A

PROJECT REPORT
ON

RATIO ANALYSIS
By
Miss. Gunjan Anil Choure

Submitted to

Savitribai Phule Pune

University in partial
fulfillment of
Bachelors of Business Administration
(BBA) Academic Session 2020-2021
Under the Guidance of
Assist. Prof. Snehal
Mirajkar
 Progressive Education Society’s

MODERN COLLEGE OF ARTS, SCIENCE AND COMMERCE

Business Administration Campus, Pune

05

ACKNOWLEDGEMENT

I would like to express my gratitude towards Prof. Dr. M. D. Alandikar Sir

(Vice- Principal, Business Administration Campus of Modern College of Arts
science & Commerce, Pune 05) & Prof. Lawly Das (HOD, BBA). Also I
would like to thank Prof. Snehal Mirajkar for her timely suggestions and
guidance and for sharing her valuable knowledge with us during completion
of the project. Finally, I would like to express my gratitude towards my
beloved family and friends for their endless support, co-operation and
encouragement.

Name : Gunjan Choure

Roll No : 54888
Place: Pune
Date:

INDEX OF THE CONTENT

Sr No Topic
1 INTRODUCTION OR EXECUTIVE SUMMARY

2 COMPANY PROFILE

3 THEORITICAL BACKGROUND OR LITERATURE REVIEW

4 RESEARCH METHODOLOGY

5 DATA ANALYSIS AND INTERPRETATION

6 FINDINGS AND SUGGESTIONS

 7 CONCLUSION

8 BIBLIOGRAPHY OR WEBLIOGRAPHY

9 ANNEXURE

INTRODUCTION OR EXECUTIVE SUMMARY

RATIO ANALYSIS

FINANCIAL ANALYSIS

Financial analysis is the process of identifying the financial strengths and

weaknesses of the firm and establishing relationship between the items of the
balance sheet and profit & loss account.
Financial ratio analysis is the calculation and comparison of ratios, which are
derived from the information in a company’s financial statements. The level and
historical trends of these ratios can be used to make inferences about a
company’s financial condition, its operations and attractiveness as an
investment. The information in the statements is used by

 Trade creditors, to identify the firm’s ability to meet their claims i.e.
liquidity position of the company.

 Investors, to know about the present and future profitability of the

company and its financial structure.

 Management, in every aspect of the financial analysis. It is the

responsibility of the management to maintain sound financial condition in
the company.

NEED OF THE STUDY

1. The study has great significance and provides benefits to various parties
whom directly or indirectly interact with the company.

2. It is beneficial to management of the company by providing crystal clear

picture regarding important aspects like liquidity, leverage, activity and
profitability.

3. The study is also beneficial to employees and offers motivation by

showing how actively they are contributing for company’s growth.

4. The investors who are interested in investing in the company’s shares will
also get benefited by going through the study and can easily take a
decision whether to invest or not to invest in the company’s shares.
Objectives
The main objectives of resent study aimed as:

To evaluate the performance of the company by using ratios as a yardstick to measure the
efficiency of the company. To understand the liquidity, profitability and efficiency positions
of the company during the study period. To evaluate and analyze various facts of the financial
performance of the company. To make comparisons between the ratios during different
periods.

OBJECTIVES

1.To analyze, interpret and to suggest the organizational efficiency of

Samsung by comparing the balance sheet and profit and loss A/c.
2.To analyses the financial performance of Samsung with the help of
ratios.
3.To examine the financial performance of Samsung for the period of
2016 to 2020

LIMITATIONS

 The study provides an insight into the financial, personnel, marketing and
other aspects of SAMSUNG. Every study will be bound with certain
limitations.

 The below mentioned are the constraints under which the study is carried
out.

 One of the factors of the study was lack of availability of ample

information. Most of the information has been kept confidential and as
such as not assed as art of policy of company.
Time is an important limitation. The whole study was conducted in a period of
60 days, which is not sufficient to carry out proper interpretation and analysis.

COMPANY PROFILE
Samsung Electronics Co., Ltd. is a South Korean multinational
electronics company headquartered in Suwon, South Korea. It is the
flagship subsidiary of the Samsung Group, accounting for 70% of the
group's revenue in 2012, and has been the world's largest
information technology company by revenue since 2009. Samsung
Electronics has assembly plants and sales networks in 80 countries and
employs around 370,000 people. Since 2012, the CEO is Kwon Oh-
Hyun.
Samsung has long been a major manufacturer of electronic components
such as lithium-ion batteries, semiconductors, chips, flash memory and
hard drive devices for clients such as Apple, Sony, HTC and Nokia.
In recent years, the company has diversified into consumer
electronics. It is the world's largest manufacturer of mobile phones
and smartphones fueled by the popularity of its Samsung Galaxy line
of devices. The company is also a major vendor of tablet computers,
particularly its Android-powered Samsung Galaxy Tab collection,
and is generally regarded as pioneering the phablet market through the
Samsung Galaxy Note family of devices.
Samsung has been the world's largest manufacturer of LCD panels
since 2002, the world's largest television manufacturer since 2006,
and world's largest manufacturer of mobile phones since 2011.
Samsung Electronics displaced Apple Inc. as the world's largest
technology company in 2011 and is a major part of the South Korean
economy. In June 2014 Samsung published the Tizen OS with the new
Samsung Z.
 For over 70 years, Samsung has been dedicated to making a better world
through diverse businesses that today span advanced technology,
semiconductors, skyscraper and plant construction, petrochemicals,
fashion, medicine, finance, hotels, and more. Our flagship company,
Samsung Electronics, leads the global market in high-tech
electronics manufacturing and digital media.

THEORITICAL BACKGROUND OR LITERATURE REVIEW

RATIO ANALYSIS

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

 Percentages

 Fractions

 Proportion of numbers

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

STEPS IN RATIO ANALYSIS

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

 To compare the calculated ratios with the ratios of the same firm relating
to the pas6t or with the industry ratios. It facilitates in assessing success
or failure of the firm.
  Third step is to interpretation, drawing of inferences and report writing
conclusions are drawn after comparison in the shape of report or
recommended courses of action.

NATURE OF RATIO ANALYSIS

Ratio analysis is a technique of analysis and interpretation of

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

 Selection of relevant data from the financial statements depending upon

the objective of the analysis.

 Calculation of appropriate ratios from the above data.

 Comparison of the calculated ratios with the ratios of the same firm in the
past, or the ratios developed from projected financial statements or the
ratios of some other firms or the comparison with ratios of the industry to
which the firm belongs.

INTERPRETATION OF THE RATIOS

The interpretation of ratios is an important factor. The inherent

limitations of ratio analysis should be kept in mind while interpreting them. The
impact of factors such as price level changes, change in accounting policies,
window dressing etc., should also be kept in mind when attempting to interpret
ratios. The interpretation of ratios can be made in the following ways.

 Single absolute ratio

 Group of ratios

 Historical comparison

 Projected ratios

 Inter-firm comparison

GUIDELINES OR PRECAUTIONS FOR USE OF RATIOS

The calculation of ratios may not be a difficult task but their use is
not easy. Following guidelines or factors may be kept in mind while interpreting
various ratios are

 Accuracy of financial statements

 Objective or purpose of analysis

 Selection of ratios

LIMITATIONS OF RATIO ANALYSIS

 Differences in definitions

 Limitations of accounting records

 Lack of proper standards

 No allowances for price level changes

 Changes in accounting procedures

 Quantitative factors are ignored

  Limited use of single ratio

 Background is over looked

 Limited use

 Personal bias

IMPORTANCE OF RATIO ANALYSIS

 Aid to measure general efficiency

 Aid to measure financial solvency

 Aid in forecasting and planning

 Facilitate decision making

 Aid in corrective action

 Aid in intra-firm comparison

 Act as a good communication

CLASSIFICATIONS OF RATIOS

The use of ratio analysis is not confined to financial manager only.

There are different parties interested in the ratio analysis for knowing the
financial position of a firm for different purposes. Various accounting ratios can
be classified as follows:

1. Traditional Classification

2. Functional Classification

3. Significance ratios

1. Traditional Classification
It includes the following.

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

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

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

2. Functional Classification

These include liquidity ratios, long term solvency and leverage

ratios, activity ratios and profitability ratios.

3. Significance ratios

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

IN THE VIEW OF FUNCTIONAL CLASSIFICATION THE RATIOS ARE

1. Liquidity ratio

2. Leverage ratio

3. Activity ratio

4. Profitability ratio
Classification Of Ratios
LIQUIDITY RATIO

I. Current Ratio: It is a ratio of current assets to current

liabilities. The ratio is calculated by dividing the current assets
by the current liabilities.

Formula: current asset/current liabilities

Certain Authorities have suggested that in order to ensure

solvency of a concern, current assets should be at least twice
the current liabilities and therefore the ratio is known as 2:1
ratio. This ratio is also named as “Working Capital Ratio” as it
represents the working capital being the excess of the current
assets over current liabilities.

II. Quick/Liquid/Acid Test Ratio: Quick ratio is used as a

measure of the company’s ability to meet its current
obligations. Since bank overdraft is secured by the inventories,
the other current assets must be sufficient to meet other current
liabilities. It is calculated as

Quick Ratio = Cash and Cash Equivalents + Marketable Securities + Accounts

Receivables) / Current Liabilities

A quick Ratio 1:1 indicates highly solvent position. This

Ratio serves as a supplement to the current ratio in analyzing
liquidity.
 III.Absolute Liquidity Ratio:

In addition to computing current and quick ratio, some analysts also

compute absolute liquid ratio to test the liquidity of the business. Absolute
liquid ratio is computed by dividing the absolute liquid assets by current
liabilities.

Formula: = Absolute liquid ratio = Absolute liquid assets / Current liabilities

Where absolute liquid assets = Cash + Bank + marketable securities.

LEVERAGE RATIO
Proprietary Ratio: Ratio to Tangible Net Worth to Total
Assets is also called as Proprietary Ratio or Capital to Total
Assets Ratio. It is calculated as:
Formula:
=shareholder’s fund/total assets

Debt-Equity Ratio: This ratio indicates the relative

proportions of debt and equity in financing the assets of a firm.
A ratio of 2:1 is considered safe.
Total debts/ Shareholder’s fund

Interest Coverage Ratio:A ratio used to determine how

easily a company can pay on outstanding debt. A ratio of more
than 1.5 is satisfactory.
Earnings Before Interest and Taxes / Interest Expense

Capital Gearing Ratio: The proportion of the equity share capital

to the total capital of the concern is known as gear ratio. This ratio
is a means of analysis of the capital structure.

Equity / Fixed cost bearings securities.

Where, Equity = Equity share capital + Free reserves + Profits and loss account credit
balance. Fixed cost bearing securities = Debentures + Long term loans.
Proprietary Ratio: Ratio to Tangible Net Worth to Total Assets is also called as
Proprietary Ratio or Capital to Total Assets Ratio. It is calculated as:
Proprietor's funds / Total assets

ACTIVITY RATIO

1.Working capital turnover ratio :is computed by dividing the net sales by average working
capital. It shows company’s efficiency in generating sales revenue using total working capital
available in the business during a particular period of time.

Formula:

2. Fixed assets turnover ratio :-(also known as sales to fixed assets ratio) is a commonly used
activity ratio that measures the efficiency with which a company uses its fixed assets to generate
its sales revenue. It is computed by dividing net sales by average fixed assets.

Formula:

3. Capital Turnover Ratio: Capital turnover ratio is the relationship between cost
of goods sold and the capital employed. This ratio is calculated to measure the
efficiency or effectiveness with which a firm utilizes its resources or the capital
employed. This ratio is a good indicator of overall profitability of a company.
Formula: SALES/NET WORKING CAPITAL

4. Current Assets Turnover Ratio: Current assets turnover ratio compares the sales
revenue of a company to its current assets. This ratio tells us how efficiently and
effectively a company is using its current asset to generate revenues.
Formula: SALES/CURRENT ASSETS

PROFITABILITY RATIO

1. Net Profit : This ratio shows the relationship between net profit and sales. It
may be calculated by two methods:
Formula Net Profit = Net Profit / Net Sales *100

Operating Profit Ratio: Operating ratio shows the operational efficiency of the
business. Lower operating ratio shows higher operating profit and vice versa.

Formula
Operating Profit Ratio

Earnings per share (EPS) ratio: measures how many dollars of net income
have been earned by each share of Common stock during a certain time period.
It is computed by dividing net income less preferred dividend by the number of
shares of common stock outstanding during the period. It is a popular measure
of overall profitability of the company and is expressed in dollars.

Formula:

Price earnings ratios (P/E ratio) : measures how many times the earnings per
share (EPS) has been covered by current market price of an ordinary share. It is
computed by dividing the current market price of an ordinary share by earnings
per share.

Formula:
 RESEARCH METHODOLOGY

METHODOLOGY

The information is collected through secondary sources during the

project. That information was utilized for calculating performance evaluation
and based on that, interpretations were made.

Sources of secondary data:

1. Most of the calculations are made on the financial statements of the

company provided statements.

2. Referring standard texts and referred books collected some of the

information regarding theoretical aspects.

3. Method- to assess the performance of he company method of observation

of the work in finance department in followed.

DATA ANALYSIS AND INTERPRETATION

LIQUIDITY RATIO

1. CURRENT RATIO

(Amount in Rs.)
 Years Current Asset Current Liablities Ratios
2016 5,85,74,151 79,03,952 7.41
2017 6,97,65,346 3,18,84,616 7.41
2018 7,20,21,081 3,18,84,616 4.48
2019 9,13,28,208 4,71,17,199 1.94
2020 9,13,28,208 3,02,66,661 3.82

Current Ratios
8

0 201 2018 2019 2020

2017
6

Interpretation

As a rule, the current ratio with 2:1 (or) more is considered as satisfactory
position of the firm.

When compared with 2019, there is an increase in the provision for tax, because
the debtors are raised and for that the provision is created.

The sundry debtors have increased due to the increase to corporate taxes.

In the year 2019, the cash and bank balance is reduced because that is used for
payment of dividends. In the year 2020, the loans and advances include majorly
the advances to employees and deposits to government. The loans and advances
reduced because the employees set off their claims. The other current assets
include the interest attained from the deposits. The deposits reduced due to the
declaration of dividends. So the other current assets decreased.

The huge increase in sundry debtors resulted an increase in the ratio, which is
above the benchmark level of 2:1 which shows the comfortable position of the
firm.

2. QUICK RATIO

(Amount in Rs.)

Years Quick Assets Current Liabilities Ratio

2016 5,85,74,151 79,03,952 7.41
2017 5,24,70,336 3,18,84,616 1.65
2018 6,98,83,268 1,60,65,620 4.35
2019 8,94,33,596 4,71,17,199 1.9
2020 11,54,31,868 3,02,66,661 3.81

QUICK RATIO

8
7
6
5
4
3
2
1
0 2016 2017 2018 2019 2020

Interpretation

Quick assets are those assets which can be converted into cash with in a short
period of time, say to six months. So, here the sundry debtors which are with the
long period does not include in the quick assets.
Compare with 2019, the Quick ratio is increased because the sundry debtors are
increased due to the increase in the corporate tax and for that the provision
created is also increased. So, the ratio is also increased with the 2020.

3. ABOSULTE LIQUIDITY RATIO

(Amount in Rs.)

Year Absolute Liquid Assets Current Liabilities Ratio

2016 3,10,04,027 79,03,952 3.92
2017 1,08,59,778 3,18,84,616 0.34
2018 3,94,66,542 1,60,65,620 2.46
2019 5,38,50,852 4,71,17,199 1.14
2020 3,56,49,070 3,02,66,661 1.18

ABOSULTE LIQUIDITY RATIO

4.5
4
3.5
3
2.5
2
1.5
1
0.5
0 2016 2017 2018 2019 2020

Interpretation
The current assets which are ready in the form of cash are considered as
absolute liquid assets. Here, the cash and bank balance and the interest on fixed
assts are absolute liquid assets.

In the year 2019, the cash and bank balance is decreased due to decrease in the
deposits and the current liabilities are also reduced because of the payment of
dividend. That causes a slight increase in the current year’s ratio.

LEVERAGE RATIOS

4. PROPRIETORY RATIO

(Amount in Rs.)

Year Share Holders Funds Total Assets Ratio

2016 6,76,79,219 7,85,72,171 0.86
2017 5,33,01,834 8,84,38,107 0.6
2018 7,02,31,061 8,91,58,391 0.79
2019 5,64,73,652 10,63,85,201 0.53
2020 9,70,60,013 12,98,05,102 0.75

PROPRIETORY RATIO
1
0.9
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0 2017 2018 2019 2020
2016

Interpretation

The proprietary ratio establishes the relationship between shareholders funds to

total assets. It determines the long-term solvency of the firm. This ratio
indicates the extent to which the assets of the company can be lost without
affecting the interest of the company.
There is no increase in the capital from the year2004. The share holder’s funds
include capital and reserves and surplus. The reserves and surplus is increased
due to the increase in balance in profit and loss account, which is caused by the
increase of income from services.

Total assets, includes fixed and current assets. The fixed assets are reduced
because of the depreciation and there are no major increments in the fixed
assets. The current assets are increased compared with the year 2019. Total
assets are also increased than precious year, which resulted an increase in the
ratio than older.

ACTIVITY RATIOS

5. WORKING CAPITAL TURNOVER RATIO

(Amount in Rs.)

Year Income From Services Working Capital Ratio

2016 3,63,09,834 5,06,70,199 0.72
2017 5,38,99,084 3,78,80,730 1.42
2018 7,27,28,759 5,53,55,460 1.31
2019 5,55,50,649 4,42,11,009 1.26
2020 9,66,54,902 8,53,75,407 1.13

WORKING CAPITAL TURNOVER

RATIO
1.6
1.4
1.2
1
0.8
0.6
0.4
0.2
0 2016 2017 2018 2019 2020

Interpretation
Income from services is greatly increased due to the extra invoice for
Operations & Maintenance fee and the working capital is also increased greater
due to the increase in from services because the huge increase in current assets.

The income from services is raised and the current assets are also raised
together resulted in the decrease of the ratio of 2020 compared with 2019.

6. FIXED ASSETS TURNOVER RATIO

(Amount in Rs.)

Year Income From Services Net Fixed Assets Ratio

2016 3,63,09,834 2,88,34,317 1.26
2017 5,38,99,084 2,95,68,279 1.82
2018 7,27,28,759 1,71,37,310 4.24
2019 5,55,50,649 1,50,56,993 3.69
2020 9,66,54,902 1,41,63,034 6.82

FIXED ASSETS TURNOVER RATIO

8

0 2016 2017 2018 2019 2020

Interpretation

Fixed assets are used in the business for producing the goods to be sold. This
ratio shows the firm’s ability in generating sales from all financial resources
committed to total assets. The ratio indicates the account of one rupee
investment in fixed assets.
The income from services is greaterly increased in the current year due to the
increase in the Operations & Maintenance fee due to the increase in extra
invoice and the net fixed assets are reduced because of the increased charge of
depreciation. Finally, that effected a huge increase in the ratio compared with
the previous year’s ratio.

7. CAPITAL TURNOVER RATIO

(Amount in Rs.)
 Year Income From Services Capital Employed Ratio
2016 3,63,09,834 3,71,75,892 0.98
2017 5,38,99,084 5,33,01,834 1.01
2018 7,27,28,759 7,02,31,061 1.04
2019 5,55,50,649 5,64,73,652 0.98
2020 9,66,54,902 9,70,60,013 1

CAPITAL TURNOVER RATIO

1.05
1.04
1.03
1.02
1.01
1
0.99
0.98
0.97
0.96
0.95 2018 2019 2020
2016 2017

Interpretation

This is another ratio to judge the efficiency and effectiveness of the company
like profitability ratio.

The income from services is greately increased compared with the previous year
and the total capital employed includes capital and reserves & surplus. Due to
huge increase in the net profit the capital employed is also increased along with
income from services. Both are effected in the increment of the ratio of current
year.

8. CURRENT ASSETS TO FIXED ASSETS RATIO

(Amount in Rs.)

Year Current Assets Fixed Assets Ratio

2016 5,85,24,151 1,99,98,020 2.93
2017 6,97,65,346 1,86,72,761 3.74
2018 7,20,21,081 1,71,37,310 4.2
 2019 9,13,28,208 1,50,56,993 6.07
2020 11,56,42,068 1,41,63,034 8.17

CURRENT ASSETS TO FIXED ASSETS RATIO

9

0 2016 2017 2018 2019 2020

Interpretation

Current assets are increased due to the increase in the sundry debtors and the net
fixed assets of the firm are decreased due to the charge of depreciation and there
is no major increment in the fixed assets.

The increment in current assets and the decrease in fixed assets resulted an
increase in the ratio compared with the previous year

PROFITABILITY RATIOS
GENERAL PROFITABILITY RATIOS

9. NET PROFIT RATIO

(Amount in Rs.)

Year Net Profit After Tax Income from Services Ratio

2016 2,11,23,474 3,60,39,834 0.59
2017 1,61,25,942 5,38,99,084 0.3
2018 1,69,29,227 7,27,28,759 0.23
2019 1,82,59,580 5,55,50,649 0.33
2020 4,05,86,359 9,66,54,902 0.42
 NET PROFIT RATIO
0.7

0.6

0.5

0.4

0.3

0.2

0.1

0
1 2 3
2018 4
2019 5
2020
2016 2017

Interpretation

The net profit ratio is the overall measure of the firm’s ability to turn each rupee
of income from services in net profit. If the net margin is inadequate the firm
will fail to achieve return on shareholder’s funds. High net profit ratio will help
the firm service in the fall of income from services, rise in cost of production or
declining demand.

The net profit is increased because the income from services is increased. The
increment resulted a slight increase in 2020 ratio compared with the year 2019.

10.OPERATING PROFIT

(Amount in Rs.)

Year Operating Profit Income From Services Ratio

2016 3,60,94,877 3,63,09,834 0.99
2017 2,75,76,814 5,38,99,084 0.51
2018 2,95,40,599 7,27,28,759 0.41
2019 3,15,86,718 5,55,50,649 0.57
2020 6,71,92,677 9,66,54,902 0.7
 OPERATING PROFIT
1.2

0.8

0.6

0.4

0.2

0 2017 2018 2019 2020

2016

Interpretation

The operating profit ratio is used to measure the relationship between net profits
and sales of a firm. Depending on the concept, it will decide.

The operating profit ratio is increased compared with the last year. The earnings
are increased due to the increase in the income from services because of
Operations & Maintenance fee. So, the ratio is increased slightly compared with
the previous year.

11. RETURN ON TOTAL ASSETS RATIO

(Amount in Rs.)
 Year Net Profit After Tax Total Assets Ratio
2016 2,11,23,474 7,85,72,171 0.27
2017 1,61,25,942 8,84,38,107 0.18
2018 1,69,29,227 8,91,58,391 0.19
2019 1,82,59,580 10,63,85,201 0.17
2020 4,05,86,359 12,98,05,102 0.31

RETURN ON TOTAL ASSETS RATIO

0.35 Interpretation
0.3
This is the ratio
0.25
between net
0.2
profit and total
0.15
assets. The ratio
0.1
indicates the
0.05
return on total
0 2017 2018 2019 2020
2016 assets in the
form of profits.

The net profit is increased in the current year because of the increment in the
income from services due to the increase in Operations & Maintenance fee. The
fixed assets are reduced due to the charge of depreciation and no major
increments in fixed assets but the current assets are increased because of sundry
debtors and that effects an increase in the ratio compared with the last year i.e.
2019.

12. RESERVES & SURPLUS TO CAPITAL RATIO

(Amount in Rs.)

Year Reserves & Surplus Capital Ratio

2016 6,55,99,299 20,79,920 31.54
2017 3,45,82,554 1,87,19,280 1.85
2018 5,15,11,781 1,87,19,280 2.75
2019 3,77,54,372 1,87,19,280 2.02
2020 7,83,40,733 1,87,19,280 4.19
 RESERVES & SURPLUS TO CAPITAL RATIO
35

30

25

20

15

10

0 2016 2017 2018 2019 2020

Interpretation

The ratio is used to reveal the policy pursued by the company a very high ratio
indicates a conservative dividend policy and vice-versa. Higher the ratio better
will be the position.

The reserves & surplus is decreased in the year 2019, due to the payment of
dividends and in the year 2020 the profit is increased. But the capital is
remaining constant from the year 2017. So the increase in the reserves &
surplus caused a greater increase in the current year’s ratio compared with the
older.

OVERALL PROFITABILITY RATIOS

13. EARNINGS PER SHARE

(Amount in Rs.)

Year Net Profit After Tax No of Equity Shares Ratio

2016 2,11,23,474 2,07,992 101.56
2017 1,61,25,942 18,71,928 8.61
2018 1,69,29,227 18,71,928 9.04
2019 1,82,59,580 18,71,928 9.75
2020 4,05,86,359 18,71,928 21.68
 EARNINGS PER SHARE
120

100

80

60

40

20

0 2016 2017 2018 2019 2020

Interpretation

Earnings per share ratio are used to find out the return that the shareholder’s
earn from their shares. After charging depreciation and after payment of tax, the
remaining amount will be distributed by all the shareholders.

Net profit after tax is increased due to the huge increase in the income from
services. That is the amount which is available to the shareholders to take.
There are 1,871,928 shares of Rs.10/- each. The share capital is constant from
the year 2017. Due to the huge increase in net profit the earnings per share is
greaterly increased in 2020.

14. PRICE EARNINGS (P/E) RATIO

(Amount in Rs.)

Year Market Price Per Share Earnings Per Share Ratio

2016 32.54 101.56 0.32
2017 28.47 8.61 3.3
2018 37.52 9.04 4.15
2019 30.17 9.75 3.09
2020 51.85 21.68 2.39
 PRICE EARNINGS (P/E) RATIO
4.5

3.5

2.5

1.5

0.5

0 2018 2019 2020

2016 2017

Interpretation

The ratio is calculated to make an estimate of application in the value of share

of a company.

The market price per share is increased due to the increase in the reserves &
surplus. The earnings per share are also increased greaterly compared with the
last year because of increase in the net profit. So, the ratio is decreased
compared with the previous year.

15. RETURN ON INVESTMENT

(Amount in Rs.)

Year Net Profit After Tax Share Holders Fund Ratio

2016 2,11,23,474 6,76,79,219 0.31
2017 1,61,25,942 5,33,01,834 0.3
2018 1,69,29,227 7,02,31,061 0.24
2019 1,82,59,580 5,64,73,652 0.32
2020 4,05,86,359 9,70,60,013 0.42
 RETURN ON INVESTMENT
0.45

0.4

0.35

0.3

0.25

0.2

0.15

0.1

0.05

0 2016 2018 2019 2020

2017

Interpretation

This is the ratio between net profits and shareholders funds. The ratio is
generally calculated as percentage multiplying with 100.

The net profit is increased due to the increase in the income from services ant
the shareholders funds are increased because of reserve & surplus. So, the ratio
is increased in the current year.
 FINDINGS AND SUGGESTIONS
1. The current ratio has shown in a fluctuating trend as 7.41, 2.19, 4.48,
1.98, and 3.82 during 2016 of which indicates a continuous increase in
both current assets and current liabilities.

2. The quick ratio is also in a fluctuating trend through out the period 2016 –
20 resulting as 7.41, 1.65, 4.35, 1.9, and 3.81. The company’s present
liquidity position is satisfactory.

3. The absolute liquid ratio has been decreased from 3.92 to 1.18, from 2016
– 20.

4. The proprietory ratio has shown a fluctuating trend. The proprietory ratio
is increased compared with the last year. So, the long term solvency of
the firm is increased.

5. The working capital increased from 0.72 to 1.13 in the year2016 – 20.

6. The fixed assets turnover ratio is in increasing trend from the year 2016 –
20. (1.26, 1.82, 4.24, 3.69, and 6.82). It indicates that the company is
efficiently utilizing the fixed assets.

7. The capital turnover ratio is increased form 2016 – 2018 (0.98, 1.01, and
1.04) and decreased in 2019 to 0.98. It increased in the current year as
1.00.

8. The current assets to fixed assets ratio is increasing gradually from 2016–
2020 as 2.93, 3.74, 4.20, 6.07 and 8.17. It shows that the current assets
are increased than fixed assets.

9. The net profit ratio is in fluctuation manner. It increased in the current

year compared with the previous year form 0.33 to 0.42.
 10.The net profit is increased greaterly in the current year. So the return on
total assets ratio is increased from 0.17 to 0.31.

11.The Reserves and Surplus to Capital ratio is increased to 4.19 from 2.02.
The capital is constant, but the reserves and surplus is increased in the
current year.

12.The earnings per share was very high in the year 2016 i.e., 101.56. That is
decreased in the following years because number of equity shares are
increased and the net profit is decreased. In the current year the net profit
is increased due to the increase in operating and maintenance fee. So the
earnings per share is increased.

13.The operating profit ratio is in fluctuating manner as 0.99, 0.51, 0.41,

0.57 and 0.69 from 2016 – 20 respectively.

14.Price Earnings ratio is reduced when compared with the last year. It is
reduced from 3.09 to 2.39, because the earnings per share is increased.

15.The return on investment is increased from 0.32 to 0.42 compared with

the previous year. Both the profit and shareholders funds increase cause
an increase in the ratio.

SUGGESTIONS

1) After the analysis of Financial Statements, the company status is better,

because the Net working capital of the company is doubled from the last
year’s position.

2) The company profits are huge in the current year; it is better to declare
the dividend to shareholders.
 3) The company is utilising the fixed assets, which majorly help to the
growth of the organisation. The company should maintain that perfectly.

4) The company fixed deposits are raised from the inception, it gives the
other income i.e., Interest on fixed deposits.

CONCLUSION
The company’s overall position is at a good position. Particularly the current
year’s position is well due to raise in the profit level from the last year position.
It is better for the organization to diversify the funds to different sectors in the
present market scenario.
 BIBLOGRAPHY AND WEBLIOGRAPHY

REFFERED BOOKS:-

 FINANCIAL MANAGEMENT - I. M. PANDEY

 MANAGEMENT ACCOUNTANCY - PILLAI & BAGAVATI

 MANAGEMENT ACCOUNTING – SHARMA & GUPTA

WEBSITES:-

 www.samsungindia.com
 www.wikipedia.com
 www.edurev.in
 www.accountingexplanation.com
 www.samsungcompany.com
 ANNEUXURE
Balance sheet as on 31st March 2020

(Amount in Rs.)

Particulars 2019 - 20 2018 - 19

SOURCES OF FUNDS :

1) SHAREHOLDERS' FUNDS

(a) Capital 18,719,280 18,719,280

(b) Reserves and Surplus 78,340,733 37,754,372

97,060,013 56,473,652

2) DEFFERED TAX LIABILITY 2,478,428 2,794,350

TOTAL 99,538,441 59,268,002

APPLICATION OF FUNDS :

1) FIXED ASSETS

(a) Gross Block 31,057,596 29,767,979

(b) Less: Depreciation 16,894,562 14,710,986

(c) Net Block 14,163,034 15,056,993

2) CURRENT ASSETS, LOANS AND ADVANCES

(a) Sundry Debtors 80,712,804 37,856,420

(b) Cash and Bank Balances 34,043,520 51,690,326

(c) Other Current Assets 152,228 857,753

(d) Loans and Advances 733,516 923,709

115,642,068 91,328,208
 LESS : CURRENT LIABILITIES AND PROVISIONS

(a) Liabilities 21,596,916 38,591,265

(b) Provisions 8,669,745 8,525,934

30,266,661 47,117,199

NET CURRENT ASSETS 85,375,407 44,211,009

TOTAL 99,538,441 59,268,002

Profit and Loss Account for the period ended on 31st March 2020

(Amount in Rs.)

Particulars 2019 - 20 2018–19

I.INCOME    

Income from Services 96,654,902 55,550,649

Other Income 2,398,220 2,285,896

TOTAL 99,053,122 57,836,545

II.EXPENDITURE    

Administrative and Other Expenses 81,334,750 75,599,719

  81,334,750 75,599,719

Less: Expenditure Reimbursable under Operations    

and Maintenance Agreement 49,474,305 49,349,892

TOTAL 31,860,445 26,249,827

III. PROFIT BEFORE DEPRECIATION AND TAXATION 67,192,677 31,586,718

Provision for Depreciation 2,183,576 2,279,917

IV. PROFIT BEFORE TAXATION 65,009,101 29,306,801

Provision for Taxation    

- Current 24,292,000 10,680,440

- Deferred (315,922) (67,359)

- Fringe Benefits 446,663 434,140

V. PROFIT AFTER TAXATION 40,586,359 18,259,580

Surplus brought forward from Previous Year 26,699,257 44,951,851

VI. PROFIT AVAIALABLE FOR APPROPRIATIONS 67,285,617 63,211,431

Transfer to General Reserve - 4,495,185

Interim Dividend Rs.15 per equity Share (2005- NIL) - 28,078,920

Provision for Dividend Distribution Tax - 3,938,069

VII. BALANCE CARRIED TO BALANCE SHEET 67,285,617 26,699,257

Earnings Per Share - Basic & Diluted 22 10