances
3.1. Current Assets
Bills Receivables
Closing Stock
Interest on Investment
Cash at Bank
Cash on Hand
Securities Deposit
Fixed Deposit with Banks
3.2. Loans and Advances
Prepaid Expenses Tax
Paid in Advance
Advance paid
4. Miscellaneous Expenditure
Preliminary Expenses
Revenue Expenditures
Discount Allowed
TOTAL

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LIABILITIES Amount
1. Share Capital
Equity Share Capital
2. Reserves & surpluses
Capital Reserve General
Account Capital
Redemption Reserve
3. Secured Loans
Debentures Loan
Long Term Loan Other
Secured Loans
4. Unsecured Loans
Fixed Deposit
Short Term Loans
Other Loans
5. Current Liabilities & Provisions
5.1. Current Liabilities
Bills Payable
Sundry Creditors
Bank Overdraft
Other Liabilities (if any)
5.2. Provisions
Provision for Tax
Proposed Dividend
TOTAL

[10]
1.2 CONTENTS OF BALANCE SHEET
(A) Assets
In business and accounting, assets are economic resources owned by business or
company. Any property or object of value that one possesses, usually considered as
applicable to the payment of one's debts is considered an asset. Simplistically stated,
assets are things of value that can be readily converted into cash.
The balance sheet of a firm records the monetary value of the assets owned by the
firm. It is money and other valuables belonging to an individual or business.
Types of Assets
There is two major type of assets:
1. Tangible assets
2. Intangible assets
Tangible Assets
Tangible assets are those have a physical substance, such as equipment and real
estate.
Intangible Assets
Intangible assets lack physical substance and usually are very hard to evaluate. Assets
which do not possess any material value. They include patents, copyrights,
franchises, goodwill, trademarks, trade names, etc.
Types of Tangible Assets
1. Fixed Assets
This group includes land, buildings, machinery, vehicles, furniture, tools,
and certain wasting resources e.g., timberland and minerals. It is also
referred to as PPE (property, plant, and equipment), these are purchased for
continued and long-term use in earning profit in a business.
2. Current Assets

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Current assets are cash and other assets expected to be converted to cash,
sold, or consumed either in a year or in the operating cycle. These assets are
continually turned
over in the course of a business during normal business activity. There are 5
major items included into current assets:
• Cash and Cash Equivalents
It is the most liquid asset, which includes currency, deposit accounts, and
negotiable instruments (e.g., money orders, cheque, bank drafts).
• Short-term Investments
It includes securities bought and held for sale in the near future to generate
income on short term price differences (trading securities).

• Receivables
It is usually reported as net of allowance for uncollectable accounts.
• Inventory
The raw materials, work- in-process goods and completely finished goods
that are considered to be the portion of a business's assets that is ready or will
be ready for sale.
• Prepaid Expenses

These are expenses paid in cash and recorded as assets before they are used or
consumed (a common example is insurance). The phrase net current assets
(also called working capital) are often used and refer to the total of current
assets less the total of current liabilities.

2. Investments
• Shares and Securities, such as bonds, common stock, or long-term notes
• Associate Companies
• Investments in special funds (e.g., sinking funds or pension funds).
• Fixed deposits with banks/finance companies
• Investments in fixed assets not used in operations (e.g., land held for sale).
Remark: While fixed deposits with banks are considered as fixed assets, the
investments in associate concerns are treated as non-current assets.
4. Loans and Advances include
• House building advance

[12]
• Car, scooter, computer etc. advance
• Multipurpose advance
• Transfer travelling allowance advance
• Tour travelling allowance advance
• DRS payment.

B Liability
1. Reserves

• Subsidy Received From The Govt.
• Development Rebate reserve
• Issue of Shares at Premium
• General Reserves
A liability is a debt assumed by a business entity as a result of its borrowing activities
or other fiscal obligations (such as funding pension plans for its employees).
Liabilities are debts and obligations of the business they represent creditors claim on
business assets.
Types of Liabilities
1. Current Liabilities
Current liabilities are short-term financial obligations that are paid off within one
year or one current operating cycle. These liabilities are reasonably expected to be
liquidated within a year. It includes:
• Accrued expenses as wages, taxes, and interest payments not yet paid
• Accounts payable
• Short-term notes
• Cash dividends and
• Revenues collected in advance of actual delivery of goods or services.
2. Long-Term Liabilities
Liabilities that are not paid off within a year, or within a business's operating cycle,
are known as long-term or non-current liabilities. Such liabilities often involve large
sums of money necessary to undertake opening of a business, major expansion of a
business, replace assets, or make a purchase of significant assets. These liabilities are
reasonably expected not to be liquidated within a year. It includes:

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• Notes payable- debt issued to a single investor.
• Bonds payable – debt issued to general public or group of investors.
• Mortgages payable.
• Capital lease obligations – contract to pay rent for the use of plant, property or
equipments.
• deferred income taxes payable, and
• Pensions and other post-retirement benefits.
3. Contingent Liabilities
A third kind of liability accrued by companies is known as a contingent liability. The
term refers to instances in which a company reports that there is a possible liability
for an event, transaction, or incident that has already taken place; the company,
however, does not yet know whether a financial drain on its resources
4. Fixed Liability
The liability which is to be paid of at the time of dissolution of firm is called fixed
liability.
Examples - Capital, Reserve and Surplus.
5. Secured Loans
A secured loan is a loan in which the borrower pledges some asset (e.g. a car or
property) as collateral for the loan, which then becomes a secured debt owed to the
creditor who gives the loan.
6. Unsecured Loans
An unsecured loan is a loan that is not backed by collateral. It is also known as
signature loan and personal loan. Unsecured loans are based solely upon the
borrower's credit rating. An unsecured loan is considered much cheaper and carries
less risk to the borrower. However, when an unsecured loan is granted, it does not
necessarily have to be based on a credit score.
2. PROFIT & LOSS STATEMENT
Income statement, also called profit and loss statement (P&L) and Statement of
Operations is financial statement that summarizes the revenues, costs and expenses
incurred d uring a specific period of time - usually a fiscal quarter or year. These

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records provide information that shows the ability of a company to generate profit by
increasing revenue and reducing costs. The purpose of the income statement is to
show managers and investors whether the company made or lost money during the
period being reported. The important thing to remember about an income statement is
that it represents a period of time. This contrasts with the balance sheet, which
represents a single moment in time. A typical format of the Profit & Loss Statement
has been given in Table 2.2.
2. FORMAT OF PROFIT & LOSS STATEMENT
PARTICULARS Amount PARTICULARS Amount
Gross Profit(Transferred) Gross Profit(Transferred)
Office and Administration
Exp:
Interest received
Salaries Rent received
Rent Discount received
Postage & telegrams Dividend received
Office electric charges Bad debts recovered
Telephone charges Provision for discount on creditors
Printing and stationary Net loss( if any)
Selling and Distribution
Expences:
Carriage outward
Advertisement
Salesmen's salaries
Commission
Insurance
Traveling expense
Bad debts
Packing expense
Financial and Other Expenses:

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Depreciation
Repair
Audit fee
Interest paid
Commission paid
Bank charges
Legal charges
Profit before Interest
Less- Net Interest
Profit before Tax
Less- Tax Payable
Profit after Tax
Less- Dividend
Retained Profit

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2.2 CONTENTS OF PROFIT & LOSS STATEMENT
a. Revenue - Cash Inflows or other enhancements of assets of an entity during
a period from delivering or producing goods, rendering services, or other
activities that constitute the entity's ongoing major operations.
b. Expenses - Cash outflows or other using- up of assets or incurrence of
liabilities during a period from delivering or producing goods, rendering
services, or carrying out o there activities that constitute the entity's ongoing
major operations.
c. Turnover
The main source of income for a company is its turnover, primarily
comprised of sales of its products and services to third-party customers.
d. Sales
Sales are normally accounted for when goods or services are delivered and
invoiced, and accepted by the customer, even if payment is not received until
some time later, even in a subsequent trading period.
e. Cost of Sales (COS)
The sum of direct costs of goods sold plus any manufacturing expenses
relating to the sales (or turnover) is termed cost of sales, or production cost of
sales, or cost of goods sold. These costs include:
• Costs of raw materials stocks
• Costs of inward-bound freight paid by the company
• Packaging costs
• Direct production salaries and wages
• Production expenses, including depreciation of trading-related fixed assets.

(f) Other Operating Expenses
These are not directly related to the production process, but contributing to the
activity of the company, there are further costs that are termed ‘other operating
expenses’. These comprises of costs like:
• Distribution costs and selling costs,
• Administration costs, and

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• Research and development costs (unless they relate to specific projects and the
costs may be deferred to future periods).

(g) Other Operating Income
Other operating income includes all other revenues that have not been included in
other parts of the profit and loss account. It does not include sales of goods or
services, reported turnover, or any sort of interest receivable, reported within the net
interest category.
(h) Gross Margin (or Gross Profit)
The difference between turnover, or sales, and COS is gross profit or gross margin. It
needs to be positive and large enough to at least cover all other expenses.
(i) Operating Profit (OP)
The operating profit is the net of all operating revenues and costs, regardless of the
financial structure of the company and whatever exceptional events occurred during
the period that resulted in exceptional costs. The profit earned from a firm's normal
core business operations. It is also known as Earnings before Interest and Tax (EBIT).
Operating Profit = Turnover - COS - other Operating Expenses +
Other Operating Income
(j) Profit before Tax (PBT)
A profitability measure that looks at a company's profits before the company has to
pay corporate income tax. This measure deducts all expenses from revenue including
interest expenses and operating expenses, but it leaves out the payment of tax.
(k) Profit after Tax (PAT)
PAT, or net profit, is the profit on ordinary activities after tax. The final charge that a
company has to suffer, provided it has made sufficient profits, is therefore corporate
taxation.
PAT = PBT - Corporation Tax
(l) Retained Profit
The retained profit for the year is what is left on the profit and loss account after
deducting dividends for the year. The balance on the profit and loss account forms
part of the capital (or equity, or shareholders’ funds) of the company.

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Research methodology
Research in common parlance refers to a search for knowledge. Once can also define
research as a scientific and systematic search for pertinent information on a specific
topic. In fact, research is an art of scientific investigation. The research involved
extensive and intensive studies of S.K COMPUPRINTS PVT. LTD. In this project
report a sincere effort has been made to study the financial statements and books of
account of the company. During the study, I study the financial position and
performance of the company at last I have given interpretation and conclusion of the
study.
Types of data
1. Primary data
2. Secondary data
Primary data is the data which is collected for the first time or we can say that it is the
raw data which a researcher gets and he has to process to retain meaning full
information from it.
Secondary data means data that are already available i.e., they refer to the data which
have already been collected and analyzed by someone else. When the researcher
utilizes secondary data, then he has to look into various sources from where he can
obtain them. In this case he is certainly not confronted with the problems that are
usually associated with the collection of original data. Secondary data may either be
published data or unpublished data. Researcher must be very careful in using
secondary data. He must make a minute scrutiny because it is just possible that the
secondary data may be unsuitable or may be inadequate in the context of the problem
which the researcher wants to study
.
Whole of my study is based on secondary data of S.K. COMPUPRINTS PVT. LTD.
I have not taken any primary data for my study because primary data would not have
been help full for my study.
During the tenure of my study I have taken help of the following secondary data.
1. Balance sheet of S.K COMPUPRINTS PVT. LTD.
2. Revenue statement of S.K COMPUPRINTS PVT. LTD.

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DATA INTERPRETATION
FINANCIAL RATIO ANALYSIS
Accounting ratios are an important tool of financial statements analysis. A ratio is a
mathematical number calculated as a reference to relationship of two or more
numbers and can be expressed as a fraction, proportion, percentage and a number of
times.
The study of financial statements and ratio analysis of S.K COMPUPRINTS
PVT.LTD. from 1/4/2015-31/3/2017 has been carried out below.
3.1 RATIO ANALYSIS
Ratio analysis helps in concluding the following aspects:
To know about Liquidity Position:
Ratio analysis helps in determining the liquidity position of the firm. A firm can be
said to have the ability to meet its current obligations when they become due. It is
measured with the help of liquidity ratios.
To Know about Long- Term Solvency:
Ratio analysis helps in assessing the long term financial viability of a firm. Long-
term solvency measured by leverage/capital structure and profitability ratios.
To Know about Operating Efficiency:
Ratio analysis determines the degree of efficiency of management and utilization of
assets. It is measured by the activity ratios.
To know about Over-All Profitability:
The management of the firm is concerned about the overall profitability of the firm
which ensures a reasonable return to its owners and optimum utilization of its assets.
This is possible if an integrated view is taken and all the ratios are considered
together.
To Know About Inter- firm Comparison:
Ratio analysis helps in comparing the various aspects of one firm with the other.

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3. WORKING CAPITAL
Working is one of the essential element for proper business operations. Working
capital is required for day to day business transaction so it is very essential to
maintain an optimum level of working capital to run business flawlessly. It measures
the liquidity of a firm.
7000000
8000000
9000000
2013 2014
WORKING
CAPTAL
WORKING CAPTAL
YEAR RATIOS PARTICULARS VALUE REMARKS
2016 Working Capital =
Current assets-Current
liabilities
Current Assets =
16873903.23
Current Liabilities =
9242076.00
7631827.23 Liquidity
position
is good
2017 Working Capital =
Current assets-Current
liabilities
Current Assets =
14599526.13
5829307.00
8770219 Liquidity
position
is good

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4. Current Ratio
Current ratio is the proportion of current assets to current liabilities. It is
expressed as follows:
Current Ratio = Current Assets
Current Liabilities
2013 2104 CURRENT
RATIO
0
0.5
1
1.5
2
2.5
2016 Current Ratio =
Current Assets
Current Liabilities
Current Assets =
16873903.23
9242076.00
1.82:1 It is safe
2017 Current Ratio =
Current Assets
Current Liabilities
Current Assets =
14599526.13
5829307.00
2.5:1 It is safe

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3. Quick Ratio
The quick assets are defined as those assets which are quickly convertible into
cash. While calculating quick assets we exclude the inventories at the end and
other current assets such as prepaid expenses, advance tax, etc., from the current
assets. Because of exclusion of non-liquid current assets it is considered better
than current ratio as a measure of liquidity position of the business. It is calculated
to serve as a supplementary check on liquidity position of the business and is
therefore, also known as ‘Acid-Test Ratio’.
Quick ratio = Quick Assets
Current Liabilities
0
0.5
1
1.5
2
2016 2017
liquid assets
2016 Acid test or Quick
ratio =
Liquid assets
Current liabilities
Liquid Assets =
12138722.23
Current Liabilities=
9242076.00
1.31:1 It is good
2017 Acid test or Quick
ratio =
Liquid assets
Current liabilities
Liquid Assets =
10493920.13
Current Liabilities=
5829307.00
1.80:1 It is good

[23]
4. Inventory Turnover Ratio
It determines the number of times inventory is converted into revenue from
operations during the accounting period under consideration. It expresses the
relationship between the cost of revenue from operations and average inventory.
The formula for its calculation is as follows:
Inventory Turnover Ratio = Cost of Revenue from Operations / Average Inventory
Average Inventory= (opening inventory + closing inventory)/2
Average inventory for the year 2017
Opening inventory = 4735181.00
Closing inventory = 4105606.00
Avg. inventory =8840787.00(4735181.00+4105606.00)
2
1.24 1.26 1.28 1.3 1.32 1.34
2016
2017
YEAR RATIOS PARTICULARS VALUE
2016 Inventory Turnover
= Cost of Revenue from Operations
Average Inventory
Cost of Revenue from Operations =
6040251.95
Average Inventory =
4735181.00
1.27:1
2017 Inventory Turnover
= Cost of Revenue from Operations
Average Inventory
Cost of Revenue from Operations =
5894797.00
Average Inventory =
4420393.00
1.33:1

[24]
5. Net Assets or Capital Employed Turnover Ratio
It reflects relationship between revenue from operations and net assets (capital
employed) in the business. Higher turnover means better activity and profitability.
It is calculated as follows :
Net Assets or Capital Employed Turnover ratio = Revenue from Operation
Capital Employed
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
2016 2017
NET ASSETS
RATIO
2016 Net Assets Turnover Ratio =
Revenue from Operation
Capital employed
Revenue from Operation =
9092971
Capital employed=
11557664
0.78:1
2017 Net Assets Turnover Ratio =
Revenue from Operation
Capital employed
Revenue from Operation =
7713808
Capital employed=
12661414
0.60:1

[25]
6. Net profit ratio
Net profit ratio is based on all inclusive concept of profit. It relates revenue from
operations to net profit after operational as well as non-operational expenses and
incomes. It is calculated as under:
Net Profit Ratio = Net profit/Revenue from Operations 100
0
0.5
1
2016 2017
NET PROFIT in %
NET PROFIT in %
2016 Net profit ratio =
Net profit
Revenue from Operations
Net profit =
51214.14
Revenue from Operations =
9092971.00
0.56%
2017 Net profit ratio =
Net profit
Revenue from Operations
Net profit =
57398.90
Revenue from Operations =
7713808.00
0.74%
X 100
100
X 100
100

[26]
Variation in turnover of the company during two financial
years
7000000
7500000
8000000
8500000
9000000
9500000
2016 2017
SALES
COMPRATIVE STATEMENTS
Table: 3 COMPARATIVE INCOME STATEMENT
Particulars Previous Current Absolute Percentage
Year Year Change change
Sales 9092971.00 7713808.00 -1379163 -15.16%
Less- Cost of Goods Sold 6040251.95 5894797.00 -145454.95 -2.40%
Gross Profit 3052719.05 1819011.00 -
1233708.05
-40.14%
Less-Operating Exp. 2510630.43 1518132.03 -992498.4 -3.52%
Earnings Before Interest
& Tax
542088.62 300878.97 -241209.65 -33.39%
Add- Interest 490874.48 243480.07 -247394.41 -100%
Profit 51214.14 57398.90 6184.76 12.07%

[27]
• Percentage Change =
Absolute Change
Figures of the previous year
3 Summary for Balance Sheet and Profit & Loss Statement
Table 3.1 Summary of Balance Sheet
PARTICULARS 2016 2017 Remarks
Current Assets 16873903.23 14599526.13 Short term liquidity available is
favorable.
Fixed Assets 3925837.89 3891195.89 Fixed Assets have decreased due to
decrease in loans and advances.
Current Liabilities 9242076.00 5829307.00 Substantial decrease in
liabilities. Liquidity position is
good.
Long Term
Liabilities
8153647.44 9227074.44 Debts have increased because of
borrowings.
Table 3.2 Summary of Profit & Loss Statement
PARTICULARS 2016 2017 Remarks
Purchase 8651932.95 5265222.00 Purchase has decreased by 39.14%
Cost of Goods Sold 6040251.95 5894797.00 COGS has decreased by 2.40%
Sale 9092971.00 7713808.00 Sales have decreased by 15.16%
Gross Profit 3052719.05 1819011.00 Gross Profit has decreased by
40.14%
Net Profit 51214.14 57398.90 Net profit has increased by 12.07%

[28]
Table: 4 Comparative Balance Sheet of S.K. COMPUPRINTS PVT.
LTD
Particulars
Pervious
Year
Current
Year
Absolute
Change
Percentage
Change
Car 593850 504772.5 (89077.5) 15%
Mobile 59773.74 53842.29 (5931.45) 9.92%
Motor Bike 31181.65 26504.40 (4677.25) 15%
Plant & Machinery 687189.75 584111.4 (103078.35) 14.99%
LCD Monitor - 6936 - -
Tata Ace 207201.51 176121.28 (148919.77) 71.87%
Closing Stock 1035485 1235091 199606 19.28%
Loans & Advances (Assets) 53073 35642 (17431) 34.81%
Sundry Debtors 1425712.6 917360.62 (508351.98) 35.66%
Cash in Hand 24869.00 1544699 1519830 61.11%
Bank Accounts 6101.48 6101.48 - -
Total 4124437.85 5091181.97 966744.12 23.43%
Capital Account 634506.05 353,181.05 281325 44.33%
Loans (Liability) 1851845.9 1908532.9 (56687) 3.06
Current Liabilities 1,638,085.9 2,493,868.57 855782.67 52.24%
Total 4124437.85 5091181.97 966744.12 23.43%

[29]
FINDINGS
This report work has identified how companies use financial statement analysis and
interpretation in making effective management decisions. Overall organizational
profitability and achievement of organizational objectives were discussed. Again
the difference between the returns of a financial statement analysis and
interpretation based on management decisions were also discussed.
• Gross profit is decreased during the period of 1/4/2015-31/3/2017, but net
profit Increased which indicates that company’s efficient management in
manufacturing and trading operations and
• Liquidity ratio of the firm is better liquidity position in over the two years. It
shows that the firm had sufficient liquid assets.

• The fixed asset turnover ratio of the firm has in 1/4/2015-31/3/2017 the ratio
is 2.31 or 1.98 respectively and it Decrease.

• cost ratio of the company has Decreased during the period of 1/4/2015-
31/3/2017

• Current liabilities are Decreased by 36.92%

• Current assets Ratio are Increased in two years.

• Net profit also Increased by 12.07%

• Return on Investment has increased.

• Gross Profit has decreased by 40.14%

• It was found that there is an increase in inventory turnover from 1.27 to 1.33

• There is decrease in turnover noticed in the year 2016-17 as compared to
year 2015-16
From the above findings is clearly understand that company is in favorable
condition in term of working capital and net profit company also invested excess
current assets above the ideal current ratio which is 2:1 in the short term investment
which is one of the best way to utilized idle working capital.

[30]
Suggestion & recomandetions
• Companies should take a step to increase its sale in order to save form
suffering loss.
• It was also suggested that company take proper measure to reduce its
operating expenses.
• Improving the average collection period for accounts receivable.

• Improving/increasing inventory turnover.

• Reducing Pre-payments and perhaps increasing inventory levels.

• Increase in purchase and Production activity.

• Proper measure should be applied to dispose off the waste product.
• Company should take proper measure to increase its growth rate like pre
production planning, or observing market conditions.

[31]
CONCLUSION
Analysis and interpretation of financial statements is an important tool in assessing
company’s performance. It reveals the strengths and weaknesses of a firm. It helps
the clients to decide in which firm the risk is less or in which one they should
invest so that maximum benefit can be earned. It is known that investing in any
company involves a lot of risk. So before putting up money in any company one
must have thorough knowledge about its past records and performances. Based on
the data available the trend of the company can be predicted in near future.
This project of financial analysis & interpretation in the production concern is not
merely a work of the project but a brief knowledge and experience of that how to
analyze the financial performance of the firm. The study undertaken has brought in
to the light of the following conclusions. According to this project I came to know
that from the analysis of financial statements it is clear that S.K. COMPUPRINTS
PVT. LTD have been incurring profit during the period of study. So the firm
should focus on getting of more profits in the coming years by taking care internal
as well as external factors. And with regard to resources, the firm is take utilization
of the assets properly. And also the firm has a maintained low inventory.
This project mainly focuses on the basics of different types of financial statements.
Balance Sheet and Profit & Loss statements of S.K. COMPUPRINTS PVT. LTD.
have been studied.
From ratio analysis of Balance Sheet and P & L Statement of S.K.
COMPUPRINTS PVT. LTD of 1/4/2015-31/3/2017 it was concluded that
liquidity position of the company is good. Current ratio, debt-equity ratio, quick
ratio, net profit margin, operating profit margin, gross profit margin, return on
assets, return on investments and return on capital employed were found to be
unacceptable. The ratios that are found to be desirable are Current Ratio, Return
On investment and Return on working capital and Debt – Equity Ratio.
Tally 9.0 is used for analyzing the balance sheet and profit & loss statements of a
company and calculating the financial ratios. In this project MS EXCEL is used to
prepare the balance sheet and calculate the financial ratios of different companies.
Profit & Loss Statements of companies were

[32]
Bibliography
Web Site.
❖
www.zaubacorp.com
Link

companyinfoz.com/company/skcompu-prints-pvtltd
Date :- 30/10/2013 Time : 7:12pm
https://www.zaubacorp.com/company/...COMPU-PRINTS
Date :- 9/11/2013 Time : 8:12pm
Books Name
1. M.Y. KHAN, P.K.JAIN (1981), Financial Management, and Cost
Accounting (third edition) New Delhi: McGraw – Hill publishing company
limited.
2. I.M.PANDEY.Financial Management New Delhi Vikas publishing house
private Ltd – ninth addition 2004
3. Financial Statement
4. Financial Management
5. Research Methodology- C.R. KOTHARI

[33]
Annexure
Table 5: Balance Sheet of S.K COMPUPRINTS PVT.LTD. as at
31st Mar -2016
PARTICULARS Amount Amount
Source of Funds:
Shareholder’s fund 3404017.68
Share Capital
Reserves & surplus
Money received against share warrants
2000000.00
1404017.68
Non-current liability 8153647.44
Long term liabilities(net) 8153647.44
Current Liabilities 9242076.00
Short term Provision 35213.00
Sundry Creditors 4799617.00
Short term loans 2531558.00
Othercurrent liabilities 1875688.00
Total 20799741.12
Application of Funds:
Fixed Assets 3925837.89
Tangible fixed assets 3785016.14
Other non-current assets 140821.75
Current Assets 16873903.23
Closing Stock 4735181.00
Loans & Advances (Assets) 6155099.00
Sundry Debtors 3845815.51
Other current assets 2137807.72
Total 20799741.12

[34]
Table 5.1: Balance Sheet of S.K COMPUPRINTS PVT.LTD. as at
31st Mar -2017
PARTICULARS Amount Amount
Source of Funds:
Shareholder’s fund 3434340.58
Share Capital
Reserves & surplus
Money received against share warrants
2000000.00
1434340.58
Non-current liability 9227074.44
Long term liabilities(net) 9227074.44
Current Liabilities 5829307.00
Short term Provision 26688.00
Sundry Creditors 4654619.00
Short term loans 0.00
Othercurrent liabilities 1148000.00
Total 18490722.02
Application of Funds:
Fixed Assets 3891195.89
Tangible fixed assets 3401222.14
Other non-current assets 489973.75
Current Assets 14599526.13
Closing Stock 4105606.00
Loans & Advances (Assets) 6909423.00
Sundry Debtors 3359315.25
Other current assets 225181.88
Total 18490722.02

[35]
6.1 Revenue statement for the year ended 2016
Particulars Amount
I. Revenue from operations 9092971.00
II. Other Income 705461.00
III. Total Revenue (I +II) 9798432.00
IV. Expenses:
Purchase of Stock-in-Trade 8651932.95
Changes in inventories of finished goods, work-in-
progress and Stock-in-Trade
-2611681.00
Employee benefit expense 553341.00
Financial costs 1092855.00
Depreciation and amortization expenses 503276.00
Other expenses 1557493.91
IV. Total Expenses 9747217.86
V. Profit before exceptional and
extraordinary items and tax
51214.14
VI. Exceptional Items 0.00
VII. Profit before extraordinary items and
tax (V - VI)
51214.14
VIII. Extraordinary Items 0.00
IX. Profit before tax (VII - VIII) 51214.14
X. Tax expense:
(1) Current tax 15825.00
(2) Deferred tax
XI. Profit(Loss) from the perid from
continuing operations
35389.14
XII. Profit/(Loss) from discontinuing
operations
0.00
XIII. Tax expense of discounting
operations
0.00
XIV. Profit/(Loss) from Discontinuing
operations (XII - XIII)
0.00
XV. Profit/(Loss) for the period (XI + XIV) 35389.14

[36]
6.2 Revenue statement for the year ended 2017
Particulars Amount
I. Revenue from operations 7713808.00
II. Other Income 646430.74
III. Total Revenue (I +II) 8360238.74
IV. Expenses:
Purchase of Stock-in-Trade 5265222.00
Changes in inventories of finished goods, work-in-
progress and Stock-in-Trade
629575.00
Employee benefit expense 554875.00
Financial costs 638911.94
Depreciation and amortization expenses 433794.00
Other expenses 780461.90
IV. Total Expenses 8302839.84
V. Profit before exceptional and
extraordinary items and tax
57398.90
VI. Exceptional Items 0.00
VII. Profit before extraordinary items and
tax (V - VI)
57398.90
VIII. Extraordinary Items 0.00
IX. Profit before tax (VII - VIII) 57398.90
X. Tax expense:
(1) Current tax 17736.00
(2) Deferred tax
XI. Profit(Loss) from the perid from
continuing operations
39662.90
XII. Profit/(Loss) from discontinuing
operations
0.00
XIII. Tax expense of discounting
operations
0.00
XIV. Profit/(Loss) from Discontinuing
operations (XII - XIII)
0.00
XV. Profit/(Loss) for the period (XI + XIV) 39662.90

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