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A Financial Statement Analysis for RCI Industries & Technologies Ltd.
Of the Requirement
Submitted To:
DECLARATION
I hereby declare that this Project Report titled A FINANCIAL STATEMENT ANALYSIS
FOR RCI INDUSTRIES & TECHNOLOGIES LTD. - A MANUFACTURING
COMPANY submitted by me to Banarsidas Chandiwala Institute of Professional Studies,
Dwarka is a bonafide work undertaken during the period from 12th June,2017 to 31st July,2017
by me and has not been submitted to any other University or Institution for the award of any
degree diploma / certificate or published any time before.
BONAFIDE CERTIFICATE
This is to certify that as per best of my belief the project entitled “A FINANCIAL
STATEMENT ANALYSIS FOR RCI INDUSTRIES & TECHNOLOGIES LTD. - A
MANUFACTURING COMPANY ” is the bonafide research work carried out by VIKRANT
DANI student of BBA, BCIPS, Dwarka , New Delhi during June-July 2017, in partial fulfillment
of the requirements for the Summer Training Project of the Degree of Bachelor of Business
Administration.
He has worked under my guidance.
--------------------
Name: Mr. Jayant Sanyal
Project Guide (Internal)
Date:
Counter signed by
-------------
Name: Dr. Davindar Sharma
Director /HOD
Date:
ACKNOWLEDGEMENT
An undertaking of work life, this is never an outcome of a single person; rather it bears the
imprints of a number of people who directly or indirectly helped me in completing the present
study. I would be failing in my duties if I don‘t say a word of thanks to all those who made my
training period educative and pleasurable one.
My heart full thanks to the whole staff of RCI Industries & Technologies Ltd. who gave me
continuous support in every possible manner to gain practical knowledge in Industry.
Finally, I would like to thank all lecturers, friends and my family for the kind of support and to
all who directly or indirectly helped me in preparing this project report.
VIKRANT DANI
Enroll.No.:04650501715
TABLE OF CONTENTS
2.1 Introduction 10
3.3 Methodology 25
Chapter 6 Findings 45
Chapter 7 Recommendations/Suggestions 47
Chapter 8 Conclusion 49
Chapter 9 Bibliography 51
EXECUTIVE SUMMARY
This project is specially designed to understand the subject matter of Financial Statement Analysis
through various ratios in the company. This project gives us information and report about company’s
Financial Position. Throughout the project the focus has been on presenting information and comments
in easy and intelligible manner.
The purpose of the training was to have practical experience of working in an organization and to have
exposure to the various management practices in the field of Finance. This training has also given me
an on the job experience of Financial Management. In the analysis, financial ratios were used to gain a
critical review of the specific areas of assessment of the company’s performance. The ratios were able
to provide a clear view of the overall performance of the company.
This project of financial analysis & interpretation in the production concern is not merely a work of the
project but a brief knowledge and experience of that how to analyze the financial performance of the
firm. The study undertaken has brought in to the light of the following conclusions. According to this
project I came to know that from the analysis of financial statements it is clear that RCI INDUSTRIES
& TECHNOLOGIES LTD. have been incurring profit during the period of study. So the firm should
focus on getting of more profits in the coming years by taking care internal as well as external
factors. And with regard to resources, the firm is take utilization of the assets properly. And also the
firm has a maintained low inventory.
This project mainly focuses on the basics of different types of financial statements. Balance
Sheet and Profit & Loss statements of have been studied. From ratio analysis of Balance Sheet
and P & L Statement of RCI INDUSTRIES & TECHNOLOGIES LTD. of 2015-17 it was
concluded that liquidity position of the company is good. Current ratio, net profit margin,
operating profit margin, Return on assets , Return on working capital were found to be
unacceptable. The ratios that are found to be desirable are Inventory Turnover Ratio , Working
Capital Turnover Ratio , Return On Investment Ratio and Debt – Equity Ratio .
II
PLAN OF RESEARCH
2.1 INTRODUCTION
Analysis means establishing a meaningful relationship between various items of the two
financial statements with each other in such a way that a conclusion is being drawn. By financial
statements by means of two statements
These are prepared at the end of a given period of time. They are the indicators of
profitability and financial soundness of the business concern. The term financial analysis is also
known as analysis and interpretation of financial statements. It refers to the establishing
meaningful relationship between various items of the two financial statements i.e. Income
statement and Position statement. It determines financial strength and weakness of the firm.
Analysis of financial statements is an attempt to assess the efficiency and performance of an
enterprise. Thus, the analysis and interpretation of financial statements is very essential to
measure the efficiency, profitability , financial soundness and future prospects of the business
units. Financial analysis serves the following purposes.
Indicating the trend of achievements
Financial statements of the previous years can be compared and the trend regarding
various expenses, purchases, sales, gross profits and net profit etc can be ascertained. Value of
assets and liabilities can be compared and the future prospects of the business can be envisaged.
The trend and other analysis of the business provides information indicating the
growth potential of the business.
10
2.2 Scope of study
The scope and period of the study is being restricted to the following.
1. The scope is limited to the operations of the RCI Industries & Technologies Ltd.
2. The information is obtained from the primary and secondary data was limited to the RCI
Industries & Technologies Ltd. .
3. The profit and loss, the balance sheet was on the last three years.
11
2.3 OBJECTIVES OF THE STUDY
Ø To calculate the important financial ratio of the organization as a part of the ratio analysis
thereby to understand the changes the needs and trends in the firm’s financial position.
Ø To assess the performance of RCI INDUSTRIES & TECHNOLOGIES LTD. On the basis of
earnings and also to evaluate the solvency position of the company.
Ø To identify the financial strengths and weaknesses of the organization.
• To know about Liquidity Position
• To Know about Long- Term Solvency
• To Know about Operating Efficiency
• To know about Over-All Profitability
• To Know About Inter- firm Comparison
Financial performance of an enterprise will affect other types of performance and also the
productivity of finances is good, the productivity of men and material would be good.
Moreover the study of non-economic and qualitative performance, which studies the non -
economic factors like customer satisfaction, citizen satisfaction etc.
12
2.5 LITERATURE REVIEW
13
6. I.M.Pandey (2007) :
In his research article on financial performance he has pointed that the financial statements contain
information about the financial consequences and sources and uses of financial resources, one should
be able to say whether the financial condition of a firm is good or bad; whether it is improving or
deteriorating. One can relate the financial variables given in financial statements in a meaningful way
which will suggest the actions which one may have to initiate to improve the firm’s financial condition
.
9. Priyaaks (Mar 2012): in his research article on financial performance he has pointed that Financial
statement analysis is the process of examining relationships among financial statement elements and
making comparisons with relevant information. It is a tool in decision-making processes related to
stocks, bonds, and other financial instruments.
From the above literature review, it is evident that, the financial performance depicts the efficiency of
organization. Along with that financial statements are very useful for decision making in the company
by Board of Directors and management. It also helps to know the prosperity of the company with the
profitability.
14
III
COMPANY PROFILE
15
3.1 COMPANY'S HISTORY
Incorporated in the year, 1992, RCI Industries & Technologies Limited is listed with BSE Ltd.
Further, we established our name in Indian Handicrafts specially made by Copper & Brass
metals. Since inception, our Company under the guidance of experienced promoters has
responded to changing economic conditions.
We are one of the leading companies engaged in the sphere of offering and exporting Copper
items such as Copper Wires which include Annealed Copper Wire, Bunched Copper Wires ropes
and copper ingots which are used in different electrical and industrial applications. With
experience of more than 25 years in the sphere of trading and exporting Copper Wires, we
understand current market trends and demand that has enabled us to cater various industries such
as manufacturing units, industries, automobile & engineering industry. Dedicated employees
forming the part of our Company, we have grown from strength to strength under the dynamic
leadership of our promoters and directors. The combined experience has propelled our Company
to source and cater to the specific needs of various customers.
Our Company is progressing rapidly and gaining trust of customers under the guidance of our
mentor & Managing Director, 'Mr. Rajeev Gupta'. His business skills, market knowledge,
extensive experience of metal trading & leadership enabled us to gain a successful position in the
market.
16
PRODUCTS OF RCI
1. Brass
2. Copper
3. Stainless Steel
4. Indian Handicraft
BRASS
We are pleased to inform you that we manufacturer close tolerance Copper and Brass Strips,
Coil/Foils 63/37, 65/35, 70/30 Alloy. The above alloys can be supplied in 4 to 366 mm width in
Soft, Half Hard, Full Hard and Spring Hard. Our Strips are precision rolled on imported
Sendzimir Mill to a close tolerance. We offer a Gauge tolerance of ±0.01 mm for thick material
(0.30 – 0.60) ±0.005 mm for thin strips (less than 0.30 mm). Our Strips are especially suited
manufacture of small precision components requiring bending, drawing and punching
operations. Using RCI quality Brass Strip, Coil/Foils is economical in terms of material saving,
fewer rejections as well as longer life of dies and punches all due to a very precise gauge
control.
Applications: Used in Automobiles Radiators, Bulb and Lamp Caps, Imitation Jewelry, Eyelets,
Thimbles, Clocks, Pens and Various sheet metal pressed components.
Ordering: Please mention the Alloy Grade, Temper, Thickness, Width & Quantity in your
enquiries.
17
18
COPPER
Electrolytic-Tough-Pitch (ETP)
is the most common copper. It is universal for electrical applications. ETP has a minimum
conductivity rating of 100% IACS and is required to be 99.9% pure. It has 0.02% to 0.04%
oxygen content (typical).
Typical Uses
Electrical engineering
Busbars, Conductors
Coaxial Cables
Transistor Components
19
STEEL
Stainless Steel: We are pleased to inform you that we manufacturer close tolerance Stainless
Steel Strips and Foils of 316, 304, 301 and 202 Grade. The above alloys can be supplied in 3 to
375 mm width in Soft, Half Hard, Full Hard and Spring Hard tempers.
Our Strips are precision rolled on imported Sendzimir Mill to a close tolerance. We offer a
Gauge tolerance of ±0.02 mm for thick material (0.30 – 0.60) and ±0.01 mm for thin strips (less
than 0.30 mm).
Our Strips are especially suited manufacture of small precision components requiring bending,
drawing and punching operations.
Using RCI quality Stainless Steel Strips is economical in terms of material saving, fewer
rejections as well as longer life of dies and punches all due to a very precise gauge
control.
Applications: Used in electrical, Computer, Watch, thermostat, Fountain Pen Nibs, Chemical
Industry, Battery Cell Contacts Flexible hoses etc.
Ordering: Please mention the Alloy Grade, Temper, Thickness, Width & Quantity in your
enquiries.
20
PROCESS FLOW CHART
21
3.4 SWOT ANALYSIS OF RCI
The strength, weakness, opportunities and threats which are being experienced by RCI as a
growing concern have been summarized up in the following lines.
Ø STRENGTH’S
Ø WEAKNESS
Ø OPPORTUNITIES
Ø THREATS
22
IV
RESEARCH METHODOLOGY
23
4.1 SOURCE OF DATA
Ø Three year annual report of RCI Industries & Technologies Ltd. from 2014-2017 .
4.2 METHODOLOGY
The study carried with the cooperation of the management who permitted to carry on
the study and provided the requisite data collected from the following sources.
Ø Primary data
Ø Secondary data
PRIMARY DATA
The information collected directly without any reference is primary data. In the study it is
mainly through conversation with concerned officers or staff members either individually or
collectively. The data includes:
2. From the people who are directly involved with the transaction of the firm.
SECONDARY DATA
Study has been taken from secondary sources i.e. published annual reports of the
company editing, classifying and tabulation of the financial data. For this purpose performance
data of RCI Industries & Technologies Ltd. for the last 3 years has been used.
24
DATA COLLECTION
AND
DATA ANALYSIS
25
26
27
28
29
30
31
32
5.1 Ratio analysis for 2015
2. Current Assets =
Current Ratio = 2625795998 1.38:1 It is not good
3. liquid Assets =
Acid test or Quick ratio = 2017097997
1.06:1 It is good.
Liquid Assets Current Liabilities =
1910210690
Liquid Liabilities
33
6. Gross Profit=
Sales 8420604476
7. Net Profit
It is not
Net Profit Ratio = = 21858930
0.26% satisfactory
Net Profit * 100 Sales=
Sales
8420604476
8. Net Income
8420604476
34
12. Sales =
It is satisfactory
Working Capital Turnover= 8420604476 1.18:1
13. Sales =
It is not good
Inventory Turnover= 8420604476 99.2:1
= 2625795998 - 608698001
= 2017097997
= 1910210690
= 316756333
35
5.2 Ratio analysis for 2016
2. Current Assets =
Current Ratio = 2874031167 1.41:1 It is not good
5. Net Profit =
Return On Investment Ratio 34679913 It is not
24.14%
Capital A/C = satisfactory
= Net Profit*100 108994150
Capital a/c+ Net Profit
36
6. Gross Profit Ratio = Gross Profit =
49.22% It is satisfactory
Gross Profit * 100 5650392108
7. Net Profit =
34679913 0.30% It is not satisfactory
Net Profit Ratio =
Sales =
Net Profit * 100
Sales 11478991527
8. Net Income =
813701527
11478991527
37
12. Sales =
It is good
Working Capital Turnover= 11478991527 14.11:1
13. Sales =
It is good
Inventory Turnover= 11478991527 34.59:1
= 2847031167 - 741482322
= 2105548845
= 2033329640
= 300000000
38
5.3 Ratio analysis for 2017
3. liquid Assets =
Acid test or Quick ratio = 2747383652 1.06:1 It is good.
39
7. Net Profit =
70716775 0.51% It is not satisfactory
Net Profit Ratio =
Sales =
Net Profit * 100
Sales 13839977093
8. Net Income =
9.
Return on working capital = Net profit = 70716775 7.95% It is not good
13839977093
40
12. Sales =
It is safe
Working Capital Turnover= 13839977093 15.56:1
13. Sales =
It is good
Inventory Turnover= 13839977093 49.47:1
= 3467609711 - 720226059
= 2747383652
= 2578448030
= 300000000
41
5.4 Variation of Financial Ratios
42
43
VI
FINDINGS
44
FINDINGS
This report work has identified how companies use financial statement analysis and interpretation in
making effective management decisions. Overall organizational profitability and achievement of
organizational objectives were discussed. Again the difference between the returns of a financial
statement analysis and interpretation based on management decisions were also discussed.
• Gross profits are decreased during the period of 2015-17, which indicates that firm’s
inefficient management in manufacturing and trading operations.
• Liquidity ratio of the firm is better liquidity position in over the three years. It shows that the
firm had sufficient liquid assets.
• Cost of goods sold ratio of the company has increased during the period .
• Working Capital Turnover Ratio has increased during the period.
• Net profit has increased by 0.25%.
• Return on Investment has increased by 35.92%.
• Gross Profit has decreased by 14.49%.
45
VII
RECOMMENDATIONS
/ SUGGESTIONS
46
Recommendations / Suggestions
This project of financial analysis & interpretation in the production concern is not merely a work of
the project but a brief knowledge and experience of that how to analyze the financial performance of
the firm. The study undertaken has brought in to the light of the following conclusions. According to
this project I came to know that from the analysis of financial statements it is clear that RCI
INDUSTRIES & TECHNOLOGIES LTD. have been incurring profit during the period of study. So
the firm should focus on getting of more profits in the coming years by taking care internal as well as
external factors. And with regard to resources, the firm is utilizing all its assets properly. And also the
firm has a maintained low inventory.
Limitations of study
2. As most of the data is from the secondary sources, hence the accuracy is limited.
47
XI
CONCLUSION
48
Analysis and interpretation of financial statements is an important tool in assessing company’s
performance. It reveals the strengths and weaknesses 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. It is
known that investing in any company involves a lot of risk. So before putting up money in any
company one must have thorough knowledge about its past records and performances. Based on the
data available the trend of the company can be predicted in near future.
This project mainly focuses on the basics of different types of financial statements. Balance Sheet and
Profit & Loss statements of have been studied.
From ratio analysis of Balance Sheet and P & L Statement of RCI INDUSTRIES &
TECHNOLOGIES LTD. of 2015-17 it was concluded that liquidity position of the company is good.
Current ratio, net profit margin, operating profit margin, Return on assets , Return on working capital
were found to be unacceptable. The ratios that are found to be desirable are Inventory Turnover Ratio ,
Working Capital Turnover Ratio , Return On Investment Ratio and Debt – Equity Ratio .
49
XI
BIBLIOGRAPHY
50
BIBLIOGRAPHY
51