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_____________________________________________________________________________________

Summer Internship Project

On

Financial Analysis Of T.T. Limited

SUMMER TRAINING REPORT SUBMITTED TOWARDS THE PARTIAL FULFILLMENT

OF GRADUATE DEGREE IN BACHELOR OF BUSINESS ADMINISTRATION

Sorabh Bothra

Enrolment No. : A

Submitted by-:

Sorabh Bothra

Enrolment No. : A

Submitted to-:

Ms. Abhilasha Singh

Asst. Prof. , A.S.B.

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Table of Content

Sr. No. Topic Page No.

1Acknowledgement 2

2 Executive Summary 3

3Objective of Study 4

4 Research Methodology5

5 Introduction

About T.T.Limited

SWOT Analysis

6

6

14

6 Financial analysis16

7Financial analysis T.T.Limited 36

8 Work done & experience 48

9 Conclusion 54

10 Recommendations 55

11 Bibliography 57

12 Annexure

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Acknowledgement

The internship report titled Financial Analysis Of T.T. Limited has been conducted by me during 7th

May 20126th July 2012 at T.T. Limited. I am also thankful to my faculty member for their supportand help for completion of the project.

I would like to express our deep and sincere gratitude to T.T. Limited for providing me this exciting

opportunity to be one of them and giving me thorough guidance and opportunities. I would like to

extend my appreciation to Mr. Sunil Mahnot, V.P. of Finance Department of T.T. Limited guiding me

through my internship.

I owe enormous intellectual debt towards my guide Ms. Abhilasha Singh, for guiding and helping me in

each and every stage of the Internship Study. She has helped me learn about the process and giving me

valuable insight into the process of research methodology. I would like to further thank Amity School of

Business for providing students with such opportunity to experience the organization culture and

experience and for their structuring of this course for the benefits of the students.

I am obliged to all my family and friends for their unlimited support. My increased spectrum of

knowledge in this field is the result of their constant support that has helped me to absorb relevant and

high quality information to complete the project

Last but not the least, I feel indebted to all customers and employees of T.T. Limited who have provided

help directly or indirectly in successful completion of this study. Thank you all for your time and

guidance in helping me achieve my goal of completing this project to the best of my ability.

Date: 21th July 12 En. Roll No. A

Sorabh Bothra

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Executive Summary

This project seeks to understand the accounting and financial work and processes in a company. The

purpose of accounting for a business is to have a record of the receipts and expenditures of its daily

activities. Also, accounting and finance makes it available for the business owners to assess and analyze

the business's performance. This will help the owner to decide what improvements they need to make,

or what practices to keep doing in order to keep the company at its successful place. In order to file for

tax returns, apply for a loan to expand your business, or for certain legal purposes, accounting is

necessary. Accounting for companies is also important so we are able to assess financial performance.

Financial analysis of a company

From this study I have learnt to issue digitally signed cheques and make purchase requisitions and

manage relationships with suppliers and make entries and manage funds based accounts.

This project provides insight about the technical aspect of accounting in companies and financial

reporting.

This project reveals operations of accountant. The project has been conducted through both primary and

secondary data.

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Objective of Study

Primary Objective

To analyze the financial statements of a company. To gain knowledge about how accounting processes goes on in company

Secondary Objective

To learn professional experience as an employee in a company

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Research Methodology

RESEARCH DESIGN

The Research Design adopted in the study was Comparative research because the study aims at making

comparisons and then analyze the advantages and disadvantages the company have vis--vis othercompanies in the same industry. Comparative research is a research methodology in the social

sciences that aims to make comparisons across different companies or cultures.

PRIMARY DATA- was collected through:

Observations,

Personal Interview,

Telephonic Interview.

SECONDARY DATA-

Books,

Web sources,

Journals,

Newspapers.

Data analysis method: Observation and Data Analysis.

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Chapter 1- Introduction

Indian Textile Industry

The Indian Textile Industry has an overwhelming presence in the economic life of the country. Apart

from providing one of the basic necessities of life, the textile industry also plays a pivotal role through

its contribution to industrial output, employment generation and the export earnings of the country.

Currently, it contributes about 14 percent to industrial production, 4 percent to the GDP, and 16 percent

to the countrys export earnings. It provides direct employment to about 35 million people. The Textile

sector is the second largest provider of employment after agriculture. Thus, the growth and all round

development of this industry has a direct bearing on the improvement of the economy of the nation.

The Indian textile industry is extremely varied, with the hand-spun and hand woven sector at one end of

the spectrum, and the capital intensive, sophisticated mill sector at the other. The close linkage of the

Industry to agriculture and the ancient culture and traditions of the country makes the Indian textile

sector unique in comparison with the textile industry of any other country. This also provides the

industry with the capacity to produce a variety of products suitable to different market segments, both

within and outside the country.

Section 1: About T.T.Limited

T. T. Limited is one of the oldest and completely integrated knitwear and textiles Company in India. It

has been for over 58 years in the industry and covers the complete chain from raw cotton to garments

and is selling all over India and across the globe. It has been ably guided by its founder, Mr. Rikhab C.

Jain who is a well-known figure in the industry and has been infused with fresh and top class

professional blood to provide a proper mix of talent at the management level.

Flagship company of the 65 years old T.T. Group

Covers the entire spectrum of Textile sector: Cotton, Yarn, Fabric, and Garments &Accessories.

A vertically integrated concern and self contained textile producer, garment manufacturer.ISO 9001 Certified and Govt. Registered Trading House.

Leadership in the domestic market: The company has 25 franchise production units at eightdifferent locations, working exclusively for T.T.

Dealer network extends to 500 Wholesalers throughout India.

The first Indian knitwear company to go public.

Offices in New Delhi, Kolkata, Tirupur and Gondal.

Overseas representative in Pakistan and Bangladesh.

Manufacturing facilities at Gajroula (UP), Avinashi (Tamil Nadu), Tirupur (Tamil Nadu),

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Kolkata (West Bengal), Gondal (Gujarat) and Rajula(Gujrat).

Awarded Excellence Award in 2010 by Indian Economic Service.

T.T. Brand has been awarded with the MASTER BRAND status by CMO COUNCIL.

Mission & Vision

TT Group's philosophy is based on a firm belief in innovation, quality and service. The head of the

group, Dr. Rikhab C. Jain, has planned and driven the growth of TT Group into a remarkable and

highly successful concern. Mr. Jain's own visionary ideas have created a large scale yarn

manufacturing enterprise, ranking among the top in India. After setting a new bench makers in the

garments industry, the group ventured into Mega projects in cotton yarn and raw cotton.

A highly - original and sophisticated approach to ring-spun yarn production and a commitment to

invest in latest technology makes TT one of India's most innovative textile company. People havealways been the top priority in Mr. Jain's vision. His belief in careful personnel selection and

training has been an unshakeable foundation of everything his company has achieved.

In one word Business Philosophy of TT Group is FAIR BUSINESS, Fair to all: Suppliers, Buyers,

Dealers, Workers, Shareholders, Investors, Community and the Society at large.

Our Companys policy is not to speculate, not to gamble, not to undertake high risk deals. Slow but

steady growth is our motto. Our Company does not interfere with free play of share & securities

market.

T.T. is a "Only cotton" Company.

T.T. uses worlds best fibre yet known to humanity: Cotton.

T.T. Partners Revolution in the White Gold : Cotton.

T.T. knows Cotton globally and delivers fruits of Cotton all over the globe.

T.T. is ready to play world Cup in Cotton.

T.T. focuses on Cotton Textiles because it is Eco friendly, pure, user friendly, Customer friendly.

customers skin loves cotton, nothing but cotton.

T.T. intends to enrich values in Cotton .

Business Philosophy

1. Management's job is not only to manage company profitably but to ensure its steady growth as

well.

2. Quick decision making, speedy implementation, harmonized, teamwork, deliver success.

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3. Our objective is to serve Customers to their satisfaction. We strive to enable them taste new

delights in quality and service. We make them break their own parameters of satisfaction.

4. Investors are owners of the company. Safeguarding their interest is the prime duty of the

management.

5. What is the best today, will not be so tomorrow and will be definitely rejected day after. Hence

continuous quality upgradation can only retain customers.

6. Let none be harmed by our dealings with them. We need not make money out of their

weaknesses. Instead let buyer and seller both mutually help each other make profit.

7. Knowledge input is the best quotient of profit. For future growth, knowledge sourcing and

knowledge management is the first requirement.

8. Ways of the world never remain the same. Keep changing and you never live out.

9. Wisdom attracts money; lack of it may cause loss of money.

10.Indians have now realized their potentials in the global scenario. Every crown there is for them,

but only if they try.

11.India traditionally ranks first in the world of nations in respect of the wealth of knowledge.

Putting this wealth into action will certainly yield rich monetary rewards as well.

12.We do not compete, we try to co-exist. Cooperation is our motto.

13.Big fish eats up small fishes and yet the ocean is always full of small fishes.

14.No one can drink all the waters of seven oceans, so none can monopolise for ever.

15.Purity of means is more important than the ends. Come what may, great souls will never pick up

means not ordained by ethics, morality and one's religion.

16.You earn money, you may loose it anytime, but if you tend to earn goodwill and integrity,

money will never leave you.

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Company Information

T.T. LIMITEDBOARD OF DIRECTORS Dr.Rikhab C. Jain (Chairman)

Shri Sanjay Kumar Jain (Managing

Director) Smt. Jyoti Jain, (Jt. Managing

Director)

Shri V.R. Mehta

Shri Navratan Dugar

Vice President (Finance) &

Company Secretary Shri Sunil Mahnot

Statutory Auditors DOOGAR &ASSOCIATES

Internal Auditors R.S. Modi & Co.

Bankers A.Consortium :ORIENTAL BANK OF COMMERCE

PUNJAB NATIONAL BANK

B.Others:

INDIAN BANK

STATEBANK OF MYSORE

STATEBANK OFHYDERABAD

STATEBANKOF INDIA

REGISTRAR & SHARE BEETAL FINANCIAL AND COMPUTER SERVICES PVT. LTD.

TRANSFER AGENTS 99, MADANGIR, BEHIND LOCAL SHOPPING CENTRE, DELHI - 110 062

Ph.: 011-29961281

E-mail:beetal@beetalfinancial.com

Registered Office T.T. GARMENT PARK, 879, Master Prithvi Nath Marg,

Karol Bagh, New Delhi - 110 005

Phone : +91-11 - 45060708

E-mail :export@tttextiles.com

Web site :www.tttextiles.com

Branches Kolkata,Avinashi, Gajroula, Rajula

Mills/Factories Gajroula (UttarPradesh), Avinashi, Distt. Tirupur(TamilNadu),

Rajula,(PipavavPort, Gujarat)

mailto:beetal@beetalfinancial.commailto:beetal@beetalfinancial.commailto:beetal@beetalfinancial.commailto:export@tttextiles.commailto:export@tttextiles.commailto:export@tttextiles.commailto:export@tttextiles.commailto:export@tttextiles.commailto:export@tttextiles.comhttp://www.tttextiles.com/http://www.tttextiles.com/http://www.tttextiles.com/http://www.tttextiles.com/http://www.tttextiles.com/http://www.tttextiles.com/http://www.tttextiles.com/mailto:export@tttextiles.commailto:beetal@beetalfinancial.com

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Products

T.T. Garments - T. T. brand was started in early 1960s and has over the years become a

household name in innerwear and casual wear in the country.

T.T. Fabric - Only T.T. gives you complete confidence to carry your garments to demanding

international markets. Reason? Unprocessed greige fabrics from T.T. are knitted from the finest

quality yarn hich is supercombed,autoconed and electronically cleared at one of the finest plants

in the country.

T.T. Fabric - Only T.T. gives you complete confidence to carry your garments to demanding

international markets. Reason? Unprocessed greige fabrics from T.T. are knitted from the finest

quality yarn hich is supercombed,autoconed and electronically cleared at one of the finest plants

in the country.

T.T. Cotton - To create value for customer in terms of better product, better quality, betterprice, better delivery.

T.T. Agrocommodity - Poultry & cattle feed (Animal feed), oil seeds, spices, grains, castor oil

& derivatives.

Market Reach

Raw Cotton

India,Bangladesh,Pakistan,China,Korea,Taiwan,Vietnam,Thailand,Indonesia,Malaysia, Turkey

and Hong-Kong.

Yarn

India,Korea,Taiwan,China,HongKong,Malaysia,Indonesia,Singapore,Bangladesh,Mauritius,Egy

pt,Turkey,Israel,Italy,Colombia,Vietnam,Brazil,USA,Peru,Argentina,Slovenia,Spain,Portugal,It

aly,Germany,South Africa,Handuras,Guatemala,Tunsia,Morocco and Tanzania.

Fabric

India, Bangladesh, Europe and USA

Inner & Casual Wear (Garments)

India,USA,Europe,Middle East.

Agri products

Vietnam,Serbia,Malaysia,Bangladesh,Korea,india,Turkey.

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Manufacturing Facilities

Garjoula Spinning Mill,Gangeshwar Spinning Mill,Garjoula Knitting Mill - The Gajroula

Unit sprawled over 14 acres of land located in verdant green environs about 110 kms, from the

national capital Delhi, very thoughtfully planned, the mill area is spacious and permits the

straight line flow of materials.

Tirupathi Spinning Mill - The Tirupur Unit is situated about 66 kms. north of Coimbatore in

south India. The weather is more equitable throughout the year. A dedicated work force of

almost 250 workers in the unit and the best technology at its disposal create a conducive

atmosphere for excellent housekeeping. No doubt that the yarn Quality matches up to the world

standards.

Gopeshwar Ginning Mills - It is situated in Amereli,Gujrat

Garment Factory - It is located at Avinashi,Tamil Nadu

STATEMENT OF COMPANY'S PHILOSOPHY ON CODE OF GOVERNANCE :

Corporate Governance is a set of systems and practices to ensure that the affairs of the Company are be

accountability, transparency, fairness in all its transactions in the widest sense and meet its stakeholders asp

company firmly believes in good Corporate Governance. The Company, while conducting its business has be

i.e. transparency, integrity, honesty, accountability and compliance of laws. The company continuously endeav

ongoing basis.

LISTING ON STOCK EXCHANGES

The Companys shares are listed on The National Stock Exchange of India Ltd (NSE) and Bombay Stock Exchais TTL and BSE is 514142.

The company has a market capitalization of 42.89 crores as on 28 July , 2012

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Competitors of T.T.Limited

The Company expects competition from both existing and new players in the field. The Company faces

competition from Ginni Filaments, Vardhman Textiles, Nagreeka Exports, Nitin Spinners, etc.

Ginni Filaments

Ginni Filaments Limited manufactures, supplies, and exports cotton yarns, processed knit fabrics,

knitted garments, and specialized yarns in India and internationally. The company also offers baby care,

beauty care, and home care products, as well as spunlace non-woven fabrics. Ginni Filaments Limited

was founded in 1990 and is based in Noida, India.

Vardhman Textiles

Vardhman has evolved through history from a small beginning in 1965 into a modern

textile major under the dynamic leadership of its chairman, S.P.Oswal. His vision and

insight has given Vardhman an enviable position in the textile industry. Under his

leadership, Vardhmanis efficientl y using resources to innovate, diversif y, integrate and

build its diverse operations into a dynamic modern enterprise. Vardhman is the second largest

producer of sewing thread in the country.

Nagreeka Exports

Nagreeka Group is a leading Indian manufacturer and exporter of cotton yarn, knitted fabrics. It has a

turnover of over US$60 million. Nagreeka Exports Ltd. (NEL) is a 100% export oriented unit (EOU) andcaters to the requirement of its valued customer. NEL has set up its own manufacturing facilities cotton

yarn and knitted fabrics.

Nitin Spinners

Nitin spinners ltd. is engaged in manufacturing of combed and curded cotton yarn from in single

and multifold and knitted fabrics. Nitin spinners was incorporated as a private ltd. company on 15-10-

1992 under the companies act 1956 in the state of Rajasthan having the nameNitin Spinners Private

Limited and went public in 1994. Nit in spinners plant & machineries imported from textile machinery

manufacturers like Reiter (Switzerland), Savoir (Italy), Mayer 7 CIEs (Germany),

Schlofhorst(Germany), Truetzschler (Germany), and Elitex (Czechoslovakia). Nit in spinner also

installed plant & machinery purchased from Laxmi machine works, Kirloskar Toyoda textile machine &

Zinser textile system. Presently they have capacity of 27,216 spindles and 1872 rotors for cotton yarn with

manufacturing capacity of 10000 TPA and Kitting machines for Knitted fabrics with manufacturing

capacity of 2000 TPA.

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Organisational Structure of T.T.Limited

Chairman &ManagingDirector

VP Finance &Company'sSecretary

Manager

VP Marketing

Manager

VP Mills

Manager

RegionalManager -

Tirupur

Manager

RegionalManager -

Gondal

Manager

Joint MD ExecutiveDircector

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SWOT Analysis Of T.T.Limited

Strengths

T. T. Limited is one of the oldest and completely integrated knitwear and textiles Company in

India.

It has been for over 58 years in the industry and covers the complete chain from raw cotton to

garments and is selling all over India and across the globe.

The company has fresh and top class professional blood to provide a proper mix of talent at the

management level.

Covers the entire spectrum of Textile sector: Cotton, Yarn, Fabric, and Garments & Accessories.

Market reach in many countries of the world

Weaknesses

The Brand Name and the Label TT is not owned by the company. Termination of the

agreement with the owner of the Brand and Label may affect the business of the company.

The Company has not entered into any firm arrangements with any party for supply of cotton.

Any upward fluctuation in price of cotton or unavailability may affect the companys operations.

The companys business is dependent on the manufacturing facilities. The shutdown of

operations at any of the manufacturing facilities may have an adverse effect on the operations.

The companys business is growing; any inability to manage this growth could result in

disruptions in its business and may result in reduced sales and profits.

The Companys success on a large scale depends upon its senior management, directors and key

personnel and its ability to attract and retain them. The loss of any of these personnel may

adversely affect its business and result of operations.

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Opportunities

The Indian Textile Industry is the second largest in the world.

It has the largest cotton acreage (9 million hectares).

It is the third largest cotton producer.

It ranks fourth in terms of staple fibre production, and sixth in filament yarn production.

India accounts for (circa) 25% of the Global trade in cotton yarn.

Knitted garments account for almost 32 percent of all exported garments.

Threats

Indian knitwear industry is highly fragmented

It is highly dependent on cotton

Unfavourable labour laws

Infrastructural bottlenecks and inefficiencies prevalent in India economy

Lack of technological development that affect the productivity and activities in whole value

chain

Competition from other countries especially China

Continuous quality improvement is the need of the hour as there are different demands patterns

all over the world.

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Finance & Accounts Department

A business is normally organized by its functions, e.g. marketing department, accounts department and

so on. This is because being grouped together allows the functions to benefit from specialization and

division of labour. This leads to lower unit costs and a greater efficiency.

Importance of finance and accounts department:

The finance and accounts department of a business takes responsibility for organizing the financial and

accounting affairs including the preparation and presentation of appropriate accounts, and the provision

of financial information for managers. The main areas covered by the financial department include:

1. Book keeping procedures.

2. Creating a balance sheet and profit and loss account.

3. Providing management information.

4. Management of wages.

5. Raising of finance.

Most people dont realize the importance of the accounting department in keeping a business operating

without hitches and delays. Thats probably because accountants oversee many of the back-office

functions in a businessas opposed to sales, for example, which is front-line activity, out in the open

and in the line of fire.

Folks may not think much about these back-office activities, but they would sure notice if those

activities didnt get done. On payday, a business had better not tell its employees, Sorry, but the

accounting department is running a little late this month; youll get your checks later.

Responsibility of Accounting department:

Payroll: The total wages and salaries earned by every employee every pay period, which are

called gross wages or gross earnings, have to be calculated. Based on detailed private information

in personnel files and earnings-to-date information, the correct amounts of income tax, and other

deductions from gross wages have to be determined.

Stubs, which report various information to employees each pay period, have to be attached to

payroll checks. The total amounts of withheld income tax have to be paid to central government

agencies on time. Retirement, vacation, sick pay, and other benefits earned by the employees have

to be updated every pay period.

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In short, payroll is a complex and critical function that the accounting department performs. Many

businesses outsource payroll functions to companies that specialize in this area.

Cash collections: All cash received from sales and from all other sources has to be carefully

identified and recorded, not only in the cash account but also in the appropriate account for the

source of the cash received. The accounting department makes sure that the cash is deposited in

the appropriate checking accounts of the business and that an adequate amount of coin and

currency is kept on hand for making change for customers.

Accountants balance the checkbook of the business and control who has access to incoming cash

receipts. (In larger organizations, the treasurermay be responsible for some of these cash

flow and cash-handling functions.)

Cash payments (disbursements): In addition to payroll checks, a business writes many other

checks during the course of a yearto pay for a wide variety of purchases, to pay property taxes,

to pay on loans, and to distribute some of its profit to the owners of the business.

The accounting department prepares all these checks for the signatures of the business officers

who are authorized to sign checks. The accounting department keeps all the supporting business

documents and files to know when the checks should be paid, makes sure that the amount to be

paid is correct, and forwards the checks for signature.

Procurement and inventory: Accounting departments usually are responsible for keeping track

of all purchase orders that have been placed for inventory (products to be sold by the business) and

all other assets and services that the business buysfrom postage to forklifts.

A typical business makes many purchases during the course of a year, many of them on credit,

which means that the items bought are received today but paid for later. So this area of

responsibility includes keeping files on all liabilities that arise from purchases on credit so that

cash payments can be processed on time.

The accounting department also keeps detailed records on all products held for sale by the

business and, when the products are sold, records the cost of the goods sold.

Property accounting: A typical business owns many substantial long-term assets calledproperty,

plant, and equipment including office furniture and equipment, retail display cabinets,

computers, machinery and tools, vehicles (autos and trucks), buildings, and land.

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Except for small-cost items, such as screwdrivers and pencil sharpeners, a business maintains

detailed records of its property, both for controlling the use of the assets and for determining

personal property and real estate taxes. The accounting department keeps these records.

The accounting department may be assigned other functions as well, but this list gives you a pretty

clear idea of the back-office functions that the accounting department performs. Quite literally, a

business could not operate if the accounting department did not do these functions efficiently and

on time. To do these back-office functions well, the accounting department must design a good

bookkeeping system and make sure that it is accurate, complete, and timely.

Accounts Payable Division

Accounts payable, also known as Creditors, is money owed by a business to its suppliers and its

employees and shown on its Balance Sheet as a liability. Accounts payable is recorded in the Account

Payable sub-ledger at the time an invoice is vouch red for payment. Vouch red, or vouched, means that

an invoice is approved for payment and has been recorded in the General Ledger or AP sub ledger as an

outstanding, or open, liability because it has not been paid. Payables are often categorized as Trade

Payables, payables for the purchase of physical goods that are recorded in Inventory, and Expense

Payables, payables for the purchase of goods or services that are expensed. Common examples of

Expense Payables are advertising, travel, entertainment, office supplies and utilities. Accounts

Payables is a form of credit that suppliers offer to their customers by allowing them to pay for

a product or service after it has already been received. Suppliers offer various payment terms for aninvoice. Payment terms may include the offer of a cash discount for paying an invoice within a defined

number of days

In a company, there is usually a much broader range of services in the Accounts Payable file,

and accountants or bookkeepers usually use accounting software to track the flow of money into

this liability account when they receive invoices and out of it when they make payments. Increasingly,

large firms are using specialized Accounts Payable automation solutions (commonly called payables) to

automate the paper and manual elements of processing an organization's invoices.

Commonly, a supplier will ship a product, issue an invoice, and collect payment later, which describes

a cash conversion cycle, a period of time during which the supplier has already paid for raw materials

but hasn't been paid in return by the final customer.

When the invoice is received by the purchaser it is matched to the packing slip and purchase order, and

if all is in order, the invoice is paid. This is referred to as the three-way match .[The three-way match

can slow down the payment process, so the method may be modified. For example, three-way matching

http://en.wikipedia.org/wiki/Accounts_payable#cite_note-0http://en.wikipedia.org/wiki/Accounts_payable#cite_note-0http://en.wikipedia.org/wiki/Accounts_payable#cite_note-0http://en.wikipedia.org/wiki/Accounts_payable#cite_note-0

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may be limited solely to large-value invoices, or the matching is automatically approved if the received

quantity is within a certain percentage of the amount authorized in the purchase order.

Reimbursements

Expense administration is usually closely related to accounts payable, and sometimes those functions

are performed by the same employee. The expense administrator verifies employees expense reports,

confirming that receipts exist to support airline, ground transport, meals and entertainment, telephone,

hotel, and other expenses. This documentation is necessary for tax purposes and to prevent

reimbursement of inappropriate or erroneous expenses. Airline expenses are, perhaps, the most prone to

fraud because of the high cost of air travel and the confusing nature of airline-related documentation,

which can consist of an array of reservations, receipts, and actual tickets.

Payables are defined as the technology or process automation solutions that automate any part of the

accounts payable ("AP") process. The key to Accounts Payable Automation is to develop or invest in

technology that will enable the company to free up labor from task the technology can perform.

Examples are opening mail, scanning, entry in to the Accounting System or ERP System and filing.

There are three main components in AP Automation.

1. 100% Electronic Invoices

2. Event Driven Workflow

3. Reporting Layer to Track all Actions

By automating the process, companies can greatly reduce the time it takes to process an invoice. In most

cases it can be taken down from several weeks or months to a matter of days. Once an invoice is

available electronically, it can automatically be matched against the order and routed for payment and

sent to the AP department for processing. Technology also automates the processing of periodic or

contract-based purchase invoices. When technology like this is fully implemented, most invoices no

longer require human intervention.

Internal Control

A variety of checks against abuse are usually present to prevent embezzlement by accounts payable

personnel. Segregation of duties is a common control. Nearly all companies have a junior employee

process and print a cheque and a senior employee review and sign the cheque. Often, the accounting

software will limit each employee to performing only the functions assigned to them, so that there is no

way any one employeeeven the controllercan singlehandedly make a payment.

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Some companies also separate the functions of adding new vendors and entering vouchers. This makes

it impossible for an employee to add himself as a vendor and then cut a cheque to himself without

colluding with another employee. This file is referred to as the master vendor file. It is the repository of

all significant information about the company's suppliers. It is the reference point for accounts payable

when it comes to paying invoices.

In addition, most companies require a second signature on cheques whose amount exceeds a specified

threshold.

Accounts payable personnel must watch for fraudulent invoices. In the absence of a purchase

order system, the first line of defense is the approving manager. In accounts payable, a simple mistake

can cause a large overpayment. A common example involves duplicate invoices. An invoice may be

temporarily misplaced or still in the approval status when the vendors calls to inquire into its payment

status. After the Account Payable staff member looks it up and finds it has not been paid, the vendorsends a duplicate invoice; meanwhile the original invoice shows up and gets paid. Then the duplicate

invoice arrives and inadvertently gets paid as well, perhaps under a slightly different invoice number.

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Financial analysis

Financial analysis is the selection, evaluation, and interpretation of financial data, along with other

pertinent information, to assist in investment and financial decision-making. Financial analysis may be

used internally to evaluate issues such as employee performance, the efficiency of operations, and credit

policies, and externally to evaluate potential investments and the credit-worthiness of borrowers, among

other things.

The analyst draws the financial data needed in financial analysis from many sources. The primary

source is the data provided by the company itself in its annual report and required disclosures. The

annual report comprises the income statement, the balance sheet, and the statement of cash flows, as

well as footnotes to these statements. Certain businesses are required by securities laws to disclose

additional information. Besides information that companies are required to disclose through financial

statements, other information is readily available for financial analysis. For example, information such

as the market prices of securities of publicly-traded corporations can be found in the financial press and

the electronic media daily. Similarly, information on stock price indices for industries and for the

market as a whole is available in the financial press.

ADVANTAGES OF RATIO ANALYSIS:

There are several advantages of ratio analysis. Some of them are:

1) Helps in financial performance analysis: Ratio analysis is very powerful tool for financial performance analysis. Ratio

analysis answers various questions relating to companies profitability, assets utilization, liquidity, financing strategies,

capabilities etc.

2) Helps in credit analysis: Ratio analysis reveals the credit worthiness of a firm. Creditors are always interested to

know whether the liquidity position of the firm is sound or not. Only those companies, whose liquidity position is sound,

will be able to repay the loans and survive in the long run.

3) Helps in security analysis: Ratio analysis also helps in security analysis. The major focus in security

analysis is on the long-term profitability, which depends on a number of factors. In this the efficiency with which

the firm utilizes its assets and the financial risk to which the firm is exposed are also studied.

4) Helps in planning: Ratio Analysis helps in planning and forecasting over a period of time. A firm or industry has certain

norms that may indicate future success or failure.

5) Simplifies Financial Statement: Ratios analysis simplifies the comprehension of financial statements. Ratio tells the

whole story of changes in the financial condition of the business.

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6) Facilities Inter Firm Comparison and Trend Analysis: It provides data for inter firm comparison and trend analysis

ratio and highlights the factors associated with successful and unsuccessful firms. They also reveal strong firms over value

and under value firm.

LIMITATIONS OF RATIO ANALYSIS

The ratio analysis is a widely used technique to evaluate the financial position of business. But there are some certain

problems in using ratios. The analyst must be aware of these problems. The following are some of the limitations of ratio

analysis.

1) Difficulty in comparison: -One serious limitation of ratio analysis arises out of the difficulty associated with

their comparison to draw inferences. This may be due to the following:

Differences in the basics of inventory valuation.

Different depreciation methods.

Estimated working life of assets particularly of plant and equipment.

Amortization of intangible of assets like good will patents and so on.

Amortization of deferred revenue expenditure such as preliminary expenditure and discount on issue of shares.

Treatment of extraordinary items of income and expenditure and soon.

2) Impact of Inflation: -The second major limitation of ratio analysis is associated with price level changes. This

impact is a weakness of traditional statements that are based on historical costs.

3) Conceptual Diversity: -Another factor that affects the usefulness of ratios is that there is difference of opinion regarding

the various concepts used to compute the ratios.

4) The ratios are generally calculated from past financial statement and thus are no indicators of future.

5) Different companies operate in different industries each having different environmental conditions

such as regulation, market structure, etc. Such factors are so significant that a comparison of two

companies from different industries might be misleading.

6) Financial accounting information is affected by estimates and assumptions. Accounting standards

allow different accounting policies, which impairs comparability and hence ratio analysis is less useful

in such situations.

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7) Ratio analysis explains relationships between past information while users are more concerned about

current and future information.

CLASSIFICATION OF RATIOS:

There are three main types of ratios, namely liquidity ratio, leverage ratiosor capital structure, profitability ratio. The ratios

in each of these types are as shown below:

LIQUIDITY RATIOS:

Current ratios

Liquid ratio or quick ratio

Working capital ratio

Inventory turnover ratio

Debtors turnover ratio

Creditors turnover ratio

Fixed assets turnover ratio

LEVERAGERATIOS:

Debt equity ratio

Proprietary ratio

Capital gearing ratio

Interest coverage ratio

Total or overall coverage ratio

PROFITABILITY RATIO:

Gross profit Ratio

Net profit Ratio

Operating Ratio

Return on Investment

Return on share holders Equity

Return on Equity capital

LIQUIDITY RATIOS:

The term liquidity refers to the firm's ability to meet its current liabilities. A firm should ensure that it does not suffer from

lack of liquidity and that it is not too highly liquid. The failure of a firm to meet its obligations due to lack of sufficient

liquidity will result in closure of the firm. A very high degree of liquidity is also bad as idle assets earn nothing. The firm's

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funds will necessarily get locked up in the current assets. Therefore it is necessary to strike a proper balance between

liquidity and non-liquidity. The ratios which reflect the short term solvency of a business unit are current ratio, quick ratio,

working capital, turnover ratio, stuckturnover ratio, debtors turnover ratio, creditors turnover ratio, fixed assets turnover ratio

etc.

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 the firm's short-term solvency. Current ratio is also called

working capital ratio. It is calculated as follows:

Current assets

Current ratio = ------------------------

Current liabilities

Significance of Current ratio:

Current ratio is an index of the firm's short-term solvency. In other words, it is the index of the strength of working capital.

The higher the current ratio, the greater is the firm's ability to meet its short-term debts. Usually a high current ratio indicates

that funds are not being economically used in the firm. There maybe exclusive inventories or account receivable or large

idle cash balance. Usually a low current ratio indicates that the firm may have some difficulty in paying off its debts. It is

essential that a firm should have a reasonable current ratio.

Interpretation:

Conventionally a current ratio of 2:1 is considered satisfactory. The higher the current ratio the greater is the margin of

safety. The larger the amount of current assets in relation to current liabilities the more is the firms ability to meet its current

obligations.

Liquid ratio or quick ratio:

Liquid ratio is the ratio of liquids (quick assets) to current liabilities. It establishes the relationship between quick assets and

current liabilities. It is also called acid test ratio.

Liquid assets

Liquid ratio= ---------------------------

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Current liabilities

Where liquid assets = current assetsstock

Quick ratio is considered to be superior to current ratio in testing the liquidity position of a firm. An asset is liquid if it can be

converted into cash immediately or within a reasonable time without loss of value. Cash is the most liquid asset. The

other assets that are considered to be relatively liquid and are included in the quick assets are book debts and

marketable securities. Stock or inventory and prepaid expenses are considered to be less liquid. When used in conjunction

with current ratio, the liquid ratio gives a better picture of the firm's liquidity.

Interpretation:

A quick ratio of 1: 1 is considered ideal. It is considered that if quick assets are equal to current liabilities then

the firm can meet its current obligation.

Working capital turnover ratio:

Working Capital is the excess of current assets over current liabilities. This ratio is computed to test the

efficiency with which the net working capital is utilized. In other words, this ratio indicates whether working capital is in

making sales. It is calculated as follows:

Sales

Working capital turnover ratio = ----------------------------

Net working capital

A low working capital turnover ratio may reflect an inadequacy of working capital and lower turnover of inventories or

receivables. A high ratio may be the result of high turnover of inventories or receivables. Current assets mean cash or those

assets, which can. be converted into cash within a year, current assets normally include cash in hand and at bank,

marketable securities, stock, sundry debtors, bills receivable and prepaid

expenses. Current liabilities are those, which are to be repaid within a year. Current liabilities include sundry

creditors, bill payable, bank overdraft, and provision for taxation.

Interpretation:

There is no standard or ideal set for working capital turnover ratio. But one can say that a higher working

capital turn over ratio indicates the efficiency of the management in the utilization of the working capital.

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Inventory turnover ratio:

Inventory turnover ratio is also known as stock turnover ratio. This ratio indicates the number of times the inventory is

replaced during the year. It shows the rate at which inventories are converted in to sales and then into cash. It establishes the

relationship between cost of goods sold and average inventory. Besides, it helps determine the liquidity of a business

concern. It is computed as follows:

Cost of goods sold

Inventory Turnover Ratio = --------------------------------

Average inventory

365

Inventory holding period (days) = -------------------------------------

Inventory turnover ratio

Significance of InventoryTurnover Ratio:

It measures the velocity of the conversion of stock into sales. A high inventory turnover indicates

Interpretation:

It measures the velocity of the conversion of stock into sales. A high inventory turnover indicates efficient management of

inventory and low inventory turnover indicates inefficient management of inventory. No standards for inventories are

laid down.

Debtors turnover ratio:

Debtor's turnover ratio is also called as receivable turnover ratio. It relates net credit sales to sundry debtors. The ratio

indicates the relationship between the sales and debtors of a firm. It is a test of the liquidity of the debtors of firm. It is

calculated as follows:

Net credit sales

Debtors turn over ratio = -----------------------------------------------

Debtors including bills receivables

Where net credit sales = credit salesreturns

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The second ratio is the average collection period ratio. It brings out the nature of firms credit policy and the quality of the

debtors more clearly. This ratio is calculated as:

Debtors x Number of days in a year

Average collection period = ------------------------------------------------------

Credit sales per day

The term debtor for this ratio is the debtors plus bills receivables at theend of the accounting period. Sometimes the ratio is

computed by taking the overage of opening and closing debtors. It should be remembered that provision for bad and

doubtful debts should not be deducted from debtors. When the credit sales are not given the total sales may be used.

Significance of debtors turnover ratio:

The debtor turnover ratio indicates the quality of debtors by measuring the rapidity or slowness in the collection process. A

shorter collection period (on higher turn over ratio) indicates prompt payment of debtors while a longer period (lower

turnover ratio) indicates the inefficiency of the credit collection.

Interpretation:

There are no fixed norms for this ratio. As a rule higher ratio indicates better efficiency.

Creditors turnover ratio:

Creditors turnover ratio is the ratio between net credit purchase and the amount of sundry creditors. It implies the credit

period enjoyed by the firm in paying its creditors. It is computed by use the following formula:

Net credit purchases

Creditors turnover ratio = ----------------------------------------------------

Sundry creditorsbills payable

Where Net credit purchases = credit purchasepurchase return.

The terms creditors for this ratio is the amount plus bills payable at the end of the accounting period. Some

times the ratio is computed by taking the average of opening and closing creditors. The creditors turnover ratio may also be

expressed in days. Then it is known as creditors payment period or creditors velocity.

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No. of days in a year

Creditors velocity = -------------------------------------- x 365 days

Net credit purchase

Significance of creditors turnover ratio : -

This ratio reflects whether terms of credit allowed by suppliers are liberal or stringent. A high creditors Turnover ratio

(shorter period) shows that creditors are being paid promptly; while a low turn ratio (longer period) reflects liberal credit

terms granted by suppliers.

Fixed Assets Turnover Ratio:

Fixed assets turn over ratio shows the relationship between sales and fixed assets. It shows whether fixed assets are fully

utilized, to be clearer, This ratio measures the efficiency with which a firm is utilizing its fixed assets ingenerating

its sales. It is computed as follows:

Sales

Fixed AssetsTurnover Ratio = -----------------------

Fixed Assets

The term fixed assets for this ratio is the depreciated value i.e. the amount of depreciation is deducted from the value of

fixed assets.

Significance of fixed Assets Turnover Ratio:

This ratio measures the efficiency in the utilization of fixed assets. A high ratio reflects over trading. On the other

hand, a lower ratio indicates idle capacity and excessive investment in fixed assets.

Interpretation:

There cannot be any norms for these ratios. But as rule, a higher turnover indicates better utilization.

LEVERAGE RATIOS:

As already observed, the short-term creditors like banks and suppliers of raw materials are interested in the short-term

solvency of a firm. For the analysis of short-term solvency or the current financial position, liquidity ratios are used. The

shareholders, debenture holders and other long-term creditors like financial institutions are more interested in the long- term

financial position or long term solvency of a firm. Leverage or solvency ratios are used for such an analysis. These ratios

are also used to analyze the capital structure of a company. That is only these are also called capital structure ratios. The

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term solvency generally refers to the firm ability to pay the interest regularly and repay the principal amount of debt on due

date.

There are two aspects of long-term solvency of a firm:

1. Ability to repay the principal amount of loan on the due date

2. Regular payment of interest.

Accordingly, there are two types of leverage ratios. The first type of leverage ratios is based on the relationship between

owned capital and borrowed capital. These ratios are calculated from the balance sheet items. The second type of leverage

ratios is coverage ratios. These are computed from the profit and loss account.

Debt-Equity Ratio:

Debt-equity ratio shows the relationship between total debts and owned capital. It is the ratio of the amount invested by

outsides to the amount invested by the shareholders. It is known as External-internal Equityratio.This ratio reflects claims

of shareholders and creditors against the assets of a company alternatively; this ratio indicates the relative proportion of debt

and equity in financing the assets of a company. It may be expressed as follows:

External equity Outsides fund

Debt-equity ratio = ------------------------ or ---------------------------

Internal Equity Shareholders funds

The term external equity refers to total outside liabilities or borrowed funds. Outside liabilities include all debt whether long

term or short term. Internal equity or shareholders funds include equity share capital, preference share capital and reserves

and surpluses. Internal equity is equal to net worth.

Significance of debt- Equity Ratio:-

This ratio is one of the most important measures of long-term solvency. It reflects the relative contributions of creditors and

owners of business in its financing. It is an index of the degree of protection the creditors have a high ratio

shows that the creditors have invested more in the business than the shareholders. Liquidity or quick assets include cash,

bank balance debtors, and bills receivable and short-term marketable securities. In order words they are current assets

minus stocks and prepaid expenses stock cannot be include in quick assets because it is not easily and readily convertible

into cash. Prepaid expenses by their very nature cannot be used for payment of quick liabilities. Current liabilities taken

after deducting that it tends to become a permanent mode of financing.

Interpretation:

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A ratio of 1:1 is considered to be a satisfactory ratio, although there cannot be a standard norm for all types of businesses.

Proprietary Ratio:

This ratio establishes the relationship between shareholders funds and total assets financed by shareholders. This is variant

of the debt-equity ratio. This ratio establishes the relationship between shareholders funds and total assets. It indicates the

proportion of total assets financed by shareholders. It is usually computed as a percentage. It is computed as follows:

Share Holders funds

Proprietary Ratio = -------------------------------------------X100

Total assets or Total resources

Shareholders funds include equity share capital, preference share capital and all reserves and surpluses. Total assets include

all assets including goodwill.

Significance of proprietary Ratio:

Like debt-equity ratio, proprietary ratio gives results relating to capital structure of a company. It reflects the general

financial strength of the company. It enables the creditors to find out the proportion of shareholders funds in the total assets.

A high proprietary ratio indicates a relatively favorable position to the creditors at the time of liquidation. On the order hand,

a low ratio indicates risk to creditors.

Interpretation:

As proprietary ratio presents a relationship ofowners funds to the total assets, the higher the ratio or the share of the

shareholders in the total capital of the firm better is the long-term solvency position of the firm.

Capital Gearing Ratio:

This is one of the important ratios used to analyze the capital structure of a company. The term capital gearing refers to the

proportion b/w fixed income bearing funds and equity shareholders funds. Fixed income bearing funds include.

Debentures other long term loans and preference share capital. Equity shareholders funds include equity capital and all

reserves and surplus that belong to equity shareholders. Preference share carry a fixed rate of dividend on equity shares

and are notified.

Fixed income bearing funds

Capital gearing ratio = ---------------------------------------------------------

Equity shareholders funds

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Where Fixed income bearing funds = preference share capital + debentures+ Long terms

Significance of Capital gearing ratio:

Capital gearing ratio reveals the company capital structure. This ratio is important not only to the company but also to

investors. The capital gearing ratio may affect the company dividend policy building up of reserves etc. this ratio shows the

effects of use of fixed interest dividend funds on the profits available to equity shareholders.

Interpretation:

If the preference share capital and other fixed interest bearing loan the equity share capital and reserve then, the firm is

highly geared and vice versa. Usually both are not preferred. A firm must be evenly geared.

Profitability Ratio:

The ultimate aim of any business enterprise is to earn maximum profit. Lord keens remarked profit is the engine that

drives the business enterprise a firm should earn profits to survive and grow over a long period of time. To the

management profit is the measure of efficiency and control. To the owners it is to measure of worth of their investment. To

the creditors, it is the margin of safety. The management of the company should know how efficiently they carry on

business operations. In order words, the management of the company is very much interested in the profitability of the

company. Besides management, creditors and owners also are interested in the profitability of the co-creditors want to get

interest and repayment of principal regularly. Owners want to get a reasonable return on their investment. The profitability

ratios measure the ability of the firm to earn an adequate return on sales total assets and invested capital. Profitability ratios

are generally calculated either on relation to sales or in a relation to investment. The profitability ratios in relation to sales are

gross profit ratio. Net profit ratio, operating ratio, expenses ratio etc. the profitability ratios in relation to

investment are return on assets on investments, Return on Equity capital etc.

Gross profit Ratio:

Gross profit ratio is also known as gross margin. This is the ratio of gross profit to net sales. That is usually expressed as

percentage. It is computed as follows:

Gross profit

Gross profit ratio=-------------------------x100

Sales

Where, Gross profit= salescost of goods sold.

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In the case of trading concern, cost of goods sold could be equal to opening stock plus purchase plus all direct expenses

charged to trading account minus closing stock. In case of manufacturing concerns, it could be equal to the sum of cost of

materials consumed, usage, direct expenses and all factory or manufacturing expenses.

Significance of Gross Profit Ratio:-

Gross profit Ratio indicates the margin of profit on sales. It is useful to ascertain whether the average

percentage of mark-up on the goods sold is maintained. Gross Profit is the result of the relationship between price, sales

volume and the cost. A change in the gross margin can be brought about by changes in any of these factors. A high

Gross Profit Ratio is a sign of good management. An increase in Gross Profit ratio may be due to any of the

following factors:

Increase in the selling price without any corresponding increase in the cost of goods sold.

Decrease in the cost of goods sold without any corresponding decrease in the selling price and

Under valuation of opening stock or overvaluation of closing stock

A relatively low Gross Profit ratio is a danger signal.

The decrease in the Gross Profit Ratio may be due to following factors.

Decrease in the selling price without corresponding decrease in the cost of goods sold.

Increase in the cost of goods sold with out any corresponding increase in the selling price.

Overvaluation of opening stock or under valuation of closing stock and

Inability of the management to improve the volume of sales.

Interpretation:

As the gross profit is found by deducting cost of goods sold from the net sales, higher the gross profit ratio the

better are the results. A low Gross Profit ratio indicates high cost of goods sold due to unfavorable purchases,

polices, excessive competition etc.

Net profit ratio:

Net profit ratio is the ratio of net profit to sales. It is know as profit margin. It is usually expressed as percentage. It is

calculated as follows:

Net profit

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Net profit ratio = ------------------------------------x 100

Sales

Here, net profit is the balance of profit and loss account after adjusting interests and taxes and all non-operating expenses

like less on sale of fixed assets, provision or containment liability etc.

Significance of Net Profit Ratio:

Net profit ratio indicates managements efficiency is manufacturing, administrating and selling the products. This is a

measure of over all profitability. It includes what portion of sales is left to the owners after all expenses have been meet.

This ratio also indicates the firms capacity to withstand adverse economic conditions.

Return on Investment (ROI):

The over all 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 earning on the capital employed. The rate of earning on capital employed(expressed as a

percentage) is referred to as ROI. This is the over all profitability as follows:

Profit before interest and tax

ROI = -----------------------------------------------

Capital employed

Where capital employed is computed from the assets side. It will include:

Fixed assets:

Land and building

Plant and machinery

Furniture and fittings

Motor vehicle

Investment made in business

Current assets:

Cash

Bank balance

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Book debts

Inventories

Bills receivable

Current liabilities:

Sundry creditors

Bills payable

Bank over draft

Interpretation:

There cannot be any norms for this ratio. It depends on the industry.

Return on Share Holders Fund:

This is the ratio of net profit shareholders fund or net worth. It measures the profitability from the shareholders point of

view. It is calculated as follows:

Profit after interest and tax

Return onShareholdersFund = ------------------------------------------x100

Shareholders fund

Here the profit is the profit after tax and preference dividend out of the profit left after tax. The preference dividend

is paid first. The remaining profit is said to be available to equity shareholders. Equity shareholders fund includes

equity capital and reserves and surplus.

Cash Profit Ratio:

The net profits of a firm are affected by the amount/method of depreciation charged. Further, depreciation being non-cash

expense, it is better to calculate cash profit ratio. This ratio measures the relationship between cash generated from

operations and the net sales.

Cash profit

Cash Profit Ratio = ------------------------------------------x100

Net sales

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Where, cash profit = Net Profit +Depreciation

Administrative Expense Ratio:

The ratio which establishes the relationship between administrative expense and net sales is called administrative expense

ratio.

Administrative expense

Administrative Expense Ratio = -------------------------------------------x100

Net sales

Total Asset Turnover Ratio:

It is relation between sales and total assets. This ratio is calculated to measure the efficiency with which a firm utilizes its

assets.

Sales

Total Assets Turnover Ratio = ------------------------------------------

Total Assets

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TT Limited

The price of Cotton, a key raw material for the Company is susceptible to volatility. The Company as

not entered into any firm arrangements with any party for supply of cotton. Any upward fluctuation in

price of cotton or unavailability may affect the companys operations.

The Company procures cotton from various cotton mandis through out Indian States namely Punjab,

Haryana, Madhya Pradesh, Gujarat and Maharashtra. The Company uses the services of agents and

cotton selectors. The company ties up the supplies for the year during the cotton season beginning mid-

October. In addition, being a 100% EOU, the Company also availing the benefit of importing cotton at

low price without having to pay duty.

The Company does not have long-term contracts with its buyers and gets the orders from time to time.

The Company has been dealing with its buyers for long, but does not have any long-term contracts with

them. In the absence of such long-term contracts there can be no assurance that a

particular buyer would continue to purchase products of the Company in the future. Any change in the

buying pattern from the buyers may adversely impact the business and profits of the Company. The

prices of the companys product and its costing constantly changes, hence as to safeguard the company,

the company only enters into short term contracts in line with their costs.

Process of Purchase and Payment at T.T.Limited

1. Purchase Order

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Use a purchase requisition when the purchase needs the involvement of professional buyer in the

purchasing department.

The purchase requisition provides the purchasing buyer with the information necessary to select an

appropriate vendor and negotiate pricing if the department has not already done so and to create a

purchase order. The purchase order is the formal offer to purchase from vendor and a legal commitment

by the vendor to supply the company with the specified goods.

Purchase order: When the purchasing department converts requisition into a purchase order, it sends the

original to the vendor and sends a copy to your department. As soon as payables department receives its

copy, it quickly reviews and checks it.

2. Capture

After making Pother company capture it in its records for further processing

3. Approval

After PO is reviewed and captured it is sent for approval either to the V.P.(Finance) if the amount is

above INR 1Lakh or to manager if the amount is below that. On Tuesday and Thursday of every week,

accounts payable invoices are selected for payment according to their terms for payment. Accounts

payable should normally be paid within seven days of their payment term unless otherwise determined

by the Controller.

4. Create E-cheques

Electronic cheques are another form of electronic tokens. They are designed to accommodate the many

indviduals and entities that might prefer to pay on credit or through some mechanism other than cash.

Once registered , a buyer can then contract the company. To complete a transaction, the buyer sends a

check to the company for a certain amount of money. These checks may be sent using email or other

transport methods . When deposited , the cheque authorises the transfer of account balances from the

account against which the cheque was drawn to the account to which the cheque was deposited. The

electronic cheques are modeled on paper cheques , except that they are initiated electronically. They use

digital signatures for signing and endorsing and require the use of digital certificates to authenticate the

payer, the payers bank and bank account. They are delivered either by direct transmission using

telephone lines or by public networks such as internets.

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A check edit list is printed and reviewed by the Controller. Upon approval, checks are then printed for

the accounts payable invoices to be paid. After the checks are printed, they are matched to the voucher

package and submitted to an authorized signer for signing.

5.

Vendors Receive payment

The fifth step involved was receipt of payment by vendors.

6. Store centrally

The sixth step in making payments was to store the data about the payment centrally for further

recording and analyzing purposes.

Reimbursements Procedure

It is the policy of the Company to reimburse employees for business use of personal vehicles. Expenses

for transportation, lodging, meals, and related items are allowable when they are incurred by an

employee, or volunteer on official business which is directly attributable to the contract or required for

administration of the agency.

1. Employees whose jobs require regular driving for business must be able to meet the driver

approval standards of this policy at all times. In addition, employees holding those jobs must

inform their supervisors of any changes that may affect their ability to meet the standards of this

policy. For example, employees who lose their license must report this within 24 hours to their

immediate supervisor.

2. Supervisors must approve employees' travel in advance for program related activities, and to

attend conferences, and community meetings and to conduct planned events.

3. Employees should provide their supervisor with the required and completed mileage form by the

tenth of each month, requesting approval for mileage reimbursement.

4. Employee's expenses for approved travel are paid or reimbursed when properly document by the

employee and approved by the supervisor.

5. Employees may not drive program vehicles without prior approval of their supervisor.

6. For all other jobs, driving is considered only an incidental function of the position.

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Particulars

I) Revenue from operations

For the Year Ended

31.03.2012

Sale ofproducts 3,823,824,604Sale ofservices 31,291Other operating revenues 152,723,587

3,976,579,482Less: Excise duty (19,042,903)Net revenue 3,957,536,579

II) Other income 82,846.463

III) Totalrevenue (I+II) 4,040,383,042

IV) Expenses:

Cost ofmaterialsconsumed 2,983,861,269

Purchase ofstock-in-tradeChanges in inventories offinishedgoods,

41,893,452

Employee benefits expense 143,728,795Finance cost 269,278,462Depreciationand amortizationexpense 111,340,331Otherexpenses 600,031,329

Totalexpenses 4,150,133,638

V) Profit / (Loss) before tax (109,750,596)

VI) Tax expense:-Currenttax -Deferred tax liabilities/ (assets) (88,597,432)-Adjustement of tax forearlierYears 553,738

VII) Profit / (Loss) for year (21,706,902)Earningsperequity share (parvalueRs.10each)Basic (1.01)

STATEMENTOF PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2012

Amount in Rs

work-in-progressand stock-in-trade

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Balance Sheet

As At

31.03.2012

I) Equity and Liabilties

1 Shareholders funds

a) Share Capital 21,49,80,500

b) Reserves and Surplus 73,26,46,72494,76,27,224

2 Non-current liabilities

a) Long term borrowings 1,33,18,06,722

b) Deferred tax liabilities(Net)

c) Other long termliabilities

d) Long term provisions

1,33,18,06,722

3 Current liabilitiesa) Short term borrowings 1,078,852,768

b) Trade payables 3,57,50,433

c) Othercurrentliabilities 29,28,17,620

d) Short term provisions 40,20,685

1,41,14,41,506

Total 3,69,08,75,452

II) Assets

1 Non CurrentAssetsa) FixedAssets

TangibleAssets 2,23,50,26,830

IntangibleAssets 29,59,188Capital work-in-progress 2,72,54,631b) Deferred taxAssets (Net) 5,12,48,684c) Long-term loans and advances 14,51,63,595d) Othernon-currentassets 1,04,54,864

2,47,21,07,7922 Current Assets

a) Currentinvestments 23,500b) Inventories 64,18,07,550c) Trade receivables 33,80,72,654d) Cash and bank balances 1,87,14,794e) Short term loans and advances

2,34,24,485

f) Othercurrentassets 19,67,24,6771,21,87,67,6603,69,08,75,452

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RATIOS OF T.T.LIMITED

TT Previous Years

Key Financial Ratios

Mar '11 Mar '10 Mar '09 Mar '08 Mar '07

Investment Valuation Ratios

Face Value 10.00 10.00 10.00 10.00 10.00

Dividend Per Share 1.00 -- -- 0.60 2.00

25.58 17.07 -0.90 10.42 12.42

Net Operating Profit Per Share (Rs) 226.32 164.66 113.65 302.54 277.69

Free Reserves Per Share (Rs) 12.45 6.27 1.40 14.17 13.39

Bonus in Equity Capital 0.57 0.57 0.57 0.57 0.57

Profitability Ratios

Operating Profit Margin(%) 11.30 10.36 -0.79 3.44 4.47

Profit Before Interest And Tax8.94 7.65 -3.94 2.45 3.60

Margin(%)

Gross Profit Margin(%) 8.98 7.66 -3.97 2.45 2.54

Cash Profit Margin(%) 5.23 6.37 -4.09 1.08 1.77

Adjusted Cash Margin(%) 5.23 6.37 -4.09 1.08 1.74

Net Profit Margin(%) 3.23 2.95 -14.76 0.48 0.91

Adjusted Net Profit Margin(%) 3.23 2.95 -14.76 0.48 0.87

Return On Capital Employed(%) 16.12 9.87 -3.78 7.12 12.69

Return On Net Worth(%) 31.58 28.51 -138.22 5.85 10.37

Adjusted Return on Net Worth(%) 28.59 34.62 -69.93 1.06 10.05

Return on Assets Excluding23.26 17.08 12.21 24.99 24.20

Revaluations

Return on Assets Including38.55 32.93 28.62 28.35 27.73

RevaluationsReturn on Long Term Funds(%) 25.44 13.99 -5.00 10.59 16.12

Liquidity And Solvency Ratios

0.60 0.70 0.61 0.68 0.84

Quick Ratio 3.12 1.79 4.23 2.13 1.96

Debt Equity Ratio 4.69 6.55 7.79 3.16 2.41

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Long Term Debt Equity Ratio 2.61 4.32 5.65 1.80 1.69

Debt Coverage Ratios

Interest Cover 2.10 1.50 -0.51 1.09 1.78

Total Debt to Owners Fund 4.69 6.55 7.79 3.16 2.41

Financial Charges Coverage Ratio 2.44 1.95 -0.02 1.47 1.92Financial Charges Coverage Ratio

2.16 2.07 -0.57 1.63 1.73Post Tax

Management Efficiency Ratios

Inventory Turnover Ratio 7.36 7.36 11.26 15.32 17.60

Debtors Turnover Ratio 15.52 15.89 11.63 28.81 23.32

Investments Turnover Ratio 7.36 7.36 11.26 15.32 18.55

Fixed Assets Turnover Ratio 1.87 1.38 1.19 4.11 6.36

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Profitability Graph:

The purpose of the above graph is to show the profitability of business. In this graph we can see that the

profitability of business of the company is going above steadily but was hit in 2009 due to global economic

slowdown as its exports most of its goods. But it again came on the road to profitability after 2009 as economic

revival took place globally.

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Mar '11 Mar '10 Mar '09 Mar '07

Operating Profit Ratio

Cash Profit Margin(%)

Adjusted Cash Margin(%)

Net Profit Margin(%)

Adjusted Net Profit Margin(%)

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The above graph shows the profitability of company with respect to its various variables such as capital

employed, assets, etc. This graph indicates that the company is earning a good income on its assets but it was hit

in 2009 due to economic slowdown in the world. Since 2009 the company has seen a steady increase in return

on capital, assets , networth and long term fund which shows the company is in recovery mode.

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Return On

Capital

Employed(%)

Return On

Net

Worth(%)

Adjusted

Return on

Net

Worth(%)

Return on

Assets

Excluding

Revaluations

Return on

Assets

Including

Revaluations

Return on

Long Term

Funds(%)

Mar '11

Mar '10

Mar '09

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This graph depicts companys profitability on per share basis. We can see high amount of profits earned by

company prior to 2009 but in 2009 it took a great dip and since then its in recovery mode.

Liquidity Graph

This graph shows the liquidity of company. We can see that the company has inadequate amount of liquidity as

current ratios is below 1, but in 2009 we can see that company has very high level of liquidity as during

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100

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200

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Operating Profit Per

Share (Rs)

Net Operating Profit

Per Share (Rs)

Free Reserves Per

Share (Rs)

Bonus in Equity

Capital

Mar '11

Mar '10

Mar '09

Mar '08

Mar '07

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2

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Current Ratio Quick Ratio Debt Equity Ratio Long Term Debt Equity

Ratio

Mar-11

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recession everyone tends to hold their liquid assets as interest rates are very low and good investments are very

few available in market.

Long Term Solvency Ratios

This graph shows the long term solvency of the business. We can see that the company has earned adequate

profits every year except in 2009 due to global economic slowdown. It can also be seen here that the company

has increased debt over period of time as compared to shareholders fund and is also able to bear the cost of it as

its profits are increasing at a faster rate since 2009

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Interest Cover Total Debt to owner's

Fund

Financial charges

coverage ratios

financial charges

coverage ratios post

tax

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Mar-10

Mar-09

Mar-08

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Activity Graph

This graph depicts the level of activity going on in the company we can see that the conversion period of

inventory is getting longer over the years indicating poor inventory management and even fixed assets turnover

ratios has also reduced over time indicating that the companys assets were better utilized before as compared to

now. This ratios indicates that the management of company need to be improved over time to increase more

profitability.

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10

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20

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Inventory turnoverratio

Debtors turnover ratio Investment TurnoverRatio

Fixed Asset TurnoverRatio

Mar-11

Mar-10

Mar-09

Mar-08

Mar-07

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WORK DONE & EXPERIENCE

This internship taught me so much, right from an introduction to who a client is, how

importantthey are to the business, the need for proper branding, the need to understand the

market etc.! I was welcomed by the office staffs and was briefed about the working of company,

what they have been doing in the years so far, what they have achieved so far in this industry,

where theystand today in this industry and also as to whom I was supposed to report on a daily

basis, my check in and checkout time etc. My mentor acted more like a friend to me, suggested

whenever change was needed and kept improvising my work.

Workkdone

Assistng inAccountsPayables

SupplierManagement

IssuingCheques

PayrollManagement

FinancialAnalysis

Passing Entries

Managingbooks ofaccounts

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Assisting in Accounts Payables

1. Supplier Management

Topics Covered:

1. Receiving bills from vendors,

2. Making Purchase requisitions

3. Making purchase orders

4. Forwarding for cheques

My Experiences:

This session was yet another platform for me to widen my knowledge in the field of

accounts, I could test myself as to know much I was familiar with accounting terminologies

and about my awareness about the accounting processes. My mentor briefed me about ERP

software and procedures involved in various works. A brief introduction was given about the

company, its departments, their work and about its accounts.

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2. Issuing cheques

Topics Covered :

1. Receiving purchase orders,2. Issuing cheques

3. Recording Issued Cheques

4. Forwarding cheques to be sent to vendors

My Experiences :

This session was very interesting session as issuing cheques was a topic that interested me

very much! I have issued great number of cheques on the basis of approved purchase ordersand it was a long process. Each cheque was issued in triplicate copies, one original and two

duplicates for recording purposes. In this process one has to be very careful regarding every

aspect as very minute mistake will result in cancellation of cheques. This totally enlightened

me about the process of issuing cheques in corporate environment.

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3. Payroll Management

Topics Covered :

1. Receiving reimbursements slips from employees2. Issuing salary cheques

3. Maintaining employees books of accounts

My Experiences :

This session briefed me about managing employees payroll, gaining an insight about the

importance of employees in company, although I was familiar with employees importance

is. I understood who employees are, how important they are, how we are supposed to handlethem, the need to keep them satisfied, it thus gave me in-depth knowledge of the subject. I

have maintained books of employees, assisted in reimbursing the employees for official

works.

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4. Financial Analysis

Topics Covered :

1. Calculation of various financial ratios2. Interpreting ratios and forwarding interpretion

My Experiences :

This part has taught me a lot about practical aspect of financial analysis. Ratios are used to

measure various aspects of business such as liquidity, return on investment,etc which shows

how healthy the company is and how much prone it is to various financial and operating

risks. As I was placed under the supervision of Mr. Sunil mahnot , VP (Finance) I wasassigned the duty of financial analysis and this has greatly enhanced my financial

knowledge. Ratio analysis in view of its several limitations should be considered only as a

tool for analysis rather than as an end in itself. The reliability and significance attached to

ratios will largely hinge upon the quality of data on which they are based. They are as good

or as bad as the data itself. Nevertheless, they are an important tool of financial analysis.

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5 Managing books of accounts

Topics Covered :

1. Passing journal entries,2. Rectifying errors,

3. Reconciling.

My Experiences :

In accounts department I have passed journal entries in ERP software for managing books of

accounts, I have identified errors and rectified them in books of accounts and also done

reconciliation. This has helped me a lot to gain the practical aspect of accountancy which hasin turn helped me in understanding the theoretical aspect in a better way.

OTHER EXPERIENCES:

This internship has inculcated concepts through working and has thought me perfection

and punctuality and the need to be confident in whatever we do. A Special thanks to my

mentor Mr. Sunil Mahnot, who has been a pillar of support and has provided guidance and

support whenever needed.

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CONCLUSION

This Internship training provided to me was an enriching once in life time opportunity. This

internship training taught me exactly how a formal organization functions, the work they do etc.

I was trained in finance and accounts and thus I understood how important it is in the successful

running of a Company. I learnt to manage suppliers , issued cheques , managed employees

payroll and books of accounts.

Analysis of financial statements have been very helpful for me. I have learnt how to find

financial ratios and understand them to gain and present a better view of financial statements.

I also understood the need for proper handling of payables as any delay in making payments to

supplier or employees puts a question mark on companys credibility.

This internship taught me what the external environment was, how people should be in

their work place. It also showed me the importance of adapting oneself according to the external

environment. It developed my confidence, my communication skills which will definitely

contribute for my future endeavors. The suggestions and work taught by my mentor has molded

me to be competent enough to face this competitive corporate world. The training has inculcated

in me the concepts of managing suppliers and building relationships with them. This exposure

provided to me by the company was an enriching ever valued part of my life. I thoroughly

enjoyed this learning process.

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Recomendations:

Ratio analysis is an important technique of financial analysis. It is a means for judging the

financial health of a business enterprise. It determines and interprets the liquidity, solvency,

profitability, etc. of a business enterprise.

T.T.Limited has a very sound business but it need to manage it more efficiently as its

activity ratios are indicating increasing poor management.

The company is running in net loss which shoud be turned around to stop eroding the

wealth of shareholder

It has negative amount of return on capital , and because to this company may find

difficulty to raise finance in future

The company has low asset turnover ratio so it has to improve it as its assets are currently

underutilized.

Accounts payable are the amounts a business or other organization owes its creditors. Accounts

receivable are the amounts a business is owed by customers or borrowers. Both accounts

receivable and accounts payable are usually managed by the bookkeeping or accounting

department of a business.

Accounts Payable Processes

o Having a well-managed accounts payable team is almost as important to a business as a top-

notch accounts receivable department. In both cases, you need to have effective management and

deliberate work flow processes, but accounts payable needs to have