ACCOUNTANCY PROJECT

Student Name: U. Anushka

Class: XII-A6
School: Maharishi Vidya Mandir, Chetpet.
Academic Year: 2025–2026

INDEX

Specific Project -1
●​ Introduction
●​ Objectives of Ratio Analysis
●​ Types of Accounting Ratios
●​ Company Profile
●​ Statement of Consolidated Financial Results[P&L]
●​ Consolidated Statement of Assets And Liabilities
●​ Ratio Analysis
●​ Summary

Specific Project -2
●​ Cash Flow Statement
●​ Objectives of Cash Flow Statement
●​ Components of Cash Flow Statement
●​ Methods of preparing Cash Flow Statement
●​ Consolidated Statement Of Cash Flow
●​ Graphical Representation Of Cash Flow Statement
●​ Conclusion
●​ Bibliography
SPECIFIC PROJECT - 1

INTRODUCTION

Accounting Ratios:
Accounting ratios are mathematical expressions that show the relationship
between two financial figures taken from a company’s financial statements,
such as the balance sheet and profit and loss account. These ratios help in
simplifying large and complex financial data into a concise and
understandable form. By expressing data in terms of ratios, it becomes
easier to analyze and interpret the financial condition of a business.
Accounting ratios are widely used to measure different aspects of
performance, including liquidity, profitability, efficiency, and solvency.

Ratio Analysis:
Ratio analysis refers to the systematic process of calculating, comparing,
and interpreting accounting ratios to evaluate a company’s financial
performance and position. It helps in understanding trends over time and in
making comparisons with other firms in the same industry. Ratio analysis is
an important tool for decision-making, as it provides valuable insights to
management, investors, and creditors. It aids in identifying strengths and
weaknesses of a business and plays a key role in effective financial
planning, control, and forecasting.
OBJECTIVES OF RATIO ANALYSIS

●​ To evaluate the financial performance of a business over a period of

time.

●​ To assess the profitability of the company and its ability to generate

earnings.

●​ To determine the liquidity position, i.e., the firm’s ability to meet

short-term obligations.

●​ To analyze the solvency of the business and its capacity to meet

long-term debts.

●​ To measure the efficiency of operations and how effectively resources

are utilized.

●​ To facilitate comparison with other firms in the same industry.

●​ To help management in planning, decision-making, and control.

●​ To identify strengths and weaknesses of the business.

●​ To provide useful information to investors, creditors, and other

stakeholders.
TYPES OF ACCOUNTING RATIOS (based on functionality)

[Link] Ratio
●​ Current Ratio
●​ Quick Ratio

[Link] Ratio
●​ Gross profit Ratio
●​ Operating Ratio
●​ Operating profit Ratio
●​ Net profit Ratio
●​ Return on Investment

[Link] Ratio
●​ Debt to Equity Ratio
●​ Total Assets to Debt Ratio
●​ Proprietary Ratio
●​ Interest Coverage Ratio
●​ Debt to Capital Employed Ratio

[Link]/Turnover Ratio
●​ Inventory Turnover Ratio
●​ Trade Receivable Turnover Ratio
●​ Trade Payable Turnover Ratio
●​ Working Capital Turnover Ratio
●​ Fixed Assets Turnover Ratio
●​ Net Assets Turnover Ratio
COMPANY PROFILE - TRENT LIMITED

Trent Limited, a Mumbai-based Tata Group company founded in

1998, is a prominent Indian retailer operating fashion and lifestyle
formats including Westside, Zudio, and Star Bazaar. As of April 2026,
Trent reported strong growth, with Q4 FY26 net profit rising 33% YoY
to ₹413 crore and revenue growing 19%. The stock is a NIFTY 50
constituent, with a market cap exceeding ₹1.5 lakh crore.

Key Retail Formats

Westside: Flagship chain offering branded fashion apparel, footwear,
accessories, and home decor.
Zudio: Value-fashion brand targeting trendy, accessible, and
affordable apparel for men, women, and children.
Star: Hypermarket and supermarket chain providing food, groceries,
and daily essentials.
Samoh: A relatively new format focusing on premium fashion.

Corporate Structure
Parent: Part of the Tata Group, with roughly 37% of the group sharing
ownership.
Leadership: Noel Tata serves as the Chairman.
RATIO ANALYSIS

1. LIQUIDITY RATIOS
(a) Current Ratio
This ratio measures the ability of a business to pay its short-term liabilities
using current assets.
It compares current assets with current liabilities.
A higher ratio indicates better liquidity and financial stability in the short run.

Formula:
Current Ratio = Current Assets / Current Liabilities

For the year ended 2026:

= 4,058.30 / 3,210.99
= 1.26 : 1

For the year ended 2025:

= 3,673.45 / 2,010.69
= 1.83 : 1

Analysis:
Decreased and below ideal, indicating weakening short-term liquidity.
(b) Quick Ratio
This ratio shows the immediate ability of a firm to pay its current liabilities
without relying on inventory.
It excludes stock because inventory may not be quickly converted into
cash.
A higher quick ratio indicates a strong short-term financial position.

Formula:
Quick Ratio = Quick Assets / Current Liabilities

For the year ended 2026:

= (4,058.30 − 2,289.01) / 3,210.99
= 1,769.29 / 3,210.99
= 0.55 : 1

For the year ended 2025:

= (3,673.45 − 2,045.05) / 2,010.69
= 1,628.40 / 2,010.69
= 0.81 : 1

Analysis:
Declined significantly, showing poor immediate liquidity position
2. SOLVENCY RATIOS

(a) Debt–Equity Ratio

This ratio shows the proportion of debt and equity used to finance the
business.
It indicates the financial risk of the company.
A lower ratio suggests a safer financial position.

Formula:
Debt–Equity Ratio = Debt / Equity (Shareholder's Fund)

For the year ended 2026:

= 2,568.00 / 7,107.96
= 0.36 : 1

For the year ended 2025:

= 2,279.49 / 5,583.36
= 0.41 : 1

Analysis:
Decreased, indicating lower financial risk and strong capital structure.
(b) Total Assets to Debt Ratio
This ratio measures how much of total assets are financed by debt.
It shows the ability of assets to cover total liabilities.
A higher ratio indicates better solvency.

Formula:
Total Assets to Debt Ratio = Total Assets / Debt

For the year ended 2026:

= 11,728.58 / 4,620.62
= 2.54 times

For the year ended 2025:

= 9,419.64 / 3,836.28
= 2.45 times

Analysis:
Increased, showing improved ability to cover debt with assets.
(c) Proprietary Ratio
This ratio shows the proportion of shareholders’ funds in total assets.
It indicates the long-term financial strength of the business.
A higher ratio means more security for creditors.

Formula:
Proprietary Ratio = Shareholder's Funds or Proprietors’ Fund or
Equity / Total Assets

For the year ended 2026:

= 7,107.96 / 11,728.58
= 0.61

For the year ended 2025:

= 5,583.36 / 9,419.64
= 0.59

Analysis:
Increased, indicating stronger owner’s contribution.
(d) Interest Coverage Ratio
This ratio measures the ability of a company to pay interest on its debt.
It compares earnings before interest with interest expenses.
A higher ratio indicates better ability to meet interest obligations.

Formula:
Interest Coverage Ratio = Profit Before Interest and tax / Interest on
Long term Debt

For the year ended 2026:

= 2,258.69 / 168.35
= 13.41 times

For the year ended 2025:

= 1,943.24 / 138.59
= 14.02 times

Analysis:
Slightly decreased but still very high, showing strong ability to pay
interest.
(e) Debt to Capital Employed Ratio
This ratio shows the proportion of debt in total capital employed.
It helps in understanding long-term financial structure.
A lower ratio indicates lower financial risk.

Formula:
Debt to Capital Employed = Long Term Debt / Capital Employed

For the year ended 2026:

= 2,568 / 9,675.96
= 0.27

For the year ended 2025:

= 2,279.49 / 7,862.85
= 0.29

Analysis:
Decreased, indicating reduced dependence on debt financing.
3. ACTIVITY RATIOS

(a) Inventory Turnover Ratio

This ratio shows how many times inventory is sold and replaced during a
period.
It indicates efficiency in inventory management.
A higher ratio means faster movement of stock.

Formula:
Inventory Turnover Ratio = Cost of Revenue from Operation /
Average Inventory

For the year ended 2026:

= 11,496.89 / 2,289.01
= 5.02 times

For the year ended 2025:

= 10,143.39 / 2,045.05
= 4.96 times

Analysis:
Increased, indicating better inventory management.
(b) Trade Receivables Turnover Ratio
This ratio measures how quickly the company collects cash from
customers.
It shows the efficiency of credit and collection policies.
A higher ratio indicates faster collection of receivables.

Formula:
Trade Receivables Turnover Ratio = Credit Revenue from Operation
s / Average Trade Receivables

For the year ended 2026:

= 20,074.21 / 51.14
= 392.4 times

For the year ended 2025:

= 17,134.61 / 62.95
= 272.2 times

Analysis:
Increased sharply, showing a very efficient collection of dues.
(c) Trade Payables Turnover Ratio
This ratio shows how quickly a company pays its suppliers.
It reflects the credit policy and payment efficiency.
A lower ratio may indicate longer payment periods.

Formula:
Trade Payables Turnover Ratio = Net Credit Purchases / Average
Trade Payables

For the year ended 2026:

= 11,496.89 / 1,208.66
= 9.51 times

For the year ended 2025:

= 10,143.39 / 928.19
= 10.93 times

Analysis:
Decreased, indicating slightly slower payment to suppliers.
(d) Working Capital Turnover Ratio
This ratio measures how efficiently working capital is used to generate
sales.
It compares net sales with working capital.
A higher ratio indicates better utilization of working capital.

Formula:
Working Capital Turnover Ratio = Revenue From Operation/ Working
Capital

For the year ended 2026:

Working Capital = 4,058.30 − 3,210.99 = 847.31
= 20,074.21 / 847.31
= 23.69 times

For the year ended 2025:

= 17,134.61 / 1,662.76
= 10.31 times

Analysis
Increased significantly, showing highly efficient use of working capital.
(e) Fixed Assets Turnover Ratio
This ratio shows how efficiently fixed assets are used to generate sales.
It compares sales with fixed assets.
A higher ratio indicates better use of long-term assets.

Formula:
Fixed Assets Turnover Ratio = Revenue from Operation/ Fixed
Assets (Net)

For the year ended 2026:

= 20,074.21 / 3,365.74
= 5.96 times

For the year ended 2025:

= 17,134.61 / 2,668.24
= 6.42 times

Analysis:
Decreased, indicating slightly reduced efficiency in using fixed assets.
(f) Net Assets Turnover Ratio
This ratio measures how efficiently total capital employed generates
revenue.
It compares net sales with net assets or capital employed.
A higher ratio indicates efficient use of total resources.

Formula:
Net Assets Turnover Ratio = Sales / Capital Employed

For the year ended 2026:

= 20,074.21 / 9,675.96
= 2.07 times

For the year ended 2025:

= 17,134.61 / 7,862.85
= 2.18 times

Analysis:
Slightly decreased, showing minor decline in overall asset utilization.
[Link] RATIO

(a) Gross Profit Ratio

This ratio measures the relationship between gross profit and net sales.
It shows how efficiently a company produces and sells its goods.
A higher ratio indicates better production efficiency and cost control.

Formula:
Gross Profit Ratio = (Gross Profit / Revenue from Operations) × 100

For the year ended 2026:

= 20,074.21 − 11,496.89 = 8,577.32
= (8,577.32 / 20,074.21) × 100
= 42.72%

For the year ended 2025:

= 17,134.61 − 10,143.39 = 6,991.22
= (6,991.22 / 17,134.61) × 100
= 40.80%

Analysis:
Increased, indicating improved cost control and production efficiency.
(b) Operating Ratio
This ratio shows the proportion of operating expenses to net sales.
It helps in understanding how much of revenue is consumed by operating
costs.
A lower ratio indicates better efficiency and higher profitability.

Formula:
Operating Ratio = (Operating Cost / Revenue from Operation) × 100

For the year ended 2026:

= (17,930.36 / 20,074.21) × 100
= 89.33%

For the year ended 2025:

= (15,409.93 / 17,134.61) × 100
= 89.93%

Analysis:
Slightly decreased, showing marginal improvement but still high
expenses.
(c) Operating Profit Ratio
This ratio measures operating profit as a percentage of net sales.
It shows the profit earned from core business operations.
A higher ratio reflects better operational efficiency.

Formula:
Operating Profit Ratio = (Operating Profit / Revenue from Operation)
× 100

For the year ended 2026:

= 2,258.69
= (2,258.69 / 20,074.21) × 100
= 11.25%

For the year ended 2025:

= (1,943.24 / 17,134.61) × 100
= 11.34%

Analysis:
Slight decrease, indicating stable but slightly reduced operating
efficiency.
(d) Net Profit Ratio
This ratio shows the percentage of net profit earned on total revenue.
It indicates overall profitability after all expenses and taxes.
A higher ratio means better financial performance.

Formula:
Net Profit Ratio = (Net Profit after tax / Revenue from Operation) × 100

For the year ended 2026:

= (1,721.33 / 20,074.21) × 100
= 8.57%

For the year ended 2025:

= (1,534.41 / 17,134.61) × 100
= 8.95%

Analysis:
Declined slightly, reflecting a small drop in overall profitability.
(e) Return on Investment (ROI)
This ratio measures the return earned on the total investment made in the
business.
It shows how efficiently capital is being used to generate profits.
A higher ROI indicates better utilization of funds.

Formula:
ROI =Profit Before Interest, Tax and Dividend / Capital Employed ×
100
Capital Employed = Equity + Debt

For the year ended 2026:

= 1,721.33 / (7,107.96 + 2,568.00) × 100
= 1,721.33 / 9,675.96 × 100
= 17.78%

For the year ended 2025:

= 1,534.41 / (5,583.36 + 2,279.49) × 100
= 1,534.41 / 7,862.85 × 100
= 19.51%

Analysis:
Decreased, indicating slightly lower returns on capital employed.
SUMMARY
Ratio 2025 2026 Trend Analysis
Current Ratio 1.83 1.26 Decrease Below Ideal,
Liquidity weakened
Quick Ratio 0.81 0.55 Decrease Poor immediate
liquidity
Debt-Equity Ratio 0.41 0.36 Decrease Lower risk, Strong
position
Total Assets To 2.45 2.54 Increase Improved solvency
Debt Ratio
Proprietary Ratio 0.59 0.61 Increase Strong owner
contribution
Interest Coverage 14.02 13.41 Decrease Very strong, slight
Ratio fall
Debt To Capital 0.29 0.27 Decrease Low financial risk
Employed
Inventory Turnover 4.96 5.02 Increase Efficient inventory
Ratio use

Trade Receivables 272.2 392.4 Increase Excellent collection

Turnover Ratio efficiency
Trade Payables 10.93 9.51 Decrease Slight delay in
Turnover Ratio payments
Working Capital 10.31 23.69 Increase Highly efficient use
Turnover Ratio
Fixed Assets 6.42 5.96 Decrease Slight decline in
Turnover Ratio efficiency
Net Assets 2.18 2.07 Decrease Slightly reduced
Turnover Ratio efficiency
Gross Profit Ratio 40.80% 42.72% Increase Strong profitability
improved
Operating Ratio 89.93% 89.33% Decrease Slight improvement,
Still high cost
Operating Profit 11.34% 11.25% Decrease Stable performance
Ratio
Net Profit Ratio 8.95% 8.57% Decrease Slight drop but still
good
Return On 19.51% 17.78% Decrease Efficient but
Investment declining returns
SPECIFIC PROJECT - 2

Cash Flow Statement (CFS)

It is a financial statement that shows the inflow and outflow of cash and
cash equivalents during a specific period. It helps in understanding how a
business generates and uses cash in its operating, investing, and financing
activities. Operating activities include cash transactions related to the core
business operations, such as receipts from customers and payments to
suppliers. Investing activities involve the purchase and sale of long-term
assets like machinery or investments. Financing activities deal with
changes in capital structure, such as issuing shares, taking loans, or paying
dividends. CFS is important because it reflects the liquidity and financial
flexibility of a business, unlike profit-based statements. It helps investors,
creditors, and management assess the company’s ability to meet
short-term obligations, plan future investments, and ensure efficient cash
management.
Objectives of Cash Flow Statement (CFS):

●​ To show the inflow and outflow of cash and cash equivalents during a
specific period.

●​ To assess the liquidity and cash position of a business.

●​ To help in understanding the ability of the firm to meet its short-term

obligations.

●​ To analyse the cash generated from operating, investing, and

financing activities.

●​ To assist management in planning and controlling cash resources

efficiently.

●​ To provide useful information to investors and creditors for

decision-making.
Components of Cash Flow Statement
●​ Operating Activities
●​ Investing Activities
●​ Financing Activities

Operating Activities:
These are cash flows from the core business operations of a company.
They include cash received from customers and cash paid to suppliers and
employees.
It shows whether the business can generate sufficient cash from its main
activities.

Investing Activities:
These involve cash flows related to the purchase and sale of long-term
assets.
Examples include buying machinery or selling investments.
It reflects how a company is investing in its future growth.

Financing Activities:
These are cash flows related to raising and repaying capital.
They include issuing shares, taking loans, or paying dividends.
It shows changes in the company’s capital structure and financial position.
Methods of Preparing Cash Flow Statement (CFS):
There are two methods of preparing the Cash Flow Statement:

1. Direct Method:
This method shows actual cash inflows and outflows from operating
activities.
It includes items like cash received from customers and cash paid to
suppliers, employees, etc.
It provides a clear view of cash transactions but is less commonly used in
practice.

2. Indirect Method:
This method starts with net profit and adjusts it for non-cash items and
changes in working capital.
Items like depreciation, gain/loss on sale of assets, and changes in current
assets and liabilities are adjusted.
It is more commonly used as it is easier to prepare from existing financial
statements.
Cash Flow (₹ In Crores) FY 2025 FY 2026
Operating Activities 1660.90 2667.62
Investing Activities -923.67 -1578.36
Financing Activities -693.67 -1147.61
CONCLUSION
The financial analysis of Trent Limited shows that the company is
performing well overall. The profitability position is strong, with good gross
and net profit ratios, indicating efficient operations and cost control.
However, the liquidity position is relatively weak, as the current and quick
ratios are below the ideal level, suggesting some pressure in meeting
short-term obligations.
The solvency position is very sound, with a low debt–equity ratio and high
interest coverage ratio, reflecting low financial risk and strong long-term
stability. Activity ratios indicate efficient management of inventory,
receivables, and assets.
The Cash Flow Statement reveals that the company generates adequate
cash from operating activities, supporting its business operations and
growth. Overall, the company is financially stable, profitable, and efficient,
but it should improve its liquidity position for better short-term financial
health.

BIBLIOGRAPHY
●​ Annual Report of Trent Limited for the financial years 2024–25 and
2025–26
●​ National Council of Educational Research and Training (NCERT)
Accountancy Textbook – Class XII
●​ Reference materials provided by the school and teacher
●​ Official website of Trent Limited
●​ Notes and study material prepared during the project