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A STUDY ON FINANCIAL PLANNING AND FINANCIAL FORECASTING IN M/S YAHOO SOFTWARE DEVELOPMENT INDIA PVT LTD, BANGALORE PROJECT REPORT SUBMITTED TO SCHOOL OF MANAGEMENT STUDIES INDIRA GANDHI NATIONAL OPEN UNIVERSITY MAIDAN GARHI, NEW DELHI IN PARTIAL FULFILMENT OF THE REQUIREMENT FOR THE DEGREE OF MASTER OF BUSINESS ADMINISTRATITON- FINANCE SUBMITTED BY ANANTH KUMAR. D (MP 072373198) UNDER THE GUIDANCE OF Prof.K.M. MAHADEVAPPAA, MA, MBA (FIN), MBA (HR) LL.B. PrePhD ACADEMIC COUNSELOR, IGNOU, BANGALORE

CERTIFICATE OF ORIGINALITY

This is to certify that the project titled A Study on Financial Planning and Financial Forecasting in M/s Yahoo Software Development India Pvt Ltd, Bangalore is a bona-fide and original work of the student and is being submitted in partial fulfillment for the award of the Masters degree in Business Administration of Indira Gandhi Open University. This report has not been submitted earlier either to this University or to any other University/Institution for the fulfillment of the requirement of a course of study.

K.M.MAHADEVAPPAA ANANTHKUMAR D Guide

Signature of Project Signature of Student

Place: Bangalore Bangalore 26 March 2012

Place: Date: 26 March 2012

ACKNOWLEDGEMENT

I sincerely feel that the credit of the project work could not be narrowed down to only one individual, as the work is the outcome of wholehearted cooperation from many persons. With their guidance and support, I was able to bring out this project report. I am thankful to the management for providing me an opportunity to do this project. I heartily thank the Officers and employees of M/s Yahoo Software Development India Pvt Ltd, Bangalore, for providing me an opportunity to do the project in their company. I earnestly thankful to Sri K.A.Upadhyaya, Senior Finance Manager and all the Departments of the company for their constant support and cooperation during the course of the project and for providing me their valuable time and information for completing my project despite their busy schedules.

4 Last but not the least, I would like to express my sincere thanks to those known and unknown people who helped me by any means.

Place: Bangalore ANANTHKUMAR D Date 13 February 2012

TABLE OF CONTENTS

Chapte r 1

Particulars

Page No.

INTRODUCTION TO FINANCE MANAGEMENT 2 CONCEPTS OF FINANCE MANAGEMENT 3 ORGANISATION PROFILE 4 DATA ANALYSIS AND INTERPRETATION 5 CONCLUSION 6 SUGGESTIONS AND RECOMMENDATIONS

7 ANNEXURE - QUESTIONNAIRE 8 BIBLIOGRAPHY / WEB SITES REFERRED

1.1 Finance A concept It would be worthwhile to recall what Henry Ford once remarked: "Money is an arm or a leg. You either use it or lose it". This statement though apparently simple, is quite meaningful. It brings home the significance of money or finance. In the modern moneyoriented economy finance is one of the basic foundations of all kinds of economic activities. It is the master key which provides access to all the sources for being employed in manufacturing and merchandising activities. The Sanskrit saying "arthah sachivah" which means "finance reigns supreme", speaks volumes for the significance of the finance function of an organization. It has rightly been said that business needs money to make more money. However, it is also true that money begets more money, only when it is properly managed. Hence, efficient management of every business enterprise is closely linked with efficient management of its finances. In conclusion we can say that Finance is regarded as "The life blood of a business enterprise". "Finance is the backbone of every business". 1.2 Meaning of Business Finance

6 Business Finance is that business activity which is concerned with the acquisition and conservation of capital funds in meeting financial needs and overall objectives of a business enterprise.

1.3 Meaning of Financial Management Financial management is broadly concerned with the acquisition and use of funds by a business firm. Its scope may be defined in terms of the following questions. How large should the firm be and how fast should it grow? What should be the composition of the firms assets? What should be the mix of the firms financing? How should the firm analyze, plan and control its financial affairs? The entire gamut of managerial efforts concerned with raising of funds at optimum cost and their effective utilization with a view to maximize the wealth of the shareholders. Financial management is concerned with the efficient use of an important economic resource; namely, capital funds. Thus, Financial management includes Anticipating Financial Needs, Acquiring Financial Resources and Allocating Funds in Business (i.e, Three As of financial management).

Figure 1.1: Framework of Financial Management

1.4 Importance of Financial Management Financial Management is indeed the key to successful business operations. Without proper administration and effective utilization of finance, no business enterprise can utilize its potentials for growth and expansion. The importance of financial management can be ascertained from the study of the following points: 1. Successful promotion: Successful promotion of a business concern depends upon efficient financial management. If the plan adopted fails to provide adequate capital to meet the requirements of fixed and working capital and particularly the latter, the firm cannot

8 carry on its business successfully. Therefore, sound financial planning is quite essential for the success of a business firm. 2. Smooth Running: Since finance is required at each stage of the business such as promotion, incorporation, development, expansion and management of day-to-day expenses, proper financial administration becomes necessary for the smooth running of a business enterprise. 3. Decision making: Financial management provides scientific analysis of all facts and figures through various financial tools such as ratio analysis, variance analysis, budgets etc., Such an analysis helps the management to evaluate the profitability of the plan in the given circumstances so that a proper decision can be taken to minimize the risk. 4. Solutions to Financial Problems: The efficient Financial Management helps the top management by providing solutions to the various financial problems faced by it. 5. Measure of performance: Financial Management is considered as a yard stick to measure the performance of the firm. The importance of Financial Management in an enterprise may very well be realized by the following words: Financial Management is properly viewed as an integral part of overall management rather than as a staff speciality concerned with fund raising operation. In addition to raising funds, financial management is directly concerned with production, marketing and other functions within an enterprise whenever decisions are made about the acquisition or distribution of assets.

9 Thus, financial management has attained a good deal of importance in modern business. 1.5 Scope and Functions of Financial Management The approach to the scope and functions of financial management is divided, in order to have a better exposition, into two broad categories. a) Traditional Approach b) Modern Approach Traditional Approach: The traditional approach, which was popular in the early stage, limited the role of financial manager to raising and administering of funds needed by the corporate enterprises to meet their financial needs. It deals with the following aspects: i) Arrangement of funds from financial institutions ii) Arrangement of funds through financial instruments like share, bonds etc., iii) Looking after the legal and accounting relationship between a corporation and its sources of funds. Thus, the finance manager had a limited role to perform. He was expected to keep accurate financial records, prepare reports on the corporations status and performance and manage cash in a way that the corporation was in a position to pay its bills in times. The term Corporation Finance was used in place of the present term Financial Management. The traditional approach to the scope of the finance function evolved during the 1920s and 1930s dominated the academic thinking during the forties and through the early fifties. It has now been discarded as it suffers from serious limitations. Following are the main limitations.

10 a) External Approach: The approach treated the subject of finance only from the view point of suppliers of funds, i.e., outsiders, viz., bankers, investors etc., It followed an outsiderlooking-in approach and not the insider-looking-out approach. Since it completely ignored the view point of those who had to take internal financing decisions. b) Ignored routine problems: The subject of financial management was mainly confined to the financial problems arising during the course of incorporation, mergers etc, and the subject did not give any importance to day-to-day financial problems of business. c) Ignored non-corporate enterprise: The approach focused mainly on the financial problems of corporate enterprises. d) Ignored working capital financing: The problems relating to financing short term or working capital were ignored in the approach. The approach focused mainly on the problems of long term financing. e) No Emphasis on allocation of funds: The approach confined financial management only to procurement of funds. It did not emphasis on allocation of funds. The conceptual framework of the traditional treatment ignored what Solomon aptly describes as the central issues of financial management. These are: i) Should an enterprise commit capital funds to certain purposes? ii) Do the expected returns meet financial standards of performance?

11 iii) How should these standards be set and what is the cost of capital funds to the enterprise? iv) How does the cost vary with the mixture of financing methods used? In the absence of the coverage of these crucial aspects, the traditional approach implied a very narrow scope for financial management. The modern approach provides a solution to these shortcomings. Modern Approach: According to modern approach the term financial management provides a conceptual and analytical framework for financial decision-making. That means, the finance function covers both acquisition of funds as well as their allocation. The new approach views the term financial management in a broader sense. It is viewed as an integral part of over-all management. The new approach is an analytical way of viewing the financial problems of a firm. The main contents of the modern approach are as follows: i) What is the total volume of funds an enterprise should commit? ii) What specific assets should an enterprise acquire? iii) How should the funds required be financed? Thus, financial management, in the modern sense of the term, can be divided into four major decisions as functions of finance. They are: i) The investment decision ii) The financing decision

12 iii) The dividend policy decision iv) The funds requirement decision. The functions of financial management may be classified on the basis of Liquidity, Profitability and Management. 1. Liquidity: It is ascertained on the basis of three important considerations. a) Forecasting cash flows i.e., matching the inflows against cash outflows. b) Raising funds i.e., financial manager will have to ascertain the sources from which funds may be raised and the time when these funds are needed. c) Managing the flow of internal funds 2. Profitability: While ascertaining profitability, the following factors are taken into account. a) Cost control b) Pricing c) Forecasting future profits d) Measuring cost of capital 3. Management: Asset management has assumed an important role in financial management. It includes: (a) The management of long term funds. (b) The management of short term funds. Apart from the above main functions, following subsidiary functions are also performed by the finance.

13 1.6 Functional Areas of Modern Financial Management As Modern Financial Management performs several functions, it is difficult task to identify the functional areas of modern financial management. However, we can list out the following important functional areas of modern management.

Key Activities of Financial Management: The three broad activities of financial management are: (a) financial analysis; planning and control (b) management of firms asset structure and (c) management of the firms financial structure. Figure 1.2 shows how these activities are related to the balance sheet of the firm.

14 Figure 1.2: Key Activities of Financial Management 1.7 Organisation of the Finance Functions Like any other functional management in a firm finance is a vital functional organ of the firm. If finance function does not operate well, the whole organizational activity will be ruined. So inefficient financial management paralyses the activity of the firm. That is why every company will have a separate department to look after the financial aspects of the company. The finance function can be broadly classified into two parts. Routine financial matters like custody of cash and bank accounts, collection or loans, payment of cash etc. Special financial functions like financial planning and budgeting, profit analysis, investment decisions etc. These two functions can be looked after by two executives and ultimately by the top management. Routine matters are looked after by the "Treasurer" and special matters are managed by the "Controller of Finance". The following chart will give an idea about the finance department.

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Figure 1.3: Organisation of the Finance Function Table 1.1: Functions of the Treasurer and the Controller

16 1.8 The Financial Management Process

Model of the financial management process is presented in Figure 1.4 1. Financial Analysis: This is the preliminary, diagnostic stage and will include: a financial analysis and review to determine the current financial performance and condition of the business; an identification of any particular financial problems, risks, constraints or limitations; and an assessment of financial Strength, Weaknesses, Opportunities and Threats (a financial SWOT analysis). 2. Financial Decision-Making: Based on the findings of the review stage, financial decisions and choices will have to be made. These are likely to include strategic investment decisions, such as investing in new production facilities or the acquisition of another company and strategic financing decisions, for example, the decision to raise additional long-term loans. 3. Financial Planning: The essence of financial planning is to ensure that the right amount of funds is available at the right time and at the right cost for the level of risk

17 involved to enable the firms objectives to be achieved. Budgeting will be a key financial planning tool. The efficiency and effectiveness of the financial planning process will be greatly aided by the application of computerized financial modeling. 4. Financial Control: The final stage of the process will require throughout the organization. This is to ensure that plans are properly implemented, that progress is continually reported to management, and that any deviations from plans are clearly identified. 1.9 Financial Decisions The important financial decisions to be taken by the manager are as follows: 1. Investment Decisions: This is concerned with the allocation of capital. It has to show the funds can be invested in assets which would yield benefit in future. This is a decision based on risk and uncertainty. Finance manager has to evaluate the investment in relation to their expected return and risk to determine whether the investment is feasible or not. Besides the financial manager is also entrusted with the management of existing assets. The whole exercise is called "Capital Budgeting". This was the first technique developed in financial management. This technique helps to know Net Present Value of assets. To have a more profitable investment, the companies can think of amalgamations and mergers internally and externally. That is why we have seen the emergence of multinational companies. 2. Finance Decisions: This decision is concerned with the mobilization of finance for investment. The finance manager has to take decisions regarding the acquisition of finance.

18 Whether entire capital required should be raised in the form of equity capital, or the amount should be borrowed totally or a balance should be struck between equity and borrowed capital has to be decided. Even the timing of acquisition of capital should also be perfectly made. While determining the ratio between debt and equity, the finance manager should ascertain the risk involved in obtaining each type of capital. Thus determining the best "Finance Mix" is another important task of the finance manager. The best capital structure will always ensure wealth maximization. 3. Dividend Decision: This decision is concerned with the divisible profits of the company. i) How much profit is to be flown back by capitalization? ii) How much cash dividend should be paid to the shareholders? iii) Maintenance of stable dividend rate over the period, are some of the issues connected with this decision. The dividend decision involves the determination of the percentage of profit earned by the enterprise which is to be paid to its shareholders. The dividend pay out ratio must be evaluated in the light of the objective of maximizing shareholders wealth. Thus, the dividend decision has become a vital aspect of financing decision. 4. Current Assets Management: The finance manager should also manage the current assets to have liquidity in the business. Investment of funds in current assets reduces the profitability of the firm. However the finance manager should also equally look after the

19 current financial needs of the firm to maintain optimum production. While investing funds in current assets, he must see that proper balance (trade off) is maintained between the profitability and liquidity. Every financial decision involves this trade off. At this level the market value of the companys shares would be the maximum.The inter-relationship between market value, financial decisions, risk-return and trade off is depicted in the chart.

Fig. 1.5: Decisions, Return, Risk and Trade off. In conclusion we can say that to maximize the wealth of the owners, the finance manager has to take carefully the decisions relating to (i) Investment (ii) Dividend (iii) Financing and (iv) Current Assets. 1.10 Objectives of Financial Management (Profit-Maximization V/s Wealth Maximization)

20 The objectives of financial management can be broadly classified into two categories: 1. Basic Objectives 2. Other Objectives 1. Basic Objectives: Traditionally the basic objectives of financial management have been (A) Maintenance of liquid assets and (B) Maximization of profitability of the firm. However, these days there is a greater emphasis on (C) Shareholders wealth maximization rather than on profit maximization. (A) Maintenance of Liquid Assets: Financial management aims at maintenance of adequate liquid assets with the firm to meet its obligations at all times. However investment in liquid assets has to be adequate - neither too low nor too excessive. The finance manager has to maintain a balance between liquidity and profitability. (B) Maximization of Profit: "Profit maximization" is a term which denotes the maximum profit to be earned by an organisation in a given time period. The profit -maximization goal implies that the investment, financing and dividend policy decisions of the enterprise should be oriented to profit maximization. The term "Profit" can be used in two senses- one as the owner-oriented concept and the other as the operational concept. Profit as the owner-oriented concept, refers to the amount of net profit which goes in the form of dividend to the shareholders. Profit as the operational concept means profitability which is an indicator of economic efficiency of the enterprise.

21 Profitability-maximization implies that the enterprise should select assets, projects and decisions which are profitable and reject those which are not profitable. It is in this sense that the term profit-maximization is used in financial management. Merits of the Profit-Maximization: 1. Best Criterion of Decision-Making: The goal of profit maximization is regarded as the best criterion of the decision making as it provides a yard-stick to judge the economic performance of the enterprise. 2. Efficient Allocation of Resources: It leads to efficient allocation of scarce resources as they tend to be diverted to those uses which, in terms of profitability, are the most desirable. 3. Optimum Utilization: Optimum utilization of available resource is possible. 4. Maximum Social Welfare: It ensures maximum social welfare in the form of maximum dividend to shareholders, timely payments to creditors, higher wages, better quality and lower prices, more employment opportunities to the society and maximization of capital to the owners. However, the profit-maximization objective suffers from several drawbacks which are as follows: 1. Time Factor Ignored: The term Profit does not speak anything about the period of profit- whether it is short-term profit or long-term profit.

22 2. It Is Vague: The term Profit is very vague. It is not clear in what exact sense the term profit is used. Whether it is Accounting profit or Economic profit or profit after tax or profit before tax. 3. The Term Maximum is also Ambiguous: The term maximum is also not clear. The concept of profit is also not clear. It is therefore, not possible to maximize what cannot be known. 4. It Ignores Time Value: The profit maximization objective fails to provide any idea regarding the timing of expected cash earnings. The choice of a more worthy project lies in the study of time value of future inflows of cash earnings. It ignores the fact that the rupee earned to day is more valuable than a rupee earned later. 5. It Ignores the Risk Factor: According to economists, profit is a reward for risk and uncertainty bearing. It is also a dynamic surplus or profit is a reward for innovation. But when can the organization maximize profits ? Profit-maximization objective does not make this clear. B) Wealth Maximization: It is now widely and universally accepted that the objective of the enterprise should be suitable and operationally feasible, precise and clear cut and should give weightage to time value and risk factors. Owing to the various drawbacks of the profit maximization objective, Professor Ezra Solomon rejected it as inappropriate and unsuitable and suggested the adoption of wealth-maximization objective which removes all the drawbacks of the profit maximization objective.

23 Wealth-maximization is also called value-maximization. The wealth or net present worth of a course of action is the difference between gross present worth and the amount of capital investment required to achieve the benefits. Gross present-worth represents the present value of expected cash benefits. In simple, wealth-maximization means maximizing the present value of a course of action (i.e. NPV= GPV of benefits -Investment). Any financial action which results in positive NPV, creates and adds to the existing wealth of the organization and the course of action which has a negative NPV, reduces the existing wealth and hence be given up. All positive actions can be adopted as they add to the existing wealth and help in wealth maximization. Significance of Wealth - Maximization: The Company although it cares more for the economic welfare of the shareholders, it cannot forget the others who directly or indirectly work for the overall development of the company. Thus wealth -maximization takes care of 1. Lenders or creditors 2 Workers or Employees 3 Public or Society 4 Management or Employer 2. Other Objectives: Besides the above basic objectives, the following are the other objectives of financial management.

24 Ensuring a fair return to shareholders Building up reserves for growth and expansion Ensuring maximum operational efficiency by efficient and effective utilization of finance Ensuring financial discipline in the management 1.11 Methods of Financial Management The term Financial Method or Financial Tool refers to any logical method or technique to be employed for the purpose of accomplishing the following two goals: a. Measuring the effectiveness of firms action and decisions b. Measuring the validity of the decisions regarding accepting or rejecting future projects Following are the important financial tools or methods used by financial manager in performance of his job: 1. Cost of Capital: Cost of capital helps the finance manager in deciding about the sources from which the funds are to be raised. In case of different sources of finance viz, shares, debentures, loans from financial institutions, banks, public deposits etc., the financial manager takes into account the cost of capital and opts for that source which is the cheapest to him. The cost of capital is also taken into account for determining the optimum capital structure.

25 2. Trading on Equity: Trading on equity is another tool which helps the finance manager in increasing the return to equity shareholders. 3. Capital Budgeting Appraisal - method such as payback period, average rate of return, internal rate of return, net present value, profitability index etc, help the finance manager in selecting the best among alternative capital investment proposals. 4. Ratio Analysis-is another method for evaluating different aspects of the firm. Different ratios serve different purposes. 5. Abc Analysis, cash management models, debtors turnover ratio etc, help the finance manager in effective management of current assets. 6. Funds Flow Analysis and Cash Flow Analysis: This technique helps the financial manager in determining whether the funds have been procured from the best available source and they have been utilized in the best possible way. Projected funds flow analysis and projected cash flow analysis help the finance manager in estimating or arranging for the future working capital or cash needs. 1.12 Financial Management and other Disciplines The study of financial management as a totally independent subject is relatively recent, its roots tracing back to the turn of this century. It draws heavily on related disciplines and fields of study. The most important of these are Accounting and Economics; in the latter discipline, macro-economics and micro-economics are of special significance. Marketing,

26 Production and the study of Quantitative methods also have an impact on the financial management field. Accounting: Financial managers play a game of managing a firms financial and real assets and securing the funding needed to support these assets. Financial managers often turn to accounting data to assist them in making decisions. Financial managers are primarily concerned with a firms cash flows, because they often determine the feasibility of certain investment and financing decisions.

Table 1.2 - Financial Management V/s Financial Accounting

Economics: There are two areas of economics with which the financial manager must be familiar: micro-economics and macro-economics. Micro-economic deals with the economic decisions of individuals and firms, whereas macro-economics looks at the economy as a whole. Marketing, Production & Quantitative Methods: Figure 1.6 depicts the relationship between financial management and its primary supportive disciplines. Marketing, Production and Quantitative methods are indirectly related to the key day-to-day decisions made by financial managers. For example, financial

27 manager should consider the impact of new product development and promotion plans made in the marketing area, because these plans will require capital outlay and have an impact on the firms projected cash flows. Similarly, changes in the production process may necessitate capital expenditures, which the firms financial managers must evaluate and then finance. And, finally, the tools of analysis developed in the quantitative methods area frequently are helpful in analyzing complex financial management problems.

Figure 1.6: Impact of other Disciplines on Financial Management

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CHAPTER 1

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INTRODUCTION TO FINANCE MANAGEMENT

CHAPTER 1 Introduction to FINANCIAL MANAGEMENT FINANCIAL MANAGEMENT Financial Management is one of the key disciplines necessary for the successful management of business corporations and other

organizations. Financial Management practices allow students to understand and explain the financial behaviors of corporations and other organizations.

30 An understanding of the practices of Financial Management equips students with the knowledge and understanding necessary to apply this knowledge to real-life business situations. In an organization financial management is split into its two principal roles. These are the accounting function, usually under the direction of the financial controller, and the corporate finance function directed by the treasurer. Accounting is concerned with the provision and

interpretation of information for economic decision making. Accounting is itself split between management accounting - the internal facing function - which services the information needs of the organizations management and financial accounting - the external facing, highly regulated, function - which provides information for investors, the general public, regulatory bodies etc. The corporate finance function is concerned with managing the finances of the organization and is involved in cash management, asset allocation, capital structuring and financial risk management in areas such as interest rates, foreign currency exchange rates and commodity trading. The program is structured so that students specialize through courses within choices including advanced corporate finance, advanced finance theory, behavioral finance and market anomalies, derivatives,

investment management, public sector financial management. 2. THEORETICAL BACKGROUND

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Financial management is that managerial activity which is concern with the planning and controlling of the firms financial resources. It was a branch of Economics till 1980 and then separate decline or activity it is of recent origin. The subject of the financial management and practicing managers. It is of great interest to academic and because the subject is still developing and then are still certain areas where a controversy exists for which no unanimous solutions have been reached it. Practicing managers are interested in this subject because among the most critical decisions of the firm are those which relate to finance, and

understanding of the theory of financial management provides them conceptual and analytical insights to make those decisions skillfully. Financial management concerned with those managerial decisions which results in acquisition and financing of long term assets of firm. If specific, liabilities are also with the trouble of size and growth of an enterprise. An analysis of these decisions is based upon expected inflow and outflow of fund therein.

Financial Management can be defined as:

32 The management of the finances of a business / organization in order to achieve financial objectives Taking a commercial business as the most common organizational structure, the key objectives of financial management would be to: Create wealth for the business Generate cash, and Provide an adequate return on investment bearing in mind the risks that the business is taking and the resources invested There are three key elements to the process of financial management:

(1) Financial Planning Management need to ensure that enough funding is available at the right time to meet the needs of the business. In the short term, funding may be needed to invest in equipment and stocks, pay employees and fund sales made on credit. In the medium and long term, funding may be required for significant additions to the productive capacity of the business or to make acquisitions.

33 (2) Financial Control Financial control is a critically important activity to help the business ensure that the business is meeting its objectives. Financial control addresses questions such as: Are assets being used efficiently? Are the businesses assets secure? Do management act in the best interest of shareholders and in accordance with business rules? (3) Financial Decision-making The key aspects of financial decision-making relate to investment, financing and dividends: Investments must be financed in some way however there are always financing alternatives that can be considered. For example it is possible to raise finance from selling new shares, borrowing from banks or taking credit from suppliers A key financing decision is whether profits earned by the business should be retained rather than distributed to shareholders via dividends. If dividends are too high, the business may be starved of funding to reinvest in growing revenues and profits further.

34 FUNCTIONAL AREA OF FINANCIAL MANAGEMENT Determining financial needs Determining source of funds Financial analysis Optimal capital structure Cost volume profit analysis Profit planning and control Fixed assets management Profit planning evaluation Capital budgeting Working capital management Dividend policy Acquisition and Mergers Corporate taxation Financial Planning and Forecasting Prepared by: Matt H. Evans, CPA, CMA, CFM Introduction Financial planning is a continuous process of directing and allocating financial resources to meet strategic goals and objectives. The output from financial planning takes the form of budgets. The most widely used form of budgets is Pro Forma or Budgeted Financial Statements. The foundation for Budgeted Financial Statements is Detail Budgets. Detail Budgets include sales forecasts, production forecasts, and other estimates in support of the

35 Financial Plan. Collectively, all of these budgets are referred to as the Master Budget. We can also break financial planning down into planning for operations and planning for financing. Operating people focus on sales and production while financial planners are interested in how to finance the operations. Therefore, we can have an Operating Plan and a Financial Plan. However, to keep things simple and to make sure we integrate the process fully, we will consider financial planning as one single process that encompasses both operations and financing. Financial Planning starts at the top of the organization with strategic planning. Since strategic decisions have financial implications, we must start our budgeting process within the strategic planning process. Failure to link and connect budgeting with strategic planning can result in budgets that are "dead on arrival." Strategic planning is a formal process for establishing goals and objectives over the long run. Strategic planning involves developing a mission statement that captures why the organization exists and plans for how the organization will thrive in the future. Strategic objectives and corresponding goals are developed based on a very thorough assessment of the organization and the external environment. Finally, strategic plans are implemented by developing an Operating or Action Plan. Within this Operating Plan, we will include a complete set of financial plans or budgets.

36 Financial Plans (Budgets) Operating Plan Strategic Plan

CHAPTER 2 CONCEPTS OF FINANCE MANAGEMENT

To start a business or expand the existing business. We have a great

37 idea, super attitude and the entrepreneurial spirit. So you head down to your local bank or financial institution; you sit down in front of the credit manager and start to explain this brilliant idea when she interrupts us: That sounds great, but where is our business plan? This scenario is played out every day in Canada people with ideas who want to plunge into business without having done a business plan. The purpose of this guide is to explain in simple terms the business plan concept and to show you how to put your own plan together. A Start-Up Guide leads entrepreneurs through the business planning process. By describing everything from Vision and Mission to Operational Strategies, the Guide provides an easy to read description of your new business concept. The affiliated Financial Planning Template helps entrepreneurs assemble their Starting

38 Balance Sheet, Pro-Forma Income Statement and first year Cash Flow Forecast.

The Financial Plan Introduction The financial plan is critical to the success of your business plan especially if it is for the purpose of getting a bank loan. The Cash Flow Forecast is arguably the most important part of the plan, but each of the other documents is important from a planning perspective. There are three sections in a financial plan: The Starting Balance Sheet The Pro-Forma (or Forecast) Income Statement The Cash Flow Forecast (each of these sections should have notes of explanation for the reader).

The Financial Planning Template To assist you in this process, we have created a template written for MS/Excel. Click here to access the template. This will take you through seven worksheets, each

39 asking for financial information. This information is then assembled into the three statements described above. Information can be changed, and the results of the change are immediately calculated. This will take you to a reasonable first draft of your financials but you will have to make some final adjustments for your particular situation. If you are using a printout of this guide you can find the Excel template under http://www.cse.gov.bc.ca/ReportsPublications/FinancialTemplate.XLT.

It is almost impossible to get things right the first time. In all business planning, but especially in the financial section, it is important to try different scenarios. What if I purchase used equipment instead of new equipment? What if I raise or lower prices? What if I reduce my personal draw? By trying different scenarios, you will soon determine what it will take to make your business financially viable.

40 With business planning, you must keep trying until you have a result that is reasonable and that you are convinced is achievable.

Five Tips on your Financial Plan

1. Be persistent! Most people do not have expertise in finance so preparing a financial plan is a journey into the unknown. Be patient.

2. Read the entire planning guide before starting on the plan. You will learn what information you require to assemble the financial part of the plan.

3. Get help in assembly, but not in research. These should be your numbers and assumptions. You will be responsible for achieving these objectives so you should believe in the numbers.

4. Be consistent. Make sure that your financial plan is consistent with the rest

41 of the business plan. For example, if your pricing section mentions a margin of 40%, this should be reflected in your Income Statement.

5. Use the simple template provided. Although it will not provide a final plan, it will get you well on your way in the journey

Calculating The Break-even

The break-even point in your business is the point at which your sales revenue equals your total expenses. At that point you neither make money, nor do you lose any. The break-even lets you know what it is going to take in sales just to survive. It provides a good indication of the viability of a business project. The break-even can also be used to evaluate a business expansion or any other business expenditure. You are simply asking how much additional revenue will be required to cover the additional cost. There are some key definitions necessary to

42 determine the break-even for the business.

They are: Fixed Costs (Overhead) are costs that do not vary directly with sales. Utilities, salaries, advertising, office supplies and telephone are just a few examples. They do not have to be the same every month. What is important is that you pay them regardless of sales made.

Variable Costs (Cost of Goods) are the actual costs of making the product or providing the service. They can include materials, shipping and contract labour.

Capacity governs your output. It can be measured in units of production,

43 billable hours, or sales volume. To calculate the break-even in units we use the following formula: Fixed Cost = Break-even in Units

(Unit Price Unit Cost)

This method is known as Total Absorption Costing, because dividing the total cost by the units sold absorbs the fixed costs. Every business plan be it for growth or for start-up needs to establish project and business costs before proceeding. Note: For planning purposes treat the entire term loan payment, both principal

Additional Concepts in Budgeting

So far, we have emphasized simple approaches to preparing budgets, such as looking at relationships between account balances and sales. We also should have a clear understanding of past financial performance to help us

44 predict future financial performance. Extending past trends and adjusting for what is expected is a common approach to preparing a forecast. However, we can improve forecasting by using several techniques. The first step is recognize certain fundamentals about forecasting:

1. Forecasting

relies

on

past

relationships

and

existing

historical

information. If these relationships change, forecasting becomes increasingly inaccurate. 2. Since forecasting can be inaccurate due to uncertainty, we should consider developing several forecast under different scenarios. We can assign probabilities to each scenario and arrive at our expected forecast. 3. The longer the planning period, the more inaccurate the forecast. If we need to increase reliability in forecasting, we should consider a shorter planning period. The planning period depends upon how often existing plans need to be evaluated. This will depend upon stability in sales, business risk, financial conditions, etc. 4. Forecasting of large inter-related items is more accurate than forecasting a specific itemized amount. When a large group of items are forecast together, errors within the group tend to cancel out. For example, an overall economic forecast will be more accurate than an industry specific forecast.

45

Quantitative and Qualitative Techniques

You should forecast for a specific reason - to help make better decisions. Forecasting is extremely difficult and you must pull from all relevant sources. We previously discussed the Percent of Sales Method and Trend Analysis as a way of forecasting. These forecasting techniques are quantitative. Quantitative techniques of forecasting are best used when changes are infrequent. In today's world of rapid change, quantitative techniques tend to be of little use. We need to add more qualitative techniques into the budgeting process. Qualitative techniques include surveys, interviews with people who are "in the know", market reports, articles, and other information sources that allow us to make a better judgment. Qualitative or Judgmental Forecasting can help improve the budgeting process, especially if we are operating in a rapidly changing environment. The Delphi Method is an example of a qualitative technique where a group of experts gets together and reaches a consensus on what will happen in the future. A questionnaire is sometimes used to facilitate the process. Two disadvantages of the Delphi Method are low reliability with the consensus and inability to reach a clear consensus.

46 Smoothing out the Numbers One simple approach to forecasting is to setup a model that relies on averages from past historical data. For example, we can take an average of the last five years. As we move forward to the next planning period, a new moving average is calculated and used as the forecast for the next planning period. Exponential smoothing can be used whereby we place more weight on the most recent set of actual numbers. This can be important where changes have occurred, making older data less reliable. Regression Analysis A statistical approach can be used for forecasting. We can rely on the average relationships between a dependent variable and an independent variable. Simple regressions look at one independent variable (such as sales pricing or advertising expenses) whereas multiple regressions consider two or more variables (such as sales pricing and advertising expenses together). Regression analysis is very popular for forecasting sales since it helps us find the right fit over a range of observations. For example, if we plot out the following observations, we can prepare a scatter graph and find the right fit:

Advertising Expense $ 100 150

Sales Dollars $ 1,500 1,560

47 180 220 270

Scatter Graph for Five Observations

1,610 1,655 1,685

s r a l l o D s e l a S

$1,700 $1,650 $1,600 $1,550 $1,500 $1,450 $0 $100 $200 $300

Adve rtising Dollars

Sensitivity Analysis We can measure how sensitive our forecast is to changes in certain variables. We can develop a range of possibilities under different assumptions and prepare alternative plans. If Plan A fails, we can quickly move to Plan B. Sensitivity analysis also tells us which assumptions have the biggest impact on the forecast. Managers can concentrate most of their resources on the biggest impact areas for improving the forecast. The main benefit of sensitivity analysis is to measure the possibility of errors in the forecast.

48 Financial Models Budgets can be prepared with the use of formal models which take advantage of techniques like regressions and sensitivity analysis. Models are built around the collection of equations, logic, and data that flows according to the relationships between operating variables and financial outputs. Financial variables (costs, sales, investments, taxes, etc.) can be manipulated by the user so that the user can see the outcome of a decision before it is made. This can help facilitate strategic thinking within the budgeting process. Two types of financial models are simulation and optimization. Simulation attempts to duplicate the effects of a decision and show its impact. Optimization seeks to optimize (maximize or minimize) a forecast objective (revenues, production costs, etc.).

Financial models provide decision support services for improvements within budgeting. Some of the benefits of financial models include:

Shows the results of planning under a variety of assumptions, allowing the user to assess the impacts of estimates that have been used.

Generates the Budgeted Income Statement and Budgeted Balance Sheet as well as forecasted financials by business unit or department.

49 In order to build a financial model, we need to establish variables, parameters, and relationships. Additionally, we can divide variables into three types:

1.

Control Variables: The inputs that the company can control, such as the level of debt financing or the level of capital spending.

2.

External Variables: Inputs that the company cannot control, such as economic conditions, consumer spending, interest rates, etc.

3.

Policy Variables: Goals and objectives of the company can impact the expected outcomes. For example, management may set targets for sales, profitability, and costs.

Parameters are the baselines or boundaries for the financial model. For example, the level of debt may have a minimum and maximum value. We also will set our beginning account balances within the financial model.

Relationships are the logic and specifications required for making things work. For example, the Budgeted Balance Sheet will require that Assets = Liabilities + Equity. Several equations will be used within the financial model. Many of these equations will be relational; i.e. if we change sales prices, total revenues will change. Equations are tested and added to the financial model to make it complete. Equations can be expanded into business and decision rules so that users do not have to worry about

50 calculating things like return on equity. The financial model takes care of critical rules for running the business or making decisions.

FINANCIAL MODEL FOR CASH

Relationships (Equations): Cash(t) = Cash(t-1) + Cash Receipts(t) + Cash

Disbursements(t) Cash Receipts(t) = (a) x Sales(t) + (b) x Sales(t-1) + (c) x Sales(t-2) + Loan(t) Cash Disbursements(t) = Accounts Payable(t+1) + Interest(t) + Loan Payment(t)

Input Variables in Dollars: Sales(t-1), Sales(t-2), Sales(t-3) Loan(t), Loan Payment(t) (a): Accounts Receivable Collection Pattern in current period (b): Accounts Receivable Collection Pattern one period ago (c): Accounts Receivable Collection Pattern two periods ago

51

(a) + (b) + (c) < 1.0

Parameters (Initial Values in Dollars): Cash(t-1), Sales(t-1), Sales(t-2), Bank Loan(t-1), Accounts Payable(t-1)

Making the Budgeting Process Work Now that we understand what goes into financial planning, it is time to focus on how to make the process into a value-added activity. Many organizations are attempting to re-engineer budgeting practices since budgeting is usually a non-value added activity; i.e. it does not add value to the decision making process. The goal is to make the entire financial planning process into a decision support service within the organization whereby the benefits of the process exceed the costs. In order to fully comprehend the problems associated with budgeting, let's quickly list the top ten problems with budgeting according to Controller Magazine: 1. Takes too long to prepare. 2. Doesn't help us run our business.

52 3. Budgets are out-of-date by the time we get them. 4. Too much playing with the numbers. 5. Too many iterations / repetitive tasks within the process. 6. Budgets are cast in stone in a constantly changing business environment. 7. Too many people are involved in the budgeting process. 8. Unable to control budget allocations. 9. By the time budgets are complete, I don't recognize the numbers. 10. Budgets do not match the strategic goals and objectives of the

organization. We will now discuss several ways of making budgeting into a value-added activity within the organization. Automate the Process In order for budgeting to be value-added, it must accept revisions quickly and easily. A highly automated budgeting process can help streamline the process for quick and easy updating. As a minimum, budgets should be maintained on spreadsheets. A spreadsheet (such as Excel, Lotus 1-2-3, etc.) can have an input panel for entering variables and automatic

53 generation of budgets within a fully integrated set of spreadsheets. For example, we can use a formula to calculate interest expense as: Interest Rate x (Beginning Long Term Debt + Current Portion of Long Term Debt + External Financing Using Long Term Debt) Spreadsheets also allow us to perform sensitivity analysis. We can simply enter new variables into the input panel and review the impact on our budgets. We can also use more formal software programs for budgeting. The best software programs will give us the option of controlling the level of detail. For example, do we want a cash budget by customer or do we want cash budgets by account or can we simply enter the cash flow data ourselves? It is very important that we have control over the detail since commercial programs sometimes over-analyze transactions and provide way too much detail. This is why many financial planners prefer spreadsheets over commercial programs. Ten Best Practices in Budgeting Finally, here are some best practices that can transform budgeting into a value-added activity: 1. Budgeting must be linked to strategic planning since strategic decisions usually have financial implications.

54 2. Make budgeting procedures part of strategic planning. For example, strategic assessments should include historical trends, competitive analysis, and other procedures that might otherwise take place within the budgeting process. 3. The Budgeting Process should minimize the time spent collecting and gathering data and spend more time generating information for strategic decision making. 4. Get agreement on summary budgets before you spend time preparing detail budgets. 5. Automate the collection and consolidation of budgets within the entire organization. Users should have access to budgeting systems for easy updating. 6. Budgets need to accept changes quickly and easily. Budgeting should be a continuous process that encourages alternative thinking. 7. Line item detail in budgets should be based on material thresholds and not rely on a system of general ledger accounts. 8. Budgets should give lower level managers some form of fiscal control over what is going on. 9. Leverage your financial systems by establishing a data warehouse that can be used for both financial reporting and budgeting.

55 10. Multi-National Companies should have a budgeting system

that can handle inter-company elimination's and foreign currency conversions.

Summary Financial Planning is a continuous process that flows with strategic decision making. The Operating Plan and the Financial Plan will both support the Strategic Plan. The best place to start in preparing a budget is with sales since this is a driving force behind much of our financial activity. However, we have to take into account numerous factors before we can finalize our budgets. Budgeting should be flexible, allowing modification when something changes. For example, the following will impact budgeting: Life cycle of the business Financial conditions of the business General economic conditions Competitive situation Technology trends Availability of resources

56 Budgeting should be both top down and bottom up; i.e. upper level management and middle level management will both work to finalize a budget. We can streamline the budgeting process by developing a financial model. Financial models can facilitate "what if" analysis so we can assess decisions before they are made. This can dramatically improve the budgeting process. One of the biggest challenges within financial planning and budgeting is how do we make it value-added. Budgeting requires clear channels of communication, support from upper-level management, participation from various personnel, and predictive characteristics. Budgeting should not strive for accuracy, but should strive to support the decision making process. If we focus too much on accuracy, we will end-up with a budgeting process that incurs time and costs in excess of the benefits derived. The challenge is to make financial planning a value-added activity that helps the organization achieve its strategic goals and objectives.

57

CHAPTER 3 ORGANISATION PROFILE

Chapter 3 : Organization Profile
The Beginning Yahoo! began in 1994 as a hobby for Stanford Ph.D. students Jerry Yang and David Filo. As David says, "The Internet was a great place to waste time." David and Jerry spent hours upon hours surfing the web and quickly became Internet aficionados. Their passion for locating, identifying and editing material stored on the Internet resulted in "David and Jerry's Guide to the World Wide Web". The categories they created as part of their Guide proved useful not only to Jerry, David and their friends, but thousands of others as well. It didn't take long for word of

58 the Guide to get out and soon thousands of people were accessing their Stanford trailer workstations. Without really meaning to, David and Jerry had created an audience and attracted the attention of corporations and financiers. Yahoo! ultimately became an incorporated business in March 1995 and received funding from Sequoia Capital, a venture capital firm, the following month. At this point in the Company's explosive growth, David and Jerry took a leave of absence from Stanford to work on Yahoo! full time. In 1995, Yahoo! hired 24 full-time employees and in April 1996, the Company's stock was first sold publicly on the NASDAQ. Yahoo! Profiles Yahoo! Inc. (NASDAQ: YHOO) is an American multinational internet corporation headquartered in Sunnyvale, California, United States. The company is perhaps best known for its web portal, search engine (Yahoo! Search), Yahoo! Directory, Yahoo! Mail, Yahoo! News,

advertising, online mapping (Yahoo! Maps), video sharing (Yahoo! Video), and social media websites and services. It is one of the largest websites in the United States.[2] Yahoo! inclusive was founded by Jerry Yang and David Filo in January 1994 and was incorporated on March 1, 1995. On January 13, 2009, Yahoo! appointed Carol Bartz, former executive chairman of Autodesk,

59 as its new chief executive officer and a member of the board of directors.[3] On September 6, 2011, Bartz was removed from her position at Yahoo! by chairman Roy Bostock, over the phone; and CFO Tim Morse was named as Interim CEO of the company.[4][5] Roughly 700 million people visit Yahoo websites every month.[6] Contents

1 History and growth 2 Products and services

o

2.1 Storing personal information and tracking usage

o o o o o o o o o o o

2.2 Communication 2.3 Content 2.4 Co-branded Internet services 2.5 Mobile Services 2.6 Commerce 2.7 Small business 2.8 Advertising 2.9 Yahoo! Next 2.10 Yahoo! BOSS 2.11 Yahoo! Meme 2.12 Yahoo! Koprol

60
o o

2.13 Y!Connect 2.14 Closed down services

2.14.1 Twitter slide leak on upcoming changes to Yahoo

3 Revenue model 4 Criticism 5 Yahoo subject of cyber attacks originating in China 6 Financial data
o

6.1 Advertising Revenue

7 Yahoo! International 8 Logos and themes 9 See also 10 Notes and references 11 External links

Your profile on Yahoo! represents who you are and serves as a hub for your identity on Yahoo!. From it, you can connect to friends, post information about yourself, and manage your Updates. Information Collection and Use Practices

To create a profile, you will need to create a display name. This is a public name you will be known as on Yahoo! services.

61
o

By default, we suggest you use your first name and first initial of your last name as your display name. You may use any display name you like, within reason. You may change your display name at any time.

You have the ability to post personal information about yourself on your profile.
o

Except for your display name, first name, and last name, all of this information is optional. By default, your first and last names are only shown to your connections.

Applications
o

You can grant applications made by third-party developers access to information within your profile.

When you do, you are granting the application and its developer complete access to all of the information within your profile. This means that the application and its developer will be able to see and store who you are and who you are connected to through profiles.

Applications installed by your connections will have access to the information about you that you have permitted those connections to see.

62

You may turn off the ability for your connections to share your information with applications in your profile settings.

More information about applications, developers, and the permissions you grant are available from a link that is provided when you install an application, or in Yahoo! Help Pages.

Connection Suggestions
o

Yahoo! uses different sources of information to determine connection suggestions based on who you communicate with frequently:

Yahoo! Messenger: contacts on your friend list Yahoo! Contacts: contacts in your address book Yahoo! Mail: email header information that identifies who you send and receive emails from frequently.

Yahoo! does not look at the content of the instant messages or emails you send or receive in order to suggest connections.

63

Updates
o

When you take certain actions, such as when you connect to a friend, comment on a guestbook, add information to your profile, or change your photo, those actions are shared as updates that your connections and others can see,

depending on your Updates settings. Manage your Updates settings. Information Sharing and Disclosure Practices The display name, display photo, gender, location, and age information you provide for your profile on Yahoo! are always public. If you prefer not to disclose this information, you may edit your profile information at any time and leave those fields blank.
o

By default, the remainder of the information on your profile is shared only with your connections; however, you may make some profile information public for anyone to view.

Applications

You can grant applications developed by third-party developers access to information within your profile.

When you do, you are granting the application and its developer complete access to all of the information within your profile. This means that the application

64 and its developer will be able to see and store who you are and who you are connected to through profiles.

Applications installed by your connections will have access to the information about you that you have permitted those connections to see.

You may turn off the ability for your connections to share your information with applications in your Profile settings.

More information about applications, developers, and the permissions you grant are available from a link that is provided when you install an application.

People Search

Your profile may be found by others who search for you by your first name, last name, display name, or email address.

You may opt out from being found in People Search.

When you choose not to make an an email address or Yahoo! ID searchable through People Search, it will continue to be attached to your Yahoo! Account. Other Yahoo! services may identify those email addresses with your profile.

65

If your profile is searchable by an email address, your email address will act as a URL for your profile. For example, if you make free2rhyme@altavista.com a searchable email address, others who know your email address can find your profile by going directly to: http://profiles.yahoo.com/free2rhyme@altavista.com.

Updates

Certain actions you take from your profile on Yahoo! are shared as updates that your connections and others can see, depending on your Updates settings.

These actions include when you connect to a friend, comment on a guestbook, add

information to your profile, or change your photo,

You can manage your Updates settings and control which updates you want to share with others.

Your Ability to Update or Delete Information

66
o

Edit Your Profile

You can edit the content of your profile, and you can set permissions regarding who can see which

information on your profile.

You may hide your profile. By hiding your profile, people will not be able to search for you, contact you, or invite you to connect. Your profile will not be shown to others and only your display name and status message will be visible.

Applications

If you no longer want to allow your connections to share your information with third-party applications and developers, you may opt-out at any time from the Permissions Settings within your profile on Yahoo!.

You may revoke permissions you granted to an application at any time. For the Yahoo! Application Platform, remove the application by choosing

"Remove" from the application's Settings menu. For applications on third-party websites and other

applications, visit your Yahoo! Account Info.

o

People Search

Although you may choose not make an email address or Yahoo! ID searchable through People Search, it will

67 continue to be attached to your Yahoo! Account. Other Yahoo! services may identify those email addresses with your profile.
o

Notifications

Email notifications are sent to you when actions related to your profile occur.

You may turn off these notifications at any time. Manage which email address your notifications are sent to.

Other When you use Yahoo!, you are subject to the Yahoo! Terms of Service.
o

Please see Profiles Help if you have questions about this service.

This page describes current Yahoo! practices with respect to this particular service. This information may change as Yahoo! revises this service by adding or removing features or using different service providers. To find out how Yahoo! treats your personal information, please visit our Privacy Policy.

68

CHAPTER 4 DATA ANALYSIS AND INTERPRETATION

Job Title: Data Analysis and Interpretation of Financial Planning & Forecasting in Yahoo Software & Development India Pvt Ltd. Interest Category: Finance & Corporate Controlling Description: The Manager will provide financial leadership to the Budgeting & Forecasting department of Corporate Finance. Primary responsibilities will include: 1. Process management of budgeting, forecasting tools, reporting, roles, issue resolution, communications. 2. Interpretation of business requirements for projects, forecasts, budgets. 3. Lead process improvement initiatives managing resources, implementing change, communicating effectively. 4. Effectively work with MEDRAD and Bayer financial leadership teams. 5. Effective issue resolution, problem solving, and providing

69 recommendations. 6. Significant data analysis. 7. Evaluating, validating requirements for, prioritizing and auctioning a large number of requests. 8. Support of internal business partners located in multiple geographic locations. Technical & Behavioral Requirements: 1. Bachelors Degree (Accounting or Finance preferred) and Masters Degree (MBA or Finance) required 2. Overall experience of 6+ years in finance/accounting/business management is required. 3. Solid business sense to analyze budgets and forecasts as well as long range planning. 4. Supervisory experience preferred. 5. Ability to lead projects managing resources effectively. 6. Proficient and knowledgeable about financial accounting policies and procedures. 7. Demonstrated business acumen with a drive for results and sound business judgment. 8. Strength in dealing with ambiguity and effective problem solving skills. 9. The ability to determine root causes of complex issues that involve

70 multiple internal contact points and IT systems. 10. The ability to recognize, develop and implement process improvements to enable effectiveness or efficiency. 11.. Excellent oral, written, listening, persuasion and consensus building and presentation skills. 3. DATA ANALYSIS AND TNTERPRETATION

RATIO ANALYSIS:-Ratio Analysis in relation to Working Capital Ratio analysis is widely used tool of financial analysis. It is defined as, the systematic uses of ratios to interpret the financial statements so that the strength and weakness of firm as well as its historical performance and financial position be determine. The term Ratio refers to the numerical or quantities relation between two variables. The ratio analysis of Working Capital can be used the management as a means of checking a firm is improving or deteriorating over the years. Over the years the significant trend analysis of ratios lies in the fact that the analysis can know the direction of movement. For example, there may be low as compared to the norms standard but trend may be upward.

THE MOST IMPORTANT RATIO OF WORKING CAPITALMANAGEMENT:1. Current Ratio 2. Quick Ratio

71 3. Cash Position Ratio 4. Working Capital Turnover Ratio 5. Inventory Turnover Ratio 6. Debtors Turnover Ratio 7. Average Collection Period 8. Fixed Asset Turnover Ratio 9. Capital Turnover Ratio 10. Inventory Turnover Period 11. Expense Ratio 12. Return on Investment 13. Gross profit Ratio

Budget 2011 Expenses A. BLR HQ related

1. Headcount:

72 Actual Head count at Q3 is $2511 & in Q4 expected net addition is $165 with this expected Headcount at the end of the year ** For 2011 the gross addition expected to be 10 & with the average attrition of 9% the net addition expected to be $164. The net addition in the product group is expected to be $251, GBS 25, & SE&O 31.

2. Salaries:

At present Blr HQ has 24 employees in Bangalore, 1 at Sunnyvale & 2 TBH. The TBH are positioned at M4 & M5. For the plan purpose an increment of 10% is considered effective from Q2 2011. The retirement plan calculated 10.66%. Bonus is calculated at 3% of the salary. Retention bonus is calculated on the existing employees as per the HR advice. The cost per/head/month is expected to be 40 & with the increase in the total Headcount expected to come down to 30 in 2011.

73 3.Employee Benefits

(i)The lifestyle expenses:

a). Gym: Presently about 250 employees use the external gym facility which is costing $50 per head/year. This is expected to go upto $75 per head/year and the usage is expected to go up to 255 employees.

b) Doctors: Presently we have one counselor at the campus who is paid $344 per month. For 2011 in addition to this counselor two Drs. are expected to be in each of the campus costing $350per dr/month.

c) Health Checkup: The co. provides comprehensive medical test to the employees during the Q1 of the each year. For 2010 these test

costed $49 per employee. In 2011 the cost is expected to be $55 per employees and 70% of the employees in Q1 are expected to utilize the service.

(ii) Medical Insurance:

74 Yahoo provides personal accident, hospitalization & life coverage. The life coverage was extended from Q3. The average cost per employees is $150, expected to go upto $175 mainly due to increase in the claim ratio.

(iii) Entertainment Expenses: Presently $500 per employees/year. This is expected to go upto $550 per employee/year & 50% of the employees are expected to use this.

(iv) Ground Transportation & Car rental:

This represent Yahoo Bus services ($52 per month/person), Yahoo Transport services ($70 per month/person), Inter office shuttle, other team transport. Due to the expected increase in the fuel prices of 20% this cost is likely to go up by 8% (v) Gifts: This represents the Pat on the back of $22 per person/year. And 40 % employees are eligible for this.

75 With this employee benefits is $96 per employees/month in 2010 is expected to be $94 per employees/year.

4.Recruitment Expenses: This consists of job portal, interview travel, background checks & campus visits. In 2010 the gross addition is expected to be 600 at the average cost of $550. In 2011 the gross hiring expected to be 700 at an average cost of $ 548 per hire. In 2011 cost includes Job portals cost which was not there in 2010. Adjusted for this the 2011 cost will be same as 2010. Since gross hiring is likely to go up by 55% compare to 2010. We need to do more campus visits, hoardings, and advertisement. In spite of this cost will remain the flat.

5. L&D Expenses: In 2011 there would be more thrust on the tech trainings & also encourage employees to undertake technical courses which will benefit the company. So the cost per employees/month in 2010 is expected $15 this will go up to $21 in 2011.

76

6. Contractors & Consultants:

This includes interns, contractors & Business consulting. Interns are estimated based on the actual # on 2010 at a monthly fees of $950 per intern. Contractors Similar to FTEs salary 10% of increment will be given from Q2 2011. The business consulting-In 2011 major thrust will be on OPD which will include many consulting projects We also intending to do many diagnostic & compensation surveys All these initiatives will push up the cost per head/month $23 in 2010 to $37 in 2011.

7. Public Relation: These expenses are mainly relating to Yahoo branding & employees retention.

77 Some of the major events planned during 2011 are tech sponsorship, showcase, hack days, go green, WIT, YEN, academic relation. These expenses are incurred mainly to enhance Yahoo brand, which will facilitate higher employee retention & also assist in hiring. These initiatives will push these expenses from $35 per

employees/month to $ ***

8. Travel: These expenses pertaining to the employees in the Blr HQ only. And is retained at the 2010 level 9. Finance Expenses: These expenses include auditors legal fees, YEFI contribution. Adjusting for the tax reversal the cost per head/month is $11 which is expected to be $8 in 2011. In 2010 there was reversal of non income tax expenditure which resulted in a negative number

Summary:

78 After adjusting tax reversal in 2010 cost per

employees/month in 2010 will be $264 which is estimated to go up to $ 301 in 2011an increase of 14% The majority of the expenses in Blr Hq are employees retention, recruitment. In 2011 Bangalore being a cost advantage center is expected to grow substantially and there is urgent need to ramp up. This will require an increase in the total expenditure however over all cost per person will be still be less than 2009. The total Blr Hq expenses % to the total Yahoo SD Indias payroll % is 11% Payroll benefit in Bangalore is about 11% where as Globally it is 22%.
FY2008

FY2009 Actual YTD

2,299,9 99 742,3 36 223,1 04 474,5 89

FY2010 Actual YTD

2,600,0 00 660,6 34 542,7 76 470,3 84

FY2011 Actual Q2
700,0 00 182,8 57 133,2 08 64,8 46

FY2011 Actual Q3
700,0 00 182,8 57 133,2 08 64,8 46

FY2011 Actual Q4
542,7 38 342,1 35 162,3 03 141,8 28

Actual YTD
Salary & Fringes Discretionary Employee Expenses Intern & Contingent Workforce Expense Marketing and PR 4,800, 000 2,715, 520 679, 741 348, 891

79
Facilities & Equipment (Net) Outsourced Service Provider Expenses Travel and Entertainment Other Expenses 1,862, 201 325, 589 2,352, 371 1,869, 338 2,0 32 262,3 40 2,122,0 17 921,2 06 (2 81) 325,6 76 2,309,1 01 (238,5 48) 4,0 01 63,4 17 735,5 18 5,5 97

21 (9,4 67) 688,6 76 6,9 17

21 (9,4 67) 688,6 76 6,9 17

80

CHAPTER 5

81

CONCLUSION

82

CHAPTER 6 SUGGESTIONS RECOMMENDATIONS AND

83

CHAPTER 7 ANNEXURE - QUESTIONNAIRE

CHAPTER 8

84

BIBLIOGRAPHY / WEB SITES REFERRED

YAHOO SOFTWARE DEVELOPMENT INDIA PRIVATE LIMITED

Balance Sheet as at March 31, 2011 Schedu le Sources of Funds Shareholders' Funds: Capital Reserves and Surplus 1 2 327,255,620 4,028,415,652 4,355,671,27 2 Application of Funds 327,255,62 0 1,090,450,13 9 1,417,705,7 59 FY 2011 (In Rs.) FY2010 (In Rs.)

Fixed Assets Gross Block Less: Depreciation Net Block Capital Work-inProgress

3 1,059,316,733 747,986,506 311,330,227 14,161,082 325,491,309 766,794,47 0 499,351,58 7 267,442,88 3 80,465,176 347,908,05 8

85

Deferred Tax Asset [Schedule 13 Note 9 (ii)]

118,589,277

70,290,779

Current Assets, Loans and Advances: Sundry Debtors Cash and Bank Balances Other Current Assets Loans and Advances 4 5 6 7 467,501,687 1,291,859,890 169,398,910 309,577,791 2,238,338,277 721,808,00 7 304,721,39 6 169,776,56 0 274,410,54 2 1,470,716,50 3

Less: Current Liabilities and Provisions: Liabilities Provisions

8 421,554,784 (80,599,368 ) 340,955,416 802,013,65 2 70,202,755 872,216,40 6

Net Current Assets

1,897,382,861 2,341,463,44 7

598,500,09 7 1,016,698,9 33

86

The Schedules referred to above and the notes thereon form an integral part of the Accounts. This is the Balance Sheet referred to in our report of even date.

For Board

and

on

behalf

of

the

For Price Waterhouse Firm Registration Number: 301112E Chartered Accountants

J. Majumdar Kuipers Partner Membership No.: F 51912 Place: Bangalore Date:

Manish Shah Company Secretary

Michael Callahan Director

Jeroen Peter Johan Director

Place: Sunnyvale & Bangalore Date:

YAHOO SOFTWARE DEVELOPMENT INDIA PRIVATE LIMITED Profit and Loss Account for the year ended March 31, 2011 Schedule Income Services 9 3,466,4 2,868,7

FY 2011 Inr.

FY 2010 Inr.

87
20,185 Other Income 10 7,19 3,398 06,362 4, 906,173

3,473,6 13,583

2,873, 612,535

Expenditure Expenditure on Employees Other Expenses Depreciation 11 12 1,704,2 77,357 874,9 80,028 248,6 34,919 1,498,6 75,990 699,6 72,611 206,0 13,925

2,827,8 92,304

2,404, 362,527

Profit for the year before taxation Add/ (Less):Provision for Taxation [Schedule 13 Note 1(viii) and 9] Current Tax MAT Credit Entitlement Deferred Tax 48,29 8,498 (83,7 41,964) 79,1 35,211 34,1 01,357

Profit for the year after

694,019,777

498, 744,613

88
taxation

Profit brought forward from the previous year

1,039,5 43,209

540,7 98,595

Balance carried to the Balance Sheet

1,733,5 62,986

1,039, 543,207

Earnings Per Share [Schedule 13 Note 1(vii) and 12]

Basic Diluted

30.88 -

54.61 -

Notes on Accounts 13

The Schedules referred to above and the notes thereon form an integral part of the Accounts. This is the Profit and Loss Account referred to in our report of even date.

For Board

and

on

behalf

of

the

89
For Price Waterhouse Firm Registration Number: 301112E Chartered Accountants

J. Majumdar Kuipers Partner Membership No.: F 51912 Place: Bangalore Date:

Manish Shah Company Secretary

Michael Callahan Director

Jeroen Peter Johan Director

Place: Sunnyvale & Bangalore Date:

YAHOO SOFTWARE DEVELOPMENT INDIA PRIVATE LIMITED Cash Flow Statement for the Year Ended March 31, 2011 2011 Rupees A . CASH FLOW FROM OPERATING ACTIVITIES Net Profit Before Tax Adjustments for : Depreciation Unrealised Foreign Exchange (net) Provision for Leave Encashment and Gratuity Profit on sale of fixed assets Interest income 1,291,442,5 58 497,269,8 38 (9,514,5 29) 83,577,3 24 (14,057,9 27) 1,350,527,870 2010 Rupees

(83,820,804) 29,624,382 (5,630,246) (4,182,100)

Operating Profit before working capital changes Adjustments for : Trade and Other Receivables Current Liabilities and Provisions

1,848,717,264 407,161,824 14,875,263 422,037,087 (897,393,239) 49,007,901 (848,385,338)

1,286,519,102

90
Adjustment for Unrealised Foreign Exchange Gain/ (Loss) Cash generated from Operations Income tax paid Fringe benefit tax paid Net cash from Operating Activities B. CASH FLOW FROM INVESTING ACTIVITIES Purchase of Fixed Assets Proceeds from sale of fixed assets Interest received Net cash used in Investing Activities C. CASH FLOW FROM FINANCING ACTIVITIES Proceeds from receipt of share premium Net cash from Financing Activities Net increase in cash and cash equivalents Cash and cash equivalents as at March 31, 2010 (Opening Balance) Cash and cash equivalents as at March 31, 2011 (Closing Balance) 1,514,801,168 115,682,840 (327,089,347)

9,514,529

431,551,616 2,280,268,880 (327,089,347) 1,953,179,533

83,820,804

(764,564,534) 521,954,568

(100,524,029) (100,524,029) 421,430,539

(452,436,292) 14,057,927 (438,378,365)

(317,732,744) 7,802,945 4,182,100 (305,747,699)

609,442,791

453,759,951

2,583,719,780 1,974,276,989

609,442,791 155,682,840

Difference

(459,475,821)

Notes: 1. The above Cash Flow Statement has been compiled from and is based on the Balance Sheet as at March 31, 2011 and the relative Profit and Loss Account for year ended on that date. 2. The above Cash Flow Statement has been prepared in consonance with the requirements of Accounting Standard (AS) - 3 on Cash Flow Statements as notified uunder the Accounting Standard Rules 2006 and the reallocations required for the purpose are as made by the Company.

91
3. Previous year's numbers have been regrouped / reclassified wherever necessary.

This is the Cash Flow referred to in our report of even date. For and on behalf of the Board

For Price Waterhouse Firm Registration Number: 301112E Chartered Accountants

J. Majumdar Partner Membership No.: F 51912 Place : Bangalore Date :

92

93

94

95

96

97

CHAPTER 2 CONCEPTS OF FINANCIAL PLANNING & FORCASTING To start a business or expand the existing business. We have a great idea, super attitude and the entrepreneurial spirit. So you head down to your local bank or financial institution; you sit down in front of the credit manager and start to explain this brilliant idea when she interrupts us: That sounds great, but where is our business plan? This scenario is played out every day in Canada people with ideas who want to plunge into business without having done a business plan. The purpose of this guide is to explain in simple terms the business plan concept and to show you how to put your own plan together.

98 A Start-Up Guide leads entrepreneurs through the business planning process. By describing everything from Vision and Mission to Operational Strategies, the Guide provides an easy to read description of your new business concept. The affiliated Financial Planning Template helps entrepreneurs assemble their Starting Balance Sheet, Pro-Forma Income Statement and first year Cash Flow Forecast.

The Financial Plan Introduction The financial plan is critical to the success of your business plan especially if it is for the purpose of getting a bank loan. The Cash Flow Forecast is arguably the most important part of the plan, but each of the other documents is important from a planning perspective. There are three sections in a financial plan: The Starting Balance Sheet The Pro-Forma (or Forecast) Income Statement

99 The Cash Flow Forecast (each of these sections should have notes of explanation for the reader).

The Financial Planning Template To assist you in this process, we have created a template written for MS/Excel. Click here to access the template. This will take you through seven worksheets, each asking for financial information. This information is then assembled into the three statements described above. Information can be changed, and the results of the change are immediately calculated. This will take you to a reasonable first draft of your financials but you will have to make some final adjustments for your particular situation. If you are using a printout of this guide you can find the Excel template under http://www.cse.gov.bc.ca/ReportsPublications/FinancialTemplate.XLT.

100 It is almost impossible to get things right the first time. In all business planning, but especially in the financial section, it is important to try different scenarios. What if I purchase used equipment instead of new equipment? What if I raise or lower prices? What if I reduce my personal draw? By trying different scenarios, you will soon determine what it will take to make your business financially viable. With business planning, you must keep trying until you have a result that is reasonable and that you are convinced is achievable.

Five Tips on your Financial Plan

1. Be persistent! Most people do not have expertise in finance so preparing a financial plan is a journey into the unknown. Be patient.

2. Read the entire planning guide before starting on the plan. You will learn what information you require to assemble the financial part of the plan.

101

3. Get help in assembly, but not in research. These should be your numbers and assumptions. You will be responsible for achieving these objectives so you should believe in the numbers.

4. Be consistent. Make sure that your financial plan is consistent with the rest of the business plan. For example, if your pricing section mentions a margin of 40%, this should be reflected in your Income Statement.

5. Use the simple template provided. Although it will not provide a final plan, it will get you well on your way in the journey

Calculating The Break-even The break-even point in your business is the point at which your sales revenue equals your total expenses. At that point you neither make money, nor do you lose any. The break-even lets you know what it is going to take in sales just to survive. It

102 provides a good indication of the viability of a business project. The break-even can also be used to evaluate a business expansion or any other business expenditure. You are simply asking how much additional revenue will be required to cover the additional cost. There are some key definitions necessary to determine the break-even for the business.

They are: Fixed Costs (Overhead) are costs that do not vary directly with sales. Utilities, salaries, advertising, office supplies and telephone are just a few examples. They do not have to be the same every month. What is important is that you pay them regardless of sales made.

Variable Costs (Cost of Goods) are the actual costs of making the product or providing the service. They can include materials, shipping and contract labour.

103

Capacity governs your output. It can be measured in units of production, billable hours, or sales volume. To calculate the break-even in units we use the following formula: Fixed Cost = Break-even in Units

(Unit Price Unit Cost)

This method is known as Total Absorption Costing, because dividing the total cost by the units sold absorbs the fixed costs. Every business plan be it for growth or for start-up needs to establish project and business costs before proceeding. Note: For planning purposes treat the entire term loan payment, both principal

Additional Concepts in Budgeting

So far, we have emphasized simple approaches to preparing budgets, such as looking at relationships between account balances and sales. We also should have a clear understanding of past financial performance to help us

104 predict future financial performance. Extending past trends and adjusting for what is expected is a common approach to preparing a forecast. However, we can improve forecasting by using several techniques. The first step is recognize certain fundamentals about forecasting:

5. Forecasting

relies

on

past

relationships

and

existing

historical

information. If these relationships change, forecasting becomes increasingly inaccurate. 6. Since forecasting can be inaccurate due to uncertainty, we should consider developing several forecast under different scenarios. We can assign probabilities to each scenario and arrive at our expected forecast. 7. The longer the planning period, the more inaccurate the forecast. If we need to increase reliability in forecasting, we should consider a shorter planning period. The planning period depends upon how often existing plans need to be evaluated. This will depend upon stability in sales, business risk, financial conditions, etc. 8. Forecasting of large inter-related items is more accurate than forecasting a specific itemized amount. When a large group of items are forecast together, errors within the group tend to cancel out. For example, an overall economic forecast will be more accurate than an industry specific forecast.

105 Quantitative and Qualitative Techniques You should forecast for a specific reason - to help make better decisions. Forecasting is extremely difficult and you must pull from all relevant sources. We previously discussed the Percent of Sales Method and Trend Analysis as a way of forecasting. These forecasting techniques are quantitative. Quantitative techniques of forecasting are best used when changes are infrequent. In today's world of rapid change, quantitative techniques tend to be of little use. We need to add more qualitative techniques into the budgeting process. Qualitative techniques include surveys, interviews with people who are "in the know", market reports, articles, and other information sources that allow us to make a better judgment. Qualitative or Judgmental Forecasting can help improve the budgeting process, especially if we are operating in a rapidly changing environment. The Delphi Method is an example of a qualitative technique where a group of experts gets together and reaches a consensus on what will happen in the future. A questionnaire is sometimes used to facilitate the process. Two disadvantages of the Delphi Method are low reliability with the consensus and inability to reach a clear consensus. Smoothing out the Numbers One simple approach to forecasting is to setup a model that relies on averages from past historical data. For example, we can take an average of

106 the last five years. As we move forward to the next planning period, a new moving average is calculated and used as the forecast for the next planning period. Exponential smoothing can be used whereby we place more weight on the most recent set of actual numbers. This can be important where changes have occurred, making older data less reliable. Regression Analysis A statistical approach can be used for forecasting. We can rely on the average relationships between a dependent variable and an independent variable. Simple regressions look at one independent variable (such as sales pricing or advertising expenses) whereas multiple regressions consider two or more variables (such as sales pricing and advertising expenses together). Regression analysis is very popular for forecasting sales since it helps us find the right fit over a range of observations. For example, if we plot out the following observations, we can prepare a scatter graph and find the right fit:

Advertising Expense $ 100 151 181 221 270

Sales Dollars $ 1,500 1,560 1,610 1,655 1,685

107

Scatter Graph for Five Observations

$1,700 $1,650 $1,600 $1,550 $1,500 $1,450 $0 $100 $200 $300 Advertising Dollars

Sensitivity Analysis We can measure how sensitive our forecast is to changes in certain variables. We can develop a range of possibilities under different assumptions and prepare alternative plans. If Plan A fails, we can quickly move to Plan B. Sensitivity analysis also tells us which assumptions have the biggest impact on the forecast. Managers can concentrate most of their resources on the biggest impact areas for improving the forecast. The main benefit of sensitivity analysis is to measure the possibility of errors in the forecast. Financial Models Budgets can be prepared with the use of formal models which take advantage of techniques like regressions and sensitivity analysis. Models are built around the collection of equations, logic, and data that flows according to the relationships between operating variables and financial

r o D s e l a S

108 outputs. Financial variables (costs, sales, investments, taxes, etc.) can be manipulated by the user so that the user can see the outcome of a decision before it is made. This can help facilitate strategic thinking within the budgeting process. Two types of financial models are simulation and optimization. Simulation attempts to duplicate the effects of a decision and show its impact. Optimization seeks to optimize (maximize or minimize) a forecast objective (revenues, production costs, etc.).

Financial models provide decision support services for improvements within budgeting. Some of the benefits of financial models include:

Shows the results of planning under a variety of assumptions, allowing the user to assess the impacts of estimates that have been used.

Generates the Budgeted Income Statement and Budgeted Balance Sheet as well as forecasted financials by business unit or department.

In order to build a financial model, we need to establish variables, parameters, and relationships. Additionally, we can divide variables into three types:

109
4.

Control Variables: The inputs that the company can control, such as the level of debt financing or the level of capital spending.

5.

External Variables: Inputs that the company cannot control, such as economic conditions, consumer spending, interest rates, etc.

6.

Policy Variables: Goals and objectives of the company can impact the expected outcomes. For example, management may set targets for sales, profitability, and costs.

Parameters are the baselines or boundaries for the financial model. For example, the level of debt may have a minimum and maximum value. We also will set our beginning account balances within the financial model.

Relationships are the logic and specifications required for making things work. For example, the Budgeted Balance Sheet will require that Assets = Liabilities + Equity. Several equations will be used within the financial model. Many of these equations will be relational; i.e. if we change sales prices, total revenues will change. Equations are tested and added to the financial model to make it complete. Equations can be expanded into business and decision rules so that users do not have to worry about calculating things like return on equity. The financial model takes care of critical rules for running the business or making decisions.

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FINANCIAL MODEL FOR CASH

Relationships (Equations): Cash(t) = Cash(t-1) + Cash Receipts(t) + Cash

Disbursements(t) Cash Receipts(t) = (a) x Sales(t) + (b) x Sales(t-1) + (c) x Sales(t-2) + Loan(t) Cash Disbursements(t) = Accounts Payable(t+1) + Interest(t) + Loan Payment(t)

Input Variables in Dollars: Sales(t-1), Sales(t-2), Sales(t-3) Loan(t), Loan Payment(t) (a): Accounts Receivable Collection Pattern in current period (b): Accounts Receivable Collection Pattern one period ago (c): Accounts Receivable Collection Pattern two periods ago (b) + (b) + (c) < 1.0

Parameters (Initial Values in Dollars):

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Cash(t-1), Sales(t-1), Sales(t-2), Bank Loan(t-1), Accounts Payable(t-1)

Making the Budgeting Process Work Now that we understand what goes into financial planning, it is time to focus on how to make the process into a value-added activity. Many organizations are attempting to re-engineer budgeting practices since budgeting is usually a non-value added activity; i.e. it does not add value to the decision making process. The goal is to make the entire financial planning process into a decision support service within the organization whereby the benefits of the process exceed the costs. In order to fully comprehend the problems associated with budgeting, let's quickly list the top ten problems with budgeting according to Controller Magazine: 11. 12. 13. 14. 15. Takes too long to prepare. Doesn't help us run our business. Budgets are out-of-date by the time we get them. Too much playing with the numbers. Too many iterations / repetitive tasks within the process.

112 16. Budgets are cast in stone in a constantly changing business

environment. 17. 18. 19. Too many people are involved in the budgeting process. Unable to control budget allocations. By the time budgets are complete, I don't recognize the

numbers. 20. Budgets do not match the strategic goals and objectives of the

organization. We will now discuss several ways of making budgeting into a value-added activity within the organization. Automate the Process In order for budgeting to be value-added, it must accept revisions quickly and easily. A highly automated budgeting process can help streamline the process for quick and easy updating. As a minimum, budgets should be maintained on spreadsheets. A spreadsheet (such as Excel, Lotus 1-2-3, etc.) can have an input panel for entering variables and automatic generation of budgets within a fully integrated set of spreadsheets. For example, we can use a formula to calculate interest expense as: Interest Rate x (Beginning Long Term Debt + Current Portion of Long Term Debt + External Financing Using Long Term Debt)

113 Spreadsheets also allow us to perform sensitivity analysis. We can simply enter new variables into the input panel and review the impact on our budgets. We can also use more formal software programs for budgeting. The best software programs will give us the option of controlling the level of detail. For example, do we want a cash budget by customer or do we want cash budgets by account or can we simply enter the cash flow data ourselves? It is very important that we have control over the detail since commercial programs sometimes over-analyze transactions and provide way too much detail. This is why many financial planners prefer spreadsheets over commercial programs. Ten Best Practices in Budgeting Finally, here are some best practices that can transform budgeting into a value-added activity: 11. Budgeting must be linked to strategic planning since strategic

decisions usually have financial implications. 12. Make budgeting procedures part of strategic planning. For

example, strategic assessments should include historical trends, competitive analysis, and other procedures that might otherwise take place within the budgeting process.

114 13. The Budgeting Process should minimize the time spent

collecting and gathering data and spend more time generating information for strategic decision making. 14. Get agreement on summary budgets before you spend time

preparing detail budgets. 15. Automate the collection and consolidation of budgets within

the entire organization. Users should have access to budgeting systems for easy updating. 16. Budgets need to accept changes quickly and easily. Budgeting

should be a continuous process that encourages alternative thinking. 17. Line item detail in budgets should be based on material

thresholds and not rely on a system of general ledger accounts. 18. Budgets should give lower level managers some form of fiscal

control over what is going on. 19. Leverage your financial systems by establishing a data

warehouse that can be used for both financial reporting and budgeting. 20. Multi-National Companies should have a budgeting system

that can handle inter-company elimination's and foreign currency conversions.

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Summary Financial Planning is a continuous process that flows with strategic decision making. The Operating Plan and the Financial Plan will both support the Strategic Plan. The best place to start in preparing a budget is with sales since this is a driving force behind much of our financial activity. However, we have to take into account numerous factors before we can finalize our budgets. Budgeting should be flexible, allowing modification when something changes. For example, the following will impact budgeting: Life cycle of the business Financial conditions of the business General economic conditions Competitive situation Technology trends Availability of resources

Budgeting should be both top down and bottom up; i.e. upper level management and middle level management will both work to finalize a budget. We can streamline the budgeting process by developing a financial model. Financial models can facilitate "what if" analysis so we can assess

116 decisions before they are made. This can dramatically improve the budgeting process. One of the biggest challenges within financial planning and budgeting is how do we make it value-added. Budgeting requires clear channels of communication, support from upper-level management, participation from various personnel, and predictive characteristics. Budgeting should not strive for accuracy, but should strive to support the decision making process. If we focus too much on accuracy, we will end-up with a budgeting process that incurs time and costs in excess of the benefits derived. The challenge is to make financial planning a value-added activity that helps the organization achieve its strategic goals and objectives.

Chapter 3 : Organization Profile

The Beginning Yahoo! began in 1994 as a hobby for Stanford Ph.D. students Jerry Yang and David Filo. As David says, "The Internet was a great place to waste time." David and Jerry spent hours upon hours surfing the web and quickly became Internet aficionados. Their passion for locating,

117 identifying and editing material stored on the Internet resulted in "David and Jerry's Guide to the World Wide Web". The categories they created as part of their Guide proved useful not only to Jerry, David and their friends, but thousands of others as well. It didn't take long for word of the Guide to get out and soon thousands of people were accessing their Stanford trailer workstations. Without really meaning to, David and Jerry had created an audience and attracted the attention of corporations and financiers. Yahoo! ultimately became an incorporated business in March 1995 and received funding from Sequoia Capital, a venture capital firm, the following month. At this point in the Company's explosive growth, David and Jerry took a leave of absence from Stanford to work on Yahoo! full time. In 1995, Yahoo! hired 24 full-time employees and in April 1996, the Company's stock was first sold publicly on the NASDAQ. Yahoo! Profiles Yahoo! Inc. (NASDAQ: YHOO) is an American multinational internet corporation headquartered in Sunnyvale, California, United States. The company is perhaps best known for its web portal, search engine (Yahoo! Search), Yahoo! Directory, Yahoo! Mail, Yahoo! News,

advertising, online mapping (Yahoo! Maps), video sharing (Yahoo! Video), and social media websites and services. It is one of the largest websites in the United States.[2]

118 Yahoo! inclusive was founded by Jerry Yang and David Filo in January 1994 and was incorporated on March 1, 1995. On January 13, 2009, Yahoo! appointed Carol Bartz, former executive chairman of Autodesk, as its new chief executive officer and a member of the board of directors.[3] On September 6, 2011, Bartz was removed from her position at Yahoo! by chairman Roy Bostock, over the phone; and CFO Tim Morse was named as Interim CEO of the company.[4][5] Roughly 700 million people visit Yahoo websites every month.[6] Contents

1 History and growth 2 Products and services

o o o o o o o o o o

2.1 Storing personal information and tracking usage 2.2 Communication 2.3 Content 2.4 Co-branded Internet services 2.5 Mobile Services 2.6 Commerce 2.7 Small business 2.8 Advertising 2.9 Yahoo! Next 2.10 Yahoo! BOSS

119
o o o o

2.11 Yahoo! Meme 2.12 Yahoo! Koprol 2.13 Y!Connect 2.14 Closed down services

2.14.1 Twitter slide leak on upcoming changes to Yahoo

3 Revenue model 4 Criticism 5 Yahoo subject of cyber attacks originating in China 6 Financial data
o

6.1 Advertising Revenue

7 Yahoo! International 8 Logos and themes 9 See also 10 Notes and references 11 External links

Your profile on Yahoo! represents who you are and serves as a hub for your identity on Yahoo!. From it, you can connect to friends, post information about yourself, and manage your Updates. Information Collection and Use Practices

120

To create a profile, you will need to create a display name. This is a public name you will be known as on Yahoo! services.
o

By default, we suggest you use your first name and first initial of your last name as your display name. You may use any display name you like, within reason. You may change your display name at any time.

You have the ability to post personal information about yourself on your profile.
o

Except for your display name, first name, and last name, all of this information is optional. By default, your first and last names are only shown to your connections.

Applications
o

You can grant applications made by third-party developers access to information within your profile.

When you do, you are granting the application and its developer complete access to all of the information within your profile. This means that the application and its developer will be able to see and store who you are and who you are connected to through profiles.

Applications installed by your connections will have access to the information about you that you have permitted those connections to see.

121

You may turn off the ability for your connections to share your information with applications in your profile settings.

More information about applications, developers, and the permissions you grant are available from a link that is provided when you install an application, or in Yahoo! Help Pages.

Connection Suggestions

Yahoo! uses different sources of information to determine connection suggestions based on who you communicate with frequently:

Yahoo! Messenger: contacts on your friend list Yahoo! Contacts: contacts in your address book Yahoo! Mail: email header information that identifies who you send and receive emails from frequently.

122
o

Yahoo! does not look at the content of the instant messages or emails you send or receive in order to suggest connections.

Updates
o

When you take certain actions, such as when you connect to a friend, comment on a guestbook, add information to your profile, or change your photo, those actions are shared as updates that your connections and others can see,

depending on your Updates settings. Manage your Updates settings. Information Sharing and Disclosure Practices The display name, display photo, gender, location, and age information you provide for your profile on Yahoo! are always public. If you prefer not to disclose this information, you may edit your profile information at any time and leave those fields blank.
o

By default, the remainder of the information on your profile is shared only with your connections; however, you may make some profile information public for anyone to view.

Applications

123

You can grant applications developed by third-party developers access to information within your profile.

When you do, you are granting the application and its developer complete access to all of the information within your profile. This means that the application and its developer will be able to see and store who you are and who you are connected to through profiles.

Applications installed by your connections will have access to the information about you that you have permitted those connections to see.

You may turn off the ability for your connections to share your information with applications in your Profile settings.

More information about applications, developers, and the permissions you grant are available from a link that is provided when you install an application.

People Search

Your profile may be found by others who search for you by your first name, last name, display name, or email address.

You may opt out from being found in People Search.

124

When you choose not to make an an email address or Yahoo! ID searchable through People Search, it will continue to be attached to your Yahoo! Account. Other Yahoo! services may identify those email addresses with your profile.

If your profile is searchable by an email address, your email address will act as a URL for your profile. For example, if you make free2rhyme@altavista.com a searchable email address, others who know your email address can find your profile by going directly to: http://profiles.yahoo.com/free2rhyme@altavista.com.

Updates

Certain actions you take from your profile on Yahoo! are shared as updates that your connections and others can see, depending on your Updates settings.

These actions include when you connect to a friend, comment on a guestbook, add

information to your profile, or change your photo,

125

You can manage your Updates settings and control which updates you want to share with others.

Your Ability to Update or Delete Information Edit Your Profile

You can edit the content of your profile, and you can set permissions regarding who can see which

information on your profile.

You may hide your profile. By hiding your profile, people will not be able to search for you, contact you, or invite you to connect. Your profile will not be shown to others and only your display name and status message will be visible.

Applications

If you no longer want to allow your connections to share your information with third-party applications and developers, you may opt-out at any time from the Permissions Settings within your profile on Yahoo!.

You may revoke permissions you granted to an application at any time. For the Yahoo! Application Platform, remove the application by choosing

"Remove" from the application's Settings menu. For

126 applications on third-party websites and other

applications, visit your Yahoo! Account Info.

o

People Search

Although you may choose not make an email address or Yahoo! ID searchable through People Search, it will continue to be attached to your Yahoo! Account. Other Yahoo! services may identify those email addresses with your profile.

Notifications

Email notifications are sent to you when actions related to your profile occur.

You may turn off these notifications at any time. Manage which email address your notifications are sent to.

Other When you use Yahoo!, you are subject to the Yahoo! Terms of Service.
o

Please see Profiles Help if you have questions about this service.

This page describes current Yahoo! practices with respect to this particular service. This information may change as Yahoo! revises this service by adding or removing features or using different

127 service providers. To find out how Yahoo! treats your personal information, please visit our Privacy Policy.

Pearl Uppal Chief Executive Officer at Fashion and You India Private Limited Gurgaon, India Internet Current

Co- Founder & Chief Executive Officer at Fashion and

You India Private Limited Past

DIRECTOR SALES at Yahoo! Regional Sales Manager at Yahoo! India Key Account Manager at Yahoo! India

Education

Indian Institute of Technology, Delhi Delhi College of Engineering

128 Recommendations 1 person has recommended Pearl Connections 500+ connections Pearl Uppal's Summary 10 years of success in driving growth in the Internet industry.

Profile Summary:

- Result driven & growth oriented professional with success in the Internet Industry in expanding business footprint, creating value and building teams.

- One of the key architects of Yahoos India business driving & delivering accelerated growth (30X growth in 5 years)

- Designated Sales Director for the last 4 years at Yahoo! India and recognized with continuous growth & expansion in sales territory, channels (Direct, online, sales representations, telesales) and product portfolio (Media Sales, Mobile and Search).

Proven success in heading Monetization for Yahoo! India, running large sales, market development and operations teams and managing the P&L for the advertising BU

129 Proven ability to drive scale by executing effective business strategies spanning the consumer- publisher- advertiser dimensions of the business Awarded Yahoo! Super Star in 2007, the highest recognition of performance at Yahoo! Global level.

Part of a 3 member leadership team running the Yahoo! India business in absence of an MD

Considered amongst the top talent and leadership in the Indian Digital Industry Specialties Business and Strategic Planning Profit Centre Management Sales and operations leadership Market development Managing teams across sales, sales operations, business development & market development Sales Channel/ Alliances / Partnership Development Pricing of Services Customer Service and Retention Management Public speaking & Media interaction

130 Pearl Uppal's Experience Co- Founder & Chief Executive Officer Fashion and You India Private Limited Privately Held; 201-500 employees; Apparel & Fashion industry November 2009 Present (2 years 1 month) DIRECTOR SALES Yahoo! Public Company; 10,001+ employees; yhoo; Internet industry May 2005 November 2009 (4 years 7 months) - Responsible for leading monetization for Yahoo! India across display, search and mobile advertising.

- Leading business strategy, sales, operations, market development and business development teams

- Managing business delivery through owned and partnered sales channels ( field, online, telesales, resellers, and networks)

- Delivered rapid growth to Yahoo! India's revenue ( scaled 30X in 5 years) - As part of Yahoo! Indias core leadership team, built & presented the business strategy to global management successfully altering current

131 segment & product focus, and identifying key areas for investment in resources to build scale in Indian operations

- Driving cross functional teams to deliver results against identified growth areas for the company

- From Jan 2009, scope of role expanded to include building and managing Yahoo! India ad network

- Media spokesperson for Yahoo! India, represented Yahoo! at Internet and Mobile Association of India and as Yahoo! speaker at Industry events. Regional Sales Manager Yahoo! India April 2003 April 2005 (2 years 1 month) Heading North & Eastern India region for Yahoo! India, responsible for - operating and managing the north India office based in Gurgaon - driving growth in revenue through market development, customer acquisition, retention and development

- worked with the MD on the advertising business strategy and was key in driving the overall go to market for Yahoo! across customers and partners. - Led all key business growth initiatives for the India MD

132 Key Account Manager Yahoo! India Public Company; 10,001+ employees; yahoo; Internet industry May 2002 March 2003 (11 months) Key Account Manager Rediff.com Public Company; 201-500 employees; REDF; Internet industry May 2000 April 2002 (2 years) As Key Accounts Sales Manager, Advertising Sales Drove exponential growth in Rediff.coms advertising sales in NCR region, contributing to 30% of national ad sales business. Established key account management processes and set up cross functional project teams to execute go to market and delivery on key accounts. Worked with the CEO and CFO to set up business analysis & metrics toolkit to provide managerial insight for effective planning, operations & cost control across Rediffs business segments.

133 Financial Leadership Programme General Electric Public Company; 10,001+ employees; GE; Electrical/Electronic

Manufacturing industry May 1999 April 2000 (1 year) As part of the Financial Leadership program Worked with the CEO of Power Control to set up a pricing framework for low voltage switch gears and CFO of GE Medical Systems to drive financial planning and analytics.

CHAPTER 4.

Data Analysis and Interpretation of Financial Planning & Forecasting

134 Job Title: Data Analysis and Interpretation of Financial Planning & Forecasting in Yahoo Software & Development India Pvt Ltd. Interest Category: Finance & Corporate Controlling Description: The Manager will provide financial leadership to the Budgeting & Forecasting department of Corporate Finance. Primary responsibilities will include: 1. Process management of budgeting, forecasting tools, reporting, roles, issue resolution, communications. 2. Interpretation of business requirements for projects, forecasts, budgets. 3. Lead process improvement initiatives managing resources, implementing change, communicating effectively. 4. Effectively work with MEDRAD and Bayer financial leadership teams. 5. Effective issue resolution, problem solving, and providing recommendations. 6. Significant data analysis. 7. Evaluating, validating requirements for, prioritizing and auctioning a large number of requests. 8. Support of internal business partners located in multiple geographic locations. Technical & Behavioral Requirements:

135 1. Bachelors Degree (Accounting or Finance preferred) and Masters Degree (MBA or Finance) required 2. Overall experience of 6+ years in finance/accounting/business management is required. 3. Solid business sense to analyze budgets and forecasts as well as long range planning. 4. Supervisory experience preferred. 5. Ability to lead projects managing resources effectively. 6. Proficient and knowledgeable about financial accounting policies and procedures. 7. Demonstrated business acumen with a drive for results and sound business judgment. 8. Strength in dealing with ambiguity and effective problem solving skills. 9. The ability to determine root causes of complex issues that involve multiple internal contact points and IT systems. 10. The ability to recognize, develop and implement process improvements to enable effectiveness or efficiency. 11.. Excellent oral, written, listening, persuasion and consensus building and presentation skills. 3. DATA ANALYSIS AND TNTERPRETATION

RATIO ANALYSIS:-Ratio Analysis in relation to Working Capital

136 Ratio analysis is widely used tool of financial analysis. It is defined as, the systematic uses of ratios to interpret the financial statements so that the strength and weakness of firm as well as its historical performance and financial position be determine. The term Ratio refers to the numerical or quantities relation between two variables. The ratio analysis of Working Capital can be used the management as a means of checking a firm is improving or deteriorating over the years. Over the years the significant trend analysis of ratios lies in the fact that the analysis can know the direction of movement. For example, there may be low as compared to the norms standard but trend may be upward.

THE MOST IMPORTANT RATIO OF WORKING CAPITALMANAGEMENT:1. Current Ratio 2. Quick Ratio 3. Cash Position Ratio 4. Working Capital Turnover Ratio 5. Inventory Turnover Ratio 6. Debtors Turnover Ratio 7. Average Collection Period 8. Fixed Asset Turnover Ratio 9. Capital Turnover Ratio 10. Inventory Turnover Period

137 11. Expense Ratio 12. Return on Investment 13. Gross profit Ratio

Budget 2011 Expenses B. BLR HQ related

2. Headcount: Actual Head count at Q3 is $2511 & in Q4 expected net addition is $165 with this expected Headcount at the end of the year ** For 2011 the gross addition expected to be 10 & with the average attrition of 9% the net addition expected to be $164. The net addition in the product group is expected to be $251, GBS 25, & SE&O 31.

138 2. Salaries:

At present Blr HQ has 24 employees in Bangalore, 1 at Sunnyvale & 2 TBH. The TBH are positioned at M4 & M5. For the plan purpose an increment of 10% is considered effective from Q2 2011. The retirement plan calculated 10.66%. Bonus is calculated at 3% of the salary. Retention bonus is calculated on the existing employees as per the HR advice. The cost per/head/month is expected to be 40 & with the increase in the total Headcount expected to come down to 30 in 2011.

3.Employee Benefits

(i)The lifestyle expenses:

a). Gym: Presently about 250 employees use the external gym facility which is costing $50 per head/year. This is expected to go upto $75 per head/year and the usage is expected to go up to 255 employees.

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b) Doctors: Presently we have one counselor at the campus who is paid $344 per month. For 2011 in addition to this counselor two Drs. are expected to be in each of the campus costing $350per dr/month.

c) Health Checkup: The co. provides comprehensive medical test to the employees during the Q1 of the each year. For 2010 these test

costed $49 per employee. In 2011 the cost is expected to be $55 per employees and 70% of the employees in Q1 are expected to utilize the service.

(ii) Medical Insurance: Yahoo provides personal accident, hospitalization & life coverage. The life coverage was extended from Q3. The average cost per employees is $150, expected to go upto $175 mainly due to increase in the claim ratio.

(iii) Entertainment Expenses:

140 Presently $500 per employees/year. This is expected to go upto $550 per employee/year & 50% of the employees are expected to use this.

(iv) Ground Transportation & Car rental:

This represent Yahoo Bus services ($52 per month/person), Yahoo Transport services ($70 per month/person), Inter office shuttle, other team transport. Due to the expected increase in the fuel prices of 20% this cost is likely to go up by 8% (v) Gifts: This represents the Pat on the back of $22 per person/year. And 40 % employees are eligible for this.

With this employee benefits is $96 per employees/month in 2010 is expected to be $94 per employees/year.

4.Recruitment Expenses:

141 This consists of job portal, interview travel, background checks & campus visits. In 2010 the gross addition is expected to be 600 at the average cost of $550. In 2011 the gross hiring expected to be 700 at an average cost of $ 548 per hire. In 2011 cost includes Job portals cost which was not there in 2010. Adjusted for this the 2011 cost will be same as 2010. Since gross hiring is likely to go up by 55% compare to 2010. We need to do more campus visits, hoardings, and advertisement. In spite of this cost will remain the flat.

5. L&D Expenses: In 2011 there would be more thrust on the tech trainings & also encourage employees to undertake technical courses which will benefit the company. So the cost per employees/month in 2010 is expected $15 this will go up to $21 in 2011.

6. Contractors & Consultants:

This includes interns, contractors & Business consulting.

142 Interns are estimated based on the actual # on 2010 at a monthly fees of $950 per intern. Contractors Similar to FTEs salary 10% of increment will be given from Q2 2011. The business consulting-In 2011 major thrust will be on OPD which will include many consulting projects We also intending to do many diagnostic & compensation surveys All these initiatives will push up the cost per head/month $23 in 2010 to $37 in 2011.

7. Public Relation: These expenses are mainly relating to Yahoo branding & employees retention. Some of the major events planned during 2011 are tech sponsorship, showcase, hack days, go green, WIT, YEN, academic relation. These expenses are incurred mainly to enhance Yahoo brand, which will facilitate higher employee retention & also assist in hiring. These initiatives will push these expenses from $35 per

employees/month to $ ***

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8. Travel: These expenses pertaining to the employees in the Blr HQ only. And is retained at the 2010 level 9. Finance Expenses: These expenses include auditors legal fees, YEFI contribution. Adjusting for the tax reversal the cost per head/month is $11 which is expected to be $8 in 2011. In 2010 there was reversal of non income tax expenditure which resulted in a negative number

Summary: After adjusting tax reversal in 2010 cost per

employees/month in 2010 will be $264 which is estimated to go up to $ 301 in 2011an increase of 14% The majority of the expenses in Blr Hq are employees retention, recruitment. In 2011 Bangalore being a cost advantage center is expected to grow substantially and there is urgent need to ramp up.

144 This will require an increase in the total expenditure however over all cost per person will be still be less than 2009. The total Blr Hq expenses % to the total Yahoo SD Indias payroll % is 11% Payroll benefit in Bangalore is about 11% where as Globally it is 22%.
FY2008

Actual YTD
Salary & Fringes Discretionary Employee Expenses Intern & Contingent Workforce Expense Marketing and PR Facilities & Equipment (Net) Outsourced Service Provider Expenses Travel and Entertainment Other Expenses 4,800, 000 2,715, 520 679, 741 348, 891 1,862, 201 325, 589 2,352, 371 1,869, 338

FY2009 Actual YTD

2,299,9 99 742,3 36 223,1 04 474,5 89 2,0 32 262,3 40 2,122,0 17 921,2 06

FY2010 Actual YTD

2,600,0 00 660,6 34 542,7 76 470,3 84 (2 81) 325,6 76 2,309,1 01 (238,5 48)

FY2011 Actual Q2
700,0 00 182,8 57 133,2 08 64,8 46 21 (9,4 67) 688,6 76 6,9 17

FY2011 Actual Q3
700,0 00 182,8 57 133,2 08 64,8 46 21 (9,4 67) 688,6 76 6,9 17

FY201 Actua Q

542, 38 342, 35 162, 03 141, 28 4, 01 63, 17 735, 18 5, 97

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YAHOO SOFTWARE DEVELOPMENT INDIA PRIVATE LIMITED

Balance Sheet as at March 31, 2011

Sched ule
Sources of Funds Shareholders' Funds:

FY 2011 (In FY2010 Rs.)

327,255,6 20 4,028,415,6 52 4,355,671, 272

(In

Rs.)
327,255,6 20 1,090,450,1 39 1,417,705, 759

Capital Reserves and Surplus

1 2

Application of Funds Fixed Assets 3

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1,059,316,7 33 747,986,5 06 311,330,2 27 14,161,0 82 325,491,3 09 766,794,4 70 499,351,5 87 267,442,8 83 80,465,1 76 347,908,0 58

Gross Block Less: Depreciation Net Block Capital Work-inProgress

Deferred Tax Asset [Schedule 13 Note 9 (ii)] Current Assets, Loans and Advances: Sundry Debtors Cash and Bank Balances Other Current Assets Loans and Advances 4 5 6 7

118,589,2 77

70,290,7 79

467,501,6 87 1,291,859,8 90 169,398,9 10 309,577,7 91 2,238,338,2 77

721,808,0 07 304,721,3 96 169,776,5 60 274,410,5 42 1,470,716,5 03

Less: Current Liabilities and Provisions: Liabilities Provisions

8 421,554,7 84 (80,599,3 68) 340,955,4 16 1,897,382,8 61 2,341,463, 447 802,013,6 52 70,202,7 55 872,216,4 06 598,500,0 97 1,016,698, 933

Net Current Assets

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The Schedules referred to above and the notes thereon form an integral part of the Accounts. This is the Balance Sheet referred to in our report of even date.

For and on behalf of the Board

For Price Waterhouse Firm Registration Number: 301112E Chartered Accountants

J. Majumdar Kuipers Partner Membership No.: F 51912 Place: Bangalore Date:

Manish Shah Company Secretary

Michael Callahan Director

Jeroen Peter Johan Director

Place: Sunnyvale & Bangalore Date:

148

YAHOO SOFTWARE DEVELOPMENT INDIA PRIVATE LIMITED

Profit and Loss Account for the year ended March 31, 2011

Schedule FY 2011 Inr. Income

Services Other Income 9 10

FY 2010 Inr. 2,868, 706,362 4, 906,173 2,873, 612,535

3,466, 420,185 7,1 93,398 3,473, 613,583

Expenditure
Expenditure on Employees Other Expenses Depreciation

11 12

1,704, 277,357 874, 980,028 248, 634,919 2,827, 892,304

1,498, 675,990 699, 672,611 206, 013,925 2,404, 362,527

Profit for the year before taxation Add/ (Less):Provision for Taxation [Schedule 13 Note 1(viii) and 9] Current Tax MAT Credit Entitlement Deferred Tax Profit for the year after taxation Profit brought forward

48,2 98,498

(83,7 41,964) 79, 135,211 34, 101,357 498, 744,613 540,

694,019,777 1,039,

149
from the previous year

543,209

798,595

Balance carried to the Balance Sheet

1,733, 562,986

1,039, 543,207

Earnings Per Share [Schedule 13 Note 1(vii) and 12]

Basic Diluted Notes on Accounts 13

30.88 -

54.61 -

The Schedules referred to above and the notes thereon form an integral part of the Accounts. This is the Profit and Loss Account referred to in our report of even date.

For and on behalf of the Board

For Price Waterhouse Firm Registration Number: 301112E Chartered Accountants

J. Majumdar Kuipers

Manish Shah

Michael Callahan

Jeroen Peter Johan

150
Partner Membership No.: F 51912 Place: Bangalore Date: Company Secretary Director Director

Place: Sunnyvale & Bangalore Date:

151

CONTENTS

Chapt Particulars er 1 2 3 Pvt. Ltd., 4 5 6 7 8 Data Analysis and Interpretation Conclusion Suggestions and Recommendations Annexure - Questionnaire Bibliography = List of books /websites referred 52 72 78 81 87 Introduction to Human Resource Management Concepts of Recruitment and Selection Company Profile of M/s Eskay Heat Transfers 36 5 15 Page No.

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