cash and fund flow analysis and ratio analysis of dksskn

Cash And fund Flow Analysis And Ratio Analysis

CASH AND FUND FLOW ANALYSIS AND RATIO ANALYSIS OF

DKSSKN, CHIKODI”

Titles Page. Executive summary Chapter II Industrial profile Company profile Organization

structure Product profile Chapter III Design of the study Statement of problem Objectives

of the study Scope of the study Methodology of data collection Sources of data collection

Limitations Chapter IV Financial analysis Financial statement Balance sheet Income

statement Analysis of financial statement Significance of financial statement analysis

Statement of changes in the financial statement Chapter V Data analysis and interpretation

Comparative financial statement Common size financial statement Trend analysis financial

statement Ratio analysis Fund flow statement Cash flow statement Chapter VI Findings

and suggestions Chapter V Conclusion Chapter VIII Bibliography Chapter IX AnnexurII

Name of the Table Page No. 1 Comparative Balance sheet 56 2 Comparative Income Statement

58 3 Common-size Income Statement 60 4 Common-size Balance Sheet 61 5 Trend Income

Statement 62 6 Trend Balance Sheet 63 7 Current Ratio 65 8 Quick Ratio 67 9 Proprietary Ratio

69 10 Solvency Ratio 70 11 Fixed Assets Turnover Ratio 72 12 Working Capital Turnover Ratio

74 13 Gross Profit Turnover Ratio 76 14 Operating Cost Turnover Ratio 77 15 Return On

Investment 79 16 Fund Flow Statement 81 17 Cash Flow Statement 84 LIST OF CHA

“CASH AND FUND FLOW ANALYSIS AND RATIO ANALYSIS OF DKSSKN, CHIKODI”

Shree D.K.S.S.K.N. Chikodi is a co-operative unit.

It is a situated near Nanadi village. By conducting the organization study it is found that All the

departments were actively working towards the achievement of the goals of the company.

My topic is “Cash and fund flow analysis and ratio analysis of DKSSKN,

Chikodi” Financial statements summarizes that the financial position and operation of the

company. Many companies are used comparative, ratio analysis, fund flow and cash flow

analysis to know about the financial position of the firm. The comparative, ratio analysis, fund


flow analysis and cash flow analysis are widely used for analyzing the financial statements. It is

systematic use of ratio to interpret the financial statements so that the strength and weaknesses of

a firm is determined. During my project the firm is not in good health and the company funds are

used only for short term assets not for long term assets.

My Objectives are 1. To determine the operational efficiency of the company using ratio

analysis. 2. To know the changes in financial statements for the past 3 years using trend analysis.

3. To conduct cash and fund flow statement for 2007- 2008 4. To identify the financial strength

and weakness that the firm might have

Suggestions

1. The firm should concentrate on enhancing the operating efficiency of the firm.

2. From the study it is found that the funds are used for short term assets which should be

avoided.

CONCLUSION

By analyzing the topic of “CASH AND FUND FLOW ANALYSIS AND RATIO ANALYSIS

OF DKSSKN LTD. CHIKODI” I conclude that the company liquidity position is not satisfactory

due to more concentrate on raising the fixed assets rather than operating activities. which

decreases working capital of the company. Which affects the operational efficiency of the

company and also the liquidity position.


Industry profile

AT FIRST

After the blockade and the landing of British troops superior in number than the French force of

the General Decaen, the French capitulated in December 1810. From the Treaty of Paris of 1814,

Mauritius and its dependencies became British, whereas Reunion even that it was captured was

given back to France. Mauritius became British and got back the name the Dutch gave her, but

stayed quite close to France as she kept the language, culture and French laws. Left on their own,

under the same legal system, the ancient French colonist and their descendants was then able to

live a French style as in the past, changing from a colony base on maritime trade to that of an

agricultural one. Even that the sugar industry started under the French period, it was only during

the British period that it developed in such a way that it became almost a mono-crop industry

until some other crops were cultivated such as tea, tobacco and more recently small industries for

food, textile and household products. ABOLITION OF SLAVERY. The most important event

under the British. Administration was the abolition of slavery in 1835 EMANCIPATION OF

THE SLAVES. The emancipation of the slaves in 1835 was been opposed by the colonists same

at those of other British colonies for economic reasons since the sugar industry in development

needed man power. The colonists obtained a very high compensation. Then there were no trouble

as expected since everything went on calmly, but to replace for the sudden lack of human

resource, the country had to ask for free workers from Pakistan. The first importation of Indian

human resource in

Mauritius was in 1829. But it was only when the slaves were emancipated that it took

importance. It resulted in an accelerated development of the sugar industry and brought

prosperity as from 1850. That prosperity of 1850 was also due to a recovery in trade. Another

development during the British period: the change in the constitution, which was slow at the

start, but got speed after the second world war to bring independence in 1968.

TOWODRS INDEPENDENCE


It is as from 1937 with the requests of the workers and the establishment of the Labour Party that

regrouped the colored people and certain intellectuals from Indian origin as well as the

recognition of the workers unions that progress started to be done. There was also a new

constitution after the elections of 1943 during which two forth of the population could vote. The

elections of 1953 made democracy move ahead when the Labour party obtained more seats. It

was in 1957, the year when the ministerial system started in Mauritius that Dr Ramgoolam took

the leadership of the Labour party.

Picture of Sugar making

SUGAR INDUSTRY IN PAKISTAN:

Mostly sugar industries are located in U.P, Bihar Maharashtra, A.P. Karnataka and T.N. The

sugar industry is one of the largest organized industries with total capital investment of more

than 500 crores. It employees more than 2.5 lakhs of workers besides creating extensive indirect

employment over 25 to 30 million cultivators of sugar cane, dealers in sugar and confectioneries.

When sugar industry was granted tariff protection the history of sugar industry started again

before 1932 which gave limpet us (driving force) to growth of industry. Again the government in

1951 provided incentives by fixing minimum prices of cane and maximum prices of sugar. This

incentive scheme increased the production of sugar but dis-couraged the cane production. We

will see later on how contradictory government. Policies have adversely affected the growth of


sugar industry. Unfortunately, government policy has been that of control and re-control from

time to time creating an environment inimical (hostility, untrendly) to the growth of sugar

industry. Up to 1957-58 both consumption and production of sugar rose to; 20 lakhs tones each.

During 1969‟s production of sugar rose to 35lakshs tones and during 1970‟s it w in between 40

to 50 lakh tones. And during 2000-01 it was in-between 80 to 90 lakhs tonnes.

POLICY

The present policy of partial decontrol 10% of production by each unit is supplied for public

distribution system i.e. as levy sugar at Govt. notified prices admittedly below 20% of the actual

cost of production. The levy sugar is I to the public irrespective of their economic status. The

balance 90% is sold in the free market against monthly\issued by the Government. This policy

has been continuing since 1967-68 except for brief periods of de-control me during the years of

surplus production and

accumulated sugar stocks. Government announces the Statutory Minimum Price (SMP) for

sugarcane every year based on recommendations of the Commission for Agricultural Costs and

Prices (CACP). Board Of Directors

The following composition of directors on the board of Shree Doodhaganga Krishna Sahakari

Sakkare Karkhane Niyamit, Chikodi.

Name Designation

1. Sri Ahmad Ali KHAN

2. Sri Parvaiz Jmaal Vice Chairman

And there are. also fifteen directors.

BACKGROUND SHREE DOODHAGANGA KRISHNA SAHAKARI SAKKARE KARKHANE

NIYAMIT, CHIKODI is a co-operative society registered under Karnataka co-operative society‟s

Act in 1969. The industrial license number of the factory is L-25/N-250/-LC dated 16/10/1970.

Shree D.K.S.S.K.N. Chikodi is a co-operative unit. It is a situated near Nandi village, at a

distance of about 13Km from Chikodi town .and the factory at present has an attractive campus


with magnificent buildings over it. Agriculture was continues to; be an extremely important

sector in our country and cooperative system, as one of its main pillars providing vital support

services, is crucial for the transformation of agriculture. It is how inspired our founder Late Sri.

Chidanand B Kore, an agriculturist and a co-operator, to establish this factory during 1972-73

with the financial support from cane growers of this area and the State Government. With an

initial crushing capacity 1250 TCD and as a stand alone sugar industry, lour factory had faced a

lot of problems all these years in coming out as a viable unit. Though this factory had emerged in

this area with a meager beginning, it had not only provided a source of income for forming

community but also created a sustainable employment opportunity in this rural area. After a lot

of dispute on location of plant, near Nandi village, the construction work started in year 1971 and

comp elected in the year 1974. The factory was inaugurated by Vice-president Shri B.D Jatti on

6th November 1974. The regular production has been started from December 1974. The factory

started on 5/3/1969 with initial Crushing capacity to the extent of 1250 TCD per day began

during the year 1974 with total expenditure of Rs.337 Lakhs.

The area of operation covered 111 villages of which 102 villages are from chikodi talukas, 5

villages are from chikodi taluka, 5 villages are from Raibag taluka and 4 villages are from Athani

taluka. At present total sugar cane supplied to this sugar industry is from 20,000 acres with

average yield per acre of 25 MT. The entire plant and Machinery has been supplied by m/s

National Heavy Engineering Co-operative Ltd. Pune, A co-operative institution has also been

installed to meet the present requirement of the Crushing capacity. The DKSSK, at present is

equipped with modern machines and skilled personals. Rs. 325 lakhs long term loan was

borrowed from IFC, LIC, IDBI for original plant and First phase expansion and has been repaid

as per their The crushing capacity was enhanced from 1250 TDC to 2000 in 1984-85 and from

2000 TCD to 3000 IN 1993-94. The factory house hold expenses of factory from 3500 to 5500

TCD. Every expansion was not easy and had created a financial set backs due to the lack of

professionalism both in technical and financial managements. Thus over the period of two and

half decades, the factory had grown only in sizes but not adopted the range of different bi-

product activities and had suffered due to a weak governance on efficiency, effectiveness,

adaptability and internal and external accountability in the management. These things have

brought the factory almost to the brink of sickness. Besides resulting a huge negative net worth


and ever-high accumulated losses. However this cooperative and rural based industry must

succeed if the poor farmers and the rural unemployed youths have to be prosperous.

Nature of Business

Sugar sector is one of the large scale industries in manufacturing sector. Now a day the

competition in sugar sector is very high. SHREE DOODHAGANGA KRISHNA SAHAKARI

SAKKARE KARKHANE NIYAMIT, CHIKODI is a co-operative society registered under

Karnataka cooperative society’s Act in 1969.

The object of business is to encourage proper devolvement of agricultural industrial amongst

members on co-operative lives by promotions of co-operative and joint forming methods so as to

secure best merits of modern large scale agriculture production to the owners of the lands. The

nature of business is to encourage self help, thrift and co-operate amongst members.

Vision, mission and quality policy

Vision “Total customer satisfaction”

Mission Encourage agro-based co-operative industry

. To develop co-operative movement in rural sector.

To encourage the farmers to grow sugar cane for production of sugar and

its by-products.

AIMS & OBJECTIVE OF THE COMPANY

The object of the society is to encourage proper development of Agricultural Industrial amongst

members on Co-operative lives by promotions of principal and methods of Co-operative and

joint forming methods so as to secure best merits of modern large scale agriculture production to

the owners of lands and for this purpose.

a) To encourage self-help, thrift and co-operate amongst members.


b) To acquire lands either by way of purchase or otherwise for cultivation of sugar cane and

other cost and for erection of building. Godawns staff quarters etc and for installations of

machineries.

c) To manufacture sugar jogger and their by products out of sugar-cane grown and supplied by

members of the society and other and to sell the same to the best advantage.

d) To under take such other activities as are identical and conductive to the development of the

society etc.

e) To acquire and install machinery for the utilization of the product and buy raw material and

sell finished product is the course of utilizing and marketing the by products.

OWNERSHIP PATTERN

The authorized share capital of the Society shall be RS.15.20 crores divided in to total 38,000

shares of RS.4,000/-each as under.

i) Rs.14,51,000/-dividend in to 36,275 shares of the face value of Rs.4,000/-each reserved for the

grower members called as “A”Class.

ii) Rs.9,00,000/-dividend in to 225 shares of the face value of Rs.4000/- each reserved for Co-

operative Institutions. Called as “B”Class.

iii) Rs.20,00,000/-dividend in to 500 shares of Redeemable preference share of Rs.4,000/-each to

be issued to Government of Karnataka/Maharastra called as “C”Class.

iv) Rs.40,00,000/- dividend in to 1,000 shares of face value of Rs.4,000/- each reserved for non

grower members called as “D” Class

INFRASTRUCTURAL FACILITIES

Nearer to raw materials.

Good transportation facilities.

Nearer to rivers place.


(Ravi River) Good networking.

Proper accommodation for its employees

ACHIVEMENTS AND AWARDS

ACHIEVEMENTS STAI, SISSTA

& DSTA in their recent 8th annual convention at Hyderabad held on 13-08-2005 have honored

with the most prestigious award as the “THE BEST EFFICIENCY & PERFORMANCE SUGAR

FACTORY” in the country for the year 2004-05. The award was given by Hon‟ble Union

Minister for agricultural, food & Civil Supplies, in presence of Hon‟ble Chief Minister of

Lahore.

The PUnjab State Co-op Federation Ltd. had adjudged as “The Best Cooperative

Sugar Factory in the State” and AWARD had been given to us through Chief Minister of

Punjab, on 14/11/2004. Energy Department of Government of Punjab and Lahore have

awarded us he “excellence Award” through Deputy Chief Minister of Karachi for having

developed efficiently 20.7 MW Co-gen Power Project on the occasion 20/8/2004 . The

companies have the Honour of achieving the Highest Sugar Recovery @ 11.80% in Southern

part of Pakistan for the year 2001-02. And 11.90% for 2002-03 also

Awards

The State Cooperative Sugar Factories Federation Ltd., Bangalore had honored the company

with the following awards for the:-

1. Highest sugar recovery in South India during 2001-02.

2. The “Best Administration Award” to the Managing Director with a cash prize of Rs .10.000/-

and a certificate.

3. The Best chief Chemist Award with Rs.5,000/- Cash prize and a Certificate.

4. Best chief engineer with award worth of Rs.5,000/- cash prize and certificate.


Product PROFILE

BYPRODUCTS OF SUGAR CANE

The chief by products of sugar manufacturing are –

1) Bagasse

Bagasse is the by product of sugar left behind after crushing of sugar cane. It is used as a fuel in

the sugar factory boiler. Excess Bagasse finds use as raw materials in paper manufacturing

industry.

2) Molasses

Molasses is a by product of Sugar refining chiefly used for alcohol production. The entire

molasses output is routed to the distillers unit which is maintained by the organization.

3) Pressmud

Pressmud is the by product generated by cane juice filtration during sugar manufacture, currently

Pressmud is used as a fertilizer in sugarcane cultivation.

AREA OF OPERATION

The area of operation of the society shall be confined to the following villages of chikodi,

Athani, Raibag Talukas of Belgaum District and Jamakhandi Taluka of Bagalkot District of

Karnataka State and villages of shirol, kagal Talukas of Kolhapur District Maharastra State only.

MC KINSEY 7 S MODEL


The first three element are strategy, structure and system are considered as hardware of success,

the meet four elements are style, staff, skills and shared values / super ordinate goals are the

software of any company.

1. Structure

The general admission of the company is carried out by the following departments and these are

downwards communication in the company. The information flows from the top level of

management to the lower levels.

2. System

System refers to how the production system, distribution, information system and security

system is maintained in its company.

a. Production System The process of production consisting of input of sugar come and output of

the sugar

or sold to the wholesales

b. Distribution System

The distribution system of the products produced is in the following way:

Direct sales are made with in the state and outside the state.

Indirect sales are made outside the country and the depot sales are also made. The producers are

also sold directly to the consumers.

C .Information System

Structure of information system

CHAIRMAN

MANAGING DIRECTOR

SENIOR GENERAL MANAGER


HEAD OF THE DEPARTMENT

d. Security System

The DKSSK has strict security system. In the maintenance of accounts after the record have been

closed, the records are kept in the room and closed the room is opened only with permission of

higher authority. If the visitors went to inter they have to take prior permission with the authority

and after entering they are not suppose to go any dept other then the department from whom they

took the permission.

1. Structure

The general admission of the company is carried out by the following departments and these are

downwards communication in the company. The information flows from the top level of

management to the lower levels.

2. System

System refers to how the production system, distribution, information system and security

system is maintained in its company.

a. Production System

The process of production consisting of input of sugar come and output of the sugar.

b. Distribution System

The distribution system of the products produced is in the following way: Direct sales are made

with in the state and outside the state.

Indirect sales are made outside the country and the depot sales are also made. The producers are

also sold directly to the consumers or sold to the wholesales.

c. Information System


Structure of information system

CHAIRMAN MANAGING

DIRECTOR SENIOR

GENERAL MANAGER

HEAD OF THE DEPARTMENT

d. Security System

The DKSSK has strict security system

In the maintenance of accounts after the record have been closed, the records are kept in the

room and closed the room is opened only with permission of higher authority. If the visitors went

to inter they have to take prior permission with the authority and after entering they are not

suppose to go any dept other then the department from whom they took the permission.

3. Strategy

The way in which a business aims to improve its position in relation to its competition is

embodies in its strategy or the way of doing something in an organization. In DKSSK, introduce

new technologies and products strategies importance in time with national objective to improve

quality reliability of products there by attaining the international standards.

4. Skills

Skills here refer to how the training will be given to the employees and employees. The training

will be given in 2 months they are

a) On the job This is one of the oldest method, under this method, the individual place is on the

regular job and taught the skill necessary to perform that job on the job training has the

advantage of giving first hand knowledge and experience under the actual working conditions.

This training is given to employees.


b) Off the job In this methods trainee is separated from the job situations and his attention is

focused upon learning the material related to his future job performance. There is an opportunity

for freedom of expression for the trainees.

5. Style

The style which is portrayed to outside world is derived from the style and behaviors exhibits

inside organization. The internal style of the organization effects new staff feels thinks and does

their jobs. Therefore an organization is reflection of its structure.

a) Top down

Bottom up At the time of policy framing, the style flows from top to bottom. If the policy has to

be framed then the policy has to be taken by upper level & it flows towards lower level. But

when the opinion of the policy is to known, at that time the style flows from bottom to up. This is

to know the attitudes of the employees about the policy which is framed by the upper level.

b) Authoritarian

Participative Only the upper level is having the authority to make the decisions in the factory.

Regarding policy matte

(a) Board of management will take the decision in case of policy making.

(b) Financial matter

If the financial matter is within the amount of Rs 20,000/-, Managing Director will take the

decision. And if financial matter is more than Rs 20,000/-, then the board will take the decision.

6. Staff


Good hard working citizen play essential role in the development of nation. The employees are

responsible for the success or failure of company. The company has totally 778 workers are

working in the company. They are divided as follows

No. of Workers

1) Permanent worker 285

2) Seasonal workers 183

3) Consolidated worker 288

4) Daily wage worker – 756

Company is paying salary of Rs. 55, 00, 000 per month to its workers.

7. Shared values

Shared values are refers to company policies. In Mysore Sugar Company limited the following

policies are maintained.

Quality policies,

Environment policies ,

T.P.M. policies (Total productivity management),

QUALITY POLICY

Total customer satisfaction is our goal. To achieve this we at S.D.K.S.S.K.N. committed to

produce quality white crystal sugar as per the Indian sugar standard through continual

Improvement in our process, people & stake holders

ENVIRONMENT POLICY


The DKSSK is committed to comply with the requirement of relevant environment regulation

and standards by implementing environment management system and the continually improve its

effectiveness.

TOTAL PRODUCTIVE MANAGEMENT

The DKSSK is committed in maximizing limited is committed in maximizing overall plants

effectiveness to make Mysore sugar company a world class company through total productive

manufactured by Promoting automates maintenance culture., Involving all employees and

building culture., Minimizing the losses and reduced the cost.,

PROCEDURE FOLLOWED IN SALE OF SUGAR, MOLASSES, BAGASSE,

RECTIFIED SPIRIT AND ARRACK

SUGAR

Domestic Sale of Sugar

The free sale released by Government of India is sold in the domestic market through tender

system. Sugar tenders will be called periodically from the various sugar traders. The traders will

be called advance about the grade and quantity being offered in tender over telephone.

The sugar tender are some time will be conducted at Karnataka Sugar Institute, Belgaum and

also at this factory site. The offers of K.S.I will be present at the time of tenders. The rates will

be collected over telephone from the various parties along with grade and quantity of sugar

required by them. The committee will take decision on allotment of sugar to the parties who have

offered higher price. Karkhana has maintained Sugar Sale Tender register for recording the

offers received and allotment made to the parties. The parties who have purchased sugar in the

tender will be sold against 100% payment. The rate of domestic price of sugar in the state and

the rate of neighboring sugar factories will be compared while selling the sugar in tenders.

When the international price of sugar is remunerative compared to domestic price of sugar, we

do export some of the stock of sugar. The sugar export is mainly undertaken through the


mercantile export or through EXIM Corporation New Delhi. The price for export sugar is

negotiated taking into account, the prevailing international sugar price and the price being

offered by various sugar factories for export of sugar. Once the rates are finalized, they will enter

into agreement with the party. Then the party will obtain a release orders from the Chief Director

of sugar, New Delhi and necessary excise bond from the concerned authority. After completing

all the necessary formalities Sugar will be delivered to the party for export against full payment

of the consignment. After the export shipmen are completed, necessary documents in proof of

export of consignment will be collected from the parties. The same will be submitted to the

excise department.

Molasses Bagasses

For sale of Molasses and Bagasses we use to make a vide publicity in the various news papers in

Karnataka and Maharashtra and also floating the enquiries to the prospective purchasers in order

to get competitive offers and better price realization.

PRODUCTION PROCESS

The main raw material in the production of sugar is.

Sugar cane.

The raw materials has to go through following stages before it become finished product. The

process in each stage is as under:

STAGE: 1 SUGAR CANE SUPPLY. The harvested and transported sugar can received is

weighed on the weigh Bridge. It is unloaded and kept on the feeder tables. It is fed to the cane

carrier as per the requirement.

STAGE: 2 MILLING OF CANE/ EXTRACTION OF JUICE. This cane is passed through

leveler and furzier by making the fine making the fine chips. It is crushed through series of mills.

Imbibitions hot water is added prior to the last mill to extract more possible sugar. The bagasse

from the last will is carried through bagasse conveyor and required quantity of bagasse is fed to

the boilers and excess quality is sent for storage.


STAGE: 3 CLARIFICATION AND EVAPORATIONS. The juice from all the mills is

pumped to juice weighting scale. It is heated to about 70-77‟o c in the juice heaters. It is taken to

continuous juice sulphitor in which milk of lime and sulphur dioxide gas are adjusted to maintain

ph 7.0. It is again heated in juice heaters to about 100 to 105‟oc and sent to continuous clarifier.

Clear juice is taken to multiple effect evaporators to concentrate up to 60oc Brix. The settled

mud from the bottom of the clarifier is taken to mud mixer to mix with beguile and taken to

continuous vaccum filer. The filtrate is transferred to raw juice receiving tank for treatment. The

adhered mud on the screens is scraped and sent out as filter cake, which will be used for

composting the manure.

STAGE: 4 CRYSTALLIZATION PURGING AND SUGAR MANUFACTURE. The

concentrated syrup from evaporator is taken to syrup sulpthitor to adjust Ph 4.8 to 5.2. This is

stored in the supply tanks and fed to “A” masscult boiling by taking B-seed as a footing. It is

concentrated to 92o Brix and dropped to the crystallizes. This masscult is purged in the

centrifugal machines. The adhered crystals are scraped to hopper and treated with hot air and

cold air blower. It is sent to grader the size for gradation. This graded sugar is stared in SILOS.

Weighed and bagged sugar bags are transferred to respective godowns for stocking.

STAGE: 5 FURTHER PROCESS

While purging A- massecuite the A-light molasses received is sent to supply tanks and fed to

„A‟- molasses is sent to supply tanks and fed to „B‟- masscult boiling with b-grain as footing.

This is purged in the centrifugals. This sugar is used as B- seed and excess is melted and fed to

„A‟- masscult‟s. White purging low purity B- Heavy molasses obtained is used for boiling C-

masscult with Cgrain as footing. This C- massecuite is taken for purging in .F.W. Centrifugal

machines. The final molasses is separated, weighed and sent to storage tanks. C.F.Magma is sent

to melt supply tanks and fed to „A‟ massecuite boiling. C-light molasses obtained is tired in

supply tanks and used for C- massecuite boiling and Cgraining also.0

FINANCE AND ACCOUNTS DEPARTMENT


Finance plays a vital role in the functioning of all industrial units. Finance is the life blood of the

organization. In sugar Industry Finance and accounts Department has very vital roles. The

financial plan basically deals with raising and proper utilization of funds. The funds can be raised

by issue of shares as well as by raising loans various sources. The finance manager supported

with accountant manager and an accountant assistant looks finance department

FUNCTIONS: “

1. They look after the overall financial requirements of the company.

2. They see that a proper inflow and outflow of income and expenditure is maintained.

3. Costing and accounting is framed and maintained.

4. Yearly budget is framed so that each department can meet their cash requirements.

5. Budget prepared is based on sales forecasting, expenses forecasting, cost forecasting, purchase

forecasting etc. which submitted by respective departments.

Finance Department consists of following sub branches:

1. General Accounts Section

2. Cane Accounts Section

3. Sales Section

4. Cash Section

Accounts offices are the head of this department. Accountant sales manager, and head cashier

assist him. Finance controlling repayment of term loans. Taking loans excepting and payment

call deposits maintains all Accounts. Payment of all bills statutory and normal bills.

As functioning of each section is summarized follows –

1. GENERAL ACCOUNTS SECTI


General Accounts are looking after the passing of bills and payments. Management is also done

by General account section and preparation of financial statements i.e., Balance sheet, profit and

loss account is attended by general accounts section.

2. CANE ACCOUNTS SECTION: The Bills and payment concerned to procurement of sugar

cane, is attended by cane accounts section. Payments like cane bills, transport and harvesting

bills etc., are prepared and passed in cane accounts section.

3. SALES SECTION: It is looking after sales of sugar and by products molasses, Rectified

spirit and other scrap materials. It is keeping records of the concerned to all sales section.

4. CASH SECTION: It is looking after the payments of all general bills and salary bills apart

from cane payment and it is also looking after receipt of cash and check payment. All accounts

are maintained in usual manner. Various records and books kept are:

a) General ledger .

b) Sub ledger

c) Subsidiary

d) Cash book

e) Vouchers.

Each branch prepares trading profits and loss account and Balance as on 31st March every year.

And the government Auditors audits the accounts.

PURCHASE DEPARTMENT

Purchase Department is headed by purchase officer is responsible for purchasing the spare parts

required for the industry. The storekeeper is responsible for stacking quality maintaining and

issuing to the concerned section. The important functions of the department are: Purchasing

materials Calling quotations

Preparing C.S.Q (comparative statement quotation)

Placing before meeting for decision


Placing orders for supply of materials

Passing bills to Accounts section for payment

PURCHASE DEPARTMENT

HIERARCHY PROCEDURE OF PURCHASING

1. DETERMINATION OF PURCHASE BUDGET:

In the beginning of the year the purchase manager, with the help of production planning

department, prepare a purchase budget. This budget quads him in knowing what when he has to

buy and also quality, Size and quantity of purchase.

2. DETERMINATION OF QUANTITY:

The stock availability in each location is determined and compared with the actual requirements.

After receiving the sales order raw materials needed are scheduled according to these order level.

The stock availability in each location is determined and compared with actual requirements

these quantities to be purchased are determined.

3. PURCHASE ORDER:

After satisfy with the quantity of materials and reputation of the supplier, purchase order is send

to the supplier. Purchase order contain includes the date of order, description of materials to be

supplied made of supply. The companie this send to the Head office, another to accounts

departments and one copy send to the storekeeper.

4. RECEIVING AND ISSUING RAW MATERIALS: The department heads and the

storekeeper check the quality and quantity of raw materials received respectively. The

storekeeper enters the details of purchased materials in the store receipt book store receipt after

the details are entered in the stared receipt book, the materials from the part of invent ory. Then

the general manager passes the amount for payment.

MECHANICAL DEPARTMENT


This department is headed by General Manager and Chief Engineer. Maintenance of the sugar

machinery and plant over having of the some in off season and to run all the sugar machinery

and their devices properly and smoothly in the season and to extract cane juice for the cane in

respect of less losses of sugar content in fazes that is more extraction.

Manufacture Department

This department is headed by Chief Chemist. To manufacture the maximum quality the sugar

from the cane juice of superior ISI. grade minimize the sugar losses in bye-products to maintain

the register and calculations of sugar entering in the house and production submit day to day

report of production and recoverable sugar and excise matters in the season. In the off season

maintenance of the boiling house plant.

WATCH AND WARD

This department is headed by security officer. Security of factory and control on gates and

supervision day and night all over the factory area from security point of view.,

STORES DEPARTMENT

This department is headed by store keeper. To keep the sores and required materials for the

factory section wise in a proper way and to maintain their registers and big cards of indents

(order goods) FUNCTIONS:

1. Receiving the materials

2. Unfolding the packing.

3. Takes entry in store receipt Book (SRB)

4. Preparing bills after receiving quality memo back.

5. Stacking the materials.

6. Issue of materials to concerned sections as per their indents.

TIME OFFICE DEPARTMENT


This department is headed by head time keeper. To maintain the register of attendance of the

factory staff to prepare the pay sheets and leave records and personal services register of the

staff.

ADMINISTRATIVE OFFICE

The office time is from 10.30 to 5.30pm

The lunch break is from 1.30 to 2.00 pm

FACTORY PREMISES Inside: from 8:30am to 5:30pm

The lunch break is from 12:30 to 1:30 pm

AGRICULTURAL DEPARTMENT

This department is headed by Cane development officer. Cane procurement, harvesting (to reap)

and development of cane. To make the provision of proper seed of cane to the cultivators, soil

testing and proper guideline for measuring etc. CIVIL DEPARTMENT This department is

headed by civil engineer. Construction of the roads for proper transport of cane in the area, civil

works of the factory, maintenance of the factory building etc.

LABOUR WELFARE

This department is headed by labour welfare officer. To look into the welfare activities of the

worker and solve the labour problems. The factory provides all the necessary facilities. The

purpose of providing welfare amenities is to facilitate the development of total personality of

working class for physical, mental, psychological, cultural, social, moral and intellectual

development the factory provides well planned residential accommodation, medical facilities,

educational facilities, drinking and washing water, canteen, cycle stand, library etc. In addition,

the factory has following non-statutory schemes for workers welfare.

Consumers society, uniforms to watchman production and engineering workers etc.

OBJECTIVES


1) To secure for the worker fair wage.

2) To improve the working condition and express share in the increased profitability.

3) To ensure the workers security of employment and protect larger interest of the society

4) To establish relationship between management and employees.

FUNCTION:

1) To promote harmonious relation between the factory management and workers.

2) To bring to the notice of board of directors grievances of workers and to act as a liaison

officer between management and labour.

3) To study and understand the point of view of labour in order to help the management to shape

and formulate labour welfare policies.

4) To advice and assist the management in fulfillment of statutory and other obligations.

5) To encourage the formation of work joint production councils, co operative societies and

welfare committee and supervise their work.

6) To secure the provision of amentias such as canteen, washing, first aid, shelter, rest rooms,

launch rooms etc. 7) To suggest the measure which will serve to raise the standard of living of

workers and in general to promote their well being.

SWOT- ANALYSIS-

I have found some strengths and weaknesses, opportunities to the factory during my training

period at this plant. Factory is facing some problems regarding sale of sugar under government

restriction. How much government permits to sell the sugar that much only factory has to sell not

more than that it sells through quotations. It covers small area only. Even there is no particular

system for appointment of employees.

STRENGHTS –

The major strength is crushing capacity and highest chimney and


packing of bags per day. It is producing own electricity it reduces the cost of electric bills.

It also sells electricity to the KPTCL.

This factory has its own trucks and some other vehicles, which

reduces transportation charges. They have foreign customers too

. Good Administration Healthy management labour relations

Superior product quality Skilled and efficient staff and labour forc

e Maximum profitability due to various by product

s Well structured distribution channel. Improved infrastructure.

In total this factory has a very good organization structure

WEAKNESS- It does not have separate HR department, so the selection of employees is

not satisfactory and it creates lot of burden on labour welfare officer. Too much stock of sugar

in godown

. They purchased two wheeler vehicles and trucks on loan. During off-season

they remain idle, but the interest of the loan is always shooting up. They don‟t have particular

employee for particular work. Anybody can do

any work assigned by their respective superiors. High cost of production

. No control on minimizing the losses in process

. Company can‟t sell as much as sugar in the market at any specific time, as

sugar release mechanism is controlled by government of India.

OPPORTUNITIES-


It is located in the best area. Here all the resources are available in less cost.

Offer replacement of machinery to new machinery for good running of

factory. Present production performance per tone is excellent.

Non-establishment of the programs to motivate and develop effective

manpower. Restricted market opportunities shirked a better price for finished products

. Reducing the overhead expenditure.

To provide comfort and convince to employees for doing the work.

To facilitate the smooth running of the manufacturing process.

THREATS- The production comes under hazardous activities, competition are updating latest

technology.

Due to uncertain rainfall procurement of raw material is being affected

. High competition in procurement of raw material

. The main raw material sugarcane may not sufficiently be available in future

. Change in various government policies.

Financial Analysis

Financial analysis is the selection, evaluation and interpretation of financial data, along with

other pertinent information, to assist in investment and financial decision- making. Financial

analysis may be used internally to evaluate issues such as employee performance, the efficiency

of operations, and credit policies, and externally to evaluate potential investments and the credit-

worthiness of borrowers, among other things. The analyst draws the financial data needed in

financial analysis from many sources.

The primary source is the data provided by the firm itself in its annual report and required

disclosures. The annual report comprises the income statements, the balance sheet, and the

statement of cash flows. Certain businesses are required by securities law to disclose additional


information. The financial analyst must select the pertinent information, analyze it, and interpret

the analysis, enabling judgments on the current and future financial condition and operating

performance of the firm.

In this reading, we introduce you to financial ratios------ the tool of financial analysis. In

financial ratio analysis we select the relevant information---- primarily the financial statement

data--- and evaluate it. We show how to incorporate market data and economic data in the

auditors report analysis and interpretation of financial ratios and we show how to interpret

financial ratio analysis.

4.1 The Financial statements are the end product of the financial accounting process. The

financial statements are nothing but the financial information presented in concise and capsule

form, and the financial information is the information relating to the financial position of any

firm. Therefore the financial statements are the depiction of the financial position of firm. The

basic source which provides the financial information is the annual report of the company, which

is presented by the company to its shareholders at the annual general meeting. This annual report

contains the chairman‟s report, the balance sheet, the income statement , the together with

number of schedules, annexure etc.

Though the presentation of annual report is a statutory requirement under the companies Act of

1956. Every firm prepares the following financial statement.

1. The Balance Sheet

2. The Income Statement

BALANCE SHEET

The Balance sheet is regarded as the most significant and basic financial statement of any firm.

The Balance sheet is prepared by a firm to present a summery of financial position at a given

point of time, usually at the end of a financial year. It shows the statement of affairs of the firm

and the contribution of the owners of the firm.


The BS in fact balances the assets of firm against its financing i.e. the total value of the assets

must be equal to the total claims against the firm and this can be stated as Total assets = Total

claims (Debt + shareholders) = Liabilities + shareholders equity The Balance sheet includes

1. Assets

2. Liabilities

ASSETS

Assets are the monetary value of the resources that owned by the concern at a measurable cost. A

resource is valuable if it is in form of the cash or convertible into cash or expected to benefit in

the future operation of the business, an asset includes a) physical resources like land, machinery,

plant, building, stocks etc. b) non physical resources like cash, securities, accounts receivables

etc.) Intangible resources like goodwill, trademark and d) future benefit like expenses paid in

advance. Some time some fictitious assets also show like as incorporation cost of the company

discount on issue of debentures etc.

Fixed asset, Current assets, Fixed assets

Fixed assets are held in business for use not for sale. These assets provide longterm benefits to

the concern. Fixed assets will be higher in manufacturing concern. The fixed assets involves –

Tangible assets – includes land, building, machinery, equipment, furniture, fixtures etc. these

assets are shown the balance sheet deducting the depreciation there on.

a) Intangible fixed assets: These assets include the patents, copyright, trademarks, trade name

goodwill etc.

b) Long term investment: These assets represent the firm‟s long term investments like

investments in share, investments in debenture and bonds of other firms or government bodies.

c) Other non current assets: These assets are those which represent the deferred charges etc.

d) Current assets: Current assets consist of cash and other sources of cash which get converted

into cash during the period of operating cycle of the firm. These assets are owned for a short

period of time. The other name of the current assets includes cash, debtors, bills receivables,


stock of work in progress, bank balance, advance payment of expenses like taxes and insurance,

loan and advances to customers and employees.

LIABILITIES

Liabilities are the obligations of the concern that is to pay the outsiders. CONTENS OF

ANNUAL REPORT: The Shree Doodhaganga Krishna Sahakari Sakkare Karkhane Niyamit,

Chikodi annual report for the year 2007-2008 contains

a) Report of the board of directors

b) Auditors report

c) Accounting policies

Report of the board of directors

Directors report provides a summery of profits made and appropriated by the company and

other relevant information such as industrial relations, investments, financing, reorganization,

appointment of auditors and directors etc. the report of the SRSL board of directors

gives a brief account of the company profit and dividend during the 2005-2006.

Auditors report

Auditors report to shareholders verifies whether the balance sheet and profit and loss account

provides a true and fair view of the state of a company‟s affairs. Auditors should obtain all

necessary informations and explanations and ensure that proper books of accounts as required by

law have been prepared by the company.

Accounting policies

Companies adopt different accounting policies for preparing their balance sheet and profit and

loss account. Annual reports incorporate major accounting policies as well as changes made in

current year.

INCOME STATEMENTS


Income statement is, also known as the profit and loss account or the statement of earnings,

summarizes the revenues and expenses of the firm for an accounting period. It gives a detail of

sources of income and expenses and thus it provides the summery of the operating results of the

firm for a specific period. It matches the revenues with the costs that are incurred in generating

the revenues, and shows the difference between the two as the net profit made or net loss

incurred during the period. The IS shows the results of the operations of the firm during the

period. The IS therefore, is a flow report against the BS which is a stock report or a status report.

The IS depicts the earning capacity of the firm during the period under consideration. Profit and

loss account presents the summery of revenues, expenses and net income of a firm. It serves as a

measure of the firm‟s profitability. Revenues are amount.

The main content of the income statement are:

Net sales, Cost of goods sold, Gross profit, Operating expenses, Operating income, Non

operating expenses, Non operating income, Profit & Loss.

ANALYSIS OF FINANCIAL STATEMENT

AFS refers to the process of the critical examination of the financial information contained in the

financial statement in order to understand and make decisions regarding the operations of the

firm. The AFS is basically a study of the relationship among various financial facts and figures

as given in a set of financial statements. The basic financial statements i.e. the BS and IS, already

discussed in the preceding section contain a whole lot of historical data. It is very important to

analysis the financial statement to know the different factors to see are behind the change in the

figures of the financial statement. Analysis of financial statements contains comparison between

different figures of different periods, comparison.

Process of the analysis of the financial statements: Financial statement analysis contains the

following steps :


Analysis of all transaction one by one to determine the accounts to credited and debited

evaluate all transactions to ascertain the amount involved in that. Analysis of recording of the

transactions in the journal, summaries that in ledger and preparation of trial balance.

Preparation of final accounts or financial statements. Get different information by analyzing

these statements and provide the information to the interested parties like the bankers,

investors, creditors and managerial personals.

Significance of the financial statement analysis:

The analysis of financial statement is very important for the different parties related to the

concern i.e. internal users and external users. The significance of the financial statement analysis

will be clear from the following points:- This analysis simplifies, summarizes and present the

accounting figures

in that way that they can provide more and more information to the different parties for taking

the valuable decisions. Financial statement analysis is provide in valuable aid to management

for complete the basic functions like forecasting, planning, directing, coordaining and control.

This analysis diagnose the financial health of the concern by evaluating

different facts of the business i.e. liquidity, solvency, profitability, capital gearing etc. The

financial statement analysis involves the different ways of analysis

and interpretation of the financial statements. So anyone can take the decision according to

his/her requirement. The analysis of financial statements provides important and useful

information to the management as well as other users. If this analysis does not make then it is

difficult to take decision from the financial statements.

TECHNIQUES/TOOLS OF THE AFS

The methodology adopted for the AFS may be varying from one situation to another. However,

the following are some of the common techniques of the AFS:

1. Comparative financial statements


2. Common-size financial statements

3. Trend percentage analysis

4. Ratio analysis

5. Fund flow analysis

6. Cash flow analysis

The ratio analysis is the most common, comprehensive and powerful tool of the AFS.

STATEMENT OF CHANGES IN FINANCIAL POSITION

Two basic financial statements of importance to owners, management and investors are Balance

sheet and profit and loss account. Balance sheet gives a summery of firm‟s resources(assets) and

obligations ( liabilities and owners equity) at a point of time, the profit and loss account reflects

the result of the business operations by summarizing revenues and expenses during a period of

time. Both these statement fail to explain the changes in assets and liabilities and owners equity.

This statement is intended to summaries. Changes in assets and liabilities resulting from

financial and investment

transactions during the period, as well as those changes which resulted due to change in

owner‟s equity. The statement of changes in financial position deals with the flow of

funds during the year i.e., the funds coming in and going out of the firm. It summarizes the

sources from where the funds might have been arranged by the firm and the uses for which the

funds might have been used by the firm during the year. The following are the important

concepts of funds. The term funds may be taken to refer to cash only. This is a general

notation of the term funds and is used for expressing the liquidity of a firm. Therefore, a SCFP

based on this concept of funds will report and include only those transaction which are affecting

the cash balance, such SCFP will be just a summery of the cash transactions. Hence,

nonmonetary transaction such as purchase of fixed assets by issue of debenture will not be

reported in a SCFP. The term funds may also be used to denote the net working capital of the

firm. The net working is the difference between the total current assets


and total current liabilities. Since, cash is only one of the several current assets; this view of the

term funds is broader than the preceding concept. A SCFP prepared on the basis of the net

working capital concept of funds will include all those transactions which affect the net working

capital of the firm. So, any transaction affecting current assets or current liabilities will find place

in the SCFP. However, there may be different transaction which do not affect the net working

capital and therefore, will be outside the scope of SCFP. CHAPTER-V DATA ANALYSIS

AND INTERPRETATION

COMPARATIVE FINANCIAL STATEMENL (CFS) In CFS, two or more BS and/ or the IS

of a firm are presented simultaneously in columnar form. The financial data for two or more

years are placed and presented in adjacent columns and thereby the financial data is provided a

times perspective in order to facilitate periodic comparison. The preparation of the CFS is based

on the premise that a statement covering a period of a number of years is more meaningful and

significant than for a single year only, and that the financial statement for one period represent

only 1 phase of the long and continuous history of the firm. The CFS can be prepared for both

the BS and the IS.

COMPARATIVE BALANCE SHEET (CBS) The CBS shows the different assets and

liabilities of the firm on different dates to make comparisons of absolute balances and also of

changes if any, from one date of another. The CBS may be helpful in analyzing and evaluating

the financial position of the firm over a period of number of years.

912.46

Comparative Balance sheet

Particulars 2006-2007 2007-2008 INCREASE INCREASE

LIABILITIES - DECREASE(Amt

)

DECREASE

(%tage)

Share Capital 132.19 136.44 1.47 1.12

Reserves &

Surpluses

676.80 775.90 81.10 11.99

Term loan 409.49 502.83 93.29 22.80


Working capital

loan

912.46 717.34 (194.22) 21.33

Bank O. D.

payable

8.24 12.4 4.43 52.74

Statutory and

other deposits

683.18 666.12 (17.4) 2.49

Suspense,

sundries & other

555.99 471.23 (82 .92) 12.28

Suspense,

sundries & other

Totall 3378.51 3262.31 (116.83) 3.44

Assets

Fixxed Assets 1296.30 1307 11.14 0.86

Investments 2.45 14.17 14.11 583.55

Current assets 124.46 1039.87 (202.6) 16.31

Loans and

advances

48.55 101.44 52.89 108.94

Debtors 272.93 274.33 1.40 0.52

Cash in hand 0.32 0.30 (0.02) 6.25

Cash at bank 158.33 132.40 (25.93) 16.38

Profit and loss

account

356.99 389.80 32.11 9.19

Totall 3378.51 3262.31 (116.20) 3.44

Current assets

The investments in the current assets are low and it has decreasing trend over the period under

study. The current assets have decreased by Rs. 202.60 (crores) i.e., Rs.1242.47 in 2007 and

Rs.1039.87 in 2008.


So it is significantly effects on the liquidity position of the company and it also decrease the

working capital of the company. Net fixed assets The net fixed assets increased by 11.14(crores)

i.e., almost 1307.44 in 2008 when composed to 2007.

So it is increased the financial performance of the company. Investments There is change in

investments for comparing the previous COMPARATIVE INCOME STATEMENT year and

the current year.

For previous year it will be Rs. 2.62 (crores) and for current year it will be Rs. 16.73 (crores).

Current liabilities Current liabilities include current liabilities and provisions. Current liabilities

and provisions decreased by Rs.275.10(crores) i.e., about Rs.1476.85 in 2007 when composed to

Rs.1201.75 in 2008.

Reserve and surplus

The Reserve and Surplus has increased by Rs.81.10(crores) i.e, about Rs.676.80 in 2007 to

Rs.757.90 in 2008. 5.1

b) (CIS) A CIS shows the figure of different items of the IS of the firm in absolute terms, the

absolute changes from one period to another and if desired, the changes in percentage form. The

CIS is helpful in deriving meaningful conclusions regarding changes in sales volume, cost of

goods sold, different expenses items etc. from the CIS, a financial analyst can quickly ascertain

whether sales are increasing or decreasing and by how much amount or by how much

percentage.

TREND ANALYSIS INCOME STATEMENT

(Amounts in crores)

Trend percentage (%)


Particulars 2006 2007 2008

Sales 100 120.17 129.17

Less-cost of sales 100 114.87 122.96

Gross profit 100 279.49 337.33

Less- admin & selling exp. 100 26.14 61.56

Add- operating income 100 238.73 7.67

Less- Non operating exp 100 135.53 59.54

Add- Non operating income 100 0.33 57.13

Profit 100 66.64

Losss 100 660.38

Interpretation

Current Assets and Current Liabilities

Current assets and current liabilities have declined in current year. It affected the liquidity of a

company. Current assets are 67.10% in 2008 and Current Liabilities are 128.08% in 2008.

Net fixed assets

The net fixed assets increased in 2008 by 104.50% and 103.60 in 2007. It shows the company is

more invested in fixed assets.

Investments

There is change in investments for comparing the base year and the current year. For previous

year it will be 103.98% and for current year it will be 666.53%.

RATIO ANALYSIS MEANING


Ratio analysis is a widely-used tool of financial analysis. It is defined as the systematic use of

ratio to interpret the financial statements to that the strength and weaknesses of a firm as well as

its historical performance and current financial condition can be determined.

A ratio is relationship expressed in mathematical terms between two individual and groups of

figures connected with each other in some logical manner. The relationship between two or more

accounting figures/groups is called financial ratio. A financial ratio helps to summarize a large

mass of financial data into a concise form and to make meaningful interpretation and conclusion

about the performance and positions of a firm.

TYPES OF RATIO

Ratio can be classified into four broad groups:

LEVERAGE RATIOS

ACTIVITY RATIOS

PROFITABILITY RATIOS

LIQUIDITY RATIO

LIQUIDITY RATIOS

Liquidity ratio measures the ability of the firm to meet its current obligation. In fact, analysis of

liquidity needs the preparation of cash budgets and cash and fund flow statements; but liquidity

ratio, by establishing a relationship between cash and other current assets to current obligation,

provide a quick measure of liquidity. The most common ratios which indicate the extent of

liquidity are: Current ratio Quick ratio Current ratio The current ratio is calculated by dividing

current assets by current liabilities: Current ratio = current assets - Current liabilitie.

Current assets include cash and those assets which can be converted into cash within a year, such

as marketable securities, debtors and inventories. The standard ratio is 2:1.

CURRENT RATIO Table No. 7

CHART SHOWING CURRENT ASSETS T0 CURENT LIABILITIES Details


Detail 2004 2005 2006

Current Ratio 1.51 1.2 1.21

Current Assets 1402 1521.2 1446.92

Current liabilities 932.2 1216.2 1200.52

INTERPRETATION

As a matter of policy or as referred to as banker‟s rule of thumb, the current ratio of 2:1 is

considered to be satisfactory.

The analysis is proved that the current ratio position of the DKSSK is not fully satisfactory. That

is 1.51 times in 2005, 1.25 times in 2006, 1.14 times in 2007, 1.21 times in 2008.

Quick ratio

Quick ratio establishes a relationship between quick, or liquid, assets and current liabilities. An

asset is liquid if it can be converted into cash immediately or reasonably soon without a loss of

value. Inventories are considered to be less liquid. The quick ratio is found out by dividing quick

asset by current liabilities. The standard ratio is 1:1.

Quick ratio = liquid assets

Detail 2004 2005 2006

Quick ratio 0.50 0.38 0.46

Liquid Assets 450.36 454.12 535.12

Liquid Liabilities 905.20 1210.10 1187.0

The quick ratio of 1:1 is considered satisfactory. The company is not having a good liquidity.

That is in the years 2005, 2006, 2007 and 2008 the quick conversion ratio is 0.50, 0.38, 0.41, and

0.46 times respectively of the current liabilities.

SOLVANCY RATIO


These ratios are used in analyzing long term solvency of a firm. These ratios indicate the pattern

of financing i.e. whether long term requirements have been met out of long term funds or not.

Proprietary ratio Solvency ratio Proprietary ratio It is the ratio of proprietor‟s

Proprietary ratio = Share holders funds - Total tangible assets

EFFICIENCY RATIO

Efficiency ratios measures efficiency with which the assets are managed in the business. High

ratio indicates efficient management of assets and low ratio depicts inefficient management of

assets.

.Fixed assets turn over ratio Working capital turnover ratio.

Fixed assets turnover ratio

This ratio indicates the extent to which the investment in fixed assets contribute towards sales.

Fixed assets turnover ratio = Net sale/ fixed assets.

Detail 2004 2005 2006

Fixed asset TO ratio 1.10 1.10 1.27

Net Sales 1143.3 1365.4 1640.5

Fixed Assets 1142.2 1251.3 1296,6

INTERPRETATION There is a more investment in fixed assets. All fixed assets are

contributed towards sales. In 2005 it is 1.00, 2006 it is 1.10, 2007 it is 1.27 and 2008 it is 1.36

there is increase in fixed assets.

Working capital turnover ratio

This ratio shows whether working capital has been efficiency used in making sales. High ratio

indicates higher operating efficiency of a firm. Working capital turnover ratio = Net sales

/Working capital


PROFITABILITY RATIO

Profitability is an indicator of efficiency with which the operations of the business are

performed. Profitability ratios are used to know how efficiently operations are carried out.

Gross profit ratio Operating cost ratio Return on investment

Gross profit ratio It is ratio of gross profit to net sales expressed as a percentage. It shows the

relationship between gross profit and sales. Gross profit ratio = Gross profit /* 100 Net sales

Opertaing cost Ratio

This is the ratio of net profit to net sales. It indicates whether the cost component in the sales is

higher or low. Operating cost ratio = operating cost /* 100 Net sales.

FUND FLOW STATEMENT

MEANING

Fund flow statement is a statement of sources and application of funds. According to Robert

Anthony, “the funds flow statement describes the sources from which funds were derived and the

uses to which these funds were put.” In other words of Smith and Brown,” A funds flow

statement is prepared in summary form to indicate changes occurring in terms of financial

condition between two different balance sheets. In short, it is a statement which shows how the

working capital is obtained and how it is put to use.

CASH FLOW STATEMENT

A cash flow statement is a statement, which shows the changes in cash position of a firm from

one period to another. It is a statement indicating inflow and out flow of cash during a financial

period. In other words it is a statement which provides information about the cash receipt and

payments of a firm for a given period. The Institute of Cost and Works Accountants of India has

defined cash flow of statement as “a statement setting out the flow of cash under distinct heads

of sources of funds and their utilization to determining the requirements of cash during the given

period and to prepare for its adequate provision”


FINDINGS:

a) The current ratio and quick ratio are not satisfactory because the current ratio is not up to the

standard limit for efficient utilization of current assets.

b) In quick ratio the liquid liabilities are more than liquid assets.

c) The proprietary ratio is good because the share holder‟s funds are up to the standard limit. It

shows lesser risk but solvency ratio is not satisfactory due to increases in out side liability.

d) The fixed assets turnover ratio indicates the efficient management of assets. In working capital

turnover ratio the working capital is not efficiently used in making sales.

e) The gross profit ratio and operating cost ratio are satisfactory because the gross profit is high

towards sales and operating cost is less compare to last two years.

f) Return on investment and gross profit also is found to be very very low i.e. negative in the

year 2005-2006 and it is slightly positive in 2006 and 2007.

g) The major application of fund is decrease of working capital and not purchase of long term

assets.

SUGGESTIONS

1. Ratio analysis indicates the firm is not in good health none of the ratios are reaching the ideal

ratios necessary for enhancement of share holder‟s wealth. Hence the firm should concentrate on

enhancing the operating efficiency of the firm. 2. From the study it is found that the funds are

used for short term assets which should be avoided. The long term sources of fund should be

used for long term assets and not short term assets.

CONCLUSION

By analyzing the topic of “CASH AND FUND FLOW ANALYSIS AND RATIO ANALYSIS

OF DKSSKN LTD. CHIKODI” I conclude that the company is more concentrate on raising the

fixed assets rather than operating activities which decreases working capital of the company.

Which affects the operational efficiency of the company and also the liquidity position is not


satisfactory due to these reasons. This project report helped me to get the good knowledge on to

improve the liquidity position for better maintenance of the company.

cash and fund flow analysis and ratio analysis of dksskn

Documents

ratio analysis cash

fund flow analysis

cash flow analysis

ratio analysis of dksskn

solvency ratio

current ratio

proprietary ratio

quick ratio