Financial Analysis of Kone Elevator

SUMMER TRAINING PROJECT  REPORT 

ON FINANCIAL ANALYSIS OF KONE ELEVATOR india ltd.

FOR THE PARTIAL FULFILLMENT OF THE REQUIREMENT  FOR THE AWARD OF DEGREE  OF   MASTERS OF BUSINESS ADMINISTRATION 

Submitted by :   Niti Chawla

Submitted to : Ms.Anjali Sharma

90212233199 SESSION – 2009-2011 Under the guidance of : Mr. Sukhbir Singh Khalsa

C.T INSTITUTE OF MANAGEMENT STUDIES SHAHPUR, JALANDHAR 

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Certificate This is to certify that the project work done on entitled “A Study on Financial Analysis of  Kone Elevator India Limited” is a bonafide work carried out by Ms.Niti Chawla under my

supervision and guidance. The project report is submitted towards the partial fulfillment of  2 years, full time degree of Masters of Business Administration. Administration. This work has not been submitted anywhere else for any other degree/diploma. The original work work was carrie carried d during during 1st June 2010 to 31st July 2010 in Kone Elevator India Limited,Delhi

Date :

Name & Sign of Faculty

 Niti Chawla Roll No.: 90212233199

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ACKNO ACK NOWL WLED ED GE GEME MENT NT “Such thanks I give as near death to those that wish her live.”Shakespeare

Carr Carryi ying ng out out this this proj projec ectt and and its its pres presen enta tati tion on in lite litera rall lly y form form beco become mess   pos possi sibl blee with with the the help help,, guid guidan ance ce and and insp inspir irat atio ion. n.We We rece receiv ived ed from from  professionals engaged in business and education. I feel obliged to all those authorities whose work has been consulted and utilized and acknowledge the text. First of all I express our sincerest depth of gratitude to almighty GOD who always supports us in our endeavour. I thank my institute who has given me an opportunity to show my skills. I am deeply grateful to Mr.Sukhbir Singh Khalsa for his ever willing help and guidance to complete my project successfully. Above all I would like to thank all contacted persons of firm who took out valuable time to answer my queries and gave me full information about elevator company. I exte extend nd my sinc sincer eree grat gratit itud udee towa toward rdss my pare parent nts, s,wh who o have have alwa always ys encouraged me and gave suggestions as how to work on project.They always stand by me in solving all my queries.Their support has always motivated me. Above all it gives me immense pleasure to thank author of various books who indirectly helped me in gaining knowledge.

 Niti Chawla 4

Preface In the present era, the business world is expanding its wings over the global nest the business activities are becoming more vast, extensive and comp comple lex x due due to the the need need of surv surviv ivin ing g thro throug ugh h the the ever ever incr increa easi sing ng competition. The cutthroat competition has led to marketing concept in which customer’s need and wants are taken into prime consideration from the product design stage to port transaction stage. To have an edge over  the competitors the companies need to know what customer wants, then carry out market research. The more a company is aware of customer’s likes and dislikes, the more successful it is.

As a common perception, companies view the business in the term of products they make but the viewpoint is myopic. Instead a  business must be viewed as a customer satisfying process and not as a goods producing process.

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DECLARATION

I do hereby declare declare that this piece of project project report entitled “A Study on Financial Analysis of Kone Elevator India Limited” for partial

fulf fulfil illm lmen entt of the the requ requir irem emen ents ts for for the the awar award d of the the degr degree ee of  “MASTER OF BUSINESS ADMINISTRATION” is a record of 

original work done by me under the supervision.This project work is my own and has neither been submitted nor published elsewhere.

PLACE: DATE:

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Sr. No.

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Contents Introduction to company.  History.  Vision and Mission.  Core value and philosophy.  Management.  Core team. responsibility.  Corporate social responsibility.

Page No. 1-8 2 3 4 5 6-7 8 9-11

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 Need, scope and methodology.  Objective of the study. Introduction to study.  What is shares and its type which is available.  Share/ Stock derivatives.  History.  Shareholder, application and their rights.  Trading.  Buying and selling of shares.  Share price determination.  Advantages and disadvantages.

5 Data analysis and interpretation. 6 Finding and Suggestion. 7 Conclusion. 8 Limitation. Bibliography. Annexure.  Questionnaire.

12-15 15 16-30 16-17 18 19 20-22 23 24-25 26-27 28-30 31-38 40-41 42-43 44-45 v-vi vii vii-x

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ORGANISATION PROFILE INTRODUCTION

KONE is one of the world’s leading elevator and escalator companies. It provides its customers with industry-leading elevators and escalators and with innovative solutions for their maintenance and modernization. KONE also provides maintenance of automatic building doors. KONE provides innovative and eco-efficient solutions for elevators, escalators and automatic building doors. We support our customers every step of the way; from design, manufacturing and installation to maintenance and modernization. KONE is a global leader in helping our customers manage the smooth flow of people and goods throughout their buildings. Our commitment to customers is present in all KONE solutions. This makes us a reli re liab able le pa part rtne nerr th thro roug ugho hout ut th thee li life fe-c -cyc ycle le of th thee bu buil ildi ding ng.. We ch chal alle leng ngee th thee conventional wisdom of the industry. We are fast, flexible, and we have a welldese de serv rved ed re repu puta tati tion on as a te tech chno nolo logy gy le lead ader er,, wi with th su such ch in inno nova vati tion onss as KO KONE NE MonoSpace®, KONE MaxiSpace™, and KONE InnoTrack™. You can experience these innovations in architectural landmarks such as the Trump Tower in Chicago, the 30 St Mary Axe building in London, the Schiphol Airport in Amsterdam and the Beijing National Grand Theatre in China and Delhi Metro Rail Stations in India. KONE employs over 32,000 dedicated experts to serve you globally and locally in 50 countries.KONE India believes quality and safety is move to do with attitude and  behavior of the people. In the continuous process of training and developing the   people, KONE India has invested heavily in an ultramodern training centre. The training centre has four shafts for important hands on training in erection and service of an ele elevat vator. or. It is als also o equ equipp ipped ed wit with h sim simula ulator tor lab for training training engineer engineerss on commissioning and trouble shooting. 8

History Konee Cor Kon Corpor porati ation on is a wor worldld-lea leadin ding g des design igner er and man manufa ufactu cturer rer of ele elevat vators ors,, escala esc alator tors, s, and "au "autow towalk alks." s." Bas Based ed in Hel Helsin sinki, ki, Fi Finla nland, nd, Kon Konee has dev develo eloped ped an internatio inter national nal organ organizat ization ion of 150 subs subsidiar idiaries ies and nearl nearly y 22,500 employees, employees, who   pro produ duce ce an and d in inst stal alll 12 12,0 ,000 00 un unit itss pe perr ye year ar.. Th Thee la late te 19 1990 90ss in intr trod oduc ucti tion on of th thee comp co mpan any' y'ss

Mono Mo nosp spac acee

elev el evat ator or co conc ncep ept, t, wh whic ich h

redu re duce cess

spac sp acee

and an d

ener en ergy gy

requirements, has helped invigorate Kone's business in a difficult economic climate. Yet sales of new elevators, escalators, and autowalks represent only 41 percent of the company's sales. Since the late 1980s Kone has built a strong business in elevator  main ma inte tenan nance ce an and d mo mode dern rniz izat atio ion. n. In 19 1997 97 th thee co comp mpan any y he held ld ma main inte tena nanc ncee an and d modernization contracts on more than 400,000 elevators worldwide. Whereas Europe traditionally has been the company's primary sales base, representing 55 percent of company revenues in 1997, the company has made strong inroads into the U.S. market, which provides 29 percent of company sales. In the 1990s Kone has stepped up its position in the Asia-Pacific region, including opening a new elevator  and escalator factory in Kunshan, China in 1998. At 11 percent of annual sales, this region represents a still limited share of Kone's revenues, sparing the company the   brunt of the late 1990s economic crisis there. Nonetheless, the company remains committed to developing this market. Kone also delivers elevators and escalators to the African and South American markets, which together represent only five percent of annual sales. Kone had been a diversified materials handling equipment company until the 1990s, when the conjunction of a worldwide recession and a too-rapid expansion forced the company to streamline its operations, returning to its long-time core elevator and escalator component.

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KONE India Delivery

KONE India factory located at Chennai is the heart of KONE India’s front line operations. This state of the art factory is equipped with fully automatic CNC machines for punching and bending operations, robotic machines for wielding operations. Factory is also equipped with the latest laser cutting machines for  cutting complex profiles. The latest addition is a V cut machine, to improve aesthetics of panels which are bend is the first of its kind in India in this industry. A fully automatic conveyor painting and powder coating plant helps to improve the aesthetics of the final products. The Quality management system of the factory is collective for ISO 9001 – 2000. Regre Reg ress ss qua quali lity ty che check ck at eve every ry st stage age inc includ luding ing pre shi shipme pment nt audi auditt hel helps ps to deliver the component error free. KONE India developed an in house ERP syst sy stem em wh whic ich h hel helps ps th thee fa fact ctor ory y in me meet etin ing g and ex exce ceed edin ing g th thee cu cust stom omer  er  expectations.

Meeting

the

environmental

challenge

of

urbanization

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Elevators and escalators account for 2–10% of a building’s entire energy consumption and buildings account for 40% of the world’s energy consumption. As urban areas grow and the cost of energy keeps rising, the challenge for KONE is to design solutions that are environmentally efficient and ensure smooth people flow.

KONE takes care of the whole lifecycle KONE provi provides des safe safe,, envir environmen onmentall tally y effi efficient cient and resp responsi onsible ble high perf performan ormance ce services, modernizations and solutions. We strive for continuous improvement in all of  our business activities by following or exceeding applicable rules and regulations, and working with our suppliers and customers to prevent or reduce business operation related emissions and waste.

We are pioneers KONE is a pioneer in developing Eco-efficient solutions. K ONE ONE machine room-less elevators, since their launch in 1996, have saved as much electricity as is produced by a typical 250 MW power plant. This is equivalent to the consumption of two million  barrels of oil or the CO2 emissions of 100,000 ca rs driving around the world.

For the lifetime of your building The KONE elevator or escalator that you buy today is built to last for a life-cycle extending even to 2050 and beyond. It incorporates eco-efficient solutions that keep the tot total al cos costt of own owners ership hip low whi while le red reduci ucing ng th thee eco ecolog logic ical al foo footpr tprint int of you your  r   building. Our maintenance and modernization services help you keep your equipment operating efficiently and looking good for its entire lifetime.

Operating buildings in an eco-efficient way

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KONE is constantly aiming to improve the environmental efficiency of its delivery and installation processes. KONE’s country organizations all over the world work for  sustainable urban development. Best practices are shared globally within the whole company. When Wh en yo you u lo look ok at th thee lo long ng te term rm,, KO KONE NE so solu luti tion onss pr prov ovid idee lo lowe werr to tota tall co cost st of  ownership, due to their energy-efficiency. KONE Eco-efficient™ solutions can help you reduce the elevators’ and escalators’ energy consumption by as much as threequarters. Over the lifetime of the equipment, the savings can amount to more than the cost of the equipment itself. KONE’s product lifecycle analyses show that most of our products’ carbon footprint is created when they are operated, not when they are constructed. Therefore, improving the environmental efficiency of our solutions by reducing their need for  energy and oil is a key issue for us.

Energy-saving hoisting solutions. The heart of our eco-efficient solutions, the KONE EcoDisc® hoisting machine, introduced in 1996, uses significantly less energy than conventional hydraulic or traction 2 speed drives.

Recovering energy. Our regenerative systems can recover up to 25% of the total energy used by an elevator and for example use it as one energy source for  lighting the building.

Standby energy saving. Up to 80% of an elevator’s energy consumption occurs when the elevator is idle. We have developed solutions that, at a preset time after the car has been used, turn off the lights and fan and switch the signalization to standby mode. In the case of KONE escalators, a good way to save energy is to run the 12

escalators at standby speed or in on-demand start mode when they’re not in use. Tests show this can save up to 30% of the energy used.

Preserving warm and cool air. For aut automa omatic tic bui buildi lding ng doo doors rs,, we off offer  er  various solutions to reduce the loss of warm or cool air from the building, making the  building heating or cooling more energy efficient.

Energy-efficie Energyefficient nt lighti lighting ng. LE LED D li ligh ghts ts co cons nsum umee 80 80% % le less ss en ener ergy gy th than an halogen lights. If every elevator, escalator and automatic door light in a major city was replaced with LED lights, it would save thousands of megawatt hours a year.

Less oil and hazardous substances. In addition to saving energy, KONE Eco-efficient™ solutions use less oil than standard elevators and escalators. We also avoid using hazardous substances in our solutions.

Efficient Maintenance

Our comprehensive maintenance services help keep the equipment safe and efficient throughout its lifetime. When the equipment is well maintained and running reliably, it’s also runni running ng energ energy-ef y-effici ficiently ently.. Our maint maintenance enance services are desig designed ned with enviro env ironme nmenta ntall eff effici icienc ency y in min mind d – to mi minim nimize ize ser servic vicee cal calls, ls, uti utiliz lizee the lat latest est technology and optimize the routes of the technicians.

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Optimizing routes. We use the latest technology to optimize the technician’s route, not only to save time but also to reduce fuel consumption and the carbon footprint of our service operations.

Redu Re duci cing ng th thee am amou ount nt of se serv rvic icee ca calls lls. Our globa globally lly harmo harmonized nized preve preventive ntive maintenance method reduces the amount of unforeseen breakdowns and unnecessary visits.

Utili Ut ilizin zing g th thee lat lates estt te tech chno nolog logy y. We us usee wi wire rele less ss te tech chno nolo logy gy to ex exch chan ange ge information between the KONE Customer Care Center™ and technicians. Technicians have the right information and equipment to fix the problem during the first service visit.

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KONE Eco-efficient Solutions

Energy saving elevators The power behind behind our eco-efficient eco-efficient solutions solutions is the KONE EcoDisc® hoisting machine, which can save half or more of the energy consumed by an elevator. Our solutions not only save energy when the elevator  is moving moving.. We also also provid providee soluti solutions ons that that reduce reduce standb standby y energy energy consum consumpti ption on when when the the elevat elevator or is standing standing still. Working Working together, together, these solutio solutions ns can save as much as three quarters of the elevator’s total ener energy gy cons consum umpt ptio ion. n. Over Over the the life lifeti time me of the the equipment, the energy savings can amount to more than the original cost of the elevator.

Energy Saving Escalators KONE is the first in the industry to offer an ecoeffici efficient ent escala escalator tor,, which which combin combines es a highly highly-effici efficient ent drive drive syst system em with with a compac compactt drive drive to achiev achievee new levels levels in energyenergy-eff effici icienc ency, y, space space savi saving ng,, reli reliab abil ilit ity y and and aest aesthe heti tics cs.. A KONE KONE escalator can also save energy when there are no  passengers on board. By using standby speed and ener energy gy-e -eff ffic icie ient nt LED LED ligh lights ts,, you you can can cut cut the the escala escalator tor’s ’s energy energy consum consumpti ption on consid considera erably bly.. Many Many of our solution solutionss are availabl availablee as easy easy to install retrofit packages.

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OUR VISION We intend to be the recognized leader in service excellence among all companies—not  just elevator companies—worldwide. We will inspire our customers’ total confidence through exceptional service that earns us 100 percent of their business, 100 percent of  the time. OUR VALUES—PRINCIPLES THAT GUIDE OUR  WORK BEHAVIOR 

People We be beli lieve eve th thee mo most st im impo port rtan antt as asse sets ts of th thee Ko Kone ne Elevator Company go home at the end of every workday. Safety Millions of people around the world use Kone elevators and escalators every day without giving safety a second thought. For us, that’s success. We understand that the safe way is the only way. Quality For more than 100 years, quality has made Kone the most trusted name in the industry. Integrity We must do the right thing every time, and run our   business to the letter and spirit of the law. By acting ethi et hica call lly y an and d ho hono nora rabl bly, y, we wi win n th thee lo loya yalt lty y of ou our  r  customers.

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Passenger safety

Elevators, escalators, moving walks and automatic building doors are among the safest modes of transport in the world. For KONE safety is always top on mind. Here are some basic basic rules for a safe and comfortabl comfortablee ride Atte Attentio ntion n is paid to safety in all KONE processes. KONE strives to provide safe products and services to its customers and end-users as well as a safe working environment for its own people. The Safety function in KONE is part of Human Resources. The Safety function’s task  is to support the KONE units in their efforts to continuously improve their safety mana ma nage geme ment nt ac acti tivi viti ties es.. In Inte tern rnal al au audi dits ts ar aree a fo foca call po poin intt of wo work rkpl plac acee sa safe fety ty management and are regularly organized at KONE units. The Safety function audits the unit-level safety management. This approach is designed to reinforce safety issues as an integral part of the day-to-day work of every KONE employee. All KONE units are required to comply with the company’s safety policy, which defines, for example, the general principles of safety operations and includes safety train tr aining ing and met method hodss as wel welll as inf inform ormati ation on abo about ut rep report orting ing.. An int intern ernal al rev review iew system has been established for monitoring accidents in the workplace by following the trends in the development of IIFR* (Industrial Injury Frequency Rate) figures. Informat Info rmation ion about possible workplace safety and neces necessary sary corrective corrective acti actions ons are communicated to all units.

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PRODUCTS OF KONE ELEVATOR :

         

         

KONE Special Elevators KONE TravelMaster™ 115 inclined autowalk  KONE EcoMaster™ 135 inclined autowalk  KONE InnoTrack™ autowalk  KONE TravelMaster™ 110 Escalator  KONE EcoMaster™ 130 Escalator  KONE TransitMaster™ 180 escalator  KONE S MiniSpace™ KONE MiniSpace™ KONE Classic Standard KONE Classic Special KONE Swift(ADV) KONE Scenic Elevators KONE Bed Elevators KONE Goods Elevators KONE Special Elevators KONE TravelMaster™ 115 inclined autowalk  KONE InnoTrack™ autowalk  KONE Bed Elevators KONE Goods Elevators

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MANAGEMENT In KONE ELEVATOR INDIA LTD. The management is concerned with direction and control c ontrol over the various activities and work for  the atainment of the objectives objectives of

the objectives laid by by the administration.

MANAGEMENT

TOP LEVEL MANAGEMENT

CHAIRMAN

MIDDLE LEVEL MANAGEMENT

SR MANAGER OF ASSEMBLY

LOWER LEVEL MANAGEMENT

ENGINEERS SUPERVISIORS

MANAGING DIRECTOR  MARKETING

FOREMAN

JOINT MANAGING QUALITY CONTROL DIRECTOR  HEAVY MACHINE SHOP G.M R&D

PEROSANAL DEPARTMENT OFFICER 

LIGHT MACHINE SHOP G.M FINANCES

OPERTIONAL STAFF PARCHASE

G.M ENGINE

OTHER STAFF PAINT SHOP

G.M WORKS GEAR SHOP FACTORY MANAGER  STORE OFFICER 

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SWOT ANALYSIS OF KONE ELEVATOR INDIA LTD. SWOT stands for strengths, weakness, opportunities and threats, which helps to isolate the strong and week areas within an export strategy. SWOT also indicates the future opportunities or threats that may exist in the chosen markets and is instrumental in strategy formulation and selection. To apply your own SWOT analysis, start by creating a heading for each category –  ‘Strengths’, ‘Strengths’, ‘Weaknesses’, ‘Opportunities’, and ‘Threats’. Under each of these, write a list list of five five releva relevant nt aspect aspectss of your your busine business ss and extern external al market market enviro environme nment. nt. Strengths and weaknesses apply to internal aspects of your business; opportunities and threats relate to external research. Your final analysis should help you develop short and long term business goals and action plans, and help guide your market selection process. Envir Environm onment ental al factor factorss intern internal al to the compan company y can be classi classifie fied d as streng strength thss or  weaknesses, and those external to the company can be classified as opportunities or  threats.

STRENGTHS Business strengths are its resources and capabilities that can be used as a basis for  developing a competitive-advantage. Examples of such strengths include: •

Patents

•

Strong brand names.

•

Good reputation

•

Cost advantages from proprietary know-how.

•

Exclusive access to high grade natural resources.

•

Favorable access to distribution networks.

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WEAKNESSES The absence of certain strengths may be viewed as a weakness. For example, each of  the following may be considered weaknesses: •

Lack of patent protection.

•

High cost structure.

•

Lack of access to the best natural resources.

•

Lack of access to key distribution channels.

OPPORTUNITIES The external environmental analysis may reveal certain new opportunities for profit and growth. Some examples of such opportunities include: . •

Arrival of new technologies.

•

Loosening of regulations.

•

Removal of international trade barriers.

THREATS Changes in the external environmental also may present threats to the firm. Some examples of such threats include: •

•

Emergence of substitute products.  New regulations.

•

Increased trade barriers

•

Intoduction of new companies.

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PRACTICAL FRAMEWORK OF TRAINING REPORT

INTRODUCTION TO THE TOPIC – FINANCIAL ANALYSIS Finan Financia ciall statem statement entss are prepar prepared ed primar primarily ily for decisi decisionon-mak making ing.. They They play play a domi domina nant nt role role in sett settin ing g the the fram framew ewor ork k of the the mana manager geria iall deci decisi sion ons. s. But But the the info inform rmat atio ion n prov provid ided ed in the the fina financi ncial al stat statem ement entss is not not an end end in itse itself lf as no meaningful meaningful conclusions conclusions can be drawn drawn from these statements statements alone. However the information provided in the financial statements is of immense use in decision –  making through analysis and interpretation of financial statements. Financial analysis is the process of identifying the financial strength & weaknesses of the Firm by  property, establishing relationship between the items of the Balance Sheet and the Profit and Loss Account.

MEANING : The term “Financial Analysis” also known as analysis and interpretation of financial statements refer to the process of determining financial strength and weaknesses of the firm by establishing strategic relationship between the items of the balance sheet,  profit and loss account and other operative data. According to Metcalf and Titard, “Analyzing financial statements is the process of  evaluating the relationship between the component parts of the financial statements to obtain a better understanding of a firm’s position and performance.” In the words of Myers, “Financial statement analysis is largely a study of relationship among the various financial factors in a business as disclosed by a single set of  stat statem emen ents ts,, and and a stud study y of the the trend trend of thes thesee fact factor orss as show shown n in a seri series es of  statements”.

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OBJECTIVE : The purpose of objective of financial analysis is to diagnose the information contained in financial statements so as to judge the profitability and financial soundness of the Just like like a doctor doctor examin examines es his his patien patientt by record recording ing his body temper temperatu ature, re, blood blood firm. Just   press pressure ure etc. etc. before before making making his conclu conclusio sion n regard regarding ing the illnes illnesss and before before givin giving g his treatment A financial analyst analysis the financial statements with various tools of 

analysis before commenting upon the financial wealth or weaknesses of an enterprise. The analysis and interpretation of financial statements is essential to bring out the mystery behind the figures in financial statements. Financial statements analysis is an attempt to determine the significance and meaning of the financial statement data so that forecast may be made of the future earnings, ability to pay interest and debt maturities (both current and the long term) and profitability of a sound dividend  policy.

TYPES OF FINANCIAL ANALYSIS

However, we can classify various types of financial analysis into different categories depending upon (i) the material used, and (ii) the method of operation followed in the analysis or the modus operandi of analysis. Types of Financial Analysis

On the basis of material used

External analysis

Internal analysis

On the basis of modus operandi

Horizontal analysis

Vertical analysis

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On the basis of Material used: a. Exte Externa rnall anal analys ysis is

 b. Internal analysis

a. Exte Extern rnal al anal analys ysis is

This This anal analys ysis is is done done by outs outsid ider erss who who do not not have have acce access ss deta detail iled ed inte intern rnal al accounting records of the business firm. These outsiders include investors, potential investors, creditors, potential creditors, government agencies, credit agencies, and the general public. For financ financial ial analys analysis, is, these these extern external al partie partiess to the firm firm depend depend almost almost entire entirely ly on the  published financial statements. b. Inter Interna nall ana analy lysi siss

The analysis analysis conducted conducted by persons persons who have access to the internal internal accountin accounting g records records of a  business firm is known as internal analysis. Such an analysis can therefore, be performed by executives and employees of the organization as well as government agencies which have statutory powers vested in them. Financial analysis for managerial purposes is the internal type of analysis that can be affected depending upon the purpose to be achieved. (ii (ii)

On the the basi basiss of of mo modus dus ope opera rand ndii a. Hori Horizo zont ntal al ana analy lysi siss b. Vert Vertic ical al anal analys ysis is

a. Hori Horizo zont ntal al ana analy lysi siss

Horizontal analysis refers to the comparison of financial data of a company for several years. The figure for this type of analysis are presented horizontally over a number of  columns. The figures of the various years are compared with standard or base year. A base year is a year of analysis is also called ‘Dynamic analysis’ as it is based on the data from year  to year rather than on data of any one year. b. Vert Vertic ical al anal analys ysis is

Vertical analysis refers to relationship of the various items in the financial statements of one accounting period. In this type of analysis the figures from financial statements of the year are compared with a base selected from the same years statement. It is also known as ‘static analysis’. Common size financial statements and financial ratios are the two tools employed in vertical analysis. Since vertical analysis considers data for one time period only. It is not very conducive to a proper analysis of financial statements.

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2.1.4 PROCEDURE OF FINANCIAL STATEMENT ANALYSIS There are three steps involved in the analysis of financial statements. These are (i) selection (ii) classification (iii) interpretation.The first step involves selection of information (data) relevant to the purpose of analysis of financial statements. The second step involved is the methodical classification of the data and the third step includes drawing of inferences and conclusion.

The following procedure is adopted for the analysis and interpretation of financial statements: 1. The analyst analyst should should acquaint acquaint himself with with the principles principles and postulan postulants ts of accounting. accounting. He should know the plans and policies of the management so that he may be able to find out whether these plans are properly executed or not. 2. The The exte extent nt of anal analys ysis is should should be dete determ rmin ined ed so that that the the sphe sphere re of work may be decided. If the aim is to find out the earning capacity of the enterprise then analysis of  income statement will be undertaken. On the other hand, if financial position is to be studied then Balance sheet analysis will be necessary. 3. The financial financial data data given in the stateme statements nts should should be re-organi re-organized zed and re-arrange re-arranged. d. It will will invol involve ve the the groupi grouping ng of simila similarr data data under under same same heads, heads, breaki breaking ng down down of  individual components or statements according to the nature. The data is reduced to a standard form. 4. A relationsh relationship ip is establishe established d among financial financial statement statementss with the help of tools tools and techniques of analysis such as ratios, trends, common size, funds flow etc. 5. The informati information on is interpreted interpreted in a simple simple and understandab understandable le way. The significa significance nce and utility of financial data is explained for helping decision taking. 6. The conclus conclusion ionss drawn drawn from inter interpre pretat tation ion are presen presented ted to the managem management ent in the the form of reports.

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2.1.5 METHODS METHODS OR DEVICES DEVICES OF FINANCIAL FINANCIAL ANALYSIS ANALYSIS The analysis and interpretation of financial statements is used to determine the financial  position and results of operations as well. A number of methods or devices are used to study the relati relations onshi hip p betwee between n differ different ent statem statement ents. s. The The follow following ing method methodss of analys analysis is are generally used: 1. Comp Compar arat ativ ivee stat statem emen ents ts 2. Tren Trend d ana analy lysi siss 3. Comm Common on siz sizee stat statem emen ents ts 4. Fund Fundss flo flow w ana analy lysi siss 5. Cash Cash flow flow anal analys ysis is 6. Rati Ratio o ana analy lysi siss 7. Cost Cost volu volume me prof profit it anal analysi ysiss These are explained as follows:

1. COMP COMPAR ARAT ATIV IVE E ST STAT ATEM EMEN ENTS TS

The compar comparati ative ve financ financial ial statem statement entss are statem statement entss of the financ financial ial positi position on at different periods of time. The elements of financial position are shown in a comparative form so as to give an idea of financial position at two or more periods. Any statement prepared in a comparative form will be covered in comparative statements. From practical point of view. Generally, two financial statements (Balance Sheet and the Income Statement) are prepared in comparative form for financial analysis purpose.

2. TREN TREND D ANAL ANALYS YSIS IS

The The fina financ ncia iall stat statem emen ents ts may may be anal analyz yzed ed by comp comput utin ing g tren trends ds of seri series es of  information. This method determines the direction upwards or downwards and involves the computation of the percentage relationship that each statement items bears to the same in the  base year. The information for a number of years is taken up and one year, generally taken for  the base year. In figures for the base year are taken as 100 and trend ratios for other years are calculated on the basis of the base year. The analyst is able to see the trend of the figures, whether upward or downward

3. COMM COMMON ON SIZ SIZE E STATE STATEME MENT NTS S

The common size statements, balance sheet and the income statements are shown in analytical percentages. The figures are shown as percentages of total assets, total liabilities 27

and the total sales. The total sales are taken as 100 and different assets are expressed as a  percentage of the total. Similarly various liabilities are taken as a part of the total liabilities. These statements are also known as component percentage as 100 percent statements because every individual item is stated as a percentage of the total 100.

4. FUND FUNDS S FLO FLOW W ANA ANALY LYSI SIS S

The fund flow statement is a statement, which shows the movement of the funds and is the report of the financial operations of the business undertaking. It indicates various means  by which funds were obtained during a particular period and the ways in which these funds were employed. In simple words, it is a statement of sources and application of funds.

5. CASH CASH FLOW FLOW ANAL ANALYS YSIS IS

Cash flow statement is a statement, which describes the inflow (sources) and outflow (uses) of the cash and cash equivalents in an enterprise during the specified period of time. Such a statement enumerates net effects of the various business transactions on cash and its equivalents and takes into account receipts and disbursements of cash. A cash flow statement summarizes the causes of changes in cash position of a business enterprise between the dates of the two balance sheets.

6. RATI RATIO O ANA ANALY LYSI SIS S

Ratio analysis is a technique of analysis and interpretation of financial statements. It is the process of establish establishing ing and interpret interpreting ing various various ratios ratios for helping helping in making making certain certain decisions. However ratio is not end itself. It is only a means of better understanding of  financial strengths and weaknesses of a firm. A ratio is a simple arithmetical expression of the relationship of one number to another. It may be defined as the indicated quotient of the two mathematical expressions.

7. COST COST VOLUM VOLUME E PROF PROFIT IT ANAL ANALYSI YSIS S

Profit is the most important measure of a firm’s performance. In the free market economy, profit is a guide for allocating resources efficiently. An analysis of the effects of  various factors on profit is an essential step in financial planning and decision-making. The analytical techniques used to study the behavior of profit in response to the changes in the volume costs and price is called the Cost Volume Profit (CVP) analysis.

28

RATIO ANALYSIS

INTRODUCTION The ratio analysis is one of the most powerful tools of the financial analysis. It is the process of establishing and interpreting various ratios (quantitative relationship between figures and groups of the figures). It is with the help of ratio that the financial statements can be analyzed more clearly and decisions made from such analysis.

MEANING

A ratio is a simple arithmetical expression of the relationship of one number to another. It may be defined as the indicated quotient of two mathematical expressions. Accord According ing to the Accoun Accountan tant’s t’s Handbook Handbook by Wixon, Wixon, Kell Kell and Bedford, Bedford, a ratio ratio is an expression of the quantitative relationship between the two numbers. According to the Kohler, a ratio is the relation of the amount, a, to another b, expressed as the ratio of a to b; a:b (ais to b) or as a simple fraction, integer, decimal fraction & percentage. In simple language ratio is one number expressed in terms of the another and can be worked out  by dividing one number into the other.

STEPS INVOLVED IN THE RATIO ANALYSIS

Selection of relevant data from the financial statements depending upon the objective of the analysis. 1. Calculatio Calculation n of appropri appropriate ate ratios ratios from from the above data. data. 2. Comparison Comparison of the the calculated calculated ratios ratios with the ratios ratios of the the same firm in the past, past, or the ratios developed from projected financial statements or the ratios of some other firms or the comparison with the ratio of the industry to which the firm belongs. 3. Interp Interpret retati ation on of of the the ratios ratios..

29

GUIDELINES FOR USE OF RATIOS

The calculation of ratios may not be difficult task but their use is not easy. Following guidelines or factors may be kept in mind while interpreting various ratios.

1. ACCURA ACCURACY CY OF FINA FINANCI NCIAL AL STATEM STATEMENT ENTS: S:

The ratios are calculated from the data available in financial statements. The reliability of  ratio is linked to the accuracy of information in these statements. Before calculating ratios one should see whether proper concepts and conventions have been used for preparing financial statements or not. 2. OBJECT OBJECTIVE IVE OR OR PURPOS PURPOSE E OF ANALY ANALYSIS SIS::

The type of ratios to be calculated will depend upon the purpose for which these are required. If the purpose is to study current financial position then ratios relating to the current assets and current liabilities will be studied. The purpose of user is also important for the analysis of ratios. 3. SEL SELEC ECTI TION ON OF RATI RATIOS OS::

Another precaution in ratio analysis is the proper selection of appropriate ratios. The ratios should match the purpose for which these are required. 4. USE USE OF OF STAN STANDA DARD RDS: S:

The ratios will give an indication of financial position only when discussed with reference reference to certain standards standards.. Unless Unless otherwise otherwise these ratios are compared compared with certain certain standards one will not be able to reach at conclusion. 5. CALI CALIBR BRE E OF THE THE ANA ANALY LYST: ST:

The ratios are only the tools of the analysis and their interpretation will depend upon the caliber and competence of the analyst. He should be familiar with various financial statements and the significance of change etc. 6. RATIO RATIO PROVID PROVIDE E ONLY ONLY A BASE BASE::

The ratios are only guidelines for the analyst; he should not base his decision entirely on them. He should study any other relevant information, situation in the concern, general economic environment etc. before reaching final conclusions.

30

CLASSIFICATION OF RATIOS The ratios have different use for different people. Therefore ratios can be classified into different categories. Various ratios can be divided into following categories depending upon their use.

Traditional classification Traditional classification or classification according to the statement, from which ratios are calculated is as follows: 

Profit and loss account



Balance sheet ratios



Inter statement ratios

Classification according to the nature of ratios In this type of ratios more emphasis is given to the nature of ratios, whether these pertain to sales, earning, inventory etc. 

Liquidity or solvency ratio



Debtors ratio



Creditors ratio



Sales ratio



Earning ratios



Cost of expenses ratio

According to importance of ratios Under this type of ratios, ratios can be divided into two categories as following:  Primary ratios:

1. Return Return on capit capital al empl employe oyed d  Secondary ratios:

1. Produ Product ctio ion n cost cost rati ratios os 2. Distri Distribut butio ion n cost cost ratio ratioss 3. Selli Selling ng cost cost rati ratios os

31

According to users of the ratios Ratios for

Ratios

for

management

shareholders

creditors

Return on

Earn Earnin ing g

Current ratios

capital

share

per  per 

employed Gros Grosss

prof profit it

ratios

Ratios

for

Liquid ratios Yield ratios

Debt Debt

Payout ratios

ratio

equi equity ty

Current ratios

32

Functional classification The four most important financial dimensions, which a firm would like to analyze, are: 

Liquidity ratios



Leverage ratios



Activity ratios



Profitability ratios

A. LIQUI LIQUIDIT DITY Y RATIOS RATIOS::

Liquidity refers to the ability of the concern to meet its current obligations and when these  become due. The short – term obligations are met by realizing amounts from current, floating or circulating assets. A firm should ensure that it does not suffer from lack of liquidity and also also that that it does not have excess excess of liqui liquidit dity. y. The failure failure of the company company to meet its obligations due to lack of sufficient liquidity will result in poor creditworthiness, loss of  creditors confidence, or even in legal tangles resulting in the closure of the company. A very high degree of the liquidity is also bad, idle assets earn nothing. The firm’s funds will be unnecessarily tied up in current assets. Therefore, it is necessary to strike a proper balance  between the high liquidity and lack of liquidity.

The most common ratios which indicates the extent of liquidity or lack of it are: •

Current ratio

•

Quick ratio

•

Absolute ratio

1. CURR CURREN ENT T RATI RATIO O

The curren currentt ratio ratio is calcul calculate ated d by dividi dividing ng curren currentt assets assets by liabil liabiliti ities es with with the help help of  following formula: Current ratio =

Current Assets Current Liabilities

This ratio is an indicator of the firm’s commitment to meet its short-term liabilities. Current assets means assets that will either be used up or converted into cash within a years’ time or norms, operating cycle or the business, whichever is longer. Current liabilities means liabilities payable within a year or during the operating cycle of business, whichever is longer, out of existing current assets or by creation of other current liabilities.

An ideal current ratio is (2:1). The ratio of 2 is considered as a safe margin of  solvency due to the fact that if the current assets are reduced to half i.e. 1 instead of 2, then also the creditors will be able to get their payable in full. Some of the current assets and current liabilities are as follows:

Current Assets

Current Liabilities

Marketable Securities

Bank overdraft

Sundry Debtor (less provision)

Income tax

Billing Receivable

Payable

Advances (recoverable) Pre-paid expenses Book debts outstanding for more than 6 months and loose tools should not be included in current assets.

Ratio ) 2. QUICK RATIO: ( Acid Test Ratio or Liquid Ratio)

This ratio establishes a relationship between quick or liquid assets and current liabilities. Quick Ratio

=

Quick Assets Quick Liabilities

Quick Assets = Current Assets – Inventories (i.e. stock) – prepaid expenses

An asset is liquid if it can be converted into cash immediately or reasonably soon without a loss of value. Cash is (the most liquid asset). Genera Generally lly,, a quick quick ratio ratio is (1:1) (1:1) is consid considere ered d to repres represent ent a satisf satisfact actory ory curren currentt financial condition. A quick ratio of (1:1) or more does not necessarily imply sound liquidity  position of dead stock is fairly low.

3. ABSOLU ABSOLUTE TE LIQUI LIQUID D RATIO RATIO / CASH CASH RATI RATIO: O:

As all book debts may not be liquid, and cash may be immediately needed to pay operating expenses and moreover, inventories are not absolutely non-liquid. To a measurable extent, inventories are available to meet current obligation. It would be appreciated that a company with a lower quick ratio may be quite solvent in case its inventory has a ready market; its realizable value is even above the book value and the portion. Since cash is the most liquid asset, a financial analyst may examine the ratio of cash and its equivalent to current liabilities.

B. LEVERAGE RATIO (Test of long term solvency) Solvency of a business means its ability to meet its long – term liabilities debenture holder; mortgagors and other long – term depositors are primarily interested in ascertaining whether  the company is having adequate profit to pay its interest obligation regularly. They would very much like to study the financial structure, the contribution of long-term depositors, vie a vie the owner to the total capital employed.

1.

DEBT – EQUITY RATIO

The ratio is also called ‘External Internal Equity Ratio’. It indicates the comparative claims of  outsiders outsiders and owner in the concern’s total equities equities the claim of deposito depositors, rs, mortgagors, mortgagors,  bondholders, suppliers, and other creditors are matched with those of owner, i.e. shareholders or propri proprieto etors. rs. The manage managemen mentt has to keep keep health healthy y balanc balancee betwee between n the two equiti equities: es: external and internal. Debt Equity Ratio

=

Total Debt  Net worth

TOTAL DEBT

NET WORTH

Debentures and Bonus

Equity share capital

Loan and Mortgage

Pref. Share capital

Security deposit with company

Reserve capital & Revenue

Fixed Deposit / Unsecured loans

Profit and Loss (Cr.)

All Current Liabilities

These funds are available at the rate of the interest generally lower than the market rate. rate. They They are used along along with with share share capita capitall funds; funds; the entire entire balance balance is then then left left for  distribution among shareholders. If the proportion of outside fund is quite high, the company is technically said to be highly leveraged. In case the ratio is 1, it is considered quit satisfactory. High High – Debt Debt Comp Compan any y is able able to borr borrow ow fund fundss on very very rest restri rict ctiv ivee term termss and and conditions.

2. EQUITY EQUITY RATI RATIO O / PROP PROPRIE RIETOR TORY Y RATIO RATIO

It is variant of debt – equity ratio. It is an important test to judge the long-term solvency of a concern. It establishes relationship between the proprietor or shareholder’s funds and the total assets. It may be expressed as: Equity ratio

=

Proprietor’s funds Total Assets

Proprietor’s fund or Net worth = Equity Share Capital + Reserve and Surplus + Preference Share Capital. Total Assets = Total Equities or Total Resources of the concern. If we take the total assets as 100, the percentage of proprietor’s funds indicates the contri contribut bution ion made made by the owners owners toward towardss total total assets assets.. The The nearer nearer the percen percentag tagee of   proprietor’s funds to 100, the larger is their contribution and the greater is the securities for  creditors, depositors, mortgagors, and debenture holders.

3. FUNDED FUNDED DEBT DEBT TO TO TOTAL TOTAL CAPITALISA CAPITALISATION TION RATIO

Funded debt to total capitalization ratio reveals what portion of total capitalization is provided  by founded debt and is formulated as: Funded debt to total capitalization

=

Funded debt

* 100

Total capitalization

Funded Debt = Debentures + Bonus + Mortgage Loan + Other Loan – Term Loans Total Capitalization = Proprietor’s Fund’s + Funded Debt This ratio depicts the extent of dependence on outside sources for providing long term finance 67% dependence may be reasonable for trading and industrial concerns. The less the  better, for long-term solvency. Beyond 67% it would be too risky. A high percentage reduces the security for depositors.

4. FIXE FIXED D ASSET ASSET RATI RATIO: O:

The ratio is expressed as follows: Fixed Asset Ratio

=

Fixed Asset Long Term Funds

The ratio should not be more than 1 if it is less than 1, it shows that a part of the working capital has been financed through long-term funds. This is desirable to some extent  because a part of working capital is termed, as “Core Working Capital” is more or less of a fixed nature. The ideal ratio is .67.

5. DEBT SERVI SERVICE CE RATIO RATIO / INTEREST INTEREST COVERAGE COVERAGE RATIO: RATIO:

Debit ratio discussed earlier is static in nature, and fails to indicate the firm’s ability to meet interest obligations. Debt-service means regular and timely permanent interest due on loans and debentures. Since interest is paid out of the earning), he more the earning available, (he less is the risk as to the payment of interest. The interest coverage ratio is computed by dividing earnings before interest and taxes (EBIT) by interest changed: Interest Coverage

=

EBIT Interest

C. ACTIVITY ACTIVITY RATIOS RATIOS (Efficiency (Efficiency Ratio) Ratio)::

Funds of creditors and owners are invested in various assets to generate sales and profits. The  better the management of assets, the larger the amount of sales. Activity ratios are employed to evaluate the efficiency with which the firm manages and utilizes its assets. These ratios are also also called called turnov turnover er ratios ratios becaus becausee they they indic indicate ate the speed speed with with which which assets assets are being being converted or turned over into sales and assets.

1.

DEBT DEBTOR ORS S TUR TURNO NOVE VER R / RECE RECEIV IVAB ABLE LE TURN TURNOV OVER ER RATI RATIO: O:

A firm sells goods for cash and credit. Credit is used as a marketing tool by a number of  companies. When the firm extends credits to its customers, book debts are expressed to be converted into cash over a short period acid, therefore, are included in current assets. The liquidity position to the firm depends upon the quality of debtors to a great extent. Debtors Turnover Ratio

=

Credit Sales Average debtors

Account Receivable = Sundry Debtors + Bills Receivable The higher the ratio, the better it is, since it would indicate that debts are being collected more promptly. For measuring the efficiency, it is necessary to set up a standard figure; ratio lower than the standard will indicate inefficiency.

2.

COLL COLLEC ECTI TION ON PERI PERIOD OD / AVE AVERA RAGE GE AGE AGE O OF F DEB DEBTO TORS RS VELO VELOCI CITY TY::

Debtor’s collection period represents the time segment, which is generally required to recover  the debts due from customers and amount realizable on bills. Debtor Collection Period

=

365 days Debtors Turnover Ratio

Debtor collection period measures the quality of debtors since it measures the rapidly or slowness with which money is collected from then. A shorter collection period implies

 prompt payment by debtors. It reduces the chances of bad debts. A longer collection period implies neither too liberal nor too restrictive. A restrictive policy results in lower sales, which will reduce profits. In general, the amount of the receivable should not exceed 3-4 month’s credit sales.

3.

TOTAL AS ASSETS TU TURNOVER RA RATIO:

Some analysis like to compute the total assets turnover. This ratio shows the firm’s ability in generating sales from all financial resources committed to total assets. Total Assets Turnover Ratio =

Sales Total Assets

D. PROFIT PROFITABI ABILIT LITY Y RATIO: RATIO:

A Company should earn profits to survive and grow over a long period of time. Profit is the difference between revenues and expenses over a period of time. Profit is ultimate output of  the company and it with has no future if it fails to make sufficient profits. Therefore, the financial manager should continuously evaluate the efficiency of its company in term of    profits. The profitability ratios are calculated to measure the operating efficiency of the company. Besides management of the company, creditors and owner are also interested in the  profitability of the firm. Owners want to get a reasonable return on their investment. This is  possible only when the company earns enough profits. Profitability ratios, deals with two aspects ‘profits’ or  earning and ‘expenses’ incurred to earn that profit. ‘Sales’ has been the main source of  recovery of expenses and earning of profit. These ratios thus study the relationship of profits as well as expenses with sales. These have accordingly been divided into categories:

A.

RATIO OF PROFIT TO SALES 1. Gros Grosss pro profi fitt rat ratio io 2. Net Net pro profi fitt rat ratio io 3. Operat Operating ing net profit profit ratio ratio

B.

RATIO OF OF EX EXPENSES TO TO SA SALES

C.

RETURN ON ON IN INVESTMENT RA RATIO

(A). (A).

RATI RATIO O OF OF PRO PROF FIT TO SALE SALES S

1.

Gross Profit Ratio:

Gross profit is an important concept for a business. It is always the endeavor of the  business to increase this margin. Gross profit represents the margin between the ‘Net Sales’ and ‘Cost of Goods Sold’. The larger this gap, the greater is the scope of absorbing various expenses expenses on administ administratio ration, n, maintenanc maintenance, e, arranging arranging finance, finance, selling selling and distribut distribution ion and creating creating necessary provision provision for anticipat anticipated ed expenses, expenses, and yet leaving net profit profit for the  proprietors or share holders. Gross profit ratio is an indicator of the extent of average mark-up on cost of goods. It is primarily a test of the efficiency of purchases and sales management. Its formulation is as below: Gross Profit Ratio

=

Gross Profit

*

100

Sales

Gross Profit = Sales – Cost of Goods Cost of Goods = (Opening Stock + Net Purchase + Procurement Expenses + Production Expenses – Closing Stock) This ratio indicates the degree to which the selling price of goods per unit may decline without resulting in losses from operations to the firm. In case there is increase in the percentage of the gross profit as compared to the  previous years it is an indicator of one or more of the following factors: 1. The selling selling price price of the goods has has gone up without without correspo correspondin nding g increase increase in the cost of goods sold. 2. The cost of goods goods sold has gone down down without without correspond corresponding ing decrease decrease in the selling selling  price of the goods. 3. Purchase Purchase might might have been omitte omitted d or the sales figures figures might might have have been inflated. inflated. 4. The opening opening stock stock has been immediat immediately ely or the closing closing stock stock has been been overvalued overvalued..

In case there is decrease in the rate of gross profit it may be due to one or more of the following reasons: 1. There may be decrease decrease in the the selling selling price of the goods goods sold sold without without correspond corresponding ing decrease in the cost of the goods sold. 2. There may be increas increasee in the cost of the the goods sold sold without without correspo correspondin nding g increase increase in the selling price of the goods sold. 3. There There may may be omissi omission on of of sales sales.. 4. Stock Stock at the end may have been been underva undervalue lued d or the openi opening ng stock stock may have been been overvalued.

2.

Net Net Pro Profit fit Rati atio / Net Net Profi rofitt Marg argin: in:

 Net Profit is obtained when operating expenses; interest and taxes are subtracted from the gross profit. The net profit margin ratio is measured as follows: Net Profit Margin

=

Profit After Tax

* 100

Sales  Net profit margin ratio establishes a relationship between the net profit and sales and indicates management’s efficiency in manufacturing administering and selling the products. This ratio is the overall measure of the firm’s ability to turn each rupee sales into net profit. This ratio also indicates the firm’s capacity to withstand adverse economic conditions. A firm with a high net margin ratio would be in an advantageous position to survive in the face of falling sales prices, risings cost of production or declining demand for the product. Similarly, a firm with high net profit margin can make better use of favorable conditions. Such as rising sales prices, falling cost of production or increasing demand for the product. Such a firm will be able to accelerate its profits at a faster rate than a firm with a low net  profit margin.

3.

Operating Net Profit Ratio:

Operating Net Profit means net profit from normal operations of a business, it is calculate as: Operat Operatin ing g Net Profit Profit = Net Sales – (Cost (Cost of Goods Goods Sold Sold + All Operati Operating ng Expens Expenses) es) + Operating Sundry Income. Here, all operational expenses refer to office and administration expenses, repairs and maintenance, selling and distribution expenses and necessary provisions. Operational Sundry Income may be in the form of discount – earned, commission receiver etc.  Non-Operating Income and non-operating expenses are not taken into account while ascertaining operating net profit. In case of net profit is given, it has to be adjusted by adding  back non-operating and deducting then from non-operating incomes. Thus an alternative of  finding out operating net profit is: The formula of operating net profit ratio is as under: Operating Net Profit =

Operating Net Profit * 100  Net Sales

Operating Net profit = Net Profit P rofit + Non-Operating Expenses – Non-Operational Income The higher the ratio, the more is the profitability

(B) (B)

RATI RATIO O OF EXP EXPENSE ENSES S TO SALE SALES: S:

1.

Operating Expenses Ratio:

Cont Contro roll over over oper operat atio iona nall expe expens nses es is an impo import rtan antt requ requis isit itee for for succ succes essf sful ul management. Operating ratio indicates proportion of net sales that have been absorbed by the expenses on operation. This ratio relates to the total operating expenses (i.e. total expenses non-operating expenses) to net sales and is expressed in percentage. Its formulation is as below: Operating Ratio

=

Total Operating Expenses

* 100

 Net Sales

Operating Expenses = Cost of Goods Sold + Office and Administration Expenses + Repairs, Maintenance & Depreciation + Selling and Distribution Distribution Expenses + Necessary Provisions A higher operating expenses ratio is unfavorable since it will leave a small amount of  operating income to meet interest, dividends etc. certain expenses are within the management  policy. The variations in the ratio, temporary or long-lived, can occur due to several factors:

1. Chan Change gess in in sale saless pri price ce 2. Change Changess in the the demand demand of of the prod product uct 3. Changes Changes in the admin administra istrative tive or or selling selling expens expenses es

2.

Indi Indivi vidu dual al (or (or spec specif ific ic)) Expe Expens nsee Rati Ratios os:: The operating expenses ratio indicates the average aggregated variations in expenses,

where some of the expenses may be increasing while others may be falling. Thus, to know the  behavior of specific expenses items, the ratio of each individual operating expenses to sales should be calculated. Comparison of such results with corresponding results of the previous years would  pinpoint  pinpoint such items of expenditu expenditure re or group of expenses, expenses, which need control on the part of  the management. Individual expenses ratios

=

Specific Expenses  Net Sales

* 100

(C) (C)

RETU RETURN RN ON INV INVES ESTM TMEN ENT T RAT RATIO IO:: 1. Retu Return rn on Equi Equity ty Capi Capita tal: l:

Return on equity capital is calculated by dividing net profit after  tax by total equity capital. It is calculated as:

Return on equity capital

=

Profit after tax * 100 Equity capital

2. Return Return on Invest Investmen mentt (ROI) (ROI)::

It is calculated by dividing net profit after tax by shareholder’s funds. It is calculated as: Ret Return on investment (ROI) =

Profit after tax * 100 Equity capital

3. Return Return on Capita Capitall Empl Employe oyed: d:

Return on capital employed is considered to be the prime or principal ratio. It throws the light on the over – all profitability of the business, which means how much, earning the amount investment in the business, is yielding. Profit is the chief motive of organizing business enterprise. Maximization of profit is the natural instinct of every businessman. The success of the business is, therefore, judged by the extent of return on the amount invested in the business. The ratio of the return on investment has 2 components. 1. Capi Capita tall emplo employe yed d 2. Retu Return rn or prof profit it

1. Capi Capita tall empl employ oyed ed::

In general sense, ‘Capital Employed’ refers to the investment made in the business. Three possible definitions of the term capital employed are generally put forward and used by various authors in the analysis of financial statements. 1. Gros Grosss Cap Capit ital al Empl Employ oyed ed::

Comp Compri rise sess fix fixed ed asse assets ts plus plus curr curren entt ass asset ets. s.

2. Net Net Capi Capita tall Emplo mploye yed d:

Comp Compri risses fixe fixed d asset assetss plus lus curr curren entt asse assetts less ess curre urren nt

liabilities. 3. Propri Proprieto etors rs Net Net Capit Capital al Employ Employed: ed:

Compri Comprises ses net net capital capital emplo employed yed plus plus debent debenture uress

and other long-term borrowings.

2. Retu Return rn on prof profit it

To calcul calculate ate a fair fair ratio ratio of return return on capit capital al employ employed, ed, there there should should be proper  proper  matching of 2 components of the ratio, i.e. capital employed and return. Any incomes from such assets are excluded from the profit. The Ratio is computed as

=

Net Profit (adjusted) * 100 Capital Employed

OBJECTIVES OF STUDY For achieving the main objective,we have some specific objectives that will help us for fulfillment of the project report. These objectives are the follows :

The first & foremost important objective of the study is to learn the working  procedure.



To determine the long term liquidity of the funds as well as solvency.



To determine the debt capacity of the company. company.



To conclude factors affecting the financial position of the company .



To decide about the future prospects of the company.

RESEARCH METHODOLOGY

For carrying out the study of this particular topic the data has been collected basically by two major sources. These are: -

(a)

Primary sources

The primary sources consist of the basic information collected from the staff people of  various departments, the officers as well as the managers of the international tractors limited. It has been collected by consulting.

( b)

Secondary sources

The secondary sources consist of the data and information collected from the annual reports, magazines, journals. and website.

LIMITATIONS OF THE STUDY Althou Although gh there there was many many limit limitati ations ons that that come come across across during during this study study but the major  major  limitation that was faced by me was that the major portion of my collected data was from the secondary sources.

The ratio analysis is one of the most powerful tools of the financial analysis. Though ratios are simple to calculate and easy to understand, they differ from some serious limitations.

•

LIMITED USE OF A SINGLE RATIO

A single ratio usually does not convey much of the sense. To make a better interpretation a large number of ratios have to be calculated, which is likely to confuse the analyst than help him in making any meaningful conclusions.

•

LACK OF ADEQUATE STANDARDS

There are no well-accepted standards or rules of thumb for all ratios, which can be accepted as norms. It renders interpretations of ratios difficult.

•

WINDOW DRESSING

Financ Financial ial statem statement entss can easily easily be window window dressed dressed to presen presentt a better better pictur picturee of   profitability to the outsiders. Hence one has to be very careful while making decisions from ratios calculated from such financial statements.

•

PRICE LEVEL CHANGES

While making ratio analysis no consideration is given to the price level and this makes the interpretations of the ratios invalid.

2.5 DATA ANALYSIS AND INTERPRETATION 1. CURR CURREN ENT T RATI RATIO O Year

2006-2006

2007-2008

2008-09

2009-10

Ratio

1.22

1.41

1.37

2.58

CURRENT RATIO

3 2.5 2 1.5 Ratio

1 0.5 0

Current Ratio:

2006-

2007-

2008-

2009-

2007

08

09

10

The current ratio of the company is increasing in all the years, with the

highest increase in the year 2009-2010. This is due to increase in the current assets of the company namely sundry debtors and the loans and the advances made by the company.

2. LIQUI IQUID D RAT RATIO IO Year Ratio

2006-2007 0.82

2007-2008 0.86

2008-09 0.83

2009-10 2.03

LIQUID RATIO

2.5 2 1.5 Ratio

1 0.5 0 2006 2006-0 -07 7 2007 2007-0 -08 8 2008 2008-0 -09 9 2009 2009-10 -10

Liquid / Quick Ratio:

Sundry debtors and loan and advances also affect the quick 

ratio of the company. The increase in these sundry debtors and the loans and advances may decrease the profitability of the company. Usually, a high acid test ratio / quick ratio is an indication that the firm is liquid and has the ability to meet its current liabilities in time. As a rule of thumb is 1:1 is considered satisfactory.

3. ABSO ABSOLU LUTE TE LIQ LIQUI UID D RATI RATIO O Year

2006-2007

Ratio

0.27

2007-2008

2008-09

2009-10

0.23

0.21

0.59

ABSOLUTE LIQUID RATIO

0.6 0.5 0.4 0.3

Ratio

0.2 0.1 0 2006-0 2006-07 7 2007-0 2007-08 8 2008-0 2008-09 9 2009-1 2009-10 0

Absolute Liquid Ratio:

Absolute liquid ratio of the company is according to the rule of 

thumb i.e. 0.5:1 in the year 2009-10 which is due to heavy cash & bank balances maintained  by the company.

EFFICIENCY RATIOS 4. DEBT DEBTOR ORS S TURNO TURNOVE VER R RATI RATIO O Year Ratio

2006-2007 17.82

2007-2008 10.21

2008-2009 9.22

2009-2010 8.02

DEBTORS TURNOVER RATIO

18 16 14 12 10 8 Ratio

6 4 2 0

Debtors Turnover Ratio:

2006-

2007-

2008-

2009-

2007

2008

2009

10

The Debtors turnover ratio, which shows that the number of 

times the debtors are turned over during a year. But the debtor of the company is reducing which shows that the company is not properly managing its debtors. There is no rule of  thumb, which may be used as a norm to interpret the ratio, as it may be different from firm to firm depending upon the nature of the business.

5. INVENT INVENTORY ORY TURNOV TURNOVER ER RATIO RATIO Year Ratio

2006-2007 12.98

2007-2008 9.90

2008-2009 9.33

2009-2010 10.89

INVENTORY TURNOVER RATIO

14 12 10 8 6

Ratio

4 2 0

Inventory turnover ratio:

2006-

2007-

2008-

2007

2008

2009

2009-10

The inventory turnover ratio shows how rapidly the inventory is

turning into receivables through sales. This ratio has been increased as compared to the last year 2008-2009.A high inventory turnover indicates the efficient management of inventory  because more frequently the stocks are sold.

6. INVENT INVENTORY ORY CONVE CONVERSI RSION ON PERI PERIOD OD Year Ratio

2006-2007 28.12

2007-2008 36.86

2008-2009 39.12

2009-2010 33.51

INVENTORY CONVERSION PERIOD

40 35 30 25 20 Ratio

15 10 5 0

Inventory conversion period:

2006-

2007-

2008-

2009-

2007

2008

2009

10

Invent Inventory ory conver conversio sion n period period of the compan company y on an

average slightly increasing as compared to the year 2006-2007.

7. CREDIT CREDITORS ORS TURNO TURNOVER VER RATIO RATIO Year Ratio

2006-2007 7.56

2007-2008 8.65

2008-2009 5.52

2009-2010 9.41

CREDITORS TURNOVER RATIO

10 8 6 4

Ratio

2 0

Creditors turnover ratio:

2006-

2007-

2008- 2009-10

2007

2008

2009

This ratio shows the time period of the company to pay its

debts. This company’s creditors ratio is increasing, which shows the company is efficiently managing its reserves by increasing its time period to pay its debts.

8. AVER AVERAG AGE E PAYM PAYMEN ENT T PERIO PERIOD D Year Ratio

2006-2007 48.28

2007-2008 42.19

2008-2009 66.12

Days

Days

Days

2009-2010 38.66

Days

AVERAGE PAYMENT PERIOD

90 80 70 60 50

East

40

West

30

North

20 10 0 1 st st Qt Qt r 2 nd nd Qt Qt r 3 rd rd Qt Qt r 4 th th Qt Qt r  

Average payment period:

Average payment period shows the average number of days

taken by the firm to pay its creditors. Average payment period of the company is decreased as compar compared ed to the the previo previous us year year 2008-2 2008-2009 009 that that shows shows that that the the compan company y is effici efficient ently ly managing its creditors in the year 2009-2010.

SOLVENCY RATIOS 9. DEBT DEBT-E -EQU QUIT ITY Y RATI RATIO O Year Ratio

2006-2007 1.93

2007-2008 1.23

2008-2009 1.45

2009-2010 0.57

DEBT-EQUITY RATIO

2 1.5 1 Ratio 0.5 0 2006- 2007- 2008- 20092007

Debt equity ratio:

2008

2009

2010

Debt equity ratio is calculated to measure the extent to which the debt

financing has been used in the business. A ratio of 1:1 may be usually considered to be satisfactory ratio although there cannot be any rule of thumb for all types of business.

10. FUNDED DEBT TO TOTAL CAPITALISATION

Year  Ratio

2006-2007 10.89

2007-2008 27.78

2008-2009 17.96

2009-2010 28.78

FUNDED DEBT TO TOTAL CAPITALISATION

30 25 20 15 Ratio

10 5 0 2006-

2007-

2008-

2009-

2007

2008

2009

2010

Funded debt to total capitalization:

In this company this ratio is increasing which is

not better for the company. So the company should adopt the measures to reduce this ratio. There is no rule of thumb but still the lesser the reliance on outsiders the better it will be. If  the ratio is smaller, better it will be up to 50% to 55% this ratio may be tolerable and not  beyond.

11. EQUITY EQUITY RATIO RATIO Year Ratio

2006-2007 0.31

2007-2008 0.37

2008-2009 0.35

2009-2010 0.50

EQUITY RATIO

0.5 0.45 0.4 0.35 0.3 0.25 0.2

Ratio

0.15 0.1 0.05 0 2006-

2007-

2008-

2009-

2007

2008

2009

2010

Equity ty rati ratio o is the the prop propri riet etar ary y rati ratio o of the the comp compan any, y, whic which h show showss the the Equity ratio: Equi relationship between the shareholders and the fund to total assets of the company. In the company this ratio is varied in different years.

12. SOLVENCY SOLVENCY RATIO RATIO Year Ratio

2006-2007 0.61

2007-2008 0.46

2008-2009 0.51

2009-2010 0.29

SOLVENCY RATIO

0.7 0.6 0.5 0.4 0.3

Ratio

0.2 0.1 0

Solvency ratio:

2006-

2007-

2008-

2009-

2007

2008

2009

2010

Solvency ratio is the ratio of the total liabilities to total assets. In the

company the solvency ratio of the company is reducing which shows the satisfactory or stable is the long-term solvency position of the firm.

13. FIXED ASSETS TO NET WORTH RATIO Year Ratio

2006-2007 0.79

2007-2008 0.84

2008-2009 0.72

2009-2010 0.46

FIXED ASSETS TO NET WORTH RATIO

0.9 0.8 0.7 0.6 0.5 0.4

Ratio

0.3 0.2 0.1 0 2006-

2007-

2008-

2009-

2007

2008

2009

2010

Fixed assets to Net Worth ratio:

This ratio established the relationship between the fixed

assets and shareholders funds to the company. This ratio is on an average but is slightly decreasing in the last two years. There is no rule of thumb to interpret this ratio but 60 to 65 % is considered to be satisfactory ratio.

14. FIXED ASSETS TO LONG TERM FUND FUND RATIO Year Ratio

2006-2007 0.70

2007-2008 0.61

2008-2009 0.59

2009-2010 0.33

FIXED ASSETS TO LONG TERM FUND RATIO

0.7 0.6 0.5 0.4 0.3

Ratio

0.2 0.1 0 2006-

2007-

2008-

2009-

2007

2008

2009

2010

Fixed assets to long-term fund ratio:

This ratio indicates the extent to which the total

of fixed assets are financed by long term funds of the company. But at this company this ratio is declining which shows that the company is working on its short-term sources.

15. RATIO OF CURRENT CURRENT ASSETS TO PROPRIETORS PROPRIETORS FUND Year Ratio

2006-2007 236.92

2007-2008 175.78

2008-2009 199.98

2009-2010 148.85

RATIO OF CURRENT ASSETS TO PROPRIETORS FUND

250 200 150 100

Ratio

50 0 2006-

2007-

2008-

2009-

2007

2008

2009

2010

Ratio of current assets to proprietors fund:

There is no rule of thumb is established

for this ratio but in this company this ratio is slightly varied between different years.

PROFITABILITY RATIO 16. NET PROFIT PROFIT RATIO RATIO Year Ratio

2006-2007 7.67

2007-2008 8.60

2008-2009 7.62

2009-2010 12.49

NET PROFIT RATIO

14 12 10 8 6

Ratio

4 2 0

Net profit ratio:

2006-

2007-

2008-

2009-

2007

2008

2009

2010

 Net profit ratio of the company is increasing which is a healthy sign for 

the company. This ratio is increased due to the liberal credit policy of the company and increase in the sales of the company.

17. RETURN RETURN ON INVESTMENT INVESTMENT Year Ratio

2006-2007 53.69

2007-2008 47.32

2008-2009 44.48

2009-2010 52.40

RETURN ON INVESTMENT

60 50 40 30 Ratio

20 10 0

Return on investment:

2006-

2007-

2008-

2009-

2007

2008

2009

2010

This This rati ratio o is one one of the the most most impo import rtan antt rati ratios os used used for  for 

measuring the overall efficiency of the firm. As compared to the previous years this ratio is on an average but it is better to compare with the other similar firms for better results.

18. EARNING EARNING PER SHARE SHARE RATIO Year Ratio

2006-2007 19.82

2007-2008 29.95

2008-2009 30.34

2009-2010 46.44

EARNING PER SHARE RATIO

50 40 30 20

Ratio

10 0 2006-

2007-

2008-

2009-

2007

2008

2009

2010

Earning per share: Earning per share is good measure of profitability in this company.

This ratio is increasing every year in this company, which shows the earning capacity of the invertors.

19. RETURN RETURN ON EQUITY CAPITAL CAPITAL Year Ratio

2006-2007 198

2007-2008 299

2008-2009 303.49

2009-2010 464.46

RETURN ON EQUITY CAPITAL

500 400 300 200

Ratio

100 0

Return on equity capital:

2006-

2007-

2008-

2009-

2007

2008

2009

2010

Return on equity capital, which is the relationship between

 profits of a company and its equity capital. In this company this ratio is increasing every year.

20. DIVIDEND DIVIDEND PAYOUT PAYOUT RATIO Year Ratio

2006-2007 0

2007-2008 0.033

2008-2009 0.313

2009-2010 0.753

DIVIDEND PAYOUT RATIO

0.8 0.7 0.6 0.5 0.4 Ratio

0.3 0.2 0.1 0

Dividend payment ratio:

2006-

2007-

2008-

2009-

2007

2008

2009

2010

This This ratio ratio is calcul calculate ated d to know know the relati relations onship hip betwee between n

dividend per share paid and the market value of the share. In the company this ratio is increasing year by year.

21. RETURN ON GROSS CAPITAL CAPITAL EMPLOYED Year Ratio

2006-2007 23.07

2007-2008 31.57

2008-2009 29.85

2009-2010 38.25

RETURN ON GROSS CAPITAL EMPLOYED

40 35 30 25 20 Ratio

15 10 5 0 2006-

2007-

2008-

2009-

2007

2008

2009

2010

Return on gross capital employed: Return on capital employed established the relationship

 between the profits and the capital employed. This ratio shows the overall profitability of the company. But the company has to increase this ratio to increase the profitability.

22. RETURN ON NET CAPITAL EMPLOYED Year Ratio

2006-2007 59.67

2007-2008 59.47

2008-2009 62.06

2009-2010 53.96

RETURN ON NET CAPITAL EMPLOYED

64 62 60 58 56 Ratio

54 52 50 48 2006-

2007-

2008-

2009-

2007

2008

2009

2010

Return on the net capital employed:

The term net capital employed comprises the

total assets used less current liabilities. This ratio is decreasing which is the good sign for the company.

LEVERAGE RATIOS 23. CAPITAL CAPITAL GEARING GEARING RATIO Year Ratio

2006-2007 8.17

2007-2008 2.59

2008-2009 4.56

2009-2010 0.71

CAPITAL GEARING RATIO

9 8 7 6 5 4

Ratio

3 2 1 0

Capital gearing ratio:

2006-

2007-

2008-

2009-

2007

2008

2009

2010

This ratio shows the relationship between the equity share

capital and the other fixed interest bearing loans. This company is low-geared company  because long-term debt was less than the equity and reserves.

24. RATIO OF RESERVES TO EQUITY EQUITY CAPITAL Year Ratio

2006-2007 269.10

2007-2008 554.08

2008-2009 796.36

2009-2010 1454.1

RATIO OF RESERVES TO EQUITY CAPITAL

1600 1400 1200 1000 800 Ratio

600 400 200 0 2006-

2007-

2008-

2009-

2007

2008

2009

2010

Ratio of reserves to equity capital: The ratio establishes relationship between the reserves

and the equity capital. This ratio shows the better position position of the company, which is highly increasing every year.

25. FINANCIAL FINANCIAL LEVERAGE LEVERAGE Year Ratio

2006-2007 1.02

2007-2008 1.04

2008-2009 1.21

2009-2010 1.80

FINANCIAL LEVERAGE

1.8 1.6 1.4 1.2 1 0.8

Ratio

0.6 0.4 0.2 0 2006-

2007-

2008-

2009-

2007

2008

2009

2010

Financial leverage: Use of long-term debts along with equity shares is financial

Leverage. This shows the capital structure of the company.

26. RATIO OF CURRENT CURRENT LIABILITIES TO SHAREHOLDERS SHAREHOLDERS FUND Year Ratio

2006-2007 1.93

2007-2008 1.23

2008-2009 1.45

2009-2010 0.57

RATIO OF CURRENT LIABILITIES TO SHAREHOLDERS FUND

2 1.8 1.6 1.4 1.2 1 0.8 0.6

Ratio

0.4 0.2 0 2006-

2007-

2008-

2009-

2007

2008

2009

2010

Ratio of current liabilities to shareholders fund: This This rati ratio o show showss that that the the how how much much

amount of current liabilities is financed from the fixed assets. This ratio is decreasing which is positive sign for the company.

27. AVERAGE AVERAGE COLLECTION COLLECTION PERIOD Year Ratio

2006-2007 20.48

2007-2008 35.74

2008-2009 39.58

2009-2010 45.51

AVERAGE COLLECTION PERIOD

50 40 30 20

Ratio

10 0 2006-

2007-

2008-

2009-

2007

2008

2009

2010

Average collection period: This ratio represents the average number of days for which it

has to wait for its receivables are converted into cash. In this firm the ratio of average collectio collection n period period is increasing increasing which is not a good sign for the company’s company’s profitabil profitability ity  position.

28. WORKING CAPTIAL TURNOVER TURNOVER RATIO RATIO Year Ratio

2006-2007 16.23

2007-2008 10.60

2008-2009 10.68

2009-2010 4.59

WORKING CAPTIAL TURNOVER RATIO

18 16 14 12 10 8

Ratio

6 4 2 0 2006-

2007-

2008-

2009-

2007

2008

2009

2010

Working capital turnover ratio:

This indicates the number of times the working capital

is turned over in the course of a year. Working capital turnover ratio is reducing of this company. So the company should have to improve it.

CONCLUSION The conclusion derived from the study of financial analysis of elevator company shows that the overall financial strength of the company is extremely good. Because the curren currentt assets assets exceeds exceeds the the curren currentt liabil liabiliti ities es in all the financ financial ial years years of the company. But current assets of the company are heavily increased during the year  2009-2010 which boosted the current ratio of the company. The working capital  position of the company is better in the financial year 2009-2010 as compared to the  previous years. The overall profitability of the company is good.

Suggestions : Liq uidity ity Ratios Rati os : 1. Liquid

Liquidity refers to the ability of the concern to meet its current obligations as and when these  become due. The short-term obligations are met by realizing amounts from current floating or  circulating assets. The liquidity position of the company is better as compared to the previous years. The ratios such as current ratio, liquid ratio and absolute liquid ratio has been increased as compared to the previous year 2006– 2007, 2007– 2008 and 2008– 2009. This increases due to the sundry debtors, loan and advances and heavy cash and bank balances maintained  by the company. Although company is heaving better liquidity position, but there is still a scope to improve it. 2. Solv Solven ency cy Rati Ratios os::

The term solvency refers to the ability of a concern to meet its long-term obligations. Due to the heavy liquidity position maintained by the company. But the long-term position is not much better. All the ratios including equity ratio, fixed assets to net worth, fixed assets to the long-term funds ratios are decreasing. So the company is recommended to make the  balance between liquidity and solvency position of the company. 3. Prof Profit itab abil ilit ity y Rati Ratios os::

The primary objective of the business undertaking is to earn profits. Profit earning is considered essential for the survival of the business. The net profits of the company is increased as compared to the previous years but this is due to the increase in the credit sales of the company which shows that the company is adopting liberal credit policy to increase its  profits but the company is also suffered from the increase in average days of collection so the company should maintain its credit policy to make a balance between the cash and credit sales and take some measures its average days of collection. For improving its collections, the company may adopt the services of the factors (factoring). 4. Efficie Efficient nt utiliz utilizati ation on of resour resources ces::

The company is having better short-term financial position. It has more current assets as compared to the current liabilities, which will effect the overall profitability position of the company so the company should manage its current assets properly.

5. Mana Manage geme ment nt of deb debto tors rs::

The increase in the current assets is due to the increase in the debtors of the company. So the company is recommended to manage its debtors properly. Increase in debtors may create certain problems in the long-term run of the company.

SOME GENERAL SUGGESTIONS FOR THE SUCCESS OF THE COMPANY:

1. Increasing Increasing the the market market area area or developi developing ng the new new market: market:

The compan company y is having having better better financ financial ial streng strength. th. So by effici efficient ently ly using using these these resources company can increase the area of operation or develop new markets by adopting international standards.

2. Qu Qual alit ity y contr control ol::

By providing good and the cost control measure with the objectives to attain the desired level of the sales volume.

BIBLIOGRAPHY

Management Accounting and Business R.K. SHARMA and SHASHI K. GUPTA, ““Management  Finance”,  Finance”, Kalyani Publishers, Ludhiana, 2000. I.M. PANDEY, “  Financial Management ”, Vikas Publishing house private limited,  New Delhi, 2000. Resear arch ch Meth Method odol olog ogy, y, Meth Method odss & Techn Techniq ique uess” Wish C.R. C.R. KOTH KOTHAR ARII, “  Rese Wishwa wa Parkashan New Delhi, 1999. Methods” Sultan Chand & Sons, New Delhi, 2001. S.D. GUPTA, “Statitical “Statitical Methods” Balance sheets, “  Inter Internat nation ional al Tracto Tractors rs Limite Limited d from from 2005 2005 – 2009 2009”. (Four (Four years years Balance Sheets). Financial statements, “ Kone elevator india limited ” a) Profit and loss account from 2006 – 2010.  b) Balance sheets from 2006– 2010.

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