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A STUDY ON FINANCIAL PERFORMANCE USING
RATIO ANALYSIS
SUBMITTED FOR THE PARTIAL FULFILLMENT OF
BACHELOR OF BUSINESS ADMINISTRATION
Submitted by
ABDUR RAHMAN
SEMESTER- 4, SECTION- B
ENROLLMENT NO. - A90606417182
Under the guidance of
Mr. KAUSHIK MITRA
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ACKNOWLEDGEMENT
I have taken efforts in this project. However, it would not have been
possible without the kind support and help of many individuals and
organizations. I would like to extend my sincere thanks to all of them. I
am highly indebted to Amity University, Kolkata for their guidance and
constant supervision as well as for providing necessary information
regarding the project & also for their support in completing the project.
I would like to express my gratitude towards my parents & my faculty
Mr. Kaushik Mitra for their kind co-operation and encouragement
which help me in completion of this project. I would like to express my
special gratitude and thanks to industry persons for giving me such
attention and time. My thanks and appreciations also go to my colleague
in developing the project and people who have willingly helped me out
with their
abilities.
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DECLARATION BY CANDIDATE
I solemnly declare that the undersigned project report on STUDY ON
FINANCIAL PERFORMANCE USING RATIO
ANALYSIS based on my work carried out during the course our study
under the supervision of Mr. Kaushik Mitra. I assert that statements
made and conclusion drawn are outcome of my research work. I further
certify that:
1. The work contained in the report is original and has been done
by me under the general supervision of my supervisor
.
2. The work has not been submitted to any other institution for
any other degree/diploma/certificate in this university or any
other university of India or Abroad.
3. We have followed the guidelines provided by the university in
writing the report.
4. Whenever we used materials (data, theoretical analysis, and
texts) from other sources, we have given due credit to them in
the text of the report and giving their details in the references.
Name – Abdur Rahman
Roll Number - 180
Enrolment Number –A90606417180
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FACULTY GUIDE APPROVAL PAGE:
This is to approve that Abdur Rahman, student of Bachelors of Business
Administration at Amity Business School; Amity University Kolkata
has successfully completed his NTCC on “Study on Financial
Performance using Ratio Analysis - Finance”
The NTCC report has been approved.
Mr. Kaushik Mitra
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ABSTRACT
In this project, titled “A STUDY ON FINANCIAL PERFORMANCE USING RATIO
ANALYSIS ”. This aim is to analysis the liquidity and profitability position of the company
using the financial tools.
This study based on financial statements such as Ratio Analysis, Comparative balance
sheet. By using this tools combined it enables to determine in an effective manner.
The study is made to evaluate the financial position, the operational results as well as
financial progress of a business concern.
This study explains ways in which ratio analysis can be of assistance in long-rang
planning, budgeting and asset management to strengthen financial performance and help avoid
financial difficulties.
The study not only throws on the financial position of a firm but also serves as a stepping
stone to remedial measures for Emami Limited.
This project helps to identify and give suggestion the area of weaker position of business
transaction in “EMAMI LTD”.
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TABLE OF CONTENTS
CHAPTE TITLE PAGE NO
R
I INTRODUCTION
7-11
II REVIEW OF LITERATURE 12
III OBJECTIVES OF STUDY 13
IV RESEARCH METHODOLOGY 14
ANNEXURE
BIBLIOGRAPHY……………………………………
INTRODUCTION
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COMPANY PROFILE
1. HISTORY OF THE COMPANY :
Emami, which started as a cosmetics manufacturing company in the year 1974, advancing
with increased momentum has expanded into Emami Group of Companies of today. Even though
cosmetics and toiletries continue to be the main thrust area, the other companies in the Emami
Group are performing equally brilliantly. From health care institution to medicines, from real
estate to retailing and, from paper to writing instruments, Hospital, Emami is creating one
success story after another.
2. Vision and Mission :
Vision
A company, which with the help of nature, caters to the consumers’ needs and their inner
cravings for dreams of better life, in the fields of personal and health care, both in India and
throughout the world.
Mission
To sharpen consumer insights to understand and meet their needs with value-added
differentiated products which are safe, effective & fast.
To integrate our dealers, distributors, retailers and suppliers into the Emami family,
thereby strengthening their ties with the company.
To recruit, develop and motivate the best talents in the country and provide them with an
environment which is demanding and challenging.
To strengthen and foster in the employees, strong emotive feelings of oneness with the
company.
To uphold the principals of corporate governance and move towards decentralization
to generate long term maximum returns for all stake owners.
To contribute whole heartedly towards the environment and society and to emerge as a
model corporate citizen.
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3. Values:
Respect for people:
We treat individuals with dignity and respect. We continue to be honest, open and ethical in all
our interactions with dealers, distributors, retailers, suppliers, shareholders, customers and with
each other.
Consumers delight:
We maximizing that our business can succeed only if we can create and keep customers. We
manufacture products that offer value for money, which are differentiated and deliver safe,
effective and fast solutions.
Integrity:
People at every level are expected to adhere to the highest standards of business ethics.
Anything less is unacceptable. Our ethical conduct transcends beyond policies. It is ingrained in
our corporate tradition that is transferred from one generation of employees to another. We
comply with applicable government laws and regulations in the geographies where we are
present.
Quality:
We are committed to excellence in everything we do. Our credo: There is always a better way-
We must think creatively, continuously innovate and pursue new ideas to achieve uncommon
solutions to common problems.
Teamwork:
Teamwork is the cornerstone of our business that helps deliver value to our customers. We work
together across titles, job responsibilities and organizational structure to share knowledge and
expertise.
The right environment:
It is our responsibility to create an environment that helps employees realize their full potential.
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Leadership:
We recognize that we can be a leading company through active delegation and by creating
leaders at every level of the organisation.
Community development:
We continue to contribute to the communities in which we operate and address social issues
responsibly. Our products are safe to make and use. We conserve natural resources and continue
to invest in a better environment.
Transparency and shareholder value:
We are committed to be driven by our conscience and regulatory standards, to deliver value to
our shareholders, commensurate with our management and financial strength.
4. Profile of the Organization:
Emami Limited is in the business of manufacturing personal, beauty and health care products.
The company manufactures herbal and Ayurvedic products through the use of modern scientific
laboratory practices. This blend enables the company to manufacture products that are mild, safe
and effective. The company's product basket comprises over 20 products, the major being
Boroplus Antiseptic Cream, Navratna Oil, Boroplus Prickly Heat Powder, Sona Chandi
Chyawanprash and Amritprash, Mentho Plus Pain Balm, Fast Relief, Golden Beauty Talc,
Madhuri Range of Products and others. The products are sold across all states in India and in
countries like Nepal, Sri Lanka, the Gulf countries, Europe, Africa and the Middle East, among
others.
5. Manufacturing:
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Emami’s products are manufactured in Kolkata, Puducherry, Guwahati and Mumbai. The
company commenced operations at its fully automated manufacturing unit in Amingaon,
Guwahati in 2003-04.
6. Network:
The company's dispersed manufacturing facilities are complemented with a strong product
throughput, facilitated by a robust distribution network of over 2100 direct distributors and 3.9
lakhs retail outlets. With a view to reach its products deeper into the country, direct selling has
been extended to rural villages. As a result, rural sales increased substantially in 2003-04
compared to the previous year. Emami is headquartered in Kolkata. The company's branch
offices are located across 27 cities in India.
7. Promoters:
Emami is promoted by Shri R.S.Agarwal and Shri R.S.Goenka, Kolkata based industrialists.
Emami’s shares are listed on the Calcutta Stock Exchange, Bombay Stock Exchange and
National Stock Exchange.
8. IT BACKBONE
INTEGRATED INFORMATION TECHNOLOGY
An efficient information technology network is necessary for a dynamic FMCG company
where the market demands change faster than perhaps in any other industry. At Emami, the
integration of information technology transpires on a continuous basis. This ensures that the
company responds to changing market place realities faster than its competitors and that its
products reach retail shelves just when they are required. In turn, this enhances brand loyalty and
retains customers.
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A successful implementation of the ERP in the offices, factories and depots increased the
company’s overall efficiency. It enabled single-point data entry and multi-point information
access. The status of raw materials, packing materials, finished goods, indents and sales
information gets constantly updated through ERP. This has become possible due to the Point to
Point Leased Line connections.
As Emami is growing rapidly, the augmented business requirement calls for a Standard ERP
system. This would provide Real-Time information to the Management, which would facilitate
to take quick decision. The information could also be available through email and Mobile
phones. So Emami would be implementing a Standard ERP system very shortly. Sales
Forecasting, Demand Planning, Process Management, Supply Chain Management, Primary and
Secondary Sales, I-Supplier, I-Expenses, I-Sales will be an integral part of the Standard ERP
system.
Emami adopts the latest Technology for IT and communication system.
9. SALES AND DISTRIBUTION NETWORK
Our Marketing & Distribution Network:
Wide, penetrative and all encompassing. That is how Emami has planned its distribution
network. The success of Emami has been largely due to its superior products that have reached
the consumers even in the remotest regions of the country and abroad.
REVIEW OF LITERATURE
2.1 Financial statements Analysis:
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The financial statements provide some extremely useful information to the extent that the
balance sheet mirrors the financial position on a particular date in terms of the structure of assets,
liabilities and owners’ equity, and so on and the profit an loss account shows the results of
operations during a certain period of time in terms of the revenues obtained and the cost incurred
during the year. Thus, the financial statements provide a summarized view of the financial
position and operations of a firm. Therefore, much an be learnt about a firm from a careful
examination of its financial statements as invaluable documents performance reports. The
analysis of financial statements is thus, an important aid to financial analysis.
The focus of financial analysis is on key figures in the financial statements and the significant
relationship that exists between them. The analysis of financial statements is a process of
evaluating the relationship between component parts of financial statements to obtain a better
understanding of the firm’s position and performance. The first task of the financial analyst is to
select the information relevant to the decision under consideration from the total information
contained in the financial statements. The second step is to arrange the information in a way to
highlight significant relationships. The final step is interpretation and drawing of inferences and
conclusion. In brief, the financial analysis is the process of selection, relation and evaluation.
2.2 Ratio Analysis:
Ratio analysis is a widely-use tool of financial analysis. It can be used to compare the risk and
return relationships of firms of different sizes. It is defined as the systematic use of ratio to
interpret the financial statements so that the strengths and weakness of a firm as well as its
historical performance and current financial condition can be determined. The term ratio refers to
the numerical or quantitative relationship between two items and variables. These ratios are
expressed as (i) percentages, (ii) fraction and (iii) proportion of numbers. These alternative
methods of expressing items which are related to each other are, for purposes of financial
analysis, referred to as ratio analysis. It should be noted that computing the ratios does not add
any information not already inherent in the above figures of profits and sales. What the ratio do
is that they reveal the relationship in a more meaningful way so as to enable equity investors,
management and lenders make better investment and credit decisions.
OBJECTIVES
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1. Primary Objective:
To evaluate the financial efficiency of “EMAMI LIMITED”.
2. Secondary Objectives:
i. To analyse the liquidity solvency position of the firm.
ii. To study the working capital management of the company.
iii. To understand the profitability position of the firm.
iv. To assess the factors influencing the financial performance of the organisation.
v. To understand the over all financial position of the company.
RESEARCH METHODOLOGY
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1. METHODOLOGY:
The project evaluates the financial performance one of the company with help of the most
appropriate tool of financial analysis like ratio analysis and comparative balance sheet. Hence, it
is essentially fact finding study.
2. Primary Data:
Primary data is the first hand information that is collected during the period of research.
Primary data has been collected through discussions held with the staffs in the accounts
department. Some types of information were gathered through oral conversations with the
cashier, taxation officer etc.
3. Secondary Data:
Secondary data studies whole company records and company’s balance sheet in which the
project work has been done. In addition, a number of reference books, journals and reports were
also used to formulate the theoretical model for the study. And some information were also
drawn from the websites.
4. Tools used in analysis:
Ratio analysis
Comparative balance sheet
5. Period of study:
The study covers the period of 2001-2002 to 2005-2006 in Emami Limited.
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BIBLOGRAPHY
BOOKS
M Y Khan and P K Jain Financial Management Fourth Edition-2006,
Tata McGraw-Hill Publishing Company Limited, New Delhi.
A. Murthy Management Accounting First Edition-2000, S. Viswanathan (Printers
&Publishers), PVT., LTD.
S.M. Maheswari Management Accounting, Sultan Chand & Sons Educational
Publishers, New Delhi.
WEBSITES
www.encyclopedia.com
www.emamigroup.com
