A STUDY ON FINANCIAL STATEMENT ANAYSIS
AT
UNIVERSAL ENGINEERS CHENNAI PVT LTD
Srikanth
T
40740354
INTRODUCTION
Financial statement analysis is the process of reviewing and
analyzing the company's financial statements to make better
economic decisions. It is used by a variety of stakeholders. Every
management aims to utilize its funds in a best possible and
profitable way.
Financial statement analysis is the process of examine a
company’s performance in the context of its industry and
economic environment in order to arrive at decision or
recommendation.
OBJECTIVE OF THE STUDY
The main objective of this financial statement analysis for any company is to
provide the necessary information required by the financial statement users for
informative decision making, assessing the current and past performance of
the company, predicting the success or failure of the business.
The primary objective of the financial statement is to provide financial
information about the company. To analyse the financial position of the
company.
To make comparative study of financial statements of different years.
To compare the Impact of ratios on the performance of company.
SCOPE OF THE STUDY
The study's scope includes the numerous variables that influence
the company's financial position. This financial analysis helps
them understand the best use of available resources by the firm,
the financial condition of the firm, and the determination of the
company's success.
Analyse financial ratios to assess profitability, solvency, working
capital management, liquidity, and operating effectiveness of the
company
INDUSTRY PROFILE
The leading Organizations in the field of Design, Development
and Fabrication of various products and equipment catering to
Integral Coach factory, Indian Railways, . They are in
experienced in a wide range of product fabrication from Mild
Steel to precious metals like Aluminium, Stainless steels, etc. and
ranging from simple fabrication to Pressure vessels and
Bioreactors.
Manufacture of fabricated structural products of iron or steel:
bridges and bridge parts, towers, masts, columns, girders, trusses,
arches, sluice gates, piers.
COMPANY PROFILE
UNIVERSAL ENGINEERS CHENNAI PRIVATE LIMITED is a Non-
Government company, incorporated on 07 Jul, 2009. It's a private unlisted
company and is classified as ‘company limited by shares'. Universal Engineers
Chennai Private Limited is majorly in Manufacturing (Metals & Chemicals,
and products thereof) business from last 13 years and currently, company
operations are active. Current board members & directors are HAMSA and
VINOD BOMB
SUCCESSFUL CUSTOMERS ARE
RAILCOACH FACTORY
MODERN COACH FACTORY
LITERATURE REVIEW
Kennedy and Muller (1999) “The analysis and interpretation of
financial statements are an attempt to determine the significance
and meaning of financial statements data so that the forecast may
be made of the prospects for future earnings of the company.
T.S.Reddy and Y.Hari Prasad Reddy, without subjecting these to
data analysis, many fallacious conclusions might be drawn
concerning the financial condition of the enterprise. Financial
statement analysis is undertaken by creditors, investors and other
financial statement users in order to determine the credit
worthiness and earning potential of an entity.
ANALYTICAL TOOLS
THE TOOL USED FOR THIS FINANCIAL STATEMENT
ANALYSIS
COMPARATIVE BALANCE SHEET
COMMON SIZE BALANCE SHEET
RATIO ANALYSIS
DATA COLLECTED (Balance sheet)
COMMON-SIZE BALANCE SHEET FOR 5
YEARS
274615621
222653583 223001144
210962732 210547997
2 2 2 2 2
0 0 0 0 0
1 1 2 2 2
8 9 0 1 2
• From the bar diagram using common-size
balance sheet of 5 years it is inferred that, the
company profit is decreased after 2018 for next
two years due to decrease in number of
production, from 2021 the company financial
health increasing and in 2022 [ 274615621].
4 COMPARATIVE BAR 2 -2
2, 0 . DIAGRAM 0 0
2, 02 4 0
2, 02 02 ,0
1 1 1
2, 02 ,0 0
, . 8 9
2, 01 ,0
8 0
, 2
2, 01 ,0
6 0
,
2, 01 ,0
4 0
,
2, 01 ,0
2 0
,
2, 01 ,0 0
,
2, 0 ,08 0
,
2, 0 ,06 0
,
0 ,0
4 0
, 2 2
,0 0
, 0 0
Current Current
, 0 1 1
Asse Liabiliti
0 8 9
ts es
0
Ø From the above bar diagram using comparative
balance sheet of 2018-19, while compared with
previous year there is an decrease in current year
that is -11,690,851 and in percentage -5%.
From the above bar diagram using comparative
balance sheet of 2018-19, while compared with
previous year there is an increase in current year that
is 414,735 and in percentage 0.19%.
From the above bar diagram using comparative balance
sheet of 2020 – 2021, while compared with previous year
there is an increase in current year that is 12,453,147 and
in percentage 5%.
From the above bar diagram using comparative
balance sheet of 2021-22, while compared with
previous year there is an increase in current year that
is 51,614,477 and in percentage 23%.
RATIO ANALYSIS
A. LIQUIDITY RATIOS C. PROFITABILITY RATIO
Current Ratio GROSS PROFIT RATIO
Quick Ratio NET PROFIT RATIO
OPERATING PROFIT RATIO
B. SOLVENCY RATIOS
DEBT EQUITY RATIOS
PROPRIETARY RATIOS
CURRENT RATIO
CURRENT RATIO = CURRENT ASSET / CURRENT
LIABILITIES
YEAR CURRENT CURRENT RATI
ASSETS O
LIABILITIES
2018 179,653,911 76,840,273 2.34
2019 174,600,610 70,335,115 2.48 From the above table it is represents that, the current ratio
2020 180,720,376 77,401,212 2.33 is increased in the year 2018-2019 with 2.48 Whereas,
2021 191,610,416 84,157,385 2.27 exceptionally low in the year 2021-2022 with 1.84. It is
2022 242,391,008 131,662,050 1.84
noticed that year after year the Current ratio is declining.
QUICK RATIO
QUICK RATIO = (CURRENT ASSETS - INVENTORY ) /
CURRENT LIABILITIES
YEAR CURRENT INVENTORY
R
CURRENT
A
ASSETS LIABILITIES
TI
O
2018 179,653,91 87,673,000 76,840,273 1.2
1
2019 174,600,61 101,106,000 70,335,115 1.04 From the above table it is inferred that, the quick ratio is
0
2020 180,720,37 90,083,000 77,401,212 1.17 increased in the year 2017-2018 with 1.2 Whereas,
6 exceptionally low in the year 2021-2022 with 0.88. It is
2021 191,610,41 92,145,000 84,157,385 1.18
6 noticed that year after year the Quick ratio is declining
2022 242,391,00 126,645,343 131,662,050 0.88
8
SOLVENCY RATIO – DEBT EQUITY
RATIO
DEBT EQUITY RATIO = LONG
TERM DEBT / SHAREHOLDERS
FUND
RAT
LONG TERM SHARE HOLDER'S I
YEAR
DEBT FUND O
2018 3,331,628.00 128,410,490.00 0.03
2019 1,872,798.00 128,410,490.00 0.01
2020 4,167,397.00 128,410,490.00 0.03
2021 3,474,372.00 128,410,490.00 0.03
2022 1,022,939.00 128,410,490.00 0.01
PROPRIETARY RATIO
PROPRIETARY RATIO = SHAREHOLDERS FUND / TOTAL ASSET
YEA
0 0 0
R
0 0
0 .
7
.
. S. .
0
SHAREHOLDER'S 0 . 5
6 6
5
YEAR TOTAL ASSET RATIO 6 1 1 .
FUND 0 . 8 8 4
5
.
0 7
4
.
0
3
.
2018 128,410,490.00 222,653,583.00 0.58 0
2
0 .
1 2 2 2 2 2
0 0 R 0 0 0
2019 128,410,490.00 210,962,732.00 0.61 1 1 2S 2 2
8 9 0 1 2
2020 128,410,490.00 210,547,997.00 0.61
From the above table it is inferred that, the proprietary
ratio is increased in the years 2018-2019 & 2019-2020
201 128,410,490.00 223,001,144.00 0.58
with 0.61. Whereas, exceptionally low in the year 2021-
2022 128,410,490.00 274,615,621.00 0.47
2022 with 0.47. It is noticed that year after year the
proprietary ratio is declining.
PROFITABILIT RATIO- GROSS PROFIT RATIO
GROSS PROFIT RATIO = (GROSS PROFIT / REVENUE
FROM
OPERATION) * 100
YEA GROSS
REVENUE FROM OPERATION RATIO
R PROFIT
135,633,730
2018 569,167,167.00 23.83
2019 119,724,6340 656,858,287.00 18.23
118,441,3390
From the above table it is inferred that, the gross profit
2020 698,880,365.00 16.95
ratio is increased in the year 2017 – 2018 with 23.83
2021 94,473,130.0 478,707,097.00 19.74
Whereas, exceptionally low in the year 20192020 with
16.95. It is noticed that year after year the Gross Profit
2022
177,617,414.
869,735,646.00 20.42 ratio is Inclining.
0
NET PROFIT RATIO
NET PROFIT RATIO = (NET PROFIT / REVENUE
FROM
OPERATIONS) * 100
YEAR REVENUE FROM
NET PROFIT RATIO
OPERATION
2018 12,592,188.00 569,167,167.00 2.21
2019 12,091,294.00 656,858,287.00 1.84
2020 7,672,115.00 698,880,365.00 1.10 From the above table it is inferred that, the net profit rati
is increased in the year 2021 – 2022 with 6.91 Whereas,
2021 16,294,497.00 478,707,097.00 3.40 exceptionally low in the year 2019-2020 with 1.10. It is
noticed that year after year the Net Profit ratio is
2022 60,118,244.00 869,735,646.00 6.91 Inclining.
OPERATING PROFIT RATIO
OPERATING PROFIT RATIO
OPERATING PROFIT RATIO = (OPERATING COST / 3
0
REVENUE FROM OPERATION) * 100 2
5
2
0
1
OPERATING REVENUE FROM RATIO 5
YEAR 1
PROFIT OPERATION
0
5
0
2018 145,186,932.00 569,167,167.00 25.51 2 2 2 2 2
0 0 0
OPERATING PROFIT 0 0
1 1 RATIO 2 2 2
2019 113,947,848.00 656,858,287.00 17.35 8 9 0 1 2
2020 111,961,339.00 698,880,365.00 16.02
From the above table it is inferred that, the operating
profit ratio is increased in the year 2017 – 2018 with
2021 93,849,130.00 478,707,097.00 19.60
25.51 Whereas, exceptionally low in the year
20192020 with 16.02. It is noticed that year after year
2022 175,442,414.00 869,735,646.00 20.17
the Operating Profit ratio is Inclining
FINDINGS
The Comparative balance sheet is increased in the year 2021-2022 with 12,453,147 with 5%
Whereas, exceptionally low in the year 2018-2020. It is noticed that year after 2021 the company
financial health is inclining.
The Common-size balance sheet is inferred that, from 2018 – 2021 the company profit is
decreased because of less in number of productions, after 2021 the profit is increased 15% while
compared with previous years.
The Current Ratio is increased in the year 2018-2019 with 2.48 Whereas, expentialcally low in
the year 2021-2022 with 1.84. It is noticed that year after year the Current ratio is declining.
The Quick Ratio is increased in the year 2018 with 1.2 Whereas, exceptionally low in the year
2021-2022 with 0.88. It is noticed that year the Quick ratio is declining.
The Debt Equity Ratio is increased in the years 2018 - 2022 with 0.03 Whereas, exceptionally
low in the years 2018-2019 & 2021-2022 with 0.01. It is noticed that year after year the Debt
Equity ratio is declining.
The Proprietary Ratio is increased in the years 2018-2022 with 0.61 Whereas, exceptionally low
in the year 2021-2022 with 0.47. It is noticed that year after year the Debt Equity ratio is
SUGGESTIONS
The business can improve its liquidity position to ensure long-term viability.
The business might look into ways to keep its current assets and liabilities. The
company might be able to keep an optimal liquidity ratio thanks to this.
In order for the business to become more profitable in the years to come, it is suggested
that it place a strong emphasis on the gross profit, net profit, and operation profit ratio.
If the company focuses more on turnover and achieves the company's overall goals, it
will have a bright future.
The debt-to-equity ratio needs to be concentrated for the years after 2020. The company
can concentrate on achieving a better debt-to-equity ratio.
The proprietary ratio for the years 2020 and beyond must be closely monitored by the
business.
Over time, the company has increased its Assets investment. The business should be
careful not to put too much money into non-current assets, as this will reduce its
liquidity.
The company's debt-to-equity ratio may become unbalanced as a result of this.
CONCLUSION
To conclude, the Universal engineers Chennai Company has maintained its
influence on the industry. We can see companies downfall, but it is expected to
rebound because it is such a big company. We can see from this study that
Universal engineer’s willingness to make contractual payments has been
severely harmed. Looking at all five years, 2021-22 is regarded as the
strongest financial year of the four. Company had the highest current and
quick ratio in 2018-2019, and the rate has since fallen, indicating that liquidity
has declined over time. It is expected that the company will rebound from the
loss if its assets are well managed and its debts are adequately financed .
REFERENCE
Agus Wahyudin, Badingatus Solikhan (2017), “Corporate governance implementation rating in Indonesia
and its effects on financial performance”,
AnandaraoSuvvari, RajaSethuDurai S., PhanindraGoyari (2019), “Financial performance assessment using
Grey relational analysis (GRA): An application to life insurance companies in India”
Avinandan Mukherjee, Rosita Nunez (2019), “Doing well by doing good: can voluntary CSR reporting
enhance financial performance’’
Binod Guragai, Paul D. Hutchison (2020), “Financial performance following discontinued operations”,
Review of Accounting and Finance
Carmen-Pilar Martí-Ballester (2015), “Socially Responsible Investment.
Carolina Herrera-Cano, Maria Alejandra Gonzalez-Perez (2019), “Representation of
Women on Corporate Boards of Directors and Firm Financial Performance”, Diversity within Diversity
Management.
Deven Krishnan, Rafikul Islam, SuhaimiMhd. Sarif (2019), “A hierarchical model to enhance financial and
strategic performance of an oil and gas company in Malaysia”
Fellipe Silva Martins, Wagner Cezar Lucato (2018), “Structural production factors’ impact on the financial
THANK YOU
