CHAPTER 5:

SWOT ANALYSIS AND INTERPRETATIONS.

 SWOT ANALYSIS AND INTERPRETATIONS

5.1 INTRODUCTION

Based on the findings extracted from the previous chapters the researcher made an attempt to
ascertain the Strength, Weakness, Opportunities and Threats regarding the financial analysis.

5.2 SWOT ANALYSIS

The SWOT analysis is a strategic planning tool used to evaluate the Strengths, Weaknesses,
Opportunities and Threats of an organization. Specifically, SWOT is a basic straightforward
model that assesses what an organization can and cannot do as well as its potential
opportunities and threats.

 Strengths

Strengths are the positive attributes of the India post financial services,
which are within the organisation control.The following are the Strength of the finance :

 Thorough Income processing

 Robust bookkeeping with adjustments
 Technology used efficiently to improve processes with automation
 Understanding of debt
 Cashflow management
 Tax efficencies
 Ideas, creativity and flexibility
 Attention to detail
 Interdepartmental communication and support (in and out)
 Versatility of roles
 Knowlege synergy
  Weaknesses

The weaknesses of finance can be improved. The following are the

weakness of the finance:

 Expenses Process
 Department Experience
 Due Diligence
 Filing, audit trail and documentation is spotty
 Prioritisation
 Man hours
 Consistency
 Bill payments - no sign off process
 Communication can break down
 Project management not currently as robust as could be
 Organisation, both physical and digital feels lacking
 Long term vision

 Opportunities

Opportunities are the external factors which are likely to

provide benefits to the finance field directly or indirectly. The following are the opportunities
for the finance :

 Create a processes bible for staff to understand - new staff, existing staff, staff within
finance and out.
 Gain experience, learn ways without poor habits.
 Develop the department with processes, natural organisation, reliable communication
platforms and proper diligence. This will allow us to avoid mistakes as well as
facilitate growth.
 Get to a point where new future staff can come in, learn the set processes and be able
to work with less training need as they can turn to guides.
 Utilise a project management tool to visualise prioritisation.
 Create a dashboard platform/regular communication/regular report to communicate to
shareholders.
 Grow sustainably.
 Maintain and improve cost savings.
 Create quartely/yearly/5 yearly plans.
  Threats

The following are the threats for the finance:

 Paying out expenses and bills which aren't warranted.

 Without proper checking, something could be incorrect, leading to backlash, e.g legal
 Spotty filing can lead to loss of vital data as well as the time cost of finding
information.
 Without enough man hours or prioritisation, jobs can slip and be forgotten.
 Lack of strict processes can cause error, inefficiency and cost, with both new and
existing staff.
 Stagnation.
 Trouble with FCA, HMRC or other legal/compliant body.
 Inefficincies costing time, money and causing frustration.
 Daily tasks slipping for adhoc/bigger picture tasks or vice versa.
 Developement of bad habits within a department.

5.3McKinsey’s Seven S Model as applicable to that organization.

The McKinsey 7S Model refers to a tool that analyzes a company’s “organizational

design.” The goal of the model is to depict how effectiveness can be achieved in an
organization through the interactions of seven key elements – Structure, Strategy, Skill,
System, Shared Values, Style, and Staff.
The focus of the McKinsey 7s Model lies in the interconnectedness of the elements that are
categorized by “Soft Ss” and “Hard Ss” – implying that a domino effect exists when
changing one element in order to maintain an effective balance. Placing “Shared Values” as
the “center” reflects the crucial nature of the impact of changes in founder values on all other
elements.
Structure of the McKinsey 7S Model

Structure, Strategy, and Systems collectively account for the “Hard Ss” elements, whereas the
remaining are considered “Soft Ss.”

1. Structure:

Structure is the way in which a company is organized – chain of command and accountability
relationships that form its organizational chart.

2. Strategy:

Strategy refers to a well-curated business plan that allows the company to formulate a plan of
action to achieve a sustainable competitive advantage, reinforced by the company’s mission
and values.

3. Systems:

Systems entail the business and technical infrastructure of the company that establishes
workflows and the chain of decision-making.

4. Skills:

Skills form the capabilities and competencies of a company that enables its employees to
achieve its objectives.

5. Style:

The attitude of senior employees in a company establishes a code of conduct through their
ways of interactions and symbolic decision-making, which forms the management style of its
leaders.

6. Staff:

Staff involves talent management and all human resources related to company decisions, such
as training, recruiting, and rewards systems
7. Shared Values:

The mission, objectives, and values form the foundation of every organization and play an
important role in aligning all key elements to maintain an effective organizational design.

5.4Annual Reports/Financial statements of factservices

Abstract
The report provides factservices performance analysis between 2015 and 2017. It utilized
ratio analysis to determine the financial health of company. The financial data used in the
exercise was obtained from Investopedia(Google). The insights gained from the financial
ratio analysis informed the recommendations about whether to invest in factservices. As
noted, the results showed that investing in this firm is the most appropriate action.

Keywords: Financial analysis, ratio analysis, factservices, Investor.

1.Meaning of Financial Statements

Financial statements are the basic and formal annual reports through which the corporate
management communicates financial information to its owners and various other external
parties which include investors, tax authorities, government, employees, etc. These refer to:
the balance sheet (position statement) as at the end of accounting period, the statement of
profit and loss of a company and the cash flow statement

2. Financial Ratio Analysis

Ratio analysis plays a critical role in evaluating organizational performance and determining
appropriate investment decisions. Financial ratio analysis helps in “analyzing and comparing
relationships between different pieces of financial information across the company’s history”.
They show events as they have unfolded in a specified period and assist in ascertaining the
financial status of a particular organization.The ratios selected to help analyze a company’s
financial situation often depend on the users and the purpose of information. Rashid (2018)
notes that ratios assessing a firm’s capacity to settle its obligations may prove indispensable
for creditors, with those about future earnings potential and profitability being suitable for
investors. Financial ratios usually use data in the financial statements and help inform future
predictions.
3. Data and Methodology

The current data was derived from factservices financial statements for the period 2015-2017.
The data was entered into the table below depending on the financial ratios used in this
analysis. As noted, all figures appear in thousands.The various financial ratios in the three
years under consideration. The table consists of different line items.

Table 1: Factservices Financial Data

Analyze the Financial Health of a Company to Improve Growth &
Profitability

Activity Ratios
Activity ratios play an equally important role in analyzing liquidity. However, they focus on
how well an organization manages current assets comprising account receivables and
inventory. The analysis examined three financial ratios in this category: accounts receivable,
total assets, and inventory turnover ratios. The inventory turnover ratio assesses the frequency
with which a corporate entity sells particular stock within a year.

-Types of activity ratio:

1)Asset Turnover Ratio:The assets turnover ratios means that how the company is utilizes
its assets to generate sales .
2)Inventory Turnover Ratio:The inventory ratios helps to manage the inventory.

3)Accounts Receivable Turnover Ratio:The receivables turnover ratio, is an ratio which

measures the well organized with which company is utilizing its assets.

Formula:

1. Assets turnover = Net revenue/average total assets.

2. Inventory Turnover Ratio = Cost of goods sold/ Average cost of inventory

3. Receivables turnover=Net revenue/average receivables

FINANCIAL ANALYSIS DATA OF 3 YEARS

Assets turover ratio

1.ASSETS TURNOVER RATIO= 60
57
48
50 42
40
30
20
10
0
2015 2016 2017

Inventory turnover ratio

7.58
2.INVENTORY TURNOVER RATIO= 8 7.19
7 6.25
6
5
4
3
2
1
0
2015 2016 2017

Receivables turnover ratio

4.4 4.37

3. RECEIVABLES TURNOVER= 4.35

4.3 4.28

4.25

4.2
4.16
4.15

4.1

4.05
2015 2016 2017
Table:

2015 2016 2017

Assets turnover ratio 42.35 48.26 57.99

Inventory turnover ratio 7.58 7.19 6.25

Receivables turnover ratio 4.16 4.37 4.28

Liquidity Ratios
According to the Institute of Management Accountants (2017), “Liquidity is a relative
measure of the proximity of current assets and current liabilities to cash and is an indication
of the company’s ability to meet its short-term obligations”

Types of liquidity ratio :

1)Current Ratio:
The current ratio helps to measure the ratio of company’s ability to pay its
due in a given period of time.This will help the investors to know about the company
payback history
2) Quick Ratio:
The quick ratio is used to know the company to pay its outstanding liabilities.
Formula:
1.Current ratio = Current assets/ Current liabilities.
2.Quick ratio = (Current Assets - Inventories - Prepaid Expenses) / Current Liabilities.
FINANCIAL ANALYSIS DATA OF 3 YEARS
Current Ratio
=Current Assets/Current Liability
2015
Current ratio
=5,488,769/4,065,515=1.35 2.5

1.94
2016 2
1.53
= 6453361/4208469=1.53 1.5 1.35

2017
1
=7,910,627/4,061,787=1.94
0.5
Quick ratio
0
2015 2016 2017
= (Current Assets - Inventories - Prepaid Expenses)
/ Current Liabilities.
2015
= (5,488,769-755,251-275,785)/ 4,065,515
= 4457733/4065515
= 1.09 Quick ratio
1.6 1.47
2016
1.4
1.19
= (6453361 -1,125,110 -325,525)/ 4208469 1.2 1.09

= 5002726/4208469 1
0.8
= 1.19 0.6
2017 0.4
0.2
= (7,910,627-1,525,411-420,154)/ 4,061,787
0
2015 2016 2017
= 5965062/4,061,787
=1.47

Table:

2015 2016 2017

Current ratio 1.35 1.53 1.94

Quick ratio 1.09 1.19 1.47

Profitability Ratios

The profitability ratios further play a significant role in assessing organizational performance.
They demonstrate whether a firm is creating earnings. In this category, the ratios selected to
facilitate the financial analysis includes gross profit margin,net profit margin,operating profit
margin,ROE, ROA, and ROI.

Types of Profitability Ratios:

1)Gross Profit Margin:The gross profit margin means the amount which it makes from
selling goods and services directly.The higher gross profit margin the more retains.

2)Operating Profit Margin:The operating profit margin shows the profit value of the
company after subtracting the taxes and interest.

3) Net Profit Margin: Net profit margin shows the percentage of the sales turned into profit.

4)Return on Assets (RoA): Return on assets determine how effectively company used its
assets to generate profits.

5) Return on Equity (RoE):Return of equity company’s net income by the share holders
equity this is done to know the profits of the company.

6) Return on Investment (RoI):Return on investment measures the profit made from the
investment on the company.

Formula:

1. Gross Profit Margin = (Revenue – Cost of Goods Sold) / Revenue

2.Operating Profit Margin = Operating Profit / Revenue

3.Net Profit margin = Net Profit ⁄ Total revenue

4.Return on Assets=Total Assets/Net Income

5. Return on Equity= Net Income/ Average Shareholders’ Equity

6. ROI=Net income/(long-term liabilities + shareholders' equity)

FINANCIAL ANALYSIS DATA OF 3 YEARS

1. Gross Profit Margin=

Gross profit margin

0.415 0.41 0.41
0.41
0.405
0.4
0.395
0.39
0.385 0.38
0.38
0.375
0.37
0.365
2015 2016 2017
2. Operating Profit Margin =

Operating profit margin

0.32
0.31
0.31
0.3
0.29
0.29
0.28
0.27
0.27
0.26
0.25
2015 2016 2017

3.Net Profit margin =

Net Profit margin
0.225 0.22
0.22
0.215 0.21
0.21
0.205
0.2
0.195 0.19
0.19
0.185
0.18
0.175
2015 2016 2017
4.Return on Assets=
Return on Assets
0.14
0.12
0.12
0.1 0.09
0.08
0.08
0.06
0.04
0.02
0
2015 2016 2017

5. Return on Equity= Return on Equity

0.18 0.17
0.16 0.14
0.14 0.13
0.12
0.1
0.08
0.06
0.04
0.02
0
2015 2016 2017

6.Return on assets:
Return on Investment
0.16 0.15
0.14
0.12 0.11
0.1
0.1
0.08
0.06
0.04
0.02
0
2015 2016 2017
-TABLE:
2015 2016 2017

Gross profit margin 0.41 0.38 0.41

Operating profit margin 0.29 0.27 0.31

Net profit margin 0.21 0.19 0.22

Return on Assets 0.08 0.09 0.12

Return on Equity 0.14 0.13 0.17

Return on Investment 0.10 0.11 0.15

Results and Discussion
1.Activity raito:

The activity ratio includes assets turnover ratio, inventory turnover ratio and receivables
turnover ratio.Activity ratios are used to determine the strengths of the organisation in
utilising its assets for generating cash and revenue.

If the company has high sales and if the inventory is consumed faster. Then its good growth
for company.Then the company will have higher activity ratios which is know as good
growth for company . If the ratios are lower then it is indicated that sales are less.If the
company has good activity ratios then it indicates that the company is utilising its assets
properly.But after calculating the activity ratios of 3 years .we got to know that the assets
turnover ratio of 2017(57.99) is less when compared to 2015(42.35)& 2016(48.26) and the
inventory turnover ratio of 2017(6.25) is also less when compared to 2015(7.58)&
2016(7.19). The receivables turnover ratio of 2017(4.28) is better when compared with
2015(4.16) & 2016(4.37).

2.Liquidity ratios:

After analysis the ratios of the company .We got to know about the current ratio of
2017(1.97) was higher when compared to 2016(1.53) and 2015(1.35)and quick ratio of
2017(1.47) is higer when compared to 2016(1.19) and 2015(1.09) of past 3 years .In this
period of time the ratios have been increasing year by year. The current assets are been used
to pay off the bills from which the liquidity ratios will not decrease.

3.Profitability ratios:

The gross profit margin of 2017 is (0.41) which is less when compared to 2015(0.41) & in the
year 2016(0.38) it was the least. The operating profit margin of 2017 is (0.31) which is higher
when compared to the year 2015(0.29) & 2016(0.27).The net profit margin of the year 2017
is (0.22) which is higher when compared to 2015(0.21)& 2016(0.19). The return on assets in
the year 2017(0.125) is higher compared to the year 2015(0.087)& 2016(0.091). Return on
Equity for the year 2017(0.170) is higher compared to the year 2015(0.146) & 2016
(0.138) .The return on investment of the year 2017(0.150) is higher when compared to
2015(0.106) & 2016 (0.111).
-Steps to be taken:
Activity ratios
After analysing ratios of the company we got know that are many good sides and bad sides of
the company. So to grow the companies financial health .The following are my suggestions.

1.Create new ideas to increase revenue: The company should create new strategies to
increase there sales in a quick way from which the can gain the profit. If the revenue increase
then company value will also increase.

2.Improving inventory management: Inventory includes items ,goods and materials by

which company sells and generate profit. But when the inventory is not managed properly the
sells gets decreased from this loss occurs. So managing the inventory turnover plays a major
role in utilising assets and generating profits.

3.Collecting the accounts receivables in a faster way: Most of the time company
will receive its payments late from its customers who would have purchased companies
goods and services. This credit period will be for a short term period.So that if the company
gets is payments soon .There will be no risk of receivables .By this the company financial
stability will be good and this will help investors gain a better image of the company.

liquidity ratios

To maintain the liquidity ratios growth for the upcoming years .Here are my few steps to be
taken:

1.Reduce or cutdown the unwanted expenses: The unwanted expenses play a major role in
using the current assets of the money.While the current assets gets decreased day by day the
company will not be able to pays its bills. So cutting down of expenses is must.

2.By selling the assets of the company: Assets includes items such as machinery, property,
raw materials and inventory etc... If a time or situation comes where the company cannot pay
its bills. The best option is to sale the unwanted assets and use that money to pay bills. From
this the can save the companys downfall.

3.Create a team to know the payment issues: Most of the times the payments cycle would
have gone wrong because of companies mistakes . Once the team assigned finds out the
problem. It gets easy to handle the payments of the company and the companies payment
cycle will be normal.
After knowing profitability ratios of the company.Here are few steps given below which will
help the company stay financially stable and help in its growth for upcoming year.

1.Learn the art of managing cost:By manging costs and having good sales and profit
company can have a better growth year to year. So manging cost plays a every import role in
growth and profitability of the company.

2.Increase the sales of the company: The sells of the company helps in making profit from
the utilised assets.From this profits company can pay many bills and variable costs.This helps
company be financially stable.Thus expenses to reduce.

3.Make plans to expand the market: To gain more profits and boost the profitability
company needs to expand there business or reach to more people. By this the public will be
attracted and the sales will automatically increase.Thus there will be boost in profitability.

-CONCLUSION:

Activity ratios

After calculating activity ratios of the company and knowing its financial health and growth
of 3 years.I would suggest to follow the steps given above . So that the company can increase
its growth and profit for upcoming years . In assets turnover ratio, inventory turnover ratio
and receivables turnover ratio.There is higher and lower ratios .When compared each and
every year.If the company wants more investors to have in future .The should make new
plans and implement on the company.

By this its financial health will be stable and the company will have good recognition .

Thus, i conclude by mentioning that if this few steps are been followed in upcoming
years .The company can increase its financial heatlh and profitability.
Liquidity ratios

Liquidity ratios shows a firm’s ability to met its short-term financial obligation, that is
whether the company has the resources to pay it creditor when payment are due.

Based on the liquidity ratios of 2015,2016 and 2017 show that the liquidity ratio is better
when compared year by year.

Under liquidity ratios we have current ratios and quick ratios. In current ratios the ratios have
been more then 1 which is a good sign for the company .

The quick ratio is also increasing year by year. So my suggestion is to follow the same
strategies used in previous years and add on new rules . By this the companies growth can be
increased each year and the company will also be profitable.

Profitability ratio

The purpose of the profitability ratio analysis is providing the information about the ability of
business to generate profit.

As this company has good profitability ratio with good return of assets and return of equity.It
would be easy for owners and investors to invest there money in upcoming year.

Thus I would like to conclude that as this company is giving a good profitability ratios
compared to pervious years .It has more chance of growth in coming years.

After analysis the financial health of the company.I would like conclude by saying that in
point of few this companys growth will increase in upcoming years if the follow all steps
suggested by me.Thus company will be financially stable and recgonised.

5.5Chairman and AGM Report

Factservices Private Limited is a Private incorporated on 08 April 2016. It is classified as

Non-govt company and is registered at Registrar of Companies, Hyderabad. Its authorized
share capital is Rs. 1,500,000 and its paid up capital is Rs. 1,000,000. It is inolved in Business
activities n.e.c.Factservices Private Limited's Annual General Meeting (AGM) was last held
on 30 November 2021 and as per records from Ministry of Corporate Affairs (MCA), its
balance sheet was last filed on 31 March 2021.Directors of Factservices Private Limited are
Bandana Mushunuri, Srinivasa Reddy Velagala and Jaswanth Javvadi.Factservices Private
Limited's Corporate Identification Number is (CIN) U74999TG2016PTC109124 and its
registration number is 109124.Its Email address is jaswanth@factservices.in and its
registered address is Plot No 91, 2-8-293/82/w/91 Womens Cooperative society, Jubilee Hills
Hyderabad Hyderabad TG 500033 IN , - , .
Current status of Factservices Private Limited is - Active.

Company Details

CIN U74999TG2016PTC109124

Company Name FACTSERVICES PRIVATE

LIMITED

Company Status Active

RoC RoC-Hyderabad

Registration Number 109124

Company Category Company limited by Shares

Company Sub Non-govt company

Category

Class of Company Private

Date of Incorporation 08 April 2016

Age of Company 6 years, 3 month, 20 days

Activity Business activities