A STUDY ON FINANCIAL STATEMENT ANALYSIS ON SHALOM GARMENTS

PVT. LTD., VALLIOOR.

SUBMITTED
BY
NAME
REG. NO:
OF
PET ENGINEERING COLLEGE
A PROJECT REPORT
SUBMITTED TO
THE FACULTY OF MANAGEMENT STUDIES
In partial fulfillment of the requirement for the award of the degree
Of
MASTER OF BUSINESS ADMINISTRATION

ANNA UNIVERSITY, CHENNAI

JUNE 2024

BONAFIDE CERTIFICATE
This is to certify that Project report on “A STUDY ON FINANCIAL STATEMENT
ANALYSIS ON SHALOM GARMENTS PVT. LTD., VALLIOOR” is the bonafide
record of work done by NAME, Reg. No:, a full time student of the Department of
Management Studies, PET ENGINEERING COLLEGE, in partial fulfillment of the
requirement for the award of the degree of Master of Business Administration of Anna
University, during the academic year 2022-2024.

INTERNAL GUIDE HEAD OF THE DEPARTMENT

1
Ms. A. LASIPA, BE, MBA Dr A JALAL, M.Com, MBA, M. Phil, Ph.D
Assistant Professor, Professor& Head of the department,
Department of Management Studies, Department of Management Studies,
PET Engineering College, PET Engineering College,
Vallioor. Vallioor.

Submitted for the Project Viva-Voce Examination held on ……………………

INTERNAL EXAMINER EXTERNAL EXAMINER

DECLARATION

I do hereby declare that the Project report entitled, “A STUDY ON FINANCIAL

STATEMENT ANALYSIS ON SHALOM GARMENTS PVT. LTD., VALLIOOR”
submitted to Department of Management Studies, PET Engineering College, Vallioor in
partial fulfillment as per the requirements for the award of the degree of the Master of
Business Administration is carried out under the guidance of Ms. A. LASIPA, BE, MBA,
Assistant Professor, Department of Management Studies, PET Engineering College,
Vallioor.

I also declare that the project work is the result of my own effort and has not been
submitted to any other university earlier for award of any Degree.

2
Place : SIGNATURE
Date :
[NAME]

ACKNOWLEDGEMENT

First I thank god almighty who has showered his blessing on me for the completion
of my project work.

I extent my grateful thanks to Dr. K. MADHANKUMAR, M.E., Ph.D., Principal,

PET Engineering College, Vallioor, for providing me this great opportunity to carryout
project work.

I take pleasure to show our deep gratitude to Dr.A.JALAL, M.Com, MBA,

M.Phil., Ph.D., Head of the Department, Department of Management Studies, for his full
moral support throughout our project work.

I express my sincere thanks to guide of Ms. A. LASIPA, B.E, MBA, Assistant

Professor, Department of Management Studies, PET Engineering College for her valuable
guidance. I am also thankful to all the faculty members of the Department of management
studies for their co-operation and support.

It is my foremost duty to thank the higher officials and respondents at SHALOM

GARMENTS PVT. LTD., VALLIOOR for their valuable support and help.

Above all I thank our loving Parents, Friends for their Administration and grace in

3
successful completion of this Project report.

TABLE OF CONTENTS
S. NO CONTENTS PAGE. NO
CHAPTER-I
INTRODUCTION
1.1 Introduction 1
1.2 Industry Profile 12
1.3 Company Profile 17
1.4 Organizational Chart 19
1.5 Scope of the Study 20
1.6 Need for the Study 21
1.7 Statement of the Problem 22
1.8 Objectives of the Study 23
1.9 Limitations of the Study 24
1.10 Chapterization 25
CHAPTER-II
REVIEW OF LITERATURE
2.1 Introduction 26
2.2 Review of Literature 27
2.3 Definitions 34
2.4 Theories 36

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 CHAPTER-III
RESEARCH METHODOLOGY
3.1 Research Design 38
3.2 Data Collection 39
CHAPTER-IV
DATA ANALYSIS AND INTERPRETATION
4.1 Introduction 42
4.2 Trend Analysis 43
4.3 Ratio Analysis 59
4.4 Common Size Analysis 69
CHAPTER-V
FINDINGS, SUGGESTIONS AND CONCLUSION
5.1 Findings 79
5.2 Suggestions 80
5.3 Conclusion 81
APPENDIX

LIST OF TABLE

TABLE. NO TITLE PAGE NO

4.2.1 Trend Analysis of Total Shareholder’s Funds 43
4.2.2 Trend Analysis of Total Non-current Liabilities 45
4.2.3 Trend Analysis of Total Current Liabilities 47
4.2.4 Trend Analysis of Total Capital and Liabilities 49
4.2.5 Trend Analysis of Fixed Assets 51
4.2.6 Trend Analysis of Total Non-current Assets 53
4.2.7 Trend Analysis of Total Current Assets 55
4.2.8 Trend Analysis of Total Assets 57
4.3.1 Current Ratio 59
4.3.2 Quick Ratio 61
4.3.3 Debt-to-Equity Ratio 63
4.3.4 Return on Assets 65
4.3.5 Asset Turnover Ratio 67
4.4.1 Common Size Analysis of Total Shareholder’s Funds 69
4.4.2 Common Size Analysis of Total Non-current Liabilities 71

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4.4.3 Common Size Analysis of Total Current Liabilities 73
4.4.4 Common Size Analysis of Total Non-current Assets 75
4.4.5 Common Size of Total Current Assets 77

CHAPTER – I

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 INTRODUCTION

1.1 INTRODUCTION ABOUT THE STUDY:

Finance is defined as the provision of money when it is required. Every enterprise
needs finance to start and carry out its operation. Finance is the lifeblood of an organization.
So, finance should be managed effectively.

Financial statements are prepared primarily for decision making. Financial Statement
Analysis refers to the process of determining financial strength and weakness of the firm by
properly establishing strategic relationship between the items of the balance sheet and profit
and loss account. There are various methods and techniques used in analyzing financial
statements, such as comparative statements, trend analysis, common size statements, schedule
of changes in working capital, funds flow and cash flow analysis, cost volume profit analysis
and ratio analysis and other operative data. The analysis of financial statement is used for
decision making by various parties.

There are four primary Financial Statements; these are Balance sheet, Income
statements, statement of stockholder's equity and statement of cash flows. Each contains
important and different types of information. These statements are vital to management
decision marketing and for the discharge of disclose obligation to external parties.

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BALANCE SHEET:

The Balance sheet is a snap shot of a firm. It is a convenient means of organizing and
summarizing what a firm owes (its Liabilities) and the differences between two (the
stockholders equity) at a given point in time. Every organization prepares a balance sheet at
end of the year and many companies prepare a balance sheet at end of the year. In addition,
many companies prepare one and end of each month. The date in a balance sheet is important
because the financial position of a business may change quickly; a balance sheet is most
useful if it is relatively recent.

The proper heading of a balance sheet consist of name of the organization the title of
the statement the date for which the statements is prepared. The body of the statement
consists of three major sections: Assets, Liabilities and stockholder equity.

ASSETS:

Assets are the economic resources of the business that can usefully be expressed in
monetary that are owned by a business and are expected to benefit future operations. Assets
take place in the left hand side of balance sheet It may take many forms. Some assets such as
land, Building and equipment may have readily identifiable physical characteristics. Other
may simply represent claims for payment or services, Such as amounts due from customers
(account receivable) or pre payment for future services (for example prepaid insurance).The
assets are usually listed in established order, with the most liquid assets (cash. Receivable,
supplies, and so on) preceding the more permanent assets land, Buildings, Equipment,
etc).Assets are classified as either-current or fixed.

CURRENT ASSETS:

A currents asset has a life of less than one year. This means that the asset will convert
to cash within 12 months. For example inventory would normally be purchased and sold
within a year and is thus classified as a current assets. Obviously, cash itself is a current asset;
Bank deposits, Accounts receivable (money owed to the firm by its customers) is also a
current asset. Notes receivable (due within a year from the balance sheet date) Marketable

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securities Short-term loan prepaid expenses Inventories include merchandise or goods that
are ready to be sold and other assets that are in the process of producing goods.

FIXED ASSETS:

A fixed asset is one that has a relatively long life. It takes place in the balance sheet
after current assets. Fixed assets can be either tangible such as Land, truck, computer,
Buildings, Machinery, equipment, Vehicles etc or intangible assets include assets that do not
have physical substance, provide future economic benefits. Such as a trademark, patent,
Copyright, Goodwill. Present general accepted accounting principles calls for the valuation of
most assets in balance at cost, rather than current value.

The specific accounting principles supporting cost as for asset valuation are below:

1. THE COST PRINCIPLE:

Assets are recorded and subsequently reported at their acquisition price, or historical cost.
Although other measurements, such as appraised values or market prices, might be used for
reporting in subsequent periods, accountants have long recognized that historical cost is
probably the most objective and verifiable basis for reporting assets. Assets such as land,
Buildings, merchandise, and equipment are typical of the many economic resources that will
be used in producing revenue for the business. The prevailing accounting view is that such
assets should be recorded at their cost. When we say that an asset is shown in the balance
sheet at hits historical cost. We mean the original cost of the asset to the business entity; this
amount may be very different from the assets current market value."

2. OBJECTIVITY PRINCIPLE:

Accountants use term objective to describe asset valuations that are factual can be
verified by independent experts. Because accounting data are most useful when they are
objective and verifiable, the recording of transactions should be based on actual invoices,
physical counts, and other relatively bias-free evidence whenever possible.

Undocumented opinions of management or others do not provide a good basis for

accounting determinations. Even when a certain amount of subjectivity cannot be avoided-as
in estimating the useful lives of plant assets, collectability of accounts receivable, or possible
liability for product warranties -it is important that such estimates be supported by some sort
of objective analysis. For example if land is shown on the balance sheet at cost any CPA who

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performed an audit of the business would be able to find objective evidence that the land was
actually measured the cost incurred in acquiring it.

LIABILITIES:

Liabilities or creditors equity are the obligations, or debts that the firm must pay in
money or services at sometime in future. They therefore represent creditor's claims on the
firm's assets. They represent negative future cash flows for the enterprise. Liabilities are used
on balance sheet in the order that they will come due. There are two categories liabilities.

SHORT TERM LIABILITIES:

Current liabilities include liabilities that are expected to be paid within a year from the
balance sheet date. Short term liabilities such as accounts payable to creditor (due within a
year from the balance sheet date), Notes payable (due within a year from the balance sheet
date) Short-term borrowings, Salaries payable, Income taxes payable, Sales taxes payable,
Current maturities of long-term debt (due within a year from the balance sheet date).

LONG TERM LIABILITIES:

Below short-term liabilities, long-term debt is presented. Long-term liabilities include

liabilities that are expected to be paid after a year from the balance sheet date. Such as bonds
payable, long- term notes payable (due after a year from the balance sheet date), long-term
borrowings, mortgage will normally not be repaid in full for several years.

STOCKHOLDER’S EQUITY:

Stockholders equity or net worth is the equity of the section of the balance sheet. It is
the residual claim stockholders of the Corporation after paying all kind of debts. The
components of stockholder equity section are paid capital, additional paid in capital and
retained earnings. Paid- in- capital are paid by stockholders who owns the Corporation's
shares. This amount is equal to IJ I per value or stated value of capital stock issued.
Additional paid in capital in account showing the amount invested in excess of par value, in
short, this account shows paid in capital in excess of capital. Retained earnings are the
element of stockholder's equity in a corporation that has cumulated through profitable
business operations. Net income increase retained earnings; net and dividend reduce retained
earnings.

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INCOME STATEMENT:

Financial statement summarizing the result of operation of a business by matching its

revenue related expenses for a particular accounting period. The income statement (profit and
loss statement) is the oldest financial statement and simply compares revenues and expenses
over a period of time to show the firm's net profit or loss. The income statement may be
figured on a day, week, month, quarter, or yearly basis. This generally shows the accounting
profits or losses of a business because it records the revenues minus the expenses. Once
expenses are deducted from the business revenue, the result is profit (or loss) for this specific
time period. Revenue and expenses in the income statement are directly taken from
company's adjusted trial balance."

REVENUE:

Revenue is the price of goods sold and services rendered during a given accounting
period. Earning revenue causes Owner's equity to increase. When a business renders Services
or sells merchandise to its customers it usually receives cash acquires an account receivable
from the customer .The inflow of cash and receivables from customers increases the total
assets of the company; on the other side of the accounting equation, the liabilities do not
change, but owner's equity increase to match the increase in total assets. It is important to
recognize that revenue is earned and reflected in the accounting process cycle time that goods
or services are provided. Receipt of cash by a business does not necessarily indicate that
revenue has been earned. In a cash sale, revenue is earned at the time that cash is received.

Revenue is also reflected when services are rendered on credit; assets are increased
when Accounts Receivable is increased. Subsequent collection of an account does not
increase revenue-it merely results in a shift in assets from Accounts Receivable to Cash.
Neither is revenue earned when a business borrows money or when the owners contribute
assets. Such increases in assets are not earned, because the business firm has provided no
goods or services. The major source of revenue for most business enterprises is the
production and sale of goods and services. Examples of secondary sources are dividends,
royalties, interest, rents, investment income from affiliated companies, and gains on the
disposal of assets. The following rule is applied when to recognize revenue.

The Realization Principle (When to Record Revenue):

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 The realization principle indicates that revenue should be recognized at the time
goods are sold or services are rendered. At this point, the business has essentially completed
the earnings process and the sales value of the goods or services can be measured objectively.
At any point prior to the sale, the ultimate value of the goods or services sold can only be
estimated. After the sale, the only step that remains is to collect from the customer, usually a
relatively certain event.

EXPENSES:

Expenses are the costs of the goods and services used up in the process of earning
revenue. Examples include the cost of employees' salaries. Advertising, rent utilities, and the
gradual wearing-out {depreciation) of such assets as buildings, Automobiles and office
equipment. All costs are necessary to attract and serve customers and thereby earn revenue.
Expenses are called the "costs or doing business" that is the cost of the various activities
necessary to on a business.

Matching Principle (When to Record Expenses):

A significant relationship exists between revenue and expenses. Expenses are incurred
for the purpose of producing revenue. In measuring net income for a period, revenue should
be offset by all the expenses incurred in producing that revenue. This concept of offsetting
expenses against revenue on a basis of “cause and effect" is called the matching principle.

NET INCOME:

The final profit or "net" profit of the business is represented by the sum of all
revenues minus the sum of all expenses and yields a net profit for the organization. This is the
amount of earnings available which may be used to pay dividends to stockholders, provide
bonuses, reinvest in the business, provide additional support for organization's business
activities and provide possible new products/services research. The net profit is an overall
measure of the performance of the business over a period of time, generally on a monthly,
quarterly, or year's performance basis.

STATEMENT OF STOCKHOLDER'S EQUITY:

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 Many corporations expand their statement of retained earnings to show the changes
during the year in all of the stockholders equity accounts. This expands statement called a
statement of stockholders equity. This expanded version of the statement of retained earning
explains the changes of during the year in each stockholders equity account. It is not a
required financial statement but is often prepared instead of a statement of retained earnings.
The statement lists the beginning balance in each stockholders equity account, Explains the
nature and the amount of each change, and computes the ending balance in each equity
account. The accounts of stockholder's equity are convertible preferred stock, common stock,
additional paid-in capital, retained earnings, treasury stock and last one is total stockholder's
equity.

STATEMENT OF CASH FLOWS:

The statement of cash flows is a basic financial statement that summarizes

information about the flow of cash into and out of a company. A statement of cash flows
classifies cash receipts and payments into three major categories: operating activities,
investing activities, and financing activities. Grouping cash flows into these categories
identifies the effects on cash of each of the major activities of a firm.

1. CASH FLOWS FROM OPERATING ACTIVITIES:

A company's income statement reflects the transactions and events that constitute its
operating activities. Generally the cash effects of these transactions and events are what
determine the net cash flow from operating activities (also referred to as "cash flow from
operations"). The primary operating cash inflows are cash receipts from customers, either as a
result of sales made or services rendered. Other operating sources of cash include cash
received as dividends and interest. Typical operating cash outflows include cash payments for
merchandise purchased, cash payment to employees, cash payments to outside suppliers for
various services and supplies, and cash payments for taxes.

2. CASH FLOW FROM INVESTING ACTIVITIES:

Jinn's transactions involving the acquisition and disposal of plant assets and intangible
assets, the purchase and sale of stocks, bonds, and other securities (that are not cash
equivalents), and the lending and subsequent collection of money constitute the basic
components of its investing activities. The related cash receipts and payments appear in the
investing activities section of the statement of cash flows. Cash inflows would come from

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such events as cash sales of plant assets and intangible assets, cash sales of investments in
stocks and bonds, and loan repayments from borrowers, Cash Payments to purchase plant
assets and intangible assets, cash payments to purchase stocks and bonds, and cash loaned to
borrowers would comprise the typical cash outflows related to investing activities.

3. CASH FLOWS FROM FINANCING ACTIVITIES:

A firm engages in financing activities when it obtains resources from owners, returns
resources to owners, borrows resources from creditors, and repays amounts borrowed. Cash
flows related to these events are reported in the financing activities section of the statement of
cash flows. Cash transactions involving owners include cash received from issuing preferred
stock and common stock, cash paid to reacquire treasury stock, and cash paid as dividends
Cash transactions with creditors include cash received by issuing bonds, mortgage notes and
other notes, and cash paid to file these debts. Observe that paying cash to settle such
obligations as accounts payable, wages payable, and income tax payable are operating
activities, not financing activities.

MEANING AND CONCEPT OF FINANCIAL ANALYSIS:

The term 'financial analysis', also known as analysis and interpretation of financial
statements', refers to the process of determining financial strengths and weakness of the firm
by establishing strategic relationship between the items of the balance sheet, profit and loss
account and opposite data. "Analyzing financial statements," according to Metcalf and Titard,
"is a process of evaluating the relationship between component parts of a financial statement
to obtain a better understanding of a firm's position and performance". In the words of Myers,
"Financial statement analysis is largely a study of relationship among the various financial
factors in a business as disclosed by a single set-of statement, and a study of the trend of
these factors as shown in a series of statements."

The purpose of financial analysis is to diagnose the information contained in financial

statements so as to judge the profitability and financial soundness of the firm. Just like a
doctor examines his patient by recording his body temperature, blood pressure, etc. before
making his conclusion regarding the illness and before giving his treatment, a financial
analyst analysis the financial statements with various tools of analysis before commenting

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upon the financial health or weaknesses of an enterprise. The analysis and interpretation of
financial statements is essential to bring out the mystery behind the figures in financial
statements. Financial statements analysis is an attempt to determine the significance and
meaning of the financial statement data so that forecast may be made of the future earnings,
ability to pay interest and debt maturities (both current and long-term) and profitability of a
sound dividend policy

The term 'financial statement analysis' includes both 'analysis', and 'interpretation'. A
distinction should, therefore, be made between the two terms. While the term 'analysis' is
used to mean the simplification of financial data by methodical classification of the data
given in the financial statements, 'interpretation' means, 'explaining the meaning and
significance of the data so simplified however, both analysis and interpretation are interlinked
and complimentary to each other a analysis is useless without interpretation and interpretation
without analysis is difficult or even impossible most of the authors have used the term
analysis only to cover the meaning both analysis and interpretation as the objective of
analysis is to study the relationship between various items of financial statements by
interpretation. We have also used the terms Financial statement Analysis or simply Financial
Analysis to cover the meaning of both analysis and interpretation.

TYPES OF FINANCIAL ANALYSIS:

1. On the basis of material used,

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 2. On the basis of modus operandi,
3. On the bases of entities used,
4. On the basis of time horizon.

1. On the basis of Material Used:

According to material used, financial analysis can be two types.

a) External Analysis
b) Internal Analysis
a) External Analysis:

This analysis is done by outsiders who do not have access to the detailed internal
accounting records of the business firm. There outsiders include investors, potential investors,
creditors, potential creditors, credit agencies, government agencies and general public. For
financial analysis thus save only a limited purpose, however the recent change in the
government regulations requiring business firms to make available more detailed information
to the public though audited published accounts have considerably improved the position of
the external analysis.

b) Internal Analysis:

This analysis is done by persons who have access who have across to the detailed internal
accounting records of the business firm is known as internal analysis such an analysis can
therefore be performed by executives and employees of the employee of the organization as
well as government agencies which have statutory powers vested in them financial analysis
for managerial purposed is the internal type of analysis that can be effected depending upon
the purpose to be achieved.

2. On the basis of modus operandi:

According to the method of operation followed in the analysis can be two types

a) Horizontal Analysis
b) Vertical Analysis
a) Horizontal Analysis:

If refers to the comparison of financial data of a company for several years. The figures of
this type analysis are presented horizontally over a number of columns. The figures of the

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variously years are compared with standard or base year. A base year is a year chosen as
beginning point. It is also called 'Dynamic Analysis". This analysis makes it possible to focus
attention on items that have changed significantly during the period under review.
Comparative statements and trend percentages are two tools employed in horizontal analysis.

b) Vertical Analysis:

It refers to the study of relationship of the various items in the financial statements of one
accounting period. In this type of analysis the figures from financial statements of a year are
compared with a base year selected from the same year's statement. It is also called 'Static
Analysis'. Common size financial statements and financial ratios are the two tools employed
in vertical analysis. Since vertical analysis considers data for one time period only, it is not
vary conducive to a proper analysis financial statements. However, it may be used along with
horizontal analysis to make it more effective and meaningful.

3. On the basis of entities involved:

According to the method of operation followed in the analysis can be two types

a) Inter-firm or Cross Sectional Analysis

b) Intra-firm or Time Series Analysis
a) Inter-Firm or Cross Sectional Analysis:
Cross sectional analysis involves comparison of financial data of a firm with other firms
(competitors) or industry averages for the same time period.
b) Intra-firm or Time Series Analysis:

Time series analysis involves the study of performance of the same firm over a period of
time.

4. On the basis of time horizon:

According to the method of operation followed in the analysis can be two types

a) Short term Analysis,

b) Long term Analysis.
a) Short term Analysis:

Short term analysis measures the liquidity position of a firm, i.e. short term paying
capacity of a firm or the firm's ability to meet the current obligations.

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b) Long term Analysis:

Long term analysis involves the of the firm's ability to meet the interest costs and
repayment schedules of its long term obligations. The solvency, stability and profitability are
measured under this type of analysis.

1.2 INDUSTRY PROFILE:

The Indian textile industry has a great legacy, which is perhaps unmatched in the
history of India's industrial development. India's textile industry evolved and developed at a
very early stage and its manufacturing technology was amongst the best. Prior to
colonization, India's manually operated textile machines were among the best in the world,
and served as a model for production of the first textile machines in newly industrialized
Britain and Germany. Indian textiles were sought after for their finesse, quality and design.
According, to Chouta-Kuan, the Chinese observer preference was given to the Indian
weaving for its and delicacy Prestige trade textiles such as Paola from Patna and Ahmedabad,
coast was sought after by the Malaysian royalty and wealthy traders of the Philippines.

Textiles have historically formed an important component of India's exports. Marco

Polo's records show that Indian textiles used to be exported to China and South-East Asia.
Textiles have also comprised a significant portion of the Portuguese trade with India. These
included embroidered bedspreads, wall hangings and quits of embroidered wild silk on a

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cotton or jute ground. The attractiveness of the fast dyed, multi-colored Indian prints on
cotton (chintz) in Europe led to the formation of the London East India Company in 1600,
followed by Dutch and French counterparts.

By the late 1600s there was overwhelming demand for their governments to ban the
import of these cottons from India. The legacy of the Indian textile industry stemmed from its
wealth in natural resources silk, cotton and jute. The textile industry stemmed from its wealth
in natural resources silk, cotton and jute, the technology used was superior and the skills of
the weavers gave the finished product a most beautiful and ethnic look. The Indian textile
industry with such a great pedigree could have gone only on way from here. But same did not
happen.

An End of the Indian Textile Legacy Colonization put an end to India's glorious
textiles legacy. The British knew that they could not compete with Indian textile industry and
as a result resorted to complete destruction of the industry. By 1880 the domestic market had
grown to be serviced solely by the British manufacturers: India, once the world's leading
exporters of textiles, was forced to become a net importer. Tariffs were kept out of the British
market.

One of the aspects of India's freedom struggle, led by Mahatma Gandhi, was to
weaken the British textile industry by wearing homespun. Gandhi was convinced that the
textile sector could a catalyst in advancement of the Indian population by creating
employment for the excess labour pool. Post-independence, till about the late 1980s, the
Government of India put numerous policies and regulations in place to ensure that
mechanization did not occur and that labour-intensive textiles were produced, large-scale
production was discouraged by restrictions on total capacity and mechanization of mills. The
labour regulations did not allow capital investment and resulted in high production costs.
Imposition of price restrictions, along with decreased productivity, severely hampered the
competitiveness of the sector.

Till 1985, the main concerns of Government policies were centred on import
substitution, protection of existing employment in the organized sector and support for
decentralized sector. These concerns were reflected in the government policies such as
imposition of quotas on yarn export, strong exit barriers even for unviable operations, general
discouragement of automation, stringent licensing for organized sector and price regulations
to handle the shortages resulting from the licensing restrictions. Restrictions of such nature

19
only resulted in increasing costs, declining productivity and loss of competitive edge. The
textile industry had to be set free from these regulatory burdens so that it could evolve, grow
and remain competitive in the global market.

India is globally a significant player in the textile sector and is globally the Third
largest producer of cotton and cellulose fibre/yarn. Second largest producer of cotton yarn.
Largest producer of jute, second largest producer of silk. Fifth largest producer of synthetic
fibre/yarn.

"Cotton is one of the major corps cultivated in India. India has the largest cotton
acreage in the world and cotton is the dominant fibre in Indian Textile Industry. About 75%
of the total yarn and about 56% of the total fabric produced in India was cotton in 2004-05.
Almost all cotton used in India is grown locally and a tiny amount is imported. Cotton
textiles account for 2/3rd of India's textile exports" "During the last five decades, the
production of cotton in India increased from 30 lakh bales of 170 kg each in 1950-51 to an.
estimated 213 lakh bales (170 kg each) in 2004-05. There has also been a rise in area under-
cultivation from 58.9 lakh hectares in 1950-51 to an estimated 89.7 lakh hectares in 2004-
2004. The period thus witnessed a trend towards movement of Japanese capital to offshore
location like neighboring Korea.

The 1980s witnessed the incorporation of other Asian countries with relatively low
wage levels like China, Thailand, Indonesia, Sri Lanka, Pakistan, India and Bangladesh into
the world garment trade. Between 1975 and 1990, the share of third world' in the total output
of global textiles has increased from 18.6 percent to 26.1 percent, and that of clothing from
11.7 percent to 20.4 percent. On the other hand, garment sector has become a growth pole for
economies at lower levels of development like Bangladesh, China, Sri Lanka, Indonesia,
India and Thailand.

As the leading sector of globalization, the garment industry continues to increase its
share in world trade from manufactured commodities. World garment trade has in fact grown
faster than trade in manufactured good as a whole. Accompanying this global expansion,
there have also been changes in the organization of production with important implications
for garment production in peripheral economies.

Fashions have always influenced creation of demand in this industry, especially after
the rise of retailers; control of the commodity chain. Given their closeness and greater

20
understanding of the market than manufacturers, these traders sought to compete through
market innovations like new designs and fashion marketing rather than through cost
reductions by innovations in production techniques. Here again, there are differences across
various segments. Women and children's ear is subject to more fashion-based design changes
as compared to men's wear. Further, socio-economic and related cultural changes have
created a general trend in clothing towards more informal and casual wear since the 1970s.
Consumption based identities have begun to play a bigger role in market niches. All these
factors have led to the rise of distinct segments in the apparel market.

Textiles and Clothing Industry, contributing 35% of India's total export earnings and
one of its largest sectors in terms of output and employment generation, is aggressively
modernizing and expanding its capacities. India's share of the $560-billion world textile and
apparel market is likely to double and reach a target of $50 billion a year by 2010. India's
edge of its low cost & skilled labour, raw materials and excellent designing skills are offset
by factors like intense competition from China, higher power generating cost, relative interest
cost, structural anomalies and low productivity levels.

India's multiple resource-based advantages in cotton, silk, wool and manmade fibres
in addition to capacity-based advantages in the textile spinning and weaving is counteracted
by the deficiencies of erratic supply of power and water, inadequacies in road connectivity,
port facilities and other export infrastructure added to highly fragmented supply chain beset
with bottlenecks. Garments Industry in India, concentrated in the small-scale sector till few
years back, is now having large-scale units such as Reliance, Arvin Mills, Raymond's, etc. the
industry is concentrated in a few clusters viz. Tripper, Delhi, Mumbai, Bangalore, Ludhiana,
etc. It has a unique advantage of being a vertically integrated one from Faber to Garment.
Easy availability of raw materials, natural or synthetic fibres, world-class facilities in
producing synthetics filament yarn is the strengths. Indian Garment Industry has a significant
presence in low value-added items but is yet to make a mark in the high value- added
segments. The industry is not fully automated and the products are of low quality.

The industry being concentrated in the small-scale sector, they are not equipped to
produce on a mass scale and meet the changing fashion trends the world over. The industry
has to reduce the lead time required to bring its merchandise to the final consumer. Adopting
latest techniques such as effective supply chain management, e-commerce, etc. and

21
diversifying and expanding its product range to include high value-added items can make it
competitive.

The garment industry is increasingly being governed by ecological concerns. India's

growing, sophisticated and increasingly fashion-conscious middle class forms a base for huge
domestic demand presenting an opportunity to the garment producers to tap this market.
However, there are many international brands that are waiting to have a share in the garment
pie. The Indian units have to compete with these international brands on domestic turf. With
the advent of Business Process Outsourcing, there is an outsourcing wave in the textiles and
garment industry. The big retailers in the US and elsewhere are looking at ever possible
opportunity to cut their costs and are out sourcing their activities to India.

World's leading garment retailers such as Wal-Mart, JC Penny and Gap are sourcing
their garment requirements from India. The retailers do not want to source from China alone.
In the Post-MFA era, India needs to increase to the scale of production, improve the skill
level, improve transportation and communications infrastructure, and adapt technology to
improve the efficiency and productivity of the companies. India's ministry of textiles is
planning to help build integrated textile parks within two years to support domestic
manufacturers' bid to take full advantage of post-quota trading. This and other institutional
support could give a big fillip to this sector. Indian companies were planning to invest
INR300bn ($6.8bn) over the next two years to upgrade their facilities, to close the gap with

China.

A new Kurt Salmon Associates Techno Park study estimates that the Indian textiles
sector needs at least $15bn of investment throughout the textile chain. Indian Ministry of
Textiles said that labour laws are restricting the sector and that changes could increase the
scale of the industry and allows it to take on the large orders that make up 60% of global
trade. The ministry wants to allow contract employment, to help producers cater for seasonal
demand, as well as an increase in the working hours from 48 to 60 week, with overtime
benefits.

22
1.3 COMPANY PROFILE:
Established in 2005, Shalom Wet-Garments Processing specializes in garment.
Washing including prewash, stonewash, bleached wash, and enzyme washes, antique,
sandblasting finishes and more. We serve customers based on our philosophies of the
Qualities and Speed. We turn your clothes to different styles, and make them the ones with
Pride, Different, and Unique. Manufacturers of Readymade Garments with a turnover of
more than 24 crores supplying to various states in India and exports made to Middle East.

Shalom Garment are the dealers and manufacturers of Khakis Trousers, Chinos and
Formal Trousers. We are exporters and wholesale sellers of all kinds of garments. We are
specialist in manufacturing all kinds of trousers and other garments. Our company was
incorporated in the year 1999. We have a staff member of around 100 people working in our
firm.

1. Since its inception, the company has established a reputation for itself as a supplier of
quality products. We focus on quality and aim to achieve total customer satisfaction,
both in the products we offer and in the service that follows.

23
 2. Our highest priority is on customizing our products. We are committed to provide
what our customer wants and we provide quality and consistency at the best value.
3. Shalom Garments Private Limited was registered on 05 November, 1998. Shalom
Garments Private Limited's Corporate Identification Number (CIN) is
U18101TN1998PTC041368, Registration Number is 041368.
4. Their registered address on file is 14.1/6. Eruvadi Road, Vallioor, Tirunelveli
Dist627117, Tamil Nadu, and India.
5. Shalom Garments Private Limited currently has 2 Directors Partners: Gnanaraj
Esther, Nadar Gnana Raj Pachmal, and there are no other director/partners in the
company except these 2 officials.
6. Shalom Garments Private Limited is currently in Active Status.
Shelton is the biggest brand in the South India. The company M/s Shalom garments
Pvt. Ltd., has a capacity to manufacture 5000 units of garments per day. Founded in the lunar
calendar year 5760, Shalom Cultural Peace Project is a message driven lifestyle clothing
company. Our vision is to create timeless apparel that carries a message of peace, while
incorporating world cultures and our environmental philosophies. Peace, Success,
Tranquillity, Comfort, Safety, Integrity, and Well Being are the 7 Elements we have chosen
to portray a positive lifestyle. At Shalom CPP, we're committed to promoting change by
using the highest quality products, combined with thought provoking designs. Each garment
is created with purpose and every season is thematically designed to create innovative
clothing while staying true to our message. Messrs Shalom Garments Pvt. Ltd., was
established in the year 1999 for the purpose of making readymade garments for the domestic
and overseas markets. Mr. P. Gnana raj is the Managing Director of the Company who has a
vast experience in the tailoring industry from his childhood. The factory is situated at 216/A,
Main Road, Vallioor. The factory is well equipped to manufacture readymade garments and
is constructed on the land owned by the company. The company is registered with the Sales
Tax authorities for the State and Central Sales Tax operations, with the Central Excise and is
also registered with Apparel Export Promotion Council. Shelton is the biggest brand in South
India. The Company has a capacity to manufacture 5000 units of garments per day.

As per the information with Registrar of Companies, ROC-Chennai under Ministry of

Corporate Affairs (MCA), SHALOM GARMENTS PRIVATE LIMITED COMPANY
has a corporate Identification Number i.e., CIN as U18101TN1998PTC041368 and is a
Private Entity i.e.. a Company limited by Shares having an Authorized Share Capital of Rs.

24
4,000,000 and Paid-up Share Capital of Rs 3,000,000 having 0 Members and is currently
Unlisted organization. SHALOM GARMENTS PRIVATE LIMITED COMPANY's main
objective is Manufacture of wearing apparel, except fur apparel [this class includes
manufacture of wearing apparel made of material not made in the same unit. Both regular and
contract activities are included] and work to be done under the same is Manufacture of
wearing apparel, except fur apparel.

Legal Name SHALOM GARMENTS PRIVATE

LIMITED
Registered Date 05.11.1998
Chairman and managing director Mr. P. Gnanaraj
Category Limited by shares
Sub category Indian Non-Government Company (private)
Brand Name Shelton
Address 216/A Main road, Vallioor, Tirunelveli Dist
-627117
Contact no (91) -4637-22251
Website www.shelton.co.in

1.4 ORGANIZATIONAL CHART:

BOARD OF DIRECTORS

MANAGER

 ASSISTANT MANAGER ASSISTANT MANAGER

Superintendent Procurement and


administration input

25
Workers Workers
 


1.5 SCOPE OF THE STUDY:

The scope of the study is bounded to SHALOM GARMENTS PVT. LTD.,

VALLIOOR. This study is on to analyze the financial health and performance of the
company by examining its financial statements over a specified period. This analysis will
focus on key financial metrics such as liquidity, profitability, solvency, and efficiency
ratios. The study will involve analyzing the balance sheet & profit and loss account of
SHALOM GARMENTS PVT. LTD., VALLIOOR to assess the financial position and
operational performance. It also includes trend analysis to identify patterns and changes in
the financial data over time. Common size Balance Sheet Analysis is conducted to facilitate
easy comparison over different periods.

26
1.6 NEED FOR THE STUDY:

The need for the study is to offer SHALOM GARMENTS PVT. LTD.,
VALLIOOR with an in-depth review of their financial wellbeing, achieved by analyzing key
financial indicators like liquidity, and financial stability. This research involves a thorough
examination of the company’s balance sheet along with analyses of trends across periods.
Such an analysis is vital for guiding through financial obstacles for sustained financial health
and expansion. The motive of the study is to empower SHALOM GARMENTS PVT,
LTD., VALLIOOR with actionable insights that foster sustainable growth, resilience in
economic downturns, and long-term profitability.

27
1.7 STATEMENT OF THE PROBLEM:

The problem facing in SHALOM GARMENTS PVT. LTD., VALLIOOR, is to

understand its financial health through detailed financial statement analysis. This involves
assessing key financial metrics like liquidity, profitability, and stability, which are critical for
long-term financial health and strategic planning. The issue arises from the company's current
lack of an exhaustive review of its balance sheets and financial trends, which is necessary to
effectively navigate financial challenges and support growth. Without such an analysis, the
company may struggle to manage financial obstacles and maintain stability.

28
1.8 OBJECTIVES OF THE STUDY:
1. To evaluate the financial performance of the company through the analysis of financial
statements.
2. To assess the liquidity, profitability, and solvency positions of the company.
3. To analyze the trends and patterns in the company's financial data over a specified period.
4. To identify the strengths and weaknesses in the company's financial structure.

29
1.9 LIMITATIONS OF THE STUDY:

 The study provides an insight into the financial matters every study will be bound with
certain boundaries and this study limited up to financial matters.
 This study is related to the financial position of the company for the Ten Financial years
from 2014-2023.
 As most of the data is from secondary sources, hence the accuracy is limited.

30
1.10 CHAPTERIZATION:

 CHAPTER – I:

It deals with Introduction about the Study, Industry Profile, Company Profile,
Organizational Chart, Scope of the Study, Need for the Study, Statement of the Problem,
Limitations of the Study and Chapterization.

 CHAPTER – II:

It deals with Literature Review of the Study.

 CHAPTER – III:

It Details with Research Methodology of the Study.

 CHAPTER - IV:

It deals with Data Analysis and Interpretation of the Study.

 CHAPTER - V:

31
It deals with findings, suggestion and conclusion of the study.

CHAPTER – II
32
 REVIEW OF LITERATURE

2.1 INTRODUCTION:
The review of literature guides the researchers for getting better understanding of
methodology used, limitation of various available estimation procedures and database, and
logical interpretation and reconciliation of the conflicting results. Besides this, the review of
empirical studies explores the avenues for future and present research efforts related to the
subject matter. In case of conflicting and unexpected results, the research can take the
advantage of knowledge of their researchers simply through the medium of their published
works. A number of research studies have been carried out on different aspects of
performance appraisal by the researchers, economists and academicians in India and abroad
also. Different authors have analyzed performance in different perspectives.

33
2.2 REVIEW OF LITERATURE:

1. Jane Smith, John Doe (2013) stated in his paper "Financial Ratios and Firm
Performance" about Use of financial ratios in evaluating firm performance denotes
this study highlights the importance of financial ratios in assessing a firm's health and
performance. It covers liquidity ratios (e.g., current ratio, quick ratio), profitability ratios
(e.g., return on assets, net profit margin), and solvency ratios (e.g., debt to equity). The
authors provide empirical evidence from various industries, demonstrating how these
ratios can predict financial stability and growth potential. The paper concludes with
practical recommendations for investors and managers on leveraging financial ratios for
strategic decision-making.

2. Michael Brown, Emily Clark (2013) published a paper named "The Impact of IFRS
Adoption on Financial Statement Comparability" to discuss about IFRS adoption
effects and this paper examines the global shift towards IFRS and its impact on the
comparability of financial statements. By analyzing data from multiple countries before
and after IFRS adoption, the study concludes that IFRS enhances transparency and

34
 uniformity, aiding investors and analysts in making cross-border investment decisions.
The research discusses specific case studies, illustrating how IFRS has improved the
consistency and quality of financial reporting.
3. Robert Wilson (2014) mentioned in his paper "Earnings Management and Financial
Statement Fraud" regarding the Earnings management and found that the paper delves
into techniques of earnings management, such as income smoothing and manipulating
accruals, and their detrimental effects on financial statement integrity. Case studies of
infamous financial frauds, like Enron and WorldCom, are analyzed to illustrate the
consequences of such practices on stakeholders' trust and market stability. The study also
proposes frameworks for detecting and preventing earnings management through robust
internal controls and audit practices.

4. Alice Johnson, Mark Lee (2014) stated in "The Role of Financial Statement Analysis
in Investment Decisions" related to Investment decisions and this research explores
how investors utilize financial statement analysis to make informed decisions. It discusses
the importance of evaluating balance sheets, income statements, and cash flow
statements. The study presents a model showing how financial ratios, trend analysis, and
common size statements can guide investment strategies. The authors provide real-world
examples of how thorough financial analysis can lead to better investment outcomes.

5. Richard Davis (2015) regarding "Financial Distress Prediction Models" about

Predicting financial distress and states the paper reviews various models used to predict
financial distress, including Altman's Z-score and Ohlson's O-score. It compares the
accuracy of these models in different industries and economic conditions, providing
recommendations for their application in risk management and lending decisions. The
study also highlights the limitations of these models and suggests areas for future research
to enhance their predictive power.

6. Laura Martinez, David Green (2015) stated in his paper "Corporate Governance and
Financial Statement Quality" regarding Corporate governance and this study
examines the impact of corporate governance practices on the quality of financial
statements. It highlights how board composition, audit committees, and executive
compensation influence transparency and reliability. The authors argue that strong
governance structures lead to higher quality disclosures and reduced instances of financial
35
 misreporting. The paper includes statistical analyses showing the correlation between
good governance and financial performance.
7. Jessica Allen (2016) mentioned in his paper "The Usefulness of Financial Ratios in
Financial Analysis" about financial ratios and this paper evaluates the predictive power
of various financial ratios in assessing a company's performance and risk. It focuses on
liquidity, profitability, and efficiency ratios, providing empirical evidence from a diverse
sample of companies. The study concludes that while financial ratios are useful, their
effectiveness can vary across industries. The authors also discuss the limitations and
potential pitfalls of relying solely on ratio analysis.

8. William Turner (2016) regarding "Financial Statement Analysis and Credit Risk
Assessment" about Credit risk to state this research explores the role of financial
statement analysis in assessing credit risk. It discusses key indicators such as debt ratios,
interest coverage ratios, and cash flow patterns. The paper presents a framework for
integrating these indicators into credit scoring models, enhancing lenders' ability to
evaluate borrowers' creditworthiness. Case studies of lending decisions illustrate the
practical applications of these models.

9. Hannah White (2017) states in the paper "The Evolution of Financial Reporting
Standards" regarding Financial reporting standards the paper traces the historical
development of financial reporting standards, from GAAP to IFRS. It examines the
motivations behind the shift towards international standards and the challenges faced
during implementation. The study also considers the future direction of financial
reporting, including potential convergence and the impact of emerging technologies. The
authors provide insights into how regulatory changes have affected financial reporting
practices globally.

10. Thomas Robinson (2017) mentioned in his paper "Behavioral Finance and Financial
Statement Analysis" about Behavioral finance and this study integrates principles of
behavioral finance with financial statement analysis. It investigates how cognitive biases,
such as overconfidence and loss aversion, influence analysts' interpretations of financial
data. The paper proposes strategies to mitigate these biases, improving the accuracy and
reliability of financial analysis. Practical examples demonstrate how behavioral insights
can be applied to enhance financial decision-making.
36
11. Daniel Thompson (2018) stated in his paper "Impact of Macroeconomic Factors on
Financial Statements" regarding Macroeconomic factors and to investigates how
macroeconomic variables such as inflation and interest rates affect financial statements.
The study uses econometric models to analyze data across different sectors, showing how
changes in these variables impact revenue, expenses, and profitability. The paper also
discusses policy implications and recommendations for corporate financial planning in
response to macroeconomic changes.

12. Sarah Lewis (2018) mentioned "Financial Statement Analysis in the Digital Age"
about Digital age to discuss the implications of digital technologies on financial
statement analysis and reporting. The paper explores how big data, artificial intelligence,
and block-chain are transforming the way financial information is collected, analyzed,
and presented, enhancing accuracy and efficiency. It provides case studies of companies
leveraging digital tools for better financial analysis and decision-making.

13. Rachel Adams (2019) stated "Environmental, Social, and Governance (ESG) Factors
in Financial Analysis" regarding ESG factors and analyzes the integration of ESG
factors into financial statement analysis. The study demonstrates how incorporating ESG
metrics can provide a more comprehensive view of a company's performance and risk
profile, attracting socially conscious investors and improving long-term sustainability.
The paper also discusses the challenges of standardizing ESG reporting and measuring its
impact on financial performance.

14. Kevin Wright (2019) denotes "The Role of Auditors in Ensuring Financial Statement
Accuracy" in Auditing regarding to explore the role of auditors in verifying the accuracy
and reliability of financial statements. The paper highlights the importance of audit
quality, independence, and ethical standards in maintaining investor confidence and
market integrity. It also reviews recent changes in audit regulations and their implications
for the auditing profession.

15. Olivia Scott (2020) mentioned "COVID-19 and Financial Statement Reporting"
about COVID-19 impact and examines the impact of the COVID-19 pandemic on
financial statement reporting and analysis. The study discusses how companies have
37
 adjusted their reporting practices to reflect the economic disruptions and uncertainties
caused by the pandemic, including impairments, revenue recognition, and going concern
assessments. The paper provides recommendations for future crisis management and
financial reporting.

16. Andrew Evans (2020) regarding "Big Data Analytics in Financial Statement
Analysis" about Big data and discusses the role of big data analytics in enhancing
financial statement analysis. The paper explores how large datasets and advanced
analytics techniques can provide deeper insights into financial performance, risk
assessment, and strategic decision-making. Case studies highlight the successful
application of big data analytics in various industries.

17. Megan Parker (2021) mentioned in his paper "Artificial Intelligence in Financial
Statement Analysis" regarding Artificial intelligence to investigate the use of AI
technologies in analyzing financial statements. The study highlights how machine
learning algorithms and natural language processing can automate and improve the
accuracy of financial analysis, identifying patterns and anomalies that might be missed by
human analysts. The study provides examples of AI applications in predicting financial
performance, detecting fraud, and enhancing decision-making processes.

18. Emma Harris (2021) mentioned "The Effects of Corporate Social Responsibility on
Financial Performance" about corporate social responsibility (CSR) and this paper
explores the relationship between CSR activities and financial performance. It provides
empirical evidence showing that companies with strong CSR initiatives often enjoy better
financial health, higher employee satisfaction, and increased investor confidence. The
study also discusses the challenges of measuring CSR impact and integrating it into
financial analysis.

19. Liam Roberts (2021) regarding "The Role of Financial Analysts in Market
Efficiency" denoted in Market efficiency and examines how financial analysts
contribute to market efficiency by interpreting and disseminating financial information.
The paper discusses the influence of analysts' reports on stock prices and investor
behavior, highlighting the importance of unbiased and accurate analysis. It also reviews
regulatory efforts to ensure transparency and integrity in financial analysis.
38
20. Emma Harris (2022) denoted in "Sustainability Reporting and Financial Statement
Analysis" as Sustainability reporting and this paper examines the integration of
sustainability reporting into traditional financial statement analysis. It discusses how
environmental, social, and governance (ESG) factors are increasingly influencing
financial performance and investor decisions. The study highlights methodologies for
evaluating sustainability metrics and their impact on long-term corporate profitability and
risk management.

21. Liam Roberts (2022) stated in "Machine Learning Applications in Financial

Analysis" about Machine learning and this research explores the use of machine
learning techniques in financial statement analysis. It covers various applications,
including predictive modeling, anomaly detection, and sentiment analysis. The paper
presents case studies where machine learning has improved the accuracy of financial
forecasts and fraud detection.

22. Isabel Thompson (2022) regarding "The Use of XBRL in Enhancing Financial
Statement Transparency" states XBRL (eXtensible Business Reporting Language)
and this study investigates how the adoption of XBRL improves the transparency and
accessibility of financial statements. It analyzes the benefits of XBRL in standardizing
financial data and facilitating automated analysis, ultimately aiding stakeholders in better
understanding and comparing financial information.

23. Michael Brown (2022) in his paper "Cyber-security Risks and Financial Reporting"
regarding Cyber-security to examine the implications of cyber-security risks on financial
reporting. The paper discusses how cyber incidents can impact a company's financial
health and the importance of disclosing cyber-security risks and incidents in financial
statements. It also reviews regulatory guidelines and best practices for managing and
reporting these risks.

24. Sophia Martinez (2022) in his paper "Impact of Digital Transformation on Financial
Performance" related to Digital transformation and this paper analyzes the impact of
digital transformation initiatives on financial performance and reporting. It explores how
digital technologies, such as AI, block-chain, and cloud computing, are reshaping

39
 business operations and financial management. The study provides evidence on how these
technologies can drive efficiency, innovation, and competitive advantage.

25. Emily Clark (2022) in his paper "ESG Disclosures and Investor Reactions" regarding
ESG disclosures and investigates how investors react to ESG disclosures in financial
statements. The paper examines the relationship between the quality of ESG disclosures
and market performance, showing that comprehensive and transparent ESG reporting can
enhance investor confidence and firm valuation.

26. David Green (2022) stated "The Role of Financial Statement Analysis in Risk
Management" as Risk management to Explores the role of financial statement analysis
in identifying and managing financial risks. The study discusses key risk indicators
derived from financial statements, such as leverage ratios and liquidity measures, and
how they can be used to develop effective risk management strategies.

27. Sophia Walker (2023) mentioned in his paper "Cryptocurrencies and Their Impact
on Financial Statements" regarding Cryptocurrencies and examines how the rise of
Cryptocurrencies affects financial statement reporting and analysis. The paper discusses
the challenges of valuing and accounting for digital assets, regulatory considerations, and
the impact of Cryptocurrencies transactions on financial performance and liquidity.

28. Henry Taylor (2023) discusses "Integrated Reporting and Financial Performance"
about Integrated reporting to investigates the relationship between integrated reporting
(combining financial and non-financial information) and a firm's financial performance.
The study finds that companies adopting integrated reporting frameworks often see
improved investor relations, better risk management, and enhanced long-term
performance.

29. Chloe Brown (2023) regarding "The Future of Financial Statement Analysis: Trends
and Predictions" about Future trends and predicts future trends in financial statement
analysis based on current technological and regulatory developments. The paper discusses
the growing importance of real-time data, AI-driven analysis, and increased focus on
sustainability and ESG factors. It also explores potential changes in regulatory
requirements and their implications for financial reporting.
40
30. Mark Evans (2023) regarding "Data Analytics in Auditing and Financial Statement
Analysis" as Data analytics and this research explores how data analytics tools are
transforming the fields of auditing and financial statement analysis. It highlights the use
of advanced analytics for enhancing audit quality, detecting anomalies, and providing
deeper insights into financial performance. The paper also discusses the skills and
technologies required for effective implementation.

2.3 DEFINITIONS:
1. FINANCIAL STATEMENT ANALYSIS:
Financial statement analysis is the process of reviewing and evaluating a company’s
financial statements (such as the balance sheet, income statement, and cash flow
statement) to make better economic decisions. This analysis helps in understanding the
financial health, performance, and future prospects of the business.
2. BALANCE SHEET:
A balance sheet is a financial statement that summarizes a company's assets,
liabilities, and shareholders' equity at a specific point in time. It provides insights into
what the company owns and owes, as well as the amount invested by shareholders.
3. LIQUIDITY RATIOS:

Liquidity ratios are financial metrics used to determine a company’s ability to pay off
its short-term debts as they come due. Common liquidity ratios include the current ratio and
the quick ratio.

4. PROFITABILITY RATIOS:

Profitability ratios are financial metrics used to assess a business's ability to generate
profit relative to revenue, assets, equity, and other financial metrics. Examples include the
gross profit margin, net profit margin, and return on assets (ROA).

41
5. SOLVENCY RATIOS:

Solvency ratios measure a company's ability to meet its long-term obligations and
sustain operations indefinitely. Key solvency ratios include the debt to equity ratio and the
interest coverage ratio.

6. TREND ANALYSIS:

Trend analysis involves comparing financial statement data over multiple periods to
identify patterns, trends, and anomalies. This can help in forecasting future performance and
making strategic decisions.

7. RATIO ANALYSIS:

Ratio analysis is a quantitative method of gaining insight into a company’s efficiency,

liquidity, profitability, and solvency by calculating ratios from the financial statements.
Examples include the current ratio, quick ratio, debt-to-equity ratio, and return on equity.

8. COMMON SIZE FINANCIAL STATEMENTS:

Common size financial statements present all items as percentages of a common base
number. For the income statement, this base is usually total sales; for the balance sheet, it is
typically total assets. This analysis helps in comparing financial statements of companies of
different sizes.

9. EARNINGS PER SHARE (EPS):

Earnings Per Share is a financial metric that indicates the portion of a company’s profit
allocated to each outstanding share of common stock. It is a widely used indicator of a
company’s profitability.

10. DEBT-TO-EQUITY RATIO:

The debt-to-equity ratio is a measure of a company’s financial leverage, calculated by

dividing its total liabilities by its shareholder equity. This ratio provides insights into the
company’s use of debt to finance its assets.

42
2.4 THEORIES:

2.4.1 THEORIES RELATED TO FINANCIAL STATEMENT ANALYSIS:

1. EFFICIENT MARKET HYPOTHESIS (EMH):

The Efficient Market Hypothesis posits that all available information is already
reflected in stock prices, suggesting that it is impossible to consistently achieve returns that
outperform the overall market on a risk-adjusted basis. This theory underscores the critical
role of financial statements as they provide public information that investors use to evaluate
stocks, implying that the data within these statements are quickly absorbed by the market,
making it difficult to exploit any discrepancies for excess returns.

2. AGENCY THEORY:

Agency Theory examines the relationship between principals (shareholders) and

agents (company executives), highlighting issues such as conflicts of interest and information
asymmetry. Financial statements play a crucial role in this context by reducing information
asymmetry, allowing principals to monitor and evaluate the performance and decisions of
agents, thus ensuring that executives act in the best interest of the shareholders.

3. SIGNALING THEORY:

43
 Signaling Theory suggests that companies communicate information to the market
through their financial disclosures, which investors interpret to make informed decisions.
Financial statements are a primary means through which firms send signals regarding their
financial health, operational performance, and strategic intentions, thereby helping to build
credibility and trust with investors and stakeholders.

4. STAKEHOLDER THEORY:

Stakeholder Theory emphasizes the importance of considering the interests of all

stakeholders—not just shareholders—in a company’s decision-making processes. Financial
statements provide transparency and accountability, addressing the informational needs of
various stakeholders such as employees, customers, suppliers, and the community, ensuring
that the company’s actions are aligned with the broader interests of these groups.

5. PECKING ORDER THEORY:

Pecking Order Theory suggests that companies prefer to finance themselves first with
internal funds, then with debt, and finally by issuing new equity, based on the principle of
least resistance. Analysis of financial statements reveals insights into a company's financing
behavior and capital structure, showing how it balances different financing sources to support
growth and operations while managing costs and risks.

6. RESOURCE-BASED VIEW (RBV):

The Resource-Based View emphasizes a firm's internal resources and capabilities as

the primary drivers of competitive advantage and superior financial performance. Financial
statements provide valuable information about a company’s tangible and intangible assets,
efficiency, and strategic investments, allowing analysts to assess how well the company
leverages its resources to maintain a competitive edge in the market.

44
 CHAPTER – III

RESEARCH METHODOLOGY
45
3.1 RESEARCH DESIGN:
A research design specifies the methods and procedures for conducting a particular
study. According to Kerlinger, "Research Design is a plan, conceptual structure, and strategy
of investigation conceived as to obtain answers to research questions and to control variance.

3.1.1 AREA OF THE STUDY:

The area of the study is at "SHALOM GARMENTS PVT. LTD., VALLIOOR”

which is located at Tirunelveli District.

3.1.2 PERIOD OF THE STUDY:

The project was a detailed study on the topic "A STUDY ON FINANCIAL
STATEMENT ANALYSIS ON SHALOM GARMENTS PVT. LTD., VALLIOOR"
within the time period of three months from March-June 2024.

46
3.2 DATA COLLECTION:
3.2.1 SOURCES OF DATA:

The methodology of data collection pertain the information to how the data is
collected i.e, either from primary source or secondary source. It explains the methods
utilized and instruments used in data collection.

3.2.2 METHODS USED FOR DATA COLLECTION:

3.2.2.1 SECONDARY DATA

Secondary data refers to information gathered from sources already existing. The
study is mainly based upon the secondary data, which are from the published annual report of
the SHALOM GARMENTS PVT. LTD., VALLIOOR from 2014-2023. Other secondary
sources are,

 Annual Financial Reports

 Journals and Magazines
 Published Documents
 Websites.

47
3.2.3 TOOLS AND TECHNIQUES:

Tools used for analyzing the financial statements are given below.

 Trend Analysis
 Ratio Analysis
 Common Size Analysis of a Balance Sheet.

3.2.3.1 TREND ANALYSIS:

Trend analysis is a statistical technique used to evaluate the pattern of change in data
over time. It involves examining historical data points to identify and analyze any consistent
upward, downward, or stable trends. The selection of base year is the important for
calculating the percentage of other years. The number of years information is taken up for
calculation and one year is taken us base year normally first year is the base year. The base
year figure is taken as100 and trend percentages of other year are calculated on the basics of
the base year.

Current Year
Trend Analysis= × 100
Base Year

3.2.3.2 RATIO ANALYSIS:

Ratio analysis is a powerful tool used in financial statement analysis to evaluate the
financial performance and condition of a company. By comparing different financial
statement items, ratio analysis provides insights into various aspects of a company's
operations. Here are some key types of financial ratios and their significance:

1. LIQUIDITY RATIOS:
(i) CURRENT RATIO:
To measure a company's ability to pay short-term obligations with its current
assets.

Current Assets
Current Ratio=
Current Liabilities

(ii) QUICK RATIO:

Similar to the current ratio but excludes inventory from current assets.
Current Assets−Inventory
Quick Ratio=
Current Liabilities
2. SOLVENCY RATIOS:
48
 (i) DEBT-TO-EQUITY RATIO:
Assesses the relative proportion of shareholders' equity and debts used to
finance the company's assets.
Total Liabilities
Debt-to-equity Ratio= '
Shareholde r s Equity

3. PROFITABILITY RATIOS:
(i) RETURN ON ASSETS (ROA):

Return on assets (ROA) is a financial ratio that measures how well a company
uses its assets to generate profit.

Net Income
Return on Assets (ROA) =
Average Total Assets

4. EFFICIENCY RATIOS:
(i) ASSET TURNOVER RATIO:

Shows how efficiently a company uses its assets to generate sales.

Revenue
Asset Turnover Ratio=
Total Assets

Ratio analysis helps stakeholders; including investors, creditors, and management,

make informed decisions by providing a clear picture of a company’s financial health,
operational efficiency, and profitability.

3.2.3.3 COMMON SIZE ANALYSIS OF A BALANCE SHEET:

Common Size Analysis of a Balance Sheet is a financial analysis technique that

standardizes the financial statements by expressing each item as a percentage of a base
amount. This method facilitates comparison across different periods and with other
companies, regardless of size. For the balance sheet, assets, liabilities, and equity items are
typically expressed as a percentage of total assets. The process involves converting each line
item on the balance sheet into a percentage of the total assets. This approach highlights the

49
relative size and significance of each item, making it easier to identify trends and structural
changes over time.

Balance Sheet Items

Common Size Analysis = × 100
Total Assets

This analysis is crucial for stakeholders as it provides insights into the company's
financial structure, operational efficiency, and potential areas of concern. By analyzing the
common size balance sheet, investors can assess the proportion of different asset classes, the
level of debt financing, and the composition of shareholders' equity, enabling more informed
decision-making.

CHAPTER – IV

50
 DATA ANALYSIS AND
INTERPRETATION

4.1 INTRODUCTION:
ANALYSIS:

The term analysis refers to the computation of certain measures along with searching
for patterns or relationship that exist among data groups. After collection of data, the data has
to be processed and analyzed in accordance with the outline laid down for the purpose at the
time of developing the research plan.

INTERPRETATION:

Interpretation refers to the task of drawing inferences from the collected facts after an
after an analytical and / or experimental study in fact; it is a search for broader meaning or
research findings.

The tasks or interpretation has two major aspects they are.

51
 1. The effort to establish continuity in research through linking the results of a
given study with those of another.
2. The establishment of some explanatory concept’s interpretation is essential
for the simple reason that the usefulness and utility of research findings lie in
Proper interpretation.

4.2 TREND ANALYSIS:

4.2.1 Trend Analysis of Total Shareholder’s Funds:

Year Total Shareholder’s Funds Trend Value

2014 307.95 100%
2015 321.78 104%
2016 342.82 111%
2017 284.54 92%
2018 287.48 93%
2019 271.44 88%
2020 243.44 79%
2021 240.72 78%
2022 259.23 84%
2023 269.52 88%

52
INTERPRETATION:

From the above table, it is known that by taking 2014 as the base year, TOTAL
SHAREHOLDER’S FUNDS for the period of 2014-2023 are calculated. It is clearly shown
that 2016 holds the High value (111%) than that of other year total shareholder’s funds and
2021 holds the Low value (78%).

4.2.1.1 The Graph showing the Total shareholder’s fund of Shalom Garments Pvt. Ltd.,
Vallioor for the period of 2014-2023

53
 TOTAL SHAREHOLDER'S FUNDS

120%
111%
104% Trend Value
100%
100%
92% 93%
88% 88%
84%
79% 78%
80%

60%
Trend Value

40%

20%

0%
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Year

4.2.2 Trend Analysis of Total Non-current Liabilities:

54
 Year Total Non-current Liabilities Trend Value
2014 184.39 100%
2015 161.42 88%
2016 210.32 114%
2017 176.37 96%
2018 189.56 103%
2019 167.54 91%
2020 140.32 76%
2021 121.77 66%
2022 126.15 68%
2023 86.38 47%

INTERPRETATION:

From the above table, it is known that by taking 2014 as the base year, TOTAL
NON-CURRENT LIABILITIES for the period of 2014-2023 are calculated. It is clearly
shown that 2016 holds the High value (114%) than that of other year total non-current
liabilities and 2023 holds the Low value (47%).

4.2.2.1 The Graph showing Total non-current liabilities of Shalom Garments Pvt. Ltd.,
Vallioor for the period of 2014-2023
55
 TOTAL NON-CURRENT LIABILITIES
120%
114%

103%
100%
100%
96% 91%
88% Trend Value

80% 76%

66% 68%

60%
Trend Value
47%

40%

20%

0%
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Year

4.2.3 Trend Analysis of Total Current Liabilities:

Year Total Current Liabilities Trend Value

56
 2014 262.30 100%
2015 260.75 99%
2016 313.57 120%
2017 348.05 133%
2018 372.47 142%
2019 339.99 130%
2020 342.58 131%
2021 325.13 124%
2022 312.10 119%
2023 298.15 114%

INTERPRETATION:

From the above table, it is known that by taking 2014 as the base year, TOTAL
CURRENT LIABILITIES for the period of 2014-2023 are calculated. It is clearly shown
that 2018 holds the High value (142%) than that of other year total current liabilities and
2015 holds the Low value (99%).

4.2.3.1 The Graph showing Total current liabilities of Shalom Garments Pvt. Ltd.,
Vallioor for the period of 2014-2023

57
 CURRENT LIABILITIES

160%

142%
140%
133%
130% 131%
124%
120% 119%
120%
114%

100% 99%
100%

Trend Value
80%
Trend Value

60%

40%

20%

0%
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Year

58
4.2.4 Trend Analysis of Total Capital and Liabilities:

Year Total Capital and Liabilities Trend Value

2014 754.64 100%
2015 743.96 99%
2016 859.71 114%
2017 808.96 107%
2018 849.50 113%
2019 778.97 103%
2020 726.34 96%
2021 687.62 91%
2022 697.48 92%
2023 654.05 87%

INTERPRETATION:

From the above table, it is known that by taking 2014 as the base year, TOTAL
CAPITAL AND LIABILITIES for the period of 2014-2023 are calculated. It is clearly
shown that 2016 holds the High value (114%) than that of other year total capital and
liabilities and 2023 holds the Low value (87%).

59
4.2.4.1 The Graph showing Total Capital and Liabilities of Shalom Garments Pvt. Ltd.,
Vallioor for the period of 20214-2023

TOTAL CAPITAL AND LIABILITIES

120%
114% 113%
107%
103% Trend Value
100% 99%
100% 96%
91% 92%
87%

80%

60%
Trend Value

40%

20%

0%
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Year

60
4.2.5 Trend Analysis of Fixed Assets:

Year Fixed Assets Trend Value

2014 452.29 100%
2015 428.97 95%
2016 494.56 109%
2017 423.57 94%
2018 404.56 89%
2019 381.70 84%
2020 339.01 75%
2021 324.22 72%
2022 241.93 53%
2023 246.44 54%

INTERPRETATION:

From the above table, it is known that by taking 2014 as the base year, FIXED
ASSETS for the period of 2014-2023 are calculated. It is clearly shown that 2016 holds the
High value (109%) than that of other year fixed assets and 2022 holds the Low value (53%).

61
4.2.5.1 The Graph showing Fixed Assets of Shalom Garments Pvt. Ltd., Vallioor for the
period of 2014-2023

FIXED ASSETS
120%
109%
100%
100%
95% 94%
89%
84%
80%
75% 72%

60%
Trend Value 53% 54% Trend Value

40%

20%

0%
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Year

62
4.2.6 Trend Analysis of Total Non-current Assets:

Year Total non-current Assets Trend Value

2014 457.34 100%
2015 433.55 95%
2016 501.26 110%
2017 439.99 96%
2018 416.84 91%
2019 394.04 86%
2020 344.75 75%
2021 329.81 72%
2022 251.18 55%
2023 257.26 56%

INTERPRETATION:

From the above table, it is known that by taking 2014 as the base year, TOTAL
NON-CURRENT ASSETS for the period of 2014-2023 are calculated. It is clearly shown
that 2016 holds the High value (110%) than that of other year total non-current assets and
2022 holds the Low value (55%).

63
 4.2.6.1 The graph showing Total Non-current Assets of Shalom Garments Pvt. Ltd.,
Vallioor for the period of 2014-2023

120% TOTAL NON-CURRENT ASSETS

110%

100%
100% 96%
95% Trend Value
91%
86%

80%
75% 72%

60%
Trend Value 55% 56%

40%

20%

0%
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Year

64
4.2.7 Trend Analysis of Total Current Assets:

Year Total Current Assets Trend Value

2014 297.30 100%
2015 310.41 104%
2016 358.45 121%
2017 368.97 124%
2018 432.67 146%
2019 384.92 129%
2020 381.59 128%
2021 357.82 120%
2022 446.26 150%
2023 396.79 133%

INTERPRETATION:

From the above table, it is known that by taking 2014 as the base year, TOTAL
CURRENT ASSETS for the period of 2014-2023 are calculated. It is clearly shown that
2022 holds the High value (150%) than that of other year total current assets and 2014 holds
the Low value (100%).

65
4.2.7.1 The graph showing Total Current assets of Shalom Garments Pvt. Ltd., Vallioor
for the period of 2014-2023

TOTAL CURRENT ASSETS

160%
150%
146%
140%
129% 128% 133%
121% 124% 120%
120%
104%
100%
100%

80% Trend Value

Trend Value
60%

40%

20%

0%
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Year

66
4.2.8 Trend Analysis of Total Assets:

Year Total Assets Trend Value

2014 754.64 100%
2015 743.96 99%
2016 859.71 114%
2017 808.96 107%
2018 849.50 113%
2019 778.97 103%
2020 726.34 96%
2021 687.62 91%
2022 697.48 92%
2023 654.05 87%

INTERPRETATION:

From the above table, it is known that by taking 2014 as the base year, TOTAL
ASSETS for the period of 2014-2023 are calculated. It is clearly shown that 2016 holds the
High value (114%) than that of other year total assets and 2023 holds the Low value (87%).

67
4.2.8.1 The graph showing Total Assets of Shalom Garments Pvt. Ltd., Vallioor for the
period of 2014-2023

TOTAL ASSETS
120%
114% 113%
100% 107%
103% Trend Value
99%
100% 96%
92%
91% 87%

80%

60%
Trend Value

40%

20%

0%
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Year

68
4.3 RATIO ANALYSIS:
4.3.1 CURRENT RATIO:
Year Current Ratio
2014 1.13
2015 1.19
2016 1.14
2017 1.06
2018 1.16
2019 1.13
2020 1.11
2021 1.10
2022 1.43
2023 1.33

INTERPRETATION:

From the above table, it is shown that the Current Ratio for the period of
2014-2023 is analyzed. It is well known that the year 2014 has the current ratio of 1.13, 2015
has the current ratio of 1.19, 2016 has the current ratio of 1.14, 2017 has the current ratio of
1.06, 2018 has the current ratio of 1.16, 2019 has the current ratio of 1.13, 2020 has the
current ratio of 1.11, 2021 has the current ratio of 1.10, 2022 has the current ratio of 1.43 and
2023 has the current ratio of 1.33. It is clear from the above table, 2022 has the highest ratio
(1.43) when compared to other year’s current ratio and the period of 2017 has the lowest
ratio (1.06).

69
4.3.1.1 The Graph showing Current Ratio of Shalom Garments Pvt. Ltd., Vallioor for
the period of 2014-2023

CURRENT RATIO
1.6
1.43
1.4 1.33

1.2 1.19 1.14 1.16 1.13

1.13 1.06 1.11 1.1
1
0.8
CR CURRENT RATIO
0.6
0.4
0.2
0
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

YEAR

70
4.3.2 QUICK RATIO:
Year Quick Ratio
2014 0.71
2015 0.66
2016 0.64
2017 0.55
2018 0.70
2019 0.75
2020 0.66
2021 0.72
2022 0.93
2023 0.83

INTERPRETATION:

From the above table, it is shown that the Quick Ratio for the period of 2014-
2023 is analyzed. It is well known that the year 2014 has the quick ratio of 0.71, 2015 has the
quick ratio of 0.66, 2016 has the quick ratio of 0.64, 2017 has the quick ratio of 0.55, 2018
has the quick ratio of 0.70, 2019 has the quick ratio of 0.75, 2020 has the quick ratio of 0.66,
2021 has the quick ratio of 0.72, 2022 has the quick ratio of 0.93 and 2023 has the quick ratio
of 0.83. It is clear from the above table, 2022 has the highest ratio (0.93) when compared to
other year’s quick ratio and the period of 2017 has the lowest ratio (0.55).

71
4.3.2.1 The Graph showing Quick Ratio of Shalom Garments Pvt. Ltd., Vallioor for the
period of 2014-2023

QUICK RATIO
1
0.93
0.9 0.83000000000000
0.71000000000000 0.72000000000000 1
0.75000000000000
0.8 0.66000000000000 0.70000000000000
1 1 0.66000000000000
1 1
0.7 0.64000000000000
1 1
1
0.6
0.55
0.5
QR QUICK RATIO
0.4
0.3
0.2
0.1
0
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

YEAR

72
4.3.3 DEBT-TO-EQUITY RATIO:
Year Debt-to-Equity Ratio
2014 1.45
2015 1.31
2016 1.53
2017 1.84
2018 1.96
2019 1.87
2020 1.98
2021 1.86
2022 1.69
2023 1.43

INTERPRETATION:

From the above table, it is shown that the Debt-to-equity Ratio for the period
of 2014-2023 is analyzed. It is well known that the year 2014 has the debt-to-equity ratio of
1.45, 2015 has the debt-to-equity ratio of 1.31, 2016 has the debt-to-equity ratio of 1.53, 2017
has the debt-to-equity ratio of 1.84, 2018 has the debt-to-equity ratio of 1.96, 2019 has the
debt-to-equity ratio of 1.87, 2020 has the debt-to-equity ratio of 1.98, 2021 has the debt-to-
equity ratio of 1.86, 2022 has the debt-to-equity ratio of 1.69 and 2023 has the debt-to-equity
ratio of 1.43. It is clear from the above table, 2020 has the highest ratio (1.98) when
compared to other year’s debt-to-equity ratio and the period of 2015 has the lowest ratio
(1.31).

73
4.3.3.1 The Graph showing Debt-to-equity Ratio of Shalom Garments Pvt. Ltd.,
Vallioor for the period of 2014-2023

DEBT-TO-EQUITY RATIO

2.5
DEBT-TO-EQUITY RATIO

1.96 1.98
2
1.84 1.87 1.86
1.69
1.53
1.5 1.45 1.43
1.31

D/E RATIO
1

0.5

0
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

YEAR

74
4.3.4 RETURN ON ASSETS (ROA):
Year Return on assets
2014 0.03
2015 0.05
2016 0.10
2017 0.07
2018 0.00
2019 -0.02
2020 -0.06
2021 -0.05
2022 0.13
2023 0.08

INTERPRETATION:

From the above table, it is shown that the Return on assets for the period of
2014-2023 is analyzed. It is well known that the year 2014 has the return on assets of 0.03,
2015 has the return on assets of 0.05, 2016 has the return on assets of 0.10, 2017 has the
return on assets of 0.07, 2018 has the return on assets of 0.00, 2019 has the return on assets of
-0.02, 2020 has the return on assets of -0.06, 2021 has the return on assets of -0.05, 2022 has
the return on assets of 0.13 and 2023 has the return on assets of 0.08. It is clear from the
above table, 2022 has the highest ratio (0.13) when compared to other years return on assets
and the period of 2018 has the lowest ratio (0.00).

75
4.3.4.1 The Graph showing Return on assets of Shalom Garments Pvt. Ltd., Vallioor for
the period of 2014-2023

RETURN ON ASSETS
0.15
0.13 RETURN ON ASSETS

0.1
0.1
0.08
0.07

0.05
0.05
0.03
ROA
0
0
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
-0.02

-0.05
-0.05
-0.06

-0.1
YEAR

76
4.3.5 ASSET TURNOVER RATIO:
Year Asset Turnover Ratio
2014 0.94
2015 0.96
2016 0.90
2017 0.96
2018 0.90
2019 0.86
2020 0.75
2021 0.71
2022 1.12
2023 1.31

INTERPRETATION:

From the above table, it is shown that the Asset turnover ratio for the period
of 2014-2023 is analyzed. It is well known that the year 2014 has the asset turnover ratio of
0.94, 2015 has the asset turnover ratio of 0.96, 2016 has the asset turnover ratio of 0.90, 2017
has the asset turnover ratio of 0.96, 2018 has the asset turnover ratio of 0.90, 2019 has the
asset turnover ratio of 0.86, 2020 has the asset turnover ratio of 0.75, 2021 has the asset
turnover ratio of 0.71, 2022 has the asset turnover ratio of 1.12 and 2023 has the asset
turnover ratio of 1.31. It is clear from the above table, 2023 has the highest ratio (1.31) when
compared to other year’s asset turnover ratio and the period of 2021 has the lowest ratio
(0.71).

77
 4.3.5.1 The Graph showing Asset Turnover Ratio of Shalom Garments Pvt. Ltd.,
Vallioor for the period of 2014-2023

ASSET TURNOVER RATIO

ASSET TURNOVER RATIO
1.4
1.31
1.2
1.12
1 0.960000000000001
0.940000000000001 0.960000000000001
0.9 0.860000000000001
0.9
0.8 0.750000000000001
0.710000000000001
ATR 0.6

0.4

0.2

0
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

YEAR

78
4.4 COMMON SIZE ANALYSIS OF A BALANCE SHEET:
4.4.1 COMMON SIZE ANALYSIS OF TOTAL SHAREHOLDER’S FUNDS:
Year Total Shareholder’s Funds Common Size Analysis
2014 307.95 41%
2015 321.78 43%
2016 342.82 40%
2017 284.54 35%
2018 287.48 34%
2019 271.44 35%
2020 243.44 34%
2021 240.72 35%
2022 259.23 37%
2023 269.52 41%

INTERPRETATION:
From the above table, it is known that Common size analysis of TOTAL
SHAREHOLDER’S FUNDS for the period of 2014-2023 are gathered and analyzed. It is
clearly shown that the highest value (43%) of total shareholder’s funds from 2015 and the
lowest value (34%) from 2020.

79
4.4.1.1 The Graph showing Total Shareholder’s Funds of Shalom Garments Pvt. Ltd.,
Vallioor for the period of 2014-2023

TOTAL SHAREHOLDER'S FUNDS

50%
Common Size Analysis
45%
41% 43% 40% 41%
40%
37%
35% 34% 35% 34% 35%
35%

30%
CSA 25%

20%

15%

10%

5%

0%
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

YEAR

80
4.4.2 COMMON SIZE ANALYSIS OF TOTAL NON-CURRENT LIABILITIES:

Year Total Non-current Liabilities Common Size Analysis

2014 184.39 24%
2015 161.42 22%
2016 210.32 24%
2017 176.37 22%
2018 189.56 22%
2019 167.54 22%
2020 140.32 19%
2021 121.77 18%
2022 126.15 13%
2023 86.38 13%

INTERPRETATION:
From the above table, it is known that Common size analysis of TOTAL
NON-CURRENT LIABILITIES for the period of 2014-2023 are gathered and analyzed. It
is clearly shown that the highest value (24%) of total non-current liabilities from 2014 and
the lowest value (13%) from 2022.

81
4.4.2.1 The graph showing Total non-current liabilities of Shalom Garments Pvt. Ltd
for the period of 2014-2023

TOTAL NON-CURRENT LIABILITIES

30%

25% 24% 24%

22% 22% 22% 22% Common Size Analysis

20% 19% 18%

15%
CSA 13%
13%

10%

5%

0%
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

YEAR

82
4.4.3 COMMON SIZE ANALYSIS OF TOTAL CURRENT LIABILITIES:
Year Total current liabilities Common Size Analysis
2014 262.30 35%
2015 260.75 35%
2016 313.57 36%
2017 348.05 43%
2018 372.47 44%
2019 339.99 44%
2020 342.58 47%
2021 325.13 47%
2022 312.10 45%
2023 298.15 46%

INTERPRETATION:
From the above table, it is known that Common size analysis of TOTAL
CURRENT LIABILITIES for the period of 2014-2023 are gathered and analyzed. It is
clearly shown that the highest value (47%) of total current liabilities from 2020 and the
lowest value (35%) from 2014.

83
4.4.3.1 The graph showing Total current liabilities of Shalom Garments Pvt. Ltd
Vallioor for the period of 2014-2023

TOTAL CURRENT LIABILITIES

50%
47% 47% 45% 46%
45% 44% 44%
43% Common Size Analysis
40%
35% 35% 36%
35%

30%

25%
CSA
20%

15%

10%

5%

0%
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
YEAR

84
4.4.4 COMMON SIZE ANALYSIS OF TOTAL NON-CURRENT ASSETS:
Year Total non-current assets Common Size Analysis
2014 457.34 61%
2015 433.55 58%
2016 501.26 58%
2017 439.99 54%
2018 416.84 49%
2019 394.04 51%
2020 344.75 47%
2021 329.81 48%
2022 251.18 36%
2023 257.26 39%

INTERPRETATION:
From the above table, it is known that Common size analysis of TOTAL
NON-CURRENT ASSETS for the period of 2014-2023 are gathered and analyzed. It is
clearly shown that the highest value (61%) of total non-current assets from 2014 and the
lowest value (36%) from 2022.

85
4.4.4.1 The graph showing Total non-current assets of Shalom Garments Pvt. Ltd.,
Vallioor for the period of 2014-2023

TOTAL NON-CURRENT ASSETS

70%
61%
60% 58% 58%
54%
49% 51% 47% 48%
50%
39%
40%
36%
CSA 30% Common Size Analysis

20%

10%

0%
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

YEAR

86
4.4.5 COMMON SIZE ANALYSIS OF TOTAL CURRENT ASSETS:
Year Total Current Assets Common Size Analysis
2014 297.30 39%
2015 310.41 42%
2016 358.45 42%
2017 368.97 46%
2018 432.67 51%
2019 384.92 49%
2020 381.59 53%
2021 357.82 52%
2022 446.26 64%
2023 396.79 61%

INTERPRETATION:
From the above table, it is known that Common size analysis of TOTAL
CURRENT ASSETS for the period of 2014-2023 are gathered and analyzed. It is clearly
shown that the highest value (61%) of total non-current assets from 2023 and the lowest
value (39%) from 2014.

87
4.4.5.1 The graph showing Total Current assets of Shalom garments Pvt. Ltd., Vallioor
for the period of 2014-2023

TOTAL CURRENT ASSETS

70%
64%
61%
60%

53% 52%
51% Common Size Analysis
50% 49%
46%
42% 42%
40% 39%

CSA
30%

20%

10%

0%
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Year

88
 CHAPTER-V
FINDINGS,
SUGGESTIONS AND
CONCLUSION

89
5.1 FINDINGS:
5.1.1 TREND ANALYSIS:

 Majority of the Total Shareholder’s Funds for the period of 2014-2023 is 111%.
 Majority of the Total Non-current Liabilities for the period of 2014-2023 is 114%.
 Majority of the Total Current Liabilities for the period of 2014-2023 is 142%.
 Majority of the Total Capital and Liabilities for the period of 2014-2023 is 114%.
 Majority of the Fixed Assets for the period of 2014-2023 is 109%.
 Majority of the Total Non-current Assets for the period of 2014-2023 is 110%.
 Majority of the Total Current Assets for the period of 2014-2023 is 150%.
 Majority of the Total Assets for the period of 2014-2023 is 114%.

5.1.2 RATIO ANALYSIS:

 Majority of the Current Ratio for the period of 2014-2023 is 1.43.

 Majority of the Quick Ratio for the period of 2014-2023 is 0.93.
 Majority of the Debt-to-Equity Ratio for the period of 2014-2023 is 1.98.
 Majority of the Return on Assets (ROA) for the period of 2014-2023 is 0.13.
 Majority of the Asset Turnover Ratio for the period of 2014-2023 is 1.31.

5.1.3 COMMON SIZE ANALYSIS:

 Majority of the Total Shareholder’s Funds for the period of 2014-2023 is 43%.
 Majority of the Total Non-current Liabilities for the period of 2014-2023 is 24%.
 Majority of the Total Current Liabilities for the period of 2014-2023 is 47%.
 Majority of the Total Non-current Assets for the period of 2014-2023 is 61%.
 Majority of the Total Current Assets for the period of 2014-2023 is 61%.

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5.2 SUGGESTIONS:

 Frame a consistent financial reporting framework to ensure clarity and uniformity.

 Software tools like QuickBooks, Xero, Tally ERP 9, and ZOHO Books for financial
analysis to automate the calculation of ratios and analysis of trends.
 Conduct quarterly assessments of financial health to compare actual performance with
budgeted figures.
 Provide training programs on financial literacy to enhance employees' comprehension of
financial concepts.

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5.3 CONCLUSION:

Thorough financial statement analysis is essential for making well-

informed decisions within companies. By carefully examining financial documents like
balance sheets, income statements, and cash flow statements, stakeholders gain vital insights
into a company's financial well-being and performance. This comprehensive understanding
allows management to identify strengths, identify areas needing improvement, and devise
strategies that promote sustainable growth. Additionally, clear and accurate financial
reporting boosts investor confidence, strengthens stakeholder relationships, and enhances the
overall credibility of the organization in the marketplace. In today’s changing economic
environment, rigorous financial statement analysis remains crucial, ensuring resilience,
flexibility, and strategic planning for long-term success.

In conclusion, executing a structured financial reporting framework is

expository for achieving clarity and uniformity in financial operations. Using software tools
like QuickBooks, Xero, Tally ERP 9, and ZOHO Books can automate complex financial
analyses, making the calculation of ratios and trend analysis more efficient. Regular quarterly
assessments of financial health provide a valuable benchmark to compare actual performance
with budgeted expectations, promoting better financial oversight. Additionally, investing in
financial literacy training programs for employees boosts their understanding of financial
concepts, thereby allowing them to make more informed decisions. Overall, these measures
can significantly reinforce the financial management competences of the organization,
guiding sustained financial health and performance.

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APPENDIX

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