This presentation provides a comprehensive and comparative information about the financial status of OPTCL. The presentation provides data regarding comparative statements, trend analysis, ratio analysis and cash flow statement of the company for a period of 6 consecutive years. After analyzing the data recommendations and suggestions are also given.
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Financial Statement Analysis of OPTCL, BBSR
1. FINANCIAL STATEMENT
ANALYSIS OF OPTCL, BBSR
PRESENTED BY
BIKASH NARAYAN NAIK
17/06/DBM/06
DEPARTMENT OF BUSINESS
MANAGEMENT
CENTRAL UNIVERSITY OF ORISSA
2. INTRODUCTION
• Financial statements contain summarized information of the
firm’s financial affairs, organized systematically. They are the
means to present the firm’s financial situation to the users.
• Financial statement analysis not only helps largely in finding
the goal division of a business enterprise but also guides,
ensuring, effective and efficient utilization of available
resources both physical and financial.
• The financial statement analysis is the starting point for
making plans, before using any sophisticated forecasting and
planning procedures.
3. SIGNIFICANCE OF STUDY
• To indicate areas of strength or weakness.
• To examine relationships among financial statement elements
and making comparisons with relevant information.
• Assess the past performance and current financial position and
to make predictions about the future performance of a
company.
• To communicates the financial information to the users.
4. RESEARCH METHODOLOGY
1. Sources of data:
Secondary data: Financial statements of OPTCL for 6 years,
company websites, Journal articles and textbooks.
2. Tools used for the analysis: The performance of the company
has been analyzed on the basis of Profitability, Liquidity,
Solvency and Efficiency.
Tools used are:
• Comparative statement
• Trend analysis
• Ratio analysis
• Cash flow statements
5. 3. Limitations of the study:
• The study is based on the secondary data.
• It may be possible that the data shown in the annual reports
may be window dressed which does not show the actual
position of the company.
• The overall performance is taken into consideration without
taking into the account of the individual values.
• Detail information about certain parameter could not be
obtained due to secrecy.
6. COMPANY PROFILE
• ODISHA POWER TRANSMISSION CORPORATION
LIMITED (OPTCL), one of the largest Transmission Utility in
the country was incorporated in March 2004.
• A company wholly owned by the Government of Orissa to
undertake the business of transmission and wheeling of
electricity in the State.
7. SWOT ANALYSIS OF OPTCL
STRENGTHS
no competition from any other
transmission corporation limited.
strongest transmission network
with 81 grid substations
WEAKNESS
likelihood that the performance of
the employee may go down.
no recruitment from past 2-3 years
the performance of the remote
grid substation has gone down due
to lack of proper manpower
OPPORTUNITIES
scope for creating network for
both inter as well as intra state
Availability of technical persons
for fresh recruitment
THREATS
maintenance of grid substation and
extra high voltage [EHV]
transmission lines has become a
challenge to the organization
a new transmission company may
come up in the future
SWOT
8. FINANCIAL STATEMENT ANALYSIS
MEANING:
• It refers to the process of determining financial strength &
weakness of the firm by establishing strategic relationship
between the items of the Balance sheet, Profit & loss account,
Cash flow statement & other operative data.
• Financial statement analysis is an attempt to determine the
significance and meaning of the financial statement data, so
that the forecast may be of the future earnings, ability to pay
interest and debt maturities (both current and long term) and
profitability of a sound dividend policy.
9. TYPES OF FINANCIAL STATEMENT
1. Income statement
2. Balance sheet
3. Statement of cash flows
4. Statement of retained earnings
NEED OF FINANCIAL STATEMENT
ANALYSIS
Analysis of financial statements has become very significant
due to widespread interest of various parties in the financial
results of a business unit.
20. (c) Absolute liquid ratio
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
2012 2013 2014 2015 2016 2017
ABSOLUTE LIQUID RATIO
ABSOLUTE LIQUID RATIO
21. 3. ACTIVITY RATIOS
(a) Working capital turnover ratio
-10
-5
0
5
10
15
20
25
30
35
2012 2013 2014 2015 2016 2017
WORKING CAPITAL TURNOVER RATIO
WORKING CAPITAL TURNOVER RATIO
26. (c) Capital gearing ratio
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
2012 2013 2014 2015 2016 2017
CAPITAL GEARING RATIO
CAPITAL GEARING RATIO
27. 5. COVERAGE RATIOS
(a) Debt service coverage ratio
0
1
2
3
4
5
6
2012 2013 2014 2015 2016 2017
DEBT SERVICE COVERAGE RATIO
DEBT SERVICE COVERAGE RATIO
28. (b) Interest coverage ratio
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
2012 2013 2014 2015 2016 2017
INTEREST COVERAGE RATIO
INTEREST COVERAGE RATIO
29. CASH FLOW STATEMENT ANALYSIS OF
THE CURRENT YEAR
-1000
-500
0
500
1000
1500
2000
CFO CFI CFF CHANGE IN NET
INCOME
CHANGE IN CASH
AND CASH
EQUIVALENTS
% CHANGE
% CHANGE
30. FINDINGS
• No significant increase in the sales.
• A good liquidity position.
• The equity capital is growing every year at the rate of 10% per
annum.
• From the analysis it has been found that the current liabilities
of the company have a very high growth.
• The company is suffering from negative working capital
turnover during the financial years 2016-17 and 2017-18. This
negative ratio indicates an operational inefficiency.
• In the current year the company failed to increase its sales
which led to an unfavourable inventory turnover ratio.
• From the analysis it can be seen that the company has higher
proportion of debt as that of equity.
31. SUGGESTIONS
• To take remedial measures to improve the working capital of
the company.
• The organization must take necessary steps to raise the interest
on loans and advances in order to increase the revenue sources
of OPTCL.
• To control expenditure.
• To increase the amount of current assets.
• Follow a strict credit policy.
• The management should generate a systematic financial plan
for better working capital management.
• Initiatives from the government of Odisha.
32. CONCLUSION
• The report provides an insight regarding all the financial
aspects of the company viz., liquidity, profitability and
solvency.
• The financial statement analysis of the company OPTCL,
shows a favorable position during all the years except in the
year 2016 when the company suffered a loss.
• Inspite of the loss occurred the company is able to revive back
in the current year and improve its profitability.
• Although, there were a few limitations associated with the
project work the work was completed with due diligence.
• Considering the findings few suggestions were pointed out
from the managerial point of view.
33. DISSEMINATION OF WORK
• Financial statement analysis of OPTCL, BBSR, Bikash
Narayan Naik and Suman Mishra, International Journal of
Development Research, Volume 8, Issue 9, September 2018.
• Citation: Bikash Narayan Naik and Suman Mishra. 2018.
“Financial statement analysis of OPTCL, BBSR”,
International Journal of Development Research, 8, (09),
23132-23145.
34. REFERENCES
Book References:
• Gupta, Sashi, “Financial Management”, 4th Edition, 2007,
Kalyani Publisher, New Delhi.
• Kothari S.P., Ball R., “Financial Statement Analysis”
• Maheswari Dr S. N “Financial Management”, Ninth Edition,
2006 Sultan Chand & Sons, New Delhi.
• Prasanna Chandra, “Financial Management”, Fourth Edition
1999, Tata McGraw Hill Publishing Company Ltd, New Delhi.
• Pandey I. M., “Financial Management”, Vikas Publishing
House Pvt. Ltd. 8th Edition 1999.
• Subramanyam K.R., “Financial Statement Analysis”
• Sinha G., “Financial Statement Analysis”
35. Research Articles
• An Empirical Analysis of the Quality of Corporate Financial
Disclosure, Surendra S. Singhvi and Harsha B. Desai
• An Empirical Investigation of the Extent of Corporate
Financial Disclosure in the Oil and Gas Industry, David
Malone, Clarence Fries, Thomas Jones
• Corporate social and financial performance- A Meta-Analysis,
Marc Orlitzky, Frank L. Schmidt, Sara L. Rynes.
• Corporate Financial Statements, A Product of the Market and
Political Processes, Ross L. Watts
• Financial ratios, discriminant analysis and the prediction of
corporate bankruptcy, Edward I. Altman
• Financial statement analysis, P. A. Griffin
