CENTRE POINT COLLEGE

SYNOPSIS

82

CENTRE POINT COLLEGE

A SYNOPSIS ON

AN ANALYTICAL STUDY OF RATIO ANALYSIS OF TATA STEEL LIMITED

Submitted to the Department of Business Management CPC, Nagpur for BBA-III

Submitted by
SWATI RAKHECHA HARSHA NAGOTRA

Project Guide
Mr. CHETANYA SAKHARE

CENTRE POINT COLLEGE 7, Nawab layout, Tilak Nagar, Nagpur

83

CENTRE POINT COLLEGE

2008-2009 CONTENTS OF INDEX PAGE

1) Introduction

2) Significance Rational
3) Objectives 4) Hypothesis 5) Research Methodology 6) Method of Collection of Data 7) Primary of Data 8) Secondary Data 9) Expected contribution 10) Chapterisation

84

CENTRE POINT COLLEGE

INTRODUCTION
Financial management seeks to plan for the future such that a personal or business entity has a positive flow of cash. The term financial management has a number of meanings including the administration and maintenance of financial assets. The process of financial management may also include identifying and trying to work around the various risks to which a particular project may be exposed. DEFINITION Financial management is concerned with the managerial decisions that result in acquisition and financing of short term & long term credits for the firm. -PHILLIPPATUS When the project is prepared it includes all the aspects of projects like companys product and its market, manufacturing process, operational viability, its financial projection and various ratios. This help the management to understand weather the project is practically possible or not. Ratio analysis gives the idea about the profitability of the project. By studying the various ratio and other related aspects of the project report presented to them for finance bank or financial institutions come to know various aspects such as its technical feasibility, economical feasibility, financial feasibility, marketability etc and the financial institutions/banks provide the finance to the company. Project report gives projected financial statements and on the basis of that ratios are calculated. Ratio analysis helps in judging the operational efficiency of the managements ability to reply short and long term loans, doing inter-firm comparison and to assess the future growth of the company. The ratio analysis of the company is done before investing or providing credit to the company.

85

CENTRE POINT COLLEGE

SIGNIFICANCE
1. Ratio analysis simplifies, summarizes & systematizes a long array of

accounting figures. 2. The main contribution of Ratio Analysis lies in bringing the

interrelationship which exists between various segments as expressed through accounting statement. 3. It is an instrument for diagnosis of the financial health of an enterprise.
4. It is an invaluable tool to the management for discharging its basic

function as forecasting, planning, co-coordinating & control.

5. It facilitates easy communication of information.

6. It discloses the changes in the financial position of an organization between two periods. 7. It also facilitates interfirm comparison.

86

CENTRE POINT COLLEGE

OBJECTIVES
1. To study the profitability: Accounting ratio help to measure the

profitability of the business by calculating the various profitability ratios.

2. To study the solvency: With the help of solvency ratios, solvency of the

company can be measured. These ratios show the relationship between the liabilities and assets.
3. To analyze the financial statement of the company: Ratio analysis

help the outsiders just like creditors, shareholders, debenture-holders, bankers to know about the profitability and ability of the company to pay them interest and dividend etc.
4. To study the operating efficiency: Ratio analysis helps to workout the

operating efficiency of the company with the help of various turnover ratios.
5. To analyze the performance of the company: With the help of ratio

analysis a company may have comparative study of its performance to the previous years.
6. To provide recommendations and suggestions based on findings:

Accounting ratios are very useful as they briefly summaries the result of detailed and complicated computations

87

CENTRE POINT COLLEGE

HYPOTHESIS
The hypothesis taken under consideration is: 1. Ratio analysis serves as an effective tool in projection of future. 2. At the time of project appraisal different ratios gives financial feasibility to the project in future.

88

CENTRE POINT COLLEGE

RESEARCH METHODOLOGY
It is a way to systematically solve the research problem. It may be understood as a science of studying how research is done scientifically. In it we study the various steps that are generally adopted by a researcher in studying his research problem along with the logic behind him. It is necessary for the researcher to know not only the research methods or techniques but also the methodology. The research methodology which used for the study is observation method. The research procedure involves the following basic elements: 1. Selection of subject 2. Selection of title of dissertation 3. Selection of time period 4. Collection of data 5. Reliability of data 6. Analysis of data 7. Reporting

89

CENTRE POINT COLLEGE

DATA COLLECTION AND ANALYSIS

DATA COLLECTION The researcher can gather secondary data, primary data or both. Primary data are data gathered for a specific purpose or for a specific research project. Secondary data are data which do not originate from the investigator but which are which are already collected for some other purpose and can be used for the study purpose. Secondary data are in the form of finished goods. It includes: a. Financial statements b. Journals c. Books d. Net The source of data which is required for the study is secondary data and appropriate source is taken under consideration: Sample universe Sample size

90

CENTRE POINT COLLEGE

Library Research
This is the type of research which is used based on the books, periodicals,journal,domentation,secondary data, etc which are available in the library. The researcher depends and has to depends, only on the materials which can be collected from library sources. Many social sciences researchers now a day make use of this method mainly because of its convienense. Morever individual researches find it suitable from the point of view of economy of time resources and manpower. However for want of adequate primary data and access to actual life situation, the observations and conclusion often turn out to be bias. There is also a danger of deterioration in the standard of the report to the level of hotchpotch compliation.However the library research method is widely used especially in social sciences. Many such compilation of work however can be very seldom be called research and a sort of confusion exist regarding the process of research in the minds of many.

91

CENTRE POINT COLLEGE

EXPECTED CONTRIBUTION
Based on our study the researcher will be making analysis to help to improve the financial position of tata steel limited and based on the study conclusions will be drawn, the researcher will be making suggestion to the management of the company to overcome the weaker areas and help in its decisions making process which may result in financial gain for the investors.

92

CENTRE POINT COLLEGE

Chapterization

The final report will be consisting the following 1. Introduction. 2. Company Profile. 3. Research Study Problem Definition. Theoretical Prospective. Objective of the study. Scope of the Study (Research boundaries). 4. Research Methodology. 5. Data Collection. 6. Data Analysis and Interpretation. 7. Findings and Report Generation. 8. Conclusion. 9. Recommendation and Suggestion. 10. Limitations. 11. References. 12. Annexure.

93