Summer Training Report

On
Financial Statement analysis of selected company undertaken at Sharp and
Tannan Chartered Company

Submitted in Partial Fulfillment for the Award of the

Degree of B. Com (H) 2018-2021 (14, Bold)

Under the Guidance of: Submitted By:

Ms. Rachita Aggarwal Ipsa Madhuri Lao
Assistant Professor 01561188818

Maharaja Agrasen Institute of Management Studies

Affiliated to Guru Gobind Singh Indraprastha University, Delhi
PSP Area, Plot No. 1, Sector 22, Rohini, Delhi 110086, India

i
 Student Declaration

This is to certify that I, Ipsa Madhuri Lao have completed the Summer Training

Report entitled Financial Statement Analysis of selected companies undertaken

at Sharp and Tannan Chartered Companies under the guidance of Rachita

Aggarwal, Assistant Professor toward partial fulfillment of the requirement for the

award of the Degree of Bachelor of Commerce at Maharaja Agrasen Institute of

Management Studies, Delhi. This is an original piece of work and I have not

submitted it earlier elsewhere.

(Signature)

Name of the Student: Ipsa Madhuri Lao

University Enrolment No: 01561188818
Program: B.Com (Hons)
Batch: 2018-21
Date: 21-10-2020

COUNTERSIGNED BY:

(Signature)
Name of Internal Faculty Guide: Ms. Rachita Aggarwal
Designation:
Date: 21-10-2020

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Certificate from the Company

iii
 Acknowledgement

Guidance, inspiration and motivation have always played a key role in the success
of any venture. I would like to pay my sincere regards to all those who guided me
in my project work.

I express my sincere thanks to Sharp and Tannan Chartered Company who gave
me the opportunity to work on my Summer Training project. I also express my
sincere thanks to the industry supervisor Ipsa Madhuri Lao for all the valuable
guidance and support extended to me during my summer training. I would like to
avail this opportunity to pay my sincere gratitude and regards to Prof. Ravi Kumar
Gupta, Director and Dr Manju Gupta, HOD, Department of Commerce, Maharaja
Agrasen Institute of Management Studies for providing me such a wonderful
opportunity to widen the horizons of my knowledge. I would also like to express
my heartfelt thanks to my Project Guide Ms. Rachita Aggarwal, Assistant
Professor for giving his/her support, guidance and encouragement throughout the
project work.

Last but not the least I would like to thank my parents, family and friends who have
directly or indirectly contributed in making this project a success.

Name of the Student: Ipsa Madhuri Lao

University Enrolment No: 01561188818

Program & Section: B.Com (Hons) 5B

Batch: 2018-2

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 Executive Summary

I applied for an internship in ‘SHARP AND TANNAN CHARTERED COMPANY’ which is in Manufacturing,
Services and Banking sector. It has the ability to handle assignments across large geographical areas including
those of cross-border nature. They also provide many services such as External Audit (Statutory), Internal
Audit, Tax Business Advisory services, Merger & Acquisition Advisory Services any more services.

I started my internship on 7th may 2020 which was work from internship. After completing
my internship on 8th July 2020. I have good knowledge of financial statements i.e. Balance
Sheet, Statement of Profit and Loss, Cash flow statements,

This project is all about the analysis of financial statement of Polyplex from past 3 years.

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 Table of Contents

Contents Page No.

Student Declaration (i)
Certificate from the Company (ii)
Acknowledgement (iii)
Executive Summary (iv)
Chapter 1 – Introduction 1
 Overview of the Industry
 About the Topic
 Research Methodology
 Purpose of the study
 Objective of the study
 Research Design
 Source of Data collection
 Limitation of the study
Chapter 2 – Company Profile 18
Chapter 3 – Data Analysis and Interpretation/ Learnings 26
from Training
Chapter 4 – Conclusions and Suggestions 50
Bibliography 57

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CHAPTER 1 -
INTRODUCTION

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Overview of the industry

Financial Analysis
Financial analysis is the process of evaluating businesses, projects, budgets, and other
finance-related transactions to determine their performance and suitability. Typically,
financial analysis is used to analyze whether an entity is stable, solvent, liquid, or profitable
enough to warrant a monetary investment.

Financial analysis is used to evaluate economic trends, set financial policy, build long-term
plans for business activity, and identify projects or companies for investment. This is done
through the synthesis of financial numbers and data. A financial analyst will thoroughly
examine a company's financial statements—the income statement, balance sheet, and cash
flow statement. Financial analysis can be conducted in both corporate finance and investment
finance settings.

One of the most common ways to analyze financial data is to calculate ratios from the data in
the financial statements to compare against those of other companies or against the
company's own historical performance.

Objectives of Financial Analysis

1. Reviewing the performance of a company over the past periods: To predict

the future prospects of the company, past performance is analyzed. Past performance is
analyzed by reviewing the trend of past sales, profitability, cash flows, return on
investment, debt-equity structure and operating expenses, etc.

2. Assessing the current position & operational efficiency: Examining the

current profitability & operational efficiency of the enterprise so that the financial health
of the company can be determined. For long-term decision making, assets & liabilities of
the company are reviewed. Analysis helps in finding out the earning capacity & operating
performance of the company.
3. Predicting growth & profitability prospects: The top management is concerned
with future prospects of the company. Financial analysis helps them in reviewing the
investment alternatives for judging the earning potential of the enterprise. With the help of
financial statement analysis, assessment and prediction of the bankruptcy and probability
of business failure can be done.
4. Loan Decision by Financial Institutions and Banks: Financial analysis helps
the financial institutions, loan agencies & banks to decide whether a loan can be given to
the company or not. It helps them in determining the credit risk, deciding the terms and
conditions of a loan if sanctioned, interest rate, maturity date etc.

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Financial Analysis is Used

 Corporate Financial Analysis

In corporate finance, the analysis is conducted internally by the accounting department and
shared with management in order to improve business decision making. This type of internal
analysis may include ratios such as net present value (NPV) and internal rate of return (IRR)
to find projects worth executing.

 Investment Financial Analysis

In investment finance, an analyst external to the company conducts an analysis for investment
purposes. Analysts can either conduct a top-down or bottom-up investment approach. A top-
down approach first looks for macroeconomic opportunities, such as high-performing sectors,
and then drills down to find the best companies within that sector. From this point, they
further analyze the stocks of specific companies to choose potentially successful ones as
investments by looking last at a particular company's fundamentals.

Significance of Financial Analysis

1. Finance Manager

Analysis of financial statements helps the finance manager in:

 Assessing the operational efficiency and managerial effectiveness of the company.

 Analyzing the financial strengths and weaknesses and creditworthiness of the company.
 Analyzing the current position of financial analysis,
 Assessing the types of assets owned by a business enterprise and the liabilities which are
due to the enterprise.
 Providing information about the cash position company is holding and how much debt the
company has in relation to equity.
 Studying the reasonability of stock and debtors held by the company.

2. Top Management

Financial analysis helps the top management:

 To assess whether the resources of the firm are used in the most efficient manner
 Whether the financial condition of the firm is sound

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 To determine the success of the company’s operations
 Appraising the individual’s performance
 evaluating the system of internal control
 To investigate the future prospects of the enterprise.

3. Trade Payables
Trade payables analyze of financial statements for:

 Appraising the ability of the company to meet its short-term obligations

 Judging the probability of firm’s continued ability to meet all its financial obligations in
the future.
 Firm’s ability to meet claims of creditors over a very short period of time.
 Evaluating the financial position and ability to pay off the concerns.

4. Lenders
Suppliers of long-term debt are concerned with the firm’s long-term solvency and
survival. They analyze the firm’s financial statements

 To ascertain the profitability of the company over a period of time,

 For determining a company’s ability to generate cash, to pay interest and repay the
principal amount
 To assess the relationship between various sources of funds (i.e. capital structure
relationships)
 To assess financial statements which contain information on past performances and
interpret it as a basis for forecasting future rates of return and for assessing risk.
 For determining credit risk, deciding the terms and conditions of a loan if sanctioned,
interest rate, and maturity date etc.

5. Investors
Investors, who have invested their money in the firm’s shares, are interested in the firm’s
earnings and future profitability. Financial statement analysis helps them in predicting the
bankruptcy and failure probability of business enterprises. After being aware of the probable
failure, investors can take preventive measures to avoid/minimize losses.

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 6. Labour Unions
Labour unions analyze the financial statements:

 To assess whether an enterprise can increase their pay.

 To check whether an enterprise can increase productivity or raise the prices of

products/ services to absorb a wage increase.

Types of Financial Analysis

There are two types of financial analysis: fundamental analysis and technical analysis.

1. Fundamental Analysis

Fundamental analysis uses ratios gathered from data within the financial statements, such as a
company's earnings per share (EPS), in order to determine the business's value. Using ratio
analysis in addition to a thorough review of economic and financial situations surrounding
the company, the analyst is able to arrive at an intrinsic value for the security. The end goal is
to arrive at a number that an investor can compare with a security's current price in order to
see whether the security is undervalued or overvalued.

2. Technical Analysis

Technical analysis uses statistical trends gathered from trading activity, such as moving
averages (MA). Essentially, technical analysis assumes that a security’s price already reflects
all publicly-available information and instead focuses on the statistical analysis of price
movements. Technical analysis attempts to understand the market sentiment behind price
trends by looking for patterns and trends rather than analyzing a security’s fundamental
attributes.

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ABOUT THE TOPIC

Statement of Profit and Loss

The profit and loss (P&L) statement is a financial statement that summarizes the revenues,
costs, and expenses incurred during a specified period, usually a fiscal quarter or year. The
P&L statement is synonymous with the income statement.
These records provide information about a company's ability or inability to generate profit
by increasing revenue, reducing costs, or both. Some refer to the P&L statement as a
statement of profit and loss, income statement, statement of operations, statement of financial
results or income, earnings statement or expense statement.
The P&L statement is one of three financial statements every public company issues quarterly
and annually, along with the balance sheet and the cash flow statement. It is often the most
popular and common financial statement in a business plan as it quickly shows how much
profit or loss was generated by a busines s.
The income statement, like the cash flow statement, shows changes in accounts over a set
period. The balance sheet, on the other hand, is a snapshot, showing what the company owns
and owes at a single moment.
It is important to compare the income statement with the cash flow statement since, under the
accrual method of accounting; a company can log revenues and expenses before cash changes
hands.
The income statement follows a general form as seen in the example below. It begins with an
entry for revenue, known as the top line, and subtracts the costs of doing business, including
the cost of goods sold, operating expenses, tax expenses, and interest expenses.
The difference, known as the bottom line, is net income, also referred to as profit or earnings.
You can find many templates for creating a personal or business P&L statement online for
free.
It is important to compare income statements from different accounting periods, as the changes
in revenues, operating costs, research and development spending, and net earnings over time
are more meaningful than the numbers themselves. For example, a company's revenues may
grow, but its expenses might grow at a faster rate.

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Balance Sheet

The balance sheet is a report that summarizes all of an entity's assets, liabilities, and equity as
of a given point in time. It is typically used by lenders, investors, and creditors to estimate the
liquidity of a business.
The balance sheet is one of the documents included in an entity's financial statements. Of the
financial statements, the balance sheet is stated as of the end of the reporting period, while the
income statement and statement of cash flows cover the entire reporting period.
Typical line items included in the balance sheet (by general category) are:
 Assets: Cash, marketable securities, prepaid expenses, accounts
receivable, inventory, and fixed assets

 Liabilities: Accounts payable, accrued liabilities, customer prepayments,

taxes payable, short-term debt, and long-term debt

 Shareholders' equity: Stock, additional paid-in capital, retained earnings,

and treasury stock
The exact set of line items included in a balance sheet will depend upon the types of business
transactions with which an organization is involved. Usually, the line items used for the balance
sheets of companies located in the same industry will be similar, since they all deal with the
same types of transactions.
The line items are presented in their order of liquidity, which means that the assets most easily
convertible into cash are listed first, and those liabilities due for settlement soonest are listed
first.
The total amount of assets listed on the balance sheet should always equal the total of all
liabilities and equity accounts listed on the balance sheet (also known as the accounting
equation), for which the equation is:
Assets = Liabilities + Equity

If this is not the case, a balance sheet is considered to be unbalanced, and should not be issued
until the underlying accounting recordation error causing the imbalance has been located and
corrected.

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 Accounting Ratios
Accounting ratios, or financial ratios, are comparisons made between one set of figures from
a company’s financial statement with another. Accounting ratios are used to determine whether
a business can pay its debt and how profitable it is. Accounting ratios are indicators of a
commercial entity’s performance and financial situation. We calculate the majority of ratios
from data that the firm’s financial statements provide. Financial ratio sources could be the
balance sheet, income statement, or statement of cash flows. The statement of changes in equity
is also a source. The data comes from either within the company’s financial statements or its
accounting statements.

Types of Accounting Ratios

1. Liquidity Ratios
Liquidity ratios measure a company's ability to pay debt obligations and its margin of safety
through the calculation of metrics including the current ratio, quick ratio and operating cash
flow ratio. Current liabilities are analyzed in relation to liquid assets to evaluate the coverage
of shortterm debts in an emergency. Bankruptcy analysts and mortgage originators use liquidity
ratios to evaluate going concern issues, as liquidity measurement ratios indicate cash flow
position.

2. Current Ratio
The current ratio is a liquidity ratio that measures a company's ability to pay short-term and
long-term obligations. To gauge this ability, the current ratio considers the current total assets
of a company (both liquid and illiquid) relative to that company’s current total liabilities.

3. Quick Ratio
The quick ratio is a measure of how well a company can meet its short-term financial liabilities.
It is also known as the acid-test ratio.

4. Absolute Liquid Ratio

Absolute liquid ratio extends the logic further and eliminates accounts receivable (sundry
debtors and bills receivables) also. Though receivables are more liquid as comparable to
inventory but still there may be doubts considering their time and amount of realization.
Therefore, absolute liquidity ratio relates cash, bank and marketable securities to the current
liabilities. Since absolute liquidity ratio lays down very strict and exacting standard of liquidity,
therefore, acceptable norm of this ratio is 50 percent. It means absolute liquid assets worth one
half of the value of current liabilities are sufficient for satisfactory liquid position of a business.

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 RATIO FORMULA

Current Ratio Current Assets/Current Liabilities

Quick Ratio Liquid Assets/Current Liabilities
Absolute Liquidity Ratio Absolute Liquid Assets/Current Liabilities
Table 1.1

Profitability Ratios
Profitability ratios are a class of financial metrics that are used to assess a business's ability to
generate earnings compared to its expenses and other relevant costs incurred during a specific
period of time. For most of these ratios, having a higher value relative to a competitor's ratio
or relative to the same ratio from a previous period indicates that the company is doing well.

1. Gross Profit Ratio

Gross profit ratio is a financial metric used to assess a company's financial health and business
model by revealing the proportion of money left over from revenues after accounting for the
cost of goods sold (COGS). Gross profit ratio, also known as gross margin, is calculated by
dividing gross profit by revenues.

2. Operating Cost Ratio

The operating cost ratio is a measure of what it costs to operate a piece of property compared
to the income that the property brings in. The operating expense ratio is calculated by dividing
a property's operating expense by its gross operating income and used for comparing the
expenses of similar properties. An investor should look for red flags such as higher
maintenance expenses, operating income or utilities that may deter him from purchasing a
specific property.

3. Operating Profit Ratio

The operating profit ratio indicates how much profit a company makes after paying for variable
costs of production such as wages, raw materials, etc. It is also expressed as a percentage of
sales and then shows the efficiency of a company controlling the costs and expenses associated
with business operations. Furthermore, it is the return achieved from standard operations and
does not include unique or one time transactions.

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 4. Net Profit Ratio

The net profit percentage is the ratio of after-tax profits to net sales. It reveals the remaining
profit after all costs of production, administration, and financing have been deducted from
sales, and income taxes recognized. As such, it is one of the best measures of the overall results
of a firm, especially when combined with an evaluation of how well it is using its working
capital. The measure is commonly reported on a trend line, to judge performance over time. It
is also used to compare the results of a business with its competitors.Net profit is not an
indicator of cash flows, since net profit incorporates a number of non-cash expenses, such as
accrued expenses, amortization, and depreciation.

5. Return on Investment Ratio

Return on investment (ROI) measures the gain or loss generated on an

investment relative to the amount of money invested. ROI is usually expressed
as a percentage and is typically used for personal financial decisions, to compare
a company's profitability or to compare the efficiency of different investments.

6. Return on Capital Employed Ratio

Return on capital employed (ROCE) is a financial ratio that measures a
company's profitability and the efficiency with which its capital is employed.

7. Earnings per Share Ratio

Earnings per share (EPS) are the portion of a company's profit allocated to each outstanding share of
common stock. Earnings per share serve as an indicator of a company's profitability.

8. Dividend Payout Ratio

The dividend payout ratio is the amount of dividends paid to stockholders relative to the
amount of total net income of a company. The amount that is not paid out in dividends to
stockholders is held by the company for growth. The amount that is kept by the company is
called retained earnings.

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 9. Dividend Yield Ratio

A financial ratio that indicates how much a company pays out in dividends each year relative
to its share price. Dividend yield is represented as a percentage and can be calculated by
dividing the dollar value of dividends paid in a given year per share of stock held by the
dollar value of one share of stock.

10. Price Earnings Ratio

The price-earnings ratio (P/E ratio) is the ratio for valuing a company that measures its
current share price relative to its per-share earnings. The price-earnings ratio is also
sometimes known as the price multiple or the earnings multiple.

RATIO FORMULA
Gross Profit Ratio Gross Profit/Net Sales X 100
Operating Cost Ratio Operating Cost/Net Sales X 100
Operating Profit Ratio Operating Profit/Net Sales X 100
Net Profit Ratio Operating Profit/Net Sales X 100
Return on Investment Ratio Net Profit After Interest And Taxes X
100

Return on Capital Employed Ratio Net Profit after Taxes X 100

Earnings Per Share Net Profit After Tax & Preference
Dividend /No of Equity Shares

Dividend Payout Ratio Earning Per Equity Share X 100

Dividend Yield Ratio Dividend Per Share/ Market Value Per
Share X 100

Price Earnings Ratio Market Price Per Share Equity Share/

Earning Per Share X 100

Table 1.2

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Working Capital Ratios

The working capital ratio is also referred to as net sales to working capital. It indicates a
company's effectiveness in using its working capital. The working capital turnover ratio is
calculated as follows: net annual sales divided by the average amount of working capital
during the same 12 month period.

1. Inventory Turnover Ratio

Inventory turnover is a ratio showing how many times a company's inventory is sold and
replaced over a period of time. The days in the period can then be divided by the inventory
turnover formula to calculate the days it takes to sell the inventory on hand. It is calculated as
sales divided by average inventory.

2. Debtors Turnover Ratio

The receivables turnover ratio is an accounting measure used to quantify a firm's effectiveness
in extending credit and in collecting debts on that credit. The receivables turnover ratio is an
activity ratio measuring how efficiently a firm uses its assets. Receivables turnover ratio can
be calculated by dividing the net value of credit sales during a given period by the average
accounts receivable during the same period. Average accounts receivable can be calculated by
adding the value of accounts receivable at the beginning of the desired period to their value at
the end of the period and dividing the sum by two.

3. Creditors Turnover Ratio

The creditor turnover ratio is a short-term liquidity measure used to quantify the rate at which
a company pays off its suppliers. Accounts payable turnover ratio is calculated by taking the
total purchases made from suppliers, or cost of sales, and dividing it by the average accounts
payable amount during the same period.

4. Working Capital Turnover Ratio

Working capital turnover is a measurement comparing the depletion of working capital used
to fund operations and purchase inventory, which is then converted into sales revenue for the
company. The working capital turnover ratio is used to analyze the relationship between the
money that funds operations and the sales generated from these operations.

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 5. Fixed Asset Turnover Ratio

The fixed-asset turnover ratio is, in general, used by analysts to measure operating
performance. It is a ratio of net sales to fixed assets. This ratio specifically measures how able
a company is to generate net sales from fixed-asset investments, namely property, plant and
equipment, net of depreciation. In a general sense, a higher fixed-asset turnover ratioindicates
that a company has more effectively utilized investment in fixed assets to generate revenue.

RATIO FORMULA
Inventory Turnover Ratio Net Sales / Inventory
Debtors Turnover Ratio Total Sales / Account Receivables
Creditors Turnover Ratio Net Credit Purchases / Accounts Payable
Working Capital Turnover Ratio Net Sales / Working Capital
Fixed Asset Turnover Ratio Cost of Sales / Capital Employed
Table 1.3

Capital Structure Ratios

The capital structure is how a firm finances its overall operations and growth by using different
sources of funds. Debt comes in the form of bond issues or long-term notes payable, while
equity is classified as common stock, preferred stock or retained earnings. Short-term debt such
as working capital requirements is also considered to be part of the capital structure.

1. Debt Equity Ratio

Debt/Equity (D/E) Ratio, calculated by dividing a company’s total liabilities by its

stockholders' equity, is a debt ratio used to measure a company's financial leverage. The D/E
ratio indicates how much debt a company is using to finance its assets relative to the value of
shareholders’ equity.

2. Proprietary Ratio
The proprietary ratio (also known as the equity ratio) is the proportion of shareholders' equity
to total assets, and as such provides a rough estimate of the amount of capitalization currently
used to support a business. If the ratio is high, this indicates that a company has a sufficient
amount of equity to support the functions of the business, and probably has room in its financial
structure to take on additional debt, if necessary. Conversely, a low ratio indicates that a
business may be making use of too much debt or trade payables, rather than equity, to support
operations.

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 3. Capital Gearing Ratio

Capital gearing ratio is a useful tool to analyze the capital structure of a company and is
computed by dividing the common stockholders’ equity by fixed interest or dividend bearing
funds. Analyzing capital structure means measuring the relationship between the funds
provided by common stockholders and the funds provided by those who receive a periodic
interest or dividend at a fixed rate. A company is said to be low geared if the larger portion of
the capital is composed of common stockholders’ equity. On the other hand, the company is
said to be highly geared if the larger portion of the capital is composed of fixed
interest/dividend bearing funds.

4. Debt Service Coverage Ratio

Debt-Service Coverage Ratio (DSCR) is a measure of the cash flow available to pay current
debt obligations. The ratio states net operating income as a multiple of debt obligations due
within one year, including interest, principal, sinking-fund and lease payments. In government
finance, it is the amount of export earnings needed to meet annual interest and principal
payments on a country's external debts. In personal finance, it is a ratio used by bank loan
officers to determine income property loans.

RATIO FORMULA

Debt Equity Ratio Total Long Term Debts / Shareholders Fund

Proprietary Ratio Shareholders Fund/ Total Assets

Capital Gearing Ratio Equity Share Capital / Fixed Interest

Bearing Funds
Debt Service Ratio Profit Before Interest and Taxes / Interest
Charges
Table 1.4

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Cash Flow Statement
A cash flow statement is a financial statement that provides aggregate data regarding all cash
inflows a company receives from its ongoing operations and external investment sources. It
also includes all cash outflows that pay for business activities and investments during a given
period.
A company's financial statements offer investors and analysts a portrait of all the transactions
that go through the business, where every transaction contributes to its success. The cash flow
statement is believed to be the most intuitive of all the financial statements because it follows
the cash made by the business in three main ways—through operations, investment, and
financing. The sum of these three segments is called net cash flow.
These three different sections of the cash flow statement can help investors determine the value
of a company's stock or the company as a whole.

Cash Flows from Operations

This is the first section of the cash flow statement and includes transactions from all operational
business activities. The cash flows from operations section begins with net income, then
reconciles all noncash items to cash items involving operational activities. So, in other words,
it is the company's net income, but in a cash version. Companies are able to generate sufficient
positive cash flow for operational growth. If there is not enough generated, they may need to
secure financing for external growth in order to expand.

Cash Flows from Investing

This is the second section of the cash flow statement, and is the result of investment gains and
losses. This section also includes cash spent on property, plant, and equipment. This section is
where analysts look to find changes in capital expenditures. While positive cash flows within
this section can be considered good, investors would prefer companies that generate cashflow
from business operations—not through investing and financing activities. Companies can
generate cash flow within this section by selling equipment or property.

Cash Flows from Financing

Cash flow from financing is the last section of the cash flow statement. The section provides
an overview of cash used in business financing. It measures cash flow between a company and
its owners and its creditors, and its source is normally from debt or equity. When the cash flow
from financing is a positive number, it means there is more money coming into the company
than flowing out. When the number is negative, it may mean the company is paying off debt,
or is making dividend payments and/ or stock buybacks.

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RESEARCH METHODOLOGY

Research can be defined to be search for knowledge or any systematic investigation to establish
facts. The primary purpose for applied research is discovering interpreting and the development
of methods and systems for the advancements of the human knowledge on a wide array of
scientific matters of our world and the universe.

Research Methodology can be defined as: The analysis of the principles of methods, rules, and
postulates employed by a discipline; the systematic study of methods that are, can be, or have
been applied within a discipline or a particular procedure or set of procedures.

PURPOSE OF THE STUDY

As a purpose of the study the project aims to analyse the Financial Statements of POLYPLEX.
Also, the project aims to cater to the various Accounting Ratios of POLPLEX.

OBJECTIVES OF THE STUDY

 To study the organization structure, history and functioning of POLYPLEX.

 To understand the concept of Financial Position and Accounting Ratios.

 To find out the Financial Position and Accounting Ratios of POLYPLEX.

 To suggest different ways to strengthen the Financial Position of POLYPLEX.

 To identify key strength, weakness, opportunity and threat for POLYPLEX.

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RESEARCH DESIGN

This Exploratory research has been conducted through secondary data. The data will be
quantitative.
Secondary data consists of data which have already been collected by some other persons and
have passed through the statistical machines at least once. Secondary data include data which
have already been collected by some individuals or institutions.

The data is collected from various books, journals, web links, and manual of books and annual
reports of the company.

SOURCES OF DATA COLLECTION

 Data Collection Method: The data has been collected through various websites, book,
published journals, reports, newspapers and articles.

 The data is verified from different sources and then analysed.

LIMITATIONS OF STUDY

 Time period for the project is two months and it’s too short for analyzing the financial
health of the company.

 Financial Information of the company is only provided for a period of three years
which does not show the clear picture of the company.

 In company, financial information is internal information which is not shown to any

outsider. So this is also a barrier.
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CHAPTER 2 –
COMPANY PROFILE

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About the organisation

Members of the Sharp & Tannan Group referred to are firms registered to practise as
Chartered Accountants under the Rules and Regulations framed by the Institute of
Chartered Accountants of India.
The Sharp & Tannan Group has very wide experience in Manufacturing, Services and
Banking sector. It has the ability to handle assignments across large geographical areas
including those of cross-border nature.

Founders
Founders of Sharp and Tannan are Late Mr. C.R. Sharp and Late Mr. B.R. Tannan. Mr. Sharp
floated the firm in 1932 in Mumbai. In 1934, Mr. Tannan joined the firm as a Partner and
Sharp & Tannan came into existence.
Mr. Sharp was a Member of the Institute of Chartered Accountants of Scotland, having being
admitted to Membership in September 1922. Mr. Tannan was a Member of the Institute of
Chartered Accountants of England & Wales.
Mr. Sharp continued to lead the firm till April 1961, when he returned to his home in
Aberdeen, Scotland. He however continued to be a Partner till he retired with effect from 1st
April 1974.
Mr. Tannan took over the reins as the Managing Partner in April 1961 till 1st April 1969,
when he also curtailed his activities. He continued with the firm as a Senior Partner till his
retirement with effect from 1st April 1974.
Both, Mr. Sharp and Mr. Tannan, were Directors in several Companies including Indian
subsidiaries of several multi-national entities.
Both the founding Partners expired within a few months from each other in 1977.

Evolution of the Group

As mentioned earlier, the firm was established in Mumbai by Mr. C.R. Sharp in 1932. Mr.
B.R. Tannan joined as a Partner in 1934, when the name of the firm was styled “Sharp &
Tannan”.
Mr. G.T. Khare joined the firm as the third Partner in 1950.

19
In 1961, when Mr. Sharp decided to curtail his activities and return to his home in
Scotland, two more Partners were inducted, Mr. H.K. Bilpodiwala and Mr. P.M. Phadke.
In 1968, a separate firm with the name of Sharp & Tannan, Delhi, was established in New
Delhi.
On 1st April 1969, Mr. Tannan also announced that he was curtailing his activities in the
firm and Mr. G.T. Khare was appointed as the Managing Partner.
Both the founding Partners of the firm retired with effect from 1st April 1974. Mr. G.T.
Khare also stepped down as Managing Partner and appointed Mr. H.K. Bilpodiwala as the
new Managing Partner. Mr. Khare continued as a Senior Partner till he also curtailed his
activities in 1978.
In 1976, a separate entity was formed called Sharp & Tannan Associates, primarily to
focus on internal audits and management services.
The Chennai (then Madras) practise was established in 1980. Thereafter, in 1988, the Pune
office was opened as a branch, followed by the Bangalore branch in 1990.
The Baroda, Goa, Hyderabad and Ahmedabad offices were set up in 1994, 2000, 2003
and 2016 respectively.
Mr. H.K. Bilpodiwala stepped down as the Managing Partner in 2006 and Mr. S.T. Kunte
was appointed as the new Managing Partner.
The Group presently has all-India staff strength of around 475, headed by 21 Partners and
5 Directors.

Code of Conduct
All the partners and qualified Chartered Accountants in employment are bound by the
Code of conduct and Ethical Practices as specified by the Chartered Accountants Act, 1949
and the guidelines and rules issued by the Institute of Chartered Accountants of India, from
time to time.
The Sharp & Tannan Group also takes separate undertakings from every staff on
maintaining client confidentiality and prevention of insider trading.

Quality Control
The Sharp & Tannan Group is subjected to quality check by the Institute of Chartered
Accountants of India (ICAI) in the form of Peer Review undertaken as per its guidelines
issued from time to time.
These guidelines require the Member firms to comply with:

 Technical standards issued by ICAI.

 Ensure quality of reporting.
 Have adequate office systems and procedures in place.
 Ensure adequate training programs for staff.

Only those Firms which have been cleared by ICAI following its Peer review are permitted to
undertake external audits (statutory audits) of listed companies in India.

20
Services
The Sharp & Tannan Group has very wide experience in Manufacturing, Services and
Banking sector. It has the ability to handle assignments across large geographical areas
including those of cross-border nature.
Core competencies are in the areas of External Audits, Internal Audits, Tax Business
Advisory services, Enterprise Risk Management, Preparation of Compliance / Internal
Control / Accounting Manuals, Financial Due Diligence and Business Valuation.
Other activities of the Group include assistance in preparation of Business Plans, Special
Accounting services, preparing Fixed Asset registers, Executive Placement and Recruitment .
 External Audit (Statutory)
 Internal Audit
 Tax Business Advisory services
 Merger & Acquisition Advisory Services
 Enterprise Risk Management
 Compliance / Internal Control / Accounting Manuals
 Financial Due Diligence
 Business and Asset Valuation
 Business Plan preparation
 Special Accounting services
 Fixed Asset Register Related services
 Executive Placement and Recruitment

1. External(statutory) Audit Service

All companies registered in India are required to get their Financial Statements audited by
Chartered Accountants under the Indian Companies Act. These audits are undertaken in
accordance with the Indian Accounting Standards and guidelines issued from time to time by
the Institute of Chartered Accountants of India.
Additionally, Companies which have a turnover over a specified amount are also required to
have their records audited by Chartered Accountants under the Indian Income Tax Act.
They present auditors to several listed companies, including some of the largest Corporations
in India. Some subsidiaries of Multi-national Corporations are also audited by them.
They are also registered with the Reserve Bank of India to undertake audit of Banks in India.
They have been auditors to several Indian and Multinational Banks on rotation (as per
Reserve Bank of India rules) during the past 6 decades.
2. Internal Audit Services
They have been in the forefront in offering services as outsourced Internal Audits. A separate
entity, Sharp & Tannan Associates was established in 1976 primarily to offer Outsourced
Internal Audit services to clients.
They are a firm proponent of risk based auditing. They stress on a value added approach
focused on Business Processes and in building up a strong relationship with Audit
Committees, by communicating efficiently and effectively. Their Outsourced Internal Audit
client list includes several Multinational Clients.

21
 3. Tax Business Advisory services

They have been offering conceptual solutions for direct tax issues for over 50 years now.
Some of their tax business advisory services include:
 Advise on the Entry Vehicle into India considering the Tax and Regulatory
Environment;
 Tax Research, Planning and Structuring
 Representation before Indian Income Tax Authorities;
 Expert advice on Double Taxation Avoidance Treaties
 Transfer Pricing

4. Merger & Acquisition Advisory Services

They have been offering M & A services for more than a decade and specialize in Middle
Market Transactions typically ranging between $50 Million to $ 250 Million; though at times
the advisory at global level has advised on the deals as large as $ 2 Billion too.
They are associated with one of the large network of M & A Advisory Worldwide having
offices in more than 40 countries. Their partners/ associates at these offices have industry
expert knowledge and many of them have held very senior positions in Industry, Banking and
Management Consulting.
Their advisory group at international level has highest success rate on mid-market
transactions due to superb international contact network and strong industry knowledge,
personalized services at senior levels, focus on strategic fit and industry dynamics resulting in
identification of right buyer / seller in timely and discreet manner.
Their transaction process usually takes between 4 to 6 months depending on the size of the
company, the industry sector and many more factors.

5. Enterprise Risk Management

In India, it has become mandatory for listed companies to have a risk management
framework in place.
Their philosophy has been to advise clients to focus on the High Priority Risks or Top Risks,
rather than populate and build up an inventory of risks across all functions / processes. Focus
on High / Top Risks ensures that the Top Management can devote time to focus and monitor
these risks, without infringing on their pursuit of business objectives.

6. Compliance / Internal Control / Accounting Manuals

Multinational Banks have approached us from time to time to help prepare India Compliance
manuals to meet with the regulatory requirements of the Reserve Bank of India. Credit
control procedures have also been documented by us for some Banks.
For manufacturing and service companies, their approach has been to frame and document
internal control procedures and have this interwoven into business processes.
7. Financial Due Diligence

22
Their focus in undertaking Financial Due Diligence assignments have been to aid valuations
and also give credible support to enable the client to form an opinion for this transaction.
Over the past year years, a large portion of such assignments have been from the private
equity space.

8. Business and Asset Valuation

They have been undertaking business valuation assignments across various industry sectors
such as Chemicals, Metals, Pharmaceutical, Maritime Port, Textile etc.
They have also been actively involved in portfolio valuation for Asset Reconstruction
Companies.

9. Business Plan preparation

Companies seeking to approach Private Equity funds often express the need to have a
professional business plan prepared for them, incorporating suitable sanity checks and
robust financial modeling. They have been rendering this service not only for Indian
projects, but also overseas projects being undertaken by Indian companies.

10. Special Accounting services

Foreign companies setting up operations in India often begin with skeletal staff till
their business matures. Companies need support for accounting and payroll during
this period. They provide this service and also help the client develop its own team so
that these activities are seamlessly handed over to in-house team whenever the
business is ready.

11. Fixed Asset Register Related services

In India, it is necessary for Companies to maintain Fixed Asset Register’s containing
certain mandatory information. Often, Companies which are multi-location and
working on legacy work platforms have the need to incorporate this Register into the
new ERP platform to which they migrate. The challenge then is to ensure
reconciliation with the Books of Accounts, supported by tagging of all Fixed Assets
and its proper recording.

12. Executive Placement and Recruitment

Experiences of working closely with organisations have enabled us to understand the work
culture and ethic of each individual client. When it comes to identifying and hiring suitable
candidates, this knowledge proves crucial.
They have been recruiting and placing candidates with clients for over 25 years now.

Sectors
Each Partner / Director of Sharp & Tannan individually specializes in one or more industries.

23
With over 475 Man-years of Professional experience amongst the existing Partners / Director
to back up, our Clients have benefited from our domain knowledge in various industrial
sectors.
Some of the industries where we possess in-depth knowledge are:
 Automobiles – Tractors
 Breweries & Distilleries
 Cement
 Chambers of Commerce
 Chemicals
 Engineering - Civil Engineering & Construction, Domestic Appliances, EPC (
Engineering, Procurement & Construction), Electricals & Switchgear, Diesel Engines
and Gensets, Welding Electrodes & Accessories, Heavy Engineering, Textile
Machinery, Glass
 Entertainment
 Logistics and Shipping
 Mining
 Oil and Gas
 Power
 Pharmaceuticals
 Refineries & Petrochemicals
 Real Estate
 Retail
 Services - Advertising, Information Technology, Insurance, Travel & Tourism
 Textiles

24
 SWOT Analysis
Below are the Strengths, Weaknesses, Opportunities and Threats (SWOT) Analysis of Sharp
and Tannan Chartered Company:-

Strengths
1. Highly skilled workforce.
2. Strong dealer community
3. Big market share
4. Strong financial position
5. Strong management team

Weaknesses
1. High staff attrition rate
2. Escalating costs
3. Too many rush jobs under tight schedules
4. Quality compliance problems

Opportunities
1. Tighter regulations, more compliance
2. Available technological inspirations
3. Available government support from parental restrain
4. Larger customer size
5. Favourable government policies

Threats
1. Many new regulatory requirements
2. Intensive competition, fee under-cutting
3. Talent acquisition and retention
4. Political instability and economic downturn
5. Rapid changes in technology

25
CHAPTER 3- DATA
ANALYSIS AND
INTERPRETATION

26
 PROFIT AND LOSS ACCOUNT OF POLYPLEX

Mar-19 Mar-18 Mar-17

(Rs. In Crore)
INCOME
Revenue From Operations [Gross] 1,327.15 1,086.77 1,104.96
Less: Excise/Sevice Tax/Other Levies 0 15.7 54.91
Revenue From Operations [Net] 1,327.15 1,071.07 1,050.04
Other Operating Revenues 20.51 17.61 1.99
Total Operating Revenues 1,347.66 1,088.67 1,052.03
Other Income 191.91 63.98 17.47
Total Revenue 1,539.56 1,152.66 1,069.50
EXPENSES
Cost Of Materials Consumed 951.63 776.29 736.99
Operating And Direct Expenses 0 0 79.37
Changes In Inventories Of FG,WIP And Stock-In
Trade -20.97 -10.35 15.29
Employee Benefit Expenses 82.1 69.94 48.02
Finance Costs 4.85 15.84 16.2
Depreciation And Amortisation Expenses 45.07 47.51 76.89
Other Expenses 189.76 174.08 73.89
Total Expenses 1,252.44 1,073.31 1,046.66

Profit/Loss Before Exceptional, ExtraOrdinary 287.13 79.35 22.84

Items And Tax
Exceptional Items 0 0 0
Profit/Loss Before Tax 287.13 79.35 22.84
Tax Expenses-Continued Operations
Current Tax 60.35 19.04 4.79
Less: MAT Credit Entitlement 0 0 3.82
Deferred Tax -1.31 1.43 1.93
Tax For Earlier Years 0 -0.01 0
Total Tax Expenses 59.04 20.45 2.9
Profit/Loss After Tax And Before 228.08 58.9 19.94
ExtraOrdinary Items
Profit/Loss From Continuing Operations 228.08 58.9 19.94
Profit/Loss For The Period 228.08 58.9 19.94

27
INTERPRETATION:

The total revenue of the company is increasing year after year.

 Percentage increase in Total Revenue for year ending March 2018 =

(83.16/1069.50)*100
= 7.77%

 Percentage increase in Total Revenue for year ending March 2019 =

(386.9/1152.66)*100
= 33.56%
 Percentage increase in Total Revenue for the last two years = (470.06/1069.50)*100
= 43.95%
This indicates a constant growth in the operations of the company over the last three years. The
company is expanding its operations throughout the country.

TOTAL REVENUE
1,800.00

1,600.00

1,400.00

1,200.00

1,000.00

800.00
2018-19 2017-18 2016-17

28
INTERPRETATION:

 Percentage increase in Total Expenses for year ending March 2018 =

(26.65/1046.66)*100
= 2.54%

 Percentage increase in Total Expenses for year ending March 2019 =

(179.13/1073.31)*100
= 16.68%
 Percentage increase in Total Expenses for the last two years = (205.78/1046.66)*100
= 19.66%

Increase in Expenses is in direct proportion with the increase in Revenue of the company.
Increase in Expenses is less than the Increase in Revenue. This is due to the cost control
mechanism that is applied in the organization.

29
 INTERPRETATION:

 Percentage increase in Net Profit for year ending March 2018 = (38.96/19.94)*100
= 195.38%
 Percentage increase in Net Profit for year ending March 2019 = (169.18/58.9)*100
= 287.23%
 Percentage increase in Net Profit for the last two years = (/19.94)*100
= 1043.83%

The company has a net increase of 10 times of Net Profit for the last two years.

NET PROFIT
250

200

150

100

50

0
2018-19 2017-18 2016-17

30
 BALANCE SHEET OF POLYPLEX

Mar-19 Mar-18 Mar-17

EQUITIES AND LIABILITIES (Rs. In Crore)

SHAREHOLDER'S FUNDS

Equity Share Capital 32.56 32.56 32.56

Total Share Capital 32.56 32.56 32.56
Reserves and Surplus 523.07 438.77 408.41

Total Reserves and Surplus 523.07 438.77 408.41

Total Shareholders Funds 555.63 471.33 440.97

NON-CURRENT LIABILITIES
Long Term Borrowings 117.07 46.01 34.1

Deferred Tax Liabilities [Net] 0 0 0

Other Long Term Liabilities 0.83 1.61 1.53

Long Term Provisions 2.93 2.12 2.24

Total Non-Current Liabilities 120.83 49.74 37.87

CURRENT LIABILITIES
Short Term Borrowings 70.79 133.91 117.97

Trade Payables 20.98 15.92 9.74

Other Current Liabilities 72.64 77.37 79.45

Short Term Provisions 2.15 1.59 1.33
Total Current Liabilities 166.56 228.8 208.49

Total Capital And Liabilities 843.03 749.87 687.33

ASSETS
NON-CURRENT ASSETS
Tangible Assets 327.01 316.2 350.16
Intangible Assets 0.01 0.03 0.11

Capital Work-In-Progress 3.67 2.2 0.1

Other Assets 3.04 3.11 3.17

31
Fixed Assets 333.73 321.55 353.55
Non-Current Investments 46.99 46.99 46.99

Deferred Tax Assets [Net] 19.74 18.51 25.08

Long Term Loans And Advances 9.23 8.31 8.31

Other Non-Current Assets 15.39 16.91 4.44

Total Non-Current Assets 425.07 412.27 438.37

CURRENT ASSETS
Current Investments 8.01 0 0

Inventories 164.34 136.95 119.81

Trade Receivables 172.48 114.85 82.36

Cash And Cash Equivalents 4.94 4.44 2.84

Short Term Loans And Advances 15.31 14.72 14.75

OtherCurrentAssets 52.88 66.64 29.2

Total Current Assets 417.96 337.6 248.96

Total Assets 843.03 749.87 687.33

32
 INTERPRETATION:

Equity Share Capital and Reserves & Surplus are the two components of Shareholder’s Fund.
Over the past three years there has been a significant increase in the Reserves of the company.
New Equity shares have not been issued by the company.
The constant increase in the Shareholder’s Fund is due to increase in the amount of reserves
and provisions.

SHAREHOLDER FUNDS

600

500

400

300

200

100

2018-19 2017-18 2016-17

33
INTERPRETATION:

Noncurrent liabilities include debentures, long-term loans, bonds payable, deferred tax
liabilities, long-term lease obligations, and pension benefit obligations.
Non-Current Liabilities have almost tripled in the year ending 2019 as compared to year ending
2017.

34
 INTERPRETATION:

Current liabilities are a company's short-term financial obligations that are due within one year
or within a normal operating cycle.
Accounts payable is the largest current liability accounts on a company's balance sheet which
has decreased as compared to last year. The company can increase its short term provision
based on the requirements.

CURRENT LIABILITIES

250

200

150

100

50

2018-19 2017-18 2016-17

35
 INTERPRETATION:

Company’s total non-current assets first decreased and then have increased in the last years. Long
term loans and advances have increased at a constant rate during the last three years Obtaining a
long-term loan provides a business with working capital that it can use to purchase assets, inventory
or equipment.

Current assets are assets which can easily be converted into cash or used to pay-off current liabilities
within one year.

There has been a significant increase of approx. 2 times in the current assets in past three years. There
has been an increase in

NON CURRENT ASSET

445
440

435

430

425

420

415

410

405

2018-19 2017-18 2016-17

36
 FINANCIAL RATIO OF POLYPLEX LIMITED

1. CURRENT RATIO

YEAR 2018-19 2017-18 2016-17

RATIO 2.51 1.48 1.19

INTERPRETATION:

The current ratio for the year 2016-17, 2017-18 & 2018-19 is 1.19, 1.48 & 2.51 respectively, compared to
standard ratio 2:1 this ratio is more higher which shows high short term liquidity efficiency at the same time
holding more than sufficient current assets mean efficient use of resources.

Company’s Current Ratio is increasing continuously in the last three years.

RATIO
3
2.5

1.5

0.5

2018-19 2017-18 2016-17

37
 2. QUICK RATIO

YEAR 2018-19 2017-18 2016-17

RATIO 1.52 0.88 0.62

INTERPRETATION:

The quick ratio for the year 2016-17, 2017-18 & 2018-19 is 0.62, 0.88 & 1.52 respectively, compared to
standard ratio 1:1. This ratio represents a satisfactory current financial situation, but it does not imply a sound
financial position.
Thus a company with a high value of quick ratio can suffer from shortage of fund if it has slow paying,
doubtful and long duration outstanding debtors. On other hand, a company with a low value of quick ratio
may really be operating with prosperity and paying its obligations in time if it has been turning over its
inventories efficiently.

There is an increase in Quick ratio for the last two years. So company is having sufficient Quick assets or
current liabilities.

RATIO
1.6
1.4

1.2

0.8

0.6

0.4

2018-19 2017-18 2016-17

38
 3. GROSS PROFIT RATIO

YEAR 2018-19 2017-18 2016-17

RATIO 14.37 8.78 11.75

INTERPRETATION:
The gross profit ratio for the year 2016-17, 2017-18 & 2018-19 is 11.75, 8.78 &
14.37 respectively. There has been a growth of Gross Profit of the company. This
indicates a continuous improvement. This ratio states that net sales are available to
pay off operating expenses including selling and distribution, administration,
financing, and taxes.

The gross profit should be at least equal to all the operating expenses for a business
to continue. Otherwise, there would be a net loss and a loss-making business model
cannot survive long in the market.

RATIO
16
14

12

10

2018-19 2017-18 2016-17

39
 4. NET PROFIT RATIO

YEAR 2018-19 2017-18 2016-17

RATIO 12.77 7.95 11.28

INTERPRETATION:

The net profit ratio for the year 2016-17, 2017-18 & 2018-19 is 11.28, 7.95 & 12.77 respectively.
The net profit increased in 2018, and had a rise of about 5% in the last year. This shows that higher
the net profit margin more effective the firm is in converting revenue into actual profit.

RATIO
14

12

10

2018-19 2017-18 2016-17

40
 5. OPERATING PROFIT RATIO

YEAR 2018-19 2017-18 2016-17

RATIO 25.01 12.92 12.8

INTERPRETATION:

The Gross profit ratio for the year 2016-17, 2017-18 & 2018-19 is 12.8, 12.92 & 25.01
respectively. A higher operating profit margin is desirable. There has been an increase of 95%
in Operating Profit Ratio in the last two years.

This shows that a high operating profit margin indicates that company has greater potential to
derive profits and more cushion against any increase in competition or costs.

RATIO
30

25

20

15

10

0
2018-19 2017-18 2016-17

41
 6. RETURN ON CAPITAL EMPLOYED

YEAR 2018-19 2017-18 2016-17

RATIO 16.08 9.09 10.16

INTERPRETATION:

The Return on Capital Employed for the year 2016-17, 2017-18 & 2018-19 is 10.16, 9.09
& 16.08 respectively. An ROCE of 16.08% in 2019 means that for every Rupee invested in
capital, the company generated 16.08 paisa in operating income. A higher ROCE is always
more favorable.

This ratio measures the efficiency with which the investment made by shareholders and
creditors is used in the business.

RATIO
18
16

14

12

10

2018-19 2017-18 2016-17

42
 7. EARNING PER SHARE

YEAR 2018-19 2017-18 2016-17

RATIO 103.2 49.85 72.44

INTERPRETATION:

The Earning per Share for the year 2016-17, 2017-18 & 2018-19 is 72.44, 48.85 & 103.2
respectively. A higher EPS is the sign of higher earnings, strong financial position and,
therefore, a reliable company to invest money.

A consistent improvement in the EPS figure year after year is the indication of continuous
improvement in the earning power of the company.

RATIO
120

100

80

60

40

20

0
2018-19 2017-18 2016-17

43
 8. INVENTORY TURNOVER RATIO

YEAR 2018-19 2017-18 2016-17

RATIO 6.88 6.31 7.35

INTERPRETATION:
The Inventory turnover ratio for the year 2016-17, 2017-18 & 2018-19 is 7.35, 6.31 & 6.88
respectively. The ideal Inventory Turnover Ratio is 4:6. After decreasing the ITR in 2017,
the company is not able to perform on its ratio in the last two year.

A low turnover ratio implies poor sales and therefore excess inventory. A high ratio shows
good sales. High inventory levels are unhealthy because they represent an investment with a
rate of return of zero.

RATIO
7.6
7.4

7.2

6.8

6.6

6.4

6.2

2018-19 2017-18 2016-17

44
 9. DEBTORS TURNOVER RATIO

YEAR 2018-19 2017-18

RATIO 45.96 51.79

INTERPRETATION:

The Debtors Turnover ratio for the year 2017-18 & 2018-19 is 51.79, 45.96 respectively. Debtors took

approximately 45 days to pay their debts in 2019 which has not improved. A lower ratio may mean that

either the company is less efficient in collecting the creditor, has a lenient credit policy, or has a poor

quality of debtors.

RATIO
54
52

50

48

46

44

42

2018-19 2017-18

45
 10. CREDITORS TURNOVER RATIO

YEAR 2018-19 2017-18

RATIO 22.85 29.93

INTERPRETATION:

The Creditors Turnover ratio for the year 2017-18 & 2018-19 is 51.79, 45.96
respectively. Creditors Turnover Ratio has been decreased over the past two years i.e.,
creditors take approximately 23 days to pay to the company.

A low ratio indicates slow payment to suppliers for purchases on credit. This may be
due to favorable credit terms, or it may signal cash flow problems and hence, a
worsening financial condition.

RATIO
35

30

25

20
2018-19 2017-18

46
 11. DEBT EQUITY RATIO

YEAR 2018-19 2017-18 2016-17

RATIO 0.24 0.29 0.29

INTERPRETATION:

The Inventory turnover ratio for the year 2016-17, 2017-18 & 2018-19 is 0.29, 0.29 & 0.24
respectively. A good debt to equity ratio is around 1 to 1.5. The company should maintain a
proper balance between Debt and Equity.

A higher debt-equity ratio indicates a levered firm, which is quite preferable for a company
that is stable with significant cash flow generation, but not preferable when a company is in
decline. Conversely, a lower ratio indicates a firm less levered and closer to being fully
equity financed.

47
 CASH FLOW STATEMENT OF POLYPLEX LIMITED

Mar-19 Mar-18 Mar-17

Net Profit/Loss Before Extraordinary Items 287.13 79.35 55.4

AndTax
Net CashFlow From Operating Activities 33.14 12.1 16.31
Net Cash Used In Investing Activities 110.73 21.85 -24.78

Net Cash Used From Financing Activities -144.35 -32.58 5.94

Net Inc/Dec In Cash And Cash Equivalents -0.48 1.37 -2.53

Cash And Cash Equivalents Begin of Year 2.9 1.54 4.07

Cash And Cash Equivalents End Of Year 2.43 2.9 1.54

INTERPRETATION:
Net Cash Flow from Operating Activities is calculated by taking a company’s:-
1. Net income
2. Adjusting for non-cash items, and
3. Accounting for changes in working capital.

The company had a positive cash flow from operating activities in the last year. This
means that the amount of income is more than the expenses.

OPERATING
35

30

25

20

2018- 2017- 2016-

48
 INTEPRETATION:
Net Cash Flow from Investing Activities is calculated by taking a company’s:
1. Sale/Purchase of Long Term Assets,
2. Sale/Purchase of Other Business and
3. Sale/Purchase of Marketable Securities.
The company is not investing in various long term and short term projects, due to this Net Cash
Flow from Investing Activities is positive in 2019.

INVESTING
120

100

80

2018-19 2017-18 2016-17

-20

INTEPRETATION:
Net Cash Flow from Financing Activities is calculated by taking:-
1. Issue/Repurchase of Equity,
2. Issue/Repurchase of Debt and
3. Dividend Payments and Other Items.

INVESTMENT
20

2018-19 2017-18 2016-17

-20

-40

-60

In the last two years, the company has cleared its Short Term and Long Term Loans and
Advances. The company has also taken Debt from external sources.

49
CHAPTER 4 –
CONCLUSION AND
SUGGESTIONS

50
FINDINGS

 Increase in sales volume causing a decrease in the proportion of both production and
non-production costs due to economies of scale.

 There is a constant growth in the operations of the company over the last three years.

 Profit of the company has approximately doubled in the last two years.

 There is an increase in debt of the company.

 There has been a continuous growth of Gross Profit of the company.

 There has been an increase of 95% in Operating Profit Ratio in the last two years.

 Company is distributing dividends to its shareholders.

 The company had a positive cash flow from operating activities in the last year.

51
RECOMMENDATIONS

 Expenses should be reduced. It will increase Return on assets

 The company should focus on increasing Revenue

 Re-evaluating your goals can help you spot intangible benefits to pursue that will
eventually help increase your profits

52
 CONCLUSION

 Expenses should be reduced.

 Increase return on assets

 The company should focus on increasing revenue

 Sell the capital assets which are not generating revenue

 Company should focus on increasing sales

53
BIBLIOGRAPHY

Books:

Interpreting and Analyzing Financial Statement by Karen P Schoenebeck POLYPLEX

LIMITED Annual Report

Websites:

 https://www.polyplex.com/

 https://www.moneycontrol.com/india/stockpricequote/packaging/polyplexcorporation
/PC08

 https://www.indiainfoline.com/company/polyplex-corporation-ltd/summary/1056

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