SUMMER TRAINING REPORT

ON

“STUDY ON A FINANCIAL STETEMENT ANALYSIS AND INTERPRETATION”

ALM INFOTECH CITY PRIVATE LIMITED

Submitted for partial fulfillment of the requirement of the degree of Master of Business
Administration (2017-2019 Batch)

SUBMITTED TO:- SUBMITTED BY:-

CONTROLLER OF EXAMINATION SANJANA LAMBA

MDU,ROHTAK REG NO: 1412031824

MBA 3rd Sem

ROLL NO.

KIIT COLLEGE OF ENGINEERING ,GURUGRAM

 ACKNOWLEDGEMENT

I have taken efforts in this internship. However, it would not have been possible without the
kind support and help of many individuals and organizations. I would like to extend my sincere
thanks to all off them.

I am highly indebted to Mr. Sanjay Sir for their guidance and constant supervision as well as for
providing necessary information regarding the internship & also for their support in completing
the internship.

I would like to express my gratitude towards my teachers and member of ALM INFOTECH
CITY PRIVATE LIMITED for their kind co-operation and encouragement which help me in
completion of this internship.
 TABLE OF CONTENTS

S.NO. TITLE PAGE NO.

Chapter-1 Introduction 01 - 04
Chapter -2 A financial statement analysis 05 - 06
and interpretation
• Meaning , objectives
Chapter -3 Financial statement 07 - 15
• Meaning
• Balance sheet -
meaning,importance
• Format of B.S
• TERM OF B.S
• Profit and loss statement -
meaning,format
Objectives of p&l
statement
Chapter-4 Financial ratios 16 - 24
• Meaning
• Objectives
• Different ratios
Chapter -5 Financial ratio analysis 25 - 38
• Balance sheet (2016)
• Balance sheet (2017)
• P&L statement (2016)
• P&L statement (2017)
• Ratio analysis for 2016
• Ratio analysis for 2017
Chapter -6 Variation of financial ratios 39 - 47
Chapter -7 Summary of B.S and P&L 48 - 51
statement
• Summary of B.S
• Summary of P&L
Chapter -8 FINDINGS 52
CONCLUSION 53
Recommendation 54 to 55
LIMITATIONS 56 TO 57
BIBLOGRAPHY 58
 CHAPTER-1
INTRODUCTION

ALM INFOTECH CITY PRIVATE LIMITED

ALM INFOTECH CITY PRIVATE LIMITED with CIN U72900DL2000PTC104762, is a 18.6 Years
old, PrivateUnListed Indian Non-Government Company, registered at DELHI (Delhi),with a paid up
capital of ₹39.88 Cr.As per MCA and other Industry classification records, the main line of business is
Computer And Related ActivitiesThe status of ALM INFOTECH CITY PRIVATE LIMITED,as on
date is Active. Company has filed its Annual Returns and/or Financial Statements upto 31-03-2017 i.e.
FY 2016-2017

As on date,2 Directors and 0 Signatories are associated with the company. The company had 4
Directors in the past, who have already resigned, on various dates.

The total registered charges of company stands at ₹7,60,60,25,000.00 ( ₹760.60 Cr ) (22 Charges ) out
of which, charges amounting ₹195.87 Cr ( 6 Charges ) are still open and ₹564.74 Cr ( 16 Charges ) are
Satisfied and Closed. Overall, IDBI TRUSTEESHIP SERVICES LIMITED holds highest open
charge, amounting ₹1,00,00,00,000.00 ( ₹100.00 Cr )

As per MCA records, company is registered at B-418 NEW FRIENDS COLONY NEW DELHI DL
110065 IN.

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About Group ALM Infotech city pvt. Ltd.-ILD trade center sector-47 sohna road, gurgaon

• The most important phase of the journey along the path of real estate business relating to
experience and reality rather than ideas is the basic thinking process as considered by
ILD Group. ILD, known by the name of International Land Developers, was founded in
the year 2006 under the successful parent/ holding company of “ALM Group” since
1990.
• Mr. Alimuddin Rafi Ahmed, the Chairman of ALM Group, has promoted ILD to bring
professional management, international design, execution and the best of services of real
estate. The group has been involved in diversified activities and is currently
implementing residential and commercial projects in Delhi and NCR.
• In order to allow customers and clients to make their best choices, ILD forms a think tank
of leading architects, interior consultants, management specialists, global finest brands in
design/ construction and decorative material inputs etc.
• According to the value for money the group is determined to provide prompt services,
quality construction/ assurance, timely possession and customer satisfaction to the fullest
extent in all its real estates ventures.
• The group promises to challenge the standards set by the industry to spread more edges
and mileages for the customers and also wishes to create innovative architecture to
transform its real estate vision into reality. Thus it endeavors to set up new marvels in the
real estate arena.
• (ILd Trade center-sohna road , gurgaon sector-47.,ILd Trade center-sohna road , gurgaon
sector-47.,ILd Trade center-sohna road , gurgaon sector-47.)

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 Company Details

CIN U72900DL2000PTC104762
Company Name ALM INFOTECH CITY PRIVATE LIMITED
Company Status Active
RoC RoC-Delhi
Registration Number 104762
Company Category Company limited by Shares
Company Sub Category Non-govt company
Class of Company Private
Date of Incorporation 28 March 2000
Age of Company 18 years, 6 month, 9 days

Share Capital & Number of Employees

Authorised Capital ₹400,000,000

Paid up capital ₹398,750,016

Director Details

DIN Director Name Designation Appointment Date

02569728 SAMBIT MOHAPATRA Director 24 February 2015

06968293 SALMAN AKBAR JALALUDDIN Additional Director 17 July 2018

07476298 NAVIN CHANDRA BAHUGUNA Wholetime Director 03 December 2016

07854386 GOVIND RAWAT SINGH Director 14 June 2017

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Headquarters

• 2nd Floor ILD Trade CentreSector 47, Sohna Road, GURGAON - 122101,
HARYANA,India

SERVICES OFFERED

• Real Estate Developer

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 CHAPTER-2

A FINANCIAL STATEMENT ANALYSIS AND INTERPRETATION

The term ‘financial analysis’, also known as analysis and interpretation of financial statements’,
refers to the process of determining financial strengths and weaknesses of the firm by
establishing strategic relationship between the items of the balance sheet, profit and loss account
and other operative 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.”

Objectives :
(i) To assess the earning capacity or profitability of the firm.

(ii) To assess the operational efficiency and managerial effectiveness.

(iii) To assess the short term as well as long term solvency position of the firm.

(iv) To identify the reasons for change in profitability and financial position of the firm.

(v) To make inter-firm comparison

(vi) To make forecasts about future prospects of the firm.

(vii) To assess the progress of the firm over a period of time.

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 (viii) To help in decision making and control.

(ix) To guide or determine the dividend action.

(x) To provide important information for granting credit.

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 CHAPTER-3
FINANCIAL STATEMENT

MEANING:

Financial statements (or financial report) are a formal record of the financial activities and
position of a business, person, or other entity.

Relevant financial information is presented in a structured manner and in a form easy to

understand. They typically include basic financial statements, accompanied by a management
discussion and analysis.

A balance sheet or statement of financial position, reports on a company's assets, liabilities, and
owners’ equity at a given point in time.

1. An income statement or statement of comprehensive income, statement of revenue &

expense, P&L or profit and loss report, reports on a company's income, expenses, and
profits over a period of time. A profit and loss statement provides information on the
operation of the enterprise. These include sales and the various expenses incurred during
the stated period.
2. A Statement of changes in equity or equity statement or statement of retained earnings,
reports on the changes in equity of the company during the stated period.
3. A cash flow statement reports on a company's cash flow activities, particularly its
operating, investing and financing activities.

For large corporations, these statements may be complex and may include an extensive set of
footnotes to the financial statements and management discussion and analysis. The notes
typically describe each item on the balance sheet, income statement and cash flow statement in
further detail. Notes to financial statements are considered an integral part of the financial
statements.

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BALANCE SHEET :

A Balance Sheet is a statement of the financial position of a business

which states the assets, liabilities, and owners' equity at a particular point in time. In other words,
the balance sheet illustrates your business's net worth. These are prepared at the end of an
accounting period like a month, quarter or year end. Comparison of balance sheets over years
helps to gauge the financial health of a business. It got its name as assets minus liabilities (net
assets) must equal the owner’s equity (they must balance). Every business will generally need a
balance sheet while applying for loans or grants, submitting taxes or seeking potential investors.

Importance of the Balance Sheet

The balance sheet is a very important financial statement for many reasons. It can be looked at
on its own, and in conjunction with other statements like the income statement and cash flow
statement to get a full picture of a company’s health.

4 important takeaways include:

1. Liquidity – Comparing a company’s current assets to its current liabilities provides a

picture of liquidity. Current assets should be greater than current liabilities so the
company can cover its short-term obligations. The Current Ratio and Quick Ratio are
examples of liquidity financial metrics.
2. Leverage – Looking at how a company is financed indicates how much leverage it has,
which in turn indicates how much financial risk the company is taking. Comparing debt
to equity and debt to total capital are common ways of assessing leverage on the balance
sheet.
3. Efficiency – By using the income statement in connection with the balance sheet it’s
possible to assess how efficiently a company uses its assets. For example, dividing
revenue into fixed assets produces the Asset Turnover Ratio to indicate how efficiently
the company turns assets into revenue.

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 4. Rates of Return – The balance sheet can be used to evaluate how well a company
generates returns. For example, dividing net income into shareholders’ equity produces
Return on Equity (ROE), and dividing net income into total assets produces Return on
Assets (ROA), and dividing net income into debt plus .

FORMAT OF BALANCE SHEET :

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Current Assets

Cash and Equivalents

The most liquid of all assets, cash, appears on the first line of the balance sheet. Cash
Equivalents are also lumped under this line item and include assets that have short-term
maturities under three months or assets that the company can liquidate on short notice, such as
marketable securities. Companies will generally disclose what equivalents it includes in the
footnotes to the balance sheet.

Accounts Receivable

This account includes the balance of all sales revenue still on credit, net of any allowances for
doubtful accounts (which generates a bad debt expense). As companies recover accounts
receivables, this account decreases and cash increases by the same amount.

Inventory

Inventory includes amounts for raw materials, work-in-progress goods and finished goods. The
company uses this account when it reports sales of goods, generally under cost of goods sold in
the income statement.

Non-Current Assets

Plant, Property and Equipment (PP&E)

Property, Plant and Equipment (also known as PP&E) capture the company’s tangible fixed
assets. This line item is noted net of depreciation. Some companies will class out their PP&E by
the different types of assets, such as Land, Building, and various types of Equipment. All PP&E
is depreciable except for Land.

Intangible Assets

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This line item will include all of the companies intangible fixed assets, which may or may not be
identifiable. Identifiable intangible assets include patents, licenses, and secret formulas.
Unidentifiable intangible assets include brand and goodwill.

Current Liabilities

Accounts Payable

Accounts Payables, or AP, is the amount a company owes suppliers for items or services
purchased on credit. As the company pays off their AP, it decreases along with an equal amount
decrease to the cash account.

Current Debt/Notes Payable

Includes non-AP obligations that are due within one year time or within one operating cycle for
the company (whichever is longest). Notes payable may also have a long-term version, which
includes notes with a maturity of more than one year.

Current Portion of Long-Term Debt

This account may or may not be lumped together with the above account, Current Debt. While
they may seem similar, the current portion of long-term debt is specifically the portion due
within this year of a piece of debt that has a maturity of more than one year. For example, if a
company takes on a bank loan to be paid off in 5-years, this account will include the portion of
that loan due in the next year.

Non-Current Liabilities

Bonds Payable

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This account includes the amortized amount of any bonds the company has issued.

Long-Term Debt

This account includes the total amount of long-term debt (Excluding the current portion, if that
account is present under current liabilities). This account is derived from the debt schedule,
which outlines all the companies outstanding debt, the interest expense and the principal
repayment for every period.

Shareholders’ Equity

Share Capital

This is the value of funds that shareholders have invested in the company. When a company is
first formed, shareholders will typically put in cash. For example, an investor starts a company
and seeds it with $10M. Cash (an asset) rises by $10M, and Share Capital (an equity account)
rises by $10M, balancing out the balance sheet.

Retained Earnings

This is the total amount of net income the company decides to keep. Every period, a company
may pay out dividends from its net income. Any amount remaining (or exceeding) is added to
(deducted from) retained earnings.

PROFIT AND LOSS STATEMENT :

The profit and loss statement is a financial statement that summarizes the revenues,
costs and expenses incurred during a specified period, usually a fiscal quarter or year. P&L
statement is synonymous with the income statement. These records provide information about a

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company's ability or inability to generate profit by increasing revenue, reducing costs or both.
Some refer to the P&L statement as a statement of profit and loss, income statement, statement
of operations, statement of financial results or income, earnings statement and expense
statement.

FORMAT OF PROFIT AND LOSS STATEMENT :

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Objectives of profit and loss account

If the profits are satisfactory in relation to the sale and total capital employed, there is no cause
for concern. The objects of studying the profit and loss account of a company for a particular
year are

1. Know trading results: To know the trading results during the period studying profit and
loss account is the essential way
2. Relate the profits: Relate the profits to following
o The total capital (share capital, reserves etc., and ling term borrowings) employed
in the concern which will indicate its overall profitability;
o The share capital which will indicate the profitability of the share capital
employed in the business;
3. The relation between profits and turnover: Objective of profit and loss account is to
find out the relation between profits and turnover. It should be seen if, with the increase
in sales, the same ratio of profitability has been maintained.

In order to compare trading results for different for different years, the bank should extract the
profit or loss figures for each year separately. For arriving at the figure, and unusual items which
do not indicate the legitimate profit relating to the particular period should be exclude.

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 CHAPTER-4

FINANCIAL RATIOS

MEANING :

A financial ratio or accounting ratio is a relative magnitude of two selected numerical

values taken from an enterprise's financial statements. Often used in accounting, there are many
standard ratios used to try to evaluate the overall financial condition of a corporation or other
organization.

Financial ratios are useful tools that help companies and investors analyze and compare
relationships between different pieces of financial information across an individual company's
history, an industry, or an entire business sector. Numbers taken from a company's income
statement, balance sheet, and cash flow statement allow analysts to calculate several types of
financial ratios for different kinds of business intelligence and information.

Objectives of Ratio Analysis

Interpreting the financial statements and other financial data is essential for all stakeholders of an
entity. Ratio Analysis hence becomes a vital tool for financial analysis and financial
management. Let us take a look at some objectives that ratio analysis fulfils.

1] Measure of Profitability

Profit is the ultimate aim of every organization. So if I say that ABC firm earned a profit of 5
lakhs last year, how will you determine if that is a good or bad figure? Context is required to
measure profitability, which is provided by ratio analysis. Gross Profit Ratios, Net Profit Ratio,
Expense ratio etc provide a measure of profitability of a firm. The management can use such
ratios to find out problem areas and improve upon them.

2] Evaluation of Operational Efficiency

Certain ratios highlight the degree of efficiency of a company in the management of its assets
and other resources. It is important that assets and financial resources be allocated and used

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efficiently to avoid unnecessary expenses. Turnover Ratios and Efficiency Ratios will point out
any mismanagement of assets.

3] Ensure Suitable Liquidity

Every firm has to ensure that some of its assets are liquid, in case it requires cash immediately.
So the liquidity of a firm is measured by ratios such as Current ratio and Quick Ratio. These help
a firm maintain the required level of short-term solvency.

4] Overall Financial Strength

There are some ratios that help determine the firm’s long-term solvency. They help determine if
there is a strain on the assets of a firm or if the firm is over-leveraged. The management will
need to quickly rectify the situation to avoid liquidation in the future. Examples of such ratios are
Debt-Equity Ratio, Leverage ratios etc.

5] Comparison

The organizations’ ratios must be compared to the industry standards to get a better
understanding of its financial health and fiscal position. The management can take corrective
action if the standards of the market are not met by the company. The ratios can also be
compared to the previous years’ ratio’s to see the progress of the company. This is known as
trend analysis.

FINANCIAL RATIO AND THEIR INTERPRETATION

DIFFERENT FINANCIAL RATIOS

Price Ratios

Price ratios are used to get an idea of whether a stock's price is reasonable or not. They are easy
to use and generally pretty intuitive, but do not forget this major caveat: Price ratios are
"relative" metrics, meaning they are useful only when comparing one company's ratio to another
company's ratio, a company's ratio to itself over time, or a company's ratio to a benchmark.

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1) Price-to-Earnings Ratio (P/E)

What you need: Income Statement, Most Recent Stock Price

The formula: P/E Ratio = Price per Share / Earnings Per Share

What it means: Think of the price-to-earnings ratio as the price you'll pay for $1 of earnings. A
very, very general rule of thumb is that shares trading at a "low" P/E are a value, though the
definition of "low" varies from industry to industry.

[InvestingAnswers Feature: The P/E Ratio -- A True Measure of Profits?]

2) PEG Ratio

What you need: Income Statement, Most Recent Stock Price

The formula: PEG Ratio = (P/E Ratio) / Projected Annual Growth in Earnings per Share

What it means: The PEG ratio uses the basic format of the P/E ratio for a numerator and then
divides by the potential growth for EPS, which you'll have to estimate. The two ratios may seem
to be very similar but the PEG ratio is able to take into account future earnings growth. A very
generally rule of thumb is that any PEG ratio below 1.0 is considered to be a good value.

3) Price-to-Sales Ratio

What you need: Income Statement, Most Recent Stock Price

The formula: Price-to-Sales Ratio = Price per Share / Annual Sales Per Share

What it means: Much like P/E or P/B, think of P/S as the price you'll pay for $1 of sales. If
you are comparing two different firms and you see that one firm's P/S ratio is 2x and the other is
4x, it makes sense to figure out why investors are willing to pay more for the company with a
P/S of 4x. The P/S ratio is a great tool because sales figures are considered to be relatively
reliable while other income statement items, like earnings, can be easily manipulated by using
different accounting rules.

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4) Price-to-Book Ratio (P/B)

What you need: Balance Sheet, Most Recent Stock Price

The formula: P/B Ratio = Price per Share / Book Value per Share

What it means: Book value (BV) is already listed on the balance sheet, it's just under a
different name: shareholder equity. Equity is the portion of the company that owners (i.e.
shareholders) own free and clear. Dividing book value by the number of shares outstanding gives
you book value per share.

Like P/E, the P/B ratio is essentially the number of dollars you'll have to pay for $1 of equity.
And like P/E, there are different criteria for what makes a P/B ratio "high" or "low."

[InvestingAnswers Feature: Don't Be Misled By the P/E Ratio]

5) Dividend Yield

What you need: Income Statement, Most Recent Stock Price

The formula: Dividend Yield = Dividend per Share / Price per Share

What it means: Dividends are the main way companies return money to their shareholders. If
a firm pays a dividend, it will be listed on the balance sheet, right above the bottom line.
Dividend yield is used to compare different dividend-paying stocks. Some people prefer to invest
in companies with a steady dividend, even if the dividend yield is low, while others prefer to
invest in stocks with a high dividend yield.

[Investing Answers Feature: Decoding the Dividend Yield Formula]

6) Dividend Payout Ratio

What you need: Income Statement

The formula: Dividend Payout Ratio = Dividend / Net Income

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What it means: The percentage of profits distributed as a dividend is called the dividend
payout ratio. Some companies maintain a steady payout ratio, while other try to maintain a
steady number of dollars paid out each year (which means the payout ratio will fluctuate). Each
company sets its own dividend policy according to what it thinks is in the best interest of its
shareholders. Income investors should keep an especially close eye on changes in dividend
policy.

__________________________________________________________________

Profitability Ratios

Profitability ratios tell you how good a company is at converting business operations into profits.
Profit is a key driver of stock price, and it is undoubtedly one of the most closely followed
metrics in business, finance and investing.

7) Return on Assets (ROA)

What you need: Income Statement, Balance Sheet

The formula: Return on Assets = Net Income / Average Total Assets

What it means: A company buys assets (factories, equipment, etc.) in order to conduct its
business. ROA tells you how good the company is at using its assets to make money. For
example, if Company A reported $10,000 of net income and owns $100,000 in assets, its ROA is
10%. For ever $1 of assets it owns, it can generate $0.10 in profits each year. With ROA, higher
is better.

8) Return on Equity (ROE)

What you need: Income Statement, Balance Sheet

The formula: Return on Equity = Net Income / Average Stockholder Equity

What it means: Equity is another word for ownership. ROE tells you how good a company is at
rewarding its shareholders for their investment. For example, if Company B reported $10,000 of

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net income and its shareholders have $200,000 in equity, its ROE is 5%. For every $1 of equity
shareholders own, the company generates $0.05 in profits each year. As with ROA, higher is
better.

9) Profit Margin

What you need: Income Statement

The formula: Profit Margin = Net Income / Sales

What it means: Profit margin calculates how much of a company's total sales flow through to the
bottom line. As you can probably tell, higher profits are better for shareholders, as is a high
(and/or increasing) profit margin.

__________________________________________________________________

Liquidity Ratios

Liquidity ratios indicate how capable a business is of meeting its short-term obligations.
Liquidity is important to a company because when times are tough, a company without enough
liquidity to pay its short-term debts could be forced to make unfavorable decisions in order to
raise money (sell assets at a low price, borrow at high interest rates, sell part of the company to a
vulture investor, etc.).

10) Current Ratio

What you need: Balance Sheet

The formula: Current Ratio = Current Assets / Current Liabilities

What it means: The current ratio measures a company's ability to pay its short-term liabilities
with its short-term assets. If the ratio is over 1.0, the firm has more short-term assets than short-
term debts. But if the current ratio is less than 1.0, the opposite is true and the company could be
vulnerable to unexpected bumps in the economy or business climate.

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11) Quick Ratio

What you need: Balance Sheet

The formula: Quick Ratio = (Current Assets - Inventory) / Current Liabilities

What it means: The quick ratio (also known as the acid-test ratio) is similar to the quick ratio in
that it's a measure of how well a company can meet its short-term financial liabilities. However,
it takes the concept one step further. The quick ratio backs out inventory because it assumes that
selling inventory would take several weeks or months. The quick ratio only takes into account
those assets that could be used to pay short-term debts today.

__________________________________________________________________

Debt Ratios

These ratios concentrate on the long-term health of a business, particularly the effect of the
capital and finance structure on the business:

12) Debt to Equity Ratio

What you need: Balance Sheet

The formula: Debt-to-Equity Ratio = Total Liabilities / Total Shareholder Equity

What it means: Total liabilities and total shareholder equity are both found on the balance sheet.
The debt-to-equity ratio measures the relationship between the amount of capital that has been
borrowed (i.e. debt) and the amount of capital contributed by shareholders (i.e. equity).
Generally speaking, as a firm's debt-to-equity ratio increases, it becomes more risky because if it
becomes unable to meet its debt obligations, it will be forced into bankruptcy.

13) Interest Coverage Ratio

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What you need: Income Statement

The formula: Interest Coverage Ratio = EBIT / Interest Expense

What it means: Both EBIT (aka, operating income) and interest expense are found on the income
statement. The interest coverage ratio, also known as times interest earned (TIE), is a measure of
how well a company can meet its interest payment obligations. If a company can't make enough
to make interest payments, it will be forced into bankruptcy. Anything lower than 1.0 is usually a
sign of trouble.

Efficiency Ratios

These ratios give investors insight into how efficiently a business is employing resources
invested in fixed assets and working capital. It's can also be a reflection of how effective a
company's management is.

14) Asset Turnover Ratio

What you need: Income Statement, Balance Sheet

The formula: Asset Turnover Ratio = Sales / Average Total Assets

What it means: Like return on assets (ROA), the asset turnover ratio tells you how good the
company is at using its assets to make products to sell. For example, if Company A reported
$100,000 of sales and owns $50,000 in assets, its asset turnover ratio is 2x. For ever $1 of assets
it owns, it can generate $2 in sales each year.

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15) Inventory Turnover Ratio

What you need: Income Statement, Balance Sheet

The formula: Inventory Turnover Ratio = Costs of Goods Sold / Average Inventory

What it means: If the company you're analyzing holds has inventory, you want that company to
be selling it as fast as possible, not stockpiling it. The inventory turnover ratio measures this
efficiency in cycling inventory. By dividing costs of goods sold (COGS) by the average amount
of inventory the company held during the period, you can discern how fast the company has to
replenish its shelves. Generally, a high inventory turnover ratio indicates that the firm is selling
inventory (thereby having to spend money to make new inventory) relatively quickly.

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 CHAPTER-5
FINANCIAL RATIO ANALYSIS
RATIO ANALYSIS

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 BALANCE SHEET OF ALM INFOTECH CITY PRIVATE LIMITED
AS AT 31 MARCH 2016
Particular As at 31 march, As at 31 march
2016 ,2015
Equity and Liabilities
1. Shareholders’funds
a.Share capital 396,750,000 398,750,000
b.Reserves and surplus 15,328,652 14,199,670
414,078,652 412,949,670
2. Share application money pending allotment
3. Non-current liabilities
a.long-term borrowings 592,651,532 171,613,742
b.other long-term liabilities
c.long-term provisions 2,387,242 3,060,319
595,038,774 174,674,061
4. Current liabilities
a.Short-term borrowings 132,595,113 254,658,500
b.Trade payables 92,288,459 67,552,050
c.Other current liabilities 123,818,511 311,565,863
d.Short term provisions 2,59,491 3,803,050
361,251,674 637,579,463
TOTAL 1360,369,000 1,225,203,194

Assets
Non-current assets
a.Fixed assets
i.tangible assets 62,503,290 77,315,754
ii.intangible assets 1,170,534 1,505,998
63,673,824 78,821,762
b.Non-current investments 213,884,630 213,724,636

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 c.Deferred tax assets (net) 4,119,501 2,593,791
d.long –term loans and advances 25,966,937 124,196,991
243,951,074 340,517,418
Current assets
a.inventories 905,046,455 716,264,129
b.trade receivables 10,988,933 12,739,966
c.cash and cash equivalents 53,244,650 -8,254,387
d.short-term loans and advances 62,244,656 82,136,134
e.other current assets 803,508 2,978,182
1,052,744,102 805,864,024
TOTAL 1,360,369,000 1,225,203,194

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 BALANCE SHEET OF ALM INFOTECH CITY PRIVATE LIMITED
AS AT 31 MARCH 2017

Particular As at 31 march, As at 31 march

2017 ,2016
1. Equity and liabilities
Shareholders’funds
a.Share capital 398,750,000 398,750,000
b.Reserves and surplus (81,387,563) 15,328,652
317,362,437 414,078,652
Non-current liabilities
a.long-term borrowings 373,420,833 592,651,532
b.long-term provisions 2,996,196 2,319,566
376,417,029 594,971,098
Current liabilities
a.Short-term borrowings 218,600,000 152,600,000
b.trade payables 72,047,493 120,010,344
c.other current liabilities 648,291,132 176,025,870
d.Short-term provisions 81,277 2,617,166
939,019,902 451,253,380
TOTAL 1,632,799,368 1,460,303,130

2. Assets
Non-current assets
a.Fixed assets
i.Tangible assets 48,022,699 62,503,290
ii.Intangible assets 584,036 1,170,534
b.Non-current investments 213,864,636 213,864,636
c.Deferred tax assets(net) 39,519,586 4,119,501

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 d.Long-term loans and advances 27,563,871 25,966,937
e.Other non-current assets 7,404,339 -

Current Assets
a.Inventories 907,837,796 905,046,456
b.Trade receivables 276,841,078 102,603,463
b.Cash and bank balances 33,205,892 61,969,431
c.Short-term loans and advances 77,703,605 82,255,374
d.Other current assets 251,830 803,508
1,295,840,202 1,152,678,232

TOTAL 1,632,799,368 1,460,303,130

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 ALM INFOTECH CITY PRIVATE LIMITED

STATEMENT OF PROFIT AND LOSS FOR THE YEAR ENDED 31

MARCH,2016

PARTICULARS FOR THE FOR THE

YEAR YEAR
ENDING ENDING
31 31
MARCH,2016 MARCH,2015
Revenue:
Revenue from operations 266,446,892 420,602,833
Other income 17,301,999 13,592,652

Total revenue 283,748,891 434,195,485

Expenses:
a.Cost of materials consumed - -
b.Cost of sales 186,926,297 309,639,272
c.Employee benefits expense 17,336,665 30,105,182
d.Finance costs 20,927,858 25,865,728
e.Depreciation expense 15,320,398 17,572,953
f.Other expenses 41,522,492 45,517,814
Total Expenses 282,033,910 428,700,949

Profit /(Loss)before extrodinary /exceptional items 1,714,981 5,494,536

Exceptional items /extraordinary items

Actural profit/(loss) 255,637 -52,211
Profit/(loss)on sale of fixed assets 183,145 216,434

Profit Before Tax 2,153,763 5,658,759

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Tax Expense:
a.Current tax expense for current year 2,549,491 3,803,050
b.Deferred tax liabilities (1,525,709) (1,495,562)
c.Income Tax expense previous year 1,000 55,656
1,024,781 2,363,144

Profit /(loss)from continuing operations 1,128,982 3,295,616

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 ALM INFOTECH CITY PRIVATE LIMITED

STATEMENT OF PROFIT AND LOSS FOR THE YEAR ENDED 31

MARCH,2017

PARTICULAR FOR THE FOR THE

YEAR YEAR
ENDING ENDING
31 31
MARCH,2017 MARCH,2016
I. Revenue from operations 139,141,160 280,169,698
II. Other income 3,737,880 3,762,338
III. Total Revenue 142,879,040 283,932,036

IV. Expenses:
a. Cost of goods sold 204,161,838 186,926,297
b. Employee benefits expense 8,691,220 17,081,228
c.Finance costs 12,900,249 20,927,858
d.Depreciation and amortization expense 10,994,928 15,320,398
e.Other expenses 36,666,836 41,522,492
V.Total expenses 273,415,070 281,778,272

VI. Profit before exceptional items (130,536,031) 2,153,764

VII. Exceptional items - -

VIII.Profit before tax (130,536,031) 2,153,764

IX. Tax expense:
Current tax - 2,549,491
Less:MAT Creadit Entitlement - -
Deferred tax 35,400,085 (1,525,709)

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Income tax Expense previous year (1,580,269) 1,000
X. Profit (loss) of the year (96,716,215) 1,128,982

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 RATIO ANALYSIS FOR 2016

S.NO. RATIOS PARTICULARS VALUE REMARKS

1. WORKING CAPITAL = Current assets= 701,492,428 Liquidity
Current assets-current liabilities 1,052,744,102 position is good
Current liabilities = .
351,251,674

2. ACID TEST = Liquid assets = .4204:1 It is not safe.

Liquid assets 147,697,647
Liquid liabilities Liquid liabilities =
351,251,674

3. CURRENT RATIO= Current assets= 2.99:1 It is good .

Current assets 1,052,744,102
Current liabilities Current liabilities =
351,251,674

4. DEBT-EQUITY RATIO = Long term loans = 1.43:1 It is safe

Long term loans 595,038,774
Total Shareholder Equity Total shareholder
equity=
414,078,652

5. TOTAL ASSETS TO DEBT Total assets 1.769:1 It is safe.

RATIO= =1,052,744,102
Total assets Debt =
debt 595,038,774

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6. PROPRIETARY RATIO = Equity = .378:1 Good financial
Equity 398,750,000 position.
Total assets Total assets=
1,052,744,102

7. NET PROFIT RATIO = Net profit = .42% It is not

Net profit *100 1,128,982 satisfactory.
Sales Sales=
266,446,892
8 RETURN ON ASSETS Net income= 1.07% It is not good.
RATIO= 8,249,780
NET INCOME*100 Fixed asstes=
Fx.assets +working capital 63,673,824
Working capital=
701,492,428

9. RETURN ON WORKING Net profit = .14 % It is not good

CAPITAL = 1,024,761
Net profit*100 Net working capital
Working capital =701,492,428

10. COST OF GOODS SOLD Cost of goods sold 70% It is not

RATIO = =186,926,297 satisfactory
COST OF GOODS SOLD *100 Sales=
SALES 266,446,892
11. FIXED ASSETS TURNOVER= Sales a/c= 4.18 times It is good .
Sales a/c 266,446,892
Working capital Fixed assets =
63,673,824

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12. WORKING CAPITAL Sales = 0.37 times Not good .
TURNOVER = 266,446,892
Sales a/c Working capital=
Working capital 701492,428

13. Asset Turnover Ratio= Sales = 0.34:1 not so good.

Sales 266,446,892
Average Total Assets Average total assets
=765,166,252

RATIO ANALYSIS FOR 2017

S.NO. RATIOS PARTICULARS VALUE REMARKS

1. WORKING CAPITAL = Current assets= 356,820,300 Liquidity
Current assets-current liabilities 1,295,840,202 position is good
Current liabilities = .
939,019,902

2. ACID TEST = Liquid assets = 0.143:1 It is not safe.

Liquid assets 388,002,406
Liquid liabilities Liquid liabilities =
939,019,902

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3. CURRENT RATIO= Current assets= 1.37:1 It is good .
Current assets 1,295,840,202
Current liabilities Current liabilities =
939,019,902

4. DEBT-EQUITY RATIO = Long term loans = 1.186:1 It is safe

Long term loans 376,417,029
Total Shareholder Equity Total shareholder
equity=
317,362,437
5. TOTAL ASSETS TO DEBT Total assets = 4.37:1 It is safe.
RATIO= 1,632,799,368
Total assets Debt=
debt 373,420,833
6. PROPRIETARY RATIO = equity= .244:1 Good financial
Equity 398,750,000 position.
Total assets total assets=
1,632,799,368
7. NET LOSS RATIO = Net Loss = -77.6% It is not
Net LOSS *100 96,716,215 satisfactory.
Sales Sales=124,523,902

8 Net income= 2.03% It is not good.

RETURN ON ASSETS 8249780
RATIO= Fix. Assets=
NET INCOME*100 48606735
Fx.assets +working capital Working assets=
356820300
9. RETURN ON WORKING Net loss = -10.28% It is not good
CAPITAL = 36,716,215
Net profit*100 Net working capital

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 Working capital =356820300

10. COST OF GOODS SOLD Cost of goods sold 163% It is satisfactory

RATIO = =204,161,838
COST OF GOODS SOLD *100
SALES Sales=124,523,902

11. FIXED ASSETS TURNOVER= Sales a/c= 2.56 times It is good .

Sales a/c 124,523,902
Working capital Fixed assets =
48606735
12. WORKING CAPITAL Sales = .34 times Not good .
TURNOVER = 124,523,902
Sales a/c Working capital=
Working capital 356820300
13. Asset Turnover Ratio= Sales = 0.307:1 It is good.
Sales 124,523,902
Average Total Assets Average total
assets=
405427035

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 CHAPTER-6

VARIATION OF FINANCIAL RATIOS

The variation of different financial ratios from 2015-2017 of

ALM INFOTECH CITY PRIVATE LIMITED has been shown below:

ALM INFOTECH CITY PRIVATE LIMITED

working capital
800000000

700000000

600000000

500000000

400000000
working capital
300000000

200000000

100000000

0
2016 2017

WORKING CAPITAL :

2016- 701,492,428

2017-356,820,300

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 ACID TEST
0.45

0.4

0.35

0.3

0.25

0.2 ACID TEST

0.15

0.1

0.05

0
2016 2017

ACID TEST :

2016-0.42

2017-0.14

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 CURRENT RATIO
3.5

2.5

CURRENT RATIO
1.5

0.5

0
2016 2017

CURRENT RATIO :

2016- 2.99

2017-1.37

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 DEBT-EQUITY RATIO
1.6

1.4

1.2

0.8
DEBT-EQUITY RATIO
0.6

0.4

0.2

0
2016 2017

DEBT-EQUITY RATIO :

2016-1.43

2017-1.18

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 TOTAL ASSETS TO DEBT RATIO
5
4.5
4
3.5
3
2.5
TOTAL ASSETS TO DEBT RATIO
2
1.5
1
0.5
0
2016 2017

TOTAL ASSETS TO DEBT RATIO :

2016 – 1.76

2017 -4.37

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 PROPRIETARY RATIO
0.4

0.35

0.3

0.25

0.2
PROPRIETARY RATIO
0.15

0.1

0.05

0
2016 2017

PROPRIETARY RATIO :

2016 - 0.37

2017- 0.24

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 COST OF GOOD SOLD RATIO
180%

160%

140%

120%

100%

80% COST OF GOOD SOLD RATIO

60%

40%

20%

0%
2016 2017

COST OF GOODS SOLD RATIO :

2016 -70%

2017 -163%

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 FIXED ASSETS TURNOVER
4.5

3.5

2.5

2 FIXED ASSETS TURNOVER

1.5

0.5

0
2016 2017

FIXED ASSETS TURNOVER :

2016 - 4.18

2017 -2.56

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 WORKING CAPITAL RATIO
0.375
0.37
0.365
0.36
0.355
0.35
WORKING CAPITAL RATIO
0.345
0.34
0.335
0.33
0.325
2016 2017

WORKING CAPITAL RATIO :

2016 - 0.37

2017 – 0.34

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 CHAPTER -7

Summary of balance sheet and profit and loss statement

summary of balance sheet

PARTICULARS 2016 2017 REMARKS

Current assets 1,152678,232 251,830 Short term liquidity available
is large
Fixed assets 63,673824 48,606,735 Fixed assets have decreased
due to decrease in investment
Current liabilities 451,253,380 939,019,902 Substantial increase in
liablilities . liquidity position
is not good.
Non-current liabilities 594,971,098 376,417,029 Debts have decreased because
of less investment.

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 1,200,000,000

1,000,000,000

800,000,000

600,000,000
2016
400,000,000
2017
200,000,000

0
CURRENT
ASSETS FIXED ASSETS
CURRENT
LIABILITIES NON-CURRENT
LIABILITIES

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 Summary of profit and loss statement

PARTICULARS 2016 2017 REMARKS

Total expences 281,778,272 273,415,070 T.E has increased by
2.96 %
Cost of goods sold 186,926,297 204,161,838 COGS has increased
by 9.22 %
Sales 266446,892 124,523,902 Sales have decreased
by 53.26%
Net profit/LOSS 266446,892 -96,716,215 Net profit has
decreased very much .

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 300,000,000

250,000,000

200,000,000

150,000,000
2016
100,000,000 2017

50,000,000

0
TOTAL COST OF GOOD SALES NET PROFIT
-50,000,000 EXPENCES SOLD AND LOSS

-100,000,000

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 CHAPTER -8

FINDINGS

This report work has identified how companies use financial statement analysis and
interpretation in making effective management decisions . Overall organisational profitability
and achievement of organizational objectives were discussed . Again the difference between the
returns of a financial statement analysis and interpretation based on management decisions were
also discussed.

• Gross profit and net profit are decreased during the period of 2015-2017 , which indicates
that firm’s inefficient management in work .
• Liquidity ratio of the firm is not better liquidity position in over the two years . It shows
that the firm had insufficient liquid assets .
• The fixed asset turnover ratio of the firm has in 2015-2017 the ratio is 4.18 to 2.56
respectively and it decrease.
• Current liabilities are increasing by 108 %.
• Current assets ratio is decreased in two years.
• Return on investment has decreased.
• Gross profit has decreased.

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 CONCLUSION

Analysis and interpretation of financial statement is an important tool in assessing company’s

performance .It reveals the strengths and weakness of a firm . It helps the clients to decide in
which firm the risk is less or in which one they should invest so maximum benefit can be earned.
It is known that investing in any company involves a lot of risk . So before putting up money in
any company one must have through knowledge about its past records and performances. Based
on the data available the trend of the company can be predicted in near future.

This project of financial analysis and interpretation in the production concern is not merely a
work of the project but a brief knowledge and experience of that how to analysis the financial
performance of the firm. The study undertaken has brought in to the light of the following
conclusions. According to this project I came to know that from the analysis of financial
statements it is clear that ALM INFOTECH CITY PRIVATE LIMITED has been incurring
profit during the period of study. So the firm should focus on getting of more profits in the
coming years by taking care internal as well as external factors. And with regard to resources, the
firm is taker utilization of the assets properly. And also firm has a maintained low inventory.

This project mainly focuses on the basics of different types of financial statements. Balance sheet
and profit & loss statements of ALM INFOTECH CITY PRIVATE LIMITED have been
studied.

From ratio analysis of balance sheet and profit & loss statement of ALM PVT.LIT. of 2015-2017
it was conclude that liquidity position of the company is not good. Many ratios calculated in this
project like: current assets ratio ,debt-equity ratio ,fixed assets turnover, working capital ratio,
proprietary ratio ,etc. all ratios were found to be unacceptable. Current liabilities are also
increase between 2015-2016.

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 RECOMMENDATION

Recommendation for company :

The profit of the company is not in a good position. Profit decrease in 2016-2017 comparison to
2015-2016 so for earn more profit company has to take alternative actions for more profit such as
:

• Increasing in employees in organization .

• Control in expenses .
• The firm have low current ratio in 2016-2017 comparison to 2015-2016 so it should
increase its current ratio where it can meet its short term obligation smoothly.
• The firm should have proper check all process of the organization.
• Working capital of the firm is more in 2015-2016 comparison tp 2016-2017 , so I
suggested that the firm maintain proper working capital for meet their future expenses.
• It should enhance its employee’s efficiency, more training needed to its employees and
minimize mistakes while performing the tasks,

54 | P a g e
 Recommendation for students :

• Financial statement should be properly interpreted and should be made to reflect current
cost accounting to reduce the negative effects of historical cost principle on financial
statement decisions.
• The effects of inflation on financial statement result should be considered to reduce the
inflation risk.
• The adequacy of financial information need to be emphasized on, as it will provide
enough and necessary details for investment and management decisions.
• A combination of different ratios should used to analyze a company’s financial and
operating performance.
• Finally, the management of the selected company should make proper use of financial
statement analysis in other decision areas of management.

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 LIMITATION

LIMITATIONS OF FINANCIAL STATEMENT ANALYSIS AND

INTERPRETATION :

1. Not a Substitute of Judgement

An analysis of financial statement cannot take place of sound judgement. It is only a

means to reach conclusions. Ultimately, the judgements are taken by an interested party
or analyst on his/ her intelligence and skill.
2. Based on Past Data

Only past data of accounting information is included in the financial statements, which
are analyzed. The future cannot be just like past. Hence, the analysis of financial
statements cannot provide a basis for future estimation, forecasting, budgeting and
planning.
3. Problem in Comparability

The size of business concern is varying according to the volume of transactions. Hence,
the figures of different financial statements lose the characteristic of comparability.
4. Reliability of Figures

Sometimes, the contents of the financial statements are manipulated by window dressing.
If so, the analysis of financial statements results in misleading or meaningless.
5. Various methods of Accounting and Financing

The closing stock of raw material is valued at purchase cost. The closing stock of finished
goods is value at market price or cost price whichever is less. In general, the closing stock
is valued at cost price or market price which ever is less. It means that the closing stock
of raw material is valued at cost price or market price whichever is less. So; an analyst

56 | P a g e
 should keep in view these points while making analysis and interpretation otherwise the
results would be misleading.
6. Change in Accounting Methods

There must be uniform accounting policies and methods for number of years. If there are
frequent changes, the figures of different periods will be different and incomparable. In
such a case, the analysis has no value and meaning.
7. Changes in the Value of Money

The purchasing power of money is reduced from one year to subsequent year due to
inflation. It creates problems in comparative study of financial statements of different
years.
8. Limitations of the Tools Application for Analysis

There are different tools applied by an analyst for an analysis. Even though, the
application of a particular tool or technique is based on the skill and experience of the
analyst. If an unsuitable tool or technique is applied, certainly, the results are misleading.
9. No Assessment of Managerial Ability

The results of the analysis of financial statements should not be taken as an indication of
good or bad management. Hence, the managerial ability can not be assessed by analysis.
10. Change of Business Condition

The conditions and circumstances of one firm can never be similar to another firm.
Likewise, the business condition and circumstances of one year to subsequent can never
be similar. Hence, it is very difficult for analysis and comparison of one firm with
another.

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 BIBLOGRAPHY

BOOKS :
1. M.Y.KHAN, P.K.JAIN (1981), Financial management, and Cost Accounting
(third edition ) New Delhi: McGaw – Hill publishing company limited.
2. I.M.PANDEY. Financial Management New Delhi Vikas publishing house private
ltd-ninth addition 2004
3. Financial Statement
4. Financial Management

COMPANY DATA :

Vouchers of Sale & Purchase

Bank statement

Balance sheet 2015-2016,2016-2017

Profit & Loss statement 2015-2016,2016-2017

Other Data of company

WEBSITES

www.google.com

E-MAIL

[email protected]

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