CHAPTER-I

1.1 INTRODUCTION OF THE STUDY

Financial analysis is the process of evaluating businesses, projects, budgets, and

other finance – related transactions to determine their performance and suitability.
Typically, financial analysis is used to analyze whether an entity is stable, solvent,
liquid, or profitable enough to warrant a monetary investment.

Financial analysis is used to evaluate economic trends, set financial policy, build
long term plans for business activity, and identify projects or companies for
investment. This is done through the synthesis of financial numbers and data. A
financial analyst will thoroughly examine a company’s financial statements the income
statement, balance sheet, and cash flow statement. Financial analysis can be conducted
in both corporate finance and investment finance settings.

One of the most common ways to analyze financial data is to calculate ratios
from the data in the financial statements to compare against those of other companies
or against the company’s own historical performance.

Financial analysis refers to an assessment of the viability, stability, and

profitability of a business, sub-business or project. It is performed by professionals
who prepare reports using ratios and other techniques, that make use of information
taken from financial statements and other reports. These reports are usually presented
to top management as one of their bases in making business decisions.

“A financial analysis looks at many aspects of a business from its

profitability and stability to its solvency and liquidity.” We also call it a financial
statement analysis, analysis of finance, or accounting analysis.

The financial analysis focuses on the key figures in the financial statements and
the important relationship between them. ‘‘The analysis of financial statements is a
process of evaluating the relationship between the component parts of the financial
statements to gain a better understanding of a company’s position and performance.”

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 The financial statements are prepared on the basis of recorded facts. The recorded
facts are these that can be expressed in monitory terms. The accounting records and
financial statement are those records are based on historical costs. The financial
statements are prepared periodically for the accounting period.

Financial statement analysis (or financial analysis) is the process of reviewing and
analyzing a company’s financial statement to make better economic decisions to earn
income in future. These statements include the income statement, balance sheet,
statement of cash flows, notes to accounts and a statement of changes in equity (if
applicable). Financial statement analysis is a method or process involving specific
techniques for evaluating risks, performance, financial health, and future prospects of
an organization.

It is used by a variety of stakeholders, such as credit and equity investors, the

government, the public, and decision – makers within the organization. These
stakeholders have different interests and apply a variety of different techniques to meet
their needs. For example, equity investors are interested in the long – term earnings
power of the organization and perhaps the sustainability and growth of dividend
payments. Creditors want to ensure the interest and principal is paid on the
organizations debt securities (e.g., bonds) when due.

Common methods of financial statement analysis include fundamental analysis,

DuPont analysis, horizontal and vertical analysis and the use of financial ratios.
Historical information combined with a series of assumptions and adjustments to the
financial information may be used to project future performance. The Chartered
Financial Analyst designation is available for professional financial analysis.

Financial analysis is the process of examining a company’s performance in the

context of its industry and economic environment in order to arrive at a decision or
recommendation. Often, the decisions and recommendations addressed by financial
analysts pertain to providing capital to companies specifically, whether to invest in
the company’s debt or equity securities and at what price. An investor in debt
securities is concerned about the company’s ability to pay interest and to repay the
principal lent. An investor in Equity securities is an owner with a residual interest in
the company and is concerned about the company’s ability to pay dividends and the
likelihood that its share price will increase.

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 Overall, a central focus of financial analysis is evaluating the company’s ability
to earn a return on its capital that is at least equal to the cost of that capital, to
profitably grow its operations, and to generate enough cash to meet obligations and
pursue opportunities.

Fundamental financial analysis starts with the information found in a company’s

financial reports. These financial reports include audited financial statements, additional
disclosures required by regulatory authorities, and any accompanying (unaudited)
commentary by management. Basic financial statement analysis as presented in this
reading provides a foundation that enables the analyst to better understand other
information gathered from research beyond the financial reports.

The primary purpose of financial reports is to provide information and data about
a company’s financial position and performance, including profitability and cash flows.
The information presented in the reports including the financial statements and notes
and management’s commentary or management’s discussion and analysis allows the
financial analyst to assess a company’s financial position and performance and
trends in that performance.

1.2 STATEMENT OF THE PROBLEM

Financial statement analysis can be a very useful tool for understanding a firm’s
performance and conditions. This paper analyzes tools used in financial analysis such
as ratios. It demonstrates that financial ratio analysis is an important instrument to
estimate resources and their used. References used in paper are from books, journals,
presentation of the data and the methodology used are objective, and they are
supported by case. It is possible to evaluate a company’s present and future
performance.

1.3 OBJECTIVES OF THE STUDY

• To analyse the solvency position of the company.

• To study about the profitability position of the company.

• To access liquidity position of the company.

• To compare the financial statement of the company.

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1.4 SCOPE OF STUDY

• This study clearly defines the financial status of the concern during the working period.
• The study report brings out the financial structure and the financial position comparing
different years.

• The financial study helps us to analyse the financial background and the utilization of the
income earned through the organization process.

1.5 RESEARCH METHODOLOGY

This study focusses on profitability and solvency position of the company. It
covers the financial performance of TRIDENT PNEUMATICS PRIVATE LIMITED.
For the success of present study data was collected mainly from the secondary data.
Under this study it has applied to compare the comparative balance sheet to know the
different between three years. This study is applied ratio analysis to the efficiency of
the company.

Primary date: Primary data is a type of data that is collected by researchers directly
from main sources through interviews, surveys, experiments, etc. primary data are usually
collected from the source where the data originally originates from and are regarded as the
best kind of data in research.

Secondary data: Secondary data is the data that has already been collected through
primary sources and made readily available for researchers to use for their own research. It is
a type of data that has already been collected in the past.

1.6 TOOLS TO BE USED IN THE STUDY

 Solvency Ratio
1. Long term solvency ratio
1. Proprietary ratio
2. Fixed assets ratio
3. Debt equity ratio

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 2. Short term solvency ratio
a. Current ratio
b. Quick ratio
c. Absolute liquid ratio

 Profitability Ratio
1. Gross profit ratio
2. Net profit ratio
3. Operating profit ratio

1.7 LIMITATION OF THE STUDY

▪ Information shown in financial statement is not precise

▪ Based on the limited information it is not possible to arrive at a proper conclusion.

▪ Some information is confidential to the organization.

▪ Balance sheet of the concern is a static document as it discloses the financial position of
the concern on a particular date.

▪ Information disclosed by profit or loss account may not be the real profit.

1.8 CHAPTER SCHEME

The report of the present study – ‘‘A STUDY OF FINANCIAL ANALYSIS OF

TRIDENT PNEUMATICS PRIVATE LIMITED’’ has been organized and presented in
five chapters.

CHAPTER 1 - INTRODUCTION OF FINANCIAL ANALYSIS.

CHAPTER 2 - REVIEW OF LITERATURE.

CHAPTER 3 - COMPANY PROFILE.

CHAPTER 4 - DATA ANALYSIS AND INTERPRETATION.

CHAPTER 5 - FINDINGS, SUGGESTIONS, CONCLUSION.

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 CHAPTER 2

REVIEW OF LITERATURE

2.1 REVIEWS

Vasanthamani (1982) in her study “The Financial Performance of Lakshmi Machine Works
Limited”. The objective of the study was to analyse the financial performance of Lakshmi machine
work with a view to analyse the future of performance potentials. The study covered the period from
1978-1982. The liquidity position of the company showed that the company was able to meet the
creditors out of its own current assets. The quick ratio also revealed that the quick liabilities were met
at of quick assets without any difficulty.

Rajeswary (1990) in her study entitled “Financial Performance of Precot Mills Limited” has
concluded that the financial position and operating efficiency of the company was satisfactory
whereas the margin or safely was not stable solvency position was not satisfactory and the earning
capacity was minimum.

Parvathi (1990) in her “Financial Performance Analysis Hindustan Photos Films Ooty” for the
year 1990-1996, concluded that the gross profit has shown as increasing trends, long term solvency of
the company, debt equity ratio was not satisfactory.

Sankar. T.L & ET.AL (1995) in their study entitled, ‘‘Financial Performance of State Level
Public Enterprises’’ suffers from staggering investment, poor profitability, unnecessary investment,
poor project planning and inadequate financial control.

Gnanavelu.N (1996) in his study entitled ‘‘Case Study of Financial Performance of Sakthi Sugars
Limited’’ has proved the financial performance of the company passion is good. The borrowing by
the company was kept at the minimum level its profitability was expected to increase further. Being
the row material in seasonal the fluctuation in working capital cannot be avoided.

Pandey.I.M & et.al (1998) in their study, “Financial Ratio Pattern In Indian Manufacturing
Companies” they observed a declining trend in profitability relation to shareholders equity and total
investment, whose impact had been deepened by the increasing interest burden.

Sardeesh Babu (1999) in her study “A Study on Financial Performance of Fertilizers and
Chemicals Travancore Limited”. The cost on various overheads can be brought down by carefully
scrutinizing each item and applying cost cutting techniques. The profitability of the company can be

6
improved by reducing the expenses that do not contribute any productive use. The current assets can
be managed efficiently by examining the material holding and stock holding procedure and pattern. If
the company increase its turnover and reduces its cost, the profit will increase leading to an increase
in the growth rate of sales, profit before tax and profit after tax.

Anil Kumar (2000) in his study on “Financial Performance of Hindustan Motors Limited,
Cochin”, in his study found that the sales of the company were showing an upward trend which
reflected a growth in its profit. The tools use by him were ratio analysis, the company’s financial
position is favorable.

Karthikeyan (2000) “Financial performance of selected automobile companies, an analytical

Study” tried to identify the relationship between the financial performance variables and to develop
simple financial forecasting performance variables are analyzed to forecast the financial performance
a simple cross-section regression analysis was made. The financial analysis variables considered were
net sales, total assets, Gross profit, Profit before tax, Dividend, retained earnings, Cash flows and Net
worth. He concluded that the sales have been consistent in all the four year of study. Total asset has
also been consistent in four years under the study.

Anshan Lakshmi (2003) made “A Study of The Financial Performance with Reference to Steel
Industries Kerala Ltd”. This study covered from 1977- 1998 to 2001-2002, the objectives of the study
was to analyze and evaluate the working capital management, to analyze the liquidity position of the
company, to evaluate the receivables, payables and cash management and to suggest ways and means
to improve the present date of working capital. The major tools used for the analysis say that the
working capital management was every author suggested that the inventory management have to be
corrected.

Hamsalakshmi and Manickam (2004) has made “A study on financial performance analysts of
selected software companies” The study has been focused on examining the structure of liquidity
position leverage and profitability. The study has revealed a favourable liquidity position and working
capital position. The study has also pointed out that the companies rely more on internal financing and
the overall profitability has been increasing at a moderate rate.

Sudarsana Reddy (2003) under took a study on ‘‘Financial Performance of Paper Industry in
Andhra Pradesh’’ for the period from 1989-90 to 1998-99. The Primary objective of the study was to
analyse the investment pattern and utilization of fixed assets, ascertaining the working capital
condition, reviewing the profitability performance and suggesting measures to improve the
profitability. He concluded that the introduction of additional funds along with restructuring of
finances and modernization of technology were needed for better operating performance.

7
 Tyler Yu & et al. (2009) examine “Comparative analysis of financial performance of companies
with female CEOs and companies without female CEOs”, the financial performance of companies
with executive-level women, those who are sitting in boardrooms, and compare them with those
without female executives. This study conducted the hypothesis tests to examine differences in
financial performance between companies with female CEOs and those without.

Praveen Kumar Jain (2013) conducted a study on welding company to “Analyse the Financial
Statements”. The study revealed that the current ratio in public sector undertakings during the study
period was found to be highly erratic while the same in private sector undertakings registered
continuous decrease. As far as the inventory was concerned, the study revealed that it was highly
unplanned in public sector undertaking units when compared to private sector units. The study

contributed much in terms of realizing the importance of effective management of working capital .

Gangadhar (2018) has made an attempt on “Financial Analysis of Companies in Criteria: A

Profitability and efficiency focus” one of the objectives of the study is to analyse the liquidity position
of the companies and to point out the factors responsible for such a position. It is concluded that the
liquidity position was quite alarming since these are facing chronic liquidity problems. Their
proportion current assets in relation to the current liabilities are very low.

2.2 REFERENCES

1. Praveen Kumar Jain (2013) Analyse the Financial Statements, Indian Journal of marketing:
Volume –XVI, No-4, December 1985, Pp.9-12.
2. Gangadhar (2018) Analyse the Financial Analysis of Companies in Criteria:
3. Sudarsana Reddy (2003) under took a study on “Financial Performance of Paper Industry in
Andhra Pradesh”
4. Vasanthamani (1982) in her study “The Financial Performance of Lakshmi Machine Works
Limited”.
5. Rajeswary (1990) in her study entitled “Financial Performance of Precot Mills Limited.
6. Parvathi (1990) in her “Financial Performance Analysis Hindustan Photos Films Ooty”
7. Sankar.T. L & et.al (1995) in their study entitled, “Financial Performance of State Level
Public Enterprises”
8. Gnanavelu.N (1996) in his study entitled “Case Study of Financial Performance of Sakthi
Sugars Limited”

8
9. Pandey.I.M & et.al (1998) in their study, “Financial Ratio Pattern in Indian Manufacturing
Companies”
10. Sardeesh Babu (1999) in her study “A Study on Financial Performance of Fertilizers and
Chemicals Travancore Limited”
11. Anil Kumar (2000) in his study on “Financial Performance of Hindustan Motors Limited,
Cochin
12. Karthikeyan (2000) “Financial performance of selected automobile companies, An
analytical Study”
13. Anshan Lakshmi (2003) made “A Study of The Financial Performance With Reference To
Steel Industries Kerala Ltd”
14. Hamsalakshmi and Manickam (2004) has made “A study on financial performance analysts
of selected software companies
15. Tyler Yu & et al. (2009) examine “Comparative analysis of financial performance of
companies with female CEOs and companies without female CEOs

9
 CHAPTER-3

COMPANY PROFILE

3.1 INTRODUCTION

Established in 1988, Trident Pneumatics Private Limited has made a name for itself in
the list of top suppliers of Filters – Air, Gas, Liquid, Oxygen & Nitrogen Gas plants in India.
The suppliers company is located in Coimbatore, Tamil Nadu and is one of the leading sellers
of listed products. C is listed Trade India’s list of verified sellers offering supreme quality of
Micro Filter, Cleansweep, Microfilters etc.

Buy Filters-Air, Gas, Liquid, Oxygen & Nitrogen Gas Plants in bulk from us for the
best quality products and services. Established in 1998, us for the best quality products and
services. Established in 1998, Trident Pneumatics Private Limited are well known Exporter
and Manufacturer and Supplier of Filters-Air, Gas, Liquid, Oxygen & Nitrogen Gas Plants
etc. Trident Pneumatics Private Limited is well known for the best quality products and
Services from Coimbatore.

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3.2 COMPANY PROFILE

Name of the company Trident Pneumatics Private Limited

Address No.5/232,K.N.G.PudurRoad,
Somayampalayam post,
Coimbatore, Tamil Nadu - 641108
E-mail id [email protected].

Business activity Exporter, Manufacturing, Supplier.

Company status Active.

Date of incorporation Established in the year 1988

Company category Company limited by shares.

Company sub category Non - government company

No. of production unit 2

No .of designers 2

No. of engineers 2

No. of employees 48

Company branches 1

Banking partners ICICI bank

3.3 OUR VISION;

We have a vision of being the most trusted brand in the heavy wire domain of the
market. And we believe this can be achieved only by consistent innovation and research,
so that we can instill the best set of features in our products, to garner patronage across
industries. Our aim is to set an industrial benchmark in terms of feature rich the products
that offer characteristics which are nowhere to be found in the market.

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3.4 OUR MISSION;

Our mission is to expand and continually improve utilizing quality practices and
employee involvement to manufacture all of our products, for all industries, both in the
domestic and international markets that result in customer and employee satisfaction. To
provide the highest quality product possible through our highly skilled and dedicated
employees and state-ofthe-art and patented products and manufacturing process.

3.5 OUR PRODUCTS;

• Cleansweep Microfilters.
• Oxygen & Nitrogen Gas Plants.
• Valves.
• Industrial dryers.
• Air dryers.
• Onsite Oxygen Plant.
• Industrial Water Chiller.
• Personal Safety Equipment.
• Medical Equipment .

3.5.1 CLEANSWEEP MICROFILTERS:

Dirt, oil and vapour coming through Compressed Air without getting filtered could
eventually have adverse effects on your end products. These contaminants have to be
periodically filtered through effective means to increase the performance of pneumatic tools.
Oil and water is present both in liquid and vapour state. Complete liquid oil and water is
removed by coalescing filters manufactured by trident, which has a filter media (boro silicate
micro glass fibres). Oil vapour is removed by activated carbon filters.

FEATURES:

• Automatic drain valve as standard fitment.

• Particles upto 0.01 microns are also filtered at lower efficience.
• Very low pressure drop. 1 PSI for dry media and 2-3 PSI for wet media.
• With 10-20 wt oil.

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 • Status indicator.
• Different coalescer grade for various applications.
• Maximum oil carry over of 0.008 ppm w/w.

3.5.2 OXYGEN & NITROGEN GAS PLANT;

We are instrumental in trading a qualitative range of Oxygen & Nitrogen Gas Plants
including Nitrogen Gas Generator, Oxygen Gas Generators etc.

OXYGEN GAS GENERETOR;

Our company has gained name and fame in field of Manufacturer & Supplier of
Oxygen Gas Generators in Coimbatore, Tamil Nadu, India. The oxygen gas generator by
Trident provides bulk oxygen cylinder to the hospital for medical use which is cost-effective
and also most reliable. We offer product to meet the satisfaction of customers by our best
product.

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NITROGEN GAS GENERETOR;

As an assumed firm, we are dedicated populated with Manufacturer & Supplier of

Nitrogen Gas Generator in Coimbatore, Tamil Nadu, India. The Nitrogen generator
manufacturers by Trident implement a simple purification process to eliminate impurities. It is
used in various industries for different purposes. Due to its high working capacity this product
highly demanded in the market.

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3.5.3 VALVES;

A valve is a device or natural object that regulates, directs or controls the flow of a fluid
(gases, liquids, fluidized solids, or slurries) by opening, closing, or partially obstructing
various passageways. Valves are technically fittings, but are usually discussed as a separate
category. In an open valve, fluid flows in a direction from higher pressure to lower pressure.
The word is derived from the Latin valve, the moving part of a door, in turn from volvere, to
turn, roll. The simplest, and very ancient, valve is simply a freely hinged flap which swings
down to obstruct fluid (gas or liquid) flow in one direction, but is pushed up by the flow itself
when the flow is moving in the opposite direction.

This is called a check valve, as it prevents or "checks" the flow in one direction. Modern
control valves may regulate pressure or flow down stream and operate on sophisticated
automation systems. Valves have many uses, including controlling water for irrigation,
industrial uses for controlling processes, residential uses such as on/off and pressure control
to dish and clothes washers and taps in the home. Even aerosol spray cans have a tiny valve
built in. Valves are also used in the military and transport sectors. In HVAC ductwork and
other near-atmospheric air flows, valves are instead called dampers. In compressed air
systems, however, valves are used with the most common type being ball valves.

15
TYPES;

• Durable Automatic Drains Valves.

• Automatic Condensate Level Sensing Drain Valves.
• Valves.
• Automatic drains valves.
• Drain Valve-Timer Type - Series Ctd.
• Automatic Air Drain Valve.

3.5.4 INDUSTRIAL DRYER;

Industrial dryers are used to efficiently process large quantities of bulk materials that need
reduced moisture levels. Depending on the amount and the makeup of material needing to be
dried, industrial dryers come in many different models constructed specifically for the type
and quantity of material to be processed. The most common types of industrial dryers are
fluidized bed dryers, rotary dryers, rolling bed dryers, conduction dryers, convection dryers,
pharmaceutical dryers, suspension/paste dryers, toroidal bed or TORBED dryers and
dispersion dryers. Various factors are considered in determining the correct type of dryer for
any given application, including the material to be dried, drying process requirements,
production requirements, final product quality requirements and available facility space.

16
TYPES;

• Refrigerant Air Dryers.

• Split Flow No Purge Loss Dryers.
• Regenerative Refrigeration Dryer.
• Dryspell Plus Desiccant Dryers.

3.5.5 AIR DRYERS;

Compressed air dryers are special types of filter systems that are specifically designed to
remove the water that is inherent in compressed air. The process of compressing air raises its
temperature and concentrates atmospheric contaminants, primarily water vapor.
Consequently, the compressed air is generally at an elevated temperature and 100% relative
humidity. As the compressed air cools, water vapor condenses into the tank(s), pipes, hoses
and tools that are downstream from the compressor. Water vapor is removed from
compressed air to prevent condensation from occurring and to prevent moisture from
interfering in sensitive industrial processes.

Excessive liquid and condensing water in the air stream can be extremely damaging to
equipment, tools and processes that rely on compressed air. The water can cause corrosion in
the tank(s) and piping, wash out lubricating oils from pneumatic tools, emulsify with the
grease used in cylinders, clump blasting media and fog painted surfaces.

Therefore, it is desirable to remove condensing moisture from the air stream to prevent
damage to equipment, air tools and processes. The function of removing this unwanted water
is the purview of the compressed air dryer. Their performance characteristics are typically
defined by flow rate in Standard Cubic Feet per Minute (SCFM) and dew point expressed as a
temperature.

17
TYPES

• Medical Breathing Air Dryers.

• Dryer for Piston Air Compressor.
• Compressed air dryer.
• Absorption Air Dryers a Heated.
• Heatless Compressed Air Dryers.
• Industrial Compressed Air Dryer.
• Durable Loco dry Air Dryers.
• Heavy Duty Absorption Air Dryers Place of Origin.

3.5.6 ONSITE OXYGEN PLANT;

Our organization, as a Exporter, Manufacturer & Supplier in Coimbatore, Tamil Nadu, India.
It is performs from the the compressor is sent through the dryer and coalescing filters where water
vapor & Oil aerosols are removed. In generator, two aluminum towers filled with sieves (Zeolite type)
to ensure continuous production of Oxygen.

18
Specification:

* System Guidelines as per ISO 10083.

* Oxygen safe for medical use as per USP requirements.
* Faster payback period.
* Automatic switchover to the secondary oxygen supply.
* Digital display- Oxygen purity and pressure.

3.5.7 INDUSTRIAL WATER CHILLER;

We are manufacturers, suppliers & exporters of high-quality Water Chillers & Industrial
water chillers from India. Our Water Chillers are designed following international standards.
It is manufactured using renowned scroll compressors make available from Danfoss
Maneurop and Copeland. The design of our water chiller is fully microprocessor based
suitable for cooling applications ranging from (+) 20°C up to (-) 15°C and for lower
temperatures of up to (-) 50°C. It is engrossed with multiple scroll compressors along with
individual refrigeration circuits.

Thus, is rated for an ambient of up to (+) 48 ° C and cooling tower water temperature up to
(+) 37°C at the inlet of the condenser. The clients have an option of using CFC free refrigerant
R407c & R-134a along with in-built process pump and stainless steel chilled water expansion
tank.

19
FEATURES;

* Stainless steel plate type heat exchanger for better efficiency.

* Counter flow pattern.
* Water reservoir for continuous flow.
* Indicator and alarms for monitoring.
* High pressure, high volume pumps for 24 hrs operation.

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3.5.8 BREATHING AIR SYSTEM;

A self-contained breathing apparatus (SCBA), sometimes referred to as a compressed air

breathing apparatus (CABA) or simply breathing apparatus (BA), is a device worn to provide
breathable air in an atmosphere that is immediately dangerous to life or health. They are
typically used in fire fighting and industry. The term self-contained means that the SCBA is
not dependent on a remote supply of breathing gas (e.g., through a long hose). If designed for
use under water, it is also known as a scuba set (self-contained underwater breathing
apparatus). When not used underwater, they are sometimes called industrial breathing sets.
Unofficial names include air pack, air tank or simply pack, which are mostly used in fire
fighting .An SCBA typically has three main components: a high-pressure tank (e.g., 2,216 to
5,500 psi (15,280 to 37,920 k Pa), about 150 to 374 atmospheres), a pressure regulator, and an
inhalation connection (mouthpiece, mouth mask or face mask), connected together and
mounted to a carrying frame. A self-contained breathing apparatus may fall into one of two
categories: open-circuit or closed-circuit.

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3.5.9 TBAS 10S MEDICAL BREATHING AIR DRYERS

We are considered as a reputed firm, we are engaged in manufacturing, supplying and

exporting a wide range of TBAS 10S Medical Breathing Air Dryer in Coimbatore, Tamil
Nadu, India. We provide this range of product atmarket leading rates.

Guaranteed dew point performance Design simplicity No refrigerants used Purge saving
& Dew point dependent control system Compact digital CO & Dew point Monitor/Alarm Air
quality mandated by NFPA 99Bacterial Penetration up to 0.0001% LED tower operation
display indicating the sequence of operation. Trident Breathing Air System medical dryers.
The TBAS medical dryers operate with the principle of Pressure Swing Adsorption, hence
removing more moisture than refrigeration air dryers, -and delivers moisture free dry air
consistently irrespective of flow variation.

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 CHAPTER – 4

DATA ANALYSIS AND INTERPRETATION

Data Analysis:

Data analysis and interpretation is the process of assigning meaning to the collected
information and determining the conclusions, significance, and implications of the findings.
The steps involved in data analysis are a function of the type of information collected,
however, returning to the purpose of the assessment and the assessment questions will
provide a structure for the organization of the data and a focus for the analysis.

Ratio (Meaning):

A Ratio is a Mathematical relationship between two items expressed in a quantitative

form.

Modes of ratios:

1. Time
2. Percentage
3. Pure

4.1.1 Advantages of ratio analysis:

1. Simplifies financial statements:

Ratio analysis simplifies the comprehension of financial statements. Rations
tell the whole story of changes in the financial conditions of a business

2. Facilities inter firm comparison:

Analysis provides data for inter firm comparison. Rations high-light the
factors associated with successful and unsuccessful firms. They also reveal strong
firms and weak firms, overvalued and undervalued firms

23
 3. Makes inter-firm comparison possible:
Ratio analysis also makes possible comparison of the performance of the
different of the firm. The ratios are helpful in deciding about their efficiency in the
past and likely performance in the future.

4. Helps in planning:
Ration analysis helps in planning and forecasting. Over a period of time a firm
or industry develops certain norms that may indicate future success or failure.

4.1.2 LIMITATION OF RATIO ANALYSIS:

The ratio analysis is one of the most powerful tools of the financial management.
Ratio analysis is widely used and useful technique to evaluate the financial position and
performance of any business unit but it suffers from a number of limitations. There
limitations must be kept in mind by the analyst while using this technique.

1. Limited use of single ratio:

The single ratio, usually, does not convey much of a sense. To make a better
interpretation a number of ratios have to be calculated which is likely to confuse the
analyst than help him to in making any meaningful conclusion.

2. Lack of adequate standards:

There are no well accepted standards or rules of thumb of all ratios which can
be accepted as norms. It renders interpretations of the ratios difficult.

3. Inherent limitation if accounting:

Like financial statements, rations also suffer from the inherent weakness of
accounting records such as their historical nature. Rations of the past are not
necessarily true indicators of the future.

4.1.3 LIMITATIONS OF ANALYSIS:

Financial analysis is the process of identifying the financial strength and weakness of
the firm. It is done by establishing relationships between the items of the financial statements
viz.., balance sheet and profit and loss account. Financial analysis can be undertaken by
management of the firm, viz…, owners, creditors, investors and others.

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OBJECTIVES OF THE FINANCIAL ANALYSIS:

Analysis of financial statements may be made of a particular purpose in view

1. To find out the financial stability and soundness of the business enterprise.
2. To assess and evaluate the earing capacity of the business.
3. To estimate and evaluate the fixed assets, stock etc.…, of the concern.
4. To estimate and determine the possibilities of future growth of the business.
5. To assess and evaluate the firms capacity and ability to repay short and long- term
loans.

TOOLS TO BE USED IN THE STUDY:

 Solvency Ratio
3. Short term solvency ratio
a. Current ratio
b. Quick ratio
c. Absolute liquid ratio

4. Long term solvency ratio

d. Proprietary ratio
e. Fixed assest ratio
f. Debt equity ratio

 Profitability Ratio
1. Gross profit ratio
2. Net profit ratio
3. Operating profit ratio

25
CURRENT RATIO:

The current ratio is a liquidity ratio that measures a company’s ability to pay short-term
obligations, or those due within one year. It tells investors and analysts hoe a company can
maximize the current assets on its balance sheet to satisfy its current debt and other
payables.

Formulae:

Current Ratio = Current Assets/Current Liabilities

TABLE NO: 4.2.1

TABLE SHOWING CURRENT RATIO

CURRENT CURRENT CURRENT

ASSETS RATIO
YEAR ASSETS LIABILITIES
IN CRORES IN CRORES IN RATIOS

2016-2017 221,169,427 286,140,218 0.77

2017-2018 240,325,635 274,378,390 0.87
2018-2019 332,061,883 342,560,754 0.96
Source: Secondary data

INTERPRETATION:

The above table and chart depict the relation between current assets and current
liabilities. Current ratio is lower during the period 2016-17 at 0.77 and for the next two years
2017-18 & 2018-19 the ratios have been gradually increased to 0.87 and 0.99.

26
 CHART NO: 4.2.1

CHART SHOWING CURRENT RATIO

1.2

1 0.96

0.87

0.8 0.77
RATIO

0.6

0.4

0.2

0
2016-17 2017-18 2018-19

YEAR

27
LIQUID RATIO:

Liquid ratio is also known as Acid test ratio. This is the ratio of liquid assets and
current liabilities. The liquid assets are the assets that are converts into cash and include cash
balances, bills receivable, debtors and short-term investments. Stock and prepaid expenses are
not included in liquid assets. Current liabilities included creditor, bills payable, bank
overdraft and outstanding expenses. The ideal ratio is 1:1.

FORMULA:

Liquid Ratio = Liquid Assets / Current Liabilities

TABLE NO: 4.2.2

TABLE SHOWING LIQUID RATIO

LIQUID ASSETS CURRENT LIQUID RATIO

YEAR LIABILITIES
IN CRORES IN CRORES IN RATIOS

2016-2017 132,509,055 286,140,218 0.46

2017-2018 114,998,855 274,378,390 0.42

2018-2019 189,643,609 342,560,754 0.55

Source: Secondary data

INTERPRETATION:

The below table and chart depict the relation between liquid assets and current
liabilities. Liquid ratio is higher during the period 2016-17 at 0.46 and lowest during the
period 2017-18 at 0.42 and again during the year 2018-19 it has increased to 0.55

28
 CHART NO: 4.2.2

CHART SHOWING LIQUID RATIO

0.6
0.55

0.5
0.46

0.42

0.4
RATIO

0.3

0.2

0.1

0
2016-17 2017-18 2018-19

YEAR

29
CASH POSITION RATIO:

Cash position ratio is expressed as the ratio of financial assets and current liabilities.
Under the financial assets is possible, according to the structure of the balance sheet, to
include the cash (cash in cash registers), accounts in bank (current accounts of the company)
and short- term marketable securities. Part of the short -term liabilities are current bank loans
(in the balance sheet are presented separately from current liabilities).

Formulae:

Cash position ratio = Cash & Bank Balance + Marketable Securities / Current Liabilities

TABLE NO: 4.2.3

TABLE SHOWING CASH POSITON RATIO

CASH&BANK CURRENT CASH POSITION

YEAR BALANCE LIABILITIES RATIO

IN CRORES IN CRORES IN RATIOS

2016-2017 6,196,137 286,140,218 0.021

2017-2018 433,874 274,378,390 0.001

2018-2019 7,001,979 342,560,754 0.02

Source: Secondary data

INTERPRETATION:

The above table and chart depict the relation between cash& bank balance and current
liabilities. Cash position ratio is higher during the period 2016-17 at 0.021 and lower during
the period 2017-18 at and again it has increased during the year 2018-19 at 0.02

30
 CHART NO: 4.2.3

CHART SHOWING CASH POSITION RATIO

0.025

0.021
0.02
0.02

0.015
RATIO

0.01

0.005

0.001

0
2016-17 2017-18 2018-19

YEAR

31
PROPRIETARY RATIO:

The proprietary ratio is also known as equity ratio. The proprietary ratio is the
proportion of shareholders equity to total assets and as such provides a rough estimate of the
amount of capitalization currently used to support a business. Shareholders’ funds include
Equity share capital, Preference share capital, Reserves and Surplus. Tangible assets will
include all the assets expect goodwill, preliminary expenses, etc.

Formulae:

Proprietary ratio = Shareholders funds / Total Tangible Assets

TABLE NO: 4.2.4

TABLE SHOWONG PROPRIETARY RATIO

SHAREHOLDERS’ TOTAL PROPRIETARY

FUNDS TANGIBLE RATIO

YEAR ASSETS
INCRORES IN CRORES IN RATIOS

2016-2017 84,306,392 261,687,294 0.32

2017-2018 114,521,311 240,439,405 0.47
2018-2019 147,113,637 272,391,362 0.54
Source: Secondary data

INTERPRETATION:

The above table and chart depict the relation between shareholders’ funds and total
tangible assets. Proprietary ratio is lowest during the period 2016-17 at 0.32 and highest
during the period 2017 -18 at 0.47 and the next preceding year 2018-19 it has again increased
to 0.54

CHART NO: 4.2.4

32
 CHART SHOWING PROPRIETARY RATIO

0.6

0.54

0.5
0.47

0.4

0.32
RATIO

0.3

0.2

0.1

0
2016-17 2017-18 2018-19

YEAR

FIXED ASSET RATIO:

33
 A fixed asset is a long-term tangible piece of property that a firm owns and uses in its
operations to generate income. Fixed assets are not expected to be consumed or converted
into cash within a year. Fixed assets are known as property, plant, and equipment.

Formulae:

Fixed Asset Ratio = Net Fixed Assets / Long Funds

TABLE NO: 4.2.5

TABLE SHOWING FIXED ASSETS RATIO

NET FIXED LONG TERM FIXED ASSETS

YEAR ASSETS FUNDS RATIO

IN CRORES IN CRORES IN RATIOS

2016-2017 262,743,673 140,833,860 1.86

2017-2018 240,656,341 117,086,264 2.05
2018-2019 272,487,230 141,764,831 1.92
Source: Secondary data

INTERPRETATION:

The above table and chart depict the relation between net fixed assets and total long-
term funds. Fixed assets ratio is lowest during the period 2016-17 at 1.86 and highest during

the period 2017- 18 at 2.05 and the preceding year 2018-19 it has increased to 1.92

CHART NO: 4.2.5

34
 CHART SHOWING FIXED ASSETS RATIO

2.1

2.05
2.05

1.95
RATIO

1.92

1.9

1.86

1.85

1.8

1.75
2016-17 2017-18 2018-19
Axis Title

YEAR

DEBT EQUITY RATIO:

35
 The debt-to-equity ratio is a financial ratio indicating the relative proportion of
shareholders equity and debt used to finance a Company’s assets. Closely related to
leveraging, the ratio is also known as risk, generating or leverage.

Formulae:

Debt Equity Ratio =Total Long-term Debts / Shareholders Funds

TABLE NO: 4.2.6

TABLE SHOWING DEBT EQUITY RATIO

TOTAL LONG- SHAREHOLDERS DEBT EQUITY

TERM DEBTS FUNDS RATIO

YEAR IN CRORES IN CRORES IN RATIOS

2016-2017 110,850,520 84,306,392 1.31

2017-2018 85,110,638 114,521,311 0.74
2018-2019 107,965,675 147,113,637 0.73
Source: Secondary data

INTERPRETATION:

The above table and chart depict the relation between total long-term debts and
shareholders fund. Debt equity ratio is highest during the period 2016-17 at 1.31 and lowest
during the period 201718 at 0.74 again during the year 2018-19 it has decreased to 0.73

CHART NO: 4.2.6

36
 CHART SHOWING DEBT EQUITY RATIO

YEAR
1.4
1.31

1.2

0.8 0.74 0.73

RATIO

0.6

0.4

0.2

0
2016-17 2017-18 2018-19
Axis Title

YEAR

PROFITABILITY RATIO:

37
 A profitability ratio a measure of profitability, which is a way to measure a company’s
performance. Profitability is a simply the capacity to make a profit, and a profit is what is left
over from income earned after you have deducted all cost and expenses related to earning the
income.

The formulas you are about to learn can be used to judge a company’s performance
and to compare its performance against other similarity-situated companies.

1. Gross profit ratio

2. Net profit ratio
3. Operating profit ratio

GROSS PROFIT RATIO:

Gross profit ratio (GP ratio) is a profitability ratio that shows the relationship between
gross profit and total net sales revenue. It is a popular tool to evaluate the operational
performance of the business. The ratio is computed by dividing the gross profit figure by net
sales.

Formulae:

Gross Profit Ratio = Gross Profit / Net Sales * 100

TABLE NO: 4.2.9

TABLE SHOWING GROSS PROFIT RATIO

GROSS PROFIT NET SALES GROSS PROFIT

RATIO
YEAR
IN CRORES IN CRORES IN PERCENTAGES

2016-2017 283,268,931 645,650,832 43.87

2017-2018 330,684,839 760,802,098 43.46
2018-2019 3,576,556,141 812,015,108 44.04

38
INTERPRETATION:

The above table and chart depict the relationship between gross profit and net sales.
Gross profit ratio is high during the period 2016-17 at 43.87 and is low during the period
2017-18 at 43.46 and the next year 2018-19 it has increased to 44.04

CHART NO: 4.2.9

CHART SHOWING GROSS PROFIT RATIO

44.1
44.04

44

43.9 43.87

43.8

43.7
RATIO

43.6

43.5 43.46

43.4

43.3

43.2

43.1
2016-17 2017-18 2018-19

YEAR

39
NET PROFIT RATIO:

The net profit percentage is the ratio of after-tax profits to net sales. It reveals the
remaining profit after all costs of production, administration and financing has been deducted
from sales, and income taxes recognized. As such it is one of the best measures of the overall
results of the firm. Especially when combined with evaluation of how well it using its
working capital. The measure is commonly reported on a trend line, to judge performance
over time. It is also used to compare the results of the business with its competitors.

Formulae:

Net Profit Ratio = Net Profit After Tax / Net Sales * 100

TABLE NO: 4.2.10

TABLE SHOWING NET PROFIT RATIO

YEAR NET PROFIT NET SALES NET PROFIT

AFTER TAX RATIO
ACCOUNTING IN CRORES IN CRORES IN ERCENTAGES
YEAR
2016-2017 18,004,029 645,650,832 2.78
2017-2018 31,211,229 760,802,098 4.10
2018-2019 36,688,501 812,015,108 4.51
Source: Secondary data

INTERPRETATION:

The above table and chart depict relationship between net profit tax and net sales. Net profit
Ratio is low during the period 2016-17 at 2.78 and has increased the next year 2017-18 at
4.10 and the precedingly 2018-19 it has even more increased to 4.51.

40
 CHART NO: 4.2.10

CHART SHOWING NET PROFIT RATIO

4.51
4.5
4.1
4

3.5

3 2.78
RATIO

2.5

1.5

0.5

0
2016-17 2017-18 2018-19

YEAR

41
 COMPARATIVE BALANCE SHEET:
COMPARATIVE BALANCE SHEET FOR THE YEAR 2016-17 & 2017-18
PARTICULARS 2017 2018 INCREASE/DECREASE PERCENTAGE
EQUITY AND LIABILITIES
(1) Shareholders' Funds
(a) Share Capital 9,216,000 9,216,000 0 0
(b) Reserves and Surplus 75,090,392 105,305,311 30,214,919 40.23
84,306,392 114,521,311 30,214,919 35.83
(2) Non- Current Liabilities
(a) Long-term borrowings 110,850,520 85,110,638 -25,739,882 -23.22
(b) Deferred tax liabilities (Net) 20,767,340 22,759,626 1,992,286 9.59
131,617,860 107,870,264 -23,747,596 -18.04
(3) Current Liabilities
(a) Short-term borrowings 113,372,042 158,287,998 44,915,956 39.62
(b) Trade payables NIL NIL NIL NIL
Due to Micro & Small Enterprises
Due to others 129,107,823 67,127,122 -61,980,701 -48.01
(c) Other current liabilities 42,694,991 42,220,536 -474,455 -1.11
(d) Short-term provisions 965,362 2,747,734 1,782,372 184.63
286,140,218 274,378,390 -11,761,828 -4.11
Total 502,064,470 496,769,965 -5,294,505 -1.05
ASSETS
(1) Non-current assets
(a) fixed assets
tangible assets 261,687,294 240,439,405 -21,247,889 -8.11
intangible assets 1,056,379 216,936 -839,443 -79.46
(b) non-current investments 1,475,000 4,144,500 2,669,500 180.98
(c) long-term loans and advances 16,676,370 11,643,489 -5,032,881 -30.179
280,895,043 256,444,330 -24,450,713 -8.70
(2) Current assets
(a) inventories 126,312,738 114,564,981 -11,747,757 -9.30
(b) trade receivables 83,881,167 119,428,348 35,547,181 42.37
(c) cash and cash equivalents 6,196,317 433,874 -5,762,443 -92.99
(d) short-term loans and advances 2,862,990 4,847,683 1,984,693 69.32
(e) other current assets 1,916,215 1,050,749 -865,466 -45.16
221,169,427 240,325,635 19,156,208 8.66
Total 502,064,470 496,769,965 -5,294,505 -1.05

42
INTERPRETATION:

1. The current assets of the company in the year 2018 is increased as compared to the
previous year 2017 at 8.66.

2. The current liabilities of the company in the year 2018 is decreased as compared
to the previous year 2017 at -4.11.

43
 COMPARATIVE BALANCE SHEET FOR THE YEAR 2017-18 & 2018-19
PARTICULARS 2018 2019 INCREASE/DECREASE PERCENTAGE
EQUITY AND LIABILITIES
(1) Shareholders' Funds
(a) Share Capital 9,216,000 9,216,000 0 0
(b) Reserves and Surplus 105,305,311 137,897,637 32,592,326 30.95
114,521,311 147,113,637 32,592,326 28.46
(2) Non- Current Liabilities
(a) Long-term borrowings 85,110,638 107,965,675 22,855,037 26.85
(b) Deferred tax liabilities (Net) 22,759,626 24,583,156 1,823,530 8.01
107,870,264 132,548,831 24,678,567 22.88
(3) Current Liabilities
(a) Short-term borrowings 158,287,998 229,242,839 70,954,841 44.83
(b) Trade payables NIL NIL NIL NIL
Due to Micro & Small Enterprises 1,975,663
Due to others 67,127,122 78,943,712 11,816,590 17.60
(c) Other current liabilities 42,220,536 30,980,624 -11,239,912 -26.62
(d) Short-term provisions 2,747,734 1,417,916 -1,329,818 -48.39
274,378,390 342,560,756 68,182,366 24.85
Total 496,769,965 622,223,222 125,453,257 25.25
ASSETS
(1) Non-current assets
(a) fixed assets
tangible assets 240,439,405 272,391,362 31,951,957 13.28
intangible assets 216,936 95,868 -121,068 -55.80
(b) non-current investments 4,144,500 4,819,500 675,000 16.29
(c) long-term loans and advances 11,643,489 12,854,609 1,211,120 10.40
256,444,330 290,161,339 33,717,009 13.148
(2) Current assets
(a) inventories 114,564,981 182,641,630 68,076,649 59.42
(b) trade receivables 119,428,348 133,321,905 13,893,557 11.63
(c) cash and cash equivalents 433,874 7,001,979 6,568,105 1513.82
(d) short-term loans and advances 4,847,683 8,902,860 4,055,177 83.65
(e) other current assets 1,050,749 193,509 -857,240 -81.58
240,325,635 332,061,883 91,736,248 38.17

Total 496,769,965 622,223,222 125,453,257 25.25

44
INTERPRETATION:

1. The current assets of the company in the year 2019 is increased as compared to
the previous year 2018 at 38.17

2. The current liabilities of the company in the year 2019 is increased as compared
to the previous year 2018 at 24.85

45
 CHAPTER-V

FINDINGS AND SUGGESTIONS AND CONCLUSION

FINDINGS:

SHORT-TERM SOLVENCY RATIO:

• Current ratio is lowest during the year 2016-17 at 0.77 and highest during
the year 201819 at 0.96
• Liquid ratio is lowest during the year 2017-18 at 0.42 and highest during the
year 2018-19 at 0.55
• Cash position ratio is highest during the year 2016-17 at 0.021 and lowest
during the year 2017- 18 at 0.001

LONG-TERM SOLVENCY RATIO:

• Proprietary ratio is lowest during the year 2016-17 at 0.32 and highest
during the year 2018-19 at 0.54
• Fixed assets ratio is lowest during the year 2016-17 at 1.86 and highest
during the year 2017-18 at 2.05
• Debt equity ratio is highest during the year 2016-17 at 1.31 and lowest
during the year 2017-18 at 2.05

PROFITABILITY RATIO:

• Gross profit ratio is lowest during the year 2017-18 at 43.46 and highest
during the year 2018-19 at 44.04
• Net profit ratio is lowest during the year 2016-17 at 2.78 and highest
during the year 201819 at 4.51

46
SUGGESTIONS:

1. In order to increase the efficiency of the company, it is suggested to control the cost of
goods sold and operating expenses.

2. To strengthen the long-term solvency, long-term funds have to be used to finance core
current assets and a part of temporary current assets. It is better if the company can
reduce the oversized short-term loans and advances eliminates the risk arranging
finance regularly.

3. The company may have to maintain the high level of the cash and bank balance to
make efficient working in the company.

47
CONCLUSION:

The project entitled as “A STUDY ON FINANCIAL STATEMNT NALYSIS”

provides me an opportunity to learn about the financial analysis of TRIDENT
PNEUMATICS PRIVATE LIMITED. Various ratios have been analyzed and relevant
findings have been listed. The ratios help us to know the liquidity, solvency and
profitability position of the company. As comparing the balance sheet with the previous
year there is an increase in the profit of the company. This study is done by the
referring the financial statements based on the ratio analysis and comparative balance
sheet.

48
REFERENCE:

BOOKS:

1. Management Accounting – Shashi K. Gupta and R.K.Sharma Neeti Gupta

2. Principles of Management Accounting

WEBSITE:

1. www.wikipedia.com
2. www.investopedia.com

49