A STUDY ON FINANCIAL PERFORMANCE OF MNC INDIA

FILING’S

Internship Report

Submitted in partial fulfillment for the award of the degree of

Bachelor of Commerce (A&F)

Submitted by

JAGADEESH K
RA2331202040008

Under the guidance of

Dr. NIXON AMIRTHARAJ. E

Assistant Professor

DEPARTMENT OF COMMERCE (Accounting & Finance)

FACULTY OF SCIENCE AND HUMANITIES
SRM INSTITUTE OF SCIENCE AND TECHNOLOGY
VADAPALANI CAMPUS

OCTOBER-2024

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 CERTIFICATE

This is to certify that the Internship Report entitled “A study on financial

performance of mnc india filings” is a bonafide work done by ‘JAGADEESH.K’, a
student of Bachelor of Commerce (A&F), Faculty of Science and Humanities, SRM Institute
of Science and Technology, Vadapalani Campus during the period of his/her study in the
academic year 2023-2026. This internship report represents entirely an independent work
of the candidate under my supervision and guidance.

Subject Name: Internship-I

Subject Code: UAF23P01L
Place: Chennai
Date of Submission: 25/10/2024

Guide Head of the Department

Dr.NIXON AMIRTHARAJ. E Dr.V.VENKATRAGAVAN

(Assistant Professor) (Associate Professor)

Internal Examiner External Examiner

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 DECLARATION

I hereby declare that the internship report- UAF23P01L entitled “A study on

financial performance of MNC india filings” submitted by me for partial fulfillment of
the degree of Bachelor of Commerce (A&F) under the guidance of “Dr.NIXON
AMIRTHARAJ. E”, Assistant Professor, Department of Commerce (A&F), Faculty of
Science and Humanities, SRM Institute of Science and Technology, Vadapalani Campus
and the same has not been submitted elsewhere for the award of any degree.

Place: Chennai

Date:25/10/2024 Signature

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 ACKNOWLEDGEMENT

I would like to express our deepest gratitude to our Founder Chancellor

Dr. T. R. Paarivendhar, Chairman Dr. Ravi Pachamuthu, for providing me an
opportunity to study in this distinguished institute.

I wish to extend my sincere thanks to Dr.S.Ramachandran, Director Academics, SRM

Group and I express my heartfelt thanks to Dr.K.R.Ananthapadmanaban, Dean, FSH,
SRM IST, Vadapalani for his constant encouragement, proved as a source of unparalleled
inspiration.

I would like to express my deepest gratitude to Dr.V.Venkatragavan, Associate Professor,

HoD, Department of Commerce (A&F), FSH, SRM IST, Vadapalani for giving me an
opportunity to take up this internship. I also would like to thank my guide Dr.NIXON
AMIRTHARAJ. E, Assistant Professor, Department of Commerce (A&F), FSH, SRM
IST, Vadapalani for his/her valuable guidance, consistent encouragement, personal caring,
timely help and providing me with an excellent atmosphere for doing research. All through
the work, in spite of his/her busy schedule, he/she has extended cheerful and cordial support
to me for completing this internship report.

I would like to express my gratitude towards NARESH BABU for giving me an opportunity
to work at MNC INDIA FILINGS and for their kind co-operation and encouragement
which helped me in completion of this internship report.

I also acknowledge with a deep sense of reverence, my gratitude towards my parents and
family who has always supported me morally as well as economically and to all my friends
who directly or indirectly helped me complete this internship report.

Above all I thank God Almighty for showering upon me his grace and blessings.

(JAGADEESH K)

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5
 TABLES OF CONTENTS

CHAPTER NO. CONTENTS PAGE NO:

1 INTRODUCTION 1 – 19

2 REVIEW OF LITERATURE 20 – 25

3 RESEARCH METHODOLOGY 26 – 44

4 DATA ANALYSIS AND INTERPRETATION 45 – 54

5 FINDINGS, SUGGESTIONS & CONCLUSION 55 – 57

ANNEXURE 58 – 60

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 CHAPTER 1

INTRODUCTION

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1.1 INTRODUCTION

Finance is a term for matters regarding the management, creation, and study of
money and investments. Specifically, it deals with the questions of how and why an
individual, company or government acquires the money needed (called capital in the
company context) and how they spend or invest that money.

Finance is then often split per the following major categories: corporate finance,
personnel finance and public finance. At the same time, and correspondingly, finance is
about the overall "system" i.e., the financial markets that allow the flow of money, via
investments and other financial instruments between and within these areas; this "flow" is
facilitated by the financial services sector.

A major focus within finance is thus investment management – called money

management for individuals, and asset management for institutions – and finance then
includes the associated activities of securities trading and stock broking, investment
banking, financial engineering, and risk management.

Financial statements :

• Financial statements (or financial reports) are formal records of the financial
activities and position of a business, person, or other entity.

• Relevant financial information is presented in a structured manner and in a form

which is easy to understand.

• They typically include four basic financial statements accompanied bya

management discussion and analysis:

1) A balance sheet or statement of financial position, reports on a company's

assets, liabilities, and owner’s equity at a given point of time.

2) An income statement or profit and loss report (P&L report), (or statement of
comprehensive income, or statement of revenue & expense) reports on a
company’s income, expenses, and profits over a stated period.

3) These include sales and the various expenses incurred during the stated
period.

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 4) A statement of change in equity or statement of equity, or statement of
retained earnings, reports on the changes in equity of the company over a
stated period.

5) A cash flow statement reports on a company’s cash flow activities,

particularly its operating, investing and financing activities over a stated
period.

1.2 SCOPE

Financial statements are usually used by various stakeholders of the company.

1. They use these data for knowing the return on investment, data about the
shareholders of the company, the assets and liabilities that the company have.

2. All these information are presented in the financial statement.

3. It is the responsibility of a company to prepare the financial statements with full

integrity and sincerity as these documents act as a reference for the prospectus
investors.

4. Financial statements may be used by users for different purposes:

a) Owners and managers require financial statements to make important

business decisions that affect its continued operations. Financial analysis is
then performed on these statements to provide management with a more
detailed understanding of the figures.

b) These statements are also used as part of management's annual report to the
stockholders.

c) Employees also need these reports in making collective bargaining

agreements (CBA) with the management, in the case of labour union or for
individuals in discussing their compensation, promotion and rankings.

d) Prospective investors make use of financial statements to assess the viability

of investing in a business. Financial analyses are often used by investors and
are prepared by professionals (financial analysts), thus providing them with
the basis for making investment decisions.

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 e) Financial institutions (banks and other lending companies) use them to decide
whether to grant a company with fresh working capital or extend debt
securities (such as a long-term bank loan or debentures) to finance expansion
and other significant expenditures

1.3 OBJECTIVES :

The objective of this project is:

• To analyse the overall financial performance of MNC INDIA FILINGS

• To evaluate the profitability of MNC INDIA FILINGS.

• To determine the liquidity position of the company.

1.4 LIMITATIONS :

• Financial Statements Are Derived from Historical Costs - Transactions are initially
recorded at their cost. This is a concern when reviewing the balance sheet, where the
values of assets and liabilities may change over time. Some items, such as
marketable securities, are altered to match changes in their market values, but other
items, such as fixed assets, do not change. Thus, the balance sheet could be
misleading if a large part of the amount presented is based on historical costs.

• Financial Statements Only Cover a Specific Period of Time - A user of financial

statements can gain an incorrect view of the financial results or cash flows of a
business by only looking at one reporting period. Any one period may vary from the
normal operating results of a business, perhaps due to a sudden spike in sales or
seasonality effects. It is better to view a large number of consecutive financial
statements to gain a better view of ongoing results.

• Financial Statements Could be Wrong Due to Fraud- The management team of a

company may deliberately skew the results presented. This situation can arise when
there is undue pressure to report excellent results, such as when a bonus plan calls
for payouts only if the reported sales level increases.

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 One might suspect the presence of this issue when the reported results spike to a
level exceeding the industry norm, or well above a company’s historical trend line
of reported results.

• Financial Statements Do Not Cover Non-Financial Issues-The financial statements

do not address nonfinancial issues, such as the environmental attentiveness of a
company's operations, or how well it works with the local community. A business
reporting excellent financial results might be a failure in these other areas.

• Financial Statements Have No Predictive Value- The information in a set of financial

statements provides information about either historical results or the financial status
of a business as of a specific date. The statements do not necessarily provide any
value in predicting what will happen in the future. For example, a business could
report excellent results in one month, and no sales at all in the next month, because
a contract on which it was relying has ended.

1.5 COMPANY PROFILE:

INTRODUCTION:

MNC CORPORATE SYSTEM INDIA PRIVATE LIMITED is a Private Company,

Which CIN Number is U74999TN2018PTC121267, was incorporated on 09-March2018.
MNC CORPORATE SYSTEM INDIA PRIVATE LIMITED is classified as Non-
Government and is registered at Registrar of Companies located in ROC CHENNAI. As
regarding the financial status on the time of registration of MNC CORPORATE SYSTEM
INDIA PRIVATE LIMITED Company its authorized share capital is Rs. 100000 and its
paid up capital is Rs. 100000.

As Per Registration of Company, it involves under in Business Activity Class / Sub

class Code 74999, Main Activity of the said Company MNC CORPORATE SYSTEM
INDIA PRIVATE LIMITED is Registration Service, E-filing, Web solution and Other
business activities National Electrical Code.

The registration number of this company is 121267. Its Email address is

info@mncgroups.com and its registered address is : SHOP NO 49 1ST FLOOR J J
COMPLEX, ANNA NAGAR, Chennai, Tamil Nadu-600040.

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 MNC Corporate System India Private Limited's Annual General Meeting (AGM)
was last held on 27th September 2021 and as per records from Ministry of Corporate Affairs
(MCA), its balance sheet was last filed on 31st March 2021.

Directors of MNC Corporate System India Private Limited are Mr. Nareshbabu and
Mrs. Mageshwari Nareshbabu.

MNC Associates, based in Chennai, is one of the leading corporate and small
business registration services company with hands on experience in dealing with company
formation, business service licenses, account services and other registration services.

MNC provides all registration and license services with speedy delivery and with
professionalism. The company understand the clients critical timelines and business
situations in depth and adopt that has a focal point and expedite the delivery process to
satisfy our clients and their business associates in all aspects.

Mr. NARESHBABU is a director registered with Ministry of Corporate

Affairs(MCA) with Director Identification Number(DIN) 8010247.

Mr. NARESHBABU was appointed as the director of MNC CORPORATE

SYSTEM INDIA PRIVATE LIMITED on 09-03-2018.

MNC provides,

Company Formation Service Accounting

E-Filing and Compliance RCMC Registration (IEC)

IPR Registration or Branding Registration Standard Certificate (ISO)

Central and State Bodies Registration

COMPANY FORMATION SERVICE:

The Company Accounts are in the aim of coming together along with individuals
with the purpose of doing business with prospective goals under the common name.

The incorporation of the Company is the at most legal process to form a corporate
entity. The Company assets and its owner are being separated legally by legal vehicle called
corporation.

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ACCOUNTING:

Accounting has a tremendous impact on a business. Further, its services is necessary

for every small and large organization to run smoothly and effectively. The process of
accounting is engaged every time they document a transaction, file tax documents, or plan
a cost.

E-FILING AND COMPLIANCE:

Electronic filing is the process of submitting tax returns over the internet using tax
preparation software that has been pre approved by the relevant tax authority. A taxpayer
has the option of filing the return using any tax preparation software with e-filing
functionality or hiring the services of tax professionals who use similar software.

RCMC REGISTRATION (IEC):

IEC (IMPORTER-EXPORTER CODE) with RCMC

(REGISTRATION-CUM-MEMBERSHIP CERTIFICATE) Registration is important

together as

RCMC basically helps the exporters to avail the benefits as given by the agencies
that aid in developing and promoting India’s export business. The RCMC certificate is valid
for the period of five years and signifies that the particular business has an
(FEDERAATION OF EXPORT ORGANISATIONS) FIEO or EPC registration.

IPR REGISTRATION AND BRANDING REGISTRATION:

Protecting and managing intellectual property rights (IPR) is the first step for any
business to seek and to establish its presence in India, it must be incorporated in an integral
part of the business asset growth strategy. Trademark registration in India, protects the
investment creating trust and loyalty among the customers. Trademark registration in to the
one registered by, for the clients. India provides the right to sue against others who try to
copy the trademark and prevents others from using similar trademark

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STANDARD CERTIFICATE (ISO):

ISO certification certifies that a management system, manufacturing process,

service, or documentation procedure has all the requirements for standardization and quality
assurance. ISO (International Organization for Standardization) is an independent, non-
governmental, international organization that develops standards to ensure the quality,
safety, and efficiency of products, services, and systems.

CENTRAL AND STATE BODIES REGISTRATION:

Development Commissioner Handicrafts, Ministry of Textiles enables registration

for Central/State Government Agency/Public sector undertakings engaged in the
development, promotion and marketing of handicrafts.

SCOPE OF THE COMPANY:

• Company registration services ideally step into the shoes of the business owner and
handle the tasks related to the registration of the company under the Ministry of
Corporate Affairs.

• Registration services is that range of activity of a registered firm that may be stated
in the annex attached to its certificate of registration

• In India, company can be registered under different types like private Limited
Company, Limited Liability Partnership, One Person Company.

• Licensors often have great ideas that you may be unable to implement yourself.

• Licensing is the degree of control and rights that it grants to the Licensee.

• Sole Licenses permit the Licensors and the Licensee to use the IP, but do not allow
the rights to be transferred to any third party.

• The audit should be organized to cover all aspects of the entity as far as they are
relevant to the financial statements being audited.

• Audit scope determines the time involved in audit exercise, depth of auditing,
aspects to be covered etc. Audit scope depends on nature of audit, objectives of audit

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 & terms of engagement, requirement of applicable legislation and auditing
standards.

• The service consultant shall validate, reconcile and review the data for proper
compliances under the GST laws that shall include Filing of any type of Returns and
compilation of data in the format in which it would be required to be maintained for
purposes of Audit.

OBJECTIVES OF THE COMPANY:

• Registering a company is executing a business with the third party or with the
contractor. A company is a separate legal entity and distinct from its members.

• Public safety is concerned with the physical safety of those on the premises. It seeks
to protect children from harm which could be moral, physical or psychological.

• It helps to subsume most indirect taxes into a single taxation system that reduces the
burden of compliance for taxpayers and eases the government's tax administration
process.

• The new portal is completely a taxpayer friendly portal. This portal is integrated
with immediate processing of ITRs (Income Tax Returns) to issue quick refunds to
taxpayers.

• To report the essential details with regard to compliance, tax depreciation, etc., as
per the income tax laws. These streamline the processes for the authorities of income
tax in the calculation and also assessing the accuracy of the income tax return filed
by the individual or company.

• To gain equal status for a job interview or to attain promotion. For prestige; for
example, to gain acceptance or a title. Right to Use Certificate Credentials on
Resume, Business Cards, and office while in good standing. To gain recognition for
knowledge and experience obtained in their profession.

• Branding registration is to protect the registered trademarks from being

misrepresented or used by unauthorised users for any commercial benefits.

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BENEFITS OF THE COMPANY:

• Increased credibility with customers and supplies.

• Protection of the business name and logo.

• Simplified operations by having a single point of contract with the government.

• Licensing agreement include increasing market share, lowering capital

requirements, increasing the return on investment, and decreasing financial and legal
risks.

• The Goods and Services Tax (GST), which will eventually boost long-term
economic development and efficiency, is unaffected by company models, methods,
geographic location, or organisational structure. The ratio of taxes paid to GDP in
India has increased due to the implementation the Goods and Services Tax (GST).

• Taxpayers can claim their refunds by filing returns. The digital medium has been
brought into the fray to make way for quicker processing over the archaic ones in
the country, which had previously inflicted a severe burden on the common man, for
whatever service it might have been.

• Analysing the standards of quality and safety will identify the source of scrap,
unnecessary overlaps and redundancy. This may help you reduce or eliminate the
scrap and overtime. Some reports show that many ISO certified businesses report a
high reduction in scrap and overtime.

• Accounting replaces memory by recording all of an individual's/transaction's firms

in a systematic and timely manner. If the information is needed again in the future,
it is simply accessible in accounting books.

SERVICES OF THE COMPANY:

• Auditing and Taxes Consulting

• Web Solutions

• HR Consulting

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 • Media Solutions

• MNC Logistics

• Loan Services

AUDITING AND TAXES CONSULTING:

AUDITING:

Internal auditors are a company's financial watchdogs. Their task is to objectively

examine a company's financial documents and review the operating procedures independent
of management. When internal auditors are placed in a consulting role, they focus on a
specific department instead of the overall company.

TAXATION:

India Law Offices offers comprehensive taxation advisory, litigation and

compliance and audit services to its clients. These services are provided in all areas of tax
including income tax, international tax, custom duty, excise duty, sales tax and service tax.

WEB SOLUTION:

BRANDING:

 Logo Design

 Brochure Design

 Flyer Design

 Packaging Design

 Corporate presentation

 Graphic Designs

LOGO DESIGN:

Logo is a symbolic icon or brand for any corporate or for the products they promote.
Significance of logo design are huge when it comes to digital marketing and promotional
campaigns. Just your logo can do the work and it will speak the rest of the company over

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the period when the company is established. Even for a new start-up's, logo design is vital
as it represents their brand image for the investment companies and their end-customers

BROCHURE DESIGN:

A corporate brochure has its own way of speaking about your brand and your
professionalism towards customers. Corporate brochure designs are the primary source and
strength for any salesmen to pitch with any customer with 100% confidence. Salesmen are
more occupied these days with other important activities to focus and target for better results
of the products/services they promote.

FLYER DESIGN:

They understand marketing flyers are the key to do some instant awareness about a
product/service activity for large volumes in short time and hence they design all our flyers
with care and persuade the target audience with amazing designs enabled with more clarity
on the information to be shared to mass audience.

PACKAGING DESIGN:

For any product, packaging design in an effective manner is inevitable for its
branding. The unambiguity and the attraction are that makes people to discover the worth
of the product. They understand the value of the product and hence the focus is towards the
liability that we possess to reach the brand to the market. Among a stiff competition of
products including the illegitimate brands, the company will be able to establish a proper
and a professional packaging designing service with the work.

CORPORATE PRESENTATION:

They design Professional Corporate Presentations with intelligent colours and

innovative ideas involving Technologies that make the presentations more and more richer.
They present ideas with a 3rd eye view and help to solve complex problems. Their Corporate
Presentation has a very wide popularity among the Corporate Sectors.

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GRAPHIC DESIGNS:

They innovate new designs with mystic concepts in the Letter heads, Flyers,
Brochures, Presentations, Posters, Pamphlets, Business card and Leaflet designs prints.
Their Graphics services have the best benchmark and is appreciated by their clients in a
huge manner. With an artistic approach of creating designs their team is trained and has
expertise to bring out the imaginations of the clients.

WEBSITE AND HOSTING:

 Web Design

 Domain Registration

 Dedicated IP

 SSL Certificate

 Malware Tools

 Web Hosting

 Payment Gateway

 Web Re-Design

WEB DESIGN:

Website design has evolved abundantly in terms of technology and user experience
and user interfaces. Website users cannot be forced to go through a link or page these days
and instead they can only make attractive pages and get their attentions leveraging latest
technology and design aspects. Website designs are categorized into Static, Dynamic, CMS
(Content Management System) based and application & enterprises based.

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DOMAIN REGISTRATION:

A domain is nothing but an identity on the internet platform. For business enterprises
their domain name decides the marketing strategy for their brand promotion. Web domains
are now available with variant extensions and the most popular one is .com around the
world. Equivalent to .com domains now country specific extensions are available like .in
(for India), .sg (for Singapore), etc.,

DEDICATED IP:

"Like for humans the necessity of a language is inevitable to communicate with one
another and to express their views, Computers or devices too need to communicate with one
another. For Computers and any hardware devices, the communication between them is
facilitated through the addresses which are nothing but a string of numbers known as an
Internet Protocol or IP address. In computer terminology this could be confined to as TCP/IP
suite. TCP refers to “Transmission Control Protocol”.

SSL CERTIFICATE:

Millions of websites and applications which involves with personal data input are
compromised at higher rates today. To prevent the customer data and to provide the
customer peace of mind and confidence level towards the brand and company, SSL
certificates helps businesses and their applications to secure their end customer personal
data with more advanced technologies.

MALWARE TOOLS:

They, at Bethink, offer extensive malware prevention software’s & tools from renowned
global suppliers like SITELOCK and DIGICERT. Malwares are the most culprit ones to be
monitored on every second to keep the web applications literally way from them. They
support right from purchase till installation of the malware removal tools for the applications
and hence Bethink has many satisfied and enduring clients across India and abroad.

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WEB HOSTING:

Web Hosting is key to the data when it comes to access, security and privacy.
Amongst the millions of servers that are ON today, we bring you the most sophisticated and
advanced servers’ infrastructure which can accommodate all the data highly encrypted,
secured and with quick access their server infrastructures are highly geared to connect the
applications, data and their devices with rapid response system. They leverage the data
through RAID (Redundant array of independent disks) and CDN (Content Delivery
Network) Technologies.

PAYMENT GATEWAY:

A payment gateway is a merchant service provided by an ecommerce application

service provider that authorizes credit card or direct payments processing for e-businesses,
online retailers, bricks and clicks, or traditional brick and mortar.

WEB RE-DESIGN:

Redesigning on Hub Spot means getting more than a new look. It’s about having an
all- inone solution that gives the website visitors exactly what they are asking for when they
need it. Map out a blueprint for redesigning the site. A truly effective redesign is more than
just about creating a new look; it’s about generating more visitors, leads, and customers.
This worksheet will help the company craft goals, for your website redesign.

HR CONSULTING:

Direct hire

Contract man power

Contract to hire

Training and Development programmes

Payroll management

DIRECT HIRE:

They offer a wide range of Direct Hire services to augment the job provider's search
efforts. They conduct preliminary interviews and shortlist the candidates as per client
organisation's requirements and make arrangements for face-to-face meeting with the job

15
provider and thus help them assess and evaluate the right candidate for the job.

They specialise in providing manpower at all levels:

Senior Management Middle Management Junior Management

CONTRACT MANPOWER:

They specialise in providing fresh / trained manpower on contract as per the specific
requirement of the client. They select and match employees to the job provider's work and
environment. These people are taken on their payroll. They pay them regular salaries with
statutory benefits and handle all the legal compliances and government regulations. The
client organisation just receives a single invoice every month. The contractual process is not
just a one-way process; they also take the Company's employees on their rolls if any such
need arises. Thus, they provide greater flexibility for the client organisation.

CONTRACT-TO-HIRE:

While their employee is working with the job provider, the client has the opportunity
to assess the candidate’s skill, work ethics and cultural fit. After the contract period, the
client organisation has the option of taking on the contractual manpower on its own payroll.

TRAINING AND DEVELOPMENT PROGRAMMES:

They provide comprehensive training solutions to Corporate, Channel Partners,

Institutes and Colleges. They have a strategic alliance with Indus, the leading training
organisation of the country having 120 plus full time trainees on payroll. They conduct
practical programs tailor made for the specific organization focused at middle and frontline
positions and have conducted over 6000 workshops covering over 1,00,000 participants
across various sectors of industry. They have extensive experience in diverse industries, viz.
Telecom, Petroleum Sector, Automobiles, Consumer Products, Consumer Durables,
(Business Process Outsourcing) BPO, Airlines, Liquor, Pharmaceuticals, IT, Tyres, News
media, and so on.

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PAYROLL MANAGEMENT:

Payroll outsourcing services are bundled into one package, creating savings and
efficiency. The simplicity of bundling payroll outsourcing consulting services helps the
implement and administer quality programs without distracting employees from their core
business functions.

LOAN SERVICES:

Bank loan

Home loan

Personal loan

Business loan

BANK LOAN:

They help assist and guide to get all sort of loans based on the customer's
requirements and eligibility.

HOME LOAN:

Here they are helping to fulfilling the customer's dream of buying own house by
assisting and guiding the customers to get loans at a nominal interest.

PERSONAL LOAN:

They help the customer’s to get loans for their personal needs from reputed concerns
as per their needs.

BUSINESSES LOAN:

They help the customer's to grow their business through acquiring the required loan
from several schemes to fulfil their requirements.

REGISTRATION SERVICES:

They help their customer's in the registration process for several sorts as mentioned
below.

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COMPANY FORMATION:

They help the customer’s to register with the taxation norms by government of India.

Partnership

Proprietorship

Private Limited

Limited Liability Partnership

Service Tax and Excise

One Person Company

LOCAL BODY & CENTRAL:

They help the customer’s to make their concern get licensed.

 Drug License

 Factory License

 IEC (Importer-Exporter Code) Modification

 Labour License

 Solvency License

 NSIC (National Small Industries Corporation) Registration

 ESI & PF Registration

 IEC (Importer-Exporter Code) Registration

 Money Lending License

 Pollution Control License

 Legal meteorology service

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BOARD REGISTRATION:

They help the customer’s to make their concern get registered

 FIEO

 Capexil

 Rubber Board

 Marine products ➢ Plastic products

 Apparel Export Promotion Council

 Export Promotion Council for Handicrafts

 Gem & Jewellery Export Promotion Council

 Agricultural and processed food products Export Development Authority

IPI REGISTRATION:

They also help the customer’s to get certified from various standards

 Trademark/Logo
 Patent
 Copyright
 Brand name
 Packing goods

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 CHAPTER 2

REVIEW OF LITERATURE

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An overview of earlier studies :

A number of researches have already undertaken various studies on different aspects

relating to the management of finance of different types of industries. Some of those studies
were reviewed and a brief report is given below.

Taylor, R k (2006) in his study mentions that financial statements as the aid towards
financial analysis. He indicates that the financial statements help the business organization
in having some extremely useful information in the form of balance sheet which mirrors the
financial position on a particular date in terms of the structure of assets, liabilities and
owner's equity and the profit and loss account which shows the result of operations during
a certain period of time, in terms of therevenue obtained and the cost incurred during the
year. Thus the financial statements provide a summarized view of the financial position and
operations of a firm.

S Sreedharna (2010) mentions about the importance of ratio analysis which helps
in the analysis of the financial performance of the company. He indicates that the situation
of the two companies is not the same. Similarly, the factors influencing the performance of
the company in one year may change in another year. It is also helpful in analyzing the profit
of the company which enables the company's survival and growth over a long period of
time. Therefore, the analysis of the ratio is very much important in order to assess and
examine the financial performance of the company.

A K Phophalia, Saritha Sharma and G R Basotia (2008) indicates that ratio

analysis is the process of determining and presenting the relationship of the items in
financial statements. It is the numerical relationship between two items of financial
statements. He also points out that the advantage of working with ratio analysis is that, it
enables the organization to properly judge the performance and financial position of the
enterprise which automatically helps the organization in their decision making process,
dragonizing the organizations financial ills and studies about the financial trends that is
happening in the organization.

Lina Warrad and Dr. Raina AI Omari (2015) studies about the impact of the
activity ratios on the financial performance analysis. He tells that most professional analysts
and investors tend to focus on Return on Asset (ROA) as their primary measure of firm
performance. He also indicates that ROA is a better metric of financial performance than

21
income statement profitability measures like return on sales(ROS). Return on asset
explicitly takes into account the assets used to support business activities. It determines
whether the company is able to generate an adequate profit on its assets rather than simply
showing return on sales(ROS).

Lambrix and Singhvi (2006) states that ratio analysis is a widely used tool for
financial performance analysis. He tells that ratio analysis is a major tool in order to interpret
financial statements so that strengths and weaknesses of the firm. He also mentions that
ratios are relative figures reflecting the relationship between related variables.

JhaSuvita, Hui Xiaofeng (2012) mentions that to analyze the financial performance
of different ownership structured commercial banks in Nepal based on their financial
characteristics and identify the determinants of performance of the banks with help of
financial ratios. The performance evaluation of banks is important for all parties including
depositors, investors, bank managers and regulators. The evolution of a firm's performance
usually employs the financial ratio method, because it provides a simple description about
the firm's financial performance in comparison with previous periods and helps to improve
its performance of management. The study reveals the result that the public sector banks
where significantly less efficient when compared to their counterpart private banks mainly
because of the funds available and also the customer dealings by the public sector banks.

ChoudharyHimanshuTripathi Gaurav (2012) states that to assess the operational

efficiency of the companies in the Indian organized retail industry in terms of inventory
turnover and also to investigate the impact of inventory turnover on financial performance.
A thorough analysis of the inventory management practices adopted at these companies
suggests that each retailer plans its inventory level keeping in view its positioning in minds
of its customers and, of course, the sales forecasting. The inventory level is based on
forecasting which plays a crucial role in the performance of the company.

Curtis C. Versoor mention that financial performance and an emphasis on ethical

as an aspect of corporate governance report that, this is the first study to demonstrate a link
between overall performance and emphasis on ethics as an aspect of corporate governance.
It identifies the 26.8% of the 500 large US public corporation in their annual reports to
shareholders, commit to ethical behavior towards their stakeholders or emphasis compliance
with their code of conduct.

22
 Collis and Jarvis (2002) then states that this may indicate that small companies
experience problems in gaining access to appropriate benchmarks, but could also be the
results of competitors filing abbreviated accounts which reduces the amount of information
available for calculating ratio and making comparison. In addition, as many small
companies operate in the service sector, they occupy niche markets and may be less
concerned with competition than those in other markets.

Melse (2004), reports that ratio analysis provides an insight into the financial health
of a firm by looking into it liquidity, solvability, profitability, activity and capital and market
structure. Jooste (2004) investigates that many authors agree that cash flow information is a
better indicator of financial performance than traditional earnings.

Bhatawdekar (2010) explains that Financial Ratio Analysis is the systematic use of
ratio to interpret the components of financial statements for evaluation of strength and
weaknesses of a firm in addition to its historical performance and present financial
condition.

Pai, Vadivel & Kamala (1995)have studied about the diversified companies and
financial performance. Main purpose of research was to found out the relationship between
the diversified firms and their financial performance. For the purpose of research, they have
selected seven large firms and analyzed those firm which different products-both related
and otherwise-in their portfolio and operating in diverse industry. In this study, a set of
performance measures / ratios was employed to determine the level of financial performance
and variation in performance from one firm to another has been observed and statistically
established. They revealed that the diversified firms studied have been healthy financial
performance.

Tiwari (2013) examined working capital management efficiency in Indian cement

industry. They found that though some of the sample firms had successfully improved
efficiency during these years, the existence of a very high degree of inconsistency in this
matter clearly pointed out the need for adopting sound working capital management policies
by these firms. It was suggested that the firms under study should have taken necessary steps
in order to improve their efficiency

23
 Dr.C.Balakrishnan (2016) observed that financial performance of any organization
is influenced by several factors like capital structure, cost, revenue and the consequential
profit margin. The study can be analyzed with many aspects like financial facts, financial
ratios, financial health, financial strength and utilization of assets, etc. The study revealed
that financial performance can be influenced by the operational and financial efficiency of
the steel industry, which are related to cost and the revenue aspects. The study analyzed the
performance of steel industry in India on the parameters such as profitability, utilization of
assets, growth of performance, financial strength and capital structure. The study also
attempted to identify the nature of relationship between the various aspects of financial
performance.

Peeler J. Patsula (2006), he define that a sound business analysis tells others a lot
about good sense and understanding of the difficulties that a company will face. We have to
make sure that people know exactly how we arrived to the final financial positions. We have
to show the calculation but we have to avoid anything that is too mathematical. A business
performance analysis indicates the further growth and the expansion. It gives a physiological
advantage to the employees and also a planning advantage.

Susan Ward (2008), emphasis that financial analysis using ratios between key
values help investors cope with the massive amount of numbers in company financial
statements. For example, they can compute the percentage of net profit a company is
generating on the funds it has deployed. All other things remaining the same, a company
that earns a higher percentage of profit compared to other companies is a better investment
option.

K.Geethanjali&Dr.S.Santhakumari (2019)- Investors perception towards online

trading in Coimbatore. This research is a descriptive research study in which convenient
sampling techniques is used. This survey is used to select the sample size ,validity and
reliability of the questionnaire 391 samples are selected for the study.

Dr.U.Thasli, Ariff, M.Nandhini and T.Pavithra (2019)-An investors perception

towards online trading . The study aims to identify the preference of the respondent towards
online trading in Udumalpet Talak . In this study questionnaire was collected from
100investors.The findings were analyzed using scaling technique and simple percentage .

C.Navya ,CH.Deepthi (2019) –Investors attitude towards online trading .It aims
that studying the investor’s perception of online trading in share markets and helps to find

24
out the present level of service provided by identifying the area which require attention for
improving its services.

Dr.IqbalThonseHawaldar, Dr.Habeeb Ur Rahiman (2019) – Investors

perception towards stock market. This study is to understand the different personal factors
affecting their investment decision and the different factor influencing various categories of
investment. Chisquare test was used as a tool to arrive at a decision regarding the association
between two variables.

Dr. N. Sakthivel, A. Saravanakumar (2018)-Investors satisfaction on online share

trading and technical problem faced by the investors. Investors satisfaction on online share
trading based on brokerage houses were analysed using percentage analysis. Primary data
were collected from 620 respondents through questionnaire.

Dr.PMohanraj, P Kowsalya (2018)- A Study on the investor perception on karvy

stock brokering in Coimbatore district .This study helps to find out the service quality issues.
primary data is collected from 100 respondents and it is 8 descriptive research design.
Primary data is collected from convenience sampling techniques.

Dr.N.Sakthivel , A. Saravanakumar – Investor’s preference towards online share

trading at NSE .Primary data is collected from 620 respondents using questionnaire .It is
suggested that all other brokerage house in the study should design and improve their
services in terms of procedures,facilities and benefits .

V.Pavithra, Mr William Robert (2017) A study on customers perception towards

online trading in retail brokerage Chennai.This study influence the stock and
investmentstrategies in retail brokerage. In this primary data is collected from 100
respondents through questionnaire using convince sampling techniques.

Dr.krishnamohanvaddai and Dr.. MeruguPratima (2016)- Investors perception

towards online trading in Visakhapatnam city . A questionnaire is collected from 400
investors and chi square is used to test the hypothesis .The study concludes that stock
broking firms in order to enhance widespread use of online trading need to organize the
short term training programmes .

25
 CHAPTER 3

RESEARCH METHODOLOGY

26
3.1 METHODOLOGY;

Research methodology simply refers to the practical “how” of any given piece of
research.

1. More specifically, it’s about how a researcher systematically designs a study to

ensure valid and reliable results that address the research aims and objectives.

2. For example, how did the researcher go about deciding:

What data to collect (and what data to ignore)

• Who to collect it from (in research, this is called “sampling design”)

• How to collect it (this is called “data collection methods”)

• How to analyse it (this is called “data analysis methods”)

Secondary data

• It is the data that has already been collected through primary sources and made
readily available for researchers to use for their own research.

• It is a type of data that has already been collected in the past.

• A researcher may have collected the data for a particular project and then made it
available to be used by another researcher.

• The data may also have been collected for general use with no specific research
purpose like in the case of the national census

Sources of secondary data include books, personal sources, journal, newspaper,

website, government record etc.

• Secondary data are known to be readily available compared to that of primary data.

• It requires very little research and need for manpower to use these sources.

27
Descriptive research design is what is being used here.

• Descriptive research isdefined as a research method that describes the characteristics

of the populationor phenomenon studied.

• This methodology focuses more on the “what” of the research subject than the “why”
of the research subject.

• The descriptive research method primarily focuses on describing the nature of a

demographic segment, without focusing on “why” a particular phenomenon occurs.

• In other words, it “describes” the subject of the research, without covering “why” it
happens.

• Financial Statement of 2019-20

Financial Performance Analysis

Financial performance analysis includes analysis and interpretation of financial

statements in such a way that it undertakes full diagnosis of the profitability and financial
soundness of the business. Financial performance analysis is the process of identifying the
financial strengths and weaknesses of the firm by properly establishing the relationship
between the items of balance sheet and profit and loss account. It also helps in short-term
and long term forecasting and growth can be identified with the help of financial
performance analysis. There are generally six steps to developing an effective analysis of
financial statements.

• Identify the industry economic characteristics

• Identify company strategies

• Assess the quality of the firm's financial statements

• Analyse current profitability and risk

• Prepare forecasted financial statements

• Value the firm

28
 A financial analyst will thoroughly examine a company's financial statements the
income statement, balance sheet, and cash flow statement. One of the most common ways
to analyze financial data is to calculate ratios from the data in the financial statements to
compare against those of other companies or against the company's own historical
performance.

There are two types of financial analysis:

• Fundamental Analysis

Fundamental Analysis Fundamental analysis uses ratios gathered from data within
the financial statements, such as a company's earnings per share (EPS), in order to determine
the business's value. Using ratio analysis in addition to a thorough review of economic and
financial situations surrounding the company, the analyst is able to arrive at an intrinsic
value for the security. The end goal is to arrive at a number that an investor can compare
with a security's current price in order to see whether the security is undervalued or
overvalued.

• Technical Analysis

Technical analysis uses statistical trends gathered from trading activity, such as
moving averages (MA). Essentially, technical analysis assumes that a security's price
already reflects all publiclyavailable information and instead focuses on the statistical
analysis of price movements. Technical analysis attempts to understand the market
sentiment behind price trends by looking for patterns and trends rather than analyzing a
security's fundamental attributes.

Advantages of Financial Analysis

• Pattern detection and forecasting:

Financial statement has the ability to reveal earnings per year, sales and profits
accrued. Though sales figures may vary, the financial planners will be in a position to find
a correlative pattern over a few years of data of sales-figures.

• Budget outline in real-time:

Decision making for planning the future, budget estimations, corrective actions

29
required for efficient budgeting, and many such decisions rely heavily on financial
statements. the statement reveal how much you can spend on marketing or product launches,
strategizing for marketingcampaigns, future expansions, requirements of funding etc.
Information is power in decision making and planning. This in term improves productivity,
budget overruns such to keep the company healthy and increase profits year after year.

Disadvantages of Financial Analysis

• Based on pattern of the market:

A big disadvantage of the financial statements analysis and use for making strategic
decisions based on figures and data pertaining to current market conditions which may
fluctuate. Past performance is a good indicator and motivator. It cannot, however, guarantee
the fluctuations and future demands. A cautious approach is called for in interpretation of
financial ratios and statements to prevent excessive risk-taking based purely on forecasts.

• Analysis of At-One-Time basis:

As the name suggests the forecast and analysis is applicable at that one time only. It
does not reveal or compare the past performance or future forecast at one glance. One will
need to exercise caution by generating and reporting on a continuous basis rather than a one-
time basis. Such extrapolation of data and financial analysis undertaken frequently is crucial
to the company's health and decision-making abilities. Financial Statement

Financial statement is intended to provide information on the resources available to

management, how these resources were finished, and what the firm accomplished with
them. The balance sheet, the income statement and the statement of cash flow. Information
from the basic financial statement can be used to calculate financial ratios and to analyses
to operations of the firm to determine what factors influences a firm earnings, cash flow and
risk characteristics. It will necessary analysis historical data; the ultimate goal of this
analysis is to provide insights to the financial performance of the company.

Financial analysis is commonly called analysis and interpretation of financial

statement. Analysis of financial statement means establishing relationship between the items
in financial statement for determining the financial strength and weakness of the business.
In the word Metcalf and Titard, ‘‘Analyzing financial statement is a process of evaluating

30
the relationship between component parts of financial statement to obtain a better
understanding of a firm and its performance.

They are useful for the following reasons:

• To determine the ability of a business to generate cash, and the sources and uses of
that cash.

• To determine whether a business has the capability to pay back its debts.

• To track financial results on a trend line to spot any looming profitability issues.

• To derive financial ratios from the statements that can indicate the condition of the
business.

• To investigate the details of certain business transactions, as outlined in the

disclosures that accompany the statements

Four Types of Financial Statements :

1. Statement of Financial Position

Statement of Financial Position, also known as the Balance Sheet, presents the
financial position of an entity at a given date. It is comprised of the following three elements:

• Assets: Something a business owns or controls (e.g. cash, inventory, plant and
machinery, etc.)

• Liabilities: Something a business owes to someone (e.g. creditors, bank loans, etc.)

• Equity: What the business owes to its owners. This represents the amount of capital
that remains in the business after its assets are used to pay off its outstanding
liabilities. Equity therefore represents the difference between the assets and
liabilities

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2. Income Statement

Income Statement, also known as the Profit and Loss Statement, reports the
company's financial performance in terms of net profit or loss over a specified period.
Income Statement is composed of the following two elements:

• Income: What the business has earned over a period (e.g. sales revenue, dividend
income, etc.)

• Expense: The cost incurred by the business over a period (e.g. salaries and wages,
depreciation, rental charges, etc.) Net profit or loss is arrived by deducting expenses
from income.

3. Cash Flow Statement

Cash Flow Statement, presents the movement in cash and bank balances over a
period. The 24 movement in cash flows is classified into the following segments:

• Operating Activities: Represents the cash flow from primary activities of a business.

• Investing Activities: Represents cash flow from the purchase and sale of assets other
than inventories (e.g. purchase of a factory plant).

• Financing Activities: Represents cash flow generated or spent on raising and

repaying share capital and debt together with the payments of interest and dividends.

4. Statement of Changes in Equity

Statement of Changes in Equity, also known as the Statement of Retained Earnings,

details the movement in owners' equity over a period. The movement in owners' equity is
derived from the following components:

• Net Profit or loss during the period as reported in the income statement

• Share capital issued or repaid during the period

• Dividend payments

• Gains or losses recognized directly in equity (e.g. revaluation surpluses)

32
Purpose OF Financial Statement :

The following are the main purpose of the analysis of financial statements:

• To estimate the earning capacity of the firm.

• To determine the long -term liquidity of the funds.

• To judge the solvency of the firm.

• To determine the debt capacity of the firm.

• To decide about the future prospects of the firm. 6. To measure the efficiency of
operations.

Objectives of Financial Analysis :

• Reviewing the company’s performance over past periods.

• Assessing the current financial position.

• Forecasting the profitability trends.

• Forecasting financial failure.

Limitation of Financial Analysis :

• Not a Substitute of Judgement

• Based on Past Data

• Problem in Comparability

• Reliability of Figures

• Various methods of Accounting and Financing

• Change in Accounting Methods

• Changes in the Value of Money

• Limitations of the Tools Application for Analysis

• No Assessment of Managerial Ability

• Change of Business Condition

33
Techniques/ Tools Financial Performance Analysis :

An analysis of financial performance can be possible through the use of one or more
tools / Techniques of financial analysis:

• Accounting techniques

It is also known as financial techniques. Various accounting techniques such as

Comparative Financial Analysis, Common-size Financial Analysis, Trend Analysis, Fund
Flow Analysis, Cash Flow Analysis, CVP Analysis, Ratio Analysis, Value Added Analysis
etc. may be used for the purpose of financial analysis. The main analysis used here are:

1. Ratio Analysis

2. Trend Analysis

3. Correlation Analysis

4. Regression Analysis – Time Series Analysis

5. DuPont Analysis

6. Comparative Balance Sheet Analysis

1. Ratio Analysis

In order to evaluate financial condition and performance of a firm, one of the’ widely
used and powerful tool is ratio or index. Ratios express the numerical relationship between
two or more things. Accounting ratios are used to describe significant relationships, which
exist between figures shown on a balance sheet, in a profit and loss account, in a budgetary
control system or in any other part of the accounting organization. Ratio analysis plays an
important role in determining the financial strengths and weaknesses of a company relative
to that of other companies in the same industry. The analysis also reveals whether the
company’s financial position has been improving or deteriorating over time. The value of
ratio analysis enables the equity or credit analyst, lenders, traders and other users to evaluate
past performance, assess the current financial position of the Company, and gain insights
useful for projecting future results.

Ratios can be classified into four broad groups on the basis of items used:

34
 A. Liquidity Ratio

B. Solvency Ratio

C. Activity Ratio

D. Profitability Ratio

A. Liquidity Ratio

Liquidity ratios are the ratios that measure the ability of a company to meet its short
term debt obligations. These ratios measure the ability of a company to pay off its short-
term liabilities when they fall due.

The liquidity ratios are a result of dividing cash and other liquid assets by the short
term borrowings and current liabilities. They show the number of times the short term debt
obligations are covered by the cash and liquid assets. If the value is greater than 1, it means
the short term obligation is fully covered. Higher the liquidity ratios are, the higher the
margin of safety that the company possess to meet its current liabilities.

Liquidity ratios greater than 1 indicates the company is in good financial health and
it is less likely fall into financial difficulties.

The concept of cash cycle is also important for better understanding of liquidity
ratios that continuously cycles through the operations of a company. A company’s cash is
usually tied up in the finished goods, the raw materials, and trade debtors. It is not until the
inventory is sold, but also when sales invoices are raised, and the debtors make payments
that the company receives cash. The cash tied up in the cash cycle is known as working
capital, and liquidity ratios try to measure the balance between current assets and current
liabilities. In other words, a company should possess the ability to translate its short term
assets into cash. The liquidity ratios attempt to measure the ability of a company.

The following are the liquidity ratios used in this analysis:

a. Current Ratio

b. Quick Ratio

c. Absolute liquidity Ratio

35
a. Current Ratio:

The current ratio is also called the working capital ratio, as working capital is the
difference between current assets and current liabilities. The current ratio is calculated by
dividing current assets by current liabilities. A ratio less than 1 may indicate liquidity issues.
A very high current ratio may mean there is excess cash that should possibly be untested
elsewhere in the business or that there is too much inventory. Most believe that a ratio
between 1.2 and 2.0 is sufficient. Low values for the current ratio (values less than 1)
indicate that a firm may have difficulty meeting entrant obligations. However, an investor
should also take note of a company’s operating cash flow in order to get a better sense of its
liquidity. A low current ratio can often be supported by a strong operating cash flow.

Current Ratio = Current Asset / Current Liabilities

b. Quick Ratio:

The term ‘liquidity’ refers to the ability of a firm to pay its short-term obligation as
and when they become due. The term quick assets or liquid assets refers current assets which
can be converted into cash immediately it comprises all current assets except stock and
prepaid expenses it is determined by dividing quick assets by quick liabilities.

Quick ratio = Quick Assets / Quick Liabilities

c. Absolute Liquid Ratio

The meaning of computing absolute liquid ratio is to eliminate accounts receivables

from the list of liquid assets because there may be some doubt about their quick collection.
This ratio is useful only when used in conjunction with current ratio and quick ratio.
Absolute Liquid ratio = Cash and Bank Balance / Current

Liabilities.

B. Solvency Ratio (Leverage Ratio)

Many financial analyses are interested in the relative use of debt and equity in the
firm. The term ‘solvency’ refers to the ability of a concern to meet its long-term obligations.
Accordingly, longterm solvency ratios indicate a firm’s ability to meet the fixed interest and
cost and repayment schedule associate with its long-term borrowings. (i.e.) Debt Equity

36
Ratio, Proprietary Ratio, etc….

The following are the Leverage ratios used in this analysis:

a. Total Debt Equity Ratio

b. Long Term Debt to Shareholders Net Worth

c. Fixed Asset Ratio

d. Fixed Assets to Net Worth Ratio

e. Proprietor Ratio

a. Total Debt- Equity Ratio

The relationship between borrowed funds and owner’s capital is a popular measure
of long term solvency of the firm. This relationship is shown by the debt equity ratio. This
ratio indicates the relative proportion of debt and equity in financing the assets of the firm.

Total Debt Equity Ratio= Total Debt / Equity

b. 0Long Term Debt to Shareholders Net Worth

Long term debt to equity ratio is a leverage ratio compare ng the total amount of
long-term debt against the shareholder’s equity of a company. The goal of this ratio is to
determine how much leverage the company is taking. A higher ratio means the company is
taking on more debt.

Long Term Debt to Shareholders Net Worth = Long Term Debt / ShareholdersFund

c. Fixed Asset Ratio

Fixed Assets Ratio is a typical solvency ratio (long term solvency) which is found
by dividing total fixed assets of a company with long term funds. It shows the amount of
fixed assets being financed by each units of long- term funds.

Fixed Asset Ratio= fixed Assets / Capital Employed

37
d. Fixed Assets to Net Worth Ratio (Fixed Asset to Proprietors Fund Ratio)

Fixed Assets to Net Worth ratio indicates the financial strength of a company the
ratio is equal to the fixed assets of a company divided by its equity capital. Equity capital is
the amount of money invested in a company by its shareholders. If the ratio is greater than
1, some of the company's assets have been financed by debt.

Equity Capital Ratio = Fixed Assets/ Shareholders Fund

e. Proprietary Ratio

Proprietary ratio relates to the shareholder’s fund to total assets. It is calculated by

dividing shareholders fund by the total assets. Proprietary ratio relates to the proprietor’s
funds to total assets. It reveals the owner’s contribution to the total value of assets.

Proprietary ratio = Shareholders fund / Total assets.

C. ACTIVITY RATIOS/ TURNOVER RATIOS

These ratios evaluate the use of the resources of the business concern along with the
use of the components of total assets. They are intended to measure the effectiveness of the
assets management the efficiency with which the assets are used would be reflected in the
speed and rapidity with which the assets are converted into sales.

The greater the rate of turnover, the more efficient the management will be. The
following are the activity ratios in this analysis:

a. Inventory Turnover Ratio

b. Inventory Holding Period

c. Fixed Asset Turnover Ratio

d. Current Asset Turnover Ratio

e. Total Asset Turnover Ratio

f. Capital Turnover Ratio

g. Working Capital Turnover Ratio

38
a. Inventory Turnover Ratio

Inventory turnover ratio shows the relationship between costs of goods sold and
average inventory or stock. Inventory turnover ratio measures the velocity of stock into
sales. Usually high inventory turnover ratio indicates effective management of inventory
because more frequently the stock is sold, therefore a lesser amount of money is required to
finance the inventory. It shows how many times accompanies inventory is sold and replaced
over a period of time. It is calculated as follows: Inventory Turnover Ratio = Net sales /
Inventory

b. Inventory Holding Period

The inventory holding period shows the number of days on average that a business
holds inventory. To calculate the inventory holding period we divide inventory by cost of
sales and multiply the answer by 365 for the holding period in days, or by 12 for the holding
period in months. Inventory Holding Period = 365 / Inventory Turnover Ratio

c. Fixed Assets Turnover Ratio

It establishes the relationship between net sale and fixed asset. It measures the ability
of the company management to generate sales volume from the companies fixed assets base.

The ratio indicates whether or not the company is over investing in assets in order
to generate sales, and the level of productivity of these assets. The ratio indicates the extent
to which the investment in fixed assets contribution towards sales, if it is compared with a
previous year. The ratio is calculated as follows:

Fixed Asset Turnover Ratio = Net Sales / Net Fixed Assets

d. Current Assets Turnover Ratio

The ratio which expresses the relationship between current assets to sale is known
as current assets turnover ratio. In other words, this ratio shows how effectively a company
can use its assets to generate sales. It can be calculated as follows:

Current Asset Turnover ratio = Net Sales / Current Assets

39
e. Total Assets Turnover Ratio

Total assets turnover ratio measures the value of a company's sales or revenues
generated relative to the value of its assets. The asset turnover ratio can often be used as an
indicator of the efficiency with which a company is deploying its assets in generating
revenue.

Total Assets Turnover ratio = Net Sales / Total Assets

f. Capital Turnover Ratio

Capital turnover is the measure that indicates organization’s efficiency in relation to

the utilization of capital employed in the business and it is calculated as;

Capital Turnover Ratio = Sales / Capital Employed

g. Working Capital Turnover Ratio

Current asset will change with the changes in sales. This ratio expresses the
relationship between the working capital and sales. Working capital turnover ratio indicates
the velocity of the utilization of net working capital. The ratio indicates the number of times
the working capital is turned over in the course of a year. It is a good measure over-trading
and under-trading.

The formula for the working capital ratio is as follows;

Working capital turnover ratio = Net sales / Working Capital

D. PROFITABILITY RATIOS

For meaningful conclusions, the profitability ratios of this quarter should be

compared to the profitability ratios of similar quarter in the previous years. The profitability
ratios of a business concern can be measured by the profitability ratios. These highlight the
end result of business activities by which alone the overall efficiency of a business unit can
be judged.

40
The following are the profitability ratios used in this analysis:

a. Net profit ratio

b. Gross Profit Ratio

c. Operating Ratio

a. Net Profit Ratio

Net profit ratio establishes a relationship between net profit (after taxes) and sales.
It is determined by dividing the net income after tax to the net sales for the period and
measures the profit per rupee of sales. The net profit percentage is the ratio of after-tax
profits to net sales. It reveals the remaining profit after all costs of production,
administration, and financing have been deducted from sales, and income taxes recognized.
As such, it is one of the best measures of the overall results of a firm, especially when
combined with an evaluation of how well it is using its working capital. The measure is
commonly reported on a trend line, to judge performance over time. It is also used to
compare the results of a business with its competitors. Net Profit Ratio analyses the amount
of money generated for every rupee of sales. This ratio measures your ability to cover all
operating costs including indirect costs. Net Profit Ratio = Net Profit / Net Sales * 100

b. Gross Profit Ratio

Gross Profit Ratio analyses the amount of profit earned on the products without
considering indirect costs. It measures the gross profit per rupee of sales. The gross profit
ratio shows the proportion of profits generated by the sale of products or services, before
selling and administrative expenses. It is used to examine the ability of a business to create
sellable products in a costeffective manner. The ratio is of some importance, especially
when tracked on a trend line, to see if a business can continue to provide products to the
marketplace for which customers are willing to pay a reasonable amount.

A decreasing gross profit percentage may indicate decreased sales prices, higher
costs of production or a shift from high profit to low profit products.

Gross profit ratio = Gross Profit / Net Sales * 100

41
c. Operating Ratio

Operating ratio shows the efficiency of a company’s management by comparing cost

of goods sold of a company to net sales. The operating ratio shows how efficient a
company’s management is at keeping costs low while generating revenue or sales. The
smaller the ratio, the more efficient the company is at generating revenue.

Operating Ratio = Cost of Goods Sold / Net Sales ×100

2. TREND ANALYSIS

Trend analysis is the practice of collecting information and attempting to spot a

pattern, or trend, in the information. Although trend analysis is often used to predict future
event, it could be used to estimate uncertain event in the past, such as how many ancient
kings probably ruled between two dates, based on data such as the average year which other
known kings reigned. When trend analysis is being used to predict the future, keep in mind
that the factors formerly impacting a data point may no longer be doing so to the same
extent. This means that an extrapolation of a historical time series will not necessarily yield
a valid prediction of the future. Thus, a considerable amount of additional research should
accompany trend analysis when using it to make predictions. Trend analysis is the process
of trying to look at current trends in order to predict future ones and is considered a form of
comparative analysis. This can include attempting to determine whether a current market
trend, such as gains in a particular market sector, is likely to continue, as well as whether a
trend in one market area could result in a trend in another. Though an analysis may involve
a large amount of data, there is no guarantee that the results will be correct

Advantages of Trend Analysis:

• Possibility of making Inter-Firm Comparison:

Trend analysis helps the analyst to make a proper comparison between the two or
more firms over a period of time. It can also be compared with industry average. That is, it
helps to understand the strength or weakness of a particular firm in comparison with other
related firm in the industry.

42
• Usefulness:

Trend analysis (in terms of percentage) is found to be more effective in comparison

with the absolutes figures/data on the basis of which the management can take the decisions.

• Useful for Comparative Analysis:

Trend analyses is very useful for comparative analysis of date in order to measure
the financial performances of firm over a period of time and which helps the management
to take decisions for the future i.e. it helps to predict the future.

• Measuring Liquidity and Solvency:

Trend analysis helps the analyst/and the management to understand the short-term
liquidity position as well as the long-term solvency position of a firm over the years with
the help of related financial Trend ratios.

• Measuring Profitability Position:

Trend analysis also helps to measure the profitability positions of an enterprise or a

firm over the years with the help of some related financial trend ratios (e.g. Operating Ratio,
Net Profit Ratio, Gross Profit Ratio etc.).

Disadvantages of Trend Analysis:

• Selection of Base Year:

It is not so easy to select the base year. Usually, a normal year is taken as the base
year. But it is very difficult to select such a base year for the propose of ascertaining the
trend. Otherwise, comparison or trend analyses will be of no value.

• Consistency:

It is also very difficult to follow a consistent accounting principle and policy

particularly when the trends of business accounting are constantly changing.

43
• Useless in Inflationary Situations:

Analysis of trend percentage is useless at the time of price-level change (i.e. in

inflation). Trends of data which are taken for comparison will present a misleading result.

Methods of Calculation of Trend Percentage :

The Statement of any of the years is taken as the base. Every item in the base year
statement is taken as 100. Trend ratios are computed by dividing each figure in the other
year’s statement with the corresponding item in the base year statement and the result is
expressed as percentages.

6. COMPARATIVE BALANCESHEET

The comparative balance sheet is the study of the trend of the same items and
computed items I two or more balance sheet of the same business enterprise on different
dates. The comparative balance sheet has twocolumn of amount against each balance sheet
items; one column shows the current year financial position whereas another column will
show the previous year’s financial position so that investors or other stakeholders can easily
understand and analyze the company’s financial performance against last year.

Financial statements of 5 years are being used here. These includes,

• Financial Statement of 2020-21

• Financial Statement of 2021-22

• Financial Statement of 2022-23

• Financial Statement of 2023-24

44
 CHAPTER 4

DATA ANALYSIS AND INTERPRETATION

45
4.1 Data representation and interpretation Liquid ratios

1. Current ratio = current asset/current liabilities

(Rs crore)

Year Current assets Current liabilities Current ratio

2019 14421.49 21087.99 0.68

2020 20110.40 23056.33 0.87

2021 34643.91 25607.34 1.35

2022 17035.58 25593.65 0.67

2023 20009.19 30871.30 0.65

Current ratio
1.6
1.4
1.2

0.8
0.6 Current ratio

0.4
0.2

2019 2020 2021 2022 2023

Current ratio compares current assets with current liabilities and tell us whether the
current assets are enough to settle current liabilities. It is inferred from the table that the
higher current ratio is

1.35 in the year 2021 and the lower was 0.65 in the year 2023. The ratio of 1.2 to 2
or above is usually considered safe it is in poor condition to pay back its debts. Hence the
current ratio of is dissatisfactory.

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LIQUID RATIO

Liquid ratio= current assets- inventory- prepaid expenses/current liabilities

(Rs crore)

Year Liquid assets Current liabilities Liquid ratio

2019 7337.68 21087.99 0.35

2020 9873.55 23056.33 0.43

2021 23620.5 25607.34 0.92

2022 5780.24 25593.65 0.23

2023 9292.53 30871.30 0.30

Liquid ratio

0.9
0.8
0.7
0.6
0.5
Liquid ratio
0.4
0.3
0.2
0.1

2019 2020 2021 2022 2023

Ratio of 1.1 is said to be the ideal quick ratio. Indicating that company has in its
possession enough assets which may be immediately liquidated for paying off the current
liabilities. The table shows that the highest liquid ratio is 0.92 in the year 2021 that is not
more than the ideal ratio. Hence the liquid ratio of the company is dissatisfactory.

47
 LONG TERM FINANCIAL POSITION RATIO OR SOLVENCY RATIO :

DEBT EQUITY RATIO

Debt equity ratio = long term borrowing (Debt) / shareholder funds

(Rs crore)

Year debt Shareholders fund Debt equity ratio

2019 29368.44 70476.72 0.41

2020 36475.07 49659.00 0.73

2021 35717.16 61514.82 0.58

2022 39175.00 70454.71 0.55

2023 42683.14 74563.12 0.57

Debt equity ratio

0.8
0.7
0.6
0.5
0.4
Debt equity ratio
0.3
0.2
0.1

2019 2020 2021 2022 2023

The debt equity ratio is a financial ratio indicating the relative proportion of
shareholders equity and debt used to finance a company assets. Debt to equity ratio greater
than 1 indicate the company may be overleveraged. In all the years debt equity ratio of a
company is less than 1.

Hence the company is good in maintaining its debt position.

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 PROPRIETARY RATIO

Proprietary ratio = shareholder funds / total assets

(Rs crore)

Year Shareholders fund Total assets Proprietary ratio

2019 70476.72 123208.15 0.57

2020 49659.00 111465.41 0.44

2021 61514.82 125114.34 0.49

2022 70454.71 137498.36 0.51

2023 74563.12 150392.56 0.49

Proprietary ratio
0.6

0.5

0.4

0.3
Proprietary ratio
0.2

0.1

2019 2020 2021 2022 2023

The high proprietary ratio indicates that a company has a sufficient amount of equity
to support the function of business. The ideal value of the proprietary ratio is depend on the
risk appetite of the investors . If investor agree to take large amount of risk than a lower
proprietary ratio is preferred. It is inferred from the table that the proprietary ratio is higher
in the year 2019 (0.57) and lower in the year 2020 (0.44). Hence proprietary ratio of the
company is satisfactory.

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RETURN ON EQUITY

Return on equity = net profit after tax and preference dividend/ (share capital+
reserve and surplus) X 100

(Rs crore)

Year Net profit after tax Share capital + reserve Return on equity
and preference and surplus
dividend

2019 4900.95 70476.72 6.95

2020 3444.55 49659.00 6.93

2021 4169.55 61514.82 6.77

2022 10533.19 70454.71 14.95

2023 6743.80 74563.12 9.04

Return on equity
16
14
12
10

Return on equity

2019 2020 2021 2022 2023

The return on equity signifies how good the company is in generating returns on the
investment it received from his shareholders. It is inferred from the table that the return on
equity is higher in the year 2022 (14.95%) and the lower in 2021 that was (6.77%).

50
RETURN ON CAPITAL EMPLOYED

Return on capital employed= net profit before interest and tax / capital employed X
100 Capital employed= total assets – current liabilities

(Rs crore)

Year Net profit before Capital employed Return on capital

interest employed
and tax

2019 11102.45 102120.16 10.87

2020 12290.41 88409.08 13.90

2021 16542.62 99507 16.62

2022 22968.02 111904.71 20.52

2023 15265.69 119521.26 12.77

Return on capital employed

25

20

15
Return on capital
10 employed

2019 2020 2021 2022 2023

Return on capital employed measures the efficiency with which investment made by
the shareholders. It is inferred from the table that the return on capital employed is higher
in the year 2022 (20.52%) and lower in the year 2019 (10.87%).

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PROFITABILITY RATIOS

GROSS PROFIT RATIO Gross profit ratio = (gross profit/net sales) x 100

(Rs crore)

Year Gross profit Net sales Gross profit ratio

2019 6154.90 37814.69 16.27

2020 9601.86 47296.99 20.30

2021 13732.00 58550.68 23.45

2022 20144.44 68923.15 29.22

2023 12234.68 58815.57 20.80

Gross profit ratio

35

30

25

20

15 Gross profit ratio

10

2019 2020 2021 2022 2023

Gross profit ratio measures the relationship of gross profit and net sales. Higher ratio
is better. The higher ratio indicates an increase in the selling price of the goods sold without
any corresponding increase in the cost of goods sold.

For the last 4 year, the gross profit ratio has been grown upwards consistently but in
the year 2023 it decreases. Overall It indicate that the gross profit ratio is increased over a
period of time. It shows the good progress of the company. It is inferred from the table that
the gross profit ratio is higher in the year 2022 (29.22%) and lower in the year 2019
(16.27%).

52
NET PROFIT RATIO

Net profit ratio = ( net profit / net sales ) x 100

(Rs crore)

Year Net profit Net sales Net profit ratio

2019 4900.95 37814.69 12.96

2020 3444.55 47296.99 7.28

2021 4169.55 58550.68 7.12

2022 10533.19 68923.15 15.28

2023 6743.80 58815.57 11.46

Net profit ratio

18
16
14
12
10
Net profit ratio

2019 2020 2021 2022 2023

Net profit ratio shows the relationship between net profit and net sales. Higher the
ratio indicates that operational efficiency of the concern. It can be observed from table that
the net profit ratio of shows that there is decrease in the net profit margin from the year 2020
to 2021 as compared to 2019.The higher net profit ratio was observed in the year 2022 that
was 15.28% and the lower in the year 2021 (7.12%) .

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OPERATING PROFIT RATIO

Operating profit ratio = (operating profit / net sales ) x 100

(Rs crore)

Year Operating profit Net sales Operating profit ratio

2019 7611.79 37814.69 20.12

2020 11875.95 47296.99 25.10

2021 15778.96 58550.68 26.94

2022 20562.94 68923.15 29.83

2023 14861.57 58815.57 25.26

Operating profit ratio

35

30

25

20

15 Operating profit ratio

10

2019 2020 2021 2022 2023

This ratio is used to measure the operational efficiency of the management . It is
inferred from the table that From the last 4 year, the operating profit ratio of the company
has been grown upwards consistently but in the year 2023 it decreases.

The highest operating ratio was observed in the year 2022 (29.83%) and lowest is
observed in the year 2019 (20.12%).

54
 CHAPTER 5

FINDINGS AND CONCLUSION

55
5.1 MAJORS FINDING

• The higher current ratio of the 1.35 in the year 2018 and the lower was 0.65 in the
year 2020.

• Higher liquid ratio is 0.92 in the year 2018 and lower was 0.23 in the year 2019 and
It was 0.30 in the year 2020.

• The Gross profit ratio has been grown upwards consistently from 2016 to 2019. It
was high in 2019 (29.22%) and low in 2016 (16.27%) and 20.80% in the year 2020.

• The Net profit shows that there is decrease in the net profit margin in the year 2017
(7.28%) and 2018 (7.12%) as compared to 2016 (12.96%) it was high in the year
2019 (15.28%) and low in the year 2018 (7.12%) It was 11.46% in the year 2020.

• The operating profit ratio has been grown upwards consistently from 2016 to 2019.
It was high in 2019 (29.83%) and low in 2016 (20.12%) and 25.26% in the year
2020.

• Return on equity is high in the year 2019 (14.95%) and was low in 2018 (6.77%)
and 9.04% in the year 2020.

• Return on capital employed is high in the year 2019 (20.52%) and was low in 2016
(10.87%) and 12.77% in the year 2020.

• Debt equity ratio is low in the last five years and it was 0.57 in the year 2020. Lower
debt equity ratio shows a good performance of a company.

• The proprietary ratio is higher in the year 2016 (0.57) and lower in the year 2017
(0.44) and 0.49 in the year 2020.

5.2 DISCUSSION AND SUGGESTION

From the findings and analysis for the last five year we can conclude some
suggestions for company so that the company can be more efficient to generate profit.

• Current ratio is low it should increase its current ratio where it can meet it short term
obligation smoothly.

56
• The company should be maintaining a sound short-term debts paying capacity in
future because the use of more amount of external funds may lead to short-term
insolvency.

• Liquid ratio is low. So I suggest that a company maintain proper liquid funds.

• All operational and related activities should be performed efficiently and effectively.

• MNC LTD has sound solvency position but the Company has to avail on the benefit
of trading on equity.

• The government intervention in promoting ‘Make in India’ in public procurement

has resulted in Indian companies garnering over Rs 50 billion in projects.

• For the very existence and growth, every company has to earn adequate profit. As
regards profitability, the company witnessed a fluctuating trend throughout the study
period, which is not desirable from the management of the company. To keep the
shareholders‟ happy and reliable the rate of return to the equity shareholders should be
consistent in the years to come.

5.3 CONCLUSION

Efficient management of finance is very important for the success of an enterprise.

Term financial performance is very dynamic term. The subject matter of financial
performance has been changing very rapidly. In present time greater importance is given to
financial performance. So, here an attempt is made by me to analyze the financial
performance. While analyzing the financial performance it can be concluded that MNC LTD
is performing good in terms of Quick assets, better inventory management, management of
fixed assets, gross profit, return on capital employed and dividend pay out ratio. These
factors plays important role in forming company strategic and operational thinking. Efforts
should constantly be made to improve the financial position up to next level of performance
in order to make benchmark. This will yield greater efficiencies and improve investor
satisfaction.

57
 ANNEXURE

MAR 23 MAR 22 MAR 21 MAR 20 MAR 19

BALANCE SHEET OF TATA STEEL (in
Rs. Cr.)

12 mths 12 mths 12 mths 12 mths 12 mths

EQUITIES AND LIABILITIES

SHAREHOLDER'S FUNDS

Equity Share Capital 1,146.13 1,146.12 1,146.12 971.41 971.41

TOTAL SHARE CAPITAL 1,146.13 1,146.12 1,146.12 971.41 971.41

Reserves and Surplus 73,416.99 69,308.59 60,368.70 48,687.59 69,505.31

TOTAL RESERVES AND SURPLUS 73,416.99 69,308.59 60,368.70 48,687.59 69,505.31

TOTAL SHAREHOLDERS FUNDS 74,563.12 70,454.71 61,514.82 49,659.00 70,476.72

NON-CURRENT LIABILITIES

Long Term Borrowings 31,381.96 26,651.19 24,568.95 24,694.37 23,457.77

Deferred Tax Liabilities [Net] 5,862.28 7,807.00 6,259.09 6,111.27 2,179.83

Other Long Term Liabilities 3,325.34 2,798.63 2,927.91 3,644.69 842.66

Long Term Provisions 2,113.56 1,918.18 1,961.21 2,024.74 2,888.18

TOTAL NON-CURRENT LIABILITIES 42,683.14 39,175.00 35,717.16 36,475.07 29,368.44

58
 CURRENT LIABILITIES

Short Term Borrowings 7,857.27 8.09 669.88 3,239.67 5,261.02

Trade Payables 10,600.96 10,969.56 11,242.75 10,717.44 7,706.13

Other Current Liabilities 11,749.21 13,837.77 12,959.43 8,398.62 6,115.81

Short Term Provisions 663.86 778.23 735.28 700.60 2,005.03

TOTAL CURRENT LIABILITIES 30,871.30 25,593.65 25,607.34 23,056.33 21,087.99

TOTAL CAPITAL AND LIABILITIES 150,392.56 137,498.36 125,114.34 111,465.41 123,208.15

ASSETS

NON-CURRENT ASSETS

Tangible Assets 70,505.66 70,416.82 70,942.90 71,778.97 24,901.24

Intangible Assets 727.72 805.20 786.18 788.18 527.35

Capital Work-In-Progress 8,070.41 5,686.02 5,641.50 6,125.35 26,982.37

Other Assets 0.00 0.00 0.00 0.00 0.00

FIXED ASSETS 79,480.43 77,018.31 77,402.35 78,731.11 52,410.96

Non-Current Investments 46,860.91 38,929.25 9,636.56 8,355.90 52,360.42

Deferred Tax Assets [Net] 0.00 0.00 0.00 0.00 0.00

59
Long Term Loans And Advances 199.26 231.16 213.50 211.97 3,787.88

Other Non-Current Assets 3,842.77 4,284.06 3,218.02 4,056.03 227.40

TOTAL NON-CURRENT ASSETS 130,383.37 120,462.78 90,470.43 91,355.01 108,786.66

CURRENT ASSETS

Current Investments 3,235.16 477.47 14,640.37 5,309.81 4,320.17

Inventories 10,716.66 11,255.34 11,023.41 10,236.85 7,083.81

Trade Receivables 1,016.73 1,363.04 1,875.63 2,006.52 632.80

Cash And Cash Equivalents 1,226.87 718.11 4,696.74 970.31 1,014.67

Short Term Loans And Advances 1,607.32 55.92 74.13 27.14 1,243.48

Other Current Assets 2,206.45 3,165.70 2,333.63 1,559.77 126.56

TOTAL CURRENT ASSETS 20,009.19 17,035.58 34,643.91 20,110.40 14,421.49

TOTAL ASSETS 150,392.56 137,498.36 125,114.34 111,465.41 123,208.15

60