A

SUMMER INTERNSHIP PROJECT

ON

“A STUDY ON FINANCIAL ANALYSIS OF KHUSHI CONSTRUCTIONS”

SUBMITTED BY
KRUSHNA BAGUL

MBA II FINANCE

UNDER GUIDANCE OF

PROF. POOJA MERCHANT

SUBMITTED TO

“SAVITRIBAI PHULE UNIVERSITY OF PUNE”

IN THE PARTIAL FULFILLMENT OF THE REQUIREMENT FOR THE AWARD

OF THE DEGREE OF MASTER IN BUSINESS ADMINI STRATION

DR. B.V. HIRAY COLLEGE OF MANAGEMENT & RESEARCH

CENTER, MALEGAON (NASHIK)

BATCH (2020-21)
 ACKNOWLEDGEMENT

The satisfaction that the successful completion of the work would be incomplete unless we
mention the people, as an expression of gratitude, who made it possible and whose constant
guidance and served as light and crowed this efforts with success. This project would not have
been possible but for the support & guidance that I received from various people at different
stages of the project.

I would like to take the opportunity to thank and express my deep sense of gratitude to my Guide
Prof. Pooja Merchant.I am greatly indebted to her for providing her valuable guidance at all
stages of the study, her advice, constructive suggestions, positive and supportive attitude and
continuous encouragement, without which it would have not been possible to complete the
project I would like to thanks (Director) Dr. S.J. Jadhav, I would also like to thanks our
Academic Coordinator Dr. Kamran Rahmani for their cooperation and assistance during the
course of my project. .Lastly, I would like to thank my parents for supporting me through my
studies in College and providing me with everything I could possibly want.

I once again express my heartfelt in debtness to all-aforesaid. Any omission or error in

acknowledgment is inadvertent. For such oversights and lapses, I tender unconditional apology.

PLACE: MR. KRUSHNA BAGUL

DATE: / / MBA-II (FINANCE)

 STUDENT DECLARATION

I Krushna Bagul hereby declare that the project entitled “A STUDY ON THE FINANCIAL
ANALYSIS OF KHUSHI CONSTRUCTIONS” is a genuine and original work for the partial
fulfillment of Master in Business Administration to Savitribai Phule Pune University. To the best of
my knowledge, any part of this context has not been submitted earlier for any degree, or Certificate
examination. The collected data and certificate are true. Further I undertake that I will be solely
responsible for anything arise out of unfair mean.

DATE: - / /

PLACE: - NAME :-……………….....

SIGN: ………………………...
 INDEX

Chapter No. Title of contents Page No.

Introduction 1-30
1
Project Profile
2.1Objective of the study 31-32
2 2.2 Scope of the Study
2.3 Limitation of Study

3 Company Profile 33-41

Research Methodology 42-44

4.1Meaning
4
4.2 Definition
4.3Type Of Research
4.3 Data Collection
4.4 Secondary Data
4.5 Type of Research

Data Interpretation 45-27

5
6 Findings & Recommendations 28-30
Conclusion 31-32
7
8 References 33-36
Appendix
 EXECUTIVE SUMMARY

The project assigned to me was to study the financial health of any organization in the country. I

decided to choose one of India’s largest companies in a sector that has rapidly grown over the

last few.

Through this report, I try and analyze the financial environment in which Khushi Constructions

is operating. Through a thorough financial analysis, my aim to understand the financial factors is

influencing the company and its decision making. Later, I try and evaluate the various ratios to

appreciate their impact on company’s performance over the last four years.

The financial statements of last four years are identified, studied and interpreted in light of

company’s performance. Critical decisions of distributing dividends, Issue of bonus Debentures

and other current news are analyzed and their impact on the bottom line of the company is

assessed.

Finally, I study ratio analysis, fund flow analysis and cash flow analysis of the company to

analyzing the financial position of the company in last four years.

1
 CHAPTER 1

INTRODUCTION

2
1.1 INTRODUCTION

The study of financial statement is prepared for the purpose of presenting a periodical review
or report by the management of and deal with the state of investment in business and result
achieved during the period under review. They reflect the financial position and operating
strengths or weaknesses of the concern by properly establishing relationship between the
items of the balance sheet and remove statements.

Financial statement analysis can be under taken either by the management of the firm or
by the outside parties. The nature of analysis defers depending upon the purpose of the
analysis. The analyst is able to say how well the firm could utilize the resource of the society
in generating goods and services. Turnover ratios are the best tools in deciding these aspects.

Hence it is overall responsibility of the management to see that the resource of the firm is
used most efficiently and effectively and that the firm’s financial position is good. Financial
statement analysis does indicate what can be expected in future from the firm.

1.2 MEANING OF FINANCIAL STATEMENT

Financial statements refer to such statements which contains financial information about an

enterprise. They report profitability and the financial position of the business at the end of

accounting period. The team financial statement includes at least two statements which the

accountant prepares at the end of an accounting period. The two statements are: -

 The Balance Sheet

 Profit And Loss Account

They provide some extremely useful information to the extent that balance Sheet mirrors the

financial position on a particular date in terms of the structure of assets, liabilities and owners

equity, and so on and the Profit and Loss account shows the results of operations during a

3
certain period of time in terms of the revenues obtained and the cost incurred during the year.

Thus the financial statement provides a summarized view of financial position and operations

of a firm

1.2.1 Meaning of Financial Analysis

The first task of financial analysis is to select the information relevant to the decision under

consideration to the total information contained in the financial statement. The second step is

to arrange the information in a way to highlight significant relationship. The final step is

interpretation and drawing of inference and conclusions. Financial statement is the process of

selection, relation and evaluation.

1.3 FEATURES OF FINANCIAL ANALYSIS

 To present a complex data contained in the financial statement in simple and

understandable form.
 To classify the items contained in the financial statement inconvenient and rational
groups.

 To make comparison between various groups to draw various

conclusions.

1.4 PURPOSE OF ANALYSIS OF FINANCIAL STATEMENTS

 To know the earning capacity or profitability.

 To know the solvency.

 To know the financial strengths.

 To know the capability of payment of interest & dividends.

 To make comparative study with other firms.

 To know the trend of business.

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 To know the efficiency of mgt.

 To provide useful information to mgt

1.5 PROCEDURE OF FINANCIAL STATEMENT ANALYSIS

 The following procedure is adopted for the analysis and interpretation of financial

statements:-

 The analyst should acquaint himself with principles and postulated of accounting. He

should know the plans and policies of the managements that he may be able to find out

whether these plans are properly executed or not.

 The extent of analysis should be determined so that the sphere of work may be decided. If

the aim is find out. Earning capacity of the enterprise then analysis of income statement

will be undertaken. On the other hand, if financial position is to be studied then balance

sheet analysis will be necessary.

 The financial data be given in statement should be recognized and rearranged. It will

involve the grouping similar data under same heads. Breaking down of individual

components of statement according to nature. The data is reduced to a standard form. A

relationship is established among financial statements with the help of tools & techniques

of analysis such as ratios, trends, common size, fund flow etc.

 The information is interpreted in a simple and understandable way. The significance and

utility of financial data is explained for help indecision making.

 The conclusions drawn from interpretation are presented to the management in the form

of reports.

5
Analyzing financial statements involves evaluating three characteristics of a company: its
liquidity, its profitability, and its insolvency. A short-term creditor, such as a bank, is
primarily interested in the ability of the borrower to pay obligations when they come due. The
liquidity of the borrower is extremely important in evaluating the safety of a loan. A long-
term creditor, such as a bondholder, however, looks to profitability and solvency measures
that indicate the company’s ability to survive over a long period of time. Long-term creditors
consider such measures as the amount of debt in the company’s capital structure and its ability
to meet interest payments. Similarly, stockholders are interested in the profitability and
solvency of the company. They want to assess the likelihood of dividends and the growth
potential of the stock.

1.6 COMPARISON CAN BE MADE ON A NUMBER OF DIFFERENT

BASES.
Following are the three illustrations:
1. Intra-company basis.
This basis compares an item or financial relationship within a company in the current year
with the same item or relationship in one or more prior years. For example, Sears, Roebuck
and Co. can compare its cash balance at the end of the current year with last year’s balance to
find the amount of the increase or decrease. Likewise, Sears can compare the percentage of
cash to current assets at the end of the current year with the percentage in one or more prior
years. Intra-company comparisons are useful in detecting changes in financial relationships
and significant trends.

2. Industry averages.

This basis compares an item or financial relationship of a company with industry averages (or
norms) published by financial ratings organizations such as Dun & Bradstreet, Moody’s and
Standard & Poor’s. For example, Sears’s net income can be compared with the average net
income of all companies in the retail chain-store industry. Comparisons with industry
averages provide information as to a company’s relative performance within the industry.

3. Intercompany basis.
This basis compares an item or financial relationship of one company with the same item or

6
relationship in one or more competing companies. The comparisons are made on the basis of
the published financial statements of the individual companies. For example, Sears’s total
sales for the year can be compared with the total sales of its major competitors such as Kmart
and Wal-Mart. Intercompany comparisons are useful in determining a company’s competitive
position.

1.7.1 TOOLS OF FINANCIAL STATEMENT ANALYSIS

Various tools are used to evaluate the significance of financial statement data. Three
commonly used tools are these:
 Ratio Analysis
 Funds Flow Analysis
 Cash Flow Analysis

Ratio Analysis:
Fundamental Analysis has a very broad scope. One aspect looks at the general (qualitative)
factors of a company. The other side considers tangible and measurable factors
(quantitative). This means crunching and analyzing numbers from the financial statements.
If used in conjunction with other methods, quantitative analysis can produce excellent
results.

Ratio analysis isn't just comparing different numbers from the balance sheet, income
statement, and cash flow statement. It's comparing the number against previous years, other
companies, the industry, or even the economy in general. Ratios look at the relationships
between individual values and relate them to how a company has performed in the past, and
might perform in the future.

A) MEANING OF RATIO:
A ratio is one figure express in terms of another figure. It is a mathematical yardstick that
measures the relationship two figures, which are related to each other and mutually
interdependent. Ratio is express by dividing one figure by the other related figure. Thus a
ratio is an expression relating one number to another. It is simply the quotient of two
numbers. It can be expressed as a fraction or as a decimal or as a pure ratio or in absolute

7
figures as “so many times”. As accounting ratio is an expression relating two figures or
accounts or two sets of account heads or group contain in the financial statements.

B) MEANING OF RATIO ANALYSIS:

Ratio analysis is the method or process by which the relationship of items or group of items in
the financial statement are computed, determined and presented.
Ratio analysis is an attempt to derive quantitative measure or guides concerning the financial
health and profitability of business enterprises. Ratio analysis can be used both in trend and
static analysis. There are several ratios at the disposal of an analyst but their group of ratio he
would prefer depends on the purpose and the objective of analysis.

While a detailed explanation of ratio analysis is beyond the scope of this section, we will
focus on a technique, which is easy to use. It can provide you with a valuable investment
analysis tool.

This technique is called cross-sectional analysis. Cross-sectional analysis compares financial

ratios of several companies from the same industry. Ratio analysis can provide valuable
information about a company's financial health. A financial ratio measures a company's
performance in a specific area. For example, you could use a ratio of a company's debt to its
equity to measure a company's leverage. By comparing the leverage ratios of two companies,
you can determine which company uses greater debt in the conduct of its business. A
company whose leverage ratio is higher than a competitor's has more debt per equity. You can
use this information to make a judgment as to which company is a better investment risk.

However, you must be careful not to place too much importance on one ratio. You obtain a
better indication of the direction in which a company is moving when several ratios are taken
as a group.

OBJECTIVE OF RATIOS:

Ratios are worked out to analyze the following aspects of business organization-
A) Solvency-
1) Long term
2) Short term

8
3) Immediate
B) Stability
C) Profitability
D) Operational efficiency
E) Credit standing
F) Structural analysis
G) Effective utilization of resources
H) Leverage or external financing

1.8 STEPS IN RATIO ANALYSIS:

 The first task of the financial analysis is to select the information relevant to the decision
under consideration from the statements and calculates appropriate ratios.

 To compare the calculated ratios with the ratios of the same firm relating to the pas6t or
with the industry ratios. It facilitates in assessing success or failure of the firm.

 Third step is to interpretation, drawing of inferences and report writing conclusions are
drawn after comparison in the shape of report or recommended courses of action.

 Third step is to interpretation, drawing of inferences and report writing conclusions are
drawn after comparison in the shape of report or recommended courses of action.

1.9 PRE-REQUISITES TO RATIO ANALYSIS:

In order to use the ratio analysis as device to make purposeful conclusions, there are certain
pre-requisites, which must be taken care of. It may be noted that these prerequisites are not
conditions for calculations for meaningful conclusions. The accounting figures are inactive in
them & can be used for any ratio but meaningful & correct interpretation & conclusion can be
arrived at only if the following points are well considered.

1) The dates of different financial statements from where data is taken must be same.
2) If possible, only audited financial statements should be considered, otherwise there must
be sufficient evidence that the data is correct.

9
 3) Accounting policies followed by different firms must be same in case of cross section
analysis otherwise the results of the ratio analysis would be distorted.
4) One ratio may not throw light on any performance of the firm. Therefore, a group of ratios
must be preferred. This will be conductive to counter checks.
5) Last but not least, the analyst must find out that the two figures being used to calculate a
ratio must be related to each other, otherwise there is no purpose of calculating a ratio.

1.10 GUIDELINES OR PRECAUTIONS FOR USE OF RATIOS:

The calculation of ratios may not be a difficult task but their use is not easy. Following
guidelines or factors may be kept in mind while interpreting various ratios are

 Accuracy of financial statements

 Objective or purpose of analysis

 Selection of ratios

 Use of standards

 Caliber of the analysis

1.10.1 IMPORTANCE OF RATIO ANALYSIS:

As a tool of financial management, ratios are of crucial significance. The importance of ratio
analysis lies in the fact that it presents facts on a comparative basis & enables the drawing of
interference regarding the performance of a firm. Ratio analysis is relevant in assessing the
performance of a firm in respect of the following aspects:

1] Liquidity position
2] Long-term solvency
3] Operating efficiency
4] Overall profitability
5] Inter firm comparison
6] Trend analysis.

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1] Liquidity Position: -

With the help of Ratio analysis conclusion can be drawn regarding the liquidity position of a
firm. The liquidity position of a firm would be satisfactory if it is able to meet its current
obligation when they become due. A firm can be said to have the ability to meet its short-term
liabilities if it has sufficient liquid funds to pay the interest on its short maturing debt usually
within a year as well as to repay the principal. This ability is reflected in the liquidity ratio of
a firm. The liquidity ratio is particularly useful in credit analysis by bank & other suppliers of
short term loans.

2] Long-Term Solvency: -

Ratio analysis is equally useful for assessing the long-term financial viability of a firm. This
respect of the financial position of a borrower is of concern to the long-term creditors,
security analyst & the present & potential owners of a business. The long-term solvency is
measured by the leverage/ capital structure & profitability ratio Ratio analysis s that focus on
earning power & operating efficiency.
Ratio analysis reveals the strength & weaknesses of a firm in this respect. The leverage ratios,
for instance, will indicate whether a firm has a reasonable proportion of various sources of
finance or if it is heavily loaded with debt in which case its solvency is exposed to serious
strain. Similarly the various profitability ratios would reveal whether or not the firm is able to
offer adequate return to its owners consistent with the risk involved.

3] Operating efficiency:
Yet another dimension of the useful of the ratio analysis, relevant from the viewpoint of
management, is that it throws light on the degree of efficiency in management & utilization of
its assets. The various activity ratios measure this kind of operational efficiency. In fact, the
solvency of a firm is, in the ultimate analysis, dependent upon the sales revenues generated by
the use of its assets- total as well as its components.

4] Overall profitability:

Unlike the outsides parties, which are interested in one aspect of the financial position of a
firm, the management is constantly concerned about overall profitability of the enterprise.

11
That is, they are concerned about the ability of the firm to meets its short term as well as long
term obligations to its creditors, to ensure a reasonable return to its owners & secure optimum
utilization of the assets of the firm. This is possible if an integrated view is taken & all the
ratios are considered together.

5] Inter firm comparison:

Ratio analysis not only throws light on the financial position of firm but also serves as a
stepping-stone to remedial measures. This is made possible due to inter firm comparison &
comparison with the industry averages. A single figure of a particular ratio is meaningless
unless it is related to some standard or norm. One of the popular techniques is to compare the
ratios of a firm with the industry average. It should be reasonably expected that the
performance of a firm should be in broad conformity with that of the industry to which it
belongs. An inter firm comparison would demonstrate the firms position vice-versa its
competitors. If the results are at variance either with the industry average or with those of the
competitors, the firm can seek to identify the probable reasons & in light, take remedial
measures.

6] Trend analysis:
Finally, ratio analysis enables a firm to take the time dimension into account. In other words,
whether the financial position of a firm is improving or deteriorating over the years. This is
made possible by the use of trend analysis. The significance of the trend analysis of ratio lies
in the fact that the analysts can know the direction of movement, that is, whether the
movement is favorable or unfavorable. For example, the ratio may be low as compared to the
norm but the trend may be upward. On the other hand, though the present level may be
satisfactory but the trend may be a declining one.

12
 1.10.2 ADVANTAGES OF RATIO ANALYSIS:

Financial ratios are essentially concerned with the identification of significant accounting data
relationships, which give the decision-maker insights into the financial performance of a
company. The advantages of ratio analysis can be summarized as follows:
 Ratios facilitate conducting trend analysis, which is important for decision making and
forecasting.
 Ratio analysis helps in the assessment of the liquidity, operating efficiency, profitability and
solvency of a firm.
 Ratio analysis provides a basis for both intra-firm as well as inter-firm comparisons.
 The comparison of actual ratios with base year ratios or standard ratios helps the management
analyze the financial performance of the firm.

1.11 CLASSIFICATIONS OF RATIOS:

The use of ratio analysis is not confined to financial manager only. There are different parties
interested in the ratio analysis for knowing the financial position of a firm for different
purposes. Various accounting ratios can be classified as follows:

1. Traditional Classification

2. Functional Classification

3. Significance ratios

1. Traditional Classification

It includes the following.

 Balance sheet (or) position statement ratio: They deal with the relationship between two
balance sheet items, e.g. the ratio of current assets to current liabilities etc., both the items
must, however, pertain to the same balance sheet.

 Profit & loss account (or) revenue statement ratios: These ratios deal with the relationship
between two profit & loss account items, e.g. the ratio of gross profit to sales etc.,

13
  Composite (or) inter statement ratios: These ratios exhibit the relation between a profit &
loss account or income statement item and a balance sheet items, e.g. stock turnover ratio,
or the ratio of total assets to sales.

2. Functional Classification

These include liquidity ratios, long term solvency and leverage ratios, activity ratios and
profitability ratios.

3. Significance ratios
Some ratios are important than others and the firm may classify them as primary and
secondary ratios. The primary ratio is one, which is of the prime importance to a concern. The
other ratios that support the primary ratio are called secondary ratios.

IN THE VIEW OF FUNCTIONAL CLASSIFICATION THE RATIOS ARE

1. Liquidity ratio

2. Leverage ratio

3. Activity ratio

4. Profitability ratio

1. Liquidity ratio

Liquidity refers to the ability of a concern to meet its current obligations as & when there
becomes due. The short term obligations of a firm can be met only when there are sufficient
liquid assets. The short term obligations are met by realizing amounts from current, floating
(or) circulating assets The current assets should either be calculated liquid (or) near liquidity.
They should be convertible into cash for paying obligations of short term nature. The
sufficiency (or) insufficiency of current assets should be assessed by comparing them with
short-term current liabilities. If current assets can pay off current liabilities, then liquidity
position will be satisfactory.

To measure the liquidity of a firm the following ratios can be calculated

 Current ratio

 Quick (or) Acid-test (or) Liquid ratio

14
  Absolute liquid ratio (or) Cash position ratio

(a) Current Ratio:

Current ratio may be defined as the relationship between current assets and current liabilities.
This ratio also known as Working capital ratio is a measure of general liquidity and is most
widely used to make the analysis of a short-term financial position (or) liquidity of a firm.

Current assets
Current ratio = Current Liabilities

Components of current ratio

CURRENT ASSETS CURRENT LIABILITIES

Cash in hand Outstanding or accrued expenses
Cash at bank Bank over draft
Bills receivable Bills payable
Inventories Short-term advances
Work-in-progress Sundry creditors
Marketable securities Dividend payable
Short-term investments Income-tax payable
Sundry debtors
Prepaid expenses

(b) QUICK RATIO:

Quick ratio is a test of liquidity than the current ratio. The term liquidity refers to the ability of a
firm to pay its short-term obligations as & when they become due. Quick ratio may be defined as
the relationship between quick or liquid assets and current liabilities. An asset is said to be liquid
if it is converted into cash with in a short period without loss of value.

Quick or liquid assets

Quick ratio =
Current Liabilities

15
Components of quick or liquid ratio

QUICK ASSETS CURRENT LIABILITIES

Cash in hand Outstanding or accrued expenses
Cash at bank Bank over draft
Bills receivable Bills payable
Sundry debtors Short-term advances
Marketable securities Sundry creditors
Temporary investments Dividend payable
Income tax payable

(C) Absolute Liquid Ratio

Although receivable, debtors and bills receivable are generally more liquid than inventories, yet
there may be doubts regarding their realization into cash immediately or in time. Hence, absolute
liquid ratio should also be calculated together with current ratio and quick ratio so as to exclude
even receivables from the current assets and find out the absolute liquid assets.

Absolute liquid assets

Absolute liquid ratio =
Current liabilities

Absolute liquid assets include cash in hand etc. The acceptable forms for this ratio is 50% (or)
0.5:1 (or) 1:2 i.e., Rs.1 worth absolute liquid assets are considered to pay Rs.2 worth current
liabilities in time as all the creditors are nor accepted to demand cash at the same time and then
cash may also be realized from debtors and inventories.

Components of Absolute Liquid Ratio

ABSOLUTE LIQUID ASSETS CURRENT LIABILITIES

Cash in hand Outstanding or accrued expenses
Cash at bank Bank over draft
Interest on Fixed Deposit Bills payable
Short-term advances
Sundry creditors
Dividend payable
Income tax payable

16
2. Leverage Ratios
The leverage or solvency ratio refers to the ability of a concern to meet its long term obligations.
Accordingly, long term solvency ratios indicate firm’s ability to meet the fixed interest and costs
and repayment schedules associated with its long term borrowings.
The following ratio serves the purpose of determining the solvency of the concern.

 Proprietory Ratio

A variant to the debt-equity ratio is the proprietory ratio which is also known as equity ratio. This
ratio establishes relationship between share holders funds to total assets of the firm.

Shareholders funds
Proprietory ratio = Total assets

SHARE HOLDERS FUND TOTAL ASSETS

Share Capital Fixed Assets
Reserves & Surplus Current Assets
Cash in hand & at bank
Bills receivable
Inventories
Marketable securities
Short-term investments
Sundry debtors
Prepaid Expenses

3. Activity Ratios

Funds are invested in various assets in business to make sales and earn profits. The efficiency
with which assets are managed directly effect the volume of sales. Activity ratios measure the
efficiency (or) effectiveness with which a firm manages its resources (or) assets. These ratios are
also called “Turn over ratios” because they indicate the speed with which assets are converted or
turned over into sales.

 Working capital turnover ratio

 Fixed assets turnover ratio

 Capital turnover ratio

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  Current assets to fixed assets ratio

(a) WORKING CAPITAL TURNOVER RATIO

Working capital of a concern is directly related to sales.

Working capital = Current assets - Current liabilities

It indicates the velocity of the utilization of net working capital. This indicates the no. of
times the working capital is turned over in the course of a year. A higher ratio indicates
efficient utilization of working capital and a lower ratio indicates inefficient utilization.

Working capital turnover ratio=cost of goods sold/working capital.

Components of Working Capital

CURRENT ASSETS CURRENT LIABILITIES

Cash in hand Outstanding or accrued expenses
Cash at bank Bank over draft
Bills receivable Bills payable
Inventories Short-term advances
Work-in-progress Sundry creditors
Marketable securities Dividend payable
Short-term investments Income-tax payable
Sundry debtors
Prepaid expenses

(B) Fixed Assets Turnover Ratio

It is also known as sales to fixed assets ratio. This ratio measures the efficiency and profit
earning capacity of the firm. Higher the ratio, greater is the intensive utilization of fixed assets.
Lower ratio means under-utilization of fixed assets.

Cost of Sales
Fixed assets turnover ratio = Net fixed assets

Cost of Sales = Income from Services

Net Fixed Assets = Fixed Assets - Depreciation

(c) Capital Turnover Ratios

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Sometimes the efficiency and effectiveness of the operations are judged by comparing the cost of
sales or sales with amount of capital invested in the business and not with assets held in the
business, though in both cases the same result is expected. Capital invested in the business may
be classified as long-term and short-term capital or as fixed capital and working capital or
Owned Capital and Loaned Capital. All Capital Turnovers are calculated to study the uses of
various types of capital.

Cost of goods sold

Capital turnover ratio =
Capital employed

Cost of Goods Sold = Income from Services

Capital Employed = Capital + Reserves & Surplus

(D) Current Assets To Fixed Assets Ratio

This ratio differs from industry to industry. The increase in the ratio means that trading is slack
or mechanization has been used. A decline in the ratio means that debtors and stocks are
increased too much or fixed assets are more intensively used. If current assets increase with the
corresponding increase in profit, it will show that the business is expanding.

Current Assets
Current Assets to Fixed Assets Ratio = Fixed Assets

Component of Current Assets to Fixed Assets Ratio

CURRENT ASSETS FIXED ASSETS

Cash in hand Machinery
Cash at bank Buildings
Bills receivable Plant
Inventories Vehicles
Work-in-progress
Marketable securities
Short-term investments

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 Sundry debtors
Prepaid expenses

4. Profitability Ratios

The primary objectives of business undertaking are to earn profits. Because profit is the engine,
that drives the business enterprise.

 Net profit ratio

 Return on total assets
 Reserves and surplus to capital ratio
 Earnings per share
 Operating profit ratio
 Price – earning ratio
 Return on investments
(A) Net Profit Ratio

Net profit ratio establishes a relationship between net profit (after tax) and sales and indicates the
efficiency of the management in manufacturing, selling administrative and other activities of the
firm.

Net profit ratio= Net sales

Net profit after tax

Net Profit after Tax = Net Profit (–) Depreciation (–) Interest (–) Income Tax

Net Sales = Income from Services

It also indicates the firm’s capacity to face adverse economic conditions such as price
competitors, low demand etc. Obviously higher the ratio, the better is the profitability .

B) Return On Total Assets

Profitability can be measured in terms of relationship between net profit and assets. This ratio

20
is also known as profit-to-assets ratio. It measures the profitability of investments. The overall
profitability can be known.

Net profit
Return on assets =
Total assets
Net Profit = Earnings before Interest and Tax

Total Assets = Fixed Assets + Current Assets

(c) RESERVES AND SURPLUS TO CAPITAL RATIO

It reveals the policy pursued by the company with regard to growth shares. A very high ratio
indicates a conservative dividend policy and increased ploughing back to profit. Higher the
ratio better will be the position.

Reserves& surplus
Reserves & surplus to capital =
Capital

(D) Earnings Per Share

Earnings per share is a small verification of return of equity and is calculated by dividing the
net profits earned by the company and those profits after taxes and preference dividend by
total no. of equity shares.

Net profit after tax

Earnings per share =
Number of Equity shares

The Earnings per share is a good measure of profitability when compared with EPS of similar
other components (or) companies, it gives a view of the comparative earnings of a firm.

(e) Operating Profit Ratio

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 Operating ratio establishes the relationship between cost of goods sold and other operating
expenses on the one hand and the sales on the other.

Operating cost
Operation ratio =
Net sales

However 75 to 85% may be considered to be a good ratio in case of a manufacturing under

taking.

Operating profit ratio is calculated by dividing operating profit by sales.

Operating profit = Net sales - Operating cost

Operating profit
Operating profit ratio =
Sales
(f) Price - Earning Ratio

Price earning ratio is the ratio between market price per equity share and earnings per share.
The ratio is calculated to make an estimate of appreciation in the value of a share of a
company and is widely used by investors to decide whether (or) not to buy shares in a
particular company.

Generally, higher the price-earning ratio, the better it is. If the price earning ratio falls, the
management should look into the causes that have resulted into the fall of the ratio.

Market Price per Share

Price – Earning Ratio = aEarnings per Share

Capital + Reserves & Surplus

Market Price per Share = Number of Equity Shares

Earnings before Interest and Tax

Earnings per Share = Number of Equity Shares

(G) Return On Investments

22
Return on share holder’s investment, popularly known as Return on investments (or) return on
share holders or proprietor’s funds is the relationship between net profit (after interest and tax)
and the proprietor’s funds.

Net profit (after interest and tax)

Return on shareholder’s investment = Shareholder’s funds

The ratio is generally calculated as percentages by multiplying the above with 100. Purpose
of Ratio Analysis:

1] To identify aspects of a business’s performance to aid decision making

2] Quantitative process – may need to be supplemented by qualitative factors to get a complete
picture.
3] 5 main areas-

 Liquidity – the ability of the firm to pay its way

 Investment/shareholders – information to enable decisions to be made on the extent of the
risk and the earning potential of a business investment
 Gearing – information on the relationship between the exposure of the business to loans as
opposed to share capital
 Profitability – how effective the firm is at generating profits given sales and or its capital
assets
 Financial – the rate at which the company sells its stock and the efficiency with which it uses
its assets

1.12 ROLE OF RATIO ANALYSIS:

It is true that the technique of ratio analysis is not a creative technique in the sense that it uses the
same figure & information, which is already appearing in the financial statement. At the same
time, it is true that what can be achieved by the technique of ratio analysis cannot be achieved by
the mere preparation of financial statement.
Ratio analysis helps to appraise the firm in terms of their profitability & efficiency of

23
performance, either individually or in relation to those of other firms in the same industry. The
process of this appraisal is not complete until the ratio so computed can be compared with
something, as the ratio all by them do not mean anything. This comparison may be in the form of
intra firm comparison, inter firm comparison or comparison with standard ratios. Thus proper
comparison of ratios may reveal where a firm is placed as compared with earlier period or in
comparison with the other firms in the same industry.
Ratio analysis is one of the best possible techniques available to the management to impart the
basic functions like planning & control. As the future is closely related to the immediate past,
ratio calculated on the basis of historical financial statements may be of good assistance to
predict the future. Ratio analysis also helps to locate & point out the various areas, which need
the management attention in order to improve the situation.
As the ratio analysis is concerned with all the aspect of a firms financial analysis i.e. liquidity,
solvency, activity, profitability & overall performance, it enables the interested persons to know
the financial & operational characteristics of an organisation & take the suitable decision.

1.13 FUND FLOW ANALYSIS:

Fund may be interpreted in various ways as

(a) Cash,
(b) Total current assets,
(c) Net working capital,
(d) Net current assets.
For the purpose of fund flow statement the term means net working capital. The flow of fund
will occur in a business, when a transaction results in a change i.e., increase or decrease in the
amount of fund.
According to Robert Anthony the funds flow statement describes the sources from which
additional funds were derived and the uses to which these funds were put.
In short, it is a technical device designed to highlight the changes in the financial condition of a
business enterprise between two balance sheets.

1.13.1 Different names of Fund-Flow Statement

24
  A Funds Statement
 A statement of sources and uses of fund
 A statement of sources and application of fund
 Where got and where gone statement
 Inflow and outflow of fund statement

1.13.2 Objectives of Fund Flow Statement

The main purposes of FFS are:

 To help to understand the changes in assets and asset sources which are not readily evident in
the income statement or financial statement.
 To inform as to how the loans to the business have been used.
 To point out the financial strengths and weaknesses of the business.

1.13.3 Format of Fund Flow Statement

Sources Applications
Fund from operation Fund lost in operations
Non-trading incomes Non-operating expenses
Issue of shares Redemption of redeemable preference share
Issue of debentures Redemption of debentures
Borrowing of loans Repayment of loans
Acceptance of deposits Repayment of deposits
Sale of fixed assets Purchase of fixed assets
Sale of investments (Long Term) Purchase of long term investments
Decrease in working capital Increase in working capital

Steps in Preparation of Fund Flow Statement.

1. Preparation of schedule changes in working capital (taking current items only).
2. Preparation of adjusted profit and loss account (to know fund from or fund lost in
operations).

25
3. Preparation of accounts for non-current items (Ascertain the hidden information).
Preparation of the fund flow statement.

1.14 CASH FLOW STATEMENT:

Cash is a life blood of business. It is an important tool of cash planning and control. A firm
receives cash from various sources like sales, debtors, sale of assets investments etc. Likewise,
the firm needs cash to make payment to salaries, rent dividend, interest etc.
Cash flow statement reveals that inflow and outflow of cash during a particular period. It is
prepared on the basis of historical data showing the inflow and outflow of cash.

1.14.1 Objectives of Cash Flow Statement

1. To show the causes of changes in cash balance between the balance sheet dates.
2. To show the actors contributing to the reduction of cash balance inspire of increasing of
profit or decreasing profit.

1.14.2 Uses of Cash Flow Statement

1. It explaining the reasons for low cash balance.
2. It shows the major sources and uses of cash.
3. It helps in short term financial decisions relating to liquidity.
4. From the past year statements projections can be made for the future.
5. It helps the management in planning the repayment of loans, credit arrangements etc.

1.14.3 Steps in Preparing Cash Flow Statement

1. Opening of accounts for non-current items (to find out the hidden information).
2. Preparation of adjusted P&L account (to find out cash from operation or profit, and cash lot
in operation or loss).
3. Comparison of current items (to find out inflow or outflow of cash).
4. Preparation of Cash Flow Statement.
To preparing Account for all non-current items is easier for preparing Cash Flow Statement.
Cash from operation can be prepared by this formula also.

26
Net Profit + Decrease in Current Assets - Increase in Current Assets
OR OR
Increase in Current Liabilities Decrease in Current Liabilities.
1.14.4 Usefulness of the Statement of Cash Flows
The information in a statement of cash flows should help investors, creditors, and others assess
the following aspects of the firm’s financial position.
 The entity’s ability to generate future cash flows.
 By examining relationships between items in the statement of cash flows, investors and
others can make predictions of the amounts, timing, and uncertainty of future cash
flows better than they can from accrual basis data. The entity’s ability to pay dividends
and meet obligations.
If a company does not have adequate cash, employees cannot be paid, debts settled, or
dividends paid. Employees, creditors, and stockholders should be particularly interested in
this statement, because it alone shows the flows of cash in a business.
 The cash investing and financing transactions during the period.
By examining a company’s investing and financing transactions, a financial statement reader
can better understand why assets and liabilities changed during the period.
1. The reasons for the difference between net income and net cash
Net income provides information on the success or failure of a business enterprise. However,
some are critical of accrual basis net income because it requires many estimates. As a result,
the reliability of the number is often challenged. Such is not the case with cash. Many readers
of the statement of cash flows want to know the reasons for the difference between net
income and net cash provided by operating activities. Then they can assess for themselves the
reliability of the income number.
In summary, the information in the statement of cash flows is useful in answering the
following questions.
 How did cash increase when there was a net loss for the period?
 How were the proceeds of the bond issue used?
 How were the expansions in the plant and equipment financed?
 Why were dividends not increased?
 How was the retirement of debt accomplished?

27
  How much money was borrowed during the year?
 Is cash flow greater or less than net income?

Cash Flow Statement

Inflow of Cash Amount Outflow of cash Amount
Redemption of preference
Opening cash balance *** ***
shares
Cash from operation *** Redemption of debentures ***
Sales of assets *** Repayment of loans ***
Issue of debentures *** Payment of dividends ***
Raising of loans *** Pay of tax ***
Collection from debentures *** Cash lost in debentures ***
Refund of tax *** Closing cash balance ***

Cash from operation can be calculated in two ways:

Cash Sales Method
Cash Sales – (Cash Purchase + Cash Operation Expenses)
Net Profit Method
It can be prepared in statement form or by Adjusted Profit and Loss Account.

28
 CHAPTER 2

PROJECT PROFILE

29
 2.1 OBJECTIVE OF THE PROJECT

To understand the information contained in financial statements with a view to know the strength
or weaknesses of the firm and to make forecast about the future prospects of the firm and thereby
enabling the financial analyst to take different decisions regarding the operations of the firm.

1. To study the present financial system at Khushi Constructions.

2. To determine the Profitability, Liquidity Ratios, Cash flow and Fund flow statement.

3. To analyze the capital structure of the company with the help of Leverage ratio.

4. To offer appropriate suggestions for the better performance of the organization.

2.2 SCOPE OF THE PROJECT

The scope of the present study is confined to financial analysis of Khushi Constructions.. The
emphasis is given to analysis financial performance in terms of liquidity, profitability, leverage
and efficiency. The period covered in the study is of last 4 years. The study is limited to Khushi
Constructions.

2.3 LIMITATIONS OF THE PROJECT

1. It consumes more time and requires lots of expenditure. More time is needed to do this
study.
2. Some of the information was lacked accuracy due to which approximately values were used
for analysis. Hence the result also reveals approximate values

30
 CHAPTER 3

COMPANY PROFILE

31
Know About Khushi Construction

KHUSHI CONSTRUCTIONS have unrivalled experience in the design, installation and

maintenance of renewable energy systems into the commercial sector. With a full multi
technology capability for all renewable energy technologies we are able to design the renewable
energy solution that best fits the needs of your projects.

Our in house design team can help you through the planning and design process to provide the
best financial and technical [Link] have a large direct employed workforce of installation
engineers all of who are CRB checked and trained the highest possible level in the respective
disciplines.

Our founding ethos was to be “best in class” and this remains our guiding principle. We have a
full nationwide capability supported by a network of regional offices ensuring we can give you
this market leading service across the India.

KHUSHI CONSTRUCTION COMPANY PRIVATE LIMITED is an Indian company

incorporated on 06/02/2004 and its registered office address is 5948, ROOM NO.3, BASTI
HARPHOOL SINGH,,SADAR BAZAR,Delhi,Delhi,INDIA,110006. The corporate
identification number (CIN) of the company is U45201DL2004PTC124494 and the company
registration number is 124494. Based on the official records, the current age of the company is
17 Years 11 Months 14 Days years.

KHUSHI CONSTRUCTION COMPANY PRIVATE LIMITED is registered at Registrar of

Companies, Delhi (RoC-Delhi) and is classified as the Indian Non-Government Company. Its
authorized share capital is INR 100,000 and its paid up capital is INR 100,000. The industrial
and the SIC code for KHUSHI CONSTRUCTION COMPANY PRIVATE LIMITED is 45201.

KHUSHI CONSTRUCTION COMPANY PRIVATE LIMITED's Annual General Meeting

(AGM) was last held on 2015-09-27 and as per the records from Ministry of Corporate Affairs
(MCA), its balance sheet was last filed on 2015-03-31. The current status of this company is
Active. The directors of this company are SUNIL KUMAR GUPTA and ROHIT KAUSHAL.

32
The contact details of the company are as per the official records. Please visit the contact section
or the contact form below for contacting this company

KHUSHI CONSTRUCTION COMPANY PRIVATE LIMITED is a mca provider company

based on the National Industrial Classification (NIC) code of 45201 and it is involved in the
business activities related to this industry code such as Alteration / additions to residential
buildings, own account,Alterations/ additions on residential buildings, on a fee or contract
basis,Construction of residential buildings, on a fee or contract basis,#General construction#,On
a fee or contract basis alterations/ additions on residential buildings,On a fee or contract basis
construction of residential buildings,Own account alteration/additions to residential
buildings,Own account construction of residential buildings,Own account repair and
maintenance of residential buildings,Repair and maintenance of residential buildings on a fee or
contract basis,Repair and maintenance on own account, of residential buildings,Residential
buildings, alterations/ additions carried out, on a fee or contract basis,Residential buildings
construction, on a fee or contract basis,Residential buildings, own account
construction,Residential buildings, repair and maintenance, on a fee or contract basis.

The other Indian private limited and limited liability companies involved in similar business
activities and industry activities as of KHUSHI CONSTRUCTION COMPANY PRIVATE
LIMITED are mentioned below in the similar companies section.

ABOUT US

At Solar Choice India, we provide renewable energy solutions for our residential, commercial,
industrial, and municipal clients. We are dedicated to energy, to sustainability, to our
environment and to our region. System Design And Integration We’ve developed and employ a
five step design process in working with our customers to guide us in designing the system that
is right for your needs and budget. We partner with each client to jointly craft the very best
renewable energy solution. Solar Choice India has a design department dedicated to providing a
high standard in-system design and integration services. Through our ongoing education and
technology-evaluation initiatives, we continuously hone our design skills with best-in-class

33
products. Installation Services We’ve developed and employ a five step design process in
working with our customers to guide us in designing the system that is right for your needs and
budget. We partner with each client to jointly craft the very best renewable energy solution.
Solar Choice India has a design department dedicated to providing a high standard in-system
design and integration services. Through our ongoing education and technology-evaluation
initiatives, we continuously hone our design skills with best-in-class products. Developing
Energy Strategy For our commercial, industrial and municipal clients, Solar Choice India
recognizes that renewable energy is just one component of an in an overall energy strategy. We
collaborate with our clients to identify other opportunities to support long-term energy
objectives. Financing Strategies Solar Choice India founded and actively participates in
Alternative Energy Funding, LLC, a renewable energy investment group that provides creative
financing opportunities for our non-profit and municipal clients. Alternative Energy Funding,
LLC is also working to develop large-scale projects to help regional utilities meet their
Renewable Energy Portfolio Standards. Giving Back Solar Choice India donates ten percent of
our profits to support the many aspects of social change needed to facilitate the shift toward
creating a sustainable future for humanity. Community Outreach Solar Choice India employs an
outreach coordinator to ensure that our company participates in the larger discussion of how to
transform our society so we can live in harmony with the planet and each other. Through our
outreach program, Solar India employees volunteer their time and energy supporting worthy
environmental forums, social causes, and events.

34
 Agriculture

Large & Small Business

CLIENTS

SUSTEN BY MAHINDRA

Mahindra Susten

ACME CLEANTECH SOLUTIONS

TATA INTERNATIONAL LIMITED

SUNMOUNT ENGINEERING

KEC INTERNATIONAL LIMITED

35
 CHAPTER 4

RE SEARCH METHODOLOGY

36
4.1 MEANING:
Methodology is the systematic, theoretical analysis of the methods applied to a field of study.
It comprises the theoretical analysis of the body of methods and principle associated with a
branch of knowledge.

4.2 DEFINITION:
According to the American sociologist Earl Robert Babbie, “Research is a systematic inquiry
to describe, explain, predict, and control the observed phenomenon. Research involves
inductive and deductive methods.”

4.3 SOURCE OF DATA

A secondary data source is an original data source that is one in which the data are collected
firsthand research purpose or project. Secondary data can be collected in a number of [Link]
the conduct of research, researchers rely on two kind’s data sources secondary and secondary.

4.3.1 SECONDARY DATA: -

The secondary data are those which have already been collected by some other agency and
which have already been processed. Secondary data are information which has previously
been collected by some organization to satisfy its own need but it is being used by department
under references for an entirely different reason. Secondary data was collected from following
sources, Reference Books, Magazines, Reports, etc.

4.4 TYPE OF RESEARCH

Descriptive research design: In a descriptive design, a researcher is solely interested in
describing the situation or case under their research study. It is a theory-based design method
which is created by gathering, analyzing, and presenting collected data. This allows a
researcher to provide insights into the why and how of research. Descriptive design helps
others better understand the need for the research. If the problem statement is not clear, you
can conduct exploratory research.

37
4.5STATEMENT OF PROBLEM:

The present study is entitled as “A Study of Financial Analysis of Reliance

Communication.,”The study is basically of diagnostic nature to measure the various facts of
financial management viz.: 1liquidity, profitability, efficiency etc.

38
 CHAPTER 5

DATA ANALYSIS & INTERPRETATION

39
BALANCE SHEET

BALANCE SHEET OF KHUSHI MAR 20 MAR 19 MAR 18

CONSTRUCTIONS (in Rs. Cr.)

12 mths 12 mths 12 mths

EQUITIES AND LIABILITIES

SHAREHOLDER'S FUNDS

Equity Share Capital 1,383.00 1,383.00 1,383.00

TOTAL SHARE CAPITAL 1,383.00 1,383.00 1,383.00

Reserves and Surplus -34,329.00 11,003.00 7,933.00

TOTAL RESERVES AND SURPLUS -34,329.00 11,003.00 7,933.00

TOTAL SHAREHOLDERS FUNDS -32,946.00 12,386.00 9,316.00

NON-CURRENT LIABILITIES

Long Term Borrowings 0.00 0.00 9,359.00

Deferred Tax Liabilities [Net] 0.00 0.00 0.00

Other Long Term Liabilities 156.00 83.00 83.00

Long Term Provisions 5.00 22.00 18.00

TOTAL NON-CURRENT LIABILITIES 161.00 105.00 9,460.00

CURRENT LIABILITIES

Short Term Borrowings 28,340.00 28,335.00 18,595.00

Trade Payables 3,014.00 2,730.00 3,110.00

Other Current Liabilities 45,429.00 17,309.00 14,249.00

40
Short Term Provisions 1,219.00 1,217.00 1,219.00

TOTAL CURRENT LIABILITIES 78,002.00 49,591.00 37,173.00

TOTAL CAPITAL AND LIABILITIES 45,217.00 62,082.00 55,949.00

ASSETS

NON-CURRENT ASSETS

Tangible Assets 1,484.00 1,645.00 2,126.00

Intangible Assets 11.00 24.00 104.00

Capital Work-In-Progress 97.00 98.00 160.00

Other Assets 0.00 0.00 0.00

FIXED ASSETS 1,592.00 1,767.00 2,390.00

Non-Current Investments 7,450.00 22,524.00 13,559.00

Deferred Tax Assets [Net] 0.00 0.00 3,558.00

Long Term Loans And Advances 0.00 0.00 0.00

Other Non-Current Assets 962.00 1,115.00 1,164.00

TOTAL NON-CURRENT ASSETS 10,004.00 25,406.00 20,671.00

CURRENT ASSETS

Current Investments 4,046.00 4,218.00 4,225.00

Inventories 32.00 61.00 64.00

Trade Receivables 253.00 1,527.00 1,672.00

Cash And Cash Equivalents 274.00 225.00 201.00

Short Term Loans And Advances 6,556.00 6,528.00 3,640.00

41
OtherCurrentAssets 24,052.00 24,117.00 25,476.00

TOTAL CURRENT ASSETS 35,213.00 36,676.00 35,278.00

TOTAL ASSETS 45,217.00 62,082.00 55,949.00

OTHER ADDITIONAL INFORMATION

CONTINGENT LIABILITIES,
COMMITMENTS

Contingent Liabilities 14,803.00 17,672.00 11,249.00

CIF VALUE OF IMPORTS

Raw Materials 0.00 0.00 0.00

Stores, Spares And Loose Tools 0.00 0.00 0.00

Trade/Other Goods 0.00 0.00 0.00

Capital Goods 0.00 0.00 0.00

EXPENDITURE IN FOREIGN
EXCHANGE

Expenditure In Foreign Currency 91.73 216.69 648.20

REMITTANCES IN FOREIGN
CURRENCIES FOR DIVIDENDS

Dividend Remittance In Foreign Currency -- -- --

EARNINGS IN FOREIGN EXCHANGE

FOB Value Of Goods -- -- --

Other Earnings 82.23 185.50 630.87

BONUS DETAILS

Bonus Equity Share Capital -- -- --

42
NON-CURRENT INVESTMENTS

Non-Current Investments Quoted Market -- -- --

Value

Non-Current Investments Unquoted Book 7,450.00 22,524.00 --

Value

CURRENT INVESTMENTS

Current Investments Quoted Market Value 3,410,200.00 3,119,500.00 --

Current Investments Unquoted Book Value 4,046.00 4,218.00 4,225.00

43
PROFIT & LOSS ACCOUNT OF KHUSHI CONSTRUCTIONS (in Rs. Cr.)

PROFIT & LOSS MAR 20 MAR 19 MAR 18

ACCOUNT OF KHUSHI
CONSTRUCTIONS (in Rs.
Cr.)

12 mths 12 mths 12 mths

INCOME

REVENUE FROM 818.00 1,379.00 2,231.00

OPERATIONS [GROSS]

Less: Excise/Sevice Tax/Other 0.00 0.00 0.00

Levies

REVENUE FROM 818.00 1,379.00 2,231.00

OPERATIONS [NET]

TOTAL OPERATING 818.00 1,379.00 2,231.00

REVENUES

Other Income 0.00 86.00 0.00

TOTAL REVENUE 818.00 1,465.00 2,231.00

EXPENSES

Cost Of Materials Consumed 0.00 0.00 0.00

Operating And Direct Expenses 714.00 901.00 1,631.00

Changes In Inventories Of 0.00 0.00 0.00

FG,WIP And Stock-In Trade

Employee Benefit Expenses 105.00 105.00 28.00

Finance Costs 0.00 0.00 0.00

Depreciation And Amortisation 183.00 277.00 200.00

Expenses

44
Other Expenses 1,428.00 489.00 308.00

TOTAL EXPENSES 2,430.00 1,772.00 2,167.00

PROFIT/LOSS BEFORE -1,612.00 -307.00 64.00

EXCEPTIONAL,
EXTRAORDINARY ITEMS
AND TAX

Exceptional Items -15,251.00 8,964.00 0.00

PROFIT/LOSS BEFORE -16,863.00 8,657.00 64.00

TAX

TAX EXPENSES-
CONTINUED
OPERATIONS

Current Tax 0.00 0.00 0.00

Less: MAT Credit Entitlement 0.00 0.00 0.00

Deferred Tax 0.00 3,558.00 0.00

Tax For Earlier Years 0.00 0.00 1.00

TOTAL TAX EXPENSES 0.00 3,558.00 1.00

PROFIT/LOSS AFTER TAX -16,863.00 5,099.00 63.00

AND BEFORE
EXTRAORDINARY ITEMS

PROFIT/LOSS FROM -44,684.00 5,099.00 63.00

CONTINUING
OPERATIONS

PROFIT/LOSS FOR THE -45,338.00 2,847.00 -9,870.00

PERIOD

OTHER ADDITIONAL
INFORMATION

EARNINGS PER SHARE

45
Basic EPS (Rs.) -165.21 10.37 -38.22

Diluted EPS (Rs.) -165.21 10.37 -38.22

VALUE OF IMPORTED
AND INDIGENIOUS RAW
MATERIALS STORES,
SPARES AND LOOSE
TOOLS

Imported Raw Materials 0.00 0.00 0.00

Indigenous Raw Materials 0.00 0.00 0.00

STORES, SPARES AND

LOOSE TOOLS

Imported Stores And Spares 0.00 0.00 0.00

Indigenous Stores And Spares 0.00 0.00 0.00

DIVIDEND AND DIVIDEND

PERCENTAGE

Equity Share Dividend 0.00 0.00 0.00

Tax On Dividend 0.00 0.00 0.00

Equity Dividend Rate (%) 0.00 0.00 0.00

46
KEY FINANCIAL RATIOS OF MAR 20 MAR 19 MAR 18
KHUSHI CONSTRUCTIONS
(in Rs. Cr.)

PER SHARE RATIOS

Basic EPS (Rs.) -165.21 10.37 -38.22

Diluted EPS (Rs.) -165.21 10.37 -38.22

Cash EPS (Rs.) -163.25 11.29 -34.96

Book Value -119.11 44.78 33.68

[ExclRevalReserve]/Share (Rs.)

Book Value -119.11 44.78 33.68

[InclRevalReserve]/Share (Rs.)

Dividend / Share(Rs.) 0.00 0.00 0.00

Revenue from Operations/Share 2.96 4.99 8.07

(Rs.)

PBDIT/Share (Rs.) -5.17 -0.11 0.95

PBIT/Share (Rs.) -5.83 -1.11 0.23

PBT/Share (Rs.) -60.97 31.30 0.23

Net Profit/Share (Rs.) -163.91 10.29 -35.68

PROFITABILITY RATIOS

PBDIT Margin (%) -174.69 -2.17 11.83

PBIT Margin (%) -197.06 -22.26 2.86

PBT Margin (%) -2,061.49 627.77 2.86

Net Profit Margin (%) -5,542.54 206.45 -442.40

Return on Networth / Equity (%) 0.00 22.98 -105.94

47
Return on Capital Employed (%) 4.91 -2.45 0.34

Return on Assets (%) -100.26 4.58 -17.64

Total Debt/Equity (X) -0.86 2.29 3.00

Asset Turnover Ratio (%) 1.80 2.22 3.98

LIQUIDITY RATIOS

Current Ratio (X) 0.45 0.74 0.95

Quick Ratio (X) 0.45 0.74 0.95

Inventory Turnover Ratio (X) 25.56 22.61 34.86

Dividend Payout Ratio (NP) (%) 0.00 0.00 0.00

Dividend Payout Ratio (CP) (%) 0.00 0.00 0.00

Earnings Retention Ratio (%) 0.00 0.00 0.00

Cash Earnings Retention Ratio (%) 0.00 0.00 0.00

VALUATION RATIOS

Enterprise Value (Cr.) 28,248.56 29,255.12 33,769.05

EV/Net Operating Revenue (X) 34.53 21.21 15.14

EV/EBITDA (X) -19.77 -975.17 127.91

MarketCap/Net Operating Revenue 0.22 0.83 2.70

(X)

Retention Ratios (%) 0.00 0.00 0.00

Price/BV (X) -0.01 0.09 0.65

Price/Net Operating Revenue 0.22 0.83 2.70

Earnings Yield -248.35 2.49 -1.64

48
2. CURRENT RATIO

YEAR 2019 -2020 2018-2019 2018-2017

Current ratio 0.45 0.74 0.95

0.9

0.8

0.7

0.6
Current ratio
0.5
Column1
0.4 Column2

0.3

0.2

0.1

0
2019 -2020 2018-2019 2018-2017

INTERPREATION : In Khushi Constructions the current ratio is 0.95:1 in 2018-2017. It

means that for one rupee of current liabilities, the current assets are 0.95 rupee is available to the
them. In other words the current assets are 0.95 times the current liabilities.

Almost 3 years current ratio has decrease but current ratio in 2018-2019 is bit higher, which
makes company sounder. The consistency increase in the value of current assets will increase the
ability of the company to meets its obligations & therefore from the point of view of creditors the
company is less risky.
Thus, the current ratio throws light on the company’s ability to pay its current liabilities out of its
current assets. The Reliance Communication doesn’t have good current ratio in the year 2019-
2020,It means they will have to increase their value in the market so that they can perform well.

49
2. QUICK RATIO
YEAR 2019 -2020 2018-2019 2018-2017

Quick Ratio 0.45 0.74 0.95

0.9

0.8

0.7

0.6
Quick Ratio
0.5
Column1
0.4 Column2

0.3

0.2

0.1

0
2019 -2020 2018-2019 2018-2017

INTERPREATION: The liquid or quick ratio indicates the liquid financial position of an
enterprise. Almost in all 3 years the liquid ratio is same, which is better for the company to
meet the urgency. The liquid ratio of the Khushi Constructions has decrease from 0.95 to 0.4
5 in 2018-2017 which shows that company follow low liquidity position to achieve high
profitability.

This indicates that the dependence on the long-term liabilities & creditors are more & the
company is following an aggressive working capital policy.

Liquid ratio of Company is not favorable because the quick assets of the company are less
than the quick liabilities. The liquid ratio shows the company’s ability to meet its immediate
obligations prompt

50
3. DEBT EQUITY RATIO

YEAR 2019 -2020 2018-2019 2018-2017

4 0.00 3.49 2.21

Debt Equity Ratio
3.5

2.5
Column2
2 Column1
Debt Equity Ratio
1.5

0.5

0
2019 -2020 2018-2019 2018-2017

INTERPREATION: The debt equity ratio is important tool of financial analysis to appraise the

financial structure of the company. It expresses the relation between the external equities &

internal equities. This ratio is very important from the point of view of creditors & owners.

The rate of debt equity ratio is decreased from 2.21 to 3.49 during the year 2018-2017 to 2018-
2019. This shows that with the increase in debt, the shareholders fund also increased. This
shows long-term capital structure of the company is sound. The lower ratio viewed as favorable
from long term creditor’s point of view.

51
4. OPERATING PROFIT MARGIN
YEAR 2019 -2020 2018-2019 2018-2017

Operating Profit
Margin(%) -174.69 -8.41 11.83

200

150

100
Operating Profit Margin(%)

Column1
50 Column2

0
2019 -2020 2018-2019 2018-2017

-50

INTERPRETATION : Operating profit margin shows actual performance of the company

and evaluation of the business is done by it. The table shows the operating profit ratio of Khushi
Constructions from the period [Link] table indicates the trend of operating profit ratio
11.83 % in 2018 to -174.69 [Link] reason of decreasing operating profit margin can be
increase in operating expenses of the company

52
 5. GROSS PROFIT MARGIN

YEAR March 2020 March 2019 March -2018

Gross Profit
Margin(%) -197.06 -28.49 2.86

50

0
Jan-18 Jan-19 Jan-20

-50

Gross Profit Margin(%)

-100 Column1
Column2

-150

-200

-250

INTERPRETATION : The gross profit is the profit made on sale of goods. It is the profit
on turnover. In the year 2017-2018 the gross profit ratio is 2.86%. It has decreased to -28.49% in
the year 2019 due to increase in sales with corresponding more increase in cost of goods sold.
It is continuously declined from 2017-2018 t0 2018-2019 due to high cost of purchases &
overheads. Although the gross profit ratio is declined during the years 2018-2019 to 2019-2020.
The net sales and gross profit is continuously increasing from the year 2018-2019 to 2019-2020.

53
[Link] PROFIT RATIO

YEAR March 2020 March 2019 March -2018

Net Profit/Share -163.91 10.29 -35.68

(Rs.)

20

0
Jan-18 Jan-19 Jan-20
-20

-40

-60
Net Profit/Share (Rs.)
-80 Column1
Column2
-100

-120

-140

-160

-180

INTERPRETATION :
The net profit ratio of the company is low in all year but the net profit has decreased from this
ratio of 3 year it has been observe that the from March 2018 to March 2019 the net profit has
decreased and it increased in the year March 2019.

Profitability ratio of company shows considerable decrease in 2 years and increase in the 2019.
Company’s sales have decreased in 2 years and increased in the 2019. At the same time
company struggling to control the expenses i.e. manufacturing & other expenses.

It is a clear index of cost control, managerial efficiency & sales promotion.

8. RETURN ON CAPITAL EMPLOYED:

54
 YEAR March 2020 March 2019 March -2018

Return on Capital 4.91 -2.45 0.34

Employed
5

2
Return on Capital Employed:
1 Column1
Column2
0
Jan-18 Jan-19 Jan-20
-1

-2

-3

INTERPRETATION:

The return on capital employed shows the relationship between profit & investment. Its purpose
is to measure the overall profitability from the total funds made available by the owner &
lenders.
The return on capital employed of Rs.0.29 indicate that net return of Rs.0.29 is earned on a
capital employed of Rs.100. this amount of Rs.0.29 is available to take care of interest, tax,&
appropriation. The return on capital employed is show-mixed trend, i.e. it decrease in March
2018, then increase in march 2019 and finally decrease in March 2020 . It is highest that is 4.91.
This indicates a very high profitability on each rupee of investment & has a great scope to attract
large amount of fresh fund.

55
9. WORKING CAPITAL

YEAR March 2020 March 2019 March -2018

0 00 -7.33 -3.31
Jan-18 Jan-19 Jan-20
Working Capital
-1

-2

-3
Working Capital
-4 Column1
Column2
-5

-6

-7

-8

INTERPRETATION:

It is very clear from the above calculations that the working capital of the company is gradually
decreasing over the years,which shows the company’s liquidity position is not [Link] results
is negative working capital over the years.

56
10. RETURN ON ASSET

YEAR March 2020 March 2019 March -2018

3.18 4.53 5.44

Return on Asset

4.5

3.5

3
#REF!
2.5
Column1
2 Column2

1.5

0.5

0
Jan-18 Jan-19 Jan-20

INTERPRETATION:

The table above depicting the data regarding net profit to total asset of Khushi Construction ,
which were working in India during the period of [Link] the year 2018 ,the net profit was
the highest as compared to other [Link] after 2018 it started decreasing,In 2018 ,it decreased
by 5.44 .In 2020 return on asset was 3.18 which was negative due to loss incurred by the
company.

57
11. RETURN ON NET WORTH.

YEAR March 2020 March 2019 March -2018

Return on Net 7.27 8.67 10.68

Worth.

12

10

Return on Net Worth.

6
Column1
Column2
4

0
Jan-18 Jan-19 Jan-20

INTERPRETATION:
The table shows the returns on net worth of Khushi Constructions
Infocomm for last 3 [Link] is evident that in the year 2018 it was 10.89 % which means the
company earning 10.89 % of its shareholders but it decrease suddenly to 8.67 in 2019 .this is
because of increase in shareholders fund was more than increase in net profit. Again it has
decrease in 2020.

58
12. ASSET TURNOVER
.

YEAR March 2020 March 2019 March -2018

34.67 47.90 46.96

Asset Turnover
50

45

40

35

30
Column1
25
Column2
20 Column3

15

10

0
Jan-18 Jan-19 Jan-20

INTERPRETATION:

Asset turnover ratio has been increased from 46.96 to 47.90 from the year 2018-2019 then it has
decrease from 47.90 to 34.67 in the year 2019-2020.

13. MARKET RATIO

59
Market value ratios relate an observable market value ,the stock price, to bool values obtained
from the firm’s financial statements.

Earnings per share

YEAR March 2020 March 2019 March -2018

Earnings
67 per share 61.50 66.17 60.34
66
65
64
63
62 Earnings per share
61 Column1
Column2
60
59
58
57
Jan-18
Jan-19 Earnings per share
Jan-20

INTERPRETATION:

From the above table it can be seen that earning per share of the company showing increasing
trend. In the year 2018 the ratio was 60.34,but in 2019 it has increased to 66.17
Because of increase in net profit. Again it has increase to 66.17 in 2019 and then decreased to
61.50 in 2020.

14. PRICE EARNING RATIO

60
 YEAR March 2020 March 2019 March -2018

P/E Ratio 17.75 20.21 14.36

25

20

15

P/E Ratio
Column1
10
Column2

0
9 5 1 7 3 9 5 1 7 3 9 5 1 7 3 9 5 1 7 3 9
n-9 n-0 n-1 n-1 n-2 n-2 n-3 n-4 n-4 n-5 n-5 n-6 n-7 n-7 n-8 n-8 n-9 n-0 n-0 n-1 n-1
Ja Ja Ja Ja Ja Ja Ja Ja Ja Ja Ja Ja Ja Ja Ja Ja Ja Ja Ja Ja Ja

INTERPRETATION:

The P/E Ratio has increased from 14.36 in 2018 to [Link] the firm has positive earnings.

61
15. DIVIDEND PAYOUT RATIO

YEAR March 2020 March 2019 March -2018

Dividend Payout 12.46 10.10 9.68

ratio

14

12

10

8
Dividend Payout ratio
Column1
6 Column2

0
Jan-18 Jan-19 Jan-20

INTERPRETATION:
The dividend payout ratio has increase from 000 to 12.46 from 2018 to 2020.

62
CHAPTER 6

FINDINGS

FINDINGS

63
 The operating profit ratio of Khushi Constructions from the period [Link]
table indicates the trend of operating profit ratio 9.81 % in 2018 to -174.69 2020.
 The net profit ratio of the company is low in all year but the net profit has decreased
from this ratio of 3 year it has been observe that the from March 2018 to March 2019 the
net profit has decreased and it increased in the year March 2019.
 The return on capital employed is show-mixed trend, i.e. it decrease in March 2018, then
increase in march 2019 and finally decrease in March 2020 . It is highest that is 4.91.
This indicates a very high profitability on each rupee of investment & has a great scope to
attract large amount of fresh fund.
 It is very clear from the above calculations that the working capital of the company is
gradually decreasing over the years, which shows the company’s liquidity position is not
[Link] results is negative working capital over the years.
 Depicting the data regarding net profit to total asset of Khushi Constructions, which
were working in India during the period of [Link] the year 2018 ,the net profit was
the highest as compared to other years.
 The table shows the returns on net worth of Khushi Constructions for last 3 [Link] is
evident that in the year 2017 it was 10.89 % which means the company earning 10.89 $
of its shareholders but it decrease suddenly to 8.67 in 2019 .this is because of increase in
shareholders fund was more than increase in net profit. Again it has decrease in 2020.
 Asset turnover ratio has been increased from 44.26 to 46.96 from the year 2018-2019
then it has decrease from 47.90 to 34.67 in the year 2019-2020.
 table it can be seen that earning per share of the company showing increasing trend. In
the year 2018 the ratio was 50.05,but in 2019 it has increased to 60.3
 Because of increase in net [Link] it has increase to 66.17 in 2019 and then
decreased to 61.50 in 2020.
 The P/E Ratio has increased from 6.47 in 2018 to [Link] the firm has positive
earnings.
 The dividend payout ratio has increase from 000 to 13.46 from 2017 to 2020.

64
 CHAPTER 7

CONCLUSION

CONCLUSION

Based on my study the following conclusions have been drawn: Identified the seven factors

65
which are important indicators of the construction industry they are liquidity factor, activity
factor, long-term solvency, efficiency, profitability, asset management, inventory factors. A
performances result shows that the performance of Indian construction industries in our
study has been diminishing year by year. The reason might be continuous economic crises
and still continuous the stagnation. The performance grades of the Indian construction
industry shows that pioneer position of the construction sector have 40% of companies
under Zero performance index. The government should analyses the financial state of the
construction industry urgently and undertake related action. From discriminate analysis
shows that 45 % companies in safe zone, 5% of companies in Distress zone and remaining
55% companies under grey zone. Performance evaluation study provide a basis for the
governments to undertake corrective action Meanwhile, in order to start any action a
realistic and continuous review of the industry is a necessity.

Khushi Constructions has better performance in ratio analysis than its peers HCC and Punj
Lloyd. . Khushi Constructions has good debtors, creditors turnover and collection period as
compared to other companies. Profitability wise Khushi Constructions has best performance
over the years than its peers. 3. Khushi Constructions has good operating ratios than other
companies As per the Khushi Constructions all Ratios are Analyze we can conclude that it is
lover in the activity ratio but little bit higher in profit margin and it has low debt overall we
can say that this company get more benefit in the future right now it get struggle but as per
the growth of ratio it get good and as per the industry average it’s performance is very good
as compare to the industry average so we can say this is the above average company

REFERENCES

66
 Jain, M. Y. (n.d.). Management Accounting. Mc Graw Hill.

 R.K. Sharma and Shashi K. Gupta :Management Accounting Kalyani Publishers, New
Dellii, 1988

 Chandra Prasanna Fundamentals of Financial Management Tata McGraw-Hill Publishing

Co. Ltd., New Delhi, 1990.

 Arulanandan M. A. : Raman K. S. Advanced Accountancy Himalaya

Publishing House, Bombay, 1989.
WEBSITES

a. TARI website [Link]

b. Khushi Constructions official website [Link]
c. Reliance official website [Link] .
d. [Link]/topic/Reliance-Jio
e. [Link]/about/reliance-jio/
f. [Link]/topic/reliance-jio-16
g. [Link] › NEWS ›
h. [Link] (n.d.).

67