PROJECT WORK

CLASS XII

1
Students would prepare only ONE
project in the entire academic session,
which is divided into two terms i.e.
Term – I and Term – II

2
TERM -I
PARTICULARS MAXIMUM MARKS
Written Test (based on Project –
Accounting Ratios) 6
Practical file 2
Viva (Ratio Analysis) 2

TERM -II
PARTICULARS MAXIMUM MARKS
Written Test (based on Comparative Statements
and Common Size Statement and Cash
Flow statement) 6
Practical file 2
Viva (Comparative Statements and Common Size
Statement and Cash flow Statement) 2

3
 SPECIFIC PROJECTS
CBSE have recommended preparation of any of the
two given specific Projects, namely
1.Segment Reporting
2.Analysis of Cash Flow Statement
3. A comparative study of the changes in Revenue, Net
Profit and Earnings per share of a Limited Companies

The data for these will be drawn mainly from

quarterly or half yearly or annual reports of corporate
sector.
Two projects will be of specific nature must use at
least one tool of analysis in each.

4
There are four tools of analysis given in the syllabus for
the analysis of Financial Statements namely

(i) Comparative Statement

(ii) Common Size Statements

(iii) Ratios

(iv) Cash Flow Statement.

Any one or more of these tools are to be used to derive

conclusions
5
No project is to be prepared on the
tools, but these tools are to be used to
achieve the object of the project.

For instance, there will not be any

project on the 'Ratios' as such, but
ratios will be used in the development
of the project to reach a conclusion.

6
For the purpose of Project Work, the following ratios will be
included :

1.Liquidity Ratios : Current Ratio, Liquidity Ratio.

2.Solvency Ratios : Debt to Equity; Total Assets to Debt, Proprietary

Ratio.

3.Activity Ratios : Inventory Turnover, Debtors Turnover, Payables

Turnover, Working Capital Turnover, Fixed Assets Turnover, Current
Assets Turnover.

4.Profitability Ratio : Gross Profit Ratio, Operating Ratio, Net Profit

Ratio, Return on Investment, Earning Per Share – Price Earnings Ratio.

7
SPECIFIC PROJECT

8
1. SEGMENT REPORTING
Accounting Standard (AS) 17 (issued 2000)
Segment Reporting
Many enterprises provide groups of products and services or operate in
geographical areas that are subject to differing rates of profitability,
opportunities for growth, future prospects, and risks.

Information about different types of products and services of an

enterprise and its operations in different geographical areas - often called
segment information - is relevant to assessing the risks and returns of a
diversified or multi-locational enterprise.

9
It is mandatory for companies to report the progress of
each segment as per AS-17 issued by the Council of The
Institute of Chartered Accountants of India since
April 1, 2001.

It ensures full disclosure about the revenue from each

segment, the profit from each segment and the amount of
capital allocated to each segment. These reports are on
quarterly, half yearly and annual basis. Thus, every
segment gets full attention of the management and the
shareholders and for fair disclosure as well. It will
also throw light on the financial position of each segment.

10
Objective of Segment Reporting
The objective of this Standard is to establish principles for reporting
financial information, about the different types of products and services an
enterprise produces and the different geographical areas in which it
operates.

Such information helps users of financial statements:

(a) To understand the performance of the enterprise in a better manner.

(b) To assess the risks and returns of the enterprise; and

(c) To make more informed judgements about the enterprise as a whole.

11
Types of Segment for CBSE Project
A.Business Segment is a distinguishable component of an enterprise that is
engaged in providing an individual product or service or a that is subject to risks
and returns that are different from those of other business segments.
For example Hindustan Unilever Limited  has
1.Soaps and Detergents,
2. Personal Products,
3. Beverages,
4.Packaged Foods
5. Others

B. Geographical Segment is engaged in providing products or services in

different economic environment and that is subject to risks and returns that are
different from those of components operating in other economic environments.
For example Hindustan Unilever Limited  has it has two Geographical
Segment.
1.India
2.Outside India. 12
An enterprise should disclose the following
for each of its segment:
(a)segment revenue,

(b) segment result;

(c) total carrying amount of segment assets;

(d) total amount of segment liabilities;

(e) total cost incurred during the period to acquire segment assets
that are expected to be used during more than one period (tangible
and intangible fixed assets);

(f ) total amount of expense included in the segment result for

depreciation and amortization in respect of segment assets for the
period; 13
Students will analyze the information given in the financial statements
as follows :

1.Performance of Segments keeping in mind their three parameters

Revenue, Net Profit and Capital Employed of companies on quarterly or
half yearly or annual basis.

2.Comparison of Revenue, Net Profit and ROI on quarterly or half

yearly or annual basis with the help of comparative or common size
statements.
The Segment reports are widely published and reported by the
companies. It can be picked up either from the newspapers or from the
websites of the companies

14
 I- SAMPLE PROJECT ON SEGMENT ANALYSIS
1. Name of Project:
Analysis of Performance of each segment of ITC Limited with reference to
i Revenue,
ii. Profit and
iii. Capital employed

2. Objectives:
To study whether the contribution of various segments of ITC Limited 
with respect to
i. Revenue, and
ii. Profit, is justified ?
iii. To know as to which operation segment is performing best in terms of
Net Profit and Return on Investment.

15
3. Period Under Study:
Financial Year ending 31st March, 20017 and 31st March,
2018

4. Tools of Analysis:
i. Common Size Statement and
ii. Ratios

5. Source Material:
From the Website of the company.
https://www.itcportal.com/about-itc/shareholder
value/annual-reports/itc-annual-report-2018/pdf/ITC-
Report-and-Accounts-2018.pdf

16
17
18
6. Processing of Datas :
I. Common Size Statement of Segment Wise Revenue .

Compare the Revenue from Operations of each segment of

with TOTAL REVENUE for the year.

Revenue of each segment

Percentage = ----------------------------------- Х 100
Total Revenue

Degree = Revenue of each segment

-------------------------------------------- Х 360
Total Revenue

19
 Total Revenues-2016-17
Segment Rs.(Crores) %age Degree

FMCG-Cigarettes 34001.98 61.82% 222.56

FMCG-Others 10498.57 19.09% 68.72

Hotels 1329.25 2.42% 8.71

Agri Business 5352.88 9.73% 35.03

Paperboards, Paper and Packaging 3819.01 6.94% 24.98

Total 55001.69 100% 360

20
 Total Revenue- 2016-17
7%

10%
2
%
FMCG-Cigarettes
FMCG-Others
Hotels
Agri Business
Paperboards, Paper and
Packaging
19%
62%

21
 Total Revenues-2017-18

Segment Rs.(Crores) %age Degree

FMCG-Cigarettes 22894.01 52.08% 187.49

FMCG-Others 11314.38 25.74% 92.66

Hotels 1404.10 3.19% 11.48

Agri Business 4551.98 10.36% 37.29

Paperboards, Paper and Packaging 3792.43 8.63% 31.08

Total 43956.90 100% 360

22
 Total Revenue- 2017-18
9%

10%
FMCG-Cigarettes
FMCG-Others
3% Hotels
Agri Business
52% Paperboards, Paper and
Packaging

26%

23
II. Common Size Statement of Segment Wise
Profit .

Compare the Profit of each segment of with TOTAL

PROFITS for the year.

Profit of the segment

Percentage = ----------------------------------- Х 100
Total Profit

Degree = Profit of the segment

-------------------------------------------- Х 360
Total Profit
24
 Segment Results-2016-17
Segment Rs.(Crores) %age Degree

FMCG-Cigarettes 13340.82 85.87 309.13

FMCG-Others 164.12 1.06 3.82

Hotels 139.79 0.90 3.24

Agri Business 848.62 5.46 19.66

Paperboards, Paper and Packaging 1042.16 6.71 24.15

Total 15535.51 100% 360

25
 Segment Results 2016-17
1
7%
1 %
% 5%

FMCG-Cigarettes
FMCG-Others
Hotels
Agri Business
Paperboards, Paper and
Packaging

86%

26
 Segment Results-2017-18

Segment Rs.(Crores) %age Degree

FMCG-Cigarettes 12513.91 86.16 310.18

FMCG-Others 28.12 0.19 0.68

Hotels 110.95 0.76 2.74

Agri Business 905.80 6.24 22.46

Paperboards, Paper and Packaging 965.84 6.65 23.94

Total 14524.62 100% 360

27
 Segment Results 2017-18
1
7%
0 %
% 6%

FMCG-Cigarettes
FMCG-Others
Hotels
Agri Business
Paperboards, Paper and
Packaging

86%

28
III. Common Size Statement of Segment Wise Capital
Employed .

Compare the Capital Employed of each segment of with TOTAL Capital

Employed for the year.

Capital Employed of the segment

Percentage= ----------------------------------- -------------------Х 100
Total Capital Employed

Degree = Capital Employed of the segment

---------------------------------------------- Х 360
Total Capital Employed

29
 Capital Employed-2016-17
Assets (Rs. In Liabilities (Rs. In Capital Employed Rs.
Segment Crores) Crores) (Crores) %age Degree

FMCG-Cigarettes 7994.51 2447.84 5546.67 23.29 83.84

FMCG-Others 7113.91 1407.21 5706.70 23.97 86.29

Hotels 5082.80 420.62 4662.18 19.58 70.49

Agri Business 2991.57 795.88 2195.69 9.22 33.19

Paperboards, Paper
6322.79 623.85 5698.94 23.94 86.19
and Packaging

Total 29505.58 5695.40 23810.18 100 360

30
 Capital Employed 2016-17
9%

10%
FMCG-Cigarettes
FMCG-Others
Hotels
Agri Business
Paperboards, Paper

23% 59%

31
 Capital Employed-2017-18
Assets (Rs. In Liabilities (Rs. In Capital Employed Rs.
Segment Crores) Crores) (Crores) %age Degree

FMCG-Cigarettes 7956.89 4624.83 3332.06 14.80 53.28

FMCG-Others 7623.20 1906.52 5716.68 25.40 91.44

Hotels 5520.54 521.45 4999.09 22.21 79.96

Agri Business 3407.41 900.18 2507.23 11.14 40.10

Paperboards, Paper
6739.83 787.13 5952.70 26.45 95.22
and Packaging

Total 31247.87 8740.11 22507.76 100 360

32
 Capital Employed 2017-18

15%

26%
FMCG-Cigarettes
FMCG-Others
Hotels
Agri Business
Paperboards, Paper
25%

11%

22%

33
 IV.Calculation of Return on Investment

Calculate the Return on Investment of each segment of Hindustan

Unilever Limited by applying the following formula:

Profit Before Interest ,Tax and Dividend

Return on Investment = ---------------------------------- ------------Х 100
Capital Employed

34
 Return on Investment-2016-17

Segment EBIT Capital ROI (in %)

Employed
FMCG-Cigarettes 13340.82 5546.67 240.52

FMCG-Others 164.12 5706.70 2.88

Hotels 119.79 4662.18 2.63

Agri Business 848.62 2195.69 38.65

Paperboards, Paper and Packaging 1042.16 5698.94 18.29

Total 15535.51 23810.18 65.25

35
 Return on Investment-2017-18

Segment EBIT Capital ROI (in %)

Employed
FMCG-Cigarettes 12513.91 3332.06 375.56

FMCG-Others 28.12 5716.68 0.49

Hotels 110.95 4999.09 2.22

Agri Business 905.80 2507.23 36.13

Paperboards, Paper and Packaging 965.84 5952.70 16.23

Total 14524.62 22507.76 64.53

36
 Return on Investment
400
350
300
250
200
150
100
50
0
Axis Title
tt e
s
ers els ess i ng
re th ot si n ag
a - O H u ck
ig ir B a
G-
C CG P
C FM Ag an
d
FM per
P a
d s,
ar
r bo
pe
Pa
37
 COMBINED COMPARITIVE STATEMENTS-2016-17
Capital Employed (% in
Segment Revenue (% in Total) EBIT (% in Total) Total) ROI (%)

FMCG-Cigarettes 61.82% 85.87 23.29 240.52

FMCG-Others 19.09% 1.06 23.97 2.88

Hotels 2.42% 0.90 19.58 2.63

Agri Business 9.73% 5.46 9.22 38.65

Paperboards, Paper
and Packaging 6.94% 6.71 23.94 18.29

Total 100% 100% 100 65.25

38
 COMBINED COMPARITIVE STATEMENTS-2017-18
Capital Employed (% in
Segment Revenue (% in Total) EBIT (% in Total) Total) ROI (%)

FMCG-Cigarettes 52.08% 86.16 14.80 375.56

FMCG-Others 25.74% 0.19 25.40 0.49

Hotels 3.19% 0.76 22.21 2.22

Agri Business 10.36% 6.24 11.14 36.13

Paperboards, Paper
and Packaging 8.63% 6.65 26.45 16.23

Total 100% 100% 100 64.53

39
 V.Conclusions and Future Projections
1.FMCG-Cigarettes Segment have the highest ROI for both the
Financial years.
2.The second best segment is Agri Business Segment having
very good revenues with very less capital investments.
3.Hotels Segment seems to be less efficient in comparisons to
above mentioned segments.
4. Paperboards. Paper and Packaging Segment seem to be not
doing so well with so much percentage of capital investments
yet making low contributions to total ROIs
5.Company is in an enviable position and its having a splendid
results year after year. Every segment is showing positive
results even though low (as in case of Packaged foods and
others) yet the greatest positive is that its not eating into other
segments revenue by making loss.

40
 III. Sample Project on Revenue, Net Profit Ratio
and
Earning per share of Hindustan Unilever Limited

1. Name of the Project: A comparative study of the

changes in Revenue, Net Profit and Earnings per
share.

2. Period of Study
(i) 206-17 Vs 2017-18
(On the basis of Annual Results)

41
3. Objective

To know whether the company has performed better

than before.

4. Tools of Analysis
(i) Comparative Statements and
(ii) Key Ratio

5. Source Material
https://www.itcportal.com/about-itc/shareholder
value/annual-reports/itc-annual-report-2018/pdf/I
TC-Report-and-Accounts-2018.pdf
.

42
43
Objectives of the Project:-
Comparison of the key data's regarding
(i) Revenue
(ii) Net Profit
(iii) Net Profit Ratio
(iv) Earnings per share.

The relative changes in the statement will be

used to derive conclusions. The relative
changes will also be shown on the Bar
Graph.

44
A) Comparative Statement for the year ending
31st March, 2017 and 2018. (In Crores INR)
Absolute Percent-
S.No Particulars 31.3.2017 31.3.2018 Change -age
(cy-py) Change

1. Revenue 58704.52 47688.55 (11015.97) (18.76)%

2. PAT 10477.23 11492.68 1015.45 9.69%

Net Profit
3. Ratio 17.85% 24.10% 6.25 35.01%

3. EPS of Rs.1 8.50 9.26 0.76 8.94%

45
Derivations
(i) Revenue has declined by 18.76%.

(ii) The Net profit has increased by 9.69%. This

means that the company has introduced expense
control system to increase profit. It is quite evident
from the above analysis.

(iii) In spite of decrease in Revenue the earning per

share has increased by 8.94% as there was increase
in Net Profit Ratio, so company is in position to offer
higher dividends.

46
70000

60000

50000

40000
2016-17
2017-18
30000

20000

10000

0
Revenue PAT
47
30

25

20

15 2016-17
2017-18

10

0
Net Profit Ratio EPS
48
Derivation
The profit has increased by
9.69% in spite of decrease in
Sales and even Net Profit Ratio
has also increased.
EPS has also increased due to
Increase in Net Profit Ratio.

49
Conclusions

In challenging markets ITC Limited has shown

increase in Net Profits and Net Profit Ratio in
spite of Decline in Revenue. The main causes
for this are:-
•Increase in Other Income.
•Decrease in Purchase of Stock in Trade.
•Decrease in Excise Duty paid.
•Increase in Profits due to Exceptional Items.

50
 II Sample Project Analysis of CFS of
Hindustan Unilever Limited

1. Name of the Project: Analysis of

Cash Flow Statement.

2. Period of Study
(i)2016-17 Vs 2017-18
(On the basis of Annual Results)

51
3. Objective

To know what is the cash generated/out flow from

three of the companies activities namely
Operating ,Investing and Financing activities.

4. Tools of Analysis
(i)Use of Companies Cash Flow Statement.

5. Source Material
https://www.itcportal.com/about-itc/shareholder
value/annual-reports/itc-annual-report-2018/pdf/
ITC-Report-and-Accounts-2018.pdf

. 52
53
54
Accounting Standard (AS) 3 –
Cash Flow Statements
The statement of cash flows
classifies cash receipts and cash
payments by operating, investing,
and financing activities ie, Cash
flows ( inflows and outflows )of
cash and cash equivalents.

55
 Key Activities of an Enterprise

Operating activities are the principal revenue-

producing activities of the enterprise and other
activities that are not investing or financing
activities.
Investing activities are the acquisition and
disposal of long-term assets and other investments
not included in cash equivalents.
Financing activities are activities that result in
changes in the size and composition of the owners’
capital (including preference share capital in the
case of a company) and borrowings of the
enterprise. 56
 Meaning of Cash and Cash Equivalent

Cash comprises cash on hand and

demand deposits with banks.

Cash equivalents are short term, highly

liquid investments that are readily
convertible into known amounts of cash
and which are subject to an insignificant
risk of changes in value.

57
CASH FLOW FROM OPERATING
ACTIVITIES:
•Net Cash flow from Operating Activities has a
positive inflow of Rs.10627.31crores
for the year ended 31st March 2016 and
Rs.13169.40 Crores for the year ended 31st
March,2018.
•There is increase in Inflow of Rs.2542.09
Crores and 23.92% for the year ending 31st
March,2018 as compared to previous year
ending 31st March,2017.
58
Possible Causes for increase in cash
flow from Operating Activities are
• Decline in Cash Purchases
•Decline in Expenses towards
Excise Duty
•Decrease in Other Expenses.
•Increase in Receipts from
Exceptional Items.
59
CASH FLOW FROM INVESTING
ACTIVITIES:
•Net Cash flow from Investing Activities shows a
increase in Cash Used towards Investing Activities.
•Cash used in Investing Activities is of Rs.3250.93
Crores for the year ended 31st March 2017 and
Outflow of Rs.7113.89 Crores for the year ended 31 st
March,2018.
•There is increase in Outflow of Rs.3862.96 Crores
and 118.83% for the year ending 31 st March,2018 as
compared to previous year ending 31st March,2017.

60
Main Causes for Increase in cash outflow from
Investing Activities are..
•Outflow under investing activities show that the
company has invested its funds in Current
Investments and Non-Current Investments.
•There is also decline in Interest Received in
current year as compared to previous year.
•There is also increase in Bank Deposits
Investments and also Deposits with Housing
Finance Company.
•There is also decrease in encashment of Bank
Deposits on maturity. 61
CASH FLOW FROM FINANCING
ACTIVITIES:
•Net cash used in financing activities has
increased from Rs.7301.03 Crores for the year
ending 31st March,2017 to Rs.6221.13 Crores
for the year ending 31st March,2018.
•There is increase in Cash flow from financing
Activities by Rs.1079.9 Crores (actually
decrease in outflow) which is 14.79% increase.

62
Main Causes for Decrease in cash outflow
from Financing Activities are..
•Increase in Proceeds from Borrowings.
•Decrease in Repayment of Non-
Current Borrowings
•Decline in Dividend Paid.
•Decrease in Dividend Tax Paid
thereby.

63
15000

10000

5000

2016-17

0
es es es
iti iti iti
tiv tiv tiv
Ac Ac Ac
g g g
-5000 it n it n cin
ra es n
pe
In
v
i na
O F

-10000

64
15000

10000

5000

2017-18

0
es es es
iti iti iti
tiv tiv tiv
Ac Ac Ac
g g g
-5000 it n it n cin
ra es n
pe
In
v
i na
O F

-10000

65
 15000

10000

5000

2016-17
2017-18
0
2017-18
s 2016-17
ti ie i es s
it v it iti e
c ctv i v
-5000 A A c t
g g
a tin tin g
A
[er es cin
p v n
O In na
Fi
-10000

66
On the basis of the above analysis, we
can conclude that ITC LIMITED is
doing well. Though there is a decline
in the Cash Used in Investing
Activities but it will improve the
Investment structure and thereby
helps in more inflow in the future.
In spite of increase in Profits, Less
dividend is paid means there are more
retained earnings, so Company has got
a good Financial Position. 67
Project Work for XI
The project work would be divided into two parts i.e.
Term I (10 marks) and Term II (10 marks) for the
purpose of
assessment and will be covered as detailed below.

Comprehensive project of any sole proprietorship

business. This may state with journal entries and
their ledger
postings, preparation of Trial balance. Trading and
Profit and Loss Account and Balance Sheet.
Expenses, incomes
and profit (loss), assets and liabilities are to be
depicted using pie chart / bar diagram.

68
TERM –I

PARTICULARS MARKS

Project (Till Ledger Posting and balancing 10

of accounts)

TERM –II

PARTICULARS MARKS

Project (Financial statements and

depiction using diagrammatic / graphical tools) 10 69
THANK YOU

70