Financial Analysis

NEED AND IMPORTANCE OF THE STUDY:
The study of Financial analysis helps in decision making for investment and
capital expenditure. Through the financial analysis, the organisation can identify
opportunities to improve performance at the department, unit or organisatioonal
level and it is needed to know the short term as well as long term liquidity position
of the organisation and with such study the management is able to decide the course
of action to be adopted in future.
The process of identifying the financial strengths and weakness of the firm
by properly establishing relationship between the items of the balance sheet and
profit & loss account. Financial analysis undertaken by the management of the firm,
or by the parties outside the firm, viz., owners, creditors, investors & others.
The Financial Statements of M/s. Nagarjuna Auto Agency, Warangal are
mirrors reflect the financial position and operating strength or weakness of the firm.
The statements are useful to management, investors, creditors, bankers, workers, and
government and public at large.
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Financial Statement Analysis of M/s Nagarjuna Auto Agency, Wgl
THEORTICAL FRAMEWORK
Accounting process involves recording, classifying and summarizing business
transactions. The day-to-day transactions of business are recorded in different subsidiary
books. These transactions are posted into various ledger accounts and the balance is taken
out at the end of a financial period. The aim of maintaining various rerecords is to be
determining profitability of the enterprise from its operation and also to find out financial
position.
Financial Statement is the out come of summarizing process of accounting.
Financial Statements essentially are reports presented annually.
DEFINITION:
According to John N. Myer, The Financial Statements provide summary of he

accounts of a business enterprise, the Balance Sheet reflecting the Assets, Liability
and Capital as on certain period.
Smith and Ashburn define, Financial Statement as the end product of Financial
Accounting in a set of Financial Statement, prepared by the accountant of a business
enterprise that purpose to reveal the financial position of the enterprise, the results
of its recent activities, and an analysis of what has been done by earnings.
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Analysis of Financial Statement:

Analysis is the process of critically examining in detail accounting information
given in the financial management for the purpose of analysis, individual items are studied,
their interrelation ship with other related figures established, the data is some times
rearranged to have suitable understanding of the information with the help of different
techniques or tool for the purpose. Analyzing Financial Statements is a process of
evaluating relationship between component parts of Financial Management to obtain a
better understanding of firms position and performance.
Interrelation of Financial Statement:

Interpretation is a process of drawing references and stating what the figure in the
Financial Statements really mean. Interpretation is dependent on interpreter himself.
Interpreter must have experience, understanding and intelligence to draw correct
conclusions from the analyzed data.
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NATURE OF FINANCIAL STATEMENTS ANALYSIS

The Financial Statements are prepared on the basis of recorded facts. The recorded
facts are those, which can be expressed, in monitory teams. The statements are prepared for
a particular period, generally one year. The transactions are recoded in the chronological
order, as and when the events happen. The Accounting periods and Financial Statements
prepared from these records are based on historical costs. The Financial Statements by
nature are summaries of the items recorded in the business and these statements are
prepared periodically, generally for the accounting period.
According to John N. Myer, The financial Statements are composed of data which
are results of combinations of:
1. Recorded facts concerning the business transaction.
2. Conventions adopted to facilitate the accounting technique.
3. Postulates, or assumptions made to and
4. Personal Judgment used in the application of the conventions and postulates.
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OBJECTIVES OF ANALYSIS
Following are the objectives of the Financial Statement Analysis:
1. To know and judge the financial position and effective utilize of funds of an
organization.
2. To judge the earnings performance of the company and the facility with which dividends
can be paid from out of earned profit.
3. In the case of Institutional investors such as LIC, UTI etc, the analysis is carried over a
long period with a view to identifying companies having growth potential and a sound
financial base.
4. To judge the ability of the company to pay the principle and interest, arrangement for
amortization of debt and the security available for the loans extended.
5. To judge the solvency of the undertaking.
6. To present the summary of findings and suggest suitable recommendations with regard
to a home.
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IMPORTANCE OF FINANCIAL STATEMENT ANALYSIS

The Financial Statements are the mirrors which reflects
Financial position and operating strength or weakness of the concern. These
statements are useful to Management, Investors, Creditors, Bankers, Workers, and
Government and public at large.
The utility of financial statements to different parties is discussed in the detail as
follows.
The Financial Statements are useful for assessing of different costs centers. The
management is able to exercise the cost control through these statements. The
efficient and inefficient sports are brought to the notice of the management. The
management is able to decide the course of action to be adopted in the future.
The trade creditors are to be paid in short period. This liability is met out of Current
Assets. The creditors will be interested in current solvency of the concern. The
calculation of current ratio and liquid ratio will enable the creditors to assess the
current financial position of the concern to their debts.
The banker is interested to see that the amount is secure and the customer is also
able to pay the interest regularly. The banker will analyze the balance sheet to
determine financial strength of the concern and the profit and loss account will also
be studied to find out the earnings position. The statements also help the banker to
determine the amount of securities it will ask from customers as a cover for the loan.
The Financial Statements are used to assess tax liability of the business enterprise.
The Government studies the economic situation of the country from these
statements. The statements enable the Government to find out whether the business
is following various rules and regulations or not. These statements also become base
for framing and amending Laws for the regulation of the business.
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These associations provide service and protection to the members. They may
analyze the Financial Statements for the purpose of providing facilities to these
members. They may develop standard ratios and design uniform system of accounts.
The Stock Exchange deals in purchase and sale of securities of different companies.
The Financial Statements enable the stockbrokers to judge the financial position of
different concerns. The fixation of the prices for securities, etc., is also based on
these statements.
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LIMITATION OF FINANCIAL STATEMENT

ANALYSIS
Though the Financial Statements are relevant and useful for the concern, still they
do not present a final picture of the concern. The utility of these statements are depending
upon a number of factors. The analysis and interpretation of these statements suffer from the
following limitations.
These statements do not give a final picture of the concern. The data given in
these statements is only approximate.
The Financial Statements are expressed in monitory values. So they appear to
give final accurate position.
The Financial Statements are prepared on the basis of historical costs or
original costs. These statements are not prepared keeping in view the present
economic conditions
The Precision of Financial Statement data is not possible because the
statements deal with matters, which cannot be precisely stated.
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SCOPE OF THE STUDY

The present study reveals the financial performance of M/s. Nagarjuna Auto Agency,
Warangal covering purely the financial data supplied in the companys Financial Statements
through Common size Statement, Comparative statements and Ratio analysis.
METHODOLOGY
For the study, the data was collected from the primary and secondary sources. It has
been scrutinized, edited and presented in the forms of tables and statements. The analysis of
the data has been made with the help of certain mathematical techniques like percentages,
proportions etc., and ratio analysis to draw conclusions.
DATA COLLECTION
The data for the present study is collected from two sources:
I)
PRIMARY DATA:
The data for the present study is collected through personal discussion held with the
Managing Partner of M/s. Nagarjuna Auto Agency, Warangal.

II)
SECONDARY DATA:
The secondary data for the present study is collected from the annual reports,
manuals, and brouchers of M/s. Nagarjuna Auto Agency, Warangal.
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LIMITATIONS OF THE STUDY

1. The study is confined to the M/s. Nagarjuna Auto Agency, Warangal Dealer and no
comparisons made with the other dealers.
2. Financial management covers the topics like cost of capital, capital budgeting, cash flow
statements, cash and inventory management, etc. The present study deals with the
Financial Analysis of M/s. Nagarjuna Auto Agency, Warangal.
3. Statements like Comparative, Common Size, and Ratio Analysis are compared from the
accounting records. So they posses these limitations and weakness as accounting records
possess.
4. It is not always possible to make estimations on the basis of the past, as it always does
not come true.
However with these limitations the study is not handicapped in any way with
available data. Care is taken to cover all aspects of the required objectives.
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CHAPTERISATION PATTERN
Keeping in view the objective of the study the whole project work is organized into
four chapters.
The first chapter is an introductory one, which deals with the theoretical aspects
relating to Financial Statement Analysis. Meaning, nature and objectives of the
Financial Statements. Importance and Limitation of the financial statements. Need
and Importance of the study, Objectives of the study sources of data, Methodology,
Scope and Limitation of the study.
The second chapter presents a brief profile about the Organization i.e., M/s.
Nagarjuna Auto Agency, Warangal.
The third chapter represents the data analysis of Financial Statements of M/s.
Nagarjuna Auto Agency, Warangal containing comparative statement, common size
statement, ratio analysis and their interpretation.
The fourth chapter sums up conclusions and provide suggestions.
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PROFILE OF NAGARJUNA AUTO AGENCY

HISTORY OF THE ORGANIZATION
Nagarjuna Auto Agency, Warangal is one of the authorized dealer of Nagarjuna
Honda M/s. Nagarjuna Auto Agency was established on 10th Aug 2002, in Warangal with
two partners. This concern fully buys the finished goods and sell them. It offers service and
also sells the spare parts of the same company. Its command area is Warangal district.
ORGANIZATIONAL STRUCTURE
Managing Partner
Manager
Chief Accountant Sales Manager
Accountant
Works Manager
Sales Executive
Spares Manager
Supervisor
Office Boys
Skilled Workers
Helpers
Washing boys
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Clerks
12
INVESTMENT OF CAPITAL
Nagarjuna Auto Agency , Warangal was established on 10 th Aug 2002 with capital
investment of Rs. 20 lakhs.
Objectives of the Organisation:
The firm is partnership firm.
1. All the partners want to earn profits.
2. The Organization wants to increase their sales.
The Organization is not a manufacturing concern, so they are trying to satisfy the
customers through their service department.
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CLASSIFICATION OF THE PRODUCT
Total number of Dealers : 1
Dealer Name
NAGARJUNA HONDA
Contact Person
MR.ARUN KUMAR
Mobile
9849177444
Address
NAGARJUNA
AUTO
H.No.
AGENCY
3-16-325,
MULUNG
WARANGAL
306012,
PRADESH
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Phone
0870-2421722 /822
Fax
0871-2421833
Email
nagarjunahonda@hotmail.com
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14
ANDHRA
HONDA MOTOR & SCOOTER INDIA PVT. LTD.

Honda is the world's largest manufacturer of 2-wheelers. Its symbol, the
Wings, represents the company's unwavering dedication in achieving goals that are unique
and above all, conforming to international norms. These wings are now in India as Honda
Motorcycle & Scooter India Pvt. Ltd. (HMSI), a wholly owned subsidiary of Honda Motor
Company Ltd., Japan. These wings are here to initiate a change and make a difference in the
Indian 2-wheeler industry. Honda's dream for India is to not only manufacture 2-wheelers of
global quality, but also meet and exceed the expectations of Indian customers with
outstanding after sales support.
About Us
Official Name
Honda Motorcycle & Scooter India Pvt. Ltd.
Established
20th Aug, 1999
Place
Manesar, District Gurgaon, Haryana, India
Capital
Rs. 300 Crore
Representative
Mr. Yukihiro Aoshima, President & CEO
Factory Location
Manesar, District Gurgaon, Haryana, India
Production Capacity 7,50,000 units per year
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CAREERS
Unique practices create unique organisations.
Honda was established upon the fundamental belief in the value of each individual.
Based on our philosophy, we respect independent spirit and freedom, equality and mutual
trust of human beings who work for or come in contact with our company. As such our
management policies focus on developing and enhancing the essential characteristics that
every individual possesses - capacity to think, reason, and most importantly - the ability to
dream.
Being the largest producer of 2-wheelers and one of the most admired companies in
the world, definitely thrills us. But what thrills our associates most is the 'Joy of Creating',
one of our missions at Honda, which promotes working for our own happiness.
If you have a passion for 2-wheelers and possess a challenging spirit, your abilities
are more important to us rather than which university you passed from.
Apply to career@hmsi-india.com to be a part of our team. Please attach your resume in
the mail and your subject line should specify what you are applying for and the years of
experience gained. Example: If you are applying for the post of a senior sales executive, and
you
have
years
of
experience,
the
subject
Senior Sales Executive : 5 yrs experience
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line
should
be:
PRODUCTS
HMSI works on a MarketIN concept, which focuses on understanding customer
needs and desire and translating them into product specifications. It is due to this concept
that with in just five years of its launch in India, HMSI has changed the Indian two wheeler
market with its products Honda Activa, Dio, Eterno, Unicorn & Newly launched Shine.
Shine
A masterful blend of form and function, the new Honda Shine brings together the
best of all that is sought in a motorcycle into one awe inspiring piece of automotive
technology.
Equipped with a host of advanced technologies like Multi Mapping CDI, Tumble
Flow Combustion Chamber, Long Intake Pipe and Connecting Tube, CV Carburetor, 2 Way
Air Jacket and Pulse Exhaust System, the newly developed 125 cc 'Optimax' engine delivers
class leading 10.3 BHP which enables Honda Shine to deliver the best balance of pickup and
mileage.
Designed to ensure superior ride quality and ease of handling through

revolutionary Ergo Tec design, which is based on Human engineering Honda Shine will set
new
benchmarks
in
the
Indian
125cc
motorcycle
segment.
Honda Shine completes a 0 60kmph run in just 5.3 secs and returns a class
leading
65kmpl
in
the
process
in
the
Indian
riding
mode.
Honda Shine has been endowed with new modern intelligent style appeal, which
possesses a balance of decent looks with tough & macho appeal and an image of sporty
looks with international taste that lends the HONDA SHINE a Decent and stylish look.
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Unicorn
Powered by a newly developed Honda 4-stroke 150cc engine and incorporating
many cutting-edge technologies developed by Honda's global R&D team, Unicorn sets new
benchmarks for premium motorcycles in India with its swift acceleration, superior mileage,
captivating style, riding comfort and convenience.
Unicorn is engineered and styled for the tastes of the younger generation having
focused vision in lives. With the 4-stroke 150cc engine delivering a whooping 13.3 bhp,
Unicorn is the fastest premium motorcycle in India racing from 0 to 60 kms per hour in a
mere 5 seconds. Unicorn has a distinctive sporty and macho design with a racy front face,
masculine fuel tank with knee grip and a natty rear.
Unicorn offers superior mileage through a combination of the famed 4-stroke Honda
engine, cutting edge technologies like Multi-Mapping CDI, Tumble Flow Combustion
Chamber and Roller Rocker arm, and a classy aerodynamic body. It delivers 60km to a litre.
Unicorn is the first motorcycle in India with the hi-tech mono suspension that
enhances riding comfort and control, and is now available in new Sleek Graphics.
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ETERNO
An entirely new standard in scooters. Tough, sleek and with the best mileage in its
class. Designed especially for the Indian conditions & to suit your everyday needs.
The Eterno is a tough & stylish 4-stroke scooter incorporating the best of Hondas
worldwide technology standards. Right from the engine to the body frame, each part is
designed to be more durable & withstands the rough & tough Indian conditions.
ETERNO is a new Indian standard scooter that defies conventional ideas about a
full size scooter in India. To those who have resigned to the fact that present full size
scooters do not satisfy their basic needs of riding comfort, loading capacity & better fuel
efficiency, ETERNO is a big surprise as it has got:
Reliable, newly designed 4-stroke 150cc engine
Best fuel efficiency in its class (60 kmpl)
Ample, practical loading capacity
Riding comfort even during multiple ride
Masculine, tough & sleek styling
So shed your worries about the full size scooter as "Geared Surprise from Honda is
here." So, go ahead & enjoy the ride.
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DIO
One look at DIO will tell you its more an accessory than a mere convenience. As
Indias first motorscooter, it blends the looks of a motorcycle with the comfort of a scooter.
The body-mounted headlamp and sleek indicators leap right off the front. Ample legroom
gives you an elegant poise. The body tapers into the tail light and yet continues to draw
attention. Of course, the DIO qualifies us to have the last word on style. If there ever existed
an attention magnet, the DIO is it.
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Honda Activa
Honda Activa is the first scooter model of HMSI for the Indian market. It has been
designed in a manner that suits the daily requirement of the entire family and has been
designed for everyone.
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21
Dealer : Warangal
MODEL
Ex-Showroom
On-Road
Activa
38,157
42,726
Dio
36,624
41,028
Eterno
35,407
39,680
Shine Kick-Disc
42,513
47,552
Shine Kick-Drum
40,619
45,453
Shine Self-Disc
45,513
50,876
Shine Self-Drum
43,619
48,777
Unicorn Kickstart
51,170
57,143
Unicorn Selfstart
54,143
60,437
(To find the prices for ETERNO, DIO and Honda Activa in other cities, close
this pop-up window and click on the relevant cities on the map)
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22
PRESS RELEASES
2
0
0
2
2
0
0
4
HONDA ENTERS INDIAN MOTORCYCLE MARKET

1. New Delhi, Wednesday, September 08, 2004
Unveils Unicorn, first Honda motorcycle for India
DIO Press Release
2. Mumbai, Friday, May 09, 2003
HONDA ANNOUNCES ETERNO PRICES
ETERNO A NEW STANDARD IN FULL-SIZE SCOOTERS UNVEILED BY HONDA
3. New Delhi, Wednesday, April 09, 2003
150cc 4-stroke geared scooter that gives the best mileage in its class and the most value for
money
DIO Press Release
4. New Delhi, Monday, August 26, 2002
HONDA ANNOUNCES DIO PRICES
DIO Press Release
5. Bangalore, Tuesday, July 23, 2002
DIO - INDIAS FIRST MOTOSCOOTER UNVEILED
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FINANCE STATEMENT TECHNIQUE

AN OVERVIEW
Financial Analysis is the basic method of appraising firms overall study. As part of
scientific investigation of the firm, it attempts to secure through a systematic study of some
significant clues about its financial condition and prospects. Its major thrust is future and
current facts with a view to projecting future functioning and viability of a concern.
DEFINATION AND SCOPE
Financial Analysis may be defined as the examination and comparison of financial
data of the business with a view to assessing its overall health. It is the process of inductive
reasoning for the purpose of formulating probability beliefs about a particular firm an
information processing system designed to supply firm related data for decision- making.
Kennedy McMuller make the statement, they hold that the analysis and the
interpretation of financial statement are an attempt to determine the significance of financial
statement data so that forecast may be made of the prospect for future earning, ability to pay
interest and debt maturates (Current and Long-term), ad profitability of a sound dividend
policy.
In a slight different connotation, the broad purpose of Financial Analysis could be
said to measurement of solvency and performance in the sense of profitability, stability and
similar items. At its best, Financial Analysis seeks to delineate areas of strength and
weakness reflected in accounting data and information from other sources.
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Type of Financial Analysis:

Financial Analysis can be divided in to two following heads. They are as follows:
1.
On the basis material used

Under this head there are 2 types:
(i)
Internal Analysis
(ii)
External Analysis
Internal Analysis:
Persons who have access to the internal accounting records of the business firm do
this analysis:
External Analysis:
Outsiders who do not have access to the detailed information of accounting and
records of the business firm do this. The outsider includes investors, creditors, Government
agencies etc.
On the basis of modus operandi
Under this head there are 2 types:
(i)
Horizontal Analysis
(ii)
Vertical Analysis
Horizontal Analysis:
It refers to the comparison of financial data of company for several years.
Vertical Analysis:
It refers to the study relationship of the various items in financial statement of one
accounting period.
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PROCEDURE OF FINANCIAL STATEMENT ANALYSIS

Broadly speaking, there are 3 steps in financial analysis.
(1)
Selection
(2)
Classification
(3)
Interpretation
The first step involves selection information (date) relevant to the purpose of
analysis of financial statement. The second step involved is the methodical classification of
data and the third step includes drawing of inferences and conclusions.
METHODS / DEVICES OF FINANCIAL ANALYSIS

The analysis of interpretation of financial statement is used to determine the
financial position and results of operation as well.
The numbers of methods or devices used to study are as follows:
1.
Comparative Statements
2.
Common Size statements
3.
Ratio Analysis
4.
Cash-flow Analysis
5.
Fund-flow Analysis
6.
Trend Analysis
7.
Cost-volume Profit Analysis
As the project work deals with the study of the following methods, these methods /
devices of financial analysis are discussed as under:
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1.
Comparative Balance Sheet Statement:

The Comparative Balance Sheet analysis is the study of the trends of same items,
groups of items and computed items in to two or more balance sheets of the same business
on different date. The change in the periodic balance sheet items reflects the conduct of
business.
Interpretations of Comparative Balance Sheet:
While interpreting Comparative Balance sheet, the interpreter is expected to study
the following aspects:
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1.
Current Financial and Liquidity Position
2.
Long-term Financial Position and
3.
Profitability of the concern.
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27
2.
Comparative Income statement:

The income statement gives the results of the operations of the business. The
comparative income statement gives an idea of the progress of a business over a period of
time. The changes in the absolute data in money values and percentages can be determined
to analyze the profitability of the business. The income has four columns. First two
columns give figures of various items for two years. Third and Fourth columns are used to
show increase or decrease in figures in absolute amounts and percentages respectively.
The analysis of interpretation of income statement will involve the following steps.
1.
The increase or decrease in sales should be compared with the increase or

decrease in cost of goods sold. An increase in sales will not always mean in
increase in profit. The profitability will improve if increase in sales is more than
the increase in cost of goods sold. The amount of gross profit should be studied
in the first step.
2.
The second step of analysis should be study of operational profits.
The
operating expenses such office, selling and distribution expenses should be

deducted from gross profit to find out operating profits. An increase in operating
profit will result from the increase in sales position and control of operating
expenses. A decrease in operating profit may be due to an increase in operating
expenses or decrease in sales. The changes in individual expenses should also
be studied. Some expenses may increases due to the expansion of business
activities while others may go up due to managerial inefficiency.
3.
The increase or decrease in net profit will give an idea about the overall
profitability of the concern. Non-operating expenses like interest paid loss from
the sale of assets, writing off deferred revenue expenditure, payment of tax etc.,
decrease the figure of operating profit. While all non-operating expenses are
deducted from operational profit, we get a figure of net profit. Some nonoperating incomes may also be there which will increase net profit. An increase
in net profit will give us an idea about the progress of the concern.
4.
An opinion should be formed about the profitability of the concern and it should
be given at the end. It should be mentioned whether the overall profitability is
good or not.
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TABLE 3.1
COMPARATIVE BALANCE SHEET OF M/S NAGARJUNA AUTO AGENCY
FOR THE YEAR ENDED 31st MARCH 2006, 2007
COMPONENTS
Year ending march

2006
Inc / Dec
Amount
2007
Inc / Dec
Percentage
ASSETS
Current Assets
Cash in hand & at Bank
1698300
232692
-1465608
-86.30
Sale Tax Deposit
6,000
6,000
0.00
Rent in Advance
300,000
300,000
0.00
Closing Stock
1151722
3280049
2128327
184.80
514163
976,388
462225
89.90
3670185
4795129
1124944
30.65
Equipments & working tools
190,372
220,384
30012
15.76
Furnitures & Fixtures
964,595
1,073,454
108859
11.29
Fixed Deposits
341219
494664
153445
44.97
Total Fixed Assets(B)
1,496,186
1,788,502
292316
19.54
TOTAL ASSETS (A+B)
5,166,371
6,583,631
1417260
27.43
Sundry Creditors
117743
73097
-44646
-37.92
Provision for Tax
332587
265046
-67541
-20.31
Andhra Bank
2,959,891
2959891
ICICI Bank
1,395,230
1395230
450330
4693264
4242934
942.18
M. Nagendram
607350
607350
0.00
M. Vijaya Laxmi
340000
118000
-222000
-65.29
T. Ramakrishna
400000
-400000
-100.00
M. Arun Kumar
1003253
103253
-90000
-89.71
Total long term liability( D)
2350603
828603
-1522000
-64.75
Capital
2365440
1061764
-1303675
-55.11
5166373
6583631
1417258
27.43
Sundry Debtors
Total Current Assets(A)
Fixed Assets
Liabilities
Current Liabilities
Total Current Liability( C )

Long Term Liabilities
(E)
TOTAL LIABILITIES C+D+E
Source: Annual report of the firm.
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29
INTERPRETATION:
1.
Comparative balance sheet reveals that during the year 2006 07 there
has been arise of 30.65% in the current assets.
2.
This is inspite of a fall in cash and bank balance.
3.
There was significant increase in closing stock.
4.
The profitability of this balance sheet not be impressive, a judged by

decreased in capital -55.11%
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TABLE 3.2
COMPONENTS
Year ending march

2007
Inc / Dec
Amount
2008
Inc / Dec
Percentage
ASSETS
Current Assets
232692
463976
231284
99.39
Sale Tax Deposit
6,000
6000
0.00
Rent in Advance
300,000
300000
0.00
Closing Stock
3280049
3102913
-177136
-5.40
Sundry Debtors
976,388
1371376
394988
40.45
4795129
5244265
449136
9.37
220,384
274935
54551
24.75
1,073,454
1113930
40476
3.77
494664
558613
63949
12.93
1,788,502
1947478
158976
8.89
TOTAL ASSETS (A+B)
6,583,631
7191743
608112
9.24
Sundry Creditors
73097
160791
87694
119.97
Provision for Tax
265046
293143
28097
10.60
Andhra Bank
2,959,891
2316208
-643683
-21.75
ICICI Bank
1,395,230
3269445
1874215
134.23
4693264
6039587
1346323
28.69
M. Nagendram
607350
255360
-35990
-57.96
M. Vijaya Laxmi
118000
18000
-100000
-84.75
T. Ramakrishna
M. Arun Kumar
103253
-103253
-100.00
828603
273360
-555243
-67.01
1061764
878796
-182968
-17.23
6583631
7191743
608112
9.24
Fixed Assets
Fixed Deposits
Liabilities
Current Liabilities

Capital
(E)
C onfident ial
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31
INTERPRETATION:
1.
Comparative balance sheet reveals that during the year 2007 08 there
has increase in fixed assets at Rs.1,58,976 i.e. 8.89%.
2.
There has decrease in long term liability and there is a scope for
liquidity.
C onfident ial
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32
TABLE 3.3
COMPONENTS
Year ending march

2008
Inc / Dec
Amount
2009
Inc / Dec
Percentage
ASSETS
Current Assets
463976
434144
-29832
-6.87
Sale Tax Deposit
6000
6000
Rent in Advance
300000
30000
Closing Stock
3102913
1816749
-1286164
-70.79
Sundry Debtors
1371376
2684435
-1313059
48.91
5244265
5241328
-2937
-0.05
274935
311171
36236
13.17
1113930
1142289
28359
2.54
558613
1012110
453497
44.80
1947478
2465570
518092
26.60
TOTAL ASSETS (A+B)
7191743
7706898
515155
7.16
Sundry Creditors
160791
183793
23002
142.30
Provision for Tax
293143
419431
126288
43.08
Andhra Bank
2316208
2476180
159972
6.90
ICICI Bank - I
3269445
2600651
-668794
20.45
ICICI Bank - II
487771
487771
6039587
6167826
128239
2.12
M. Nagendram
255360
255360
M. Vijaya Laxmi
18000
18000
100.00
273360
255360
18000
6.58
Capital
878796
1283713
404917
46.07
7191743
7706899
515156
7.16
Fixed Assets
Fixed Deposits
Liabilities
Current Liabilities

(E)
C onfident ial
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33
INTERPRETATION:
1.
Comparative balance sheet reveals that during the year 2008 09 the
current assets decrease by 0.05% and there was decrease in cash in
hand and bank and closing stock.
C onfident ial
2.
The long term liabilities are increased there is a no scope for liquidity.
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34
TABLE 3.4
COMPONENTS
Year ending march

2009
2010
Inc / Dec
Amount
Inc / Dec
Percentage
ASSETS
Current Assets
434144
1984541
1550397
357.11
Sale Tax Deposit
6000
6000
Rent in Advance
30000
30000
Closing Stock
1816749
2762078
945329
52.03
Sundry Debtors
2684435
4462354
1777919
66.23
5241328
9514973
4273645
81.53
311171
207785
-103386
-33.22
1142289
665083
-477206
-41.77
Fixed Deposits
1012110
617340
-394770
-39.00
2465570
1490208
-975362
39.66
TOTAL ASSETS (A+B)
7706898
11005181
3298283
42.80
Sundry Creditors
183793
258523
74730
40.66
Provision for Tax
419431
1213235
793804
189.25
Andhra Bank
2476180
1867515
-608665
-24.58
ICICI Bank - I
2600651
3664086
1063435
40.89
ICICI Bank - II
487771
188562
99209
61.34
257204
257204
6167826
7449125
1281299
20.77
M. Nagendram
255360
1255360
1000000
391.60
255360
1255360
1000000
391.60
1283713
2300696
1016983
79.22
7706899
11005181
3298282
42.80
Fixed Assets
Liabilities
Current Liabilities
Centurion Bank
Capital
(E)
C onfident ial
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35
INTERPRETATION:
1.
Comparative balance sheet reveals that during the year 2009 10

current assets and fixed assets were increased by 81.53% and 39.56%
respectively.
2.
The long term liabilities were increased by 39.66% there is no scope

for liquidity.
C onfident ial
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36
TABLE 3.5
COMPARATIVE INCOME STATEMENT OF M/S NAGARJUNA AUTO AGENCY
Year ending march
COMPONENTS
Inc / Dec
Amount
Inc / Dec
Percentage
2006
2007
Net Sales
9,612,947.00
21,717,975.00
12105028
125.92
Less: Cost of Goods Sold
9,107,572.00
20,523,606.00
11416034
125.35
Gross Profit (A)
505,375.00
1,194,369.00
688994
136.33
Less:Operating Expenses
466,378.00
1,204,584.00
738206
158.28
Total Operating Exp. ( B )
466,378.00
1,204,584.00
738206
158.28
OPERATING PROFIT A-B
38,997.00
-10,215.00
-28782
-73.80
Add: Non Operating Income
47,666.00
346,474.00
298808
626.88
TOTAL INCOME
86,663.00
336,259.00
249596
288.01
Interest
39,753.00
223,203.00
183450
461.47
Profit Before Tax
46,910.00
113,056.00
66146
141.01
1,000.00
5,003.00
4003
400.30
45,910.00
108,053.00
62143
135.36
Less: Non Operating Exp.
Less Tax
PROFIT AFTER TAX
INTERPRETATION:
C onfident ial
1.
Sales increased by 125.92% in the year 2007.
2.
Cost of goods sold increased by 125.35% in the year 2007
3.
The gross profit also increased by 136.33%.
4.
Net profit after tax increased by 135.36%.
5.
Overall the firm income statement is satisfactory.
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37
TABLE 3.6
Year ending march
COMPONENTS
Inc / Dec
Amount
Inc / Dec
Percentage
2007
2008
Net Sales
21,717,975.00
25,385,115.00
3667140
16.89
20,523,606.00
23,984,804.00
3461196
16.86
Gross Profit (A)
1,194,369.00
1,400,311.00
305942
17.24
1,204,584.00
1,391,717.00
187133
15.53
1,204,584.00
1,391,717.00
187133
15.53
-10,215.00
8,594.00
-18809
-184.13
346,474.00
596,608.00
250134
72.19
TOTAL INCOME
336,259.00
605,202.00
268943
79.98
Interest
223,203.00
540,418.00
317215
142.12
Profit Before Tax
113,056.00
64,784.00
-48272
-42.40
5,003.00
0.00
-5003
-100.00
108,053.00
64,784.00
-43269
-40.04
Less Tax
PROFIT AFTER TAX
INTERPRETATION:
1.
Net sales, cost of goods sold was increased in the year 2008 for
16.89% and 16.86% respectively.
C onfident ial
2.
In the year 2008 operating expenses were increased.
3.
In the year 2008 operating profit decreased by 184.13%.
4.
Profit after tax were decreased by 40.04% in year 2008.
5.
Overall the firm income statement is not satisfactory in the year 2008.
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38
TABLE 3.7
Year ending march
COMPONENTS
2008
Inc / Dec
Amount
2009
Inc / Dec
Percentage
Net Sales
25,385,115.00
27901872
2516757
9.91
23,984,804.00
26120428
2135624
8.90
Gross Profit (A)
1,400,311.00
1781444
381133
27.21
Less: Operating Expenses
1,391,717.00
1672739
281022
20.19
1,391,717.00
1672739
281022
20.19
8,594.00
108705
100111
1.16
596,608.00
669362
72754
12.19
TOTAL INCOME
605,202.00
778067
172865
0.28
540,418.00
619927
79509
14.71
64,784.00
158140
93356
144.10
0.00
2500
2500
100
64,784.00
155640
90856
140.24

Interest
Profit Before Tax
Less Tax
PROFIT AFTER TAX
INTERPRETATION:
1.
There is an increase in net sales and cost of goods sold in the year 2009
for 9.91 % and 8.90% respectively.
C onfident ial
2.
Operating profit increased in the year 2009 for 1.16%.
3.
Net profit after tax was increased in the year 2009.
4.
The overall income statement is satisfactory.
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39
TABLE 3.8
Year ending march
COMPONENTS
Inc / Dec
Amount
Inc / Dec
Percentage
2009
2010
Net Sales
27901872
53272984
25371112
90.93
26120428
49659038
23538610
90.11
Gross Profit (A)
1781444
3613946
1832502
102.87
1672739
3321142
1648403
98.54
1672739
3321142
1648403
98.54
108705
292804
184099
169.35
669362
1025960
356598
53.27
TOTAL INCOME
778067
1318764
540697
69.49
Interest
619927
662639
42712
6.89
Profit Before Tax
158140
656125
497985
314.90
2500
2500
100.00
155640
656125
500485
321.56
Less Tax
PROFIT AFTER TAX
INTERPRETATION:
1.
There is an increase in net sales and cost of goods sold in the year 2009 and
2010 for 90.93% and 90.11% respectively.
2.
It may conclude that the total income increased in 2008 09 & 2009 10 due
to the greater.
3.
Non-operating expenses were increased.
C onfident ial
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40
TABLE 3.9
COMMON SIZE BALANCE SHEET OF M/S NAGARJUNA AUTO AGENCY

FOR THE YEAR ENDED 31st MARCH 2006, 2007, 2008, 2009 AND 2010
COMPONENTS
2006
ASSETS
Rs
2007
Inc/Dec %
Rs
2008
Inc/Dec %
Rs
2009
Inc/Dec %
Rs
2010
Inc/Dec
%
Rs
Inc/Dec
%
Current Assets
1698300
32.87
232692
3.53
463976
6.45
434144
5.63
1984541
18.03
Sale Tax Deposit
6,000
0.11
6,000
0.09
6,000
0.08
6000
0.08
6000
0.05
Rent in Advance
300,000
5.81
300,000
4.55
300,000
4.17
300000
3.89
300000
2.73
Closing Stock
1151722
22.29
3280049
49.82
3102913
43.14
1816749
23.57
2762078
25.10
514163
9.95
976,388
14.83
1371376
19.07
2684435
34.83
4462354
40.55
3670185
71.03
4795129
72.83
5244265
72.92
5241328
68.00
9514973
86.45
190,372
3.68
220,384
3.34
274,935
3.82
311171
4.03
207785
1.89
964,595
18.67
1,073,454
16.30
1,113,930
15.49
1142289
14.82
665083
6.04
Fixed Deposits
341219
6.60
494664
7.51
558613
7.77
1012110
13.13
617340
5.61
1,496,186
28.96
1,788,502
27.16
1,947,478
27.07
246570
31.99
1317276
11.97
TOTAL ASSETS (A+B)
5,166,371
100.00
6,583,631
100.00
7,191,743
100.00
7706898
100.00
1105181
100.00
Sundry Debtors
Fixed Assets

TABLE 3.10
C onfident ial
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41
COMMON SIZE BALANCE SHEET OF M/S NAGARJUNA AUTO AGENCY

2006
COMPONENTS
LIABILITIES
Rs
2007
Inc/Dec %
Rs
2008
Inc/Dec %
Rs
2009
Inc/Dec %
2010
Inc/Dec
%
Rs
Inc/Dec
%
Rs
Current Liabilities
Sundry Creditors
117743
2.28
73097
1.11
160791
2.23
183793
2.38
258523
2.35
Provision for Tax
332587
6.44
265046
4.02
293143
4.07
419439
5.44
1213235
11.02
Andhra Bank
0.00 2,959,891
44.96 2,316,208
32.21 2472180
32.12
1867515
16.97
ICICI Bank I
0.00 1,395,230
21.19 3,269,445
45.46 2600651
33.74
3664086
33.29
ICICI Bank II
0.00
487771
6.32
188562
1.71
Centurion Bank
257204
2.33
450330
8.72
4693264
71.29
6039587
83.98 6167826
80.02
7449125
67.69
M. Nagendram
607350
11.75
607350
9.22
255360
3.55
255360
3.31
1255360
11.41
M. Vijaya Laxmi
340000
6.58
118000
1.79
18000
0.25
T. Ramakrishna
400000
7.74
0.00
0.00
0.00
0.00
M. Arun Kumar
1003253
19.42
103253
1.57
0.00
0.00
0.00
2350603
45.50
828603
12.58
273360
3.80
255360
3.31
1255360
11.41
Capital
2365440
45.78
1061764
16.12
878796
12.21 1283713
16.66
2300696
20.91
5166373
100.00
6583631
100.00
7191743
100.00 7706899
100.00
11005181
100.00

Long Term Liability
C onfident ial
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42
INTERPRETATION:
1.
By studying the common size balance sheet we can observe that there
was an increase in current assets for 71.03% to 72.92% in the year
2005 06 and 2007 08.
2.
We can observe that there was an decrease in current asset in 2008 09

for 68.00% again increase for 86.45% in the year 2009 10.
3.
It reveals that the fixed assets were decrease from 28.96% to 11.97%
from the year 2006 to 2010 respectively.
4.
Current liabilities of the firm increased by 8.7% to 83.97% from the

year 2005 to 2008 respectively, then in 2008 to 2010 current liabilities
of the firm decreased by 80.02% to 67.69% respectively.
5.
Similarly the long-term liabilities was decrease from 45.50% to 3.31%

from the year 2005 06 to 2008 09 respectively and increased in
2010 for 11.40%.
C onfident ial
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43
TABLE 3.11
COMMON SIZE INCOME STATEMENT OF M/S NAGARJUNA ATUO AGENCY

2006
COMPONENTS
2007
2008
2009
2010
Rs
Inc/
Dec %
Rs
Inc/
Dec %
Rs
Inc/
Dec %
Rs
Inc/
Dec %
Rs
Inc/
Dec %
Net Sales
9,612,947.00
100.00
21,717,975.00
100.00
25,385,115.00
100.00
27901872
100.00
53272984
100.00
9,107,572.00
94.74
20,523,606.00
94.50
23,984,804.00
94.48
26120428
93.61
49659038
93.21
Gross Profit (A)
505,375.00
5.26
1,194,369.00
5.50
1,400,311.00
5.52
1781444
6.38
3613946
6.78
466,378.00
4.85
1,204,584.00
55.55
1,391,717.00
5.48
1672739
5.99
3321147
6.23
466,378.00
4.85
1,204,584.00
5.55
1,391,717.00
5.48
1672739
5.99
3321147
6.23
38,997.00
0.40
-10,215.00
-0.09
8,594.00
0.03
108705
0.39
292804
0.55
Non Operating Income
47,666.00
0.50
346,474.00
1.60
596,608.00
2.35
669362
2.39
1025960
1.92
TOTAL INCOME
86,663.00
0.90
336,259.00
1.55
605,202.00
2.38
778067
2.79
1318764
2.47
Interest
39,753.00
0.41
223,203.00
1.03
540,418.00
2.13
619927
2.22
662639
1.24
Profit Before Tax
46,910.00
0.49
113,056.00
0.52
64,784.00
0.25
158140
0.57
656125
1.23
1,000.00
0.01
5,003.00
0.02
0.00
0.00
2500
8.00
45,910.00
0.48
108,053.00
0.50
64,784.00
0.25
155640
0.56
656125
1.23
Tax
PROFIT AFTER TAX
C onfident ial
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44
INTERPRETATION:
1.
There was a simultaneous increase in the Sales from the year 2005-06
to 2009-10.
2.
The cost of goods sold is a percentage of sales has been decrease from
94.74% to 94.50% in the year 2005-06 and 2006-07 respectively,
from 94.50% to 94.48% in the year 2006-07 and 2007-08 respectively,
from 94.48% to 93.21% in the year 2007-08 to 2009-10 respectively.
3.
The total operating expenses were 4.85% in the year 2005-06 and
decrease in operating expenses for 5.55% to 6.23% from 2006-07 to
2009-10.
4.
The Gross Profit has been Increased from 5.26% to 6.78% from the
year 2005-06 to 2009-10.
5.
The Net Profit was decreased by 0.25% in the year 2008 and
increased in 2009 and 2010 for 0.56% and 1.23% respectively.
C onfident ial
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45
MEANING OF RATIOS ANALYSIS:
Ratio is an expression of the quantitative relationship that exists between the

two numbers. In simple language ratio is one number expressed in terms of another
and can be worked out by dividing one number by the other. It shows the relationship
between two figures.
Ratio analysis is a widely used tool of financial analysis. It is defined as the
systematic use of ratios to interpret the financial statements so that the strengths
weakness of firm as well as its historical performance and current condition can be
determined.
The relationship between two or more accounting figures/groups is called
financial ratios. A financial ratio helps to summarize a large mass of financial data
into a concise form and to make meaningful interpretation and conclusion about the
performance of the firm.
A ratio may be expressed either in proportion or as rate or as percentage. A
ratio may take the form of proportion. Here the figures of the two items used for
computing the ratio or expressed in common denominator. Example are current
ratio=5:3 acid test ratio 1.3:1 etc.,
C onfident ial
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46
NATURE:
The ratio analysis of financial statements stands for the process of
arrangements of data computation of ratios interpretation of the ratios as computed
and projections through ratios. However ratio analysis is not an end itself. It is only a
means of better understanding of financial statements and weakness of a firm
collection of more ratios does not serve and purpose, unless several appropriate ratios
are analyzed and interpreted.
The following are the four steps involved in ratio analysis.
1. Selection of relevant data from the financial statement depending upon
objective of the analysis.
2. Calculation of appropriate ratios from above data
3. Comparison of calculated ratios with the ratio of the same firm in the or
the ratios developed from projected financial statements the ratios of the
some other firms or the comparison with the ratios of the industry to which
the firm belongs.
4. Interpretation of ratio
C onfident ial
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47
MANAGERIAL USE OF RATIO ANALYSIS:
Ratio analyses helps in decision making from the information

provided in these financial statements.
Ratios enable the financial analyst to summarize and simplify the

voluminous financial data.
The trend ratios enable the analyst to find out whether the firm has
been improving its performance or not over the year.
Ratios are helpful in identifying the problem areas of firm and this
will make the management to take necessary corrective measures to
improve the results in future.
Ration analysis helps to formulate policies for future including the

capital expense decisions.
Ratio analysis is important tools for both minimizing costs and

maximizing revenues profits.
ADVANTAGES OF RATIO ANALYSES:
1. Useful in financial position analysis

2. Useful in simplifying accounting figures
3. Useful in assessing the operational efficiency
4. Useful in forecasting purposes
5. Useful in locating weak spots of business
6. Useful in comparison of performance
C onfident ial
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48
CURRENT RATIO:
Meaning:
This ratio establishes the relationship between current assets and Current
Liabilities
Objective:
The objective of computing this ratio is to measure the ability of the firm to
meet its short term obligations and to reflect the short term financial strength of a firm
Components:
Current assets: this means the assets, which are held

for their conversion into cash within a year.
Current liabilities: this means the liabilities which are

expected to be matured within a year
Computation:
This ratio is computed by dividing the current assets by current
liability. Generally 2:1 is considered ideal for a concern.
Formula:
Current assets
Current ratio =
----------------------Current liabilities
Significance:
It indicates the amount of current assets available for each current liability.
Higher the ratio, greater the margin of safety for creditors and vice versa.
However too high or too low ratio calls for further investigation since the too
high ratio may indicate the presence of idle funds and too low ratio may
indicate the over trading or under capitalization. Traditionally a current ratio
may indicate the over trading or under capitalization. Traditionally a current
ratio of 2:1 is considered to be a satisfactory ratio.
C onfident ial
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49
TABLE 3.12
Current Ratio
Years
Current Assets
Current Liabilities
Current Ratio
2005-06
2006-07
2007-08
2008-09
2009-10
3670185
4795129
5244265
5241328
9514973
450330
4693264
6039587
6167826
7449125
8.15
1.02
0.87
0.85
1.28
INTERPRETATION:
The above table indicates that the Current Ratio of the host organization. It is
very much higher than the ideal ratio i.e., 2:1inthe year 2005-06 and was little lower
than the ideal ratio i.e., 1.02% in 2004-05 and 0.87in 2007-08.
In the year 2009-10 the ratio is increased, than the ideal ratio for 1.28%.
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NET PROFIT RATIO:

Meaning:
This ratio measures the relationship between net profit and net sales
Objective:
The main objective of computing this ratio is to determine the overall profitability
due to various factors such as operational efficiency, trading on equity etc.
Components:
Net profit
Net sales
Computation:
This ratio is computed by dividing the nit profit by net sales. It is expressed as
percentage.
Formula:
Net profit
Net profit Ratio =
-----------------
100
Net sales
The figure of net profit may be taken either before tax or after tax.
Significance:
This ratio indicates on an average net margin earned on sale of 100%
higher the ratio greater is the capacity of the firm to withstand adverse
economic condition and vice versa.
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TABLE 3.13
NET PROFIT RATIO:
Years
2005-06
2006-07
2007-08
2008-09
2009-10
Net Profit
45,910
108,053
64,784
155640
656125
Net sales
9,612,947
21,717,975
25,385,115
27901872
53272984
Net Profit Ratio
0.48
0.50
0.26
0.56
1.23
INTERPRETATION :
From the above table it is clear that the ratio of the net profit in the year 200506 was 0.48% and increased by 0.50% in the year 2006-07 and decreased again by
0.26% in the year 2007-08.
In the year 2008-09 increased by 0.56% and in the year 2009-10 increased by
1.23%.
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Gross Profit Ratio:

Gross Profit Ratio is one of the most commonly used ratios. It reveals
the results of trading operations of the business. In other words it indicates to us the
profitability of the core activity of the business. The business men can continue with
this business as long as he is happy with this difference , as he knows that the core
activity is profitable. Even he is finally suffered a loss it is due to factors that are not
inherent in the business and could be over come either through cost reduction increase
in volume or any other appropriate business strategy.
Gross Profit Ratio captures this differential.
Formula:
Gross Profit
Gross Profit Ratio =
---------------- * 100
Net Sales
Components:
Gross profit
Net Sales -Cost of Goods Sold
Net Sales
Total Sales - Sales Returns
Cost of Good sold
(Opening Stock + Purchases+
Manufacturing
Expenses) Closing Stock
Computation:
This ratio is computed by dividing the gross profit by Net Sales. It is
expressed as percentage
Significance:
The higher the ratio the better will be the performance of the business.
However Gross Profit Ratio of the current year must be compared with that of
the previous years to know the change in performance.
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TABLE 3.14
GROSS PROFIT RATIO:
Years
2005-06
2006-07
2007-08
2008-09
2009-10
Gross Profit
505,375
1,194,369
1,400,311
1781444
3613946
Net Sales
9,612,947
21,717,975
25,385,115
27901872
53272984
Gross Profit Ratio
5.26
5.50
5.52
6.38
6.78
INTERPRETATION:
The above table reveals that the gross profit if the organization is lower than in
the year 2005-06 when compared to next four years.
However it is above 5% in the year 2005-06 and 2007-08 policies and above
6% in the 2008-09 and 2009-10, low cost of goods take good position in excessive
competitive market. The highest rate of gross profit ratio is 6.78% in the 2009-10.
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TREND ANALYSIS OF NAGARJUNA AUTO AGENCY

Trend Analysis:
What is trend Analysis?
The financial statements may be analyzed by computing trends of series of
information.
This method determines the direction upwards or downwards and
involves the computation of the percentage relationship that each statement item bears
to the same item in base year. The information for a number of years is taken up and
one year, generally the first year, is taken as a base year. The figures of the base year
are taken as 100 and trend ratios for other years are calculated on the basis of base
year. The analyst is able to see the trend of figures, whether upward or downward.
For example, if sales figures for the year 1985 to 1990 are to be studied, then sales of
1985 will be taken as 100 and the percentage of sales for all other years will be
calculated in relation to the base year, i.e., 1985. Suppose the following trends are
determined.
1985
100
1986
120
1987
110
1988
125
1989
135
1990
140
The trends of sales show that sales have been more in all the years since 1985.
The sales have shown an upward trend except in 1987 when sales were less than the
previous year i.e., 1986. A minute study of trends shows that rate of increase in sales
is less in the years 1989 and 1990. The increase in sales is 15% in 1988 as compared
to 1987 and increase is 10% in 1989 compared to 1988 and 5% in 1990 as compared
to 1989. Though the sales are more as compared to the base year but still the rate of
increase has not been constant and requires a study by comparing these trends to other
items like cost of production etc.
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Produce for calculating trends:

1.
One year is taken as a base year. Generally the first or the last is taken as
base year.
2.
The figures of base year are taken as 100.
3.
Trend percentages are calculated in relation to base year. If a figure in

other year is less than the figure in base year the trend percentage will be
less than 100 and it will be more than 100 if figure is more than base year
figure. Each years figure is divided by the base years figure.
The interpretation of trend analysis involves a cautious study. The mere
increase or decrease in trend percentage may give misleading results if studied in

isolation. An increase of 20% in current assets may be treated favourable. If this
increase in current assets is accompanied by an equivalent increase in current
liabilities then this increase will be unsatisfactory. The increase in sales may not
increase profits if the cost of production has also gone up.
The base period should be carefully selected. The base period should be a
normal period. The price level changes in subsequent years may reduce the utility of
trend ratios. If the figure of the base period is very small, then the ratios calculated on
this basis may not give a true idea about the financial data.
The accounting
procedures and conventions used for collecting data and preparation of financial
statements should be similar, otherwise the figures will not be comparable.
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TABLE 3.15
TREND ANALYSIS
Net Sales:
Years
2005-06
2006-07
2007-08
2008-09
2009-10
Sales
9612947
21717975
25385115
27901872
53272984
Percentage
100.00
225.92
264.07
290.25
554.18
INTERPRETATION:
The above table shows the changes in the sales during the period of five years.
The net sales increased from 225.92% to 554.18 % in the year from 2006-07 to 200910 when compared to base year 2005-06.
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TABLE 3.16
Gross Profit:
Years
2005-06
2006-07
2007-08
2008-09
2009-10
Gross Profit
505378
1194369
1400311
1781444
3613946
Percentage
100.00
236.33
277.08
352.50
715.10
INTERPRETATION :
From the above table it can be concluded that the gross profit increased from
the first to last year.
The Gross Profit was increased from 236.33% to 715.10% from the year 200607 to 2009-10 when compare to the base year 2005-06.
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TABLE 3.17
Profit After Tax:

Years
2005-06
2006-07
2007-08
2008-09
2009-10
Net Profit
45910
108053
64784
155640
656125
Percentage
100.00
235.35
141.11
339.01
1429.15
INTERPRETATION :
The above table indicates that the net profits are increase in the period of four
years has been increased comparing to the base year.
The Net Profit in the year 2006-07 was increased by 235.35% comparing to
the base year.
However the Net Profit was decrease in the year 2007-08 comparing to the
previous year i.e.,41.11%.
In 2008-09 and 2009-10 the net profit increased by 339.01% and 1429.15%
respectively.
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TABLE 3.18
Operating Expenses:
Years
2005-06
2006-07
2007-08
2008-09
2009-10
Operating Expenses
466378
1204584
1391717
1672739
3321147
Percentage
100.00
258.28
298.40
358.67
712.11
INTERPRETATION :
The above table reveals that the operating expenses increased in the review
period of the five years.
The operating expenses were increased by 258.28% in the year 2006-07 and
by 298.40% in the year 2007-08 compared to the base year 2005-06.
In the year 2008-09 and 2009-10 operating expenses increased by 358.67%
and 712.11% respectively.
The firm has to take the controlling steps to minimize the operating expenses
so as to increase the profit of the firm.
CONCLSIONS:
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1. The Net Sales of the firm were increases by 9.91% and 90.93% in the year
2008-09 and 2008-09 respectively.
2. The Gross Profit of the firm has been increased by 27.21% i.e. Rs.3,81,133 in
the year 2008-09 and 102.87% i.e. Rs.18,32,502 in the year 2009-10.
3. The Net Profit of the firm has been increased by 140.24% i.e. Rs.90,856 in the
year 2008-09 and 321.56% i.e. Rs.5,00,485 in the year 2009-10 respectively.
4.
The Current Assets were decreased by 0. 05% i.e. Rs.2,937 in the year 200809 and increased by 81.53% i.e. Rs.42,73,645 in the year 2009-10 respectively
5. The Fixed Assets of the firm increased by 26.60% i.e. Rs.5,18,012 in the year
2008-09 and in the year 2009-10 decreased by 39.66% i.e. Rs.9,75,362.
6. The Current Liabilities of the firm were increased by 2.12% i.e. Rs.1,28,239 in
the year 2008-09 and in the year 2009-10 increased by 20.77% i.e.
Rs.12,81,299.
7. The Capital of the firm has been increased by 46.07% and 79.22% in the year
2009-10 respectively.
8. The firm is maintaining good balance between Current Asset and Current
Liabilities, this can be noticed from Current Ratio.
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Suggestions:
1.
The firm has to increase its sales and turnover.
2.
The firm has to control its non-operating expenses and as a result there was an
increase in its earnings before interest and tax.
3.
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The company has to decrease its operating expenses.
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62
BIBLIOGRAPHY
Book
1)
Author
Management Accounting
Publisher
Dr. S.N. Maheshwari
Sultan Chand & Sons,

2001
2)
Financial Management
Prasanna chandra
TATA
MC.GRAWHILL, 1988
3)
4)
Advanced Management
Shashi K. Gupta
Accounting
& R.K. Sharma
Financial Management
I.M. Pandey
Kalyani Publishers,2004
Vikas Publishing
House, 2005.
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63

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Financial Analysis

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NEED AND IMPORTANCE OF THE STUDY:

Financial Statement Analysis of M/s Nagarjuna Auto Agency, Wgl

According to John N. Myer, The Financial Statements provide summary of he

Financial Statement Analysis of M/s Nagarjuna Auto Agency, Wgl

Analysis of Financial Statement:

Interrelation of Financial Statement:

Financial Statement Analysis of M/s Nagarjuna Auto Agency, Wgl

NATURE OF FINANCIAL STATEMENTS ANALYSIS

Financial Statement Analysis of M/s Nagarjuna Auto Agency, Wgl

Financial Statement Analysis of M/s Nagarjuna Auto Agency, Wgl

IMPORTANCE OF FINANCIAL STATEMENT ANALYSIS

Financial Statement Analysis of M/s Nagarjuna Auto Agency, Wgl

Financial Statement Analysis of M/s Nagarjuna Auto Agency, Wgl

LIMITATION OF FINANCIAL STATEMENT

Financial Statement Analysis of M/s Nagarjuna Auto Agency, Wgl

SCOPE OF THE STUDY

Managing Partner of M/s. Nagarjuna Auto Agency, Warangal.

manuals, and brouchers of M/s. Nagarjuna Auto Agency, Warangal.

Financial Statement Analysis of M/s Nagarjuna Auto Agency, Wgl

LIMITATIONS OF THE STUDY

Financial Statement Analysis of M/s Nagarjuna Auto Agency, Wgl

The fourth chapter sums up conclusions and provide suggestions.

Financial Statement Analysis of M/s Nagarjuna Auto Agency, Wgl

PROFILE OF NAGARJUNA AUTO AGENCY

Chief Accountant Sales Manager

Financial Statement Analysis of M/s Nagarjuna Auto Agency, Wgl

Financial Statement Analysis of M/s Nagarjuna Auto Agency, Wgl

CLASSIFICATION OF THE PRODUCT

Total number of Dealers : 1

Financial Statement Analysis of M/s Nagarjuna Auto Agency, Wgl

HONDA MOTOR & SCOOTER INDIA PVT. LTD.

Honda Motorcycle & Scooter India Pvt. Ltd.

20th Aug, 1999

Manesar, District Gurgaon, Haryana, India

Rs. 300 Crore

Mr. Yukihiro Aoshima, President & CEO

Manesar, District Gurgaon, Haryana, India

Production Capacity 7,50,000 units per year

Financial Statement Analysis of M/s Nagarjuna Auto Agency, Wgl

Senior Sales Executive : 5 yrs experience

Financial Statement Analysis of M/s Nagarjuna Auto Agency, Wgl

Designed to ensure superior ride quality and ease of handling through

Financial Statement Analysis of M/s Nagarjuna Auto Agency, Wgl

Financial Statement Analysis of M/s Nagarjuna Auto Agency, Wgl

Financial Statement Analysis of M/s Nagarjuna Auto Agency, Wgl

Financial Statement Analysis of M/s Nagarjuna Auto Agency, Wgl

Financial Statement Analysis of M/s Nagarjuna Auto Agency, Wgl

Financial Statement Analysis of M/s Nagarjuna Auto Agency, Wgl

HONDA ENTERS INDIAN MOTORCYCLE MARKET

Financial Statement Analysis of M/s Nagarjuna Auto Agency, Wgl

FINANCE STATEMENT TECHNIQUE

Financial Statement Analysis of M/s Nagarjuna Auto Agency, Wgl

Type of Financial Analysis:

On the basis material used

Financial Statement Analysis of M/s Nagarjuna Auto Agency, Wgl

PROCEDURE OF FINANCIAL STATEMENT ANALYSIS

METHODS / DEVICES OF FINANCIAL ANALYSIS

Common Size statements

Cost-volume Profit Analysis

Financial Statement Analysis of M/s Nagarjuna Auto Agency, Wgl

Comparative Balance Sheet Statement:

Current Financial and Liquidity Position

Long-term Financial Position and

Profitability of the concern.