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CHAPETER 1

INTRODUCTION

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1. INTRODUCTION TO TOPIC

Financial statement analysis is the process of examining relationships

among financial statement elements and making comparisons with relevant

information. It is a valuable tool used by investors and creditors, financial

analysts, and others in their decision-making processes related to stocks, bonds,

and other financial instruments. The goal in analyzing financial statements is to

assess past performance and current financial position and to make predictions

about the future performance of a company. Investors who buy stock are

primarily interested in a company's profitability and their prospects for earning

a return on their investment by receiving dividends and/or increasing the market

value of their stock holdings. Creditors and investors who buy debt securities,

such as bonds, are more interested in liquidity and solvency the company's

short-and long-run ability to pay its debts. Financial analysts, who frequently

specialize in following certain industries, routinely assess the profitability,

liquidity, and solvency of companies in order to make recommendations about

the purchase or sale of securities, such as stocks and bonds. . In this study ratio

analysis has been to analyze the financial performance of Dr. Agarwals Eye

hospital ltd.

Financial analysis refers to an assessment of the viability, stability and

profitability of abusiness, sub-business orproject.

It is performed by professionals who prepare reports using ratios that make useof information taken from financial statements and other reports. These reports

are usually presented to top management as one of their bases in making

business decisions. Based on these reports, management may:

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Continue or discontinue its main operation or part of its business;

Make or purchase certain materials in the manufacture of its product;

Acquire or rent/lease certain machineries and equipment in the

production of its goods;

Issue stocks or negotiate for a bankloan to increase its working capital;

Make decisions regarding investing or lending capital;

Other decisions that allow management to make an informed selection on

various alternatives in the conduct of its business.

Financial analysts often assess the firm's:

1. Profitability - its ability to earn income and sustain growth in both short-

term and long-term. A company's degree of profitability is usually based on

the income statement, which reports on the company's results of operations;

2. Solvency - its ability to pay its obligation to creditors and other third parties

in the long-term;3. Liquidity - its ability to maintain positive cash flow, while satisfying

immediate obligations;

Both 2 and 3 are based on the company'sbalance sheet, which indicates the

financial condition of a business as of a given point in time.

4. Stability- the firm's ability to remain in business in the long run, without

having to sustain significant losses in the conduct of its business. Assessing a

company's stability

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Fundamental analysis involves examining the economic, financial and other

qualitative and quantitative factors related to a security in order to determine its

intrinsic value. While typically this method is used to evaluate the value of a

companys stock, its use can be extended for any kind of security, such as

bonds or currency.

Fundamental analysis, which is also known as quantitative analysis, involves

delving into a companys financial statements (such as profit and loss account

and balance sheet) in order to study various financial indicators (such as

revenues, earnings, liabilities, expenses and assets). Such analysis is usually

carried out by analysts, brokers and savvy investors.

Fundamental Analysis: Two Approaches

While carrying out fundamental analysis, investors can use either of the

following approaches:

1. Top-down approach: In this approach, an analyst investigates both

international and national economic indicators, such as GDP growth rates,

energy prices, inflation and interest rates. The search for the best security then

trickles down to the analysis of total sales, price levels and foreign

competition in a sector in order to identify the best business in the sector.

2. Bottom-up approach: In this approach, an analyst starts the search with

specific businesses, irrespective of their industry/region.

Fundamental Analysis: How Does It Work?

Fundamental analysis is carried out with the aim of predicting the future

performance of a company. It is based on the theory that the market price of a

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security tends to move towards its real value or intrinsic value. Thus, the

intrinsic value of a security being higher than the securitys market value

represents a time to buy. If the value of the security is lower than its market

price, investors should sell it.

The steps involved in fundamental analysis are:

1. Macroeconomic analysis, which involves considering currencies,

commodities and indices.

2. Industry sector analysis, which involves the analysis of companies that are

a part of the sector.3. Situational analysis of a company.

4. Financial analysis of the company.

5. Valuation

The valuation of any security is done through the discounted cash flow (DCF)

model, which takes into consideration:

1. Dividends received by investors

2. Earnings or cash flows of a company

3. Debt, which is calculated by using the debt to equity ratio and the current

ratio (current assets/current liabilities)

Financial planning is the process of making informed money management

decisions in order to secure your future. Financial planning helps to achieve

financial goals and meet personal priorities, taking into consideration available

resources, responsibilities, risk appetite and lifestyle. A financial plan lays

down the allocation of savings across various asset classes to achieve an

appropriate risk-reward balance.

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Financial planning may include:

Asset allocation

Investment planning Retirement planning

Insurance planning

Financial Planning: Steps

Financial planning helps to translate your personal objectives into specific plans

and outlines strategies to implement these plans. The process of financial

planning comprises of the following steps:

Laying down financial goals and objectives: The first step is to identify

your objectives. This may include childrens education, the age at which you

would retire, the lifestyle you would like to have in the future and what you

would like to leave behind for your spouse and dependents.

Gathering data: You need to accumulate data such as your income level,

tax returns, insurance policies, trusts, estate planning documents, investments

and real estate. The more detailed information you can gather, the more

accurate your financial plan will be.

Analysis of data: This step involves considering various alternatives to

meet your financial goals and objectives.

Adopting and implementing a financial plan: The next thing to do is to

formulate strategies that best meet your financial goals and putting this plan

into action.

Monitoring the financial plan: It is important to revisit your goals,

strategies and plan at regular intervals.

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Financial Planner

A financial planner helps people find a path to their financial goals and

understand the impact of their financial decisions. Ensure that the financial

planner you hire is qualified from a certified board in his/her country. The US

requires a planner to obtain certification from the Certified Financial Planner

Board of Standards to become a Certified Financial Planner (CFP). In Canada,

it is the Financial Planners Standards Council that grants the certificate.

A comprehensive financial plan can protect you from unforeseen, unfavorable

situations. It may prevent you from falling into a financial hole and ensure thatyour financial health is sound even after retirement.

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CHAPTER 2

PROJECT PROFILE

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2. PROJECT PROFILE

2.1 TITLE OF THE PROJECT:

A STUDY ON FINANCIAL PERFORMANCE ANALYSIS Undertaken at

DR.AGARWALS EYE HOSPITAL LIMITED.

2.2 NEED FOR THE STUDY

The accurate preparation of financial statement and periodic analysis of

this statement are essential for various decision making and growth of the

enterprise.

Analyzing the financial performance is a way to assessing the financial

health of the company and helps in compare them with other company in

the industry.

Also financial decision making and financial planning can be done by

analyzing financial statements, which depicts financial position of the

firms.

DR.AGARWALS EYE HOSPITAL LIMITED should know about the

performance of major players in the industry and its own position among

them. In order to survive in the most competitive market, they have to

financially perform well. So doing this analysis would be a meaningful

one.

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2.3 OBJECTIVES OF THE STUDY

To analyze the financial position of DR.AGARWALS EYE

HOSPITAL LIMITED and to compare the financial statements of

various years.

SECONDARY OBJECTIVES:

To analyze PROFITABILITY, SOLVENCY, LIQUIDITY and

STABILITY of DR.AGARWALS EYE HOSPITAL LIMITED

To correlate various financial variables over the study periods.

To isolate the trail offs if any and give only an opinion for further

improvement.

2.4 SCOPE OF THE STUDY

The study should provide a reliable indication of a company's financial

position, operating results, and changes in financial position. Also, statement

components and categories should aid in decisions. Financial statements may

provide information in addition to that specified by authoritative requirements

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and regulatory groups. In as much as management knows the most about the

business, it is encouraged to identify certain circumstances and explain their

financial effects on the enterprise.

To evaluate the financial statement of the DR.AGARWALS EYE

HOSPITAL LIMITED by using Financial, Mathematical and statistical

tools.

To cover all areas of financial proposition need and should result in theachievement of each goals.

2.5 LIMITATIONS OF THE STUDY

The accuracy of the outcome of the study will depends upon the accuracy

of the data provided in annual reports of DR.AGARWALS EYE

HOSPITAL LIMITED

The limitation of various tools used during the study will also influence

the outcome of the study.

The financial statements of three years only taken for this study.

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CHAPTER 3

COMPANY PROFILE

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3. COMPANY PROFILE

3.1 INTRODUCTION

DR.AGARWALS Group of Eye Hospitals started in the year 1957. Now it has

27 branches. The hospital has completed its 50 years of quality service in eye

care. The target is to have 100 eye hospitals in the next three years. At present

more than 100 ophthalmologists are working in this group more than 1000 man

power. The team is headed by the CEO Mr. S. Rajagopalan, Vice President Mr.

V.Suresh, and General Manager Mr. Bharathkanth Reddy.

3.2 HISTORY OF DR.AGARWALS HOSPITAL

DR.AGARWALS HOSPITAL 1927

Armed with a degree in medicine and the ambition to create an eye

hospital of repute DR.R.S.AGARWAL left his home town of Bulandshar and

came to the big city Delhi. Here he set up his practice in one of the by lanes of

the busy central areas of Delhi called Darya Ganj. The son of a farmer he had

known the only security lay intilling the land, however now with a medical

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degree he wanted to stretch out and lay his life towards the up liftment of

human misery through the practices of allopathic medicine.


Saw the emergence of an advanced postgraduate training centre as

awarded by the Government of India. Now five levels and 30,000 square feet of

concrete structure housed every department of ophthalmology with

microbiology and pathology alongside. The training center had hospital beds,

which could number over 50 and resident training programs for four eye

surgeons. Dr.Athiya Agarwal joined the forces after post alongside completing

her mastersin pathology to combine as an ocular pathologist.


For the first time live cataract surgery was relayed to the international

audience at the convention of the American Society for Cataract and Refractive

Surgery at Seattle. This two hour extravagant saw five surgeries and detailed

out reality what others might find fiction, no anaesthesia, laser Phakonit under 1

mm cataract surgery was shown through an instruction course conducted in

Bangalore and heart in Seattle. This could not have been possible without the

immense help given by Sun TV and the Department of Telecommunications,

Bangalore.

The Kargil war brought out the patriotic fervour of the institution and a

six-member team sponsored by Indian Airlines travelled the border zones

giving relief in terms of medication, interlobular lenses, and surgery. For the

first time phacoemulsification with foldable interlobular lenses was carried out

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at 14,000 feet above sea level, the roles were reversed with the patients being

fine, however the surgeon needed oxygen under the surgical mask. However the

determination of the team saw over 10000 people coming under the umbrella of

treatment with over 45 lakhs worth of drugs and equipment much of it donated

by Apiary Associates and Dr.Agarwal's Pharma Ltd.

3.3 EXECUTIVE SUMMARY

State of the art world class One Stop Super Specialty Hospital for complete eye

care solutions.

Promoted by the internationally renowned Dr.J.Agarwal & family, with decades

of experience in providing total eye care solutions.

Recognised as one of the major eye centers of the world at the XXVI

International Congress of Ophthalmology, Singapore - 1990.

Has several creditable achievements such as Micro Phakonit Cataract Surgery,

Zyoptix treatment for correction of Myopia, Hypermetropia and astigmatism

and Aberropia corrective treatment, Aberropia (a new refractive entity),

Airpump technique (to remove surge during phacoemulsification), No

Anesthesia Cataract Surgery.

Highly skilled and motivated team of Ophthalmologists and Surgeons, to

support the core team. Successful expansion to cities such as Jaipur,

Kanchipuran, Villupuram, Vellore, Kumbakonam, Hosur, Krishnagiri, Erode,

Dharmapuri, Salem, Chittor and Neyveli. Proposed expansion to Panruti.

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The Hospital and its promoters are recipients of several International Awards

like Barraquer Award by Keratomileusis Study Group and Kelman Award by

the International Hellenic Society of Cataract & Refractive surgery for

excellence in eye care surgery.

The Company is the only listed eye care hospital in the country and only one of

the two consistently profit making and dividend paying listed hospital

companies in the Country ( other one being Apollo Hospitals Ltd).

About 25 books have been come out from this institution for the benefit of

Ophthalmologists. These books are published internationally by Slack

Incorporated, Highlights of Ophthalmology and Jaypee Brothers Medical

Publishers in India.

3.4 ACHIEVEMENTS

Dr. Agarwals eye Hospital bags three coveted Awards at the American Society

of Cataract and refractive surgery Conference, Chicago.

American Academy Achievement Award for Dr. Athiya Agwarwal and

Sunitha Agwarwal.

No anesthesia Cataract Surgery - June 13th 1998.

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CHAPTER 4

REVIEWOF LITERATURE

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4.1 INTRODUCTION

A financial statement is a collection of data organized according to

logical and consistent accounting procedures. The terms Financial Statements

generally refers to the statements.

Balance Sheet

The Profit and Loss account.

These statements are used to convey to management and other interested

outsiders the profitability and financial position of a firm.

Many of the research works have been conducted, over the period to

evaluate the financial position of the company with the help of the various

ratios or by applying the Multiple Discriminant Analysis to predict the

corporate failure.

L.C Gupta (1999) attempted a refinement of Beavers method with

objective of predicting the business failure by analyzing financial

performance through various tools.

- L.C Gupta (1999)

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Beavers method

Whereas Mansur. A.Mulla (2002) made a study in Textile mill with

the help of Z score model for evaluating the financial health with five

weighted financial ratios in the industry.

- Mansur. A.Mulla (2002)

Then followed by Selvam M and others (2004) had revealed aboutCement industrys financial health with special reference to India

Cements Limited.

-Selvam M (2004)

Bagchi S.K (2004) analyzed about practical implication of accounting

ratios in risk evaluation and concluded that accounting ratios are still

dominant factors in the matter of credit risk evaluation.

-Bagchi S.K (2004)

Credit Risk Evaluation

Krishna Chaitanya (2005) used Z score model to measure the financial

distress of IDBI and concluded that IDBI is likely to become insolvent

in the years to come. He suggested some restructuring actions as

solution.

- Krishna Chaitanya (2005)

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From the above reviews, the researcher identified the research gap which

could be dealt in this study.

FINANCIAL STATEMENT

Financial Statements are prepared for the purpose of presenting a

periodical review of report on progress by the management and deal with the

status of investing in the business and the results achieved during the period

under review. They reflect a combination of recorded facts accounting

principles and personal Judgments.

- The American Institute of Certified Public Accountants (AICPA)

NATURE OF FINANCIAL STATEMENTS

Financial Statements reflects a combination of recorded facts,

accounting principles and personal judgments

- The American Institute of Certified Public Accountants (AICPA)

RECORDED FACTS

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The term Recorded facts refers to the data taken out from accounting

Records, Facts which have not been recorded in the financial books are not

depicted in financial statements, however important they might be.

ACCOUNTING PRINCIPLES

Certain accounting principles, concepts and conventions are followed in

the preparation of financial statements.

PERSONAL JUDGMENT

It has an important bearing on the financial statement, for example the

selection of a method for stock valuation depends on the personal judgment of

the accountant.

OBJECTIVES OF FINANCIAL STATEMENTS

Financial statements are the sources of information on the basis of which

conclusion are drawn about the profitability and financial position of a concern.

To provide reliable financial information about economic resources

and obligation of a business firms.

To provide other needed information about changes in such economic

resources and obligations.

To provide financial information that assists in estimating the earning

potentials of business.

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FINANCIAL ANALYSIS

INTRODUCTION

Financial statements are prepared primarily for decision-making. They

play a dominant role in setting the framework of managerial decisions.

Financial analysis is the process of identifying the financial strengths and

weakness of the firm by properly establishing relationship between the items of

the Balance Sheet and the Profit & Loss account.

FINANCIAL ANALYSIS

It is a process of evaluating the relationship between components parts

of a financial statement to obtain a better understanding of a firms position and

performance.

Metcalf and Titard

PROCEDURE OF FINANCIAL STATEMENT ANALYSIS

There are three steps involved in the analysis of financial statement.

o Selection

o Classification

o Interpretation

The first step involves selection of information relevant to the purpose of

analysis of financial statements. The second step involved is the methodical

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classification of the data and the third step includes drawing of inferences and

conclusions.

ANALYSIS AND INTERPRETATION OF FINANCIAL STATEMENT

Analysis and interpretation of financial Statements is the most important

step in accounting.

ANALYSIS

Analysis refers to the methodical classification of the data given in the

financial statement.

INTERPRETATION

The term interpretation means explaining the meaning and significance

of the data so arranged. It is the study of the relationship between various

financial factors comparisons of relationship between various financial factors

of the same company over a period of time can be made.

Analysis and interpretation are closely related. Interpretation is not

possible without analysis and without analysis and without interpretation

analysis has no value. Hence the term analysis is widely used to refer both

analysis and interpretation.

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It is a process of evaluating the relationship between the various

components of a financial statement to obtain a clear understanding of a firms

position and performance.

LIMITATION OF FINANCIAL STATEMENT

Financial statements are relevant and useful for a concern. But they do

not present a final picture. It suffers from the following limitations.

Financial statements are only interim reports. They are not final becausethe exact financial position can be known only when business is closed.

Many items in the financial statements are based on the personal

judgment of the account.

Financial statement ignores the changes in price level. Hence their use is

limited during inflationary periods.

Financial statements are records of past events only. Past can never be a

hundred percent representative of the future.

RATIO ANALYSIS

CURRENT RATIO:

The ratio of current assets to current liabilities is called Current

ratio. In order to measure the short term liquidity or solvency of a

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concern, comparison of current assets and current liabilities is inevitable.

Current ratio indicates the ability of a concern to meet its current

obligations as and when they are due for payment.

The term current assets includes debtors, stock, bills receivables,

bank and cash balances, prepaid expenses, income due and short term

investments.The term current liabilities include creditors, bank overdrafts,

bills payable, outstanding expenses, income received in advances etc.

Current Assets

Current Ratio = ----------------------

Current Liabilities

LIQUID RATIO:

This ratio otherwise called as Quick or Acid ratio. It is calculated

by comparing the quick assets with current liabilities. Quick or liquid

assets refer to assets which are quickly convertible into cash. Current

assets other than stock and prepaid expenses are considered as quick

assets.

Quick assets

Liquid Ratio= ----------------------

Current Liabilities

DEBT EQUITY RATIO:

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This ratio to determine long term solvency position of a company. It is

also called as external-internal equity ratio. The term external equities

refer to total outsiders liabilities. An internal equity refers to share

holders funds or the tangible net worth. Here a share holder refers to

only equity shareholders.

Long term Debt

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

Share holders funds

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CHAPTER 5

RESEARCH METHODOLOGY

5. REASEARCH METHODOLOGY

5.1 RESEARCH DESIGN

Research design is the arrangement of conditions for collection and analysis of

data in a manner that aims to combine relevance to the research purpose with

economy on procedure.

DESK RESEARCH:

Desk research to find information about potential customers, competitors and

intermediaries in markets has been a time intensive process, often carried out on

an on-going basis to cope with the slow delivery of paper-based material. With

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the Internet, vast seas of information have opened up electronically making

desk research a practical tool for research, particularly in dynamic markets

where data is quickly out of date.

5.2 DATA COLLECTION

DATA SOURCES:

Secondary data sources:

Secondary data consists for odd information which already exists some where

having been collected for specific purpose in the study. The secondary data for

this study collected from,

Company records,

Annual report (2003-08)

Internet

profit & loss account (2003-08)

5.3 ANALYSIS TOOL

TECHNIQUES OF FINANCIAL ANALYSIS:

Three primary types of financial statement analysis are commonly known

as horizontal analysis, vertical analysis, comparative statement, common-size

statement and ratio analysis.

HORIZONTAL ANALYSIS

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When an analyst compares financial information for two or more years

for a single company, the process is referred to as horizontal analysis, since the

analyst is reading across the page to compare any single line item, such as sales

revenues. In addition to comparing dollar amounts, the analyst computes

percentage changes from year to year for all financial statement balances, such

as cash and inventory. Alternatively, in comparing financial statements for a

number of years, the analyst may prefer to use a variation of horizontal analysis

called trend analysis. Trend analysis involves calculating each year's financial

statement balances as percentages of the first year, also known as the base year.

When expressed as percentages, the base year figures are always 100 percent,

and percentage changes from the base year can be determined.

VERTICAL ANALYSIS

When using vertical analysis, the analyst calculates each item on a single

financial statement as a percentage of a total. The term vertical analysis applies

because each year's figures are listed vertically on a financial statement. The

total used by the analyst on the income statement is net sales revenue, while on

the balance sheet it is total assets. This approach to financial statement analysis,

also known as, component percentage produces common size balance sheet.

Common-size balance sheets and income statements can be more easily

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compared, whether across the years for a single company or across different

companies

COMPARATIVE STATEMENT:

Comparative statements are financial statement that cover a different

time frame, but are formatted in a manner that makes comparing line items

from one period to those of a different period an easy process. This quality

means that the comparative statement is a financial statement that lends itself

well to the process of comparative analysis. Many companies make use of

standardized formats in accounting functions that make the generation of a

comparative statement quick and easy.

RATIO ANALYSIS:

A ratio is a mathematical relationship between two or more items taken from

the financial statement. Result analysis is the process of computing,

determining and presenting the relationship of items. It also includes

comparison and interpretation of ratio and using them as basic for the future

projections. Result analysis is helpful to management and outsiders to diagnoses

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the financial health of a business concern. It helps in measuring the profitability

solvency and activity of a firm.

Ratio analysis is an important way to state meaningful relationship between

components of financial statement.

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CHAPTER 6

DATA ANALYSIS &

INTERPRETATION

6. DATA ANALYSIS AND INTERPRETATION

RATIO ANALSIS

CURRENT RATIO

Current Assets

CURRENT RATIO = ----------------------

Current liabilities

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TABLE 6.1.1 CURRENT RATIO

YEAR CURRENT

ASSETS

CURRENT

LIABILITIES

RATIO

2006-2007 25,539 17,780 1.436

2007-2008 57,049 38,071 1.4982008-2009 58204 62,300 0.934

CHART 6.2.1 CURRENT RATIO

1.4361.498

0.934

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

2006-2007 2007-2008 2008-2009

2006-2007

2007-2008

2008-2009

INFERENCE:

During the study period the Current ratio trend is decreasing gradually.

The Range is between 1.436 and 0.934 times. It shows adverse liquidity

position of the company.

LIQUID RATIO

LIQUID Ratio = (LIQUID Assets / Current liabilities)

LIQUID Assets = Current Assets - Inventory

TABLE 6.1.2 LIQUID RATIO

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RATIO LIQUID

ASSETS

CURRENT

LIABILITIES

RATIO

2006-2007 23,174 17,780 1.3

2007-2008 52,712 38,071 1.38

2008-2009 34,613 62,300 0.56

CHART 6.2.2 LIQUID RATIO

1.3

1.38

0.56

0 0.5 1 1.5

2006-2007

2007-2008

2008-2009

RATIO

INFERENCE:

During the study period the LIQUID ratio trend was decreasing gradually.

The Range is between 1.3 and 0.56 times.

It shows unfavorable position of the company.

DEBT EQUITY RATIO:

LONG TERM DEBTDEBT EQUITY RATIO = --------------------------------

SHARE HOLDERS FUND

TABLE 6.1.3 DEBT EQUITY RATIO RATIO

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CHART 6.2.3 DEBT EQUITY RATIO RATIO

RATIO

0

0.5

1

1.5

2

2.5

2006-2007 2007-2008 2008-2009

RATIO

INFERENCE: The Range is between 0.36 and 2.26 times It shows

unfavorable position of the company.

FIXED ASSET RATIO:

This ratio explains whether the firm has raised adequate long-term funds

to meet its fixed assets requirements.

Fixed Assets

YEAR LONG

TERM

DEBT

SHAREHOLDERS

FUND

RATIO

2006-2007 17,820 48855 0.362007-2008 49,462 1,03,178 0.4792008-2009 2,18,953 96,826 2.26

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FIXED ASSETS RATIO = -------------------------

Long -Term Fund

TABLE 6.1.4 FIXED ASSETS RATIO

YEAR NET FIXED

ASSTS

LONG

TERM

FUNDS

RATIO

2006-2007 54,109 66,675 0.812007-2008 68,943 1,52,640 0.452008-2009 2,01,868 3,15,779 0.64

CHART 6.2.4 FIXED ASSETS RATIO

2006-2007

2007-2008

2008-2009

INFERENCE:

The Range is between 0.81 and 0.64 times It shows unfavorable position

of the company.

OPERATING PROFIT RATIO:

It is the ration of profit made from operating sources to the sales, usually

shown as a percentage.

Operating profit

OPERATING PROFIT = ----------------------- X 100

Sales

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TABLE 6.1.5 OPERATING PROFIT RATIO

YEAR OPERATING

PROFIT

CAPITAL

EMPLOYED

RATIO

2006-2007 24,692 54,109 45.632007-2008 41,616 68,943 60.362008-2009 35,726 2,01,868 17.69

CHART 6.2.5 OPERATING PROFIT RATIO RATIO

0

10

20

30

40

50

60

70

1 2 3 4

Series1

Series2

INFERENCE:

The Range is between 45.63 and 17.69 times

Ratio shows a decline in yr 2006-07 of 17.069 from 60.36

RETURN ON SHAREHOLDERS FUNDS

It is desired to work out the profitability of the company.

RETURN ON Profit after Interest & Tax

SHAREHOLDERS FUNDS = ------------------------------- x 100

Shareholders fund

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TABLE 6.1.6 RETURN ON SHARE HOLDERS FUNDS

YEAR OPERATING

PROFIT

CAPTIAL

EMPLOYED

RATIO

2006-2007 12,956 48,855 26.522007-2008 12,678 1,03,178 12.292008-2009 5,827 96,826 6.02

CHART 6.2.6 RETURN ON SHARE HOLDERS FUND

0

5

10

15

20

25

30

2006-2007 2007-2008 2008-2009

Series1

INFERENCE:

The Range is between 26.52 and 6.02 times

RETURN ON TOTAL ASSETS:

This ratio is computed to know the productivity of the total assets.

Profit after Interest &Tax

TOTAL ASSETS = ----------------------------------X100

Total Assets

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TABLE 6.1.7 RETURN ON TOTAL ASSETS

YEAR NET

PROFIT

TOTAL

ASSETS

RATIO

2006-2007

12,956 79,648 16.272007-2008 12,678 1,25,992 10.062008-2009 5,827 2,60,072 2.24

CHART 6.2.7 RETURN ON TOTAL ASSETS

RATIO

0

2

4

6

8

10

12

14

16

18

2006-2007 2007-2008 2008-2009

RATIO

INFERENCE:

The Range is between 16.27 and 2.24 times .It shows declining trend

WORKING CAPITAL TURNOVER RATIO:

Working capital ratio measures the effective utilization of working capital.

WORKING CAPTIAL Sales/Cost Of Sales

TURNOVER RAT IO = ---------------------------

Net Working Capital

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TABLE 6.1.8 WORKING CAPITAL TURNOVER RATIO

YEARS INCOME NET

WORKING

CAPITAL

RATIO

2006-2007 1,58,832 7,759 20.472007-2008 2,33,883 18,977 12.322008-2009 4,26,658 -4096 -104.16

CHART 6.2.8 WORKING CAPITAL TURNOVER RATIO

-120

-100

-80

-60

-40

-20

0

20

40

2006-2007 2007-2008 2008-2009

Series1

INFERENCE: The Range is between 20.47 and -104.16 times It shows


OPERATING PROFIT RATIO:

It is the ration of profit made from operating sources to the sales, usually

shown as a percentage.

Operating profit

OPERATING PROFIT = ------------------ X 100

Sales

TABLE 6.1.9 OPERATING PROFIT RATIO

YEARS OPERATING

PROFIT

INCOME RATIO

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2006-2007 24,692 1,58,832 15.552007-2008 41,616 2,33,883 17.792008-2009 35,726 4,26,658 8.37

CHART 6.2.9 OPERATING PROFIT RATIO

0

2

4

6

8

10

12

14

16

18

2006-2007 2007-2008 2008-2009

Series1

INFERENCE:

The Range is between 15.5 and 8.37 times It shows unfavorable position

of the company.

CAPTIAL TURNOVER RATIO:

Managerial efficiency is also calculated by establishing the relationship

between cost of sales or sales with the amount of capital invested in the

business.

CAPITAL TURNOVER SalesRATIO = -------------------------

Capital Employed

TABLE 6.1.10 CAPITAL TURNOVER RATIO

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YEAR INCOME CAPTIAL

EMPLOYED

RATIO

2006-2007 1,58,832 54,109 2.942007-2008 2,33,883 68,943 3.39

2008-2009 4,26,658 2,01,868 2.11CHART 6.2.10 CAPITAL TURNOVER RATIO

2006-2007

35%

2007-2008

40%

2008-2009

25%

INFERENCE:

The Range is between 2.94 and 2.11 times It shows declining trend.

COMMONSIZE BALANCE SHEET OF (2006&07)

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PARTICULARS

2006 % 2007 %

ASSETS:

Current assets

(A) inventories 2365 2.55 4237 2.089

(B) sundry debtors 7024 7.59 12,201 6.015

(C) cash & bank balance 16,150 17.45 40,511 19.97

Total current assets (A) 25,539 27.59 57,049 28.126

Loans & advances (B) 12,761 13.79 43,820 21.60

Fixed assets (C) 54,109 58.47 68,943 33.99

Investments (D) 128 0.138 33,019 16.279

Total assets (A+B+C+D) 92,537 100 2,02,830 100

LIABILITIES:

Current liabilities:

Sundry creditors for

expenses

7,537 8.145 9,043 4.46

Sundry creditors for others

(a) micro, small, medium nil 2,090 1.03

(b) others 9,349 10.10 26,008 12.82Unpaid dividend 894 0.966 931 0.459

Total liabilities (A) 17,780 19.21 38,071 18.77

Provisions:

Provisions for tax -2720 -2.939 626 0.31

Proposed dividend 3900 4.215 6,750 3.33

Corporate dividend tax nil - 1,147 0.56

Provision for FBT 971 1.049 1,915 0.94

Retirement benefits 547 0.59 nil -

Provision for wealth tax Nil - 80 0.039

Total provisions (B) 2,698 2.92 10,659 5.26

Secured loans (C) 17,820 19.26 49,462 24.39

Deferred tax liability (D) 3,191 3.45 3,191 1.57

Share capital & reserves:

Share capital 32,500 35.12 45,000 22.19

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COMPARATIVE BALANCE SHEET (2007&2008)

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2007 2008 Increase(+) or decrease(-) in 2008

over 2007

RS RS Amount Percentage

Assets:

Current assets:

(a)inventories 4,337 23,59119,254 443.94

(b)sundry debtors 12,201 22,609 10,408 85.30

(c)cash & bank balance 40,511 12,004 -28,507 -70.36

Total current assets (A) 57,049 58,204 1,155 2.02

Loan & advances (B) 43,820 1,26,316 82,496 188.26

Fixed assets:

Fixed assets (C) 68,943 2,01,8681,32,925 192.80

Investments (D) 33,019 319 -32,700 -99.03

Total assets (A+B+C+D) 2,02,831 3,86,707 1,83,876 90.65

Liabilities:



exp

9,043 19,730

10,687 118.17


others:

(A) micro, small,

medium

2,090

nil

-2090

-100

(B) others 26,008 41,526 15,518 59.67

Unpaid dividend 931 1,044 113 12.13

Total liabilities (A) 38,071 62,300 24,229 63.64

Provision:

Provision for tax 626 -3430 -4056 -647.92

Proposed dividend 6750 6750 0 0

Corporate dividend tax 1147 1,147 0 0Provision for FBT 1915 158 -1757 -91.74

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COMMONSIZE INCOME STATEMENT (2007-2008)

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COMMON SIZE INCOME STATEMENT (2006&2007)

Particulars 2008 2007 Amount %

Hospital Income 401800 215022 186778 86.86%

Other income 12,179 5,906 6273 106.2%

Balance opening 12,679 12,955 -276 -2.13%

Total income (A) 4,26,658 2,33,883 1,92,775 82.4%

Operating expenses:

Hospital operative exp 2,35,429 1,01,864 1,33,565 131.12%

Administrative exp 1,22,467 74,596 47,871 64.17%

Depreciation 33,036 15,807 17,229 108.99%

Total operating exp

(B)

3,90,932 1,92,267 1,98,665 103.32%

Non-operating exp

Financial expenses 16,559 3,177 13,382 421.21%

Impairment loss Nil 7,09 -709 -100%

Miss.expenditure 8,80 8,80 0 0

Current tax 2,600 10,547 -7,947 -75.34%

Fringe benefit tax 1,448 944 504 53.38%

Wealth tax 15 80 -65 -81.25%

Short provision for

earlier

0 3,704 -3704 0

Proposed dividend 6,750 6,750 0 0

Corporate dividend 1,147 1,147 0 0

Amount transferred 500 1,000 -500 -50%

Net operating exp(c) 29,899 28,938 961 3.32%

Net profit (A-B-C) 5,827 12,678 -6851 -54.03

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Particulars 2006 % 2007 %

Hospital Income 1,32,201 83.23% 2,15,022 91.9%

Other income 14,815 9.32% 5,906 2.52%

Balance opening 11,816 7.43% 12,955 5.53%

Total income (A) 1,58,832 100% 2,33,883 100%

Operating expenses:

Hospital operative

exp

71,646 45.10% 1,01,864 43.55%

Administrative exp 46,700 29.40% 74,596 31.89%

Depreciation 15,794 9.94% 15,807 6.75%

Total operating exp

(B)

1,34,140 84.45% 1,92,267 82.20%

Non-operating exp

Financial expenses 1,230 0.77% 3,177 1.35%

Impairment loss 576 0.36% 709 0.303%

Miss.expenditure 880 0.55% 880 0.34%

Provision for tax 6,117 3.85% 10,547 4.50%

Provision for fringe 971 0.61% 944 0.40%

Provision for deferred

tax

-2688 -1.692% 0 0%

Provision for wealth

tax

0 0 80 0.03%

Short provision earlier NIL 0 3,704 1.58%

Proposed dividend 3900 2.45% 6,750 2.88%

Corporate dividend

tax

547 0.344% 1,147 0.490%

Amount transferred to

gross profit

203 0.12% 1,000 0.427%

Total non-operating

expenses(C)

11,736 7.38% 28,938 12.37%

Net profit(A-B-C) 12,956 8.15% 12,678 5.420%

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STATEMENT SHOWING TREND PERCENTAGE

YEAR END (RS IN 000S) TREND PERCENTAGE

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PARTICULARS 2006 2007 2008 2006 2007 2008

Hospital income 1,32,201 2,15,022 4,01,800 100 162.6 303.93

Other income 14,815 5,906 12,179 100 39.86 82.20

Balance opening 11,816 12,955 12,679 100 109.63 107.30

Total income (A) 1,58,832 2,33,883 4,26,658 100

147.25 268.62

Operating expenses:

Hospital operative exp 71,646 1,01,864 2,35,429 100 142.17 328.60

Administrative exp 46,700 74,596 1,22,467 100 262.24 0.056

Depreciation 15,794 15,807 33,036 100 100.08 0.63

Total operating exp

(B)

1,34,140 1,92,267 3,90,932 100 291.43 290.85

Non operating exp:

Financial exp 1230 3,177 16,559 100 258.2 1346.26

Impairment loss 576 709 0 100 123.09 -

Miss. Expenditure 880 880 880 100 100 100

Current tax 6117 10,547 2,600 100 172.42 42.50

Fringe benefit tax 917 944 1,448 100 97.21 149.12

Wealth tax - 80 15 100 - -

Provision for deferred

tax

-2688 - - 100 - -

Short provision earlier - 3,704 - 100 - -

Proposed dividend 3900 6,750 6,750 100

173.07 1730.07

Corporate dividend 547 1,147 1,147 100 209.68 209.68

Amount transferred to

gross profit

203 1,000 500 100 492.6 246.30

Total non operating

expenses (C)

11,736 28,938 29,899 100

246.5 254.76

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Net profit (A-B-C) 12,956 12,678 5827 100

97.8 44.97

TREND PERCENTAGE FOR THE YEAR ENDING 2006,2007 AND 2008

Assets 2006 2007 2008 % % %

Current assets

Inventories 2365 4237 23591 100 180 997

Sundry debtors 7024 12201 22609 100 171 322

Cash and Bank

balances

16150 40511 12004 100 250 74.30

Total Current

assets(A)

25539 57049 58204 100 223 227

Loans and

Advances(b)

12761 43820 126316 100 339 26.56

Fixed Assets(C ) 54109 68943 201868 100 127.4 373

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Investments (D) 128 33019 319 100 257 249

Total

Assets(A+B+C+D)

92537 202830 386707 100 219.1 417

Liabilities:

Current Liabilities:

Sundry creditors forexpenses

7537 9043 19730 100 120 248


others:

Micro,small,medium - 2090

Others 9349 26008 41526 100 278 444

Unpaid dividend 894 931 1044 100 104.1 117

Total Current

liabilities(A)

17780 38071 62300 100 214.1 350

PROVISIONS:

Provision for tax -2720 626 3430 100 23 126

Proposed dividend 3900 9750 6750 100 250 173Corporate dividendtax

- 1147 1147

Provision for FBT 971 1915 158 100 197 16

Tax on proposed

dividend

547 100

Retirement benefits - 140 1614

Provision for wealthtax

- 80 50

Total provisions(B) 2698 10659 6287

Secured loans(c ) 17820 49462 218953 100 277 1228

Unsecured loans( D) 4805 100

Deferred tax liability( D)

3191 3191 3191 100 100 100

SHARE CAPITAL

AND RESERVES:

Share capital 32500 45000 45000 100 138 138

Reserves and surplus 16355 58178 51826 100 355 317

Less :miscellaneousexpenditure

2611 1731 850 100 66.2 32.5

Totalliabilities(A+B+C+D)

92537 202830 386707 100 233 418

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CHANGES IN WORKING CAPITAL FOR THE YEAR (2007&2008)

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CHANGES IN WORKING CAPITAL FOR THE YEAR (2006&2007)

PARTICULARS 2007 2008 INCREASE DECREASE

Current assets:

Inventories 4,337 23,591 19,254 -

Sundry debtors 12,201 22,609 10,408 -

Cash & bank

balance

40,511 12,004 - 28,507

Total current assets

(A)

57,049 58,204 29,662 28,507


Sundry creditors 9,043 19,730 - 10,687

Sundry creditorsfor others

- - -

(a) micro, small,

medium

2,090 - 2,090 2,090

(b) others 26,008 41,526 - 15,518

unpaid dividend 931 1044 - 113

Total current

liabilities (B)

38,071 62,300 2,090 26,318

Working capital

(A-B)

18,978 -4096 31,752

54,825

Net decrease in

working capital

- 23,074 23,073 -

18,978 18,978 31,410 54,825

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PARTICULARS 2006 2007 INCREASE DECREASE

Current assets:

Inventories 2,365 4,337 1,872 -

Sundry debtors 7,024 12,201 5,177 -

Cash & bank balance 16,150 40,511 24,361 -

Total current assets(A)

25,539 57,049 31410 -


Sundry creditors 7,537 9,043 - 1,506

Sundry creditors forothers

- - -

(c) micro, small,medium

- 2,090 - 2,090

(d) others 9,349 26,008 - 16,659

unpaid dividend 894 931 - 37

Total current

liabilities (B)

17,780 38,072 - 20,292

Working capital (A-

B)

7,759 18,977

31,410 20292

Net increase in

working capital

11,118 - - 11,118

18,877 18,977 31,410 31,410

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CHAPTER 7FINDINGS

7. FINDINGS

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From the research, a lots of facts came to lime light and there are

summarized below.

During the study period the Current ratio trend is decreasing

gradually. The Range is between 1.436 and 0.934 times. It shows

adverse liquidity position of the company.

During the study period the liquid ratio trend was decreasing

gradually. The Range is between 1.3 and 0.56 times. It shows


The Range of debt equity ratio is between 0.36 and 2.26 times It

shows unfavorable position of the company.

The Range of fixed asset turnover ratio is between 0.81 and 0.64 times

It shows unfavorable position of the company.

The Range of operating profit ratio is between 45.63 and 17.69 timesratio shows a decline in year 2006-07 of 17.069 from 60.36

The Range of return on share holders fund is between 26.52 and 6.02

times.

The Range of return on total assets is between 16.27 and 2.24 times .It

shows declining trend.

The Range of working capital turnover ratio is between 20.47 and

-104.16 times It shows unfavorable position of the company.

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The Range of operating profit is between 15.5 and 8.37 times It shows


The Range of capital turnover ratio is between 2.94 and 2.11 times It

shows declining trend.

It is found that there is relationship between occupation and reasons for

visit to Dr.Agarwals opticals.. The result did not support the hypothesis

and we may say that occupation is all the matter of visiting

Dr.Agarwals optical.

It is interpreted from the research that 42% of the respondent visited the

showroom for service and quality, followed by service with 15%.

Majority 62% of the customers are satisfied with the collection and 33%

of customers suggest improving the collection in the showroom.

It is found that majority of the respondents felt pleasant about the

ambience of the showroom followed by some felt appealing.

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CHAPTER 8

SUGGESTIONS

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8. SUGGESTIONS

The company can try to reduce the operating expenses to increase the

Net profit of the firm.

Company may increase its fixed asset to increase the net asset of the

company.

The company can try to increase its operating profit by exercising

effective control over the expenses.

The company should try to reduce the debtors collection period. To

avoid loss to the company in the form of bad debts.

Company should start utilizing unutilized resources to increase the

productivity.

The cash and bank balance of the concern may be increased to meet

the current obligation.

The liabilities and provisions of the company can be decreased so that

the efficiency of the company can be maintained.

The company can try to reduce the Reserves and Surplus. So, that the

total capital has increased.

The company may strike a balance between the current assets and

current liabilities to maintain the solvency position.

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Optimum utilization of working capital must be planned to result in

sound financial position.

More attention must be made in order to raise good will of the firm.

CHAPTER 9

CONCLUSION

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9. CONCLUSION

Financial performance is considered to be the life blood of every

organization; therefore the company should concentrate on all the financial

aspects. The main aim of the study was to improve the financial position of the

company and the ultimate goal is to achieve the maximum utilization of the

profit.

The working capital has been decreased in the year 2007 to 2008. The

company has to be careful in utilizing the resources to meet the various needs

for the operations.

The analysis and interpretation of the financial statement is essential to bring

out the mystery behind the figure in financial statement financial analysis is an

attempt to determine the significance and meaning of financial statement data

so that forecast may be made for future earnings, and enable to pay interest,

debt maturities, and to increase the profitability of the company with sound

dividend policy.

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corrected brand

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