A

PROJECT REPORT

ON

FINANCIAL STATEMENT ANALYSIS

OF BHARATI VIDYAPEETH DEEMED UNIVERSITY

Submitted in the partial fulfilment of the requirement for the award of the
Degree of Bachelor of Business Administration {BBA}

SUBMITTED BY: UNDER GUIDANCE OF:

Vrity Malik Mr. Aditya Vij (6TH SEMESTER)

BHARATI VIDYAPEETH DEEMED UNIVERSITY SCHOOL OF

DISTANCE EDUCATION

Academic Study Center - BVIMR, New Delhi

An ISO 9001:2008 Certified Institute NAAC Accredited Grade A University

STUDENT UNDERTAKING

1
This is to certify that I VRITY MALIK had completed the Project titled To
study the Financial Statement Analysis of BHARATI VIDYAPEETH
DEEMED UNIVERSITY under the guidance of Mr. Aditya Vij in the
partial fulfilment of the requirement for the award of degree of BBA from
Bharati Vidyapeeth Deemed University, SDE, Academic Study Centre BVIMR,
New Delhi. This is an original piece of work and I had neither copied nor
submitted it earlier elsewhere.

VRITY MALIK

BBA VITH SEMESTER

DATED :-

ACKNOWLEDGEMENT
2
With candor and pleasure I take opportunity to express my sincere thanks and
obligation to my esteemed guide Mr. Aditya Vij . It is because of his able and
mature guidance and co-operation without which it would not have been possible
for me to complete my project.

I would also like to express my gratitude to Mr. Amarjeet Deshmukh [director],

BVUSDE, New Delhi for providing all needful facilities in the campus and the
best faculty for the students

This report has been made possible through direct and indirect support of various
people for whom I wish to express my appreciation and gratitude.

I also owe my sincere and whole hearted thanks to Mr. Aditya Vij(Project Guide)
for constantly guiding me and tackling variety of hurdles with implicit patience
throughout my research project and whose deep involvement and interest in the
project infused in me great inspiration and confidence in taking up this study in
right direction. Without his overall guidance and help the project may not have
seen to be completed.

In the end, I also want to thanks my friends for their support and help during the
project.

VRITY

Table of Contents
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 TABLE OF CONTENT
CONTENT PAGE

NO.

CHAPTER 1 - INTRODUCTION

(6-8)

CHAPTER 2 REVIEW OF LITERATURE

(10-13)

CHAPTER 3 RESEARCH METHODOLOGY

(15-20)

CHAPTER 4 DATA ANALYSIS

(22-28)

4.1 Methods and techniques of data analysis

4.2 Primary Data Analysis

CHAPTER 5 FINDINGS AND RECOMMENDATIONS

(30-33)

CHAPTER 6 - CONCLUSION AND SUGGESTIONS

(34-38)

BIBLIOGRAPHY

(40)

ANNEXURE

4
 CHAPTER 1
INTRODUCTION

5
1.1 INTRODUCTION :
Financial Statement Analysis generally attempts to reveal the meaning and significance of the
items composed in Profit and Loss Account and Balance Sheet. According to Kennedy and
Macmillan Financial Performance is scientific evaluation of profitability and financial strength
of any business concern. Financial Performance is the snapshot of a concern's position and
ability to survive the ever-changing environment. It is the blue print of the financial affairs of the
concern and reveals how a business is prospered under the leadership of its management human
resources. In fact, financial performance is the medium of evaluation of management
performance. According to accounting point of view financial statement are prepare by a
business enterprise at the end of every financial year. Financial statements are end products of
financial accounting. They are capsulate periodical reports of financial and operating data
accumulated by a firm in its books of accounts and the General Ledger. The overall objective of
a business is earning satisfactory returns on the funds invested in it. Consistent with maintaining
a sound financial position, an evaluation of such performance is doing in order to measure the
efficiency of operations or the profitability of the organization and to assess the financial strength
as compared with a similarly situated concern. Financial Appraisal is generally directed towards
evaluating the liquidity, stability and profitability of a concern which put together symbolizes the
financial efficiency of a concern.

I. What is Financial Statement?

According to Meigs and Meigs (2003), financial statement are a structured representation of the
financial position and financial performance of an entity. The objective of financial statements is
to provide information about the financial position, financial performance and cash flows of an

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entity that is useful to a wide range of users in making economic decisions. Financial statements
also show the results of the managements stewardship of the resources entrusted to it. To meet
these objectives, financial statements provide information about an entitys:

a) Assets

b) Liabilities

c) Equity

d) Income and expenses, including gains and losses

e) Contribution by and distribution to owners in their capacity as owners, and

f) cash flows

A complete set of financial statement comprises:

1) A statement of financial position as at the end of the period:

2) A statement of comprehensive income for the period;

3) A statement of changes in equity for the period:

4) A statement of cash flow for the period.

5) Notes of Account comprising a summary of significant accounting policies and other

explanatory information; and

6) A statement of financial position as at the beginning of the earliest comparative period when
an entity applies an accounting policy retrospectively or makes a retrospective restatement of
items in its financial statements or when it reclassifies items in its financial statements

II. Objective of a Financial Statement Analysis

Business decisions are made on the basis of the best available estimates of the outcome of such
decisions. According to Meigs and Meigs (2003), the purpose of financial statement analysis is to
provide information about a business unit for decision making purpose and such information
need not to be limited to accounting data. White ratios and other relationships based on past
performance may be helpful in predicting the future earnings performance and financial health of
a company, we must be aware of the inherent limitations of such data. According to Meigs and
Meigs (2003), the key objectives of financial analysis are to determine the companys earnings
performance and the soundness and liquidity of its financial position. We are essentially
interested in financial analysis as a predictive tool. Accordingly, we want to examine both
quantitative and qualitative data in order to ascertain the quality of earnings and the quality and
protection of assets. In periods of recession when business failures are common, the balance

7
sheet takes on increase importance because the question of liquidity is uppermost in the minds of
many in the business community. However, when business conditions are good, the income
statement receives more attention. Nevertheless, a financial analyst has to grapple on the above
complexities of using financial statement analysis to achieve a specific purpose.

III. Uses and Users of Financial Statement

According to Akpan (2002), financial statement may be used by users for different purposes:

a) OWNERS AND MANAGERS:

Require financial statement to make important business decisions that affect its
operations. Financial analysis is then performed on these statements to provide
management with a more detailed understanding of the figures. These statement are also
used as part of managements annual report to the stockholders.
b) EMPLOYERS:
Also need these reports in making collective bargaining agreements (CBA) with the
management, in the case of labour unions or for individuals in discussing their compensation
promotion and rankings.

c) PROSPECTIVE INVESTORS:
They make use of financial statements to assess the viability of investing in a business.
Financial analysis are often used by investors and are prepared by professionals (financial
analyst), thus providing them with the basis for making investment decisions.
d) FINANCIAL INSTITUTIONS:
Financial institutions (banks and other lending company) use them to decide whether to
grant a company with fresh working capital or extend debt securities (such as a long term
bank loan or debentures) to finance expansion and other significant expenditures.

e) GOVERNMENT ENTITIES:
Government entities (Tax authorities) need financial statements to ascertain the property
and accuracy of taxes and other duties declared and paid by a company.
f) VENDORS:
They require financial statement to access the credit worthiness of the business.
g) MEDIA AND GENERAL PUBLIC:
They are also interested in financial statements for a variety of reasons.

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 CHAPTER 2

LITERATURE REVIEW

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The Literature review of this study will emphasis on the related studies on comparing and
analyzing financial statements to make an investment. The basis of financial planning analysis
and decision making is the financial information (Statements). Financial statements are needed to
predict, compare and evaluate a firms earning ability. It is also required to aid in economic
decision making investment and financing decision making. The financial information of an
enterprise is contained in the financial statements. The use of financial statement analysis in
investment decision has been addressed by a series of authors.

According to Gautam, U. S. (2005) Accountancy (P#215)

Financial Statement is generally explained as financial information which is the information

relating to financial position of any firm in a capsule form. Financial statement according to J. A
Ohison (1999) was defined as a written report that summarizes the financial status of an
organization for a stated period of time. It includes an income statement and balance sheet or
statement of the financial position describing the flow of resources, profit and loss and the
distribution or retention of profit.

According to Pandey, I.M. (2005 Financial management)

profitability is the ability of an entity to earn income. It can be assessed by computing various
relevant measures including the ratio of net sales to assets, the rate earned on total assets etc.

According to Craig Lawrence (1993)

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This paper examines the relationship between airline profitability and market share in the context
of contemporary strategic business theory. The paper provides a general overview of the business
environment in which airlines operates, provides some of the organizational goals airlines
pursue, and develops a situation assessment template for the airline industry. Theories of
business management are then evaluated with respect to the nature of the airline industry before
major elements of market share and profitability are examined. An empirical analysis based on a
model of a domestic Australian route is used to draw some conclusions about the impact of
different business strategies on airline profitability and market share. This is then broadened
through the introduction of a simple network model to examine the potential impact of operating
a network of services. The paper reaches the conclusion that the simplistic profitability-market
share relationship is not applicable to the airline industry, given that there are a large number of
other factors impacting on airline performance.

According to Laszlo Halpern, Gabor Korosi (1997)

Labor market and financial information is combined to explore the effect of the quality of labor
employed on the profitability of the firm. The quality of labor is measured as the portion of wage
differentials that cannot be explained by the human capital model. Profitability of Hungarian
exporting firms can be explained by economic factors during transition. Besides the quality of
labor export share, wage and bank costs, payables, receivables, foreign ownership, inventories,
amortization and equity became significant explanatory variables. Sectors proved to be
insignificant explanation for profit differences. Changing effects of monopolistic competition
and of the size of the firm reflect turbulent institutional environment for firms.

According to Kathryn L. Dehenter, Paul H. Malatesta (1998)

They present empirical evidence on the relative profitability, leverage, and labor intensity of
government-owned and privately-owned firms. Cross-sectional analysis of a sample of very large
firms indicates that those owned by governments are significantly less profitable than those held
privately. They are also more highly leveraged and more labor intensive. They conduct a time
series analysis of privatized firms and find little evidence 37 that privatization enhances
profitability. In our sample profitability improves immediately before privatization. The evidence

11
on subsequent improvement is mixed. Some measures of profitability are significantly less after
privatization than just beforehand. The evidence suggests that governments efficiently restructure
at least some firms before selling them, but that the actual change of ownership does not give rise
to further efficiency gains subsequently.

According to Richard S. Markovits (1998)

Politicians and most economists seem to assume that from the perspective of locative
(economic) efficiency he currently devotes too few resources to real investment in general and
R&D in particular. He therefore supports antitrust, tax, tort-law, and "innovation-law" policies
that will tend to increase the amount of resources devoted to all types of real investment and
R&D. This Article argues that this assumption and those related policy conclusions are far too
crude. The Article begins by executing a partial and preliminary third best-locative-efficiency
analysis that concludes that although the extant Pareto imperfections almost certainly cause the
private profitability of production-process research (designed to make discoveries whose use will
reduce the private or locative cost of producing relevant quantities of extant products) to be
lower than the locative efficiency of such research, his imperfections seem very likely to cause
the private profitability of product research and non-innovative investments in product quality or
variety to be higher than their locative efficiency. The primary reason for these latter conclusions
is that imperfections in seller competition seem likely to deflate the private cost that a product-
R&D investment or non innovative product-investment (because their private cost to be longer
than their locative cost) by more than they deflate the private benefits of product research and
non innovative product investment yield the investor. The Article concludes by outlining the
implications of these results for the desirability of various extant and proposed antitrust, tax, tort-
law, and copyright-patent-and-trade-secret policies. The general thrust of its argument is that, to
be allocatively efficient, policies that seek to encourage additional R&D expenditures or
investments in general must be more selective -- must be designed to insure that he will subsidize
only those expenditures whose profitability would otherwise be deflated by the Pareto
imperfections present in our economy.

According to Boris Nenide, Robert W. Pricer S. Michael Camp(2001)

12
These authors have presented a paper reviewing literature of various financial ratios that have
been used in research in the area of accounting and finance.It reveals that the use of ratio
calculations with multivariate analysis for predicting the performance of business firms is
common. However, much of the research uses a large database information without determining
if sample assumptions needed can be met for reliable conclusions to be drawn by the researchers.
This paper presents recommended adjustment techniques for researchers using large databases
for ratio calculation to allow for confidence that the results of analysis will be meaningful and
that inferences may be drawn from the data. Using a sample from the Kauffman Center for
Entrepreneurial Leadership Financial Statement Database, Balance Sheet and Income Statement
data of 250 firms is used to illustrate and explain techniques for data error identification,
handling the problem of denominators being negative or approaching zero when calculating
ratios, and effective techniques for transforming the data to achieve approximation of normal
distributions. The application of these recommendations will allow researchers to use financial
statement data samples that will meet required characteristics for the use of valid multivariate
statistical analysis.

According to Meigns et al. (2001)

Financial Statement simply means a declaration of what is believed to be true and which,
communicated in terms of monetary unit. It describes certain attributes of a company that is
considered to fairly represent its financial activities. Meigs and Meigs (2003) stated that the rate
of return on investment (ROI) is a test of managements efficiency in using available resources.
This review is organized under the following sub-heads for ease of comprehension.

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 CHAPTER- 3

ABOUT THE ORGANIZATION

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HISTORY

Established in 1992, Bharati Vidyapeeth University Institute of Management & Research

(BVIMR), New-Delhi enjoys the reputation of being one of the premier institute imparting
quality education in Management & Information technology.Strategically located in West Delhi.
BVIMR has splendid layout on sprawling four acres of land with 'state-of-art' infrastructure &
instructional facilities. The institute has carved its niche with a vision of 'Leadership in
management education through Innovation & Excellence.
The team led by Dr. Vikas Nath, Director-BVIMR could achieve the success under the able
guidance of the founder Hon'ble Dr. Patangrao Kadam, Vice Chancellor, Dr.Shivajirao Kadam
and Secretary, Dr. Vishwajeet Kadam.At BVIMR, the students, faculty and management share
team oriented common goals that are intellectually stimulating.Besides training young
professionals to meet the challenges of globalization, we at BVIMR develop entrepreneutrial
skills in our students.

Director SDE Message(New Delhi)

15
Mr. Amarjit R. Deshmukh

DirectorSDE
Academic Study Center: BVIMR, New Delhi

Dear BVUSDE Student,

Bharati Vidyapeeth University has established the School of Distance Education (SDE) during
the year 2004-2005. The motto was 'to reach the unreached' and provide educational
opportunities to working professionals and rural people.

The University got approval from Distance education Council and University Grants
Commission accorded its approval to start various programs of studies at under graduate and post
graduate level. Quality assurance and maintenance have been the motto of the School of
Distance Education.

The students are provided quality study material in Self Learning format and in addition to this
counseling is provided by well educated and rich industrial experienced Faculty at the
constituent units of the University itself One of the great advantages of Distance Learning is that
it provides a viable and affordable alternative to conventional mode of education, especially for
those, who for several socio-economic, family and geographic constraints, could not get
education despite their high motivation and genuine aptitude for studies, and also for those who
do not have time for education through conventional mode because of their personal,
professional and family obligations.

To help you overcome the fear of studying on your own from home we have devised a host of
support services specifically for our distance education students. Details of these will be
available in our Study Guide, which I recommend you to read thoroughly and organize your
study programme

I hope you will enjoy the course and it will be a great value addition to your profile. We are
always at your service to help solve your queries and questions.

Vice Chancellor's Message:

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We at BVIMR are amazed at its continuos growth as a provider of quality education. In last 15
years of its existence it has already created a place for itself.

Through many years of its existence, BVIMR has been able to remain academically closely
aligned to dynamic needs of fast globalizing Indian economy. The open economy provides many
opportunities but, on the flip side of these opportunities are the challenges it poses.

There is an attempt to maintain close partnership with the industry through visiting faculties,
seminars, felicitation programs etc.

BVIMR gives utmost importance to ethics and corporate social responsibility, as we believe to
be a good leader, it is important to be a good human being first. These subjects are taught as a
foundation for becoming business leaders. Also, at BVIMR enough focus is placed on co-
curricular activities where students are encouraged to participate, so as to have a well developed
personality. We prepare every student to become an achiever in his or her right.

Our faculty members gladly shoulder the responsibility to bring out the leader in each and every
student.

After passing out from the institute each one of our student is ready to face the world and take
the bull by its horns.

I hope you will enjoy discovering each one of these leaders of tomorrow one by one.

Founder's Message:

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Our mission at Bharati Vidyapeeth is to identify and prepare leaders for the new millennium and
also to cope-up with the increasing demand for leaders in the modern society.

Institute of Management is a workshop where today's youths are shaped up as effective managers
of tomorrow. Apart from the study of their regular syllabi, the students should get fair and proper
opportunities to express their views and ideas, especially in the field of Management, which
plays a vital role in the modern era. The youth should be molded and equipped with courage,
self-determination, and dedication and must be in a position to overcome any sort of difficulty
with introspection.

Keeping this in mind, we should start brainstorming process of management students, because
today's youth's are building blocks of tomorrow's Society. I am sure, "hard work brings
surprising results" and we are second to none in this sphere.

In pursuance of the main objective, Bharati Vidyapeeth has started several institutions operating
right from pre-primary to post graduation research level.

Institute Of Management & Research, New Delhi is one of these 157 institutions of Bharati
Vidyapeeth, Pune. The institute was established in 1992 as a part of BVP family in New Delhi,
the National Capital.BVIMR, Delhi although permanently recognized by University of Pune
earlier is brought under the ambit of Bharati Vidyapeeth Deemed University by the Government
of India on the recommendation of UGC under Section 3 of UGC Act, vide its Letter
Notification No. F.9-16/2004-U3 dated 25th February 2005.

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VISION:

To be a world class management institute for social transformation through dynamic education.

MISSION:

To impart borderless inclusive,absolute ingress to management and technical education

based on excellence.

To construct education system apt for the altering and assorted requisites of society and
industry in global context.

To proffer quality,advanced education for broadening the horizons of mind and creating
skilled pools of talents.

To foster quality research in management and technical facets for a holistic societal
development.

To develop national and international networks with industry,NGOs and research

institutions to address the expectancy concerns of stake holders.

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 To nurture pervasive appliance of ICT for embellishment of teaching, learning and
development for efficacious system inception.

To effect quality as an intrinsic component of all the institutional operations by

advocating innovative practices.

QUALITY ASSURANCE POLICY

To have intact, international benchmarks of quality assurance for perpetual self-

introspection of its performance standards and quality enhancements.

To further the creation of learner centric, altruistic learning ambiance, to facilitate

outcome based quality education, learning, training and development.

To enroot and harmonize ecumenical quality benchmarks for distinctive pedantic

executive pursuits, so as to evolve a world class brainery.

To convene training and development activities for personnel, to architect their

competencies for implementation of quality praxis.

To incarnate and systemize quality aestheticism and savoir-faire in the Institute.

CAMPUS FACILITIES

KRC - Knowledge Resource Center

BVIMR Library is a knowledge resource center with over 44000 books and over 179 National
and International Journals and Magazines. It is a fully computerized library with open access
system. A separate research section has a good stock of old issues of Journals/ Magazine/ News
Papers and research reports. The Library has subscribed EBSCO on-line Journal, which is a

20
collection over 1200 e-journals . The digital library contains a number of CDs/ Video cassettes
and is linked to various resource centers through broadband of 20 Mbps. Institute is the member
of American Library & British Council in India. The state-of-art, fully air-conditioned library has
all modern facilities to service the students & research scholars.
Online Collection
EBSCO (1200 Online Journals)
National Journals : 47
Magazines : 34
Newsletters : 03
Exchange Programme Journals : 50
Magazines : 01
Newsletters : 02
International Journals : 37

IRC - Information Resource Center:

The Computer center at BVIMR has more than 400 computers with the latest configuration. The
computer center is professionally managed & equipped with three IBM XEON based servers
ported with Windows 2003 server and Redhat linux Server. The Computer Lab is also protected
by Cyberoam firewall against unauthorized intrusion of viruses and spyware. In addition to the
general software it also has PROWESS (a corporate database) and SPSS. To add to the list a
digital Library of 30 computers are also there. LCDs and Printer facility are available to faculty
and students.
Internet / Wi-fi - The center integrates itself with the rest of the world with 20 Mbps through
leased line. The campus is Wi-Fi enabled too. Many students have laptop to access the wi-fi
facilities.

About Bharati Vidyapeeth

Maharashtra has a very long and well nurtured tradition of private initiative in higher education.
There are several organizations in Maharashtra, established by social reformers, educationists
and others, which have made commendable contributions to the cause of education. Inspired by
their work, Dr. Patangrao Kadam established Bharati Vidyapeeth in 1964 at Pune. The mission,
which Bharati Vidyapeeth has defined for itself is to bring about intellectual awakening of people
through the spread of education and to prepare human resources needed for all-round
development, particularly economy of the country.

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During the last 48 years or so, Bharati Vidyapeeth has made astonishing strides in the field of
education, particularly in higher and professional education. At present, it conducts 167
educational units of various kinds, right from pre-primary schools to postgraduate institutions.
They include 67 colleges / institutes of different disciplines.

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 CHAPTER 4

RESEARCH METHODOLOGY

STATEMENT OF PROBLEM

The study has been taken in the organisation for the purpose to know the FINANCIAL
STATEMENT ANALYSIS of the company.

OBEJECTIVE OF THE STUDY

The study basically aims to find out the financial performance of the company. Knowledge of the
current financial position are vital for a companys future course of action. It includes
familiarizing with the various financial management policies, standards, accounting system,
financial practices, internal control system and other salient features of the company.

23
 To know the current assets and current liabilities position of the company.
To analyse the financial health of the company.
To find out the profitability of Bharati Vidyapeeth .
To know about the capital structure and solvency of Bharati Vidya Peeth.

MANAGERIAL USFULNESS OF STUDY

The study highlights the problems related to the working capital of Hindalco Industries ltd so
that the company can improve the profitability of organisation and also customer satisfaction
through the high quality goods and products. The study provides complete information about all
the close competitors of company. It provides the feedback from customers regarding their
problems and their perception about investing in Hindalco Industries ltd so that company can
improve their services.

RESEARCH METHODOLOGY

Research methodology used here is purely explorative. it is used when one is seeking into the
general nature of the problem, possible decision alternatives and relevant variables that need to
be considered. this resistance is also useful for establishing priorities among research questions
and learning about practical problems of carrying out research.

The research methodology is highly flexible, unstructured and qualitative. Exploratory research
hypothesis are either vague or ill defined, or they do not exist at all.

SAMPLING PLAN

There has been no sampling plan as such as the study involved understanding the various process
and analysing them .The study involve the detailed analysis of secondary data calculated from
various sources and therefore no sample size and plan has been considered.

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DATA SOURCE:

Data has been collected through literature survey and expert opinion. Literature survey includes
the collection of data from various sources like books and study material. The part of data is
collected from primary sources and other from secondary sources.

PRIMARY SOURCES:

Information gathered by interview and discussing with the head and employees of departments
and my project guide.

SECONDARY SOURCES:

Company annual report.

Company websites.
Published information on the related topics.
Internal circulation booklets.

DATA ANALYSIS:

Different statistical tools are used like ms- word and ms-excel used for the analysis of data and
also consulted by some related books.

DATA COLLECTION METHODS:

The data will be collected using both by primary data collection methods as well as secondary
sources.

SECONDARY DATA :

Secondary data that will be used are web sites and published materials related to working capital
management as well as any relevant information on capital of the company.

Significance of Analysis of Financial Statements :

Financial analysis is the process of identifying the financial strengths and weaknesses of the firm
by properly establishing relationships between the various items of the balance sheet and the

25
statement of profit and loss. Financial analysis can be undertaken by management of the firm, or
by parties outside the firm, viz., owners, trade creditors, lenders, investors, labour unions,
analysts and others. The nature of analysis will differ depending on the purpose of the analyst. A
technique frequently used by an analyst need not necessarily serve the purpose of other analysts
because of the difference in the interests of the analysts.

Financial analysis is useful and significant to different users in the following ways:

(a) Finance manager:

Financial analysis focusses on the facts and relationships related to managerial performance,
corporate efficiency, financial strengths and weaknesses and creditworthiness of the
company. A finance manager must be well-equipped with the different tools of analysis to
make rational decisions for the firm. The tools for analysis help in studying accounting data
so as to determine the continuity of the operating policies, investment value of the business,
credit ratings and testing the efficiency of operations. The techniques are equally important
in the area of financial control, enabling the finance manager to make constant reviews of
the actual financial operations of the firm to analyse the causes of major deviations, which
may help in corrective action wherever indicated.

(b) Top management:

The importance of financial analysis is not limited to the finance manager alone. It has a
broad scope which includes top management in general and other functional managers.
Management of the firm would be interested in every aspect of the financial analysis. It is
Analysis of Financial Statements 177 178 Accountancy : Company Accounts and Analysis
of Financial Statements their overall responsibility to see that the resources of the firm are
used most efficiently and that the firms financial condition is sound. Financial analysis
helps the management in measuring the success of the companys operations, appraising the
individuals performance and evaluating the system of internal control.

(c)Trade payables:

Trade payables, through an analysis of financial statements, appraises not only the ability of
the company to meet its short-term obligations, but also judges the probability of its

26
continued ability to meet all its financial obligations in future. Trade payables are
particularly interested in the firms ability to meet their claims over a very short period of
time. Their analysis will, therefore, evaluate the firms liquidity position.

(d) Lenders:
Suppliers of long-term debt are concerned with the firms longterm solvency and survival.
They analyse the firms profitability over a period of time, its ability to generate cash, to be
able to pay interest and repay the principal and the relationship between various sources of
funds (capital structure relationships). Long-term lenders analyse the historical financial
statements to assess its future solvency and profitability.

(e) Investors:
Investors, who have invested their money in the firms shares, are interested about the
firms earnings. As such, they concentrate on the analysis of the firms present and future
profitability. They are also interested in the firms capital structure to ascertain its influences
on firms earning and risk. They also evaluate the efficiency of the management and
determine whether a change is needed or not. However, in some large companies, the
shareholders interest is limited to decide whether to buy, sell or hold the shares.

(f) Labour unions:

Labour unions analyse the financial statements to assess whether it can presently afford a
wage increase and whether it can absorb a wage increase through increased productivity or
by raising the prices.

(g) Others:
The economists, researchers, etc., analyse the financial statements to study the present
business and economic conditions. The government agencies need it for price regulations,
taxation and other similar purposes.

Objectives of Analysis of Financial Statements :

Analysis of financial statements reveals important facts concerning managerial performance
and the efficiency of the firm. Broadly speaking, the objectives of the analysis are to
apprehend the information contained in financial statements with a view to know the
weaknesses and strengths of the firm and to make a forecast about the future prospects of

27
the firm thereby, enabling the analysts to take decisions regarding the operation of, and
further investment in the firm. To Analysis of Financial Statements 179 be more specific,
the analysis is undertaken to serve the following purposes (objectives):
To assess the current profitability and operational efficiency of the firm as a whole as well
as its different departments so as to judge the financial health of the firm.
To ascertain the relative importance of different components of the financial position of
the firm.
To identify the reasons for change in the profitability/financial position of the firm.
To judge the ability of the firm to repay its debt and assessing the short-term as well as the
long-term liquidity position of the firm. Through the analysis of financial statements of
various firms, an economist can judge the extent of concentration of economic power and
pitfalls in the financial policies pursued. The analysis also provides the basis for many
governmental actions relating to licensing, controls, fixing of prices, ceiling on profits,
dividend freeze, tax subsidy and other concessions to the corporate sector.
Tools of Analysis of Financial Statements:
The most commonly used techniques of financial analysis are as follows
:
1. Comparative Statements:
These are the statements showing the profitability and financial position of a firm for
different periods of time in a comparative form to give an idea about the position of two
or more periods. It usually applies to the two important financial statements, namely,
balance sheet and statement of profit and loss prepared in a comparative form. The
financial data will be comparative only when same accounting principles are used in
preparing these statements. If this is not the case, the deviation in the use of accounting
principles should be mentioned as a footnote. Comparative figures indicate the trend and
direction of financial position and operating results. This analysis is also known as
horizontal analysis.

2. Common Size Statements:

These are the statements which indicate the relationship of different items of a financial
statement with a common item by expressing each item as a percentage of that common
item. The percentage thus calculated can be easily compared with the results of
corresponding percentages of the previous year or of some other firms, as the numbers
are brought to common base. Such statements also allow an analyst to compare the
operating and financing characteristics of two companies of different sizes in the same

28
 industry. Thus, common size statements are useful, both, in intra-firm comparisons over
different years and also in making inter-firm comparisons for the same year or for
several years. This analysis is also known as Vertical analysis. 180 Accountancy :
Company Accounts and Analysis of Financial Statements.

3. Trend Analysis:

It is a technique of studying the operational results and financial position over a series of
years. Using the previous years data of a business enterprise, trend analysis can be done to
observe the percentage changes over time in the selected data. The trend percentage is the
percentage relationship, in which each item of different years bear to the same item in the
base year. Trend analysis is important because, with its long run view, it may point to basic
changes in the nature of the business. By looking at a trend in a particular ratio, one may
find whether the ratio is falling, rising or remaining relatively constant. From this
observation, a problem is detected or the sign of good or poor management is detected.

4. Ratio Analysis:

It describes the significant relationship which exists between various items of a balance
sheet and a statement of profit and loss of a firm. As a technique of financial analysis,
accounting ratios measure the comparative significance of the individual items of the
income and position statements. It is possible to assess the profitability, solvency and
efficiency of an enterprise through the technique of ratio analysis.

5. Cash Flow Analysis:

It refers to the analysis of actual movement of cash into and out of an organisation. The flow
of cash into the business is called as cash inflow or positive cash flow and the flow of cash
out of the firm is called as cash outflow or a negative cash flow. The difference between the
inflow and outflow of cash is the net cash flow. Cash flow statement is prepared to project
the manner in which the cash has been received and has been utilised during an accounting
year as it shows the sources of cash receipts and also the purposes for which payments are
made. Thus, it summarises the causes for the changes in cash position of a business
enterprise between dates of two balance sheets.

29
 CHAPTER- 5

DATA ANALYSIS

30
Primary data analysis:

BHARATI VIDYAPEETH
Balance sheet as on 31st
March 2015
PARTICULARS 31.3.2015 31.3.2014
i: LIABILITIES
Deposits and Grants 15,87,560 16,63,560
Current liabilities 1,808 0
Other Liabilities 1,01,045 0
Student Account 28,750 0
Income and Expenditure Account 3,21,08,014 2,25,62,731
TOTAL 3,38,27,177 2,42,26,291
ii : ASSETS
Fixed Assets 9,35,180 10,02,617
Branch/Divisions 2,68,27,008 2,14,27,091
Other Assets 2,11,957 2,13,012
Cash and Bank Balances 48,76,252 8,13,941

Comparative Balance sheet as on 31st March 2015

PARTICULARS 31st March 31st March
2015 2014
i: LIABILITIES
Deposits and Grants 15,87,560 16,63,560 -76,000 -5%
Current liabilities 1,808 0 1,808 100
%
Other Liabilities 1,01,045 0 1,01,04 100
5 %
Student Account 28,750 0 28,750 100
%
Income and Expenditure 3,21,08,014 2,25,62,731 95,45,2 42%
Account 83
Total 3,38,27,177 2,42,26,291

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ii : ASSETS
Fixed Assets 9,35,180 10,02,617 -67,437 -7%
Branch/Divisions 2,68,27,008 2,14,27,091 53,99,9 25%
17
Student Account 9,76,780 7,69,630 2,07,15 27%
0
Other Assets 2,11,957 2,13,012 -1,055 0%
Cash and Bank Balances 48,76,252 8,13,941 40,62,3 499
11 %
Total 3,38,27,177 2,42,26,291

Table 2 : Comparitive Balance Sheet

1% ii : ASSETS
Fixed Assets
Branch/Divisions
40%
Student Account
50%
Other Assets
Cash and Bank
Balances
1%
7% 0% Total

Interpretation:

Table 1 shows- Using comparative analysis, the organization is following the growth
pattern. In the context of the analysis, every ratio is growing and every difference in
positive.

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 BHARATI VIDYAPEETH
Income & Expenditure Sheet For The Year Ended
31st March 2015
PARTICULARS 31.3.2015 31.3.2014
i : Income
Tuition Fees 1,46,56,000 1,02,12,000
Other Fees 19,66,000 577500
Bank Interest 2,38,429 105192
Other Income 2,51,889 276810
Total 1,71,12,318 1,11,71,502

ii : Expenses
Salary and Allowance 38,03,799 41,08,703
Administrative
Expenditure 30,51,863 9,65,800
Educational Expenditure 5,94,936 2,01,819
Depreciation 1,16,437 1,11,407
Total 75,67,035 53,87,729

Surplus 95,45,283 57,83,773

Table 3: Income & Expenditure Statement

Bharati Vidyapeeth
Income & Expenditure Sheet for the year ended 31st March 2015
PARTICULAR 31st 31st Increase/ % Increase/
S March March (Decrease) (Decrease) in
2015 2014 over 2014 relation to 2014
i : Income
Tuition Fees 44%

33
 1,46,56,00 1,02,12,00 44,44,000
0 0
Other Fees 240%
19,66,000 5,77,500 13,88,500
Bank 127%
Interest 2,38,429 1,05,192 1,33,237
Other -9%
Income 2,51,889 2,76,810 -24,921
Total
1,71,12,3 1,11,71,5
18 02

ii :
Expenses
Salary and -7%
Allowance 38,03,799 41,08,703 -3,04,904
Administrat 216%
ive 30,51,863 9,65,800 20,86,063
Expenditure
Educational 195%
Expenditure 5,94,936 2,01,819 3,93,117
Depreciatio 5%
n 1,16,437 1,11,407 5,030
Total
75,67,035 53,87,729

Surplus 65%
95,45,283 57,83,773 37,61,510

Table 4 : Comparitive Income Statement

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 Bharati Vidyapeeth Income & Expenditure Sheet for the year ended 31st March 2015 31st March 2015

i : Income Tuition Fees Other Fees

Bank Interest Other Income Total
0% 3%
25% i : Expenses Salary and Allowance Administrative
13%
1% 0% Expenditure
16%
5% 0% Educational Depreciation Total
6% 29% Expenditure
Surplus

Intrepretation:
Table 4 shows-

Using comparative analysis, the organization is following the growth pattern. In the context of
the analysis, every ratio is growing and every difference in positive.Comparison shows positive
variance

35
 CHAPTER-5
Findings

FINDINGS
The balance-sheet along with the income statement is an important tool for
investors and many other parties who are interested in it to gain insight into
a institution and its operations. The balance sheet is snapshot at a single
point of time of the institutions account- covering its assets & liabilities.

36
P&L Account tells the net profit and net loss of a institution & its
appropriation.
In case of Bharati Vidya Peeth , the institute continued to grow and
diversify its assets base and revenue streams. It shows all the items are
increased mostly but increase in this year is more as compared to the
previous year.

The income of the institution is increased between 2014-15 by 13%..

The expenses of the institution is increased by 21,79,306.
The assets of the institution is increased by 50% and the fixed assets
are increased by 1%.
Cash and bank balances of the instituition is increased by 7%.
The total ratio of the institution Is increased by 50%.

37
 CHAPTER-6
Conclusion & Suggestions

38
Conclusion:

Analysis and interpretation of financial statement is an important tool in assessing companys

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

This project of financial statement analysis is not merely a work of the project but a brief
knowledge and experience of that how to analyse the financial performance of the institution.
The study undertaken has brought in to the light of the following conclusions. According to this
project I came to know that from the analysis of financial statements is clear that Bharati
Vidyapeeth Deemed University have been incurring profit during the period of study. So the
institution should focus on getting of more profits in the coming year by taking care of internal
as well as external factors. And with regard to resources, the institution is take utilization of the
assets properly. And also the institution has maintained low inventory.

This project mainly focuses on the basics of different types of financial statements Balance
Sheets and Profit & Loss statements of Bharati Vidyapeeth Deemed University has been studied.

39
 CHAPTER-7
BIBLIOGRAPHY

40
 Bibliography
The data has been collected through certain resources that areas follows :-

Books Referred :-
Khan& Jain , ( 2007) , Financial Management
I.M.Pandey , (1978) , Financial Management and Tax
Brigham & Western (7th edition 2011), Financial Management
Maheshwary& Maheshwary (2012) , Financial and Resource
Management
Ambrish Gupta, (2008) , Financial Accounting for Management

Website :-
www.bvusde.com
www.bvimr.com

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ANNEXURE

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