ych final work of project

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1.1 INTRODUCTION

The project was undertaken mainly to study the financial position and the

working capital management of YCH Group Pvt. Ltd. Established in the

year 1955. YCH logistics is nurtured by quality consciousness, passion for

hard work and the will to succeed. YCH services deals various with

Intribution, Intrabution, and Retrogistics which cater the requirements of

Consumer Goods Industry, Hi-tech Electronics, Chemical and Health Care.

YCH with its diversified services has a strong supply chain management

across India, which helps in tapping the market as a whole and provides at

time services to its customers. It has also introduced a V-hub so that virtual

sourcing of raw materials can be done based on the requirements, to feed the

global manufacturing plants, enabling manufactures and brand owners to

Buy Anywhere, Make Anywhere and Sell Anywhere.

The growth of all the services which the company is dealing is linked to the

economic development of the country. Our country is thriving to progress

further and aims to convert her as a developed nation. To attain this

objective, the development of all the core sectors like infrastructure, power,

construction, automobiles, consumer durables, etc. is essential and this in

turn is expected to augment the growth of the corporate sector of the country

as a whole.

As the economy is growing in a faster manner, the disposable income of the

people are also increasing and most of the population is brought under the

spectrum for spending for housing and white goods. Importantly, the

aspiration to own luxury goods is also seen increasing and this has resulted

in a revolution for consumer durables. The company is confident of

capitalizing all these factors and increasing its market presence across the

country.


1.2 STATEMENT OF THE PROBLEM

Every business enterprise functions with a view to earn profits. Profits are

vital for a concern in order to sustain and ensure a long life. Working capital

is also required in order to run day to day activities .Here in this project an

attempt is made to evaluate the working capital of YCH group Pvt. ltd. The

project aims to find out the financial efficiency and weakness of the concern

and to draw inference about the present position of the company.

1.3 OBJECTIVES

1) To study the financial position of YCH Group Pvt. Ltd and to evaluate

the progress for a period of 4 years.

2) To know the financial efficiency and weakness of the concern.

3) To find out the liquidity position of the company.

1.4 RESERCH METHODOLOGY

Research methodology is a way to systematically solve the research problem. It

may be understood as a science of studying how research is done scientifically.

The study is done through by colleting primary data and secondary data.

PRIMARY DATA

Primary data are those data which are directly collected or which are the

first hand data. Primary data’s are the reliable and accurate than any other

ones. Primary data can be collected by the interaction with the staffs,

employees and interviewing to the managers. Primary data were collected

by,

Direct interview with the department heads


SECONDARY DATA

Secondary data are the data, which are early, collected by some ones. It is

obtained from various sources other than primary data. Secondary data consists of

catalogue, manuals, magazines, annual reports and Internets. It is sufficient for an

effective study. Secondary data were collected by.

Annual reports of YCH Group Pvt. Ltd

Periodicals, books, etc. published by the company

Internet website (www.ych.com )

1.5 SCOPE OF THE STUDY

The study basically aims to find out the financial performance of the YCH Group

Pvt ltd. Knowledge of the current financial position are vital for a company’s

future course of action. The study also looks at the feedbacks, which can be used

efficiently to improve the quality of the service and cost reduction activities. It

helps the organization to make decisions regarding the control of the debts and

creditors and also regarding the fund utilization of the firm.

1.6 LIMITATIONS OF THE STUDY

1. The effectiveness of the study depends on the correctness of the

information provided.

2. The study covers only a limited period of 4 years.

1.7 CHAPTERIZATION

This report is mainly divided into six chapters:

Chapter-1 Introduction

Chapter-2 Industry profile

Chapter- 3 Company profile

http://www.ych.com/


Chapter-4 Theoretical frame work

Chapter-5 Data analysis and interpretation

Chapter-6 Findings, Conclusion and Suggestions

Bibliography

Appendix


2.1 BIRTH OF LOGISTICS:

Logistics can be defined as providing the right type of products and/or services at

the right price, at right place, time and in the right condition. The birth of

Logistics can be traced back to ancient war times of Greek and Roman empires

when military officers titled as 'Logistikas' were assigned the duties of providing

services related to supply and distribution of resources. This was done to enable

the soldiers to move from their base position to a new forward position efficiently,

which could be a crucial factor in determining the outcome of wars. This also

involved inflicting damage to the supply locations of the enemy and safeguarding

one's own supply locations. Thus, this lead to the development of a system which

can be related to the current day system of logistics management.

The term "logistics" originates from the ancient Greek "λόγος" ("logos"—"ratio,

word calculation, reason, speech, oration"). The Oxford English dictionary defines

logistics as: “The branch of military science having to do with procuring,

maintaining and transporting material, personnel and facilities.”The American

Council of Logistics Management defines logistics as “the process of planning,

implementing and controlling the efficient and effective flow, and storage of

goods, services and related information from the point of origin to the point of

consumption for the purpose of conforming to customer requirements.”

Logistics, as a business concept, evolved only in the 1950s. This was mainly due

to the increasing complexity of supplying one's business with materials, and

shipping out products in an increasingly globalized supply chain, calling for

experts in the field who are called Supply Chain Logisticians.

Logistics has evolved itself as an art and science. However, it cannot be termed as

an exact science. Logistics does not follow a defined set of tables nor is it based

on skills inherited from birth. A logistics manager performs his duties and

responsibilities based on his educational experiences, skills, past experiences and


intuition. These skills are nourished by a constant application of the same by him

for the betterment of his organization.

Chart no: 1-Logistics Historical Development

2.2 RECENT STUDY

A recent study defined logistics as: That part of the supply chain process that

plans, implements and controls the efficient flow and storage of goods, services

and related information from the point of origin to the point of consumption, in

order to met the customers’ requirements. Today's modern, efficient

warehouses/distribution centres are the heart of logistics, and provide control,

efficiency and velocity for goods moving through the system.

A bit broad, but the elements that make up the modern logistics

industry continue to evolve as the breadth of value added services

warehouse logistics providers offer does. This expansion has been accelerated by

three vital trends in the new economy:

The general trend toward outsourcing,

The previously unprecedented growth of e-commerce and

DORMANT YEARS DEVELOMENT YEARS TAKE-OFF YEARS LOGISTIC ALLIANCE 3RD PARTY

LOGISTIC GLOBALISATION

LOGISTICS

1950s 1960 s 1970s 1980s 1990s 21ST CENTURY


The importance of the partnership aspect of the manufacturer/marketer-

logistics provider relationship.

A recent study found that 95 percent of the U.S.’s chief executives believe they

should have some form of logistics strategy, and nearly 50 percent of the nation’s

CEOs are currently incorporating supply chain planning into their overall business

strategies.

One thing is certain: no matter how logistics is defined, the function accounts for

8.7 percent of the total U.S. Gross Domestic Product ($910 billion in 2002). It is

growing dramatically in terms not just of services provided and outsourced but in

terms of volume. The industry’s 3PL provider element (that most closely served

by IWLA) alone counts for more than $78 billion and is estimated to be growing

by 15-20 percent per year. Its benefits include:

Reduced need for personnel

Reduced transportation and distribution cost

Improved customer service

Improved cycle time

Free-up capital in manufacturers’ and marketers’ non-core areas.

2.3 LOGISTICAL MANAGEMENT FUNCTIONS

Logistics is the process of movement of goods across the supply chain of the

company. This process is consist of various functions, which have to be properly

managed to bring effectiveness efficiency in the supply chain of organization. The

major logistical function are:

1. ORDER PROCESSING:

The starting point of physical distribution activities is the processing of

customers’ orders. In order to provide quicker customer service, the orders

received from customers should be processed within the least possible time. Order


processing includes receiving the order ,recording the order, filling the order, and

assembling all such orders for transportation, etc. the company and the customers

benefit when these steps are carried out quickly and accurately. The error

committed at this stage at times can prove to be very costly.

Order processing activity consists of the following:

Order checking in any deviations in agreed or negotiation term

Prices , payment and delivery terms

Checking the availability in of the material stock

Production and material scheduling for storage

Acknowledge the order, indicating deviation

2. WAREHOUSING:

Warehousing refers to the storing and assorting products in order to create time

utility. Generally, larger the number of warehouses firm has the lesser would be

the time taken in serving customers at different locations, but greater would be the

cost of warehousing. Thus, the firm has to strike a balance between the cost of

warehousing and the level of customer service.

Major decision in warehousing is as follow:

➢ Logistics of warehousing facility

➢ Number of warehousing

➢ Size of warehouse

➢ Design of the building

➢ Ownership of the warehouse

3. INVENTORY MANAGEMENT:

Linked to warehousing decisions are the inventory decisions which hold the key to

success of physical distribution especially where the inventory costs may be as

high 30-40 per cent(e.g., steel and automobiles). No wonder, therefore, that the


new concept of Just-in-Time-Inventory decision is increasingly becoming popular

with a number of companies. A correct estimate of the demand helps to hold

proper inventory level and control the inventory costs. And it also maintain

production at a consistent level.

4. TRANSPORTATION:

Transportation seeks to move goods from points of production and sale to points

of consumption in the quantities required at times needed and at a reasonable cost.

The transportation system adds time and a place utility to the goods handled and

thus, increases their economic value. To achieve these goals, transportation

facilities must be adequate, regular, dependable and equitable in terms of costs

and benefits of the facilities and service provided.

5. INFORMATION:

The physical distribution managers continuously need up-to-date information

about inventory, transportation and warehousing. For example, in respect on

inventory, information about present stock position at each location, future

commitment and replenishment capabilities are constantly required. Similarly,

before choosing a 16 carrier, information about the availability of various modes

of transport, their costs, services and suitability for a particular product is needed.

About warehousing, information with respect to space utilization, work schedules,

unit load performance, etc., is required.


Fig no: 1- Supply Chain Management

2.4 RELEVANCE OF LOGISTICS INTERNATIONAL MARKETING

Marketing experts have recognized that for developing a position of sustainable

competitive advantage, a major source is superior logistics performance. Thus, it

can be argued that instead of viewing distribution, marketing and manufacturing

as largely separate activities within the business, they need to be unified,

particularly at the strategic level. One might be tempted to describe such an

integrated approach to strategy and planning as ‘Marketing Logistics’. Business

can only compete and survive either by winning a cost advantage or by providing

superior value and benefit to the customer.

In recent years, numbers of companies have become aware that the market place

encompasses the world, not just the India .As a practical matter, marketing

managers finding that they need to do much work in terms of conceptualizing ,


designing , and implementing logistics initiatives to market effective globally.

Following are the reasons behind the extension of logistics activities at global

level to do business internationally.

The magnitudes of global business are:

• Increase in the magnitude global business

• Business is relying on foreign countries to provide a source of raw materials and

market of finished goods

• Fall of global trade barriers.

• Increase in Global competition.

2.5 PROSPECTS OF GROWTH IN THE INDUSTRY

In years gone by, the traditional warehousing and logistics facility was located by

rail, road tracks, a sea port, and/or air ways, usually in the least desirable parts of

cities or large towns. This stereotype then faded as gigantic, state-of-the-art

facilities began to sprout in more rural areas on the outskirts of transportation and

population hubs. The World started beginning to see such facilities showing up in

even less "traditional" areas. Modern warehouses now are being located in

carefully manicured industrial parks that are sprouting as fast as the corn and

wheat once did in these open spaces-often in out-of-the-way places. Why the

emphasis on such locations for logistics companies?

Much of it is due to the great flux that the logistics industry has been undergoing

in the first three years of the 21st century. Most of these changes are being driven

by a growing trend in the manufacturing and retail sectors to form partnerships

with companies to which they can outsource non-core logistics competencies-3PL

providers.

In turn, 3PL providers are continually looking to provide innovative supply chain

solutions to customers by focusing on value-added capabilities, differentiating

themselves from the competition. They focus on key objectives, such as

implementing information technologies, instituting effective management

processes, integrating services and technologies globally, and delivering


comprehensive solutions that create value for 3PL users and their supply chains.

This need to partner with customers and become more integrated into their supply

chain processes has created the ancillary need to locate close to these customers.

That isn't to say the need for easy access to transportation hubs and different

modes of transportation won't continue to be important. But the above shift in

business strategy, along with the advances in technology and enhanced

communication, has opened the door for logistics facilities to operate effortlessly

in a myriad of locations.

Profit warnings, share price pressures, mergers, reorganizations, relocations,

disposals, painful layoffs and great geopolitical uncertainties can sweep away

even the most comprehensive logistics strategies – and that’s despite outstanding

management over many years. These are exceptionally difficult times and it has

never been more important to connect logistics and freight planning to executive

board thinking than now. It’s easy to lose sight of the bigger picture in the rush to

cut infrastructure cost and conserve cash. Hopefully organization succeed in

protecting the business, satisfying shareholders and analysts, but what about

capacity and flexibility, morale and momentum?

To be a logistics winner in the coming years, organizations need to use the

downturn to reshape for growth, propelled by an unshakeable conviction that the

mission is still important, that more prosperous times lie ahead, and that in some

way the company infrastructure is helping to build a better kind of world.

Own passion for running the race matters most of all in a downturn, when people

are insecure, see only savage cost savings, and loyalty is tested. The corporation’s

future will be dominated by six factors, or faces of a cube, spelling F U T U R E.

Logistics is inevitable in the future and essentially the management policy also has

a significant role in the future of world. Generally the study is being featured with

all aspects of management in Logistics and Freight areas. (Logistics include

Transportation, Warehousing, Network Design, Cross docking, and Value

Adding).

2.6 SIZE OF THE LOGISTICS MARKET IN INDIA:


Indian Supply Chain and Logistics Industry is more than USD 100 Billion in size

and is the backbone of Indian Economy. Our industry is growing at a rate of 8-

10% annually and has been a crucial contributor in the growth and development of

the Indian economy. In the near future, Traditional Logistics services like

Transportation and Warehousing would continue to growth at a good rate.

However, the big ticket growth would come from the Value Added

Logistics services in the near future.

At present, Outsourced Logistics accounts for only one-third of the total Logistics

market in India, which is a significantly lower proportion vis-à-vis the developed

markets. Growth in this industry is currently being driven in India by over USD

300 billion worth of infrastructure investments, the phased introduction of VAT,

the development of organized Retail and Agro-processing industries, along with a

strong manufacturing growth. In addition, we expect strong Foreign Direct

Investment inflows in the Indian markets, which would lead to increased market

opportunities for providers of Third-Party Logistics in India.

Therefore, India possesses substantial opportunities for growth in the Supply

Chain &Logistics industry in the coming years, notwithstanding the temporary jolt

due to the economic slowdown.

THIRD PARTY LOGISTICS IN INDIA

Third party logistics (3PL) market in India is at its nascent stage.3PL is

fast gaining popularity in Indian logistics market.

Companies in textile , automotive ,pharmaceutical, manufacturing , retail

and FMCG sectors are increasingly opting to outsource their logistics

requirements to specialized service providers

According to the recent survey of 3 PL service providers Engineering,

Automotive And Retail sectors are the top revenue earners

3PL MARKET COMPRISES OF TWO SEGMENTS:


Chart no: 2

Segments of 3pl market

20052008

2012

0.00%

5.00%

10.00%

15.00%

20.00%

5%10%

18%Column2

Graph no: 1

SHARE OF 3PL FIRMS IN LOGISTIC INDUSTRY

2.7 SWOT ANALYSIS OF LOGISTICS

ASSET BASED NON-ASSET BASED

Own some of the assets used in the SCM which includes trucks, distribution centre and warehouses

Does not own such assets.


STRENGTH:

Quick way to re-engineer distribution networks

Enhanced distribution and transportation Service

Time Saving in servicing customer

Flexibility in restructuring distribution networks and expansion plans

Economies of scale in distribution

WEAKNESS:

Lesser control over outsourced third party activities.

Lack of proper set of skilled man power

Forged bills and claims by 3PL provider agency.

Difficult to switch 3PL provider agency.

Lesser co-ordination between branch offices and 3PL agency

OPPORTUNITIES:

Better utilization of working capital

Fast expansion of principal’s business without investing in infrastructure

and transportation resources

Cost optimization as a result of fast and efficient processes

Concentration on core competencies

THREATS:

Value Added Tax (VAT) might affect 3PL industry as distribution

channels would be trimmed.

Poor transportation infrastructure of India might lower the profit margin

E-Commerce is emerging as a primary threat to 3PL industry.

Threat of leakage of operational competencies to competitors.

2.8 COMPANIES INVOLVED IN 3PL LOGISTICS

DHL

FEDERAL EXPRESS

VRL LOGISTICS

HI-TECH LOGISTICS(HTL)

3.1 INTRODUCTION TO COMPANY PROFILE


YCH group is the leading integrated end to end supply chain management and

logistic partner to some of the world’s largest companies in the hi-tech electronics,

chemicals / health care and consumer goods industries.

Business is to provide integrated logistics services such as warehousing and

inventory management, transportation and distribution management, and freight

management.

It provide end to end supply chain management services through a suite of supply

chain solutions to manage the 3 key logistics processes within a supply chain ,

mainly raw materials

Management, consumer goods distribution and service and return management

YCH operations are spanning throughout Asia Pacific, Including Singapore,

Malaysia, Thailand, Indonesia, China, Taiwan, Hong Kong, Australia, India,

Vietnam, and Korea.

3.2 HISTORY OF YCH LOGISTICS PVT.LTD

Founded in 1955, YCH Group is the leading integrated end-to-end supply chain

management and logistics partner to some of the world's largest companies in the

hi-tech/electronics, chemicals/healthcare and consumer goods industries. Our

business is to provide integrated logistics services such as warehousing and

inventory management, transportation and distribution management, and freight

management services. We also provide global end-to-end supply chain

management services through a suite of supply chain solutions to manage the 3

key logistics processes within a supply chain, namely raw materials management,

consumer goods distribution and service and returns management.

MILESTONES

EARLY YEARS 1955-1970s

We were established in 1955 as a small local passenger transportation business

under the name of Yap Chwee Hock Transport and General Contractors ("YCH

Transport"). In 1973, YCH Transport was converted from a sole proprietorship to

a private limited enterprise and was renamed Yap Chwee Hock Transport Pte Ltd,

which is today known as YCH Global Logistics Pte Ltd.


1977-1990s

In 1977, we undertook a strategic decision to redirect our passenger transportation

business to cargo transportation and in the following year, became one of the

major cargo transport contractors for the then Port of Singapore Authority. In the

early 1980s, we diversified into the business of warehouse leasing and the

provision of freight forwarding services via the acquisitions of Freight

Connections Worldwide Pte Ltd and Regional Forwarding & Warehousing

Management Pte Ltd ("RFWM") in 1982 and 1983 respectively. RFWM was

incorporated in Singapore on 6 October 1980 as a private exempt limited company

and was renamed YCH Logistics Pte Ltd on 17 March 1989. In 1999, YCH

Logistics Pte Ltd was renamed YCH Group Pte Ltd and presently serves as our

holding company.

In the mid-1980s, we grew from a warehousing and cargo transportation provider

to an integrated third party logistics company providing services such as

warehousing, distribution inventory management and freight management. In line

with the growth of our business, we established a number of distribution centres to

manage the warehousing and regional distribution for MNC clients in 1991. We

developed and completed our present headquarters, known as YCH Distri Park, in

1992. The establishment of YCH Malaysia in 1991 marked our first foray

overseas.

In 1993, we set up PDC-YCH Distri Park, a 51% owned joint venture with Penang

Development Corporation, to operate a distribution hub in Penang. This joint

venture in Penang is fully operated and managed by YCH. In 1993, we also

opened the Roche Distribution Centre in Singapore to manage the logistics needs

of Roche. In 1994, we expanded into China and set up operations in Shanghai to

operate a distribution hub by way of a 51% owned joint venture with Shanghai

Wai Gao Qiao Free Trade Zone United Development Co and China Ocean

Shipping Agency Shanghai. This joint venture in Shanghai is fully operated and

managed by YCH.


1995 Onwards

In 1995, we made an investment to build an automated storage and retrieval

system warehouse in Singapore. In 1997, we commenced operations in Hong

Kong through the establishment of YCH HONG KONG.

With the growing trend of logistics outsourcing and the increasingly complex

requirements of our clients, we further expanded our services to include the

provision of supply chain management services through a suite of supply chain

solutions, namely Intribution™ (raw materials management to support

manufacturing) in 1996, Retrogistics™ (service and returns management) in 1998

and Intrabution™ (consumer goods distribution) in 2000.

In 1996, we were awarded an Innovation Development Award under EDB's

Innovation Development Scheme, for the development of the Intribution™

solution. We were appointed by Compaq Asia to implement our Intribution™

solution to service its Asia-Pacific manufacturing operations in the same year.

Today, we have implemented the Intribution™ solution for our various clients,

such as Natsteel Electronics in Singapore and Mexico, Motorola in Singapore and

China, Gateway in Malaysia, MiTac in Taiwan and Solectron in Mexico.

In 1999, YCH Logistics Pte Ltd was renamed YCH Group Pte Ltd and presently

serves as our holding company.

3.3 PHILOSOPHY

Our Philosophy

YCH is founded on a philosophy that thrives on overcoming challenges. This is

embodied in the corporate philosophy using the Chinese Character – (Sheng)

meaning to RISE. The acronym of the word RISE was adopted as the company’s

corporate values, focusing on the level of service and confidence we provide to

our client.

Reliability Our proven Reliability to perform our best is the company’s


assurance of professionalism.

Integrity We strive to deliver an uncompromising commitment to Integrity in

all business activities.

Sincerity Our Sincerity is demonstrated through the genuine care and interest

we place on the welfare of our clients and staff.

Enterpris

e

Our dynamism and innovative spirit of Enterprise, in meeting new

challenges, is a true reflection of our Vibrancies, Energy, Strength

and Passion to achieve our corporate goals.

3.4MISSION

Our Mission to Be The No. 1 Supply Chain Solutions Player in Asia Pacific.

3.5VISION

“Our Vision to Build THE Logistics Superhighway in a Borderless World

represents our passion in creating the ultimate superhighway of optimal efficiency

& speed. THE Logistics Superhighway will enable the Physical, Informational,

and Financial flows of the supply chain to flow seamlessly throughout a

borderless world”.

3.6 YCH BRAND STORY

Over the years, the YCH brand has come to represent reliability and integrity. As

the company evolved, so did our brand identity.

In 1955, our logo brings memories to YCH's humble beginnings - from a

transportation company to today's leading supply chain solutions provider.


The need for YCH to keep up with the increasing pace of globalisation dictated by

technological advances instilled our need to reinvent our corporate identity.

Hence, in 1999, the company updated the logo to give it a more modern look for

the times. The YCH logo embodied a new dynamism. A robust spirit that has

evolved from a corporate philosophy of rising to the challenges in exceeding

customer expectations, in a demanding, ever-changing world. The symmetry of

each letter rendered in twin lines headed in the same direction suggests a

commitment to building strong partnerships.

The current YCH brand identity was introduced in October 2005, on YCH’s 50th

Anniversary. Research from our branding exercise indicated that the brand

audience associated YCH’s brand essence with the characteristic font type and the

colour yellow.

The new YCH logo encapsulates the company’s vision, energy, and dynamism. It

personifies YCH Group’s forward-looking spirit and also signifies strong

partnerships, in a journey on the Logistics Superhighway.

“YCH” is embedded right in the heart of “supply chain” and is the key to

connecting global businesses, empowering through a connected supply chain

The company had gone through three eras of change and had emerged a more

vibrant, dynamic leading-edge company than ever before. The new logo embraced


the strengths of the previous logo - the twin lines and the familiar yellow

corporate colour. YCH is now better represented in this new visually dynamic

context and ready to move towards new horizons in this borderless world.

3.7 Consumers of YCH Group Pvt. Ltd.

CONSUMER GOODS INDUSTRY

Unilever

Mary Kay

CHEMICALS / HEALTH CARE

BASF (Badische Anilin- und Soda-Fabrik)

Hunts Man

ELECTRONICS

Dell

Motorola

Samsung

LG

3.8 SOLUTIONS AND SERVICES

Our award-winning end-to-end supply chain solutions, namely Intribution,

Intrabution and Retrogistics, address the entire supply chain needs of our clients,

from suppliers to manufacturers (for parts and components), from manufacturers

and brand owners to resellers and consumers (for finished products), and from

consumers to original equipment manufacturers (for spares and returns),

respectively.

These solutions allows us to provide more holistic supply chain management

services to our clients from supply chain consulting, design, solutioning, through

to the delivery of integrated logistics services such as warehousing, freight

forwarding and transportation. All these are integrated through cutting edge

technology applications and the management of the information supply chain or


electronic transfer of information, either via the EDI, API, web services and so on.

The implementation of our supply chain solutions for our clients involves:

(1) The setting up of physical inventory management facilities such as supplier

and distribution hubs,

(2) The setting up of system interfaces between YCH and our customers'

operations and computer systems and

(3) The customisation of our clients' supply chain networks processes with

regards to the flow of inventory and information

Chart no: 4

End To End Supply Chain Management Solutions

As depicted in the diagram above, the entire supply chain can be broken into

3 key stages, involving interactions between:

Suppliers and manufacturers, where raw materials are aggregated to

support the manufacturing process;

GLOBAL SUPPLIERS

RETROGISTICS

(SERVICE &RETURNS LOGISTICS)

LO

CONSUMERS

INTRABUTION

(CONSUMER GOODS FULFILMENT)

MANUFACTURERS

INTRIBUTION

MANUFACTURING LOGISTICS


Manufacturers and end consumers, where finished consumer goods are

distributed directly to the end consumer or indirectly via various

distribution channels such as distributors, wholesalers and retailers; and

End consumers and manufacturers, where defective goods are returned to

the manufacturer or appointed returns centre for service and repair.

In addition to the physical movement of goods, each of these interactions also

involves the exchange of information between parties in the supply chain The

supply chain management also involves the co-ordination and integration of

various functions such as procurement, manufacturing planning, distribution

and marketing.

INTRIBUTION

Manufacturing Logistics Solutions:

Managing the flow of your raw materials information and financial transactions

has never been smoother than with Intribution , a web enabled manufacturing

logistics solutions .Intribution ensure that the manufacturer’s needs are met

throughout the manufacturing process in a cost and time efficient manner.

Vendor Managed Inventory/Suppliers Owned Inventory:

As we know how everything connects, we can help you to nimble in your

business. It is done by orchestrating the movements of your inventories on a

Just - In - Time basis to support built to order (BTO) and configured to order

(CTO) manufacturing .under the SOI model, we enable the transfer of materials

ownership from suppliers to manufacturers only upon manufacturing pull.

Materials Hub Management:

Inventory from anywhere in the world is carefully housed in these hubs until such

time that they are needed to be delivered in a just- in time basis to the production

floor. Our mini-max replenishment capability ensures that inventory can be


replenished or adjusted based on the needs of manufacturer, minimizing inventory

obsolescence.

Virtual Hub:

It allows virtual sourcing of raw materials based on optimised requirements to

feed to global manufacturing plants, enabling manufacturers and brand owners to

Buy Anywhere, Make Anywhere, Sell Anywhere.

INTRABUTION

Customer Goods Fulfilment

The internet generation has produced a new breed of consumers with sophisticated

demands. Getting finished goods to them as quickly as their tastes evolve becomes

a priority. And this we take very seriously with Intrabution a solution that bridges

the complexities in distributing finished products to retailers and final consumers.

Order Fulfilment

Order management and fulfilment takes on a new approach with Intrabution,

streamlining it to a distinct advantage for brand owners and manufacturers.

Harnessing the power of internet and cutting-edge technologies as well as the

traditional means of phone and fax, Intrabution synchronises the order fulfilment

process for ease of use. With the Intrabution hubs that pick, pack and deliver

according to order specifications, providing real-time delivery and inventory

status visibility, we are very swiftly able to fulfil your commitments to your

customers.

RETROGISTICS

Service and Return Logistics:

Service does not stop at the shop floor. It means following up with your clients’

needs even after the point of sale. To help you and your clients,

Retrogistics efficiently manages the service and returns logistics when your

products require after-sales parts replacement, warranty returns and servicing. In a

nutshell, we become a critical part of your after-sales service, helping you create

brand loyalty among your consumers.


Spares and Returns Management:

YCH even look into the nuts and bolts of operating a spare and returns policy.

They receive and pick up defective products from the end users. Without skipping

a beat, they ensure parts and components inventory management, auto

replenishment and spare parts delivery to facilitate on site after sales service.

3.9 SERVICES

Freight Management

Warehousing

Transportation

Freight management : There freight management service includes managing

clients' freight requirements and activities, including the booking and scheduling

of freight activities and the preparation and coordination of the necessary

documentation. They have established a network of overseas air and sea freight

agents to provide on time deliveries to Europe, the Americas and Asia.

Y-Track their web-based global track and trace system, is incorporated to our

freight management services to provide their customers with end-to-end visibility

in tracking shipments via the Internet.

The YCH Freight Connector provides user an access to the simplest shipment

booking system with competitive rates from multiple Carriers/Agents.

The Freight Connector is an interactive multi-modal, internet-based supply chain

management tool that allows customers to create shipment bookings over the

internet. This system allows the shipper to make, search, and edit bookings,

irrespective of time, day, and location, all over the Internet.

With the Freight Connector online Shipment Tracking system user can track the

status as well as the history of your shipments from the job level down to the

individual SKU level anywhere in the world. The system allows the user to search


by their Booking references, the Forwarders reference, House and Master Air

Waybill numbers, Bill of Lading numbers, Container/Trailer numbers, Purchase

Order Numbers or the date ranges.

Transportation: They have developed an extensive and comprehensive network

of transportation fleets, providing container trucking services and local cargo

delivery services such as the collection and transportation of our clients' goods

from a designated pick-up point to a designated drop-off point.

YCH transportation and distribution management services also include the

delivery of our clients' inventory which are managed by us and stored in our

warehouses to designated locations.

Warehousing:

YCH provide warehousing and inventory management services such as the

provision of warehouse space, the stocking and tracking of inventory, and other

ancillary services such as the stuffing and unstuffing of cargo, handling,

packaging and labelling.

Their headquarters at YCH Distri park, Singapore is situated on a 7.8 hectare land

in Tuas.The facilities located within YCH Distri Park include Air-Conditioned

Warehouses, Cold and Clean Room, Temperature-controlled warehouses, Very

Narrow Aisles and Automated Storage and Retrieval Systems warehouses to

maximise use of space and improve operational efficiency.

They also have specialized Chem Parks which manage Dangerous & Hazardous

Cargo, with stringent safety systems, such as spillage containment tanks, Strong

Rooms, and so on. All their hubs and facilities have 24-hr security with CCTVs

and Motion Detectors and also comply with industry specific standards and

classifications such as TAPA, Responsible Care, etc.

3.10 EVENTS

YCH (Tianjin) donates to Quake Victims.


YCH (India) organizes Blood Donation Camp in association with Lions

Club of India.

YCH (Thailand) launches Voices of Customer Survey

3.11 AWARDS

YCH was awarded with ‘Best IT/Electronic Logistics Service

Provider’ (Singapore).

YCH bagged frost and Sullivan ‘Best Domestic Logistic Service

Provider’ (Singapore).

YCH bags ‘SBA ENTERPRISE’ of the year award.

YCH wins the prestigious ‘CIO 100’ award for the year 2010.

YCH has been honoured with the Singapore Chemical Industry

Council’s (SCIC) Responsible Care achievement award for Employee

Health and Safety Code in 2010.

4.1 INTRODUCTION

Business as we know is concerned with the financial activities. In order to

ascertain the financial status of the business every enterprise prepares certain

statements, known as the financial statements. Financial statements refer to two

statements which are prepared by a business concern at the end of the year.


These are (i) Income Statement Or Trading And Profit And Loss Account

which is prepared by a business concern in order to know the profit earned and

loss sustained during a specified period; (ii) Position Statement Or Balance

Sheet which is prepared by a business concern on a particular date in order to

know its financial position.

1) Income statement: Trading concerns, whose financial activities are

restricted to purchases and sales of goods prepare trading and Profit

and Loss Account. The trading and Profit and Loss Account in order to

ascertain their net income/net loss. Manufacturing concern require

information regarding the cost of production also, so they prepare one

more additional Account, known as the manufacturing Account. In

case of Joint Stock Companies profit and loss appropriation is also

prepared to show the disposal of profit earned by the company. It

furnishes the information regarding purchases, sales, direct expenses,

gross profit or gross loss and net profit and net loss

2) Position statement: it is a mirror which reflects the true position of the

assets and liabilities of the business on a particular date. Assets include

all current and non-current assets and the liabilities include creditors

equities and proprietors’ equities. It is traditionally known as the

balance sheet.

4.2 FINANCIAL ANALYSIS

Financial analysis is the systematic numerical calculation of the relationship of

one financial fact with the other to measure the profitability, operational

efficiency, solvency and the growth potential of the business. The analysis

serves the interests of shareholders, debenture-holders, potential investors,

creditors, bankers, journalists, legislators, politicians, researchers, stock

exchanges, taxations authorities and economists. The analysis of financial

statements makes it simple, intelligible, and meaningful for all concerned

parties. Financial statements are split into simple statements by the process of


rearranging, regrouping and calculations of various ratios. The analysis

simplifies, summarizes and systematizes the monotonous figures.

Financial analysis in this way is the purposeful and systematic presentation of

financial statements. Various items of income and position statements are

compared and their inter relationship is established.

According to Kennedy and Memullar “ The analysis and interpretation of

financial statements are an attempt to determine the significance and

meaning of financial statements data, so that a forecast may be made of the

prospects for future earning, ability to pay interest and debt maturities( both

current and long term) and profitability of sound dividend policy.”

To these statements added are the statement of retained earnings and some

other statements (as fund flow statement, cash flow statement, etc.) and

schedules of fixed assets (as investments, current assets etc) to give a full view

of the financial affairs. All these statements are collectively called as a package

of financial statements. Statement of retained earnings (when prepared

separately) or profit and loss appropriation Account shows the utilization of

profits of the company i.e., dividend declared, amount transferred to general

reserve or any other reserve are shown in this Account. Funds flow statement

summarizes the changes in working capital in a specified period and indicates

the various sources and applications of funds. Cash flow statement gives the

various items of inflow and outflow of cash. Various schedules of fixed assets

are prepared by companies to show as to how the figures shown in the balance

sheet have been arrived at.

4.3 NATURE OF FINANCIAL STATEMENTS

Financial statements are prepared for the purpose of presenting a periodical

review or report by the management and deal with the state of investment in

business and result achieved and best result achieved during the period under

review. They reflect a combination of recorded facts, Accounting conventions


and personal judgments’. From this it is clear that financial statements are

affected by three things i.e., recorded facts, conventions and personal

judgments’. Only those facts which are recorded in the business books will be

reflected in the financial statements. For example, fixed assets are recorded in

the books at cost price and shown in the balance sheet cost price irrespective of

their market or realizable price. Again, financial statements are prepared by

following certain principles which are in use from a long time. Such

convention will not reflect the true position of the business as the actual

position of the business will definitely be better as compared to the position

depicted from the financial statements. Personal judgment of the Accountant

again will reflect the preparation of financial statements. For an example, the

choice of the method of depreciation or which expenditure is to be capitalized

or not will affect the preparation of the financial statements.

Following points truly reflect the nature of financial statements of business

entities:

These are reports or summarized reviews about the performance,

achievements and weaknesses of the business.

These are prepared at the end of the Accounting period so that various

parties may take decisions of their future actions in respect of the

relationship with the business.

The reliability of financial statements depends on the reliability of

Accounting data

The figures in the financial statements are a combination of recorded

facts

These statements are prepared as per Accounting concepts and

conventions

These statements are influenced by the personal judgement of the

Accountant though he is expected to be more objective in his approach.

These judgements may relate to the valuation of inventory, depreciation


of fixed assets and while making distinction between capital and

revenue.

Significance/ purpose

1) Judging the operational efficiency of the business: It is very

significant that the company must know the operational efficiency of

its management. We analyze the financial, match the amount of

manufacturing, selling, distribution and financial expenses of the

current year with the corresponding expenses of the previous year and

assess the managerial efficiency of the business. We can judge the

operational efficiency of the business by calculating the profitability

ratios.

2) Measuring short term and long term financial position: The

business must know its financial soundness. It should satisfy itself that

its current resources are sufficient to meet its current liabilities. We can

calculate current and liquid ratios for comparing current assets and

current liabilities to ascertain short term financial soundness. Long

term and financial position can be measured by calculating debt equity,

proprietary d fixed asset ratios. The results of the financial analysis

may be studied and corrective steps can be taken, if necessary.

3) Indicating the trend of achievements: Financial statements of the

previous years can be compared and the trend regarding various

expenses, purchases, sales, gross profit and net profit can be

ascertained, cost of goods sold, values of assets and liabilities can be

compared and the future prospects of the business can be indicated.

4) Assessing the growth potential of the business: The trend and

dynamic analysis of the business provides us sufficient information

indicating the growth potential of the business. If the trend predicts

gloomy picture, effective measures can be applied as remedial

(corrective) measures. If the cost of production is rising without


corresponding increase in sales price, efforts should be made to reduce

cost of production.

5) Measuring the profitability: Financial statements show the gross

profit, net profit and other expenses. The relationship of these items

can be established with sales. Gross profit, net profit expenses and

operating ratios may be calculated and the profitability of the business

ascertained.

6) Intra-firm and inter firm comparison of the firm: Analysis of

financial statements can be made with the previous years’ performance

of the same firm and also with the performance of other firms. Intra-

firm analysis provides an opportunity to self appraisal, whereas inter-

firm analysis presents the operational efficiency of the firm as

compared to other firms. Comparison helps us in detecting our

weaknesses and applying corrective measures.

7) Forecasting, budgeting and deciding future line of action: The

analysis provides sufficient information regarding the profitability,

performance and financial soundness of the business on the basis of

these information’s, we can make effective forecasting budgeting and

planning.

8) Simplified, systematic and intelligible presentation of the facts:

Analysis of financial statements is an effective tool for simplifying,

systematizing and summarizing the monotonous figures. An average

person can draw conclusion from these ratios. The facts can be made

more attractive by graphs and diagrams, which can be easily

understood

4.4 PARTIES INTERESTED IN THE FINANCIAL ANALYSIS

1) Owners: The owners provide funds for the operations of a business

and they want to know whether their funds are being properly utilized


or not. The financial statements prepared from time to time to satisfy

their curiosity.

2) Creditors: They want to know the financial position of a concern

before giving loans or granting credit. The financial statements help

them in judging such position.

3) Potential Investors: Prospective investors, who want to invest money

in a firm, would like to make an analysis of the financial statements of

that firm to know how safe proposed investment will be.

4) Employees: Employees are interested in the financial position of a

concern they serve, particularly when payment of bonus depends upon

the size of the profits earned.

5) Government: Central and State governments are interested in the

financial statements because they reflect the earnings for a particular

period for purposes of taxation. Moreover, these financial statements

are used for compiling statistics concerning statistics concerning

business which, in turn, help in compiling national Accounts

6) Research scholars: The financial statements, being a mirror of the

financial position of a firm, are of immense value to the research

scholar who wants to make a study into financial operations of a

particular firm.

7) Consumers: Consumers are interested in the establishment of good

Accounting control so that cost of production may be reduced with the

resultant reduction of the prices of goods they buy.

8) Managers: actual results achieved by the employees can be measured

against the budgeted performance they were expected to achieve and

the remedial action can be taken if the performance is not upto the

mark. Accounting information is very helpful to the management for

planning, control, evaluation of performance and decision making.

4.5 LIMITATIONS OF FINANCIAL STATEMENT


1) Interim and not final reports: financial statements do not depict the

exact position and are essentially interim reports. The exact position

can be only known if the business is closed.

2) Lack of precision and definiteness: financial statements may not be

realistic because these are prepared by following certain basic concepts

and conventions. For example, going concern concept gives us an idea

that the business will continue and assets are to be recorded at cost but

the book value at which the asset is shown may not be actually

realisable. Similarly, by following the principle of conservatism the

financial statements will not reflect the true position of the business.

3) Lack of objective judgement: financial statements are influenced by

the personal judgement of the Accountant. He may select any method

for depreciation, valuation of stock, amortization of fixed assets and

treatment of deferred revenue expenditure. Such judgement if based on

the integrity and competency of the Accountant will definitely affect

the preparation of the financial statements.

4) Record only monetary facts: financial statements record only

monetary facts, i.e., those transactions are recorded in the books of

Accounts which can be measured in monetary terms. Those

transactions which cannot be measured in monetary terms such as,

conflict between production manager and marketing manager may be

very important for a business concern but not recorded in the books of

Accounts.

5) Historical in nature: These statements are drawn after the actual

happening of the events. They attempt to present a view of the past

performance and have nothing to do with the Accounting for the future.

Modern management is forward looking but these statements do not

directly help them in making future estimates and taking decisions for

the future.


6) Artificial view: These statements do not give a real and correct report

about the worth of the assets and their loss of value as these are shown

on historical cost basis. Thus, these statements provide artificial view

as market or replacement value and effect of the changes in the price

level are completely ignored.

7) Scope of manipulations: these statements are sometimes prepared

according to the needs of the situation or the whims of the

management. A highly efficient concern may conceal its real

profitability by disclosing loss or minimum profit whereas an

inefficient concern may declare dividend by wrongly showing profit in

Profit and Loss Account. Window dressing may also be resorted to in

order to show better financial position of a concern than its real

position.

8) Inadequate information: There are many parties who are interested in

the information given in the financial statements but their objectives

and requirements differ. The financial statements as prepared under the

provisions of the companies act, 1956, fail to meet the needs of all.

These are mainly prepared to safeguard the interests of the

shareholders.

9) Ignores price level changes: The results shown by financial

statements may be misleading, if price level changes have not been

accounted for. The ratio may improve with the increase in price,

whereas the actual efficiency may not improve. Ratios of the two years

will not be meaningful for comparison, if the prices of commodities are

different. Change in price effects, cost of production, sales and values

of assets and as a consequence comparability of ratios also suffers.

10) Financial analysis spots the symptoms but does not arrive at

diagnosis: Financial analysis shows the trend of the affairs of the

business. It may spot symptoms of financial unsoundness and


operational inefficiency but that cannot be accepted. A final decision in

this regard will require further investigation and thorough diagnosis.

11) Financial analysis is only a tool, not the final remedy: Analysis of

statement is a tool to measure the profitability, efficiency and the

financial soundness of the business. It should be noted that personal

judgement of the analyst is more important in financial analysis. We

should not rely on single ratio. Before reaching any conclusion, we

should calculate several ratios. Accountant should not be biased in the

calculation of ratios. It should not be calculated to prove the personal

contention.

3.6 MEANING OF ANALYSIS OF FINANCIAL

STATEMENTS

“Financial statements analysis is largely a study of relationship among

various financial factors in a business as disclosed by single set of

statements and a study of the trend of these factors as shown in a series of

statements”

MYER

Analysis is the process of critically examining in detail Accounting information

given in the financial statements. For the purpose of analysis, individual items

are studied; their interrelationships with other related figures established, the

data sometimes rearranged to have better understanding of the information with

the help of different techniques or tools for the purpose. Analyzing financial

statements is a process of evaluating relationship between component parts of

financial statements to obtain better understanding of firm’s position and

performance. The analysis of financial statements thus refers to the treatment

of the information contained in the financial statements in a way so as to afford

a full diagnosis of the profitability and financial position of the firm concerned.

For this purpose financial statements are classified methodically, analysed and

compare with the figures of previous years or other similar firms.


Meaning of Interpretation

Analysis and interpretation are closely related. Interpretation is not

possible without analysis and without interpretation analysis has no value.

Various Account balances that appear in the financial statements do not

represent homogeneous data so it is difficult to interpret and draw conclusion.

This requires an analysis of the data in the financial statements so as to bring

some homogeneity to the figures shown in the financial statements.

Interpretation is thus drawing inference and stating what the figures in

the financial statements really mean. Interpretation is dependent on interpreter

itself. Interpreter must have experience, understanding and intelligence to draw

correct conclusions from the analyzed data.

4.7 OBJECTIVES OF FINANCIAL STATEMENTS

The main objective of analysis of financial statements is to assess:

The present and future earning capacity or profitability of the concern,

The operational efficiency of the concern as whole and of its various

parts of the departments,

The short term and long term solvency of the concern for the benefit of

the debenture holders and trade creditors,

The comparative study in regard to one firm or one department with

another department,

The possibility of developments in the future by making forecasts and

preparing budgets,

The financial stability of a business concern,

The real meaning and significance of financial data, and

The long term liquidity of its funds

4.8 TYPES OF FINANCIAL STATEMENTS


Different type of financial statements can be made on the basis of

1) Nature of the analyst and the materials used

2) The objective of the analysis

3) The modus operandi of the analysis

These are discussed in detail below:

1) According to the nature of the analyst and the material used by him

External analysis

It is made by those persons who are not connected with the enterprise. They do

not access to the enterprise. They do not have access to the detailed record of

the company and have to depend mostly on published statements. Such type of

analysis is made by the investors, credit agencies, governmental agencies and

research agencies.

Internal analysis

The internal analysis is made by those persons who have access to the books of

Accounts. They are members of the organisation. Analysis of financial

statements or other financial data for managerial purpose in the internal type of

analysis. The internal analyst can give more reliable result than the external

because every type of information is at his disposal.

2) According to the objective of the analysis

Long term analysis

This analysis is made in order to study the long term financial stability,

solvency, liquidity and profitability as well as the earning capacity of a

business concern. The purpose of making such type of analysis is to know

whether in the long-run the concern will be able to earn a minimum amount

which will be sufficient to maintain a reasonable rate of return on the

investment so as to provide the funds required for modernization, growth and

development of the business and to meet its costs of capital. This type of


analysis helps the long term financial planning which is essential for the

continued success of a business.

Short term analysis

This is made to determine the short term solvency, stability and liquidity as

well as earning capacity of the business. The purpose of this analysis is to

know whether in the short run a business concern will have adequate funds

readily available to meet its short-term requirements and sufficient borrowing

capacity to meet contingencies in the near future. This analysis is made with

reference to items of current assets and current liabilities (working capital

analysis) to have fairly sufficient knowledge about the company’s current

position which may be helpful for short term financial planning and long-term

planning.

3) According to the modus operandi of the analysis

Horizontal (or dynamic) analysis

This analysis is made to review and analyze financial statements of a number

of years and therefore based on financial data taken from several years. This is

very useful for long-term trend analysis and planning. Comparative financial

statement is an example of this type of analysis.

Vertical (or static) analysis

This analysis is made to review and analyse the financial statements of one

particular year only. Ratio analysis of the financial year relating to a particular

Accounting year is an example of this type of analysis.

4.9 TOOLS USED FOR THE ANALYSIS OF FINANCIAL

STATEMENTS


Chart No: 5

Tools of Financial analysis

1) Comparative financial statements

2) Common size statements

3) Trend analysis

4) Funds flow statement

5) Cash flow statement

6) Cost profit volume analysis

7) Ratio analysis

COMPARATIVE FINANCIAL STATEMENTS

In the words of FLAUKE “Comparative analysis is the study of trend of the

same items and computed from two or more financial statements of the same

business enterprise on different dates.”

The comparative financial statements are statements of the financial position at

different periods of time. The elements of financial position are shown in a

comparative form so as to give an idea of financial position at two or more

periods. Any statement prepared in a comparative form will be covered in

comparative statements.

The two comparative statements are

1) Comparative balance sheet

Financial Analysis

Techniques

Comparative Financial

Statements

Common-size

Financial Statements

Trend Percentages

Fund Flow Analysis Cash Flow

Analysis

CVP Analysis

Ratio Analysis


2) Comparative income statement

Comparative balance sheet

The comparative balance sheet analysis is the study of the trend of the same

items, group of items and computed items in two or more balance sheets of the

same business enterprise on different dates. The changes in periodic balance sheet

items reflect the conduct of the business. The changes can be observed by

comparison of the balance sheet at the beginning and at the end of a period and

these changes can help in forming an opinion about the progress of an enterprise.

Comparative income statement

The income statement gives the result of the operations of a business. The

comparative income statement gives an idea of the progress of a business over

a period of time. The changes in absolute data in money values and percentages

can be determined to analyze the profitability of the business.

COMMON SIZE STATEMENT

The common size statements, balance sheet and income statement, are shown

as analytical percentages.

The common size statements may be prepared in the following way:

1. The total assets or liabilities are taken as 100

2. The individual assets are expressed as a percentage of total assets,

i.e., 100 and different liabilities are calculated in relation to total

liabilities.

Common size balance sheet

A statement in which balance sheet items are expressed as the ratio

of each asset to total assets and in the ratio of each liability is

expressed as a ratio of each asset to total liabilities is called

common size balance sheet.


Common size income statement

The items in income statement are shown as percentages of sales to

show the relation of each item to sales. This relationship is helpful in

evaluating operational activities of the enterprise.

TREND ANALYSIS

Trend analysis refers to the comparison of past data over a period of time

with that of a base year. Under this method, percentage relationship that each

statement item bears to the same item in the base year is calculated. Any year i.e.,

earliest year involved in comparison, or the latest year, or any intervening year,

may be taken as the base year. As the purpose of this analysis is to highlight some

important changes, the trend calculated only for some important items that can be

connected with each other. The concerned item in the base year is taken to be

equal to as 100 and then based on this, trend percentage for the corresponding

items in other years are calculated. This method is a horizontal type of analysis of

financial statements. The trend percentages are shown in comparative financial

statements.

Trend analysis is a useful tool for the management since it reduces large

amount of absolute data in to a simple and easily readable form. By looking at the

trend in a particular ratio one can see whether the ratio is increasing or decreasing

or remaining constant. From this a problem is unearthed and good management is

observed.

While calculating trend percentage, care should be taken regarding the following

matters:

The accounting principles and practices followed should be constant

throughout the period for which analysis is made. In the absence of such

consistency, the comparability will be adversely affected.

The base year should be carefully selected. It should be a normal year and

be representative of the items shown in the statement.


Trend percentage should be calculated only for items having logical

relationship with one another.

RATIO ANALYSIS

Systematized, simplified and summarized presentation of the

information from financial statements in the form of ratios is termed as ratio

analysis. A ratio is a simple arithmetical expression of the relationship of one

number to another. It may be defined as the indicated quotient of two

mathematical expressions. However, ratio analysis is not an end in itself. It is

only a means of better understanding of financial strengths and weaknesses of a

firm. Calculation of mere ratios does not serve any purpose, unless several

appropriate ratios are analysed and interpreted. There are a number of ratios

which can be calculated from the information given in the financial statements,

but the analyst has to select the appropriate data and calculate only a few

appropriate ratios from the same keeping in mind the objective of analysis.

The following are the four steps involved in the ratio analysis:

1) Selection of relevant data from the financial statements depending upon

the objective of the analysis.

2) Calculation of appropriate ratios from the above data.

3) Comparison of the calculated ratios with the ratios of the same firm in

the past, or the ratios developed from projected financial statements or

the ratios of some other firms or the comparison with the ratios of the

industry to which the firm belongs

4) Interpretation of the ratios

CASH FLOW STATEMENT

It is a statement of changes in the short term financial position of the business

due to inflow and outflow of cash. Such a statement enumerates net effects of

the various business transactions on cash and its equivalents and takes into

account receipts and disbursements of cash. A cash flow statement summarizes


the causes of changes in cash position of a business enterprise between dates of

two balance sheets. Cash flows exclude movements between items that

constitute cash or cash equivalents because these components are part of the

cash management of an enterprise rather than part of its operating, investing

and financing activities. Cash management includes the investment of excess

cash in cash equivalents.

FUND FLOW STATEMENT

The fund flow statement is a statement which shows the movement of funds

and is a report of the financial operations of the business undertaking. It

indicates various means by which funds were obtained during a particular

period and the ways in which these funds were employed. In simple words, it is

a statement of sources and application of funds.

The term ‘flow’ means movement and includes both ‘inflow’ and ‘outflow’.

The term ‘flow of funds’ means transfer of economic values from one asset of

equity to another. Flow of funds is said to have taken place when any

transaction makes changes in the amount of funds available before happening

of the transaction. If the effect of transaction results in the increase of funds, it

is called source of funds and if it results in the decrease of funds, it is known as

application of funds.

5.1 RATIO ANALYSIS

LIQUIDITY RATIO’S

The short term creditors of a company like suppliers of goods of credit and

commercial banks providing short term loans are primarily interested in knowing

the company’s ability to meet its current or short term obligations as and when

these become due. The short term obligations of a firm can be met only when

there are sufficient liquid assets. Therefore a firm must ensure that it does not

suffer from lack of liquidity or capacity to pay its current obligations. If a firm

fails to meet such current obligations due to lack of liquidity position, its goodwill


in the market is likely to be affected beyond repair. It will result in a loss of

creditor’s confidence in the firm and may cause even closure of the firm. Even a

very high degree of liquidity is not good for a firm because such a situation

represents unnecessarily excessive funds of the firm being tied up in current

assets. Therefore, it is very important to have a proper balance in regard to the

liquidity of the firm.

The short term obligations are met by realizing amounts from current, floating or

circulating assets. The current assets should either be liquid or near liquidity.

These should be convertible into cash for paying obligations of short term nature.

If current assets can pay off current liabilities, then the liquidity position will be

satisfactory. On the other hand, if current liabilities may not be easily met out of

current assets then liquidity position will be bad. The bankers, suppliers of goods

and other short term creditors are interested in the liquidity of the concern. They

will extend credit only if they are sure that current assets are enough to pay out the

obligations.

To measure the liquidity of a firm, the following ratio’s can be calculated:

Current Ratio

Quick Ratio Or Acid Test Ratio Or Liquid Ratio

Absolute Liquid Ratio Or Cash Position Ratio

CURRENT RATIO

Current ratio may be defined as the relationship between current assets and

current liabilities. This ratio, also known as working capital ratio, is a measure

of general liquidity and is most widely used to make the analysis of a short

term financial position or liquidity of a firm. It is calculated by dividing the

total of current assets by total of current liabilities.

Current ratio=current assets/current liabilities

Table no: 1 Current ratio


YEAR CURRENT

ASSETS

CURRENT

LIABILITIES

CURRENT

RATIO

2007 64,130,350 22,305,873 2.87

2008 271,903,801 156,648,560 1.73

2009 312,727,723 324,810,506 0.96

2010 366,844,660 364,169,492 1.007

2007-2008 2008-2009 2009-2010 2010-20110

0.5

1

1.5

2

2.5

3

2.87

1.73

0.96 1

Column2

Graph no: 2 Current Ratio

As a convention the minimum of 2:1 is referred to as a rule of thumb or arbitrary

standard of liquidity for a firm. A ratio equal to or near the rule of thumb is

considered to be satisfactory.

Here, we see that expect for the financial year 2009 and 2010. The Company’s

current assets are double the current liabilities. The years shows an

unsatisfactory current assets position. The ratio of current assets over current

liabilities is found to be decreasing over the period but gradually it increases in

the year 2010. This is due long term liabilities they have to meet. Moreover,

they have started talking long term loans from the year 2008 as their business


expanded. And they are meeting their short term obligations from the current

assets. The current ratio are 2.87, 1.73, 0.96, 1.00 times the current liabilities in

the financial years 2007, 2008, 2009, 2010 respectively. Hence, it can be

inferred that the general liquidity position the firm over a period of 4 years is

not up to the mark but gradually its current assets are increasing as shown in

the year in the year 2010.

(Note: current liabilities are taken as 1 and current assets are given

comparison to it.)

ych final work of project

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