Completed Project

Financial performance
Chapter-I
INTRODUCTION
For every organization there is a needed to evaluate the financial

performance, in order to know whether the company is growing or not. So
the study is full based on evaluation of financial statements of BESCOM.
Evaluation of the financial performance of any industry is very
important as the success of the industries mainly depends on its effective
overall performance that is ultimately displayed by virtual of financial
indicators. To understand the general direction in which the company is
moving and the steps it takes to correct the deviations against the set
stands is the primary task that should be carried out by any prudent
management.
Management is ultimately accountable for the direction in which the

corporate enterprise moving. An in depth analysis of the financial
performance from time to time will be instrumental in setting right any
adverse deviations from planned benchmarks of performance so that
ultimately the corporate enterprises is enables to get the optimum returns
on its investments. A system of management accounting would go a long
way in attaining any objectives towards this end.
With the details study of the financial performance, one can make an
attempt to ascertain profitability to show whether company is getting
satisfactory return on its investments, liquidity position to know
company’s ability to meet all its financial obligations in its day-to-day
business operation.
R C Collage of commerce & management 1

Financial performance is used to interpret the financial health of the

enterprise. There are different parties interested in the analysis and
interpreting the financial performance for knowing the financial position of
the firm. For each individual purposes, like managers may use information
as a managerial tool, shareholders will be interested in financial health,
employees will like to share the prosperity, creditors will be interested to
know the financial condition and performance of the firm while granting
credit, providing loans or making investments in the firm and the
community at large has social and economic interests in the organization.
FINA
NCIAL PERFORMANCE PARAMETRES–AN OVER VIEW:
1.1 FINANCIAL STATEMENT: The American Institute of certified Public

Accountants states the nature of financial system
Financial statement are prepared for the purpose of presenting a
periodical review of report on progress by the management and deal with
the status of investment in the business and the results achieved during
the period under review. They reflect a combination of recorded facts,
accounting principles, and personal judgments.
V
arious financial statements are:
Income statement or profit and loss account
Balance sheet
Statement of retained earnings
Fund flow statement

Cash flow statement

1.2 IMPORTANCE OF FINANCIAL STATEMENTS
The financial statements are mirror that reflects the financial position
and operating strength and weakness of the concern. These statements
are useful to management, investors, creditors, bankers, workers, and
government and public at large. George. O May points out the following
major uses of financial statements.
➢ As a report of stewardship
➢ As a basis for fiscal policy
➢ To determine the legality of dividends
➢ As guide to wise dividend action
➢ As a basis for granting of credit
➢ It provides prospective information, to investors.
➢ As an aid to government supervision
➢ As a basis for price or rate regulation
➢ As a basis for taxation
1.3 LIMITATIONS:
Though financial statements are relevant and useful for the concern
still they do not present a final picture of the concern. The utility of these
statements is dependent upon a number of factors. The analysis and
interpretation of these statements should be done very carefully
otherwise misleading conclusions may be drawn.
The financial statements suffer from following limitations:
➢ Only interim reports (that is exact information is not given only

approximate)
➢ Do not give exact position of the concern
➢ The statements are on the basis of historical costs
➢ Impact of non-monetary factors ignored (eg: goodwill of the

company)
1.4 COMPARATIVE STATEMENT
The comparative financial statements are statements of the financial

positions at different periods of time. The elements of financial position
are shown in a comparative form so as to give an idea of financial position
at two or more periods. Any statements in a comparative form will be
covered in comparative statements. Two financial statements (that is
balance sheet and income statements) are prepared in comparative form
in order to compare figures of two periods but also the relationship

between balance sheet and income statement enables an in-depth study

of financial position of operative results.
Comparative statement may show.

1. Absolute figures.
2. Changes in absolute figures that are increase/decrease.
3. Absolute data in terms of percentages.
4. increase/decrease in terms of percentages.
1.5 IMPORTANCE OF COMPARATIVE STATEMENT.
Comparative statement is prepared by a concern to know the current

financial position, short-term financial position and profitability of the
concern.
A student should study the increase/decrease in current assets and

current liabilities this will enable him to analyze the current financial
position.
The long-term financial position of the concern can be analyzed by

studying the changes in fixed assets, long-term liabilities and capital. The
proper financial policy of the concern will finance fixed assets by the issue
of long-term securities or issue of fresh capital.
If the increase in financial assets is more than the increase in long-

term securities then part of financial assets are financed by working
capital.
Profitability:

To know the profitability of a concern there should be increase in

retained earnings, various resources and surplus etc., improved or not, if
there is decrease in retained earnings and other resources there will be
decrease in profit vice versa.,
Chapter-II
RESEARCH DESIGN
2.1 STATEMENT OF THE PROBLEM
The profitability of a business depends on the efficiency with which

fixed assets are used and to identify the area where lapses have occurred
and also to suggest remedial measure this study is undertaken.
Any business enterprise needs funds for its operations. Creditors and
investors are the major “sources” of funds apart from “owner’s funds”. An
enterprise would succeed in getting funds from these sources provided its
performances are satisfactory.
In present case, the BESCOM being a public sector undertaking, the
major sources of funds are:
a) Loan from Rural electrification corporation Ltd, New Delhi
b) Term Loans from Commercial banks namely SBI, Oriental bank of
commerce, Corporation bank, UCO bank.
c) Loans from Government of India & Karnataka.
Each of above “sources” view at company’s performance from different
angles, as their expectations differs. The study aims at:
Whether the financial position and overall performance of the
company has viewed by creditors and investors is satisfactory or not.
The study also aims at examining the short fall and suggesting
measures.
2.2. OBJECTIVES OF THE STUDY

The study was carried out keeping in mind the following objectives

1. To study the financial performance of the company for the last four
years.
2. To analyze the financial performance of the company with the help of
the trend analysis using various statements of the company.
3. To suggest improvement in financial performance.
2.3. SCOPE OF THE STUDY

Analysis of the financial position of BESCOM is needed to study the
financial performance and growth over a period and to know the progress
of the power sector in its distribution region.
The study has been undertaken for understanding the following
points:
➢ The financial position of BESCOM.
➢ How the BESCOM going on to meet the obligation of creditors and
investors.
➢ Growth in financial performance of BESCOM.
➢ Utilization of sources and application of funds.
2.4. METHODOLOGY OF RESEARCH
Research methodology is a systematic way of solving any research

problem. It is a science of analyzing how research is done scientifically. It
studies the various steps that are generally adopted by a research in
studying the research problem.
The feasibility of the project was analyzed and the necessary financial
analysis was made with the help of trend analysis, comparative
statement, and ratio analysis along with the necessary tables and graphs

2.5. SOURCES OF DATA
There are two types of data collections:

1. Primary data
2. Secondary data
1. Primary data:
Primary data are those data, which are collected at first hand,
either by the researcher or by someone else especially for the purpose
of the study is known as primary data.
The primary data are collected by direct contact with the finance
department heads and asking them that it had preplanned and doubts
that have risen while they were explained. The study was mainly the
financial aspect of the company.
2. Secondary data:
The study depends upon secondary data,

The company provides the data for the study. The main sources of
information were taken from:
1. The internal sources of the company.
2. Annual reports of the company for the year 2004-05 to 2007-08.
3. Balance sheet and profit and loss account.
4. Manuals provided by the company, books and articles.
5. Company website.
2.6. PLAN OF ANALYSIS
The gathered data have been analyzed to draw the conclusions with
the help of statistical tools and techniques, such as averages and

percentages, where necessary to make the data in presentable manner

tables, charts, diagrams and the like where utilized.
2.7. LIMITATIONS OF THE STUDY
➢ The study was limited for a period of 4 years.

➢ The study was based on the secondary data such as published
annual report of the company; accuracy of calculations depends
very much as the information found in the balance sheet.
➢ The findings of the study cannot be generalized since the study is
solely confined to BESCOM.
➢ There is a limit to the time taken for the study, which is restricted
to ten weeks
2.8. CHAPTER SCHEME
This project report is presented fewer than five chapters.
Chapter-01: Introduction to financial management, financial

Performance.
Chapter-02: Design of the study. This chapter portrays the statements

of problems, Objective of the study, Scope of study,
Methodology, source of data, plan of analysis, Limitation
of the study and chapter scheme.
Chapter-03: Profile of BESCOM.
Chapter-04: Analysis and interpretation of data of BESCOM.

Chapter-05: Summary of findings, suggestions and conclusions.
Chapter-III
PROFILE OF BESCOM

Bangalore Electricity Supply Company is a registered company under

the company’s Act of 1956. BESCOM was incorporated on 30th April 2002
and commenced its operations with effect from 1st June 2002. It is a
company wholly owned by Government of Karnataka with an authorized
share capital of Rs 250, 00, 00,000.
The company has set its agenda on revenue improvement measures in
tune with the policy objectives of the Government of Karnataka to bring
efficiency in the power sector, especially in the field of distribution of
electricity and providing better services to the customers.
Bangalore Electricity Supply Company is mainly vested with functions
of transmission and distribution of power in Bangalore and other five
districts. It operates under a control of Karnataka Power transmission
Corporation Ltd. KPTCL is supplying energy to BESCOM. BESCOM is
making payment of transmission charges to KPTCL and PGCAL. The
average transmission charges being paid to KPTCL is Rs 30 crores per
month, the transmission charges being paid to PGCIL is Rs 8 crores per
month. The tariff of PGCIL transmission charges is as approved by Central
Electricity Regulatory Commission.
BESCOM covers a contiguous area of 41,092 sq Kms with a population
of over 168 Lakhs and serves more than 65 Lakhs customers the total
assets worth Rs 3,224.79 Crores as on 31st march 2008. To transmit and
distribute power in its region, it operates nearly 320 sub-stations,
62,941.86 Kms of HT line length and 140,066.60 Kms of LT line length,
and 112,745 distributions transforms throughout its region. To enable
earlier operation of the system BESCOM has been divided into 3 zonal
offices, 6 Circle Offices, 24 Divisions, 24 Sub-divisions, 78 Accounting
sections and 309 Non Accounting Sections. The above offices looking after
maintenance of power supply and day -to- day functioning. The annual
turnover of the organization was more than Rs 5000 Crores during the
year 2007-08. The other Districts which come under the BESCOM area are
Davanagere, Kolar, Chitradurga, Chikkaballapur, and Tumkur. The total

working employees of the BESCOM area are 10,369.
3.1 STRATEGY AND VISION
The vision of BESCOM is to be the best electricity distribution company

in India. In order to achieve this vision, the company has drawn up a
strategy with focus on customer satisfaction, regulatory compliance,
meeting stake holder expectations etc.
3.2 MISSION STATEMENT
The mission of BESCOM is to ensure complete customer satisfaction by

providing its customers reliable and quality power supply at competitive
rates.
3.3 HISTORY OF BESCOM
The Govt. of Karnataka has embarked on optimistic policy of

introducing reforms in the power sector of Karnataka in the year 1999 by
enacting Karnataka Reforms Act. In the first step the erstwhile Karnataka
Electricity Board, which was responsible for Power Transmission and
Distribution in the state of Karnataka was corporatized into Karnataka
Power Transmission Corporation Limited on 1.8.1999.
Subsequently, Transmission and Distribution functions of KPTCL were
separated. KPTCL remained as a Transmission Company. Distribution of
power was entrusted to four regional Distribution Companies on 1.6.2002
viz., BESCOM, HESCOM, MESCOM & GESCOM. One more Distribution
Company was formed in Mysore on 1.4.2005 by bifurcating the
jurisdiction of Mangalore Electricity Supply Company Ltd.,
3.4 POWER OF TECHNOLOGY
BESCOM is always believed in keeping pace with latest technology.

To keep them operating effectively under maximum efficiency even while
increasing capacity, BESCOM has undertaken the renovation,
modernization and up rating of its power stations in a phased manner.
BESCOM continued its pursuit of higher goals in the direction of increased
meter sales, increased collection, and meaningful energy audit at 11 kv
and below, increased customer care activities using information
technology, adopting modern technical modes by reducing human
intervention etc. All these have been ably supported by the employees
and officers and the result is reflected in present improved position of the
company
3.5 FUNCTIONS OF BESCOM
The dominant function of BESCOM is retail supply of Electricity in

the designated area. Power is purchased from the generating companies
like Karnataka power Corporation Ltd., Central Generating Companies,
Independent Power Producer, IPPs at the agreed rates and sells it to
different category of consumer at the rates determined by Karnataka
Regulatory Commission.
3.6 DUTIES OF BESCOM
BESCOM is vested with the duty of selling power to consumers. In

this process the following supplemental duties which are incidental to
main function.

a) Selling power to consumers at the rates for and by KERC.

b) Supply at specified voltage and frequency.
c) Maintenance of lines and equipments to ensure smooth and quality
power supply.
d) Augmentation of infrastructure to meet the demand.
e) Ensuring safety of Public and animal life by taking suitable actions
to minimize risk of accidents.
f) Perspective planning of activities in relation to demand and supply
of Power.
3.7 ORGANIZATION STRUCTURE
The structure of BESCOM is basically a horizontal structure where

most of the authority and power vested with two top level management.
Top management consists chairman and board of directors. The managing
director takes decisions on the basis of suggestions given by chairman
and board of directors. The middle level management consists of technical
director, financial advisor, company secretary, vigilance, TA&QC, internal
Audit and communication & reforms coordination officers. The operational
level consists of technical general manager, superintending engineer,
finance controller, accounts controller, supervisors and workers.
3.8 CORPORATE GOVERNANCE
BESCOM believes in striving continuously towards higher levels of

transparency, responsibility and accountability and fairness in all aspects
of its operations. At Bangalore Electricity Supply Company Ltd, corporate
governance practice is not merely a matter of adherence to a regulatory
framework, but a means of achieving excellence through adoption of
competitive corporate strategies, prudent business plans and strategic

monitoring. This would ultimately result in transforming the corporate
entity into a more democratic organization. The board of BESCOM
believes and supports corporate governance practices of high standard,
ensuring observance of these principles in all its dealings.
3.9 MANAGEMENT COUNCIL
A forum to focus on policy making through a democratic & participative

approach ensure competition of BESCOM projects on time.
Core group
Each new project at BESCOM is steered by a core group. The Leader of

the core group is the project manager. It is the responsibility of the core
group & the project manager to ensure that project is completed within
the allotted time & within the allocated resources.
Project management
The project management team at BESCOM is proactive & co-ordinates

power engineering, contracts manufacturing / supplies & the site
organization construction & erection planning monitoring & control cycles
are totally integrated.
Construction management
This team co-ordinate with the contractors, vendors as well as

personnel of integral engineering disciplines. The trust area is to create
quality work at reasonable within the allotted time.
Material management
The material management system encompasses stores management

sourcing of materials, inventory control, vendor development, material
classification, modification & standardization.
Operations management
Functional areas of this system includes co-ordinates of all main issues

like support review performance, level, co-ordination failure analysis,
power evacuation & O & M quality aspects of the discipline.
3.10 FINANCE DEPARTMENT
The finance department consists of managing director at top level and

financial advisor and internal auditor at middle level and finance
controller, accounts controller, resource controller, loans and budget
controller, revenue monitorer etc, at the operational level of
management.
The finance department is divided into following sections.
• Cash Section
• Budget Section
• Loan Section
• Provident Fund Section
• Bills Section
• Establishment Section
• Complication Section
• Internal Audit Section
• Pay Roll Section
Receipts
All receipts are accepted only through cheques & demand drafts. To
account for it a separate receipts ledger is maintained. Some of the
major receipts are from power sale, surplus funds, & Plan loans. Non-
plan loans scrap sales, money deposits, provident fund & other
miscellaneous incomes. These accounts are prepared daily and monthly
wise reports on collection.
Payments
All payments are made only though bank cheques & drafts. A rough
cashbook is prepared to record the daily payments and at the end of the
month a consolidated payment ledger is prepared. The major payments
are salary, wages, materials, interest on over draft and other sundries.
Source of funds
Finance is the lifeblood of any industry. The same applies to BESCOM,

the main sources of funds are:
• Equity share capital

• Share deposits
• Reserves & surplus
• Secured & Unsecured loans from commercial banks
• Service line and security deposits
Authorized capital
The authorized capital of the company is 25,00,00,000 Equity shares

of Rs. 10/- each. The issued, subscribed and paid up capital of the
company is 20,59,50,000. Equity shares of Rs. 10/- each fully paid up.
Loan funds
The secured loan funds are loan from rural electrification corporation
Ltd New Delhi, term loans from commercial banks namely UCO Bank,
State bank of India, Oriental bank of commerce & corporation bank. The
unsecured loan funds are loan from Govt. - PMGY, APDRP, term loan from
PFC, Loan from Govt. of Karnataka for power sector automation, Loan
from Govt. of Karnataka Ganga kalyana.
3.11 SIGNIFICANT ACCOUNTING POLICIES
Method of accounting
• The financial statements are prepared under historical cost

convention in accordance with the provisions of the companies Act,
1956 as are applicable and also in accordance with provisions of
electricity supply Act 1948
• All items of income and expenditure having a material bearing on

the financial statements are recognized on accrual basis.
Fixed assets

Fixed assets are started at cost of acquisition or construction less

accumulated depreciation. All costs relating to the acquisition &
installation of fixed assets are capitalized & include interest & finance
charges payable on loans obtained from construction.
Depreciation
Depreciation on all assets is provided on straight-line method as per

electricity (supply) Act, 1948 on the basis of Central Government
notification. Depreciation on leasehold land is provided at the years
ammonization rate arrived at on the basis of lease period.
Depreciation on all assets is provided unto 90% of the original cost.

Plant & machinery costing Rs.500 or less individually is depreciated at
100% in the year in which they are installed & put to use.
Capital Work in progress
Materials issued to capital work in progress are valued at the cost of

purchase or at scheduled standard rates (standard rate is determined on
the basis of previous purchases and prevailing market rates)
Inventory, stores and spares
Inventory, stores and spares are valued at cost of purchase or at

scheduled standard rates (the standard rate is determined on the basis of
previous purchases and prevailing market rates). Scrapped and released
assets identified for disposal are valued at written down value

Retirement benefits: -
Pension and gratuity are provided base on the revised rates prescribed
by KPTCL and ESCOM’s. Leave encashment is provided on the basis of
estimate made by the company and not on the basis of actuarial
valuation.
Accounting of Grants / contributions: -
Grants / Contributions received for capital expenditure are included in

capital reserves & are neither diminished nor costs of assets have been
reduced to the extent of grants. Other grants are credited to the profit &
Loss accounts.
Taxes on income
Current tax is determined as the amount of tax payable in respect of

taxable income for the year is computed in accordance with the Income
tax Act 1961.
Power purchase
The power purchase cost is recognized based on the Govt. of

Karnataka for accounting the cost of power based on the billings made by
power generators pool allocated to BESCOM by the Govt. of Karnataka.
The company recognizes the readings at interface point of each power
generator allocated to it.

Chapter- VI
DATA ANALYSIS AND INTERPRETATION
The data collected is analyzed in three parts.
Part A – Analysis of balance sheet with technique of trend analysis.
Part B – Income statement analysis with trend analysis.
Part C – Ratio analysis from balance sheet and Income statement.

PART-A
ANALYSIS OF BALANCESHEET
BALANCESHEET FOR THE PERIOD FROM 2004-05 TO
2007-08(4YEARS) OF BESCOM

Particulars 2004-05 2005-06 2006-07 2007-08

I. Sources of
funds
1)Share
holders funds
a)Share 2059500000 2059500000 2059500000 2059500000
capital
b)Share 30772172 47653783 151353 151353
deposits
b1)share (7144378)
deposit adj
account
c)reserves & 3566120003 5116741184 6843754203 9319635925
surplus
2)Loans funds
a)Secured 3902637440 4328661152 6136234685 4246550064
loans
b)Unsecured 773141167 761255152 1028655668 920669199
loans
3)Other funds
a)Service line 10004867488 11964152754 13548691453 15701370568
&security
deposits
b) Deposits
c)Deferred
tax
liability
TOTAL 20329893892 24277964025 29616987362 32247877109
II.
Applications
of funds
1)Fixed
assets
a)Gross Block 15857801510 20155602739 23235231040 27924600692
b)Less (6894668724) (7889919408) (7816875281) (8589729370)

depreciation
c) Net block 8963132786 12265683331 15418355759 19334871322
d)capital work 1581029533 534276460 770998164 1755277720
in progress
Total:1 10544162319 12799959791 16189353923 21090149042
2)
Investments
3)Current
Table No.01 showing trend and growth rate of reserves

and surplus of BESCOM:
Year 2004-05 2005-06 2006-07 2007-08

Reserves & 3566120003 5116741184 6843754203 9319635925
surplus
Trend 100 143.48 191.91 261.33
Growth rate 0 43.48 91.91 161.33
in (%)
Graph No.01 showing trend & growth rates of reserves &

surplus of BESCOM:
Analysis:
Table 01 & graph 01 show that trend & growth rate in reserves & surplus
of BESCOM over a period of 4 years.
Trend:
The trend analysis is made by taking 2004-2005 as basis. The
trend in the year 2004 & 05 was assumed to be 100% in reserves &
surplus, in 2005 & 06 trend rise to 143.48%, in the year 2006 & 07 it
rises to 191.91%, in 2006 & 07 it again rises to 261.33

Growth rate:
In the year 2004 & 05 shows 0% rise in reserves & surplus of
BESCOM. In the following year 2005 & 06 it was found a growth of
43.48%, in the year 2006 & 07 there was increase in the growth of
reserves & surplus by 91.91., in 2007-08 it was increased by 161.33.
Interpretation:
From the above analysis it was inferred that reserves & surplus has
been increasing year by year, which shows that there was increase in the
profit.
Table No. 02 showing trend & growth rate of loan funds

of BESCOM:
Year 2004-05 2005-06 2006-07 2007-08

Loan funds 4675778607 5089916304 7164890353 5167219263
Trend 100 108.85 153.23 110.51
Growth rate 0 8.85 53.23 10.51
in (%)
Graph No.02 showing trend & growth rates of loan fund

of BESCOM:

Analysis:-
Table 2 & graph 2 showing the trend & growth in loan funds of
BESCOM over a period of 4 years.
Trend:-
The trend in the 2004 & 05 was assumed to be 100% in loan funds,
in 2005 & 06 trend rises to 108.85%, in 2006 & 07 again rises to
153.23% and in 2007-08 declines to 110.51%.
Growth rate:
The year 2004 &05 shows 0% rise in loan funds of BESCOM and in
the following year 2005-06 it increased by 8.85%, in the year 2006 & 07
further increased by 53.23%, in the year 2007 & 08 there was a decline
in growth of loan funds to 10.51%.
Interpretation:
The above analysis shows that there was a constant increased in
trend & growth of loan funds of BESCOM up to 2006-07, but in 2007-08
there was a decreased in growth rate loan fund.

Table No.03 showing trend and growth rate of Fixed

Assets of BESCOM:
Year 2004-05 2005-06 2006-07 2007-08

Fixed 8963132786 12265683331 15418355759 19334871322
assets
Trend 100 136.84 172.01 215.71
Growth 0 36.84 72.01 115.71
rate (%)
Graph No.03 showing trend & growth rates of fixed

assets of BESCOM:
Analysis:-
Table 3 & graph 3 showing the trend & growth in fixed assets of
Trend:-
The trend in the 2004 & 05 was assumed to be 100% in fixed
assets, in 2005 & 06 trend raised to 136.84%, in 2006 & 07 it raised to
172.01%. In the following year it was further raises to 215.71%.

Growth rate:
The year 2004 &05 shows 0% rise in fixed assets of BESCOM and in
the following year 2005-06 there was a growth of 36.84%, in the year
2006-07 further raised by 72.01%, in 2007-08 there was a further growth
of 115.71.
Interpretation:
The above analysis shows that in there were constant increase in
trend & growth of fixed assets of BESCOM.
Table NO.04 showing trend & growth rate of current

assets, loans & advances of BESCOM:
Year 2004-05 2005-06 2006-07 2007-08

Current 19802576560 24410069507 23838646692 26325362281
assets,
loans &
advances
Trend 100 123.26 120.38 132.93
Growth rate 0 23.26 20.38 32.93

in (%)
Graph No.04 showing trend & growth rates in current

assets, loans & advances of BESCOM:
Analysis:-
Table 4 & Graph 4 showing the trend & growth in current asset, loans
& advances of BESCOM over a period of 4 years.
Trend:-
The trend in the 2004-05 was assumed to be 100% in current
assets, loans & advances, in 2005-06 trend increased to 123.26%, in
2006-07 there was slight decline in the trend of current assets, loans &
advances to 120.38%. In the following year it was increased to 132.93%.
Growth rate:
The year 2004-05 shows 0% rise in current assets,loans & advances
of BESCOM and in the following year 2005-2006 there was a growth of
23.26% , in the year 2006 & 07 it was declined to 20.38%, in the last
year it increased by 32.93%.
Interpretation:
The above analysis shows that there were increases and decreases
in the growth rate of current assets, loans& advances of BESCOM over a
period. But in the last year it was increased.

Table NO.05 showing trend & growth rate of current

liabilities & provision of BESCOM:
Year 2004-05 2005-06 2006-07 2007-08

Current 10016844987 12932065273 10411013253 15167634214
liabilities &
provisions
Trend 100 129.10 103.93 151.42
Growth rate 0 29.10 3.93 51.42
in (%)
Graph No.05 showing trend & growth rates in current

liabilities & provisions of BESCOM:
Analysis:-
Table 5 & Graph 5 showing the trend & growth in current liabilities
& provision of BESCOM over a period of 4 years.
Trend:-
The trend in the 2004-05 was assumed to be 100% in current

liabilities & provision, in 2005-06 trend increased to 129.10%, in 2006-07
there was decline in the trend of current liabilities & provisions to
103.93%. In the following year it was increased to 151.42%.
Growth rate:
The year 2004-05 shows 0% rise in current liabilities & provisions of
BESCOM and in the following year 2005-06 there was a growth of
29.10%, in the year 2006-07 declined to 3.93%, in the last year there
was a further growth of 51.42.
Interpretation:
The above analysis shows that there were constant increases and
decreases in current liabilities & provisions of BESCOM up to 2006-07, but
in the last year it was increased.
PART-B
ANALYSIS OF INCOME STATEMENT
INCOME STATEMENT OF BESCOM FROM 2004-05 TO
2007-08
Year 2004-05 2005-06 2006-07 2007-08
Net sales 36437359781 42823482792 52661032621 58066884560

Less: cost of 30413771469 33596178108 45805821294 49399923587
goods sold
Gross profit 6023588312 9227304684 6855211327 8666960973
Less: 3782727703 6249487690 5989442727 6887229300
operating
expenses
Operating 2240860609 2977816994 865768600 1779731673
income
Add: other 119800496 514414574 592156623 1097873658
incomes
EBDIT 2360661105 3492231568 1457925223 2877605331
Less: 990418320 1108809234 106267723 480676057
depreciation
EBIT 1370242785 2383422334 1351657500 2396929274
Less: 248899922 1031381670 1368385637 1720767302
interest
EBT before 1121342863 1352040664 (16728137) 676161972
prior
charges or
credits
(+) prior (236725450) (668058466) 588154558 (526817512)
charges or
(-) credits
EBT 884617413 683982198 571426421 149344460
Less: tax 75910000 170700000 68348347 23640091
EAT 808707413 513282198 503078074 125704369
Table NO.06 showing trend & growth rate of Net sales of

BESCOM:
Year 2004-05 2005-06 2006-07 2007-08

Net sales 36437359781 42823482792 52661032621 58066884560
Trend 100 117.52 144.52 159.36
Growth rate 0 17.52 44.52 59.36
in (%)
Graph No.06 showing trend & growth rates in Net sales

of BESCOM:
Analysis:-
Table 6 & Graph 6 showing the trend & growth in Net sales of
Trend:-
The trend in the 2004-05 was assumed to be 100% in Net sales,
in 2005-06 trend raised to 117.52%, in 2006-07 it once again increased
to 144.52% in the trend of Net sales. In the following year it was further
increased to 159.36%.
Growth rate:
The year 2004-05 shows 0% rise in Net sales of BESCOM and in the
following year 2005-06 there was a growth of 17.52% in Net sales, in the
year 2006-07 increased by 44.52%, in the last year there was a further
growth of 59.36%.
Interpretation:
The above analysis shows that there was a constant increase in
growth rate of net sales of BESCOM from 2004-05 to 2007-08.

Table NO.07 showing trend & growth rate of Cost of

Goods Sold of BESCOM:
Year 2004-05 2005-06 2006-07 2007-08

Cost of 30413771469 33596178108 45805821294 49399923587
goods sold
Trend 100 110.46 150.60 162.42
Growth 0 10.46 50.60 62.42
rate(%)
Graph No.07 showing trend & growth rates in Cost of

Analysis:-
Table 7 & Graph 7 showing the trend & growth in Cost of Goods
Sold of BESCOM over a period of 4 years.
Trend:-
The trend in the 2004-05 was assumed to be 100% in cost of

goods sold, in 2005-06 trend increased to 110.46%, in 2006-07 & 2007-
08 it further increased to 150.60 & 162.42% respectively.
Growth rate:
The year 2004-05 shows 0% rise in cost of goods sold of BESCOM
and in the following year 2005-06 there was a growth of 10.46% & in
2006-07 & 2007-08 it has a further growth of 50.60 & 62.42%
respectively in the cost of goods sold.
Interpretation:
The above analysis shows that there was a constant increase in the
growth rate of cost of goods sold of BESCOM.
Table NO.07 showing trend & growth rate of Cost of

Year 2004-05 2005-06 2006-07 2007-08

Cost of 30413771469 33596178108 45805821294 49399923587
goods sold
Trend 100 110.46 150.60 162.42

Growth rate 0 10.46 50.60 62.42
in (%)
Graph No.07 showing trend & growth rates in Cost of

Analysis:-
Table 7 & Graph 7 showing the trend & growth in Cost of Goods
Sold of BESCOM over a period of 4 years.
Trend:-
The trend in the 2004-05 was assumed to be 100% in cost of
goods sold, in 2005-06 trend increased to 110.46%, in 2006-07 & 2007-
08 it further increased to 150.60 & 162.42% respectively.
Growth rate:
The year 2004-05 shows 0% rise in cost of goods sold of BESCOM
and in the following year 2005-06 there was a growth of 10.46% & in
2006-07 & 2007-08 it has a further growth of 50.60 & 62.42%
respectively in the cost of goods sold.
Interpretation:
The above analysis shows that there was a constant increase in the
growth rate of cost of goods sold of BESCOM.
Table No.08 showing trend and growth rate in Operating

Expenses of BESCOM:
Year 2004-05 2005-06 2006-07 2007-08

Operating 3782727703 6249487690 5989442727 6887229300
exp.
Trend 100 165.21 158.33 182.07
Growth rate 0 65.21 58.33 82.07
in (%)
Graph No.8 showing trend & growth rates of Operating

exp. Of BESCOM:
Analysis:-

Table 8 & Graph 8 showing the trend & growth in operating

expenses of BESCOM over a period of 4 years.
Trend:-
The trend in the 2004-05 was assumed to be 100% in operating
expenses, in 2005-06 trend increased to 165.21%, in 2006-07 there was
decline to 158.33% in the trend of operating expenses. In the following
year it was a growth of 182.07%.
Growth rate:
The year 2004-05 shows 0% rise in operating expenses of BESCOM
and in the following year 2005-06 there was a raise in growth up to the
level of 65.21% in operating expenses. However in the year 2006-07 it
declines to 58.33%, in the last year there was a growth of 82.07%.
Interpretation:
The above analysis shows that there was increase in trend & growth
rate of operating expenses of BESCOM except in the year 2006-07.

Table No.9 showing trend and growth rate in

Depreciation of BESCOM:
Year 2004-05 2005-06 2006-07 2007-08

Depreciation. 990418320 1108809234 106267723 480676057
Trend 100 111.95 10.72 48.53
Growth rate 0 11.95 -89.28 -51.47
in (%)
Graph No.9 showing trend & growth rates of

Depreciation of BESCOM:
Analysis:-
Table 9 & Graph 9 showing the trend & growth in Depreciation of
Trend:-
The trend in the 2004-05 was assumed to be 100% in Depreciation
and in 2005-06 trend increases to 111.95%, in 2005-06 there was a
decline to 10.72% in the trend Depreciation. In the following year also it
declines to 48.53%.
Growth rate:
The year 2004-05 shows 0% rise in the depreciation of BESCOM and
in the following year 2005-06 there was a slight growth of 11.95% in

depreciation, but in 2006-07 &2007-08 the growth rate decreases by

-89.21% & 51.47% respectively.
Interpretation:
The above analysis shows that there was increase in depreciation in
2005-06, but last two years it was decreases because depreciation
withdrawn from contributions/subsidies were deducted from total
depreciation.
Table No.10 showing trend and growth rate in Interest

of BESCOM:
Year 2004-05 2005-06 2006-07 2007-08

Interest. 248899922 1031381670 1368385637 1720767302
Trend 100 414.37 549.77 691.34
Growth rate 0 314.37 449.77 591.34
(%)
Graph No.10 showing trend & growth rates of Interest of

BESCOM:

Analysis:-
Table10 & Graph 10 showing the trend & growth in Interest of
Trend:-
The trend in the 2004-05 was assumed to be 100% in Interest
and in 2005-06 trend suddenly increased to 414.37%, in 2006-07 &
2007-08 it increased to 549.77 & 691.34% respectively.
Growth rate:
The year 2004-05 shows 0% rise in of BESCOM and in the following
year 2005-06 there was a sudden growth of 314.37% ,in 2006-07 it
increased by 449.77% and in the last year it once again increased by
591.34%.
Interpretation:
From the above analysis it was inferred that trend & growth rate of
interest of BESCOM was increased frequently which shows that loan funds
of company increased frequently.

Table No.11 showing trend and growth rate in Interest

of BESCOM:
Year 2004-05 2005-06 2006-07 2007-08

Interest. 248899922 1031381670 1368385637 1720767302
Trend 100 414.37 549.77 691.34
Growth rate 0 314.37 449.77 591.34
(%)
Graph No.11 showing trend & growth rates of Interest of

BESCOM:
Analysis:-
Table11 & Graph 11 showing the trend & growth in Interest of
Trend:-
The trend in the 2004-05 was assumed to be 100% in Interest
and in 2005-06 trend suddenly increased to 414.37%, in 2006-07 &
2007-08 it increased to 549.77 & 691.34% respectively.
Growth rate:
The year 2004-05 shows 0% rise in of BESCOM and in the following

year 2005-06 there was a sudden growth of 314.37% ,in 2006-07 it
increased by 449.77% and in the last year it once again increased by
591.34%.
Interpretation:
From the above analysis it was inferred that trend & growth rate of
interest of BESCOM was increased frequently which shows that loan funds
of company increased frequently.
Table No.12 showing trend and growth rate in Profit

after Tax of BESCOM:
Year 2004-05 2005-06 2006-07 2007-08

PAT 808707413 513282198 503078074 125704369
Trend 100 63.46 62.20 15.54
Growth rate 0 -36.54 -37.80 -84.46
(%)

Graph No.12 showing trend & growth rate in profit after

Tax of BESCOM:
Analysis:-
Table 12 & Graph 12 showing the trend & growth in Profit after
Tax of BESCOM over a period of 4 years.
Trend:-
The trend in the 2004-05 assumed to be 100% in Profit after Tax
and in 2005-06 trends decreased to 63.46% and 2006-07 & 2007-08 it
once again decreased to 62.20% & 15.54% respectively.
Growth rate:

The year 2004-05 shows 0% rise in Profit after Tax of BESCOM and
in the following years from 2005-06 to 2007-08 the growth rate
decreased to -36.54%,-37.80%,-84.46% respectively.
Interpretation:
From the above analysis it was observed that the trend & growth
rate of profit after tax decreases frequently because of overall raise in
cost, interest, & expenses of the company.
PART-C
Ratio Analysis
1) Current ratio:
Current ratio may be defined as the relationship between current

assets and current liabilities. This ratio, also known as working capital
ratio, is a measure of general liquidity and is most widely used to make
the analysis of a short-term financial position or liquidity of a firm. It is

calculated by dividing the total of current assets by total of the current

liabilities.
Current assets
Current Ratio =
Current liabilities
Current Ratio of 2:1 is considered to be satisfactory
Table no. 13 showing Current Ratio of BESCOM:

Year Current assets Current Ratio
liabilities
2004-05 19802576560 10016844987 1.97
2005-06 24410069507 12932065273 1.88
2006-07 23838646692 10411013253 2.28
2007-08 26325362281 15167634214 1.73
Graph No.13 showing Current Ratio of BESCOM:
Interpretation:
It was inferred that BESCOM has maintained a moderate current
ratio that the standard of 2:1. The above table shows that current ratio
for the years 2004-05 to 2007-08 are 1.97, 1.88, 2.28 & 1.73
respectively. There has been a small decrease in the current ratio in the
year 2005-06 compared to 2004-05 and in year 2006-07 again increases.

But in year 2007-2008 it once again decreases, because there has been
decrease in current assets and increase in current liabilities in the year.
2) Quick Ratio:
Quick ratio is also known as acid test or liquid ratio, it is a more

rigorous test of liquidity than the current ratio. The term ‘liquidity’ refers
to the ability of a firm to pay its short-term obligations as and when they
become due. Quick ratio may be defined as the relationship between
quick/liquid assets and current or liquid liabilities. An asset is said to be
liquid if it can be converted into cash within a short period without loss of
value. In that sense, cash in hand and cash at bank are the most liquid
assets. The other assets which can be included in the liquid assets are
bills receivable, Sunday debtors, marketable securities and short-term or
temporary investments. The ideal ratio of quick ratio is 1:1.
Quick Assets
Quick Ratio=
Current Liabilities
Table no. 14 showing Quick Ratio of KPTCL:

Year Quick assets Current Ratio

liabilities
2004-05 19279271150 10016844987 1.92
2005-06 23656032808 12932065273 1.82
2006-07 22666710949 10411013253 2.17
2007-08 25198147055 15167634214 1.66
Graph No.14 showing Quick Ratio of BESCOM:
Interpretation:
In the above table, quick assets include current assets, loans &
advances less inventory. And quick liabilities include current liabilities less
bank overdraft. It was inferred from the above table that quick ratio for
the year 2004-05 to 2007-08 are 1.92, 1.82, 2.17 & 1.66 respectively. It
indicates amount of quick assets available to meet its short-term
obligations. A quick ratio of 1:1 is considered as satisfactory ratio. This
shows that the BESCOM has higher than standard ratio. So BESCOM has
more liquid assets to meet sort-term obligations.
3. Solvency Ratio or the ratio of total liabilities to total

assets:
The firm may be interested in knowing the proportion of the
interest bearing debt (also called funded debt) in the capital structure. So

solvency ratio measures the extent to which borrowed funds support the
firm’s assets.
The solvency ratio is calculated by using following formula:
Total liabilities
Solvency Ratio =
Total assets
The numerator of the ratio includes all the debt, short term as well as
long term and the denominator of the ratio is the total of all assets (the
balance sheet total).
Table no. 15 showing Solvency Ratio of BESCOM:
Year Total liabilities Total assets Ratio

2004-05 14692623594 30346738879 0.48
2005-06 18021981577 37210029298 0.48
2006-07 17575903606 40028000615 0.43
2007-08 20334853477 47415511323 0.42
Graph no. 15 showing Solvency Ratio of BESCOM:
Interpretation:

The solvency ratios from 2004-05 to 2007-08 are 0.48, 0.48, 0.43,
0.42respectively. Generally, lower solvency ratio indicates more stable or
satisfactory in the long term solvency position of a firm. The solvency
ratios of BESCOM are low in all the years, so it has a stable solvency
position.
4. Long term Debt Equity Ratio:

Debt equity ratio is calculated to know the extent of outsiders fund and
shareholders fund used in acquiring the assets for firm. In other words, it
is calculated to measure the relative claims of outsiders and owners
against the assets of the firm, it is also called as external-internal equity
ratio or debt to net worth ratio. It is shown as
Long term Debt

Debt Equity Ratio=
Net Worth
Table no. 16 showing Debt Equity Ratio of BESCOM:
Year Long term Net worth Ratio

debt
2004-05 4675778607 5649247797 0.82

2005-06 5089916304 7223894967 0.70
2006-07 7164890353 8903405556 0.80
2007-08 5167219263 11379287278 0.45
Graph No.16 showing Debt Equity Ratio of BESCOM:
Interpretation:
A ratio of 1:1 may be usually considered to be satisfactory ratio. A
high debt equity ratio which indicates that the claims of outsiders are
greater than those of owners. In the year 2004-05 the debt equity ratio is
0.82 and it decreased to 0.70 in 2005-06, but in 2006-07 it once again
increased to 0.80, in the fallowing year it once again decreases. The
ratios are below 1 in all the years so the claims of the outsiders to assets
is lower than claims of owners.

5. Working capital Turnover Ratio:

Working capital of a concern is directly related to sales. It indicates
the velocity of utilization of net working capital. The ratio indicates the
number times the working capital is turned over in the course of year.
This ratio measures the efficiency with which the working capital is being
used by company. A higher ratio indicates efficient utilization of working
capital and a low ratio indicates otherwise.
a) Working capital=current assets-current liabilities
Opening + closing working capital

b) Average working capital= -----------------------------------
2
Cost of sales
Working capital turnover ratio= -------------------------------
Average working capital
Table no. 17 showing Working capital turnover Ratio of

BESCOM:
Year Cost of sales Average Ratio

working capital
2004-05 30413771469 9785731573 3.10
2005-06 33596178108 10631867904 3.15
2006-07 45805821294 12452818836 3.67
2007-08 49399923587 12292680753 4.01
Graph No.17 showing Working capital turnover Ratio of

BESCOM:
Interpretati
on:
From the above table the working capital turnover ratio for the year
2004-05 to 2007-08 are 3.10, 3.15, 3.67, and 4.01 respectively. This
ratio indicates the number of times the working capital is turned over in
the course of year. The working capital turnover should be neither very
high nor very low. It should be just normal.
6. Inventory or stock Turnover Ratio:

Every firm has to maintain a certain level of inventory of finished
goods so as to be able to meet the requirements of the business. But the
level of inventory neither be too high nor too low, it would indicate
whether inventory has been efficiently used or not. Inventory turnover
ratio is also known as stock velocity is normally calculated as
Opening stock+ closing stock
Average inventory = -------------------------------
2
Cost of sales
Inventory turnover ratio= ------------------------
Average inventory

Table no. 18 showing inventory or stock turnover Ratio

of BESCOM:
Year Cost of sales Average stock Ratio

2004-05 30413771469 523305410 58.11
2005-06 33596178108 638671055 52.60
2006-07 45805821294 962986221 47.56
2007-08 49399923587 1149575485 42.97
Graph No.21 showing stock turnover Ratio of BESCOM:
Interpreta
tion:
From the above table the stock turnover ratio for the year 2004-05 to
2007-08 are 58.11, 52.60, 47.56, 42.97respectively. a stock turnover of
8 times a year is considered ideal. As such in above table the stock
turnover ratio is above ideal level, so a high inventory turnover indicates
efficient management of inventory because more frequently the stocks
are sold, the lesser amount of money is required to finance the inventory.

7. Gross Profit Margin Ratio:
Gross profit ratio measures the relationship of gross profit to net

sales and is usually represented as a percentage. The gross profit ratio
indicates the extent to which selling prices of goods per unit may
decline without resulting in losses on operations of a firm. It reflects
the efficiency with which a firm produces its products. As the gross
profit is found by deducting cost of goods sold from the net sales,
higher the gross ratio better the result. It is calculated by dividing the
gross profit by sales.
Gross Profit
Gross Profit Margin Ratio=
Net Sales
Table no.22 Showing Gross Profit Margin Ratio of

BESCOM:
Year Gross Profit Sales Ratio (%)

2004-05 6023588312 36437359781 16.53
2005-06 9227304684 42823482792 21.54
2006-07 6855211327 52661032621 13.01
2007-08 8666960973 58066884560 14.92

Graph No.22 showing Gross Profit Margin Ratio of

BESCOM:
Interpretation:
The above situation the gross profit margin of the firm from 2004-05 to
2007-08 is 16.53, 21.54, 13.10, 14.92 respectively. In 2005-06 it has a
highest gross profit than the other years, because the gross profit and
sales are high, but at a same time cost of goods sold is decreased
compared to other years. In 2006-07 & 2007-08 sales are increased, but
gross profit decreased compared to 2005-06, because the cost of goods
sold increased.
8. Net Profit Margin Ratio:

Net profit is obtained when operating expenses interest and taxes
are subtracted from the gross profit.
Net profit margin ratio establishes a relationship between net profit
and sales. It indicates management efficiency in manufacturing
administrating and selling the products.

The ratio is the overall measure of firm’s ability to turn each

rupees sale in to net worth. This ratio also indicates the firm’s
capability to withstand adverse economic conditions.
The ratio is calculated as under
Net Profit after Tax

Net Profit Margin ratio=
Net Sales
Table no.23 Showing Net Profit Margin Ratio of BESCOM:
Year Net Profit Sales Ratio

2004-05 808707413 36437359781 2.21
2005-06 513282198 42823482792 1.19
2006-07 503078074 52661032621 0.95
2007-08 125704369 58066884560 0.21
Graph No.23 showing Net Profit Margin Ratio of

BESCOM:
Interpretation:

The net profit ratio of the company from 2004-05 to 2007-08 are
2.21, 1.19, 0.95, 0.21, respectively. From the above ratios it was
necessary to understand the operating cost of BESCOM was a drastically
high because the company was getting decrease in operational profit and
net profit ratio even though the company earns maximum gross profit
ratio. In 2004-05 it has a highest net profit then it gradually decreases,
because operating expenses were increased.
9. Operating profit Ratio:
Operating profit ratio is the ratio between operating profit and

sales. Operating profit is the net profit earned from the normal
operations of the business without considering financial transactions
and non-recurring and abnormal transactions. It is the net profit plus
non-operating expenses minus non-operating incomes.
Operating profit= Net sales-operating cost
Operating profit
Operating profit Ratio = * 100
Net sales
Table no.24 Showing operating Ratio of BESCOM:
Year Operating Net Sales Percentage

profit
2004-05 2240860609 36437359781 6.15
2005-06 2977816994 42823482792 6.95
2006-07 865768600 52661032621 1.65
2007-08 1779731673 58066884560 3.07
Graph No.24 showing operating Profit Ratio of BESCOM:
Interpretation:
The standard operating profit ratio is 10%. So, an operating profit ratio
of 10% or more is an indication of the operating efficiency of the business
and vice versa, but in above situation the operating profit ratio is less
than standard level in all the year because of higher operating cost. In the
year 2006-07 it has a very low operating profit ratio of 1.64.
10. Operating Ratio:

Operating ratio establishes the relationship between cost of goods

sold and other operating expenses on the one hand and sales on other.
It measures the cost of operations per rupee of sales. The ratio is
calculated by dividing operating costs with net sales and it generally
represented as percentages.
Operating cost= cost of goods sold + operating expenses
Operating cost
Operating Ratio = * 100
Net sales
Table no.25 Showing operating Ratio of BESCOM:
Year Operating cost Net Sales Percentage

2004-05 34196499172 36437359781 93.85
2005-06 39845665798 42823482792 93.04
2006-07 51795264021 52661032621 98.35
2007-08 56287152887 58066884560 96.93
Graph No.25 showing operating Ratio of BESCOM:

Interpretation:
The operating cost ratio of the company from 2004-05 to 2007-08 are
93.85, 93.04, 98.35, 96.93respectively. Generally a low operating ratio is
an indication of the operating efficiency of the business and vice versa.
But in above situation the operating cost ratio is high in all the years so
the company inefficient in operating costs which results in decrease the
profits.
11. Earning Per Share:

EPS is a good measure of profitability and it gives a view of the
comparative earnings of a firm. EPS calculated for a number of years
indicates whether or not earning power of the company has increased.EPS
is a small variation of return on equity capital and is calculated by
dividing the net profit after taxes and preference dividend by the total
number of equity shares. Thus,
Net Profit
EPS =
No. Of Equity Shares
Table no.26 Showing EPS of BESCOM:
Year Net Profit No. of equity Ratio

share
2004-05 808707413 205950000 3.92

2005-06 513282198 205950000 2.49
2006-07 503078074 205950000 2.44
2007-08 125704369 205950000 0.61
Graph No.26 showing EPS of BESCOM:
Interpretation:
It was inferred from the above table that earning per share throws
light on the performance of the company. The EPS of the company from
2004-05 to 2007-08 are 3.92, 2.49, 2.44, 0.61 rupees respectively. In
2004-05 the company has a highest EPS of 3.92 rupees than, it was
gradually decreased in the subsequent years, because of decreases in the
net profit of the company from 2005-06 to 2007-08. In 2007-08 the EPS
of the company was very low compared to other years.


Completed Project

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Completed Project

Uploaded by

Copyright:

Available Formats

Financial performance

For every organization there is a needed to evaluate the financial

Management is ultimately accountable for the direction in which the

R C Collage of commerce & management 1

Financial performance is used to interpret the financial health of the

1.1 FINANCIAL STATEMENT: The American Institute of certified Public

Income statement or profit and loss account

Statement of retained earnings

Fund flow statement

R C Collage of commerce & management 2

Cash flow statement

➢ As a basis for fiscal policy

➢ To determine the legality of dividends

➢ As guide to wise dividend action

➢ As a basis for granting of credit

➢ It provides prospective information, to investors.

➢ As an aid to government supervision

➢ As a basis for price or rate regulation

➢ As a basis for taxation

The financial statements suffer from following limitations:

➢ Only interim reports (that is exact information is not given only

➢ Do not give exact position of the concern

➢ The statements are on the basis of historical costs

➢ Impact of non-monetary factors ignored (eg: goodwill of the

1.4 COMPARATIVE STATEMENT

The comparative financial statements are statements of the financial

R C Collage of commerce & management 4

between balance sheet and income statement enables an in-depth study

Comparative statement may show.

1.5 IMPORTANCE OF COMPARATIVE STATEMENT.

Comparative statement is prepared by a concern to know the current

A student should study the increase/decrease in current assets and

The long-term financial position of the concern can be analyzed by

If the increase in financial assets is more than the increase in long-

R C Collage of commerce & management 5

To know the profitability of a concern there should be increase in

2.1 STATEMENT OF THE PROBLEM

The profitability of a business depends on the efficiency with which

2.2. OBJECTIVES OF THE STUDY

R C Collage of commerce & management 7

2.3. SCOPE OF THE STUDY

2.4. METHODOLOGY OF RESEARCH

Research methodology is a systematic way of solving any research

R C Collage of commerce & management 8

2.5. SOURCES OF DATA

There are two types of data collections:

The study depends upon secondary data,

2.6. PLAN OF ANALYSIS

R C Collage of commerce & management 9

percentages, where necessary to make the data in presentable manner

2.7. LIMITATIONS OF THE STUDY

➢ The study was limited for a period of 4 years.

2.8. CHAPTER SCHEME

This project report is presented fewer than five chapters.

Chapter-01: Introduction to financial management, financial

Chapter-02: Design of the study. This chapter portrays the statements

Chapter-03: Profile of BESCOM.

Chapter-04: Analysis and interpretation of data of BESCOM.

R C Collage of commerce & management 10

Chapter-05: Summary of findings, suggestions and conclusions.

R C Collage of commerce & management 11

Bangalore Electricity Supply Company is a registered company under