FINANCIAL STATEMENT ANALYSIS AND BENEISH MANIPULATION INDEX

Sandeep K Biswal Ashish Baghel Anand Avakanvar

CONTENTS
Management Discussion Analysis (MDA) and Directors Report (DR) Notes on Accounting Procedure Balance Sheet Analysis P&L Analysis Financial Ratio Analysis Beneish Index Analysis

MDA & DR
Greek sovereign debt crisis Japan Earthquake RBIs contractionary monetary policy Persistent hike in fuel price COGS increased Reduced production cost backed by R&D Auto ancillary sector growth has declined

NOTES ON AP
Value of fixed assets include transportation and installation costs All R&D expenses capitalized Provision has been made to review fixed asset prices Sona Koyo understated depreciation on intangible assets Lease hold depreciation considers less of useful life and lease period

B/S ANALYSIS (VA)

B/S ANALYSIS (HA)

P&L ANALYSIS (VA)

P&L ANALYSIS (HA)

FINANCIAL RATIOS
In comparison to other two firms Sona Koyo has better inventory management WCT is the least in case of Sundaram Clayton Sundaram Clayton is in a better position to meet short term debt obligations Gabriel India is generating more income from operations

FINANCIAL RATIOS contd.

Long term risk prospects are more in case of Gabriel India Sundaram Clayton has a better net profit margin Due to high ROE Gabriel India can raise more equity capital at reduced cost

BENEISH INDEX ANALYSIS

Considering a cut off value of 11.72 %, the probability of manipulation received for three companies show a slight inclination towards GAAP violation The companies under study have significant figures of leveraging which is necessary for the industry they belong to. Hence, the cut off value can be increased a little

ROAD AHEAD
Increased competition and inflation remains a major concern However, buoyant demand side factors are expected to keep growth momentum of the sector going Hence, cost and efficiency optimization shall be the key words

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