Project Report on

FINANCIAL STATEMENT
ANALYSIS OF
BATA SHOES AND
SERVIS SHOES
For the Partial fulfillment of
The Requirement
Of Bachelor Degree

AND

Under the Supervision of

Prof. Dukhishyam Mohanty
P.N.Autonomous College

Submitted by
Pinki Parida
(+3 Final Year Commerce)
Roll No- 68103U07099
(Year: 2007-10)
 DECLARATION

I, Pinki Parida, student of +3 final year commerce,Accounting

Hons. Roll no-68103U07099 of P.N.Autonomous College, Khurda

hereby declare that the project Report entitled “FINANCIAL

STATEMENT ANALYSIS OF BATA SHOES AND SERVIS

SHOES” is my own original work based on the survey undertaken

by me. I also declare that this report has not been submitted to any

other University/ Institute for the award of any degree or any

professional diploma.

Pinki Parida

(+3 Final Year Commerce)

Roll No- 68103U07099
(Year: 2007-10)
 CERTIFICATE

This is to certify that Pinki Parida has completed her project work
on the subject entitled “FINANCIAL STATEMENT ANALYSIS
OF BATA SHOES AND SERVIS SHOES” which is based on the
survey / research study undertaken by him.

The project report is completed by the candidate under my

supervision. It is an original unaided research study completed
under my supervision to meet the partial requirement of the
Bachelor Degree of the P.N. Autonomous College, Khurda

Date:

Prof. Dukhishyam
Mohanty

(Faculty Guide)
 ACKNOWLEDGEMENT

I would like to express my deep sense of gratitude to the

respectable guide distinguished personalities for their precious

suggestions and encouragement during the project.

The experience which is gained by me during this project is

essential for me at this turning point of my career.

I am also thankful to Prof. Akhil Chandra Chand ,Principal for

his support.

I am thankful to Prof. D.S.Mohanty, for supervising my research

project for valuable guidance.

Last but not the least I would like to thank company officials, my

friends & family members for their constant support.

Pinki Parida

(+3 Final Year Commerce)

Roll No- 68103U070199
 (Year: 2007-10)

Common Size Financial Statement discloses the internal

structure of the firm. It indicates the existing relationship
between sales and each income statement account. It shows
the mix of assets that produce income and the mix of the
sources of capital, whether by current or long-term debt or by
equity funding.

The primary objective of financial analysis is to forecast or

determine the actual financial status and performance of a
project
 TABLE OF CONTENT

Section I

a) Introduction
Introduction of Bata shoes

Introduction of Serves shoes

Project proceedings

1. Ratio Analysis…………………………………………….…………. 14

a) Liquid Ratio…………………………………………………... 15

b) Leverage Ratio………………………………………………… 18

c) Profitability Ratio……………………………………………… 24

d) Activity Ratio………………………………….….………….. 32

e) Market Ratios…………………………………………………. 33

f) Statement of Cash Flow………………………………………. 38

Company’s introduction:

Introduction of Serves shoes company :

Serves e are in leather trade since last 25 years having a tannery. Now they started
manufacturing of shoes of various kinds for men, women, sports, softy shoes, boots and
much other kind of shoes under the choice of buyers

Vision:

“Enabling people to advance with confidence and success”

Mission:

“To make our customer prosper, our staff excels and creates value for shareholders”

Introduction of Bata Shoes Company

Bata Ltd. is a privately owned global shoe manufacturer and retailer headquartered in
Ontario, Canada. The company is led by a third generation of the Bata family. With
operations in 68 countries, Bata is organized into four business units. Bata Canada,
based in Toronto, serves the Canadian market with 250 stores. Based in Paris, Bata
Europe serves the European market with 500 stores. With supervision located in
Singapore, Bata International boasts 3,000 stores to serve markets in Africa, the Pacific,
and Asia, Finally, Bata Latin America, operating out of Mexico City, sells footwear
throughout Latin America. All told, Bata owns more than 4,700 retail stores and 46
production facilities. Total employment for the company exceeds 50,000
VISION
To be the premier organization operating locally and internationally that provided the
complete range of financial services to all segment under one roof

MISSION
To develop and deliver the most innovative products manage customer experience deliver
quality services that contribute to brand strength establish a competitive advantage and
enhance profitability , thus providing value to stake holder of the bank.

Data Processing and Analysis:

We can use several tools to evaluate a company, but we will use one of the most valuable
tool that is “financial ratios Ratios are useful both to internal and external analysts of
the firm. For internal purposes: ratios can be useful in planning for the future, setting
goals, and evaluating the performance of managers. External analysts use ratios to
decide whether to grant credit, to monitor financial performance, to forecast financial
performance, and to decide whether to invest in the company we will use Microsoft Word
and Microsoft Excel work sheets to compute the different ratios and analysis.

Project proceedings:

RATIO ANALYSIS:

(1) PROFITABILITY RATIO’S

(2) Debt & Leverage Ratio’s

(3) Liquidity & Working Capital Ratio’s

(4) shareholder ratio’s

 (1)Liquidity & Working Capital Ratio’s

(a) Current Ratio

(b) Quick Ratio
(c) Avg. Inventory Turnover Period
(d) Accounts Receivable Collection Period
(e) Accounts Payable Payment Period

(a) Current Ratio

Current Ratio = Current Assets / Current Liabilities

Current assets normally include cash, marketable securities, accounts receivables, and
inventories. Current liabilities consist of accounts payable, short-term notes payable,
current maturities of long-term debt, accrued taxes, and other accrued expenses

BATA SHOES

Year 2008 2009

Current Assets 1398003 1652271
Current Liabilities 808720 734907
Current ratio 1.73 2.25
SERVIS SHOES

Year 2008 2009

Current Assets 1591361 2427082
Current Liabilities 1896571 1896571
Current ratio 0.840 1.280
 1.4

1.2

0.8
Quick Ratio 20x7
0.6 Quick Ratio 20x8

0.4

0.2

0
Bata Servis

Interpretation

BATA SHOES

The current ratio for the year, 2008 & 2009 is 1.73 & 2.25 respectively this1.73 ratio is
lower which shows low short term.

SERVIS SHOES

The ratios for the last 2 years are 0.840, & 1.280,

(b)Quick Ratio:

Quick ratio=current assets-stock/current liabilities

The debt to equity ratio is the most popular leverage ratio and it provides detail around
the amount of leverage (liabilities assumed) that a company has in relation to the monies
provided by shareholders

BATA SHOES

Year 2008 2009

Current assets-stock 628007 377982
Current liabilities 808720 734907
Quick ratio 0.78 0.51

SERVIS SHOES

Year 2008 2009

Current assets-stock 892505 2308826
Current liabilities 1896571 1896571
Quick ratio 0.471 1.218

Interpretation

BATA SHOES

We can see from the above calculations that this ratios continuously decreasing in the
last two years.

SERVIS SHOES

Calculating this debt ratio we can see that it was 0.471 & 1.218 the year, 2008 & 2009
respectively. This shows increasing the ratio of the company
 (c)Avg. Inventory Turnover Period:

Avg inventory period = inventory / cost of sales*365

BATA SHOES

Year 2008 2009

Inventory 769996 1274289
Cost of sales 2327134 2942432
Avg inventory period 120.78 158.08

SERVIS SHOES

Year 2008 2009

Inventory 698556 1182566
Cost of sales 3809633 5355170
Avg inventory period 66.92 80.60

Interpretation

BATA SHOES

We can see from the above calculations that this ratios continuously decreasing in the last two years. In
2008 it was 1.66 and in 2009 it was 1.33.

SERVIS SHOES

Analysis shows that this ratio was as high as 1.2 among two years. However, it declined to 1.15 in the year
2009. In 2008 the ratio somewhat increased to 1.85.

(d)Accounts Receivable Collection Period:

 Avg account receivable period=trade receivable/sales*365

The capitalization ratio measures the debt component of a company's capital structure, or
capitalization (i.e., the sum of long-term debt liabilities and shareholders' equity) to support a
company's operations and growth. Long-term debt is divided by the sum of long-term
debt and shareholders' equity. This ratio is considered to be one of the more meaningful
of the "debt" ratios - it delivers the key insight into a company's use of leverage.

BATA SHOES

Year 2008 2009

Trade receivable 3482 893
Sales 3964187 5106578
Avg account receivable 0.321 0.064

SERVIS SHOES

Year 2008 2009

Trade receivable 1904 2844
Sales 4521147 639323
Avg account receivable 0.15 1.62

45

40

35

30

25
Gross Profit Margin 20x7
20 Accounts Receivable
Collection Period 20x8
15

10

0
Bata Servis
 Interpretation

BATA SHOES

It is obvious from the above calculations that there is a gradual fall in this ratio over the years.

SERVIS SHOES

The ratios for the last 2 years are, 0.65 and 0.52. Shows below standard of 2:1

(e)Accounts Payable Payment Period:

Profit Ability Ratio’s

(a) Gross Profit Margin

(b) Net Profit Margin
(c) Assets Turnover Ratio
(d) ROCE

(a)Gross Profit Margin:

Gross profit = gross profit/sales*100

Sales to working capital give an indication of the turnover in working capital per year. A
low working capital indicates an unprofitable use of working capital.

 BATA SHOES

Year 2008 2009

Gross profit 1637053 2164116
Sales 3964187 5106578
Gross profit margin 41.29 42.37

SERVICE SHOES

Year 2008 2009

Gross profit 711514 1038153
Sales 4521147 6393323
Gross profit margin 15.73 16.24

16

14

12

10

8 Net Profit Margin 20x7

Gross Profit Margin 20x8
6

0
Bata Servis
 Interpretation:

BATA SHOES

This liquidity ratio for the years, 2008 & 2009 is, 41.29& 42.37 compared to standard
ratio this ratio is lower which shows low short term liquidity efficiency at the same time
holding less than sufficient current assets mean inefficient use of resources

SERVIS SHOES

The ratios for the last 2 years are, 15.73 &16.24 shows the ratio

(b)Net profit margin:

Net profit margin= PBIT/sales*100

Positive working capital means that the company is able to pay off its short-term
liabilities. Negative working capital means that a company currently is unable
to meet its short-term liabilities with its current assets (cash, accounts receivable
and  inventory).
Also known as "net working capital", or the "working capital ratio".

BATA SHOES

Year 2008 2009

PBIT 503999 663822
sales 3964187 5106578
Net profit margin 12.71 12.99
SERVICE SHOES

Year 2008 2009

PBIT 236180 878203
sales 4521147 6393323
Net profit margin 5.23 13.74
 30

25

20

Assets Turnover Ratio

15 20x7
Net Profit Margin 20x8
10

0
Bata Servis

Interpretation:

BATA SHOES

It is very clear from the above calculations that the working capital of the Bata is
gradually increasing over the years, which shows good short term liquidity efficiency.

SERVIS SHOES

This ratio increased to a great extent in 2008, almost double of the year 2009

(e) Assets turnover ratio:

Assets turnover ratio=sales/cap employment

The interest coverage ratio tells us how easily a company is able to pay interest expenses
associated to the debt they currently have. 

BATA SHOES

Year 2008 2009

sales 3964187 5106578
Cap employed 206334 191251
Assets turnover ratio 19.21 26.70
 SERVICE SHOES

Year 2008 2009

sales 4521147 6393323
Cap employed 576630 523901
Assets turnover ratio 7.85 12.21

30

25

20

Assets Turnover Ratio

15 20x7
Assets Turnover Ratio
20x8
10

0
Bata Servis

Interpretation

BATA SHOES

We can see from this ratio analysis that, this company has covered their interest expenses
19.21 times in 2008 and 26.70 times in 2009. It means they have performed pretty much
same in 2008 and 2009.

SERVIS SHOES

We can see that, this company has covered their interest expenses 7.85 times in 2008 and
12.21 times in 2009.
(d)Return on capital employed:

Return on capital employed=PBIT/capital employed*100

The ratio of total debt to total assets, generally called the debt ratio, measures the
percentage of funds provided by the creditors. The proportion of a firm's total assets that
are being financed with borrowed funds.

BATA SHOES

Year 2008 2009

PBIT 503999 663822
Capital employed 191251 206334
Return cap employed 2.64 3.22

SERVIS SHOES

Year 2008 2009

PBIT 236180 478203
Capital employed 576630 523901
Return cap employed 0.41 0.913

Interpretation:

BATA SHOES

Calculating the debt ratio, we came to see that this company is highly leveraged one

SERVIS SHOES

Calculating the debt ratio, we came to see that this company is highly leveraged one.

Earning Per Share- EPS:

 Earning Per Share = Profit after Taxation

Number of Shares

The portion of a company's profit allocated to each outstanding share of common

stock. Earnings per share serve as an indicator of  a company's profitability. Earnings
per share are generally considered to be the single most  important variable in
determining a share's price. It is also a major component used to calculate the price-to-
earnings valuation ratio. 

BATA SHOES

Year 2008 2009

Profit after Taxation 10084037 15614020
Number of Shares 690000 759000
Earning Per Share 14.61 20.57

SERVIS SHOES

Year 2008 2009

Profit after Taxation 3130229 1301301
Number of Shares 650000 799500
Earning Per Share 4.815 1.627

Price / Earning Ratio:

Price / Earning Ratio = Stock Price Per Share

Earning Per Shares

The Price-Earnings Ratio is calculated by dividing the current market price per share of
the stock by earnings per share (EPS). (Earnings per share are calculated by dividing
net income by the number of shares outstanding.)

BATA SHOES
 Year 2008 2009
Stock price per share 10 10
EPS 14.61 20.57
Price / Earning Ratio 0.68 0.49

SERVIS SHOES

Year 2008 2009

Stock price per share 10 10
EPS 4.815 1.627

Price / Earning Ratio 2.07 6.14

Interpretation

BATA SHOES

The P/E ratio was 0.54 times in 2006 and increased further to as high as 0.68 times in
the following year. However, in 2009 it declined to 0.49 times which is an alarming
signal for the potential investors.
SERVIS SHOES

The P/E ratio was 2.83 times in 2006 and decreased a little bit in 2008. However, in
2009 it increased as much higher than before to 6.14 times.
Dividend cover:

Dividend Payout Ratio = Earning per share

Dividends per shrare

The percentage of earnings paid to shareholders in dividends.

BATA SHOES

Year 2008 2009

DPS 2.0014 3.597
EPS 14.61 20.57
Dividend Payout Ratio 0.137 0.175
 SERVIS SHOES

Year 2008 2009

DPS 00 1.21
EPS 4.815 1.627

Dividend Payout Ratio 00 0.74

Conclusion

Financial Statement Analysis is a method used by interested parties such as investors,

creditors, and management to evaluate the past, current, and projected conditions and
performance of the firm. This report mainly deals with two companies. It is required by
law that all private and public limited companies must prepare the financial statements
like, income statement, balance sheet and cash flow statement of the particular
accounting period. The management and financial analyst of the company analyze the
financial statements for making any further financial and administrative decisions for the
betterment of the company