INTRODUCTION

Finance is the master-key which provide access to all the resources employed in
manufacturing activity. Financial management is concerned with procurement
and use of funds. Its main aim is to use business funds in such a way that the
firms value/earning are maximized. The pros and cons various decisions have
to look into before making a final selection. Financial management provides a
framework for selecting a proper course of action and deciding a viable
commercial strategy. The main objective of a business is to maximize the
owners economic welfare.

CHARACTERISTICS OF A FINANCIAL STATEMENT

The financial Statement should have the following characteristics:

Depict true financial position: The financial Statements are prepared in

such a way that it should depict a true and fair view of the financial
position of the concern.

Effective presentation: The financial should be presented in a simple

and easily assailable manner so as to make them easily understandable,
even to a layman.

Attractive: Financial Statement should be prepared in such a manner that

it should attract the eyes of the reader.

Comparability: The result of the financial Statement should be

comparable. It should be presented in such a way that it can be compared
the previous year Statement.

Analytical representation: The information should be analyzed. A

relationship can be established in similar type of information. This should
be helpful in analysis.

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IMPORTANCE OF FINANCIAL STATEMENT

The financial Statements are mirrors which reflect the financial position and
operating strength or weakness of the concern. The utility of financial
Statements to different parties are the following:

Management: Management is able to exercise cost control through

financial Statements and decide the course action to be adopted in future.

Creditors: The trade creditors are to be paid in a short span of time. This
liability is met out of current assets. The creditors will be interested in the
short term solvency of the concern.

Bankers: The banker is interested to see that the loan amount is secure
and customer is able to pay the interest payment by the concern.

Government: The financial Statements enable the government to find out

whether the business is following various regulations or not.

Investors: The investors are interested in the security of the principal

amount of loan and regular interest payment by the concern. The
investors will analyze the present financial position and study the future
prospects of the concern.

Others: Trade associations, stock exchange and public at large may also
analyze the financial Statements to judge the financial position of
different concern.

FINANCIAL STATEMENTS ANALYSIS

The financial Statement provides rich information about the operational results
of a business units and much can be learnt from a careful examination of these
Statements. Financial Statements are prepared primary for decision making. The
Statements are not an end in themselves, but are useful in decision making. The

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purpose of financial analysis is to estimate the earning capacity of the business
and also be assessing the financial position and financial performance of the
business.

Financial analysis (also referred to as financial Statement analysis or accounting

analysis or accounting analysis) refers to an assessment of the viability,
stability, profitability of a business, sub-business or project. Analysis of
financial Statement means such a treatment of the information contained in two
Statements as to afford a full diagnosis of the profitability and financial position
of the firm.

OBJECTIVES OF FINANCIAL ANALYSIS

To estimate the earning capacity of the firm.

To gauge the financial position and financial performance of the firm.

To determine the long term liquidity of the funds.

To judge the solvency of the firm.

To determine the debt capacity of the firm.

To decide about the future prospects of the firm.

To know the progress of the firm.

To measure the efficiency of operations.

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LIMITATIONS OF FINANCIAL STATEMENT ANALYSIS

The analysis of financial Statement has certain limitations also.

The figures drawn from Statement of just one year have limited use and
value. So, it will be dangerous to depend upon them only.

The basic nature of financial Statement is historic. Past can never be

100% representive of the future. Hence, future course of business events
should be forecasted and interpreted in the context.

The result of the analysis of financial Statement should not be taken as an

indication of good or bad management. The ratios or other figures explain
only probable State of events.

Any change in the method or procedure of accounting mars the utility of

such analysis. The figures of different financial Statements lose the
characteristics of comparability.

An analyst should also be cautious from window dressing in the accounts.

It does not disclose reason for changes.

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TYPES OF FINANCIAL ANALYSIS

Distinction between the different types of financial analysis can be made either
on the basis of material used for the same or according to the modus operandi of
the analysis or the object of the analysis.

Chart No: 1.1 a

Types of financial
analysis

According to According to modus According to objective of

material used operandi analysis

External analysis Horizontal analysis Long term analysis

Internal analysis Vertical analysis Short term analysis

External analysis: Financial analysis of financial Statement is made by

those who do not have access to the detailed accounting records of the
company, i.e., banks, creditors and general public.

Internal analysis: Such analysis is made by the finance and accounting

department to help the top management. These people have direct reach to
the relevant financial records.

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 Horizontal analysis: When the financial Statements for a number of years
are reviewed and analyzed, the analysis is called horizontal analysis. The
presentation of comparative Statements is an example of horizontal analysis.

Vertical analysis: Vertical analysis is also known as static analysis. When

ratio is calculated from the balance sheet of one year, it is called vertical
analysis. It is not very useful for long term planning as it does not include the
trend study for future.

Long term analysis: In the long term the company must earn a minimum
amount sufficient to maintain a suitable rate of return on the investment to
provide for the necessary growth and development of the company and to
meet the cost of capital.

Short term analysis: The short term analysis of financial Statement is

mainly concerned with the working capital analysis. In the short term a
company must have ample funds readily available to meet its current needs
and sufficient borrowing capacity to meet the contingencies.

TOOLS OF FINANCIAL ANALYSIS

The analysis of financial Statements consists of a study of relationship and

trends to determine whether or not the financial position of the concern and its
operating efficiency have been satisfactory. The analytical tools generally
available to an analyst for this purpose are as follows:

Comparative financial Statements.

Common size Statements.

Trend analysis.

Ratio analysis.

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Comparative financial Statements.

The preparation of comparative financial and operating Statements is an

important device of horizontal financial analysis. Financial data becomes more
meaningful when compared with similar data for previous period or a number of
prior periods. Generally, balance sheet and income statement which alone are
prepared in a comparative form because they are the most important statements
of financial position. In these statement figures for two or more periods are
placed side by side to facilitate comparison. These statements render
comparison between two periods of time and exhibit the magnitude and
direction of historical changes in the operating results and financial status of a
business. Financial statements of two or more firms may also be compared for
drawing inferences. This is known as inter-firm comparison. The statement also
provides for columns to indicate the change from one year to another in
absolute terms and also in percentage form.

Common size Statements.

Comparative Statements that give only the vertical percentage ratio for financial
data without giving rupee values are known as common size Statements. A
common size Statement shows the relation of each component to the whole. It is
useful in vertical financial analysis and comparison of two business enterprises.
Each item of assets is converted into percentage to total liabilities and capital
fund. Thus the whole balance sheet is converted into percentage form. Such
converted balance sheet is known as common size balance sheet. When balance
sheets of the same concern for several years or when balance sheets of two or
more than two concerns for the same year are converted into percentage form
and prescribed form and presented as such, they are known as comparative
common size balance sheets. In balance sheet the total of assets or liabilities is
taken as 100 and all the figures are expressed as percentage of the total.

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Ratio Analysis:

Ratio analysis is a widely-use tool of financial analysis. It can be used to

compare the risk and return relationships of firms of different sizes. It is defined
as the systematic use of ratio to interpret the financial statements so that the
strengths and weakness of a firm as well as its historical performance and
current financial condition can be determined. The term ratio refers to the
numerical or quantitative relationship between two items and variables. These
ratios are expressed as (i) percentages, (ii) fraction and (iii) proportion of
numbers. These alternative methods of expressing items which are related to
each other are, for purposes of financial analysis, referred to as ratio analysis. It
should be noted that computing the ratios does not add any information not
already inherent in the above figures of profits and sales. What the ratio does is
that they reveal the relationship in a more meaningful way so as to enable equity
investors; management and lenders make better investment and credit decisions.

Ratios used for the analysis:

Current Ratio:
The current ratio is the ratio of total current assets to total current liabilities.
It is calculated by dividing current assets by current liabilities:

Current Asset
Current Ratio =
Current Liabilities

The current assets of a firm, as already stated, represent those assets which
can be, in the ordinary course of business, converted into cash within a short
period of time, normally not exceeding one year and include cash and bank
balances, marketable securities, inventory of raw materials, semi-finished
(work-in-progress) and finished goods, debtors net of provision for bad and
doubtful debts, bills receivable and prepaid expenses. The current liabilities
defined as liabilities which are short-term maturing obligations to be met, as

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 originally contemplated, within a year, consist of trade creditors, bills
payable, bank credit and provision for taxation, dividends payable and
outstanding expenses.

Quick or Liquid Ratio

The liquidity ratio is a measure of liquidity designed to overcome this defect
of the current ratio. It is often referred to as quick ratio because it is a
measurement of a firms ability to convert its current assets quickly into cash
in order to meet its current liabilities. Thus, it is a measure of quick or acid
liquidity. Generally speaking quick ratio of 1:1 is considered satisfactory as a
firm can easily meet all current claims.

Quick/Liquid Assets
Quick Ratio =
Current Liabilities

Cash Ratio
This ratio is also known as cash position ratio or super quick ratio. It is a
variation of quick ratio. This ratio establishes the relationship absolute liquid
asserts and current liabilities. Absolute liquid assets are cash in hand, bank
balance and readily marketable securities. Both the debtors and bills
receivable are excluded from liquid assets as there is always an uncertainty
with respect to their realization. In other words, liquid assets minus debtors
and bills receivable are absolute liquid assets. In this form of formula:

Cash in hand & at bank+Marketable securities

Cash Ratio =
Current Liabilities

Debt Equity Ratio

The relationship between borrowed funds and owners capital is a popular
measure of the long-term financial solvency of a firm. The relationship is
shown by the debt-equity ratios. This ratio reflects the relative claims of

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 creditors and shareholders against the assets of the firm. The relationship
between outsiders claims and owners capital can be shown in different
ways and, accordingly, there are many variants of the debt-equity ratio.
Total debt
Debt to Equity Ratio =
Total equity

Equity = Share Capital + Reserves and Surplus

Proprietary Ratio
Proprietors funds mean the sum of the paid-up equity share capital plus
preference share capital plus reserve and surplus, both of capital and revenue
nature. From the sum so arrived at, intangible assets like goodwill and
fictitious assets capitalized as Miscellaneous expenditure should be
deducted. Funds payable to others should not be added. It may be noted that
total tangible assets include fixed assets, current assets but exclude fictitious
assets like preliminary expenses, profit & loss account debit balance etc.

Shareholders funds
Proprietary Ratio =
Total Assets

Return on Equity Ratio

This ratio indicates the amount of net income returned as a percentage of
shareholders funds. Return on equity measures a corporations profitability
by revealing how much profit a company generates with the money
shareholders have invested.

Net Profit
Return on Equity Ratio =
Shareholders Funds

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 Working Capital Turnover Ratio
This ratio indicates the efficiency or otherwise in the utilization of short tern
funds in making sales. Working capital means the excess of current over the
current liabilities. In fact, in the short run, it is the current liabilities which
play a major role. A careful handling of the short term assets and funds will
mean a reduction in the amount of capital employed, thereby improving
turnover. The following formula is used to measure this ratio:

Net Sales
Working capital turnover ratio =
Net Working Capital

Working Capital = Current Asset Current Liability

Return on total Assets Ratio

Return on total assets is a ratio that measures a companys earnings before
interest and taxes against its total net assets. The ratio is considered an
indicator of how effectively a company is using its assets to generate
earnings before contractual obligations must be paid. The following is used
for measurement of the ratio.
Net Profit
Return on total Assets Ratio =
Total Assets

Current Asset Turnover Ratio

Current assets turnover indicates that the current assets are turned over in the
form of sales more number of times. A high current assets turnover ratio
indicates the capability of the organization to achieve maximum sales with
the minimum investment in current assets. Higher the current ratio better will
be the situation.
Net Sales
Current Asset Turnover Ratio =
Current Asset

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 Total Asset Turnover Ratio
The total asset turnover ratio measures the ability of a company to use its
assets to efficiently generate sales. The ratio considers all assets, current and
fixed. Those assets include fixes assets, like plant and equipment, as well as
inventory, accounts receivable, as well as any other current assets.

Net Sales
Total Asset Turnover Ratio =
Total Asset

Gross Profit Ratio

Gross profit ratio shows the gap between revenue and trading cost. Normally
the gross profit ratio should remain the same from year to year, because of
sales will normally vary directly and in the same proportion with sales. A
ratio of 25% to 30% may be considered good.
Gross Profit
Gross Profit Margin = *100
Sales

Net Profit Ratio

The profit margin is indicative of managements ability to operate the
business with sufficient success not only to recover from revenues of the
period, the cost of merchandise or services, the expenses of operating the
business and the cost of borrowed funds, but also a margin of reasonable
compensation to the owners for providing their capital at risk.

Net Profit
Net Profit Ratio = *100
Net Sales

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TITLE OF STUDY

A STUDY ON FINANCIAL PERFORMANCE ANALYSIS WITH SPECIAL

REFERENCE TO PANCHAMI DISTRIBUTORS, MANGALURU

STATEMENT OF THE PROBLEM

In this study it has been imparted the knowledge about the financial functions
that made an important role in the business, and also the different types of
financial analysis viz., balance sheet, ratio analysis, fundamental analysis of
fund flow and fact sheets.

NEED FOR THE STUDY

Finance is very essential in smooth running of the business. No business can

stand long without having proper resources and application of finance. For the
effective attainment of business goals, the organization has to effectively
manage their finance. This leads them to attain their business objective. During
the past five years of time, the business world had to face economic conditions
like recession. This might have role in the net result of the financial
performance of the company. But, the study made sincere efforts to understand
the financial efficiency of the organization.

A financial performance analysis may provide the following benefits:

Identify financial strength and weakness and evaluate financial

performance in relation to the industry performance as a whole and
acquire useful information concerning competitors.

Historical financial ratio analysis can be used as an effective preliminary

step in preparing a budget or in making forecast.

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 Evaluate past performance and set objectives for future performance, also

provide an ongoing means to evaluate a companys performance

financially.

A greater awareness of financial Statements and their interrelationship

can be lead to improved profitability or cash flow.

OBJECTIVE OF THE STUDY

To study the overall financial performance of Panchami Distributors.

To access the financial strength and weakness of the organization.

To measure the capital structure of the company.

To understand the profitability position of the firm.

To have a comparative study about the balance sheet of various years.

SCOPE OF THE STUDY

The project titled A study on financial performance of Panchami Distributors

has been particularly intended to analyze the financial strength, weakness and
utilization of resources in various field of application. The researcher can also
evaluate the trend of income, operating profit, expenditure and this helps to
reduce its expenditure in order to come up with good performance.

RESEARCH METHODOLOGY

Research methodology is the method used to collect data from the various
source. Research is a careful investigation or the enquiry especially through
search for new facts in any branch of knowledge. The technique used for
analysis was Ratio Analysis, Comparative and Common Size Statements and
Trend Analysis. The source of data collected for the study is from annual
reports of Panchami Distributors.

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METHOD OF DATA COLLECTION

There are mainly two types of methods used in methodology. The data can be
collected through:

PRIMARY DATA:

The primary data are collected mainly through direct discussion with
officials. Having formal and informal discussion with officer and other
officials at various levels.

SECONDARY DATA:

The secondary data are obtained from website, annual report of the
organization, published sources and company articles. Data analyzed with
the help of statistical techniques.

LIMITATIONS OF THE STUDY

Time available for the project work is limited. It will affect the entire

study.

The study is mostly based on secondary data, so errors are possible.

Lack of information.

This study is restricted for a period of five year.

Inter comparison among other similar companys not possible in this

study.

The companys higher officials were not allowed to meet in person and the
companys data was kept confidential among them

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INDUSTRY PROFILE

The consumer electronics industry manufactures and distributes everything

from telephones, stereo components, televisions, alarm clocks, and calculators
to digital cameras, video cameras, VCRs, and DVD and MP3 players-basically,
everything you see when you go into a Best Buy or Circuit City store. (Some
industry observers also include desktop and laptop PC manufacturers as part of
the industry.) Needless to say, consumer electronics is big business. In 2005, in
the U.S. alone, consumers spent more than $75 billion on consumer electronics
products, 8 percent more than in 2004.
The industry employs a host of engineers, designers, marketers, salespeople,
customer service reps, and finance gurus to continually improve familiar
products as well as come up with the next big must-have gadget. Although
much of the actual manufacturing of consumer electronics products is done in
Asia and other low labour-cost locations, there are many career opportunities in
the industry in the United States. On the technical side, opportunities exist for
software and electronics engineers, quality assurance engineers, industrial
designers, manufacturing design engineers, and IT professionals. If you're a
people person or if you can design a marketing campaign, close a distribution
deal with a major retail chain, write marketing copy, or help a confused
consumer understand a complex product, consumer electronics companies may
be good places for you, too.
You can earn your stripes at a multinational corporation like Samsung or
Mitsubishi, where big money backs big products such as high-definition
television (HDTV) and smart phones (mobile handsets with advanced operating
systems and powerful processors). Or you can try your hand at a start-up that's
pushing the consumer-electronics envelope in one market niche or another. So
before you start your job search, think about whether you like the structure and
resources (and bureaucracy) that a big organization will have or prefer the

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flexibility and cutting-edge spirit (and bare-bones budget) of a younger, smaller
company.
Job seekers should also keep in mind that many consumer electronics products
are global brands, so many companies have opportunities for international
positions and travel, and foreign language skills are often highly desirable. And
in the United States, though there is some concentration of consumer electronics
jobs on the East and West Coasts, the industry is sprawled across the country.
Many of the large companies have multiple offices to choose from, with each
location housing a different product line or corporate function.

Falling prices
These days, because so many consumer electronics products rely on
semiconductors for their functionality, Moore's Law, which states that
semiconductor speed doubles every 18 months, applies just as much to the
consumer electronics industry as it does to computer hardware. Because of this,
consumer electronics companies are developing new and improved products all
the time. If you're one of the many consumers who need to have the latest and
greatest gadgets, it's going to cost you a pretty penny to stay on the cutting edge.
But if you don't need top-of-the-line consumer electronics products-if you're
happy with getting a 4-megapixel digital camera, for instance, and are prepared
to leave the 8-megapixel camera to the hardcore gadget-heads-just wait a little
while, and the price on the product that's right for you will almost certainly
decrease substantially.

Cool new products

As usual in consumer electronics, these days there are a number of cool, new
products on or about to reach electronics store shelves. For instance, to take
advantage of the improved sound offered by digital radio, many of the big
electronics makers are bringing digital home and car radios to market. Digital

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cameras, meanwhile, are increasingly likely to include significant digital video
recording capability. And there are refrigerators on the market with TV screens
embedded in them, which you even can use to surf the 'Net. Satellite TV in your
car; satellite radio systems that give you live, up-to-the-minute reports on traffic
conditions; handheld media-storage devices; live TV on your cell phone-the list
of innovative new consumer electronics products already on or about to hit the
market goes on and on.

Who controls the digital home

Televisions, stereos, cameras, and other consumer electronics products grow
more useful and powerful when they are tied together wirelessly and can reach
out to the Internet. For the digital home to take shape and for sales to soar as
consumers see its advantages, companies need to figure out how to get all their
gadgets talking to each other and to a central hub that will store the many
megabytes of media files that entertain us. Microsoft wants the computer in the
middle and is pushing its Media Centre software; Sony is selling a portable
LCD television that can grab video from the Internet, a personal video recorder,
or a DVD player; and Sharp will launch technology for sending HDTV signals
through a home's existing electrical wiring. No matter which arrangement
proves popular, there should be plenty of work in turning today's homes into
tomorrow's networked entertainment centres.
The consumer electronics industry includes manufacturers of all shapes and
sizes. The largest are multinational conglomerates with more than 100,000
employees and interests in many different industries. The smallest often have
only one office with fewer than 50 employees focused on one product. In the
middle are manufacturers that offer a range of products within a certain
category, such as speakers and audio accessories. Because companies of all
sizes can make similar products, industry observers usually break down the
market by product category rather than company size.

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Video
These days, all eyes are on video. As the switch is made from analog to digital
technology, the market is quickly expanding beyond traditional televisions,
DVDs, and camcorders to include flat-screen and high-definition digital
televisions, personal video recorders (PVRs), elaborate home theater systems,
home satellite systems, set-top Internet access devices designed to bring
interactivity to the television, and cell phones and other handheld devices that
can download, store, and play video. Key players include Matsushita
(Panasonic), Philips (Magnavox), Sony, Thompson (RCA), TiVo, and
Microsoft (WebTV).

Audio
Vinyl may be the latest retro resurgence, but it can't stop the digital wave.
Consumers can now choose from CDs, DVDs, MiniDiscs, MP3s, and
proprietary digital formats from the likes of Apple and Sony to get digital-
quality sound. The proliferation of digital formats is also driving new demand
for upgraded home theatre systems, multimedia PCs, car stereos, and portable
players. Key players include Bose, Harman International, Sony, and Toshiba.

Mobile and wireless

Mobile electronics and wireless technology have transformed communication.
Better technology and lower prices have turned high-end products like cell
phones and pagers into commodities sold out of street-side kiosks. And broad
market demand is fueling the race to develop the next generation of smart
phones and wired PDAs, which will use high-speed wireless networks to
transmit voice and data. High-end car audio, security, navigation, and
multimedia systems manufacturers are also taking advantage of the new digital
technologies and making inroads in the mass market. Key players include
Motorola, Nokia, and Samsung.

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Integrated home systems
Picture this: While sitting at your computer at work, you pull up the website for
your home, check out the live video feed to make sure your new puppy isn't
devouring the muffins you forgot to put back in the cupboard this morning,
click a link to preheat the oven for dinner, and turn up the thermostat to warm
the house. This is the smart home. Smart homes are powered by integrated
home systems-electronic products that are networked together and connected to
the rest of the world via the Internet or wireless technology. Players in this
fledgling market include IBM, and appliance manufacturers such as Sunbeam
and Whirlpool are joining the fray by experimenting with products that are
network-friendly.
The U.S. Bureau of Labour Statistics expects the number of jobs in this industry
to shrink by some 7 percent between 2004 and 2014, as compared to a 14
percent increase in the number of jobs overall during that period. But the reality
here is that job prospects will vary tremendously depending on the specific
industry segment you're looking to work in and the specific career you desire.
Because of increasing automation and outsourcing, production jobs and
customer service jobs will probably not have a great outlook in coming years.
But electrical engineers, technicians, and others involved in designing and
testing the ongoing flow of new products being brought to market will face
much better prospects.
A key to ongoing success in your career in consumer electronics will be an
ability to think about the ways in which digital content, piracy protections, the
design of an electronic product and available networking technology can
interact to produce something that is truly entertaining and flattering to use.

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Wholesale Distribution Industry Overview

When marketing to the wholesale distribution industry, it is important to have a

firm understanding of the current wholesale distribution market. With annual
sales of about $7 trillion, the US wholesale distribution industry includes about
330,000 companies. For the period between 2015 and 2019, the output of the
US wholesale distribution industry is forecast to grow at an annual compounded
rate of 5 percent. In the US, the 50 largest distributors are generating 25% of the
industry revenue.

A respected industry overview cited the industrys growth over the last decade
as having been above average as compared to other industries. Over the last
decade, distributor revenue grew 60%. If this sounds less than enthusiastic,
heres the reality check they provide: during that 10-year period, while
distributor revenue grew nearly 60% with computers, electrical goods, and
machinery leading the pack retailers only showed 40% growth.

Knowing there is a core reliance on technology to keep up with growing

efficiency in the market, Frantz Group offers strategy services and lead
generation for technology providers targeting the wholesale distribution
industry. Our emphasis on this target market over the years gives us a keen
insight into the pains, needs, and desires of wholesale distributors that we can
put to work for your organization. Our approach to B2B inbound marketing can
give your firm the visibility and conversion potential it needs to be effective
marketing to wholesale distributors.

Primary indicators will continue to dictate growth in the industry. Of four

primary wholesale industry indicators, three have slowed, while one is a great
cost savings for distributors- Although growth is projected moving forward,
total wholesale industry sales fell 3.6% in 2015, compared to 2014. Total US

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manufacturers shipments, an indicator of demand for industries in the
wholesale sector, fell 4.1% in September 2015 compared to the same period in
2014. US tourism spending on all tourism goods and services decreased 0.8% in
the second quarter of 2015 compared to the same period in 2014. Heres some
improvement: The average US retail price for diesel and regular gas fell 32.2%
and 24.7%, respectively, in the week ending November 16, 2015, compared to
the same week in 2014.

Increases in labor productivity are trending upward. Thanks to continuing

advances in technology to improve efficiency of warehouse and distribution
operations, industry labor productivity rose more than 20% during the decade of
2003 and 2013.

Industry opportunities that recur in comparative reading include, internet sales

possibilities for distributors who can develop online catalogs to extend their
markets beyond traditional limitations, logistics services potentially offered to
customers for inventory management, just-in-time delivery and fulfillment
services, and, the additional revenue to be realized from adding processing
services for appropriate industry segments where materials can be further
manipulated to fill manufacturers or possibly other distributors needs, or
individual products can be pre-packaged into specialized groups prior to
shipment to retailers or other distributors, etc.

Challenges to the wholesale industry, in addition to fuel prices, include three

key items: competition from manufacturers and large retailers who bypass
distributors by selling directly, the impact of fluctuating interesting rates upon
already-tight profit margins, and the fact that distributors businesses tend to be
impacted by the economic conditions of the geographic areas they serve. While
were on the subject of geography: challenges to international growth for

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wholesalers include the logistical concerns that go with multiple locations as
well as the integration of records, orders, etc., and the increasing need for
heightened and more highly sophisticated security. These concerns are mirrored
for foreign sources of supply to US manufacturers and distributors, also.

In terms of what pundits call the competitive landscape, tech vendors take
note: While technology is helping the wholesale distribution industry increase
efficiencies to improve its bottom line (inventory management and order
fulfillment for example), technology is also helping manufacturers and retailers
looking to rob business from distributors by improving supply chain
efficiencies. The distributor/manufacturer/retailer dance gets more complex as
distributors work to increase revenue by adding services that are helpful for
and billable to manufacturers and retailers, in addition to net-new logistics
services for clients and possible independent online catalog sales increasing
complexity with technology as a key enabler.

The Evolution of Wholesale Distribution

Trends and Predictions of intelligence Expert Paper Introduction In many ways,

the wholesale distribution industry looks much as it did in previous decades.
Distributors are focused on improving profitability, expanding their margins,
and outmaneuvering the competition. However, new technologies, changing
market dynamics, and increasingly demanding customers have fundamentally
reshaped the way todays distributors do business. In fact, 40% of CEOs and IT
executives now view IT as a competitive weapon Source. Facing the Forces of
Change. Those who remain technology laggards in the distribution industry face
a tough future. Throughout the industry, even core technologies such as demand
management systems are surprisingly underutilized. This means that the
companies with modern ERP systems in place already have a competitive leg up

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and will be in a better position to adapt and innovate as the pace of technology
evolution increases. In our work with some of the industrys most innovative
distributors, we have a front row seat for the trends that are altering the
competitive landscape in wholesale distribution. Following is a summary of the
top trends were seeing:

Operational Efficiency is Still Priority One

Regardless of size, geography, and specialization, achieving operational

efficiency is still the top priority for distributors. Even as they look to the future
and the transformational potential of new and emerging technologies such as
mobile and cloud, many are focusing on issues such as demand management,
warehouse operations, transportation planning, and logistics. The day-to-day
agenda continues to be balancing the books, knowing whats in the warehouse,
and giving customers timely information on pricing and availability. Many
believe they cant achieve the operational and competitive advantages promised
by the latest technologies without first getting their existing operations in sound
order, which often means optimizing and standardizing processes within the
enterprise as a foundation for innovation and growth.

Improving the Understanding of Customer Profitability

Distributors are changing the way they manage customers. For years, many
have devoted the most time and effort to keeping their biggest and their
loudest customers happy, with little or no insight on the return from their
investment. The mass of data trapped in outmoded legacy systems and ad hoc
spread sheets couldnt answer basic questions such as Is my biggest customer
my most profitable? Is keeping this customer worth the time and budget? Which
areas of customer service deliver the best ROI? With the emergence of
advanced analytic tools, more distributors are evaluating their customer
relationships with a more data-driven mind-set to better understand the cost to

24
serve. The results may often be counterintuitive, but theyre helping
distributors achieve higher margins by operating in a more lean and profitable
way.

Demanding Customers Get More Demanding

Just selling great products isnt enough. In todays market, customers are
looking for total solutions turnkey approaches that combine products and
services in a way that accelerates time-to-value. At the same time, their
expectations for core service offerings continue to grow. Todays customers
want the same delivery times for special orders as they get with off -the-shelf
products. In a market with more competition and more choices, loyalty isnt
what it used to be. Distributors need to give their customers a reason to come
back, and a wider, more personalized lineup of services is often the answer.

A More Consolidated and Competitive Market

Bigger is now better. Across the industry, distributors are racing their
competitors to expand their footprint, enter new markets, and increase
efficiencies. Distributors are under pressure to operate around the clock, and
global competition is resetting the markets expectations on pricing. And
distributors face a host of new competition from non-traditional sources as well.
Traditional distributors are now competing directly with big-box retailers and
online portals, and more manufacturers are selling via direct channels.
However, the drive toward more mergers and acquisitions comes with growing
pains. The challenges of integrating data, processes, and operations can delay
the efficiencies that merging companies expect to realize. Those who can
readily consolidate their systems and operations and present a unified front to
the market have the best chance of success.

25
Expansion into Online Channels

As competition heats up, distributors are scrambling to find new sources of

revenue and innovative ways to engage customers. The Amazon.com
revolution in the retail experience has ramped up the markets expectation in
the B2B sphere as well. Currently, around 80% of distribution CEOs plan to
invest in e-commerce channels in the near future. [Source: Facing the Forces
of Change] Todays more innovative distributors have already deployed the
always-on, mobile-ready self-service channels to complement their traditional
channels. The distributors that allow customers to do business wherever,
whenever, and however they want will continue to outpace and outperform the
companies that cant give their customers viable online choices.

Dramatic Increases in Speed of Sales Analytics to Be Able to React Faster

to Market Changes

The pace at which distributors have to adjust product mix to meet consumer
demand for a continual stream of innovative products is increasing. Todays
customers have choices. If one distributor cant deliver, they will quickly find
someone that can. Distributors need to anticipate demand changes and ensure
that the right products are available to capitalize on evolving preferences. More
companies are leveraging metadata from the point of sale and the supply chain
to accelerate this process.

IT Strategy Gets Clearer as it Becomes Cloudier

Cloud-based solutions continue to grow in popularity as business leaders are

drawn to the promises of streamlined access, lower IT overhead, and continual
innovation. Scores of companies have begun exploring the viability of Cloud-
based applications, with trial runs of applications in areas such as HR and
Finance running in the public Cloud. These initiatives are often a first step
toward moving a greater share of mission-critical applications into a private

26
Cloud architecture. However, many businesses are also finding that Cloud
computing isnt an all-or-nothing proposition. Some enterprises still prefer to
maintain the bulk of applications on site, whether for security, competitive, or
economic reasons. In the near future, many IT environments will be a
heterogeneous mix of on-premise, hosted, and Cloud-based deployments as
companies learn from experience which applications are best suited to run in
private or public Clouds.

27
COMPANY PROFILE

Panchami Distributors Private Limited is a Private Company incorporated on 23

June 2000. It is classified as Indian Non-Government Company and is
registered at Registrar of Companies, Bangalore. Its authorized share capital is
Rs. 2,500,000 and its paid up capital is Rs. 2,220,000.It is involved in other
computer related activities [for example maintenance of websites of other firms/
creation of multimedia presentations for other firms etc.
Panchami Distributors Private Limited's Annual General Meeting (AGM) was
last held on 30 September 2015 and as per records from Ministry of Corporate
Affairs (MCA), its balance sheet was last filed on 31 March 2015.
Directors of Panchami Distributors Private Limited are Padmaja Jwalaprasad,
Jwalaprasad, Mithun Chowter and Moodbidri Virendra.
Panchami Distributors Private Limited's Corporate Identification Number is
(CIN) U72900KA2000PTC027333 and its registration number is 27333.Its
Email address is cmkyroc@gmail.com and its registered address is NELE, II
CROSS, LOWER BENDOOR MANGALORE, MANGALORE - 575002,
Karnataka.
Current status of Panchami Distributors Private Limited is - Active.

Company
PANCHAMI DISTRIBUTORS PRIVATE LIMITED
Name

Company
Active
Status

RoC RoC-Bangalore

Registration
27333
No

28
 Company
Company limited by shares
Category

Company Sub
Indian Non-Government Company
Category

Class of
Private Company
Company

Date of
23 June 2000
Incorporation

Age of
15 years, 7 month, 11 days
Company

Other computer related activities like maintenance of websites of

Activity other firms/ creation of multimedia presentations for other firms
etc.

Share Capital & Number of Employees

Authorised Capital 2,500,000

Paid up capital 2,220,000

29
Listing and annual compliance details

Listing status Unlisted

Date of Last Annual General 30 September

Meeting 2015

Date of Latest Balance Sheet 31 March 2015

Director Details

DIN Directors Name Designation Appointment

Date
00850838 PADMAJA Director 23 June 2000
JWALAPRASAD

00850912 JWALAPRASAD Managing 23 June 2000

Director

00444636 MITHUN Director 31 January

CHOWTER 2009

01320978 MOODBIDRI Director 31 January

VIRENDRA 2009

30
RATIO ANALYSIS

CURRENT RATIO

Table No: 5.1.a

Year Current Current Current

Assets Liabilities Ratio
2010-2011 47932882.82 41595492 1.15
2011-2012 42841490.05 38667468.75 1.10
2012-2013 54565279.37 46152615.72 1.18
2013-2014 63006966.87 52802935.79 1.19
2014-2015 77655411.49 63532617.74 1.22

CURRENT RATIO
1.24
1.22
1.22
1.2 1.19
1.18
1.18
1.16 1.15
1.14
1.12
1.1
1.1
1.08
1.06
1.04
2010-2011 2011-2012 2012-2013 2013-2014 2014-2015

Chart No: 5.1. a

Interpretation

The standard of the current ratio is 2:1. This differs from company to company.
It depends on the nature and size of business operations of the company. The
current ratio expresses how the company is able to pay its short term liabilities.
The current ratio of Panchami Distributors has increased from 1.15 to 1.22.
Hence the ratio have been increasing over the years, the short term solvency of
the company is also improving.

31
QUICK RATIO

Table No: 5.2. b

Year Quick Assets Current Quick Ratio

Liabilities
2010-2011 31241196.3 41595492 0.75
2011-2012 28388591.14 38667468.75 0.73
2012-2013 32588947.08 46152615.72 0.70
2013-2014 43104710.48 52802935.79 0.81
2014-2015 52339129.98 63532617.74 0.82

QUICK RATIO
0.84
0.82
0.82 0.81
0.8
0.78
0.76 0.75
0.74 0.73
0.72
0.7
0.7
0.68
0.66
0.64
2010-2011 2011-2012 2012-2013 2013-2014 2014-2015

Chart No: 5.1. b

Interpretation

The quick ratio tells us how liquid the company is in order to pay its liabilities.
The quick ratio has shown an increasing rate from 0.75 to 0.82. Also the quick
ratio follows the pattern of current ratio as the company has negligible levels of
inventory.

32
CASH RATIO

Table No: 5.3. c

Year Cash & Bank Current Cash Ratio

Balances Liabilities
2010-2011 91729.72 41595492 0.002
2011-2012 930851.78 38667468.75 0.02
2012-2013 1624810.28 46152615.72 0.03
2013-2014 705292.58 52802935.79 0.01
2014-2015 1272380.35 63532617.74 0.02

CASH RATIO
0.035
0.03
0.03

0.025
0.02 0.02
0.02

0.015
0.01
0.01

0.005 0.002
0
2010-2011 2011-2012 2012-2013 2013-2014 2014-2015

Chart No: 5.1. c

Interpretation

The above graph shows that in the year 2010-11 ratio is 0.002, in the year 2011-
12 is 0.02, in the year 2012-13 it increased to 0.03 and there was a sudden
decrease to 0.01 in the year 0.01 in the year 2013-14 and 0.02 in the year 2014-
15.

33
DEBT EQUITY RATIO

Table No: 5.4 .d

Year Total Debt Total Equity Debt Equity

Ratio
2010-2011 44705731.36 5371117.46 8.32
2011-2012 43114304.11 5556339.94 7.75
2012-2013 50837292.85 8470273.52 6.00
2013-2014 56719153.15 10143304.72 5.59
2014-2015 17589236.75 14105246.39 1.24

DEBT EQUITY RATIO

9 8.32
7.75
8
7
6
6 5.59

5
4
3
2 1.24
1
0
2010-2011 2011-2012 2012-2013 2013-2014 2014-2015

Chart No: 5.1. d

Interpretation

Debt equity ratio shows the percentage of debt capital and share capital in the
total capital structure. It is usually said that 60% debt and 40% equity is a sound
capital structure. Here the ratio shows that company is using less debt funds
when compared to different years. The ratio is 1.24 in the year 2014-15 when
compared to 8.32 in the year 2010-11.

34
PROPRIETORY RATIO

Table No: 5.5. e

Year Shareholders Total Assets Proprietory

Fund Ratio
2010-2011 5371117.46 50076848.82 0.10
2011-2012 5556339.94 48670644.05 0.11
2012-2013 8470273.52 59307566.37 0.14
2013-2014 10143304.72 66862457.87 0.15
2014-2015 14105246.39 81121854.49 0.17

PROPRIETORY RATIO
0.18 0.17
0.16 0.15
0.14
0.14
0.12 0.11
0.1
0.1
0.08
0.06
0.04
0.02
0
2010-2011 2011-2012 2012-2013 2013-2014 2014-2015

Chart No: 5.1. e

Interpretation

The above graph shows the financial strength of the company. It helps the
creditors to find out the proportion of shareholders fund in the assets. The
acceptable norm is 1:3. In 2010-09, ratio was 0.10, in 2011-12 ratio was 0.11, in
2012-13 ratio was 0.14, in 2013-14 ratio was 0.15 and sudden hike of ratio to
0.17 took place in the year 2014-15.

35
RETURN ON EQUITY

Table No: 5.6. f

Year Net Profit Shareholders Return on

Fund Equity
2010-2011 2962975 5371117.46 55.16
2011-2012 185222 5556339.94 3.33
2012-2013 2913934 8470273.52 34.40
2013-2014 1673031 10143304.72 16.49
2014-2015 3961942 14105246.39 28.02

RETURN ON EQUITY
60 55.16

50

40 34.4
28.02
30

20 16.49

10
3.33
0
2010-2011 2011-2012 2012-2013 2013-2014 2014-2015

Chart No: 5.1. f

Interpretation

The above graph shows the return on equity ratio. Here in the year 2010-11
there is high return on equity i.e. 55.16, in the year 2011-12 it was 3.33, in the
year 2012-13 it was 34.4, in the year 2013-14 it was 16.49 and in the year 2014-
15 it was 28.02.

36
WORKING CAPITAL TURNOVER RATIO

Table No: 5.7. g

Year Net Sales Net Working Working

Capital Capital
Turnover Ratio
2010-2011 225093260.53 6337390.82 35.51
2011-2012 247490663.88 4174021.30 59.29
2012-2013 293841787.52 8412663.65 34.92
2013-2014 321674591.06 10204031.08 31.52
2014-2015 372724929.20 14122793.75 26.39

WORKING CAPITAL TURNOVER RATIO

70
59.29
60

50

40 35.51 34.92
31.52
30 26.39

20

10

0
2010-2011 2011-2012 2012-2013 2013-2014 2014-2015

Chart No: 5.1. g

Interpretation

The ratio indicates no of times the working capital is turned over the course of a
year. The ratio measures the effective utilization of working capital. Very high
working capital turnover ratio is not a good situation for any firm. In the year
2011-12 the working capital is the highest that is 59.29 and in the year 2012-13
it was 34.92.

37
RETURN TO TOTAL ASSET RATIO

Table No: 5.8 .h

Year Net Profit Total Assets Return to Total

Assets Ratio
2010-2011 2962975 50076848.82 5.91
2011-2012 185222 48670644.05 0.38
2012-2013 2913934 59307566.37 4.91
2013-2014 1673031 66862457.87 2.50
2014-2015 3961942 81121854.49 4.88

Return on total asset ratio

7
5.91
6
4.91 4.88
5

3 2.5

1 0.38
0
2010-2011 2011-2012 2012-2013 2013-2014 2014-2015

Chart No: 5.1. h

Interpretation

The above graph shows the return to total assets ratio of the company. In the
year 2010-11 the returns is high i.e. 5.91, in the year 2011-12 it decreased to
0.38, in 2012-13 the ratio increased to 4.9, in 2013-14 it reduced to 2.5 and in
the year 2014-15 the ratio increased to 4.88 respectively.

38
CURRENT ASSETS TURNOVER RATIO

Table No: 5.9 .i

Year Net Sales Current Assets Current Assets

Turnover Ratio
2010-2011 225093260.53 47932882.82 4.69
2011-2012 247490663.88 42841490.05 5.77
2012-2013 293841787.52 54565279.37 5.38
2013-2014 321674591.06 63006966.87 5.10
2014-2015 372724929.20 77655411.49 4.79

CURRENT ASSET TURNOVER RATIO

7
5.77
6 5.38
5.1
4.69 4.79
5

0
2010-2011 2011-2012 2012-2013 2013-2014 2014-2015

Chart No: 5.1. i

Interpretation

The above graph shows the current asset turnover ratio of 5 year. In the year
2011-12 the ratio was highest to 5.77 while compared to other years. In 2010-11
ratio was 4.69, in 2012-13 ratio increased to 5.38, in 2013-14 ratio was 5.1 and
in the year 2014-15 ratio was 4.79.

39
TOTAL ASSETS TURNOVER RATIO

Table No: 5.10. j

Year Net Sales Total Assets Total Assets

Turnover Ratio
2010-2011 225093260.53 50076848.82 4.49
2011-2012 247490663.88 48670644.05 5.08
2012-2013 293841787.52 59307566.37 4.95
2013-2014 321674591.06 66862457.87 4.81
2014-2015 372724929.20 81121854.49 4.59

TOTAL ASSETS TURNOVER RATIO

5.2
5.08
5.1
5 4.95
4.9 4.81
4.8
4.7
4.59
4.6
4.49
4.5
4.4
4.3
4.2
4.1
2010-2011 2011-2012 2012-2013 2013-2014 2014-2015

Chart No: 5.1. j

Interpretation

The above graph shows that the total asset turnover ratio of the company is
increasing and decreasing through the years. Here in the year 2010-11 the ratio
was 4.49, in 2011-12 the ratio was 5.08 and there was sudden decrease to 4.95
in the year 2012-13, in the year 2013-14 it was 4.81 and in the year 2014-15 it
was 4.59 respectively.

40
GROSS PROFIT RATIO

Table No: 5.11. k

Year Gross Profit Net Sales Gross Profit

Ratio
2010-2011 2962974.87 225093260.53 1.31
2011-2012 298482.48 247490663.88 0.12
2012-2013 4287693.58 293841787.52 1.45
2013-2014 2437229.20 321674591.06 0.75
2014-2015 5744981.67 372724929.20 1.54

GROSS PROFIT RATIO

1.8
1.6 1.54
1.45
1.4 1.31
1.2
1
0.75
0.8
0.6
0.4
0.2 0.12

0
2010-2011 2011-2012 2012-2013 2013-2014 2014-2015

Chart No: 5.1. k

Interpretation

The above graph shows the gross profit ratio of the company. In the year 2011,
2013 and 2015 it was showing a greater gross profit due to increase in net sales.
A high ratio of gross profit to sale is a sign of good management as it applies
that the cost of production of the firm is relatively low.

41
NET PROFIT RATIO

Table No: 5.1. l

Year Net Profit Net Sales Net Profit

Ratio
2010-2011 2962975 225093260.53 1.31
2011-2012 185222 247490663.88 0.07
2012-2013 2913934 293841787.52 0.99
2013-2014 1673031 321674591.06 0.52
2014-2015 3961942 372724929.20 1.06

NET PROFIT RATIO

1.4 1.31

1.2
1.06
0.99
1

0.8

0.6 0.52

0.4

0.2 0.07
0
2010-2011 2011-2012 2012-2013 2013-2014 2014-2015

Chart No: 5.1. l

Interpretation

The above graph shows the net profit ratio of the company. The ratio establishes
a relationship between the net profit and net sales indicating management
efficiency in administration, selling the product. The net profit shows a good
proportion i.e. 1.31in the year 2010-11 and 1.06 in the year 2014-15.

42
 TABLE NO: 5.2. a SHOWING THE COMPARATIVE BALANCE SHEET
OF PANCHAMI DISTRIBUTORS PVT LTD FOR THE YEAR 2011-2012

PREVIOUS CURRENT AMOUNT % OF

PARTICULARS YEAR YEAR (INCREASE/ (INCREASE/
2011 2012 DECREASE) DECREASE)

Assets
Fixed Assets 16,79,318 53,31,046 36,51,728 217.45

Deffered Tax 17648 51108 33460 189.60

Assets (net)
Long Term Loans 447000 447000 0.00 0.00
& Advances

Current Assets 47932882.82 42841490.05 (5091392.77) (10.62)

TOTAL ASSETS 50076848.82 48670644.05 1406204.77 2.80

Liabilities

Share Capital 2220000 2220000 0.00 0.00

Reserves & 3151117.46 3336339.94 185222.48 5.87

Surplus
Long Term 3110239.36 4446835.36 1336596 42.97
Borrowings
Current Liabilities 41595492 38667468.75 2928023.25 7.03

TOTAL 50076848.82 48670644.05 1406204.77 2.80

LIABILITIES

43
Interpretation

It is observed that the comparative balance sheet that the fixed assets of
Panchami distributors show a higher rate of scale of 217.45% while
compared to the year 2011-2012.
The current asset has decreased to 10.62% in the year 2012.
The share capital of the company has been constant in 2011-12 year.
The current liabilities of the company have decreased to 7.03% in the year
2012.

44
TABLE NO: 5.2 .b SHOWING THE COMPARATIVE BALANCE SHEET
OF PANCHAMI DISTRIBUTORS PVT LTD FOR THE YEAR 2012-2013

PREVIOUS CURRENT AMOUNT % OF

PARTICULARS YEAR YEAR (INCREASE/ (INCREASE/
2012 2013 DECREASE) DECREASE)

Assets

Fixed Assets 5331046 4329341 (1001705) (18.79)

Deffered Tax 51108 215946 164838 322.52

Assets (net)
Long Term Loans 447000 197000 (250000) (55.92)
& Advances

Current Assets 42841490.05 54565279.37 11723789.32 27.36

TOTAL ASSETS 48670644.05 59307566.37 16466076.32 33.83

Liabilities

Share Capital 2220000 2220000 0.00 0.00

Reserves & 3336339.94 6250273.52 2913933.58 87.33

Surplus
Long Term 4446835.36 4684677.13 237841.77 5.35
Borrowings
Current Liabilities 38667468.75 46152615.72 7485146.97 19.35

TOTAL 48670644.05 59307566.37 16466076.32 33.83

LIABILITIES

45
Interpretation

It is observed that the comparative balance sheet that the fixed assets of
Panchami distributors show a lower rate of scale of 18.79% while compared
to the year 2012-2013.
The current asset has increased 27.36% in the year 2013.
The share capital of the company has been constant in 2012-13 year.
The current liabilities of the company have increased to 19.35% in the year
2013.

46
TABLE NO: 5.2. c SHOWING THE COMPARATIVE BALANCE SHEET
OF PANCHAMI DISTRIBUTORS PVT LTD FOR THE YEAR 2013-2014

PREVIOUS CURRENT AMOUNT % OF

PARTICULARS YEAR YEAR (INCREASE/ (INCREASE/
2013 2014 DECREASE) DECREASE)
Assets
Fixed Assets 4329341 3339853 (989488) (22.55)

Deffered Tax 215946 310638 94692 43.84

Assets (net)
Long Term Loans 197000 205000 8000 4.06
& Advances
Current Assets 54565279.37 63006966.87 8441687.5 15.47

TOTAL ASSETS 59307566.37 66862457.87 7554891.5 12.73

Liabilities
Share Capital 2220000 2220000 0.00 0.00

Reserves & Surplus 6250273.52 7923304.72 1673031.2 26.76

Long Term 4684677.13 3916217.36 (768459.77) (16.40)

Borrowings
Current Liabilities 46152615.72 52802935.79 6650320.07 14.40

TOTAL 59307566.37 66862457.87 7554891.5 12.73

LIABILITIES

47
Interpretation

It is observed that the comparative balance sheet that the fixed assets of
Panchami distributors show a lower rate of scale of 22.55% while compared
to the year 2013-2014.
The current asset has increased to 15.47% in the year 2014.
The share capital of the company has been constant in 2013-14 year.
The current liabilities of the company have increased to 14.40% in the year
2014.

48
TABLE NO: 5.2. d SHOWING THE COMPARATIVE BALANCE SHEET
OF PANCHAMI DISTRIBUTORS PVT LTD FOR THE YEAR 2014-2015

PREVIOUS CURRENT AMOUNT % OF

PARTICULARS YEAR YEAR (INCREASE/ (INCREASE/
2014 2015 DECREASE) DECREASE)

Assets
Fixed Assets 3339853 2782272 (557581) (16.69)

Deffered Tax 310638 479171 168533 54.25

Assets (net)

Long Term Loans 205000 205000 0.00 0.00

& Advances

Current Assets 63006966.87 77655411.49 14648444.62 23.24

TOTAL ASSETS 66862457.87 81121854.49 14259396.62 21.32

Liabilities
Share Capital 2220000 2220000 0.00 0.00

Reserves & 7923304.72 11885246.39 3361941.67 50.00

Surplus
Long Term 3916217.36 3483990.36 (432227) (11.03)
Borrowings
Current Liabilities 52802935.79 63532617.74 10729681.95 20.32

TOTAL 66862457.87 81121854.49 14259396.62 21.32

LIABILITIES

49
Interpretation

It is observed that the comparative balance sheet that the fixed assets of
Panchami distributors show a Lower rate of scale of 16.69% while compared
to the year 2014-2015.
The current asset has increased to 23.24% in the year 2015.
The share capital of the company has been constant in 2014-15 year.
The current liabilities of the company have increased to 20.32% in the year
2015.

50
 TABLE NO: 5.2. d SHOWS THE COMMON SIZE BALANCE SHEET OF
PANCHAMI DISTRIBUTORS PVT LTD FOR THE YEAR 2011-2015

Particulars 2011 2012 2013 2014 2015

Assets
Fixed Assets 3.35 10.95 7.30 5.00 3.43

Differed Tax Assets 0.03 0.10 0.36 0.46 0.60

(net)
Long Term Loans & 0.91 0.89 0.33 0.30 0.25
Advances

Current Assets 95.71 88.02 92.00 94.23 95.72

TOTAL ASSETS 100 100 100 100 100

Liabilities
Share Capital 4.43 4.56 3.75 3.32 2.73

Reserves & Surplus 6.30 6.85 10.53 11.85 14.65

Long Term 6.21 9.13 7.90 5.85 4.30

Borrowings
Current Liabilities 83.06 79.46 77.82 78.98 78.32

TOTAL 100 100 100 100 100

LIABILITIES

51
Interpretation

The fixed assets of the company was 3.35% in the year 2011 and then
increased to 10.95% in the year 2012, in 2013 it was 7.30%, in 2014 it was
5% and in 2015 it decreased to 3.43%.
The current assets in the year 2011, 2013, 2014 and 2015 was increased
to95.71%, 92%, 94.23% and 95.82% respectively.
The share capital of the company shows a decreasing scale i.e. in the
previous years it was around the scale of 4% but in the current year its
decreased to 2.43%.
The current liabilities of the company a good rate of scaling. In the year
2011, 2012, 2013, 2014, 2015 the scale was 83.06%, 79.46%, 77.82%,
78.98% and 78.32% respectively.

52
TREND ANALYSIS OF SHARE CAPITAL

Table No: 5.4 .a

Year Share capital Growth in

Percentage
2010-2011 2220000 100
2011-2012 2220000 100
2012-2013 2220000 100
2013-2014 2220000 100
2014-2015 2220000 100

SHARE CAPITAL
120

100 100 100 100 100 100

80

60

40

20

0
2010-2011 2011-2012 2012-2013 2013-2014 2014-2015

Chart No: 5.4 .a

Interpretation

From the above trend line it is clear that the share capital is constant from 2010-
11 to 2014-15.

53
TREND ANALYSIS OF CURRENT ASSETS

Table No: 5.4 .b

Year Current assets Growth in

Percentage
2010-2011 47932882.82 100
2011-2012 42841490.05 89.37
2012-2013 54565279.37 113.83
2013-2014 63006966.87 131.44
2014-2015 77655411.49 162

CURRENT ASSETS
180
160 162
140
131.44
120
113.83
100 100
89.37
80
60
40
20
0
2010-2011 2011-2012 2012-2013 2013-2014 2014-2015

Chart No: 5.4. b

Interpretation

The above trend line shows that there is an increasing rate in current assets from
2011-12 to 2014-15 year. Hence the financial performance is good.

54
TREND ANALYSIS OF CURRENT LIABILITIES

Table No: 5.4 .c

Year Current liabilities Growth in

Percentage
2010-2011 41595492 100
2011-2012 38667468.75 92.96
2012-2013 46152615.72 110.95
2013-2014 52802935.79 126.94
2014-2015 63532617.74 152.73

CURRENT LIABILITIES
180
160
152.73
140
126.94
120
110.95
100 100
92.96
80
60
40
20
0
2010-2011 2011-2012 2012-2013 2013-2014 2014-2015

Chart No: 5.4. c

Interpretation

The above trend line shows that there is increasing rate in current liabilities
from 2012-13 to 2014-15. In 2012 it was 92.96, in 2013 it was 110.95, in 2014
it was 126.94 and in 2015 it was 152.73.

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TREND ANALYSIS OF FIXED ASSETS

Table No: 5.4. d

Year Fixed Assets Growth in

Percentage
2010-2011 1679318 100
2011-2012 5331046 317.45
2012-2013 2782272 165.07
2013-2014 4329341 257.80
2014-2015 3339853 198.88

FIXED ASSETS

350
317.45
300

250 257.8

200 198.88
165.07
150

100 100

50

0
2010-2011 2011-2012 2012-2013 2013-2014 2014-2015

Chart No: 5.4. d

Interpretation

The above trend line shows that there is a sudden increase in the year 2011-12
i.e. 317.45 and declined to 165.07 in the year 2012-13, in 2013-14 it was 257.8
and in the year 2014-15 it declined to 198.88.

56
FINDINGS

Current ratio is found to be below the standard ratio 2:1 which indicates that
the companys short term solvency is not very strong.
Quick ratio is below the standard ratio of 1:1.
The Cash Ratio position of the company is not satisfactory for the last five
years. It is fluctuating over the years and there is no standard ratio
maintained.
Proprietary ratio has increased to 0.17 during the current year 2014-15
Return on equity is low (28.02percent) while compared to other financial
years.
Working capital turnover ratio has decreased during the current year.
Return on total asset ratio is found to be fluctuating and developing over the
years.
Current assets turnover ratio has decreased to 4.79 in the current year.
Total assets turnover ratio has seen fluctuating and decreasing over the years
from 2012-2013.
Gross profit ratio has increased to 1.54percent during the current year.
There is a huge increase in the net profit of the company during the current
year.

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SUGESSTIONS
The company's profit over the last five years has been increasing when
compared to previous years. The company must take further steps to increase
the profit level.

The liquidity position of the company is quite satisfactory. And this must be
improved further for the purpose of proper utilization of the liquid assets of
the company.
The sales of the organization can be further increased by improving the
quality through optimum utilization of company's resources (i.e. assets, raw
materials, credit system, etc.) and that in turn will increase the overall profits
of the organization.
The Management must also study the market position and it also find the
demand prevailing in the market for the products and thus this will guide
them to enhance their sales volume.

Net fixed asset of the company has decreased and even though they are not
utilizing the enhanced technology to increase sales. So the management
should take initiative steps for the proper utilization of the resources.
The cash ratio position of the company is not satisfactory for the last five
years. It is fluctuating over the years and there is no standard ratio
maintained. So the management should take steps to improving the cash
position of the company.
The Gross Profit ratio can be improved by increasing the gross profit and the
factors decreasing the gross profit ratio should be thoroughly checked timely
whether they are operating factors or any misleading factors.

58
CONCLUSION
The study discusses briefly on the distribution of the electronic goods, profile of
Panchami Distributors Pvt Ltd. It is classified as Indian Non-Government
Company and is registered at Registrar of Companies. It is involved in
distribution of electronic goods of mainly 3 brands like Sony, Panasonic and
whirlpool etc. Also other computer related activities like maintenance of
websites of other firms/ creation of multimedia presentations for other firms etc.

The analysis and interpretation of financial statement of Panchami Distributors

was done using ratio analysis, comparative, common size financial statements
and trend analysis. Even though all the ratios calculated do not give satisfactory
results, majority of the calculated ratios gives satisfactory results.

The company has gained good strength and track record in the distribution of
the products and services to the retailers in the market. On the whole, the
companys financial performance is good and developing too.

59