CHAPTER-I ____________________ ___________________________

INTRODUCTION

APPROACH TO THE STUDY

 INTRODUCTION

 NEED FOR THE STUDY

 OBJECTIVES OF THE STUDY

 SIGINIFICANCE OF THE STUDY

 RESRARCH METHODOLOGY

 LIMITATIONS OF THE STUDY

 ORGANIZATIONAL STRUCTURE

 FUNCTIONAL DEPARTMENT
 INTRODUCTION

The word Finance comes from a Latin word ‘finises. The Sanskrit saying

‘arthahsachivah’ means ‘finance’. Finance holds the key to all activities. The

path of success is greased with money. Finance is the management of the

monetary affairs of a company. It is the process of organizing the flow of funds so

that a business can carry out its objectives in the most efficient manner and meet

its obligations as they fall due.

In every organization where funds are involved sound financial management is

necessary. It was a branch of economics till 1890, after it emerged as a distinct

field of study at the turn of 20th century.

Financial management means the entire gamut of managerial efforts

devoted to the management of finance both its sources and uses of the

enterprise. It is concerned with the managerial decisions that result in the

acquisition and financing of long term and short term credits for the firm. The

basic objectives of Financial Management are maintenance of the liquid assets

and maximization of the profitability of the firm. The Financial management helps

in monitoring the effective deployment of funds in fixed assets and in working

capital.

Financial management as an integral part of overall management is not a

totally independent area. It draws heavily on related disciplines and field of

study, such as economics, accounting, marketing, production and quantitative

methods. It helps in profit planning, capital spending, measuring costs, controlling

output from a given input of funds.

The financial manager must see that the funds are procured in a manner

that the risk, cost and control considerations are properly balanced in a given

situation and there is optimum utilization of funds. The financial manager

estimates the total requirements of funds, both in short period and long period.

The financial manager assesses the financial position of the company through

the working out of the return on capital, debt-equity ratio, cost of capital from

each source etc.., and comparison of the capital structure with that of similar

companies.

working capital:

Working capital means the excess of account assets over current

liabilities. Statement of changes in working capital between the two balance

sheet dates. This statement is prepared with the help of current assets and

current liabilities derived from the two balance sheets.

Net working capital = current assets – current liabilities.

Sources of working capital

 Sales of non – current assets:

• Sales of long – term investments.

• Sales of tangible fixed asset.

• Sales of in tangible fixed asset.

 Long term financing

• Long term borrowings

• Issue of equity & preference shares

 Short – term financing such as banking borrowings.

USES OF WORKING CAPITAL

 Adjusted Net Loss From Operations.

 Purchase of Non – Current Assets.

• Purchase of long – term investments.

• Purchase of tangible fixed asset.

• Purchase of in tangible fixed asset.

 Repayment of long term dedt & short term debts.

A Cash flow statement is statement is statement – depicting

change in cash position from one period to another period. The Cash flow

statement can be prepared on the same pattern like the funds flow statement.

From this statement we can find out the cash position OT the firm by taking

into account “Sources and application of cash “. It is useful for short term

planning such as possibility of repayment of long – term debt, dividend,

policies, replacement of plant and machinery etc,

Cash plays a very important role in the entire economic life of a

business. This movement of cash is of vital importance to the management. A

firm needs to make payments to its suppliers, to incur day-to-day expenses

and to pay salaries, wages, interest and dividend, etc, in fact, what blood is to

a human body, cash is to a business enterprise. It is very essential for a

business to maintain adequate balance of cash.

Cash flows analysis is more useful and appropriate than funds flow

analysis for short-term financial as in a very short period it is cash which is

more relevant than the working capital for forecasting the ability of the firm to

meet its immediate obligations. Cash flow statement provides information of

all activities classified under operation, investing and finance in activities , the

funds statement even when prepared on cash basis did not disclose cash

flow such activities, the funds statement even when thus Cash flow statement

is more useful than the fund flow statement.

Financial statements of any firm or organization reveals 2 important

aspects i.e., the financial soundness and its solvency position. A financial

manager may not be able to take an appropriate decision by observing the

financial statements. Financial statement analysis is the close observation

and critical examination of data contained in financial statements in order to

understand better and to make decisions as and when required, on the other

hand it is the study of the relationship among various financial facts and

figures given in financial statements.

Financial statement analysis is useful for assessing the growth of

the DCI Ltd., its resulting financial need and in determining the projected

analysis of financial statements, their adequacy or inadequacy of financial

position can be known in advance and long-term financing of the firm

repayment of loans, expansion of the business, allocation of resources etc.,

can be easily analyzed.

The major objective of the present study is to focus on the analysis

of financial statements in DCI Ltd.

The study is more specifically aimed:

 To know about the business operations of DCI Ltd.

 To compare the operational efficiency of DCI Ltd.

 To evaluate the management of resources in DCI Ltd.

 To study the significance of various financial resources

 To find out various sources of working capital in D.C.I.

 To examine the existing working capital patterns and utilization of sources

of funds in D.C.I.

 To analyze how the sources of working capital is being formulated and

executed in D.C.I.

 To evaluate the changes in working capital over a period of study in D.C.I

 To analyze the cash flow statement during the year 2004-05 to 2008-09.

 To summarize and suggest the observation of the study for improvement

of financial performance.
METHODOLOGY OF THE STUDY:

Information of the present study has been collected from both primary and

secondary sources. The study is mainly based on information collected from

the secondary sources due to time constraints. Mainly I used two types of

sources to obtain the information. They are

Primary sources: The primary sources of data are collected through direct

discussions and interviews with the officials in the financial departments.

Secondary sources:

 Data collected from documents, records and magazines.

 Data gathered from the annual reports of the company. and

 Data collected from the company website

www.dredge-india.com
LIMITATIONS OF THE STUDY:

The project work has been undertaken with almost accurate data

but the following aspects can be termed as the limitations of the project work.

The limitation includes:

 The study is limited to the five years review period from 2004-05 to 2008-

09.

 DCI Ltd. Is a service oriented organization. So various interpretations may

not hold good.

 Time given to study is limited to 8 weeks which is not enough to study

such a huge organization.

 Analysis of competitors is not possible as their information is kept secret.

The significance of the financial statements and its performance in

DCI Ltd. has been discussed in the first chapter. The need for the present

study, objectives, methodology and the presentation of the study has also

been discussed in the in the same chapter. A brief profile of DCI Ltd. is given

in the second chapter, whereas the third chapter covers the theoretical frame

work. The fourth chapter deals with specific financial data analysis and

interpretations. The final chapter gives an outline of summary suggestions.

SIGINIFICANCE OF THE STUDY

 The study has great significance and provides benefits to various parties

whom directly or indirectly interacts with the company.

 It is beneficial to top management of the company by proving crystal clear

picture regarding important aspects likes liquidity, inventory and

receivables.

 The study is also beneficial to employees and offers Motivation by

showing how activity they are contributing for the company growth.