FINANCIAL STATEMENT ANALYSIS OF ANDHRA PRADESH STATE FINANCIAL CORPORATION

Size: px

Start display at page:

Download "FINANCIAL STATEMENT ANALYSIS OF ANDHRA PRADESH STATE FINANCIAL CORPORATION"

Sibyl Little
8 years ago
Views:

1 FINANCIAL STATEMENT ANALYSIS OF ANDHRA PRADESH STATE FINANCIAL CORPORATION INTRODUCTION ALOK RAJ BHATT* *Assistant Professor, Kshatriya College of Engineering, Chepur. Statements prepared with the help of accounting information are known as financial statements. Analysis of financial statements involves two jobs 1) Analyzing the data 2) interpreting the analyzed data. The process of applying different tools of analysis to know the behavior or nature of accounting information is known as analysis. Commenting up on the analyzed data is known as interpretation of data. INTRODUCTION TO THE APSFC Andhra Pradesh state financial corporation is a term lending Institution established in 1956 for promoting small and medium scale industries in Andhra Pradesh under the provisions of the state financial corporation and act, The corporation came in to existence on by merger of Andhra state financial corporation and Hyderabad state financial corporation. The corporation has launched many entrepreneur-friendly schemes to provide term loans, special and seed capital assistance to suit the needs of various categories of entrepreneurs. The corporation has completed five decades service in industrial financing of tiny, small and medium scale sector units and contributing to the balanced regional development of the state. Pinnacle Research Journals 81 OBJECTIVE OF THE STUDY The object of financial statement analysis is to establish the relationship between the different components of the statements. The objective of the study is to analyze the financial performance by way of horizontal analysis with the help of financial statement analysis tool. To examine the profitability position of the company. SCOPE THE STUDY The critical scope of the study is confined with the study of available financial statement of Andhra Pradesh State Financial Corporation. The present study is intended to cover a period of 3 years from for comparative balance sheet analysis.

2 The study is limited to the financial performance of the APSFC and that to with their aspects which are required for the calculation and analysis of the financial performance of APSFC. METHODOLOGY OF THE STUDY The study is carried in the APSFC more specifically to examine financial statement and analysis. The analysis is worked out by using various sources of data collected, which is gathered in two ways. They are 1. Primary source 2. Secondary source SECONDARY SOURCES: data collected from the annual reports, broachers and from the official website of APSFC and also with the concerned literatures, book of the subject matters and financial management books. TOOLS AND TECHNIQUES USED In order to study the financial statement analysis the 1) Comparative statement analysis and 2) Ratio analysis as an accounting technique is used in a study. PERIOD OF THE STUDY Pinnacle Research Journals 82 To study the financial performance analysis of APSFC I have chosen 3 years period, i.e., from 2009 to LIMITATION OF THE STUDY Statements like comparative statements are computed from historical accounting records, so they possess limitations and weakness which is been possessed by accounting records process. Ratio analysis is based on financial statements which are themselves subject to the several limitations therefore any ratio analysis based on such statement suffers from similar limitations. This paper limits only financial performance of the APSFC from 2009 to 2011.

3 DATA ANALYSIS AND INTERPRETATION COMPARATIVE INCOME STAEMENT OF APSFC FOR THE YEAR ENDED 31 MARCH, 2010 AND 1011 Pinnacle Research Journals 83 PARTICULARS CHANGE (IN RUPEES) CHANGE (IN PERCENTAGE) INCOMES Interest on loans and advances Other income TOTAL EXPENDITURE Interest and other financial expenses Personnel expenses Administrative expenses Depreciation Bad debts written off TOTAL Operating profit Add: Excess NPA provision written off Excess income tax provision of earlier (50.73) year written back Deferred tax assets (DAT) (44.86) Profit before provisions Less: Provision for income tax Provision for fringe benefit tax (FBT) Provision for incentive to employees (8.93) Provision for retirement benefits of employees Provisions against standard assets (20.55) Net profit carried to P&L appropriation a/c (34.68) INTERPRETATION 1) Among all operating expenses, personal expenses have increased by 35 percent but the operating profit has increased a meager percent. 2) Bad debts have increased by percent in the year 2011 in comparison to 2010 this is not a good sign.

4 3) During the year 2011 profit before provision is increased in comparison to Operating profit because of the excess provision for NPA, Income Tax provided in the previous years were written off and added back to the current year s profit. 4) Above reasons have resulted in a negligible increase in the net profit prior to the appropriation items. COMPARATIVE BALANCESHEET OF APSFC FOR THE YEAR ENDING31 MARCH, 2010 AND CHANGE (in rupees) Change (in percentage) CAPITAL AND LIABILITIES: Share Capital Loans Pending Conversion to Share Capital Reserve Fund and Other Reserves Borrowings Current Liabilities & Provisions (5388.5) T O T A L: PROPERTY AND ASSETS: Cash & Bank Balances Investments ( ) Loans & Advances (Net of NPAs provision Fixed Assets Other Assets T O T A L: Pinnacle Research Journals 84 INTERPRETATION 1) The working capital as a measure of short term solvency has been decreased by percent in the year 2011 as compare to the year ) The fixed assets have increased by percent in the year 2011 where as long term borrowings have increased by percent. 3) The investments has decreased by percent in the year 2011 in comparison to the year ) Reserve fund balance is increased by percent which is majorly as a result of appropriations where as profit is not increased effectively. 5) There is no increase in share capital by bay of new issue. 6)

5 PROFITABILITY RATIOS 1) General profitability ratios 2) Overall profitability ratios GENERAL PROFITABILITY RATIOS The following ratios are studied as a general profitability ratios. a) Expenses ratio b) Operating profit ratio c) Net profit ratio A. EXPENSES RATIOS generally the expenses ratios are calculated in relation to sales or in relation to investment. Following are the expenses ratios Administration expenses ratio Financial expenses ratio Personal expense ratio PROFITABILITY RATIOS OF APSFC FOR THE YEAR 2009, 2010 AND 2011 Pinnacle Research Journals 85 PARTICULARS 2009 % 2010 % 2011 % General profitability ratios Administrative expenses ratio Financial expense ratio Personal expenses ratio Operating profit ratio Net profit ratio Overall profitability ratios Returns on shareholders investment ratio Earnings per share INTERPRETATION 1) Among the three expenses ratio, finance expense ratio has increased larger by in the year 2011 in comparison with 2009 ( )

6 2) The operating profit ratio has increased by in the year 2011 from the base year 2009 (57.75) 3) Returns n shareholders investment ratio is decreased to in the year 2011 in comparison to the previous years 4) Earnings per share is consistently increasing from 2009, 2010 and 2011 i.e., 63.35/-, 47.29/-, 20.45/-. CONCLUSION 1) The APSFC will have to reduce the operating expenses to improve the profitability. 2) The company will have to frame good credit policy to speed up the collection period. 3) Mainly company has to maintain consistency levels all through its policies to attain consistent financial performance. BIBLIOGRAPHY Elements of Management Accounting by H.Prem Jar Financial Management by Khan and Jain Financial Management by IM. Pndey Financial Management by ICFAI Official Website of APSFC Pinnacle Research Journals 86

Consolidated balance sheet

Consolidated balance sheet Non current assets 31/12/2009 31/12/2008 (*) 01/01/2008 (*) Property, plant and equipment 1,352 1,350 1,144 Investment property 7 11 11 Fixed assets held under concessions 13,089