A Project On Financial Analysis

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FINANCIAL ANALYSIS
Jamshedpur Utilities & Services Company Limited
A PROJECT ON
SUBMITTED FOR THE PARTIAL FULFILLMENT OF THE REQUIREMENT FOR AWARDING THE DEGREE OF
MASTER OF BUSINESS ADMINISTRATION (MBA) By ANUBHUTI
Jamshedpur womens college

Roll no. - 09MBA00004
JAMSHEDPUR WOMENS COLLEGE
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FINANCIAL ANALYSIS
This is hereby declared that this project is completed by me, Anubhuti, under the guidance of Mr. Financial manager in JUSCO. The title of this project is FINANCIAL ANALYSIS of JUSCO using different techniques. The data and information collected are authentic to the best of my knowledge.
GUIDE NAME: SIGNATURE: DATE:
PREFACE
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FINANCIAL ANALYSIS
The summer training program is designed to give the future managers feel of the corporate environment and work culture. These real life situations are entirely different from the stimulated exercise enacted in an artificial environment inside the classroom. And it is precisely because of this reason that the summer training programs are designed. It is a bridge between institution and organization. It was exactly in this context that I was privileged to join Jamshedpur Utilities & Services Company Ltd as a summer trainee founded by the visionary Indian industrialist Jamshedji Nauserwanji Tata in 1907, Indias one of the largest private sector company. JUSCO is known not only for its professional management, but also for its enlightened and progressive approach towards employee welfare and betterment of society. After the opportunity to undergo two months summer training at JUSCO, I carried out my project concerning the financing procedure in JUSCO, Jamshedpur. The first week was spend in getting to know more about company profile, its services & the financing procedure in JUSCO. The remaining period was spent in analyzing the financial position of the company and its comparison with other companies. It also includes visits to the project guide within the organization. The project consists of various techniques used for analyzing the financial status of the company.
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FINANCIAL ANALYSIS
ACKNOWLEDGEMENT
First of all I would like to thanks Mrs. Shukla Mohanty, Principal of Jamshedpur Womens College, who has given us the opportunity to do the internship so that we can gain knowledge. I would also like to thanks Mr. S.N Thakur, H.R Head of JUSCO who has given me the opportunity to do the internship in the company. I am also grateful to Mr. U. Mishra (CFO of JUSCO), Mr. Raju Shaw (Financial Manager), and Miss Shweta Gupta (Financial Manager), for their tremendous support and for giving us their precious time for completion of project. And lastly I would like to express my gratitude to the whole Finance & Accounts department for their support at the time of need and their cooperation in my project. Anubhuti MBA (finance)
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FINANCIAL ANALYSIS
CONTENTS
S.N 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 TITLE ORGANIZATION PROFILE TATA GROUP JUSCO PROFILE JUSCO CULTURE SERVICES OFFERED AWARDS AND RECOGNATION FINANCIAL ANALYSIS RATIO ANALYSIS INTER FIRM COMPARISION COMPARATIVE FINANCIAL STATEMENT COMMON SIZE BALANCE SHEET TREND ANALYAIS GENERAL LIMITATIONS OF FINANCIAL ANALYSIS CONCLUSION BIBLIOGRAPHY PG.N . 6 7 8 9 10-14 15-16 18 19-39 40-54 55-59 60-61 62-66 67 68 69
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FINANCIAL ANALYSIS
ORGANIZATION PROFILE
I n 1 9 0 2 t h e F o u n d e r o f T a t a S t e el w r o D e rt a bh iia t a o o to o T s s tn j s h ar e h i s Vi s i o n fo r J a m s h e d p u r
B e , s u r e , t o l a y w i d e s t r e e t s p l a n t e d w i t h s h a d y tr e e s , e v e r y o t h e r o f a q u i c k g r o w i n g v ari ety . B e s u r e th at th er e i s p l e n ty o f s p a c e fo r l a w n s a n d g ar d e n s , r e s er v e l ar g e ar e a s fo r fo o t b all, h o c k e y g r o u n d s a n d p ar k s, e ar m a r k ar e a s f o r Hin d u tem pl es, Mo h a m m ed an m o s q u es a n d C h r i s ti a n c h u c h e s . r J a m s e tj i T a t a N
F a c t
F il e Area P o p u l a ti o n L en gth of R o ad s W a t er M ai n s L e n g t h o f D r ai n s A v gD a i l y W a t e r P o w er A v ail ab ility : : : : : : : 64 s q km 0. 7 0 m illi o n 5 2 4k m s 5 0 0k m s 3 5 6k m s 160 ML D 9 9.4 2 %
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FINANCIAL ANALYSIS
TATA GROUP
The Tata group is a multinational company headquartered in Mumbai, India. In terms of market capitalization and revenues, Tata Group is the largest private corporate group in India and has been recognized as one of the most respected companies in the world .It has interests in steel, automobiles, information technology, communication, power, tea and hospitality. The Tata Group has operations in more than 85 countries across six continents and its companies export products and services to 80 nations. The Tata Group comprises 114 companies and subsidiaries in seven business sectors, 27 of which are publicly listed. 65.8% of the ownership of Tata Group is held in charitable trusts. Companies which form a major part of the group include Tata Steel, Corus Steel, Tata Motors, Tata Consultancy Services, Tata Technologies, Tata Tea, Titan Industries, Tata Power, Tata Communications, Tata Teleservices and the Taj Hotels. The group takes the name of its founder, Jamsedji Tata, a member of whose family has almost invariably been the chairman of the group. The current chairman of the Tata group is Ratan Tata, who took over from J. R. D. Tata in 1991 and is currently one of the major international business figures in the age of globality
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FINANCIAL ANALYSIS
In a first of a kind initiative in India, the Jamshedpur Utilities and Services Company (JUSCO) was carved out of Tata Steel from its Town Services Division in 2004. In JUSCO, the steel major reposed nine decades of experience and expertise. The mandate for JUSCO was to convert an obligatory service into a customer focused sustainable corporate entity. Jamshedpur Utilities & Services Company is today Indias only comprehensive urban infrastructure service provider. A Tata Enterprise, its services focus on the Tata Group Purpose to improve the quality of life of the communities we serve. The Group purpose is reflected in JUSCOs Mission of providing quality services for life. Its services include water, power, infrastructure, public health and horticulture services. JUSCO works alongside civic bodies, large and small industries, local government bodies, communities and individuals to deliver value through sustainable solutions. The Company believes that a clear sense of the Tata Values and Mission allows it to achieve immense clarity on its role for the future. JUSCO intends to rise to the challenge of meeting India's need for infrastructure development in a sustainable manner by anticipating and addressing the country's growth needs such that the ability of future generations to meet their own needs is not compromised.
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FINANCIAL ANALYSIS
JUSCO
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FINANCIAL ANALYSIS
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FINANCIAL ANALYSIS
WATER AND WASTE WATER

:: Operations & Maintenance of Water & Wastewater Services at Jamshedpur
60,000 customers accounting for a population of approx 7.00 lakes in Jamshedpur, trust us enough to drink water from their taps the only city in India where consumers are assured of this quality. Jamshedpurs citizens enjoy 8 hours of water supply each day, the highest level of water availability in India. We have also created District Metered Areas where 24X7 water supply is assured. Our team manages a 550 kilometer water distribution and a 500 kilometer waste water system in the city. We have been abstracting water from natural sources for over a century now without impacting the sustainability of the water sources. We manage the entire water cycle from abstraction and transmission of water, water purification, distribution, waste water collection and disposal.
PUMP HOUSE PLANT
WATER DISTRIBUTION
WATER
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FINANCIAL ANALYSIS
POWER SERVICES
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FINANCIAL ANALYSIS
ENGINEERING AND CONTRUCTION

JUSCO offers design, construction and turnkey services as well as comprehensive EPC services; according to individual needs, it undertakes end-to-end projects or provides stand alone solutions in the areas of:
Building & Industrial Construction geared to provide EPC Services as well as exclusive construction solutions for Residential/ Commercial/ Industrial/ Recreational requirements. Road Construction & Maintenance facilitating economic growth Design & Planning Consultancy understanding and delivering the physical planning, architectural and structural needs of modern townships Township Management solutions for Indias urban growth & development
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FINANCIAL ANALYSIS
MUNICIPAL SOLID WASTE

Solid waste management has become a major environmental issue in India. For ensuring sustainable solution to this problem, MSW-Mgt & handling Rules 2000 were enacted with obligatory requirements for improvement in MSW management infrastructure in cities across the country. Taking an early initiative, JUSCO has put in place the expertise and skills to strategies, devise and design the blueprint for excellent Waste management for the city of Jamshedpur. JUSCO has been offering integrated solutions to Municipal Waste Management. The services in Municipal waste comprise of: Waste Transfer- Secondary collection and Transportation Transfer Station Management Composting Engineered secured landfills Landfill Capping Integrated Waste Recycling and Reclamation Recycling of Municipal and specialized wastes The above projects are taken on various aspects of project management viz. EPC, Turnkey Basis BOOT, BOT, DBOOT, O&M etc. JUSCO's Public Health &
Horticulture Services integrate environment sanitation, disease prevention
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FINANCIAL ANALYSIS
and control and horticulture. Together, these services promote a healthy life for the citizens by ensuring that civic needs do not stretch the environment and ensures one of the lowest incidences of communicable diseases in India. In the last 5 years, 5.15 million trees have been planted to maintain the ecological balance. The Company follows an integrated approach in the delivery of quality services which are regular, efficient, state of the art & are at affordable cost.
JUSCO Samachar (vernacular) conferred Gold Award by PRCI
JUSCO Samachar (vernacular) was conferred Gold Award by the Public Relations Council of India (PRCI) at their 4th Global Meet held on 3 April 2010 at India Habitat Centre, New Delhi. The Global Meet together with Annual PRCI 2010 Chanakya Awards, Corporate Collateral Awards and Hall of Fame in PR was inaugurated by the Honble Advisor to Bureau of Parliamentary Studies on Training and Former Union Minister Sri Mani Shankar Aiyer.
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FINANCIAL ANALYSIS
MUNICIPALIKA AWARD to JUSCO at the 1st International Conference on Solid Waste Management and Municipalika Exhibition at Kolkata JUSCO was declared the Winner for "BEST EXHIBITOR of Urban Infrastructure Services" at the 1st International Conference on Solid Waste Management on Nov 6, 2009.
:: MORE AWARDS & RECOGNITIONS
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FINANCIAL ANALYSIS
ISO 9001 WATER MANAGEMENT
ISO 9001 PUBLIC ISO 9001 INTEGRATED HEALTH & HORICULTURE CUSTOMER SERVICES SERVICES
ISO 9001 POWER SERVICES
JN TATA COMMENDATION ISO 9001 PUBLIC AWARD 2006 ENGINEERING CONSTRUCTION
JUSCO SAHYOG KENDRA
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FINANCIAL ANALYSIS
These guaranteed performance standards and assured service levels are unmatched by any other infrastructure company in India. In a bid to catapult our services to world-class levels, we conducted a Voice of Customer study to assess current satisfaction levels and become even more customer-centric. Our aspiration is also to enhance the responsiveness of our services and make JUSCOs service standards uniform across all locations and cross sections of customers.
FINANCIAL ANALYSIS
MEANING:
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FINANCIAL ANALYSIS
Analysis of financial statements means the presentation of facts given in financial statements into distinct and different components by using scientific methods and it also includes the arrangement of facts according to the need and convenience . in other words, FINANCIAL ANALYSIS involves the division of facts on the basis of some definite plans, classifying them into classes on the basis of certain conditions and presenting them in most convenient, simple and understandable form.
TYPES OF ANALYSIS 1. EXTERNAL ANALYSIS: This is analysis based on information easily

available to outsiders for the business. outsiders include creditors suppliers,suppliers,investor,government agencies,etc. 2.INTERNAL ANALYSIS: this is an analysis done on the basis of information obtained from internal and unpublished records and books.
TECHNIQUES OF ANALYSIS
1. 2. 3.
RATIO ANALYSIS COMPARATIVE STATEMENT COMMON- SIZE STATEMENT
4. TREND ANALYSIS
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FINANCIAL ANALYSIS
RATIO ANALYSIS
MEANING
Ratio analysis is an important means of express the relationship between two numbers. Accounting ratio shows interrelationship which exist among various accounting data. When relationship among various accounting data supplied by financial statements is worked out, they are known as accounting ratio. To be useful, a ratio must represent a meaningful relationship, but use of ratio cannot take the place of studying the underlying data. The analysis and interpretation data of the financial data presentation of information that will aid in decision making by business managers, investor and creditors as well as other group who are interested in the financial status and operating result of business. The universal used technique for analysis of financial statement in modern times is the ratio analysis it is a principal technique so far known to judge the condition portrayed by the financial statement. The analysis can judge by its used the financial growth, development and the present condition of business enterprises.
USES OF RATIOS
1. Ratios offer help in intra firm comparisons, industry comparison and also for inter firm comparison. 2. Financial position of the entity can be studied.
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FINANCIAL ANALYSIS
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FINANCIAL ANALYSIS
LIMITATIONS & PROBLEMS OF RATIO ANALYSIS
1. Ratios are based on financial statements, so contain almost all of the deficiencies of those accounts.
2.
Some ratios are open for manipulation and need to be interpreted with care. E.g. - stock levels may be kept artificially low at year-end, creating an impression of high efficiency in this area. Inter-firm comparisons are faced with the problem that different organizations might use rather different accounting policies. E.g. depreciations methods etc.
3.
4. Detailed knowledge of a companys markets is seldom obtainable from the published accounts, but is extremely important for assessing future profitability. 5. Ratios are useful when comparing similar organizations operating under similar conditions. Comparisons with different types of organizations can be misleading.
TYPES OF RATIOS
BALANCE SHEET
INCOME STATEMENT
1. LIQUIDITY RATIO 2. LEVERAGE RATIO
1.TURNOVER RATIO 3. PROFITABILITY RATIO
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FINANCIAL ANALYSIS
JAMSHEDPUR UTILITIES AND SERVICES COMPANY LIMITED BALANCE SHEET as at 31st March2006-09
As at 31.3.09 Rupees FUNDS EMPLOYED: SHARE CAPITAL 203,500,000 As at 31.3.08 Rupees
As at 31.3.07 Rupees As at 31.3.06 Rupees 3,500,000
3,500,000 3,500,000
RESERVE AND SURPLUS 758,359,765 452,582,434 TOTAL SHAREHOLDERS' FUND LOANS SECURED Unsecured TOTAL FUND EMPLOYED APPLICATION OF FUNDS: FIXED ASSETS Gross Block Less: Depreciation/ Amortization
177,407,69 0 95,781,200 180,907,69 961,859,765 456,082,434 0 99,281,200
49,012,501 100,000,000 - 180,000,000 1,010,872,2 180,907,69 66 736,082,434 0 99,281,200
1,026,640,7 129,976,93 22 511,962,498 8 65,904,757 80,625,948 27,803,034 10,320,566

119,656,37 2 119,656,37 2 10,044,486 34,196,813 3,432,035 62,472,722 62,472,722 33,018,419 15,780,600 7,897,226 467,999,64 1 61,631,394 159,651,00 0 697,179,26 1
Net Block 946,014,774 484,159,464 Capital work-in-progress 131,218,575 258,031,668 1,077,233,3 49 742,191,132 INVESTMENTS 32,984,970 624,930 DEFERRED TAX ASSET (NET) 18,715,792 13,575,214 CURRENT ASSETS, LOANS & ADVANCES Inventories 54,800,158 19,977,913 1,007,570,5 Sundry Debtors 965,267,895 47 Cash and Bank Balances 100,509,430 75,833,103 Loans and Advances
8,246,497 708,050,70 2 31,894,568 200,967,98 267,858,178 113,602,432 2 1,388,435,6 1,216,983,9 949,159,74 61 95 9
LESS: CURRENT LIABILITIES & PROVISIONS 1,328,091,6 1,115,752,6 824,579,57 635,581,74 Current Liabilities 23 47 0 5 Provisions 178,405,883 121,540,190 0 73,588,057 1,506,497,5 1,237,292,8 932,149,73 709,169,80 06 37 0 2
107,570,16
ASSETS/ (LIABILITIES) (118061845) (20,308,842) 17,010,019 11,990,541 1,010,872,2 180,907,69 TOTAL FUNDS APPLIED 66 736,082,434 0 99,281,200
JAMSHEDPUR WOMENS COLLEGE NET CURRENT
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FINANCIAL ANALYSIS
JAMSHEDPUR UTILITIES AND SERVICES COMPANY LIMITED PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED ON 31ST MARCH 2008 2008-2009 Rupees 2007-2008 Rupees INCOME :
Income from Sales and Services 3,196,459,983 2,432,987,390 2,175,221,006 1,554,579,222
2006-2007 Rupees
2005-2006 Rupees
245,000,00 Other Operational-Incentive Other Income

TOTAL INCOME
245,000,000 40,020,992
3,481,480,975
0 44,663,578
2,722,650,968
23,686,291
2,198,907,297
14,876,350
1,569,455,572
EXPENDITURE :
Operating Expenses 3,135,483,170 2,417,677,933 2,007,015,113 1,500,041,088
Depreciation Less : Transfer from capital contribution Interest paid

TOTAL EXPENDITURE
52,825,170 3,699,473 49,125,697 17,631,417

3,202,240,284
17,879,048 2,576,113
2,438,133,094
6,888,531 2,013,903,644
2,784,700 1,502,825,788
PROFIT BEFORE TAXES TAXES - Current Tax (Includes Rs . 25,435,810 related to past year: Previous year Rs . 6,112,005 ) - Deferred Tax (Includes credit of Rs Nil related to past year :Previous year Rs. Nil) - Fringe Benefit Tax ( Net of write back Rs 1,032,820 related to past year : Previous year Rs.435,680). TOTAL TAXES PROFIT AFTER TAXES Balance of Profit/(loss) brought forward from previous year BALANCE CARRIED TO BALANCE SHEET Basic and Diluted Earnings per Share Rs (Face value of the Share Rs. 10/-)
279,240,691
284,517,874
185,003,653
67,140,649
80,657,691
104,996,158
75,522,042
27,432,509
(5,140,578) 75,517,213
(6,785,721) 98,210,437
-3,240,649 72,281,393
-6,070,594 21,361,915
4,467,180 79,984,393 199,256,298 413,874,075 613,130,373 17.45
3,067,212 101,277,649 183,240,225 177,407,690 360,647,915 523.54
1,624,190 73,905,583 111,098,070
4,100,000 25,461,915 41,678,734
317.42
119.08
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FINANCIAL ANALYSIS
Liquidity analysis aim to measure the short term ability of the enterprise to pay its maturity obligations and to meet unexpected need for cash .The aim of liquidity analysis for a company is to have adequate funds on hand to pay bill when they are due.
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FINANCIAL ANALYSIS
MEANING:The current ratio is a widely used measure for evaluating a companys liquidity and short- term debt- paying ability.
FORMULA:-
Current ratio:
ANALYSIS:-
Current assets Current liabilities
A current ratio of 2:1 is considered as ideal,i.e. if current ratio is 2 or more it means that the concern has the ability to meet its current obligations but if this ratio is less than 2 it indicates that the concern has difficulty in meeting its current obligations. From the calculation shown above, shows poor short term financial position. It may be due to following reasons:A concern may not be able to pay off its creditors, even if its current ratio is High enough because the distribution of current assets is not favorable to Liquidity position. It may be due to share of stock in current assets is comparatively high other Stock of finished goods is in excess as compared to future sales and its Turnover is slow. In such situation it may be difficult in the payment of current liabilities even if current ratio is high.
MEANING:The acid test ratio is a measure of a companys immediate short-term liquidity. It he is a relationship between liquid assets and current liabilities. The liquid assets exclude inventory and prepaid expenses. Due to uncertainty about its selling price and is not easily and readily convertible into cash.
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FINANCIAL ANALYSIS
FORMULA:ACID TEST RATIO= CURRENT ASSETS - INVENTORY CURRENT LIABILITIES
ANALYSIS:The actual guideline for this ratio is 1.If this ratio is less than 1, the financial position of the concern shall be deemed to be unsound and real cash have to be provided for the payment of the liabilities. The balance sheet of JUSCO shows that the ratio in 2007 is 1, which means it is at appropriate level. While in the preceding year 2008-09 is less than 1 (0.88 and 0.96 respectively).
MEANING:This ratio belongs to conservative list and is not widely used in practice. This ratio establishes relationship between absolute liquid assets and current liabilities. There are two components. Absolute liquid assets which mean marketable security, cash in hand and bank balance. Current liabilities will be as per mention in the current ratio.
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FINANCIAL ANALYSIS
FORMULA:ABSOLUTE LIQUID RATIO = CASH AND BANK + INVESTMENT
ANALYSIS:The desirable norms for this ratio is 1:2,i.e Re 1 worth of absolute liquid assets are sufficient for Rs 2 worth of current liabilities. Cash balance yields no return and are considered barren.
MEANING:Financial leverage refers to the use of debt finance which measures the ability of the company to survive over a long period of time. Leverage ratio helps in assessing the risk arising from the use of debt capital. Two types of ratios are commonly used to analyze financial leverage. STRUCTRAL RATIO: - based on the proportion of debt and equity in the financial structure of the firm COVERAGE RATIO: - Which shows the relationship between debt servicing
commitment and sources for meeting this burden.
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FINANCIAL ANALYSIS
MEANING:The objective of calculating this ratio is to measure the relative proportion of debt and equity in financing the assets of a firm.
FORMULA:DEBT EQUITY RATIO = OUTSIDERS FUND
SHARE HOLDERS FUND (Outsiders fund = secured loan and unsecured loan, Shareholders fund = share capital and reserve)
ANALYSIS:-
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FINANCIAL ANALYSIS
The desirable norms for this ratio are 2:1. A low ratio indicates greater claim of owners than creditors. Since from the creditors point of view it represent a larger margin of safety. The same low ratio may be taken as unsatisfactory by the shareholder. A high debt equity ratio shows that the claims of creditors are greater than those of owners. The debt equity ratio in case of JUSCO for the year 2008-09 is less than 2:1.
MEANING:This ratio measures the percentage of total assets provided by creditors. It indicates the companys degree of leverage. It also provides some indication of the companys ability to with stand losses without impairing the interest on creditors.
FORMULA:DEBT CAPITAL RATIO= TOTAL DEBT TOTAL ASSETS (Debt includes short- term as well as long- term loans and the ASSETS includes total of current assets and fixed assets)
ANALYSIS
The higher the percentage of debt to total assets, the greater the risk that the company may be unable to meet its maturing obligation. The lower the ratio the more equity is available to the creditors. Thus from the creditors point of view a low ratio of debt to total assets is usually desirable. The adequacy of this ratio is often judged in the light of companys earning.
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FINANCIAL ANALYSIS
MEANING:This ratio is defined as profit cover of interest i.e. it indicates the relationship between PBIT and FIXED INTEREST charges .it determine the debt surviving capacity of business enterprise keeping in view fixed interest on long term debt.
FORMULA:INTEREST COVERAGE RATIO AND TAXES = PROFIT BEFORE INTEREST INTEREST
ANALYSIS:It shows the number of times the interest charges are covered by the income out of which they will be paid higher the ratio ,the more beneficial for the lender ,because this ratio measures the margin of safety(MOS) for the lender. It measures the degree of protection; creditors have from default on the payment of interest by the company. It provides indications of the companys ability to meet interest payment as they come due. However in case of JUSCO it is decreasing over the years.
MEANING:This ratio to attempts to measure the capital gearing or capital leverage in the scheme of capitalization ratio. It reflects the degree of equity financing in the total capital structure of a concern. This ratio establishes the relationship between fixed assets and dividend bearing securities and equity shareholder of a company.
FORMULA:CAPITALGEARING RATIO = EQUITY SHARE CAPITAL
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FINANCIAL ANALYSIS
FIXED INTEREST BEARING FUND (equity share capital = share capital and reserve)
ANALYSIS:A highly geared capital is one which has a small proportion of equity capital including any reserve or undistributed profits which may be regarded as being is made of equity capital, the capital is said to be low geared. The higher the ratio, the more beneficial for the firm at the time of prosperity the owners will enjoy the benefit of trading on equity. While at the time of depression they will have to suffer a lot because they will have to pay the interest whether they are in loss or profit. When the rate of interest is fixed, higher gearing ratio is beneficial for shareholders. In case of JUSCO, this ratio is higher for the year 2009 which indicates more beneficial for the firm.
MEANING:It is referred to activity and assets management ratio which measures how efficiently assets are employed by a firm. Investment of the funds of creditors and owners in various kinds of assets is done to generate sale and profit. The effective management of asset and capital employed will increase the amount of sales. It is computed to evaluate the efficiency with which the firm manages and utilizes its assets and capital. These ratios are very important for the concern to judge how well facilities at the disposal of the concern are being used to measure the effectiveness with which are concern uses its resources at its disposal. This ratio is usually are calculated on the basis of sales or cost of sales and are expressed in times, rather than as a percentage. The higher the turnover ratios, the better the use of capital or resources will be.
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FINANCIAL ANALYSIS
MEANING:It measures how fast the inventory is moving through the firm and generating sales. The inventory turnover reflects the efficiency of inventory management. The higher the ratio, the more efficient the management of inventories and vice-versa.
FORMULA:INVENTORY TURNOVER RATIO = SALES OR COST OF SALES AVERAGE INVENTORY
(Average inventory = (opening inventory + closing inventory)/2)
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FINANCIAL ANALYSIS
ANALYSIS: -However, this may not always be true a high inventory
turnover may be caused by low level of inventory which may result in frequent stock of and loss of sales. A low ratio signifies that inventory does not sell fast and stays on the self or in the warehouse for a long time. Generally faster the inventory turnover the less cash i.e. tied up in inventory and less the chance of inventory obsolesces. Smaller and faster moving inventory means company has less cash tied up in inventory.
MEANING:It measures the number of time on average account receivable (trade debtors receivable) are collected during the period. Receivable turnover is computed by dividing net credit sales (net sales net cash sales) by the average net receivables. This ratio shows how many times sundry debtors (a/c receivable) turned over during the year.
FORMULA:Debtors turnover ratio = Net credit sales
Average sundry debtor
ANALYSIS:It determines the liquidity of one item on current assets and find out how faster debts are being collected.
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FINANCIAL ANALYSIS
MEANING:It is use to assess the effectiveness of the companys credit and collection policies. The general rule is that the collection period should not greatly exceed the credit term period.
FORMULA:AVERAGE COLLECTION PERIOD = AVERAGE DEBTORS * 365/12/52 NET CREDIT SALES
ANALYSIS:This period indicates an average period for which the credit sales remain outstanding and measures the quality of debtors. It indicates the speed with which the money is collected from debtors. This ratio is the measure of collectively of account receivable and tells about how the credit policy of the company is being enforced. The shorter the average collection period the better the quality of debtors as short collection period indicates prompt payment by debtors. A long collection period implies a too liberal and ineffective credit and collection performance by the management. This increases the chances of bad debts.
MEANING: -This ratio expresses the relationship between the sales and
average net fixed assets. It is most useful for manufacturing concern since sales are produced not only by the use of working capital but also by the capital invested in fixed assets. This ratio indicates how effectively and profitably the fixed assets business is used.
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FINANCIAL ANALYSIS
FORMULA:Fixed assets turnover ratio = Sale Fixed Assets
ANALYSIS:This ratio is supposed to measure the efficiency with which fixed assets are employed. A high ratio indicates high degree of efficiency in assets utilization and low ratio reflects inefficient use of assets. When the fixed assets of the firm are old and substantially depreciated the fixed assets turnover ratio tends to be high because the denominator of the ratio is very low.
MEANING:This ratio is also known as total investment turnover ratio. This ratio establishes a relationship between total assets and sales of the concern. This ratio indicates how efficiently, effectively and profitability a company uses its assets to generate sales.
FORMULA:TOTAL ASSETS TURNOVER RATIO = NET SALES TOTAL ASSETS (TOTAL ASSETS = FIXED ASSETS + CURRENT ASSETS)
ANALYSIS:A high ratio in an indicator of over trading of total assets while low ratio reveals idle capacity.
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FINANCIAL ANALYSIS
MEANING:The main objective of a company is to earn profits because profits are necessary to survive and grow over a long period of time. The word profit can be defined as the excess of total revenues over the expenses over a given period .the word ability shows the power of a concern to earn profits. The profitability position also affects the liquidity position which is vital to creditors as well. It also tries to establish relationship between profit, turnover, capital employed etc.
MEANING:-
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FINANCIAL ANALYSIS
This ratio is very useful to the proprietors and prospective investor because it reveals the overall profitability of the concern. This ratio measures the relationship between net profit and sales of a firm. (Net profit = Profit after tax)
FORMULA:NET PROFIT RATIO = NET PROFIT * 100 NET SALES
ANALYSIS:The net profit margin is indicative of managements ability to operate the business with sufficient success not only to recover from revenues of the period, the cost of merchandise or services, the expenses of operating the business and the cost of borrowed fund. This ratio is a symbol of profitability and efficiency of the business. Higher the ratio the more favorable for the business as it denotes sound management and efficiency. Lower ratio reveals decline in profits and mismanagement.
MEANING:This ratio is computed by dividing net income after tax by average total assets. This ratio is calculated to measure the profit after tax against the amount invested in total to ascertain whether assets are being utilized properly or not.
FORMULA:
RETURN ON ASSETS = NET PROFIT AFTER TAX * 100
39
FINANCIAL ANALYSIS
AVERAGE TOTAL ASSETS (EXCLUDING FICTITIOUS ASSETS)
ANALYSIS:The higher the ratio, the better it is for the concern. This ratio reveals the profitability of total assets. Hence it throws light on how efficiently the assets are utilized by the management. The return on total assets measures the profitability of the total funds/ investments of a firm. It, however, throws no light on the profitability of the different sources of fund which finance the total assets.
MEANING
This ratio measures the relationship between net profit before interest and tax and average capital employed. This ratio is an indicator of the earning capacity on the capital employed in the business. The objectives of computing this ratio is to determine how efficiently the long term funds supplied by the creditor and share holder have been used.
FORMULA:RETURN ON CAPITAL EMPLOYED = PROFIT BEFORE INTEREST & TAXES * 100 CAPITAL EMPLOYED
(Capital Employed= Current Assets + Fixed Assets Current Liabilities)
40
FINANCIAL ANALYSIS
ANALYSIS:This ratio measure the profitability of total capital employed in the business. This ratio helps in determining as to what extent the management has been successful in increasing the income of the shareholder through the use of borrowed capital. This ratio is an important tool for making investment decision, a project yielding higher return in favorable as it reveals more profit. This ratio is considered to be the most important ratio because it reflects the overall efficiency with which capital is issued.
MEANING:It measures the profitability on the common shareholders (equity shareholder) viewpoint. This ratio is calculated to find out how efficiently the funds supplied by the equity shareholders have been used.
FORMULA:RETURN ON EQUITY = NET PROFIT AFTER TAX & PREFERENCE DIVIDENDS* 100 EQUITY SHAREHOLDERS FUNDS
ANALYSIS:Higher the ratio the more efficient the management and utilization of equity shareholders funds. The return on equity may be substantially higher than its return on assets. The reason for this is effective use of leverage or trading on the equity at a gain. Trading on equity at a gain means that the company has borrowed money at a lower rate of interest than it is able to earn by using the borrowed money.
41
FINANCIAL ANALYSIS
MEANING Inter firm comparison means an analysis and interpretation of relative efficiency
on the basis of financial data of two or more company or trading concerns. It involves the comparison of two or more companies in the same industry with objectives to highlight upon their competitive position and to improve the profitability and productivity of those companies. Thus inter-firm comparison is a tool used by the management of a company to compare its operating performance and financial result with those of similar company engaged in the same industry.
PROCEDURE:Collection of data of companies participating in inter-firm companies.
Information is provided through balance sheet and profit and loss to determine the efficiency or otherwise of its business by comparing the performance of other businesses.
Efforts are made to highlight upon the weaknesses and reasons as why the result vary from one business to other.
42
FINANCIAL ANALYSIS PRIMARILY COMPARISON IS DONE TO EXAMINE THE FOLLOWING:-
ADEQUACY OF PROFITS EFFICIENCY IN SELLING EFFICIENCY OF PRODUCTION
OTHER COMPANIES
OMAXE LTD.
Incorporated as Omaxe Builders Private Limited in 1989, to undertake construction & contracting business, the company changed its constitution to a limited company known as Omaxe
43
FINANCIAL ANALYSIS
Construction Ltd., in 1999. The name of the company has now changed to Omaxe Ltd in 2006.
As a civil construction and contracting company, Omaxe successfully executed more than one hundred and twenty industrial, institutional, commercial and residential projects for a number of prestigious Indian private, public sector and Multinational's clients such as Amity University, LG, Pepsi, Samsung, Wave Cinemas, National Brain Research Centre, P.G.I. M.E.R, Apollo Hospitals and Delhi High Court.
CESC LTD.
The pioneer of electricity supply in India, CESC Limited commenced power generation and distribution in Kolkata in 1899 with Indias first thermal power station. CESC, one of the few private power utilities, has since grown to a generating capacity of about 1000 MW across four thermal power plants. CESC is a vertically integrated power company and its operation encompasses coal mining, generation and distribution of power. Today, the company serves 15 million people spread over its licensed area of 567 sq. km in the twin cities of Kolkata and Howrah in the State of West Bengal, India. Poised for large
44
FINANCIAL ANALYSIS
growth in demand, CESC is setting up a number of power stations in the country.
National project construction corporation ltd.

It was established in the year 1957 as a premiere construction co to create necessary infrastructure for economy of the development of the co. It was to provide the necessary manpower and knowhow for the construction of national project. and also act as a price deterrent for the private sector. In its 50 years of existence the corporation has successfully associated itself completion of over 130 national projects from concept commissioning stage. Some of them is remote and hazardous over the country. Besides completion of projects in India and contributing to the socio-economic of the country, the corporation has successfully executed several overseas projects.
45
FINANCIAL ANALYSIS
JUSCO Ltd. BALANCE SHEET AS AT 31ST MARCH, 2009 PARTICULARS (Amount) SOURCES OF FUNDS FUNDS EMPLOYED: SHARE CAPITAL 203,500 ,000 RESERVE AND 758,359 SURPLUS ,765 TOTAL 961,859 SHAREHOLDERS' ,765 FUND LOANS SECURED:Unsecured TOTAL FUND EMPLOYED APPLICATION OF FUNDS FIXED ASSETS FIXED ASSETS Less: Depreciation/ Amortization Net Block Capital work-inprogress 49,012 ,501 49,012 ,501 OMAXE Ltd. BALANCE SHEET AS AT 31ST MARCH, 2009 PARTICULARS (Amount) SOURCES OF FUNDS Liabilities Share Capital Reserves & Surplus Net Worth (1) Secured Loans (2) Unsecured Loans (3) Assets Gross Block 2 (-) Acc. Depreciation Net Block (A) 1,026,640, 722 80,625 ,948 946,014 ,774 131,218 ,575 1,077,233, 349 32,984 ,970 18715 ,792 Current Liabilities Provisions Net Curr. Assets (i - ii) (D) Capital Work in Prgs. (B) Investments (C) Inventories Sundry Debtors Cash And Bank Loans And Advances 212.2 3 255.8 9 2,600.5 0 20,605.5 8 672. 75 1,114.4 4 11,033.1 5 33,425.9 2 6,933.0 2 55. 28 26,437.6 2 Consumers' Security Deposits Deffered Tax Liability Less: Recoverable Advance against Depreciation APPLICATION OF FUNDS FIXED ASSETS Gross Block 43.53 Less: Depreciation/ Amortization Net Block Capital work-inprogress 35 33.92 52 09.61 6 19.55 58 29.16 INVESTMENTS 69.69 5 b) Loans & Advances c) Inter-Unit Balance Current Liabilities Net Current Assets: 5 a) Miscellaneous Expenditure (to the extent not written off or adjusted) b) Profit & Loss Account : 1,735.6 7 11,217.8 2 12,953.4 9 15,576.2 7 764.2 5 468.1 28.78 7 42.18 7 42.18 3 02.99 1 97.95 71 55.39 3 Differed Revenue Asset 4 Current Assets, Loans & Advances: a) Current Assets 2. Investments 00 576802 38 b) Less: Depreciation c) Net Block a) Gross Block 72 4315822 50 801381 22 150 5117203 CESE Ltd. BALANCE SHEET AS AT 31ST MARCH, 2009 PARTICULARS (Amount) SOURCES OF FUNDS FUNDS EMPLOYED: SHARE 1 CAPITAL 25.60 RESERVE AND 44 SURPLUS 60.88 45 86.48 LOANS SECURED 10.61 Unsecured 18.17 16 1 APPLICATION OF FUNDS 1. Fixed Assets 15 NATIONAL PROJECTS BALANCE SHEET AS AT 31ST MARCH, 2009 PARTICULARS (Amount) SOURCES OF FUNDS 1. Shareholders Funds : Share Capital 29842000 0 2. Loan Funds : a) Secured Loans 46 b) Unsecured Loans 73899571 86 77374761 32 490989
87
INVESTMENTS DEFERRED TAX ASSET (NET) CURRENT ASSETS, LOANS & ADVANCES
6859979 921 1316237 941 1118 214 8845464 099 (6681280 23) 0
54,800 ,158 Inventories Sudry Debtors Cash and Bank Balances 965,267, 895 100,509,430
Misc. Expenses (E) Total Assets (A+B+ C+D+E)
0. 00 29,294.0 1
CURRENT ASSETS, LOANS & ADVANCES Inventories 176.21 Sudry Debtors 315.15
82677707 95 77374761 32
46
FINANCIAL ANALYSIS
Loans and Advances 267,858,178 1,388,435, 661 LESS: CURRENT LIABILITIES & PROVISIONS Current Liabilities Provisions 1,328,091, 623 178,405, 883 1,506,497,506 NET CURRENT ASSETS/ (LIABILITIES) TOTAL FUNDS APPLIED (118061 845) 1,010,872, 266 NET CURRENT ASSETS/ (LIABILITIES) Miscellaneous Exp. Cash and Bank Balances Loans and Advances Deferred Payments 986.44 455.14 28.70 1 961.64 LESS: CURRENT LIABILITIES & PROVISIONS Current Liabilities Provisions
1093.11 120.57 1213.68 747.96 8.58 7155.39
47
FINANCIAL ANALYSIS
Profit and loss of Different Companies

JUSCO Ltd. OMAXE Ltd. CESA Ltd.
NATIONAL PROJECTS
PROFIT & LOSS ACCOUNT FOR THE & LOSS ACCOUNT FOR THE & LOSS ACCOUNT FOR THE & LOSS ACCOUNT FOR THE YEAR PROFIT PROFIT PROFIT YEAR YEAR YEAR ENDED ON 31ST MARCH 2008 ENDED ON 31ST MARCH 2008 ENDED ON 31ST MARCH 2008 ENDED ON 31ST MARCH 2008
INCOME : Sales Income from Sales &3,196,459,983Other Income Services Other OperationalIncentive Other Income
TOTAL INCOME EXPENDITURE :
6,997.79 INCOME 565.36 Earning from sale
INCOME Work 3031.32 Done for the

year
8255638359
of Electricity
245,000,000Total Income 7,563.15 Other Income
Cost 168.27 of Work Done for the Corporation
379967
40,020,992Raw Material Cost 3,481,480,975 Excise Other Expenses
0 0EXPENDITURE
5,641.24 Cost of Electrical
Energy Purchased
3199.59 Income Other TOTAL

EX 412.46 P E N D I T U R E
154448996 8410467322
Operating Expenses 3,135,483,170 Operating Profit
1,356.55 Generation, Distribution, Construction & 2006.40 Work Expenses Administration & Other Expenses
7768502489
Depreciation 52,825,170 Less : Transfer from capital contribution 3,699,473 Interest paid 49,125,697
Interest Name Gross Profit
1,074.78 Interest 281.77 Depreciation
140.96 Personnel 174.90 Administration
296177055 35592195
17,631,417 Depreciation
48.26 Profit before Tax
2734.72 Expenses Other
32719401
& Other App.

TOTAL EXPENDITURE 3,202,240,284 Profit Bef. Tax
798.87 Provision for
Provisions (52.68) TOTAL Profit/Loss(-) Bef. (2.50)

Interest and Tax
181844786
Taxation
PROFIT BEFORE TAXES 279,240,691 Tax
Other Non- Recurring Income

TAXES
19.9 Current 778.97 Fringe Benefit Tax
8314835926 95631396
Reported Profit
896.81 Deferred Tax (net) (113.54)
Less: Interest
433395437
48
FINANCIAL ANALYSIS
- Current 80,657,691 Equity Dividend Recoverable/payable 0 113.54 Deferred Tax (5,140,578)
L - ess: Prior Period Adjustments

Profit/Loss(-) 409.69 before tax
5350150
Profit After Taxation
-343114191
75,517,213
Profit brought favored from previous year
Provision for Tax 135.14
- Fringe Benefit Tax TOTAL TAXES
4,467,180 79,984,393
Transfer (to)/from
Reserve for unforeseen exigencies
i. Income Tax ii. Fringe Benefit Tax (15.58)
0 1543703
PROFIT AFTER TAXES
Debenture redemption reserve
Profit/loss(-) for 5.13 The year after tax
-344657894
General reserve
Balance of Profit/(loss) brought forward 413,874,075 from previous year
Deferred Tax Revenue-286977656 (350.00) Balance -7980793139 (49.97) Profit/Loss (-) b/f from previous year
Proposed dividend on Equity Shares
BALANCE CARRIED 613,130,373 TO BALANCE SHEET
Tax on proposed dividend
Carried (8.50) forward to Balance Sheet
-8267770795
Carried forward to Balance Sheet Earning per Equity Share (In Rupees)
(Face value of Rs. 10 per Share)
Notes 125.91 to Accounts

Basic Earning per share Diluted Earnings per share(-) 1154.94 (-) 1154.94
Basic & Diluted
32.79
49
FINANCIAL ANALYSIS
ANALYSIS OF JUSCO WITH OTHERPROJECT JUSCO LTD. OMAXE LTD. CESC NATIONAL
2009 2009 4.78 4.36 0.53 1.26 0.48 1.26 4.8 0.34 10.4 15.13 2009 1.73 1.6 0.86 0.49 0.27 2.29 34.64 5.81 15.61 8.61 23.36 0.47 0.34 2009 0.92 0.92 0.18 25.92 0.93 0.22 0 0.93 184.95 2.11 0.47 102.82 1.184557
LIQUIDITY RATIO
CURRENT RATIO ACID TEST RATIO CASH RATIO 0.92 0.88 0.08 0.05 0.019 14.83 19.62 1.63 85.49 3.24 112.63 3.51 1.44
LEVERAGE RATIO
DEBT EQUITY RATIO DEBT CAPITAL RATIO INTEREST COVERAGE RATIO CAPITAL GEARING RATIO SOLVENCY RATIO
TURNOVER RATIO
INVENTORY TURNOVER RATIO DEBTORS TURNOVER RATIO AVREGE COLLECTION PERIOD FIXED ASSETS TURNOVER RATIO TOTAL ASSETS TURNOVER RATIO
PROFITABILITY RATIO
NET PROFIT MARGIN RETURN ON ASSESTS RETURN ON CAPITAL EMPLOYED RETURN ON EQUITY
6 9 27 20
3 6
13 4 3 8
-3 -4 -16
-96
50
FINANCIAL ANALYSIS
CURRENT RATIOS
JUSCO LTD.:- This ratio is less than the industry average i.e.2:1, indicating that entity may face liquidity problem due to deficiency in short term financial position. 0MAXE ltd.:-It is higher than industrial average as well as international Standard, Good in short-term financial position. CESE LTD.:- This ratio is less than the industrial average. It indicates poor Short-term financial position. NATIONAL PROJECT LTD.:-This ratio is less than the industrial average. It indicates poor Short-term financial position.
ACID TEST RATIO
51
FINANCIAL ANALYSIS
JUSCO LTD.: In this ratio, the ratio analysis is less than 1.It Indicates the financial position is deemed to be unsound and real cash have to be provided for the payment of the liabilities. OMAXE ltd:-In this ratio, the ratio analysis is more than 1. It indicates good financial position. CESE LTD.:-In this ratio, the ratio analysis more is than 1. It indicates good financial position. NATIONAL PROJECT LTD.:-In this ratio, the ratio is less than 1.It indicates the financial position is deemed to be unsound and real cash have to be provided for the payment of the liabilities.
52
FINANCIAL ANALYSIS
DEBT-EQUITY RATIO JUSCO LTD.:-The debt equity ratio in case of JUSCO for the year 2008-09 is less than 2:1 .The low ratio may be taken as unsatisfactory for the shareholder. OMAXE LTD.:-The debt equity ratio in case of OMAXE for the year is less than 2:1. The low ratio may be taken as unsatisfactory for the shareholder. CESE LTD :-The debt equity ratio in case of CESE for the year 2008-09 is less than 2:1. The low ratio may be taken as unsatisfactory by the shareholder. NATIONAL PROJECT LTD.:-The debt equity ratio in case Of NATIONAL PROJECT for the year 2008-09 is more than 2:1. . A high debt equity ratio shows that the claims of creditors are Greater than those of owners. DEBT-EQUITY RATIO JUSCO LTD.:-The debt equity ratio in case of JUSCO for the year 2008-09 is less than 2:1 .The low ratio may be taken as unsatisfactory for the shareholder. OMAXE LTD.:-The debt equity ratio in case of OMAXE for the year is less than 2:1. The low ratio may be taken as unsatisfactory for the shareholder. CESE LTD :-The debt equity ratio in case of CESE for the year 2008-09 is less than 2:1. The low ratio may be taken as unsatisfactory by the shareholder. NATIONAL PROJECT LTD.:-The debt equity ratio in case Of NATIONAL PROJECT for the year 2008-09 is more than 2:1. . A high debt equity ratio shows that the claims of creditors are Greater than those of owners. INTEREST COVERAGE RATIO JUSCO LTD.-- In case of JUSCO ltd. Interest coverage ratio is 14, which indicates that the firm is in better position to pay its lenders. The margin of safety for the lender is good as compared to other companies. OMAXE LTD.-.In case of OMAXE ltd., this ratio is 1.26 which is not enough for the firm to pay to its lenders.
53
FINANCIAL ANALYSIS
CESC LTD.- In case of CESC ltd., this ratio is 2.29 which is also not satisfactory. NATIONAL PROJECT:- In case of NATIONAL PROJECT ,the ratio is 0.22 which indicates bad financial position CAPITAL GEARING RATIO JUSCO LTD.- The capital gearing ratio is 19.62, which indicates the degree of equity financing in the total capital structure of a concern is at average level. CESC LTD.- The capital gearing ratio is 34.64,which shows better capital structure.
54
FINANCIAL ANALYSIS
INVENTORY TURNOVER RATIO
JUSCO LTD.-This ratio is 85.49, which shows average of cash tied up in inventory and less the chance of inventory obsolesces. OMAXE LTD.-This ratio is 3.24, which shows least cash tied up in inventory. it also refers efficient management of inventory. CESC LTD.- This ratio is 15.61, which means less of cash tied up in inventory. NATIONAL PROJECT:- this ratio is 184.95, which means better in inventory management.
Debtors turnover ratio JUSCO LTD.- Debtors turnover ratio is 3.24, which represent the three times, on average receivables are
collected during the period. OMAXE LTD. Debtors turnover ratio is 10.4, which represent the ten times, on average receivables are collected during the period. CESC LTD. This ratio is 8.61, which represent the eight times, on average receivables are collected during the period. NATIONAL PROJECT- this ratio is 2.11.which represent the 2 times, on average receivables are collected during the perio
AVERAGE COLLECTION PERIOD

JUSCO LTD.- Average collection period is 112.63, which shows long collection period implies a too liberal and ineffective credit and collection performance by the management. This increase the chance of bad debt. CESC ltd In this, the average collection period is 23.36 which indicates the credit sales outstanding and measure the quality of debtors. NATIONAL PROJECT In this, the average collection period is 0.47 which indicates prompt payment by debtors.
FIXED ASSETS TURNOVER RATIO

JUSCO ltd. In this, fixed assets turnover ratio is 3.51, which indicates that fixed assets are not being efficiently in assets utilization. OMAXE LTD. In this, the fixed ratio is 15.13, which indicates a average degree of efficiency in assets utilization.
55
FINANCIAL ANALYSIS
CESC LTD.-The fixed turnover ratio is 0.47, which indicates least degree of efficiency in assets utilization. NATIONAL PROJECT- The fixed turnover ratio is 102.82.this means high degree of efficiency in assets Utilization. Or better is the performance.
N ET PROFIT MARGIN JUSCO LTD. The net profit ratio is 6, which indicates fewer profit margins.
CESC LTD.-.net profit margin is 0.13, which also indicates less profit. NATIONAL PROJECT.- net profit margin is -3, which indicates bad financial position.
Return on capital employed
56
FINANCIAL ANALYSIS
Jusco ltd. In this ratio, the return on capital employed is 31, which indicates the return on capital employed will satisfy the owners that their money is profitability utilized. OMAXE LTD.-In this ratio, the return on capital employed is 3, which indicates that money is profitability utilized. CESC LTD.- In this ratio, the return on capital employed is 3, which is also indicates that money is profitability utilized. NATIONAL PROJECT.- the return on capital employed is -16. This means that bad utilization of money from the other companies.
Comparative Financial Statement

Meaning:Statement showing financial data for two or more than two years, placed side by side to facilitate comparison is called Comparative Financial Statement. Such a statement spot lights trends and establishes relationship between items that appear on the same row of comparative financial statement. It discloses changes in items of financial statement over time in both rupees and percentage form. Each item (such as debtors) on a row for one fiscal period is compared with the same item in a different period. The analyst calculates the absolute changes, the difference between the figures of one year and the next and also the percentage changes (increase or decrease) from one year to the next, using the early year as the base year. Comparisons of financial statement can be inter firm or intra firm.
Objectives:-
57
FINANCIAL ANALYSIS
The main purpose of preparing comparative statements is to get insight into the reasons for changes in financial position and operating result of a business enterprise. 1. It helps us to know the strength and weaknesses in various areas of business. 2. It helps us to know the changes in financial positions. 3. It helps us to develop and know the trend. Advantages:1. Easy comparison 2. Indicate trend of progress 3. Weakness easily diagnosed 4. Helps in forecasting the profitability and financial soundness 5. Comparison of performance Types of Comparative Statements There are two types of comparative statements:1. Comparative Balance sheet 2. Comparative Income Statement Comparative Balance Sheet:Comparative Balance Sheet analysis is the study of the trend of same items, group of items, a compound items in two or more balance sheets of the same business enterprise of different dates. Procedures:1. First columns shows assets and liabilities 2. Second columns is made for previous year balance sheet figures
58
FINANCIAL ANALYSIS
3. Third column shows balance sheet figures of the current year 4. Fourth column shows increase or decrease in assets and liabilities in absolute terms 5. Fifth column shows the percentage change
Analysis:1: profitability means progress of the company or concern .by comparing the balances of reserves and surplus we can say that it has increased to 67% as compared to previous year indicating sound profitability position. 2: The statement show that fixed assets have increased by Rs. 335,042,217 i.e. 45%, while share capital have increased by 5714% which indicates increase in fixed assets has been financed by long term funds. It symbolizes sound commercial principle. 3: The current liability has increased by 19%, which is more than current assets 14%, indicating weak short term financial position.
JAMSHEDPUR UTILITIES AND SERVICES COMPANY LIMITED BALANCE SHEET as at 31st March, 2009
As at 31.3.09 Rupees FUNDS EMPLOYED: SHARE CAPITAL RESERVE AND SURPLUS TOTAL SHAREHOLDERS' FUND LOANS SECURED:- Cash credit from Axis Bank Limited As at 31.3.08 Rupees ABSOLUTE CHANGE INCREASE OR DECREASE 200,000,000 305,777,31 505,777,31 -50,987,499 PERCENTAGE INCREASE OR DECREASE
203,500,000 758,359,765 961,859,765 49,012,501
3,500,000 452,582,434 456,082,434 100,000,000
5714.286 67.56279 110.896 -50.9875
59
FINANCIAL ANALYSIS
(Secured by hypothecation of inventories and book debts) Unsecured :- Inter- Company loan from Tata Steel Limited, the Holding Company TOTAL FUND EMPLOYED APPLICATION OF FUNDS: FIXED ASSETS Gross Block Less: Depreciation/ Amortization Net Block Capital work-in-progress INVESTMENTS DEFERRED TAX ASSET (NET) CURRENT ASSETS, LOANS & ADVANCES Inventories Sundry Debtors Cash and Bank Balances Loans and Advances LESS: CURRENT LIABILITIES & PROVISIONS Current Liabilities Provisions NET CURRENT ASSETS/ (LIABILITIES) TOTAL FUNDS APPLIED 0 1,010,872,266 180,000,000 736,082,434 -180,000,000 274,789,832 -100 37.33139
1,026,640,722 80,625,948 946,014,774 131,218,575 1,077,233,349 32,984,970 18,715,792 54,800,158 965,267,895 100,509,430 267,858,178 1,388,435,661 1,328,091,623 178,405,883 1,506,497,506 (118061845) 1,010,872,266
511,962,498 27,803,034 484,159,464 258,031,668 742,191,132 624,930 13,575,214 19,977,913 1,007,570,547 75,833,103 113,602,432 1,216,983,995 1,115,752,647 121,540,190 1,237,292,837 (20,308,842) 736,082,434
514,678,224 52,822,914 461,855,310 -126,813,093 335,042,217 32,360,040 5,140,578 34,822,245 -42,302,652 24,676,327 154,255,746 171,451,666 212,338,976 56,865,693 269,204,669 -97,753,003 274,789,832
100.5305 189.9897 95.39322 -49.1463 45.14231 5178.186 37.86738 174.3037 -4.19848 32.54031 135.7856 14.08824 19.03101 46.78756 21.75755 481.3322 37.33139
Comparative Income Statement:Meaning:The profit and loss account is the summary of the results of the operations of a business transacted during a definite period, i.e. a year. It is prepared to enable the analysis to have definite knowledge about the progress of the business. Such a statement facilitates the horizontal analysis since each accounting variable is analyzed horizontally. Procedure:-
60
FINANCIAL ANALYSIS
The comparative P & L A/C is prepared showing increase or decrease in items both in absolute form and relative form, i.e. , showing the change in percentages. It has five columns. 1. First column is for income and expenses 2. Second column is for previous years original figures 3. Third column is for current year original figures 4. Fourth column is for changes in absolute figures 5. Fifth column shows relative changes (in percentage) Analysis: If we look into the figures of sales and gross profit, we come to know that sales have increased by 31% and gross profit by 27% indicating increase trend growth. The overall increase in operating expenses is by 29%, which results in increase in net operating income by only 27%. It shows due to increase in sales, the operating expenses are not controlled at significant level. The PBT has increased by 1.85% whereas income tax has decreased by 21%, as a result profit after tax has increased by 8.74%.
JAMSHEDPUR UTILITIES AND SERVICES COMPANY LIMITED

PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED ON 31ST MARCH 2008
ABSOLUTE CHANGE INCREASE OR DECREASE 763,472,593 PERCENTAGE INCREASE OR DECREASE
2008-2009 Rupees INCOME : Income from Sales and Services ( Net of service tax of Rs. 168,647,219 Previous period: Rs.176,758,171) 3,196,459,983
2007-2008 Rupees 2,432,987,390
31.38004727
61
FINANCIAL ANALYSIS
Other Operational-Incentive Other Income TOTAL INCOME EXPENDITURE : Operating Expenses Depreciation Less : Transfer from capital contribution Interest paid TOTAL EXPENDITURE PROFIT BEFORE TAXES TAXES - Current Tax (Includes Rs .25,435,810 related to past year: Previous year Rs . 6,112,005 ) - Deferred Tax (Includes credit of Rs Nil related to past year :Previous year Rs. Nil) - Fringe Benefit Tax ( Net of write back Rs 1,032,820 related to past year : Previous year Rs.435,680). TOTAL TAXES PROFIT AFTER TAXES Balance of Profit/(loss) brought forward from previous year BALANCE CARRIED TO BALANCE SHEET Basic and Diluted Earnings per Share Rs (Face value of the Share Rs. 10/-) 3,135,483,170 52,825,170 3,699,473 49,125,697 17,631,417 3,202,240,284 279,240,691 17,879,048 2,576,113 2,438,133,094 284,517,874 31,246,649 15,055,304 764,107,190 -5,277,183 174.76685 584.4193946 31.33984736 -1.854780835 2,417,677,933 717,805,237 29.6898618 245,000,000 40,020,992 3,481,480,975 245,000,00 0 44,663,578 2,722,650,968 0 -4,642,586 758,830,007 0 -10.39456803 27.87099837
80,657,691
104,996,158
-24,338,467
-23.18034056
(5,140,578) 75,517,213 4,467,180 79,984,393 199,256,298 413,874,075 613,130,373 17.45
(6,785,721) 98,210,437 3,067,212 101,277,649 183,240,225 177,407,690 360,647,915 523.54
1,645,143 -22,693,224 1,399,968 -21,293,256 16,016,073 236,466,385 252,482,458 -506
-24.24418864 -23.10673355 45.64301392 -21.02463496 8.74047879 133.2898168 70.00801821 -96.66692134
Common Size Balance Sheet:In the common size balance sheet, each item of asset is converted into percentages to total assets and each item of capital and liabilities is converted into percentage to total liabilities and capital fund. Thus the balance sheet converted into percentage form is called common size balance sheet.
62
FINANCIAL ANALYSIS
Incase two or more business concern are to be compared the balance sheet of other concern is also converted likewise into percentages and is known as Comparative Common Size Balance Sheet.
Analysis:1. It is clear from the analysis that JUSCO is having decreasing working
capital. Incase of JUSCO it is decreasing by -3%and in case of OMAXE Ltd. it increased by 72%. It shows OMAXE Ltd. is sufficient to meet its short term obligations where as JUSCO is concentrating on expansion of its services.
2. The investment is greater incase of OMAXE Ltd. as compare to JUSCO
which indicates profitable business.
Determination of Common Size Statement

Common Size Balance Sheet
JUSCO LTD. As at 31.3.09 % Rupees FUNDS EMPLOYED: SHARE CAPITAL RESERVE AND SURPLUS TOTAL SHAREHOLDERS' FUND (A) LOANS SECURED:- Cash credit from Axis Bank Limited (Secured by hypothecation of inventories and book debts) Unsecured :- Inter- Company loan from Tata Steel Limited, the Holding Company TOTAL FUND EMPLOYED (B) 203,500,000 758,359,765 961,859,765 OMAXE LTD. As at 31.3.09 % Rupees 4.78379133 30.91815268 35.70194401
5.848996102 17356700000 21.79677302 112178200000 27.64576912 129534900000
49,012,501 0 1,010,872,266
1.408717087 0 29.05448621
155762700000 7642500000 163405200000
42.93075606 2.106398407 45.03715447
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FINANCIAL ANALYSIS
APPLICATION OF FUNDS: FIXED ASSETS Gross Block Less: Depreciation/ Amortization Net Block Capital work-in-progress (D) INVESTMENTS (E) DEFERRED TAX ASSET (NET) (F) CURRENT ASSETS, LOANS & ADVANCES Inventories Sundry Debtors Cash and Bank Balances Loans and Advances (G) (-): CURRENT LIABILITIES & PROVISIONS Current Liabilities Provisions (C) NET CURRENT ASSETS/ (LIABILITIES) TOTAL FUNDS APPLIED TOTAL LIABILITIES (A+B+C) TOTAL ASSETS(D+E+F+G) 0 0 29.5077031 2.317350642 27.19035246 3.771483704 30.96183616 0.948053862 0.537929211 0 0 1.290215535 0.584940705 0.70527483 0 0.70527483 7.167404721 0.328865499
1,026,640,722 80,625,948 946,014,774 131,218,575 1,077,233,349 32,984,970 18,715,792
4681200000 2122300000 2558900000 0 2558900000 26005000000 1193200000
54,800,158 965,267,895 100,509,430 267,858,178 1,388,435,661
1.575065899 27.74372558 2.888841594 7.69877857 39.90641164 0 38.17200357 5.127741102 43.29974467 -3.39333303 29.05448621 100 100
28103200000 6727500000 11144400000 109138300000 155113000000
7.745703071 1.854209393 3.071579511 30.08030635 42.75168808 0 19.10854077 0.152360751 19.26090152 72.53755342 80.73909848 100 100
1,328,091,623 178,405,883 1,506,497,506 (118061845) 1,010,872,266 3479229537 2517369772
69330200000 552800000 69883000000 263183000000 292940100000 362823100000 184870100000
Meaning:Trend analysis is also an important tool of analysis and interpretation of financial statement. Trend means tendency in general term. Trend analysis is discloses changed in the financial and operating data of financial statement over a series of year. The trend analysis of business and other financial data may be done in any of the following ways:1. Trend percentage
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FINANCIAL ANALYSIS
2. Trend ratios 3. Graphic or diagrammatic presentation
TREND PERCENTAGE
While calculating trend percentage, first the information contained in the financial statements is tabulated and taking the earliest year or any one year as a base, the percentage increase or decrease for other years is calculated. The percentages are called TREND PERCENTAGE. Which give an idea about the changed in comparison to previous year.
Procedure of Trend Percentage

Under this method following steps are taken:1. Selection of base year 2. Each item of the base year is taken as 100 3. Calculation of percentage relationship that each item of each year bears to the same item in the base year.
Formula:Trend Percentage =Absolute value of that year *100 Absolute value of the base year
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FINANCIAL ANALYSIS
TREND PERCENTAGE
31st MARCH SALES (Rs) Increase/Decrease in comparison to 2006-09 Sale of Base Year Rs.1554579222 620641784 257766384 763472593 39.92345808 16.58110313 49.11120528 Increase or Decrease in % in comparison to 2006-09
2006 2007 2008 2009
1554579222 2175221006 2432987390 3196459983
INTERPRETATION:1. The sale of the firm has increased or decreased for the last three years 2006-09. 2. The sale of the firm for the year 2007 is 39%, where it has decreased in 2008 by 16% and again increased in 2009 by 49%. Note: - The overall analysis of the financial items indicates that the firm is doing well and, therefore, its financial position is found to be good.
TREND RATIOS:MEANING:Trend percentage method is not considered to be suitable for comparison purposes because plus (+), minus (-) signs are used under it. Hence, trend ratio method is considered more suitable than this method. The calculation of trend ratio involves the arithmetical relationship which each item of several years bears to be the same item of the base year. One particular year is taken as base and the value of each item is regarded equal to 100 and the value of the other years is converted in the same ratio. This method is also used while preparing index number.
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FINANCIAL ANALYSIS
JAMSHEDPUR UTILITIES AND SERVICES COMPANY LIMITED

COMPUTATION OF TREND ANALYSIS USING BALANCE SHEET as ON( 2008-2009)
TREND PERCENTAGE As at 31.3.09 Rupees FUNDS EMPLOYED: SHARE CAPITAL RESERVE AND SURPLUS TOTAL SHAREHOLDERS' FUND LOANS SECURED:- Cash credit from Axis Bank Ltd. (Secured by hypothecation of inventories and book debts) Unsecured :- Inter- Company loan from Tata Steel Limited, the Holding Company TOTAL FUND EMPLOYED APPLICATION OF FUNDS: FIXED ASSETS Gross Block Less: Depreciation/ Amortization Net Block Capital work-in-progress 203,500,000 758,359,765 961,859,765 49,012,501 As at 31.3.08 Rupees 3,500,000 452,582,434 456,082,434 100,000,000 2009 2008 as Base Year 100 100 100 100
5814.285714 167.5627925 210.896034 49.012501
0 1,010,872,266
180,000,000 736,082,434
0 137.3313938
100 100
INVESTMENTS DEFERRED TAX ASSET (NET) CURRENT ASSETS, LOANS & ADVANCES Inventories Sundry Debtors Cash and Bank Balances Loans and Advances
1,026,640,722 80,625,948 946,014,774 131,218,575 1,077,233,34 9 32,984,970 18,715,792 54,800,158
511,962,498 27,803,034 484,159,464 258,031,668 742,191,132 624,930 13,575,214 19,977,913 1,007,570,54 7 75,833,103 113,602,432
200.5304541 289.9897472 195.3932215 50.8536708 145.1423094 5278.186357 137.8673809 274.3037173 95.80151959 132.5403103 235.7856018 114.0882433
100 100 100 100 100 100 100 100 100 100 100 100
965,267,895 100,509,430 267,858,178 1,388,435,66 1 1,216,983,995 1,115,752,64 1,328,091,623 7 178,405,883 121,540,190 1,506,497,50 1,237,292,837
LESS: CURRENT LIABILITIES & PROVISIONS Current Liabilities Provisions 119.031008 146.787563 121.757555 100 100 100
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FINANCIAL ANALYSIS
NET CURRENT ASSETS/ (LIABILITIES) TOTAL FUNDS APPLIED 6 (118061845) 1,010,872,266 (20,308,842) 736,082,434 581.3322345 137.3313938 100 100
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FINANCIAL ANALYSIS
GRAPHIC AND DIAGRAMATIC PRESENTATION:Meaning:The trend percentages or trend ratios can also be represented by graphs and diagrams. Changes in two or three different variables may also be represented. The graph and diagrams draw human attention immediately and the changes are understood easily only with a glimpse. That is why now a days the graphs and diagrams are being used in publish account to show changes in sale profit and other items even data for different past years regarding various items of the statement are represented by graphs and diagrams.
The above diagram represents sales in the Y- axis and years on the X-axis. There has been increase and decrease in sales for three years but the overall position of the firm is good.
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FINANCIAL ANALYSIS
SOME GENERAL LIMITATIONS OF FINANCIAL ANALYSIS

Past financial performance, good or bad, is not necessarily an accurate predictor of future performance. Financial statements do not tell you about changes in senior management. Financial statements do not tell you about the loss of major customers. Financial statements do not tell you about the competitive environment in which the company operates. Financial statements do not disclose the companys future prospects, or the results of its expenditures on Research and Development, or new product introductions, or new marketing campaigns, or new pricing strategies, or the customers recent decision to enter or exit a particular market segment. The more out-of-date customers financial statement are, the less reliable they are as a risk management tool. Without reading the Notes to the financial statements, credit managers cannot get a clear idea of the risk they are evaluating. Unaudited statements may or may not follow Generally Accepted Accounting Principles, and if they do not follow GAAP relying on them could be a serious mistake. Financial statements can be altered legally by adjusting certain types of reserves. Financial results can be improved by reducing or eliminating discretionary expenditures - even if this cost cutting is at the expense of long term growth and profits. Foreign financial statements do not follow GAAP. In some cases, local accounting rules are so different from GAAP accounting rules that it is easy to make the wrong decision after reviewing the foreign financial data.
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FINANCIAL ANALYSIS
By the end of a financial analysis, readers must be able to answer the two following questions that served as the starting point for their investigations: Is the company solvent? Will it be able to repay all its creditors in full? Is the company creating any value for its shareholders? A company is solvent when it is able to honour all its commitments by liquidating all of its assets, i.e. if it ceases its operations and puts all its assets up for sale. Net assets, i.e. the difference between assets and total liabilities, are the traditional measure of a company's solvency. A company creates value if the return on capital employed (after tax) that it generates exceeds the cost of the capital (i.e. equity and net debt) that served to finance capital employed. Lastly JUSCO is a unique company as it provides various services such as WATER DISTRIBUTION, POWER DISTRIBUTION, CONSTRUCTION, MUNICIPAL SOLID WASTE AND PUBLIC HEALTH. Its comparison with other companies may not present the true picture.
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FINANCIAL ANALYSIS
BIBLIOGRAPHY

WWW.GOOGLE.COM .WWW.MONEYCONTROL.COM WWW.JUSCOLTD.COM WWW.OMAXELTD.COM WWW.NPCC.GOV.IN WWW.CESC.COM
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FINANCIAL ANALYSIS
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Jamshedpur Utilities & Services Company Limited

MASTER OF BUSINESS ADMINISTRATION (MBA) By ANUBHUTI

Jamshedpur womens college

JAMSHEDPUR WOMENS COLLEGE

GUIDE NAME: SIGNATURE: DATE:

JAMSHEDPUR WOMENS COLLEGE

JAMSHEDPUR WOMENS COLLEGE

JAMSHEDPUR WOMENS COLLEGE

F il e Area P o p u l a ti o n L en gth of R o ad s W a t er M ai n s L e n g t h o f D r ai n s A v gD a i l y W a t e r P o w er A v ail ab ility : : : : : : : 64 s q km 0. 7 0 m illi o n 5 2 4k m s 5 0 0k m s 3 5 6k m s 160 ML D 9 9.4 2 %

JAMSHEDPUR WOMENS COLLEGE

JAMSHEDPUR WOMENS COLLEGE

JAMSHEDPUR WOMENS COLLEGE

JAMSHEDPUR WOMENS COLLEGE

JAMSHEDPUR WOMENS COLLEGE

WATER AND WASTE WATER

PUMP HOUSE PLANT

JAMSHEDPUR WOMENS COLLEGE

JAMSHEDPUR WOMENS COLLEGE

ENGINEERING AND CONTRUCTION

JAMSHEDPUR WOMENS COLLEGE

MUNICIPAL SOLID WASTE

JAMSHEDPUR WOMENS COLLEGE

JUSCO Samachar (vernacular) conferred Gold Award by PRCI

JAMSHEDPUR WOMENS COLLEGE

:: MORE AWARDS & RECOGNITIONS

JAMSHEDPUR WOMENS COLLEGE

ISO 9001 WATER MANAGEMENT

ISO 9001 POWER SERVICES

JN TATA COMMENDATION ISO 9001 PUBLIC AWARD 2006 ENGINEERING CONSTRUCTION

JUSCO SAHYOG KENDRA

JAMSHEDPUR WOMENS COLLEGE

JAMSHEDPUR WOMENS COLLEGE

TYPES OF ANALYSIS 1. EXTERNAL ANALYSIS: This is analysis based on information easily

RATIO ANALYSIS COMPARATIVE STATEMENT COMMON- SIZE STATEMENT

JAMSHEDPUR WOMENS COLLEGE

JAMSHEDPUR WOMENS COLLEGE

JAMSHEDPUR WOMENS COLLEGE

1. LIQUIDITY RATIO 2. LEVERAGE RATIO

1.TURNOVER RATIO 3. PROFITABILITY RATIO

JAMSHEDPUR WOMENS COLLEGE

177,407,69 0 95,781,200 180,907,69 961,859,765 456,082,434 0 99,281,200

49,012,501 100,000,000 - 180,000,000 1,010,872,2 180,907,69 66 736,082,434 0 99,281,200

1,026,640,7 129,976,93 22 511,962,498 8 65,904,757 80,625,948 27,803,034 10,320,566

8,246,497 708,050,70 2 31,894,568 200,967,98 267,858,178 113,602,432 2 1,388,435,6 1,216,983,9 949,159,74 61 95 9

JAMSHEDPUR WOMENS COLLEGE NET CURRENT

245,000,00 Other Operational-Incentive Other Income

Depreciation Less : Transfer from capital contribution Interest paid

52,825,170 3,699,473 49,125,697 17,631,417

4,467,180 79,984,393 199,256,298 413,874,075 613,130,373 17.45

3,067,212 101,277,649 183,240,225 177,407,690 360,647,915 523.54

1,624,190 73,905,583 111,098,070

4,100,000 25,461,915 41,678,734

JAMSHEDPUR WOMENS COLLEGE

JAMSHEDPUR WOMENS COLLEGE

Current assets Current liabilities

JAMSHEDPUR WOMENS COLLEGE

FORMULA:ACID TEST RATIO= CURRENT ASSETS - INVENTORY CURRENT LIABILITIES

JAMSHEDPUR WOMENS COLLEGE

commitment and sources for meeting this burden.

JAMSHEDPUR WOMENS COLLEGE

FORMULA:DEBT EQUITY RATIO = OUTSIDERS FUND