A

Project Report
On
Cash Flow Statement
At

                          

     SUBMITTED TO

           
 INDEX

Sr. No. particulars Page no.

1 Introduction

2 Company profile
3 Departments
4 Literature Review
5 Research Methodology
6 Theoretical Framework
7 Cash Flow Analysis
8 Findings
9 Recommendation
10 Conclusion
11Overa Bibliography
12 Appendix
 INTRODUCTION

In financial accounting, a cash flow statement or statement of cash flows is a financial

statement that shows a company's incoming and outgoing cash during a time period. All three
statements are arranged from the same accounting information, but each statement serves its
individual function. The statement of cash flow reports the movement of cash into and out of
your business in a given year. Cash is the lifeblood of your company. The cash flow statement
reports your business' sources and uses of cash and the beginning and ending values for cash
and cash equivalents each year. It also includes the combined total change in cash and cash
equivalents from all sources and uses of cash.

Cash flow statements format planning involves forecasting and tabulating all significant cash
inflows and analyzing the timing of expected payments in detail. We have highly skilled cash
flow financing professionals prepare comprehensive periodic cash flow projections that can
assist you in tasks such as budgeting, business planning and fund raising.

1 What Does Cash Flow Mean?

1. A revenue or expense stream that changes a cash account over a given period. Cash
inflows usually arise from one of three activities - financing, operations or investing -
although this also occurs as a result of donations or gifts in the case of personal finance. Cash
outflows result from expenses or investments. This holds true for both business and personal
finance.

2. An accounting statement called the "statement of cash flows", which shows the amount of
cash generated and used by a company in a given period. It is calculated by adding noncash
charges (such as depreciation) to net income after taxes. Cash flow can be attributed to a
specific project, or to a business as a whole. Cash flow can be used as an indication of a
company's financial strength.
Cash flow Plan is a range of powerful, easy-to-use software packages for preparing
comprehensive monthly cash flow projections for 12 months ahead. You can use it for cash
flow planning, budgets, business planning, fund raising etc. for young & established
businesses of all sizes and types. It incorporates a roll-forward facility to help you to speedily
update the projections every month. More powerful versions also include a tool for
consolidating projections.

Cashflow Plan will help plan your business's cash requirements, improve control over
cashflows and conserve cash resources. It will be especially useful if you need to forecast
cashflows in the context of:

1 tight cash/profit margins

2 limited financial resources

3 planning for growth or radical change

4 compiling cash budgets

5 preparing business improvement plans.

2. When to Use Cashflow Plan

Cashflow Plan is a software tool for preparing cashflow projections for a business. It will
be especially useful to your business if you need to improve its future net cashflow.
Cashflow Plan will help you to plan cash requirements and thereby improve control over your
business's cashflows and to conserve its cash resources
In addition to compiling detailed monthly cash flow forecasts, Cash flow Plan automatically
generates fully-integrated income statements (profit and loss accounts) and balance sheets
on a monthly basis. This makes Cash flow Plan very suitable for many other purposes
where you may need 12-month projections:

1 preparing shorter term business plans,

2 exploring development options,

3 constructing budgets,

4 assessing strategies,

5 raising external finance and so on ........

THE CASH FLOW STATEMENT

The cash flow statement & analysis have become so important that more extends coverage is
required. In essence cash flow statement is fund statement prepared on the basis of fund
defined in term of cash equivalent. The cash flow analysis have however been extended to
certain uses that are more or less foreign to prior fund statement usage. Usually cash flow
statement is prepared in “T” format. Cash flow statement summaries sources of cash in flow
& uses of cash out flow of the firm during a particular period of Time. The projected cash
flow statement is prepare month wise, so that it can be useful in presenting information of
excess cash in some month & shorted of cash in others. By making available such
information in advance, the cash flow statement unable the management to revise the it plans,
in the month when cash receipts are expected to be greater than such payment. Bank
overdraft can be repay, short term government security can be purchased, and cash discount
can be availed & so on. Like wise, in the month when cash payment are expected to exceed
receipt, the firm would be required to arrange for bank overdraft or sale it marketable
security.

The cash flow statement includes some important terms, which are as under ;

 “CASH” means cash balance on had & deposited with bank.

 “CASH” equivalent are short-term and mostly liquid
investment that are readily convertible in to known amount of
cash and which are subject to less risk of changes in value.
 “CASH FLOW” consist cash in flow & cash out flow of cash &
cash equivalent.
 The statement should include operating, investment & financial
activity of firm.

COMPANY PROFILE

I have take training in the SHASHI INDUSTRIES at BHAVNAGAR with intention to obtain
a practical training as a part of my syllabus. SHASHI INDUSTRIES is very well known for
its production of quality agarbattis.

Shashi industries have their 5 branches at bhavnagar and rests are at banglore.

SHASHI INDUSTRY

Opp. Darbari kothar

Selarsha road

Bhavnagar-364001

MAJA FREGRENCE

Bhavnagar.

SHASHI INDUSTRY

Banglore.

SHASHI INCENSE

Banglore.
Shashi industry is very famous in India and abroad too for its production of best quality
agarbattis. The products are known by its brand name like Maza, Denim, Ruturaj, Pavitra,
Chandan, Camay, Yes, Gulal, Rose, Tall, Mogra, etc.

Shashi industry was established in 1960. Mr. Shashibhai is the founder of the firm. the
firm was sole proprietorship till 1994. Then after it has been converted into partnership.
Mr.shashibhai vadher and his son Mr. Tusharbhai are the partners.

It also produces an electric stabilizers under the name of “TINA ELECTRONICS

PVT. LTD.”with the brand name of “Miracle” in banglore. It is producing for the first time in
India with German technologies and It has receive favourable reply of people.
Brief information about the company
Name of the company : shashi industry

Registered office : opp. Darbari kothar

Selarsha road,

Bhavnagar 364001

Phone (0278) 2430539

Fax : (0278) 2436743

Year of incorporation : 1960

Chairman : Mr. shashibhai R. Vadher

Managing director : Mr. tushar bhai S. Vadher

Corporate office : SHASHI INDUSTRY

1046,4th M’Block

80 Feet Road,

Rajai Nagar,

Banglore – 560010

TINA ELECTRONICS PVT.LTD

1st Floor, Kamakshipalya,

Ind. Estate,

Megadi Road,

Banglore -560079

Factories : SHASHI INDUSTRY

Plot No. 89 GIDC Chitra,

Bhavnagar.

MAZA FRAGRANCE PVT. LTD.

Plot No.36, GIDC Vartej,

Bhavnagar.

Auditors : M/S J.C.Rampura & Company,

Rajkot.

Bankers : State Bank Of India

Product : Incense Sticks

Accounting Year : 1st April to 31st March

Production : Manual

Total Worker : 81
Age Of Retirement : Not Fixed

Competitors : Cycle Brand Agarbattis

Banglore

Production Capacity : 20000 dozen packet per year

E-mail Address : shashiho@sancharnet.in

Website :www.incensestickindia.com

History and development of the company

The SHASHI INDUSTRY was actually found by Mr. Shashibhai Vadher and
established in 1960. at the time they were producing the “pan masala & kimam”

After a long period of time, in the year 1975 Mr. Shashibhai moved towards
producing quality agarbattis. When they selected this business, they observed that 95% of
incense sticks was covered by Bangalore, So Mr. shashibhai decided to start incense stick
business with modern attitude and introduced fancy fragrance of incense and also strategic
tricks of marketing. First they started unit at BHAVNAGAR in GUJARAT under the name of
SHASHI INDUSTRY.

Later on in 1994-95, the soleproperietorship firm converted into partnership firm. Mr.
Tusharbhai Vadher , son of Mr. Shahshibhai Vadher Joins the industry In 1994.

SHASHI INDUSTRY starts its 2nd unit at Bangalore in 1899 because of 2 reasons i.e.

1) The raw material are easily available

2) Easy to export from Bangalore.

About the Product

SHASHI INDUSTRY introduced its 1st product of incense stick named “AVON
AGRBATTI” in 1976. in a short period avon agarbatti had got a very good market,

Inspired by this popularity they launched their other products like “RUTURAJ” in 1978 and
“PAVITRA CHANDAN” in 1980 at that stage turn over was about 8 to 19 lacks.
 In 1984, they introduced “ MAJA AGARBATTI” this brand has got favourable public
response and the golden period of the company has been started, then in 1989 they introduced
“DENIM AGARBATTI”. Their another products are camay , gulal , jaipur , magnet flora ,
rose royal , kevada , shashi sugandh , etc. the products are available in different packing in
market.

Some products were dropped out because of scarcity of raw materials and chemicals
and some products are dropper out due to te change in choice and preference of consumer i.e.
Avon & voice

Structure of organisation

In shashi industries structure of organization is easy and strong in every aspect of

management. We understand the organization structure of shashi industries easily through
above under stable that can make the organization structure of shashi industries. And we can
predict the growth and development of organization depends on the financial position as well
as return on investment.
 PROCESS

To do he thing In the systematic manner is called a process. The production process of

agarbatti is listed below.
ASSORTMENT PROCESS

The manufacturing process starts with assortment of raw materials of agarbattis. It means
collection of raw incense, imported perfumes, packing etc. unskilled workers do this work if
any problem arises, the worker inform his superior.

DEEPING PROCESS
The second most important step of the process is DEEPING PROCESS. In this the bundles of
of raw materials (each bundle contains about 500gms. Agarbatti ) are deeped into a big
container, which contain perfumes, colours and other chemicals.

DRYING PROCESS

In this process the deeped agarbatti are kept in a big plate of aluminium for drying. The
agarbatti are dried for minimum 12 hours and after that the agarbattis become finished
product.

WEIGHTING PROCESS

In this fourth step , the agarbattis are weighted on electronic weight machine. The weight are
different like 20gms. , 25gms. , 3gms. , 45gms. , 75gms. , 500gms. , and also according to
number of incense sticks as per the order of customer. The maximum weight is 500gms.

PACKING PROCESS

After all it is necessary to pack that agarbatti in attractive manner. They are packing
different boxes according to its grams & flavors. For packing materials the firm has its own
press in Bombay named “MAJA Printing Press”.

QUALITY CONTROL SYSTEM

It is last but not least step, it is necessary to pass from quality control system. The supervisor
of the firm checked of the product and if the quality is not satisfactory then it will go again
for responding.

TIME KEPING SYSTEM

The time keeping system is very essential for any of he organization. In shashi industry the
accouting time is 11 a.m. to 6 p.m. There is only one shift, the timing of manager, clerk,
superviser, peon, etc. are 9 to 6 Including 1 to 2.30 break for lunch.

With the help of time keeping system they maintains register for wage and salary. If workers
come late. They will get less salary.

EMPLOYEE SERVICE

Service and benefits provided by organization to the employee play a very significant role for
motivating them to achieve their fully performance. The profit of the company also depends
upon its employees. So it is very necessary to delight the employees as they are the precious
assets for the company.

Mostly these facilities depends upon company’s internal policy.

The SHASHI INDUSTRY also provides various types of facilities to its employees are as
under.

1 HOUSING FACILITIES
This firm provides housing facilities only to its security guards and higher managerial level
employees.

2 CANTEEN FACILITIES

It also provides canteen facilities to its workers working in the factory and tea & meal facility
to its employees at a very reasonable rate.

3 MEDICAL FACILITIES

The first aid treatment at the time of accident is given to the employees. Although accident
doesn’t take place in the industry. The company also takes the insurance policy of employees.
At the time of permanent disablement and long diseases, the firm also provides medical
treatment.

4 LOAN FACILITIES

The loan facility is also provided to their employees for any important or urgent matter like
marriage, disablement of work , etc. they provide loans without charging any interest.

5 ENTERTAINMENT FACILITIES

The firm also provides some type of entertainment facility like one day picnic without taking
any charge.
 Shashi products,

 Maja


 RuturaJ

 denim
  Camay hagzagone,

This above all the products manufacture by shashi industries in vartej G.I.D.C

PRODUCTION AREA
The shashi industries involve employee are work for rapping and packaging of agarbatties in
one department and move the packaging in cartoon some other department. There are large
employment create in the society because it is pour hand work no any technical machinery is
necessary. The following image of working area of shashi industries.

So the above photo say it is pour mentally process of manufacturing of agarbatties.

There for human cooperation is most important for the smooth running of the organization.

WAREHOUSING
In shashi industries have two stored department one is general and second is special product
stored department. It is very nice bounded for the product convenience from the environment.
In vartej premises following are the area of stored department.

 Finished PRODUCT

general stored

In a general store raw material are store and keeping systematically manner.
Each and every item is marked and carried a name plat of it. And send the all goods
Ahmadabad for export as well as out side the region for selling of products.

technical stored

In shashi industries all the activity based on the hand work but the essence on agarbatties is
through the machinery techniques.
MEANING,
Human resource management means to manage the people in proper way. Human being is
most valuable assets of the organization. Therefore, any of the company recruitment and
selection of employee through eminent and expert people. Because, if wrong selection may
be create big problem for the organization.

Definition:

“Human resource management involves the task of handling the human problem
of an organization and it’s devoted to acquiring, developing, utilization, and maintaining an
efficient work force.”

In short, we can say that personnel management is based on this sentence,

“Mind your man and will mind all other things”

Each an every company has maintain separate HRM department. Shashi industries also
maintain separate personnel department for the management of human being.
  Recruitment, selection, and induction through eminent &
expert staff.
 Training and development through expert and brilliant
manager.
 Job description.
 Promotion and transfer policy.
 Performance appraisal.
 Provident fund scheme for employee and employer.
 Grievances handling procedure.
 Collective bargaining agreement.
 Trade union.
 Personnel record.

Above this all function of HRM manage by the company through expert people in the
organization hence the shashi industries running very good and smoothly in competitive
market.
MEANING
Marketing is most important function and part of the management. It is a key factor of sale of
goods and services. Nothing can be possible without marketing in any of the business field.
Each an every organization maintain the marketing department for long survival &durable in
modern business time.

Basically, marketing management is a program for analyzing planning implement and

controlling mutually desired exchange between specific persons. Marketing management
concern with product planning, development, pricing, packaging, selling, etc. it is a back born
of the company.

In shashi industries, there is a separate marketing department, which plays an important role
in the Indian fragrance market, the shashi industries currently 3rd rank in overall Indian
market for Aggarbatties and also famous in foreign market. This success is based on good and
speedy marketing of shashi industries for the product.

In currently shashi industries main focus on large marketing of product through market
research and know the actual position of product and provide satisfaction and actual
requirement of customer, and also quality of product. The shashi industries marketing involve
following step take by the company for marketing of products.

 Product planning
 Market segmentation
 Pricing policy
 Advertisement
 Sales promotion
 Channel of distribution
 Marketing research

Therefore shashi industries are prominent role play in Indian fragrance

market though it’s above marketing strategy of the organization.
 In pricing policy involve the following different price to be taken from the
customers

Name of the product weight Price

( Gram ) ( per dozen )

Ruturaj 20 44.00

Ruturaj 70 158.00

Pavitra Chandan 20 44.00

Pavitra Chandan 30 90.00

Pavitra Chandan 70 158.00

Pavitra Chandan 90 190.00

Pavitra Chandan 180 340.00

Pavitra Chandan 400 636.00

Maja 20 69,00

Maja silver pack 30 102.00

Maja 80 208.00

Maja 160 372.00

Maja hexa gonal 22 78.00

Denim 20 72.00

Denim 40 130.00

Denim 75 228.00

Denim 150 416.00

Denim hexa gonal 22 82.00

Maja Dhoop stick 10 22.00

Rose Royal 20 57.00

Rose Royal Hegza gonal 22 78.00

Rose Royal 70 170.00

yes 25 80.00

yes 75 228.00

yes hegza gonal 22 85.00

Jaipur 25 80.00

Jaipur 75 228.00

Magnet flora 22 144.00

current 5 in 1 45(stick) 120.00

Sunday to Sunday 7in1 7 (stick) 189.00

Top six (6 in 1) 506.00

super six 95.00

Tirth 25 50.00

Tirth 70 138.00

Blue bird hegza gonal 22 80.00

Affile 18 stick 72.00

Affile hegza gonal 25 88.00

Gulab 70 138.00

Gulab hegza gonal 22 80.0

Camay 20 69.00

So the above all the product manufacturing shashi industries and all the products price is
determined on the basis of market serve and consider the competitors price policy. This only
possible through marketing department and marketing department of shashi industries is very
well in Indian market and the based on good marketing they got the 3rd rank in fragrance
market of India.
 INTRODUCTION

Finance is the blood of the business. “Finance Management is that managerial activity which
is concerned with the planning and controlling of the firm’s financial resources.” Finance
management is the most important activity of the firm and it means that the firm secures
capital, if needs and employees it.

Finance management is mainly concerned with raising fund in the suitable manner using the
funds as profitably as possible, planning future operations and controlling current
performances and future developments through financial accounting, cost accounting,
budgeting and other functions.

The Finance and Accounts Department of shashi industries plant is located in the
Administration Building, which is situated outside the Plant factory gate. The Finance &
Accounts (F & A) Department is a service department and its name function is to co-ordinate
the financial activities at Plant Site. The F & A department maintain the records as required
under various statute and get the same audited by Statutory Auditors under the functional
supervision and guidance of shashi industries at Bhavnagar.
 FINANCIAL PLANNING

The planning means deciding in advance what is to be done, i.e.; plan is projected course of
action. Finance department also need planning. Financial planning is carried on for the
determination of a financial requirement for a specified period that may arise in future. This
planning is done by keeping in view the past as well as present and also future.

As far as shashi industries is concerned, there are three different types of planning based on
the time period-

Short term planning: This type of planning is done by keeping in view cash, sales, purchase,
use of funds, and preparation of cash flow statements etc.The duration of short term plan is
generally for one year.

Medium term planning: In this, company takes decisions regarding the circulating capital
i.e.; the working capital cycle to operate the business and current assets of the company. The
time limit for medium term planning is five years.

Long term planning: In this, plans about expansion, modernization, technological change
etc.are done. The duration of this is five to ten years.

In shashi industries use all techniques of finance. The industries also use the bank facilities
to managing its finance. Whenever the shashi industries require the money, they use the
finance according to their requirement it is very clear that if the shashi industries got the 3rd
rank in manufacturing of quality incense sticks their management of finance may be very
good.
 LITERATURE REVIEW

The shashi industries was very good industries since 1994 because it’s become a partnership
firm. After the company gradually increases his performance and today they got 3rd rank in
manufacturing agarbatties. So, shashi industries involve many student as well as employer
working. They say if shashi do the efficiency effort in CASH FLOW ANALYISIS in the
organization.

There for every senior and workers of the company as well as customer survey says shashi
manufacturing good quality of aggarbatties in the Indian market.

Cash management is a broad term that refers to the collection, concentration, and
disbursement of cash. It encompasses a company's level of liquidity, its management of cash
balance, and its short-term investment strategies. In some ways, managing cash flow is the
most important job of business managers.

- Tim Koller, Marc Goedhart, David Wessels. 2005

About the cash analysis we can say that it is the lifeblood of any business. In an organization
we can see many activities to get the cash from sales, debtors, sale of assets, investment etc.
like this the company spend also the cash in some areas – payment to salaries, rent dividend,
interest etc. Lastly, we can say that cash flow reveals the inflow and outflow of cash during a
particular period.

Cash flow is the difference between the amount of cash flowing in and out a company. Make
sure to consistently include the different types of cash flows.

- Keck, T., E. Levengood, and A. Longfield, 1998,

The value of the equity can be calculated by subtracting any outstanding debts from the total
of all discounted cash flows.

- Aswath Damodaran 2001 Investment Valuation

Calculating cash flows after the forecast period is much more difficult as uncertainty, and
therefore the risk factor, rises with each additional year into the future. The continuing value,
or terminal value, is a solution that represents the cash flows after the forecast period.

- Kubr, Marchesi, Ilar, Kienhuis. 1998. Starting Up. McKinley & Company
 OBJECTIVE

 To find the liquidity position of the SHASHI INDUSTRIES. For the availability of
cash and utilization of the cash by the organization.

 It will help find to assess the company's ability to generate positive cash flows in the
future

 To assess its ability to meet its obligations to service loans, pay dividends etc

 To assess the effect on its finances of major transactions in the year.

 To study the firms liquidity.

 To learn about how company manage its cash & become such well recognized
profitable industry & if there is any problem arise then what steps taken by company.

 To study the techniques used in organization.

 To study methods & techniques use for cash flow analysis.

 Meeting day to day cash requirement of firm.

 RESEARCH METHODOLGY

Research is the systematic collection, analysis and reporting of data and making relevant
finding to deal with a specific situation faced by the company. The data can be collected and
analyzed with the help of diagram and charts, which help in arriving to a conclusion.

In general sense research methodology means how to research and which best way select for
finding out data from the company during the industrial training. The main objective of the
research methodology is choosing the best path for collecting required data.

The report is on “cash flow statement” at SHASHI INDUSTRIES. The following research
methodology is being followed for the project work.

Type of data used

For the preparation of report the data used is secondary data

Data collection

The following sources of data are used for preparation of the report.

Annual report of “ SHASHI INDUSTRIES”

Website of “ SHASHI INDUSTRIES”

RESEARCH DESIGN & METHODOGY

Research design is blue print of data collection, measurement & analysis of data. It indicate
both structure of problem & plan of investigation used to obtain empirical evidence on those
relationship.

There are generally three types of research design which are as follows .

1 .EXPLORATORY STUDIES

2. DESCROPTIVE STUDIES

3. CAUSAL STUDIES

For the research design I have selected DESCRIPTIVRE STUDIES because as cash flow
analysis is topic in which there must detail description of all transaction are required to
study so that we get idea how cash is collect from various sources & utilized in organization .
Further while doing in depth study we get complete picture of process that follow in
organization.

Significant of study

Aim of work help to reach destination by problems arises in the way .work become more
efficient if purpose for doing work is clear.

Limitations:

The limitation of my research work is

1) The time available was not sufficient enough to probe deeper for a more detailed
study.
2) Limitation of the secondary data used for making the study can be considered as
limitation of the study itself.
3) Similarly, the limitation of the various tools used for analysis can be a limitation of
the study.
 THEORATICAL FRAMEWORK

Cash flow is the movement of cash into or out of a business, project, or financial product. It
is usually measured during a specified, finite period of time. Measurement of cash flow can
be used for calculating other parameters that give information on a company's value and
situation. Cash flow can e.g. be used for calculating parameters:

To determine a project's rate of return or value. The time of cash flows into and out of
projects are used as inputs in financial models such as internal rate of return and net present
value.

To determine problems with a business's liquidity. Being profitable does not necessarily mean
being liquid. A company can fail because of a shortage of cash even while profitable.

As an alternative measure of a business's profits when it is believed that accrual accounting

concepts do not represent economic realities. For example, a company may be notionally
profitable but generating little operational cash (as may be the case for a company that barters
its products rather than selling for cash). In such a case, the company may be deriving
additional operating cash by issuing shares or raising additional debt finance.

Cash flow can be used to evaluate the 'quality' of income generated by accrual accounting.
When net income is composed of large non-cash items it is considered low quality.

To evaluate the risks within a financial product, e.g. matching cash requirements, evaluating
default risk, re-investment requirements, etc.

Cash flow is a generic term used differently depending on the context. It may be defined by
users for their own purposes. It can refer to actual past flows or projected future flows. It can
refer to the total of all flows involved or a subset of those flows. Subset terms include net
cash flow, operating cash flow and free cash flow.
Statement of cash flow in a business's financials

The (total) net cash flow of a company over a period (typically a quarter or a full year) is
equal to the change in cash balance over this period: positive if the cash balance increases
(more cash becomes available), negative if the cash balance decreases. The total net cash
flow is the sum of cash flows that are classified in three areas:

1. Operational cash flows- Cash received or expended as a result of the company's

internal business activities. It includes cash earnings plus changes to working capital.
Over the medium term this must be net positive if the company is to remain solvent.
2. Investment cash flows- Cash received from the sale of long-life assets, or spent
on capital expenditure (investments, acquisitions and long-life assets).

3. Financing cash flows- Cash received from the issue of debt and equity, or paid
out as dividends, share repurchases or debt repayments.

OBJECTIVE AND IMPORTANCE OF THE STATEMENT

OBJECTIVE

The cash flow statement has become very useful in financial accounting for more than
reason. A cash flow statement provides information for planning of short term needs of the
firm. Cash flow statement highlight a changes in the financial structure of enterprises changes
in various sources of cash, debt & equity in the statement.

Cash flow statement shows from where & to what extend cash has been received from
different sources. It helps in allocation of resources in the light of the nature of cash available.

The information about the cash flow of on enterprise is useful in providing users of financial
statement with a basis to assess the ability of the utilize those cash flow. The economic
decisions that are taken by the user require an evaluation of an enterprise to generate cash and
cash equivalent and the timing and certainty of their generation.
 IMPORTANCE

 Cash flow statement helps the management in taking short term financial decision.

 It enables the management to account for situation when business has earned huge
profit yet run without money or when it has suffered a loss & still as plenty of money
at the bank.

 It gives the clear picture of cash in flow & out from the operation. It is there for, very
useful to internal financial management the possibility of retiring long term debts, in
planning replacement of plant facility or formulating dividend policy.

 Cash flow statement act like a controller for the management. A comparison of cash
flow statement of previous year with the budget for that would indicate to that extend
the resources of the enterprise where raise it & applied according to the plan which
may highlight trends of the moment of cash of the company.

 Cash flow statement is useful in evaluating financial policy & current cash position.
The cash flow statement will enable the management in planning & co-ordinate the
financial operation probably because cash flow statement is prepared on estimated
bases for the next accounting period.

 So, that the management come to know how much cash will be needed and at which
time period the recruitment of cash will be raised. What are the internal sources &
external sources of cash especially this statement is important for the preparing the
cash budget.
 HOW TO PREPARE THE CASH FLOW STATEMENT

The principal different between a fund flow statement and cash flow statement lies in amount
shows as resources provided by business operation. Other items which are to be included in
the cash flow statement are cash receipt & cash payment like issue of equity share, cash sale,
cash purchase, etc.

Normally cash flow statement is prepared annually, half, quarterly, or monthly, with the help
of two balances, one at beginning of the year & other at operation of the company. The
measurement depend upon determining cash receipt & disbursement over a given period,
where as, income is determining revenue & expenses of the given period. Therefore a number
of items appear on either the cash flow statement of the income statement but not on both.
The item, which is not related with any kind of cash out lay, will not be included in the cash
flow statement. In following way the flow of cash can be summarized.

All the increases in the current assets excluding cash & decreases in current liability, which
increases working capital and decreases in cash balance.

All decreases in the current assets excluding cash & increase in current liability, which causes
decrease in working capital and increase in cash balance.
 SOURCES AND USES OF CASH OF THE COMPANY

USES OF CASH

In SHASHI INDUSTRIES the uses of money normally uses for the payment of revenue
expenditure in form of cash. Cash payment is made here for two kinds of uses.

 CASH IN WAY OF REVENUE EXPENDITURE

 CASH FOR CAPITAL EXPENDITURE

The following are revenue expenditure for preparing a monthly cash budget of the company

 salary payment
 GEB bill payment
 Excise duty payment
 Payment of sales tax
 Raw material payment
 Container payment
 Payment of transfer of goods
 Other routine expenses
 Income tax payment

However the salary is paid to the employee by cash or cheque and all the payment to the
supplier of the goods are made as per the bill and due date of payment.

For the capital expenditure the payment is done the approval of the expenditure. Actually
major capital expenditure are made with plant expansion, process improvement, replacement
of machinery, capacity expansion etc.

SOURCES OF CASH

Normally the banks are main sources to provide required cash for the company. In cash of
cash needs of the company, they make date wise call. Money requirement is made usually
from Bangalore & sometime from local level bank. In case of urgent requirement telephonic
transfer system is used.
 COMPARISION OF CASH FLOW AND FUND FLOW STATEMENT

Fund flow statements (FFS) is prepared to show movement of funds during a period, while
the term funds used to denote net working capital (NWC). The statement has mainly two
segments –uses of funds and sources of funds. The difference between sources and uses
represent change in net working capital (NWC).

One the other hand, cash flow statement (CFS ) is prepared, in interpreting the term
funds as cash. The statement shows the sources and uses of cash and cash equivalent and
mainly it is used for short term cash planning.

Only changes in non-current items of the balance sheet appear in the body of fund flow
statement (FFS) and other changes effecting individual current assets or current liabilities do
not find place in the fund flow statement (FFS). This involves preparation of a statement of
changes in Net Working Capital.

Fund flow statement reflects the movement of changes in Net Working Capital, while
cash flow statement shows the movement in cash inflow and outflow of the company.

Fund from operation in the fund flow statement contain net profit after meeting all the
expenses as shown in profit and loss account plus non-fund expenses like depreciation.

On the other hand, cash from operation in the cash flow statement is the net profit plus non
cash expenses like depreciation, writing off bad debts, outstanding preliminary expenses, etc.
adjustments for changes in the of current assets and current liability are also made to compute
cash from operations.

Cash flow statement is useful in short-term planning for making cash budget, while
fund flow statement is useful in long-term planning to know the net working capital of the
company.

Cash flow statement, reflecting movement in cash indicates liquidity of the enterprise
and is of interest of bankers and lenders. On the other hand, fund flow statement indicates
changes in working capital which is important for internal management of the company.
 LIMITATION OF THE CASH FLOW STATEMENT

Some of the limitations of the cash flow statement are as follows:

A As the enterprise shifts from strictly cash basis, enters into credit transactions as well
takes into account prepared and accrued items, the net income no doubt would
generally represent an increase in working capital. Yet equating net income in cash
flow for such enterprise would be inaccurate and misleading since a number of non
cash items affects the net income of the firm.

B Cash flow is part of working capital. The volume of cost flowing in any part of the
system and the speed at which it flows determines the amount of capital. Tied up
sometimes in any segment of the enterprise or business. At any given time cash flow
analysis used in connection with ratio analysis provided a barometer for measuring
the aforesaid change and financing problem of the business much more manageable.

C there are two methods of cash flow statement preparation;

1) DIRECT METHOD

2) INDIRECT METHOD

Sometimes it can be possible that due to the of wrong method the accurate cash the
company can not make proper cash planning.
 Preparation methods:

The direct method of preparing a cash flow statement results in a more easily understood
report. The indirect method is almost universally used, because FAS 95 requires a
supplementary report similar to the indirect method if a company chooses to use the direct
method.

Direct method

The direct method for creating a cash flow statement reports major classes of gross cash
receipts and payments. Under IAS 7, dividends received may be reported under operating
activities or under investing activities. If taxes paid are directly linked to operating activities,
they are reported under operating activities; if the taxes are directly linked to investing
activities or financing activities, they are reported under investing or financing activities.

Indirect method

The indirect method uses net-income as a starting point, makes adjustments for all
transactions for non-cash items, then adjusts from all cash-based transactions. An increase in
an asset account is subtracted from net income, and an increase in a liability account is added
back to net income. This method converts accrual-basis net income (or loss) into cash flow by
using a series of additions and deductions.

Cash flow activities

The cash flow statement is partitioned into three segments, namely:

1) Cash flow resulting from operating activities;

2) Cash flow resulting from investing activities; and

3) Cash flow resulting from financing activities.

The money coming into the business is called cash inflow, and money going out from the
business is called cash outflow.

Operating activities
Operating activities include the production, sales and delivery of the company's product as
well as collecting payment from its customers. This could include purchasing raw materials,
building inventory, advertising, and shipping the product.

Under IAS 7, operating cash flows include

Receipts from the sale of goods or services

Receipts for the sale of loans, debt or equity instruments in a trading portfolio

Interest received on loans

Dividends received on equity securities

Payments to suppliers for goods and services

Payments to employees or on behalf of employees

Interest payments (alternatively, this can be reported under financing activities in IAS 7, and
US GAAP)

Items which are added back to [or subtracted from, as appropriate] the net income figure
(which is found on the Income Statement) to arrive at cash flows from operations generally
include:

 Depreciation (loss of tangible asset value over time)

 Deferred tax
 Amortization (loss of intangible asset value over time)

Any gains or losses associated with the sale of a non-current asset, because associated cash
flows do not belong in the operating section.(unrealized gains/losses are also added back
from the income statement)

Investing activities

Examples of investing activities are

 Purchase or Sale of an asset (assets can be land, building, equipment, marketable

securities, etc.)
 Loans made to suppliers or received from customers
 Payments related to mergers and acquisitions

Financing activities
Financing activities include the inflow of cash from investors such as banks and shareholders,
as well as the outflow of cash to shareholders as dividends as the company generates income.
Other activities which impact the long-term liabilities and equity of the company are also
listed in the financing activities section of the cash flow statement.

Under IAS 7,

 Proceeds from issuing short-term or long-term debt

 Payments of dividends
 Payments for repurchase of company shares
 Repayment of debt principal, including capital leases

For non-profit organizations, receipts of donor-restricted cash that is limited to long-term

purposes

 Items under the financing activities section include:

 Dividend paid
 Sale or repurchase of the company's stock
 Net borrowings
 Payment of dividend tax

Disclosure of non-cash activities

Under IAS 7, non-cash investing and financing activities are disclosed in footnotes to the
financial statements. Under US General Accepted Accounting Principles (GAAP), non-cash
activities may be disclosed in a footnote or within the cash flow statement itself. Non-cash
financing activities may include

 Leasing to purchase an asset

 Converting debt to equity
 Exchanging non-cash assets or liabilities for other non-cash assets or liabilities
 Issuing shares in exchange for assets
 ANALYSIS

The study of accounting is not restricted to recording of business transactions in books of

accounts and preparing necessary accounts but to analyze and interpret the financial health of
the enterprise. Analysis of financial statements reveals the underlying significance of the
items composed in them. Analysis breaks down the complex set of facts and figures in to
simple elements. Interpretation is the next step. It consists in explaining the real significance
of these statements.

Thus, the analysis of financial statement has to be undertaken to suit the purpose for which it
is required. Analysis of financial statements is undertaken with a variety of objectives like:

1) Determination of the health of the business enterprise.

2) Judging the solvency of the enterprise
3) Management can measure the operational efficiency of the Organization.
4) To know liquidity position of the organization

Many companies are interested in calculating cash flow analysis, for that personal
use and they are use number.

Management of the company would be interested in every aspect of the financial

analyses because they have responsibility to set that the resources of the firm are used more
effectively and efficiently.

The shashi industries analyses of CASH FLOW for the organization because of
knowing of cash available and utilization of the cash. And how it would be distributed among
the various expenses.

RATIO ANALYSIS

Net Profit Ratio

What Does Net profit Ratio Mean?

Net profit ratio is the ratio of net profit (after taxes) to net sales. It is expressed as
percentage.

Net profit ratio is used for knowing the profitability of the company as follows;

Net Profit Ratio : (Net profit / sales) X 100

For 2009-10

Net Profit Ratio : (Net profit / sales) X 100

= (463953 / 48814199) X 100

= 0.95

For 2010-11

Net Profit Ratio : (Net profit / sales) X 100

= (498237/ 59020214) X 100

= 0.84
INTERPRETATION:

From the above ratio we can conclude that in the year 2009-10 the net profit ratio is 0.95 and
in the year 2010-11 is 0.84 so it is greater than the current year.thus the profitability of the
firm is decreased in the current year.

Thus, the company’s efficiency is decreased in the current 2010-11 year. Company should
have to take corrective steps to take to improve the net profit ratio.
Quick ratio

What Does Quick Ratio Mean?

An indicator of a company's short-term liquidity. The quick ratio measures a

company's ability to meet its short-term obligations with its most liquid assets. The higher the
quick ratio, the better the position of the company.

The quick ratio is calculated as:

For 2009-10

= currant assets - inventory/ currant liabilities

=19604934 - 70,86,018.00 / 2,11,993.80

= 0.59

For 2010-11

= currant assets - inventory/ currant liabilities

= 78840433 - 4,16,88,768 / 2,69,493

= 0.27
INTERPRETATION:

From the above ratio we can conclude that in the year 2009-10 quick ratio is 0.59 and in
2010-11 quick ratio is 0.27. obviously it is less than the previous year. So we can say that
company effectiveness of working is decreased is in the current year.

Thus, company should have to find the reason for the decreased in the quick ratio and should
have to take corrective steps to remove it.
Current Ratio

Current ratio may be defined as the relationship between current assets and current
liabilities. This ratio is also known as "working capital ratio". It is a measure of general
liquidity and is most widely used to make the analysis for short term financial position or
liquidity of a firm. It is calculated by dividing the total of the current assets by total of the
current liabilities.

Formula:

Following formula is used to calculate current ratio:

Current Ratio = Current Assets / Current Liabilities

For 2009-10

Current Ratio = Current Assets / Current Liabilities

= 8, 40,75,290 / 2020150

= 4.16:1

For 2010-11

Current Ratio = Current Assets / Current Liabilities

YEAR 2010-11 = 9,02,82,362 / 20,32,212

= 4.46:1
INTERPRETATION:

From the above chart we can conclude that current ratio is 4.46 in the year 2009-10 and 4.16
in the year 2010-11. So it shows decreased in the current ratio. It indicates that liquidity of the
firm is decreased in the current year 2010-11 as compared to the previous year 2009-10.

Thus, the company should have to take corrective steps and find the reasons for decreased in
the current ratio.
Cash ratio

The ratio of a company's total cash and cash equivalents to its current
liabilities. The cash ratio is most commonly used as a measure of company liquidity. It can
therefore determine if, and how quickly, the company can repay its short-term debt. A strong
cash ratio is useful to creditors when deciding how much debt, if any, they would be willing
to extend to the asking party.

Formula:

Following formula is used to calculate cash ratio

Cash ratio = cash / current liability

For 2009-10

Cash ratio = cash / current liability

= 11,20,986 / 2,11,993

= 5.28

For 2010-11

Cash ratio = cash / current liability

= 2,57,13,73 / 2,69,493

= 9.54
INTERPRETATION:

From the above cash we can conclude that in the year 2009-10 the cash ratio is 5.28 and in
the 2010-11 ratio is 9.54 it shows positive ratio as compared to the previous year. It indicates
that cash balance of the company is increased about doble in the current year. It shows that
company has enough cash to compansate its short term liability.

Thus, we can say that cash ratio is higher or about double in the current year as compared to
the previous year. The company should have to increase cash ratio to pay the liability of firm.
Equity Multiplier Ratio

This ratio shows a company's total assets per Rupees of stockholders' equity. A higher equity
multiplier indicates higher financial leverage, which means the company is relying more on
debt to finance its assets.

Formula:

Following formula is used to calculate Equity multiplier ratio

Equity multiplier ratio = Total asset / Total equity

For 2009-10

Equity multiplier ratio = Total asset / Total equity

= 29359993 / 14717210

= 1.99

For 2010-11

Equity multiplier ratio = Total asset / Total equity

= 98511493 / 89721210

= 1.09
INTERPRETATION:

From the above diagram we can say that equity multiplier ratio of the firm is 1.99 in 2010-11
and 1.09 in 2009-10. Obvously, prevous ratio is higher than the current year. It indicates that
the company’s total asset per rupees of stockholder equity is less in the current year.

Thus,the company should have to find the reason behind the decreasement in th equity
multiplier ratio. And take corrective steps to improve it.
 The Miller-Orr Model

Most firms don’t use their cash flows uniformly and also cannot predict their daily cash
inflows and outflows. Mille-Orr Model helps them by allowing daily cash flow variation.

Under the model, the firm allows the cash balance to fluctuate between the upper control
limit and the lower control limit, making a purchase and sale of marketable securities only
when one of these limits is reached. The assumption made here is that the net cash flows are
normally distributed with a zero value of mean and a standard deviation. This model provides
two control limits – the upper control limit and the lower control limit as well as a return
point. When the firm’s cash limit fluctuates at random and touches the upper limit, the firm
buys sufficient marketable securities to come back to a normal level of cash balance i.e. the
return point. Similarly, when the firm’s cash flows wander and touch the lower limit, it sells
sufficient marketable securities to bring the cash balance back to the normal level i.e. the
return point.
The lower limit is set by the firm based on its desired minimum “safety stock” of cash in
hand The firm should also determine the following factors:
1. An interest rate for marketable securities, (i)
2. A fixed transaction cost for buying and selling marketable securities, (c)
3. The standard deviation if its daily cash flows, (s)

The upper control limits and return path are than calculated by the Miller-Orr Model as
follows:
Distance between the upper limits and lower limits is 3Z.

(Upper limit – Lower limit) = (3/4 C Transaction Cost C Cash Flow Variance/Interest
Rate) 1/3

Z = (3/4 C cs2/i) 1/3

If the transaction cost is higher or cash flows shows greater fluctuations, than the upper limit
and lower limit will be far off from each other. As the interest rate increases, the limits will
come closer. There is an inverse relation between the Z and the interest rate. The upper
control limit is three times above the lower control limits and the return point lies between the
upper and lower limits.

Hence,
Upper Limit = Lower Limit + 3Z
Return Point = Lower Limit + Z

So, the firm holds the average cash balance equal to:
Average Cash Balance = Lower Limit + 4/3 Z

The Miller-Orr Model is more realistic as it allows variation in cash balance within the lower
and upper limits. The lower limit can be set according to the firm’s liquidity requirement. To
determine the standard deviation of net cash flows the pasty data of the net cash flow
behaviour can be used. Managerial attention is needed only if the cash balance deviates from
the limits.
 FINDING

 Cash flow statement is prepared by receipt and payment method.

 From the balance sheet of the company we can say that reserve or provision of the
company is also good. It will consumed by the company in case of emergency.

 I found from the balance sheet of the company that mostly cash transaction is to be
done by the company.

 The ratio analysis of the company gives data that there is scarcity of the cash in the
company because quick ratio and current ratio of the firm is less as compared to the
previous year.

 Net profit Ratio of the firm is also decreased in the current year as compared to the
previous year. So we can say that profit of the company is also decreased in current
year.

 Current ratio of the company is also decreased in the current year as compared to the
previous year. it indicates that it ability to pay short term debt is less in this year 2010-
11.

 Cash ratio of the company is greater in the current year as compared to the previous
year So, Company has maintain enough cash balance in the company to pay its short
term liability.

RECOMMENDATION

After studying data analysis, I would like to suggest some points as under:

.
 1 Shashi industries should establish in every city for his own
agency for sale only aggarbatties.

2 If the company wants to maintain its position they have to advertise his product in
the market.

3 From the data available I find that firm should concentrate on the Maza product
because its sales are very high compared to other products.

4 Firm should have to expand his product for the maximization of the profit.

5 Currently, firm is running in weak position as compared to the previous year so

they have to increase the sales by taking corrective steps.
For e.g. Like advertising, some scheme giving to the buyers.

CONCLUSION

I had a great experience in taking training SHASHI INDUSTRIES Pvt. Ltd. at VARTEJ,
G.I.D.C... It is really a progressive company. On seeing its production, it is tremendous
development for any new company; from all points of view is perfect in its work of SHASHI
INDUSTRIES.
It employees around 110 workers, so from social point of view, it increases workers esteems
by giving them earnings.

The brand name “SHASHI INDUSTRIES” is now becoming house hold because it is very
easy to remember and its product quality cannot forget the name SHASHI INDUSTRIES.

All employees and management works together without any conflict and with dull
responsibility. And I give my best wishes to SHASHI INDUSTRIES to achieve more and
more success and to become world famous.

BIBLIOGRAPHY

For the information I have referred to the following books and contacts in this project and I
am including all this details from the under mentioned books as well as websites.
‫٭‬ The SHASHI story book - provided by the library

‫٭‬ Annual report of the company (2010-2010)

‫٭‬ Financial management (Prasanna chandra ,6th edition)

‫٭‬ (http://mortgageprocess.wordpress.com/2009/03/03/cash-flow-analysis-from-financial-
books/)

‫٭‬ http://www.seminarprojects.com/Forum-mba-project-ideas

APPENDIX

PROFIT & LOSS ACCOUNT FOR THE YEAR 2010-2011

 Particulars Amount
Incomes

Sales 5,90,20,214

Closing stock 88,90,020

Opening stock 55,000

Other income 2,61,000

68226234

Expenditure
Opening stock 60,20,200

Direct expenses 41,84,321

Administrative expenses 28,85,500

Selling & distribution expenses 29,97,445

Financial expenses 9,90,000

Partners payment 4,25,000

Depreciation 9,00,000

18402466

Profit 4,98,237.68

5,60,86,267.62
 Balance Sheet end of the year 2010-2011

Particulars Amount Amount

Sources of fund
partners capital 8,21,53,373

Loan funds
Secured loan 59,29,422

Unsecured loan 16,38,415 75,67,837

8,97,21,210

Application of funds
Fixed assets 1,20,64,534

Investments 76,06,526

Current assets, loans

and advances
Inventories 4,16,88,768

Sundry debtors 1,14,37,929

Cash and Bank 2,57,13,736

Loans and advances 1,14,41,929

9,02,82,362

Less: current liabilities 2,69,493

Provisions 3,63,286

Sundry debtors 1,95,99,433

2,02,32,212 7,00,50,150

8,97,21,210
 Profit & loss A/c for the year ended 2009-10
Particulars Amount
Incomes

Sales 4,88,14,199.27

Closing stock 70,86,018.00

Opining stock 34,735.00

Other income 1,51,315.00

5,56,22,314.09
5,60,86,267.62
Profit 4,63,953.53
Expenditure
Opining stock 57,31,185.00

Direct expenses 5,60,86,267.62

31,92,103.14

Administrative expenses 27,86,614.97

Selling & distribution expenses 28,95,479.25

Financial expenses 8,64,368.56

Partners payment 4,20,000.00

Depreciation 8,03,186.00

Profit before tax 3,89,29,377.17

3,89,29,377.17
 Balance Sheet end of the year 2009-10

Particulars Amount Amount

Sources of fund
partners capital 7,21,53,373.43

Loan funds
Secured loan 58,79,422.04

Unsecured loan 16,22,415.00 70,37,883.51

1,47,17,210.47
Application of funds
Fixed assets 71,11,534.05

Investments 26,43,526.00

Current assets, loans

and advances
Inventories 70,86,018.00

Sundry debtors 1,13,97,929.68

Cash and Bank 11,20,986.48

Loans and advances 14,31,929.57

2,10,36,863.73

Less: current liabilities 2,11,993.80

Provisions 3,23,286.00

Sundry debtors 1,95,39,433.51

1,60,74,713.31 49,62,150.42

1,47,17,210.47