Académique Documents
Professionnel Documents
Culture Documents
1.1) INTRODUCTION:
Financial analysis (also referred to as financial statement
analysis or accounting analysis or Analysis of finance) refers to an assessment of the viability, stability and profitability of a business, sub-business or project. It is performed by professionals who prepare reports using ratios that make use of information taken from financial statements and other reports. These reports are usually presented to top management as one of their bases in making business decisions.
Continue or discontinue its main operation or part of its business; Make or purchase certain materials in the manufacture of its product; Acquire or rent/lease certain machineries and equipment in the production of its goods;
Issue stocks or negotiate for a bank loan to increase its working capital; Make decisions regarding investing or lending capital; Other decisions that allow management to make an informed selection on various alternatives in the conduct of its business.
Page 1
3. Liquidity - its ability to maintain positive cash flow, while satisfying immediate obligations;
Both 2 and 3 are based on the company's balance sheet, which indicates the financial condition of a business as of a given point in time.
4. Stability - the firm's ability to remain in business in the long run, without having to sustain significant losses in the conduct of its business. Assessing a company's stability requires the use of the income statement and the balance sheet, as well as other financial and non-financial indicators. Etc.
Financial Statement Analysis is a very important and effective tool to the management of an enterprise. The objectives of a Financial Statement Analysis are as follows: 1. To assess the real meaning and significance of financial data as disclosed in the Financial Statements. 2. To assess the liquidity and short-term solvency position of the enterprise. 3. To assess the long-term solvency position of the enterprise. 4. To assess the present and future profitability of the enterprise. 5. To evaluate the operational efficiency of the enterprise. 6. To evaluate the managerial efficiency of the enterprise. 7. To assess the growth potentiality of the enterprise. 8. To evaluate the different activities of the concern.
P. R. Patil college of Engineering & Technology, Amravati Page 2
2. Decisions And Plans The management of the company is responsible for taking decisions and formulating plans and policies for the future. They, therefore, always need to evaluate its performance and effectiveness of their action to realise the company's goal in the past. For that purpose, financial statement analysis is important to the company's management.
3. Extension Of Credit The creditors are the providers of loan capital to the company.Therefore they may have to take decisions as to whether they have to extend their loans to the company and demand for higher interest rates. The financial
P. R. Patil college of Engineering & Technology, Amravati Page 3
4. Investment Decision The prospective investors are those who have surplus capital to invest in some profitable opportunities. Therefore, they often have to decide whether to invest their capital in the company's share. The financial statement analysis is important to them because they can obtain useful information for their investment decision making purpose.
Past Performance - Across historical time periods for the same firm (the last 5 years for example),
Future Performance - Using historical figures and certain mathematical and statistical techniques, including present and future values, This extrapolation method is the main source of errors in financial analysis as past statistics can be poor predictors of future prospects.
Comparative Performance - Comparison between similar firms. These ratios are calculated by dividing a (group of) account balance(s), taken from the balance sheet and / or the income statement, by another, for example: Net income / equity = return on equity (ROE) Net income / total assets = return on assets (ROA) Stock price / earnings per share = P/E ratio
Page 4
They say little about the firm's prospects in an absolute sense. Their insights about relative performance require a reference point from other time periods or similar firms.
One ratio holds little meaning. As indicators, ratios can be logically interpreted in at least two ways. One can partially overcome this problem by combining several related ratios to paint a more comprehensive picture of the firm's performance.
Seasonal factors may prevent year-end values from being representative. A ratio's values may be distorted as account balances change from the beginning to the end of an accounting period. Use average values for such accounts whenever possible.
Financial ratios are no more objective than the accounting methods employed. Changes in accounting policies or choices can yield drastically different ratio values.
(Fundamental analysis). Financial analysts can also use percentage analysis which involves reducing a series of figures as a percentage of some base amounts. For example, a group of items can be expressed as a percentage of net income. When proportionate changes in the same figure over a given time period expressed as a percentage is known as horizontal analysis. Vertical or common-size analysis reduces all items on a statement to a common size as a percentage of some base value which assists in comparability with other companies of different sizes. As a result, all Income Statement items are divided by Sales, and all Balance Sheet items are divided by Total Assets.
Another method is comparative analysis. This provides a better way to determine trends. Comparative analysis presents the same information for two or more time periods and is presented side-by-side to allow for easy analysis.
Page 5
Page 7
A Study of Financial Analysis of Agriculture Produce Market Committee of Amravati CHAPTER NO. 2 ORGANIAZATION PROFILE
2.1) INTRODUCTION: The Maharashtra State Agricultural Marketing Board (MSAMB), Pune was established on 23rd, March 1984, under section 39A of Maharashtra Agricultural Produce Marketing (Development & Regulation) Act, 1963. MSAMB has done pioneering work in the field of Agricultural Marketing in the State and achieved success in various areas. MSAMB is having an important role in developing and coordinating agricultural marketing system in the State of Maharashtra.
Objectives of MSAMB As per the provision of Maharashtra Agricultural Produce Marketing (Development & Regulation) Act, 1963 section 39(J), the Board shall perform the following functions and shall have power to do such things as may be necessary or expedient for carrying out these functions.
To co-ordinate the functioning of the Market Committees including programmes undertaken by such Market Committees for the development of markets and market areas.
Page 8
To undertake State level planning of the development of the agriculture produce markets.
To give advise to Market Committees in general or any Market Committee in particular with a view to ensuring improvement in the functioning thereof.
To supervise and guide the Market Committees in the preparation of plans and estimates of construction programme undertaken by them.
To make necessary arrangements for propaganda and publicity on matters relating to marketing of agricultural produce.
To grant subventions or loans to Market Committees for the purposes of this Act on such terms and conditions as it may determine.
To arrange or organise seminars, workshops, exhibitions on subject relating to agricultural marketing & giving training to members and employees of marketing committee.
To do such other things as may be of general interest relating to marketing of agricultural produce.
To carry out any other function specifically entrusted to it by this Act. To carry out such other functions of like nature as may be entrusted to it by the State Government.
Board of Directors MSAMB is committed towards smooth and orderly development of agricultural marketing in the State. The Board of Directors take all policy decisions in respect of this sphere of activity and such other important issues. The Board of Directors of the Maharashtra State Agricultural Marketing Board consists of the following members:
P. R. Patil college of Engineering & Technology, Amravati Page 9
Page 10
Amravati Division Amravati District Mr. V.J. Rane Mob-9422560817 Tel. 0721-2572178 damo_amarawati@msamb.com Akola & Washim District Mr. M.S. Gawale A.P.M.C., Akola Mob. 9405973734 Tel. 0724-2433478 Fax. 0724-2433478 damo_akola@msamb.com Buldhana District Mr.S. P. Bajare A.P.M.C., Buldhana Mob. 9049996126 Tel. 07262-242033 Fax. 07262-243822
Page 11
Page 12
Board of Directors
Class of APMC
Rate of Interest
The APMC has to submit a loan proposal along with the following documents. Loan application in the prescribed form. (Hyperlink) Loan repayment agreement. Loan hypothecation agreement & APMC Director Bodys Indemnity Bond. Sanction from competent authority for building plan & layout. Approval under section 12(1).
The necessary formats for this purpose can be downloaded from the download option. The repayment period of loan provided for the following development works is as follows. Sr.No. Development Work Repayment Period 1 Purchase of Land, Drinking water system, Auction halls, Compound, Sanitary, Computers and Weigh bridges, Roads, Shetkari niwas, Electrification, & other facilities 2 3 Traders Shops Commercial Complex 5 Years 1 Year 10 Years
Page 14
As per the provision of section 37(2) of the Act, every APMC shall, out of market fund, pay within two months, from the date of expiry of previous year, to the Marketing Board the annual contribution as fixed by the Govt. as per the above notification. During 2011-12 as per income out of 300 APMCs, contribution of 291 APMCs) was fixed to Rs.26.46 crores.
Page 15
Maharashtra is a key agricultural State accounting for 6-7% of all agricultural production in the country today. The State leads in the production of a number of crops including several fruits, vegetables, sugar, cotton, pulses etc. Agriculture is a major source of income for rural masses constituting 60-70% of the State's population. It is a major contributor to State's economy at around 25 % of the GDP. State's farmers have been quite successful and they have been consistently producing large quantities of marketable surplus. So far agriculture has been an economically viable activity in the State. However, in recent days there has been a disturbing trend with stagnation in prices for farm produce, high levels of post harvest losses and decreasing farm incomes. Under these circumstances the farmers of Maharashtra, like in rest of the country have very few options but to improve their post harvest management practices so that the present high levels of post harvest losses at 25-30% could be brought down to a reasonable level of 5% or so. And secondly they have to add value through processing to their farm produce for better remunerative prices. These steps can lead to better returns with increased market demand for agricultural produce and better chances of marketing. THE CONCEPT: The State Government has identified post harvest management, food and agro processing, agribusiness and agriculture marketing as thrust areas in the coming years. This along with an excellent response received for the consultancy services offered by the Marketing Board in the past for APMCs and the Cooperative Societies in the State, the need for enlarging the scope and range of services was considered by the Managing Director. This led to the formation of a full fledged consultancy services.The Chairman of the Board of Directors of the Maharashtra State Agricultural Marketing Board (MSAMB), the Hon'ble Minister
P. R. Patil college of Engineering & Technology, Amravati Page 16
OBJECTIVES: One of the key objectives of the MSAMB is to facilitate more efficient marketing of agricultural produce, develop agro-processing, post harvest management practices so that farmers can expect better remuneration for their farm produce. Presently the quality of consultancy services available to farmers and cooperatives in the State are not up to the mark. Besides, the consultancy fees charged are quite high at 6 to 8 %. Keeping this in mind the Consultancy Division would specialise in areas of post harvest management, agro processing and related agriculture activities including production and marketing of organic produce, animal husbandry, poultry and fisheries as per demand. The consultancy services will cover the works of preparation of project plan, evaluation of projects, continues technical guidance till completion of the project, financial planning, training of employees etc. Primary focus will be on providing technical guidance in the following types of services: 1. Project Identification 2. Concept Development
P. R. Patil college of Engineering & Technology, Amravati Page 17
BENEFICIERY: The services would be offered at a concessional /reasonable fee. The services of Consultancy Division will be available to any entrepreneur including farmers co-operatives, the APMCs, and individuals including a number of private entrepreneurs who have come forward to set up a variety of post harvest management and agro processing facilities in the State. The consultancy help would be provided to any of them who would approach the Marketing Board.
Page 18
VISHEH GHATAK YOJANA societies - Concession in above fees upto 50% + S.T. w.r.t. above PERSONNEL: The Consultancy Division has a number of experts in the field of Agriculture and Agro business and other related fields. Additional and specialised expertise as required is out-sourced from the market on a project to project basis. Besides additional expert services of Mr Milind Akare, General Manager cum Managing Director, Shri.R. S. Shingte, Nodal Officer, MACP, Shri Prakash Asthekar, Dy General Manager, MSAMB, expert in Agriculture and Cooperatives, Principal, Horticulture Training Center of NIPHT is available as required. KEY PROJECTS EXECUTED BY THE PROJECT DIVISION: 1. Conceptualization, Planning, and implementation of Basic Infrastructure Facilities such as
P. R. Patil college of Engineering & Technology, Amravati Page 19
2. Specialized infrastructure facilities like setting up of Grain cleaning and sorting facility Commercial multi commodity multi chamber Cold Storages Pre-Cooling cum Cold Storages, Onion Storage facility Model Export center. Ripening Chambers Pack House Shetkari Bazaar.
4. State level Planning: Blue print for the State for the overall development of APMCs. Conceptualization and detailed plan of an Integrated State level Marketing Infrastructure Development plan for Horticulture produce. Conceptualization of State level plans for development of marketing and agribusiness. Preparation of concept paper and study papers for the State Government from time to time.
Page 20
The consultancy division is having 5 active projects on hand valued at an estimated Rs.25000 lakhs. In these mainly projects of establishing Cold chain in the State under RKVY, Rice Mills, Dal Mill, Flour Mills, Fruits & Vegetable processing, Oil Extraction, Cold Storage projects of Co-operative Societies, chilli park and APMCs are included .Project Consultancy Division appraises project reports of the co-operative societies received from the Directorate of Marketing. About 150 appraisal reports of various co-operative societies have been submitted to the Director of Marketing.
Page 21
A Study of Financial Analysis of Agriculture Produce Market Committee of Amravati CHAPTER NO 3 RESEARCH METHODOLOGY
3.1) INTRODUCTION:. Research Methodology is process of systematic gathering, recording
and analyzing of data collected by various techniques to access the respond and accordingly prepare a report based on impact of promotional activity. It is careful investigation or inquiry especially through search of knowledge through objective and systematic method of finding solution of a problem. Thus in short the term research refers to formulating a hypothesis. The present study is based on secondary data for the facts and figures and primary data as personal interview and questionnaire. The information is taken from the News paper, books and magazines. Research problem is one which require a researcher to find out the best solution for the best solution for the given problem that is to find out by which course of action the objective can be attained optimally in context of given environment. 3.2)
PROBLEM DEFINATION:
In todays inflationary economy everybody wants to make investment. But
at the same time it is very crucial decision for a common man. Everyone generally go for investment by analyzing historical data i.e. on the basis of technical and financial analysis but there are a very few investors who consider other factors which affect the market and ultimately could affect their investment Decision. Taking in mind that, what are those other factors which could affect the investment decision and to what to extent it can affect the overall market scenario, researcher going for this research. The study is entitled to A study of financial analysis of Agriculture produce Market Committee of Amravati
P. R. Patil college of Engineering & Technology, Amravati Page 22
3.4) RESEARCH DESIGN:The research design will be Descriptive research design it is the plan structure and strategy of investigation conceived so as to obtained answer to research question and research design is the specification of method and procedure for acquiring the information needed. Data means information required in the research. There are two types of data sources, which have been helpful to carry out the research these are as follows:
a) Primary data Primary data are those, which are collected a fresh and for the first time. Primary data was collected through questionnaires & Interview schedule. b) Secondary data Secondary data are those, which have already been collected by publication of Governments, Periodicals of organization, newspaper, books, & internet etc.
Page 23
Page 24