RATIO ANALYSIS

A
RESEARCH PROJECT REPORT
ON
ANALYSIS OF FINANCIAL STATEMENTS (RATIO ANALYSIS)
(an empirical study with special reference to G-CELL Company)

UNDER THE ESTEEMED GUIDENCE OFSUBMITTED BY

MBA- 4th SEM

UNIVERSITY ROLL NO
PAPER CODE-(CP-402)

IN PARTIAL FULFILLMENT FOR THE AWARD OF DEGREE

OFMASTER

OF BUSINESS ADMINISTRATION

ICL INSTITUTE OF MANAGEMENT & TECHNOLOGY

(Affiliated to Kurukshetra University, Kurukshetra)
(2011-2013).

RATIO ANALYSIS
ACKNOWLEDGEMENT
Gratitude is the hardest of emotions to express and one often does not find adequate
words to convey what one feels and trying to express it
The present project file is an amalgamated of various thoughts and experiences .The
successful completion of this project report would have not been possible without the help
and guidance of number of people and specially to my project guide .I take this opportunity
to thank all those who have directly and indirectly inspired, directed and helped me towards
successful completion of this project report.

I am also immensely indebted to my project guide, MR. for his/her illumining observation,
encouraging suggestions and constructive criticisms, which have helped me in completing
this research project successfully.

I also acknowledge with deep sense of gratitude and wholeheartedness to several other
people who also deserve much more than a mere acknowledgement for their exemplary
help and cooperation intended to me by them.

NAME

RATIO ANALYSIS
PREFACE
Practical training is an important part of management courses. Theoretical studies in
classroom are not sufficient to understand the functioning of complex and large sized
organization, managerial climate and the real problems coming in the way of
management of Man, Material, Machines and Money.
Practical training supplements the theoretical studies i.e. it covers what is left uncovered
in the classrooms. It offers an exposure to real practice of management in business
organization.
It exposes student to an invaluable treasure of experience.
In the forthcoming pages an attempt has been made to present a comprehensive report
concerning different aspects of my study. The overall knowledge gained by me will be
reflected in the report itself.

NAME
MBA 4th SEM
University Roll
No.

RATIO ANALYSIS

DECLARATION

I hereby declare that, the project entitled ANALYSIS OF FINANCIAL STATEMENTS

(RATIO ANALYSIS)OF GECLL COMPANYassigned to me for the partial fulfillment
of MBA degree from Kurukshetra University, Kurukshetra. The work is originally
completed by me and the information provided in the study is authentic to the best of my
knowledge.

This study has not been submitted to any other institution or university for the award of any
other degree.
MBA
University Roll No.

RATIO ANALYSIS

CERTIFICATE

This is to certify that NAME.. has completed the project entitled ANALYSIS OF
FINANCIAL STATEMENTS (RATIO ANALYSIS) OF GECLL COMPANYunder my
supervision. To the best of my knowledge, the report consists of result of the empirical
study conducted by the student. In my opinion, the work is of requisite standard expected
from an MBA student. Therefore, I recommend the same to be sent for evaluation to the
university.

ASSISTANT PROFESSOR

CONTENTS

RATIO ANALYSIS

1.

INTRODUCTION TO-6-31
1.1

INDUSTRY

1.2

PROJECT

2.

OBJECTIVES

OF

THE

STUDY

32-33
3.

RESEARCH METHODOLOGY

4.

ANALYSIS & INTERPRETATION

34-36
37-48

5.

FINDINGS
49-50

6.

LIMITATIONS OF STUDY

51-52

7.

SUGGESTIONS
53-54

8.

CONCLUSION

55-56

9.

BIBLIOGRAPHY
57

10. ANNEXURE

58-65

RATIO ANALYSIS

CHAPTER 1
INTRODUTION

RATIO ANALYSIS

INDUSTRY PROFILE
manufacturing and software development and services.
Despite the unprecedented global economic downturn, the Indian IT industry has weathered
the storm well, and will achieve sustainable growth Information technology (IT) is defined
as the design, development, implementation and management of computer-based
information systems, particularly software applications and computer hardware. Today, it
has grown to cover most aspects of computing and technology. The reason why it has
catapulted in importance is due to the improving accessibility, awareness and utility of
technology. It is a common fact that a countrys IT potential is paramount for its march
towards global competitiveness, healthy GDP and defense capabilities.
IT professionals perform a variety of duties ranging from data management, networking,
engineering computer hardware, database and software design, to the management and
administration of entire systems. With the already high penetration of conventional personal
computer and network technology, coupled with the growing convergence of information,
communication and entertainment, the industry is now keenly focused on the integration
with other technologies such as mobile phones, automobiles and televisions etc, thereby
increasing the demand for such jobs. The largest firms globally include IBM, HP, Dell and
Microsoft.
Performance
In India, it is important to make the distinction between IT and ITES (IT enabled services).
The latter refers to services delivered over telecom networks/ Internet to a range of external
business areas (Colloquially referred to as KPO and BPO) and is treated elsewhere on this
website (see ITES industry overview). Hence, we shall focus on the IT industry here by
limiting the discussion to electronics hardware going forward. India is expected to witness
an average 8% salary increase in 2010 and ~50% of companies have strong hiring plans,
according to a survey by global HR consultancy Mercer, giving yet another indication of
8

RATIO ANALYSIS
the high confidence levels among the countrys corporate houses after the economy staged a
faster-than-expected recovery from the slowdown.
While the larger players continue to lead growth, gradually increasing their share in the
industry aggregate, several high-performing small and medium enterprises have also stood
out.
Growth Potential
The strong demand for electronic hardware and software in India has been fuelled by a
variety of drivers including the high growth rate of the economy, emergence of a vast
domestic market catering to the new generation of young consumers, a thriving middleclass
populace with increasing disposable incomes and a relatively low-cost work force having
advanced technical skills.
Indeed, the Government has also identified growth of this sector as a thrust area as there
remains great expectation for significant growth given the fairly low levels of penetration of
technology among the 1.1 billion population; There were only 60 million Internet users in
2009, 7 million DVD players and personal computers were sold in 2008-09, and 11 million
new mobile subscribers were added every month in the same period. In this scenario there
is now a big opportunity to step up the production to gain higher global share besides
meeting the domestic demands
.
The Indian IT sector has also built a strong reputation for its high standards of software
development ability, service quality and information security in the foreign market- which
has been acknowledged globally and has helped enhance buyer confidence. The industry
continues its drive to set global benchmarks in quality and information security through a
combination of provider and industry-level initiatives and strengthening the overall
frameworks, creating greater awareness and facilitating wider adoption of standards and
best practices.
Future Prospects
The industry is likely to continue growing from strength to strength, as local players
incorporate best in class practices from global counterparts whilst retaining their edge in
terms of lower cost of labor and focused governmental investments.
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RATIO ANALYSIS
New graduates with degrees in related fields such as electrical engineering and computer
science can hope to achieve significant professional growth and a healthy remuneration
from companies looking to hire the best talent available, given the high proportion who
leave to pursue jobs in this sector oversea.
Post liberalization
Regulated VSAT links became visible in 1985. Desai (2006) describes the steps taken to
relax regulations on linking in 1991: Videsh Sanchar Nigam Limited (VSNL)
introduced Gateway Electronic Mail Service in 1991, the 64 kbit/s leased line service in
1992, and commercial Internet access on a visible scale in 1992. Election results were
displayed via National Informatics Centre's NICNET.
The Indian economy underwent economic reforms in 1991, leading to a new era of
globalization and international economic integration. Economic growth of over 6%
annually was seen during 1993-2002. The economic reforms were driven in part by
significant the internet usage in the country. The new administration under Atal Bihari
Vajpayeewhich placed the development of Information Technology among its top five
priorities formed the Indian National Task Force on Information Technology and
Software Development.
Wolcott & Goodman (2003) report on the role of the Indian National Task Force on
Information Technology and Software Development:
Within 90 days of its establishment, the Task Force produced an extensive background
report on the state of technology in India and an IT Action Plan with 108 recommendations.
The Task Force could act quickly because it built upon the experience and frustrations of
state governments, central government agencies, universities, and the software industry.
Much of what it proposed was also consistent with the thinking and recommendations of
international bodies like the World Trade Organization (WTO), International
Telecommunications Union (ITU), and World Bank. In addition, the Task Force
incorporated the experiences of Singapore and other nations, which implemented similar
programs. It was less a task of invention than of sparking action on a consensus that had
already evolved within the networking community and government.

10

RATIO ANALYSIS

The New Telecommunications Policy, 1999 (NTP 1999) helped further liberalize India's
telecommunications sector. The Information Technology Act 2000 created legal
procedures for electronic transactions and e-commerce.
Throughout the 1990s, another wave of Indian professionals entered the United States. The
number of Indian Americans reached 1.7 million by 2000. This immigration consisted
largely of highly educated technologically proficient workers. Within the United States,
Indians fared well in science, engineering, and management. Graduates from the Indian
Institutes of Technology (IIT) became known for their technical skills. The success of
Information Technology in India not only had economic repercussions but also had farreaching political consequences. India's reputation both as a source and a destination for
skilled workforce helped it improve its relations with a number of world economies. The
relationship between economy and technologyvalued in the western world
facilitated the growth of an entrepreneurial class of immigrant Indians, which further helped
aid in promoting technology-driven growth.

11

RATIO ANALYSIS

COMPANY PROFILE

ABOUT GCELL
Gcell, an independent design, branding and software agency.
A creative studio comprising of an international groups of professionals. Our method
applies proactive thought, designing, storytelling and captivating content to bring creative
ideas to life.
With great attention to detail, they provide unique design and software solution. Gcell, short
form for gray cell, is a kind of cell present in the gray matter of the brain which controls
perceptions such as creativity, imagination, inspiration, ingenuity and intelligence. Well, if
we look at these perceptions, they are exactly what Gcell stands for and thats how the name
Gcell Technologies came into being. The company having the ability to unleash the power
of imagination and combine it with the discipline of technology to create an altogether
unique solution for its clients. This is what Gcell is all about.
GCELL TECHNOLOGY
About the Organization
Type of company: Private LTD
Establishment: - 2009
Revenue: - 2, 62, 99, 158.00
Corporate office:Cell Technologies Pvt. Ltd.
Plot-8, Sector-32, Urban Estate,
Gurgaon, Haryana 122001, India Ph: 0124 4998850 Fax: 0124 -49988

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RATIO ANALYSIS

Organization Structure

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RATIO ANALYSIS

SERVICES
Cell provides service for complete design and software solution for start up to well
established organization.

Cell services includes:Design

Branding
Identity
Print
Websites
Art Direction
Advertisement
3d
Photography
Software
Software consultancy services
Software solution
Software development
Digital Marketing
Online advertisement
Social media Marketing
Search Engine optimization

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RATIO ANALYSIS

CLIENTS
Kingdoms of Dream
Wizcraft
Dance Caf
UCSKM School
Gaushal
Apra Auto
E.C pocktech Machine Pvt. Ltd.
A san Hostility co. pvt. Ltd
Sanskar world school
Apra CNG
Sid sam group
Vivek logani Associate
Apra true value
Royal Oak intl.
Architecture plus
Xeon intl.
Star public School
Achme intl.
Euro Intl. School.
Pepsi

15

RATIO ANALYSIS

APRA AUTO
APRA Auto (India) Pvt. Ltd. is one of the largest authorized Maruti dealership in India. The
company entered into auto business with one Showroom at 32nd Milestone Complex in the
year 2000. Since then, in this short span of time, APRAs automobile division has grown
into one of the largest automobile dealership for Sales, Service and Spares. With six
showrooms, six authorized dealer workshops, one True Value outlet and a world class
infrastructure, APRA Autos has more than 50% of Maruti Suzuki Sales & Service Market
Share.
Presently the company is one of the largest A+ dealers of Maruti Suzuki India Ltd. in Delhi
& NCR with an average sale of approximately 900 units per month. APRA Auto is proud to
be one of the major Auto Solution providers through its various outlets in Delhi & NCR.

Motto & Vision

Redefining Customer Satisfaction

These three words perfectly summarize the entire percept of APRA Auto. This is the
theme around which our company runs. Our company mottos uniqueness and objectivity
provide constant motivation to us and is a driving force among the employees and makes
them goal oriented while doing their work with dedication & sincerity.
The companys motto of Redefining Customer Satisfaction has enabled us
to grow exponentially in a very short span of our operations. The company believes in
building a very strong bondage with its customers & pro
viding services of Care beyond Compare.
16

RATIO ANALYSIS

Vision
At APRA Auto, our vision is clear and forthright: to be the leading authorized Maruti
dealership in India with the highest moral standards that can deliver exceptional
services to our customers.
As one of the leading authorized Maruti dealership in India, this means we're committed to:
Fulfilling and exceeding our clients requirements.
Ahead of market in product and service quality as well as cost competitiveness.
Acting as a responsible employer.
Achieving a productive and sustainable business growth with a focus on business
excellence and strategic expansion.

The Promoters
Mr. Anumod Sharma, Managing Director

Apra Group of Companies is spearheaded by Mr. Anumod Sharma, a

visionary and an illustrious entrepreneur having interests in wide ranging fields of
businesses. A Commerce & Management Graduate from Delhi University, he started out
with a chemical plant and later diversified into Hotels, Hospitality, Automobiles, Real
Estate and Handicrafts. He is regarded as a pioneer in promoting hospitality business in
Gurgaon. He is the motivating force behind the biggest entertainment extravaganzas of all
times, i.e. The KINGDOM OF DREAMS.
He, along with Wiz craft, has been instrumental in launching a string of successful F & B
outlets such as Fireballs, Axis, The Monk, Terroir, Bean Stalk, Ultra-Premium and HowzattIndias first Cricket themed Pub Brewery serving fresh style of Beer. Having a keen acumen
of the business world, the versatile ability of Mr. Anumod Sharma has enabled him to create
a separate niche in the Business community. Some of his notable ventures are: APRA
Auto, Kingdom of Dreams, APRA Motels and Galaxy Hotel
17

RATIO ANALYSIS

Mrs. Neelima Sharma, Director

She is a very devout humanitarian who believes in spreading of good deeds to everyone
with whom she A dynamic personality, Mrs. Neelima Sharma is an Arts graduate
from Delhi University. A very active lady, she is actively involved with all the business
activities of APRA group. A keen admirer of art and elegance, her aesthetic sense can be
seen in the tasteful interior decorations of various business activities of the group.
Comes in contact with. She is deeply associated with charitable trust Saksham for
imparting education to the underprivileged.

Mr. Rajinder Gupta, Director Finance

An astute, young & dynamic person, Mr. Rajinder Gupta is a commerce graduate
and holds a management degree in Finance. He has been associated with the APRA Group
for more than 19 years now and is actively involved into finance management of the group.
His vast experience includes hospitality, automobile & real estate fields.

Mr. Abhishek Sharma, Director

Next Generation successor, Mr. Abhishek Sharma is an Electrical Engineering

graduate from University of Technology, Sydney and a natural visionary of unparalleled
dimensions. His young & dynamic personality has brought innovation & freshness within
the APRA Group. The company has succeeded in erecting a state of the art CNG retrofitment division under his exceptional guidance. He spearheads various businesses of
the Group. He has brought new efficiency and initiated various new developments in the
company.

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RATIO ANALYSIS

The Group
APRA Group is a $ 400 million business concern having an all-inclusive presence in
Automobile, Hospitality, Entertainment and IT sectors. Some of the notable ventures of
Apra group are:

Kingdom of Dreams: A project which will definitely put Gurgaon in the elite list of top
tourist destinations of the world along with New Yorks Broadway and Moulin Rouge of
Paris. A cultural extravaganza on a scale never seen before. Developed as Little India, it
features an interesting confluence of Indian Art, Culture, Heritage, Crafts, Cuisines and
Performing Arts with all the frills of latest technological wizardry.

APRA Autos: Apra Auto (India) Pvt. Ltd. is one of the largest automobile dealers of Maruti
Suzuki India Ltd. With six showrooms, six authorized dealer workshops and a True Value
outlet and a world class infrastructure, APRA Autos has more than 50% of Maruti Suzuki
Sales & Service Market Share.

APRA Motels: Also known as 32nd Milestone Hotel at NH-8, Gurgaon. This hotel
complex has Restaurants, Discotheque, Rooms and other entertainment joints. This hotel
has been running successfully since its establishment in year 1991.

Galaxy Hotel: A Five star Deluxe Hotel well known for HOWZATT; Indias First Cricket
theme Pub & Brewery serving fresh style of Beer. The Hotel also boasts of Restaurant The
Monk which was recently voted by the guests as the best Chinese Restaurant in NCR.

Gcell Technologies: Gcell is the newest addition in the stable of APRA Group. Gcell is an
IT company providing complete IT solutions to customers across the Globe. One of the
most upcoming and fastest growing companies in the field of IT Solutions in India.

Real Estate: Real estate development projects such as The Galaxy and The Pacific
Square.
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RATIO ANALYSIS

Financial Statement Analysis

Introduction:
AFinancial Statement is a compilation of data, which is logically and consistently
organizedaccordingtoaccountingprinciples.Itspurposeistoconveyanunderstanding
ofsomefinancialaspectsofabusinessfirm.Itshowsapositionatamovementintime, as in the
case of balance sheet, or reveals a series of activities over a given period of time,
asinthecaseofanincomestatement.Financialstatementsarethemajormeansthrough

which

firms present their financial situation to stock holders, creditors and general public. The
majority of firms which include extensive financial statements in their annual reports,
which receive wide distribution.
Natureof financial statement Analysis:
FinancialStatementAnalysisconsistoftheapplicationofanalyticaltoolsandtechniques to the
data in financial statements in order to derive fromthem measurements and relationships
that are significant and useful fordecision making.
Theprocessoffinancialanalysiscanbedescribedinvariousways,dependingonthe
objectivestobeobtained.Financialanalysiscanbeusedasapreliminaryscreeningtool
intheselectionofstocksinthesecondarymarket.Itcanbeusedasaforecastingtoolfor
futurefinancialconditionsandresults.Itmay

be

usedasaprocessofevaluationand

diagnosisofmanagerial,operatingorotherproblemareas.Aboveall,financialanalysis
reducesrelianceonintuition,guessesandthusnarrowstheareasof

uncertaintythatis

presentinalldecisionmakingprocesses.Financialanalysisdoesnotlessontheneedfor judgment
but rather establishes a soundand systematic basis forits rational application
Sourcesof Financial Information:

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RATIO ANALYSIS
Thefinancialdataneededinfinancialanalysiscomefrommanysources.Theprimary
sourceisthedataprovidedbythefirmitselfinitsannualreportandrequireddisclosures.
Theannualreportcomprisestheincomestatement,thebalancesheet,andthestatement
ofcashflows,aswellasfootnotetothesestatements.Besidesthisinformationsuchas
themarketpriceofsecuritiespubliclytradedcorporationscanbefoundinthefinanciapressandthee
lectronicmediadaily.Thefinancialpressalsoprovidesinformationto

stock price indices

forindustries and formarket as a whole.

Objective and Importance of Financial Statements Analysis:

The primary objective of financial statements analysis is to understand and diagnose the
information contained in financial statement with a view to judge the profitability financial
soundness of the firm, and to make forecast about future prospects of the firm.
The purpose of analysis depends upon the person interested in such analysis and his object.
However, the following purposes or objectives of financial statements analysis may be
stated to bring out significance of such analysis:
1. To assess the earning capacity or profitability of the firm.
2. To assess the operational efficiency and managerial effectiveness.
3. To assess the short term as well as long term solvency of the firm.
4. To identify the reasons for change in profitability and financial position of the firm.
5. To make inter-firm comparisons.
6. To make forecasts about future prospects of the firm.
7. To assess the progress of the firm over a period of time.
8. To help in decision making and control.
9. To guide or determine the dividend action.
10. To provide important information for granting credit.

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RATIO ANALYSIS

Types of Financial Analysis:

We can classify various types of financial analysis into different categories depending
Upon

On the basis of material used

On the basis of time horizon

On the basis of entities used

On the basis of modus operandi

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RATIO ANALYSIS

PROCEDURE OF FINANCIAL STATEMENTS ANALYSIS:

Broadly speaking there are three steps involved in the analysis of financial statements.
These are
(i) Selection
(ii) Classification
(iii) Interpretation

The first step involves selection of information (data) relevant to the purpose of analysis
of financial statements. The second step involved is the methodical classification of the data
and the third step includes drawing of inferences and conclusions.
The following procedure is adopted for the analysis and interpretation of financial
statements.

The analyst should acquaint himself with principles and postulates of accounting.
He should know the plans and policies of the management so that he may be able
to find out whether these plans are properly executed or not.

The extent of analysis should be determined so that the sphere of work may be
decided. If the aim is to find out the earning capacity of the enterprise then analysis
of income statement will be undertaken. On the other hand, if the financial position
is to be studied then balance sheet analysis will be necessary.

The financial data given in the statements should be re-organized and re-arranged.
It will involve the grouping of similar data under same heads, breaking down of
individual components of statements according to nature. The data is reduced to a
standard form.

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RATIO ANALYSIS

A relationship is established among financial statements with the help of tools and
techniques of analysis such as ratios, trends, common size, funds flow etc.

The information is interpreted in a simple and understandable way. The

significance and utility of financial data is explained for helping decision-taking.

The conclusions drawn from interpretation are presented to the management in the
form of reports.

Limitations of Financial Statement Analysis:

Financial analysis is a powerful mechanism of determining financial strengths and
weakness of a firm. But, the analysis is based on the information available in the financial
statements. Thus, the financial analysis suffers from serious inherent limitations of financial
statements. The financial analyst has also be careful about the impact of price level changes,
windows dressing of financial statements, changes in the accounting policies of a firm,
accounting concepts and conventions, and personal judgment, etc. The readers are advised
to relate the limitations of financial statements as given in the previous chapter and also the
limitations of ratios as a tool of financial analysis as discussed in Ratio Analysis. Some of
the important limitations of financial analysis are, however, summed up as below:

It is only a study of interim reports.

Financial analysis is based upon only monetary information and nonmonetary factors are ignored.
It does not consider changes in price levels.
As the financial statements are prepared on the basis of a going concern, it
does not give exact position. Thus accounting concepts and conventions
cause a serious limitation to financial analysis.
Changes in accounting procedure by a firm may often make financial
analysis misleading.
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RATIO ANALYSIS
Analysis is only a means and not an end in itself. The analyst has to make
interpretation and draw his own conclusions. Different people may interpret
the same analysis in different ways.

ThePrincipal Tools ofAnalysis

Intheanalysisoffinancialstatements,theanalystcanhaveavarietyoftoolsavailable
fromwhichhecanchoosethebestsuitedtohisspecificpurpose.Thefollowingarethe

important

tools of analysis.
ThePrinciples Tools/Techniques ofFinancial Analysis:

Toolsof Financial
Analysis

Ratio
Analysis

Funds Flow
Analysis

Cash Flow
Analysis

25

Trend
Analy

FUND FLOW STATEMENT

Fundsflowanalysishasbecomeanimportanttoolintheanalyticalkitoffinancial
analysis,creditgrantinginstitutionsandfinancialmanagers.Thisisbecausethebalance
sheetofthebusinessrevealsitsfinancialstatusataparticularpointoftime.Itrevealsthe
changesinworkingcapitalposition.Ittells

about

thesourcesfromwhichtheworking

capitalwasobtainedandthepurposeforwhichitwasused. It bringsoutthechanges, which have

taken place behind the balance sheet.
Theinformationitcontainsintheselection,reclassificationandsummarizationofthe
datacontainedinprofitandlossaccountandbalancesheet,itisnowayreplacementof
eitherthesestatements.To

provideacomparativeviewofmovementoffundsbythe

statementofchangesinfinancialpositionispreparedfortheperiodcoveredbytheprofit and loss

account as well as the correspondingpreviousperiod.

CASH FLOW STATEMENT

Cashflowanalysisisastatement,whichmeasuresinflowsandoutflowsofcashon
accountofanytypeofbusinessactivity.Thecashflowstatementalsoexplainsreasons
forsuchinflowsandoutflowsofcash.Cashflowstatementmaybepreparedonthebasis
ofactualorestimateddata.Aprojectedcasharethe

wherecame

Sourcesofcashcanbebothinternalaswellasexternal.A

partofthestatement.
properplanningofcash

resourceswillenablethemanagementtohavecashavailablewheneverresourceswill
enablethemanagementtohavecashavailablewheneverneededandputittosome
profitableor productive use in case there is surplus cash available.

TREND ANALYSIS

Analystsmakeatrendanalysisofperformanceoverthepastfivetotenyearstogetan
overallpicture.Trendanalysisismadeinrespectofsales,costofsales,grossprofit,net
profit(beforetax),netprofit (aftertax),networth,debt,dividendpolicy,bonusand Rights issues,
return onnet worth, earnings per share, etc.

PURPOSE OF FINANCIAL STATEMENT ANALYSIS

To know the earning capacity or profitability.
To know the solvency.
To know the financial strengths.
To know the capability of payment of interest and dividend.
To know the trend of business.
To know the efficiency of management.

RATIO ANALYSIS
The term Ratio refers to the numerical and quantitative relationship between two items or
variables. This relationship can be exposed as

Percentages

Fractions

Proportion of numbers

Ratio analysis is defined as the systematic use of the ratio to interpret the financial
statements. So that the strengths and weaknesses of a firm, as well as its historical
performance and current financial condition can be determined. Ratio reflects a quantitative
relationship helps to form a quantitative judgment.

STEPS IN RATIO ANALYSIS

The first task of the financial analysis is to select the information relevant to the decision
under consideration from the statements and calculates appropriate ratios.

To compare the calculated ratios with the ratios of the same firm relating to the pas6t or
with the industry ratios. It facilitates in assessing success or failure of the firm.

Third step is to interpretation, drawing of inferences and report writing conclusions are
drawn after comparison in the shape of report or recommended courses of action.

BASIS OR STANDARDS OF COMPARISON

Ratios are relative figures reflecting the relation between variables. They enable analyst to
draw conclusions regarding financial operations. They use of ratios as a tool of financial
analysis involves the comparison with related facts. This is the basis of ratio analysis. The
basis of ratio analysis is of four types.

Past ratios, calculated from past financial statements of the firm.

Competitors ratio, of the some most progressive and successful competitor firm at the
same point of time.

Industry ratio, the industry ratios to which the firm belongs to

Projected ratios, ratios of the future developed from the projected or pro forma financial
statements

Ratios Are Useful For Several Parties Such As

1) Investors, both present as well as potential investors.

2) Financial analyst.
3) Mutual funds.
4) Stock broker and stock exchange authorities.
5) Government.
6) Tax department.
7) Competitors.
8) Research analysts and students
9) Companys management

10) Creditors and Suppliers

11) Lending Institutions Banks and Financial Institutions
12) Financial Manager
13) Other Interested parties like credit rating agencies etc

Nature of Ratio Analysis

Ratio analysis is a technique of analysis and Interpretation of financial statements. It is the
process of establishing and interpreting various ratios for helping in making certain decisions. It
is only a means of understanding of financial strengths and weaknesses of a firm. There are a
number of ratios which can be calculated from the information given in the financial statements,
but the analyst has to select the appropriate data and calculate only a few appropriate ratios. The
following are the four steps involved in the ratio analysis.

Selection of relevant data from the financial statements depending upon the objective of
the analysis.
Calculation of appropriate ratios from the above data
Comparison of the calculated ratios with the ratios of the same firm in the past, or the
ratios developed from projected financial statements or the ratios of some other firms or
the comparison with ratios of the industry to which the firm belongs.
CLASSIFICATIONS OF RATIOS
The use of ratio analysis is not confined to financial manager only. There are
different parties interested in the ratio analysis for knowing the financial position of a firm for
different purposes. Various accounting ratios can be classified as follows:
1. Traditional Classification
2. Functional Classification
3. Significance ratios

1.Traditional Classification
It includes the following.

Balance sheet (or) position statement ratio: They deal with the relationship between two
balance sheet items, e.g. the ratio of current assets to current liabilities etc., both the items
must, however, pertain to the same balance sheet.

Profit & loss account (or) revenue statement ratios: These ratios deal with the relationship
between two profit & loss account items, e.g. the ratio of gross profit to sales etc.,

Composite (or) inter statement ratios: These ratios exhibit the relation between a profit &
loss account or income statement item and a balance sheet items, e.g. stock turnover ratio,
or the ratio of total assets to sales.

2. Functional Classification
These include liquidity ratios, long term solvency and leverage ratios, activity
ratios and profitability ratios.

3. Significance ratios
Some ratios are important than others and the firm may classify them as primary
and secondary ratios. The primary ratio is one, which is of the prime importance to a concern.
The other ratios that support the primary ratio are called secondary ratios.

CHAPTER 2
OBJECTIVE
OF THE
STUDY

Objectives of the study

To evaluate the performance of the company by using ratios as a yardstick to measure the
efficiency of the company.
To have a first-hand experience of the functioning of a IT company.
To have a practical experience of the functioning of the Finance Department of a Gcell
Technologies Pvt. Ltd.
To study how financial management practices plays an important role in supporting other
activities of an integrated all functional area.
To understand the liquidity, profitability and efficiency positions of the company during
the study period.
To evaluate and analyze various facts of the financial performance of the company. To
make comparisons between the ratios during different periods

CHAPTER 3

RESEARCH
METHODOLOGY

RESEARCH METHODOLOGY
Research methodology is a way to systematically solve the research problem. It may be
understood as a science of studying how research is done scientifically. So, the research
methodology not only talks about the research methods but also considers the logic behind the
method used in the context of the research study.

Research Design:
Descriptive research is used in this study because it will ensure the minimization of bias and
maximization of reliability of data collected. The researcher had to use fact and information
already available through financial statements of earlier years and analyze these to make critical
evaluation of the available material. Hence by making the type of the research conducted to be
both Descriptive and Analytical in nature. From the study, the type of data to be collected and the
procedure to be used for this purpose were decided.

Study design and Methodology:Two types of data are collected, one is primary data and second one is secondary data. The
primary data were collected from the Department of finance, G-cell. The secondary data were
collected from the Annual journal of G-cell, G-cell website, etc.
The information is collected through secondary sources during the project. That information was
utilized for calculating performance evaluation and based on that, interpretations were made.

Sources of secondary data:

1. Most of the calculations are made on the financial statements of the company provided
statements.
2. Referring standard texts and referred books collected some of the information regarding
theoretical aspects.
3. Method- to assess the performance of he company method of observation of the work in
finance department in followed.

Sources of Data:
The sources of data are from the annual reports of the company from the year 2009 to 2012

Methods of Data Analysis

The data collected were edited, classified and tabulated for analysis. The analytical tools used in
this study.

Analytical Tools Applied

The study employs the following analytical tools:
Comparative statement.
Fund flow statement

 Cash flow statement

Ratio Analysis.

CHAPTER 4

DATA ANALYSIS
AND
INTERPRETATION

1 . CURRENT RATIO OF GCELL TECHNOLOGY.

Current ratio =

Current assets/Current liabilities

Year

2011-12

2010-11

2009-10

Current Asset

6,143.48

6,224.56

5,081.20

Current Liabilities

7,121.94

5,619.04

4,797.76

Current ratio

0.86

1.11

0.90

INTERPRETATION:
Generally accepted current ratio is 2:1. As above diagram and current ratio states that the
current ratio of GCELL TECHNOLOGY. for the last three year is less than 2:1 and it is
constantly decreasing. So current ratio of the Bank is not satisfactory because the ratio is much
below the accepted standard of 2:1. So it indicates lack of liquidity and shortage of funds. The
current ratio was1.11:1 in 2010-11, which has decreased to 0.86 in this year.

2. QUICK RATIO OFGCELL TECHNOLOGY.

Quick ratio = Liquid assets/Current liabilities
Year

2011-12

2010-11

2009-10

Liquid Assets

4415.10

4832.37

3982.14

Current Liabilities

7,121.94

5,619.04

4,797.76

Quick Ratio

0.62

0.86

0.83

INTERPRETATION
An acid test or quick ratio of 1:1 is considered satisfactory. As above diagram and calculation
shows that quick ratio of GCELL TECHNOLOGY is less than 1:1. So it is not satisfactory. So
Bank should maintain satisfactory level of quick ratio.

3. ABSOLUTE LIQUIDITY RATIO OF GCELL TECHNOLOGY.

Absolute liquid ratio = Absolute liquid assets/Current liabilities

Year

2011-12

2010-11

2009-10

Absolute liquid assets

614.64

475.17

635.61

Current liabilities

7,121.94

5,619.04

4,797.76

Absolute liquid ratio

0.086

0.084

0.013

INTERPRETATION
As above calculation and diagram stated that absolute liquidity ratio is less than 1:1 and it is
constantly increasing in three year 2010, 2011, and 2012. So it shows that there is adequacy of
cash and short-term securities.

4. STOCK TURNOVER RATIO OF GCELL TECHNOLOGY.

Inventory turnover ratio = Net Sales/Average stock or inventory
Year

2011-12

2010-11

2009-10

Net Sales

23,494.41

18,516.33

13,081.08

Average Inventory

1555.92

1033.85

898.42

Inventory turnover ratio

15.10

17.91

14.56

INTERPRETATION
The conversion of stock into sales is measured by inventory turnover ratio. As above
calculation and diagram shows that inventory turnover ratio of GCELL TECHNOLOGY is
satisfactory in 2010-11 but not satisfactory in 2011-12.

5. DEBTOR TURNOVER RATIO OF GCELL TECHNOLOGY.

Debtors Turnover Ratio = Net credit sales/Average debtors
Year

2011-12

2010-11

2009-10

Net Credit Sales

23,000.41

16,406.33

10,080.81

Average Debtors

5005.13

3003.52

4000.42

Debtors turnover ratio

4.59

5.46

2.52

INTERPRETATION:
These ratios also indicate the weak position of Debtors turnover ratio is increasing 2010-11and
decrease in the year2011-12.

6. WORKING CAPITAL TURNOVER RATIO IN GCELL TECHNOLOGY.

Working Capital Turnover Ratio = Cost of goods sold/Working Capital

Year

2011-12

2010-11

2009-10

COGS

47949.42

41234.96

26402.71

Working Capital

978.46

605.52

283.44

Working capital turnover ratio

49

68

93

INTERPRETATION
This ratio also indicate the weak position of working capital but as compare to 2009-10,working
capital ratio (2010-11) in GCELL TECHNOLOGY is much better. So this ratio indicates the
underutilization of working capital

7. FIXED ASSETS TURNOVER RATIO OF GCELL TECHNOLOGY.

Fixed Assets Turnover Ratio =

Cost of Goods Sold/Net Fixed Assets

Year

2011-12

2010-11

2009-10

COGS

47949.42

41234.96

26402.71

Net fixed assets

12,718.68

10,710.31

9,296.73

Fixed assets turnover ratio

3.77

3.85

2.84

INTERPRETATION
This ratio is particular importance in manufacturing concern where the investment in fixed
assets is quite high. If there is fall in this ratio, it will show that assets have not been used as
efficiently, as they had been used in the previous year. If we see the fixed assets of GCELL
TECHNOLOGY in the current year, it is highest among the last three years. So it indicates that
there is better utilization of fixed assets in 2011-12.

8. NET PROFIT RATIO OF GCELL TECHNOLOGY.

Net profit Ratio = Net profit/Net sales
Year

2011-12

2010-11

2009-10

Net Profit

3,519.61

2,774.26

991.57

Net Sales

23,494.41

18,516.33

13,081.08

Net Profit Ratio

0.15%

0.15%

0.07%

INTERPRETATION
Above diagram and calculation shows that Bank is continuously increasing its profit percentage.
It is in a very good situation. Since 2009-10 the profit ratio is increasing which shows that
GCELL TECHNOLOGY is in better condition from the previous situation. Management should
consider these things so that GCELL TECHNOLOGY moves on with a better profit margin.

9. COMARATVE BALANCE SHEET OF GCELL TECHNOLOGY

YEAR
TOTAL ASSEST
TOTAL
LIABILITIES

2011-12
12,718.68
12,718.68

2010-11
10,710.38
10,710.38

2009-10
9,296.73
9,296.73

INTERPRETATION:
To show the above comparative Balance Sheet of GCELL Technology Current Assets are
increase among years and to be best in among three years. And The current Liability of the
company is also increased in the 2012 its means the company is not a strong position.

10. FUND FLOW STATEMENT OF GCELL TECHNOLOGY

YEAR
Fund From Operation

2011-12
5651.23

2010-11

2009-10

3852.42

1343.21

INTERPRETATION: To Show the above Fund flow statement is also increased in the year
2012 in the comparison of the other years 2010and 2011. So to be show the fund flows from year
to year.

11. CASH FLOW STATEMENT OF GCELL TECHNOLOGY

YEAR

2011-12

2010-11

2009-10

Cash & cash

6869.65

6006.53

3584.09

equivalent

INTERPRETATION:
Cash flow statement tells us there are three activities of the fund flow statement and net flow
from OA is also to be increased and also the fund from IA and FA is also to be increased in year
to year.

CHAPTER 5
FINDINGS

FINDINGS

Current ratio is decrease in 2011 to a compression of 2010 of GCELL TECHNOLOGY. Maintains

0.86:1 Current Ratio in current financial year but Ideal Current Ratio is 2:1. So, GCELL
TECHNOLOGY. Concern on it.
GCELL TECHNOLOGY. Net working capital ratio in 2011 is weak compare to 2010.
Since 2009-10 the profit ratio is increasing which shows that GCELL TECHNOLOGY. is in
better condition from the previous situation.
Fixed assets of GCELL TECHNOLOGY. In the current year, it is highest among the last three
years. So it indicates that there is better utilization of fixed assets in 2011-12.
GCELL TECHNOLOGY expands more Funds on Current Assets in Comparison of Fixed Assets.
To find out the comparative Balance Sheet of GCELL Technology Current Assets are increase
among years and to be best in among three years. And The current Liability of the company is
also increased in the 2012 its means the company is not a strong position.
To find out the Fund flow statement is also increased in the year 2012 in the comparison of the
other years 2010and 2011. So to be show the fund flows from year to year.
Cash flow statement tells us there are three activities of the fund flow statement and net flow
from OA is also to be increased and also the fund from IA and FA is also to be increased in year
to year.

CHAPTER 6
LIMITATIONS

LIMITATIONS
1. The study provides an insight into the financial, personnel, marketing and other aspects
of Gcell Technologies Pvt. Ltd. Every study will be bound with certain limitations.
2. The below mentioned are the constraints under which the study is carried out.
3. One of the factors of the study was lack of availability of ample information. Most of the
information has been kept confidential and as such as not assed as art of policy of
company.

CHAPTER -7
RECOMMENDATIONS

RECOMMENDATIONS

So far GCELL TECHNOLOGY. has done good job. It has brilliant team of management
with best technology available. It also has excellent growth over a number of years.
But I like to submit few suggestions, which would useful to improve financial
position further.

GCELL TECHNOLOGY. Should increase its capacity utilization. It should work full
capacity to minimize its cost of production. With this increase in capacity utilization, the
total cost will spread over more units by decreasing the per unit cost.

GCELL TECHNOLOGY. Should maintain its liquidity of cash in business.

The purpose of the analysis is to be identifying a good project, not to select the best
financing option.

Financing will help it to earn higher amount of profit, and higher profit help in attracting more
and more customer.

There is a great need for effective management of working capital in any firm. There is no
precise way to determine the exact amount of gross or net working capital for any firm.

CHAPTER -8
CONCLUSION

CONCLUSION

The companys overall position is at a good position. Particularly the current years position is
well due to raise in the profit level from the last year position. In previous year company is
establishment is new but in 2011-2012company is growing its earn good net profit.
Its financial position is now good in future company earns more and more profit so it clear show
that in report. Now business is growing of G-cell technology so its financial position is also
growing.

BIBILIOGRAPHY

1. Annual report of G-Cell 2009-11

Reference Books:
Financial Management- Ninth Edition, I M Pandey (1983)/Page no.517 to 528
Sharma & Gupta : Management Accounting
Rastogi R P Financial Management (Galgotia 2000, 3rd edition.)/page no.59 to 71
Chandra. P : Financial Management Theory & practice
Khan & Jain : Financial Management (3rd edition) page no. 4.1 to 4.33

Reference websites:
http://www.apraauto.com/About-Us.aspx, 9feb.2013

http://www.gcell.in, 9feb.2013

ANNEXURE

PROFIT AND LOSS ACCOUNT OF GCELL TECHNOLOGY

Mar '2011-12
12 mths

Mar '2010-11
12 mths

Mar '2009-10
12 mths

25,586.43
2,092.02
23,494.41
548.15
202.23
24,244.79

20,323.63
1,807.30
18,516.33
285.09
23.69
18,825.11

14,668.13
1,587.05
13,081.08
132.65
-156.29
13,057.44

16,604.88
143.93
1,445.56
98.33

12,461.56
120.97
1,199.85
96.92

9,208.71
98.69
1,024.52
75.36

1,439.26

1,109.96

264.21

165.83

-59.55

-42.83

20,240.46
Mar '11
12 mths
Operating Profit
3,456.18
PBDIT
4,004.33
Interest
70.86
PBDT
3,933.47
Depreciation
413.86
Other Written Off
0.00
Profit Before Tax
3,519.61
Extra-ordinary items
0.00
PBT (Post Extra-ord 3,519.61

15,523.22
Mar '10
12 mths
3,016.80
3,301.89
156.85
3,145.04
370.78
0.00
2,774.26
72.49
2,846.75

11,640.24
Mar '09
12 mths
1,284.55
1,417.20
134.12
1,283.08
291.51
0.00
991.57
48.97
1,040.54

Items)
Tax
Reported Net Profit
Total Value Addition
Preference Dividend
Equity Dividend
Corporate
Dividend

857.51
2,662.10
3,635.58
0.00
706.08
96.56

759.00
2,087.75
3,061.66
0.00
549.52
74.23

199.69
836.78
2,431.53
0.00
278.83
33.23

Tax
Per share data (annualised)
Shares in issue (lakhs) 5,872.47
Earning Per Share 45.33

5,659.08
36.89

2,726.16
30.69

(Rs)
Equity Dividend (%)
Book Value (Rs)

190.00
138.02

100.00
191.91

Income
Sales Turnover
Excise Duty
Net Sales
Other Income
Stock Adjustments
Total Income
Expenditure
Raw Materials
Power & Fuel Cost
Employee Cost
Other Manufacturing
Expenses
Selling and

Admin 0.00

Expenses
Miscellaneous
Expenses
Preoperative

1,947.76
Exp 0.00

Capitalised
Total Expenses

230.00
175.04

BALANCE SHEET OF GCELL TECHNOLOGY

Mar '2011-12

Mar '2010-11

Mar '2009-10

12 mths

12 mths

12 mths

Total Share Capital

293.62

282.95

272.62

Equity Share Capital

293.62

282.95

272.62

Share Application Money

33.97

8.01

0.00

Preference Share Capital

0.00

0.00

0.00

Reserves

9,985.80

7,527.60

4,959.26

Revaluation Reserves

0.00

11.67

12.09

Networth

10,313.39

7,830.23

5,243.97

Secured Loans
Unsecured Loans

407.23
1,998.06

602.45
2,277.70

981.00
3,071.76

Total Debt

2,405.29

2,880.15

4,052.76

Total Liabilities

12,718.68

10,710.38

9,296.73

Mar '11

Mar '10

Mar '09

12 mths

12 mths

12 mths

Gross Block

6,227.72

4,866.18

4,653.66

Less: Accum. Depreciation

2,841.73

2,537.77

2,326.29

Net Block

3,385.99

2,328.41

2,327.37

Capital Work in Progress

985.86

1,374.31

886.96

Investments

9,325.29

6,398.02

5,786.41

Inventories

1,694.21

1,188.78

1,060.67

Sundry Debtors

1,354.72

1,258.08

1,043.65

Cash and Bank Balance

614.64

475.17

635.61

Total Current Assets

3,663.57

2,922.03

2,739.93

Loans and Advances

2,479.91

2,034.47

1,402.45

Fixed Deposits

0.00

1,268.06

938.82

Total CA, Loans & Advances

6,143.48

6,224.56

5,081.20

Deffered Credit

0.00

0.00

0.00

Current Liabilities

5,116.06

3,822.50

3,520.20

Provisions

2,005.88

1,796.54

1,277.56

Total CL & Provisions

7,121.94

5,619.04

4,797.76

Net Current Assets

-978.46

605.52

283.44

Miscellaneous Expenses

0.00

4.12

12.55

Total Assets

12,718.68

10,710.38

9,296.73

Contingent Liabilities

2,615.41

2,020.79

1,220.39

Sources Of Funds

Application Of Funds

Comparative balance sheet of GCELL TECHNOLOGY

As on 31 december2010 to 2012
ASSEST

December

31ST IN

Trend

CRORE

percentages
(base year2010

Particular

2012

2011

2010

2010

2011

2012

Cash & Bank

616.64

475.17

635.61

100

77.05

103.08

Sundry debtors

1354.72

1258.08

1043.65

100

92.87

77.04

Inventory

1694.21

1188.78

1060.67

100

70.16

62.60

Total CA

3663.57

2922.03

2739.93

100

79.75

74.78

Loan & Adv.

2479.91

2034.47

1402.45

100

82.03

56.55

FD

1000

1268.06

938.82

100

126.86

93.89

Total CA

6143.48

6224.56

5081.20

100

101.32

82.70

CURRENT
ASSEST

FIXED ASSETS

Land

500

500

500

100

100

100

Building

1500

1350

1260

100

90

84

Plant& Mach.

1500

1350

1250

100

90

83.34

Total F.Assets

3500

3200

3010

100

91.42

88.86

12,718.68

10,710.38

9,296.73
100

84.02

73.09

Total assets
CL

5116.06

3822.50

3520.20

100

74.71

68.80

Provision

2005.88

796.54

1277.56

100

39.72

63.70

Total Lib.

12718.68

10710.3

9296.73

100

84.20

73.90

Statement of Fund from Operations

Particulars

2012

Rs

2011

Rs

2010

Rs

Net profit

3519.61

3519.61

2774.24

2774.24

991.87

991.87

Add: Dep.

413.86

370.78

291.51

Preliminary Exp.

1947.76

Other written off

0.00

264.31
2361.62

0.00

5881.23
Less: dividend
Fund From Operation

230

230
5651.23

165.83
635.09

0.00

4044.42
190

190
3852.42

451.34
1443.21

100

100
1343.21

Cash flow Statement

Particulars

2012

Rs

2011

Rs

2010

Rs

A.Cash flow from

OA:
Net profit BT

3519.61

2846.75

1040.54

Add: Dep.

2841073

2537.77

2326.29

Provision

2005.88

8367.19

1796.54

7181.06

1277.56

4644.40

Less: tax paid

(2092.02)

(1807.30)

(1587.05)

Net OA

6275.17

5373.76

3057.55

B.Cash flow from

IA:
Interest

70.86

156.85

134.12

Dividend

230

300.86

190

346.85

100

234.12

293.62

293.62

285.95

285.95

272.62

272.62

C. Cash flow from

FA:
Issue of capital

Cash & cash

equivalent

6869.65

6006.53

3584.09