PROJECT REPORT on BY HARSHITHA M R 1NZ18MBA28 ...

1

PROJECT REPORT

on

A STUDY ON FINANCIAL PERFORMANCE OF

COLOR TOKENS, INDIA LLP

BY

HARSHITHA M R

1NZ18MBA28

Submitted to

DEPARTMENT OF MANAGEMENT STUDIES

NEW HORIZON COLLEGE OF ENGINEERING,

OUTER RING ROAD, MARATHALLI,

BENGALURU

In partial fulfilment of the requirements for the award of the degree of

MASTER OF BUSINESS ADMINISTRATION

Under the guidance of

Mr. SANTOSH KUMAR S

SENIOR ASSISTANT PROFESSOR

2018 - 2020

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CERTIFICATE

This is to certify that HARSHITHA M R bearing USN 1NZ18MBA28 is a

bonafide student of Master of Business Administration course of the Institute 2018-

2020, autonomous program, affiliated to Visvesvaraya Technological University,

Belgaum. Project report on a study on financial performance of COLOR TOKENS

India LLP, BANGLORE is prepared by him/her under the guidance of Mr.

SANTOSH KUMAR S, in partial fulfilment of requirements for the award of the

degree of Master of Business Administration of Visvesvaraya Technological

University, Belgaum Karnataka.

Signature of Internal Guide Signature of HOD Principal

Name of the Examiners with affiliation Signature with date

1. External Examiner

2. Internal Examiner

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Certificate of Experience

This is to certify that HARSHITHA M R, has completed her Project work with ColorTokens India LLP in the

Finance team as a Consultant from 13th Dec 2019 to 10th Feb 2020.

Harshitha M R completed the following activities during her Project work period:

- Ensuring all the Book Keeping records are in place.

- Setting up the Finance Operations processes for eg. Purchase Bills, Agreements, Invoice Bills,

Payment Vouchers, Expense forms.

- Setup the HR operations function and processes in place.

We found her to be a self-starter and have worked sincerely on her assignments and her

performance was good.

We wish her all the very best for the future. For

ColorTokens India LLP

Eric James I accept and acknowledge

Senior Manager, HR HARSHITHA M R

Date: 16-02-2020

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DECLARATION

I, HARSHITHA M R, hereby declare that the project report on A study on financial performance of

COLOR TOKENS India LLP Banglore with reference to COLOR TOKEN INDIA LLP BANGLORE

prepared by me under the guidance of Mr. Santosh kumar S, faculty of M.B.A Department, New Horizon

College of Engineering.

I also declare that this project report is towards the partial fulfilment of the university regulations for the

award of the degree of Master of Business Administration by Visvesvaraya Technological University,

Belgaum.

I have undergone an industry project for a period of Eight weeks. I further declare that this report is based on

the original study undertaken by me and has not been submitted for the award of a degree/diploma from any

other University / Institution.

Signature of Student

Place:

Date:

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ACKNOWLEDGEMENT

The successful completion of the project would not have been possible without the guidance

and support of many people. I express my sincere gratitude to Mr. BIJU MOHAN, finance

and operation manager, COLOR TOKENS India LLP Bangalore for allowing doing my

project at Color tokens.

I thank the staff of COLOR TOKENS, Bengaluru for their support and guidance and helping

me in completion of the report.

I am thankful to my internal guide Mr. SANTOSH KUMAR S for his constant support and

inspiration throughout the project and invaluable suggestions, guidance and also for

providing valuable information.

Finally, I express my gratitude towards my parents and family for their continuous support

during the study.

HARSHITHA M R

1NZ18MBA28

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TABLE OF CONTENTS

SL. NUMBER CONTENTS PAGE NUMBERS

1 Executive Summary 7

2 Theoretical Background Of The Study 8-11

3 Industry Profile &Company Profile 12-28

4 Application Of Theoretical Framework 29-38

5 Analysis And Interpretation Of Financial

Statements And Reports 39-68

6 Learning Experience- Findings,

Suggestions And Conclusion 69-72

7 Bibliography 73

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EXECUTIVE SUMMARY

This report is an analysis of the financial operations and performance of the company. This

report will provide an assessment and analysis of the profitability, liquidity, performance

and financial position of the company using figures from the financial statements.

In the analysis, financial ratios were used to gain a critical review of the specific areas of

assessment of the company’s performance. The ratios were able to provide a clear view of the

overall performance of the company.

Gross Profit margin is very good which implies that direct costs are properly monitored. The

company has a healthy liquidity position which means that it can rely on its current assets to

finance the current liabilities and does not have to commit to long term debts. However, it can be

noticed that the future does not look bright, firstly because of recurring losses and secondly

because unhealthy financing structure giving that it relies a heavily on debts.

It has been recommended that the company should look into ways of improving sales in period of

low demand to improve profitability and also increase financing to expand and grow the business.

Given the nature of the business, it has been interesting to evaluate the business by comparing

with past year results and also with the industry benchmark.

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CHAPTER-1

THOERETICAL BACKGROUND

OF THE STUDY

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1.1 THOERETICAL BACKGROUND OF THE STUDY

Ratio Analysis is a very powerful and most commonly used tool of analysis and interpretation of financial

statements. It concentrates on the inter-relationship among figures appearing in the financial statement.

Ratio analysis helps to analyse the past performance of a company and to make future projections. It

allows various interested parties like management, shareholders, potential investors, creditors, government

and other analytics to make an evaluation of the various aspects of company’s performance from their

own point of view and interest. For Example, management and shareholders may be interested in the

company’s profitability while creditors and debenture holders may be interested in the solvency of the

company.

Financial ratio analysis is used by credit professionals to answer these questions

about customers:

Is the business profitable?

Can the business pay its bills on time?

How is the business financed?

How does the company financial performance this year compare to last year?

How does the customer’s performance compare with its competitors?

How does the customer’s performance compare to the industry norms?

A ratio is simply one number expressed in terms of another number. In other words, a ratio

expresses mathematical relationship between one number and another.

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Ratio analysis is a tool to help evaluate the overall financial condition of a customer's business.

Ratio's are useful for making comparisons between a customer and other businesses in an industry. A

financial ratio is a simple mathematical comparison of two or more entries from a company's financial

statements. Creditors use ratios to chart a company's progress. uncover trends and point to potential

problem areas.

CLASSIFICATION OF RATIO:

A) Classification according to the nature of accounting statement from which the ratios are derived:

1. Balance Sheet Ratios.

2. Profit and Loss Account Ratios.

3. Combined or Composit Ratios.

B) Classification from the point of view of financial management or objective:

1. Liquidity Ratios.

2. Capital Structure Ratios.

3. Turnover Ratios.

4. Profitability Ratios.

C) LIQUIDITY RATIOS:

1. Current Ratio

2. Quick Ratio

D) CAPITAL STRUCTURE RATIOS:

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1. Debt-Equity Ratio

2. Proprietary Ratio

3. Interest Coverage Ratio

4. Capital Gearing Ratio

E) TURNOVER RATIOS:

1. Inventory Turnover Ratio

2. Debtors Turnover Ratio

3. Fixed Asset Turnover Ratio

4. Capital Turnover Ratio

F) PROFITABILITY RATIOS:

1.Gross Profit Ratio

2.Net Profit Ratio

3.Operating Ratio

A)Return on investment (ROI)

B)Return on equity (ROE)

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CHAPTER 2

INDUSTRY PROFILE

AND

COMPANY PROFILE

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2.1 INDUSTRY PROFILE:

The standard approach to securing data centers has emphasized strong perimeter protection to keep threats on the

outside of the network. However, this model is ineffective for handling new types of threats – including advanced

persistent threats and coordinated attacks. What’s needed is a better model for data center security: one that

assumes threats can be anywhere and probably are everywhere, then acts accordingly. Micro-segmentation,powered

by Color Tokens India LLP.not only adopts such an approach, but also delivers the operational agility of network

virtualization that is foundational to a modern software-defined data center.

Threats to Today’s Data Centers Research shows that more than 30 percent of data center outages are caused by

cyber attacks, and a 60 minute outage can cost businesses upwards of half a million dollarsi . Cyber threats today

are coordinated attacks that often include months of reconnaissance, vulnerability exploits, and “sleeper” malware

agents that can lie dormant until activated by remote control. Despite increasing types of protection at the edge of

data center networks – including advanced firewalls, intrusion prevention systems, and network-based malware

detection – attacks are succeeding in penetrating the perimeter, and breaches continue to occur. The primary issue is

that once an attack successfully gets past the data center perimeter, there are few lateral controls to prevent threats

from traversing inside the network.

The best way to solve this is to adopt a stricter, micro-granular security model with the ability to tie security to

individual workloads and the agility to provision policies automatically. The research firm Forrester calls this “Zero

Trust,” and microsegmentation embodies this approach. With micro-segmentation, fine-grained network controls

enable unit-level trust, and flexible security policies can be applied all the way down to a network interface. In a

physical network, this would require deploying a physical firewall per workload, so up until now, micro-

segmentation has been cost-prohibitive and operationally infeasible.

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The Solution:

Color Tokens is a network virtualization platform that for the first time makes microsegmentation economically and

operationally feasible. It provides the networking and security foundation for the software-defined data center

(SDDC), enabling the three key functions of micro-segmentation: isolation, segmentation, and segmentation with

advanced services. Businesses gain key benefits with micro-segmentation:

1. Network security inside the data center

2. Automated deployment for data center agility

3. Integration with leading networking and security infrastructure

Network security consists of the policies and practices adopted to prevent and monitor unauthorized access,

misuse, modification, or denial of a computer network and network-accessible resources. Network security involves

the authorization of access to data in a network, which is controlled by the network administrator. Users choose or

are assigned an ID and password or other authenticating information that allows them access to information and

programs within their authority. Network security covers a variety of computer networks, both public and private,

that are used in everyday jobs; conducting transactions and communications among businesses, government

agencies and individuals. Networks can be private, such as within a company, and others which might be open to

public access. Network security is involved in organizations, enterprises, and other types of institutions. It does as

its title explains: It secures the network, as well as protecting and overseeing operations being done. The most

common and simple way of protecting a network resource is by assigning it a unique name and a corresponding

password.

Network security starts with Authentication, commonly with a username and a password. Since this requires just

one detail authenticating the user name i.e., the password this is sometimes termed one-factor authentication.

With two-factor authentication, something the user 'has' is also used (e.g., a security token or 'dongle', an ATM

card, or a mobile phone)and with three-factor authentication, something the user 'is' is also used (e.g.,

a fingerprint or retinal scan).

Once authenticated, a firewall enforces access policies s uch as what services are allowed to be accessed by the

network users.Though effective to prevent unauthorized access, this component may fail to check potentially

https://en.wikipedia.org/wiki/Policies

https://en.wikipedia.org/wiki/Unauthorized

https://en.wikipedia.org/wiki/Computer_network

https://en.wikipedia.org/wiki/Authentication

https://en.wikipedia.org/wiki/Two-factor_authentication

https://en.wikipedia.org/wiki/Security_token

https://en.wikipedia.org/wiki/Dongle

https://en.wikipedia.org/wiki/ATM_card

https://en.wikipedia.org/wiki/ATM_card

https://en.wikipedia.org/wiki/Mobile_phone

https://en.wikipedia.org/wiki/Fingerprint

https://en.wikipedia.org/wiki/Retinal_scan

https://en.wikipedia.org/wiki/Firewall_(networking)

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harmful content such as computer wormsor Trojans being transmitted over the network. Anti-virus software or

an intrusion prevention system (IPS). help detect and inhibit the action of such malware. An anomaly-based

intrusion detection system may also monitor the network like wireshark traffic and may be logged for audit

purposes and for later high-level analysis. Newer systems combining unsupervised machine learning with full

network traffic analysis can detect active network attackers from malicious insiders or targeted external attackers

that have compromised a user machine or account. Communication between two hosts using a network may be

encrypted to maintain privacy.

2.2 COMPANY PROFILE:

HISTORY:

ColorTokens security platform delivers technical innovations in a business-to-business sales model to protect

datacenters from hackers and insider threats. We protect the data that drives the world. With patents and 150+

people working to develop new technologies and approaches, we have some of the most unique value in the market.

ColorTokens is a stealth mode Silicon Valley company, backed by legendary investors and advisors who have

helped structure the IT industry over last 30+ years.

ColorTokens core team comes, with deep industry experience across hardware, software and cloud technologies,

from Silicon Graphics, Sun Microsystems, HP, and VMware.

ColorTokens has disrupted a $5B industry in the hottest convergence in the market - security and cloud

infrastructure. Venture capital in the security industry alone as exceeded $10B over the past several years with

ColorTokens being one of the leaders of our space. We have some of the largest organizations working with us. Our

mission is to deliver the next generation Cyber Security platform.Our mission is to deliver the next generation

Cyber Security platform

Experienced technocrats manage ColorTokens and have grown technology companies many

times:

https://en.wikipedia.org/wiki/Computer_worm

https://en.wikipedia.org/wiki/Trojan_horse_(computing)

https://en.wikipedia.org/wiki/Anti-virus_software

https://en.wikipedia.org/wiki/Intrusion_prevention_system

https://en.wikipedia.org/wiki/Malware

https://en.wikipedia.org/wiki/Anomaly-based_intrusion_detection_system

https://en.wikipedia.org/wiki/Anomaly-based_intrusion_detection_system

https://en.wikipedia.org/wiki/Deep_packet_inspection

https://en.wikipedia.org/wiki/Machine_learning

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Dr. Nitin Mehta, CEO https://www.linkedin.com/in/nitin-mehta-a3b37014

Bharat Sastri, VP and Co-Founder https://www.linkedin.com/in/bharatsastri

Pankaj Parekh, VP Engineering https://www.linkedin.com/in/pparekh

Rajesh Khazanchi, VP Product Management https://www.linkedin.com/in/rajeshkhazanchi

Hiten Patel, VP, Operations https://www.linkedin.com/in/hiten-patel-2016

Eric James Senior Manager, HR https://www.linkedin.com/in/eric-james-5099874/

Puneet: https://www.linkedin.com/in/ptutliani/

Ajay Goel: https://www.linkedin.com/in/ajay-goel-55b6b151/

Kuldeep Raina: https://www.linkedin.com/in/kulldeepraina/

PROMOTERS:

Dr. Nitin Mehta

CEO

https://www.linkedin.com/in/nitin-mehta-a3b37014

https://www.linkedin.com/in/bharatsastri

https://www.linkedin.com/in/pparekh

https://www.linkedin.com/in/rajeshkhazanchi

https://www.linkedin.com/in/hiten-patel-2016

https://www.linkedin.com/in/eric-james-5099874/

https://www.linkedin.com/in/ptutliani/

https://www.linkedin.com/in/ajay-goel-55b6b151/

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Raj Parekh

Board member

Rajesh Khazanchi

VP, Engineering and Product Management

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Ajay Goel

Managing Director, APAC Region

VISION & MISSION

MISSION:

Our mission is to deliver the next generation Cyber Security platform.

VISION:

To solve some serious technical challenges and are comfortable to go ahead and scale the organization to solve

many more technical challenges. Our core operational value is innovation.

Our next growth focus is the India Software Development Center

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QUALITY POLICY:

Cyber Security annual spend is $1B in USA alone:

The world is not winning the battle against cyber theft. The problem is acute and in USA alone, the annual

expenditure on Cyber Security is approximately $1B.

All current approaches are to enhance existing solutions thereby increasing complexity and skill levels needed to

manage security.

Network and Cyber security is where we are at…

“Trust Everyone” is the fundamental nature of the Internet. It’s time for a radically different solution that

address this fundamental nature. ColorTokens radically different approach is

“Trust No One”.

ColorTokens is all about challenging the core assumption that built Internet. We all know that threat defense is not

working. ColorTokens approach starts with the acknowledgment that the Internet was conceived as an open system

with security added as an after thought.

Compute, Storage and Network resources have grown exponentially, and ensuring their security from hackers and

other cyber criminals has grown to be an unmanageable nightmare. With its novel zero-trust approach,

ColorTokens limits all access until policies and verification permit.

Application security cloaking establishes a programmable overlay network – which provides secure transmission

and isolation, with no decrement to performance, rendering the underlay network invisible.

ColorTokens effectively eliminates attack surfaces with no cumbersome network infrastructure changes, no

firmware requirements, and with minimal deployment time frames.

We are Novel

We are a well funded company run by accomplished technocrats with a track record of launching multiple

successful companies.

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We are Refreshing

We are not your run of the mill B2B and B2C company. We are an enterprise class product company challenging

the world with an innovative and differentiated approach to Cyber security.

We are Innovative

We have solved some serious technical challenges and are comfortable to go ahead and scale the organization to

solve many more technical challenges. Our core operational value is innovation.

Paradigm shifts require a different way to look at Cloud based management platform and a robust networking

security substrate. You will participate in changing the cyber security paradigm by delivering cloaked networks

which are undetectable by internal and external hackers.

The Company is leading the paradigm shift away from fragmented and rigid security half-measures, towards a

unified and adaptive security framework.

The technology spans traditional on premise engineering domains, as well as modern, platform/software-as-a-

service product offerings. The technical breadth and depth essential for this position, ranges from the lowest levels

of networking algorithms to the highest levels of Analytics, Artificial Intelligence, NLP, and Visualization. Be a

part of a team of software engineering gurus and provide guidance and mentorship to other members of the

organization.

This is an influential, hands-on position with broad impact across the ColorTokens business. The company’s benefit

package is comprehensive and the work environment is high paced and delivery oriented.

A differentiated world class cutting edge product company

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In India, there are three classes of IT organizations:

Service companies who essentially provide technical or BPO people to customers at a lower cost than what they

might pay in their countries.

B2B, B2C and web application organizations that essentially build business using internet technologies

Deep technology companies that are product focused

ColorTokens is a product company in the Network and Cyber Security space. We are building a product team in

India that rivals the best minds in the world and deliver products that are Novel, Refreshing and Insightful

Our next growth focus is the India Software Development Center

As of 1st March 2017, the company has been formed, office space for 80 people leased and the senior technical

management is on board and has commenced software development.

Located in Santa Clara that is redefining Enterprise and Cloud Security.

Backed by legendary investors and advisors who have helped structure the IT industry over last 30+ years.

Representing deep industry experience across hardware, software and cloud technologies, that comes from

Silicon Graphics, Sun Microsystems, HP, and VMware.

PRODUCT/SERVICE PROFILE

PRODUCT 1:

UNIFIED THREAT VISIBILITY AND ANALYTICS

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Enterprises today are a complex mesh of business applications, workloads, users and hybrid environments.

ColorTokens Unified Threat Visibility and Analytics reduces dependency on multiple point tools and provides

nanoscopic visibility with context.

ColorTokens Unified Threat Visibility and Analytics provides customers with augmented visibility and contextual

analytics. This enables security and risk management teams to make policy decisions with heightened confidence

and hunt threats with precision.

RISK METRICS DRIVEN POLICY RECOMMENDATIONS

ColorTokens provides policy recommendations based on machine learning, flow data, unwarranted reachability,

zero-day threat feeds and vulnerability scores. The risk metrics is built on residual principle, which is essentially the

risk posture of assets, after all security controls have been applied. IT admins can see the quantified risk scores,

simulate security policies and see its impact to business even before enforcing them.

CONTEXT AUGMENTATION WITH THIRD-PARTY INTEGRATION:

With ColorTokens security operators are empowered to make informed policy decisions by leveraging

multi-dimensional context from several sources. Integration with a variety of cyber threat intelligence

sources and vulnerability scanning tools helps assess security health of critical resources. ColorTokens

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helps decipher how users access critical applications and corporate assets. Security teams can further

leverage flow data statistics that provide granular visibility and threat traversal for forensics, reporting, and

dashboarding. Further, process level visibility helps to understand if there are malicious processes that are

taking advantage of whitelisted policy paths to laterally move or ex-filtrate data. This enables policy

authoring for nano-segmentation.

PRODUCT 2

UNIFIED INTENT BASED ENVIRONMENT

ColorTokens platform-agnostic software-defined security enables enterprises to efficiently secure their dynamic

application environments in minutes. ColorTokens Enforcement reduces the attack surface, and helps protect

workloads, applications and users distributed across bare metal or multi-cloud data centers.

CREATE ZERO-TRUST NETWORKS

Instantly improve the security posture of your multi-cloud, multi-vendor data center with secure micro-

segmentation. Save costs by avoiding additional investment on high-capacity firewalls. Eliminate operational

headaches by not dealing with thousands of firewall rules, and time-consuming and error-prone VLANs/ACL

configurations.

PROTECT AGAINST LATERAL THREATS

Reduce the attack surface, limit the propagation of advanced persistent threats (APTs) and secure the east-west

traffic of your data center through faster threat remediation. Safeguard your brand reputation. Protect your data

center from undetected data breaches using secure micro-segmentation and in-depth unified threat visibility into

cross-segment traffic.

AUTOMATE SECURITY

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Eliminate configuration errors and time-consuming manual effort by automating security across every segment (and

micro-segment) of your data center. Create and reuse security policy templates without having to deal with IPs or

VLAN memberships. Ensure uniform security posture even when resources move across clouds or data centers.

DEFINE, THEN ENFORCE:Visualize ‘what-if’ scenarios to create accurate policies prior to actual

deployment, without breaking your network or compromising your security posture. Prevent operator errors and

security gaps by observing the segments with the policies in ‘defined’ state. Assess the risk score, check for

unauthorized attempts on the business application and then enforce with a single click.

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PRODUCT 3:

COLOR TOKENS RADAR 360

Radar360 protects end-points and servers, including legacy and unpatched systems, against known and unknown

cyberthreats. Administrators get full visibility and control of the processes to effectively lockdown and protect the

systems.

ColorTokens Radar360 takes a simpler, yet robust signature-less approach that works at the kernel level to detect,

alert and prevent unauthorized processes running on your end-points and critical servers.

COMPLETE PROTECTION FROM KNOWN AND UNKNOWN THREATS

Radar360 features intelligent algorithms for in-depth analyses of every running process and files present in the

machine. The system processes are analyzed with known whitelisted processes, combined with contextual behavior

analysis of suspicious activities. Radar360 protects end-points and servers against malware, phishing, zero-day

exploits, ransomware, APT later threats and so on.

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Radar360 provides complete secure lockdown of legacy desktops and servers, and those resources running

unpatched software. The Radar360 software agent is ultra-lightweight, enabling it to protect legacy systems with

slower processing power and RAM. The agent is self-contained to enable continuous protection. Radar360

provides exceptional security to your critical desktops and servers, without the need for disparate anti-virus tools,

signature updates, patch management software and SIEM products. Since Radar360 enables complete and

customizable endpoint lock down, there is no headache and additional cost incurred in teaching cyber hygiene to

your employees.

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SWOT ANALYSIS OF THE COMPANY:

STRENGTH:

1. Strong technical team

2. Strong dealer community

3. Strong investors

4. into niche market

WEAKNESS:

1. Company need awareness

2. Lack of awerness among society

3. High cost

OPPORTUNITY:

1. People need security

2. Foriegn customers

THREAT:

1. Competitors

2. Change in regulation of govt.

3. Natuaral disaster

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APPLICATION OF McKinsey 7S FRAMEWORK TO THE COMPANY

Strategy: the plan devised to maintain and build competitive advantage over the competition

(top to down).

Structure: the way the organization is structured and who reports to whom.

Each and every department has been taken over by each vice-prsident

Systems: the daily activities and procedures that staff members engage in to get the job done.

Shared Values: called "superordinate goals" when the model was first developed, these are the core values of

the company that are evidenced in the corporate culture and the general work ethic.

Style: the style of leadership adopted. They follow democratic leadership

Staff: the employees and their general capabilities.

Recruiting only highly experienced folks

Skills: the actual skills and competencies of the employees working for the company.

Coding skill

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CHAPTER-3

APPLICATION OF THEORETICAL

FRAMEWORK

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3.1 GENERAL INTRODUCTION

Finance is one of the most important factors needed for the successful operation of a business firm .It is

the life and blood of any business activity and is pervasive in all fields .It is impossible to imagine a world

without finance in this day and age .All economic activities have their base in finance and aim at

generating more finance .It has been rightly said that a business may be called successful only when it is

able to generate adequate return on investments and has financial stability. Thus, efficient management of

ever business activity or firm is closely linked with efficient finance management.

DEFINITIONS:

Finance has been defined in various ways by many various authors; some of the most prominent

definitions are stated as follows:

By-Ivan Thompson:

The term finance comes from the Latin "finis" which means end or finish. It is a term whose implications

affect both individuals and businesses, organizations and states it has to do with obtaining and using or

money management.

Simon Andrade :

Defines the term finances of the following ways:1)"Area of economic activity in which money is the

basis of the basis of the various embodiments, whether stock market investment, real estate, industrial,

construction, agricultural development, so on. and 2)" Area of the economy in which we study the

performance of capital markets and supply and price of financial assets.

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Financial ratio analysis is a useful technique to measure, compare, and evaluate the financial

condition and performance of a customer. Ratio analysis enables a credit manager to spot trends in a

customer's financial performance, and to compare its performance and financial condition with the

average performance of similar businesses in the same industry. Balance sheet ratios measure liquidity

and solvency(a business's ability to pay its bills as they come due)and leverage(the extent to which the

business is dependent on creditors).

Financial ratio analysis is used by credit professionals to answer these questions about customers:

Is the business profitable?

Can the business pay its bills on time?

How is the business financed?

How does the company financial performance this year compare to last year?

How does the customer’s performance compare with its competitors?

How does the customer’s performance compare to the industry norms?

Financial ratio analysis is a useful tool for determining a customer's overall financial condition.

financial ratios are useful for making quick comparisons. Banks and trade creditors use financial ratio

analysis to help them decide whether a business is a good credit risk or not.

3.2 STATEMENT OF THE PROBLEM:

Analysis of financial performance is one of the major requirements for planning. It is very crucial

to analyze its performance. The liquidity position, long term solvency, profitability and operating

efficiency are their key factors that influence the survival in long-term competitive environment.

Hence, the study is undertaken to study whether the company's financial position is sound or not.

3.3 NEED FOR THE STUDY

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Ratio analysis is perhaps the first financial tool developed to analyze and interpret the financial

statement and it is still widely used for this purpose .Financial performance analysis is a well researched

area an innumerable studies have proved the utility and usefulness of this analytical technique .It uses the

help of various tools and formulate to analyze and find out financial security and stability of a business

.This research seeks to investigate and then constructively contribute.

3.4 OBJECTIVES OF THE STUDY:

To reflect the working capital efficiency of the concern.

To compare the efficiency of the firm.

To reflect the financial position of the organisation

To analyze how the company has utilized its resources.

To analyze the liquidity position and evaluate the profitability of the firm.

3.5 METHODOLOGY OF THE STUDY:

Both primary and secondary data were collected from various sources for conducting the study

.Primary data was collected from the company whereas the secondary data was collected from various

textbooks websites and journals.

Primary Data

Secondary Data

PRIMARY DATA:

Primary data is a data which is collected-used for the first time. It’s a new & fresh data. In the primary

method, the collection of data was done as per the needs and requirements of the study .it constitutes;

Discussion

Direct Interview

Obeservation

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SECONDARY DATA:

The secondary data which has been collected before and it is used in this study for the source

mentioned below:

Reference Books

Annual Reports

The data collected has been analyzed with the help of simple mathematical and accounting technique-

(Ratio Analysis).

3.6 LIMITATIONS OF THE STUDY

The above analysis is confirmed to only one company i.e., the Color Tokens India LLP, Bangalore.

Analysis in this is dependent on the information supplied by the company

The study taken into consideration is only the quantitative aspects and not the qualitative aspects.

The controlling technique which is adopted is just an assumption of an estimates budgeted value

adopted by the company.

The research is done only for the academic purpose.

3.7 REVIEW OF LITERATURE

3.8

Amalendu Bhunia (2010) has undertaken an analysis of financial performance of pharmaceutical

companies to understand how management of finance plays a crucial role in the growth. The study covers

to public sector drug & pharmaceutical enterprises listed on Bombay Stock Exchange (BSE). The study

has been undertaken for the period of twelve year from 1997-98 to 2008-09. In order to analysis financial

performance in terms of liquidity, solvency, profitability and financial efficiency, various accounting

ratios have been used. Statistical measures namely Liner Multiple Regression Analysis and Test of

Hypothesis – t test has been used.

34

Dharmendra Mistry (2010) in his study “A Comparison of Financial Performance of Major Gujarat

Parma” players through value added and economic value added”. The purpose of this study is to classify

major Gujarat pharmacy players in cohesive categories on the basis of their financial characteristic

revealed by the financial statements. The study also revealed that economic value added has also positive

correlation with firm size, funds of proprietors, and funds of money lenders and have significant impact

on economic value added.

Gaur Jighyasu (2010) focuses on the financial performance measures of business group companies of

India non-metallic mineral products industries. The study uses financial data of fifty seven business group

companies of Indian non-metallic mineral products industries namely cement, glass, gems & jewellery,

refractoriness, ceramic tiles, over a period of ten years (1999-2008) and examines the firm’s financial

performance using performance measures through Operating Profit and Return on net worth, the size,

Leverage, Working Capital Ratio and Age of the firm are included as determinants of firm

performance.Non- metallic mineral product categories consist of important industries of the

manufacturing sector (which contributes almost fifteen per cent to the GDP) and three- four per cent to the

GDP.

Prasanta Paul (2011) Reported that “Financial Performance Evaluation - A Comparative Study of Some

Selected NBFCs”. In this study, five listed NBFCs have been considered for analyzing comparative

financial performance. Different statistical tools like, Arithmetic mean, Standard Deviation, Coefficient of

Variance, Correlation and Analysis of Variance have been used extensively. Arithmetic Mean (AM) is an

ideal measure of central tendency, which is rigidly defined, easy to calculate, based on all observations

and affected least by fluctuations of sampling has been applied in this study. It has been used to get a

stable average and it is easy to understand the results of the study. It concludes that the selected companies

differ significantly in terms of their financial performance indicators from one to another, may be for the

different services they provide. There are no significant differences in the last five years in the

management of financial performance of each selected NBFCs, except marginal deviation in some cases

in the year 2006-07 may be for the effect of general recession in that period

35

Neha Mittal (2011) Studies the determination of capital structure choice of the selected Indian industries.

The main objective is to investigate whether and to what extent the main structure theories can explain the

capital structure choice of Indian firms. It has applied multiple regression models on the selected

industries by taking data for the period 2001-2008. It examines the relevance of capital structure in

selected Indian industries based on a regression analysis and data study. It concludes that the main

variables determining capital structure of industries in India are agency cost, assets structure, non-debt tax

shield and size. The coefficients of these variables are significant at one per cent and five per cent levels.

Velmathi and Ganesan (2012) in their article entitled “Inventory Management of Commercial Vehicle

Industry in India” reported that the overall analysis of inventory management of all units in the Indian

commercial vehicle industry is very good. Among the firms in the commercial vehicle industry TML

occupies the first place in the management of inventory. It is evidently proved through strong correlation

between inventory and sales. FML‟s average growth 33 rate of sales has been more than the growth rate

of inventory which indicates that very good administration of inventory.

Mehran Ali Memon and Izah Mohd Tahir (2012) in their study entitled “Performance Analysis of

Manufacturing Companies in Pakistan” stated that the main objective is to examine the performance of

fourteen manufacturing companies in Pakistan using financial accounting ratios. The study suggested as

ENGRO being the largest company by total assets over three years (2006, 2007, 2008) spent more,

making low sales, having less PBT and ROA than the other thirteen smaller companies: FCC being

second largest company by assets it shows high sales, high PBT and ROA during the five year period. On

the other hand, NRL being the fourth largest company by total assets shows highest sales in five years,

lowest expenditures in 2010 as compared to other thirteen listed companies but it has decreasing PBT and

ROA during the period under investigation. Finally, they concluded that in highlighted companies

incurred higher expenses as a result of Expense Preference Behaviour Theory and low productivity

growth.

Kartik Chandra Nandi (2012) in his study “Trends in Liquidity Management and Their Impact on

Profitability: A Case Study”. Made an attempt to observe the trend values of liquidity position of the

36

company and study the correlation between liquidity and profitability. An attempt has also been made to

establish the linear relationship between liquidity and profitability with the help of a multiple regression

model. The study used various statistical tests viz. t-test, F-test and Durbin-Watson test and has been

applied in order to test the significance of the results obtained. He concluded that the selected company

always tries to maintain adequate amount of net working capital in relation to current liabilities so as to

keep a good amount of liquidity throughout the study period.

Amir Hossein Jamali and Asghar Asadi (2012) in their study investigated the relationship between the

management efficiency and the firms profitability for a sample of thirteen auto manufacturing companies

listed on the Bombay Stock Exchange. The analysis is carried out using Minitab 14 and conducting

Pearson Coefficient correlation test on variables of the study including Gross Profit Ratio and Assets

Turnover Ratio. The central conclusion of the study is that profitability and management efficiency are

highly correlated to each other and based on the results of the study recommendations for improving the

management efficiency and profitability in this industry are suggested.

Owolabi and Obida (2012) In their article titled “Liquidity Management and Corporate Profitability:

Case Study of Selected Manufacturing Companies Listed on The Nigerian Stock Exchange” an attempt is

made to measures the relationship between liquidity management and corporate profitability using data

from selected manufacturing companies quoted on the floor of the Nigerian Stock Exchange.The result of

the study was obtained using descriptive analysis and the finding shows that liquidity management

measured in terms of the companies Credit Policies, Cash Flow Management and Cash Conversion Cycle

has significant impact on corporate profitability. They found that managers can increase profitability by

adopting good credit policy, short cash conversion cycle and effective cash flow management procedures.

Hima Bindu and Subrahmanyam (2012) In their study dealt with the evaluation of earning power,

analysis of operating efficiency, analysis of financial efficiency and measurement of financial health of

Dairy Industry in Andhra Pradesh using Z score analysis. The financial health of Amrit Corp Limited,

GSKCH Limited, Heritage Foods India Limited and NDDB differs and these companies fall under too

healthy zone. The financial health of Ravi Leela Dairy Products Limited is in danger and the unit is

37

considered to be in bankruptcy zone. Its failure is certain and it would occur probably within a period of

two years.

Venkataramana and Ramakrishnan (2012) evaluate the profitability and financial position of selected

cement companies in India through various financial ratio and applied correlation, mean, standard

deviation and variance. The study uses liquidity and profitability ratios for assessment of impact of

liquidity ratios on profitability performance of selected cement companies.

Seyed Mohammad Alavinasab and Esmail Davoudi (2013) in their study examined the relationship

between working capital management and profitability for listed companies on Tehran stock exchange.

Hundrden forty seven companies were selected for the period of 2005-2009. The effect of various

variables of working capital management including cash conversion cycle, the current ratio, current asset

to total asset ratio, current liabilities to total asset ratio and debt to total asset ratio on return on assets and

return on equity are studied. Multivariate regression and Pearson correlation are used to test the

hypothesis. The results of the statistical test of the hypothesis show a negative significant relationship

exist between cash conversion cycle and return on assets and cash conversion cycle and return on equity.

However, the relationship between current ratio and return on equity is insignificant.

Hari Govinda Rao & et al. (2013) In their study entitled “An Empirical Analysis on Financial

Performance of Public Sector Housing Corporation in India: A Case Study of HUDCO”, stated that the

main concept of their study is Profitability and liquidity management is of crucial importance in financial

management decision. The most favourable financial performance could be achieved by a company that

can trade off between profitability and liquidity performance indicators. The purpose of this study is to

find out the financial position of and know the significance of them.

Descriptive statistics discloses that performance of the selected unit in terms of liquidity, solvency and

profitability position is very satisfactory and relatively efficient financial position is found in 36 all the

cases. They suggested that both the institutions under the study should concentrate on financial

profitability, especially unexplained variables in purpose of creating shareholders‟ wealth.

Dharmaraj and Kathirvel (2013) In their study related to “Analysing the Financial Performance of

Selected Indian Automobile Companies” suggested that the financial performance of Atul Auto Ltd,

Ashok Leyland, HMT Ltd, Tata Motors Ltd, and SML ISUZU Ltd are highly improved as compared to

38

the group average value for all ratios. In India there is a huge scope for automobile companies. They are

financially strong and they are growing at the rate of 17 per cent per annum and contributing to the Indian

economy reasonably. Finally, the study provides companies with understanding of the activities that

would enhance their financial performances. The results of this study imply that it might be necessary for

all companies to take all required decisions to enhance their financial position.

Moses Joshuva Daniel (2013) In his study “A Study on Financial Status of TATA Motors Ltd” stated the

main objectives to analyzing the overall financial status of the TATA Motors Ltd by using various

financial tools. In order to analyze financial status in terms of Profitability, Solvency, Activity and

Financial stability various accounting ratios have been used. It is cleared from the study that 37 the

company’s financial performance is satisfactory. The company has stable growth and it shows a greater

status in all the areas it works. The company has been suggested to reduce the expenditure as it increases

every year. Decrease in expenses will increase the profitability.

Kavitha and Palanivelu (2013) Main objectives of their study is know about the financial health of the

steel industries and to analyze and compare the financial performances of NSE listed steel industries

based on ratio analysis and „Z‟Score (Altman/s model). They suggested that the companies‟ try to

increase production and sales get maximize profit to strengthen financial position of the NSE listed

companies.

The management may utilize maximum production capacity and reduce interest burden increase profit.

The policy of borrowed financing in selected steel group of companies under study was not proper. So the

companies may use widely borrowed funds and can try to reduce the fixed charges burden gradually by

decreasing borrowed funds and enhancing the owner’s fund. They concluded that the companies might

enlarge their equity share capital by issuing new equity shares. For regular supply of raw materials and the

final product infrastructure facilities are required further improvement.

39

CHAPTER 4

DATA ANALYSIS

AND

INTERPRETATION

40

INTRODUCTION:

The process of establishing the meaningful relationship between the items of two financial

statements with the objectives of identifying the financial & operational strengths and the weakness. The

process includes both analysis and interpretation, there are number of methods or techniques which are

used in analysis of financial statements comparative statements, trend analysis, common size statements

etc.

MEANING OF ANALYSIS:

Analysis means the examination and evaluation of the relevant information to select the best

course of action from various courses of alternatives.

It refers to the proper alignment of data where in the total figures in the financial statements are

regrouped with their distinct or the different parts.

MEANING OF INTERPRETATION:

Interpretation refers to the composition of various components and definite conclusions may be

drawn about the earning capacity, efficiency, profitability, liquidity, solvency etc. Comparison is very

much essential for meaningful interpretation.

4.1 CURRENT RATIO:

It is the ratio of current assets to current liabilities. it shows a firm’s ability to cover its current

liabilities with its current assets.This ratio which expresses the relationship between the CA and CL. This

ratio is a sign of companies’ obligation to meet its short term liabilities. The current ratio is an guide of

the concerns financial firmness since it shows the extent of working capital, which is the amount by

41

which the current assets exceed the current liabilities. A very high CR would indicate inadequate

employment of funds while a poor CR is a danger signal to the management.

Current Ratio = Total Current Assets

Total Current Liabilities

TABLE: 4.1 Tables showing current ratio

Year Current Assets Current Liabilities Ratio

2015-2016 3364820 200000 16.82

2016-2017 8365445 300000 27.88

2017-2018 10017165 344000 29.11

ANALYSIS:

From the above it can be analysed that the current ratio has increased from 16.82 to 27.88 2015-2016, again it has

increased from 27.88 to 29.11 from 2016-2017 to 2017-2018.

GRAPH: 4.1 Graph showing current ratio

INTERPRETATION:

0

10

20

30

40

2015-2016 2016-2017 2017-2018

1. CURRENT ASSET

42

In 2015-2016 Current ratio was 16.82, in 2016-2017 the ratio was 27.88 & in 2017-2018 it was 29.11.

The data above shows that the current ratio is upto the mark as it’s assets have been increased

4.2 QUICKRATIO:

This is the ratio of liquid assets to liquid liabilities .It shows a firm’s ability to meet the

current liabilities with its most liquid (quick) assets.This ratio expresses the connectivity

between liquid assets and liquid liabilities. The ideal ratio is 1:1. This ratio shows the instant

ability to meet the current liabilities. Liquid assets means all the current assets less inventories,

sticky debts, etc. such assets can be ‘quickly’ converted into cash.

Quick Ratio = Cash and Equivalents – Inventory

Total Current Liabilities

TABLE: 4.2 Tables showing quick ratio:

Year Quick Asset Current Liabilities Ratio

2015-2016 1412000 200000 7.06

2016-2017 4692000 300000 15.64

2017-2018 5077000 344000 14.76

ANALYSIS:

From the above data, it can be analysed that the Quick ratio has increased from 7.06 to 15.64 2015-2016, again it

has changed from 15.64 to 14.76 from 2016-2017 to 2017-2018.

GRAPH: 4.2 Graph showing Quick ratio

43

INTERPRETATION:

In 2015-2016 Quick ratio was 7.06 in 2016-2017 the ratio was 15.64 & in 2017-2018 it was 14.76

The data above shows that the Quick ratio is upto the mark and this is due to fluctuation in the ratio of liquid asset

over current liability.

4.3 ABSOLUTE LIQUID RATIO:

This ratio shows how well the fixed assets are being utilised. If compared with a previous period, it indicates

whether the investment in fixed assets has been judicious or not. This ratio expresses the number of times fixed

assets are being turned-over in a stated period.

ABSOLUTE LIQUID RATIO = Fixed Asset After Depreciation

Proprietors fund

TABLE: 4.3 Tables showing Absolute liquid ratio:

Year Fixed Asset After

Depreciation

Proprietors fund Ratio

2015-2016 186000 2087820 0.09

2016-2017 164000 4946445 0.03

2017-2018 228000 7513165 0.03

0

5

10

15

20

2015-2016 2016-2017 2017-2018

2. QUICK ASSET Ratio

44

ANALYSIS:

From the above data, it can be analysed that the Fixed asset turn over ratio has decreased from 0.08 to 0.033 2015-

2016, again it has changed from 0.033 to 0.030 from 2016-2017 to 2017-2018.

GRAPH: 4.3 Graph showing Absolute liquid ratio

INTERPRETATION:

In 2015-2016 Absolute liquid ratio was 0.08 in 2016-2017 the ratio was 0.033 & in 2017-2018 it was 0.030The data

above shows that the fixed asset turn over ratio declining efficiency in investment.

4.4 DEBT EQUITY RATIO:

This ratio measures the extent of equity covering the debt .A low ratio is generally viewed as

favorable for organization .This ratio is determined to ascertain the soundness of ling term

financial policies.This ratio expresses the connectivity between long term liabilities and

shareholders fund of the concern. The ideal ratio is 2:1.

Debt equity ratio = Outsiders fund / Shareholders fund

0

0.02

0.04

0.06

0.08

0.1

2015-2016 2016-2017 2017-2018

3.FIXED ASSET TURNOVER RATIO Ratio

45

TABLE: 4.4 Tables showiing Debt equity ratio:

Year Outsider Fund Shareholder Fund Ratio

2015-2016 1250000 2087820 0.59

2016-2017 3500000 4946445 0.70

2017-2018 2500000 7513165 0.33

ANALYSIS:

From the above data, it can be analysed that the Debt equity ratio has increased from 0.59 to 0.70 2015-2016, again

it has decreased from 0.70 to 0.33 from 2016-2017 to 2017-2018.

GRAPH: 4.4 Graph showing Debt equity ratio

INTERPRETATION:

In 2015-2016 Debt equity ratio was 0.59 in 2016-2017 the ratio was 0.70 & in 2017-2018 it was 0.33

The data above shows that the Debt equity ratio has increased from 2015-16 to 2016-17 ,which is not

favourable.and again it has decreased to 2017-2018 whic is favourable.

4.5 PROPRIETORY RATIO:

The ratio expresses relationship between the shareholders fund and total assets ,the stronger is the

financial position of the concern and vice versa.This ratio measures the relationship among

shareholder fund and total realizable assets, Greater the proprietor ratio greater is the stability of the

company. The ideal ratio is taken to be 0.5:1.it is used to measure the overall efficiency or

0

0.2

0.4

0.6

0.8

2015-2016 2016-2017 2017-2018

4. DEBT EQUITY RATIO Ratio

46

performance of a business. Generally, a large no of ratios can also be used for determining the

profitability.

Proprietary Ratio = Shareholders Fund / Total Assets

TABLE: 4.5 Tables showiing Proprietary Ratio:

Year Shareholder Fund Total Asset Ratio

2015-2016 2087820 3536820 0.59

2016-2017 4946445 8394445 0.58

2017-2018 7513165 10129165 0.74

ANALYSIS:

From the above data, it can be analysed that the Proprietory ratio has been from 0.59 to 0.58 2015-2016, again it

has increased from 0.58 to 0.74 from 2016-2017 to 2017-2018.

GRAPH: 4.5 Graph showing Proprietary Ratio

INTERPRETATION:

In 2015-2016 Proprietory ratio was 0.59 ,in 2016-2017 the ratio was 0.58 & in 2017-2018 it was 0.74

The data above shows that the Proprietory ratio has increased from 2016-17 to 2017-18

4.6 TOTAL ASSET TURNOVER RATIO:

This ratio establishes the relationship between net sales and total assets .This ratio indicates the utilization

of the total assets in working of the concern.

0

0.2

0.4

0.6

0.8

2015-2016 2016-2017 2017-2018

5. PROPRIETORY RATIO Ratio

47

Total asset turnover ratio = Net Sales /Total asset

TABLE: 4.6 Tables showiing Total asset turnover ratio:

Year Net sales Total Asset Ratio

2015-2016 2687000 3536820 0.76

2016-2017 5675000 8394445 0.67

2017-2018 9955000 10129165 0.98

ANALYSIS:

From the above data, it can be analysed that the Total asset turn over ratio is changed from 0.76 to 0.67 2015-2016,

again it has increased from 0.67 to 0.98 from 2016-2017 to 2017-2018.

GRAPH: 4.6 Graph showing Total asset turnover ratio

INTERPRETATION:

In 2015-2016 total asset turn over ratio was 0.76,in 2016-2017 the ratio was 0.67 & in 2017-2018 it was 0.98.The

data above shows that the total asset turnover ratio has increased from 2016-17 to 2017-18.which shows that the

company is properly using its assets at its disposal to promote sales.

4.7 DEBT TURNOVER RATIO:

0

0.2

0.4

0.6

0.8

1

1.2

2015-2016 2016-2017 2017-2018

6.TOTAL ASSET TURNOVER RATIO Ratio

48

The liquidity position of a concern to pay its shorter obligations in time depends upon the quality of its

debtors, Debtor’s turnover ratio indicates the velocity of a debt collection of a firm .In simple words it

indicates the number of times average debtors are turned over during a year.

Debtors Turnover ratio = sales / Average Debtors

Average Debtors = Opening debtors + closing debtors

TABLE: 4.7 Tables showiing Debtors Turnover ratio:

Year NET SALES AVERAGE TRADE

DEBTORS

Ratio

2015-2016 2687000 371910 7.22

2016-2017 5675000 1470632.5 3.85

2017-2018 9955000 2592805 3.83

From the above data, it can be analysed that the Debt turn over ratio is changed from 7.22 to 3.85 2015-2016, again

it has increased from 3.85 to 3.83 from 2016-2017 to 2017-2018.

GRAPH: 4.7 Graph showing Debtor turnover ratio

INTERPRETATION:

0

1

2

3

4

5

6

7

8

2015-2016 2016-2017 2017-2018

7, DEBTOR TURN OVER RATIO Ratio

49

In 2015-2016 Debtort turn over ratio was 7.22,in 2016-2017 the ratio was 3.85 & in 2017-2018 it was 3.83.The data

above shows that the total asset turnover ratio has increased from 2016-17 to 2017-18

4.8 FIXED ASSETS RATIOS:

This ratio measures the efficiency of the assets used this ratio expresses the number of times fixed

assets are being turned over in a stated period .This ratio is important in case of manufacturing concerns

because sales are produced only by use of current assets but also by invested in fixed assets .the ideal

turnover ratio is ten times.

Fixed asset Ratio=

Shareholders fund+Long term

loan

Net Fixed Asset

TABLE: 4.8 Tables showiing Fixed asset turnover ratio :

Year Shareholders fund Net Fixed Asset Ratio

2015-2016 3337820 186000 17.94

2016-2017 8446445 164000 51.50

2017-2018 10013165 228000 43.91

ANALYSIS:

From the above data, it can be analysed that the Fixed Asset ratio is changed from 17.94 to 51.50 2015-2016, again

it has increased from 51.50 to 43.91 from 2016-2017 to 2017-2018.

50

GRAPH: 4.8 Graph showing Fixed asset turnover ratio

INTERPRETATION:

In 2015-2016 Fixed asset ratio was 17.94 ,in 2016-2017 the ratio was 51.50 & in 2017-2018 it was 43.91.

4.9 CURRENT ASSET TURNOVER RATIO:

Current asset turnover ratio is a ratio that indicates how efficiency a firm is using as current assets to

generate revenue.

Current asset turnover ratio = Net sales / Current asset

TABLE: 4.9 Tables showiing Current asset turnover ratio :

Year NET SALES CURRENT ASSET Ratio

2015-2016 2687000 3164820 0.84

2016-2017 5675000 8065445 0.70

2017-2018 9955000 9673165 1.02

ANALYSIS:

0

10

20

30

40

50

60

2015-2016 2016-2017 2017-2018

8.FIXED ASSET RATIO Ratio

51

From the above data, it can be analysed that the Current asset turn over ratio is changed from 0.84 to 0.70 2015-

2016, again it has increased from 0.70 to 1.02 from 2016-2017 to 2017-2018.

GRAPH: 4.9 Graph showing Current asset turnover ratio

INTERPRETATION:

In 2015-2016 Current asset turn over ratio was 0.84 ,in 2016-2017 the ratio was 0.70 & in 2017-2018 it was

1.02.The data above shows that the total asset turnover ratio has increased from 2016-17 to 2017-18.which shows

that the company is not properly using its current asset in an efficient manner to achieve targetted sales.

4.10 CASH RATIO:

Since cash is liquid asset, a financial analyst may examine cash ratio and its equivalent to current

liabilities .Trade investments are equivalent of cash .therefore, they may be included in the computation of

cash ratio.

Cash ratio = cash + marketable securities / Current liability

TABLE: 4.10 Tables showiing Cash ratio :

0

0.2

0.4

0.6

0.8

1

1.2

2015-2016 2016-2017 2017-2018

9.CURRENT ASSET TURN OVER RATIO Ratio

52

Year CASH&BANK

BALANCE

CURRENT LIABILITIES Ratio

2015-2016 2000000 200000 10

2016-2017 5000000 300000 16.66

2017-2018 6000000 344000 17.44

ANALYSIS:

From the above data, it can be analysed that the Cash ratio is changed from 10 to 16.66 2015-2016, again it has


GRAPH: 4.10 Graph showing Cash ratio

INTERPRETATION:

In 2015-2016 cash ratio was 10 ,in 2016-2017 the ratio was 16.66& in 2017-2018 it was 17.44.

4.11 NET PROFIT RATIO:

Net profit ratio is the ratio, which expenses the relationship between net profit and sales. In short it

means the final profit available for the owners. A high net profit ratio indicates that the profitability of the

concern is good.

Net profit Ratio = Net profit * 100 / Sale

0

2

4

6

8

10

12

14

16

18

20

2015-2016 2016-2017 2017-2018

10.CASH RATIO Ratio

53

TABLE: 4.11 Tables showiing Net profit Ratio :

Year NET PROFIT NET SALES Ratio

2015-2016 44382000 2687000 16.51

2016-2017 35262500 5675000 6.21

2017-2018 56472000 9955000 5.67

ANALYSIS:

From the above data, it can be analysed that the Net ratio is changed from 16.51 to 6.21 2015-2016, again

has decreased from 6.21to 5.67 from 2016-2017 to 2017-2018.

GRAPH: 4.11 Graph showing Net profit Ratio

INTERPRETATION:

In 2015-2016 net profit ratio was 16.51 ,in 2016-2017 the ratio was 6.21 & in 2017-2018 it was 5.67.The data

above shows that, the profitability is not in favour.

4.12 INVENTORY WORKING CAPITAL:

0

2

4

6

8

10

12

14

16

18

2015-2016 2016-2017 2017-2018

11.NET PROFIT RATIO Ratio

54

It is the percentage measures of a firm’s capability in finance its inventories from its available

cash. Inventory working capital = Inventory / Net working Capital

TABLE: 4.12 Tables showiing Inventory working capital :

Year INVENTORY WORKING CAPITAL Ratio

2015-2016 588000 3164820 0.18

2016-2017 308000 8065445 0.03

2017-2018 923000 9673165 0.09

From the above data, it can be analysed that the inventory working capital ratio is changed from 0.18 to 0.038

2015-2016, again it has varied from 0.038 to 0.095 from 2016-2017 to 2017-2018.

GRAPH: 4.12 Graph showing Inventory working capital

INTERPRETATION:

0

0.02

0.04

0.06

0.08

0.1

0.12

0.14

0.16

0.18

0.2

2015-2016 2016-2017 2017-2018

12.INVENTORY WORKING CAPITAL RATIO Ratio

55


above shows that, the low liquid of current asset

4.13 FIXED ASSET TURNOVER RATIO:

This ratio shows how well the fixed assets are being utilised. If compared with the previous period, it indicates

whether the investment in fixed assets has been judicious or not

FIXED ASSET TURN OVER RATIO: NET SALES

FIXED ASSET- DEPRECIATION

TABLE: 4.14 Tables showing Cash turnover Ratio :

Year NET SALES Fixed asset- dep Ratio

2015-2016 2687000 186000 14.44

2016-2017 5675000 164000 34.60

2017-2018 9955000 228000 43.66

ANALYSIS:

From the above data, it can be analysed that the Fixed asset turn over ratio has been increased from 14.44to 34.60

2015-2016, again it has increased from 34.60to 43.66 from 2016-2017 to 2017-2018.

GRAPH: 4.13 Graph showing Fixed Asset Turn Over Ratio:

56

INTERPRETATION:

In 2015-2016 fixed asset turn over ratio was 14.44,in 2016-2017 the ratio was 34.60 & in 2017-2018 it was 43.66

The data above shows that, the profitability is not in favour.The overall profitability is good, which is favourable to

the company

4.14 CASH TURNOVER RATIO:

It indicates a firm’s efficiency in its use of cash for generation of sales reserve.

Cash turnover ratio = Net sales / Cash

TABLE: 4.14 Tables showiing Cash turnover Ratio :

Year NET SALES CASH Ratio

2015-2016 2687000 2000000 1.34

2016-2017 5675000 5000000 1.13

2017-2018 9955000 6000000 1.66

0

5

10

15

20

25

30

35

40

45

50

2015-2016 2016-2017 2017-2018

13.FIXED ASSET TURN OVER RATIO Ratio

57

ANALYSIS:

From the above data, it can be analysed that the Cash turn over ratio has been increased from 1.34 to 1.13 2015-

2016, again it has increased from 1.13 to 1.66 from 2016-2017 to 2017-2018.

GRAPH: 4.14 Graph showing Cash turnover ratio

INTERPRETATION:

In 2015-2016 Cash turnover ratio was 1.34 ,in 2016-2017 the ratio was 1.13 & in 2017-2018 it was 1.66.The data

above shows that, the profitability is not in favour.The overall profitability is good, which is favourable to the

company

4.15 WORKING CAPITAL TURN OVER RATIO:

Working Capital turn over ratio = Sales

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

1.8

2015-2016 2016-2017 2017-2018

14.CASH TURNOVER RATIO Ratio

58

Net working capital

this ratio shows the number of times working capital is turned -over in a stated period

TABLE: 4.15 Tables showiing Working capital turn over ratio :

Year Sales Net working capital Ratio

2015-2016 2687000 3164820 0.84

2016-2017 5675000 8065445 0.70

2017-2018 9955000 9673165 1.02

ANALYSIS:

From the above data, it can be analysed that the working capital turn over ratio has been varied from 0.84 to 0.70

2015-2016, again it has increased from 0.70 to 1.03 from 2016-2017 to 2017-2018.

GRAPH: 4.15 Graph showing Working capital turnover ratio

0

0.5

1

1.5

2015-2016 2016-2017 2017-2018

15.WORKING CAPITAL TURN OVER RATIO Ratio

59

BALANCE SHEET FOR THE YEAR 2015-2016

PARTICULARS SCHEDULES 2015-2016

SOURCES OF FUND

Shareholder Funds:

Share capital 1 1,644,000

Reserves & Surplus 2 443,820

Loan Funds

Secured Loans 3 1,250,000

Unsecured Loans 4 0

Differed Tax Liability 5 0

Total Liability 3,337,820

APPLICATION OF FUNDS

Fixed asset

Gross Block 6 190,000

less: Accumulated Depreciation -4,000

Net Block 186,000

Capital work in Progress

Investments 7 0

Current Assets,Loans & Advances

Inventory 8 588,000

Sundry debtor 9 443,820

Cash and bank balance 10 2,000,000

Loans & Advances 11 333,000

60

PROFIT AND LOSS ACCOUNT FOR THE YEAR 2015-2016


INCOME:

Sales(Gross) 2,687,000

Less:Excise Duty On sales

Other Incomes 14

Increase/decrease in stocks 15

EXPENDITURE:

Material Manufacturing & Other Expenses 16

Salary , wages and amenities 17 1,539,100

Repairs & Maintainance 18 53,300

Administrative and other Expenses 19 403,000

Selling & Distribution Expense 20 2,300

(A) 3,364,820

Less:Current Liability & Provision

Current Liability 12 200,000

Provision 13 0

(B) 200,000

Net current asset (A-B) 3,164,820

Total Asset 3,536,820

199,000

61

Financial & Other charges 21 2,500

Depreciation 4,000

Profit Before Tax 682,800

Provision for:

Income Tax 238,980

Fringe Benifit tax

Deferred Tax

Income Tax/Wealth Tax Adjustment

Profit After Tax 443,820

Balance as per last year

Profit Available for appropriation 443,820

Appropriation

Proposed dividend on equity share 0

Corporate dividend tax 0

Transfer to general reserve 443,820

Transfer from Debenture Redemption Reserve 0

Surplus Carried over

Basic/Diluted Earning Per share(Rs)

Significance accounting policy and notes on accounts 22

62



SOURCES OF FUND

Shareholder Funds:


Reserves & Surplus 2 796,445

Loan Funds


Unsecured Loans 4 0




Fixed asset



Net Block 164,000


Investments 7 0


63

Inventory 8 308,000

Sundry debtor 9 2,497,445



(A) 8,365,445



Provision 13 0

(B) 300,000



-52,000



INCOME:



Other Incomes 14


EXPENDITURE:

64




Administrative and other Expenses 19 1,486,200



Depreciation 31,000


Provision for:

Income Tax 189,875

Fringe Benifit tax

Deferred Tax





Appropriation







65




SOURCES OF FUND

Shareholder Funds:


Reserves & Surplus 2 1,361,165

Loan Funds


Unsecured Loans 4 0




66

Fixed asset



Net Block 228,000


Investments 7 0


Inventory 8 923,000

Sundry debtor 9 2,688,165



(A) 10,017,165



Provision 13 0

(B) 344,000



116,000



67

INCOME:



Other Incomes 14


EXPENDITURE:




Administrative and other Expenses 19 3,006,300



Depreciation 80,000


Provision for:

Income Tax 304,080

Fringe Benifit tax

Deferred Tax





68

Appropriation








69

CHAPTER-5

FINDINGS,

SUGGESTIONS &

CONCLUSION

70

5.1 FINDINGS:

In 2015-2016 Current ratio was 16.82, in 2016-2017 the ratio was 27.88 & in 2017-2018 it was 29.11.

The data above shows that the current ratio is upto the mark as it’s assets have been increased.

In 2015-2016 Quick ratio was 7.06 in 2016-2017 the ratio was 15.64 & in 2017-2018 it was 14.76

The data above shows that the Quick ratio is upto the mark and this is due to fluctuation in the ratio of liquid asset

over current liability.

From the above data, it can be analysed that the Fixed asset turn over ratio has decreased from 0.08 to 0.033

2015-2016, again it has changed from 0.033 to 0.030 from 2016-2017 to 2017-2018.

In 2015-2016 Debt equity ratio was 0.59 in 2016-2017 the ratio was 0.70 & in 2017-2018 it was 0.33

The data above shows that the Debt equity ratio has increased from 2015-16 to 2016-17 ,which is not

favourable.and again it has decreased to 2017-2018 whic is favourable.

In 2015-2016 Proprietory ratio was 0.59 ,in 2016-2017 the ratio was 0.58 & in 2017-2018 it was 0.74

The data above shows that the Proprietory ratio has increased from 2016-17 to 2017-18.

In 2015-2016 total asset turn over ratio was 0.76,in 2016-2017 the ratio was 0.67 & in 2017-2018 it was

0.98.The data above shows that the total asset turnover ratio has increased from 2016-17 to 2017-18.which

shows that the company is properly using its assets at its disposal to promote sales.

In 2015-2016 Debtort turn over ratio was 7.22,in 2016-2017 the ratio was 3.85 & in 2017-2018 it was 3.83.The

data above shows that the total asset turnover ratio has increased from 2016-17 to 2017-18

From the above data, it can be analysed that the Fixed Asset ratio is changed from 17.94 to 51.50 2015-2016,

again it has increased from 51.50 to 43.91 from 2016-2017 to 2017-2018.

In 2015-2016 Current asset turn over ratio was 0.84 ,in 2016-2017 the ratio was 0.70 & in 2017-2018 it was

1.02.The data above shows that the total asset turnover ratio has increased from 2016-17 to 2017-18.which

shows that the company is not properly using its current asset in an efficient manner to achieve targetted sales.

71

From the above data, it can be analysed that the Cash ratio is changed from 10 to 16.66 2015-2016, again it has


From the above data, it can be analysed that the Net ratio is changed from 16.51 to 6.21 2015-2016, again it

has decreased from 6.21to 5.67 from 2016-2017 to 2017-2018.


above shows that, the low liquid of current asset

In 2015-2016 fixed asset turn over ratio was 14.44,in 2016-2017 the ratio was 34.60 & in 2017-2018 it was

43.66 The data above shows that, the profitability is not in favour.The overall profitability is good, which is

favourable to the company

5.2 SUGGESTIONS:

Adequate information should be given to employees that late fee cannot be claimed for exemption.

Specific instructions given by clients should be provided to validator before starting validation

process.

Adequate information should be given to employees to claim last quarter declaration.

Targets assigned to each employee should not be changed frequently which leads to de-motivation.

5.3 CONCLUSION:

The topic undertaken “Ratio Analysis” was to know about the financial performance and analyze and

interpret the company’s performance .The analysis of the Color Token undertaken was done with the help

of different financial tools.

The Color Token achieved tremendous progress over the recent year. The Color Token has a healthy

financial performance. the Color Token has been to achieve growth across the multiple parameters,

including customer’s acquisition, geographical spread, business volume and revenues.

72

The liquidity of the Color Token is financially sound .It is found that the assets are more than the current

liability and we can conclude that the Color Token will be able to meet all its financial commitments

immediately ,without succumbing to pressure .Therefore the short term solvency position of Color Tokens

India LLP remains healthy.

After having solved different ratios and analyzing the financial data, we can conclude that the Color

Tokens has gradually excelled over the year .Thus ratio analysis has been a very useful technique which

has highlighted the performance of Color Tokens India LLP in the key- areas and also has in the

avocation of certain strategies to be followed by Color Tokens India LLP which is indispensable to its

future growth.

To conclude the Color Tokens India LLP financial position is satisfactory .The analysis of the Color

Tokens India LLP was made using tools and techniques by ratios.

LEARNING EXPERIENCE

As an intern,my various responsibility includes:-

1. Basic Audit, Data Entry and analysing in excel.

2. Understanding each and every transaction and maintaing the account book.

3. Account Recievable and expense tracking.

4. Learning Quickbook.

5. Compose and input Jounal entry into Quickbooks.

6. Scanning and filing the journal entries.

7. Making data available to each individual through zoho.

It was great learning in Colortokens,it was indeed a pleasure to work with both the HR team & Finance team,Got an

opportunity to learn from basic accounts to analysis of ratio.

73

BIBLIOGRAPHY

BOOKS:

Name of the Author Title of the Book Publish

er REDDY AND APPANIAH Income Tax Theory and

practice

Himalaya Publications

S N MAHESHWARI Advanced Management

Accounting

Sultan Chand.

B S RAMAN Advanced Financial

Accounting

United Publishers

WEBSITES:

www.google.com

www.wikipedia.com

www.yahooanswers.com

www.colortokens.com

https://colortokens.com/about

ARTICLES:

Moses Joshuva Daniel (2013)

Vivek Kumar and Major Singh (2013)

Seyed Mohammad Alavinasab and Esmail Davoudi (2013)

Kavitha and Palanivelu (2013)

Hari Govinda Rao & et al. (2013)

Dharma raj and Kathirvel (2013)

http://www.google.com/

http://www.wikipedia.com/

http://www.yahooanswers.com/

http://www.colortokens.com/

74

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1 Katarzyna Goldmann. "Chapter 8 Use of Financial Analysis in Operational and Strategic

Management in Practice of Polish Business", Springer Science and Business Media LLC, 2020

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