A

PROJECT REPORT

ON

“A STUDY ON FINANCIAL STATEMENT USING RATIO ANALYSIS.”

AT

“OM SAI CONSTRUCTION MACHINERY AND EQUIPMENTS, LTD. SASWAD”

BY
MR. PRASHANT VILAS RASKAR
(MBA-Finance)

Under the guidance of

Prof.Anjum Gudmithe
In Partial Fulfillment Of Two Years Full Time Course Masters In
Business Administration (MBA)
Year 2022-23
Submitted To

SAVITRIBAI PHULE PUNE UNIVERSITY

Pune District Education Association’s

COLLEGE OF ENGINEERING, HADAPSAR(Manjari BK), PUNE-412307
1
 Pune District Education Association’s
COLLEGE OF ENGINEERING, HADAPSAR(Manjari BK), PUNE-412307

CERTIFICATE

This is to certify that Mr. Prashant Vilas Raskar is the student of MBA(Finance) Final Year
2022-2023of the Department of Master of Business Administration, College Of Engineering, Hadapsar
(Manjari BK), Pune-412307, He has successfully carried out his summer project entitled
“A STUDY ON FINANCIAL STATEMENT USING RATIO ANALYSIS.”
at “OM SAI CONSTRUCTION MACHINERY AND EQUIPMENTS, LTD. SASWAD”
for the whole academic session 2022-23.

This research work has been carried out under my supervision and is of sufficiently high
standard to warrant its presentation for the examination leading to the Degree of Master of
Business Administration of university Pune.

Project guide H.O.D Principal

(Prof. Anjum Gudmithe) (Dr. Ajit Deshpande) (Dr. R.V.Patil)

2
 ACKNOWLEDGEMENT

It gives me great pleasure to express my gratitude towards all the individuals who have
directly or indirectly helped me in completing this project. First of all I am extremely grateful to
Mr. Sanket Takle, Vice President (Accounts and Finance Project), Om Sai Construction
Machinery And Equipment Ltd Saswad, for providing me integrating project in finance for
sixty days. I would like to express my sincere gratitude to my company guide Mr. Ravi Takle,
Associate Vice President (Accounts and Finance), Om Sai Construction Machinery And
Equipment Ltd Saswad for his invaluable guidance during the project period which helped me
in completing the project successfully. I also extent my special thanks to Mr. Anand takle
(Asst Personnel Manager), Om Sai Construction Machinery And Equipment Ltd Saswad.

I wish to express my sincere thanks to our Director Mr. sanket takle and my project guide
Prof.Anjum Gudmithe for providing me valuable guidance & inputs which helped me to complete this
project in true sense.

I also extend my thanks to all the staff of Finance department of Kalyani Steels Ltd. for their support,
which helped me a lot in completing the project.

Lastly my ingenious thanks to all my colleagues and friends for their kind co- operation
and help.

Date -

Place – Pune Mr.Prashant Vilas Raskar

3
 DECLARATION

I hereby that the project “A STUDY ON FINANCIAL STATEMENT USING

RATIO ANALYSIS.” at “OM SAI CONSTRUCTION MACHINERY AND
EQUIPMENTS, LTD. SASWAD” is an independent analysis done by me as a part of
MBA , university of Pune under the guidance of Prof. Anjum Gudmithe.

This report has not been previously submitted for an award of any degree of this or any
other university

Date –

Place – Pune Mr. Prashant Vilas Raskar

1
 EXECUTIVE SUMMARY

This Project is on “RATIO ANALYSIS”. The management of Finance is important in any

type of organization. The Financial Management is very important because it deals with the
cash forum day to day business activities. Various aspects are required to be taken into
consideration while calculating financial analysis & statement. The reason for selecting this
topic as project is that there is lot of scope in this subject to learn various calculations.
Preparation of statement, from those calculations one can find out the company is having
problem in its day to day functioning & what is the current position of the company. To have
a better understanding of how ratios are analyzed and their importance in decision-making, I
selected this topic of ratio analysis. In large companies like these, there are lot many
decisions to be made, since they are manufacturing companies. The decisions regarding
purchases, turnover, profitability etc. are made to cut down costs and increase profits. The
Earnings of the partners can also be determined with the help of ratios.

2
 INDEX

CHAPTERS PARTICULARS PG.NO.

1 Introduction

2 Company Profile

3 Objective And Scope Of Project

4 Needs And Limitations Of Project

5 Concept And Research Methodology

6 Data Analysis And Interpretation

7 Findings

8 Suggestion

9 Conclusion

10 Bibliography

Annexure

3
TABLE
NO. TITLE OF THE TABLE PAGE NO.
1 Current Ratio

2 Liquid Ratio

3 Debt Equity Ratio

4 Proprietor Ratio

5 Return on Assets

6 Return on Shareholder’s fund

7 Gross Profit Ratio

8 Net Profit Ratio

9 Debtor turnover Ratio

10 Fixed Asset Turnover Ratio

4
 CHAPTER NO. 1

INTRODUCTION

The basic for financial analysis, planning and decision is financial information. A business
firm prepares its final accounts via, Balance Sheet and Profit and Loss Account, which
provided useful financial information for the purpose of decision-making. Financial
information is needed to Predict, compare and evaluate the firm’s earning ability. The
former Statement viz Profit and Loss Account shows the operating activities of the concern
and the later Balance Sheet depicts the balance value acquire assets and liabilities at a
particular point of time .However, these statements do not disclose all of the necessary and
relevant information.

For the purpose of obtaining the material and relevant information necessary for
ascertaining the financial strength and weaknesses of an enterprise, it is necessary to analysis
the data depicted in the financial analysis and planning .For instance, funds flow statement is
a valuable aid to a financial manager or a creditor in evaluating the uses of funds by a firm
and in determine how the firm finance those uses. In addition to studying past flow, the
financial manager can evaluate future flows by means of funds statements based on
forecasts.

5
 CHAPTER NO. 2

OBJECTIVES OF THE PROJECT

 To study the concept of financial statement analysis & various ratio’s used for the
same.

 To examine the company’s financial position & profitability using ratio analysis.

 To Study and understand Asset use efficiency of the company.

 To draw the observation based on study & suggest suitable measures to improve
performance.

6
 SCOPE OF STUDY

 Financial Analysis is useful to know the Strengths & Weakness of the company.

 It is useful to identify financial position of company.

 It is useful in all the fields like banking sector, large scale companies, MNC’s, Etc.

7
 CHAPTER NO.3

NEED OF STUDY

 Ratio analysis is an important technique of financial statement analysis. Accounting

ratios are useful for understanding the financial position of the company. Different
users such as investors, management, bankers and creditors use the ratio to analyze
the financial situation of the company for their decision making purpose.
 Accounting ratios are important for judging the company's efficiency in terms
of its operations and management.
 Accounting ratios can also be used in locating weakness of the company's
operations even though its overall performance may be quite good.
Management can then pay attention to the weakness and take remedial measures
to overcome them.

 Although accounting ratios are used to analyze the company's past financial
performance, they can also be used to establish future trends of its financial
performance. As a result, they help formulate the company's future plans.

 It is essential for a company to know how well it is performing over the years and
as compared to the other firms of the similar nature. Besides, it is also important
to know how well its different divisions are performing among themselves in
different years. Ratio analysis facilitates such comparison.

8
 LIMITATIONS OF THE STUDY

 The analysis is limited to just three years of data study (from year 2015 to year 2017)
for financial analysis.

 The findings of the study are based on the information retrieved by the selected unit.

 Many facts and data are such that they are not to be disclosed because of the
confidential nature of the same.

 Time is an important limitation. The whole study was conducted in a period of 60

days, which is not sufficient to carry out proper study.

9
 CHAPTER NO 4

COMPANY PROFILE

COMPANY PROFILE:

OM SAI

10
 Company Name Om Sai Construction machinery and equipment Ltd. Saswad
Year Of 2003
Establishment
Nature Of Business Construction and Manufacturing
Reg. Office A/p Saswad, tal- Purandhar, Dist- Pune.
pin-412301

Contact
+(91)-22230808
Contact Person Miss. Pooja Gore
Mob.No 8787675609

OM SAI came into being in 2003 with the vision of Mr. Sanket Takle More to forge ahead
in the sphere of construction equipment manufacturing. It started by taking baby steps of
supplying oil lubricant pumps and gear boxes to major industrial giants. Since then, OM SAI
has achieved great heights with its expertise and detailed execution. In the mid-eighties, OM
SAI proved its mettle by creating a nitric acid pump to be used in India’s combat weapon the
Prithvi missile. In 1982, the development of the Concrete Block Making Machine
catapulted.

With a workforce of 30 to 40 workers, OM SAI started manufacturing small concrete mixers

at its warje Workshop, which was set up in 1991. In the same year, OM SAI achieved yet
another striking goal by exporting its products to Sri Lanka.

. COMPANYMISSIONANDVISION:

Mission:

“Our mission is growth through innovation and ideas. We believe in building successful
long term relationships with our customers by offering integrated solutions and service
exceeding their expectations!”

11
Vision

“Our vision is to provide innovative, world-class, construction equipment’s backed by

technically competent serving capabilities, with the prime motive of satisfying each and
every customer beyond the expected levels of business excel.

History and achievements:

OM SAI has achieved great heights with its expertise and details execution in the past years.
It has been blessed by exponential opportunities to test its metal in the course of time. In the
mid-eighties, OM SAI was given a chance to display Its expertise by working on a project
for DRDO (Defiance - Research & Development Organization).

OM SAI put in all its efforts to come up with a nitric acid pump to be used in the country’s
combat weapon – the Prithvi Missile. The topping on the cake was when Dr. APJ Abdul
Kalam Ex. President of India personally tested the pump at Hyderabad and approved of its
use.

12
OM SAI Milestones:

 OM SAI established in 2003

 An ISO 9001: 2008 certified.

 Also going for ISO 14001 & OHSAS 18001.

 Three Manufacturing units spread across 15 acres.

 50 different types of Construction Machinery.

 Export to more than 4countries.

 2 Machines manufactured every hour.

ORGANIZATION DEPARTMENTS:

13
PRODUCT PROFILE:

14
ORGANIZATIONAL STRUCTURE:
Organizational flow chart: Production Process Flow:

15
Organizational Working System:

FUTURE PLAN:

In the forthcoming years OM SAI, headed by Mr.Takle More and his sons took this
company to higher levels.

The focus was effectively changes towards the manufacturing special equipment for
construction of dams, irrigation prototype and design which were delivered with personal
involvement on site.

16
 CHAPTER NO.5

CONCEPT & RESEARCH METHODOLOGY

CONCEPTS RELATING TO STUDY TOPIC

FINANCIAL STATEMENTS

I) MEANING OF FINANCIAL STATEMENTS

A financial statement (or financial report) is a formal record 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 easy to understand. They typically
include basic financial statements, accompanied by a management discussion and
analysis:

1. A balance sheet,also referred to as a statement of financial position, reports on a

company's assets, liabilities, and ownership at a given point in time.
2. An income statement, also known as a statement of comprehensive income,
statement of revenue & expense, P&L or profit and loss report, reports on a

3. A statement of changes in equity, also known as equity statement or statement of retained

earnings, reports on the changes in equity of the company during the stated period.

4. A statement of cash flows reports on a company's cash flow activities, particularly its
operating, investing and financing activities.

For large corporations, these statements may be complex and may include an
extensive set of footnotes to the financial statements and management discussion and
analysis. The notes

17
typically describe each item on the balance sheet, income statement and cash flow
statement in further detail. Notes to financial statements are considered an integral part
of the financial statements.

18
 PURPOSE OF FINANCIAL STATEMENTS ANALYSIS BY BUSINESS ENTITIES

"The objective of financial statements is to provide information about the financial

position, performance and changes in financial position of an enterprise that is useful to a
wide range of users in making economic decisions." Financial statements should be
understandable, relevant, reliable and comparable. Reported assets, liabilities, equity,
income and expenses are directly related to an organization's financial position.

Financial statements are intended to be understandable by readers who have "a reasonable
knowledge of business and economic activities and accounting and who are willing to
study the information diligently." Financial statements may be used by users for different
purposes:

• 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.
These statements are also used as part of management's annual report to the
stockholders.
• Employees also need these reports in making collective bargaining agreements (CBA)
with the management, in the case of labor unions or for individuals in discussing their
compensation, promotion and rankings.
• 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.
• 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.

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RATIO ANALYSIS:

MEANING OF RATIO

Ratio is a numerical or arithmetical relationship between two figures. Those are

relationships expressed in mathematical terms between figures which are connected with
each other in some manner. Ratios can be expressed in two ways:

Times-when one value is divided by another, the unit used to express the quotient is termed
as “times”.

Percentage-If the quotient obtained is multiplied by 100; the unit of expression is termed as
“percentage”.

RATIO ANALYSIS:

Ratio analysis is one of the popular tools of financial statement analysis. In simple words,
ratio is the quotient formed when one magnitude is divided by another measured in the same
unit. Ratio is defined as “the indicated quotient of two mathematical expressions” and as
“the relationship between two or more things”.

OBJECTIVES OF RATIO ANALYSIS

Ratio analysis tries to reduce large figures to an easily understandable relationship. A ratio,
as an effective tool of control has to be handled very carefully. Ratios do not make
conclusions, but is a skillful job of the analyst to draw conclusions by making scientific
evaluation of the ratio analysis.

20
Important objectives of ratio analysis are as follows:

• To provide the necessary basis for inter-firm comparison as well as intra- firm
comparison

• To provide the necessary basis for inter-period comparison

• To help in providing a part of information needed in the process of decision making.

• To focus on facts on a comparative basis and facilitate drawing of conclusions

relating to the performance of a firm.

• To evaluate the performance of a firm in determining the important aspects of a

business such as liquidity, solvency, operational efficiency, overall profitability,
capital gearing etc.

• To throw light on the degree of efficiency in the management and the effectiveness
in the utilization of its assets.

• To provide the way for effective control of the enterprise in the matter of achieving
the physical and monetary targets.

• To promote co-ordination among the departments and the staff by a study of

performance and efficiency of each department.

21
CLASSIFICATION OF RATIO’S:-

There are different parties interested in ratio analysis, for convenience purpose classify
ratio’s as follows,

1. Liquidity ratio.
2. Lever ratio
3. Profitability ratio.
4. Turnover ratio.

RATIOANALYSIS

Liquidity ratio
Turnover ratio

Leverage ratio Profitability ratio

22
LIQUIDITY RATIO:

The ratios used to judge the short- term solvency of the company are included under this
group. The commercial banks, creditors are basically interested in these ratios as it shows
the company’s cash position in the short- term and their payments can be secured. The
following are the types of liquidity ratios:

CURRENT RATIO:

This ratio indicates how to expect current claims are covered by current assets.

Current Assets

Current Ratio=

Current Liability

It is a crude type of ratio which shows the backing given by the current assets for payment of
current liabilities. All the current assets like stock, debtors, marketable securities, bills
receivables, prepaid expenses, cash and bank balances, short term advances. The current
liabilities include creditors, outstanding expenses, bills payable, bank overdraft, cash
credits.2:1

Indication:

“Current ratio indicates the backing available to current liability in the form of current
assets”.

23
Liquid ratio/ Quick ratio:

This ratio is better tool to measure the ability to honor day-to-day commitments.

Liquid current asset

Liquid Ratio=

Liquid liability

A standard quick ratio prescribed by the financial institutions is at 1:1. The quick assets are
calculated by adding up debtors, bills receivables, cash, bank and marketable securities. The
current liabilities consist of all the payments or all the liabilities (even bank overdraft).

Indications:

“Liquid ratio indicates the backing available to liquid liabilities in the form of liquid assets”.

24
LEVERAGE RATIO:

They are also called as solvency ratios. These ratios indicate the long term financial
prospects of the company. So, these ratios deal with the utilization of the long term funds.
The following are the leverage ratios

Debt Equity Ratio:

This ratio calculate the follow:

Long Term Debt

Debt Equity ratio =

Equity shareholder fund

The ideal debt- equity ratio is at 2:1. But a government company, the ratio be liquated till
1:1. This ratio indicates the stake of owners and the creditors in the company. A hyper debt-
equity ratio indicates huge part of borrowed investments and also less control of the owner.

Indications:

“Debt Equity ratio indications the stake of shareholders or owners in the

organization vis-a-vis that of creditors”.

25
Proprietor Ratio:

This ratio indicates the relationship between the Owners Fund and Total
Assets.

Owned funds

Proprietor Ratio = x100

Total Assets

This ratio indicates the percentage of investment in fixed assets, current assets and total
assets from the owned funds. If a company has a very conservative approach to the market,
this ratio is very high.

Indications:

“This ratio indicates the extents to which the owner’s funds are sunk in different
kind of asset”.

26
PROFITABILITY RATIO:

These ratios indicate the efficiency with which the operations in the company are carried
out. The creditors evaluate the profitability ratios for judging the credibility of the concern.
The following are the profitability ratios.

Return on Assets:

The ratio measures the profitability of the investment in the firm.

Net Profit

Return on Assets=

Total Asset

Indications

“It indicates the profitable use of investments. All the assets are being considered. So, higher
the ratio better it is for the company”.

27
Return on Equity:

This ratio measures firm’s efficiency at generating profit, & shows how well a
company uses investment for growth.

Profit after tax- preference dividends

Return on Equity =

Equity

It measures the returns for the shareholders. So, higher the ratio better it is for the company.
These ratios are usually calculated by the owners or the shareholders.

Return on capital employed:

It is calculated as,

Net profit after tax + interest on long term loans

Return on Capital Employed =

Capital employed

This ratio indicates the use of the long term funds by the company. The
interest is being added back to the profits as it is a compulsory charge on the earnings of the
company. The banks and the financial institutions can give a period for non- payment of the
installment but interest for such period is calculated.

28
These ratios indicate the efficiency with which the operations in the company are carried
out. The creditors evaluate the profitability ratios for judging the credibility of the concern.
The following are the profitability ratios.

Gross Profit Ratio-

This ratio is the difference between net sales & cost of good sold.

GrossProfit

Gross Profit Ratio = × 100

Net Sales

Indications:

This ratio is high for manufacturing concerns and on a lower side for other concerns. It
indicates the relation between the cost of production and the sales. It shows the efficiency of
the company in producing goods.

29
Net Profit Ratio:

This ratio is used to detrmine the overall profitability due to

various factors such as operational efficiency, trading on equity.

Net Profit

Net Profit Ratio = X100

Sales

Indication:

This ratio indicates the amount leftover for the owners after considering all types of cost. For
calculating net profits the net profit after taxes is considered. So higher the ratio better it is
for the company.

30
Operating Ratio:

It is calculated as,

Operating profit

Operating Profit Ratio= x 100

Sales

Indications:

“This profit indicates the profits which arise only from the operations. The non-operating
expenses like interest paid, dividends paid out, loss due to theft etc. are not considered and
so added up. The non-operating incomes like interest or dividends received are ignored. So
higher the ratio better it is for the company”.

31
Activity/ Turnover Ratio:

These groups of ratios indicate the efficiency of the assets and the investments, to be
converted into sales. The assets and the investments include the fixed assets, current assets
and the capital employed. High turnover ratio indicates better utilization of resources.

Stock Turnover Ratio:

The indication given by this ratio is the no of times finished stock is turned over during
given accounting period.

Cost of goods sold

Stock Turnover Ratio=

Average stock or net sales/average stock

Indications:

This ratio is expressed in times and it indicates the efficient use of minimum stock levels to
generate maximum sales. So higher the ratio better it is. If the ratio is calculated on the basis
of cost of goods sold, it indicates that the company is operating with minimum possible
operating expenses

32
Debtor turnover ratio-

Credit policy followed by firm is indicated by this ratio.

Net credit sales

Debtor turnover ratio=

Average debtors

Indications:

“It indicates the speed of the debtors to be converted into cash. So higher the
debtors’ ratio better it is for the company. If debtors and bills receivables are given, both are
included as they are generated through credit sales”.

Working capital turnover ratio-

The indication given by this ratio is the no of times working capital is turned around in
particular period.

Net sale

Working capital turnover ratio =

Net working capital

Indication:

“It indicates the efficiency of the management to utilize the minimum sanctioned working
capital for maximizing sales. So higher the ratio better it is for the company”.

33
Fixed Asset Turnover Ratio:

This ratio is more important for manufacturing concern, as it indicate the utilization of fixed
assets.

Net sales

Fixed Asset Turnover Ratio=

Net fixed assets

Indications:

“It indicates the amount of fixed assets being utilized efficiently for generating sales. A
hyper ratio may indicate a lower valuation of fixed assets or acquiring assets by way of
lease. A very low ratio may indicate inefficient utilization of the fixed assets”

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RESEARCH METHODOLOGY

What is Research...?

Research is a careful investigation or enquiry especially through search for new facts in
any branch of knowledge.

Definition of research:

M. Stephenson define the research as “The manipulation of things, concepts or symbols

for the purpose of generalizing to extent, correct or verify knowledge , whether that
knowledge aids in construction of theory or in the practice of an art”.

Importance of research:

1. Research provides the guidance to social planning.

2. Research facilitates control by providing knowledge.

3. Research is importance because it suggest effective remedial measures.

4. Research affords a considerable sound basis for prediction.

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SOURCES OF DATA COLLETCION:

There are mainly two through which the data required for the research is collected Data was
gathered through both primary & secondary sources.

1. Primary Data:

We collect primary data during the course of doing experiment in experimental research.
We can obtain primary data either through observation or through direct communication
with respondent in one form or another or through personal interview. Primary data is
collected personally to be used. Primary data is first-hand information collected by
researcher from observation or communication.

2. Secondary Data:

The secondary data are those which have already collected and stored. Secondary data easily
get those secondary data from records, journals, annual reports of the company etc. it will
save the time, money and efforts to collect the data. Secondary data also made available
through trade magazines, annual reports, books etc.

This project is based secondary data collected through annual reports of the organization.
The data collection was aimed at study of working capital management of the company.

 Sources of secondary data:

The information is collected through secondary sources during the project. That information
was utilized for calculating performance evaluation and based on that, interpretations were
made.

 Data collected through published financial statements.

 Ratios calculated from financial statement.
 Analysis and interpretation of ratios.

36
INSTRUMENTS OF DATA GATHERING:

1. Annual report of OM SAI construction machinery & equipment Ltd 2014-2015

2. Annual report of OM SAI construction machinery & equipment Ltd 2015-2016

3. Annual report OM SAI construction machinery & equipment Ltd 2016-2017

STATISTICAL TOOLS FOR DATA ANALYSIS:

1. Column charts.
2. Ratio analysis.

37
 CHAPTER NO.6

DATA ANALYSIS & INTERPRETATION

38
Data Analysis & Interpretation:

1 Current Ratio:

Current Asset

Current Ratio =

Current Liability

Table no: 1 Current Ratio

2015-16 2016-17 2017-18

Current Assets 721,04,0164 697533272 683769875

Graph no.1

Current 4250,66,537 644837810 3956433632

Liability

Current Ratio 1.69:1 1.08:1 0.17:1

1.69
1.8
1.6
1.4
1.08
1.2
1
0.8
0.6
0.4 0.17
0.2
0
2015-16 2016-17 2017-18

Current Ratio Series2

Interpretation: The ideal current ratio for any firm is 2:1. If we see the current ratio of the
company for last three years it has fluctuating from 2015 to 2017 The current ratio of
company is less than the ideal ratio i.e. 2:1

2 Liquid Ratio:

Liquid current asset

39
 Liquid Ratio=

Liquid liability

Table no: 2

2015-16 2016-17 2017-18

Liquid Asset 548118197 52903229 531885603

Liquid liability 64126264 644837810 668433632

Liquid Ratio 0.91:1 0.82:1 0.8:1

Graph no: 2

0.91
0.92
0.9
0.88
0.86
0.84 0.82
0.82 0.8
0.8
0.78
0.76
0.74
2015-16 2016-17 2017-18

Liquid Ratio Series2

Interpretation:-

The standard of Liquid ratio is 1:1 in the year 2017 & 2018 Liquid ratio0.82 &
0.80.There is liquidity problem in the company because liquid current Assets are decreasing
year to year. So company may not fulfill the current obligation on urgent basis.

3 Fixed Assets turnover ratio:

Net sales

40
Fixed Assets turnover ratio =

Net fixed assets

Table no: 3

2015-16 2016-17 2017-18

Net Sales 1268863236 1047605354 745748832

Net fixed Assets 490047212 289242304 351422120

Fixed Assets 2.58 3.62 2.12

Turnover Ratio

Graph no.3

600000000

500000000

400000000
Net Sales
1268863236
300000000
1047605354
745748832
200000000

100000000

Interpretation:-

This ratio can be used for making temporal study as well as for making inter-firm
comparisons. A low ratio shows that either the firm has made high inveshment in fixed
assets or that it is not able to utilize the assets in efficient manner. Similarly, high fixed
asset ratio shows that the company is efficient but may also be operating aat over capacity.

41
4 Debtor turnover ratio:

Net credit sales

Debtor turnover ratio=

Average debtors

Table no: 4

2015-16 2016-17 2017-18

Credit Sales 258366422 285042133 222944958

Debtors 386436202 354978918 365626958

Debtors Turnover Ratio 0.67 0.8 0.61

Graph no: 4
0.8
0.8
0.67
0.7 0.61
0.6
0.5
0.4
0.3
0.2
0.1
0
2015-16 2016-17 2017-18

Debtors Turnover Ratio Series2

Interpretation:-

In debtors turnover ratio showing calculation between year the 2014-15, 2015-16& 2016-17
In 2015-16 the debtors turnover ratio is more than other year. This ratio shows debtor’s
turnover during the year, higher the ratio, the greater the efficiency of credit management.
On an average company debtors period 18 months.

5 Debt Equity Ratio:

42
 Long Term Debt

Debt Equity ratio =

Equity shareholder fund

Table no: 5

2015-16 2016-17 2017-18

Long Term Debt 10291936 167920787 87985475

Shareholder Fund 1287002425 1146204290 1100552070

Debt Equity Ratio 0.16:1 0.14:1 0.07:1

Graph no: 5

0.16
0.16 0.14
0.14
0.12
0.1
0.07
0.08
0.06
0.04
0.02
0
2015-16 2016-17 2017-18

Debt Equity Ratio Series2

Interpretation:

Debt Equity ratio indicates the stake of shareholders or owners in the organization vis –a vis
that of the creditors. A high debt equity ratio may indicate that the financial stake of the
creditors & more than that of the owners.

43
6 Proprietor Ratio:

Owned funds

Proprietor Ratio = x100

Total Assets

Table no: 6

2015-16 2016-17 2017-18

Owner's fund 410114566 367743417 287808105

Total Asset 1287002425 1146204290 1100552070

Proprietor Ratio 31.86% 32.08% 26.50%

Graph no: 6

35.00% 31.86% 32.08%

30.00% 26.50%

25.00%

20.00%

15.00%

10.00%

5.00%

0.00%
2015-16 2016-17 2017-18

Proprietor Ratio Series2

Interpretation:

Low proprietor ratio indicates that mostly assets are financed by the way of
creditors. There is less in the year 2015-16 indicates the low proprietor ratio compare to
other years. Because there is less proportion of shareholders fund are used to finance its
assets.

44
7 Return on Assets:

Net Profit

Return on Assets= x100

Total Asset

Table no:.7

2015-16 2016-17 2017-18

Net Profit 2838134 12081538 10687271

Total Asset 1287002425 146204290 1100552070

Return on total 0.22% 1.05% 0.97%

assets

Graph no: 7

1.20% 1.05%
0.97%
1.00%

0.80%

0.60%

0.40%
0.22%
0.20%

0.00%
2015-16 2016-17 2017-18

Return on total assets Series2

Interpretation :

The return on total assets has boom increased in the year 2016-17 as compare to
last year this is indicates the company made proper utilization of its total assets and get
sufficient return on invested assets. But in the year 2017-18 it slightly decrease.

45
8 Return on Shareholder’s fund:

Net Profit

Return on Shareholder’s fund= X100

Shareholder’s fund

Table no: 8

2015-16 2016-17 2017-18

Net Profit 2838134 12081538 10687271
Shareholders fund 410114566 367743417 287808105
Return on 0.69% 3.28% 3.71%
Shareholder’s fund
Graph no 8

3.71%
4.00%
3.28%
3.50%
3.00%
2.50%
2.00%
1.50%
0.69%
1.00%
0.50%
0.00%
2015-16 2016-17 2017-18

Return on Shareholder’s fund

Interpretation:

Higher this ratio better will be the situation. “Return on shareholders funds has been
decreased in the last two years but the in the year 2016-18has booming increased return on
shareholder funds so its indicates company earned sufficient return for its shareholder in the
year2017-18

46
 9 GROSS PROFIT RATIO:

Gross Profit

Gross Profit Ratio =

Net Sales

Table no: 9

2015-16 2016-17 2017-18

Gross Profit 451235249 273871305 225851889

Net Sales 1268863236 1047605354 745748832

Gross Profit 0.36:1 0.26:1 0.30:1

Ratio

Graph no:9

0.4 0.36

0.35 0.3
0.3 0.26

0.25
0.2
0.15
0.1
0.05
0
2015-16 2016-17 2017-18

Gross Profit Ratio Series2

Interpretation:-

Gross profit Margin shows fluctuating trend in the sale from 2015 To 2018

Volume of sales has been changing due to the market ups and downs that’s why it makes an
impact on the profit of the company.

10 Net Profit Ratio:

47
 Net Profit

Net Profit Ratio = X100

Sales

Table no: 10

2015-16 2016-17 2017-18

Net Profit 2838134 12081538 10687271

Net sales 1268863236 1047605354 745748832

Net Profit 0.22% 1.15% 1.43%

Ratio

Graph no: 10

1.60% 1.43%
1.40%
1.15%
1.20%
1.00%
0.80%
0.60%
0.40% 0.22%
0.20%
0.00%
2015-16 2016-17 2017-18

Net Profit Ratio Series2

Interpretation:

In this ratio year 2016 the net profit ratio was decreasing after that in 2017 net profit ratio
are increasing compare to previous year The net profit margin was boom during the year
2018 compare to 2017 & 2018

CHAPTER NO.7
48
FINDINGS

• The company has lower current ratio compare to standard ratio. The standard current
ratio is 2:1. The standard current ratio for 2015-16 is close to satisfactory ratio but in
the year 2015-16 and 2016-17situations below satisfactory.

• The standard quick ratio is 1:1. Company’s quick ratios are below the standard ratio
during all year. The current liabilities exceed the liquid assets.

• The working capital turnover ratio are sound in all the year. In the year 2017 working
capital turnover ratio is high compared with previous two years and it is continues
increasing. Company utilized proper working capital.

• Company deters turnover ratio low may be because company manufacturing heavy
equipment. Company almost given 18 months credit period.

• Company Properly Utilizes fixed assets to increase the net sales.

• The gross profit ratio of the company is fluctuing in the year 2014-15 gross profit
ratio is higher.

• Net profit ratio of the company increased consistently; it means company increased
its profitability. Its good sign for company.

49
 CHAPTER NO.8

SUGGESTIONS

 Company has lower current and absolute quick ratio so company should try increase
these ratio as per standard ratio for the day to day activities of the company.

 Company’s working capital is good, should be maintain future performance.

Company’s debtors collection period is high so company should try to decrease
debtors collection period.

 For achieving more return on investment the net profit ratio should increased.

 The gross profit ratio of the company is satisfactory so company should try to
maintain gross profit ratio for future performance

50
 CHAPTER NO.9

CONCLUSION:

 The study on financial performance of company conducted inOM SAI construction

machinery & equipment Ltd. to analyze the financial position of the company. The
company’s financial position is analyzed by using the tool of annual reports from
2014-15 to 2016-17.

 The financial strength depends on the operations of all units of the company. From
the performance evaluation of the company for three years using the financial
information made available one can conclude that the company had been running its
business in a very safe mode by taking fewer risks.

 The research study included the financial performance of the company and mainly
concentrated on ratio analysis. From the study it is concluded that, the financial
performance of the company became stronger and improved from year to year.

 Ratios are almost satisfying but some ratios are below the satisfying standards. The
company may follow the given suggestions in the study which may help to achieve
desire ratio levels & better financial performance.

51
 CHAPTER NO.10

B I B L O G R A P H Y~

Books:-

 FINANCIAL MANAGEMENT BY I.M. PANDEY

 FINANCIAL MANAGEMENT BY PRASANNA CHANDRA.

Other Reference:-

 ANNUAL REPORT OF OM SAI CONSTRUCTION MACHINERY &

EQUIPMENT LTD.

Website:-

 www.ucm.com
 www.wikipedia.com

52
Annexure:-

SOURCES OF FUNDS SCH 2015 2016 2027

.
NO.
A. EQUITY AND LABILITIES
1.SHARE HOLDER'S FUNDS
share capital 3 199,822,63 199,822,63 199,822,630
0 0
Reserve & Surplus 4 210,291,93 167,920,78 87,985,475
6 7

2.NON-CURENT
LIABILITIES
Long-term borrowing 5 210,291,93 167,920,78 87,985,475
6 7
Deferred tax liabilities 6 - - -

3.CURRENT LIABILTIES.

Short-term borrowing 7 334,999,87 308,008,48 3,653,277,27

1 0 7
Term Payable 8 19,895,525 285,042,13 222,944,958
3
Other Current Liabilities 9 34291177 26,693,497 58,129,758
Short Term Provision 10 35879964 25093700 22081639

TOTAL RS. 128700242 114620429 1100552070

5 0

B. ASSETS \

1.NON-CURRENT ASSETS
a) FIXED ASSETS

Tangible Assets 11 539,773,65 419,305,58 341,815,522

9 5

53
Intangible Assets 11 452433 140499 -
Capital working-in-progress 11 - - -
Intangible Assets Undredevel 11 16549660 16977550 52957759
Sub-total of fixed asset 556775753 436423634 394773280
b)Non current investment 12 502400 502400 502400
c)Deferred tax assets (net) 6 2529216 5697266 15303864
d)Long-term loans and adv. 13 6154893 6047718 6202651

CURRENT ASSETS

a)Inventories 14 172858247 168500043 151884272

b)Trade receivables 15 327025032 354978918 365626958
c)Cash & cash equivalents 16 29230113 12072008 9203390
d)Short-term loans & adv. 17 190578426 161445699 157055255
e)Other current assets 18 1348346 536604 -

TOTAL 128700242 114620429 1100552070

5 0

A STATEMENT OF PROFIT & LOSS ACCOUNT

PARTICULARS SC 2015 2016 2027

H
NO.

INCOME

Sales 19 126886323 104760535 745748832

6 4
Other Income 20 20427766 177145496 3,585,022

TOTAL Rs. 128929100 122475085 749,333,85

2 0 4

EXPENDITURE

54
Raw Material consumption 21.a 748463519 700275953 459,754,09
7
Cost of Goods Purchase 21.b 61353808 41233402 29,755,131
Changes in inventories F.G.WIP. 21.c 19753197 -2141757 7,996,864
and stock-in tra.

Employee benefits
Expenses 22 125121543 114549318 80,238,522
Finance costs 23 81610408 79543834 69,397,785
Other Expenses 201947188 190956957 125,702,63
24 1
Dep.&amortisation exp. 12 49726447 130063281 -9,606,598
Preliminary Exp. Written off - - -
TOTAL EXPENDITURE 128797610 125448098 813,385,67
2 8 2

PROFIT/(LOSS)BEFORE 1314900 -29730138 -64051818

EXCEPTIONAL & ITEMES &
TAX
Exceptional Item 25.a 3000000 40873077 65386891

Profit & Loss Before Tax 4314900 11142939 1335073

1335073
PROFIT & LOSS BEFOR
TAX
4314900 11142939
TAX EXPENSE 6 1476766 -938600 -9352198
PROFIT/(LOSS)FOR THE YEAR 2838134 12081538 10687271

NET PROFITS AFTER TAX 2838134 12081538 10687271

55