EKNATH SITARAM DIVEKAR COLLEGE OF VARVAND

(2021-22)
A
PROJECT REPORT

“A STUDY ON FUND FLOW STATEMENT

AT SRI ANANTHA LAKSHMI SPINNING MILLS (P) LTD,

SUBMITTED BY:

PRATHAM SUNIL KAMBLE

SUBMITTED TO

SAVITRIBAI PHULE PUNE UNIVERSITY

IN PARTIAL FULFILMENT OF THE REQUIRMENT FOR

AWARD OF THE DEGREE IN BACHELER OF

BUSINESS ADMINISTRATION

(BBA.SEM V)

UNDER THE GUIDANCE

OF PROF. TAKAWANE
 VARADGRAM GRAM SHIKSHAN SANSTHAS

EKNATH SITARAM DIVEKAR ART’S, SCIENCE & COMMERCE

COLLEGE, VARVAND

AFFILIATED TO

SAVITRIBAI PHULE PUNE UNIVERSITY

This is to certify that MR. PRATHAM SUNIL KAMBLE student of Bachelor fo

Business Administration (TYBBA SEM V SPE- FINANCE) has satisfactory

completed his Project Work.

As per a syllabus laid down by the Savitribai Phule University during the Academic

year 2021-22 & entered up this project report fot currently & correctly.

Project Guide H.O.D

Takavane S.V. Shitole A.V.

 EKNATH SITARAM DIVEKAR COLLEGE OF VARVAND

(2021-22)

PROJECT VIVA – VOCE EXAM

SUBJECT – FUND FLOW STATEMENT

ROLL NO : 11 EXAM SEAT NO :

CLASS : TY.BBA

DATE :

PLACE :

INTERNAL EXAMINER : EXTERNAL EXAMINER :

I am PRATHAM SUNIL KAMBLE hereby declare that this project entitled “A
STUDY ON FUND FLOW STATEMENT” is submitted by me for partial fulfillment
of Bachelor Of Business Administration degree SAVITRIBAI PHULE PUNE UNIVERSITY, PUNE
hereby declare that all information in this report is best on my own Fact, finding and experience at the

AT SRI ANANTHA LAKSHMI SPINNING MILLS (P) LTD and the same has
not been previously submitted in any examination of this University of any university. This
information has been purely for academic purpose.

Date: 16/01/2021
Place: Kalyan

Pratham Sunil Kamble

(TY.BBA)
 ACKNOWLEDGEMENT

It gives me great pleasure having done a project on an interesting and

knowledgeable topic “A STUDY ON FUND FLOW STATEMENT AT SRI
ANANTHA LAKSHMI SPINNING MILLS LTD” This project has
immensely enlarged my knowledge as far as academics are concerned. There
are many people associated with this project without which this project would
not have reached its successful completion.

I extend my sincere gratitude towards my parents, who have always encouraged

me and given great support. They have been a great source of motivation in the
completion of my project.

Above all I thank the almighty for my successful completion of this project.

PRATHAM SUNIL KAMBLE

 TABLE OF CONTENTS

CHAPTER
NO CONTENTS PAGE NO
1 1. INTRODUCTION 1-21

1.1 Meaning Of Financial Analysis 1-2

1.2 Objectives Of Financial Management 2-3
1.3 Importance Of Financial Management 3-4
1.4 Functions Of Financial Management 4-5
1.5 Types Of Financial Analysis 5-9
1.6 Methods Of Financial Analysis 9-21
2 2. INDUSTRY AND COMPANY PROFILE 22-40

2.1 Industry Profile 22-35

2.2 Company Profile
36-40
3 3. RESEARCH DESIGN 41-46
3.1 Statement Of The Problem 41
3.2 Objectives Of The Study 42
3.3 Scope Of The Study 42-43
3.4 Methodology Of The Study 44
3.5 Tools Of Analysis 45
3.6 Limitation Of The Study 46
3.7 Chapter Scheme 46
4. DATA ANALYSIS AND
4 INTERPRETATION 47-67
5. FINDINGS, SUGGESTIONS &
5 CONCLUSION 68-70
5.1 Findings 68-69
5.2 Suggestions 69
5.3 Conclusions 70
BIBLIOGRAPHY
ANNEXURE
 LIST OF TABLES

TABLES PARTICULARS PAGE.NO

1.1 Fund flow format 17-18
4.1 Balance sheet of m/s. Sri Anantha Lakshmi Spinning Mills 47
(p) ltd, to 2011-2016 year
4.2 Changing in working capital for the year 2011-2012 48
4.3 Profit &loss appropriation a/c for the year 2011-2012 49
4.4 Funds flow statement for the year 2011-2012 49
4.5 Changing in working capital for the year 2011-2012 50
4.6 Profit &loss appropriation a/c for the year 2011-2012 51
4.7 Funds flow statement for the year 2011-2012 51
4.8 Changing in working capital for the year 2013-2014 52
4.9 Profit &loss appropriation a/c for the year 2013-2014 53
4.10 Funds flow statement for the year 2013-2014 53
4.11 Changing in working capital for the year 2014-2015 54
4.12 Profit &loss appropriation a/c for the year 2014-2015 55
4.13 Funds flow statement for the year 2014-2015 55
4.14 Changing in working capital for the year 2015-2016 56
4.15 Profit &loss appropriation a/c for the year 2015-2016 57
4.16 Funds flow statement for the year 2015-2016 57
4.17 Net working capital for the year 2011-2016 58

4.18 Current assets & current liabilities, for the year 2011-2016 59
4.19 Funds from operations for the year 2011-2016 60
4.20 Profit or losses for the year 2011-2016 61
4.21 Current ratio for the year 2010-2016 62
4.22 Quick ratio for the year 2010-2016 64
4.23 Absolute liquid ratio for the year2011-2016 66
 LIST OF GRAPHS

GRAPHS PARTICULARS PAGE NO

4.1 Net working capital for the year 2010-2016 58
4.2 Current assets & current liabilities for the year 59
2010-2016
4.3 Funds from operations for the year 2011-2016 60
4.4 Profits and losses for the year 20110-2016 61
4.5 Current ratio for the year 2011-2016 62
4.6 Quick ratio for the year 2011-2016 64
4.7 Absolute liquid ratio for the year 2011-2016 66
 EXECUTIVE SUMMARY

The term financial analysis refers to the process of determining financial

strength and weakness of the firm by establishing strategic relationship between
the items of the balance sheet, profit and loss account and other operative
data.The statement of changes in financialposition of a business enterprise.

Funds flow statement is a statement which discloses the analytical information

about the different sources of a fund and the application of the same in an
accounting cycle. It deals with the transactions which change either the amount
of current assets and current liabilities (in the form of decrease or increase in
working capital) or fixed assets, long-term loans including ownership fund.

Ration analysis is the most powerful tool of financial analysis. It is an

important and age old technique of analysis and interpretation of financial
statements. It is also used to analyze various aspects of operational efficiency
and degree of profitability.

FINDINGS:

 It was observed that the current assets are increased by 51%, and current
liabilities are increased by 66.5% comparing to base year.
 It was observed that the profits are increased 93.7% in 2015-16
comparing to 2010-11
 In 2011 the current ratio was 1.20%. From the year 2011-2016 the current
ratio was decreased from 1.20% to 1.09%.
 In 2011 the quick ratio was 0.45%, and the year 2013 its fall down to
0.34%, from 2013-2016 its increased by 0.42%.
 In the year 2011 the absolute liquidity ratio0.02% and every year it is
increasing. In the year 2011-2016 the absolute liquidity ratio increased
from 0.02% to 0.88%

SUGGESTIONS:

 Company should maintain sufficient current assets by issue of loans &

advances to outsiders; it will help to increase working capital.
 The company is suggested to maintain sufficient amount of cash and bank
balance to pay its quick liabilities which will increase its credit
worthiness and goodwill
 To maintain sufficient reserve and surplus, to ensure financial stability of
the business
 Company should try to maintain its current ratio at the standard 2:1
 Company should maintain its quick ratio at the standard 1:1
 Company should maintain cash and bank balance sufficiently.
 Company should increase current assets and reduce current liabilities
 The company should improve the liquidity

CONCLUSION:

“A STUDY ONFUND FLOW ANALYSIS &RATIO ANALYSIS ATSRI

ANANTHA LAKSHMI SPINNING MILLS (P) LTD,” gives a view of
analysis evaluation of liquidity position of the company is not well comparing to
previous years the company should increase current assets and reduce current
liabilities. And profitability of the company is good based on the tools used
analysis and interpretations have been made giving way for useful and
constructive suggestions.
FUND FLOW ANALYSIS AND RATIO ANALYSIS

1. INTRODUCTION

1.1 MEANING OF FINANCIAL ANALYSIS:

The term ‗financial analysis‘ also known as analysis and interpretation of

‗financial statements‘, refers analysis is to diagnose the information contained
in financial statement so as to judge the profitability and financial soundness of
firm 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 to the process of
determining financial strength and weakness of the firm by establishing strategic
relationship between the items of the balance sheet, profit and loss account and
other operative data.

The purpose of financial meaning of the financial statement data so

earnings, ability to pay interest and debt maturities and profitability of a sound
dividend policy. The term financial statement analysis includes both analysis
and interpretation. A distinction should, therefore, be made between 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 exploring the meaning and significance of the data so
simplified.

Financial statement is the process of identifying the financial strengths and

weaknesses of the firm. It is done by establishing relationships between the
items of financial statements like balance sheet and profit and loss account.
Financial analysis can be undertaken by management of the firm or by parties
outside the firm. Financial management is the specialized function of general
management, which, is relates to the procurement of finance, and its effective
utilization for the achievement of the goal of the organization.

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MEANING, DEFINITIONS OF FINANCIAL MANAGEMENT:

MEANING:

Financial Management is an organizational activity that is concerned with the

management of financial resources. In common parlance is described as
providing monetary resources at the time they are required. But financial
management covers the mobilization and effective utilization of funds.
DEFINITIONS:

―Finance Management is concerned with the efficient use of an

important economic resources, namely capital funds‖.

SOLOMON.

―Financial management is an area of financial decision

making harmonizing individual motives and enterprises goals‖.

-WESTON & BRIGHAN.

1.2 OBJECTIVES OF FINANCIAL MANAGEMENT:

Financial decisions can be make keeping in view the basic objective of

maximization of owner‘s economic welfare. It can be achieved through two
widely accepted criteria.

 PROFIT MAXIMISATION:
The efficiency of the firm is measured through the volume of profits
earned by it. It means maximizing the rupee income of the firm. Profit
maximization objective may be started in terms of return on investment or profit
to sales ratios. This would help in profitable utilization of society‘s economic
resources, since the financial manager is responsible for the efficient utilization
of resources, increasing of revenues, controlling costs, Minimizing risks.

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FUND FLOW ANALYSIS AND RATIO ANALYSIS

 WEALTH MAXIMISATION:
Wealth maximization objective is a widely recognized criterion with which the
performance of business enterprise is devalued. The word ―wealth‖ refers to
the net present worth of the firm. The net present worth is the difference
between gross present worth and the amount of capital investment required to
achieve the benefits. Gross present worth represents the present value of
expected cash flows (benefits) discounted at a rate.

1.3 IMPORTANCE OF FINANCIAL MANAGEMENT:

Finance is very essential for the smooth running of the business. It has
been rightly termed as universal lubricant, which keeps the enterprise dynamic.
It is indispensable in any organization as it helps in

 Financial planning and successful promotion of an enterprise.

 Acquisition of funds as and when required at the minimum possible cost
Proper use and allocation of funds..
 Taking sound financial decisions..
 Improving the profitability through financial controls;
 Increasing the wealth of the investors and the nation; and
1.3.1 IMPORTANCE FINANCIAL ANALYSIS:

Analysis of financial statement is carried out to measure the enterprise

liquidity, profitability, solvency and other indicators to assess its operator
efficiency, financial position and performance. Financial analysis serves the
following purpose.

 HELPFUL IN MEASURING THE SOLVENCY OF THE FIRM:

It should satisfy itself that is current resource are sufficient to meet its
current liabilities. This is possible through the calculation of liquid ratios.

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FUND FLOW ANALYSIS AND RATIO ANALYSIS

 COMPARISON OF PAST AND PRESENT RESULTS:

Financial statement of the previous years can be compared and the trend
regarding various expenses, purchases, sales, gross profit and net profit can be
ascertained.

 HELP IN MEASURING THE PROFITABILITY:

Financial statements show the gross profit, net profit and debt and other
expenses. The relationship of these can be established with sales by calculating
operating ratios.

1.4FUNCTIONS OF FINANCIAL MANAGEMENT:

In the context of achievingthe goals like maximization of risks, liquidity,

profitability, wealth maximization etc. The total functions of financial
management can be divided into three different groups.

 Liquidity function
 Profitability functions
 Management functions

 LIQUIDITY FUNCTION:
In seeking sufficient liquidity to carry the firms activities the financial
managers perform the following the tasks. Forecasting the cash flows and
managing the flow of internal funds.

 PROFITABILITY FUNCTION:
The other function of financial manager is to provide reasonable and
adequate return on capital employed. With respect to profitability important
financial functions are cost control and measuring required return.

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FUND FLOW ANALYSIS AND RATIO ANALYSIS

 MANAGING FUNCTIONS:
Managing functions are divided into two types. They are

Managing assets.
Managing funds.

MANAGING ASSETS:
Assets are the resources by which the firm is able to conduct business.
The function of asset management recognizes the decision making role of
financial manager. Asset management includes knowing the total amount of the
assets needed by the firm to carry out its operation.

MANAGING FUNDS:
Funds may be viewed as the liquid assets of a firm the term includes cash held
by the firm, money borrowed by the firm and money gained from purchases of
common and preferred stock.

1.5 TYPES OF FINANCIAL ANALYSIS:

The various types of financial analysis can be brought into different categories
the material used and the method of operation followed in the analysis.
According to material used, the financial analysis may be used either external
analysis for internal analysis. But on the basis of the modus, operandi, it can be
classified into horizontal analysis and vertical analysis.

1.5.1 EXTERNAL ANALYSIS:

This analysis is done on the basis of information available from published

records. Thus an analysis which is done by outsiders who don‘t have access to
the detailed records of the company is known as external analysis. Outsiders
include investors, credit agencies, government agencies and other creditors.
External analysis serves only a very limited purpose.

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FUND FLOW ANALYSIS AND RATIO ANALYSIS

1.5.2 INTERNAL ANALYSIS:

This analysis is done on the basis of information obtained from internal records.
Thus an analysis which is conducted by persons who have access to the detailed
records of the concern is known as internal analysis. Such an analysis is usually
performed by executives and employees of the organization and government
officials.

1.5.3 HORIZONTAL ANALYSIS:

Horizontal analysis is also known as dynamic analysis or trend analysis.

Analysis which is done by analyzing the financial data of a company for several
years is called horizontal analysis. Under this analysis.

The analysts compare the figures of the various years with that of the
standard or base year to know the periodical trend of various items shown in the
statements with the passage of time

1.5.4 VERTICAL ANALYSIS:

Vertical analysis is also known as static analysis or structural analysis.

Analysis which is done by analyzing a single set of financial statement is known
as vertical analysis. Under this analysis, the figures from financial statement of a
year are compared with a base selected from the same year‘s statement.

1.5.5 FINANCIAL STATEMENT ANALYSIS:

Financial analysis is the process of identifying the financial strengths and

weakness of the firm by properly establishing relationship between the items of
financial statements such as balance sheet and the profit and loss account.

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Financial analysis is highly essential to understand the efficiency and financial

position of the enterprise. It enables the investors to learn and forecast the
direction, growth and future of the organization. Financial analysis can be
undertaken by management of the firm, or by parties outside the firm, viz.,
owners, creditors, investors and others.

1.5.5.1 FINANCIAL STATEMENTS:

Financial statements primarily comprise two basic statements:

1. The position statement or the balance sheet

2. The income statement or the profit and loss account.

However, specified that a complete set of financial statements must include.

1. A balance sheet

2. An income statement

3. A statement of changes in financial position.

1. BALANCE SHEET:

An American institute of certified public accountants defines balance

sheet as a tabular statement of summary of balances carried forward after an
actual and constructive closing of books of account and kept according to
principles of accounting. The purpose of balance sheet is the show the
resources that the company has i.e., its assets and from where there resources
come from i.e., its liabilities and investments by owners and outsiders.

The balance sheet is one of the important statements depicting the

financial strength of the concern. It shows on the one hand the properties that it
utilizes and on other hand the sources of these properties.

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FUND FLOW ANALYSIS AND RATIO ANALYSIS

The balance sheet shows all the assets owned by the concern and all the
liabilities and claims it owes to owners and outsiders. The balance sheet is
prepared on a particular date.

2. INCOME STATEMENT:

Income statement is prepared to determine the operational position of the

concern. It is statement of revenues earned and the expenses incurred for
earning that revenue, if there is excess of revenues over expenditures to will
show a profit and if the expenditures are more than the income then there will
be a loss. The income statement is prepared for a partition period, generally a
year. When income statement is prepared for the year ending then all revenues
and expenditures falling due in that year will be taken into account irrespective
of their receipt or payment.

3. STATEMENTS OF CHANGES IN FINANCIAL POSITION:

The basic financial statements, the balance sheet and the profit and loss account
or income statement of the business operations by summarizing revenues and
expenses of the company.

The balance sheet gives a static view of the sources and users of finances.
The profit and loss account but besides profits owners‘ equity may change due
to other factors such additional investment or withdrawal of profits.

An additional statements in needed to show the changes in assets,

liabilities and owners‘ equity between dates of two balance sheets Changes in
assets and liabilities resulting from financial and investment transactions during
the period. The most commonly used forms of the statement of changes in
financial position are called funds flow statement and the cash flow statements

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FUNDS FLOW STATEMENT:

The statement of changes in financial position of a business enterprise. The

sources and uses of working capital between dates of two balance sheets are
known as the funds flow statement. A projected statement of changes in
working capital is immensely useful in the firm‘s long range planning. The
flows of in order to plan the repayment schedules of its long-term debt.

CASH FLOW STATEMENT:

A statement of changes in the financial position of a firm on cash basis is

called cash flow statement. Summarizes the courses of changes in cash position
of a business enterprise between states of two balance sheets. This statement is
similar to changes in working capital.

1.6METHODS OR DEVICES OF FINANCIAL ANALYSIS:

The analysis and interpretation of financial statement is used to determine

the financial position and result of operations as well. An effort is made to use
those devices, which clearly analyze the position of the enterprise. The
following methods of analysis are generally used.

 Comparative statement
 Common-size statement
 Trend analysis
 Funds flow statement
 Cash flow statement
 Ratio analysis

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 COMPARATIVE STATEMENT:
Comparative statements are those statements which are designed to
provide time perspective to the consideration of various elements of financial
position embodied in such statements. Both the income statement and balance
sheets be prepared in the form of comparative financial statements.

 COMPARATIVE INCOME STATEMENTS:

The income statement describes net profit or net loss account of
operations. A comparative income statement will show the absolute figures for
two or more periods. The absolute change from one period to another and if
change in terms percentages.

Since the two or more period can quickly ascertain whether sales have
increased or decreased whether cost of sales has increased or decreased etc.

 COMPARATIVE BALANCE SHEET:

The comparative balance sheet analysis is the study of the extend of the
same items groups of items and computed items in two or more balance sheet of
the same business enterprise on different dates. The changes in periodic balance
sheet the conduct of a business. The changes can be observed by comparison of
the balance sheet at the beginning and at the end of a period and these changes
can help in forming an opinion about the progress of an enterprise. The
comparative balance sheet has two columns for the data of original balance
sheet. A third column is used to show in increasing figures. The fourth column
may be added for giving percentages of increases or decreases.

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 COMMON SIZE STATEMENT:

Common size statements financial tool of studying key changes and trends in
financial position of a company. In common size statement, each item is stated
as a percentage of the total of which that item is a part each percentage exhibits
the relation of the individual item to its respective tool. The common size
percentage method represents a type of ratio analysis. This statement component
percentage or 100 percent statement.

 COMMON SIZE BALANCE SHEET:

Common size balance sheet is prepared by stating the total assets as 100
and reducing individual assets into percentages of the total. The common size
balance sheet percentage shows the relation of each asset item to total assets and
of each liability and owners‘ equity item to total liabilities and owner‘s equity.
Comparison of common size statement of a single enterprise over the years is
valuable in that it reveals the changing proportions of components within group
of assets and liabilities.

 TREND ANALYSIS:
The financial statements may be analyzed by computing trends of series
of information. This method determines the direction upwards or downward
and involves. The computation of the percentage relationships that each
statement item bears to the same item in base year. The information for a
number of years is taken one year. The figures of the base year are taken as 100
and trend ratios for other years are calculated on the base of the year. The
analyst is able to see the trend of figures whether upward or downward

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 FUNDS FLOW STATEMENT:

The statement of changes in financial position of a business enterprise.The
sources and uses of working capital between dates of two balance sheets are
known as the funds flow statement. A projected statement of changes in
working capital is immensely useful in the firm‘s long range planning. The
flows of in order to plan the repayment schedules of its long-term debt.

The major sources of working capital are the firm‘s net profit from
operations. The ultimate success of a company depends upon its ability to earn
profit. The expense items that do not involve working capital should be added
to not profit.Meaning of Funds Flow Statement:

Funds flow statement is a statement which discloses the analytical

information about the different sources of a fund and the application of the same
in an accounting cycle. It deals with the transactions which change either the
amount of current assets and current liabilities (in the form of decrease or
increase in working capital) or fixed assets, long-term loans including
ownership fund.

It gives a clear picture about the movement of funds between the opening
and closing dates of the Balance Sheet. It is also called the Statement of Sources
and Applications of Funds, Movement of Funds Statement; Where Got—Where
Gone Statement: Inflow and Outflow of Fund Statement, etc. No doubt, Funds
Flow Statement is an important indicator of financial analysis and control .This
statement supplies an efficient method for the financial manager in order to
assess the:

(a) Growth of the firm,

(b) Its resulting financial needs, and

(c) To determine the best way to finance those needs.

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In particular, funds flow statements are very useful in planning intermediate and
long-term financing.

Objective of Preparing a Fund Flow Statement:

The main purpose of preparing a Funds Flow Statement is that it reveals
clearly the important items relating to sources and applications of funds of fixed
assets, long-term loans including capital. It also informs how far the assets
derived from normal activities of business are being utilized properly with
adequate consideration.

Secondly, it also reveals how much out of the total funds is being
collected by disposing of fixed assets, how much from issuing shares or
debentures, how much from long-term or short-term loans, and how much from
normal operational activities of the business.

Thirdly, it also provides the information about the specific utilization of

such funds, i.e. how much has been applied for acquiring fixed assets, how
much for repayment of long-term or short-term loans as well as for payment of
tax and dividend etc.

Significance and Importance of Funds Flow Statement:

Since traditional reports (i.e. Income Statement/Profit and Loss Account,
and Balance Sheet) are not very informative, a financial analyst has to depend
on some other report—Funds Flow Statement. In other words, along with the
traditional sources of information, some other sources of information are
absolutely required in order to take the challenge offered by modern business.

Funds Flow Statement, no doubt, caters to the needs of management. This

is because a Funds Flow Statement not only presents the Balance Sheet values
for consecutive two years, it also ascertains the changes of working capital—
which is a very important indicator.

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It not only reveals the source from which additional working capital has
been financed but also, at the same time, the use of such funds. Moreover, from
a projected funds flow statement the management can easily ascertain the
adequacy or inadequacy of working capital, i.e., it helps in decision-making in a
number of ways.

The significance and importance of Funds Flow Statements may be summarized

as:

(a) Analysis of Financial Statement:

The traditional financial statements, viz. Profit and Loss Account and
Balance Sheet, exhibit the result of the operation and financial position of a
firm. Balance Sheet presents a static view about the resources and how the said
resources have been utilized at a particular date with recording the changes in
financial activities. But Funds Flow Statement can do so, i.e., it explains the
causes of changes so made and effect of such change in the firm accordingly.

(b) Highlighting Answers to Various Perplexing Questions:

Funds Flow Statement highlights answers of the following questions:

(i) Causes of changes in Working Capital;

(ii) Whether the firm sells any Non-Current Asset; if sold, how were the
proceeds utilized?

(iv) Where did the net profit go?

(v) Was it possible to pay more dividend than the present one?

(vi) Did the firm pay-off its scheduled debts? If so, how, and from what
sources?

(vii) Sources of increased Working Capital, etc.

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(c) Realistic Dividend Policy:

Sometimes it may so happen that a firm, instead of having sufficient profit,

cannot pay dividend due to lack of liquid sources, viz. cash. In such a
circumstance, Funds Flow Statement helps the firm to take decision about a
sound dividend policy which is very helpful to the management.

(d) Proper Allocation of Resources:

Resources are always limited. So, it is the duty of the management to

make its proper use. A projected Funds Flow Statement helps the management
to take proper decision about the proper allocation of business resources in a
best possible manner since it highlights the future.

(e) As a Future Guide:

A projected Funds Flow Statement acts as a business guide. It helps the

management to make provision for the future for the necessary funds to be
required on the basis of the problem faced. In other words, the future needs of
the fund for various purposes can be known well in advance which is a very
helpful guide to the management. In short, a firm may arrange funds on the
basis of this statement in order to avoid the financial problem that may arise in
future.

(f) Appraising of the Working Capital:

A projected Funds Flow Statement, no doubt, helps the management to know

about how the working capital has been efficiently used and, at the same time,
also suggests how to improve the working capital position for the future on the
basis of the present problem faced by it, if any.

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 General Rules for Preparing Funds Flow Statement:

The following general rules should be observed while preparing funds

flow statement:

Increase in a current asset means increase (plus) in working capital.

Decrease in a current asset means decrease (minus) in working capital.

Increase in a current liability means decrease (minus) in working
capital. Decrease in a current liability means increase (plus) in working
capital.
Increase in current asset and increase in current liability does not affect
working capital.

Decrease in current asset and decrease in current liability does not affect
working capital.

7. Changes in fixed (non-current) assets and fixed (non-current) liabilities affect

working capital.

A funds flow statement can be prepared in statement form or ‗T‘ form.

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TABLE: 1.1

SCHEDULE OF CHANGING IN WORKING CAPITAL

PREVIOUS CURRENT
CURRENT ASSETS INCREASE DECREASE
YEAR YEAR

Inventories *** *** *** ***

Trade *** *** *** ***

receivables *** *** *** ***

Cash and bank balance *** *** *** ***

Short term loans and advances **** **** **** ****

(A) Total current assets *** *** *** ***

Current liabilities
*** *** *** ***

Short term *** *** *** ***

borrowings Trade *** *** *** ***

**** ****
payable
*** ***
Other current liabilities
*** ***
Short term provisions (B)
Total current liabilities **** **** **** ****

Net working capital (A-B)

Increasing working

capital

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PROFIT &LOSS APPROPRIATION A/C

AMOUNT
PARTICULARS AMOUNT (Rs) PARTICULARS
(Rs)

To reserves *** By funds from operation ***

and surplus

**** ****

FUNDS FLOW STATEMENT

SOURCES AMOUNT (Rs) APPLICATIONS AMOUNT (Rs)

Fixed assets

Tangible assets ***

Funds from operation *** Capital in progress ***

Long term loans ***

and advances.
Long term borrowings ***
Other noncurrent assets
***
Increasing working
Differed tax liability *** ***
capital

**** ****

(From page no 556 financial management by I.M. PANDAY Published by VIKAS Publishing house PVT LTD)

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 CASH FLOW STATEMENT:

The statement of cash flows is useful for short run planning. A firm
needs sufficient cash to pay debts maturing in the near future to pay interest
andother expenses and to pay dividend to shareholders. A statement of changes
in financial position on cash basis, commonly known as the cash flow statement.
Summarizes the causes of changes in cash position between dates of the two
balance sheets. It indicates the sources and user of cash.

 RATIO ANALYSIS:
Ration analysis is the most powerful tool of financial analysis. It is an
important and age old technique of analysis and interpretation of financial
statements. It is also used to analyze various aspects of operational efficiency
and degree of profitability.

 MEANING OF RATIO:
Ratio is one figure expressed in terms of another. It is an expression of
relationship between one figure and other figure which are mutually
interdependent. It is the numerical or an arithmetical relationship between two
figures which are mutually interdependent. In other words a ratio is a
mathematical relationship between two items expressed in quantitative form.
When ratio is explained with reference to the items shown in the financial
statements, it is called accounting ratio.

CURRENT RATIO.
QUICKRATIO.
GROSS PROFIT.

INVENTORY TURNOVER RATIO.

FIXED ASSET TURNOVER
RATIO ABSOLUTE LIQUID
RATIO

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CURRENT RATIO :
Liquidity ratios judge the firm‘s ability to meet short-term obligations.
The firm has to maintain 2:1 current ratio is better. These ratios give a good
insight into a firm‘s ability to remain solvent in the events if advertising for this
purpose;

Short-term resources are composed with short-term obligations.

currentassests
Current ratio
currentliabilities
=

QUICK RATIO:
This is a narrow measure of liquidity; this ratio concentrates on cash,
marketable receivables in relation to current obligation. Company actually
maintained 1:1 ratio is better to meet future requirements. So, it provides a
more penetrating measure of liquidity than current ratio.

Quickassests
Quick Ratio =
currentliabilities
Quick assets: Current assets-inventory.

Liquid assets = Current assets – (Inventory + prepaid expenses)

GROSS PROFIT RATIO:

The ratio means the relationship of gross profit to net sales and it is
usually represented as percentage.

GROSS PROFIT Ratio = (GROSS PROFIT / NET SALES) 100

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INVENTORY TURN OVER RATIO:

This ratio establishes a relationship between the cost of goods sold
during a given period and average amount of inventory outstanding during that
period in the absence of this data. Alternatively the amount of net sales and
inventory levels at the end of the period is taken to calculate the ratio.

sales
Inventory turnover ratio= inventory

FIXED ASSETS TURN OVER RATIO:

When a film sells goods on credit nook debts created debtors are expected
to be continued in to cash over a short period. To a great extent the amount
quality of debtors determines the liquidity position of the firms. Debtors
turnover ratio indicated the number the debtors (or) receivable turn over each.

SALES
Debtors turnover ratio
=
FIXEDASSETS

ABSOLUTE LIQUID RATIO:

It is still more stringent test of liquidity. it may not be possible to realize

amounts from all the debtors and hence the amount of debtors also is treated
non-liquid assets generally an absolute liquid ratio 0.5:1 will be taken as
standard norm

Absolute Liquid Ratio= (absolute liquid assets/ current liability)

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2. INDUSTRY AND COMPANY PROFILE

2.1 INDUSTRY PROFILE

2.1.1 COTTON:

Cotton is a natural vegetable fiber of great economic as a raw material for

cloth. Its wide spread use is largely due to the ease with which its fiber are spun
in to yam. Cotton's strength, absorbency, and capacity to be washed and dyed
also make it adaptable to a considerable variety of textile products. Cotton its
fashionable nature and versatile.

2.1.2 HISTORY:

The oldest cotton fibers and boil fragments, dated from around 5000 B.C.
were discovered in Mexico. In 5000 B.C. the Greek historian Herodotus
reported of an plant that "before fleece" cotton has been worn in India and
Egypt forever 5000 years. Cotton was grown by Native American as early as
1500. In England in the 1700' it was against the law to import are manufacture
fabric made of cotton since it was a threat to the sheep and wool industry.

American colonists were able to grow lots of cotton, but processing was
difficult. It was not until the 1700' that the cotton industry flourished in the
United States.

It was then that Slater, an English men, built the first American cotton
mill has improved over the past centuries making cotton growth these mills
converted cotton fiber in to yam and cloth. In 1973 Eli Whitney developed the
cotton gin, which mechanically separates the seed from the lint fiber. Whitney
named his machine a gin, short for the word "engine technology and production
must more efficient.

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2.1.3 COTTON PLANT:

Cotton is produced by small trees and shrubs which bear botanical name
"Gossipier' One or two weeks after showing shoots appear and 50-80 days later
flowering begins. First buds are formed. After 3 weeks blossoms appear after
blossoming the petals fall offend the off spring to the boll develops.

The bolls divided by partition in to 3-5 sections contain seeds. Fiber

grows on the seeds. The plant has certainly been grown and used in India for at
least 5000 years and probably for much longer. Cotton was used also by the
ancient Chinese, Egyptians, and north and South Americans.

In early spring seeds are planted 1-3 in seed, by mechanical planters, seed
beds. Plants are irrigated fertilized and weeded, as needed, during the 25 week
growing cycle. The true leaves appear after 2 or 4 weeks with the bud also
known as a "aquaria" appearing about 5 or 7 weeks letting the cotton bowl
developed, producing the fibers abs deeds that are harvested.

The cotton bolls open naturally over time and defoliant chemicals is
applied by grounder air top quality. This helps the leaves and fall off and any
remaining closed bolls to open. A mechanical cotton harvester moves through
the field picking the cotton, which then packed in to truck load sized "modules"
and taken to the gin. The gin separated the cotton fibers form.

The seeds cleaning equipment removes twigs and other debris. The fiber,
now called lint is packed in to 500 pounds bales and then transported to textile
mills. The cotton is carded roomed, making all of the fibers run parallel, and
then spun in to thread. Some whole cotton seed is fed to cattle. Some seed is
further processed the fine "linter fibers are removed and the seed is pressed and
cooked. Producing cotton seed our as meal.

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2.1.4 TYPES OF COTTON:

India grows all the 4 major types of cotton garborturn, ghirsute,

gherbaceous, and barb dense the first hybrid in the cotton crop was developed in
India, in Surat, by dry CT Patel (h4 intrahirsute in 1970) more than 200 varieties
and hybrids were evolved in the subsequent 5 decades.

Hybrids occupy around 45 % of cotton crop in India, as in 1998.

Important land marks in the India cotton history include the development and
release of native hybrids like G.cott D H37, G.cot D H9, DDH2 and drought
tolerant straights verities like SRT1, RENUKA, LRA 5166, ANJALI and RAJ
AT.

2.1.5 CULTIVATION:

Successful cultivation of cotton requires alone growing season plenty

sunshine and water during the period growth, and dry weather for harvest. It
cultivated in countries with hot climate as India, china, USA, Pakistan.

Cotton producing areas in India are spread throughout the country.

Punjab, Haryana, Maharashtra, Andhra Pradesh, Tamilnadu and Karnataka are
the major cotton producing states.

Cotton is shown around May and June and harvested around September
to December.

In different parts of the country a number of methods, chemical and

mechanical have been used to control seeds and grass including intensive
spraying of herbicide before and after planting. The cultivating, rotary hoe, and
flame cultivator are also used to destroy weeds.

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2.1.6 PROCESSING:

Raw cotton kappa's which is picked from field's cotton seed. To separate
the seed from raw cotton it is taken to machine called gains. Where seed is
separated fromkappa‘s. The kappa's which seeds so generated are called lint. It
is in loose form the cotton above lint is pressed and packed in BAL form in
hydraulic/ pneumatic press and at ken to mills.

 USERS:
Like lumber cotton comes in many varieties and qualities, each suitable for
different purposes. The long lint libbers are used for many things, most of many
things, most of which a thread, yarn or cotton fabric. Clothing and bedding
items are common products. The smaller cotton libbers, as linter are removed
from the seed and are used as stuffing for furniture and components of linoleum,
plastics and insulation.

 COMMODITY VALUE:
Cotton is a leading cash crop nationally, ranking just behind corn,
soybeans, wheat and hay. In 2004, California's crop value was over $ 796
million. Additionally the 2004 value of cotton seed was nearly $ 131 million.

2.1.7 MARKETING:

In determination the value of cotton samples are drawn from random bale
and evaluated according to staple, grade, and character.

Staple refers to fiber length. Fiber length can be classified in to 3 grades i.e.

• Short staple

• Medium staple

• Long staple

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Grader refers to color, brightness, and amount of foreign matter. Color

groping indicates the degree of whiteness character refers to the diameter,
strength, body, maturity, uniformity and smoothness of the fiber.

2.1.8PRODUCTS:

Cotton is still a principal raw material for the worlds textile industry, by
its dominant position has been seriously eroded by synthetic fiber. Increased
global production, emergence of synthetic as an alternative to cotton textile and
improved productivity are mainly contributing for world supply.

World demand for cotton continued to be erratic and some groups lobbies for
increased price supports, but an upward trend began in the 1980's. World
production of cotton in the early 1990's stood at 18.9 million metric tons
annually. The leading producers include china, India, USA, Pakistan, and
turkey. Cotton textiles command a significant share in export from India. It
accounts for nearly 22% of the total exports.

 TOP PRODUCING COUNTRIES:

The majority of the cotton is produced in the cotton belt of the United
States, ranging along the southern part of the nation from California to Florida
and Virginia. In the 2004, cotton was produced in 13 California countries from
as for north as glen country and far south as imperial country. Major production
areas are Fresno, kings and Merced countries.

2.1.9 INDIA COMING ON STRONG IN COTTON PRODUCTION:

Cotton producers in India have made huge strides forward in cotton

production, increasing their average yields from 294 pounds per acre nationally
to 391 pounds per acre over those last three seasons, a 33% increase. As a result,
India cotton production from 10.6 million in 19 bales in 2004-2005 the huge
2004 crop produced 4 million bales of excess supply.

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This up surge in production was due to a combination of great whether

and of BT technology's ability to reduce risks and costs and save Indian cotton
producers from the worn invasions that used to frequently destroy their crops.

The great weather was shared across almost the entire planet in 2004 and
the yields produced will likely go down in as a once in a life time happening.
Technology's impact on cotton production in India and around the world is still
evolving.

The international cotton advisory committee estimates that 27% of world

cotton areas or will be planted to officially approved biotech varieties in 2005-
2006, up from 2% in 1996-97 that 27% contributes to 36% of world production
exports.

2.1.9.1 POLICY OF GOVERNMENT OF INDIA TOWARDS COTTON

INDUSTRY:

The cotton production policies in India historically have been oriented

towards promoting and supporting the textile industry.

The government of India announces a minimum support price for each

variety of seed cotton (kappas) based on recommendations from the commission
for agricultural costs and prices. The government of India is also providing
subsides to the production inputs of the cotton in the area of prices. It's sort of a
double edge sword.

2.1.10 MARKET FOR INDIAN COTTON:

The two major groups in the cotton market are:

• Private traders,

• State- level co- operatives.

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The cotton corporation of India limited of these three groups, private

traders handles more than 70% of cotton seed and lint, followed by co-
operatives and the CCI.

The cotton corporation of India Ltd. For the year 2006-07 had purchased
60.30 lakh quintals of kappa's equivalent to 11771akh bales valuing RS.
1121.70 croresin Andhra Pradesh, Maharashtra, Madhya Pradesh, Orissa and
Karnataka. Beside these the corporation had also carried out commercial
operations and purchased 2.71 lakh bales valuing RS.282.82 crores in the year
2006-07 as compared to around 1.00 lakh bales valuing RS. 108.81 crores
during the previous year (i.e. for the year 2005-06)

2.1.11 EXPORTS OF COTTON:

The main market for Indian cotton export is china. The other markets also
include Taiwan, Thailand and turkey. In July 2001, the union government
removed all curbs on cotton exports. As a result of these, now the exporters are
not required to obtain any certificate from the textile commissioner on the
registration, allocation, quality and quantity of export. India exported around 25
percent cotton during 2006-07 and it is estimated nearly 62 percent exported to
china.During the year 2006-07 the prices of Indian cotton in early part of the
season being lower than the international prices, had been attractive to foreign
buyers and there was good demand for Indian cotton, especially S-6, H-4 and
Bunny which had resulted in sustained cotton exports, which are estimated at
55.00 laths bales.

The cotton advisory board estimated an 18-20% increase in cotton exports to 65

lakh bales for October 2007- September-2008, as against its August 2007
estimate of 58 lakh bales.

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2.1.12 IMPORTS OF COTTON:

Despite good domestic crops, India is importing cotton because of quality

problems or low world prices particularly for processing in to quality problems
or low world prices particularly for processing in to exportable products like
yarns are fabrics.

India imported just 7, 21,000 lakh bales of cotton in 2003-2004. The

imports rose to 1,21,000 lakh bales in 2004-05, 4,70,000 lakh bales in 2005-06
and the anticipated imports for the year 2006-07 are 5,50,000 lakh bales.

2.1.13THE ORGANIZATIONS DEALING WITH THE PROMOTION OF

COTTON INDUSTRY IN INDIA:

The organizations that try to promote the quantity and quality of cotton in India
are:

• The cotton corporation of India Ltd.

• Cotton Advisory Board.

• Cotton Association of India.

• Central Institute of cotton Research.

• The cotton corporation of India Limited.

The cotton corporation of India ltd. was established on 31st July 1970 as a
government company registered under the company's act 1956With the
changing cotton scenario, the role and functions of the corporation were also
reviewed and revised from time to time.

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As per the policy directives from the ministry of Textiles, Government of India
in 1985, the corporation is nominated as the Nodal Agency of Governmentof
India, for undertaking price support operations, where the prices of support
operations, whenever the prices of kappa's (seed cotton) touch the support level.

He cotton corporations of India ltd operations cover all the cotton growing
states in the country comprising of:

• Punjab, Haryana and Rajasthan in northern zone.

• Gujarat, Maharashtra and Madhya Pradesh in central zone.

• Andhra Pradesh, Karnataka and Tamil Nadu in southern zone.

• Cotton Advisory Board.

2.1.14 FUTURE OF COTTON INDUSTRY IN INDIA:

The cotton Advisory Board (CAB) has estimated the cotton crop at 310
lakh bales for the current season 2007-2008. Theirs is to9 historic high and
represent a 11% jump over last year's crop estimate of 280 lakh bales.

The increase in cotton production area is also expected to increase to

95.301akh hectares for the season 2007-08 against 91.42 lakh hectares for the
season 2006-07.

Cotton Advisory Board expects to the higher at 65 lakh bales as against

55 lakh bales in 2006-07. Import in 2007-08 are projected at 6.50 lakh bales as
compared to 5.50 lakh bales in 2006-07 because mills have to rely on foreign
growths to spin some finer counts of yarn.

It is also estimated that the cotton industry is going to provide 12 million

new jobs. Mainly for the semi- skilled and un skilled about.

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Currently, India is responsible for roughly none-fourth of the planted

cotton area in the world with about 22 million 9 acres planted to cotton. If their
yields keep moving towards the worked average, the country could become a
big player in world. Trade very quickly.

2.1.15 STRUCTURE OF INDIA'S COTTON TEXTILE INDUSTRY:

Unlike other major textile-producing countries, India's textile industry is

comprised mostly of small-scale, non integrated spinning, weaving, finishing,
and apparel-making enterprises. This 9 unique industry structure is primarily a
legacy of government policies that have promoted labor-intensive, small-scale
operations and discriminated against larger scale firms

 COTTON FARMING AND HARVESTING:

Cotton is grown in tropical as well as sub tropical area in India. Mostly
the cotton grown in India is from dry lands and crops mostly depend on the
irrigation systems available and not only on the rain water.

 GINNING:
Ginning is the process where cotton fiber is separated from the cotton
seed. The first Step in the ginning process is when the cotton is vacuumed into
tubes that carry it to a dryer to reduce moisture and improve the fiber quality.
Then it runs through cleaning equipment to remove leaf trash, sticks and other
foreign matter.

The seeds are too large to pass through these openings, resulting in the
fibers being pulled away from the seed. Long fiber cottons must be ginned in a
roller gin because saw gins can damage their delicate fibers.

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 OIL MILK:
In the operation the oil is extracted from the cotton seeds that are coming
from the Ginning process. The cotton seeds coming from the ginning unit are
then passed through the pressing unit and crude cotton oil is produced. The
pressed cotton seed oil cake is supplied as the cattle feed.

The crude is further modified as the bio-diesel which could be used as the
one of the energy source.

 SPINNING:
Spinning is the process of converting cotton or manmade fiber into yarn
to be used for weaving and knitting. Largely due to deregulation beginning in
the mid-1980s, spinning is the most consolidated and technically efficient sector
in India's textile industry.

Average plant size remains small, however, and technology outdated,

relative to other major producers. In 2002/03, India's spinning sector consisted
of about 1,146 small-scale independent firms and 1,599 larger scale independent
units.

 FABRIC FINISHING:
Fabric finishing (also referred to as processing), which includes dyeing,
Printing, and other cloth preparation prior to the manufacture of clothing, is also
dominated by a large number of independent, small-scale enterprises. Overall,
about 2,300 processors are operating in India including about 2,100independent
units and 200 units that are integrated with spinning, weaving, or knitting units.

 CLOTHING:

Apparel is produced by about 77,000 small-scale units classified as

domestic Manufacturers, manufacturer exporters, and fabricators
(subcontractors).

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2.1.16 SPINNING PROCESS:

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 BLOW ROOM:
The cotton mix is then fed into the blow room where the clearing of the
cotton is carried out, in order to remove the trash and other foreign materials.
Major parts of the impurities nearly 5% of the input are removed as waste, a
past of which goes invisible waste. The output in this stage is in the form of
laps.

 CARDING:
The laps are fed into cards, where the next important stage of cleaning as cotton
and removal of short fibers takes place. Only 60 to 65% of trash will be cleaned
in blow room. Carding only will clean balance amount of trash. The output in
this stage is in the form of silvers.

 COMBERS:
The most sophisticated department, which is very important for anybody who
wants to, exports those yams. This department refines the silvers and strength
and other good quality parameters. The output is combed silvers.

 DRAW FRAMES:
Combined silvers are fed into draw frame paralyze the fiber in the silver as even
less the quality of the silver by mixing the silver from the different cans and
producing an even quality silver. The output is simple's bobbins.

 RING FRAMES:

The simplex bobbins are cruelled to the ring frame spindles where the
speed is very high. By giving the twist, yam is produced. The output is in the
form of cops.

 SIMPLEX:
The objects in this stage are drafting two silver into roving and twisting
the roving and to win the roving on bobbins.

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 SPINNING:
The object of spinning is further drafting the roving into yam as per
required count. To import twisting yam for getting strain there. This is the final
stage in manufacturing of yam. The finishing section includes cone winding,
cone packaging, reeling, bounding and labelling not only producing the yam but
is to be packed in sizes in different shapes as required by the buyers.

 CONE WINDING:
The spinning cops are cruelled into the cone winding and the yarn is
wound on the drums and the yarn in' cones 'is produced which is the final
product. In this stage is out put it is the final output and it is in the form of yarn.

 CONE BAGS:
50 cones are put in each bag. Cone bag are for dispatch. After packing
and bounding of the mill are, printed and the specification of the product from
whom it is sending and to the party to be received also placed. The company has
no objection certificate from pollution control.

 MAN POWER REQUIREMENT:

The importance of personal function is increasing day to day. It is the
human factor that can mould the organization as we wish. Any resource cannot
yield efficiently managed by the human resources. That is why some
management of human resources.

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2.2 COMPANY PROFILE

Sri Anantha Lakshmi Spinning Mills Pvt. Ltd. (SALSM) was located on the
NH-5 AT Boyapalem, guntur was established in the year 2005 with an initial
capacity of 14,400 spindles specialized in manufacturing 100% cotton yarn of
various counts. Within 5 years from its initial commencement, SALSM
expanded its total capacity to 26,000 spindles. SALSM is known for best quality
and prompt delivery and for the same reason majority of the production is
exported to other countries. The unit produces yarn of counts ranging from 30s
to 60s both Combed and Carded (Weaving and Knitting) and has established a
very strong foothold in national and international market. It also manufactures
other finer counts on order basis.

Right from the beginning of its commercial production, Sri Anantha Lakshmi
Spinning Mills Pvt. Ltd. developed the habit of producing best-in-class quality
yarn with high intension, sincere efforts, intelligent direction and
skillfulexecution.We incorporate proven methodologies and scalable processes
to produce high quality yarn that can best suite our customer requirements.

2.2.1 VISION:

To achieve USD 20 Million dollars turnover in 2017.

2.2.2 MISSION:

To manufacture, supply, and source the best-in-class quality yarn of customer

desired parameters at competitive price. To maintain long term relationship
with all stakeholders by creating a feel-good environment to business with us.

2.2.3 VALUES:

Operational Excellence.Customer Centric.Quality Driven.Commitment. Respect

for individual. Learning & Sharing.

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2.2.4 MARKETS:

With International Quality Standards. Sri Anantha Lakshmi Spinning

Mills Pot Ltd has maintained a very good reputation in both National and
international Textile arena. The 100 % cotton yarn we manufacture is exported
to countries like Bangladesh, Turkey, Peru and Brazil, other than 100% cotton
yarn, we can export.

Raw cotton

Cotton Wastes for open End

Spinning National Sales: Sales

@salyarn.com

ExportSale:[email protected]

2.2.5 QUALITY:

At Sri AnanthaLakshmi Spinning Mills Pvt Ltd each employee is aware

of the importance of quality and always thrives to maintain the same with an
emphasis on end consumer needs. From time to time we conduct awareness and
training sessions for all employees to make them quality conscious.

From raw cotton selection to finished yarn packaging, we have defined

process to maintain high quality and have a separate team to monitor and
execute the process. With an experience of over 5 decades in raw cotton and
trading. The chairman managing director himself gets into the act in procuring
the best Raw Cotton. This signifies the utmost importance given to quality of
products at the company.

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2.2.6 QUALITY ASSURANCE:

 RAW MATERIAL
Raw cotton is procured from different crop rich regions in Andhra Pradesh,
India. Each lot will be finalized after undergoing rigid analysis of fiber
parameters including length, strength, neps, maturity, short fiber percentage,
contamination, trash, and yellow spots. The raw cotton lots are then further
analyzed and are systematically allocated to the correct yarn count line.

 2. BALE MANAGEMENT
In order to produce the desired count yarn, it is very important to have an
effective bale management system. At SALSM, raw cotton bales are stocked up
to 6 months to meet our consistent customer‘s quality parameters.

 3. BACKEND PROCESS
Backend process plays a pivotal role in achieving the desired quality
parameters. In the blow room dual contamination clearing systems are installed
back-to-back to reduce contamination levels and ensure dust free yarns. Once
clean, the yarns undergo the auto levellers in the carding and draw frame
process to create uniformity.

All the machines installed are monitored on a 24 hr basis in order to

detect any deviations. We also implement colour coding system at all steps to
prevent product mix-ups.

 4. QUALITY TESTING EQUIPMENT

UT5, Cascade, RKM, Classimate, Yarn Cafeteria

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2.2.7 CARRERS:

We encourage and give opportunity to the job seekers with the following
qualities :

Smart Working rather than hard working

Consistency with a vision for growth

Team player with positive

attitude Process oriented

Reliable and honest

2.2.8 PRODUCTS:

SALSM is known for best quality and prompt delivery and for the same reason
majority of the production is exported to other countries. The unit produces yarn
of counts:
30/1 KH, 30/1 KW, 30/1 CH, 30/1 CW, 40/1 KH, 40/1 KW, 40/1 CH, 40/1
CW, 60/1 CW
and has established a very strong foothold in national and international market.
It also manufactures other finer counts on order basis.

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CONTACT DETAILS:

CHAIRMAN

Mr.KoteswaraRaoSamineni

Chairman Managing Director

Mobile No: +91 984 814 3721

email: [email protected]

DIRECTOR

Mr.Phani Kumar Samineni

Executive Director

Mobile No: +91 964 051 2999

email: [email protected]

Factory Manager:

LingaiahKompally

Registered Office & Mill Address:

Sri Anantha Lakshmi Spinning Mills Pvt

Ltd 59/1, NH-5, Marripalem Village

YadlapaduMandal, Guntur – 522233

Andhra Pradesh, India

eMail: [email protected]

National Sales :[email protected] Suppliers : [email protected]

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3. RESEARCH DESIGN

3.1 STATEMENT OF THE PROBLEM

Financial statement analysis is used to identify the trends and

relationships between financial statement items. Both internal management and
external users (such as analysts, creditors, and investors) of the financial
statements need to evaluate a company's profitability, liquidity, working capital
changes.

The most common methods used for financial statement analysis are
fund flow analysis, and ratio analysis. These methods include calculations and
comparisons of the results to historical company data, competitors, or industry
averages to determine the relative strength and performance of the company
being analyzed.

PLACE OF STUDY

All the activities are carried out in the SRI ANANTHA LAKSHMI SPINNING
MILLS (P) LTD.

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3.2 OBJECTIVES OF THE STUDY

1) To know the changes in working capital for the year 2011 to 2016.
2) To know the changes in current assets and current liabilities of the
business.
3) To understand the changes in the funds position for the business.
4) To understand the short term liquidity position of the business by using
the ratio analysis.

3.3 SCOPE OF THE STUDY

The study of financial statement analysis of SRI ANANTHA LAKSHMI
SPINNING MILLS (P) LTD. is a very wide topic and could be detailed study.
But here it is intended to make a brief reports keeping in view in the time factor.
In the study many factors that need detailed analysis could not be discussed in
detail because of the limitations regarding length of the project and available
time.

The scope of the study has, therefore, been limited to the presentation of
comparative balance sheets, common size balance sheet, cash flow statements
and their analysis and calculation of various ratios and their analysis.

Finance is considered as the life-blood of any business. It is defined as the

provision of money at the time it is needed. All the plans of a businessman
would remain mere dreams unless adequate money is available to convert them
into reality.
Finance management is very important to every type of organization. It
refers to that part of managerial activity concerned with the procurement and
utilization of funds for business purposes. The financial manager is also
responsible for affective utilization of funds. He is to point out situations where
the funds are being kept idle or where a proper use of funds is not being made.

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This is also as an important consideration in dividend decision. Hence, it is

crucial to employ the funds properly and profitably.
The funds have to be invested that the company can produce at its
optimum level without endangering its financial solvency. Thus financial
implications of each decision to invest in fixed assets are to be properly
analyzed.

For this, the financial manager must have a detailed knowledge of

techniques of capital budgeting and qualifying uncertainty. He must also keep in
view the needs of working capital and ensure that while true forms enjoy an
optimum level of working capital they do not keep too much Funds blocked in
inventories, book debts and cash etc.
The twin aspects of procurement and effective utilization of funds
therefore, are the crucial tasks which the financer manager performs.
THE FINANCIAL MANAGEMENT IS CONCERNED WITH:
(a) Estimation of the fixed and working capital requirements,
(b) Formulation of capital structure,
(c) Procurement of fixed and working capital, and
(d) Management of earnings.

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3.4 METHODOLOGY OF THE STUDY

Methodology describes the method of achieving objectives through
collection of data. The data collected can be either primary or secondary. The
above information is carried on with the cooperation of management of ‗SRI
ANANTHA LAKSHMI SPINNING MILLS(P) LTD.

SOURCES OF DATA:
1 Primary data
2. Secondary data
PRIMARY DATA:
Most of the information is collected from internal interviews and
discussion with various officials in the finance department and concerned
executive of other department.

SECONDARY DATA:
The information collection from
1. Annual reports, published records and reference books.
2. Executive and staff of financial accounting department.
3. Executives of other departments.

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3.5 TOOLS OF ANALYSIS

There are some of the tools, which are relevant for the study of ration
analysis and performance of ‗SRI ANANTHA LAKSHMI SPINNING MILLS
(P) LTD.
1) FUND FLOW ANALYSIS
a. SCHEDULE OF CHANGING IN WORKING CAPITAL
b. PROFIT &LOSS APPROPRIATION A/C
c. FUNDS FLOW STATEMENT

2) RATIO ANALYSIS
a. CURRENT RATIO
Current Ratio = current assets/current liabilities

b. QUICK RATIO

Quick Ratio = quick assets/current liabilities

c. ABSOLUTE LIQUID RATIO

Absolute Liquid Ratio=absolute liquid assets/ current liability

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3.6 LIMITATIONS OF THE STUDY

1) To confine that study period of two months is for extensive.
2) All the financial details are revealed as some matters are confidential.
3) Information gathered is mostly with the available data.
4) It is based on study of internal reports.
5) Financial analysis is based upon only monetary information and non-
monetary factors are ignored.
6) As the financial statements are prepared on the basis of going concern, it
does not give exact position. Thus accounting concept and conventions
cause a serious limitation to financial analysis
3.7 CHAPTER SCHEME

For the easy presentation, the whole data are presented chapter wise. This
project contains 6 chapters, they are as follows;

1. Introduction- Background of the study

2. Industry and Company Profile
3. Research Design
4. Analysis and Interpretation
5. Findings Suggestions and Conclusions

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4. ANALYSIS AND INTERPRETATION OF DATA

Table: 4.1

BALANCE SHEET OF M/S. SRI ANANTHA LAKSHMI

SPINNING MILLS (P) LTD, 2011-2016

PARTICULARS 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16

CURRENT
ASSETS
Inventories 131630008 162037510 189522253 159840773 175824851 195165585
Trade Receivables 18065596 21706994 237675 12867227 14153950 15710884
Cash and Bank 4631167 5163958 8823592 21267392 23394131 25967486
balance
Short term loans 57610008 71387511 71921633 68141691 74955860 83201004
and advances
FIXED ASSETS
Tangible Assets 271416323 335520403 411908508 395414170 434955587 482800701
Capital work in 2169010 2336262 6115287 10713617 11784979 13081327
progress
Long term Loans 4230312 4662890 5765890 10762920 11839212 13141525
and Advances
Other Non- 16663004 18953754 13887583 18369331 20206265 22428954
Current Assets
TOTAL 506415428 621769282 708182421 697377121 767114835 851497466
ASSETS
Current
&NoncurrentLia
bilities
Capital 45000000 45000000 45000000 45000000 45000000 49950000
Reserves and 66702027 83377533 84481560 104941079 116435187 129243057
surplus
Long term 189430279 236787848 307301887 262876792 289964471 321860563
borrowings
Deferred tax 29383621 36729526 37333573 46156610 51772272 57467222
liability
Short term 95406448 119258060 147375184 118291485 131120634 145543904
borrowings
Trade payables 19027499 23784373 6879286 36287695 40016465 44418276
Other current 49573554 61966942 64595931 76873460 85060806 94417494
liabilities
Short-term 11892000 14865000 15215000 6950000 7745000 8596950
provisions

Total Liabilities 506415428 621769282 708182421 697377121 767114835 851497466

Source: Financial report

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4.2 FUNDS FLOW STATEMENT

Table: 4.2

CHANGING IN WORKING CAPITAL FOR THE

YEAR 2011-2012

Particulars 2011 2012 INCREASE DECREASE

CURRENT ASSETS

Inventories 131630008 162037510 30407502 ----

Trade receivables 18065596 21706994 3641398 ----

Cash and bank balance 4631167 5163958 532791 ----

Short term loans and 57610008 71387511 13777503 ----

advances

(A) Total current assets 211936779 260295973

Current liabilities

Short term borrowings

95406448 119258060 ---- 23851612
Trade payable Other
19027499 23784373 ---- 4756874
current liabilities
49573554 61966942 ---- 12393388
Short term provisions
11892000 14865000 ---- 2973000

175899501 219874375
Total current
36037278 40421598 48359194 43974874
liabilities Net working

capital (A-B)
4384320 4384320
Increasing working
capital

40421598 40421598 48359194 48359194

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Table: 4.3

PROFIT &LOSS APPROPRIATION A/CFOR THE YRAR 2011-12

Particulars Amount (Rs) Particulars Amount (Rs)

To reserves and surplus 16675506
By funds from operation 16675506

16675506 16675506

Table: 4.4

FUNDS FLOW STATEMENTFOR THE YEAR 2011-2012

SOURCES AMOUNT (RS) APPLICATIONS AMOUNT (RS)

Fixed assets
Funds from operation 16675506 Tangible assets 64104080
Capital in progress 167252
Long term borrowings 47357569 Long term loans 432578
and advances.
Other noncurrent assets
Differed tax liability 7345905 2290750
Increasing working capital
4384320

71378980 71378980
Source: Balance sheet 2011-12

INTERPRETATION:
When compared to 2011 in the year 2012 current assets are increased to
260295973 there has been an increase of 22.81%

When compared to 2011 in the year 2012 current liabilities are increased to
219874375 there has been an increase of 24.9%In 2012 net increases of working
capital is 4384320 In 2011-12 the funds from operations is 16675506.

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Table: 4.5

CHANGING IN WORKING CAPITAL FOR THE

YEAR 2012-2013

Particulars 2012 2013 INCREASE DECREASE

CURRENT ASSETS

Inventories 162037510 189522253 27484743 ----

Trade receivables 21706994 237675 ---- 21469319

Cash and bank balance 5163958 8823592 3659634 ----

Short term loans 71387511 71921633 534122 ----

and advances

(A) Total current

260295973 270505153
assets
Current liabilities

Short term 119258060 147375184 ---- 28117124

borrowings Trade 23784373 6879286 16905087 ----

payable 61966942 64595931 ---- 2628989

Other current liabilities 14865000 15215000 ---- 350000

Short term provisions 219874375 234065401

Total current liabilities 40421598 36439752 48583586 52565432

Net working capital A-B 3981846 3981846

Decreasing working 40421598 40421598 52565432 52565432

capital

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Table: 4.6

PROFIT &LOSS APPROPRIATION A/C FOR THE YEAR 2012-2013

Particulars Amount (Rs) Particulars Amount (Rs)

To reserves 1104027
and surplus
By funds from 1104027
operation
1104027 1104027

Table: 4.7

FUNDS FLOW STATEMENT FOR THE YEAR 2012-2013

SOURCES AMOUNT (RS) APPLICATIONS AMOUNT (RS)

Funds from operation 1104027 Fixed assets

Long term borrowings 70514039 Tangible assets 76388105
Differed tax liability 604047 Capital in progress 3779025
Other noncurrent 5066171 Long term loans 1103000
and advances
assets 3981846
Decreasing working
capital
81270130 81270130
Sources: Balance sheet 2012-2013

INTERPRETATION:
When compared to 2012 in the year 2013 current assets are increased to
270505153 there has been an increase of 3.9%

When compared to 2012 in the year 2013 current liabilities are increased to
234065401 there has been an increase of 6.45%

In 2013net decreases of working capital is 3981846

In 2012-13 the funds from operations is 11044027.

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Table: 4.8

CHANGING IN WORKING CAPITAL FOR THE

YEAR 2013-2014

Particulars 2013 2014 Increase Decrease

CURRENT ASSETS

Inventories 189522253 159840773 ---- 29681480

Trade receivables 237675 12867227 12629552 ----

Cash and bank balance 8823592 21267392 12443800 ----

Short term loans and advances 71921633 68141691 ---- 3779942

(A) Total current assets 270505153 262117083

Current liabilities

Short term borrowings

147375184 118291485 29083699 ----
Trade payable
6879286 36287695 ---- 29408409
Other current liabilities
64595931 76873460 ---- 12277529
Short term provisions
15215000 6950000 8265000 ----
Total current liabilities
234065401 238402640

Net working capital (A-B)

36439752 23714443 62422051 75147360
Decreasing working capita
12725309 12725309

36439752 36439752 75147360 75147360

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Table: 4.9

PROFIT &LOSS APPROPRIATION A/c FOR THE YEAR 2013-2014

Particulars Amount (Rs) Particulars Amount (Rs)

To reserves and surplus 20459519

By funds from operation 20459519

20459519 20459519

Table: 4.10

FUNDS FLOW STATEMENT FOR THE YEAR 2013-2014

Sources Amount (Rs) Applications Amount (Rs)

Funds from 20459519 Long term borrowings 44425095

operation Differed 8823037 Capital in progress 4598330

tax liability Tangible 16494338 Long term loans 4997030

and advances.
assets 12725309 4481748
Other noncurrent assets
Decreasing working
capital
58502203 58502203

Sources: Balance sheet

INTERPRETATION:
When compared to 2013 in the year 2014 current assets are decreased to
262117083 there has been an decrease of -3.1%

When compared to 2013 in the year 2014 current liabilities are increased to
238402640 there has been an increase of 1.85%

In 2014 net increases of working capital is 12725309

In 2013-14 the funds from operations is 20459519.

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Table: 4.11

CHANGING IN WORKING CAPITAL FOR THE

YEAR 2014-2015

Particulars 2014 2015 INCREASE DECREASE

CURRENT ASSETS

Inventories 159840773 175824851 15984078 ----

Trade receivables 12867227 14153950 1286723 ----

Cash and bank balance 21267392 23394131 2126739 ----

Short term loans and 68141691 74955860 6814169 ----

advances

262117083 288328792
(A) Total current assets
Current liabilities
118291485 131120634 ---- 12829149
Short term borrowings
36287695 40016465 ---- 3728770
Trade payable
76873460 85060806 ---- 8187346
Other current liabilities
6950000 7745000 ---- 795000
Short term provisions
238402640 263942905
(B) Total current liabilities
23714443 24385887 26211709 25540265

Net working capital (A-B) 671444 671444

Increasing working capital

24385887 24385887 26211709 26211709

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Table: 4.12

PROFIT &LOSS APPROPRIATION A/C FOR THE YEAR 2014-2015

Particulars Amount (Rs) Particulars Amount (Rs)

To reserves and surplus 11494108
By funds from operation 11494108
11494108 11494108

Table: 4.13

FUNDS FLOW STATEMENT FOR THE YEAR 2014-2015

SOURCES AMOUNT (RS) APPLICATIONS AMOUNT (RS)

Funds from 11494108 Tangible assets 39541417

operation Differed tax 5615662 Capital in progress 1071362

liability Long term 27087679 Long term loans 1076292
and advances.
borrowings
Other noncurrent
assets 1836934

Increasing working 671444

capital
44197449 44197449
Sources: Balance sheet

INTERPRETATION:

When compared to 2014 in the year 2015 current assets are increased to
288328792 there has been an increase of 10%

When compared to 2014 in the year 2015 current liabilities are increased to
238402640 there has been an increase of 10.7%

In 2015 net increases of working capital is671444

In this year 2014-15 funds from operations is 11494108.

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Table: 4.14

CHANGING IN WORKING CAPITAL FOR THE YEAR 2015-2016

Particulars 2015 2016 INCREASE DECREASE

CURRENT ASSETS

Inventories 175824851 195165585 19340734 ----

Trade receivables 14153950 15710884 1556934 ----

Cash and bank balance 23394131 25967486 2573355 ----

Short term loans and 74955860 83201004 8245144 ----

advances
288328792 320044959
(A) Total current assets
Current liabilities
131120634 145543904 ---- 14423270
Short term borrowings
40016465 44418276 ---- 4401811
Trade payable
85060806 94417494 ---- 9356688
Other current liabilities
7745000 8596950 ---- 851950
Short term provisions
263942905 292976624
(B) Total current liabilities
24385887 27068335 31716167 29033719

Net working capital (A-B) 2682448 2682448

27068335 27068335 31716167 31716167

Increasing working capital

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Table: 4.15

PROFIT &LOSS APPROPRIATION A/C FOR THE YEAR 2015-2016

Particulars Amount (Rs) Particulars Amount (Rs)

To reserves and surplus 12807870
By funds from operation 12807870
12807870 12807870

Table: 4.16

FUNDS FLOW STATEMENT FOR THE YEAR 2015-2016

SOURCES AMOUNT (RS) APPLICATIONS AMOUNT (RS)

Funds from operation 12807870 Tangible assets 47845114

Differed tax liability 5694950 Capital in progress 1296348

Long term borrowings 31896092 Long term loans 1302313
and advances.
Increase in share capital 4950000
Other noncurrent
assets 2222689

Increasing working 2682448

capital

55348912 55348912
Sources: Balance sheet

INTERPRETATION:

When compared to 2015 in the year 2016 current assets are increased to
320044959 there has been an increase of 10.9%

When compared to 2015 in the year 2016b current liabilities are increased to
292976624 there has been an increase of 11%In 2016 net increases of working
capital is 2682448. In 2015-16 the funds from operations is 12807870.

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Table: 4.17
NET WORKING CAPITAL OF SRI ANANTHALAKSHMI SPINNING
MILLS PVT LTD, 2011-2016
YEAR NET WORKING CAPITAL BY PERCENTAGE(%) OF
INCRESED OR
DECRESED NET
WORKING
CAPITAL(2010-11 base year)
2010-11 36037278 100%
2011-12 40421598 12.16%
2012-13 36439752 1.11%
2013-14 23714443 -34.19%
2014-15 24385887 -32.33%
2015-16 27068335 -24.88%
Sources: statement of changes in working capital

Graph: 4.1

50000000
40421598
40000000 36037278 36439752
30000000 27068335
23714443 24385887
20000000
10000000
0
-1000000

2010-112011-122012-132013-142014-152015-16

NET WORKING CAPITAL

Sources: statement of changes in working capital

INTERPRETATION:

The Net working capital has been fluctuating in the study period 2011-2016,
here 2010-11 is the base year. In the year 2011-2012 the net working capital is
increased by 12.16% comparing to base year2010-11, in the year 2012-13
increased by 1.11% comparing to base year, and the year 2013-14 net working
capital is decreased by 34.1% comparing to base year, in the year 2014-15 the
net working capital is decreased by 32.33% when I am comparing to 2010-11
the net working capital is decreased by 24.88% in the year 2015-16. It is
observed that the overall net working capital is not good comparing to base
year. So company should increase current assets and reduce current liabilities.
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Table: 4.18
CURRENT ASSETS & CURRENT LIABILITIES OF SRI
ANANTHALAKSHMI SPINNING MILLS PVT LTD, 2011-
2016
YEAR CURRENT PERCENTAGE CURRENT PERCENTAGE
ASSETS INCRESE OR LIABILITIES INCRESE OR
DECRESE DECRESE
CURRENT CURRENT
ASSETS (2010-11 LIABILITIES
base year) (2010-11 base
year)
2010-11 211936779 100% 175899501 100%
2011-12 260295973 22.8% 219874375 24.9%
2012-13 270505153 27.6% 234065401 33%
2013-14 262117083 23.6% 238402640 35.5%
2014-15 288328792 36% 263942905 50%
2015-16 320044959 51% 292976624 66.5%
Sources: Balance sheet

Graph: 4.2
35000000
30000000
CURRENT ASSETS
25000000
20000000
PERCENTAGE INCRESE OR DECRESE CURRENT
15000000
CURRENT LIABILITIES
10000000
50000000
0

PERCENTAGE INCRESE OR
2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 DECRESE CURRENT LIABILITIES

Sources: Balance sheet

INTERPRETATION:

The current assets and current liabilities has been fluctuating in the study period
2011-2016, here 2010-11 is the base year. 2011-12 the current assets are
increased by 22.8% and current liabilities are increased by 24.9% comparing to
base year, in every year the current assets and current liabilities are increasing in
the year 2015-16 the current assets are increased by 51% and current liabilities
are increased by 66.5% comparing to base year 2010-11.If you observe
everyyear current assets and current liabilities are increasing but current

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liabilities are increasing more then current liabilities.

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Table: 4.19
FUNDS FROM OPERATIONS OF SRI ANANTHALAKSHMI
SPINNING MILLS PVT LTD, 2011-2016
YEAR FUNDS FROM OPERATIONS PERCENTAGE INCRESE OR
DECREASE FUNDS FROM
OPERATIONS
(on the base of 2022-23)
2011-12 16675506 100%
2012-13 1104027 -93.3%
2013-14 20459519 22.6%
2014-15 11494108 -31.0%
2015-16 12807870 -23.19%
Sources: Balance sheet

Graph: 4.3

25000000
FUNDS FROM
20000000 OPERATIONS
15000000
PERCENTAGE
10000000
INCRESE OR
DECREASE FUNDS
5000000
FROM OPERATIONS
0
2011-12 2012-13 2013-14 2014-15 2015-16
-5000000
Sources: Balance sheet

INTERPRETATION:

The current assets and current liabilities has been fluctuating in the study period
2011-2016, here 2011-12 is the base year. Funds from operations are decreased
by 93.3% in 2012-13comparing to 2011-12, in the year 2013-14 funds from
operations are increased by 22.6%, 2014-15 the funds are decreased by 31%
comparing to base year , in the year 2015-16 the funds from operations are
decreased by 23.2% comparing to 2011-12.The funds from operation are
decreasing comparing to 2011-12 in the year 2013-14 the highest funds from
operations is 22.6% increased.

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Table: 4.20
PROFIT OR LOSSES OF SRI ANANTHALAKSHMI SPINNING MILLS
PVT LTD, 2011-2016
YEAR PROFIT OR LOSSES BY PERCENTAGE (%) OF
INCRESED OR DECRESED
PROFITS (2010-11 base year)
2010-11 66702027 100%
2011-12 83377533 24.9%
2012-13 84481560 26.6%
2013-14 104941079 57.3%
2014-15 116435187 74.5%
2015-16 129243057 93.7%
Sources: Balance sheet

Graph: 4.4

100.00% 93.70%

80.00% 74.50%
57.30%
60.00%

40.00%
24.90% 26.60%
20.00%

0.00%
2011-12 2012-13 2013-14 2014-15 2015-16

BY % OF INCRESED OR DECRESED PROFITS (ON THE BASE OF 2010-11)

Sources: Balance sheet

INTERPRETATION:

The profits has been fluctuating in the study period 2011-2016, here 2010-11 is
the base year. In the year 2011-2012 the profit is increased by 24.9% comparing
to base year2010-11, in the year 2012-13 the profit is increased by 1.32%
comparing to previous year2011-12, in the year 2013-14 the profit is increased
by 24.21% comparing to2012-13, in the year 2014-15 the profit is increased by
10.90% comparing to 2013-14, in the year 2015-16 the profit is increased by
10.99% comparing to 2014-2015.

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4.3 RATIO ANALYSIS

Table: 4.21

CURRENT RATIO OF SRI ANANTHALAKSHMI SPINNING MILLS

PVT LTD, 2010-2016
CURRENT CURRENT CURRENT
YEAR
ASSETS LIABILITIES RATIO

2010-11 211936779 175899501 1.20

2011-12 260295973 219874375 1.18

2012-13 270505153 234065401 1.15

2013-14 262117083 238402640 1.10

2014-15 288328792 263942905 1.09

2015-16 320044959 292976624 1.09

Sources: Balance sheet

Graph: 4.5

35000000

30000000

25000000

20000000
CURRENT ASSETS
15000000
10000000
CURRENT LIABILITIES
50000000

0
2010-11 2011-12 2012-13 2013-14 2014-15 2015-16

Sources: Balance sheet

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INTERPRETATION:

Generally 2:1 ratio is considered to be ideal for concern i.e., current

assets should be twice the current liabilities.

The current ratio has been fluctuating in the study period .in the year
2010-2011 the current ratio was recorded 1.20 (1.20) it represent that for very
current liability of RS 1, the firm has the current assets of RS 1.20.

In the year 2011-2012 the current ratio decreased from 1.20to1.18.later on

the year 2012-2013 the ratio decreased from 1.18 to 1.15. The ratio from 2013-
2014 the ratio decreased from 1.15 to 1.10, the year of 2014-2015 the ratio will
be decreased 1.10 to1.09. in the year 2015-2016 the ratio is in same position
1.09.The maximum current ratio recorded 1.20 in the year 2011-2012. The
minimum current ratio recorded 2015-2016.

Here all years are satisfying the rule of the current ratio. So the short term
financial position or liquidity position of the company is satisfactory.

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Table:4.22

QUICK RATIO OF SRIANANTHALAKSHMI SPINNING MILLS PVT

LTD, 2010-2016

CURRENT
YEAR QUICK ASSETS QUICK RATIO
LIABILITIES

2010-11 80306771 175899501 0.45

2011-12 98258463 219874375 0.44

2012-13 80982900 234065401 0.34

2013-14 102276310 238402640 0.42

2014-15 112503941 263942905 0.42

2015-16 124879374 292976624 0.42

Sources: Balance sheet

Graph: 4.6

35000000

30000000

25000000

20000000
QUICK ASSETS
15000000 CURRENT LIABILITIES

10000000

50000000

0
2010-112011-122012-132013-142014-152015-16

Sources: Balance sheet

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FUND FLOW ANALYSIS AND RATIO ANALYSIS

INTERPRETATION:

As per rule of liquid ratio 1 to 1 ratio (1:1) is considered ideal ratio for a
concern i.e RE 1.liquid assets to discharge RE 1.curren liability.

The quick ratio has been varying throughout the study period. the quick
ratio was noticed 0.45 in the year 2010-2011 in the year 2011-2012 the quick
ratio falls down from 0.45 to 0.44 .later on there is decreased ratio was 0.34.in
the year 2012-2013, the ratio will be increase from 0.34 to 0.42.in the year
2013-2014 the ratio was same 0.42 for 2014-15 and 2015-2016. The ratio was
noticed that 2011-2012 the ratio was highest and 2013-2014 lowest ratio
noticed.

Here all years are satisfying the rule of the quick ratio so the liquidity
position of the company is satisfactory.

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FUND FLOW ANALYSIS AND RATIO ANALYSIS

Table: 4.23

ABSOLUTE LIQUID RATIO OF SRIANANTHALAKSHMI SPINNING

MILLS PVT LTD, 2011-2016

YEAR ABSOLUTE LIQUID CURRENT DEBTORS

ASSETS LIABILITY TURN OVER
RATIO
2010-11 4631167 175899501 0.02

2011-12 5163958 209874375 0.02

2012-13 8823592 234065401 0.03

2013-14 21267392 238372640 0.08

2014-15 23394131 236942905 0.08

2015-16 25967486 292976624 0.08

Sources: Balance sheet

Graph: 4.7
35000000

30000000

25000000

20000000

15000000 ABSOLUTE LIQUID ASSETS

CURRENT LIABILITY

10000000

50000000

2010-11 2011-12 2012-13 2013-14 2014-15 2015-16

Sources: Balance sheet

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FUND FLOW ANALYSIS AND RATIO ANALYSIS

INTERPRETATION:

In the year 2010-2011 the absolute liquid ratio was recorded 0.02. In the
year 2011-2012 the absolute liquid ratio recorded 0.02. In the year 2012-2013
ratio was increase absolute liquid ratio from 0.02 to 0.03. In the year 2013-2014
was the absolute liquid ratio increased 0.03 to 0.08. in the year 2014-2015m
2015- 2016 the ratio was 0.08. The highest ratio was recorded 0.08 in the years
2013-2014, 2014-2015 and, 2015-2016. The lowest recorded 0.02 in the year
2010-2011 and 2011-2012.

According the higher current ratio explains that the company will be able to pay
its debt maturing within a year. On the other hand a low current ratio point to
the possibility that the company may not be able to pay its short term debts.

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 FUND FLOW ANALYSIS AND RATIO ANALYSIS

5. FINDINGS, SUGGESTIONS & CONCLUSION

5.1 FINDINGS:

1. It was observed that in the year 2011-2012 the current assets are increased
by 22.81% and current liabilities are increased by 24.9% finally the
working capital also increased by 4384320.
2. It was observed that in the year 2012-2013 the current assets are
increased by 3.9% and current liabilities are increased by 6.45% finally
the working capital also decreased by 3981846.
3. It was observed that in the year 2013-2014 the current assets are
decreased by 3.1% and current liabilities are increased by 1.85% finally
the working capital also decreased by 12725309.
4. It was observed that in the year 2014-2015 the current assets are
increased by 10% and current liabilities are increased by 10.7% finally
the working capital also increased by 671444.
5. It was observed that in the year 2015-2016 the current assets are increased
by 10.9% and current liabilities are increased by 11% finally the working
capital also increased by 2682448.
6. It was observed that the net working capital in decreased to 24.88%
comparing to 2015-16
7. It was observed that the current assets are increased by 51%, and current
liabilities are increased by 66.5% comparing to base year.
8. It was observed that the profits are increased 93.7% in 2015-16
comparing to 2010-11
9. In 2011 the current ratio was 1.20%. From the year 2011-2016 the current
ratio was decreased from 1.20% to 1.09%.
10.In 2011 the quick ratio was 0.45%, and the year 2013 its fall down to
0.34%, from 2013-2016 its increased by 0.42%.

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FUND FLOW ANALYSIS AND RATIO ANALYSIS

11.In the year 2011 the absolute liquidity ratio0.02% and every year it is
increasing. In the year 2011-2016 the absolute liquidity ratio increased
from 0.02% to 0.88%

5.2 SUGGESTIONS:

1. Company should maintain sufficient current assets by issue of loans

& advances to outsiders; it will help to increase working capital.
2. The company is suggested to maintain sufficient amount of cash and
bank balance to pay its quick liabilities which will increase its credit
worthiness and goodwill
3. To maintain sufficient reserve and surplus, to ensure financial stability
of the business
4. Company should try to maintain its current ratio at the standard 2:1
5. Company should maintain its quick ratio at the standard 1:1
6. Company should maintain cash and bank balance sufficiently.
7. Company should increase current assets and reduce current liabilities
8. The company should improve the liquidity

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FUND FLOW ANALYSIS AND RATIO ANALYSIS

5.3 CONCLUSION:

The study conducted on fund flow analysis and ratio analysis at

―THE ANANTHALAKSHMI SPINNING MILLS (P) LTD” gives a view
of
analysis evaluation of liquidity position of the company is not well comparing to
previous years the company should increase current assets and reduce current
liabilities. And profitability of the company is good based on the tools used
analysis and interpretations have been made giving way for useful and
constructive suggestions. The company should enhance its performance for
meeting challenges and exploiting opportunities in future. The project will guide
to the management to interpret its weakness and problems this will certainly
help the management to taking financial decisions. However more efforts need
to be taken to improve the financial position for the growth of the company.

Based on the analysis and interpretation I tried to give my findings and

suggestions for the company as per my best knowledge.

Finally project really helps us in knowing the practical things of the

textiles. Really I enjoyed this project work in its real spirit.

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FUND FLOW ANALYSIS AND RATIO ANALYSIS

BIBLIOGRAPHY

 Financial management by I.M. PANDAY Published by VIKAS

Publishing house PVT LTD

 Financial management theory and practices by PRASANA\JA

CHANDRA

 Financial management text problems by M.Y. KHAN & P.K.JAIN

 Financial management and polices by V.K. BHALLA

 Financial management by S.N. Maheswari

 Financial and management accounting by DR.R. Thirumal published

by thakur publishers

Web sites:

 www. Salyarn.com
 www. accountingtools.com
 www.Project mba .com
 www. Accounting for management.com
 www. Financial management. Com
 www. Financial ratios. com

NEW HORIZON COLLEGE Page 72