A

PROJECT
REPORT ON
ANALYSIS OF FINANCIAL STATEMENTS
AT INFOWIZ

Submitted in fulfillment of the requirement of Bachelors of

Business Administration
SESSION: (2021-2023)

Submitted by:
GURPREET SINGH
BBA
Uni. Roll No.

GURU KASHI UNIVERSITY

TALWANDI SABO
 DECLARATION
I Gurpreet Singh student of GURU KASHI UNIVERSITY, Talwandi sabo have completed the final project
on Analysis of financial statements of INFOWIZ Industry Pvt. Ltd.. The information given in this project is
original and true to the best of my knowledge.

Gurpreet Singh

BBA 3rd Sem

 ACKNOWLEDGEMENT
The satisfaction Euphoria that accompanies the successful completion of my
project any work would be incomplete unless we mention the name of the person, who made it possible,
whose constant guidance and encouragement served as a beckon of light and crowned our efforts with
success. I consider it a privilege to express through the pages of this report, a few words of gratitude and
respect to those who guided and inspired in the completion of this project.

I am deeply thankful to Mr.Surneel Goyal (Branch manager) for giving me the opportunity to undergo
my project in their esteemed organization and their timely suggestions & Valuable guidance. They constantly
encouraged me and showed the right path from day first till the completion of my project.

I am also extremely thankful to Mr. Gulbahar Singh who was constant source of knowledge and
inspiration at all levels throughout my training.

However, I accept the sole responsibility for any possible errors of omission and would be extremely grateful
to the readers of this project report if they bring such mistakes to my notice.
 Table of content
SR. No. TOPICS PAGE NO.

1. EXECUTIVE SUMMARY

2. INTRODUCTION
A) COMPANY
B) TOPIC
3. OBJECTIVE AND SCOPE OF STUDY

4. RESARCH METHDOLOGY

5. FINANCIAL RATIO ANALYSIS

6. FINDINGS AND SUGGESTIONS

7. CONCLUSION

8. LIMITATIONS

9. BIBLIOGRAPHY

10. APPENDIX

5
 EXECUTIVE SUMMARY

Project Title: Financial Statement Analysis

The training at INFOWIZ involved the day to day working at corporate accounts departments with
the senior & junior managers and research department in the company. This project helped me to get
the deeper understanding of the process of Financial Statement Analysis and how decisions are taken
to strengthen the financial position.
For this study four years ‘comparative Income Statement & Balance Sheet have been taken for
calculating ratio analysis. Main objective in undertaking this project is to supplement
academic knowledge with absolute practical exposure to day to day functions of the sector.
Financial analysis which is the topic of this project refers to an assessment of the viability, stability
and profitability of a business. This important analysis is performed usually by finance
professionals in order to prepare financial or annual reports. These financial reports are made with
using the information taken from financial statements of the company and it is based on the
significant tool of Ratio Analysis. These reports are usually presented to top management as one of
their basis in making crucial business decisions.
During the training period at Infowiz I had close connection with preparation of financial statements
and also their analysis which was made by professionals in the accounting team of the company.
This experience was an emphasis on the importance of these Ratios which could be the roots of
decisions made by management that can make or break the company. So, I was influenced to
allocate the aim of this project to study the details about these ratios and their possible effects on the
decisions made by not only people inside the company but also the outsiders such as investors.

6
 CHAPTER 01
INTRODUCTION

7
 A.INTRODUCTION
TO THE COMPANY

8
 INFOWIZ, BATHINDA

INFOWIZ is a nationally recognized IT company which is committed to provide highly

customized integrated IT solution to clients and also renowned for superior training
programs delivered by an enviable team of qualified experts and highly experienced trainers.

INFOWIZ is an 8 years young organization which has won the NATIONAL AWARD for
2 consecutive years 2014-15 and 2015-16 for BEST Industrial Training from Hon’able
GOVERNOR of Punjab and Haryana Sh. Kaptan Singh Solanki. INFOWIZ is a
member of Confederation of Indian Industry (CII membership number- N4654P) and also
with an ISO Certification which has been working in the field of CSE, IT, ECE,
MECHANICAL, CIVIL and EE, BBA & MBA.

Our skilled team of professionals make sure that the product is developed as per the
customer’s needs and keeping the customer informed about the development of their project
from time to time. In INFOWIZ our Research & Development arm offers SEO tools for
SEM professionals.

INFOWIZ also provides Technical Support & Consultancy to Software Companies like
JIA Group, Newzealand, Sagitech solutions Panchkula, Jarc infotech Mohali, Infonet
Solution, Delhi etc.

Company Strategy

Purpose: - To be a leader in IT industry by providing enhanced services relationships and

profitability. We continuously strives to deliver exceptional services and achieve excellent
results throughout different sectors.

9
Our Mission

To grow through creativity invention and innovation and to build long term relationships
with our clients and provide exceptional customer services by pursuing business through
innovation and advances technology.

OUR VISSION

Our vision is to be recognized as a leading provider of quality services that exceed the
expectations of our esteemed clients.

OUR VALUES

 Putting Customers First.

 Taking pride in what we do.
 Respecting Others.
 Striving to be the Best.
 Acting with Integrity.

Our Hottest Clients & Projects:-

PROJECTS URL's COUNTRY

1) Viva Sales www.infowiz.in/vivasales UK

2) Mds Creative www.mdscreative.com Germany
3) Liddle TV www.filmon.com UK
4) Paradigms(Android) Running Australia
5) Printcost www.popgraphics.net UK
6) PSTDO essencesoftwares.com Australia
7) Dashboard(Wordpress) www.bootstrap.achieversperfect.com USA
8) Essencesoftwares Running USA
9) Realstate www.realestate.infowiz.in Russia

10
\10)Dealpartners www.dealpartners.co.uk.gridhosted.co.uk UK

11) Littletonvineyard www.littletonvineyard.net USA

12) Gpakoffshore www.gpakoffshore.com UK

OUR TEAM:-

Real Generosity toward the future consists in giving all to what is present.

INFOWIZ’s consultative approach can transform your challenge into dynamic business
positives.

1) Mr. Kamal jot Kansal

(C.E.O)

He is the backbone of INFOWIZ and a man with more than 11 year rich practical
experience; who believes the Idea that “if you don’t design your own life plan chances are
you will fall into someone else plan”.

2) Dr. Seema Kansal

(Managing Director)

A woman believes that "the harder you work the luckiest you become." She has more
than 8 years’ experience in Business Field.

3) Mr. Rajeev Nayyar

(General

Manager)

A man who strongly feel that “opportunities don’t happen, you create them ". A very
committed team leader who has been professionally attached with Multinational companies
for more than 18 years and has lead the marketing teams in all states of North India.

4) Mr. Surneel Goyal

11
 (Branch Manager)
A man who believes that "Things work out best for those who make the best of how
things work out." He has more than 4 years solid industrial experience in a software
companies & is very dashing and innovative in His technical approach.

5) Ms. Urvashi

(Dean Academics)

A woman who possess element of talent which is the most crucial ingredient of recipe of
success. She has more than 3 years’ experience in business development.

6) Er. Gurpreet Goyal

(Head & Technical Advisor at US Branch)

He has more than 10 years industrial experience in US and smooth handling of the entire
US business.

7) Er. Yukti Jindal

(Center Head- US Branch)

A woman who firmly believes that "In life, where you reach largely depends upon where
you start." She joined this branch in the year 2007 and has given her immense inputs in
bringing the company to its present status.
COURSES Offered:

For CSE/IT/MCA Professionals:-

1) Web Development in PHP with LIVE Projects

2) Web Development in .NET with LIVE Projects
3) JAVA (Core as well as Advance ) with LIVE Projects
4) Android Applications with LIVE Projects
5) Web Designing (Photoshop, Coral Draw)
6) C#, Console Applications, VB.NET, ASP.NET
12
 7) MySQL, SQL, ORACLE
8) Networking (MCSE, CCNA, RHSE)
9) SEO (Search Engine Optimization)

For ECE/EE/EIE Professionals:-

1) Robotics With Live Project

2) VLSI-VHDL with Live Project
3) Embedded System Design with Live Project
4) Microcontroller with Live Project
5) Microprocessor with Live Project
6) PCB Designing
7) AVR & PIC Family
8) PCB and layout designing
9) AUTOMATION with Live Project
10) Project development with ARM processors
For MECHANICAL Professionals:-

1) AUTOCAD (2D)
2) AUTOCAD (3D)
3) SOLIDWORKS
4) CATIA
5) PRO-E
6) NX-Cam
7) CNC PROGRAMMING
8) 3D-PRINTING
MANUFACTURE PROCESS (MP
For CIVIL Professionals:-

1) AUTOCAD (2D)
2) AUTOCAD (3D)
3) STAAD-PRO
4) REVIT
5) 3Ds-MAX
FOR BBA/MBA:-

1) MARKETING.
13
2) HR.
3) FINANCE.
9)

14
B.INTRODUCTION
TO THE TOPIC

15
FINANCIAL STATEMENTS

Financial statements are summaries of the operating, financing, and investment activities of a
business. Financial statements should provide information useful to both investors and creditors in
making credit, investment, and other business decisions. And this usefulness means that investors
and creditors can use these statements to predict, compare, and evaluate the amount, timing, and
uncertainty of potential cash flows. In other words, financial statements provide the information
needed to assess a company‘s future earnings and therefore the cash flows expected to result from
those earnings. In this chapter, we discuss the four basic financial statements: the balance sheet, the
income statement, the statement of cash flows, and the statement of shareholders ‘equity. The
analysis of financial statements is provided in Part Six of this book.
The accounting data in financial statements are prepared by the firm‘s management according to a
set of standards, referred to as generally accepted accounting principles (GAAP). The financial
statements of a company whose stock is publicly traded must, by law, be audited at least annually by
independent public accountants (i.e., accountants who are not employees of the firm). In such an
audit, the accountants examine the financial statements and the data from which these statements are
prepared and attest—through the published auditor‘s opinion—that these statements have been
prepared according to GAAP. The auditor‘s opinion focuses on whether the statements conform to
GAAP and that there is adequate disclosure of any material change in accounting principles.
The financial statements are created using several assumptions that affect how we use and interpret
the financial data:

Transactions are recorded at historical cost. Therefore, the values shown in the statements are not
market or replacement values, but rather reflect the original cost (adjusted for depreciation, in the
case of depreciable assets).

The appropriate unit of measurement is the dollar. While this seems logical, the effects of
inflation, combined with the practice of recording values at historical cost, may cause problems in
using and interpreting these values.

16
The statements are recorded for predefined periods of time. Generally, statements are produced to
cover a chosen fiscal year or quarter, with the income statement and the statement of cash flows
spanning a period‘s time and the balance sheet and statement of shareholders‘ equity as of the end of
the specified period. But because the end of the fiscal year is generally chosen to coincide with the
low point of activity in the firm‘s operating cycle, the annual balance sheet and statement of share
holders‘equity may not be representative of values for the year.

Statements are prepared using accrual accounting and the matching principle. Most businesses
use accrual accounting, where income and revenues are matched in timing such that income is
recorded in the period in which it is earned and expenses are reported in the period in which they are
incurred to generate revenues. The result of the use of accrual accounting is that reported income
does not necessarily coincide with cash flows. Because the financial analyst is concerned ultimately
with cash flows, he or she often must understand how reported income relates to a company‘s cash
flows.

It is assumed that the business will continue as a going concern. The assumption that the
business enterprise will continue indefinitely justifies the appropriateness of using historical costs
instead of current market values because these assets are expected to be used up over time instead of
sold.

Full disclosure requires providing information beyond the financial statements. The requirement
that there be full disclosure means that, in addition to the accounting numbers for such accounting
items as revenues, expenses, and assets, narrative and additional numerical disclosures are provided
in notes accompanying the financial statements. An analysis of financial statements is therefore not
complete without this additional information.

Statements are prepared assuming conservatism. In cases in which more than one interpretation
of an event is possible, statements are prepared using the most conservative interpretation.
The financial statements and the auditors‘ findings are published in the firm‘s annual and quarterly
reports sent to shareholders and the 10K and 10Q filings with the Securities and Exchange
Commission (SEC).Also included in the reports, among other items, is a discussion by management,
providing an overview of company events. The annual reports are much more detailed and disclose
more financial information than the quarterly reports.

17
In the preparation of final accounts of a firm, the financial statements display the net results for the
given year. They play a vital role in allowing a user of a financial statement, to understand the results of
a firm for a given year. Let us find out more about what a financial statement is and their relevance.
A financial statement is a formal record of the financial activities, and position of a business, person, or
other entity. It is presented in a structured manner and in a form easy to understand.
What is the use of a financial statement?

As a whole, financial statements fulfill the following purpose, which makes them indispensable:

 First, to scrutinize the ability of a business to generate cash and the sources and utilization of
that cash.

 Second, to ascertain whether a business has the capability to pay back its debts.

 Third, to help track financial results on a trend line to spot any looming profitability issues.

 Next, to help derive financial ratios from the statements that can indicate the condition of
the business.

 Lastly, to investigate the particulars of certain business transactions, as mentioned in

the disclosures that accompany along with the statements.

If a business has plans to issue its financial statements to outside users such as investors or creditors, the
financial statements should be ideally formatted in accordance with one of the major accounting
frameworks. These frameworks allow for some leeway in how financial statements can be structured, so
statements issued by different firms even in the same industry are likely to have somewhat different
appearances. Financial statements that are being issued to outside parties may be audited to verify their
accuracy.

There are three basic financial statements:

Balance sheet

Income statement

Cash Flow statement

18
 BALANCE SHEET

The balance sheet is a summary of the assets, liabilities, and equity of a business at a particular point
in time—usually the end of the firm‘s fiscal year. The balance sheet is also known as the statement
of financial condition or the statement of financial position. The values shown for the different
accounts on the balance sheet are not purported to reflect current market values; rather, they reflect
historical costs.

Assets are the resources of the business enterprise, such as plant and equipment that are used to
generate future benefits. If a company owns plant and equipment that will be used to produce goods
for sale in the future, the company can expect these assets (the plant and equipment) to generate cash
inflows in the future.

Liabilities are obligations of the business. They represent commitments to creditors in the form of
future cash outflows. When a firm borrows, say, by issuing a long-term bond, it becomes obligated
to pay interest and principal on this bond as promised. Equity, also called shareholders ‘equity or
stockholders ‘equity, reflects ownership. The equity of a firm represents the part of its value that is
not owed to creditors and therefore is left over for the owners. In the most basic accounting terms,
equity is the difference between what the firms owns—its assets—and what it owes its creditors—its
liabilities

19
ASSETS

There are two major categories of assets: current assets and noncurrent assets, where noncurrent
assets include plant assets, intangibles, and investments. Assets that do not fit neatly into these
categories may be recorded as either other assets, deferred charges, or other noncurrent assets.

CURRENT ASSETS

Current assets (also referred to as circulating capital and working assets) are assets that could
reasonably be converted into cash within one operating cycle or one year, whichever takes longer.
An operating cycle begins when the firm invests cash in the raw materials used to produce its goods
or services and ends with
the collection of cash for the sale of those same goods or services. There are three basic methods of
accounting for inventory, including:

■ FIFO (first in, first out), which assumes that the first items purchased are the first items sold,
■ LIFO (last in, first out), which assumes that the last items purchased are the first items sold

Noncurrent Assets

Noncurrent assets are assets that are not current assets; that is, it is not expected that noncurrent
assets can be converted into cash within an operating cycle. Noncurrent assets include physical
assets, such as plant and equipment, and nonphysical assets, such as intangibles.
Plant assets are the physical assets, such as the equipment, machinery, and buildings, which are
used in the operation of the business. We describe a firm‘s current investment in plant assets by
using three values: gross plant assets, accumulated depreciation, and net plant assets. Gross plant

and equipment, or gross plant assets, is the sum of the original costs of all equipment, buildings,
and machinery the firm uses to produce its goods and services. Depreciation, as you will see in
the next chapter, is a charge that accounts for the using up of an asset over the length of an
accounting period; it is a means for allocating the asset‘s cost over its useful life. Accumulated

20
depreciation is the sum of all the depreciation charges taken so far for all the company‘s assets. Net
plant and equipment, or net plant assets, is the difference between gross plant assets and
accumulated depreciation. The net plant and equipment amount is hence the value of the assets—
historical cost less any depreciation- according to the accounting books and is therefore often
referred to as the book value of the assets.

INTANGIBLE ASSETS:

are the current value of nonphysical assets that represent long-term investments of the company.
Such intangible assets include patents, copyrights, and goodwill. The cost of some intangible assets
is amortized (―spread out‖) over the life of the asset. Amortization is akin to depreciation: The
asset‘s cost is allocated over the life of the asset; the reported value is the original cost of the asset,
less whatever has been amortized. The number of years over which an intangible asset is amortized
depends on the particular asset and its perceived useful life. For example, a patent is the exclusive
right to produce and sell a particular, uniquely defined good and has a legal life of 17 years, though
the useful life of a patent—the period in which it adds value to the company-may be much less than
17 years. Therefore the company may choose to amortize a patent‘s cost over a period less than 17
years.

A company may have additional noncurrent assets, depending on their particular circumstances. A
company may have a noncurrent asset referred to as investments, which are assets that are
purchased with the intention of holding them for a long term, but which do not generate revenue or
are not used to manufacture a product. Examples of investments include equity securities of another
company and real estate that is held for speculative purposes. Other noncurrent assets include long
term prepaid expenses, arising from prepayment for which a benefit is received over an extended
period of time, and deferred tax assets, arising from timing differences between reported income
and tax income, whereby reported income exceeds taxable income.
Long-term investment in securities of other companies may be recorded at cost or market value,
depending on the type of investment; investments held to maturity are recorded at cost, whereas
investments held as trading securities or available for sale are recorded at market value. Whether the
unrealized gains or losses affect earnings on the income statement depend on whether the securities
are deemed trading securities or available for sale.
21
LIABILITIES

Liabilities, a firm‘s obligations to its creditors, are made up of current liabilities, long-term
liabilities, and deferred taxes.
Current Liabilities
Current liabilities are obligations that must be paid within one operating cycle or one year,
whichever is longer. Current liabilities include:
Accounts payable, which are obligations to pay suppliers. They arise from goods and services
that have been purchased but not yet paid.

Accrued expenses, which are obligations such as wages and salaries payable to the employees
of the business, rent, and insurance.

Current portion of long-term debt or the current portion of capital leases. Any portion of
long-term indebtedness—obligations extending beyond one year—due within the year.

Short-term loans from a bank or notes payable within a year.

Long-term liabilities are obligations that must be paid over a period beyond one year. They include
notes, bonds, capital lease obligations, and pension obligations. Notes and bonds both represent
loans on which the borrower promises to pay interest periodically and to repay the principal amount
of the loan. operates.
DEFFERED TAXES

Along with long-term liabilities, the analyst may encounter another account, deferred taxes.
Deferred taxes are taxes that will have to be paid to the federal and state governments based on
accounting income, but are not due yet. Deferred taxes arise when different methods of accounting
are used for financial statements and for tax purposes. These differences are temporary and are the
result of different timing of revenue or expense recognition for financial statement reporting and tax
purposes. The deferred tax liability arises when the actual tax liability is less than the tax liability
shown for financial reporting purposes (meaning that the firm will be paying the difference in the
future), whereas the deferred tax asset, mentioned earlier, arises when the actual tax liability is
greater than the tax liability shown for reporting purposes.

22
EQUITY

Equity is the owner‘s interest in the company. For a corporation, ownership is represented by
common stock and preferred stock. Shareholders‘ equity is also referred to as the book value of
equity, since this is the value of equity according to the records in the accounting books. The value
of the ownership interest of preferred stock is represented in financial statements as its par value,
which is also the dollar value on which dividends are figured.

There are actually four different labels that can be applied to the number of shares of a corporation
on a balance sheet:
The number of shares authorized by the shareholders.

The number of shares issued and sold by the corporation, which can be less than the number of
shares authorized.

The number of shares currently outstanding, which can be less than the number of shares issued
if the corporation has bought back (repurchased) some of its issued stock.

The number of shares of treasury stock, which is stock that the company has repurchased.

The outstanding stock is reported in the stock accounts, and adjustments must be made for any
treasury stock. The bulk of the equity interest in a company is in its retained earnings.

A retained- earnings is the accumulated net income of the company, less any dividends that have
not been paid, over the life of the corporation. Retained earnings are not strictly cash and any
correspondence to cash is coincidental. Any cash generated by the firm that has not been paid out in
dividends has been reinvested in the firm‘s assets—to finance accounts receivable, inventories,
equipment, and so forth.

23
 THE INCOME STATEMENT

An income statement is a summary of the revenues and expenses of a business over a period of
time, usually one month, three months, or one year. This statement is also referred to as the profit
and loss statement. It shows the results of the firm‘s operating and financing decisions during that
time.
The operating decisions of the company—those that apply to production and marketing—generate
sales or revenues and incur the cost of goods sold (also referred to as the cost of sales or the cost of
products sold). The difference between sales and cost of goods sold is gross profit. Operating
decisions also result in administrative and general expenses, such as advertising fees and office
salaries. Deducting these expenses from gross profit leaves operating profit, which is also referred
to as earnings before interest and taxes (EBIT), operating income, or operating earnings.
Operating decisions take the firm from sales to EBIT on the income statement the results of
financing decisions are reflected in the remainder of the income statement. When interest expenses
and taxes, which are both influenced by financing decisions, are subtracted from EBIT, the result is
net income. Net income is, in a sense, the amount available to owners of the firm. If the firm has
preferred stock, the preferred stock dividends are deducted from net income to arrive at earnings
available to common shareholders. If the firm does not have preferred stock (as is the case with
Fictitious and most no fictitious corporations), net income is equivalent to earnings available for
common shareholders. The board of directors may then distribute all or part of this as common stock
dividends, retaining the remainder to help finance the firm.

24
INFOWIZ LIMITED
In ` Lac s
Balance Sheet as at March 31, 2021 March 31, 2020
EQUITY AND LIABILITIES
SHAREHOLDERS' FUNDS
Share capital 574 286
Reserves and surplus 47,494 41,806
48,068 42,092
NON-CURRENT LIABILITIES
Deferred tax liabilities (net) - -
Other long-term liabilities 30 364
30 364
CURRENT LIABILITIES
Trade payables 124 68
Other current liabilities 5,546 4,071
Short-term provisions 8,045 6,117
13,715 10,256
61,813 52,71 2
ASSETS
NON-CURRENT ASSETS
Fixed assets
7,347 5,719
Tangible assets
Intangible assets - 13
Capital work-in-progress 769 954
8,116 6,686

Non-current investments 6,108 3,968

Deferred tax assets (net) 433 542

Long-term loans and advances 4,378 2,227
Other non-current assets 26 52
19,061 13,475
CURRENT ASSETS
Current investments 749 2,749

Trade receivables 8,627 7,336

Cash and cash equivalents 27,722 24,100
Short-term loans and advances 5,654 5,052
42,752 39,237

61,813 52,71
2

28
 CASH FLOW STATEMENT

It is a statement, which measures inflows and outflows of cash on account of any type of
business activity. The cash flow statement also explains reasons for such inflows and outflows
of cash so it is a report on a company's cash flow activities, particularly its operating, investing
and financing activities.

Flow of Infowiz ------------------- in Rs. Lacs. -------------------

Mar '18 Mar '17 Mar '16 Mar '15

12 mths 12 mths 12 mths 12 mths
Net Profit Before Tax 16155.00 13818.00 12693.00
16798.00
Net Cash From Operating Activities 12475.00 10478.00 9578.00 7955.00
Net Cash (used in)/from
5684.00 -13494.00 1207.00 665.00
Investing Activities
Net Cash (used in)/from Financing Activities -20536.00 -6968.00 6908.00 4961.00
Net (decrease)/increase In Cash and Cash Equivalents -2383.00 -10023.00
1454.00 3622.00
Opening Cash & Cash Equivalents 19153.00 29176.00
27722.00 24100.00
Closing Cash & Cash Equivalents 16770.00 19153.00
29176.00 27722.00
 CHAPTER 2
REVIEW OF RELATED
LITERATURE
2.1 Definition of cash
Khan and Jain (2013) define cash as “the ready currency to which all liquid assets can be
reduced”. In the narrow sense, cash symbolize currencies and any other financial
instruments that is generally accepted as a cash equivalent, such as bank drafts, demand
deposits and cheques.
In the broader perspective, however, cash includes “near cash” assets - assets that can be
readily sold or converted into cash within a shorter time span. According to Khan and Jain
(2013), “such assets provide a short-term outlet for excess cash and are also useful for
meeting planned outflow of funds”. Dauter (1956) recognized money orders, and cheques
drawn against demand deposits as cash.
It should be noted that ,cash is considered as the firm’s least productive assets as it is not
directly involved in the production of goods and services as in the case of other liquid
assets (inventories and receivables), therefore, no direct returns (profit) will accrue to a
firm when it holds cash in currency and in non-interest bearing accounts.

2.2 Motives for Holding Cash.

Despite the seemingly low or no return for holding cash, a number of reasons exist that
motivate businesses to keep cash. Von Eije & Westerman, (2001) points out that “cash
usually would not be needed if it were not for the market imperfections and resulting
transaction costs of urgently needing cash at short notice if the need arises and there is no
enough cash”

J.M Keynes (1936) identified only three (3) reasons of cash by excluding compensating
motive. However, other writers have identified (4) reasons why cash is held are
transaction, precautionary, speculative and compensating motive (Ross, Westerfield, Jaffe,
1996; Von Horne and Wachowicz, 1998; Khan and Jain, 2013),
2.2.1 Transaction motive.
Kytönen (2004) identified that; transaction motive is one of the main reasons why firms
hold cash in the form of non-interest-bearing currency. Since firms financial obligations
(For example, payment of wages and salaries, payments of bills and settlement of other
operational expenses) are settled mainly through the exchange of cash, firms keep cash to
settle such obligations when they fall due.
It is therefore right to assert that, there is a positive correlation between the transactional
motive of holding and the volume of transaction a firm engages in, in that the more
payment the firm is expected to honour, the greater will be its transaction motive for
holding cash.

2.2.2 Precautionary motive.

Unfortunately, the amount of cash to be spent by the firm in the future with regards to
transaction purposes cannot be determined with certainty as emergencies can occur which
will require the firm to make immediate cash disbursement. To prevent such situation,
additional cash in excess of its transactional needs is kept as a precautionary measure and
this is referred to as holding cash with a precautionary motive.

The amount of money that a business holds for this purpose depends on a number of
factors such as, the attitude of the business towards risk and the uncertainty characterized
with the cash outflow and inflow of the business
According to Horne and Wachowicz (1992), “firm should endeavor to bring in profit on
the cash set aside for precautionary and transaction needs by investing a larger percentage
of it in “near cash” such as marketable securities”
The more cash for precautionary motive are held in near cash assets, the less currency cash
kept and the greater the interest earned, all other things being equal. However, Ross et al
(1996) highlights that there is a trade-off between the interest revenue earned and the
transaction costs involved in purchasing and selling such near cash assets.
2.2.3 Speculative Motive
This is where a firm holds additional cash balance with the aim of benefiting from yet
unidentified investment opportunities or utilizing uncertainties in the money market. For
example, if a firm expects a swift fall in the prices of its inputs, the firm may hold cash
awaiting such occurrence to take advantage of.

2.2.4 Compensating Motive

Some commercial banks require a minimum cash balance in every current account.
Although this balance is a non-interest-bearing deposit, this minimum cash balance must
be maintained by the firm so as to benefit from the luxury of holding that account in the
bank. Cash held for this purpose is for compensation motive.

2.3 Cash Management

Cash shortage will inevitably impact negatively on the operations of the business, while
excess cash will also remain idle without contributing anything significant, in terms of
returns, towards the profitability of the organization. Maintaining a sound cash position for
the business, therefore, a major function of the Finance Manager.
Watson and Head (2007) explained the management of cash to mean the practice that
concerns itself with the optimization of the amount of cash available, obtaining maximum
benefit from returns on idle funds and minimizing losses caused by delays in the
transmission of funds. Cash management as “the process of forecasting, collecting,
disbursing, investing, and planning for cash a company needs to operate smoothly”.
(Zimmerer et al, 2008)
Although businesses must possess enough funds to meet its financial obligations or it risk
facing bankruptcy, keeping excessive amount of cash for unexpected circumstances is not
profitable as this idle money could have been invested elsewhere to generate returns. This
limits or reduces the growth of the business and its profitability because investing cash,
even for a short period of time, can add to the profits of the business.

An efficient cash management, therefore, affords the firm an opportunity to face the cash
demands of the firm, guard against the situation of holding unnecessary large amount of
cash and increase the returns generated from each dollar the company owns.
According to Davidson et al (1992), cash can be a problem even though business has a
large number of customers, offers a superior product to its customers and enjoy a strong
reputation in the industry.
It should be noted that businesses suffering from cash flow problems do not have a safety
margin in case of unforeseen expenditure. They may also exhibit certain features such as
experiencing problems in obtaining funding for innovation and expansion; and difficulty in
recruiting and retaining good employees.
Westerfield et al (1999) highlighted the essence to establish a distinction between cash and
liquidity management as the word cash is used practically in two ways. This preposition
was also affirmed by Khan and Jain (2013), who indicated that practically, cash can be
used to mean actual currency cash on hand or cash equivalents (near cash).
One of the maiden studies into solving cash management problems in businesses was
conducted by Gentry (1988) whose recommendation grouped cash-level planning into
phases, and further recognised the characteristics of cash inflows and outflows, such as the
level and swiftness of cash flows as well as its patterns and steadiness as essential parts
that should be included when designing a direct measure of a given cash level.
 CHAPTER 03
OBJECTIVE OF THE STUDY
There have been various objectives for this study.

 The first of which is a detailed analysis of the financial statements that is the balance sheet
and the income statement of, INFOWIZ Industry Pvt. Ltd.
 The second objective, however the most important one or in other word the principle aim of
this project is the understanding and assessment of financial ratios based on the statements of
the company.
 The next aim of the project is to recognize the position of the company through those ratios
and data available. This recognition is a leading factor in changes of each and every company
and the base and root of lots of management decisions.
 CHAPTER 04
RESEARCH METHODOLOGY
Research framework:

This study is based on the data about INFOWIZ

for a detailed study of its financial statements, documents and system ratios and finally to recognize
and determine the position of the company.

Types of data which helped to prepare this report:

1. First type is the primary data which was collected personally to be used and studied to prepare
and reach the objectives already mentioned.
2. The secondary data which was already prepared so these data was only used to reach the aims
and objectives of this project. These data has been collected from the financial reports of the
company.

How the data was collected:

The sources of collecting the primary data was through interviews, observation however the
secondary one was collected from the financial statements already available to the employees of the
company and some of which was published.

Personal Interview:

Personal Interview method requires a person known as the interviewer asking questions generally in
a face to face contact to the other person or persons. In some cases, I had the chance to ask my
questions personally from the Head of Accounts department and Head of HR Department regarding
the information I needed.
Different questions and information I could collect during these two methods are:
Printed and Digital Sources:

The secondary data I collected was through the study of the financial statements already existed in
the company in form of printed files or digital files reserved in the company for further references. I
had chosen these files because of the reliability and suitability of this information which I was also
sure about the accuracy of them.
These files consist of:

1. Annual report of the company

2. Financial balance sheets
3. Income statements
4. Financial reports
5. Different reports prepared by Finance Department.
 CHAPTER 05
DATA ANALYSIS

29
 FINANCIAL ANALYSIS
Financial analysis is a tool of financial management. It consists of the evaluation of the financial condition
and operating performance of a business firm, an industry, or even the economy, and the forecasting of its
future condition and performance. It is, in other words, a means for examining risk and expected return.
Data for financial analysis may come from other areas within the firm, such as marketing and production
departments, from the firm‘s own accounting data, or from financial information vendors such as
Bloomberg Financial Markets, Moody‘s Investors Service, Standard & Poor‘s Corporation, Fitch Ratings,
and Value Line, as well as from government publications, such as the Federal Reserve Bulletin. Financial
publications such as Business Week, Forbes, Fortune, and the Wall Street Journal also publish financial
data (concerning individual firms) and economic data (concerning industries, markets, and economies),
much of which is now also available on the Internet.
Within the firm, financial analysis may be used not only to evaluate the performance of the firm, but also
its divisions or departments and its product lines. Analyses may be performed both periodically and as
needed, not only to ensure informed investing and financing decisions, but also as an aid in implementing
personnel policies and rewards systems.
Outside the firm, financial analysis may be used to determine the creditworthiness of a new customer, to
evaluate the ability of a supplier to hold to the conditions of a long-term contract, and to evaluate the
market performance of competitors.
Firms and investors that do not have the expertise, the time, or the resources to perform financial analysis
on their own may purchase analyses from companies that specialize in providing this service. Such
companies can provide reports ranging from detailed written analyses to simple creditworthiness ratings for
businesses. As an example, Dun & Bradstreet, a financial services firm, evaluates the creditworthiness of
many firms, from small local businesses to major corporations. As another example, three companies—
Moody‘s Investors Service, Standard & Poor‘s, and Fitch— evaluate the credit quality of debt obligations
issued by corporations and express these views in the form of a rating that is published in the reports
available from these three organization.

30
Who uses these analyses?
Financial statements are used and analyzed by a different group of parties, these groups consists of
people both inside and outside a business. Generally, these users are:
A. Internal Users: are owners, managers, employees and other parties who are
directly connected with a company:
1. Owners and managers require financial statements to make important business decisions
that affect its continued operations. Financial analysis is then performed on these statements
to provide management with more detailed information. These statements are also used as
part of management's report to its stockholders, and it form part of the Annual Report of the
company.

2. Employees also need these reports in making collective bargaining agreements with the
management, in the case of labour unions or for individuals in discussing their compensation,
promotion and rankings.
B. External Users: are potential investors, banks, government agencies and other parties who
are outside the business but need financial information about the business for numbers of
reasons.
1. Prospective investors make use of financial statements to assess the viability of investing in
a business. Financial analyses are often used by investors and is prepared by professionals
(financial analysts), thus providing them with the basis in making investment decisions.

2. Financial institutions (banks and other lending companies) use them to decide whether to
give a company with fresh loans or extend debt securities (such as a long- term bank loan ).
3. Government entities (tax authorities) need financial statements to ascertain the
propriety and accuracy of taxes and duties paid by a company.
4. Media and the general public are also interested in financial statements of some companies
for a variety of reasons.

31
 FINANCIAL RATIO ANALYSIS
Ratio analysis is such a significant technique for financial analysis. It indicates relation of two
mathematical expressions and the relationship between two or more things.
Financial ratio is a ratio of selected values on an enterprise's financial statement.
There are many standard ratios used to evaluate the overall financial condition of a corporation or
other organization. Financial ratios are used by managers within a firm, by current and potential
stockholders of a firm, and by a firm‘s creditor. Financial analysts use financial ratios to compare the
strengths and weaknesses in various companies.
Values used in calculating financial ratios are taken from balance sheet, income statement and the
cash flow of company, besides Ratios are always expressed as a decimal values, such as 0.10, or the
equivalent percent value, such as 10%.
Essence of ratio analysis:
Financial ratio analysis helps us to understand how profitable a business is, if it has enough money to
pay debts and we can even tell whether its shareholders could be happy or not.
Financial ratios allow for comparisons:
1. between companies
2. between industries
3. between different time periods for one company
4. between a single company and its industry average
To evaluate the performance of one firm, its current ratios will be compared with its past ratios.
When financial ratios over a period of time are compared, it is called time series or trend analysis. It
gives an indication of changes and reflects whether the firm‘s financial performance has improved or
deteriorated or

Remained the same over that period of time. It is not the simply changes that has to be determined,
but more importantly it must be recognized that why those ratios have changed. Because those
changes might be result of changes in the accounting polices without material change in the firm‘s
performances.

32
What does ratio analysis tell us?
After such a discussion and mentioning that these ratios are one of the most important tools that is
used in finance and that almost every business does and calculate these ratios, it is logical to express
that how come these calculations are of so importance.
What are the points that those ratios put light on them? And how can these numbers help us in
performing the task of management?
The answer to these questions is: We can use ratio analysis to tell us whether the business
1. is profitable
2. Has enough money to pay its bills and debts
3. Could be paying its employees higher wages, remuneration or so on
4. is able to pay its taxes
5. Is using its assets efficiently or not
6. Has a gearing problem or everything is fine
7. Is a candidate for being bought by another company or investor?
But as it is obvious there are many different aspects that these ratios can demonstrate. So for using
them first we have to decide what we want to know, then we can decide which ratios we need and
then we must begin to calculate them.

33
 Which Ratio for whom:
As before mentioned there are varieties of people interested to know and read these information and
analyses, however different people for different needs. And it is because each of these groups have
different type of questions that could be answered by a specific number and ratio.
Therefore we can say there are different ratios for different groups, these groups with the ratio
that suits them is listed below:
1. Investors: These are people who already have shares in the business or they are willing to be part
of it. So they need to determine whether they should buy shares in the business, hold on to the shares
they already have or sell the shares they already own. They also want to assess the ability of the
business to pay dividends. As a result the Return on Capital Employed Ratio is the one for this
group.
2. Lenders: This group consists of people who have given loans to the company so they want to be
sure that their loans and also the interests will be paid and on the due time. Gearing Ratios will suit
this group.
3. Managers: Managers might need segmental and total information to see how they fit into the
overall picture of the company which they are ruling. And Profitability Ratios can show them what
they need to know.
4. Employees: The employees are always concerned about the ability of the business to provide
remuneration, retirement benefits and employment opportunities for them, therefore these
information must be find out from the stability and profitability of their employers who are
responsible to provide the employees their need. Return on Capital Employed Ratio is the
measurement that can help them.

5. Suppliers and other trade creditors: Businesses supplying goods and materials to other
businesses will definitely read their accounts to see that they don't have problems, after all, any
supplier wants to know if his customers are going to pay them back and they will study the Liquidity
Ratio of the companies.
6. Customers: are interested to know the Profitability Ratio of the business with which they are
going to have a long term involvement and are dependent on the continuance of presence of that.

34
7. Governments and their agencies: are concerned with the allocation of resources and, the
activities of businesses. To regulate the activities of them, determine taxation policies and as the
basis for national income and similar statistics, they calculate the Profitability Ratio of businesses.
8. Local community: Financial statements may assist the public by providing information about the
trends and recent developments in the prosperity of the business and the range of its activities as they
affect their area so they are interested in lots of ratios.

9. Financial analysts: they need to know various matters, for example, the accounting concepts
employed for inventories, depreciation, bad debts and so on. therefore they are interested in possibly
all the ratios.

10. Researchers: researchers' demands cover a very wide range of lines of enquiry ranging from
detailed statistical analysis of the income statement and balance sheet data extending over many
years to the qualitative analysis of the wording of the statements depending on their nature of
research.

35
Comparative Balance Sheet of Infowiz for year 2021
& 2021

Particulars MAR'20 MAR'21

Increase / Decrease Increase /
lacs Lacs (Amount) Decrease (%)

EQUITY AND LIABILITIES

Share Capital 286 287 -1 -0.35
Share Warrants & Outstanding
Shareholder's Funds 42,092.00 36,059.00 6033 16.73
Long-Term Borrowings 0 0 0
Secured Loans 0 0 0
Unsecured Loans 0 0 0
Deferred Tax Assets / Liabilities -542 -322 -220 68.32
Other Long Term Liabilities 364 120 244 203.33
Long Term Trade Payables 0 0 0
Long Term Provisions 0 0 0
Total Non-Current Liabilities -178 -202 24 -11.88
Trade Payables 68 178 -110 -61.80
Current Liabilities - - - -
Other Current Liabilities 4,071.00 2,827.00 1244 44.00
Short Term Borrowings 0 0 0
Short Term Provisions 6,117.00 3,788.00 2329 61.48
Total Current Liabilities 10,256.00 6,793.00 3463 50.98
Total Liabilities 52,170.00 42,650.00 9520 22.32

ASSETS
Gross Block 10,420.00 8,060.00 2360 29.28
Less: Accumulated Depreciation 4,688.00 3,607.00 1081 29.97
Less: Impairment of Assets 0 0 0
Net Block 5,732.00 4,453.00 1279 28.72
Lease Adjustment A/c 0 0 0
Capital Work in Progress 954 1,135.00 -181 -15.95
Intangible assets under development 0 0 0
Pre-operative Expenses pending 0 0 0
Assets in transit 0 0 0
Non Current Investments 3,968.00 2,764.00 1204 43.56
Long Term Loans & Advances 2,269.00 1,552.00 717 46.20
Other Non Current Assets 10 8 2 25.00
Total Non-Current Assets 12,933.00 9,912.00 3021 30.48
Total Reserves 41,806.00 35,772.00 6034 16.87
Current Assets Loans & Advances
Currents Investments 2,749.00 1,580.00 1169 73.99
Inventories 0 0 0
Cash and Bank 24,100.00 20,401.00 3699 18.13
Other Current Assets 2,799.00 2,453.00 346 14.11
Short Term Loans and Advances 2,253.00 1,939.00 314 16.19
Total Current Assets 39,237.00 32,738.00 6499 19.85
Net Current Assets (Including Current 28,981.00 25,945.00 3036 11.70
Investm
Total Current Assets Excluding Current 36,488.00 31,158.00 5330 17.11
Invest
Miscellaneous Expenses not written off 0 0 0
Total Assets 52,170.00 42,650.00 9520 22.32

36
Contingent Liabilities 193 554 -361 -65.16
Total Debt 0 0 0
Book Value (in Cr.) 735.87 0 735.87
Adjusted Book Value (in Cr.) 735.87 0 735.87

37
 Comparative Income Statement of Infowiz
for year 2021 & 2021

Particulars MAR'20 MAR'21

Increase / Decrease Increase /
lacs Lacs (Amount) Decrease (%)
Income
Sales Turnover 44341 36765 7576 20.61
Less :Excise Duty - - - -
Net Sales 44341 36765 7576 20.61
Other Income 2576 2298 278 12.10
Stock Adjustments - - - -
Total Income 46917 39063 7854 20.11
Expenditure - - - -
Raw Materials - - - -
Power & Fuel Cost - - - -
Employee Cost 24350 19932 4418 22.17
Other Manufacturing Expenses 3990 2969 1021 34.39
Selling and Admin Expenses - - -
Miscellaneous Expenses 3474 2849 625 21.94
Preoperative Exp Capitalised - - - -
Total Expenses 31814 25750 6064 23.55
Operating Profit 12,527.00 11,015.00 1512 13.73
PBDIT 15103 13313 1790 13.45
Interest - - - -
PBDT 15,103.00 13,313.00 1790 13.45
Depreciation 1,101.00 956.00 145 15.17
Other Written Off - - - -
Profit Before Tax 14002 12357 1645 13.31
Extra-ordinary items - - - -
PBT (Post Extra-ord Items) 14,002.00 12,357.00 1645 13.31
Tax 3808 3241 567 17.49
Reported Net Profit 10,194.00 9,116.00 1078 11.83
Total Value Addition 31814 25750 6064 23.55
Preference Dividend - - - -
Equity Dividend 3618 2412 1206 50.00
Corporate Dividend Tax 615 403 212 52.61
Per share data (annualised) - - - -
Shares in issue (lakhs) 5,714.03 5,742.36 -28.33 -0.49
Earning Per Share (Rs) 178.40 158.75 19.65 12.38
Equity Dividend (%) 1260 840 420 50.00
Book Value (Rs) 736.64 627.95 108.69 17.31

38
Cash Flow Statement

Cash Flow Statement of Infowiz for

year 2021 & 2021

Particulars MAR’20 MAR’19

Lacs Lacs

Net Profit Before Taxes 14002 12274

Adjustments for Expenses & Provisions -952 -920
Adjustments for Liabilities & Assets -273 -1268
Cash Flow from operating activities 9148 6942
Cash Flow from investing activities -2,307 -2,824
Cash Flow from financing activities -3177 -3319
Effect ofexchange fluctuation ontranslation
Reserve 0 0
Net increase/(decrease) in cash and cash
Equivalents 3664 799
Opening Cash & Cash Equivalents 20402 19557
Cash & Cash Equivalent on Amalgamation
/ 0 0
Take over / Merger
Cash& Cash Equivalent ofSubsidiaries under
Liquidations 0 0
Translationadjustment on reserves/ opcash
balances foreign subsidiaries 0 0
Effect of Foreign Exchange Fluctuations 34 45
Closing Cash & Cash Equivalent 24100 20
40
1

39
 RATIOS OF INFOWIZ INDUSTRY PRIVATE LIMITED

LIQUIDITY RATIOS:

The two liquidity ratios, the current ratio and the acid test ratio, are the most important ratios in almost
the whole of ratio analysis and they are also the simplest to use. Liquidity ratios provide information
about a firm‘s ability to meet its short- term financial obligations. They are of particular interest to
those extending short term credit to the firm. Two frequently-used liquidity ratios are current and quick
ratio.
While liquidity ratios are most helpful for short-term creditors/suppliers and bankers, they are also
important to financial managers who must meet obligations to suppliers of credit and various
government agencies. A company's ability to turn short-term assets into cash to cover debts is of the
utmost importance when creditors are seeking payment. Bankruptcy analysts and mortgage originators
frequently use the liquidity ratios to determine whether a company will be able to continue as a going
concern. A complete liquidity ratio analysis can help uncover weaknesses in the financial position of
the business. Generally, the higher the value of the ratio, the larger the margin of safety that the
company possesses to cover short-term debts.

40
CURRENT RATIO: Curret asset/ current liabilities

Year 2021 2020 2019 2018 2017

Current
ratio 1.45 1.12 0.99 1.79 1.84

2500

2000

1500
year
Current ratio
1000

500

0
1 2 3 4 5

Comments:

The ratio is mainly used to give an idea of the company‘s ability to pay back its short- term liabilities
(debt and payables) with its short-term assets (cash, inventory, receivables). The higher the current
ratio, the more capable the company is of paying its obligations. A ratio in each year suggests that the
company would be able to pay off its obligations if they came due at that point, but the company has
shown constant decreasing trend in its financial health in subsequent years, Since low current ratio does
not necessarily mean that the firm will go bankrupt, but it is definitely is not a good sign. Short term
creditors prefer a high current ratio since it reduce their risk.

41
 1. QUICK OR ACID-TEST RATIO

The essence of this ratio is a test that indicates whether a firm has enough short-term assets to cover its
immediate liabilities without selling inventory. So it is the backing available to liabilities that must be
paid almost immediately. There are two terms of liquid asset and liquid liabilities in this formula,
Liquid asset is all current assets except the inventories and prepaid expenses, because prepaid expenses
cannot be converted to cash. The liquid liabilities include all current liabilities except bank overdraft
and cash credit since they are not required to be paid off immediately.

Quick Ratio = liquid assets / liquid liabilities

Year 2021 2020 2019 2018 2017

Quick
ratio 0.88 0.68 0.69 1.35 1.32

2012
2011
2010
2009
2008

Quick ratio
year
2007
2006
2005
2004

1 2 3 4 5

Comments:
The acid-test ratio is far more forceful than the current ratio, primarily because the current ratio
includes inventory assets which might not be able to turn to cash immediately. Companies with ratios
of less than 1 cannot pay their current liabilities and should be looked at with extreme caution.
Furthermore, if the acid-test ratio is much lower than the current ratio, it means current assets are highly
dependent on inventory.

42
TURN OVER RATIOS

Accounting ratios that measure a firm's ability to convert different accounts within their balance sheets
into cash or sales. Companies will typically try to turn their production into cash or sales as fast as
possible because this will generally lead to higher revenues.
Such ratios are frequently used when performing fundamental analysis on different companies.

Cost of Goods Sold

Inventory Turnover =
Average Inventory

INVENTORY TURNOVER RATIO

Inventory turnover is the ratio of cost of goods sold to average inventory. It is an activity / efficiency
ratio and it measures how many times per period, a business sells and replaces its inventory again.

Inventory turnover ratio is used to measure the inventory management efficiency of a business. In general, a
higher value indicates better performance and lower value means inefficiency in controlling inventory levels. A
lower inventory turnover ratio may be an indication of overstocking which may pose risk of obsolescence and
increased inventory holding costs. However, a very high turnover may result in loss of sales due to inventory
shortage.

Year 2021 2020 2019 2018 2017

Inventory
turnover 7.54 4.84 12.86 13.36 14.56

43
 year

1
2
3
4
5

FIXED ASSET TURNOVER RATIO

Fixed-asset turnover is the ratio of sales (on the profit and loss account) to the value of fixed assets
(on the balance sheet). It indicates how well the business is using its fixed assets to generate sales.

Generally speaking, the higher the ratio, the better, because a high ratio indicates the business has less
money tied up in fixed assets for each unit of currency of sales revenue. A declining ratio may indicate
that the business is over-invested in plant, equipment, or other fixed assets

YEAR 2021 2020 2019 2018 2017

44
Fixed 1.27 0.33 0.92 0.82 0.81
assets
turnover
ratio

2013
2012
2011
2010
2009
2008 Fixed assets turnover
2007 ratio
2006 year
2005
2004

12345

PROFITABILITY RATIOS

Profitability measures are important to company managers and owners alike. If a small business has
outside investors who have put their own money into the company, the primary owner certainly has to
show profitability to those equity investors.

Profitability ratios show a company's overall efficiency and performance. We can divide profitability
ratios into two types: margins and returns. Ratios that show margins represent the firm's ability to
translate sales dollars into profits at various stages of measurement. Ratios that show returns represent
the firm's ability to measure the overall efficiency of the firm in generating returns for its shareholders.

1) NET PROFIT MARGIN

When doing a simple profitability ratio analysis, net profit margin is the most often margin ratio used.
The net profit margin shows how much of each sales dollar shows up as net income after all expenses
are paid. For example, if the net profit margin is 5%, that means that 5 cents of every dollar is
45
profit.The net profit margin measures profitability after consideration of all expenses including taxes,
interest, and depreciation. The calculation is: Net Income/Net Sales = %. Both terms of the
equation come from the income statement

Year 2021 2020 2019 2018 2017

Net
profit
margin
(%) 17.98 19.03 7.07 6.12 1.67

2500

2000

1500
year
1000 Net profit margin (%)

500

0
1 2 3 4 5

46
 CHAPTER 06
OBSERVATION AND FINDINGS

47
Based on the ratios and calculations made on my project I can analyze S.S.V. as follows:

The year 2009 could be called the peak on the business during last five year which almost divides the
ratios into two parts, before 2004 and after that.

Liquidity ratios shows that the firm has been facing some problems regarding paying short term
liabilities for 3 years, but it is trying to improve the situation.

The usage ratio of the company had followed a comparable pattern. The overall efficiency of the
company to use its assets, capital or the working capital had increased from 2005 to 2007. However in
the later years, it is declining and falling to a lower level of efficiency, for which we can blame the
environmental conditions of the country, and that, involves the economical and political challenges of
India and the world. The Company fails to increase its profitability in the last year, though it should be
mentioned that we see a noticeable net profit point in the 2008. It also fails to give satisfactory rate of
return in the two years compared to 2009.

IMPORTANCE

Ratio analysis is an important technique of financial analysis. It is a means for judging the financial
health of a business enterprise. It determines and interprets the liquidity, solvency, profitability,etc. of a
business enterprise.
It becomes simple to understand various figures in the financial statements through the use of
different ratios. Financial ratios simplify, summarize, and systemize the accounting figures presented in
financial statements.

With the help of raito analysis, comparision of profitability and financial soundness can be made
between one industry and another. Similarly comparision of current year figures can also be made with
those of previous years with the help of ratio analysis and if some weak points are located, remidial
measures’ are taken to correct them.

48
 If accounting ratios are calculated for a number of years, they will reveal the trend of costs, sales,
profits and other important facts. Such trends are useful for planning.

Financial ratios, based on a desired level of activities, can be set as standards for judging actual
performance of a business. For example, if owners of a business aim at earning profit @ 25% on the
capital which is the prevailing rate of return in the industry then this rate of 25% becomes the standard.
The rate of profit of each year is compared with this standard and the actual performance of the
business can be judged easily.

Ratio analysis discloses the position of business with different viewpoint. It discloses the position of
business with liquidity viewpoint, solvency view point, profitability viewpoint, etc. with the help of
such a study, we can draw conclusion regardings the financial health of business enterprise.

49
CHAPTER 07
CONCLUSION

50
 Ratios make the related information comparable. A single figure by itself has no meaning, but
when expressed in terms of a related figure, it yields significant interferences. Thus, ratios are relative
figures reflecting the relationship between related variables. Their use as tools of financial analysis
involves their comparison as single ratios, like absolute figures, are not of much use.

Ratio analysis has a major significance in analyzing the financial performance of a company over a
period of time. Decisions affecting product prices, per unit costs, volume or efficiency have an impact
on the profit margin or turnover ratios of a company.

Financial ratios are essentially concerned with the identification of significant accounting data
relationships, which give the decision-maker insights into the financial performance of a company.

The analysis of financial statements is a process of evaluating the relationship between component
parts of financial statements to obtain a better understanding of the firm‘s position and performance.

The first task of financial analyst is to select the information relevant to the decision under
consideration from the total information contained in the financial statements. The second step is to
arrange the information in a way to highlight significant relationships. The final step is interpretation
and drawing of inferences and conclusions. In brief, financial analysis is the process of selection,
srelation and evaluation.

Ratio analysis in view of its several limitations should be considered only as a tool for analysis
rather than as an end in itself. The reliability and significance attached to ratios will largely hinge upon
the quality of data on which they are based. They are as good or as bad as the data itself. Nevertheless,
they are an important tool of financial analysis.

51
 CHAPTER 08
LIMITATIONS

52
The ratios analysis is one of the most powerful tools of financial management. Though ratios are simple
to calculate and easy to understand, they suffer from serious limitations.

1. Limitations of financial statements: Ratios are based only on the information which has
been recorded in the financial statements. Financial statements themselves are subject to several
limitations. Thus ratios derived, there from, are also subject to those limitations. For example,
non-financial changes though important for the business are not relevant by the financial
statements. Financial statements are affected to a very great extent by accounting conventions
and concepts. Personal judgment plays a great part in determining the figures for financial
statements.

Comparative study required: Ratios are useful in judging the efficiency of the business
only when they are compared with past results of the business. However, such a comparison
only provide glimpse of the past performance and forecasts for future may not prove correct
since several other factors like market conditions, management policies, etc. may affect the
future operations.

2. Problems of price level changes: A change in price level can affect the validity of ratios
calculated for different time periods. In such a case the ratio analysis may not clearly indicate the
trend in solvency and profitability of the company. The financial statements, therefore, be adjusted
keeping in view the price level changes if a meaningful comparison is to be made through accounting
ratios.

3. Lack of adequate standard: No fixed standard can be laid down for ideal ratios. There are no
well accepted standards or rule of thumb for all ratios which can be accepted as norm. It renders
interpretation of the ratios difficult.

4. Limited use of single ratios: A single ratio, usually, does not convey much of a sense. To
make a better interpretation, a number of ratios have to be calculated which is likely to confuse the
analyst than help him in making any good decision.

5. Personal bias: Ratios are only means of financial analysis and not an end in itself. Ratios have to
interpret and different people may interpret the same ratio in different way.

53
6. Incomparable: Not only industries differ in their nature, but also the firms of the similar business
widely differ in their size and accounting procedures etc. It makes comparison of ratios difficult and
misleading.
7.

54
 CHAPTER 09
BIBLIOGRAPHY

55
 Web Sites:

WWW.INFOWIZ.CO.IN

WWW.MONEYCONTROL.COM

Books Referred:

―Basic Financial Management- M Y Khan

―Financial Management- Prasanna Chandra

Annual Reports.

56
CHAPTER 10
APPENDIX

57
Comparative Balance Sheet of Infowiz for year 2020
& 2021

Particulars MAR'20 MAR'19

Increase / Decrease Increase /
lacs Lacs (Amount) Decrease (%)

EQUITY AND LIABILITIES

Share Capital 286 287 -1 -0.35
Share Warrants & Outstanding
Shareholder's Funds 42,092.00 36,059.00 6033 16.73
Long-Term Borrowings 0 0 0
Secured Loans 0 0 0
Unsecured Loans 0 0 0
Deferred Tax Assets / Liabilities -542 -322 -220 68.32
Other Long Term Liabilities 364 120 244 203.33
Long Term Trade Payables 0 0 0
Long Term Provisions 0 0 0
Total Non-Current Liabilities -178 -202 24 -11.88
Trade Payables 68 178 -110 -61.80
Current Liabilities - - - -
Other Current Liabilities 4,071.00 2,827.00 1244 44.00
Short Term Borrowings 0 0 0
Short Term Provisions 6,117.00 3,788.00 2329 61.48
Total Current Liabilities 10,256.00 6,793.00 3463 50.98
Total Liabilities 52,170.00 42,650.00 9520 22.32

ASSETS
Gross Block 10,420.00 8,060.00 2360 29.28
Less: Accumulated Depreciation 4,688.00 3,607.00 1081 29.97
Less: Impairment of Assets 0 0 0
Net Block 5,732.00 4,453.00 1279 28.72
Lease Adjustment A/c 0 0 0
Capital Work in Progress 954 1,135.00 -181 -15.95
Intangible assets under development 0 0 0
Pre-operative Expenses pending 0 0 0
Assets in transit 0 0 0
Non Current Investments 3,968.00 2,764.00 1204 43.56
Long Term Loans & Advances 2,269.00 1,552.00 717 46.20
Other Non Current Assets 10 8 2 25.00
Total Non-Current Assets 12,933.00 9,912.00 3021 30.48
Total Reserves 41,806.00 35,772.00 6034 16.87
Current Assets Loans & Advances
Currents Investments 2,749.00 1,580.00 1169 73.99
Inventories 0 0 0
Cash and Bank 24,100.00 20,401.00 3699 18.13
Other Current Assets 2,799.00 2,453.00 346 14.11
Short Term Loans and Advances 2,253.00 1,939.00 314 16.19
Total Current Assets 39,237.00 32,738.00 6499 19.85
Net Current Assets (Including Current 28,981.00 25,945.00 3036 11.70
Investm
Total Current Assets Excluding Current 36,488.00 31,158.00 5330 17.11
Invest
Miscellaneous Expenses not written off 0 0 0
Total Assets 52,170.00 42,650.00 9520 22.32
58
 Comparative Income Statement of Infowiz
for year 2020 & 2021

Particulars MAR'20 MAR'19

Increase / Decrease Increase /
lacs Lacs (Amount) Decrease (%)
Income
Sales Turnover 44341 36765 7576 20.61
Less :Excise Duty - - - -
Net Sales 44341 36765 7576 20.61
Other Income 2576 2298 278 12.10
Stock Adjustments - - - -
Total Income 46917 39063 7854 20.11
Expenditure - - - -
Raw Materials - - - -
Power & Fuel Cost - - - -
Employee Cost 24350 19932 4418 22.17
Other Manufacturing Expenses 3990 2969 1021 34.39
Selling and Admin Expenses - - -
Miscellaneous Expenses 3474 2849 625 21.94
Preoperative Exp Capitalised - - - -
Total Expenses 31814 25750 6064 23.55
Operating Profit 12,527.00 11,015.00 1512 13.73
PBDIT 15103 13313 1790 13.45
Interest - - - -
PBDT 15,103.00 13,313.00 1790 13.45
Depreciation 1,101.00 956.00 145 15.17
Other Written Off - - - -
Profit Before Tax 14002 12357 1645 13.31
Extra-ordinary items - - - -
PBT (Post Extra-ord Items) 14,002.00 12,357.00 1645 13.31
Tax 3808 3241 567 17.49
Reported Net Profit 10,194.00 9,116.00 1078 11.83
Total Value Addition 31814 25750 6064 23.55
Preference Dividend - - - -
Equity Dividend 3618 2412 1206 50.00
Corporate Dividend Tax 615 403 212 52.61
Per share data (annualised) - - - -
Shares in issue (lakhs) 5,714.03 5,742.36 -28.33 -0.49
Earning Per Share (Rs) 178.40 158.75 19.65 12.38
Equity Dividend (%) 1260 840 420 50.00
Book Value (Rs) 736.64 627.95 108.69 17.31

59
Cash Flow Statement
Cash Flow Statement of Infowiz for
year 2020 & 2021

Particulars MAR’20 MAR’19

Lacs Lacs

Net Profit Before Taxes 14002 12274

Adjustments for Expenses & Provisions -952 -920
Adjustments for Liabilities & Assets -273 -1268
Cash Flow from operating activities 9148 6942
Cash Flow from investing activities -2,307 -2,824
Cash Flow from financing activities -3177 -3319
Effect ofexchange fluctuation ontranslation
Reserve 0 0
Net increase/(decrease) in cash and cash
Equivalents 3664 799
Opening Cash & Cash Equivalents 20402 19557
Cash & Cash Equivalent on Amalgamation
/ 0 0
Take over / Merger
Cash& Cash Equivalent ofSubsidiaries under
Liquidations 0 0
Translationadjustment on reserves/ opcash
balances foreign subsidiaries 0 0
Effect of Foreign Exchange Fluctuations 34 45
Closing Cash & Cash Equivalent 24100 20
40
1

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