A STUDY ON FINANCIAL PERFORMANCE ANALYSIS

IN NAFIL TRADERS, SALEM

PROJECT REPORT

Submitted by

SRIMATHI A (613322631105)

in partial fulfillment for the award of the Degree of

MASTER OF BUSINESS ADMINISTRATION

VIVEKANANDHA INSTITUTE OF INFORMATION AND

MANAGEMENT STUDIES, TIRUCHENGODE

ANNA UNIVERSITY, CHENNAI

JULY 2024

i
 BONAFIDE CERTIFICATE

Certified that this Report titled “A STUDY ON FINANCIAL PERFORMANCE ANALYSIS

IN NAFIL TRADERS, SALEM” is the bonafide work of SRIMATHI A (613322631105) who
carried out the work under my supervision. Certified further that to the best of my knowledge the
work reported herein does not form part of any other thesis or dissertation on the basis of which a
degree or award was conferred on an earlier occasion on this or any other candidate.

SIGNATURE OF THE GUIDE SIGNATURE OF THE HOD

Submitted for the project viva-voice examination held on _____________

INTERNAL EXAMINER EXTERNAL EXAMINER

ii
 DECLARATION

I SRIMATHI A (Reg No : 613322631105), hereby declare that the Project report, entitled “A
STUDY ON FINANCIAL PERFORMANCE ANALYSIS IN NAFIL TRADERS, SALEM”
submitted in partial fulfillment of the requirements for the award of degree of MASTER OF
BUSINESS ADMINISTRATION is a record of the original work done by me, under the
supervisions and guidance of Mr. A. HAJA MYDEEN, MBA., [Link]., (Ph.D)., [Link]., [Link]
(Yoga)., Assistant Professor, Vivekanandha Institute of Information and Management Studies,
Thiruchengode and it has not formed the basis for the award of any Degree/ Fellowship of other
similar title to any candidate of any university.

Place: Tiruchengode Signature of the Student

Date:

iii
 ACKNOWLEDGMENT

I wish to express my profound gratitude to Management of Vivekanandha Educational Institutions

for giving me the opportunity to do the project.

I offer heartfelt thanks to our beloved Chairman & Secretary, Vivekanandha Educational
Institutions, Prof. Dr. M. KARUNANITHI, [Link]., M.S., Ph.D., [Link]., who provided all
facilities for carrying out this project work.

I immensely thank, Dr. V. MOHANASUNDARAM, MBA., [Link]., Ph.D., Director,

Vivekanandha Institute of Information and Management Studies for his Valuable Guidance,
encouragement in completion of this project report successfully.

I immensely thank, Prof. T. KRISHNA KUMAR, [Link]., MBA., [Link]., SET., Head of the
Department, Vivekanandha Institute of Information and Management Studies for his Constant
motivation in completion of this project report Successfully.

I take this opportunity to thank my Guide Mr. A. HAJA MYDEEN, MBA., [Link]., (Ph.D).,
[Link]., [Link] (Yoga)., Assistant Professor, Vivekanandha Institute of Information and
Management Studies for his aspiring guidance and constructive criticism during the project work.

I would also like to thank, Mr. N. SUGUNESWARAN, [Link]., Auditor of SUGAM

ASSOSCIATE who provided me with all facilities being required and conducive conditions for
my MBA Project.

SRIMATHI A

iv
 ABSTRACT

This project “A STUDY ON FINANCIAL PERFORMANCE ANALYSIS IN NAFIL

TRADERS, SALEM”. Finance is regarded as the life blood of a business enterprise. In the
modern oriented economy, finance is one of the basic foundations of all kind of economic
activities. They play a dominant role in setting the frame work and managerial conclusion and be
drawn from these statements is of immense use in decision making through analysis and
interpretation of financial statements.

The objective of the study are mainly focused on analyzing the performance of finance which is
revealed through profitability position of the concern for the study period. All the components
which are influencing the financial strength could be analyzed.

The study covers only last four years statement which is 2019 to 2022. The secondary data was
collected from annual reports, mainly from balance sheet and profit and loss account. The data that
used in this study, Ratio Analysis of the overall performance methodology.

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 CONTENT

CHAPTER CONTENT PAGE NO

ABSTRACT ⅴ

LIST OF TABLES ⅶ

LIST OF CHARTS ⅷ

1 INTRODUCTION OF THE STUDY

1.1 INTRODUCTION 2
1.2 INDUSTRY PROFILE 7
1.3 COMPANY PROFILE 11
1.4 OBJECTIVES OF THE STUDY 13
1.5 STATEMENT OF THE PROBLEM 13
1.6 NEED OF THE STUDY 13
1.7 LIMITATION OF THE STUDY
14

2 REVIEW OF LITERATURE 16

3 RESEARCH METHODOLOGY

3.1 RESEARCH DESIGN 25

3.2 SOURCES OF DATA 26

3.3 TOOLS FOR ANALYSIS 26

4 DATA ANALYSIS AND INTERPRETATION 32

FINDINGS 58
5
SUGGESTION 59

CONCLUSION 60

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 LIST OF TABLES

TABLE NO PARTICULAR PAGE NO

4.1.1 Current Ratio 33

4.2.1 Cash Ratio 35

4.3.1 Debt to Equity Ratio 37

4.4.1 Proprietary Ratio 39

4.5.1 Gross Profit Ratio 41

4.6.1 Net Profit Ratio 43

4.7.1 Operating Profit Ratio 45

4.8.1 Return on Investment 47

4.9.1 Return on Equity 49

4.10.1 Return on Asset 51

4.11.1 Inventory Turnover Ratio 53

4.12.1 Fixed Assets Turnover Ratio 55

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 LIST OF CHARTS

CHART NO PARTICULAR PAGE NO

4.1.2 Current Ratio 34

4.2.2 Cash Ratio 36

4.3.2 Debt to Equity Ratio 38

4.4.2 Proprietary Ratio 40

4.5.2 Gross Profit Ratio 42

4.6.2 Net Profit Ratio 44

4.7.2 Operating Profit Ratio 46

4.8.2 Return on Investment 48

4.9.2 Return on Equity 50

4.10.2 Return on Asset 52

4.11.2 Inventory Turnover Ratio 54

4.12.2 Fixed Assets Turnover Ratio 56

viii
 CHAPTER - 1
INTRODUCTION

1
 INTRODUCTION

1.1.1. FINANCIAL STATEMENT ANALYSIS

The process of critical evaluation of the financial information contained in the financial statements
in order to understand and make decisions regarding the operations of the firm is called ‘Financial
Statement Analysis’.

It is basically a study of relationship among various financial facts and figures as given in a set of
financial statements, and the interpretation thereof to gain an insight into the profitability and
operational efficiency of the firm to assess its financial health and future prospects.

The term ‘financial analysis’ includes both ‘analysis and interpretation’. The term analysis means
simplification of financial data by methodical classification given in the financial statements.
Interpretation means explaining the meaning and significance of the data. These two are
complimentary to each other. Analysis is useless without interpretation, and interpretation without
analysis is difficult or even impossible.

Financial statement analysis is a judgemental process which aims to estimate current and past
financial positions and the results of the operation of an enterprise, with primary objective of
determining the best possible estimates and predictions about the future conditions.

It essentially involves regrouping and analysis of information provided by financial statements to

establish relationships and throw light on the points of strengths and weaknesses of a business
enterprise, which can be useful in decision-making involving comparison with other firms (cross
sectional analysis) and with firms’ own performance, over a time period (time series analysis).

According to the American institute to Certified Public Accounts, (AICPA), ‘Financial statement
reflects a combination of recorded facts, Account principals and personal judgements’. Financial
statement analysis is the process of reviewing and analyzing a company’s financial statement to
make better decisions to earn income in future.

2
➢ Recorded facts: The term recorded facts refers to the data taken out form accounting records.
Facts which have not been recorded in the financial book are not depicted in financial
statements, however they might be. For example, fixed assets are shown at cost irrespective
of their market or replacement price since only cost price is recorded in the book.
➢ Accounting principles: Certain accounting principles, concepts, and convention are followed
in the preparation of financial statement. For example, the principal of valuing assets at cost
less depreciation is following for balance sheet purpose.
➢ Personal judgments: Personal judgements has and important bearing on the financial
statements. For example, the selection of a method for stock valuation depends on the personal
judgement of the accounting.

1.1.2. SIGNIFICANCE OF ANALYSIS OF FINANCIAL STATEMENTS

Financial analysis is the process of identifying the financial strengths and weaknesses of the firm
by properly establishing relationships between the various items of the balance sheet and the
statement of profit and loss. Financial analysis can be undertaken by management of the firm, or
by parties outside the firm, viz., owners, trade creditors, lenders, investors, labour unions, analysts
and others. The nature of analysis will differ depending on the purpose of the analyst. A technique
frequently used by an analyst need not necessarily serve the purpose of other analysts because of
the difference in the interests of the analysts.

Financial analysis is useful and significant to different users in the following ways:

➢ Finance manager: Financial analysis focusses on the facts and relationships related to
managerial performance, corporate efficiency, financial strengths and weaknesses and
creditworthiness of the company. A finance manager must be well-equipped with the
different tools of analysis to make rational decisions for the firm. The tools for analysis
help in studying accounting data so as to determine the continuity of the operating policies,
investment value of the business, credit ratings and testing the efficiency of operations.

3
➢ Top management: The importance of financial analysis is not limited to the finance
manager alone. It has a broad scope which includes top management in general and other
functional managers. Management of the firm would be interested in every aspect of the
financial analysis. Financial analysis helps the management in measuring the success of
the company’s operations, appraising the individual’s performance and evaluating the
system of internal control.

➢ Trade payables: Trade payables, through an analysis of financial statements, appraises

not only the ability of the company to meet its short-term obligations, but also judges the
probability of its continued ability to meet all its financial obligations in future. Trade
payables are particularly interested in the firm’s ability to meet their claims over a very
short period of time. Their analysis will, therefore, evaluate the firm’s liquidity position.

➢ Lenders: Suppliers of long-term debt are concerned with the firm’s long-term solvency
and survival. They analyze the firm’s profitability over a period of time, its ability to
generate cash, to be able to pay interest and repay the principal and the relationship between
various sources of funds (capital structure relationships). Long-term lenders analyze the
historical financial statements to assess its future solvency and profitability.

➢ Investors: Investors, who have invested their money in the firm’s shares, are interested
about the firm’s earnings. As such, they concentrate on the analysis of the firm’s present
and future profitability. They are also interested in the firm’s capital structure to ascertain
its influences on firm’s earning and risk. They also evaluate the efficiency of the
management and determine whether a change is needed or not. However, in some large
companies, the shareholders’ interest is limited to decide whether to buy, sell or hold the
shares.

➢ Labor unions: Labor unions analyze the financial statements to assess whether it can
presently afford a wage increase and whether it can absorb a wage increase through
increased productivity or by raising the prices.

4
1.1.3. TOOLS OF ANALYSIS OF FINANCIAL STATEMENTS

The most commonly used techniques of financial analysis are as follows:

➢ Comparative Statements: These are the statements showing the profitability and financial
position of a firm for different periods of time in a comparative form to give an idea about
the position of two or more periods. It usually applies to the two important financial
statements, namely, balance sheet and statement of profit and loss prepared in a
comparative form. The financial data will be comparative only when same accounting
principles are used in preparing these statements. If this is not the case, the deviation in the
use of accounting principles should be mentioned as a footnote. Comparative figures
indicate the trend and direction of financial position and operating results. This analysis is
also known as ‘horizontal analysis’.

➢ Common Size Statements: These are the statements which indicate the relationship of
different items of a financial statement with a common item by expressing each item as a
percentage of that common item. The percentage thus calculated can be easily compared
with the results of corresponding percentages of the previous year or of some other firms,
as the numbers are brought to common base. Such statements also allow an analyst to
compare the operating and financing characteristics of two companies of different sizes in
the same industry. Thus, common size statements are useful, both, in intra-firm
comparisons over different years and also in making inter-firm comparisons for the same
year or for several years. This analysis is also known as ‘Vertical analysis’.

➢ Trend Analysis: It is a technique of studying the operational results and financial position
over a series of years. Using the previous years’ data of a business enterprise, trend analysis
can be done to observe the percentage changes over time in the selected data. The trend
percentage is the percentage relationship, in which each item of different years bear to the
same item in the base year. Trend analysis is important because, with its long run view, it
may point to basic changes in the nature of the business. By looking at a trend in a particular
ratio, one may find whether the ratio is falling, rising or remaining relatively constant.

5
➢ Ratio Analysis: It describes the significant relationship which exists between various items
of a balance sheet and a statement of profit and loss of a firm. As a technique of financial
analysis, accounting ratios measure the comparative significance of the individual items of
the income and position statements. It is possible to assess the profitability, solvency and
efficiency of an enterprise through the technique of ratio analysis.

➢ Cash Flow Analysis: It refers to the analysis of actual movement of cash into and out of
an organization. The flow of cash into the business is called as cash inflow or positive cash
flow and the flow of cash out of the firm is called as cash outflow or a negative cash flow.
The difference between the inflow and outflow of cash is the net cash flow. Cash flow
statement is prepared to project the manner in which the cash has been received and has
been utilized during an accounting year as it shows the sources of cash receipts and also
the purposes for which payments are made. Thus, it summarizes the causes for the changes
in cash position of a business enterprise between dates of two balance sheets.

6
 1.2. INDUSTRY PROFILE

WHOLESALE MARKET

Wholesale refers to the sale of goods in large quantities to distributors who further sell them to the
end-users or other distributors. Wholesale trade comprises purchasing, storing, and selling
merchandise to retailers or other wholesalers and providing related services such as breaking bulk.

The major types of wholesalers are non-durable goods merchant wholesalers, wholesale electronic
markets and agents and brokers, and durable goods merchant wholesalers. The non- durable
wholesalers sell products that need to be purchased often, such as food items, petrol, and so on.
The ownership forms include wholesale or distribution chains and independent wholesalers having
premium, mid- range, and economy prices.

The wholesale market covered in this report is segmented

➢ By Type: Non-Durable Goods Wholesalers, Wholesale Electronic Markets And Agents

And Brokers, Durable Goods Wholesalers
➢ By Ownership: Wholesale/Distribution Chain Independent Wholesalers
➢ By Price Range: Premium, Mid-Range, Economy

MARKET SIZE

The wholesale market size has grown strongly in recent years. It will grow from $49488.7 billion
in 2023 to $53017.84 billion in 2024 at a compound annual growth rate (CAGR) of 7.1%. The
growth in the historic period can be attributed to economic growth, global trade, supply chain
efficiency, government policies, infrastructure development, and globalization.

The wholesale market size is expected to see strong growth in the next few years. It will grow to
$68092.65 billion in 2028 at a compound annual growth rate (CAGR) of 6.5%. The growth in the
forecast period can be attributed to growing sustainability concerns, demand for health and
wellness products, diversification of product offerings, regulatory changes, logistics innovation,
and global economic uncertainty. Major trends in the forecast period include digital transformation
in wholesale, data analytics and business intelligence, integra of artificial intelligence (Al), cross-
border wholesale trade, and blockchain for supply chain transparency.
7
Positive Economic Outlook And Commodity Price Recovery Fuel Wholesale Market Growth

The wholesale market is expected to benefit from the steady economic growth forecast for many
developed and developing countries. According to the International Monetary Fund (IMF), the
global GDP growth was 3.3% in 2020 and 3.4% in 2021. Recovering commodity prices, after a
decline in the historic period is further expected to be a significant factor driving economic growth.
The US economy is expected to register stable growth during the forecast period. Additionally,
emerging markets are expected to continue to grow slightly faster than developed markets in the
forecast period. Greater economic growth is likely to drive public and private investments, joint
ventures, and foreign direct investments in the end-user markets, thereby driving the market during
the forecast period.

Rapid Expansion Of E-Commerce Set To Drive Robust Growth In The Wholesale Market

The increasing prevalence of e-commerce is expected to propel the growth of the wholesale market
going forward. E-commerce refers to the process of purchasing and selling things and services
online, which involves the electronic exchange of commodities, services, or information between
businesses and customers, or both. E-commerce offers improved efficiency, broader market reach,
cost savings, and the ability to provide a better customer experience in the wholesale industry. For
instance, in August 2023, according to the United States Census Bureau, a US-based government
agency, the estimate for e- commerce in the second quarter of 2023 climbed by 7.5% (or 1.4%),
while overall retail sales increased by 0.6% (or 0.4%). Therefore, the increasing prevalence of e-
commerce is driving the growth of the wholesale market.

Major companies operating in the wholesale market report are Walmart Inc., [Link] Inc.,
Berkshire Hathaway Inc., AmerisourceBergen Corp., Cardinal Health The Home Depot Inc.,
Target Corporation, Itochu Corp, Lowe's Companies Inc., Sinopharm, Sysco Corp., Best Buy Co.
Inc., Dollar General Corporation, Tech Data Corp., C&S Wholesale Grocers Inc., Dollar Tree Inc.,
The Sherwin-Williams Company, Genuine Parts Company, BJ's Wholesale Club Holdings Inc.,
W.W. Grainger Inc., Tractor Supply Company, LKQ Corporation, United Rentals Inc., Brueder
Mannesmann AG, HD Supply Holdings Inc., Fastenal Company, Pool Corporation, Big Lots Inc.,
The Michaels Companies Inc., Applied Industrial Technologies Inc.

8
The Impact Of COVID-19 On The Global Wholesale Market

The outbreak of COVID-19 disease (COVID-19) has acted as a massive restraint on the wholesale
market in 2020 as supply chains were disrupted due to trade restrictions and consumption declined
due to lockdowns imposed by governments globally. COVID-19 is an infectious disease with flu-
like symptoms including fever, cough, and difficulty breathing. The virus was first identified in
2010 in Wuhan, Hubei province of the People's Republic of China, and has spread globally,
including Western Europe, North America, and Asia. Steps by national governments to contain
the transmission have resulted in a decline in the manufacture and trade of non-essential goods and
an overall decline in economic activity with countries entering a state of 'lockdown' and the
outbreak having a negative impact on businesses throughout 2020 and into 2021. However, it is
expected that the wholesale market will recover from the shock over the forecast period as it is a
'black swan' event and not related to ongoing or fundamental weaknesses in the market or the
global economy.

Transforming Wholesale Trade With Predictive Analytics: Case Study Of HD Smith

The use of analytics in the wholesale trade market is enhancing supply chain efficiencies by
anticipating the future demand of the customer. Predictive analytics uses historical data to predict
future events. Some of the applications where wholesale trade companies use predictive analytics
are to project profitability, model business scenarios, and improve marketing campaigns. For
instance, HD Smith, a pharmaceutical wholesale distributor, implemented analytics to streamline
their operations, manage their inventory, and perform profitability analysis.

Increasing Focus On Innovative Retail Services To Provide Reliable Services To Their

Customers

Major companies operating in the wholesale market are focusing on innovative services such as
digital dash to provide reliable services to their customers. Digital dash refers to an electronic
display panel in a vehicle's dashboard that provides real-time information and data about the
vehicle's performance and status. For instance, in March 2023, KPMG International Limited, a
Netherland-based services network and accounting company launched a new digital product to
boost retail services, dash. KPMG has used automation to make Dash available to all types of
corporations because it can start working quickly.

9
Dash can start working with little lead time, no development or implementation, and no upfront
costs. Dash creates an interactive dashboard of insights to assist businesses in making better
business decisions and generating predictions and suggestions. It does this by combining company
data with Al and three billion external data points.

Asia-Pacific was the largest region in the wholesale market in 2023. North America was the
second-largest region in the wholesale market. The regions covered in the wholesale market report
are Asia-Pacific, Western Europe, Eastern Europe, North America, South America, Middle East,
Africa.

The countries covered in the wholesale market report are Australia, China, India, Indonesia, Japan,
South Korea, Bangladesh, Thailand, Vietnam, Malaysia, Singapore, Philippines, Hong Kong, New
Zealand, USA, Canada, Mexico, Brazil, Chile, Argentina, Colombia, Peru, France, Germany, UK,
Austria, Belgium, Denmark, Finland, Ireland, Italy, Netherlands, Norway, Portugal, Spain,
Sweden, Switzerland, Russ Czech Republic, Poland, Romania, Ukraine, Saudi Arabia. Israel. Iran.
Turkey. UAE. Egypt. Nigeria, South Africa.

The wholesale market includes revenues earned by entities by providing wholesale services by
merchant wholesalers, specialty wholesalers, and general wholesalers. The market value includes
the value of related goods sold by the service provider or included within the service offering. The
wholesale market also includes sales of food, hard or durable goods, soft goods and art goods.
Values in this market are 'factory gate' values, that is the value of goods sold by the manufacturers
or creators of the goods, whether to other entities (including downstream manufacturers,
wholesalers, distributors and retailers) or directly to end customers. The value of goods in this
market includes related services sold by the creators of the goods.

The market value is defined as the revenues that enterprises gain from the sale of goods and/or
services within the specified market and geography through sales, grants, or donations in terms of
the currency (in USD, unless otherwise specified).

The revenues for a specified geography are consumption values that are revenues generated by
organizations in the specified geography within the market, irrespective of where they are
produced. It does not include revenues from resales along the supply chain, either further along
the supply chain or as part of other products.

10
 1.3. COMPANY PROFILE

Company Name: NAFIL TRADERS

Owner Name: HASSAIN SALIM

Overview: Nafil Traders established in 2017, is a leading wholesale distributor of

high-quality consumer goods. With over 6 years of industry experience, we
specialize in providing a diverse range of products, including grocery items, personal
care items, and office supplies, to retailers, e-commerce businesses, and other bulk
buyers across the country. Our company is headquartered in Salem, Tamilnadu.,
with a network of regional distribution centers strategically located to ensure timely
and efficient delivery to our clients.

Mission Statement: Our mission is to empower retailers and businesses by offering

a vast selection of premium products at competitive prices, backed by exceptional
customer service and logistical support. We aim to be the preferred partner for our
clients by consistently meeting their needs and exceeding their expectations.

Products and Services:

Product Range: Nafil Traders offers an extensive catalog of over 10,000 SKUs,
encompassing top brands and exclusive items. Our product categories include:

❖ Personal Care: Beauty products, grooming kits, health and wellness items.

❖ Stationery Items: Notebooks and Diaries, Art and Craft supplies, etc.,

❖ Grocery Items: Products of Nestle, Amul, Cadbury, etc.,

11
Supply Chain and Distribution: We pride ourselves on our efficient supply chain
management and state-of-the-art warehousing facilities. Our advanced inventory
management systems ensure that we maintain optimal stock levels, minimizing lead
times and reducing costs for our clients.

Market Reach: Nafil Traders serves a broad spectrum of clients, from small retail
shops to large multinational corporations. Our extensive distribution network covers
the entire States, and we are continually expanding our reach to new markets. Our
robust online platform also enables us to serve clients globally, offering seamless
order processing and international shipping.

Sustainability and Corporate Responsibility: We are committed to sustainable

business practices and corporate responsibility. Nafil Traders actively seeks to
reduce our environmental impact through efficient resource management, waste
reduction, and eco-friendly packaging solutions. We also engage in various
community support initiatives and charitable activities, reflecting our dedication to
social responsibility.

Future Vision: Looking ahead, Nafil Traders aims to further expand our product
range and market presence. We are investing in cutting-edge technology and
infrastructure to enhance our service offerings and maintain our position as an
industry leader. Our goal is to continue driving growth and success for our clients
and stakeholders, adapting to the ever-evolving market landscape.

Contact Information:

Address: P N Patti Town Panchayat, Mettur, Salem, Tamil Nadu, 636401 India

“Nafil Traders - Your Trusted Partner in Wholesale Distribution”.

12
1.4. OBJECTIVES OF THE STUDY

➢ To measure the effective utilization of the company.

➢ To calculate the ratios and financial strengths and weakness of the organization.
➢ To examine the financial performance of the NAFIL TRADERS of profitability through
ratio analysis.
➢ To compare the present and previous year’s performance of NAFIL TRADERS.
➢ To identify the liquidity position of NAFIL TRADERS.

1.5. STATEMENT OF THE PROBLEM

The analysis of the financial statement i.e. income statement and the balance sheet it is very
difficult to analyze the complete picture of financial performance. Therefore there is a need of
applying the modern tools of management accounting to access the exact financial performance
and position of the business enterprise.

Accounting ratios are relationships expressed in mathematical terms between the figures that are
connected with each other in some manner. The balance sheet of the bank that has been undertaken
for the study, furnishes that the bank is in good financial position of the bank would be better
understandable only if it is subjected to analysis such as “Ratio Analysis in Indian Overseas Bank.
Hence the topic for the study is chosen as “Analysis of statement using Ratio Analysis.

1.6. NEED OF THE STUDY

➢ It can give understanding of practical approach or implementation overview.

➢ It helps in decision-making, communicating and control.
➢ It Helps in forecasting and planning by performing analysis.

13
1.7. LIMITATION OF THE STUDY

➢ The data have been tabulated using last four years annual report and such data are
secondary in nature.
➢ It may be difficult to compare with other businesses as they may not be willing to share
the information.

➢ The study was completely done on the basis of ratios calculated from the balance sheets.

14
CHAPTER - 2
REVIEW OF
LITERATURE

15
 REVIEW OF LITERATURE

According to Gautam, U. S. (2005) Accountancy Financial Statement is generally explained as

financial information which is the information relating to financial position of any firm in a capsule
form.

Financial statement according to J. A Ohison, (1999) was defined as a written report that
summarizes the financial status of an organization for a stated period of time. It includes an income
statement and balance sheet or statement of the financial position describing the flow of resources,
profit and loss and the distribution or retention of profit.

According to Pandey, I.M. (2005) (Financial management) profitability is the ability of an entity
to earn income. It can be assessed by computing various relevant measures including the ratio of
net sales to assets, the rate earned on total assets etc.

According to Meigns et al. (2001), Financial Statement simply means a declaration of what is
believed to be true and which, communicated in terms of monetary unit. It describes certain
attributes of a company that is considered to fairly represent its financial activities. Meigs and
Meigs (2003) stated that the rate of return on investment (ROI) is a test of management's efficiency
in using available resources.

According to Meigs and Meigs (2003), the purpose of financial statement analysis is to provide
information about a business unit for decision making purpose and such information need not to
be limited to accounting data. White ratios and other relationships based on past performance may
be helpful in predicting the future earnings performance and financial health of a company, we
must be aware of the inherent limitations of such data.

According to Meigs and Meigs (2003), the key objectives of financial analysis are to determine
the company's earnings performance and the soundness and liquidity of its financial position. We
are essentially interested in financial analysis as a predictive tool. Accordingly, we want to
examine both quantitative and qualitative data in order to ascertain the quality of earnings and the
quality and protection of assets. In periods of recession when business failures are common, the
balance sheet takes on increase importance because the question of liquidity is uppermost in the
minds of many in the business community.
16
Juliet D’Souza and William L. Megginson, The financial operating performance of privatized
firms during the 1990‟s This study compares the pre and the post-privatization financial and
operating performance of 85 companies from 28 industrialized countries that are privatized
through public share offerings between 1990 and 1996. We document significant increases in
profitability, output, operating efficiency and dividend payments and there is a significant decrease
in leverage ratios for our full sample of firms after privatization and for most subsamples
examined.

According to Rajiv and Mishra, Balance Sheet, P&L a/c and cash flow Performance contain a
lot of numbers that can be used to draw some meaningful inferences, these inferences can further
be used as the inputs for planning, decision making. The numbers contained in the financial
Performances carry a host of information that can be put to use in making judgments‟ regarding
financial strength and weakness of the firm, efficiency and past policies and remedial measures or
corrective action to be taken. Financial management, Rajiv Srivastava, Anil Mishra, Oxford
university press.

According to Slhler, A comprehensive analysis, presenting data in meaningful terms is a

significant aid to understanding the profitability and financial strength of a company. When
properly prepared, financial evaluations can be used in performance appraisal and to highlight
similarities and differences among unit of the same organization.

According to Van Horne, Wachowicz, Financial analysis involves the use of various financial
Performances. The Balance Sheet summarizes the assets, Liabilities and owner’s equity of a
business at the moment in time, usually the end of the year or the quarter. Financial Performance
analysis is the art of transforming data from financial Performances into information that is useful
for informed decision making.

Mingyi Hung (2000) in his paper on “accounting standards and the value relevance of financial
Performances: An international Analysis” concluded that the use of accrual accounting (versus the
cash accounting) negatively affects the value relevance of financial Performances in countries with
weak shareholder protection.

17
Efendioglu. M (2010) explores the impact of strategic planning on financial performance of major
industrial enterprises of Turkey. This paper is one of the few studies to examine the strategic
planning process in a sample of firms from a transitional economy. It can be considered a
longitudinal study because it examines a set of institutions to identify changes in their performance
overtime, as they incorporate the use of strategic tools in a dynamic competitive environment. The
research sample was drawn from the Turkish chamber of industry database which listed the top
500 manufacturing firms in 2006. The findings of this study provide a contribution to our
understanding of the nature and practice of strategic planning in Turkish companies and
possibilities of correlations between their efforts and performance.

Amir (1993) was the first to use the term “value relevance” in the context of information content
of accounting figures. An accounting figure/ratio value relevant is it has the significantly strong
predicted association with the stock prices and stock market indicators such, price-earnings (P/E)
or price to book (P/B) ratios. Misund et al. in their study on the value of relevance of accounting
figures in the international oil and gas industry concluded that all accounting figures are value
relevant, be it cash or accrual based.

According to Liu, Nissim and Thomas (2004), we found that multiples based on reported
earnings outperform multiples based on a variety of reported operating cash flow measures. EPS
forecasts represented substantially better summary measures of value than did operating cash
forecasts in all five countries examined, and this relative superiority was absorbed in most of the
industries. Hardly any studies have been done in the area of investing value relevance of financial
Performances based on Indian Accounting Standards. This may be probably because it’s just ten
years that due to a number of reforms, Indian economy has divulged into a market-oriented
economy. Further, most of the accounting standards have been developed during last six years by
the ICAI. Prior to this, due concerns were not involved in improving the quality and integrity of
financial reporting.

Amir, E. Harris, T.S & Venuti, E.K (1993) “A comparison of the value relevance of U.S.P-632
Ohlson (1995) depicted in his work that the value of the firm can be expressed. PgNo-454

18
Rao (1993) discussed in his research about ‘Financial appraisal of Indian Automotive Tyre
Industry’. Main objective of study was intended to probe into the financial conditionfinancial
strength and weakness-of the Indian tyre industry. He has been measured and evaluates the
financial performance through inter-company and inter-sector analysis for the period of 1981-
1988. He has found that the fixed assets utilisation in many of the tyre undertakings was not as
productive as expected and inventory was managed fairly well. He has considered that the tyre
industry's overall profit performance was subjected to inconsistency and ineffective. He has
suggested some recommendations to improve financial performance.

Rao (1993) has made a study about inter-company financial analysis of tea industryretrospect and
prospect. He wished to analyses the important variables of tea industry and projected future trends
regarding sales and profit for the next 10 year periods, with a view to help the policy makers to
take appropriate decisions. He have been calculated various financial ratios for analysing the
financial health of the industry. After the comparison of ratios, he has concluded that the forecast
of sales and profits of tea manufacturing companies showed that the Indian tea industry has bright
prospects. He has also revealed that the recent changes in the Indian economic policies may boost
up the foreign exchange earnings, which may benefit those companies, which are exporting to hard
currency areas.

Pai, Vadivel & Kamala (1995) have studied about the diversified companies and financial
performance. Main purpose of research was found out the relationship between diversified firms
and their financial performance. For the purpose of research, they have selected seven large firms
and analysed those firm which having different products-both related and otherwise-in their
portfolio and operating in diverse industries. In this study, a set of performance measures / ratios
was employed to determine the level of financial performance and variation in performance from
one firm to another has been observed and statistically established. They revealed that the
diversified firms studied have been healthy financial performance.

Bala Ramaswamy, Darry long and Mattew C.H. Yeung (2005) has found empirical evidence
that firm size and the firm ownership are important determinants of financial performance in the
Malaysian palm oil sector-findings lend support to industry analysts who have highlighted that
profitability is higher in privately owned firms.

19
Vijayakumar A. (1996) has studied about ‘Assessment of Corporate Liquidity - a discriminate
analysis approach’ in this research he has revealed that the growth rate of sales, leverage, current
ratio, operating expenses to sales and vertical integration was the important variables which
determine the profitability of companies in the sugar industry. Also he has studied the short term
liquidity position in twenty-eight selected sugar factories in co-operative and private sectors. In
research a discriminate analysis has been used by the researcher, to undertaken to distinguish the
good risk companies from poor risk companies based on current and liquidity ratios. In this study
discriminating ‘Z’ scores have been calculated with the help of discriminate function and
according to the ‘Z’ scores the companies are ranked in the order of liquidity.

Loundes (1998) studied on his research paper regarding “performance of Australian Government
Trading Enterprises: An overview”. He has provided an overview of GTE performance over the 5
years to 1996 using the IBIS Enterprise Database, following the method of analysing firm
performance as outlined by the steering committee (1998). He has made comparative analysis and
its results indicate that there are large differences in performance across firms, and more
particularly, across the industries. Assessing the performance of Government Trading Enterprises
(GTEs) has become increasingly important in the context of the push towards privatisation.

Jagannadha Rao (1991) in his study states that there is poor state of financial performance of the
company is the cumulative result of unfavourable factors such as continuous lowcapacity
utilization of the units, fall in sugar recovery in some of the units, poor operational performance,
high cane price advised by the State Government and paid up by the company, low levy price of
sugar. Remedy for the poor financial performance is rather a stupendous task. Not all-sided
approach is required: better the operational performance of the sugar units particularly the sick
units, paying reasonably high cane price, reducing the cost of production by improving capacity
utilization, and taking advantage of free quota to make good the losses suffered due to low levy
price.

According to Ohlson (1995) depicted in his work that the value of a firm can be expressed as a
linear function of book value, earnings and other value relevant information. Financial
management theory and practice Prasanna Chandra 7th edition 2010 TATA McGraw Hill.

20
Hassan Mobeen Alam, Ali Raza and Muhammad Akram (2011) examine financial
performance of leasing companies since 2008 to 2010. Ratio analysis technique has been used to
evaluate financial performance of leasing companies. All data has been retrieved from securities
& Exchange commission of Pakistan, Asian financial service association, Leasing Association of
Pakistan, State Bank of Pakistan, and leasing company’s websites. Nine companies are selected
for analysis out of fifteen and this study covers three year period (2008, 2009 and 2010) . The
researcher used ratios as statistical tools. This study concludes that in 2010 the financial ratios are
showing the positive change but there is a decline in financial performance of leasing companies
in 2009 when compared to 2008.

Shaji. U and G. Ganesan (2012) made an attempt to study the overall financial performance of
selected public sector drug and pharmaceutical enterprises in India with the help of some statistical
measures (i.e.) mean, standard deviation, coefficient of variance, linear multiple regression
analysis and test of hypothesis. The study revealed that the industry will witness an increase in the
market share. The sector is poised not only to take new challenge but to sustain the growth
momentum of the post decade.

Sami and Khan108 in their study entitled, “Financial Performance Appraisal of Paper Industry in
India: A Study of Selected Paper Mills” investigated the financial performance of paper industries
namely Ballarpur Industries Limited (BILT) and Tamil Nadu Newsprint and Papers Limited
(TNPL)with the application of independent sample t-test. The findings showed significant
differences in gross profit, net profit, current ratios, quick ratios and debt equity ratios in BILT and
TNPL.

According to Akpan (2002), financial statement may be used by users for different purposes:

a) OWNERS AND MANAGERS, b) EMPLOYERS, c) PROSPECTIVE INVESTORS, d)

FINANCIAL INSTITUTIONS, e) GOVERNMENT ENTITIES, f) VENDORS, g)
MEDIA AND GENERAL PUBLIC.

According to Diamond (2006), all watchful business owners have an innate sense of how well
their business is doing. Almost without thinking about it, these business owners can tell you any
time during the month how close they are to butting budgeted figures.

21
a) Income Statement

According to Patrick, Ralph, Barry & Susan (2002:63-92), income statement provides the
information of the transactions occurred in a certain period of time called accounting period.
Expenses include purchase, administrative expenses, selling expenses, depreciation, amortization
expenses and income tax paid. Initially gross profit is calculated by subtracting cost of goods sold
from net sales. Cost of goods sold is the expense occurred from the sales of the goods, Labour
cost, raw materials and overhead expenses occurred during the sales period falls under the cost of
goods sold category.

According to Diamond (2006), Operating income is calculated by subtracting the depreciation and
the other selling and administrative expenses. From the operating income, interest and/or
amortization is paid which will result in earning before tax income of the entity.

Finally, income tax is paid from earning before tax resulting in net profit. Management decides if
they want to pay dividends or not. If they do pay dividends then preferred dividends are paid first
and afterwards common stock holders dividends are paid. The residue income also known as the
retained earnings are reinvested in the firm. (Charles and Patricia, 1983:24-27)

b) Balance Sheet

A firm's assets, liabilities and equity at a given time period are presented in the balance sheet. It
shows the financial position at a point in time There are two sub accounts in balance sheet.

Assets account is the first one, which includes all the current and fixed assets of the company.
Current assets include cash, market securities, account receivable, inventories, prepaid expenses
etc. Current assets also named as working capital provide short-term benefit for the entity. The
other items which fall under assets are property, plant, equipment, goodwill, intangibles, long term
investments, note receivable and other long term assets. Additionally, the other sub account
includes all the liabilities and equity. Accounts payable, accrued expenses, notes payable, short
term debt are the major components of current liabilities. While total long term debt, deferred
income tax and minority interest added to the current liabilities sums up the total liabilities. Total
liabilities summed up with total equity make total liabilities & shareholder's equity, which is
always equal to the total assets. (Frank, 1989)

22
Techniques of Financial Statement Analysis

According to Diamond (2006), the most common of these includes, horizontal, vertical and ratio
analysis. All of these techniques focus on relationships among items in the financial statement
themselves.

According to Diamond (2006), three problems involved in such analysis are:

➢ That firms use different accounting principles and methods.

➢ That it is often difficult to define what industry and firm is really a part.
➢ That accounting principles varies among countries.

23
 CHAPTER - 3
RESEARCH
METHODOLOGY

24
 RESEARCH METHODOLOGY

Research methodology is the specific procedure or techniques used to identify, select, process and
analyze information. It is systematic method to resolve a research problem. The method used for
the research is Descriptive Research to find out our Objectives. The report has been prepared on
the basis of information collected data from different sources. In order to achieve the objectives of
the project proper research method was applied. It is an empirical study, so researcher has followed
scientific approach to design the research methodology for investigation. For this study researcher
is using secondary data as a source of information for thus research e.g. the Annual Reports,
Websites and other publications. The following tool and techniques have been classification in the
study.

PERIOD OF THE STUDY

Researcher wants to collect all required data, particulars and information for the research. He also
takes interest to select a short period of the study because of convenience for properly data
collection, and analysis of the same for come to the conclusion. Hence, the researcher undertakes
research for the period of 5 years on the Financial Performance of company. The present study is
made for a period of the 4 (four) accounting years ending to 31- 3-2022. (From 2018-2019 to 2021-
2022)

3.1. RESEARCH DESIGN

❖ To decide the objective and subjective of the research.

❖ To determine the most suitable method of research.
❖ To decide the appropriate research instrument for data collection.
❖ To prepare the research report.

25
3.2. DATA COLLECTION METHOD

There are two data collection method

❖ Primary data
❖ Secondary data

In this study, the researcher used only secondary data collection method, and it is described below.

SECONDARY DATA

The researcher uses both the methods of data collection for his convenience. But researcher gives
more emphases on secondary data because the researcher undertakes research in Financial
Performance practices for which researcher needs all Annual reports, which are in nature of
secondary data. Secondary data are those data which are gathered for some other purpose and are
already available in the firm’s internal records. This research paper data stemmed from balance
sheet and profit & loss account in a year from 2019 to 2022. Different ratio parameters were
analysed. The data available in the form of material, websites, journals etc., I have used some
Magazines, Newspaper, Websites and courses material for that purpose.

[Link] FOR ANALYSIS

RATIO ANALYSIS

Ratio analysis is an accounting method that uses financial statements, like balance sheets and
income statements, to gain insights into a company’s financial health. Ratio analysis will help
determine various aspects of an organization including profitability, liquidity and market value.
The main types of ratios are

➢ Liquidity ratio
➢ Leverage ratio
➢ Profitability ratio
➢ Efficiency ratio

26
3.3.1. LIQUIDITY ANALYSIS

CURRENT RATIO

The Current ratio is liquidity ratio that measures whether a firm has enough resources to meet its
short-term obligations. It compares a firm’s current assets to its current liabilities. A current ratio
of less than 1 indicates that the company may have problems meeting its short-term obligations.

Current Ratio = Current assets / Current liabilities

CASH RATIO

The cash ratio is a measurement of a company’s liquidity. It specifically calculates the ratio of a
company’s total cash and cash equivalents to its current liabilities. The metric evaluates
company’s ability to repay its short-term debt with cash or near-cash resources, such as
easily marketable securities. This information is useful to creditors when they decide how much
money, if any, they would be willing to loan a company.

Cash Ratio = Cash + Cash Equivalents / Current Liabilities

3.3.2. LEVERAGE ANALYSIS

DEBT EQUITY RATIO

The Debt-Equity ratio is a financial metric, which establishes a relationship between the total debt
owed by the firm to outsiders and the funds employed by the shareholders. The Debt-Equity ratio
is one of the four solvency ratios. Solvency ratios are those which measures an enterprises
capability to meet its long-term obligations. A debt-equity of 2:1 is considered ideal. It is also
represented as D/E ratio. It is an important metric which is used to evaluate a company’s financial
leverage.

Debt-to Equity Ratio = Shareholder’s Funds / Long Term Debt

27
PROPRIETARY RATIO

Proprietary ratio can be used to evaluate the stability of the capital structure of a business or
company and also show how the assets of a business are formed by issuing a number of equity
shares rather than taking loans or debt from outside. It also indicates how much the shareholders
will receive in the event of liquidation of the company.

Proprietary Ratio = Proprietors Funds / Total Assets

3.3.3. PROFITABILITY RATIO

GROSS PROFIT RATIO

Gross profit ratio is a financial ratio that measures the performance and efficiency of a business by
dividing its gross profit figure by the total net sales. The gross profit ratio can also be expressed in
percentage form, multiplying the result by 100. The company’s net sales figure represent all its
gross sales over a certain period of time.

Gross Profit Ratio = Gross Profit / Net Sales × 100

NET PROFIT RATIO

Net profit ratio is a profitability ratio that measures the company’s profits to the total amount of
money brought into the business. It is expressed in the form of percentages. Net profit ratio is
regarded as a good measure of the firm’s overall performance. Net profit ratio also known as net
profitability ratio or net profit margin. The relationship between net sales and net profit after tax.

Net Profit Ratio = Net Profit after tax / Net Sales × 100

28
OPERATING RATIO

Operating ratio is a company’s operating expenses as a percentage of revenue. The operating ratio
can be used to determine the efficiency of a company’s management by comparing operating
expenses to net sales. An operating ratio of 80 or lower is considered desirable.

Operating Ratio = Cost of goods sold + Operating Expenses / Net Sales × 100

RETURN ON INVESTMENT

Return on investment (ROI) is a performance measure used to evaluate the efficiency or

profitability of an investment or compare the efficiency of a number of different investments. It is
expressed as a percentage. It can be used by a company to estimate inventory investments, pricing
policy, capital equipment investments etc. It is an important ratio that is mostly used by investors
while screening for companies to invest.

Return on Investment = Net Profit before interest and tax / Capital employed × 100

RETURN ON EQUITY RATIO

The Return on equity shareholder’s funds ratio shows how much money is returned to the owners
as a percentage of the money they have invested or retained in the company. It is used to measure
profitability. This ratio is calculated to know the firm’s profitability from the perspective of
shareholders.

Return on Equity = Net Profit after interest & tax / Shareholder’s funds

29
RETURN ON ASSET

The ROA metric is commonly expressed as a percentage using a company’s net income and its
average assets. A higher ROA means a company is more efficient and productive at managing its
balance sheet to generate profits while a lower ROA indicates there is room for improvement.

Return on Assets = Total Assets / Net Income

3.3.4. EFFICIENCY RATIO

INVENTORY TURNOVER RATIO

Inventory turnover is a financial ratio showing how many times a company turned over
its inventory relative to its cost of goods sold (COGS) in a given period. A company can then
divide the days in the period, typically a fiscal year, by the inventory turnover ratio to calculate
how many days it takes, on average, to sell its inventory.

The inventory turnover ratio can help businesses make better decisions on pricing, manufacturing,
marketing, and purchasing. It is one of the efficiency ratios measuring how effectively a company
uses its assets.

Inventory Turnover Ratio = COGS / Average Value of Inventory

FIXED ASSET TURNOVER RATIO

The fixed asset turnover ratio (FAT) is used by analysts to measure operating performance. This
efficiency ratio compares net sales to fixed assets and measures a company’s ability to generate
net sales from its fixed-asset investments, namely property, plant, and equipment (PP&E).

The fixed asset turnover ratio reveals how efficient a company is at generating sales from its
existing fixed assets.

Fixed Asset Turnover Ratio = COGS (Net sales) / Fixed Assets

30
 CHAPTER - 4
DATA ANALYSIS
AND
INTERPRETATION

31
 DATA ANALYSIS AND INTERPRETATION

ANALYSIS OF DATA

Analysis of data means studying the tabulated material in order to determine internet facts or
meanings. It involves breaking down existing complex factors in to simpler parts and putting the
together in new arrangements for purposes of interpretation various tools used for the analysis and
interpretation of data.

RATIO ANALYSIS

Ratio analysis is the process of determining and presenting the relationship of items and group of
items in the statements. According to Batty J. Management Accounting “Ratio can assist
management in its basic functions of forecasting, planning coordination, control and
communication”. It is helpful to know about the Liquidity, Solvency, Capital Structure and
Profitability of an organization. It is helpful tool to aid in applying judgment, otherwise complex
situations. Ratio analysis is a technique of analyzing the financial statement of industrial concerns.
Now a day, this technique is sophisticated and is commonly used in business concerns. Ratio
analysis is not an end but it is only means of better understanding of financial strength and
weakness of a firm.

Ratio analysis is one of the most powerful tools of financial analysis which helps in analyzing and
interpreting the health of the firm. Ratios are proved as the basis instrument in the control process
and acts as back bone in schemes of the business forecast. The financial ratio is widely used to
evaluate the financial performance of any financial institution.

This chapter analyzes the financial performance of the Nafil Traders with the help of an efficient
tool namely Ratio analysis. For analyzing the financial statements of an organization, a number of
financial tools are used out of which Ratio analysis is considered the most powerful and popular
tool which could be very easily applied for practical purposes.

The result of ratio analysis is more accurate and it can be used as the basis for future decision.
Now-a-days all organizations use this technique widely to evaluate their performance. The ratio is
the relationships expressed in mathematical terms in figures which are connected with each other
in some manner. The nature and classification of ratios vary from organization to organization.

32
4.1. CURRENT RATIO

The Current ratio is liquidity ratio that measures whether a firm has enough resources to meet its
short-term obligations. It compares a firm’s current assets to its current liabilities. A current ratio
of less than 1 indicates that the company may have problems meeting its short-term obligations.

Current Ratio = Current assets / Current liabilities

CURRENT RATIO

Financial Year Current Assets Current Liabilities Current Ratio

2019 29,49,301 5,85,643 5.04

2020 50,47,073 23,88,576 2.11

2021 62,59,647 32,35,101 1.93

2022 71,53,681 25,98,791 2.75

4.1.1. TABLE SHOWING THE ANALYSIS OF CURRENT RATIO

33
Interpretation :

From the above table current ratio in the year 2019 to 2022 was 5.04, 2.11, 1.93, 2.75. It shows
the liquidity position of the Nafil Traders. A range between 1.5 – 3 is considered healthy. The
Nafil Traders has a more ideal ratio in the year 2020 - 2022. Finally Current ratio of the last year
2022 increased during the study period.

CURRENT RATIO
6.00

5.00 5.04

4.00
RATIO

3.00
2.75

2.00 2.11
1.93

1.00

0.00
2019 2020 2021 2022
YEAR

4.1.2. CHART SHOWING THE ANALYSIS OF CURRENT RATIO

34
4.2. CASH RATIO

The cash ratio is a measurement of a company's liquidity. It specifically calculates the ratio of a
company's total cash and cash equivalents to its current liabilities. The metric evaluates
company's ability to repay its short-term debt with cash or near-cash resources, such as
easily marketable securities. This information is useful to creditors when they decide how much
money, if any, they would be willing to loan a company.

Cash Ratio = Cash + Cash Equivalents / Current Liabilities

CASH RATIO

Financial Year Cash Current Liabilities Cash ratio

2019 1,26,745 5,85,643 0.22

2020 84,710 23,88,576 0.04

2021 1,81,468 32,35,101 0.06

2022 2,68,234 25,98,791 0.10

4.2.1 TABLE SHOWING THE ANALYSIS OF CASH RATIO

35
Interpretation :

From the above table cash ratio in the year 2019 to 2022 was 0.22, 0.04, 0.06, 0.10. It shows the
liquidity position of the Nafil Traders. A range between 0.5 - 1 is considered healthy. The Nafil
Traders has a less ideal ratio in the year 2019 - 2022. Finally Cash ratio of the last year 2022
slightly increased during the study period.

CASH RATIO
0.25

0.22
0.20

0.15
RATIO

0.10 0.10

0.05 0.06
0.04

0.00
2019 2020 2021 2022
YEAR

4.2.2. CHART SHOWING THE ANALYSIS OF CASH RATIO

36
4.3. DEBT EQUITY RATIO

The Debt-Equity ratio is a financial metric, which establishes a relationship between the total debt
owed by the firm to outsiders and the funds employed by the shareholders. The Debt-Equity ratio
is one of the four solvency ratios. Solvency ratios are those which measures an enterprises
capability to meet its long-term obligations. A debt-equity of 2:1 is considered ideal. It is also
represented as D/E ratio. It is an important metric which is used to evaluate a company’s financial
leverage.

Debt-to Equity Ratio = Shareholder’s Funds / Long Term Debt

DEBT TO EQUITY RATIO

Financial Year Total Debt Shareholder’s Equity Debt to Equity ratio

2019 35,72,829 29,87,186 1.2

2020 56,09,237 32,20,661 1.7

2021 67,71,674 35,36,573 1.9

2022 76,24,228 38,13,380 2.0

4.3.1. TABLE SHOWING THE ANALYSIS OF DEBT EQUITY RATIO

37
Interpretation :

The above table 4.3 shows the debt equity ratio from the financial year 2019-20 to 2022-23. The
ratio started with 1.2 during the year 2019-20, the had a slight hike on 2020-21 , 2021-22, 2022-
23, with ratio of 1.7, 1.9, 2.0 respectively.

DEBT TO EQUITY RATIO

2022 2.0

2021 1.9
YEAR

2020 1.7

2019 1.2

0.0 0.5 1.0 1.5 2.0 2.5

RATIO

4.3.2. CHART SHOWING THE ANALYSIS OF DEBT EQUITY RATIO

38
4.4. PROPRIETARY RATIO

Proprietary ratio can be used to evaluate the stability of the capital structure of a business or
company and also show how the assets of a business are formed by issuing a number of equity
shares rather than taking loans or debt from outside. It also indicates how much the shareholders
will receive in the event of liquidation of the company.

Proprietary Ratio = Proprietors Funds / Total Assets

PROPRIETARY RATIO

Financial Year Shareholders Equity Total asset Proprietary ratio

2019 29,87,186 35,72,829 0.84

2020 32,20,661 56,09,237 0.57

2021 35,36,573 67,71,674 0.52

2022 38,13,380 76,24,228 0.50

4.4.1. TABLE SHOWING THE ANALYSIS OF PROPERIETARY RATIO

39
Interpretation :

From the above table proprietary ratio in the year 2019 it was 0.84 is decreased during 2020 it was
0.57. Then it decreased in the year of 2021 it was 0.52. Finally proprietary ratio remains same in
the year of 2022, it was 0.5 during the study period.

PROPRIETARY RATIO

2022 0.5

2021 0.5
YEAR

2020 0.6

2019 0.8

0.0 0.1 0.2 0.3 0.4RATIO 0.5 0.6 0.7 0.8 0.9

4.4.2. CHART SHOWING THE ANALYSIS OF PROPERIETARY RATIO

40
4.5. GROSS PROFIT RATIO

Gross profit ratio is a financial ratio that measures the performance and efficiency of a business by
dividing its gross profit figure by the total net sales. The gross profit ratio can also be expressed in
percentage form, multiplying the result by 100. The company’s net sales figure represent all its
gross sales over a certain period of time.

Gross Profit Ratio = Gross Profit / Net Sales × 100

GROSS PROFIT RATIO

Financial Year Gross profit Net sales Gross profit ratio

2019 8,69,153 1,06,27,248 8.18

2020 8,86,972 121,61,023 7.29

2021 10,92,168 157,59,104 6.93

2022 14,00,627 193,73,193 7.23

4.5.1. TABLE SHOWING THE ANALYSIS OF GROSS PROFIT RATIO

41
Interpretation :

From the above table it is found that gross profit ratio in the year 2019 was 8.18% and it was
decreased to 7.29% in 2020. Then in 2021 to 2022 it reaches the maximizing of 6.93% to 7.23%.
Finally gross profit ratio in the year 2022 is the lowest ratio during the study period

GROSS PROFIT RATIO

8.2 8.2
8.0

7.8

7.6
7.3
7.4 7.2
RATIO

7.2 6.9

7.0

6.8

6.6

6.4

6.2
2019 2020 2021 2022
YEAR

4.5.2. CHART SHOWING THE ANALYSIS OF GROSS PROFIT RATIO

42
4.6. NET PROFIT RATIO

Net profit ratio is a profitability ratio that measures the company’s profits to the total amount of
money brought into the business. It is expressed in the form of percentages. Net profit ratio is
regarded as a good measure of the firm’s overall performance. Net profit ratio also known as net
profitability ratio or net profit margin. The relationship between net sales and net profit after tax.

Net Profit Ratio = Net Profit after tax / Net Sales × 100

NET PROFIT RATIO

Financial Year Net profit Sales Net profit ratio

2019 4,13,475 106,27,248 3.89

2020 4,13,475 121,61,023 3.40

2021 5,39,565 157,59,104 3.42

2022 5,81,196 193,73,193 3.00

4.6.1. TABLE SHOWING THE ANALYSIS OF NET PROFIT RATIO

43
Interpretation :

From the above table net profit ratio for the year 2019 is 3.89. Then year of 2019 to 2020 is 3.40,
year of 2021 is slightly increase to 3.40 than 2020. Finally operating ratio in the year 2022 is
decrease to compare of 2021 during the study period.

NET PROFIT RATIO

4.0
3.9

3.5 3.4 3.4

3.0 3.0

2.5
RATIO

2.0

1.5

1.0

0.5

0.0
2019 2020 2021 2022
YEAR

4.6.2. CHART SHOWING THE ANALYSIS OF NET PROFIT RATIO

44
4.7. OPERATING PROFIT RATIO

Operating ratio is a company’s operating expenses as a percentage of revenue. The operating ratio
can be used to determine the efficiency of a company’s management by comparing operating
expenses to net sales. An operating ratio of 80 or lower is considered desirable.

Operating Ratio = Cost of goods sold + Operating Expenses / Net Sales × 100

OPERATING PROFIT RATIO

Financial Year Operating profit / EBIT Sales Operating profit ratio

2019 3,93,744 106,27,248 3.7

2020 4,13,475 121,61,023 3.4

2021 4,29,085 157,59,104 2.7

2022 5,81,196 193,73,193 3.0

4.7.1. TABLE SHOWING THE ANALYSIS OF OPERATING PROFIT

RATIO

45
Interpretation :

From the above table operating ratio for the year 2018 - 2019 is 3.7. Then year of 2019 to 2020 is
3.4, year of 2021 is decrease to 2.7 than 2021. Finally operating ratio in the year 2022 is increase
to compare of 2021 during the study period.

OPERATING PROFIT RATIO

4.0
3.7
3.5 3.4
3.0
3.0
2.7
2.5
RATIO

2.0

1.5

1.0

0.5

0.0
2019 2020 2021 2022
YEAR

4.7.2. CHART SHOWING THE ANALYSIS OF OPERATING PROFIT

RATIO

46
4.8. RETURN ON INVESTMENT

Return on investment (ROI) is a performance measure used to evaluate the efficiency or

profitability of an investment or compare the efficiency of a number of different investments. It is
expressed as a percentage. It can be used by a company to estimate inventory investments, pricing
policy, capital equipment investments etc. It is an important ratio that is mostly used by investors
while screening for companies to invest.

Return on Investment = Net Profit before interest and tax / Capital employed × 100

RETURN ON INVESTMENT

Financial Net profit before interest and capital Return on

Year tax employed investment

2019 3,93,744 31,87,186 12.4

2020 4,13,475 34,20,661 12.1

2021 4,29,085 37,36,573 11.5

2022 5,81,196 50,25,437 11.6

4.8.1. TABLE SHOWING THE ANALYSIS OF RETURN ON

INVESTMENT

47
Interpretation :

From the above table return on investment explains that in the year 2019 it was 12.4 and it is
decreasing by 12.1 in the year 2020 and it is decreasing by 11.5 in the year 2021. Then year 2022
is slightly increasing by 11.6. Finally return on investment in the year 2022 is increase to compare
of 2021 during the study period.

RETURN ON INVESTMENT
12.6

12.4 12.4

12.2 12.1

12.0
RATIO

11.8
11.6
11.6 11.5

11.4

11.2

11.0
2019 2020 2021 2022
YEAR

4.8.2. CHART SHOWING THE ANALYSIS OF RETURN ON

INVESTMENT

48
4.9. RETURN ON EQUITY RATIO

The Return on equity shareholder’s funds ratio shows how much money is returned to the owners
as a percentage of the money they have invested or retained in the company. It is used to measure
profitability. This ratio is calculated to know the firm’s profitability from the perspective of
shareholders.

Return on Equity = Net Profit after interest & tax / Shareholder’s funds

RETURN ON EQUITY

Financial Year Net income Common equity Return on equity

2019 3,71,184 29,87,186 12.4

2020 3,90,915 32,20,661 12.1

2021 4,06,525 35,36,573 11.5

2022 4,97,711 38,13,380 13.1

4.9.1. TABLE SHOWING THE ANALYSIS OF RETURN ON EQUITY

RATIO

49
Interpretation :

From the above table equity share holder funds indicates that in the year 2019 and 2020 it is
decreasing by 12.4 and 12.1 respectively and in the year 2021 it decline to 11.5. Finally return on
equity shareholder funds ratio is maximum in the last year 2022 and increase ratio in the year 13.1
during the study period.

RETURN ON EQUITY
13.5
13.1
13.0

12.4
12.5
12.1
RATIO

12.0

11.5
11.5

11.0

10.5
2019 2020 2021 2022
YEAR

4.9.2. CHART SHOWING THE ANALYSIS OF RETURN ON EQUITY

RATIO

50
4.10. RETURN ON ASSET

The ROA metric is commonly expressed as a percentage using a company's net income and its
average assets. A higher ROA means a company is more efficient and productive at managing its
balance sheet to generate profits while a lower ROA indicates there is room for improvement.

Return on Assets = Total Assets / Net Income

RETURN ON ASSET

Financial Year Net income Total asset Return on asset

2019 3,71,184 35,72,829 10.39

2020 3,90,915 56,09,237 6.97

2021 4,06,525 6771674 6.00

2022 4,97,711 76,24,228 6.53

4.10.1. TABLE SHOWING THE ANALYSIS OF RETURN ON ASSET

51
Interpretation :

From the above table return on asset explains that in the year 2019 it was 10.39 and it is decreasing
by 6.97 in the year 2020 and it is decreasing by 6.0 in the year 2021. Then year 2022 is slightly
increasing by 6.53 . Finally return on asset in the year 2022 is increase to compare of 2021 during
the study period.

RETURN ON ASSET
12.0

10.4
10.0

8.0
7.0
6.5
6.0
RATIO

6.0

4.0

2.0

0.0
2019 2020 2021 2022
YEAR

4.10.2. CHART SHOWING THE ANALYSIS OF RETURN ON ASSET

52
4.11. INVENTORY TURNOVER RATIO

Inventory turnover is a financial ratio showing how many times a company turned over
its inventory relative to its cost of goods sold (COGS) in a given period. A company can then
divide the days in the period, typically a fiscal year, by the inventory turnover ratio to calculate
how many days it takes, on average, to sell its inventory.

The inventory turnover ratio can help businesses make better decisions on pricing, manufacturing,
marketing, and purchasing. It is one of the efficiency ratios measuring how effectively a company
uses its assets.

Inventory Turnover Ratio = COGS / Average Value of Inventory

INVENTORY TURNOVER RATIO

Financial Year COGS Avg inventory Inventory turnover ratio

2019 118,21,911 12,10,329 9.77

2020 121,61,023 32,42,986 3.75

2021 157,59,104 46,08,264 3.42

2022 193,73,193 54,05,164 3.58

4.11.1. TABLE SHOWING THE ANALYSIS OF INVENTORY

TURNOVER RATIO

53
Interpretation :

From the above table Inventory turnover ratio for the study period 2019 – 2022. The ratio 2019 –
2022 is 9.77, 3.75, 3.42, 3.58 . In this we can understand that it decrease in the year of 2019 -2022.
Finally fixed turnover ratio is decreasing last year during the study period

INVENTORY TURNOVER RATIO

2019 2020 2021 2022

3.6, 17%

9.8, 48%
3.4, 17%

3.7, 18%

4.11.2. CHART SHOWING THE ANALYSIS OF INVENTORY

TURNOVER RATIO

54
4.12. FIXED ASSETS TURNOVER RATIO

The fixed asset turnover ratio (FAT) is used by analysts to measure operating performance. This
efficiency ratio compares net sales to fixed assets and measures a company's ability to generate
net sales from its fixed-asset investments, namely property, plant, and equipment (PP&E).

The fixed asset turnover ratio reveals how efficient a company is at generating sales from its
existing fixed assets.

Fixed Asset Turnover Ratio = COGS (Net sales) / Fixed Assets

FIXED ASSETS TURNOVER RATIO

Financial Year COGS Fixed assets Fixed asset turnover ratio

2019 118,21,911 6,23,528 18.96

2020 121,61,023 5,62,164 21.63

2021 157,59,104 5,12,027 30.78

2022 193,73,193 4,70,547 41.17

4.12.1. TABLE SHOWING THE ANALYSIS OF FIXED ASSET

TURNOVER RATIO

55
Interpretation :

From the above table fixed turnover ratio for the study period 2019 – 2022. The ratio 2019 – 2022
is 18.96, 21.63, 30.78, 41.17. In this we can understand that it increase in the year of 2019 -2022.
Finally fixed turnover ratio is increasing last year during the study period

FIXED ASSETS TURNOVER RATIO

18.96, 17%
41.17, 37%
21.63, 19%

30.78, 27%

2019 2020 2021 2022

4.12.2. CHART SHOWING THE ANALYSIS OF FIXED ASSET

TURNOVER RATIO

56
CHAPTER - 5
FINDINGS
AND
SUGGESTION

57
 FINDINGS

❖ Current ratio is maximum in the year 2019 and the year 2021 is the lowest ratio. Current
ratio is increasing in the year 2022.
❖ Cash ratio has an decrease year by year during the study period.
❖ Debt equity ratio has an increase year by year during the study period.
❖ Proprietary ratio has an decrease year by year during the study period.
❖ We can understand that it decrease every year. Gross profit ratio is decreasing year by year
during the study period.
❖ The Net profit ratio in the year 2021-2022 is increased to 3.42 than previous year.
❖ Operating ratio has an decrease year by year during the study period.
❖ Return on investment of this study shows that, the ratio of 2021-2022 is found to be lower
than previous year as 11.5.
❖ Return on equity shareholder funds ratio in the year 2021-2022 is increased to 13.1 than
previous year during the study period.
❖ Return on asset has an decrease year by year during the study period.
❖ Inventory turnover ratio of this study shows that the ratio of 2021-2022 is decreased to 3.42
than previous year.
❖ Fixed asset turnover ratio has an increase year by year during the study period.

58
 SUGGESTION

❖ The Current ratio of the firm is satisfactory because the ideal value of current ratio is 2:1.
In the year 2020, 2022 the ratios are 2.11 and 2.75 respectively. Those ratios are equal to
ideal value indicates that the liquidity position was good in those years.
❖ Liquidity ratio of the firm is not better position in over the 4 years. So I suggested that the
firm maintain proper liquid funds like cash and bank balance.
❖ The firm high inventory so I suggested that the firm must increase sales.
❖ The firm should control fluctuations in cash and bank balances as it impacts the current
ratio of the company.
❖ Net profit ratio have some fluctuations, so the firm may enter in a new market or may
diversify, maintain strong relationship with customers and suppliers.
❖ Each and every year’s inventory level should be flexible for the stock level.
❖ There is slight fluctuations in Fixed asset turnover ratio, it should be stabilized by analyzing
the factors affecting the same.
❖ The Return on investment of the firms is satisfactory, because an annual ROI
of approximately 7% or greater is considered a good ROI for an investment in stocks.

59
 CONCLUSION

The study conducted on ratio analysis at “Nafil Traders” given a view of analysis evaluation of
liquidity position of the company. Based on the tools used analysis and interpretation have been
made giving way for useful and constructive suggestion.

Thus the ratio analysis of the company is satisfactory. The company should enhance its
performance for meeting challenges and exploiting opportunities in future. The project will guide
to the management to interpret its weakness and problem this will certain help the management to
taking financial decision. However more efforts need to take to improve the financial position for
the growth of the company.

60
 BIBLIOGRAPHY

1. H. Hall (1994) - International Journal of Information Management, Volume 14, Issue 4, August
1994, Pages 281–294

2. Torben J. Andersen (2001) - Information & Management, Volume 39, Issue 2, December 2001,
Pages 85–100

3. s Hui-Lin Lined all (2011) - Agglomeration and productivity: Firm-level evidence from China's
textile industry, Volume 22, Issue 3, September 2011, Pages 313–329

4. Ali Hasanbeigi (2012) - Renewable and Sustainable Energy Reviews, Volume 16, Issue 6,
August 2012, Pages 3648–3665

5. Nese Yalcined all (2012) - Expert Systems with Applications, Volume 39, Issue 5, April 2012,
Pages 5872–5880

BOOK:
❖ M. Pandy, Financial Management
❖ Murthy, A, Financial Management. Margham Publication., Chennai, 2007.
❖ C.R. Kothari Quantitative Techniques Vikas Publishing House Pvt. Ltd., New Delhi, 2014
❖ Reddy T.S and Dr. Hari Prasad Reddy, Cost Accounting, Margham Publication., Chennai,
2007.
❖ Guthamani, G., Analysis of Financial Statement Practice Hall of India Pvt Ltd., New Delhi,
1998.

WEBSITE:
❖ [Link]. com
❖ [Link]
❖ [Link]

61
 APPENDIX

BALANCE SHEET OF NAFIL TRADERS AS ON MARCH 2019 - 2022

Particulars Mar’22 Mar’21 Mar’20 Mar’19

LIABILITIES

Equity Share Capital 38,13,380 35,36,573 32,20,661 29,87,186

Reserve & Surplus - - - -

Loan from Bank 12,12,057 2,00,000 2,00,000 2,00,000

Sundry creditors 26,64,797 30,35,101 21,88,576 3,85,643

Other Liabilities & Provision -66,006 - - -

TOTAL LIABILITIES 76,24,228 67,71,674 56,09,237 35,72,829

Cash at Bank & Balances 58,242 1,66,050 1,77,122 41,857

Cash in Hand 2,09,992 1,62,234 84,710 1,26,745

Inventories 58,75,920 49,34,470 43,32,057 21,53,915

Sundry Debtor 10,03,671 9,96,893 2,18,630 5,26,876

Fixed asset 4,70,547 5,12,027 5,62,165 6,23,528

Other asset 5,856 - 2,34,554 99,908

TOTAL ASSETS 76,24,228 67,71,674 56,09,237 35,72,829

62
 HASSAIN SALEEM
127/7, Kaveri Nagar, Mettur Dam, Salem - 636 401

Balance Sheet as on 31.03.2022

Liabilities Rs. Rs. Assets Rs. Rs.

Capital Account 38,13,380 Fixed Assets 4,70,547

Capital Account 38,13,380 Computer 4,906

Loans (Liability) 12,12,057 Furniture & Fitting 36,505

BAJAJ FINANCE LTD 10,12,057 Jewellary 2,35,600

Jewel Loan from Bank 2,00,000 Motor Cycle 14,013

Current Liabilities 25,98,791 Tata Ace 1,79,523

Duties & Taxes -66,006 Current Assets 71,53,681

CGST -42,496 Closing Stock 58,75,920

SGST -23,510 Sundry Debtors 10,03,671

Sundry Creditors 26,64,797 Cash-in-Hand 2,09,992

Bank Accounts 58,242

DBS Bank 0527 55,473

ICICI Bank 1730 2,769

TCS 206 CR 5,856

Total 76,24,228 Total 76,24,228

" Vide our Report of Even Date"

Place:
Date: Chartered Accountants

63
 NAFIL TRADERS Prop; H. Saleem
127/7, Kaveri Nagar, Mettur Dam, Salem – 636 401

Trading Profit & Loss account for the year ended 31.03.2022

Particulars Rs. Rs. Particulars Rs. Rs.

Opening Stock 49,34,470 Sales Accounts 1,93,73,193
Purchase Accounts 1,89,14,016 Closing Stock 58,75,920
Gross Profit c/o 14,00,627

2,52,49,113 2,52,49,113

Indirect Expenses 8,19,431 Gross Profit b/f 14,00,627

Accounts & GST Filing 24,000
Fees
Audit Fees 15,000
Bank charges 44,264
Delivery Expenses 96,081
Depreciation 41,480
General Expenses 63,846
Interest on Bajaj OD 60,720
Power & Fuel 26,530
Printing & Stationery 20,430
Rent Paid 48,000
Repairs & Maintenance 38,560
Staff Salary 2,40,000
Telephone Expenses 10,430
Travelling Expenses 90,090
Net Profit 5,81,196
Total 14,00,627 Total 14,00,627

“ Vide our Report of Even Date”

Place :
Date : Chartered Accountants

64
 HASSAIN SALEEM (A.Y. 2021-2022) T131
127/7, KAVERI NAGAR, METTUR DAM, SALEM PAN: CDIPS2705P

Capital A/c as on 31st March 2021

Particulars Amount Particulars Amount

To Drawings 2,08,075.00 By Balance B/F 32,55,228.00
To Life Insurance Premium 22,145.00 By Net Profit 5,39,565.00
To Tution fees 28,000.00
To Balance C/F 35,36,573.00
Total 37,94,793.00 Total 37,94,793.00

Balance Sheet as on 31st March 2021

Liabilities Amount Assets Amount

Capital Account 35,36,573.00 Computer 8,176.00
Jewel Loan from Bank 2,00,000.00 Furniture and fitting 40,561.00
Sundry Creditors Others 30,35,101.00 Motor Cycle 16,486.00
TATA ACE 2,11,204.00
Jewellery 2,35,600.00
Closing Stock 49,34,470.00
Sundry Debtors Others 9,96,893.00
Balance with Revenue
Authorities, etc. 40,828.00

Cash at Bank 19,234.00

Cash in Hand 1,62,234.00
Balance with Revenue
Authorities, etc. 1,05,988.00

Total 67,71,674.00 Total 67,71,674.00

65
 HASSAIN SALEEM (A.Y. 2021-2022) T131
127/7, KAVERI NAGAR, METTUR DAM, SALEM PAN: CDIPS2705P

Trading A/c 1 for the year Ending 31st March 2021

Particulars Amount Particulars Amount

To Finished Goods 42,82,057.00 By Sales of goods 1,57,59,104.00
To Purchases 1,52,25,939.00 By Finished Goods 49,34,470.00
To Freight 93,410.00
To Gross Profit 10,92,168.00
Total 2,06,93,574.00 Total 2,06,93,574.00

Profit and Loss A/c for the year Ending 31st March 2021

Particulars Amount Particulars Amount

To Accounting charges 15,000.00 By Gross Profit 10,92,168.00

To Audit Fee 20,750.00

To Bank Charges 3,067.00

To Salaries and Wages 1,80,000.00

To Rent Paid 48,000.00

To Power and Fuel (Indirect) 15,220.00

To Travelling expenses 32,150.00

To Repairs to Machinery 34,430.00

To Depreciation 50,138.00

To Other Expenses 57,785.00

To Delivery Expenses 78,463.00

To Telephone Expenses 6,960.00

To Printing 10,640.00

To Net Profit 5,39,565.00

Total 10,92,168.00 Total 10,92,168.00

66
 NAFIL TRADERS.
PROP: SALEEM H
WARD 19, [Link] 7,
METTUR DAM,
SALEM 636 401.
******
SALIM'S CAPITAL ACCOUNT

01.04.2019 By Opening Balance b/d 2,987,186

31.03.2020 By Business Income 413,475
To Drawings 180,000
31.03.2020 To Closing Balance c/d 3,220,661

3,400,661 3,400,661

BALANCE SHEET AS ON 31st MARCH 2020

LIABILITES Rs. ASSETS Rs.

Salim's Capital A/c 3,220,661 Computer 13,626

Sundry Creditors 2,188,576 Furniture 45,068

Indian Bank JDL Loan 100,000 Bike 19,395

LVB Bank JDL Loan 100,000 TATA Ace 248,475

Jewellery 235,600

Sundry Debtors 218,630

GST ITC C/o 234,554

Closing Stock 4,332,057

Bank 177,122

Cash-in-hand 84,710

5,609,237 5,609,237

67
 NAFIL TRADERS.
PROP: SALEEM H
WARD 19, [Link] 7,
METTUR DAM,
SALEM 636 401.
******

TRADING PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31.03.2020

To Opening Stock 2,153,915 By Sales 12,161,023

To Purchase 13,376,329 By Closing Stock 4,332,057

To Carriage 75,864

To Gross Profit C/d 886,972

16493080 16493080

To Salary 120,000 By Gross Profit 886,972

To Rent 48,000

To Printing & Stationery 8,340

To Postage & Telephone 9,650

To Power & Fuel 14,680

To General Expenses 72,385

To Travelling Exp 27,658

To Repairs & Maintenance 26,854

To Delivery Expenses 84,567

To Depreciation 61,363

To Net Profit 413,475

886,972 886,972

68
 NAFIL TRADERS.
PROP: SALEEM H
WARD 19, [Link] 7,
METTUR DAM,
SALEM 636 401.
******
SALIM'S CAPITAL ACCOUNT

01.04.2018 By Opening Balance b/d 2,766,592

31.03.2019 By Business Income 393,744

To School Fees 23,150

To Drawings 150,000

31.03.2019 To Closing Balance c/d 2,987,186

3,160,336 3,160,336

BALANCE SHEET AS ON 31st MARCH 2019

LIABILITES Rs. ASSETS Rs.

Salim's Capital A/c 2,987,186 Computer 22,710
Sundry Creditors 385,643 Furniture 50,076
Indian Bank JDL Loan 100,000 Bike 22,818
LVB Bank JDL Loan 100,000 TATA Ace 292,324
Jewellery 235,600
Sundry Debtors 526,876
GST ITC C/o 99,908
Closing Stock 2,153,915
Bank 41,857
Cash-in-hand 126,745

3,572,829 3,572,829

69
 NAFIL TRADERS.
PROP: SALEEM H
WARD 19, [Link] 7,
METTUR DAM,
SALEM 636 401.
******

TRADING PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31.03.2019
,

To Opening Stock 266,742 By Sales 10,627,248

To Purchase 959,252 By Closing Stock 2,153,915

To Carriage 58,768

To Gross Profit C/d 869,153

2153915 2,153,915

To Salary 120,000 By Gross Profit 869,153

To Rent 48,000

To Printing & Stationery 7,835

To Postage & Telephone 8,460

To Power & Fuel 13,854

To General Expenses 68,345

To Travelling Exp 32,856

To Repairs & Maintenance 21,868

To Delivery Expenses 77,874

To Depreciation 76,317

To Net Profit 393,744

869,153 869,153

70