TOOLS OR TECHNIQUES OF FINANCIAL STATEMENT

ANALYSIS

1. Comparative Statements

2. Trend Analysis

3. Common size statements

4. Z-SCORE analysis

5. Cash flow analysis

6. Ratio analysis

7. Cost-volume profit analysis.

1. Comparative Statements

The changes in the financial data over a period can be best understood if the
statements of two or more years are placed side by side to facilitate comparison. Such
statements are called comparative financial statements. In the simple words
comparative financial statements are statements of financial position of a business so
designed as to provide time perspective to the consideration of various elements of
financial position embodied in such statements. In other words, the comparative
statements are statements which are prepared in a form that reflect the financial
position for two or more periods. Financial data become more meaningful and logical
when compared with similar data for a previous period or number of previous periods.
Such statements are very helpful in measuring the effects of the conduct of a business
during the period under consideration. The two comparative statements are:

a) Comparative Balance Sheet

The comparative balance sheet analyses the trend of the same items, group of
items and computed items in two or more balance sheets of the same business
enterprise on different dates. The changes in periodic balance sheet items
reflect the conduct of a business. The changes can be observed by comparison
of the balance sheet at the beginning and at the end of a period and these
changes can help in forming an opinion about the progress of an enterprise.
 b) Comparative Income Statement
The Comparative Income Statement gives an idea of the progress of a business
over a period of time. The changes in absolute data in money values and
percentages can be determined to analyze the profitability of the business.

2. Trend Analysis

Comparing the past data over a period of time with a base year is called trend analysis.
Under this technique, information for a number of years is taken up and one year (usually
the first year) is taken as the base year. Each item of the base year is taken as 100 and on
that basis the percentages for other years are calculated. The object of calculating the trend
percentages is to show the direction of the change upward or downward. The trend
percentages are generally computed for major items in the statement. In brief, the
procedure for calculating trends is as follows: One year is taken as a base year which is
generally is the first year or last year. Trend percentages are calculated in relation to base
year.

3. Common Size Statements

The common size statements, balance sheet and income statements are shown in
analytical percentages. The figures are shown as percentages of total asset, total
liabilities and total sales. The total assets are taken as 100 and different assets expressed
as percentage of the total. Similarly, various liabilities are taken as a part of total
liabilities. These statements are also known as 59 component percentage or 100 percent
statements because every individual item is stated as a percentage of the total 100.

a) Common-Size Balance Sheet

A statement in which balance sheet items are expressed as the ratio of each asset to
total assets and the ratio of each liability is expressed as a ratio of total liabilities is
called Common-Size Balance Sheet.
b) Common-Size Income Statement
The items in income statements can be shown as percentages of sales to show the
relation of each item to sales. A significant relationship can be established between
items of income statement and volume of sales.
The increase in sales will certainly increase selling expenses and not administrative
or financial expenses. In case the volume of sales increases to a considerable extent,
administrative and financial expenses may go up and vice
 versa. So, a relationship is established between the sales and other items in income
statement and this relationship is helpful in evaluating operational activities of the
enterprise.

4. Z-SCORE Analysis

The Altman Z-score, a variation of the traditional Z-SCORE in statistics, is based

on five financial ratios that can be calculated from data found on a company's
annual 10- K report. It uses profitability, leverage, liquidity, solvency, and activity
to predict whether a company has a high probability of becoming insolvent.

A score below 1.8 means it's likely the company is headed for bankruptcy, while
companies with scores above 3 are not likely to go bankrupt. Investors can use
Altman Z-scores to determine whether they should buy or sell a stock if they're
concerned about the company's underlying financial strength. Investors may
consider purchasing a stock if its Altman Z-Score value is closer to 3 and selling or
shorting a stock if the value is closer to 1.8.3

In more recent years, however, a Z-Score closer to 0 indicates a company may be in

financial trouble. In a lecture given in 2019 titled "50 Years of the Altman Score,"
Professor Altman himself noted that recent data has shown that 0—not 1.8—is the
figure at which investors should worry about a company's financial strength.

Altman Z-Score = 1.2A + 1.4B + 3.3C + 0.6D + 1.0E

Where:

 A = working capital / total assets

 B = retained earnings / total assets

 C = earnings before interest and tax / total assets

 D = market value of equity / total liabilities

 E = sales / total assets

5. Cash Flow Analysis

Cash flow statement is a vital importance to the financial management. It is essential

tool of financial analysis for short term planning. A firm needs sufficient cash to pay
debts maturing in the near future, to pay interest and other expense and to pay
dividends to shareholders. The firm can make projections of cash inflows and
outflows for the near future to determine the availability of cash. It better explains the
cause for poor cash position in spite of substantial profits in a firm by throwing light
on various applications of cash made by the firm. It also helps in planning the
repayment of loans, replacement of fixed assets and other similar long-term planning
of cash. So, a historical analysis of cash provides insight to prepare reliable cash flow
projections for the immediate future.

6. Ratio Analysis

Ratio Analysis measures the profitability, efficiency and financial soundness of the
business. A Ratio Analysis is the ―study of the relationship among the various
financial factors in a business‖. Accounting ratios are relationship expressed in
mathematical terms between two related figures in the financial statements. Single
figures in it yield no meaning but when expressed in terms of a related figure, it yields
valuable information. According to Accountant‘s Handbook by Wixon, Kelland
Bedford, a ratio ―is an expression of quantitative relationship between two numbers‖.
So, it helps in better understanding of financial strength and weakness of a firm.

 TYPES OF RATIOS

Ratios can be classified in to four broad groups

1. Liquidity Ratios

2. Leverage/Capital Structure Ratios

3. Activity Ratios

4. Profitability Ratios
 i. LIQUIDITY RATIOS

The term liquidity means the firm‘s ability to meet its current liabilities when they
become due. Liquidity Ratios are used to measure the liquidity position or short-term
financial position of a firm. The ratios used for this are as follows:

 Current ratio

Current ratio is defined as the ratio of current assets to current liabilities. It shows the
relationship between total current assets and total current liabilities. It is a measure of
firm‘s short-term solvency.

Current Ratio = Current Assets / Current Liabilities

 Liquid Ratio or Quick Ratio

Liquid ratio is the ratio of liquid assets (or quick assets) to liquid liabilities (or quick
liabilities). It establishes the relationship between quick assets and quick liabilities. It is
also called Acid Test ratio. As a rule of thumb or as convention quick ratio 1:1. It means
that if quick asset is equal to current liability, then the concern may be able to meet its
short-term obligations.

Liquid Ratio = Liquid asset / Current Liabilities or Liquid asset / Liquid

Liabilities

 Absolute Liquid Ratio / Cash Ratio

Cash ratio or absolute liquid ratio shows the relationship between cash and current
liabilities. Absolute liquid asset include cash in hand and at bank and marketable
securities or temporary investments. The acceptable norm for this ratio is 0.5:1 or 1:2
i.e., re 1 worth absolute liquid asset are considered adequate to pay Rs. 2 worth
current liabilities in time as all creditors are not expected to demand cash at the same
time and then cash may also be realized from debtors and inventories.

Cash Ratio = Cash & Bank + Short-Term Securities / Current Liabilities

ii. LEVERAGE RATIOS (SOLVENCY RATIOS)

The term solvency means the ability of a firm to meet its long-term obligations. The
long-term creditors of firm are primarily interested in knowing firm‘s ability to pay
interest on long term borrowings, repayments of principal amount at maturity etc. So,
these ratios indicate a firm‘s ability to meet the fixed interest and cost and repayment
schedules associated with its long-term borrowings. The ratios used for this purpose
are as follows:

a) Debt Equity Ratio

Debt Equity Ratio shows the relationship between total debts and owned debt. It is the
ratio of the amount invested by outsiders to the amount invested by the shareholders.
This ratio reflects the relative claims of shareholders and creditors against the assets of
the company

Debt Equity Ratio = Outsider‘s fund / Shareholders fund Or External equity/internal

equity
b) Fixed Assets to Net Worth Ratio

Fixed Assets to Net Worth ratio measures the percentage of Fixed Assets to Net
Worth. This ratio helps to analyze the long-term solvency of the firm.

Fixed Assets to Net worth Ratio = Fixed Assets / Shareholders fund

c) Proprietary Ratio

This ratio establishes the relationship between shareholder‘s fund and total assets. The
shareholder‘s funds are Equity share capital, preference share capital, undistributed
profits, reserves and surpluses. Out of this amount, accumulated losses should be
deducted. It indicates the proportion of total assets financed by shareholders. A high
Proprietary Ratio indicates a relatively favorable position to creditors at the time of
liquidation.
Proprietary Ratio = Proprietor‘s fund / Total Asset

d) Interest Coverage Ratio

This ratio relates the fixed interest charges to the operating profit or the earnings
before interest and tax (EBIT). It indicates whether the firm has earned sufficient
profits to pay periodically the interest charges.

Interest coverage ratio = Net profit (before interest & tax)/ Fixed Interest charges.
 e) Solvency Ratio

Solvency Ratio is used to measure the Solvency of a firm. Solvency means the ability to
meet the outside liabilities out of total assets. Thus, this ratio establishes the relationship
between total assets and outside liabilities

Solvency Ratio = Total outsiders‟ liability/ Total Assets

iii. ACTIVITY RATIOS

Activity ratios show how effectively a firm uses its available resources or assets.
These ratios indicate the speed with which the resource is turned over or converted to
sales. Activity ratios, thus, involves a relationship between sales and assets.

a) Inventory Turnover Ratio

Inventory turnover ratio also known as stock turnover ratio establishes the
relationship between costs of goods sold and average inventory.

Inventory turnover ratio=Cost of Goods Sold/Average Inventory at Cost

b) Debtors Turnover Ratio

This ratio indicates the rate at which cash is generated by turnover of debtors. So,
Debtors turnover ratio indicates the velocity of debt collection of firms.

Debtors‟ turnover ratio =Net Credit Annual Sales /Average Trade Debtors

c) Creditors Turnover Ratio

Creditor‘s turnover ratio is the ratio between net credit purchase and average
amount of sundry creditors including the bills payable.

Creditors turnover ratio = Net Credit Annual Purchases/Average Trade Creditors

d) Fixed Assets turnover Ratio.

Fixed assets turnover ratio shows the relationship between sales and fixed assets.
Fixed asset turnover = Net sales/fixed assets
 e) Working Capital Turnover Ratio

The relation between sales and working capital is called working capital turnover ratio.
This ratio shows how many times the working capital is turned over to produce sales.

Working capital turnover ratio =Cost of Sales / Average Working Capital

iv. PROFITABILITY RATIOS

The profitability of a firm can be easily measured by its profitability ratios.

Profitability Ratio measures the ability of a firm to earn an adequate return on sales,
total assets and invested capital. Profitability Ratios are calculated either in relation to
sales or in relation to investment. It includes following ratios:

a) Gross Profit Ratio

Gross Profit Ratio is also known as gross margin. This is the ratio of gross profit to net
sales. It is usually expressed as percentage. It indicates the margin of profit on sales.
The G/P ratio should be sufficient to cover all operating expense, fixed interest
charges, dividends and appropriations of reserves.
Gross Profit Ratio = Gross Profit / Net Sales * 100

b) Net Profit Ratio

Net Profit ratio indicates management‘s efficiency in manufacturing, administering

and selling the products. This is a measure of overall profitability. It indicates what
portion of sales is left to the owners after all expenses have been met. This ratio also
indicates the firm‘s capacity to withstand adverse economic conditions.
Net Profit ratio = Net Profit / Sales * 100

c) Operating Ratio

This ratio establishes the relationship between cost of goods sold and other operating
expenses on the one hand and the sales on the other. In other words, it measures the
cost of operations per rupee of sales.
Operating Ratio = Operating Cost/ Net Sales *100

d) Expense Ratio
This ratio indicates the relationship of various expenses to net sales. As per rule lower
the ratio, greater is the profitability and vice versa.
Expenses ratio = Particular Expense / Net Sales*100

e) Earnings per Share Ratio

This indicates the profit available to equity shareholders per share basis. It is calculated
by dividing the earnings (profit) available to equity shareholders by number of equity
shares issued.
EPS=Net Profit available to equity shareholders/Number of equity shares

f) Return on Investment
The overall objective of a business is to earn a satisfactory return on capital invested.
The management and owners are very much interested in the rate of earnings on the
capital employed. The rate of earnings on capital employed (expressed as a percentage)
is referred to as ROI.
ROI = Gross Profit / Total Assets * 100

g) Net Profit Margin Ratio

This ratio indicates percentage of net profit included in the total income. Higher the
ratio, higher will be profitability of the organization.
Profit Margin Ratio == Net Profit / Total Income *100

h) Return on Equity Capital

The equity shareholders are the real owners of the company. They bear all the risks
and the entitled to all the profits remaining after all the claims of outsiders and
preference shareholders have been met in full. The profitability of accompany from
the equity shareholders point of view can be assessed in terms of return to equity
shareholders to the amount of capital invested by them.
ROE = Net Profit / Net Worth * 100

i) Price Earnings Ratio

This ratio gives a fair idea about the potential market price of a share. This ratio is
mainly used to value the company‘s performance as expected by equity shareholders.
 It indicates expectation about the future of a company. It shows the number of times
the EPS is covered by its market price.
P/E Ratio = Market Price per share / Earning per share

j) Return on Capital Employed

This ratio establishes the relationship between profits and capital employed. This ratio
measures the overall profitability and efficiency of the business.
Return on Capital Employed = Net Profit / Capital Employed *100

LIMITATIONS OF RATIO ANALYSIS

Ratio should be used with great care because they suffer from serious limitations. It is
better that one should keep in mind these limitations before drawing conclusions. The
important limitations are as follows.

1. It is difficult to decide on proper basis of comparison.

2. The comparison is rendered difficult because of differences in situations of two

companies or of one company over years.

3. The price level changes make the interpretations of ratio invalid.

4. The difference in the definitions of items in the balance sheet and profit and loss
statement makes the interpretation of ratios difficult.

5. The ratios calculated at point of time are less informative and defective as they
suffer from short term changes.
The ratios are generally calculated from past financial statements and thus are no indicators
of future.
LIMITATION OF TREND ANALYSIS

1. Trend ratio become un comparable if the same accounting practices are not
followed.

2. Trend ratios do not take in to considered the price level changes.

Trend ratios must always be read with absolute data on which they are based;
otherwise, the conclusion may be misleading.
 CONCLUSION
Financial statement analysis is an analysis that highlights the important relationship in the
financial statements. Financial statement analysis focuses on the evaluation of past
performance of the business firm in terms of liquidity, profitability, operational efficiency
and growth potentiality. Financial statements analysis includes the method use in
assessing and interpreting the result of past performance and current financial position as
they relate to particular factors of interest in investment decisions. Therefore, financial
statement analysis is an important means of assessing past performance and in forecasting
and planning future performance.
 INTRODUCTION
Molly Enterprises is one of the leading machines manufacturing units in Kerala. We sell
complete range of machinery for sawmills, furniture units, granite-crushing units etc. we
also trade in electric motors and allied accessories. The manufacture of these
machineries is done with utmost care and efficiency, making use of all kinds of modern
machine tools. Experienced engineers and workmen have put in their best effort to
produce the best of machineries.

Mr. P V Joy has been the sole proprietor since the early 1970‘s. Molly Enterprises
provide the better control of quality under a very effective and direct administrative
management. All the manufacturing processes are completely automatic and precise
throughout achieving the best quality products and a fully equipped laboratory is present
for the assessment of quality control. They have increasingly developed its activity and
progress and today the company is present in all markets throughout India.

In 1982, Molly enterprises were established under the managing partnership of Mr. P.
V. Joy. At MOLLY ENTERPRISES, we have a complete range of clay working
machinery, machinery for plywood mills, and machinery for the manufacture of
matches.

In the year 1994, Mr. P. V. Joy established Sakthi Ceramics. Here we manufacture all
kinds of clay products like floor tiles, Hurde‘s wire cut bricks, decorative tiles, etc. We
are also equipped with the latest machinery for this purpose.

INDUSTRIAL PROFILE

In Indian economy small-scale and cottage industries occupy an important place,

because of their employment potential and their contribution to total industrial output
and exports. Government of India has taken a number of steps to promote them.
However, with recent measures, small- scale and cottage industries facing both internal
competition as well as external competition. There is no clear distinction between small-
scale and cottage industries. However, it is generally believed that cottage industry is,
one which is carried on wholly or primarily with the help of members of the family. As
against this, small-scale industry employs hired labour.
DEFINITIONOF SMALL SCALE INDUSTRYAL UNDERTAKINGS IN

INDIA

In India, Small Scale Industrial (SSI) Undertakings are industries that are primarily
involved in the manufacturing or production of goods, typically on a small scale. These
industries play a critical role in the country's economy by contributing to industrial output,
creating jobs, and promoting economic growth in rural and semi-urban areas. The term
"small scale industry" is now more commonly referred to as Micro, Small, and Medium
Enterprises (MSMEs) following the enactment of the MSMED Act, 2006, which aims to
promote and facilitate the growth of small industries in India.

I. ANCILLARY INDUSTRIES

Ancillary industries refer to those industries that are dependent on and support the
operations of larger industries by supplying them with components, raw materials, or
specialized services. These industries play a crucial role in the overall industrial
ecosystem, as they provide the necessary inputs required for the manufacturing of
products in larger industries (often referred to as parent industries or core industries).

Ancillary industries are typically small to medium-sized enterprises (SMEs) that are highly
specialized in producing particular components or services used in the production process of
larger companies.

II. TINY UNITS

This refers to undertakings having fixed investment in plant and machinery not exceeding
Rs.25 lakhs. These also include undertakings providing services such as laundry,
Xeroxing, repairs and maintenances of customer equipment and machinery, hatching and
poultry etc. Located in main towns with population less than 50000. These units often
operate with basic infrastructure, such as small workshops or homes (in the case of
cottage industries). They tend to rely on low-cost, labor-intensive methods of production.

III. SMALL-SCALE SERVICE ESTABLISHMENTS

Small-scale service establishments refer to businesses or units that provide services rather
than manufacturing goods and operate on a relatively small scale. These establishments
typically cater to local or regional markets and often employ fewer people compared to
 large-scale enterprises. Despite their small size, they contribute significantly to the
service sector, one of the largest and fastest-growing sectors of the Indian economy.
This mean enterprise engaged in personal or household services in rural areas and town
with population not exceeding 50000 and having fixed investment in plant and machinery
not exceeding Rs.25 lakhs.

IV. HOUSEHOLD INDUSTRIES.

Household industries refer to small-scale businesses typically operated within or near the
home, often by family members or a small group of individuals. These industries are
characterized by their low capital investment, use of local resources, and labor-intensive
nature. These cover artisan skilled craftsman and technicians who can work in their own
houses if their work requires less than 300 square feet space, less than 1Kw power, less
than 5 workers and no pollution is caused. Handicraft, toys, dolls, small plastic and paper
products electronic and electrical gadgets are some examples of these industries.

They play a significant role in the informal sector, particularly in rural and semi-urban
areas, and often produce goods for local consumption or regional markets.

OBJECTIVES OF SMALL-SCALE INDUSTRIES

 To create more employment opportunities with less investment.

 To remove economic backwardness of rural and less developed regions of the country.
 To reduce regional imbalances.
 To mobilise and ensure optimum utilisation of unexploited resources of the
country.
 To improve standards of living of people.
 To ensure equitable distribution of income and wealth.
 To solve unemployment problem.
 To adopt latest technology aimed at producing better quality products at lower costs.
 CHARATERISTICS OF SMALL-SCALE INDUSTRIES

i. Ownership:- Ownership of small-scale unit is with one individual in sole

proprietorship or it can be with few individuals in partnership.
ii. Management & Control: A small-scale unit is normally a one man show and even in
case of partnership the activities are mainly carried out by the active partner and the
rest are generally sleeping partners. These units are managed in a personalized
fashion. The owner is activity involved in all the concerning business.

iii. Area Of Operation: The area of operation of small unit is localized catering to the local
or regional demand. The overall resources at the disposal of small-scale units are
limited and as a result of this, it is forced to confine its activities to the local level.
iv. Technology: Small industries are fairly labour intensive with comparatively smaller
capital investment than the larger units. Therefore, these units are more suited for
economics where capital is scared and there is abundant supply of labour.

v. Gestation Period: Gestation period is that period after which teething problems are
over and return on investment starts. Gestation period of small-scale unit is less as
compared to large scale unit.

vi. Flexibility: Small scale units as compared to large scale units are more change
susceptible and highly reactive and responsive to socio-economic conditions. They are
more flexible to adopt changes like new method of production, introduction of new
products etc.

vii. Resources: Small scale units use local or indigenous resources and as such can be
located anywhere subject to the availability of these resources like labour and raw
materials.

viii. Dispersal of Unit: Small scale units use local resources and can be dispersed over a
wide territory. The development of small units in rural and backward areas promotes
more balanced regional development and can prevent the influx of job seekers from
rural areas to cities.
ADVANTAGES ASSOCIATED WITH SMALL SCALE INDUSTRIES
Small-scale industries (SSIs) in India offer numerous advantages, primarily in terms of
employment generation and regional development. These industries play a significant role
in providing jobs, especially in rural areas, where they help reduce unemployment and
poverty. With relatively low capital investment requirements, SSIs are accessible to a
wide range of entrepreneurs, fostering a spirit of self-reliance and promoting inclusive
growth. They contribute substantially to India's GDP, particularly in sectors such as
textiles, food processing, and handicrafts, while also ensuring balanced regional
development by establishing units in smaller towns and rural areas. This decentralization
of industrial activity helps in reducing the concentration of economic power in urban
centres and stimulates local economies.

In addition to creating jobs and supporting regional growth, small-scale industries are
highly adaptable and encourage innovation. They can quickly respond to market demands
and consumer preferences, often offering customized products that larger industries may
not be able to provide. Furthermore, many SSIs have strong export potential, contributing
to India's foreign exchange earnings. The flexibility of SSIs also allows them to form
symbiotic relationships with large industries by acting as suppliers or subcontractors,
enhancing the overall industrial ecosystem. Government initiatives, such as subsidies and
skill development programs, further bolster their growth, making SSIs an essential driver
of India's economic and social progress.

SECTOR WISE GROWTH OF SMALL BUSINESS IN INDIA

We can have an overview of how small-scale industries are growing sector wise by the
figures of employment generated by those sectors. Food product industry comes on top
in terms of employment generation, providing jobs to nearly 5 lakh people. The second
rank goes to non-metallic mineral product which created 4.5 lakh jobs and metal product
industry is ranked three with an employment of 3.75 lakh people.

It is followed by small business of wood product, basic metal industries chemicals and
chemical products, machinery parts, hosiery and garment units, repair service, paper
products, printing industry and rubber and plant products with a contribution in
employment generation of anywhere between 10% and 5%.
COMPANY PROFILE

Molly enterprises is one of the leading machine manufacturing industries in our state
it enjoys near monopoly in manufacturing of wood machinery, tile factory and other
industrial machinery it has its own vision goals and mission.

• VISION
―A world leader in the industry laying emphasis on cutting down waste and
production cost and by providing superior value to our customer‖

• MISSION
―To accomplish continuous improvement driven by integrity, team work and
innovative ideas‖

• SLOGANS
“Taking to machinery -Think of molly”

HISTORY OF MOLLY ENTERPRISE

In the year of 1973, Mr. P V Joy established Molly enterprise. Molly enterprises have
an excellent experience in the field of machine manufacturing for almost 39 years.
Molly enterprises is one of the leading machine manufacturing units in Kerala. They sell
complete range of machinery of sawmills, furniture units granite crushing units etc. We
also trade in electronic Motors and allied accessories. The manufacture of these
machineries is done with utmost care and efficiency making use of all kind of modern
machine tools. Experienced engineers and workmen have put in their best effort to
produce the best of machineries.

Mr. P V Joy has been the sole proprietor since the early 1970s. Molly Enterprises
provides the better control of quality under a very effective and direct administrative
management. All the manufacturing process are completely automatic and precise
throughout achieving the best quality product and a fully equipped laboratory is present
for the assessment of quality control. They have increasingly developed its activity and
progress and today the company is present in all market throughout India.

Now Molly Enterprises is exporting their machinery to countries like Dubai, Sharjah,
Muscat, Oman, Sri Lank and South Africa.
SISTER CONCERN

1. MOLLY MACHINE TOOLS

This was established in the year 1982 under the managing partnership of Mr. p.v joy.
They have complete range of clay working machinery, machinery of plywood mills
and machinery for the manufacture of matches.

2. SAKTHI CERAMICS

Sakthi ceramics was established in the year 1994 under the proprietorship of Mr. V
joy, Sakthi ceramics are manufactures of all kind of clay product like floor tiles,
Hurde‘s wire cut bricks, decorative tiles etc. And is equipped with latest machinery
such as clay mixer, fine grinding rollers, pug mill, de-airing pug mill, automatic
revolving press etc.

CORPORATE PROFILE

Proprietor : Joicy P. Joy (Wife of P. V. Joy)

Manager : Mr. Mohanan

Accountant : Mr. Santhosh, Ms. Ambily

Auditors : V.K.S. Nambudhiri & Company

Registered office : Major Industrial Estate, Ollur, Thrissur,

Pin – 680306 Kerala – India

Phone : 0487-2352466

Email : [email protected]

Website : http:Iwww.mollyindia.com
 PRODUCT PROFILE OF MOLLY ENTERPRISES
SL PRODUCT NAME SPECIFICATION
NO.
1. MOLLY BRAND SPLINE MOULDER Indigenously made and ideal for
- ME 15 straight curve & irregular mouldings,
& cutting grooves & for making
tongs ribs etc…
2. MOLLY BRAND COMBINED Indigenously made and ideal for
THICKESSER CUM JOINTER straightening the surface & planning
(SURFACE) PLANNER – ME 16 all kind of sizes to a max width of
18‖‘
3. MOLLY BRAND CIRCULAR Indigenously made, heavy duty
SAW BENCH - ME 18 circular saw bench, (fixed table
type) with heavy machined table.
Saw blade (saw guard provided),
runs in double row ball bearings.
Motorisation attachment provided.

4. MOLLY BRAND CHISEL MORTISING Ideal for making square and

MACHINE – ME 19 rectangular holes in wooden
articles such as doors, windows
panelled with 1 HP electric motor
& starter.
5. MOLLY BRAND TENONING Widely used in carpentry and
MACHINE – ME 20 furniture shops for making accurate
and true tenons – double or single,
as required – in wooden articles.
Tenon heads are easily adjustable.

6. PORTABLES DRILLING MACHINE – Ideal for installation construction

ME 21 and pest control work.

7. PORTABLE VERTICAL DISC SANDER Sands and polishes flat surface and
– ME 22 awkward contours with equal
facility.
8. ORBITAL SANDER – ME 23 Gives finest possible finish to
furniture, shop-fittings and
cabinets.
MACHINE MANUFACTURING PROCESS

In Molly enterprises they produce machines of various shapes and size according to the
work orders as well as common standards. Brand image and quality are never compromised
in the production process of MOLLY ENTERPRISES.

1. Purchasing of Raw Materials: The production process starts with the receiving of work
order by the concerned parties. Molly enterprises also produce machines according to the
common pre scribed standards in the market. Raw materials are purchased according to
the work order. They are purchased within and outside Kerala.

2. Raw Materials used for manufacturing: Mild steel, stainless steel, EN series Bronze,
Gun Metal, White Metal, Grey casting and grade castings. These raw materials are mainly
from outside Kerala.

3. Distribution of Raw Materials: Raw materials will be distributed according to the

drawing, nature and size of the job the raw materials purchased for the production process
may have to undergo gas cutting, welding or can be directed directly to machine.
4. Towards Machine shop: Machine shop contains wide variety of machines of various size and
shape which are used for producing variety of machines. The raw materials are then given to
various machines according to work order.

5. Assembling Shop: Various parts of the machinery manufactured in the machine shop are
assembled in the assembly shop. If any holding is required for any machinery any drilling
or any scraping is required, it will be done in the assembly shop. At most care and
accuracy is required in this process.

6. Painting shop: After assembling of machinery according to the work order, in the assembly
shop, it will be moved to painting shop. Here the machinery painted for protecting against any
outsider‘s interference. Required quality of paints used for painting the machinery.

7. Packing shop: The last and final process before a machine delivery is packing. Packing
helps the product attractive and protects from damage. Machineries which are to be
exported are packed according to the statutory requirements. A fully fledged packing
section works for this process.
 PRODUCTION FACILITIES IN MOLLY ENTERPRISES

Various machines used in the production process of molly enterprises are:

1. Various size of lathe machine

2. Drilling machine (various size)
3. Shaping machine (various size)
4. Planner machine (various size)
5. Milling machine (various size)
6. Surface grander machine
7. Hax saw machine
8. Slotting machine (various size)
9. Gear Hobber machine
10. Wielding machine (various size)

MARKETING ACTIVITIES OF MOLLY ENTERPRISES

The stress of the company is in its products, people and distribution network. The head
office is situated in major industrial estate Ollur, Thrissur, company has got distributors
throughout Kerala. They are constantly contact with the head office as and when a need
arises.

MOLLY ENTERPRISES, as a small-scale industrial unit has got limited option for
going global. But within its contours, it has successfully clinched orders from Dubai,
Muscat, Sharjah, Kuwait. South Africa and Sri Lanka. Molly Enterprises mainly use to
website for global orders and also actively participated in many trade fairs held abroad.

It has also gone deeply into the hearts of acts customers by television, radio, various
newspapers, industrial magazines and various national and local business magazines. It
has got a cutting-edge in marketing its products through their wide marketing base as
there is not many serious competitors in their area.

Molly enterprises got its marketing agencies throughout Kerala. They collect orders
according to the customer choice and make machines according to their needs Molly
enterprises has participated in various trade fairs in and outside India and has got
various outlets for receiving orders. Molly enterprises also gave a compact Disc along
with the product which shows how the product can be assembled and various other
works could be done with case.
 CERTIFICATES AND AWARDS

• Best display unit in all KERALA BUYERS-SELLERS MEET-1982 conducted

by District industries center.

• Gold Medal in Thrissur pooram exhibition 1983.

• Gold Medal in Thrissur pooram exhibition 1984.

• Gold Medal in ―Enterprise Kerala 93 conducted by Kerala state small scale Industries
Association 14-5-1993

• Best display unit award in south Indian trade exhibition -2000 south Indian Industrial
product exhibition 2000; organized by inter trade Lanka Management Private Limited
Sri Lanka

• Golden grade in khadi and Village industries exhibition organized by Kerala Khadi
and Village industries federation-2003.

CONCLUSION

The company is one of the leading machines manufacturing units in Kerala. The
company sell complete range of machinery for sawmills, furniture units granite crushing
units etc. The company also trade in electric motors and allied accessories. The
company enjoys near monopoly in manufacturing of match factory plywood bricks, tile
factory and other industrial machinery it has its own vision goals and mission. Molly
enterprises have an excellent experience in the field of machine manufacturing for
almost 39 years. The Government of India has taken more steps to promote the total
contribution for export and import of the small-scale industries.
 DATA ANALYSIS AND INTERPRETATION
The term Analysis refers to rearrangement and simplification of data given in the
financial statement. The analysis is done by establishing the relationship between the
items of the Balance sheet and Profit and Loss Account. Financial performance analysis
refers to an assessment of the viability, stability and profitability of a business, or
Company. It is a process of examining and comparing financial data using various
analytical tools and techniques. The financial data shown are used related to the study
conducted on financial performance of Molly enterprises. The financial data needed for
the study are collected on the basis of information given in the Annual Reports of Molly
enterprises from 2018-2019 to 2022-2023. The tools used for the analysis are Ratio
Analysis and trend analysis.

Data simply means row facts and figures, or the collected information related to the
subject. The success of research depends on the collection of data. After the collection
of data, the researcher has to undertake the risk of its organization, classification and
presentation of the organized data.

Data analysis involves analysis of the presented data using statistical method. Analysis
of data reveals different characteristics of the data; they can be used for arriving at
various conclusion and interpretation. After analyzing the data, the researcher should
have to explain the findings on the basis of some theory. It is known as interpretation.

In this study data are collected from the secondary sources such as organization
published documents, website, and secondary data etc.

TOOLS FOR DATA ANALYSIS

1 Ratio Analysis

2 Comparative Balance Sheet

3 Trend Analysis

4 Common Size Balance Sheet

5 Z- Score Analysis
 RATIO ANALYSIS

i. Current Ratio
Current ratio is the relationship between current assets and current liabilities. Current
ratio is defined as the ratio of current asset to current liabilities. It is measure of firm‘s
short-term solvency. Current ratio is called working capital ratio.
Table - CURRENT RATIO
Year
Current Assets Current Liabilities
Current Ratio
2018-2019 1070975.31 388929.82 2.75
2019-2020 2220931.09 800274.35 2.77
2020-2021 2200546.92 651260.68 3.37
2021-2022 2575770.74 1202805.72 2.14
2022-2023 1952971.74 783410.65 2.49
Source: Annual reports of Molly enterprises

FIGURE NO: CURRENT RATIO

Current Ratio
4

3.5

2.5

1.5

0.5

0
2018-19 2019-20 2020-21 2021-2022 2022-23

Current Ratio

Current ratio is useful to test the short-term debt paying ability of a business. A ratio 2:1 or
higher is considered as satisfactory. Here current assets are higher than the current liabilities,
and the year 2022-2023 the ratio is 2.49 that mean the company can able to pay its current
liabilities as and when it required. And also, the highest current ratio is in the year 2020-
20221 as 3.37.
ii. QUICK RATIO /LIQUID RATIO
Quick ratio is the ratio of quick assets to current liabilities. It is the measure of the instant
debt paying ability of the business enterprise. Quick assets or liquid assets are those
assets which are quickly convertible in to cash. It comprises all current assets except
stock and prepaid expenses.
Table - Liquid ratio
Year Liquid Assets Current Liabilities Liquid Ratio
2018-2019 184835.31 388929.82 .41
2019-2020 276351.09 800274.35 .34
2020-2021 175546.92 651260.68 .26
2021-2022 162910.74 1202805.72 .13
2022-2023 46276.74 783410.65 0.05
Source: Annual reports of Molly enterprises
FIGURE NO: 5.2 LIQUID RATIO

Liquid Ratio

0.5

0.4

0.3

0.2

0.1

0
2018-2019 2019-2020 2020-2021 2021-2022 2022-2023

Liquid Ratio

The ideal ratio is 1:1 considered as satisfactory. Here in these financial years the quick
ratio is not up to 1. So, the company cannot able to pay its short-term debts immediately
because inventories cannot be converted in to cash quickly. And also, in the year 2022-
2023 the quick ratio 0.05 is comparatively lower than the other financial years.
iii. ABSOLUTE LIQUID RATIO
It measures the ability of a business to cover its short-term obligations using its most
liquid assets. These liquid assets are typically those that can be quickly converted to cash
without significant loss in value. The ALR is a more stringent measure than the current
ratio because it excludes assets that may take longer to convert into cash, such as
inventories.
Table - Absolute Liquid Ratio
Year Absolute Liquid Current Liabilities Absolute Liquid
Assets Ratio(%)
2018-2019 4189.06 388929.82 1.07

2019-2020 77997.60 800274.35 9.74

2020-2021 3555.88 651260.68 0.54
2021-2022 29709.44 1202805.72 2.47
2022-2023 4591.74 783410.65 0.58
Source: Annual reports of Molly enterprises

FIGURE NO: ABSOLUTE LIQUID RATIO

Absolute Liquid Ratio

2022-2023

2021-2022

2020-2021

2019-2020

2018-2019

0 2 4 6 8 10 12

The standard norm of absolute liquid ratio is 0.5:1. The amount of cash equalness are at
least 50% of current liabilities. In the year 2018-19 and from the year 2020-21 to 2022-23
shows that absolute liquid ratio was higher the standard norm. But in the year 2019-20 it
 is very high as 9.74. And also, after 2019-20 the absolute liquid ratio becomes
decreased.

iv. DEBT EQUITY RATIO

A firm uses both equity (or shareholders‘ funds) and debt (or borrowed funds) for
financing its assets. The ratio of these two sources of funds termed as debt equity ratio.
Table - Debt equity ratio

Year Total Borrowed Fund Owned Fund Debt Equity

Ratio
2018-2019 1246714 1329486.85 .93
2019-2020 1923994.74 768240.25 2.5
2020-2021 2281497.33 339541.66 6.71
2021-2022 1928408.24 365252.8 5.27
2022-2023 2023792.61 -39229.66 -51.58
Source: Annual reports of Molly enterprises
FIGURE NO: DEBT EQUITY RATIO

Debt Equity Ratio

10

0
2018-2019 2019-2020 2020-2021 2021-2022 2022-2023
-10

-20

-30

-40

-50

-60

Debt Equity Ratio

The standard norm of debt equity ratio is 2:1. In the year 2019-2020 to 2021-2022 shows
standard debt equity ratio. It indicates total borrowed fund can be two times of equity or
owned fund. But in the year 2018-2019 and 2022-2023, the debt equity ratio of the company
was below the standard. Also, in the year 2022-2023, the ratio becomes negative as -29.23.
which means the company depends more on owned fund rather than borrowed fund.

v. PROPRIETARY RATIO / EQUITY RATIO

It is the ratio of shareholders‘ funds to total assets of the firm. It indicates the relative
contribution of owners or shareholders in financing total assets. This ratio also called
Net worth to total assets ratio.
Table - Proprietary ratio
year Stock holders‘ Total assets Proprietary ratio
equity (%)
2018-2019 1329486.85 2576200.85 51.6
2019-2020 768240.25 2692234.99 28.5
2020-2021 339541.66 2621038.99 12.95
2021-2022 365252.8 2293661.24 15.92
2022-2023 -39229.66 1984562.95 -1.97
Source: Annual reports of Molly enterprises
FIGURE NO: PROPRIETARY RATIO

Proprietary Ratio

60

50 51.6

40

30
28.5

20
15.92
12.95
10

0
-1.97
2018-2019 2019-2020 2020-2021 2021-2022 2022-2023
-10

From the year 2018-2019 proprietary ratio was high. Which indicates better safety to
creditors. Since the firm was largely depends on shareholders‘ funds for financing total
assets. But from 2019-2020 the proprietary ratio was decreasing and also in the year 2022-
2023 the ratio becomes negative. Which indicates the firm depends up on borrowed funds
and greater risk for creditors.
vi. SOLVENCY RATIO
A solvency ratio is a key financial metric that measures a company‘s ability to meet its
long-term debt obligations. It indicates the overall financial health of a business and
whether it has enough assets to cover its liabilities. Higher solvency ratios generally
indicate a more financially stable company, as it shows the company has a greater
capacity to cover its debt obligations.

Table - Solvency Ratio

Year Total Borrowed Total Assets Solvency Ratio

Funds
2018-2019 1246714.00 2576200.85 0.48
2019-2020 1923994.74 2692234.99 0.71
2020-2021 2281497.33 2621038.99 0.87
2021-2022 1928408.24 2293661.24 0.84
2022-2023 2023792.61 1984562.95 1.01
Source: Annual reports of Molly enterprises
FIGURE NO: 5.6 SOLVECY RATIO

Solvency Ratio
1.2

0.8

0.6

0.4

0.2

0
2018-19 2019-20 2020-21 2021-22 2022-23

The solvency position of the company is better 1:1 is considered to be ideal. From the year
2018-2019 to 2021-2022 it shows below the standard. But in the year 2022-2023 it shows
better position of the solvency of the company.

vii. INVENTORY TURNOVER RATIO

Inventory turnover ratio shows the relationship between cost of goods sold and average
inventory. This ratio indicates how efficiency or effectively the resources are utilized by
a firm in the asset management.
Table - Inventory Turnover Ratio
Year Cost of Goods Sold Average Inventory Inventory
Turnover Ratio
2018-2019 1932467.00 812144.00 2.37
2019-2020 1549133.85 1415360.00 1.09
2020-2021 810750.62 1984790.00 0.40
2021-2022 1494803.49 2218930.00 0.67
2022-2023 3698497.04 2159777.5 1.71
Source: Annual reports of Molly enterprises
FIGURE NO: INVENTORY TURNOVER RATIO

Inventory Turnover Ratio

2.37

1.71

1.09

0.67
0.4

2018-19 2019-20 2020-21 2021-22 2022-23

Inventory Turnover Ratio

A high inventory turnover ratio indicates sufficient management of the inventory. The stock
was sold more frequently less amount of money is blocked by way of inventory. The
inventory turnover ratio in stands as 2018-2019 was 2.37 which is decreased to
1.09 in 2019-2020 and in 2020-2021 was 0.40 and was in 2021-2022 was 0.67 and in 2022-
 2023 it was 1.71. That means the company‘s inventory movement is increased.

viii. FIXED ASSETS TURNOVER RATIO

This ratio indicates the effectiveness of a company's investment in fixed assets (like
property, plant, and equipment) in driving sales. Higher values of this ratio generally
suggest that the company is using its fixed assets efficiently to produce sales.

Table - Fixed Assets Turnover Ratio

Year Cost of Sales Fixed Assets Fixed Assets

Turnover Ratio
2018-2019 1932467.00 1353243.69 1.42
2019-2020 1549133.85 1155900.25 1.32
2020-2021 810750.62 987874.75 0.82
2021-2022 1494803.49 844660.02 1.76
2022-2023 3698497.04 734814.86 5.03
Source: Annual reports of Molly enterprises
FIGURE FIXED ASSET TURNOVER RATIO

Fixed Asset Turnover Ratio

6
5
4
3
2
1
0
2018-19 2019-20 2020-21 2021-22 2022-23

Fixed Asset Turnover Ratio

From the year 2018-2019 to 2021-2022 the fixed asset turnover ratio was lows which
indicates in the utilization of fixed assets by the management. But in the year 2022- 2023 the
fixed assets turnover ratio increased as 5.03 which indicates that efficiency in the utilization
of fixed assets by the management.

ix. NET PROFIT RATIO

It indicates how much profit a company makes for each dollar of sales after all expenses
are deducted. This ratio is useful for assessing overall profitability and efficiency, as it
reflects the company‘s ability to control costs relative to its sales.

Table Net Profit Ratio

Year Profit After Tax Net Sales Net Profit Ratio

2018-2019 123603.48 3484913 3.54
2019-2020 -269695.60 2923771 -9.22
2020-2021 -243698.59 1854462 -13.14
2021-2022 -240779.86 2185026 -11.01
2022-2023 -414154.46 4256072.1 -9.73
Source: Annual reports of Molly enterprises
FIGURE NO: 5.9 NET PROFIT RATIO

Net Profit Ratio

6
4
2
0
2018-2019 2019-2020 2020-2021 2021-2022 2022-2023
-2
-4
-6
-8
-10
-12
-14

Net Profit Ratio

High ratio indicates the efficient management of affairs of business. This ratio helps to
ascertain how profitably the assets have used during the period. 2018-2019 only shows the
positive proportion in the net profit of the company. From 2019-2020 to 2022-2023 the net
profit ratio shows negative ratio. It reveals that the company were going in a loss-making
stage.

x. GROSS PROFIT RATIO

The Gross Profit Ratio, also known as the Gross Profit Margin, is a financial metric that
shows the percentage of revenue that exceeds the cost of goods sold (COGS). It indicates
how well a company is able to produce and sell its products at a profit before accounting
for other operating expenses, taxes, and interest. This ratio is useful for understanding a
company's core production efficiency and pricing strategy.

Table Gross - Profit Ratio

Year Gross Profit Net Sales Gross Profit Ratio

2018-2019 1552446.13 3484913 44.54
2019-2020 1374637.15 2923771 47.01
2020-2021 1043711.38 1854462 56.28
2021-2022 690222.51 2185026 31.58
2022-2023 557575.06 4256072.1 13.10
Source: Annual reports of Molly enterprises
FIGURE NO: GROSS PROFIT RATIO

Gross Profit Ratio

60
56.28

50
47.01
44.54
40

30 31.58

20

13.1
10

0
2018-2019 2019-2020 2020-2021 2021-2022 2022-2023
Higher ratio considered to be better. Throughout the 5 years the company shows a good
financial position and gross profit. From 2018-2019 to 2020-2021 there was increase in the
gross profit ratio. But from 2021-2022 and 2022-2023 the gross profit ratio becomes
declined.

xi. CURRENT ASSET TURNOVER RATIO

It indicates how many times the current assets are "turned over" in relation to the
company‘s sales. A higher ratio generally suggests that a company is efficiently using its
current assets to generate sales, while a lower ratio may indicate inefficiency or
underutilization of these assets.

Table Current Asset Turnover Ratio

Year Net Sales Current Asset Current Asset

Turnover Ratio
2018-2019 3484913 1070975.31 3.25
2019-2020 2923771 2220931.09 1.31
2020-2021 1854462 2200546.92 0.08
2021-2022 2185026 2575770.74 0.84
2022-2023 4256072.1 1952971.74 2.17
Source: Annual reports of Molly enterprises
FIGURE NO: 5.11 CURRENT ASSET TURNOVER RATIO

CURRENT ASSET TURNOVER RATIO

3.25

2.17
1.31

0.84
0.08

2018-2019 2019-2020 2020-2021 2021-2022 2022-2023

It indicates that the current assets turnover in the form sales number of times. Higher current
asset turnover ratio is better for firm. 2018-2019 shows the highest current asset turnover
ratio as 3.25. and from 2020-2021 to 2021-2022 the ratio becomes declined. And in the year
2022-2023 the ratio has been increased as 2.17.

xii. RETURN ON CAPITAL EMPLOYED

Return on capital employed ratio measures the efficiency with which the investment
made by shareholders and creditors is used in the business. Managers use this ratio for
various financial decisions. It is computed by dividing the net income before interest and
tax by capital employed.
Table - Return On Capital Employed

Year Net Income Before Capital Employed Return on Capital

Interest and Tax Employed Ratio
2018-2019 123483.48 500000 24.69
2019-2020 -269695.60 500000 -53.93
2020-2021 -243698.59 500000 -48.73
2021-2022 -240779.86 500000 -48.15
2022-2023 -414154.46 500000 -82.83
Source: Annual reports of Molly enterprises
FIGURE NO RETURN ON CAPITAL EMPLOYED

Return On Capital Employed

40

20

0
2018-2019 2019-2020 2020-2021 2021-2022 2022-2023
-20

-40

-60

-80

-100
In the return on capital employed ratio only 2018-2019 shows the positive ratio. And from
2019-2020 to 2022-2023 the company only faces negative ratios. Higher the ratio better it
is. Higher ratio shows the overall profitability of the concern. And also, it is not satisfactory
to the concern.

xiii. ASSET TURNOVER RATIO

It shows how many dollars of sales are produced for each dollar of assets. This ratio is a
key indicator of operational efficiency and is often used to compare performance over
time or across companies in the same industry.

Table Asset Turnover Ratio

Year Net Sales Average Total Asset Turnover

Assets Ratio
2018-2019 3484913 2228221.61 1.56
2019-2020 2923771 2634217.995 1.10
2020-2021 1854462 2656636.99 0.69
2021-2022 2185026 2457350.02 0.88
2022-2023 4256072.1 2139111.975 1.98
Source: Annual reports of Molly enterprises
FIGURE NO: ASSET TURNOVER RATIO

Asset Turnover Ratio

2
1.8
1.6
1.4
1.2
1
0.8
0.6
0.4
0.2
0
2018-2019 2019-2020 2020-2021 2021-2022 2022-2023

Higher the ratio better it is. Highest ratio indicates the efficient use of assets. In the year
2022-2023 shows the highest as compared to other 4 years that means that year the assets
are most efficiently used. In the year 2020-2021 shows the lowest asset turnover ratio.
Which indicates that year the assets are not efficiently used.

xiv. WORKING CAPITAL TURNOVER RATIO

The Working Capital Turnover Ratio measures a company's effectiveness in using its
working capital to generate sales. This ratio indicates how many times a company can
turn over its working capital within a period, typically one year, reflecting operational
efficiency.
Table - Working Capital Turnover Ratio
Year Net Sales Net Working Working Capital
Capital Ratio
2018-2019 3484913 682045.49 5.10
2019-2020 2923771 1420656.74 2.05
2020-2021 1854462 1549286.24 1.19
2021-2022 2185026 1202805.72 1.56
2022-2023 4256072.1 783410.65 3.63
Source: Annual reports of Molly enterprises
FIGURE WORKING CAPITAL TURNOVER RATIO

Working Capital Turnover Ratio

6

0
2018-2019 2019-2020 2020-2021 2021-2022 2022-2023

In the year 2020-2021 and 2022-2023 indicates that there is an inefficient utilization of
working capital which may adversely affect the financial performance of the company. In
the year 2018-2019,2019-2020 and 2022-2023 shows an efficient utilization of working
capital which will affect the financial performance of the company.

COMPARATIVE BALANCE SHEET

Comparative study of financial statements is the comparison of the financial statements of

the business with the previous year‘s balance sheet. It enables identification of weak points
and applying corrective measures. Practically, two financial statements (balance sheet) are
prepared in comparative form for analysis purposes.

COMPARATIVE BALANCE SHEET AS ON 31st MARCH 2018 & 2019

Particulars As on As on Change % Increase/
31/03/2018 31/03/2019 Decrease
Source of
fund:
Capital
account:
Joycy Joy 500000 500000 0 Nil
Proprietary
current
account:
As per 730883.37 829486.85 98603.48 13%
schedule
Loans funds:
Secured
Loans:
Kuri account 270000 1097122 827122 31%
Bank of Baroda 379359 149592 (229767) 60%
New Car Loan
a/c
Total 1880242.37 2576200.85 695958.48 37%
Application of
funds:
Fixed assets:
As per 1574482.23 1353243.69 (221238.54) 14%
schedule
Investments:
Bank of Baroda 12500 12500 Nil
share
Total 1586982.23 1365743.69 (221238.54) 13%
Current
account,
Loans and
Advances:
Current
Assets:
Closing stock 738148 886140 147992 20%
Sundry debtors 152919.50 180646.25 27726.75 18%
Cash in hand 910.53 4189.06 3278.53 360%
Loans and
Advances:
Advance tax 15000 30000 15000 100%
Electricity 1306 4133 2827 216%
deposit
Sales tax 15000 15000 0 Nil
deposit
Post office 3500 3500 0 Nil
deposit
Telephone 1600 1600 0 Nil
deposit
Bank of Baroda 90021.17 450238.67 360217.5 400%
KSSIA social 8000 16000 8000 100%
security fund -
EKM
Gas cylinder 500 500 0 Nil
deposit -
Obeena
IT compulsory 7440 7440 0 Nil
deposit
Total 1034345.20 1599386.98 565041.78 5%
Less: Current
Liabilities and
Provisions:
Current
liabilities:
Sundry 741085.06 388929.82 (352155.24) 47%
creditors
Net current 293260.14 1210457.16 917197.02 313%
assets
Total 1880242.37 2576200.85 695958.48 37%

1. All the items in the balance sheet show a good trend in the study period of
2018-2019 and the investors help to invest in the molly enterprises.
2. There is no change in the company share capital.
3. The company‘s proprietor‘s current account increased by 13%.
4. Kuri account increased by 31%.
5. Bank of Baroda car loan decreased by 60%.
6. Fixed assets decreased by 14%.
7. There is no change in the investment in the bank of Baroda.
8. Closing stock increased by 20%.
9. Sundry debtors increased by 18%.
10. Cash in hand increased by 360%.
11. Advance tax increased by 100%.
12. Electricity deposit increased by 216%.
13. No change in sales tax deposit.
14. No change in post office deposit.
15. No change in telephone deposit.
16. Bank of Naroda increased by 400%.
17. KSSIA social security fund increased by 100%.
18. No change in Gas cylinder deposit.
19. No change in IT compulsory deposit.
20. Sundry creditors decreased by 47%.
21. Net current asset increased by 313%.
22. Total increased by 37%.
COMPARATIVE BALANCE SHEET AS ON 31st MARCH 2019 & 2020
Particulars As on As on Change % Increase/
31/03/2019 31/03/2020 Decrease
Source of
fund:
Capital
account:
Joycy Joy 500000 500000 0 Nil
Proprietary
current
account:
As per 829486.85 268240.25 (561246.6) 68%
schedule
Loans funds:
Secured
Loans:
Bank of Baroda - 410515.74 410515.74 100%
share
Kuri account 1097122 1366515 269392 25%
Bank of Baroda 149592 146964 (2628) 1.7%
New Car Loan
a/c
Total 2576200.85 2692234.99 116033.99 4.50%
Application of
funds:
Fixed assets:
As per 1353243.69 1155900.25 (197343.75) 15%
schedule
Investments:
Bank of Baroda 12500 12500 0 Nil
share
Total 1365743.69 1168400.25 (197343.75) 14%
Current
account,
Loans and
Advances:
Current
Assets:
Closing stock 886140 1944580 1058440 119%
Sundry debtors 180646.25 198353.49 17707.49 9.80 %
Cash in hand 4189.06 77997.60 73808.54 1762%
Loans and
Advances:
Advance tax 30000 45000 15000 50%
Electricity 4133 7647 3514 85%
deposit
Sales tax 15000 15000 0 Nil
deposit
Post office 3500 3500 0 Nil
deposit
Telephone 1600 1600 0 Nil
deposit
Bank of Baroda 450238.67 - (450238.67) 100%
KSSIA social 16000 22000 6000 37.5%
security fund -
EKM
Gas cylinder 500 500 0 Nil
deposit - Obeena

IT compulsory 7440 7440 0 Nil

deposit
Labour welfare - 491 491 100%
fund
Total 1599386.98 2324109.09 724722.09 45%
Less: Current
Liabilities and
Provisions:
Current
liabilities:
Sundry 388929.82 800274.35 411344.35 105%
creditors
Net current 1210457.16 1523834.74 313377.74 26%
assets
Total 2576200.85 2692234.99 116033.94 4.50%

1. All the items in the balance sheet show a good trend in the study period of
2019-2020 and the investors help to invest in the molly enterprises.
2. There is no change in the company share capital.
3. The company‘s proprietor‘s current account decreased by 68%.
4. Kuri account increased by 25%.
5. Bank of Baroda car loan decreased by 1.7%.
6. Fixed assets decreased by 15%.
7. There is no change in the investment in the bank of Baroda.
8. Closing stock increased by 119%.
9. Sundry debtors increased by 9.80%.
10. Cash in hand increased by 1762%.
11. Advance tax increased by 50%.
12. Electricity deposit increased by 85%.
13. No change in sales tax deposit.
14. No change in post office deposit.
15. No change in telephone deposit.
16. Bank of Naroda decreased by 100%.
17. KSSIA social security fund increased by 37.5%.
18. No change in Gas cylinder deposit.
19. No change in IT compulsory deposit.
20. Sundry creditors increased by 105%.
21. Net current asset increased by 26%.
COMPARATIVE BALANCE SHEET 31ST MARCH 2020 & 2021
Particulars As on As on Change % Increase/
31/03/2020 31/03/2021 Decrease

Source of
fund:
Capital
account:
Joycy Joy 500000 500000 0 Nil
Proprietary
current
account:
As per 268240.25 (160458.34) (107781.91) 40%
schedule
Loans funds:
Secured
Loans:
Bank of Baroda 410515.74 417747.33 7231.59 1.76%
share
Kuri account 1366515 614250 (752265) 55%
Bank of Baroda 146964 - (146964) 100%
New Car Loan a/c

LIC –Loan a/c - 1249500 1249500 100%

Total 2692234.99 2621038.99 (71195.5) 2.64%
Application of
funds:
Fixed assets:
As per 1155900.25 987874.75 (168025.5) 14.53%
schedule
Investments:
Bank of Baroda 12500 12500 0 Nil
share
Total 1168400.25 1000374.75 (168025.5) 14%
Current
Account, Loans
and Advances:
Current
Assets:
Closing stock 1944580 2025000 80420 4%
Sundry debtors 198353.49 175191.04 (23157.45) 11.67%
Cash in hand 77997.60 3555.88 (74441.72) 95%
Loans and
Advances:
Advance Tax 45000 10000 (35000) 78%
Electricity 7647 7647 0 Nil
Deposit
Sales tax 15000 15000 0 Nil
Deposit
Post office 3500 3500 0 Nil
Deposit
Telephone 1600 1600 0 Nil
Deposit
KSSIA social 22000 22000 0 Nil
security fund -
EKM
Gas Cylinder 500 500 0 Nil
Deposit -
Obeena
IT Compulsory 7440 7440 0 Nil
Deposit
Labour Welfare 491 491 0 Nil
Fund
Total 2324109.09 2271924.92 (52184.17) 2.24%
Less: Current
Liabilities and
Provisions:
Current
Liabilities
Sundry 800274.35 651260.68 (52184.17) 6.52%
Creditors
Net Current 1523834.74 1620664.24 96829.5 6.35%
Assets
Total 2692234.99 2621038.99 (71195.5) 2.64%

1. All the items in the balance sheet show a good trend in the study period of
2020-2021 and the investors help to invest in the molly enterprises.
2. There is no change in the company share capital.

3. The company‘s proprietor‘s current account decreased by 40%.

4. Kuri account decreased by 55%.

5. Bank of Baroda car loan decreased by 100%.

6. Fixed assets decreased by 14.53%.

7. There is no change in the investment in the bank of Baroda.

8. Closing stock increased by 4%.

9. Sundry debtors increased by 11.67%.

10. Cash in hand decreased by 95%.

11. Advance tax decreased by 78%.

12. No change in electricity deposit.

13. No change in sales tax deposit.

14. No change in post office deposit.

15. No change in telephone deposit.

16. No change in Bank of Baroda.

17. No change in KSSIA social security fund.

18. No change in Gas cylinder deposit.

19. No change in IT compulsory deposit.

20. Sundry creditors decreased by 6.52%.

21. Net current asset increased by 6.35%.

COMPARATIVE BALANCE SHEET 31ST MARCH 2021 & 2022
Particulars As on As on Change % Increase/
31/03/2021 31/03/2022
Decrease
Source of Funds:

Capital
account:
Joycy Joy 500000 500000 0 Nil
Proprietary
current
account:
As per (160458.34) (134747.20) (25710.8) 16%
schedule
Loans funds:
Secured
Loans:
Bank of Baroda 417747.33 368158.24 (49588.76) 11.87%
share
Kuri account 614250 610750 (3500) 0.56%
LIC loan a/c 1249500 949500 (300000) 24%
Total 2621038.99 2239661.04 (327377.96) 12.5%
Application of
funds:
Fixed assets:
As per 987874.75 844660.92 (143214.08) 145%
schedule
Investments:
Bank of Baroda 12500 12500 0 Nil
share
Total 1000375 857160.02 (143214.98) 14.31%
Current
account, Loans
and
Advances:
Current
Assets:
Closing Stock 2025000 2412860 387860 19%
Sundry debtors 175191.04 133201.30 (41989.7) 24%
Cash in hand 3555.88 29709.44 26154.44 735%
Loans and
Advances:
Advance tax 10000 - (10000) 100%
Electricity 7647 7647 0 Nil
deposit
Sales tax 15000 15000 0 Nil
deposit
Post office 3500 3500 0 Nil
deposit
Telephone 1600 1600 0 Nil
deposit
KSSIA social 22000 27000 5000 22%
security fund -
EKM
Gas cylinder 500 500 0 Nil
deposit -
Obeena
IT compulsory 7440 7440 0 Nil
deposit
Labour welfare 491 849 358 73%
fund
Total 2271924.92 2639306.74 367682.74 16.18%
Less: Current
Liabilities and
Provisions:
Current
liabilities:
Sundry 651260.68 1100387.72 449127.72 69%
creditors
Expense Payable - 102418 102418 100%
Net current 1620664.24 1436501.02 (184162.98) 11.36%
assets
Total 2621038.99 2293661.04 327377.96 12.5%

1. All the items in the balance sheet show a good trend in the study period of
2021-2022 and the investors help to invest in the molly enterprises.
2. There is no change in the company share capital.
3. The company‘s proprietor‘s current account decreased by 16%.
4. Kuri account decreased by 0.56%.
5. Bank of Baroda car loan decreased by 24%.
6. Fixed assets decreased by 145%.
7. There is no change in the investment in the bank of Baroda.
8. Closing stock increased by 19%.
9. Sundry debtors decreased by 24%.
10. Cash in hand increased by 735%.
11. Advance tax decreased by 100%.
12. No change in electricity deposit.
13. No change in sales tax deposit.
14. No change in post office deposit.
15. No change in telephone deposit.
16. No change in Bank of Baroda.
17. KSSIA social security fund increased by 22%.
18. No change in Gas cylinder deposit.
19. No change in IT compulsory deposit.
20. Sundry creditors increased by 69%.
21. Net current asset decreased by 11.36%.
22. Total increased by 12.5%.
COMPARATIVE BALANCE SHEET 31ST MARCH 2022 & 2023
Particulars As on As on Change % Increase/
31/03/2022 31/03/2023 Decrease
Source of
Funds:
Capital
Account:
Joycy Joy 500000 500000 0 Nil
Proprietary
Current
Account:
As per (134747.20) (539229.66) (25710.8) 19%
Schedule
Loans funds:
Secured
Loans:
Bank of Baroda 368158.24 430942.44 62784.44 17%
share
Bank of Baroda - 40450.17 40450.17 100%
covid 19
Kuri account 610750 602900 (7850) 1.28%
LIC loan a/c 949500 949500 0 Nil
Total 2239661.04 1984562.95 (309098.05) 14%
Application of
funds:
Fixed assets:
As per 844660.92 734814.86 (109845.14) 13%
schedule
Investments:
Bank of Baroda 12500 12500 0 Nil
share
Total 857160.02 747314.86 (109845.14) 13%
Current
account, Loans
and
Advances:
Current Assets:
Closing stock 2412860 1906695 (506165) 21%
Sundry debtors 133201.30 41685 (91516) 68.70%
Cash in hand 29709.44 4591.74 (25117.26) 84.54%
Loans and
Advances:
Electricity 7647 7647 0 Nil
deposit
Sales tax 15000 15000 0 Nil
deposit
Post office 3500 3500 0 Nil
deposit
Telephone 1600 1600 0 Nil
deposit
KSSIA social 27000 32000 5000 18.51%
security fund -
EKM
Gas cylinder 500 500 0 Nil
deposit -
Obeena
IT compulsory 7440 7440 0 Nil
deposit
Labour welfare 849 - (849) 100%
fund
Total 2639306.74 2020658.74 (618648.26)
Less: Current
Liabilities and
Provisions:
Current
liabilities:
Sundry 1100387.72 783410.65 (316977.35) 28.80%
creditors
Expense Payable 102418 - (102418) 100%
Net current 1436501.02 1237248.09 (199252.91) 14%
assets
Total 2293661.04 1984562.95 (309098.05) 14%

1. All the items in the balance sheet show a good trend in the study period of
2022-2023 and the investors help to invest in the molly enterprises.
2. There is no change in the company share capital.
3. The company‘s proprietor‘s current account decreased by 19%.
4. Kuri account decreased by 1.28%.
5. No change in Bank of Baroda car loan.
6. Fixed assets decreased by 13%.
7. There is no change in the investment in the bank of Baroda.
8. Closing stock decreased by 21%.
9. Sundry debtors decreased by 68.70%.
10. Cash in hand decreased by 84.54%.
11. No change in Advance tax.
12. No change in electricity deposit.
13. No change in sales tax deposit.
14. No change in post office deposit.
15. No change in telephone deposit.
16. No change in Bank of Baroda.
17. KSSIA social security fund increased by 18.51%.
18. No change in Gas cylinder deposit.
19. No change in IT compulsory deposit.
20. Sundry creditors decreased by 28.80%.
21. Net current asset decreased by 14%.
22. Total decreased by 14%.
 TREND ANALYSIS
I. TREND ANALYSIS OF CURRENT ASSETS

TABLE NO:

Year Current Asset Change in Trend (%)

2018-2019 1070975.31 100

2019-2020 2220931.09 207.3

2020-2021 2200546.92 205.4

2021-2022 2575770.74 240.5

2022-2023 1952971.74 182.3

Figure TREND ANALYSIS OF CURRENT ASSETS

Trend Analysis Of Current Assets

300%

250%

200%

150%

100%

50%

0%
2018-2019 2019-2020 2020-2021 2021-2022 2022-2023

Current Assets

From the table the base year considered to be 2018-2019. The trend analysis reveals that,
there is an overall increase in current-assets of the organization. Most of the year were
increased the trend of current assets. From 2019-2020 to 2021-2022 the trend has been
increased. But in the year 2022-2023 the trend analysis of current asset was decreased
compared to 2021-2022.
 II. TREND ANALYSIS OF NON-CURRENT ASSETS

TABLE NO:

Year Non-Current Asset Change in Trend (%)

2018-2019 1353243.69 100

2019-2020 1155900.25 84.4

2020-2021 987874.75 73.1

2021-2022 844660.02 62.4

2022-2023 734814.86 54.3

Figure TREND ANALYSIS OF NON-CURRENT ASSETS

TREND ANALYSIS OF NON-CURRENT ASSETS

120%

100%

80%

60%

40%

20%

0%
2018-2019 2019-2020 2020-2021 2021-2022 2022-2023

Non-Current Assets

From the table the base year considered to be 2018-2019. The trend analysis reveals that,
there is an overall decrease in non-current-assets of the organization. From 2019-2020 to
2022-2023 the trend analysis of non-current asset was decreasing. And also, the least trend
has been showed in the year 2022-2023 as 54.30.
 III. TREND ANALYSIS OF CURRENT LIABILITIES
TABLE NO:

Year Current Liability Change in Trend (%)

2018-2019 388929.82 100

2019-2020 800274.35 205.7

2020-2021 651260.68 167.4

2021-2022 1202805.72 309.2

2022-2023 783410.65 201.4

Figure TREND ANALYSIS OF CURRENT LIABILITIES

TREND ANALYSIS OF CURRENT LIABILITIES

350%

300%

250%

200%

150%

100%

50%

0%
2018-2019 2019-2020 2020-2021 2021-2022 2022-2023

Current Liability

From the table the base year considered to be 2018-2019. The trend analysis reveals that,
there is an overall increase in current liability of the organization. From 2019-2020 to
2021-2022 the trend analysis of current liability has a positive upward movement. From
2020-2021 the current liability increased almost double the previous year. And in the year
2022-2023 the trend has been decreased to 201.42.
 IV. TREND ANALYSIS OF NON-CURRENT LIABILITIES
TABLE NO:

Year Non-Current Liability Change in Trend (%)

2018-2019 1246714 100

2019-2020 1923994.74 154.3

2020-2021 2281497.33 183.1

2021-2022 1928408.24 154.6

2022-2023 2023792.61 162.3

Figure TREND ANALYSIS OF NON-CURRENT LIABILITIES

Trend Analysis Of Non-Current Liability

200%
180%
160%
140%
120%
100%
80%
60%
40%
20%
0%
2018-2019 2019-2020 2020-2021 2021-2022 2022-2023

Non-Current Liability

From the table the base year considered to be 2018-2019. The trend analysis reveals that,
there is an overall increase in non-current-liability of the organization. From 2019-2020
to 2020-2021 there is a upward increase in the trend analysis of the non-current liability of
the organization. In the year 2021-2022 the trend has been decreased from 183.1 to 154.6.
In the year 2022-2023 the trend has been increased to 162.3.
 V. TREND ANALYSIS OF TOTAL EQUITY
TABLE NO:

Year Total Equity Change in Trend (%)

2018-2019 1329486.85 100

2019-2020 768240.25 57.7

2020-2021 339541.66 25.5

2021-2022 365252.8 27.4

2022-2023 -39229.66 -2.95

Figure TREND ANALYSIS OF TOTAL EQUITY

Trend Analysis of Total Equity

120%

100%

80%

60%

40%

20%

0%
2018-2019 2019-2020 2020-2021 2021-2022 2022-2023
-20%

Total Equity

From the table the base year considered to be 2018-2019. The trend analysis reveals that,
there is an overall decrease in total equity of the organization. From 2019-2020 to 2022-
2023 shows the downward movement of the trend analysis of the total equity of the
organization. And also, in the year 2022-2023 the trend analysis shows negative trend as
(2.95). The equity of the firm has been downward throughout the period.
 COMMON SIZE BALANCE SHEET
A statement in which each asset is shown as percentage of total asset and each liability and
capital as a percentage of total liability and capital is called a common-size balance sheet.

COMMON SIZE BALANCESHEET AS ON 2019-2023

Particulars 2019 Percentage 2023 Percentage

change change
Liabilities:

Share Capital 500000 16.86 500000 18.06

Other Equity 829486.85 27.97 -539229.66 -19.48

Non-Current Liability 1246714 42.04 2023792.61 73.11

Current Liability 388929.82 13.11 783410.65 28.30

Total 2965130.67 100 2767973.6 100

Assets:

Fixed Asset
1365743.69 46.06 747314.86 26.99

Current Asset 1599386.98 53.93 2020658.74 73

Total 2965130.67 100 2767973.6 100

1. The common size balance sheet shows that the share capital in 2019 is 16.86% and
in 2023 is 18.06%.
2. Other equity in 2019 is 27.97% and in 2023 is -19.48%.
3. Non-current liability in 2019 is 42.04% and in 2023 is 73.11%.
4. Current liability in 2019 is 13.11% and in 2023 is 28.30%.
5. Fixed asset is in 2019 is 46.06% and in 2023 is 26.99%.
6. Current asset is in 2019 is 53.93% and in 2023 is 73%.
 Z- SCORE
The Altman Z-Score is a financial metric used to assess a company's likelihood of
bankruptcy. Developed by Edward Altman in 1968, it combines several financial ratios into
a single score to evaluate a company's financial health. It is widely applied to manufacturing
firms but can also be adapted for non-manufacturing and private companies with
modifications.
Altman Z-Score = 1.2A + 1.4B + 3.3C + 0.6D + 1.0E

Where:

A = Working Capital / Total Assets

B = Retained Earnings / Total Assets

C = Earnings Before Interest and Tax / Total Assets

D = Market Value of Equity / Total Liabilities

E = Sales / Total Assets

 WORKING CAPITAL TO TOTAL ASSETS(A)

Year Working Capital Total Assets Ratio
2018-2019 682045.49 2576200.85 0.264749

2019-2020 1420656.74 2692234.99 0.527687

2020-2021 1549286.24 2621038.99 0.591096

2021-2022 1202805.72 2293661.24 0.524404

2022-2023 783410.65 1984562.95 0.394752

 EBIT TO TOTAL ASSETS (C)
Year EBIT Assets Ratio

2018-2019 123483.48 2576200.85 0.047932

2019-2020 -269695.60 2692234.99 -0.10018

2020-2021 -243698.59 2621038.99 -0.09298

2021-2022 -240779.86 2293661.24 -0.10498

2022-2023 -414154.46 1984562.95 -0.20869

 EQUITY TO TOTAL LIABILITIES (D)

Year Equity Liabilities Ratio

2018-2019 1329486.85 2576200.85 0.516065

2019-2020 768240.25 2692234.99 0.285354

2020-2021 339541.66 2621038.99 0.129545

2021-2022 365252.8 2293661.24 0.159244

2022-2023 -39229.66 1984562.95 -0.01977

 SALES TO ASSETS (E)

Year Sales Assets Ratio
2018-2019 3484913 2576200.85 1.352733

2019-2020 2923771 2692234.99 1.086001

2020-2021 1854462 2621038.99 0.707529

2021-2022 2185026 2293661.24 0.952637

2022-2023 4256072.1 1984562.95 2.144589

 TABLE Z-SCORE

Year A (1.2) B (1.4) C (3.3) D (0.6) E (1.0) Z-SCORE

2018-2019 0.264749 0 0.047932 0.516065 1.352733 1.8734974

2019-2020 0.527687 0 -0.10018 0.285354 1.086001 1.5598438

2020-2021 0.591096 0 -0.09298 0.129545 0.707529 1.1877372

2021-2022 0.524404 0 -0.10498 0.159244 0.952637 1.3310342

2022-2023 0.394752 0 -0.20869 -0.01977 2.144589 1.9177524

From the table is the Z- SCORE of the company in the period 2018-2019 to 2022-2023. In
the year 2018-2019 the company in grey zone, that means there is no immediate threat for the
company. And also, the company is not sound in the year. And from 2019-2020 to 2021-2022
the company‘s Z-SCORE is below 1.81 so, the company in danger zone. With in 2 or 3 years
the company will collapse. In the year 2022-2023 the Z-SCORE ratio is 1.9177524 that is
greater than 1.82 so, the company is in grey zone and there is no immediate threat for the
company‘s finance and also at the movement the company is not sound.
CONCLUSION
The Financial Analysis is the process of identifying the financial strengths and weaknesses of
the firm by properly establishing relationship between the items of the balance sheet and the
profit and loss account. Financial statement analysis is the process of determining the
financial strength and weakness of the firm by establishing strategic relationship between the
items of the Balance Sheet, Profit and Loss Account and other operating data. Different
financial tools used for analysis in this study are ratio analysis and trend analysis

INTODUCTION

This chapter includes the complete findings of the study. The findings are understood through
the application of the tools like ratio analysis, comparative balance sheet and trend analysis.
And it also includes the suggestion for the improvement of the performance of the small-scale
industries. And finally, the conclusion of the study.

FINDINGS

1) The current ratio of the molly enterprises is useful to test the short-term debt paying of
the business. In all year the ratios are higher than 2:1. The higher ratio shown in the
year 2020-2021 as 3.37.

2) The quick ratio is 1:1 considered as satisfactory, but in all the financial year quick ratio
is not up to 1. The highest quick ratio shown in the year 2018-2019 as .41 and the
lowest ratio shown in the year 2022-23 as 0.05.

3) The absolute liquid ratio is better in all years. The highest absolute liquid ratio shown in
the year 2019-2020 as 9.74 and the lowest absolute liquid ratio shown in the year 2022-
2023 as 0.58.

4) The debt equity ratio reveals that from the year 2019-2020 to 2021-2022 the company
depends on borrowed fund. But in the year 2022-2023 the ratio becomes negative as -
51.58, this generates that the company depends on owned fund rather than borrowed
fund.

5) Higher proprietary ratio gives better safety for the creditors to the company. From the
year 2018-2019 to 2021-2022 there is a positive ratio. But in the year 2022- 2023 the
ratio showed negative. It clarifies that there is a little risk to the creditors of the
 company.

6) The solvency position of the company is good. The highest solvency ratio brings in the
year 2022-2023 as 1.01 and the lowest is in the year 2018-2019 as 0.48.

7) A high inventory turnover ratio indicates sufficient management of the inventory. The
highest turnover showed in the year 2018-2019 as 2.37 and the lowest showed in the
year 2020-21 as 0.40.

8) The fixed asset turnover ratio is highest in the year 2022-2023 as 5.03, it shows that the
efficiency in the utilization of fixed assets by the management. The lowest ratio in the
year 2019-2020 as 1.32.

9) In the case of net profit ratio, only in the year 2018-2019 shows the positive figure. The
other financial year showed net loss for the company. The company were going in a
loss- making company.

10) Highest gross profit ratio considered are to be better. Throughout the 5 years the good
financial position and good gross profit. Higher ratio showed in the year 2020-2021 as
56.28 and the lowest in the year 2022-2023 as 13.10.

11) A high current asset turnover ratio indicates the capability of the organization to
achieve maximum sales with the maximum investment in current assets. It indicates that
the current assets turnover in the form sales number of times. Higher current asset
turnover ratio is better for firm. 2018-2019 shows the highest current asset turnover
ratio as 3.25. And from 2020-2021 to 2021-2022 the ratio becomes declined. And in the
year 2021-2023 the ratio has been increased as 2.17.

12) In return on capital employed ratio only 2019-2020 shows the positive ratio. And from
2020-2021 to 2022-2023 the company only faces negative ratios. Higher the ratio better
it is. Higher ratio shows the overall profitability of the concern. And also, it is not
satisfactory to the concern.

13) Higher asset turnover ratio better it is. Highest ratio indicates the efficient use of assets.
In the year 2022-2023 shows the highest as compared to other 4 years that means that
year the assets are most efficiently used. In the year 2020-2021 shows the lowest asset
turnover ratio. Which indicates that year the assets are not efficiently used.

14) Higher working capital turnover ratio indicates better performance and low working
capital turnover ratio indicates the inefficient utilization of working capital. In the year
 2020-2021 and 2022-2023 indicates that there is an inefficient utilization of working
capital which may adversely affect the financial performance of the company. In the
year 2018-2019,2019-2020 and 2022-2023 shows an efficient utilization of working
capital which will affect the financial performance of the company.

15) The trend analysis reveals that, there is an overall increase in current assets of the
organization. Most of the positions of the company has improved a lot during the period
2022-2023, as compared to 2018-2019.

16) The trend analysis reveals that the non-current asset shows a downward trend from
2019-2020 to 2022-2023.

17) The trend analysis reveals that the current liabilities show an upward trend from 2021-
2022 and then its show an upward trend.

18) The trend analysis reveals that non-Current liabilities show an upward movement till
2021 and from 2021 it shows a downward trend in 2022 and an upward trend in 2023.

19) The trend analysis of Total Equity shows a downward trend from 2019 to 2023.

20) The common size balance sheet of the company for the past 5 years shows that the share
capital in 2019 is 16.86 % and in 2023 it is 18.06 %. And the Current liabilities for the
company shows increasing trend. It increasing from 13.11% to 28.30%. Likewise,
the current asset of the company is increasing in the current year compare with previous
year (19.07%).

21) From 2018-2019 to 2022-2023, the company‘s Z-Score indicates fluctuating financial
health. In 2018-2019, the company was in the grey zone, facing no immediate financial
threat but still not financially sound. However, from 2019-2020 to 2021-2022, the Z-
Score dropped below 1.81, putting the company in the danger zone, signalling a high
risk of collapse within 2-3 years if conditions didn‘t improve. By 2022-2023, the Z-
Score rose to 1.9177, moving the company back into the grey zone. While this
improvement suggests no immediate financial threat, the company remains weak and
not yet in a stable or strong position.

Using tools like Ratios, Trend analysis and Comparative Balance Sheet financial
information could be easily standardized and compared.
SUGGESSIONS
On the basis of above findings, the following suggestions have been put forward to
improve the financial position of MOLLY ENTERPRISES.

1. As quick ratio of company indicates that its liquidity position was not satisfactory.
Hence the company must increase the quick assets to increase the liquidity position
of the company.
2. The company should concentrate to increase their profit through reducing their
expenses.
3. The return on capital employed is not satisfactory for the company, to maintain the
company had a good profitability position.
4. The company should use innovative ideas or any new strategy for the good
profitability for the concern.
5. Current liquidity of the company was high, indicating strong short-term solvency,
which allowed the firm to strategically reduce its current assets. The company should
concentrate on working capital management.
6. The company should concentrate on working capital management.

7. In trend analysis, increasing non-current liabilities, which decreases efficiency rate.

So it has to work with efficiency.
8. To show the Z-SCORE analysis in green zone the company must increase the total
sales, profit. And also, the company must decrease the total liability. And also, the
company did not have any retained earnings.
CONCLUSION

The study was conducted to evaluate the ‗Financial performance‘ of MOLLY

ENTERPRISES. For the period of five years ranging from 2018-2019 to 2022-2023. It
helps to explore the strength and weakness of the company.

The current and liquidity ratio indicates the short-term financial position of the
company. And the study reveals that it is not enough but it improving slowly.
Solvency ratio of the company is satisfactory so they can easily pay outside debts.
Debt equity and proprietary ratio shows long term financial position. Which shows a
satisfactory level. Similarly, activity ratio and profitability ratio help full in evaluating
the efficiency of performance and management. The ratio indicates sound financial
position.

Financial analysis can be defined as a study of relationship between many factors as

disclosed by the statement and the study of the trend of these factors. The objective of
financial analysis is the pinpointing of strength and weakness of a business
undertaking by regrouping and analyzing of figures obtained from financial statement
and balance sheet by the tools and techniques of management accounting.

We hope that the study will go a long way in helping the company to take remedial
measures on the basis of our path breaking findings which are appropriate for the
overall improvement of the company. Thus, if the suggestions made in the study are
taken into consideration for developing an array of survival and growth strategies in
the context of highly competitive domestic and international business environment,
we hope the company will be able to improve its financial performance.
 BIBILIOGRAPHY

Books

1. M Y Khan and P K Jain financial management‖ Tata MC Graw hill publishing co

th
ltd 4 education 2004.
2. I M Pandy ―New Delhi Vikas publishing house private LTD, 9th education
2004.

Website

1. www.wikipedia.com
2. www.google.com
3. www.mollyindia.com